Exhibit 9
MICHAEL L. ASHNER
100 Jericho Quadrangle
Suite 214
Jericho, New York 11753
August 11, 2000
Mr. Jay Schottenstein
Schottenstein Stores Corporation
1800 Moler Road
Columbus, Ohio 43201
Dear Jay:
The purpose of this letter is to set forth the terms and conditions
of our understanding pursuant to which I and my affiliates (collectively
"Ashner") who are shareholders in Burnham Pacific Properties, Inc. ("BPP") and
Schottenstein Stores Corporation and its affiliates (collectively
"Schottenstein") who are shareholders in BPP will cause a notice to be sent to
BPP setting forth their intention to nominate a slate of directors (the
"Schottenstein/Ashner Directors") for election at BPP's 2000 Annual Meeting of
stockholders currently scheduled to be held on October 18, 2000 (the "2000
Annual Meeting") and solicit proxies in favor of the election of the
Schottenstein/Ashner Directors and, if successful, oversee the management,
operation and liquidation of BPP and Burnham Pacific Operating Partnership,
L.P., a Delaware limited partnership (the "Operating Partnership"). In this
regard, it is my understanding as follows:
1. Notice. Any notice setting forth the slate of directors to be
proffered by Ashner and Schottenstein must be delivered to BPP on or prior to
August 18, 2000 and must be in compliance with Article II, Section 13 of BPP's
by-laws.
2. Proxy Solicitation. Ashner and Schottenstein will seek to:
(i) replace current management of BPP with qualified,
competent and effective executives including, without limitation, Jay
Schottenstein as Chief Executive Officer and Co-Chairman, Michael
Ashner as President and Co-Chairman, Carolyn Tiffany as Chief
Operating Officer and Treasurer, Peter Braverman as Executive Vice
President, Benton Kraner as Executive Vice President and Irwin Bain
as Secretary;
(ii) pursue an orderly liquidation of BPP and the Operating
Partnership (collectively, the "Company") for the benefit of BPP's
stockholders and the Operating Partnership's limited partners which
is intended to commence and be completed over a 36-month period,
subject to market conditions;
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(iii) replace current property management arrangements at the
properties owned by BPP or the Operating Partnership and asset
management arrangements with BPP and the Operating Partnership
provided such new arrangements are on a basis which will be
significantly less costly to the Company;
(iv) review thoroughly all "golden parachute" or other
severance arrangements with existing management prior to payment
thereunder to ensure the validity and reasonableness of such
arrangements and review and pursue any claims or causes of action
which BPP may have against the intended recipients as well as raise
any other defenses the Company may have with respect to the payment
thereof;
(v) oppose any sale of all or substantially all of the
assets of the Company (either by sale of stock, assets, merger or
otherwise) which is not reasonably expected to yield at least $8.00
per common share of BPP either in cash or securities of another
entity or a combination thereof;
(vi) cause the entire board of directors of BPP to consist
of eight persons, four of whom shall be nominated by Schottenstein
(two of whom shall be persons who are not employees of, consultants
to or otherwise affiliates of Schottenstein or Ashner ("Independent
Directors")), three of whom shall be nominated by Ashner and one of
whom will be nominated by the preferred stockholders of BPP;
provided, however, that in the event that the holders of preferred
stock of BPP elect not to nominate a director or loses the right to
nominate one director, then Schottenstein shall have the right to
nominate a fifth director who shall be an Independent Director;
(vii) to the extent not already provided for in the by-laws of
BPP, use all reasonable efforts to cause the by-laws of BPP to be
amended to provide that (1) no sale of the Company or any of its
asset may be made to an affiliate of the Company, and (2) no lease
may be entered into at any of the Company's properties with an
affiliate of the Company without the consent of all Independent
Directors;
(viii) cause no expansion in the number of members of the
Board of Directors without their mutual consent.
3. Slate of Directors. The Schottenstein/Ashner Directors shall
consist of three directors who shall be nominated by Ashner, four directors who
shall be nominated by Schottenstein, two of whom will be persons who are not
employees of, consultants to or otherwise affiliates of Schottenstein or Ashner
("Independent Directors"), and one director who shall be nominated by the
preferred stockholders of BPP. If the holder of the preferred stock of BPP
elects not to nominate a director to our slate or loses the right to nominate
one director, then Schottenstein shall have the right to nominate a fifth
director who shall be an Independent Director.
4. Property, Asset Management and Other Services. If the
Schottenstein/Ashner Directors are elected, the parties acknowledge that
Schottenstein or its affiliate shall provide the Company with a bid to provide
property management services for the Company and that Ashner or its affiliate
shall provide the Company with a bid to provide asset management and entity
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management services to the Company. Any fees payable in connection with services
provided in connection with the disposition of the assets of the Company shall
be shared equally between Schottenstein and Ashner.
5. Meetings. The parties will seek to cause meetings of the Board of
Directors of BPP to be held at least eleven times per year in Columbus, Ohio.
The parties will further seek to cause any additional meetings of the Board of
Directors to be held at such times and at such places as Ashner shall determine.
6 Costs. To the extent the proxy costs of the parties hereto are not
reimbursed by the Company, we will share equally in all costs associated with
the proxy solicitation contemplated hereby and Ashner shall reimburse
Schottenstein within 30 days of the date hereof for one-half of all third party
costs incurred by Schottenstein to date in connection with its prior offers to
acquire the Company and its the assets.
7. Term. This agreement shall terminate upon the occurrence of any of
the following:
(i) immediately, if a slate of directors other than the
Schottenstein/Ashner Directors shall be elected at the 2000
Annual Meeting;
(ii) one year from the date hereof if there has been no
meeting of the Stockholders of BPP prior to such date at which a
slate of directors of BPP is elected;
(iii) if the Schottenstein/Ashner Directors shall have been
elected, three years from the date on which the Schottenstein/Ashner
Directors shall first become directors of BPP; or
(iv) by either party hereto if a valid offer is made to
acquire all or substantially all of the assets of the Company (either
by sale of stock, assets, merger or otherwise) which is reasonably
expected to yield at least $8.00 per common share of BPP either in
cash or securities of another entity or a combination thereof.
No termination of this agreement shall relieve any party from any breach of this
agreement or the failure to fulfill a covenant hereunder prior to such
termination.
8. Purchases/Sales of BPP Stock or Partnership Interests in the
Operating Partnership. (a) If either party or their respective affiliates elects
to acquire shares of stock of BPP or partnership interests in the Operating
Partnership (the "Purchasing Party"), the Purchasing Party shall either (i) give
the other party hereto five business days prior notice of such acquisition,
which notice shall set forth the number of shares of stock of BPP or partnership
interests in the Operating Partnership that such Purchasing Party desires to
acquire (the "Purchase Interests") and the purchase price if known, and the
non-Purchasing Party shall have the right to participate with such Purchasing
Party equally in such purchase by giving written notice thereof to the
Purchasing Party within three business days of receipt of such notice or,
alternatively, (ii) purchase the Purchase Interests without giving prior notice
to the non-Purchasing Party, in which case the Purchasing Party shall give
subsequent notice to the non-Purchasing Party of such purchase before or within
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one business day after such acquisition, which notice shall set forth the
Purchase Interest that such Purchasing Party acquired or is acquiring and the
purchase price therefore, in which event, the non-Purchasing Party shall have
the right to participate with such Purchasing Party equally in such purchase by
giving written notice thereof to the Purchasing Party and accompanying such
notice with payment of the purchase price therefore within five business days of
receipt of such notice. If the non-Purchasing Party shall fail to give notice to
the Purchasing Party within the applicable time period set forth herein, such
non-Purchasing Party shall have no rights with respect to the shares or
partnership interests acquired except as set forth in the following paragraph.
(b) If a party desires to sell any shares of its stock in BPP or
partnership interests in the Operating Partnership (such party being hereinafter
referred to as the "Selling Party"), the Selling Party shall give the other
party prior notice of such sale, which notice shall set forth the number of
shares of stock of BPP or partnership interests in the Operating Partnership
that such Selling Party is selling (the "Sale Interests") and the purchase price
therefore, in which event the non-Selling Party shall have the right to acquire
the Sale Interests for the purchase price set forth in the Selling Party's
notice by giving written notice thereof to the Purchasing Party within one
business day of receipt of such notice. Any sale of Sale Interests hereunder
shall be consummated on or prior to the fifth business day following the receipt
by the non-Selling Party of the Selling Party's notice delivered pursuant to
this paragraph 8(b). If the non-Selling Party shall fail to give notice to the
Selling Party, or shall fail to purchase the Sale Interests, within the time
period set forth herein, the non-Selling Party shall have no rights with respect
to the Sale Interests.
9. Notices. All communications hereunder shall be in writing and
shall be sent by facsimile, overnight mail, registered or certified mail, return
receipt requested; if intended for me, shall be addressed to Ashner at 100
Jericho Quadrangle, Suite 214, Jericho, New York 11753, Facsimile No. (516)
433-2777, with a copy to David J. Heymann, Esq., Post & Heymann, LLP, 100
Jericho Quadrangle, Suite 214, Jericho, New York 11753, Facsimile No. (516)
433-2777 or at such other address of which Ashner shall have given notice to
Schottenstein in the manner herein provided; if intended for Schottenstein shall
be addressed to it at 1800 Moler Road, Columbus, Ohio 43207, Facsimile No. (614)
443-2344, Attention: Jay Schottenstein with a copy to J. Philip Rosen, Esq.,
Weil, Gotshal & Manges, LLP, 767 Fifth Avenue, New York, New York 10153,
Facsimile No. (212) 310-8007, or at such other address of which Schottenstein
shall have given notice to Ashner in the manner herein provided.
10. Severability. If any provision of this agreement or the
application of any provision hereof to any person or circumstances is held
invalid, the remainder of this agreement and the application of such provision
to other persons or circumstances shall not be affected unless the provision
held invalid shall substantially impair the benefits of the remaining portions
of this agreement.
11. No Modification Except in Writing. This agreement shall not be
changed, modified, or amended except by a writing signed by the party to be
charged, and this agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
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12. Further Assurances. Each of the parties hereto hereby agrees to
execute and deliver all such further documents and take all such further actions
as shall be necessary, desirable or expedient to consummate the transactions
contemplated hereby.
13. Captions. The captions appearing in this agreement are inserted
only as a matter of convenience and for reference and in no way define, limit or
describe the scope and intent of this agreement or any of the provisions hereof.
14. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
the conflict of laws principles thereof.
If the foregoing accurately reflects Schottenstein's understanding of
our relationship involving the subject matter set forth herein, please sign the
enclosed copy of this letter and return it to the undersigned. This document may
be executed in multiple counterparts.
Very truly yours,
/s/ Michael L. Ashner
Michael L. Ashner
Agreed to and accepted this 11th day of August, 2000.
SCHOTTENSTEIN STORES CORPORATION
By: /s/ Jay L. Schottenstein
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Jay L. Schottenstein
