SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE l3D
Under the Securities Exchange Act of 1934
Burnham Pacific Properties, Inc.
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
12232C108
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(CUSIP Number)
with a copy to:
Stephen Feinberg Robert G. Minion, Esq.
450 Park Avenue Lowenstein Sandler PC
28th Floor 65 Livingston Avenue
New York, New York 10022 Roseland, New Jersey 07068
(212) 421-2600 (973) 597-2500
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(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications)
August 20, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule l3G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Section 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box: [X]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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Cusip No. 12232C108
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1) Names of Reporting Persons/I.R.S. Identification Nos. of Above Persons
(entities only): Stephen Feinberg
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2) Check the Appropriate Box if a Member of a Group (See Instructions):
(a) Not
(b) Applicable
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3) SEC Use Only
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4) Source of Funds (See Instructions): WC
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5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e): Not Applicable
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6) Citizenship or Place of Organization: United States
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Number of 7) Sole Voting Power: *
Shares Beneficially 8) Shared Voting Power: *
Owned by
Each Reporting 9) Sole Dispositive Power: *
Person With: 10) Shared Dispositive Power: *
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11) Aggregate Amount Beneficially Owned by Each Reporting Person:
2,601,626*
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12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions): Not Applicable
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13) Percent of Class Represented by Amount in Row (11): 7.5%*
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14) Type of Reporting Person (See Instructions): IA, IN
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* Blackacre SMC Master Holdings, LLC ("Blackacre") is the holder of
1,599,990 Preferred Units (the "Units") of Burnham Pacific Operating
Partnership, L.P. (the "Partnership"). Pursuant to the Partnership's Agreement
of Limited Partnership, as amended, the Units are redeemable by the holders
thereof for, at the option of the Partnership, either cash or shares of Series
1997-A Convertible Preferred Stock (the "Preferred Stock") of Burnham Pacific
Properties, Inc. (the "Company"). Based upon Blackacre's holdings of 1,599,990
Units, Blackacre has the right to redeem such Units for 1,599,990 shares of
Preferred Stock (unless the Partnership elects to pay the redemption price for
such units in cash). In addition, Blackacre is the holder of 10 shares of
Preferred Stock. Pursuant to the Company's Articles Supplementary designating
the Preferred Stock, the Preferred Stock held or acquired through redemption by
Blackacre is or will be, as of September 30, 1999, convertible into a total of
2,601,626 shares of Common Stock of the Company (the "Common Stock"). Stephen
Feinberg possesses sole power to vote and direct the disposition of all
securities of the Company owned by Blackacre. Although the Partnership may elect
to pay the redemption price for the Preferred Units in cash, and as a result
thereof, Steven Feinberg believes that he currently does not beneficially own
any shares of Common Stock for purposes of Reg. Section 240.13d-3; however,
because of Mr. Feinberg's expectation that the Partnership would elect to pay
the redemption price in shares of Preferred Stock (which, as noted herein, are
convertible into shares of Common Stock), pursuant to Reg. Section 240.13d-3,
Mr. Feinberg may be deemed to beneficially own 2,601,626 shares of common stock
of the Company, or 7.5% of those issued and outstanding. See Item 5 for further
information.
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Item 1. Security and Issuer.
This statement relates to the common stock, par value $.01 per share
(the "Common Stock"), of Burnham Pacific Properties, Inc. (the "Company"), whose
principal executive offices are located at 610 West Ash Street, Suite 2001, San
Diego, CA 92101.
Item 2. Identity and Background.
The person filing this statement is Stephen Feinberg, whose business
address is 450 Park Avenue, 28th Floor, New York, New York 10022. Mr. Feinberg
serves as the investment manager for Blackacre SMC Master Holdings, LLC
("Blackacre"). Blackacre is engaged in the investment in personal property of
all kinds, including but not limited to capital stock, depository receipts,
investment companies, mutual funds, subscriptions, warrants, bonds, notes,
debentures, options and other securities of whatever kind and nature.
Mr. Feinberg has never been convicted in any criminal proceeding, nor
has he been a party to any civil proceeding commenced before a judicial or
administrative body of competent jurisdiction as a result of which he was or is
now subject to a judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws. Mr. Feinberg is a
citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
Blackacre is the holder of 1,599,990 Preferred Units (the "Units") of
Burnham Pacific Operating Partnership, L.P. (the "Partnership"). Pursuant to the
Partnership's Agreement of Limited Partnership, as amended (the "Agreement"),
the Units are redeemable by the holders thereof for, at the option of the
Partnership, either cash or shares of Series 1997-A Convertible Preferred Stock
(the "Preferred Stock") of the Company. Based upon Blackacre's holdings of
Units, Blackacre has the right to redeem the Units for 1,599,990 shares of
Preferred Stock (unless the Partnership elects to pay the redemption price in
cash). In addition, Blackacre is the holder of 10 shares of Preferred Stock.
Pursuant to the Company's Articles Supplementary designating the Preferred
Stock, as of September 30, 1999, the Preferred Stock held or acquired through
redemption by Blackacre will be convertible into 2,601,626 shares of Common
Stock.
The Units were acquired by Blackacre directly from the Partnership in
exchange for certain real estate assets owned by Blackacre. The 10 shares of
Preferred Stock were acquired by Blackacre in exchange for 10 Units. All funds
or other consideration used to purchase or acquire Units or securities of the
Company on behalf of Blackacre came directly from the assets of Blackacre.
Item 4. Purpose of Transaction.
The acquisition of the securities referred to herein is for investment
purposes on behalf of Blackacre. Except as described below, Stephen Feinberg has
no present plans or intentions which relate to or would result in any of the
transactions required to be described in Item 4 of Schedule 13D.
Mr. Feinberg intends to closely evaluate the performance of the Common
Stock, including but not limited to the continued analysis and assessment of the
Company's business, assets, operations, financial condition, capital structure,
management and prospects. He, or other Blackacre representatives, intend to
pursue and continue active discussions with the Company's existing management
<PAGE>
with respect to actions which might be taken by the Company to maximize
shareholder value. Depending upon the Company's financial condition, results of
operations, future prospects and other factors which Mr. Feinberg and Blackacre
deem relevant, including but not limited to the Company's response to the
above-described communications, Blackacre may, among other things, (i)
communicate with other shareholders of the Company or persons who may desire to
become shareholders of the Company regarding the replacement of the Company's
existing executive officers and/or existing members of the board of directors of
the Company, and/or other matters regarding the management and operation of the
Company, (ii) seek the removal of one or more members of the Company's board of
directors and/or executive officers, (iii) solicit proxies, to be used at either
the Company's regular annual meeting of shareholders, or at a special meeting of
shareholders, for the purposes described in clauses (i) and/or (ii) above or for
the election of one or more nominees of Blackacre and/or such other shareholders
(which may include one or more designees of Blackacre) to the board of directors
of the Company, (iv) seek to cause the Company to merge with or into,
consolidate with, transfer all or substantially all of its assets to, or
otherwise engage in any business combination with, one or more other parties,
and/or (v) take such other actions as Mr. Feinberg or Blackacre may determine.
On June 15, 1999, Blackacre delivered a letter to the Company, the
terms of which did not constitute a plan or proposal which relate to or would
result in any of the transactions required to be described in Item 4 of Schedule
13D, but which, among other things, stated generally Blackacre's position with
respect to its desire that the Company and its existing management act to
maximize shareholder value.
On August 20, 1999, Blackacre delivered a letter to the Company, the
terms of which did not constitute a plan or proposal which relate to or would
result in any of the transactions required to be described in Item 4 of Schedule
13D, but which, among other things, stated that the Company may wish to effect
certain modifications and/or clarifications to the Company's Shareholders Rights
Plan.
Item 5. Interest in Securities of the Issuer.
Based upon information set forth in the Company's Quarterly Report on
Form 10-Q/A-1 for the quarterly period ended March 31, 1998, as of May 14, 1999,
there were issued and outstanding 31,960,008 shares of Common Stock. Blackacre
is the holder of 1,599,990 Units, which may be redeemed by Blackacre for, at the
option of the Partnership, either cash or shares of the Preferred Stock. In
addition, Blackacre is the holder of 10 shares of Preferred Stock. The Preferred
Stock held or acquired through redemption by Blackacre is or will be
convertible, as of September 30, 1999, into a total of 2,601,626 shares of
Common Stock of the Company (the "Common Stock"). Stephen Feinberg possesses
sole power to vote and direct the disposition of all securities of the Company
owned by Blackacre. Because the Partnership may elect to pay the redemption
price for the Preferred Units in cash, Steven Feinberg believes that he
currently does not beneficially own any shares of Common Stock for purposes of
Reg. Section 240.13d-3; however, because of Mr. Feinberg's expectation that the
Partnership would elect to pay the redemption price in shares of Preferred Stock
(which, as noted herein, are convertible into shares of Common Stock), pursuant
to Reg. Section 240.13d-3, Mr. Feinberg may be deemed to beneficially own
2,601,626 shares of Common Stock, or 7.5% of those deemed issued and
outstanding.
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During the past sixty days, there were no transactions in shares of
Common Stock, or any securities directly or indirectly convertible into or
exchangeable for shares of Common Stock, by Stephen Feinberg or any person or
entity controlled by him or any person or entity for which he possesses voting
or investment control over the securities thereof, except as described in this
Schedule 13D.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
Blackacre is party to an Agreement, dated as of December 5, 1997, with
Westbrook Burnham Holdings, L.L.C., Westbrook Burnham Co-Holdings, L.L.C., MJL
Associates, SAB Associates, Eugene J. Rosenfeld, Steven A. Berlinger, Jack L.
Mahoney and Mark Cassidy, which provides, among other things, that, in certain
circumstances, Blackacre and certain other parties to such Agreement will, in
their capacities as holders of shares of Preferred Stock, jointly consent to
certain matters involving the Company, jointly vote, and/or jointly refrain from
voting the shares of Preferred Stock held by them, based upon certain factors
set forth in such Agreement, including, among others, the number of shares of
Preferred Stock held by such parties.
Blackacre is a party to an Agreement to Contribute, dated as of
December 5, 1997, with, among other parties, the Company, which provides, among
other things, that Blackacre and certain other parties have the right, in
certain circumstances, to acquire additional Units, shares of Preferred Stock
and/or shares of Common Stock.
The Company and Blackacre, among others, are party to a Registration
Rights Agreement, dated as of December 31, 1997.
No other contracts, arrangements, understandings or similar
relationships exist with respect to the securities of the Company between
Stephen Feinberg or Blackacre and any person or entity.
Item 7. Material to be Filed as Exhibits.
1. Agreement, dated as of December 5, 1997, by and among, among
others, Blackacre SMC Master Holdings, LLC and Westbrook Burnham Holdings, LLC.
2. Agreement to Contribute by and among, among others, Burnham Pacific
Properties, Inc., Burnham Pacific Operating Partnership, L.P., dated as of
December 5, 1997, incorporated by reference to Exhibit 10.2 to the Form 8-K
filed by Burnham Pacific Properties, Inc. on December 16, 1997.
3 Letter, dated June 15, 1999, from Blackacre SMC Master Holdings, LLC
to the Company.
4. Letter, dated August 20, 1999, from Blackacre SMC Master Holdings,
LLC to the Company.
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Signature
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned hereby certifies that the information set
forth in this statement is true, complete and correct.
August 20, 1999
/s/ Stephen Feinberg
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Stephen Feinberg, in his capacity as the
investment manager for Blackacre SMC Master
Holdings, LLC
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL
CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001).
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EXHIBIT 1
AGREEMENT, dated as of December 5, 1997, by and among Blackacre SMC
Master Holdings, LLC, a Delaware limited liability company; Westbrook Burnham
Holdings, L.L.C., a Delaware limited liability company; Westbrook Burnham
Co-Holdings, L.L.C., a Delaware limited liability company; MJL Associates, A
California Limited Partnership; SAB Associates, A California Limited
Partnership; Eugene S. Rosenfeld; Steven A. Berlinger; Jack L. Mahoney; and Mark
Cassidy.
Preliminary statement
Certain capitalized terms used herein are defined in section 1 hereof.
Burnham proposes to issue and sell to the Westbrook Entities and the Westbrook
Entities propose to purchase from Burnham, under and in accordance with the
terms of the Stock Purchase Agreement, 2,800,000 shares of Burnham Preferred
Stock. BPOP proposes to issue and sell, under and in accordance with the terms
of the Contribution Agreement, 2,000,000 BPOP Preferred Units, of which units a
percentage between 80% and 84% will be distributed to Blackacre and the
remainder will be distributed to the Highridge Members. In addition, the
Westbrook Entities and Blackacre desire to effect an exchange pursuant to which
the Westbrook Entities will transfer to Blackacre 10 shares of Burnham Preferred
Stock and Blackacre will transfer to the Westbrook Entities 10 BPOP Preferred
Units. The Westbrook Entities, Blackacre and the Highridge Members desire to
provide for the resolution of certain issues arising in connection with their
respective ownerships of the Burnham Preferred Stock and the BPOP Preferred
Units, and accordingly agree as follows.
1. Definitions.
a. "Affiliate" shall have the meaning given that term in section 12b-2 of
the Securities Exchange Act of 1934, as amended.
b. "Blackacre" shall mean:
i. Blackacre SMC Master Holdings, LLC, a Delaware limited liability
company, or
ii. if Blackacre SMC Master Holdings, LLC shall have transferred any
or all of its BPOP Preferred Units and/or Burnham Preferred Stock
to any Affiliate of Blackacre Capital Group L.P. or Cerberus
Partners L.P. which Affiliate has agreed to be bound by this
agreement in accordance with section 14(c) hereof, such
Affiliate.
c. "BPOP" shall mean Burnham Pacific Operating Partnership, L.P., a
Delaware limited partnership.
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d. "BPOP Preferred Units" shall mean the Series 1997-A units of preferred
limited partner interests of BPOP established pursuant to the First
Amendment to the BPOP Limited Partnership Agreement.
e. "BPOP Preferred Units Terms" shall mean the Terms of Series 1997-A
Preferred Units and Common Units of BPOP, in the form attached to the
First Amendment to the BPOP Limited Partnership Agreement as exhibit C
thereto.
f. "Burnham" shall mean Burnham Pacific Properties, Inc., a Maryland
corporation.
g. "Burnham Articles Supplementary" shall mean the articles supplementary
designating 4,800,000 shares of preferred stock as 4,800,000 shares of
Burnham Preferred Stock.
h. "Burnham Common Stock" shall mean the shares of common stock, par
value $0.01 per share, of Burnham.
i. "Burnham Preferred Stock" shall mean the shares of Series 1997-A
Convertible Preferred Stock, par value $0.01 per share, of Burnham.
j. "Closing Date" shall mean the Closing Date, as defined in the
Contribution Agreement.
k. "Contribution Agreement" shall mean that certain Agreement to
Contribute, dated as of December 5, 1997, by and among Burnham, BPOP
and entities designated as "Contributors" therein.
l. "Contribution Consideration" shall have the meaning given that term in
the Contribution Agreement.
m. "Expense Reimbursement Amount" shall have the meaning given that term
in section 8 hereof.
n. "First Amendment to the BPOP Limited Partnership Agreement" shall mean
the First Amendment to Agreement of Limited Partnership of BPOP dated
as of the Closing Date by and among Burnham, Burnham Pacific L.P.,
Inc., HPBA, LLC, HPBA II, LLC, HPBA Inc., HPBA II Inc., GSF
Associates, L.L.C., GSF II Associates, L.L.C., and entities designated
as "Contributors", and persons and entities listed as "Existing
Partners" therein.
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o. "Highridge Agent" shall mean:
i. John S. Long, or
ii. if he is deceased, has been declared incompetent by a court of
competent jurisdiction or has provided written notice to the
parties hereto that he has resigned as the Highridge Agent,
Eugene S. Rosenfeld, or
iii. if he is deceased, has been declared incompetent by a court of
competent jurisdiction or has provided written notice to the
parties hereto that he has resigned as the Highridge Agent,
Steven A. Berlinger.
p. "Highridge Members" shall mean the following individuals and entities:
i. MJL Associates, A California Limited Partnership;
ii. SAB Associates, A California Limited Partnership;
iii. Eugene S. Rosenfeld;
iv. Steven A. Berlinger;
v. Jack L. Mahoney; and
vi. Mark Cassidy.
q. "Larger Owner" shall, as between the Westbrook Entities and Blackacre,
mean:
i. The Westbrook Entities, if the aggregate number of shares of
Burnham Preferred Stock and BPOP Preferred Units owned by the
Westbrook Entities exceeds the aggregate number of shares of
Burnham Preferred Stock and BPOP Preferred Units owned by
Blackacre, and
ii. Blackacre, if the aggregate number of shares of Burnham Preferred
Stock and BPOP Preferred Units owned by Blackacre exceeds the
aggregate number of shares of Burnham Preferred Stock and BPOP
Preferred Units owned by the Westbrook Entities.
<PAGE>
r. "Redemption Default Payment" shall mean an amount equal to the
difference between:
i. the amount paid to the Westbrook Entities, if any, pursuant to
section 9(c) of the Burnham Articles Supplementary, but only if
such amount was determined pursuant to clause (i) of section 9(c)
of the Burnham Articles Supplementary, and
ii. the sum of:
(1) the amount that would have been paid to the Westbrook
Entities had there been a timely redemption pursuant to
section 9(a) of the Burnham Articles Supplementary and
(2) the reasonable costs, if any, incurred by the Westbrook
Entities in compelling Burnham to perform its redemption
under section 9 of the Burnham Articles Supplementary.
s. "Reimbursable Costs" shall mean all reasonable costs incurred by any
party hereto in connection with documenting and negotiating, and
performing due diligence investigation in connection with, the
issuance of the Burnham Preferred Stock and the BPOP Preferred Units,
as contemplated by the Stock Purchase Agreement and the Contribution
Agreement, excluding, however, costs incurred by any party hereto in
connection with the acquisition and contribution of contributed
property to BPOP pursuant to the Contribution Agreement. It is
anticipated that 100% of the fees and disbursements of Cadwalader,
Wickersham & Taft; Paul, Hastings, Janofsky & Walker LLP; McGuire,
Woods, Battle & Boothe, L.L.P.; Price Waterhouse & Co. LLP; and Jones,
Day, Reavis & Pogue (in respect of environmental matters) will be
Reimbursable Costs and that portions of the fees and disbursements of
Battle Fowler LLP and Gibson, Dunn & Crutcher LLP to be determined by
the parties hereto will be Reimbursable Costs.
t. "Stock Purchase Agreement" shall mean that certain stock purchase
agreement, dated as of December 5, 1997, by and among Burnham, BPOP
and the Westbrook Entities.
u. "WBH" shall mean Westbrook Burnham Holdings, L.L.C., a Delaware
limited liability company.
v. "WBC" shall mean Westbrook Burnham Co-Holdings, L.L.C., a Delaware
limited liability company.
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w. "Westbrook Entities" shall mean:
i. WBH and WBC , or
ii. if any of the Westbrook Entities shall have transferred any or
all of its shares of Burnham Preferred Stock and/or BPOP
Preferred Units to any Affiliate of Westbrook Real Estate
Partners Management II, L.L.C., which Affiliate has agreed to be
bound by this agreement in accordance with section 12(c) hereof,
such Affiliate.
2. Authority to bind.
a. WBC hereby appoints WBH as its agent and attorney-in-fact to act for
it with respect to any matter arising under this agreement, and WBC
hereby agrees that any action taken by WBH as such agent and
attorney-in-fact shall be binding on it. WBH will act on its own
behalf with respect to any matter arising under this agreement.
b. Each of the Highridge Members hereby appoints the Highridge Agent as
its agent and attorney-in-fact to act for it with respect to any
matter arising under this agreement, and each Highridge Member hereby
agrees that any action taken by the Highridge Agent as such agent and
attorney-in-fact shall be binding on it.
3. Right to propose nominees for election to the Burnham board of directors;
voting agreement relating to Burnham Preferred Stock. Section 6.5 of the
Stock Purchase Agreement grants to the Westbrook Entities a "Nomination
Right" (as such term is defined in such section). Sections 3(b) and 3(c) of
the Burnham Articles Supplementary grant to the holders of the Burnham
Preferred Stock certain voting rights described in those sections. Section
3(d) of the Burnham Articles Supplementary provides that, upon the
occurrence of a "Dividend Payment Default" or a "Voting Rights Default" (as
such terms are defined in such section 3(d)), the holders of the Burnham
Preferred Stock, voting as a separate class, shall be entitled to elect an
additional two "Series 1997-A Directors" (as such term is defined in such
section) to the Burnham board of directors. In addition, section 3(d) of
the Burnham Articles Supplementary grants to the holders of Burnham
Preferred Stock the right to remove any "Series 1997-A Director" from the
Burnham board of directors by a majority vote and the right to elect a
successor. Section 3(f) of the Burnham Articles Supplementary requires
<PAGE>
Burnham to 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 Burnham Preferred Units
solely in accordance with instructions received from the holders of a
majority of the outstanding shares of Burnham Preferred Stock. Blackacre
and the Westbrook Entities agree as follows with respect to the exercise of
these rights:
a. so long as (x) the Westbrook Entities own a number of shares of
Burnham Preferred Stock and/or BPOP Preferred Units in the aggregate
in excess of 1,080,000, and Blackacre owns a number of shares of
Burnham Preferred Stock and/or BPOP Preferred Units in the aggregate
in excess of 1,080,000, or (y) both the Westbrook Entities and
Blackacre in each case own a number of shares of Burnham Preferred
Stock and/or BPOP Preferred Units in the aggregate less than 1,080,000
and the aggregate number of shares and units owned by the Westbrook
Entities is equal to the aggregate number of shares and units owned by
Blackacre:
i. the Westbrook Entities will not make any nomination under section
6.5 of the Stock Purchase Agreement without the joint consent and
agreement of the Westbrook Entities and Blackacre to the identity
of the individual so nominated and his or her nomination.
ii. on each occasion that the holders of the Burnham Preferred Stock
are entitled to exercise voting rights under sections 3(b) and
3(c) of the Burnham Articles Supplementary, the Westbrook
Entities and Blackacre will vote all shares of Burnham Preferred
Stock held by them as agreed, and only as agreed, by the
Westbrook Entities and Blackacre in each instance in writing in
advance of the vote. If the Westbrook Entities and Blackacre are
unable so to agree with respect to any exercise of voting rights
under such sections, neither the Westbrook Entities nor Blackacre
shall exercise any such voting rights.
iii. on each occasion that the holders of the Burnham Preferred Stock
are entitled to vote to elect two additional "Series 1997-A
Directors" as provided in section 3(d) of the Burnham Articles
Supplementary, the Westbrook Entities and Blackacre will vote all
shares of Burnham Preferred Stock owned by them in favor of, and
only in favor of, one individual who has been designated in
writing by the Westbrook Entities and one individual who has been
designated in writing by Blackacre.
iv. on each occasion that the holders of the Burnham Preferred Stock
are entitled to vote for the removal of any "Series 1997-A
Director" and for the election of a successor to any director so
removed, as provided in such section 3(d) of the Burnham Articles
<PAGE>
Supplementary, the Westbrook Entities and Blackacre will vote all
shares of Burnham Preferred Stock owned by them in favor of
removal of such individual and in favor of the election of a
successor to any director so removed if and only if whichever of
the Westbrook Entities or Blackacre designated such director
pursuant to clause (iii) above has so agreed.
v. on each occasion that the holders of the Burnham Preferred Stock
are entitled, in accordance with section 3(f) of the Burnham
Articles Supplementary, to vote to require Burnham to act on or
with respect to any matter as to which Burnham is entitled or
requested to act in its capacity as holder of Burnham Preferred
Units, the Westbrook Entities and Blackacre will vote all shares
of Burnham Preferred Stock held by them as agreed, and only as
agreed, by the Westbrook Entities and Blackacre in each instance
in writing in advance of the vote. If the Westbrook Entities and
Blackacre are unable so to agree with respect to any exercise of
voting rights under such section, neither the Westbrook Entities
nor Blackacre shall exercise any such voting rights.
b. so long as (x) the Westbrook Entities own a number of shares of
Burnham Preferred Stock and/or BPOP Preferred Units in the aggregate
less than 1,080,000, or (y) Blackacre owns a number of shares of
Burnham Preferred Stock and/or BPOP Preferred Units in the aggregate
less than 1,080,000, or (z) both the Westbrook Entities and Blackacre
in each case own a number of shares of Burnham Preferred Stock and/or
BPOP Preferred Units in the aggregate less than 1,080,000 and the
aggregate number of shares and units owned by the Westbrook Entities
is not equal to the aggregate number of shares and units owned by
Blackacre:
i. then:
(1) if the Westbrook Entities are the Larger Owner, the
Westbrook Entities may exercise their rights to make
nominations under section 6.5 of the Stock Purchase
Agreement without having to obtain the consent and agreement
of Blackacre to the identity of the individual so nominated
and his or her nomination, and
(2) if Blackacre is the Larger Owner, the Westbrook Entities
will exercise their rights to make nominations under section
6.5 of the Stock Purchase Agreement solely in accordance
<PAGE>
with the directions of Blackacre as to the identity of the
individual so nominated and his or her nomination.
ii. on each occasion that the holders of the Burnham Preferred Stock
are entitled to exercise voting rights under sections 3(b) and
3(c) of the Burnham Articles Supplementary,
(1) if the Westbrook Entities are the Larger Owner:
(a) the Westbrook Entities may vote all shares of Burnham
Preferred Stock held by them as they determine in their
sole discretion, and
(b) Blackacre will vote all shares of Burnham Preferred
Stock held by it as directed, and only as directed, by
the Westbrook Entities in writing in advance of the
vote.
(2) if Blackacre is the Larger Owner:
(a) Blackacre may vote all shares of Burnham Preferred
Stock held by it as it determines in its sole
discretion, and
(b) the Westbrook Entities will vote all shares of Burnham
Preferred Stock held by them as directed, and only as
directed, by Blackacre in writing in advance of the
vote.
iii. on each occasion that the holders of the Burnham Preferred Stock
are entitled to vote to elect two additional "Series 1997-A
Directors" as provided in section 3(d) of the Burnham Articles
Supplementary,
(1) if the Westbrook Entities are the Larger Owner:
(a) the Westbrook Entities may vote all shares of Burnham
Preferred Stock held by them as they determine in their
sole discretion, and
(b) Blackacre will vote all shares of Burnham Preferred
Stock held by it in favor of, and only in favor of,
individuals who have been designated in writing in
advance of the vote by the Westbrook Entities.
<PAGE>
(2) if Blackacre is the Larger Owner:
(a) Blackacre may vote all shares of Burnham Preferred
Stock held by it as it determines in its sole
discretion, and
(b) the Westbrook Entities will vote all shares of Burnham
Preferred Stock held by them in favor of, and only in
favor of, individuals who have been designated in
writing in advance of the vote by Blackacre.
iv. on each occasion that the holders of the Burnham Preferred Stock
are entitled to vote for the removal of any "Series 1997-A
Director" and for the election of a successor to any director so
removed as provided in such section 3(d) of the Burnham Articles
Supplementary,
(1) if the Westbrook Entities are the Larger Owner:
(a) the Westbrook Entities may vote all shares of Burnham
Preferred Stock held by them as they determine in their
sole discretion, and
(b) Blackacre will vote all shares of Burnham Preferred
Stock held by it in favor of removal of such individual
and in favor of the election of a successor to any
director so removed if, and only if, the Westbrook
Entities so direct.
(2) if Blackacre is the Larger Owner:
(a) Blackacre may vote all shares of Burnham Preferred
Stock held by it as it determines in its sole
discretion, and
(b) the Westbrook Entities will vote all shares of Burnham
Preferred Stock held by them in favor of removal of
such individual and in favor of the election of a
successor to any director so removed if, and only if,
Blackacre so directs.
<PAGE>
v. on each occasion that the holders of the Burnham Preferred Stock
are entitled, in accordance with section 3(f) of the Burnham
Articles Supplementary, to vote to require Burnham to act on or
with respect to any matter as to which Burnham is entitled or
requested to act in its capacity as holder of Burnham Preferred
Units,
(1) if the Westbrook Entities are the Larger Owner:
(a) the Westbrook Entities may vote all shares of Burnham
Preferred Stock held by them as they determine in their
sole discretion, and
(b) Blackacre will vote all shares of Burnham Preferred
Stock held by it as directed, and only as directed, by
the Westbrook Entities in writing in advance of the
vote.
(2) if Blackacre is the Larger Owner:
(a) Blackacre may vote all shares of Burnham Preferred
Stock held by it as it determines in its sole
discretion, and
(b) the Westbrook Entities will vote all shares of Burnham
Preferred Stock held by them as directed, and only as
directed, by Blackacre in writing in advance of the
vote.
4. Voting agreement relating to BPOP Preferred Units. Sections 3(b) and
3(c) of the BPOP Preferred Units Terms provide that BPOP will not take
certain actions without the approval of the holders of a majority of
the outstanding BPOP Units, voting separately as a class. Blackacre and
the Westbrook Entities agree as follows with respect to the exercise of
these rights:
a. so long as (x) the Westbrook Entities own a number of shares of
Burnham Preferred Stock and/or BPOP Preferred Units in the
aggregate in excess of 1,080,000, and Blackacre owns a number of
shares of Burnham Preferred Stock and/or BPOP Preferred Units in
the aggregate in excess of 1,080,000, or (y) both the Westbrook
Entities and Blackacre in each case own a number of shares of
Burnham Preferred Stock and/or BPOP Preferred Units in the
aggregate less than 1,080,000 and the aggregate number of shares
and units owned by the Westbrook Entities is equal to the
aggregate number of shares and units owned by Blackacre, on each
<PAGE>
occasion that the holders of the BPOP Preferred Units are
entitled to exercise voting rights under sections 3(b) and 3(c)
of the BPOP Preferred Units Terms, the Westbrook Entities and
Blackacre will vote all BPOP Preferred Units held by them as
agreed, and only as agreed, by the Westbrook Entities and
Blackacre in each instance in writing in advance of the vote. If
the Westbrook Entities and Blackacre are unable so to agree with
respect to any exercise of voting rights under such sections,
neither the Westbrook Entities nor Blackacre shall exercise any
such voting rights.
b. so long as (x) the Westbrook Entities own a number of shares of
Burnham Preferred Stock and/or BPOP Preferred Units in the
aggregate less than 1,080,000, or (y) Blackacre owns a number of
shares of Burnham Preferred Stock and/or BPOP Preferred Units in
the aggregate less than 1,080,000, or (z) both the Westbrook
Entities and Blackacre in each case own a number of shares of
Burnham Preferred Stock and/or BPOP Preferred Units in the
aggregate less than 1,080,000 and the aggregate number of shares
and units owned by the Westbrook Entities is not equal to the
aggregate number of shares and units owned by Blackacre, then:
i. if the Westbrook Entities are the Larger Owner, Blackacre
will vote all BPOP Preferred Units held by it as directed,
and only as directed, by the Westbrook Entities in writing
in advance of the vote, and
ii. if Blackacre is the Larger Owner, Blackacre may exercise its
rights to vote the BPOP Preferred Units without having to
obtain the consent and agreement of the Westbrook Entities.
5. Certain provisions relating to voting and consent rights.
a. Notice of votes.
i. Whenever the holders of the Burnham Preferred Stock are entitled
to vote on any matter and (a) Blackacre is entitled to direct the
Westbrook Entities how to vote on such matter or (b) voting on
such matter is required to be done with the consent, agreement or
approval of Blackacre and the Westbrook Entities, the Westbrook
Entities will as promptly as practical provide written notice of
that fact to Blackacre and the Highridge Members, such notice to
provide a reasonably detailed description of the matter to be
voted on and to be accompanied by any proxy or other solicitation
materials prepared by Burnham.
<PAGE>
ii. Whenever the holders of the BPOP Preferred Units are entitled to
vote on any matter and (a) the Westbrook Entities are entitled to
direct Blackacre how to vote on such matter or (b) voting on such
matter is required to be done with the consent, agreement or
approval of Blackacre and the Westbrook Entities, Blackacre will
as promptly as practical provide written notice of that fact to
the Westbrook Entities, such notice to provide a reasonably
detailed description of the matter to be voted on and to be
accompanied by any proxy or other solicitation materials prepared
by BPOP.
iii. The parties giving any notice required by clauses (i) or (ii)
above will make reasonable efforts to ensure such notice is
received by the intended recipient, including calling to confirm
receipt of such notice, and will make reasonable efforts to
obtain a response from the intended recipient of such notice.
iv. Any party who has received notice as prescribed in clauses (i) or
(ii) above, who is entitled to direct or participate in the
direction of the vote on any matter, and who fails to respond
prior to the date on which such vote is taken shall forfeit his
or its right to direct or participate in the direction of such.
b. The parties hereto agree that, if either of the Westbrook Entities,
Blackacre or any of the Highridge Members were to fail to comply with
its respective obligations under sections 3 or 4 hereof:
i. Blackacre and/or the Westbrook Entities would be irreparably
injured and that damages would not provide an adequate remedy for
such failure, and
ii. accordingly, under those circumstances, Blackacre and/or the
Westbrook Entities, as the case may be, shall be entitled to
equitable relief to enforce the obligations under sections 3 and
4 hereof of any party which has failed to comply with its
agreements hereunder.
c. Each of the parties hereto agrees that, except as otherwise expressly
provided herein, to the extent that any party hereto is entitled to
exercise its voting rights in respect of, or rights hereunder to
direct the voting of, any Burnham Preferred Shares and BPOP Preferred
Units, each party hereto shall be entitled to vote, or to direct the
vote, in a manner determined by such party in its sole discretion and
<PAGE>
that no such party shall be under any duty or obligation to any other
party hereto with respect to the exercise of such rights and no such
duties shall be inferred or implied.
d. To the extent that any holder of shares of Burnham Preferred Stock or
BPOP Preferred Units has the right to vote or consent in respect of
such securities on any matter not expressly dealt with in section 3 or
4 hereof, the right to vote or direct the voting of such shares of
Burnham Preferred Stock or BPOP Preferred Units shall be governed as
nearly as possible by the provisions of section 3 or 4 hereof, as the
case may be, as though the occasion giving rise to such right to vote
were specifically mentioned in such sections.
e. No provision of this agreement is intended to, or shall be construed
to, give rise to any rights against any of the Westbrook Entities in
favor of any of the Highridge Members.
f. Blackacre agrees that, in all cases in which:
i. the Westbrook Entities are entitled to direct Blackacre on how to
vote shares of Burnham Preferred Stock and/or BPOP Preferred
Units held by Blackacre, Blackacre will direct the Highridge
Members to vote BPOP Preferred Units and/or shares of Burnham
Preferred Stock held by the Highridge Members in the same manner
as Blackacre has been directed by the Westbrook Entities to vote
BPOP Preferred Units and/or shares of Burnham Preferred Stock
held by Blackacre.
ii. the Westbrook Entities and Blackacre are required by the terms of
this agreement to refrain from exercising any rights to vote
shares of Burnham Preferred Stock and/or BPOP Preferred Units,
Blackacre will direct the Highridge Members to refrain from
voting the BPOP Preferred Units and/or shares of Burnham
Preferred Stock held by the Highridge Members.
<PAGE>
g. Each of the Highridge Members agrees that each of the Westbrook
Entities is intended to be a third party beneficiary of the covenants
of the Highridge Members contained in this agreement to vote BPOP
Preferred Units and/or shares of Burnham Preferred Stock held by the
Highridge Members as directed by Blackacre and that each of the
Westbrook Entities shall be entitled to enforce the obligations of the
Highridge Members under such covenants by an action brought in the
name of either or both of the Westbrook Entities.
h. For the avoidance of doubt, in determining the number of shares of
Burnham Preferred Stock and/or BPOP Preferred Units owned by Blackacre
for any purpose under this agreement, shares of Burnham Preferred
Stock and/or BPOP Preferred Units owned by the Highridge Members will
not be counted.
i. Each of the Highridge Members agrees that:
i. so long as it or he owns any BPOP Preferred Units and Blackacre
owns any BPOP Preferred Units and/or Burnham Preferred Stock, it
or he will vote or refrain from voting such BPOP Preferred Units
as directed, and only as directed, by Blackacre.
ii. so long as it or he owns any shares of Burnham Preferred Stock
and Blackacre owns any BPOP Preferred Units and/or Burnham
Preferred Stock, it or he will vote or refrain from voting such
Burnham Preferred Stock as directed, and only as directed, by
Blackacre.
iii. so long as it or he owns any BPOP Preferred Units, Blackacre does
not own any Burnham Preferred Stock or BPOP Preferred Units, and
the Westbrook Entities own any Burnham Preferred Stock and/or
BPOP Preferred Units, it or he will vote or refrain from voting
such BPOP Preferred Units as directed, and only as directed, by
the Westbrook Entities.
iv. so long as it or he owns any shares of Burnham Preferred Stock,
Blackacre does not own any Burnham Preferred Stock or BPOP
Preferred Units, and the Westbrook Entities own any Burnham
<PAGE>
Preferred Stock and/or BPOP Preferred Units, it or he will vote
or refrain from voting such shares of Burnham Preferred Stock as
directed, and only as directed, by the Westbrook Entities.
v. it or he will, upon request of any party entitled under clauses
(i), (ii), (iii) or (iv) above to direct the vote of its or his
BPOP Preferred Units and/or shares of Burnham Preferred Stock,
grant to the requesting party an irrevocable written proxy in
form and substance satisfactory to the requesting party
authorizing the requesting party to vote its or his BPOP
Preferred Units and/or shares of Burnham Preferred Stock.
vi. it or he will not sell or otherwise dispose of any BPOP Preferred
Units or shares of Burnham Preferred Stock unless its or his
transferee executes and delivers to the other parties hereto an
agreement, in form and substance satisfactory to the other
parties hereto, assuming its or his transferor's obligations
under this section 5(i).
j. Anything herein to the contrary notwithstanding, and without in any
way derogating the obligations of the Highridge Members under section
5(i) hereof, Blackacre shall not be required, or have any duty to the
Westbrook Entities, to attempt to enforce the provisions of section
5(i) hereof against any of the Highridge Members by legal proceedings
or otherwise.
k. The Westbrook Entities and Blackacre acknowledge and agree that a
fundamental premise of this agreement is that the Westbrook Entities
and Blackacre share a common economic interest as purchasers and
holders of Burnham Preferred Stock and/or BPOP Preferred Units.
Accordingly, the Westbrook Entities and Blackacre agree as follows:
i. each of the Westbrook Entities and Blackacre shall disclose to
the others in reasonable detail all material interests in and
transactions with Burnham and/or its Affiliates (other than
ownership of shares of Burnham Preferred Stock and BPOP Preferred
Units) that any such party or any of its Affiliates acquires and
all material written or oral agreements or understandings that
such party or any of its Affiliates reaches with Burnham and/or
its Affiliates.
ii. anything herein to the contrary notwithstanding, none of the
Westbrook Entities and Blackacre shall have or purport to
exercise any right:
<PAGE>
(1) to vote under any proxy granted hereunder or to direct the
voting of any other party hereunder or
(2) to request, grant or withhold agreement, approval or consent
hereunder, with respect to any matter in which any of the
Westbrook Entities or Blackacre, or any of their Affiliates,
as the case may be, has any interest not arising solely as a
result of its ownership of shares of Burnham Preferred Stock
and BPOP Preferred Units.
iii. on each occasion on which any of the Westbrook Entities or
Blackacre votes any such proxy, directs the others to vote
hereunder or requests, grants or withholds agreement, approval or
consent hereunder, on or with respect to any matter, the
Westbrook Entities and Blackacre, as the case may be, shall be
deemed to have represented to the others that the representing
party has complied in full with section 5(k)(i) hereof.
6. The obligations of the Highridge Members with respect to exercise of
indemnification rights.
a. Whenever Blackacre intends to make a claim for indemnification under
article 7 of the Contribution Agreement, Blackacre shall advise the
Highridge Agent in writing of its intention to do so. Such written
notice shall set forth in reasonable detail the nature and basis of
the claim or claims to be made.
b. Each of the Highridge Members shall be obligated to defray its share
of the expenses incurred by Blackacre in prosecuting such claims. For
purposes of this section 6, the share of expenses for each Highridge
Member shall be a percentage of such expenses equal to the ratio of:
i. the Contribution Consideration received by such Highridge Member
to
ii. the aggregate Contribution Consideration received by all of the
Highridge Members and Blackacre.
c. If all Highridge Members contribute their shares of such expenses, any
amounts recovered by Blackacre in respect of such claim, whether by
judgment, settlement or otherwise, shall be applied:
<PAGE>
i. first, to the recoupment by each of Blackacre and the Highridge
Members of their expenses of prosecuting such claim,
ii. then, to the payment to each of Blackacre and the Highridge
Members of their respective shares of the balance of the gross
amount recovered that is payable to Blackacre and the Highridge
Members. For purposes of this clause (ii), the share of Blackacre
and each Highridge Member shall be a percentage of the amount
distributable under this clause (ii) equal to the ratio of:
(1) the Contribution Consideration received by such person or
entity to
(2) the aggregate Contribution Consideration received by all of
the Highridge Members and Blackacre.
d. If any Highridge Member fails to contribute its or his share of such
expenses, any amounts recovered by Blackacre in respect of such claim
that is payable to Blackacre and/or the Highridge Members, whether by
judgment, settlement or otherwise, shall be applied:
i. first, to the recoupment by Blackacre and those Highridge Members
who so contributed of their shares of the expenses of prosecuting
such claim,
ii. then, to the payment to Blackacre and those Highridge Members who
contributed their shares of such expenses of a fee equal to 20%
of the gross amount recovered, such fee to be allocated among the
parties entitled thereto in proportion to the shares received by
each under section 6(d)(iii) hereof, and
iii. then, to the payment to each of Blackacre and the Highridge
Members of their respective shares of the balance of the gross
amount recovered. For purposes of this clause (iii), the share of
Blackacre and each Highridge Member shall be a percentage of the
amount distributable under this clause (iii) equal to the ratio
of:
(1) the Contribution Consideration received by such person or
entity to
(2) the aggregate Contribution Consideration received by all of
the Highridge Members and Blackacre.
<PAGE>
7. Exchange of 10 shares of Burnham Preferred Stock for 10 BPOP Preferred
Units.
a. The Westbrook Entities hereby agree to transfer to Blackacre on the
Closing Date 10 shares of Burnham Preferred Stock (the "Exchanged
Shares") and Blackacre hereby agrees to transfer to the Westbrook
Entities on the Closing Date 10 BPOP Preferred Units (the "Exchanged
Units").
b. At the closing of the transfers contemplated by section 7(a) hereof:
i. the Westbrook Entities shall deliver to Blackacre a certificate
representing the Exchanged Shares and an accompanying stock
power, and
ii. Blackacre shall deliver to the Westbrook Entities an instrument,
in form satisfactory to the Westbrook Entities, conveying to the
Westbrook Entities the Exchanged Units.
c. The Westbrook Entities represent that, as of the Closing Date, they
will have duly conveyed to Blackacre good title to the Exchanged
Shares, free and clear of all liens and encumbrances.
d. Blackacre represents that, as of the Closing Date, it will have duly
conveyed to the Westbrook Entities good title to the Exchanged Units,
free and clear of all liens and encumbrances.
8. Allocation of expense reimbursement amount. Pursuant to section 6.3 of the
Stock Purchase Agreement, Burnham is obligated to pay certain expenses and
transaction costs of the parties hereto, up to an aggregate amount of
$500,000 (the "Expense Reimbursement Amount"). The parties hereto agree
that, notwithstanding the provisions of section 6.3 of the Stock Purchase
Agreement:
a. each of the parties hereto will submit to each other party hereto:
i. on or promptly after the Closing Date a schedule showing
Reimbursable Costs incurred by such party, such schedule to be
prepared and submitted in good faith, and
ii. as promptly as practicable after receiving a request therefor,
such backup information supporting the schedule referred to in
clause (i) above as is reasonably requested by any party hereto.
<PAGE>
b. each of the parties hereto shall have the right to review the
schedules and backup information provided by any party hereto, and the
amounts of Reimbursable Costs and the calculation thereof by each
party shall be subject to agreement by each of the parties hereto.
c. the Expense Reimbursement Amount shall be applied to pay Reimbursable
Costs incurred by the parties hereto or to reimburse parties hereto
who have paid Reimbursable Costs in the manner agreed by the parties
hereto. No portion of the Expense Reimbursement Amount shall be so
applied until all parties hereto have reached agreement on all matters
arising under this section 8. Each of the parties hereto agrees to act
reasonably and in good faith in reviewing and coming to agreement on
the matters arising under this section 8.
d. the balance of the Reimbursable Costs remaining after application of
the Expense Reimbursement Amount as provided in section 8(c) hereof
will be borne 50% by Blackacre and the Highridge Members and 50% by
the Westbrook Entities, and the parties hereto shall make balancing
payments among themselves to the extent necessary to achieve such
50/50 sharing.
e. the amount of any Reimbursable Costs to be borne by Blackacre and the
Highridge Members under section 8(d) hereof will be borne by each of
them in proportion to the total Contribution Consideration received by
each of them as a fraction of the total Contribution Consideration
received by all of them.
9. No Amendments to Burnham Articles Supplementary or Agreement of Limited
Partnership of BPOP. Anything herein to the contrary notwithstanding, in no
event shall:
a. the Westbrook Entities request or consent to any amendments to the
certificate of incorporation of Burnham, the by-laws of Burnham or the
Burnham Articles Supplementary without the prior written approval of
Blackacre, which approval shall not be unreasonably withheld.
b. Blackacre request or consent to any amendments to the BPOP limited
partnership agreement, the First Amendment to the BPOP Limited
Partnership Agreement, the BPOP Preferred Units Terms or any other
documents or agreements that would have the effect of amending the
BPOP limited partnership agreement, without the prior written approval
of the Westbrook Entities, which approval shall not be unreasonably
withheld.
<PAGE>
c. the Westbrook Entities be required to vote Burnham Preferred Stock
held by them in favor of any request or consent to any amendments to
the certificate of incorporation of Burnham, the by-laws of Burnham or
the Burnham Articles Supplementary, without their consent, which
consent shall not be unreasonably withheld.
d. Blackacre or the Highridge Members be required to vote BPOP Preferred
Units held by them in favor of any request or consent to any
amendments to the BPOP limited partnership agreement, the First
Amendment to the BPOP Limited Partnership Agreement, the BPOP
Preferred Units Terms and any other documents or agreement that would
have the effect of amending the BPOP limited partnership agreement,
without their consent, which consent shall not be unreasonably
withheld.
10. Non-applicability of section 10(e) of the Burnham Articles Supplementary to
certain shares of Burnham Preferred Stock. WBH and WBC agree that section
10(e) of the Burnham Articles Supplementary shall not apply to any shares
of Burnham Preferred Stock issued on redemption of any Burnham Preferred
Units at any time held by Blackacre or any of its Affiliates or any of the
Highridge Members or any of their Affiliates, whether such shares continue
to be held by Blackacre or are held by direct or indirect transferees from
Blackacre. This agreement shall continue to have effect notwithstanding any
subsequent transfer by WBH or WBC of any shares of Burnham Preferred Stock.
11. Information and Access. Pursuant to section 5.5 of the Stock Purchase
Agreement, the Westbrook Entities have, among other rights, the right of
access to the property, books and records of Burnham and BPOP and to
receive various information concerning the businesses, personnel and
properties of Burnham and BPOP as the Westbrook Entities may reasonably
request. The Westbrook Entities agree to exercise their rights pursuant to
such section at the request, and on behalf of, Blackacre at such times and
on such terms as Blackacre shall reasonably direct. Blackacre agrees to
bear the reasonable costs incurred by the Westbrook Entities in acting
pursuant to the direction of Blackacre hereunder.
12. Redemption default payment sharing.
a. Section 9(a) of the Burnham Articles Supplementary provides that, if
Burnham stockholder approval of the issuance of Burnham Common Stock
upon conversion of the Burnham Preferred Stock and any related matters
is not timely obtained, Burnham shall no later than June 30, 1998
redeem such number of shares of Burnham Preferred Stock as shall have
been agreed upon by the Westbrook Entities and Burnham in accordance
<PAGE>
with section 5.7 of the Stock Purchase Agreement at the price
specified in such section 9(a). Section 9(c) of the Burnham Articles
Supplementary provides that, if Burnham fails to pay the redemption
price required under section 9(a) on or before June 30, 1998, Burnham
shall pay to the Westbrook Entities a specified amount as liquidated
damages.
b. Section 4.20 of the Contribution Agreement provides that, if Burnham
stockholder approval of the issuance of Burnham Common Stock upon
redemption of the BPOP Preferred Units is not timely obtained, Burnham
and BPOP shall no later than September 30, 1998 redeem such number of
BPOP Preferred Units as specified in such section 4.20 at the price
specified in section 9 of Exhibit C to the First Amendment to the BPOP
Limited Partnership Agreement.
c. If Burnham is required to redeem shares of Burnham Preferred Stock
pursuant to section 9 of the Burnham Articles Supplementary and fails
to pay the redemption price required under section 9(a) of the Burnham
Articles Supplementary on or before June 30, 1998 and as a result is
required to pay to the Westbrook Entities liquidated damages
determined pursuant to clause (i) of section 9(c) of the Burnham
Articles Supplementary, then, in the event that Burnham and BPOP are
required to redeem BPOP Preferred Units under section 4.20 of the
Contribution Agreement and Burnham and BPOP fail fully and timely to
satisfy such redemption obligations as to the BPOP Preferred Units,
then, unless Burnham and BPOP have fully satisfied their obligation to
redeem the BPOP Preferred Units pursuant to section 4.20 of the
Contribution Agreement prior to Burnham's satisfying its obligation to
redeem shares of Burnham Preferred Stock pursuant to section 9 of the
Burnham Articles Supplementary, the Westbrook Entities shall, on the
later of (a) the date one business day following the date of receipt
by the Westbrook Entities of payment under clause (i) of section 9(c)
of the Burnham Articles Supplementary and (b) September 30, 1998, pay
to Blackacre 25% of the Redemption Default Payment.
13. Highridge Members' liability. Each party hereto agrees that the obligations
of the Highridge Members under this agreement shall be several and
distinct, and not joint, so that any breach hereunder by any Highridge
Member shall not be imputed to, and shall not be the responsibility of, any
other Highridge Member, and any remedies for any such breach shall be
pursued only against the Highridge Member committing such breach.
14. Miscellaneous provisions.
<PAGE>
a. Amendment and modification. This agreement may only be amended or
modified by the parties hereto, pursuant to an instrument in writing
signed by the parties hereto.
b. Extension; waiver. The party entitled to the benefit of any respective
term or provision hereof may waive any inaccuracies in the
representations and warranties contained herein or in any document,
certificate or writing delivered pursuant hereto or waive compliance
with any obligation, agreement or condition contained herein. Any
agreement on the part of a party to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed by the
party entitled to the benefits of such extended or waived term or
provision. The representations, warranties and agreements of any of
the parties provided for in this agreement, and the parties'
obligations hereunder, shall continue in effect notwithstanding any
investigation made by the other party hereto.
c. Entire agreement; assignment.
i. This agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both
written and oral, between the parties hereto with respect to the
subject matter hereof.
ii. Any party hereto may assign its rights under this agreement to
any other person provided that such other person assumes the
obligations hereunder of its assignor.
d. Notification of Transfer.
i. In the event that Blackacre shall have transferred any or all of
its BPOP Preferred Units and/or Burnham Preferred Stock to any
person or entity other than any Affiliate of Blackacre Capital
Group L.P. or Cerberus Partners L.P., then Blackacre shall
provide written notification of such transfer to the Westbrook
Entities promptly following the date of such transfer, which
notification shall disclose the identity of the transferee and
the number of shares and/or units so transferred.
ii. In the event that any of the Westbrook Entities shall have
transferred any or all of its BPOP Preferred Units and/or Burnham
Preferred Stock to any person or entity other than any Affiliate
<PAGE>
of Westbrook Real Estate Partners Management II, L.L.C., then
such Westbrook Entity shall provide written notification of such
transfer to Blackacre promptly following the date of such
transfer, which notification shall disclose the identity of the
transferee and the number of shares and/or units so transferred.
e. Notices. Any notices required or permitted to be given under the terms
of this agreement shall be in writing and shall be deemed to have been
given when (i) personally delivered with signed delivery receipt
obtained, (ii) when transmitted by facsimile machine, if followed by a
mailing thereof pursuant to this section 14(e) before the end of the
first business day thereafter, with printed confirmation of successful
transmission to the facsimile number set forth in the appropriate
address listed below being obtained by the sender from the sender's
facsimile machine, or (iii) when deposited in the United States first
class mail if sent postage prepaid by registered or certified mail,
return receipt requested, or transmitted to a national overnight
delivery service for next business morning delivery, in each case
addressed as follows:
(1) if to Blackacre, to:
Blackacre Capital
450 Park Avenue
28th Floor
New York, New York 10022
Attention: Ron Kravit
Phone: (212) 891-2104
Fax: (212) 758-5305
(2) if to the Westbrook Entities, to:
Westbrook Burnham Holdings, L.L.C.
Westbrook Burnham Co-Holdings, L.L.C.
c/o Westbrook Partners, L.L.C.
11150 Santa Monica Boulevard
Suite 1450
Los Angeles, California 90025
Attention: Keith Gelb
Phone: (310) 231-4350
Fax: (310) 231-4355
with a copy to:
Westbrook Partners, L.L.C.
<PAGE>
13155 Noel Road, Suite 2300
Dallas, TX 75240
Attention: Patrick Fox
Phone: 972-934-7404
Fax: 972-774-9066, 972-934-8333
with a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: Allen Curtis Greer, II
Phone: (212) 504-6660
Fax: (212) 504-6666
(3) if to the Highridge Members, to:
The Highridge Agent
c/o Highridge Partners, Inc.
300 Continental Boulevard
Suite 360
El Segundo, California 90245
Attention: John S. Long and Steven A. Berlinger
Phone: (310) 648-7600
Fax: (310) 648-7619
The time to respond to any notice shall commence to run on the date of
delivery at the appropriate addresses (or attempted delivery if delivery is
refused during normal business hours). A party may change the address to which
notices shall be sent to it by written notice to all other parties (said change
of address to be effective upon receipt by such parties).
f. Governing law. This agreement shall be governed by the laws of the
State of New York (regardless of the laws that might otherwise govern
under applicable New York principles of conflicts of law) as to all
matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
g. Descriptive headings. The descriptive headings herein are inserted for
convenience of reference only and shall in no way be construed to
define, limit, describe, explain, modify, amplify, or add to the
interpretation, construction or meaning of any provision of, or scope
or intent of, this agreement nor in any way affect this agreement.
<PAGE>
h. Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
i. Expenses. Except as otherwise expressly set forth herein, all costs
and expenses (including legal fees and expenses) incurred in
connection with this agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
j. Parties in interest. This agreement shall be binding upon and inure
solely to the benefit of each party hereto and its Affiliates and
nothing in this agreement, express or implied, is intended by or shall
confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this agreement.
k. Further assurances. If any time after the execution of this agreement
any further action is necessary or desirable to carry out the purposes
of this agreement, the parties to this agreement shall take all such
necessary action.
<PAGE>
l. Jurisdiction. Any legal action or proceeding with respect to this
agreement shall be brought in the courts of the State of New York or
of the United States District Court for the Southern District of New
York and the appellate courts of any thereof and, by execution and
delivery of this agreement, each party to this agreement hereby
accepts, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each party to this agreement hereby expressly and
irrevocably submits the person of such party to this agreement to the
in personam jurisdiction of the foregoing courts in any suit, action
or proceeding arising, directly or indirectly, out of or relating to
this agreement. To the extent permitted under applicable law, this
consent to personal jurisdiction shall be self-operative and no
further instrument or action, other than service of process in one of
the manners specified in this agreement or as otherwise permitted by
law, shall be necessary in order to confer jurisdiction upon the
person of such party to this agreement in any such court. To the
fullest extent permitted under applicable law, each party to this
agreement irrevocably waives and agrees not to assert, by way of
motion, as a defense or otherwise, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or
proceeding brought in such a court referred to in this section 14(l),
any claim that any such suit, action or proceeding has been brought in
an inconvenient forum, any claim that it is not personally subject to
the jurisdiction of any such court or that this agreement or the
<PAGE>
subject matter hereof may not be enforced in or by such court.
Provided that service of process is effected in one of the manners
specified herein or as otherwise permitted by law, the parties agree
that any final judgment in any suit, action or proceeding brought in
such a court of competent jurisdiction from which an appeal may not be
further taken, shall be conclusive and binding upon the parties and,
so far as is permitted under applicable law, shall be enforced in any
courts of competent jurisdiction, by a suit upon such judgment. Each
party hereto waives any right it may have to a trial by jury in any
legal action or proceeding with respect to this agreement.
IN WITNESS WHEREOF, each of the undersigned has caused this agreement
to be executed on its behalf as of the date first set forth above.
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:___________________________
Name:
Title:
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:_____________________
Name:
Title:
Westbrook Burnham Holdings, L.L.C.
By: __________________________________________
Name:
Title:
Westbrook Burnham Co-Holdings, L.L.C.
By: __________________________________________
Name:
Title:
MJL Associates, A California Limited Partnership
By: MJL Investments, Inc., its general partner
By: __________________________________________
Name:
Title:
SAB Associates, A California Limited Partnership
By: SAB Investments, Inc., its general partner
By: __________________________________________
Name:
Title:
____________________________________________
Eugene S. Rosenfeld
____________________________________________
Steven A. Berlinger
____________________________________________
Jack L. Mahoney
____________________________________________
Mark Cassidy
<PAGE>
EXHIBIT 3
Blackacre Capital Management LLC
June 15, 1999
Mr. David J. Martin
Burnham Pacific Properties, Inc.
610 West Ash Street, Suite 1600
San Diego, CA 92101-355
Re: Proposal by Schottenstein Stores Corporation
Dear David:
We refer you to the offer made by an affiliate of Schottenstein Stores
Corporation dated June 7, 1999 to acquire all the outstanding shares of common
stock of Burnham Pacific Properties, Inc. (together with is subsidiaries, the
"Company") for $13.00 per share in cash. As you know, we control a significant
equity interest in the Company. As such, we would expect that you and the
Company's other directors act in good faith for the benefit of the Company and
its stockholders, and not with some other goal in mind.
In light of the offer, we urge you and the Board to take all steps
necessary to insure that we, as well as the other holders of equity interests in
the Company, receive maximum value for our interests. It is imperative that you
and the other members of management and the Board act in a manner that makes it
clear to the market and your stockholders that the Company's actions are not
motivated by a desire to perpetuate management's and the Board's control over
the Company.
It has come to our attention that the Board is considering adopting
defensive takeover mechanisms in response to the Schottenstein offer. A poison
pill or other defensive mechanism does not, in our view, represent a reasonable
response to the Schottenstein proposal. Instead, the Board should be considering
adopting a well designed process that will help us all maximize value for our
interests in the Company. We urge you to carefully consider our views and vote
against the adoption of a poison pill or other takeover defensive mechanism.
Given the enhanced profile and scrutiny imposed by the Schottenstein proposal,
<PAGE>
it is essential that management and the Board act in a manner that could only be
interpreted one way -- shareholder friendly. The failure to do so would, in our
view, further depress the market value of the Company's stock and could subject
the Board's actions to scrutiny by the courts.
We expect to share our views with other members of the Board in the
near future.
Very truly yours,
/s/ Ronald J. Kravit
________________________________
Ronald J. Kravit
cc: Board of Directors
<PAGE>
EXHIBIT 4
BLACKACRE SMC MASTER HOLDINGS, LLC
450 Park Avenue
28th Floor
New York, New York 10022
August 20, 1999
Burnham Pacific Properties Inc.
610 West Ash Street
Suite 1600
San Diego, CA 92101-3350
Re: Shareholders Rights Agreement (the "Rights Plan"), dated as of
June 19, 1999, between Burnham Pacific Properties Inc. (the
"Company") and First Chicago Trust Company of New York as Rights
Agent
Gentlemen:
Following the review of the Rights Plan, we are writing to advise you
of certain modifications to the Rights Plan that we believe are warranted in
order to avoid the inadvertent trigger of the Rights (as defined in the Rights
Plan) as a result of our ownership of preferred operating partnership units
("Preferred Units") in Burnham Pacific Partnership, L.P. (the "Operating
Partnership").
Accordingly, our recommendations are as follows:
1. The Rights Plan should make clear that any exchange of Preferred
Units for preferred stock of the Company ("Preferred Stock") and
the subsequent conversion of that Preferred Stock into common
stock of the Company ("Common Stock") would not be a Triggering
Event (as defined in the Rights Plan) under the Rights Plan. In
addition, because our Preferred Units can only be converted in
tranches (the last of which may be converted on September 30,
1999), the Rights Plan should make clear that as tranches of our
Preferred Units become convertible or are converted into
Preferred Stock or, subsequently, Common Stock, they will not be
deemed additional acquisitions of the Company's stock, and will
not constitute a Triggering Event.
2. As you are aware, because we hold primarily Preferred Units, we
entered into certain arrangements with Westbrook that protect our
rights with respect to the Company. To the extent that there can
be any attribution of ownership of (i) Westbrook's Preferred
Stock or Common Stock to us or (ii) our Preferred Units,
Preferred Stock or Common Stock to Westbrook as a result of these
arrangements, the Rights Plan should make clear that the
aggregate ownership resulting from such attribution will not
violate the definition of "Grandfathered Percentage" or
constitute a Triggering Event.
<PAGE>
3. We should receive the same exceptions provided to Westbrook
Burnham Co-Holdings, L.L.C. and Westbrook Burnham Holdings,
L.L.C. in clauses 7 and 8 of the definition of "Beneficial
Ownership." Additionally, given that we own 10 shares of
Preferred Stock, please advise us of how the issuance of Rights
will impact on the conversion of Preferred Stock pursuant to
Section 5 of the Articles of Supplementary designating 4,800,000
shares of Preferred Stock as 4,800,000 shares of Series 1997-A
Convertible Preferred Stock.
4. It appears that our first offer rights set forth in Section 4.23
of the Agreement to Contribute (the "Contribution Agreement"),
dated December 5, 1997, among the Company, the Operating
Partnership, the contributors and existing partners listed
therein is implicated under the issuance and/or the exercise of
the Rights. In this regard, we expect that you will issue to us
the Rights that we would be entitled to receive had you complied
with Section 4.23 of the Contribution Agreement.
Please be advised that we are still reviewing the Rights Plan and,
accordingly, we reserve the right to make further comments.
We look forward to a prompt response addressing our concerns relating
to the Rights Plan. If you have any questions, please feel free to contact the
undersigned or our counsel, Steven Lichtenfeld of Battle Fowler LLP at
212-856-6996.
Respectfully yours,
BLACKACRE SMC MASTER HOLDINGS, LLC
By: Blackacre Capital Group, L.P., its
managing member
By: Blackacre Capital Management Corp.,
its general partner
By: /s/ Ronald J. Kravit
_______________________________
Ronald J. Kravit
Vice-President
