<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
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): February 3, 1997 (January 27,
1997)
SPIEKER PROPERTIES, INC.
(Exact name of Registrant as
Specified in its Charter)
CALIFORNIA
(State or Other Jurisdiction
of Incorporation)
1-12528
(Commission File Number)
94-3185802
(IRS Employer Identification No.)
2180 SAND HILL ROAD
MENLO PARK, CA 94025
(415) 854-5600
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
<PAGE> 2
Item 5. OTHER EVENTS.
On January 27, 1997, Spieker Properties, Inc. (the "Company") completed
its public offering of 10,000,000 shares of the Company's Common Stock
(excluding up to 1,500,000 shares that may be issued upon exercise of an
over-allotment option) at $34.50 per share. The Company will use a portion of
these net proceeds from the public offering to fund the acquisition of a
portfolio of predominately office properties located in Emeryville, California
(the "Emeryville Portfolio"). A copy of the Contribution Agreement and
Registration Rights and Lock-up Agreement relating to the acquisition of the
Emeryville Portfolio have been included as exhibits hereto.
Item 7. EXHIBITS.
(c) Pricing Agreement dated January 21, 1996, relating to the public
offering of 11,500,000 shares of the Company's Common Stock
(including 1,500,000 shares that may be issued upon execution of
an over-allotment option).
Contribution Agreement relating to the acquisition of the Emeryville
Portfolio.
Registration Rights and Lock-up Agreement relating to the
acquisition of the Emeryville Portfolio
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPIEKER PROPERTIES, INC.
Date: February 3, 1997 By: /s/ Craig C. Vought
----------------------------------
Craig C. Vought
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
- -------------- -----------------------------------------------
1.1 Pricing Agreement dated January 21, 1996,
relating to the public offering of 11,500,000
shares of the Company's Common Stock (including
1,500,000 shares that may be issued upon
execution of an over-allotment option).
10.1 Contribution Agreement relating to the
acquisition of the Emeryville Portfolio.
10.2 Registration Rights and Lock-up Agreement
relating to the acquisition of the Emeryville
Portfolio
<PAGE> 1
Pricing Agreement
January 21, 1997
Goldman, Sachs & Co.,
Alex. Brown & Sons Incorporated,
Dean Witter Reynolds Inc.,
Donaldson, Lufkin & Jenrette Securities Corporation,
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Prudential Securities Incorporated,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Dear Ladies and Gentlemen:
Spieker Properties, Inc., a Maryland corporation (the "Company"),
proposes, subject to the terms and conditions stated herein and in the
Underwriting Agreement, dated February 28, 1996 (the "Underwriting Agreement"),
between the Company and Spieker Properties, L.P., a California limited
partnership (the "Operating Partnership"), on the one hand and Goldman, Sachs &
Co., Alex. Brown & Sons Incorporated, Dean Witter Reynolds Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Prudential Securities Incorporated,
on the other hand, to issue and sell to the Underwriters named in Schedule I
hereto (the "Underwriters") the Shares specified in Schedule II hereto (the
"Designated Shares" consisting of Firm Shares and any Optional Shares the
Underwriters may elect to purchase). Each of the provisions of the Underwriting
Agreement is incorporated herein by reference in its entirety, and shall be
deemed to be a part of this Pricing Agreement to the same extent as if such
provisions had been set forth in full herein; and each of the representations
and warranties set forth therein shall be deemed to have been made at and as of
the date of this Pricing Agreement, except that each representation and warranty
which refers to the Prospectus in Section 2 of the Underwriting Agreement shall
be deemed to be a representation or warranty as of the date of this Pricing
Agreement in relation to the Prospectus included in the registration statement
on Form S-3 (File No. 333-04299) (including the related Rule 462(b) registration
statement, the "Third Registration Statement"), as amended or supplemented
relating to the Designated Shares which are the subject of this Pricing
Agreement, in the form in which it is proposed to be filed with the Commission.
Each representation and warranty which refers to the Second Registration
Statement in Section 2(a) of the Underwriting Agreement shall also be deemed to
be a representation or warranty in relation to the Third Registration Statement
as of the date of this Pricing Agreement. Each reference to the Representatives
herein and in the provisions of the Underwriting Agreement so incorporated by
reference shall be deemed to refer to you. Unless otherwise defined herein,
terms defined in the Underwriting Agreement are used herein as therein defined,
except that Merrill Lynch, Pierce, Fenner & Smith Incorporated shall be included
as a Representative. The Representatives designated to act on behalf of the
Representatives and on behalf of each of the Underwriters of the Designated
Shares pursuant to Section 12 of the Underwriting Agreement and the address of
the Representatives referred to in such Section 12 are set forth in Schedule II
hereto.
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An amendment to the Second Registration Statement, the Third
Registration Statement or a supplement to the Prospectus, as the case may be,
relating to the Designated Shares, in the form heretofore delivered to you is
now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, (a) the Company agrees
to issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at the time and
place and at the purchase price to the Underwriters set forth in Schedule II
hereto, the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto and, (b) in the event and to the extent that
the Underwriters shall exercise the election to purchase Optional Shares, as
provided below, the Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company at the purchase price to the Underwriters set forth in
Schedule II hereto that portion of the number of Optional Shares as to which
such election shall have been exercised.
The Company hereby grants to each of the Underwriters the right to
purchase at their election up to the number of Optional Shares set forth
opposite the name of such Underwriter in Schedule I hereto on the terms referred
to in the paragraph above for the sole purpose of covering over-allotments in
the sale of the Firm Shares. Any such election to purchase Optional Shares may
be exercised by written notice from the Representatives to the Company given
within a period of 30 calendar days after the date of this Pricing Agreement,
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by the
Representatives, but in no event earlier than the First Time of Delivery or,
unless the Representatives and the Company otherwise agree in writing, no
earlier than two or later than ten business days after the date of such notice.
-2-
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If the foregoing is in accordance with your understanding, please sign
and return to us eight counterparts hereof, and upon acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the
Underwriters, the Company and the Operating Partnership. It is understood that
your acceptance of this letter on behalf of each of the Underwriters is or will
be pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination, upon request, but without warranty on the part of the
Representatives as to the authority of the signers thereof.
Very truly yours,
SPIEKER PROPERTIES, INC.
By:
Name:
Title:
SPIEKER PROPERTIES, L.P.
By: SPIEKER PROPERTIES, INC.
By:
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
Alex. Brown & Sons Incorporated
Dean Witter Reynolds Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Prudential Securities Incorporated
By: Goldman, Sachs & Co.
_________________________
(Goldman, Sachs & Co.)
-3-
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SCHEDULE I
<TABLE>
<CAPTION>
MAXIMUM NUMBER
NUMBER OF FIRM OF OPTIONAL SHARES
SHARES TO BE WHICH MAY BE
UNDERWRITER PURCHASED PURCHASED
---------------- -------------- ------------------
<S> <C> <C>
Goldman, Sachs & Co. ...................................... 1,400,000 210,000
Alex. Brown & Sons Incorporated............................ 1,400,000 210,000
Dean Witter Reynolds Inc................................... 1,400,000 210,000
Donaldson, Lufkin & Jenrette Securities Corporation........ 1,400,000 210,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated......... 1,400,000 210,000
Prudential Securities Incorporated......................... 1,400,000 210,000
Jefferies & Company, Inc................................... 400,000 60,000
Montgomery Securities...................................... 400,000 60,000
J.P. Morgan Securities Inc. .............................. 400,000 60,000
Morgan Stanley & Co. Incorporated.......................... 400,000 60,000
----------- ----------
Total............................................. 10,000,000 1,500,000
=========== ==========
</TABLE>
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SCHEDULE II
TITLE OF DESIGNATED SHARES: Common Stock, par value $.0001 per share
NUMBER OF DESIGNATED SHARES: Number of Firm Shares: 10,000,000
Maximum Number of Optional Shares: 1,500,000
INITIAL OFFERING PRICE TO PUBLIC: $34.50 per Share
PURCHASE PRICE TO THE UNDERWRITERS: $32.69 per Share
FORM OF DESIGNATED SHARES:
Definitive form, to be delivered through The Depository Trust Company.
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE: Same day funds.
BLACKOUT PROVISIONS WITH RESPECT TO THE DESIGNATED SHARES:
During the period beginning from the date hereof and continuing to and
including the date 90 days after the date hereof, the Company will not
offer, sell, contract to sell or otherwise dispose of any Shares or any
securities of the Company that are substantially similar to the Shares, or
any other security convertible into or exchangeable for, or represent the
right to receive, Shares or any such substantially similar securities,
except for (i) Shares issuable pursuant to employee stock option plans
existing on, or upon the conversion of convertible or exchangeable
securities existing on, or upon the conversion of convertible or
exchangeable securities outstanding as of, the date hereof, and (ii) Shares
issuable upon the exchange of partnership units in the Operating
Partnership or the issuance of partnership units in the Operating
Partnership (which may be exchanged for Shares no earlier than 90 days
after the date hereof), without the prior written consent of the
Representatives.
TIME OF DELIVERY: 9:30 a.m. (New York City time), January 27, 1997
CLOSING LOCATION: Morrison & Foerster, 755 Page Mill Road, Palo Alto,
California 94304
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives: Goldman, Sachs & Co., Alex. Brown & Sons
Incorporated, Dean Witter Reynolds Inc., Donaldson, Lufkin & Jenrette
Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Prudential Securities Incorporated.
Address for Notices, etc.: Goldman, Sachs & Co., 85 Broad Street, New York,
New York 10004
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EXHIBIT 99.1
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement"), dated as of September
30, 1996, is entered into by and among SPIEKER PROPERTIES, L.P., a California
limited partnership ("Transferee"), SPIEKER PROPERTIES, INC., a Maryland
corporation (the "REIT"), WATERGATE TOWER ASSOCIATES, a California limited
partnership ("WTA"), TOWER II, a California limited partnership ("T-2"),
WATERGATE TOWER III ASSOCIATES, a California limited partnership ("WT-3"),
BAYBRIDGE OFFICE PLAZA ASSOCIATES, a California limited partnership ("BOPA"),
F.P. LATHROP, MARCIA FAY LATHROP and SANDRA L. HYDE (collectively, the
"Trustees"), as Trustees of The Lathrop Trust, a trust organized under the laws
of the State of California ("Lathrop Trust"), and F.P. LATHROP, an individual
("Lathrop"). WTA, T-2, WT-3 and BOPA are collectively referred to herein as the
"Partnership Transferors" and each, individually, a "Partnership Transferor."
The Partnership Transferors and the Trustees, as Trustees of the Trust, are
collectively referred to herein as the "Transferors").
WHEREAS, the Transferors are the owners of the Property (as defined
below); and
WHEREAS, each Transferor desires to contribute its respective
Constituent Parcel(s) (as defined below) to Transferee, and Transferee desires
to accept the contribution of the respective Constituent Parcel(s) from each
Transferor, all on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the respective agreements
hereinafter set forth, the Transferors and Transferee hereby agree as follows:
1. Properties Included in Contribution. The Transferors hereby
agree to contribute to Transferee, and Transferee hereby agrees to accept as
a contribution from the Transferors, subject to the terms and conditions set
forth herein, the following:
(a) all of the Transferors' right, title and interest in and to
those certain parcels of real property located in Emeryville, California, and
more particularly described in Exhibits A-1 through A-7 attached hereto
(collectively, the "Real Property"), including all improvements thereto or
thereon (collectively, the "Improvements"), and together with all of the
Transferors' right, title and interest in and to all rights, privileges and
easements appurtenant to the Real Property, including, without limitation, all
minerals, oil, gas and other hydrocarbon substances on and under the Real
Property, as well as all development rights, air rights, water, water rights,
riparian rights and water stock relating to the Real Property and any
rights-of-way or other appurtenances used in connection with the beneficial use
and enjoyment of the Real Property and all of the Transferors' right, title and
interest in and to all roads and alleys adjoining or servicing the Real Property
(collectively, the "Appurtenances");
(b) all personal property owned by the Transferors located on or
in or used exclusively in connection with the Real Property and Improvements,
including, without
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limitation, those items described in Exhibit B attached hereto (the "Personal
Property"), provided, however, in no event shall the term Personal Property
include or be deemed to include any items of personal property that are located
in the Lathrop Leased Premises (as defined below); and
(c) any intangible personal property now owned by the Transferors
(or acquired by the Transferors prior to the Closing Date) and used in the
ownership, use or operation of the Real Property, Improvements and Personal
Property, including, without limitation, the right to use any trade name now
used in connection with the Real Property and, to the extent approved by
Transferee pursuant to this Agreement, any contract or lease rights (including,
without limitation, the lessor's interest in and to all tenant leases, subleases
and tenancies, including all amendments, modifications, agreements, records,
substantive correspondence, and other documents affecting in any way a right to
occupy any portion of the Improvements (the "Leases"), and the Transferors'
interest in all security deposits and prepaid rent, if any, under the Leases and
any and all guaranties of the Leases), utility contracts or other agreements or
rights relating to the ownership, use and operation of the Property, as defined
below (collectively, the "Intangible Property").
All of the items referred to in subparagraphs (a), (b) and (c) above
are collectively referred to as the "Property." As used herein, the term
"Constituent Parcel" shall mean the parcels constituting the Land as separately
identified on one of Exhibits A-1 through A-7 hereto, together with the
Improvements thereon and the Appurtenances, Personal Property and Intangible
Property properly allocable thereto. The Constituent Parcels and the ownership
thereof are more particularly described and defined on Schedule 1 attached
hereto.
2. Issuance of OP Units.
(a) In exchange for the contribution of the Property to
Transferee, Transferee shall issue to the Transferors (or, at the written
direction of the Partnership Transferors, one or more of their constituent
partners) a certain number of OP Units (as defined below) as determined pursuant
to Paragraph 2(d) below, and shall prepay the Existing Loans (together with all
prepayment fees, costs and expenses incurred in connection therewith) as
described in Paragraph 2(c) below.
(b) Within two (2) business days after the due execution and
delivery of this Agreement by both parties, Transferee shall wire transfer into
an escrow established with a national title company (or agent therefor) selected
by Transferee and reasonably acceptable to the Transferors ("Title Company") an
initial deposit in the amount of One Hundred Thousand Dollars ($100,000.00) (the
"Initial Deposit"). Additionally, in the event that Transferee delivers to the
Transferors the Approval Notice (as defined below), Transferee shall wire
transfer into such escrow with Title Company, within two (2) business days after
its delivery of the Approval Notice, an additional deposit in the amount of Six
Hundred Fifty Thousand Dollars ($650,000) (the "Additional Deposit;" and,
together with the Initial Deposit and (to the extent applicable) the Extension
Deposit, the "Deposit). The Deposit shall be held in an interest-bearing account
and interest accruing thereon shall be held for the account of Transferee,
subject to the provisions of
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Paragraph 8(a) below. In the event the contribution of the Property as
contemplated hereunder is consummated, the Deposit plus interest accrued thereon
shall be returned to Transferee. In the event that the Closing does not occur
hereunder, the Deposit shall be returned to Transferee or delivered to the
Transferors as set forth in this Agreement.
(c) At the closing of the transaction contemplated hereunder (the
"Closing"), Transferee shall take title to the Property subject to, but shall
not in any way assume, those certain mortgages or deeds of trust identified on
Schedule 2 attached hereto (the "Existing Loans"). The parties hereto
acknowledge that Transferee will prepay the Existing Loans immediately following
the Closing. As used herein, the term "Loan Payoff Amount" shall mean the
aggregate outstanding balance (principal and accrued interest) of the Existing
Loans, together with all prepayment fees, costs and expenses incurred in
connection with the prepayment of the Existing Loans.
(d) At the Closing, Transferee shall issue to the Transferors (or,
at the written direction of the Partnership Transferors, one or more of their
constituent partners) (each such person or entity who receives OP Units
hereunder being referred to herein as an "OP Recipient") that number of limited
partnership units in Transferee ("OP Units") that is equal to the quotient of
(1) the OP Unit Amount divided by (2) the average daily closing price of a share
of common stock ("Common Stock") of the REIT for the twenty (20) business day
period immediately preceding the date that is one business day before the
Closing Date (the "Average Stock Price"), provided that if the Average Stock
Price is less than $26.00, the number of OP Units issued to the Transferors
shall be equal to the OP Unit Amount divided by $26.00 and if the Average Stock
Price is greater than $32.00, the number of OP Units issued to the Transferors
shall be equal to the OP Unit Amount divided by $32.00. As used herein, the term
"OP Unit Amount" shall mean the amount determined by subtracting the amount of
the Loan Payoff Amount from the sum of One Hundred Twenty-Nine Million Dollars
($129,000,000) (the "Agreed Amount"), provided that the number of OP Units
issued shall be subject to adjustments and prorations as set forth herein,
including but not limited to, the credits and prorations set forth in Section
9(f) below, any adjustments that may be made for certain potential leasing
activity as described in Paragraph 16(c) below, and the credit set forth in
Section 18(b) below. Notwithstanding anything to the contrary set forth herein,
in the event that Transferee delivers the Extension Notice and places in escrow
the Extension Deposit as provided in Paragraph 9(b) below, the Average Stock
Price shall be determined as if the Closing Date were the date that is exactly
thirty (30) days after the expiration of the Due Diligence Period.
(e) Notwithstanding anything to the contrary provided herein, in
no event shall any OP Units be issued to or offered to any person that is not an
"accredited investor" under all applicable federal and state securities laws or
to whom the issuance of OP Units would be prohibited without the registration
thereof or without the providing of appropriate disclosure with respect thereto.
In the event that any OP Units are to be issued pursuant to Paragraph 2(d) above
to a Transferor that is a partnership, such Transferor shall amend its
partnership agreement prior to the Closing to prohibit the distribution of OP
Units by such Transferor to any constituent partner thereof that fails to meet
the standards set forth in the first sentence of this Paragraph 2(e).
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(f) The allocation of the Agreed Value among the Constituent
Parcels shall be as set forth on Exhibit C attached hereto and made a part
hereof.
3. Title to the Property.
(a) At the Closing, the Transferors shall convey to Transferee fee
simple title to the Real Property and the Improvements pursuant to one or more
grant deeds (the "Grant Deeds") in the form of Exhibit D attached hereto,
subject only to the Existing Loans and the other exceptions to title approved by
Transferee in writing prior to the Title Notification Date (as defined below)
(collectively, the "Permitted Exceptions"). Evidence of delivery of fee simple
title shall be the issuance to Transferee at Closing by Title Company of its
ALTA Owner's Extended Coverage Policy of Title Insurance in the amount of the
Agreed Value insuring fee simple title to the Real Property, the Appurtenances
and the Improvements in Transferee, subject only to the Permitted Exceptions
(the "Title Policy"). The Title Policy shall provide full coverage against
mechanics' and materialmen's liens arising out of the construction, repair or
alteration of any of the Improvements, including any tenant improvements
therein, and shall contain such special endorsements as Transferee may
reasonably require (the "Endorsements"). The Title Company shall also provide
for reinsurance with direct access to the reinsurers and in such amounts as
Transferee may require. The Transferors shall execute an "Owner's Affidavit" in
form reasonably satisfactory to the Transferors to support the issuance of the
Title Policy. The Transferors shall have the right, at the Transferors' sole
cost and expense, to obtain their own policy of title insurance, provided that
the issuance of such policy shall not constitute a condition to the Transferors'
obligations hereunder.
(b) At the Closing, the Transferors shall transfer title to the
Personal Property, subject to the Existing Loans, by one or more warranty bills
of sale in the form attached hereto as Exhibit E (the "Bills of Sale"), such
title to be free of any liens, encumbrances or interests other than the
Permitted Exceptions.
(c) At the Closing, the Transferors shall transfer title to the
Intangible Property, subject to the Existing Loans, by one or more assignments
of Intangible Property in the form attached hereto as Exhibit F (the
"Assignments of Intangible Property") and one or more assignments of the Leases
in the form attached hereto as Exhibit G (the "Assignments of Leases"), such
title to be free of any liens, encumbrances or interests other than the
Permitted Exceptions.
4. Due Diligence and Time for Satisfaction of Conditions. Transferee
shall have the right to commence due diligence with respect to the Property
following the date on which this Agreement is fully executed by the parties
hereto (the "Effective Date") and the due diligence period ("Due Diligence
Period") shall expire on the seventy-fifth (75th) day after the Effective Date,
provided, however, in the event that the Transferors fail to deliver to
Transferee all of the items set forth in Part I of Schedule 3 attached hereto
(the "Initial Delivery Items") within five (5) days after the Effective Date,
the Due Diligence Period shall be extended by one day for each day beyond such
five (5) day period until all of the Initial Delivery Items are
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delivered to Transferee, and in the event that the Transferors fail to deliver
to Transferee all of the items set forth in Part II of Schedule 3 attached
hereto (the "Secondary Delivery Items") within ten (10) days after the Effective
Date, the Due Diligence Period shall be extended by one day for each day beyond
such ten (10) day period until all of the Secondary Delivery Items are delivered
to Transferee. The Transferors shall have the right to deliver written notice
(the "Delivery Notice") to Transferee informing Transferee that the Transferors
have delivered to Transferee all of the Initial Delivery Items or all of the
Secondary Delivery Items, as the case may be, and, unless Transferee responds in
writing to the Transferors within five (5) days after its receipt of the
Delivery Notice specifying in reasonable detail which of the Initial Delivery
Items or the Secondary Delivery Items have not been delivered to Transferee, the
date on which the Delivery Notice is delivered to Transferee shall conclusively
be deemed to be for all purposes of this Agreement the date on which all of the
Initial Delivery Items or Secondary Delivery Items, as the case may be, were
delivered to Transferee. In addition to the foregoing, the Transferors shall
make available to Transferee and its employees, representatives, counsel and
consultants access to all of its non-privileged books, records and files
relating to the Property in the Transferors' possession or reasonable control,
including, without limitation, all of the items set form on said Schedule 3
other than the Initial Delivery Items and the Secondary Delivery Items, and the
Transferors agree, to the extent reasonably feasible, to allow Transferee to
make copies at the Transferors' office or the property management office of such
items as Transferee reasonably requests. Transferee acknowledges that the
Transferors have delivered to Transferee prior to the date hereof certain of the
items described on said Schedule 3 as set forth on said Schedule 3 and agrees
that the Transferors shall not be required to deliver additional copies of such
items to Transferee.
5. Diligence Period Conditions. The following conditions are precedent
to Transferee's obligation to consummate the transactions contemplated hereby
(the "Diligence Period Conditions"):
(a) Transferee's review and approval of title to the Property, as
follows:
(i) Transferee shall use all reasonable efforts to obtain as
soon as reasonably possible after the Effective Date a current extended coverage
preliminary title report on the Real Property, issued by Title Company,
accompanied by copies of all documents referred to in the report (collectively,
the "Preliminary Report"), and to arrange for the Title Company to deliver to
the Transferors a duplicate copy of the Preliminary Report;
(ii) The Transferors shall deliver to Transferee, within five
(5) business days after their receipt of the Preliminary Report, copies of any
existing and proposed easements, covenants, restrictions, agreements or other
documents which affect title to the Property (other than the Leases), of which
any Transferor has knowledge, and which are not disclosed by the Preliminary
Report;
(iii) The Transferors shall deliver to Transferee, within
five (5) days after the Effective Date, copies of the most recent as-built
surveys (if any) of the Real Property and Improvements in the Transferors'
possession or reasonable control; and
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(iv) The Transferors shall deliver to Transferee, within five
(5) days after the Effective Date, copies of the most recent property tax bills
for the Property.
Transferee shall advise the Transferors, on or prior to the date that
is thirty (30) days prior to the end of the Due Diligence Period (the "Title
Notification Date"), what exceptions to title will be accepted by Transferee.
The Transferors shall have ten (10) business days after receipt of Transferee's
objections to give Transferee: (i) written notice that the Transferors will
remove such objectionable exceptions on or before the Closing Date; or (ii)
written notice that the Transferors elect not to cause such exceptions to be
removed. The Transferors' failure to give notice to Transferee within the ten
(10) business day period shall be deemed to be the Transferors' election not to
cause such exceptions to be removed. If the Transferors give Transferee notice
or are otherwise deemed to have elected to proceed under clause (ii), Transferee
shall have ten (10 ) business days thereafter to elect to proceed with the
transaction or terminate this Agreement. If Transferee shall fail to give the
Transferors notice of its election on or before such tenth (10th) day,
Transferee shall be deemed to have elected to terminate this Agreement. If the
Transferors shall give notice pursuant to clause (i) and shall fail to remove
any such objectionable exceptions from title prior to the Closing Date, and
Transferee is unwilling to take title subject thereto, the Transferors shall be
in default and Transferee shall have the rights and remedies set forth in
Paragraph 8 below.
(b) Transferee's review and approval, prior to the end of the Due
Diligence Period, of any service contracts, utility contracts, maintenance
contracts, management contracts, equipment leasing agreements, and brokerage and
leasing commission agreements which may continue after Closing (collectively,
the "Service Contracts"), certificates of occupancy, presently effective
warranties or guaranties received by the Transferors from any contractors,
subcontractors, suppliers or materialmen in connection with any construction,
repairs or alterations of the Improvements or any tenant improvements, reports
of insurance carriers insuring the Property and each portion thereof respecting
the claims history of the Property, if any, environmental reports, soils
reports, insurance policies, insurance certificates of Tenants, and other
contracts or documents of significance to the ownership, use or operation of the
Property (collectively, the "Other Documents"). Transferee shall advise the
Transferors in writing during the Due Diligence Period which of the Service
Contracts Transferee will assume at Closing (the "Assumed Contracts"), and the
Transferors shall terminate as of the Closing Date all Service Contracts which
Transferee elects not to assume, without penalty or liability to Transferee,
provided that, notwithstanding the foregoing, Transferee shall assume at
Closing, and the Transferors shall have no obligation to terminate, that certain
equipment lease covering certain security equipment located at the Tower One
Property, the Tower Two Property, the Tower Three Property and the Baybridge
Office Plaza Property (as such terms are defined on Schedule 1 attached hereto),
a copy of which equipment lease has been provided to Transferee prior to the
date hereof. Without limiting the foregoing, the Transferors shall terminate, or
caused to be terminated, as of the Closing, all management agreements and
leasing or listing agreements relating to the Property. Except to the extent
provided in Paragraph 16(b) below, under no circumstances shall Transferee be
deemed to have assumed at Closing any obligation to pay any leasing commissions
with respect to the Property.
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(c) Transferee's review and approval, prior to the end of the Due
Diligence Period, of all books and records relating to the Property and all
income and expense statements, year-end financial and monthly operating
statements for the three (3) most recent calendar years prior to the Closing
Date and the current year (including copies of all audit or review letters), a
copy of the operating budgets pertaining to said years, and copies of any and
all financial or operating statements pertaining to said years submitted to any
lenders holding a security interest in the Property (to the extent different
than the financial and operating statements otherwise referenced in this
Paragraph 5(c)).
(d) Transferee's review and approval, prior to the end of the Due
Diligence Period, of a copy of the Leases and the Rent Roll (as defined below).
(e) Transferee's review and approval, prior to the end of the Due
Diligence Period, of the structural, mechanical, electrical and other physical
characteristics and condition of the Property, structural calculations for the
Improvements, site plans, engineering reports and plans, landscape plans, and
floor plans, and copies of any as-built plans and specifications for the
Property. Such review shall include an examination for the presence or absence
of Hazardous Material (as defined in Paragraph 10(l) below), which shall be
performed or arranged by Transferee at Transferee's sole expense. If, based upon
Transferee's Phase I examination, Transferee's consultants determine that a
Phase II examination is necessary with respect to all or a part of the Real
Property, Transferee may elect to perform a Phase II examination, provided,
however, that that the Transferors shall have the prior right to approve the
scope of such Phase II testing, the times at which and locations in which any
drilling or other invasive or destructive testing shall be done, and the
identity of Transferee's environmental consultant(s) and any contractors
performing work on the Property, which approval shall not be unreasonably
withheld, delayed or conditioned. The Transferors acknowledge that, based on
Transferee's and its consultants preliminary review of certain environmental
reports relating to the Property, Transferee intends to undertake certain Phase
II work. In the event that the Transferors fail to disapprove in writing any
request for approval by Transferee under this Paragraph 5(e) within three (3)
business days after the Transferors' receipt of such request, the Transferors
shall be deemed to have approved such requested matter.
(f) Transferee's review and approval, prior to the end of the Due
Diligence Period, of all governmental permits and approvals relating to the
construction, operation, use or occupancy of the Property, and all zoning,
land-use, subdivision, environmental, building and construction laws and
regulations restricting or regulating or otherwise affecting the use, occupancy
or enjoyment of the Property.
(g) The transaction contemplated hereunder shall have been
approved by the Board of Directors of the REIT, which approval may be given or
withheld in the sole and absolute discretion of said Board, and for any or for
no reason whatsoever. The parties acknowledge and agree that the Transferee's
delivery of the Approval Notice shall be deemed to constitute satisfaction of
the Diligence Period Condition set forth in this Paragraph 5(g).
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<PAGE> 8
Prior to the end of the Due Diligence Period, Transferee shall deliver
written notice (the "Approval Notice") to the Transferors informing the
Transferors as to whether or not Transferee has approved or waived all of the
Diligence Period Conditions. Notwithstanding anything in this Agreement to the
contrary, Transferee shall have the right to terminate this Agreement at any
time prior to the end of the Due Diligence Period in its sole and absolute
discretion and for any or for no reason whatsoever. If, by the end of the Due
Diligence Period, Transferee shall not have delivered the Approval Notice to the
Transferors approving or waiving all of the Diligence Period Conditions, then
this Agreement shall automatically terminate. Transferee shall affirm in writing
the termination of this Agreement prior to the Deposit being returned to
Transferee.
6. Transferee Conditions to Closing. The following conditions are
precedent to Transferee's obligation to consummate the transactions contemplated
hereby (the "Transferee Conditions Precedent"):
(a) Transferee shall not have terminated this Agreement pursuant
to any right of termination reserved to Transferee hereunder, including, without
limitation, pursuant to the right of termination set forth in Paragraph 5 above.
(b) The Transferors' obtaining and delivering to Transferee on or
before the Closing Date tenant estoppel certificates in form and substance
satisfactory to Transferee from all of the tenants ("Tenants") of the Property,
which certificates shall be dated no earlier than thirty (30) days after the
Effective Date. The Transferors shall deliver to each of the Tenants of the
Property, and shall use commercially reasonable efforts to obtain from each of
the Tenants, Transferee's standard form tenant estoppel certificate in the form
attached hereto as Exhibit O, revised by the Transferors to reflect the terms of
the respective Leases, and modified to address specific concerns arising as a
result of Transferee's review of the Leases. Notwithstanding the foregoing, in
the event that the Transferors obtain and deliver satisfactory tenant estoppel
certificates from all of the Major Tenants (as defined below), but are unable,
despite commercially reasonable efforts, to obtain estoppel certificates from
all of the Minor Tenants (as defined below), then the Transferors shall be
deemed to have satisfied the Transferee Condition Precedent set forth in this
Paragraph 6(b) provided that (i) the Transferors obtain and deliver to
Transferee satisfactory tenant estoppel certificates as described above from at
least ninety-five percent (95%) of the Minor Tenants and (ii) the applicable
Transferor delivers to Transferee a landlord estoppel certificate in form and
substance reasonably satisfactory to Transferee with respect to each Minor
Tenant that fails to deliver a satisfactory tenant estoppel certificate. The
representations and warranties set forth in each landlord estoppel certificate
shall survive the Closing until the earlier of (x) the scheduled expiration date
of the Lease with respect to which such landlord
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<PAGE> 9
estoppel certificate is delivered or (y) the date on which such Transferor
delivers a satisfactory tenant estoppel certificate from the applicable Minor
Tenant. Each Transferor agrees to execute such landlord estoppel certificates as
are required to satisfy the Transferee Condition Precedent set forth in this
Paragraph 6(b). Notwithstanding the foregoing, the Transferors shall have the
right to disclose in such certificates any appropriate facts or circumstances
relating to such Leases or tenancies that are known by the Transferors, provided
that such right shall not affect Transferee's right to terminate this Agreement
in the event that each such landlord estoppel certificate is not reasonably
satisfactory to Transferee. As used herein, the term "Major Tenant" shall mean
any Tenant that, together with all of its affiliated entities, occupies 5,000
square feet of space or more at the Property, and the term "Minor Tenant" shall
mean any Tenant that is not a Major Tenant. Transferee shall have the right,
prior to Closing, to attempt to obtain recertified tenant estoppel certificates
dated close to the Closing Date, provided that the foregoing shall not be a
condition precedent to Transferee's obligations hereunder.
(c) As of the Closing, there shall be no litigation pending by
third persons to enjoin the contribution of the Property to Transferee or
otherwise to challenge the consummation of the transactions contemplated hereby.
(d) Pay-off letters from the holders of the Existing Loans shall
have been obtained on or before the Closing Date and appropriate arrangements
for the satisfaction of the indebtedness and the discharge of the liens relating
thereto shall have been made as of the Closing Date such that the Title Company
is able to issue the Title Policy without taking exception for the Existing
Loans.
(e) All of the Transferors' representations and warranties
contained in or made pursuant to this Agreement shall have been true and correct
in all material respects when made and shall be true and correct in all material
respects as of the Closing Date. At the Closing, the Transferors shall deliver
to Transferee a certificate certifying that each of the Transferors'
representations and warranties contained in Paragraph 10 below are true and
correct as of the Closing Date, subject only to such exceptions as are necessary
to reflect events arising after the Effective Date that are beyond the
reasonable control of the Transferors or their respective employees, agents or
contractors. In no event shall the inclusion of any such exception in such
certificate limit the Transferee's right to terminate this Agreement in the
event that any of the Transferors' representations and warranties contained in
or made pursuant to this Agreement is not true and correct in all material
respects when made and true and correct in all material respects as of the
Closing Date.
(f) The physical condition of the Property shall be substantially
the same on the Closing Date as on the Effective Date, reasonable wear and tear
and loss by casualty excepted (subject to the provisions of Paragraph 13 below),
and, as of the Closing Date, there shall be no litigation or administrative
agency or other governmental proceeding of any kind whatsoever, pending or
threatened, which as of or after Closing could reasonably be anticipated to
materially adversely affect the value of the Property or the ability of
Transferee to operate the Property in the manner in which the Property is being
operated on the Effective Date, and no proceedings shall be pending or
threatened which could or would cause the redesignation or other modification of
the zoning classification of, or of any building or environmental code
requirements applicable to, the Property.
(g) As of the Closing, all of the Leases (including both existing
Leases and any new Leases entered into pursuant to the terms of this Agreement)
shall be in full force and effect (other than Leases that expire prior to the
Closing pursuant to their terms), without default thereunder by any Transferor,
and, as of the Closing, there shall be no increase in the square
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<PAGE> 10
footage of space with respect to which either the Tenant is in material default
of its Lease obligations or the Tenant is the subject of any pending bankruptcy
or insolvency proceeding from that which existed and was disclosed to (or
otherwise actually known by) Transferee prior to the expiration of the Due
Diligence Period.
(h) Title Company shall be irrevocably and unconditionally
committed to issue to Transferee the Title Policy as described in Paragraph 3(a)
above, subject only to the payment of the premium therefor.
(i) The Average Stock Price shall be equal to or greater than
$24.00, provided that Transferee shall not have the right to terminate this
Agreement as a result of the failure of the Transferee Condition Precedent set
forth in this Paragraph 6(i) to the extent that the Average Stock Price has been
reduced to an amount below $24.00 as a result of (A) a willful act of Transferee
or the REIT or (B) any event, condition or circumstance that also constitutes a
breach of any representation or warranty made by Transferee or the REIT herein.
The Transferee Conditions Precedent are intended solely for the benefit
of Transferee. Subject to the provisions of Paragraph 8 below, if any of the
Transferee Conditions Precedent is not satisfied, Transferee shall have the
right in its sole discretion either to waive in writing such Transferee
Condition Precedent and proceed with the consummation of the transactions
described herein or terminate this Agreement. The parties acknowledge and agree
that Transferee's consummation of the transactions contemplated herein shall be
deemed to constitute its waiver of any unsatisfied Transferee Condition
Precedent, provided that the foregoing shall not limit any right that Transferee
may otherwise have hereunder with respect to any breach by any Transferor of any
representation or warranty set forth herein. The failure of the Transferee
Condition Precedent set forth in Paragraph 6(c) shall not relieve Transferee
from any liability in the event that such Transferee Condition Precedent is not
satisfied as a result of the breach of any representation or warranty by
Transferee hereunder.
In the event that the Transferors reasonably determine prior to the
Closing Date that any of the Transferors' representations or warranties
contained in or made pursuant to this Agreement is not true and correct in all
material respects and that the Transferors are unable, despite their use of
commercially reasonable efforts, to cure such breach such that all of the
Transferors' representations and warranties are true and correct in all material
respects as of the Closing Date, then the Transferors shall have the right to
deliver written notice to Transferee describing in reasonable detail the facts
and circumstances giving rise to such breach and demanding that the Transferee,
on or before the earlier of (i) the date that is twenty (20) days after the date
on which Transferee received such notice or (ii) the Closing Date, either waive
such breach or terminate this Agreement. In the event that Transferee fails to
notify the Transferors by the deadline established in the immediately preceding
sentence that Transferee has waived such breach, then this Agreement shall
automatically terminate. In no event shall the terms of this paragraph limit any
of Transferee's rights under Paragraph 8 below.
Notwithstanding anything to the contrary set forth herein, in the event
that Transferee delivers the Extension Notice and places in escrow the Extension
Deposit as provided in
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Paragraph 9(b) below, the following provisions shall apply in the event that the
Closing occurs later than the date that the Closing would have occurred had
Transferee not delivered the Extension Notice (the "Scheduled Closing Date"):
(1) In the event that the Transferee Condition Precedent set forth
in Paragraph 7(g) above is not satisfied on the extended Closing Date (the
"Extended Closing Date"), Transferee shall not have the right to terminate this
Agreement as a result of the failure of the Transferee Condition Precedent set
forth in Paragraph 7(g) above unless, as of the Extended Closing Date, there
shall be an increase in the square footage of space with respect to which either
the Tenant is in material default of its Lease obligations or the Tenant is the
subject of any pending bankruptcy or insolvency proceeding of at least 50,000
square feet from that which existed and was disclosed to (or otherwise actually
known by) Transferee on the Scheduled Closing Date;
(2) Transferee shall not have the right to terminate this
Agreement as a result of the failure of the Transferee Condition Precedent set
forth in Paragraph 7(i) above; and
(3) In the event that either or both of the Transferee Conditions
Precedent set forth in Paragraphs 7(e) and (f) above is or are not satisfied on
the Extended Closing Date as a result of an event that is beyond the reasonable
control of the Transferors or their respective employees, agents or contractors,
then Transferee shall have the right to terminate this Agreement as a result of
the failure of either or both of such Transferee Conditions Precedent only if
Transferee pays to the Transferors the sum of $500,000.
The parties hereto acknowledge and agree that, notwithstanding
Transferee's delivery of the Extension Notice, Transferee shall have the right
to terminate this Agreement on the Scheduled Closing Date if any Transferee
Condition Precedent is not satisfied on the Scheduled Closing Date.
7. Transferors Conditions to Closing. The following conditions are
precedent to the Transferors' obligations hereunder, including, without
limitation, their obligations to contribute the Property to Transferee (the
"Transferors Conditions Precedent"):
(a) All of Transferee's representations and warranties contained
in or made pursuant to this Agreement shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects as of the Closing Date. At the Closing, Transferee shall deliver to the
Transferors a certificate certifying that each of Transferee's representations
and warranties contained in Paragraph 11 below are true and correct as of the
Closing Date, subject only to such exceptions as are necessary to reflect events
arising after the Effective Date that are beyond the reasonable control of
Transferee, the REIT or their respective employees, agents or contractors. In no
event shall the inclusion of any such exception in such certificate limit the
Transferors' right to terminate this Agreement in the event that any of
Transferee's representations and warranties contained in or made pursuant to
this Agreement is not true and correct in all material respects when made and
true and correct in all material respects as of the Closing Date.
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(b) The Average Stock Price shall be equal to or greater than
$24.00.
(c) As of the Closing, there shall be no litigation pending to
enjoin the contribution of the Property to Transferee or otherwise to challenge
the consummation of the transactions contemplated hereby.
(d) No federal legislation shall have been adopted after the
Effective Date and prior to the Closing that could reasonably be expected to
undermine the anticipated tax treatment afforded to the contribution of the
Property to Transferee by the Transferors as set forth herein, and between the
Effective Date and the Closing Date, neither the Internal Revenue Service nor
any court applying federal law shall have issued any authoritative challenge to
or otherwise authoritatively rejected the anticipated tax treatment afforded to
the contribution of the Property to Transferee by the Transferors as set forth
herein.
(e) Transferee shall not have disapproved the maximum
reimbursement amount reasonably requested by the OP Recipients pursuant to
Paragraph 19 below and Transferee shall have offered the OP Recipients the
opportunity to enter into the Reimbursement Agreement (as defined below) in such
maximum amounts.
(f) The Transferors shall not have terminated this Agreement
pursuant to any right of termination reserved to the Transferors hereunder.
(g) Transferee shall have delivered the OP Units to the Title
Company with instructions to deliver the OP Units to the OP Recipients at the
Closing.
(h) Prior to the Closing, either that certain Investor Rights
Agreement (the "Investor Rights Agreement") dated November 18, 1993, by and
among the REIT and the individuals set forth on "Exhibit A" thereto (the
"Original Investors"), shall have been amended to provide that the registration
rights granted to the OP Recipients pursuant to the Registration Rights/Lock-Up
Agreement (as defined below) shall not be subordinate to the registration rights
granted to the Original Investors under the Investor Rights Agreement or the
Original Investors shall have waived in writing the provisions of Section 11 of
the Investor Rights Agreement (as well as any other provision of the Investor
Rights Agreement or any other document having a similar effect) with respect to
the OP Recipients.
The Transferors Conditions Precedent are intended solely for the
benefit of the Transferors. Subject to the provisions of Paragraph 8 below, if
any of the Transferors Conditions Precedent is not satisfied, the Transferors
shall have the right in their sole discretion either to waive in writing such
Transferors Condition Precedent and proceed with the consummation of the
transactions described herein or terminate this Agreement. The parties
acknowledge and agree that the Transferors' consummation of the transactions
contemplated herein shall be deemed to constitute their waiver of any
unsatisfied Transferors Condition Precedent, provided that the foregoing shall
not limit any right that the Transferors may otherwise have hereunder with
respect to any breach by Transferee of any representation or warranty set forth
herein. The
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failure of the Transferors Condition Precedent set forth in Paragraph 7(c) shall
not relieve the Transferors from any liability in the event that such
Transferors Condition Precedent is not satisfied as a result of the breach of
any representation or warranty by any Transferor hereunder or the breach by any
Transferor of Paragraph 18(k) below. Additionally, in the event that the
Transferors terminate this Agreement as a result of the failure of the
Transferors Condition Precedent set forth in Paragraph 7(d) above, the
Transferors shall, as a condition of the effectiveness of such termination, pay
to Transferee any title, escrow, legal and inspection fees actually incurred by
Transferee and any other third party, out-of-pocket expenses actually incurred
by Transferee in connection with the performance of its due diligence review of
the Property, including, without limitation, environmental and engineering
consultants' fees and expenses (but in no event to exceed $500,000).
8. Remedies.
(a) In the event that the transactions contemplated by this
Agreement are not consummated because of the failure of any condition or any
other reason except a default under this Agreement on the part of Transferee,
the Deposit (including, to the extent applicable, the Extension Deposit) plus
interest accrued thereon shall immediately be returned to Transferee. If said
transactions are not consummated because of a default under this Agreement on
the part of Transferee, which default occurs after the expiration of the Due
Diligence Period, the Deposit (including the Extension Deposit, if any, and
together with the interest accrued thereon) shall be paid to, and may thereafter
be retained by, the Transferors as liquidated damages. THE PARTIES HAVE AGREED
THAT THE TRANSFERORS' ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY TRANSFEREE,
WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE, BY
PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE DEPOSIT (TOGETHER
WITH THE INTEREST EARNED THEREON) HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS
THE PARTIES' REASONABLE ESTIMATE OF THE TRANSFERORS' DAMAGES AND AS THE
TRANSFERORS' EXCLUSIVE REMEDY AGAINST TRANSFEREE, AT LAW OR IN EQUITY, IN THE
EVENT THAT THE CLOSING DOES NOT OCCUR AS A RESULT OF A DEFAULT UNDER THIS
AGREEMENT ON THE PART OF TRANSFEREE.
INITIALS: WTA ____ T-2 ____ WT-3 ____ BOPA ____
Lathrop ____ Trustees ____/____/____ Transferee ____
Nothing contained in this Paragraph 8(a) shall limit or affect the Transferors'
right to pursue any claim against Transferee arising in connection with any
Termination Surviving Obligation (as defined below).
(b) In the event that the transactions contemplated by this
Agreement are not consummated because of a default under this Agreement on the
part of any Transferor, which default is not cured within three (3) business
days after receipt of written notice from Transferee (provided that no notice or
cure period shall be required in the event that of a default of the Transferors'
obligations to deliver the documents set forth in Paragraph 9(c) below),
Transferee
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may either (i) terminate this Agreement by delivery of notice of termination to
the Transferors, whereupon (A) the Deposit plus interest accrued thereon shall
be immediately returned to Transferee, and, (B) the Transferors shall pay to
Transferee any title, escrow, legal and inspection fees actually incurred by
Transferee and any other third party, out-of-pocket expenses actually incurred
by Transferee in connection with the performance of its due diligence review of
the Property, including, without limitation, environmental and engineering
consultants' fees and expenses (but in no event to exceed $500,000), and neither
party shall have any further rights or obligations hereunder, or (ii) continue
this Agreement pending Transferee's action for specific performance. Nothing
contained in this Paragraph 8(b) shall limit or affect Transferee's right to
pursue any claim against any Transferor arising in connection with any
Termination Surviving Obligation. In no event shall any Transferor be deemed to
be in default hereunder as the result of any representation or warranty that is
true and correct when made being not true and correct as of the Closing as a
result of events arising after the Effective Date that are beyond the reasonable
control of the Transferors or their respective employees, agents or contractors.
The inclusion in this Paragraph 8(b) of the remedy of specific performance shall
not in any way be deemed to constitute any Transferor's consent to such remedy
or waiving any defenses that any Transferor may have to such equitable relief.
Without limiting any other right or remedy available to Transferee, with respect
to any default by a Transferor that is known by Transferee prior to the
scheduled Closing Date (or scheduled Extended Closing Date, as applicable), in
the event that Transferee fails to commence an action for specific performance
prior to the date that is sixty (60) days after the scheduled Closing Date (or
scheduled Extended Closing Date, as applicable), Transferee shall be deemed to
have waived its right to pursue such an action for specific performance, and,
with respect to any default by a Transferor that is first known by Transferee
after the scheduled Closing Date (or scheduled Extended Closing Date, as
applicable), in the event that Transferee fails to commence an action for
specific performance prior to the date that is thirty (30) days after Transferee
first acquires such knowledge, Transferee shall be deemed to have waived its
right to pursue such an action for specific performance.
(c) As used herein, the term "Termination Surviving Obligations"
shall mean, collectively, (i) Transferee's indemnity obligations under Paragraph
14 below, (ii) the parties' indemnity obligations under Paragraph 18(b) below,
(iii) the provisions of Paragraph 18(h) below, (iv) the provisions of Paragraph
18(m) below, and (v) Transferee's obligations under Paragraph 23 below.
9. Closing and Escrow.
(a) The parties shall, to the extent reasonably possible, conduct
an escrow Closing through the Title Company. Upon mutual execution of this
Agreement, the parties hereto shall deposit an executed counterpart of this
Agreement with Title Company and this Agreement shall serve as instructions to
Title Company as the escrow holder for consummation of the transactions
described herein. The Transferors and Transferee agree to execute such
additional escrow instructions as may be appropriate to enable the escrow holder
to comply with the terms of this Agreement; provided, however, that in the event
of any conflict between the provisions of this Agreement and any supplementary
escrow instructions, the terms of this Agreement shall control. The parties
hereto shall endeavor to conduct an escrow Closing and
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shall deliver the documents described in Paragraphs 9(c) and (d) to Title
Company sufficiently prior to the scheduled Closing Date (or scheduled Extended
Closing Date, as applicable) to enable the Closing to occur as scheduled.
(b) The Closing shall occur on or before the date that is thirty
(30) days after the expiration of the Due Diligence Period or such later date
mutually approved by the parties in their sole and absolute discretion (the
"Closing Date"). Notwithstanding the foregoing, Transferee shall have the right,
by delivering written notice (the "Extension Notice") to the Transferors and
depositing an additional Five Hundred Thousand Dollars ($500,000) in escrow (the
"Extension Deposit") at least fifteen (15) days prior to the Scheduled Closing
Date, to extend the Closing Date for up to sixty (60) days. If the Closing does
not occur on or before the scheduled Closing Date (or scheduled Extended Closing
Date, as applicable), Title Company shall, unless it is notified by either party
to the contrary within five (5) days after the Closing Date, return to the
depositor thereof items which were deposited hereunder. Any such return shall
not, however, relieve either party of any liability it may have for its wrongful
failure to close.
(c) At or before the Closing (or promptly after the Closing as
provided in subparagraphs (iv), (vi), (vii) and (viii) below), the Transferors
shall deliver to Transferee (either directly or through escrow, conditioned upon
the Closing occurring) the following (the delivery of which is both an
obligation of the Transferors and, except as expressly provided in subparagraphs
(iv), (vi), (vii) and (viii) below, a condition precedent to Transferee's
obligations hereunder):
(i) the duly executed and acknowledged original Grant Deeds,
which shall be recorded at Closing by Title Company in the Official Records of
Alameda County, California;
(iii) the duly executed original Bill of Sales;
(iv) duly executed original counterparts of the Assignments of
Leases and originals of all Leases (and lease correspondence files) (provided
that the Leases and such files may be delivered promptly after Closing);
(v) the duly executed original tenant estoppel certificates
and landlord estoppel certificates described in Paragraph 6(b) above;
(vi) originals of all Other Documents not previously delivered
to Transferee (to the extent in the Transferors' possession or reasonable
control) (provided that such Other Documents may be delivered promptly after
Closing);
(vii) duly executed original counterparts of the Assignments of
Intangible Property and originals of all Assumed Contracts (to the extent in the
Transferors' possession or reasonable control) (provided that such Assumed
Contracts may be delivered promptly after Closing);
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(viii) originals (to the extent in the Transferors' possession or
reasonable control) or copies of the building permits and certificates of
occupancy for the Improvements and all tenant-occupied space included within the
Improvements not previously delivered to Transferee (provided that such items
may be delivered promptly after Closing);
(ix) copies of the duly executed notices to the Tenants
substantially in the form attached hereto as Exhibit P;
(x) duly executed original affidavits pursuant to Section
1445(b)(2) of the IRC, and on which Transferee is entitled to rely, that neither
any Transferor nor any other OP Recipient is a "foreign person" within the
meaning of Section 1445(f)(3) of the IRC;
(xi) duly executed original California Forms 590-RE certifying
that each Transferor and any other OP Recipient are California residents or that
withholding of tax under Section 18805 or Section 26131 of the California
Revenue and Taxation Code will not be required upon the contribution of the
Property to Transferee;
(xii) the duly executed original certificate certifying as to
the Transferors' representations and warranties as required by Paragraph 6(e)
above;
(xiii) an original Security Agreement and UCC-1 Financing
Statement (as such terms are defined below), duly executed by each Lathrop
Indemnitor (as defined in Paragraph 12(a) below);
(xiv) an original registration rights and lock-up agreement in
the form of Exhibit H attached hereto (the "Registration Rights/Lock-Up
Agreement"), duly executed by each OP Recipient;
(xv) an original subscription agreement in the form of Exhibit
I attached hereto (the "Subscription Agreement"), duly executed by each OP
Recipient;
(xvi) an original counterpart amendment to Transferee's
partnership agreement in the form of Exhibit J attached hereto (the "OP
Amendment"), duly executed by each OP Recipient;
(xvii) the original Reimbursement Agreement duly executed by each
OP Recipient that elects to execute such document;
(xviii) a closing settlement statement prepared by the Title
Company in form and content satisfactory to Transferee and the Transferors,
setting forth, without limitation, all prorations, adjustments and credits
against the Agreed Amount and reflecting the calculation of the number of OP
Units (including both Tier I OP Units and Tier II OP Units) to be issued
hereunder;
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(xix) a duly executed original opinion from the Transferors'
counsel, substantially in the form of Exhibit K attached hereto;
(xx) such resolutions, authorizations, bylaws or other
corporate and/or partnership documents or agreements relating to the Partnership
Transferors and their partners as shall be reasonably required by the Title
Company; and
(xxi) any other instruments, records or correspondence called
for hereunder which have not previously been delivered, including, without
limitation, the Lease amendment referred to in Paragraph 22 below.
Transferee may waive the requirement for the Transferors' compliance
with any of the foregoing items by written instrument.
(d) At or before the Closing, Transferee shall deliver to the
Transferors (either directly or through escrow, conditioned upon the Closing
occurring) the following (the delivery of which is both an obligation of
Transferee and a condition precedent to the Transferors' obligations hereunder):
(i) duly executed original counterparts of the Assignments of
Leases;
(ii) duly executed original counterparts of the Assignments of
Intangible Property;
(iii) a duly executed original counterpart of the Security
Agreement;
(iv) an original counterpart of the Registration Rights/Lock-Up
Agreement, duly executed by Transferee and the REIT;
(v) a duly executed original counterpart of the Subscription
Agreement;
(vi) an original counterpart of the OP Amendment, executed by
the REIT;
(vii) one or more original Registered Certificates of Ownership
evidencing the Tier I OP Units (as defined in the Registration Rights/Lock-Up
Agreement) issued to the OP Recipients and one or more original Registered
Certificates of Ownership evidencing the Tier II OP Units (as defined in the
Registration Rights/Lock-Up Agreement) issued to the OP Recipients;
(viii) the duly executed original certificate certifying as to
Transferee's representations and warranties as required by Paragraph 7(a) above;
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(ix) a certified copy of the resolution of the REIT's Board of
Directors approving the transactions contemplated hereunder;
(x) evidence reasonably satisfactory to the Transferors that
the Transferors Condition Precedent set forth in Paragraph 7(h) above has been
satisfied;
(x) an original counterpart of the Reimbursement Agreement,
duly executed by the REIT; and
(xi) a closing settlement statement prepared by the Title
Company in form and content satisfactory to Transferee and Transferor, setting
forth, without limitation, all prorations, adjustments and credits against the
Agreed Amount and reflecting the calculation of the number of OP Units
(including both Tier I OP Units and Tier II OP Units) to be issued hereunder.
(e) The Transferors and Transferee shall each deposit such other
instruments as are reasonably required by the escrow holder or otherwise
required to close the escrow and consummate the acquisition of the Property in
accordance with the terms hereof. The Transferors and Transferee hereby
designate Title Company as the "Reporting Person" for the transaction pursuant
to Section 6045(e) of the Code and the regulations promulgated thereunder and
agree to execute such documentation as is reasonably necessary to effectuate
such designation.
(f) The following are to be apportioned at Closing, as follows:
(i) Rent. Rent under the Leases shall be prorated to
Transferee for the period on and after the Closing Date ("Transferee's Ownership
Period"), regardless of whether or not such rent has been paid to the
Transferors. With respect to any rent arrearages arising under the Leases, after
Closing Transferee shall pay to the Transferors any rent actually collected by
Transferee which is applicable to the period preceding the Closing Date
("Transferor's Ownership Period"); provided, however, that all rent collected by
Transferee shall be applied first to all unpaid rent accruing during
Transferee's Ownership Period, and then to unpaid rent accruing during
Transferors' Ownership Period. After Closing, Transferee shall take reasonable
steps to recover any rent arrearages for the benefit of the Transferors,
provided that in no event shall Transferee be required to institute any lawsuit
or unlawful detainer action, and provided further that the Transferors shall pay
to Transferee all amounts reasonably incurred by Transferee in collecting such
amounts. If the Transferors do not pay such reasonable collection costs,
Transferee may offset such reasonable costs against any rent arrearages
collected. The Transferors shall not be permitted to take any steps to recover
any rent arrearages, provided that the Transferors shall have the right to file
an action prior to the Closing Date (and prosecute such action after the Closing
Date) to recover from a Tenant any rent arrearages or other damages, so long as
such action does not seek a termination of the Lease, and the Transferors shall
have the right after the Closing Date to sue a Tenant at such time as such
Tenant is no longer a tenant of the Property or any portion thereof. To the
extent that any Transferor receives prior to the Closing Date any percentage
rent payments that are attributable to the period on or after the
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Closing Date, Transferee shall receive a credit at Closing in the amount
attributable to the period on or after the Closing Date. With respect to all
percentage rent payments received by Transferee after the Closing Date which
relate to periods prior to the Closing Date, Transferee shall pay to the
Transferors, within fifteen (15) days after its receipt of each such payment,
the pro rata portion of each such amount based upon the number of days in the
period with respect to which such percentage rent is calculated that are prior
to the Closing Date and the number of days in such period that are after the
Closing Date.
(ii) Leasing Costs; Security Deposits; Prepaid Rent. Except to
the extent expressly provided to the contrary in Paragraph 16 below, Transferor
shall pay all leasing commissions and tenant improvement costs that are incurred
in connection with any Lease executed on or before the Closing (including
leasing commissions attributable to expansion, renewal or extension options
which are not exercised until after the Closing , but excluding any tenant
improvement costs or allowances attributable to expansion, renewal or extension
options which are not exercised until after the Closing, which obligation shall
be assumed by Transferee at the Closing). Transferee shall be entitled to a
credit against the Agreed Amount for the total sum of all security deposits and
prepaid rent paid to the Transferors (or their predecessor(s)-in-interest) by
the Tenants under the Leases, and any interest earned thereon to the extent such
interest is to be repaid to any Tenant, as well as for any free rent, operating
expense abatements, or other unexpired concessions under the Leases to the
extent they apply to any period after the Closing.
(iii) Other Tenant Charges. Where the Leases contain tenant
obligations for taxes, common area expenses, operating expenses or additional
charges of any other nature, and where the Transferors shall have collected on
an estimated basis any portion thereof in excess of amounts owed by the
Transferors for such items for Transferors' Ownership Period, then there shall
be a credit given to Transferee at Closing for all such excess amounts
collected. Transferee shall apply all such excess amounts to the charges owed by
Transferee for such items during Transferee's Ownership Period and, if required
by the Leases, shall rebate or credit tenants with any remainder. If it is
determined subsequent to Closing that the amount collected during Transferors'
Ownership Period exceeded expenses incurred during the same period by more than
the amount previously credited to Transferee at Closing, then the Transferors
shall promptly pay to Transferee the deficiency. If it is determined subsequent
to Closing that the amount collected during Transferors' Ownership Period
exceeded expenses incurred during the same period by less than the amount
previously credited to Transferee at Closing, then Transferee shall promptly pay
to the Transferors the overpayment.
(iv) Utility Charges. The Transferors shall cause all the
utility meters to be read on the Closing Date, and the Transferors shall be
responsible for the cost of all utilities used during Transferors' Ownership
Period, except to the extent such utility charges are billed to and paid by
tenants directly or to the extent Transferee receives a credit for such charges
pursuant to Paragraph 9(f)(iii) above.
(v) Other Apportionments; Closing Costs. Interest on the
Existing Loan, amounts payable under the Assumed Contracts, annual or periodic
permit and/or
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inspection fees (calculated on the basis of the period covered), and liability
for other Property operation and maintenance expenses and other recurring costs
not otherwise allocated in this Paragraph 9(f) shall be apportioned at Closing
to Transferee's and Transferors' Ownership Periods. Transferee shall pay the
premium for the Title Policy (including the Endorsements), all transfer taxes,
any sales tax on the Personal Property and all escrow fees, provided that
Transferee shall be entitled to a credit against the Agreed Amount in an amount
equal to all transfer and sales taxes paid by Transferee pursuant to this
sentence. The Transferors and Transferee shall each pay fifty percent (50%) of
all recording and notary fees. In the event that the Transferors deliver to
Transferee a recent ALTA "as built" survey for any Constituent Parcel generally
acceptable to Transferee, Transferee shall pay the cost of updating such survey;
in the event that the Transferors fail to deliver such survey for such
Constituent Parcel, the Transferors and Transferee shall each pay fifty percent
(50%) of the cost of preparing an ALTA "as built" survey meeting Transferee's
standard survey requirements. All other costs and charges of the escrow not
otherwise provided for in this Paragraph 9(f)(v) or elsewhere in this Agreement
shall be allocated in accordance with the closing customs for Alameda County,
California as conclusively determined by the Title Company.
(vi) Real Estate Taxes and Assessments.
(1) All delinquent real estate taxes and assessments
shall be paid by the Transferors at or before Closing.
(2) Non-delinquent real estate taxes and assessments
shall be prorated at Closing to Transferee's and Transferors' Ownership Periods
using the actual current tax bill, but if such tax bill is not available at
Closing, then such proration shall use an estimate calculated to be 102% of the
amount of the previous year's tax bill, subject to a post-closing reconciliation
using the actual current tax bill when received pursuant to Paragraph 9(f)(viii)
below. In the proration(s), Transferee shall be credited with an amount equal to
the real estate taxes and assessments applicable to Transferors' Ownership
Period, to the extent such amount has not been actually paid by the Transferors
(and not tenants); the Transferors shall be credited with an amount equal to the
real estate taxes and assessments paid by the Transferors (and not tenants) and
applicable to Transferee's Ownership Period.
(3) Where the Leases contain tenant obligations for real
estate taxes or assessments, the provisions of Paragraph 9(f)(iii) above shall
apply, but only with respect to that portion of such taxes or assessments that
is paid by the Tenants.
(4) If, after Closing, any additional real estate taxes
or assessments applicable to Transferors' Ownership Period are levied for any
reason, including back assessments, then the Transferors shall pay all such
additional amounts, except to the extent the same are actually collected from
tenants. If, after Closing, any refund of real estate taxes or assessments
applicable to Transferors' Ownership Period are received by Transferee for any
reason, including a successful tax appeal, then Transferee shall remit to the
Transferors any such refund not owed to tenants, less Transferee's costs of
collection.
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(vii) Preliminary Closing Adjustment. Prior to Closing, the
Transferors and Transferee shall jointly prepare a preliminary Closing
adjustment statement addressing all of the aforesaid apportionments and shall
deliver such statement to the Title Company. Such preliminary Closing adjustment
statement shall also contain such information as is necessary to enable the
Title Company to accurately calculate the number of OP Units to be issued
hereunder.
(viii) Post-Closing Reconciliation. Subject to the provisions of
Paragraph 9(f)(vi) above, if any of the aforesaid apportionments cannot be
calculated accurately by the Closing Date, then they shall be calculated as soon
after the Closing Date as feasible. Either party owing the other party a sum of
money based on such subsequent apportionments shall promptly pay said sum to the
other party following delivery of a written demand therefor, together with a
reasonable explanation and supporting documentation. If payment is not made
within ten (10) days after delivery of such demand and information, interest
shall accrue thereon at the rate of two percent (2%) over the then applicable
publicly announced prime rate of Bank of America, NT&SA per annum or the maximum
rate allowed by law, whichever is less (the "Rate"), from the Closing Date to
the date of payment. In making the reconciliation's described in this Paragraph
9(f)(viii), each party shall have the right to review the other party's books
and records to the extent relevant to a specific apportionment then being
reconciled.
(ix) Survival. The provisions of this Paragraph 9(f) shall
survive the Closing; provided that any demand made pursuant to Paragraph
9(f)(viii) above shall be made prior to the first anniversary of the Closing
Date or shall be deemed waived. In no event shall the foregoing one year
survival period apply to the provisions of clause (4) of Paragraph 9(f)(vi)
above.
10. Representations and Warranties of Transferor. Subject to Paragraph
18(l) below, each Transferor hereby represents and warrants to and covenants
with Transferee as follows, which representations and warranties shall survive
the Closing for the period set forth in Paragraph 18(e) below:
(a) To the Transferors' knowledge, except to the extent set forth
on Schedule 4 attached hereto (as such may be supplemented pursuant to the last
grammatical paragraph of this Paragraph 10, the "Disclosure Schedule"), there
are now, and at the time of Closing will be, no material physical or mechanical
defects of the Property, including, without limitation, the structural and
load-bearing components of the Property, the roof(s), the parking lot(s), the
plumbing, heating, air conditioning and electrical and life safety systems, and,
to the Transferors' knowledge, all such items are in good operating condition
and repair. Except to the extent set forth on the Disclosure Schedule, no
Transferor has received any written notice that any of such items violate any
applicable building codes, environmental, zoning and land use laws, or any other
applicable local, state and federal laws and regulations (collectively, "Laws"),
and, to the Transferors' knowledge (without duty of investigation), all such
items are in compliance with all Laws; provided, however, the Transferors shall
not be deemed to make any representation or warranty regarding the Americans
with Disabilities Act of 1990 or the regulations and interpretations promulgated
thereunder or any similar or related state or local
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laws, ordinances or regulations (the "ADA") other than that no written notice of
any violation under the ADA has been received by any Transferor.
(b) To the Transferors' knowledge, except to the extent set forth
on the Disclosure Schedule, the use and operation of the Property now are, and
at the time of Closing will be, in compliance with all Laws.
(c) The annual operating statements and income and expense reports
delivered by the Transferors to Transferee are and at the time of Closing will
be true, correct and complete copies of such documents, and, except to the
extent set forth in the Disclosure Schedule, all monthly and any other periodic
operating statements and income and expense reports delivered by the Transferors
to Transferee are and at the time of Closing will be true, correct and complete
copies of such documents in all material respects. To the Transferors'
knowledge, the surveys, mechanical and structural plans and specifications, soil
reports, certificates of occupancy, warranties, and all books and records
relating to the Property and all contracts or documents delivered to Transferee
which are not otherwise described in the immediately preceding sentence are and
at the time of Closing will be true and complete copies of such documents.
(d) The rent roll attached hereto as Exhibit L (the "Rent Roll")
is true, correct and complete. The copies of the Leases delivered by the
Transferors to Transferee are true, correct and complete copies and contain all
of the information pertaining to any contractual rights of any of the Tenants
and, to the Transferors' knowledge, any other parties to occupy the Property,
including, without limitation, all information regarding any rent concessions,
over-standard tenant improvement allowances or other inducements to lease.
Except to the extent set forth on the Disclosure Schedule, all of the Leases and
Assumed Agreements are in full force and effect, without material default by any
party thereunder.
(e) To the Transferors' knowledge, except to the extent set forth
on the Disclosure Schedule, there are no condemnation proceedings, either
instituted or planned to be instituted, affecting the Property, nor has any
Transferor received notice of any special assessment, environmental, zoning or
other land-use regulation proceedings affecting the Property.
(f) To the Transferors' knowledge, all water, sewer, gas,
electric, telephone, and drainage facilities and all other utilities required by
law or by the normal use and operation of the Property are and at the time of
Closing will be installed to the property lines of the Real Property, are and at
the time of Closing will be connected pursuant to valid permits, and are and at
the time of Closing will be adequate to service the Property and to permit
compliance with all Laws.
(g) To the Transferors' knowledge, except to the extent set forth
on the Disclosure Schedule, the Transferors have obtained all licenses, permits,
variances, approvals, authorizations, easements and rights of way, including
proof of dedication, required from all governmental authorities having
jurisdiction over the Property or from private parties for the
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intended use, operation and occupancy of the Property and to insure vehicular
and pedestrian ingress to and egress from the Property.
(h) Except to the extent set forth on the Disclosure Schedule,
there is no litigation pending or, to the Transferors' knowledge, threatened
against any Transferor that arises out of the ownership of the Property or that
might detrimentally affect the value or the use or operation of the Property for
its intended purpose or the ability of any Transferor to perform its obligations
under this Agreement.
(i) Each of WTA, T-2, WT-3 and BOPA is a duly organized and
validly existing limited partnership in good standing under the laws of the
State of California. Lathrop Trust is a duly formed and validly existing trust
under the laws of the State of California. This Agreement is, and all documents
executed by the Transferors or any OP Recipient which are to be delivered to
Transferee at the Closing are or at the time of Closing will be, duly
authorized, executed and delivered by such party, are and at the time of Closing
will be legal, valid and binding obligations of such party enforceable against
such party in accordance with their respective terms, are and at the time of
Closing will be sufficient to convey title (if they purport to do so), and do
not and at the time of Closing will not violate any provision of any agreement
or judicial order to which any Transferor or OP Recipient or the Property is
subject. No consent, waiver, approval or authorization is required to be
obtained from any person or entity to enable the Transferors to perform their
obligations hereunder.
(j) Except to the extent set forth on the Disclosure Schedule, at
the time of Closing there will be no outstanding written or oral contracts made
by any Transferor for any improvements to the Property which have not been fully
paid for, and the Transferors shall cause to be discharged all mechanics' and
materialmen's liens arising from any labor or materials furnished to the
Property prior to the time of Closing, other than obligations being assumed by
Transferee at Closing pursuant to Paragraph 5(b) above or Paragraph 16(b) below.
(k) Neither any Transferor nor any OP Recipient is a "foreign
person" within the meaning of Section 1445(f)(3) of the IRC.
(l) Except as disclosed in any of the materials identified on
Exhibit M attached hereto (the "Environmental Document List") or the Disclosure
Schedule, to the Transferors' knowledge, neither the Property nor any real
estate sharing a common boundary with the Property (but excluding any real
property separated from the Property by a public right of way) is in violation
of any federal, state, local or administrative agency ordinance, law, rule,
regulation, order or requirement relating to environmental conditions or
Hazardous Material ("Environmental Laws"). Except as disclosed in any of the
materials identified on the Environmental Document List or the Disclosure
Schedule, neither any Transferor nor, to the Transferors' knowledge, any third
party has used, manufactured, generated, treated, stored, disposed of, or
released any Hazardous Material on, under or about the Property or any real
estate sharing a common boundary with the Property (but excluding any real
property separated from the Property by a public right of way) or transported
any Hazardous Material over the Property in violation of any Environmental Laws.
Except as disclosed in any of the materials
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identified on the Environmental Document List or the Disclosure Schedule,
neither any Transferor nor, to the Transferors' knowledge, any third party has
installed, used or removed any storage tank on, from or in connection with the
Property except in full compliance with all Environmental Laws, and, except as
disclosed in any of the materials identified on the Environmental Document List
or the Disclosure Schedule, to the Transferors' knowledge, there are no storage
tanks or wells (whether or not abandoned) located on, under or about the
Property. Except as disclosed in any of the materials identified on the
Environmental Document List or the Disclosure Schedule, to the Transferors'
knowledge, the Property does not consist of any building materials that contain
Hazardous Material. For the purposes hereof, "Hazardous Material" shall mean any
substance, chemical, waste or other material which is listed, defined or
otherwise identified as "hazardous" or "toxic" under any federal, state, local
or administrative agency ordinance or law, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Sections 9601 et seq.; and the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq.; or any regulation, order, rule or requirement adopted
thereunder, as well as any formaldehyde, urea, polychlorinated biphenyls,
petroleum, petroleum product or by-product, crude oil, natural gas, natural gas
liquids, liquefied natural gas, or synthetic gas usable for fuel or mixture
thereof, radon, asbestos, and "source," "special nuclear" and "by-product"
material as defined in the Atomic Energy Act of 1985, 42 U.S.C. Sections 3011 et
seq.
(m) To the Transferors' knowledge, the Environmental Document List
is a true, and complete listing of (i) all reports, test results, analytical
data, boring logs, and other studies undertaken by or at the request of any
Transferor and/or in the Transferors' possession or reasonable control with
respect to the Property and the environmental conditions thereof, (ii) all
written orders, directives and notices of governmental authorities in connection
with the environmental condition of the Property in the Transferors' possession
or reasonable control, and (iii) all correspondence to and from governmental
authorities and environmental consultants with respect to the environmental
condition of the Property in the Transferors' possession or reasonable control.
(n) Except to the extent set forth on the Disclosure Schedule, all
alterations, improvements or other work required to have been completed by the
Transferors under any Leases, including, without limitation, all alterations,
improvements and other work required to prepare space for the initial occupancy
of each Tenant under a Lease, has heretofore been completed and paid for in
full, other than obligations being assumed by Transferee at Closing pursuant to
Paragraph 5(b) above or Paragraph 16(b) below.
(o) The Transferors are the legal owners of the Property, with
full right to convey the same, and, without limiting the generality of the
foregoing, Transferor has not granted any option or right of first refusal or
first opportunity to any party to acquire any interest in any of the Property
(other than space leasehold interests).
(p) Neither any Transferor nor, to the Transferors' knowledge, any
of the Tenants has either filed or been the subject of any filing of a petition
under the Federal Bankruptcy Law or any federal or state insolvency laws or laws
for composition of indebtedness
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or for the reorganization of debtors that remains pending, except to the extent
set forth on the Disclosure Schedule.
(q) To the Transferors' knowledge, each parcel constituting a
portion of the Real Property has been created by way of a subdivision of land
completed in accordance with all applicable laws, rules and regulations.
(r) To the Transferors' knowledge, except to the extent set forth
on the Disclosure Schedule, no portion of the Real Property is located in a
wetland area, as defined by Laws, or in a designated or recognized floodplain,
flood plain district, flood hazard area or area of similar characterization, and
no commercial use of any portion of the Property will violate any requirement of
the United States Corps of Engineers or Laws relating to wetland areas.
(s) Except as disclosed in the Leases, there are no free rent,
operating expense abatements, incomplete tenant improvements, rebates,
allowances, or other unexpired concessions or any termination, extension,
cancellation or expansion rights under any existing or pending Leases. Except
with respect to those matters specifically identified on Schedule 5 attached
hereto, the Transferors have paid in full all of landlord's leasing costs or
obligations, including, without limitation, any costs incurred by the
Transferors in connection with any tenant improvements, with respect to all
Leases entered into prior to the Effective Date.
(t) Except to the extent set forth on the Disclosure Schedule, to
the Transferors' knowledge, none of the Tenants has indicated to any Transferor
either orally or in writing its intent to terminate its respective Lease prior
to expiration of the respective term of such Lease.
(u) Except with respect to those matters specifically identified
on Schedule 5 attached hereto, no brokerage or similar fee is due and unpaid by
any Transferor with respect to any Lease executed prior to the Effective Date.
Except with respect to those matters specifically identified on Schedule 5
attached hereto, no brokerage or similar fee shall be due or payable on account
of the exercise of, without limitation, any renewal, extension or expansion
options arising under any Lease executed prior to the Effective Date.
As used herein, the term "to the Transferors' knowledge" or words of
similar import shall mean only the actual knowledge of (i) Lathrop, (ii) Sandra
Hyde, (iii) Thomas Lathrop, (iv) Robert Goldsmith, (v) Steve Lathrop, (vi) Chris
White or (vii) Ernie Hughes (the "Knowledge Individuals"), together with the
knowledge that could be learned or obtained from a review by any of the
Knowledge Individuals of the files and other materials relating to the Property
that are in the possession or reasonable control of the Knowledge Individuals.
Notwithstanding anything to the contrary provided in this Agreement,
the Transferors shall not be liable for the breach of any of their
representations and warranties set forth herein or in any landlord estoppel
certificate delivered to Transferee pursuant to Paragraph 6(b) above if
Transferee had actual knowledge, without duty of investigation, of such breach
on or prior to the Closing Date and Transferee nevertheless elects to close
hereunder, and Transferee waives any
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and all rights against the Transferors with respect to such actually known
matters. For the purposes of the immediately preceding sentence, Transferee's
"actual knowledge" shall be deemed to include only the actual knowledge of
Warren E. Spieker, Jr., Peter H. Schnugg, John Winther and Stuart Rothstein.
Notwithstanding anything to the contrary provided herein, the
Transferors shall have the right, at any time prior to the tenth (10th) date
after the Effective Date, to deliver to Transferee a replacement Disclosure
Schedule for the Disclosure Schedule attached hereto as Schedule 4 (as well as a
replacement Schedule 5 and replacement Exhibits L and M for those attached to
this Agreement), which replacement Schedules and Exhibits shall be substituted
for all purposes in the place of such Schedules and Exhibits attached hereto and
which Schedules and Exhibits may include information supplemental to that
included on the Schedules and Exhibits that are attached to this Agreement,
other than information that is within the actual knowledge, without
investigation, of Lathrop or Sandra Hyde as of the Effective Date.
11. Representations and Warranties of Transferee. Transferee and
the REIT each hereby represents and warrants to the Transferors as follows,
which representations and warranties shall survive the Closing for the period
set forth in Paragraph 18(e) below:
(a) Transferee is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of California. This
Agreement is, and all documents executed by Transferee which are to be delivered
to the Transferors at the Closing are or at the time of Closing will be, duly
authorized, executed and delivered by Transferee and are or at the Closing will
be legal, valid and binding obligations of Transferee, and do not and at the
time of Closing will not violate any provisions of any agreement or judicial
order to which Transferee is subject.
(b) The REIT is a corporation duly organized, validly existing and
in good standing under the laws of the State of Maryland and is qualified to do
business in good standing under the laws of the State of California. This
Agreement is, and all documents executed by the REIT which are to be delivered
to the Transferors at the Closing are or at the time of Closing will be, duly
authorized, executed and delivered by the REIT and are or at the Closing will be
legal, valid and binding obligations of the REIT, and do not and at the time of
Closing will not violate any provisions of any agreement or judicial order to
which the REIT is subject.
(c) The REIT has complied in all material respects with all
disclosure and reporting requirements under the federal securities laws,
including, without limitation, filing all reports, schedules, forms, statements
and other documents required to be filed by the REIT with the Securities and
Exchange Commission pursuant to the reporting requirements of Section 13 of the
Securities Exchange Act of 1934, as amended, except to the extent that such
non-compliance could not reasonably be anticipated to have any material adverse
effect on the price of the Common Stock.
Notwithstanding anything to the contrary provided in this Agreement,
Transferee shall not be liable for the breach of any of its representations and
warranties set forth herein if
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any of the Knowledge Individuals had actual knowledge, without duty of
investigation, of such breach on or prior to the Closing Date and the
Transferors nevertheless elect to close hereunder, and each Transferor waives
any and all rights against Transferee with respect to such actually known
matters.
12. Indemnification.
(a) Subject to the provisions of Paragraphs 18(e) and (l) below,
each Lathrop Indemnitor (as defined below) hereby agrees to indemnify Transferee
and, with counsel of the defendant party's choice, defend and hold Transferee
and the REIT harmless from and against any and all claims, demands, liabilities,
costs, expenses, penalties, damages and losses, including reasonable attorneys'
fees and costs, resulting from any misrepresentation or breach of warranty made
by any of the Transferors in this Agreement or in any document, certificate, or
exhibit given or delivered to Transferee or the REIT pursuant to or in
connection with this Agreement. Subject to the provisions of Paragraph 18(e)
below, Transferee hereby agrees to indemnify the Transferors and, with counsel
of the defendant party's choice, defend and hold the Transferors harmless from
and against any and all claims, demands, liabilities, costs, expenses,
penalties, damages and losses, including reasonable attorneys' fees and costs,
resulting from any misrepresentation or breach of warranty made by Transferee in
this Agreement or in any document, certificate, or exhibit given or delivered to
the Transferors pursuant to or in connection with this Agreement. At least ten
(10) days prior to the Closing Date, the Transferors shall designate one or more
OP Recipients that will own as of the Closing Date OP Units having a value in
the aggregate (calculated in the manner set forth in Paragraph 2(d) above) of at
least $17,500,000 as of the Closing Date to assume the indemnity obligations set
forth in the first sentence of this Paragraph 12(a), and each such designated OP
Recipient is referred to herein as a "Lathrop Indemnitor." Promptly following
such designation, each Lathrop Indemnitor shall execute an agreement in form
reasonably acceptable to Transferee acknowledging that such Lathrop Indemnitor
is bound by all provisions hereof applicable to any Lathrop Indemnitor.
(b) Each Lathrop Indemnitor hereby agrees to indemnify Transferee
and, with counsel of the defendant party's choice, defend and hold Transferee
harmless from and against any and all claims, demands, liabilities, costs,
expenses, penalties, damages and losses, including, without limitation,
attorneys' fees, arising out of or resulting from any act or omission of the
Transferors or any of their affiliates or their respective agents,
representatives, employees, contractors, officers, directors or trustees prior
to the Closing Date that arises out of or in connection with the Transferors' or
their affiliates' ownership, use or operation of the Property, including, but
not limited to, any obligations or liabilities arising out of or in connection
with the Leases.
(c) Transferee agrees to indemnify the Transferors and, with
counsel of the defendant party's choice, defend and hold the Transferors
harmless from and against any and all claims, demands, liabilities, costs,
expenses, penalties, damages and losses, including, without limitation,
attorneys' fees, arising out of or resulting from any act or omission of
Transferee after the Closing Date that arises out of or in connection with
Transferee's ownership, use or operation
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of the Property, including, but not limited to, any obligations or liabilities
arising out of or in connection with the Leases.
(d) At the Closing, each Lathrop Indemnitor shall grant to
Transferee a lien upon and continuing security interest in such Lathrop
Indemnitor's OP Units and all of such Lathrop Indemnitor's right, title and
interest as a partner in Transferee, together with any and all Common Stock
acquired by such Lathrop Indemnitor upon conversion of such OP Units pursuant to
the terms of the OP Agreement (collectively, the "Collateral"), which shall be
security for the indemnification obligations of such Lathrop Indemnitor set
forth in Paragraphs 12(a) and (b) above. Notwithstanding the foregoing, in the
event that the Lathrop Indemnitors receive pursuant to the terms hereof OP Units
having a value in the aggregate (calculated in the manner set forth in Paragraph
2(d) above) greater than $17,500,000 as of the Closing Date, the lien and
security interest described in the first sentence of this Paragraph 12(d) shall
attach only to such number of OP Units as have a value of $17,500,000 as of the
Closing Date, and any OP Units received by the Lathrop Indemnitors in excess of
such figure (such OP Units, and the holder's right, title and interest as a
partner in Transferee appurtenant to such OP Units, being referred to herein as
"Excess Units"), as well as any Common Stock acquired upon conversion of any
Excess Units, shall be free of such lien and security interest and shall not be
included within the definition of the term "Collateral." Any transfer by a
Lathrop Indemnitor of its OP Units (other than Excess Units) or Common Stock
acquired by such Lathrop Indemnitor upon conversion or any proceeds thereof
shall be subject to such lien and security interest. At Closing, each Lathrop
Indemnitor agrees to execute a security agreement in the form of Exhibit N
attached hereto (the "Security Agreement"), together with one or more UCC-1
financing statements (collectively, the "UCC-1 Financing Statement").
Notwithstanding anything to the contrary provided herein or in the Security
Agreement, the sole recourse of the Transferee with respect to each Lathrop
Indemnitor's indemnity obligations set forth in Paragraphs 12(a) and (b) above
shall be against the Collateral and neither any Lathrop Indemnitor nor any other
Transferor shall have any personal liability with respect thereto. The parties
hereto acknowledge that the Security Agreement provides, subject to the terms
and conditions set forth therein, that the lien on fifty percent (50%) of the
Collateral shall be released 18 months after the Closing Date and that the lien
on all remaining Collateral shall be released on the third (3rd) anniversary of
the Closing Date.
(e) In the event that Transferee asserts that any Lathrop
Indemnitor has an indemnification obligation to Transferee pursuant to this
Paragraph 12, Transferee shall deliver written notice (the "Indemnification
Notice") to each Lathrop Indemnitor describing in reasonable detail the
circumstances giving rise to such obligation and the amount thereof. Except to
the extent otherwise agreed by such parties in writing, in the event that each
Lathrop Indemnitor fails to deliver written notice to Transferee within thirty
(30) days after its receipt of an Indemnification Notice indicating that such
Lathrop Indemnitor agrees with the circumstances giving rise to and the amount
of such claimed indemnification obligation, the Transferee shall have the right
to commence legal action to establish its rights with respect to such indemnity
obligation.
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(f) In the event that (i) each Lathrop Indemnitor delivers written
notice to Transferee within thirty (30) days after its receipt of an
Indemnification Notice unequivocally stating that such Lathrop Indemnitor agrees
with the circumstances giving rise to and the amount of such claimed
indemnification obligation or (ii) such Lathrop Indemnitor has an
indemnification obligation to Transferee under this Paragraph 12 as determined
by final judgment in the legal action commenced by Transferee pursuant to
Paragraph 12(e) above, and if such Lathrop Indemnitor does not satisfy such
obligation within ten (10) days after the final judgment rendered in such
action, then, in either event, Transferee shall, to the extent permitted by law,
be deemed, to be fully entitled to such indemnification as claimed. As to such
Lathrop Indemnitor, Transferee, without the payment of any further consideration
or the taking of any further action required by such Lathrop Indemnitor, shall
be deemed to have acquired from such Lathrop Indemnitor such portion of the
Collateral as shall be equal in value, based on the Common Stock Value (as such
term is defined in the Partnership Agreement of Transferee), to the amount of
such indemnification obligation. In the event that Transferee shall have
acquired from any Lathrop Indemnitor any Collateral pursuant to this Paragraph
12(f), Transferee shall deliver written notice to such Lathrop Indemnitor within
ten (10) days thereafter identifying the specific Collateral acquired and, if
such Collateral consists of OP Units, the number of OP Units held by such
Lathrop Indemnitor following such acquisition. Each Lathrop Indemnitor hereby
agrees to execute such documents as may be reasonably requested by Transferee to
evidence the transfer of such Collateral to Transferee.
(g) The provisions of this Paragraph 12 shall survive the Closing.
13. Risk of Loss.
(a) If any of the Property is damaged or destroyed prior to the
Closing Date, and such damage or destruction would cost less than Five Hundred
Thousand Dollars ($500,000) to repair or restore, then this Agreement shall
remain in full force and effect and Transferee shall acquire the Property upon
the terms and conditions set forth herein. In such event, Transferee shall
receive a credit against the Agreed Amount equal to any deductible under the
Transferors' property damage insurance policy and uninsured amounts (but in no
event in excess of $500,000), and the Transferors shall assign to Transferee all
of the Transferors' right, title and interest in and to all proceeds of
insurance other than loss of rent proceeds attributable to the period prior to
Closing on account of such damage or destruction. If any of the Property is
damaged or destroyed prior to the Closing, and the cost of repair would exceed
Five Hundred Thousand Dollars ($500,000), or condemnation proceedings are
commenced with respect to any material portion of the Property or could
reasonably be anticipated to have any material adverse effect upon the Property,
then, Transferee shall have the right, at its election, either to terminate this
Agreement or to not terminate this Agreement and acquire the Property.
Transferee shall have ten (10) days after the Transferors notifies Transferee in
writing that an event described in the immediately preceding sentence has
occurred to make such election by delivery to the Transferors of an election
notice (the "Election Notice"). Transferee's failure to deliver the Election
Notice within such ten (10) day period shall be deemed an election to terminate
this Agreement. If this Agreement is terminated by delivery of notice of
termination to the Transferors, then Transferee and the Transferors shall each
be released from all obligations
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hereunder, except as otherwise expressly provided to the contrary herein. If
Transferee continues this Agreement, Transferee shall receive a credit against
the Agreed Amount equal to any deductible under the Transferors' property damage
insurance policy and any uninsured amounts (but in no event in excess of
$500,000, without the consent of the Transferors in their sole and absolute
discretion), and the Transferors shall assign to Transferee all of the
Transferors' right, title and interest in and to all insurance proceeds (other
than any loss of rent proceeds attributable to the period prior to the Closing,
which shall remain the property of the Transferors) or condemnation awards on
account of such damage, destruction or taking, and Transferee shall accept the
Property as damaged or destroyed, or condemned, as the case may be, and the
Closing shall occur on the terms and conditions contained in this Agreement. As
used in this Paragraph 13, the cost to repair or restore shall include the cost
of lost rental revenue, including additional rent and base rent, occurring after
the Closing, if any.
(b) Notwithstanding the provisions of Paragraph 13(a) above, in
the event that Transferee delivers the Extension Notice and places in escrow the
Extension Deposit as provided in Paragraph 9(b) below, during the period
following the Scheduled Closing Date, Transferee shall be entitled to terminate
this Agreement pursuant to Paragraph 13(a) above only if (i) any portion of the
Property is damaged or destroyed prior to the Extended Closing Date and such
damage or destruction would cost more than Two Million Five Hundred Thousand
Dollars ($2,500,000) to repair or restore, (ii) any portion of the Property is
damaged or destroyed prior to the Extended Closing Date and the cost or
repairing such damage or destruction that is not covered by insurance proceeds
would exceed One Million Dollars ($1,000,000), or (iii) condemnation proceedings
are commenced with respect to a portion of the Property and the value of the
portion of the Property that is subject to such proceedings exceeds $1,000,000.
In the event that Transferee does not have the right to terminate this Agreement
pursuant to this Paragraph 13(b) or Transferee elects not to terminate this
Agreement under the circumstances described in this Paragraph 13(b), the
provisions of Paragraph 13(a) above regarding continuation of this Agreement
shall be applicable.
14. Possession. Possession of the Property shall be delivered to
Transferee on the Closing Date subject to the rights of Tenants under the
Leases, provided, however, that prior to the Closing Date the Transferors shall
afford authorized representatives of Transferee reasonable access to the
Property for purposes of conducting an audit of the Transferors' financial and
operating statements and satisfying Transferee with respect to the
representations, warranties and covenants of the Transferors contained herein
and with respect to the satisfaction of any Diligence Period Condition or any
Transferee Condition Precedent. Transferee hereby agrees to indemnify and hold
the Transferors harmless from any damage or injury to persons or property
(including the Property) caused by Transferee or its representatives during
their entry and investigations prior to the Closing and agrees to keep the
Property free of any claims liens or claims by mechanics or materialmen engaged
in Transferee's due diligence activities. If this Agreement is terminated,
Transferee shall repair the damage caused by Transferee's entry and
investigations, provided the foregoing shall not require Transferee to repair or
remediate any conditions that are discovered by Transferee as opposed to being
first caused by Transferee. The foregoing indemnity shall survive the
termination of this Agreement or the Closing, as applicable.
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15. Covenants of the Transferors. Between the Transferors' execution of
this Agreement and the Closing, the Transferors shall maintain the Property in
good order, condition and repair (subject to the provisions of Paragraph 13
above), shall perform all work required to be performed by the landlord under
the terms of any Lease, and shall make all repairs, maintenance and replacements
of the Improvements and any Personal Property and otherwise operate the Property
in the same manner as before the making of this Agreement, as if the Transferors
were retaining the Property. The Transferors shall promptly notify Transferee of
any condemnation, environmental, zoning or other land-use regulation proceedings
of which any Transferor becomes aware, as well as any violations of any Laws
relating to the Property of which any Transferor becomes aware and any
litigation of which any Transferor becomes aware that arises out of the
ownership of the Property or that might detrimentally affect the value or the
use or operation of the Property or the ability of the Transferors to perform
their obligations hereunder. The Transferors shall not knowingly commit or
permit to occur any action which will result in a violation of any Laws between
the date hereof and the Closing. Through the Closing Date, the Transferors shall
maintain or cause to be maintained, at the Transferors' sole cost and expense,
the Transferors' existing policy or policies of insurance. In the event that any
Transferor discovers, without duty of investigation, prior to the Closing Date,
that, as a result of changed circumstances, any statement contained in any
tenant estoppel certificate delivered to Transferee pursuant to Paragraph 6(b)
is no longer true in any material respect, such Transferor shall inform
Transferee of such circumstances promptly after such discovery.
16. Transferee's Consent to New Contracts And Leases.
(a) The Transferors shall not, after the date of the Transferors'
execution of this Agreement, enter into any Lease or contract, or any amendment
thereof, or permit any Tenant to enter into any sublease, assignment or
agreement pertaining to the Property, or waive any rights of any Transferor
under any contract or Lease, without in each case obtaining Transferee's prior
written consent thereto, which consent in the case of any Lease shall include
approval of the financial condition of the proposed tenant, the configuration of
the space to be leased, and the terms of such Lease (including, without
limitation, the rent and any concessions provided under such proposed Lease),
and which consent shall not be unreasonably withheld or delayed by Transferee.
Notwithstanding the foregoing, the Transferors shall be entitled, without the
consent of Transferee, to enter into, amend or otherwise deal with Service
Contracts that are not Assumed Contracts in the ordinary course of business that
are terminable on not more than thirty (30) days' prior notice and which shall
not be binding on Transferee after the Closing Date. The Transferors shall
deliver to Transferee, together with any request for approval of a new Lease, a
copy of the proposed Lease, a description of the proposed Tenant and its
proposed use of the premises and whatever financial information on the proposed
Tenant the Transferors have received, as well as any additional information
reasonably requested by Transferee (including, without limitation, if
applicable, an environmental questionnaire).
(b) Except to the extent expressly provided to the contrary
herein, with respect to any new Lease or Lease extension or expansion entered
into by the Transferors between the date of this Agreement and the Closing Date
and approved by Transferee pursuant to
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the terms of this Agreement, the leasing commissions and tenant improvement
costs incurred in connection with such new Lease or extension or expansion shall
be prorated between the Transferors and Transferee based on the number of months
(or fractional months) in such new Lease or extension or expansion that are
prior to the Closing Date and the number of such months (or fractional months)
that are after the Closing Date.
(c) If, prior to Closing, General Electric Capital Corporation
("GECC") executes a binding agreement to extend the term of that certain Lease
dated January 1, 1992 between WT-3 and GECC and covering approximately 42,869
rentable square feet in the Tower Three Property, the Agreed Amount shall be
increased by the sum of One Million Dollars ($1,000,000.00), provided that (i)
the term of the GECC Lease is extended for a period of five (5) years or more,
(ii) the initial base rental for the extension term is $2.05 per square foot or
more, (iii) the base rent during any additional extension options (beyond those
currently provided in such Lease) granted to GECC shall be equal to the greater
of (A) the prior year's rent and (B) 100% of fair market rental, and (iv) any
other material terms and conditions that differ from those set forth in the GECC
Lease, as well as the form and substance of such binding agreement, are approved
by Transferee in its good faith discretion. In the event that Transferee
approves such Lease extension and the Agreed Amount is increased pursuant to
this Paragraph 16(c), the Transferors shall be responsible for all leasing
commissions and tenant improvement costs incurred in connection with obtaining
such Lease extension (notwithstanding anything to the contrary provided herein
(including Paragraph 16(b) above)).
17. Cooperation. The Transferors shall cooperate and do all acts as may
be reasonably required or requested by Transferee with regard to the fulfillment
of any Diligence Period Condition or Transferee Condition Precedent, including
execution of any documents, applications or permits. Each Transferor hereby
irrevocably authorizes Transferee and its agents to make all inquiries with, and
applications to, any third party, including any governmental authority, as
Transferee may reasonably require to complete its due diligence. Transferee
agrees to provide to the Transferors within a reasonable period after request
all public information available regarding the Transferee and the REIT as well
as all other information reasonably requested by the Transferors relevant to the
Transferors' evaluation of the transactions contemplated by this Agreement.
18. Miscellaneous.
(a) Notices. Any notice, consent or approval required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given upon (i) hand delivery; (ii) one (1) day after being deposited with
Federal Express or another reliable overnight courier service or (iii)
transmission by facsimile telecopy during the recipient's normal business hours
as evidenced by a regular machine-printed confirmation of such transmission, and
addressed as follows:
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If to any of
the Transferors: c/o F.P. Lathrop
2000 Powell Street, Suite 1600
Emeryville, California 94608
Fax: (510) 547-2348
With a copy to: Crosby, Heafey, Roach & May
1999 Harrison Street
Oakland, California 94612
Attention: Charles H. Seaman
Fax: (510) 273-8832
If to Transferee: Spieker Properties, L.P.
4900 Hopyard Road, Suite 120
Pleasanton, California 94588
Att'n: John Winther
Fax No.: (510) 463-1755
With a copy to: Orrick, Herrington & Sutcliffe
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111-3143
Att'n: David S. Fries, Esq.
Fax No.: (415) 773-5759
or such other address as either party may from time to time specify in writing
to the other.
(b) Brokers and Finders. Neither party has had any contact or
dealings regarding the Property, or any communication in connection with the
subject matter of this transaction, through any real estate broker or other
person who can claim a right to a commission or finder's fee in connection with
the transaction contemplated herein, except for Western Capital Advisors
("Broker"), whose commission shall be paid by Transferee at the Closing through
escrow in the event, but only in the event, that the Closing occurs hereunder.
Notwithstanding the foregoing, in no event shall Transferee be obligated to pay
a commission to Broker pursuant to this Paragraph 18(b) in an amount greater
than $1,400,000 (the "Commission Limit"). Transferee shall be entitled to a
credit against the Agreed Amount in an amount equal to the amount of the
commission paid by Transferee to Broker pursuant to the provisions of this
Paragraph 18(b). The Transferors shall deliver to Transferee as soon as
reasonably possible after the Effective Date a separate agreement executed by
Broker pursuant to which Broker acknowledges and agrees that no commission shall
be payable by Transferee to Broker in the event that the Closing fails to occur
for any reason whatsoever, including, without limitation, a default by
Transferee hereunder, and that Transferee's obligation to Broker in the event
that the Closing occurs shall be limited to the Commission Limit. The
Transferors agree to indemnify, defend and hold harmless Transferee against and
from any liability, damage, cost and expense, including without limitation
attorneys' fees, arising out of or resulting from any claim or demand
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<PAGE> 34
by Broker for a commission or any other compensation in connection with the
transaction contemplated by this Agreement (i) in the event that the Closing
fails to occur for any reason whatsoever, including, without limitation, a
default by Transferee hereunder, and (ii) in excess of the Commission Limit, in
the event that the Closing occurs. Transferee covenants and agrees that its
payment of such commission to Broker is properly allocable to capital
expenditures with respect to the Real Property and that Transferee shall
capitalize such payment for all purposes, including federal and state income tax
purposes. In the event that any other broker or finder makes a claim for a
commission or finder's fee based upon any contact, dealings or communication,
the party whose conduct is the basis for the broker or finder making its claim
shall indemnify, defend and hold harmless the other party against and from any
commission, fee, liability, damage, cost and expense, including without
limitation attorneys' fees, arising out of or resulting from any such claim. The
provisions of this paragraph shall survive the Closing or, to the extent
applicable, the termination of this Agreement.
(c) Successors and Assigns.
(i) This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors, heirs,
administrators and assigns, provided that no party shall have the right to
assign any of its rights hereunder without the prior written consent of all
other parties, which consent may be given or withheld in each of the party's
sole and absolute discretion. Notwithstanding the foregoing, Transferee shall
have the right, upon notice to the Transferors, to cause title to one or more of
the Constituent Parcels to be vested at Closing in a title holding entity wholly
owned by Transferee and/or the REIT, provided that such shall not in any manner
have any adverse tax effects upon any Transferor or release Transferee or the
REIT from any liability hereunder.
(ii) Notwithstanding anything to the contrary provided
herein, the parties hereto acknowledge and agree that the Trustees and Lathrop
shall have the right to contribute all of Lathrop Trust's and Lathrop's right,
title and interest in and to the Restaurant Property, the Christie Property, the
Shellmound Property and BOPA to a newly formed partnership ("New Partnership"),
the general partner of which shall be the Trustees, in which event, (A) the New
Partnership shall be substituted in the place of the Trustees and Lathrop Trust
(acting through the Trustees) for all purposes hereunder, including, without
limitation, in the place of Lathrop Trust (acting through the Trustees) under
Paragraph 18(l) below, (B) the New Partnership shall be deemed a Partnership
Transferor hereunder, and (C) the New Partnership shall execute an agreement in
form reasonably acceptable to Transferee assuming all of the Trustees' and
Lathrop Trust's (acting through the Trustees) obligations hereunder and agreeing
to be bound by the provisions hereof.
(d) Amendments. Except as otherwise provided herein, this
Agreement may be amended or modified only by a written instrument executed by
the Transferors and Transferee.
(e) Continuation and Survival of Representations and Warranties,
Etc. All representations and warranties by the respective parties contained
herein or made in writing
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pursuant to this Agreement (including, without limitation, any representations
and warranties contained in the Deeds, the Bills of Sale, the Assignments of
Leases, the Intangible Assignments and any Closing certificates) are intended to
and shall remain true and correct as of the time of Closing, shall be deemed to
be material, and, together with all indemnities made by the respective parties
contained herein or made in writing pursuant to this Agreement (including,
without limitation, any representations and warranties contained in the Deed,
the Deeds, the Bills of Sale, the Assignments of Leases, the Intangible
Assignments and any Closing certificates) shall survive the execution and
delivery of this Agreement and the Closing for a period of three (3) years, or,
to the extent expressly provided herein, beyond any termination of this
Agreement. The Transferors' representations and warranties set forth in any
landlord estoppel certificate delivered pursuant to Paragraph 6(b) above shall
survive the Closing for the periods of time set forth in said Paragraph 6(b).
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
(g) Merger of Prior Agreements. This Agreement and the schedules
and exhibits hereto constitute the entire agreement between the parties and
supersede all prior agreements and understandings between the parties relating
to the subject matter hereof.
(h) Enforcement. If either party hereto fails to perform any of
its obligations under this Agreement or if a dispute arises between the parties
hereto concerning the meaning or interpretation of any provision of this
Agreement, or if any dispute arises or any claim is brought under Paragraph
12(e) above, then the party not prevailing in such dispute shall pay any and all
costs and expenses incurred by the other party on account of such default and/or
in enforcing or establishing its rights hereunder, including, without
limitation, court costs or costs of arbitration and reasonable attorneys' fees
and costs. Any such attorneys' fees and other reasonable expenses incurred by
either party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from and in addition to any other amount included in such
judgment, and such attorneys' fees obligation is intended to be severable from
the other provisions of this Agreement and to survive and not be merged into any
such judgment. The provisions of this Paragraph 18(h) shall survive the
termination of this Agreement.
(i) Time of the Essence. Time is of the essence of this Agreement.
(j) Severability. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect.
(k) Marketing. During the term of this Agreement, the Transferors
shall not market the Property, offer the Property for sale or transfer to or
enter into any contract for the sale or transfer of the Property with any other
prospective transferees or purchasers.
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(l) Joint and Several. Other than with respect to Lathrop Trust
(acting through the Trustees), which shall be joint and severally liable with
all of the other Transferors for all of the other Transferors' obligations
hereunder, the obligations of the Transferors hereunder shall be several and not
joint and each Transferor shall only be responsible for all those covenants,
agreements, representations, warranties and indemnities made by the Transferors
hereunder to the extent within the control of such Transferor or to the extent
applicable to either such Transferor or the Constituent Parcels owned by such
Transferor. Nothing contained in the previous sentence shall limit Transferee's
right to terminate this Agreement pursuant to the terms hereof in the event of a
default by any of the Transferors. The parties further agree that any default by
either Transferee or the REIT hereunder shall be deemed a default of both
Transferee and the REIT.
(m) Confidentiality. Each party hereto hereby agrees to maintain
in confidence, and not to disclose to any third party, the information contained
in this Agreement or pertaining to the transaction contemplated hereby and the
information and data furnished or made available by the Transferors to
Transferee, its agents and representatives in connection with Transferee's
investigation of the Property and the transactions contemplated by the Agreement
for so long as such information is not publicly known (other than through a
party's breach of this Paragraph 18(m)); provided, however, that each party, its
agents and representatives may disclose such information and data (a) to such
party's accountants, attorneys, prospective lenders, investment bankers,
accountants, underwriters, ratings agencies, directors, partners, consultants
and other advisors in connection with the transactions contemplated by this
Agreement (collectively "Representatives") to the extent that such
Representatives reasonably need to know (in such party's reasonable discretion)
such information and data in order to assist, and perform services on behalf of,
such party, and to the extent such Representatives are informed of and agree to
be bound by the provisions of this Paragraph 18(m); (b) to the extent required
by any applicable statute, law, regulation or governmental authority, including,
but not limited to, the United States Securities and Exchange Commission
("SEC"); (c) to the extent such disclosure is required or appropriate in
connection with Transferee's or any of its affiliates preparation of a
registration statement for filing with the SEC or any prospectus prepared and/or
circulated pursuant thereto or any other securities offerings or filings
undertaken pursuant thereto or subsequent thereto; and (d) in connection with
any litigation that may arise between the parties in connection with the
transactions contemplated by this Agreement. Without limiting any obligation on
Transferee imposed by applicable securities laws, Transferee shall use good
faith efforts to consult with and seek the consent of Lathrop prior to issuing
any press release or making any other public disclosure regarding the entering
into of this Agreement or, if the context requires, the termination of this
Agreement. The provisions of this Paragraph 18(m) shall survive termination of
this Agreement.
(n) Tax Consequences. Each Transferor acknowledges and agrees that
he or it has relied fully upon the advice of its own legal counsel and/or
accountant in determining the tax consequences of this Agreement and the
transactions contemplated hereby and not upon any representations or advice by
Transferee, the REIT or any officer, director, employee, shareholder,
representative or agent thereof. Each Transferor acknowledges and agrees that
Transferee has recommended that the Transferors retain legal counsel and tax
experts to advise the Transferors
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on the tax consequences of the transactions described herein, including, without
limitation, the consequences of the Transferors' receipt of OP Units.
(o) SEC Compliance. If it becomes reasonably necessary to do so in
order to comply with applicable securities laws or the rules or regulations of
the SEC, for a period of four (4) years after the Closing Date, Transferee and
Transferee's agents shall have the right to inspect and to obtain copies of the
Transferors' books and records supporting the operation of the Property for the
period of three (3) full calendar years preceding the calendar year which
includes the Closing Date. Transferee shall give reasonable prior notice to the
Transferors when Transferee wishes to exercise its right to inspect such books
and records. Such inspection shall take place at the office of the Transferors
during normal business hours on a date and at a time reasonably convenient to
the Transferors and Transferee. The provisions of this Paragraph 18(o) shall
survive the Closing.
19. Reimbursement Agreement. At the Closing, each OP Recipient shall
have the right to elect to execute a reimbursement agreement in the form of
Exhibit Q attached hereto ("Reimbursement Agreement") pursuant to which such OP
Recipient shall agree to reimburse the REIT for a portion of any losses incurred
by the REIT pursuant to those certain guarantees referenced in the Reimbursement
Agreement up to a maximum amount reasonably designated by such OP Recipient and
approved by the Transferee in its good faith discretion. Notwithstanding the
foregoing, in the event that the Transferee fails to approve the maximum amounts
reasonably designated by each such OP Recipient, the Transferors shall have the
right to terminate this Agreement as provided in Paragraph 7 above.
20. Tax Deferred Exchange. It is presently contemplated that both
Transferee and each Transferor may desire to effectuate a tax-deferred exchange
(also known as a "1031" exchange) (individually an "Exchange" and collectively
the "Exchanges") in connection with the transaction described herein. As used
herein, the term "Exchange Party" shall mean the party hereto desiring to effect
an Exchange, and the term "Accommodator" shall mean the other party. It is
acknowledged that each of the parties may be both an Exchange Party and an
Accommodator. Each party hereby agrees to cooperate with the other party in
connection with the Exchange contemplated by the other party, provided that:
(a) All documents executed by the Accommodator in connection with
the Exchange shall be subject to the prior reasonable approval of the
Accommodator and shall recognize that the Accommodator is acting solely as an
accommodating party to such Exchange, shall have no liability with respect
thereto, and is making no representation or warranty that the transactions
qualify as a tax-free exchange under Section 1031 of the Federal Code or any
applicable state or local laws and shall have no liability whatsoever if any
such transactions fails to so qualify.
(b) Such Exchange shall not result in the Accommodator incurring
any additional costs or liabilities.
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(c) The Accommodator shall be reasonably satisfied that the
Exchange will not result in any increased risks or any adverse tax consequences
to the Accommodator.
(d) In no event shall the Accommodator be obligated to acquire any
property or otherwise be obligated to take title, or appear in the records of
title, to any property in connection with such Exchange.
(e) In no event shall the Exchange Party's consummation of such
Exchange constitute a condition precedent to the Exchange Party's obligations
under this Agreement, and the Exchange Party's failure or inability to
consummate such Exchange shall not be deemed to excuse or release the Exchange
Party from its obligations under this Agreement.
21. Post-Closing Restriction on Transfer. Transferee covenants and
agrees that it shall not sell, transfer or otherwise dispose of all or any part
of the Tower One Property, the Tower Two Property, or the Tower Three Property
(constituting real property) on or before the earliest of (i) the fifth (5th)
anniversary of the Closing, (ii) the date of death of Lathrop or (iii) the date
of death of Marcia Fay Lathrop, without the consent of Lathrop (which consent
Lathrop may grant or withheld in his sole and absolute discretion), if such
sale, transfer or other disposition would cause gain to be recognized by any OP
Recipient. Transferee covenants and agrees that it shall not sell, transfer or
otherwise dispose of all or any part of the Baybridge Office Plaza Property
(constituting real property) on or before the third (3rd) anniversary of the
Closing, without the consent of Lathrop, if such sale, transfer or other
disposition would cause gain to be recognized by any OP Recipient. Transferee
covenants and agrees that it shall not sell, transfer or otherwise dispose of
all or any part of the Christie Property, the Shellmound Property, or the
Restaurant Property on or before the earliest of (i) the third (3rd) anniversary
of the Closing, (ii) the date of death of Lathrop or (iii) the date of death of
Mrs. F.P. Lathrop, without the consent of Lathrop, if such sale, transfer or
other disposition would cause gain to be recognized by any OP Recipient.
Capitalized terms used in this Paragraph 21 and not otherwise defined in this
Agreement shall have the meanings set forth on Schedule 1 attached hereto.
22. Lathrop Lease Extension. At the Closing, Transferee, at the option
of Lathrop, shall enter into an amendment to that certain Lease dated April 1,
1985 between WT-3 and F.P. Lathrop Properties ("Lathrop Properties"), as
amended, covering certain space located in the Tower Three Property (the
"Lathrop Leased Premises"), which amendment (i) shall extend the term of such
Lease for a period of six (6) years, (ii) shall permit Lathrop Properties to
continue to use the two premium parking spaces currently used by Lathrop
Properties throughout the term of such Lease (as so extended), (iii) shall
provide that base rent shall be adjusted to equal the fair market rental at the
beginning of the extension term (including market escalation provisions), (iv)
shall provide that such Lease shall be terminable by either party on thirty (30)
days notice following the death of Lathrop, (v) shall provide that Lathrop
Properties shall have the right, at any time prior to the first (1st)
anniversary of the Closing Date, to terminate such Lease upon the giving of six
(6) months' prior notice to Transferee, and (vi) shall provide that Transferee
shall have the right to recapture any portion of the Lathrop Leased Premises
that Lathrop Properties attempts to assign or sublet after the Closing (other
than an assignment or subletting to an affiliate of Lathrop). In the event that
Lathrop exercises the option provided in this Paragraph
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22, Lathrop shall endeavor to provide a draft of the amendment to Transferee for
its review and approval in sufficient time prior to the Closing Date to permit
the execution of such amendment at the Closing.
23. Return of Documents. In the event that this Agreement terminates,
Transferee agrees to promptly return to the Transferors any documents received
from the Transferors regarding the Property, and to deliver to the Transferors
copies of all non-privileged or confidential reports, surveys and other document
generated or received by Transferee from persons other than the Transferors
(excluding, in all cases, documents generated by the Transferee's counsel),
provided, however, if this Agreement terminates as a result of a default by any
Transferor hereunder, Transferee's obligation to deliver such third-party
documents to the Transferors shall be conditioned upon the Transferors
reimbursing Transferee for the cost thereof. Transferee's obligations set forth
in this Paragraph 23 shall survive the termination of this Agreement. All of
such documents delivered to the Transferors by Transferee hereunder shall be
delivered without representation or warranty whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
WATERGATE TOWER ASSOCIATES,
a California limited partnership
By:_________________________________________
F.P. Lathrop
General Partner
TOWER II,
a California limited partnership
By:_________________________________________
F.P. Lathrop
General Partner
WATERGATE TOWER III ASSOCIATES,
a California limited partnership
By:_________________________________________
F.P. Lathrop
General Partner
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BAYBRIDGE OFFICE PLAZA ASSOCIATES,
a California limited partnership
By:_________________________________________
F.P. Lathrop
General Partner
____________________________________________
F.P. LATHROP,
as Trustee of The Lathrop Trust
____________________________________________
MARCIA FAY LATHROP,
as Trustee of The Lathrop Trust
____________________________________________
SANDRA L. HYDE,
as Trustee of The Lathrop Trust
____________________________________________
F.P. LATHROP
SPIEKER PROPERTIES, L.P.,
a California limited partnership
By: Spieker Properties, Inc.,
a Maryland corporation
Its General Partner
By____________________________________
Its___________________________________
SPIEKER PROPERTIES, INC.,
a Maryland corporation
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By:______________________________________
Its:_____________________________________
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List of Schedules and Exhibits
Exhibit A -- Description of Real Property
Exhibit B -- Description of Personal Property
Exhibit C -- Allocation of Agreed Amount
Exhibit D -- Form of Grant Deed
Exhibit E -- Form of Bill of Sale
Exhibit F -- Form of Assignment of Intangible Property
Exhibit G -- Form of Assignment of Leases
Exhibit H -- Form of Registration Rights/Lock-Up Agreement
Exhibit I -- Form of Subscription Agreement
Exhibit J -- Form of OP Amendment
Exhibit K -- Form of Transferors' Counsel's Opinion
Exhibit L -- Rent Roll
Exhibit M -- Environmental Document List
Exhibit N -- Form of Security Agreement
Exhibit O -- Tenant Estoppel Certificate Form
Exhibit P -- Form of Tenant Notice
Exhibit Q -- Form of Reimbursement Agreement
Schedule 1 -- Ownership and Definition of Constituent Parcels
Schedule 2 -- Existing Loans
Schedule 3 -- Due Diligence Review Items
Schedule 4 -- Disclosure Schedule
Schedule 5 -- Remaining Tenant Obligations
<PAGE> 1
EXHIBIT 99.2
REGISTRATION RIGHTS AND
LOCK-UP AGREEMENT
THIS REGISTRATION RIGHTS AND LOCK-UP AGREEMENT (the
"Agreement") is entered into this ______ day of _________, 1996 by and between
Spieker Properties, Inc., a Maryland corporation (the "Company"), and
___________________________ (the "Investor").
R E C I T A L S
WHEREAS, this Agreement is made pursuant to that certain
Contribution Agreement dated as of September __, 1996 (the "Contribution
Agreement") by and among Spieker Properties, L.P., a California limited
partnership (the "Operating Partnership"), [the Investor] and certain other
parties, pursuant to which the Investor will receive OP Units (as defined
below);
WHEREAS, the Company is the general partner of the Operating
Partnership;
WHEREAS, in consideration for the Investor's obligations under
the Contribution Agreement, the Company wishes to provide the Investor with
certain registration rights;
WHEREAS, in consideration for the Operating Partnership's
obligations under the Contribution Agreement, the Investor has agreed to the
lock-up provisions as set forth in Section II below; and
NOW THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements set forth hereinafter, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
I. Definitions
As used in this Agreement, the following terms shall have the
following respective meanings:
"Closing" shall mean the "Closing" under and as
defined in the Contribution Agreement.
"Common Stock" shall mean the Common Stock of the
Company, par value $.0001 per share;
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act;
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"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time;
"Lock-up Period" shall mean, with respect to the Tier
I Shares, the period commencing on the Closing and ending on the third (3rd)
anniversary of the Closing, and, with respect to the Tier II Shares, the period
commencing on the Closing and ending on the first (1st) anniversary of the
Closing.
"OP Units" shall mean, collectively, the Tier I OP
Units and the Tier II OP Units;
"Potential Tier I Shares" shall mean, collectively,
the Common Stock that has been issued to the Investor upon conversion of its
Tier I OP Units and all Common Stock that would be issued to the Investor if all
of its unconverted Tier I OP Units were converted to Common Stock;
"Potential Tier II Shares" shall mean, collectively,
the Common Stock that has been issued to the Investor upon conversion of its
Tier II OP Units and all Common Stock that would be issued to the Investor if
all of its unconverted Tier II OP Units were converted to Common Stock;
The terms "register," "registered," and
"registration" shall refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and the declaration
or ordering of the effectiveness of such registration statement;
"Registrable Securities" shall mean: (i) the Common
Stock issued or issuable upon conversion of the OP Units; and (ii) any other
Common Stock issued as a dividend or other distribution with respect to, or in
exchange for or in replacement of such OP Units or shares of Common Stock;
provided, however, that shares of Common Stock or other securities shall not be
treated as Registrable Securities (A) if they have been sold to or through a
broker or dealer or underwriter in a public distribution or a public securities
transaction pursuant to an effective registration statement or pursuant to
Commission Rule 144 ("Rule 144"), or (B) if in the reasonable opinion of counsel
to the Company they may be sold in a transaction exempt from the registration
and prospectus delivery requirements of the Securities Act and if the Company
has removed all transfer restrictions and legends with respect to the
registration and prospectus delivery requirements from the consummation of such
sale;
"Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time;
"Shares" shall mean the Common Stock issuable to the
Investor upon conversion of its OP Units.
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<PAGE> 3
"Tier I OP Units" shall mean those certain _______
limited partnership units in the Operating Partnership issued to the Investor on
the date hereof and that are represented by Registered Certificate of Ownership
No. ______, which partnership units are convertible, at the Investor's option,
for Shares of Common Stock of the Company. [WITH RESPECT TO ALL INVESTORS IN THE
AGGREGATE, TIER I OP UNITS WILL HAVE A VALUE OF $19,000,000 AS OF THE CLOSING AS
COMPUTED UNDER THE CONTRIBUTION AGREEMENT, AND TIER I REGISTERED CERTIFICATES OF
OWNERSHIP WILL BE ISSUED REPRESENTING OP UNITS HAVING A VALUE IN THE AGGREGATE
AS OF THE CLOSING OF $19,000,000. THE TRANSFERORS SHALL DESIGNATE PRIOR TO
CLOSING WHICH $1,500,000 OF "EXCESS UNITS" TO BE TIER I OP UNITS, IN ADDITION TO
$17,500,000 OF OP UNITS COVERED BY SECURITY AGREEMENT.]
"Tier I Shares" shall mean the Common Stock issuable
to the Investor upon conversion of its Tier I OP Units.
"Tier II OP Units" shall mean those certain _______
limited partnership units in the Operating Partnership issued to the Investor on
the date hereof and that are represented by Registered Certificate of Ownership
No. ______, which partnership units are convertible, at the Investor's option,
for Shares of Common Stock of the Company. [ALL OP UNITS THAT ARE NOT TIER I OP
UNITS WILL BE TIER II OP UNITS (I.E., THOSE OP UNITS IN EXCESS OF THE FIRST
$19,000,000 OF OP UNITS.]
"Tier II Shares" shall mean the Common Stock issuable
to the Investor upon conversion of its Tier II OP Units.
II. Lock-up Agreement.
A. The Investor hereby agrees that, prior to the end
of the Lock-up Period, it will not, directly or indirectly, offer, sell,
contract to sell, grant any option to purchase, make any short sale, transfer,
pledge [other than pursuant to the Security Agreement, as defined in the
Contribution Agreement], cause a registration of, or otherwise dispose of or
make a distribution of (collectively, "Dispose of") any of the shares of Common
Stock acquired by the conversion of all or a portion of its Tier I OP Units
owned as of the date hereof, except as set forth in Section II(C) below, without
the prior written consent of the Company.
B. The Investor hereby agrees that, prior to the end
of the Lock-up Period, it will not, directly or indirectly, Dispose of any of
the shares of Common Stock acquired by the conversion of all or a portion of its
Tier II OP Units owned as of the date hereof, except as set forth in Sections
II(D) and (E) below, without the prior written consent of the Company.
C. Notwithstanding Section II(A) hereof, in the event
of the death of the Investor during the Lock-up Period, the personal
representative of the Investor's estate shall have a one-time right exercisable
at any time following such death and prior to nine (9) months after such death,
to Dispose of the Investor's Tier I Shares in an amount not to exceed in the
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aggregate fifty percent (50%) of the Investor's Potential Tier I Shares,
provided, however, (i) in no event shall any Tier I Shares be Disposed of
pursuant to this Section II(C) prior to the first anniversary of the Closing and
(ii) in no event shall the Investor Dispose of Tier I Shares pursuant to this
Section II(C) during any calendar month in an amount greater than ten percent
(10%) of the Investor's Potential Tier I Shares. In the event that the Investor
dies prior to the first anniversary of the Closing, the period referenced in the
immediately preceding sentence shall commence upon the first anniversary of the
Closing and shall end on the date that is nine (9) months after such
anniversary. [ONLY F.P. LATHROP AND BETTY AUSTIN SHALL HAVE THE RIGHTS SET FORTH
IN THIS SECTION II(C). WITH RESPECT TO ANY OTHER PERSON THAT RECEIVES OP UNITS,
SECTION II(C) AND, UNLESS SUCH PERSON RECEIVES TIER II UNITS ARTICLES III AND IV
SHALL BE DELETED AND CORRESPONDING CHANGES SHALL BE MADE TO EACH REGISTRATION
RIGHTS AND LOCK-UP AGREEMENT.]
D. Notwithstanding Section II(B) hereof, the Investor
shall have the right to assign as collateral and pledge its Tier II OP Units
and/or its Tier II Shares to an institutional lender, provided that the security
agreement, pledge agreement and/or other documents pursuant to which such
assignment and pledge are made shall be reasonably satisfactory to the Company.
In the event that the Investor so assigns and pledges any of its Tier II OP
Units and/or its Tier II Shares prior to the first anniversary of the Closing,
the Company agrees, if so requested by the secured party, to waive the one year
lock-up on such OP Units and/or Shares.
E. Notwithstanding Section II(B) hereof, at any time
after the first anniversary of the Closing, the Investor may Dispose of any of
its Tier II Shares, provided, however, (i) in no event shall the Investor
Dispose of Tier II Shares pursuant to this Section II(E) during any calendar
month in an amount greater than twenty percent (20%) of the Investor's Potential
Tier II Shares.
III. Registration Rights During Lock-up Period.
A. Requested Registration. If, under Section II(C) or
(E) hereof, the Investor may Dispose of Shares during the Lock-up Period, then,
during such period, the Investor may request in writing that the Company effect
a registration, qualification or compliance with respect to Registrable
Securities, provided that any such request shall be limited by the limitations
on Disposition of Shares set forth in Section II above and the Investor shall
remain subject to such limitations, and provided further that such request is
for the registration, qualification or compliance of Shares having an aggregate
offering price (as determined based on the highest closing price of the Common
Stock on a public exchange within five (5) business days of such written
request) to the public, net of underwriting discounts and commissions, of at
least $500,000.
Upon receipt of such written request, the Company shall use
its best efforts to effect as soon as reasonably practicable and in no event
later than 90 days after receipt of the request therefor all such registrations,
qualifications and compliances (including, without
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<PAGE> 5
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under the applicable blue sky or other state
securities laws and appropriate compliance with exemptive regulations issued
under the Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of the Investor's Registrable Securities as are specified in such
request, provided that with respect to any registration, qualification or
compliance requested in connection with the first paragraph of this Section, the
Company may in its sole discretion file a registration statement under Rule 415
of the Securities Act (or under a rule substantially equivalent to Rule 415 as
now in effect) for an offering of the Investor's Registered Securities on a
continuous or delayed basis in the future (a "Shelf Registration Statement"),
which would permit or facilitate the sale and distribution of the Investor's
Registrable Securities as may be so requested and, provided further, that the
Company shall not be obligated to take any action to effect any such
registration, qualification or compliance pursuant to this Section III(A):
(1) In any particular jurisdiction in
which the Company would be required to execute a general consent to
service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act;
(2) If the Company has already
effected one registration for the Investor pursuant to this Section;
(3) If at the time of the request to
effect a registration, qualification or compliance of Registrable
Securities the Company gives notice within 30 days of such request that
it is engaged or has fixed plans to engage within 60 days of the time
of the request in a registered public offering as to which the Investor
may include Registrable Securities pursuant to Section IV and which the
Company in good faith estimates will become effective within such 60
day period without a reduction in the Shares requested to be registered
hereunder;
(4) If the Investor has already sold
or could have sold Shares in a registration pursuant to Section IV
hereof; or
(5) If the Company is not eligible to
file a registration statement on Form S-3 (or a substantially
equivalent registration form under the Securities Act subsequently
adopted by the Commission that permits inclusion of or incorporation by
reference to other documents filed by the Company with the Commission).
The Company hereby represents and warrants to the Investor that, as of
the date of this Agreement, the Company is eligible to file a
registration statement on Form S-3 and agrees that, throughout the
Lock-up Period, the Company shall use reasonable good faith efforts to
ensure that the Company remains eligible to file a registration
statement on Form S-3 (or a substantially equivalent registration form
under the Securities Act subsequently adopted by the Commission that
permits inclusion of or incorporation by reference to other documents
filed by the Company with the Commission). If the Company is not
eligible to file a registration statement on Form S-3
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despite the Company's reasonable good faith efforts to remain eligible
to do so, the Company shall still be obligated to file and effect the
registration, qualification and compliance as so requested, provided
that (i) such registration, qualification and/or compliance of Shares
have an aggregate offering price (as determined under the first
paragraph of this Section III(A) of at least $2,500,000, (ii) the
Investor shall bear all expenses of such registration, qualification
and/or compliance as provided in Section VI below, and (iii) the
Company may select any Commission registration statement available to
the Company for such registration, qualification and/or compliance.
B. Delay of Registration. If the Company shall
furnish to the Investor a certificate signed by the President of the Company
stating that, in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for a filing of a registration statement to be made on or before the date such
filing would be required and it is therefore essential to defer such filing,
then the Company may direct that such request to file a registration statement,
as the case may be, be delayed for a period not in excess of 60 days, provided
that the filing of such registration statement has not previously been delayed
by the Company pursuant to this Section III(B).
IV. Registrations During Lock-up Period.
A. Company Registration. If (i) under Section II(C)
or (E) hereof the Investor may Dispose of Shares during the Lock-up Period and
(ii) at any time or from time to time during the Lock-up Period the Company
shall determine to register any of its Common Stock, either for its own account
or the account of another security holder, other than a registration relating to
employee stock option or purchase plans, a registration relating to a Rule 145
transaction or a registration pursuant to a registration form which does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of Registrable Securities, the
Company will:
1. promptly give to the Investor written
notice thereof; and
2. subject to the lock-up provisions of
Sections II(A) and (B) hereof, include either in such registration and in any
underwriting involved therein, or, at the Company's sole option, in a separately
filed Shelf Registration Statement, all the Registrable Securities specified in
a written request made within twenty (20) days after receipt of such written
notice from the Company, by the Investor, provided that the amount of the
Investor's Registrable Securities to be included in any registration involving
an underwriting shall be subject to further reduction as set forth in Section
IV(B) below.
B. Underwriting. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Investor as a part of the written
notice given pursuant to Section IV(A)(1). In such event, and provided that the
Company at its sole option chooses not to file a separate Shelf Registration
Statement to cover the Investor's Registrable Securities, the right of the
Investor to registration pursuant to this Section shall be conditioned upon such
Investor's participation in such
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underwriting and the inclusion of such Investor's Registrable Securities in the
underwriting to the extent provided herein. The Investor shall (together with
the Company and other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company.
Notwithstanding any other provision of this Section, if the underwriter advises
the Company in writing that marketing factors require a limitation of the number
of shares to be underwritten, the number of Registrable Securities of the
Investor to be included in the registration and underwriting shall be reduced on
a pro rata basis based on the total number of the securities proposed to be sold
by the Investor and other security holders. The Company shall advise the
Investor of any such limitations and the number of shares of Registrable
Securities that may be included in the registration and underwriting. If the
Investor disapproves of the terms of any such underwriting, it may elect to
withdraw therefrom by written notice to the Company and the underwriter. The
Registrable Securities so withdrawn shall also be withdrawn from registration.
V. Registration Rights After Expiration of the Lock-up Period.
After the expiration of the Lock-up Period, the Investor shall have the
registration rights that are set forth in the Investor Rights Agreement (as
amended, the "Investor Rights Agreement"), dated November 18, 1993, by and among
the Company and the investors set forth in Exhibit A attached to such agreement,
as if and to the extent the Investor was considered a "Holder" as defined in the
Investor Rights Agreement. In the event of a conflict between the terms of this
Agreement and the terms of the Investor Rights Agreement, the terms of this
Agreement shall control.
VI. Expenses of Registration. All expenses incurred in
connection with any attempted or completed registration, qualification or
compliance pursuant to Sections IV and V, including without limitation, all
registration, filing and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, expenses of any special audits
incidental to or required by such registration, qualification or compliance
shall be borne by the Company or by a party other than the Investor, as the case
may be. All such expenses incurred in connection with any registration,
qualification or compliance requested by the Investor pursuant to Section III
shall be borne by the Investor. With respect to any registration, qualification
or compliance, the Company shall not be required to pay underwriters' discounts,
commissions, or stock transfer taxes relating to Registrable Securities or the
fees and disbursements of any counsel retained by the Investor.
VII. Registration Procedures. In the case of each
registration, qualification or compliance effected by the Company pursuant to
this Agreement, the Company will keep the Investor advised in writing as to the
initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense (except as otherwise provided in Section VI
above) the Company will:
A. prepare and file with the Commission a
registration statement with respect to such securities and use its best efforts
to cause such registration, qualification or compliance to become and remain
effective for a period of 180 days or until the Investor has
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completed the distribution described in the registration statement relating
thereto, whichever shall first occur;
B. furnish to the Investors and other security
holders participating in such registration and to the underwriters of the
securities being registered such number of copies of the registration statement,
preliminary prospectus, final prospectus and other documents incident thereto as
such underwriters, the Investor and other security holders from time to time may
reasonably request;
C. prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statements as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement;
D. use its best efforts to register or qualify the
securities covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as such Investor and other participating
security holders may reasonably request, in a writing received by the Company at
least ten days prior to the original filing of such registration statement;
E. enter into a written underwriting agreement in
customary form and substance reasonably satisfactory to the Company, the
Investor, the other participating security holders and the managing underwriter
or underwriters of the public offering of such securities, if the offering is to
be underwritten, in whole or in part;
F. notify each holder of securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement 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 a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing;
G. furnish, at the request of the Investor and other
participating security holders, on the date that such Registrable Securities are
delivered to the underwriters for sale in connection with a registration
pursuant to this Agreement, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on
the date that the registration statements with respect to such securities
becomes effective, (i) an opinion, dated such date, of the counsel representing
the Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Investor and other security holders
requesting registration of Registrable Securities and (ii) a letter dated such
date, from the independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified public accounts
to underwriters in an underwritten public offering,
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addressed to the underwriters, if any, and to the Investor and other
participating security holders; and
H. use its best efforts to take such other steps as
are reasonably necessary to effect the registration contemplated hereby and to
facilitate the lawful disposition of the Registrable Securities subject thereto.
VIII. Indemnification.
A. The Company will indemnify the Investor, other
participating security holders, if any, and each underwriter, if any, of the
Investor's and other participating security holders' securities covered by such
registration statement, with respect to certain customary matters that relate to
the registration of the Registrable Securities. Such indemnification will be
provided pursuant to an indemnification agreement to be subsequently negotiated.
The foregoing indemnity agreement is subject to the condition that, insofar as
it relates to any such untrue statement (or alleged untrue statement) or
omission (or alleged omission) made in the preliminary prospectus but eliminated
or remedied in the final prospectus, such indemnity agreement shall not inure to
the benefit of any underwriter or the Investor and other participating security
holders, if there is not an underwriter, as the case may be, if a copy of such
final prospectus was not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such action is required by
the Securities Act or any other applicable state securities law or any rule or
regulation promulgated thereunder.
B. The Investor and other participating security holders will,
if Registrable Securities held by or issuable to the Investor and other
participating security holders are included in the securities to which such
registration, qualification or compliance is being effected, indemnify,
severally and not jointly, to the extent of the proceeds received by the
Investor and other participating security holders therefrom, the Company with
respect to certain customary matters that relate to information provided by the
Investor and other participating Holders that is set forth in the registration
statement that pertains to the Registrable Securities. Such indemnification will
be provided pursuant to an indemnification agreement to be subsequently
negotiated.
IX. Information by Investor. The Investor shall furnish to the
Company such information regarding the Investor and the distribution proposed by
such Investor as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement.
X. Transfer of Registration Rights. Except as otherwise
provided herein, the rights to cause the Company to register securities granted
by the Company under Section V may be assigned or otherwise conveyed to a
transferee or assignee of Registrable Securities, who shall be considered an
"Investor" for purposes of this Agreement; provided that (i) such transfer is
effected in compliance with the lock-up provisions of Section II and any
restrictions on transfer set forth in the partnership agreement of the Operating
Partnership, (ii) such transfer is effected in accordance with applicable
federal and state securities laws, (iii) such transferee or assignee
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becomes a party to this Agreement or agrees in writing to be subject to the
terms hereof to the same extent as if he were an original purchaser hereunder,
and (iv) the Company is given written notice by the Investor of said transfer,
stating the name and address of said transferee and identifying the securities
with respect to which such registration rights are being assigned. The rights to
cause the Company to effect registrations, qualifications and compliance granted
by the Company under Sections III and IV above are not assignable or otherwise
conveyable, other than upon the death of the Investor, in which event the
personal representative of the Investor's estate shall succeed to the Investor's
rights under this Agreement.
XI. Miscellaneous.
A. Successors and Assigns. Except as otherwise
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
B. Governing Law. This Agreement shall be governed by
and construed under the laws of the State of California.
C. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
D. Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
E. Notices. Except as otherwise provided, all notices
and other communications required or permitted hereunder shall be in writing and
shall be deemed effectively given upon personal delivery to the party to be
notified or upon deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified at the
address indicated for such party on the signature page hereof, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties.
F. Amendments and Waivers. Any term of this Agreement
may be amended and the observance of any term of the Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and the Investor.
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon the Investor, the Company and their respective successors and
assigns.
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G. Entire Agreement. This Agreement and the other
documents and agreements referred to herein constitute the entire understanding
and agreement among the parties with regard to the subject matter hereof and
thereof.
H. Severability. If one or more provisions of this
Agreement are determined to be unenforceable under applicable law, such
provisions shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provision were so excluded and shall
be enforceable in accordance with its terms.
I. Attorneys' Fees. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and disbursements
in addition to any other relief to which such party may be entitled.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
SPIEKER PROPERTIES, INC.
By:
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Its:
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