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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):
DECEMBER 31, 1997
BURNHAM PACIFIC PROPERTIES, INC.
(Exact name of Registrant as specified in its Charter)
<TABLE>
<S> <C> <C>
MARYLAND 1-9524 33-0204162
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
610 WEST ASH STREET
SAN DIEGO, CALIFORNIA
(Address of Principal 92101
Executive Offices) (Zip Code)
</TABLE>
(619) 652-4700
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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Item 2.
Golden State Properties Portfolio Transactions
Burnham Pacific Properties, Inc. (the "Company") through its recently
formed operating partnership subsidiary Burnham Pacific Operating
Partnership, L.P. (the "Operating Partnership") has completed its acquisition
of a portfolio of twenty shopping centers (the "Golden State Properties")
containing approximately 2.6 million square feet of gross leasable area, all
of which are located in California, and the related financing thereof.
Contribution Agreement
Pursuant to the terms of the previously reported Agreement to Contribute
dated as of December 5, 1997 (the "Contribution Agreement") by and among the
Company and investment funds affiliated with Blackacre Capital Group, L.P.
and Highridge Partners (the "Contributors"), on December 31, 1997, the
Contributors contributed the Golden State Properties to the Operating
Partnership in exchange for initial consideration of approximately $302.4
million. Of this consideration $50 million was in the form of 2,000,000
Preferred Limited Partner Units of the Operating Partnership ("Preferred
Units") valued at an agreed upon price of $25 per Preferred Unit. Each
Preferred Unit has a distribution priority of 8% and is exchangeable after a
period of approximately 1 year for a share of Series A Preferred Stock (as
hereinafter defined) of the Company.
The Company financed the cash portion of the acquisition price of the
Golden State Properties through the privately negotiated sale of $70 million
of the Company's newly-designated and issued Series 1997-A Convertible
Preferred Stock, par value $.01 per share (the "Series A Preferred Stock"),
the borrowing of first mortgage debt collateralized by nineteen of the Golden
State Properties and additional borrowings under its existing credit facility
with Nomura Asset Capital Corporation, as amended and restated (the "Credit
Facility"). See "Stock Purchase Agreement" and "Mortgage Financing."
As previously reported, the Contributors have the right to receive
additional consideration of up to $41.6 million for additional value
resulting from the lease-up of certain specified portions of the Golden State
Properties and construction and lease-up of certain additional space. The
additional consideration, if any, will be based upon incremental income and
will be paid out over an eighteen-month period. The Contributors have the
option of taking the additional consideration in Common Limited Partner Units
of the Operating Partnership ("Common Units") with the number of such Common
Units to be equal to the amount of such additional value divided by the then
fair market value (as determined at the respective times of payment) of the
common stock, par value $.01 per share, of the Company (the "Common Stock").
The Contributors will also have the option of having the Company or the
Operating Partnership immediately redeem such Common Units for cash. Any
leases for the unleased and unbuilt space must adhere to certain standards as
to use, creditworthiness and lease terms, with the Contributors responsible
for all leasing costs and the Company retaining certain approval rights. The
amount of the aggregate consideration for the acquisition of the Golden State
Properties was negotiated among the parties to the Contribution Agreement.
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The foregoing summary of the terms and provisions of the Contribution
Agreement is qualified in its entirety by reference to the terms and
provisions of the Contribution Agreement, as filed with the Securities and
Exchange Commission as an exhibit to the Company's Current Report on Form 8-K
on December 16, 1997.
Stock Purchase Agreement
Pursuant to the terms of the previously reported Stock Purchase
Agreement dated as of December 5, 1997 (the "Stock Purchase Agreement") among
the Company, the Operating Partnership, Westbrook Burnham Holdings, L.L.C.
and Westbrook Burnham Co-Holdings, L.L.C. (together with Westbrook Burnham
Holdings, L.L.C., the "Buyer"), on December 31, 1997 the Company issued to
the Buyer 2,800,000 shares of Series A Preferred Stock at an agreed upon
price of $25 per share for cash. The Series A Preferred Stock has a dividend
yield of 8% and is convertible after a period of approximately one year into
Common Stock at a conversion price per share initially equal to $15.375,
which price represents 107% of the $14.375 base price per share of the Common
Stock at the time that the principal terms of the Series A Preferred Stock
were negotiated. The Company used the proceeds of the sale to finance, in
part, the acquisition of the Golden State Properties pursuant to the
Contribution Agreement.
The foregoing summary of the description of the Series A Preferred Stock
and the terms and provisions of the Stock Purchase Agreement are qualified in
their entirety by reference to the Articles Supplementary relating to the
Series A Preferred Stock and the terms and provisions of the Stock Purchase
Agreement filed as exhibits hereto.
Mortgage Financing
On December 31, 1997, the Company's (and the Operating Partnership's)
subsidiary BPP/Golden State Acquisitions, L.L.C. ("Golden State LLC") sold to
Nomura Asset Capital Corporation its 8.33% $135,039,950.82 mortgage
promissory note due December 31, 2007 for $150 million, being the equivalent
of a 6.76% $150 million mortgage promissory note with the same maturity.
The Company has accounted for the sale of the mortgage note and expects to
account for the payment of principal and interest thereon as if the note were
a 6.76% $150 million mortgage promissory note. This first mortgage debt is
collateralized by nineteen of the twenty Golden State Properties. The
proceeds of this mortgage financing were used to finance, in part, the
acquisition of the Golden State Properties pursuant to the Contribution
Agreement. The assets of Golden State LLC, including the Golden State
Properties, are not available to satisfy claims that any creditor may have
against the Company or the Operating Partnership or any other affiliate of
the Company other than Golden State LLC. Golden State LLC has not agreed to
pay or make its assets available to pay creditors of the Company or the
Operating Partnership or any other affiliate other than Golden State LLC.
In addition, on December 31, 1997, the Company caused the Operating
Partnership to execute an Amended and Restated Revolving Loan Agreement with
Nomura Asset Capital Corporation (the "Amended Revolver") pursuant to which
the Operating Partnership became the
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primary obligor of financing commitments from Nomura Asset Capital
Corporation thereunder, with the Company becoming the guarantor of the
Operating Partnership's obligations.
The foregoing summaries of financing arrangements with Nomura Asset
Capital Corporation are qualified in their entirety by reference to the Loan
Agreement dated as of December 31, 1997 by and between BPP/Golden State
Acquisitions, L.L.C. and Nomura Asset Capital Corporation and the Amended
Revolver filed as exhibits hereto.
Item 5. Other Events.
Burnham Pacific Operating Partnership, L.P.
As of December 31, 1997, the Company substantially completed the
previously reported process of transferring to the Operating Partnership
legal or beneficial ownership of the real property and related personal
property owned by the Company and its subsidiaries and of the beneficial
interest owned by the Company and its subsidiaries in any partnership or
limited liability company that owns a direct or indirect interest in real
property and related personal property. The Operating Partnership is the
vehicle through which the Company owns its currents assets, will make its
future acquisitions and generally conduct its business. The Company believes
that this structure (frequently called an "UPREIT Structure") enhances the
Company's ability to acquire properties from existing owners on a basis which
the Company understands may defer the recognition of certain federal income
taxes to the contributing owners.
The transfer and contribution by the Company of its properties to the
Operating Partnership will have no effect upon the consolidated financial
statements of the Company.
In connection with the closing of the acquisition of the Golden State
Properties pursuant to the Contribution Agreement, the Contributors were
admitted as additional limited partners in the Operating Partnership upon the
issuance to them of 2,000,000 Preferred Units. See "Contribution Agreement."
The existing owners of Simi Valley Plaza received Common Units as a part of
the consideration for the acquisition of that property. See "Simi Valley
Plaza Acquisition" below.
Simi Valley Plaza Acquisition
The Company has completed its previously reported acquisition of a 49%
minority interest in Simi Valley Plaza, a 219,775 square foot promotional
center anchored by Edwards Theaters and Home Base for a total purchase Price
of approximately $24.5 million. The Company has the right to acquire the
remaining interest by December 1998. The property is located on Los Angeles
Boulevard in Simi Valley, California. The Company financed the acquisition of
its 49% interest through assumption of its pro rata share of existing
mortgage debt of approximately $16.2 million and the issuance initially of
approximately $4.1 million of Common Units.
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Disposition of Pacific West Outlet Center
The Company has completed its previously reported sale of the Pacific
West Outlet Center in Gilroy, California, to Horizon Group, Inc., a
factory-outlet center REIT, for approximately $38.5 million. The disposition
of the property, which the Company acquired in 1993, resulted in a gain to
the Company of approximately $5.4 million. The net proceeds were used to pay
down indebtedness under the Credit Facility.
Pacific West Outlet Center consists of approximately 203,412 square feet
of space in Phases I and II of a larger project known as The Outlets at
Gilroy, which also includes approximately 373,900 square feet under Phases
III, IV and V currently owned by the Buyer.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of the Golden State Properties and of Simi Valley
Plaza are hereby incorporated by reference to the Company's Current Report
on Form 8-K filed on December 16, 1997.
(b) Pro Forma Financial Statements meeting the requirements of Item 7 of Form
8-K are hereby incorporated by reference to the Company's Current Report
on Form 8-K filed on December 16, 1997.
(c) Exhibits filed herewith.
3.1.2 Articles Supplementary relating to Series 1997-A Convertible
Preferred Stock.
4.1 Stock Purchase Agreement dated as of December 5, 1997 by and among Burnham
Pacific Properties, Inc., Burnham Pacific Operating Partnership,
L.P., Westbrook Burnham Holdings, L.L.C. and Westbrook Burnham Co-
Holdings, L.L.C.
4.2.1 Registration Rights Agreement dated as of December 31, 1997 by and among
Burnham Pacific Properties, Inc., Westbrook Burnham Holdings, L.L.C. and
Westbrook Burnham Co-Holdings, L.L.C.
4.2.2 Registration Rights Agreement dated as of December 31, 1997 by and among
Burnham Pacific Properties, Inc. and each of the Existing Partners Listed
on Exhibit A-1 thereto.
10.1 First Amendment to Agreement of Limited Partnership of Burnham Pacific
Operating Partnership, L.P. dated as of December 31, 1997 (including
the exhibits thereto).
10.2 Loan Agreement dated as of December 31, 1997 by and between BPP/Golden
State Acquisitions, L.L.C. and Nomura Asset Capital Corporation.
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10.3 Amended and Restated Revolving Loan Agreement dated as of December 31,
1997 by and between Burnham Pacific Operating Partnership, L.P. and Nomura
Asset Capital Corporation.
99.1 Press release of Burnham Pacific Properties, Inc. dated January 5, 1998.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Current Report on Form 8-K
to be signed on its behalf by the undersigned hereunto duly authorized.
Date: January 14, 1998
BURNHAM PACIFIC PROPERTIES, INC.
By: /s/ Daniel B. Platt
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Daniel B. Platt
Chief Financial Officer
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Exhibit 3.1.2
BURNHAM PACIFIC PROPERTIES, INC.
ARTICLES SUPPLEMENTARY
Designating 4,800,000 shares of Preferred Stock
as 4,800,000 shares of
SERIES 1997-A CONVERTIBLE PREFERRED STOCK
Burnham Pacific Properties, Inc., a corporation organized and existing
under the laws of Maryland (the "Corporation"), does hereby certify to the
State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority contained in Article VI of the
charter of the Corporation, as amended (the "Charter"), and in accordance
with Section 2-208 of the Maryland General Corporation Law, the Board of
Directors of the Corporation at a meeting held on November 19, 1997 duly
adopted a resolution creating a series of the Preferred Stock, par value $.01
per share (the "Preferred Stock"), designated as Series 1997-A Convertible
Preferred Stock, and having the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption set
forth below and authorizing the issuance of such series of Preferred Stock as
set forth below. Upon any restatement of the Charter, Sections 1 through 13
of this Article FIRST shall become subsection (6.6) of ARTICLE VI of the
Charter, with any necessary or appropriate changes to the enumeration and
lettering of sections and subsections hereof.
Section 1. Designation and Amount.
Of the 5,000,000 authorized shares of Preferred Stock, 4,800,000
shares are designated Series 1997-A Convertible Preferred Stock (the "Series
1997-A Convertible Preferred Stock").
Section 2. Dividends and Distributions.
(a) Holders of shares of Series 1997-A Convertible Preferred Stock
will be entitled to receive, when, as and if authorized by the Board of
Directors out of funds legally available for the payment of dividends,
cumulative quarterly cash dividends per share (rounded up to the nearest whole
cent) equal to the greater of (i) 2.00% (per quarter) of $25.00 per share of
Series 1997-A Convertible Preferred Stock (such $25.00, the "Stated Value"), and
(ii) the Common Stock Dividend Amount (as hereinafter defined) per share of
Series 1997-A Convertible Preferred Stock, payable in each case in arrears on
the last Business Day (as hereafter defined) of each March, June, September and
December of each year, commencing on the first such day after the issuance of a
share of Series 1997-A Convertible Preferred Stock
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(each a "Dividend Payment Date"). The "Common Stock Dividend Amount"
applicable as of any Dividend Payment Date shall mean the amount of the
product of (i) the dividend payable on (or immediately preceding, as set
forth below) such Dividend Payment Date with respect to each share of Common
Stock, and (ii) the number of shares of Common Stock into which each share of
Series 1997-A Convertible Preferred Stock would be entitled to be converted,
at the Conversion Price then in effect and otherwise as set forth in these
Articles Supplementary (but without giving effect to the date limitations set
forth in the first sentence of Section 5(a) hereof), as of the record date
established for such Dividend Payment Date (determined, for purposes of this
computation, to the fourth decimal place), less the Dividend Catch-Up Amount
(as hereinafter defined). The "Dividend Catch-Up Amount" shall mean an
amount per share of Common Stock equal to the amount by which the regular
($0.25 per share of Common Stock per quarter, adjusted for splits, share
dividends and other similar events, as such $0.25 per share dividend amount
may from time to time be reasonably and sustainably increased by the Board of
Directors by resolution stating that such increased dividend amount is
"regular") aggregate dividends per share of Common Stock payable on the three
most recent dates fixed for payment of dividends on the Common Stock
(excluding the date concurrent with or within five Business Days preceding
such Dividend Payment Date), whether or not declared, exceed the aggregate
dividends per share of Common Stock actually paid on said three payment
dates. Such cumulative quarterly cash dividends will accrue daily on the
basis of a 360-day year of twelve 30-day months, and will, to the extent not
paid in full on a Dividend Payment Date, together with accruals thereon,
accrue at the compounded quarterly rate of 2.00% from such Dividend Payment
Date until payment is made, whether or not the Corporation has earnings or
surplus. The dividend payable to a holder of a share of Series 1997-A
Convertible Preferred Stock on the first Dividend Payment Date after the
share is issued will be the accrued dividend calculated from the date of
issuance to such Dividend Payment Date. If any Dividend Payment Date is not
a Business Day, the dividend due on that Dividend Payment Date will be paid
on the Business Day immediately succeeding that Dividend Payment Date. Each
Dividend Payment Date will be a date which is the date fixed for payment of
dividends with respect to the shares of Common Stock or is not more than five
Business Days after the date fixed for payment of dividends with respect to
the shares of Common Stock. As used with regard to the Series 1997-A
Convertible Preferred Stock, the term "Business Day" means a day on which
both state and federally chartered banks in New York, New York are required
to be open for general banking business; "Accrued Dividends" means all
accrued and due dividends (compounded as provided above and together with
accruals thereon) and all accrued but not yet due dividends (whether or not
declared or authorized); and "Outstanding Dividends" means all accrued and
due dividends (compounded as provided above and together with accruals
thereon) (whether or not declared or authorized) but excluding all accrued
but not yet due dividends.
(b) Each dividend will be payable to holders of record of the
Series 1997-A Convertible Preferred Stock on a date (a "Record Date")
selected by the Board of Directors which is not less than 10 nor more than 45
days before the Dividend Payment Date on which the dividend is to be paid.
No Record Date will precede the close of business on the date the Record Date
is fixed.
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(c) Unless and until all Accrued Dividends on the Series 1997-A
Convertible Preferred Stock under Section 2(a) through the most recent
preceding Dividend Payment Date have been paid (or are being paid
contemporaneously therewith), the Corporation may not (i) declare or pay any
dividend, make any distribution (other than a distribution payable solely in
shares of Common Stock), or set aside any funds or assets for payment or
distribution with regard to any Junior Shares (as hereinafter defined), (ii)
redeem or purchase (directly or indirectly, including, without limitation,
through the Operating Partnership (as hereinafter defined) or Subsidiaries
(as hereinafter defined)), or set aside any funds or other assets for the
redemption or purchase of, any Junior Shares (as hereinafter defined) or
(iii) authorize, take or cause or permit to be taken any action of the
general partner of the Operating Partnership, that will result in (A) the
declaration or payment by the Operating Partnership of any distribution to
its partners (other than distributions made concurrently with distributions
payable to the Corporation in respect of its partnership interest or
Preferred Units (as hereinafter defined) in each case that will be used by
the Corporation to fund the payment in full of all such Accrued Dividends
(such distributions to the Corporation in respect of its partnership interest
being referred to as "Authorized LP Distributions" and such distributions to
the Corporation in respect of its Preferred Units being referred to as
"Authorized Preferred Unit Distributions"), or the setting aside of any funds
or assets for payment of any distributions to its partners (other than those
made concurrently with Authorized LP Distributions or Authorized Preferred
Unit Distributions) or (B) the redemption or purchase (directly or
indirectly, including, without limitation, through the Operating Partnership
or Subsidiaries), or the setting aside of any funds or other assets for the
redemption or purchase of any partnership interests in the Operating
Partnership, except for exchange or conversions of partnership interests in
the Operating Partnership in the ordinary course into shares of (1) Common
Stock or (2) pursuant to the Operating Partnership Agreement (as defined
herein), Series 1997-A Convertible Preferred Stock. As used herein, the term
"Junior Shares" means, with regard to the Series 1997-A Convertible Preferred
Stock, all partnership interests in the Operating Partnership other than
those partnership interests held of record and beneficially by the
Corporation, all shares of Common Stock and all shares of any other class or
series of stock of the Corporation to which the shares of Series 1997-A
Convertible Preferred Stock are prior in rank with regard to payment of
dividends or payments upon the liquidation, dissolution or winding-up of the
Corporation; the term "Operating Partnership" means Burnham Pacific Operating
Partnership, L.P., a Delaware limited partnership, or any successor thereto;
the term "Subsidiary" means any Person in which the Company directly or
indirectly owns any equity interest; the term "Person" shall mean an
individual, partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association, joint venture,
nation or government, any state or other political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government or other entity of
whatever nature; the term "Preferred Units" means the Series 1997-A Preferred
Units issued pursuant to the Agreement of Limited Partnership, dated as of
November 14, 1997, by and among Burnham Pacific Properties, Inc., as General
Partner and Burnham Pacific L.P., Inc., and Burnham Pacific Properties, Inc.,
as limited partners, as amended by the First Amendment to the Agreement of
Limited Partnership (and exhibits thereto), dated as of December 31, 1997 (as
amended from time to time, the "Operating Partnership Agreement").
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(d) While any shares of Series 1997-A Convertible Preferred Stock
are outstanding, the Corporation may not pay any dividend, or set aside any
funds for the payment of a dividend, with regard to any shares of any class
or series of stock of the Corporation which ranks on a parity with Series
1997-A Convertible Preferred Stock as to payment of dividends unless at least
a proportionate payment is made with regard to all Accrued Dividends on the
Series 1997-A Convertible Preferred Stock (except, as to any shares of the
Series 1997-A Convertible Preferred Stock as to which a notice of conversion
has been furnished by the holder thereof, at the effective time of
conversion) under Section 2(a) through the most recent preceding Dividend
Payment Date. A payment of dividends with regard to the Series 1997-A
Convertible Preferred Stock will be proportionate to a payment of a dividend
with regard to another class or series of stock if the dividend per share of
Series 1997-A Convertible Preferred Stock is the same percentage of the
Accrued Dividends (except as aforesaid), under Section 2(a) through the most
recent preceding Dividend Payment Date, with regard to a share of Series
1997-A Convertible Preferred Stock that the dividend paid with regard to a
share of stock of the other class or series is of the Accrued Dividends
(except as aforesaid), under Section 2(a) through the most recent preceding
Dividend Payment Date, with regard to a share of stock of that other class or
series.
(e) Any dividend paid with regard to shares of Series 1997-A
Convertible Preferred Stock will be paid equally with regard to each
outstanding share of Series 1997-A Convertible Preferred Stock, except to the
extent that shares of Series 1997-A Convertible Preferred Stock are
outstanding for differing amounts of time during the relevant dividend period.
Section 3. Voting Rights.
The voting rights of the holders of shares of Series 1997-A
Convertible Preferred Stock will be only the following:
(a) The holders of shares of Series 1997-A Convertible Preferred
Stock will have the right to vote on all matters on which the holders of Common
Stock are entitled to vote on an "as converted" basis with holders of shares of
the Common Stock, as though part of the same class as holders of Common Stock,
with such number of shares of Common Stock deemed held of record by holders of
shares of Series 1997-A Convertible Preferred Stock on any Record Date as would
be the number of shares of Common Stock into which the shares of Series 1997-A
Convertible Preferred Stock held by such holders would be entitled to be
converted on such Record Date. The holders of shares of Series 1997-A
Convertible Preferred Stock shall receive all notices of meetings of the holders
of shares of Common Stock, and all other notices and correspondence to the
holders of shares of Common Stock provided by the Corporation, and shall be
entitled to take such actions, and shall have such rights, as are set forth
herein or are otherwise available to the holders of shares of Common Stock in
the Charter and in the By-laws of the Corporation as in effect on the date
hereof, in each case with the same effect as would be taken by holders of Series
1997-A Convertible Preferred Stock if deemed to be holders of such number of
shares of Common Stock as determined as aforesaid. Notwithstanding the
provisions of this Section 3(a) and of Section 3(b) below, the holders of shares
of Series 1997-A Convertible Preferred Stock shall not have the right to vote
(and shall not be counted in determining whether
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a quorum is present for such purposes) on the matter provided for in Section
5.7 in the Stock Purchase Agreement (as hereinafter defined).
(b) While any shares of Series 1997-A Convertible Preferred Stock
are outstanding, the Corporation will not, directly or indirectly, including
through a recapitalization, reorganization, or a merger or consolidation with
any other Person, or otherwise, without approval of holders of at least a
majority of the outstanding shares of Series 1997-A Convertible Preferred
Stock, voting separately as a class, (i) issue any shares of Series 1997-A
Convertible Preferred Stock, except (A) pursuant to that certain Stock
Purchase Agreement dated as of December 5, 1997 (as amended from time to
time, the "Stock Purchase Agreement") by and among the Corporation, the
Operating Partnership, and Westbrook Burnham Holdings, L.L.C., and Westbrook
Burnham Co-Holdings, L.L.C. (together, the "Initial Purchaser") or (B) as to
not more than 2,000,000 shares of Series 1997-A Convertible Preferred Stock,
pursuant to the Operating Partnership Agreement, by and among the
Corporation, HPBA, LLC, and HPBA II, LLC, as in effect on the date hereof and
pertaining to the exchange of Preferred Units for shares of Series 1997-A
Convertible Preferred Stock, (ii) issue any Preferred Units except pursuant
to the Operating Partnership Agreement as in effect on the date hereof; (iii)
increase the number of authorized shares of Series 1997-A Convertible
Preferred Stock; (iv) combine, split or reclassify the outstanding shares of
Series 1997-A Convertible Preferred Stock into a smaller or larger number of
shares; (v) exchange or convert any shares of Series 1997-A Convertible
Preferred Stock for other securities or the right to receive cash, or propose
or require an exchange or conversion other than as provided herein, or
reclassify any shares of Series 1997-A Convertible Preferred Stock, or to
authorize, create, classify, reclassify or issue any class or series of stock
ranking prior to or on a parity with the Series 1997-A Convertible Preferred
Stock either as to dividends or upon liquidation, dissolution or winding-up
of the Corporation or as to the rights of the Series 1997-A Convertible
Preferred Stock; (vi) amend, alter or repeal, or permit to be amended,
altered or repealed, the following provisions of the By-laws of the
Corporation in a manner which would affect adversely the rights and
preferences of any holders of Series 1997-A Convertible Preferred Stock,
including, without limitation, any exception set forth therein applicable to
Series 1997-A Convertible Preferred Stock, Article II, Section 11; Article
III, Sections 2, 5 (last sentence), 9 (last sentence) and 10; Article IV,
Sections 2 (last sentence), 3 (second sentence), 5 (last sentence); and
Article XIV (last sentence); (vii) amend, alter or repeal, or permit to be
amended, altered or repealed, the Operating Partnership Agreement pertaining
to or affecting the terms and conditions of, or the rights or preferences of
the Preferred Units; or (viii) amend, alter or repeal, or permit to be
amended, altered or repealed, any of the provisions of the Charter (including
the terms of the Series 1997-A Convertible Preferred Stock), the By-laws of
the Corporation, the Operating Partnership Agreement, or any organizational
document of any Subsidiary, in such a manner as would affect adversely the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications and terms
and conditions of redemption of (A) the Series 1997-A Convertible Preferred
Stock (including, without limitation, taking any such action the result of
which could be to alter the manner or rate of exchange of partnership
interests in the Operating Partnership, including, without limitation, the
Preferred Units, for securities of the Corporation as in effect on the date
hereof), or (B) the Common Stock; provided, however, that the increase of
classes of
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capital stock which have rights superior to those of the class of Common
Stock, as otherwise permitted hereby, shall not be deemed adversely to affect
the Common Stock.
(c) While any shares of Series 1997-A Convertible Preferred Stock
are outstanding, the Corporation will not, directly or indirectly, including
through a recapitalization or a merger or consolidation with any other
Person, or otherwise, without the approval of the holders of not less than a
majority of the outstanding shares of the Series 1997-A Convertible Preferred
Stock, voting separately as a class, propose, authorize, take, or cause to be
taken or allow to occur any of the following actions: (i) the Transfer (as
hereinafter defined) by the Corporation to a Person of the right to exercise
all or a portion of the Corporation's rights as the general partner of the
Operating Partnership, or the Transfer in a single transaction or series of
transactions of all or substantially all of the assets of the Corporation,
the Operating Partnership and the Subsidiaries, considered as a whole,
including for such purpose any Person (but excluding from the applicability
of this clause (i) any Person in which the Corporation or the Operating
Partnership has a direct or indirect minority interest such that a sale,
transfer or assignment is not within the Corporation's or Operating
Partnership's control and a merger or consolidation of the Corporation with
or into a wholly-owned Subsidiary of the Corporation in which the Corporation
Market Capitalization (as hereinafter defined) is unchanged as a result
thereof) owned directly or indirectly by the Corporation to the extent of the
Corporation's attributed interest in such other Person; (ii) any
reorganization or recapitalization of the Corporation, the Operating
Partnership and the Subsidiaries, considered as a whole, in a single
transaction or in more than one transaction, in or as a result of which the
Common Stock Valuation (as hereinafter defined) is not in excess of $15.375;
(iii) any merger or consolidation of the Corporation or the Operating
Partnership with any Person (except a merger or consolidation of the
Corporation with or into a wholly-owned Subsidiary in which the Corporation
Market Capitalization is unchanged) in or as a result of which the Common
Stock Valuation is not in excess of $15.375; (iv) the Corporation's
termination of the election, or the taking of any action by the Corporation
which would cause termination other than by election, of the Corporation as a
real estate investment trust under the Internal Revenue Code of 1986, as
amended; (v) a Change of Control (as defined in Section 4 hereof); or (vi)
the Transfer on or before December 31, 1999, of the Common Stock or units of
the Operating Partnership held directly or indirectly, of record or
beneficially, by either of J. David Martin or Daniel B. Platt, as of the date
of the initial purchase by the Initial Purchaser of shares of Series 1997-A
Convertible Preferred Stock by either such Person ("Individual Ownership").
There shall be excluded from the transactions requiring approval of not less
than a majority of the outstanding shares of Series 1997-A Convertible
Preferred Stock, as set forth in clause (vi) of this Section 3(c), any
Transfer, as to any said Person, which occurs solely and directly as a result
of the death or proceedings in divorce of such Person or which occurs as to
not more than 30% of Individual Ownership as of the date of such initial
purchase, or which occurs on or after December 31, 1998, March 31, 1999, June
30, 1999, and September 30, 1999, as to a further 17.5% of Individual
Ownership released from such restriction at each such date. As used herein,
"Common Stock Valuation" is the value of each share of Common Stock
determined, in connection with any reorganization, recapitalization, merger
or consolidation, absent manifest error, by reference to the opinion of a
nationally-recognized investment bank obtained by the Board of Directors of
the Corporation at the expense of the Corporation for such purpose, unless
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the Corporation and the Initial Purchaser otherwise agree. As used herein,
"Corporation Market Capitalization" is the total market equity capitalization
of the Corporation determined by reference to (determined based upon the
Current Market Price, as defined in Section 5(e)(vii) hereof) (i) outstanding
(assuming for this purpose the exercise of all then outstanding and
exercisable warrants or other rights to acquire Common Stock issued in the
ordinary course of business and the exercise or conversion of all other then
exercisable or convertible Common Stock equivalents not otherwise referenced
below and Preferred Units) shares of Common Stock, (ii) the number of shares
of Common Stock which would be issued on conversion of outstanding shares of
Series 1997-A Convertible Preferred Stock (determined in accordance with the
terms hereof without regard to any timing restrictions on conversion), and
(iii) all partnership and other equity interests in the Operating Partnership
and the other Subsidiaries held by Persons (other than the Company and the
Subsidiaries) (assuming for this purpose the exchange or conversion of all
such third-Person partnership and other equity interests in the Operating
Partnership or other Subsidiaries for shares of Common Stock). As used
herein, "Transfer" means any sale, transfer by operation of law or otherwise,
assignment, disposition or arrangement, whether voluntary or involuntary,
which has the effect, directly or indirectly, of altering the holding of or
causing or permitting another Person to succeed to, any voting control or
economic interest, whether beneficial or of record or both (other than as a
nominee of the transferor), including any arrangement for collateral purposes
only, or which could, with the passage of time or the occurrence of any
event, or both, have such effect.
(d) Upon the occurrence of a Dividend Payment Default (as
hereinafter defined) or of any Voting Rights Default (as hereinafter
defined), the number of members of the entire Board of Directors (as if there
were no vacancies or unfilled newly-created directorships thereon) shall be
automatically increased by two, from not more than 11 to not more than 13,
such that the holders of the Series 1997-A Convertible Preferred Stock,
voting as a separate class, shall be entitled immediately to elect two
directors. Thereafter, such right of the holders of shares of Series 1997-A
Convertible Preferred Stock, voting as a class, so to elect and so at all
times have represent such holders two members of the Board of Directors shall
continue without interruption until as provided below (but subject to
reinstatement of such right upon any further Dividend Payment Default). Such
directors shall be referred to as the "Series 1997-A Directors." At such
time when a Payment Dividend Default has been cured and there exists no
Protective Rights Default or Voting Rights Default, then the right to elect
Series 1997-A Directors provided for in this paragraph and the terms of the
incumbent Series 1997-A-elected Directors shall immediately terminate . The
Series 1997-A Directors, shall each sit as he or she may request on each
committee of the Board or on any other group so acting, whether or not
formally constituted as a committee of the Board, but no more than one such
director on each such committee. The election of a Series 1997-A Director
shall be by the affirmative vote of the holders of a plurality of the votes
cast by holders of the shares of Series 1997-A Convertible Preferred Stock,
which vote may be evidenced by a consent to action without a meeting signed
by the holders of such shares or may be obtained at a special meeting of the
holders of Series 1997-A Convertible Preferred Stock held as provided in
Section 3(e) hereof. Any Series 1997-A Director from time to time sitting as
a member of the Board may be removed by the holders of record of not less
than a majority of the outstanding shares of Series 1997-A Convertible
Preferred Stock and, if so removed, a successor individual to serve as a
Series 1997-A Director
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may be elected by the holders of record of not less than a majority of the
outstanding shares of Series 1997-A Convertible Preferred Stock. At any
annual meeting of the holders of Common Stock at which directors are to be
elected, the incumbent Series 1997-A Directors shall be nominated and, upon
the affirmative vote of not less than the holders of a plurality of shares of
Series 1997-A Convertible Preferred Stock, shall be elected to serve as the
Series 1997-A Directors. As used herein, "Dividend Payment Default" shall
mean a failure by the Corporation on any four consecutive Dividend Payment
Dates to pay in full the dividends set forth in Section 2(a) hereof as
intended to be due and payable on such dates such that there are Outstanding
Dividends (whether or not declared) with respect to such four consecutive
Dividend Payment Dates. As used herein, a "Voting Rights Default" shall mean
the failure to observe any of the provisions of Sections 3(a), 3(b), or 3(c)
hereof.
(e) Whenever the holders of shares of Series 1997-A Convertible
Preferred Stock have the right under Section 3(d) to elect a director or
directors or wish to remove a director, but have not done so, the Secretary
of the Corporation will, upon the written request of the holders of record of
at least 15% of the outstanding shares of Series 1997-A Convertible Preferred
Stock, call a special meeting of the holders of Series 1997-A Convertible
Preferred Stock for the purpose of removing and/or electing a director or
directors, as the case may be. The meeting will be held at the earliest
practicable date upon the notice required for annual meetings of the
shareholders of the Corporation (or such shorter notice as is stipulated in
the written requests for such meeting or is otherwise agreed in writing by
the holders of record of the outstanding shares of Series 1997-A Convertible
Preferred Stock before or within 10 days after the meeting) at the place
specified in the request for a meeting, or if there is none, at a place in
New York, New York, designated by the Secretary of the Corporation. If the
meeting has not been called within 2 days after delivery of the written
request to the Secretary of the Corporation, or within 4 days after the
request is mailed by registered mail, addressed to the Secretary of the
Corporation at the Corporation's principal office, the holders of record of
at least 25% of the outstanding shares of Series 1997-A Convertible Preferred
Stock may designate in writing one holder to call and appoint an individual
to chair (who need not be an officer or member of the Board) the meeting at
the expense of the Corporation, and the meeting may be called by that person
upon the notice required for annual meetings (or such shorter notice as
aforesaid). Any holder of shares of Series 1997-A Convertible Preferred
Stock or its representative will have access to the stock ledger of the
Corporation relating to the Series 1997-A Convertible Preferred Stock for the
purpose of causing a meeting of shareholders to be called in accordance with
this Section 3(e). Except as otherwise provided above in Section 3(d) or
this Section 3(e), a director elected in accordance with Section 3(d) and
this Section 3(e) will serve until the next annual meeting of the
shareholders of the Corporation and until his or her successor is elected and
qualified by the holders of Series 1997-A Convertible Preferred Stock, voting
as a class, and qualified. Any action which may be taken by the holders of
shares of Series 1997-A Convertible Preferred Stock at a meeting thereof may
be taken if holders of the required number of shares consent thereto in
writing in accordance with the applicable provisions of the Maryland General
Corporation Law.
(f) The Corporation shall act on or with respect to any matter as
to which it is entitled or requested to act in its capacity as a holder of
Preferred Units by voting or otherwise
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acting with respect to all such Preferred Units solely in accordance with
instructions received from a majority of the holders of Series 1997-A
Convertible Preferred Shares.
Section 4. Change of Control; Liquidation.
(a) Upon (i) the Transfer in a single transaction, or series of
transactions, of all or substantially all of the assets of the Corporation,
the Operating Partnership and the Subsidiaries, considered as a whole,
including for such purpose the assets of any Subsidiary (except that with
respect to any such Subsidiary in which the Corporation or the Operating
Partnership has a direct or indirect minority interest such that a sale,
transfer or assignment is not within the Corporation's or Operating
Partnership's control, and is not a part of, or occurring in connection with,
a transaction or series of transactions covered hereby, this provision shall
not apply), (ii) the merger or consolidation of the Corporation or the
Operating Partnership with any other Person (other than a merger of the
Corporation with or into a wholly-owned Subsidiary of in which the
Corporation Market Capitalization is unchanged), (iii) any recapitalization
of the Corporation, the Operating Partnership and the Subsidiaries,
considered as a whole, in a single transaction or a series of transactions,
in an amount or amounts which aggregate 30% or more of Corporation Market
Capitalization, excluding for the purpose hereof the refinancing of any
commercial loans (including loans secured by real estate in amounts and
subject to terms and conditions substantially the same as the commercial
loans of the Corporation on December 5, 1997), or (iv) a Change of Control
(as defined in this Section 4), each holder of the Series 1997-A Convertible
Preferred Stock, may at its option receive, and, if so electing by written
notice to the Corporation to such effect, will be entitled to receive, out of
the assets of the Corporation available for distribution to its stockholders,
whether from capital, surplus or earnings, before any distributions made to
holders of any Junior Shares, an amount per share (the "Change of Control
Preference") equal to the product of (A) the sum of (1) Stated Value plus the
per share amount of Accrued Dividends with regard to the Series 1997-A
Convertible Preferred Stock to the date of final distribution (whether or not
declared) and (2) 5% of the sum of Stated Value and the per share amount of
Outstanding Dividends with regard to the Series 1997-A Convertible Preferred
Stock to the date of final distribution. For the purposes of this Section
4(a), Corporation Market Capitalization shall be calculated on the date of
the first of any transactions in a series for purposes of determining the
percentage thereof represented by all transactions in such series. The
Corporation shall provide proper notice to each holder of record of shares of
Series 1997-A Convertible Preferred Stock of any event of the nature set
forth in clauses (i) through (iv) of this Section 4(a).
(b) In the event of an involuntary liquidation, dissolution or
winding-up of the Corporation as a result of which the assets of the
Corporation are sold to multiple unrelated Persons, and the holders of the
Corporation's equity securities receive solely cash in a distribution upon
liquidation, each holder of the Series 1997-A Convertible Preferred Stock,
may at its option receive, and, if so electing by written notice to the
Corporation to such effect, shall be entitled to receive, out of the assets
of the Corporation available for distribution to its stockholders, whether
from capital, surplus or earnings, before any distributions made to holders
of any Junior Shares, an amount per share equal to the sum of (i) Stated
Value plus (ii) the per share amount of Accrued Dividends with respect to the
Series 1997-A Convertible Preferred
9
<PAGE>
Stock to the date of final distribution (whether or not declared). In the
event of any other involuntary or a voluntary liquidation, dissolution or
winding-up of the Corporation, each holder of the Series 1997-A Convertible
Preferred Stock, may at its option receive, and, if so electing by written
notice to the Corporation to such effect, shall be entitled to receive, out
of the assets of the Corporation available for distribution to its
stockholders, whether from capital, surplus or earnings, before any
distributions made to holders of any Junior Shares, an amount per share equal
to the sum of (i) Stated Value plus the per share amount of Accrued Dividends
with respect to the Series 1997-A Convertible Preferred Stock to the date of
final distribution (whether or not declared) and (ii) 5% of the sum of Stated
Value and the per share amount of Outstanding Dividends. All amounts payable
under this Section 4(b) shall be payable as a liquidation preference (the
"Liquidation Preference").
(c) Holders of Series 1997-A Convertible Preferred Stock may
further elect, when delivering the written notice to the Corporation with
respect to the election under Section 4(a) or Section 4(b), in lieu of
receiving the Change of Control Preference or the Liquidation Preference, as
the case may be, to receive Common Stock on conversion of Series 1997-A
Convertible Preferred Stock, without regard to the time restriction on
conversion established in Section 5(a) hereof, in the manner and as provided
in Section 5 hereof.
(d) If, upon any liquidation, dissolution or winding-up of the
Corporation, the assets of the Corporation, or proceeds of those assets,
available for distribution to the holders of Series 1997-A Convertible
Preferred Stock and of shares of all other classes or series which are on a
parity as to distributions on liquidation with the Series 1997-A Convertible
Preferred Stock are not sufficient to pay in full the Change of Control
Preference or the Liquidation Preference, as the case may be, to the holders
of the Series 1997-A Convertible Preferred Stock which have not elected to
convert shares of Series 1997-A Convertible Preferred Stock as provided in
Section 4(c) by reference to Section 5 hereof, and any liquidation preference
of all other classes or series which are on a parity as to distributions on
liquidation with the Series 1997-A Convertible Preferred Stock, then the
assets, or the proceeds of those assets, which are available for distribution
to such holders of shares of Series 1997-A Convertible Preferred Stock and of
the shares of all other classes or series which are on a parity as to
distributions on liquidation with Series 1997-A Convertible Preferred Stock
will be distributed to the holders of the Series 1997-A Convertible Preferred
Stock and of the shares of all other classes or series which are on a parity
as to distributions on liquidation with the Series 1997-A Convertible
Preferred Stock ratably in accordance with the respective amounts of the
Liquidation Preference, with respect to shares of the Series 1997-A
Convertible Preferred Stock entitled thereto, and the liquidation preferences
applicable to the shares of other classes or series which are on a parity as
to distributions on liquidation with Series 1997-A Convertible Preferred
Stock, with respect to the shares of any such other class or series entitled
thereto. After payment of the full amount of the Change of Control
Preference or the Liquidation Preference, as the case may be, such holders of
shares of Series 1997-A Convertible Preferred Stock will not be entitled to
any further distribution of assets of the Corporation.
As used herein, a "Change of Control" of the Corporation or the
Operating Partnership shall be deemed to have occurred if any of the
following occur (or in the case of any
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proposal made by any Person to the Corporation or the Operating Partnership,
if any of the following could occur as a result thereof): (i) the Corporation
takes or fails to take any action such that it ceases to be required to file
reports under Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or any successor to that Section; (ii) any "person" (as
defined in Sections 13(d) and 14(d) of the Exchange Act) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of either (A) 30% or more of the outstanding shares
of Common Stock, or (B) 30% (by right to vote or grant or withhold any
approval) of the outstanding securities of any other class or classes which
individually or together have the power to elect a majority of the members of
the Board; (iii) other than as a result of the death or disability of one or
more of the directors within a three-month period, a majority of the members
of the Board for any period of three consecutive months are not persons who
(A) had been directors of the Corporation for at least the preceding 24
consecutive months or (B) when they initially were elected to the Board, (x)
were nominated (if they were elected by the stockholders) or elected (if they
were elected by the directors) with the affirmative concurrence of 66-2/3% of
the directors who were Continuing Directors at the time of the nomination or
election by the Board and (y) were not elected as a result of an actual or
threatened solicitation of proxies or consents by a person other than the
Board or an agreement intended to avoid or settle such a proxy solicitation
(the directors described in clauses (A) and (B) of this clause (iii) being
"Continuing Directors"); (iv) the Corporation or a Subsidiary of the
Corporation ceases to be the sole General Partner of the Operating
Partnership or grants or sells to any person, or consents to any amendment to
the agreement of limited partnership of the Operating Partnership, or the
organizational documents of the other Subsidiaries, which has the effect of
transferring, the power to control or direct the actions of the Operating
Partnership or such other Subsidiaries as if such person (A) is a general
partner of the Operating Partnership or (B) is a limited partner of the
Operating Partnership with consent or approval rights greater than the
consent or approval rights held by the limited partners of the Operating
Partnership on the date hereof; or (v) the Operating Partnership is a party
to any entity conversion or any merger or consolidation in which the
Operating Partnership is not surviving entity in such merger or consolidation
or in which the effect is of the nature set forth in the next preceding
clause (iv). Notwithstanding anything to the contrary herein, the term
"Change of Control" shall not include any of the foregoing events to the
extent that they arise in connection with an underwritten, widely distributed
offering or sale to the public of equity securities.
(e) The Corporation shall give the holders of Series 1997-A
Convertible Preferred Stock no less than 30 days' prior written notice of the
occurrence of any of the events described in Section 4(a) with a description
of the event or events which are occurring and the rights of the holders in
respect thereof.
Section 5. Conversion Into Common Stock.
(a) Optional Conversion. (i) On and after December 31, 1998,
March 31, 1999, June 30, 1999, and September 30, 1999 or earlier as provided
in Section 4(c), each holder of shares of Series 1997-A Convertible Preferred
Stock will have the right, at the holder's option, exercised by notice to
such effect (the "Notice of Election to Convert"), to convert 25% of the
shares of Series 1997-A Convertible Preferred Stock held of record by the
holder into
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<PAGE>
shares of Common Stock, such that any and all shares of Series 1997-A
Convertible Preferred Stock will be subject to conversion, at the holder's
option, on and after September 30, 1999, and such that each share of Series
1997-A Convertible Preferred Stock will be entitled to be converted into (A)
a number of fully paid and non-assessable shares of Common Stock (calculated
as to each conversion to the nearest 1/100th of a share) equal to Stated
Value plus the amount, if any, of the per share amount of Outstanding
Dividends as of the effective time of the conversion, divided by the
Conversion Price, as hereinafter defined, then in effect, or (B) such other
securities or assets as the holder is entitled to receive in accordance with
Section 5(e). In the event of a merger or consolidation, or in the
occurrence of an event as referenced in Section 4(a) or (b) of these Articles
Supplementary, then and without regard to the aforesaid limitations on the
timing of conversion, each holder of shares of Series 1997-A Convertible
Preferred Stock will have the right, at the holder's option, to exercise as
aforesaid, to convert 100% of the shares of Series 1997-A Convertible
Preferred Stock held of record by the holder into shares of Common Stock,
such that any and all shares of Series 1997-A Convertible Preferred Stock
will be subject to conversion.
(ii) The holder of each share of Series 1997-A Convertible
Preferred Stock to be converted must surrender the certificate representing
that share to the conversion agent for the Series 1997-A Convertible
Preferred Stock appointed by the Corporation (which may be the Corporation
itself), with the Notice of Election to Convert on the back of that
certificate duly completed and signed, at the principal office of the
conversion agent. If the shares issuable on conversion are to be issued in a
name other than the name in which the Series 1997-A Convertible Preferred
Stock is registered, each share surrendered for conversion must be
accompanied by an instrument of transfer, in form reasonably satisfactory to
the Corporation, duly executed by the holder or the holder's duly authorized
attorney and by funds in an amount sufficient to pay any transfer or similar
tax which is required to be paid in connection with the transfer or evidence
that such tax has been paid or is not payable.
(b) Mandatory Conversion. Subject to Section 7 hereof, if, after
the fifth anniversary of the date of the first issuance of shares of Series
1997-A Convertible Preferred Stock, the Current Market Price and the VWAP
(each as hereinafter defined) of the Common Stock on the Trading Day
immediately before the Notice of Mandatory Conversion and the Trading Day
immediately before the Mandatory Conversion Date referred to below shall be
greater than the Initial Conversion Price (as hereinafter defined), the
Corporation shall have the right, subject to the rights of the holders under
Section 3(d), 4 and 7 hereof, to convert at any time and from time to time
not less than all of the outstanding shares of Series 1997-A Convertible
Preferred Stock into a number of shares of Common Stock as determined in
accordance with Section 5(a) of these Articles Supplementary. In order to
elect to effect the mandatory conversion of Series 1997-A Convertible
Preferred Stock, subject to the requirements as set forth above, the
Corporation shall issue a notice that all shares of Series 1997-A Convertible
Preferred Stock are to be converted into shares of Common Stock, setting
forth the date of the intended conversion (such notice, the "Notice of
Mandatory Conversion", and such date, the "Mandatory Conversion Date") to all
holders of outstanding shares of Series 1997-A Convertible Preferred Stock on
a date (the "Mandatory Conversion Notice Date") at least 90 but not more than
120 days prior to the Mandatory Conversion Date. The Notice of Mandatory
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<PAGE>
Conversion shall also specify a record date (the "Mandatory Conversion Record
Date") selected by the Board of Directors which is not less than 20 but not
more than 45 days before the Mandatory Conversion Date and the number of
shares of Common Stock into which each share of Series 1997-A Convertible
Preferred Stock will be converted. If the Corporation gives a Notice of
Mandatory Conversion, then, provided that the computation set forth in the
Notice of Mandatory Conversion is not clearly erroneous, the outstanding
shares of Series 1997-A Convertible Preferred Stock will be automatically be
converted into shares of Common Stock at the close of business on the
Mandatory Conversion Date regardless of whether the holders of such shares of
Series 1997-A Convertible Preferred Stock actually surrender the certificates
representing their shares of Series 1997-A Convertible Preferred Stock for
conversion and on such date the Corporation will pay the holders an amount
equal to all Accrued Dividends through the Mandatory Conversion Date in
accordance with Section 5(a) hereof. At the close of business on the
Mandatory Conversion Date, (i) the certificates representing the shares of
Series 1997-A Convertible Preferred Stock will cease to represent anything
other than the shares of Common Stock into which the shares of the Series
1997-A Convertible Preferred Stock were automatically converted and the right
to receive any unpaid Accrued Dividends as provided herein and (ii) the
Corporation shall, at its option (the exercise of which will be described in
the Notice of Mandatory Conversion), either (A) deliver certificates
representing the shares of Common Stock to which the holders of the Series
1997-A Convertible Preferred Stock are entitled without requiring the
surrender of the certificates which formerly represented shares of Series
1997-A Convertible Preferred Stock, or (B) deliver certificates representing
the shares of Common Stock to which the holders of Series 1997-A Convertible
Preferred Stock are entitled when the holder surrenders the certificates
representing Series 1997-A Convertible Preferred Stock issued before the
Mandatory Conversion Date and complies with the other requirements of
subparagraph 5(a)(ii) (excluding the completion of the Notice of Election to
Convert). As used with regard to the Series 1997 A Convertible Preferred
Stock, the term "Trading Day" means (A) if the Common Stock is listed on at
least one stock exchange, a day on which there is trading on the principal
stock exchange on which the Common Stock is listed, (B) if the Common Stock
is not listed on a stock exchange, but sale prices of the Common Stock are
reported on an automated quotation system, a day on which trading is reported
on the principal automated quotation system on which sales of the Common
Stock are reported, or (C) if the Common Stock is not listed on a stock
exchange and sale prices of the Common Stock are not reported on an automated
quotation system, a day on which quotations are reported by National
Quotation Bureau Incorporated.
(c) Conversion Procedures. (i) The effective time of the
conversion under Section 5(a) shall be immediately prior to the close of
business on the day when all the conditions in Section 5(a)(ii) have been
satisfied.
(ii) If shares of Series 1997-A Convertible Preferred Stock
are noticed for conversion between the close of business on a dividend
payment Record Date and the opening of business on the corresponding Dividend
Payment Date ("Ex Record Date Shares"), the dividend with respect to those
shares will be payable on the Dividend Payment Date to the holder of record
of the Ex Record Date Shares on the dividend payment Record Date
notwithstanding the surrender of the Ex Record Date Shares for conversion
after the dividend payment Record Date and prior to the Dividend Payment
Date. The Corporation will make no payment or adjustment
13
<PAGE>
for Accrued Dividends on Ex Record Date Shares, whether or not in arrears, or
for dividends on the shares of Common Stock issued upon conversion of the Ex
Record Date Shares, other than to make payment to the holder of record
thereof on the Record Date. All Accrued Dividends payable with respect to
shares of Series 1997-A Convertible Preferred Stock noticed for conversion
during any period commencing with the close of business on each Dividend
Payment Date and ending with the opening of business on the next succeeding
Record Date will be paid to the holder converting such shares on the related
conversion date. The provisions of this Section 5(c)(ii) shall not limit the
obligation of the Corporation to issue shares of Common Stock in conversion
of shares of Series 1997-A Convertible Preferred Stock, including Ex Record
Date Shares, at Stated Value plus Outstanding Dividends, as elsewhere
provided herein.
(iii) As promptly as practicable after the effective time
for conversion of shares of Series 1997-A Convertible Preferred Stock, the
Corporation will issue and will deliver to the holder at the office of the
holder set forth in the Notice of Election to Convert, or on the holder's
written order, a certificate or certificates representing the number of full
shares of Common Stock issued upon the conversion of the shares of Series
1997-A Convertible Preferred Stock. Any fractional interest in respect of a
share of Common Stock arising upon a conversion will be settled as provided
in Section 5(d).
(iv) Each conversion will be deemed to have been effected at
the effective time provided in Section 5(c)(i) or on the Mandatory Conversion
Date as provided in Section 5(b), as applicable, and the person in whose name
a certificate for shares of Common Stock is to be issued upon a conversion
will be deemed to have become the holder of record of the shares of Common
Stock represented by that certificate at such effective time. All shares of
Common Stock delivered upon conversion of Series 1997-A Convertible Preferred
Stock will upon delivery be duly and validly issued and fully paid and
non-assessable, free of all liens and charges and not subject to any
preemptive rights except such preemptive rights as may exist pursuant to the
Stock Purchase Agreement. The shares of Series 1997-A Convertible Preferred
Stock so converted will no longer be deemed to be outstanding and all rights
of the holder with respect to those shares will immediately terminate, except
the right to receive the shares of Common Stock, and, if applicable, other
securities, cash or other assets to be issued or distributed as a result of
the conversion.
(d) Fractional Shares. No fractional shares of Common Stock will
be issued upon conversion of shares of Series 1997-A Convertible Preferred
Stock. Any fractional interest in a share of Common Stock resulting from
conversion of shares of Series 1997-A Convertible Preferred Stock will be
paid in cash (computed to the nearest cent) based on the Current Market Price
(as defined in Section 5(e)(vii) hereof) of the Common Stock as of the
Trading Date next preceding the date of conversion. If more than one share
of Series 1997-A Convertible Preferred Stock is surrendered for conversion at
substantially the same time by the same holder, the number of full shares of
Common Stock issuable upon the conversion will be computed on the basis of
all the shares of Series 1997-A Convertible Preferred Stock surrendered at
that time by that holder.
(e) Conversion Price. The "Conversion Price" per share of Series
1997-A Convertible Preferred Stock will initially be a price (the "Initial
Conversion Price") equal to
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$15.375, established as a 7% premium to $14.375 (such $14.375, "Base Price"),
and will be further adjusted as follows from time to time, subject to Section
5(e)(viii), if any of the events described below occurs:
(i) If the Corporation (A) pays a dividend or makes a
distribution on its Common Stock in shares of its Common Stock or (B)
subdivides, splits or reclassifies its outstanding Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
that event will be reduced so that the holder of a share of Series 1997-A
Convertible Preferred Stock surrendered for conversion after that event will
receive the number of shares of Common Stock which the holder would have
received if the share of Series 1997-A Convertible Preferred Stock had been
converted immediately before the happening of the event (or, if there is more
than one such event, if the share of Series 1997-A Convertible Preferred
Stock had been converted immediately before the first of those events and the
holder had retained all the Common Stock or other securities or assets
received after the conversion). If the Corporation combines its outstanding
Common Stock into a smaller number of shares, the Conversion Price in effect
immediately prior to that event will be increased so that the holder of a
share of Series 1997-A Convertible Preferred Stock surrendered for conversion
after that event will receive the number of shares of Common Stock which the
holder would have received if the shares of Series 1997-A Convertible
Preferred Stock had been converted immediately before the happening of the
event (or, if there is more than one such event, if the share of Series
1997-A Convertible Preferred Stock had been converted immediately before the
first of those events and the holder had retained all the Common Stock or
other securities or assets received after the conversion). An adjustment
made pursuant to this Section 5(e)(i) will become effective immediately after
the Record Date, in the case of a dividend or distribution, and will become
effective immediately after the effective date, in the case of a subdivision,
split, reclassification or combination. If such dividend or distribution is
declared but is not paid or made, the Conversion Price then in effect will be
appropriately readjusted. However, a readjustment of the Conversion Price
will not affect any conversion which takes place before the readjustment.
(ii) If the Corporation issues rights or warrants to the
holders of its Common Stock as a class entitling them to subscribe for or
purchase Common Stock at a price per share less than the lesser of the Base
Price and the Conversion Price then in effect at the Record Date for the
determination of stockholders entitled to receive the rights or warrants,
then the Conversion Price in effect immediately before the issuance of the
rights or warrants will be reduced in accordance with the equation set forth
on Exhibit A hereto, which is hereby incorporated by reference herein. The
adjustment provided for in this Section 5(e)(ii) will be made successively
whenever any rights or warrants are issued, and will become effective
immediately after each Record Date. In determining the subscription or
purchase price, as the case may be, there will be taken into account any
consideration received by the Corporation for the rights or warrants, with
the value of that consideration, if other than cash, to be reasonably
determined by the Board of Directors of the Corporation (whose determination,
if made in good faith, will be conclusive). If any rights or warrants which
lead to an adjustment of the Conversion Price expire or terminate without
having been exercised, the Conversion Price then in effect will be
appropriately readjusted. However, a readjustment of the Conversion Price
will not affect any conversion which takes place before the readjustment. In
the event that a
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transaction may be viewed as causing this Section 5(e)(ii) to be applicable
and Section 5(e)(iv) hereof may also be construed as being applicable, then
Section 5(e)(iv) will be applied and this Section 5(e)(ii) will not be
applied.
(iii) If the Corporation distributes to the holders of its
Common Stock as a class any shares of stock of the Corporation (other than
Common Stock) or evidences of indebtedness or assets (other than cash
dividends or distributions) or rights or warrants or other derivative
securities (other than those referred to in Section 5(e)(ii) or in Section
5(e)(iv)) to subscribe for or purchase any securities, then, in each such
case, the Conversion Price will be reduced so that it will equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the Record Date for the distribution by a fraction of which the numerator is
the Current Market Price of the Common Stock on the Record Date for the
distribution less the then fair market value (as determined by the Board of
Directors, whose determination, if made in good faith, will be conclusive) of
the stock, evidences of indebtedness, assets, rights or warrants which are
distributed with respect to one share of Common Stock, and of which the
denominator is the Current Market Price of the Common Stock on that Record
Date. Each adjustment will become effective immediately after the Record
Date for the determination of the stockholders entitled to receive the
distribution. If any distribution is declared but not made, or if any rights
or warrants expire or terminate without having been exercised, effective
immediately after the decision is made not to make the distribution or the
rights or warrants expire or terminate, the Conversion Price then in effect
will be appropriately readjusted. However, a readjustment will not affect
any conversion which takes place before the readjustment. In the event that
a transaction may be viewed as causing this Section 5(e)(iii) to be
applicable and Section 5(e)(iv) hereof may also be construed as being
applicable, then Section 5(e)(iv) will be applied and this Section 5(e)(iii)
will not be applied.
(iv) If the Corporation issues or sells (or the Operating
Partnership or any Subsidiary issues or sells) any equity or debt securities
which are convertible, directly or indirectly, into or exchangeable for
shares of Common Stock ("Convertible Securities"), or any rights, options
(other than the issuance or exercise after the date hereof of stock options
covering no more than 1,367.777 shares of Common Stock issued pursuant to
currently outstanding options, subject to appropriate adjustment to the
extent that the Corporation (A) pays a dividend or makes a distribution on
its Common Stock in shares of its Common Stock, (B) subdivides its
outstanding Common Stock into a greater number of shares or (C) combines its
outstanding Common Stock into a smaller number of shares, and other than
shares issued to members of the Corporation's Board of Directors under the
Corporation's Stock Options and Incentive Plan as amended to May 6, 1997 and
other than Preferred Units) or warrants to purchase or subscribe for Common
Stock at a conversion, exchange or exercise price per share which is less
than the lesser of the Base Price and the Conversion Price then in effect,
the Corporation will be deemed to have issued or sold, on the date on which
the Convertible Securities, rights, options or warrants are issued, the
maximum number of shares of Common Stock into or for which the Convertible
Securities may then be converted or exchanged or which are then issuable upon
the exercise of the rights, options or warrants immediately prior to the
close of business on the date on which the Convertible Securities, rights,
options or warrants are issued, and the Conversion Price shall be adjusted
downward as if it were an event covered by Section 5(e)(v) hereof (and, if
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applicable, Section 5(e)(viii)(B) hereof). However, no further adjustment of
the Conversion Price will be made as a result of the actual issuance of
shares of Common Stock upon conversion, exchange or exercise of the
Convertible Securities, rights, options or warrants. If any Convertible
Securities, rights, options or warrants to which this Section applies are
redeemed, retired or otherwise extinguished or expire without any shares of
Common Stock having been issued upon conversion, exchange or exercise
thereof, effective immediately after the Convertible Securities, rights,
options or warrants expire, the Conversion Price then in effect will be
readjusted to what it would have been if those Convertible Securities,
rights, options or warrants had not been issued. However, a readjustment
will not affect any conversion which takes place before the readjustment.
For the purposes of this Section 5(e)(iv), (x) the price of shares of Common
Stock issued or sold upon conversion or exchange of Convertible Securities or
upon exercise of rights, options or warrants will be (A) the consideration
paid to the Corporation for the Convertible Securities, rights, options or
warrants, plus (B) the consideration paid to the Corporation upon conversion,
exchange or exercise of the Convertible Securities, rights, options or
warrants, with the value of the consideration, if other than cash, to be
determined reasonably by the Board of Directors of the Corporation (whose
determination, if made reasonably and in good faith, will be conclusive) and
(y) any change in the conversion or exchange price of Convertible Securities
or the exercise price of rights, options or warrants will be treated as an
extinguishment, when the change becomes effective, of the Convertible
Securities, rights, options or warrants which had the old conversion,
exchange or exercise price and an immediate issuance of new Convertible
Securities, rights, options or warrants with the new conversion, exchange or
exercise price.
(v) If the Corporation issues or sells any Common Stock
(excluding, however, from the effects of this Section 5(e)(v), (W) Common
Stock purchased in the open-market and resold pursuant to the Corporation's
dividend reinvestment plan, (X) sales of Common Stock by the Corporation at
an offering price to the ultimate purchaser not less than $13.75 per share as
to an aggregate offering price of not more than $120,000,000, provided that
all such sales occur on or before June 30, 1998, and sales of not less than
$60,000,000 of such aggregate amount occur on or before March 31, 1998, (Y)
on conversion or exchange of Convertible Securities, or (Z) on exercise of
rights, options or warrants, to which Section 5(e)(ii), (iii) or (iv)
applies) for a consideration per share less than the lesser of the Base Price
and the Conversion Price then in effect, on the date of the issuance or sale,
upon consummation of the issuance or sale, the Conversion Price in effect
immediately prior to the issuance or sale will be reduced in accordance with
the equation set forth on Exhibit A hereto, which is hereby incorporated by
reference herein. In the event of sale of Common Stock which would be in
accordance with clause (X) of the parenthetical above except that the
offering price to the ultimate purchaser is at an offering price of less than
$13.75 or less per share, the reduction of the Conversion Price shall be by
reference to the lower of the Base Price and the Conversion Price then in
effect and not by reference to the $13.75 threshold.
(vi) If there is a reclassification or change of outstanding
shares of Common Stock (other than a change in par value, or as a result of a
subdivision or combination), or a merger or consolidation of the Corporation
with any other entity that results in a reclassification, change, conversion,
exchange or cancellation of outstanding shares of Common
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Stock, or a sale or transfer of all or substantially all of the assets of the
Corporation, upon any subsequent conversion of Series 1997-A Convertible
Preferred Stock, each holder of the Series 1997-A Convertible Preferred Stock
will be entitled to receive the kind and amount of securities, cash and other
property which the holder would have received if the holder had converted the
shares of Series 1997-A Convertible Preferred Stock into Common Stock
immediately before the first of those events and had retained all the
securities, cash and other assets received as a result of all those events.
In the event that a transaction may be viewed as causing this Section
5(e)(vi) to be applicable and 5(e)(iii) is also applicable, then Section
5(e)(iii) will be applied and this Section 5(e)(vi) will not be applied.
(vii) For the purpose of any computation under this
Section 5(e) or otherwise in these Articles Supplementary, the "Current
Market Price" of the Common Stock on any date will be, as of any date of
determination, the average of the volume weighted average price of the
Company Common Stock (the "VWAP") on each of the twenty Trading Days
immediately preceding such date, as the VWAP for each day is reported by a
firm of national recognition for the preparation of such reports proposed
either by the Initial Purchaser to the Company, or by the Company to the
Initial Purchaser, and in either case, approved by the non-proposing party
(such approval not to be unreasonably withheld or delayed); provided,
however, that Current Market Price will be computed based on each of the
sixty Trading Days immediately preceding the determination dates called for
in Section 5(b) and Section 9 of these Articles Supplementary.
(viii) Notwithstanding anything to the contrary herein, (A)
subject to the immediately following clause (B), no adjustment in the
Conversion Price will be required unless the adjustment would require a
change of at least 1.0% in the Conversion Price; provided, however, that any
adjustments which are not made because of this Section 5(e)(viii) will be
carried forward and taken into account in any subsequent adjustment, and (B)
if the Corporation issues or sells any Common Stock or other capital stock,
or any warrants, rights, options or Convertible Securities that would require
adjustment of the Conversion Price hereunder, and the purchase price of such
Common Stock or capital stock sold, or issuable upon exercise or conversion
of such warrants, rights, options or Convertible Securities, as the case may
be, is less than or equal to $11.00, then the Conversion Price shall be equal
to the lesser of (1) the Conversion Price as adjusted pursuant to the
applicable provisions hereof after giving effect to the issuance or sale
giving rise to such readjustment and (2) such purchase price which is less
than or equal to $11.00. All calculations under this Section 5(e) will be
made to the nearest cent or to the nearest one hundredth of a share, as the
case may be.
(ix) If any one of the events in Sections 5(e)(i) through
5(e)(vi) occurs, then the Corporation will mail to the holders of record of
the Series 1997-A Convertible Preferred Stock, at least 15 days before the
applicable date specified below, a notice stating the applicable one of (A)
the date on which a record is to be taken for the purpose of the dividend,
distribution or grant of rights or warrants, or, if no record is to be taken,
the date as of which the holders of Common Stock of record who will be
entitled to the dividend, distribution or rights or warrants will be
determined, (B) the date on which it is expected the Convertible Securities
will be issued or the date on which the change in the conversion, exchange or
exercise price of the
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Convertible Securities, rights, options or warrants will be effective, (C)
the date on which the Corporation anticipates selling Common Stock for less
than the lesser of the Base Price and the Conversion Price on the date of the
sale (except that no notice need be given of (x) the anticipated date of sale
of Common Stock upon exercise of options or warrants which have been
described in a notice to the holders of record of Series 1997-A Convertible
Preferred Stock given at least 15 days before the options or warrants are
exercised or (y) a sale described in Section 5(e)(v)(x)), or (D) the date not
less than 30 days before the date on which the reclassification,
consolidation, merger or share exchange, is expected to become effective, and
the date not less than 30 days before the date as of which it is expected
that holders of record of Common Stock will be entitled to exchange their
shares of Common Stock for securities or other property deliverable upon the
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding-up. Whenever the Conversion Price is
adjusted, the Corporation will promptly send each holder of record of shares
of Series 1997-A Convertible Preferred Stock a notice of the adjustment of
the Conversion Price setting forth the adjusted Conversion Price, the date on
which the adjustment becomes effective, a brief description of the events
which caused the adjustment, and a calculation of the adjustment, all of
which shall be subject to the approval (not to be unreasonably delayed or
withheld) of the Initial Purchaser.
(f) Reservation of Common Stock. (i) The Corporation will at all
times reserve and keep available, free from preemptive rights, out of the
authorized but unissued shares of Common Stock, for the purpose of effecting
conversion of the Series 1997-A Convertible Preferred Stock, the maximum
number of shares of Common Stock which the Corporation would be required to
deliver upon the conversion of all the outstanding shares of Series 1997-A
Convertible Preferred Stock. For the purposes of this Section 5(f)(i), the
number of shares of Common Stock which the Corporation would be required to
deliver upon the conversion of all the outstanding shares of Series 1997-A
Convertible Preferred Stock will be computed as if at the time of the
computation all the outstanding shares of Series 1997-A Convertible Preferred
Stock were held by a single holder.
(ii) Before taking any action that would cause an adjustment
reducing the Conversion Price below the then par value (if any) of the shares
of Common Stock deliverable upon conversion of the Series 1997-A Convertible
Preferred Stock, the Corporation will take all corporate action which may, in
the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and non-assessable shares of Common
Stock at the adjusted Conversion Price.
(iii) The Corporation will cause to be listed the shares
of Common Stock required to be delivered upon conversion of the Series 1997-A
Convertible Preferred Stock, prior to the delivery, upon each national
securities exchange, if any, upon which the outstanding shares of Common
Stock are listed at the time of delivery.
(g) Payment of Certain Taxes. The Corporation will pay any
documentary stamp or similar issue or transfer taxes payable in respect of
the issue or delivery of shares of Common Stock on conversion of Series
1997-A Convertible Preferred Stock; provided, however, that the Corporation
will not be required to pay any tax which may be payable in respect of any
transfer involved in the issue or delivery of shares of Common Stock in a
name other than that of
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the holder of record of Series 1997-A Convertible Preferred Stock to be
converted and no such issue or delivery will be made unless and until the
person requesting the issue or delivery has paid to the Corporation the
amount of any such tax or has established, to the satisfaction of the
Corporation, that the tax has been paid or is not payable.
Section 6. Status.
Shares of Series 1997-A Convertible Preferred Stock may only be
issued in accordance with the Stock Purchase Agreement or the Operating
Partnership Agreement. Shares of Series 1997-A Convertible Preferred Stock
converted or redeemed pursuant to the terms hereof shall not be reissued.
Section 7. Optional Redemption After Notice of Mandatory Conversion.
(a) Notwithstanding anything to the contrary contained in Section
5, each holder of Series 1997-A Convertible Preferred Stock will have the
right, exercised at any time after the Mandatory Conversion Notice Date but
prior to the Mandatory Conversion Date, to require the Corporation to redeem
any or all of the number of shares of Series 1997-A Convertible Preferred
Stock specified in the Notice of Mandatory Conversion that are owned of
record by the holder (the number of shares as to which each holder elects
redemption under this clause (a) being referred to as the "Identified
Redemption Shares"), at a redemption price per share (the "Redemption Price")
equal to (i) the sum of (A) Stated Value plus (B) the per share amount of the
sum of all Accrued Dividends with regard to the Series 1997-A Convertible
Preferred Stock (whether or not declared) through the Redemption Date, as
herein defined, times (ii) the percentage determined in accordance with the
following table:
Redemption Date Percentage
---------------- ----------
December 31, 2002 to December 31, 2003 105%
December 31, 2003 to December 31, 2004 104%
December 31, 2004 to December 31, 2005 103%
December 31, 2005 to December 31, 2006 102%
December 31, 2006 to December 31, 2007 101%
December 31, 2007 and thereafter 100%
(b) In order to exercise a right to require the Corporation to
redeem a holder's Series 1997-A Convertible Preferred Stock, the holder must
deliver a request for redemption with respect to the Identified Redemption
Shares, accompanied by the certificates representing the shares to be
redeemed, to the Corporation at any time prior to the Mandatory Conversion
Date. If a request for redemption is given with regard to shares of Series
1997-A Convertible Preferred Stock, promptly (but in no event more than five
Business Days) after the request for redemption is given to the Corporation,
the Corporation will pay the holder cash equal to the Redemption Price of the
shares. The date of such payment is referred to herein as the "Redemption
Date."
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(c) (i) If a request for redemption accompanied by the
certificates representing the shares to be redeemed is delivered to the
Corporation, on the Redemption Date dividends will cease to accrue with
regard to the shares of Series 1997-A Convertible Preferred Stock to be
redeemed, and at the close of business on that date the holders of those
shares will cease to be stockholders with respect to those shares, will have
no interest in or claims against the Corporation by virtue of such shares
(other than as described in clause (ii) below) and will have no voting or
other rights with respect to such shares.
(ii) The dividend with respect to a share of Series 1997-A
Convertible Preferred Stock which is the subject of a request for redemption
delivered on a day which falls between the close of business on a dividend
payment Record Date and the opening of business on the corresponding Dividend
Payment Date will be payable on the Dividend Payment Date to the holder of
record of the share of Series 1997-A Convertible Preferred Stock on the
dividend payment Record Date notwithstanding the redemption of the share of
Series 1997-A Convertible Preferred Stock after the dividend payment Record
Date and prior to the Dividend Payment Date.
Section 8. Ranking. The shares of Series 1997-A Convertible
Preferred Stock will, with respect to the payment of dividends, the right to
redemption in accordance with Section 7, the right to receive the Change of
Control Preference, the right to receive the Liquidation Preference, and any
other distribution of assets on liquidation, dissolution or winding-up of the
Corporation, rank prior to any other series of Preferred Stock, prior to
Common Stock and prior to any other class or series of stock of the
Corporation.
Section 9. Mandatory Redemption in Certain Instances.
(a) If required under the rules of the New York Stock Exchange to
enable the Initial Purchaser to fully convert all of the shares of Series
1997-A Convertible Preferred Stock contemplated to be purchased by the
Initial Purchaser under the Stock Purchase Agreement, the Corporation shall
seek the approval of its shareholders as to the issuance of the Common Stock
upon conversion of the Series 1997-A Convertible Preferred Stock and any
related matters at the 1998 annual meeting of shareholders, the date of which
the Corporation will use reasonable efforts to advance in time as reasonably
possible and which shall in any event be held on or before May 12, 1998. If
such shareholder approval is not obtained at such meeting, then the
Corporation may, in its sole discretion, convene a special meeting of
shareholders for such purpose, provided, that the same shall be called and
held in sufficient time to enable the Corporation to satisfy its obligations
to the Initial Purchaser under this Section 9. In connection with each such
meeting of shareholders, the Corporation will recommend such approval to its
shareholders, and use its best efforts (including, without limitation, the
retention of a soliciting firm for customary services in this regard) to
cause such approval to be granted. In each such case, the Corporation shall
immediately notify the Initial Purchaser as to whether such shareholder
approval has been obtained. If such approval is not obtained, the
Corporation shall, upon no less than ten Business Days prior written notice
and in any event no later than June 30, 1998, redeem such number of shares of
Series 1997-A Convertible Preferred Stock as shall have been agreed upon by
the Initial Purchaser and the Corporation in accordance with Section 5.7 of
the Stock Purchase Agreement (the "Redeemed
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Shares") at a purchase price per share, in cash, paid to the Initial
Purchaser, in an amount equal to the greater of (i) the Stated Value plus the
per share amount of Accrued Dividends, if any, and (ii) the aggregate Current
Market Price of a number of shares of Common Stock (calculated to the nearest
1/100th of a share) equal to the Stated Value plus the per share amount, of
Outstanding Dividends, if any, as of the date of such redemption (the
"Mandatory Redemption Date") divided by the Conversion Price then in effect,
plus Accrued Dividends, if any (such greater amount, the "Mandatory
Redemption Price").
(b) On the Mandatory Redemption Date, dividends will cease to
accrue with regard to the Redeemed Shares, and at the close of business on
such date the Initial Purchaser will have no interest in or claims against
the Corporation by virtue of such shares and will have no voting or other
rights with respect to such shares.
(c) The Mandatory Redemption Price shall be due and payable in
full on the Mandatory Redemption Date, which shall be no later than June 30,
1998. In the event that the Corporation fails to deliver to the Initial
Purchaser the Mandatory Redemption Price on or before such date, then the
Corporation shall pay to the Initial Purchaser as liquidated damages an
amount, per share of Series 1997-A Convertible Preferred Stock required to
have been redeemed, equal to the greater of (i) 150% of the amount determined
under clause (i) of the definition of Mandatory Redemption Price in Section
9(a), less the amount of dividends actually paid on or prior to June 30,
1998, from the date of original issuance of such shares, on each share of
Convertible Preferred Stock required to have been redeemed, and (ii) the
amount determined under clause (ii) of said definition (in each case, the
amount of such liquidated damages to be in lieu of and not in addition to the
Mandatory Redemption Price).
Section 10. Miscellaneous.
(a) Except as otherwise expressly provided herein, whenever a
notice or other communication is required or permitted to be given to holders
of shares of Series 1997-A Convertible Preferred Stock, the notice or other
communication will be deemed properly given if deposited in the United States
mail, postage prepaid, addressed to the persons shown on the books of the
Corporation as the holders of the shares of Series 1997-A Convertible
Preferred Stock at the addresses as they appear on the books of the
Corporation, as of the Record Date or dates determined in accordance with
applicable law and with the Charter and Bylaws, as in effect from time to
time, with a copy sent to each of Westbrook Burnham Holdings, L.L.C. and
Westbrook Burnham Co-Holdings, L.L.C., c/o Westbrook Partners, L.L.C., at 599
Lexington Avenue, Suite 3800, New York, New York 10022 and at 13155 Noel
Road, LB 54, Suite 2300, Dallas, Texas 75240, in each case by documented
overnight delivery service or, to the extent receipt is confirmed, telecopy,
telex or other electronic transmission service.
(b) Shares of Series 1997-A Convertible Preferred Stock will not
have any designations, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends and other distributions,
qualifications or terms and conditions of redemption, other than those
specifically set forth herein, in the Charter, and as may be provided under
applicable law.
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(c) The headings of the various subdivisions herein are for
convenience only and will not affect the meaning or interpretation of any of
the provisions herein.
(d) The preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption of the Series 1997-A
Convertible Preferred Stock may be waived, and any of such provisions of the
Series 1997-A Convertible Preferred Stock may be amended, with the approval
of holders of at least a majority of the outstanding shares of Series 1997-A
Convertible Preferred Stock, voting separately as a class.
(e) Notwithstanding anything to the contrary contained in Section
2, 3, 4, 5, 7, 8 or 10(d) hereof, each holder of record of Series 1997-A
Convertible Preferred Stock hereby agrees (subject to relinquishment by
Westbrook Real Estate Fund II, L.P. as permitted below) that, in determining
whether any holder of Series 1997-A Convertible Preferred Stock has (i) voted
to remove or elect any director of the Corporation under Section 3, (ii)
approved any action by the Corporation under Section 3, (iii) elected the
Change of Control Preference or the Liquidation Preference, as the case may
be, or shares of Common Stock in lieu of either thereof under Section 4, (iv)
elected to cause the conversion of such holder's Series 1997-A Convertible
Preferred Stock into Common Stock or other assets under Section 5, (v)
elected to receive the Company Redemption Price under Section 7 or (vi)
received any notice of the Corporation required or permitted herein,
Westbrook Real Estate Fund II, L.P., shall have the right to grant or deny
such approvals, make or decline any such elections or receive any such
notices with regard to all shares of the Series 1997-A Convertible Preferred
Stock held of record by such holder, and a notice received by Westbrook Real
Estate Fund II, L.P., and a document executed by Westbrook Real Estate Fund
II, L.P., calling a meeting of shareholders, exercising the right to take
action by written consent without a meeting, exercising voting rights either
together with holders of shares of Common Stock or separately as a class,
including without limitation the granting or denying of approval to any
action by the Corporation, or electing or removing any director, or electing
or declining to the Corporation to effect the conversion as to any shares of
Series 1997-A Convertible Preferred Stock, or electing or declining to the
Corporation to effect the redemption as to any shares of Series 1997-A
Convertible Preferred Stock, shall determine the matter for such holders as
Westbrook Real Estate Fund II, L.P. may indicate. Upon written notice by
Westbrook Real Estate Fund II, L.P. to the Corporation, Westbrook Real Estate
Fund II, L.P. may relinquish such rights and powers over any or all shares of
Series 1997-A Convertible Preferred Stock. The foregoing may, but need not,
be evidenced by execution by each holder of Series 1997-A Convertible
Preferred Stock, other than Westbrook Burnham Holdings, L.L.C., and Westbrook
Burnham Co-Holdings, L.L.C., of a proxy in favor of Westbrook Real Estate
Fund II, L.P.
Section 11. Certain Distributions
In determining whether a distribution that is required to be made in
order for the Corporation to maintain its status as a REIT (other than upon
voluntary or involuntary liquidation), by dividend, redemption or other
acquisition of shares or otherwise, is permitted under the Maryland General
Corporation Law, amounts that would be needed, if the Corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon
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dissolution of holders of the Series 1997-A Convertible Preferred Stock shall
not be added to the Corporation's total liabilities; provided, that to the
extent that any such distribution exceeds the amount that would be permitted
if such amounts were added to the Corporation's total liabilities, then such
excess shall be distributed solely to the holders of the Series 1997-A
Convertible Preferred Stock and, provided further, to the extent that any
distributions to such holders exceed the amounts otherwise due and payable
hereunder, then the amount of such excess (per share) shall be applied in
reduction of the Stated Value of each share of Series 1997-A Convertible
Preferred Stock in respect of which such distribution is paid.
Section 12. Severability of Provisions.
Whenever possible, each provision hereof shall be interpreted in a
manner as to be effective and valid under applicable law, but if any
provision hereof is held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating or otherwise adversely affecting the
remaining provisions hereof. If a court of competent jurisdiction should
determine that a provision hereof would be valid or enforceable if a period
of time were extended or shortened or a particular percentage were increased
or decreased, then such court may make such change as shall be necessary to
render the provision in question effective and valid under applicable law.
Section 13. Irrevocability of Exemption From Limits.
The Board of Directors shall not amend, alter or repeal the
exemption from the Ownership Limits of Section 7.2.1 of the Charter granted
to prospective holders of the Series 1997-A Convertible Preferred Stock on
November 19, 1997 and December 5, 1997 to the detriment of such a holder
without the consent of such a holder ("holder" herein including any
affiliated successor of the persons named in such resolutions).
SECOND: These Articles Supplementary have been approved by the Board
of Directors in the manner and by the vote required by law.
THIRD: The undersigned acknowledges these Articles Supplementary to
be the act of the Corporation and states as to all manners and facts required
to be verified under the oath that, to the best of his knowledge, information
and belief, these matters and facts are true in all material respects and
such statement is made under penalties for perjury.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, these Articles Supplementary are executed on
behalf of the Corporation by its President and attested by its Secretary this
15th day of December, 1997.
BURNHAM PACIFIC PROPERTIES, INC.
By: /s/ J. David Martin
-----------------------------------------
J. David Martin
President
[SEAL]
Attest:
/s/ Nina Galloway
- ----------------------------
Name: Nina Galloway
Title: Secretary
25
<PAGE>
Exhibit A
Burnham Pacific Properties, Inc.
Series 1997-A Convertible Preferred Stock ("Preferred Stock")
[previously circulated separately]
<PAGE>
===============================================================================
STOCK PURCHASE AGREEMENT
by and among
WESTBROOK BURNHAM HOLDINGS, L.L.C.
WESTBROOK BURNHAM CO-HOLDINGS, L.L.C.
BURNHAM PACIFIC PROPERTIES, INC.
and
BURNHAM PACIFIC OPERATING PARTNERSHIP, L.P.
dated as of
December 5, 1997
===============================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
Definitions
Section 1.1 "Action". . . . . . . . . . . . . . . . . . . . . .1
Section 1.2 "ADA" . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.3 "Affiliate" . . . . . . . . . . . . . . . . . . . .1
Section 1.4 "Agreement to Contribute" . . . . . . . . . . . . .2
Section 1.5 "Agreement" . . . . . . . . . . . . . . . . . . . .2
Section 1.6 "Amended Company By-laws" . . . . . . . . . . . . .2
Section 1.7 "Articles Supplementary". . . . . . . . . . . . . .2
Section 1.8 "ASTM Standard" . . . . . . . . . . . . . . . . . .2
Section 1.9 "Benefit Arrangements". . . . . . . . . . . . . . .2
Section 1.10 "Blue Sky Laws". . . . . . . . . . . . . . . . . .2
Section 1.11 "Board of Directors" . . . . . . . . . . . . . . .2
Section 1.12 "Business Day" . . . . . . . . . . . . . . . . . .2
Section 1.13 "Buyer". . . . . . . . . . . . . . . . . . . . . .2
Section 1.14 "Buyer Counsel". . . . . . . . . . . . . . . . . .2
Section 1.15 "Buyer Ownership". . . . . . . . . . . . . . . . .2
Section 1.16 "California REIT". . . . . . . . . . . . . . . . .2
Section 1.17 "Capital Expenditure Budget and Schedule". . . . .2
Section 1.18 "CERCLA" . . . . . . . . . . . . . . . . . . . . .2
Section 1.19 "Closing". . . . . . . . . . . . . . . . . . . . .3
Section 1.20 "Closing Date" . . . . . . . . . . . . . . . . . .3
Section 1.21 "Code" . . . . . . . . . . . . . . . . . . . . . .3
Section 1.22 "Commitment" . . . . . . . . . . . . . . . . . . .3
Section 1.23 "Company". . . . . . . . . . . . . . . . . . . . .3
Section 1.24 "Company Asset Transfer" . . . . . . . . . . . . .3
Section 1.25 "Company Charter". . . . . . . . . . . . . . . . .3
Section 1.26 "Company Common Stock" . . . . . . . . . . . . . .4
Section 1.27 "Company Excess Stock" . . . . . . . . . . . . . .4
Section 1.28 "Company Leases" . . . . . . . . . . . . . . . . .4
Section 1.29 "Company Notice" . . . . . . . . . . . . . . . . .4
Section 1.30 "Company Plans". . . . . . . . . . . . . . . . . .4
Section 1.31 "Company Preferred Stock". . . . . . . . . . . . .4
Section 1.32 "Company Properties" . . . . . . . . . . . . . . .4
Section 1.33 "Company Registration Statement" . . . . . . . . .4
Section 1.34 "Company Reports". . . . . . . . . . . . . . . . .4
Section 1.35 "Company Stock". . . . . . . . . . . . . . . . . .4
Section 1.36 "Controlled Group Liability" . . . . . . . . . . .4
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Section 1.37 "Current Market Price" . . . . . . . . . . . . . .4
Section 1.38 "Debt Instruments" . . . . . . . . . . . . . . . .4
Section 1.39 "Development Properties" . . . . . . . . . . . . .5
Section 1.40 "Development Budget and Schedule". . . . . . . . .5
Section 1.41 "Disclosure Schedules" . . . . . . . . . . . . . .5
Section 1.42 "Employee Benefit Plans" . . . . . . . . . . . . .5
Section 1.43 "Employees". . . . . . . . . . . . . . . . . . . .5
Section 1.44 "Environmental Claim". . . . . . . . . . . . . . .5
Section 1.45 "Environmental Matters". . . . . . . . . . . . . .5
Section 1.46 "ERISA". . . . . . . . . . . . . . . . . . . . . .5
Section 1.47 "Exchange Act" . . . . . . . . . . . . . . . . . .5
Section 1.48 "Execution Closing". . . . . . . . . . . . . . . .5
Section 1.49 "Exercise Restriction" . . . . . . . . . . . . . .5
Section 1.50 "Existing Partners Registration Rights Agreement".5
Section 1.51 "GAAP" . . . . . . . . . . . . . . . . . . . . . .5
Section 1.52 "Golden State Acquisition" . . . . . . . . . . . .5
Section 1.53 "Government Authority" . . . . . . . . . . . . . .5
Section 1.54 "Hazardous Substance". . . . . . . . . . . . . . .6
Section 1.55 "Hazardous Waste". . . . . . . . . . . . . . . . .6
Section 1.56 "HQ Space" . . . . . . . . . . . . . . . . . . . .6
Section 1.57 "HSR Act". . . . . . . . . . . . . . . . . . . . .6
Section 1.58 "Incentive Plan" . . . . . . . . . . . . . . . . .6
Section 1.59 "Indemnitor" . . . . . . . . . . . . . . . . . . .6
Section 1.60 "Insurance Policies" . . . . . . . . . . . . . . .6
Section 1.61 "IRS". . . . . . . . . . . . . . . . . . . . . . .6
Section 1.62 "Knowledge". . . . . . . . . . . . . . . . . . . .6
Section 1.63 "Liabilities". . . . . . . . . . . . . . . . . . .6
Section 1.64 "Liens". . . . . . . . . . . . . . . . . . . . . .7
Section 1.65 "Losses and Expenses". . . . . . . . . . . . . . .7
Section 1.66 "Material Company Lease" . . . . . . . . . . . . .7
Section 1.67 "Materials of Environmental Concern" . . . . . . .7
Section 1.68 "New Company Title Policies" . . . . . . . . . . .7
Section 1.69 "Nomination Right" . . . . . . . . . . . . . . . .7
Section 1.70 "NYSE" . . . . . . . . . . . . . . . . . . . . . .7
Section 1.71 "Offered Securities" . . . . . . . . . . . . . . .7
Section 1.72 "Operating Partnership". . . . . . . . . . . . . .7
Section 1.73 "Operating Partnership Preferred Units". . . . . .7
Section 1.74 "Operating Partnership Preferred Units Buyer". . .8
Section 1.75 "Operating Partnership Units". . . . . . . . . . .8
Section 1.76 "Operating Partnership Agreement". . . . . . . . .8
Section 1.77 "Other Company Properties" . . . . . . . . . . . .8
Section 1.78 "Other Company Title Policies" . . . . . . . . . .8
Section 1.79 "Pension Plans". . . . . . . . . . . . . . . . . .8
Section 1.80 "Permitted Exceptions" . . . . . . . . . . . . . .8
Section 1.81 "Permitted Liens". . . . . . . . . . . . . . . . .8
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Section 1.82 "Person" . . . . . . . . . . . . . . . . . . . . .9
Section 1.83 "Pro Rata Share" . . . . . . . . . . . . . . . . .9
Section 1.84 "Project". . . . . . . . . . . . . . . . . . . . .9
Section 1.85 "Property Condition Reports" . . . . . . . . . . .9
Section 1.86 "Property Restrictions". . . . . . . . . . . . . .9
Section 1.87 "Proxy Statement". . . . . . . . . . . . . . . . .9
Section 1.88 "Purchase Price" . . . . . . . . . . . . . . . . .9
Section 1.89 "Purchased Shares" . . . . . . . . . . . . . . . .9
Section 1.90 "Registration Rights Agreement". . . . . . . . . .9
Section 1.91 "Regulatory Filings" . . . . . . . . . . . . . . .9
Section 1.92 "REIT" . . . . . . . . . . . . . . . . . . . . . .9
Section 1.93 "Related Documents". . . . . . . . . . . . . . . .9
Section 1.94 "Release " . . . . . . . . . . . . . . . . . . . .9
Section 1.95 "Rent Roll". . . . . . . . . . . . . . . . . . . .9
Section 1.96 "REOC Qualification Date". . . . . . . . . . . . .9
Section 1.97 "Rights Exercise Notice" . . . . . . . . . . . . .9
Section 1.98 "SEC". . . . . . . . . . . . . . . . . . . . . . 10
Section 1.99 "Securities Act" . . . . . . . . . . . . . . . . 10
Section 1.100 "Securities Laws" . . . . . . . . . . . . . . . 10
Section 1.101 "Subsidiaries . . . . . . . . . . . . . . . . . 10
Section 1.102 "Tax" . . . . . . . . . . . . . . . . . . . . . 10
Section 1.103 "Tax Return". . . . . . . . . . . . . . . . . . 10
Section 1.104 "Tenancy Leases". . . . . . . . . . . . . . . . 10
Section 1.105 "Welfare Plans" . . . . . . . . . . . . . . . . 10
ARTICLE 2
Purchase and Sale of Shares; Stock Purchase
Section 2.1 "Purchase and Sale" . . . . . . . . . . . . . . . 10
Section 2.2 "Consideration" . . . . . . . . . . . . . . . . . 10
Section 2.3 "Closing" . . . . . . . . . . . . . . . . . . . . 11
Section 2.4 "Additional Agreements and Stock Purchase
Deliveries". . . . . . . . . . . . . . . . . . . 11
Section 2.5 "Time and Place of Stock Purchase". . . . . . . . 11
Section 2.6 "Right to Assign.". . . . . . . . . . . . . . . . 11
ARTICLE 3
Representations and Warranties of the Company
and the Operating Partnership
Section 3.1 "Organization and Qualification, Subsidiaries". . 12
Section 3.2 "Authority Relative to Agreements;
Board Approval". . . . . . . . . . . . . . . . . 13
Section 3.3 "Capital Stock and Units" . . . . . . . . . . . . 13
Section 3.4 "No Conflicts; No Defaults, Required Filings and
Consents". . . . . . . . . . . . . . . . . . . . 15
Section 3.5 "SEC and Other Documents, Financial Statements;
Undisclosed Liabilities". . . . . . . . . . . . 16
Section 3.6 "Litigation, Compliance With Law" . . . . . . . . 17
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<PAGE>
Section 3.7 "Absence of Certain Changes or Events". . . . . . 17
Section 3.8 "Tax Matters; REIT and Partnership Status". . . . 17
Section 3.9 "Compliance With Agreements; Liens" . . . . . . . 19
Section 3.10 "Financial Records; Company Charter and By-laws;
Corporate Records". . . . . . . . . . . . . . . 20
Section 3.11 "Properties" . . . . . . . . . . . . . . . . . . 21
Section 3.12 "Environmental Matters". . . . . . . . . . . . . 28
Section 3.13 "Employees and Employee Benefit Plans" . . . . . 30
Section 3.14 "Labor Matters". . . . . . . . . . . . . . . . . 32
Section 3.15 "Affiliate Transactions" . . . . . . . . . . . . 32
Section 3.16 "Insurance". . . . . . . . . . . . . . . . . . . 32
Section 3.17 "Brokers or Finders" . . . . . . . . . . . . . . 32
Section 3.18 "REOC Status". . . . . . . . . . . . . . . . . . 32
Section 3.19 "Knowledge Defined". . . . . . . . . . . . . . . 34
Section 3.20 "Maryland Takeover Law". . . . . . . . . . . . . 34
Section 3.21 "Proxy Statement." . . . . . . . . . . . . . . . 34
Section 3.22 "Vote Required". . . . . . . . . . . . . . . . . 34
Section 3.23 "Exemption from Ownership Restrictions". . . . . 35
ARTICLE 4
Representations and Warranties of Buyer
Section 4.1 "Organization". . . . . . . . . . . . . . . . . . 35
Section 4.2 "Due Authorization" . . . . . . . . . . . . . . . 35
Section 4.3 "Conflicting Agreements and Other Matters". . . . 35
Section 4.4 "Acquisition for Investment, Sophistication,
Source of Funds" . . . . . . . . . . . . . . . . 35
Section 4.5 "Brokers or Finders". . . . . . . . . . . . . . . 36
Section 4.6 "REIT Qualification Matters". . . . . . . . . . . 36
Section 4.7 "Investment Company Matters". . . . . . . . . . . 36
ARTICLE 5
Representations and Covenants Relating to Closing
Section 5.1 "Taking of Necessary Action". . . . . . . . . . . 36
Section 5.2 "Preferred Stock, Articles Supplementary;
By-laws" . . . . . . . . . . . . . . . . . . . . 37
Section 5.3 "Public Announcements; Confidentiality" . . . . . 37
Section 5.4 "Conduct of the Business" . . . . . . . . . . . . 38
Section 5.5 "Information and Access". . . . . . . . . . . . . 38
Section 5.6 "Notification of Certain Matters" . . . . . . . . 38
Section 5.7 "Approval of Company Shareholders; Redemption." . 39
ARTICLE 6
Certain Additional Covenants
Section 6.1 "Resale". . . . . . . . . . . . . . . . . . . . . 39
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Section 6.2 "REIT Status" . . . . . . . . . . . . . . . . . . 40
Section 6.3 "Payments". . . . . . . . . . . . . . . . . . . . 40
Section 6.4 "First Offer Rights". . . . . . . . . . . . . . . 40
Section 6.5 "Board of Directors". . . . . . . . . . . . . . . 42
Section 6.6 "Shareholders Vote Regarding the Conversion or
Redemption of Company Preferred Stock or Operating
Partnership Preferred Units". . . . . . . . . . . 44
Section 6.7 "Operating Partnership Preferred Units" . . . . . 44
Section 6.8 "Existing Partners Agreements". . . . . . . . . . 44
Section 6.9 "REOC Status" . . . . . . . . . . . . . . . . . . 44
Section 6.10 "Board of Directors Resolutions.". . . . . . . . 45
ARTICLE 7
Conditions to Closing
Section 7.1 "Conditions of Purchase at Closing" . . . . . . . 45
Section 7.2 "Conditions of Sale at Closing" . . . . . . . . . 48
ARTICLE 8
Survival; Indemnification
Section 8.1 "Survival". . . . . . . . . . . . . . . . . . . . 50
Section 8.2 "Indemnification by the Company". . . . . . . . . 50
Section 8.3 "Third-Party Claims". . . . . . . . . . . . . . . 50
Section 8.4 "Exclusive Remedy". . . . . . . . . . . . . . . . 51
Section 8.5 "Indemnification Limitation". . . . . . . . . . . 51
Section 8.6 "Covenant Between Buyer and Operating Partnership
Preferred Unit Buyer with Respect to
Indemnification Agreement". . . . . . . . . . . . 51
ARTICLE 9
Termination
Section 9.1 "Termination" . . . . . . . . . . . . . . . . . . 52
Section 9.2 "Procedure and Effect of Termination" . . . . . . 53
Section 9.3 "Expenses". . . . . . . . . . . . . . . . . . . . 53
ARTICLE 10
Miscellaneous
Section 10.1 "Counterparts" . . . . . . . . . . . . . . . . . 53
Section 10.2 "Governing Law". . . . . . . . . . . . . . . . . 53
Section 10.3 "Entire Agreement" . . . . . . . . . . . . . . . 53
Section 10.4 "Notices". . . . . . . . . . . . . . . . . . . . 53
Section 10.5 "Successors and Assigns" . . . . . . . . . . . . 55
Section 10.6 "Headings" . . . . . . . . . . . . . . . . . . . 55
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Section 10.7 "Amendments and Waivers" . . . . . . . . . . . . 55
Section 10.8 "Interpretation; Absence of Presumption" . . . . 56
Section 10.9 "Severability" . . . . . . . . . . . . . . . . . 56
Section 10.10 "Further Assurances". . . . . . . . . . . . . . 56
Section 10.11 "Specific Performance". . . . . . . . . . . . . 56
Section 10.12 "Schedules" . . . . . . . . . . . . . . . . . . 56
Section 10.13 "Submission to Jurisdiction". . . . . . . . . . 56
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SCHEDULES
Schedule 3.1(d) Jurisdictions in which Subsidiaries Not
Qualified to Do Business
Schedule 3.1(e) Subsidiaries
Schedule 3.3(b) Operating Partnership Unit Options, Warrants, Etc.
Schedule 3.3(c) Other Interests
Schedule 3.4(c) Company Stock Option Plans; Operating Partnership Unit
Option Plans
Schedule 3.4(e) Statutory; Regulatory Compliance
Schedule 3.4(f) Contract Compliance
Schedule 3.4(g) Company Filings; Consent
Schedule 3.5(a) Company Registration Statements and Company Reports
Schedule 3.5(b) Company Financials
Schedule 3.6(a) Pending Litigation
Schedule 3.6(b) Company Compliance; Subsidiary Compliance
Schedule 3.7 Absence of Certain Changes or Events
Schedule 3.8(a) Tax Matters
Schedule 3.9(a) Company Defaults; Charter or By-Laws Compliance
Schedule 3.9(b) Company Filings
Schedule 3.9(c) Material Agreements
Schedule 3.9(e) Permitted Liens
Schedule 3.10(a) Financial Records
Schedule 3.10(b) Company Charter and By-Laws; Operating Partnership
Agreement; Joint Venture and Partnership Agreements of
Subsidiaries
Schedule 3.10(c) Company Corporate Records; Operating Partnership Records;
Subsidiary Corporate Records
Schedule 3.11(a) Property Addresses; Title Summary
Schedule 3.11(a)-(i) Older Title Insurance
Schedule 3.11(a)-(ii) New Company Title Policies
Schedule 3.11(b) Permits; Licenses; Zoning
Schedule 3.11(b)-(i) Company Properties with No Zoning Endorsement
Schedule 3.11(c) Road Changes; Condemnation Proceedings
Schedule 3.11(f) Material Company Leases
Schedule 3.11(g) Material Commitments
Schedule 3.11(h) Property Rights; Rights of First Refusal
Schedule 3.11(i) Non-Compliance and Capital Expenditure Budget and
Schedule; Insurance
Schedule 3.11(j) Developed, Undeveloped, or Rehabilitated Land
of Company Property; Development, Construction,
Management and Leasing Agreements
Schedule 3.11(l) Company Properties; HQ Space; Tenancy Leases
Schedule 3.11(n) Mortgage Debt; Mortgage Defaults
Schedule 3.12(a)(i) Environmental Concerns
Schedule 3.12(a)(ii) Inherited Properties
Schedule 3.13(a) Employee Benefit Plans; Company Plans Compliance
Schedule 3.14 Collective Bargaining; Labor Union Agreements
Schedule 3.15 Affiliate Transactions; Conflict Policies & Agreements;
Waivers
vii
<PAGE>
Schedule 3.18(g) Predecessor Company Information
Schedule 3.19 Individuals for Knowledge Test
viii
<PAGE>
EXHIBITS
Exhibit A Form of Articles Supplementary (Section 9, Mandatory Redemption
in Certain Instances, to be agreed on before the close of
business on December 9, 1997, with the number of shares to be
redeemed to be calculated in accordance with the principles of
Section 4.20 of the Agreement to Contribute)
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Amended Company Bylaws
Exhibit D Form of Operating Partnership Agreement, including Exhibits A, B
and C and the First Amendment thereto
Exhibit E Form of Company Resolutions (to be delivered after the Execution
Closing)
Exhibit F Form of Charter "Limits" Exemption Representation
Letter
Exhibit G Form of Existing Partners Registration Rights
Agreement
ix
<PAGE>
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of December 5,
1997, is made by and among Burnham Pacific Properties, Inc., a Maryland
corporation (the "Company"), Burnham Pacific Operating Partnership, L.P., a
Delaware limited partnership (the "Operating Partnership") and Westbrook
Burnham Holdings, L.L.C. and Westbrook Burnham Co-Holdings, L.L.C., each a
Delaware limited liability company (collectively, jointly and severally, the
"Buyer").
RECITALS:
WHEREAS, Buyer wishes to purchase from the Company, and the Company
wishes to sell to Buyer, an aggregate of 2,800,000 shares of a newly
designated and authorized series of convertible preferred stock of the
Company, convertible into shares of the Company's common stock, par value
$0.01 per share (respectively, the "Company Preferred Stock" and the "Company
Common Stock", and such stock of such series and class, and all other series
of preferred stock of the Company outstanding from time to time,
collectively, the "Company Stock"), having the terms set forth in the form of
Articles Supplementary in substantially the form attached as Exhibit A (the
"Articles Supplementary"), which designates the Company Preferred Stock
pursuant to the Company's Articles of Incorporation dated March 24, 1997, as
amended by the Articles of Amendment and Restatement dated May 22, 1997 (as
so amended to the date hereof, the "Company Charter"), at a price of $25.00
per share;
WHEREAS, the parties hereto are entering into this Agreement to
provide for such purchase and sale and to establish various rights and
obligations in connection therewith;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE 1
Definitions
As used in this Agreement, the following terms shall have the
following respective meanings:
Section 1.1 "Action" shall mean any actual or threatened action,
suit, arbitration, inquiry, proceeding or investigation by or before any
Government Authority.
Section 1.2 "ADA" shall have the meaning set forth in
Section 3.11 (b).
Section 1.3 "Affiliate" shall have the meaning ascribed thereto in Rule
12b-2 promulgated under the Exchange Act, and as in effect on the date hereof
and including, with respect to Buyer, Westbrook Real Estate Fund II, L.P.,
Westbrook Real Estate Co-Investment Partnership II, L.P. and their Affiliates
and investors.
<PAGE>
Section 1.4 "Agreement to Contribute" shall mean the Agreement to
Contribute, dated as of December 5, 1997, by and among Burnham Pacific
Properties, Inc., Burnham Pacific Operating Partnership, L.P. and each of the
Contributors listed in Exhibit A-1 thereto.
Section 1.5 "Agreement" shall have the
meaning set forth in the first paragraph hereof.
Section 1.6 "Amended Company By-laws" shall have the meaning set forth
in Section 7.1(d).
Section 1.7 "Articles Supplementary" shall have the meaning set forth in
the first paragraph of the Recitals hereof.
Section 1.8 "ASTM Standard" shall have the meaning set forth in Section
3.12(a).
Section 1.9 "Benefit Arrangements" shall have the meaning set forth in
Section 3.13(f).
Section 1.10 "Blue Sky Laws" have the meaning set forth in Section
3.4(g).
Section 1.11 "Board of Directors" shall mean the board of directors of
the Company.
Section 1.12 "Business Day" shall mean any day other than a Saturday, a
Sunday or a bank holiday in New York, New York.
Section 1.13 "Buyer" shall have the meaning set forth in the first
paragraph hereof.
Section 1.14 "Buyer Counsel" shall mean the General Counsel of Buyer or
such counsel to Buyer as such General Counsel shall have determined shall
render any opinion to the Company in connection with this Agreement.
Section 1.15 "Buyer Ownership" shall have the meaning set forth in
Section 6.5(a)(i).
Section 1.16 "California REIT" shall have the meaning set forth in
Section 3.18(g).
Section 1.17 "Capital Expenditure Budget and Schedule" shall have the
meaning set forth in Section 3.11(i).
Section 1.18 "CERCLA" shall have the meaning set forth in Section
3.12(a).
2
<PAGE>
Section 1.19 "Closing" shall mean the Execution Closing or the
closing at which the purchase and sale of the Purchased Shares is
consummated.
Section 1.20 "Closing Date" shall mean, with respect to the Closing,
three (3) Business Days after the date on which the conditions set forth
herein with respect thereto shall have been satisfied or duly waived, or if
the Company and Buyer mutually agree on a different date, the date upon which
they have mutually agreed.
Section 1.21 "Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto, including all of the rules and
regulations promulgated thereunder.
Section 1.22 "Commitment" shall have the meaning set forth in Section
3.7.
Section 1.23 "Company" shall have the meaning set forth in the first
paragraph hereof.
Section 1.24 "Company Asset Transfer" shall mean the transactions
pursuant to which (i) the Company and its Subsidiaries transfer legal or
beneficial ownership of (a) all real property and related personal property
owned by the Company or any Subsidiary of the Company directly and (b) at
least 99% of the beneficial interest owned by the Company and/or the
Company's Subsidiaries in any partnership or limited liability company that
owns a direct or indirect interest in real property and related personal
property (in each case as provided in Section 7.5 of the Operating
Partnership Agreement) to the Operating Partnership in exchange for a general
partner interest and a limited partner interest therein and (ii) a
wholly-owned corporate subsidiary of the Company will contribute cash in the
amount of $1,000 to the Operating Partnership in exchange for a limited
partner interest therein. Notwithstanding the foregoing, (i) it shall not be
a requirement of the Company Asset Transfer that there be transferred to the
Operating Partnership any real property and related personal property or
interests therein owned by so-called "downREIT partnerships" in which the
general partner is the Company or an Affiliate of the Company and the limited
partners are third parties or any real property and related personal property
or interest therein required by the terms of mortgage debt thereon to be held
in a single purpose bankruptcy remote subsidiary of the Company; provided,
however, that the Company shall have the right to cause legal or beneficial
ownership of any such real property and related personal property or interest
therein to be so contributed to the Operating Partnership or a Subsidiary of
the Operating Partnership as part of the Company Asset Transfer or
thereafter, and (ii) Buyer acknowledges that pursuant to Section 2.2(i) of
the Agreement to Contribute, it is a condition precedent to the closing of
the Golden State Acquisition that the Company Asset Transfer has been
accomplished and is proceeding to the extent provided in such Section 2.2(i)
of the Agreement to Contribute, as such Section 2.2(i) may be amended or
waived by the parties to the Agreement to Contribute (which amendment or
waiver shall not require the approval of Buyer).
Section 1.25 "Company Charter" shall have the meaning set forth in the
first paragraph of the Recitals hereof.
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Section 1.26 "Company Common Stock" shall have the meaning set forth in
the first paragraph of the Recitals hereof.
Section 1.27 "Company Excess Stock" shall have the meaning set forth in
Section 3.3(a).
Section 1.28 "Company Leases" shall mean all retail property leases
relating to the Company Properties.
Section 1.29 "Company Notice" shall have the meaning as set forth in
Section 6.4(b).
Section 1.30 "Company Plans" shall have the meaning set forth in Section
3.13(a).
Section 1.31 "Company Preferred Stock" shall have the meaning set forth
in the first paragraph of the Recitals hereof.
Section 1.32 "Company Properties" shall have the meaning set forth in
Section 3.11(a).
Section 1.33 "Company Registration Statement" shall have the meaning set
forth in Section 3.5(a).
Section 1.34 "Company Reports" shall have the meaning set forth in
Section 3.5(a).
Section 1.35 "Company Stock" shall have the meaning set forth in the
first paragraph of the Recitals hereof.
Section 1.36 "Controlled Group Liability" shall have the meaning set
forth in Section 3.13(f).
Section 1.37 "Current Market Price" shall mean, as of any date of
determination, the average of the volume weighted average price of the
Company Common Stock (the "VWAP") on each of the twenty trading days
immediately preceding such date, based upon the trading prices reported by
the NYSE or any other nationally recognized exchange or quotation system on
which the price of the Company Common Stock is quoted, as the VWAP for each
day is reported by a firm of national reputation for the preparation of such
reports proposed either by Buyer to the Company, or by the Company to Buyer,
and in either case approved by the non-proposing party (such approval not to
be unreasonably withheld or delayed).
Section 1.38 "Debt Instruments" shall mean all notes, mortgages, deeds
of trust or similar instruments which evidence or secure any indebtedness
owing to the Company or any Subsidiary.
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Section 1.39 "Development Properties" shall have the meaning set forth
in Section 3.11 (j).
Section 1.40 "Development Budget and Schedule" shall have the meaning
set forth in Section 3.11 (j).
Section 1.41 "Disclosure Schedules" shall mean the volume or volumes
of disclosure schedules delivered at or prior to the Closing pursuant to
Section 7.1(i).
Section 1.42 "Employee Benefit Plans" shall have the meaning set forth
in Section 3.13(f).
Section 1.43 "Employees" shall have the meaning set forth in Section
3.13(f).
Section 1.44 "Environmental Claim" shall have the meaning set forth in
Section 3.12(b).
Section 1.45 "Environmental Matters" shall have the meaning set forth in
Section 3.12(b).
Section 1.46 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, and any successor thereto.
Section 1.47 "Exchange Act" shall have the meaning set forth in Section
3.4(g).
Section 1.48 "Execution Closing" shall mean the date of execution and
delivery of this Agreement.
Section 1.49 "Exercise Restriction" shall have the meaning set forth in
Section 6.4(d).
Section 1.50 "Existing Partners Registration Rights Agreement" shall
mean that certain Registration Rights Agreement to be entered into as of the
"Closing Date", as that term is defined in the Agreement to Contribute, by
and among the Company and each of the Existing Partners listed on Exhibit
A-1, in the form attached as Exhibit G.
Section 1.51 "GAAP" shall have the meaning set forth in Section 3.5(b).
Section 1.52 "Golden State Acquisition" shall mean the contribution of
property to the Operating Partnership pursuant to the Agreement to Contribute.
Section 1.53 "Government Authority" shall mean any government or state
(or any subdivision thereof) of or in the United States, or any agency,
authority, bureau, commission, department or similar body or instrumentality
thereof, or any governmental court or tribunal.
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Section 1.54 "Hazardous Substance" shall have the meaning set forth in
Section 3.12(a).
Section 1.55 "Hazardous Wastes" shall have the meaning set forth in
Section 3.12(a).
Section 1.56 "HQ Space" shall have the meaning set forth in Section
3.11(a).
Section 1.57 "HSR Act" shall have the meaning set forth in Section
3.4(g).
Section 1.58 "Incentive Plan" shall have the meaning set forth in
Section 3.3(a).
Section 1.59 "Indemnitors" shall have the meaning set forth in Section
8.2(a).
Section 1.60 "Insurance Policies" shall have the meaning set forth in
Section 3.16.
Section 1.61 "IRS" shall mean the Internal Revenue Service.
Section 1.62 "Knowledge" shall have the meaning set forth in Section
3.19.
Section 1.63 "Liabilities" shall mean, as to any Person, all debts,
adverse claims, liabilities and obligations, direct, indirect, absolute or
contingent of such Person, whether accrued, vested or otherwise, whether in
contract, tort, strict liability or otherwise which are either required by
GAAP to be reflected in such Person's balance sheets or other books and
records, or material to the Company, the Operating Partnership and the other
Subsidiaries, taken as a whole, including (i) obligations arising from
non-compliance with any law, rule or regulation of any Government Authority
or imposed by any court or any arbitrator of any kind, (ii) all indebtedness
or liability of such Person for borrowed money, or for the purchase price of
property or services (including trade obligations), (iii) all obligations of
such Person as lessee under leases, capital or other, (iv) liabilities of
such Person in respect of plans covered by Title IV of ERISA, or otherwise
arising in respect of plans for employees or former employees or their
respective families or beneficiaries, (v) reimbursement obligations of such
Person in respect of letters of credit, (vi) all obligations of such Person
arising under acceptance facilities, (vii) all liabilities of other Persons,
directly or indirectly, guaranteed, endorsed (other than for collection or
deposit in the ordinary course of business) or discounted with recourse by
such Person or with respect to which the Person in question is otherwise
directly or indirectly liable, (viii) all obligations secured by any Lien on
property of such Person, whether or not the obligations have been assumed,
and (ix) all other items which have been, or in accordance with GAAP would
be, included in determining total liabilities on the liability side of the
balance sheet, and in all events excluding litigation matters involving
tenants that arise and are dealt with in the ordinary course of business and
operating equipment leases.
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Section 1.64 "Liens" shall mean all liens, mortgages, deeds of trust,
deeds to secure debt, security interests, pledges, claims, charges, easements
and other encumbrances of any nature whatsoever.
Section 1.65 "Losses and Expenses" shall have the meaning set forth in
Section 8.2(a).
Section 1.66 "Material Company Leases" shall have the meaning set forth
in Section 3.11(f).
Section 1.67 "Materials of Environmental Concern" shall have the meaning
set forth in Section 3.12(b).
Section 1.68 "New Company Title Policies" means the new ALTA owner's
title insurance policies or date-down endorsements to existing owner's title
insurance policies (in the case of new policies, in the amount of the fair
market value of the applicable Company Property and containing customary
endorsements) in each case dated as of the Closing Date, obtained or to be
obtained by the Company or the Operating Partnership with respect to those
Company Properties where (i) there is no existing owner's title insurance
policy or (ii) the existing owner's title insurance policy is more than one
(1) year old. A schedule of those Company Properties where New Company Title
Policies have been or will be obtained is attached to this Agreement as
Schedule 3.11(a)-(i). Such policies or endorsements shall show title to the
applicable Company Property vested in the applicable entity described on such
Schedule 3.11(a)-(i) with respect thereto or in the Operating Partnership,
subject to no liens or encumbrances other than (a) Permitted Liens, (b) those
matters shown on Schedule B-1 of the Old Company Title Policies, and (c)
those additional encumbrances (excluding monetary liens other than those
listed on Schedule 3.9(a)) which do not materially affect the value or
utility of the applicable Company Property, and which would be acceptable to
institutional life insurance companies and commercial bank mortgage lenders
in a similar context.
Section 1.69 "Nomination Right" shall have the meaning set forth in
Section 6.5(a).
Section 1.70 "NYSE" shall mean The New York Stock Exchange, Inc.
Section 1.71 "Offered Securities" shall have the meaning set forth in
Section 6.4(b).
Section 1.72 "Operating Partnership" shall have the meaning as set forth
in the first paragraph hereof.
Section 1.73 "Operating Partnership Preferred Units" shall mean the
class of partnership units representing convertible preferred interests in
the Operating Partnership and having the rights and preferences set forth in
Exhibit C to the Operating Partnership Agreement.
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Section 1.74 "Operating Partnership Preferred Units Buyer" shall
mean the collective reference to Blackacre SMC Holdings, L.P. and Blackacre
SMC Holdings II, L.P., each a Delaware limited partnership, and the other
"Existing Partners", as that term is defined in the Agreement to Contribute.
Section 1.75 "Operating Partnership Units" shall mean the
ownership interests in the Operating Partnership.
Section 1.76 "Operating Partnership Agreement" shall mean that
certain Agreement of Limited Partnership, dated as of November 14, 1997,
including Exhibits A, B and C thereto and together with the First Amendment
thereto, dated the date hereof, as amended from time to time.
Section 1.77 "Other Company Properties" shall have the meaning
set forth in Section 3.11(a).
Section 1.78 "Other Company Title Policies" shall have the
meaning set forth in Section 3.11(a).
Section 1.79 "Pension Plans" shall have the meaning set forth in
Section 3.13(f).
Section 1.80 "Permitted Exceptions" shall have the meaning set
forth in Section 3.11(a).
Section 1.81 "Permitted Liens" shall mean (i) Liens (other than
liens imposed under ERISA) for taxes or other assessments or charges of
Governmental Authorities that are not yet delinquent or that are being
contested in good faith by appropriate proceedings, in each case, with
respect to which adequate reserves or other appropriate provisions are being
maintained by the Company or its Subsidiaries to the extent required by GAAP,
(ii) statutory Liens of landlords, carriers, warehousemen, mechanics,
materialmen and other Liens imposed by law and created in the ordinary course
of business for amounts not yet overdue or which are being contested in good
faith by appropriate proceedings, in each case, with respect to which
adequate reserves or other appropriate provisions are being maintained by the
Company or its Subsidiaries to the extent required by GAAP, (iii) the Company
Leases, (iv) easements, rights-of-way, covenants and restrictions which are
customary and typical for office or commercial properties similar to the
Company Properties and which do not (x) interfere materially with the
ordinary conduct of any Company Property or the business of the Company and
its Subsidiaries as a whole or (y) detract materially from the value or
usefulness of the Company Property to which they apply, (v) the Liens which
were granted by the Company or any of its Subsidiaries to lenders pursuant to
credit agreements in existence on the date hereof which are described in the
Company Reports or Schedule 3.9(e) or which provide for the financing of the
Company Properties in the ordinary course of the business of the Company or
any Subsidiaries, as applicable.
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Section 1.82 "Person" shall mean any individual, partnership,
corporation, limited liability company, business trust, joint stock company,
unincorporated association, joint venture, other entity of whatever nature or
Government Authority.
Section 1.83 "Pro Rata Share" shall have the meaning set forth in
Section 6.4(b).
Section 1.84 "Project" shall have the meaning set forth in
Section 3.11(j).
Section 1.85 "Property Condition Reports" shall have the meaning
set forth in Section 3.11(b).
Section 1.86 "Property Restrictions" shall have the meaning set
forth in Section 3.11 (a).
Section 1.87 "Proxy Statement" shall have the meaning set forth
in Section 3.21.
Section 1.88 "Purchase Price" shall mean an amount equal to
$70,000,000 to be paid by Buyer to the Company at the Closing.
Section 1.89 "Purchased Shares" shall have the meaning set forth
in Section 2.1.
Section 1.90 "Registration Rights Agreement" shall mean the
Registration Rights Agreement, to be dated as of the Closing Date, by and
between the Company and Buyer.
Section 1.91 "Regulatory Filings" shall have the meaning set
forth in Section 3.4(g).
Section 1.92 "REIT" shall have the meaning set forth in Section
3.8(b).
Section 1.93 "Related Documents" shall mean (a) the Registration
Rights Agreement, (b) the Articles Supplementary, (c) the Agreement to
Contribute and (d) the Operating Partnership Agreement.
Section 1.94 "Release" shall have the meaning set forth in
Section 3.12(b).
Section 1.95 "Rent Roll" shall have the meaning set forth in
Section 3.11(f).
Section 1.96 "REOC Qualification Date" shall have the meaning set
forth in Section 3.18(b).
Section 1.97 "Rights Exercise Notice" shall have the meaning set
forth in Section 6.4(b).
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Section 1.98 "SEC" shall have the meaning set forth in Section
3.5(a).
Section 1.99 "Securities Act" shall have the meaning set forth in
Section 3.4(g).
Section 1.100 "Securities Laws" shall have the meaning set forth
in Section 3.5(a).
Section 1.101 "Subsidiaries" shall mean, collectively, the
Operating Partnership and any other Person in which the Company owns a direct
or indirect equity interest and of which the Company is the direct or
indirect general partner or managing member or as to which the Company has
the right to elect a majority of the board of directors or other governing
body, or otherwise direct the management of its business and affairs.
Section 1.102 "Tax" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Code Section 59A), 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 of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not. The term "Tax" also includes any amounts payable pursuant
to any tax sharing agreement to which any relevant entity is liable as a
successor or pursuant to contract.
Section 1.103 "Tax Return" means any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
Section 1.104 "Tenancy Leases" shall have the meaning set forth in
Section 3.11(l).
Section 1.105 "Welfare Plans" shall have the meaning set forth in
Section 3.13(f).
ARTICLE 2
Purchase and Sale of Shares; Stock Purchase
Section 2.1 "Purchase and Sale." Subject to the terms and
conditions hereof, at Closing the Company will issue, sell and deliver, and
Buyer will purchase and acquire from the Company an aggregate of 2,800,000
shares of Company Preferred Stock (the "Purchased Shares").
Section 2.2 "Consideration." Subject to the terms and conditions
hereof, at Closing, Buyer shall deliver to the Company the Purchase Price by
wire transfer of
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immediately available funds in U.S. dollars to the account or accounts
specified by the Company.
Section 2.3 "Closing." Subject to the terms and conditions
hereof, at the Closing on the Closing Date, the Company will issue, sell, and
deliver, and Buyer will purchase and acquire from the Company the Purchased
Shares.
Section 2.4 "Additional Agreements and Stock Purchase
Deliveries." (a) At the Closing, and as a condition to Buyer's obligations
hereunder to effect the transactions contemplated hereby, the Company and
Buyer shall enter into a registration rights agreement (the "Registration
Rights Agreement"), in substantially the form of Exhibit B hereto, together
with such other agreements set forth in Section 7.1(a), each of which shall
be satisfactory in form and substance to Buyer and the Company.
(b) In addition to the other things required to be done hereby, at
Closing, the Company shall deliver, or cause to be delivered, to Buyer the
following: (i) stock certificates representing the number of Purchased Shares
to be issued and delivered in connection with such Stock Purchase, free and
clear of all Liens (unless created by Buyer or any of its Affiliates), with
all necessary stock transfer and other documentary stamps attached, (ii) a
certificate, dated the Closing Date and validly executed on behalf of the
Company, as contemplated by Section 7.1(b), (iii) evidence or copies of any
consents, approvals, orders, qualifications or waivers required pursuant to
Section 7.1, (iv) all certificates and other instruments and documents
required by this Agreement to be delivered by the Company to Buyer at or
prior to Closing, and (v) such other instruments reasonably requested by
Buyer, as may be necessary or appropriate to confirm or carry out the
provisions of this Agreement.
(c) In addition to the delivery of the Purchase Price and the
other things required to be done hereby, at Closing, Buyer shall deliver, or
cause to be delivered, to the Company the following: (i) a certificate, dated
the Closing Date and validly executed by Buyer, as contemplated by Section
7.2(b), (ii) if not previously delivered to the Company, all other
certificates, documents, instruments and writings required pursuant hereto to
be delivered by or on behalf of Buyer at or before Closing, and (iii) such
other instruments reasonably requested by the Company, as may be necessary or
appropriate to confirm or carry out the provisions of this Agreement.
Section 2.5 "Time and Place of Stock Purchase." The Closing
shall take place on the Closing Date at the offices of Cadwalader, Wickersham
& Taft at such time as the Company and Buyer shall mutually agree.
Section 2.6 "Right to Assign." Buyer may assign its rights and
delegate its obligations created hereby to purchase the Purchased Shares in
accordance with the provisions of Section 10.5.
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ARTICLE 3
Representations and Warranties of the Company and the Operating Partnership
The Company and the Operating Partnership hereby represent and
warrant, jointly and severally, to Buyer as follows:
Section 3.1 "Organization and Qualification, Subsidiaries." (a)
The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Maryland. The Company has all
requisite corporate power and authority to own, operate, lease and encumber
its properties and conduct the business in which it is engaged or proposes to
engage through the Operating Partnership and to enter into this Agreement and
those other Related Documents to which it is a party, and to perform its
obligations hereunder and thereunder.
(b) The Operating Partnership is a limited partnership duly
organized, validly existing and in good standing under the laws of the State
of Delaware. The Operating Partnership has all requisite partnership power
and authority to own, operate, lease and encumber its properties and conduct
the business in which it engages and proposes to engage and to enter into
this Agreement and the Related Documents to which it is a party, and to
perform its obligations hereunder and thereunder.
(c) Each of the Subsidiaries of the Company other than the
Operating Partnership is a corporation, partnership or limited liability
company duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization, and has the
corporate, partnership or limited liability company power and authority to
own its properties and conduct the business in which it is engaged or
proposes to engage.
(d) Each of the Company and the Subsidiaries is duly qualified to
do business and in good standing in each jurisdiction in which the ownership
of its property or the conduct of its business requires such qualification,
except as set forth in Schedule 3.1(d).
(e) Schedule 3.1(e) sets forth the name of each Subsidiary of the
Company or the Operating Partnership (whether owned directly or indirectly
through one or more intermediaries). All of the outstanding shares of capital
stock of, or other equity interest in, each of the Subsidiaries owned by the
Company or the Operating Partnership are duly authorized, validly issued,
fully paid and nonassessable, and are owned, directly or indirectly, by the
Company or the Operating Partnership free and clear of all Liens, except as
set forth in Schedule 3.1(e). The following information for each Subsidiary
is set forth in Schedule 3.1(e), if applicable: (i) its name and jurisdiction
of incorporation or organization, (ii) the type of and percentage interest
held by the Company or Operating Partnership in the Subsidiary and, in the
case of Subsidiaries, the partnership agreement or other organizational
documents of the Subsidiary, and (iii) any loans from the Company or the
Operating Partnership to, or priority payments due to the Company or the
Operating Partnership from, the Subsidiary, and the rate of return thereon.
Except as set forth in Schedule 3.1(e), there are no existing
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options, warrants, calls, subscriptions, convertible securities or other
rights, agreements or commitments which obligate the Company or any of the
Subsidiaries to issue, transfer or sell any shares of capital stock or equity
interests in any of the Subsidiaries.
Section 3.2 "Authority Relative to Agreements; Board Approval."
(a) As of the date hereof, the execution, delivery and performance of this
Agreement and the Related Documents, and the filing with the Maryland
Department of Assessments and Taxation of the Articles Supplementary, have
been duly and validly authorized by all necessary corporate action on the
part of the Company. This Agreement has been duly executed and delivered by
the Company and constitutes the valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar
laws relating to creditors' rights or general principles of equity. Upon the
issuance of shares of Company Preferred Stock, the Articles Supplementary
will constitute a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights or general principles of equity.
(b) The shares of Company Preferred Stock to be acquired pursuant
to this Agreement have been duly authorized for issuance, and upon issuance
will be duly and validly issued, fully paid and nonassessable. When issued
and delivered against payment therefor as provided herein, Buyer will receive
good title to such shares of Company Preferred Stock, free and clear of all
Liens, security interests, pledges, charges, encumbrances, shareholders'
agreements and voting trusts, subject to any rights of Buyer hereunder and
under the Registration Rights Agreement and except for those resulting from
any action taken by Buyer. The shares of Company Common Stock issuable upon
conversion of the Company Preferred Stock in accordance with the provisions
of the Articles Supplementary will, upon issuance upon such conversion, be
duly and validly issued, fully paid and nonassessable.
Section 3.3 "Capital Stock and Units." (a) The authorized
capital stock of the Company on the date hereof consists of 75,000,000 shares
of Company Common Stock, and 5,000,000 shares of preferred stock, of which
4,800,000 shall be designated Company Preferred Stock upon the filing of the
Articles Supplementary, and 20,000,000 shares of excess stock of the Company
(the "Company Excess Stock"), par value $0.01 per share. As of September 30,
1997, there were 23,432,852 shares of Company Common Stock issued and
outstanding, no shares of such preferred stock issued and outstanding and no
shares of Company Excess Stock issued and outstanding and, as of the date of
the Execution Closing, there is no change except for an immaterial change in
the number of shares of Company Stock outstanding. All such issued and
outstanding shares of Company Common Stock are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. In
addition, as of the date of the Execution Closing, the Company has reserved
out of its authorized shares of Company Common Stock 7,804,878 (or such other
number of shares of Company Common Stock as may from time to time be required
to effect any conversion of shares of Company Preferred Stock) shares of
Company Common Stock for issuance upon conversion or exchange of the shares
of Company Preferred Stock and the Operating
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Partnership Preferred Units. The Company has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities the holders
of which have the right to vote) with the stockholders of the Company on any
matter. Except for the options awarded and the Company's Stock Option and
Incentive Plan as amended on May 6, 1997 (the "Incentive Plan"), there are no
existing options, warrants, calls, subscriptions, convertible securities, or
other rights, agreements or commitments which obligate the Company to issue,
transfer or sell any shares of capital stock or other equity interests of the
Company except with respect to certain "put" rights as disclosed in Schedule
3.1(e) and with respect to the contingent rights to receive Operating
Partnership Common Units as set forth in Schedule 3.3(b). The consummation
of the transactions contemplated in this Agreement will not give rise to any
preemptive rights or antidilution rights exercisable by any holder of Company
Stock except for any such rights which have been waived.
(b) Schedule 3.3(b) describes the number of Operating Partnership
Units which will be outstanding immediately after the Closing (after giving
effect to the transactions contemplated hereby and by the Agreement to
Contribute), subject to change from the date of Execution Closing to the
Closing Date (and which Schedule 3.3(b) shall be updated to the Closing Date
such that it is true, correct and complete as of the Closing Date, as
provided in Section 7.1(u) of this Agreement), which represents the sum of:
(i) a number of Operating Partnership Common Units to be held by the Company
not in excess of the number of shares of Company Common Stock then
outstanding, (ii) the number of Operating Partnership Common Units then
outstanding and issued to the contributors in connection with the Golden
State Acquisition as provided in the Agreement to Contribute, (iii) that
number of Operating Partnership Preferred Units equal to the number of shares
of Company Preferred Stock then outstanding and issued to Buyer hereunder,
(iv) the number of Operating Partnership Preferred Units then outstanding and
issued to the Operating Partnership Preferred Units Buyer and (v) that number
of Operating Partnership Common Units to be held by other contributors of
property to "downREIT" partnership Subsidiaries of the Company or the
Operating Partnership, estimated not to exceed 2,800,000 Operating
Partnership Units, which number shall be set forth in Schedule 3.3(b). All
such Operating Partnership Units will be validly issued, fully paid and, in
the case of limited partnership units, nonassessable. Immediately after the
Closing (after giving effect to the transactions contemplated hereby and by
the Agreement to Contribute), the Company will own the number of Operating
Partnership Common Units referred to in clause (i) of the first sentence of
this Section 3.3(b), and 2,800,000 Operating Partnership Preferred Units
referred to in clause (iii) of the first sentence of this Section 3.3(b).
Except as aforesaid, there will be no other Operating Partnership Units
issued or outstanding and no classes of units, or any other form of general
or limited partnership interest, of the Operating Partnership issued or
outstanding immediately after the Closing (after giving effect to the
transactions contemplated hereby and by the Agreement to Contribute). Except
as set forth in Schedule 3.3(b), as of the Closing Date, the Operating
Partnership will not have issued or granted securities convertible into
interests in the Operating Partnership, and will not be a party to any
outstanding commitments of any kind relating to, or any agreements or
understandings with respect to, interests in the Operating Partnership,
whether issued or unissued. The Operating Partnership Preferred Units that
will be owned by
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the Company from and after the Closing will have in all material respects the
same distribution and liquidation preferences with respect to the Operating
Partnership as the Company Preferred Stock has with respect to the Company,
which distributions shall be applied by the Company exclusively to satisfy
the rights of the holders of the Company Preferred Stock.
(c) Except as set forth in Schedule 3.3(c) and except for
interests in the Subsidiaries of the Company and the Operating Partnership,
none of the Company or any of its Subsidiaries owns directly or indirectly
any interest or investment (whether equity or debt) in any corporation,
partnership, joint venture, business, trust or entity (other than investments
in short-term investment securities).
Section 3.4 "No Conflicts; No Defaults, Required Filings and
Consents." Except as contemplated hereby, neither the execution and delivery
by the Company hereof nor the consummation by the Company or any Subsidiary
of the transactions contemplated hereby in accordance with the terms hereof,
will:
(a) conflict with or result in a breach of any provisions of the
Company Charter or By-laws of the Company;
(b) conflict with or result in a breach of any provisions of the
Operating Partnership Agreement or any amendment thereto;
(c) except as set forth in Schedule 3.4(c), result in a breach or
violation of, a default under, or the triggering of any right, payment or
other obligation pursuant to, or accelerate vesting under, any of the Company
stock option plans or Operating Partnership Unit option plans or similar
compensation plans or any grant or award made under any of the foregoing;
(d) violate or conflict with any regulation, rule, order or
administrative position of NYSE, or any other national securities exchange on
which the Company Common Stock is listed;
(e) except as set forth in Schedule 3.4(e), violate or conflict
with any statute, regulation, judgment, order, writ, decree or injunction
applicable to the Company or its Subsidiaries;
(f) except as set forth in Schedule 3.4(f), violate or conflict
with or result in a breach of any provision of, or constitute a default (or
any event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination or in a right of termination or
cancellation of, or accelerate the performance required by, or result in the
creation of any Lien upon any of the properties of the Company or its
Subsidiaries under, or result in being declared void, voidable or without
further binding effect, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust or any license, franchise,
permit, lease, contract, agreement or other instrument, commitment or
obligation to which the Company or its Subsidiaries is a party, or by which
the Company or its Subsidiaries or any of their properties is bound or
affected;
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(g) except as set forth in Schedule 3.4(g), require any consent,
approval or authorization of, or declaration, filing or registration with,
any Government Authority, other than any filings required under the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), state securities laws
("Blue Sky Laws") (collectively, the "Regulatory Filings"), and any filings
required to be made with the Office of the Secretary of the State of Maryland
and NYSE or any other national securities exchange on which the Company
Common Stock is listed; or
(h) conflict with or result in a breach of any provision of the
organizational documents of any Subsidiary.
Section 3.5 "SEC and Other Documents, Financial Statements;
Undisclosed Liabilities." (a) The Company has delivered or made available to
Buyer, or there are commercially available to Buyer in the ordinary course,
all annual, quarterly or current reports of the Company filed with the
Securities and Exchange Commission ("SEC") under the Exchange Act, and, in
connection with the Company's public offering of Company Common Stock
commenced in April 1997, the registration statement bearing number 333-31591,
and all exhibits, amendments and supplements thereto (collectively, the
"Company Registration Statement"), and each report, registration statement,
or proxy statement and all exhibits thereto prepared by it or relating to its
properties, in each case since January 1, 1994 (except as to the Company
Registration Statement, as to which the applicable date shall be the
effective date thereof), which are set forth in Schedule 3.5(a), each in the
form (including exhibits and any amendments thereto) filed with the SEC
(collectively, the "Company Reports"). The Company Reports were filed with
the SEC in a timely manner and constitute all forms, reports and documents
required to be filed by the Company under the Securities Act, the Exchange
Act and the rules and regulations promulgated thereunder (the "Securities
Laws"). As of their respective dates, the Company Reports (i) complied as to
form in all material respects with the applicable requirements of the
Securities Laws and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that as to the compliance of the Company Reports with the requirements of the
Securities Laws, insofar as such representation is made as to matters of form
established in the Securities Laws, and assuming that such Company Reports
were prepared under the direction of and with the advice of independent
counsel and auditors to the Company, it is a representation made to the
Company's Knowledge. There is no unresolved violation or position asserted
by any Government Authority with respect to any of the Company Reports.
(b) Except as set forth in Schedule 3.5(b), each of the balance
sheets included in or incorporated by reference into the Company Reports
(including the related notes and schedules) fairly presented the financial
position of the entity or entities to which it relates as of its date and
each of the statements of operations, stockholders' equity (deficit) and cash
flows included in or incorporated by reference into the Company Reports
(including any related notes and schedules) fairly presented the results of
operations, retained earnings or
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cash flows, as the case may be, of the entity or entities to which it relates
for the periods set forth therein, in each case in accordance with United
States generally accepted accounting principles ("GAAP") consistently applied
during the periods involved except as may be noted therein and except in the
case of the unaudited statements, normal recurring year-end adjustments.
(c) Except as and to the extent set forth in the Company Reports
or any Schedule hereto, none of the Company or any of the Subsidiaries has
any Liabilities.
Section 3.6 "Litigation, Compliance With Law." (a) Except as
disclosed in Schedule 3.6(a), there are no Actions pending or, to the
Company's Knowledge, threatened against the Company or any of the
Subsidiaries which question the validity hereof or any action taken or to be
taken in connection herewith, and there are no continuing orders, injunctions
or decrees of any Government Authority to which the Company or any of its
Subsidiaries is a party or by which any of its properties or assets are bound.
(b) To the Company's Knowledge, none of the Company or its
Subsidiaries is in violation of any statute, rule, regulation, order, writ,
decree or injunction of any Government Authority or any body having
jurisdiction over them or any of their respective properties, except as set
forth in Schedule 3.6(b), provided, however, that this Section 3.6(b) shall
not apply to facts or matters otherwise set forth in (or by reference in)
Section 3.11 or Section 3.12 as to which Sections 3.11 or 3.12 shall apply.
Section 3.7 "Absence of Certain Changes or Events." Except as
disclosed in the Company Reports filed with the SEC prior to the date hereof,
as contemplated by any of the Related Documents or in Schedule 3.7, since
September 30, 1997, the Company and each of its Subsidiaries have conducted
their business only in the ordinary course of such business and have not
acquired any real estate or entered into any financing arrangements in
connection therewith or conducted their business, other than in each case in
the ordinary course of its business, and there has not been (a) any change,
circumstance or event that would reasonably be expected to result in an
adverse effect on the business, operations or condition (financial or
otherwise) of the Company, the Operating Partnership and the Subsidiaries,
considered as a whole, (b) any declaration, setting aside or payment of any
dividend or other distribution with respect to the Company Common Stock,
except for dividends in the ordinary course of business consistent with past
practice or otherwise, (c) any commitment, contractual obligation, borrowing,
capital expenditure or transaction (each, a "Commitment") entered into by the
Company or any of the Subsidiaries other than in the ordinary course of
business or (d) any change in the Company's accounting principles, practices
or methods other than as required by changes in GAAP and related accounting
practices or procedures. Except as set forth in Schedule 3.7, the Company is
not now contemplating entering into any Commitment which, had it occurred on
or before the date hereof, would be required to be disclosed in the Company
Reports or in Schedule 3.7.
Section 3.8 "Tax Matters; REIT and Partnership Status." (a) The
Company and each of the Subsidiaries has timely filed with the appropriate
taxing authority all Tax
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Returns required to be filed by it or has timely requested extensions and any
such request has been granted and has not expired. Each such Tax Return is
complete and accurate in all respects. All Taxes shown as owed by the
Company or any of the Subsidiaries on any Tax Return have been paid or
accrued, except for Taxes being contested in good faith and for which
adequate reserves have been taken, in the reasonable opinion of the Company.
The Company and each of the Subsidiaries has properly accrued all Taxes for
such periods subsequent to the periods covered by such Tax Returns as
required by GAAP. Except as set forth in Schedule 3.8(a), none of the
Company or any of the Subsidiaries has executed or filed with the IRS or any
other taxing authority any agreement now in effect extending the period for
assessment or collection of any Tax. Except as set forth in Schedule 3.8(a),
none of the Company or any of the Subsidiaries is a party to any pending
action or proceedings by any taxing authority for assessment or collection of
any Tax, and no claim for assessment or collection of any Tax has been
asserted against it. True and complete copies of all federal, state and
local income and franchise Tax Returns, or any extensions applicable thereto,
filed by the Company and each of the Subsidiaries for the taxable years 1994
to the present and all communications relating thereto, have been delivered
to Buyer or have been made available for inspection by its representatives.
Except as set forth in Schedule 3.8(a), no claim has been made by an
authority in a jurisdiction where the Company or any of the Subsidiaries does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. Except as set forth in Schedule 3.8(a), there is no dispute or
claim concerning any Tax liability of the Company or any of the Subsidiaries
claimed or raised by any taxing authority in writing. As of the date hereof,
the Company is a "domestically-controlled" REIT within the meaning of Code
Section 897(h)(4)(B). Except as set forth in Schedule 3.8(a), to the
Company's Knowledge no person or entity which would be treated as an
"individual" for purposes of Section 542(a)(2) of the Code (as modified by
Section 856(h) of the Code) owns or would be considered to own (taking into
account the ownership attribution rules under Section 544 of the Code, as
modified by Section 856(h) of the Code) in excess of 9.8% of the value of the
outstanding equity interest in the Company. The Company is not a
"Pension-Held REIT" within the meaning of Section 856(h)(3)(D) of the Code.
(b) The Company (i) intends in its federal income tax return for
the tax year ended December 31, 1997 and for the tax year that will end on
December 31, 1998 to elect to be taxed as a real estate investment trust
within the meaning of Section 856 of the Code ("REIT") and has complied (or
will comply) with all applicable provisions of the Code relating to a REIT,
(ii) has operated, and intends to continue to operate, in such a manner as to
qualify as a REIT for each of its taxable years, (iii) has not taken or
omitted to take any action which would reasonably be expected to result in a
challenge to its status as a REIT, and no such challenge is pending or, to
the Company's Knowledge, threatened, and (iv) assuming the accuracy of
Buyer's representations in Section 4.6 and Section 4.7, will not be rendered
unable to qualify as a REIT for federal income tax purposes as a consequence
of the transactions contemplated hereby, including without limitation any
exchange of Operating Partnership Preferred Units by any holders thereof by
the Company for Company Preferred Stock or Company Common Stock, or both.
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(c) Any amount or other entitlement that could be received
(whether in cash or property or the vesting of property) as a result of any
of the transactions contemplated hereby by any employee, officer, or director
of the Company, or the Operating Partnership or any of their Affiliates who
is a "disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.28OG-1) under any employment, severance or termination
agreement, other compensation arrangement or plan currently in effect, would
not be characterized as an "excess parachute payment" (as such term is
defined in Section 28OG(b)(1) of the Code).
(d) The disallowance of a deduction under Section 162(m) of the
Code for employee remuneration will not apply to any amount paid or payable
by the Company or any of its Subsidiaries under any contract, stock plan,
program, arrangement or understanding currently in effect.
(e) The Company and all of its predecessors was eligible to and
did validly elect to be taxed as a REIT for federal income tax purposes for
calendar year 1987 and all subsequent taxable periods. The Operating
Partnership is and each Subsidiary of the Company organized as a partnership
(and any other Subsidiary that files Tax Returns as a partnership for federal
income tax purposes) was, in the case of each such Subsidiary, and continues
to be classified as a partnership for federal income tax purposes.
Section 3.9 "Compliance With Agreements; Liens." (a) Neither the
Company nor any of the Subsidiaries is in default under, or in violation of
any provision of, the Company Charter, the By-laws of the Company or the
Operating Partnership Agreement (or equivalent documents), except as set
forth in Schedule 3.9(a).
(b) The Company and each of the Subsidiaries have filed all
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file
with any Government Authority and all other material reports and statements
required to be filed by them, and have paid all fees or assessments due and
payable in connection therewith, except as set forth in Schedule 3.9(b).
There is no unresolved violation asserted by any regulatory agency, nor has
the Company received notice from any regulatory agency with respect to any
report or statement relating to an examination of the Company or any of the
Subsidiaries.
(c) The Company Reports describe all material agreements (other
than agreements providing for the Golden State Acquisition and agreements
entered into in the ordinary course of business relating to Company Leases,
indebtedness of the Company, commitments with respect thereto, the
acquisition or development or construction of, additions or expansions to, or
management or leasing services for commercial buildings or other real
properties) which are currently in effect and under which the Company or any
Subsidiaries currently has, or expects to incur any obligation. Schedule
3.9(c) sets forth a complete and accurate list of all material agreements
entered into by the Company or any Subsidiary as of the date hereof which are
not listed in the Company Reports or any other Schedule hereto, including the
material Debt Instruments, except for agreements providing for the Golden
State
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Acquisition and the Related Documents. True and complete copies of each
agreement set forth in Schedule 3.9(c) have been delivered or made available
to Buyer.
(d) Subject to the provisions of Section 3.11, which as to facts
or matters otherwise set forth therein (or by reference therein) such Section
3.11 shall be applicable and this Section 3.9(d) shall not be applicable,
each agreement and instrument of the Company is in full force and effect as
against the Company and, as against the other parties thereto, no payments,
if any, thereunder are delinquent, and no notice of default thereunder has
been sent or received by the Company or any of its Subsidiaries and there
does not exist under any agreement of the Company or any of its Subsidiaries
any default by the Company or any Subsidiary, and no event has occurred
which, with notice or lapse of time or both, would constitute such a default
by the Company or any Subsidiary.
(e) Schedule 3.9(e) sets forth a true, complete and correct list
of all Liens which could materially adversely affect the value of the Company
or the Company Properties other than those described in the Company Reports,
Liens under credit agreements providing for the financing of the Company
Properties and entered into by the Company or its Subsidiaries in the
ordinary course of business, Permitted Exceptions relating to Company
Properties and items (i) - (iv) in the definition of Permitted Liens.
Section 3.10 "Financial Records; Company Charter and By-laws;
Corporate Records." (a) The books of account and other financial records of
the Company and each of the Subsidiaries are in all respects true and
complete, have been maintained in accordance with good business practices,
and are accurately reflected in all respects to the extent required by GAAP
in the financial statements included in the Company Reports, except as set
forth in Schedule 3.10(a).
(b) The Company has previously delivered or made available to
Buyer true and complete copies of the Company Charter and the By-laws of the
Company, as amended to date, the Operating Partnership Agreement, and the
charter, by-laws, organization documents, partnership agreements and joint
venture agreements of the Subsidiaries, and all amendments thereto. All such
documents are listed in Schedule 3.1(e) or Schedule 3.18(g). A true, complete
and correct chart of the Company, the Operating Partnership, and the
Subsidiaries showing ownership, voting rights and contractual relationships
affecting ownership and voting rights, and identifying the general partner of
any limited partnerships, is set forth in Schedule 3.10(b).
(c) The minute books and other records of corporate or partnership
proceedings of the Company and each of the Subsidiaries have been made
available to Buyer, contain in all material respects accurate records of all
meetings and accurately reflect in all material respects all other corporate
action of the stockholders and directors and any committees of the Board of
Directors of the Company and their Subsidiaries which are corporations and
all actions of the partners of the Operating Partnership and Subsidiaries
which are partnerships, and all actions of the members of Subsidiaries which
are limited liability companies except for documentation of discussions
relating to or in connection with
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the transactions contemplated hereby or matters related thereto, except as
set forth in Schedule 3.10(c).
Section 3.11 "Properties." (a) Title Matters. Schedule 3.11(a)
sets forth as of the date of this Agreement a complete and accurate list and
the location of all real property directly or indirectly owned, all or in
part, by the Company, the Operating Partnership or any of the Subsidiaries,
or as to which the Company or its Subsidiaries has a leasehold interest
(collectively, and together with the land thereunder, all buildings,
structures and other improvements and fixtures (other than trade fixtures
owned by tenants under the terms of the Company Leases (as defined below))
located on or under such land, and all easements, rights and other
appurtenances to such land, the "Company Properties"), other than the office
space leased by the Company from which the Company operates its business
which is listed separately on Schedule 3.11(a) as HQ Space (the "HQ Space").
For purposes of this Section 3.11, the Company Properties expressly do not
include the properties acquired in the Golden State Acquisition; however, the
Company represents and warrants that neither the Company nor any of its
Subsidiaries have transferred title to any of the assets acquired in the
Golden State Acquisition. As of the date of this Agreement, the Company or,
in the case of Company Properties owned by Subsidiaries, the Subsidiary
indicated on Schedule 3.11(a), owns good and marketable fee simple title (or,
if so indicated in Schedule 3.11(a), leasehold title) to each of the Company
Properties, and such title is (i) in the case of those Company Properties
identified on Schedule 3.11(a)-(i), to the Company's Knowledge, free and
clear of any Liens, title, defects, restrictions or covenants, or reservation
of interests in title, except for (A) Permitted Liens, (B) zoning, building,
fire, health, environmental and pollution control laws and other land use
laws, ordinances, rules and regulations applicable to the Company Properties,
(C) all matters, whether or not of record, to the extent caused by Buyer or
its agents, representatives or contractors, and (D) all other matters listed
as exceptions on Schedules B-1 of the New Company Title Policies or shown on
any survey of the Company Properties listed on Schedule 3.11(a)-(ii) or
obtained by Buyer, and (ii) in the case of all other Company Properties (the
"Other Company Properties"), to the Company's Knowledge, free and clear any
Liens, title defects, restrictions or covenants or reservation of interests
in title, except for (A) Permitted Liens, (B) zoning, building, fire, health,
environmental and pollution control laws and other land use laws, ordinances,
rules and regulations applicable to the Company Properties, (C) all matters
whether or not of record, to the extent caused by Buyer or its agents,
representatives or contractors, and (D) all other matters listed as
exceptions in Schedule B-1 of the existing title policies (lender's or
owner's) provided to or made available to Buyer prior to the date of this
Agreement and issued with respect to the Other Company Properties (the "Other
Company Title Policies") or shown on any survey of the Company Properties
listed on Schedule 3.11(a)-(ii) or obtained by Buyer (items (i) (A) through
(D) and (ii)(A) through (D) are collectively the "Permitted Exceptions").
The Company also represents and warrants that, with respect to the Other
Company Properties, it has not voluntarily created any liens or encumbrances
not listed as exceptions to title to the Other Company Properties since the
date of the Other Company Title Policies, other than items which constitute
Permitted Liens. None of the Permitted Exceptions interferes with, impairs,
or is violated by the existence of any building or other structure or
improvement which constitutes a part of, or the present use, occupancy or
operation (or, if currently under
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rehabilitation or development, such rehabilitation or development) of the
Company Properties in any material respect taken as a whole. Except as shown
or described in any of the Permitted Exceptions, or any survey listed on
Schedule 3.11 (a)-(ii) or obtained by Buyer, no material improvements
constituting a part of any Company Property encroach on real property not
constituting a part of such Company Property or an abutting Company Property
unless there is a valid easement for the benefit of the Company with respect
thereto, with customary duration and terms for institutional quality shopping
centers, of a type generally acceptable to institutional lenders, nor, except
as so described or disclosed, are there other material adverse matters
(which, in the case of Company Properties with respect to which there is a
survey listed on Schedule 3.11(a)-(ii), has arisen since the date thereof, or
at any time in the case of all other Company Properties) that would be
disclosed by a current ALTA survey. To the Company's Knowledge and except as
may be shown or indicated in any of the Permitted Exceptions, all parcels of
land included in each Company Property that purport to be contiguous are
contiguous and are not separated by strips, gaps or gores. All applicable
premiums with respect to the title policies regarding the Company Properties
have been paid, and to the Knowledge of the Company such policies are in full
force and effect. Except as set forth in Schedule 3.11(a), there is no
material outstanding claim, nor, to the Company's Knowledge, has any claim
been made by the Company or its Subsidiaries, or by any other party, that
would reduce the stated coverage under any such policy. True and complete
copies of all such policies and the surveys listed on Schedule 3.11(a)-(ii)
of each of the Company Properties in the possession or control of the Company
have been made available by the Company to Buyer or to its representatives,
and as of the date of this Agreement neither the Company nor any of the
Subsidiaries has any more recent policies or surveys for the Company
Properties.
(b) Permitting and Compliance with Laws; Uninsured Damage from
Casualty; Property Condition. Except as set forth in Schedule 3.11(b) and
except with respect to the Development Properties, to the Company's Knowledge
there has been obtained and is in full force and effect (i) any material
currently required certificate, permit or license (including certificates of
occupancy (or equivalent) for tenant space) from any Government Authority
having jurisdiction over any Company Property and (ii) any agreement,
easement or other right which is necessary to permit the lawful use,
occupancy or operation of the existing buildings, structures or other
improvements which constitute a part of any of the Company Properties as
currently used, occupied or operated or which are necessary to permit the
lawful use and operation of any current utility service to any Company
Property or of any currently utilized driveways, roads or other currently
utilized means of egress and ingress to and from any of the Company
Properties and there is not pending, or to the Company's Knowledge,
threatened (in writing) Action against the Company for the cancellation or
material adverse modification of any of same. To the Company's Knowledge
(provided, however, that with respect to the Properties listed on Schedule
3.11(b)-(i), such representation shall be absolute, and shall not be
qualified by Knowledge, with respect to uses allowed under zoning laws ),
each Company Property is in material compliance (compliance being deemed to
include for such purposes preexisting lawful zoning nonconformaties) with
each federal, state or municipal law, ordinance, order, regulation or
requirement, including any applicable zoning law or building code, or any
insurance requirements applicable to any Company Property. Except as
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set forth in Schedule 3.11(b), neither the Company nor the Subsidiaries have
received notice of any violation of the Americans with Disabilities Act (the
"ADA") from any Government Authority or any notice from any other Person as
to a material violation of the ADA which the Company believes, in good faith,
is valid, in each case which have not been cured (or settled, with no further
payments or performance due from the Company or any Subsidiary, in the case
of private matters). Except as set forth in Schedule 3.11(b), there is no
uninsured current physical damage to any Company Property from casualty in
excess of $100,000. Except for repairs identified in the Capital Expenditure
Budget and Schedule and as set forth in the Company Reports or the Property
Condition Reports, to the Company's Knowledge each Company Property other
than a Development Property (i) is in good or better operating condition and
repair and is structurally sound, and (ii) consists of sufficient land,
parking areas, driveways and other improvements and lawful means of access
and utility service and capacity to permit the use thereof in the manner and
for the purposes to which it is presently devoted (or, in the case of the
Development Property and except as noted in Section 3.11(j) or Schedule
3.11(j), for the development and operation thereon of the applicable
Project), except, in each such case, to the extent that failure to meet such
standards would not materially and adversely affect the use or occupancy of
the Company Properties. The Company has made available to Buyer or to its
representative true and complete copies of the most recent existing third
party engineering and other third property condition reports relating to the
condition of any Company Property prepared for the Company or otherwise in
the Company's or any Subsidiary's possession, and all other such reports in
the Company's or any Subsidiaries possession that sets forth material adverse
facts with respect to the condition of any Company Property (collectively,
the "Property Condition Reports").
(c) Condemnation and Other Property-Related Actions. Except as set
forth in Schedule 3.11(c), or the Company Reports, or which are included in
the Permitted Exceptions, there is no currently pending or, to the Company's
Knowledge, threatened (in writing) (i) rezoning, condemnation or eminent
domain proceedings with respect to any Company Properties other than road
widenings or changes of grade of roads which would not have a material
adverse effect on the applicable Company Property's value or operations, (ii)
change in the assessed valuation of any Company Property which would have a
material adverse effect on the applicable Company Property's value, (iii)
special assessment against any Company Property, or (iv) so-called "impact
fee" or any agreement with any Government Authority to hereafter pay for
sewer extension, oversizing utilities, lighting or like expenses or charges
for work or services by such Government Authority except as set forth in the
Capital Expenditure Budget and Schedule or any Development Budget and
Schedule and except as reflected in the current operating statements for the
Company Properties, all of which have previously been delivered or made
available to Buyer.
(d) Independent Unit. Except for matters included in the
Permitted Exceptions, each of the Company Properties is an independent unit
which does not rely on any facilities, other than the facilities of public
utility companies and water and sewer departments or districts, which are
connected to the Company Properties through valid and customary easements, if
necessary or appropriate, located on any property not included in such
Company Property to fulfill any municipal or governmental requirements or for
the furnishing to such
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Company Property of any essential building systems or utilities, or access or
parking other than facilities the benefit of which inures to the Company
Properties pursuant to one or more valid easements, or facilities which are
located on or abutting Company Properties pursuant to one or more valid
easements and are sufficient to serve more than one property adequately and
lawfully. Each of the Company Properties other than the Development
Properties is served by adequate water and sanitary systems and other
utilities currently used in the operation of such Company Property, and each
of the Company Properties has lawful access to public roads, in all cases
sufficient for the current use and occupancy of each Company Property. To
the Company's Knowledge and except as may be shown or described in any of the
Permitted Exceptions, no material portion of any building improvements
included in any Company Property lies in any area designated by the U.S. Army
Corps of Engineers or other Governmental Authority as a special flood hazard
area unless the Company or the applicable Subsidiary maintains all required
flood insurance with respect thereto.
(e) INTENTIONALLY OMITTED.
(f) Leasing Matters. Attached hereto as Schedule 3.11(f) is a
rent roll covering each Company Property (the "Rent Roll") which Rent Roll is
true, complete and correct as of October 31, 1997 in all material respects.
The Rent Roll attached as Schedule 3.11(f) shall be updated to a date not
more than five (5) Business Days prior to the Closing, and it shall be a
condition to the Buyer's obligation to close that such updated rent roll,
shall not show any material variations from the attached Rent Roll, other
than variations in the ordinary course of the Company's and its Subsidiaries'
business, which variations from the version of the Rent Roll attached hereto
as Schedule 3.11(f) do not have a material adverse effect on the Company
Properties. As of the date thereof, the Rent Roll lists all Company Leases
for any portion of each Company Property or otherwise affecting each Company
Property, and is accurate and complete in all material respects as of the
date of the Rent Roll. The copies of the Company Leases which have been
delivered or made available to Buyer are true, correct and complete, and
constitute all outstanding Company Leases known to the Company relating to
each Company Property. The Company shall promptly provide true, complete and
correct copies of any Company Leases entered into after the date of this
Agreement to Buyer. Each Company Lease (i) is in full force and effect with
respect to the Company or the applicable Subsidiary, and, to the Company's
Knowledge, the applicable tenant; and (ii) constitutes the entire agreement
between the Company and applicable Subsidiary and such tenant with respect to
the applicable Company Property and includes any other agreements between
such parties related in any way to such Property. Except as set forth on the
Rent Roll, Schedule 3.11(f), or the Capital Expenditure Budget and Schedule,
all tenant improvements and other improvements required to be furnished,
constructed or installed or paid for by a Company or Subsidiary as landlord
under each Company Lease (and to the Company's Knowledge, by any predecessor
landlord under such Company Lease) has been fully performed and has been
fully paid or will be fully performed and paid on or before the Closing Date
except as otherwise expressly indicated on the Rent Roll, Schedule 3.11 (f)
or the Capital Expenditure Budget and Schedule. To the Company's Knowledge,
neither the Company nor any Subsidiary is in default in the performance of
any material obligation under any of the Company Leases (or any agreements
incorporated therein by reference) and the
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Company has no Knowledge of any circumstances which, merely with the passage
of time or the giving of notice, or both, would constitute an event of
default by landlord under any of the Company Leases. Except as set forth on
the Rent Roll or Schedule 3.11(f), to the Company's Knowledge, no tenant is
in monetary default beyond 30 days or material nonmonetary default under its
Company Lease. Except as indicated in the Rent Roll or Schedule 3.11(f), (x)
no advance rent or other payment has been made with respect to any Company
Lease except rental for the current month, other than security deposits in
the ordinary course, (y) no tenant which is currently paying rent, or which
is reflected in the Company's balance sheets, financial statements, other
operating statements or Company Reports as paying rent, is entitled to any
unexpired free rent period or other unexpired concession under its Company
Lease and (z) there is no obligation under the Company Lease for the
refunding of a security deposit. Except as otherwise expressly set forth in
the Rent Roll or as set forth on Schedule 3.11(f), to the Company's Knowledge
there are no actions, voluntary or involuntary, pending against any tenant
under any bankruptcy or insolvency laws. Except as shown on the Rent Roll,
on Schedule 3.11(f), or in any of the Company Leases, and except for certain
rights of first refusal which are set forth in the sections of the
partnership agreements referenced in Schedule 3.1(e) and which relate to
partnerships in which the Company and the Subsidiaries collectively, directly
or indirectly, own less than a 100% interest, neither the Company nor any
Subsidiary has granted to any Person (including without limitation tenants
under Company Leases) any option or right of first refusal, first offer or
first opportunity or comparable right to acquire any interest in any Company
Property or any portion thereof, and the Company has no Knowledge that any
other Person has granted any such option or right of first refusal or first
opportunity to acquire which remains in force and effect. In addition, and
without limiting the generality of the foregoing, with respect to each
Company Lease for premises larger than 10,000 square feet of rentable space
(collectively, the "Material Company Leases"), except as set forth in
Schedule 3.11(f) or in the Rent Rolls, (i) no tenant under any Material
Company Lease is more than 30 days in arrears in the payment of base rent,
and (ii) no tenant under any of the Material Company Leases has any options,
rights of first offer, rights of first refusal or first opportunity or
comparable rights to purchase any portion of any Company Property. None of
the Material Company Leases and none of the rents or other amounts payable
thereunder has been assigned, pledged or encumbered except in connection with
financing secured by the applicable Company Property which is described in
Section 3.9(c). Other than the tenants identified in the Rent Rolls,
licensees and month to month and other tenants with lease terms of less than
six (6) months or with respect to whom the Company or its Subsidiaries have
the right to terminate such occupancy rights upon no more than sixty days
notice, contractors pursuant to contracts entered into in the ordinary
course, and parties to easement agreements which constitute Permitted
Exceptions, no third party has any right to occupy or use any portion of any
Company Property. Except as otherwise set forth on Schedule 3.11(f), the
Capital Expenditure Budget and Schedule includes all outstanding material
tenant improvement and similar material work required to be made by the
lessor under each of the Material Company Leases. There are no outstanding
material brokerage commissions or similar amounts payable in respect of any
of the Company Leases other than amounts being paid in the ordinary course on
a timely basis or which are being diligently contested in good faith.
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(g) Material Commitments. Schedule 3.11(g) sets forth a complete
and accurate list of all material contracts, options, commitments, letters of
intent or similar written understandings made or entered into by the Company
or any of the Subsidiaries as of the date hereof (x) to enter into any
Material Company Lease, (y) to sell, mortgage, pledge, hypothecate any
Company Property or to otherwise enter into a material transaction in respect
of the ownership or financing of any Company Property, or (z) to purchase or
acquire an option, right of first refusal or similar right in respect of any
real property, which, in any such case, has not yet been reduced to a written
lease or contract (other than in connection with or as the same may relate to
the Golden State Properties), and sets forth with respect to each such
commitment, letter of intent or other understanding the principal business
terms thereof, excluding, however, in each case such commitments, letters of
intent or similar written understandings which do not bind any party thereto.
The Company has previously delivered or made available to Buyer a true and
complete copy of each such commitment, letter of intent or other
understanding.
(h) Options, Rights of First Refusal and Other Property Related
Contracts. Except as set forth in the Company Reports or Schedule 3.11(h),
none of the Company or any of its Subsidiaries has any outstanding options or
rights of first refusal or has entered into any outstanding contracts with
others for the purchase of any real property by the Company, the Operating
Partnership or any Subsidiary (other than easements related to any Company
Property).
(i) Capital Expenditure Budgets and Schedules. Schedule 3.11(i)
sets forth the Company's or any Subsidiary's capital expenditure budget and
schedule for each Company Property (the "Capital Expenditure Budget and
Schedule"), which describes the material capital expenditures which the
Company or any Subsidiary has budgeted for such Company Property for calendar
year 1998, excluding, however (except as otherwise provided in Section
3.11(f)), any tenant improvements required to be made under any Company
Lease. The Capital Expenditure Budget and Schedule for each Company Property
represents the good faith business judgment of the Company as to all known
reasonably foreseeable maintenance and capital expenditure items for such
Company Property.
(j) Development Properties. Schedule 3.11(j) contains a list of
each Company Property, or property which the Company has under a letter of
intent or option, which consists of or includes material amounts of
underdeveloped land or which is intended to be or is in the process of being
substantially redeveloped or rehabilitated (collectively, the "Development
Properties") a brief description of the development or rehabilitation
intended by the Company or any Subsidiary to be carried out or completed
thereon (collectively, the "Projects"), including any budget and development
or rehabilitation schedule therefor prepared by or for the Company or any
Subsidiary (collectively, the "Development Budget and Schedule"), if the
Company or a Subsidiary does not own such Development Property, a description
of the Company's contract rights with respect thereto, the status of zoning
approvals and building permits for such Project, the status of design and
major construction contracts, and if such Project is under development, the
approximate percentage of completion and any known material impediments to
completion and opening for operation. In the case of
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each Project the development of which has commenced, the costs and expenses
incurred in connection with such Project and the progress thereof are, except
as set forth in Schedule 3.11(j), consistent and in compliance in all
material respects with all aspects of the Development Budget and Schedule
applicable thereto. The Company has made available to Buyer or to its
representative all feasibility studies, soil tests, due diligence reports and
other studies, tests or reports performed by or for the Company, or otherwise
in the possession of the Company, and all material architectural, engineering
and general construction contracts which relate to the Development Properties
or the Projects. Neither the Company nor any of its Subsidiaries is in
material default under any development agreement, disposition agreement,
disposition and development agreement or comparable agreement affecting any
of the Company Properties, and all such agreements are in full force and
effect.
(k) Disclosure. To the Company's Knowledge, the representations
and warranties and the statements and information contained in this
Agreement, in the Exhibits and Schedules hereto and in all of the materials
delivered by the Company to Buyer and its counsel, accountants, appraisers
and consultants pursuant to this Agreement or in connection with the due
diligence investigations conducted by or on behalf of Buyer in connection
with this Agreement do not contain any untrue statement of a material fact
and, when taken together, do not omit to state a material fact required to be
stated therein or necessary in order to make such representations,
warranties, statements or information not misleading in light of the
circumstances under which they were made.
(l) Ground Leases and HQ Leases. The Company has provided or made
available to the Buyer accurate and complete copies of the leases for the HQ
Space and the ground leases underlying the leased Company Properties
referenced in Schedule 3.11(a), if any, including all amendments and other
modifications thereto (collectively, the "Tenancy Leases"). Each of the
Tenancy Leases is valid, binding and in full force and effect as against the
Company or the applicable Subsidiary and, to the Company's Knowledge, against
the other party thereto. Except as indicated in the Company Reports or
Schedule 3.11(l) or any other Schedule to this Agreement and except for
tenants under the Company Leases and matters set forth in the Permitted
Exceptions, none of the Tenancy Leases is subject to any pledge, lien,
assignment, license or other agreement granting to any third party any
interest therein or any right to the use or occupancy of any premises leased
thereunder. Except as set forth in the Company Reports or Schedule 3.11(l),
there is no pending or, to the Company's Knowledge, threatened (in writing)
proceeding which is reasonably likely to interfere with the quiet enjoyment
of the tenant under any of the Tenancy Leases. No payments under any Tenancy
Lease are delinquent and no notice of default thereunder has been sent or
received by the Company or any of its Subsidiaries which has not been cured
or waived prior to the date hereof, and to the Knowledge of the Company,
there does not exist under any of the Tenancy Leases any default by the
Company or any Subsidiary or any event which merely with notice or lapse of
time or both, would constitute such a default by the Company.
(m) Reciprocal Easement Agreements. To the Company's Knowledge,
all reciprocal easement agreements referenced as Permitted Exceptions or
otherwise necessary for the operation of any Company Property or with respect
to which any Company Property is
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subject, are in full force and effect, without default in any material
respect by any party thereto.
(n) Mortgage and Other Debt. Schedule 3.11(n) accurately
describes and summarizes the approximate amount, term, interest rate, payment
terms, prepayment restrictions and restrictions on transfer that would be
applicable to the transactions contemplated hereby and by the Agreement to
Contribute, of all mortgage debt encumbering the Company Properties and all
other indebtedness for borrowed money of the Company. There are no material
defaults thereunder by the Company or any of its Subsidiaries except as
indicated on said Schedule 3.11(n).
Section 3.12 "Environmental Matters." (a) Except as disclosed on
Schedule 3.12(a)(i), the Company and its Subsidiaries have not generated,
stored, released, discharged or disposed of, nor to the Company's Knowledge
or its Subsidiaries' knowledge, used or handled Hazardous Substances or
Hazardous Wastes (as those terms are defined below) at, upon or from any
property in violation of any law, regulation or directive, or in connection
with which remedial action would be prudent or required under any federal,
state or local law, regulation or directive. To the Company's Knowledge and
its Subsidiaries' knowledge and except as set forth in any environmental
report provided by the Company and its Subsidiaries to Buyer including those
listed on Schedule 3.12-(a)(i), or otherwise provided to or obtained by
Buyer, in each case prior to the date that is fifteen (15) days after the
date of this Agreement, and except as expressly disclosed on Schedule
3.12(a)(i) attached hereto, no Hazardous Substances or Hazardous Wastes are
or have been generated, stored, released, located, discharged or disposed of,
used or handled from, at or upon any property, and no Hazardous Substance or
Hazardous Waste is or has been located on any property, except for cleaning
and maintenance supplies customarily used in connection with properties
similar to the Company Properties and except cleaning and maintenance
supplies which are customarily sold in comparable retail properties and which
have been used, stored and sold, as applicable, in compliance with all
applicable laws, regulations and directives. As used in this Agreement, the
terms "Hazardous Substances" and "Hazardous Wastes" shall have the meanings
set forth in the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Sections 9601 et. seq., as amended, and the
regulations thereunder (collectively, "CERCLA"), Solid Waste Disposal Act, as
amended, including amendments under the Resource Conservation and Recovery
Act, 42 U.S.C. Sections 6901 et. seq., and the regulations thereunder
(collectively "RCRA"), Federal Water Pollution Control Act, 33 U.S.C.
Sections 1251 et. seq., as amended, and the regulations thereunder
(collectively the "Federal Clean Water Act") and such terms shall also
include asbestos, petroleum products, radon, radioactive materials, lead
paint, UFFI and other regulated substances under any federal, state or local
law, regulation or directive. To the Company's Knowledge and its
Subsidiaries' knowledge and except as set forth in any environmental report
provided by the Company and its Subsidiaries to Buyer or otherwise obtained
by Buyer, in each case prior to the date hereof, and except as expressly
disclosed on Schedule 3.12(a)(i), no Hazardous Substance or Hazardous Wastes
are, to the Company's Knowledge and the Subsidiaries' knowledge, located on
property adjacent to any property hereunder. Except as disclosed in the
environmental report(s) delivered to Buyer hereunder or in any report
obtained by Buyer, in each case prior to the date that is fifteen (15) days
after the
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date of this Agreement, neither the Company nor its Subsidiaries has received
written notice of, or has knowledge of, any notice from any agency, authority
or court concerning the removal, treatment or management of any Hazardous
Substances or Hazardous Wastes. For the properties listed in Schedule
3.12-(a)(ii) (the "Inherited Properties"), the facts and circumstances on
which an Environmental Claim related to a property is based shall be deemed
to have been "known" to the Company and its Subsidiaries for purposes of any
representations and warranties made under this Section 3.12 if (i) the
Environmental Claim results in liability of $1,000,000 or more for an
individual Environmental Claim, or $5,000,000 or more in the aggregate for
any Environmental Claims hereunder that individually may result in liability
of less than $1,000,000, and (ii) the facts or circumstances would have been
detected or discovered if the Company and its Subsidiaries had conducted an
environmental assessment for the property or properties in accordance with
the ASTM Standard Practice for Environmental Site Assessments: Phase I
Environmental Assessment Process, E 1527-97 (the "ASTM Standard"), on the
property or properties. For purposes of the Agreement, the Phase I reports
listed in Schedule 3.12-(a)(i) are deemed to be reports of environmental
assessments conducted in accordance with the ASTM Standard.
(b) For purposes hereof, the terms listed below shall have the
following meanings:
(i) "Environmental Claim" shall mean any Claim, investigation or
written notice by any person alleging potential liability
(including potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resources damages,
property damages, loss of value, consequential damages, personal
injuries or fatalities, or penalties) of the Company or its
Subsidiaries arising out of, based on or resulting from (A) the
presence, generation, transportation, management, recycling, reuse,
treatment, use, storage, disposal or Release of Materials of
Environmental Concern or the threatened Release of Materials of
Environmental Concern at any location, or (B) activities or
conditions upon which any violation, or alleged violation of, or
liability or alleged liability under, any Environmental Law.
(ii) "Environmental Laws" shall mean federal, state, local, and
municipal laws, ordinances, principles of common law, rules,
by-laws, orders, governmental policies, statutes and regulations
relating to the condition, pollution or protection of the
environment or of flora or fauna or their habitat or of human
(including employee and worker) health and safety, or to the
cleanup or restoration of the environment, including, but not
limited to, any laws relating to (A) generation, treatment,
storage, disposal, management, recycling, reuse or transportation
of chemicals, materials, wastes, emissions or discharges or
protection of the environment from the same, (B) exposure of
persons to, or Release or threat of Release of, Materials of
Environmental Concern, and (C) the safety and health of workers and
employees.
(iii) "Materials of Environmental Concern" shall mean all
chemicals, pollutants, contaminants, wastes, toxic substances,
asbestos, radioactive
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materials, petroleum or any fraction thereof, petroleum products
and hazardous substances (as defined in Section 101(14) of CERCLA,
42 U.S.C. Section 6601(14)), or hazardous wastes as now defined and
regulated under any Environmental Laws.
(iv) "Release" shall mean any active or passive release, spill,
emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration.
Section 3.13 "Employees and Employee Benefit Plans." (a) The
Company Reports and Schedule 3.13(a) together set forth a complete and
accurate list of all Employee Benefit Plans and all material Benefit
Arrangements which affect Employees of the Company or any of its Subsidiaries
(the "Company Plans"). With respect to each Company Plan, (i) the Company
and each of its Subsidiaries is in compliance in all material respects with
the terms of each Company Plan and with the requirements prescribed by all
applicable statutes, orders or governmental rules or regulations, (ii) the
Company and each of its Subsidiaries has contributed to each Pension Plan
included in the Company Plans not less than the amounts accrued for such plan
for all plan periods for which payment is due, and (iii) none of the Company
or any of its Subsidiaries has any funding commitment or other liabilities
except as reserved for in the financial statements in or incorporated by
reference into the Company Reports, or, in the case of clauses (i) through
(iii), as is set forth in Schedule 3.13(a).
(b) Other than in connection with the proposed substitution of the
Operating Partnership as the employer and paymaster of the employees of the
Company on or about January 1, 1998, or as set forth on Schedule 3.13(a) none
of the Company or any of its Subsidiaries has made any commitment to
establish any new Employee Benefit Plan, to modify any Employee Benefit Plan,
or to increase benefits or compensation of Employees of the Company or any of
its Subsidiaries (except for normal increases in compensation consistent with
past practices), and no intention to do so has been communicated to Employees
of the Company or any of its Subsidiaries.
(c) There are no pending or, to the Company's Knowledge,
threatened claims against or otherwise involving any of the Company Plans or
any fiduciaries thereof with respect to their duties to the Company Plans and
no suit, action or other litigation (excluding claims for benefits incurred
in the ordinary course of Company Plan activities) has been brought against
or with respect to any such Company Plans.
(d) Neither the Company, the Operating Partnership or any entity
under "common control" with the Company or the Operating Partnership within
the meaning of Section 4001 of ERISA has contributed to, or been required to
contribute to, any "multiemployer plan" (as defined in Section 3(37) and
4001(a)(3) of ERISA).
(e) Other than the Company's Plans, the Company and its
Subsidiaries do not maintain or contribute to any plan or arrangement which
provides or has any liability to provide life insurance, medical or other
employee welfare benefits to any Employee or former Employee upon his
retirement or termination of employment and the Company and its
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Subsidiaries have never represented, promised or contracted (whether in oral
or written form) to any employee or former employee that such benefits would
be provided.
(f) For purposes hereof, "Employee Benefit Plans" means each and
all "employee benefit plans" as defined in Section 3(3) of ERISA maintained
or contributed to by a party hereto or in which a party hereto participates
or participated and which provides benefits to Employees, including (i) any
such plans that are "employee welfare benefit plans" as defined in Section
3(l) of ERISA, including retiree medical and life insurance plans ("Welfare
Plans"), and (ii) any such plans that constitute "employee pension benefit
plans" as defined in Section 3(2) of ERISA ("Pension Plans"). "Benefit
Arrangements" means life and health insurance, hospitalization, savings,
bonus, deferred compensation, incentive compensation, holiday, vacation,
severance pay, sick pay, sick leave, disability, tuition refund, service
award, company car, scholarship, relocation, patent award, fringe benefit,
individual employment, consultancy or severance contracts and other polices
or practices of a party hereto providing employee or executive compensation
or benefits to Employees, other than Employee Benefit Plans. "Employees"
mean all current employees, former employees and retired employees of a party
hereto or any of its Subsidiaries, including employees on disability, layoff
or leave status. "Controlled Group Liability" means any and all liabilities
under (i) Title IV of ERISA, (ii) Section 302 of ERISA, (iii) Sections 412
and 4971 of the Code, (iv) the continuation coverage requirements of Section
601 et seq. of ERISA and Section 4980B of the Code, other than such
liabilities that arise solely out of, or relate solely to, the Plans.
(g) With respect to each plan that is subject to Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code: (i) there does not
exist any accumulated funding deficiency within the meaning of Section 412 of
the Code or Section 302 of ERISA, whether or not waived, (ii) the fair market
value of the assets of such plan equals or exceeds the actuarial present
value of all accrued benefits under plan (whether or not vested), on a
termination basis, (iii) no reportable event within the meaning of Section
4043(c) of ERISA has occurred, and the consummation of the transactions
contemplated by this agreement will not result in the occurrence of any such
reportable event, and (iv) all premiums to the Pension Benefit Guaranty
Corporation have been timely paid in full.
(h) There does not now exist, nor to the Company's Knowledge, do
any circumstances exist that could result in, any Controlled Group liability
that would be a liability of the Company following the Buyer's purchase of
Company Preferred Stock hereunder. Without limiting the generality of the
foregoing, neither the Company nor any ERISA Affiliate has engaged in any
transaction described in Section 4069 or Section 4204 of ERISA.
(i) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) result in, cause the accelerated vesting or
delivery of, or increase the amount or value of, any payment or benefit to
any employee of the Company.
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Section 3.14 "Labor Matters." Except as set forth in Schedule
3.14, none of the Company or any of its Subsidiaries is a party to, or bound
by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor union organization. Except for the
matters set forth in Schedule 3.14, there is no unfair labor practice or
labor arbitration proceeding pending or, to the Company's Knowledge,
threatened against the Company or any of its Subsidiaries. To the Company's
Knowledge, there are no organizational efforts with respect to the formation
of a collective bargaining unit presently being made or threatened involving
employees of the Company or any of its Subsidiaries.
Section 3.15 "Affiliate Transactions." Schedule 3.15 sets forth
a complete and accurate list of (i) all relationships and transactions,
series of related transactions or currently proposed transactions or series
of related transactions entered into by the Company or any of its
Subsidiaries since December 31, 1995, which are of the type required to be
disclosed by the Company pursuant to Item 404 of Regulation S-K of the
Securities Laws, and (ii) all agreements, arrangements or policies of the
Company and/or the Subsidiaries of the Company (including the Operating
Partnership) concerning transactions with Affiliates or other conflicts of
interest. Each agreement, arrangement or policy described in clause (ii)
hereof and set forth in Schedule 3.15 is in full force and effect, and the
Company, each of its Subsidiaries, and the other parties thereto are in
compliance therewith, or such compliance has been waived by the Board of
Directors as set forth in Schedule 3.15. A true and complete copy of all
agreements or contracts relating to any such transaction has been made
available for inspection by Buyer. Schedule 3.15 sets forth an accounting of
such transactions regarding participatory interests, the allocation of
overhead and expenses thereunder, and all other matters material to each of
such agreements or contracts.
Section 3.16 "Insurance." The Company and the Operating
Partnership maintain insurance policies covering the assets, business,
equipment, properties, operations and employees of the Company and each of
its Subsidiaries (collectively, the "Insurance Policies") which are of a type
and in amounts customarily carried by Persons of similar size and resources
as the Company conducting businesses similar to those of the Company and the
Operating Partnership. There is no material claim by the Company or any of
its Subsidiaries pending under any of the material Insurance Policies as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies.
Section 3.17 "Brokers or Finders." No agent, broker, investment
banker or other firm or person, including any of the foregoing that is an
Affiliate of the Company with which the Company dealt, is or will be entitled
to any broker's or finder's fee or any other commission or similar fee from
the Company in connection with this Agreement or any of the transactions
contemplated hereby for which Buyer will be responsible. Section 3.18 "REOC
Status." (a) The Company was incorporated as a California corporation on June
30, 1986 and from its date of incorporation until January 1, 1987, the
Company conducted no business and owned no assets. The Company subsequently
reorganized as a Maryland corporation in 1997.
Section 3.18 "REOC Status." (a) The Company was incorporated as a
California corporation on June 30, 1986 and from its date of incorporation
until January 1, 1987, the Company conducted no business and owned no assets.
The Company subsequently reorganized as a Maryland corporation in 1997.
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(b) As of the date of the Company's first long-term investment
that was not a short-term investment of funds pending long-term commitment,
i.e., January 1, 1987 (the "REOC Qualification Date"), and continuously
thereafter to and including the Closing Date, at least 50 percent of the
assets of the Company (other than short-term investments pending long-term
commitment or distribution to investors), valued at cost, have been invested
in real estate which has been under active development or management by the
Company.
(c) The Company has been actively engaged in the management or
development of real estate in the ordinary course of its business at all
times from the REOC Qualification Date to and including the Closing Date.
(d) The "real estate" referenced above which was purchased on the
REOC Qualification Date and thereafter includes the Company Properties except
for any such real estate sold. To the extent any of the Company Properties
are subject to tenant leases (the "Leases"), the Company has substantial
responsibilities under each of the Leases, and none of the Leases provides
that substantially all management and maintenance activities with respect to
the Company Property in question or any portion thereof are the
responsibility of the tenant lessees.
(e) The Company has not merely passively assumed the risks of its
real estate ownership, but the return to its stockholders from its investment
in the Company Properties has been and is based in part on the cash flow and
capital appreciation of the Company Properties, and such return depends in
substantial part on the success of the Company's management and development
efforts with respect to the Company Properties.
(f) The employees of the Company perform most of the development
and management functions of the real estate business described herein, except
that the Company has employed independent contractors, each of which is
terminable without cause and without substantial penalty upon reasonably
short notice, to perform certain of the day-to-day management activities
associated with the Company Properties. In any event, the Company represents
and warrants that it has devoted substantial resources to such management and
development activities and to the oversight of its independent contractors
who perform such activities from the REOC Qualification Date to and including
the Closing Date.
(g) Schedule 3.18(g) sets forth a complete and accurate list of
(i) the Articles of Incorporation and Bylaws, and all amendments to each, of
Burnham Sleepy Hollow, Inc., the name by which the California corporation
that is the corporate predecessor of the Company (hereinafter, the
"California REIT") was known at the time of its formation, and all amendments
thereto; (ii) all material advisory and management agreements entered into by
the California REIT or the Company, and the Subsidiaries of each, from and
after January 1, 1987 with respect to the assets of the California REIT or
the Company, respectively; and (iii) the annual reports for the California
REIT or the Company, as the case may be, filed with the SEC under the
Exchange Act for the years 1987 to 1996, inclusive, each of which accurately
describes the business of the Company or, as applicable, its predecessor, the
California REIT,
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and the types and values (by category) of real properties owned and operated
by them during the periods referenced in this Section 3.18(g).
Section 3.19 "Knowledge Defined." As used herein, the phrase "to
the Company's Knowledge" (or words of similar import) means actual knowledge
of those individuals identified in Schedule 3.19, who are all of the
individuals who are directors and executive officers of the Company who knew
or should know as to the matters referenced herein, and includes any facts,
matters or circumstances set forth in any written notice from any Government
Authority or any other material written notice received by the Company or any
Subsidiary, and also includes any matter of which Buyer informs the Company
in writing prior to the date hereof or to which the Company acknowledges or
agrees.
Section 3.20 "Maryland Takeover Law." The terms of Section 3-602
and 3-702 of the Maryland General Corporation Law will not apply to Buyer,
any acquisition of Company Preferred Stock pursuant to this Agreement or as a
result of the exchange, conversion or redemption of Company Preferred Stock
pursuant to this Agreement or the Articles Supplementary, or any other
transaction contemplated by this Agreement. The resolutions substantially in
the form of Exhibit E hereto have been adopted by the Company, remain in full
force and effect on the date hereof and will not be amended, modified,
rescinded or revoked in any manner that would cause such terms to apply to
the Buyer or any such acquisition.
Section 3.21 "Proxy Statement." The proxy statement to be mailed
to holders of the Company Common Stock in connection with the vote of such
holders described in Section 3.22 hereof (as the same may be amended or
supplemented, the "Proxy Statement") and all of the information included or
incorporated by reference therein (other than any information supplied or to
be supplied by for inclusion or incorporation by reference therein) will not,
as of the date the Proxy Statement is first mailed to such holders and as of
the time of the meeting of such holders in connection with the transactions
contemplated hereby, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not misleading. The Proxy Statement will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations promulgated by the SEC thereunder.
Section 3.22 "Vote Required." The affirmative vote of the
holders of a majority of the outstanding shares of Company Common Stock
entitled to vote and duly present in person or by proxy at a meeting duly
called (and with each share of Company Common Stock entitled to one vote per
share) at which a quorum is present is the only vote of the holders of any
class or series of Company Stock necessary to approve, for purposes of the
rules of the NYSE or otherwise, the exchange of Operating Partnership
Preferred Units for Company Preferred Stock or Company Common Stock pursuant
to the Operating Partnership Agreement, as amended.
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Section 3.23 "Exemption from Ownership Restrictions." The Board
of Directors (or a special committee designated by the Board of Directors)
has adopted the resolutions, in the form of Exhibit E, which shall be
delivered to Buyer after the Execution Closing and on or before December 9,
1997, exempting Buyer from ownership restrictions under Section
7.2.1(a)(i)(1) of the Company Charter, based upon representations and
agreements of the Buyer delivered to the Company in the form attached as
Exhibit F, which resolutions remain in full force and effect on the date
hereof and will not be amended, modified, rescinded or revoked without the
prior written consent of Buyer.
ARTICLE 4
Representations and Warranties of Buyer
Westbrook Burnham Holdings, L.L.C. and Westbrook Burnham
Co-Holdings, L.L.C. hereby represent and warrant, jointly and severally, to
the Company as follows:
Section 4.1 "Organization." Each of Westbrook Burnham Holdings,
L.L.C. and Westbrook Burnham Co-Holdings, L.L.C. is a limited liability
company duly organized, validly existing and in good standing under the laws
of the State of Delaware. Buyer has all requisite power and authority to
own, operate, lease and encumber its properties and carry on its business as
now conducted, and to enter into this Agreement and the Registration Rights
Agreement, and to perform its obligations hereunder and thereunder.
Section 4.2 "Due Authorization." The execution, delivery and
performance of this Agreement and the Registration Rights Agreement have been
duly and validly authorized by all necessary action on the part of Buyer.
This Agreement has been duly executed and delivered by Buyer for itself and
constitutes the valid and legally binding obligations of Buyer, enforceable
against Buyer, in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights or general principles of equity.
Section 4.3 "Conflicting Agreements and Other Matters." Neither
the execution and delivery of this Agreement, nor the performance by Buyer of
its obligations hereunder, will conflict with, result in a breach of the
terms, conditions or provisions of, constitute a default under, result in the
creation of any mortgage, security interest, encumbrance, Lien or charge of
any kind upon any of the properties or assets of Buyer, pursuant to, or
require any consent, approval or other action by or any notice to or filing
with any Government Authority pursuant to, the organizational documents or
agreements of Buyer, or any agreement, instrument, order, judgment, decree,
statute, law, rule or regulation by which Buyer is bound, except for filings
after any Stock Purchase under Section 13(d) of the Exchange Act.
Section 4.4 "Acquisition for Investment, Sophistication, Source
of Funds." Buyer is acquiring the Company Preferred Stock being purchased by
it for its own account for the purpose of investment and not with a view to
or for transfer or sale in connection with any
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distribution thereof, and Buyer has no present intention or plan to effect
any transfer or distribution of shares of Company Preferred Stock (except for
the possible contemplated transfer by Buyer of shares of the Purchased Shares
to its Affiliates and except for the possible transfer by Buyer to the
Operating Partnership Preferred Units Buyer in the event of a mandatory
redemption of Operating Partnership Preferred Units (as contemplated in the
Articles Supplementary) in each case subject to available exemptions under
federal and applicable state security laws), provided that the disposition of
Company Preferred Stock owned by Buyer shall at all times be and remain
within its control, subject to the provisions of this Agreement and the
Registration Rights Agreement. Buyer is able to bear the economic risk, and
will be supplied with the funds for, the acquisition of Company Preferred
Stock pursuant hereto and can afford to sustain a total loss on such
investment, and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the proposed
investment, and therefore has the capacity to protect its own interests in
connection with the acquisition of Company Preferred Stock pursuant hereto.
Buyer is an "accredited investor" within the meaning of Rule 501 of
Regulation D under the Securities Act.
Section 4.5 "Brokers or Finders." No agent, broker, investment
banker or other firm or person, including any of the foregoing that is an
Affiliate of Buyer with which the Buyer dealt, is or will be entitled to any
broker's or finder's fee or any other commission or similar fee from Buyer in
connection with this Agreement or any of the transactions contemplated hereby
for which the Company will be responsible.
Section 4.6 "REIT Qualification Matters." After giving effect
to Buyer's purchase of Company Preferred Stock hereunder, no person who would
be treated as an "individual" for purposes of Section 542(a)(2) of the Code
(as modified by Section 856(h) of the Code) owns or would be considered to
own (taking into account the ownership attribution rules under Section 544 of
the Code, as modified by Section 856(h) of the Code) in excess of 9.8% of the
value of the outstanding equity interest in Buyer.
Section 4.7 "Investment Company Matters." Buyer is not, and
after giving effect to the purchase of Company Preferred Stock contemplated
hereby, will not be, an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.
ARTICLE 5
Representations and Covenants Relating to Closing
Section 5.1 "Taking of Necessary Action." Each of Buyer, the
Company and the Operating Partnership, agrees to use commercially reasonable
efforts promptly to take, or cause to be taken, all action and promptly to do
or cause to be done all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement and the Registration Rights
Agreement, subject to the terms and conditions hereof and thereof.
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Section 5.2 "Preferred Stock, Articles Supplementary; By-laws."
Following authorization by the Board of Directors of the Company, at or
before the Closing, the Company shall cause to be duly executed and filed
with the State Department of Assessments and Taxation of the State of
Maryland, the Articles Supplementary in the form attached as Exhibit A.
Section 5.3 "Public Announcements; Confidentiality." (a)
Subject to each party's disclosure obligations imposed by law and any stock
exchange or similar rules and the confidentiality provisions contained in
Section 5.3(b), the Buyer, jointly and severally, and the Company shall
cooperate with each other in the development and distribution of all news
releases and other public information disclosures with respect to this
Agreement and the Registration Rights Agreement, and any of the transactions
contemplated hereby or thereby. Buyer shall also have the right to review
and, before filing or other public dissemination, or both, approve (which
approval will not be unreasonably withheld or delayed) any statements made or
information provided with respect to Buyer or any Affiliate or to the
transactions contemplated by this Agreement, including, without limitation,
such statements intended to be included in any future Regulatory Filing
prepared by or on behalf of the Company.
(b) Buyer agrees that all information provided to Buyer or any of
its representatives pursuant to this Agreement shall be kept confidential
(except that Buyer may disclose the same to, upon the request of, the
Operating Partnership Preferred Unit Buyer, to which the Company hereby
agrees), and Buyer shall not disclose such information to any persons other
than the directors, officers, employees, financial advisors, legal advisors,
accountants, consultants and affiliates of Buyer who reasonably need to have
access to the confidential information and who are advised of the
confidential nature of such information; provided, however, the foregoing
obligation of Buyer shall not (i) relate to any information that (1) is or
becomes generally available to Buyer or any of its representatives other than
as a result of unauthorized disclosure by Buyer or by Persons to whom Buyer
has made such information available, or (2) is or becomes available to Buyer
or any of its representatives on a non-confidential basis from a third party
that is not bound by any other confidentiality agreement with the Company or
any Subsidiary, or (ii) prohibit disclosure of any information if required by
law, rule, regulation, court order or other legal or governmental process if
prior thereto Buyer uses reasonable efforts to give the Company notice and an
opportunity to object and Buyer shall reasonably cooperate if the Company
chooses to so object.
(c) The Company agrees that all information provided to the
Company or any of its representatives pursuant to this Agreement shall be
kept confidential, and the Company shall not disclose such information to any
Persons other than the directors, officers, employees, financial advisors,
legal advisors, accountants, consultants and affiliates of the Company who
reasonably need to have access to the confidential information and who are
advised of the confidential nature of such information; provided, however,
the foregoing obligation of the Company shall not (i) relate to any
information that (1) is or becomes generally available to the Company or any
of its representatives other than as a result of unauthorized disclosure by
the Company or by Persons to whom the Company has made such information
available, or (2) is or becomes available to the Company on a
non-confidential basis
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from a third party that is not bound by any other confidentiality agreement
with the Buyer, or (ii) prohibit disclosure of any information if required by
law, rule, regulation, court order or other legal or governmental process if
prior thereto the Company uses reasonable efforts to give Buyer notice and an
opportunity to object and the Company shall reasonably cooperate if Buyer
chooses to object.
Section 5.4 "Conduct of the Business." Except for transactions
contemplated hereby or as disclosed in the Company Reports, during the period
from the date hereof to the date of the Closing, and except for the
following: (a) any financings obtained by the Company in order that the
Company may obtain sufficient funds to finance the Golden State Acquisition,
(b) sales of Common Stock up to $120,000,000 at an offering price to the
ultimate purchaser not less than $13.75 per share, (c) the Company Asset
Transfer and any financings related thereto, (d) the acquisition of real
property or interests therein from time to time in exchange for Operating
Partnership Units, cash and/or the assumption of indebtedness and any
financing related thereto, and (e) the sale of the Company Property located
in Gilroy, California, the Company will, except as otherwise consented to or
approved by Buyer in writing or as permitted or required hereby, which
consent shall not be unreasonably withheld, conduct the business of the
Company and its Subsidiaries and engage in transactions only in the ordinary
course.
Section 5.5 "Information and Access." From the date hereof to
the date on which Buyer shall own less than 250,000 shares of Company
Preferred Stock, the Company and its Subsidiaries shall afford to Buyer and
Buyer's accountants, counsel and other representatives full and reasonable
access during normal business hours (and at such other times as the parties
may mutually agree) to its properties, books, contracts, commitments, records
and personnel and, during such period, shall furnish promptly to Buyer (a) a
copy of each report, schedule and other document filed or received by it
pursuant to the requirements of the Securities Laws, and (b) all other
information concerning their businesses, personnel and the Company Properties
as Buyer may reasonably request. Buyer and its accountants, counsel and
other representatives shall, in the exercise of the rights described in this
Section, not unduly interfere with the operation of the businesses of the
Company or its Subsidiaries. Not by way of limitation of the provisions of
Section 5.3(b), the information acquired by Buyer pursuant to this Section
5.5 shall be subject to the provisions of Section 5.3(b) and, furthermore,
Buyer will use such information and with respect to such information conduct
itself not in violation of applicable securities laws. Buyer will cause any
other Person given access to such information by Buyer (other than the
Operating Partnership Preferred Unit Buyer, which Buyer understands has
separately so confirmed to the Company) to make similar confirmations to the
Company as the Company may reasonably request.
Section 5.6 "Notification of Certain Matters." Until all of the
Company Preferred Stock has been issued, each of Buyer, jointly and
severally, and the Company shall use its good faith efforts to notify the
other party in writing of its discovery of any matter that would render any
of such party's or the other party's representations and warranties contained
herein untrue or incorrect in any material respect, but the failure of either
party so to notify the other party shall not be deemed a breach of this
Agreement.
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Section 5.7 "Approval of Company Shareholders; Redemption." The
Company shall at its own expense (i) exercise reasonable efforts to advance
in time as much as is reasonably practicable the date of, and duly call, its
1998 annual meeting of shareholders, to a date not later than May 12, 1998,
(ii) duly submit to the vote for approval by a majority of the holders of
Company Common Stock entitled to vote at such meeting thereon, the issuance
of Company Common Stock upon the conversion, exchange or redemption of the
Company Preferred Stock and of the Operating Partnership Preferred Units and
Operating Partnership Common Units, (iii) recommend approval thereof and
exercise best efforts to obtain such approval, including, without limitation,
retaining a soliciting firm for customary services in connection therewith,
and (iv) in the event that such approval is not obtained at said annual
meeting, then the Company may, in its sole discretion, convene a special
meeting of shareholders for such purpose, provided that the same shall be
called and held in sufficient time to enable the Company to satisfy its
obligations set forth in Section 9 of the Articles Supplementary, but in no
event later than ten Business Days prior to June 30, 1998. At such special
meeting thereof, the Company shall submit such matter for approval by the
vote of holders of Company Common Stock, recommend approval thereof and
exercise best efforts to obtain such approval including, without limitation,
retaining a soliciting firm for customary services in connection therewith.
In the event that the approval of such matter by holders of the Company
Common Stock is not obtained, the Company shall redeem the shares of Company
Preferred Stock and Operating Partnership Preferred Units in such aggregate
number (of which 7/12 shall be shares of Company Preferred Stock and 5/12
shall be Operating Partnership Preferred Units) as will result in the
aggregate number of shares of Company Common Stock issuable upon the
conversion, exchange or redemption of Company Preferred Stock, Operating
Partnership Preferred Units and Operating Partnership Common Units (issued
pursuant to the Agreement to Contribute) after such redemption not exceeding
19.9% of the number of shares of Company Common Stock outstanding immediately
prior to the Closing hereunder and under the Agreement to Contribute, in
accordance with Section 9 of the Articles Supplementary, which number of
shares shall be agreed upon by Buyer and the Company at the Closing. In the
event that the Company does not pay to Buyer the Mandatory Redemption Price
(as such term is defined in Section 9 of the Articles Supplementary) on or
before the date such Mandatory Redemption Price is due, the Company shall pay
to Buyer the amount of liquidated damages in accordance with Section 9 of the
Articles Supplementary.
ARTICLE 6
Certain Additional Covenants
The parties hereto agree that the covenants set forth in this
Article 6 shall survive the Closing and shall not be subject to Section 8.1
of this Agreement.
Section 6.1 "Resale." Buyer, jointly and severally,
acknowledges and agrees that as of the Closing Date the Purchased Shares will
not be registered under the Securities Act or the securities laws of any
state and that such Purchased Shares may be sold or otherwise disposed of
only in one or more transactions registered under the Securities Act and,
where applicable, such state securities laws or as to which an exemption from
the registration
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requirements of the Securities Act and, where applicable, such state
securities laws is available and the certificates representing such Purchased
Shares or any Company Common Stock into which Purchased Shares may be
converted will be legended to such effect.
Section 6.2 "REIT Status." From and after the date hereof, the
Company will elect to be taxed as a REIT in its federal income tax returns,
will comply with all applicable laws, rules and regulations of the Code
relating to a REIT, and will not take any action or fail to take any action
which would reasonably be expected to, alone or in conjunction with any other
factors, result in the loss of its status as a REIT for federal income tax
purposes or the failure of the representations in Section 3.8 hereof to be
true and correct.
Section 6.3 "Payments." The Company acknowledges and agrees to
pay or reimburse from time to time upon the direction of Buyer and the
Operating Partnership Preferred Units Buyer, at and after the Closing,
reasonable expenses of Buyer and the Operating Partnership Preferred Units
Buyer and third-party transaction costs to Buyer and the Operating
Partnership Preferred Units Buyer, up to an aggregate amount equal to
$500,000, incurred or paid by Buyer and the Operating Partnership Preferred
Units Buyer in completing this transaction including, without limitation, any
amendment or modification of, or waiver of, the transaction documents (as
invoiced by reasonably detailed statements or invoices).
Notwithstanding any termination of this Agreement by Buyer pursuant
to Section 9.1(b) or 9.1(d), the Company acknowledges and agrees to make the
payments as set forth above.
Section 6.4 "First Offer Rights." (a) Buyer shall have the
rights set forth in this Section 6.4 as the holder of record and beneficially
of the Purchased Shares. The rights set forth herein are in favor of Buyer
and its successors and assigns, provided that any exercise procedures to be
accomplished hereunder shall be performed by Buyer or its nominee designated
in writing to the Company and no other person may accomplish such procedures
or seek to exercise the rights set forth in this Section 6.4. Absent an
express assignment of the rights of Buyer under this Section 6.4, no transfer
by Buyer of the Purchased Shares shall affect the rights of Buyer hereunder.
(b) In the case of the proposed issuance by the Company of, or the
proposed granting by the Company of shares of, any class of Company Stock, or
any rights to subscribe for or to purchase, or any warrants or options for
the purchase of, Company Stock or any stock or securities convertible into or
exchangeable for Company Stock (collectively, the "Offered Securities"),
other than (i) issuance of interests in the Operating Partnership in
connection with acquisitions, mergers, joint ventures and similar
transactions, and (ii) exchanges by the Company of Company Common Stock for
Operating Partnership Units. Buyer shall have, at any time and from time to
time, the right to purchase such percentage, from which shall be subtracted
the First Offer Reduction as provided in the next sentence (such percentage
in effect from time to time, as hereinafter defined, the "Pro Rata Share")
which shall initially be 19.5%. The First Offer Reduction will only be
determined and applied as a result of an issuance by the Company as to which
Buyer has the right to make an offer to
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purchase under this Section 6.4 and does not elect to do so in full. As used
herein, the "First Offer Reduction" shall be the product of 19.5%, or such
other Pro Rata Share as shall have previously been determined after
application of a First Offer Reduction, multiplied by the quotient of (A) the
number of shares of Offered Securities, divided by (B) the sum of the number
of shares of Company Common Stock outstanding (computed on a fully-diluted
basis), plus the number of Offered Securities. Buyer may elect to make a
purchase hereunder of a number of shares less than would be determined as
Buyer's Pro Rata Share, in which case Buyer and the Company will make an
adjustment to the Pro Rata Share according to the principles established
here, but reflecting such lesser purchase amount. On each occasion that the
Company proposes to issue any Offered Securities to the public, the Company
shall give to Buyer prior written notice (the "Company Notice") of its
intention, by first class mail, postage prepaid, addressed at its last
address as shown by the records of the Company describing the same, the price
and the specific terms (or in the context of an offering of Offered
Securities, a range of price and terms) upon which the Company proposes to
issue the same. Buyer shall have 15 Business Days (but in the case of a
retail "spot" offering, two Business Days so long as the Company has advised
Buyer that it is considering effecting such an offering, and the material
terms thereof, as promptly as is practical for the Company to do so and in
any event not less than ten days prior to the beginning of such two Business
Day Period) from the date of the receipt by Buyer of the Company Notice to
deliver a notice (the "Rights Exercise Notice") notifying the Company of
Buyer's intention to purchase all or a part of its Pro Rata Share of such
Offered Securities in accordance herewith for the price and upon the terms
specified by the Company Notice and at a price or prices no less favorable to
Buyer than the price or prices at which such Offered Securities are proposed
to be offered for sale to others, less, in the event of any sale other than a
public offering, the per unit amount of any placement fees or commissions, to
the extent that the same are not payable by the Company under the terms of
any placement agent's or other similar agreement applicable to such sale and
provided, however, that the purchase of such Offered Securities shall be
consummated prior to the later of (i) 30 days after the date of the Rights
Exercise Notice and (ii) the date that the Company consummates the issuance
of the Offered Securities described in the Company Notice. If, in connection
with any proposed issue of Offered Securities, the Buyer fails to exercise in
full its rights as set forth in this Section 6.4, then subject to the next
following sentence, the Company may sell the unsold Offered Securities at any
time within 180 days (90 days in the case of a public offering) thereafter at
a price and upon terms no more favorable to the purchasers thereof than
specified in the Company Notice; provided, that the Company shall not sell or
grant, or permit conversion under, any Offered Securities after such 180-day
period (or 90-day period in the case of a public offering) without renewed
compliance with this Section 6.4; provided, further, that in the case of a
widely distributed underwritten public offering of Offered Securities, if in
the good faith opinion of the Company and the underwriter, such renewed
compliance by the Company with the procedural requirements hereunder (i.e.,
timing of notices, etc.) would otherwise materially impede the consummation
of such public offering, the parties agree to take such further action as may
be reasonably necessary to effectuate such offering while preserving Buyer's
substantive rights hereunder. Each Rights Exercise Notice delivered by Buyer
to the Company hereunder shall be irrevocable and binding on Buyer.
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(c) The provisions of this Section 6.4 shall not apply to (i) any
shares of any class of the Company Stock or convertible securities, issuable
upon the redemption or conversion of the Purchased Shares of the Company,
(ii) any options to purchase shares of Company Stock (determined at the time
of the grant of such options) at an exercise price not less than the fair
market value of such shares on the date of grant issued from time to time to
employees, consultants or directors as compensation or incentives for
services rendered to the Company, or the Operating Partnership, whether under
the Company's amended Stock Option and Incentive Plan or any successor
thereto and (iii) any other issuance or sale of Common Stock as contemplated
by clause (X) of the parenthetical of the first sentence of Section 5(e)(v)
of the Articles Supplementary.
(d) Notwithstanding the foregoing, if and to the extent that Buyer
is prevented or prohibited from the exercise in full or in part of its rights
to purchase any Offered Securities under this Section 6.4 due to restrictions
on the ownership by Buyer (or any group of holders with which such Buyer may
be affiliated or may be deemed to be affiliated) of any thereof, whether
under applicable Maryland law, or the Company Charter or the Amended Company
By-laws, or by reason of restrictions applicable for purposes of the
Company's continued qualification as a REIT for purposes of the Code (the
"Exercise Restriction"), such number of Offered Securities required to be
purchased pursuant to such preemptive right shall automatically be reduced to
such amount as to not exceed the Exercise Restriction, and Buyer from time to
time thereafter may exercise such right up to an aggregate number of Offered
Securities as is equal to such reduction, subject always to the restrictions
as aforesaid.
(e) The rights of Buyer set forth in this Section 6.4 shall
commence on the date hereof and shall expire on that date when Buyer no
longer owns 250,000 or more shares of Company Preferred Stock, except as to
purchases as to which Buyer may make on a deferred basis under Section 6.4(d)
which shall continue without time restriction.
Section 6.5 "Board of Directors." (a) Pursuant to the standards
and procedures set forth in Section 6.5(b), Buyer shall, from time to time
when there exists a vacancy on the Board of Directors with respect to a seat
occupied or to be occupied by the Company Preferred Stock nominee, but not
less often than annually, propose a person for nomination and election to the
Board of Directors (the "Nomination Right"). Such member shall have a seat
on a committee of the Board of Directors, as determined prior to the Closing
as to the initial person selected by Buyer for nomination to the Board of
Directors, and thereafter, as determined by the Board of Directors. If a
vacancy on the Board of Directors should exist prior to the date of the next
annual meeting, a nominee proposed by the holders of Company Preferred Stock
approved by the Nominations Committee (or other committee with appropriate
authority of the Board of Directors) will be appointed to such vacancy in
lieu of waiting until the next annual meeting. The Nomination Right will no
longer be available on the earlier to occur of:
(i) the date on which the sum (referred to herein as "Buyer
Ownership") of (A) Buyer's ownership of shares of Company Preferred Stock
(calculated on an "as-converted"
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basis), considered in the aggregate, (B) any shares of Company Preferred
Stock then held by the Operating Partnership Preferred Unit Buyer (also
calculated on an "as converted" basis), and (C) the number of Operating
Partnership Preferred Units held by the Operating Partnership Preferred Unit
Buyer and Buyer (in each case, calculated on an "as-converted" basis),
decreases to below 30% of the aggregate number of shares of Company Preferred
Stock and Operating Partnership Preferred Units, in each case issued in the
transaction contemplated hereby and by the Agreement to Contribute,
outstanding (in each case, calculated on an "as converted" basis), but in all
events excluding the effects of any redemption; and
(ii) the date on which (A) Buyer Ownership decreases to below 50%
of the number of shares of Company Preferred Stock and the number of
Operating Partnership Preferred Units issued in the transaction contemplated
hereby and by the Agreement to Contribute then outstanding (in each case,
calculated on an "as-converted" basis), (B) Buyer Ownership, considered in
the aggregate, is less than 2% of outstanding shares of the Company Common
Stock on a fully-diluted basis, and (C) the Current Market Price of the
Company Common Stock has achieved or exceeded 7% per annum price increases
from a price of $14.38 per share of Company Common Stock, measured from the
Closing Date to the date of determination of whether the Nomination Right has
terminated; and
(iii) a publicly underwritten, widely distributed offering (one in
which at least 50% of the shares sold are distributed to retail purchasers)
of Company Preferred Stock.
In addition, the Company will permit each of Westbrook Real Estate
Fund II, L.P., and Westbrook Real Estate Co-Investment Partnership II, L.P.,
limited rights to consult with and advise management sufficient to permit
ERISA counsel to Westbrook Partners, L.L.C., to render favorable advice as to
ERISA matters. Blackacre Capital Group, L.P., and Westbrook Partners,
L.L.C., will be permitted each to have representatives attend Board of
Directors and significant committee meetings, except executive sessions of
the Board of Directors or the committees until either of the Nomination Right
terminates or no shares of Company Preferred Stock remain outstanding.
(b) All nominees proposed by Buyer under paragraph (a) of this
Section 6.5 shall be of such character, and shall have such educational
background, experience and knowledge of complex financial and management
issues and matters as to be qualified, and shall otherwise be suitable, for
membership on a board of directors of a publicly held company engaged in real
estate investment. Except as hereinafter provided, the Nomination Committee
(or any other committee with appropriate authority) of the Board of Directors
shall have the right in its discretion to reject any such nominee, provided
that it so notifies Buyer within 20 days after Buyer proposes such nominee.
In the event that the Nomination Committee (or such other committee) rejects
a nominee, Buyer shall have the right to propose three alternate candidates
meeting the criteria set forth in this paragraph, one of which shall be
approved by the Nomination Committee (or such other committee) as promptly as
practicable.
(c) The Company's obligations under this Section 6.5 shall be
subject to the performance by the directors of the Company of their duties in
compliance with Maryland law.
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Section 6.6 "Shareholders Vote Regarding the Conversion or
Redemption of Company Preferred Stock or Operating Partnership Preferred
Units." Notwithstanding anything to the contrary herein or in the Articles
Supplementary, that holders of shares of Company Preferred Stock will not be
permitted to vote on the matter described in Section 5.7. The Buyer hereby
agrees that it shall not vote its shares of Company Preferred Stock on such
matter and that it shall not transfer any share of Preferred Stock unless the
transferee shall deliver to the Company its written agreement to be bound by
this Section 6.6.
Section 6.7 "Operating Partnership Preferred Units." The Company
and Buyer agree that, for so long as shares of Company Preferred Stock are
outstanding, the Company (i) shall own and hold the Operating Partnership
Preferred Units on behalf of the holders of the Company Preferred Stock in an
amount equal to the number of outstanding shares of Company Preferred Stock
and having in all material respects the same distribution and liquidation
preferences with respect to the Operating Partnership as the Company
Preferred Stock has with respect to the Company which distributions and
preferences shall be applied by the Company exclusively to satisfy the rights
of the holders of the Company Preferred Stock, (ii) shall receive, hold and
pay over to such holders the proceeds of such Operating Partnership Preferred
Units, and (iii) shall act solely at the direction of the holders of a
majority of the Company Preferred Stock in exercising any right or taking any
action requested to be taken by it in its capacity as a holder of the
Company's Operating Partnership Preferred Units.
Section 6.8 "Existing Partners Agreements." Without the
approval of Buyer the Company will not make or permit to occur any amendment
to the Existing Partners Registration Rights Agreement or the Operating
Partnership Agreement, nor waive or fail to observe in any material respect
any provisions thereof, if the effect thereof could adversely affect the
rights of any holder of Company Preferred Stock (with respect to the
Operating Partnership Agreement) or any Person under the Registration Rights
Agreement (with respect to the Existing Partners Registration Rights
Agreement), and the Company will afford any such Person the opportunity to
obtain a similar benefit resulting from any amendment or waiver of, or
failure to observe, any material provisions of such agreements.
Section 6.9 "REOC Status." The Company shall conduct its
business in such fashion that the representations made in Section 3.18 of
this Agreement remain true and correct after the Closing Date. The Company
covenants and warrants that it will comply with all requirements, and take
all actions and cause its subsidiaries to take all actions necessary, to
maintain its status as a "real estate operating company" as such term is
defined in 29 C.F.R. Section 2510.3-101. Specifically, but without
limitation, the Company covenants that it has or it will establish an "annual
valuation period", which will be an annual period of no more than 90 days
that will begin no later than the anniversary of the REOC Qualification Date,
and that on at least one day within each annual valuation period, the Company
will maintain the investment of at least 50 percent of its assets (other than
short-term investments pending long-term commitment or distribution to
investors), valued at cost, in real estate which is under active development
or management by the Company as described above. The Company also covenants
to devote substantial resources to the management of the real estate it owns,
and
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continuously to remain actively engaged in the management or development of
real estate in the ordinary course of its business. The Company agrees to
cooperate with Buyer and to furnish such additional information as may be
reasonably requested by Buyer to evidence the actions indicated above.
Section 6.10 "Board of Directors Resolutions." The resolutions
of the Board of Directors referenced in Sections 3.20 and 3.23 will not be
amended, modified, rescinded or revoked in contravention of the provisions of
Section 3.20 and Section 3.23, respectively.
ARTICLE 7
Conditions to Closing
Section 7.1 "Conditions of Purchase at Closing." The obligations
of Buyer to purchase and pay for the Purchased Shares at the Closing are
subject to satisfaction or waiver of each of the following conditions
precedent:
(a) "This Agreement and Related Documents." Buyer shall have
received a counterpart of this Agreement and the Related Documents, each duly
executed by each of the parties thereto other than Buyer if an agreement or,
in the case of the Articles Supplementary, duly executed by the appropriate
officers of the Company and receipted as filed and in full force by the
appropriate Government Authority.
(b) "Representations and Warranties; Covenants." The
representations and warranties of the Company and the Operating Partnership
contained herein shall have been true and correct in all material respects on
and as of the date hereof (subject to the Company's right to deliver, amend
or modify any Schedules described herein prior to the Closing), and shall be
true and correct in all material respects on and as of the date of the
Closing (as supplemented by any Schedules delivered prior thereto) with the
same effect as though such representations and warranties had been made on
and as of the Closing (except for representations and warranties that speak
as of a specific date or time other than the Closing (which need only be true
and correct in all material respects as of such date or time)). The
covenants and agreements of the Company to be performed on or before the date
of Closing in accordance with this Agreement shall have been duly performed
in all material respects (except for the Company's obligation to deliver the
Purchased Shares at the Closing). The Company shall have delivered to Buyer
at the Closing a certificate of an appropriate officer in form and substance
reasonably satisfactory to Buyer dated the date of the Closing to such effect.
(c) "Company Preferred Stock; Articles Supplementary." The
Articles Supplementary shall have been duly filed with the State Department
of Assessments and Taxation of the State of Maryland, any other Government
Authority or NYSE and shall be in full force and effect. Buyer shall have
received a certified copy of the Articles Supplementary, as filed with the
State Department of Assessments and Taxation of the State of Maryland.
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(d) "Amended Company By-laws; Modification of Ownership Limit;
Rights of Holder of Company Preferred Stock; Operating Partnership
Agreement." The amendment to the Company By-laws in the form attached as
Exhibit C (the "Amended Company By-laws") shall have been approved by the
Board of Directors, all as required or permitted by and in accordance with
the Company Charter, duly filed if any filing thereof shall be required by
any Government Authority or NYSE, and shall be in full force and effect. The
Board of Directors resolutions pertaining to this Agreement and matters
referenced in Section 3.23, and the procedures, findings and transactions
contemplated hereby, shall have been duly approved and adopted by the Board
of Directors and the Secretary shall have placed the record of such action in
such records and shall be in form and substance satisfactory to Buyer. The
Operating Partnership Agreement shall have been reasonably modified, if
necessary, (i) so as to create a primary distribution to the Company in order
to enable the Company to receive, on a pari passu basis on its Operating
Partnership Preferred Units, before the Operating Partnership makes other
distributions, amounts sufficient to pay all amounts due from time to time
upon the Company Preferred Stock, and (ii) in all other respects necessary to
permit ERISA counsel to Buyer to confirm, after consultation with the
Company's counsel, to Buyer that its investment in the Company Preferred
Stock is in compliance with the rules and regulations promulgated under and
the provisions of ERISA, and, in particular, that the purchase of Company
Preferred Stock is a qualifying venture capital investment for ERISA purposes.
(e) "HSR Act." Any waiting period applicable to the consummation
of the transactions contemplated hereby under the HSR Act shall have expired
or been terminated, and no action shall have been instituted by the United
States Department of Justice or the United States Federal Trade Commission
challenging or seeking to enjoin the consummation of the transactions
contemplated hereby, which action shall not have been withdrawn or
terminated, or the Company and Buyer shall have mutually concluded that no
filing under the HSR Act is required with respect to the transactions
contemplated hereby and counsel to the Company shall have rendered its
opinion to such effect.
(f) "Consents." The Company shall have obtained the consents set
forth in Schedule 3.4(f) and no approval of the NYSE shall be necessary with
respect to the authorization, issuance or conversion of Company Preferred
Stock which shall not have been obtained.
(g) "Lending Consents." The Company shall have obtained all
necessary consents from lending institutions to the transactions contemplated
by the Agreement to Contribute and by this Agreement (including any consents
required in connection with the Company Asset Transfer).
(h) "Accountants." The Company shall have caused to be supplied
to Buyer a letter, satisfactory to Buyer in scope, form and substance, as to
financial statement matters referenced in Section 3.5(a) of this Agreement.
(i) "Disclosure Schedules." All Schedules referred to in this
Agreement, whether attached hereto at the Execution Closing or delivered in a
separate disclosure volume
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or volumes, shall have been amended or modified, if necessary, to reflect
completion of Buyer's review thereof and shall otherwise have been determined
by Buyer in its sole and absolute discretion to be satisfactory in scope and
content to the Buyer in all respects, provided that, Buyer shall have
notified the Company of desired changes, if any, within the periods
established in Section 7.1(j).
(j) "Due Diligence." Buyer shall have had completed its due
diligence review, which shall have been determined by Buyer to be
satisfactory in its sole and absolute discretion, as provided in this Section
7.1(j). As to all informational matters set forth in the Schedules hereto,
other than Schedules delivered or information under Section 3.12, Buyer shall
be deemed to have completed its review and arrived at a satisfactory
determination unless Buyer has notified the Company otherwise within five
Business Days after the later of (i) the Execution Closing and (ii) that date
on which all Schedules hereto have been delivered to Buyer and the
representatives and counsel in definitive form. As to matters relating to
Section 3.12, Buyer shall be deemed to have completed its review and arrived
at a satisfactory determination unless Buyer has notified the Company
otherwise within 15 days of the Execution Closing. Matters referenced in
Section 3.11(f) shall be handled as provided therein.
(k) "Operating Partnership." The Company shall have formed the
Operating Partnership, the Operating Partnership Agreement (and all
amendments thereto) of which partnership shall conform to Exhibit D hereto.
(l) "Golden State Acquisition." The Company shall have closed the
Golden State Acquisition and there shall exist no material adverse change
with respect to the Company and the Golden State Acquisition.
(m) "Company Preferred Stock Nominee." The Company and Buyer
shall have consulted and agreed upon an initial Company Preferred Stock
nominee to serve as a member of the Board of Directors, and as to the
Committee of the Board of Directors on which such person shall sit.
(n) "No Injunction." There shall not be in effect any order,
decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits consummation of the transactions contemplated hereby and
there shall be no pending Action with which respect to this Agreement or the
transactions contemplated hereby, which could reasonably be expected to have
a material adverse effect on the ability of the Company to consummate the
transactions contemplated hereby or to issue the Purchased Shares.
(o) "Proceedings." All corporate and other proceedings to be
taken by the Company in connection with the transactions contemplated hereby,
including without limitation Exhibit E hereto, and all documents incident
thereto shall be reasonably satisfactory in form and substance to Buyer and
Buyer shall have received all such counterpart originals or certified or
other copies of such documents as it may reasonably request.
(p) "REIT Status." The Company shall have elected to be taxed as
a REIT in its most recent federal income tax return, and shall be in
compliance with all applicable
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laws, rules and regulations, including the Code, necessary to permit it to be
taxed as a REIT. The Company shall not have taken any action or have failed
to take any action which would reasonably be expected to, alone or in
conjunction with any other factors, result in the loss of its status as a
REIT for federal income tax purposes.
(q) "Opinion of Counsel." Buyer shall have received opinions from
the following: (i) Loeb & Loeb LLP, special counsel to the Company, (ii)
Goodwin, Procter & Hoar LLP, counsel to the Company, and (iii) Ballard Spahr
Andrews & Ingersoll, special Maryland counsel to the Company, in each case
covering such matters and otherwise in form and substance reasonably
satisfactory to Buyer.
(r) "NYSE Matters." The Company shall have received written
advice from the NYSE to the effect that the transactions contemplated herein
and in the Related Documents will not result in the de-listing of the
Company's Common Stock.
(s) "Rent Roll." Buyer shall have received the Rent Roll, as
updated, to a date not more than five Business Days prior to Closing in
conformity with Section 3.11(f), from the Company.
(t) "Title Policy." New Company Title Policies shall have been
issued and delivered with respect to each of the Company Properties
referenced on Schedule 3.11(a)-(i).
(u) "Operating Partnership Units." Buyer shall have received
Schedule 3.3(b), as updated to the Closing Date. The adjustments to Schedule
3.3(b) shall pertain only to clauses (i) to (v) of the first sentence of
Section 3.3(b), and to the extent that any adjustments are made as to matters
contemplated by the penultimate sentence of Section 3.3(b), Schedule 3.3(b)
as to be delivered at the Closing Date, if to satisfy this Section 7.1(u),
shall be determined by Buyer in its sole and absolute discretion to be
satisfactory in scope and content to Buyer in all respects.
(v) "Articles Supplementary." The form Section 9 of the Articles
Supplementary shall have been agreed to by Buyer on or before the close of
business December 9, 1997.
Section 7.2 "Conditions of Sale at Closing." The obligation of
the Company to issue and sell any Purchased Shares at Closing is subject to
satisfaction or waiver of each of the following conditions precedent:
(a) "This Agreement and Related Documents." The Company shall
have received a counterpart of this Agreement and the Related Documents, as
applicable to Buyer, (other than the Articles Supplementary), each duly
executed by each of the parties thereto.
(b) "Representations and Warranties, Covenants." The
representations and warranties of Buyer contained herein shall have been true
and correct in all respects on and as of the date hereof, and shall be true
and correct in all respects on and as of the relevant Closing Date with the
same effect as though such representations and warranties had been
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made on and as of the Closing Date (except for representations and warranties
that speak as of a specific date or time other than such Closing Date (which
need only be true and correct in all respects as of such date or time)). The
covenants and agreements of Buyer to be performed on or before the relevant
Closing Date in accordance with this Agreement shall have been duly performed
in all respects (except for Buyer's obligation to pay the related Purchase
Price at such Closing). Buyer shall have delivered to the Company at the
relevant Closing a certificate of an appropriate officer in form and
substance reasonably satisfactory to the Company dated the relevant Closing
Date to such effect.
(c) "HSR Act." Any waiting period applicable to the consummation
of the transactions contemplated hereby under the HSR Act shall have expired
or been terminated, and no action shall have been instituted by the United
States Department of Justice or the United States Federal Trade Commission
challenging or seeking to enjoin the consummation of the transactions
contemplated hereby, which action shall not have been withdrawn or
terminated, or the Company and Buyer shall have mutually concluded that no
filing under the HSR Act is required with respect to the transactions
contemplated hereby.
(d) "Consents." The Company shall have obtained the consents set
forth in Schedule 3.4(f).
(e) "No Injunction." There shall not be in effect any order,
decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits consummation of the transactions contemplated hereby and
there shall be no pending Actions with respect to this Agreement or the
transactions contemplated hereby, which could reasonably be expected to have
a material adverse effect on the ability of Buyer to consummate the
transactions contemplated hereby or to acquire the Purchased Shares.
(f) "Proceedings." All limited liability company and other
proceedings to be taken by Buyer in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Company and the Company shall have
received all such counterpart originals or certified or other copies of such
documents as it may reasonably request.
(g) "Opinion of Counsel." The Company shall have received
opinions from the following: (i) Patrick Fox, Esq., general counsel of
Buyer, (ii) McGuire, Woods, Battle & Boothe, special Maryland counsel to
Buyer, and (iii) Cadwalader, Wickersham & Taft, special New York counsel to
Buyer, in each case covering such matters and otherwise in form and substance
reasonably satisfactory to the Company.
(h) "Board of Directors Approval." The Board of Directors shall
have approved the Articles Supplementary and the Amended Company By-laws.
(i) "NYSE Matters." The Company shall have received written
advice from the NYSE to the effect that the transactions contemplated herein
and in the Related Documents will not result in the de-listing of the Company
Common Stock.
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(j) "Articles Supplementary." The form of Article 9 of the
Articles Supplementary shall have been agreed to by the Company on or before
the close of business on December 9, 1997.
ARTICLE 8
Survival; Indemnification
Section 8.1 "Survival." Except as shall be otherwise expressly
stated in this Agreement, all representations, warranties and covenants and
agreements of the parties contained herein, including indemnity or
indemnification agreements contained herein, or in any Schedule or Exhibit
hereto, or any certificate, document or other instrument delivered in
connection herewith shall survive until the second anniversary of the
Closing, except that the representations and warranties contained in Sections
3.11 and 3.12 hereof shall survive only until eighteen months following the
Closing.
Section 8.2 "Indemnification by the Company." (a) Subject to
Section 8.1 and Section 8.4 hereof, from and after any Closing Date, the
Company and the Operating Partnership (collectively, the "Indemnitors"),
jointly and severally, shall indemnify and hold harmless Buyer from and
against any and all debts, damages, claims, losses, expenses, costs,
obligations, and liabilities, together with all unpaid brokerage and leasing
commissions accrued as of the Closing on account of Company Leases, including
liabilities for all reasonable attorneys' fees and expenses (including
attorney and expert fees and expenses incurred to enforce the terms of this
Agreement) suffered or incurred, directly or indirectly, by Buyer by reason
of, or arising out of (i) any breach as of the date made or deemed made or
required to be true of any representation or warranty made by an Indemnitor
in or pursuant to this Agreement or (ii) any failure by an Indemnitor to
perform or fulfill any of its covenants or agreements set forth in this
Agreement (such debts, damages, claims, losses, expenses, costs, obligations,
and liabilities, collectively, "Losses and Expenses"). Notwithstanding any
other provision of this Agreement to the contrary, in no event shall Losses
and Expenses include a party's incidental or consequential damages. The
indemnity set forth in this Article 8 shall inure to the benefit of Buyer and
its successors and assigns, and shall be based upon the assumptions that
Buyer has purchased at the Closing all 2,800,000 shares of Company Preferred
Stock the sale and purchase of which is the subject of this Agreement and
that thereafter that Buyer is the holder of each and every outstanding share
of Company Preferred Stock or Common Stock issued on conversion thereof.
(b) Except with respect to third-party claims being defended in
good faith or claims for indemnification with respect to which there exists a
good faith dispute, each Indemnitor shall satisfy its obligations hereunder
within 30 days of receipt of a notice of claim under this Article 8.
Section 8.3 "Third-Party Claims." If a claim by a third party
is made against Buyer and if Buyer intends to seek indemnity with respect
thereto under this Article, Buyer shall promptly notify the Indemnitors in
writing of such claims setting forth such claims in
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reasonable detail. The Indemnitors may at any time, after admitting in
writing their indemnification liability hereunder undertake, through counsel
of their own choosing and at their own expense, the settlement or defense
thereof, and such Indemnitee shall cooperate with the Indemnitors in
connection therewith, provided, however, that Buyer may participate in such
settlement or defense through counsel chosen by it, provided that the fees
and expenses of such counsel in such event shall be borne by Buyer. Buyer
shall not pay or settle any claim as to which an Indemnitor has admitted in
writing its indemnification liability hereunder and which such Indemnitor is
contesting, unless such Indemnitee waives its right to indemnification
therefor from the Indemnitors hereunder. Notwithstanding the foregoing, Buyer
shall have the right to pay or settle any such claim, provided that in such
event it shall waive any right to indemnity therefor by the Indemnitors. If
the Indemnitors do not notify Buyer that the Indemnitors admit their
indemnification liability hereunder with respect to such claim and elect to
undertake the defense thereof, such Indemnitee shall have the right to
contest and, after ten day's prior written notice to the Indemnitors, during
which time the Indemnitors may admit liability and assume defense thereof,
settle or compromise the claim but shall not thereby waive any right to
indemnity therefor pursuant to this Agreement.
Section 8.4 "Exclusive Remedy." The indemnification provisions
under this Section 8 shall be the exclusive remedy available to Buyer for the
Losses and Expenses, or any other claim for breach of this Agreement and all
other remedies, if any, hereunder, whether in law or in equity are hereby
waived.
Section 8.5 "Indemnification Limitation." Notwithstanding any
other provision in this Agreement to the contrary, the Indemnitors shall not
be liable to indemnify any Indemnitee hereunder for any Losses or Expenses
arising from any breach of representation or warranty made in Article 3
hereof, unless, until and only to the extent that (i) in the case of any
breach of representation or warranty set forth in Section 3.11 or 3.12
hereof, the aggregate amount of all Losses and Expenses claimed by the Buyer
from time to time under such sections exceeds $1,750,000 or (ii) in the case
of any breach of representation or warranty set forth in any section
contained in Article 3 hereof other than Section 3.11 and Section 3.12, the
aggregate amount of all Losses and Expenses claimed by the Indemnitee from
time to time under such sections (other than Section 3.11 and Section 3.12)
exceeds $1,750,000; provided, however, that no indemnification shall be made
hereunder for any Losses and Expenses based upon or arising out of the Golden
State Acquisition. For purposes of indemnification hereunder, any Losses and
Expenses which could otherwise be categorized as falling under clause (i) or
clause (ii) above shall be deemed to be Losses and Expenses under clause (i)
only.
Section 8.6 "Covenant Between Buyer and Operating Partnership
Preferred Unit Buyer with Respect to Indemnification Agreement." In the
event of a claim by Buyer under this Agreement with respect to a
representation or warranty of the Company under Article 3 hereof, Buyer will,
prior to asserting such claim, first advise the Operating Partnership
Preferred Unit Buyer of its intention to do so and will determine if the
Operating Partnership Preferred Unit Buyer wishes to pursue such claim under
the Agreement to Contribute based on the representations and warranties
established thereunder. If the
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Operating Partnership Preferred Unit Buyer does not advise Buyer that it
wishes to pursue such claim jointly with Buyer by a written notice to such
effect, including provision for such sharing of expenses as Buyer and the
Operating Partnership Preferred Unit Buyer may jointly determine within 20
Business Days of the date Buyer advises the Operating Partnership Preferred
Unit Buyer of its intention to assert such claim, unless any applicable
statute of limitations shall require the assertion of a claim in a lesser
amount of time, Buyer shall no longer consult with the Operating Partnership
Preferred Unit Buyer as to such claim, its assertion or any resolution
thereof. Buyer acknowledges that, pursuant to Section 7.8 of the Agreement to
Contribute, as in effect on the date hereof, the Operating Partnership
Preferred Unit Buyer has a reciprocal understanding with the Company. Buyer
agrees that, if Buyer shall not have provided to the Operating Partnership
Preferred Unit Buyer written notice of Buyer indicating Buyer's wish to
pursue with the Operating Partnership Preferred Unit Buyer jointly a claim
which the Operating Partnership Preferred Unit Buyer intends to pursue
against the Company, then, if such claim is subsequently asserted in a court
of appropriate jurisdiction and venue, by the Operating Partnership Preferred
Unit Buyer against the Company within 90 days thereafter, Buyer will not seek
separately to assert such claim against the Company, unless and to the extent
that Buyer does not wish to pursue such claim jointly with the Operating
Partnership Preferred Unit Buyer because of defenses or counterclaims which
exist against the Operating Partnership Preferred Unit Buyer under the
Agreement to Contribute which are not available to the Company with respect
to Buyer under this Agreement.
ARTICLE 9
Termination
Section 9.1 "Termination." This Agreement may be terminated at
any time prior to the Closing by:
(a) the mutual consent of the Company and Buyer;
(b) Buyer (if it is not in breach of any of its material
obligations hereunder) in the event of a breach or failure by the Company
that is material in the context of the transactions contemplated hereby of
any representation, warranty, covenant or agreement by the Company contained
herein which has not been, or cannot be, cured within 30 Business Days after
written notice of such breach is given to the Company;
(c) the Company (if it is not in breach of any of its material
obligations hereunder) in the event of a breach or failure by Buyer that is
material in the context of the transactions contemplated hereby of any
representation, warranty, covenant or agreement by Buyer contained herein
which has not been, or cannot be, cured within 30 Business Days after written
notice of such breach is given to Buyer; or
(d) Buyer if the Closing shall not have occurred on or prior to
December 31, 1997, but subject to extension to a date not later than January
31, 1998, as the date contemplated for the closing pursuant to the Agreement
to Contribute may be extended
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thereunder, unless the failure of such occurrence shall be due to the failure
of Buyer to perform or observe any material covenant or agreement set forth
herein required to be performed or observed by Buyer on or before the Closing.
Section 9.2 "Procedure and Effect of Termination." In the event
of termination of this Agreement by either or both of the Company and Buyer
pursuant to Section 9.1, written notice thereof shall forthwith be given by
the terminating party to the other party hereto, and this Agreement shall
thereupon terminate and become void and have no effect, and the transactions
contemplated hereby shall be abandoned without further action by the parties
hereto, except that the provisions of Sections 5.4 (Public Announcements),
6.3 (Payments), 9.3 (Expenses), 10.2 (Governing Law), and 10.4 (Notices)
shall survive the termination of this Agreement; provided, however, that such
termination shall not relieve any party hereto of any liability for any
breach of this Agreement.
Section 9.3 "Expenses." Except as set forth in Section 6.3 of
this Agreement, whether or not any of the transactions contemplated herein
are consummated, all legal and other costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses.
ARTICLE 10
Miscellaneous
Section 10.1 "Counterparts." This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other party. Copies of
executed counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section, provided receipt of copies of such counterparts is
confirmed.
Section 10.2 "Governing Law." THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF.
Section 10.3 "Entire Agreement." This Agreement (including
agreements incorporated herein) and the Schedules and Exhibits hereto contain
the entire agreement between the parties with respect to the subject matter
hereof and there are no agreements, understandings, representations or
warranties between the parties other than those set forth or referred to
herein. This Agreement is not intended to confer upon any person not a party
hereto (and their successors and assigns) any rights or remedies hereunder.
Section 10.4 "Notices." All notices and other communications
hereunder shall be sufficiently given for all purposes hereunder if in
writing and delivered personally, sent by documented overnight delivery
service or, to the extent receipt is confirmed, telecopy, telefax
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or other electronic transmission service to the appropriate address or number
as set forth below. Notices to the Company shall be addressed to:
Burnham Pacific Properties, Inc.
610 West Ash Street, Suite 1600
San Diego, CA 92101-3350
Attention: Daniel B. Platt
Telecopy Number: 619-652-4711
Burnham Pacific Operating Partnership, L.P.
610 West Ash Street, Suite 1600
San Diego, CA 92101-3350
Attention: Daniel B. Platt
Telecopy Number: 619-652-4711
and a copy to:
Loeb & Loeb LLP
1000 Wilshire Blvd.
Suite 1800
Los Angeles, CA 90017-3460
Attention: Andrew S. Clare
Telecopy Number: 213-688-3899
Loeb & Loeb LLP
345 Park Avenue
New York, NY 10154-0037
Attention: Christopher K. Aidun
Telecopy Number: 212-407-4990
Goodwin, Procter & Hoar LLP
Exchange Place
53 State Street
Boston, MA 02109-2881
Attention: William King
Telecopy Number: 617-523-1231
or at such other address and to the attention of such other person as the
Company may designate by written notice to Buyer. Notices to Buyer shall be
addressed to:
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Westbrook Burnham Holdings, L.L.C.
and Westbrook Burnham Co-Holdings, L.L.C.
11150 Santa Monica Blvd.
Suite 1450
Los Angeles, CA 90025
Attention: Keith Gelb
Telecopy Number: 310-231-4350
and a copy to:
Westbrook Partners, L.L.C.
13155 Noel Road, Suite 2300
Dallas, TX 75240
Attention: Patrick Fox, Esq.
Telecopy Number: 972-774-9066, 972-934-8333
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, NY 10038
Attention: Allen Curtis Greer, II
Telecopy Number: 212-504-6666
Section 10.5 "Successors and Assigns." This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors. Except as specifically provided hereby, Buyer shall
not be permitted to assign any of its rights hereunder to any third party,
other than to one or more Affiliates of Buyer of which Buyer, directly or
indirectly, owns a majority of the voting power, provided that such
Affiliates agree to be bound hereby and Buyer remains obligated hereunder,
and provided that, following Closing Date, any bona fide financial
institution to which any Buyer, or any permitted transferee has transferred
(including upon foreclosure of a pledge) shares of Company Stock for the
purpose of securing bona fide indebtedness of any Buyer and which has agreed
to be bound by this Agreement shall also be entitled to enforce the rights of
Buyer hereunder.
Section 10.6 "Headings." The Section, Article and other headings
contained in this Agreement are inserted for convenience of reference only
and will not affect the meaning or interpretation of this Agreement. All
references to Sections or Articles contained herein mean Sections or Articles
of this Agreement unless otherwise stated.
Section 10.7 "Amendments and Waivers." This Agreement may not be
modified or amended except by an instrument or instruments in writing signed
by the party against whom enforcement of any such modification or amendment
is sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on the
part of such other party hereto to be performed or complied with. The waiver
by any party hereto of a breach of any term or provision hereof shall not be
construed as a waiver of any subsequent breach.
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Section 10.8 "Interpretation; Absence of Presumption." (a) For
the purposes hereof, (i) words in the singular shall be held to include the
plural and vice versa and words of one gender shall be held to include the
other gender as the context requires, (ii) the terms "hereof," "herein," and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the
Schedules and Exhibits hereto) and not to any particular provision of this
Agreement, and Article, Section, paragraph, Exhibit and Schedule references
are to the Articles, Sections, paragraphs, Exhibits and Schedules to this
Agreement unless otherwise specified, (iii) the word "including" and words of
similar import when used in this Agreement shall mean "including, without
limitation," unless the context otherwise requires or unless otherwise
specified, (iv) the word "or" shall not be exclusive.
(b) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the
party drafting or causing any instrument to be drafted.
Section 10.9 "Severability." Any provision hereof which is
invalid or unenforceable shall be ineffective to the extent of such
invalidity or unenforceability, without affecting in any way the remaining
provisions hereof.
Section 10.10 "Further Assurances." The Company and Buyer agree
that, from time to time, whether before, at or after the Closing Date, each
of them will execute and deliver such further instruments of conveyance and
transfer and take such other action as may be necessary to carry out the
purposes and intents hereof.
Section 10.11 "Specific Performance." Buyer and the Company each
acknowledge that, in view of the uniqueness of the parties hereto, the
parties hereto would not have an adequate remedy at law for money damages in
the event that this Agreement was not performed in accordance with its terms,
and therefore agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which the
parties hereto may be entitled at law or in equity.
Section 10.12 "Schedules." Any matter set forth on any Schedule
shall be deemed to be referred to on all other Schedules to which such matter
logically relates and where such reference would be appropriate and can
reasonably be inferred from the matters disclosed on the first Schedule as if
set forth on such other Schedules.
Section 10.13 "Submission to Jurisdiction" Each of the parties
hereby irrevocably submits to the jurisdiction of any New York State or
Federal court in the Southern District of the State of New York. Each of the
parties hereby irrevocably waives, to the fullest extent they may effectively
do so, the defense of such action or proceeding and hereby expressly waives
all rights of jurisdiction in any action or proceeding which they may now or
hereafter have by reason of their present or any future domicile.
[SIGNATURE PAGE FOLLOWS]
56
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IN WITNESS WHEREOF, this Agreement has been signed by or on behalf
of each of the parties hereto as of the day first above written.
BURNHAM PACIFIC PROPERTIES, INC.
By: /s/ Daniel B. Platt
________________________________
Name: Daniel B. Platt
Title: Chief Financial Officer
WESTBROOK BURNHAM HOLDINGS, L.L.C.
By: /s/ Keith Gelb
________________________________
Authorized Signatory
WESTBROOK BURNHAM CO-HOLDINGS,
L.L.C.
By: /s/ Keith Gelb
________________________________
Authorized Signatory
BURNHAM PACIFIC OPERATING
PARTNERSHIP, L.P.
By: Burnham Pacific Properties,
Inc., as general partner,
By: /s/ Daniel B. Platt
________________________________
Name: Daniel B. Platt
Title: Chief Financial Officer
57
<PAGE>
Exhibit 4.2.1
REGISTRATION RIGHTS AGREEMENT
by and among
BURNHAM PACIFIC PROPERTIES, INC.
WESTBROOK BURNHAM HOLDINGS, L.L.C.
and
WESTBROOK BURNHAM CO-HOLDINGS, L.L.C.
dated as of
December 31, 1997
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.................................................... 1
(a) "Agreement"....................................................... 1
(b) "Buyer"........................................................... 1
(c) "Company"......................................................... 1
(d) "Commission"...................................................... 1
(e) "Exchange Act".................................................... 1
(f) "Exercise Notice"................................................. 1
(g) "Existing Partners"............................................... 1
(h) "Existing Partners Agreement"..................................... 1
(i) "NASD"............................................................ 2
(j) "Registrable Securities".......................................... 2
(k) "Registration Expenses"........................................... 2
(l) "Registration Suspension Period".................................. 2
(m) "Securities Act".................................................. 2
(n) "Shelf Registration".............................................. 2
(o) "Stock Purchase Agreement"........................................ 2
(p) "Suspension Notice"............................................... 2
(q) "Tag-Along Notice"................................................ 2
(r) "Tag-Along Shares"................................................ 2
(s) "Tag-Along Transaction"........................................... 2
(t) "Third Party"..................................................... 3
(u) "Underwritten/Placed Offering".................................... 3
SECTION 2. SHELF REGISTRATION.............................................. 3
(a) Obligation to File and Maintain................................... 3
(b) Black-Out Periods of Buyer........................................ 3
(c) Black-Out Periods of the Company.................................. 4
(d) Notice............................................................ 5
SECTION 3. DEMAND REGISTRATION............................................ 5
(a) Buyer Right to Demand Registration................................ 5
(b) Special Demand Registration....................................... 5
(c) Black-Out Periods of Buyer........................................ 5
(d) Black-Out Periods of the Company.................................. 6
(e) Notice............................................................ 6
SECTION 4. INCIDENTAL REGISTRATIONS........................................ 7
i
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(a) Notification and Inclusion........................................ 7
(b) Cut-back Provisions............................................... 7
(d) Duration of Effectiveness......................................... 8
SECTION 5. REGISTRATION PROCEDURES......................................... 8
SECTION 6. CERTAIN UNDERWRITTEN OFFERINGS.................................. 10
SECTION 7. PREPARATION; REASONABLE INVESTIGATION........................... 11
SECTION 8. TAG-ALONG RIGHTS................................................ 11
(a) Rights and Notice................................................. 11
(b) Number of Shares to be Included................................... 12
(c) Abandonment of Sale............................................... 12
(d) Terms of Sale..................................................... 12
(e) Timing of Sale.................................................... 12
SECTION 9. INDEMNIFICATION................................................. 12
(a) Indemnification by the Company.................................... 12
(b) Indemnification by Buyer.......................................... 13
(c) Notices of Claims, etc............................................ 14
(d) Indemnification Payments.......................................... 14
(e) Contribution...................................................... 14
SECTION 10. COVENANTS RELATING TO RULE 144................................. 15
SECTION 11. MISCELLANEOUS................................................. 15
(a) Expenses.......................................................... 15
(b) Counterparts...................................................... 15
(c) Governing Law..................................................... 15
(d) Entire Agreement.................................................. 16
(e) Notices........................................................... 16
(f) Successors and Assigns............................................ 17
(g) Headings.......................................................... 17
(h) Amendments and Waivers............................................ 17
(i) Interpretation: Absence of Presumption............................ 18
(j) Severability...................................................... 18
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
December 31, 1997, by and among Burnham Pacific Properties, Inc., a Maryland
corporation (the "Company") and Westbrook Burnham Holdings, L.L.C. and
Westbrook Burnham Co-Holdings, L.L.C., each a Delaware limited liability
company (collectively hereinafter referred to as the "Buyer").
RECITALS:
WHEREAS, the Company and Buyer have entered into a Stock Purchase
Agreement, dated as of December 5, 1997 (the "Stock Purchase Agreement"),
that provides for the purchase by Buyer and sale by the Company to Buyer of
the Company Preferred Stock (as defined therein); and
WHEREAS, the Company has agreed to provide the registration rights
set forth herein as a condition to the Closing under the Stock Purchase
Agreement;
NOW, THEREFORE, in consideration of the premises and the covenants
and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound hereby, the parties hereto hereby agree as
follows:
Section 1. Definitions. Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Stock Purchase
Agreement. In addition, as used herein, the following terms shall have the
following meanings:
(a) "Agreement": shall have the meaning set forth in the first
paragraph hereof.
(b) "Buyer": shall have the meaning set forth in the first
paragraph hereof.
(c) "Company": shall have the meaning set forth in the first
paragraph hereof.
(d) "Commission": the Securities and Exchange Commission, and any
successor thereto.
(e) "Exchange Act": the Securities Exchange Act of 1934, as
amended, and any successor thereto, and the rules and regulations thereunder.
(f) "Exercise Notice": shall have the meaning set forth in Section
7(a).
(g) "Existing Partners": shall have the meaning set forth in the
Existing Partners Agreement.
(h) "Existing Partners Agreement": shall have the meaning set
forth in Section 3(a).
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(i) "NASD": the National Association of Securities Dealers, Inc.
(j) "Registrable Securities": (i) any and all shares of Company
Stock and (ii) any securities issued or issuable with respect to any Company
Stock or other securities referred to in clause (i) by way of conversion,
exchange, stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization or
otherwise issued to Buyer pursuant to the Stock Purchase Agreement. As to
any particular Registrable Securities, once issued, such securities shall
cease to be Registrable Securities when (A) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, or (B) such securities shall have been sold
in accordance with Rule 144 (or any successor provision) under the Securities
Act.
(k) "Registration Expenses": (i) the fees and disbursements of
counsel and independent public accountants for the Company incurred in
connection with the Company's performance of or compliance with this
Agreement, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, and any
premiums and other costs of policies of insurance obtained by the Company
against liabilities arising out of the sale of any securities and (ii) all
registration, filing and stock exchange or NASD fees, all fees and expenses
of complying with securities or blue sky laws, all printing expenses,
messenger and delivery expenses, any fees and disbursements of any common
counsel retained by Buyer, and transfer taxes, if any.
(l) "Registration Suspension Period": shall have the meaning set
forth in Section 2(b).
(m) "Securities Act": the Securities Act of 1933, as amended, and
any successor thereto, and the rules and regulations thereunder.
(n) "Shelf Registration": shall have the meaning set forth in
Section2(a).
(o) "Stock Purchase Agreement": shall have the meaning set forth in
the first paragraph of the Recitals hereof.
(p) "Suspension Notice": shall have the meaning set forth in
Section 2(b).
(q) "Tag-Along Notice": shall have the meaning set forth in Section
8(a).
(r) "Tag-Along Shares": shall have the meaning set forth in Section
8(a).
(s) "Tag-Along Transaction": any non-public issuance of Company
Stock other than in a distribution registered under the Securities Act for
consideration all, or substantially all, of which consists of cash or cash
equivalents (as determined under GAAP).
(t) "Tag-Along Transaction Shares": shall have the meaning set
forth in Section 8(a).
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<PAGE>
(u) "Third Party": shall have the meaning set forth in Section 8(a).
(v) "Underwritten/Placed Offering": a sale of securities of the
Company to an underwriter or underwriters for reoffering to the public or on
behalf of a person other than the Company through an agent for sale to the
public.
Section 2. Shelf Registration. (a) Obligation to File and
Maintain. At any time and from time to time following the date on which the
Buyer holds in excess of 250,000 shares of Registrable Securities, promptly
upon the written request of Buyer, the Company will use its best efforts to
file with the Commission a registration statement under the Securities Act
for the offering on a continuous or delayed basis in the future of all of the
Registrable Securities (the "Shelf Registration"). The Shelf Registration
shall be on an appropriate form, and the Shelf Registration and any form of
prospectus included therein or prospectus supplement relating thereto, shall
reflect such plan of distribution or method of sale as Buyer may from time to
time notify the Company, including the sale of some or all of the Registrable
Securities in a public offering or, if requested by Buyer, subject to receipt
by the Company of such information (including information relating to
purchasers) as the Company reasonably may require, (i) in a transaction
constituting an offering outside the United States which is exempt from the
registration requirements of the Securities Act in which the Company
undertakes to effect registration of such shares as soon as possible after
the completion of such offering in order to permit such shares to be freely
tradable in the United States, (ii) in a transaction constituting a private
placement under Section 4(2) of the Securities Act in connection with which
the Company undertakes to register such shares after the conclusion of such
placement to permit such shares to be freely tradable by the purchasers
thereof, or (iii) in a transaction under Rule 144A of the Securities Act in
connection with which the Company undertakes to register such shares after
the conclusion of such transaction to permit such shares to be freely
tradable by the purchasers thereof. The Company shall use its best efforts
to keep the Shelf Registration continuously effective for the period
beginning on the date on which the Shelf Registration is declared effective
and ending on the first date that there are no Registrable Securities (Buyer
to promptly notify the Company of such). During the period during which the
Shelf Registration is effective, the Company shall supplement or make
amendments to the Shelf Registration, if required by the Securities Act, or
if reasonably requested by Buyer or an underwriter of Registrable Securities,
including to reflect any specific plan of distribution or method of sale, and
shall use its reasonable best efforts to have such supplements and amendments
declared effective, if required, as soon as practicable after filing.
Notwithstanding anything to the contrary provided herein, Buyer's rights
pursuant to this Section 2 shall be effective not earlier than one year
following the date hereof.
(b) Black-Out Periods of Buyer. Notwithstanding anything herein to
the contrary, (i) the Company shall have the right, exercisable on not more
than five occasions (including any Black-Out Period rights the Company may
have under Section 3(c) below, and not more than two in any 12 month period),
from time to time to require Buyer not to sell under the Shelf Registration,
as provided for in Section 2(a), or to suspend the effectiveness thereof
during the period starting with the date 20 days prior to the Company's good
faith estimate, as certified in writing by an executive officer of the
Company to Buyer, of the
3
<PAGE>
proposed date of filing of a registration statement or a preliminary
prospectus supplement relating to an existing shelf registration statement,
in either case, pertaining to an underwritten public offering of equity
securities of the Company for the account of the Company, and ending on the
date 75 days following the effective date of such registration statement or
the date of filing of such prospectus supplement, and (ii) the Company shall
be entitled to postpone or suspend (but not for a period exceeding 90 days)
the filing or effectiveness of a registration statement otherwise required to
be prepared and filed by it pursuant to Section 2(a) if the Company
determines, in its good faith judgment, that such registration and offering
or continued effectiveness would interfere with any material financing,
acquisition, disposition, corporate reorganization or other material
transaction involving the Company or any of its subsidiaries or public
disclosure thereof would be required prior to the time such disclosure might
otherwise be required, or when the Company is in possession of material
information that it deems advisable not to disclose in a registration
statement.
Once any registration statement filed pursuant to Section 2(a), or
as set forth below in Section 3 has been declared effective, any period
during which the Company fails to keep such registration statement effective
and usable for resale of Registrable Securities shall be referred to as a
"Registration Suspension Period", which term shall not include any failure
solely attributable to the exercise of the Company's rights under this
Section 2(b). A Registration Suspension Period shall commence on and include
the date that the Company gives written notice to Buyer of its determination
that such registration statement is no longer effective or usable for resale
of Registrable Securities (the "Suspension Notice") to and including the date
when the Company notifies Buyer that the use of the prospectus included in
such registration statement may be resumed for the disposition of Registrable
Securities.
(c) Black-Out Periods of the Company. Subject to the conditions of
this Section 2(c), Buyer shall have the right, exercisable on not more than
five occasions (including any Black-Out Period rights Buyer may have in
Section 3(d) below, and not more than two in any 12 month period), to require
the Company not to sell any common equity securities of the Company or any
securities convertible into common equity securities of the Company under any
registration statement or prospectus supplement, relating to an existing
shelf registration statement or to suspend the effectiveness thereof, during
the period starting with the date 20 days prior to Buyer's good faith
estimate, as certified in writing by an executive officer of Buyer to the
Company, of the proposed date of filing of a preliminary prospectus
supplement relating to a Shelf Registration filed pursuant to Section 2(a),
pertaining to an underwritten public offering of Registrable Securities, and
ending on the date 75 days following the date of filing of the final
prospectus supplement, but in no event on a date later than 90 days following
the date of filing of the preliminary prospectus supplement. The Company's
obligations under this Section 2(c) are subject to the continuing
satisfaction of the following conditions: (i) no black-out period pursuant to
Section 2(b)(i) shall be in effect at the time of Buyer's exercise of its
rights under this Section 2(c); (ii) the Company shall not have suspended
sales of Registrable Securities pursuant to Section 2(b)(ii); and (iii) the
Company shall not have delivered to Buyer a written notice to the effect that
the Board of Directors has determined in good faith that compliance with this
Section 2(c) would reasonably be expected to have a material adverse effect
on the Company. In no event may the Company include in any
4
<PAGE>
preliminary prospectus supplement under which Buyer is offering Registrable
Securities covered by this Section 2(c) any equity securities of the Company
or any securities convertible into equity securities of the Company.
(d) Notice. The Company shall give Buyer prompt notice in the
event that the Company has suspended sales of Registrable Securities under
Section 2(b).
Section 3. Demand Registration. (a) Buyer Right to Demand
Registration. At any time that a shelf registration statement is not filed
and maintained as set forth in Section 2(a) or there shall have occurred a
Registration Suspension Period in excess of 60 days, if the Company shall
receive a written request from the Buyer that the Company file a registration
statement or similar document under the Securities Act with respect to the
Registrable Securities, then the Company shall promptly cause such
registration statement or similar document to be filed with the Commission
and shall use its best efforts to cause all Registrable Securities that the
Buyer has requested to be registered under the Securities Act to be so
registered within 120 days of such request and maintain the effectiveness of
such registration statement until the earlier of (i) the sale of all of the
Registrable Securities registered pursuant thereto (Buyer to promptly notify
the Company of such) and (ii) 180 days following the effective date of such
registration. The Buyer may exercise its rights under this Section 3(a)
twice during any twelve month period, provided, that its second such right
shall be conditioned upon the Existing Partners (as such term is defined in
the Registration Rights Agreement, dated as of December __, 1997, by and
among the Company and each of the Existing Partners listed on Exhibit A-1
thereto (the "Existing Partners Agreement")) not having exercised their
second right to demand registration under Section 3(a) of the Existing
Partners Agreement with the Company, dated as of the date hereof, during such
twelve month period. Notwithstanding anything to the contrary provided
herein, Buyer's rights pursuant to this Section 3 shall be effective not
earlier than one year following the date hereof.
(b) Special Demand Registration. Buyer may demand in writing that
the Company register and list, not earlier than one year following the date
hereof, the Company Preferred Stock on the principal exchange on which the
Company's securities are then listed, if so permitted by applicable law and
the regulations of such exchange. If the Company shall receive a written
request from the Buyer that the Company file a registration statement or
similar document under the Securities Act pursuant to this Section 3(b), then
the Company shall promptly cause such registration statement or similar
document to be filed with the Commission and shall use its best efforts to
cause all Registrable Securities that the Buyer has requested to be
registered under the Securities Act to be so registered within 120 days of
such request and maintain the effectiveness of such registration until the
earlier of (i) the sale of all of the Registrable Securities registered
pursuant thereto (Buyer to promptly notify the Company of such) and (ii) 180
days following the effective date of such registration.
(c) Black-Out Periods of Buyer. Notwithstanding anything herein to
the contrary, (i) the Company shall have the right, exercisable on not more
than five occasions (including any Black-Out Period rights the Company may
have in Section 2(b) above, and not more than two in any 12 month period),
from time to time to require Buyer not to sell
5
<PAGE>
pursuant to a registration statement or similar document under the Securities
Act filed pursuant to Section 3(a) or (b) or to suspend the effectiveness
thereof during the period starting with the date 20 days prior to the
Company's good faith estimate, as certified in writing by an executive
officer of the Company to Buyer, of the proposed date of filing of a
registration statement or a preliminary prospectus supplement relating to an
existing registration statement, in either case, pertaining to an
underwritten public offering of equity securities of the Company for the
account of the Company, and ending on the date 75 days following the
effective date of such registration statement or the date of filing of such
prospectus supplement, and (ii) the Company shall be entitled to postpone or
suspend (but not for a period exceeding 90 days) the filing or effectiveness
of a registration statement otherwise required to be prepared and filed by it
pursuant to Section 3(a) or (b) if the Company determines, in its good faith
judgment, that such registration and offering or continued effectiveness
would interfere with any material financing, acquisition, disposition,
corporate reorganization or other material transaction involving the Company
or any of its subsidiaries or public disclosure thereof would be required
prior to the time such disclosure might otherwise be required, or when the
Company is in possession of material information that it deems advisable not
to disclose in a registration statement.
(d) Black-Out Periods of the Company. Subject to the conditions of
this Section 3(d), Buyer shall have the right, exercisable on not more than
five occasions (including any Black-Out Period rights Buyer may have in
Section 2(c) above, and not more than two in any 12 month period), to require
the Company not to sell any common equity securities of the Company or any
securities convertible into common equity securities of the Company under any
registration statement or prospectus supplement relating to an existing
registration statement or to suspend the effectiveness thereof, during the
period starting with the date 20 days prior to Buyer's good faith estimate,
as certified in writing by an executive officer of Buyer to the Company, of
the proposed date of filing of a preliminary prospectus supplement relating
to a registration statement or similar document under the Securities Act
filed pursuant to Section 3(a) or (b), pertaining to an underwritten public
offering of Registrable Securities, and ending on the date 75 days following
the date of filing of the final prospectus supplement, but in no event on a
date later than 90 days following the date of filing of the preliminary
prospectus supplement. The Company's obligations under this Section 3(d) are
subject to the continuing satisfaction of the following conditions: (i) no
black-out period pursuant to Section 3(c)(i) shall be in effect at the time
of Buyer's exercise of its rights under this Section 3(d); (ii) the Company
shall not have suspended sales of Registrable Securities pursuant to Section
3(c)(ii); and (iii) the Company shall not have delivered to Buyer a written
notice to the effect that the Board of Directors has determined in good faith
that compliance with this Section 3(d) would reasonably be expected to have a
material adverse effect on the Company. In no event may the Company include
in any preliminary prospectus supplement under which Buyer is offering
Registrable Securities covered by this Section 3(d) any equity securities of
the Company or any securities convertible into equity securities of the
Company.
(e) Notice. The Company shall give Buyer prompt notice in the
event that the Company has suspended sales of Registrable Securities under
Section 3(c).
6
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Section 4. Incidental Registrations. (a) Notification and
Inclusion. If the Company proposes to register for its own account any
common equity securities of the Company or any securities convertible into
common equity securities of the Company under the Securities Act (other than
a registration relating solely to the sale of securities to participants in a
dividend reinvestment plan, a registration on Form S-4 (or successor form)
relating to a business combination or similar transaction permitted to be
registered on such Form S-4 (or successor form), a registration on Form S-8
(or successor form) relating to the sale of securities to participants in a
stock or employee benefit plan, or a registration permitted under Rule 462
under the Securities Act registering additional securities of the same class
as were included in an earlier registration statement for the same offering
and declared effective), the Company shall, at each such time, promptly give
written notice of such registration to Buyer. Upon the written request of
Buyer given within 10 days (but in the case of a retail "spot" offering, two
Business Days so long as the Company has advised Buyer that it is considering
effecting such an offering, and the material terms thereof, as promptly as is
practical for the Company to do so and in any event not less than 10 days
prior to the beginning of such two Business Day period) after receipt of such
notice by Buyer, the Company shall seek to include in such proposed
registration such Registrable Securities of the same class as is then being
registered by the Company as Buyer shall request be so included and shall use
its best efforts to cause a registration statement covering all of the
Registrable Securities that Buyer has requested to be registered to become
effective under the Securities Act. The Company shall be under no obligation
to complete any offering of securities it proposes to make under this Section
4 and shall incur no liability to Buyer for its failure to do so. If, at any
time after giving written notice of its intention to register any securities
and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may,
at its election, give written notice of such determination to Buyer and,
thereupon, (i) in the case of a determination not to register, the Company
shall be relieved of its obligation to register any Registrable Securities in
connection with such registration (but not from its obligation to pay the
Registration Expenses incurred in connection therewith) and (ii) in the case
of a determination to delay registering, the Company shall be permitted to
delay registering any Registrable Securities for the same period as the delay
in registering such other securities. Notwithstanding anything to the
contrary provided herein, Buyer's rights pursuant to this Section 4 shall be
effective not earlier than one year following the date hereof.
(b) Cut-back Provisions. If a registration pursuant to this
Section 4 involves an Underwritten/Placed Offering of the securities so being
registered, whether or not solely for sale for the account of the Company,
which securities are to be distributed by or through one or more underwriters
of recognized standing under underwriting terms customary for such
transaction, and the underwriter or the managing underwriter, as the case may
be, of such Underwritten/Placed Offering shall inform the Company of its
belief that the amount of securities requested to be included in such
registration or offering exceeds the amount which can be sold in (or during
the time of) such offering without delaying or jeopardizing the success of
the offering (including the price per share of the securities to be sold),
then the Company will include in such registration (i) first, all the
securities of the Company which the
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Company proposes to sell for its own account and (ii) second, to the extent
of the amount which the Company is so advised can be sold in (or during the
time of) such offering, Registrable Securities and other securities requested
to be included in such registration, pro rata among Buyer and others
exercising incidental registration rights on the basis of the number of
securities requested to be included by all such persons.
(c) Duration of Effectiveness. At the request of Buyer, the
Company shall, subject to Section 2(b), use its best efforts to keep any
registration statement for which Registrable Securities are included under
this Section 4 effective and usable for up to 90 days (subject to extension
for the length of any Registration Suspension Period), unless the
distribution of securities registered thereunder has been earlier completed;
provided, however, that in no event will the Company be required to prepare
or file audited financial statements with respect to any fiscal year by a
date prior to the date on which the Company would be so required to prepare
and file such audited financial statements if such registration statement
were no longer effective and usable.
Section 5. Registration Procedures. (a) In connection with each
request by Buyer to file a registration statement as provided in Sections 2
or 3, the Company shall use its best efforts to, as expeditiously as
reasonably practicable:
(i) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration and
use its best efforts to cause such registration statement to become
effective, provided that before filing such registration statement or any
amendments or supplements thereto, the Company will furnish to the counsel
selected by Buyer, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel before any such
filing is made, and the Company will comply with any reasonable request
made by such counsel to make changes in any information contained in such
documents relating to Buyer;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement during the period which such registration statement
is required to be kept effective;
(iii) furnish to Buyer such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits other than those which are being
incorporated into such registration statement by reference), such number of
copies of the prospectus contained in such registration statements
(including each complete prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, including documents incorporated by reference, as Buyer may
reasonably request;
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(iv) register or qualify all Registrable Securities under such other
securities or blue sky laws of such jurisdictions as Buyer shall reasonably
request, to keep such registration or qualification in effect for so long
as such registration statement remains in effect, and take any other action
which may be reasonably necessary or advisable to enable Buyer to
consummate the disposition in such jurisdictions of the securities owned by
Buyer, except that the Company shall not for any such purpose be required
to qualify generally to do business as a foreign corporation or register as
a broker or dealer in any jurisdiction wherein it would not but for the
requirements of this paragraph be obligated to be so qualified or
registered, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(v) furnish to Buyer a signed counterpart, addressed to among others,
the underwriters, if any, of
(A) an opinion of counsel for the Company, dated the effective
date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), reasonably satisfactory in
form and substance to Buyer, and
(B) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective date of
such registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement), signed by the independent public accountants
who have certified the Company's financial statements included in such
registration statement; covering such matters with respect to such
registration statement and with respect to events subsequent to the
date of such financial statements,
all as are customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to the underwriters in underwritten public
offerings of securities;
(vi) immediately notify Buyer at any time when the Company becomes
aware that a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made, and at the request of Buyer promptly prepare and
furnish to Buyer a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus as so
amended or supplemented shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made;
9
<PAGE>
(vii) comply or continue to comply in all material respects with
the Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission, and not file any amendment or supplement to
such registration statement or prospectus to which Buyer shall have
reasonably objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of the Securities
Act, having been furnished with a copy thereof at least five Business Days
prior to the filing thereof;
(viii) make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least 12 months, but not more than 18 months, beginning with the first full
calendar month after the effective date of such registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act;
(ix) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the
effective date of such registration statement;
(x) list all Company Stock covered by such registration statement on
any securities exchange on which any of the Company Stock is then listed;
(b) In connection with the filing of any registration statement
covering Registrable Securities, Buyer shall furnish in writing to the
Company such information regarding Buyer (and any of its affiliates), the
Registrable Securities to be sold, the intended method of distribution of
such Registrable Securities, and such other information requested by the
Company as is necessary or advisable for inclusion in the registration
statement relating to such offering pursuant to the Securities Act and the
rules of the Commission thereunder. Such writing shall expressly state that
it is being furnished to the Company for use in the preparation of a
registration statement, preliminary prospectus, supplementary prospectus,
final prospectus or amendment or supplement thereto, as the case may be.
Buyer agrees by acquisition of the Registrable Securities that upon
receipt of any notice from the Company of the happening of any event of the
kind described in paragraph (a)(vi) of this Section 5, Buyer will forthwith
discontinue its disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until Buyer's
receipt of the copies of the supplemented or amended prospectus contemplated
by paragraph (a)(vi) of this Section 5.
Section 6. Certain Underwritten Offerings. If requested by the
underwriters for any underwritten offerings by Buyer, under a registration
requested pursuant to Section 2(a), the Company will enter into a customary
underwriting agreement with such underwriters for such offering, to contain
such representations and warranties by the Company and such other terms as
are customarily contained in agreements of this type, including indemnities
to the effect and to the extent provided in Section 9. Buyer shall be a party
to such underwriting agreement and may, at its option, require that any or
all of the conditions precedent to
10
<PAGE>
the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of Buyer. Buyer shall not be
required to make any representations or warranties to or agreement with the
Company or the underwriters other than representations, warranties or
agreements regarding Buyer and Buyer's intended method of distribution and
any other representation or warranty required by law. Other than Morgan
Stanley Dean Witter Discover, Donaldson, Lufkin & Jenrette and Lehman
Brothers, which firms are now designated by the Company as agreeable to it,
the Company may decline (but not more than three times) to retain an
underwriter of Buyer's choice. Buyer shall only propose underwriters of
mutually recognized standing.
Section 7. Preparation; Reasonable Investigation. In connection
with the preparation and filing of the registration statement under the
Securities Act, the Company will give Buyer, its underwriters, if any, and
their respective counsel, the opportunity to participate in the preparation
of such registration statement, each prospectus included therein or filed
with the Commission, and each amendment thereof or supplement thereto, and
will give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers, its
counsel and the independent public accountants who have certified its
financial statements as shall be necessary, in the opinion of Buyer's and
such underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
Section 8. Tag-Along Rights. Buyer shall be entitled to the rights
set forth in this Section 8.
(a) Rights and Notice. The Company shall not directly or
indirectly sell or otherwise dispose of shares of Company Stock to any person
(a "Third Party") in connection with a Tag-Along Transaction, unless the
terms and conditions of such sale or other disposition shall include an offer
to Buyer to include, at the option of Buyer, in such sale or other
disposition the Registrable Securities of the same class as those securities
to be so sold or disposed of by the Company owned as of the Exercise Notice
(as defined below) by Buyer at the time of such sale or other disposition
determined in accordance with Section 8(b) (the "Tag-Along Shares"). The
Company shall send a written notice (the "Tag-Along Notice") to Buyer setting
forth the number of shares of Company Stock proposed to be sold or otherwise
disposed of in the Tag-Along Transaction (the "Tag-Along Transaction
Shares"), and the price at which such shares are proposed to be sold (or the
method by which such price is proposed to be determined). At any time within
15 Business Days (but in the case of a retail "spot" offering, two Business
Days so long as the Company has advised Buyer that it is considering
effecting such an offering, and the material terms thereof, as promptly as is
practical for the Company to do so and in any event not less than 15 days
prior to the beginning of such two Business Day period) after its receipt of
the Tag-Along Notice, Buyer may exercise its option to sell the Tag-Along
Shares by furnishing written notice of such exercise (the "Exercise Notice")
to the Company. Notwithstanding anything to the contrary provided herein,
Buyer's rights pursuant to this Section 8 shall be effective not earlier than
one year following the date hereof.
11
<PAGE>
(b) Number of Shares to be Included. If the proposed sale or other
disposition by the Company in connection with a Tag-Along Transaction is
consummated, Buyer shall have the right to sell to the Third Party as part of
such proposed sale or other disposition such number of Registrable Securities
owned by Buyer equal to the Pro Rata Share of Buyer (as determined pursuant
to Section 6.4(b) of the Stock Purchase Agreement) of the number of shares in
the completed offering. All calculations pursuant to this paragraph shall
exclude and ignore any unissued shares of Company Stock issuable pursuant to
stock options, warrants and other rights to acquire shares of Company Stock
and pursuant to convertible or exchangeable securities; provided, further,
that the provisions of this Section 8 shall not apply to (i) any shares of
any class of the Company Stock or convertible securities, issuable upon the
redemption or conversion of the Purchased Shares; (ii) or any shares of
Company Stock issued to employees, consultants or directors as compensation
or incentives for services rendered to the Company, or the Operating
Partnership, whether under the Company's amended Stock Option and Incentive
Plan or any successor thereto; or (iii) any issuance or sale of not more than
$120 million of Company Common Stock as contemplated in clause (X) of the
parenthetical of Section 5(e)(v) of the Articles Supplementary.
(c) Abandonment of Sale. Each of the Company and the Third Party
shall have the right, in its sole discretion, at all times prior to
consummation of the proposed sale or other disposition giving rise to the
tag-along right granted by this Section 8 to abandon, rescind, annul,
withdraw or otherwise terminate such sale or other disposition, whereupon all
tag-along rights in respect of such sale or other disposition pursuant to
this Section 8 shall become null and void, and neither the Company nor the
Third Party shall have any liability or obligation to Buyer with respect
thereto by virtue of such abandonment, rescission, annulment, withdrawal or
termination.
(d) Terms of Sale. The purchase from Buyer pursuant to this
Section 8 shall be on the same terms and conditions, including the per share
price and the date of sale or other disposition, as are applicable to the
Company, and which shall be consistent with the relevant Tag-Along Notice.
(e) Timing of Sale. If, with respect to any Tag-Along Notice,
Buyer fails to deliver an Exercise Notice within the requisite time period,
the Company shall have 120 days after the expiration of the time in which the
Exercise Notice is required to be delivered in which to sell or otherwise
dispose of not more than the number of shares of Company Stock described in
the Tag-Along Notice on terms not more favorable to the Company than were set
forth in the Tag-Along Notice. If, at the end of 120 days following the
receipt of the Tag-Along Notice, the Company has not completed the sale or
other disposition of Company Stock in accordance with the terms described in
the Tag-Along Notice, the Company shall again be obligated to comply with the
provisions of this Section 8 with respect to, and provide Buyer with the
opportunity to participate in, any proposed sale or other disposition of
shares of Company Stock in connection with a Tag-Along Transaction.
Section 9. Indemnification. (a) Indemnification by the Company. In
the event of any registration of any Registrable Securities of the Company
under the Securities Act, the
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<PAGE>
Company will, and hereby does, indemnify and hold harmless Buyer, each other
person who participates as an underwriter in the offering or sale of such
securities and each other person who controls any such underwriter within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which Buyer or any such underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement under which such
Registrable Securities were registered and sold under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and the Company will reimburse Buyer
and each such underwriter and controlling person for any reasonable legal or
any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceedings; provided, however, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by Buyer or any other person who participates as an underwriter in
the offering or sale of such securities, in either case, specifically stating
that it is for use in the preparation thereof, and provided, further, that
the Company shall not be liable to Buyer or any person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
person, if any, who controls such underwriter within the meaning of the
Securities Act in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense
arises out of such person's failure to send or give a copy of the final
prospectus or supplement to the persons asserting an untrue statement or
alleged untrue statement or omission or alleged omission at or prior to the
written confirmation of the sale of Registrable Securities to such person if
such statement or omission was corrected in such final prospectus or
supplement. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of Buyer or any such underwriter or
controlling person and shall survive the transfer of such securities by Buyer.
(b) Indemnification by Buyer. The Company may require, as a
condition to including any Registrable Securities in any registration
statement pursuant to Section 2 or Section 3, that the Company shall have
received an undertaking satisfactory to it from Buyer to indemnify and hold
harmless (in the same manner and to the same extent as set forth in paragraph
(a) of this Section 8) the Company, each director of the Company, each
officer of the Company and each other person, if any, who controls the
Company within the meaning of the Securities Act, and each other person who
participates as an underwriter in the offering or sale of such securities and
each other person who controls any such underwriter within the meaning of the
Securities Act, with respect to any untrue statement or alleged untrue
statement of a material fact in or omission or alleged omission to state a
material fact from such
13
<PAGE>
registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereto,
if such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by Buyer specifically stating that it is for use in
the preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of the Company or any such director, officer, or controlling
person and shall survive the transfer of such securities by Buyer.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this Section 8,
such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of this
Section 8, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying
party shall be entitled to assume the defense thereof, for itself, if
applicable, together with any other indemnified party similarly notified to
the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to the indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof.
(d) Indemnification Payments. To the extent that the indemnifying
party does not assume any defense in an action brought against an indemnified
party as provided in Section 8(c), the indemnified party (or parties if there
is more than one) shall be entitled to the reasonable legal expenses of
common counsel for the indemnified party (or parties). In such event,
however, the indemnifying party will not be liable for any settlement
effected without the written consent of such indemnifying party. The
indemnification required by this Section 8 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as
and when bills are received or expense, loss, damage or liability is incurred.
(e) Contribution. If, for any reason, the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of the expense, loss, damage or liability, (i)
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the other
(determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission relates to
information supplied by the indemnifying party or the indemnified party and
the parties' relative intent, knowledge, access to information and
opportunity to
14
<PAGE>
correct or prevent such untrue statement or omission), or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law or
provides a lesser sum to the indemnified party than the amount hereinafter
calculated, in the proportion as is appropriate to reflect not only the
relative fault of the indemnifying party and the indemnified party, but also
the relative benefits received by the indemnifying party on the one hand and
the indemnified party on the other, as well as any other relevant equitable
considerations. No indemnified party guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any indemnifying party who was not guilty of such
fraudulent misrepresentation.
Section 10. Covenants Relating to Rule 144. The Company will file
in a timely manner, information, documents and reports in compliance with the
Exchange Act and will, at its expense, forthwith upon the request of Buyer,
deliver to Buyer a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number
(including area code), (b) the Company's Internal Revenue Service
identification number, (c) the Company's Commission file number, (d) the
number of shares of Company Common Stock and the number of shares of Company
Preferred Stock outstanding as shown by the most recent report or statement
published by the Company, and (e) whether the Company has filed the reports
required to be filed under the Exchange Act for a period of at least 90 days
prior to the date of such certificate and in addition has filed the most
recent annual report required to be filed thereunder. If at any time the
Company is not required to file reports in compliance with either Section 13
or Section 15(d) of the Exchange Act, the Company will, at its expense,
forthwith upon the written request of Buyer, make available adequate current
public information with respect to the Company within the meaning of
paragraph (c)(2) of Rule 144 of the General Rules and Regulations promulgated
under the Securities Act.
Section 11. Miscellaneous.
(a) Expenses. All Registration Expenses incurred in connection
with any Shelf Registration or other registration which may be requested
under Sections 2, 3 or 4 (including all Registration Expenses incurred in
connection with any registration of any securities other than those of the
Buyer as referred to in the first sentence of Section 4(a)) shall be borne by
the Company.
(b) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party. Copies of executed
counterparts transmitted by telecopy, telefax or other electronic
transmission service shall be considered original executed counterparts for
purposes of this Section 10, provided receipt of copies of such counterparts
is confirmed.
(c) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF.
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<PAGE>
(d) Entire Agreement. This Agreement (including agreements
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred to
herein. This Agreement is not intended to confer upon any person not a party
hereto (and their successors and assigns) any rights or remedies hereunder.
(e) Notices. All notices and other communications hereunder shall
be sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices to
the Company shall be addressed to:
Burnham Pacific Properties, Inc.
610 West Ash Street
Suite 1600
San Diego, CA 92101-3350
Attention: David Platt
Telecopy Number:
with a copy to:
Loeb & Loeb LLP
1000 Wilshire Blvd.
Suite 1800
Los Angeles, CA 90017-2475
Attention: Andrew Clare, Esq.
Telecopy Number: (213) 688-3460
Loeb & Loeb LLP
345 Park Avenue
18th Floor
New York, NY 10154-0037
Attention: Christopher Aidun, Esq.
Telecopy Number: (212) 407-4990
Goodwin, Proctor & Hoar LLP
Exchange Place
53 State Street
Boston, MA 02109-2881
Attention: William King, Esq.
Telecopy Number: (617) 523-1231
or at such other address and to the attention of such other person as the
Company may designate by written notice to Buyer. Notices to Buyer shall be
addressed to:
16
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Westbrook Burnham Holdings, L.L.C. and
Westbrook Burnham Co-Holdings, L.L.C.
11150 Santa Monica Blvd.
Suite 1450
Los Angeles, CA 90025
Attention: Keith Gelb
Telecopy Number: (310) 231-4350
with a copy to:
Westbrook Partners, L.L.C.
13155 Noel Road, Suite 2300
Dallas, TX 75240
Attention: Patrick Fox, Esq.
Telecopy Number: (972) 774-9066, (972) 934-8333
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: Allen Curtis Greer, Esq.
Telecopy Number: (212) 504-6666
(f) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors. Each party hereto shall be permitted to assign any of its rights
hereunder to any third party, provided that (i) Buyer shall remain the agent
for all third party assignees with respect to the registration and other
rights as set forth herein, (ii) such transfer is effected in accordance with
applicable federal and state securities laws, (iii) such assignee becomes a
party to this Agreement or agrees in writing to be subject to the terms
hereof, and (iv) the Company is given written notice by the Buyer of said
transfer stating the name and address of said assignee and identifying the
securities with respect to which such registration rights are being assigned.
(g) Headings. The Section and other headings contained in this
Agreement are inserted for convenience of reference only and will not affect
the meaning or interpretation of this Agreement. All references to Sections
or other headings contained herein mean Sections or other headings of this
Agreement unless otherwise stated.
(h) Amendments and Waivers. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought.
Either party hereto may, only by an instrument in writing, waive compliance
by the other party hereto with any term or provision hereof on the part of
such other party hereto to be performed or complied with. The waiver by any
party hereto of a breach of any term or provision hereof shall not be
construed as a waiver of any subsequent breach.
17
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(i) Interpretation: Absence of Presumption. For the purposes
hereof, (i) words in the singular shall be held to include the plural and
vice versa and words of one gender shall be held to include the other gender
as the context requires, (ii) the terms "hereof", "herein", and "herewith"
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, paragraph or other references are to the
Sections, paragraphs, or other references to this Agreement unless otherwise
specified, (iii) the word "including" and words of similar import when used
in this Agreement shall mean "including, without limitation," unless the
context otherwise requires or unless otherwise specified, (iv) the word "or"
shall not be exclusive, and (v) provisions shall apply, when appropriate, to
successive events and transactions.
This Agreement shall be construed without regard to any presumption
or rule requiring construction or interpretation against the party drafting
or causing any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
[SIGNATURE PAGE FOLLOWS]
18
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf
of each of the parties hereto as of the day first above written.
BURNHAM PACIFIC PROPERTIES, INC.
By: /s/ Daniel B. Platt
------------------------------
Name: Daniel B. Platt
Title: Chief Financial Officer
WESTBROOK BURNHAM CO-HOLDINGS,
L.L.C.
By: /s/ Keith Gelb
------------------------------
Authorized Signatory
WESTBROOK BURNHAM HOLDINGS, L.L.C.
By: /s/ Keith Gelb
------------------------------
Authorized Signatory
19
<PAGE>
Exhibit 4.2.2
REGISTRATION RIGHTS AGREEMENT
by and between
BURNHAM PACIFIC PROPERTIES, INC.
and
EACH OF THE EXISTING PARTNERS LISTED
ON EXHIBIT A-1 TO THIS AGREEMENT
dated as of
December 31, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
(a) "Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
(b) "Buyer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
(c) "Buyer Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
(d) "Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(e) "Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(f) "Company Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(g) "Company Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(h) "Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(i) "Contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(j) "Contribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(k) "Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(l) "Exercise Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(m) "Existing Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(n) "NASD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(o) "Operating Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(p) "Placed Offering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(q) "Preferred Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(r) "Registrable Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(s) "Registration Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(t) "Registration Suspension Period . . . . . . . . . . . . . . . . . . . . . . . .3
(u) "Required Interest" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(v) "Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(w) "Shelf Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(x) "Suspension Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(y) "Tag-Along Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(z) "Tag-Along Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(aa) "Tag-Along Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(bb) "Tag-Along Transaction Shares . . . . . . . . . . . . . . . . . . . . . . . . .4
(cc) "Third Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
(dd) "Underwritten/Placed Offering . . . . . . . . . . . . . . . . . . . . . . . . .4
(ee) "Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 2. Shelf Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
(a) Obligation to File and Maintain . . . . . . . . . . . . . . . . . . . . . . . .4
(b) Black-Out Periods of the Existing Partners. . . . . . . . . . . . . . . . . . .5
(c) Black-Out Periods of the Company. . . . . . . . . . . . . . . . . . . . . . . .6
(d) Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Section 3. Demand Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
(a) The Existing Partners' Rights to Demand Registration. . . . . . . . . . . . . .6
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(b) Special Demand Registration . . . . . . . . . . . . . . . . . . . . . . . . . .7
(c) Black-Out Periods of the Existing Partners. . . . . . . . . . . . . . . . . . .7
(d) Black-Out Periods of the Company. . . . . . . . . . . . . . . . . . . . . . . .8
(e) Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 4. Incidental Registrations. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
(a) Notification and Inclusion. . . . . . . . . . . . . . . . . . . . . . . . . . .9
(b) Cut-back Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
(c) Duration of Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6. Certain Underwritten Offerings. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 7. Preparation; Reasonable Investigation . . . . . . . . . . . . . . . . . . . . 14
Section 8. Tag-Along Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Rights and Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Number of Shares to be Included . . . . . . . . . . . . . . . . . . . . . . . 15
(c) Abandonment of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(d) Terms of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(e) Timing of Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Indemnification by the Company. . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Indemnification by the Existing Partners. . . . . . . . . . . . . . . . . . . 17
(c) Notices of Claims, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(d) Indemnification Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(e) Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 10. Covenants Relating to Rule 144. . . . . . . . . . . . . . . . . . . . . . . . 18
Section 11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(d) Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(e) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(f) Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(g) Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(h) Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(i) Interpretation; Absence of Presumption. . . . . . . . . . . . . . . . . . . . 21
(j) Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
(ii)
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of December 31,
1997, by and between Burnham Pacific Properties, Inc., a Maryland corporation
(the "Company"), and the parties listed on Schedule 1 hereto (the "Existing
Partners"). Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Contribution Agreement (as hereinafter defined).
WHEREAS, the Company, together with Burnham Pacific Operating Partnership,
L.P., a Delaware limited partnership (the "Operating Partnership"), and certain
entities that are owned, either directly or indirectly, by the Existing Partners
(the "Contributors") have entered into an Agreement to Contribute, dated as of
December 5, 1997 (the "Contribution Agreement"), pursuant to which the
Contributors will transfer to the Operating Partnership certain properties in
exchange for consideration which will consist, in part, of 0 units of limited
partner interest in the Operating Partnership (the "Units") and 2,000,000 units
of preferred limited partner interest in the Operating Partnership (the
"Preferred Units"); and
WHEREAS, pursuant to the Operating Partnership Agreement and the Operating
Partnership Amendment, the Units and the Preferred Units shall be redeemable or
exchangeable for shares of Series 1997-A Convertible Preferred Stock of the
Company, par value $.01 per share (the "Company Preferred Stock") (the Company
Preferred Stock and the Company's common stock, par value $0.01 per share (the
"Company Common Stock"), together with such stock of such series and class, and
all other series of preferred stock of the Company outstanding from time to time
are sometimes referred to herein as the "Company Stock"), or the cash
equivalent; and
WHEREAS, in order to induce the Existing Partners to enter into the
Contribution Agreement, the Company has agreed to provide the registration
rights set forth herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall have
the following meanings:
(a) "Agreement": shall have the meaning set forth in the first
paragraph hereof.
(b) "Buyer": Westbrook Burnham Holdings, L.L.C. and Westbrook
Burnham Co-Holdings, L.L.C.
(c) "Buyer Agreement": the Registration Rights Agreement by and
between the Company and Buyer of even date herewith.
<PAGE>
(d) "Company": shall have the meaning set forth in the first
paragraph hereof.
(e) "Company Common Stock": shall have the meaning set forth in the
recitals to this Agreement.
(f) "Company Preferred Stock": shall have the meaning set forth in
the recitals to this Agreement.
(g) "Company Stock": shall have the meaning set forth in the
recitals to this Agreement.
(h) "Commission": the Securities and Exchange Commission, and any
successor thereto.
(i) "Contributors": shall have the meaning set forth in the recitals
to this Agreement.
(j) "Contribution Agreement": shall have the meaning set forth in
the recitals to this Agreement.
(k) "Exchange Act": the Securities Exchange Act of 1934, as amended,
and any successor thereto, and the rules and regulations thereunder.
(l) "Exercise Notice": shall have the meaning set forth in Section
8(a).
(m) "Existing Partners": the Existing Partners listed on Exhibit A-1
to the Contribution Agreement.
(n) "NASD": the National Association of Securities Dealers, Inc.
(o) "Operating Partnership": shall have the meaning set forth in the
recitals to this Agreement.
(p) "Placed Offering": a sale of securities of the Company to a
placement agent or agents for reoffering or through a placement agent or
agents for sale in each case in a transaction not registered under the
Securities Act.
(q) "Preferred Units": shall have the meaning set forth in the
recitals to this Agreement.
(r) "Registrable Securities": (i) any and all shares of Company
Stock and (ii) any securities issued or issuable with respect to any
Company Stock by way of conversion, exchange, stock dividend or stock split
or in connection with a combination
2
<PAGE>
of shares, recapitalization, merger, consolidation or
other reorganization or otherwise including, without
limitation, any shares of Company Stock, issuable upon
the redemption or exchange or conversion of the Units and
the Preferred Units issued to the Existing Partners
pursuant to the Contribution Agreement in accordance with
the Operating Partnership Agreement and the Operating
Partnership Amendment. As to any particular Registrable
Securities, once issued, such securities shall cease to
be Registrable Securities when (A) a registration
statement with respect to the sale of such securities
shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance
with such registration statement, or (B) such securities
shall have been sold in accordance with Rule 144 (or any
successor provision) under the Securities Act.
(s) "Registration Expenses": (i) the fees and disbursements of
counsel and independent public accountants for the Company incurred in
connection with the Company's performance of or compliance with this
Agreement, including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and compliance, and any
premiums and other costs of policies of insurance obtained by the Company
against liabilities arising out of the sale of any securities and (ii) all
registration, filing and stock exchange or NASD fees, all fees and expenses
of complying with securities or blue sky laws, all printing expenses,
messenger and delivery expenses, any fees and disbursements of any common
counsel retained by the Existing Partners and transfer taxes, if any.
(t) "Registration Suspension Period": shall have the meaning set
forth in Section 2(b).
(u) "Required Interest": shall have the meaning set forth in Section
2(c).
(v) "Securities Act": the Securities Act of 1933, as amended, and
any successor thereto, and the rules and regulations thereunder.
(w) "Shelf Registration": shall have the meaning set forth in
Section 2(a).
(x) "Suspension Notice": shall have the meaning set forth in Section
2(b).
(y) "Tag-Along Notice": shall have the meaning set forth in
Section 8(a).
(z) "Tag-Along Shares": shall have the meaning set forth in
Section 8(a).
(aa) "Tag-Along Transaction": any non-public issuance of Company
Stock other than in a distribution registered under the Securities Act for
consideration all, or substantially all, of which consists of cash or cash
equivalents (as determined in accordance with generally accepted accounting
principles).
3
<PAGE>
(bb) "Tag-Along Transaction Shares": shall have the meaning set forth
in Section 8(a).
(cc) "Third Party": shall have the meaning set forth in Section 8(a).
(dd) "Underwritten/Placed Offering": a sale of securities of the
Company to an underwriter or underwriters for reoffering to the public or
on behalf of a person other than the Company through an agent for sale to
the public.
(ee) "Units": shall have the meaning set forth in the recitals to
this Agreement.
Section 2. Shelf Registration.
(a) Obligation to File and Maintain. At any time beginning two weeks
prior to and ending two weeks following the date the Preferred Units are first
redeemable for Company Preferred Stock, the Company will use its best efforts to
cause to be filed with the Commission a registration statement under the
Securities Act for the offering on a continuous or delayed basis in the future
of all of the Registrable Securities (the "Shelf Registration") and will use its
best efforts to cause such Shelf Registration to be declared effective by the
Commission as soon as practicable thereafter. The Shelf Registration shall
provide (x) that upon any redemption of the Units and the Preferred Units
pursuant to the Operating Partnership Agreement and the Operating Partnership
Amendment that is satisfied with shares of the Company Common Stock or Company
Preferred Stock, the Existing Partners shall receive shares of Company Common
Stock and Company Preferred Stock that shall be registered under the Securities
Act pursuant to the Shelf Registration and (y) for the offer and sale on a
continuous basis in the future of all of the Registrable Securities. The Shelf
Registration shall be on an appropriate form and the Shelf Registration and any
form of prospectus included therein or prospectus supplement relating thereto
shall reflect such plan of distribution or method of sale as the Existing
Partners may from time to time notify the Company, including the sale of some or
all of the Registrable Securities in a public offering or, if requested by the
Existing Partners, subject to receipt by the Company of such information
(including information relating to purchasers) as the Company reasonably may
require, (i) in a transaction constituting an offering outside the United States
which is exempt from the registration requirements of the Securities Act in
which the Company undertakes to effect registration of such shares as soon as
possible after the completion of such offering in order to permit such shares to
be freely tradeable in the United States, (ii) in a transaction constituting a
private placement under Section 4(2) of the Securities Act in connection with
which the Company undertakes to register such shares after the conclusion of
such placement to permit such shares to be freely tradeable by the purchasers
thereof, or (iii) in a transaction under Rule 144A of the Securities Act in
connection with which the Company undertakes to register such shares after the
conclusion of such transaction to permit such shares to be freely tradeable by
the purchasers thereof. The Company shall use its best efforts to keep the
Shelf Registration continuously effective for the period beginning on the date
on which the Shelf Registration is
4
<PAGE>
declared effective and ending on the first date that there are no Registrable
Securities (it being understood that the Existing Partners shall promptly notify
the Company of such sale). During the period during which the Shelf Registration
is effective, the Company shall supplement or make amendments to the Shelf
Registration, if required by the Securities Act or if reasonably requested by
the Existing Partners or an underwriter of Registrable Securities, including to
reflect any specific plan of distribution or method of sale, and shall use its
reasonable best efforts to have such supplements and amendments declared
effective, if required, as soon as practicable after filing. Notwithstanding
the foregoing, the Existing Partners shall be prohibited from utilizing this
Shelf Registration for purposes of reselling any Registrable Securities earlier
than one year following the date hereof.
(b) Black-Out Periods of the Existing Partners. Notwithstanding
anything herein to the contrary, (i) the Company shall have the right,
exercisable on not more than five occasions (including any black-out period
rights the Company may have under Section 3(d) below but not more than two in
any twelve-month period), from time to time to require the Existing Partners not
to sell under the Shelf Registration as provided for in Section 2(a) or to
suspend the effectiveness thereof during the period starting with the date 30
days prior to the Company's good faith estimate, as certified in writing by an
executive officer of the Company to Buyer, of the proposed date of filing of a
registration statement or a preliminary prospectus supplement relating to an
existing shelf registration statement, in either case, pertaining to an
underwritten public offering of equity securities of the Company for the account
of the Company, and ending on the date 75 days following the effective date of
such registration statement or the date of filing of such prospectus supplement,
and (ii) the Company shall be entitled to postpone or suspend (but not for a
period exceeding 90 days) the filing or effectiveness of a registration
statement otherwise required to be prepared and filed by it pursuant to this
Section 2(a) if the Company determines, in its good faith judgment, that such
registration and offering or continued effectiveness would interfere with any
material financing, acquisition, disposition, corporate reorganization or other
material transaction involving the Company or any of its subsidiaries or public
disclosure thereof would be required prior to the time such disclosure might
otherwise be required, or when the Company is in possession of material
information that it deems advisable not to disclose in a registration statement.
Once any registration statement filed pursuant to Section 2(a) or as set
forth below in Section 3 has been declared effective, any period during which
the Company fails to keep such registration statement effective and usable for
resale of Registrable Securities shall be referred to as a "Registration
Suspension Period," which term shall not include any failure solely attributable
to the exercise of the Company's rights under this Section 2(b). A Registration
Suspension Period shall commence on and include the date that the Company gives
written notice to the Existing Partners of its determination that such
registration statement is no longer effective or usable for resale of
Registrable Securities (the "Suspension Notice") to and including the date when
the Company notifies the Existing Partners that the use of the prospectus
included in such registration statement may be resumed for the disposition of
Registrable Securities.
5
<PAGE>
(c) Black-Out Periods of the Company. Subject to the conditions of
this Section 2(c), the Existing Partners shall have the right, exercisable on
not more than five occasions (including any black-out period rights the Existing
Partners may have in Section 3(d) below and not more than two in any twelve
month period), to require the Company not to sell any common equity securities
of the Company or any securities convertible into common equity securities of
the Company under any registration statement or prospectus supplement relating
to an existing shelf registration statement or to suspend the effectiveness
thereof, during the period starting with the date 20 days prior to the Existing
Partners' good faith estimate as certified in writing by an authorized
representative of the Existing Partners of the proposed date of filing of a
preliminary prospectus supplement relating to a Shelf Registration filed
pursuant to Section 2(a), pertaining to an underwritten public offering of
Registrable Securities, and ending on the date 75 days following the date of
filing of the final prospectus supplement, but in no event on a date later than
90 days following the date of filing of the preliminary prospectus supplement.
Such right may only be exercised by the Existing Partners holding more than
fifty percent (50%) of the Registrable Securities held by all of the Existing
Partners (the "Required Interest"). The Company's obligations under this
Section 2(c) are subject to the continuing satisfaction of the following
conditions: (i) no black-out period pursuant to Section 2(b)(i) shall be in
effect at the time of the requesting Existing Partners' exercise of their rights
under this Section 2(c); (ii) the Company shall not have suspended sales of
Registrable Securities pursuant to Section 2(b)(ii); and (iii) the Company shall
not have delivered to the Existing Partners a written notice to the effect that
the Board of Directors has determined in good faith that compliance with this
Section 2(c) would reasonably be expected to have a material adverse effect on
the Company. In no event may the Company include in any preliminary prospectus
supplement under which Existing Partners are offering Registrable Securities
covered by this Section 2(c) any equity securities of the Company or any
securities convertible into equity securities of the Company.
(d) Notice. The Company shall give Buyer prompt notice in the event
that the Company has suspended sales of Registrable Securities under Section
2(b).
Section 3. Demand Registration.
(a) The Existing Partners' Rights to Demand Registration. At any
time that a shelf registration statement is not filed and maintained as set
forth in Section 2(a) or there shall have occurred a Registration Suspension
Period in excess of 60 days, promptly upon the written request of the Existing
Partners holding the Required Interest, the Company will file a registration
statement or similar document under the Securities Act with respect to the
Registrable Securities held by the Existing Partners and the sale by the
Existing Partners of Registrable Securities (the "Demand Registration"). The
Company will use its best efforts to cause all Registrable Securities that such
Existing Partners have requested to be registered under the Securities Act to be
so registered within 120 days of such request and maintain the effectiveness of
such Demand Registration until the earlier of (i) the sale of all of the
Registrable Securities registered pursuant thereto (it being understood that the
Existing Partners shall promptly notify the Company of such sale) and (ii) 180
days following the
6
<PAGE>
effectiveness of such registration statement. The Demand Registration shall be
on an appropriate form and the Demand Registration and any form of prospectus
included therein or prospectus supplement relating thereto shall reflect such
plan of distribution or method of sale as the Existing Partners may from time to
time notify the Company, including the sale of some or all of the Registrable
Securities in a public offering or, if requested by the Existing Partners,
subject to receipt by the Company of such information (including information
relating to purchasers) as the Company reasonably may require, (i) in a
transaction constituting an offering outside the United States which is exempt
from the registration requirements of the Securities Act in which the Company
undertakes to effect registration of such securities as soon as possible after
the completion of such offering in order to permit such securities to be freely
tradeable in the United States, (ii) in a transaction constituting a private
placement under Section 4(2) of the Securities Act in connection with which the
Company undertakes to register such securities after the conclusion of such
placement to permit such securities to be freely tradeable by the purchasers
thereof, or (iii) in a transaction under Rule 144A of the Securities Act in
connection with which the Company undertakes to register such securities after
the conclusion of such transaction to permit such securities to be freely
tradeable by the purchasers thereof. The Existing Partners holding the Required
Interest may exercise their rights under this Section 3(a) twice during any
twelve-month period; provided, that the Existing Partners' second such demand
registration right shall be conditioned upon Buyer having not exercised its
second demand registration right pursuant to Section 3(a) of the Buyer Agreement
during such twelve month period. Notwithstanding anything to the contrary
provided herein, the Existing Partners' rights pursuant to this Section 3 shall
be effective not earlier than one year following the date hereof.
(b) Special Demand Registration. The Existing Partners may demand in
writing that the Company register and list, not earlier than one year following
the date hereof, the Company Preferred Stock on the principal exchange on which
the Company's securities are then listed if so permitted by applicable law and
the regulations of such exchange. If the Company shall receive a written
request from the Existing Partners holding the Required Interest that the
Company file a registration statement or similar document under the Securities
Act pursuant to this Section 3(b), then the Company shall promptly cause such
registration statement or similar document to be filed with the Commission and
shall use its best efforts to cause all Registrable Securities that the Existing
Partners holding the Required Interest have requested to be registered under the
Securities Act to be so registered within 120 days of such request and maintain
the effectiveness of such registration statement until the earlier of (i) the
sale of all of the Registrable Securities registered pursuant thereto (it being
understood that the Existing Partners shall promptly notify the Company of such
sale) and (ii) 180 days following the effectiveness of such registration
statement. Such registration statement shall provide for the registration under
the Securities Act of the Company Preferred Stock held by the Existing Partners
and shall provide for the sale by the Existing Partners of shares of the Company
Preferred Stock.
(c) Black-Out Periods of the Existing Partners. Notwithstanding
anything herein to contrary, (i) the Company shall have the right, exercisable
on not more than five
7
<PAGE>
occasions (but not more than two in any 12 month period), from time to time to
require the Existing Partners not to sell pursuant to a registration statement
or similar document under the Securities Act filed pursuant to Section 3(a) and
(b) or to suspend the effectiveness thereof during the period starting with the
date 20 days prior to the Company's good faith estimate, as certified in writing
by an executive officer of the Company to the Existing Partners, of the proposed
date of filing of a registration statement, or a preliminary prospectus
supplement relating to an existing registration statement in either case,
pertaining to an underwritten public offering of equity securities of the
Company for the account of the Company, and ending on the date 75 days following
the effective date of such registration statement or the date of filing of such
prospectus supplement, and (ii) the Company shall be entitled to postpone or
suspend (but not for a period exceeding 90 days) the filing or effectiveness of
a registration statement otherwise required to be prepared and filed by it
pursuant to Section 3(a) and (b) if the Company determines, in its good faith
judgment, that such registration and offering or continued effectiveness would
interfere with any material financing, acquisition, disposition, corporate
reorganization or other material transaction involving the Company or any of
its subsidiaries or public disclosure thereof would be required prior to the
time such disclosure might otherwise be required, or when the Company is in
possession of material information that it deems advisable not to disclose in a
registration statement.
(d) Black-Out Periods of the Company. Subject to the conditions of
this Section 3(d), the Existing Partners shall have the right, exercisable on
not more than five occasions (including any black-out period rights the Existing
Partners may have in Section 2(c) above, and but not more than two in any 12
month period), to require the Company not to sell any common equity securities
of the Company or any securities convertible into common equity securities of
the Company under any registration statement or prospectus supplement relating
to an existing registration statement or to suspend the effectiveness thereof,
during the period starting with the date 20 days prior to the Existing Partners'
good faith estimate, as certified in writing by the Existing Partners to the
Company, of the proposed date of filing of a preliminary prospectus supplement
relating to a registration statement or similar document under the Securities
Act filed pursuant to Section 3(a) and (b), pertaining to an underwritten public
offering of Registrable Securities, and ending on the date 75 days following the
date of filing of the final prospectus supplement, but in no event on a date
later than 90 days following the date of filing of the preliminary prospectus
supplement. Such right may only be exercised by the Existing Partners holding
the Required Interest. The Company's obligations under this Section 3(d) are
subject to the continuing satisfaction of the following conditions: (i) no
black-out period pursuant to Section 3(c)(i) shall be in effect at the time of
the Existing Partners' exercise of their rights under this Section 3(d); (ii)
the Company shall not have suspended sales of Registrable Securities pursuant to
Section 3(c)(ii); and (iii) the Company shall not have delivered to the Existing
Partners a written notice to the effect that the Board of Directors has
determined in good faith that compliance with this Section 3(d) would reasonably
be expected to have a material adverse effect on the Company. In no event may
the Company include in any preliminary prospectus supplement under which the
Existing Partners are offering Registrable Securities covered by this Section
3(d) any equity securities of the Company or any securities convertible into
equity securities of the Company.
8
<PAGE>
(e) Notice. The Company shall give the Existing Partners prompt
notice in the event that the Company has suspended sales of Registrable
Securities under Section 3(c).
Section 4. Incidental Registrations.
(a) Notification and Inclusion. If the Company proposes to register
(x) for its own account or (y) pursuant to a right to registration on request
pursuant to the Buyer Agreement, any common equity securities of the Company or
any securities convertible into common equity securities of the Company under
the Securities Act (other than a registration relating solely to the sale of
securities to participants in a dividend reinvestment plan, a registration on
Form S-4 (or successor form) relating to a business combination or similar
transaction permitted to be registered on such Form S-4, a registration on Form
S-8 (or successor form) relating to the sale of securities to participants in a
stock or employee benefit plan, or a registration permitted under Rule 462 under
the Securities Act registering additional securities of the same class as were
included in a earlier registration statement for the same offering and declared
effective), then the Company shall, at each such time, promptly give written
notice of such registration to the Existing Partners. Upon the written request
of the Existing Partners holding the Required Interest within 10 days (but in
the case of a retail "spot" offering, two Business Days so long as the Company
has advised the Existing Partners that it is considering effecting such an
offering, and the material terms thereof, as promptly as is practical for the
Company to do so and in any event not less than 10 days prior to the beginning
of such two Business Day period) after receipt of such notice by the Existing
Partners, the Company shall seek to include in such proposed registration such
Registrable Securities of the same class as is then being registered by the
Company as the Existing Partners holding the Required Interest shall request be
so included and shall use its best efforts to cause a registration statement
covering all of the Registrable Securities that the Existing Partners have so
requested to be registered to become effective under the Securities Act. The
Company shall be under no obligation to the Existing Partners to complete any
offering of securities it proposes to make under this Section 4 and shall incur
no liability (including under this Section 4 or under Section 5) to the Existing
Partners for its failure to do so. If, at any time after giving written notice
of its intention to register any securities as set forth in this Section 4(a)
and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to the Existing Partners
and, thereupon, (i) in the case of a determination not to register, the Company
shall be relieved of its obligation to the Existing Partners to register any
Registrable Securities in connection with such registration (but not from its
obligation to pay the Registration Expenses incurred in connection therewith)
pursuant to Section 4(a) hereof and (ii) in the case of a determination to delay
registering, the Company shall be permitted to delay registering any Registrable
Securities for the same period as the delay in registering such other
securities. Notwithstanding anything to contrary herein, the existing Partners
rights hereunder shall be effective not earlier than one year following the date
hereof.
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(b) Cut-back Provisions. If a registration pursuant to this Section
4 involves an Underwritten/Placed Offering of the securities so being
registered, whether or not solely for sale for the account of the Company, which
securities are to be distributed by or through one or more underwriters of
recognized standing under underwriting terms customary for such transaction, and
the underwriter or the managing underwriter, as the case may be, of such
Underwritten/Placed Offering shall inform the Company of its belief that the
amount of securities requested to be included in such registration or offering
exceeds the amount which can be sold in (or during the time of) such offering
without delaying or jeopardizing the success of the offering (including the
price per share of the securities to be sold), then the Company will include in
such registration (i) first, all the securities of the Company which the Company
proposes to sell for its own account and (ii) second, to the extent of the
amount which the Company is so advised can be sold in (or during the time of)
such offering, Registrable Securities and other securities requested to be
included in such registration pro rata among the Existing Partners and others
exercising incidental registration rights on the basis of the number of
securities requested to be included by all such persons.
(c) Duration of Effectiveness. At the request of the Existing
Partners holding the Required Interest, the Company shall, subject to Section
2(b), use its best efforts to keep any registration statement for which
Registrable Securities are included under this Section 4 effective and usable
for up to 90 days (subject to extension for the length of any Registration
Suspension Period), unless the distribution of securities registered thereunder
has been earlier completed; provided, however, that in no event will the Company
be required to prepare or file audited financial statements with respect to any
fiscal year by a date prior to the date on which the Company would be so
required to prepare and file such audited financial statements if such
registration statement were no longer effective and usable.
Section 5. Registration Procedures. (a) In connection with the filing
of any registration statement as provided in Sections 2, 3 or, subject to the
terms and conditions of Section 4, the Company shall use its best efforts to, as
expeditiously as reasonably practicable:
(i) prepare and file with the Commission the requisite registration
statement (including a prospectus therein) to effect such registration and
use its best efforts to cause such registration statement to become
effective, provided that before filing such registration statement or any
amendments or supplements thereto, the Company will furnish to the counsel
selected by the Existing Partners holding the Required Interest copies of
all such documents proposed to be filed, which documents will be subject to
the review of such counsel before any such filing is made, and the Company
will comply with any reasonable request made by such counsel to make
changes in any information contained in such documents relating to the
Existing Partners;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness of
such registration and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered
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by such registration statement during the period in which such registration
statement is required to be kept effective;
(iii) furnish to each Existing Partner and the underwriter, if
any, of the securities being registered, without charge, such number of
conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits) other than
those which are being incorporated into such registration statement by
reference, such number of copies of the prospectus contained in such
registration statements (including each complete prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, including documents incorporated by reference, as
the Existing Partners may reasonably request;
(iv) register or qualify all Registrable Securities under such other
securities or blue sky laws of such jurisdictions as the Existing Partners
and the underwriters, of the securities being registered, if any, shall
reasonably request, to keep such registration or qualification in effect
for so long as such registration statement remains in effect, and take any
other action which may be reasonably necessary or advisable to enable the
Existing Partners to consummate the disposition in such jurisdictions of
the securities owned by the Existing Partners, except that the Company
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation or register as a broker or dealer in any
jurisdiction wherein it would not but for the requirements of this
paragraph be obligated to be so qualified or registered, or to consent to
general service of process in any such jurisdiction, or to subject the
Company to any material tax in any such jurisdiction where it is not then
so subject;
(v) furnish to the Existing Partners a signed counterpart, addressed
to the Underwriter if any, addressed to each Existing Partner (and the
underwriters, if any), of
(A) an opinion of counsel for the Company, dated the effective
date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), reasonably satisfactory in
form and substance to the Existing Partners, and
(B) to the extent permitted by then applicable rules of
professional conduct, a "comfort" letter, dated the effective
date of such registration statement (or, if such registration
includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), signed by the
independent public accountants who have certified the Company's
financial statements included in such registration statement,
covering such matters with respect to such registration
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statement and with respect to events subsequent to the date of such
financial statements,
all as are customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in connection with underwritten
public offerings of securities;
(vi) immediately notify the Existing Partners at any time when the
Company becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made, and, at the request of the Existing Partners,
promptly prepare and furnish to the Existing Partners a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;
(vii) comply or continue to comply in all material respects with
the Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission thereunder so as to enable any Existing
Partner to sell its Company Stock pursuant to Rule 144 promulgated under
the Securities Act, and not file any amendment or supplement to such
registration statement or prospectus to which the Existing Partners shall
have reasonably objected on the grounds that such amendment or supplement
does not comply in all material respects with the requirements of the
Securities Act, having been furnished with a copy thereof at least five
Business Days prior to the filing thereof;
(viii) make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least 12 months, but not more than 18 months, beginning with the first full
calendar month after the effective date of such registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act;
(ix) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the
effective date of such registration statement;
(x) cooperate with the Existing Partners to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any Securities Act legend; and enable
certificates for such Registrable Securities to be issued for such numbers
of shares of Company Stock and registered in
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such names as the selling Existing Partners may reasonably request in
writing at least two Business Days prior to any sale of Registrable
Securities;
(xi) list all Company Stock covered by such registration statement on
any securities exchange on which any of the Company Stock is then listed
and cause to be satisfied all requirements and conditions of such
securities exchange to the listing of such securities that are reasonably
within the control of the Company including, without limitation,
registering the applicable class of Company Stock under the Exchange Act,
if appropriate, and using its best efforts to cause such registration to
become effective pursuant to the rules of the Commission;
(xii) in connection with any sale, transfer or other disposition
by any Existing Holder of any Company Stock pursuant to Rule 144
promulgated under the Securities Act, cooperate with such holder to
facilitate the timely preparation and delivery of certificates representing
Company Stock to be sold and not bearing any Securities Act legend, and
enable certificates for such Company Stock to be for such number of shares
and registered in such name as the selling Existing Partners may reasonably
request in writing at least two business days prior to any sale of
Registrable Securities;
(xiii) notify each Existing Partner, promptly after it shall
receive notice thereof, of the time when such registration statement, or
any post-effective amendments to the registration statement, shall have
become effective, or a supplement to any prospectus forming part of such
registration statement has been filed;
(xiv) notify each Existing Partner of any request by the
Commission for the amendment or supplement of such registration statement
or prospectus for additional information; and
(xv) advise each Existing Partner, promptly after it shall receive
notice or obtain knowledge thereof, of (A) the issuance of any stop order
by the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for such
purpose (and use all reasonable efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such stop order should be issued), and
(B) the suspension of the registration of the subject shares of the Company
Stock in any state jurisdiction.
(b) In connection with the filing of any registration statement covering
Registrable Securities, the selling Existing Partners shall furnish in writing
to the Company such information regarding such Existing Partner (and any of its
affiliates), the Registrable Securities to be sold, the intended method of
distribution of such Registrable Securities, and such other information
requested by the Company as is necessary or advisable for inclusion in the
registration statement relating to such offering pursuant to the Securities Act
and the rules of the Commission thereunder. Such writing shall expressly state
that it is being furnished to the Company for use in the preparation of a
registration statement, preliminary prospectus,
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supplementary prospectus, final prospectus or amendment or supplement thereto,
as the case may be.
Each Existing Partner agrees by acquisition of the Registrable Securities
that upon receipt of any notice from the Company of the happening of any event
of the kind described in paragraph (a)(vi) of this Section 5, such Existing
Partner will forthwith discontinue its disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until such Existing Partner's receipt of the copies of the supplemented or
amended prospectus contemplated by paragraph (a)(vi) of this Section 5.
Section 6. Certain Underwritten Offerings. If requested by the
underwriters for any underwritten offerings by the Existing Partners, under a
registration requested pursuant to Section 2(a), the Company will enter into a
customary underwriting agreement with such underwriters for such offering, to
contain such representations and warranties by the Company and such other terms
as are customarily contained in agreements of this type, including indemnities
to the effect and to the extent provided in Section 9. Each selling Existing
Partner shall be a party to such underwriting agreement and may, at its option,
require that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such Existing Partner. An Existing Partner shall not be required
to make any representations or warranties to or agreement with the Company or
the underwriters other than representations, warranties or agreements regarding
such Existing Partner and such Existing Partner's intended method of
distribution and any other representation or warranty required by law. Other
than Morgan Stanley Dean Witter Discover, Donaldson, Lufkin & Jenrette and
Lehman Brothers, which firms are now designated by the Company as agreeable to
it, the Company may decline (but not more than three times) to retain an
underwriter of the Existing Partners' choice. The Existing Partners shall only
propose underwriters of nationally recognized standing.
Section 7. Preparation; Reasonable Investigation. In connection with
the preparation and filing of the registration statement under the Securities
Act, the Company will give the Existing Partners, their underwriters, if any,
and their respective counsel, the opportunity to participate in the preparation
of such registration statement, each prospectus included therein or filed with
the Commission, and each amendment thereof or supplement thereto, and will give
each of them such access to its books and records and such opportunities to
discuss the business of the Company with its officers, its counsel and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of the Existing Partners and such
underwriters' respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
Section 8. Tag-Along Rights. Each Existing Partner shall be entitled
to the rights set forth in this Section 8.
(a) Rights and Notice. The Company shall not directly or indirectly
sell or otherwise dispose of shares of Company Stock to any person (a "Third
Party") in connection
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with a Tag-Along Transaction, unless the terms and conditions of such sale or
other disposition shall include an offer to each Existing Partner to include, at
the option of such Existing Partner, in such sale or other disposition that
number of Registrable Securities of the same class of those securities to be so
sold or disposed of by the Company owned by such Existing Partner as of the
Exercise Notice (as defined below) at the time of such sale or other disposition
determined in accordance with Section 8(b) (the "Tag-Along Shares"). The
Company shall send a written notice (the "Tag-Along Notice") to each Existing
Partner setting forth the number of shares proposed to be sold or otherwise
disposed of in the Tag-Along Transaction (the "Tag-Along Transaction Shares"),
and the price at which such shares are proposed to be sold (or the method by
which such price is proposed to be determined). At any time within 15 days
after its receipt of the Tag-Along Notice, the Existing Partners may exercise
their option to sell the Tag-Along Shares by furnishing written notice of such
exercise (the "Exercise Notice") to the Company. Notwithstanding anything to
the contrary provided herein, the Existing Partners' rights pursuant to this
Section 8 shall be effective not earlier than one year following the date
hereof.
(b) Number of Shares to be Included. If the proposed sale or other
disposition by the Company in connection with a Tag-Along Transaction is
consummated, each Existing Partner shall have the right to sell to the Third
Party as part of such proposed sale or other disposition such number of
Registrable Securities owned by such Existing Partner equal to the product of
(i) the ratio of the total number of Registrable Securities owned by such
Existing Partner (assuming, with respect to all such Registrable Securities, the
redemption or exchange for, or the conversion into, shares of Company Common
Stock) at the time that such Existing Partners receives the Tag-Along Notice to
the total number of outstanding shares of Company Common Stock at the time that
such Existing Partner receives the Tag-Along Notice, and (ii) the number of
Tag-Along Transaction Shares; provided, however, that if the number of Tag-Along
Shares is greater than the number of Registrable Securities owned by such
Existing Partner at the time that such Existing Partner receives the Tag-Along
Notice, then such Existing Partner shall have the right to sell to the Third
Party as part of the proposed sale or other disposition to the Third Party by
the Company in connection with a Tag-Along Transaction the total number of
Registrable Securities owned by such Existing Partner at the time that such
Existing Partner receives the Tag-Along Notice. All calculations pursuant to
this paragraph shall exclude and ignore any unissued shares issuable pursuant to
stock options, warrants and other rights to acquire shares and pursuant to
convertible or exchangeable securities; provided, however, that the provisions
of this Section 8 shall not apply to (i) any shares of any class of Company
Stock or convertible securities issuable upon redemption or conversion of the
Company Preferred Stock, (ii) or any shares of Company Stock issued to
employees, consultants or directors as compensation or incentives for services
rendered to the Company, whether under the Company Stock Option and Incentive
Plan or any successor thereto, or (ii) any issuance or sale of not more than
$120,000,000 of Company Common Stock as contemplated in clause (x) of the
parenthentrial of Section 5(e)(v) of the Articles Supplementary of the Company.
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(c) Abandonment of Sale. Each of the Company and the Third Party
shall have the right, in its sole discretion, at all times prior to consummation
of the proposed sale or other disposition giving rise to the tag-along right
granted by this Section 8 to abandon, rescind, annul, withdraw or otherwise
terminate such sale or other disposition, whereupon all tag-along rights in
respect of such sale or other disposition pursuant to this Section 8 shall
become null and void, and neither the Company nor the Third Party shall have any
liability or obligation to the Existing Partners with respect thereto by virtue
of such abandonment, rescission, annulment, withdrawal or termination.
(d) Terms of Sale. The purchase from the Existing Partners pursuant
to this Section 8 shall be on the same terms and conditions, including the per
share price and the date of sale or other disposition, as are applicable to the
Company, and which shall be consistent with the relevant Tag-Along Notice;
provided, however, that the Existing Partners shall not be required to make any
representations or warranties with respect to the Company.
(e) Timing of Sale. If, with respect to any Tag-Along Notice, an
Existing Partner fails to deliver an Exercise Notice within the requisite time
period, the Company shall have 120 days after the expiration of the time in
which the Exercise Notice is required to be delivered in which to sell or
otherwise dispose of not more than the number of shares of Company Stock
described in the Tag-Along Notice on terms not more favorable to the Company
than were set forth in the Tag-Along Notice. If, at the end of 120 days
following the receipt of the Tag-Along Notice, the Company has not completed the
sale or other disposition in accordance with the terms described in the
Tag-Along Notice, the Company shall again be obligated to comply with the
provisions of this Section 8 with respect to, and provide each Existing Partner
with the opportunity to participate in, any proposed sale or other disposition
of shares in connection with a Tag-Along Transaction.
Section 9. Indemnification.
(a) Indemnification by the Company. In the event of any registration
of any Registrable Securities of the Company under the Securities Act, the
Company will, and hereby does, indemnify and hold harmless each Existing
Partner, its officers and directors and each person who controls such Existing
Partner within the meaning of the Securities Act, each other person who
participates as an underwriter in the offering or sale of such securities and
each other person who controls any such underwriter within the meaning of the
Securities Act, against any losses, claims, damages, and expenses (including,
without limitation, reasonable attorneys fees) joint or several, to which the
Existing Partners or any such indemnitees may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
registration statement under which such Registrable Securities were registered
and sold under the Securities Act, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
or arising out of or based upon any omission or alleged omission to state
therein a material fact
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required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and the
Company will reimburse each Existing Partner for any reasonable legal or any
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceedings; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by the Existing Partners or
any other person who participates as an underwriter in the offering or sale of
such securities, in either case, specifically stating that it is for use in the
preparation thereof, and provided, further, that the Company shall not be liable
to the Existing Partners or any person who participates as an underwriter in the
offering or sale of Registrable Securities or any other person, if any, who
controls such underwriter within the meaning of the Securities Act in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such person's failure to
send or give a copy of the final prospectus or supplement to the persons
asserting an untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of Registrable
Securities to such person if such statement or omission was corrected in such
final prospectus or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Existing
Partners or any such underwriter or controlling person and shall survive the
transfer of such securities by the Existing Partners.
(b) Indemnification by the Existing Partners. The Company may
require, as a condition to including any Registrable Securities in any
registration statement pursuant to Section 2 or Section 3, that the Company
shall have received an undertaking satisfactory to it from each Existing Partner
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in paragraph (a) of this Section 9) the Company, each director of the
Company, each officer of the Company and each other person, if any, who controls
the Company within the meaning of the Securities Act, and each other person who
participates as an underwriter in the offering or sale of such securities and
each other person who controls any such underwriter within the meaning of the
Securities Act, with respect to any untrue statement or alleged untrue statement
of a material fact in or omission or alleged omission to state a material fact
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by an Existing Partner specifically stating that it is
for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any such director, officer, or
controlling person and shall survive the transfer of such securities by any
Existing Partner.
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(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 9, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 9, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to assume the defense thereof,
for itself, if applicable, together with any other indemnified party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to the indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof.
(d) Indemnification Payments. To the extent that the indemnifying
party does not assume the defense of an action brought against the indemnified
party as provided in Section 9(c), the indemnified party (or parties if there is
more than one) shall be entitled to the reasonable legal expenses of common
counsel for the indemnified party (or parties). In such event, however, the
indemnifying party will not be liable for any settlement expected without the
written consent of such indemnifying party. The indemnification required by
this Section 9 shall be made by periodic payments of the amount thereof during
the course of an investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
(e) Contribution. If, for any reason, the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of the expense, loss, damage or liability, (i) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the other
(determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission relates to information supplied
by the indemnifying party or the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission), or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in the proportion as
is appropriate to reflect not only the relative fault of the indemnifying party
and the indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other, as
well as any other relevant equitable considerations. No indemnified party
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any indemnifying
party who was not guilty of such fraudulent misrepresentation.
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Section 10. Covenants Relating to Rule 144. The Company will file in a
timely manner, information, documents and reports in compliance with the
Exchange Act and will, at its expense, forthwith upon the request of the
Existing Partners, deliver to the Existing Partners a certificate, signed by the
Company's principal financial officer, stating (a) the Company's name, address
and telephone number (including area code), (b) the Company's Internal Revenue
Service identification number, (c) the Company's Commission file number, (d) the
number of shares of Company Common Stock and the number of shares of Company
Preferred Stock outstanding as shown by the most recent report or statement
published by the Company, and (e) whether the Company has filed the reports
required to be filed under the Exchange Act for a period of at least 90 days
prior to the date of such certificate and in addition has filed the most recent
annual report required to be filed thereunder. If at any time the Company is
not required to file reports in compliance with either Section 13 or Section
15(d) of the Exchange Act, the Company will, at its expense, forthwith upon the
written request of the Existing Partners, make available adequate current public
information with respect to the Company within the meaning of paragraph (c)(2)
of Rule 144 of the General Rules and Regulations promulgated under the
Securities Act.
Section 11. Miscellaneous.
(a) Expenses. All Registration Expenses incurred in connection with
any Shelf Registration or other registration which may be requested under
Sections 2, 3 or 4 (including all Registrable Expenses incurred in connection
with any registration of any securities other than those of the Existing
Partners as referred to in the first sentence of Section 4(a)) shall be borne by
the Company.
(b) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission service shall
be considered original executed counterparts for purposes of this Section 10,
provided receipt of copies of such counterparts is confirmed.
(c) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
CHOICE OF LAW PRINCIPLES THEREOF
(d) Entire Agreement. This Agreement (including agreements
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred to
herein. This Agreement is not intended to confer upon any person not a party
hereto (and their successors and assigns) any rights or remedies hereunder.
(e) Notices. All notices and other communications hereunder shall be
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by
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documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to the Company shall be addressed
to:
Burnham Pacific Properties, Inc.
610 West Ash Street
Suite 1600
San Diego, CA 92101-3350
Attention: Daniel B. Platt
Telecopy Number: (619) 652-4711
with a copy to:
Loeb & Loeb LLP
345 Park Avenue
18th Floor
New York, New York 10154-0037
Attention: Christopher Aidun, Esq.
Telecopy Number: (212) 407-4990
Goodwin, Procter & Hoar LLP
Exchange Place
53 State Street
Boston, MA 02109-2881
Attention: William B. King, Esq.
Telecopy Number: (617) 523-1231
or at such other address and to the attention of such other person as the
Company may designate by written notice to the Existing Partners. Notices to
the Existing Partners shall be addressed to:
Highridge Partners, Inc.
300 Continental Boulevard
Suite 360
El Segundo, CA 90245
Attn: Mr. John S. Long
Telecopy Number: (310) 648-7619
and
Blackacre Capital Group, L.P.
450 Park Avenue
28th Floor
New York, New York 10022
20
<PAGE>
Attn: Mr. Ronald J. Kravit
Telecopy Number: (212) 758-5305
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Steven L. Lichtenfeld, Esq.
Telecopy Number: (212) 856-7823
(f) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors.
Each party hereto shall be permitted to assign any of its rights hereunder to
any third party, provided that (i) an Existing Partner shall remain the agent
for all third party assignees with respect to the registration and other rights
as set forth herein, (ii) such transfer is effected in accordance with
applicable federal and state securities laws, (iii) such assignee becomes a
party to this Agreement or agrees in writing to be subject to the terms hereof,
and (iv) the Company is given written notice by the relevant Existing Partner
of said transfer stating the name and address of said assignee and identifying
the securities with respect to which such registration rights are being
assigned.
(g) Headings. The Section and other headings contained in this
Agreement are inserted for convenience of reference only and will not affect the
meaning or interpretation of this Agreement. All references to Sections or
other headings contained herein mean Sections or other headings of this
Agreement unless otherwise stated.
(h) Amendments and Waivers. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought.
Either party hereto may, only by an instrument in writing, waive compliance by
the other party hereto with any term or provision hereof on the part of such
other party hereto to be performed or complied with. The waiver by any party
hereto of a breach of any term or provision hereof shall not be construed as a
waiver of any subsequent breach.
(i) Interpretation; Absence of Presumption. For the purposes hereof,
(i) words in the singular shall be held to include the plural and vice versa and
words of one gender shall be held to include the other gender as the context
requires, (ii) the terms "hereof", "herein", and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and Section,
paragraph or other references are to the Sections, paragraphs, or other
references to this Agreement unless otherwise specified, (iii) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless the context otherwise requires or unless
otherwise specified, (iv) the word
21
<PAGE>
"or" shall not be exclusive, and (v) provisions shall apply, when appropriate,
to successive events and transactions.
This Agreement shall be construed without regard to any presumption or rule
requiring construction or interpretation against the party drafting or causing
any instrument to be drafted.
(j) Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each
of the parties hereto as of the day first above written.
[SIGNATURE PAGE FOLLOWS]
22
<PAGE>
THE COMPANY:
BURNHAM PACIFIC PROPERTIES, INC.
By: /s/ David B. Platt
------------------------------
Name: David B. Platt
Title: Chief Financial Officer
THE EXISTING PARTNERS:
BLACKACRE SMC HOLDINGS, L.P.
By: Blackacre Capital Group, L.P.,
its general partner
By: Blackacre Capital Management Corp.,
its general partner
By: /s/ Jeffrey B. Citrin
----------------------
Name: Jeffrey B. Citrin
Title: Co-President
BLACKACRE SMC II HOLDINGS LLC
By: Blackacre Capital Group, L.P.,
its managing member
By: Blackacre Capital Management Corp.,
its managing member
By: /s/ Jeffrey B. Citrin
-------------------------
Name: Jeffrey B. Citrin
Title: Co-President
23
<PAGE>
MJL ASSOCIATES, A CALIFORNIA LIMITED
PARTNERSHIP
By: MJL Investments, Inc., a California
corporation, as general partner
By: /s/ Steven A. Berlinger
------------------------------
Name: Steven A. Berlinger
Title: Vice President
/s/ Eugene S. Rosenfeld
---------------------------
Eugene S. Rosenfeld
/s/ Jack L. Mahoney
---------------------------
Jack L. Mahoney
/s/ Mark Cassidy
---------------------------
Mark Cassidy
/s/ Steven A. Berlinger
---------------------------
Steven A. Berlinger
SAB ASSOCIATES, A CALIFORNIA LIMITED
PARTNERSHIP
By: SAB Investments, Inc., a California
corporation, as general partner
By: /s/ Steven A. Berlinger
Name: Steven A. Berlinger
Title: President
24
<PAGE>
BLACKACRE SMC MASTER
HOLDINGS, LLC
By: Blackacre SMC Holdings, L.P.,
its managing member
By: Blackacre Capital Group, L.P., its
general partner
By: Blackacre Capital Management Corp.,
its general partner
By: /s/ Jeffrey B. Citrin
-------------------------------
Name: Jeffrey B. Citrin
Title: Co-President
By: Blackacre SMC II Holdings, LLC, its
managing member
By: Blackacre Capital Group, L.P., its
managing member
By: Blackacre Capital Management Corp.,
its general partner
By: /s/ Jeffrey B. Citrin
-------------------------------
Name: Jeffrey B. Citrin
Title: Co-President
25
<PAGE>
SCHEDULE 1
Blackacre SMC Master Holdings, L.L.C.
MJL ASSOCIATES, A CALIFORNIA LIMITED PARTNERSHIP
Eugene S. Rosenfeld
Jack L. Mahoney
Mark Cassidy
Steven A. Berlinger
SAB ASSOCIATES, A CALIFORNIA LIMITED PARTNERSHIP
26
<PAGE>
FIRST AMENDMENT
TO AGREEMENT OF LIMITED PARTNERSHIP
OF
BURNHAM PACIFIC OPERATING PARTNERSHIP, L.P.
THIS FIRST AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP, dated as
of December 31, 1997, is entered into by and among BURNHAM PACIFIC
PROPERTIES, INC., a Maryland corporation, as the General Partner, BURNHAM
PACIFIC L.P., INC., as a continuing Limited Partner ("BPLP"), the entities
designated as "CONTRIBUTORS" on Exhibit A (the "Contributors"), as incoming
and withdrawing limited partners, HPBA, LLC ("HPBA") and HPBA II, LLC
("HPBAII"), both Delaware limited liability companies, as incoming and
withdrawing limited partners, HPBA INC. and HPBA II INC., both California
corporations, as incoming and withdrawing partners, GSF ASSOCIATES, L.L.C.
("GSF") and GSF II ASSOCIATES, L.L.C. ("GSF II"), both Delaware limited
liability companies, as incoming and withdrawing partners, and the persons
and entities listed as "EXISTING PARTNERS" on Exhibit B (the "Existing
Partners").
RECITALS
A. The General Partner and BPLP are the initial partners of
Burnham Pacific Operating Partnership, L.P. (the "Operating Partnership"), a
Delaware limited partnership operated pursuant to that certain Agreement of
Limited Partnership of the Operating Partnership dated as of November 14,
1997 (the "Operating Partnership Agreement"), and the General Partner has
authority to execute the First Amendment on behalf of any other parties
heretofore admitted as Partners of the Operating Partnership.
B. The parties to this First Amendment desire to amend the
provisions of the Operating Partnership Agreement, effective as of the date
first written above, (i) to provide for the contribution of the Properties by
the Contributors to the Operating Partnership, the transfer by the Operating
Partnership of the Contribution Consideration and rights to receive
Additional Equity Value and Additional Consideration to the Existing Partners
as the designees of the Contributors, and the admission of the Existing
Partners as Limited Partners of the Partnership; all pursuant to the
provisions of that certain "Agreement to Contribute", dated as of December 5,
1997, among the Operating Partnership, Burnham Pacific Properties, Inc. and
the Contributors (as amended from time to time, the "Contribution
Agreement"), and (ii) to provide for the establishment of two classes of
Partnership Interests and related Units (a preferred class thereof and a
common class thereof)("Preferred Units" and "Common Units", respectively),
each having the respective rights set forth in the Operating Partnership
Agreement and this First Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt
and
<PAGE>
sufficiency of which are hereby acknowledged, the parties to this First
Amendment hereby agree as follows:
Section 1. Defined Terms. Unless otherwise defined in this First
Amendment, the capitalized terms used in this First Amendment shall have the
meanings ascribed to such terms in the Contribution Agreement and the
Operating Partnership Agreement (as applicable).
Section 2. Amendment of Operating Partnership Agreement. The
Operating Partnership Agreement hereby is amended to provide for the
following:
(a) Contribution. Each Contributor hereby contributes its
interest in the Properties owned by it as required pursuant to the
Contribution Agreement, and the Operating Partnership hereby
accepts such contribution.
(b) Admissions and Withdrawals.
(i) Each Contributor hereby is admitted as a Limited Partner
of the Operating Partnership.
(ii) Immediately thereafter, each Contributor hereby
distributes all of its rights under the Contribution Agreement
(including, but not limited to, its rights to receive Units,
Preferred Units, the Cash Reimbursement Component, Additional
Equity Value and Additional Consideration and any portion
thereof already deemed to have been received by such
Contributor)(collectively, the "Contribution Rights") to its
members (HPBA Inc. and HPBA, or HPBA II Inc. and HPBA II, as
appropriate) and each Contributor thereupon withdraws as a
Limited Partner of the Partnership for all purposes.
Simultaneously with such withdrawal, each of such members
hereby is admitted as a Limited Partner of the Operating
Partnership.
(iii) Immediately thereafter, each of HPBA Inc. and HPBA II
Inc. hereby distributes all of its interest in the
Contribution Rights to HPBA and HPBAII, respectively, and each
of HPBA Inc. and HPBA II Inc. thereupon withdraws as a Limited
Partner of the Operating Partnership for all purposes.
Immediately thereafter, each of HPBA and HPBA II hereby
distributes all of its interest in the Contribution Rights to
its members (Blackacre SMC Holdings, L.P. or its Affiliated
designee who is then a member of HPBA ("BSMC") and GSF with
respect to HPBA, and Blackacre SMC II Holdings, LLC or its
Affiliated designee who is then a member of HPBA II ("BSMCII")
and GSFII with respect to HPBA II) and each of HPBA and HBPA
II thereupon withdraws as a Limited Partner of the Operating
Partnership for all purposes. Simultaneously with such
withdrawal, each of BSMC and BSMCII (or
<PAGE>
their Affiliated designee who is then a member of HPBA and
HPBA II), GSF, and GSF II hereby is admitted as a Limited
Partner of the Operating Partnership.
(iv) Immediately thereafter, each of GSF and GSFII hereby
distributes all of its interest in the Contribution Rights to
its respective members (each of which is listed as an Existing
Partner on Exhibit B) and thereupon withdraws as a Limited
Partner of the Operating Partnership for all purposes.
Simultaneously with such withdrawal, each of such Existing
Members hereby is admitted as a Limited Partner of the
Operating Partnership.
(v) Immediately after the foregoing transactions, no
Contributor or its direct or indirect owners through any
intermediaries who is not an Existing Partner shall be a
Partner of the Operating Partnership.
(c) Contribution Consideration. For convenience, each of the
Contributors has directed that the Operating Partnership transfer
directly to the Existing Partners all of the Contribution
Consideration, Additional Equity Value and Additional Consideration
that it is entitled to receive under the Contribution Agreement by
reason of its contribution of its Properties to the Operating
Partnership hereunder; in each case, such transfers to be made by
the Operating Partnership as, when and to the extent required under
the Contribution Agreement; provided, however, that despite such
direct transfers to the Existing Partners, all of the transactions
described above in this Section 2 shall be deemed to have occurred
in the order indicated for all purposes and be so treated by all
parties.
(d) Unit Classes. As authorized in Section 4.2.A. of the
Operating Partnership Agreement, the General Partner hereby causes
the Partnership to issue two classes of Limited Partnership
Interest, to be known and designated "Common Units" and "Series
1997-A Preferred Units" respectively (each of which may be divided
into subclasses known as "Class A" and "Class B" Common Units or
Preferred Units for the limited purposes of and as provided in
Sections 4.2.C and 5.1 of the Operating Partnership Agreement).
All Limited Partner Interests outstanding immediately prior to the
first admission of the Contributors as provided in Section 2 of
this First Amendment shall be Common Units; and there shall be
issued the further number of Common Units to the Contributors and
held by the Existing Members (after the distributions, admissions
and withdrawals described in said Section 2) as determined pursuant
to the Contribution Agreement and as evidenced by amendments to
Exhibit A to the Operating Partnership Agreement from time to time.
There shall also be issued as a part of the consideration provided
for under the Contribution Agreement to the Contributors and held
by the Existing Members (after the
<PAGE>
distributions, admissions and withdrawals described in said Section
2) 2,000,000 Series 1997-A Convertible Preferred Units. To the
extent that the General Partner issues not more than 2,800,000
shares of its Series 1997-A Convertible Preferred Stock pursuant to
a Stock Purchase Agreement dated as of December 5, 1997 among the
General Partner, the Operating Partnership and Westbrook Partners,
L.L.C. (the "Preferred Stock Purchase Agreement"), the Partnership
shall, consistent with the terms of the proviso to the first
sentence of Section 4.2.A of the Operating Partnership Agreement,
issue to the General Partner a like number (up to 2,800,000) of
Series 1997-A Preferred Units. The respective rights of the Series
1997-A Preferred Units and of the Common Units are set forth on
Exhibit C hereto.
(e) Reconstitution, Continued Effect. The Operating Partnership
hereby is reconstituted and the business of the Operating
Partnership hereby is continued pursuant to the Operating
Partnership Agreement, as the same has been amended by this First
Amendment. Except as amended by this First Amendment, the
Operating Partnership Agreement shall continue in full force and
effect. In the event of a conflict between the provisions of this
First Amendment and the provisions of the Operating Partnership
Agreement, the provisions of this First Amendment shall control.
(f) Interpretation. This First Amendment shall be deemed to be a
part of the Operating Partnership Agreement for all purposes,
including, without limitation, the general provisions of Article 15
(accordingly, counterpart execution of this First Amendment is
permitted)
Section 3. Confirmations. The General Partner hereby confirms
that all consents or approvals required to be obtained under the Operating
Partnership Agreement to the foregoing transactions have occurred, and that
the UPREIT Transaction has occurred to the extent that the Operating
Partnership and its Subsidiaries have legal or beneficial ownership of at
least 60% by value of the assets owned by the General Partner (other than its
interest in the Operating Partnership) and by its Subsidiaries (including the
Operating Partnership) immediately prior to the effectiveness of this First
Amendment.
Section 4. Reallocation Amount. The Contributors shall,
notwithstanding anything in this Agreement to the contrary, have the right at
any time prior to the transfer of the Contribution Consideration to the
Existing Partners, to specify a portion of the Cash Reimbursement Component
thereof (the "Reallocation Amount") that shall be paid to HPBA and HPBA II
(instead of paying all of the Cash Reimbursement Component to the Existing
Partners) so as to fund expenses of HPBA, HPBA II, HPBA Inc., HPBA II Inc.
and the Contributors. Notwithstanding the provisions of Section 2(b) of this
First Amendment, the Reallocation Amount (if any) shall be deemed to have
been paid to the Contributors, thereupon distributed by them to HPBA Inc.,
HPBA II Inc., HPBA and HPBA II (in proportion to their respective shares of
the entire Cash Reimbursement Component otherwise payable to them)
<PAGE>
and the portions thereof so deemed distributed to HPBA Inc. and HPBA II Inc.
thereupon being distributed from HPBA Inc. and HPBA II Inc. to HPBA and HPBA
II respectively (in lieu of further distributions thereof being deemed to
have occurred from HPBA and HPBA II to the members of HPBA and HPBA II).
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment on the day and year first above written.
[SIGNATURE PAGES TO FOLLOW]
<PAGE>
GENERAL PARTNER:
BURNHAM PACIFIC PROPERTIES, INC.
By: /s/ Daniel B. Platt
------------------------------
Name: Daniel B. Platt
Title: Chief Financial Officer
CONTINUING LIMITED PARTNER:
BURNHAM PACIFIC L.P., INC.
By: /s/ Daniel B. Platt
-------------------------------
Name: Daniel B. Platt
Title: Chief Financial Officer
[SIGNATURES CONTINUED]
<PAGE>
CONTRIBUTORS:
HPBA - Benicia Associates, L.L.C.,
HPBA - Madera Associates, L.L.C.,
HPBA - Castro Associates, L.L.C.,
HPBA - Redondo Beach Associates, L.L.C.,
HPBA - Suisun Associates, L.L.C.,
HPBA - Duarte Associates, L.L.C.,
HPBA - Sacramento Associates, L.L.C.,
HPBA - Westminster Associates, L.L.C.,
Delaware limited liability companies
By: HPBA, LLC, a Delaware limited liability
company, Managing Member
By: GSF Associates, L.L.C., a Delaware
limited liability company, manager
member
By: MJL Associates, a California
Limited Partnership, its
managing member
By: MJL Investments, Inc., a
California
corporation, its
general partner
By: /s/ Steven A. Berlinger
-----------------------------
Name: Steven A. Berlinger
Title: Vice President
HPBA II - AC Sacramento Associates, L.L.C.,
HPBA II - Bell Gardens Associates, L.L.C.,
HPBA II - Bellflower Associates, L.L.C.,
HPBA II - Fremont Associates, L.L.C.,
HPBA II - Menifee Associates, L.L.C.,
HPBA II - Placerville Associates, L.L.C.,
HPBA II - San Jose Associates, L.L.C.,
HPBA II - San Marcos Associates, L.L.C.,
HPBA II - Santa Rosa Associates, L.L.C.,
HPBA II - Shasta Associates, L.L.C.,
HPBA II - SHP Sacramento Associates, L.L.C.,
HPBA II - Vacaville Associates, L.L.C.,
Delaware limited liability companies
By: HPBA II, LLC, a Delaware limited liability
company, its managing member
<PAGE>
By: GSF II Associates, L.L.C., a Delaware
limited liability company, its
managing member
By: MJL Associates, a California
Limited Partnership, its
managing member
By: MJL Investments, Inc., a
California
corporation, its
general partner
By: /s/ Steven A. Berlinger
-----------------------------
Name: Steven A. Berlinger
Title: Vice President
<PAGE>
INTERVENING AND WITHDRAWING PARTNERS:
HPBA, INC.
By: /s/ Jack L. Mahoney
-----------------------------------
Name: Jack L. Mahoney
Title: President
HPBA II INC.
By: /s/ Jack L. Mahoney
-----------------------------------
Name: Jack L. Mahoney
Title: President
HPBA, LLC
By: GSF Associates, L.L.C, a Delaware
limited liability company, its
managing member
By: MJL Associates, a California
Limited Partnership, its managing member
By: MJL Investments, Inc., a
California corporation, its General Partner
By: /s/ Steven A. Berlinger
---------------------------
Name: Steven A. Berlinger
Title: Vice President
<PAGE>
HPBA II, LLC
By: GSF II Associates, L.L.C., a Delaware limited
liability company, its
managing member
By: MJL Associates, a California Limited
Partnership, its managing member
By: MJL Investments, Inc., a California
corporation, its General Partner
By: /s/ Steven A. Berlinger
--------------------------------
Name: Steven A. Berlinger
Title: Vice President
GSF ASSOCIATES, L.L.C.
By: MJL Associates, a California Limited
Partnership, its
managing member
By: MJL Investments, Inc., a California
corporation, its General Partner
By: /s/ Steven A. Berlinger
--------------------------------
Name: Steven A. Berlinger
Title: Vice President
GSF II ASSOCIATES, L.L.C., a
Delaware limited liability
company
By: MJL Associates, a California Limited
Partnership, its
managing member
By: MJL Investments, Inc., a California
corporation, its General Partner
By: /s/ Steven A. Berlinger
--------------------------------
Name: Steven A. Berlinger
Title: Vice President
[SIGNATURES CONTINUED]
<PAGE>
EXISTING PARTNERS:
MJL Associates, a California Limited
Partnership
By: MJL Investments, Inc., a California
corporation, as General Partner
By: /s/ Steven A. Berlinger
-------------------------------------
Name: Steven A. Berlinger
Title: Vice President
/s/ Eugene S. Rosenfeld
--------------------------------------------
Eugene S. Rosenfeld
<PAGE>
/s/ Steven A. Berlinger
-------------------------------------------------
Steven A. Berlinger
/s/ Jack L. Mahoney
-------------------------------------------------
Jack L. Mahoney
/s/ Mark H. Cassidy
-------------------------------------------------
Mark H. Cassidy
SAB ASSOCIATES, A CALIFORNIA LIMITED
PARTNERSHIP
By: SAB Investments, Inc., a California
corporation, as general partner
By: /s/ Steven A. Berlinger
--------------------------------------------
Name: Steven A. Berlinger
Title: President
<PAGE>
BLACKACRE SMC MASTER
HOLDINGS, LLC
By: Blackacre SMC Holdings, L.P., its
managing member
By: Blackacre Capital Group, L.P., its
general partner
By: Blackacre Capital Management Corp.,
its general partner
By: /s/ Jeffrey B. Citrin
------------------------------------
Name: Jeffrey B. Citrin
Title: Co-President
By: Blackacre SMC II Holdings, LLC, its
managing member
By: Blackacre Capital Group, L.P., its
managing member
By: Blackacre Capital Management
Corp., its general partner
By: /s/ Jeffrey B. Citrin
------------------------------------
Name: Jeffrey B. Citrin
Title: Co-President
<PAGE>
WESTBROOK BURNHAM HOLDINGS, L.L.C.
By: /s/ Keith Gelb
--------------------------------
Authorized Signatory
WESTBROOK BURNHAM CO-HOLDINGS,
L.L.C.
By: /s/ Keith Gelb
---------------------------------
Authorized Signatory
[END OF SIGNATURES; EXHIBITS FOLLOW]
<PAGE>
LOAN AGREEMENT
Dated as of December 31, 1997
by and between
BPP/GOLDEN STATE ACQUISITIONS, L.L.C.
(as Borrower)
and
NOMURA ASSET CAPITAL CORPORATION
(as Lender)
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II. GENERAL TERMS. . . . . . . . . . . . . . . . . . . . . .. . . . 27
Section 2.1. Amount of the Loan . . . . . . . . . . . . . . . . . . . . 27
Section 2.2. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . 27
Section 2.3. Security for the Loan. . . . . . . . . . . . . . . . . . . 27
Section 2.4. Borrower's Note. . . . . . . . . . . . . . . . . . . . . . 28
Section 2.5. Principal and Interest Payments. . . . . . . . . . . . . . 28
Section 2.6. Voluntary Defeasance . . . . . . . . . . . . . . . . . . . 29
Section 2.7. Prepayment . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.8. Application of Payments. . . . . . . . . . . . . . . . . . 32
Section 2.9. Payment of Debt Service, Method and Place of Payment . . . 32
Section 2.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.11. Defeasance Requirements . . . . . . . . . . . . . . . . . 32
Section 2.12. Central Cash Management . . . . . . . . . . . . . . . . . 34
Section 2.13. Security Agreement. . . . . . . . . . . . . . . . . . . . 42
Section 2.14. Securitization. . . . . . . . . . . . . . . . . . . . . . 44
Section 2.15. Supplemental Deed of Trust Affidavits . . . . . . . . . . 46
Section 2.16. Transfer of Trust Property. . . . . . . . . . . . . . . . 46
ARTICLE III. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . 46
Section 3.1. Conditions Precedent to the Making of the Loan . . . . . . 46
Section 3.2. Form of Loan Documents and Related Matters . . . . . . . . 51
i
<PAGE>
ARTICLE IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 51
Section 4.1. Representations and Warranties of Borrower . . . . . . . . 51
Section 4.2. Survival of Representations and Warranties . . . . . . . . 59
ARTICLE V. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . 59
Section 5.1. Borrower Covenants . . . . . . . . . . . . . . . . . . . . 59
ARTICLE VI. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 71
Section 6.1. Borrower Negative Covenants. . . . . . . . . . . . . . . . 70
ARTICLE VII. DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 7.1. Event of Default . . . . . . . . . . . . . . . . . . . . . 73
Section 7.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7.3. Remedies Cumulative. . . . . . . . . . . . . . . . . . . . 76
Section 7.4. Lender's Right to Perform. . . . . . . . . . . . . . . . . 77
ARTICLE VIII. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.1. Survival . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.2. Lender's Discretion. . . . . . . . . . . . . . . . . . . . 77
Section 8.3. Governing Law. . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.4. Modification, Waiver in Writing. . . . . . . . . . . . . . 78
Section 8.5. Delay Not a Waiver . . . . . . . . . . . . . . . . . . . . 78
Section 8.6. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.7. Trial By Jury. . . . . . . . . . . . . . . . . . . . . . . 79
Section 8.8. Headings . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 8.9. Assignment . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 8.10. Severability. . . . . . . . . . . . . . . . . . . . . . . 79
Section 8.11. Preferences . . . . . . . . . . . . . . . . . . . . . . . 80
ii
<PAGE>
Section 8.12. Waiver of Notice. . . . . . . . . . . . . . . . . . . . . 80
Section 8.13. Remedies of Borrower. . . . . . . . . . . . . . . . . . . 80
Section 8.14. Exculpation . . . . . . . . . . . . . . . . . . . . . . . 80
Section 8.15. Exhibits Incorporated . . . . . . . . . . . . . . . . . . 81
Section 8.16. Offsets, Counterclaims and Defenses . . . . . . . . . . . 81
Section 8.17. No Joint Venture or Partnership . . . . . . . . . . . . . 82
Section 8.18. Waiver of Marshalling of Assets Defense . . . . . . . . . 82
Section 8.19. Waiver of Counterclaim. . . . . . . . . . . . . . . . . . 82
Section 8.20. Conflict: Construction of Documents . . . . . . . . . . . 82
Section 8.21. Brokers and Financial Advisors. . . . . . . . . . . . . . 82
Section 8.22. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 82
Section 8.23. Estoppel Certificates . . . . . . . . . . . . . . . . . . 83
Section 8.24. Payment of Expenses . . . . . . . . . . . . . . . . . . . 83
Section 8.25. Bankruptcy Waiver . . . . . . . . . . . . . . . . . . . . 83
Section 8.26. Entire Agreement. . . . . . . . . . . . . . . . . . . . . 83
Section 8.27. Dissemination of Information. . . . . . . . . . . . . . . 84
Section 8.28. Limitation of Interest. . . . . . . . . . . . . . . . . . 84
Section 8.29. Indemnification . . . . . . . . . . . . . . . . . . . . . 85
Section 8.30. Borrower Acknowledgments. . . . . . . . . . . . . . . . . 85
Section 8.31. Publicity . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 8.32. Cross-Collateralization . . . . . . . . . . . . . . . . . 85
iii
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LOAN AGREEMENT
THIS LOAN AGREEMENT, made as of December 31, 1997, is by and between
NOMURA ASSET CAPITAL CORPORATION, a Delaware corporation (together, with its
successors and assigns, "Lender"), having an address at 2 World Financial
Center, Building B, New York, New York 10281-1198, Attention: Sheryl McAfee,
Telefax Number (212) 667-1206, and BPP/GOLDEN STATE ACQUISITIONS, L.L.C., a
Delaware limited liability company ("Borrower"), with an address of c/o
Burnham Pacific Properties, Inc., 610 West Ash Street, San Diego, California
92101, Attention: Daniel Platt, Telefax Number: (619) 652-4711.
RECITALS
WHEREAS, Borrower desires to obtain a loan (the "Loan") from Lender in
the principal amount of One Hundred Thirty-Five Million Thirty-Nine Thousand
Nine Hundred Fifty and 82/100 Dollars ($135,039,950.82) (the "Loan Amount")
to pay the acquisition costs for the Facilities to be acquired by Borrower;
WHEREAS, Lender is willing to make the Loan on the condition that
Borrower joins in the execution and delivery of this Agreement which shall
establish the terms and conditions of the Loan; and
WHEREAS, Lender and Borrower contemplate that all or any portion of
Lender's interest in the Loan and to the Loan Documents may be assigned, in
whole or in part, by Lender to another Person, including, without limitation,
to a trustee on behalf of security holders in connection with a
Securitization.
NOW, THEREFORE, in consideration of the making of the Loan by Lender and
the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereby covenant, agree, represent and warrant as
follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Definitions. For all purposes of this Agreement:
(a) the capitalized terms defined in this Article I have the meanings
assigned to them in this Article I, and include the plural as well as the
singular;
(b) all accounting terms have the meanings assigned to them in
accordance with GAAP;
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, or other subdivision; and
<PAGE>
(d) the following terms have the following meanings:
"Account Collateral" has the meaning provided in Section 2.13(a).
"Accounts" means any of Borrower's rights to payment for goods sold or
leased or for services rendered arising from the ownership or operation of
any Facility and not evidenced by an Instrument, including, without
limitation, all accounts and accounts receivable arising from the ownership
or operation of any Facility, now existing or hereafter coming into
existence, and all proceeds thereof (whether cash or non-cash, moveable or
immovable, tangible or intangible), received from the sale, exchange,
transfer, collection or other disposition or substitution thereof. In
addition to the foregoing, the term "Accounts" shall include the meaning as
such term has in the UCC.
"Accrued Interest" has the meaning provided in Section 2.5(e).
"Adjusted Net Operating Income" means, for any Facility and for any
applicable period, the Net Operating Income for such period subject to the
following adjustments and assumptions: (i) Operating Income shall not be
considered for tenants who, as of the date of such calculation, are not in
occupancy and paying rent; (ii) reimbursements from tenants will be included
only to the extent Lender determines, in its sole discretion, that such
reimbursements are stabilized and recurring, but reimbursements in excess of
the corresponding expense items shall not be included; (iii) percentage rent
will be included only to the extent Lender determines that such percentage
rent is stabilized and recurring, up to a maximum of 50-75% of percentage
rent collected in the preceding 12 months; (iv) income from month-to-month
tenants and temporary tenants will be included only to the extent Lender
determines that such month-to-month income and temporary income are
stabilized and recurring, up to a maximum of 50% of such rent collected in
the preceding 12 months; (v) other income may be included on a case-by-case
basis in Lender's sole discretion, and in any event only to the extent such
income is determined by Lender to be stabilized and recurring and of an
operating nature for a period of at least three years; (vi) a vacancy and
credit loss allowance will be applied, in an amount equal to the greatest of
(a) actual historical vacancy and/or credit loss, (b) 5% of the non-anchor
revenues (to the extent not accounted for), and (c) market vacancy
allowances; (vii) expenses will be equal to the actual expenses for the
trailing 12 months ended in the most recently completed fiscal quarter
(except for real estate taxes and insurance, which will be included at their
stabilized, recurring levels), and will exclude any non-recurring items and
the costs of capital improvements; (viii) management fees will be assumed to
be the greater of (a) actual management fees and (b) 4% of effective gross
income for the Facility (provided, that the amount of the management fees so
determined will be reduced by those costs which are incurred by the Facility
and were deducted under other sections hereof, but would ordinarily be paid
by the manager from its management fee; (ix) capital expenditures will be
deemed to be the greater of (a) $0.15 per square foot and (b) the amount
recommended by the structural engineering/property condition reports approved
by Lender prior to the Closing; (x) a deduction will be made for the
pro-rated amount of tenant improvement costs and leasing commissions, based
on a 60% retention rate assumption and other assumptions based on market
information, for tenants that are scheduled to roll over during the
amortization period of the Loan, without
2
<PAGE>
duplication for costs deducted under other sections, subject to a minimum of
$1.00 per occupied square foot for non-anchor space; and (xi) such other
adjustments as determined by Lender in its reasonable discretion consistent
with its due diligence findings and prevailing market conditions.
Notwithstanding the foregoing, Adjusted Net Operating Income shall be
determined in a manner consistent with and using the same underwriting
standards and methodology as used in calculating Base Net Operating Income.
"Advisor" means Nomura Securities International, Inc.
"Affiliate" of any specified Person means any other Person controlling,
controlled by or under common control with such specified Person. For the
purposes of this Agreement, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities or
other beneficial interests, by contract or otherwise; and the terms
"controls", "controlling" and "controlled" have the meanings correlative to
the foregoing.
"Agreement" means this Loan Agreement, as the same may from time to time
hereafter be modified, supplemented or amended.
"Allocated Loan Amount" means, with respect to any Facility, the portion
of the Loan Amount allocated to such Facility as set forth on Exhibit B
attached hereto, as such amounts shall be adjusted from time to time as
hereinafter set forth. Upon each adjustment in the amount of Principal
Indebtedness due to either (i) a regular monthly payment of principal
pursuant to Section 2.5(c), (ii) a prepayment of principal pursuant to
Section 2.7(c), or (iii) a payment of Excess Cash Flow pursuant to Section
2.7(a), each Allocated Loan Amount shall be decreased by an amount equal to
the product of (x) the amount of such principal payment multiplied by (y) a
fraction, the numerator of which is the applicable Allocated Loan Amount
(prior to the adjustment in question) and the denominator of which is the
total of all Allocated Loan Amounts (prior to the adjustment in question).
Notwithstanding the foregoing, when the Principal Indebtedness is reduced as
a result of Lender's receipt of proceeds with respect to a Taking or casualty
affecting one hundred percent (100%) of a Facility, the Allocated Loan Amount
for such Facility with respect to which the proceeds were received shall be
reduced to zero (such Allocated Loan Amount prior to reduction being referred
to as the "Withdrawn Allocated Amount"), and each other Allocated Loan Amount
shall, if the Withdrawn Allocated Amount exceeds the proceeds with respect to
such Taking or casualty (such excess being referred to as the "Proceeds
Deficiency"), be increased by an amount equal to the product of (1) the
Proceeds Deficiency multiplied by (2) a fraction, the numerator of which is
the applicable Allocated Loan Amount (prior to the adjustment in question)
and the denominator of which is the aggregate of all of the Allocated Loan
Amounts (prior to the adjustment in question) other than the Withdrawn
Allocated Amount.
"Annual Operating Budget" means an annual budget for the operations of
the Facilities (broken down on a month-by-month basis and a
Facility-by-Facility basis) prepared and submitted by Borrower to Lender on
or prior to December 31, 1997 for the calendar year commencing January 1,
1998 and thereafter on each December 1 for each succeeding calendar
3
<PAGE>
year, all in form and substance reasonably satisfactory to Lender and as
reasonably approved by Lender, as the same shall be amended by Borrower from
time to time, with Lender's written consent, not be unreasonably withheld or
delayed. Lender's approval shall be deemed given if Lender does not respond
to Borrower's proposed budget within thirty (30) days of Lender's receipt
thereof.
"Appraisals" means the appraisals, if any, with respect to any Facility
delivered to Lender in connection with the Loan and any more recent appraisal
of any Facility delivered to Lender or Lender's servicer, as applicable, each
made by an Appraiser at the request of Borrower or Lender, as any of the same
may be updated by recertification from time to time (and pursuant to the
terms of this Agreement) by the Appraiser performing such Appraisal.
"Appraiser" means any Independent appraiser selected by Borrower (and
reasonably satisfactory to Lender) who is (i) a member of the Appraisal
Institute with a national practice and who has at least ten (10) years
experience with real estate of the same type and in the geographic area of
the applicable Facility to be appraised or (ii) otherwise reasonably
acceptable to Lender.
"Appurtenant Rights" has the meaning set forth in the Deed of Trust.
"Assignment of Agreements" means, with respect to each Facility, a first
priority Assignment of Management Agreement and Agreements Affecting Real
Estate, in form and substance satisfactory to Lender in its sole discretion,
dated as of the Closing Date from Borrower, as assignor, to Lender, as
assignee, as the same may thereafter from time to time be supplemented,
amended, modified or extended by one or more written agreements supplemental
thereto, and "Assignments of Agreements" means all such instruments
collectively.
"Assignment of Leases" means, with respect to each Facility, a
first priority Assignment of Leases and Rents, in form and substance
satisfactory to Lender in its sole discretion, dated as of the Closing Date
from Borrower, as assignor, to Lender, as assignee, assigning to Lender
Borrower's interest in and to the Leases and the Rents with respect to the
applicable Facility as security for the Loan, as the same may thereafter from
time to time be supplemented, amended, modified or extended by one or more
written agreements supplemental thereto, and "Assignments of Leases" means
all such instruments collectively.
"Base Payment" has the meaning provided in Section 2.5(c).
"Base Net Operating Income" means the amount shown on Exhibit C.
"Basic Carrying Costs" means, with respect to any Facility, the
following costs with respect to such Facility: (i) real property taxes,
assessments and Impositions applicable to such Facility, and (ii) insurance
premiums for policies of insurance required or permitted to be maintained by
Borrower pursuant to this Agreement or the other Loan Documents.
"Basic Carrying Costs Monthly Installment" means, with respect to all of
the Facilities, Lender's reasonable and good faith estimate of one-twelfth
(1/12th) of the sum of the
4
<PAGE>
annual amounts of all of the relevant Basic Carrying Costs (provided, that
Lender may calculate reasonably and in good faith the monthly amount to
assure that funds are reserved in sufficient amounts to enable the payment of
all Impositions, including, without limitation, taxes and insurance premiums,
thirty (30) days prior to their respective due dates). If the relevant Basic
Carrying Costs for the then current Fiscal Year or payment period are not
ascertainable by Lender at the time a monthly deposit is required to be made,
the Basic Carrying Costs Monthly Installment shall be Lender's reasonable and
good faith estimate based on one-twelfth (1/12th) of the relevant aggregate
Basic Carrying Costs for the prior Fiscal Year or payment period, with
reasonable adjustments as reasonably determined by Lender. As soon as the
relevant Basic Carrying Costs are fixed for the then current Fiscal Year or
period, the next ensuing Basic Carrying Costs Monthly Installment shall be
reasonably adjusted to reflect any deficiency or surplus in prior Basic
Carrying Costs Monthly Installments.
"Basic Carrying Costs Sub-Account" means the Sub-Account of the Cash
Collateral Account established and maintained pursuant to Section 2.12
relating to the payment of Basic Carrying Costs.
"Borrower" has the meaning provided in the first paragraph of this
Agreement.
"Burnham Party Agreement" means that certain Certificate dated as of the
date hereof, executed by the signatories thereto (collectively, the "Burnham
Parties" and each individually, a "Burnham Party") for the benefit of Lender,
regarding the separateness covenants of such Burnham Parties.
"Business Day" means any day other than (i) a Saturday or a Sunday, and
(ii) a day on which federally insured depository institutions in New York,
New York, Chicago, Illinois and any state in which the Collection Account or
the Cash Collateral Account is located are authorized or obligated by law,
regulation, governmental decree or executive order to be closed.
"Capital Improvement Costs" means costs incurred by Borrower in
connection with capital improvements to the Facilities.
"Capital Reserve Amount" means, with respect to all of the Facilities,
an amount per annum equal to the greater of (i) the sum of the amounts
obtained by multiplying $0.15 by the number of square feet of gross rentable
area (as approved by Lender) for each Facility per annum and (ii) the sum of
the amounts indicated in the Engineering Report(s) as the annual amount
required to maintain each Facility.
"Capital Reserve Monthly Installment" means, with respect to the
Facilities, an amount equal to one-twelfth (1/12th) of the Capital Reserve
Amount for all of the Facilities.
"Capital Reserve Sub-Account" means the Sub-Account of the Cash
Collateral Account established and maintained pursuant to Section 2.12
relating to the payment of Capital Improvement Costs.
"Cash Collateral Account" has the meaning provided in Section 2.12(b).
5
<PAGE>
"Cash Collateral Account Agreement" has the meaning provided in Section
2.13(c).
"Cash Collateral Account Bank" means the bank chosen by Lender to hold
the Cash Collateral Account, or any successor bank hereafter selected by
Lender upon prior written notice to Borrower and otherwise in accordance with
the terms hereof.
"Cash Management Event" means the occurrence of any one or more of the
following: (i) an Event of Default or (ii) the Optional Prepayment Date.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
"Collateral" means, collectively, the Land, Appurtenant Rights,
Improvements, Equipment, Rents, Leases, Accounts, Account Collateral, General
Intangibles, goods, Instruments, Inventory, Money, Permitted Investments and
(to the full extent assignable) Permits and all Proceeds and products of any
of the foregoing, all whether now owned or hereafter acquired and all other
property which is or hereafter may become subject to a Lien in favor of
Lender as security for the Loan.
"Collateral Security Instrument" means any right, document or
instrument, other than a Deed of Trust, given as security for the Loan
(including, without limitation, the Assignments of Leases, the Assignments of
Agreements, and the Manager's Subordinations), as the same may thereafter
from time to time be supplemented, amended, modified or extended by one or
more written agreements supplemental thereto.
"Collection Account" has the meaning provided in Section 2.12(a).
"Collection Account Agreement" has the meaning set forth in Section
2.12(b).
"Collection Account Bank" means, with respect to each Facility, the
applicable collection bank for such Facility and any successor bank hereafter
selected by Borrower and reasonably approved by Lender.
"Condemnation Proceeds" has the meaning provided in Section 2.12(h).
"Contingent Obligation" means, without duplication, any obligation of
Borrower guaranteeing any indebtedness, leases, dividends or other
obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of Borrower, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor, (iii) to purchase property,
6
<PAGE>
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment
of such primary obligation or (iv) otherwise to assure or hold harmless the
owner of such primary obligation against loss in respect thereof. The amount
of any Contingent Obligation shall be deemed to be an amount equal to
Borrower's maximum anticipated liability in respect thereof (assuming that
Borrower is required to perform thereunder) as determined by Lender in good
faith (taking into account the non-recourse or limited recourse nature of
such Contingent Obligation, if applicable).
"Current Interest Accrual Period" has the meaning provided in Section
2.12(g).
"Debt Service" means, for any period, the aggregate of all principal,
interest payments, Default Rate interest, Late Charges and Yield Maintenance
Premium that accrue or are due and payable in accordance with the Loan
Documents during such period.
"Debt Service Coverage Ratio" means, for any period, the quotient
obtained by dividing Net Operating Income for all of the Facilities for the
specified period by the aggregate amount of the Base Payments due for such
period.
"Debt Service Payment Sub-Account" means the Sub-Account of the Cash
Collateral Account established and maintained pursuant to Section 2.12
relating to the payment of Debt Service.
"Deed of Trust" means, with respect to each Facility, a first priority
Fee and Leasehold Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing or such other comparable document which is customarily used by
prudent lenders in the jurisdiction in which the applicable Collateral is
located, in form and substance satisfactory to Lender in Lender's sole
discretion, dated as of the Closing Date, granted by Borrower to the Deed of
Trust Trustee for the benefit of Lender with respect to the Facility covered
thereby as security for the Loan, as the same may thereafter from time to
time be supplemented, amended, modified or extended by one or more written
agreements supplemental thereto, and "Deeds of Trust" means all such
instruments collectively.
"Deed of Trust Trustee" means the trustee, if any, under the applicable
Deed of Trust.
"Default" means the occurrence of any event which, but for the giving of
notice or the passage of time, or both, would be an Event of Default.
"Default Collateral" has the meaning provided in Section 8.14.
"Default Rate" means the per annum, interest rate equal to the lesser of
(i) the Maximum Amount or (ii) the Interest Rate plus five percent (5%).
"Defeasance Debt Service Coverage Ratio" means, in respect of any
period, the quotient obtained by dividing (i) the aggregate amount of the
Adjusted Net Operating Income of the Facilities remaining after a defeasance
pursuant to Section 2.11 by (ii) the aggregate amount
7
<PAGE>
of the Base Payments due for such period minus the payments Lender would have
received had the relevant U.S. Obligations referred to in Section 2.11 been held
as security for the Note for such period.
"Defeasance Deposit" means the following in each of the following
circumstances:
(i) in the case of a total defeasance of the Loan and each Facility
pursuant to Section 2.11, "Defeasance Deposit" means the amount that will
be sufficient to purchase U.S. Obligations (A) having maturity dates on or
prior to, but as close as possible to, successive scheduled Payment Dates
(after the Defeasance Release Date) upon which Payment Dates interest and
principal payments would be required under the Note as though the Maturity
Date of the Note were the Optional Prepayment Date and (B) in amounts
sufficient to pay all scheduled principal and interest payments on the
Note as if the Maturity Date of the Note were the Optional Prepayment Date
(but without any adjustment of the monthly amortization schedule); and
(ii) in the case of a partial defeasance of the Loan on a
Facility-by-Facility basis pursuant to Section 2.11, "Defeasance Deposit"
means the amount that will be sufficient to purchase U.S. Obligations (A)
having maturity dates on or prior to, but as close as possible to, the
successive scheduled Payment Dates (after the date of such voluntary
defeasance) upon which Payment Dates interest and principal payments would
be required under the Note as though the Maturity Date of the Note were
the Optional Prepayment Date and (B) in amounts sufficient to pay all
scheduled principal and interest payments on the Note (1) as if the
Maturity Date of the Note were the Optional Prepayment Date (but without
any adjustment of the monthly amortization schedule) and (2) as if the
outstanding principal indebtedness due under the Note were an amount equal
to 125% of the Allocated Loan Amount for the Facility being defeased; and
(ii) in the case of a partial defeasance of the Loan pursuant to Section
5.1(P), "Defeasance Deposit" means the amount that will be sufficient to
purchase U.S. Obligations (A) having maturity dates on or prior to, but as
close as possible to, the successive scheduled Payment Dates (after the
date of such voluntary defeasance) upon which Payment Dates interest and
principal payments would be required under the Note as though the Maturity
Date of the Note were the Optional Prepayment Date and (B) in amounts
sufficient to pay all scheduled principal and interest payments on the
Note (1) as if the Maturity Date of the Note were the Optional Prepayment
Date (but without any adjustment of the monthly amortization schedule) and
(2) as if the outstanding principal indebtedness due under the Note were
an amount equal to the amount required to be defeased pursuant to Section
5.1(P) in connection with such partial defeasance.
"Defeasance Release Date" has the meaning provided in Section 2.11(a).
8
<PAGE>
"Deferred Maintenance Amount" means, with respect to all of the
Facilities, the aggregate sum of the amount for each Facility or any portion
thereof as set forth on Exhibit C.
"Deferred Maintenance Costs" means the costs incurred by Borrower in
connection with completion of the repairs to (including, but not limited to,
work in connection with causing any Facility to comply with the Americans
with Disabilities Act) and environmental remediation of all of the Facilities
as itemized on Exhibit D hereto.
"Deferred Maintenance Sub-Account" means the Sub-Account of the Cash
Collateral Account established and maintained pursuant to Section 2.12
relating to the payment of Deferred Maintenance Costs.
"Designated Treasury Rate" means the yield, calculated by linear
interpolation (rounded to three decimal places) of the yields of United
States Treasury Constant Maturities with terms (one longer and one shorter)
most nearly approximating that of noncallable United States Treasury
obligations having maturities as close as possible to twenty (20) years from
the Optional Prepayment Date, as determined by Lender on the basis of Federal
Reserve Statistical Release H.15-Selected Interest Rates under the heading
U.S. Governmental Security/Treasury Constant Maturities, or other recognized
source of financial market information selected by Lender for the week prior
to the Optional Prepayment Date.
"Eligible Account" means (i) an account maintained with a federal or
state chartered depository institution or trust company whose (x) commercial
paper, short-term debt obligations or other short-term deposits are rated at
least A-1 by each Rating Agency if the deposits in such account are to be
held in such account for thirty (30) days or less or (y) long-term unsecured
debt obligations are rated at least AA- by each Rating Agency if the deposits
in such account are to be held in such account for more than thirty (30)
days; or (ii) a segregated trust account maintained with the trust department
of a federal or state chartered depository institution or trust company
acting in its fiduciary capacity which institution or trust company is
subject to regulations regarding fiduciary funds on deposit substantially
similar to 12 C.F.R. Section 9.10(b); or (iii) an account otherwise
acceptable to each Rating Agency, as confirmed in writing that such account
would not, in and of itself, result in a downgrade, qualification or
withdrawal of the then current ratings assigned to any security issued in
connection with a Securitization.
"Engineer" means any reputable Independent engineer, properly licensed
in the relevant jurisdiction and approved by Lender in Lender's reasonable
discretion.
"Engineering Reports" means, with respect to any Facility, the
structural engineering reports prepared by an Engineer and delivered to
Lender in connection with the Loan and any amendments or supplements thereto
delivered to Lender.
"Entity" means a (a) limited partnership, if Borrower is listed as a
limited partnership in the first paragraph of this Agreement or (b) limited
liability company, if Borrower is listed as a limited liability company in
the first paragraph of this Agreement.
9
<PAGE>
"Environmental Claim" means any written request for information by a
Governmental Authority, or any written notice, notification, claim,
administrative, regulatory or judicial action, suit, judgment, demand or
other written communication by any Person or Governmental Authority
requiring, alleging or asserting liability with respect to Borrower, or any
Facility, whether for damages, contribution, indemnification, cost recovery,
compensation, injunctive relief, investigatory, response, remedial or cleanup
costs, damages to natural resources, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, Use, Release or
threatened Release into the environment of any Hazardous Substance
originating at or from, or otherwise affecting any Facility, (ii) any fact,
circumstance, condition or occurrence forming the basis of any violation, or
alleged violation, of any Environmental Law by Borrower or otherwise
affecting any Facility or (iii) any alleged injury or threat of injury to
health, safety or the environment by Borrower or otherwise affecting any
Facility.
"Environmental Laws" means any and all applicable federal, state, local
and foreign laws, rules, regulations or municipal ordinances, each as amended
from time to time, any judicial or administrative orders, decrees, settlement
agreements or judgments thereunder, and any Permits, approvals, licenses,
registrations, filings and authorizations, in each case as in effect as of
the relevant date, relating to the environment, health or safety, or the
Release or threatened Release of Hazardous Substances into the indoor or
outdoor environment including, without limitation, ambient air, soil, surface
water, ground water, wetlands, land or subsurface strata, or otherwise
relating to the presence or Use of Hazardous Substances.
"Environmental Reports" means, with respect to any Facility, the
environmental audit reports delivered to Lender in connection with the Loan
and any amendments or supplements thereto delivered to Lender.
"Equipment" means all fixtures, appliances, machinery, furniture,
furnishings, decorations, tools and supplies, now owned or hereafter acquired
by Borrower, including but not limited to, all beds, linens, radios,
televisions, carpeting, telephones, cash registers, computers, lamps,
glassware, restaurant and kitchen equipment, and building equipment,
including but not limited to, all heating, lighting, incinerating, waste
removal and power equipment, engines, pipes, tanks, motors, conduits,
switchboards, security and alarm systems, plumbing, lifting, cleaning, fire
prevention, fire extinguishing, refrigeration, washing machines, dryers,
stoves, refrigerators, ventilating, and communications apparatus, air cooling
and air conditioning apparatus, escalators, elevators, ducts, and
compressors, materials and supplies, and all other machinery, apparatus,
equipment, fixtures and fittings now owned or hereafter acquired by Borrower
wherever located, any portion thereof or any appurtenances thereto, together
with all additions, replacements, parts, fittings, accessions, attachments,
accessories, modifications and alterations of any of the foregoing. In
addition to the foregoing, the term "Equipment" shall include the meaning as
such term has in the UCC.
"Equity Interests" means all direct or indirect record or beneficial
equity interests in Borrower, at all tiers or levels.
10
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.
Section references to ERISA are to ERISA, as in effect at the date of this
Agreement and, as of the relevant date, any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefore.
"ERISA Affiliate" means any corporation or trade or business that is a
member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which Borrower is a member, and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11)
of the Code and the lien created under Section 302(f) of ERISA and Section
412(n) of the Code, described in Section 414(m) or (o) of the Code of which
Borrower is a member.
"Event of Default" has the meaning set forth in Section 7.1.
"Excess Cash Flow" has the meaning set forth in Section 2.12.
"Extra Funds" has the meaning set forth in Section 2.12.
"Facility" means each "Real Property" (as defined in the Deed of Trust),
and the Collateral with respect thereto, for so long as such Real Property
and related Collateral is encumbered by the lien of a Deed of Trust, such
that, in the event that a Facility has been released in full pursuant to
Section 2.11 of this Agreement, then the term "Facility" shall no longer be
deemed to refer to the Real Property and related Collateral which is the
subject of such release. "Facilities" shall refer, at any time, collectively
to each and all Real Property and related Collateral that are encumbered by
the lien of a Deed of Trust as of the relevant time.
"Fiscal Year" means the 12-month period ending on December 31 of each
year or such other fiscal year of Borrower as Borrower may select from time
to time with the prior written consent of Lender not to be unreasonably
withheld or delayed.
"GAAP" means generally accepted accounting principles consistently
applied in the United States of America as of the date of the applicable
financial report.
"General Intangibles" means all intangible personal property of Borrower
(other than Accounts, Rents, Instruments, Inventory, Money and Permits),
including, without limitation, things in action, settlements, judgments,
contract rights, rights to performance (including, without limitation, rights
under warranties), refunds of real estate taxes and assessments and other
rights to payment of Money, copyrights, trademarks, trade names and patents
now existing or hereafter in existence. In addition to the foregoing, the
term "General Intangibles" shall include the meaning as such term has in the
UCC.
"Governmental Authority" means any national or federal government, any
state, regional, local or other political subdivision thereof with
jurisdiction and any Person with jurisdiction exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
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<PAGE>
"Gross Revenue" means, with respect to any Facility, the total dollar
amount of all income and receipts of any kind whatsoever received by Borrower
in the ordinary course of its business with respect to such Facility,
including, without limitation, all Rents (but excluding security deposits
until forfeited or otherwise entitled to be retained by Borrower) and Money.
"Hazardous Substance" means, collectively, (i) any petroleum or
petroleum products or waste oils, explosives, radioactive materials,
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls
("PCBs"), lead in drinking water, and lead-based paint, the presence,
generation, use, transportation, storage or disposal of or exposure to which
(x) is regulated or could lead to liability under any Environmental Law or
(y) is subject to notice or reporting requirements under any Environmental
Law, (ii) any chemicals or other materials or substances which are now or
hereafter become defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," "contaminants," "pollutants" or words of similar import under
any Environmental Law and (iii) any other chemical or any other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated under any Environmental Law.
"Impositions" means all taxes (including, without limitation, all real
estate, ad valorem, sales (including those imposed on lease rentals), use,
single business, gross receipts, value added, intangible transaction
privilege, privilege, license or similar taxes), assessments (including,
without limitation, to the extent not discharged prior to the Closing Date,
all assessments for public improvements or benefits, whether or not commenced
or completed within the term of the Deed of Trust), ground rents, water,
sewer or other rents and charges, excises, levies, fees (including, without
limitation, license, permit, inspection, authorization and similar fees), and
all other governmental charges, in each case whether general or special,
ordinary or extraordinary, foreseen or unforeseen, of every character in
respect of any Facility (including all interest and penalties thereon), which
at any time prior to, during or in respect of the term hereof may be assessed
or imposed on or in respect of or be a Lien upon (i) Borrower (including,
without limitation, all income, franchise, single business or other taxes
imposed on Borrower for the privilege of doing business in the jurisdiction
in which any Facility, or any other Collateral is located) or Lender, (ii)
any Facility, or any other Collateral or any part thereof or (iii) any
occupancy, operation, use or possession of, or sales from, or activity
conducted on, or in connection with any Facility or the leasing or use of any
Facility or any part thereof or the acquisition or financing of the
acquisition of any Facility by Borrower. Nothing contained in this Agreement
shall be construed to require Borrower to pay any tax, assessment levy or
charge imposed on Lender, in the nature of a franchise, capital levy, estate,
inheritance, succession, income or net revenue tax.
"Improvements" means, with respect to any Facility, all buildings,
structures and improvements of every nature whatsoever situated on the Land
on the Closing Date or thereafter, including, but not limited to, to the
extent (if any) of Borrower's right, title or interest therein or thereto,
all gas and electric fixtures, radiators, heaters, washing machines, dryers,
refrigerators, ovens, engines and machinery, boilers, ranges, elevators and
motors, plumbing and heating fixtures, antennas, carpeting and other floor
coverings, water heaters, awnings and storm sashes,
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<PAGE>
and cleaning apparatus which are or shall be attached to the Land or said
buildings, structures or improvements.
"Indebtedness" means, at any given time, the Principal Indebtedness,
together with all accrued and unpaid interest thereon and all other obligations
and liabilities due or to become due to Lender pursuant hereto, under the Note
or in accordance with any of the other Loan Documents, and all other amounts,
sums and expenses paid by or payable to Lender hereunder or pursuant to the Note
or any of the other Loan Documents.
"Indemnified Party" shall have the meaning set forth in Section 8.29.
"Independent" means, when used with respect to any Person, a Person who
(i) does not have any direct financial interest or any material indirect
financial interest in Borrower or in any Affiliate of Borrower, and (ii) is
not connected with Borrower or any Affiliate of Borrower as an officer,
employee, promoter, underwriter, trustee, partner, member, manager, creditor,
director or person performing similar functions.
"Independent Director" means a duly appointed member of the board of
directors of the relevant entity who shall not have been, at the time of such
appointment or at any time in the preceding five (5) years, (a) a direct or
indirect legal or beneficial owner in such entity or any of its affiliates,
(b) a creditor, supplier, employee, officer, director, manager or contractor
of such entity or any of its affiliates, (c) a person who controls such
entity or any of its affiliates, or (d) a member of the immediate family of a
person defined in (a), (b) or (c) above.
"Initial Basic Carrying Cost Amount" means, for Borrower and the
Facilities, the amount shown on Exhibit C.
"Initial Interest Rate" means a rate of 8.33% per annum.
"Initial Securitization Amount" means the sum of $375,000.00.
"Instruments" means all instruments, chattel paper, documents or other
writings obtained by Borrower from or in connection with the ownership or
operation of any Facility evidencing a right to the payment of Money,
including, without limitation, all notes, drafts, acceptances, documents of
title, and policies and certificates of insurance, including but not limited
to, liability, hazard, rental and credit insurance, guarantees and
securities, now or hereafter received by Borrower or in which Borrower has or
acquires an interest pertaining to the foregoing. In addition to the
foregoing, "Instruments" shall include the meaning such term has in the UCC.
"Insurance Proceeds" has the meaning provided in Section 2.12(h).
"Insurance Requirements" means all material terms of any insurance
policy required pursuant to the Loan Documents and all material regulations
and then current standards applicable to or affecting the Facility or any
part thereof or any use or condition thereof, which
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<PAGE>
may, at any time, be recommended in writing by the Board of Fire
Underwriters, if any, having jurisdiction over any Facility, or such other body
exercising similar functions.
"Interest Accrual Period" means each period of time running from and
including the eleventh (11th) day of a calendar month to and including the
tenth (10th) day of the following calendar month during the term of the Loan.
If the Closing Date shall occur prior to the tenth (10th) day of a calendar
month, the first Interest Accrual Period shall commence on and include the
Closing Date and end on and include the tenth (10th) day of the calendar
month in which the Closing Date occurs. If the Closing Date shall occur
after the tenth (10th) day of a calendar month, the first Interest Accrual
Period shall commence on the Closing Date and end on and include the tenth
(10th) day of the calendar month following the month in which the Closing
Date occurs. If the Closing Date shall occur on the tenth (10th) day of a
calendar month, the first Interest Accrual Period shall consist of a one (1)
day period consisting of the Closing Date.
"Interest Rate" means, as applicable, before the Optional Prepayment
Date, the Initial Interest Rate and, on and after the Optional Prepayment
Date, the Revised Interest Rate.
"Inventory" means all goods now owned or hereafter acquired by Borrower
intended for sale or lease, or to be furnished under contracts of service by
Borrower in connection with any Facility, including without limitation, all
inventories held by Borrower for sale or use at or from any Facility, and all
other such goods, wares, merchandise, and materials and supplies of every
nature owned by Borrower and all such other goods returned to or repossessed
by Borrower. In addition to the foregoing, the term "Inventory" shall
include the meaning as such term has in the UCC.
"Investor" has the meaning provided in Section 8.27.
"Issuer" means any issuer of securities issued in connection with a
Securitization.
"Land" means all of the Land defined and described in the Deeds of
Trust.
"Late Charge" means the lesser of (i) five percent (5%) of any unpaid
amount and (ii) the maximum late charge permitted to be charged under the
laws of the State of California.
"Leases" means all leases and other agreements or arrangements affecting
the use or occupancy of all or any portion of any Facility now in effect or
hereafter entered into (including, without limitation, all lettings,
subleases, licenses, concessions, tenancies and other occupancy agreements
covering or encumbering all or any portion of any Facility), together with
any guarantees, supplements, amendments, modifications, extensions and
renewals of the same, and all additional remainders, reversions, and other
rights and estates appurtenant thereto.
"Leasing Expenses" means expenses estimated in the Annual Operating
Budget to be incurred by Borrower in connection with the execution of Leases
with respect to the Facilities, including without limitation legal fees,
design costs, space planning costs, tenant improvement costs, allowances and
brokerage fees; provided, however, that Leasing Expenses shall not include
14
<PAGE>
marketing expenses or payments made to Affiliates of Borrower (except for
reimbursement of payments made by such Affiliates to Persons who are not
Affiliates of Borrower).
"Leasing Reserve Monthly Installment" means, with respect to the
Facilities, an aggregate amount equal to Twenty-Five Thousand Dollars
($25,000.00).
"Leasing Reserve Sub-Account" means the Sub-Account of the Cash
Collateral Account established and maintained pursuant to Section 2.12
relating to the payment of Leasing Expenses.
"Legal Requirements" means all statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting Borrower, the Loan Documents, any Facility or any part
thereof, or the ownership, construction, use, alteration or operation thereof
or any part thereof enacted and in force as of the relevant date, and all
Permits and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record
or known to Borrower, at any time in force affecting any Facility or any part
thereof, including, without limitation, any which (i) may require repairs,
modifications, or alterations in or to any Facility or any part thereof, or
(ii) in any way limit the use and enjoyment thereof.
"Lender" has the meaning provided in the first paragraph of this
Agreement.
"Liabilities" has the meaning set forth in Section 2.14.
"Lien" means any mortgage, deed of trust, lien (statutory or other),
pledge, easement, restrictive covenant, hypothecation, assignment,
preference, priority, security interest, or any other encumbrance or charge
on or affecting any Facility or any portion thereof or any Collateral or
Borrower, or any interest therein, including, without limitation, any
conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, the
filing of any financing statement or similar instrument under the UCC or
comparable law of any other jurisdiction, domestic or foreign, and
mechanic's, materialmen's and other similar liens and encumbrances.
"Loan" has the meaning provided in the Recitals hereto.
"Loan Amount" has the meaning provided in the Recitals hereto.
"Loan Documents" means, collectively, this Agreement, the Note, the
Deeds of Trust, the Assignments of Leases, the Assignments of Agreements, the
Manager's Subordinations, the Cash Collateral Account Agreements, the
Collection Account Agreements, the Burnham Party Agreement, and all other
agreements, instruments, certificates and documents delivered by or on behalf
of Borrower or any Affiliate to evidence or secure the Loan or otherwise in
satisfaction of the requirements of this Agreement, the Deed of Trust or the
other documents listed above.
"Losses" has the meaning provided in Section 5.1(i).
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<PAGE>
"Management Agreement" means, with respect to any Facility, the
management agreement entered into between the applicable Manager and Borrower
pertaining to the management of such Facility and "Management Agreements"
means all such agreements, collectively.
"Manager" means the manager of a Facility acceptable to Lender in
Lender's discretion.
"Manager's Subordination" means, with respect to any Facility, the
Manager's Consent and Subordination of Management Agreement in form and
substance satisfactory to Lender in Lender's sole discretion, executed by
Manager, Borrower and Lender, as the same may thereafter from time to time be
supplemented, amended, modified or extended by one or more written agreements
supplemental thereto, and "Manager's Subordinations" means all such
agreements, collectively.
"Material Adverse Effect" means a material adverse effect upon (i) the
business or the financial position or results of operation of Borrower, (ii)
the ability of Borrower to perform, or of Lender to enforce, any of the Loan
Documents or (iii) the value of (x) the Collateral taken as a whole or (y)
any Facility.
"Material Lease" has the meaning set forth in the Deed of Trust.
"Maturity Date" means January 11, 2028 or such earlier date resulting
from acceleration of the Indebtedness by Lender.
"Maximum Amount" means the maximum rate of interest designated by
applicable laws relating to payment of interest and usury.
"Money" means all moneys, cash, rights to deposit or savings accounts,
credit card receipts, rents or other items of legal tender obtained from or
for use in connection with the ownership or operation of any Facility.
"Multiemployer Plan" means a multiemployer plan defined as such
in Section 3(37) of ERISA to which contributions have been made by Borrower
or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Operating Income" means for any period (as calculated for all
Facilities or any Facility, as applicable) the excess, if any, of Operating
Income for such period over Operating Expenses for such period.
Notwithstanding the foregoing part of this definition of "Net Operating
Income" to the contrary, if the period for which Net Operating Income is
being calculated includes periods prior to the Closing Date, Net Operating
Income shall be calculated for such period based on the applicable pro rata
portion of Base Net Operating Income.
"Note" means and refers to the promissory note, in form and substance
satisfactory to Lender in Lender's sole discretion, dated the Closing Date,
made by Borrower to Lender pursuant to this Agreement as such note may be
modified, amended, supplemented,
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<PAGE>
extended or consolidated in writing, and any note(s) issued in exchange therefor
or in replacement thereof.
"Officer's Certificate" means a certificate of Borrower which is signed
by the managing equity owner of Borrower.
"Operating Expense Certificate" means a certificate of Borrower in the
form attached hereto as Exhibit A.
"Operating Expense Monthly Installment" means, with respect to each
Interest Accrual Period commencing on or after the Optional Prepayment Date,
the amount shown on the Annual Operating Budget for such period.
"Operating Expense Sub-Account" means the Sub-Account of the Cash
Collateral Account established and maintained pursuant to Section 2.12
relating to the payment of operating expenses, as reasonably approved by
Lender.
"Operating Expenses" means, for any period, for Borrower, all
expenditures by Borrower as and to the extent required to be expensed under GAAP
during such period in connection with the ownership, operation, maintenance,
repair or leasing of the Facilities, including, without limitation or
duplication:
(i) expenses in connection with cleaning, repair, replacement,
painting and maintenance;
(ii) wages, benefits, payroll taxes, uniforms, insurance costs and
all other related expenses for employees of Borrower or any Affiliate
engaged in repair, operation, maintenance of the Facilities or service
to tenants of the Facilities;
(iii) any management fees and expenses;
(iv) the cost of all electricity, oil, gas, water, steam, heat,
ventilation, air conditioning and any other energy, utility or similar
item and overtime services;
(v) the cost of cleaning supplies;
(vi) Impositions;
(vii) business interruption, liability, casualty and fidelity
insurance premiums;
(viii) legal, accounting and other professional fees and expenses
incurred in connection with the ownership, leasing or operation of the
Facilities, including, without limitation, collection costs and expenses;
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<PAGE>
(ix) costs and expenses of security and security systems;
(x) trash removal and exterminating costs and expenses;
(xi) advertising and marketing costs;
(xii) costs of environmental audits and monitoring, environmental,
investigation, remediation, or other response actions or any other
expenses incurred with respect to compliance with Environmental Laws; and
(xiii) all other ongoing expenses which in accordance with GAAP are
required to be or are included in Borrower's annual financial statements
as operating expenses of the Facilities.
Notwithstanding the foregoing, Operating Expenses shall not include (1)
Capital Improvement Costs, (2) any taxes imposed on Borrower's net income,
(3) depreciation or (4) Debt Service and other payments in connection with
the Indebtedness. Operating Expenses shall be calculated in accordance with
GAAP.
"Operating Income" means, for any period, for Borrower, all income of
Borrower during such period from the operation of the Facilities, including,
without limitation:
(i) all amounts payable as Rents (other than security deposits,
unless forfeited or entitled to be retained by Borrower) and all other
amounts payable under Leases or other third party agreements relating to
the ownership and operation of the Facilities;
(ii) business interruption proceeds; and
(iii) all other amounts which in accordance with GAAP are required
to be or are included in Borrower's annual financial statements as
operating income of the Facilities;
provided, however, in the event of a partial or total defeasance pursuant to
Section 2.11, then the proceeds, for any period, of the U.S. Obligations
pledged by Borrower in conjunction with such partial or total defeasance
shall be included in Operating Income for such period solely for the purpose
of calculating Debt Service Coverage Ratio for such period.
"Operating Partnership" means Burnham Pacific Operating Partnership,
L.P., a Delaware limited partnership.
"Optional Prepayment Date" means January 11, 2008.
"Other Borrowings" means, without duplication (but not including the
Indebtedness or any Transaction Costs payable in connection with the
Transactions), (i) all indebtedness of Borrower for borrowed money or for the
deferred purchase price of property or
18
<PAGE>
services, (ii) all indebtedness of Borrower evidenced by a note, bond,
debenture or similar instrument, (iii) the face amount of all letters of
credit issued for the account of Borrower and, without duplication, all
unreimbursed amounts drawn thereunder, (iv) all indebtedness of Borrower
secured by a Lien on any property owned by Borrower whether or not such
indebtedness has been assumed, (v) all Contingent Obligations of Borrower,
and (vi) all payment obligations of Borrower under any interest rate
protection agreement (including, without limitation, any interest rate swaps,
caps, floors, collars or similar agreements) and similar agreements,
excluding unsecured trade debt incurred in the ordinary course of business up
to an aggregate amount of $250,000 relating to the ownership and operation of
the Facilities.
"Payment Date" means the eleventh (11th) day of each calendar month
during the term of the Loan, provided, however, that for purposes of making
payments hereunder, but not for purposes of calculating interest accrual
periods, if the eleventh (11th) day of a given month shall not be a Business
Day, then the Payment Date for such month shall be the next succeeding
Business Day.
"PBGC" means the Pension Benefit Guaranty Corporation established under
ERISA, or any successor thereto.
"PCBs" has the meaning provided in the definition of "Hazardous
Substance."
"Permits" means, with respect to any Facility, all licenses,
registrations, permits, allocations, filings, authorizations, approvals and
certificates used in connection with the ownership, operation, construction,
renovation, use or occupancy of such Facility, including, without limitation,
building permits, business licenses, state health department licenses, food
service licenses, liquor licenses, licenses to conduct business, and all such
other permits, licenses and rights, obtained from any Governmental Authority
or private Person concerning ownership, operation, construction, renovation,
use or occupancy of such Facility, the failure of which to maintain or
possess could have a Material Adverse Effect.
"Permitted Encumbrances" means, with respect to any Facility,
collectively, (i) the Lien created by the Related Deed of Trust or the other
Loan Documents, of record, (ii) all Liens and other matters disclosed in the
Title Insurance Policy concerning such Facility, or any part thereof which
have been approved by Lender in Lender's sole discretion, (iii) Liens, if
any, for Impositions imposed by any Governmental Authority not yet delinquent
or being contested in good faith and by appropriate proceedings in accordance
with the Deed of Trust, (iv) without limiting the foregoing, any and all
governmental, public utility and private restrictions, covenants,
reservations, easements, licenses or other agreements of an immaterial nature
which may be granted by Borrower after the Closing Date and which do not
materially and adversely affect (A) the ability of Borrower to pay any of its
obligations to any Person as and when due, (B) the marketability of title to
such Facility, (C) the fair market value of such Facility, or (D) the use or
operation of such Facility as of the Closing Date and thereafter.
"Permitted Investments" shall have the meaning ascribed to such term in
the Cash Collateral Account Agreement.
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<PAGE>
"Permitted Transfers" shall mean, provided that no Event of Default
has occurred and is continuing,
(i) Permitted Encumbrances;
(ii) all transfers of worn out or obsolete furnishings, fixtures or
equipment;
(iii) all Leases which are not Material Leases;
(iv) all Material Leases which have been approved by Lender in
writing in Lender's reasonable discretion; and
(v) Transfers of limited partnership interests in the Operating
Partnership or equity interests in the SPE Equity Owner;
provided, however, that after taking into account any
Transfers after the date hereof, whether to the proposed
transferee or otherwise, (x) the Operating Partnership shall
be the sole managing member of Borrower, (y) the SPE Equity
Owner shall be the sole general partner of the Operating
Partnership and (z) during any 24-month period, persons who
were directors of the SPE Equity Owner at the beginning of
such period and persons who were nominated to be directors of
the SPE Equity Owner by persons who were directors of the SPE
Equity Owner at the beginning of such period, continue to
constitute a majority of the Board of Directors of the SPE
Equity Owner.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, estate, trust, unincorporated
association, or any other entity, any federal, state, county or municipal
government or any bureau, department or agency thereof and any fiduciary
acting in such capacity on behalf of any of the foregoing.
"Plan" means an employee benefit or other plan established or
maintained by Borrower or any ERISA Affiliate and that is covered by Title IV
of ERISA, other than a Multiemployer Plan.
"Premium" has the meaning provided in Section 2.1.
"Principal Indebtedness" means the principal amount of the entire
Loan outstanding as the same may be increased or decreased, as a result of
prepayment or otherwise, from time to time.
"Proceeds" means all proceeds whether cash or non-cash, movable or
immovable, tangible or intangible (including Insurance Proceeds and
Condemnation Proceeds), from the Collateral, including, without limitation,
those from the sale, exchange, transfer, collection, loss, damage,
disposition, substitution or replacement of any of the Collateral and all
income, gain, credit, distributions and similar items from or with respect to
the Collateral. In addition to the foregoing, the term "Proceeds" shall also
include the meaning as such term has in the UCC.
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<PAGE>
"Rating Agencies" means Fitch Investors Service, Inc., Moody's
Investors Service, Inc., Duff & Phelps Credit Rating Co. and S&P or any
successor thereto, and any other nationally recognized statistical rating
organization to the extent that any of the foregoing have been or will be
engaged by Lender or its designees in connection with a Securitization (each,
individually a "Rating Agency").
"Recourse Distributions" has the meaning provided in Section 8.14.
"Related Deed of Trust" means, with respect to a particular
Facility, the Deed of Trust relating to such Facility.
"Release" means any release, threatened release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment including,
without limitation, the movement of Hazardous Substances through ambient air,
soil, surface water, ground water, wetlands, land or subsurface strata.
"Remedial Work" has the meaning provided in Section 5.1(D)(i).
"REMIC" means a real estate mortgage investment conduit as defined
under Section 860 D(a) of the Code.
"Rents" means, with respect to any Facility, all receipts, rents
(whether denoted as advance rent, minimum rent, percentage rent, additional
rent or otherwise), issues, income, royalties, profits, revenues, proceeds,
bonuses, deposits (whether denoted as security deposits or otherwise), lease
termination fees or payments, rejection damages, buy-out fees and any other
fees made or to be made in lieu of rent, any award made hereafter to Borrower
in any court proceeding involving any tenant, lessee, licensee or
concessionaire under any of the Leases of such Facility in any bankruptcy,
insolvency or reorganization proceedings in any state or federal court, and
all other payments, rights and benefits of whatever nature from time to time
due under any of the Leases of such Facility, including, without limitation,
(i) rights to payment earned under the Leases for such Facility for space in
the Improvements for the operation of ongoing businesses, such as
restaurants, news stands, barber shops, beauty shops and pharmacies, and (ii)
all other income, consideration, issues, accounts, profits or benefits of any
nature arising from the ownership, possession, use or operation of such
Facility.
"Required Base Debt Service Payment" means all of the Required Debt
Service Payment except for that portion of the Required Debt Service Payment
which consists of payments of Excess Cash Flow which may be due and payable
after the Optional Prepayment Date.
"Required Debt Service Payment" means, on any Payment Date, the Debt
Service then due and payable by Borrower.
"Revised Interest Rate" means a rate equal to five hundred (500)
basis points plus the greater of (x) the Initial Interest Rate, and (y) the
sum of the (i) the Designated Treasury Rate
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<PAGE>
as of the Optional Prepayment Date, and (ii) one hundred (100) basis points,
such Revised Interest Rate not to exceed the Maximum Amount.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc.
"Securitization" shall have the meaning provided in Section 2.14.
"Securitization Closing Date" means the date on which a
Securitization is effected.
"Security Agreement" has the meaning provided in Section 2.11.
"Security Deposit Account" has the meaning provided in Section 2.12.
"Single-Purpose Entity" means a corporation, limited partnership, or
limited liability company which, at all times, since its formation and
thereafter:
(i) was organized solely for the purpose of (x) owning the
Facilities or (y) acting as a member of the limited liability
company which owns the Facilities or (z) acting as the general
partner of a limited partnership which owns the Facilities;
(ii) has not and will not engage in any business unrelated to (x)
the ownership of the Facilities or (y) acting as a member of a
limited liability company which owns the Facilities or (z)
acting as a general partner of a limited partnership which
owns the Facilities;
(iii) has not and will not have any assets other than (x) those
related to the Facilities or (y) its member interest in the
limited liability company which owns the Facilities, or (z)
its general partnership interest in the limited partnership
which owns the Facilities, as applicable;
(iv) except as otherwise expressly permitted by this Agreement, has
not and will not engage in, seek or consent to any
dissolution, winding up, liquidation, consolidation, merger,
asset sale, transfer of partnership or membership interests,
or amendment of its limited partnership agreement, articles of
incorporation, articles of organization, certificate of
formation or operating agreement (as applicable),
(v) if such entity is a limited partnership, has as its only
general partners, general partners which are Single-Purpose
Entities which are corporations;
(vi) if such entity is a corporation, at all relevant times will
have at least one Independent Director;
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(vii) the board of directors of such entity may not take any action
requiring the unanimous affirmative vote of one hundred
percent (100%) of the members of the board of directors unless
all of the directors, including an Independent Director shall
have participated in such vote;
(viii) has not and will not fail to correct any known
misunderstanding regarding the separate identity of such
entity;
(ix) if such entity is a limited liability company, has at least
one member that is a Single-Purpose Entity which is a
corporation;
(x) without the unanimous consent of all of the partners,
directors or members, as applicable, has not and will not with
respect to itself or to any other entity in which it has a
direct or indirect legal or beneficial ownership interest (a)
file a bankruptcy, insolvency or reorganization petition or
otherwise institute insolvency proceedings or otherwise seek
any relief under any laws relating to the relief from debts or
the protection of debtors generally, (b)seek or consent to the
appointment of a receiver, liquidator, assignee, trustee,
sequestrator, custodian or any similar official for such
entity or all or any portion of such entity's properties; (c)
make any assignment for the benefit of such entity's
creditors; or (d) take any action that might cause such entity
to become insolvent;
(xi) has maintained and will maintain its accounts, books and
records separate from any other person or entity;
(xii) has maintained and will maintain its books, records,
resolutions and agreements as official records;
(xiii) has not and will not commingle its funds or assets with those
of any other entity;
(xiv) has held and will hold its assets in its own name;
(xv) has conducted and will conduct its business in its name;
(xvi) has maintained and will maintain its financial statements,
accounting records and other entity documents separate from
any other person or entity;
(xvii) has paid and will pay its own liabilities out of its own funds
and assets;
(xviii) has observed and will observe all partnership, corporate or
limited liability company formalities as applicable;
(xix) has maintained and will maintain an arms-length relationship
with its Affiliates;
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(xx) (a) if such entity owns the Facilities, has no indebtedness
other than the Indebtedness and unsecured trade payables in
the ordinary course of business relating to the ownership and
operation of the Facilities which (1) do not exceed, at any
time, a maximum amount of $250,000 with respect to any
Facility and (2) are paid within sixty (60) days of the date
incurred, or (b) if such entity acts as the general partner of
a limited partnership which owns the Facilities, has no
indebtedness other than unsecured trade payables in the
ordinary course of business relating to acting as general
partner of the limited partnership which owns the Facilities
which (1) do not exceed, at any time, $10,000 with respect to
any Facility and (2) are paid within sixty (60) days of the
date incurred, or (c) if such entity acts as a member of a
limited liability company which owns the Facilities, has no
indebtedness other than unsecured trade payables in the
ordinary course of business relating to acting as a member of
the limited liability company which owns the Facilities which
(1) do not exceed, at any time, $10,000 with respect to any
Facility and (2) are paid within sixty (60) days of the date
incurred;
(xxi) has not and will not assume or guarantee or become obligated
for the debts of any other entity or hold out its credit as
being available to satisfy the obligations of any other entity
except for the Indebtedness;
(xxii) will not acquire obligations or securities of its partners,
members or shareholders;
(xxiii) has allocated and will allocate fairly and reasonably shared
expenses, including, without limitation, shared office space
and uses separate stationary, invoices and checks;
(xxiv) except pursuant hereto, has not and will not pledge its assets
for the benefit of any other person or entity;
(xxv) has held and identified itself and will hold itself out and
identify itself as a separate and distinct entity under its
own name and not as a division or part of any other person or
entity;
(xxvi) has not made and will not make loans to any person or entity;
(xxvii) has not and will not identify its partners, members or
shareholders, or any affiliates of any of them as a division
or part of it;
(xxviii) if such entity is a limited liability company, its articles of
organization, certificate of formation and/or operating
agreement, as applicable, shall provide that such entity will
dissolve only upon the bankruptcy of the managing member;
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(xxix) has not entered and will not enter into or be a party to,
any transaction with its partners, members, shareholders or
its affiliates except in the ordinary course of its business
and on terms which are intrinsically fair and are no less
favorable to it than would be obtained in a comparable
arms-length transaction with an unrelated third party;
(xxx) has paid and will pay the salaries of its own employees from
its own funds;
(xxxi) as maintained and will maintain adequate capital in light of
its contemplated business operations; and
(xxxii) if such entity is a limited liability company or limited
partnership, and such entity has one or more managing members
or general partners, as applicable, then such entity's
organizational documents shall provide that such entity shall
continue (and not dissolve) for so long as a solvent managing
member or general partner, as applicable, exists.
"SPE Equity Owner" means Burnham Pacific Properties, Inc.
"SPE Equity Owner's Certificate" means the SPE Equity Owner's
Certificate in form and substance satisfactory to Lender in Lender's sole
discretion dated as of the Closing Date.
"Start-Up Day" means the "start-up day," within the meaning of
Section 860G(a)(9) of the Code, of any "real estate mortgage investment
conduit," within the meaning of Section 860D of the Code, that holds the Note.
"Sub-Account" shall have the meaning provided in Section 2.12(c).
"Survey" means, with respect to any Facility, a survey of such
Facility satisfactory to Lender, prepared by a registered Independent
surveyor reasonably satisfactory to Lender and Title Insurer, together with a
metes and bounds legal description of the land corresponding with the survey
and containing the Surveyor's Certification.
"Surveyor's Certification" means a surveyor's certification in form
and substance satisfactory to Lender in Lender's sole discretion.
"Taking" means a taking or voluntary conveyance during the term
hereof of all or part of any Facility, or any interest therein or right
accruing thereto or use thereof, as the result of or in settlement of any
condemnation or other eminent domain proceeding by any Governmental Authority
affecting such Facility or any portion thereof whether or not the same shall
have actually been commenced.
"Tax Fair Market Value" means, with respect to any Facility, the
fair market value of such Facility, and (x) shall not include the value of
any personal property or other property
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that is not an "interest in real property" within the meaning of Treasury
Regulation Sections 1.860G-2 and 1.856-3(c), or is not "qualifying real
property" within the meaning of Treasury Regulation Section 1.593-11(b)(iv),
and (y) shall be reduced by the "adjusted issue price" (within the meaning of
Code Section 1272(a)(4)) (the "Tax Adjusted Issue Price") of any
indebtedness, other than the Loan, secured by a Lien affecting such Facility,
which Lien is prior to or on a parity with the Lien created under the Related
Deed of Trust.
"Title Instruction Letter" means an instruction letter in form and
substance satisfactory to Lender in Lender's sole discretion.
"Title Insurance Policy" means, with respect to any Facility, the
loan policy of title insurance for such Facility issued by Title Insurer with
respect to such Facility in an amount acceptable to Lender and insuring the
first priority Lien in favor of Lender created by the Related Deed of Trust
and acceptable to Lender in Lender's discretion, and "Title Insurance
Policies" means all such loan policies of title insurance collectively.
"Title Insurer" means Fidelity National Title Insurance Company and
any reinsurer reasonably required by Lender and/or any other nationally
recognized title insurance company acceptable to Lender in Lender's
reasonable discretion; provided, however, that the reinsurer of any Title
Insurance Policy may include, in amounts reasonably acceptable to Lender,
Chicago Title Insurance Company, Commonwealth Land Title Insurance Company,
First American Title Insurance Company and Stewart Title Guaranty Company.
"Transaction Costs" means all fees, costs, expenses and
disbursements paid or payable by Borrower relating to the Transactions,
including, without limitation, all appraisal fees, legal fees, accounting
fees and the costs and expenses described in Section 8.24.
"Transactions" means the transactions contemplated by the Loan
Documents.
"Transfer" means any conveyance, transfer (including, without
limitation, any transfer of any direct legal or beneficial interest in
Borrower), sale, Lease (including, without limitation, any amendment,
extension, modification, waiver or renewal thereof), or Lien, whether by law
or otherwise, of, on or affecting any Collateral of Borrower (other than a
Permitted Transfer). In addition to the foregoing, a "Transfer" shall be
deemed to have occurred if during any 24 month period, persons who were
directors of the SPE Equity Owner at the beginning of such period and persons
who were nominated to be directors of the SPE Equity Owner by persons who
were directors of the SPE Equity Owner at the beginning of such period, cease
to constitute a majority of the Board of Directors of the SPE Equity Owner.
"Trust Property" means, at any time, the real property, improvements
and other property rights and interests encumbered by a Deed of Trust.
"UCC" means, with respect to any Collateral, the Uniform Commercial
Code in effect in the jurisdiction in which the relevant Collateral is
located.
"UCC Searches" has the meaning specified in Section 3.1.
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"Unearned Premium" has the meaning provided in Section 2.7(g).
"U.S. Obligations" means obligations or securities not subject to
prepayment call or early redemption which are direct obligations of, or
obligations fully guaranteed as to timely payment by, the United States of
America or any agency or instrumentality of the United States of America, the
obligations of which are backed by the full faith and credit of the United
States of America.
"Use" means, with respect to any Hazardous Substance, the
generation, manufacture, processing, distribution, handling, use, treatment,
recycling or storage of such Hazardous Substance or transportation to or from
the property of any Person of such Hazardous Substance.
"Yield Maintenance Premium" means, in the event that all or any
portion of the Note is accelerated, the amount that, when added to the amount
otherwise due as a result of such acceleration, would be sufficient to
purchase U.S. Obligations (A) having maturity dates on or prior to, but as
close as possible to, successive scheduled Payment Dates (after the date of
such acceleration of the Note) upon which Payment Dates interest and
principal payments would be required under the Note as though the Maturity
Date of the Note was the Optional Prepayment Date and (B) in amounts
sufficient to pay all scheduled principal and interest payments on the Note
as if the Maturity Date of the Note was the Optional Prepayment Date (but
without any adjustment of the monthly amortization schedule); provided,
however, that under no circumstances shall the Yield Maintenance Premium be
less than zero.
ARTICLE II
GENERAL TERMS
Section 2.1. Amount of the Loan. Lender shall lend to Borrower a
total aggregate amount equal to the Loan Amount. In addition, to induce
Borrower to agree to the Initial Interest Rate, Lender is paying to Borrower
on the date hereof an interest rate buy-up premium (the "Premium") in the
amount of Fourteen Million Nine Hundred Sixty Thousand Forty-Nine and 34/100
Dollars ($14,960,049.34). Borrower acknowledges receipt of the Loan and the
Premium, in the aggregate amount of One Hundred Fifty Million Dollars
($150,000,000.00). Lender acknowledges and agrees that Borrower shall have no
obligation to repay the Premium; provided, however, nothing set forth herein
shall impair, diminish or otherwise affect Borrower's obligation to repay the
Unearned Premium in accordance with Section 2.7(g) hereof.
Section 2.2. Use of Proceeds. Proceeds of the Loan and the
Premium shall be used to pay the acquisition costs for the Facilities to be
acquired by Borrower. Any excess will be available to Borrower and may be
used for any lawful purpose.
Section 2.3. Security for the Loan. The Note and Borrower's
obligations hereunder and under the other Loan Documents shall be secured by
the Deeds of Trust, the
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Assignments of Leases, the Assignments of Agreements, the Manager's
Subordinations, and the security interest and Liens granted in this Agreement
and in the other Loan Documents.
Section 2.4. Borrower's Note. (a) Borrower's obligation to pay the
principal of and interest on the Loan (including Late Charges, Default Rate
interest, and the Yield Maintenance Premium, if any), shall be evidenced by
this Agreement and by the Note, duly executed and delivered by Borrower. The
Note shall be payable as to principal, interest, Late Charges, Default Rate
interest, Yield Maintenance Premium, if any, and Unearned Premium, if any, as
specified in this Agreement, with a final maturity on the Maturity Date.
Borrower shall pay all outstanding Indebtedness on the Maturity Date.
(b) Lender is hereby authorized, at its sole option, (i) to endorse
on a schedule attached to the Note (or on a continuation of such schedule
attached to the Note and made a part thereof) an appropriate notation
evidencing the date and amount of each payment of principal, interest, Late
Charges, Default Rate interest and Yield Maintenance Premium, if any, in
respect thereof, which books and records shall be made available to Borrower,
at Borrower's sole cost and expense on reasonable advance notice, for
examination at Lender's offices and/or (ii) to record the Allocated Loan
Amount in its books and records.
Section 2.5. Principal and Interest Payments.
(a) Accrual of Interest before the Optional Prepayment Date.
Before the Optional Prepayment Date, interest shall accrue on the outstanding
principal balance of the Note and all other amounts due to Lender under the
Loan Documents at the Initial Interest Rate.
(b) Accrual of Interest on or after the Optional Prepayment Date.
On and after the Optional Prepayment Date, interest shall accrue on the
outstanding principal balance of the Note and all other amounts due to Lender
under the Loan Documents at the Revised Interest Rate.
(c) Monthly Base Payments, of Principal and Interest at the Initial
Interest Rate. On each Payment Date, Borrower shall pay to Lender a monthly
constant payment as indicated on Exhibit C, which payment is based on the
Initial Interest Rate and an amortization schedule of 360 months. Each
payment required to be made by Borrower pursuant to this Section 2.5(c) is
hereinafter sometimes referred to as a "Base Payment."
(d) Payments of Excess Cash Flow. On and after the earlier to
occur of (i) the Optional Prepayment Date or (ii) at Lender's sole election,
upon the occurrence and during the continuation of an Event of Default
hereunder, any date on or after the occurrence and during the continuation of
such Event of Default, in addition to the Base Payment, Borrower shall pay to
Lender all Excess Cash Flow to be applied as described in Section 2.8.
(e) Payments of Excess of Revised Interest Rate Over Initial
Interest Rate. To the extent, for any period, that accrued interest at the
Revised Interest Rate exceeds interest required to be paid hereunder for such
period at the Initial Interest Rate (such amount, the "Accrued Interest"),
Borrower shall only be required to pay such Accrued Interest after the
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outstanding principal balance of the Note has been paid in full. Unpaid
Accrued Interest shall accrue and compound on a monthly basis at the Revised
Interest Rate.
(f) Payment Dates. All payments required to be made pursuant to
Sections 2.5(a)-(e) above shall be made beginning on the first Payment Date
immediately after the end of the second Interest Accrual Period; provided,
however, that Borrower shall pay interest for the first Interest Accrual
Period on the Closing Date.
(g) Calculation of Interest. Interest shall accrue on the
outstanding principal balance of the Loan and all other amounts due to Lender
under the Loan Documents commencing upon the Closing Date. Interest shall
accrue on Accrued Interest commencing on the first Payment Date following the
Optional Prepayment Date. Interest shall be computed on the actual number of
days elapsed, based on a 360 day year.
(h) Default Rate Interest. If an Event of Default has occurred and
is continuing, the entire unpaid amount outstanding hereunder and under the
Note will bear interest at the Default Rate.
(i) Late Charge. If Borrower fails to make any payment of any sums
due under the Loan Documents after the same is due, Borrower shall, at
Lender's option evidenced by written notice of Lender to Borrower, pay a Late
Charge.
(j) Maturity Date. On the Maturity Date, Borrower shall pay to
Lender all amounts owing under the Loan Documents, including without
limitation, interest, principal, Late Charges, Default Rate interest, Accrued
Interest and any Yield Maintenance Premium. The Yield Maintenance Premium
shall only be due and payable on the date of acceleration of the Note.
Section 2.6. Voluntary Defeasance.
(a) Provided that no Event of Default has occurred and is then
continuing, after two years after the Start-Up Day (but only before the
Optional Prepayment Date), Borrower may voluntarily defease (A) all of the
Loan or (B) a portion of the Loan on a Facility-by-Facility basis, or (C) a
portion of the Loan on a non-Facility-by-Facility basis, but only pursuant to
Section 5.1(P); provided, that for any defeasance, Borrower must comply with
Section 2.11.
(b) In the event of any such voluntary defeasance Borrower shall
give Lender written notice of its intent to defease, which notice shall be
given at least thirty (30) days prior to the date upon which defeasance is to
be made and shall specify the Payment Date and the amount of such defeasance.
If any such notice of defeasance is given, Borrower shall be required to
defease the Loan or a portion thereof pursuant to Section 5.1(P) or Section
2.11 on the specified Payment Date (unless such notice is revoked by Borrower
prior to the date specified therein in which event Borrower shall immediately
reimburse Lender for any reasonable costs incurred by Lender in connection
with Borrower's giving of such notice and revocation).
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(c) Any voluntary defeasance of the Loan by Borrower is required to
be made on a Payment Date.
(d) Borrower shall not be permitted at any time to defease all or
any part of the Loan except as expressly provided in this Section 2.6.
(e) BORROWER UNDERSTANDS AND ACKNOWLEDGES THAT AS A MATERIAL
INDUCEMENT TO LENDER'S AGREEMENT TO MAKE THE LOAN, BORROWER HAS AGREED, AS
SET FORTH HEREIN, THAT THE LOAN MAY NOT BE PREPAID OR DEFEASED AT ALL PRIOR
TO TWO YEARS AFTER THE START-UP DAY, AND IN CERTAIN OTHER CASES MAY ONLY BE
PREPAID OR DEFEASED WITH THE CONCURRENT PAYMENT OF CERTAIN YIELD MAINTENANCE
PREMIUMS. BORROWER HEREBY IRREVOCABLY WAIVES, DISCLAIMS AND RENOUNCES ANY AND
ALL RIGHTS IT MAY HAVE TO THE CONTRARY UNDER Section 2954.10 OF THE
CALIFORNIA CIVIL CODE OR OTHERWISE. BORROWER HEREBY AGREES THAT LENDER'S
DAMAGES, IN THE EVENT OF A PERMITTED PREPAYMENT OR DEFEASANCE HEREUNDER,
WOULD BE IMPRACTICABLE TO DETERMINE, AND THAT THE YIELD MAINTENANCE PREMIUMS
SET FORTH HEREIN ARE REASONABLE ESTIMATES THEREOF. BY INITIALING THIS
PROVISION IN THE SPACE PROVIDED BELOW, BORROWER HEREBY DECLARES THAT LENDER'S
AGREEMENT TO MAKE THE LOAN AT THE INTEREST RATE AND FOR THE TERM SET FORTH
HEREIN CONSTITUTES ADEQUATE CONSIDERATION, GIVEN INDIVIDUAL WEIGHT BY
BORROWER, FOR THE WAIVERS AND AGREEMENTS SET FORTH ABOVE.
INITIALS: ______________
Section 2.7. Prepayment. (a) On and after the earlier to occur of
(i) the Optional Prepayment Date or (ii) at Lender's sole election, upon the
occurrence and during the continuation of an Event of Default hereunder, any
date on or after and during the continuation of such Event of Default, in
addition to all other payments required hereunder, Borrower shall pay and use
all Excess Cash Flow to prepay the Loan on each Payment Date in accordance
with Section 2.12(g) and Section 2.8 and, after payment in full of the
Principal Indebtedness (but not Accrued Interest or interest thereon) to pay
Accrued Interest and interest thereon and all other amounts then owing.
(b) If Borrower is required by Lender under the provisions of any
Deed of Trust to prepay the Loan or any portion thereof in the event of
damage, destruction or a Taking of a Facility, Borrower shall prepay the Loan
to the full extent of the Insurance Proceeds or the Condemnation Proceeds,
and there shall be no Yield Maintenance Premium or penalty assessed against
Borrower by reason thereof.
(c) On any Payment Date occurring on and after the Optional
Prepayment Date (provided no Event of Default has occurred and is
continuing), Borrower may voluntarily prepay the Loan in whole or in part,
and there shall be no Yield Maintenance Premium or penalty assessed against
Borrower by reason thereof.
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(d) All prepayments made pursuant to this Section 2.7 shall be
applied in accordance with the provisions of Section 2.8
(e) Any prepayment of the Loan by Borrower is required to be made
on a Payment Date.
(f) Borrower shall not be permitted at any time to prepay all or
any part of the Loan except as expressly provided in this Section 2.7.
(g) Notwithstanding anything to the contrary set forth herein, if
the Loan is prepaid in whole or in part prior to the Optional Prepayment Date
in circumstances where, pursuant to the applicable provisions of the Loan
Documents, no Yield Maintenance Premium is due, then Borrower shall
nevertheless pay to Lender (in addition to the prepaid principal and accrued
interest) an amount (the "Unearned Premium") equal to the Relevant Percentage
of (i) the Hypothetical Principal minus (ii) the unpaid Principal
Indebtedness (before accounting for such prepayment). As used herein, (x)
the "Relevant Percentage" shall mean the percentage of the unpaid Principal
Indebtedness that is being so prepaid, and (y) the "Hypothetical Principal"
shall mean the principal balance that would be outstanding on the date of
such prepayment under a loan in the original principal amount of One Hundred
Fifty Million Dollars ($150,000,000.00), which is made on the date hereof,
with interest at the rate of 6.76% per annum, and is paid in 312 equal
monthly installments of principal and interest on each Payment Date
commencing February 11, 1998 (with each such monthly installment being
applied first to accrued interest, computed on the basis of the actual number
of days elapsed and a 360-day year, and then to amortization of principal).
The payment of the Unearned Premium required under this Section 2.7(g) is
intended as a refund to Lender of the unearned portion of the Premium.
(h) BORROWER UNDERSTANDS AND ACKNOWLEDGES THAT AS A MATERIAL
INDUCEMENT TO LENDER'S AGREEMENT TO MAKE THE LOAN, BORROWER HAS AGREED, AS
SET FORTH HEREIN, THAT THE LOAN MAY NOT BE PREPAID OR DEFEASED AT ALL PRIOR
TO TWO YEARS AFTER THE START-UP DAY, AND IN CERTAIN OTHER CASES MAY ONLY BE
PREPAID OR DEFEASED WITH THE CONCURRENT PAYMENT OF CERTAIN YIELD MAINTENANCE
PREMIUMS. BORROWER HEREBY IRREVOCABLY WAIVES, DISCLAIMS AND RENOUNCES ANY AND
ALL RIGHTS IT MAY HAVE TO THE CONTRARY UNDER Section 2954.10 OF THE
CALIFORNIA CIVIL CODE OR OTHERWISE. BORROWER HEREBY AGREES THAT LENDER'S
DAMAGES, IN THE EVENT OF A PERMITTED PREPAYMENT OR DEFEASANCE HEREUNDER,
WOULD BE IMPRACTICABLE TO DETERMINE, AND THAT THE YIELD MAINTENANCE PREMIUMS
SET FORTH HEREIN ARE REASONABLE ESTIMATES THEREOF. BY INITIALING THIS
PROVISION IN THE SPACE PROVIDED BELOW, BORROWER HEREBY DECLARES THAT LENDER'S
AGREEMENT TO MAKE THE LOAN AT THE INTEREST RATE AND FOR THE TERM SET FORTH
HEREIN CONSTITUTES ADEQUATE CONSIDERATION, GIVEN INDIVIDUAL WEIGHT BY
BORROWER, FOR THE WAIVERS AND AGREEMENTS SET FORTH ABOVE.
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INITIALS: ______________
Section 2.8. Application of Payments. Except during the
continuation of an Event of Default, all proceeds of any repayment, including
prepayments, of the Loan shall be applied to pay: first, any costs and
expenses of Lender, including, without limitation, the Lender's reasonable
attorney's fees and disbursements actually arising as a result of such
repayment or reasonably expended by Lender to protect the Collateral; second,
accrued and unpaid interest at the Initial Interest Rate; third, to the
Principal Indebtedness (but not to Accrued Interest or interest thereon);
fourth, to Accrued Interest and interest accrued thereon; and fifth, any
other amounts then due and owing under the Loan Documents. After the
occurrence and during the continuation of an Event of Default, all proceeds
of repayment, including any payment or recovery on the Collateral shall,
unless otherwise provided in the Deeds of Trust, be applied in such order and
in such manner as Lender shall elect in its sole discretion.
Section 2.9. Payment of Debt Service, Method and Place of Payment.
(a) Except as otherwise specifically provided herein, all payments and
prepayments under this Agreement and the Note shall be made to Lender not
later than 12:00 noon, New York City time, on the date when due and shall be
made in lawful money of the United States of America in federal or other
immediately available funds to an account specified to Borrower by Lender in
writing, and any funds received by Lender after such time, for all purposes
hereof, shall be deemed to have been paid on the next succeeding Business Day.
(b) All payments made by Borrower hereunder or by Borrower under
the other Loan Documents, shall be made irrespective of, and without any
deduction for, any set-offs or counterclaims.
Section 2.10. Taxes. All payments made by Borrower under this
Agreement and under the other Loan Documents shall be made free and clear of,
and without deduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority (other than taxes imposed
on the income of Lender).
Section 2.11. Defeasance Requirements. (a) Subject to Section 2.6,
the Loan may be defeased (A) in whole, or (B) in part on a
Facility-by-Facility basis, or (C) in part on a non-Facility-by-Facility
basis, but only pursuant to Section 5.1(P); provided, that Borrower: (i)
provides not less than thirty (30) days prior written notice to the Lender
specifying a Payment Date (the "Defeasance Release Date") on which the
payments provided in clauses (ii) and (iii) below are to be made and the
deposits provided in clause (iv) below are to be made, (ii) pays all interest
accrued and unpaid on the Principal Indebtedness to and including the
Defeasance Release Date, (iii) pays all other sums then due and payable under
the Loan Documents, (iv) deposits with Lender an amount equal to the
Defeasance Deposit, (v) in the case of a defeasance in part on a
Facility-by-Facility basis, provides to Lender evidence satisfactory that the
Defeasance Debt Service Coverage Ratio for all Facilities (after giving
effect to the defeasance and calculated on the basis of the prior twelve (12)
calendar months), shall be greater
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than the greater of (x) 1.50 and (y) the Debt Service Coverage Ratio
(calculated on the basis of the prior twelve (12) calendar months) for all
Facilities as of the Payment Date immediately preceding the Defeasance
Release Date, (vi) delivers to Lender (A) a security agreement, in form and
substance reasonably satisfactory to Lender, creating a first priority
perfected Lien on the deposits required pursuant to this Section and the U.S.
Obligations purchased on behalf of Borrower in accordance with this Section
(the "Security Agreement") securing Borrower's obligations under the Loan
Documents, (B) for execution by Lender, a release of each relevant Facility
from the lien of the Related Deed of Trust in a form appropriate for
recording in each jurisdiction in which the relevant Facility is located, (C)
an Officer's Certificate of Borrower certifying that the requirements set
forth in this Section have been satisfied, including, without limitation,
that no Event of Default has occurred and is continuing, (D) an opinion of
counsel from Borrower's counsel in form and substance reasonably satisfactory
to the Lender stating, among other things, (x) that, without qualification,
the U.S. Obligations have been duly and validly assigned and delivered to
Lender and Lender has a first priority perfected security interest on the
deposits required pursuant to this Section and a first priority perfected
lien on the U.S. Obligations and the proceeds thereof purchased hereunder and
(y) that the defeasance will not adversely affect the status of any REMIC
formed in connection with a Securitization, and (E) such other certificates,
documents or instruments as the Lender may reasonably request including,
without limitation, (x) written confirmation from the relevant Rating
Agencies that such defeasance will not cause any Rating Agency to withdraw,
qualify or downgrade the then applicable rating on any security issued in
connection with any Securitization and (y) a certificate from an Independent
certified public accountant certifying that the amounts of the U.S.
Obligations comply with all of the requirements of this Loan Agreement. The
U.S. Obligations shall mature on or be redeemable, or provide for payment
thereon, on or prior to the Business Day preceding the date on which payments
under the Note are due and payable and the proceeds thereof shall be payable
directly to the Cash Collateral Account. In connection with the foregoing,
Borrower appoints Lender as its agent for the purpose of applying the amounts
delivered pursuant to clause (iv) above to purchase U.S. Obligations.
Notwithstanding anything in this Agreement to the contrary, in the event the
Yield Maintenance Premium is due as a result of the acceleration of the
Indebtedness after the occurrence of an Event of Default, Lender shall have
the right to receive and collect the Yield Maintenance Premium but shall have
no obligation to purchase U.S. Obligations or otherwise comply with this
Section 2.11.
(b) Upon compliance with the requirements of this Section 2.11 in
the event of a total defeasance of the Loan, or a partial defeasance of the
Loan on a Facility-by-Facility basis, the relevant Facilities or Facility for
which such defeasance has been consummated shall be released from the Lien of
the Related Deed of Trust. In connection with a total defeasance of the
Loan, Borrower may be required by Lender to assign its obligations under the
Note, the other Loan Documents and the Security Agreements together with the
pledged U.S. Obligations to such other entity or entities established or
designated by Lender (the "Successor Trustor"). Such Successor Trustor shall
assume the obligations under the Note, the other Loan Documents and the
Security Agreements and, upon such assignment, Borrower shall be relieved of
its obligations thereunder.
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(c) Nothing in this Section 2.11 shall release Borrower from any
liability or obligation relating to any environmental matters arising under
Sections 4.1(b)(U) or 5.1(D)-(I), inclusive, hereof.
Section 2.12. Central Cash Management.
(a) Collection Accounts and Security Deposit Accounts.
(i) Borrower shall open and maintain at each Collection Account
Bank two trust accounts (each, a "Collection Account" and a
"Security Deposit Account", respectively, and collectively,
the "Collection Accounts" and the "Security Deposit
Accounts"), and the relevant Collection Account Bank shall not
commingle the amounts in either such account with any other
amounts held on behalf of Lender or any other Person.
(ii) Each Collection Account shall be assigned an identification
number by the relevant Collection Account Bank and shall be
opened and maintained in the name "Nomura Asset Capital
Corporation as Mortgagee of BPP/Golden State Acquisitions,
L.L.C." Neither Borrower nor any Manager shall have any right
of withdrawal from any Collection Account. Borrower shall
cause all tenants of each Facility to deposit all Rents, Money
or other items of Gross Revenue (other than security deposits)
directly into the applicable Collection Account. Without in
any way limiting Borrower's obligations pursuant to the
preceding sentence, if Borrower or any Manager nevertheless
receives any Rents, Money or other items of Gross Revenue
(other than security deposits), the same shall be held in
trust for the benefit of Lender, and Borrower shall, and shall
cause each Manager to, within two (2) Business Days after
receipt thereof, deposit the same in the applicable Collection
Account. Within five (5) days after the date hereof, Borrower
shall send notices (collectively, the "Tenant Notices") to
each tenant under the Leases of any Facility and other
obligors with respect to any Facility, instructing them to
make all payments of Rent and any other amounts which are
payable to Borrower under Leases or otherwise with respect to
the relevant Facility directly to the applicable Collection
Account.
(iii) Each Security Deposit Account shall be assigned an
identification number by the applicable Collection Account
Bank and shall be opened and maintained in the name "Nomura
Asset Capital Corporation as Mortgagee of BPP/Golden State
Acquisitions, L.L.C." Borrower shall cause all tenants of
each Facility to deposit all security deposits directly into
the applicable Security Deposit Account. Without in any way
limiting Borrower's obligations pursuant to the preceding
sentence, Borrower shall, and shall cause each Manager to,
deposit directly into the
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applicable Security Deposit Account all security deposits
received by or on behalf of Borrower in violation or
contradiction of the preceding sentence within two (2)
Business Days after receipt thereof. Neither Borrower nor any
Manager shall have any right of withdrawal from any Security
Deposit Account. On written request from Borrower with
appropriate supporting materials, Lender will direct the
applicable Collection Account Bank to release funds from the
applicable Security Deposit Account to refund or apply
security deposits as required by the Leases of the relevant
Facility or by applicable Legal Requirements (and in the case
of an application of security deposits, Borrower shall
thereupon deposit the amount of the security deposit
reimbursed by the applicable tenant as a result of such
application into the applicable Collection Account). Borrower
may designate a new financial institution to serve as a
Collection Account Bank hereunder as provided in Section
2.13(i). Any breach of this Section 2.12(a) by Borrower shall
be an Event of Default.
(b) Payments. Prior to the occurrence of a Cash Management Event,
Borrower shall pay to Lender or Lender's designee or to an account identified
by Lender or Lender's designee on or prior to each Payment Date, the Required
Debt Service Payment for such Payment Date, the Basic Carrying Costs Monthly
Installment for the Interest Accrual Period immediately preceding such
Payment Date and the Capital Reserve Monthly Installment for the Interest
Accrual Period immediately preceding such Payment Date. After the occurrence
of a Cash Management Event, pursuant to each of the Collection Account
Agreements among the respective Collection Account Banks, Borrower and Lender
(each, a "Collection Account Agreement"), Borrower will authorize and direct
each Collection Account Bank to transfer on a daily basis, all funds
deposited in the Collection Account (but not the Security Deposit Account)
for each Facility to Lender or Lender's designee to be held in an Eligible
Account established by Lender or Lender's designee (the "Cash Collateral
Account"). The Cash Collateral Account shall be under the sole dominion and
control of Lender. Borrower shall have no right of withdrawal in respect of
the Cash Collateral Account. If, twelve (12) calendar months after the
occurrence of a Cash Management Event, the Debt Service Coverage Ratio
computed on the basis of the prior twelve (12) calendar months, is greater
than or equal to 1.50, then Borrower may revoke its instruction to the
Collection Account Banks regarding the transfer of funds to the Cash
Collateral Account and will resume making payments to Lender in accordance
with the first sentence of this Section 2.12(b).
(c) Establishment of Sub-Accounts. Each Cash Collateral Account
shall contain a Debt Service Payment Sub-Account, a Basic Carrying Costs
Sub-Account, a Capital Reserve Sub-Account, a Deferred Maintenance
Sub-Account, a Leasing Reserve Sub-Account, a Securitization Expense
Sub-Account and an Operating Expense Sub-Account, each of which accounts
(individually, a "Sub-Account" and collectively, the "Sub-Accounts") (i) may
be ledger or book entry accounts and need not be actual accounts and (ii)
shall be an Eligible Account to which certain funds shall be allocated and
from which disbursements shall be made pursuant to the terms of this Loan
Agreement.
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(d) Permitted Investments. Upon the written request of Borrower,
which request may be made once per Interest Accrual Period, Lender shall
direct the Cash Collateral Account Bank to invest and reinvest any balance in
the Cash Collateral Account from time to time in Permitted Investments as
instructed by Borrower; provided, however, that (i) if Borrower fails, to so
instruct Lender, or an Event of Default shall have occurred and is
continuing, Lender may direct the Cash Collateral Account Bank to invest and
reinvest such balance in Permitted Investments as Lender shall determine in
Lender's sole discretion, (ii) the maturities of the Permitted Investments on
deposit in the Cash Collateral Account shall, to the extent such dates are
ascertainable, be selected and coordinated to become due not later than the
day before any disbursements from the Sub-Accounts must be made, (iii) all
such Permitted Investments shall be held in the name and be under the sole
dominion and control of Lender; (iv) no Permitted Investment shall be made
unless Lender shall retain a perfected first priority Lien in such Permitted
Investment securing the Indebtedness and all filings and other actions
necessary to ensure the validity, perfection, and priority of such Lien have
been taken; (v) Lender shall only be required to follow the investment
instructions which were most recently received by Lender and Borrower shall
be bound by such last received investment instructions; and (vi) any written
request from Borrower continuing investment instructions shall contain an
Officer's Certificate. from Borrower (which may be conclusively relied upon
by Lender and its agents) that any such investments constitute Permitted
Investments. It is the intention of the parties hereto that all amounts
deposited in the Cash Collateral Account (or as much thereof as Lender may
arrange to invest) shall at all times be invested in Permitted Investments.
All funds in the Cash Collateral Account that are invested in a Permitted
Investment are deemed to be held in such Cash Collateral Account for all
purposes of this Agreement and the other Loan Documents. All gain in
investments of funds in the Cash Collateral Account shall be allocated in the
same manner as any other funds in the Cash Collateral Account. Lender shall
have no liability for any loss in investments of funds in the Cash Collateral
Account that are invested in Permitted Investments (unless invested contrary
to Borrower's request other than after the occurrence of a Default or an
Event of Default) and no such loss shall affect Borrower's obligation to
fund, or liability for funding, the Cash Collateral Account and each
Sub-Account, as the case may be. Borrower and Lender agree that Borrower
shall include all such earnings and losses (other than those for Lender's
account in accordance with the immediately preceding sentence) on the Cash
Collateral Account as income of Borrower for federal and applicable state tax
purposes. Borrower shall be responsible for any and all fees, costs and
expenses associated with Permitted Investments.
(e) Interest on Accounts. All interest paid or other earnings on
the Permitted Investments made hereunder shall be deposited into the Cash
Collateral Account and shall be subject to allocation and distribution like
any other monies deposited therein.
(f) Payment of Basic Carrying Costs, Debt Service, Capital
Improvement Costs, Deferred Maintenance Costs, Leasing Expenses,
Securitization Expenses and Operating Expenses.
(i) Payment of Basic Carrying Costs. At least five (5)
Business Days prior to the due date of any Basic Carrying Cost,
and not more frequently than once each Interest Accrual Period,
Borrower shall
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notify, Lender in writing and request that Lender pay such Basic
Carrying Cost on behalf of Borrower on or prior to the due date
thereof. Together with each such request, Borrower shall
furnish Lender with copies of bills and other documentation as
may be reasonably required by Lender to establish that such
Basic Carrying Cost is then due. Lender shall make such payments
out of the Basic Carrying Cost Sub-Account before the same shall
be delinquent to the extent that there are funds available in the
Basic Carrying Cost Sub-Account and Lender has received
appropriate documentation to establish the amount(s) due and the
due date(s) as and when provided above.
(ii) Payment of Debt Service. At or before 12:00 noon, New
York City time, on each Payment Date during the term of the Loan,
Lender shall transfer to Lender's own account from the Debt
Service Payment Sub-Account an amount equal to the Required Debt
Service Payment for the Payment Date. Borrower shall be deemed
to have timely made the Required Debt Service Payment pursuant to
Section 2.9 regardless of the time Lender makes such transfer as
long as sufficient funds are on deposit in the Debt Service
Payment Sub-Account at 12:00 noon, New York City time on the
applicable Payment Date.
(iii) Payment of Capital Improvement Costs. Not more
frequently than once each Interest Accrual Period and provided
that no Event of Default has occurred and is continuing, Borrower
may notify Lender in writing and request that Lender release to
Borrower or its designee funds out of the Capital Reserve
Sub-Account to the extent funds are available therein for payment
of Capital Improvement Costs. Together with each such request,
Borrower shall furnish Lender with copies of bills and other
documentation as may be reasonably required by Lender to
establish that such Capital Improvement Costs are reasonable,
including, but not limited to, an Officer's Certificate stating
that (i) the work relating thereto has been completed and that
such amounts are then due (or have been paid) and (ii) the
released funds shall be used solely for the purpose of payment of
such Capital Improvement Costs. Upon Lender's approval (which
shall not be unreasonably withheld), which approval, if granted
by Lender, shall be delivered within ten (10) Business Days of
Lender's receipt of such request, Lender shall release the funds
to Borrower or its designee within ten (10) days of Lender's
approval. Lender's failure to approve or disapprove such request
within such ten (10) day period shall be deemed to be the
approval of Lender.
(iv) Payment of Deferred Maintenance Costs. Not more
frequently than once each Interest Accrual Period and provided
that no Event of Default has occurred and is continuing, Borrower
may notify Lender in writing and request that Lender release to
Borrower or its
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designee funds out of the Deferred Maintenance Sub-Account to the
extent funds are available therein for payment of Deferred
Maintenance Costs. Together with each such request, Borrower
shall furnish Lender with a certificate stating that an item of
deferred maintenance listed on Exhibit D has been completed and
stating the cost to complete such item. If Lender's approval is
granted, Lender shall release the funds to Borrower or its
designee within ten (10) days of Lender's approval. Upon
satisfactory completion of the repairs identified on Exhibit D
attached hereto, as determined by Lender in its reasonable
discretion, and provided no Event of Default has occurred and is
continuing, Lender shall release to Borrower all amounts
remaining in the Deferred Maintenance Sub-Account.
(v) Payment of Leasing Expenses. Not more frequently than
once each Interest Accrual Period and provided that no Event of
Default has occurred and is continuing, Borrower may notify
Lender in writing and request that Lender release to Borrower or
its designee funds out of the Leasing Reserve Sub-Account to the
extent funds are available therein for payment of Leasing
Expenses. Together with each such request, Borrower shall
furnish Lender with copies of bills and other documentation as
may be reasonably required by Lender to establish that such
Leasing Expenses are reasonable, and that such amounts are then
due (or have been paid). Upon Lender's approval (which shall not
be unreasonably withheld), which approval, if granted by Lender,
shall be delivered within ten (10) Business Days of Lender's
receipt of such request, Lender shall release the funds to
Borrower or its designee within ten (10) days of Lender's
approval.
(vi) Payment of Securitization Expenses. To the extent
funds are available therein to pay the amounts for which Borrower
is responsible pursuant to Section 2.14, Lender may release funds
out of the Securitization Expense Sub-Account to (a) pay such
amounts or (b) after Lender has paid all of the amounts for which
Borrower is responsible pursuant to Section 2.14, provided no
Event of Default has occurred and is continuing, to refund to
Borrower all amounts remaining in the Securitization Expense
Sub-Account.
(vii) Payment of Operating Expenses. On and after the
Optional Prepayment Date, not more frequently than once each
Interest Accrual Period and provided that no Default or Event of
Default has occurred and is continuing, Lender shall direct the
Cash Collateral Account Bank to, within five (5) Business Days of
Lender's receipt of an Operating Expense Certificate from
Borrower, such Operating Expense Certificate to be delivered by
Borrower not more frequently than once each Interest Accrual
Period, transfer funds to Borrower or its designee out of the
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Operating Expense Sub-Account to the extent that there are funds
available therein in an amount not to exceed the amount stated in
the Operating Expense Certificate up to the Operating Expense
Monthly Installment. Together with each such Operating Expense
Certificate, Borrower shall furnish Lender with an Officer's
Certificate stating that all operating expenses from previous
periods have been paid in full and that such amounts are then due
or have been paid.
(viii) Extra Funds for Operating Expenses. On and after the
Optional Prepayment Date, not more frequently than once each
Interest Accrual Period and provided that no Default or Event of
Default has occurred and is continuing if in a given Interest
Accrual Period, the Borrower requires amounts in excess of the
Operating Expense Monthly Installment ("Extra Funds"), Borrower,
at the time it delivers the Operating Expense Certificate, may
deliver a written request to Lender for a disbursement of Extra
Funds stating the amount of such Extra Funds and the purpose for
which such amount is intended with attachments of copies of bills
and other documentation as may be required by Lender to establish
that such Operating Expenses are reasonable and that such amounts
are then due or expected to become due in that month. Within ten
(10) days after Lender's approval, which approval, if granted by
Lender (such approval not to be unreasonably withheld or
delayed), shall be delivered within ten (10) Business Days of
Lender's receipt of such request, Lender shall release the funds
to Borrower or its designee.
(ix) Reconciliation. On and after the Optional Prepayment
Date, Borrower shall furnish Lender monthly, on each Payment
Date, a budget variance report reconciling the Operating Expenses
shown on the Annual Operating Budget with requested disbursements
for payment of Operating Expenses pursuant to Section 2.12(f).
(x) Remaining Amounts. All remaining amounts shall be
remitted to Borrower for Borrower's account on each Payment Date.
(g) Monthly Funding of Sub-Accounts. During each Interest Accrual
Period and except as provided below, during the term of the Loan commencing with
the Interest Accrual Period in which the Closing Date occurs (each, the "Current
Interest Accrual Period"), Lender shall allocate all funds then on deposit
(regardless of whether such funds were transferred by any Collection Account
Bank to the Cash Collateral Account Bank or by Borrower to Lender pursuant to
Section 2.12(b)) in the Cash Collateral Account among the Sub-Accounts as
follows and in the following priority:
(i) first, to the Basic Carrying Costs Sub-Account, until
an amount equal to the Basic Carrying Costs Monthly Installment
for the Current Interest Accrual Period has been allocated to the
Basic Carrying
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Costs Sub-Account, provided, that as of the Closing Date Borrower
shall deposit into the Cash Collateral Account for funding of the
Basic Carrying Costs Sub-Account an amount agreed to by Lender
and Borrower;
(ii) second, to the Debt Service Payment Sub-Account, until
an amount equal to the Required Base Debt Service Payment for the
Payment Date immediately after the Current Interest Accrual
Period has been allocated to the Debt Service Payment Sub-Account;
(iii) third, to the Capital Reserve Sub-Account, until an
amount equal to the Capital Reserve Monthly Installment for the
Current Interest Accrual Period has been allocated to the Capital
Reserve Sub-Account;
(iv) fourth, to the Leasing Reserve Sub-Account, until an
amount equal to the Leasing Reserve Monthly Installment has been
allocated to the Leasing Reserve Sub-Account;
(v) fifth, to the Securitization Expense Sub-Account,
provided, however, that only the Initial Securitization Expense
Amount shall be allocated to the Securitization Sub-Account;
(vi) sixth, during each of the following periods: on and
after the Optional Prepayment Date, or at Lender's sole election,
upon the occurrence and during the continuation of an Event of
Default, to the Operating Expense Sub-Account, until an amount
equal to the Operating Expense Monthly Installment for the
Current Interest Accrual Period has been allocated to the
Operating Expense Sub-Account;
(vii) seventh, during each of the following two periods: (i)
on and after the Optional Prepayment Date and (ii) at Lender's
sole election, upon the occurrence of a Default or an Event of
Default hereunder which is continuing, any amounts deposited into
or remaining in the Cash Collateral Account after (A) the minimum
amounts set forth in clauses (i), (ii), (iii), (iv), (v) and (vi)
above have been satisfied with respect to the Current Interest
Accrual Period and any periods prior thereto and (B) the funding
of additional reserves at levels determined by Borrower to be
prudent for working capital, Capital Improvement Costs and other
Borrower costs, which levels shall be satisfactory to Lender, in
Lender's sole discretion (the "Excess Cash Flow"), shall be
allocated to the Debt Service Sub-Account and be applied by
Lender on each Payment Date in accordance with Section 2.8 and
shall not be disbursed to Borrower; and further provided,
however, that if an Event of Default has occurred and is
continuing any amounts deposited into or remaining in the Cash
Collateral Account shall be for the account of Lender and may be
withdrawn by Lender to be applied in any manner as Lender may
elect in Lender's sole discretion; and
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(vii) seventh, provided that (i) no Default or Event of
Default has occurred and is continuing and Lender has received
all financial information described in Section 5.1(Q) for the
most recent periods for which the same are due, Lender agrees
that in each Current Interest Accrual Period any amounts
deposited into or remaining in the Cash Collateral Account after
(A) the minimum amounts set forth in clauses (i), (ii), (iii),
(iv), (v), (vi) and (vii) (if applicable) above have been
satisfied with respect to the Current Interest Accrual Period and
any periods prior thereto and (B) the funding of additional
reserves at levels determined by Borrower to be prudent for
working capital, Capital Improvement Costs and other Borrower
costs, which levels shall be satisfactory to Lender, in Lender's
sole discretion, shall be disbursed by Lender on the first
Payment Date after the end of the then Current Interest Accrual
Period, at Borrower's expense, to such account that Borrower may
request in writing. Lender and its agents shall not be
responsible for monitoring Borrower's use of any funds disbursed
from the Cash Collateral Account or any of the Sub-Accounts.
If an Event of Default has occurred and is continuing or if on any
Payment Date the balance in any Sub-Account is insufficient to make the
required payment due from such Sub-Account, Lender may, in its sole
discretion, in addition to any other rights and remedies available hereunder,
withdraw funds from any other Sub-Account to pay such deficiency. In the
event that Lender elects to apply funds of any such Sub-Account to pay any
Required Base Debt Service Payment, Borrower shall, upon demand, repay to
Lender the amount of such withdrawn funds to replenish such Sub-Account, and
if Borrower shall fail to repay such amounts within three (3) Business Days
after notice of such withdrawal, an Event of Default shall exist hereunder.
Notwithstanding the foregoing, on the Closing Date Borrower shall deposit (i)
the Initial Basic Carrying Costs Amount into the Basic Carrying Costs
Sub-Account, (ii) the Deferred Maintenance Amount into the Deferred
Maintenance Sub-Account and (iii) the Initial Securitization Expense Amount
in the Securitization Expense Sub-Account.
(h) Condemnation Proceeds and Insurance Proceeds. In the event of
a Taking with respect to any Facility, Borrower shall cause all the proceeds
in respect of such Taking ("Condemnation Proceeds") to be paid to Lender who
shall, except as otherwise provided in the second succeeding sentence or in
Section 2.12(c) of the Related Deed of Trust, apply such Condemnation
Proceeds to reduce the Indebtedness in accordance with Section 2.7 and
Section 2.8. In the event of a casualty with respect to any Facility, except
as otherwise provided in the next sentence or in Section 2.5 of the Related
Deed of Trust, Borrower shall cause all Proceeds of any insurance policy
("Insurance Proceeds") to be paid to Lender who shall apply such Insurance
Proceeds to reduce the Indebtedness in accordance with Section 2.7 and
Section 2.8. All Insurance Proceeds received by Borrower or Lender in
respect of business interruption coverage and all Condemnation Proceeds
received in respect of a temporary Taking shall be maintained in the Cash
Collateral Account maintained with respect to the affected Facility, to be
applied by Lender in the same manner as Rents (other than security deposits)
received from Borrower with respect to the operation of such Facility;
provided, further, that in
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the event that the Insurance Proceeds of any such business interruption
insurance policy or Condemnation Proceeds of such temporary Taking are paid in a
lump sum in advance, Lender shall hold such Insurance Proceeds or Condemnation
Proceeds in a segregated interest-bearing escrow account at the Cash Collateral
Account Bank, and Lender shall estimate the number of months required for
Borrower to restore the damage caused by the casualty to the Facility or that
the Facility will be affected by such temporary Taking, as the case may be,
shall divide the aggregate business interruption Insurance Proceeds or
Condemnation Proceeds in connection with such casualty or temporary Taking by
such number of months, and shall disburse from such escrow account into the Cash
Collateral Account each month during the performance of such restoration or
pendency of such temporary Taking such monthly installment of said Insurance
Proceeds or Condemnation Proceeds. Any Insurance Proceeds or Condemnation
Proceeds made available to Borrower for restoration or repair in accordance with
the Related Deed of Trust, to the extent not used by Borrower in connection
with, or to the extent they exceed the cost of, such restoration, shall be paid
to Borrower.
(i) Payment of Basic Carrying Costs. Except to the extent that
Lender is obligated to pay Basic Carrying Costs from the Basic Carrying Costs
Sub-Account pursuant to the terms of Section 2.12(f), Borrower shall pay all
Basic Carrying Costs with respect to itself and the Facilities in accordance
with the provisions of the Deeds of Trust, subject, however, to Borrower's
rights to contest payment of same in accordance with the Deeds of Trust.
Borrower's obligation to pay (or cause Lender to pay) Basic Carrying Costs
pursuant to this Agreement shall include, to the extent permitted by
applicable law, Impositions resulting from future changes in law which impose
upon Lender or any Deed of Trust Trustee an obligation to pay any property
taxes or other Impositions or which otherwise adversely affect Lender's or
the Deed of Trust Trustee's interests. (In the event such a change in law
prohibits Borrower from assuming liability for payment of any such
Imposition, the outstanding Indebtedness shall, at the sole option of Lender,
become due and payable on the date that is 120 days after such change in law
(and failure to pay such amounts on the date due shall be an Event of
Default)). Should an Event of Default have occurred and be continuing, the
proceeds on deposit in the Basic Carrying Costs Sub-Account may be applied by
Lender in any manner as Lender in its sole discretion may determine.
Section 2.13. Security Agreement. (a) Pledge of Accounts. To
secure the full and punctual payment and performance of all of the
Indebtedness, Borrower hereby sells, assigns, conveys, pledges and transfers
to Lender and grants to Lender a first and continuing security interest in
and to, the following property, whether now owned or existing or hereafter
acquired or arising and regardless of where located (collectively, the
"Account Collateral"):
(i) all of Borrower's right, title and interest in the Cash
Collateral Account (including all Sub-Accounts) and all Money and
Permitted Investments, if any, from time to time deposited or
held in the Cash Collateral Account;
(ii) all of Borrower's right, title and interest in each
Collection Account and Security Deposit Account and all Money, if
any, from time to time
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deposited or held in any Collection Account or Security Deposit
Account; provided, however, that nothing herein is intended to
subject any Security Deposit Account to any claim of Lender in
violation of applicable Legal Requirements);
(iii) all interest, dividends, Money, Instruments and other
property from time to time received, receivable or otherwise
payable in respect of, or in exchange for, any of the foregoing;
and
(iv) to the extent not covered by clauses (i), (ii), or
(iii) above, all Proceeds and products of any or all of the
foregoing.
(b) Covenants. Borrower covenants that (i) all Rents, Money and
other items of Gross Revenue shall be deposited directly into the relevant
Collection Account or the Security Deposit Account, as applicable, in
accordance with Section 2.12(a) and (ii) so long as any portion of the
Indebtedness is outstanding, Borrower shall not open (nor permit any Manager
or any Person to open) any other account for the collection of Rents, Money
or other items of Gross Revenue, other than such replacement Collection
Accounts as may be approved by Lender in Lender's sole discretion.
(c) Instructions and Agreements. On or before the Closing Date,
Borrower will submit to each Collection Account Bank for each Facility a
Collection Account Agreement to be executed by such Collection Account Bank.
On or before the Closing Date, Borrower and the Cash Collateral Account Bank
will execute and deliver a Cash Collateral Account Agreement in form and
substance satisfactory to Lender in Lender's sole discretion (the "Cash
Collateral Account Agreement"). Borrower agrees that prior to the payment in
full of the Indebtedness, the Cash Collateral Account Agreement shall be
irrevocable by Borrower without the prior written consent of Lender.
(d) Financing Statements: Further Assurances. Borrower will
execute and deliver to Lender for filing a financing statement or statements
in connection with the Account Collateral in the form required to properly
perfect Lender's security interest in the Account Collateral to the extent
that it may be perfected by such a filing. Borrower agrees that at any time
and from time to time, at the expense of Borrower, Borrower shall promptly
execute and deliver all further instruments, and take all further action,
that Lender may request, in order to perfect and protect the pledge and
security interest granted or purported to be granted hereby, or to enable
Lender to exercise and enforce Lender's rights and remedies hereunder with
respect to, the Account Collateral.
(e) Transfers and Other Liens. Borrower agrees that it will not
sell or otherwise dispose of any of the Account Collateral other than
pursuant to the terms hereof and of the other Loan Documents, or create or
permit to exist any Lien upon or with respect to all or any of the Account
Collateral, except for the Lien granted to Lender under this Agreement.
(f) Lender's Reasonable Care. Beyond the exercise of reasonable
care in the custody thereof, Lender shall not have any duty as to any Account
Collateral or any income
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thereon in its possession or control or in the possession or control of any
agents for, or of Lender, or the preservation of rights against any Person or
otherwise with respect thereto. Lender shall be deemed to have exercised
reasonable care in the custody of the Account Collateral in its possession if
the Account Collateral is accorded treatment substantially equal to that
which Lender accords its own property, it being understood that Lender shall
not be liable or responsible for (i) any loss or damage to any of the Account
Collateral, or for any diminution in value thereof from a loss of, or delay
in Lender's acknowledging receipt of, any wire transfer from the Collection
Account Bank or (ii) any loss, damage or diminution in value by reason of the
act or omission of Lender, or Lender's agents, employees or bailees.
(g) Lender Appointed Attorney-In-Fact. Borrower hereby
irrevocably constitutes and appoints Lender as Borrower's true and lawful
attorney-in-fact, with full power of substitution, at any time after the
occurrence and during the continuation of an Event of Default to execute,
acknowledge and deliver any instruments and to exercise and enforce every
right, power, remedy, option and privilege of Borrower with respect to the
Account Collateral, and do in the name, place and stead of Borrower, all such
acts, things and deeds for and on behalf of and in the name of Borrower with
respect to the Account Collateral, which Borrower could or might do or which
Lender may deem necessary or desirable to more fully vest in Lender the
rights and remedies provided for herein with respect to the Account
Collateral and to accomplish the purposes of this Agreement. The foregoing
powers of attorney are irrevocable and coupled with an interest.
(h) Continuing Security Interest: Termination. This Section 2.13
shall create a continuing pledge of and security interest in the Account
Collateral and shall remain in full force and effect until payment in full of
the Indebtedness. Upon payment in full of the Indebtedness, Borrower shall
be entitled to the return, at its expense, of such of the Account Collateral
as shall not have been sold or otherwise applied pursuant to the terms
hereof, and Lender shall execute such instruments and documents as may be
reasonably requested by Borrower to evidence such termination and the release
of the pledge and Lien hereof, provided, however, that Borrower shall pay on
demand all of Lender's reasonable expenses in connection therewith.
(i) Replacement of Collection Account Bank. So long as no Default
or Event of Default shall have occurred and be continuing, Borrower shall
have the right at any time to designate a successor Collection Account Bank
to hold one or more of the Collection Account or the Security Deposit Account
upon thirty (30) days prior written notice to Lender, and Lender's reasonable
approval of the successor. No such designation shall become effective until
each of Borrower and the successor collection account bank has delivered to
Lender an executed collection account agreement substantially equivalent to
the existing Collection Account Agreement and financing statements as may be
necessary or appropriate have been prepared, executed and delivered to a
filing agency.
Section 2.14. Securitization. Borrower hereby acknowledges that
Lender, its successors or assigns, may sell or securitize the Loan or
portions thereof in one or more transactions through the issuance of
securities, which may be rated by the Rating Agencies (each,
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a "Securitization"; collectively, the "Securitizations"). Borrower agrees
that at its sole cost and expense, it shall reasonably cooperate with Lender
and use its best efforts to facilitate the consummation of each
Securitization including, but not limited to, by (a) amending or causing the
amendment of this Agreement and the other Loan Documents, and executing such
additional documents including amendments to Borrower's organizational
documents and preparing financial statements as reasonably requested by the
Rating Agencies to conform the terms of the Loan to the terms of similar
loans underlying completed or pending securitized transactions having or
seeking ratings the same as those then being sought in connection with the
relevant Securitization, provided, however, that any such amendment or
additional documents shall not change the economic terms of the Loan; (b)
promptly and reasonably providing such information as may be reasonably
requested in connection with the preparation of a private placement
memorandum or a registration statement required to privately place or
publicly distribute the securities in a manner which does not conflict with
federal or state securities laws; (c) providing in connection with each of
(i) a preliminary and a private placement memorandum or (ii) a preliminary
and final prospectus, as applicable, an indemnification certificate (x)
certifying that Borrower has carefully examined such memorandum or
prospectus, as applicable, including, without limitation, the sections
entitled "Special Considerations", "Description of the Deed of Trust Loan and
"The Underlying Trust Properties", "The Managers", "Borrower" and "Certain
Legal Aspects of the Deed of Trust Loan", and such sections (and any other
sections reasonably requested) insofar as they relate to Borrower, its
Affiliates, the Loan or the Facilities do not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make
the statements made, in the light of the circumstances under which they were
made, not misleading, provided, however, that Borrower shall not be required
to indemnify Lender for any losses relating to untrue statements or omissions
which Borrower identified to Lender in writing at the time of Borrower's
examination of such memorandum or prospectus as applicable, and (y)
indemnifying Lender (and its officers, directors, partners, employees,
affiliates and agents and each other person, if any, controlling Lender or
any of its affiliates within the meaning of either Section 15 of the
Securities Act of 1933, as amended, or Section 20 of the Securities Exchange
Act of 1934, as amended), the Issuer and the Advisor for any losses, claims,
damages, expenses or liabilities (including, without limitation, all
liabilities under all applicable federal and state securities laws)
(collectively, the "Liabilities") to which any of them may become subject (i)
insofar as the Liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact relating to
Borrower, its Affiliates, the Loan, the Facilities, the Managers or any
aspect of the subject financing or the parties directly involved therein
contained in such sections or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated in
such sections or necessary in order to make the statements in such sections,
in light of the circumstances under which they were made, not misleading or
(ii) as a result of any untrue statement of material fact in any of the
financial statements of Borrower incorporated into any placement memorandum,
prospectus, registration statement or other document connected with the
issuance of securities or the failure to include in such financial statements
or in any placement memorandum, prospectus, registration statement or other
document connected with the issuance of securities any material fact relating
to Borrower, its Affiliates, the Facilities, the Loan, the Managers and any
aspect of the subject financing necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided that Borrower shall have had an opportunity to review
and
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comment upon the relevant portions of such documents; and (z) agreeing to
reimburse Lender, the Issuer and the Advisor for any legal or other expenses
reasonably incurred by Lender, the Issuer and the Advisor in connection with
investigating or defending the Liabilities; (d) causing to be rendered such
customary opinion letters as shall be reasonably requested by the Rating
Agencies for other securitizations having or seeking ratings comparable to
that then being sought for the relevant Securitization; (e) making such
representations, warranties and covenants, as may be reasonably requested by
the Rating Agencies and comparable to those required in other securitized
transactions having or seeking the same rating as is then being sought for
the Securitization; (f) providing such information regarding the Collateral
as may be reasonably requested by the Rating Agencies or otherwise required
in connection with the formation of a REMIC and (g) providing any other
information and materials required in the Securitization process. Borrower
acknowledges and agrees that Lender may, at any time on or after the Closing
Date, assign its duties, rights or obligations hereunder or under any Loan
Document in whole, or in part, to a servicer and/or a trustee in Lender's
discretion. Nothing herein shall in any way limit Lender's right to sell all
or a portion of the Loan in a transaction which is not a Securitization.
Section 2.15. Supplemental Deed of Trust Affidavits. The Liens to
be created by the Deeds of Trust are intended to encumber the respective
Facilities described therein to the full extent of Borrower's obligations
under the Loan Documents. As of the Closing Date, Borrower shall have paid
all state, county and municipal recording and all other taxes imposed upon
the execution and recordation of the Deeds of Trust.
Section 2.16. Transfer of Trust Property. Borrower acknowledges
that Lender has examined and relied on the creditworthiness and experience of
Borrower, its partners and their principals in owning and operating
properties such as the Facilities in agreeing to make the Loan, and that
Lender will continue to rely on Borrower's ownership of the Facilities as a
means of maintaining the value of the Facilities as security for repayment of
the Indebtedness. Borrower acknowledges that Lender has a valid interest in
maintaining the value of the Facilities so as to ensure that, should Borrower
default in the repayment of the Indebtedness, Lender can recover the
Indebtedness by a sale of the Facilities. Borrower shall not, without the
prior written consent of Lender, which consent may be granted or withheld in
the sole and absolute discretion of Lender, sell, convey, alienate, mortgage,
encumber, pledge or otherwise transfer any Facility or any part thereof, or
permit any Facility or any part thereof to be sold, conveyed, mortgaged,
encumbered, pledged or otherwise transferred, except as otherwise permitted
by this Agreement.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to the Making of the Loan. (a)
As a condition precedent to the making of the Loan, Borrower shall have
satisfied the following conditions (unless waived by Lender in accordance
with Section 8.4) with respect to each Facility on or before the Closing Date:
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(A) Loan Documents.
(i) Loan Agreement. Borrower shall have executed and delivered
this Agreement to Lender.
(ii) Note. Borrower shall have executed and delivered to Lender
the Note.
(iii) Deeds of Trust. Borrower shall have executed and delivered
to Lender the Deeds of Trust and each Deed of Trust shall have been
filed of record in the appropriate filing offices in the jurisdiction in
which the related Facility is located or irrevocably delivered to a
title agent for such recordation.
(iv) Assignments of Leases. Borrower shall have executed and
delivered to Lender the Assignments of Leases and each Assignment of
Leases shall have been filed of record in the appropriate filing offices
in the jurisdiction in which the related Facility is located or
irrevocably delivered to a title agent for such recordation.
(v) Assignments of Agreements. Borrower shall have executed and
delivered to Lender the Assignments of Agreements and each Assignment of
Agreements shall, to the extent prudent pursuant to local practice, have
been filed of record in the appropriate filing offices in the
jurisdiction in which the related Facility is located or irrevocably
delivered to a title agent for such recordation.
(vi) Financing Statements. Borrower and its partners or members
(and their shareholders), as applicable, shall have executed and
delivered to Lender all financing statements required by Lender and such
financing statements shall have been filed of record in the appropriate
filing offices in each of the appropriate jurisdictions or irrevocably
delivered to a title agent for such recordation.
(vii) Manager's Subordinations. Each Manager and Borrower shall
have executed and delivered to Lender the Manager's Subordinations.
(viii) Cash Collateral Account Agreement. Borrower and the Cash
Collateral Account Bank shall have executed and delivered the Cash
Collateral Account Agreement and shall have delivered an executed copy
of such agreement to Lender.
(ix) Collection Account Agreements. Borrower and each Collection
Account Bank shall have executed and delivered each Collection Account
Agreement and shall have delivered an executed copy of such Agreement to
Lender.
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(B) Opinions of Counsel. Lender shall have received from counsel
satisfactory to Lender, legal opinions in form and substance satisfactory to
Lender in Lender's sole discretion (including without limitation, a
bankruptcy opinion with respect to Borrower). All such legal opinions will
be addressed to Lender and the Rating Agencies, dated as of the Closing Date,
and in form and substance satisfactory to Lender, the Rating Agencies and
their counsel. Borrower hereby instructs any of the foregoing counsel, to the
extent that such counsel represents Borrower, to deliver to Lender such
opinions addressed to Lender and the Rating Agencies.
(C) Secretary's Certificate and SPE Equity Owner's Certificate. Lender
shall have received a Secretary's Certificate with respect to Borrower's
managing equity owner and an SPE Equity Owner's Certificate with respect to
Borrower.
(D) Insurance. Lender shall have received certificates of insurance
demonstrating insurance coverage in respect of each Facility of types, in
amounts, with insurers and otherwise in compliance with the terms, provisions
and conditions set forth in the Deeds of Trust. Such certificates shall
indicate that Lender is an additional insured as its interests may appear and
shall contain a loss payee endorsement in favor of Lender with respect to the
property policies required to be maintained under the Deeds of Trust. All
insurance policies required to be maintained hereunder shall be maintained
from the Closing Date throughout the term of this Agreement in the types and
amounts required under the Deeds of Trust.
(E) Lien Search Reports. Lender shall have received satisfactory
reports of UCC (collectively, the "UCC Searches"), federal tax Lien,
bankruptcy, state tax lien, judgment and pending litigation searches
conducted by a search firm reasonably acceptable to Lender. Such searches
shall have been received in relation to Borrower and each equity owner in
Borrower. Such searches shall have been conducted in each of the locations
designated by Lender in Lender's reasonable discretion and shall have been
dated not more than fifteen (15) days prior to the Closing Date.
(F) Title Insurance Policy. Lender shall have received (i) a Title
Insurance Policy or a marked up commitment (in form and substance reasonably
satisfactory to Lender in Lender's reasonable discretion) from Title Insurer
to issue the Title Insurance Policy and (ii) a fully executed copy of the
Title Instruction Letter from the Title Insurer.
(G) Environmental Matters. Lender shall have received an Environmental
Report with respect to each Facility, addressed to Lender, which
Environmental Report shall be (i) prepared by a firm approved by Lender in
Lender's sole discretion, (ii) prepared based on a scope of work determined
by Lender in Lender's sole discretion and (iii) in form and content
acceptable to Lender in Lender's sole discretion, such Environmental Report
to be conducted by an Independent environmental Engineer.
(H) Consents, Licenses, Approvals. Lender shall have received copies
of all consents, licenses and approvals, if any, required in connection with
the execution, delivery and performance by Borrower under, and the validity
and enforceability of the Loan Documents, and such consents, licenses and
approvals shall be in full force and effect.
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(I) Additional Matters. Lender shall have received such other Permits,
certificates (including certificates of occupancy reflecting the uses of each
Facility as of the Closing Date), opinions, documents and instruments
(including without limitation, written proof from the appropriate
Governmental Authority regarding the zoning of each Facility in form and
substance satisfactory to Lender in Lender's sole discretion) relating to the
Loan as may have been requested by Lender and all other documents and all
legal matters in connection with the Loan shall be satisfactory in form and
substance to Lender. Borrower shall provide Lender with information
reasonably satisfactory to Lender regarding the Basic Carrying Costs on or
before the Closing Date.
(J) Representations and Warranties. The representations and warranties
herein and in the other Loan Documents shall be true and correct in all
material respects.
(K) Accounting and Regulatory Review. Lender shall have received an
accounting and regulatory review satisfactory to Lender in Lender's sole
discretion showing no anticipated decrease in cash flow. Such review shall
be (i) prepared by a firm approved by Lender in Lender's sole discretion,
(ii) prepared based on a scope of work determined by Lender in Lender's sole
discretion and (iii) in form and content acceptable to Lender in Lender's
sole discretion.
(L) No Injunction. No law or regulation shall have been adopted, no
order, judgment or decree of any Governmental Authority shall have been
issued, and no litigation shall be pending or threatened, which in the good
faith judgment of Lender would enjoin, prohibit or restrain, or impose or
result in an adverse effect upon the making or repayment of the Loan or the
consummation of the Transactions.
(M) Survey. Lender shall have received a Survey with respect to each
Facility which Survey shall be (i) prepared by a firm approved by Lender in
Lender's sole discretion, (ii) prepared based on a scope of work determined
by Lender in Lender's sole discretion and (iii) in form and content
acceptable to Lender in Lender's sole discretion.
(N) Engineering Report. Lender shall have received an Engineering
Report (which shall include, among other things, a seismic study) with
respect to each Facility prepared by an Engineer (addressed to Lender) and
which reports shall be (i) prepared by a firm approved by Lender in Lender's
sole discretion, (ii) prepared based on a scope of work determined by Lender
in Lender's sole discretion and (iii) in form and content acceptable to
Lender in Lender's sole discretion.
(O) Appraisal. Lender shall have received an Appraisal satisfactory to
Lender with respect to each Facility which shall be (i) prepared by a firm
approved by Lender in Lender's sole discretion, (ii) prepared based on a
scope of work determined by Lender in Lender's sole discretion and (iii) in
form and content acceptable to Lender in Lender's sole discretion.
(P) Security Deposits. All security deposits with respect to each
Facility on the Closing Date shall have been transferred to the relevant
Security Deposit Account, and
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Borrower shall be in compliance with all applicable Legal Requirements
relating to such security deposits.
(Q) Service Contracts and Permits. Borrower shall have delivered to
Lender a copy of all material contracts and Permits relating to the
Facilities.
(R) Site Inspection. Unless waived by Lender in accordance with
Section 8.4, Lender shall have performed, or caused to be performed on its
behalf, an on-site due diligence review of the Facilities to be acquired with
the Loan satisfactory to Lender in Lender's sole discretion.
(S) Use. The Facilities shall be operating only as
[anchored shopping centers].
(T) Financial Information. Lender shall have received all financial
information (which financial information shall be satisfactory to Lender in
Lender's sole discretion) relating to the Facilities including, without
limitation, audited financial statements of Borrower and other financial
reports requested by Lender in Lender's sole discretion. Such financial
information shall be (i) prepared by a firm approved by Lender in Lender's
sole discretion, (ii) prepared based on a scope of work determined by Lender
in Lender's sole discretion and (iii) in form and content acceptable to
Lender in Lender's sole discretion.
(U) Management Agreement. Lender shall have received a true and
correct copy of the Management Agreement with respect to each Facility.
(V) Leases: Tenant Estoppels; Subordination, Nondisturbance and
Attornment Agreements. With respect to each Facility, Borrower shall have
delivered a true, complete and correct rent roll and a copy of each of the
Leases identified in such rent roll, and each Lease shall be satisfactory to
Lender in Lender's sole discretion. Borrower shall, among other things and
without limitation, for each Facility provide (i) evidence that each Lease is
in full force and effect and (ii) originally executed tenant estoppel
certificates and subordination, nondisturbance and attornment agreements from
tenants with leases which in the aggregate account for 100% of the total
square footage of the relevant Facility in form and substance satisfactory to
Lender in Lender's sole discretion.
(W) Subdivision. Evidence satisfactory to Lender (including title
endorsements) that the Land with respect to each Facility constitutes a
separate lot for real estate tax and assessment purposes.
(X) Transaction Costs and Fees. Borrower shall have paid or caused to
be paid all Transaction Costs.
(Y) Utilities. Evidence that all utility services required for each
Facility are available.
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(b) Lender shall not make the Loan unless and until each of the
applicable conditions precedent set forth in Section 3.1 is satisfied and
until Borrower provides any other information reasonably required by Lender.
(c) In connection with the Loan, Borrower shall execute and/or deliver
to Lender all additions, amendments, modifications and supplements to the
items set forth in this Article III, including without limitation,
amendments, modifications and supplements to the Note, Deeds of Trust,
Assignments of Leases, and Assignments of Agreements, if reasonably requested
by Lender to effectuate the provisions hereof, and to provide Lender with the
full benefit of the security intended to be provided under the Loan
Documents. Without in any way limiting the foregoing, such additions,
modifications and supplements shall include those deemed reasonably desirable
by Lender's counsel in the jurisdiction in which a Facility is located.
(d) The making of the Loan shall constitute, without the necessity of
specifically containing a written statement to such effect, a confirmation,
representation and warranty by Borrower to Lender that all of the applicable
conditions to be satisfied in connection with the making of the Loan have
been satisfied (unless waived by Lender in accordance with Section 8.4,) and
that all of the representations and warranties of Borrower set forth in the
Loan Documents are true and correct in all material respects as of the date
of the making of the Loan.
Section 3.2. Form of Loan Documents and Related Matters. The Loan
Documents and all of the certificates, agreements, legal opinions and other
documents and papers referred to in this Article III, unless otherwise
specified, shall be delivered to Lender, and shall be reasonably satisfactory
in form and substance to Lender.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of Borrower. (a) Closing
Date Representations and Warranties of Borrower. Borrower represents and
warrants that, as of the Closing Date:
(A) Organization. Borrower (i) is a duly organized and validly
existing Entity in good standing under the laws of the State of its
formation, (ii) has the requisite Entity power and authority to carry on its
business as now being conducted, and (iii) has the requisite Entity power to
execute and deliver, and perform its obligations under, the Loan Documents.
(B) Authorization. The execution and delivery by Borrower of the Loan
Documents, Borrower's performance of its obligations thereunder and the
creation of the security interests and Liens provided for in the Loan
Documents (i) have been duly authorized by all requisite Entity action on the
part of Borrower, (ii) will not violate any provision of any applicable Legal
Requirements, any order of any court or other Governmental Authority, any
organizational document of Borrower or any indenture or agreement or other
instrument to which Borrower is a party or by which Borrower is bound, (iii)
will not be in conflict with, result in
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a breach of, or constitute (with due notice or lapse of time or both) a
default under, or result in the creation or imposition of any Lien of any
nature whatsoever upon any of the property or assets of Borrower pursuant to,
any such indenture or agreement or instrument and (iv) have been duly
executed and delivered by Borrower. Other than those obtained or filed on or
prior to the Closing Date Borrower is not required to obtain any consent,
approval or authorization from, or to file any declaration or statement with,
any Governmental Authority or other agency in connection with or as a
condition to the execution, delivery or performance of the Loan Documents.
The Loan Documents to which any Manager is a party have been duly authorized,
executed and delivered by such Manager.
(C) Single-Purpose Entity.
(i) Borrower has been, and will continue to be, a duly
formed and existing Entity, and a Single-Purpose Entity. (ii)
BPP/Golden State Acquisitions, Inc., a Delaware corporation, at
all times since its formation has been, and will continue to be,
a duly formed and existing corporation in good standing, and
Borrower will take no action to cause such entity not to be a
duly formed and existing corporation in good standing.
(iii) Borrower at all times since its formation has
complied, and will continue to comply, with the provisions of all
of its organizational documents, and the laws of the state in
which Borrower was formed relating to the Entity.
(iv) All customary formalities regarding the Entity
existence of Borrower have been observed at all times since its
formation and will continue to be observed.
(v) Borrower has been at all times since its formation and
will continue to be adequately capitalized in light of the nature
of its business.
(b) Additional Closing Date Borrower Representations and
Warranties. Borrower represents and warrants that, as of the Closing Date:
(A) Litigation. Other than unlawful detainer actions instituted
in the ordinary course of the operation of a Facility and as disclosed to
Lender in writing prior to the date hereof, there are no actions, suits or
proceedings at law or in equity by or before any Governmental Authority or
other agency now pending and served or, to the knowledge of Borrower,
threatened against Borrower, the Operating Partnership, the SPE Equity Owner,
Manager, or any Facility.
(B) Agreements. Borrower is not a party to any agreement or
instrument or subject to any restriction which is likely to have a Material
Adverse Effect. Borrower is not in material default in any respect in the
performance, observance or fulfillment of any of the
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obligations, covenants or conditions contained in any material agreement or
instrument to which it is a party or by which Borrower or any Facility is
bound.
(C) No Bankruptcy Filing. Borrower is not contemplating either
the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of Borrower's
assets or property, and Borrower has no knowledge of any Person contemplating
the filing of any such petition against it.
(D) Full and Accurate Disclosure. No statement of fact made by
or on behalf of Borrower in the Loan Documents or in any other document or
certificate delivered to Lender by Borrower contains any untrue statement of
a material fact or omits to state any material fact necessary to make
statements contained herein or therein not misleading. There is no fact
presently known to Borrower which has not been disclosed to Lender which
materially adversely affects, nor as far as Borrower can foresee, might
materially adversely affect the business, operations or condition (financial
or otherwise) of Borrower.
(E) Location of Chief Executive Offices. The location of
Borrower's principal place of business and the location of Borrower's chief
executive office is: c/o Burnham Pacific Properties, Inc., 610 West Ash
Street, San Diego, CA 92101.
(F) Compliance. Borrower, each Facility and Borrower's use
thereof and operations thereat comply in all material respects with all
applicable Legal Requirements, including without limitation, building and
zoning ordinances and codes. Borrower is not in default or violation of any
order, writ, injunction, decree or demand of any Governmental Authority, the
default or violation of which is reasonably likely to have a Material Adverse
Effect.
(G) Other Debt and Obligations. Borrower has no financial
obligation under any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which Borrower is a party, or by which
Borrower or any Facility is bound, and other than unsecured trade payables
incurred in the ordinary course of business relating to the ownership and
operation of the Facilities which do not exceed, at any time, a maximum
amount of $250,000 (with respect to each Facility) and are paid within sixty
(60) days of the date incurred, and other than obligations under the Deeds of
Trust and the other Loan Documents, and other than the Permitted
Encumbrances. Borrower has not borrowed or received other debt financing
that has not been heretofore repaid in full and Borrower has no known
material contingent liabilities.
(H) ERISA. Each Plan and, to the knowledge of Borrower, each
Multiemployer Plan, is in compliance in all material respects with, and has
been administered in all material respects in compliance with, its terms and
the applicable provisions of ERISA, the Code and any other federal or state
law, and no event or condition has occurred as to which Borrower would be
under an obligation to furnish a report to Lender under Section 5.1(T).
(I) Solvency. Borrower (i) has not entered into this Loan
Agreement or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor, and (ii) has received reasonably equivalent value in
exchange for its obligations under the Loan Documents.
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Giving effect to the transactions contemplated hereby, the fair saleable
value of Borrower's assets exceeds and will, immediately following the
execution and delivery of this Agreement, exceed Borrower's total
liabilities, including, without limitation, subordinated, unliquidated, or
disputed liabilities or Contingent Obligations. The fair saleable value of
Borrower's assets is and will, immediately following the execution and
delivery of this Agreement, be greater than Borrower's probable liabilities,
including the maximum amount of its Contingent Obligations or its debts as
such debts become absolute and matured. Borrower's assets do not and,
immediately following the execution and delivery of this Agreement, will not,
constitute unreasonably small capital to carry out its business as conducted
or as proposed to be conducted. Borrower does not intend to, and does not
believe that it will, incur debts and liabilities (including, without
limitation, Contingent Obligations and other commitments) beyond its ability
to pay such debts as they mature (taking into account the timing and amounts
to be payable on or in respect of obligations of Borrower).
(J) Not Foreign Person. Borrower is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Code.
(K) Enforceability. The Loan Documents are the legal, valid and
binding obligation of Borrower, enforceable against Borrower in accordance
with their terms, subject to bankruptcy, insolvency and other limitations on
creditors' rights generally and to equitable principles.
(L) Investment Company Act, Public Utility Holding Company Act.
Borrower is not (i) an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended, (ii) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of either a "holding company or a
"subsidiary company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or (iii) subject to any other federal or state law
or regulation which purports to restrict or regulate its ability to borrow
money.
(M) No Defaults. No Default or Event of Default exists under or
with respect to any Loan Document.
(N) Labor Matters. Borrower is not a party to any collective
bargaining agreements.
(O) Title to the Trust Property. Borrower owns good,
indefeasible, marketable and insurable fee simple title to each Facility free
and clear of all Liens, other than the Permitted Encumbrances applicable to
such Facility. There are no outstanding options to purchase or rights of
first refusal affecting any Facility. The Permitted Encumbrances do not and
will not materially and adversely affect (i) the ability of Borrower to pay
in full all sums due under the Note or any of its other obligations in a
timely manner or (ii) the use of any Facility for the use currently being
made thereof, the operation of any Facility as currently being operated or
the value of any Facility.
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(P) Use of Proceeds: Margin Regulations. Borrower will use the
proceeds of the Loan for the purposes described in Section 2.2. No part of
the proceeds of the Loan will be used for the purpose of purchasing or
acquiring any "margin stock" within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System or for any other purpose which
would be inconsistent with such Regulation U or any other Regulations of such
Board of Governors, or for any purposes prohibited by applicable Legal
Requirements.
(Q) Financial Information. All historical financial data
concerning Borrower and its Facility that has been delivered by Borrower to
Lender is true, complete and correct in all material respects. Since the
delivery of such data, except as otherwise disclosed in writing to Lender,
there has been no material adverse change in the financial position of
Borrower or any Facility, or in the results of operations of Borrower.
Borrower has not incurred any obligation or liability, contingent or
otherwise, not reflected in such financial data which might materially
adversely affect its business operations or any Facility.
(R) Condemnation. No Taking has been commenced or, to
Borrower's knowledge, is contemplated with respect to all or any portion of
any Facility or for the relocation of roadways providing access to any
Facility.
(S) Intentionally omitted.
(T) Utilities and Public Access. Each Facility has adequate
rights of access to public ways and are served by adequate water, sewer,
sanitary sewer and storm drain facilities as are adequate for full
utilization of such Facility for their current purposes. Except as otherwise
disclosed by the Surveys, all public utilities necessary to the continued use
and enjoyment of the Facility as presently used and enjoyed are located in
the public right-of-way abutting the premises, and all such utilities are
connected so as to serve each Facility either (i) without passing over other
property or, (ii) if such utilities pass over other property, pursuant to
valid easements. All roads necessary for the utilization of each Facility
for their current purposes have been completed and dedicated to public use
and accepted by all Governmental Authorities or are the subject of access
easements for the benefit of such Facility.
(U) Environmental Compliance. Borrower represents, warrants and
covenants, as to itself and each Facility:
(i) Borrower and each Facility are in compliance with all
applicable Environmental Laws, which compliance includes, but is
not limited to, the possession by Borrower of and compliance with
all environmental, health and safety Permits, licenses and other
governmental authorizations required in connection with the
ownership and operation of each Facility under all Environmental
Laws, except where the failure to comply with such laws is not
reasonably likely to result in a Material Adverse Effect.
(ii) There is no Environmental Claim pending or, to
Borrower's knowledge, threatened, and no penalties arising under
Environmental
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Laws have been assessed, against Borrower, any Facility or
against any Person whose liability for any Environmental Claim
Borrower has or may have retained or assumed either contractually
or by operation of law, and no investigation or review is pending
or, to the knowledge of Borrower, threatened by any Governmental
Authority, citizens group, employee or other Person with respect
to any alleged failure by Borrower, or any Facility to have any
environmental, health or safety permit, license or other
authorization required under, or to otherwise comply with, any
Environmental Law or with respect to any alleged liability of
Borrower for any Use or Release of any Hazardous Substances or
the presence, Use, or Release of any Hazardous Substances at, on,
in, under, or from any Facility.
(iii) To the knowledge of Borrower after due inquiry,
there have been and are no past or present Releases or threats of
Release of any Hazardous Substance that are likely to form the
basis of any Environmental Claim against Borrower, any Facility
or, to Borrower's knowledge, against any Person whose liability
for any Environmental Claim Borrower has or may have retained or
assumed either contractually or by operation of law.
(iv) To the knowledge of Borrower after due inquiry and
except as disclosed in the Environmental Reports, without
limiting the generality of the foregoing, there is not present
at, on, in or under any Facility, PCB-containing equipment,
asbestos or asbestos containing materials, underground or
aboveground storage tanks or surface impoundments for Hazardous
Substances, lead in drinking water (except in concentrations that
comply with all Environmental Laws), or lead-based paint (nor
have there been any underground storage tanks present at, on, in,
or under any Facility).
(v) No Liens are presently recorded with the appropriate
land records under or pursuant to any Environmental Law with
respect to any Facility and, to Borrower's knowledge, no
Governmental Authority has been taking or is in the process of
taking any action that could subject any Facility to liens under
any Environmental Law.
(vi) There have been no environmental investigations,
studies, audits, reviews or other analyses conducted by or on
behalf of Borrower that are in the possession or control of
Borrower in relation to any Facility which have not been provided
to Lender.
(vii) No conditions exist which would require Borrower under
any Environmental Laws to place a notice on any deed to any
Facility with
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respect to the presence, Use or Release of Hazardous Substances
at, on, in, under or from any Facility and no Facility has had
such notice in its deed.
(V) No Joint Assessment, Separate Lots. Borrower has not and
shall not suffer, permit or initiate the joint assessment of any Facility (i)
with any other real property constituting a separate tax lot, and (ii) with
any portion of such Facility which may be deemed to constitute personal
property, or any other procedure whereby the lien of any taxes which may be
levied against such personal property shall be assessed or levied or charged
to such Facility as a single Lien. Each Facility is comprised of one or more
parcels, each of which constitutes a separate tax lot and none of which
constitutes a portion of any other tax lot.
(W) Assessments. Except as disclosed in the Title Insurance
Policy, there are no pending or, to the knowledge of Borrower, proposed
special or other assessments for public improvements or otherwise affecting
any Facility, nor, to the knowledge of Borrower, are there any contemplated
improvements to any Facility that may result in such special or other
assessments.
(X) Deeds of Trust and Other Liens. Each Deed of Trust creates
a valid and enforceable first mortgage lien on the applicable Facility as
security for the repayment of the Indebtedness, subject only to the Permitted
Encumbrances applicable to such Facility. Each Collateral Security
Instrument establishes and creates a valid, subsisting and enforceable Lien
on and a security interest in, or claim to, the rights and property described
therein. All property covered by such Collateral Security Instrument is
subject to a UCC financing statement filed and/or recorded, as appropriate,
(or irrevocably delivered to an agent for such recordation or filing) in all
places necessary to perfect a valid first priority Lien with respect to the
rights and property that are the subject of such Collateral Security
Instrument to the extent governed by the UCC. All continuations and any
assignments of any such financing statements have been or will be timely
filed or refiled, as appropriate, in the appropriate recording offices.
(Y) Enforceability. The Loan Documents executed by Borrower in
connection with the Loan, including, without limitation, any Collateral
Security Instrument, are the legal, valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their terms,
subject to bankruptcy, insolvency and other limitations on creditors' rights
generally and to equitable principles. Such Loan Documents are, as of the
Closing Date, not subject to any right of rescission, set-off, counterclaim
or defense by Borrower, including the defense of usury, nor will the
operation of any of the terms of the Note, the Deeds of Trust, or such other
Loan Documents, or the exercise of any right thereunder, render the Deeds of
Trust unenforceable against Borrower, in whole or in part, or subject to any
right of rescission, set-off, counterclaim or defense by Borrower, including
the defense of usury, and Borrower has not asserted any right of rescission,
set-off, counterclaim or defense with respect thereto.
(Z) No Liabilities. Borrower has no liabilities or obligations
including without limitation Contingent Obligations, (and including, without
limitation, liabilities or obligations in tort, in contract, at law, in
equity, pursuant to a statute or regulation, or otherwise) other than those
liabilities and obligations expressly permitted by this Agreement.
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(AA) No Prior Assignment. As of the Closing Date, (i) Lender is
the assignee of Borrower's interest under the Leases, and (ii) there are no
prior assignments of the Leases or any portion of the Rent due and payable or
to become due and payable which are presently outstanding.
(AB) Certificate of Occupancy. Borrower has obtained all Permits
necessary to use and operate the Facilities for the uses described in Section
3.1(S), and all such Permits are in full force and effect. The respective
use being made of each Facility is in conformity in all respects with the
certificates of occupancy and/or Permits for such Facility and any other
restrictions, covenants or conditions affecting such Facility.
(AC) Flood Zone. Except as shown on the Survey, no Facility is
located in a flood hazard area as defined by the Federal Insurance
Administration.
(AD) Physical Condition. Except as disclosed in the related
Engineering Reports, each Facility is free of material structural defects and
all building systems contained therein are in good working order in all
material respects subject to ordinary wear and tear.
(AE) Intellectual Property. All trademarks, trade names and
service marks that Borrower owns or has pending, or under which it is
licensed, are in good standing and uncontested. There is no right under any
trademark, trade name or service mark necessary to the business of Borrower
as presently conducted or as Borrower contemplates conducting its business.
Borrower has not infringed, is not infringing, and has not received notice of
infringement with respect to asserted trademarks, trade names and service
marks of others. To Borrower's knowledge, there is no infringement by others
of trademarks, trade names and service marks of Borrower.
(AF) Security Deposits. All security deposits with respect to
each Facility on the Closing Date have been transferred to the relevant
Security Deposit Account on or prior to the Closing Date, and Borrower is in
compliance with all applicable Legal Requirements relating to such security
deposits.
(AG) Conduct of Business. Borrower does not conduct its business
"also known as", "doing business as" or under any other name.
(AI) Title Insurance. Each Facility is covered by either an
American Land Title Association (ALTA) mortgagee's title insurance policy, or
a commitment to issue such a title insurance policy, insuring a valid first
lien on such Facility, which is in full force and effect and is freely
assignable to and will inure to the benefit of Lender and any successor or
assignee of Lender, including but not limited to the trustee in a
Securitization, subject only to the Permitted Encumbrances.
(AK) Tax Fair Market Value. Each Allocated Loan Amount with
respect to the relevant Facility does not exceed the Tax Fair Market Value of
such Facility. If the Note is significantly modified prior to the closing
date of a Securitization so as to result in a taxable exchange under Code
Section 1001, Borrower will, if requested by Lender, represent that each
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Allocated Loan Amount does not exceed the Tax Fair Market Value of the
relevant Facility as of the date of such significant modification.
(AL) Leases. Except as disclosed in the tenant estoppel
certificates or in the rent roll statement delivered to Lender prior to the
Closing Date, (a) Borrower is the sole owner of the entire lessor's interest
in the Leases; (b) the Leases are valid and enforceable, subject to
bankruptcy, insolvency, moratorium and other laws limiting or affecting the
rights of creditors generally; (c) the material terms of all alterations,
modifications and amendments to the Leases are reflected in the certified
rent roll statement delivered to and approved by Lender; (d) none of the
Rents reserved in the Leases have been assigned or otherwise pledged or
hypothecated; (e) none of the Rents have been collected for more than one (1)
month in advance; (f) the premises demised under the Leases have been
completed and the tenants under the Leases have accepted the same and have
taken possession of the same on a rent-paying basis; (g) to Borrower's
knowledge, there exist no offsets or defenses to the payment of any portion
of the Rents; (h) no Lease contains an option to purchase, right of first
refusal to purchase, or any other similar provision; (i) no Person has any
possessory interest in, or right to occupy, the Facility except under and
pursuant to a Lease; (j) each Lease is subordinate to the Loan Documents,
either pursuant to its terms or a recorded subordination agreement; and (k)
no Lease has the benefit of a non-disturbance agreement that would be
considered unacceptable to prudent institutional lenders.
Section 4.2. Survival of Representations and Warranties.
Borrower agrees that (i) all of the representations and warranties of
Borrower set forth in this Agreement and in the other Loan Documents
delivered on the Closing Date are made as of the Closing Date (except as
expressly otherwise provided) and (ii) all representations and warranties
made by Borrower shall survive the delivery of the Note and continue for so
long as any amount remains owing to Lender under this Agreement, the Note or
any of the other Loan Documents; provided, however, that the representations,
warranties and covenants set forth in Section 4.1(b)(U) and Sections 5.1(D)
through 5.1(I) inclusive shall survive in perpetuity and shall not be subject
to the exculpation provisions of Section 8.14. All representations,
warranties, covenants and agreements made in this Agreement or in the other
Loan Documents shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or
on its behalf.
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.1. Borrower Covenants. Borrower covenants and agrees
that, from the date hereof and until payment in full of the Indebtedness:
(A) Existence; Compliance with Legal Requirements; Insurance.
Borrower shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its Entity existence, rights, licenses,
Permits and franchises necessary for the conduct of its business and comply
in all respects with all applicable Legal Requirements and Insurance
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Requirements applicable to it and any Facility. Borrower shall notify Lender
promptly of any written notice or order that Borrower receives from any
Governmental Authority relating to Borrower's failure to comply with such
applicable Legal Requirements relating to any Facility and promptly take any
and all actions necessary to bring its operations at such Facility into
compliance with such applicable Legal Requirements (and shall fully comply
with the requirements of such Legal Requirements that at any time are
applicable to its operations at any Facility) provided, that Borrower at its
expense may, after prior notice to Lender, contest by appropriate legal,
administrative or other proceedings conducted in good faith and with due
diligence, the validity or application, in whole or in part, of any such
applicable Legal Requirements as long as (i) neither the applicable
Collateral nor any part thereof or any interest therein, will be sold,
forfeited or lost if Borrower pays the amount or satisfies the condition
being contested, and Borrower would have the opportunity to do so, in the
event of Borrower's failure to prevail in the contest, (ii) Lender would not,
by virtue of such permitted contest, be exposed to any risk of any civil
liability for which Borrower has not furnished additional security as
provided in clause (iii) below, or to any risk of criminal liability, and
neither the applicable Collateral nor any interest therein would be subject
to the imposition of any lien as a result of the failure to comply with such
Legal Requirement or of such proceeding and (iii) Borrower shall have
furnished to Lender additional security in respect of the claim being
contested or the loss or damage that may result from Borrower's failure to
prevail in such contest in an amount equal to 125% of the amount of such
claim. Borrower shall at all times maintain, preserve and protect all
franchises and trade names and preserve all the remainder of its property
necessary for the continued conduct of its business and keep each Facility in
good repair, working order and condition, except for reasonable wear and use,
and from time to time make, or cause to be made, all necessary repairs,
renewals, replacements, betterments and improvements thereto, all as more
fully provided in the Deeds of Trust. Borrower shall keep each Facility
insured at all times, by financially sound and reputable insurers, to such
extent and against such risks, and maintain liability and such other
insurance, as is more fully provided herein and in the Deeds of Trust.
(B) Impositions, and Other Claims. Borrower shall pay and
discharge or cause to be paid and discharged all Impositions, as well as all
lawful claims for labor, materials and supplies or otherwise, which could
become a Lien, all as more fully provided in, and subject to any rights to
contest contained in, the applicable Deed of Trust.
(C) Litigation. Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened
(in writing) against Borrower which is reasonably likely to have a Material
Adverse Effect.
(D) Environmental Remediation.
(i) If any investigation, site monitoring, cleanup,
removal, abatement, restoration remedial work or other response
action of any kind or nature is required pursuant to an order or
directive of any Governmental Authority or under any applicable
Environmental Law (collectively, the "Remedial Work"), because of
or in connection with the (x) past, present or future presence,
suspected presence, Release or threatened Release of a
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Hazardous Substance at, on, in, under or from the Facility or any
portion thereof or (y) violation of or compliance with applicable
Environmental Laws, Borrower shall promptly commence and
diligently prosecute to completion all such Remedial Work. In
all events, such Remedial Work shall be commenced within the time
period ordered or directed by such Governmental Authority or such
shorter period as may be required under any applicable
Environmental Law; provided, however, that Borrower shall not be
required to commence such Remedial Work within the above
specified time periods: (x) if prevented from doing so by any
Governmental Authority, (y) if commencing such Remedial Work
within such time periods would result in Borrower or such
Remedial Work violating any Environmental Law or (z) if Borrower,
at its expense and after prior notice to Lender, is contesting by
appropriate legal, administrative or other proceedings, conducted
in good faith and with due diligence, the need to perform
Remedial Work, as long as (1) Borrower is permitted by the
applicable Environmental Laws to delay performance of the
Remedial Work pending such proceedings, (2) no Facility nor any
part thereof or interest therein would be sold, forfeited or lost
if Borrower performs the Remedial Work being contested, and
Borrower would have the opportunity to do so, in the event of
Borrower's failure to prevail in the contest, (3) Lender would
not, by virtue of such permitted contest, be exposed to any risk
of any civil liability for which Borrower has not furnished
additional security as provided in clause (4) below, or to any
risk of criminal liability, and no Facility nor any interest
therein would be subject to the imposition of any Lien for which
Borrower has not furnished additional security as provided in
clause (4) below, as a result of the failure to perform such
Remedial Work and (4) Borrower shall have furnished to Lender
additional security in respect of the Remedial Work being
contested and the loss or damage that may result from Borrower's
failure to prevail in such contest in an amount equal to 125% of
the cost of such Remedial Work and any loss or damage that may
result from Borrower's failure to prevail in such contest.
(ii) All Remedial Work under clause (i) above shall be
performed by contractors, and under the supervision of a
consulting environmental Engineer, each approved in advance by
Lender which approval will not be unreasonably withheld or
delayed. All costs and expenses incurred in connection with such
Remedial Work shall be paid by Borrower. If Borrower does not
timely commence and diligently prosecute to completion the
Remedial Work, Lender may (but shall not be obligated to), upon
sixty (60) days prior written notice to Borrower of its intention
to do so, cause such Remedial Work to be performed. Borrower
shall pay or reimburse Lender on demand for all Advances (as
defined in the Deed of Trust) and expenses (including reasonable
attorneys' fees and disbursements) relating to or incurred by
Lender in connection with
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monitoring, reviewing or performing any Remedial Work in
accordance herewith.
(iii) Unless otherwise required by law, Environmental
Laws or any Governmental Authority, Borrower shall not commence
any Remedial Work under clause (i) above, nor enter into any
settlement agreement, consent decree or other compromise relating
to any Hazardous Substances or Environmental Laws which is
reasonably likely to have a Material Adverse Effect.
Notwithstanding the foregoing, if the presence or threatened
presence or Release of Hazardous Substances at, on, in, under,
from or about Borrower's Facility poses an immediate threat to
the health, safety or welfare of any Person or the environment,
or is of such a nature that an immediate response is necessary,
Borrower may complete all necessary Remedial Work. In such
events, Borrower shall notify Lender as soon as practicable and,
in any event, within three Business Days, of any action taken.
(E) Environmental Matters: Inspection.
(i) Borrower shall not cause, allow or authorize a
Hazardous Substance to be present at, on, in, under or to emanate
from any Facility, or migrate from adjoining property controlled
by Borrower onto or into any Facility, except under conditions
permitted by applicable Environmental Laws and, in the event that
such Hazardous Substances are present at, on, in, under or
emanate from any Facility, or migrate onto or into any Facility,
Borrower shall cause the performance of Remedial Work, removal or
remediation of such Hazardous Substances, in accordance with this
Agreement and Environmental Laws. Borrower shall use best
efforts to prevent, and to seek the remediation of, any migration
of Hazardous Substances onto or into any Facility from any
adjoining property.
(ii) Upon prior written notice to Borrower, Lender shall
have the right at all reasonable times to enter upon and inspect
all or any portion of any Facility. If Lender has reason to
believe that Remedial Work may be required, Lender may select or
may require Borrower to select a consulting environmental
Engineer reasonably satisfactory to Lender to conduct and prepare
environmental reports assessing the environmental condition of
any Facility. Lender shall be given a reasonable opportunity to
review any reports, data and other documents or materials
reviewed or prepared by the environmental Engineer. The
inspection rights granted to Lender in this Section 5.1(E) shall
be in addition to, and not in limitation of any other inspection
rights granted to Lender in the Loan Documents, and shall
expressly include the right (if Lender suspects that Remedial
Work may be required) to conduct or require Borrower to conduct
soil
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borings, establish ground water monitoring wells and conduct
other customary environmental tests, assessments and audits.
(iii) Borrower agrees to bear and shall pay or reimburse
Lender promptly on demand for all sums advanced and expenses
incurred (including reasonable attorneys' fees and disbursements,
but excluding internal overhead, administrative and similar costs
of Lender) relating to, or incurred by Lender in connection with,
the inspections and reports described in this Section 5.1(E) in
the following situations:
(x) If Lender has grounds to believe, at the time any such
inspection is ordered, that there exists an occurrence or condition that
could lead to an Environmental Claim;
(y) If any such inspection reveals an occurrence or condition
that could lead to an Environmental Claim; or
(z) If an Event of Default with respect to the Facility exists
at the time any such inspection is ordered, and such Event of Default relates
to any representation, covenant or other obligation pertaining to Hazardous
Substances, Environmental Laws or any other environmental matter.
(F) Environmental Notices,. Borrower shall promptly provide
notice to Lender of:
(i) any Environmental Claim asserted or threatened (in
writing) by any Governmental Authority or other Person with
respect to any Hazardous Substance at, on, in, under or emanating
from any Facility, which could reasonably be expected to impair
the value of Lender's interests hereunder or have a Material
Adverse Effect;
(ii) any Environmental Claim or proceeding, investigation or
inquiry commenced or threatened in writing by any Person or
Governmental Authority, against Borrower, with respect to the
presence, suspected presence, Release or threatened Release of
Hazardous Substances from or onto, in or under any property not
owned by Borrower, including, without limitation, proceedings
under the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended, 42 U.S.C. Section 9601, et seq., which
could reasonably be expected to impair the value of Lender's
security interests hereunder or have a Material Adverse Effect;
(iii) all Environmental Claims asserted or threatened
(in writing) against Borrower, against any other party occupying
any Facility or any portion thereof which become known to
Borrower, or against any Facility, which could reasonably be
expected to impair the value of Lender's security interests
hereunder or have a Material Adverse Effect;
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(iv) the discovery by Borrower of any occurrence or
condition on any Facility or on any real property adjoining or in
the vicinity of any Facility which could reasonably be expected
to lead to an Environmental Claim against Borrower or Lender
which such Environmental Claim is reasonably likely to have a
Material Adverse Effect; and
(v) the commencement or completion of any Remedial Work.
(G) Copies of Notices. Borrower shall immediately transmit to
Lender copies of any citations, orders, notices or other written
communications received from any Person or any Governmental Authority and any
notices, reports or other written communications submitted to any
Governmental Authority with respect to the matters described in Section
5.1(F).
(H) Environmental Claims. Lender and/or, to the extent
authorized by Lender if applicable, the Deed of Trust Trustee may join and
participate in, as a party if Lender so determines, any legal or
administrative proceeding or action concerning any Facility or any portion
thereof under any Environmental Law, if, in Lender's reasonable judgment, the
interests of Lender or the Deed of Trust Trustee, will not be adequately
protected by Borrower. Borrower agrees to bear and shall pay or reimburse
Lender and the Deed of Trust Trustee on demand for all reasonable sums
advanced and reasonable expenses incurred (including reasonable attorneys'
fees and disbursements) and the Deed of Trust Trustee, incurred by Lender and
the Deed of Trust Trustee in connection with any such action or proceeding.
(I) Indemnification. Borrower agrees to indemnify,
reimburse, defend (with counsel satisfactory to Lender, at Lender's election)
and hold harmless Lender and any Deed of Trust Trustee, for, from, and
against all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses, including, without
limitation, interest, penalties, consequential damages, attorneys' fees,
disbursements and expenses, and consultants' fees, disbursements and
expenses, including costs of Remedial Work (collectively, "Losses") asserted
against, resulting to, imposed on, or incurred by Lender or any Deed of Trust
Trustee, directly or indirectly, in connection with any of the following:
(i) events, circumstances, or conditions which are alleged
to, or do, form the basis for an Environmental Claim;
(ii) the presence, Use or Release of Hazardous Substances
at, on, in, under or from any Facility, which presence, Use or
Release requires or could require Remedial Work;
(iii) any Environmental Claim against Borrower, Lender,
Deed of Trust Trustee or any Person whose liability for such
Environmental Claim Borrower has or may have assumed or retained
either contractually or by operation of law; or
(iv) the breach of any representation, warranty or covenant
set forth in Section 4.1(b)(U) and Sections 5.1(D) through
5.1(I), inclusive.
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The indemnity provided in this Loan Agreement shall not be
included in any exculpation of Borrower from personal liability provided in
this Loan Agreement or in any of the other Loan Documents. Nothing in this
Section 5.1(I) shall be deemed to deprive Lender of any rights or remedies
provided to it elsewhere in this Agreement or the other Loan Documents or
otherwise available to it under law. Borrower waives and releases Lender and
any Deed of Trust Trustee from any rights or defenses Borrower may have under
common law or Environmental Laws for liability arising from or resulting from
the presence, Use or Release of Hazardous Substances except to the extent
directly and solely caused by the fraud or willful misconduct of Lender or
Deed of Trust Trustee.
(J) Access to Facilities. Borrower shall permit agents,
representatives and employees of Lender to inspect any Facility or any part
thereof at such reasonable times as may be requested by Lender upon advance
notice.
(K) Notice of Default. Borrower shall promptly, upon learning of
such occurrence, advise Lender of any material adverse change in Borrower's
condition, financial or otherwise, or of the occurrence of any Default or
Event of Default.
(L) Cooperate in Legal Proceedings. Except with respect to any
claim by Borrower against Lender, Borrower shall cooperate with Lender with
respect to any proceedings before any Governmental Authority which may in any
way affect the rights of Lender hereunder or any rights obtained by Lender
under any of the Loan Documents and, in connection therewith, not prohibit
Lender, at its election, from participating in any such proceedings.
(M) Perform Loan Documents. Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions required to be
observed, performed or satisfied by it, and shall pay when due all costs,
fees and expenses required to be paid by it, under the Loan Documents
executed and delivered by Borrower.
(N) Insurance Benefits. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any Insurance Proceeds lawfully or
equitably payable to Lender in connection with any Facility, and Lender shall
be reimbursed for any expenses incurred in connection therewith (including
reasonable attorneys' fees and disbursements and the payment by Borrower of
the expense of an Appraisal on behalf of Lender in case of a fire or other
casualty affecting any Facility or any part thereof out of such Insurance
Proceeds, all as more specifically provided in the Deeds of Trust.
(O) Further Assurances. Borrower shall, at Borrower's sole cost
and expense:
(i) upon Lender's request therefor given from time to time
after the occurrence of any Event of Default pay for (a) reports
of UCC, federal tax lien, state tax lien, judgment and pending
litigation searches with respect to Borrower and (b) searches of
title to any Facility, each such search to be conducted by search
firms reasonably designated by Lender in each of the locations
reasonably designated by Lender.
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(ii) furnish to Lender all instruments, documents, boundary
surveys, footing or foundation surveys, certificates, plans and
specifications, Appraisals, title and other insurance reports and
agreements, and each and every other document, certificate,
agreement and instrument required to be furnished pursuant to the
terms of the Loan Documents;
(iii) execute and deliver to Lender such documents,
instruments, certificates, assignments and other writings, and do
such other acts necessary, to evidence, preserve and/or protect
the Collateral at any time securing or intended to secure the
Note, as Lender may require in Lender's discretion; and
(iv) do and execute all and such further lawful acts,
conveyances and assurances for the better and more effective
carrying out of the intents and purposes of this Agreement and
the other Loan Documents, as Lender shall require from time to
time in its discretion.
(P) Management of Trust Property. Each Facility will be managed
at all times by a Manager pursuant to a Management Agreement unless
terminated as herein provided. Any Management Agreement shall be terminated
by Borrower, at Lender's request, upon thirty (30) days prior written notice
to Borrower and the relevant Manager, (i) upon the occurrence and continuance
of an Event of Default, (ii) intentionally omitted, or (iii) in the event
that, as of the last day of a calendar quarter, the Debt Service Coverage
Ratio for any or all of the Facilities, computed on the basis of the prior
twelve (12) calendar months, is less than 1.15. Lender shall not have the
right to require Borrower to terminate a Management Agreement pursuant to
clause (iii) above if on the first Payment Date after Lender made the
determination that Lender had the right to terminate a Manager pursuant to
clause (iii) above, Borrower defeases the Loan in accordance with the terms
of Section 2.11 in an amount sufficient to cause the Debt Service Coverage
Ratio (calculated as if such amount was actually applied to reduce the
Principal Indebtedness upon which Debt Service was paid and calculated as if
the Principal Indebtedness was reamortized on a straight-line basis (as if
the reduction had occurred) over the remaining number of months until the
Maturity Date), computed on the basis of the prior twelve (12) calendar
months, to be at least equal to 1.50. If a Manager is terminated pursuant
hereto, Borrower immediately shall seek a replacement manager reasonably
acceptable to Lender in Lender's discretion, and Borrower's failure to
appoint a reasonably acceptable manager within thirty (30) days after
Lender's request of Borrower to terminate a Management Agreement shall
constitute an immediate Event of Default. Borrower may from time to time
appoint a successor manager to manage the relevant Facilities, which
successor manager shall be approved in writing by Lender in Lender's sole
discretion. Notwithstanding the foregoing, any successor manager selected
hereunder by Lender or Borrower to serve as manager (i) shall be a reputable
management company having at least seven years' experience in the management
of commercial properties with similar uses as the Facilities and in the
jurisdiction(s) in which the relevant Facility or Facilities are located and
(ii) shall not be paid management fees in excess of fees which are market
fees for comparable managers of comparable properties in the same geographic
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area. At its option, Borrower may elect to manage any Facility; provided,
however, notwithstanding such right and the exercise of Borrower's election
to manage any Facility, at Lender's request, Borrower will be required to
appoint a manager, acceptable to Lender, to manage the Facility upon the
occurrence of an event described in clauses (i) through (iii) above;
provided, further, Lender shall not have the right to require Borrower to
appoint a manager pursuant to clause (iii) above if Borrower defeases the
Loan as described in the second sentence of this Section 5.1(P).
(Q) Financial Reporting.
(i) Borrower shall keep and maintain or shall cause to be
kept and maintained on a Fiscal Year basis, in accordance with
GAAP, books, records and accounts reflecting in reasonable detail
all of the financial affairs of Borrower and all items of income
and expense in connection with the operation of the Facilities
and in connection with any services, equipment or furnishings
provided in connection with the operation of each Facility.
Lender, at Lender's cost and expense, whether such income or
expense may be realized by Borrower or by any other Person
whatsoever, shall have the right from time to time and at all
times during normal business hours upon reasonable prior written
notice to Borrower to examine such books, records and accounts at
the office of Borrower or other Person maintaining such books,
records and accounts and to make such copies or extracts thereof
as Lender shall desire. After the occurrence of an Event of
Default, Borrower shall pay any costs and expenses incurred by
Lender to examine any and all of Borrower's books, records and
accounts as Lender shall determine in Lender's sole discretion to
be necessary or appropriate in the protection of Lender's
interest.
(ii) Borrower shall furnish to Lender annually within ninety
(90) days following the end of each Fiscal Year, a true, complete
and correct copy of Borrower's financial statement (a) be in form
and substance acceptable to Lender in Lender's sole discretion,
(b) be prepared in accordance with GAAP, (c) include, without
limitation, a statement of operations (profit and loss), a
statement of cash flows, a calculation of Net Operating Income, a
consolidated balance sheet, an aged accounts receivable report
and such other information or reports as shall be reasonably
requested by Lender or any applicable Rating Agency, (d) be
accompanied by an Officer's Certificate from a senior executive
of Borrower certifying as of the date thereof (x) that such
statement is true, correct, complete and accurate and fairly
reflects the results of operations and financial condition of
Borrower for the relevant period, and (y) notice of whether there
exists an Event of Default or Default, and if such Event of
Default or Default exists, the nature thereof the period of time
it has existed and the action then being taken to remedy same and
(e) be
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accompanied by an opinion from an Independent certified public
accountant acceptable to Lender in Lender's sole discretion.
(iii) Borrower shall furnish to Lender annually within
forty (40) days following the end of each Fiscal Year, a true,
complete and correct copy of Borrower's unaudited financial
statement which shall (a) be in form and substance acceptable to
Lender in Lender's sole discretion, (b) be prepared in accordance
with GAAP, (c) include, without limitation, a statement of
operations (profit and loss), a statement of cash flows, a
calculation of Net Operating Income, a consolidated balance
sheet, an aged accounts receivable report and such other
information or reports as shall be reasonably requested by Lender
or any applicable Rating Agency and (d) be accompanied by an
Officer's Certificate from a senior executive of Borrower
certifying as of the date thereof (x) that such statement is
true, correct, complete and accurate and fairly reflects the
results of operations and financial condition of Borrower for the
relevant period, and (y) notice of whether there exists an Event
of Default or Default, and if such Event of Default or Default
exists, the nature thereof, the period of time it has existed and
the action then being taken to remedy same.
(iv) Borrower shall furnish to Lender within twenty-five
(25) days following the end of each calendar month, a true,
correct and complete monthly unaudited financial statement which
shall (a) be in form and substance acceptable to Lender in
Lender's sole discretion, (b) be prepared in accordance with
GAAP, (c) include, without limitation, a statement of operations
(profit and loss), a statement of cash flows, a calculation of
Net Operating Income, a consolidated balance sheet, an aged
accounts receivable report and such other information or reports
as shall be reasonably requested by Lender or any applicable
Rating Agency and (d) be accompanied by an Officer's Certificate
from a senior executive of Borrower certifying as of the date
thereof (x) that such statement is true, correct, complete and
accurate and fairly reflects the results of operations and
financial condition of Borrower for the relevant period, and (y)
notice of whether there exists an Event of Default or Default,
and if such Event of Default or Default exists, the nature
thereof, the period of time it has existed and the action then
being taken to remedy same.
(v) Borrower shall furnish to Lender, within twenty-five
(25) days following the end of each calendar month, a true,
complete and correct rent roll and occupancy report (including
statistics concerning tenant sales) and such other occupancy and
rate statistics as Lender shall request in Lender's discretion.
Each such document shall (a) be in form and substance acceptable
to Lender in Lender's sole discretion, and (b) be accompanied by
an Officer's Certificate from a senior executive of Borrower
certifying as of the date thereof (x) that such statement is true,
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correct, complete and accurate and (y) notice of whether there
exists an Event of Default or Default, and if such Event of
Default or Default exists, the nature thereof, the period of time
it has existed and the action then being taken to remedy same.
(vi) Borrower shall furnish to Lender, within ten (10)
Business Days after request, such further information with
respect to the operation of the Facility and the financial
affairs of Borrower as may be requested by Lender, including
without limitation all business plans prepared for Borrower.
(vii) Borrower shall furnish to Lender, within ten (10)
Business Days after request, such further information regarding
any Plan or Multiemployer Plan and any reports or other
information required to be filed under ERISA as may be requested
by Lender.
(viii) Borrower shall, concurrently with Borrower's
delivery to Lender, provide a copy of the items required to be
delivered to Lender under this Section 5.1(Q) to the Rating
Agencies, the trustee, and any servicer and/or special servicer
that may be retained in conjunction with the Loan or any
Securitization. Borrower shall furnish to Lender written notice,
within two Business Days after receipt by Borrower, of any Rents,
Money or other items of Gross Revenue that Borrower is not
required by this Agreement to deposit in the Collection Account
or Cash Collateral Account, together with such other documents
and materials relating to such Rents, Money or other items of
Gross Revenue as Lender requests in Lender's discretion.
(ix) Borrower shall provide Lender with updated information
(satisfactory to Lender in Lender's discretion) concerning the
Basic Carrying Costs for the next succeeding Fiscal Year prior to
the termination of each Fiscal Year.
(x) Borrower shall furnish to Lender, within ten (10)
Business Days after request, such other financial information
with respect to Borrower or any Manager as Lender may reasonably
request.
(R) Conduct of Business. Borrower shall cause the operation of
each Facility to be conducted at all times in a manner consistent with at
least the level of operation of such Facility as of the Closing Date,
including, without limitation, the following:
(i) to maintain or cause to be maintained the standard of
operations at each Facility at all times at a level necessary to
insure a level of quality for each Facility consistent with
similar facilities in the same competitive market;
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(ii) to operate or cause to be operated each Facility in a
prudent manner in compliance in all respects with applicable
Legal Requirements and Insurance Requirements relating thereto
and cause all licenses, Permits, and any other agreements
necessary for the continued use and operation of each Facility to
remain in effect; and
(iii) to maintain or cause to be maintained sufficient
Inventory and Equipment of types and quantities at each Facility
to enable Borrower or Manager to operate such Facility.
(S) Intentionally omitted.
(T) ERISA. Borrower shall deliver to Lender as soon as
possible, and in any event within ten days after Borrower knows or has reason
to believe that any of the events or conditions specified below with respect
to any Plan or Multiemployer Plan has occurred or exists, a statement signed
by a senior financial officer of Borrower setting forth details respecting
such event or condition and the action, if any, that Borrower or its ERISA
Affiliate proposes to take with respect thereto (and a copy of any report or
notice required to be filed with or given to PBGC by Borrower or an ERISA
Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a
Plan, as to which PBGC has not by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified
within 30 days of the occurrence of such event (provided that a
failure to meet the minimum funding standard of Section 412 of
the Code or Section 302 of ERISA, including, without limitation,
the failure to make on or before its due date a required
installment under Section 412(m) of the Code or Section 302(e) of
ERISA, shall be a reportable event regardless of the issuance of
any waivers in accordance with Section 412(d) of the Code); and
any request for a waiver under Section 412(d) of the Code for any
Plan;
(ii) the distribution under Section 4041 of ERISA of a
notice of intent to terminate any Plan or any action taken by
Borrower or an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of or the appointment
of a trustee to administer, any Plan, or the receipt by Borrower
or any ERISA Affiliate of a notice from a Multiemployer Plan that
such action has been taken by PBGC with respect to such
Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer
Plan by Borrower or any ERISA Affiliate that results in liability
under Section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of a purchaser default)
or the receipt by
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Borrower or any ERISA Affiliate of notice from a Multiemployer
Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or
has terminated under Section 4041A of ERISA,
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against Borrower or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days;
(vi) the adoption of an amendment to any Plan that, pursuant
to Section 401(a)(29) of the Code or Section 307 of ERISA, would
result in the loss of tax-exempt status of the trust of which
such Plan is a part if Borrower or an ERISA Affiliate fails to
timely provide security to the Plan in accordance with the
provisions of said Sections; and
(vii) the imposition of a Lien or a security interest in
connection with a Plan.
(U) Single Purpose Entity. Borrower shall at all times be a
Single Purpose Entity.
(V) Trade Indebtedness. Borrower will pay its trade
payables, within sixty (60) days of the date incurred, unless Borrower is in
good faith contesting Borrower's obligation to pay such trade payables in a
manner satisfactory to Lender (which may include Lender's requirement that
Borrower post security with respect to the contested trade payable).
(W) Capital Improvements and Environmental Remediation.
Borrower shall, within six (6) months of the date hereof perform the repairs
and environmental remediation to the each Facility itemized on Exhibit D
hereto.
(X) Annual Operating Budgets. Borrower shall submit to
Lender Annual Operating Budgets at those times and in such form and substance
as set forth in the definition of "Annual Operating Budget" in this Agreement.
(Y) SPE Equity Owner Filings. Borrower shall deliver to
Lender within fifteen (15) days after filing with the SEC copies of any
filings made with the SEC by the SPE Equity Owner.
ARTICLE VI
NEGATIVE COVENANTS
Section 6.1. Borrower Negative Covenants. Borrower covenants
and agrees that, until payment in full of the Indebtedness, it will not do,
directly or indirectly, any of the following unless Lender consents thereto
in writing:
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(A) Liens on the Trust Property. Incur, create, assume,
become or be liable in any manner with respect to, or permit to exist, any
Lien with respect to any Facility or any portion thereof, except: (i) Liens
in favor of Lender, and (ii) the Permitted Encumbrances.
(B) Transfer. Except as expressly permitted by or
pursuant to this Agreement or the Deed of Trust, or except as otherwise
approved by Lender in writing in Lender's sole discretion, allow any Transfer
to occur, terminate or modify the Management Agreement, or enter into a
Management Agreement with respect to any Facility.
(C) Other Borrowing. Except for (i) unsecured trade
payables incurred in the ordinary course of business relating to the
ownership and operation of the Facilities which do not exceed, at any time, a
maximum amount of $250,000 (with respect to any one Facility) and are paid
within sixty (60) days of the date incurred, incur, create, assume, become or
be liable in any manner with respect to Other Borrowings.
(D) Leases. Enter into any Leases with all or any
portion of any Facility which grant the lessee thereunder any option to
purchase or right of first refusal to purchase all or any portion of such
Facility.
(E) Change In Business. Cease to be a Single-Purpose
Entity or make any material change in the scope or nature of its business
objectives, purposes or operations, or undertake or participate in activities
other than the continuance of its present business.
(F) Debt Cancellation. Cancel or otherwise forgive or
release any material claim or debt owed to Borrower by any Person, except for
adequate consideration or in the ordinary course of Borrower's business.
(G) Affiliate Transactions. Enter into, or be a party
to, any transaction with an Affiliate of Borrower, except in the ordinary
course of business and on terms which are no less favorable to Borrower or
such Affiliate than would be obtained in a comparable arm's length
transaction with an unrelated third party, and, if the amount to be paid to
the Affiliate pursuant to the transaction or series of related transactions
is greater than $50,000 (determined annually on an aggregate basis) fully
disclosed to Lender in advance.
(H) Creation of Easements. Create, or permit any
Facility or any part thereof to become subject to, any easement, license or
restrictive covenant, other than a Permitted Encumbrance.
(I) Misapplication of Funds. Distribute any Rents or
Money received from Accounts in violation of the provisions of Section 2.12.
(J) Certain Restrictions. Enter into any agreement
which expressly restricts the ability of Borrower to enter into amendments,
modifications or waivers of any of the Loan Documents.
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(K) Issuance of Equity Interests. Issue or allow to be
created any stocks or shares or partnership or membership interests, as
applicable, or other ownership interests other than the stocks, shares,
partnership or membership interests and other ownership interests which are
outstanding or exist on the Closing Date or any security or other instrument
which by its terms is convertible into or exercisable or exchangeable for
Borrower's ownership interests in Borrower. If at any time Borrower is a
limited partnership or a limited liability company, Borrower shall not allow
to be issued or created any stock in Borrower's general partner or managing
member, as applicable, other than the stock which is outstanding or existing
on the Closing Date or any security or other instrument which by its terms is
convertible into or exercisable or exchangeable for any stock in Borrower's
general partner or managing member, as applicable.
(L) Assignment of Licenses and Permits. Assign or
transfer any of its interest in any Permits pertaining to any Facility, or
assign, transfer or remove or permit any other Person to assign, transfer or
remove any records pertaining to any Facility without Lender's prior written
consent which consent may be granted or refused in Lender's sole discretion.
(M) Place of Business. Change its chief executive
office or its principal place of business or place where its books and
records are kept without giving Lender at least thirty (30) days prior
written notice thereof and promptly providing Lender such information as
Lender may reasonably request in connection therewith.
ARTICLE VII
DEFAULTS
Section 7.1. Event of Default. The occurrence of one
or more of the following events shall be an "Event of Default" hereunder:
(i) if on any Payment Date the funds in the Debt
Service Payment Sub-Account are insufficient to pay the
Required Debt Service Payment due on such Payment Date,
unless Borrower pays the Required Debt Service Payment
due on such Payment Date;
(ii) intentionally omitted;
(iii) if Borrower falls to pay the outstanding
Indebtedness on the Maturity Date;
(iv) if on any Payment Date Borrower fails to pay
the Basic Carrying Costs Monthly Installment or the
Capital Reserve Monthly Installment due on such Payment
Date;
(v) if on the date any payment of a Basic Carrying
Cost would become delinquent, the funds in the Basic
Carrying Costs Sub-Account required to be reserved
pursuant to Section 2.12(g) together with any funds
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in the Cash Collateral Account not allocated to another
Sub-Account are insufficient to make such payment;
(vi) the occurrence of the events identified
elsewhere in the Loan Documents as constituting an "Event
of Default" hereunder or thereunder;
(vii) a Transfer, unless the prior written
consent of Lender is obtained (which consent may be
withheld with or without cause in Lender's discretion);
(viii) if Borrower fails to pay any other amount
payable pursuant to this Agreement or any other Loan
Document;
(ix) if any representation or warranty made herein
or in any other Loan Document, or in any report,
certificate, financial statement or other Instrument,
agreement or document furnished by Borrower in connection
with this Agreement, the Note or any other Loan Document
executed and delivered by Borrower, shall be false in any
material respect as of the date such representation or
warranty was made or remade, and such falsity or
incorrectness shall not have been cured within thirty
(30) days after the date on which the Borrower has
knowledge of such falsity or incorrectness, or if the
Borrower is diligently pursuing such cure in such thirty
(30) day period and, in the Lender's judgment such
falsity or incorrectness can be cured with reasonable
diligence in an additional sixty (60) days, then such
thirty (30) day limited cure period shall be extended an
additional sixty (60) days for a total of ninety (90)
days;
(x) if Borrower, any of Borrower's partners or
members, as applicable, or the SPE Equity Owner makes an
assignment for the benefit of creditors;
(xi) if a receiver, liquidator or trustee shall be
appointed for Borrower, any of Borrower's partners or
members, as applicable, or the SPE Equity Owner or if
Borrower, any of Borrower's partners or members, as
applicable, or the SPE Equity Owner shall be adjudicated
as bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to
federal bankruptcy law, or any similar federal or state
law, shall be filed by or against, consented to, or
acquiesced in by Borrower, any of Borrower's partners or
members, as applicable, or the SPE Equity Owner or if any
proceeding for the dissolution or liquidation of
Borrower, any of Borrower's partners or members, as
applicable, or the SPE Equity Owner shall be instituted;
provided, however, that if such appointment,
adjudication, petition or proceeding was involuntary and
not consented to by Borrower, any of Borrower's partners
or members, as applicable, or the SPE Equity Owner as the
case may be, upon the same not being
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discharged, stayed or dismissed within 90 days, or if
Borrower, any of Borrower's partners or members, as
applicable, or the SPE Equity Owner shall generally not
be paying its debts as they become due;
(xii) if Borrower attempts to delegate its
obligations or ssign its rights under this Agreement, any
of the other Loan Documents or any interest herein or
therein, except as specifically permitted herein;
(xiii) if any provision of any organizational
document of Borrower is amended or modified in any
respect which may adversely affect Lender, or if Borrower
or any of its partners or members, as applicable, fails
to perform or enforce the provisions of such
organizational documents or attempts to dissolve
Borrower; or if Borrower or any of its partners or
members, as applicable, breaches any of its covenants set
forth in Sections 5.1(U), or 6.1(E);
(xiv) if Borrower fails to (A) notify Lender of
the occurrence of a Default under any of the Loan
Documents within ten (10) days of the day on which
Borrower first has knowledge of such Default or (B) give
any notice due to any Person under any Loan Document (a)
within two (2) days after such notice was due or (b) in
accordance with the applicable procedural requirements
set forth in the Loan Documents;
(xv) if Borrower shall be in default under any of
the other obligations, agreements, undertakings, terms,
covenants, provisions or conditions of this Agreement,
the Note, the Deeds of Trust or the other Loan Documents,
not otherwise referred to in this Section 7.1, for ten
(10) days after written notice to Borrower from Lender or
its successors or assigns, in the case of any default
which can be cured by the payment of a sum of money or
for thirty (30) days after written notice from Lender or
its successors or assigns, in the case of any other
default (unless otherwise provided herein or in such
other Loan Document); provided, however, that if such
non-monetary default under this subparagraph is
susceptible of cure but cannot reasonably be cured within
such thirty (30) day period and provided further that
Borrower shall have commenced to cure such default within
such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30)
day period shall be extended for such time as is
reasonably necessary for Borrower in the exercise of due
diligence to cure such default, but in no event shall
such period exceed ninety (90) days after the original
notice from Lender;
(xvi) if an event or condition specified in
Section 5.1(T) shall occur or exist with respect to any
Plan or Multiemployer Plan and, as a result of such event
or condition, together with all other such events or
conditions, Borrower or any ERISA Affiliate shall incur
or in the opinion
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of Lender shall be reasonably likely to incur a liability
to a Plan, a Multiemployer Plan or PBGC (or any
combination of the foregoing) which would constitute, in
the determination of Lender, a Material Adverse Effect;
(xvii) if without Lender's prior written consent
(A) any Manager resigns or is removed, (B) the management
or control of such Manager is transferred or (C) any
Management Agreement is entered into for any Facility or
(D) there is any change in or termination of any
Management Agreement for any Facility; and
(xviii) if any Burnham Party shall be in default
under any of its respective covenants, agreements or
undertakings set forth in the Burnham Party Agreement.
Section 7.2. Remedies. (a) Upon the occurrence and
during the continuation of an Event of Default, all or any one or more of the
rights, powers and other remedies available to Lender against Borrower under
this Agreement, the Note, the Deeds of Trust or any of the other Loan
Documents, or at law or in equity may be exercised by Lender at any time and
from time to time (including, without limitation, the right to accelerate and
declare the outstanding principal amount, unpaid interest, Default Rate
interest, Late Charges, Yield Maintenance Premium and any other amounts owing
by Borrower to be immediately due and payable), without notice or demand,
whether or not all or any portion of the Indebtedness shall be declared due
and payable, and whether or not Lender shall have commenced any foreclosure
proceeding or other action for the enforcement of its rights and remedies
under any of the Loan Documents with respect to any Facility or all or any
portion of the Collateral. Any such actions taken by Lender shall be
cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of
Lender permitted by law, equity or contract or as set forth herein or in the
other Loan Documents. Notwithstanding anything contained to the contrary
herein, the outstanding principal amount, unpaid interest, Default Rate
interest, Late Charges, Yield Maintenance Premium and any other amounts owing
by Borrower shall be accelerated and immediately due and payable, without any
election by Lender upon the occurrence of an Event of Default described in
Section 7.1(x) or Section 7.1(xi). Notwithstanding that this Agreement may
refer to a continuing Event of Default, and without limiting Borrower's right
to cure a Default which may, with the passage of time, become an Event of
Default, Borrower shall have no right pursuant to this Agreement to cure any
Event of Default unless this Agreement is amended by Borrower and Lender in
writing.
Section 7.3. Remedies Cumulative. The rights, powers
and remedies of Lender under this Agreement shall be cumulative and not
exclusive of any other right, power or remedy which Lender may have against
Borrower pursuant to this Agreement or the other Loan Documents executed by
or with respect to Borrower, or existing at law or in equity or otherwise.
Lender's rights, powers and remedies may be pursued singly, concurrently or
otherwise, at such
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time and in such order as Lender may determine in Lender's sole discretion.
No delay or omission to exercise any remedy, right or power accruing upon an
Event of Default shall impair any such remedy, right or power or shall be
construed as a waiver thereof but any such remedy, right or power may be
exercised from time to time and as often as may be deemed expedient. A
waiver of any Default or Event of Default shall not be construed to be a
waiver of any subsequent Default or Event of Default or to impair any remedy,
right or power consequent thereon. Any and all of Lender's rights with
respect to the Collateral shall continue unimpaired, and Borrower shall be
and remain obligated in accordance with the terms hereof, notwithstanding (i)
the release or substitution of Collateral at any time, or of any rights or
interest therein or (ii) any delay, extension of time, renewal, compromise or
other indulgence granted by Lender in the event of any Default or Event of
Default with respect to the Collateral or otherwise hereunder.
Notwithstanding any other provision of this Agreement, Lender reserves the
right to seek a deficiency judgment or preserve a deficiency claim, in
connection with the foreclosure of any Deed of Trust on a related Facility,
to the extent necessary to foreclose on other parts of the Trust Property.
Section 7.4. Lender's Right to Perform. If Borrower
fails to perform any covenant or obligation contained herein and such failure
shall continue for a period of five Business Days after Borrower's receipt of
written notice thereof without in any way limiting Section 7.1 hereof, from
Lender, Lender may, but shall have no obligation to, itself perform, or cause
performance of such covenant or obligation, and the expenses of Lender
incurred in connection therewith shall be payable by Borrower to Lender upon
demand. Notwithstanding the foregoing, Lender shall have no obligation to
send notice to Borrower of any such failure.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival. Subject to Section 4.2, this
Agreement and all covenants, agreements, representations and warranties made
herein and in the certificates delivered pursuant hereto shall survive the
execution and delivery of this Agreement and the execution and delivery by
Borrower to Lender of the Note, and shall continue in full force and effect
so long as any portion of the Indebtedness is outstanding and unpaid.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such
party. All covenants, promises and agreements in this Agreement contained,
by or on behalf of Borrower, shall inure to the benefit of the respective
successors and assigns of Lender. Nothing in this Agreement or in any other
Loan Document, express or implied, shall give to any Person other than the
parties and the holder(s) of the Note, the Deeds of Trust and the other Loan
Documents, and their legal representatives, successors and assigns, any
benefit or any legal or equitable right, remedy or claim hereunder.
Section 8.2. Lender's Discretion. Whenever pursuant to
this Agreement, Lender exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Lender, the
decision of Lender to approve or disapprove or to decide whether
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arrangements or terms are satisfactory or not satisfactory shall (except as
is otherwise specifically herein provided) be in the sole discretion of
Lender.
Section 8.3. Governing Law. (a) In all respects,
including, without limitation, matters of construction, validity and
performance, this Agreement and the obligations arising hereunder shall be
governed by, and construed in accordance with, the laws of the State of
California applicable to contracts made and performed in such State and any
applicable law of the United States of America. To the fullest extent
permitted by law, Borrower hereby unconditionally and irrevocably waives any
claim to assert that the law of any other jurisdiction governs this Agreement
and the Note, and this Agreement and the Note shall be governed by and
construed in accordance with the laws of the State of California.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN
ANY FEDERAL OR STATE COURT IN LOS ANGELES, CALIFORNIA OR IN ANY FEDERAL OR
STATE COURT IN THE JURISDICTION IN WHICH THE COLLATERAL IS LOCATED AND
BORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION
OR PROCEEDING.
Section 8.4. Modification, Waiver in Writing. No
modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement, the Note or any other Loan Document, or consent
to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective
only in the specific instance, and for the purpose, for which given. Except
as otherwise expressly provided herein, no notice to or demand on Borrower
shall entitle Borrower to any other or future notice or demand in the same,
similar or other circumstances.
Section 8.5. Delay Not a Waiver. Neither any failure
nor any delay on the part of Lender in insisting upon strict performance of
any term, condition, covenant or agreement, or exercising any right, power,
remedy or privilege hereunder, or under the Note, or of any other Loan
Document, or any other instrument given as security therefor, shall operate
as or constitute a waiver thereof, nor shall a single or partial exercise
thereof preclude any other future exercise, or the exercise of any other
right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable
under this Agreement, the Note or any other Loan Document, Lender shall not
be deemed to have waived any right either to require prompt payment when due
of all other amounts due under this Agreement, the Note or the other Loan
Documents, or to declare a default for failure to effect prompt payment of
any such other amount.
Section 8.6. Notices. All notices, consents, approvals
and requests required or permitted hereunder or under any other Loan Document
shall be given in writing and shall be effective for all purposes if hand
delivered or sent by (a) hand delivery, with proof of attempted
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delivery, (b) certified or registered United States mail, postage prepaid,
(c) expedited prepaid delivery service, either commercial or United States
Postal Service, with proof of attempted delivery, or (d) by telecopier (with
answerback acknowledged) provided that such telecopied notice must also be
delivered by one of the means set forth in (a), (b) or (c) above, addressed
if to Lender at its address set forth on the first page hereof, and if to
Borrower at its designated address set forth on the first page hereof or at
such other address and Person as shall be designated from time to time by any
party hereto, as the case may be, in a written notice to the other parties
hereto in the manner provided for in this Section 8.6. A copy of all
notices, consents, approvals and requests directed to Lender shall be
delivered concurrently to each of the following: William Lindsay, Esquire,
Gibson, Dunn & Crutcher, LLP, 333 South Grand Avenue, Los Angeles, CA
90071-3197, Telefax Number (213) 229-7520; Two World Financial Center,
Building B, New York, NY 10281-1198, Attention Sheryl McAfee, Telefax Number
(212) 667-1206; and Two World Financial Center, Building B, New York, NY
10281-1198, Attention: Legal Counsel, Telefax Number (212) 667-1022. A
notice shall be deemed to have been given: (a) in the case of hand delivery,
at the time of delivery; (b) in the case of registered or certified mail,
when delivered or the first attempted delivery on a Business Day; (c) in the
case of expedited prepaid delivery upon the first attempted delivery on a
Business Day; or (d) in the case of telecopier, upon receipt of answerback
confirmation, provided that such telecopied notice was also delivered as
required in this Section 8.6. A party receiving a notice which does not
comply with the technical requirements for notice under this Section 8.6 may
elect to waive any deficiencies and treat the notice as having been properly
given.
SECTION 8.7. TRIAL BY JURY. BORROWER AND LENDER, TO THE
FULLEST EXTENT THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN
ANY ACTION OR PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION,
BROUGHT BY ANY PARTY HERETO WITH RESPECT TO THIS AGREEMENT, THE NOTE OR THE
OTHER LOAN DOCUMENTS.
Section 8.8. Headings. The Article and Section
headings in this Agreement are included herein for convenience of reference
only and shall not constitute a part of this Agreement for any other purpose.
Section 8.9. Assignment. Lender shall have the right
to assign in whole or in part this Agreement and/or any of the other Loan
Documents and the obligations hereunder or thereunder to any Person and to
participate all or any portion of the Loan evidenced hereby, including
without limitation, any servicer or trustee in connection with a
Securitization. Lender shall provide Borrower with written notice of any
such assignment; provided, however, that such notice shall not be a condition
of Lender's right to assign this Agreement and/or any of the Loan Documents
and the failure to deliver such notice shall not constitute a default under
this Loan Agreement.
Section 8.10. Severability. Wherever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
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provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
Section 8.11. Preferences. Lender shall have no
obligation to marshal any assets in favor of Borrower or any other party or
against or in payment of any or all of the obligations of Borrower pursuant
to this Agreement, the Note or any other Loan Document. Lender shall have
the continuing and exclusive right to apply or reverse and reapply any and
all payments by Borrower to any portion of the obligations of Borrower
hereunder. To the extent Borrower makes a payment or payments to Lender for
Borrower's benefit, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable
cause, then, to the extent of such payment or proceeds received, the
obligations hereunder or part thereof intended to be satisfied shall be
revived and continue in full force and effect, as if such payment or proceeds
had not been received by Lender.
Section 8.12. Waiver of Notice. Borrower shall not be
entitled to any notices of any nature whatsoever from Lender except with
respect to matters for which this Agreement or the other Loan Documents
specifically and expressly provide for the giving of notice by Lender to
Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice
from Lender with respect to any matter for which this Agreement or the other
Loan Documents does not specifically and expressly provide for the giving of
notice by Lender to Borrower.
Section 8.13. Remedies of Borrower. In the event that a
claim or adjudication is made that Lender or its agents, has acted
unreasonably or unreasonably delayed acting in any case where by law or under
this Agreement, the Note, the Deeds of Trust or the other Loan Documents,
Lender or such agent, as the case may be, has an obligation to act reasonably
or promptly, Borrower agrees that neither Lender nor its agents, shall be
liable for any monetary damages, and Borrower's sole remedies shall be
limited to commencing an action seeking injunctive relief or declaratory
judgment. The parties hereto agree that any action or proceeding to
determine whether Lender has acted reasonably shall be determined by an
action seeking declaratory judgment.
Section 8.14. Exculpation. Except as otherwise set
forth in this Section 8.14 and Section 4.2 to the contrary, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the
obligations contained in this Agreement, the Note, the Deeds of Trust or any
of the other Loan Documents executed and delivered by Borrower except that
Lender may pursue any power of sale, bring a foreclosure action, action for
specific performance, action for money judgment, or other appropriate action
or proceeding (including, without limitation, to obtain a deficiency
judgment) against Borrower or any other Person solely for the purpose of
enabling Lender to realize upon (i) the Collateral, and (ii) the Rents and
Accounts arising from any Facility to the extent (x) received by Borrower or
any Manager (or any of their affiliates), after and during the continuation
of the occurrence of an Event of Default or (y) distributed to Borrower or
any Manager, or their respective shareholders, or partners or members, as
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applicable, or affiliates during or with respect to any period for which
Lender did not receive the full amounts it was entitled to receive as
prepayments of the Loan pursuant to Section 2.7 (all Rents and Accounts
covered by clauses (x) and (y) being hereinafter referred to as the "Recourse
Distributions") and (iii) any other collateral given to Lender under the Loan
Documents ((i), (ii), and (iii) collectively, the "Default Collateral");
provided, however, that any judgment in any such action or proceeding shall
be enforceable only to the extent of any such Default Collateral. The
provisions of this Section 8.14 shall not, however, (a) impair the validity
of the Indebtedness evidenced by the Loan Documents or in any way affect or
impair the Liens of the Deeds of Trust or any of the other Loan Documents or
the right of Lender to foreclose the Deeds of Trust following an Event of
Default; (b) impair the right of Lender to name any Person as a party
defendant in any action or suit for judicial foreclosure and sale under any
of the Deeds of Trust; (c) affect the validity or enforceability of the Note,
the Deeds of Trust or the other Loan Documents; (d) impair the right of
Lender to obtain the appointment of a receiver; (e) impair the right of
Lender to bring suit for any damages, losses, expenses, liabilities or costs
resulting from fraud, intentional misrepresentation, physical waste of all or
any portion of any Facility, or wrongful removal or disposal of all or any
portion of any Facility by any Person in connection with this Agreement, the
Note, the Deeds of Trust or the other Loan Documents; (f) impair the right of
Lender to obtain the Recourse Distributions received by any Person; (g)
impair the right of Lender to bring suit with respect to any misappropriation
of security deposits or Rents collected more than one month in advance; (h)
impair the right of Lender to obtain Insurance Proceeds or Condemnation
Proceeds due to Lender pursuant to the Deeds of Trust; (i) impair the right
of Lender to enforce the provisions of Sections 4.1(b)(U) or 5.1(D)-(I) of
this Agreement, Section 2.8 of the Deeds of Trust even after repayment in
full by Borrower of the Indebtedness; (j) prevent or in any way hinder Lender
from exercising, or constitute a defense, or counterclaim, or other basis for
relief in respect of the exercise of, any other remedy against any or all of
the Collateral securing the Note as provided in the Loan Documents; (k)
impair the right of Lender to bring suit with respect to any misapplication
of any funds; or (l) impair the right of Lender to sue for, seek or demand a
deficiency judgment against any Person solely for the purpose of foreclosing
the Trust Property or any part thereof or realizing upon the Default
Collateral; provided, however, that any such deficiency judgment referred to
in this clause (l) shall be enforceable only to the extent of any of the
Default Collateral. The provisions of this Section 8.14 shall be
inapplicable to any Person if (i) any petition for bankruptcy, reorganization
or arrangement pursuant to federal or state law against Borrower shall be
filed by or against Borrower or consented to or acquiesced to by Borrower,
(ii) if Borrower shall institute any proceeding for the dissolution or
liquidation of Borrower, (iii) if Borrower shall make an assignment for the
benefit of creditors or (iv) if Borrower shall breach the representation and
warranty in Section 4.1(b)(Z).
Section 8.15. Exhibits Incorporated. The information
set forth on the cover, heading and recitals hereof, and the Exhibits
attached hereto, are hereby incorporated herein as a part of this Agreement
with the same effect as if set forth in the body hereof.
Section 8.16. Offsets, Counterclaims and Defenses. Any
assignee of Lender's interest in and to this Agreement, the Note, the Deeds
of Trust and the other Loan Documents shall take the same free and clear of
all offsets, counterclaims or defenses which are unrelated to
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the Loan, this Agreement, the Note, the Deeds of Trust and the other Loan
Documents which Borrower may otherwise have against any assignor, and no such
unrelated counterclaim or defense shall be interposed or asserted by Borrower
in any action or proceeding brought by any such assignee upon this Agreement,
the Note, the Deeds of Trust and other Loan Documents and any such right to
interpose or assert any such unrelated offset, counterclaim or defense in any
such action or proceeding is hereby expressly waived by Borrower.
Section 8.17. No Joint Venture or Partnership. Borrower
and Lender intend that the relationship created hereunder be solely that of
borrower and lender. Nothing herein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between
Borrower and Lender nor to grant Lender any interest in the Trust Property
other than that of mortgagee or lender.
Section 8.18. Waiver of Marshalling of Assets Defense.
To the fullest extent that Borrower may legally do so, Borrower waives all
rights to a marshalling of the assets of Borrower, and others with interests
in Borrower, and of the Trust Property, or to a sale in inverse order of
alienation in the event of foreclosure of the interests hereby created, and
agrees not to assert any right under any laws pertaining to the marshalling
of assets, the sale in inverse order of alienation, homestead exemption, the
administration of estates of decedents, or any other matters whatsoever to
defeat, reduce or affect the right of Lender under the Loan Documents to a
sale of any Facility for the collection of the Indebtedness without any prior
or different resort for collection, or the right of Lender or Deed of Trust
Trustee to the payment of the Indebtedness in preference to every other
claimant whatsoever.
Section 8.19. Waiver of Counterclaim. Borrower hereby
waives the right to assert a counterclaim, other than compulsory
counterclaim, in any action or proceeding brought against Borrower by Lender
or Lender's agents.
Section 8.20. Conflict: Construction of Documents. In
the event of any conflict between the provisions of this Agreement and the
provisions of the Note, the Deeds of Trust or any of the other Loan
Documents, the provisions of this Agreement shall prevail. The parties
hereto acknowledge that they were represented by counsel in connection with
the negotiation and drafting of the Loan Documents and that the Loan
Documents shall not be subject to the principle of construing their meaning
against the party which drafted same.
Section 8.21. Brokers and Financial Advisors. Borrower
and Lender hereby represent that they have dealt with no financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Agreement except Advisor. Borrower
hereby agrees to indemnify and hold Lender harmless from and against any and
all claims, liabilities, costs and expenses of any kind in any way relating
to or arising from a claim by any Person (other than Advisor), that such.
Person acted on behalf of Borrower in connection with the transactions
contemplated herein. The provisions of this Section shall survive the
expiration and termination of this Agreement and the repayment of the
Indebtedness.
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Section 8.22. Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute
one and the same instrument.
Section 8.23. Estoppel Certificates. Borrower and
Lender each hereby agree at any time and from time to time upon not less than
fifteen (15) days prior written notice by Borrower or Lender to execute,
acknowledge and deliver to the party specified in such notice, a statement,
in writing, certifying that this Agreement is unmodified and in full force
and effect (or if there have been modifications, that the same, as modified,
is in full force and effect and stating the modifications hereto), and
stating whether or not, to the knowledge of such certifying party, any
Default or Event of Default has occurred, and, if so, specifying each such
Default or Event of Default; provided, however, that it shall be a condition
precedent to Lender's obligation to deliver the statement pursuant to this
Section , that Lender shall have received, together with Borrower's request
for such statement, an Officer's Certificate stating that no Default or Event
of Default exists as of the date of such certificate (or specifying such
Default or Event of Default).
Section 8.24. Payment of Expenses. Borrower shall,
whether or not the Transactions are consummated, pay all Transaction Costs,
which shall include, without limitation, reasonable out-of-pocket fees,
costs, expenses, and disbursements of Lender and its attorneys, local
counsel, accountants and other contractors in connection with (i) the
negotiation, preparation, execution and delivery of the Loan Documents and
the documents and instruments referred to therein, (ii) the creation,
perfection or protection of Lender's liens in the Collateral (including,
without limitation, fees and expenses for title and lien searches and filing
and recording fees, intangibles taxes, personal property taxes, mortgage
recording taxes, due diligence expenses, travel expenses, accounting firm
fees, costs of the Appraisals, Environmental Reports (and an environmental
consultant), Surveys and the Engineering Reports), (iii) the negotiation,
preparation, execution and delivery of any amendment, waiver or consent
relating to any of the Loan Documents, and (iv) the preservation of rights
under and enforcement of the Loan Documents and the documents and instruments
referred to therein, including any restructuring or rescheduling of the
Indebtedness.
Section 8.25. Bankruptcy Waiver. Borrower hereby agrees
that, in consideration of the recitals and mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, in the event Borrower shall (i) file with any
bankruptcy court of competent jurisdiction or be the subject of any petition
under Title 11 of the U.S. Code, as amended, (ii) be the subject of any order
for relief issued under Title 11 of the U.S. Code, as amended, (iii) file or
be the subject of any petition seeking any reorganization, arrangement
composition, readjustment, liquidation, dissolution or similar relief under
any present or law relating to bankruptcy, insolvency or other relief of
debtors, (iv) have sought or consented to or acquiesced in the appointment of
any trustee, receiver, conservator or liquidator or (v) be the subject of any
order, judgment or decree entered by any court of competent jurisdiction
approving a petition filed against such party for any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future federal or state act or law relating to
bankruptcy, insolvency or other relief for debtors, the automatic stay
provided by the Federal Bankruptcy Code shall be
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modified and annulled as to Lender, so as to permit Lender to exercise any
and all of its remedies, upon request of Lender made on notice to Borrower
and any other party in interest but without the need of further proof or
hearing. Neither Borrower nor any Affiliate of Borrower shall contest the
enforceability of this Section 8.25.
Section 8.26 Entire Agreement. This Agreement,
together with the Exhibits hereto and the other Loan Documents constitutes
the entire agreement among the parties hereto with respect to the subject
matter contained in this Agreement, the Exhibits hereto and the other Loan
Documents and supersedes all prior agreements, understandings and
negotiations between the parties.
Section 8.27 Dissemination of Information. If Lender
determines at any time to sell, transfer or assign the Note, this Loan
Agreement and any other Loan Document and any or all servicing rights with
respect thereto, or to grant participations therein or issue mortgage
pass-through certificates or other securities evidencing a beneficial
interest in a rated or unrated public offering or private placement, Lender
may forward to each purchaser, transferee, assignee, servicer, participant or
investor in such securities (collectively, the "Investor") or any Rating
Agency rating such securities and each prospective Investor, all documents
and information which Lender now has or may hereafter acquire relating to the
Loan, Borrower, any guarantor, any Indemnitor and the Facility, which shall
have been furnished by Borrower, any guarantor, any Indemnitor, or any party
to any Loan Document, or otherwise furnished in connection with the Loan, as
Lender in its sole discretion determines necessary or desirable.
Section 8.28. Limitation of Interest. It is the
intention of Borrower and Lender to conform strictly to applicable usury
laws. Accordingly, if the transactions contemplated hereby would be usurious
under applicable law, then, in that event, notwithstanding anything to the
contrary in any Loan Document, it is agreed as follows: (i) the aggregate of
all consideration which constitutes interest under applicable law that is
taken, reserved, contracted for, charged or received under any Loan Document
or otherwise in connection with the Loan shall under no circumstances exceed
the maximum amount of interest allowed by applicable law, and any excess
shall be credited to principal by Lender (or if the Loan shall have been paid
in full, refunded to Borrower); and (ii) in the event that maturity of the
Loan is accelerated by reason of an election by Lender resulting from any
default hereunder or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never
include more than the maximum amount of interest allowed by applicable law,
and any interest in excess of the maximum amount of interest allowed by
applicable law, if any, provided for in the Loan Documents or, otherwise
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore prepaid, shall be credited to principal (or if
the principal portion of the Loan and any other amounts not constituting
interest shall have been paid in full, refunded to Borrower).
In determining whether or not the interest paid or
payable under any specific contingency exceeds the maximum amount allowed by
applicable law, Lender shall, to the maximum extent permitted under
applicable law (a) exclude voluntary prepayments and the effects thereof, and
(b) amortize, prorate, allocate and spread, in equal parts, the total amount
of
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interest throughout the entire contemplated term of the Loan so that the
interest rate is uniform throughout the entire term of the Loan; provided,
that if the Loan is paid and performed in full prior to the end of the full
contemplated term hereof, and if the interest received for the actual period
of existence thereof exceeds the maximum amount allowed by applicable law,
Lender shall refund to Borrower the amount of such excess, and in such event,
Lender shall not be subject to any penalties provided by any laws for
contracting for, charging or receiving interest in excess of the maximum
amount allowed by applicable law.
Section 8.29. Indemnification. Subject to Section 8.14,
Borrower shall indemnify and hold Lender and each of its affiliates
(including its officers, directors, partners, employees and agents and each
other person, if any, controlling Lender or any of its affiliates within the
meaning of either Section 15 of the Securities Act of 1933, as amended, or
Section 20 of the Securities Exchange Act of 1934, as amended) (each,
including Lender, an "Indemnified Party") harmless against any and all
losses, claims, damages, costs, expenses (including the fees and
disbursements of outside counsel retained by any such person) or liabilities
in connection with, arising out of or as a result of the transactions and
matters referred to or contemplated by this Agreement, except to the extent
that it is finally judicially determined that any such loss, claim, damage,
cost, expense or liability resulted solely from the fraud or willful
misconduct of such Indemnified Party. In the event that any Indemnified
Party becomes involved in any action, proceeding or investigation in
connection with any transaction or matter referred to or contemplated in this
Agreement, Borrower shall periodically reimburse any Indemnified Party upon
demand therefor in an amount equal to its reasonable legal and other expenses
(including the costs of any investigation and preparation) incurred in
connection therewith to the extent such legal or other expenses are the
subject of indemnification hereunder.
Section 8.30. Borrower Acknowledgments. Borrower hereby
acknowledges to and agrees with Lender that (i) the scope of Lender's
business is wide and includes, but is not limited to, financing, real estate
financing, investment in real estate and other real estate transactions which
may be viewed as adverse to or competitive with the business of Borrower or
its Affiliates and (ii) Borrower has been represented by competent legal
counsel and has consulted with such counsel prior to executing this Loan
Agreement and any of the other Loan Documents.
Section 8.31. Publicity. Lender and Borrower shall have
the right, with each other's consent (not to be unreasonably withheld), to
issue press releases, advertisements and other promotional materials
describing Lender's participation in the origination of the Loan or the
Loan's inclusion in any Securitization effectuated or to be effectuated by
Lender.
Section 8.32. Cross-Collateralization. Without
limitation to any other right or remedy provided to Lender in this Agreement,
any of the other Loan Documents, or at law or in equity, Borrower
acknowledges and agrees that, to the full extent permitted under applicable
law, if an Event of Default shall occur and be continuing, (i) Lender shall
have the right to pursue all of its rights and remedies in one proceeding, or
separately and independently in separate proceedings which it, as Lender, in
its sole and absolute discretion, shall determine from time to time, (ii)
Lender is not required to either marshall assets or sell Collateral in any
inverse order of
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alienation, (iii) the exercise by Lender of any remedies against any
Collateral will not impede Lender from subsequently or simultaneously
exercising remedies against any other Collateral, (iv) all Liens and other
rights, remedies and privileges provided to Lender in this Agreement and in
the other Loan Documents or otherwise shall remain in full force and effect
until Lender has exhausted all of its remedies against the Collateral and all
Collateral has been foreclosed, sold and/or otherwise realized upon, and (v)
each Facility shall be security for the performance of all of Borrower's
obligations hereunder.
[signatures commence on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this
Loan Agreement to be duly executed by their duly authorized representatives,
all as of the day and year first above written.
LENDER:
NOMURA ASSET CAPITAL
CORPORATION, a Delaware corporation
By: /s/ Justin C. Bert
--------------------------------
Name: Justin C. Bert
------------------------------
Title: Vice President
-----------------------------
[signatures continued on following page]
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BORROWER:
BPP/GOLDEN STATE ACQUISITIONS, L.L.C.,
a Delaware limited liability company
By: BURNHAM PACIFIC OPERATING
PARTNERSHIP, L.P., a Delaware
limited partnership, its
Managing Member
By: Burnham Pacific Properties,
Inc., a Maryland corporation,
its sole General Partner
By: /s/ Michael L. Rubin
------------------------------
Name: Michael L. Rubin
----------------------------
Title: Executive Vice President
--------------------------
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EXHIBIT A
Operating Expense Certificate
Nomura Asset Capital Corporation
2 World Financial Center, Building B
New York, New York 10281-1198
Attention: Sheryl McAfee
Re: Loan Agreement (the "Loan Agreement") dated as of
December 30, 1997 between BPP/Golden State
Acquisitions, L.L.C. ("Borrower") and Nomura Asset
Capital Corporation (together with its successors and
assigns "Lender")
Ladies and Gentlemen:
This certificate is delivered in accordance with Section 2.12(f) of
the Loan Agreement. All capitalized terms not defined herein shall have the
meanings ascribed to them in the Loan Agreement.
Borrower hereby certifies that the Operating Expenses for the
Interest Accrual Period from _________________ to _________________, are
_________________ Dollars ($____________) and that such Operating Expenses
are equal to or less than the Operating Expenses for such period set forth
on the Operating Budget.
BPP/GOLDEN STATE ACQUISITIONS, L.L.C.,
a Delaware limited liability company
By: BURNHAM PACIFIC OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership,
its Managing Member
By: Burnham Pacific Properties, Inc.,
a Maryland corporation,
its sole General Partner
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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EXHIBIT B
Allocated Loan Amounts
[see attached]
<PAGE>
EXHIBIT C
Additional Definitions
Base Net Operating Income $21,120,552.00
Base Payment $ 1,022,114.79
Deferred Maintenance Amount $ 420,750.00
Initial Basic Carrying Costs Amount $ 1,172,409.40
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EXHIBIT D
Deferred Maintenance and Environmental Remediation Exhibit
[see attached]
<PAGE>
AMENDED AND RESTATED
REVOLVING LOAN AGREEMENT
between
BURNHAM PACIFIC OPERATING PARTNERSHIP, L.P.,
as Borrower,
and
NOMURA ASSET CAPITAL CORPORATION,
as Lender
December 31, 1997
$135,000,000 Secured Revolving Credit Facility
$70,000,000 Unsecured Revolving Credit Facility
<PAGE>
CONTENTS
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ARTICLE 1. DEFINITIONS AND RELATED MATTERS. . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.2.1. Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.2.2. Determinations. . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.2.3. Accounting Terms and Determinations . . . . . . . . . . . . . . . 16
1.2.4. Assumption. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 2. AMOUNT AND TERMS OF THE CREDIT FACILITIES. . . . . . . . . . . . . . . 16
Section 2.1. Credit Facilities . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1.1. Commitments and Advances. . . . . . . . . . . . . . . . . . . . . 16
2.1.2. Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.1.3. Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . 17
2.1.4. Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.2. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.3. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.3.1. Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.3.2. Determination of Rate . . . . . . . . . . . . . . . . . . . . . . 18
2.3.3. Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . 18
2.3.4. Computations. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.3.5. Maximum Lawful Rate of Interest . . . . . . . . . . . . . . . . . 18
Section 2.4. Note, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.4.1. Advances Evidenced by Note. . . . . . . . . . . . . . . . . . . . 18
2.4.2. Notation of Amounts and Maturities, Etc . . . . . . . . . . . . . 18
Section 2.5. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.6. Termination, Reduction and Extension of Commitment. . . . . . . . 20
Section 2.7. Repayments and Prepayments. . . . . . . . . . . . . . . . . . . . 20
2.7.1. Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.7.2. Mandatory Prepayment of Excess Advances . . . . . . . . . . . . . 20
2.7.3. Optional Prepayment . . . . . . . . . . . . . . . . . . . . . . . 21
2.7.4. Mandatory Prepayment in Certain Events. . . . . . . . . . . . . . 21
2.7.5. Repayment on Reconveyance of Collateral Pool. . . . . . . . . . . 21
2.7.6. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.8. Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 3. CONDITIONS PRECEDENT TO ADVANCES . . . . . . . . . . . . . . . . . . . 22
Section 3.1. Conditions Precedent to Effective Date. . . . . . . . . . . . . . 22
3.1.1. Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.1.2. Certain Documents . . . . . . . . . . . . . . . . . . . . . . . . 22
3.1.3. Fees and Expenses Paid. . . . . . . . . . . . . . . . . . . . . . 22
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3.1.4. Collateral Property . . . . . . . . . . . . . . . . . . . . . . . 22
3.1.5. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.2. Conditions Precedent to Advances. . . . . . . . . . . . . . . . . 23
3.2.1. Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.2.2. Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . 23
3.2.3. Available Amount. . . . . . . . . . . . . . . . . . . . . . . . . 23
3.2.4. Pro Forma Debt Service Coverage Ratio . . . . . . . . . . . . . . 23
3.2.5. Pro Forma Consolidated Total Debt to Total Capitalization of
the Borrower. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.2.6. Representations and Warranties. . . . . . . . . . . . . . . . . . 23
3.2.7. No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.2.8. No Material Adverse Change. . . . . . . . . . . . . . . . . . . . 23
Section 3.3. Additional Conditions Precedent and Provisions Applicable to
Certain Acquisition Advances. . . . . . . . . . . . . . . . . . . 24
Section 3.4. Conditions Precedent to Designation of a Collateral
Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 4. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . 28
Section 4.1. Organization, Authority and Tax Status of the Borrower;
Enforceability, Etc. . . . . . . . . . . . . . . . . . . . . . . 28
4.1.1. Organization and Authority; Tax Status . . . . . . . . . . . . . 28
4.1.2. Authorization; Binding Effect. . . . . . . . . . . . . . . . . . 28
4.1.3. REIT Status. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.2. Consolidated Subsidiaries . . . . . . . . . . . . . . . . . . . . 28
4.2.1. Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.2.2. Organization and Ownership. . . . . . . . . . . . . . . . . . . . 29
Section 4.3. No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.4. Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . 29
Section 4.5. Financial Information . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.6. No Material Adverse Change. . . . . . . . . . . . . . . . . . . . 30
Section 4.7. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.8. Agreements; Applicable Law. . . . . . . . . . . . . . . . . . . . 30
Section 4.9. Governmental Regulation . . . . . . . . . . . . . . . . . . . . . 30
Section 4.10. Margin Regulations. . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.11. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . 31
Section 4.12. Title to Property; Liens. . . . . . . . . . . . . . . . . . . . . 31
Section 4.13. Licenses, Trademarks, Etc . . . . . . . . . . . . . . . . . . . . 31
Section 4.14. Environmental Condition . . . . . . . . . . . . . . . . . . . . . 32
Section 4.15. Absence of Certain Restrictions . . . . . . . . . . . . . . . . . 32
Section 4.16. Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.17. Delinquent Property Liens . . . . . . . . . . . . . . . . . . . . 33
Section 4.18. Improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.19. Damage; Takings . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.20. Zoning and Other Laws . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.21. Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.22. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
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Section 4.23. Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.24. Certificates of Occupancy . . . . . . . . . . . . . . . . . . . . 34
Section 4.25. Condition of Properties . . . . . . . . . . . . . . . . . . . . . 34
Section 4.26. Management Agreements . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.27. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 5. AFFIRMATIVE COVENANTS OF THE BORROWER. . . . . . . . . . . . . . . . . 35
Section 5.1. Financial Statements and Other Reports. . . . . . . . . . . . . . 35
Section 5.2. Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.3. Corporate Existence, Etc. . . . . . . . . . . . . . . . . . . . . 37
Section 5.4. Payment of Taxes and Charges. . . . . . . . . . . . . . . . . . . 37
Section 5.5. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . 38
Section 5.6. Maintenance of Insurance. . . . . . . . . . . . . . . . . . . . . 38
Section 5.7. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.8. NYSE Listing; REIT Status . . . . . . . . . . . . . . . . . . . . 38
Section 5.9. Remedial Action Regarding Hazardous Materials . . . . . . . . . . 38
Section 5.10. Offering Documents. . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.11. Release and Substitution of Real Properties in the Collateral
Pool. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 5.12. Collateral Properties Located Outside California. . . . . . . . . 40
Section 5.13. Removal or Substitution of Unencumbered Assets in Unencumbered
Pool. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.14. Certain Events With Respect to Collateral Properties. . . . . . . 41
Section 5.15. Estoppels, SNDAS. . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.16. Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 6. NEGATIVE COVENANTS OF THE BORROWER PARTIES . . . . . . . . . . . . . . 42
Section 6.1. Investments; Asset Mix. . . . . . . . . . . . . . . . . . . . . . 42
Section 6.2. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . 42
6.2.1. Maximum Consolidated Total Debt to Total Capitalization of the
Borrower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.2.2. Debt Service Coverage Ratio . . . . . . . . . . . . . . . . . . . 42
Section 6.3. Minimum Unencumbered Pool; Property NOI of Unencumbered
Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.4. Restriction on Fundamental Changes. . . . . . . . . . . . . . . . 43
Section 6.5. Transactions with Affiliates. . . . . . . . . . . . . . . . . . . 43
Section 6.6. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.7. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 7. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 44
7.1.1. Failure to Make Payments. . . . . . . . . . . . . . . . . . . . . 44
7.1.2. Default in Other Debt . . . . . . . . . . . . . . . . . . . . . . 44
7.1.3. Breach of Certain Covenants . . . . . . . . . . . . . . . . . . . 45
7.1.4. Breach of Warranty. . . . . . . . . . . . . . . . . . . . . . . . 45
7.1.5. Other Defaults Under Agreement and Other Loan Documents . . . . . 45
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7.1.6. Involuntary Bankruptcy; Appointment of Receiver, Etc. . . . . . . 45
7.1.7. Voluntary Bankruptcy; Appointment of Receiver, Etc. . . . . . . . 46
7.1.8. Judgments and Attachments . . . . . . . . . . . . . . . . . . . . 46
7.1.9. Change of Tax Status. . . . . . . . . . . . . . . . . . . . . . . 46
7.1.10. Material Adverse Change . . . . . . . . . . . . . . . . . . . . . 46
7.1.11. Impairment of Guaranty. . . . . . . . . . . . . . . . . . . . . . 46
Section 7.2. Property Specific Matters . . . . . . . . . . . . . . . . . . . . 47
Section 7.3. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 8. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.1. Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.2. Waivers; Modifications in Writing . . . . . . . . . . . . . . . . 48
Section 8.3. Cumulative Remedies; Failure or Delay . . . . . . . . . . . . . . 48
Section 8.4. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.5. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . 49
Section 8.6. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.7. Choice of Forum . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.8. Changes in Accounting Principles. . . . . . . . . . . . . . . . . 51
Section 8.9. Survival of Agreements, Representations and Warranties. . . . . . 51
Section 8.10. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . 51
Section 8.11. Complete Agreement. . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.12. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . 51
Section 8.13. Unsecured Advances; No Lien . . . . . . . . . . . . . . . . . . . 52
Section 8.14. Waiver of Trial by Jury . . . . . . . . . . . . . . . . . . . . . 52
Section 8.15. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.16. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.17. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.18. Independence of Covenants . . . . . . . . . . . . . . . . . . . . 53
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EXHIBITS
Exhibit A-1 Form of Secured Revolving Note
Exhibit A-2 Form of Unsecured Revolving Note
Exhibit B Form of Notice of Borrowing
Exhibit C-1 Form of Secretary's Certificate
Exhibit C-2 Form of Officer's Certificate
Exhibit C-3 Form of Certificate of Property Acquisitions
Exhibit C-4 Form of Compliance Certificate
Exhibit D Form of Opinion of Borrower's Counsel
Exhibit E Form of Mortgage
Exhibit F Form of Omnibus Assumption and Amendment Agreement
SCHEDULES
Schedule 1.1A Commitments
Schedule 1.1B Unencumbered Assets
Schedule 3.1.2 Closing Documents
Schedule 4.2 Consolidated Subsidiaries
Schedule 4.4 Governmental Approvals
Schedule 4.7 Litigation
Schedule 4.14 Environmental Condition
Schedule 4.21 Lease Defaults
Schedule 4.25 Condition of Property
v
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AMENDED AND RESTATED
REVOLVING LOAN AGREEMENT
AMENDED AND RESTATED REVOLVING LOAN AGREEMENT dated as of
December 31, 1997 (as amended from time to time, this "Agreement") between
BURNHAM PACIFIC OPERATING PARTNERSHIP, L.P., a Delaware limited partnership
(the "Borrower"), and NOMURA ASSET CAPITAL CORPORATION (the "Lender").
RECITALS
A. Burnham Pacific Properties, Inc., a Maryland corporation
(the "Guarantor"), as borrower, and Lender are parties to that certain
Revolving Loan Agreement dated as of November 18, 1996 (as heretofore
amended, the "Original Loan Agreement") pursuant to which Lender agreed to
make available to Borrower Secured Advances and Unsecured Advances upon the
terms and subject to the conditions set forth in the Original Loan Agreement.
B. The Guarantor is the sole general partner of Borrower.
Concurrently herewith or immediately prior hereto, Guarantor has transferred
its interest in all Real Properties (as defined in the Original Loan
Agreement) and certain other interests to Borrower, and has requested that
Lender consent to such transfer in accordance with the Original Loan
Agreement. Lender has consented to such transfer to Borrower on the
condition that Borrower execute and deliver, and satisfy the conditions
precedent set forth in, this Agreement.
C. By this Agreement, Borrower and Lender intend to modify,
amend and restate the terms and provisions of the Original Loan Agreement in
its entirety.
ARTICLE 1.
DEFINITIONS AND RELATED MATTERS
Section 1.1. Definitions. The following terms with initial
capital letters have the following meanings:
"Adjusted Property Expenses" means, for any Retail Property,
for any period, without duplication, Property Expenses relating to such
Retail Property in such period, adjusted to exclude (to the extent otherwise
included in the determination thereof) Debt Service, leasing costs, capital
improvements and depreciation and amortization expense; provided, however,
that Adjusted Property Expenses shall include:
(i) management fees for such Retail Property in an
amount equal to the greater of (x) actual management fees incurred for such
period and (y) 4% of Adjusted Property Income for such Retail Property for
such period;
(ii) leasing costs in an amount equal to (x) $1.00 per
annum per rentable square foot for each Real Property that is (A) a power
center or promotional center or (B) a
Amended and Restated Revolving Loan Agreement
<PAGE>
factory outlet center or other Retail Property that does not have an anchor
tenant, and (y) $1.00 per annum per occupied square foot of shop space for
each Real Property that does have an anchor tenant (in each case (a) subject
to the last proviso hereto, as determined by the Lender in its reasonable
discretion, and (b) regardless whether or not such costs were incurred, or
were incurred in such amount, in such period); and
(iii) a reserve for capital improvements in an amount
equal to the greater of (x) $0.15 per annum per square foot for each Retail
Property and (y) the aggregate amount scheduled for such year for deferred
maintenance in the property condition report in respect of such Retail
Property delivered to the Lender pursuant to Section 3.4 (in either case
regardless whether or not such a reserve for such Retail Property is deducted
for such period in determining net income of the Borrower);
provided, further, that with respect to each Collateral Property, any written
agreement between the Borrower and the Lender, each acting in its discretion,
shall constitute a conclusive determination of the characterization of each
such Property and the identity of each anchor tenant.
"Adjusted Property Income" means, for any Retail Property, on
any date of determination, the sum of (i) product of (x) gross rents
(exclusive of percentage rents) for such Retail Property for the last month
ended prior to such date of determination for which the information required
under Section 5.1.7.2 has been delivered to the Lender, to the extent that
such rents were paid under Leases of all or any portion of such Real Property
in effect on the last day of such month and under which the tenants are not
in default for more than ninety (90) days in payment of rent and other
amounts due under such Leases on such date, multiplied by (y) 12, plus (ii)
percentage rents accrued and Recoveries for such Retail Property actually
received, in each case for the last twelve-month period ended prior to such
date of determination for which the information required under Section
5.1.7.2 has been delivered to the Lender; provided, however, that, in
determining such Property Income, if the vacancy rate for such month is less
than (a) 5% of rentable square footage, if such Retail Property is a factory
outlet center or does not have an anchor tenant, or (b) 5% of shop square
footage, if such Retail Property does have an anchor tenant, then such gross
revenue shall be adjusted to give effect to such an assumed vacancy rate of
5%.
"Adjusted Property NOI" means, for any Retail Property on any
date of determination, (i) Adjusted Property Income as determined on such
date of determination minus (ii) Adjusted Property Expenses for the last
twelve-month period ended prior to such date of determination for which the
information required under Section 5.1.7.2 has been delivered to the Lender.
"Advance" means a Secured Advance or an Unsecured Advance, and
"Advances" means the Secured Advances and the Unsecured Advances.
"Affected Property" means a Property which is the subject of a
Property-Specific Breach, or to which a Property-Specific Breach relates.
Amended and Restated Revolving Loan Agreement
2
<PAGE>
"Affiliate" means, with respect to any Person, any other
Person that, directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such first
Person. Unless otherwise indicated, "Affiliate" refers to an Affiliate of
the Borrower or Guarantor. Notwithstanding the foregoing, in no event shall
the Lender or any Affiliate of the Lender be deemed to be an Affiliate of the
Borrower.
"Agreement" is defined in the Preamble and includes all
Schedules and Exhibits.
"Applicable Cap Rate" means, with respect to any Real
Property, (i) 10.50% (expressed as a decimal) or (ii) such other rate
applicable to such Real Property as may be agreed in writing between the
Borrower and the Lender, each acting in its discretion.
"Applicable Law" means all applicable provisions of all (i)
constitutions, treaties, statutes, laws, rules, regulations and ordinances of
any Governmental Authority, (ii) Governmental Approvals and (iii) orders,
decisions, judgments, and decrees of any Governmental Authority.
"Applicable LIBO Rate" means, for any Interest Period, the
rate per annum of interest equal to the sum of (i) (x) 1.40% in the case of
Secured Advances, and (y) 1.50% in the case of Unsecured Advances, plus (ii)
LIBOR for such Interest Period.
"Asset Value" shall mean, as of any date of determination
thereof, with respect to any Real Property, an amount equal to (i) the
Property NOI for such Real Property for the twelve-month period immediately
preceding the date of determination divided by (ii) the Applicable Cap Rate.
"Available Amount" shall mean, as of any date of
determination, an amount equal to (i) the quotient obtained by dividing (x)
the aggregate Adjusted Property NOI for all of the Collateral Properties
(excluding any such Property with respect to which notice has been given
pursuant to Section 5.14(a) for as long as required by Section 5.14(b)), as
determined on such date, by (y) 1.60, divided by (ii) the then effective Debt
Service Constant.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. Section 101 et seq.), as amended from time to time.
"Bankruptcy Remote Entity" means a Consolidated Subsidiary (i)
one hundred percent of which is owned, directly or indirectly, by the
Borrower and/or Guarantor and (ii) which is a so-called "bankruptcy remote
special purpose vehicle" that meets the criteria in effect from time to time
of the Rating Agencies.
"Borrower" is defined in the Preamble and includes its
successors.
"Borrower Parties" means, collectively, the Borrower and
Guarantor and "Borrower Party" means each of (or either of) the Borrower and
the Guarantor, as applicable.
Amended and Restated Revolving Loan Agreement
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"Business Day" means a day of the week (but not a Saturday,
Sunday or legal holiday) on which banks located in New York, New York, and
London, England are open for carrying on substantially all of such banks'
business functions and on which commercial banks are open for dealings in
Dollar deposits in the London interbank market.
"Capital Stock" means, with respect to any Person, all (i)
shares, interests, participations or other equivalents (howsoever designated)
of capital stock or partnership or other equity interests of such Person and
(ii) rights (other than debt securities convertible into capital stock or
other equity interests), warrants or options to acquire any such capital
stock or partnership or other equity interests of such Person.
"Capitalized Lease Obligations" means all obligations of any
Borrower Party or a Consolidated Subsidiary under Capitalized Leases.
"Capitalized Leases" means all leases of any Borrower Party
and its Consolidated Subsidiaries of real or personal property that are
required to be capitalized on the consolidated balance sheets of such Persons
in accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral Pool" means, at any time, the pool of Collateral
Properties at such time, but excluding any such Property with respect to
which notice has been given pursuant to Section 5.14(a) for as long as
required by Section 5.14(b).
"Collateral Property" means any Retail Property that from time
to time is subject to the Lien of a Mortgage and that satisfies the
conditions set forth in Section 3.4 at the time such Retail Property first
becomes a Collateral Property, but excluding any such Property with respect
to which notice has been given pursuant to Section 5.14(a) for as long as
required by Section 5.14(b).
"Commitment" means the aggregate amount of the Secured
Revolving Commitment and the Unsecured Revolving Commitment.
"Consolidated Subsidiary" means each Subsidiary of each
Borrower Party (whether now existing or hereafter created or acquired) the
accounts of which are (or should be) consolidated with the accounts of such
Borrower Party in its consolidated financial statements in accordance with
GAAP.
"Consolidated Total Debt" means, at any time, without
duplication, the aggregate amount of all Debt of the Borrower Parties and
their respective Consolidated Subsidiaries at such time.
"Contingent Obligation" means, as to any Person, without
duplication, any obligation, direct or indirect, contingent or otherwise, of
such Person (i) with respect to any Debt of another Person, including any
direct or indirect guarantee of such Debt (other than any endorsement for
collection in the ordinary course of business) or any other direct or
indirect obligation or liability,
Amended and Restated Revolving Loan Agreement
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by agreement or by operation of law (including without limitation, in the
case of a partnership, the obligation of a general partner thereof) or
otherwise, to pay or purchase or repurchase any such Debt or any security
therefor, or to provide funds for the payment or discharge of any such Debt
(whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), (ii) to provide funds to maintain the financial
condition of the other Person, or (iii) otherwise to assure or hold harmless
the holders of Debt of another Person against loss in respect thereof,
including through minimum or guaranteed payment obligations under a master
lease or similar arrangement. The amount of any Contingent Obligation shall
be an amount equal to the maximum amount of such Person's liability in
respect of the Debt (other than a Contingent Obligation) guaranteed or
otherwise supported thereby (without duplication).
"Contractual Obligation" means, as applied to any Person, any
provision of any security issued by that Person or of any agreement or other
instrument to which that Person is a party or by which it or any of the
properties owned by it is bound or otherwise subject.
"Controlled Group" means all domestic and foreign members of a
controlled group of corporations under Section 1563(a) of the Code
(determined without regard to Section 1563(b)(2)(C) of the Code) and all
trades or businesses (irrespective of whether incorporated) that are under
common control with any Borrower Party.
"Debt" means, with respect to any Person, the aggregate amount
of, without duplication: (i) all obligations for borrowed money; (ii) all
obligations evidenced by bonds, debentures, notes or other similar
instruments; (iii) all obligations to pay the deferred purchase price of
property or services, except current trade liabilities and other accounts
payable and accrued expenses incurred in the ordinary course of business;
(iv) all Capitalized Lease Obligations; (v) the aggregate redemption price or
liquidation value of preferred stock that is subject to mandatory redemption,
in whole or in part, at any time prior to the second anniversary of the
Maturity Date; (vi) all obligations or liabilities of others secured by a
Lien on any asset owned by such Person (other than taxes not yet delinquent)
whether or not such obligation or liability is assumed by such Person; (vii)
all obligations of such Person, contingent or otherwise, to reimburse the
issuer in respect of any letters of credit or bankers' acceptances, and
(viii) all Contingent Obligations.
"Debt Service" shall mean, for any period, the sum of (a) all
regularly scheduled payments and mandatory prepayments of principal of Debt
of the Borrower Parties, and their Consolidated Subsidiaries (without
duplication) made during such period (exclusive of balloon payments at
maturity or otherwise) plus (b) Interest Expense for such period.
"Debt Service Constant" means, at any time, the greater of (i)
the sum of (x) the then current Ten-Year Treasury Rate plus (y) 2.25% or (ii)
9.25%.
"Debt Service Coverage Ratio" means, on the last day of each
calendar month, the ratio of (i) EBITDA for the twelve (12) months then
ended, to (ii) Debt Service for such twelve-month period.
"Default" means any condition or event that, with the giving
of notice or lapse of time or both, would, unless cured or waived, become an
Event of Default.
Amended and Restated Revolving Loan Agreement
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"Dollars" and "$" means lawful money of the United States of
America.
"EBITDA" means, for any period, consolidated net income (or
loss) of the Borrower Parties and their Consolidated Subsidiaries (without
duplication) for such period taken as a single accounting period plus (i) any
loss (or minus any income) attributable to extraordinary items, (ii) losses
(or minus any gains) from sales of assets, (iii) Interest Expense, (iv) taxes
on, or measured by income, and (v) depreciation and amortization expense, in
each case for such period.
"Effective Date" means the earliest date upon which all of the
conditions to the effectiveness of this Agreement set forth in Section 3.1
are satisfied.
"Environmental Damages" means all claims, judgments, damages,
losses, penalties, liabilities (including strict liability), costs and
expenses, including costs of investigation, remediation, defense, settlement
and attorneys' fees and consultants' fees, that are incurred at any time as a
result of, relating to or in connection with, the existence of Hazardous
Materials upon, about or beneath any Real Property or migrating or
threatening to migrate to or from any Real Property (in any such case in
violation of Environmental Requirements) or arising in any manner whatsoever
out of any violation of Environmental Requirements.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for Environmental Damages.
"Environmental Requirements" means all Applicable Laws
relating to Hazardous Materials or the protection of human health or the
environment, including all requirements pertaining to reporting, permitting,
investigation and remediation of releases or threatened releases of Hazardous
Materials into the environment, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any Person that is or was a member of
the controlled group of corporations or trades or businesses (as defined in
Subsection (b), (c), (m) or (o) of Section 414 of the Code) of which any
Borrower Party or any Consolidated Subsidiary is or was a member at any time
within the last six years.
"Event of Default" means any of the events specified in
Section 7.1.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any successor thereto.
"Fees" means, collectively, the fees described in Section 2.5
hereof.
"Fiscal Year" means the fiscal year of the Borrower and the
Guarantor, which shall be the 12-month period ending on December 31 in each
year or such other period as the Borrower
Amended and Restated Revolving Loan Agreement
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and the Guarantor may designate and the Lender may approve in writing.
"Fiscal Quarter" or "fiscal quarter" means any quarter of a Fiscal Year.
"Funding Date" means any date on which an Advance is (or is
requested to be) made.
"Funds From Operations" or "FFO" means consolidated net income
of the Guarantor, computed in accordance with GAAP, excluding gains (or
losses) from sales of property, plus depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. The Borrower
shall compute Funds From Operations in accordance with standards established
from time to time by NAREIT.
"GAAP" means generally accepted accounting principles as in
effect in the United States of America (as such principles are in effect on
the date hereof).
"Governmental Approval" means an authorization, consent,
approval, permit or license issued by, or a registration or filing with, any
Governmental Authority.
"Governmental Authority" means any nation and any state or
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any tribunal or arbitrator of competent
jurisdiction.
"Guarantor" means Burnham Pacific Properties, Inc., a Maryland
corporation.
"Guaranty" means the General Continuing Repayment Guaranty to
be executed by Guarantor in connection with the Agreement.
"Hazardous Materials" means any chemical substance (i) the
presence of which requires investigation or remediation under any Applicable
Law; or (ii) that is or becomes defined as a "hazardous waste" or "hazardous
substance" under any Applicable Law, including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section
9601 et seq.) or the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.); or (iii) that is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous and is or becomes regulated by any Governmental Authority; or (iv)
the presence of which on any Real Property causes or threatens to cause a
nuisance upon the Real Property or to adjacent properties or poses or
threatens to pose a hazard to any Real Property or to the health or safety of
Persons on or about any Real Property; or (v) which contains gasoline, diesel
fuel or other petroleum hydrocarbons; or (vi) which contains polychlorinated
biphenyls (PCBs) or asbestos.
"Indemnified Liabilities" is defined in Section 8.1.3.
"Indemnitees" is defined in Section 8.1.3.
"Interest Expense" means, for any period, the sum (without
duplication) for such period of (i) total interest expense of the Borrower
Parties and their Consolidated Subsidiaries (without duplication), including
without limitation (x) Fees payable pursuant to Section 2.5.2, (y) the
Amended and Restated Revolving Loan Agreement
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portion of any Capitalized Lease Obligations allocable to interest expense,
and (z) amortization of costs related to interest rate protection contracts
and rate buy-downs, to the extent such amortization is classified as
"interest expense" under GAAP, (ii) capitalized interest (other than
capitalized interest paid from any interest reserve established in connection
with a construction loan), and (iii) interest incurred on any liability or
obligation that constitutes a Contingent Obligation of the Borrower or any
Consolidated Subsidiary.
"Interest Payment Date" means the first Business Day in each
month.
"Interest Period" means each one-month period from and
including an Interest Payment Date (or, in the case of the first Interest
Period, from and including the Effective Date) to, but excluding, the next
succeeding Interest Payment Date.
"Investment" means, with respect to any Person, (i) any direct
or indirect purchase or other acquisition by that Person of stock or
securities, or any beneficial interest in stock or other securities, of any
other Person, any partnership interest (whether general or limited) in any
other Person, or all or any substantial part of the business or assets of any
other Person, or (ii) any direct or indirect loan, advance or capital
contribution by that Person to any other Person, including all indebtedness
and accounts receivable from that other Person that are not current assets or
did not arise from sales to that other Person in the ordinary course of
business. The amount of any Investment shall be the original cost of such
Investment, plus the cost of all additions thereto, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment.
"Lease" means any agreement, oral or written, relating to the
leasing or occupancy of any Real Property.
"Lender" is defined in the Preamble, subject to Section 8.5.2.
"LIBOR" shall mean, for any Interest Period, the rate per
annum determined by the Lender to the rate at which deposits in U.S. Dollars
are offered to prime banks in the London interbank eurodollar market at
approximately 11:00 a.m. (London, England time) on the date which is two (2)
Business Days before the first day of such Interest Period for a one (1)
month period, as quoted on Telerate page 3750 or on such replacement system
as is then customarily used to quote the London interbank offered rate. If
two or more such rates appear on Telerate page 3750 or associated pages, the
applicable rate shall be the arithmetic mean of such offered rates. Each
determination of the LIBOR shall be conclusive and binding absent manifest
error.
"Lien" means any lien, mortgage, pledge, security interest,
charge, or encumbrance of any kind (including any conditional sale or other
title retention agreement or any lease in the nature thereof) and any
agreement to give or refrain from giving any lien, mortgage, pledge, security
interest, charge, or other encumbrance of any kind.
"Loan Documents" means, collectively, this Agreement, the
Security Documents, the Notes and any other agreement, instrument or other
writing executed (or assumed) or delivered
Amended and Restated Revolving Loan Agreement
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by the Borrower in connection herewith from time to time and all exhibits and
schedules to any of the foregoing and as any of the same may be amended from
time to time.
"Margin Regulations" means Regulations G, U and X of the
Federal Reserve Board, as amended from time to time.
"Margin Stock" means "margin stock" as defined in Regulation U.
"Material", "Material Adverse Effect" or "Material Adverse
Change" means (i) a condition or event material to, (ii) a material adverse
effect on or (iii) a material adverse change in, as the case may be, any one
or more of the following: (A) the business, assets, results of operations,
financial condition or prospects of the Borrower Parties and their
Consolidated Subsidiaries taken as a whole or (B) the ability of the Borrower
or Guarantor to perform its obligations under any Loan Document to which it
is a party. (determined in each reference, with respect to the Borrower
only, as if the Borrower owned all real properties and Investments of the
Guarantor as of the date required by the context in which such reference is
made).
"Material Environmental Event" means, with respect to any Real
Property, (i) a violation of any Environmental Requirement or (ii) the
presence of Hazardous Materials on, about or under such Real Property that,
under or pursuant to any Environmental Requirement, would require remediation
if, in any such case, the total cost to the Borrower and its Subsidiaries of
remedying such violation of such Environmental Requirement or remediating
such Hazardous Materials reasonably could be expected to exceed $250,000.
"Material Lease" means any Lease (or group of leases at any
single Property to Affiliates of a Person) demising 3,000 square feet or more.
"Maturity Date" means November 18, 1998, as such date may be
extended in accordance with the terms hereof.
"Mortgages" shall mean, collectively, each (i) mortgage, deed
of trust, assignment of rents, security agreement and fixture filing and
similar instrument executed by or assumed by the Borrower in favor of the
Lender and, in the case of a deed of trust, the trustee, acting for the
benefit of the Lender, (ii) assignment of lessor's interest in leases and
rents executed by or assumed by the Borrower in favor of the Lender, (iii)
assignment of agreements, permits and contracts executed by or assumed by the
Borrower in favor of the Lender, and (iv) financing statements executed by
the Borrower in favor of the Lender, in each case covering the Collateral
Properties as security for the Secured Advances, in substantially the form of
Exhibit E attached hereto with such changes thereto as the Lender may
reasonably require to conform such security instrument to the form
customarily used in the jurisdiction in which a Collateral Property is
located, as such may be modified and supplemented and in effect from time to
time.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 3(37) and Section 4001(a)(3) of ERISA to which any Borrower Party
or any of its ERISA Affiliates is making or accruing an obligation to make
contributions or to which any such Person has made or accrued an obligation
to make contributions.
Amended and Restated Revolving Loan Agreement
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"NAREIT" means the National Association of Real Estate
Investment Trusts.
"Note" means a Secured Revolving Note or an Unsecured
Revolving Note, as the case may be.
"Notice of Borrowing" is defined in Section 2.1.3.
"Obligations" means all present and future obligations and
liabilities of the Borrower and the Guarantor of every type and description
arising under or in connection with this Agreement, the Mortgages, the Notes
and the other Loan Documents due or to become due to the Lender or any Person
entitled to indemnification, or any of the Lender's successors or permitted
transferees, whether for principal, interest, Fees, expenses, indemnities or
other amounts (including attorneys' fees and expenses) and whether due or not
due, direct or indirect, joint or several, absolute or contingent, voluntary
or involuntary, liquidated or unliquidated, determined or undetermined, and
whether now or hereafter existing, renewed or restructured, whether or not
from time to time decreased or extinguished and later increased, created or
incurred, whether or not arising after the commencement of a proceeding under
the Bankruptcy Code (including post-petition interest) and whether or not
allowed or allowable as a claim in any such proceeding, and whether or not
recovery of any such obligation or liability may be barred by a statute of
limitations or such obligation or liability may otherwise be unenforceable.
"Pension Plan" means any pension plan subject to Title IV of
ERISA including a Multiemployer Plan and any money purchase pension plan
subject to the funding requirements of Section 412 of the Code.
"Permitted Investments" means (i) marketable direct
obligations issued or unconditionally guaranteed by the United States
Government or issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within one year from the
date of acquisition thereof, (ii) marketable direct obligations issued by any
state of the United States or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and having, at the time of acquisition, the highest
rating obtainable from either Standard & Poor's Ratings Group, a division of
McGraw-Hill Inc., or Moody's Investors Service, Inc., (iii) commercial paper
having, at the time of acquisition, the highest rating obtainable from either
Standard & Poor's Ratings Group, a division of McGraw-Hill Inc., or Moody's
Investors Service, Inc., (iv) certificates of deposit, other time deposits,
and bankers' acceptances maturing within one year from the date of
acquisition thereof issued by any bank operating under the laws of the United
States or any state thereof or the District of Columbia that has combined
capital and surplus of not less than $500,000,000, or (v) institutional money
market funds organized under the laws of the United States of America or any
state thereof that invest solely in any of the Investments permitted under
the foregoing clauses (i), (ii), (iii), and (iv).
"Person" means an individual, a corporation, a partnership, a
limited liability company, a trust, an unincorporated organization or any
other entity or organization, including a government or any agency or
political subdivision thereof and, for the purpose of the definition of
"ERISA Affiliate", a trade or business.
Amended and Restated Revolving Loan Agreement
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"Plan" means any pension, retirement, disability, defined
benefit, defined contribution, profit sharing, deferred compensation,
employee stock ownership, employee stock purchase, health, life insurance, or
other employee benefit plan or arrangement, irrespective of whether any of
the foregoing is funded, maintained or contributed to by any Borrower Party
or any of its ERISA Affiliates.
"Post-Default Rate" means, at any time, a rate per annum equal
to the Applicable LIBO Rate in effect at such time plus 5%.
"Prohibited Transaction" means a transaction that is
prohibited under Section 4975 of the Code or Section 406 or 407 of ERISA and
not exempt under Section 4975 of the Code or Section 408 of ERISA.
"Properties" means, at any time, all Real Properties in the
Unencumbered Pool or the Collateral Pool, and "Property" means any of such
Real Properties.
"Property Expenses" means, for any Real Property, for any
twelve-month period, all operating expenses relating to such Real Property in
such period determined in accordance with GAAP, adjusted to exclude (to the
extent otherwise included in the determination thereof) Debt Service and
depreciation and amortization expense.
"Property Income" means, for any Real Property, for any
period, all gross revenue from the ownership or operation of such Real
Property (but excluding (x) income from a sale or other capital transaction,
(y) proceeds of business interruption insurance, and (z) tenant security
deposits (except, and to the extent, that such security deposits are
forfeited and applied to pay the forfeiting tenant's obligations under a
Lease)), service fees and charges (other than amounts paid to a merchants'
association or promotional association) and all Recoveries in such period.
"Property NOI" means, for any Real Property for any
twelve-month period, (i) Property Income for such period minus (ii) Property
Expenses for such period.
"Property-Specific Breach" means a breach of a representation
or warranty or an affirmative covenant set forth in this Agreement or any
other Loan Documents with respect to a Property, which breach would not be a
Default or an Event of Default hereunder if such Property were not in the
Collateral Pool or in the Unencumbered Pool and, in the case of a Collateral
Property, if Borrower had not executed and delivered a Mortgage with respect
to such Property.
"Property-Specific Event" means (i) a condition or event
material to, (ii) a material adverse effect on or (iii) a material adverse
change affecting, the results of operations or prospective Adjusted Property
NOI or Property NOI of any Property such that, at any time and in the
Lender's reasonable judgment, the Adjusted Property NOI or Property NOI for
such Property as determined at any time in the twelve-month period after such
time is likely to be materially less than the Adjusted Property NOI or
Property NOI for such Property as determined at such time.
Amended and Restated Revolving Loan Agreement
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"Rating Agency" shall mean any rating agency or agencies
selected by the Lender from time to time, including, but not limited to,
Standard & Poor's Ratings Group, a division of McGraw-Hill Inc., Moody's
Investors Service, Inc., Duff & Phelps Credit Rating Co. and Fitch Investors
Service Inc.
"Real Properties" means the parcels (or portions thereof) of
real property, improvements and fixtures thereon and appurtenances thereto
now or hereafter owned by the Borrower or in which it has a subsisting ground
leasehold interest; and "Real Property" means any of them.
"Recoveries" means, with respect to any Retail Property, all
amounts paid by tenants under leases of all or a portion of such Retail
Property for reimbursement of amounts expended (or deemed expended) by the
Borrower with respect to such Retail Property, in all cases excluding
scheduled monthly base rent and percentage rent, refundable deposits and
amounts paid to merchant's associations.
"Regulation G" means Regulation G of the Federal Reserve
Board, as amended from time to time.
"Regulation U" means Regulation U of the Federal Reserve
Board, as amended from time to time.
"Regulation X" means Regulation X of the Federal Reserve
Board, as amended from time to time.
"Responsible Officer" is defined in Section 2.1.3.2.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any Capital Stock of the any
Borrower Party or any Subsidiary now or hereafter outstanding, except (a) a
dividend or other distribution payable solely in shares of Capital Stock of
such Borrower Party or such Subsidiary, as the case may be, (b) the issuance
of equity interests upon the exercise of outstanding warrants, options or
other rights, including without limitation the issuance of equity interests
in the Guarantor in exchange for equity interests in the Borrower, pursuant
to the Borrower's partnership agreement as in effect on the date hereof, and
(c) a dividend or distribution on account of Capital Stock of a Subsidiary
(A) that is paid to a Borrower Party or a Subsidiary, or (B) that is made pro
rata to all holders of Capital Stock of such Subsidiary, or (C) that is paid
to any Person as required under any document or instrument governing the
rights or preferences of such Capital Stock as in effect at the time such
Person first acquires such Capital Stock (or any Capital Stock in respect of
which such Capital Stock is issued), (ii) any redemption, retirement, sinking
fund or similar payment, repurchase or other acquisition for value, direct or
indirect, of any Capital Stock of any Borrower Party or any Subsidiary now or
hereafter outstanding, except (x) conversion of Capital Stock of a Borrower
Party into Capital Stock of the Borrower and (y) redemption or repurchase of
Capital Stock of a Subsidiary from a Person that holds a minority interest in
such Subsidiary that is required under any document or instrument governing
the rights and preferences of such Capital Stock as in
Amended and Restated Revolving Loan Agreement
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effect at the time such Person first acquires such Capital Stock (or any
Capital Stock in respect of which such Capital Stock is issued).
"Retail Property" means any Real Property that is (w) a
neighborhood or community shopping center, whether or not there is an anchor
tenant, (x) a factory outlet center, or (y) a promotional or power center, or
(z) an entertainment center.
"SEC" means the United States Securities and Exchange
Commission, and any successor.
"Secured Advance" is defined in Section 2.1.1.
"Secured Overdraw" is defined in Section 2.7.2.
"Secured Revolving Commitment" means the amount set forth as
the Lender's "Secured Revolving Commitment" on Schedule 1.1A, as reduced or
terminated from time to time pursuant to the terms hereof.
"Secured Revolving Note" means the Amended and Restated
Secured Revolving Note made payable to the order of the Lender, in
substantially the form of Exhibit A-1 hereto, as amended from time to time.
"Senior Officer" means the Chairman of the Board of Directors,
the President, the Chief Executive Officer, the Chief Operating Officer or
the Chief Financial Officer of the Guarantor.
"Single Employer Plan" means a Plan other than a Multiemployer
Plan.
"Subsidiary" shall mean any (i) corporation of which at least
a sufficient number of the outstanding shares of stock having by the terms
thereof ordinary voting power to elect a majority of the board of directors
of such corporation (irrespective of whether or not at the time stock of any
other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time directly
or indirectly owned or controlled by a Borrower Party or one or more of a
Borrower Party's other Subsidiaries or (ii) partnership or other entity with
respect to which any Borrower Party has possession, directly or indirectly,
of the power to direct or cause the direction of management or policies of
such partnership or other entity. "Wholly-Owned Subsidiary" shall mean any
such Subsidiary of which all of the equity, other than directors' qualifying
shares, is so owned or controlled by a Borrower Party.
"Ten-Year Treasury Rate" means, as of any date of
determination, the yield of United States Treasury Constant Maturities with a
term most nearly approximating that of noncallable United States Treasury
obligations having a maturity as close as possible to ten (10) years from the
date of determination as determined by Lender on the basis of Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading U.S.
Governmental Security/Treasury Constant Maturities, or other recognized
source of financial market information selected by Lender for the week prior
to the date of determination.
Amended and Restated Revolving Loan Agreement
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"Total Capitalization" means, with respect to the Borrower, at
any time, the sum of (i) the product of (x) the last closing sale price prior
to such time of shares of each class of Capital Stock of the Guarantor that
is publicly traded, on the principal stock exchange on which shares of such
class of Capital Stock are listed, multiplied by (y) the sum of (1) number of
shares of Capital Stock of such class that are issued and outstanding at such
time, plus (2) the number of shares of Capital Stock of such class issuable
upon exchange of partnership interests in the Borrower, plus (ii) the
aggregate stockholders' equity attributed to shares of each class of Capital
Stock of the Guarantor that is not publicly traded, as reflected in the most
recent consolidated balance sheet of the Guarantor delivered to the Lender
pursuant to Section 5.1 hereof, plus (iii) the aggregate principal amount of
Debt of the Borrower Parties and their Consolidated Subsidiaries (without
duplication) outstanding at such time.
"Unencumbered Asset" means any Real Property that satisfies
all of the following conditions:
(i) fee simple title to, or a ground leasehold interest
in, such Real Property is held by the Borrower, free and clear of any Lien
(other than (a) easements, covenants, and other restrictions, charges or
encumbrances not securing Debt that do not interfere materially with the
ordinary operations of the property and do not materially detract from the
value of the property; (b) building restrictions, zoning laws and other
Applicable Laws, (c) leases and subleases of the property in the ordinary
course of business, (d) property taxes not yet delinquent; and (e)
involuntary Liens that secure obligations being contested in good faith by
appropriate proceedings and with respect to which the Borrower has, within
thirty (30) days after the attachment of such Lien, recorded or obtained a
bond or other security which has the effect of removing such Lien under
Applicable Law (the Liens referred to in clauses (a), (b), (c) and (d) being
referred to as "Permitted Encumbrances"));
(ii) the Borrower (or the Guarantor, pursuant to the
Original Loan Agreement) has delivered to the Lender a certificate to the
effect that (x) to the best of the Borrower's (or the Guarantor, pursuant to
the Original Loan Agreement) knowledge, no Material Environmental Event has
occurred and is continuing with respect to such Real Property; and (y) in the
event that a property condition report with respect to such Real Property was
prepared for the Borrower (or the Guarantor, pursuant to the Original Loan
Agreement) within 12 months preceding the time that such Real Property
becomes an Unencumbered Asset, such report reflects no material deferred
maintenance requirements for such Real Property, and, in any case, the
Borrower (or the Guarantor, pursuant to the Original Loan Agreement) knows of
no material deferred maintenance requirements for such Real Property;
(iii) the Real Property has been expressly approved by the
Lender in writing as eligible for inclusion in the Unencumbered Pool in its
reasonable discretion or has been deemed approved by the Lender pursuant to
Section 5.13(c) hereof; and
(iv) the Real Property has been designated by the
Borrower (or the Guarantor, pursuant to the Original Loan Agreement) as an
Unencumbered Asset.
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Unless the Borrower shall have notified the Lender to the
contrary, the Real Properties listed as "Unencumbered Assets" in the
Compliance Certificate most recently delivered to the Lender shall be
considered designated by the Borrower as Unencumbered Assets pursuant to
clause (iv) above. As of the Effective Date, all of the Real Properties that
have been approved by the Lender as eligible for inclusion in the
Unencumbered Pool pursuant to clause (iii) above are set forth on Schedule
1.1B.
"Unencumbered Asset Value" means, at any time, the sum of the
Asset Values at such time of all of the Unencumbered Assets that then are in
the Unencumbered Pool.
"Unencumbered Pool" means, at any time, the pool of
Unencumbered Assets at such time, but excluding any such Property with
respect to which notice has been given pursuant to Section 5.13(a) for as
long as required by Section 5.13(b).
"Unsecured Advance" is defined in Section 2.1.1.
"Unsecured Revolving Commitment" means the amount set forth as
the Lender's "Unsecured Revolving Commitment" on Schedule 1.1A, as reduced or
terminated from time to time pursuant to the terms hereof.
"Unsecured Revolving Note" means the Amended and Restated
Unsecured Revolving Note made payable to the order of the Lender, in
substantially the form of Exhibit A-2 hereto, as amended from time to time.
Section 1.2. Related Matters.
1.2.1. Construction. Unless the context of this
Agreement clearly requires otherwise, references to the plural include the
singular, the singular includes the plural, the part includes the whole,
"including" is not limiting, and "or" has the inclusive meaning represented
by the phrase "and/or". The words "hereof", "herein", "hereby", "hereunder"
and similar terms in this Agreement refer to this Agreement as a whole
(including the Preamble, the Schedules and the Exhibits) and not to any
particular provision of this Agreement. Article, section, subsection,
exhibit, schedule, recital and preamble references in this Agreement are to
this Agreement unless otherwise specified. References in this Agreement to
any agreement, other document or law "as amended" or "as amended from time to
time", or to amendments of any document or law, shall include any amendments,
supplements, replacements, renewals, waivers or other modifications.
References in this Agreement to any law (or any part thereof) include any
rules and regulations promulgated thereunder (or with respect to such part)
by the relevant Governmental Authority, as amended from time to time.
References herein to any Schedule shall mean such Schedule as attached to the
Original Loan Agreement, as amended from time to time pursuant thereto or
pursuant hereto. References herein to any delivery to the Lender hereunder
shall be deemed to include each similar delivery to the Lender heretofore
made by or on behalf of the Guarantor, as Borrower, under the Original Loan
Agreement.
1.2.2. Determinations. Any determination or calculation
contemplated by Section 2.3.2 of this Agreement that is made by the Lender
shall be final and conclusive and
Amended and Restated Revolving Loan Agreement
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binding upon the Borrower, in the absence of manifest error. References in
this Agreement to any "determination" by the Lender include good faith
estimates by the Lender (in the case of quantitative determinations), and
good faith beliefs by the Lender (in the case of qualitative determinations).
All references herein to "discretion" of the Lender (or terms of similar
import) shall, unless otherwise expressly provided in respect of any
particular determination, mean "absolute and sole discretion". All consents
and other actions of the Lender contemplated by this Agreement may be given,
taken, withheld or not taken in the Lender's discretion (whether or not so
expressed), except as otherwise expressly provided herein.
1.2.3. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared on
a consolidated basis in accordance with GAAP applied on a basis consistent
(except for changes that the independent public accountants of the Borrower
deem necessary in order to allow them to render an unqualified opinion to the
Borrower and for changes that are not deemed so necessary but are concurred
in by such independent public accountants and the Lender) with the audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries referred to in Section 4.5.1.
1.2.4. Assumption. Borrower hereby assumes and agrees
to perform all of the Guarantor's obligations under the Original Loan
Agreement or the "Loan Documents" (as defined therein) whenever arising.
Lender hereby consents to the transfer of all Real Properties to Borrower.
ARTICLE 2.
AMOUNT AND TERMS OF THE CREDIT FACILITIES
Section 2.1. Credit Facilities.
2.1.1. Commitments and Advances. Upon the terms and
subject to the conditions set forth in this Agreement, the Lender hereby
agrees, at any time from and after the Effective Date until the Business Day
next preceding the Maturity Date, to make advances that are secured by the
Lien of the Mortgages on the Collateral Properties (each, a "Secured
Advance,") to the Borrower in an aggregate principal amount not to exceed, at
any time outstanding, the lesser of (x) the Available Amount at such time or
(y) the Secured Revolving Commitment. The Lender also agrees, at any time and
from and after the Effective Date until the Business Day next preceding the
Maturity Date, upon the terms and subject to the conditions set forth in this
Agreement, to make unsecured advances (each, an "Unsecured Advance") to the
Borrower in an aggregate principal amount not to exceed at any time
outstanding the Unsecured Revolving Commitment. Advances may be voluntarily
prepaid and, subject to the provisions of this Agreement, any amounts so
prepaid may be re-borrowed, up to the amount available under this Section
2.1.1 at the time of such re-borrowing. The Borrower hereby agrees that all
outstanding Secured Advances and Unsecured Advances made by the Lender under
the Original Loan Agreement shall be deemed to be Secured Advances and
Unsecured Advances hereunder,
Amended and Restated Revolving Loan Agreement
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respectively, and shall be evidenced by the Secured Revolving Note and the
Unsecured Revolving Note, respectively.
2.1.2. Minimum Amounts. Advances made under this
Section 2.1 shall be in a minimum amount of $500,000 and integral multiples
of $250,000 in excess thereof.
2.1.3. Notice of Borrowing.
2.1.3.1. When the Borrower desires to borrow
pursuant to Section 2.1, it shall deliver to the Lender a
Notice of Borrowing in substantially the form of Exhibit B,
duly completed and executed by a Responsible Officer (a
"Notice of Borrowing"), no later than 10:00 a.m. (California
time) at least two (2) Business Days before the proposed
Funding Date. Each Notice of Borrowing shall specify whether
the requested Advance is to be a Secured Advance or an
Unsecured Advance.
2.1.3.2. The Borrower shall notify the Lender of
the names of its officers and employees authorized to request
and take other actions with respect to Advances on behalf of
the Borrower (each a "Responsible Officer") and shall provide
the Lender with a specimen signature of each such officer or
employee. The Lender shall be entitled to rely conclusively
on a Responsible Officer's authority to request and take other
actions with respect to Advances on behalf of the Borrower
until the Lender receives written notice to the contrary. The
Lender shall have no duty to verify the authenticity of the
signature appearing on any Notice of Borrowing.
2.1.4. Funding. Subject to and upon satisfaction of the
applicable conditions set forth in Article 3 as determined by the Lender as
set forth therein, the Lender shall make the proceeds of the requested
Advances available to the Borrower in Dollars by transferring immediately
available funds to such account as from time to time may be designated by the
Borrower.
Section 2.2. Use of Proceeds. The proceeds of the Advances
shall be used by the Borrower for general corporate purposes, including,
without limitation, refinancing secured or unsecured Debt, payment of loan
fees (including, without limitation, fees in respect of the Advances pursuant
to Section 2.5), property development costs, property acquisition costs,
capital improvements and working capital, in each case to the extent
otherwise permissible hereunder. No part of the proceeds of the Advances
shall be used directly or indirectly for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any Margin Stock or
maintaining or extending credit to others for such purpose or for any other
purpose that otherwise violates the Margin Regulations.
Section 2.3. Interest.
2.3.1. Interest Rate.
2.3.1.1. So long as no Event of Default exists, the
unpaid principal amount of all Advances shall bear interest at
the Applicable LIBO Rate.
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2.3.1.2. During such time as an Event of Default
exists (whether or not the Obligations have then become due
and payable by acceleration) and from and after the Maturity
Date, the interest rate applicable to the then outstanding
principal balance of all Advances shall be the Post-Default
Rate.
2.3.2. Determination of Rate. The Lender shall, on the
second Business Day preceding the first day of each Interest Period,
determine the Applicable LIBO Rate for such Interest Period.
2.3.3. Payment of Interest. Accrued interest shall be
due and payable in arrears on each Interest Payment Date and on the Maturity
Date.
2.3.4. Computations. Interest on the Advances and other
amounts payable hereunder or the other Loan Documents shall be computed on
the basis of a 360-day year and the actual number of days elapsed.
2.3.5. Maximum Lawful Rate of Interest. The rate of
interest payable on any Advances or other amount shall in no event exceed the
maximum rate permissible under Applicable Law. If the rate of interest
payable on any Advances or other amount is ever reduced as a result of this
Section and at any time thereafter the maximum rate permitted by Applicable
Law shall exceed the rate of interest provided for in this Agreement, then
the rate provided for in this Agreement shall be increased to the maximum
rate provided by Applicable Law for such period as is required so that the
total amount of interest received by the Lender is that which would have been
received by the Lender but for the operation of the first sentence of this
Section.
Section 2.4. Note, Etc.
2.4.1. Advances Evidenced by Note. The Secured Advances
made by the Lender shall be evidenced by the Secured Revolving Note. The
Unsecured Advances made by the Lender shall be evidenced by the Unsecured
Revolving Note. Each Note shall be dated the Effective Date and stated to
mature in accordance with the provisions of this Agreement.
2.4.2. Notation of Amounts and Maturities, Etc. The
Lender is hereby irrevocably authorized to record on the schedule attached to
the Notes (or a continuation thereof) the information contemplated by such
schedule. The failure to record, or any error in recording, any such
information shall not, however, affect the obligations of the Borrower
hereunder or under any Note to repay the principal amount of the Advances
evidenced thereby, together with all interest accrued thereon. All such
notations shall constitute prima facie evidence of the accuracy of the
information so recorded.
Section 2.5. Fees.
2.5.1. Intentionally Omitted.
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2.5.2. On each Funding Date, the Borrower shall pay to
the Lender a fee in an amount equal to 0.25% of the principal amount of the
Advances made by the Lender on such Funding Date.
2.5.3. Upon extension of the Maturity Date pursuant to
Section 2.6.2, the Borrower shall pay to the Lender an extension fee (the
"Extension Fee") equal to .50% of the aggregate Commitments.
2.5.4. All Fees shall be fully earned when payable
hereunder and shall be non-refundable.
2.5.5. The Borrower, and by its consent hereto, the
Guarantor, hereby grants to the Lender a right of first refusal with respect
to any proposed financing or refinancing of any Real Property owned by any
Borrower Party or any Affiliate of any Borrower Party. Within ten (10) days
after such Borrower Party has determined that it intends (or its Affiliate
intends) to finance or refinance any of such Real Properties, such Borrower
Party shall notify the Lender of such intent. In the event that, after
discussions with the Lender, such Borrower Party desires to seek bona fide
financing proposals from third parties with respect to such Real Property
such Borrower Party shall inform the Lender as to the material terms of any
such proposal. If such Borrower Party indicates to the Lender that such
Borrower Party intends to accept (or thereafter accepts) any of such
proposals (an "Acceptable Proposal"), such Borrower Party shall so inform the
Lender and, if the Lender indicates that it intends to match such Acceptable
Proposal but requires written verification thereof, then such Borrower Party
shall obtain a written definitive proposal from a bona-fide third party
lender, and such Borrower Party shall thereupon send a copy of such written
proposal to the Lender. The Lender shall have ten (10) days after receipt of
such written proposal to elect to agree to finance such Real Property upon
the terms described in such written definitive proposal with no material
deviations therefrom. If the Lender agrees to finance such Real Property on
the terms described in such written proposal with no material deviations
therefrom, then such Borrower Party shall, or shall cause its Affiliate to,
if such Borrower Party elects to proceed with such financing, consummate such
financing with reasonable diligence, subject to satisfaction of the
conditions precedent in such written proposal and the Lender's reasonable and
customary conditions precedent. In the event that the Lender fails to so
elect in writing in such ten (10) day period to finance such Real Property or
indicates that it does not intend to match such Acceptable Proposal, then the
Lender shall be deemed to have elected not to so finance such Real Property.
In such event, such Borrower Party (or such Affiliate of such Borrower Party,
as the case may be), shall have a period of ninety (90) days in which to
consummate the financing described in such written definitive proposal or
Acceptable Proposal, as applicable, with such Person with respect to such
Real Property. If either (i) such transaction is not so consummated on or
prior to the conclusion of such ninety (90) day period with such Person, or
(ii) there are material changes to the terms of the financing set forth in
such definitive written proposal or Acceptable Proposal, as applicable (with
any increase in interest rate or spread, reduction in proceeds, increase in
fees (other than reimbursements), or shortening of final maturity being
conclusively deemed material), then the financing of such Real Property shall
again be subject to Lender's right of first refusal, and such Borrower Party
shall thereafter again be obligated to comply with this Section 2.5.5 with
respect to such Real Property as set
Amended and Restated Revolving Loan Agreement
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forth herein. The foregoing right of first refusal shall expire upon the
later to occur of the indefeasible satisfaction of the Obligations or the
Maturity Date (or any extension thereof pursuant hereto).
Section 2.6. Termination, Reduction and Extension of Commitment.
2.6.1. The Lender's Commitments shall terminate without
further action on the part of the Lender on the Maturity Date unless such
Maturity Date is extended pursuant to Section 2.6.2. In addition, the
Commitments shall terminate in accordance with Section 7.3.
2.6.2. The Borrower may, by written notice to the Lender
not less than 60 days and not more than 120 days before the Maturity Date,
request that the Maturity Date be extended to the date that is one year
following the Maturity Date; provided that the Maturity Date may be so
extended only one time. If the Borrower shall so request such an extension,
the Maturity Date shall be automatically extended to the date that is one
year following the Maturity Date; provided that no such extension shall be
effective unless (a) no Default or Event of Default shall exist either on the
date of the notice requesting such extension or on the Maturity Date then in
effect, (b) each of the representations and warranties of the Borrower set
forth in the Loan Documents shall be true and complete in all material
respects on and as of each such date with the same force and effect as if
made on and as of each such date (or, if any such representation or warranty
is expressly stated to have been made as of a specific date, as of such
specific date) and (c) the Borrower has paid the Extension Fee to the Lender.
2.6.3. The Borrower shall have the right, at any time or
from time to time after the Effective Date, to terminate in whole or
permanently reduce in part, without premium or penalty, the unused Secured
Revolving Commitment or unused Unsecured Revolving Commitment to an amount
not less than the aggregate principal amount of Secured Advances or Unsecured
Advances, respectively, outstanding at such time, by giving the Lender
written notice of such termination or reduction and the amount of any partial
reduction. Any such termination or partial reduction shall be irrevocable
and shall be effective on the date specified in the Borrower's notice and
shall be in a minimum amount of $250,000 and an integral multiple thereof.
Section 2.7. Repayments and Prepayments.
2.7.1. Repayment. The unpaid principal amount of all
Advances shall be paid in full on the Maturity Date.
2.7.2. Mandatory Prepayment of Excess Advances. If at
any time the outstanding principal amount of all Secured Advances exceeds
that lesser of (v) the then Available Amount or (w) the Secured Revolving
Commitment (such excess shall be referred to herein as the "Secured
Overdraw"), the Borrower shall, no later than the third Business Day after
which the Borrower learns or is notified of the excess, make mandatory
prepayments of the Secured Advances to the extent necessary such that, after
such repayment, such excess is eliminated; provided, however, that if the
only Default or Event of Default hereunder at such time is such excess
outstanding balance of Secured Advances, and if at such time the positive
Amended and Restated Revolving Loan Agreement
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amount obtained by subtracting (x) the outstanding principal balance of the
Unsecured Advances from (y) the Unsecured Revolving Commitment, exceeds the
Secured Overdraw, then upon satisfaction of the conditions precedent herein
to the making of an Unsecured Advance (other than the two (2) Business Day
advance notice requirement of Section 2.1.3.1 hereof) on or prior to the
expiration of such three (3) Business Day period, the Lender shall be deemed
to have made, and the Borrower shall be deemed to have borrowed, an Unsecured
Advance in the amount of the Secured Overdraw, the proceeds of which shall be
deemed to have been applied to repay Secured Advances. If at any time the
outstanding principal amount of all Unsecured Advances exceeds the Unsecured
Revolving Commitment, the Borrower shall, on the third Business Day after the
Borrower learns or is notified of the excess, make mandatory prepayments of
the Unsecured Advances to the extent necessary such that, after such
repayment, such excess is eliminated.
2.7.3. Optional Prepayment. The Borrower may, at any
time and from time to time, prepay the Advances, in each case in the minimum
amount of $250,000 (or in such lesser amount of Secured Advances or Unsecured
Advances as may be outstanding at the time of such a prepayment) and integral
multiples of $250,000 in excess thereof, and, upon the terms and subject to
the conditions hereof, reborrow Advances. The Borrower shall specify, as to
each optional prepayment pursuant to this Section 2.7.3, whether such
prepayment is to be applied to outstanding Secured Advances or Unsecured
Advances.
2.7.4. Mandatory Prepayment in Certain Events. If any
Borrower Party at any time (x) sells or otherwise disposes of any Real
Property, (y) issues and sells any shares of Capital Stock or (z) incurs any
Debt described in clause (i) or (ii) of the definition of the term "Debt",
and receives net cash proceeds equal to or in excess of the minimum
prepayment amount specified in Section 2.7.3, then the Borrower shall give
written notice thereof to the Lender and, if such net cash proceeds are not
invested or reinvested within 20 Business Days in a manner not prohibited by
Section 6.1, then upon request therefor by the Lender, the Borrower shall
apply the remaining uninvested net cash proceeds of such sale, issuance or
incurrence received by any Borrower Party to repay any outstanding Unsecured
Advances.
2.7.5. Repayment on Reconveyance of Collateral Pool. If
at any time there is no Collateral Property (or the Collateral Pool is not
deemed to contain any Collateral Property), upon written demand by Lender the
Borrower shall thereupon repay the then outstanding principal amount of
Unsecured Advances, together with all accrued and unpaid interest thereon,
and the Commitments shall terminate.
2.7.6. Reinstatement. To the extent the Lender receives payment of any
amount under the Loan Documents, whether by way of payment by the Borrower,
set-off or otherwise, which payment is subsequently invalidated, declared to
be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, other law or
equitable cause, in whole or in part, then, to the extent of such payment
received, the Obligations or part thereof intended to be satisfied thereby
shall be revived and continue in full force and effect as if such payment had
not been received by the Lender.
Amended and Restated Revolving Loan Agreement
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Section 2.8. Manner of Payment. Except as otherwise
expressly provided, the Borrower shall make each payment hereunder or under
the other Loan Documents to the Lender in Dollars and in immediately
available funds, without any deduction for any set-off, recoupment,
counterclaim, taxes or tax withholding or otherwise, not later than 11:00
a.m. (California time) on the due date thereof. Any payments received after
11:00 a.m. (California time) on any Business Day shall be deemed received on
the next succeeding Business Day. Whenever any payment to be made hereunder
shall be due on a day that is not a Business Day, such payment shall instead
by made on the next succeeding Business Day. Delivery shall be made in
accordance with the written instructions from time to time given to the
Borrower by the Lender.
ARTICLE 3.
CONDITIONS PRECEDENT TO ADVANCES
Section 3.1. Conditions Precedent to Effective Date. The
occurrence of the Effective Date and the obligation of the Lender to make any
Advances on any Funding Date shall be subject to the satisfaction of the
following conditions precedent:
3.1.1. Effective Date. The Effective Date shall occur on
or before December 31, 1997.
3.1.2. Certain Documents. The Lender shall have received
the documents listed on Schedule 3.1.2, all of which shall be in form and
substance satisfactory to the Lender.
3.1.3. Fees and Expenses Paid. The Borrower shall have
paid all out-of-pocket expenses due and payable on or before the Effective
Date, including all reasonable legal fees and disbursements of the Lender's
counsel for which the Borrower shall have been billed on or prior to such
date.
3.1.4. Title Insurance. Lender shall have received with
respect to each of the Collateral Properties (as defined in the Original Loan
Agreement) title endorsements issued by the Title Company (as hereinafter
defined) satisfactory to Lender dating down each of the title insuring the
first priority of the Liens created under the Mortgages (as defined in the
Original Loan Agreement and as amended in connection with the execution of
this Agreement) and showing that the Mortgages are subject only to such liens
(other than those described in Part II of Schedule B to the title policies
currently ensuring the liens of the Mortgages or those to which Lender has
agreed in writing) as are acceptable to Lender or permitted by the express
terms of the relevant Mortgage, as amended.
3.1.5. General. All other documents and legal matters in
connection with the transactions contemplated by this Agreement shall have
been delivered or executed or recorded in form and substance reasonably
satisfactory to the Lender and the Lender shall have received all such
counterpart originals or certified copies thereof as the Lender may request,
including, without limitation the Guaranty executed by Guarantor.
Amended and Restated Revolving Loan Agreement
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Section 3.2. Conditions Precedent to Advances. The obligation
of the Lender to make any Advances on any Funding Date shall be subject to
the following conditions precedent:
3.2.1. Effective Date. The conditions precedent set forth
in Section 3.1 shall have been satisfied or waived in writing by the Lender
before the Notice of Borrowing is given.
3.2.2. Notice of Borrowing. The Borrower shall have
delivered to the Lender, in accordance with the applicable provisions of this
Agreement, a Notice of Borrowing in respect of the proposed Advance.
3.2.3. Available Amount. In the case of a proposed Secured
Advance, the aggregate outstanding principal amount of Secured Advances
(after giving effect to the proposed Secured Advance) shall not be greater
than the lesser of (x) the Secured Revolving Commitment, or (y) Available
Amount.
3.2.4. Pro Forma Debt Service Coverage Ratio. On the
Funding Date, the ratio of (i) EBITDA for the twelve (12) months immediately
preceding the Funding Date, to (ii) pro forma Debt Service in respect of all
Debt of the Borrower Parties and their Consolidated Subsidiaries (without
duplication) outstanding on such Funding Date (including the Advances
proposed to be made on such Funding Date) for the twelve (12) month period
beginning on the first day of the first full month following such Funding
Date (assuming that all such Debt will remain outstanding for the entire
twelve-month period and will bear interest throughout such period at the
interest rate applicable thereto on the Funding Date), shall be not less than
1.75 to 1.00.
3.2.5. Pro Forma Consolidated Total Debt to Total
Capitalization of the Borrower. On the Funding Date, after giving pro forma
effect to the Advances proposed to be made on such Funding Date, the ratio of
Consolidated Total Debt to Total Capitalization of the Borrower shall not be
greater than 65.00%.
3.2.6. Representations and Warranties. All of the
representations and warranties of the Borrower contained in the Loan
Documents shall be true and correct in all material respects on and as of the
Funding Date as though made on and as of that date (except to the extent that
such representations and warranties expressly were made only as of a specific
date).
3.2.7. No Default. No Default or Event of Default shall
exist or result from the making of the Advance.
3.2.8. No Material Adverse Change. No Material Adverse
Change shall have occurred since September 30, 1996 (determined as if the
Borrower owned all real properties and Investments of the Guarantor as of
such date).
Each borrowing of an Advance shall constitute a
representation and warranty by the Borrower as of the Funding Date that the
conditions contained in Sections 3.2.1 through 3.2.8 have been satisfied.
Amended and Restated Revolving Loan Agreement
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Section 3.3. Additional Conditions Precedent and Provisions
Applicable to Certain Acquisition Advances. In the event that the Borrower
desires to acquire a Retail Property that, once acquired, will qualify as a
Collateral Property and in connection therewith Borrower intends to request a
Secured Advance that would cause the aggregate outstanding principal amount
of Secured Advances to exceed the Available Amount, then the Lender shall
make such Secured Advance for the purpose of acquiring such Retail Property
if, in addition to satisfaction of all of the other conditions set forth in
this Agreement, all of the following conditions shall be satisfied as of the
Funding Date:
(i) The Borrower shall have delivered to the Lender the
information and documents required to be delivered under Section 3.4 as to
such Retail Property, and such Retail Property shall be approved as eligible
for inclusion in the Collateral Pool in accordance with Section 3.4;
(ii) The Borrower shall have delivered to the Lender,
together with the Notice of Borrowing referred to in Section 3.2.2, a
certificate, in substantially the form of Exhibit C-3 (a "Certificate of
Property Acquisitions") together with the attachments referred to therein,
executed by a Senior Officer of the Borrower, describing the Retail Property
to be acquired, designating such Retail Property as a Collateral Property
effective upon consummation of the acquisition of such Retail Property, and
setting forth the Available Amount as if such Retail Property were a
Collateral Property as of the date of such Certificate of Property
Acquisitions;
(iii) All statements set forth in the certificate
referred to in clause (ii) above shall be true and correct as of the date
thereof and the Funding Date;
(iv) The Borrower shall have provided to the Lender such
information as may be reasonably requested by the Lender in order to verify
the terms, timing and method of payment specified in the contract between the
Borrower, as purchaser of the Retail Property to be acquired, and the seller
of such property, or to determine compliance with this Section 3.3; and
(v) On the Funding Date, substantially contemporaneously
with the funding of such Secured Advance, all of the conditions precedent to
designation of such Retail Property as a Collateral Property shall be
satisfied, and such Retail Property shall be a Collateral Property.
Section 3.4. Conditions Precedent to Designation of a Collateral
Property. Each Retail Property designated in a written notice delivered by
the Borrower to the Lender, shall be a Collateral Property upon satisfaction
of the following conditions:
(i) Liens of the Mortgages. A Mortgage shall constitute a
valid first mortgage lien on the fee simple title to (or the Borrower's
leasehold interest in a valid and subsisting ground lease of) the proposed
Collateral Property, which shall secure all of the Obligations, subject only
to such Liens as are acceptable to the Lender (including Permitted
Encumbrances) that are permitted by the express terms of the relevant
Mortgage; and an amendment to each existing Mortgage of record in favor of
the Lender adding the applicable Collateral Property to the collateral
property subject to the lien of the Mortgage(s); and the Borrower shall have
delivered UCC-1 financing statements covering fixtures owned or to be owned
by the Borrower
Amended and Restated Revolving Loan Agreement
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and affixed to, or used in connection with, such proposed Collateral
Property, in each case appropriately completed and duly executed and
delivered to the Lender for filing in the appropriate county and state
offices.
(ii) Title Insurance. The Lender shall have received
policies of title insurance on forms of, and issued by, one or more
nationally-recognized title insurance companies reasonably satisfactory to
Lender (the "Title Company"), showing fee simple title or ground leasehold
interest vested in the Borrower with respect to such proposed Collateral
Property and an endorsement to all pre-existing title insurance policies in
favor of the Lender, in each case insuring the first priority of the Liens
created under the Mortgages insured thereby, with an aggregate liability of
not less than the aggregate principal balance of the Secured Advances,
subject only to such Liens as are acceptable to Lender or permitted by the
express terms of the relevant Mortgage (including Permitted Encumbrances),
together with, as may be reasonably required by the Lender, such reinsurance
schedules and endorsements (including, without limitation, tie-in
endorsements) and otherwise in form and substance reasonably satisfactory to
the Lender. In addition, the Borrower shall have paid to the Title Company
(and shall have delivered to the Lender evidence of such payment) all
expenses of the Title Company in connection with the issuance of such
policies, reinsurance schedules, endorsements and agreements and an amount
equal to the recording and stamp taxes (including, without limitation,
mortgage recording taxes), if any, payable in connection with recording the
Mortgages in the appropriate county land offices.
(iii) Environmental Audit. The Lender shall be
satisfied that (A) there are no pending or threatened claims, suits, actions
or proceedings arising out of or relating to the existence of any Hazardous
Materials at, in, on or under the proposed Collateral Property, (B) the
proposed Collateral Property is in compliance with all applicable
Environmental Requirements, and (C) no Hazardous Materials exist at, in, on
or under any Property except in compliance with applicable Environmental
Requirements. The Lender shall have received, without limitation, (1) a
comprehensive environmental audit of each Property (which shall include,
without limitation, a visual survey, a record review, an area reconnaissance
and a Phase I environmental study and, if the Lender shall so request, a
Phase II environmental study), satisfactory in form and substance to the
Lender, conducted and certified by a qualified, independent environmental
consultant within 12 months prior to the time such Retail Property first
becomes a Collateral Property, (2) evidence that all required approvals from
all governmental and quasi-governmental authorities having jurisdiction with
respect to the proposed Collateral Property, and (3) such other environmental
reports, inspections and investigations as the Lender shall reasonably
require, prepared, in each instance, by engineers or other consultants
reasonably satisfactory to the Lender.
(iv) Insurance. The Lender shall have received evidence of
the existence of all insurance required to be maintained by the Borrower
pursuant to the Loan Documents and the designation of the Lender as the loss
payee or additional insured, as applicable, thereunder to the extent required
by the Loan Documents, in form and substance specified in the Loan Documents.
Amended and Restated Revolving Loan Agreement
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(v) Operating Statements; Budgets. The Lender shall have
received (a) operating statements for such proposed Collateral Property for
two calendar years prior to the time of designation thereof as a Collateral
Property, and for the twelve months prior to such time, and an itemized
financial forecast and budget for the operation of such proposed Collateral
Property for the 12 month period thereafter, all prepared on a cash basis (or
such other accounting basis reasonably acceptable to the Lender),
consistently applied, together with a written statement of the assumptions
used in the preparation thereof and a certificate of the Borrower, to the
effect that such budget, financial forecast and assumptions are reasonable
and represent the Borrower's best estimates of the future financial
performance and requirements of such proposed Collateral Property, and (b) a
current rent roll, certified by the Borrower to be correct and complete in
all material respects, all of the foregoing to be in form and substance
reasonably satisfactory to the Lender.
(vi) Searches. The Lender shall have received copies of UCC
filing searches, tax lien searches, judgment searches and real estate tax
searches and municipal department searches setting forth any and all building
violations (if available) in each county where such proposed Collateral
Property is located (and in the case of UCC filing searches, in the office of
the Secretary of State or other applicable state office of the State where
such proposed Collateral Property is located), demonstrating as of a recent
date the existence of no other financing statements, tax liens, judgments,
building violations or delinquent real estate taxes, together with evidence
that all fees payable in connection with any such searches have been paid.
(vii) Survey. The Lender shall have received a survey
of such proposed Collateral Property that is reasonably satisfactory to the
Lender, and is in compliance with the minimum standard detail requirements
for an urban land title surveys adopted by the American Land Title
Association and American Congress on Surveying and Mapping, and certified to
the Lender, the Title Company and any other parties reasonably requested by
the Lender as of a certification date satisfactory to the Lender.
(viii) Other Documents. The manager of the proposed
Collateral Property shall have executed and delivered a consent and
subordination of management agreement in form and substance satisfactory to
the Lender.
(ix) Material Contracts. The Lender shall have received
certified copies of all material contracts relating to the proposed
Collateral Property, including all amendments and modifications thereto,
which shall be in form and substance reasonably satisfactory to the Lender.
(x) Property Condition Report. The Lender shall have
received reports covering the physical and structural condition of the
proposed Collateral Property in form and substance, and prepared by a
qualified independent engineer, reasonably satisfactory to the Lender and
dated no more than 12 months prior to the time such Retail Property first
becomes a Collateral Property, which shall (i) identify deferred maintenance
and the cost thereof and include a 10-year schedule of annual cost to perform
deferred maintenance and of capital expenditures, and (ii) assess the
probable maximum loss in the event of earthquake.
Amended and Restated Revolving Loan Agreement
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(xi) Leases. The Lender shall have received a copy of each
Material Lease in effect with respect to all or a portion of such Collateral
Property including all amendments and modifications thereto, all of which
shall be in form and substance reasonably satisfactory to the Lender.
(xii) Appraisal. The Lender shall have received and
approved an MAI appraisal of the proposed Collateral Property prepared within
12 months prior to the time such Retail Property first becomes a Collateral
Property.
(xiii) Zoning Compliance, Etc. The Lender shall have
received evidence reasonably satisfactory to the Lender that all improvements
have been constructed and are being used and operated in compliance in all
material respects with (A) all applicable zoning, subdivision, environmental
and other laws, orders, rules, regulations and requirements of all
governmental or quasi-governmental authorities having jurisdiction with
respect to the proposed Collateral Property, and (B) all building permits
issued in respect of the proposed Collateral Property and (if available) a
copy of all certificates of occupancy for each such property.
(xiv) Estoppel Letters. The Lender shall have received
and approved subordination, non-disturbance and attornment agreements and
tenant estoppel letters or certificates from each anchor tenant (as
determined by the Lender in its discretion) and from each lessee under a
Material Lease relating to the proposed Collateral Property, and, in the case
of a proposed Collateral Property in which the Borrower is acquiring a
leasehold interest, an estoppel certificate from the applicable ground
lessor, each in form and substance reasonably satisfactory to the Lender.
(xv) Recording Taxes. The Borrower shall have paid all
mortgage recording taxes payable (if any) in each jurisdiction in which the
proposed Collateral Property is located in connection with the recordation of
any Mortgage.
(xvi) Perfection of Security Interests. The Lender
shall have received evidence that all actions necessary or, in the opinion of
the Lender, desirable to perfect and protect the Liens and security interests
created by the Loan Documents have been taken, including, without limitation,
evidence that each Mortgage on a proposed Collateral Property has been duly
filed and recorded in the appropriate governmental offices and that the
related UCC financing statements have been duly filed in the appropriate
governmental offices.
(xvii) Opinions. The Lender shall have received an
opinion of counsel to the Borrower and an opinion of local counsel to the
Lender in the state in which the proposed Collateral Property is located, in
each case with respect to such matters as the Lender reasonably may request,
in form and substance and from counsel reasonably satisfactory to the Lender.
(xviii) Approval. The proposed Collateral Property has
been expressly approved by the Lender in writing, in its discretion, as a
Collateral Property. Lender hereby acknowledges that it has heretofore
approved each Collateral Property under the Original Loan Agreement, and each
such Real Property shall constitute a Collateral Property hereunder as of the
Effective Date.
Amended and Restated Revolving Loan Agreement
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ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender as follows:
Section 4.1. Organization, Authority and Tax Status of the
Borrower; Enforceability, Etc.
4.1.1. Organization and Authority; Tax Status. Each
Borrower Party: (a) is duly organized as a corporation, partnership, limited
liability company or other entity, as applicable, (b) is validly existing and
in good standing under the laws of the jurisdiction of its formation and(c)
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing
of property requires such qualification, except where the absence of such
qualification would not have a Material Adverse Effect. Each Borrower Party
has all requisite power and authority to own or hold under lease the property
it purports to own or hold under lease, to carry on its business as now
conducted and as proposed to be conducted, to execute and deliver the Loan
Documents to which it is a party and to perform its obligations hereunder and
thereunder.
4.1.2. Authorization; Binding Effect. Each Borrower Party
has by all necessary action duly authorized (a) the execution and delivery of
the Loan Documents to which each Borrower Party is a party and (b) the
performance of its obligations thereunder. Each Loan Document to which the
Borrower is a party constitutes the legal, valid and binding obligation of
the Borrower, enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to creditors' rights generally.
4.1.3. REIT Status. The Guarantor is organized in
conformity with the requirements for qualification as a real estate
investment trust under the Code and its ownership and method of operation
enables it to meet the requirements for taxation as a real estate investment
trust under the Code.
Section 4.2. Consolidated Subsidiaries.
4.2.1. Ownership. Schedule 4.2 (as amended from time to
time) contains complete and correct lists of each Borrower Party's
Consolidated Subsidiaries, showing, in each case, the correct name thereof,
the type of organization, the jurisdiction of its organization, and the
percentage of Capital Stock outstanding and owned by such Borrower Party
(except for the percentage of Capital Stock of Borrower owned by Guarantor)
and Consolidated Subsidiaries. All of the outstanding shares of Capital
Stock of each Consolidated Subsidiary shown in Schedule 4.2 as being owned by
the a Borrower Party or any Consolidated Subsidiary have been validly issued
and are owned by such Borrower Party or such Consolidated Subsidiary free and
clear of any Lien other than Permitted Encumbrances (except as otherwise
disclosed on Schedule 4.2).
Amended and Restated Revolving Loan Agreement
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4.2.2. Organization and Ownership. Each Consolidated Subsidiary is a
corporation, partnership or other legal entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except where
the failure or absence of any of the foregoing would not have a Material
Adverse Effect. Each Consolidated Subsidiary has all requisite power and
authority to own or hold under lease the property it purports to own or hold
under lease, to carry on its business as now conducted and as proposed to be
conducted, except where the absence or failure of any of the foregoing would
not have a Material Adverse Effect.
Section 4.3. No Conflict. The execution, delivery and
performance by each Borrower Party of each Loan Document to which it is
party, and the consummation of the transactions contemplated thereby, do not
and will not (a) violate any provision of the charter or bylaws of the any
Borrower Party, (b) conflict with, result in a breach of, or constitute (or,
with the giving of notice or lapse of time or both, would constitute) a
default under, or require the approval or consent of any person pursuant to
any Contractual Obligation of any Borrower Party, or violate any provision of
Applicable Law binding on any Borrower Party except in each case where such
conflict, breach, default, lack of approval or consent or violation would not
have a Material Adverse Effect and would not constitute or result in a
Property-Specific Event, or (c) result in the creation or imposition of any
Lien securing any material obligation, encumbering any material asset of any
Borrower Party (excluding the Liens of the Lender on the Collateral
Properties).
Section 4.4. Governmental Approvals. Except for filings and
recordings which are described on Schedule 4.4, which in each case have been
made and are in full force and effect, no Governmental Approval is or will be
required in connection with the execution, delivery and performance of any
Borrower Party of this Agreement or any Loan Document to which it is party or
the transactions contemplated hereby or thereby or to ensure the legality,
validity or enforceability hereof or thereof. Each Borrower Party and each
of its Consolidated Subsidiaries possesses all Governmental Approvals that
are necessary for the ownership, maintenance and operation of the Properties
and conduct of its business as now conducted and proposed to be conducted,
and is not in violation thereof except where the failure to possess such
Governmental Approvals would not have a Material Adverse Effect and would not
constitute or result in a Property-Specific Event.
Section 4.5. Financial Information.
4.5.1. The consolidated balance sheet of the Guarantor and
its Consolidated Subsidiaries for the Fiscal Year ended December 31, 1996,
and the consolidated statements of income, retained earnings and cash flow of
the Guarantor and its Consolidated Subsidiaries for the Fiscal Year then
ended, in each case certified by the Guarantor's independent certified public
accountants, copies of which have been delivered to the Lender, were prepared
in accordance with GAAP consistently applied and fairly present the
consolidated financial position of the Guarantor and its Consolidated
Subsidiaries as of the respective dates thereof and the results of operations
and cash flow of the Guarantor and its Consolidated Subsidiaries for the
respective
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periods then ended. Neither the Guarantor nor any Consolidated Subsidiary
had on such dates any material Contingent Obligations, liabilities for taxes
or long-term leases, unusual forward or long-term commitments or unrealized
losses from any unfavorable commitments which are not reflected in the
foregoing statements or in the notes thereto and which are material to the
business, assets, prospects, results of operation or financial condition of
the Guarantor and its Consolidated Subsidiaries taken as a whole.
4.5.2. The unaudited consolidated balance sheet of the
Guarantor and its Consolidated Subsidiaries as at September 30, 1997 and
related statements of income and cash flow for the period then ended,
certified by the Chief Financial Officer of the Guarantor, a copy of which
has been delivered to the Lender, were prepared in accordance with GAAP
consistently applied (except to the extent noted therein) and fairly present
the consolidated financial position of the Guarantor and its Consolidated
Subsidiaries as of such date and the results of operations and cash flow for
the period covered thereby, subject to normal year-end audit adjustments.
Neither the Guarantor nor any Consolidated Subsidiary had on such date any
material Contingent Obligations, liabilities for taxes or long-term leases,
unusual forward or long-term commitments or unrealized losses from any
unfavorable commitments which are not reflected in the foregoing statements
or in the notes thereto and which are Material.
Section 4.6. No Material Adverse Change. Since September 30,
1996, there has been no Material Adverse Change and there has been no
Property-Specific Event.
Section 4.7. Litigation. Except as disclosed in Schedule 4.7
hereto, there are no actions, suits or proceedings pending or, to the best
knowledge of any Borrower Party, threatened against or affecting any Borrower
Party or any Consolidated Subsidiary or any of its or their respective
properties (a) in which there is a reasonable possibility of an adverse
determination that could have a Material Adverse Effect or would constitute
or result in a Property-Specific Event, or (b) which draws into question the
validity or the enforceability of this Agreement, any other Loan Document or
any transaction contemplated hereby or thereby.
Section 4.8. Agreements; Applicable Law. No Borrower Party nor
any Consolidated Subsidiary is in violation of any Applicable Law, or in
default under any Contractual Obligations to which it is a party or by which
its properties are bound, except where such violation or default could not,
individually or in the aggregate, have a Material Adverse Effect and could
not constitute or result in a Property-Specific Event.
Section 4.9. Governmental Regulation. No Borrower Party nor any
Consolidated Subsidiary is (a) an "investment company" registered or required
to be registered under the Investment Company Act of 1940, as amended, or a
company controlled by such a company, or (b) subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or to any Federal or state, statute or regulation
limiting its ability to incur Debt for money borrowed.
Section 4.10. Margin Regulations. No Borrower Party nor any
Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purposes of purchasing or carrying
Margin Stock. The execution, delivery and performance of
Amended and Restated Revolving Loan Agreement
30
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the Loan Documents by each Borrower Party will not violate the Margin
Regulations. The value of all Margin Stock held by any Borrower Party and
its Subsidiaries constitutes less than 25% of the value, as determined in
accordance with the Margin Regulations, of all assets of the Borrower Parties
and its Subsidiaries.
Section 4.11. Employee Benefit Plans. Each Borrower Party and
each of the ERISA Affiliates is in compliance in all Material respects with
all Applicable Laws including any applicable provisions of ERISA and the Code
and the regulations and published interpretations thereunder with respect to
all Plans and Multiemployer Plans. There have been no Prohibited
Transactions with respect to any Plan which could result in any Material
liability of any Borrower Party or any of the ERISA Affiliates. No Borrower
Party nor any of the ERISA Affiliates has participated in or contributed to
any Pension Plan at any time. No Borrower Party nor any of the ERISA
Affiliates has failed to make any Material payments required to be made under
any agreement relating to a Multiemployer Plan or any law pertaining thereto.
The Borrower Parties and the ERISA Affiliates have not had asserted and do
not expect to have asserted against them any Material penalty, interest or
excise tax under Sections 4971, 4972, 4975, 4976, 4977, 4979, 4980 or 4980B
of the Code or Sections 502(c)(1) or 502(i) of ERISA. Each Plan covering
employees of the Borrower Parties or any of the ERISA Affiliates is able to
pay benefits thereunder when due. There are no Material claims pending or
overtly threatened, involving any Plan, nor is there any reasonable basis to
anticipate any claims involving any such Plans, other than claims for
benefits under such Plans.
Section 4.12. Title to Property; Liens.
4.12.1. Each of the Borrower and its Subsidiaries has good
and marketable title to, or valid and subsisting leasehold interests in, all
of its Real Property and other property reflected in its books and records as
being owned by it, subject to Permitted Encumbrances. On and after the
Effective Date, (i) each Real Property from time to time designated by the
Borrower as an Unencumbered Asset meets the conditions set forth in the
definition of "Unencumbered Asset" and (ii) each Collateral Property meets
the conditions specified in the definition of "Collateral Property".
4.12.2. No Borrower Party nor any Subsidiary is in default
in the performance or observance of any of the covenants or conditions
contained in any of its Contractual Obligations, except where such default or
defaults, if any, would not have a Material Adverse Effect and would not
constitute or result in a Property-Specific Event.
Section 4.13. Licenses, Trademarks, Etc. Each Borrower Party
and each Subsidiary owns or holds valid licenses in all necessary trademarks,
copyrights, patents, patent rights and other similar rights which are
Material to the conduct of their respective businesses as heretofore operated
and as proposed to be conducted. Neither any Borrower Party nor any
Subsidiary has been charged or, to the best knowledge of the Borrower
Parties, threatened to be charged with any infringement of, nor has any of
them infringed on, any unexpired trademark, patent, patent registration,
copyright, copyright registration or other proprietary right of any Person
except
Amended and Restated Revolving Loan Agreement
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where the effect thereof individually or in the aggregate would not have a
Material Adverse Effect. [Conform]
Section 4.14. Environmental Condition. Except as set forth on
Schedule 4.14 hereto:
4.14.1. To the best of each Borrower Party's knowledge, all
Real Property owned or operated by the Borrower or any Subsidiary is free
from contamination from any Hazardous Materials except contamination that
would not have a Material Adverse Effect and would not constitute or result
in a Property-Specific Event. To the best of each Borrower Party's
knowledge, no polychlorinated biphenyls (PCBs) (including any transformers,
capacitors, ballasts, or other equipment which contains dielectric fluid
containing PCBs) or asbestos is constructed within, stored, disposed of or
located on such Real Property, except for matters that would not have a
Material Adverse Effect and that would not constitute or result in a
Property-Specific Event. No Borrower Party nor any Subsidiary has caused or
suffered, nor to the knowledge of any Borrower Party has any other owner or
user of such Real Property caused or suffered, any Environmental Damages that
has had or which could have a Material Adverse Effect or which could
constitute or result in a Property-Specific Event.
4.14.2. Neither any Borrower Party nor any Subsidiary nor,
to the best knowledge of each Borrower Party, any prior owner or occupant of
the Real Property owned or used by any Borrower Party or any Subsidiary, has
received notice of any alleged violation of Environmental Requirements, or
notice of any alleged liability for Environmental Damages in connection with
the Real Property, which could reasonably be expected to have a Material
Adverse Effect. There exists no order, judgment or decree outstanding, nor
any action, suit, proceeding, citation or investigation, pending or, to the
best of each Borrower Party's knowledge, threatened, relating to any alleged
liability arising out of the suspected presence of Hazardous Material, any
alleged violation of Environmental Requirements or any alleged liability for
Environmental Damages in connection with the Real Property or the business or
operations of each Borrower Party and its Subsidiaries that has had or which
could have a Material Adverse Effect or which could constitute or result in a
Property-Specific Event nor, to the best of each Borrower Party's knowledge,
does there exist any basis for such action, suit, proceeding, citation or
investigation being instituted or filed.
Section 4.15. Absence of Certain Restrictions. No Subsidiary or
any Borrower Party is subject to any Contractual Obligation which restricts
or limits its ability to (a) pay dividends or make any distributions on its
Capital Stock, (b) incur or pay Debt owed such Borrower Party, (c) make any
loans or advances to such Borrower Party or (d) transfer any of its property
to such Borrower Party; provided that the foregoing restrictions in
subclauses (b), (c) and (d) shall not apply to any Bankruptcy Remote Entity
to the extent such restrictions are required by any rating agency as a
condition to the rating of the Debt of such Bankruptcy Remote Entity.
Section 4.16. Mortgages. Each of the Mortgages creates the
Liens and/or assignments which it purports to create, and the Mortgages and
financing statements under the UCC in respect of the Mortgages have been duly
filed and recorded in such manner and in such places as are required by
applicable law in order to create, preserve and protect the respective Liens
thereof
Amended and Restated Revolving Loan Agreement
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on the Collateral Properties and the assignment thereunder of any leases and
rents, and to perfect the security interests created thereby in all of the
Collateral Properties as to which a security interest may be perfected by the
filing of a financial statement under the UCC, and all taxes, fees and other
governmental charges due in connection with such recordings and filings have
been paid; the Mortgages constitute valid, binding and enforceable first
priority mortgage Liens on the Collateral Properties constituting real
property in favor of the Lender, subject only to Liens for real estate taxes
and assessment not yet delinquent and other Liens expressly permitted by the
respective Mortgages; the Mortgages create valid, binding and enforceable
first priority security interests in and Liens on the Collateral Properties
in the nature of the fixtures and personalty that can be encumbered by the
Mortgage and, with respect to all Collateral Properties in the nature of
personal property as to which a security interest may be perfected by the
filing of a financing statement under the UCC, a perfected security interest
in all such Collateral Properties, in each case a favor of the Lender,
subject only to Liens expressly permitted by the respective Mortgages; and
each Assignment creates a valid, binding and enforceable first priority
assignment of and Lien on the rents, incomes, agreements and leases referred
to therein in favor of the Lender.
Section 4.17. Delinquent Property Liens. Except for claims
which are being contested in accordance with the relevant Mortgage or which
constitute or will constitute Permitted Encumbrances, or which, individually
or in the aggregate, are not material, there is no delinquent tax, sewer
rent, water charge, assessment or other outstanding charge against any of the
Properties; and there are no mechanics' or similar Liens or claims for
overdue payment for labor or material in a material amount affecting any of
the Properties.
Section 4.18. Improvements. Except as disclosed in the surveys
or title policies delivered to the Lender hereunder prior to the time any
property becomes a Property, all improvements comprising a portion of any
Property lie wholly within the boundary and building restriction lines of
such Property and no improvements on adjoining properties encroach upon any
of the Properties in any respect except as shown on the surveys delivered to
the Lender on or prior to the date hereof.
Section 4.19. Damage; Takings. Except as disclosed in the
property condition reports delivered to the Lender in accordance with Section
3.4(x), each of the Properties is free of material damage and waste and there
is no proceeding pending or, to the Borrower's knowledge, threatened, for a
taking or condemnation of all or any portion of any of such Properties.
Section 4.20. Zoning and Other Laws. The use and operation of
each of the Properties, separate and apart from any other properties,
constitutes a legal use under applicable zoning regulations and complies in
all material respects with all Applicable Laws and all applicable
requirements of insurance underwriters.
Section 4.21. Leases. The Borrower has delivered to the Lender
a correct and complete copy of each Material Lease relating to the Properties
and all amendments thereto. The Borrower has delivered to the Lender current
rent rolls for each of the Properties including, in respect of each Lease,
the name and address of the tenant, the date and term of the Lease, base
Amended and Restated Revolving Loan Agreement
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rent, square footage, expiration provisions, percentage rent provisions
(where applicable), sales figures (where applicable) and such other
information regarding the Leases as the Lender may reasonably require. The
information contained in such rent rolls is correct and complete in all
material respects as of the date set forth thereon. Except as reflected on a
tenant estoppel accepted by the Lender on or prior to the time a property
becomes a Property (or become a Property under the Original Loan Agreement,
as applicable), or as reflected on Schedule 4.21, to the best knowledge of
the Borrower, there is no event, condition or circumstance that with the
giving of notice or the passage of time or both would constitute a material
default or a material event of default under the Leases relating to the
Properties, or would give Borrower or any of the tenants thereunder the right
to terminate the Lease or abate or offset any material amount of rent
thereunder. Except as disclosed in writing by the Borrower to the Lender,
and approved by the Lender, none of the tenants of any of the Properties have
any: (i) option to purchase any Property or portion thereof or (ii) right of
first refusal to purchase any Property or portion thereof.
Section 4.22. Contracts. A true, complete and correct copy of
each material contract or other agreement (including all amendments thereto)
affecting any of the Properties has been provided to the Lender and each
thereof is unmodified and in full force and effect and the Borrower nor, to
the Borrower's knowledge, any other party to any thereof is in default
thereunder (other than any defaults which, if uncured, would not have a
Material Adverse Effect and would not constitute or result in a
Property-Specific Event).
Section 4.23. Permits. There have been issued in respect of
each of the Properties all material permits and governmental approvals
necessary or required for the Borrower to own and operate such Properties in
the manner currently operated, including any required permits relating to
Hazardous Materials, other than any such permit or approval which, if not
obtained, would not have a Material Adverse Effect and would not constitute
or result in a Property-Specific Event. To the best of the each Borrower
Party's knowledge, each such permit is in full force and effect and no
Borrower Party has not received any notice of violation or revocation
thereof. No other permits are required from any governmental entity in order
to operate any of the Properties as it is now operated.
Section 4.24. Certificates of Occupancy. None of the Borrower
Parties has received no notice of actual or threatened cancellation or
suspension of any certificate of occupancy for any portion of any Properties,
and, to the best of each Borrower Party's knowledge, all such certificates of
occupancy are in full force and effect.
Section 4.25. Condition of Properties. Except as set forth in
the property condition reports delivered pursuant to Section 3.4(x) or as set
forth in Schedule 4.25, the buildings, structures and improvements included
on or within each of the Properties are structurally sound and in good repair
in all material respects, and all mechanical, electrical, heating, air
conditioning, drainage, sewer, water and plumbing systems are in all material
respects in proper working order.
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Section 4.26. Management Agreements. Except for the management
agreement pursuant to which the Collateral Property commonly known as Pacific
Outlet Center is managed, and any management agreement which relates to a
Property hereafter acquired by the Borrower, none of the Properties is
subject to or encumbered by any management agreement.
Section 4.27. Disclosure. The information in any document,
certificate or written statement furnished to the Lender by or on behalf of
any Borrower Party with respect to the business, assets, prospects, results
of operation or financial condition of any Borrower Party or any Subsidiary,
including operating statements and rent rolls, for use in connection with the
transactions contemplated by this Agreement has been true and correct in all
material respects. There is no fact known to any Borrower Party (other than
matters of a general economic nature) that has a Material Adverse Effect (or
that constitutes or results in a Property-Specific Event) or could reasonably
be expected to have a Material Adverse Effect (or constitute or result in a
Property-Specific Event) which has not been disclosed herein or in such other
documents, certificates, and statements.
ARTICLE 5.
AFFIRMATIVE COVENANTS OF THE BORROWER
So long as any portion of the Commitments shall be in effect and
until all Obligations are paid in full:
Section 5.1. Financial Statements and Other Reports. The
Borrower will deliver to the Lender:
5.1.1. within 90 days after the end of each Fiscal Year,
the consolidated balance sheet of the Guarantor and its Consolidated
Subsidiaries as of the end of such Fiscal Year and the related consolidated
statements of income, stockholders' equity and cash flow of the Guarantor and
its Consolidated Subsidiaries for such Fiscal Year, setting forth in each
case in comparative form the consolidated or combined figures, as the case
may be, for the previous Fiscal Year, all in reasonable detail and
accompanied by a report thereon of Deloitte & Touche LLP or other independent
certified public accountants of recognized national standing selected by the
Guarantor and reasonably satisfactory to the Lender, which report shall be
unqualified (except for qualifications that the Lender does not consider
Material in its reasonable discretion) and shall state that such consolidated
financial statements fairly present the financial position of the Guarantor
and its Consolidated Subsidiaries as at the date indicated and the results of
their operations and cash flow for the periods indicated in conformity with
GAAP (except as otherwise stated therein) and that the examination by such
accountants in connection with such consolidated financial statements has
been made in accordance with generally accepted auditing standards;
5.1.2. within 25 days after the end of each month, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
as at the end of such month and the related combined statements of income and
cash flow of each Borrower Party and its Consolidated Subsidiaries for such
month and the portion of the Fiscal Year ended at the end of such month,
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setting forth in each case in comparative form the consolidated or combined
figures, as the case may be, for the corresponding periods of the prior
Fiscal Year, all in reasonable detail and in conformity with GAAP (except as
otherwise stated therein), together with a representation by the Guarantor's
chief financial officer, as of the date of such financial statements, that
such financial statements have been prepared in accordance with GAAP
(provided, however, that such financial statements may not include all of the
information and footnotes required by GAAP for complete financial
information) and reflect all adjustments that are, in the opinion of
management, necessary for a fair presentation of the financial information
contained therein;
5.1.3. together with each delivery of financial statements
pursuant to clauses (a) and (b) above, a certificate of the chief financial
officer of the Guarantor, in substantially the form of Exhibit C-4 (a
"Compliance Certificate"), duly completed and setting forth the calculations
required to establish whether the Borrower Parties were in compliance with
Sections 6.2 and 6.3 on the date of such financial statements;
5.1.4. promptly, and in any event no more than 3 days,
after the Borrower becomes aware of the occurrence of any Property-Specific
Breach or any Default or Event of Default, a certificate of a Senior Officer
of the Borrower (or Guarantor) setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect thereto;
5.1.5. contemporaneously with their being filed with the
SEC, copies of all financial statements, reports, notices and proxy
statements sent or made available by the Guarantor to its security holders,
all registration statements (other than the exhibits thereto) and annual,
quarterly, monthly or other reports, if any, filed by the Guarantor with the
SEC (other than reports under Section 16 of the Securities Exchange Act of
1934, as amended) and all press releases by the Guarantor concerning material
developments in the business of the Guarantor, and all communications between
Borrower and its partners (other than the Guarantor);
5.1.6. promptly, and in any event no more than 3 days,
after the Borrower obtains knowledge thereof, notice of all litigation or
proceedings commenced or threatened affecting each Borrower Party or any
Subsidiary in which there is a reasonable possibility of an adverse decision
and (a) which involves alleged liability in excess of $500,000 (in the
aggregate) which is not covered by insurance, (b) in which injunctive or
similar relief is sought which if obtained could have a Material Adverse
Effect or could constitute or result in a Property-Specific Event or (c)
which questions the validity or enforceability of any Loan Document;
5.1.7. for each Unencumbered Asset held in the Unencumbered
Pool and for each Collateral Property:
5.1.7.1. within 90 days after the end of each Fiscal
Year, a property budget with respect to such Unencumbered Asset or
Collateral Property for the next Fiscal Year;
5.1.7.2. within 25 days after the end of each month,
an operating statement for the twelve month period then ended, and a
rent roll and lease status report with respect to such Unencumbered
Asset or Collateral Property, and
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5.1.7.3. promptly following the Lender's request
therefor, a certificate of insurance showing the existence of hazard
insurance on the Unencumbered Asset or Collateral Property, which
insurance shall be in form and substance satisfactory to the Lender;
5.1.8. promptly after the receipt thereof, a copy of any
notice, summons, citation or written communication concerning any actual,
alleged, suspected or threatened Material violation of Environmental
Requirements, or Material liability of any Borrower Party or any Subsidiary
for Environmental Damages in connection with its Real Property or past or
present activities of any Person thereon or Material Environmental Event; and
5.1.9. from time to time such additional information
regarding the financial position or business of each Borrower Party and the
Consolidated Subsidiaries as the Agent may reasonably request.
Section 5.2. Inspection. The Borrower shall, and shall cause
the Guarantor and each Consolidated Subsidiary to, permit such persons as the
Lender may designate, at reasonable times upon reasonable prior notice, and
as often as may be reasonably requested, to (a) visit and inspect any
properties of each Borrower Party and the Consolidated Subsidiaries, provided
that the Lender shall not unreasonably interfere with the businesses of the
tenants of such properties, (b) inspect and copy their books and records, and
(c) discuss with their officers and employees and their independent
accountants, their respective businesses, assets, liabilities, prospects,
results of operation and financial condition.
Section 5.3. Corporate Existence, Etc. The Borrower shall, and
shall cause the Guarantor and each Consolidated Subsidiary to, at all times
preserve and keep in full force and effect its partnership, corporate or
other legal existence (except in the case of a Consolidated Subsidiary where
the failure to do so would not have a Material Adverse Effect), as the case
may be, and any licenses, permits, rights and franchises material to its
business (except in the case of a Consolidated Subsidiary where the failure
to do so would not have a Material Adverse Effect), provided, however, that
the partnership, corporate or other legal existence of any Consolidated
Subsidiary may be terminated if, in the good faith judgment of the Borrower,
such termination is in the best interest of the Borrower and is not
disadvantageous in any material respect to the Lender.
Section 5.4. Payment of Taxes and Charges. The Borrower shall,
and shall cause the Guarantor and each Consolidated Subsidiary to, file all
tax returns required to be filed in any jurisdiction and, if applicable, pay
and discharge all taxes imposed upon it or any of its properties or in
respect of any of its franchises, business, income or property before any
material penalty shall be incurred with respect to such taxes, provided,
however, that, unless and until foreclosure, distraint, levy, sale or similar
proceedings shall have commenced, the Borrower, the Guarantor and the
Consolidated Subsidiaries need not pay or discharge any such tax so long as
the validity or amount thereof is contested in good faith and by appropriate
proceedings and so long as any reserves or other appropriate provisions as
may be required by GAAP, or as reasonably may be required by the Lender,
shall have been made therefor.
Amended and Restated Revolving Loan Agreement
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Section 5.5. Maintenance of Properties. The Borrower shall, and
shall cause the Guarantor and each Consolidated Subsidiary to, maintain or
cause to be maintained in good repair, working order and condition (ordinary
wear and tear excepted), all Real Properties and all other Material
properties useful or necessary to its business and all Properties (except in
each case where the failure to do so would not have a Material Adverse Effect
and would not constitute or result in a Property-Specific Event), and from
time to time the Borrower will make or cause to be made all appropriate
repairs, renewals and replacements thereto (except where the failure to do so
would not have a Material Adverse Effect and would not constitute or result
in a Property-Specific Event).
Section 5.6. Maintenance of Insurance. The Borrower shall, and
shall cause the Guarantor and each Consolidated Subsidiary to, maintain with
financially sound and reputable insurance companies, insurance in at least
such amounts, of such character and against at least such risks as are
usually insured against in the same general area by companies of established
repute engaged in the same or a similar business, including, without
limitation, with respect to each Unencumbered Asset and each Collateral
Property, business interruption insurance covering a period of 12 months
business interruption.
Section 5.7. Conduct of Business. None of the Borrower Parties
nor any Consolidated Subsidiary shall engage in any business other than the
business of owning and operating, leasing, developing, selling or brokering
Real Properties or any businesses incident thereto. The Borrower shall, and
shall cause the Guarantor and each Consolidated Subsidiary to, conduct its
business in compliance with Applicable Law and all material Contractual
Obligations (except where the failure to do so would not have a Material
Adverse Effect).
Section 5.8. NYSE Listing; REIT Status. The Borrower will cause
Guarantor to maintain the listing of Guarantor's Capital Stock on the New
York Stock Exchange and continue to qualify as a real estate investment trust
under the Code.
Section 5.9. Remedial Action Regarding Hazardous Materials. The
Borrower shall promptly take, and shall cause the Guarantor and their
respective Subsidiaries promptly to take, any and all necessary remedial
action in connection with the presence, storage, use, disposal,
transportation or release of any Hazardous Materials on, under or about any
Real Property in order to comply with all applicable Environmental
Requirements. In the event that the Borrower, the Guarantor or any of their
respective Subsidiaries undertakes any remedial action with respect to any
Hazardous Materials on, under or about any Real Properties, the Borrower, the
Guarantor and their respective Subsidiary shall conduct and complete such
remedial action to the extent required by any applicable Environmental
Requirements and in accordance with the policies, orders and directives of
all Governmental Authorities.
Section 5.10. Offering Documents.
(a) If requested by the Lender, in connection with any
sale, assignment or transfer of the Commitments and the Advances permitted
under Section 8.5.2 , the Notes and other Loan Documents by the Lender, the
Borrower shall assist the Lender in the preparation of a private placement
memorandum or similar document describing the Notes, each Property, any
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other Collateral for the Loan and any other information regarding the
Borrower or the Guarantor as may be reasonably necessary in connection with
such sale, assignment or transfer.
(b) At the request of the Lender, the Borrower shall
execute and deliver to the Lender an instrument (in form and substance
reasonably satisfactory to the Lender) indemnifying and holding the Lender,
its Affiliates and their respective directors, officers, shareholders,
employees and agents, and each of them, harmless from and against any and all
costs, expenses and damages incurred by any indemnified party as a result of
any untrue statement of a material fact contained in any offering document
based upon information provided in writing by the Borrower or any Affiliate
thereof, which describes the Borrower, an Affiliate thereof, or any Property,
or as a result of any untrue statement of a material fact in any of the
financial statements of the Borrower or any Affiliate thereof incorporated in
such document, or the failure to include in such financial statements or
document any material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading,
provided that the Borrower or any Affiliate thereof shall have provided the
information and approved the information for use in such document.
Section 5.11. Release and Substitution of Real Properties in the
Collateral Pool.
(a) If the Borrower at any time desires to withdraw or
substitute any Collateral Property from the Collateral Pool, it shall (i) so
notify the Lender in writing, and (ii) deliver to the Lender a certificate of
the Borrower's chief financial officer setting forth the calculations
establishing that, after giving effect to such withdrawal (and any concurrent
addition of properties to the Collateral Pool pursuant to Section 3.4), the
then Available Amount is greater than or equal to the then outstanding
principal amount of all Secured Advances. Effective upon the satisfaction of
each and all of the conditions set forth herein (including, without
limitation, (i) the accuracy of such certificate and (ii) in connection with
any substitution of properties in the Collateral Pool that is required in
order for such certificate to be accurate, upon satisfaction of the
conditions precedent to the addition of any proposed new Collateral Property
to the Collateral Pool pursuant to Section 3.4), such Collateral Property
shall no longer be deemed a Collateral Property and the Lender shall, at the
cost and expense of the Borrower, execute and deliver such documents and
instruments as the Borrower reasonably may request to effect the release of
such Collateral Property from the lien of the applicable Mortgage. The
following shall be conditions precedent to the Lender's obligation to release
the lien of any Mortgage pursuant hereto:
(i) at the time of such release, no Default or Event
of Default shall then exist or would occur or exist as a result
of such release;
(ii) after giving effect to such release the Debt
Service Coverage Ratio would be not less than 1.60;
(iii) at the time of such release, the Lender shall
have received, at the Borrower's sole cost and expense, CLTA 111
endorsements to the title policies insuring the liens of the
Mortgages then remaining unreleased, ensuring without exception
the continued priority of such Mortgages after such release; and
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(iv) at the time of such release, the Lender shall have
received such other documents, instruments, endorsements or
assurances as it may reasonably request, all at the sole cost and
expense of the Borrower.
In no event shall the Borrower be entitled to any release of the lien of any
Mortgage on less than the entirety of a Collateral Property without Lender's
prior written consent, which consent may be granted, conditioned or withheld in
Lender's sole and absolute discretion.
(b) The Lender hereby agrees that within five (5) Business
Days after the Lender receives the information described in Section 3.4(v)
hereof, the Lender shall give the Borrower a preliminary indication of the
Lender's intent to accept or reject a proposed addition to, or substitution
in, the Collateral Pool. The Lender hereby further agrees that after it has
indicated its preliminary intent to accept a Retail Property into the
Collateral Pool, the Lender shall use reasonably diligent efforts (as long as
no Default or Event of Default has occurred and is continuing) to complete
its diligence with respect to such Retail Property and to review and
acknowledge the Borrower's satisfaction of the conditions precedent set forth
in this Agreement to the inclusion of such Retail Property into the
Collateral Pool (or to specify such conditions precedent as the Borrower may
have failed to satisfy), in each case within thirty (30) days after the
Lender has indicated its intent to accept such Retail Property into the
Collateral Pool.
Section 5.12. Collateral Properties Located Outside California.
In the event that the Borrower proposes to include a Real Property in the
Collateral Pool which Real Property is located outside the State of
California, and the Lender approves the inclusion of such Real Property in
the Collateral Pool pursuant hereto, then the Borrower shall execute such
amendments, modifications and supplements to the Loan Documents and the
Secured Revolving Note as the Lender may reasonably require (including
without limitation a division of the Secured Revolving Note into multiple
notes, if requested by the Lender, and modifications to the Mortgages to
secure one or more of such notes) to enable the Lender to enforce its rights
in multiple jurisdictions in such order, and in such manner, as the Lender
may desire.
Section 5.13. Removal or Substitution of Unencumbered Assets in
Unencumbered Pool.
(a) If any Unencumbered Asset (including any of the Real
Properties listed on Schedule 1.1B) (w) no longer satisfies the conditions of
clause (i) of the definition of the term "Unencumbered Asset", or (x) is
subject to a Material Environmental Event, or (y) suffers or is subject to a
Property Specific Event, or (z) is subject to a Property-Specific Breach, the
Lender shall have the right in its discretion, at any time and from time to
time, to notify the Borrower that, effective upon the giving of such notice,
and for so long as such condition persists, such Real Property shall no
longer be considered an Unencumbered Asset for purposes of calculating the
Unencumbered Asset Value of Unencumbered Assets in the Unencumbered Pool, or
aggregate Property NOI of such Unencumbered Assets, for purposes of Section
6.3.
(b) If the Lender has delivered a notice with respect to a
Real Property pursuant to Section 5.13(a) hereof, then at such time as such
Real Property is no longer subject to any condition described in Section
5.13(a)(w)-(z), the Borrower may give the Lender written
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notice thereof and if the Borrower gives such written notice (together with
reasonably detailed evidence of the cure of such condition), such Real
Property shall, effective with the delivery by the Borrower of the next
Compliance Certificate, again be considered an Unencumbered Asset, including
without limitation for purposes of calculating the Unencumbered Asset Value
of Unencumbered Assets in the Unencumbered Pool, and aggregate Property NOI
of such Unencumbered Assets for purposes of Section 6.3, until such time as
Section 5.13(a) hereof again applies thereto.
(c) If the Borrower desires to designate a Real Property as
an Unencumbered Asset to be added to the Unencumbered Pool from time to time
(other than those listed on Schedule 1.1B), it will so notify the Lender in
writing, which notice will include (a) a physical description of the property
to be added to the Unencumbered Pool, including its age and location, (b) a
recent title report, (c) information regarding the occupancy of the property
(including without limitation a rent roll), (d) operating statements for the
most recent Fiscal Quarter and the two most recent Fiscal Years (to the
extent available to the Borrower) and (e) an operating budget for the current
Fiscal Year. The Lender shall be deemed to have given approval of any
property to be eligible for inclusion in the Unencumbered Pool unless the
Borrower receives notice from the Lender rejecting the designation of such
property as an Unencumbered Asset in the exercise of its reasonable
discretion or requesting additional information regarding such property
within ten (10) Business Days after the Lender's receipt of written notice of
such designation from the Borrower (in which case such property only shall be
part of the Unencumbered Pool upon the Lender's written approval, not to be
unreasonably withheld or delayed).
(d) If the Borrower at any time intends to withdraw any
Real Property from the Unencumbered Pool, it shall (i) so notify the Lender
in writing, and (ii) deliver to the Lender a certificate of its chief
financial officer setting forth the calculations establishing that the
Borrower will be in compliance with Section 6.3 after giving effect to such
withdrawal (and any concurrent addition of properties to the Unencumbered
Pool pursuant to Section 5.13(c)), which calculations shall be in
substantially the form of the calculations in Exhibit C-4. Effective
automatically upon delivery of such notice and certificate by the Borrower,
such property shall no longer constitute an Unencumbered Asset.
Section 5.14. Certain Events With Respect to Collateral
Properties.
(a) If any Collateral Property is subject to or suffers (x)
a Material Environmental Event or (y) a Property-Specific Event or (z) a
Property-Specific Breach, the Lender shall have the right in its discretion,
at any time and from time to time, to notify the Borrower that, effective
upon the giving of such notice, and for so long as such event or condition
persists, such Retail Property no longer shall be considered a Collateral
Property for purposes of calculating the Available Amount.
(b) If the Lender has delivered a notice with respect to a
Retail Property pursuant to Section 5.14(a) hereof, then at such time as such
Collateral Property is no longer subject to any condition described in
Section 5.14(a)(x)(y) or (z), the Borrower may give the
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Lender written notice thereof (together with reasonably detailed evidence of
the cure of such condition) and such Retail Property shall, effective with
the delivery by the Borrower of the next Compliance Certificate, again be
considered a Collateral Property for purposes of calculating the Available
Amount, until such time as Section 5.14(a) again applies thereto.
Section 5.15. Estoppels, SNDAS. From time to time, upon receipt
of the Lender's reasonable request therefor, the Borrower shall use
reasonable, diligent efforts to obtain an estoppel statement and a
subordination, nondisturbance agreement, each in form and substance
reasonably acceptable to the Lender, from each tenant under a Material Lease
in a Property which tenant has not previously delivered such documents to
Lender.
Section 5.16. Title Insurance. From time to time, upon receipt
of the Lender's request therefor, the Borrower shall obtain such additional
title insurance coverage and endorsements as the Lender may request to ensure
that the total liability under the title policies insuring the Mortgages is
not less than the Available Amount.
ARTICLE 6.
NEGATIVE COVENANTS OF THE BORROWER PARTIES
So long as any portion of the Commitments shall be in effect and
until all Obligations are paid in full:
Section 6.1. Investments; Asset Mix. Each Borrower Party shall
not at any time after the Effective Date make, and shall not permit any
Consolidated Subsidiary to make, any Investment in any Person, or purchase or
lease any other asset or property, except (i) Capital Stock of the
Consolidated Subsidiaries listed in Schedule 4.2 on the Effective Date, or in
any Capital Stock of any Person formed or acquired after the Effective Date
and added to Schedule 4.2 in accordance with Section 8.2.2 that has
substantially no assets other than direct or indirect ownership or ground
leasehold interests in Retail Properties, (ii) in the case of the Borrower,
Retail Properties, (iii) Permitted Investments, (iv) in the case of the
Guarantor, partnership interests in the Borrower, and (v) any other
Investments, assets or property to the extent that the aggregate book value
of such Investments, assets or property does not exceed ten percent (10%) of
the consolidated total assets (plus accumulated depreciation) of the Borrower
Parties in each case as shown on its most recent financial statement
delivered or required to be delivered to the Lender pursuant to Section 5.1
hereof.
Section 6.2. Financial Covenants.
6.2.1. Maximum Consolidated Total Debt to Total
Capitalization of the Borrower. The ratio of Consolidated Total Debt to
Total Capitalization of the Borrower Parties shall not be greater than 75.00%
at any time.
6.2.2. Debt Service Coverage Ratio. On the last day of
each month, the Debt Service Coverage Ratio shall not be less than 1.50.
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Section 6.3. Minimum Unencumbered Pool; Property NOI of Unencumbered
Assets. The aggregate Unencumbered Asset Value of all Unencumbered Assets in
the Unencumbered Pool shall not, at any time, be less than $50,000,000; and,
on the last day of each month, aggregate Property NOI of the Unencumbered
Assets in the Unencumbered Pool for the twelve-month period then ended shall
be not less than $5,250,000.
Section 6.4. Restriction on Fundamental Changes. Guarantor, Borrower
and each of their respective Subsidiaries shall not enter into any merger,
consolidation or reorganization or any sale of all or a substantial portion
of the consolidated total assets of Guarantor, Borrower and their respective
Subsidiaries, or liquidate, wind up or dissolve, except that, as long as no
Default or Event of Default shall exist after giving effect to such merger or
consolidation, any Subsidiary may be merged or consolidated with or into the
Borrower, Guarantor or a Consolidated Subsidiary; PROVIDED, HOWEVER, that the
Guarantor may reincorporate in any State of the United States, by merger with
and into a wholly-owned Subsidiary formed solely for the purpose of
reincorporation which, prior to such merger, conducts no business and has no
assets or liabilities; PROVIDED, FURTHER, that in connection with any such
reincorporation, Guarantor or its successor shall deliver or cause to be
delivered to the Lender such documents and instruments as the Lender may
reasonably request in form and substance acceptable to the Lender in its
reasonable judgment, including without limitation a reaffirmation or
re-execution of the Loan Documents, certified copies of all organizational
documents, agreements and plans of merger, and certificates issued by
Governmental Authorities, evidence that the material agreements of Guarantor
do not require consent to such transaction or that such consent has been
obtained, and legal opinions regarding the authorization, execution and
delivery of any new documents and the continued enforceability of the Loan
Documents against the survivor of any such merger.
Section 6.5. Transactions with Affiliates. Neither the Borrower, the
Guarantor nor any Subsidiary shall, directly or indirectly, enter into any
transaction (including the purchase, sale, lease, or exchange of any property
or the rendering of any service) with any Affiliate of such Person unless (a)
such transaction is not otherwise prohibited by this Agreement, (b) such
transaction is in the ordinary course of business and (c) such transaction is
on fair and reasonable terms no less favorable to the Borrower or such
Subsidiary, as the case may be, than those terms which might be obtained at
the time in a comparable arm's length transaction with a Person who is not an
Affiliate or, if such transaction is not one which by its nature could be
obtained from such other Person, is on fair and reasonable terms and was
negotiated in good faith, PROVIDED that this Section 6.5 shall not restrict
(a) dividends, distributions and other payments and transfers on account of
any shares of Capital Stock of any Subsidiary, and (b) payments pursuant to
the terms of any Contractual Obligations in effect on the date hereof,
PROVIDED that such dividends, distributions or other payments are not
otherwise prohibited by the terms of this Agreement or would result in a
Default or an Event of Default.
Section 6.6. Restricted Payments. Each Borrower Party shall not, and
shall not permit any Subsidiary to, directly or indirectly, declare, pay or
make, or agree to declare, pay or make, any Restricted Payment, except:
Amended and Restated Revolving Loan Agreement
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6.6.1. dividends, distributions or payments by any Subsidiary to
the Borrower or to a Wholly-Owned Subsidiary that is not a Bankruptcy Remote
Entity;
6.6.2 dividends, distributions or payments by the Borrower to
Guarantor; and
6.6.2. if no Default or Event of Default shall then exist or
result from such Restricted Payment, the Guarantor may pay or make Restricted
Payments so long as the aggregate amount of all Restricted Payments pursuant
to this Section 6.6.2 paid during the Fiscal Quarter in which such Restricted
Payment is proposed to be made and the three Fiscal Quarters immediately
preceding such Fiscal Quarter (treated as a single accounting period),
together with the Restricted Payment proposed to be made, does not exceed 95%
of the aggregate amount of Funds From Operations for the period of four
Fiscal Quarters immediately preceding the Fiscal Quarter in which such
Restricted Payment is proposed to be made, or such greater amount as is
required to maintain the qualification of the Guarantor as a REIT under the
Code.
Section 6.7. ERISA. The Borrower shall not, and shall not permit any
current ERISA Affiliate to:
6.7.1. engage in any Prohibited Transaction or engage in any
conduct or commit any act or suffer to exist any condition with respect to
any Plan that could give rise to any Material excise tax, penalty, interest
or liability under Sections 4971, 4972, 4975, 4976, 4977, 4979, 4980 or 4980B
of the Code or Sections 502(c) or 502(i) of ERISA;
6.7.2. adopt or contribute to any Plan that is Pension Plan;
6.7.3. create or suffer to exist any liability with respect to
Plans that are welfare plans within the meaning of Section 3(1) of ERISA if,
after immediately giving effect to such liability, the aggregate annualized
cost with respect to such Plans for post retirement benefits for any fiscal
year would exceed $500,000.
ARTICLE 7.
EVENTS OF DEFAULT
Section 7.1. Events of Default. Subject to Section 7.2, the occurrence
of any one or more of the following events, acts or occurrences shall
constitute an event of default (an "Event of Default"):
7.1.1. Failure to Make Payments. The Borrower (i) shall fail to
pay when due any principal (whether at stated maturity, upon acceleration,
upon required prepayment or otherwise) of any Advance or (ii) shall fail to
pay interest on any Advance or any other amount payable under the Loan
Documents; or
7.1.2. Default in Other Debt. Any Borrower Parties or any of
their respective Consolidated Subsidiary shall default in the payment
(whether at stated maturity, upon acceleration, upon required prepayment or
otherwise), beyond any period of grace provided
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therefor, of any principal of or interest on any Debt with a principal amount
of in excess of $1,000,000 if (a) as a result of such default, the holder or
holders of such Debt (or a Person on behalf of such holder or holders) shall
cause such Debt to become or be declared due and payable prior to its stated
maturity, or (b) such payment constitutes the final payment of principal due
upon the stated maturity of such Debt; PROVIDED, HOWEVER, that it shall not
be an Event of Default hereunder if, on one occasion while this Agreement is
in effect, the Borrower shall default, beyond any applicable grace period, in
the payment of a single tranche of non-recourse indebtedness of the Borrower
(other than the Obligations) secured by a Real Property in a principal amount
not to exceed Five Million Dollars ($5,000,000.00); or
7.1.3. Breach of Certain Covenants. The Borrower shall fail to
perform, comply with or observe any agreement, covenant or obligation under
Section 2.2, 5.2, 5.3 (as to the Borrower and the Guarantor), 5.4, 5.5, 5.6,
the first sentence of Section 5.7, Section 5.8 or Article 6 (other than
Section 6.7) as and when required, or the Borrower shall fail to perform,
comply with or observe any agreement, covenant or obligation under Section
5.1 hereof within ten (10) days after such performance, compliance or
observance is first required; or
7.1.4. Breach of Warranty. (a) Any representation or warranty or
certification made or furnished by the Borrower in Sections 4.1, 4.3(a), 4.5,
4.6, 4.7, 4.9, 4.10 or 4.27 of this Agreement shall prove to have been false
or incorrect in any material respect when made (or deemed made), or (b) any
other representation or warranty or certification made or furnished by the
Borrower in this Agreement or the other Loan Documents or any agreement,
instrument or document contemplated hereby or thereby shall prove to have
been false or incorrect in any material respect when made (or deemed made),
and such falsity or incorrectness shall not have been cured within thirty
(30) days after the date on which the Borrower has knowledge of such falsity
or incorrectness, or if the Borrower is diligently pursuing such cure in such
thirty (30) day period and, in the Lender's judgment such falsity or
incorrectness can be cured with reasonable diligence in an additional sixty
(60) days, then such thirty (30) day limited cure period shall be extended an
additional sixty (60) days for a total of ninety (90) days; or
7.1.5. Other Defaults Under Agreement and Other Loan Documents.
The Borrower or Guarantor shall fail to perform, comply with or observe any
agreement, covenant or obligation to be performed, observed or complied with
by it under this Agreement (other than those provisions referred to in
Section 7.1.1, 7.1.2, 7.1.3 or 7.1.4 above) or under the other Loan Documents
and such failure shall not have been remedied within 30 days after written
notice thereof from the Lender or, if such default can be remedied but cannot
be remedied within such 30-day period, and so long as the Borrower is
diligently attempting to remedy such failure, such failure shall not have
been remedied within 90 days after such notice; or
7.1.6. Involuntary Bankruptcy; Appointment of Receiver, Etc.
There shall be commenced against Borrower, Guarantor or any Consolidated
Subsidiary an involuntary case seeking the liquidation or reorganization of
the Borrower, Guarantor or such Consolidated Subsidiary under Chapter 7 or
Chapter 11, respectively, of the Bankruptcy Code or any similar proceeding
under any other Applicable Law or an involuntary case or proceeding seeking
the appointment of a receiver, liquidator, sequestrator, custodian, trustee
or other officer having
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similar powers of the Borrower, Guarantor or Consolidated Subsidiary or to
take possession of all or a substantial portion of its property or to operate
all or a substantial portion of its business, and any of the following events
occur: (i) the Borrower, Guarantor or Consolidated Subsidiary consents to the
institution of the involuntary case or proceeding; (ii) the petition
commencing the involuntary case or proceeding is not timely controverted;
(iii) the petition commencing the involuntary case or proceeding remains
undismissed and unstayed for a period of 90 days (PROVIDED, HOWEVER, that,
during the pendency of such period, the Lender shall be relieved of the
Commitments); or (iv) an order for relief shall have been issued or entered
therein; or
7.1.7. Voluntary Bankruptcy; Appointment of Receiver, Etc. The
Borrower, Guarantor or any Subsidiary shall institute a voluntary case
seeking liquidation or reorganization under Chapter 7 or Chapter 11,
respectively, of the Bankruptcy Code or any similar proceeding under any
other Applicable Law, or shall consent thereto; or shall consent to the
conversion of an involuntary case to a voluntary case; or shall file a
petition, answer a complaint or otherwise institute any proceeding seeking,
or shall consent or acquiesce to the appointment of, a receiver, liquidator,
sequestrator, custodian, trustee or other officer with similar powers of it
or to take possession of all or a substantial portion of its property or to
operate all or a substantial portion of its business; or shall make a general
assignment for the benefit of creditors; or shall generally not pay its debts
as they become due; or the Board of Directors (or respective governing body)
of the Borrower, Guarantor or a Subsidiary (or any committee thereof) adopts
any resolution or otherwise authorizes action to approve any of the
foregoing; or
7.1.8. Judgments and Attachments. The Borrower, Guarantor or any
Consolidated Subsidiary shall suffer any money judgments, writs or warrants
of attachment or similar processes which individually or in the aggregate
involve an amount or value in excess of $1,000,000 and such judgments, writs,
warrants or other orders shall continue unsatisfied and unstayed for a period
of 30 days unless the amount of such judgments, writs, warrants or
attachments are fully covered by insurance (other than deductibles
substantially the same as those in effect on the Effective Date and provided
that any deductible in excess of $100,000 is supported by a bond or letter of
credit in at least the amount by which such deductible exceeds $100,000) and
the insurer has in writing accepted liability therefor; or a judgment
creditor shall obtain possession of any material portion of the assets of the
Borrower, Guarantor or any Consolidated Subsidiary by any means, including,
without limitation, levy, distraint, replevin or self-help; or
7.1.9. Change of Tax Status. Guarantor shall either determine or
receive written notice from the relevant taxing authority that the Borrower
does not conform or no longer conforms to the requirements for qualification
as a real estate investment trust under the Code; or
7.1.10. Material Adverse Change. No Material Adverse Change shall
have occurred after September 30, 1996 (determined as if the Borrower owned
all real properties and Investments of the Guarantor as of such date).
7.1.11. Impairment of Guaranty. Any guaranty executed by
Guarantor, including the Guaranty, shall be revoked, terminated or disavowed
in any manner.
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Section 7.2. Property Specific Matters. Notwithstanding anything
herein or in any of the other Loan Documents to the contrary, a
Property-Specific Breach or a Property-Specific Event (either of which does
not have a Material Adverse Effect) shall not constitute a Default or an
Event of Default so long as (x) if the Affected Property otherwise is an
Unencumbered Asset and the Lender gives notice to the Borrower pursuant to
Section 5.13(a), the Borrower is not in breach of Section 6.3, and (y) if the
Affected Property otherwise is a Collateral Property and the Lender gives
notice to the Borrower pursuant to Section 5.14(a), the outstanding principal
amount of Secured Advances does not exceed the Available Amount (determined
without reference to such Affected Property) unless the Borrower would be
permitted under the terms and conditions of Section 2.7.2 hereof to borrow
Unsecured Advances in an amount at least equal to the Secured Overdraw to
repay such Secured Overdraw when required by Section 2.7.2 hereof.
Section 7.3. Remedies.
7.3.1. If an Event of Default occurs under Section 7.1.6 or 7.1.7,
then the Commitments shall automatically and immediately terminate, and the
obligation of the Lender to make any Advances hereunder shall cease, and the
unpaid principal amount of and any accrued interest on all Advances shall
automatically become immediately due and payable, without presentment,
demand, protest, notice or other requirements of any kind, all of which are
hereby expressly waived by the Borrower.
7.3.2. If an Event of Default occurs and is continuing under
Section 7.1 hereof, other than under Section 7.1.6 or 7.1.7, the Lender may,
by written notice to the Borrower, declare that the Commitments are
terminated, whereupon the obligation of the Lender to make any Advance
hereunder shall cease, and/or declare the unpaid principal amount of all
Advances to be, and the same shall thereupon become, due and payable together
with any and all accrued interest thereon, without presentment, demand,
protest, any additional notice whatsoever or other requirements of any kind,
all of which are hereby expressly waived by the Borrower.
ARTICLE 8.
MISCELLANEOUS
Section 8.1. Expenses; Indemnity. The Borrower shall pay, within 10
days after demand therefor:
8.1.1. any and all reasonable attorneys' fees and disbursements
and out-of-pocket cost and expenses incurred by the Lender in connection with
the development, drafting and negotiation of this Agreement and the other
Loan Documents, the administration hereof and thereof (including any
amendments); and
8.1.2. all costs and expenses (including fees and disbursements of
in-house and other attorneys, appraisers and consultants) incurred by the
Lender in any workout, restructuring or similar arrangements or, after a
Default, in connection with the protection, preservation,
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exercise or enforcement of any of the terms of the Loan Documents or in
connection with any foreclosure, collection or bankruptcy proceedings.
8.1.3. The Borrower shall indemnify, defend and hold harmless the
Lender and the officers, directors, employees, agents, attorneys, affiliates,
successors and assigns of the Lender (collectively, the "INDEMNITEES") from
and against (a) any and all transfer taxes, documentary taxes, assessments or
charges made by any Governmental Authority by reason of the execution and
delivery of the Loan Documents or the making of the Advances, and (b) any and
all liabilities, losses, damages, penalties, judgments, claims, out-of-pocket
costs and expenses of any kind or nature whatsoever (including reasonable
attorneys' fees and disbursements in connection with any actual or threatened
investigative, administrative or judicial proceeding, whether or not such
Indemnitee shall be designated a party thereto) that may be imposed on,
incurred by or asserted against such Indemnitee, in any manner relating to or
arising out of the Loan Documents, the Advances, the use or intended use of
the proceeds of the Advances (the "Indemnified Liabilities"); PROVIDED that
(i) no Indemnitee shall have the right to be indemnified or held harmless
hereunder for its own gross negligence or willful misconduct, as determined
by a final judgment of a court of competent jurisdiction, and (ii)
Indemnified Liabilities shall include amounts attributable to the passive or
active negligence of the Lender.
8.1.4. To the extent that the undertaking to indemnify and hold
harmless set forth in Section 8.1.3 may be unenforceable because it is
violative of any Applicable Law or public policy, the Borrower shall make the
maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities that is permissible under Applicable Law. All
Indemnified Liabilities shall be payable within 10 days after demand therefor.
Section 8.2. Waivers; Modifications in Writing.
8.2.1. No amendment of any provision of this Agreement or any
other Loan Document (including a waiver thereof or consent relating thereto)
shall be effective unless the same shall be in writing and signed by the
Lender.
8.2.2. Notwithstanding anything to the contrary, the Borrower may,
by written notice furnished to the Lender, amend Schedules 1.1B and 4.2 to
the extent the changes to such Schedules are expressly permissible under this
Agreement and, with the prior written consent of the Lender which the Lender
may give or withhold in its discretion, the Borrower may amend Schedules 4.7,
4.14, 4.21 and 4.25.
8.2.3. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No notice to
or demand on the Borrower in any case shall entitle Borrower to any other or
further notice or demand in similar or other circumstances.
Section 8.3. Cumulative Remedies; Failure or Delay. The rights and
remedies provided for under this Agreement are cumulative and are not
exclusive of any rights and remedies that may be available to the Lender
under Applicable Law or otherwise. No failure or delay on the part of the
Lender in the exercise of any power, right or remedy under the Loan Documents
shall impair such power, right or remedy or operate as a waiver thereof, nor
shall any
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single or partial exercise of any such power, right or remedy preclude other
or further exercise thereof or of any other power, right or remedy.
Section 8.4. Notices, Etc. All notices and other communications under
this Agreement shall be in writing and (except for financial statements,
other related informational documents and routine communications, which may
be sent by first-class mail, postage prepaid) shall be personally delivered
or sent by prepaid courier, by overnight mail, by overnight, registered or
certified mail (postage prepaid), or by prepaid telex, telecopy or telegram,
and shall be deemed given when received by the intended recipient thereof.
Unless otherwise specified in a notice sent or delivered in accordance with
this Section 8.4, all notices and other communications shall be given to the
parties hereto at their respective addresses (or to their respective telex or
telecopier numbers) set out below:
If to the Borrower:
Burnham Pacific Operating Partnership, L.P.
610 West Ash Street
Suite 1600
San Diego, California 92101
Attention: Daniel B. Platt
Chief Financial Officer
Telephone: (619) 652-4700
Facsimile: (619) 652-4711
If to the Lender:
Nomura Asset Capital Corporation
633 W. Fifth Street, 68th Floor
Los Angeles, California 90071
Attention: Mr. Wayne Brandt
Telephone: (213) 243-1622
Facsimile: (212) 643-1732
Section 8.5. Successors and Assigns.
8.5.1. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. The Borrower may not assign or transfer any interest hereunder
without the prior written consent of the Lender.
8.5.2. The Borrower agrees that the Lender may elect, at any time,
to sell or assign its rights and obligations hereunder to any assignee or
purchaser approved by the Borrower, which approval shall not be unreasonably
conditioned, withheld or delayed; PROVIDED, HOWEVER, that no such approval
shall be required with respect to such an assignment at any time during which
an Event of Default has occurred and is continuing. Upon any such
assignment, the Lender shall be released from its obligations hereunder with
respect to the obligations so
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assigned. The Borrower further agrees that the Lender may elect, at any
time, to grant participations in its rights and obligations under the Loan
Documents to one or more financial institutions, private investors or other
entities, in the Lender's discretion (each such transferee, a "Participant"),
so long as, after giving effect to any such participation, the Lender
retains, beneficially and of record, a portion of the Commitments in effect
from time to time which is a controlling interest and which is not less than
the beneficial interest in the Commitments held by any such Participant
(unless an Event of Default has occurred and is continuing, in which case the
foregoing limitation shall be inapplicable). The Borrower further agrees
that the Lender may disseminate to any such actual or potential Participant
all documents and information (including, without limitation, all financial
information) which has been or is hereafter provided to or known to the
Lender with respect to: (a) the Unencumbered Assets and the Collateral
Properties and their operation; (b) the Borrower; and/or (c) any lending
relationship other than the Loans which the Lender may have with the
Borrower. In the event of any such sale, assignment or participation, the
Lender and the parties to such transaction shall share in the rights and
obligations of the Lender as set forth in the Loan Documents only as and to
the extent they agree among themselves. In connection with any such sale,
assignment or participation, the Borrower further agrees that the Loan
Documents shall be sufficient evidence of the obligations of Borrower to each
Participant, and upon written request by the Lender, the Borrower shall enter
into such amendments or modifications to the Loan Documents as may be
reasonably required in order to evidence any such sale, assignment or
participation. The indemnity obligations of Borrower under the Loan
Documents shall also apply with respect to any Participant.
Section 8.6. Confidentiality. The Lender will maintain any
confidential information that it may receive from the Borrower pursuant to
this Agreement confidential and shall not disclose such information to third
parties without the prior consent of the Borrower, except for disclosure:
(a) to legal counsel, accountants and other professional advisors to the
Lender; (b) to regulatory officials having jurisdiction over the Lender; (c)
as required by Applicable Law or in connection with any legal proceeding; (d)
to another Person in connection with a potential assignment or participation
as provided in Section 8.5.2 ; and (e) of information that has been
previously disclosed publicly without breach of this provision.
Section 8.7. Choice of Forum.
8.7.1. All actions or proceedings arising in connection with this
Agreement and the other Loan Documents shall be tried and litigated in state
or Federal courts located in Los Angeles, County of Los Angeles, State of
California, unless such actions or proceedings are required to be brought in
another court to obtain subject matter jurisdiction over the matter in
controversy. EACH OF THE BORROWER AND THE LENDER WAIVES ANY RIGHT IT MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS, TO ASSERT THAT IT IS NOT
SUBJECT TO THE JURISDICTION OF SUCH COURTS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS Section.
8.7.2. IN ANY ACTION AGAINST THE BORROWER, SERVICE OF PROCESS MAY
BE MADE UPON THE BORROWER BY REGISTERED OR
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CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS INDICATED IN Section
8.4, WHICH SERVICE SHALL BE DEEMED SUFFICIENT FOR PERSONAL JURISDICTION AND
SHALL BE DEEMED EFFECTIVE 10 DAYS AFTER MAILING.
8.7.3. Nothing contained in this Section 8.7 shall preclude the
Lender from bringing any action or proceeding arising out of or relating to
this Agreement and the other Loan Documents in the courts of any place where
the Borrower or any of its assets may be found or located.
Section 8.8. Changes in Accounting Principles. Except as otherwise
provided herein, if any changes in generally accepted accounting principles
from those used in the preparation of the financial statements referred to in
this Agreement hereafter result from the promulgation of rules, regulations,
pronouncements, or opinions of or required by the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions), or there shall occur
any change in the Borrower's fiscal or tax years and, as a result of any such
changes, there shall result a change in the method of calculating any of the
financial covenants, negative covenants, standards or other terms or
conditions found in this Agreement, then the parties agree to enter into
negotiations in order to amend such provisions so as to equitably reflect
such changes with the desired result that the criteria for evaluating the
Borrower's financial condition shall be the same after such changes as if
such changes had not been made.
Section 8.9. Survival of Agreements, Representations and Warranties.
All agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement, the closing and the extensions of
credit hereunder and shall continue until payment and performance of any and
all Obligations. Any investigation at any time made by or on behalf of the
Lender shall not diminish the right of the Lender to rely thereon.
Section 8.10. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same Agreement.
Section 8.11. Complete Agreement. This Agreement, together with the
Exhibits and Schedules hereto, and the other Loan Documents is intended by
the parties as the final expression of their agreement regarding the subject
matter hereof and as a complete and exclusive statement of the terms and
conditions of such agreement.
Section 8.12. Limitation of Liability.
8.12.1. No claim shall be made by the Borrower against the Lender
or the Affiliates, directors, officers, employees, attorneys or agents of the
Lender for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or under any other theory of
liability arising out of or related to the transactions contemplated by this
Agreement or the other Loan Documents, or any act, omission or event
occurring in
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connection therewith; and the Borrower hereby waives, releases and agrees not
to sue upon any claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
Section 8.13. Unsecured Advances; No Lien. The Unsecured Advances
contemplated in this Agreement are unsecured loans and extensions of credit
and no Lien is intended to be created upon the Unencumbered Assets, the
Collateral Pool (or any Collateral Property) or any other property of the
Borrower or any of its Subsidiaries by any provision in this Agreement or the
other Loan Documents. Without limitation of the foregoing, in no event shall
the Borrower's representations, warranties or covenants with respect to the
Unencumbered Pool or any of the Unencumbered Assets be, or be deemed to be,
secured by any property of the Borrower.
Section 8.14. Waiver of Trial by Jury. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION (A) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING ANY
PRESENT OR FUTURE AMENDMENT THEREOF OR (B) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES OR ANY OF THEM WITH
RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER AMENDED) OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND REGARDLESS
OF WHICH PARTY ASSERTS SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION; AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
Section WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO
THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY.
Section 8.15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS (OTHER THAN THE RULES REGARDING
CONFLICTS OF LAWS, EXCEPT THOSE CONTAINED IN CALIFORNIA CIVIL CODE Section
1646.5) OF THE STATE OF CALIFORNIA.
Section 8.16. Headings. The Article and Section headings used in this
Agreement are for convenience of reference only and shall not affect the
construction hereof.
Section 8.17. Severability. If any provision of this Agreement shall
be held to be invalid, illegal or unenforceable under Applicable Law in any
jurisdiction, such provision shall be ineffective only to the extent of such
invalidity, illegality or unenforceability, which shall not
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affect any other provisions hereof or the validity, legality or
enforceability of such provision in any other jurisdiction.
Section 8.18. Independence of Covenants. All covenants under this
Agreement shall each be given independent effect so that if a particular
action or condition is not permitted by any such covenant, the fact that it
would be permitted by another covenant, by an exception thereto, or be
otherwise within the limitations thereof, shall not avoid the occurrence of a
Default or an Event of Default if such action is taken or condition exists.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first set forth above.
Borrower:
BURNHAM PACIFIC OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership
By: Burnham Pacific Properties, Inc.,
a Maryland corporation, its sole General Partner
By: /s/ Michael L. Rubin
----------------------------------------
Name: Michael L. Rubin
----------------------------------
Title: Executive Vice President
----------------------------------
Lender:
NOMURA ASSET CAPITAL CORPORATION
By: /s/ Justin C. Bert
-----------------------------------------------
Name: Justin C. Bert
---------------------------------------------
Title: Vice President
--------------------------------------------
CONSENTED TO FOR THE PURPOSES OF BINDING ITSELF TO THE COVENANTS SET FORTH
IN Section 2.5.5 HEREOF:
Burnham Pacific Properties, Inc.,
a Maryland corporation
By: /s/ Michael L. Rubin
-----------------------------------------------
Name: Michael L. Rubin
---------------------------------------------
Title: Executive Vice President
--------------------------------------------
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SCHEDULE 1.1A
COMMITMENTS
Secured Revolving Credit Facility
LENDER COMMITMENT
---------------------------------------- ------------
Nomura Asset Capital Corporation $135,000,000
------------
Total. . . . . . . . . . . . . . . . . . $135,000,000
Unsecured Revolving Credit Facility
LENDER COMMITMENT
---------------------------------------- ------------
Nomura Asset Capital Corporation $70,000,000
-----------
Total. . . . . . . . . . . . . . . . . . $70,000,000
Amended and Restated Revolving Loan Agreement
Schedules - 1
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SCHEDULE 1.1B
UNENCUMBERED ASSETS
PROPERTY ADDRESS
- ------------------------------------ ---------------------------------------
1. Anacomp 12365 Crosthwaite Circle
Poway, CA 92064
2. IMED 10021 Willow Creek Road
San Diego, CA 92131
3. Plaza Rancho Carmel 12120-12165 Alta Carmel Court
San Diego, CA 92128
4. Ruffin Village 9353 Clairemont Mesa Boulevard
San Diego, CA 92123
5. Marcoa 5960 Cornerstone Court Way
San Diego, CA 92121
Amended and Restated Revolving Loan Agreement
Schedules - 2
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SCHEDULE 3.1.2
CLOSING DOCUMENTS
PRINCIPAL LOAN DOCUMENTS
- ------------------------
The following, in each case duly executed by all parties, as appropriate:
1. Amended and Restated Revolving Loan Agreement
Exhibits
Exhibit A-1 -- Form of Amended and Restated Secured
Revolving Note
Exhibit A-2 -- Form of Amended and Restated Unsecured
Revolving Note
Exhibit B -- Form of Notice of Borrowing
Exhibit C-1 -- Form of Secretary's Certificate
Exhibit C-2 -- Form of Officer's Certificate
Exhibit C-3 -- Form of Certificate of Real
Property Acquisitions
Exhibit C-4 -- Form of Compliance Certificate
Exhibit D -- Form of Opinion of Borrower's Counsel
Exhibit E -- Form of Mortgage
Exhibit F -- Form of Omnibus Assumption and Amendment
Agreement
Schedules
Schedule 1.1A -- Commitments
Schedule 1.1B -- Unencumbered Assets
Schedule 3.1.2 -- Closing Documents
Schedule 4.2 -- Consolidated Subsidiaries
Amended and Restated Revolving Loan Agreement
Schedules - 3
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Schedule 4.4 -- Governmental Approvals
Schedule 4.7 -- Litigation
Schedule 4.14 -- Environmental Condition
Schedule 4.21 -- Lease Default
Schedule 4.25 -- Condition of Properties
2. UCC-1
3. Intentionally Omitted
4. General Continuing Repayment Guaranty
OTHER CLOSING DOCUMENTS
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The following, in each case as of a recent date:
5. Opinion of Borrower's Counsel (Delaware)
6. Opinion of Borrower's Counsel (California)
7. Opinion of Guarantor/General Partner's Counsel
8. Title Policies for each Property
9. Certified Financial Statements for each Property
10. Lender's Closing Instructions
CLOSING CERTIFICATES
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The following, in the case of certificates and the like duly executed by the
parties specified herein or therein:
11. Certificate of Borrower as to (i) incumbency, (ii) partnership
agreement, and (iii) resolutions
12. Certificate of Officers of Borrower as to (i) no defaults, (ii) no
material adverse changes, and (iii) representations and warranties
13. Good Standing Certificate (Borrower - DE)
14. Partnership Agreement (Borrower)
15. Certified Certificate of Formation of Borrower
Amended and Restated Revolving Loan Agreement
Schedules - 4
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16. Certificate of General Partner as to (i) Articles of Incorporation of
General Partner, (ii) bylaws of General Partner, (iii) incumbency and
(iv) resolutions
17. Bylaws of General Partner
18. Resolutions of General Partner (approval of loan, guaranty and other
transactions)
19. Certified Certificate of Incorporation of General Partner
20. Good Standing Certificate of General Partner
21. Intentionally Omitted
22. Intentionally Omitted
Amended and Restated Revolving Loan Agreement
Schedules - 5
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SCHEDULE 4.14
ENVIRONMENTAL CONDITION
Amended and Restated Revolving Loan Agreement
Schedules - 6
<PAGE>
SCHEDULE 4.2
CONSOLIDATED SUBSIDIARIES
Amended and Restated Revolving Loan Agreement
Schedules - 7
<PAGE>
SCHEDULE 4.25
CONDITION OF PROPERTY
NONE
Amended and Restated Revolving Loan Agreement
Schedules - 8
<PAGE>
SCHEDULE 4.4
CONSENTS AND APPROVALS
NONE
Amended and Restated Revolving Loan Agreement
Schedules - 9
<PAGE>
SCHEDULE 4.7
LITIGATION
NONE
Amended and Restated Revolving Loan Agreement
Schedules - 10
<PAGE>
Company Press Release
SOURCE: Burnham Pacific Properties, Inc.
Burnham Pacific Closes on Golden State Properties Acquisition and Related
Investments by Blackacre Capital and Westbrook Partners
SAN DIEGO, Jan. 5 /PRNewswire/ -- Burnham Pacific Properties, Inc. (NYSE: BPP
- - news) announced today that it has completed its acquisition of the 2.6
million square-foot California retail portfolio of Golden State Properties,
making it the largest publicly traded West Coast retail REIT. In addition,
the Company announced that simultaneous with the closing of the acquisition,
affiliates of Blackacre Capital Group, LP (previously the majority owner of
the Golden State Properties portfolio) and Westbrook Partners, L.L.C.
invested $120 million in newly issued convertible preferred securities of
Burnham Pacific.
The Transaction
Burnham Pacific acquired the Golden State portfolio for an initial price
of $302.4 million. Blackacre, Highridge, and Westbrook invested in $120
million of convertible preferred securities carrying a dividend yield of 8%,
and ultimately exchangeable for Burnham Pacific common shares at a price of
$15-3/8 per share. Burnham Pacific's total equity base was increased some 35%
by the addition of the $120 million in convertible preferred securities.
Nomura Asset Capital Corporation funded $150 million in first mortgage
debt collateralized by the Golden State assets at a rate of 6.76%. The
balance of the initial price was funded from Burnham Pacific's line of credit
which is also provided by Nomura.
The partners of Golden State have the right to receive up to an
additional $41.6 million for value created through the lease-up of certain
specified unleased portions of the portfolio. The additional consideration
will be paid out over an eighteen-month period. Any leasing activity for the
unleased and unbuilt space must adhere to certain standards as to use,
creditworthiness and lease terms, with Golden State responsible for all
leasing costs and Burnham Pacific retaining certain approval rights.
Donaldson, Lufkin & Jenrette Securities Corporation acted as Financial
Advisor in connection with the transaction.
The Acquired Golden State Properties
The acquired Golden State portfolio consists of 20 grocery-anchored
community centers, all of which are located in California. The properties
contain about 2.6 million
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square feet and are approximately 92.3% leased. Supermarkets, including
Ralph's, Raley's and Food 4 less, account for 27.4% of the total base rents
for the properties.
In commenting on the portfolio, David Martin, President and CEO of
Burnham Pacific, stated, "In management's opinion, anchor tenant sales are
strong, the properties are located in desirable "in-fill" locations, and the
acquisition price is well below replacement cost. Upside potential value
exists in the opportunity to increase below market rents as leases expire,
and in several value enhancement opportunities."
The acquired properties located in Northern California include Creekside
Shopping Center in Vacaville; Sunset Center in Suisun City; Discovery Plaza,
Summer Hills Shopping Center and Arcade Square in Sacramento; Prospector's
Plaza in Placerville; Santa Rosa Value Center in Santa Rosa; 580 Marketplace
in Castro Valley; Gateway Plaza in Fremont; Southampton Shopping Center in
Benicia; Silver Creek Plaza in San Jose; and Shasta Crossroads in Redding.
Properties located in Southern California include Centerwood Plaza in
Bellflower; Ralph's Center in Redondo Beach; Bell Gardens Marketplace in Bell
Gardens; Westminster Center in Westminster; Buena Vista Shopping Center in
Duarte; San Marcos Plaza in San Marcos; Hallmark Town Center in Madera; and
Menifee Town Center in Menifee.
Burnham Pacific Post-Acquisition
Following the completion of the Golden State acquisition, Burnham
Pacific owns interests in 61 properties totaling some 8.2 million square feet
with a book value exceeding $1.1 billion. Of the total GLA, over 93% is in
the form of retail properties.
"In addition to making Burnham Pacific the largest retail REIT in
California," stated David Martin, "we fully expect this transaction to be
accretive to our funds from operations per share on a primary and fully
diluted basis and to provide many upside opportunities to create additional
value."
The Parties
Burnham Pacific Properties is a fully integrated real estate operating
company which acquires, rehabilitates, develops and manages retail properties
on the West Coast. Burnham Pacific has offices in San Diego, Los Angeles, San
Francisco and Portland, Oregon. Additional information on Burnham Pacific may
be obtained on the company's website at http://www. burnhampacific.com or by
calling 800-462-5181.
Golden State is a private investment partnership between Los
Angeles-based Highridge Partners, Gene Rosenfeld and John Long, and private
real estate investment fund Blackacre Capital Group, L.P. of New York.
Westbrook Partners, L.L.C. is a private, fully-integrated real estate
investment management company with approximately $3 billion in real estate
investments under management.
This news release contains forward looking statements regarding future
events or financial performance of the Company. These statements are only
predictions and actual events or results may differ materially, particularly
if the current and
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adverse conditions affecting the California retail economy generally or the
Company's tenants specifically, or otherwise. Investors should refer to the
documents the Company files from time to time with the Securities and
Exchange Commission, specifically the cautionary statement identifying
certain factors that could affect future results included in the MD&A section
of our most recent report on Form 10K.
SOURCE: Burnham Pacific Properties, Inc.
Monday January 5, 7:30 am Eastern Time
Company Press Release
SOURCE: Burnham Pacific Properties, Inc.
Burnham Pacific Announces Sale of Pacific West Outlet Center
SAN DIEGO, Jan. 5 /PRNewswire/ -- Burnham Pacific Properties, Inc. (NYSE:
BPP -- news), today announced the sale of its Pacific West Outlet Center in
Gilroy, California, to Horizon Group, Inc. (NYSE: HGI -- news), of Norton
Shores, Michigan, for $38.5 million.
Pacific West Outlet Center was one of two outlet centers owned by Burnham
Pacific. The company continues to own the 255,000 square-foot San Diego
Factory Outlet Center in San Ysidro, south of San Diego near the Mexican
border.
"The sale of our Gilroy outlet is consistent with our strategy of
focusing on anchored community, promotional and entertainment retail centers
in major metropolitan markets on the West Coast," stated David Martin,
Burnham Pacific's President and Chief Executive Officer. "As we have done
with other non-core properties, we are selling this center with the intent of
redeploying the proceeds into properties better aligned with our target
strategy."
Burnham Pacific Properties is a fully integrated real estate operating
company which acquires, rehabilitates, develops and manages retail properties
on the West Coast. Headquartered in San Diego, Burnham Pacific has offices in
Los Angeles, San Francisco and Portland, Oregon.
SOURCE: Burnham Pacific Properties, Inc.
