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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-12528
SPIEKER PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
MARYLAND 94-3185802
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (IRS EMPLOYER
ORGANIZATION) IDENTIFICATION NO.)
2180 SAND HILL ROAD, MENLO PARK, CA 94025
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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(650) 854-5600
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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TITLE OF EACH CLASS NAME OF EXCHANGE ON WHICH REGISTERED
------------------- ------------------------------------
<S> <C>
Series B Preferred Stock New York Stock Exchange
Series C Preferred Stock New York Stock Exchange
Common Stock New York Stock Exchange
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [ ]
As of March 13, 1998, the aggregate market value of the voting stock held
by nonaffiliates of the registrant was $2,262,374,876. The aggregate market
value was computed with reference to the closing price on the New York Stock
Exchange on such date. This calculation does not reflect a determination that
persons are affiliates for any other purpose.
As of March 13, 1998, 56,736,674 shares of Common Stock ($.0001 par value)
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
PART III: Portions of the registrant's definitive proxy statement to be
issued in conjunction with the registrant's annual stockholders' meeting to be
held on June 10, 1998.
LOCATION OF EXHIBIT INDEX: The index of exhibits is contained in Part IV
herein.
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<PAGE> 2
TABLE OF CONTENTS
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PAGE
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PART I
Item 1. Business....................................................
Item 2. Properties..................................................
Item 3. Legal Proceedings...........................................
Item 4. Submission of Matters to a Vote of Security Holders.........
14
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PART II
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<S> <C> <C>
Item 5. Market for Registrant's Common Stock and Related Stockholder
Matters.....................................................
Item 6. Selected Financial Data.....................................
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................
Item 8. Financial Statements and Supplementary Data.................
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure....................................
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PART III
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Item 10. Directors and Executive Officers of the Registrant..........
Item 11. Executive Compensation......................................
Item 12. Security Ownership of Certain Beneficial Owners and
Management..................................................
Item 13. Certain Relationships and Related Transactions..............
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PART IV
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Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K.........................................................
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<PAGE> 3
PART I
This Annual Report contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company's actual results could
differ materially from those set forth in the forward-looking statements as a
result of various factors, including general real estate investment risks,
competition, risks associated with acquisition and development activities and
debt financing, environmental matters, general uninsured losses and seismic
activity.
ITEM 1. BUSINESS
Description of Business
Spieker Properties, Inc. (the "Company") is a leading real estate
investment trust ("REIT") that specializes in the acquisition, development and
management of office and industrial properties in California and Washington,
Oregon and Idaho (the "Pacific Northwest"). As of December 31, 1997, the Company
owned income-producing properties (the "Properties") aggregating approximately
34.5 million rentable square feet. The portfolio consists of industrial
properties aggregating approximately 18.9 million rentable square feet, office
properties aggregating approximately 15.3 million rentable square feet and
retail properties aggregating approximately 0.3 million rentable square feet.
The Company has acquired 4.2 million net rentable square feet of office and
industrial properties since December 31, 1997. As of December 31, 1997, the
average occupancy rate of the properties was approximately 94.5%
The Company was incorporated in the state of Maryland on August 20, 1993,
and commenced operations effective with the completion of its initial public
offering ("IPO") on November 18, 1993. In the IPO, the Company issued 20,400,000
shares of Common Stock at $20.50 per share, or $418.2 million and used net
proceeds of $386.8 million to purchase an approximate 77.6% general partnership
interest in Spieker Properties L.P. (the "Operating Partnership"). Unless the
context otherwise requires, the Company and the Operating Partnership are
collectively referred to as the "Company." Since its IPO, the Company has
increased its ownership of the Operating Partnership by completing secondary
offerings of Common Stock and contributing the net proceeds from such offerings
to the Operating Partnership. As of December 31, 1997, the Company owned an
approximate 89.2% general partnership interest in the Operating Partnership.
Business Strategy and Operational Philosophy
The Company's principal objective is to achieve sustainable long-term
growth in Funds from Operations per share. The Company has pursued this goal
since its inception through focused business strategies and operating
philosophies.
BUSINESS STRATEGY
Focus on Quality Commercial Property. The Company invests in quality office
and industrial properties that possess attributes that enable the properties to
be competitive in both the short and the long run. The Company seeks to own
properties in locations which provide easy access to major transportation
arteries and are close to important services. With more than 25 years of
experience in owning and operating income-producing properties, the Company's
management possesses a high degree of knowledge of the physical and locational
characteristics that give a property long term viability.
<PAGE> 4
The Company takes significant steps to differentiate its Properties from
those of nearby competitors, so as to maximize their attractiveness to potential
users. The Company focuses on office properties that have ample glass line per
square foot of office space, and user friendly common areas, stairs, elevators
and restrooms, convenient parking and efficient suite layouts. Additionally, the
Company seeks to provide amenities and services such as conference rooms and
health clubs. The Company's warehouse Properties typically have high clear
heights, numerous dock facilities, appropriate truck staging and high-capacity
sprinkler systems. The Company also seeks to differentiate its industrial
Properties through the use of landscaping as well as exterior glass walls.
The Company pays careful attention to the long-term quality of the
buildings that it develops by emphasizing first-class materials, systems and
workmanship during their construction. The exterior appearances of the Company's
Properties are designed to be attractive, enduring and appropriately simple. The
Company avoids projects which are lavish or unnecessarily intricate, as these
features tend to prematurely date buildings and often fail to deliver value from
the tenants' perspective.
Serve Wide Range of Tenants and Limit Capital Expenditures. The Company
focuses on leasing space to tenants of various sizes and on owning properties
that are easily divisible and therefore appeal to a wide range of potential
tenants. Such property flexibility also allows the Company to better serve
existing tenants by accommodating their inevitable expansion and contraction
needs. In addition, the Company's experience is that such project flexibility
helps it maintain high occupancy rates particularly when market conditions are
less favorable.
By focusing on divisible projects and a wide range of tenants, the Company
has been able to control the capital expenditures associated with re-leasing
space. The Company also attempts to limit tenant improvement expenditures to
those which are in demand by, and adaptable to, a high number of users.
Invest in Growing Regions. The Company focuses its activities primarily in
California, Washington and Oregon. The Company believes these regions possess
diverse and vibrant economies with strong prospects for continued economic
growth due to their Pacific Rim location, quality of life, well-developed
transportation infrastructures, high technology industries, well-educated
employee base and excellent universities. Within these states, the Company
focuses its activities on the major metropolitan areas of Seattle, Portland, San
Francisco, San Jose, Sacramento, Los Angeles County, Orange County and San
Diego, which have shown to be desired locations of a large number of businesses.
Dominate Submarkets. In each specific local submarket in which it operates,
the Company generally seeks to own a number of properties and to be one of the
most significant commercial landlords in that market. Through this approach, the
Company can offer prospective tenants a variety of property options and can
provide existing tenants, who are growing, additional space in Properties owned
by the Company in the same area. The Company believes that this strategy gives
it a measure of control over the rental rates it charges for its properties. The
Company also believes that it has achieved significant market penetration within
a number of the submarkets in which it operates. Such market focus enables the
Company to maximize synergistic opportunities and economies of scale and allows
management to concentrate its expertise on specific markets and local
conditions.
Provide Superior Level of Service. The Company's goal is to provide a
superior level of service to its tenants in order to achieve high occupancy and
rental rates, as well as low turnover. The Company's office property managers
are located on-site, providing tenants with convenient access to management and
allowing tenants to focus on their business rather than on property issues.
On-site staff enables the Company's properties to be well-maintained and to
convey a sense of quality, order and security. The Company has significant
experience in acquiring properties managed by others and thereafter improving
tenant satisfaction, occupancy levels, renewal rates and rental income by
implementing the Company's tenant service programs.
OPERATING PHILOSOPHY
Fully-Integrated Management Capabilities. The Company has had, and will
continue to have, a philosophy of maintaining in-house resources to add value to
properties through the entire cycle of acquisition,
<PAGE> 5
development, and ownership, including design, construction, leasing and
management. The Company utilizes in-house resources to market, lease and manage
its properties and does not typically list its properties with outside
businesses or use third-party management contractors. All of the Company's
officers with real estate responsibility have had extensive experience marketing
various properties and have, at least one time in their careers, been directly
responsible for leasing specific properties. The Company believes this approach
gives it a significant advantage as such depth of experience provides it with a
detailed knowledge of markets and tenant preferences.
Accountability. The Company has a philosophy of holding one Senior Officer
or a small group of Senior Officers accountable, under the supervision and
direction of the Company's executive officers, for all phases of a property's
development, from purchase, design and budgeting through construction, leasing
and ongoing management. The Company believes that this approach increases the
likelihood of a project's success because of the Senior Officer's
accountability, continuity of involvement in the project and resulting detailed
knowledge of the property and its tenants, particularly as compared to a
compartmentalized approach to the real estate business where individuals are
responsible for only certain limited areas of a project.
Training and Retention. The Company's hiring, training and retention of a
talented management group has been an important factor in its success. The
Company expends significant efforts in the training of new employees in
fundamental real estate skills as well as in the continuing education of
existing employees. All of the Company's officers, including the executive
officers, are involved in the education program, which reinforces the program's
importance to the Company and its personnel. The Company's officer compensation
program includes cash bonuses and restricted stock payments tied largely to
growth in net operating income from existing properties under their management,
as well as contribution to Funds from Operations from new acquisitions and
developments in their regions. Non-officer compensation includes subjective
bonuses based upon, among other factors, tenant satisfaction and leasing and
re-leasing success. The Company also believes that stock options are an
effective means of linking employees' actions to stockholder value and generally
grants options to all full-time employees upon the completion of one year of
service with the Company.
Maximize Economies of Scale. As a result of the Company's rapid growth over
the last few years, it has become one of the largest owners and operators of
commercial property in California and the Pacific Northwest. This size will
continue to enable the Company to achieve benefits from the economies of scale
in its leasing, financing and administrative operations. The Company believes
that it can also achieve operational synergies resulting from the number of
properties it operates in each submarket.
Employees
As of December 31, 1997, the Company had 377 employees.
Competition
Other properties within the Company's markets compete with the Properties
in attracting tenants, primarily on the bases of location, rental rates,
services provided, and the design and condition of the improvements. In each of
the Company's markets, the competition for tenants has been, and continues to
be, intense. Some of these competing properties are newer, better located or
better capitalized than the Company's properties. The number of competitive
commercial properties in a particular area could have a material effect on the
Company's ability to lease space in its properties or at newly developed or
acquired properties and on the rents charged.
The Company also faces competition in its efforts to acquire equity
interests in desirable real estate; such competitors include domestic and
foreign financial institutions, other REITs, life insurance companies, pension
funds, trust funds, partnerships and individual investors.
Working Capital
The Company believes that the cash provided by operations and its unsecured
line of credit provide sufficient sources of liquidity to fund the Company's
working capital requirements.
<PAGE> 6
Environmental Matters
Compliance with laws and regulations relating to the protection of the
environment, including those regarding the discharge of materials into the
environment, has not had any material effects upon the capital expenditures,
earnings or competitive position of the Company.
The 97 Properties owned by the Company at December 31, 1993, were each
subject to a Phase I environmental audit or update during the twelve-month
period ended December 31, 1993, certain of the Properties were subject to Phase
II environmental investigations, and all buildings constructed prior to 1985
have been subject to asbestos detection investigations. In addition, for each of
the properties acquired subsequent to December 31, 1993, and for each parcel of
land purchased for development, a Phase I environmental audit or update was
completed as part of the acquisition due diligence process. These investigations
have not revealed any environmental condition that the Company believes would
have a material effect on its business, assets or results of operations.
Independent parties have reported that no asbestos-containing materials were
used in buildings constructed on the Properties during or after 1985.
Site assessments have revealed soil and ground water contamination at the
Stender Way II property in Santa Clara, California. A third party is primarily
bearing the costs relating to this environmental condition and the Company
believes that its exposure, if any, is not material. Additionally, three
properties located in Stanford Research Park in Palo Alto, California, are
subject to varying degrees of known environmental contamination. The remediation
costs associated with this contamination have also been, and are expected to
continue to be, borne by other parties. Furthermore, the Company has entered
into indemnification agreements whereby the Company has been, and is to be,
indemnified for liabilities arising from clean-up costs relating to these three
properties. Environmental contamination has been found to have originated on the
industrial development project site in Santa Clara, which is known as Walsh at
Lafayette, and which was acquired by the Company in 1995. The relevant
government agency has identified a third party as responsible for remediation,
and the remediation process is continuing. The Company is being indemnified for
environmental contamination on the Walsh at Lafayette property by a third party
that was the former owner of the property.
Site assessments have revealed that soil and groundwater at the Company's
Montgomery Ward property in Pleasant Hill, California, have been contaminated
with volatile organic compounds. The likely sources of this contamination are
on-site underground storage tanks and a potential off-site contamination source.
To date, no government agency has issued any directives requiring that a
remediation plan be filed or the contamination be cleaned up. The Spieker
partnership (the "Spieker Predecessor") that transferred this property to the
Company previously filed a lawsuit against the seller to enforce an indemnity
agreement and against certain other potentially responsible parties to have
those parties bear any clean-up costs. Settlement has been reached with certain
of the defendants in the lawsuit, resulting in cash payments to the Company. A
trial involving the remaining defendants ended without any additional cash
awards being made. Due to the nature of this environmental condition and the
Company's expectation that other parties will be primarily responsible for the
clean-up costs, the Company believes that its exposure, if any, for clean-up
costs would not have a material adverse effect on the Company's financial
condition, results of operations or liquidity.
Site assessments have revealed soil and groundwater contamination at the
Arden Square property in Sacramento, California, and the Woodside Central
property in Woodside, California. These retail properties have been sold to
Pacific Retail Trust ("PRT"). The Company agreed to indemnify PRT for the
contamination. However, the Company believes that the liabilities and clean-up
costs associated with this contamination are covered under the Company's
pollution insurance policy (except to the extent of the deductible under such
policy). A possible similar situation was recently discovered in Pleasanton,
California at the Rose Pavilion property, which has been sold to Excel Realty
Trust, Inc. ("Excel"). The Company agreed to indemnify Excel for this
contamination. The Company also has pollution insurance coverage for this
property and believes that the liabilities and clean-up costs, if any,
associated with this contamination will be covered by such insurance (except to
the extent of the deductible under such policy).
Although the environmental investigations conducted to date have not
revealed any environmental liability that the Company believes would have a
material adverse effect on the Company's business, assets or
<PAGE> 7
results of operations, and the Company is not aware of any such liability, it is
possible that these investigations did not reveal all environmental liabilities
or that there are material environmental liabilities of which the Company is
unaware. No assurances can be given that (i) future laws, ordinances, or
regulations will not impose any material environmental liability, or (ii) the
current environmental condition of the Properties has not been, or will not be,
affected by tenants and occupants of the Properties, by the condition of
properties in the vicinity of the Properties, or by third parties unrelated to
the Company.
Year 2000 Compliance
The Company has conducted a review of its computer systems for the purpose
of identifying any systems that could be affected by the "Year 2000" issue. Many
of the software programs utilized by the Company have date sensitive fields that
may recognize a date entry using "00" as the year 1900 rather than the year
2000, which could potentially result in a system or software failure. The
Company believes that because modifications have been made to its existing
software and because assurances have been provided by the Company's external
software vendors, the Year 2000 issue will not impose an operational or
financial problem for the Company's computer systems. The Company will continue
to keep apprised of any Year 2000 issues as they may arise and will evaluate
whether or not they will have any impact on any of the Company's operations.
<PAGE> 8
ITEM 2. PROPERTIES
General
As of December 31, 1997, the Company's portfolio of properties consisted of
industrial and office income-producing properties located in California and the
Pacific Northwest. The total rentable square footage of the Properties at
December 31, 1997, was approximately 34.5 million rentable square feet,
consisting of approximately 18.9 million square feet of industrial property,
approximately 15.3 million square feet of office property and approximately 0.3
million square feet of retail property. As of December 31, 1997, the average
occupancy rate of the Properties was approximately 94.5%.
After an extensive review of the Company's investment opportunities and
strategic position in 1996, the Company decided to focus exclusively on office
and industrial properties. The Company divested itself of its retail properties
and reinvested the proceeds from these properties in office and industrial
properties, which the Company believes offer better growth prospects. During
1997, the Company completed the disposal of nine of its retail properties at an
aggregate consideration of $110.4 million, and on February 27, 1998, the Company
disposed of its last retail asset for $40.9 million. The numbers reflected in
the tables below do not include any data relating to the retail properties sold.
For the year ended December 31, 1997, none of the Properties had net book
values equal to 4.6% or more of the Company's total aggregate net book value.
The Location and Type of the Company's Properties
The Properties are located in seven geographic areas within California and
the Pacific Northwest, which are comprised of numerous local markets. The
following table sets forth, as of December 31, 1997, the location and type of
the Properties by rentable square feet.
RENTABLE SQUARE FOOTAGE OF PROPERTIES BY LOCATION AND TYPE OF PROPERTY
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GEOGRAPHIC AREA INDUSTRIAL OFFICE TOTAL % OF TOTAL
--------------- ---------- ---------- ---------- ------------
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Seattle, WA/Boise, ID............ 3,628,794 1,904,181 5,532,975 16.2%
Portland, OR..................... 3,224,527 2,096,945 5,321,472 15.5
Sacramento, CA................... 1,391,851 1,458,942 2,850,793 8.3
East Bay -- San Francisco, CA.... 5,397,759 2,575,281 7,973,040 23.3
South Bay -- San Francisco, CA... 3,373,911 2,825,044 6,198,955 18.1
Orange County/L.A. County, CA.... 1,267,681 3,298,044 4,565,725 13.3
San Diego, CA.................... 598,819 1,208,599 1,807,418 5.3
---------- ---------- ---------- -----
Total.................. 18,883,342 15,367,036 34,250,378 100.0%
========== ========== ========== =====
% of total....................... 55.1% 44.9% 100.0%
</TABLE>
Property Operating Income
The following table sets forth for the quarter ended December 31, 1997, the
Company's property operating income, which is rental revenue less rental
expenses and real estate taxes and excluding interest, depreciation and
amortization and general and administrative expenses, on a percentage basis by
the location and type of the Properties.
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PERCENTAGE OF NET OPERATING INCOME BY LOCATION AND TYPE OF PROPERTY
FOR THE QUARTER ENDED DECEMBER 31, 1997
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GEOGRAPHIC AREA INDUSTRIAL OFFICE % OF TOTAL
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<S> <C> <C> <C>
Seattle, WA/Boise, ID........................... 5.8% 6.9% 12.7%
Portland, OR.................................... 6.6 4.2 10.8
Sacramento, CA.................................. 1.6 6.2 7.8
East Bay -- San Francisco, CA................... 10.0 10.3 20.3
South Bay -- San Francisco, CA.................. 9.0 18.2 27.2
Orange County/L.A. County, CA................... 1.7 12.6 14.3
San Diego, CA................................... 2.1 4.8 6.9
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% of Total................................. 36.8% 63.2% 100.0%
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Average Occupancy Rates
The following table sets forth the aggregate average year-end occupancy
rates of the Properties during the years specified.
AVERAGE OCCUPANCY
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YEAR TOTAL RENTABLE AVERAGE OCCUPANCY
(AS OF DECEMBER 31) SQUARE FOOTAGE AT YEAR END
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1997.................................... 34,250,378 94.5%
1996.................................... 21,429,732 96.6
1995.................................... 16,282,278 96.9
1994.................................... 13,933,113 97.6
1993.................................... 11,072,796 92.1
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The following table sets forth the aggregate average occupancy rates as of
December 31, 1997, of the Properties, in terms of location and type of the
Properties.
AVERAGE OCCUPANCY BY LOCATION AND TYPE OF PROPERTY
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DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
1997 1997 1996
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Seattle, WA/Boise, ID................. 95.3% 96.1% 96.3%
Portland, OR.......................... 93.1 98.0 97.3
Sacramento, CA........................ 91.9 92.3 94.1
East Bay -- San Francisco, CA......... 94.2 94.5 98.0
South Bay -- San Francisco, CA........ 97.6 95.3 99.3
Orange County/L.A. County, CA......... 94.3 94.1 91.3
San Diego, CA......................... 92.5 94.7 95.9
---- ---- ----
Total Portfolio.................. 94.5% 95.2% 96.8%
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Tenant Improvements and Leasing Commissions
While maintaining high occupancy levels in each of its property types and
markets, the Company also focuses on controlling the expenditures associated
with leasing, renewing or re-leasing space. The following table sets forth
information related to the leasing and re-leasing activity and expenditures for
the year ended December 31, 1997.
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1st Generation 2nd Generation
Total Space(1) Space(2) Average Costs
------------------ -------------------- ------------------ Lease Per Change in Tenants
Type # Leases Sq. Feet # Leases Sq. Feet #Leases Sq. Feet Term(mo) Sq. Foot(3) Rents(4) Retained(5)
- ---- -------- -------- -------- -------- ------- -------- -------- ----------- --------- -----------
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Industrial 325 5,774,904 58 1,168,891 267 4,606,013 45 $0.88 18.8% 55.7%
Office 673 2,121,754 122 570,977 551 1,550,777 41 3.65 27.9 55.2
--- --------- --- --------- --- --------- -- ---- ----- -----
Total 998 7,896,658 180 1,739,868 818 6,156,790 42 $1.57 23.0% 55.3%
=== ========= === ========= === ========= == ==== ===== =====
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(1) 1st generation is defined as previously unleased shell space.
(2) Net of month-to-month leases, but including 2nd generation repositioning leases.
(3) Represents tenant improvements and commission costs per square foot, calculated based on 2nd generation space, excluding
month-to-month leases and 2nd generation repositioning leases of 2,798,822 square feet.
(4) Measured as the difference between 2nd generation net effective rents on new and renewed leases as compared to the expiring
rents on the same space.
(5) Percentage of tenants retained by the Company at lease expiration, tenants the Company chose not to renew to
accommodate the expansion of existing tenants and tenants that renewed, but moved to another space.
</TABLE>
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Lease Expirations
The following tables set forth the lease expirations in summary and by type
for leases in place in the Properties as of January 1, 1998, assuming none of
the tenants exercises renewal options or termination rights. The tables do not
include month-to-month leases.
LEASE EXPIRATIONS OF THE COMPANY'S PORTFOLIO
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RENTABLE SQUARE ANNUAL BASE RENTS PERCENTAGE OF TOTAL ANNUAL
FOOTAGE SUBJECT TO UNDER BASE RENT REPRESENTED
YEAR OF LEASE EXPIRATION EXPIRING LEASES EXPIRING LEASES BY EXPIRING LEASES(1)
------------------------ ------------------ --------------------- --------------------------
(IN THOUSANDS)
<S> <C> <C> <C>
1998........................... 5,766,712 $ 59,241 15.4%
1999........................... 5,034,787 61,485 16.0
2000........................... 5,651,911 67,602 17.5
2001........................... 5,514,415 67,153 17.4
2002........................... 4,984,798 57,983 15.0
2003........................... 1,938,966 25,023 6.5
2004........................... 1,414,092 15,006 3.9
2005........................... 602,319 4,450 1.2
2006........................... 587,776 10,703 2.8
2007........................... 465,546 9,358 2.4
Thereafter..................... 416,398 7,353 1.9
---------- -------- -----
Total.......................... 32,377,720 $385,357 100.0%
========== ======== =====
</TABLE>
- ---------------
(1) Calculated by dividing annual base rent (amounts contractually due, which
may include taxes, insurance, and common area maintenance ("Annual Base
Rent")) as adjusted for contractual increases expiring during each period by
the total Annual Base Rent inclusive of contractual increases.
LEASE EXPIRATIONS OF THE INDUSTRIAL PROPERTIES
<TABLE>
<CAPTION>
RENTABLE SQUARE PERCENTAGE OF TOTAL ANNUAL
FOOTAGE SUBJECT TO ANNUAL BASE RENTS BASE RENTS REPRESENTED
YEAR OF LEASE EXPIRATION EXPIRING LEASES UNDER EXPIRING LEASES BY EXPIRING LEASES(1)
------------------------ ------------------ --------------------- --------------------------
(IN THOUSANDS)
<S> <C> <C> <C>
1998........................... 3,409,434 $ 17,643 17.2%
1999........................... 2,416,168 13,732 13.4
2000........................... 3,238,943 19,288 18.8
2001........................... 2,984,122 17,716 17.3
2002........................... 2,625,955 12,447 12.2
2003........................... 1,044,181 7,824 7.6
2004........................... 1,044,412 8,127 7.9
2005........................... 480,394 2,434 2.4
2006........................... 99,239 874 0.9
2007........................... 105,839 1,393 1.4
Thereafter..................... 161,588 912 0.9
---------- -------- -----
Total.......................... 17,610,275 $102,390 100.0%
========== ======== =====
</TABLE>
- ---------------
(1) Calculated by dividing Annual Base Rent as adjusted for contractual
increases expiring during each period by the Total Base Rent inclusive of
contractual increases.
<PAGE> 11
LEASE EXPIRATIONS OF THE OFFICE PROPERTIES
<TABLE>
<CAPTION>
RENTABLE SQUARE PERCENTAGE OF TOTAL ANNUAL
FOOTAGE SUBJECT TO ANNUAL BASE RENTS BASE RENTS REPRESENTED
YEAR OF LEASE EXPIRATION EXPIRING LEASES UNDER EXPIRING LEASES BY EXPIRING LEASES(1)
------------------------ ------------------ --------------------- --------------------------
(IN THOUSANDS)
<S> <C> <C> <C>
1998........................... 2,357,278 $ 41,598 14.7%
1999........................... 2,618,619 47,753 16.9
2000........................... 2,412,968 48,314 17.1
2001........................... 2,530,293 49,437 17.4
2002........................... 2,358,843 45,536 16.1
2003........................... 894,785 17,199 6.1
2004........................... 369,680 6,879 2.4
2005........................... 121,925 2,016 0.7
2006........................... 488,537 9,829 3.5
2007........................... 359,707 7,965 2.8
Thereafter..................... 254,810 6,441 2.3
---------- -------- -----
Total.......................... 14,767,445 $282,967 100.0%
========== ======== =====
</TABLE>
- ---------------
(1) Calculated by dividing Annual Base Rent as adjusted for contractual
increases expiring during each period by the Total Base Rent inclusive of
contractual increases.
1997 Acquisitions
During 1997 the Company acquired office and industrial properties totaling
12.5 million square feet representing a total investment of $1.5 billion. Office
acquisitions added 9.0 million square feet at a total investment of $1.3 billion
while industrial acquisitions added 3.4 million square feet for a $0.2 billion
total investment. As used herein, the terms "total investment" and "invested"
represents the initial cost of acquisitions, plus projected costs of certain
repositioning capital expenditures anticipated at the time of purchase.
Certain properties in the WCB Portfolio that are located in states outside
of California and the Pacific Northwest or that did not meet the Company's
strategic objectives were acquired by Spieker Northwest, Inc., an affiliate of
the Company.
Refer to footnote 3 of the Financial Statements, "Acquisitions and
Dispositions," for a detailed listing of the properties acquired.
<PAGE> 12
1997 Developments
The following table sets forth certain information regarding property
developments and re-developments completed by the Company during the year ended
December 31, 1997. The Company considers a development or a re-development
property completed once the property has been at least 95% leased.
DEVELOPMENTS AND RE-DEVELOPMENTS COMPLETED IN 1997
<TABLE>
<CAPTION>
RENTABLE TOTAL
PROPERTY NAME LOCATION SQUARE FEET INVESTMENT
------------- -------- ----------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
INDUSTRIAL
Marine Drive Distribution Center II.................. Portland, OR 106,000 $ 3,353
Concord North Commerce Center........................ Concord, CA 193,590 9,074
Airport Way Commerce Center.......................... Portland, OR 205,000 7,522
Benicia Industrial II(1)............................. Benicia, CA 896,234 18,926
Ryan Ranch Industrial(14B)........................... Monterey, CA 14,664 1,806
Woodinville III...................................... Seattle, WA 247,330 12,137
--------- -------
Subtotal........................................ 1,662,818 $52,818
========= =======
OFFICE
Ridder Park.......................................... Milpitas, CA 83,841 8,515
Gateway Oaks III..................................... Sacramento, CA 46,227 5,635
Bellefield Building "N".............................. Bellevue, WA 46,070 6,137
Ryan Ranch Office III................................ Monterey, CA 24,343 3,001
Bellefield Maplewood Bldg............................ Bellevue, WA 34,461 5,202
The City -- 3800 Chapman(1).......................... Orange, CA 157,231 9,768
--------- -------
Subtotal........................................ 392,173 $38,258
--------- -------
Total Completed Developments............... 2,054,991 $91,076
========= =======
</TABLE>
- ---------------
(1) Represents re-development of property acquired.
<PAGE> 13
Developments In Process
The following table sets forth certain information regarding the Company's
property developments in process as of December 31, 1997.
DEVELOPMENTS IN PROCESS
<TABLE>
<CAPTION>
ACTUAL OR
ESTIMATED SHELL RENTABLE TOTAL
PROPERTY NAME LOCATION COMPLETION DATE SQUARE FEET INVESTMENT(1)
------------- -------- --------------- ----------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
INDUSTRIAL
Riverside Industrial............... Sacramento, CA June 1997 174,624 $ 7,133
Bay Center Business Park -- Ph.
III.............................. Hayward, CA August 1997 116,941 6,563
Sorrento Vista..................... San Diego, CA June 1997 228,130 10,215
Marine Drive Distribution Ctr.
III.............................. Portland, OR July 1997 258,500 8,605
Dixon Landing North Phase 2........ Milpitas, CA October 1997 85,290 7,408
Dixon Landing North Phase 1........ Milpitas, CA October 1997 116,890 10,956
Seaport Distribution Center........ Sacramento, CA August 1997 199,553 6,510
158th Commerce Park................ Portland, OR March 1998 381,750 16,589
Kirkland 118 Corp. Center.......... Kirkland, WA March 1998 80,000 5,964
--------- --------
Subtotal...................... 1,641,678 $ 79,943
--------- --------
OFFICE
4949 Meadows Building.............. Lake Oswego, OR November 1997 125,000 $ 17,648
Gateway Office III................. San Jose, CA May 1998 121,500 21,628
Eastgate Technology Park (Ph I).... San Diego, CA April 1998 225,000 22,820
Treat Towers....................... Walnut Creek, CA December 1998 375,000 63,569
Arboretum Courtyard................ Santa Monica, CA December 1998 131,000 32,241
Gateway Oaks IV.................... Sacramento, CA August 1998 82,000 11,854
Ryan Ranch Oaks.................... Monterey, CA June 1998 34,895 4,937
4800 Meadows....................... Portland, OR November 1998 74,500 12,812
Carlsbad Ranch..................... Carlsbad, CA March 1999 122,000 17,200
--------- --------
Subtotal...................... 1,290,895 $204,709
--------- --------
Total Developments in
Process................ 2,932,573 $284,652
========= ========
</TABLE>
- ---------------
(1) Represents projected total cost of development.
<PAGE> 14
Acquisitions Completed Subsequent to Year-End
The following table sets forth certain information regarding the properties
acquired by the Company between January 1, 1998, and March 13, 1998.
PROPERTIES ACQUIRED IN 1998 (THROUGH MARCH 13, 1998)
<TABLE>
<CAPTION>
TOTAL
MONTH RENTABLE TOTAL
PROPERTY NAME LOCATION ACQUIRED SQUARE FEET INVESTMENT(1)
------------- -------- -------- ----------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
INDUSTRIAL PROPERTIES
Hayward Business Park................... Hayward, CA March 630,976 $ 33.3
RREEF/West Sacramento................... Sacramento, CA March 579,545 25.0
--------- ------
Subtotal........................... 1,210,521 $ 58.3
========= ======
OFFICE PROPERTIES
Concourse(2)............................ San Jose, CA January 541,000 $137.5
Koll Bellefield......................... Bellevue, WA January 60,000 9.9
The City Office Portfolio(3)............ Orange, CA January 752,308 103.5
Marina Business Center(4)............... Marina Del Rey, CA February 261,966 32.0
Santa Monica Business Park(4)........... Santa Monica, CA February 958,641 155.1
Skyport Plaza(2)........................ San Jose, CA February 359,600 34.3
Brea Park Center........................ Brea, CA March 20,269 2.5
--------- ------
Subtotal........................... 2,953,784 $474.8
========= ======
Total......................... 4,164,305 $533.1
========= ======
</TABLE>
- ---------------
(1) Represents initial purchase price plus estimated repositioning costs.
(2) Does not include additional costs of land parcels acquired for future
development.
(3) Includes a 324,666 square foot property to be redeveloped at a total
investment of $35.6 million.
(4) Incremental closings of properties previously identified as the TDC
Portfolio.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which either the Company
or the Properties is a party, or to which any of the assets of the Company or
the Properties are subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of security holders in the
fourth quarter of the fiscal year ended December 31, 1997.
<PAGE> 15
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The shares of the Company's Common Stock are traded on the New York Stock
Exchange under the symbol SPK.
Market Information
The Company's Common Stock has been traded on the New York Stock Exchange
since November 18, 1993. The high, low, and closing price per share of Common
Stock for the four quarters of fiscal 1996 and the four quarters of fiscal 1997
are as follows:
<TABLE>
<CAPTION>
COMMON STOCK
HIGH LOW CLOSE DIVIDENDS DECLARED
------ ------ ------ ------------------
<S> <C> <C> <C> <C>
1996
First quarter................................. $27.00 $24.63 $25.38 $ .43
Second quarter................................ $27.88 $23.88 $27.25 $ .43
Third quarter................................. $30.38 $27.13 $29.38 $ .43
Fourth quarter................................ $36.00 $29.00 $36.00 $ .43
1997
First quarter................................. $40.38 $33.50 $39.00 $ .47
Second quarter................................ $38.00 $33.25 $35.19 $ .47
Third quarter................................. $40.56 $35.19 $40.56 $ .47
Fourth quarter................................ $42.88 $38.63 $42.88 $ .57
</TABLE>
On March 13, 1998, the closing price of the Common Stock on the NYSE was
$39.88 per share.
There is no established public trading market for the Company's Class B and
Class C Common Stock.
Holders
The approximate number of holders of record of the shares of the Company's
Common Stock was 406 as of March 13, 1998. As of such date, there was one record
holder of the Company's Class B Common Stock and one record holder of the
Company's Class C Common Stock. The Company is not aware of the number of
beneficial owners of the Class B and Class C Common Stock.
Dividends and Distributions
On March 11, 1998, the Company announced that the dividend payable to
holders of Common Stock for the first quarter of 1998 would be $.57 per share.
The dividends declared on shares of Class B and Class C Common Stock and Series
A Preferred Stock were $.6975, $.5825 and $.6951, respectively.
For the first three quarters of 1997, the Company declared quarterly
dividends to holders of Common Stock of $.47 per share. On December 10, 1997,
the Company declared a $.57 per share dividend for the fourth quarter of 1997.
This represented a 21.3% increase over the quarterly dividend declared for each
of the first three quarters of 1997 and brought the total dividends declared for
1997 to $1.98 per share of Common Stock. For each of the four quarters of 1996
the Company declared dividends to holders of Common Stock of $.43 per share. In
addition to the dividends declared to holders of Common Stock, the Company also
declared dividends to holders of its Class B and Class C Common Stock, Series A
Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock. The
Company declared dividends to holders of Series A Preferred Stock of $0.5732 per
share for the first, second and third quarters of 1997, $0.6951 for the fourth
quarter of 1997, and $0.5244 per share for each of the four quarters of 1996.
For each of the four quarters of 1997, and 1996, the Company declared dividends
to the holders of Series B Preferred Stock of $0.59 per share. The Company
declared dividends to holders of Series C Preferred Stock of $0.4922 for the
fourth quarter of 1997. For the first three quarters of 1997 the Company
declared quarterly dividends to holders of Class B Common Stock of
<PAGE> 16
$0.5975 per share and for the fourth quarter of 1997 the Company declared
quarterly dividends of $.6975 per share. For the four quarters of 1996, the
Company declared quarterly dividends of $.5575 per share to holders of Class B
Common Stock. For the first, second and third quarters of 1997, the company
declared quarterly dividends to holders of Class C Common Stock of $0.4825 per
share and for the fourth quarter of 1997, the Company declared dividends of
$0.5825 per share. For the four quarters of 1996 the Company declared quarterly
dividends of $0.4425 per share to holders of Class C Common Stock.
Future dividends by the Company will be at the discretion of the Board of
Directors and will depend upon the actual Funds from Operations of the Company,
its financial condition, capital requirements, the annual distribution
requirements under the REIT provisions of the Internal Revenue Code, applicable
legal restrictions and such other factors as the Board of Directors deems
relevant. Although the Company intends to continue to make quarterly
distributions to its stockholders, no assurances can be given as to the amounts
of dividends, if any, distributed in the future. The Company's policy is to
review its dividends on an annual basis.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data for:
- Spieker Properties, Inc. consolidated operating data presented for the
years ended December 31, 1997, December 31, 1996, December 31, 1995 and
December 31, 1994, and for the period from November 19, 1993, to December
31, 1993. The consolidated balance sheet data presented as of December
31, 1997, 1996, 1995, 1994, and 1993.
- Spieker Partner Properties combined operating data presented for the
period from January 1, 1993, to November 18, 1993.
This selected financial data should be read in conjunction with financial
statements (including the notes thereto) of the Company included in Item 14.
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
------------------------------------------------------------------------------- -------------
YEAR YEAR YEAR YEAR NOV. 19, 1993 JAN. 1, 1993
ENDED ENDED ENDED ENDED TO TO
DEC. 31, 1997 DEC. 31, 1996 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1993 NOV. 18, 1993
------------- ------------- ------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues.................. $331,313 $200,699 $153,391 $121,037 $ 12,696 $ 78,157
Income (loss) from
operations before
disposition of
property, minority
interests and
extraordinary items... 110,134 65,764 30,335 13,363 1,699 (15,574)
Income (loss) before
extraordinary items..... 115,004 64,190 24,666 10,541 1,316 (13,363)
Net income (loss)....... 115,004 64,190 (8,837) 10,541 (980) (13,363)
Net income (loss)
available to Common
Stockholders............ 99,890 52,051 (11,471) 9,303 (980) N/A
Net income per share of
Common Stock before
extraordinary
items(1)................ 2.04 1.50 .84 .46 .06 N/A
Net income (loss) per
share of Common
Stock(1)................ 2.04 1.50 (.44) .46 (.05) N/A
Dividends and
distributions per share:
Series A Preferred
Stock............... 2.41 2.10 2.05 1.24 N/A N/A
Series B Preferred
Stock............... 2.36 2.36 .14 N/A N/A N/A
Series C Preferred
Stock............... .44 N/A N/A N/A N/A N/A
Common Stock(1)....... 2.09 1.77 1.74 1.60 .19 N/A
</TABLE>
<PAGE> 17
<TABLE>
<CAPTION>
COMPANY
-----------------------------------------------------------------------------
AS OF AS OF AS OF AS OF AS OF
DEC. 31, 1997 DEC. 31, 1996 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1993
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Investment in real estate (before
accumulated depreciation)........ $3,252,572 $1,447,173 $1,098,871 $ 870,613 $ 722,928
Net investment in real estate...... 3,083,521 1,319,472 974,259 770,827 638,533
Total assets....................... 3,242,934 1,390,314 1,011,497 809,938 691,909
Mortgage loans, net(2)............. 96,502 45,997 112,702 514,098 403,676
Unsecured debt..................... 1,335,000 674,000 377,700 -- 900
Total debt......................... 1,431,502 719,997 490,402 514,098 404,576
Stockholders' equity (deficit)..... 1,493,828 563,928 419,847 206,304 205,061
</TABLE>
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
------------------------------------------------------------------------------ -------------
YEAR YEAR YEAR YEAR NOV. 19, 1993 JAN. 1, 1993
ENDED ENDED ENDED ENDED TO TO
DEC. 31, 1997 DEC. 31, 1996 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1993 NOV. 18, 1993
------------- ------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Funds from Operations(3)... $ 147,912 $ 93,293 $ 61,428 $ 41,935 $ 5,622 $ 7,426
Cash flow provided by (used
in):
Operating activities..... 191,450 112,581 76,471 47,750 5,935 3,806
Investing activities..... (1,697,885) (387,567) (200,515) (161,332) (169,050) (16,972)
Financing activities..... 1,499,727 296,749 121,954 97,378 175,611 24,637
Total rentable square
footage of properties at
end of period............ 34,543 21,430 16,282 13,933 11,073 10,317
Occupancy rate at end of
period................... 94.5% 96.6% 96.9% 97.6% 92.1% N/A
</TABLE>
- ---------------
(1) Per share amounts are presented for the period for the years ended December
31, 1997, 1996, 1995 and 1994 based upon weighted average shares outstanding
of 48,968,905, 34,691,140, 26,140,488 and 20,417,513, respectively, and for
the period from November 19, 1993, to December 31, 1993, based upon weighted
average shares outstanding of 20,400,000. Dividends and distributions per
share include dividends on the Class B and Class C Common Stock. The actual
Class B Common Stock dividends declared in 1997, 1996 and 1995 were $2.49,
$2.23 and $1.64 per share, and the actual Class C Common Stock dividends
declared in 1997, 1996 and 1995 were $2.03, $1.77 and $0 per share.
(2) Net of discount of approximately $31.6 million and $38.3 million as of
December 31, 1994, and 1993, respectively.
(3) Funds from Operations means income (loss) from operations before disposal of
real estate properties, minority interests and extraordinary items plus
depreciation and amortization and an adjustment for straight-lined rents
less cash distributable to minority interests in certain properties owned by
the Company. In February 1995, the National Association of Real Estate
Investment Trusts ("NAREIT") established new guidelines clarifying its
definition of Funds from Operations and requested that REITs adopt this new
definition beginning in 1996. The new definition provides that the
amortization of debt discount and deferred financing costs is no longer to
be added back to net income to calculate Funds from Operations. In 1996, the
Company substantially implemented the new NAREIT definition for calculating
Funds from Operations. The amounts presented above for the years ended
December 31, 1995 and 1994, have been restated to reflect the new NAREIT
definition. Funds from Operations previously reported by the Company based
on the old NAREIT definition for the years ended December 31, 1995 and 1994,
were $70,790 and $52,142, respectively. Management generally considers Funds
from Operations to be a useful financial performance measure of the
operating performance of an equity REIT because, together with net income
and cash flows, Funds from Operations provides investors with an additional
basis to
<PAGE> 18
evaluate the ability of a REIT to incur and service debt and to fund
acquisitions and other capital expenditures. Funds from Operations does not
represent net income or cash flows from operations as defined by GAAP and
does not necessarily indicate that cash flows will be sufficient to fund
cash needs. It should not be considered as an alternative to net income as
an indicator of the Company's operating performance or to cash flows as a
measure of liquidity. Funds from Operations does not measure whether cash
flow is sufficient to fund all of the Company's cash needs including
principal amortization, capital improvements and distributions to
stockholders. Funds from Operations also does not represent cash flows
generated from operating, investing or financing activities as defined by
GAAP. Further, Funds from Operations as disclosed by other REITs may not be
comparable to the Company's calculation of Funds from Operations.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of the results of operations and
financial condition of the Company should be read in conjunction with the
selected financial data and the Company's financial statements included
elsewhere in this Form 10-K.
RESULTS OF OPERATIONS
OVERVIEW
In 1997, the Company continued to identify and complete strategic
acquisition and development transactions and to focus on increasing the cash
flow from its existing core portfolio of properties by maintaining high
occupancy levels and increasing effective rents. The Company also continued to
strengthen its balance sheet and to establish a capital structure that allows
the Company to continue to take advantage of growth opportunities.
During 1997, the Company added 12.5 million square feet to its portfolio by
completing acquisitions representing a total investment of approximately $1.5
billion (the "1997 Acquisitions"). As used herein, the terms "total investment"
and "invested" represents the initial purchase price of acquisitions, plus
projected costs of certain repositioning capital expenditures anticipated at the
time of purchase. The Company increased its core west coast market penetration
during 1997 with the purchase of the WCB Portfolio, the largest portfolio
purchase completed by the Company to date. The portfolio added 1.4 million
square feet in Oregon for a total investment of $170.6 million, 1.3 million
square feet in Northern California for a total investment of $162.9 million and
0.7 million square feet in Southern California for a total investment of $89.5
million. The Company continued to increase its presence in Southern California,
by adding another 3.0 million square feet for a total investment of $395.4
million. Additional acquisitions, for a total investment of $638.7 million
increased the Company's regional focus significantly by adding 1.7 million
square feet in the East Bay-San Francisco, 1.5 million square feet in Oregon and
over 1.0 million square feet in each of the South Bay-San Francisco and Seattle
geographical regions.
While the Company was able to complete a significant number of acquisition
transactions during 1997, the overall market for property acquisitions has
become more challenging. In all of the markets in which the Company operates,
the Company is experiencing an increased level of competition for acquisitions,
including competition from a number of REITs, pension funds and other capital
sources. The Company believes that as the fundamentals of these markets have
strengthened and the number of qualified buyers has increased, the average
initial return achievable on new acquisitions has decreased and the acquisition
cost of new properties has begun to approach replacement cost levels.
The Company has continued to increase its level of development activity. In
1997, 12 projects, including 2 redevelopment projects, totaling 2.1 million
square feet were completed at a total investment of $91.1 million. In addition,
as of December 31, 1997, the Company had developments in process in each of its
operating regions representing an estimated total investment of $284.7 million
and a total of 2.9 million square feet of office and industrial space. The
developments completed during 1997 and the developments in process at December
31, 1997, are collectively referred to as the "Developments." Certain of the
developments in process, though not yet completed, were partially leased and
occupied during 1997 and, accordingly, certain
<PAGE> 19
revenue and expense amounts for such developments are included in the Company's
operating results for the year ended December 31, 1997.
The Company was also able to increase rents in its Core Portfolio. The
"Core Portfolio" is defined as properties owned at January 1, 1996, and still
owned at December 31, 1997. On the 6.2 million square feet of second-generation
space renewed or re-leased in the Core Portfolio during the year, new effective
rents were, on average, 23.0% higher than the expiring coupon rent. (See Table
under "Tenant Improvements and Leasing Commissions").
The Company continued to strengthen its balance sheet by accessing both the
public and private equity markets and the public debt market. The Company raised
more than $969 million in equity capital in 1997 by completing two public
offerings of Common Stock, a combined public and direct placement of Series C
Cumulative Redeemable Preferred Stock and a placement of Common Stock in a
Registered Unit Investment Trust. In addition, over the course of the year, the
Company issued $500 million of investment grade rated unsecured notes with
maturities ranging from ten to thirty years.
During 1997 the Company disposed of nine retail properties for a total
sales price of $110.4 million and recognized a book gain of approximately $18.5
million. In addition to the retail properties, the Company also disposed of four
other properties, for a total sales price of $15.4 million, which were not
consistent with the Company's long-term growth strategy due to location, asset
quality, tenant mix or certain other characteristics. The Company disposed of
two office properties, one industrial property and one parking garage, and
recognized an aggregate book gain of approximately $1.8 million.
COMPARISON OF 1997 TO 1996
The following comparison is of the Company's consolidated operations for
the year ended December 31, 1997, as compared to the year ended December 31,
1996.
Rental revenues for the year ended December 31, 1997 increased by $125.1
million or 63.7% to $321.6 million, as compared with $196.5 million for the year
ended December 31, 1996. Of this increase, $91.9 million was generated by the
1997 Acquisitions. The 1997 Acquisitions were acquired on various dates
throughout 1997 and, as such, a full year's revenue and expense were not
recognized during the year. $29.5 million of the rental revenue increase was
generated by properties acquired during 1996 (the "1996 Acquisitions"), for
which the Company recognized a full year's results in 1997 as compared to a
partial year's results in the year of acquisition. $8.7 million is attributable
to the Core Portfolio and $8.3 million of the rental revenue increase in 1997
was generated by the Developments. The increases in rental revenue are partially
offset by a decrease of $13.3 million attributable to the disposition of
properties which were owned by the Company during the year ended December 31,
1996 (the "Property Dispositions").
Interest and other income increased by $5.5 million or 131.0% for the year
ended December 31, 1997, as compared to the year ended December 31, 1996. The
net increase in interest and other income is due to interest income from
mortgage loans made to Spieker Northwest, Inc. (SNI), an affiliate of Spieker
Properties, Inc., in relation to SNI's acquisition of non-core assets in the WCB
Portfolio and higher average cash balances of $56.4 million for the year ended
December 31, 1997, as compared to $13.4 million 1996.
Rental expenses increased by $32.0 million or 92.2% for the year ended
December 31, 1997, as compared with the same period in 1996. Real estate taxes
increased by $9.1 million or 58.7% in 1997, as compared to $15.5 million in
1996. The overall increase in rental expenses and real estate taxes
(collectively referred to as "property operating expenses") is primarily a
result of the growth in the total square footage of the Company's portfolio of
properties. Of the total $41.1 million increase in property operating expenses,
$30.3 million is attributable to the 1997 Acquisitions, $9.8 million is
attributable to the 1996 Acquisitions, $1.9 million is attributable to the
Developments, and $1.4 million is attributable to the Core Portfolio offset by a
$2.3 million decrease attributable to the Property Dispositions. On a percentage
basis, property operating expenses were 28.4% and 25.5% of rental revenues for
the years ended December 31, 1997, and December 31, 1996, respectively. The
increase in property operating expenses as a percentage of rental revenues is
attributable to the increased percentage of office properties in the Company's
portfolio. For the year ended December 31,
<PAGE> 20
1997, 60.1% of the Company's net operating income (rental revenues less property
operating expenses) was generated by office properties as compared with 44.9%
during 1996.
In relation to the Company's decision to divest itself of its retail
properties, the following analysis of the office and industrial properties (i.e.
non-retail properties) is presented: Rental revenues net of property operating
expenses (referred to as "net property operating income") increased by $95.0
million or 75.9% to $220.2 million, as compared to $125.2 million for the year
ended December 31, 1996. Of this increase, $61.6 million and $19.7 million
relates to the 1997 and 1996 Acquisitions, $7.3 million is attributable to the
Core Portfolio, and $6.4 million is attributable to the Developments.
Interest expense increased by $25.1 million or 67.5% to $62.3 million for
the year ended December 31, 1997, from $37.2 million for 1996. The increase in
interest expense is due to increases in the total average outstanding debt
balances. The average outstanding debt for the year ended December 31, 1997, and
1996 was $936.0 million and $554.0 million, respectively. The increase in the
average outstanding debt balance is consistent with the increase in the size of
the Company's portfolio of properties.
Depreciation and amortization expenses increased by $15.4 million or 41.2%
for the year ended December 31, 1997, as compared with 1996, due to the 1997 and
1996 Acquisitions and the completed Developments.
General and administrative expenses and other expenses increased by $4.7
million for the year ended December 31, 1997 as compared with 1996, primarily as
a result of the increased number of employees. On a percentage basis, general
and administrative expenses were 4.6% of rental revenues for 1997, as compared
with 5.1% for 1996.
During 1997, the Company disposed of nine retail properties resulting in a
gain on disposition of $18.5 million. In addition, the Company disposed of two
office properties, one industrial property and one parking lot resulting in a
gain of $1.8 million. This brings the total gain on disposition of property for
1997 to $20.3 million.
Net income before minority interests and disposition of property increased
by $44.3 million or 67.3% to $110.1 million for the year ended December 31,
1997, from $65.8 million for 1996. The increase in net income is principally due
to the 1997 and 1996 Acquisitions.
COMPARISON OF 1996 TO 1995
The following compares the Company's results for the year ended December
31, 1996, with its results for the year ended December 31, 1995.
For the year ended December 31, 1996, rental revenues increased by $45.1
million, or 29.8%, to $196.5 million, as compared to $151.4 million for the year
ended December 31, 1995. The increase was attributable to revenues in the amount
of $18.9 million from the 1996 Acquisitions, $16.1 million from properties
acquired during 1995 (the "1995 Acquisitions"), $7.9 million from the
Developments, and $2.2 million from the 1995 Core Portfolio. As used herein, the
term "1995 Core Portfolio" refers to those stabilized properties owned by the
Company as of January 1, 1995.
Interest and other income increased by $2.2 million, or 110.0%, to $4.2
million for the year ended December 31, 1996, as compared to the year ended
December 31, 1995. The net increase in interest and other income was primarily
due to $1.8 million in interest income earned on the Company's investment in two
mortgages, which were acquired in January 1996.
Rental expenses increased by $10.1 million, or 41.1%, to $34.7 million for
the year ended December 31, 1996, as compared to $24.6 million for 1995. Real
estate taxes increased by $3.6 million, or 30.3%, to $15.5 million in 1996, as
compared to $11.9 million in 1995. The total increase in property operating
expenses (rental expenses and real estate taxes) is due to a $5.9 million
increase attributable to the 1996 Acquisitions, a $5.3 million increase
attributable to the 1995 Acquisitions, a $2.0 million increase attributable to
the Developments, and a $0.5 million increase attributable to the 1995 Core
Portfolio. On a percentage basis, property operating expenses were 25.5% and
24.1% of rental revenues for the years ended December 31, 1996 and 1995,
<PAGE> 21
respectively. The higher percentage of property operating expenses is
attributable to an increasing percentage of office properties in the Company's
portfolio, and to the Company's acquisition of properties with occupancy levels
less than the expected stabilized occupancy, resulting in the Company
recognizing the full expense burden of a property before recognizing the full
revenue potential of the property, which doesn't occur until the acquired vacant
space is leased.
The net property operating income (rental revenues less rental expenses and
real estate taxes) in the Core Portfolio increased by $1.7 million or
approximately 1.6% from the year ended December 31, 1995, to the year ended
December 31, 1996. The increase is principally the result of increasing
effective rents on leases signed for the renewal or releasing of
second-generation space and contractual rent increases included in leases signed
in prior years. For both the year ended December 31, 1995, and the year ended
December 31, 1996, the occupancy in the 1995 Core Portfolio was stable at
approximately 97%.
Interest expense decreased by $9.2 million, or 19.8%, to $37.2 million in
1996, from $46.4 million in 1995. The decrease in interest expense is due to the
elimination of the amortization of debt discount as a result of the December
1995 refinancing of $347.0 million of secured mortgage debt (the "Prudential
Debt"). The prepayment of the Prudential Debt resulted in the write-off of
approximately $28.1 million in debt discount which was previously being
amortized over the remaining term of the loans and recorded as interest expense.
The Prudential Debt was prepaid with the net proceeds from the concurrent
underwritten public offering of $260.0 million of investment grade rated
unsecured notes and 4.25 million shares of Series B Preferred Stock.
Depreciation and amortization expenses increased by $5.8 million, or 18.4%,
to $37.4 million for the year ended December 31, 1996, as compared with the same
period in 1995, due to the 1995 and 1996 Acquisitions and the Developments.
General and administrative expenses and other expenses increased by $1.6
million, or 18.8%, to $10.1 million for the year ended December 31, 1996, as
compared with 1995, primarily as a result of the increased number of employees,
which rose from 175 at December 31, 1995, to 212 at December 31, 1996. On a
percentage basis, general and administrative expenses were 5.1% of rental
revenues for the year ended December 31, 1996, as compared with 5.6% for 1995.
In 1996, net income before minority interests and disposal of real estate
properties increased by $35.5 million, or 117.2%, to $65.8 million as compared
to $30.3 million in 1995. The increase in net income is principally due to (i)
the increase in income from the 1995 and 1996 Acquisitions, the Developments and
the increased property operating income generated by the 1995 Core Portfolio as
a result of increased rental rates realized on the renewal and re-leasing of
second-generation space and (ii) the decrease in interest expense.
LIQUIDITY AND CAPITAL RESOURCES
For the year ended December 31, 1997, cash provided by operating activities
increased by $78.9 million, or 70.1%, to $191.5 million, as compared to $112.6
million for 1996. The increase is primarily due to the increase in net income
resulting from the 1996 and 1997 Acquisitions, the Developments, increased
property operating income generated by the Core Portfolio and is partially
offset by an increase in interest expense. Cash used for investing activities
increased by $1,310.3 million, or 338.1%, to $1,697.9 million for 1997, as
compared to $387.6 million for 1996. The increase is attributable to the
Company's ongoing acquisition and development of office and industrial
properties offset by proceeds from dispositions. Cash provided by financing
activities increased by $1,203.0 million, or 405.5%, to $1,499.7 million for
1997, as compared to $296.7 million for 1996. During 1997, cash provided by
financing activities consisted primarily of $968.6 million in net proceeds from
the sale of Common Stock and Series C Preferred Stock, $500.0 million in
proceeds from the issuance of unsecured notes (see below), $200.0 million of
proceeds from a separate short-term bank facility, net payments of $39.0 million
on the Facility (as defined below) and net payments of $13.4 million on mortgage
loans. Additionally, payments of distributions increased by $26.3 million to
$107.9 million for 1997, as compared with $81.6 million for 1996. The
distribution payment increase is due to the greater number of shares outstanding
and a 9.3% increase in the distribution rate of $.47 per share for the first
three quarters of 1997 from $.43 per share in 1996. Additionally, in the fourth
quarter of 1997 the Company declared a $.57 per share
<PAGE> 22
dividend which represents a 32.6% increase per share over dividends paid in 1996
and a 21.3% increase over the amount paid during each of the first three
quarters of 1997.
The principal sources of funding for acquisitions, development, expansion
and renovation of the properties are an unsecured line of credit, public and
privately placed equity financing, public unsecured debt financing, the issuance
of partnership units in the Operating Partnership, the assumption of secured
debt on properties acquired and cash flow provided by operations. The Company
believes that its liquidity and its ability to access capital are adequate to
continue to meet liquidity requirements for the foreseeable future.
At December 31, 1997, the Company had no material commitments for capital
expenditures related to the renewal or re-leasing of space. The Company believes
that the cash provided by operations and its line of credit provide sufficient
sources of liquidity to fund capital expenditure costs associated with the
renewal or re-leasing of space.
In 1996, the Company concurrently sold 4,887,500 shares of Common Stock
(including 637,500 shares sold pursuant to the underwriters' exercise of their
over-allotment option) through an underwritten public offering and directly
placed 1,176,470 shares of Class C Common Stock and 135,000 shares of Common
Stock with a limited number of institutional investors at $25.50 per share. The
net proceeds of $151.3 million were used primarily to repay floating rate debt.
In January 1997, the Company sold 11,500,000 shares of Common Stock
(including 1,500,000 shares sold to the underwriters in the exercise of their
over-allotment option in February 1997) through an underwritten public offering
at $34.50 per share. The net proceeds of $374.8 million were used to purchase
properties during the first quarter of 1997, many of which were under contract
or letter of intent at the time of the offering, and to repay indebtedness.
Also, in January 1997, the Company and the Operating Partnership filed a shelf
registration statement with the SEC which registered $500.0 million of equity
securities of the Company and $500.0 million of debt securities of the Operating
Partnership and became effective in January 1997.
In September 1997, the Company and the Operating Partnership filed a shelf
registration (the "September 1997 Shelf Registration Statement") with the SEC
which registered $500.0 million of equity securities of the Company and $500.0
million of debt securities of the Operating Partnership and became effective in
October 1997.
On October 10, 1997, the Company sold 6,000,000 shares of Series C
Cumulative Redeemable Preferred Stock for $25.00 per share. Dividends are
payable at an annual rate of 7.875% of the liquidation preference of $150.0
million. Net proceeds of $146.0 million were used principally to repay
borrowings on the unsecured line of credit and to fund the ongoing acquisition
and development of property.
In November 1997, the Company sold 11,500,000 shares of Common Stock
(including 1,500,000 shares sold to the underwriters in the exercise of their
over-allotment option) through an underwritten public offering at $38.875 per
share. The net proceeds of $425.0 million were used to repay indebtedness and to
purchase properties which were under contract at the time of the offering.
In December 1997, the Company placed 573,134 shares of Common Stock in a
Registered Unit Investment Trust at $41.875 per share together with other
publicly traded REIT's. The net proceeds of $22.8 million were used to pay down
borrowings on the unsecured line of credit and to fund the ongoing acquisition
and development of properties.
In 1996 the Company issued $375.0 million of investment grade rated
unsecured notes in five tranches as follows: $100.0 million of 6.9% notes due
January 15, 2004, priced to yield 6.97%; $100.0 million of 8.0% medium-term
notes due July 19, 2005; $50.0 million of 7.58% medium-term notes due December
17, 2001; $100.0 million of 7.125% notes due December 1, 2006 priced to yield
7.14%; and $25.0 million of 7.875% notes due December 1, 2016, priced to yield
7.91%. The net proceeds of $372.0 million from these issuances were used to pay
down borrowings on the line of credit and to fund ongoing acquisition and
development of properties.
<PAGE> 23
In 1997 the Company issued $500.0 million of investment grade rated debt.
On July 14, 1997, the Company issued $150.0 million of investment grade rated
unsecured notes. The notes carry an interest rate of 7.125%, were priced to
yield 7.183%, and mature on July 1, 2009. On September 29, 1997, the Company
issued $150.0 million of investment grade rated unsecured debentures. The
debentures carry an interest rate of 7.5%, were priced to yield 7.57% and mature
on October 1, 2027. On December 8, 1997, the Company issued $200.0 million of
7.35% notes, priced to yield 7.37%, and mature on December 1, 2017. Net proceeds
from the July 1997, September 1997 and December 1997 unsecured debt securities
of $489.0 million were used to repay borrowings on the unsecured line of credit
and to fund the ongoing acquisition and development of properties.
As of December 31, 1997, the Company had in total $1.1 billion of
investment grade rated unsecured debt securities outstanding. The debt
securities have interest rates which vary from 6.65% to 8.00%, and maturity
dates which range from 2000 to 2027. Average maturity for all unsecured debt
extended from 7.0 years at December 31, 1996, to 10.9 years at December 31,
1997.
The Company has a $250.0 million unsecured line of credit facility (the
"Facility") with interest at London Interbank Offered Rates ("LIBOR") plus .80%.
The Facility matures in August 2001. This facility has a competitive bid option
that allows the Company to request bids from the Lenders for advances up to
$150.0 million. At December 31, 1997, the Company had $0 million outstanding
under the Facility. In addition, the Company had $200.0 million outstanding
under a separate short-term bank facility at December 31, 1997. This short-term
facility carries interest at LIBOR plus 0.65% and matures in November 1998 with
an option to extend for one more year.
In addition to the unsecured debt securities and the Facility, the Company
has $96.5 million of secured indebtedness (the "Mortgages") at December 31,
1997. The Mortgages have interest rates varying from 7.37% to 9.75% and maturity
dates from 1998 to 2012. The Mortgages are secured by a first or second deed of
trust on the related properties and generally require monthly principal and
interest payments. The Company also has $12.7 million of assessment bonds
outstanding as of December 31, 1997.
Subsequent to year end in January and February 1998 the Company issued
$276.5 million of investment grade rated unsecured notes in three tranches as
follows: $150.0 million of 6.75% notes due January 15, 2008, priced to yield
6.79%; $125.0 million of 6.875% notes due February 1, 2005; and $1.5 million of
7.0% notes due February 2, 2007. Additionally, in February 1998, the Company
placed 710,832 shares of Common Stock at a price of $42.25 in a Registered Unit
Investment Trust along with other publicly traded REIT's. The net proceeds of
$274.3 million for the notes and $28.5 million for the Common Shares were used
to pay down borrowings on the line of credit and to fund the ongoing acquisition
and development of properties.
After completion of the equity and debt offerings, the Company has the
capacity pursuant to the September 1997 Registration Statement to issue up to
approximately $342.0 million in equity securities and the Operating Partnership
has the capacity pursuant to the September 1997 Registration Statement to issue
up to $338.5 million in debt securities.
FUNDS FROM OPERATIONS
The Company considers Funds from Operations to be a useful financial
measure of the operating performance of an equity REIT because, together with
net income and cash flows, Funds from Operations provides investors with an
additional basis to evaluate the ability of a REIT to incur and service debt and
to fund acquisitions, developments, and other capital expenditures. Funds from
Operations does not represent net income or cash flows from operations as
defined by generally accepted accounting principles ("GAAP") and Funds from
Operations should not be considered as an alternative to net income as an
indicator of the Company's operating performance or as an alternative to cash
flows as a measure of liquidity. Funds from Operations does not measure whether
cash flow is sufficient to fund all of the Company's cash needs including
principal amortization, capital improvements, and distributions to stockholders.
Funds from Operations does not represent cash flows from operating, investing,
or financing activities as defined by GAAP. Further, Funds
<PAGE> 24
from Operations as disclosed by other REITs may not be comparable to the
Company's calculation of Funds from Operations, as described below.
Pursuant to the National Association of Real Estate Investment Trusts
("NAREIT") revised definition of Funds from Operations, the Company calculates
Funds from Operations by adjusting net income before minority interest,
calculated in accordance with GAAP, for certain non-cash items, principally the
amortization and depreciation of real property and for dividends on shares and
other equity interests that are not convertible into shares of Common Stock. The
Company does not add back the depreciation of corporate items, such as computers
or furniture and fixtures, or the amortization of deferred financing costs or
debt discount. However, the Company eliminates the effect of straight-lined
rents, as defined under GAAP, in its FFO calculation, as management believes
this presents a more meaningful picture of rental income over the reporting
period.
Funds from Operations per share is calculated based on weighted average
share equivalents outstanding, assuming the conversion of all shares of Series
A Preferred Stock, Class B Common Stock, Class C Common Stock and all
partnership units in the Operating Partnership into shares of Common Stock and
including the dilutive effect of stock options.
The tables below set forth the Company's calculation of Funds from
Operations for 1997 and 1996.
STATEMENT OF FUNDS FROM OPERATIONS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1997 1997 1997 1997
--------- -------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Income from operations before disposition
of property and minority interests:... $23,812 $26,111 $27,051 $33,160 $110,134
Adjustments:
Depreciation and amortization...... 10,478 12,276 13,282 16,136 52,172
Dividends on Series B Preferred
Stock............................ (2,510) (2,510) (2,510) (2,510) (10,041)
Dividends on Series C Preferred
Stock............................ -- -- -- (2,658) (2,658)
Distributions on Preferred
Operating Partnership Units...... -- -- -- (402) (402)
Other, net......................... 187 187 186 186 747
Straight-lined rent................ 3 (579) (624) (840) (2,040)
------- ------- ------- ------- --------
Funds from Operations................... $31,970 $35,485 $37,385 $43,072 $147,912
======= ======= ======= ======= ========
Weighted average diluted share
equivalents outstanding............... 52,558 56,353 56,459 64,099 57,396
======= ======= ======= ======= ========
</TABLE>
<PAGE> 25
STATEMENT OF FUNDS FROM OPERATIONS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1996 1996 1996 1996 1996
--------- -------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Income from operations before
disposition of property and
minority interests:................. $14,829 $17,131 $16,096 $17,557 $ 65,764
Adjustments:
Depreciation and amortization...... 8,475 8,723 9,938 9,904 37,040
Dividends on Series B Preferred
Stock............................ (2,510) (2,510) (2,510) (2,510) (10,041)
Dividends on Series C Preferred
Stock............................ -- -- -- -- --
Distributions on Preferred
Operating Partnership Units...... -- -- -- -- --
Other, net......................... 115 120 116 103 303
Straight-lined rent................ (70) 125 252 (80) 227
------- ------- ------- ------- --------
Funds from Operations................... $20,839 $23,589 $23,892 $24,974 $ 93,293
======= ======= ======= ======= ========
Weighted average diluted share
equivalents outstanding.............. 39,105 43,438 43,498 43,777 42,460
======= ======= ======= ======= ========
</TABLE>
The sum of quarterly FFO data in 1997 varies from the annual data due to
rounding.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted as a separate section of this Form
10-K. See Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
<PAGE> 26
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on June 10, 1998.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on June 10, 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on June 10, 1998.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on June 10, 1998.
<PAGE> 27
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
<TABLE>
<S> <C> <C>
(a) 1. FINANCIAL STATEMENTS AND REPORTS OF ARTHUR ANDERSEN LLP,
INDEPENDENT AUDITORS
Reports of Independent Public Accountants
Financial Statements:
Balance Sheets:
Spieker Properties, Inc. Consolidated as of December 31,
1997 and 1996
Statements of Operations:
Spieker Properties, Inc. Consolidated for the Years Ended
December 31, 1997, December 31, 1996, and December 31,
1995
Statements of Stockholders' Equity:
Spieker Properties, Inc. Consolidated for the Years Ended
December 31, 1997, December 31, 1996, and December 31,
1995
Statements of Cash Flows:
Spieker Properties, Inc. Consolidated for the Years Ended
December 31, 1997, December 31, 1996, and December 31,
1995
Notes to Financial Statements
2. FINANCIAL STATEMENT SCHEDULES:
Schedule III -- Real Estate and Accumulated Depreciation as
of December 31, 1997
All other schedules are omitted because they are not
required or the required information is shown in the
financial statements or notes thereto.
(b) REPORTS ON FORM 8-K
During the quarter ended December 31, 1997, the Company
filed the following reports on Form 8-K and Form 8-K/A:
(i) Form 8-K/A dated October 10, 1997, which includes the
statements of revenues and certain expenses of the WCB
Portfolio
(ii) Form 8-K dated November 28, 1997, which includes the
statements of revenues and certain expenses of the San Jose
Concourse and The City Office Portfolio
(c) EXHIBITS
The exhibits cited in the following Index to Exhibits are
filed herewith or are incorporated by reference to exhibits
previously filed.
</TABLE>
<PAGE> 28
EXHIBITS (ENCLOSED ATTACHMENTS ARE SEQUENTIALLY NUMBERED)
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<S> <C>
3.1 Articles of Incorporation of Spieker Properties, Inc. (1)
3.1A Articles of Amendment of Spieker Properties, Inc.
(incorporated by reference to Exhibit 3.1A to Spieker
Properties, Inc.'s Report on Form 10-K for the year ended
December 31, 1996)
3.2 Bylaws of Spieker Properties, Inc.(1)
3.3 Articles Supplementary of Spieker Properties, Inc. for
Series A Preferred Stock (incorporated by reference to
Exhibit 4.2 to Spieker Properties, Inc.'s Report on Form
10-Q for the quarter ended March 31, 1994)
3.4 Articles Supplementary of Spieker Properties, Inc. for Class
B Common Stock (incorporated by reference to Exhibit 4.2 to
Spieker Properties, Inc.'s Report on Form 10-Q for the
quarter ended March 31, 1995)
3.5 Articles Supplementary of Spieker Properties, Inc. for the
Series B Preferred Stock(2)
3.6 Articles Supplementary of Spieker Properties, Inc. for the
Class C Common Stock(2)
3.7 Articles Supplementary of Spieker Properties, Inc. for the
Series C Preferred Stock (incorporated by reference to
Exhibit 3.1 to Spieker Properties, Inc.'s Report on Form
10-Q for the quarter ended September 30, 1997).
4.1 Agreement pursuant to Item 601(b)(4)(iii)(A) of Regulation
S-K(1)
4.2 Intentionally omitted
4.3 Series A Preferred Stock Purchase Agreement, (incorporated
by reference to Exhibit 4.1 to Spieker Properties, Inc.'s
Form 10-Q Report for the quarter ended March 31, 1994)
4.4 Investor Rights Agreement relating to A Series Preferred
Stock (incorporated by reference to Exhibit 4.3 to Spieker
Properties, Inc.'s Form 10-Q Report for the quarter ended
March 31, 1994)
4.5 Indenture dated as December 6, 1995, among Spieker
Properties, L.P., Spieker Properties, Inc. and State Bank
and Trust, as Trustee(2)
4.6 First Supplemental Indenture relating to the 2000 Notes, the
2000 Note and Guarantee(2)
4.7 Second Supplemental Indenture relating to the 2001 Notes,
2001 Note and Guarantee(2)
4.8 Third Supplemental Indenture relating to the 2002 Notes, the
2002 Note and Guarantee(2)
4.9 Fourth Supplemental Indenture relating to the 2004 Notes and
the 2004 Note(2)
4.10 Class B Common Stock Purchase Agreement (incorporated by
reference to Exhibit 4.1 to Spieker Properties, Inc.'s Form
10-Q Report for the quarter ended March 31, 1994)
4.11 Investor's Rights Agreement relating to Class B Common
Stocks (incorporated by reference to Exhibit 4.3 to Spieker
Properties, Inc.'s Form 10-Q Report for the quarter ended
March 31, 1994)
4.12 Class C Common Stock Purchase Agreement(2)
4.13 Investor's Rights Agreement relating to Class C Common
Stock(2)
4.14 Fifth Supplemental Indenture relating to the Medium Term
Note Program and Forms of Medium Term Notes (incorporated by
reference to Exhibit 4.1 to Spieker Properties, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30,
1996)
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<S> <C>
4.15 Sixth Supplemental Indenture relating to the 7 1/8% Notes
Due 2006 (incorporated by reference to Exhibit 4.1 of
Spieker Properties, Inc.'s Current Report on Form 8-K filed
with the Commission on December 19, 1996)
4.16 Seventh Supplemental Indenture relating to the 7 7/8% Notes
Due 2016 (incorporated by reference to Exhibit 4.2 of
Spieker Properties, Inc.'s Current Report on Form 8-K filed
with the Commission on December 19, 1996)
4.17 Eighth Supplemental Indenture relating to the 7.125% Notes
Due 2009 (incorporated by reference to Exhibit 4.9 of
Spieker Properties, Inc's Registration statement on Form S-3
(File No. 333-35997))
4.18 Ninth Supplemental Indenture relating to the 7.50%
Debentures Due 2027 (incorporated by reference to Exhibit
4.1 Spieker Properties, Inc.'s Report on Form 10-Q for the
quarter ended September 30, 1997)
4.19 Tenth Supplemental Indenture relating to the 7.35%
Debentures Due 2017 (incorporated by reference to Exhibit
4.1 Spieker Properties, Inc.'s Current Report on Form 8-K
dated January 30, 1998)
4.20 Eleventh Supplemental Indenture relating to the 6.75% Notes
Due 2008 (incorporated by reference to Exhibit 4.2 Spieker
Properties, Inc.'s Current Report on Form 8-K dated January
30, 1998)
4.21 Twelfth Supplemental Indenture relating to the 6.875% Notes
Due 2006 (incorporated by reference to Exhibit 4.3 Spieker
Properties, Inc.'s Current Report on Form 8-K dated January
30, 1998)
4.22 Thirteenth Supplemental Indenture relating to the 7% Notes
Due 2007 (incorporated by reference to Exhibit 4.1 Spieker
Properties, Inc.'s Current Report on Form 8-K dated January
30, 1998)
10.1 Second Amended and Restated Agreement of Limited Partnership
of Spieker Properties, L.P.
10.2 First Amendment to Second Amended and Restated Agreement of
Limited Partnership of Spieker Properties, L.P.
10.3 Credit Agreement among Spieker Properties, L.P., as
borrower, Wells Fargo Bank, as Agent, Morgan Guaranty Trust
Company of New York, as Documentation Agent, and the lenders
named therein, dated as of August 8, 1997, and Loan Notes
pursuant to such Credit Agreement (incorporated by
reference to Exhibit 10.16 to Spieker Properties, Inc.'s
Current Report on Form 8-K dated September 22, 1997))
10.4* Form of Employment Agreement between the Company and each of
Warren E. Spieker, Jr., John K. French, Bruce E. Hosford,
and Dennis E. Singleton(1)
10.5* Form of Spieker Merit Plan(1)
10.6* Amended and Restated Spieker Properties, Inc. 1993 Stock
Incentive Plan (incorporated by reference to Exhibit 4.3 to
Spieker Properties, Inc.'s Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996)
10.7 Form of Indemnification Agreement between Spieker
Properties, Inc. and its directors and officers
(incorporated by reference to Exhibit 10.21 to Spieker
Properties, Inc.'s Registration Statement on Form S-11 (File
No. 33-67906))
10.8 Form of Land Holding Agreement among Spieker Properties,
Inc., Spieker Northwest, Inc., Spieker Properties, L.P. and
owner of the applicable Land Holding (incorporated by
reference to Exhibit 10.22 to Spieker Properties, Inc.'s
Registration Statement on Form S-11 (File No. 33-67906))
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<S> <C>
10.9* Form of Employee Stock Incentive Pool (incorporated by
reference to Exhibit 10.35 to Spieker Properties, Inc.'s
Registration Statement on Form S-11 (File No. 33-67906))
10.10 Form of Excluded Property Agreement between the Operating
Partnership and certain of the Senior Officers (incorporated
by reference to Exhibit 10.36 to Spieker Properties, Inc.'s
Registration Statement on Form S-11 (File No. 33-67906))
10.11* Amended and Restated Spieker Properties, Inc. 1993
Directors' Stock Option Plan (incorporated by reference to
Exhibit 4.2 to Spieker Properties, Inc.'s Quarterly Report
on Form 10-Q for the quarter ended June 30, 1996)
12.1 Schedule of Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Dividends
21.1 List of Subsidiaries of Spieker Properties, Inc.
23.1 Consent of Independent Public Accountants
</TABLE>
- ---------------
* Indicates management contract or compensatory plan or arrangement.
(1) Incorporated by reference to the identically numbered exhibit to the
Company's Registration Statement on Form S-11 (Registration No. 33-67906),
which became effective on November 10, 1993.
(2) Incorporated by reference to the identically numbered exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
<PAGE> 31
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Spieker Properties, Inc.:
We have audited the accompanying consolidated balance sheets of Spieker
Properties, Inc. (a Maryland corporation) as of December 31, 1997 and 1996, and
the related consolidated statements of operations, stockholders' equity and cash
flows for the years ended December 31, 1997, 1996 and 1995. These consolidated
financial statements and the schedule referred to below are the responsibility
of the management of Spieker Properties, Inc. Our responsibility is to express
an opinion on these consolidated financial statements and the schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Spieker
Properties, Inc. as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years ended December 31, 1997, 1996 and
1995, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying schedule listed in the
index to the financial statements is presented for purposes of complying with
the Securities and Exchange Commission rules and is not a required part of the
basic financial statements. This information has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
San Francisco, California
January 27, 1998
<PAGE> 32
SPIEKER PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND 1996
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
INVESTMENTS IN REAL ESTATE:
Land, land improvements and leasehold interests............. $ 694,621 $ 338,445
Buildings and improvements.................................. 2,159,581 944,646
Construction in progress.................................... 89,509 31,969
---------- ----------
2,943,711 1,315,060
Less -- accumulated depreciation............................ (169,051) (127,701)
---------- ----------
2,774,660 1,187,359
Investment in mortgages..................................... 271,675 14,381
Property held for disposition, net.......................... 37,186 117,732
---------- ----------
Net investments in real estate............................ 3,083,521 1,319,472
CASH AND CASH EQUIVALENTS................................... 22,628 29,336
ACCOUNTS RECEIVABLE, net of allowance for doubtful accounts
of $260 and $430 as of December 31, 1997, and 1996........ 8,661 3,799
DEFERRED RENT RECEIVABLE.................................... 5,276 3,242
RECEIVABLE FROM AFFILIATES.................................. 294 117
DEFERRED FINANCING AND LEASING COSTS, net of accumulated
amortization of $10,036 and $7,682 as of December 31, 1997
and 1996, respectively.................................... 30,983 15,860
FURNITURE, FIXTURES & EQUIPMENT, net........................ 3,375 2,386
PREPAID EXPENSES, DEPOSITS ON PROPERTIES AND OTHER ASSETS... 50,892 16,054
INVESTMENT IN AFFILIATE..................................... 37,304 48
---------- ----------
$3,242,934 $1,390,314
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 33
SPIEKER PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
AS OF DECEMBER 31, 1997 AND 1996
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
DEBT:
Unsecured notes........................................... $1,135,000 $ 635,000
Unsecured short-term borrowings........................... 200,000 39,000
Mortgage loans............................................ 96,502 45,997
---------- ---------
Total debt............................................. 1,431,502 719,997
---------- ---------
ASSESSMENT BONDS PAYABLE.................................... 12,672 4,758
ACCOUNTS PAYABLE............................................ 9,519 3,258
ACCRUED REAL ESTATE TAXES................................... 1,003 731
ACCRUED INTEREST............................................ 21,541 10,471
UNEARNED RENTAL INCOME...................................... 13,712 6,345
DIVIDENDS AND DISTRIBUTIONS PAYABLE......................... 41,110 18,660
OTHER ACCRUED EXPENSES AND LIABILITIES...................... 32,034 16,406
--------- ---------
Total liabilities...................................... 1,563,093 780,626
--------- ---------
MINORITY INTERESTS.......................................... 186,013 45,760
--------- ---------
COMMITMENTS AND CONTINGENCIES............................... -- --
STOCKHOLDERS' EQUITY:
Series A Preferred Stock: convertible, cumulative, $.0001
par value, 1,000,000 shares authorized, issued and
outstanding as of December 31, 1997 and 1996, $25,000
liquidation preference................................. 23,949 23,949
Series B Preferred Stock: cumulative, redeemable, $.0001
par value, 5,000,000 shares authorized, 4,250,000
issued and outstanding, as of December 31, 1997 and
1996, $106,250 liquidation preference.................. 102,064 102,064
Series C Preferred Stock: cumulative, redeemable, $.0001
par value, 6,000,000 shares authorized, issued and
outstanding, as of December 31, 1997, $150,000
liquidation preference................................. 145,959 --
Common Stock: $.0001 par value, 654,500,000 shares
authorized, 55,772,632 and 31,821,861 shares issued and
outstanding as of December 31, 1997 and 1996,
respectively........................................... 5 3
Class B Common Stock: $.0001 par value, 2,000,000 shares
authorized, issued and outstanding as of December 31,
1997 and 1996.......................................... -- --
Class C Common Stock: $.0001 par value, 1,500,000 shares
authorized, 1,176,470 issued and outstanding as of
December 31, 1997...................................... -- --
Excess Stock: $.0001 par value per share, 330,000,000
shares authorized, no shares issued or outstanding..... -- --
Additional paid-in capital................................ 1,223,229 438,376
Deferred compensation..................................... (1,378) (464)
Retained earnings (deficit)............................... -- --
---------- ----------
Total stockholders' equity............................. 1,493,828 563,928
---------- ----------
$3,242,934 $1,390,314
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 34
SPIEKER PROPERTIES, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
REVENUES:
Rental income............................................ $321,609 $196,471 $151,412
Interest and other income................................ 9,704 4,228 1,979
-------- -------- --------
331,313 200,699 153,391
-------- -------- --------
OPERATING EXPENSES:
Rental expenses.......................................... 66,654 34,690 24,601
Real estate taxes........................................ 24,644 15,510 11,934
Interest expense, including amortization of discount and
financing costs....................................... 62,266 37,235 46,386
Depreciation and amortization............................ 52,779 37,385 31,602
General and administrative and other expenses............ 14,836 10,115 8,533
-------- -------- --------
221,179 134,935 123,056
-------- -------- --------
Income from operations before disposition of property,
minority interests and extraordinary items.......... 110,134 65,764 30,335
-------- -------- --------
GAIN ON DISPOSITION OF PROPERTY.......................... 20,252 8,350 --
-------- -------- --------
Income from operations before minority interests and
extraordinary items................................. 130,386 74,114 30,335
MINORITY INTERESTS' SHARE IN NET INCOME.................... (15,382) (9,924) (5,669)
-------- -------- --------
Net income before extraordinary items................. 115,004 64,190 24,666
EXTRAORDINARY ITEMS, net of minority interests of $7,302
for the year ended December 31, 1995..................... -- -- (33,503)
-------- -------- --------
Net income (loss)..................................... $115,004 $ 64,190 $ (8,837)
-------- -------- --------
PREFERRED DIVIDENDS:
Series A Preferred Stock.............................. (2,415) (2,098) (2,048)
Series B Preferred Stock.............................. (10,041) (10,041) (586)
Series C Preferred Stock.............................. (2,658) -- --
-------- -------- --------
Net income (loss) available to Common Stockholders.... $ 99,890 $ 52,051 $(11,471)
======== ======== ========
INCOME (LOSS) PER SHARE OF COMMON STOCK:
Basic earnings per share
Income before extraordinary
items................................................. $ 2.07 $ 1.51 $ .84
Extraordinary items, net of minority interests........... -- -- (1.28)
-------- -------- --------
Net income (loss) available to Common Stockholders....... $ 2.07 $ 1.51 $ (.44)
======== ======== ========
Diluted earnings per share
Income before extraordinary items..................... $ 2.04 $ 1.50 $ .84
Extraordinary items, net of minority interests........ -- -- (1.28)
-------- -------- --------
Net income (loss) available to Common Stockholders.... $ 2.04 $ 1.50 $ (.44)
======== ======== ========
DIVIDENDS AND DISTRIBUTIONS PER SHARE:
Series A Preferred Stock................................. $ 2.41 $ 2.10 $ 2.05
======== ======== ========
Series B Preferred Stock................................. $ 2.36 $ 2.36 $ .14
======== ======== ========
Series C Preferred Stock................................. $ .44 $ -- $ --
======== ======== ========
Common Stock, including Class B and Class C.............. $ 2.09 $ 1.77 $ 1.74
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 35
SPIEKER PROPERTIES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS B CLASS C
SERIES A, SERIES B COMMON COMMON COMMON COMMON ADDITIONAL
AND SERIES C STOCK STOCK STOCK STOCK PAR PAID-IN
PREFERRED STOCK SHARES SHARES SHARES VALUE CAPITAL
------------------ ----------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994....... $ 23,949 20,417,513 -- -- $2 $ 183,344
Series B Preferred Stock offering
(4,250,000 shares)............. 102,064 -- -- -- -- --
Conversion of Operating
Partnership units -- Employee
Stock Incentive Pool........... -- 16,732 -- -- -- 343
Common Stock offering............ -- 6,256,329 -- -- 1 117,157
Class B Common Stock offering.... -- -- 2,000,000 -- -- 49,961
Exercise of Stock options........ -- 33,500 -- -- -- 686
Deferred compensation
amortization................... -- -- -- -- -- --
Dividends declared............... -- -- -- -- -- (48,171)
Net loss......................... -- -- -- -- -- --
-------- ----------- ---------- ---------- --- ----------
BALANCE AT DECEMBER 31, 1995....... 126,013 26,724,074 2,000,000 -- 3 303,320
Conversion of Operating
Partnership units -- Employee
Stock Incentive Pool........... -- 15,537 -- -- -- 386
Common Stock offering............ -- 5,022,500 -- -- -- 121,368
Class C Common Stock offering.... -- -- -- 1,176,470 -- 29,963
Restricted Stock grant........... -- 8,000 -- -- -- 200
Exercise of Stock options........ -- 51,750 -- -- -- 1,061
Non-cash Compensation Merit
Fund........................... -- -- -- -- -- 100
Deferred compensation
amortization................... -- -- -- -- -- --
Dividends declared............... -- -- -- -- -- (18,022)
Net income....................... -- -- -- -- -- --
-------- ----------- ---------- ---------- --- ----------
BALANCE AT DECEMBER 31, 1996....... 126,013 31,821,861 2,000,000 1,176,470 3 438,376
Conversion of Operating
Partnership units -- Employee
Stock Incentive Pool........... -- 14,984 -- -- -- 524
Conversion of Operating
Partnership units to Common
Stock ......................... -- 155,380 -- -- -- --
Common Stock offerings........... -- 23,573,134 -- -- 2 822,634
Series C Preferred Stock offering
(6,000,000 shares)............. 145,959 -- -- -- -- --
Restricted Stock grant........... -- 41,073 -- -- -- 1,447
Exercise of Stock options........ -- 166,200 -- -- -- 3,425
Non-cash Compensation Merit
Fund........................... -- -- -- -- -- 236
Deferred compensation
amortization................... -- -- -- -- -- 60
Allocation to minority
interests...................... -- -- -- -- -- (42,855)
Dividends declared............... -- -- -- -- -- (3,687)
Net income....................... -- -- -- -- -- 3,069
-------- ----------- ---------- ---------- --- ----------
BALANCE AT DECEMBER 31, 1997....... $271,972 55,772,632 2,000,000 1,176,470 $5 $1,223,229
======== =========== ========== ========== === ==========
<CAPTION>
RETAINED
DEFERRED EARNINGS
COMPENSATION (DEFICIT) TOTAL
------------ --------- ----------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994....... $ (991) $ -- $ 206,304
Series B Preferred Stock offering
(4,250,000 shares)............. -- -- 102,064
Conversion of Operating
Partnership units -- Employee
Stock Incentive Pool........... -- -- 343
Common Stock offering............ -- -- 117,158
Class B Common Stock offering.... -- -- 49,961
Exercise of Stock options........ -- -- 686
Deferred compensation
amortization................... 339 -- 339
Dividends declared............... -- -- (48,171)
Net loss......................... -- (8,837) (8,837)
------- --------- ----------
BALANCE AT DECEMBER 31, 1995....... (652) (8,837) 419,847
Conversion of Operating
Partnership units -- Employee
Stock Incentive Pool........... -- -- 386
Common Stock offering............ -- -- 121,368
Class C Common Stock offering.... -- -- 29,963
Restricted Stock grant........... (200) -- --
Exercise of Stock options........ -- -- 1,061
Non-cash Compensation Merit
Fund........................... -- -- 100
Deferred compensation
amortization................... 388 -- 388
Dividends declared............... -- (55,353) (73,375)
Net income....................... -- 64,190 64,190
------- --------- ----------
BALANCE AT DECEMBER 31, 1996....... (464) -- 563,928
Conversion of Operating
Partnership units -- Employee
Stock Incentive Pool........... -- -- 524
Conversion of Operating
Partnership units of Common
Stock ......................... -- -- --
Common Stock offerings........... -- -- 822,636
Series C Preferred Stock offering
(6,000,000 shares)............. -- -- 145,959
Restricted Stock grant........... (1,447) -- --
Exercise of Stock options........ -- -- 3,425
Non-cash Compensation Merit
Fund........................... -- -- 236
Deferred compensation
amortization................... 533 -- 593
Allocation to minority
interests...................... -- -- (42,855)
Dividends declared............... -- (111,935) (115,622)
Net income....................... -- 111,935 115,004
------- --------- ----------
BALANCE AT DECEMBER 31, 1997....... $(1,378) $ -- $1,493,828
======= ========= ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 36
SPIEKER PROPERTIES, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1997 1996 1995
----------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss)........................................ $ 115,004 $ 64,190 $ (8,837)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities --
Depreciation and amortization............................ 52,779 37,385 31,602
Amortization of discount and deferred financing costs.... 1,426 1,224 9,362
Non-cash compensation.................................... 865 508 368
Minority interests' share of net income.................. 15,382 9,924 5,669
Extraordinary items...................................... -- -- 33,503
Gain on disposition of property.......................... (20,252) (8,350) --
Increase in accounts receivable and other assets......... (11,935) (2,891) (1,954)
(Increase) decrease in receivables from related
parties............................................... (177) 269 453
Decrease in assessment bonds payable..................... (1,070) (849) (726)
Increase in accounts payable and accrued expenses and
other liabilities..................................... 28,086 2,985 8,959
Increase in accrued real estate taxes.................... 272 225 328
Increase (decrease) in accrued interest.................. 11,070 7,961 (1,070)
Decrease in payable to related party..................... -- -- (1,186)
----------- --------- ---------
Net cash provided by operating activities............. 191,450 112,581 76,471
----------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to properties.................................. (1,483,866) (406,552) (195,528)
Additions to deposits on properties, net................. (31,473) (8,974) (904)
Additions to investment in mortgages..................... (257,294) (14,381) --
Additions to leasing costs............................... (8,231) (5,627) (4,083)
Additions to investment in affiliate..................... (37,256) -- --
Proceeds from disposition of properties.................. 120,235 47,967 --
----------- --------- ---------
Net cash used for investing activities................... (1,697,885) (387,567) (200,515)
----------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt....................................... 1,368,000 684,800 472,677
Payments on debt......................................... (720,435) (455,205) (550,763)
Payments of financing fees............................... (12,026) (3,612) (2,747)
Payments of dividends and distributions.................. (107,857) (81,626) (54,377)
Proceeds from sale of Series C and Series B Preferred
Stock, net of issuance costs.......................... 145,959 -- 102,064
Proceeds from sale of Common Stock, net of issuance
costs................................................. 822,636 121,368 117,158
Proceeds from sale of Class B Common Stock, net of
issuance costs........................................ -- -- 49,961
Proceeds from sale of Class C Common Stock, net of
issuance costs........................................ -- 29,963 --
Proceeds from stock options exercised and partnership
units sold............................................ 3,450 1,061 686
Prepayment of interest, restructuring fees, and
penalties............................................. -- -- (12,705)
----------- --------- ---------
Net cash provided by financing activities........ 1,499,727 296,749 121,954
----------- --------- ---------
Net (decrease) increase in cash and cash
equivalents.................................... (6,708) 21,763 (2,090)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD........... 29,336 7,573 9,663
----------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................. $ 22,628 $ 29,336 $ 7,573
=========== ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 37
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
1. ORGANIZATION AND BASIS OF PRESENTATION
Spieker Properties, Inc. (the "Company") was organized in the state of
Maryland on August 20, 1993, and commenced operations effective with the
completion of its initial public offering ("IPO") on November 18, 1993. The
Company qualifies as a real estate investment trust ("REIT") under the Internal
Revenue Code of 1986 (the "Code"), as amended. As of December 31, 1997, the
Company owned an approximate 89.2 percent general and limited partnership
interest in Spieker Properties L.P. (the "Operating Partnership"). The Company
and the Operating Partnership are collectively referred to as the "Company".
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The Company's consolidated financial statements include the consolidated
financial position of the Operating Partnership and its subsidiaries as of
December 31, 1997 and 1996, and its consolidated results of operations and cash
flows for the years ended December 31, 1997, 1996 and 1995. The Company's
investment in Spieker Northwest, Inc. (an unconsolidated Preferred Stock
subsidiary of the Company) is accounted for under the equity method. All
significant intercompany balances and transactions have been eliminated in the
consolidated financial statements.
Properties
Properties are recorded at cost and are depreciated using the straight-line
method over the estimated useful lives of the properties. The estimated lives
are as follows:
<TABLE>
<S> <C>
Land improvements and leasehold interests......... 18 to 40 years
Buildings and improvements........................ 10 to 40 years
Tenant improvements............................... Term of the related lease
</TABLE>
The cost of buildings and improvements includes the purchase price of the
property or interests in property, legal fees, acquisition costs and interest,
property taxes and other costs incurred during the period of construction.
Expenditures for maintenance and repairs are charged to operations as
incurred. Significant renovations or betterments which extend the economic
useful life of assets are capitalized.
Investments in real estate are stated at the lower of depreciated cost or
estimated fair value. Fair value for financial reporting purposes is evaluated
periodically by the Company on a property by property basis using undiscounted
cash flow. If a potential impairment is identified, it is measured by the
property's fair value based on either sales comparables or the net cash expected
to be generated by the property, less estimated carrying costs (including
interest) throughout the anticipated holding period, plus the estimated cash
proceeds from the ultimate disposition of the property. To the extent that the
carrying value exceeds the estimated fair value, a provision for decrease in net
realizable value is recorded. Estimated fair value is not necessarily an
indication of a property's current value or the amount that will be realized
upon the ultimate disposition of the property. As of December 31, 1997 and 1996,
none of the carrying values of the properties exceeded their estimated fair
values. As of December 31, 1997 and 1996, the properties are located primarily
in California, Oregon and Washington. As a result of this geographic
concentration, the operations of these properties could be adversely affected by
a recession or general economic downturn in the areas where these properties are
located.
<PAGE> 38
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
The Company owns mortgage loans that are secured by real estate. Certain of
the mortgage loans are with an affiliate of the Company (see note 4). The
Company assesses possible impairment of these loans by reviewing the fair value
of the underlying real estate. As of December 31, 1997, the estimated fair value
of the underlying real estate was in excess of the Company's book value of the
mortgage loans.
Construction in Progress
Project costs clearly associated with the development and construction of a
real estate project are capitalized as construction in progress. In addition,
interest, real estate taxes and other costs are capitalized during the period in
which activities necessary to get the property ready for its intended use are in
progress.
Cash and Cash Equivalents
Highly liquid investments with an original maturity of three months or less
when purchased are classified as cash equivalents.
Deferred Financing and Leasing Costs
Costs incurred in connection with financing or leasing are capitalized and
amortized on a straight-line basis over the term of the related loan or lease.
Unamortized financing and leasing costs are charged to expense upon the early
termination of the lease or upon the early payment of financing.
Fair Value of Financial Instruments
Based on the borrowing rates currently available to the Company, the
carrying amount of debt approximates fair value. Cash and cash equivalents
consist of demand deposits, certificates of deposit and overnight repurchase
agreements with financial institutions. The carrying amount of cash and cash
equivalents approximates fair value.
Minority Interest
Minority interest in the Company consists of the limited partners' interest
in the Operating Partnership of approximately 10.8 percent and 15.1 percent at
December 31, 1997 and 1996, respectively. Certain officers of the Company own
limited partners' interest.
In connection with the acquisition of the WCB Portfolio (see note 3) the
Company issued in part limited partners' interest of 2,007,495 Preferred
Operating Partnership Units to the sellers of the portfolio. The Preferred
Operating Partnership Units are convertible into 1,824,994 Operating Partnership
Units at the discretion of the holder subsequent to May 3, 1998, or they may be
redeemable for cash subsequent to December 3, 2002. Preferred Operating
Partnership Units are paid distributions quarterly in the amount of $1,266.
Revenues
All leases are classified as operating leases. Rental income is recognized
on the straight-line basis over the terms of the leases. Deferred rent
receivable represents the excess of rental revenue recognized on a straight-
line basis over cash received under the applicable lease provisions.
<PAGE> 39
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
Interest and Other Income
Interest and other income includes interest income on cash, cash
equivalents, and investment in mortgages and management fee income.
Extraordinary Items
Extraordinary items for the year ended December 31, 1995, consist of (i)
$11,767 in prepayment penalties, and a write-off of $28,100 in previously
capitalized debt discount (prepaid interest and arrangement fee paid to a
secured lender at the time of the IPO and until December 1995 was amortized to
interest expense) related to the paydown of the secured debt as a result of the
stock offering in December 1995, and (ii) a fee of $938 paid in connection with
the conversion of the secured line of credit into an unsecured facility.
Net Income (Loss) Per Share of Common Stock
Per share amounts for the Company are computed using the weighted average
common shares outstanding (including Class B Common Stock and Class C Common
Stock) during the period. The diluted weighted average common shares outstanding
include the dilutive effect of stock options. The basic and diluted weighted
average common shares outstanding for the year ended December 31, 1997, 1996 and
1995 are as follows:
<TABLE>
<CAPTION>
BASIC WEIGHTED AVERAGE DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING COMMON SHARES OUTSTANDING
------------------------- -------------------------
<S> <C> <C>
Year ended:
December 31, 1997.......... 48,207,141 48,968,905
December 31, 1996.......... 34,438,317 34,691,140
December 31, 1995.......... 26,081,291 26,140,488
</TABLE>
Earnings used in the calculation are reduced by dividends owed to preferred
stockholders.
Reclassifications
Certain items in the 1996 and 1995 financial statements have been
reclassified to conform to the 1997 presentation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE> 40
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
3. ACQUISITIONS AND DISPOSITIONS
The Company acquired the following properties (the "1997 Acquisitions")
during the year ended December 31, 1997:
<TABLE>
<CAPTION>
TOTAL
RENTABLE
PROPERTY SQUARE INITIAL
PROJECT NAME LOCATION TYPE(1) FEET COST(2)
------------ -------- -------- --------- --------
<S> <C> <C> <C> <C>
Southcenter West Business Park....... Tukwila,WA I 286,921 $ 6,400
Mission West Portfolio............... San Diego, CA O 619,935 45,300
Emeryville Portfolio................. Emeryville, CA O 946,385 125,700(3)
Brea Park Centre..................... Brea, CA O 141,837 10,800
555 Twin Dolphin Drive............... Redwood Shores, CA O 198,494 40,900
North Creek Parkway Centre........... Bothell, WA O 204,871 22,600
Riverside Centre..................... Portland, OR O 98,434 9,300
Metro Plaza.......................... San Jose, CA O 411,288 73,900
1740 Technology...................... San Jose, CA O 194,538 39,600
Fountaingrove........................ Santa Rosa, CA O 160,808 16,200
Pasadena Financial................... Pasadena, CA O 145,702 26,700
Century Square....................... Pasadena, CA O 205,653 41,700
Point West Corporate Center.......... Sacramento, CA O 145,184 17,200(6)
Sierra Point......................... Brisbane, CA O 99,150 10,600
Brea Corporate Plaza................. Brea, CA O 119,406 10,900
McKesson Building.................... Pasadena, CA O 150,951 19,100
Coral Tree Commerce Center........... Vista, CA I 130,866 8,400
Progress Industrial Park............. Vista, CA I 123,275 7,500
Lafayette Terrace.................... Lafayette, CA O 47,392 7,500
Parkway Industrial................... Portland, OR I 175,000 7,500
Brea Corporate Place................. Brea, CA O 490,000 62,300
Sepulveda Center..................... Los Angeles, CA O 170,134 25,200
Kennedy Portfolio.................... Portland, OR(4) I 1,265,000 111,800
790 E. Colorado...................... Pasadena, CA O 130,000 19,300
Washington Park...................... Federal Way, WA O 50,000 6,100
Nobel Corporate Plaza................ San Diego, CA O 103,192 16,700
Kelley Point Distribution Center..... Portland, OR I 500,000 16,400
Tower 17............................. Irvine, CA O 229,133 40,100
Johnson Ranch Corporate Center....... Roseville, CA O 127,059 20,500(6)
San Mateo Baycenter II............... San Mateo, CA O 119,152 24,400
Southgate Office Plaza............... Renton, WA O 268,347 31,000(6)
Borregas Avenue...................... Sunnyvale, CA I 39,899 3,100
California Circle.................... Milpitas, CA I 95,545 10,200
La Jolla Centre I.................... La Jolla, CA O 154,320 29,500
Park Plaza........................... San Diego, CA O 66,745 9,500
Plaza Center/U.S. Bank Center........ Bellevue, WA O 458,000 80,600
WCB Portfolio........................ (5) O/I 3,420,807 422,600(3)(6)
</TABLE>
<PAGE> 41
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
TOTAL
RENTABLE
PROPERTY SQUARE INITIAL
PROJECT NAME LOCATION TYPE(1) FEET COST(2)
------------ -------- -------- --------- --------
<S> <C> <C> <C> <C>
ABAM Building........................ Federal Way, WA O 50,000 4,900
Douglas Center....................... Roseville, CA O 100,000 14,000(6)
11999 San Vincente................... Brentwood, CA O 55,457 12,500
</TABLE>
- ---------------
(1) "O" indicates office property; "I" indicates industrial property.
(2) Represents the initial acquisition cost of the properties excluding any
additional repositioning costs.
(3) The Company paid cash and issued Operating Partnership Units or Preferred
Operating Partnership Units to the sellers of this portfolio.
(4) Also includes properties located in Redmond, WA; Fremont, CA and Hayward,
CA.
(5) Properties are located in California, Oregon and Washington.
(6) Includes cost of land to be developed.
During the year ended December 31, 1996, the Company acquired 4,708,776
square feet of office and industrial property at an initial cost of $340,298
(the "1996 Acquisitions"). The 1997 and 1996 acquisitions were recorded using
the purchase method of accounting.
The Company disposed of the following properties (the "1997 Dispositions")
during the year ended December 31, 1997:
<TABLE>
<CAPTION>
TOTAL
RENTABLE
PROPERTY SQUARE INITIAL
PROJECT NAME LOCATION TYPE(1) FEET COST(2)
------------ -------- -------- --------- -------
<S> <C> <C> <C> <C>
Totem Hill............................ Kirkland, WA R 25,250 $ 4,100
Arbor Faire........................... Fresno, CA R 199,956 18,500
Broadway Faire........................ Fresno, CA R 60,383 9,100
Walker Center......................... Beaverton, OR R 89,624 10,000
West Park Plaza....................... San Jose, CA R 88,136 10,100
Woodside.............................. Redwood City, CA R 80,598 12,000
South Point Plaza..................... Everett, WA R 188,945 14,600
Sunset Science........................ Portland, OR I 49,750 2,400
Metro 580............................. Pleasanton, CA R 174,653 21,700
Jefferson Parking..................... Boise, ID -- -- 800
Howe Avenue........................... Sacramento, CA O 118,473 8,800
Arden Square.......................... Sacramento, CA R 100,162 10,300
Arden Office.......................... Sacramento, CA O 52,313 3,400
</TABLE>
- ---------------
(1) indicates office property; "I" indicates industrial property; "R" indicates
retail property.
During the year ended December 31, 1996, the Company disposed of three
retail properties and one industrial property for $49,188 (the "1996
Dispositions").
The following unaudited pro forma summary financial information for the
years ended December 31, 1997, and 1996 combines the consolidated results of
operations of the Company as if the 1997 and 1996 Acquisitions and the 1997 and
1996 Dispositions had all occurred on January 1, 1996. Preparation of the pro
<PAGE> 42
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
forma summary information was based upon assumptions deemed appropriate by the
Company. The pro forma summary information is not necessarily indicative of the
results which actually would have occurred if the 1997 and 1996 Acquisitions and
the 1997 and 1996 Dispositions had been consummated at January 1, 1996, and
carried forward through December 31, 1997, nor does it purport to represent the
future financial position and result of operations for future periods.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------
1997 1996
---------- ----------
<S> <C> <C>
Revenues............................................ $ 451,539 $ 417,453
========== ==========
Net income available to common stockholders before
disposition of property........................... $ 100,329 $ 80,834
========== ==========
Net income available to common stockholders before
disposition of property per share
Basic............................................. $ 1.69 $ 1.36
========== ==========
Diluted........................................... $ 1.66 $ 1.34
========== ==========
Common stock shares outstanding..................... 60,374,057 60,374,057
========== ==========
</TABLE>
4. Transactions With Affiliates
Revenues and Expenses
The Company received $919, $802 and $1,427 during 1997, 1996 and 1995,
respectively, for management services provided to certain properties that are
controlled and operated by either Spieker Northwest, Inc. or Spieker Partners
related entities (collectively, "Spieker Partners"). Certain officers of Spieker
Properties, Inc., are partners in Spieker Partners.
Acquisition of Properties
On October 1, 1997, the Company acquired San Mateo Baycenter II (SMBC II),
a 119,152 square foot office building located in San Mateo, California, valued
at $24,434, through the purchase of a partnership interest in a related entity
in which two officers of the Company held a general partnership interest. The
Company paid $5,818 to unaffiliated limited partners, issued partnership units
with a value of $7,625 to the two officers and assumed a mortgage of $10,991 in
connection with the purchase. The basis of the property was recorded as the sum
of cash paid to acquire unaffiliated partners' interest and the carryover basis
of the two officers of the Company who held general partnership interest in SMBC
II. The monetary value of the Operating Partnership units issued to the two
officers of the Company was based upon the negotiated value paid to the
unaffiliated partners. The number of Operating Partnership units issued was
calculated by dividing such monetary basis by the stock price of the Company's
Common Stock (into which such units are convertible) at the close of day prior
to acquisition.
On December 12, 1997, the Company acquired a land parcel under landholding
agreements with certain senior officers of the Company. The landholding
agreement provides that the Company has the option to purchase a landholding for
the lower of a predetermined fixed price or an appraised fair market value and
that the Directors of the Company must approve the purchase. The 10.18 acre land
parcel located in Monterey, California, was acquired for $1,486, which was an
appraised amount that was lower than the fixed price specified in the
landholding agreement. The Company acquired the land for the purpose of
developing a 34,895 square foot office building at an estimated total cost of
$4,937.
<PAGE> 43
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
During the year ended December 31, 1996, the Company purchased certain land
parcels from Spieker Partners totaling $1,783, pursuant to the provisions of
certain landholding agreements. The acquisitions from Spieker Partners were
subject to approval by the Board of Directors.
Receivable From Affiliates
The $294 and $117 receivable from affiliates at December 31, 1997 and 1996,
respectively, primarily represents management fees and reimbursements due from
Spieker Northwest, Inc. and Spieker Partners.
Investments in Mortgages
Included in Investment in Mortgages are $257,294 of loans to Spieker
Northwest, Inc. (SNI). The loans are secured by deeds of trust on real property,
bear interest at 8.5%, and mature in 2012. Interest income of $3,108 is included
in interest and other income for the year ended December 31, 1997.
Investments in Affiliate
The investment in affiliate represents an investment in SNI. The Company
owns 95% of the Preferred Stock of SNI. Certain Senior Officers of the Company
own 100% of the voting stock of SNI. SNI owns 2.8 million square feet of office,
industrial and retail property located in various states. In addition, SNI owns
seven parcels of land totaling 86.6 acres. The entire portfolio of property is
held for sale at December 31, 1997. In addition to property ownership, SNI
provides property management services to certain properties owned by Spieker
Partners.
Summarized condensed financial information of SNI is presented as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Balance Sheet:
Investments in real estate, net.................. $296,094 $ --
Other assets..................................... 2,915 351
-------- ----
$299,009 $351
======== ====
Mortgages and other.............................. $260,520 $ 1
Shareholders' equity............................. 38,489 350
-------- ----
$299,009 $351
======== ====
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Results of Operations:
Revenues............................ $6,750 $1,304 $1,309
Interest expense.................... 3,108 -- --
Other expenses...................... 3,461 1,224 1,287
------ ------ ------
Net Income.......................... $ 181 $ 80 $ 22
====== ====== ======
</TABLE>
5. Property Held For Disposition
The Company has determined to focus exclusively on properties that meet its
continuing strategic objectives. The Company has therefore decided to divest
itself of its retail properties and certain other
<PAGE> 44
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
properties. Included in property held for disposition of $37,186 at December 31,
1997, are two properties. One of the properties is a retail center located in
Northern California and the other property is an office building located in
Southern California. The retail property was disposed of subsequent to December
31, 1997 (see note 15). The divestiture of the remaining property is subject to
identification of a purchaser, negotiation of acceptable terms and other
customary conditions. Property held for disposition at December 31, 1996, of
$117,732 consisted of 10 retail properties of which nine were disposed of during
1997 (see note 3).
The following summarizes the condensed results of operations of the two
properties held for disposition for the years ended December 31, 1997, 1996 and
1995:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Income........................................... $6,464 $5,542 $5,356
Property Operating Expenses...................... 1,852 1,478 1,132
------ ------ ------
Net Operating Income............................. $4,612 $4,064 $4,224
====== ====== ======
</TABLE>
6. Debt
As of December 31, 1997 and 1996, debt consists of the following:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Unsecured investment grade notes, varying fixed
interest rates from 6.65% to 8.00% payable
semi-annually, due 2000 to 2027.................... $1,135,000 $635,000
Unsecured short-term borrowings:
Unsecured line of credit........................... -- 39,000
Unsecured short-term bank facility................. 200,000 --
Mortgage loans, varying interest rates from 7.37% to
9.75%, due 1998 to 2012............................ 96,502 45,997
---------- --------
$1,431,502 $719,997
========== ========
</TABLE>
On August 8, 1997, the Company amended its Unsecured Line of credit
facility. The maximum amount available under the facility is $250,000. The
facility carries interest at LIBOR (London Interbank Offered Rates) plus 0.80%,
matures in August 2001, includes an annual administrative fee of $50 and an
annual facility fee of .20%. The line of credit facility is subject to financial
covenants concerning leverage, interest coverage and certain other ratios. The
Company is currently in compliance with all of the covenants in the line of
credit facility concerning its indebtedness.
On November 13, 1997, the Company obtained a $200,000 short-term bank
facility. This short-term facility carries interest at LIBOR plus 0.65% (6.53%
at December 31, 1997) and matures November 1998 with an option to extend for one
more year.
Mortgage loans generally require monthly principal and interest payments.
The mortgage loans are secured by deeds of trust on 16 properties. The
undepreciated book value of real estate assets pledged as collateral under deeds
of trust for mortgage loans at December 31, 1997, and December 31, 1996, is
$228,618 and $79,440, respectively.
The unsecured notes are subject to financial covenants concerning leverage,
interest coverage and certain other ratios. The Company is currently in
compliance with all of the covenants in the unsecured note agreements governing
its indebtedness.
<PAGE> 45
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
Interest capitalized for the years ended December 31, 1997, 1996 and 1995,
was $6,338, $3,116 and $1,301, respectively.
Maturity Schedule
The scheduled maturities of all debt outstanding as of December 31, 1997,
are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ------
<S> <C>
1998 (includes short-term borrowings, see paragraph
above).................................................... $ 202,917
1999........................................................ 6,991
2000........................................................ 102,066
2001........................................................ 133,814
2002........................................................ 123,558
Thereafter.................................................. 862,156
----------
$1,431,502
==========
</TABLE>
7. LEASING ACTIVITY
Future minimum rentals due under noncancelable operating leases in effect
at December 31, 1997, with tenants are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- ----------
<S> <C>
1998........................................................ $ 353,118
1999........................................................ 303,991
2000........................................................ 241,265
2001........................................................ 185,749
2002........................................................ 114,749
Thereafter.................................................. 223,904
----------
$1,422,776
==========
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for
their pro rata share of specified operating expenses, which amounted to $83,170,
$44,155 and $32,125 for the years ended December 31, 1997, 1996 and 1995,
respectively. These amounts are included as rental revenue and rental expense in
the accompanying statements of operations. Certain of the leases also provide
for the payment of additional rent based on a percentage of the tenant's
revenues. Additional rents under these leases for the years ended December 31,
1997, 1996 and 1995, were $254, $362 and $310 respectively. Certain leases
contain options to renew.
<PAGE> 46
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
8. DIVIDENDS AND DISTRIBUTIONS PAYABLE
The dividends and distributions payable at December 31, 1997, and December
31, 1996, represent amounts payable to stockholders of record and distributions
payable to minority interest holders as of the same dates. The stockholders of
record and minority interests holders as of December 31, 1997, and December 31,
1996, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Shares of:
Common Stock.................................. 55,772,632 31,821,861
Class B Common Stock.......................... 2,000,000 2,000,000
Class C Common Stock.......................... 1,176,470 1,176,470
Series A Preferred Stock...................... 1,000,000 1,000,000
Series B Preferred Stock...................... 4,250,000 4,250,000
Series C Preferred Stock...................... 6,000,000 --
Units of:
Minority Interest Holders..................... 7,322,126 6,549,819
Minority Interest Holders -- Preferred........ 2,007,495 --
</TABLE>
9. INCOME TAXES
The Company has elected to be taxed as a REIT pursuant to Section 856(c)(1)
of the Code. As a REIT, the Company generally will not be subject to federal
income tax to the extent that it distributes at least 95 percent of its taxable
income to its stockholders. Additionally, REITs are subject to a number of
organizational and operational requirements. If the Company fails to qualify as
a REIT in any taxable year, the Company will be subject to federal income tax
(including any applicable alternative minimum tax) based on its taxable income
using corporate income tax rates. Even if the Company qualifies for taxation as
a REIT, the Company may be subject to certain state and local taxes on its
income and property and to federal income and excise taxes on its undistributed
taxable income.
Taxable income allocable to the Company, excluding minority interests, for
the years ended December 31, 1997, 1996 and 1995, was approximately $103,300,
$66,200 and $3,800, respectively. The taxable income for the years ended
December 31, 1997, 1996 and 1995, includes $13,144, $12,138 and $2,634,
respectively, allocable to the preferred stockholders.
The differences between book income and taxable income primarily result
from timing differences consisting of depreciation expense for tenant
improvements and unearned rental income.
10. STOCKHOLDERS' EQUITY
Preferred Stock
The 1,000,000 shares of Series A Cumulative, Convertible, Preferred Stock
rank senior to the Company's Common Stock as to dividends and liquidation
rights. The shares are convertible into 1,219,512 shares of the Company's Common
Stock and have voting rights equal to 1,219,512 shares of Common Stock. The
dividend per share, calculated on the converted numbers of shares, is equal to
the Common Stock dividend, provided that the dividend yield on the preferred
stock may not be less than the initial dividend rate thereof. Dividends are paid
quarterly in arrears. With respect to the payment of dividends and amounts upon
liquidation, the
<PAGE> 47
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
Series A Preferred Stock ranks on parity with the Company's Series B and Series
C Preferred Stocks and ranks senior to the Company's Common Stock, Class B
Common Stock and Class C Common Stock.
The Series B Preferred Stock dividends are paid quarterly in arrears at
9.45% of the initial liquidation preference per annum. The Series B Preferred
Stock is redeemable on or after December 11, 2000 at the option of the Company
in whole or in part at a redemption price of $25.00 per share, plus accrued and
unpaid dividends. With respect to the payments of dividends and amounts upon
liquidation, the Series B Preferred Stock ranks on parity with the Company's
Series A and Series C Preferred Stocks and ranks senior to the Company's Common
Stock, Class B Common Stock and Class C Common Stock.
On October 10, 1997, the Company issued 6,000,000 shares of Series C
Cumulative Redeemable Preferred Stock for $25.00 per share. The Series C
Preferred Stock dividends are payable quarterly in arrears at an annual rate of
7.88% of the initial liquidation preference of $150,000. The Series C Preferred
shares are redeemable after October 10, 2002 at the option of the Company, in
whole or in part, at a redemption price of $25.00 per share, plus accrued and
unpaid dividends. With respect to the payments of dividends and amounts upon
liquidation the Series C Preferred shares rank on parity to the Company's Series
A and Series B Preferred Stocks and ranks senior to the Company's Common Stock,
Class B Common Stock and Class C Common Stock.
Class B Common Stock
The Class B Common Stock ranks on parity with the Company's Common Stock
and Class C Common Stock with respect to dividends. In the event of any
liquidation of the Company, the holders of Class B Common Stock rank on parity
with Class C Common Stock and are entitled to receive prior and in preference to
holders of Common Stock, an amount per share of Class B Common Stock equal to
all declared but unpaid dividends for each share of Class B Common Stock.
Dividends are paid quarterly in arrears.
Class C Common Stock
The Class C Common Stock ranks on parity with the Company's Common Stock
and Class B Common Stock with respect to dividends. In the event of any
liquidation of the Company, the holders of Class C Common Stock rank on parity
with Class B Common Stock and are entitled to receive prior to and in preference
to the holders of Common Stock, an amount per share of Class C Common Stock
equal to all declared but unpaid dividends for each share of Class C Common
Stock. Dividends are paid quarterly in arrears.
Ownership Limitations
To maintain its qualification as a REIT, not more than 50 percent of the
value of the outstanding shares of the Company may be owned, directly or
indirectly, by five or fewer individuals (defined to include certain entities),
applying certain constructive ownership rules. To help ensure that the Company
will not fail this test, the Company's Charter provides for certain restrictions
on the transfer of the Common Stock to prevent further concentration of stock
ownership. Moreover, to evidence compliance with these requirements, the Company
must maintain records that disclose the actual ownership of its outstanding
Common Stock and will demand written statements each year from the record
holders of designated percentages of its Common Stock disclosing the actual
owners of such Common Stock.
<PAGE> 48
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
11. EMPLOYEE RETIREMENT AND STOCK PLANS
Retirement Savings Plan
Effective January 1, 1994, the Company adopted a retirement savings plan
pursuant to Section 401(k) of the Internal Revenue Code, whereby participants
may contribute a percentage of compensation, but not in excess of the maximum
allowed under the Code. The plan provides for a matching contribution by the
Company which amounted to $393, $292 and $266 for the years ended December 31,
1997, 1996, and 1995. In addition, the Company may make additional contributions
at the discretion of management. Management authorized additional contributions
of $337, $230 and $126 for the years ended December 31, 1997, 1996, and 1995.
Stock Incentive Plan
The Company has adopted the Spieker Properties, Inc. 1993 Stock Incentive
Plan (the "Stock Incentive Plan") to provide incentives to attract and retain
officers and key employees. Under the Plan as amended on May 22, 1996, the
number of shares available for option grant is 9.9% of the number of shares of
Common Stock, on a fully-converted basis, outstanding as of the last day of the
immediately preceding quarter, reduced by the number of shares of Common Stock
reserved for issuance under other stock compensation plans of the Company.
Shares granted under this plan vest over four or five years.
Information relating to the Stock Incentive Plan from January 1, 1995
through December 31, 1997, is as follows:
<TABLE>
<CAPTION>
EMPLOYEES
-------------------------
OPTION PRICE
OPTIONS PER SHARE
--------- ------------
<S> <C> <C>
Shares under option at January 1, 1995............. 905,500 $ 20.50
Granted............................................ 659,000 20.50
Exercised.......................................... (33,500) 20.50
Forfeited.......................................... (48,000) 20.50
--------- ------------
Shares under option at December 31, 1995........... 1,483,000 20.50
Granted............................................ 1,628,000 25.00-31.63
Exercised.......................................... (51,750) 20.50
Forfeited.......................................... (5,750) 20.50
--------- ------------
Shares under option at December 31, 1996........... 3,053,500 20.50-31.63
Granted............................................ 1,237,500 35.19
Exercised.......................................... (163,950) 20.50-29.25
Forfeited.......................................... (24,000) 20.50-29.25
--------- ------------
Shares under option at December 31, 1997........... 4,103,050 $20.50-35.19
========= ============
Options exercisable at December 31, 1997........... 1,269,160 $ 21.34(1)
========= ============
Shares available for grant at December 31, 1997.... 6,488,012
=========
</TABLE>
- ---------------
(1) Represents the average price.
Employee Stock Incentive Pool
At the time of the Company's initial public offering, the Senior Officers
of the Company reserved a portion of their Operating Partnership Units for
awards to personnel employed by the Company at the time of
<PAGE> 49
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
the IPO. The units are converted into Common Stock at the time of grant. The
aggregate number of units reserved for the Employee Stock Incentive Pool is
equivalent to 69,990 shares of Common Stock. The participants in the Pool were
granted 100% of their respective allocations as of January 1, 1997.
The initial deferred compensation of $1,320 pertaining to the 69,990 units
was recorded on the books of the Company, and is being amortized annually based
on the vesting period. The initial value was calculated by converting the 69,990
partnership units into shares of Common Stock and multiplying by the Company's
Common Stock price on the date of the grant.
Non-cash compensation expense for the awards is measured by the number of
Operating Partnership units converted multiplied by the Company's Common Stock
price on the date of conversion.
For the years ended December 31, 1997, 1996 and 1995, non-cash compensation
expense recognized for such awards was $533, $388 and $339, respectively.
Directors Stock Option Plan
On May 22, 1996, the Directors' Stock Option Plan was amended to increase
the number of shares of Common Stock subject to automatic annual option grants
to the Company's independent directors from 500 shares to 4,000 shares, to
increase the number of shares of Common Stock available for option grant from
30,000 to 150,000, and to provide that, in the event of a Change in Control,
outstanding options will become fully vested. To date 46,000 shares have been
granted under the plan and 2,250 shares have been exercised.
Stock Options
The Company applies APB 25 and related interpretations in accounting for
its stock option plan. Accordingly, no compensation cost has been recognized.
Had compensation cost for the plan been determined based on the fair value at
the grant dates for awards under the plan consistent with the method prescribed
by Statement of Financial Accounting Standard ("SFAS") No. 123, "Accounting for
Stock-Based Compensation," the Company's net income and earnings per share would
not have been materially reduced.
For these disclosure purposes, the fair value of each option grant is
estimated on the date of grant using the Black-Scholes option-pricing model with
the following weighted average assumptions used for grants in 1997 and 1996,
respectively; dividend yield of 5.8% and 6.15%; expected volatility of 18.6% and
13.28%; expected lives of six and seven years; and risk-free interest rates of
6.42% and 6.21%.
12. COMMITMENTS AND CONTINGENCIES
Environmental Matters
The Company follows the policy of monitoring its properties for the
presence of hazardous or toxic substances. The Company is not aware of any
environmental liability with respect to the properties that would have a
material adverse effect on the Company's business, assets or results of
operations. There can be no assurance that such a material environmental
liability does not exist. The existence of any such material environmental
liability would have an adverse effect on the Company's results of operations
and cash flow.
<PAGE> 50
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
LEASE COMMITMENTS
The Company has entered into operating ground leases on certain land
parcels with periods ranging from 16 to 53 years. Future minimum rental payments
required under noncancelable operating ground leases in effect at December 31,
1997, are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
---- -------
<S> <C>
1998............................................... $ 1,420
1999............................................... 1,425
2000............................................... 1,425
2001............................................... 1,425
2002............................................... 1,426
Thereafter......................................... 24,351
-------
$31,472
=======
</TABLE>
The land on which three of the Company's properties are located is owned by
Stanford University and is subject to ground leases. The ground leases expire in
2039 or 2040, and unless the leases are extended, the use of the land, together
with all improvements, will revert back to Stanford University. The former
owners of the three properties prepaid the ground leases through 2011, 2012 and
2017; thereafter, the Company will be responsible for the ground lease payments,
as defined under the terms of the leases. These ground lease payments have been
segregated from the total purchase price of the properties, capitalized as
leasehold interests in the accompanying consolidated balance sheet, and are
being amortized ratably over the terms of the related prepayment periods (18 to
24 years).
General Uninsured Losses
The Company carries comprehensive liability, fire, flood, extended coverage
and rental loss insurance with policy specifications, limits and deductibles
customarily carried for similar properties. There are, however, certain types of
extraordinary losses which may be either uninsurable, or not economically
insurable. Should an uninsured loss occur, the Company could lose its investment
in, and anticipated profits and cash flows from, a property.
Certain of the properties are located in areas that are subject to
earthquake activity; the Company has therefore obtained limited earthquake
insurance. In the event of an earthquake, properties are self-insured for the
first $25,000 of loss. The Company is insured for the next $175,000 of loss
(less a deductible of 5% of total insured value per occurrence), any losses in
excess of $200,000 will be borne by the Company.
<PAGE> 51
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
13. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest................................ $56,108 $31,167 $39,876
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
Debt assumed in relation to property acquisitions..... 63,940 -- 22,827
Minority interest capital recorded in relation to
property acquisitions.............................. 97,164 -- 8,877
Increase to land and assessment bond payable.......... 8,984 1,283 4,687
Write-off of fully depreciated property............... 3,196 15,469 3,662
Write-off of fully amortized deferred financing and
leasing costs...................................... 2,359 4,696 1,847
Conversion of operating partnership units to Common
Stock with resulting reduction in minority interest
and increase in additional paid-in capital......... 524 386 343
Extraordinary loss write-off of deferred financing
costs.............................................. -- -- 28,100
</TABLE>
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly 1997 and 1996 data is as follows:
<TABLE>
<CAPTION>
QUARTER
-----------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
1997
Revenues............................... $66,417 $75,878 $83,896 $105,122 $331,313
Income from operations before
disposition of property, minority
interests and extraordinary items.... 23,812 26,111 27,051 33,160 110,134
Net income available to Common
Stockholders......................... 19,121 30,997 24,220 25,554 99,890
Income per share of Common Stock....... $ .43 $ .65 $ .50 $ .47 $ 2.04
1996
Revenues............................... $45,318 $47,696 $52,143 $ 55,542 $200,699
Income from operations before
disposition of property, minority
interests and extraordinary items.... 14,980 17,131 16,096 17,557 65,764
Net income available to Common
Stockholders......................... 9,859 11,889 9,753 20,550 52,051
Income per share of Common Stock....... $ .31 $ .33 $ .27 $ .57 $ 1.50
</TABLE>
The sum of quarterly financial data in 1997 and 1996 varies from the annual
data due to rounding.
<PAGE> 52
SPIEKER PROPERTIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31, 1997 AND 1996
15. SUBSEQUENT EVENTS -- UNAUDITED
Subsequent to year end in January and February 1998 the Company issued
$276,500 of investment grade rated unsecured notes in three tranches as follows:
$150,000 of 6.75% notes due January 15, 2008; $125,000 of 6.875% notes due
February 1, 2005; and $1,500 of 7.0% notes due February 2, 2007. The net
proceeds of $274,300 were used to pay down borrowings on the line of credit and
to fund the ongoing acquisition and development of properties.
On February 18, 1998, the Company placed 710,832 shares of Common Stock at
a price of $42.25 in a Registered Unit Investment Trust. The net proceeds of
$28,500 were used to paydown borrowings on the line of credit and to fund the
ongoing acquisition and development of properties.
On February 27, 1998, the Company disposed of a retail property held for
disposition at December 31, 1997, resulting in a gain on disposition of
approximately $9,500.
On various dates subsequent to December 31, 1997, through March 13, 1998,
the Company acquired properties totaling 4.2 million rentable square feet at a
total initial acquisition cost of $538,000.
<PAGE> 53
SPIEKER PROPERTIES, INC.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
INITIAL COST TO COMPANY
----------------------------------- ADDITIONS
ENCUMBRANCES LAND AND AND
PROJECT LOCATION AND LIENS(1) LEASEHOLD INTEREST BUILDINGS IMPROVEMENTS
------- -------- ------------ ------------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
10011 Stender Way II.............. Santa Clara, CA $ $ 118,274 $ 840,169 $ 1,250,787
10041 Scott Blvd.................. Santa Clara, CA 128,623 583,455 1,811,630
10061 Fresno Warehouse II......... Fresno, CA 28,920 310,908 1,616,875 1,731,588
10071 Bakersfield Warehouse....... Bakersfield, CA 519,900 1,623,282 2,004,571
10091 Terminal St. Warehouse...... Sacramento, CA 198,113 1,181,083 205,205
10101 Stender Way I............... Santa Clara, CA 98,915 536,920 230,416
10111 Applied Materials I......... Santa Clara, CA 381,686 1,625,507 3,690
10121 Sunnyvale Business Center... Santa Clara, CA 257,035 811,284 394,183
10161 Cupertino Business Center... Cupertino, CA 3,876,840 3,970,597 882,898
10171 Fresno Warehouse III........ Fresno, CA 405,166 1,407,087 368,232
10191 North American Van Lines.... San Jose, CA 2,191,699 4,999,710 786,893
10241 Applied Materials II........ Santa Clara, CA 1,472,055 651,943 3,392,605 3,040,850
10261 Front Street Warehouse...... Sacramento, CA 294,674 908,485 166,066
10271 Aspect Building............. San Jose, CA 147,535 2,223,805 2,265,103 281,512
10301 Cadillac Court.............. Milpitas, CA 113,280 959,042 1,493,087 972,430
10331 Ryan Ranch Industrial....... Monterey, CA 422,500 969,386 798,752
10371 Fremont Bayside............. Fremont, CA 6,551,633 1,245,617 2,704,137 330,210
10381 Livermore Commerce Ctr...... Livermore, CA 36,333 1,312,199 3,563,238 878,425
10401 Fairfield Business Center... Fairfield, CA 439,350 2,662,769 1,190,154
10421 Patrick Henry Drive......... San Jose, CA 10,101 933,058 2,702,038 2,277,020
10431 COG Warehouse............... Milpitas, CA 518,900 2,616,039 1,907,937 1,086,032
10451 Okidata Distribution
Center...................... Milpitas, CA 365,043 1,854,892 1,750,086 1,132,809
10461 Pro Log..................... Monterey, CA 780,000 1,148,054 1,058,360
10481 Huntwood Business Center.... Hayward, CA 8,617 198,026 686,076 1,271,015
10491 Independent Rd Warehouse.... Oakland, CA 237,380 706,174 405,735
10501 Grandview Drive............. So. San Fran, CA 534,974 259,751 561,224 520,092
10511 Baycenter Business Park
II.......................... Hayward, CA 235,412 1,228,225 3,116,626 2,155,360
10521 Keebler Warehouse........... Hayward, CA 92,441 569,642 1,568,210 229,779
10531 Fremont Commerce Center..... Fremont, CA 614,357 1,588,166 593,031
10571 Montague Industr. Center.... Palo Alto, CA 1,482,000 5,131,899 5,933,875
10591 Dubuque Business Center..... So. San Fran, CA 2,912,158 3,128,405 2,939,958
10601 Cabot Blvd. Warehouse....... Hayward, CA 1,550,174 4,531,092 1,257,050
10611 Benicia Commmerce Center.... Benicia, CA 434,027 3,810,746 1,102,493
10621 Montgomery Ward............. Pleasant Hill, CA 717,750 3,485,901 95,406
10631 Eden Landing Bus. Center.... Hayward, CA 1,152,163 1,940,740 281,456
10641 Good Guys Dist. Center...... Hayward, CA 14,751 4,923,246 9,254,184 150,352
10651 Fleetside Comrce Center..... Benicia, CA 369,320 1,080,303 2,952,609 540,501
10661 Industrial Dr. Warehouse.... Fremont, CA 2,259,536 1,822,496 3,793,609 3,148
<CAPTION>
LAND,
LAND IMP.
AND BUILDINGS AND CONSTRUCTION DEPRECIABLE
LEASEHOLD BUILDING ACCUMULATED AND/OR LIVES
INT. IMPROVEMENTS TOTAL DEPRECIATION ACQUISITION (YEARS)
------------ -------------- -------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
10011 $ 491,822 $ 1,717,408 $ 2,209,230 $ 640,225 1978 4-40
10041 554,191 1,969,517 2,523,708 578,097 1976 4-40
10061 784,254 2,875,117 3,659,370 1,015,073 1981 3-40
10071 1,090,739 3,057,014 4,147,753 1,039,864 1982 20-40
10091 202,000 1,382,401 1,584,401 670,114 1975 3-40
10101 170,073 696,177 866,250 304,716 1978 20-40
10111 381,686 1,629,197 2,010,883 928,607 1975 20-40
10121 241,207 1,221,295 1,462,502 334,355 1987 4-40
10161 4,082,078 4,648,256 8,730,335 1,294,993 1985 32-40
10171 482,421 1,698,064 2,180,485 430,315 1987 5-40
10191 2,199,552 5,778,750 7,978,302 1,924,653 1988 10-40
10241 1,270,250 5,815,147 7,085,397 2,655,557 1979 16-40
10261 294,674 1,074,551 1,369,225 245,929 1988 5-40
10271 2,229,772 2,540,648 4,770,420 581,724 1989 6-40
10301 1,131,026 2,293,533 3,424,559 897,607 1991 5-40
10331 557,763 1,632,875 2,190,638 650,979 1991 5-40
10371 1,247,069 3,032,895 4,279,964 743,752 1990 3-40
10381 1,499,807 4,254,055 5,753,862 960,043 1988 3-40
10401 1,079,336 3,212,938 4,292,274 903,230 1991 3-40
10421 993,156 4,918,960 5,912,116 1,399,854 1991 12-40
10431 3,093,192 2,516,816 5,610,008 762,329 1992 11-40
10451
2,210,130 2,527,657 4,737,787 975,275 1993 4-40
10461 1,121,135 1,865,279 2,986,414 412,176 1993 12-40
10481 434,534 1,720,583 2,155,117 654,280 1979 7-40
10491 332,303 1,016,986 1,349,289 483,827 1972 5-40
10501 468,097 872,970 1,341,067 416,937 1979 20-40
10511
1,781,453 4,718,758 6,500,211 1,465,094 1984 3-40
10521 605,637 1,761,994 2,367,631 508,502 1985 10-40
10531 708,494 2,087,060 2,795,554 472,462 1989 5-40
10571 2,820,461 9,727,313 12,547,774 4,089,757 1993 5-40
10591 3,491,267 5,489,253 8,980,520 1,390,672 1986 3-40
10601 1,559,831 5,778,486 7,338,317 1,621,198 1988 3-40
10611 683,781 4,663,485 5,347,266 971,595 1989 3-40
10621 717,750 3,581,308 4,299,058 792,442 1989 35-40
10631 1,158,197 2,216,162 3,374,359 549,368 1990 3-40
10641 4,936,467 9,391,315 14,327,782 1,345,308 1990 5-40
10651 1,080,303 3,493,110 4,573,413 849,840 1990 6-40
10661 1,822,496 3,796,757 5,619,253 474,185 1993 3-40
</TABLE>
<PAGE> 54
<TABLE>
<CAPTION>
INITIAL COST TO COMPANY
----------------------------------- ADDITIONS
ENCUMBRANCES LAND AND AND
PROJECT LOCATION AND LIENS(1) LEASEHOLD INTEREST BUILDINGS IMPROVEMENTS
------- -------- ------------ ------------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
10711 Redwood Shores.............. Redwood City, CA 3,437,897 3,702,938 1,489,219
10741 Baycenter Business Park I... Hayward, CA 1,500,000 4,105,976 102,731
10761 2905-2909 Stender Way....... Santa Clara, CA 385,992 1,174,719 216,534
10781 Meier - Central South....... Santa Clara, CA 2,571,112 7,177,524 300,799
10791 Meier - Mountain View....... Santa Clara, CA 5,910,195 5,265,351 14,236,164 55,704
10801 Meier - Central North....... Santa Clara, CA 1,753,361 4,740,570 0
10811 Meier - Sunnyvale........... Santa Clara, CA 352,776 953,800 0
10821 732-834 Striker Ave......... Sacramento, CA 1,009,601 2,767,658 215,283
10831 Fresno Warehouse I.......... Fresno, CA 2,105,609 841,100 2,304,645 0
10871 Walsh & Lafayette Ind
Park........................ Santa Clara, CA 3,359,291 7,810,558 1,382,535
10881 Ridder Park................. San Jose, CA 153,068 1,794,057 4,287,007 1,812,184
10901 Ryan Ranch - Lot 14B........ Monterey, CA 311,835 763,946 169,338
10911 Cadillac Court II........... Milpitas, CA 184,086 845,833 1,166,712 667,138
10931 Northgate Commerce Ctr...... Sacramento, CA 1,854,097 5,611,579 412,473
10941 Doolittle Business Center... San Leandro, CA 866,075 2,618,714 224,276
10951 Benicia Ind I (Stone)....... Benicia, CA 5,238,267 15,735,277 108,241
10961 Benicia Ind I (Getty Ct).... Benicia, CA 1,134,212 3,402,635 0
11001 Carlsbad Airport Plaza...... Carlsbad, CA 1,532,406 4,609,834 79,390
11041 Concord North Comm Ctr...... Concord, CA 2,340,139 4,912,564 1,265,142
11071 Benicia Ind II.............. Benicia, CA 3,891,910 11,697,314 434,929
11161 Port of Oakland............. Oakland, CA 1,693,760 5,091,125 31,493
11191 Stadium Plaza............... Anaheim, CA 9,134,965 29,269,756 24,087
11211 Sorrento Vista.............. San Diego, CA 2,745,889 0 0
11231 Charcot Business Center..... San Jose, CA 2,988,923 8,992,249 23,723
11241 Airport Service Center...... San Jose, CA 668,283 2,009,768 24,192
11251 Dixon Landing North......... Milpitas, CA 6,392,701 0 0
11261 Kifer Road Industrial
Park........................ Sunnyvale, CA 3,530,775 10,616,731 0
11281 Baycenter Business Park
III......................... Hayward, CA 190,339 1,248,216 0 0
11291 Riverside Business Center... Sacramento, CA 204,425 1,471,099 0 0
11361 Ravendale at Central........ Mountain View, CA 2,018,673 6,064,095 0
11371 Centerpark Plaza One........ San Diego, CA 1,367,014 5,469,103 0
11411 Camino West Business Park... Carlsbad, CA 470,938 1,883,751 0
11421 Centerpark Plaza Two........ San Diego, CA 1,340,092 4,099,312 144,528
11461 Western Metal Lath.......... Riverside, CA 86,332 1,383,776 5,189,776 0
11491 Eastgate Technology Park.... La Jolla, CA 5,865,873 0 0
11551 Seaport Distribution
Center...................... W Sacramento, CA 1,180,994 0 0
11601 Coral Tree Commerce
Center...................... Vista, CA 5,166,839 2,115,241 6,341,466 0
11611 Progress Industrial......... Vista, CA 1,865,948 5,593,426 0
11761 Huntwood Business Center.... Hayward, CA 2,929,335 8,788,004 0
11771 Fremont Commerce Center..... Fremont, CA 4,315,601 12,946,802 0
11871 Oak Creek................... Milpitas, CA 8,837 2,040,639 6,095,607 0
11881 Milimont R&D................ Fremont, CA 1,806,606 5,419,919 0
11891 Kato R&D.................... Fremont, CA 2,002,504 6,007,610 0
11911 California Circle II........ Milpitas, CA 2,555,551 7,670,997 0
<CAPTION>
LAND,
LAND IMP.
AND BUILDINGS AND CONSTRUCTION DEPRECIABLE
LEASEHOLD BUILDING ACCUMULATED AND/OR LIVES
INT. IMPROVEMENTS TOTAL DEPRECIATION ACQUISITION (YEARS)
------------ -------------- -------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
10711 3,796,415 4,833,639 8,630,054 1,033,698 1987 7-40
10741 1,500,000 4,208,707 5,708,707 376,600 1994 3-40
10761 385,992 1,391,253 1,777,245 170,181 1995 6-40
10781 2,571,112 7,478,323 10,049,435 557,109 1995 5-40
10791 5,265,351 14,291,868 19,557,218 1,022,278 1995 5-40
10801 1,753,361 4,740,570 6,493,931 335,791 1995 40
10811 352,776 953,800 1,306,576 67,561 1995 40
10821 1,024,488 2,968,054 3,992,543 246,751 1995 5-40
10831 841,100 2,304,645 3,145,745 162,521 1995 5-40
10871
3,359,291 9,193,093 12,552,384 637,349 1995 5-40
10881 1,794,057 6,099,191 7,893,248 240,328 1995 10-40
10901 311,835 933,284 1,245,119 52,967 1995 4-40
10911 845,833 1,833,850 2,679,683 210,977 1995 7-40
10931 1,869,659 6,013,045 7,882,705 410,245 1995 10-40
10941 984,533 2,724,532 3,709,065 125,807 1996 12-40
10951 5,238,267 15,843,518 21,081,785 760,203 1996 40
10961 1,134,212 3,402,635 4,536,847 163,043 1996 40
11001 1,532,406 4,695,825 6,228,231 276,153 1995 5-40
11041 2,344,326 6,173,520 8,517,845 307,397 1995 3-40
11071 4,107,912 11,916,241 16,024,153 606,164 1996 4-40
11161 1,701,338 5,115,039 6,816,377 205,609 1996 40
11191 9,134,965 29,293,843 38,428,809 979,739 1996 3-40
11211 2,745,889 0 2,745,889 0 1996 40
11231 2,988,923 9,015,971 12,004,894 266,450 1996 40
11241 692,476 2,009,768 2,702,244 59,103 1996 40
11251 6,392,701 0 6,392,701 0 1996 40
11261
3,530,775 10,616,731 14,147,506 309,547 1996 40
11281
1,248,216 0 1,248,216 0 1996 40
11291 1,471,099 0 1,471,099 0 1996 40
11361 2,018,673 6,064,095 8,082,768 151,602 1996 40
11371 1,367,014 5,469,103 6,836,116 125,334 1997 40
11411 470,938 1,883,751 2,354,689 43,169 1997 40
11421 1,340,092 4,243,840 5,583,933 113,780 1997 40
11461 1,383,776 5,189,776 6,573,552 118,933 1997 40
11491 5,865,873 0 5,865,873 0 1997 40
11551
1,180,994 0 1,180,994 0 1997 40
11601
2,115,241 6,341,466 8,456,707 79,268 1997 40
11611 1,865,948 5,593,426 7,459,374 69,918 1997 40
11761 2,929,335 8,788,004 11,717,339 73,233 1997 40
11771 4,315,601 12,946,802 17,262,403 107,890 1997 40
11871 2,040,639 6,095,607 8,136,245 13,480 1997 40
11881 1,806,606 5,419,919 7,226,524 11,292 1997 40
11891 2,002,504 6,007,610 8,010,115 12,516 1997 40
11911 2,555,551 7,670,997 10,226,548 31,963 1997 40
</TABLE>
<PAGE> 55
<TABLE>
<CAPTION>
INITIAL COST TO COMPANY
----------------------------------- ADDITIONS
ENCUMBRANCES LAND AND AND
PROJECT LOCATION AND LIENS(1) LEASEHOLD INTEREST BUILDINGS IMPROVEMENTS
------- -------- ------------ ------------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
11941 Pacific Corporate Park...... San Diego, CA 2,796,397 8,389,191 0
11951 Sorrento Tech I, II & III... San Diego, CA 2,686,323 7,263,117 0
11961 Westridge I................. San Diego, CA 1,712,464 4,630,094 0
11991 Commerce Pointe Business
Ctr......................... Ontario, CA 198,164 1,259,456 3,183,874 0
12011 Borregas Avenue............. Sunnyvale, CA 779,601 2,338,802 0
12041 W. North Market............. Sacramento, CA 1,150,545 3,451,632 0
12051 Overland Court W............ Sacramento, CA 648,541 3,294,800 7,250,436 0
12091 Vintage Park Industrial..... Foster City, CA 1,806,861 24,805,818 68,996,871 0
20001 West Valley Business Ctr.... Kent, WA 51,955 681,200 2,124,967 2,242,955
20011 Cascade Comrce. Park........ Kent, WA 39,756 2,430,989 5,005,502 1,710,661
20031 Valley Freeway Bus.
Center...................... Kent, WA 1,061,293 2,243,650 469,519
20071 Woodinville Corp. Center
I........................... Woodinville, WA 1,321,071 3,712,131 509,782
20081 Woodinville Corp. Center
II.......................... Woodinville, WA 1,851,708 6,391,154 3,259,516
20111 Georgetown Center........... Seattle, WA 4,274,197 4,165,405 464,030
20121 City Commerce Park.......... Seattle, WA 1,855,377 2,548,461 1,315,036
20141 Vancouver Comrce. Park...... Vancouver, WA 337,930 1,359,073 126,681
20151 Millcreek Distribution
Ctr......................... Kent, WA 18,305 2,541,162 7,738,028 105,747
20161 Sea-Tac Industrial Park..... SeaTac, WA 1,953,528 5,538,926 41,880
20171 Valley Industrial Park...... Kent, WA 27,384 6,765,505 17,221,447 286,803
20221 Woodinville Corp Ctr........ Bellevue, WA 2,588,694 5,996,128 3,456,282
20231 Everett Industrial Center... Everett, WA 4,740 1,863,532 5,577,154 14,542
20251 Everett 526................. Everett, WA 1,087,615 3,273,209 15,046
20261 Southcenter West Business
Park Tukwila, WA 6,442,468 0
20271 Kirkland 118 Commerce Ctr... Kirkland, WA 1,195,205 0 0
20321 Redmond Heights Tech
Center...................... Redmond, WA 49,140 3,136,545 9,256,994 0
30001 Park 217 I.................. Portland, OR 1,359,958 2,346,881 3,173,399
30011 Park 217 Phase II........... Portland, OR 490,845 1,762,678 1,500,008
30021 Park 217 Phase III.......... Portland, OR 101,555 601,310 201,653
30041 Swan Island................. Portland, OR 871,878 290,504 758,714 460,460
30051 Columbia Commerce Park...... Portland, OR 1,939,782 6,606,003 2,366,248
30071 Nelson Business Center
I&II........................ Tigard, OR 30,513 3,454,590 5,905,233 4,405,154
30081 SW Commerce Ctr............. Portland, OR 499,146 1,390,426 783,923
30101 Columbia IV................. Portland, OR 833,668 4,430,444 37,876
30141 Marine Dr Distribution
Ctr......................... Portland, OR 1,166,743 3,509,787 1,519,766
30151 Marine Drive Dist. Ctr II... Portland, OR 622,307 1,867,657 728,793
30161 Airport Way Commerce Park... Portland, OR 333,337 1,837,144 3,780,598 2,326,353
30171 4949 Meadows Building....... Lake Oswego, OR 233,587 2,286,561 10,360,234 1,078,282
30181 Marine Drive Dist. Ctr
III......................... Portland, OR 1,760,241 4,260,978 1,454,812
30201 158th Commerce Park......... Portland, OR 198,643 2,864,037 0 0
30211 Nimbus Corp. Ctr............ Beaverton, OR 121,471 17,708,135 52,726,670 290,363
30221 Parkway Industrial.......... Wilsonville, OR 1,878,731 5,619,196 20,688
<CAPTION>
LAND,
LAND IMP.
AND BUILDINGS AND CONSTRUCTION DEPRECIABLE
LEASEHOLD BUILDING ACCUMULATED AND/OR LIVES
INT. IMPROVEMENTS TOTAL DEPRECIATION ACQUISITION (YEARS)
------------ -------------- -------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
11941 2,796,397 8,389,191 11,185,588 17,477 1997 40
11951 2,686,323 7,263,117 9,949,440 15,892 1997 40
11961 1,712,464 4,630,094 6,342,558 10,406 1997 40
11991
1,259,456 3,183,874 4,443,330 6,633 1997 40
12011 779,601 2,338,802 3,118,403 14,618 1997 40
12041 1,150,545 3,451,632 4,602,177 7,191 1997 40
12051 3,294,800 7,250,436 10,545,236 15,105 1997 40
12091 24,805,818 68,996,871 93,802,689 144,978 1997 40
20001 1,286,458 3,762,664 5,049,121 1,356,630 1980 20-40
20011 3,129,620 6,022,827 9,152,447 1,271,533 1989 5-40
20031
1,262,572 2,511,890 3,774,462 702,403 1990 7-40
20071
1,740,944 3,807,389 5,548,333 1,070,387 1988 3-40
20081
4,258,674 7,243,704 11,502,379 2,099,391 1991 4-40
20111 4,517,411 4,386,222 8,903,632 1,268,681 1984 5-40
20121 2,218,399 3,500,474 5,718,873 899,742 1988 5-40
20141 451,891 1,375,033 1,826,924 285,670 1990 3-40
20151
2,541,162 7,843,775 10,384,937 643,702 1994 5-40
20161 1,953,528 5,580,806 7,534,334 452,799 1994 4-40
20171 6,862,205 17,411,550 24,273,755 1,450,231 1994 3-40
20221 4,160,957 7,880,148 12,041,105 718,569 1995 5-40
20231 1,863,532 5,591,696 7,455,228 245,020 1996 12-40
20251 1,087,615 3,288,254 4,375,869 130,983 1996 12-40
20261
0 6,442,468 6,442,468 161,062 1997 40
20271 1,195,205 0 1,195,205 0 1997 40
20321
3,136,545 9,256,994 12,393,539 77,142 1997 40
30001 2,483,105 4,397,132 6,880,237 1,688,700 1980 5-40
30011 780,261 2,973,270 3,753,531 995,717 1981 10-40
30021 132,615 771,904 904,519 357,569 1981 5-40
30041 369,011 1,140,667 1,509,678 432,077 1978 5-40
30051 2,527,306 8,387,641 10,914,947 1,956,796 1988 3-40
30071
4,944,462 8,842,121 13,786,583 1,852,168 1990 3-40
30081 707,816 1,969,044 2,676,859 505,746 1989 5-40
30101 833,668 4,468,320 5,301,988 412,765 1994 40
30141
1,870,511 4,325,785 6,196,296 405,082 1995 5-40
30151 1,117,248 2,101,508 3,218,756 122,188 1996 5-40
30161 2,890,094 5,054,002 7,944,096 274,206 1996 3-40
30171 3,237,428 10,518,056 13,755,484 27,902 1996 40
30181
2,853,738 4,622,293 7,476,031 20,351 1996 40
30201 2,864,037 0 2,864,037 0 1997 40
30211 17,714,423 53,010,745 70,725,168 471,926 1997 4-40
30221 1,878,731 5,639,884 7,518,615 58,821 1997 40
</TABLE>
<PAGE> 56
<TABLE>
<CAPTION>
INITIAL COST TO COMPANY
----------------------------------- ADDITIONS
ENCUMBRANCES LAND AND AND
PROJECT LOCATION AND LIENS(1) LEASEHOLD INTEREST BUILDINGS IMPROVEMENTS
------- -------- ------------ ------------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
30231 Kelley Point Distribution
Ctr Portland, OR 4,108,593 12,325,778 0
30251 Wilsonville................. Wilsonville, OR 75,408 10,379,970 19,739,337 75,095
40011 Cole Rd. Warehouse.......... Boise, ID 302,376 103,617 416,506 166,205
------------ ------------ -------------- ------------
Total Industrial $31,780,640 $271,937,760 $ 664,755,333 $ 84,153,460
------------ ------------ -------------- ------------
10001 Santa Clara Office Center
I........................... Santa Clara, CA $ 1,211,172 $ 187,326 $ 1,392,344 $ 2,647,051
10021 Santa Clara Office Center
II.......................... Santa Clara, CA 173,317 2,581,836 2,721,067
10031 Gateway Ofc. Phase I........ San Jose, CA 721,215 9,010,137 4,166,105
10051 Santa Clara Office Center
III......................... Santa Clara, CA 36,746 2,193,334 1,935,626
10081 Gateway Ofc. Phase II....... San Jose, CA 1,275,102 19,544,636 14,665,000
10131 The Alameda................. San Jose, CA 774,316 4,278,623 941,095
10141 Creekside Phase I........... San Jose, CA 391,024 10,385,797 8,518,712 4,046,490
10151 North First Ofc. Ctr........ San Jose, CA 6,698,611 5,900,388 2,655,393
10181 455 University.............. Sacramento, CA 925,000 1,305,000 627,315
10211 8880 Cal Center............. Sacramento, CA 3,252,741 8,493,503 2,343,474
10231 740 University.............. Sacramento, CA 261,250 793,750 162,785
10251 Denny's Restaurant.......... Santa Clara, CA 181,634 551,427 1,225
10281 Gateway Oaks II............. Sacramento, CA 1,510,137 4,258,061 1,354,031
10291 Gateway Oaks I.............. Sacramento, CA 2,926,887 9,856,301 183,540
10311 701 University.............. Sacramento, CA 1,051,108 3,239,007 506,139
10321 Ryan Ranch Ofc. Ctr......... Monterey, CA 1,048,740 3,951,223 2,341,237
10341 The Orchard................. Sacramento, CA 1,505,937 4,517,810 430,394
10351 555 University.............. Sacramento, CA 1,467,023 4,401,069 292,164
10361 575 and 601 University...... Sacramento, CA 1,677,507 5,692,420 558,728
10391 655 University.............. Sacramento, CA 1,147,733 3,443,200 228,357
10541 Lockheed Bldg............... Palo Alto, CA 1,735,789 6,264,357 1,126,913
10551 Xerox Campus................ Palo Alto, CA 9,145,484 29,360,411 5,281,728
10561 Foothill Research Ctr....... Palo Alto, CA 7,474,154 30,819,577 5,592,931
10671 2180 Sand Hill Road......... Menlo Park, CA 685,933 1,939,229 289,805
10681 Point West Executive Ctr.... Sacramento, CA 2,538,020 5,952,306 874,130
10701 McCarthy.................... Milpitas, CA 3,605 845,039 4,219,348 302,506
10751 Point West Commercenter..... Sacramento, CA 3,443,730 9,025,615 789,619
10851 Ryan Ranch Off-Ph II........ Monterey, CA 565,580 2,012,002 510,499
10891 Gateway Oaks III............ Sacramento, CA 1,151,181 3,325,818 352,667
10981 La Jolla Centre II.......... San Diego, CA 3,252,653 13,070,059 206,321
10991 One Pacific Heights......... San Diego, CA 3,089,433 8,365,526 11,720
11011 Pacific Point............... San Diego, CA 3,111,202 9,333,605 325,446
11021 Bayside Corporate Center.... Foster City, CA 485,563 2,455,163 7,623,408 291,091
11031 Ryan Ranch Office II Bldg
D........................... Monterey, CA 420,000 2,160,535 155,442
11051 3600 American River Dr...... Sacramento, CA 1,059,222 4,274,450 160,093
11052 3610 American River Dr...... Sacramento, CA 490,859 1,963,435 19,892
11053 3620 American River Dr...... Sacramento, CA 1,033,387 4,133,548 5,102
11061 Inwood Business Park........ Irvine, CA 2,232,769 8,955,666 258,519
11141 Carmel Valley Centre........ San Diego, CA 2,792,159 11,223,607 284,788
11151 2290 North First Street..... San Jose, CA 1,222,335 4,891,759 87,129
<CAPTION>
LAND,
LAND IMP.
AND BUILDINGS AND CONSTRUCTION DEPRECIABLE
LEASEHOLD BUILDING ACCUMULATED AND/OR LIVES
INT. IMPROVEMENTS TOTAL DEPRECIATION ACQUISITION (YEARS)
------------ -------------- -------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
30231
4,108,593 12,325,778 16,434,371 102,715 1997 40
30251 10,379,970 19,814,432 30,194,402 46,816 1997 40
40011 114,465 571,863 686,328 254,124 1976 16-40
------------ -------------- -------------- ------------
$296,146,099 $ 724,783,785 $1,020,929,883 $ 70,022,794
------------ -------------- -------------- ------------
10001
$ 806,700 $ 3,452,928 $ 4,259,628 $ 1,057,473 1977 3-40
10021
931,364 4,568,232 5,499,596 1,651,826 1980 2-40
10031 1,552,569 12,372,689 13,925,257 4,601,399 1981 3-40
10051
623,340 3,556,356 4,179,696 1,212,805 1981 3-40
10081 3,829,146 31,681,601 35,510,747 10,323,713 1983 3-40
10131 966,236 5,027,798 5,994,034 1,570,873 1984 3-40
10141 10,965,419 11,989,446 22,954,866 3,247,768 1985 5-40
10151 6,973,869 8,280,522 15,254,392 2,351,934 1985 3-40
10181 993,704 1,915,538 2,909,242 472,131 1987 3-40
10211 3,804,401 10,346,247 14,150,648 2,212,640 1989 3-40
10231 280,701 949,913 1,230,614 249,324 1987 3-40
10251 181,634 552,652 734,286 135,706 1988 34-40
10281 1,996,441 5,142,028 7,138,469 1,387,423 1992 3-40
10291 2,938,968 10,092,713 13,031,681 1,958,311 1990 2-40
10311 1,247,111 3,549,142 4,796,253 928,136 1991 3-40
10321 2,093,355 5,280,216 7,373,571 1,640,186 1992 3-40
10341 1,539,497 4,914,644 6,454,141 977,219 1990 3-40
10351 1,484,661 4,681,119 6,165,780 934,493 1990 3-40
10361 1,915,967 6,069,259 7,985,227 1,262,326 1990 3-40
10391 1,159,673 3,696,629 4,856,302 871,131 1990 2-40
10541 1,735,789 7,391,270 9,127,059 1,658,590 1993 8-40
10551 9,145,484 34,642,139 43,787,623 7,367,895 1993 8-40
10561 7,474,154 36,412,508 43,886,662 8,549,768 1993 6-40
10671 753,570 2,168,742 2,922,312 945,106 1973 3-40
10681 2,573,522 6,792,320 9,365,842 718,634 1994 10-40
10701 845,039 4,521,853 5,366,892 421,643 1994 1-40
10751 3,443,730 9,815,234 13,258,964 902,153 1994 4-40
10851 565,580 2,522,502 3,088,082 292,116 1995 3-40
10891 1,161,264 3,668,403 4,829,667 172,065 1995 2-40
10981 3,268,743 13,266,160 16,534,903 757,289 1995 4-40
10991 3,101,153 8,365,526 11,466,680 453,360 1995 4-40
11011 3,111,202 9,659,051 12,770,253 613,598 1995 4-40
11021 2,465,778 7,903,884 10,369,662 451,260 1996 7-40
11031
420,000 2,315,977 2,735,977 75,289 1996 5-40
11051 1,059,222 4,441,526 5,500,747 241,803 1995 12-40
11052 490,859 1,986,684 2,477,543 108,066 1995 5-40
11053 1,033,387 4,145,469 5,178,856 216,231 1995 12-40
11061 2,251,304 9,195,650 11,446,955 517,263 1995 3-40
11141 2,796,624 11,503,930 14,300,555 577,022 1996 1-40
11151 1,222,335 4,978,888 6,201,223 213,886 1996 40
</TABLE>
<PAGE> 57
<TABLE>
<CAPTION>
INITIAL COST TO COMPANY
----------------------------------- ADDITIONS
ENCUMBRANCES LAND AND AND
PROJECT LOCATION AND LIENS(1) LEASEHOLD INTEREST BUILDINGS IMPROVEMENTS
------- -------- ------------ ------------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
11171 Dove Street................. Newport Beach, CA 1,569,792 6,283,219 45,185
11221 Fairchild Corporate
Center...................... Irvine, CA 2,011,443 8,054,128 299,075
11271 One Pacific Plaza........... Huntington Beach, CA 2,020,971 8,088,154 20,457
11301 Fidelity Plaza.............. Sacramento, CA 1,354,983 3,695,222 0
11311 Central Park Plaza.......... Santa Clara, CA 184,291 9,456,552 24,937,956 42,700
11321 Corona Corporate Center..... Corona, CA 743,147 2,986,626 11,980
11331 Wood Island Office
Complex..................... Larkspur, CA 62,939 3,796,146 10,090,937 90,251
11341 One Lakeshore Centre........ Ontario, CA 69,341 3,899,948 15,321,532 43,556
11351 Pacific View Plaza.......... San Diego, CA 1,404,336 3,808,865 123,326
11381 La Place Court.............. Carlsbad, CA 1,467,057 5,868,303 202,359
11391 Carmel View Office Plaza.... San Diego, CA 1,426,649 5,706,594 0
11401 The City.................... Orange, CA 5,586,737 22,370,476 697,373
11431 Centerpark Plaza Two........ San Diego, CA 882,852 3,531,407 0
11451 Camino West................. Carlsbad, CA 980,334 3,921,333 30,271
11471 Emeryville Towers........... Emeryville, CA 25,344,479 100,357,313 195,746
11481 Brea Park Centre............ Brea, CA 2,905,070 7,865,273 287,514
11501 The City.................... Orange County, CA 1,309,617 5,248,210 0
11511 555 Twin Dolphin Plaza...... Redwood City, CA 8,181,629 32,696,657 0
11521 Metro Plaza................. San Jose, CA 24,780,898 14,789,132 59,182,491 19,894
11531 1740 Technology............. San Jose, CA 21,261,808 7,918,598 31,678,718 53,378
11541 Fountaingrove............... Santa Rosa, CA 12,262 4,391,945 11,841,364 54,900
11561 Sierra Point................ Brisbane, CA 369,277 2,429,943 8,198,137 0
11571 Pasadena Financial.......... Pasadena, CA 5,352,439 21,413,447 0
11581 Century Square.............. Pasadena, CA 8,318,792 33,284,001 0
11591 Brea Corporate Plaza........ Brea, CA 2,958,418 8,000,717 31,421
11621 Point West Corp Center I.... Sacramento, CA 4,388,722 11,865,803 0
11641 McKesson Building........... Pasadena, CA 5,159,033 13,949,317 0
11651 Point West Corp Center II... Sacramento, CA 1,000,000 0
11671 Arboretum Courtyard......... Santa Monica, CA 5,718,678 0 0
11681 Lafayette Terrace........... Lafayette, CA 2,037,282 5,508,225 0
11691 Brea Place.................. Brea, CA 5,254,525 14,206,679 0
11711 Sepulveda Center............ Los Angeles, CA 5,046,469 20,186,465 0
11721 Brea Corporate Place........ Brea, CA 1,788,158 41,041,733 0
11781 790 E Colorado Ave.......... Pasadena, CA 3,867,021 15,468,209 0
11791 Tower Seventeen............. Irvine, CA 4,011,677 36,105,751 0
11801 Gateway Oaks IV............. Sacramento, CA 1,091,445 0 0
11811 Noble Corporate Plaza....... San Diego, CA 4,511,165 12,197,775 0
11821 Carlsbad Ranch.............. Carlsbad, CA 3,873,656 0 0
11831 San Mateo Baycenter......... San Mateo, CA 2,464,154 10,422,627 486,426
11841 Treat Towers................ Walnut Creek, CA 1,372,500 4,089,868 0 0
11851 Johnson Ranch Corp Centre... Roseville, CA 1,085,000 5,707,610 13,246,387 0
11861 100 Moffett................. Mountain View, CA 1,140,758 3,084,373 0
11921 East Hills Office Park...... Anaheim, CA 2,166,615 5,857,884 0
11931 Stadium Towers Plaza........ Anaheim, CA 3,909,588 35,185,683 0
<CAPTION>
LAND,
LAND IMP.
AND BUILDINGS AND CONSTRUCTION DEPRECIABLE
LEASEHOLD BUILDING ACCUMULATED AND/OR LIVES
INT. IMPROVEMENTS TOTAL DEPRECIATION ACQUISITION (YEARS)
------------ -------------- -------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
11171 1,569,792 6,328,405 7,898,196 246,270 1996 40
11221
2,028,596 8,357,118 10,385,715 295,343 1996 3-40
11271 2,020,971 8,108,611 10,129,582 236,914 1996 40
11301 1,354,983 3,713,552 5,068,535 139,619 1996 40
11311 9,456,552 24,981,056 34,437,608 679,303 1996 40
11321 743,147 2,998,607 3,741,754 77,994 1996 40
11331
3,796,146 10,181,188 13,977,335 252,462 1996 40
11341 3,899,948 15,365,088 19,265,036 390,028 1996 40
11351 1,404,336 3,932,192 5,336,528 111,929 1996 40
11381 1,467,057 6,070,663 7,537,720 152,682 1997 4-30
11391 1,426,649 5,706,594 7,133,243 130,776 1997 40
11401 5,586,737 23,092,907 28,679,644 926,895 1996 40
11431 882,852 3,531,407 4,414,259 80,928 1997 40
11451 980,334 3,951,604 4,931,937 93,504 1997 40
11471 25,344,479 100,553,058 125,897,537 2,334,536 1997 40
11481 2,905,070 8,152,788 11,057,857 234,719 1997 40
11501 1,309,617 5,248,210 6,557,827 196,715 1996 40
11511 8,181,629 32,699,579 40,881,208 749,396 1997 40
11521 14,789,132 59,210,974 74,000,106 1,235,983 1997 40
11531 7,918,598 31,738,856 39,657,454 665,744 1997 40
11541 4,391,945 11,897,492 16,289,437 226,474 1997 40
11561 2,429,943 8,198,137 10,628,080 136,636 1997 40
11571 5,352,439 21,415,448 26,767,887 401,502 1997 40
11581 8,318,792 33,286,002 41,604,795 624,075 1997 40
11591 2,958,418 8,032,138 10,990,555 134,218 1997 40
11621 4,388,722 11,873,373 16,262,095 198,079 1997 40
11641 5,159,033 13,950,189 19,109,223 203,428 1997 40
11651 1,000,000 0 1,000,000 0 1997 40
11671 5,718,678 0 5,718,678 0 1997 40
11681 2,037,282 5,508,225 7,545,508 68,853 1997 40
11691 5,254,525 14,206,679 19,461,204 147,986 1997 40
11711 5,046,469 20,186,465 25,232,934 168,221 1997 40
11721 1,788,158 41,041,733 42,829,892 427,518 1997 40
11781 3,867,021 15,468,209 19,335,230 128,902 1997 40
11791 4,011,677 36,105,751 40,117,428 225,661 1997 40
11801 1,091,445 0 1,091,445 0 1997 40
11811 4,511,165 12,197,775 16,708,939 101,648 1997 40
11821 3,873,656 0 3,873,656 0 1997 40
11831 2,592,989 10,792,402 13,385,391 3,435,696 1995 3-40
11841 4,089,868 0 4,089,868 0 1997 40
11851 5,707,610 13,246,387 18,953,997 82,790 1997 40
11861 1,140,758 3,084,373 4,225,131 6,426 1997 40
11921 2,166,615 5,857,884 8,024,498 12,935 1997 40
11931 3,909,588 35,185,683 39,095,271 75,179 1997 40
</TABLE>
<PAGE> 58
<TABLE>
<CAPTION>
INITIAL COST TO COMPANY
----------------------------------- ADDITIONS
ENCUMBRANCES LAND AND AND
PROJECT LOCATION AND LIENS(1) LEASEHOLD INTEREST BUILDINGS IMPROVEMENTS
------- -------- ------------ ------------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
11971 Centerpoint Irvine I........ Irvine, CA 1,427,562 3,859,706 0
12031 East Roseville Parkway...... Roseville, CA 1,563,207 0 0
12061 Park Plaza.................. San Diego, CA 2,570,283 6,952,094 0
12071 La Jolla Centre I........... La Jolla, CA 2,956,723 26,610,508 0
12081 Vintage Park Office......... Foster City, CA 539,285 7,138,571 17,842,517 0
12101 Ryan Ranch Office Lot 2..... Monterey, CA 1,486,666 0 0
12111 Douglas Corporate Center.... Roseville, CA 850,036 3,468,131 10,960,024 (560)
12121 San Mateo Baycenter II...... San Mateo, CA 10,967,089 1,235,114 6,991,110 10,994,434
12131 Stadium Towers Land......... Anaheim, CA 3,652,063 0
12141 East Hills Land............. Anaheim, CA 1,720,330 0
12151 Commerce Pointe Land........ Ontario, CA 533,909 3,298,543 0
12161 Port Plaza Land............. W Sacramento, CA 533,030 1,853,178 0
12171 Concord N Commerce Ctr II... Concord, CA 900,110 772 0
12181 11999 San Vicente........... Los Angeles, CA 3,386,706 9,156,651 0
20021 Federal Way Office.......... Fed Way, WA 297,202 765,990 182,405
20041.. Bellevue Gtwy I............. Bellevue, WA 2,681,773 6,064,829 7,284,053
20051 Bellevue Gateway II......... Bellevue, WA 1,201,588 4,859,552 2,596,943
20061 Main Street Office.......... Bellevue, WA 13,081 1,917,015 1,385,821 506,312
20181 North Creek Parkway
Centre...................... Bothell, WA 6,104,971 16,506,048 120,670
20211 Bellefield Office........... Park Bellevue, WA 12,525,504 5,533,331 20,479,015 7,271,167
20241 10700 Building.............. Bellevue, WA 16,256 24,384 4,661,175 0
20281 ABAM Building............... Federal Way, WA 1,331,876 3,601,580 0
20311 Washington Park I & II...... Federal Way, WA 2,116,789 4,032,231 0
20341 Southgate Office Plaza I, II
& III....................... Renton, WA 4,972,175 26,037,186 0
20351 Plaza Center................ Bellevue, WA 8,118,310 72,514,112 0
30091 5550 Macadam Office......... Portland, OR 764,081 3,646,922 256,834
30111 River Forum................. Portland, OR 2,462,767 16,637,177 832,611
30121 Kruse Way................... Portland, OR 0 2,785,451 7,911,320 763,332
30131 4004 S.W. Kruse Way Place Lake Oswego, OR 0 981,486 4,012,304 1,538,304
30191 Riverside Centre............ Portland, OR 9,284,496 40,010
30241 One Pacific Square.......... Portland, OR 3,531,661 31,537,204 0
30261 Kruseway Plaza I & II....... Lake Oswego, OR 4,048,414 10,945,715 0
30271 Kruse Woods................. Lake Oswego, OR 23,364,054 63,160,726 13,303
30281 4800 Meadows Lake........... Oswego, OR 69,674 0 0
40001 Key Financial Tower......... Boise, ID 236,500 2,864,931 5,599,189
------------ ------------ -------------- ------------
Total Office................ $ 77,267,870 $382,880,341 $1,348,876,752 $100,468,373
------------ ------------ -------------- ------------
Grand Totals................ $109,048,510 $654,818,101 $2,013,632,085 $184,621,833
============ ============ ============== ============
<CAPTION>
LAND,
LAND IMP.
AND BUILDINGS AND CONSTRUCTION DEPRECIABLE
LEASEHOLD BUILDING ACCUMULATED AND/OR LIVES
INT. IMPROVEMENTS TOTAL DEPRECIATION ACQUISITION (YEARS)
------------ -------------- -------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
11971 1,427,562 3,859,706 5,287,268 8,041 1997 40
12031 1,563,207 0 1,563,207 0 1997 40
12061 2,570,283 6,952,094 9,522,377 28,967 1997 40
12071 2,956,723 26,610,508 29,567,231 110,877 1997 40
12081 7,138,571 17,842,517 24,981,088 37,491 1997 40
12101 1,486,666 0 1,486,666 0 1997 40
12111 3,468,131 10,959,465 14,427,596 22,832 1997 40
12121 3,410,659 15,822,868 19,233,527 2,933,804 1997 40
12131 3,652,063 0 3,652,063 0 1997 40
12141 1,720,330 0 1,720,330 0 1997 40
12151 3,298,543 0 3,298,543 0 1997 40
12161 1,853,178 0 1,853,178 0 1997 40
12171 900,110 772 900,882 0 1997 40
12181 3,386,706 9,156,651 12,543,357 19,076 1997 40
20021 297,202 948,395 1,245,597 188,209 1989 20-40
20041 4,526,668 11,503,987 16,030,655 3,017,147 1985 2-40
20051 1,867,498 6,901,076 8,768,574 1,624,358 1988 3-40
20061 1,927,586 1,901,029 3,828,615 388,187 1990 2-40
20181
6,120,611 16,644,805 22,765,416 384,077 1997 5-40
20211 6,470,273 27,032,219 33,502,491 1,759,846 1995 3-40
20241 24,384 4,661,175 4,685,559 184,369 1996 40
20281 1,331,876 3,601,580 4,933,456 7,504 1997 40
20311 2,116,789 4,032,231 6,149,021 33,602 1997 40
20341
4,972,175 26,037,186 31,009,361 162,810 1997 40
20351 8,118,310 72,514,112 80,632,421 302,142 1997 40
30091 765,082 3,918,620 4,683,702 861,642 1990 3-40
30111 2,462,767 17,469,788 19,932,555 1,779,854 1994 5-40
30121 2,825,101 8,635,002 11,460,102 747,831 1994 5-40
30131 1,422,662 5,109,432 6,532,093 549,336 1995 3-40
30191 0 9,324,506 9,324,506 194,816 1997 40
30241 3,531,661 31,537,204 35,068,865 66,640 1997 40
30261 4,048,414 10,945,715 14,994,129 22,958 1997 40
30271 23,364,054 63,174,028 86,538,083 132,951 1997 40
30281 69,674 0 69,674 0 1997 40
40001 302,677 8,426,942 8,729,619 3,120,583 1977 5-40
------------ -------------- -------------- ------------
$398,475,111 $1,434,797,800 $1,833,272,912 $ 99,027,769
------------ -------------- -------------- ------------
$694,621,210 $2,159,581,585 $2,854,202,795 $169,050,562
============ ============== ============== ============
</TABLE>
- ---------------
(1) Includes assessment bonds payable
<PAGE> 59
SPIEKER PROPERTIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
A summary of activity for real estate and accumulated depreciation is as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
REAL ESTATE:
Balance at beginning of year......................... $1,315,060 $1,098,871 $ 870,613
Acquisition of properties and limited partners'
interests....................................... 1,526,012 340,298 185,862
Improvements...................................... 127,889 67,537 46,058
Cost of real estate disposed of................... (15,804) (42,206) --
Property held for disposition..................... (6,250) (133,971) --
Disposition of and write-off of fully depreciated
property........................................ (3,196) (15,469) (3,662)
---------- ---------- ----------
Balance at end of year............................... $2,943,711 $1,315,060 $1,098,871
========== ========== ==========
ACCUMULATED DEPRECIATION:
Balance at beginning of year......................... $ 127,701 $ 124,612 $ 99,786
Depreciation expense.............................. 48,536 33,487 28,488
Disposal of property.............................. (3,834) (3,102) --
Property held for disposition..................... (156) (11,827) --
Disposition of and write-off of fully depreciated
property........................................ (3,196) (15,469) (3,662)
---------- ---------- ----------
Balance at end of year............................... $ 169,051 $ 127,701 $ 124,612
========== ========== ==========
</TABLE>
The aggregate cost for federal income tax purposes of real estate as of
December 31, 1997 was $2,711,789.
<PAGE> 60
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SPIEKER PROPERTIES, INC.
(Registrant)
<TABLE>
<S> <C>
Dated: March 25, 1998 /s/ WARREN E. SPIEKER, JR.
-----------------------------------------------------------
Warren E. Spieker, Jr.
Chairman of the Board, Director and Chief Executive Officer
Dated: March 25, 1998 /s/ CRAIG G. VOUGHT
-----------------------------------------------------------
Craig G. Vought
Executive Vice President and Chief Financial Officer
Dated: March 25, 1998 /s/ JOHN K. FRENCH
-----------------------------------------------------------
John K. French
Director, Executive Vice President and Chief Operating
Officer
Dated: March 25, 1998 /s/ ELKE STRUNKA
-----------------------------------------------------------
Elke Strunka
Vice President and Principal Accounting Officer
Dated: March 25, 1998 /s/ DAVID M. PETRONE
-----------------------------------------------------------
David M. Petrone
Director
</TABLE>
<PAGE> 61
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in Menlo Park,
California on the 25th day of March, 1998.
SPIEKER PROPERTIES, INC.
By: /s/ ELKE STRUNKA
------------------------------------
Elke Strunka
Vice President and Principal
Accounting Officer
<PAGE> 62
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ------------
<S> <C> <C>
3.1 Articles of Incorporation of Spieker Properties, Inc.(1)....
3.1A Articles of Amendment of Spieker Properties, Inc.
(incorporated by reference to Exhibit 3.1A to Spieker
Properties, Inc.'s Report on Form 10-K for the year ended
December 31, 1996)..........................................
3.2 Bylaws of Spieker Properties, Inc.(1).......................
3.3 Articles Supplementary of Spieker Properties, Inc. for
Series A Preferred Stock (incorporated by reference to
Exhibit 4.2 to Spieker Properties, Inc.'s Report on Form
10-Q for the quarter ended March 31, 1994)..................
3.4 Articles Supplementary of Spieker Properties, Inc. for Class
B Common Stock (incorporated by reference to Exhibit 4.2 to
Spieker Properties, Inc.'s Report on Form 10-Q for the
quarter ended March 31, 1995)...............................
3.5 Articles Supplementary of Spieker Properties, Inc. for the
Series B Preferred Stock(2).................................
3.6 Articles Supplementary of Spieker Properties, Inc. for the
Class C Common Stock(2).....................................
3.7 Articles Supplementary of Spieker Properties, Inc. for the
Series C Preferred Stock (incorporated by reference to
Exhibit 3.1 to Spieker Properties, Inc.'s Report on Form
10-Q for the quarter ended September 30, 1997)..............
4.1 Agreement pursuant to Item 601(b)(4)(iii)(A) of Regulation
S-K(1)......................................................
4.2 Intentionally omitted.......................................
4.3 Series A Preferred Stock Purchase Agreement, (incorporated
by reference to Exhibit 4.1 to Spieker Properties, Inc.'s
Form 10-Q Report for the quarter ended March 31, 1994)......
4.4 Investor Rights Agreement relating to A Series Preferred
Stock (incorporated by reference to Exhibit 4.3 to Spieker
Properties, Inc.'s Form 10-Q Report for the quarter ended
March 31, 1994).............................................
4.5 Indenture dated as December 6, 1995, among Spieker
Properties, L.P., Spieker Properties, Inc. and State Bank
and Trust, as Trustee(2)....................................
4.6 First Supplemental Indenture relating to the 2000 Notes, the
2000 Note and Guarantee(2)..................................
4.7 Second Supplemental Indenture relating to the 2001 Notes,
2001 Note and Guarantee(2)..................................
4.8 Third Supplemental Indenture relating to the 2002 Notes, the
2002 Note and Guarantee(2)..................................
4.9 Fourth Supplemental Indenture relating to the 2004 Notes and
the 2004 Note(2)............................................
4.10 Class B Common Stock Purchase Agreement (incorporated by
reference to Exhibit 4.1 to Spieker Properties, Inc.'s Form
10-Q Report for the quarter ended March 31, 1994)...........
4.11 Investor's Rights Agreement relating to Class B Common
Stocks (incorporated by reference to Exhibit 4.3 to Spieker
Properties, Inc.'s Form 10-Q Report for the quarter ended
March 31, 1994).............................................
4.12 Class C Common Stock Purchase Agreement(2)..................
4.13 Investor's Rights Agreement relating to Class C Common
Stock(2)....................................................
</TABLE>
<PAGE> 63
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ------------
<S> <C> <C>
4.14 Fifth Supplemental Indenture relating to the Medium Term
Note Program and Forms of Medium Term Notes (incorporated by
reference to Exhibit 4.1 to Spieker Properties, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30,
1996).......................................................
4.15 Sixth Supplemental Indenture relating to the 7 1/8% Notes
Due 2006 (incorporated by reference to Exhibit 4.1 of
Spieker Properties, Inc.'s Current Report on Form 8-K filed
with the Commission on December 19, 1996)...................
4.16 Seventh Supplemental Indenture relating to the 7 7/8% Notes
Due 2016 (incorporated by reference to Exhibit 4.2 of
Spieker Properties, Inc.'s Current Report on Form 8-K filed
with the Commission on December 19, 1996)...................
4.17 Eighth Supplemental Indenture relating to the 7.125% Notes
Due 2009 (incorporated by reference to Exhibit 4.9 of
Spieker Properties, Inc's Registration statement on Form S-3
(File No. 333-35997)).......................................
4.18 Ninth Supplemental Indenture relating to the 7.50%
Debentures Due 2027 (incorporated by reference to Exhibit
4.1 Spieker Properties, Inc.'s Report on Form 10-Q for the
quarter ended September 30, 1997)...........................
4.19 Tenth Supplemental Indenture relating to the 7.35%
Debentures Due 2017 (incorporated by reference to Exhibit
4.1 Spieker Properties, Inc.'s Current Report on Form 8-K
dated January 30, 1998).....................................
4.20 Eleventh Supplemental Indenture relating to the 6.75% Notes
Due 2008 (incorporated by reference to Exhibit 4.2 Spieker
Properties, Inc.'s Current Report on Form 8-K dated January
30, 1998)...................................................
4.21 Twelfth Supplemental Indenture relating to the 6.875% Notes
Due 2006 (incorporated by reference to Exhibit 4.3 Spieker
Properties, Inc.'s Current Report on Form 8-K dated January
30, 1998)...................................................
4.22 Thirteenth Supplemental Indenture relating to the 7% Notes
Due 2007 (incorporated by reference to Exhibit 4.1 Spieker
Properties, Inc.'s Current Report on Form 8-K dated January
30, 1998)...................................................
10.1 Second Amended and Restated Agreement of Limited Partnership
of Spieker Properties, L.P. ................................
10.2 First Amendment to Second Amended and Restated Agreement of
Limited Partnership of Spieker Properties, L.P. ............
10.3 Credit Agreement among Spieker Properties, L.P., as
borrower, Wells Fargo Bank, as Agent, Morgan Guaranty Trust
Company of New York, as Documentation Agent, and the lenders
named therein, dated as of August 8, 1997, and Loan Notes
pursuant to such Credit Agreement (incorporated by
referenced to Exhibit 10.16 to Spieker Properties, Inc.'s
Current Report on Form 8-K dated September 22, 1997)).......
10.4* Form of Employment Agreement between the Company and each of
Warren E. Spieker, Jr., John K. French, Bruce E. Hosford,
and Dennis E. Singleton(1)..................................
10.5* Form of Spieker Merit Plan(1)...............................
10.6* Amended and Restated Spieker Properties, Inc. 1993 Stock
Incentive Plan (incorporated by reference to Exhibit 4.3 to
Spieker Properties, Inc.'s Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996)............................
</TABLE>
<PAGE> 64
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ------------
<S> <C> <C>
10.7 Form of Indemnification Agreement between Spieker
Properties, Inc. and its directors and officers
(incorporated by reference to Exhibit 10.21 to Spieker
Properties, Inc.'s Registration Statement on Form S-11 (File
No. 33-67906))..............................................
10.8 Form of Land Holding Agreement among Spieker Properties,
Inc., Spieker Northwest, Inc., Spieker Properties, L.P. and
owner of the applicable Land Holding (incorporated by
reference to Exhibit 10.22 to Spieker Properties, Inc.'s
Registration Statement on Form S-11 (File No. 33-67906))....
10.9* Form of Employee Stock Incentive Pool (incorporated by
reference to Exhibit 10.35 to Spieker Properties, Inc.'s
Registration Statement on Form S-11 (File No. 33-67906))....
10.10 Form of Excluded Property Agreement between the Operating
Partnership and certain of the Senior Officers (incorporated
by reference to Exhibit 10.36 to Spieker Properties, Inc.'s
Registration Statement on Form S-11 (File No. 33-67906))....
10.11* Amended and Restated Spicker Properties, Inc. 1993
Directors' Stock Option Plan (incorporated by reference to
Exhibit 4.2 top Spicker Properties, Inc.'s Quarterly Report
on Form 10-Q for the quarter ended June 30, 1996)...........
12.1 Schedule of Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Dividends.......................
21.1 List of Subsidiaries of Spicker Properties, Inc. ...........
23.1 Consent of Independent Public Accountants...................
</TABLE>
- ---------------
* Indicate management contract or compensatory plan or arrangement.
(1) Incorporated by reference to the identically numbered exhibit to the
Company's Registration Statement on form S-11 (Registration No. 33-67906),
which became effective on November 10, 1993.
(2) Incorporated by reference to the identically numbered exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
<PAGE> 1
EXHIBIT 10.1
SECOND AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
SPIEKER PROPERTIES, L.P.
-----------------------------
Dated as October 13, 1997
-----------------------------
IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION, THE PARTNERSHIP
INTERESTS BEING OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. ACCORDINGLY, NO PARTNERSHIP INTEREST MAY BE RESOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS SUBSEQUENTLY
REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS, OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE, AND UNLESS
THE OTHER TRANSFER RESTRICTIONS CONTAINED HEREIN HAVE BEEN SATISFIED.
INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE
TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE
SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES
COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY
OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I Definitions, Etc...................................................1
1.1 Definitions..............................................................1
1.2 Exhibit, Etc............................................................15
ARTICLE II Organization......................................................15
2.1 Formation...............................................................15
2.2 Name....................................................................15
2.3 Character of the Business...............................................15
2.4 Location of the Principal Place of Business.............................16
2.5 Agent for Service of Process............................................16
2.6 Certificates of Ownership...............................................16
ARTICLE III Term..............................................................16
3.1 Commencement............................................................16
3.2 Dissolution.............................................................17
ARTICLE IV Contributions to Capital..........................................17
4.1 General Partner Capital Contribution....................................17
4.2 Limited Partner Capital Contributions...................................17
4.3 Issuances of Additional Partnership Units...............................17
4.4 Contribution of Proceeds of Issuance of Shares of Common Stock..........19
4.5 Options.................................................................19
4.6 Land Holding Agreements.................................................19
4.7 Admission of Additional Limited Partners................................20
4.8 No Third Party Beneficiary..............................................20
4.9 No Interest; No Return..................................................21
4.10 Adjustment Upon Conversion of Preferred Stock...........................21
4.11 Guaranty Agreement......................................................21
ARTICLE V Partners..........................................................21
5.1 Partners................................................................21
5.2 Designation of Additional Units.........................................21
ARTICLE VI Allocations and Other Tax and Accounting Matters..................22
6.1 Allocations.............................................................22
6.2 Distributions...........................................................22
6.3 Books of Account........................................................23
6.4 Audits..................................................................24
6.5 Tax Elections and Returns...............................................24
6.6 Tax Matters Partner.....................................................24
6.7 Section 6227(a) Adjustments.............................................24
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE VII Rights, Duties and Restrictions of the General Partner............25
7.1 Expenditures by Partnership.............................................25
7.2 Powers and Duties of General Partner....................................25
7.3 Consent of Limited Partners.............................................28
7.4 Actions with Respect to Certain Documents...............................28
7.5 General Partner Participation...........................................28
7.6 Proscriptions...........................................................28
7.7 Additional Limited Partners.............................................29
7.8 Title Holder............................................................29
7.9 Compensation of the General Partner.....................................29
7.10 Waiver and Indemnification..............................................29
7.11 Operation in Accordance with REIT Requirements..........................30
ARTICLE VIII Dissolution, Liquidation and Winding-Up...........................30
8.1 Accounting..............................................................30
8.2 Distribution on Dissolution.............................................30
8.3 Timing Requirements.....................................................31
8.4 Sale of Partnership Assets..............................................31
8.5 Distributions in Kind...................................................31
8.6 Documentation of Liquidation............................................31
8.7 Liability of the Liquidating Trustee....................................31
ARTICLE IX Transfer of Partnership Interests.................................32
9.1 General Partner Transfer................................................32
9.2 Transfers by Limited Partners...........................................32
9.3 Restrictions on Transfer................................................33
ARTICLE X Rights and Obligations of the Limited Partners....................34
10.1 No Participation in Management..........................................34
10.2 Bankruptcy of a Limited Partner and Certain Other Events................34
10.3 No Withdrawal...........................................................35
10.4 Duties and Conflicts....................................................35
10.5 Acquisition Projects....................................................35
10.6 Development Projects....................................................35
10.7 Management Activities...................................................36
10.8 Acquisition/Development Projects; Management Activities
-- Further Assurance...................................................36
10.9 Conversion Upon Death...................................................36
10.10 Limited Liability.......................................................37
10.11 Right of Offset.........................................................37
ARTICLE XI Rights............................................................37
</TABLE>
-ii-
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
11.1 Rights..................................................................37
11.2 Terms of Rights.........................................................38
ARTICLE XII Arbitration of Disputes...........................................38
12.1 Arbitration.............................................................38
12.2 Procedures..............................................................38
12.3 Binding Character.......................................................39
12.4 Exclusivity.............................................................39
12.5 No Alteration of Agreement..............................................40
12.6 Acknowledgment..........................................................40
ARTICLE XIII General Provisions................................................41
13.1 Notices.................................................................41
13.2 Successors..............................................................41
13.3 Effect and Interpretation...............................................41
13.4 Counterparts............................................................41
13.5 Partners Not Agents.....................................................41
13.6 Entire Understanding; Etc...............................................41
13.7 Amendments..............................................................42
13.8 Severability............................................................43
13.9 Trust Provision.........................................................43
13.10 Pronouns and Headings...................................................43
13.11 Assurances..............................................................43
13.12 Tax Consequences........................................................43
13.13 Securities Representations..............................................43
13.14 Merger Waiver...........................................................44
ARTICLE XIV POWER OF ATTORNEY.................................................45
14.1 Power of Attorney.......................................................45
14.2 Duration of Power.......................................................46
</TABLE>
-iii-
<PAGE> 5
TABLE OF CONTENTS
(CONTINUED)
EXHIBITS AND SCHEDULES
Exhibit A - Partnership Units
Exhibit B - Allocations
Exhibit C - Rights Terms
Exhibit D - Land Holdings
Exhibit E - Excluded Properties
Exhibit F - Partner Addresses
Schedule 1 - Partners Possessing Rights
Schedule 2 - Exercise Notice
Schedule 3 - Election Notice
-iv-
<PAGE> 6
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SPIEKER PROPERTIES, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP is made and entered into as of the 13th day of October, 1997, by and
among Spieker Properties, Inc., a Maryland corporation, and those certain
Persons identified on Exhibit A attached hereto as a Limited Partner.
W I T N E S S E T H:
WHEREAS, the Persons set forth on Exhibit A attached hereto are the
partners of Spieker Properties, L.P., a California limited partnership, which
partnership was formed pursuant to that certain Agreement of Limited Partnership
of Spieker Properties, L.P., dated as of October 15, 1993, which Agreement was
amended by amendments dated as of November 12, 1993, December 31, 1993, May 5,
1994, May 25, 1994, and June 20, 1994 (the "Original Agreement"), which Original
Agreement was amended and restated in its entirety pursuant to the terms of that
certain First Amended and Restated Agreement of Limited Partnership of Spieker
Properties, L.P., which Agreement has been amended by amendments dated as of
February 28, 1995, March 31, 1995, May 11, 1995, December 5, 1995, December 11,
1995, March 6, 1996, March 20, 1996, January 24, 1997 and October 10, 1997 (the
"First Restated Agreement"); and
WHEREAS, the undersigned Partners desire to amend the First Restated
Agreement in its entirety as set forth in this Agreement, pursuant to and as
permitted by Section 15.7 of the First Restated Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the
undersigned Partners, hereby legally binding the Partnership, hereby agree that
the First Restated Agreement shall be amended and restated in its entirety as
follows:
ARTICLE I
DEFINITIONS, ETC.
1.1 DEFINITIONS. Except as otherwise expressly provided, the following
terms and phrases shall have the meanings set forth below:
"Accountants" shall mean the firm or firms of independent certified
public accountants selected by the General Partner on behalf of the Partnership
to audit the books and records of the Partnership and to prepare statements and
reports in connection therewith.
"Acquisition Cost" shall mean (i) in the case of Contributed Property
acquired by the General Partner in exchange for shares of Common Stock, the
Current Per Share Market Price as
1
<PAGE> 7
of the closing date on which the General Partner acquired such Contributed
Property multiplied by the number of shares of Common Stock issued in the
acquisition, or (ii) in the case of Contributed Property acquired by the General
Partner for consideration other than Common Stock, the amount of such
consideration plus, in either case, any costs and expenses incurred by the
General Partner in connection with such acquisition or contribution; provided,
however, that in the event the Acquisition Cost of Contributed Property is
financed by any borrowings by the General Partner, the Partnership shall assume
any such obligations of the General Partner concurrently with the contribution
of such property to the Partnership or, if impossible, shall obligate itself to
the General Partner in an amount and on terms equal to such obligations, and the
Acquisition Cost shall be reduced by the amount of such obligations.
"Acquisition Project" shall mean any real property on which retail,
industrial, office, research and development, or warehouse and distribution uses
are conducted, including construction and improvement activities undertaken with
respect thereto and off-site improvements, on-site improvements, structures,
buildings and/or related parking and other facilities; provided, however, that
the term "Acquisition Project" shall not include the Development Projects, the
Excluded Properties and the Land Holdings.
"Act" shall mean the California Revised Limited Partnership Act,
California Corporations Code Sections 15611-15723, as the same may hereafter be
amended from time to time.
"Additional Limited Partner" shall have the meaning set forth in
Section 4.3(a) hereof.
"Additional Units" shall have the meaning set forth in Section 4.3(a)
hereof.
"Adjusted Capital Account Deficit" shall mean, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of any relevant fiscal year and after giving effect to the following
adjustments:
(a) credit to such Capital Account any amounts which such Partner is
obligated or treated as obligated to restore with respect to any deficit balance
in such Capital Account pursuant to Section 1.704-1(b)(2)(ii)(c) of the
Regulations, or is deemed to be obligated to restore with respect to any deficit
balance pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and
1.704-2(i)(5) of the Regulations; and
(b) debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the requirements of the alternate test for economic effect contained
in Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith.
"Administrative Expenses" shall mean (i) all administrative and
operating costs and expenses incurred by the Partnership and SWIP or any other
Investment Entity, (ii) those
2
<PAGE> 8
administrative costs and expenses of the General Partner, including salaries
paid to officers of the General Partner, and accounting and legal expenses
undertaken by the General Partner on behalf or for the benefit of the
Partnership, and (iii) to the extent not included in clause (ii) above, REIT
Expenses, provided that Administrative Expenses shall not include Initial
Offering Expenses or costs and expenses incurred subsequent to the Completion of
the Offering relating to any offer or registration of securities by the General
Partner and all statements, reports, fees and expenses incidental thereto,
including underwriting discounts and selling commissions applicable to any such
offer of securities.
"Affiliate" shall mean, with respect to any Partner (or as to any
other person the affiliates of whom are relevant for purposes of any of the
provisions of this Agreement), (i) any member of the Immediate Family of such
Partner; (ii) any trustee or beneficiary of a Partner; (iii) any legal
representative, successor, or assignee of any Person referred to in the
preceding clauses (i) and (ii); (iv) any trustee for the benefit of any Person
referred to in the preceding clauses (i) through (iii); or (v) any Controlled
Entity with respect to any Person referred to in the preceding clauses (i)
through (iv).
"Agreement" shall mean this Second Amended and Restated Agreement of
Limited Partnership, as originally executed and as hereafter amended, modified,
supplemented or restated from time to time, as the context requires.
"Arbitration Rules" shall have the meaning set forth in Section 12.1
hereof.
"Assignee" shall mean a Person to whom one or more Partnership Units
have been transferred, but who has not become a Substituted Limited Partner.
"Bankruptcy" shall mean, with respect to any Partner, (i) the
commencement by such Partner of any proceeding seeking relief under any
provision or chapter of the federal Bankruptcy Code or any other federal or
state law relating to insolvency, bankruptcy or reorganization, (ii) an
adjudication that such Partner is insolvent or bankrupt; (iii) the entry of an
order for relief under the federal Bankruptcy Code with respect to such Partner,
(iv) the filing of any such petition or the commencement of any such case or
proceeding against such Partner, unless such petition and the case or proceeding
initiated thereby are dismissed within ninety (90) days from the date of such
filing, (v) the filing of an answer by such Partner admitting the allegations of
any such petition, (vi) the appointment of a trustee, receiver or custodian for
all or substantially all of the assets of such Partner unless such appointment
is vacated or dismissed within ninety (90) days from the date of such
appointment but not less than five (5) days before the proposed sale of any
assets of such Partner, (vii) the insolvency of such Partner or the execution by
such Partner of a general assignment for the benefit of creditors, (viii) the
convening by such Partner of a meeting of its creditors, or any class thereof,
for purposes of effecting a moratorium upon or extension or composition of its
debts, (ix) the failure of such Partner to pay its debts as they mature, (x) the
levy, attachment, execution or other seizure of substantially all of the assets
of such Partner where such seizure is not discharged within thirty (30) days
thereafter, or (xi) the admission by such Partner in writing of its inability to
pay its debts as they mature or that it is generally not paying its debts as
they become due.
3
<PAGE> 9
"Beneficially Own" shall have the meaning set forth in attached
Exhibit C.
"Capital Account" shall mean, with respect to any Partner, the
separate "book" account which the Partnership shall establish and maintain for
such Partner in accordance with Section 704(b) of the Code and Section
1.704-1(b)(2)(iv) of the Regulations and such other provisions of Section
1.704-1(b) of the Regulations that must be complied with in order for the
Capital Accounts to be determined in accordance with the provisions of said
Regulations. In furtherance of the foregoing, the Capital Accounts shall be
maintained in compliance with Section 1.704-1(b)(2)(iv) of the Regulations; and
the provisions hereof shall be interpreted and applied in a manner consistent
therewith. In the event that a Partnership Interest is transferred in accordance
with the terms of this Agreement, the Capital Account, at the time of the
transfer, of the transferor attributable to the transferred interest shall carry
over to the transferee.
"Capital Contribution" shall mean, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any property other than
money contributed to the Partnership with respect to the Partnership Interest
held by such Partner (net of liabilities to which such property is subject).
"Capital Stock" means Common Stock, Class B Common Stock, Class C
Common Stock, Series A Preferred Stock, Series B Cumulative Redeemable Preferred
Stock, Series C Cumulative Redeemable Preferred Stock and other classes and
series of capital stock issued from time to time by the Company.
"Cash Amount" shall mean the amount of cash equal to the product of
the Closing Price (calculated, in the case of the exercise of Rights, on the
date on which the Exercise Notice is delivered to the General Partner)
multiplied by the Common Stock Amount.
"Certificate" shall mean the Certificate of Limited Partnership
establishing the Partnership, as filed with the office of the California
Secretary of State, as it may be amended from time to time in accordance with
the terms of this Agreement and the Act.
"Class B Common Stock" shall mean the Class B Common Stock (par value
$.0001 per share) of the General Partner, as described in the Common B Articles
Supplementary.
"Class C Common Stock" shall mean the Class C Common Stock (par value
$.0001 per share) of the General Partner, as described in the Common C Articles
Supplementary.
"Closing Price" on any date shall mean the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Common
Stock is not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or, if the Common Stock is not
listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities
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<PAGE> 10
Dealers, Inc. Automated Quotations System or, if such system is no longer in
use, the principal other automated quotations system that may then be in use or,
if the Common Stock is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Stock as such person is selected from time to time by the
Board of Directors of the General Partner. In the event that the Common Stock
Amount includes additional rights that a holder of shares of Common Stock would
be entitled to receive and if the value of such additional rights is not
included in the Closing Price, then the value of such additional rights shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers in its reasonable judgment
appropriate, and such amount shall be added to the Closing Price.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common B Articles Supplementary" shall mean those certain Articles
Supplementary executed by the General Partner and filed with the Department on
May 10, 1995, and pursuant to which the Class B Common Stock was issued.
"Common B Interest" shall mean the interest in the Partnership
received by the General Partner in exchange for the additional Capital
Contribution made by the General Partner in connection with the issuance of the
Class B Common Stock, which Common B Interest includes the right to receive
certain additional rights as set forth in this Agreement.
"Common C Articles Supplementary" shall mean those certain Articles
Supplementary executed by the General Partner and filed with the Department on
March 1, 1996, and pursuant to which the Class C Common Stock was issued.
"Common C Interest" shall mean the interest in the Partnership
received by the General Partner in exchange for the additional Capital
Contribution made by the General Partner in connection with the issuance of the
Class C Common Stock, which Common C Interest includes the right to receive
certain additional rights as set forth in this Agreement.
"Common Stock" shall mean the shares of the common stock, par value
$.0001 per share, of the General Partner.
"Common Stock Amount" shall mean the number of shares of Common Stock
equal to the product of the number of Partnership Units offered for conversion
by an Exercising Partner, multiplied by the Conversion Factor; provided,
however, that in the event the General Partner issues to all holders of Common
Stock rights, options, warrants or convertible or exchangeable securities
entitling the shareholders to subscribe for or purchase additional Common Stock,
or any other securities or property of the General Partner, the value of which
is not included in the first sentence of the definition of Closing Price of the
shares of Common Stock (collectively, "additional rights"), then the Common
Stock Amount shall also include such additional rights that a holder of that
number of shares of Common Stock would be entitled to receive.
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<PAGE> 11
"Completion of the Offering" shall mean the closing of the sale of
Common Stock in the initial public offering of the General Partner, which
occurred on November 18, 1993.
"Consent of the Limited Partners" means the written consent of a
Majority-In-Interest of the Limited Partners, which consent shall be obtained
prior to the taking of any action for which it is required by this Agreement and
may be given or withheld by a Majority-In-Interest of the Limited Partners,
unless otherwise expressly provided herein, in their sole and absolute
discretion.
"Contributed Property" shall have the meaning set forth in the
definition of "Gross Asset Value."
"Contribution Date" shall have the meaning set forth in Section
4.3(a) hereof.
"Control" shall mean the ability, whether by the direct or indirect
ownership of shares or other equity interests, by contract or otherwise, to
elect a majority of the directors of a corporation, to select the managing
partner of a partnership, or otherwise to select, or have the power to remove
and then select, a majority of those persons exercising governing authority over
an Entity. In the case of a limited partnership, the sole general partner, all
of the general partners to the extent each has equal management control and
authority, or the managing general partner or managing general partners thereof
shall be deemed to have control of such partnership and, in the case of a trust,
any trustee thereof or any Person having the right to select any such trustee
shall be deemed to have control of such trust.
"Controlled Entity" shall mean, with respect to any Limited Partner
or Person, any Entity which directly or indirectly Controls, is Controlled by,
or is under common Control with, such Limited Partner or Person.
"Conversion Component" shall have the meaning set forth in attached
Exhibit C.
"Conversion Factor" shall mean 1.0, provided that in the event that
the General Partner (i) pays a dividend on its outstanding shares of Common
Stock in shares of Common Stock or makes a distribution to all holders of its
outstanding Common Stock in shares of Common Stock, (ii) subdivides its
outstanding shares of Common Stock, or (iii) combines its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of shares of Common Stock issued and
outstanding on the record date for such dividend, distribution, subdivision or
combination (assuming for such purposes that such dividend, distribution,
subdivision or combination occurred as of such time), and the denominator of
which shall be the actual number of shares of Common Stock (determined without
the above assumption) issued and outstanding on the record date for such
dividend, distribution, subdivision or combination. Any adjustment to the
Conversion Factor shall become effective immediately after the record date for
such event in the case of a dividend or distribution or the effective date in
the case of a subdivision or combination.
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"Current Per Share Market Price" on any date shall mean the average
of the Closing Price for the five consecutive Trading Days ending on such date.
"Demand Notice" shall have the meaning set forth in Section 12.2
hereof.
"Department" shall mean the Maryland State Department of Assessments
and Taxation.
"Depreciation" shall mean, with respect to any asset of the
Partnership for any fiscal year or other period, the depreciation, depletion or
amortization, as the case may be, allowed or allowable for Federal income tax
purposes in respect of such asset for such fiscal year or other period;
provided, however, that if there is a difference between the Gross Asset Value
and the adjusted tax basis of such asset, Depreciation shall mean "book
depreciation, depletion or amortization" as determined under Section
1.704-1(b)(2)(iv)(g)(3) of the Regulations.
"Development Project" shall mean any vacant land intended for
development for retail, industrial, office, research and development, or
warehouse and distribution uses; provided, however, the term Development Project
shall not include the Acquisition Projects, the Excluded Properties and the Land
Holdings, except that so long as any Limited Partner that is a Senior Officer of
the General Partner owns a beneficial interest in a Land Holding, the term
Development Project shall include such Land Holding.
"Entity" shall mean any general partnership, limited partnership,
corporation, limited liability company, joint venture, trust, business trust,
cooperative, association or other business association or entity.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time (or any corresponding provisions of
succeeding laws).
"Exercise Notice" shall have the meaning set forth in attached
Exhibit C.
"Excluded Properties" shall mean those certain real properties listed
on attached Exhibit E.
"Existing Property Manager" shall mean Spieker Northwest, Inc., a
California corporation.
"General Partner" shall mean Spieker Properties, Inc., a Maryland
corporation, its duly admitted successors and assigns and any other Person who
is a general partner of the Partnership at the time of reference thereto. As of
the date of this Agreement, Spieker Properties, Inc. is the only General Partner
of the Partnership.
"Gross Asset Value" shall mean, with respect to any asset of the
Partnership, such asset's adjusted basis for Federal income tax purposes, except
as follows:
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<PAGE> 13
(a) the initial Gross Asset Value of (i) the assets contributed by
each Limited Partner to the Partnership prior to the date hereof is the gross
fair market value of such contributed assets as indicated in the books and
records of the Partnership as of the date hereof and (ii) in the case of any
other asset hereafter contributed by a Partner, other than money ("Contributed
Property"), the gross fair market value of such Contributed Property as
reasonably determined by the General Partner using such reasonable method of
valuation as the General Partner may adopt; provided, however, that the gross
fair market value of any Contributed Property contributed by the General Partner
shall be the Acquisition Cost of such Contributed Property;
(b) if the General Partner reasonably determines that an adjustment
is necessary or appropriate to reflect the relative economic interests of the
Partners, the Gross Asset Values of all Partnership assets shall be adjusted to
equal their respective gross fair market values, as reasonably determined by the
General Partner, as of the following times:
(i) a Capital Contribution (other than a de minimis Capital
Contribution) to the Partnership by a new or existing Limited Partner as
consideration for Partnership Units;
(ii) the distribution by the Partnership to a Partner of more
than a de minimis amount of Partnership property as consideration for the
redemption of Partnership Units; and
(iii) the liquidation of the Partnership within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Regulations;
(c) the Gross Asset Values of Partnership assets distributed to any
Partner shall be the gross fair market values of such assets (taking Section
7701(g) of the Code into account) as reasonably determined by the General
Partner as of the date of distribution; and
(d) the Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Section 734(b) or 743(b) of the Code, but only to the extent that
such adjustments are taken into account in determining Capital Accounts pursuant
to Section 1.704-1(b)(2)(iv)(m) of the Regulations (see attached Exhibit B);
provided, however, that Gross Asset Values shall not be adjusted pursuant to
this paragraph to the extent that the General Partner reasonably determines that
an adjustment pursuant to paragraph (b) above is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this paragraph (d).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into account with respect to the Partnership's assets for purposes of computing
Net Income and Net Loss. Any adjustment to the Gross Asset Values of Partnership
property shall require an adjustment to the Partners' Capital Accounts; as for
the manner in which such adjustments are allocated to the Capital Accounts, see
paragraph (c) of the definition of Net Income and Net Loss in the case of
adjustment by Depreciation, and paragraph (d) of said definition in all other
cases.
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"Guaranty Agreement" shall mean that certain Guaranty Agreement dated
as of even date herewith, by and among the Partnership, the General Partner and
certain of the Limited Partners, as such may be amended, supplemented, modified
or restated from time to time.
"Hart-Scott Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Immediate Family" shall mean, with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews, nieces,
brothers, sisters, brothers-in-law, sisters-in-law and children-in-law.
"Initial Offering Expenses" shall mean (i) costs and expenses
incurred prior to, at or substantially concurrent with the Completion of the
Offering relating to the formation of the General Partner, including taxes, fees
and assessments associated therewith, and (ii) costs and expenses incurred prior
to, at or substantially concurrent with the Completion of the Offering relating
to any offer or registration of securities by the General Partner and all
statements, reports, fees and expenses incidental thereto, including
underwriting discounts and selling commissions applicable to any such offer of
securities.
"Investment Entity" shall have the meaning set forth in Section 7.5
hereof.
"Land Holding Agreements" means those certain Land Holding Agreements
dated as of November 18, 1993, by and among the Partnership, the General
Partner, the Existing Property Manager, and certain Persons that are Affiliates
of certain of the Limited Partners, relating to the Land Holdings.
"Land Holdings" shall mean those certain real properties listed on
attached Exhibit D (or the ownership interest therein).
"Lien" shall mean any liens, security interests, mortgages, deeds of
trust, charges, claims, encumbrances, pledges, options, rights of first offer or
first refusal and any other rights or interests of others of any kind or nature,
actual or contingent, or other similar encumbrances of any nature whatsoever.
"Limited Partners" shall mean those Persons listed under the heading
"Limited Partners" on Exhibit A hereto in their respective capacities as limited
partners of the Partnership, their permitted successors or assigns as a limited
partner hereof, or any Person who, at the time of reference thereto, is a
limited partner of the Partnership.
"Liquidating Trustee" shall mean such Person as is selected as the
Liquidating Trustee hereunder by the General Partner, which Person may include
an Affiliate of the General Partner, provided such Liquidating Trustee agrees in
writing to be bound by the terms of this Agreement. The Liquidating Trustee
shall be empowered to give and receive notices, reports and payments in
connection with the dissolution, liquidation and/or winding-up of the
Partnership and shall hold and exercise such other rights and powers as are
necessary or required
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<PAGE> 15
to permit all parties to deal with the Liquidating Trustee in connection with
the dissolution, liquidation and/or winding-up of the Partnership.
"Majority-In-Interest of the Limited Partners" shall mean Limited
Partner(s) who hold in the aggregate more than fifty percent (50%) of the
Percentage Interests then allocable to and held by the Limited Partners, as a
class.
"Merit Plan" shall mean that certain Agreement and Merit Plan of
Spieker Properties, L.P. Limited Partners entered into as of November 18, 1993
by certain of the Limited Partners, as such may be amended from time to time.
"Minimum Gain Attributable to Partner Nonrecourse Debt" shall mean
"partner nonrecourse debt minimum gain" as determined in accordance with
Regulation Section 1.704-2(i)(2).
"Net Financing Proceeds" shall mean the cash proceeds received by the
Partnership in connection with any borrowing or refinancing of borrowing by or
on behalf of the Partnership (whether or not secured), after deduction of all
costs and expenses incurred by the Partnership in connection with such
borrowing, and after deduction of that portion of such proceeds used to repay
any other indebtedness of the Partnership, or any interest or premium thereon.
"Net Income or Net Loss" shall mean, for each fiscal year or other
applicable period, an amount equal to the Partnership's net income or loss for
such year or period as determined for federal income tax purposes by the
Accountants, determined in accordance with Section 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a) of the Code shall be included in taxable
income or loss), with the following adjustments: (a) by including as an item of
gross income any tax-exempt income received by the Partnership; (b) by treating
as a deductible expense any expenditure of the Partnership described in Section
705(a)(2)(B) of the Code (including amounts paid or incurred to organize the
Partnership (unless an election is made pursuant to Code Section 709(b)) or to
promote the sale of interests in the Partnership and by treating deductions for
any losses incurred in connection with the sale or exchange of Partnership
property disallowed pursuant to Section 267(a)(1) or Section 707(b) of the Code
as expenditures described in Section 705(a)(2)(B) of the Code); (c) in lieu of
depreciation, depletion, amortization, and other recovery deductions taken into
account in computing total income or loss, there shall be taken into account
Depreciation; (d) gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for Federal income tax
purposes shall be computed by reference to the Gross Asset Value of such
property rather than its adjusted tax basis; and (e) in the event of an
adjustment of the Gross Asset Value of any Partnership asset which requires that
the Capital Accounts of the Partnership be adjusted pursuant to Regulation
Section 1.704-1(b)(2)(v)(e), (f) and (m), the amount of such adjustment is to
be taken into account as additional Net Income or Net Loss pursuant to attached
Exhibit E.
"Net Operating Cash Flow" shall mean, with respect to any fiscal
period of the Partnership, the excess, if any, of "Receipts" over
"Expenditures." For purposes hereof, the term "Receipts" means the sum of all
cash receipts of the Partnership from all sources for such period, including Net
Sale Proceeds and Net Financing Proceeds but excluding Capital Contributions,
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and any amounts held as reserves as of the last day of such period which the
General Partner reasonably deems to be in excess of necessary reserves as
determined below. The term "Expenditures" means the sum of (a) all cash expenses
of the Partnership for such period, (b) the amount of all payments of principal
and interest on account of any indebtedness of the Partnership including
payments of principal and interest on account of General Partner Loans, or
amounts due on such indebtedness during such period, and (c) such additional
cash reserves as of the last day of such period as the General Partner deems
necessary for any capital or operating expenditure permitted hereunder.
"Net Sale Proceeds" means the cash proceeds received by the
Partnership in connection with a sale of any asset by or on behalf of the
Partnership after deduction of any costs or expenses incurred by the
Partnership, or payable specifically out of the proceeds of such sale
(including, without limitation, any repayment of any indebtedness required to be
repaid as a result of such sale or which the General Partner elects to repay out
of the proceeds of such sale, together with accrued interest and premium, if
any, thereon and any sales commissions or other costs and expenses due and
payable to any Person in connection with a sale, including to a Partner or its
Affiliates).
"New Securities" shall have the meaning set forth in Section 4.3(c).
"Nonrecourse Deductions" shall have the meaning set forth in Sections
1.704-2(b)(1) and (c) of the Regulations.
"Nonrecourse Liabilities" shall have the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Offered Interests" shall have the meaning set forth in attached
Exhibit C.
"Option" means an option to purchase Common Stock granted under the
Stock Incentive Plan.
"Ownership Limit" shall have the meaning set forth in attached
Exhibit C.
"Partner Nonrecourse Deductions" shall have the meaning set forth in
Section 1.704-2(i)(2) of the Regulations.
"Partners" shall mean the General Partner and the Limited Partners,
their duly admitted successors or assigns or any Person who is a partner of the
Partnership at the time of reference thereto.
"Partnership" shall mean the limited partnership formed pursuant to
the Original Agreement and hereby constituted, as such limited partnership may
from time to time be constituted.
"Partnership Interest" shall mean the ownership interest of a Partner
in the Partnership from time to time, including each Partner's Percentage
Interest and such Partner's Capital Account. Wherever in this Agreement
reference is made to a particular Partner's Partnership
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<PAGE> 17
Interest, it shall be deemed to refer to such Partner's Percentage Interest and
shall include the proportionate amount of such Partner's other interests in the
Partnership which are attributable to or based upon the Partner's Partnership
Interest. A Partnership Interest may be expressed as a number of Partnership
Units.
"Partnership Minimum Gain" shall have the meaning set forth in
Section 1.704-2(b)(2) of the Regulations.
"Partnership Unit" shall mean a fractional undivided share of the
Partnership Interests of all Partners issued pursuant hereto. As of the date of
this Agreement, there shall be considered to be ___________ Partnership Units
validly issued and outstanding. The allocation of Partnership Units to each
Partner as of the date hereof is as set forth opposite its name on the attached
Exhibit A.
"Percentage Interest" shall mean, with respect to any Partner, the
undivided percentage ownership interest of such Partner in the Partnership, as
determined by dividing the number of Partnership Units owned by such Partner by
the total number of Partnership Units then outstanding.
"Person" shall mean any individual or Entity.
"Property" or "Properties" shall mean any real property in which the
Partnership, directly or indirectly, acquires ownership of a fee, mortgage or
leasehold interest.
"Qualified Individual" shall have the meaning set forth in Section
12.2 hereof.
"Regulations" shall mean the final, temporary or proposed income tax
regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"Regulatory Allocations" shall have the meaning set forth in attached
Exhibit B.
"Reimbursement Agreement" shall have the meaning set forth in the
Guaranty Agreement.
"REIT" shall mean a real estate investment trust as defined in
Section 856 of the Code.
"REIT Expenses" shall mean (i) costs and expenses incurred subsequent
to the Completion of the Offering relating to the formation and continuity of
existence of the General Partner and its subsidiaries (which subsidiaries shall,
for purposes of this definition, be included within the definition of General
Partner), including taxes, fees and assessments associated therewith, and any
and all costs, expenses or fees payable to any director or trustee of the
General Partner or such subsidiaries, (ii) costs and expenses associated with
the preparation and filing of any periodic reports by the General Partner under
federal, state or local laws or regulations, including filings with the SEC,
(iii) costs and expenses associated with compliance by the General Partner with
laws, rules and regulations promulgated by any regulatory body,
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<PAGE> 18
including the SEC, and (iv) all other operating or administrative costs of the
General Partner incurred in the ordinary course of its business on behalf of the
Partnership.
"REIT Requirements" shall have the meaning set forth in Section 6.2
hereof.
"Requesting Party" shall have the meaning set forth in Section 12.2
hereof.
"Responding Party" shall have the meaning set forth in Section 12.2
hereof.
"Restricted Period" shall mean, with respect to a Limited Partner,
the period of time during which such Limited Partner is a Senior Officer of the
General Partner or such longer period specified in an employment agreement
between such Limited Partner and the General Partner.
"Rights" shall have the meaning set forth in Section 11.1 hereof.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Section 704(c) Tax Items" shall have the meaning set forth in
attached Exhibit E.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Officers" shall mean those certain individuals holding the
office of vice president or higher of the General Partner, as well as any other
individual designated by the General Partner from time to time as a "Senior
Officer."
"Series A Preferred Articles Supplementary" shall mean those certain
Articles Supplementary executed by the General Partner and filed with the
Department on May 6, 1994, and pursuant to which the Series A Preferred Stock
was issued.
"Series A Preferred Interest" shall mean the interest in the
Partnership received by the General Partner in exchange for the additional
Capital Contribution made by the General Partner in connection with the issuance
of the Series A Preferred Stock, which Series A Preferred Interest includes the
right to receive certain preferential distributions and additional rights as set
forth in this Agreement.
"Series A Preferred Stock" shall mean the Series A Preferred Stock
(par value $.0001 per share) of the General Partner as described in the Series A
Preferred Articles Supplementary.
"Series A Redemption Distribution" shall have the meaning set forth
in Section 6.2(c) hereof.
"Series B Cumulative Redeemable Preferred Articles Supplementary"
shall mean those certain Articles Supplementary executed by the General Partner
and filed with the Department on December 7, 1995, and pursuant to which the
Series B Cumulative Redeemable Preferred Stock was issued.
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"Series B Cumulative Redeemable Preferred Interest" shall mean the
interest in the Partnership received by the General Partner in exchange for the
additional Capital Contribution made by the General Partner in connection with
the issuance of the Series B Cumulative Redeemable Preferred Stock, which Series
B Cumulative Redeemable Preferred Interest includes the right to receive certain
preferential distributions and additional rights as set forth in this
Agreement.
"Series B Cumulative Redeemable Preferred Interest Redemption
Distribution" shall have the meaning set forth in Section 6.2(d) hereof.
"Series B Cumulative Redeemable Preferred Stock" shall mean the
Series B Cumulative Redeemable Preferred Stock (par value $.0001 per share) of
the General Partner, as described in the Series B Cumulative Redeemable
Preferred Articles Supplementary.
"Series C Cumulative Redeemable Preferred Articles Supplementary"
shall mean those certain Articles Supplementary executed by the General Partner
and filed with the Department on October 9, 1997, and pursuant to which the
Series C Cumulative Redeemable Preferred Stock was issued.
"Series C Cumulative Redeemable Preferred Interest" shall mean the
interest in the Partnership received by the General Partner in exchange for the
additional Capital Contribution made by the General Partner in connection with
the issuance of the Series C Cumulative Redeemable Preferred Stock, which Series
C Cumulative Redeemable Preferred Interest includes the right to receive certain
preferential distributions and additional rights as set forth in this
Agreement.
"Series C Cumulative Redeemable Preferred Interest Redemption
Distribution" shall have the meaning set forth in Section 6.2(e) hereof.
"Series C Cumulative Redeemable Preferred Stock" shall mean the
Series C Cumulative Redeemable Preferred Stock (par value $.0001 per share) of
the General Partner, as described in the Series C Cumulative Redeemable
Preferred Articles Supplementary.
"Stock Incentive Plan" shall mean the Amended and Restated 1993 Stock
Incentive Plan of Spieker Properties, L.P., as such may be amended from time to
time, along with any other employee or non-employee stock incentive or option
plans adopted by the General Partner.
"Stock Incentive Pool" shall mean the Employee Stock Incentive Pool
of Spieker Properties, L.P. dated November 18, 1993, as amended from time to
time.
"Substituted Limited Partner" shall have the meaning set forth in the
Act.
"SWIP" shall mean Spieker Washington Interest Partners, a California
general partnership, the sole partners of which shall be the General Partner and
the Partnership.
"Tax Items" shall have the meaning set forth in attached Exhibit B.
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<PAGE> 20
"Third Arbitrator" shall have the meaning set forth in Section 12.2
hereof.
"Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Stock is listed or admitted to trading
is open for the transaction of business or, if the Common Stock is not listed or
admitted to trading on any national securities exchange, shall mean any day
other than a Saturday, a Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive order to
close.
"Transaction Expenses" shall have the meaning set forth in attached
Exhibit C.
"Transfer" as a noun, shall mean any sale, assignment, conveyance,
pledge, hypothecation, gift, encumbrance or other transfer, and, as a verb,
shall mean to sell, assign, convey, pledge, hypothecate, give, encumber or
otherwise transfer.
1.2 EXHIBIT, ETC. References to "Exhibit" or to a "Schedule" are, unless
otherwise specified, to one of the Exhibits or Schedules attached to this
Agreement, and references to an "Article" or a "Section" are, unless otherwise
specified, to one of the Articles or Sections of this Agreement. Each Exhibit
and Schedule attached hereto and referred to herein is hereby incorporated
herein by reference.
ARTICLE II
ORGANIZATION
2.1 FORMATION. Certain of the Partners have previously formed a limited
partnership pursuant to the provisions of the Act, and all other pertinent laws
of the State of California, for the purposes and upon the terms and conditions
hereinafter set forth. The Partners agree that the rights and liabilities of the
Partners shall be as provided in the Act, except as otherwise herein expressly
provided. The General Partner executed the Certificate and filed it with the
Office of the Secretary of State of the State of California on November 10,
1993. A certified copy of the Certificate shall be filed for record in each
county in which the Partnership owns real property or an interest therein to the
extent required by applicable law, and the General Partner shall cause such
other notice, instrument, document or certificate as may be required by
applicable law, and which may be necessary to enable the Partnership to conduct
its business and to own the Properties and any other Partnership assets under
the Partnership name, to be filed or recorded in all appropriate public offices.
The General Partner shall execute and file any amendments to the Certificate
required by law.
2.2 NAME. The business of the Partnership shall be conducted under the name
of Spieker Properties, L.P. or such other name as the General Partner may
select, and all transactions of the Partnership, to the extent permitted by
applicable law, shall be carried on and completed in such name.
2.3 CHARACTER OF THE BUSINESS. The purpose of the Partnership shall be to
acquire, hold, own, develop, redevelop, construct, finance, improve, maintain,
operate, manage, sell,
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lease, transfer, encumber, convey, exchange, and otherwise dispose of or deal
with Properties and ownership interests therein (including, without limitation,
the beneficial interest in any mortgage or deed of trust secured by a Property);
to acquire, hold, own, develop, redevelop, construct, finance, improve,
maintain, operate, manage, sell, lease, transfer, encumber, convey, exchange,
and otherwise dispose of or deal with real and personal property of all kinds,
whether owned by the Partnership or otherwise; to be a partner in and to
exercise all of the powers of a partner in other partnerships; to be a member in
and to exercise all of the powers of a member in a limited liability company; to
be a shareholder in a corporation, including, without limitation, the Existing
Property Manager (provided that the Partnership shall not have more than a ten
percent (10%) voting interest in the Existing Property Manager or any other
corporation structured similarly thereto); and to undertake such other
activities as may be necessary, advisable, desirable or convenient to the
business of the Partnership, and to engage in such other ancillary activities as
shall be necessary or desirable to effectuate the foregoing purposes. The
Partnership shall have all powers necessary or desirable to accomplish the
purposes enumerated. In connection with the foregoing, but subject to all of the
terms, covenants, conditions and limitations contained in this Agreement and any
other agreement entered into by the Partnership, the Partnership shall have full
power and authority, directly or indirectly, to enter into, perform and carry
out contracts of any kind, to borrow money and to issue evidences of
indebtedness, whether or not secured by mortgage, deed of trust, pledge or other
lien, and, directly or indirectly, to acquire and construct additional
Properties.
2.4 LOCATION OF THE PRINCIPAL PLACE OF BUSINESS. The location of the
principal place of business of the Partnership shall be at 2180 Sand Hill Road,
Suite 200, Menlo Park, California 94025, or such other location as shall be
selected from time to time by the General Partner in its sole discretion.
2.5 AGENT FOR SERVICE OF PROCESS. The Partnership has heretofore appointed
Sara H. Reynolds, whose address is 2180 Sand Hill Road, Suite 200, Menlo Park,
California 94025, as its agent for service of process, and Sara H. Reynolds
shall continue to be the Partnership's agent for service of process. Such agent
may be changed from time to time by the General Partner in its sole discretion
by filing an amendment to the Certificate.
2.6 CERTIFICATES OF OWNERSHIP. Each Partner's ownership interest in the
Partnership shall be evidenced by one or more registered certificates of
ownership, which certificates shall be executed by the General Partner. Such
certificates shall contain a legend evidencing the restrictions on transfer of
the Partnership Units, which legend shall be substantially similar to the legend
contained on the cover page of this Agreement. It is not a condition to the
valid issuance of any ownership interest, Partnership Interest or Partnership
Unit that a certificate of ownership be executed and delivered to a Partner.
ARTICLE III
TERM
3.1 COMMENCEMENT. The Partnership commenced business as a limited
partnership upon the filing of the Certificate of Limited Partnership with the
Secretary of State of the State of California on November 10, 1993.
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3.2 DISSOLUTION. The Partnership shall continue until dissolved upon the
occurrence of the earliest of the following events:
(a) The dissolution, termination, retirement or Bankruptcy of the
General Partner unless the Partnership is continued as provided in Section 9.1
hereof;
(b) The election to dissolve the Partnership made in writing by the
General Partner with the Consent of the Limited Partners;
(c) The sale or other disposition of all or substantially all the
assets of the Partnership unless the General Partner in its sole and absolute
discretion elects to continue the Partnership business for the purpose of the
receipt and the collection of indebtedness or the collection of any other
consideration to be received in exchange for the assets of the Partnership
(which activities shall be deemed to be part of the winding up of the affairs of
the Partnership);
(d) Dissolution required by operation of law; or
(e) December 31, 2053.
ARTICLE IV
CONTRIBUTIONS TO CAPITAL
4.1 GENERAL PARTNER CAPITAL CONTRIBUTION. Prior to the date hereof, the
General Partner has made certain Capital Contributions to the Partnership as
described in the books and records of the Partnership as of the date hereof.
4.2 LIMITED PARTNER CAPITAL CONTRIBUTIONS. Prior to the date hereof, the
Limited Partners have made certain Capital Contributions to the Partnership as
described in the books and records of the Partnership as of the date hereof.
4.3 ISSUANCES OF ADDITIONAL PARTNERSHIP UNITS.
(a) Without the consent of any Limited Partner, but subject to the
terms of Section 9.3 below, the General Partner may from time to time cause the
Partnership to issue to the Partners (including the General Partner) or other
Persons additional Partnership Units ("Additional Units") or other Partnership
Interests in one or more classes, or one or more series of any of such classes,
with such designations, preferences and relative, participating, optional or
other special rights, powers and duties, including, without limitation, rights,
powers and duties senior to the Limited Partner's Partnership Interests, and, if
necessary, admit any such other Person as an additional Limited Partner
("Additional Limited Partner") (in accordance with Section 4.7 hereof), in
exchange for the Capital Contribution by such Partner or Person of cash and/or
property. Without limiting the provisions of this Article IV, the General
Partner is expressly authorized to cause the Partnership to issue Additional
Units for less than fair market value. In the event that Additional Units are
issued by the Partnership pursuant to this Section 4.3(a):
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(i) the Percentage Interest of the Person to whom the
Additional Units are being issued shall be equal to a fraction, the
numerator of which is equal to the number of Partnership Units issued to
such Person as of the date of contribution to the Partnership (the
"Contribution Date") and the denominator of which is equal to the total
number of issued and outstanding Partnership Units on the Contribution Date
(including the Partnership Units issued to such Person); and
(ii) the Percentage Interests of each Partner other than the
Person to whom Additional Units are being issued shall be adjusted, as of
the Contribution Date, such that the Percentage Interest of each such
Partner shall be equal to a fraction, the numerator of which is equal to
the number of Partnership Units owned by such Partner and the denominator
of which is the total number of Partnership Units specified in the
denominator of the fraction described in subparagraph (i) of this Section
4.3(a).
The General Partner shall have the right and shall possess the authority to
amend this Agreement without the consent of any Limited Partner to evidence any
action taken pursuant to this Section 4.3(a).
(b) The General Partner may not cause the Partnership to issue
Additional Units or other Partnership Interests to itself unless either:
(i)(A) the Additional Units or additional Partnership
Interests are issued in connection with an issuance of shares of the
General Partner (including shares of Common Stock issued by the
General Partner to the Partnership to satisfy the Partnership's
redemption obligations under Article XI hereof), which shares have
designations, preferences and other rights, all such that the
economic interests are substantially similar to the designations,
preferences and other rights of the Additional Units or additional
Partnership Interests issued to the General Partner in accordance
with Section 4.3(a) hereof, and (B) except for shares of Common Stock
issued by the General Partner to the Partnership to satisfy the
Partnership's redemption obligation under Article XI hereof, the
General Partner shall make a Capital Contribution to the Partnership
in an amount equal to the net proceeds raised in connection with the
issuance of such shares of the General Partner; or
(ii) the Additional Units or additional Partnership
Interests are issued to all Partners pro rata in accordance with
their respective Percentage Interests.
(c) After the date hereof, the General Partner shall not issue any
additional shares of Common Stock (other than shares of Common Stock issued
pursuant to Article XI hereof), rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase shares
of Common Stock (collectively, "New Securities") other than to all holders of
the shares of Common Stock unless (i) the General Partner shall cause the
Partnership to issue to the General Partner Partnership Interests or rights,
options, warrants or convertible or exchangeable securities of the Partnership
having designations, preferences and other rights, all such that the economic
interests are substantially similar to those of the New Securities, and (ii) the
General Partner contributes the proceeds, if any (subject to actual or
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deemed reimbursement of any expenses, including underwriting discount commission
or fees by the Partnership to the General Partner pursuant to Section 7.1
hereof) from the issuance of such New Securities and from the exercise of rights
contained in such New Securities to the Partnership. Without limiting the
foregoing, the General Partner is expressly authorized to issue New Securities
for less than fair market value (so long as the General Partner concludes in
good faith that such issuance is in the best interests of the Partnership) and
to cause the Partnership to issue to the General Partner corresponding
Partnership Interests.
4.4 CONTRIBUTION OF PROCEEDS OF ISSUANCE OF SHARES OF COMMON STOCK. In
connection with the issuance of shares of Common Stock pursuant to Section 4.3
hereof, the General Partner shall make a Capital Contribution to the Partnership
of the proceeds raised in connection with such issuance, provided that if the
proceeds actually received by the General Partner are less than the gross
proceeds of such issuance as a result of any underwriter's discount, commission
or fee or other expenses paid or incurred in connection with such issuance, then
the General Partner shall be deemed to have made a Capital Contribution to the
Partnership in the amount of the gross proceeds of such issuance and the
Partnership shall be deemed simultaneously to have reimbursed the General
Partner pursuant to Section 7.1 hereof for the amount of such underwriter's
discount, commission or fee or other expenses. A redemption of a Partnership
Unit, whether by the Partnership or the General Partner, shall not constitute an
issuance of shares of Common Stock for purposes of this Section 4.4.
4.5 OPTIONS. If at any time or from time to time Options granted in
connection with any Stock Incentive Plan are exercised in accordance with the
terms of the Stock Incentive Plan or Common Stock is issued pursuant to any
stock purchase plan, dividend reinvestment plan or similar plan adopted by the
General Partner (as the case may be):
(a) the General Partner shall, as soon as practicable after such
exercise, contribute to the capital of the Partnership an amount equal to the
exercise price paid to the General Partner by such exercising party in
connection with the exercise of the Option or the purchase price of the Common
Stock issued pursuant to such stock purchase, dividend reinvestment or similar
plan;
(b) the General Partner shall be issued Additional Units equal to the
number of shares of Common Stock delivered by the General Partner to such
exercising party or purchaser;
(c) the General Partner shall be deemed to have made an additional
Capital Contribution to the Partnership equal to the Current Per Share Market
Price (as of the Trading Date immediately preceding the date on which the
purchase of the Common Stock by such exercising party is consummated) multiplied
by the number of shares of Common Stock delivered by the General Partner to such
exercising party or purchaser; and
(d) the Percentage Interests of the Partners shall be adjusted in the
manner set forth in Section 4.3(a) above.
4.6 LAND HOLDING AGREEMENTS. If at any time or from time to time shares of
Common Stock are issued to the owner of a Land Holding in accordance with the
terms of the Land Holding Agreements, (i) the General Partner shall be issued
Additional Units equal to the
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number of shares of Common Stock issued, (ii) the General Partner shall be
deemed to have made an additional Capital Contribution to the Partnership equal
to the Current Per Share Market Price (as of the Trading Date immediately
preceding the date on which such shares are issued) multiplied by the number of
shares of Common Stock delivered by the General Partner to such owner and (iii)
the Percentage Interests of the Partners shall be adjusted in the manner set
forth in Section 4.3(a) above.
4.7 ADMISSION OF ADDITIONAL LIMITED PARTNERS.
(a) After the date hereof, a Person who makes a Capital Contribution
to the Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) a written agreement in form satisfactory to the General Partner
accepting all of the terms and conditions of this Agreement and (ii) such other
documents or instruments as may be required in the discretion of the General
Partner in order to effect such Person's admission as an Additional Limited
Partner.
(b) No Person shall be admitted as an Additional Limited Partner
without the consent of the General Partner, which consent may be given or
withheld in the General Partner's sole and absolute discretion and for any or no
reason whatsoever. The admission of any Person as an Additional Limited Partner
shall become effective on the date upon which the name of such Person is
recorded on the books and records of the Partnership, following the consent of
the General Partner to such admission.
(c) If an Additional Limited Partner is admitted to the Partnership
on any day other than the first day of a Fiscal Year, then Net Income, Net Loss,
each item thereof and all other items allocable among Partners and Assignees for
such Fiscal Year shall be allocated among such Additional Limited Partner and
all other Partners and Assignees by taking into account their varying interests
during the Fiscal Year in accordance with Section 706(d) of the Code, using the
interim closing of the books method. Solely for purposes of making such
allocations, each of such items for the calendar month in which an admission of
any Additional Limited Partner occurs shall be allocated among all Partners and
Assignees including such Additional Limited Partner.
(d) The General Partner, acting alone, shall be authorized on behalf
of each of the Partners to amend this Agreement to reflect the admission of any
Additional Limited Partner or any increase in the Percentage Interests of any
Partner and the corresponding reduction of the Percentage Interests of the other
Partners in accordance with the provisions of Section 4.3 and this Section 4.7.
Notwithstanding anything contained herein to the contrary, an Additional Limited
Partner that acquires Additional Units pursuant to Section 4.3 and this Section
4.7 shall not acquire any interest in, and may not exercise or otherwise
participate in, any Rights pursuant to Article XI and attached Exhibit C, unless
the General Partner approves in writing the acquisition of Rights by such
Additional Limited Partner prior to or contemporaneous with the admission of
such Additional Limited Partner to the Partnership.
4.8 NO THIRD PARTY BENEFICIARY. No creditor or other third party having
dealings with the Partnership shall have the right to enforce the right or
obligation of any Partner to make Capital Contributions or to pursue any other
right or remedy hereunder or at law or in equity, it
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being understood and agreed that the provisions of this Agreement shall be
solely for the benefit of, and may be enforced solely by, the Partners and their
respective successors and assigns. None of the rights or obligations of the
Partners herein set forth to make Capital Contributions to the Partnership shall
be deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may such rights or obligations be sold, transferred or assigned
by the Partnership or pledged or encumbered by the Partnership to secure any
debt or other obligation of the Partnership or of any of the Partners.
4.9 NO INTEREST; NO RETURN. No Partner shall be entitled to interest on its
Capital Contribution or on such Partner's Capital Account. Except as provided
herein or by law, no Partner shall have any right to demand or receive the
return of its Capital Contribution from the Partnership.
4.10 ADJUSTMENT UPON CONVERSION OF PREFERRED STOCK. Upon the conversion of
any shares of Series A Preferred Stock to Common Stock, the Percentage Interests
of the Partners shall be adjusted in accordance with the provisions of Section
4.3(a) of this Agreement as if, on the date of such conversion, the General
Partner had been issued Additional Units equal in number to the number of shares
of Common Stock issued as a result of such conversion. In no event, however,
shall there be any adjustment of the Partners' Percentage Interests upon the
conversion of the Class B Common Stock or the Class C Common Stock into Common
Stock.
4.11 GUARANTY AGREEMENT. Each of the Partners acknowledges that certain of
the Limited Partners may make certain payments to the Partnership or the General
Partner pursuant to the terms of the Guaranty Agreement and/or one or more of
the Reimbursement Agreements, which payments shall be treated as Capital
Contributions hereunder, provided, however, in no event shall any Limited
Partner be entitled to the issuance of any Additional Units as a result of any
such payment made by such Limited Partner pursuant to the Guaranty Agreement or
any of the Reimbursement Agreements, nor shall the Percentage Interests of the
Partners be adjusted as a result thereof.
ARTICLE V
PARTNERS
5.1 PARTNERS. Exhibit A attached hereto sets forth the names of the
Partners of the Partnership as of the date hereof. A Partner may be both a
General Partner and a Limited Partner hereunder.
5.2 DESIGNATION OF ADDITIONAL UNITS. With respect to all Additional Units
issued to the General Partner hereunder, the General Partner shall have the
right to designate which of such Additional Units shall be held by the General
Partner in its capacity as a "General Partner" hereunder and which of such
Additional Units shall be held by the General Partner in its capacity as a
"Limited Partner" hereunder, provided that the General Partner shall at all
times hold in its capacity as a "General Partner" hereunder such amount of
Partnership Units as is not less than one percent (1%) of the total number of
Partnership Units outstanding hereunder.
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ARTICLE VI
ALLOCATIONS AND OTHER TAX AND ACCOUNTING MATTERS
6.1 ALLOCATIONS. Net Income, Net Loss and/or other Partnership items shall
be allocated pursuant to the provisions of attached Exhibit B.
6.2 DISTRIBUTIONS. The General Partner shall cause the Partnership to
distribute all or a portion of Net Operating Cash Flow to the Partners from time
to time as determined by the General Partner, but in any event not less
frequently than quarterly in such amounts as the General Partner shall
determine; provided, however, that notwithstanding the foregoing, the General
Partner shall use its best efforts to cause the Partnership to distribute
sufficient amounts to enable the General Partner to pay shareholder dividends
that will (1) satisfy the requirements for qualifying as a REIT under the Code
and Regulations ("REIT Requirements"), and (2) avoid any federal income or
excise tax liability of the General Partner; and provided further, that all such
distributions shall be made in accordance with the provisions of this Section
6.2.
(a) Distributions shall be made in accordance with the following
order of priority:
(i) First, to the General Partner, on account of the Series A
Preferred Interest, the Series B Cumulative Redeemable Preferred Interest
and the Series C Cumulative Redeemable Preferred Interest on a pro rata
basis, until the total amount of distributions made pursuant to this
subparagraph (i) equals the total amount of accrued but unpaid dividends
(if any) on the Series A Preferred Stock, the Series B Cumulative
Redeemable Preferred Stock and the Series C Cumulative Redeemable Preferred
Stock as of the date of such distribution;
(ii) Second, to the General Partner, on account of the Common B
Interest and the Common C Interest, an amount equal to the sum of (x)
$0.0625 per annum multiplied by the number of shares issued and outstanding
of Class B Common Stock, plus (y) $0.05 per annum multiplied by the number
of shares issued and outstanding of Class C Common Stock, prorated on a
daily basis over each calendar year, and adjusted, as appropriate, to
reflect any variance in the number of such shares issued and outstanding
from time to time; and
(iii) Next, to the Partners, pro rata in accordance with the
Partners' then Percentage Interests.
Neither the Partnership nor the Limited Partners shall have any obligation to
see that any funds distributed to the General Partner pursuant to subparagraph
(a)(i) of this Section 6.2 are in turn used by the General Partner to pay
dividends on the Series A Preferred Stock, the Series B Cumulative Redeemable
Preferred Stock or the Series C Cumulative Redeemable Preferred Stock or that
any funds distributed to the General Partner pursuant to subparagraph (a)(ii) of
this Section 6.2 are in turn used by the General Partner to pay dividends on the
Class B Common Stock or the Class C Common Stock.
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(b) If, pursuant to a Limited Partner's exercise of Rights in
accordance with the provisions of Article XI hereof, the General Partner elects
to pay all or a portion of the consideration for the Offered Interest in the
form of the Cash Amount, the General Partner shall cause the Partnership to
distribute to the Partners such portion of Net Operating Cash Flow as the
General Partner shall reasonably determine to be prudent under the
circumstances, which distribution shall be made prior to the closing of the
purchase and sale of the Offered Interest specified in such Exercise Notice, and
which distribution shall be made in accordance with subparagraph (a) of this
Section 6.2; provided, however, the General Partner shall have the right in its
sole discretion to delay the actual distribution of Net Operating Cash Flow to
the Partners required by this Section 6.2(b) until the next scheduled
distribution of Net Operating Cash Flow.
(c) Notwithstanding the foregoing, the General Partner may, in its
sole discretion, at any time on or after May 13, 1999, when any Series A
Preferred Stock is outstanding, make one ore more special distributions to
itself, alone, on account of the Series A Preferred Interest, for the sole
purpose of, and in an amount no greater than such amount as will be used by the
General Partner for, redemption of all or any portion of the outstanding Series
A Preferred Stock (any such distribution shall be referred to as a "Series A
Redemption Distribution"). There shall be no adjustment of the then current
Percentage Interests of the Partners on account of any Series A Redemption
Distribution.
(d) Notwithstanding the foregoing, the General Partner may, in its
sole discretion, at any time on or after December 11, 2000, when any Series B
Cumulative Redeemable Preferred Stock is outstanding, make one or more special
distributions to itself, alone, on account of the Series B Cumulative Redeemable
Preferred Interest, for the sole purpose of, and in an amount no greater than
such amount as will be used by the General Partner for, redemption of all or any
portion of the outstanding Series B Cumulative Redeemable Preferred Stock (any
such distribution shall be referred to as a "Series B Cumulative Redeemable
Preferred Interest Redemption Distribution"). There shall be no adjustment of
the then current Percentage Interests of the Partners on account of any Series B
Cumulative Redeemable Preferred Interest Redemption Distribution.
(e) Notwithstanding the foregoing, the General Partner may, in its
sole discretion, at any time on or after October 10, 2002, when any Series C
Cumulative Redeemable Preferred Stock is outstanding, make one or more special
distributions to itself, alone, on account of the Series C Cumulative Redeemable
Preferred Interest, for the sole purpose of, and in an amount no greater than
such amount as will be used by the General Partner for, redemption of all or any
portion of the outstanding Series C Cumulative Redeemable Preferred Stock (any
such distribution shall be referred to as a "Series C Cumulative Redeemable
Preferred Interest Redemption Distribution"). There shall be no adjustment of
the then current Percentage Interests of the Partners on account of any Series C
Cumulative Redeemable Preferred Interest Redemption Distribution.
6.3 BOOKS OF ACCOUNT. At all times during the continuance of the
Partnership, the General Partner shall maintain or cause to be maintained full,
true, complete and correct books of account in accordance with generally
accepted accounting principles wherein shall be entered particulars of all
monies, goods or effects belonging to or owing to or by the Partnership, or
paid,
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received, sold or purchased in the course of the Partnership's business, and all
of such other transactions, matters and things relating to the business of the
Partnership as are usually entered in books of account kept by persons engaged
in a business of a like kind and character. In addition, the Partnership shall
keep all records as required to be kept pursuant to the Act. The books and
records of account shall be kept at the principal office of the Partnership, and
each Partner shall at all reasonable times have access to such books and records
and the right to inspect the same.
6.4 AUDITS. Not less frequently than annually, the books and records of the
Partnership shall be audited by the Accountants.
6.5 TAX ELECTIONS AND RETURNS. All elections required or permitted to be
made by the Partnership under any applicable tax law shall be made by the
General Partner in its sole discretion; provided, however, the General Partner
shall, if requested by a transferee, file an election on behalf of the
Partnership pursuant to Section 754 of the Code to adjust the basis of the
Partnership property in the case of a transfer of a Partnership Interest,
including transfers made in connection with the exercise of Rights, made in
accordance with the provisions of this Agreement. The General Partner shall be
responsible for preparing and filing all federal and state tax returns for the
Partnership, together with required Partnership schedules showing allocations of
tax items and copies of the tax returns of the Existing Property Manager, SWIP
and any other Investment Entities, as well as, to the extent appropriate, all
other Entities in which the Partnership or any of the foregoing has an equity
interest, all within the period of time prescribed by law (including, to the
extent timely elected, any extension periods permitted by law). The General
Partner shall cause the Accountants to prepare and file all state and federal
tax returns on a timely basis. On or before April 1 of each year, the General
Partner shall either cause the Accountants to prepare and deliver to each
Limited Partner a Schedule K-1 or deliver written notice to each Limited Partner
informing each Limited Partner that the Partnership intends to file a valid
filing extension and notifying each Limited Partner of the General Partner's
good faith estimate of such Limited Partner's allocable share of Partnership
income for the preceding year. If the General Partner files such an extension,
then, on or before August 1 of such year, the General Partner shall either cause
the Accountants to prepare and deliver to each Limited Partner a Schedule K-1 or
deliver written notice to each Limited Partner informing each Limited Partner
that the Partnership intends to file a further filing extension. If the General
Partner files such a further extension, then, on or before October 1 of such
year, the General Partner shall cause the Accountants to prepare and deliver to
each Limited Partner a Schedule K-1. The General Partner is expressly authorized
to file any filing extensions permitted by law.
6.6 TAX MATTERS PARTNER. The General Partner has been designated as, and
shall continue to be, the tax matters partner within the meaning of Section
6231(a)(7) of the Code for the Partnership.
6.7 SECTION 6227(a) ADJUSTMENTS. Nothing contained in this Agreement shall
be construed to limit the ability of any Partner, including the General Partner,
to file an administrative adjustment request on its own behalf pursuant to
Section 6227(a) of the Code.
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ARTICLE VII
RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER
7.1 EXPENDITURES BY PARTNERSHIP. The General Partner is authorized to pay
compensation for accounting, administrative, legal, technical, management and
other services rendered to the Partnership. All of the aforesaid expenditures
shall be made on behalf of the Partnership, and the General Partner shall be
entitled to reimbursement by the Partnership for any expenditures incurred by it
on behalf of the Partnership which shall be made other than out of the funds of
the Partnership. The Partnership shall also assume, and pay when due, all
Administrative Expenses.
7.2 POWERS AND DUTIES OF GENERAL PARTNER. The General Partner shall be
responsible for the management of the Partnership's business and affairs. Except
as otherwise herein expressly provided, and subject to the limitations expressly
set forth in Section 7.3 hereof, the General Partner shall have, and shall have
full and complete power, authority and discretion to take such action for and on
behalf of the Partnership and in its name as the General Partner shall, in its
sole and absolute discretion, deem necessary or appropriate to carry out the
purposes for which the Partnership was organized. Except as otherwise expressly
provided herein, and subject to Section 7.3 hereof, the General Partner shall
have the right, power and authority:
(a) To manage, control, invest, reinvest, acquire by purchase, lease
or otherwise, sell, contract to purchase or sell, grant, obtain, or exercise
options to purchase, options to sell or conversion rights, assign, transfer,
convey, deliver, endorse, exchange, pledge, mortgage, abandon, improve, repair,
maintain, insure, lease for any term and otherwise deal with any and all
property of whatsoever kind and nature, and wheresoever situated, in furtherance
of the purposes of the Partnership;
(b) To acquire, directly or indirectly, interests in real estate of
any kind and of any type, and any and all kinds of interests therein, and to
determine the manner in which title thereto is to be held; to manage, insure
against loss, protect and subdivide any of the real estate, interests therein or
parts thereof; to improve, develop or redevelop any such real estate; to
participate in the ownership and development of any property; to dedicate for
public use, to vacate any subdivisions or parts thereof, to re-subdivide, to
contract to sell, to grant options to purchase or lease, to sell on any terms;
to convey, to mortgage, pledge or otherwise encumber said property, or any part
thereof; to lease said property of any part thereof from time to time, upon any
terms and for any period of time, and to renew or extend leases, to amend,
change or modify the terms and provisions or any leases and to grant options to
lease and options to renew leases and options to purchase; to partition or to
exchange said real property, or any part thereof, for other real or personal
property; to grant easements or charges of any kind; to release, convey or
assign any right, title or interest in or about or easement appurtenant to said
property or any part thereof; to construct and reconstruct, remodel, alter,
repair, add to or take from buildings on any real property in which the
Partnership owns an interest; to insure any Person having an interest in or
responsibility for the care, management or repair of such property; to direct
the trustee of any land trust to mortgage, lease, convey or contract to convey
the real estate held in such land trust or to execute and deliver deeds,
mortgages, notes, and any and all documents pertaining to the property subject
to such land trust or in any matter regarding such trust; to execute assignments
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of all or any part of the beneficial interest in any land trust in which the
Partnership owns a beneficial interest;
(c) To employ, engage or contract with or dismiss from employment or
engagement Persons to the extent deemed necessary by the General Partner for the
operation and management of the Partnership business, including but not limited
to, contractors, subcontractors, engineers, architects, surveyors, mechanics,
consultants, accountants, attorneys, insurance brokers, real estate brokers and
others;
(d) To enter into, make, amend, perform and carry out or cancel and
rescind, contracts and other obligations, including, without limitation,
guarantees and indemnity agreements, for any purpose pertaining to the business
of the Partnership, SWIP and any other Investment Entities, the Existing
Property Manager, as well as any other Entity in which the Partnership or any of
the other foregoing Entities has a direct or indirect ownership interest; and to
loan money to, borrow money from and engage in transactions with Affiliates of
the Partnership or any other Person;
(e) To borrow money, procure loans and advances from any Person for
Partnership purposes, and to apply for and secure, from any Person, credit or
accommodations; to contract liabilities and obligations, direct or contingent
and of every kind and nature with or without security; and to repay, discharge,
settle, adjust, compromise, or liquidate any such loan, advance, credit,
obligation or liability;
(f) To pledge, hypothecate, mortgage, assign, deposit, deliver, enter
into sale and leaseback arrangements or otherwise give as security or as
additional or substitute security, or for sale or other disposition any and all
Partnership property, tangible or intangible, including, but not limited to,
real estate and beneficial interests in land trusts, and to make substitutions
thereof, and to receive any proceeds thereof upon the release or surrender
thereof; to sign, execute and deliver any and all assignments, deeds and other
contracts and instruments in writing; to authorize, give, make, procure, accept
and receive moneys, payments, property, notices, demands, vouchers, receipts,
releases, compromises and adjustments; to waive notices, demands, protests and
authorize and execute waivers of every kind and nature; to enter into, make,
execute, deliver and receive written agreements, undertakings and instruments of
every kind and nature; to give oral instructions and make oral agreements; and
generally to do any and all other acts and things incidental to any of the
foregoing or with reference to any dealings or transactions which the General
Partner may deem necessary, proper or advisable to affect or accomplish any of
the foregoing;
(g) To acquire and enter into any contract of insurance which the
General Partner deems necessary or appropriate for the protection of the
Partnership, for the conservation of the Partnership's assets or for any purpose
convenient or beneficial to the Partnership;
(h) To conduct any and all banking transactions on behalf of the
Partnership; to adjust and settle checking, savings, and other accounts with
such institutions as the General Partner shall deem appropriate; to draw, sign,
execute, accept, endorse, guarantee, deliver, receive and pay any checks,
drafts, bills of exchange, acceptances, notes, obligations,
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undertakings and other instruments for or relating to the payment of money in,
into, or from any account in the Partnership's name; to execute, procure,
consent to and authorize extensions and renewals of any of the foregoing; to
make deposits into and withdrawals from the Partnership's bank accounts and to
negotiate or discount commercial paper, acceptances, negotiable instruments,
bills of exchange and dollar drafts;
(i) To demand, sue for, receive, and otherwise take steps to collect
or recover all debts, rents, proceeds, interest, dividends, goods, chattels,
income from property, damages and all other property, to which the Partnership
may be entitled or which are or may become due the Partnership from any Person;
to commence, prosecute or enforce, or to defend, answer or oppose, contest and
abandon all legal proceedings in which the Partnership is or may hereafter be
interested; and to settle, compromise or submit to arbitration any accounts,
debts, claims, disputes and matters which may arise between the Partnership and
any other Person and to grant an extension of time for the payment or
satisfaction thereof on any terms, with or without security;
(j) To make arrangements for financing, including the taking of all
action deemed necessary or appropriate by the General Partner to cause any
approved loans to be closed;
(k) To take all reasonable measures necessary to insure compliance by
the Partnership with applicable arrangements, and other contractual obligations
and arrangements entered into by the Partnership from time to time in accordance
with the provisions of this Agreement, including periodic reports as required to
be submitted to lenders and using all due diligence to insure that the
Partnership is in compliance with its contractual obligations;
(l) To maintain the Partnership's books and records;
(m) To prepare and deliver, or cause to be prepared and delivered by
the Partnership's Accountants, all financial and other reports with respect to
the operations of the Partnership and all Federal and state tax returns and
reports and to make all tax elections and determinations with respect to the
Partnership and its assets;
(n) To act in any state or nation in which the Partnership may
lawfully act, for itself or as principal, agent or representative for any Person
with respect to any business of the Partnership;
(o) To become a partner, member or shareholder in, and perform the
obligations of a partner, member or shareholder of, any general or limited
partnership, or limited liability company or corporation;
(p) To apply for, register, obtain, purchase or otherwise acquire
trademarks, trade names, labels and designs relating to or useful in connection
with any business of the Partnership, and to use, exercise, develop and license
the use of any of the foregoing; and
(q) To do all acts which are necessary, customary or appropriate for
the protection and preservation of the Partnership's assets, including the
establishment of reserves.
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Except as otherwise provided herein, to the extent the duties of the General
Partner require expenditures of funds to be paid to third parties, the General
Partner shall not have any obligations hereunder except to the extent that
Partnership funds are reasonably available to it for the performance of such
duties, and nothing herein contained shall be deemed to require the General
Partner, in its capacity as such, to expend its individual funds for payment to
third parties on behalf of the Partnership or to undertake any individual
liability or obligation on behalf of the Partnership.
7.3 CONSENT OF LIMITED PARTNERS. The General Partner shall not, without the
prior Consent of the Limited Partners, on behalf of the Partnership, undertake
any of the following actions:
(a) Terminate this Agreement or, except as expressly provided
otherwise herein, amend or modify this Agreement.
(b) Dissolve the Partnership.
Except as specifically provided in this Agreement, including, without
limitation, this Section 7.3, the Limited Partners shall have no right to vote
on any matter concerning the business and affairs of the Partnership, including,
without limitation, any decisions regarding the merger of the Partnership or the
sale, exchange, lease, mortgage or pledge or other transfer of, or the granting
of a security interest in, all or substantially all of the assets of the
Partnership and the incurrence of indebtedness by the Partnership, whether or
not in the ordinary course of the Partnership's business.
7.4 ACTIONS WITH RESPECT TO CERTAIN DOCUMENTS. Notwithstanding the
provisions of Section 7.3 hereof to the contrary, whenever the consent,
agreement, authorization or approval of the Partnership is required under any
agreement to which the Limited Partners and/or their Controlled Entities are
parties in interest other than in their capacities as Limited Partners of the
Partnership, the Consent of the Limited Partners shall not be required.
7.5 GENERAL PARTNER PARTICIPATION. The General Partner agrees that it shall
not engage in any business other than acting as the general partner of the
Partnership and that all business activities of the General Partner, including,
without limitation, the incurrence of indebtedness, shall be conducted through
the Partnership; provided, however, the foregoing shall not preclude the General
Partner from (i) possessing an ownership interest in SWIP or some other Entity
(collectively, the "Investment Entities") so long as the Partnership's interest
in any Property, partnership, limited liability company or other Entity in which
the Investment Entity has an ownership interest is at least 99 times the
Investment Entity's interest, (ii) issuing equity securities, the net proceeds
of which are contributed to the Partnership, or (iii) guarantying or co-signing
an obligation of the Partnership, any Investment Entity or any other Entity in
which the Partnership has a direct or indirect equity interest.
7.6 PROSCRIPTIONS. The General Partner shall not have the authority to:
(a) Do any act in contravention of this Agreement; or
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(b) Possess any Partnership property or assign rights in specific
Partnership property for other than Partnership purposes.
Nothing herein contained shall impose any obligation on any Person or firm doing
business with the Partnership to inquire as to whether or not the General
Partner has properly exercised its authority in executing any contract, lease,
mortgage, deed or other instrument on behalf of the Partnership, and any such
third Person shall be fully protected in relying upon such authority.
7.7 ADDITIONAL LIMITED PARTNERS. The General Partner shall have the right
to admit additional Limited Partners to the Partnership in accordance with the
provisions of this Agreement.
7.8 TITLE HOLDER. To the extent allowable under applicable law, title to
all or any part of the Properties of the Partnership may be held in the name of
the Partnership or any other Person, the beneficial interest in which shall at
all times be vested in the Partnership. Any such title holder shall perform any
and all of its respective functions to the extent and upon such terms and
conditions as may be determined from time to time by the General Partner,
consistent with the business purposes of the Partnership.
7.9 COMPENSATION OF THE GENERAL PARTNER. The General Partner shall not be
entitled to any compensation for services rendered to the Partnership solely in
its capacity as General Partner, except with respect to reimbursement for those
costs and expenses constituting Administrative Expenses.
7.10 WAIVER AND INDEMNIFICATION.
(a) Neither the General Partner nor any Person acting on its behalf,
pursuant hereto, shall be liable, responsible or accountable in damages or
otherwise to the Partnership or to any Partner for any acts or omissions
performed or omitted to be performed by them within the scope of the authority
conferred upon the General Partner by this Agreement and the Act, provided that
the General Partner's or such other Person's conduct or omission to act was
taken in good faith and in the belief that such conduct or omission was in the
best interests of the Partnership and, provided further, that the General
Partner or such other Person shall not be guilty of fraud, misconduct, bad faith
or gross negligence. The Partnership shall, and hereby does, indemnify and hold
harmless the General Partner and its Affiliates and any individual acting on
their behalf from any loss, damage, claim or liability, including, but not
limited to, reasonable attorneys' fees and expenses, incurred by them by reason
of any act performed by them in accordance with the standards set forth above or
in enforcing the provisions of this indemnity; provided, however, no Partner
shall have any personal liability with respect to the foregoing indemnification,
any such indemnification to be satisfied solely out of the assets of the
Partnership.
(b) Any Person entitled to indemnification under this Agreement shall
be entitled to receive, upon application therefor, the costs reasonably incurred
defending any proceeding against such Person; provided, however, that such
advances shall be repaid to the Partnership, without interest, if such Person is
found by a court of competent jurisdiction upon entry of a final
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judgment not to be entitled to such indemnification. All rights of the
indemnitee hereunder shall survive the dissolution of the Partnership; provided,
however, that a claim for indemnification under this Agreement must be made by
or on behalf of the Person seeking indemnification prior to the time the
Partnership is liquidated hereunder. The indemnification rights contained in
this Agreement shall be cumulative of, and in addition to, any and all rights,
remedies and recourse to which the person seeking indemnification shall be
entitled, whether at law or in equity. Indemnification pursuant to this
Agreement shall be made solely and entirely from the assets of the Partnership,
and no Partner shall be liable therefor.
7.11 OPERATION IN ACCORDANCE WITH REIT REQUIREMENTS. The Partners have
agreed that it is their intent that the Partnership be operated in a manner that
will enable the General Partner to (a) satisfy the REIT Requirements and (b)
avoid the imposition of any federal income or excise tax liability. The General
Partner shall use its best efforts to cause the Partnership to avoid taking any
action that would result in the General Partner ceasing to satisfy the REIT
Requirements or would result in the imposition of any federal income or excise
tax liability on the General Partner. The determination as to whether the
Partnership has operated in the manner prescribed in this Section 7.11 shall be
made without regard to any action or inaction of the General Partner with
respect to distributions and the timing thereof. Notwithstanding anything to the
contrary above, but subject to the other terms and conditions of this Agreement,
the General Partner shall have the right in its sole and absolute discretion to
determine the manner in which the Partnership shall be operated.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND WINDING-UP
8.1 ACCOUNTING. In the event of the dissolution, liquidation and winding-up
of the Partnership, a proper accounting (which shall be certified) shall be made
of the Capital Account of each Partner and of the Net Income or Net Loss of the
Partnership from the date of the last previous accounting to the date of
dissolution. Financial statements presenting such accounting shall include a
report of a certified public accountant selected by the Liquidating Trustee.
8.2 DISTRIBUTION ON DISSOLUTION. In the event of the dissolution and
liquidation of the Partnership for any reason, the assets of the Partnership
shall be liquidated for distribution in the following rank and order:
(a) Payment of creditors of the Partnership (other than Partners) in
the order of priority as provided by law;
(b) Establishment of reserves as provided by the General Partner to
provide for contingent liabilities, if any;
(c) Payment of debts of the Partnership to Partners, if any, in the
order of priority provided by law; and
(d) To the Partners in accordance with the positive balances in their
Capital Accounts after giving effect to all contributions, distributions and
allocations for all periods,
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including the period in which such distribution occurs (other than those
adjustments made pursuant to this Section 8.2(d) and Section 8.3 hereof).
Whenever the Liquidating Trustee reasonably determines that any reserves
established pursuant to paragraph (b) above are in excess of the reasonable
requirements of the Partnership, the amount determined to be excess shall be
distributed to the Partners in accordance with the above provisions.
8.3 TIMING REQUIREMENTS. In the event that the Partnership is "liquidated"
within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations, any and
all distributions to the Partners pursuant to Section 8.2(d) hereof shall be
made no later than the later to occur of (i) the last day of the taxable year of
the Partnership in which such liquidation occurs or (ii) ninety (90) days after
the date of such liquidation.
8.4 SALE OF PARTNERSHIP ASSETS. In the event of the liquidation of the
Partnership in accordance with the terms of this Agreement, the Liquidating
Trustee may, with the Consent of the Limited Partners, sell Partnership property
if the Liquidating Trustee has in good faith solicited bids from unrelated third
parties and obtained independent appraisals before making any such sale;
provided, however, all sales, leases, encumbrances or transfers of Partnership
assets shall be made by the Liquidating Trustee with the prior Consent of the
Limited Partners and solely on an "arm's-length" basis, at the best price and on
the best terms and conditions as the General Partner in good faith believes are
reasonably available at the time and under the circumstances and on a
non-recourse basis to the Limited Partners. The liquidation of the Partnership
shall not be deemed finally completed until the Partnership shall have received
cash payments in full with respect to obligations such as notes, installment
sale contracts or other similar receivables received by the Partnership in
connection with the sale of Partnership assets and all obligations of the
Partnership have been satisfied or assumed by the General Partner. The
Liquidating Trustee shall continue to act to enforce all of the rights of the
Partnership pursuant to any such obligations until such obligations are paid in
full or otherwise satisfied.
8.5 DISTRIBUTIONS IN KIND. In the event that it becomes necessary to make a
distribution of Partnership property in kind, the General Partner may, with the
Consent of the Limited Partners, transfer and convey such property to the
distributees as tenants in common, subject to any liabilities attached thereto,
so as to vest in the distributees undivided interests in the whole of such
property in proportion to their respective rights to share in the proceeds of
the sale of such property (other than as a creditor) in accordance with the
provisions of Section 8.2 hereof.
8.6 DOCUMENTATION OF LIQUIDATION. Upon the completion of the dissolution
and liquidation of the Partnership, the Partnership shall terminate and the
Liquidating Trustee shall have the authority to execute and record any and all
documents or instruments required to effect the dissolution, liquidation and
termination of the Partnership.
8.7 LIABILITY OF THE LIQUIDATING TRUSTEE. The Liquidating Trustee shall be
indemnified and held harmless by the Partnership from and against any and all
claims, demands, liabilities, costs, damages and causes of action of any nature
whatsoever arising out of or incidental to the Liquidating Trustee's taking of
any action authorized under or within the scope
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of this Agreement; provided, however, that the Liquidating Trustee shall not be
entitled to indemnification, and shall not be held harmless, where the claim,
demand, liability, cost, damage or cause of action at issue arose out of:
(a) A matter entirely unrelated to the Liquidating Trustee's action
or conduct pursuant to the provisions of this Agreement; or
(b) The proven misconduct or negligence of the Liquidating Trustee.
ARTICLE IX
TRANSFER OF PARTNERSHIP INTERESTS
9.1 GENERAL PARTNER TRANSFER. The General Partner shall not withdraw from
the Partnership and shall not sell, assign, pledge, encumber or otherwise
dispose of all or any portion of its interest in the Partnership without the
Consent of the Limited Partners. Upon any Transfer of a Partnership Interest in
accordance with the provisions of this Section 9.1, the transferee General
Partner shall become vested with the powers and rights of the transferor General
Partner, and shall be liable for all obligations and responsible for all duties
of the General Partner, once such transferee has executed such instruments as
may be necessary to effectuate such admission and to confirm the agreement of
such transferee to be bound by all the terms and provisions of this Agreement
with respect to the Partnership Interest so acquired. It is a condition to any
Transfer otherwise permitted hereunder that the transferee assumes by operation
of law or express agreement all of the obligations of the transferor General
Partner under this Agreement with respect to such transferred Partnership
Interest, and no such Transfer (other than pursuant to a statutory merger or
consolidation wherein all obligations and liabilities of the transferor General
Partner are assumed by a successor corporation or other Entity by operation of
law) shall relieve the transferor General Partner of its obligations under this
Agreement without the Consent of the Limited Partners, in their reasonable
discretion. In the event the General Partner withdraws from the Partnership, in
violation of this Agreement or otherwise, or dissolves, terminates or upon the
Bankruptcy of the General Partner, a Majority-In-Interest of the Limited
Partners may elect to continue the Partnership business by selecting a
substitute general partner.
9.2 TRANSFERS BY LIMITED PARTNERS.
(a) Subject to the provisions of Sections 9.2(b) and 9.3 hereof,
including, without limitation, compliance with any restrictions or limitations
set forth therein, each Limited Partner shall have the right to Transfer, with
or without the consent of the General Partner, all or a portion of its
Partnership Interest to any Person that is the Immediate Family of such Limited
Partner or an Affiliate of such Limited Partner, provided that prior written
notice of such proposed transfer is delivered to the General Partner. No other
Transfers of a Limited Partner's Partnership Interest may be effected without
the consent of the General Partner, which consent may be given, withheld or
conditioned in the General Partner's sole and absolute discretion.
(b) No transfer permitted or consented to under this Section 9.2
(other than pursuant to a statutory merger or consolidation wherein all
obligations and liabilities of the transferor Partner are assumed by a successor
corporation or other Entity by operation of law)
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shall relieve the transferor Limited Partner of its obligations under this
Agreement without the approval of the General Partner, in its sole and absolute
discretion. Upon such permitted or consented to Transfer, the transferee shall
be deemed to be an Assignee with respect to such Partnership Interest, but shall
not become or be admitted to the Partnership as a Substituted Limited Partner
without the consent of the General Partner, which consent may be given or
withheld in the General Partner' sole and absolute discretion and for any or no
reason whatsoever. An Assignee shall be entitled as a result of such Transfer
only to receive the economic benefits of the Partnership Interest to which the
transferor Limited Partner would otherwise be entitled, along with such
transferor Limited Partner's rights with respect to the Rights (although any
transferee of any transferred Partnership Interest shall be subject to any and
all ownership limitations contained in the corporate charter of the General
Partner as may be amended from time to time which may limit or restrict such
transferee's ability to exercise the Conversion Component of the Rights), and
such Assignee shall have no right (a) to participate in the management of the
Partnership or to vote on any matter requiring the consent or approval of the
Limited Partners, (b) to demand or receive any account of the Partnership's
business, or (c) to inspect the Partnership's books and records, unless and
until such Assignee is admitted to the Partnership as a Substituted Limited
Partner. A transferee of a Partnership Interest may become a Substituted Limited
Partner only upon the satisfaction of the following conditions: (A) filing with
the Partnership of a duly executed and acknowledged written instrument of
assignment in a form approved by the General Partner specifying the Partnership
Interest being assigned, setting forth the intention of the transferor Limited
Partner that such transferee succeed to the assignor's interest as a Limited
Partner and assuming by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect
to such transferred Partnership Interest; (B) execution and acknowledgment by
the transferor Limited Partner and such transferee of any other instruments
required in the sole and absolute discretion of the General Partner, including
the acceptance and adoption by such transferee of the provisions of this
Agreement; (C) obtaining the written consent of the General Partner as provided
in Section 9.2(a) above; and (D) payment of a transfer fee to the Partnership,
sufficient to cover the reasonable expenses of the substitution, if any. Any
transferee, whether or not admitted as a Substituted Limited Partner, shall take
subject to the obligations of the transferor Limited Partner hereunder.
(c) Notwithstanding anything to the contrary provided in this
Agreement, including, without limitation, Section 9.2(b) hereof, shares of
Common Stock that are transferred to employees of the General Partner pursuant
to the terms of this Agreement and the Stock Incentive Pool and that are
subsequently sold by such employees shall not be subject to the restrictions on
such Common Stock that were imposed on the transferor immediately prior to such
transfer under this Agreement, provided that the aggregate number of shares of
Common Stock released from such restrictions pursuant to this Section 9.2(c)
shall not exceed such limitations as established from time to time by the
General Partner in its sole and absolute discretion.
9.3 RESTRICTIONS ON TRANSFER. In addition to any other restrictions on
Transfer herein contained, in no event may any Transfer of a Partnership
Interest by any Partner be made and in no event shall Additional Units be issued
(i) to any Person that lacks the legal right, power or capacity to own a
Partnership Interest; (ii) in violation of any provision of any mortgage or
trust
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deed (or the note or bond secured thereby) constituting a Lien against a
Property or any part thereof, or other instrument, document or agreement to
which the Partnership, SWIP or any other Investment Entity, the Existing
Property Manager or any other Entity in which the Partnership has an interest is
a party or is otherwise bound; (iii) in violation of applicable law, including,
without limitation, any applicable state securities "Blue Sky" law (including
investment suitability standards); (iv) in the event such Transfer or issuance
would cause the General Partner to cease to comply with the REIT Requirements;
(v) if such Transfer or issuance would cause a termination of the Partnership
for federal income tax purposes; (vi) if such Transfer or issuance would, in the
opinion of counsel to the Partnership, cause the Partnership to cease to be
classified as a partnership for Federal income tax purposes; (vii) if such
Transfer or issuance would cause the Partnership to become, with respect to any
employee benefit plan subject to Title 1 of ERISA, a "party-in-interest" (as
defined in Section 3(14) of ERISA) or a "disqualified person" (as defined in
Section 4975(c) of the Code); (viii) if such Transfer or issuance would, in the
opinion of counsel to the Partnership, cause any portion of the assets of the
Partnership to constitute assets of any employee benefit plan pursuant to
Department of Labor Regulations Section 2510.3-101; (ix) if such Transfer or
issuance may not be effected without registration of such Partnership Interest
under the Securities Act, would require filing of a registration statement under
the Securities Act, or would otherwise violate any Federal, state or foreign
securities laws or regulations applicable to the Partnership or such Partnership
Interest; (x) if such Transfer or issuance would violate any provision of the
General Partner's Articles of Incorporation, as such may be amended from time to
time; or (xi) to a lender to the Partnership or any Person who is related
(within the meaning of Section 1.752-4(b) of the Regulations) to any lender to
the Partnership whose loan constitutes a "nonrecourse liability" (within the
meaning of Section 1.752-1(a)(2) of the Regulations) without the consent of the
General Partner, in its sole and absolute discretion, unless the Partnership's
basis for tax purposes would not be reduced as a result of such Transfer.
ARTICLE X
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
10.1 NO PARTICIPATION IN MANAGEMENT. Except as expressly permitted
hereunder, the Limited Partners shall not take part in the management of the
Partnership's business, transact any business in the Partnership's name or have
the power to sign documents for or otherwise bind the Partnership.
10.2 BANKRUPTCY OF A LIMITED PARTNER AND CERTAIN OTHER EVENTS. The
Bankruptcy, death (subject to Section 10.9 below), incompetency, legal
incapacity, withdrawal or retirement of any Limited Partner shall not cause a
dissolution of the Partnership, but the rights of such Limited Partner to share
in the Net Income or Loss of the Partnership and to receive distributions of
Partnership funds shall, on the happening of such event, devolve on its
successors or assigns, subject to the terms and conditions of this Agreement,
and the Partnership shall continue as a limited partnership. However, in no
event shall such assignee(s) become a Substituted Limited Partner except in
accordance with Article IX hereof.
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10.3 NO WITHDRAWAL. Notwithstanding anything to the contrary provided in
Section 10.2 above, no Limited Partner may withdraw or retire from the
Partnership without the prior written consent of the General Partner, other than
as expressly provided in this Agreement.
10.4 DUTIES AND CONFLICTS. The General Partner recognizes that the Limited
Partners and their Affiliates have or may have other business interests,
activities and investments, some of which may be in conflict or competition with
the business of the Partnership, and that, subject to the provisions of Sections
10.5, 10.6 and 10.7 hereof, such persons are entitled to carry on such other
business interests, activities and investments; provided that each Limited
Partner that is a Senior Officer of the General Partner shall devote
substantially all of his time and attention to the business and affairs of the
Partnership (and its affiliated entities), except that such Limited Partners may
devote such time and attention to the Excluded Properties and the partnerships
that own the Excluded Properties as such Limited Partners shall reasonably
determine is necessary for them to fulfill their fiduciary duties to the
partnerships that own the Excluded Properties and the constituent partners
therein. Subject to the provisions of Sections 10.5, 10.6 and 10.7 hereof, the
Limited Partners and their Affiliates may engage in or possess an interest in
any other business or venture of any kind, independently or with others, on
their own behalf or on behalf of other entities with which they are affiliated
or associated, and such persons may engage in any activities, whether or not
competitive with the Partnership, without any obligation to offer any interest
in such activities to the Partnership or to any Partner. Except as otherwise
provided in Sections 10.5, 10.6 and 10.7 hereof, neither the Partnership nor any
Partner shall have any right, by virtue of this Agreement, in or to such
activities, or the income or profits derived therefrom, and the pursuit of such
activities, even if competitive with the business of the Partnership, shall not
be deemed wrongful or improper.
10.5 ACQUISITION PROJECTS. Notwithstanding anything contained in Section
10.4 hereof to the contrary, each Limited Partner and/or its Controlled Entities
shall not, during the Restricted Period, acquire, directly or indirectly, a
Controlling or general partner interest in any Acquisition Project other than
through their ownership interest in the Partnership or the Existing Property
Manager (or such other Entity established by the General Partner in which the
Partnership holds an ownership interest in a manner similar to the ownership
interest that it holds in the Existing Property Manager), without the prior
written consent of the General Partner, which consent shall not be unreasonably
withheld so long as (i) such Acquisition Project will not be competitive with
any Property, (ii) such Acquisition Project will not require any substantial
time commitment from any Limited Partner or a material time commitment of the
Limited Partners in the aggregate, and (iii) the Limited Partner has first
notified the General Partner of the opportunity to acquire an equity ownership
interest in such Acquisition Project and the General Partner has informed the
Limited Partner that the Partnership does not desire to acquire such interest.
10.6 DEVELOPMENT PROJECTS. Notwithstanding anything contained in Section
10.4 hereof to the contrary, each Limited Partner and its Controlled Entities
shall not, during the Restricted Period, acquire, hold, own, develop, construct,
improve, maintain, operate, sell, lease, transfer, encumber, convey or otherwise
deal with any Development Project other than through their ownership interest in
the Partnership or the Existing Property Manager or such other Entity
established by the General Partner in which the Partnership holds an ownership
interest in a
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manner similar to the ownership interest that it holds in the Existing Property
Manager, without the prior written consent of the General Partner.
10.7 MANAGEMENT ACTIVITIES. Notwithstanding anything contained in Section
10.4 hereof to the contrary, each Limited Partner and its Controlled Entities
shall not, during the Restricted Period, operate or provide property,
development or asset management services in direct competition with any Property
other than through the Existing Property Manager or such other Entity
established by the General Partner in which the Partnership holds an ownership
interest in a manner similar to the ownership interest that it holds in the
Existing Property Manager.
10.8 ACQUISITION/DEVELOPMENT PROJECTS; MANAGEMENT ACTIVITIES -- FURTHER
ASSURANCES. The Limited Partners acknowledge and agree that the restrictions
contained in Sections 10.5 and 10.6 hereof relating to Acquisition Projects and
Development Projects and the restrictions contained in Section 10.7 shall
continue to remain effective with respect to a Limited Partner and its
Controlled Entities for the applicable periods specified in such Sections 10.5,
10.6 and 10.7, notwithstanding any Transfer of the Partnership Interest of such
Limited Partner. In connection with the Transfer or conversion of a Limited
Partner's entire Partnership Interest, the Limited Partner shall execute and
deliver to the General Partner such instruments or documents as the General
Partner may reasonably request confirming the transferor Limited Partner's
obligations to continue to be bound by the provisions of this Section 10.8 and
Sections 10.5, 10.6 and 10.7 hereof.
10.9 CONVERSION UPON DEATH. So long as Code Section 1014 or a successor
provision remains in effect and provides for the "step-up" in basis of an asset
upon death, as determined by the Partnership's counsel, upon the death of a
Limited Partner, all of such Limited Partner's Partnership Units shall, without
the taking of any action by the General Partner or any heir, representative,
administrator or executor of or for such Limited Partner, automatically convert
as of the date of such death into shares of Common Stock in the amount of the
Common Stock Amount; provided that the General Partner, in its sole and absolute
discretion, shall have the option, instead of issuing the Common Stock Amount to
the estate of the decedent Limited Partner, of paying to such estate the Cash
Amount or any combination of cash and Common Stock equal to the Cash Amount. In
determining the Cash Amount, the Closing Price shall be calculated as of the
date of death. Any "cash" owed may be paid in the form of cash, cashier's or
certified check or by wire transfer of immediately available funds. The General
Partner shall notify the executor, administrator, legal representative or
personal representative of the decedent Limited Partner's estate of the General
Partner's election to issue the Common Stock Amount, to pay the Cash Amount or
to deliver a combination thereof within a reasonable period of time after the
General Partner becomes aware of such death. In the event that any Liens exist
or arise with respect to the decedent Limited Partner's Partnership Units, the
Common Stock Amount or the Cash Amount, as the case may be, shall be reduced by
an amount necessary to discharge such Liens, as determined by the General
Partner in good faith, and the General Partner is expressly authorized to apply
such portion of the consideration as may be necessary to satisfy any
indebtedness in full and to discharge such Lien in full. In the event any state
or local property transfer tax is payable as a result of the transfer of the
decedent Limited Partner's Partnership Units to the General Partner (or its
designee), the decedent Limited Partner's estate shall assume and pay such
transfer tax. If the General Partner elects to pay a portion of the
consideration
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owing in cash because the issuance of the Common Stock Amount would cause the
Person legally entitled to receive such Common Stock, together with such
Person's Affiliates, to Beneficially Own in the aggregate shares of Common Stock
in excess of the Ownership Limit, and, if as a result thereof the General
Partner elects to raise such cash through a public offering of its securities,
borrowings or otherwise, the Cash Amount shall be reduced by the Transaction
Expenses allocable to the amounts required to pay the Cash Amount hereunder;
provided, however, notwithstanding the foregoing, the Cash Amount shall not be
reduced hereunder by an amount exceeding 5% of the Cash Amount computed without
regard to the adjustment for Transaction Expenses.
10.10 LIMITED LIABILITY. No Limited Partner shall be bound by, or
personally liable for, the expenses, liabilities or obligations of the
Partnership, except as provided by this Agreement or the Act.
10.11 RIGHT OF OFFSET. The General Partner shall have the right to offset
any amounts owed to the Partnership by any Limited Partner pursuant to any
written agreement between such Limited Partner and the Partnership pursuant to
which such Limited Partner acquired Partnership Units against any amounts owed
to such Limited Partner by the Partnership hereunder, including the right to
cancel the Partnership Units held by such Limited Partner based upon the fair
market value of such Partnership Units on the date of such cancellation. In the
event that the General Partner exercises its offset rights under this Section
10.11, the General Partner shall notify the affected Limited Partner in writing
of such action.
ARTICLE XI
RIGHTS
11.1 RIGHTS. The Limited Partners identified on Schedule 1 to this
Agreement shall have the right, but not the obligation (such right sometimes
referred to herein as the "Rights"), to convert all or a portion of their
Partnership Units into shares of Common Stock and to sell the remainder (or any
part thereof) of their Partnership Units to the General Partner (or its
designee), at any time or from time to time prior to the fiftieth (50th)
anniversary of the date on which the Completion of the Offering occurs, on the
terms and subject to the conditions and restrictions contained in attached
Exhibit C. The Rights granted hereunder may be exercised by any one or more of
such Limited Partners, on the terms and subject to the conditions and
restrictions contained in attached Exhibit C, upon delivery to the General
Partner of an Exercise Notice substantially in the form of attached Schedule 2,
which notice shall specify the Partnership Units to be sold or converted by such
Limited Partner. Once delivered, the Exercise Notice shall be irrevocable,
subject to the issuance of shares of Common Stock by the General Partner or the
payment of the Cash Amount by the General Partner in respect of such Partnership
Interests, all in accordance with the terms hereof. Notwithstanding anything
contained herein to the contrary, an Additional Limited Partner that acquires
Additional Units pursuant to Sections 4.3 and 4.7 hereof shall not acquire any
interest in, and may not exercise or otherwise participate in, any Rights
pursuant to this Article XI and attached Exhibit C, unless the General Partner
in its sole and absolute discretion approves in writing prior to or
contemporaneous with the admission of such Additional Limited Partner the
acquisition of Rights by such Additional Limited Partner, in
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<PAGE> 43
which event said Schedule 1 shall be amended to add the name of such Additional
Limited Partner.
11.2 TERMS OF RIGHTS. The terms and provisions applicable to the Rights
shall be as set forth in attached Exhibit C, which terms and provisions are
hereby incorporated herein as if set forth in their entirety in this Section
11.2.
ARTICLE XII
ARBITRATION OF DISPUTES
12.1 ARBITRATION. Notwithstanding anything to the contrary contained in
this Agreement, all claims, disputes and controversies between or among any of
the Partners (including, without limitation, any claims, disputes and
controversies between the Partnership and any one or more of the Partners and
any claims, disputes and controversies between any one or more Partners) arising
in any way out of or in connection with this Agreement or the Partnership shall
be resolved by binding arbitration in San Francisco, California, in accordance
with California Civil Procedure Code Sections 1280 et seq. (other than Section
1283.05), this Article XII and, to the extent not inconsistent with this Article
XII (other than the reference in this Article to Sections of the California
Civil Procedure Code), the Expedited Procedures and Commercial Arbitration Rules
of the American Arbitration Association (the "Arbitration Rules"). In the event
of any direct conflict, the terms of this Agreement shall control over any
conflicting provisions of the California Civil Code of Procedure and the
Arbitration Rules, and the terms of the Arbitration Rules shall control over any
conflicting provisions of the California Civil Code of Procedure.
12.2 PROCEDURES. Any arbitration called for by this Article XII shall be
conducted in accordance with the following procedures:
(a) The Partnership or any Partner (the "Requesting Party") may
demand arbitration pursuant to Section 12.1 hereof at any time by giving written
notice of such demand (the "Demand Notice") to any other Partner with respect to
which a claim, dispute or controversy exists hereunder and (if the Requesting
Party is not the Partnership) to the Partnership, which Demand Notice shall
describe in reasonable detail the nature of the claim, dispute or controversy.
(b) Within fifteen (15) days after the giving of a Demand Notice, the
Requesting Party, on the one hand, and each of the other Partners and/or the
Partnership against whom the claim has been made or with respect to which a
dispute has arisen (collectively, the "Responding Party"), on the other hand,
shall select and designate in writing to the other party one reputable,
disinterested individual (a "Qualified Individual") willing to act as an
arbitrator of the claim, dispute or controversy in question. Each of the
Requesting Party and the Responding Party shall use its best efforts to select a
present or former partner of a national accounting firm that is not then
currently employed by such party as its respective Qualified Individual. Within
fifteen (15) days after the foregoing selections have been made, the arbitrators
so selected shall jointly select a present or former partner of a national
accounting firm that is not then currently employed by any of the parties as the
third Qualified Individual willing to act as an arbitrator of the claim, dispute
or controversy in question (the "Third Arbitrator"). In the event that the two
arbitrators
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<PAGE> 44
initially selected are unable to agree on the Third Arbitrator within the second
fifteen (15) day period referred to above, then, on the application of either
party, the American Arbitration Association shall promptly select and appoint a
present or former partner of a national accounting firm that is not currently
employed by any of the parties as the Qualified Individual to act as the Third
Arbitrator in accordance with the terms of the Arbitration Rules. The three
arbitrators selected pursuant to this subsection (b) shall constitute the
arbitration panel for the arbitration in question.
(c) The presentations of the Partners in the arbitration proceeding
shall be commenced and completed within sixty (60) days after the selection of
the arbitration panel pursuant to subsection (b) above, and the arbitration
panel shall render its decision in writing within thirty (30) days after the
completion of such presentations. Any decision concurred in by any two (2) of
the arbitrators shall constitute the decision of the arbitration panel, and
unanimity shall not be required. If a decision concurred in by at least two (2)
of the arbitrators is not rendered within such thirty (30) day period, then each
of the parties shall select a new Qualified Individual willing to act as an
arbitrator and a new arbitration proceeding shall commence in accordance with
this Article XII.
(d) The arbitration panel shall have the discretion to include in its
decision a direction that all or part of the attorneys' fees and costs of the
prevailing party or parties and/or the costs of such arbitration be paid by any
other party or parties. On the application of a party before or after the
initial decision of the arbitration panel, and proof of its attorneys' fees and
costs, the arbitration panel shall order the other party to make any payments
directed pursuant to the preceding sentence.
(e) The Third Arbitrator shall have the right in its discretion to
authorize the obtaining of discovery, including the taking of depositions of
witnesses for the purpose of discovery.
(f) At the request of any party, the arbitrators shall make and
provide to the parties written findings of fact and conclusions of law.
(g) Notwithstanding anything to the contrary provided herein, the
arbitrators shall have no authority to award punitive damages.
12.3 BINDING CHARACTER. Any decision rendered by the arbitration panel
pursuant to this Article XII shall be final and binding on the parties thereto,
and judgment thereon may be entered by any state or federal court of competent
jurisdiction sitting in San Francisco, California.
12.4 EXCLUSIVITY. Arbitration shall be the exclusive method available for
resolution of claims, disputes and controversies described in Section 12.1
hereof, and the Partnership and its Partners stipulate that the provisions
hereof shall be a complete defense to any suit, action, or proceeding in any
court or before any administrative or arbitration tribunal with respect to any
such claim, controversy or dispute. The provisions of this Article XII shall
survive the dissolution of the Partnership. Each Partner consents to the
jurisdiction of any competent court
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<PAGE> 45
sitting in San Francisco, California to compel arbitration in accordance with
the provisions of this Article XII.
12.5 NO ALTERATION OF AGREEMENT. Nothing contained herein shall be deemed
to give the arbitrators any authority, power or right to alter, change, amend,
modify, add to, or subtract from any of the provisions of this Partnership
Agreement.
12.6 ACKNOWLEDGMENT. PURSUANT TO THE TERMS OF THE ORIGINAL AGREEMENT AND/OR
THE FIRST RESTATED AGREEMENT, EACH OF THE PARTNERS IDENTIFIED ON EXHIBIT A TO
THIS AGREEMENT AS ORIGINALLY EXECUTED AGREED TO HAVE ANY DISPUTE ARISING OUT OF
THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION DECIDED BY
NEUTRAL ARBITRATION AS PROVIDED BY THIS AGREEMENT AND ACKNOWLEDGED THAT SUCH
PARTNER WAS GIVING UP ANY RIGHTS THAT SUCH PARTNER MIGHT POSSESS TO HAVE THE
DISPUTE LITIGATED IN A COURT OR JURY TRIAL EXCEPT AS SPECIFICALLY INCLUDED IN
SUCH "ARBITRATION OF DISPUTES" PROVISION. EACH PARTNER IDENTIFIED ON EXHIBIT A
TO THIS AGREEMENT AS ORIGINALLY EXECUTED, BY HAVING EXECUTED THE ORIGINAL
AGREEMENT AND/OR THE FIRST RESTATED AGREEMENT, ACKNOWLEDGED THAT IT HAS GIVEN UP
ITS JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE
SPECIFICALLY INCLUDED IN THIS "ARBITRATION OF DISPUTES" PROVISION AND THAT IF
SUCH PARTNER REFUSES TO SUBMIT TO ARBITRATION AFTER HAVING AGREED TO THIS
PROVISION, SUCH PARTNER MAY BE COMPELLED TO ARBITRATE UNDER THE TERMS OF THIS
AGREEMENT. EACH PARTNER IDENTIFIED ON EXHIBIT A TO THIS AGREEMENT AS ORIGINALLY
EXECUTED, BY HAVING EXECUTED THE ORIGINAL AGREEMENT AND/OR THE FIRST RESTATED
AGREEMENT, ACKNOWLEDGED THAT ITS AGREEMENT TO THIS ARBITRATION PROVISION WAS OR
IS VOLUNTARY. THIS AGREEMENT MODIFIES CERTAIN OF THE TERMS OF THE ORIGINAL
AGREEMENT AND/OR THE FIRST RESTATED AGREEMENT, AND BY EXECUTING THIS AGREEMENT,
EACH PARTNER IDENTIFIED ON EXHIBIT A TO THIS AGREEMENT AS ORIGINALLY EXECUTED
HEREBY CONSENTS TO SUCH MODIFICATIONS. EACH ADDITIONAL LIMITED PARTNER, BY
AGREEING TO BE BOUND BY THE TERMS OF THIS AGREEMENT, SHALL BE DEEMED TO HAVE
ACKNOWLEDGED THAT (i) ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THIS
"ARBITRATION OF DISPUTES" PROVISION SHALL DECIDED BY NEUTRAL ARBITRATION AS
PROVIDED BY THIS AGREEMENT, (ii) SUCH PARTNER IS GIVING UP ANY RIGHTS THAT SUCH
PARTNER MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL
EXCEPT AS SPECIFICALLY INCLUDED IN THIS "ARBITRATION OF DISPUTES" PROVISION,
(iii) IT IS GIVING UP ITS JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE
RIGHTS ARE SPECIFICALLY INCLUDED IN THIS "ARBITRATION OF DISPUTES" PROVISION,
(iv) IF SUCH PARTNER REFUSES TO SUBMIT TO ARBITRATION AFTER HAVING AGREED TO
THIS PROVISION, SUCH PARTNER MAY BE COMPELLED TO ARBITRATE UNDER THE TERMS OF
THIS
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AGREEMENT, AND (v) ITS AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.
ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices, offers or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and may be
personally served, telecopied or sent by United States mail and shall be deemed
to have been given when delivered in person, upon receipt of telecopy or three
business days after deposit in United States mail, registered or certified,
postage prepaid, and properly addressed, by or to the appropriate party. For
purposes of this Section 13.1, the addresses of the Partners as of the date
hereof are set forth on attached Exhibit F. The address of any Limited Partner
may be changed by a notice in writing given to the General Partner in accordance
with the provisions hereof, and the address of the General Partner may be
changed by a notice in writing given to each of the Limited Partners in
accordance with the provisions hereof.
13.2 SUCCESSORS. This Agreement and all the terms and provisions hereof
shall be binding upon and shall inure to the benefit of all Partners, and their
legal representatives, heirs, successors and permitted assigns, except as
expressly herein otherwise provided.
13.3 EFFECT AND INTERPRETATION. This Agreement shall be governed by and
construed in conformity with the laws of the State of California.
13.4 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which shall constitute one and the same
instrument.
13.5 PARTNERS NOT AGENTS. Except as specifically provided herein, nothing
contained herein shall be construed to constitute any Partner the agent of
another Partner, or in any manner to limit the Partners in the carrying on of
their own respective businesses or activities.
13.6 ENTIRE UNDERSTANDING; ETC. Except as set forth in this Section 13.6,
this Agreement constitutes the entire agreement and understanding among the
Partners with respect to the matters set forth in this Agreement. Except to the
extent otherwise expressly provided herein, including, without limitation, in
Section 12.6 with respect to the Partners' consent to the arbitration provisions
set forth in the Original Agreement and/or the First Restated Agreement and
herein, and in Sections 13.12 and 13.13 with respect to various tax consequence
acknowledgements and securities representations made in the Original Agreement
and/or the First Restated Agreement, all prior agreements among the Partners,
whether written or oral, with respect to the matters set forth in this
Agreement, are merged herein and shall be of no force or effect, and this
Agreement supersedes in the entirety the Original Agreement and the First
Restated Agreement. Notwithstanding the foregoing, (i) the one year restriction
on the exercise of Rights with respect to the Emeryville Additional Units (as
such term is defined in the Eighth Amendment to the First Restated Agreement) as
set forth in Paragraph 6 of the Eighth Amendment to the First Restated Agreement
shall continue in full force and effect and shall not be merged herein, (ii) the
New Limited Partners (as such term is defined in such Eighth
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Amendment) shall have the right to distribute their Partnership Units to those
certain Persons identified on Schedule 1A to such Eighth Amendment subject to
the conditions set forth in the first paragraph of said Eighth Amendment, in
which event such Persons, subject to complying with such conditions, shall be
admitted to the Partnership as Limited Partners in the place of such
distributing New Limited Partners, and (iii) the provisions of the Guaranty
Agreement and the Reimbursement Agreements shall under no circumstances be
deemed to be merged herein.
13.7 AMENDMENTS.
(a) Except to the extent expressly otherwise provided herein
(including, without limitation, in Section 13.7(b) below), this Agreement may
not be amended except by a written instrument signed by the General Partner (and
approved on behalf of the General Partner by at least a majority of its
directors who are not Limited Partners or Affiliates of the General Partner or
any of the Limited Partners) and a Majority-In-Interest of the Limited Partners;
provided that no amendment of this Agreement may be made without the consent of
all of the affected Limited Partners if such amendment (i) converts any Limited
Partner's interest in the Partnership into a general partnership interest (other
than the General Partner if the General Partner is also a Limited Partner), (ii)
modifies the limited liability of any Limited Partner in a manner adverse to
such Limited Partner (other than the General Partner if the General Partner is
also a Limited Partner), (iii) alters or modifies the Rights set forth in
Article XI in a manner adverse to such Partner, or (iv) amends any provision of
this Section 13.7.
(b) Notwithstanding anything to the contrary provided in Section
13.7(a) above, the General Partner shall have the power, without the consent of
any Limited Partner, to amend this Agreement as may be required to facilitate or
implement any of the following:
(i) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the Limited Partners;
(ii) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;
(iii) to reflect the granting of Rights to Additional Limited
Partners;
(iv) to set forth the rights, powers and duties of the holders
of any Additional Units issued pursuant to Section 4.3(a) hereof
(including, without limitation, amending the distribution and allocation
provisions set forth herein);
(v) to reflect any change that does not adversely affect the
Limited Partners in any material respect, to cure any ambiguity, to
correct or supplement any defective provision in this Agreement, or to
make other changes with respect to matters arising under this Agreement
that will not be inconsistent with any other provision of this Agreement;
and
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(vi) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or regulations of a
Federal or state agency or contained in Federal or state law.
13.8 SEVERABILITY. If any provision of this Agreement, or the application
of such provision to any person or circumstance, shall be held invalid by a
court of competent jurisdiction, the remainder of this Agreement, or the
application of such provision to persons or circumstances other than those to
which it is held invalid by such court, shall not be affected thereby.
13.9 TRUST PROVISION. This Agreement, to the extent executed by the trustee
of a trust, is executed by such trustee solely as trustee and not in a separate
capacity. Nothing herein contained shall create any liability on, or require the
performance of any covenant by, any such trustee individually, nor shall
anything contained herein subject the individual personal property of any
trustee to any liability.
13.10 PRONOUNS AND HEADINGS. As used herein, all pronouns shall include the
masculine, feminine and neuter, and all defined terms shall include the singular
and plural thereof whenever the context and facts require such construction. The
headings, titles and subtitles herein are inserted for convenience of reference
only and are to be ignored in any construction of the provisions hereof. Any
references in this Agreement to "including" shall be deemed to mean "including
without limitation".
13.11 ASSURANCES. Each of the Partners shall hereafter execute and deliver
such further instruments and do such further acts and things as may be required
or useful to carry out the intent and purpose of this Agreement and as are not
inconsistent with the terms hereof.
13.12 TAX CONSEQUENCES. Each Partner identified on Exhibit A to this
Agreement as originally executed acknowledged in the Original Agreement and/or
the First Restated Agreement that it has relied fully upon the advice of its own
legal counsel and/or accountant in determining the tax consequences of the
Original Agreement and/or the First Restated Agreement, as applicable, and the
transactions contemplated thereby and not upon any representations or advice by
the General Partner or by any other Partner. Each Additional Limited Partner, by
agreeing to be bound by the terms of this Agreement, shall be deemed to have
acknowledged that 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 thereby and not upon any representations or advice by
the General Partner or by any other Partner.
13.13 SECURITIES REPRESENTATIONS. In the Original Agreement and/or the
First Restated Agreement, each Limited Partner identified on Exhibit A to this
Agreement, as originally executed, represented and warranted to the Partnership
and the General Partner that such Limited Partner (i) acquired its Partnership
Units for itself for investment purposes only, and not with a view to any resale
or distribution of such Partnership Units, (ii) has been advised and understands
that such Partnership Units have not been and will not be registered under the
Securities Act or any applicable state securities laws and, therefore, cannot be
resold unless such Partnership Units are registered under the Securities Act and
all applicable state securities laws,
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<PAGE> 49
or unless an exemption from registration is available, and (iii) has, either
alone or with its "purchaser representatives" as that term is defined in Rule
501(h) under the Securities Act, such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Partnership. In the Original Agreement and/or the First
Restated Agreement, each Limited Partner identified on Exhibit A to this
Agreement as originally executed further acknowledged that the Partnership and
the General Partner made available to such Limited Partner, at a reasonable time
prior to its acquisition of its Partnership Interest, the opportunity to ask
questions and receive answers concerning the terms and conditions of such
acquisition and to obtain any additional information which the Partnership
and/or the General Partner possessed or could acquire without unreasonable
effort or expense that is necessary to verify the accuracy of the information
furnished by the Partnership and the General Partner in connection with such
acquisition. Each Limited Partner admitted to the Partnership after the date
hereof, shall, by its agreeing to be bound by the terms hereof, be deemed to
have represented and warranted to the Partnership and the General Partner that
such Limited Partner (i) acquired its Partnership Units for itself for
investment purposes only, and not with a view to any resale or distribution of
such Partnership Units, (ii) has been advised and understands that such
Partnership Units have not been and will not be registered under the Securities
Act or any applicable state securities laws and, therefore, cannot be resold
unless such Partnership Units are registered under the Securities Act and all
applicable state securities laws, or unless an exemption from registration is
available, and (iii) has, either alone or with its "purchaser representatives"
as that term is defined in Rule 501(h) under the Securities Act, such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of its investment in the Partnership, and that
the Partnership and the General Partner made available to such Limited Partner,
at a reasonable time prior to its acquisition of its Partnership Interest, the
opportunity to ask questions and receive answers concerning the terms and
conditions of such acquisition and to obtain any additional information which
the Partnership and/or the General Partner possessed or could acquire without
unreasonable effort or expense that is necessary to verify the accuracy of the
information furnished by the Partnership and the General Partner in connection
with such acquisition.
13.14 MERGER WAIVER. Pursuant to the terms of the First Restated Agreement,
certain of the Limited Partners acknowledged that, in connection with any
proposed merger, tender offer or acquisition of the General Partner or the
Partnership or similar event, the General Partner's obligations to its
shareholders may conflict with the interests of the Limited Partners and that
each of such Limited Partners had consulted with its advisors, including legal
counsel, regarding such conflicts and understood such conflicts, and each of
such Limited Partners waived, and agreed that it would not pursue, any claims
against the General Partner to the extent that the General Partner is fulfilling
its obligations to its shareholders in connection with any such proposed merger,
tender offer, acquisition or similar event and agreed, to the extent that the
General Partner is fulfilling its obligations to its shareholders, not to enjoin
or to attempt to enjoin any such proposed merger, tender offer, acquisition or
similar event. Each Limited Partner signing below or admitted to the Partnership
after the date hereof, shall, by its agreeing to be bound by the terms hereof,
be deemed to have acknowledged that, in connection with any proposed merger,
tender offer or acquisition of the General Partner or the Partnership or similar
event, the General Partner's obligations to its shareholders may conflict with
the interests of the Limited Partners and that each of such Limited Partners had
consulted with its advisors, including legal counsel, regarding such conflicts
and understood such conflicts, and to have
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<PAGE> 50
waived, and agreed that it would not pursue, any claims against the General
Partner to the extent that the General Partner is fulfilling its obligations to
its shareholders in connection with any such proposed merger, tender offer,
acquisition or similar event and agreed, to the extent that the General Partner
is fulfilling its obligations to its shareholders, not to enjoin or to attempt
to enjoin any such proposed merger, tender offer, acquisition or similar event.
ARTICLE XIV
POWER OF ATTORNEY
14.1 POWER OF ATTORNEY.
(a) Each Limited Partner and each Assignee hereby constitutes and
appoints the General Partner, any Liquidating Trustee, and authorized officers
and attorneys-in-fact of each, and each of those acting singly, in each case
with full power of substitution, as its true and lawful agent and
attorney-in-fact, with full power and attorney in its name, place and stead to:
(i) execute, swear to, seal, acknowledge, deliver, file and
record in the appropriate public offices (a) all certificates, documents
and other instruments (including, without limitation, this Agreement and
the Certificate and all amendments or restatements thereof) that the
General Partner or the Liquidating Trustee deems appropriate or
necessary to form, qualify or continue the existence or qualification of
the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability to the extent provided by
applicable law) in the State of California and in all other
jurisdictions in which the Partnership may or plans to conduct business
or own property; (b) all instruments that the General Partner deems
appropriate or necessary to reflect any amendment, change, modification
or restatement of this Agreement as permitted in and in accordance with
its terms; (c) all conveyances and other instruments or documents that
the General Partner deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of
this Agreement, including, without limitation, a certificate of
cancellation; (d) all instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to, or other events
described in, Articles VIII or IX hereof or the Capital Contribution of
any Partner; and (e) all certificates, documents and other instruments
relating to the determination of the rights, preferences and privileges
of Partnership Interests; and
(ii) execute, swear to, seal, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion of the
General Partner, to make, evidence, give, confirm or ratify any vote,
consent, approval, agreement or other action which is made or given by
the Partners hereunder or is consistent with the terms of this Agreement
or appropriate or necessary, in the sole discretion of the General
Partner, to effectuate the terms or intent of this Agreement.
(b) Nothing contained herein shall be construed as authorizing
the General Partner to amend this Agreement except in accordance with Section
13.7 hereof or as may be otherwise expressly provided for in this Agreement.
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<PAGE> 51
14.2 DURATION OF POWER. The power of attorney granted herein is hereby
declared to be irrevocable and coupled with an interest in recognition of the
fact that each of the Partners will be relying upon the power of the General
Partner to act as contemplated by this Agreement in any filing or other action
by it on behalf of the Partnership, and it shall: (i) survive the transfer of
all or any portion of such Limited Partner's or Assignee's Partnership
Interests; (ii) survive the death, incapacity, bankruptcy or insolvency of the
Limited Partner or Assignee; and (iii) extend to such Limited Partner's or
Assignee's heirs, successors, assigns and personal representatives. Each such
Limited Partner or Assignee hereby agrees to be bound by any action taken by the
General Partner, acting in good faith pursuant to such power of attorney; and
each Limited Partner or Assignee hereby waives any and all defenses which may be
available to contest, negate or disaffirm the action of the General Partner,
taken in good faith under such power of attorney. Each Limited Partner or
Assignee shall execute and deliver to the General Partner or the Liquidating
Trustee, within fifteen (15) days after receipt of the General Partner's or
Liquidating Trustee's request therefor, such further designation, powers of
attorney and other instruments as the General Partner or the Liquidating
Trustee, as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.
IN WITNESS WHEREOF, this Agreement is hereby entered into among the
undersigned Partners as of the date first written above.
GENERAL PARTNER: SPIEKER PROPERTIES, INC.,
a Maryland corporation
By: /s/ WARREN E. SPIEKER, JR.
---------------------------------
Warren E. Spieker, Jr.
Its: Chief Executive Officer
--------------------------------
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COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Warren E. Spieker, Jr.
----------------------------------------
Print Name of Limited Partner
/s/ WARREN E. SPIEKER, JR.
----------------------------------------
Signature of Limited Partner
<PAGE> 53
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Dennis E. Singleton
----------------------------------------
Print Name of Limited Partner
/s/ DENNIS E. SINGLETON
----------------------------------------
Signature of Limited Partner
<PAGE> 54
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
John K. French
----------------------------------------
Print Name of Limited Partner
/s/ JOHN K. FRENCH
----------------------------------------
Signature of Limited Partner
<PAGE> 55
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Bruce E. Hosford
----------------------------------------
Print Name of Limited Partner
/s/ BRUCE E. HOSFORD
----------------------------------------
Signature of Limited Partner
<PAGE> 56
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
BLAKE FAMILY TRUST
----------------------------------------
Print Name of Limited Partner
[SIG], trustee
----------------------------------------
Signature of Limited Partner
<PAGE> 57
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
John Davenport
----------------------------------------
Print Name of Limited Partner
/s/ JOHN DAVENPORT
----------------------------------------
Signature of Limited Partner
<PAGE> 58
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
James C. Eddy
----------------------------------------
Print Name of Limited Partner
/s/ JAMES C. EDDY
----------------------------------------
Signature of Limited Partner
<PAGE> 59
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
John A. Foster
----------------------------------------
Print Name of Limited Partner
/s/ JOHN A. FOSTER
----------------------------------------
Signature of Limited Partner
<PAGE> 60
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Donald S. Jefferson
----------------------------------------
Print Name of Limited Partner
/s/ DONALD S. JEFFERSON
----------------------------------------
Signature of Limited Partner
<PAGE> 61
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Eli Khouri
----------------------------------------
Print Name of Limited Partner
/s/ ELI KHOURI
----------------------------------------
Signature of Limited Partner
<PAGE> 62
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Vincent D. Mulroy
----------------------------------------
Print Name of Limited Partner
/s/ VINCENT D. MULROY
----------------------------------------
Signature of Limited Partner
<PAGE> 63
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Richard L. Romney
----------------------------------------
Print Name of Limited Partner
/s/ RICHARD L. ROMNEY
----------------------------------------
Signature of Limited Partner
<PAGE> 64
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Peter H. Schnugg
----------------------------------------
Print Name of Limited Partner
/s/ PETER H. SCHNUGG
----------------------------------------
Signature of Limited Partner
<PAGE> 65
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
John B. Souther Jr.
----------------------------------------
Print Name of Limited Partner
/s/ JOHN B. SOUTHER JR.
----------------------------------------
Signature of Limited Partner
<PAGE> 66
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Craig Vought
----------------------------------------
Print Name of Limited Partner
/s/ CRAIG VOUGHT
----------------------------------------
Signature of Limited Partner
<PAGE> 67
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Joel Benoliel
----------------------------------------
Print Name of Limited Partner
/s/ JOEL BENOLIEL
----------------------------------------
Signature of Limited Partner
<PAGE> 68
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Adrian J. Gordon
----------------------------------------
Print Name of Limited Partner
/s/ ADRIAN J. GORDON
----------------------------------------
Signature of Limited Partner
<PAGE> 69
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Elke Strunka
----------------------------------------
Print Name of Limited Partner
/s/ ELKE STRUNKA
----------------------------------------
Signature of Limited Partner
<PAGE> 70
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Anthony P. Meier, for The Meier Family Trust
--------------------------------------------
Print Name of Limited Partner
/s/ ANTHONY P. MEIER
--------------------------------------------
Signature of Limited Partner
<PAGE> 71
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Joseph D. Russell, Jr.
----------------------------------------
Print Name of Limited Partner
/s/ JOSEPH D. RUSSELL, JR.
----------------------------------------
Signature of Limited Partner
<PAGE> 72
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Stuart Rothstein
----------------------------------------
Print Name of Limited Partner
/s/ STUART ROTHSTEIN
----------------------------------------
Signature of Limited Partner
<PAGE> 73
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Josh N. Smith
----------------------------------------
Print Name of Limited Partner
/s/ JOSH N. SMITH
----------------------------------------
Signature of Limited Partner
<PAGE> 74
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
John R. Winther
----------------------------------------
Print Name of Limited Partner
/s/ JOHN R. WINTHER
----------------------------------------
Signature of Limited Partner
<PAGE> 75
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Frank L. Alexander
----------------------------------------
Print Name of Limited Partner
/s/ FRANK L. ALEXANDER
----------------------------------------
Signature of Limited Partner
<PAGE> 76
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Richard Leider
----------------------------------------
Print Name of Limited Partner
/s/ RICHARD LEIDER
----------------------------------------
Signature of Limited Partner
<PAGE> 77
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Richard P. Gervais
----------------------------------------
Print Name of Limited Partner
/s/ RICHARD P. GERVAIS
----------------------------------------
Signature of Limited Partner
<PAGE> 78
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Print Name of Limited Partner
THE LATHROP TRUST
----------------------------------------
The Lathrop Trust (u/t/d November 19, 1993)
Signature of Limited Partner:
/s/ F. PIERCE LATHROP
----------------------------------------
F. Pierce 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
<PAGE> 79
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Print Name of Limited Partner
THE LATHROP TRUST
----------------------------------------
The Lathrop Trust (u/t/d November 19, 1993)
Signature of Limited Partner:
----------------------------------------
F. Pierce Lathrop
As Trustee of The Lathrop Trust
/s/ MARCIA FAY LATHROP
----------------------------------------
Marcia Fay Lathrop
As Trustee of The Lathrop Trust
----------------------------------------
Sandra L. Hyde
As Trustee of The Lathrop Trust
<PAGE> 80
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Print Name of Limited Partner
THE LATHROP TRUST
----------------------------------------
The Lathrop Trust (u/t/d November 19, 1993)
Signature of Limited Partner:
----------------------------------------
F. Pierce Lathrop
As Trustee of The Lathrop Trust
----------------------------------------
Marcia Fay Lathrop
As Trustee of The Lathrop Trust
/s/ SANDRA L. HYDE
----------------------------------------
Sandra L. Hyde
As Trustee of The Lathrop Trust
<PAGE> 81
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Betty G. Austin
----------------------------------------
Print Name of Limited Partner
/s/ BETTY G. AUSTIN
----------------------------------------
Signature of Limited Partner
<PAGE> 82
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Robert H. Goldsmith
----------------------------------------
Print Name of Limited Partner
/s/ ROBERT H. GOLDSMITH
----------------------------------------
Signature of Limited Partner
<PAGE> 83
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Steven P. Lathrop
----------------------------------------
Print Name of Limited Partner
/s/ STEVEN P. LATHROP
----------------------------------------
Signature of Limited Partner
<PAGE> 84
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Shand Lathrop Green
----------------------------------------
Print Name of Limited Partner
/s/ SHAND LATHROP GREEN
----------------------------------------
Signature of Limited Partner
<PAGE> 85
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Thomas Lathrop
----------------------------------------
Print Name of Limited Partner
/s/ THOMAS LATHROP
----------------------------------------
Signature of Limited Partner
<PAGE> 86
COUNTERPART LIMITED PARTNER SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF SPIEKER PROPERTIES, L.P.
DATED AS OF OCTOBER 13, 1997
Gregg R. Dougherty
----------------------------------------
Print Name of Limited Partner
/s/ GREGG R. DOUGHERTY
----------------------------------------
Signature of Limited Partner
<PAGE> 87
14.2 DURATION OF POWER. The power of attorney granted herein is hereby
declared to be irrevocable and coupled with an interest in recognition of the
fact that each of the Partners will be relying upon the power of the General
Partner to act as contemplated by this Agreement in any filing or other action
by it on behalf of the Partnership, and it shall: (i) survive the transfer of
all or any portion of such Limited Partner's or Assignee's Partnership
Interests; (ii) survive the death, incapacity, bankruptcy or insolvency of the
Limited Partner or Assignee; and (iii) extend to such Limited Partner's or
Assignee's heirs, successors, assigns and personal representatives. Each such
Limited Partner or Assignee hereby agrees to be bound by any action taken by the
General Partner, acting in good faith pursuant to such power of attorney; and
each Limited Partner or Assignee hereby waives any and all defenses which may be
available to contest, negate or disaffirm the action of the General Partner,
taken in good faith under such power of attorney. Each Limited Partner or
Assignee shall execute and deliver to the General Partner or the Liquidating
Trustee, within fifteen (15) days after receipt of the General Partner's or
Liquidating Trustee's request therefor, such further designation, powers of
attorney and other instruments as the General Partner or the Liquidating
Trustee, as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.
IN WITNESS WHEREOF, this Agreement is hereby entered into among the
undersigned Partners as of the date first written above.
GENERAL PARTNER: SPIEKER PROPERTIES, INC.,
a Maryland corporation
By:
---------------------------------
Its:
--------------------------------
46
<PAGE> 88
EXHIBIT A
PARTNERSHIP UNITS
<TABLE>
<CAPTION>
General Partner: Partnership Units
- ---------------- ----------------
<S> <C>
Spieker Properties, Inc. 2,723,648
Limited Partners:
- -----------------
Spieker Properties, Inc. (*) 44,548,730
Warren E. Spieker, Jr. 2,401,089
Dennis E. Singleton 627,017
John K. French 535,405
Bruce E. Hosford 692,350
Bradley N. Blake 106,050
Gregg R. Daugherty 45,655
John G. Davenport 154,228
James C. Eddy 147,735
John A. Foster 145,210
Donald S. Jefferson 231,848
Vincent D. Mulroy 124,493
Richard L. Romney 120,121
Peter H. Schnugg 205,475
John B. Souther, Jr. 86,595
Craig G. Vought 105,965
Joel Benoliel 66,798
</TABLE>
A-1
<PAGE> 89
<TABLE>
<S> <C>
Adrian J. Gordon 10,738
Elke Strunka 5,369
Meier Family Trust (u/t/d June 17, 1982) 573,662
Joseph D. Russell, Jr. (**) 11,337
Stuart A. Rothstein (**) 6,877
Josh N. Smith (**) 4,020
Peter C. Thompson (**) 8,306
John R. Winther (**) 9,734
Frank L. Alexander (**) 5,714
Richard T. Leider (**) 4,286
Eli Khouri III (**) 2,857
Richard Gervais (**) 4,020
F.P. Lathrop, Marcia Fay Lathrop and Sandra L. Hyde, as
Trustees of The Lathrop Trust (u/t/d November 19, 1993) 724,393
Betty G. Austin 16,894
Robert Goldsmith 1,928
Steven Lathrop 7,249
Shand Green 923
Thomas Lathrop 6,243
</TABLE>
(*) Includes 2,531,645 Partnership Units allocated to the Class B Common Stock
and 1,176,470 Partnership Units allocated to the Class C Common Stock, but
excludes 1,000,000 shares of Series A Preferred Stock, which is
convertible into Common Stock equivalent to 1,219,512 Partnership Units.
If the Series A Preferred Stock were converted into Common Stock, Spieker
Properties, Inc. would hold 45,768,242 Partnership Units as a Limited
Partner.
(**) Transferee of Partnership Units pursuant to the terms of the Merit Plan.
A-2
<PAGE> 90
EXHIBIT B
ALLOCATIONS
Allocation of Net Income and Net Loss.
(a) Net Income. Except as otherwise provided herein, Net Income
for any fiscal year or other applicable period shall be allocated in the
following order and priority:
(1) First, to the Partners, until the cumulative Net
Income allocated pursuant to this Subparagraph 1(a)(1) for the current and all
prior periods equals the cumulative Net Loss allocated pursuant to Subparagraphs
1(b)(3) and (4) hereof for all prior periods, among the Partners in the reverse
order that such Net Loss was allocated (and, in the event of a shift of a
Partner's interest in the Partnership, to the Partners in a manner that most
equitably reflects the successors in interest of such Partners);
(2) Second, to the General Partner, until the cumulative
Net Income allocated pursuant to this Subparagraph 1(a)(2) for the current and
all prior periods equals the cumulative Net Loss allocated pursuant to
Subparagraph 1(b)(2) hereof for all prior periods;
(3) Third, to the General Partner until the cumulative
amount of Net Income allocated pursuant to this Subparagraph 1(a)(3),
Subparagraph 1(a)(3) of Exhibit E to the First Restated Agreement as in effect
immediately prior to the Fourth Amendment thereto and Subparagraph 1(c)(1)(iii)
of Exhibit E to the First Restated Agreement as in effect immediately prior to
the Third Amendment thereto equals the total amount of dividends paid on the
Series A Preferred Stock as of or prior to the date of such allocation plus the
total amount of accrued but unpaid dividends on any Series A Preferred Stock
issued and outstanding as of such date plus the total amount of dividends paid
on the Series B Cumulative Redeemable Preferred Stock as of or prior to the date
of such allocation plus the total amount of accrued but unpaid dividends on any
Series B Cumulative Redeemable Preferred Stock issued and outstanding as of such
date plus the total amount of dividends paid on the Series C Cumulative
Redeemable Preferred Stock as of or prior to the date of such allocation plus
the total amount of accrued but unpaid dividends on any Series C Cumulative
Redeemable Preferred Stock issued and outstanding as of such date;
(4) Fourth, to the General Partner on account of the
Common B Interest and the Common C Interest, an amount equal to the sum of (x)
$0.0625 per annum multiplied by the number of shares issued and outstanding of
Class B Common Stock, plus (y) $0.05 per annum multiplied by the number of
shares issued and outstanding of Class C Common Stock, prorated on a daily basis
over each calendar year, and adjusted, as appropriate, to reflect any variance
in the number of such shares issued and outstanding from time to time; and
(5) Thereafter, the balance of the Net Income, if any,
shall be allocated to the Partners in accordance with their respective
Percentage Interests.
B-1
<PAGE> 91
(b) Net Loss. Net Loss of the Partnership for each fiscal year or
other applicable period shall be allocated as follows:
(1) First, to the Partners in accordance with their
respective Percentage Interests until the Capital Account balances of the
Limited Partners are reduced to zero (for purpose of this calculation, such
Partners' share of Partnership Minimum Gain shall be added back to their Capital
Accounts);
(2) Second, to the General Partner until its Capital
Account balance has been reduced to zero (for purpose of this calculation, such
Partner's share of Partnership Minimum Gain shall be added back to its Capital
Account);
(3) Thereafter, to the Partners in accordance with their
then Percentage Interests; and
(4) Notwithstanding the preceding provisions of this
Subparagraph 1(b), to the extent that any Net Loss allocated to a Partner under
Subparagraph 1(b) would cause such Partner (hereinafter, a "Restricted Partner")
to have an Adjusted Capital Account Deficit as of the end of the fiscal year to
which such Net Loss relates, such Net Loss shall not be allocated to such
Restricted Partner and instead shall be allocated to the other Partner(s)
(hereinafter, the "Permitted Partners") pro rata in accordance with their
relative Percentage Interests.
(c) Book-Up and Capital Account Adjustments. On any
day on which Series A Preferred Stock is redeemed or converted into Common Stock
or the Series B Cumulative Redeemable Preferred Stock is redeemed or the Series
C Cumulative Redeemable Preferred Stock is redeemed, the Partnership may, in the
discretion of the General Partner, adjust the Gross Asset Values of all
Partnership assets to equal their respective gross fair market values and shall
allocate the amount of such adjustment as Net Income or Net Loss pursuant to
Paragraph 1(a) hereof.
Special Allocations.
Notwithstanding any provisions of Paragraph 1 of this
Exhibit B, the following special allocations shall be made in the following
order:
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If there
is a net decrease in Partnership Minimum Gain for any Partnership fiscal year
(except as a result of conversion or refinancing of Partnership indebtedness,
certain capital contributions or revaluation of the Partnership property as
further outlined in Regulation Sections 1.704-2(d)(4), (f)(2) or (f)(3)), each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to that
Partner's share of the net decrease in Partnership Minimum Gain. The items to be
so allocated shall be determined in accordance with Regulation Section
1.704-2(f). This Paragraph 2(a) is intended to comply with the minimum gain
chargeback requirement in said section of the Regulations and shall be
B-2
<PAGE> 92
interpreted consistently therewith. Allocations pursuant to this Paragraph 2(a)
shall be made in proportion to the respective amounts required to be allocated
to each Partner pursuant hereto.
(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If
there is a net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt
during any fiscal year (other than due to the conversion, refinancing or other
change in the debt instrument causing it to become partially or wholly
nonrecourse, certain capital contributions, or certain revaluations of
Partnership property as further outlined in Regulation Section 1.704-2(i)(4)),
each Partner shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to that
Partner's share of the net decrease in the Minimum Gain Attributable to Partner
Nonrecourse Debt. The items to be so allocated shall be determined in accordance
with Regulation Section 1.704-2(i)(4) and (j)(2). This Paragraph 2(b) is
intended to comply with the minimum gain chargeback requirement with respect to
Partner Nonrecourse Debt contained in said section of the Regulations and shall
be interpreted consistently therewith. Allocations pursuant to this Paragraph
2(b) shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant hereto.
(c) Qualified Income Offset. In the event a Limited Partner
unexpectedly receives any adjustments, allocations or distributions described in
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such Limited
Partner has an Adjusted Capital Account Deficit, items of Partnership income and
gain shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate the Adjusted Capital Account Deficit as quickly as
possible. This Paragraph 2(c) is intended to constitute a "qualified income
offset" under Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal
year or other applicable period shall be allocated to the Partners in accordance
with their respective Percentage Interests.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any fiscal year or other applicable period shall be specially
allocated to the Partner that bears the economic risk of loss for the debt
(i.e., the Partner Nonrecourse Debt) in respect of which such Partner
Nonrecourse Deductions are attributable (as determined under Regulation Section
1.704-2(b)(4) and (i)(1)).
(f) Curative Allocations. It is the intent of the Partnership
that, to the extent possible, the Capital Account balances of the Partners be in
the following relationship: (1) first, the Capital Account of the General
Partner should be at least equal to $25.00 multiplied by the number of issued
and outstanding shares of Series A Preferred Stock, Series B Cumulative
Redeemable Preferred Stock and Series B Cumulative Redeemable Preferred Stock;
and (2) second, the Limited Partners' Capital Account balances and the General
Partner's Capital Account balance in excess of the product described in (1)
should be in proportion to their Percentage Interests. Thus, items of "book"
income, gain, loss, and deduction shall be allocated among the Partners so that,
to the extent possible, the resulting Partners' Capital Account balances bear
this relationship. This Paragraph 2(f) is intended to minimize to the extent
possible and to the extent necessary any economic distortions which may result
from application
B-3
<PAGE> 93
of the Regulatory Allocations and shall be interpreted in a manner consistent
therewith. For purposes hereof, "Regulatory Allocations" shall mean the
allocations provided under Subparagraph 1(b)(2) and this Paragraph 2 (save
Subparagraphs 2(d) and (f) hereof).
(g) Merit Plan. To the extent that the Partnership recognizes
income or gain or is entitled to deduction, expense or loss with respect to
transfers of interests pursuant to the Merit Plan, all such items shall be
allocated among the Limited Partners in accordance with the Merit Plan.
3. Tax Allocations.
(a) Generally. Subject to Paragraphs 3(b) and (c) below, items of
income, gain, loss, deduction and credit to be allocated for income tax purposes
(collectively, "Tax Items") shall be allocated among the Partners on the same
basis as their respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from the
sale of property is treated as gain which is ordinary income by virtue of the
application of Code Section 1245 or 1250 ("Affected Gain"), then (A) such
Affected Gain shall be allocated among the Partners in the same proportion that
the depreciation and amortization deductions giving rise to the Affected Gain
were allocated and (B) other Tax Items of gain of the same character that would
have been recognized, but for the application of Code Sections 1245 and/or 1250,
shall be allocated away from those Partners who are allocated Affected Gain
pursuant to Clause (A) so that, to the extent possible, the other Partners are
allocated the same amount, and type, of capital gain that would have been
allocated to them had Code Sections 1245 and/or 1250 not applied; provided,
however, that the net amount of Tax Items allocated to each Partner shall be the
same as if this Paragraph 3(a) did not exist. For purposes hereof, in order to
determine the proportionate allocations of depreciation and amortization
deductions for each fiscal year or other applicable period, such deductions
shall be deemed allocated on the same basis as Net Income and Net Loss for such
respective period.
(c) Allocations Respecting Section 704(c) and Revaluations. If
any Partnership property is subject to Code Section 704(c) or is reflected in
the Capital Accounts of the Partners and on the books of the Partnership at a
book value that differs from the adjusted tax basis of such property, then the
tax items with respect to such property shall, in accordance with the
requirements of Regulations Section 1.704-1(b)(4)(i), be shared among the
Partners in a manner that takes account of the variation between the adjusted
tax basis of the applicable property and its book value in the same manner as
variations between the adjusted tax basis and fair market value of property
contributed to the Partnership are taken into account in determining the
Partners' share of tax items under Code Section 704(c). The General Partner is
authorized to choose any reasonable method permitted by the Regulations pursuant
to Code Section 704(c), including the "remedial" method, the "curative" method
and the "traditional" method.
(d) Code Section 752 Specification. Pursuant to Regulations
Section 1.752-3, the Partners' interest in Partnership profits for purposes of
determining the Partners' shares of excess nonrecourse liabilities shall be
their Percentage Interests.
B-4
<PAGE> 94
EXHIBIT C
RIGHTS TERMS
The Rights shall be subject to the following terms and conditions:
1. DEFINITIONS. The following terms and phrases shall, for purposes
of this Exhibit C and the Agreement, have the meanings set forth below:
"BENEFICIALLY OWN" shall mean the ownership of Common Stock by a
Person who would be treated as an owner of such Shares of Common Stock either
directly or constructively through the application of Section 544 of the Code,
as modified by Section 856(h)(1)(B) of the Code.
"CONVERSION COMPONENT EXERCISE NOTICE" shall have the meaning set
forth in Paragraph 2(a) of this Exhibit C.
"CONVERSION RIGHTS" shall have the meaning set forth in Paragraph
2(a) of this Exhibit C.
"ELECTION NOTICE" shall mean the written notice to be given by the
General Partner to the Exercising Partners in response to the receipt by the
General Partner of an Exercise Notice from such Exercising Partners
substantially in the form of Schedule 3 to the Agreement.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any successor statute.
"EXERCISE NOTICE" shall mean and include a Conversion Component
Exercise Notice and/or a Sale Component Exercise Notice.
"EXERCISING PARTNERS" shall have the meaning set forth in Paragraph
2 of this Exhibit C.
"OFFERED INTERESTS" shall mean the Partnership Units of the
Exercising Partners identified in a Conversion Component Exercise Notice or a
Sale Component Exercise Notice which, pursuant to the exercise of Conversion
Rights or Sale Rights, can be acquired by the General Partner under the terms
hereof.
"SALE COMPONENT EXERCISE NOTICE" shall have the meaning set forth
in Paragraph 2(b) of this Exhibit C..
"SALE RIGHTS" shall have the meaning set forth in Paragraph 2(b) of
this Exhibit C.
2. DELIVERY OF EXERCISE NOTICES. Any one or more Limited Partners
possessing Rights ("Exercising Partners") may, subject to the limitations set
forth herein:
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<PAGE> 95
(a) deliver to the General Partner written notice ("Conversion
Component Exercise Notice") pursuant to which such Exercising Partners elect to
exercise their Rights to convert ("Conversion Rights") all or any portion of
their Partnership Units into shares of Common Stock, subject to the limitations
contained in Paragraphs 4 and 5 below; and
(b) deliver to the General Partner written notice ("Sale Component
Exercise Notice") pursuant to which such Exercising Partners elect to exercise
their Rights to sell ("Sale Rights") all or any portion of their Partnership
Units to the General Partner (or the General Partner's designee), subject to the
limitations contained in Paragraphs 3 and 5 below.
3. LIMITATIONS ON EXERCISE OF SALE RIGHTS. The first Sale Component
Exercise Notice may not be exercised prior to the time that Conversion Rights
have been exercised to the fullest extent permissible under Paragraph 4 below.
4. LIMITATION ON EXERCISE OF CONVERSION RIGHTS. Subject to
Paragraphs 3 and 5 of this Exhibit C, Conversion Rights may be exercised at any
time and from time to time to the extent that, upon exercise of the Conversion
Rights, the Exercising Partner, together with its Affiliates, in the aggregate,
shall not Beneficially Own shares of Capital Stock including shares of Common
Stock to be issued in connection with the exercise of such Conversion Rights, in
excess of nine and nine-tenths percent (9.90%) of the issued and outstanding
shares of Capital Stock (the "Ownership Limit"). For purposes of computing the
Ownership Limit as of any date, such Limited Partner and its Affiliates shall be
deemed to own all shares of Common Stock issuable to such Limited Partner and
its Affiliates upon the conversion of convertible securities held by it and the
exercise of stock options granted on or before such date under the Stock
Incentive Plan. If a Conversion Component Exercise Notice is delivered to the
General Partner, but, as a result of the Ownership Limit or as a result of
restrictions contained in the Certificate of Incorporation of the General
Partner, the Conversion Rights cannot be exercised in full, the Conversion
Component Exercise Notice shall be deemed to be modified such that the
Conversion Rights shall be exercised only to the extent permitted under the
Ownership Limit or under the Certificate of Incorporation of the General
Partner, with the remainder of such Conversion Rights being deemed to be Sale
Rights and with the corresponding portion of the Conversion Component Exercise
Notice being deemed to be a Sale Component Exercise Notice.
5. FREQUENCY OF EXERCISE; SIZE OF OFFERED INTEREST. Each Limited
Partner shall be permitted to deliver up to four (4) separate Exercise Notices
per calendar year. Without the prior written consent of the General Partner,
which consent may be withheld in its sole and absolute discretion, no Exercising
Partner may exercise Rights for less than five hundred (500) Partnership Units
or, if such Exercising Partner holds less than five hundred (500) Partnership
Units, all of the Partnership Units held by such Exercising Partner.
6. COMPUTATION OF CONSIDERATION/FORM OF PAYMENT. With respect to
the exercise of Conversion Rights, the consideration payable for the Offered
Interest shall be the issuance by the General Partner of the Common Stock
Amount. With respect to the exercise of Sale Rights, the consideration shall, in
the sole and absolute discretion of the General Partner, be paid in the form of
(a) cash, cashier's or certified check, or by wire transfer of immediately
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<PAGE> 96
available funds to the Exercising Partner's designated account in the amount of
the Cash Amount, or (b) by the issuance by the General Partner of the Common
Stock Amount, or (c) any combination of cash and Common Stock equal to the Cash
Amount.
7. CLOSING; DELIVERY OF ELECTION NOTICE. The closing of the
acquisition of Offered Interests shall, unless otherwise mutually agreed, be
held at the principal offices of the General Partner, on the following date(s):
(a) With respect to the exercise of Conversion Rights, the closing
shall occur on the date agreed to by the General Partner and the Exercising
Partners, which date shall in no event occur after the later of (i) ten (10)
days after the date of the Conversion Component Exercise Notice or (ii) the
expiration or termination of the waiting period applicable to each Exercising
Partner, if any, under the Hart-Scott Act; and
(b) With respect to the exercise of Sale Rights, the General
Partner shall, within thirty (30) days after receipt by the General Partner of
any Sale Component Exercise Notice delivered in accordance with the requirements
of Paragraph 3 above, deliver to the Exercising Partners an Election Notice,
which Election Notice shall set forth the computation of the Cash Amount and
shall specify the form of the consideration (which shall be in accordance with
Paragraph 6 above) to be paid by the General Partner to such Exercising Partners
and the date, time and location for completion of the purchase and sale of the
Offered Interests, which date shall in no event be later than (i) ten (10) days
after delivery by the General Partner of the Election Notice for Offered
Interests with respect to which the General Partner has elected to pay the
consideration by issuance of shares of its Common Stock (or, if later, the
expiration or termination of the waiting period applicable to each Exercising
Partner, if any, under the Hart- Scott Act) or (ii) sixty (60) days after the
initial date of receipt by the General Partner of the Sale Component Rights
Notice for Offered Interests with respect to which the General Partner has
elected to pay the Cash Amount; provided, however, that such sixty (60) day
period may be extended for an additional period to the extent required for the
General Partner to cause additional shares of its Common Stock to be issued to
provide financing to be used to acquire the Offered Interests. Notwithstanding
the foregoing, the General Partner agrees to use commercially reasonable efforts
to cause the closing of the acquisition of Offered Interests hereunder to occur
as quickly as possible.
8. ADJUSTMENT TO PURCHASE PRICE. If, with respect to the exercise
of Sale Rights, the General Partner elects to pay all or any portion of the
consideration under Paragraph 6 above in cash and if as a result thereof the
General Partner elects to raise such cash through a public offering of its
securities, borrowings or otherwise, the Cash Amount shall be reduced by an
amount ("Transaction Expenses") equal to the expenses incurred by the General
Partner in connection with such raising of funds allocable to the amounts
required to pay the Cash Amount hereunder; provided, however, notwithstanding
the foregoing, the Cash Amount shall not be reduced hereunder by an amount
exceeding 5% of the Cash Amount computed without regard to the adjustment for
Transaction Expenses.
9. CLOSING DELIVERIES. At the closing of the purchase and sale of
Offered Interests, payment of the consideration shall be accompanied by proper
instruments of transfer
C-3
<PAGE> 97
and assignment and by the delivery of (i) representations and warranties of (A)
the Exercising Partner with respect to its due authority to sell all of the
right, title and interest in and to such Offered Interests to the General
Partner and, with respect to the status of the Partnership Units being
transferred, free and clear of all Liens, and (B) the General Partner with
respect to due authority for the purchase of such Offered Interests, and (ii) to
the extent that any shares of Common Stock are issued in payment of the
consideration or any portion thereof, a stock certificate or certificates
evidencing the Common Stock to be issued and registered in the name of the
Exercising Partner or its designee.
10. TERM OF RIGHTS. Unless sooner terminated, the rights of the
parties with respect to the Rights shall commence as of the Completion of the
Offering and lapse for all purposes and in all respects on the fiftieth (50th)
anniversary of the Completion of the Offering; provided, however, that the
parties hereto shall continue to be bound by an Exercise Notice delivered to the
General Partner prior to such anniversary.
11. COVENANTS OF THE GENERAL PARTNER. To facilitate the General
Partner's ability to fully perform its obligations hereunder, the General
Partner covenants and agrees as follows:
(a) At all times during the pendency of the Rights, the General
Partner shall reserve for issuance such number of shares of Common Stock as may
be necessary to enable the General Partner to issue such shares in exchange for
all of the Partnership Units held by Limited Partners which are from time to
time outstanding.
(b) As long as the General Partner shall be obligated to file
periodic reports under the Exchange Act, the General Partner will timely file
such reports in such manner as shall enable any recipient of Common Stock issued
to Limited Partners hereunder in reliance upon an exemption from registration
under the Securities Act to continue to be eligible to utilize Rule 144
promulgated by the SEC pursuant to the Securities Act, or any successor rule or
regulation or statute thereunder, for the resale thereof.
(c) During the pendency of the Rights, the Limited Partners shall
receive in a timely manner all reports filed by the General Partner with the SEC
and all other communications transmitted from time to time by the General
Partner to its stockholders generally.
(d) Under no circumstances shall the General Partner declare any
stock dividend, stock split, stock distribution or the like, unless fair and
equitable arrangements are provided, to the extent necessary, to fully adjust,
and to avoid any dilution in, the rights of Limited Partners under this
Agreement.
(e) Notwithstanding the General Partner's determination as to the
form in which the consideration for the Offered Interests shall be payable, the
General Partner shall be required to pay such consideration by cashier's check
or wire transfer of immediately available funds to the extent that payment by
issuance of Common Stock would disqualify the General Partner from being
characterized as a REIT.
C-4
<PAGE> 98
12. LIMITED PARTNER'S COVENANT. Each Limited Partner covenants and
agrees with the General Partner that all Offered Interests tendered to the
General Partner in accordance with the exercise of Rights herein provided shall
be delivered to the General Partner free and clear of all Liens, and should any
Liens exist or arise with respect to such Offered Interests, the General Partner
shall be under no obligation to acquire the same unless, in connection with such
acquisition, the General Partner has elected in its sole and absolute discretion
to pay such portion of the consideration therefor in the form of cash in
circumstances where such cash will be sufficient to cause such existing Lien to
be discharged in full upon application of all or a part of such consideration
and the General Partner is expressly authorized to apply such portion of the
consideration as may be necessary to satisfy any indebtedness in full and to
discharge such Lien in full. Each Limited Partner further agrees that, in the
event any state or local property transfer tax or sales tax is payable as a
result of the transfer of its Offered Interests to the General Partner (or its
designee), such Limited Partner shall assume and pay such transfer and/or sales
tax.
C-5
<PAGE> 99
EXHIBIT D
LAND HOLDINGS
1. Deer Valley Plaza (Antioch)
2. Benicia Phase II (Benicia)
3. Fairfield Phase II (Fairfield)
4. Fresno Land (Fresno)
5. Ryan Ranch Land
6. Venture Oaks II (Sacramento)
D-1
<PAGE> 100
EXHIBIT E
EXCLUDED PROPERTIES
1. San Mateo Phase II (Spieker-Singleton #68 Limited Partnership)
2. Yuba Distribution Center (Yuba City Associates)
3. Montgomery Washington Tower (Crow-Spieker #99)
4. Coronado Center (Spieker-French #86, Limited Partnership)
5. 777 San Marin (777 San Marin Associates L.P., 775/779 San Marin
Associates, L.P.)
6. 6000 Stoneridge (Spieker-Singleton #52, Limited Partnership)
7. 188th Street Commerce Center (Spieker West Valley Associates I)
8. Renaissance Faire (Black Point Partnership L.P.)
9. Sky Valley (Paddy Creek Associates, L.P.)
E-1
<PAGE> 101
EXHIBIT F
PARTNER ADDRESSES
1. The address for Warren E. Spieker, Jr., John K. French, Dennis E.
Singleton, John A. Foster, Craig B. Vought, Elke Strunka, Stuart A.
Rothstein, Joseph D. Russell, Jr. and Eli Khouri III shall be:
c/o Spieker Properties, Inc.
2180 Sand Hill Road, Suite 200
Menlo Park, California 94025
FAX: (650) 854-6594
2. The address for Bruce E. Hosford, Donald S. Jefferson and Richard T.
Leider and Richard Gervais shall be:
c/o Spieker Properties, Inc.
1150 114th Avenue S.E.
Bellevue, Washington 98004
FAX: (425) 455-4105
3. The address for Peter H. Schnugg and John R. Winther shall be:
c/o Spieker Properties, Inc.
2200 Powell Street, Suite 325
Emeryville, California 94608
FAX: (510) 594-5608
4. The address for John G. Davenport shall be:
c/o Spieker Properties, Inc.
19600 Fairchild, Suite 285
Irvine, CA 92612
FAX: (714) 756-8180
5. The address for James C. Eddy and John B. Souther, Jr. shall be:
c/o Spieker Properties, Inc.
4380 S.W. Macadam Avenue, Suite 100
Portland, Oregon 97201
FAX: (503) 221-8627
F-1
<PAGE> 102
6. The address for Richard L. Romney shall be:
c/o Spieker Properties, Inc.
9255 Towne Centre Drive, Suite 100
San Diego, CA 92121
FAX: (619) 623-8506
7. The address for Vincent D. Mulroy and Frank L. Alexander shall be:
c/o Spieker Properties, Inc.
700 Larkspur Landing Circle, Suite 126
Larkspur, California 94939
FAX: (415) 464-5601
8. The address for Joel Benoliel shall be:
999 Lake Drive
Issaquah, WA 98027
FAX: (206) 313-6592
9. The address for Gregg R. Daugherty shall be:
8425 NE 12th Street
Medina, WA 98039
FAX: (206) 688-8031
10. The address for Adrian J. Gordon shall be:
4224 26th Street
San Francisco, CA 94131
FAX: (415) 282-9759
11. The address for Blake Family Trust and Josh N. Smith shall be:
c/o Pacific Retail Trust
1331 North California Blvd., Suite 150
Walnut Creek, CA 94596
FAX: (510) 935-5902
F-2
<PAGE> 103
12. The address for Meier Family Trust shall be:
Meier Family Trust
c/o Mr. Anthony P. Meier
Hockey-Meier Company
525 Middlefield Road, Suite 140
Menlo Park, California 94025
FAX: (650) 329-1537
13. The address for Betty G. Austin, Steve Lathrop, Shand Green, Tom
Lathrop, Bob Goldsmith, and F.P. Lathrop, Marcia Fay Lathrop and Sandra
L. Hyde, as Trustees of the Lathrop Trust (u/t/d November 19, 1993)
shall be:
c/o F.P. Lathrop
2000 Powell Street, Suite 1600
Emeryville, California 94608
F-3
<PAGE> 104
SCHEDULE 1
PARTNERS POSSESSING RIGHTS
SCHEDULE 2
EXERCISE NOTICE
To: Spieker Properties, Inc.
Reference is made to that certain Second Amended and Restated
Agreement of Limited Partnership of Spieker Properties, L.P. dated as of October
13, 1997 (the "Partnership Agreement"), among Spieker Properties, Inc., a
Maryland corporation, the undersigned, and certain other persons, governing that
certain California limited partnership known as Spieker Properties, L.P. (the
"Partnership"). Capitalized terms used but not defined herein shall have the
meanings set forth in the Partnership Agreement. Pursuant to Article XI and
Paragraph 2 of Exhibit C to the Partnership Agreement, each of the undersigned,
being a limited partner of the Partnership (an "Exercising Partner"), hereby
elects to exercise its Conversion Rights and/or Sale Rights as to the Number of
Partnership Units specified opposite its signature below:
Type of
Rights Being
Exercised Number of
(Conversion Rights Partnership
Exercising Partner or Sale Rights) Units
- ------------------ --------------- -----
________________________________________
Printed Name of Exercising Partner
________________________________________
Signature of Exercising Partner
________________________________________
Date
<PAGE> 105
SCHEDULE 3
ELECTION NOTICE
To: All Exercising Partners
Reference is made to that certain Second Amended and Restated
Agreement of Limited Partnership of Spieker Properties, L.P. dated as of October
13, 1997 (the "Partnership Agreement"), among the undersigned and certain other
persons, including the Exercising Partners, governing that certain California
limited partnership known as Spieker Properties, L.P. (the "Partnership"). All
capitalized terms used but not defined herein shall have the meanings set forth
in the Partnership Agreement. Pursuant to subsection (b) of Paragraph 7 of
Exhibit C to the Partnership Agreement, the undersigned, being the general
partner of the Partnership, hereby notifies the Exercising Partners that (a) the
consideration for the Partnership Units as to which the Sale Rights are being or
are deemed to be exercised is $_________, the computation of which is set forth
on an attachment hereto; (b) $_________ of the consideration is payable in cash
and the balance thereof is payable by issuance of ______ shares of Common Stock;
and (c) the closing of the purchase and sale of the Partnership Units as to
which the Sale Rights are being or are deemed to be exercised shall take place
at the offices of the General Partner at ______ a.m., local time, on
__________________.
Dated: __________________
SPIEKER PROPERTIES, INC.,
a Maryland corporation
By: _____________________________
Its: _____________________________
<PAGE> 106
COUNTERPART SIGNATURE PAGE TO
LIMITED PARTNERSHIP AGREEMENT OF
SPIEKER PROPERTIES, L.P.
This Counterpart Signature Page is executed and made effective
for all purposes as of this 4th day of February, 1998 (the "Effective Date"),
by those certain Persons identified on Schedule 1 attached hereto and who have
executed this Counterpart Signature Page below (the "New Limited Partners").
WHEREAS, Section 4.3 of the Partnership Agreement provides that
the General Partner may, without the consent of any Limited Partner, from time
to time, cause the Partnership to issue Additional Units to a Person and, if
necessary, admit such Person as an Additional Limited Partner, in exchange for
the Capital Contribution by such Person of cash and/or property;
WHEREAS, pursuant to the terms of that certain Contribution
Agreement (as such may have been amended, the "Contribution Agreement") dated as
of January 7, 1998, by and between the Partnership, Spieker Properties, Inc., a
Maryland corporation (the "General Partner"), and certain persons and entities
affiliated with or otherwise associated with Transpacific Development Company,
as "Contributors," the New Limited Partners are concurrently herewith making the
Capital Contribution to the Partnership of the New Limited Partners' direct
and/or indirect right, title and interest in certain real, personal and
intangible property described in the Contribution Agreement as the "Properties"
(the "TDC Capital Contribution");
WHEREAS, the General Partner desires to issue Four Hundred
Eighty-six Thousand Six Hundred Forty-seven (486,647) Additional Units (the "TDC
Additional Units") to the New Limited Partners in exchange for the New Limited
Partners' making of the TDC Capital Contribution, which TDC Additional Units
shall be allocated among the New Limited Partners in the manner set forth on
Schedule 2 attached hereto;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the undersigned hereby agree as
follows:
1. Capitalized terms used herein, unless otherwise defined herein,
shall have the same meanings as set forth in that certain Second Amended and
Restated Agreement of Limited Partnership of Spieker Properties, L.P. dated as
of October 13, 1997 (as such Agreement may have been amended, restated,
supplemented, modified or otherwise changed, the "Partnership Agreement").
2. Each of the New Limited Partners hereby agrees to be subject and
bound at all times to all of the terms and conditions of the Partnership
Agreement, as now in effect, as amended hereby or as hereafter amended or as
modified by the Contribution Agreement Without limitation of the foregoing, each
of the New Limited Partners acknowledges and agrees that it is bound by Article
XII of the Partnership Agreement which provides for the arbitration of disputes
arising under the Partnership Agreement and is deemed to have made all of the
representation,
1
<PAGE> 107
warranties, acknowledgements, waivers and agreements set forth in Sections
13.12, 13.13 and 13.14 of the Partnership Agreement.
3. Each of the New Limited Partners hereby acknowledges and agrees
that it has relied fully upon the advice of its own legal counsel and/or
accountant in determining the tax consequences of the transactions contemplated
hereby and not upon any representations or advice by the General Partner or by
any other Partner except or as set forth in the Contribution Agreement. Each of
the New Limited Partners hereby represents and warrants to the Partnership and
the General Partner that it (i) is acquiring its allocated portion of the TDC
Additional Units for itself for investment purposes only, and not with a view to
any resale or distribution of such Partnership Units, (ii) has been advised and
understands that the TDC Additional Units have not been and will not be
registered under the Securities Act or any applicable state securities laws and,
therefore, cannot be resold unless the TDC Additional Units are registered under
the Securities Act and all applicable state securities laws, or unless
exemptions from registration are available, and (iii) has, either alone or with
its "purchaser representative" as that term is defined in Rule 501(h) under the
Securities Act, such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of its investment in the
Partnership. Each of the New Limited Partners hereby acknowledges that the
Partnership and the General Partner have made available to such New Limited
Partner, at a reasonable time prior to its acquisition of its allocated portion
of the TDC Additional Units, the opportunity to ask questions and receive
answers concerning the terms and conditions of such acquisition and to
obtain any additional information which the Partnership and/or the General
Partner possessed or could acquire without unreasonable effort or expense that
is necessary to verify the accuracy of the information furnished by the
Partnership and the General Partner in connection with such acquisition.
4. The addresses of the New Limited Partners to be reflected in the
books and records of the Partnership shall be as indicated on Schedule 3
attached hereto, until changed in accordance with the terms of the Partnership
Agreement.
5. This Counterpart Signature Page may be executed in two or more
counterparts, each of which shall be deemed originals, and all of which taken
together shall constitute one instrument.
IN WITNESS WHEREOF, this Counterpart Signature Page is hereby executed
by the undersigned Persons as of the Effective Date.
NEW LIMITED PARTNERS: SC ENTERPRISES,
a California limited partnership
By: /s/ SHURL CURCI
---------------------------------------
Shurl Curci
its General Partner
2
<PAGE> 108
MARINA BUSINESS CENTER,
a California general partnership
By: East Villa Marina,
a California general partnership,
its General Partner
By: Victor and Hannah Zaccaglin Trust
D/T/D March 20, 1992,
its General Partner
By: /s/ Victor Zaccaglin
---------------------------------
Victor Zaccaglin, Trustee
By:
----------------------------------------
Shurl Curci and Kay Curci as Trustees of
the Curci Trust of 1983 (Restated)
its General Partner
By: SC Enterprises,
a California limited partnership,
its General Partner
By:
---------------------------------
Shurl Curci
its General Partner
By:
----------------------------------------
Shurl Curci and Kay Curci as Trustees of
the Curci Trust of 1983 (Restated)
its General Partner
By: John Curci, as Trustee of the Curci
Revocable Trust No. 2,
its General Partner
By:
----------------------------------
John Curci, Trustee
3
<PAGE> 109
MARINA BUSINESS CENTER,
a California general partnership
By: East Villa Marina,
a California general partnership,
its General Partner
By: Victor and Hannah Zaccaglin Trust
D/T/D March 20, 1992,
its General Partner
By:
---------------------------------
Victor Zaccaglin, Trustee
By: /s/ SHURL CURCI
----------------------------------------
By: /s/ KAY CURCI
----------------------------------------
Shurl Curci and Kay Curci as Trustees
of the Curci Trust of 1983
(Restated)
its General Partner
By: SC Enterprises,
a California limited partnership,
its General Partner
By: /s/ SHURL CURCI
---------------------------------
Shurl Curci
its General Partner
By: /s/ SHURL CURCI
----------------------------------------
By: /s/ KAY CURCI
----------------------------------------
Shurl Curci and Kay Curci as Trustees of
the Curci Trust of 1983 (Restated)
its General Partner
By: John Curci, as Trustee of the Curci
Revocable Trust No. 2,
its General Partner
By:
----------------------------------
John Curci, Trustee
3
<PAGE> 110
MARINA BUSINESS CENTER,
a California general partnership
By: East Villa Marina,
a California general partnership,
its General Partner
By: Victor and Hannah Zaccaglin Trust
D/T/D March 20, 1992,
its General Partner
By:
---------------------------------
Victor Zaccaglin, Trustee
By:
----------------------------------------
Shurl Curci and Kay Curci as Trustees
of the Curci Trust of 1983
(Restated)
its General Partner
By: SC Enterprises,
a California limited partnership,
its General Partner
By:
---------------------------------
Shurl Curci
its General Partner
By:
----------------------------------------
Shurl Curci and Kay Curci as Trustees of
the Curci Trust of 1983 (Restated)
its General Partner
By: John Curci, as Trustee of the Curci
Revocable Trust No. 2,
its General Partner
By: /s/ JOHN CURCI
----------------------------------
John Curci, Trustee
3
<PAGE> 111
By: Ceezee,
a California general partnership,
its General Partner
By: Victor and Hannah Zaccaglin Trust
D/T/D March 20, 1992,
its General Partner
By: /s/ VICTOR ZACCAGLIN
---------------------------
Victor Zaccaglin, Trustee
By: CA Ceezee,
a California general partnership
its General Partner
By:
---------------------------
Shurl Curci and Kay Curci
as Trustees of the Curci
Trust of 1983 (Restated)
its General Partner
ROBERT BLUMIN AND CAROLEE BLUMIN,
AS TRUSTEES OF THE BLUMIN FAMILY TRUST
U/T/A/ DATED OCTOBER 12, 1988
By:
-----------------------------
Robert Blumin, Trustee
By:
-----------------------------
Carolee Blumin, Trustee
MATLOW-KENNEDY ENTERPRISES,
a California general partnership
By: Cliffshire Properties,
a California general partnership,
its General Partner
By:
------------------------------
Howard R. Matlow
Its: General Partner
4
<PAGE> 112
By: Ceezee,
a California general partnership,
its General Partner
By: Victor and Hannah Zaccaglin Trust
D/T/D March 20, 1992,
its General Partner
By:
---------------------------
Victor Zaccaglin, Trustee
By: CA Ceezee,
a California general partnership
its General Partner
By: /s/ SHURL CURCI
---------------------------
By: /s/ KAY CURCI
---------------------------
Shurl Curci and Kay Curci
as Trustees of the Curci
Trust of 1983 (Restated)
its General Partner
ROBERT BLUMIN AND CAROLEE BLUMIN,
AS TRUSTEES OF THE BLUMIN FAMILY TRUST
U/T/A/ DATED OCTOBER 12, 1988
By:
-----------------------------
Robert Blumin, Trustee
By:
-----------------------------
Carolee Blumin, Trustee
MATLOW-KENNEDY ENTERPRISES,
a California general partnership
By: Cliffshire Properties,
a California general partnership,
its General Partner
By:
------------------------------
Howard R. Matlow
Its: General Partner
4
<PAGE> 113
By: Ceezee,
a California general partnership,
its General Partner
By: Victor and Hannah Zaccaglin Trust
D/T/D March 20, 1992,
its General Partner
By:
---------------------------
Victor Zaccaglin, Trustee
By: CA Ceezee,
a California general partnership
its General Partner
By:
---------------------------
Shurl Curci and Kay Curci
as Trustees of the Curci
Trust of 1983 (Restated)
its General Partner
ROBERT BLUMIN AND CAROLEE BLUMIN,
AS TRUSTEES OF THE BLUMIN FAMILY TRUST
U/T/A/ DATED OCTOBER 12, 1988
By: /s/ ROBERT BLUMIN
-----------------------------
Robert Blumin, Trustee
By: /s/ CAROLEE BLUMIN
-----------------------------
Carolee Blumin, Trustee
MATLOW-KENNEDY ENTERPRISES,
a California general partnership
By: Cliffshire Properties,
a California general partnership,
its General Partner
By:
------------------------------
Howard R. Matlow
Its: General Partner
4
<PAGE> 114
By: Ceezee,
a California general partnership,
its General Partner
By: Victor and Hannah Zaccaglin Trust
D/T/D March 20, 1992,
its General Partner
By:
---------------------------
Victor Zaccaglin, Trustee
By: CA Ceezee,
a California general partnership
its General Partner
By:
---------------------------
Shurl Curci and Kay Curci
as Trustees of the Curci
Trust of 1983 (Restated)
its General Partner
ROBERT BLUMIN AND CAROLEE BLUMIN,
AS TRUSTEES OF THE BLUMIN FAMILY TRUST
U/T/A/ DATED OCTOBER 12, 1988
By:
-----------------------------
Robert Blumin, Trustee
By:
-----------------------------
Carolee Blumin, Trustee
MATLOW-KENNEDY ENTERPRISES,
a California general partnership
By: Cliffshire Properties,
a California general partnership,
its General Partner
By: /s/ HOWARD R. MATLOW
------------------------------
Howard R. Matlow
Its: General Partner
4
<PAGE> 115
By: Fountain Properties,
a California general partnership,
its General Partner
By: /s/ K.E. KENNEDY
-----------------------------
K.E. Kennedy
Its: General Partner
5
<PAGE> 116
Pursuant to Section 4.7 of the Partnership Agreement, each of the New
Limited Partners is hereby admitted to the Partnership as a Limited Partner, and
the name of each of the New Limited Partners is hereby recorded in the books and
records of the Partnership, effective as of the Effective Date. The General
Partner hereby acknowledges that it has consented to the admission of each of
the New Limited Partners as a Limited Partner in the Partnership, that the name
of each of the New Limited Partners has been recorded in the books and records
of the Partnership, effective as of the Effective Date, that the Partnership has
issued to the New Limited Partners the number of Partnership Units identified on
Schedule 2 attached hereto, and that Exhibit F to the Partnership Agreement is
deemed amended to add the addresses of the New Limited Partners as set forth in
Paragraph 4 above.
SPIEKER PROPERTIES, INC.
a Maryland corporation
By: /s/ JEFFREY K. NICKELL
-------------------------------------
Its: Jeffrey K. Nickell, Vice President
------------------------------------
Dated: February 4, 1998
----------------------------------
6
<PAGE> 117
SCHEDULE 1
New Limited Partners
SC Enterprises, a California limited partnership
Marina Business Center, a California general partnership
Matlow-Kennedy Enterprises, a California general partnership
Robert Blumin and Carolee Blumin, as Trustees of the Blumin Family Trust U/T/A
Dated October 12, 1988
<PAGE> 118
SCHEDULE 2
TDC Additional Units
<TABLE>
<CAPTION>
Name of New Limited Partner TDC Additional Units
<S> <C>
SC Enterprises 26,539
Marina Business Center 194,775
Matlow-Kennedy Enterprises 90,868
Blumin Family Trust 174,465
</TABLE>
<PAGE> 119
SCHEDULE 3
Addresses
SC Enterprises
2377 Crenshaw Boulevard, Suite 300
Torrance, California 90501
Fax: (310) 782-8428
Marina Business Center
c/o SC Enterprises
2377 Crenshaw Boulevard, Suite 300
Torrance, California 90501
Fax: (310) 782-8428
Matlow-Kennedy Enterprises
c/o Broman & Greig
2811 Wilshire Boulevard, Suite 700
Santa Monica, California 90403
Fax. (310) 829-7659
Blumin Family Trust
2664 Claray Drive
Los Angeles, CA 90077
Fax: (310)474-0946
<PAGE> 1
EXHIBIT 10.2
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
SPIEKER PROPERTIES, L.P.
This First Amendment ("First Amendment") to the Second Amended and
Restated Agreement of Limited Partnership of Spieker Properties, L.P., a
California limited partnership, dated as of October 13, 1997 (the "Partnership
Agreement"), is executed and made effective for all purposes as of this 3rd day
of December, 1997 (the "Effective Date"), by and between Spieker Properties,
Inc., a Maryland corporation, the General Partner of the Partnership, and those
Persons identified on Schedule 1 attached hereto (the "WCB Limited Partners").
WHEREAS, Section 4.3 of the Partnership Agreement provides that the
General Partner may, without the consent of any Limited Partner, from time to
time, cause the Partnership to issue Additional Units to a Person in one or more
classes, or one or more series of any of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including, without limitation, rights, powers and duties
senior to the Limited Partners' Partnership Interests, and, if necessary, admit
such Person as an Additional Limited Partner, in exchange for the Capital
Contribution by such Person of cash and/or property;
WHEREAS, pursuant to the terms of that certain Agreement of Purchase
and Sale dated as of September 15, 1997 between the Partnership, as "Buyer," and
the WCB Limited Partners and certain other Persons, as "Seller" (as amended from
time to time, the "WCB Purchase Agreement"), the WCB Limited Partners are
concurrently herewith making the Capital Contribution to the Partnership of
certain real, personal and intangible property described in the WCB Purchase
Agreement as the "December Properties" and generally described on Schedule 2
attached hereto (the "WCB Capital Contribution");
WHEREAS, the General Partner and the WCB Limited Partners desire to
enter into this First Amendment to set forth the terms and conditions on which
the WCB Limited Partners shall make the WCB Capital Contribution and to amend
certain other provisions of the Partnership Agreement as set forth herein;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions.
(a) Capitalized terms used herein, unless otherwise defined
herein, shall have the same meanings as set forth in the Partnership Agreement.
(b) Section 1.1 of the Partnership Agreement is hereby amended
to add the following defined terms and phrases:
1
<PAGE> 2
"Majority-In-Interest of the WCB Limited Partners" shall mean
WCB Limited Partner(s) who hold in the aggregate more than fifty percent (50%)
of the Percentage Interests then allocable to and held by the WCB Limited
Partners.
"Standard Partnership Units" shall mean all Partnership Units
other than WCB Partnership Units.
"Standard Percentage" shall mean, with respect to any Partner,
the percentage determined by dividing the number of Standard Partnership Units
owned by such Partner by the total number of Standard Partnership Units then
outstanding.
"WCB Cash Amount" shall mean the amount of cash equal to the
product of the Closing Price (calculated, in the case of the exercise of WCB
Rights, on the date on which the WCB Exercise Notice is delivered to the General
Partner) multiplied by the WCB Common Stock Amount.
"WCB Common Stock Amount" shall mean the number of shares of
Common Stock equal to the product of (i) the number of WCB Partnership Units
offered for conversion by a WCB Limited Partner pursuant to its exercise of WCB
Rights, multiplied by (ii) the WCB Conversion Coefficient; provided, however,
that in the event the General Partner issues to all holders of Common Stock
rights, options, warrants or convertible or exchangeable securities entitling
the shareholders to subscribe for or purchase additional Common Stock, or any
other securities or property of the General Partner, the value of which is not
included in the first sentence of the definition of Closing Price of the shares
of Common Stock (collectively, "additional rights"), then the Common Stock
Amount shall also include such additional rights that a holder of that number of
shares of Common Stock would be entitled to receive.
"WCB Conversion Coefficient" shall mean 0.90909.
"WCB Exercise Notice" shall mean a notice in the form attached
hereto as Schedule 3.
"WCB Limited Partners" shall have the meaning provided in the
introductory paragraph of this First Amendment.
"WCB Partnership Unit Issue Price" shall mean $37.36.
"WCB Partnership Units" shall mean the Additional Units to be
received by the WCB Limited Partners in exchange for the WCB Capital
Contribution, which WCB Partnership Units shall include the right to receive
certain preferential distributions and additional rights as set forth in this
First Amendment, provided that, upon the conversion of any of such Additional
Units into Standard Partnership Units in accordance with the provisions of
Section 4.13 below, such Additional Units shall no longer be deemed WCB
Partnership Units hereunder.
"WCB Per Diem Preferred Return Amount" shall mean $.006909.
2
<PAGE> 3
"WCB Preferred Return" shall mean, with respect to any calendar
day, (i) the number of WCB Partnership Units outstanding as of the close of
business on the preceding business day multiplied by (ii) WCB Per Diem Preferred
Return Amount.
"WCB Redemption Amount" shall have the meaning set forth in
Section 4.12 hereof.
"WCB Redemption Notice" shall have the meaning set forth in
Section 4.12 hereof.
"WCB Rights" shall have the meaning set forth in Section 11.3
hereof.
"WCB Standard Unit Conversion Notice" shall have the meaning
set forth in Section 4.13 hereof.
2. Pursuant to Section 4.7 of the Partnership Agreement, each of the
WCB Limited Partners is hereby admitted to the Partnership as a Limited Partner,
and the names of the WCB Limited Partners are hereby recorded in the books and
records of the Partnership, effective as of the date first written above. By
executing this First Amendment, the General Partner hereby consents to the
admission of the WCB Limited Partners as Limited Partners in the Partnership.
3. The Partnership hereby issues to the WCB Limited Partners the
respective number of WCB Partnership Units set forth adjacent to the name of
each of the WCB Limited Partners on Schedule 4 attached hereto.
4. Each of the WCB Limited Partners hereby agrees to be subject and
bound at all times to all of the terms and conditions of the Partnership
Agreement, as now in effect, as amended hereby or as hereafter amended. Without
limitation of the foregoing, each of the WCB Limited Partners acknowledges and
agrees that it is bound by Article XII of the Partnership Agreement which
provides for the arbitration of disputes arising under the Partnership Agreement
and is deemed to have made all of the representation, warranties,
acknowledgements, waivers and agreements set forth in Sections 13.12, 13.13 and
13.14 of the Partnership Agreement.
5. The General Partner hereby represents and warrants to the WCB
Limited Partners that (i) the WCB Partnership Units are duly authorized, validly
issued, fully paid and non-assessable; (ii) this First Amendment has been duly
authorized, executed and delivered by the General Partner, enforceable against
the General Partner in accordance with its terms; (iii) to the General Partner's
knowledge, no consent, waiver, approval or authorization of, or filing,
registration or qualification with or notice to, any governmental authority or
any other person is required to be made, obtained or given by the General
Partner or any other person in connection with the execution, delivery and
performance of this First Amendment by the General Partner, except for such
approvals or authorizations as have already been obtained or given; and (iv) its
execution and delivery of this First Amendment and the performance of its
obligations hereunder will not conflict with, result in a breach of or
constitute a default (or any event that, with notice or lapse of time, or both,
would constitute a default) or result in the acceleration of any obligation
under any of the terms, conditions or provisions of any other agreement or
instrument
3
<PAGE> 4
to which it or the Partnership is a party or by which it or the Partnership is
bound or to which any of its or the Partnership's property or assets are
subject, conflict with or violate any of the provisions of any statute or any
order, rule or regulation or any court or governmental or regulatory agency,
body or official, that would materially and adversely affect the performance of
its duties hereunder.
6. Each WCB Limited Partner hereby represents and warrants to the
General Partner and the Partnership that (i) this First Amendment has been duly
authorized, executed and delivered by such WCB Limited Partner, enforceable
against such WCB Limited Partner in accordance with its terms; (ii) to such WCB
Limited Partner's knowledge, no consent, waiver, approval or authorization of,
or filing, registration or qualification with or notice to, any governmental
authority or any other person is required to be made, obtained or given by such
WCB Limited Partner or any other person in connection with the execution,
delivery and performance of this First Amendment by such WCB Limited Partner,
except for such approvals or authorizations as have already been obtained or
given; and (iii) its execution and delivery of this First Amendment and the
performance of its obligations hereunder will not conflict with, result in a
breach of or constitute a default (or any event that, with notice or lapse of
time, or both, would constitute a default) or result in the acceleration of any
obligation under any of the terms, conditions or provisions of any other
agreement or instrument to which it is a party or by which it is bound or to
which any of its property or assets are subject, conflict with or violate any of
the provisions of any statute or any order, rule or regulation or any court or
governmental or regulatory agency, body or official, that would materially and
adversely affect the performance of its duties hereunder.
7. Section 4.3(b)(i) of the Partnership Agreement is hereby amended
by inserting the words "or in connection with any of the WCB Limited Partners
exercise of the WCB Rights" immediately after the words "Article XI hereof" in
each of the two places where the words "Article XI hereof" appear in said
Section.
8. A new Section 4.3(b)(ii) is hereby added to the Partnership
Agreement as follows, and the existing Section 4.3(b)(ii) is hereby renumbered
as Section 4.3(b)(iii):
(ii) the Additional Partnership Units or additional Partnership
Interests are issued in connection with the General Partner's redemption
of WCB Additional Units and the payment of the WCB Redemption Amount
pursuant to and in accordance with Section 4.12 below; or
9. A new Section 4.12 is hereby added to the Partnership Agreement
as follows:
4.12 Redemption of WCB Partnership Units. The General Partner
shall have the right at any time and from time to time after December 3,
2002, by delivering written notice (the "WCB Redemption Notice") to all or
a portion of the WCB Limited Partners, to cause the Partnership to redeem
all or a portion of the WCB Partnership Units then held by such WCB
Limited Partners as specified in such WCB Redemption Notice (unless a WCB
Standard Unit Conversion Notice has previously been delivered with respect
to such WCB
4
<PAGE> 5
Partnership Units in accordance with Section 4.13 below) for an amount
equal to the product of (i) the WCB Partnership Unit Issue Price
multiplied by (ii) the number of WCB Partnership Units so specified (the
"WCB Redemption Amount"). The closing of the redemption of such WCB
Partnership Units shall, unless otherwise mutually agreed, be held at the
principal offices of the General Partner, on the date agreed to by the
General Partner and such WCB Limited Partners, which date shall in no
event occur later than the date that is ten (10) days after the date on
which the General Partner delivers the WCB Redemption Notice. At such
closing, the General Partner shall deliver the WCB Redemption Amount in
immediately available funds to such WCB Limited Partners and each such WCB
Limited Partner shall deliver to the General Partner certificates or other
instruments in form satisfactory to the General Partner evidencing such
WCB Partnership Units together with a duly executed certificate in the
form attached hereto as Exhibit H.
10. A new Section 4.13 is hereby added to the Partnership Agreement
as follows:
4.13 Conversion of WCB Partnership Units into Standard
Partnership Units. Each WCB Limited Partner shall have the right, at any
time and from time to time after May 3, 1998 and prior to the General
Partner's delivery of a WCB Redemption Notice, by delivering written
notice (the "WCB Standard Unit Conversion Notice") to the General Partner,
to convert all or a portion of the WCB Partnership Units then held by such
WCB Limited Partner as specified in such WCB Standard Unit Conversion
Notice into that number of Standard Partnership Units equal to the product
of (i) the WCB Conversion Coefficient multiplied by (ii) the number of WCB
Partnership Units so specified, which conversion shall be deemed effective
on the date (the "Effective Date of Conversion") that is five (5) business
days after the General Partner's receipt of the WCB Standard Unit
Conversion Notice or such other date mutually agreed upon by the General
Partner and such WCB Limited Partner. Upon the Effective Date of
Conversion, such WCB Limited Partner shall no longer be entitled to
exercise the WCB Rights with respect to the WCB Partnership Units so
converted (but shall be entitled to exercise such WCB Rights with respect
to any WCB Partnership Units not so converted), but shall possess the
Rights with respect to such Standard Partnership Units on the terms and
subject to the conditions and restrictions contained in Exhibit C to this
Agreement, provided that, notwithstanding anything to the contrary
provided in this Agreement (including, without limitation, Exhibit C
thereto), such WCB Limited Partner shall not be permitted to exercise
Rights for less than five thousand (5,000) Standard Partnership Units (or,
if such WCB Limited Partner holds less than five thousand (5,000) Standard
Partnership Units, all of the Standard Partnership Units held by such WCB
Limited Partner).
11. Section 6.2(a)(i) of the Partnership Agreement is hereby deleted
in its entirety, and the following is hereby substituted in the place thereof:
5
<PAGE> 6
(i) First, pro rata (in the proportion that amounts due and
unpaid pursuant to each of clause (x) and clause (y) bear to the total
amounts due and unpaid pursuant to both clause (x) and clause (y) in the
aggregate) (x) to the General Partner, on account of the Preferred
Interest and the Series B Cumulative Redeemable Preferred Interest on a
pro rata basis, until the total amount of distributions made to the
General Partner pursuant to this subparagraph (i) equals the total amount
of accrued but unpaid dividends (if any) on the Series A Preferred Stock
and the Series B Cumulative Redeemable Preferred Stock as of the date of
such distribution and (y) to the WCB Limited Partners, an amount equal to
the sum of [1] the WCB Preferred Return as to such period plus [2] the
accrued but unpaid WCB Preferred Return in respect of any prior period;
12. Section 6.2(a)(iii) of the Partnership Agreement is hereby
deleted in its entirety, and the following is hereby substituted in the place
thereof:
(iii) Next, to the Partners holding Standard Partnership Units,
pro rata in accordance with such Partners' then Standard Percentages.
13. A new Section 11.3 is hereby added to the Partnership Agreement
as follows:
11.3 WCB Rights. The WCB Limited Partners shall have the right,
but not the obligation (such right sometimes referred to herein as the
"WCB Rights"), to convert all or a portion of their WCB Partnership Units
into shares of Common Stock, at any time or from time to time after May 3,
1998 and prior to the earlier of (i) the fiftieth (50th) anniversary of
the Completion of the Offering or (ii) the date on which the General
Partner delivers a WCB Redemption Notice with respect to such WCB
Partnership Units, on the terms and subject to the conditions contained in
Exhibit G attached hereto. The WCB Rights granted hereunder may be
exercised by any one or more of the WCB Limited Partners, on the terms and
subject to the conditions and restrictions contained in attached Exhibit
G, upon delivery to the General Partner of a WCB Exercise Notice, which
notice shall specify the number of WCB Partnership Units to be converted
by such WCB Limited Partner. Once delivered, the WCB Exercise Notice shall
be irrevocable, subject to the issuance of shares of Common Stock by the
General Partner in respect of such WCB Partnership Units, all in
accordance with the terms of attached Exhibit G. Notwithstanding anything
to the contrary provided in this Agreement, none of the WCB Limited
Partners shall have the right to exercise their WCB Rights with respect to
all or any portion of the WCB Partnership Units prior to May 3, 1998.
14. A new Section 13.7(c) is hereby added to the Partnership
Agreement as follows:
(c) Notwithstanding anything to the contrary provided in
Section 13.7(a) or (b) above, this Agreement may not be amended except by
a written instrument signed by the General Partner (and approved on behalf
of the
6
<PAGE> 7
General Partner by at least a majority of its directors who are not
Limited Partners or Affiliates of the General Partner or any of the
Limited Partners) and a Majority-In-Interest of the WCB Limited Partners
if such amendment would: (i) amend any of the distribution or liquidation
provisions of this Agreement such that the WCB Partnership Units fail to
rank pari passu with any existing or future preferred Partnership Interest
granted to the General Partner, any Additional Partner or any other
Person, (ii) alters or modifies the WCB Rights set forth in Section 11.2
in a manner adverse to such Partner, or (iii) amends any provision of this
Section 13.7(c).
15. Exhibit B to the Partnership Agreement is hereby deleted in its
entirety, and Exhibit B attached hereto is hereby inserted in the place thereof.
16. Exhibit F to the Partnership Agreement is hereby amended to add
the addresses for the WCB Limited Partners that are set forth on Schedule 5
attached hereto.
17. The Partnership Agreement is hereby amended by adding a new
Exhibit G in the form attached to this First Amendment.
18. The Partnership Agreement is hereby amended by adding new
Exhibits H and H-1 in the respective forms attached to this First Amendment.
19. This First Amendment may be executed in two or more
counterparts, each of which shall be deemed originals, and all of which taken
together shall constitute one instrument. By executing this First Amendment
below, each signatory hereby agrees that a facsimile signature shall be deemed
to have the same effect as an original signature.
20. This First Amendment shall be governed by and construed in
conformity with the laws of the State of California.
21. Except as specifically provided herein, the Partnership
Agreement shall remain in full force and effect.
22. To the extent that the WCB Purchase Agreement provides that the
parties obligations thereunder shall survive the Closing (as defined in the WCB
Purchase Agreement), such provisions of the WCB Purchase Agreement and the
parties obligations thereunder shall not be merged into the provisions of this
First Amendment and shall survive the execution and delivery of this First
Amendment.
7
<PAGE> 8
IN WITNESS WHEREOF, this First Amendment is hereby entered into
among the undersigned parties as of the Effective Date.
GENERAL PARTNER: SPIEKER PROPERTIES, INC.
a Maryland corporation
By: /s/ [SIG]
----------------------------------------
Its:
---------------------------------------
NEW LIMITED PARTNERS: WCB II-S BRD LIMITED PARTNERSHIP, a
Delaware limited partnership
By: WCB II-S BRD Gen-Par, Inc., a
Delaware corporation,
its General Partner
By: /s/ [SIG]
----------------------------------
Name: Edward M.
Title: V.P.
WHAMC REAL ESTATE LIMITED
PARTNERSHIP, a Delaware limited partnership
By: WHAMC Gen-Par, Inc., a Delaware
corporation, its General Partner
By: /s/ [SIG]
----------------------------------------
Name: Edward M. S
Title: V.P.
8
<PAGE> 9
WCB TWENTY-SIX LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WCB Twenty-Six, Inc.,
a Delaware corporation,
its General Partner
By: /s/ [SIG]
----------------------------------
Name: Edward M.
Title: V.P.
WCB TWENTY-SEVEN LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WCB Twenty-Seven, Inc.,
a Delaware corporation,
its General Partner
By: /s/ [SIG]
----------------------------------
Name: Edward M.
Title: V.P.
WCB NINE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WCB Nine, Inc.,
a Delaware corporation,
its General Partner
By: /s/ [SIG]
----------------------------------
Name: Edward M.
Title: V.P.
9
<PAGE> 10
Schedule I to First Amendment
List of WCB Limited Partners
----------------------------
WCB II-S BRD Limited Partnership
WHAMC Real Estate Limited Partnership
WCB Twenty-Six Limited Partnership
WCB Twenty-Seven Limited Partnership
WCB Nine Limited Partnership
<PAGE> 11
Schedule 2 to First Amendment
Description of WCB Capital Contribution
---------------------------------------
<TABLE>
<CAPTION>
WCB Limited Partner Description of WCB Capital Contribution
- --------------------------------------- ---------------------------------------
<S> <C>
WCB II-S BRD Limited Partnership Fremont 3
LSI Logic
Oak Creek I
Oak Creek H
Santa Clara Office
Sorrento Tech I, H, III
Westridge I
WHAMC Real Estate Limited Partnership Pacific Corporate Park
WCB Twenty-Six Limited Partnership Stadium Towers Plaza Land
WCB Nine Limited Partnership Wilsonville Business Center
WCB Twenty-Seven Limited Partnership Wilsonville Land
</TABLE>
<PAGE> 12
Schedule 3 to First Amendment
Form of WCB Exercise Notice
---------------------------
To: Spieker Properties, Inc.
Reference is made to that certain Second Amended and Restated
Agreement of Limited Partnership of Spieker Properties, L.P. dated as of October
13, 1997 (as amended, the "Partnership Agreement"), among Spieker Properties,
Inc., a Maryland corporation, the undersigned, and certain other persons,
governing that certain California limited partnership known as Spieker
Properties, L.P. (the "Partnership"). Capitalized terms used but not defined
herein shall have the meanings set forth in the Partnership Agreement. Pursuant
to Section 11.3 of the Partnership Agreement and Exhibit G to the Partnership
Agreement, each of the undersigned, being a WCB Limited Partner of the
Partnership, hereby elects to exercise its WCB Rights as to the number of WCB
Partnership Units specified opposite its signature below:
Exercising WCB Number of WCB
Limited Partner Partnership Units
----------------------------------------------
Printed Name of Exercising WCB Limited Partner
----------------------------------------------
Signature of Exercising WCB Limited Partner
----------------------------------------------
Date
<PAGE> 13
Schedule 4 to First Amendment
Allocation of WCB Partnership Units
<TABLE>
<CAPTION>
WCB Limited Partners WCB Partnership units
-------------------- ---------------------
<S> <C>
WCB II-S BRD Limited Partnership 897,089
WHAMC Real Estate Limited Partnership 288,851
WCB Twenty-Six Limited Partnership 55,674
WCB Nine Limited Partnership 721,993
WCB Twenty-Seven Limited Partnership 43,888
---------
TOTAL 2,007,495
=========
</TABLE>
<PAGE> 14
Schedule 5 to First Amendment
Addresses of WCB Limited Partners
---------------------------------
<TABLE>
<CAPTION>
WCB Limited Partners Address
-------------------- -------
<S> <C>
WCB II-S BRD Limited Partnership 450 Newport Center Drive
WHAMC Real Estate Limited Partnership Suite 304
WCB Twenty-Six Limited Partnership Newport Beach, California 92660-7640
WCB Nine Limited Partnership
WCB Twenty-Seven Limited Partnership
</TABLE>
<PAGE> 15
EXHIBIT B
ALLOCATIONS
1. Allocation of Net Income and Net Loss.
(a) Net Income. Except as otherwise provided herein, Net Income for
any fiscal year or other applicable period shall be allocated in the following
order and priority:
(1) First, to the Partners, until the cumulative Net Income
allocated pursuant to this Subparagraph l(a)(1) for the current and all prior
periods equals the cumulative Net Loss allocated pursuant to Subparagraphs
l(b)(3) and (4) hereof for all prior periods, among the Partners in the reverse
order that such Net Loss was allocated (and, in the event of a shift of a
Partner's interest in the Partnership, to the Partners in a manner that most
equitably reflects the successors in interest of such Partners);
(2) Second, to the General Partner and the WCB Limited
Partners, until the cumulative Net Income allocated pursuant to this
Subparagraph 1 (a)(2) for the current and all prior periods equals the
cumulative Net Loss allocated pursuant to Subparagraph 1 (b)(2) hereof for all
prior periods;
(3) Third, in equal priority, (x) to the General Partner until
the cumulative amount of Net Income allocated pursuant to this Subparagraph 1
(a)(3), Subparagraph 1 (a)(3) of Exhibit E to the First Restated Agreement as in
effect immediately prior to the Fourth Amendment thereto and Subparagraph 1
(c)(1)(iii) of Exhibit E to the First Restated Agreement as in effect
immediately prior to the Third Amendment thereto equals the total amount of
dividends paid on the Series A Preferred Stock as of or prior to the date of
such allocation plus the total amount of accrued but unpaid dividends on any
Series A Preferred Stock issued and outstanding as of such date, plus the total
amount of dividends paid on the Series B Cumulative Redeemable Preferred Stock
as of or prior to the date of such allocation plus the total amount of accrued
but unpaid dividends on any Series B Cumulative Redeemable Preferred Stock
issued and outstanding as of such date, plus the total amount of dividends paid
on the Series C Cumulative Redeemable Preferred Stock as of or prior to the date
of such allocation plus the total amount of accrued but unpaid dividends on any
Series C Cumulative Redeemable Preferred Stock issued and outstanding as of such
date, and (y) to the WCB Limited Partners until the cumulative amount of Net
Income allocated pursuant to this Subparagraph 1 (a)(3) equals the total amount
of distributions made to the WCB Limited Partners pursuant to Section 6.2(a)(i)
of this Agreement;
(4) Fourth, to the General Partner on account of the Common B
Interest and the Common C Interest, an amount equal to the sum of (x) $0.0625
per annum multiplied by the number of shares issued and outstanding of Class B
Common Stock, plus (y) $0.05 per annum multiplied by the number of shares issued
and outstanding of Class C Common Stock, prorated on a daily basis over each
calendar year, and adjusted, as appropriate,
B-1
<PAGE> 16
to reflect any variance in the number of such shares issued and outstanding from
time to time; and
(5) Thereafter, the balance of the Net Income, if any, shall be
allocated to the Partners holding Standard Partnership Units in accordance with
their respective Standard Percentages.
(b) Net Loss. Net Loss of the Partnership for each fiscal year or
other applicable period shall be allocated as follows:
(1) First, to the Partners (other than the WCB Limited Partners
with respect to their WCB Partnership Units) in accordance with their respective
Standard Percentages until the Capital Account balances of the Limited Partners
(other than the WCB Limited Partners with respect to their WCB Partnership
Units) are reduced to zero (for purpose of this calculation, such Partners'
share of Partnership Minimum Gain shall be added back to their Capital
Accounts);
(2) Second, to the General Partner and the WCB Limited Partners
(to the extent of their WCB Partnership Units), in proportion to their positive
Capital Account balances, until their Capital Account balances have been reduced
to zero (for purpose of this calculation, such Partners' share of Partnership
Minimum Gain shall be added back to their Capital Accounts);
(3) Thereafter, to the Partners holding Standard Partnership
Units in accordance with their then Standard Percentages; and
(4) Notwithstanding the preceding provisions of this
Subparagraph 1 (b), to the extent that any Net Loss allocated to a Partner under
Subparagraph 1 (b) would cause such Partner (hereinafter, a "Restricted
Partner") to have an Adjusted Capital Account Deficit as of the end of the
fiscal year to which such Net Loss relates, such Net Loss shall not be allocated
to such Restricted Partner and instead shall be allocated to the other
Partner(s) (hereinafter, the "Permitted Partners") pro rata in accordance with
their relative Percentage Interests.
(c) Book-Up and Capital Account Adjustments. On any day on which
Series A Preferred Stock is redeemed or converted into Common Stock or the
Series B Cumulative Redeemable Preferred Stock is redeemed or the Series C
Cumulative Redeemable Preferred Stock is redeemed or any WCB Partnership Units
are converted into Standard Partnership Units, the Partnership may, in the
discretion of the General Partner, adjust the Gross Asset Values of all
Partnership assets to equal their respective gross fair market values and shall
allocate the amount of such adjustment as Net Income or Net Loss pursuant to
Paragraph 1 (a) hereof
B-2
<PAGE> 17
2. Special Allocations.
Notwithstanding any provisions of Paragraph 1 of this Exhibit B, the
following special allocations shall be made in the following order:
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If there is a
net decrease in Partnership Minimum Gain for any Partnership fiscal year (except
as a result of conversion or refinancing of Partnership indebtedness, certain
capital contributions or revaluation of the Partnership property as further
outlined in Regulation Sections 1.704-2(d)(4), (f)(2) or (f)(3)), each Partner
shall be specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to that Partner's share
of the net decrease in Partnership Minimum Gain. The items to be so allocated
shall be determined in accordance with Regulation Section 1.704-2(f). This
Paragraph 2(a) is intended to comply with the minimum gain chargeback
requirement in said section of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this Paragraph 2(a) shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant hereto.
(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If there
is a net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt
during any fiscal year (other than due to the conversion, refinancing or other
change in the debt instrument causing it to become partially or wholly
nonrecourse, certain capital contributions, or certain revaluations of
Partnership property as further outlined in Regulation Section 1.704-2(i)(4)),
each Partner shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to that
Partner's share of the net decrease in the Minimum Gain Attributable to Partner
Nonrecourse Debt. The items to be so allocated shall be determined in accordance
with Regulation Section 1.704-2(i)(4) and (j)(2). This Paragraph 2(b) is
intended to comply with the minimum gain chargeback requirement with respect to
Partner Nonrecourse Debt contained in said section of the Regulations and shall
be interpreted consistently therewith. Allocations pursuant to this Paragraph
2(b) shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant hereto.
(c) Qualified Income Offset. In the event a Limited Partner
unexpectedly receives any adjustments, allocations or distributions described in
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such Limited
Partner has an Adjusted Capital Account Deficit, items of Partnership income and
gain shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate the Adjusted Capital Account Deficit as quickly as
possible. This Paragraph 2(c) is intended to constitute a "qualified income
offset" under Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal
year or other applicable period shall be allocated to the Partners in accordance
with their respective Percentage Interests.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
for any fiscal year or other applicable period shall be specially allocated to
the Partner that bears the economic risk of loss for the debt (i.e., the Partner
Nonrecourse Debt) in respect of which such
B-3
<PAGE> 18
Partner Nonrecourse Deductions are attributable (as determined under Regulation
Section 1.704-2(b)(4) and (i)(l)).
(f) Curative Allocations. It is the intent of the Partnership
that, to the extent possible, the Capital Account balances of the Partners be in
the following relationship: (1) first, the Capital Account of the General
Partner should be at least equal to $25.00 multiplied by the number of issued
and outstanding shares of Series A Preferred Stock, Series B Cumulative
Redeemable Preferred Stock and Series C Cumulative Redeemable Preferred Stock,
and the Capital Accounts of the WCB Limited Partners should be at least equal to
the WCB Partnership Unit Issue Price multiplied by the number of issued and
outstanding WCB Partnership Units; and (2) second, the Limited Partners' (other
than the WCB Limited Partners with respect to their WCB Partnership Units)
Capital Account balances and the General Partner's Capital Account balance in
excess of the product described in clause (1) above should be in proportion to
their Standard Percentages. Thus, items of "book" income, gain, loss, and
deduction shall be allocated among the Partners so that, to the extent possible,
the resulting Partners' Capital Account balances bear this relationship. This
Paragraph 2(f) is intended to minimize to the extent possible and to the extent
necessary any economic distortions which may result from application of the
Regulatory Allocations and shall be interpreted in a manner consistent
therewith. For purposes hereof, "Regulatory Allocations" shall mean the
allocations provided under Subparagraph 1(b)(2) and this Paragraph 2 (save
Subparagraphs 2(d) and (f) hereof).
(g) Merit Plan. To the extent that the Partnership recognizes
income or gain or is entitled to deduction, expense or loss with respect to
transfers of interests pursuant to the Merit Plan, all such items shall be
allocated among the Limited Partners in accordance with the Merit Plan.
3. Tax Allocations.
(a) Generally. Subject to Paragraphs 3(b) and (c) below, items
of income, gain, loss, deduction and credit to be allocated for income tax
purposes (collectively, "Tax Items") shall be allocated among the Partners on
the same basis as their respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from
the sale of property is treated as gain which is ordinary income by virtue of
the application of Code Section 1245 or 1250 ("Affected Gain"), then (A) such
Affected Gain shall be allocated among the Partners in the same proportion that
the depreciation and amortization deductions giving rise to the Affected Gain
were allocated and (B) other Tax Items of gain of the same character that would
have been recognized, but for the application of Code Sections 1245 and/or 1250,
shall be allocated away from those Partners who are allocated Affected Gain
pursuant to Clause (A) so that, to the extent possible, the other Partners are
allocated the same amount, and type, of capital gain that would have been
allocated to them had Code Sections 1245 and/or 1250 not applied; provided,
however, that the net amount of Tax Items allocated to each Partner shall be the
same as if this Paragraph 3(a) did not exist. For purposes hereof, in order to
determine the proportionate allocations of depreciation and amortization
deductions for each fiscal year or other applicable period, such deductions
shall be deemed allocated on the same basis as Net Income and Net Loss for such
respective period.
B-4
<PAGE> 19
(c) Allocations Respecting Section 704(c) and Revaluations. If
any Partnership property is subject to Code Section 704(c) or is reflected in
the Capital Accounts of the Partners and on the books of the Partnership at a
book value that differs from the adjusted tax basis of such property, then the
tax items with respect to such property shall, in accordance with the
requirements of Regulations Section 1.704-1(b)(4)(i), be shared among the
Partners in a manner that takes account of the variation between the adjusted
tax basis of the applicable property and its book value in the same manner as
variations between the adjusted tax basis and fair market value of property
contributed to the Partnership are taken into account in determining the
Partners' share of tax items under Code Section 704(c). The General Partner is
authorized to choose any reasonable method permitted by the Regulations pursuant
to Code Section 704(c), including the "remedial" method, the "curative" method
and the "traditional" method.
(d) Code Section 752 Specification. Pursuant to Regulations
Section 1.752-3, the interest of the Partners holding Standard Partnership Units
in Partnership profits for purposes of determining the Partners' shares of
excess nonrecourse liabilities shall be their Standard Percentages.
B-5
<PAGE> 20
EXHIBIT G
WCB RIGHTS TERMS
The WCB Rights shall be subject to the following terms and
conditions:
1. DELIVERY OF WCB EXERCISE NOTICES. Any one or more WCB Limited
Partners possessing WCB Rights may deliver to the General Partner a WCB Exercise
Notice pursuant to which such WCB Limited Partners elect to exercise their WCB
Rights to convert all or any portion of their WCB Partnership Units into shares
of Common Stock, provided, however, no WCB Limited Partner shall be entitled to
exercise its WCB Rights to the extent that, upon exercise of its WCB Rights,
such WCB Limited Partner, together with its Affiliates, in the aggregate, would
Beneficially Own shares of Common Stock (including shares of Common Stock to be
issued in connection with the exercise of such WCB Rights) in excess of the
Ownership Limit.
2. FREQUENCY OF EXERCISE; SIZE OF EXERCISE. Each WCB Limited Partner
shall be permitted to deliver up to four (4) separate WCB Exercise Notices per
calendar year. Without the prior written consent of the General Partner, which
consent may be withheld in its sole and absolute discretion, no WCB Limited
Partner may exercise WCB Rights for less than five thousand (5,000) WCB
Partnership Units or, if such WCB Limited Partner holds less than five thousand
(5,000) WCB Partnership Units, all of the WCB Partnership Units held by such WCB
Limited Partner.
3. COMPUTATION OF CONSIDERATION. With respect to the exercise of WCB
Rights, the consideration payable for the WCB Partnership Units shall be the
issuance by the General Partner of the WCB Common Stock Amount.
4. CLOSING. The closing of the exercise of the WCB Rights shall,
unless otherwise mutually agreed, be held at the principal offices of the
General Partner, on the date agreed to by the General Partner and the exercising
WCB Limited Partner, which date shall in no event occur later than the date that
is ten (10) days after the date on which such WCB Limited Partner delivers the
WCB Exercise Notice. At such closing, the General Partner shall deliver a stock
certificate or certificates representing the WCB Common Stock Amount and
evidencing the Common Stock to be issued and registered in the name of such WCB
Limited Partner or its designee and such WCB Limited Partner shall deliver to
the General Partner certificates or other instruments in form satisfactory to
the General Partner evidencing such WCB Partnership Units together with a
certificate in the form attached hereto as Exhibit H-1.
5. TERM OF WCB RIGHTS. Unless sooner terminated, the rights of the
parties with respect to the WCB Rights shall commence as of May 3, 1998 and
lapse for all purposes and in all respects on the fiftieth (50th) anniversary of
the Completion of the Offering; provided, however, that the parties hereto shall
continue to be bound by a WCB Exercise Notice delivered to the General Partner
prior to such anniversary.
G-1
<PAGE> 21
6. COVENANTS OF THE GENERAL PARTNER. To facilitate the General
Partner's ability to fully perform its obligations hereunder, the General
Partner covenants and agrees as follows:
(a) At all times during the pendency of the WCB Rights, the General
Partner shall reserve for issuance such number of shares of Common Stock as may
be necessary to enable the General Partner to issue such shares in exchange for
all of the WCB Partnership Units held by WCB Limited Partners which are from
time to time outstanding.
(b) As long as the General Partner shall be obligated to file
periodic reports under the Exchange Act, the General Partner will timely file
such reports in such manner as shall enable any recipient of Common Stock issued
to WCB Limited Partners hereunder in reliance upon an exemption from
registration under the Securities Act to continue to be eligible to utilize Rule
144 promulgated by the SEC pursuant to the Securities Act, or any successor rule
or regulation or statute thereunder, for the resale thereof.
(c) During the pendency of the WCB Rights, the WCB Limited Partners
shall receive in a timely manner all reports filed by the General Partner with
the SEC and all other communications transmitted from time to time by the
General Partner to its stockholders generally.
(d) Under no circumstances shall the General Partner (i) declare any
stock dividend, stock split, stock distribution, extraordinary dividend,
distribution of assets or the like or (ii) in connection with a takeover defense
measure or a recapitalization issue or sell any shares of Common Stock or other
equity securities or any instrument convertible into any equity security for
consideration that is substantially less than fair value of such Common Stock or
other equity security (it being agreed that any determination of fair value by
the Board of Directors of the General Partner shall conclusively establish the
fair value thereof), unless in either circumstance fair and equitable
arrangements are provided, to the extent necessary, to fully adjust, and to
avoid any dilution in, the rights of WCB Limited Partners under this Agreement.
(e) Notwithstanding anything to the contrary provided in this
Agreement (including, without limitation, this Exhibit G, in the event that the
issuance of Common Stock upon exercise of any WCB Limited Partner's WCB Rights
would disqualify the General Partner from being characterized as a REIT, the
General Partner shall have the right to, and shall be required to, pay to such
WCB Limited Partner by cashier's check or wire transfer of immediately available
funds the WCB Cash Amount in lieu of the WCB Common Stock Amount.
7. WCB LIMITED PARTNER'S COVENANT. Each WCB Limited Partner
covenants and agrees with the General Partner that all WCB Partnership Units
tendered to the General Partner in accordance with the exercise of WCB Rights
herein provided shall be delivered to the General Partner free and clear of all
Liens, and should any Liens exist or arise with respect to such WCB Partnership
Units, the General Partner shall be under no obligation to acquire the same.
Each WCB Limited Partner further agrees that, in the event any state or local
property transfer tax or sales tax is payable as a result of the transfer of its
WCB Partnership
G-2
<PAGE> 22
Units to the General Partner (or its designee), such WCB Limited Partner shall
assume and pay such transfer and/or sales tax.
G-3
<PAGE> 23
EXHIBIT H
FORM OF WCB LIMITED PARTNER CERTIFICATE
(REDEMPTION)
Reference is made to that certain Second Amended and Restated
Limited Partnership Agreement of Spieker Properties, L.P., dated as of October
13, 1997 (as amended from time to time, the "Partnership Agreement").
Capitalized terms used herein and not otherwise defined herein shall have the
same meanings as set forth in the Partnership Agreement.
Pursuant to Section 4.12 of the Partnership Agreement, and in
connection with the General Partner's delivery to the undersigned of the WCB
Redemption Amount, the undersigned hereby represents and warrants to the General
Partner that the undersigned has the authority to sell, transfer and convey to
the General Partner all of its right, title and interest in and to the WCB
Partnership Units specified in the WCB Redemption Notice dated __________, 2
___ and that such WCB Partnership Units are being sold, transferred and conveyed
to the General Partner free and clear of all Liens.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of this ________ day of _________ , 2___.
WCB____________ LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WCB_______ ,Inc.,
a Delaware corporation
By:
-------------------------------------
Name:
Title:
<PAGE> 24
EXHIBIT H-1
FORM OF WCB LIMITED PARTNER CERTIFICATE
(WCB RIGHTS)
Reference is made to that certain Second Amended and Restated
Limited Partnership Agreement of Spieker Properties, L.P., dated as of October
13, 1997 (as amended from time to time, the "Partnership Agreement").
Capitalized terms used herein and not otherwise defined herein shall have the
same meanings as set forth in the Partnership Agreement.
Pursuant to Section 11.3 of, and Exhibit G to, the Partnership
Agreement, and in connection with the General Partner's delivery to the
undersigned of the WCB Common Stock Amount, the undersigned hereby represents
and warrants to the General Partner that the undersigned has the authority to
sell, transfer and convey to the General Partner all of its right, title and
interest in and to the WCB Partnership Units specified in the WCB Exercise
Notice dated ________ ,_____ and that such WCB Partnership Units are being sold,
transferred and conveyed to the General Partner free and clear of all Liens.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of this _______ day of ______,_____
WCB LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WCB ____, Inc.,
a Delaware corporation
By:
-------------------------------
Name:
Title:
<PAGE> 1
Exhibit 12.1
Spieker Properties, Inc. and Subsidiaries
Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Dividends
(in thousands, except ratios)
<TABLE>
<CAPTION>
Spieker
Partners
Properties
Spieker Properties, Inc. Consolidated Combined
-------------------------------------------------------------------- ------------
Period of Period of
November January 1
Year Ended Year Ended Year Ended Year Ended 19, 1993 to 1993 to
December 31, December 31, December 31, December 31, December 31, December 31,
1997 1996 1995 1994 1993 1993
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Income from operations before disposition
of property, minority interest and
extraordinary items $110,134 $ 65,764 $30,335 $13,363 $1,699 $(15,144)
Interest expense(1) 62,266 37,235 46,386 44,395 4,522 47,176
Amortization of capitalized interest 385 266 195 183 21 154
-------- -------- ------- ------- ------ --------
Total earnings $172,785 $103,265 $76,916 $57,941 $6,242 $ 32,186
======== ======== ======= ======= ====== ========
Fixed charges:
Interest expense(1) $62,266 $37,235 $46,386 $44,395 $4,522 $ 47,176
Capitalized interest 6,338 3,116 1,301 468 - 265
Series A Preferred Dividends(2) 2,415 2,098 2,048 1,238 - -
Series B Preferred Dividends(3) 10,041 10,041 586 - - -
Series C Preferred Dividends(4) 2,658 - - - - -
-------- -------- ------- ------- ------ --------
Total fixed charges and preferred dividends $83,718 $52,490 $50,321 $46,101 $4,522 $ 47,441
======== ======== ======= ======= ====== ========
Ratio of earnings to fixed charges
(excluding preferred dividends) 2.52 2.56 1.61 1.29 1.38(4) 0.68(4)
======== ======== ======= ======= ====== ========
Ratio of earnings to combined fixed charges
and preferred dividends(2)(3) 2.06 1.97 1.53 1.26
======== ======== ======= =======
Fixed charges in excess of earnings $ - $ - $ - $ - $ - $ 15,255
======== ======== ======= ======= ====== ========
</TABLE>
Notes:
(1) Includes amortization of debt discount and deferred financing fees.
(2) The Company issued 1,000 shares of Series A Preferred Stock on May 13,
1994. Prior to that date there was no preferred stock outstanding.
(3) The Company issued 4,250 shares of Series B Preferred Stock in
December 1995.
(4) The Company issued 6,000 shares of Series C Preferred Stock in October
1997.
(5) The ratio for the year ended December 31, 1993 (which combines the result
of operations of Spieker Properties, Inc. and Spieker Partners Properties)
is 0.74 and fixed charges in excess of earnings in $13,535.
<PAGE> 1
EXHIBIT 21.1
LIST OF SUBSIDIARIES OF SPIEKER PROPERTIES, INC.
1. Brea Place Associates, L.P., a California limited partnership
2. Fremont Bayside Associates, L.P., a California limited partnership
3. S.S. Livermore L.P., a California limited partnership
4. Sand Hill Northwest Properties, L.L.C.
5. Spieker Brea, L.P., a Delaware limited partnership
6. Spieker Partners-Livermore Ltd., a California limited partnership
7. Spieker Properties #122, Limited Partnership, a California limited
partnership
8. Spieker Properties #144, Limited Partnership, a Texas limited
partnership
9. Spieker Properties #154, Limited Partnership, a California limited
partnership
10. Spieker Properties #166, Limited Partnership, a California limited
partnership
11. Spieker Properties #172, Limited Partnership, a California limited
partnership
12. Spieker Properties #177, Limited Partnership, a California limited
partnership
13. Spieker Properties #178, Limited Partnership, a California limited
partnership
14. Spieker Properties #179, Limited Partnership, a California limited
partnership
15. Spieker Properties #183, Limited Partnership, a California limited
partnership
16. Spieker Properties #185, Limited Partnership, a California limited
partnership
17. Spieker Properties #219, Partners, a California general partnership
18. Spieker Properties #221, Partners, Limited Partnership, a California
general partnership
19. Spieker Properties #237, Partners, a California general partnership
20. Spieker Properties #238, Partners, a California general partnership
21. Spieker Properties, L.P., a California limited partnership
22. Spieker Washington Interest Partners, a California general
partnership
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports included in this Form 10-K into the Company's previously filed
Registration Statements File Nos. 333-00346, 333-09425, 333-14325, 333-21709,
333-35997, and 333-43707.
ARTHUR ANDERSEN LLP
San Francisco, California
March 23, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 22,628
<SECURITIES> 0
<RECEIVABLES> 8,661
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,980,897
<DEPRECIATION> 169,051
<TOTAL-ASSETS> 3,242,934
<CURRENT-LIABILITIES> 0
<BONDS> 1,431,502
0
271,972
<COMMON> 5
<OTHER-SE> 1,221,851
<TOTAL-LIABILITY-AND-EQUITY> 3,242,934
<SALES> 0
<TOTAL-REVENUES> 331,313
<CGS> 0
<TOTAL-COSTS> 91,298
<OTHER-EXPENSES> 67,615
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 62,266
<INCOME-PRETAX> 110,134
<INCOME-TAX> 0
<INCOME-CONTINUING> 115,004
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 99,840
<EPS-PRIMARY> 2.07
<EPS-DILUTED> 2.04
</TABLE>
