<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported):
July 1, 1998 (January 7, 1998)
SPIEKER PROPERTIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 1-12528 94-3185802
-------- ------- ----------
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
2180 SAND HILL ROAD, MENLO PARK, CA 94025
----------------------------------- -----
(Address of principal executive offices) (Zip code)
(650) 854-5600
--------------
(Registrant's telephone number, including area code)
<PAGE> 2
SPIEKER PROPERTIES, INC.
CURRENT REPORT
ON
FORM 8-K
Item 2. Acquisition or Disposition of Assets
The Company previously reported the acquisition of phases of the TDC
Portfolio, totaling 2,907,934 square feet of office properties (as identified in
note (h) in the Notes and adjustments to pro forma condensed consolidated
financial statements) located in California and Arizona on its Report on Form
8-K dated January 20, 1998, on its Annual Report on Form 10-K for the year ended
December 31, 1997 and on its Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998. Certain audited historical financial information and unaudited
pro forma information concerning the portion of the TDC Portfolio which closed
on or before April 30, 1998 (the "TDC Portfolio") is provided in Item 7 of this
Current Report on Form 8-K.
Item 7. Financial Statements and Exhibits.
(a) Statements of Revenues and Certain Expenses for the TDC Portfolio Report
of Independent Public Accountants
Statements of Revenues and Certain Expenses for the three months
ended March 31, 1998, (unaudited) and for the year ended December
31, 1997
Notes to Statements of Revenues and Certain Expenses for the three
months ended March 31, 1998, (unaudited) and for the year ended
December 31, 1997
(b) Pro Forma Financial Information
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1998
(unaudited)
Pro Forma Condensed Consolidated Statements of Operations for the
three months ended March 31, 1998 (unaudited), and for the year
ended December 31, 1997 (unaudited)
Notes and adjustments to Pro Forma Condensed Consolidated Financial
Statements (unaudited)
(c) Exhibits
2.1 Contribution Agreement relating to the acquisition of the TDC
Portfolio, as amended.
23.1 Consent of Independent Public Accountants
2
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of Spieker Properties, Inc.:
We have audited the accompanying statement of revenues and certain
expenses of the TDC Portfolio, as defined in Note 1, for the year ended December
31, 1997. This financial statement is the responsibility of the management of
Spieker Properties, Inc. (the "Company"). Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of revenues and certain
expenses is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the statement of
revenues and certain expenses. 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
audit provides a reasonable basis of our opinion.
The accompanying statement of revenues and certain expenses was prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in the Company's Current Report on Form
8-K dated July 1, 1998, and is not intended to be a complete presentation of
the revenues and expenses of the TDC Portfolio.
In our opinion, the statement of revenues and certain expenses referred
to above presents fairly, in all material respects, the revenues and certain
expenses of the TDC Portfolio for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
San Francisco, California ARTHUR ANDERSEN LLP
May 25, 1998
3
<PAGE> 4
SPIEKER PROPERTIES, INC.
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE TDC PORTFOLIO
FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, 1998 December 31, 1997
-------------- -----------------
(unaudited)
<S> <C> <C>
RENTAL REVENUES $ 7,652 $ 29,440
CERTAIN EXPENSES:
Rental expenses 1,726 9,594
Real estate taxes 655 2,574
----------- -----------
2,381 12,168
----------- -----------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 5,271 $ 17,272
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
SPIEKER PROPERTIES, INC.
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE TDC PORTFOLIO
FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1997
(in thousands)
1. Basis of Presentation and Summary of Significant Accounting Policies:
Properties Acquired
The accompanying statements of revenues and certain expenses include the
operations (see "Basis of Presentation" below) of certain properties listed
below in the TDC Portfolio acquired by Spieker Properties, L.P. (the "Company")
in several phases prior to and including April 30, 1998. Spieker Properties,
Inc. owns an approximate 88.8% general partners' interest in Spieker Properties,
L.P. (the "Operating Partnership" collectively with Spieker Properties, Inc.
referred to as the "Company") as of March 31, 1998. The portion of the TDC
Portfolio which closed on April 30, 1998 is comprised of the following
properties (the "Property"):
<TABLE>
<CAPTION>
Property Name Location Description
------------- -------- -----------
<S> <C> <C>
Cerritos Towne Center Cerritos, CA Three building office complex totaling 330,704 sq. ft.
2600 Michelson/18581 Teller Irvine, CA Two building office property totaling 389,643 sq. ft.
Metro Center Foster City, CA Three building office complex totaling 707,469 sq. ft.
Biltmore Commerce Center Phoenix, CA Three story office building totaling 262,875 sq. ft.
</TABLE>
Basis of Presentation
The accompanying statements of revenues and certain expenses are not
representative of the actual operations of the Property for the periods
presented. Certain expenses may not be comparable to the expenses expected to be
incurred by the Company in the proposed future operations of the Property;
however, except for the ground leases discussed in Note 3, the Company is not
aware of any material factors relating to the Property that would cause the
reported financial information not to be indicative of future operating results.
Excluded expenses consist of property management fees, interest, depreciation
and amortization and other costs not directly related to the future operations
of the Property.
The financial information presented for the three months ended March 31, 1998,
is unaudited. In the opinion of management, the unaudited financial information
contains all adjustments, consisting of normal recurring accruals, necessary for
a fair presentation of the statement of revenues and certain expenses for the
Property.
5
<PAGE> 6
Revenue Recognition
All leases are classified as operating leases, and rental revenue is recognized
on a straight-line basis over the terms of the leases.
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 revenues and expenses. Actual results could
differ from those estimates.
2. Leasing Activity:
The minimum future rental revenues from leases in effect as of April 1, 1998,
for the remainder of 1998 and annually thereafter are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1998 (nine months) $ 19,134
1999 21,587
2000 14,437
2001 11,723
2002 8,222
Thereafter 22,173
------------
$ 97,276
============
</TABLE>
In addition to minimum rental payments, tenants pay reimbursements for their pro
rata share of specified operating expenses, which amounted to $1,011 for the
three months ended March 31, 1998, (unaudited) and $3,987 for the year ended
December 31, 1997. Certain leases contain options to renew.
3. Lease Commitments:
The Company has entered into operating ground leases on certain land parcels of
the Property with a period of 56 years. Under certain circumstances the Company
has options to purchase the land parcels at Fair Market Value before the end of
the lease term. Future minimum rental payments required under noncancelable
operating ground leases in effect at March 31, 1998, are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1998 (nine months) $ 2,656
1999 3,542
2000 3,542
2001 3,542
2002 3,542
Thereafter 180,642
------------
$ 197,466
============
</TABLE>
6
<PAGE> 7
SPIEKER PROPERTIES, INC.
PRO FORMA FINANCIAL INFORMATION
The unaudited, pro forma condensed consolidated balance sheet as of
March 31, 1998, reflects the acquisition of the TDC Portfolio, the offering of
$25 million in unsecured investment grade debt, the issuance of 1,166,144 shares
of common stock, 1,500,000 Series D Preferred Units in Spieker Properties, L.P.,
and certain other adjustments as if such transactions had all occurred on March
31, 1998. The accompanying unaudited, pro forma condensed consolidated statement
of operations for the three months ended March 31, 1998 reflects the 1998 Debt
Issuances, the 1998 Common Stock and Preferred Unit Issuances, the 1998 Acquired
Properties, and certain other adjustments as if such transactions had occurred
on January 1, 1998. The accompanying unaudited, pro forma condensed consolidated
statement of operations for the year ended December 31, 1997, reflects the 1997
Acquired Properties and Mortgages, the 1997 Property Dispositions, the 1997 Debt
Issuances, the 1997 Common and Preferred Stock Issuances, the 1998 Debt
Issuance, the 1998 Common Stock and Preferred Unit Issuances, the 1998 Acquired
Properties and certain other adjustments as if such transactions and adjustments
had all occurred on January 1, 1997.
These statements should be read in conjunction with respective
consolidated financial statements and notes thereto included in the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, and its
Annual Report on Form 10-K for the year ended December 31, 1997. In the opinion
of management, the unaudited, pro forma condensed consolidated financial
information provides for all adjustments necessary to reflect the effects of the
above property acquisitions and dispositions and offerings.
These pro forma statements may not necessarily be indicative of the
results that would have actually occurred if the acquisitions had been in effect
on the date indicated, nor does it purport to represent the financial position,
results of operations or cash flows for future periods.
7
<PAGE> 8
SPIEKER PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
(unaudited, dollars in thousands)
<TABLE>
<CAPTION>
Common Stock and Acquisition
Debt Preferred Unit of the TDC
Historical (a) Issuance (b) Issuances (c) Portfolio (d)
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investment in real estate, net $ 3,644,006 $ - $ - $ 278,209
Cash and cash equivalents 21,042 23,438 117,183 (142,382)
Deferred financing and leasing
costs, net 35,426 1,562 - -
Other assets 79,657 - - -
------------ ------------ ------------ ------------
Total assets $ 3,780,131 $ 25,000 $ 117,183 $ 135,827
============ ============ ============ ============
LIABILITIES
Mortgage loans $ 115,354 $ - $ - $ -
Unsecured line of credit 321,000 - - 102,637
Unsecured notes 1,411,500 25,000 - -
Other liabilities 168,294 - - -
------------ ------------ ------------ ------------
Total liabilities 2,016,148 25,000 - 102,637
------------ ------------ ------------ ------------
MINORITY INTEREST 202,482 - 73,125 33,190
------------ ------------ ------------ ------------
STOCKHOLDERS' EQUITY
Series A Preferred Stock 23,949 - - -
Series B Preferred Stock 102,064 - - -
Series C Preferred Stock 145,959 - - -
Common Stock 6 - - -
Additional paid-in capital 1,290,648 - 44,058 -
Deferred compensation (1,357) - - -
Retained earnings 232 - - -
------------ ------------ ------------ ------------
Total stockholders' equity 1,561,501 - 44,058 -
------------ ------------ ------------ ------------
$ 3,780,131 $ 25,000 $ 117,183 $ 135,827
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Other
Adjustments (d) Pro Forma
--------------- ---------
<S> <C> <C>
ASSETS
Investment in real estate, net $ - $ 3,922,215
Cash and cash equivalents - 19,281
Deferred financing and leasing
costs, net - 36,988
Other assets - 79,657
------------- -------------
Total assets $ - $ 4,058,141
============= =============
LIABILITIES
Mortgage loans $ - $ 115,354
Unsecured line of credit - 423,637
Unsecured notes - 1,436,500
Other liabilities - 168,294
------------- -------------
Total liabilities - 2,143,785
------------- -------------
MINORITY INTEREST (15,415)(e) 293,382
------------- -------------
STOCKHOLDERS' EQUITY
Series A Preferred Stock - 23,949
Series B Preferred Stock - 102,064
Series C Preferred Stock - 145,959
Common Stock - 6
Additional paid-in capital 15,415(e) 1,334,706
Deferred compensation - (1,357)
Retained earnings - 15,647
------------- -------------
Total stockholders' equity 15,415 1,620,974
------------- -------------
$ - $ 4,058,141
============= =============
</TABLE>
The accompanying notes are an integral part of this unaudited, pro forma
condensed consolidated balance sheet.
8
<PAGE> 9
SPIEKER PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(unaudited, dollars in thousands, except per share data)
<TABLE>
<CAPTION>
1998 Common Stock
1998 Debt and Preferred
Historical (a) Issuance (f) Unit Issuances (g)
-------------- ------------ ------------------
<S> <C> <C> <C>
REVENUES
Rental income $ 117,637 $ - $ -
Interest and other income 7,670 - -
------------- ------------- -------------
Total revenue 125,307 - -
------------- ------------- -------------
OPERATING EXPENSES
Rental expenses 24,389 - -
Real estate taxes 9,300 - -
Interest expense, including amortization of
finance costs 29,267 4,075 -
Depreciation and amortization 19,586 - -
General and administrative and other expenses 4,822 - -
------------- ------------- -------------
Total operating expenses 87,364 4,075 -
------------- ------------- -------------
Income from operations before disposition of
property and minority interests 37,943 (4,075) -
------------- ------------- -------------
Minority interests share in net income (4,761) - (1,442)
------------- ------------- -------------
Net income before disposition of property 33,182 (4,075) (1,442)
------------- ------------- -------------
Series A Preferred Stock dividends (695) - -
Series B Preferred Stock dividends (2,510) - -
Series C Preferred Stock dividends (2,953) - -
------------- ------------- -------------
Net income available to common stockholders
before disposition of property $ 27,024 $ (4,075) $ (1,442)
============= ============= =============
Net income per common share $ 0.44
=============
Weighted average common shares outstanding 60,931,677 1,761,290
============= =============
</TABLE>
<TABLE>
<CAPTION>
1998 Acquired Other
Properties (h) Adjustments Pro Forma
-------------- ----------- ---------
<S> <C> <C> <C>
REVENUES
Rental income $ 10,642 $ - $ 128,279
Interest and other income 10 - 7,680
------------- ------------- -------------
Total revenue 10,652 - 135,959
------------- ------------- -------------
OPERATING EXPENSES
Rental expenses 3,027 - 27,416
Real estate taxes 655 - 9,955
Interest expense, including amortization of
finance costs - - 33,342
Depreciation and amortization 1,766 - 21,352
General and administrative and other expenses - - 4,822
------------- ------------- -------------
Total operating expenses 5,448 - 96,887
------------- ------------- -------------
Income from operations before disposition of
property and minority interests 5,204 - 39,072
------------- ------------- -------------
Minority interests share in net income - (86)(i) (6,289)
------------- ------------- -------------
Net income before disposition of property 5,204 (86) 32,783
------------- ------------- -------------
Series A Preferred Stock dividends - - (695)
Series B Preferred Stock dividends - - (2,510)
Series C Preferred Stock dividends - - (2,953)
------------- ------------- -------------
Net income available to common stockholders
before disposition of property $ 5,204 $ (86) $ 26,625
============= ============= =============
Net income per common share $ 0.42
=============
Weighted average common shares outstanding 62,692,967 (j)
=============
</TABLE>
The accompanying notes are an integral part of this unaudited,
pro forma condensed consolidated statement of operations.
9
<PAGE> 10
SPIEKER PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(unaudited, dollars in thousands, except share data)
<TABLE>
<CAPTION>
1997 Acquired 1997 Common
Properties and 1997 Property 1997 Debt and Preferred
Historical(a) Mortgages (k) Dispositions (l) Issuances (n) Stock Issuances (q)
------------- ------------- ---------------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income $ 321,609 $ 135,165 $ (8,420) $ - $ -
Interest and other income 9,704 - - - -
---------- --------- --------- --------- -----------
Total Revenues 331,313 135,165 (8,420) - -
---------- --------- --------- --------- -----------
OPERATING EXPENSES
Rental expenses 66,654 28,986 (1,574) - -
Real estate taxes 24,644 10,594 (755) - -
Interest expense 62,266 - - 36,438 -
Depreciation and
amortization 52,779 22,369 (617) - -
General and administrative and
other expenses 14,836 - - - -
---------- --------- --------- --------- -----------
Total operating expenses 221,179 61,949 (2,946) 36,438 -
---------- --------- --------- --------- -----------
Income from operations before
disposition of property and
minority interests 110,134 73,216 (5,474) (36,438) -
---------- --------- --------- --------- -----------
Minority interests share of net income (12,761) - - - -
---------- --------- --------- --------- -----------
Net income before disposition of
property 97,373 73,216 (5,474) (36,438) -
---------- --------- --------- --------- -----------
Series A Preferred Stock dividends (2,415) - - - -
Series B Preferred Stock dividends (10,041) - - - -
Series C Preferred Stock dividends (2,658) - - - (9,155)
---------- --------- --------- --------- -----------
Net income available to common
stockholders before disposition of
property $ 82,259 $ 73,216 $ (5,474) $ (36,438) $ (9,155)
========== ========= ========= ========= ===========
Net income per common share $ 1.68
==========
Weighted average common shares
outstanding 48,968,905 11,405,152 (j)
========== ===========
</TABLE>
<TABLE>
<CAPTION>
1998 Common Stock
1998 Debt and Preferred 1998 Acquired Other
Issuance (f) Unit Issuances (g) Properties (h) Adjustments (m) Pro Forma
------------ ------------------ -------------- --------------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income $ - $ - $ 76,939 $ (21,626) $ 503,667
Interest and other income - - - 15,107 24,811
--------- ------------ --------- ----------- -----------
Total Revenues - - 76,939 (6,519) 528,478
--------- ------------ --------- ----------- -----------
OPERATING EXPENSES
Rental expenses - - 28,234 (4,735) 117,565
Real estate taxes - - 5,830 (1,784) 38,530
Interest expense 31,361 - - - 130,065
Depreciation and
amortization - - 12,895 (3,401) 84,024
General and administrative and
other expenses - - - - 14,836
--------- ------------ --------- ----------- -----------
Total operating expenses 31,361 46,959 (9,920) 385,020
--------- ------------ --------- ----------- -----------
Income from operations before
disposition of property and
minority interests (31,361) - 29,980 3,401 143,458
--------- ------------ --------- ----------- -----------
Minority interests share of net income - (5,768) - (7,733) (o) (26,262)
--------- ------------ --------- ------- -----------
Net income before disposition of
property (31,361) (5,768) 29,980 (4,332) 117,196
--------- ------------ --------- ----------- -----------
Series A Preferred Stock dividends - - - - (2,415)
Series B Preferred Stock dividends - - - - (10,041)
Series C Preferred Stock dividends - - - - (11,813)
--------- ------------ --------- ----------- -----------
Net income available to common
stockholders before disposition of
property $ (31,361) $ (5,768) $ 29,980 $ (4,332) $ 92,927
========= ============ ========= =========== ===========
Net income per common share $ 1.50
===========
Weighted average common shares
outstanding 1,774,972 62,149,029 (j)
============ ==========
</TABLE>
The accompanying notes are an integral part of this unaudited,
pro forma condensed consolidated statement of operations.
10
<PAGE> 11
SPIEKER PROPERTIES, INC.
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, dollars in thousands, except per share amounts)
(a) Reflects the historical consolidated balance sheet of the Company as of
March 31, 1998, and the historical consolidated statements of operations
for the three months ended March 31, 1998, and for the year ended
December 31, 1997, excluding gains on disposition of property of $9.0
million and $20.3 million, respectively.
(b) Reflects the issuance of unsecured investment grade rated debt
securities of $25.0 million at an interest rate of 6.88% and with a
maturity date of April 30, 2007.
(c) Reflects the issuance of 1,166,144 shares of common stock at a price of
$39.88 per share and offering costs of approximately $2.4 million. Also
reflects the issuance of 1,500,000 operating partnership units
convertible into Series D Preferred Stock, at $50.00 per share, dividend
rate of 7.6875% of the liquidation preference of $75 million, and
offering costs of approximately $1.9 million.
(d) The Company acquired the TDC properties at an aggregate acquisition cost
of $405.4 million which closed on various dates. Reflects the
acquisition of the portion of the TDC portfolio which occurred in April
1998, at an aggregate acquisition cost of $278.2 million, including
acquisition costs. The acquisition was funded with cash on hand,
borrowings on the unsecured line of credit, and the issuance of
operating partnership units.
(e) Reflects the allocation of the limited partners' interest in the
Operating Partnership. The limited partners' pro forma ownership of the
Operating Partnership as of March 31, 1998, was approximately 12.0%.
(f) Reflects the incremental effect of the issuance of unsecured investment
grade rated debt securities of $150.0 million on January 27, 1998 at an
interest rate of 6.75% and a maturity date of January 15, 2008. In
addition, reflects the incremental effect of the issuance of unsecured
investment grade rated debt securities of $125.0 million on February 6,
1998 at an interest rate of 6.88% and a maturity date of February 1,
2005. Also reflects the incremental effect of the issuance of unsecured
investment grade rated debt securities of $1.5 million on February 2,
1998 at an interest rate of 7.0% and a maturity date of February 1,
2005. In addition, reflects the issuance of unsecured investment grade
rated debt securities of $25.0 million on April 29, 1998 at an interest
rate of 6.88% and a maturity date of April 30, 2007.
(g) Reflects the incremental effect of the issuance of 1,500,000 operating
partnership units convertible into shares of Series D Preferred Stock,
at $50.00 per share, dividend rate of 7.6875% of the liquidation
preference of $75 million, and offering costs of approximately $1.9
million. In addition, reflect the incremental effect of the issuance of
608,828 shares of common stock on March 30, 1998 and the issuance of
1,166,144 shares of common stock on April 29, 1998 (collectively, the
"1998 Common Stock offerings").
(h) Reflects the incremental effect of the Company's revenues, rental
expenses and real estate taxes from the acquisition of 4.2 million
square feet of net rentable property during 1998. Such amounts represent
the operations of the properties prior to acquisition by the Company.
Also reflects depreciation and amortization for periods prior to
acquisition. Estimated depreciation and amortization has been based upon
asset lives of 3 to 40 years.
<TABLE>
<CAPTION>
PROPERTY TOTAL RENTABLE INITIAL
PROJECT NAME LOCATION TYPE(1) SQUARE FEET COST(2)
------------ -------- ------- ----------- -------
<S> <C> <C> <C> <C>
Concourse San Jose, CA O 536,250 $172,400
The City Office Portfolio Orange, CA O 728,660 97,300
Santa Monica Business Park(3) Santa Monica, CA O 957,063 110,210
Marina Business Park(3) Marina Del Rey, CA O 260,180 29,600
2600 Michelson/18581 Teller(3) Irvine, CA O 389,643 64,000
Cerritos Towne Center(3) Cerritos, CA O 330,704 41,518
Metro Center(3) Foster City, CA O 707,469 130,917
Biltmore Comm. Ctr.(3) Phoenix, AZ O 262,875 41,774
</TABLE>
----------
(1) "O" indicates Office
(2) Represents the initial acquisition cost of the properties excluding
any additional repositioning costs.
(3) Properties referenced as the "TDC Portfolio" in this filing. Does
not include one property totaling 80,821 square feet at an Initial
Cost of $11,600 with an estimated close date in the 3rd Quarter of
1998. This last property will complete the acquisition of the TDC
Portfolio as previously externally reported.
(i) Reflects the allocation of the limited partners' interest in income of
the Operating Partnership. The limited partners' pro forma weighted
average ownership of the Operating Partnership for the three month
period ended March 31, 1998, was approximately 12.2%.
11
<PAGE> 12
(j) Pro forma basic and diluted weighted average shares outstanding for the
three months ended March 30, 1998 includes the effect of the 1998 Common
Stock Offerings. Pro forma basic and diluted weighted average shares
outstanding for the twelve months ended December 31, 1997 includes the
effect of the January 1997 sale of 11,500,000 shares of Common Stock
(including 1,500,000 shares sold to the underwriters in the exercise of
their over-allotment option) at $34.50 per share, the November 1997 sale
of 11,500,000 shares of Common Stock (including 1,500,000 shares sold to
the underwriters in the exercise of their over-allotment option) at
$38.875 per share, and the December 1997 placement of 573,134 shares of
Common Stock in a Registered Unit Investment Trust at $41.875 per share
(collectively "The 1997 Common Stock offerings").
(k) Reflects the incremental effect on the Company's revenues, rental
expenses and real estate taxes from the acquisition of 12.5 million
square feet of net rentable property and two investments in mortgages
during 1997. Such amounts represent the operations of the acquired
properties and interest earned on mortgages prior to acquisition by the
Company. Also reflects depreciation and amortization for periods prior
to acquisition. Estimated depreciation and amortization has been based
upon asset lives of 3 to 40 years. The Company acquired the following
properties (the "1997 Acquisitions") during the year ended December 31,
1997:
<TABLE>
<CAPTION>
Property Total Rentable
Project Name Location Type (1) Square Feet Initial 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)
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.
12
<PAGE> 13
(l) Reflects the elimination of the operations of 13 properties disposed of
in 1997 included in the historical statements of operations. Also
reflects the elimination in rental revenues of interest income from the
repayment of two investments in mortgages. The Company disposed of the
following properties (the "1997 Dispositions") during the year ended
December 31, 1997:
<TABLE>
<CAPTION>
Property Total Rentable
Project Name Location Type (1) Square Feet Sales Price
- ------------ -------- -------- ----------- -----------
<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) "O" indicates office property; "I" indicates industrial property; "R"
indicates retail property.
(m) Reflects the reduction in revenue and expenses for the portion of the
WCB Portfolio, aggregating 1.7 million square feet of property,
purchased by an affiliate of Spieker Properties, L.P.. Also reflects the
increase in management fee and interest income from an affiliate of
Spieker Properties, L.P. relating to the 1.7 million square feet of
property in the WCB Portfolio to be purchased by an affiliate of Spieker
Properties, L.P.
(n) Reflects the incremental effect of the issuance of investment grade
rated unsecured notes of $150.0 million on July 14, 1997 at an interest
rate of 7.125% and a maturity date of July 1, 2009. In addition,
reflects the incremental effect of the issuance of investment grade
rated unsecured debentures of $150.0 million on September 29, 1997 at an
interest rate of 7.5% and a maturity date of October 1, 2027. Also
reflects the incremental effect of the issuance of investment grade
rated unsecured notes of $200.0 million on December 8, 1997 at an
interest rate of 7.35% and a maturity date of December 1, 2007.
(o) Reflects the allocation of pro forma income to minority interests based
upon pro forma minority ownership in the Operating Partnership of
approximately 14.0%.
(p) The Company's pro forma taxable income for the 12-month period ended
March 31, 1998, is approximately $166 million, which has been
calculated as pro forma income from operations before minority interests
for the same period of approximately $147 million plus GAAP depreciation
and amortization of approximately $67 million less tax basis
depreciation and amortization and other tax differences of approximately
$48 million.
(q) Reflects the incremental effect of the issuance of 6,000,000 shares of
Series C Cumulative Redeemable Preferred Stock at $25.00 per share,
dividends payable at an annual rate of 7.875% of the liquidation
preference of $150.0 million.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPIEKER PROPERTIES, INC.
(Registrant)
Date: July 1, 1998 By: /s/ ELKE STRUNKA
------------------------------------- ----------------------------
Elke Strunka
Vice President and
Principal Accounting Officer
14
<PAGE> 1
EXHIBIT 2.1
CONTRIBUTION AGREEMENT
dated as of January 7, 1998
among
SPIEKER PROPERTIES, L.P.,
a California limited partnership,
SPIEKER PROPERTIES, INC.,
a Maryland corporation,
and
THE CONTRIBUTORS
identified on the signature pages hereto
in connection with certain properties
managed by
TRANSPACIFIC DEVELOPMENT COMPANY,
a California corporation
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS .................................... 1
Section 1.1 Definitions ........................................................ 1
Section 1.2 Terms Generally .................................................... 11
ARTICLE II
PROPERTIES ...................................... 11
Section 2.1 Properties ......................................................... 11
Section 2.2 Properties Leased By Ground Lessors................................. 14
Section 2.3 Timing ............................................................. 14
Section 2.4 Contribution Consideration ......................................... 15
ARTICLE III
CONDITIONS PRECEDENT ................................. 22
Section 3.1 Conditions to Spieker's Obligations ................................ 22
Section 3.2 Conditions to the Contributors' Obligations ........................ 25
Section 3.3 Termination ........................................................ 26
Section 3.4 Waiver by Spieker .................................................. 26
Section 3.5 Required Consents .................................................. 26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES;
SPIEKER'S EXAMINATION OF THE PROPERTIES ....................... 27
Section 4.1 Representations and Warranties of the Contributors ................. 27
Section 4.2 Extended Due Diligence Items ....................................... 30
Section 4.3 Estoppels .......................................................... 30
Section 4.4 Limitation on Claims; Survival of Representations and Warranties ... 30
Section 4.5 Representations, Warranties and Covenants of Spieker and the REIT .. 32
Section 4.6 Spieker's Independent Investigation ................................ 34
Section 4.7 Entry and Indemnity; Limits on Government Contacts ................. 35
Section 4.8 Release ............................................................ 36
</TABLE>
i
<PAGE> 3
ARTICLE V
<TABLE>
<S> <C>
TITLE ........................................ 37
Section 5.1 Conveyance of Title ................................................ 37
Section 5.2 Review of Title .................................................... 38
ARTICLE VI
BROKERS ....................................... 39
Section 6.1 Brokers ............................................................ 39
ARTICLE VII
INTERIM OPERATION OF THE PROPERTIES ....................... 40
Section 7.1 Interim Operation of the Properties ................................ 40
Section 7.2 Tenant Improvement Costs, Leasing Commissions and Free Rent ........ 42
Section 7.3 Contributors' Insurance ............................................ 42
Section 7.4 Capital Improvements ............................................... 42
Section 7.5 Second Closing Properties .......................................... 42
Section 7.6 Tenant Notices ..................................................... 43
Section 7.7 Risk of Loss and Insurance Proceeds ................................ 43
Section 7.8 Notifications ...................................................... 44
Section 7.9 Assumed Contracts .................................................. 44
Section 7.1 Michelson Purchase Agreement ....................................... 45
Section 7.1 BCIC Matters ....................................................... 46
ARTICLE VIII
CLOSING AND ESCROW ............................... 46
Section 8.1 Escrow Instructions ................................................ 46
Section 8.2 Closing ............................................................ 46
Section 8.3 Deposit of Documents ............................................... 47
Section 8.4 Estoppel Certificates .............................................. 50
Section 8.5 Prorations ......................................................... 51
Section 8.6 Tax Certiorari Proceedings ......................................... 54
Section 8.7 Closing Costs ...................................................... 55
Section 8.8 CC&R Matters ....................................................... 55
ARTICLE IX
CERTAIN TAX MATTERS ............................... 56
Section 9.1 Protection of Negative Capital Accounts ............................ 56
Section 9.2 Book-Tax Disparity ................................................. 59
Section 9.3 Tax Return Review .................................................. 60
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 9.4 REIT Status ........................................................ 60
Section 9.5 Termination Transaction ............................................ 60
ARTICLE X
MISCELLANEOUS ................................. 60
Section 10.1 Notices ........................................................... 60
Section 10.2 Entire Agreement .................................................. 61
Section 10.3 Time .............................................................. 62
Section 10.4 Attorneys' Fees ................................................... 62
Section 10.5 No Merger ......................................................... 62
Section 10.6 Assignment ........................................................ 62
Section 10.7 Counterparts ...................................................... 62
Section 10.8 Governing Law; Jurisdiction and Venue ............................. 62
Section 10.9 Confidentiality and Return of Documents ........................... 63
Section 10.10 Interpretation of Agreement....................................... 66
Section 10.11 Amendments........................................................ 66
Section 10.12 No Recording...................................................... 66
Section 10.13 Third Party Beneficiary; Contributors' Obligations Several........ 66
Section 10.14 Severability...................................................... 67
Section 10.15 Drafts not an Offer to Enter into a Legally Binding Contract...... 67
Section 10.16 Further Assurances................................................ 67
Section 10.17 SEC Compliance.................................................... 67
Section 10.18 No Marketing...................................................... 68
Section 10.19 Possession........................................................ 68
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A Concurrent Transactions Exhibit
Exhibit B Deleted
Exhibit C Spieker Ground Lease Agreement B
Santa Monica Business Park (BCIC)
Exhibit D Spieker Ground Lease Agreement B
Metro Center (OB-1)
Exhibit E Spieker Ground Lease Agreement B
Metro Center (Town Center East-1)
Exhibit F Spieker Ground Lease Agreement B
Metro Center (Town Center East-2)
Exhibit G Spieker Ground Lease Agreement B
Metro Center - (Town Center East-3)
Exhibit H Spec Building
Exhibit I Deleted
Exhibit J Conversion, Registration Rights and
Lock-up Agreement
Exhibit K Subscription Agreement
Exhibit L Counterpart OP Signature Page
Exhibit M Lock-up Agreement
Exhibit N Michelson Purchase Agreement
Exhibit O Security Agreement
Exhibit P Deed
Exhibit Q Deleted
Exhibit R Assignment of Partnership Interest
Exhibit S Bill of Sale
Exhibit T Assignment of Leases
Exhibit U Assignment of Contracts
Exhibit V REIT Tax Opinion
Exhibit W Tenant Estoppel Certificate
Exhibit X Ground Lessor Estoppel Certificate
Exhibit Y Guarantee
Exhibit Z Traceable Debt Guarantee
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
SCHEDULES
<S> <C>
Schedule 1 Contributors, Contribution Amounts and OP Unit Amounts
Schedule 2 Contributor Persons
Schedule 2.1(a) Fee Properties
Schedule 2.1(b) Ground Lease Parcel Improvements
Schedule 2.1(c) Partnership Interests
Schedule 2.1(d) Leasehold Estates
Schedule 2.1(e) Personal Property
Schedule 2.1(f) Excluded Leases
Schedule 2.1(g) Deleted
Schedule 2.4(b)(i) Existing Indebtedness
Schedule 2.4(d) OP Unit Distributees
Schedule 2.4(e)(i)(1) Wire Transfer Instructions
Schedule 2.4(e)(ii) Traceable Debt Account Wire Transfer Instructions
Schedule 3.1(c) Title Insurance Amounts
Schedule 3.1(i) Excluded Tenants
Schedule 3.1(j) Conditions to Closing Second Closing Properties
Schedule 3.5 Required Consents
Schedule 4.1(f) Rent Rolls
Schedule 4.1(g) Contracts
Schedule 4.1(i) Litigation
Schedule 4.1(j) Notices of Violations
Schedule 4.1(k) Partnership Liabilities
Schedule 4.2 Extended Due Diligence Items
Schedule 5.2(a) Permitted Exceptions
Schedule 5.2(b) Title Objections
Schedule 7.2 Tenant Improvement Costs
Schedule 7.4 Capital Improvement Items
Schedule 7.5 Development Covenants
Schedule 9.1(b) Minimum Debt Level, Allocable Minimum Debt Levels and Guarantee Amounts
</TABLE>
v
<PAGE> 7
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement"), dated as of January 7,
1998, is entered into by and among the parties identified on the signature pages
hereto (each, a "Contributor," and collectively, the "Contributors"), Spieker
Properties, Inc., a Maryland corporation (the "REIT"), and Spieker Properties,
L.P., a California limited partnership ("Spieker").
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below, which meanings shall be applicable
equally to the singular and plural of the terms defined:
"Acceptable Replacement Debt" shall have the meaning set forth in Section
9.1(d).
"Accredited Investor" shall have the meaning set forth in Section 2.4(d).
"Additional Maturity Date Debt" shall have the meaning set forth in
Section 9.1(b).
"Additional Protection Period" shall have the meaning set forth in
Section 9.1(b).
"Additional Rents" shall have the meaning set forth in Section 8.5(a).
"Adjusted Contribution Amount" shall have the meaning set forth in
Section 2.4(a).
"Affidavit of Property Value" shall have the meaning set forth in Section
8.3(a)(xii).
"Affiliate" shall mean with respect to any Person (i) any other Person
that directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such Person, or (ii) any other
Person owning or controlling 10% or more of the outstanding voting securities of
or other ownership interests in such Person.
"Agreement" shall have the meaning set forth in the first paragraph of
this Agreement.
"Allocable Minimum Debt Level" shall have the meaning set forth in
Section 9.1(b).
"Allocated Contribution Amount" shall have the meaning set forth in
Section 2.4(b).
"Applicable Partners" shall have the meaning set forth in Section 9.1(a).
1
<PAGE> 8
"Assignment of Partnership Interest" shall have the meaning set forth in
Section 5.1.
"Assignment of Contracts" shall have the meaning set forth in Section
8.3(a).
"Assignment of Contribution Ground Leases" shall have the meaning set
forth in Section 5.1.
"Assignment of Leases" shall have the meaning set forth in Section
8.3(a).
"Assumed Contracts" shall have the meaning set forth in Section 7.9.
"Average Share Price" shall have the meaning set forth in Section 2.4(c).
"BCIC" means Barclay-Curci Investment Company.
"Bill of Sale" shall have meaning set forth in Section 8.3(a).
"Book-Tax Disparity" shall have the meaning set forth in Section 9.2.
"Bridge Note" shall mean that certain Promissory Note dated December 18,
1997, from the Pledgors to Spieker.
"Bridge Pledge Agreement" shall mean that certain Pledge Agreement dated
December 18, 1997, by and between the Pledgors and Spieker.
"Business Day" shall mean any day other than a Saturday, a Sunday, or a
federal holiday recognized by the Federal Reserve Bank of San Francisco.
"Capital Improvement Items" shall have the meaning set forth in Section
7.4.
"Cerritos Development Rights" shall mean certain development rights, and
options to acquire ground leasehold interests, of Bloomfield Associates under
that certain Third Amended and Restated Disposition and Development Agreement
for Cerritos Towne Center Development Plan 2, dated as of March 1, 1986, as
amended, with respect to the following parcels: Parcels 1 and 6, City of
Cerritos, County of Los Angeles, as shown on Parcel Map 19205 of map recorded in
Book 203, Page 26 and 27 of Parcel Maps in the Official Records of the Los
Angeles County Recorder.
"Claims" shall mean suits, actions, proceedings, investigations, demands,
claims, liabilities, fines, penalties, liens, judgments, losses, injuries,
damages, expenses or costs, including reasonable attorneys' and experts' fees
and costs and investigation, and remediation costs.
"Closing" shall have the meaning set forth in Section 2.3(a).
2
<PAGE> 9
"Closing Date" shall have the meaning set forth in Section 2.3(a).
"Closing Document" shall mean any and all documents, agreements,
instruments, or undertakings executed or delivered in connection with a Closing.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
corresponding provision(s) of any succeeding law.
"Collateral" shall have the meaning set forth in Section 4.4(a).
"Concurrent Transactions Exhibit" shall have the meaning set forth in the
introductory paragraph of Article II.
"Confidential Information" shall have the meaning set forth in Section
10.9(c).
"Confidentiality Agreement" shall mean the Confidentiality Agreement,
dated August 15, 1997, between Spieker Properties, Inc. and Transpacific
Development Company, as amended by Amendment No. 1 dated October 3, 1997.
"Consent Properties" shall mean, collectively, those certain Properties
described on Schedule 3.5 hereto.
"Contracts" shall have the meaning set forth in Section 2.1(g).
"Contribution Ground Leases" shall have the meaning set forth in Section
4.1(b).
"Contribution Property" shall have the meaning set forth in Section 2.1.
"Contribution Real Property" shall have the meaning set forth in Section
2.1.
"Contributor" or "Contributors" shall have the meaning set forth in the
first paragraph of this Agreement.
"Contributors' Evaluation Material" shall have the meaning set forth in
Section 10.9(a).
"Contributor Party" or "Contributor Parties" shall have the meaning set
forth in Section 4.8(a).
"Contributor Persons" shall mean the Contributors, together with their
constituent partners, shareholders or members, all as identified on Schedule 2
hereto.
"Control" (including the terms "controlling," "controlled by," and "under
common control with") shall mean the possession, direct or indirect, of the
power to direct or cause
3
<PAGE> 10
the direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Conversion, Registration Rights and Lock-up Agreement" shall have the
meaning set forth in Section 2.4(c)(i).
"Counterpart OP Signature Page" shall have the meaning set forth in
Section 2.4(c)(i).
"Deed" shall have the meaning set forth in Section 5.1.
"Deposit" shall have the meaning set forth in Section 2.4(e)(i)(2).
"Deposit Deadline" shall have the meaning set forth in Section
2.4(e)(i)(1).
"Dilution Event" shall have the meaning set forth in Section 2.4(c).
"Due Diligence Materials" shall mean all of the documents and other
materials delivered to, or made available for inspection by, Spieker and its
representatives prior to the Effective Date, or with respect to the Extended Due
Diligence Items, prior to the Extended Due Diligence Termination Date.
"Due Diligence Period" shall mean the period commencing on November 11,
1997 and ending at 5:00 P.M. (Los Angeles time) on the Due Diligence Termination
Date, during which period Spieker shall have the right to conduct the due
diligence activities contemplated by Section 4.6 of this Agreement.
"Due Diligence Termination Date" shall mean the Effective Date with
respect to all matters other than the Extended Due Diligence Items, or with
respect to the Extended Due Diligence Items, prior to the Extended Due Diligence
Termination Date.
"Effective Date" shall mean the date of this Agreement.
"Excluded Leases" shall mean the leases, licenses, or other occupancy
agreements listed on Schedule 2.1(f) hereto, each of which shall be terminated
by the parties thereto prior to the Closing of the contribution of the
applicable Property.
"Executing Partners" shall have the meaning set forth in Section 9.1(d).
"Existing Indebtedness" shall have the meaning set forth in Section
2.4(b)(i).
"Existing Indenture" shall have the meaning set forth in Section 9.1(d).
"Existing Leases" shall have the meaning set forth in Section 2.1(f).
"Expiration Date" shall have the meaning set forth in Section 4.4(b).
4
<PAGE> 11
"Extended Due Diligence Items" shall mean those items set forth on
Schedule 4.2 hereto.
"Extended Due Diligence Termination Date" shall mean 5:00 p.m. Pacific
time on January 12, 1998 (or such later date as TDC and Spieker may mutually
agree).
"Fee Parcel" shall have the meaning set forth in Section 2.1(a).
"Fee Parcel Improvements" shall have the meaning set forth in Section
2.1(a).
"Fee Property" or "Fee Properties" shall have the meaning set forth in
Section 2.1(a).
"First Closing" shall have the meaning set forth in Section 2.3(a)(i).
"First Closing Property" shall have the meaning set forth in Section
2.3(a)(i).
"Foster City CC&Rs" shall mean those certain covenants, conditions and
restrictions recorded in the Official Records of San Mateo County, California as
Document No. 85058153 and as Document No. 85059495 (as such document was amended
by Document Nos. 95012805 and 95076087).
"Full Protection Period" shall have the meaning set forth in Section
9.1(b).
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"Governmental Authority" shall mean any federal, state, county or
municipal government, or political subdivision thereof, any governmental agency,
authority, board, bureau, commission, department, instrumentality, or public
body, or any court or administrative tribunal.
"Gross Contribution Amount" shall have the meaning set forth in Section
2.4(a).
"Ground Lease Parcel" or "Ground Lease Parcels" shall have the meaning
set forth in Section 2.2.
"Ground Lease Parcel Improvements" shall have the meaning set forth in
Section 2.1(b).
"Ground Lessor" or "Ground Lessors" shall have the meaning set forth in
Section 2.2.
"Guaranteed Indebtedness" shall have the meaning set forth in Section
9.1(b).
"Guarantees" shall have the meaning set forth in Section 9.1(a).
5
<PAGE> 12
"Hazardous Materials" shall mean materials, wastes or substances that are
(A) included within the definition of any one or more of the terms "hazardous
substances," "hazardous materials," "toxic substances," "toxic pollutants" and
"hazardous waste" in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901, et
seq.), the Clean Water Act (33 U.S.C. Section 1251, et seq.), the Safe Drinking
Water Act (14 U.S.C. Section 1401, et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801, et seq.), and the Toxic Substance
Control Act (15 U.S.C. Section 2601, et seq.) and the regulations promulgated
pursuant to such laws, (B) regulated, or classified as hazardous or toxic, under
federal, state or local environmental laws or regulations, (C) petroleum, (D)
asbestos or asbestos-containing, (E) polychlorinated biphenyls, (F) flammable
explosives or (G) radioactive materials.
"IRS" shall mean the Internal Revenue Service.
"Indemnified Party" shall have the meaning set forth in Section 6.1.
"Initial Protection Period" shall have the meaning set forth in Section
9.1(b).
"Intangible Property" shall have the meaning set forth in Section 2.1(j).
"Lease Cost Shift Date" shall have the meaning set forth in Section 7.2.
"Leasehold Estate" or "Leasehold Estates" shall have the meaning set
forth in Section 2.1(d).
"Leasehold Improvements" shall have the meaning set forth in Section
2.1(d).
"Leasehold Property" or "Leasehold Properties" shall have the meaning set
forth in Section 2.1(d).
"Leases" shall mean all Existing Leases and New Leases, collectively.
"Leasing Costs" shall have the meaning set forth in Section 7.2.
"Letters of Intent" shall mean those ten (10) letters of intent dated
November 11, 1997 between Spieker and each of the Contributors (including that
between Spieker and SC Enterprises with respect to the integrated nature of the
transactions contemplated in the other letters of intent).
"Licenses and Permits" shall have the meaning set forth in Section
2.1(j).
"Lock-up Agreement" shall have the meaning set forth in Section
2.4(c)(ii).
"Material Event" shall have the meaning set forth in Section 7.7.
6
<PAGE> 13
"McDonnell-Douglas Indemnity Agreement" shall mean that certain indemnity
agreement being negotiated from McDonnell-Douglas Corporation in favor of BCIC,
Santa Monica Associates, SC Enterprises, Spieker and the REIT, in a form
mutually satisfactory to the parties thereto.
"Michelson Assignment Agreement" shall have the meaning set forth in
Section 2.1(k).
"Michelson Indemnity Agreement" shall mean that certain indemnity
agreement being negotiated from SC Enterprises in favor of Spieker, in a form
mutually satisfactory to the parties thereto in their reasonable discretion.
"Michelson Purchase Agreement" shall mean that certain Purchase and Sale
Agreement, dated as of December 26, 1997, by and among DW Michelson Associates,
Michelson Company Limited Partnership and SC Enterprises, attached hereto as
Exhibit N.
"Michelson Purchase Agreement Rights" shall have the meaning set forth in
Section 2.1(k).
"Michelson Seller" shall mean DW Michelson Associates.
"Minimum Debt Level" shall have the meaning set forth in Section 9.1(b).
"MS" shall have the meaning set forth in Section 2.4(b)(iii).
"Negative Accounts" shall have the meaning set forth in Section 9.1(b).
"New Leases" shall mean those leases, license agreements and occupancy
agreements encumbering any Real Property which are entered into after the
Effective Date in accordance with the terms of this Agreement, as the same may
be amended or modified from time to time in accordance with the terms of this
Agreement.
"New York Life" shall mean New York Life Insurance Company.
"New York Life Loan" shall mean that certain Existing Indebtedness from
New York Life to Santa Monica Associates that is secured by a portion of the
Property commonly known as Santa Monica Business Park.
"New York Life Loan Assumption Documents" shall have the meaning set
forth in Section 8.3(a)(xv).
"New York Life Loan Documents" shall mean those certain instruments and
documents evidencing, securing or otherwise relating to the New York Life Loan.
"Non-Terminable Contracts" shall have the meaning set forth in Section
4.1(g).
7
<PAGE> 14
"Objection Notice" shall have the meaning set forth in Section 5.2.
"Objections" shall have the meaning set forth in Section 5.2.
"OP Unit Amount" shall have the meaning set forth in Section 2.4(b).
"OP Unit Distributees" shall have the meaning set forth in Section
2.4(d).
"OP Units" shall have the meaning set forth in Section 2.4(b).
"Order" shall mean an order or decree of any Governmental Authority.
"Organizational Documents" shall have the meaning set forth in Section
4.5(f).
"Original Spieker Unsecured Debt" shall have the meaning set forth in
Section 9.1(a).
"Partnerships" shall have the meaning set forth in Section 2.1(c).
"Partnership Agreements" shall mean the partnership agreements of Santa
Monica Associates, BCIC and Michelson Company Limited Partnership.
"Partnership Interest" shall have the meaning set forth in Section
2.1(c).
"Permitted Changes" shall have the meaning set forth in the last
paragraph of Section 4.1.
"Permitted Exceptions" shall have the meaning set forth in Section 5.2.
"Person" shall mean any individual, partnership, corporation, limited
liability company, trust or other legal entity.
"Personal Property" shall have the meaning set forth in Section 2.1(e).
"Pledgors" shall mean Shurl Curci, an individual, and SC Enterprises, a
California limited partnership.
"Prescribed Form" shall have the meaning set forth in Section 8.4(a).
"Prime Rate" shall mean the prime (or base) rate of interest publicly
announced by Citibank, N.A. or its successors from time to time.
"Property" or "Properties" shall have the meaning set forth in Section
2.2.
"REIT" shall have the meaning set forth in the first paragraph of this
Agreement.
8
<PAGE> 15
"Real Estate Taxes" shall mean any real estate taxes and assessments,
water rates, water meter charges, sewer rates, sewer charges and similar matters
imposed by any Governmental Authority.
"Real Property" or "Real Properties" shall have the meaning set forth in
Section 2.2.
"Records and Plans" shall have the meaning set forth in Section 2.1(i).
"Redemption Shares" shall have the meaning set forth in Section 4.5(g).
"Release" shall have the meaning set forth in Section 10.9(c).
"Rentable Area Floor" shall have the meaning set forth in Section 3.1(i).
"Rent Rolls" shall have the meaning set forth in Section 4.1(f).
"Replacement Guarantees" shall have the meaning set forth in Section
9.1(e).
"Representatives" shall have the meaning set forth in Section 10.9(a)(i).
"Required Consents" shall have the meaning set forth in Section 3.5.
"Required Deletion Items" shall have the meaning set forth in Section
3.1(c).
"Required Percentage" shall have the meaning set forth in Section 8.4(a).
"Restricted Actions" shall have the meaning set forth in Section 9.1(a).
"Santa Monica CC&Rs" shall mean those certain covenants, conditions and
restrictions recorded in the Official Records of Los Angeles County, California
as Document No. 781093326 (as amended by Document No. 79238988) and as Document
No. 78584496 (as amended by Document No. 78950755).
"Schedule of Contracts" shall have the meaning set forth in Section
4.1(g).
"SEC" shall mean the Securities and Exchange Commission.
"Second Closing Properties" shall have the meaning set forth in Section
2.3(a)(ii).
"Second Closings" shall have the meaning set forth in Section 2.3.
"Share" shall have the meaning set forth in Section 2.4(c).
"Significant Tenant" shall mean any Tenant occupying 5,000 square feet or
more.
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"Spec Building" shall mean that certain approximate 50,000 rentable
square foot, two-story office building planned for construction by Bloomfield
Associates in Cerritos, California, on that certain real property described on
Exhibit H hereto.
"Spieker" shall have the meaning set forth in the first paragraph of this
Agreement and shall include any assignee and any successor in interest of
Spieker.
"Spieker's Evaluation Material" shall have the meaning set forth in
Section 10.9(b).
"Spieker Ground Lease Agreements" shall have the meaning set forth in
Section 2.2.
"Spieker Partnership Agreement" shall mean 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 be amended, restated,
supplemented, modified or otherwise changed from time to time.
"Spieker Party" or "Spieker Parties" shall have the meaning set forth in
Section 4.7(a).
"Subscription Agreement" shall have the meaning set forth in Section
2.4(c)(i).
"Supplement" shall have the meaning set forth in Section 5.2.
"TDC" shall mean Transpacific Development Company, a California company.
"Tax Default" shall have the meaning set forth in Section 9.1(c).
"Tenant" shall mean the tenant, occupier or Licensee under any lease,
license agreement or occupancy agreement encumbering any Real Property.
"Termination Surviving Provisions" shall mean the provisions set forth in
Sections 2.4(f), 4.7(a) and (b), 6.1, 10.4, 10.9(a), (b) and (c) and 10.12,
which provisions shall survive any termination of this Agreement.
"Termination Transaction" shall have the meaning set forth in Section
9.4.
"Title Commitment" shall have the meaning set forth in Section 3.1(c).
"Title Company" shall have the meaning set forth in Section 2.4(e)(i).
"Title Policies" shall have the meaning set forth in Section 5.3.
"Traceable Debt" shall have the meaning set forth in Section 9.1(b).
"Warranties" shall have the meaning set forth in Section 2.1(h).
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SECTION 1.2 TERMS GENERALLY. For all purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision;
(b) the words "including" and "include" and other words of similar
import shall be deemed to be followed by the phrase "without limitation"; and
(c) any consent, determination, election or approval required to be
obtained, or permitted to be given, by or of any party hereunder, shall be
granted withheld or made (as the case may be) by such party in the exercise of
such party's sole and absolute discretion.
ARTICLE II
PROPERTIES
In consideration of the mutual covenants and agreements hereinafter set
forth and subject to the terms and conditions contained in this Agreement,
Spieker and the Contributors agree that all of the following transactions and
events shall contemporaneously occur on the applicable Closing Date in the order
and in the manner specified in the Concurrent Transactions Exhibit attached
hereto as Exhibit A (the "Concurrent Transactions Exhibit"). Spieker and the
Contributors further agree that the Concurrent Transactions Exhibit may be
amended by TDC following the Effective Date, provided that any such Amendment
shall not be adverse to Spieker or any of the Contributors in anything other
than an immaterial respect. In the event of a direct conflict between this
Agreement and the Concurrent Transactions Exhibit, this Agreement shall control.
SECTION 2.1 PROPERTIES. Each Contributor agrees to contribute to Spieker,
and Spieker agrees to accept from each such Contributor, subject only to the
Permitted Exceptions and to all other terms, covenants and conditions set forth
herein, all of such Contributor's right, title and interest in and to the
following (provided that with respect to BCIC's interest in the following, the
applicable Contributors shall cause the same to be transferred to Spieker, and
Spieker agrees to accept the same from BCIC, subject only to the Permitted
Exceptions and to all other terms, covenants and conditions set forth herein,
all in the manner prescribed by the Concurrent Transactions Exhibit):
(a) FEE PROPERTIES. Each property described in Schedule 2.1(a)
hereto (such Contributor's right, title and interest in and to the same being
each a "Fee Parcel") identified as being owned by such Contributor on Schedule
2.1(a), together with any and all rights, privileges and easements appurtenant
thereto, together with all buildings, improvements and fixtures located thereon
(such Contributor's right, title and interest in and
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to the same being collectively, the "Fee Parcel Improvements"; each Fee Parcel,
together with the Fee Parcel Improvements thereon, a "Fee Property" and,
collectively, the "Fee Properties").
(b) GROUND LEASE PARCEL IMPROVEMENTS. All buildings, improvements
and fixtures located on each parcel of land described in Schedule 2.1(b) hereto
identified as being owned by such Contributor or BCIC (such Contributor's or
BCIC's right, title and interest in and to the same being the "Ground Lease
Parcel Improvements").
(c) PARTNERSHIP INTERESTS. The partnership interests in the
partnerships described in Schedule 2.1(c) hereto (the "Partnerships") identified
as being owned by such Contributor on Schedule 2.1(c) (each, a "Partnership
Interest" and, collectively, the "Partnership Interests").
(d) LEASEHOLD PROPERTIES. Each leasehold estate described in
Schedule 2.1(d) hereto identified as being owned by such Contributor on Schedule
2.1(d), together with any and all rights and privileges appurtenant thereto
owned by such Contributor (such Contributor's right, title and interest in and
to the same being each, a "Leasehold Estate" and, collectively, the "Leasehold
Estates"), together with all buildings, improvements and fixtures located
thereon (such Contributor's right, title and interest in and to the same being
collectively, the "Leasehold Improvements"; each Leasehold Estate, together with
the Leasehold Improvements thereon, a "Leasehold Property" and, collectively,
the "Leasehold Properties").
(e) PERSONAL PROPERTY. The tangible personal property described in
Schedule 2.1(e) hereto identified as being owned by such Contributor or BCIC on
Schedule 2.1(e), and located on the Properties or the TDC offices and used
solely in the operation or maintenance of any one or more of the Properties
(such Contributor's or BCIC's right, title and interest in and to the same being
the "Personal Property").
(f) LEASES. (i) Each Contributor's or BCIC's interest as landlord,
owner or licensor in each of the leases owned by such Contributor other than the
Excluded Leases listed on Schedule 2.1(f) hereto (each, an "Existing Lease" and
collectively, the "Existing Leases"), (ii) such Contributor's or BCIC's interest
as landlord, owner, or licensor, in any New Leases and (iii) to the extent
assignable, such Contributor's or BCIC's rights under any guarantees, letters of
credit or other instruments that secure or guarantee the performance of the
obligations of each Tenant.
(g) CONTRACTS. To the extent assignable, all service contracts,
maintenance contracts, operating contracts, parking contracts and like contracts
and agreements relating to the Properties, and equipment leases, contracts,
subcontracts and agreements relating to the construction of any unfinished
tenant improvements (such Contributor's or BCIC's right, title and interest in
and to the same being collectively, the "Contracts"), provided that the term
"Contracts" shall not include the Spieker Ground Lease Agreements, and any
property
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management or leasing agreements (which agreements, in each case, shall be
terminated concurrently with the Closing with respect to the applicable
Property).
(h) WARRANTIES. To the extent assignable, all warranties and
guaranties made by or received from any third party with respect to any
building, building component, structure, fixture, machinery, equipment or
material situated on any Property, or contained in any or comprising a part of
any Fee Parcel Improvement or Ground Lease Parcel Improvement (such
Contributor's or BCIC's right, title and interest in and to the same being
collectively, the "Warranties").
(i) RECORDS AND PLANS. To the extent such Contributor or BCIC
currently has such items in its possession or control, all (i) preliminary,
final and proposed building plans and specifications (including "as-built" floor
plans and drawings) and tenant improvement plans and specifications for the Fee
Parcel Improvements, the Ground Lease Parcel Improvements and the Leasehold
Improvements, (ii) books, records, documents, agreements and other materials
necessary for the continued operation, use, ownership, management or development
of the Properties, and (iii) surveys, grading plans, topographical maps,
architectural and structural drawings and engineering, soils, seismic, geologic
and architectural reports, studies and tests relating to any Property (such
Contributor's or BCIC's right, title and interest in and to the same being
collectively, the "Records and Plans").
(j) INTANGIBLE PROPERTY. To the extent transferable, any intangible
personal property now or hereafter owned by such Contributor or BCIC and used in
the ownership, use or operation of any one or more of the Properties (provided
that if any such intangible personal property is owned or used in connection
with property other than the applicable Property, then only the portion of such
intangible property respecting or allocable to such applicable Property shall
constitute "Intangible Property"), and related names and proprietary computer
equipment, software and systems, including all (i) licenses, permits, building
inspection approvals, certificates of occupancy, approvals, subdivision maps and
entitlements issued, approved or granted by Governmental Authorities in
connection with a Property, (ii) covenants, conditions and restrictions,
reciprocal easement agreements, area easement agreements and other common or
planned development agreements or documents affecting any Property (including
all of BCIC's rights as declarant or owner under the Santa Monica CC&Rs, but
excluding all of the applicable Contributors' rights as declarant under the
Foster City CC&Rs) and (iii) licenses, consents, easements, rights of way and
approvals obtained from private parties to make use of utilities and to ensure
vehicular and pedestrian ingress and egress for any Property (such Contributor's
or BCIC's right, title and interest in and to the same being collectively, the
"Licenses and Permits") or other rights relating to the ownership, use or
operation of any of the Properties (such Contributor's or BCIC's right, title
and interest in and to the same being collectively, the "Intangible Property").
Each (i) Fee Property, or (ii) real property owned by the Partnerships is
referred to herein individually as a "Contribution Real Property" and all of the
foregoing are referred to herein collectively as the "Contribution Real
Properties."
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(k) MICHELSON ASSIGNMENT AGREEMENT. Certain rights of the
Contributors under the Michelson Purchase Agreement (the "Michelson Purchase
Agreement Rights"), which rights shall be assigned to and assumed by Spieker in
accordance with an assignment and assumption agreement mutually satisfactory to
Spieker and the applicable Contributor (the "Michelson Assignment Agreement").
(l) CERRITOS DEVELOPMENT RIGHTS. The applicable Contributors and
Spieker agree to negotiate in good faith with respect to the contribution of the
Cerritos Development Rights to Spieker in exchange for OP Units. In the event
the parties reach a mutually acceptable agreement regarding such contribution,
this Agreement will be amended to reflect such agreement. Failure to reach such
an agreement will have no impact on this Agreement.
Each Fee Property, Leasehold Property, and the Ground Lease Parcel
Improvements, together with the Personal Property, the Leases, the Contracts,
the Warranties, the Records and Plans, the Intangible Property relating thereto,
the Partnership Interests, and the Michelson Purchase Agreement Rights are
referred to herein as a "Contribution Property" and, collectively, as the
"Contribution Properties."
SECTION 2.2 PROPERTIES LEASED BY GROUND LESSORS. SC Enterprises, as
successor to BCIC as owner (as contemplated in the Concurrent Transactions
Exhibit), and each other owner (SC Enterprises and each such other owner being
referred to herein each as a "Ground Lessor" and, collectively, the "Ground
Lessors") of the real property on which the Ground Lease Parcel Improvements are
located (each a "Ground Lease Parcel" and, collectively, the "Ground Lease
Parcels") described in Schedule 2.1(b) hereto identified as being owned by such
Ground Lessor on Schedule 2.1(b) (or in the case of SC Enterprises, identified
as being currently owned by BCIC), agrees to lease to Spieker such Ground Lease
Parcel, and Spieker agrees to lease from such Ground Lessor such Ground Lease
Parcel, together with any and all rights, privileges and easements appurtenant
thereto owned by such Ground Lessor (with such exceptions as are described in
Schedule 2.1(b)), on the terms and conditions set forth in the Spieker Ground
Lease Agreements set forth as Exhibits C through G hereto (the "Spieker Ground
Lease Agreements"). The Contribution Real Properties, together with the Ground
Lease Parcels, are referred to herein collectively as the "Real Properties." The
Contribution Properties, together with the Ground Lease Parcels, are referred to
herein collectively as the "Properties."
SECTION 2.3 TIMING.
(a) The contribution and leasing of the Properties under the terms
of this Agreement will take place on the following schedule:
(i) With respect to the Properties other than the Second
Closing Properties (the "First Closing Properties"), on February 3, 1998 or such
earlier date (but in no event earlier than January 12, 1998) mutually agreed by
the parties hereto (the "First Closing");
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(ii) With respect to the Properties commonly known as the
Delta Dental Property and the Spec Building described on Exhibit H hereto (the
"Second Closing Properties"), on June 30, 1998 or such earlier date (but in no
event earlier than June 15, 1998) mutually agreed by the parties hereto (the
"Second Closing").
(b) As used herein, the term "Closing" or "Closing Date" means the
"First Closing" or the "Second Closing," or some combination thereof, as the
context dictates.
(c) The parties hereto acknowledge and agree that, notwithstanding
anything to the contrary provided in Sections 3.1 or 3.2 below, but subject to
Section 2.3(d) below, or any other provision of this Agreement, (i) in the event
that any condition to Spieker's or any Contributor's obligations hereunder is
not satisfied or waived prior to the First Closing and such party elects to
terminate this Agreement pursuant to the terms hereof, such party shall be
obligated to terminate this Agreement as to all First Closing Properties (in
which event this Agreement shall terminate as to all Second Closing Properties
as well), and (ii) in the event that any condition to Spieker's or any
Contributor's obligations hereunder is not satisfied or waived prior to the
Second Closing and such party elects to terminate this Agreement pursuant to the
terms hereof, such party shall be obligated to terminate this Agreement as to
all Second Closing Properties (in which event this Agreement shall terminate as
to all Second Closing Properties), but neither party shall have the right to
unwind or otherwise rescind this Agreement as to the consummated First Closing
and the First Closing Properties.
(d) With respect to the Property commonly known as Biltmore Commerce
Center, the parties shall attempt to resolve the parking matter identified on
Schedule 4.2 (the "Biltmore Parking Matter") prior to the First Closing in the
manner prescribed on such Schedule. In the event the Biltmore Parking Matter is
not so resolved prior to the First Closing, the parties shall consummate the
First Closing with respect to all First Closing Properties other than Biltmore
Commerce Center, and shall consummate the Closing of the Biltmore Commerce
Center reasonably promptly following such resolution of the Biltmore Parking
Matter. In the event the Biltmore Parking Matter is not so resolved prior to the
Second Closing, the parties shall consummate the Second Closing with respect to
all Second Closing Properties, but shall terminate this Agreement with respect
to the Closing of Biltmore Commerce Center, and the parties shall have no
further obligations hereunder with respect to Biltmore Commerce Center except
under the Termination Surviving Provisions, but neither party shall have the
right to unwind or otherwise rescind this Agreement as to the consummated First
and Second Closings and the First and Second Closing Properties..
SECTION 2.4 CONTRIBUTION CONSIDERATION.
(a) GROSS AND ADJUSTED CONTRIBUTION AMOUNTS. The parties agree that
the total valuation of the Properties (the "Gross Contribution Amount") shall be
$522,104,885. After adjustment for (i) the ground leasing rather than
contribution of the Ground Lease Parcels, (ii) two million six hundred thousand
dollars ($2,600,000) (which represents the agreed reduction in the valuation of
the portion of Santa Monica Business Park
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held by Santa Monica Associates as a result of Spieker assuming the New York
Life Loan, provided that New York Life consents to the contribution of the
applicable Property to Spieker subject to such debt and Spieker accepts
contribution of such Property subject to such debt as of the applicable
Closing), and (iii) eight hundred twenty-four thousand and thirty-seven dollars
($824,037) (which represents the agreed discount with respect to certain cash
payments by Spieker hereunder), the valuation of the Contribution Properties
(the "Adjusted Contribution Amount") shall be $439,685,848.
(b) OP UNIT AMOUNT. The consideration to be received by the
Contributors in the form of units of partnership interest of Spieker ("OP
Units") in exchange for the contribution of the Contribution Properties (the "OP
Unit Amount") is the Adjusted Contribution Amount, minus the sum of the
following amounts, all of which will be paid, distributed or reimbursed by
Spieker:
(i) Existing Indebtedness. The outstanding principal
balance of all remaining existing debt on the Properties under the loans
described on Schedule 2.4(b)(i) hereto (the "Existing Indebtedness"), together
with any accrued (and unpaid) interest thereon (other than any principal or
accrued interest which is to be paid by the Contributors at the applicable
Closing as set forth in the Concurrent Transactions Exhibit), together with any
late fees or other amounts owing thereunder, and, in the event that New York
Life consents to the contribution of the applicable Property to Spieker subject
to such debt and Spieker accepts contribution of such Property subject to such
debt as of the applicable Closing, any assumption fees relating thereto. The
parties hereto acknowledge and agree that Spieker shall acquire the Properties
subject to the Existing Indebtedness, but not assume any portion of the Existing
Indebtedness, other than the New York Life Loan, and with the exception of the
New York Life Loan, Spieker shall repay the Existing Indebtedness substantially
concurrent with the applicable Closings.
(ii) Prepayment Penalties. The amount of any prepayment
penalties or other charges incurred in connection with the retirement of the
Existing Indebtedness and any other fees incurred as a result of the repayment
by Spieker of the debt referenced in (i) above.
(iii) Transaction Costs. The amount of all the transaction
and closing costs and expenses incurred by the Contributors, whether pursuant to
this Agreement or otherwise (including all closing costs and expenses that are
obligations of the Contributors under this Agreement, and the fees of Morgan
Stanley & Co. Inc. ("MS") and the Contributors' accountants, attorneys and
advisers), provided that Spieker's obligation to repay such amount shall not
exceed 1.7% of the Gross Contribution Amount. In addition, such amount shall not
include those costs and expenses that are attributable to the Spieker Ground
Lease Agreements, which costs and expenses shall be paid by the Ground Lessors.
At least two (2) Business Days prior to each Closing, Contributors shall provide
Spieker with a schedule setting forth the Contributors' good faith estimate of
the costs and expenses to be paid or reimbursed by Spieker under this clause
(iii) at such Closing.
(iv) Payments to Contributors. The amount of cash or Shares
payable to certain Contributors with respect to the sale of their partnership
interests to Spieker
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in accordance with the Concurrent Transactions Exhibit and in the amounts shown
on Schedule 1 hereto.
(v) Traceable Debt Borrowing. The amount of the proceeds of
the Traceable Debt incurred by Spieker at the First Closing. The Traceable Debt
shall be guaranteed by the ultimate individual partners, shareholders or members
of those Contributors that receive distributions of such proceeds. These
proceeds shall be distributed to such Contributors in respect of their OP Units
in accordance with the applicable provisions of this Section 2.4(b)(v), and
Sections 2.4(e)(ii) and 9.1 and the Concurrent Transactions Exhibit:
(1) To reimburse certain of such Contributors (or
their partners, shareholders or members) for their prior repayment of certain
principal and/or accrued interest relating to debt associated with those certain
Properties commonly known as Cerritos Towne Center and Marina Business Center;
and
(2) To reimburse certain other of such
Contributors (or their partners, shareholders or members) for certain costs and
expenses incurred in connection with the Spieker Ground Lease Agreements and for
other anticipated costs and expenses.
The portions of the Gross Contribution Amount allocated to each
Contributor (the "Allocated Contribution Amount"), the Adjusted Contribution
Amount (and its components) and the portion of the Deposits allocated to each
Property and Contributor are set forth on Schedule 1 hereto.
(c) ISSUANCE OF OP UNITS AND SHARES.
(i) OP Units. The OP Unit Amount shall be payable to the
Contributors or, with respect to any Contributor, a Contributor Person
designated by the applicable Contributor, at the applicable Closing, by issuance
to the Contributors of OP Units having the terms set forth in the Spieker
Partnership Agreement, which OP Units shall be convertible into Shares having
certain registration rights as set forth in the Conversion, Registration Rights
and Lock-up Agreements (as defined below). At the applicable Closing, Spieker
and the REIT will execute and deliver to each Contributor or Contributor Person
who receives OP Units a counterpart Conversion, Registration Rights and Lock-up
Agreement substantially in the form attached hereto as Exhibit J (a "Conversion,
Registration Rights and Lock-up Agreement"), which Agreements shall also be
executed and delivered by each such Contributor or Contributor Persons. The
Contributors shall receive that number of OP Units that is equal to the quotient
of (1) the OP Unit Amount divided by (2) $41.57 (the "Average Share Price");
provided that any fractional OP Units shall be eliminated by rounding to the
nearest whole number. Each Person receiving OP Units shall execute and deliver
to Spieker a Subscription Agreement in the form attached hereto as Exhibit K
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("Subscription Agreement") and a counterpart signature page to the Spieker
Partnership Agreement in the form attached hereto as Exhibit L ("Counterpart OP
Signature Page").
(ii) Shares. Any shares of common stock of the REIT
("Shares") shall be payable to the applicable Contributor, or with respect to
such Contributor, a Contributor Person designated by such Contributor, at the
applicable Closing, by issuance to such Contributor of Shares, which Shares
shall have been registered pursuant to the terms of the REIT's existing shelf
registration statement. At the applicable Closing, such Contributor and the REIT
shall execute and deliver a Lock-up Agreement substantially in the form attached
hereto as Exhibit M (the "Lock-up Agreement"). The Contributor shall receive
that number of Shares that is equal to the quotient of (1) the dollar valuation
of Shares payable to such Contributor as set forth on Schedule 1, and (2) the
Average Share Price; provided that any fractional Shares shall be eliminated by
rounding to the nearest whole number.
(iii) Anti-Dilution. In the event that between the date
hereof and the issuance of OP Units or Shares, there has occurred any
conversion, change, exchange or reclassification of the OP Units or Shares into
another security or form of property pursuant to any merger, consolidation,
acquisition of business and assets, reorganization or recapitalization, or there
has occurred any reclassification under other circumstances or any split,
dividend or similar change in respect of the OP Units or the Shares (any such
conversion, change, exchange, reclassification, split, dividend, or similar
change being referred to herein as a "Dilution Event"), then appropriate
adjustment shall be made in the number of OP Units or Shares and/or kind of
securities issued to Contributors in order to provide the Contributors with the
same number of OP Units, Shares and/or such securities that they would have
received after such Dilution Event if the issuance of OP Units and Shares had
occurred immediately prior to such Dilution Event (and all references to the OP
Units or Shares shall refer to such adjusted number and/or kind of securities).
(d) ISSUANCE TO ACCREDITED INVESTORS; DISTRIBUTION. Notwithstanding
anything to the contrary provided herein, in no event shall any OP Units or
Shares be issued or offered by Spieker to any Person that is not an "accredited
investor" as defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended, or to whom the issuance of OP Units would be
prohibited without the registration thereof or without the providing of
appropriate disclosure with respect thereto (an "Accredited Investor"). Any OP
Units received by a Contributor shall be held by the Contributor and may not be
distributed by the Contributor to its partners, shareholders or members prior to
the termination of the applicable Expiration Date. Notwithstanding anything to
the contrary contained in the Spieker Partnership Agreement, following the
applicable Expiration Date, each Contributor shall be free to distribute, at any
time, any OP Units received to any of its intermediate or ultimate partners,
shareholders or members identified on Schedule 2.4(d) hereto, and to the heirs
or estates of any such partners, shareholders or members (collectively, the "OP
Unit Distributees"), subject, however, to Sections 9.3 and 10.9 of the Spieker
Partnership Agreement. Notwithstanding anything to the contrary in the Spieker
Partnership Agreement, in the event of the death of a Person identified on
Schedule 2.4(d) prior to the distribution of OP Units, the OP Units
distributable to the heirs or estate of such Person shall, immediately
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following such distribution of OP Units to such heirs or estate, be converted to
Shares in the same manner set forth in Section 10.9 of the Spieker Partnership
Agreement.
(e) DEPOSIT AND PAYMENT OF ADJUSTED CONTRIBUTION AMOUNT.
(i) Deposit.
(1) By 3:00 P.M. (Los Angeles time) on the first
Business Day after the Effective Date (the "Deposit Deadline"), Spieker shall
deposit, by wire transfer (made in accordance with the wire transfer
instructions set forth on Schedule 2.4(e)(i)(1) attached hereto) of immediately
available funds, in escrow with Commonwealth Land Title Insurance Company, 888
West 6th Street, Los Angeles, California 90017 (Attn: Lee Mellen) (the "Title
Company") a cash payment in the amount of ten million dollars ($10,000,000)
(together with any interest accrued thereon, the "Deposit").
(2) Title Company shall hold the Deposit, in
escrow, in interest bearing obligations of the United States government or an
institutional savings account, and all interest thereon shall be deemed a part
of the Deposit. A portion of the Deposit shall be allocated to each Property in
proportion to the Gross Contribution Amount for such Property set forth in
Schedule 1 hereto. If the contribution or leasing of a Property as contemplated
herein is consummated, then the applicable portion of the Deposit (including the
interest accrued thereon) shall be returned to Spieker. Notwithstanding anything
that may be construed to the contrary herein, Spieker and the Contributors
understand and agree that Spieker shall have no obligation to fund the Deposit
unless Spieker has completed and is satisfied in its sole and absolute
discretion with its independent due diligence investigation as contemplated by
Section 4.6. The parties hereto acknowledge and agree that (A) Spieker shall
have the right in its sole and absolute discretion and for any or no reason
whatsoever to terminate this Agreement without liability (except for the
Termination Surviving Provisions) at any time prior to its posting the Deposit,
and (B) by posting the Deposit, Spieker will evidence and acknowledge its
satisfaction with and approval of all of the Due Diligence Materials and its due
diligence investigation, provided that the foregoing shall not limit or impair
any of Spieker's other rights granted under the terms of this Agreement.
(ii) Payment of Adjusted Contribution Amount. The
components of the Adjusted Contribution Amount set forth in Section 2.4(b) that
involve cash payments, as adjusted pursuant to Section 8.5, shall be deposited
by Spieker, by wire transfer (made in accordance with the wiring instructions
set forth on Schedule 2.4(e)(i)(l) hereto) of immediately available funds, with
the Title Company and released and distributed or paid at the applicable Closing
in accordance with the Concurrent Transactions Exhibit; provided, however, the
proceeds of the Traceable Debt shall be deposited by Spieker in a separately
identified account with the Title Company (the "Traceable Debt Account") on the
First Closing Date, by wire transfer (made in accordance with the wire
instructions set forth on Schedule 2.4(e)(ii) hereto). These proceeds shall be
released from the Traceable Debt Account and distributed to certain Contributors
in respect of their OP Units at the applicable Closing in accordance with the
provisions of this Section 2.4(e)(ii) and Sections 2.4(b)(v) and
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9.1 hereof and the Concurrent Transactions Exhibit. The portion of the Adjusted
Contribution Amount to be paid in OP Units shall be reflected in the books and
records of Spieker as of the applicable Closing, and certificates representing
such OP Units shall be delivered to the holder(s) thereof by Spieker promptly
after the Closing. The portion of the Adjusted Contribution Amount to be paid in
Shares shall be reflected in the books and records of the REIT as of the
applicable Closing and certificates evidencing such Shares shall be delivered to
the applicable Contributors at the applicable Closing.
(f) LIQUIDATED DAMAGES.
(i) IF THE CONTRIBUTION AND LEASING OF THE PROPERTIES IS
NOT CONSUMMATED DUE TO THE FAILURE OF ANY CONDITION TO SPIEKER'S OBLIGATION TO
ACQUIRE OR LEASE ANY PROPERTY THROUGH NO FAULT OF SPIEKER, OR DUE TO THE
CONTRIBUTORS' MATERIAL DEFAULT HEREUNDER, THEN THE DEPOSIT SHALL BE RETURNED TO
SPIEKER, AND SPIEKER'S SOLE REMEDY, AT LAW OR IN EQUITY, SHALL BE THE RETURN OF
SUCH DEPOSIT, PROVIDED, THAT IF THE CONTRIBUTION AND LEASING OF THE PROPERTIES
IS NOT CONSUMMATED BECAUSE OF A MATERIAL DEFAULT UNDER THIS AGREEMENT ON THE
PART OF THE CONTRIBUTORS, SPIEKER MAY EITHER:
(A) TERMINATE THIS AGREEMENT BY WRITTEN NOTICE OF TERMINATION TO THE
CONTRIBUTORS WHEREUPON ANY DEPOSIT SHALL BE IMMEDIATELY RETURNED TO SPIEKER, AND
CONTRIBUTORS SHALL ALSO IMMEDIATELY REIMBURSE SPIEKER, UPON SPIEKER'S WRITTEN
REQUEST TO CONTRIBUTORS, FOR ALL ACTUAL, OUT-OF-POCKET COSTS, FEES AND EXPENSES
INCURRED BY SPIEKER AND ITS AFFILIATES IN CONNECTION WITH THE NEGOTIATION OF
THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER, AND THE PERFORMANCE OF
SPIEKER'S DUE DILIGENCE AND OTHER INVESTIGATIONS, INCLUDING ALL REASONABLE LEGAL
AND ACCOUNTING FEES, ENVIRONMENTAL AND OTHER CONSULTANTS' FEES AND ALL TRAVEL
EXPENSES; PROVIDED THAT SUCH COSTS, FEES AND EXPENSES (I) SHALL NOT EXCEED FIVE
HUNDRED THOUSAND DOLLARS ($500,000), (II) SHALL BE PAYABLE BY THE CONTRIBUTORS
ONLY IF THE FOLLOWING CONDITIONS HAVE BEEN SATISFIED: (1) THE FAILURE TO
CONSUMMATE THE TRANSACTIONS WAS THE RESULT OF A MATERIAL BREACH OF THIS
AGREEMENT BY THE CONTRIBUTORS, AND (2) SPIEKER PROVIDED THE CONTRIBUTORS WITH
WRITTEN NOTICE, AND A REASONABLE OPPORTUNITY (BUT NO GREATER THAN A 30 DAY
PERIOD) TO CURE SUCH MATERIAL BREACH (IN WHICH EVENT, THE APPLICABLE CLOSING
DATE SHALL BE EXTENDED ACCORDINGLY IN ORDER TO PERMIT CONTRIBUTORS THE
OPPORTUNITY TO EFFECT SUCH CURE OR, IN THE CASE OF A BREACHED REPRESENTATION OR
WARRANTY, TO CAUSE SUCH REPRESENTATION OR WARRANTY TO BE TRUE AND
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<PAGE> 27
CORRECT PRIOR TO SUCH CLOSING DATE); AND (III) IF PAID BY THE
CONTRIBUTORS, SHALL RELIEVE THE CONTRIBUTORS OF ANY FURTHER OBLIGATION
UNDER THIS AGREEMENT (OTHER THAN FOR THE CONTRIBUTORS' OBLIGATIONS UNDER
ANY TERMINATION SURVIVING PROVISIONS).
(B) CONTINUE THIS AGREEMENT PENDING SPIEKER'S ACTION FOR SPECIFIC
PERFORMANCE, IN WHICH LATTER EVENT SPIEKER, AS A CONDITION TO SUCH
ACTION, SHALL NOT REQUEST OR ACCEPT RETURN OF THE DEPOSIT.
(ii) IF THE CONTRIBUTION AND LEASING OF THE PROPERTIES IS
NOT CONSUMMATED AS A RESULT OF A MATERIAL DEFAULT BY SPIEKER HEREUNDER, THEN, AS
THEIR SOLE AND EXCLUSIVE REMEDY AT LAW OR IN EQUITY, THE CONTRIBUTORS SHALL
RECEIVE AND RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES. UPON THE PAYMENT OF SUCH
AMOUNT, THIS AGREEMENT SHALL BE DEEMED TERMINATED, AND SHALL BE NULL AND VOID
(EXCEPT FOR THE TERMINATION SURVIVING PROVISIONS). THE PARTIES HAVE AGREED THAT
THE CONTRIBUTORS' ACTUAL DAMAGES, IN THE EVENT OF A FAILURE TO CONSUMMATE SUCH
TRANSACTIONS DUE TO SPIEKER'S MATERIAL DEFAULT, WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICABLE TO DETERMINE. AFTER NEGOTIATION, THE PARTIES HAVE AGREED THAT,
CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT, THE
AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF THE DAMAGES THAT THE
CONTRIBUTORS WOULD INCUR IN SUCH EVENT. BY PLACING THEIR INITIALS BELOW, EACH
PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE
FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS
AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION. THE
FOREGOING IS NOT INTENDED TO LIMIT ANY PARTY'S OBLIGATIONS UNDER THE TERMINATION
SURVIVING PROVISIONS.
INITIALS: Spieker: /s/ EK REIT: /s/ EK
------- -------
Contributors: /s/ SC /s/ VZ /s/ JC /s/ RB
--------- ------------ -------- ----------
S. Curci V. Zaccaglin J. Curci R. Blumin
/s/ CB /s/ MB /s/ SB /s/ RI /s/ HM /s/ KK
--------- ---------- --------- -------- --------- ----------
C. Blumin M. Barclay S. Barclay R. Irish H. Matlow K. Kennedy
(Each person who has placed his or her initials above has done so in each
of the capacities with respect to the Contributors indicated on the
signature pages hereto.)
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(g) In the event any party hereto becomes entitled to receive the
Deposit pursuant to the terms of this Agreement, the other parties hereto shall
take such action as may be reasonably required by Title Company to release the
Deposit to the entitled party within one Business Day after Title Company's or
such entitled party's written request.
(h) In the event that Spieker fails to fund prior to the Deposit
Deadline (with time being of the essence) the full amount of the Deposit for any
or no reason whatsoever in accordance with the terms of Section 2.4(e)(i), this
Agreement shall immediately and automatically terminate. Upon any termination of
this Agreement pursuant to this Section 2.4(h), no party shall have any further
rights or obligations hereunder, except under the Termination Surviving
Provisions.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1 CONDITIONS TO SPIEKER'S OBLIGATIONS. Spieker's obligation to
accept contribution of the Contribution Properties and to lease the Ground Lease
Parcels is conditioned upon the satisfaction (or Spieker's written waiver) on or
prior to the applicable Closing Date of the following conditions; provided that
the conditions set forth in (b) and (h) shall be satisfied on or prior to the
First Closing:
(a) There shall exist on the Closing Date no pending Order
prohibiting, enjoining or restraining any Contributor from consummating the
transactions contemplated hereby with respect to any Property.
(b) All consents required to be obtained from, or filings required
to be made with, any Governmental Authority or third party (other than any
lender) in connection with the execution and delivery of this Agreement by the
Contributors or the consummation by the Contributors of the transactions
contemplated hereby shall have been obtained or made.
(c) The Title Company shall have issued or shall have irrevocably
and unconditionally committed to issue, upon payment of the applicable premium
therefor, an ALTA Extended Coverage Owner's Policy of Title Insurance with
respect to each Real Property or Leasehold Estate in the amount shown on
Schedule 3.1(c) hereto with respect to such Real Property or Leasehold Estate,
showing title to such Real Property or Leasehold Estate vested in Spieker,
subject only to the Permitted Exceptions, together with such endorsements and
with such reinsurance as Spieker may reasonably require and that are customarily
obtained by similar parties in similar transactions involving similar assets
(including nonimputation endorsements) (the "Title Policies"). In connection
with the foregoing, each Contributor agrees to execute and deliver to Title
Company such affidavits and other documents, in form reasonably satisfactory to
such Contributor, as Title Company shall reasonably require in order to permit
the issuance of the Title Policies. Nothing
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contained herein shall require any Contributor to bring any action or proceeding
or otherwise to incur any expense to correct, discharge or otherwise remove
title exceptions or defects with respect to any Property or to remove, remedy or
comply with any other grounds for Spieker's refusing to approve title, provided
that on the Closing Date the applicable Contributor shall be obligated to remove
or discharge, or otherwise cause the Title Company to omit as an exception to
title or to insure against collection thereof from or against any Real Property
or Leasehold Estate any mortgages created by such Contributor (other than the
liens securing repayment of the New York Life Loan), any mechanics' liens or
judgment liens and any liens and encumbrances voluntarily created by such
Contributor in violation of Section 7.1 (collectively the "Required Deletion
Items"). The parties hereto acknowledge and agree that each Contributor shall
apply the Adjusted Contribution Amount payable to it to satisfy or cause the
removal of the Required Deletion Items applicable to its Property upon the
applicable Closing Date to the extent it does not otherwise satisfy the same
with other funds.
(d) Spieker shall have received tenant and ground lessor estoppel
certificates and/or Contributor certificates to the extent required to satisfy
the condition to Spieker's obligation set forth in Section 8.4.
(e) Each of the documents required to be delivered by the applicable
Contributor pursuant to Section 8.3 shall have been delivered materially in
accordance therewith, and the applicable Contributor shall not otherwise be in
material default of its material obligations hereunder, and the Contributor
shall have remade, as of the applicable Closing Date, each of the
representations and warranties applicable to it or its Property as required in
accordance with the paragraph immediately following Section 4.1(m) below, and
such representations and warranties shall be true and correct when made, and
shall remain true and correct in all material respects as of such Closing Date,
except for the Permitted Changes (as defined in said Section 4.1).
(f) Spieker shall not have previously terminated this Agreement
pursuant to and in accordance with any termination right granted to Spieker
under this Agreement.
(g) Pay-off letters from the holders of the Existing Indebtedness
(other than New York Life) affecting the applicable Property shall have been
obtained on or before the Closing Date and appropriate arrangements for the
satisfaction of the indebtedness and the discharge of the liens relating thereto
shall have been made as of the Closing Date such that the Title Company is able
to issue the Title Policies without taking exception for the Existing
Indebtedness (other than the liens securing repayment of the New York Life
Loan).
(h) New York Life shall have consented to the assumption of the New
York Life Loan by Spieker, without modification in the terms thereof, and shall
have executed, acknowledged (where appropriate) and delivered to Spieker such
consents, certificates and other documents as may be reasonably required to
evidence (i) New York Life's consent to the transfer of the applicable Property
to Spieker and the assignment of the New York Life Loan to, and the assumption
of the New York Life Loan by, Spieker, (ii) the
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outstanding balance of the New York Life Loan as of the Closing Date to such
lender's knowledge, and (iii) that, to such lender's knowledge, the New York
Life Loan is in full force and effect, without default by any party thereto, as
of the Closing Date.
(i) The physical condition of the applicable Property shall not be
substantially worse on the day of Closing than it was on the Effective Date,
reasonable wear and tear and loss by casualty excepted (subject to the
provisions of Section 7.7 below), and, as of the Closing Date, there shall be no
material increase (measured from the Due Diligence Termination Date) in the
rentable area of the improvements component of such Property with respect to
which (i) an Existing Lease with rentable area in excess of the Rentable Area
Floor is, or Existing Leases with aggregate rentable area in excess of the
Rentable Area Floor are, not in full force and effect (unless Spieker has
theretofore consented to the termination or surrender of such Existing Lease,
and except for Excluded Leases and Existing Leases that will or may expire in
accordance with their terms prior to or concurrently with the applicable
Closing), (ii) a material default exists by any Tenant under an Existing Lease
with rentable area in excess of the Rentable Area Floor, or by Tenants under
Existing Leases with aggregate rentable area in excess of the Rentable Area
Floor (except for Excluded Leases and Existing Leases that will or may expire in
accordance with their terms prior to the applicable Closing Date), or (iii) a
Tenant under an Existing Lease with rentable area in excess of the Rentable Area
Floor is, or Tenants under Existing Leases in excess of the Rentable Area Floor
are, the subject of a pending bankruptcy or insolvency proceeding, from that
which existed and was disclosed to or otherwise known by Spieker on the Due
Diligence Termination Date (except for Excluded Leases and Existing Leases that
will or may expire in accordance with their terms prior to the applicable
Closing Date). Notwithstanding the foregoing to the contrary, in no event shall
any default, termination or surrender, or bankruptcy or insolvency proceeding
with respect to any or all of the Tenants listed on Schedule 3.1(i) hereto be
taken into account in determining whether the Rentable Area Floor shall have
been exceeded. As used herein, "Rentable Area Floor" shall mean the greater of
(A) 15,000 square feet, and (B) ten percent (10%) of the rentable area of the
applicable Improvements component of the applicable Property.
(j) With respect to the Second Closing Properties, each of those
certain conditions identified on Schedule 3.1(j) hereto shall have been fully
satisfied.
(k) With respect to the Michelson Property, (i) certain rights under
the Michelson Purchase Agreement shall have been assigned to Spieker pursuant to
the Michelson Assignment Agreement (as evidenced by an executed counterpart
thereof being placed in escrow by the applicable Contributors in accordance with
Section 8.3), and (ii) the transactions contemplated by the Michelson Purchase
Agreement shall be in a position to be consummated concurrently with the First
Closing in accordance with the terms of the Michelson Purchase Agreement and all
conditions precedent to the closing under the Michelson Purchase Agreement shall
have been satisfied or duly waived by the applicable parties thereto.
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(l) The Pledgors shall not be in material default of their
obligations under the Bridge Note or the Bridge Pledge Agreement.
(m) With respect to the First Closing Properties, on the trading day
immediately prior to the First Closing, the price of a Share shall be no more
than one hundred fifteen percent (115%) of the Average Share Price.
(n) The McDonnell-Douglas Indemnity Agreement shall have been
entered into by the parties thereto.
SECTION 3.2 CONDITIONS TO THE CONTRIBUTORS' OBLIGATIONS. Each
Contributor's obligation to contribute the Contribution Properties and lease the
Ground Lease Parcels is conditioned upon the satisfaction (or such Contributor's
written waiver) on or prior to the Closing Date of the following conditions:
(a) There shall exist on the Closing Date no pending Order
prohibiting, enjoining or restraining Spieker from consummating the transactions
contemplated hereby with respect to any Property.
(b) All consents required to be obtained from, or filings required
to be made with, any Governmental Authority or third party in connection with
the execution and delivery of this Agreement by Spieker or the consummation by
Spieker of the transactions contemplated hereby shall have been obtained or
made.
(c) Spieker shall have satisfied its obligations under Article II
hereof in the manner set forth in the Concurrent Transactions Exhibit.
(d) Spieker shall not otherwise be in material default of its
material obligations hereunder.
(e) Each of the documents required to be delivered by Spieker
pursuant to Section 8.3 shall have been delivered as provided therein and all of
Spieker's representations and warranties contained herein shall be true and
correct in all material respects as of the Closing Date.
(f) The Contributors shall not have previously terminated this
Agreement pursuant to and in accordance with any termination right expressly
granted to the Contributors under this Agreement.
(g) Spieker shall not be in material default of its obligations
under the Bridge Note or the Bridge Pledge Agreement.
(h) With respect to the First Closing Properties, on the trading day
immediately prior to the First Closing, the price of a Share shall be no less
than eighty-five percent (85%) of the Average Share Price.
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<PAGE> 32
(i) With respect to the Michelson Property (i) certain obligations
under the Michelson Purchase Agreement shall have been assumed by Spieker
pursuant to the Michelson Assignment Agreement (as evidenced by an executed
counterpart thereof being placed in escrow by Spieker in accordance with Section
8.3), and (ii) the transactions contemplated by the Michelson Purchase Agreement
shall be in a position to be consummated concurrently with the First Closing in
accordance with the terms of the Michelson Purchase Agreement and all conditions
precedent to the closing under the Michelson Purchase Agreement shall have been
satisfied or duly waived by the applicable parties thereto.
SECTION 3.3 TERMINATION. In the event that any condition set forth in
Section 3.1 or Section 3.2 is not satisfied on or prior to the applicable
Closing Date, then the party to this Agreement whose obligations are conditioned
upon the satisfaction of such condition may in its sole and absolute discretion
terminate this Agreement, subject to Sections 2.3(c), 2.3(d) and 2.4(f) above,
by written notice delivered to the other party at or prior to the occurrence of
the Closing. Upon any termination of this Agreement pursuant to this Section
3.3, no party shall have any further rights or obligations hereunder, except
under the Termination Surviving Provisions.
SECTION 3.4 WAIVER BY SPIEKER. Notwithstanding anything to the contrary
contained in this Agreement, if Spieker with actual knowledge of (i) a default
in any of the covenants, agreements or obligations to be performed by any
Contributor under this Agreement or under any Closing Document, and/or (ii) any
breach of any representation or warranty of any Contributor made in this
Agreement, any Contributor certificate, or any Closing Document, nonetheless
elects to proceed to Closing, then, upon the consummation of the Closing,
Spieker shall be deemed to have waived any such default and breach and shall
have no Claim against any Contributor with respect thereto, or any termination
or unwind right hereunder by reason thereof; provided, however, that if Spieker
shall provide written notice to Contributors, prior to the applicable Closing
Date, of a material default or material breach by such Contributor under this
Agreement (including a material breach of any representation or warranty of such
Contributor), Contributors shall be entitled, by delivering written notice to
Spieker, to extend the applicable Closing Date for a reasonable period of time
(not to exceed thirty (30) days) in order to provide Contributors with an
opportunity to cure such default or breach (or in the case of a breach of a
representation or warranty, to cause such representation or warranty to be true
and correct in all material respects prior to the applicable Closing Date as so
extended); and provided further that if Contributors fail to cure such default
or breach prior to or on the applicable Closing Date as so extended (or in the
case of a material breach of a representation or warranty, fail to cause such
representation or warranty to be true and correct in all material respects prior
to or on the applicable Closing Date as so extended), then upon the consummation
of the applicable Closing, Spieker shall not be deemed to have waived the same
and shall retain any Claim against any Contributor that Spieker may have with
respect thereto, but shall have no further termination or unwind right hereunder
by reason thereof.
SECTION 3.5 REQUIRED CONSENTS. Spieker and Contributors acknowledge that
each party's respective obligations hereunder with respect to the Consent
Properties are
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<PAGE> 33
conditioned upon the receipt of those certain consents described on Schedule 3.5
hereto (the "Required Consents"). Promptly following the Effective Date,
Contributors shall use their reasonable best efforts to obtain as soon as
practically possible all Required Consents, and Spieker agrees to reasonably
cooperate with such efforts by Contributors. In no event, however, shall the
exercise of such reasonable best efforts require the expenditure of any funds,
the forfeiture of any right, or the granting of any other concession by or on
the part of any Contributor or TDC, except for such payments or fees as are
expressly required under the applicable documents to which such consenting party
and the applicable Contributor or TDC are parties or bound as conditions to the
giving of the applicable Required Consent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES;
SPIEKER'S EXAMINATION OF THE PROPERTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS. Subject
to the provisions of Sections 4.2, 4.3 and 4.4, each Contributor hereby makes
the following representations and warranties as to itself and its own Properties
(provided that with respect to the Property currently owned by BCIC, each
Contributor that is a direct or indirect partner therein hereby makes the
following representations and warranties as to (x) itself and (y) as to BCIC and
such Property severally in proportion to their respective direct or indirect
interests in BCIC as of the Effective Date):
(a) Such Contributor has not (i) made a general assignment for the
benefit of creditors that remains pending, (ii) filed any voluntary petition in
bankruptcy or suffered the filing of any involuntary petition by such
Contributor's creditors (which petition has not been resolved), (iii) suffered
the appointment of a receiver to take possession of any of the Properties or
all, or substantially all, of such Contributor's other assets, that remains
pending, (iv) suffered the attachment or other judicial seizure of any of the
Properties or all, or substantially all, of such Contributor's other assets,
that remains pending, or (v) made an offer of settlement, extension or
composition to its creditors generally (which offer is still outstanding).
(b) Such Contributor is not a "foreign person" as defined in Section
1445 of the Code and any related regulations.
(c) For each Contributor who is not an individual, such Contributor
is duly organized and validly existing and in good standing under the laws of
its state of formation. Such Contributor further represents and warrants that
this Agreement and all documents executed by such Contributor that are to be
delivered to Spieker at Closing (i) are, or at the time of Closing will be, duly
authorized, executed and delivered by such Contributor, (ii) do not, and at the
time of Closing will not, violate any provision of any agreement or judicial
order to which such Contributor is a party or to which such Contributor or any
Property owned by such Contributor is subject and (iii) constitute (or in the
case of Closing documents
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<PAGE> 34
will constitute) a valid and legally binding obligation of such Contributor,
enforceable in accordance with its terms.
(d) Such Contributor has full and complete power and authority to
enter into this Agreement and, subject to obtaining any consents or waivers
required to be obtained prior to Closing as set forth on Schedule 3.5 hereto, to
perform its obligations hereunder.
(e) The Due Diligence Materials contain true, correct, complete and
accurate copies of all Existing Leases, the New York Life Loan Documents,
Property operating statements and income and expense reports, the Partnership
Agreements, the ground leases creating each Leasehold Estate (the "Contribution
Ground Leases"), all material Contracts and all material environmental and
structural reports in the possession or control of any Contributor. This
representation shall not be deemed breached by virtue of any Leases or Contracts
entered into after the Effective Date in accordance with Section 7.1.
(f) Except as identified in the rent rolls attached hereto as
Schedule 4.1(f) (the "Rent Rolls")), to such Contributor's actual knowledge, (i)
there are no leases, license agreements or occupying agreements (or any
amendments or supplements thereto) encumbering, or in force with respect to, any
Property (except for subleases and other occupancy agreements to which such
Contributor is not a party, any New Leases entered into after the Effective Date
in accordance with Section 7.1, and the Excluded Leases), and (ii) as of the
Effective Date, such Contributor has not received written notice that remains
pending or unresolved from any Tenant that such Contributor has not performed
its material obligations under such Lease, and, to such Contributor's knowledge,
all of the Leases are in full force and effect, without material default by any
party thereto, except as set forth on Schedule 4.1(f). The Rent Rolls are true,
correct, complete and accurate in all material respects.
(g) The Contracts that are not terminable without cause or penalty
within thirty (30) days, or that cannot be terminated in accordance with their
terms prior to the applicable anticipated Closing Date, with respect to any
Property owned by such Contributor (the "Non-Terminable Contracts") are as set
forth in Schedule 4.1(g) hereto (the "Schedule of Contracts").
(h) Such Contributor has not received any written notice of any
currently pending or threatened condemnation of all or any portion of any
Property, and, to such Contributor's knowledge, no such condemnation is pending
or threatened.
(i) Such Contributor has not received written notice of any
litigation that is currently pending or threatened with respect to any Property
owned by such Contributor except with respect to the litigation described in
Schedule 4.1(i) hereto, and, to such Contributor's knowledge, no such litigation
is pending or threatened, except as set forth on said Schedule.
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<PAGE> 35
(j) Except as set forth on Schedule 4.1(j) hereto, such Contributor
has not received any written notice from any Governmental Authority that all or
any portion of any Property is in material violation of any applicable building
codes or any applicable environmental law (relating to clean-up or abatement),
zoning law or land use law, or any other applicable local state or federal law
or regulation relating to any Property, which material violation has not been
cured or remedied prior to the Effective Date.
(k) The applicable Contributors hold valid title to the Partnership
Interests, free from all liens, claims and interests of third parties, except as
created by the Partnership Agreements and the Bridge Pledge Agreement, and,
except as set forth on Schedule 4.1(k) hereto, the Partnerships (except for
Michelson Company Limited Partnership) shall have no liabilities, contingent or
otherwise, as of the Closing Date.
(l) To such Contributor's knowledge, no party is in material default
under any of the New York Life Loan Documents or the Contribution Ground Leases,
and the New York Life Loan Documents and Contribution Ground Leases are in full
force and effect.
(m) Exhibit N hereto is a true, correct and complete copy of the
Michelson Purchase Agreement (including all exhibits, schedules and appendices
thereto), which Agreement has not been amended, supplemented, restated or
otherwise modified. The Michelson Purchase Agreement is presently in full force
and effect and neither the applicable Contributor nor, to such Contributor's
knowledge, the Michelson Seller is in default thereunder.
If Spieker has actual knowledge on the Effective Date of a breach of
or inaccuracy of any representation or warranty made under this Section 4.1,
then no Contributor shall have any liability hereunder by reason of such breach
or inaccuracy, and such representations and warranties shall be deemed modified
for the purposes of this Agreement to reflect the facts or circumstances that
constitute or give rise to such breach or inaccuracy. Each of the
representations and warranties of each Contributor contained in this Section 4.1
is made as of the Effective Date. Such representations and warranties shall be
remade by such Contributor as of the applicable Closing Date with respect to any
Property to be contributed or leased by a Contributor on such date, modified as
appropriate so as to disclose any material inaccuracies or exceptions to such
representations or warranties that have arisen, to such Contributor's knowledge,
during the period after the Effective Date and prior to such Closing Date,
provided that such Contributor shall not be required to disclose any Permitted
Changes and its remade representations and warranties shall be deemed subject to
any and all applicable Permitted Changes. As used in this Agreement, "Permitted
Changes" shall mean (A) any matters expressly permitted in this Agreement or
otherwise specifically approved or agreed to in writing by Spieker, (B) any
matter or action that this Agreement expressly contemplates will take place or
occur prior to or concurrently with the applicable Closing, and (C) any fact or
circumstance that would render inaccurate the representations and warranties set
forth in Section 4.1(f) unless the existence of such fact or circumstance would
constitute a failure of the condition precedent set forth in Section 3.1(i)
above. Each Contributor will use its reasonable efforts to assure that the
representations and
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warranties contained in this Section 4.1 can be remade as of the applicable
Closing Date without any such modifications. The fact that the Contributors must
remake their representations and warranties in accordance with the foregoing
standards as of the applicable Closing Date shall not impair Spieker's rights
and remedies hereunder with respect to the representations and warranties that
were made by the Contributors under Section 4.1 as of the Effective Date.
Notwithstanding anything contained in this Agreement to the contrary, in the
event that in connection with the remaking of any representations and warranties
pursuant to the foregoing the existence of litigation is disclosed by a
Contributor, and such litigation could not reasonably be anticipated to have a
material adverse effect on any Property, then the disclosure or existence of
such litigation shall not cause such Contributor's representations and
warranties hereunder to fail to remain true and correct in all material respects
as of the applicable Closing Date for the purposes of Section 3.1(e) above.
SECTION 4.2 EXTENDED DUE DILIGENCE ITEMS. The parties have agreed to
extend the Due Diligence Period to the Extended Due Diligence Termination Date
for those items listed on Schedule 4.2 hereto (the "Extended Due Diligence
Items"). From the Effective Date to the Extended Due Diligence Termination Date,
Spieker shall have the right to continue its independent due diligence
investigation as contemplated by Section 4.6 solely with respect to the Extended
Due Diligence Items. In the event that Spieker is not fully satisfied in its
sole and absolute discretion with such investigation prior to the Extended Due
Diligence Termination Date, Spieker will so notify the Contributors in writing
and shall be entitled to terminate this Agreement therefor by delivering written
notice to the Contributors prior to the Extended Due Diligence Termination Date.
If Spieker elects to terminate this Agreement, the Deposit shall be returned to
Spieker in accordance with Section 2.4(f), this Agreement shall terminate and no
party shall have any further rights or obligations hereunder, except under the
Termination Surviving Provisions. If Spieker does not so terminate this
Agreement prior to the Extended Due Diligence Termination Date, Spieker shall be
deemed to be fully satisfied with its investigation of the Extended Due
Diligence Items.
SECTION 4.3 ESTOPPELS. The representations and warranties of each
Contributor made or remade pursuant to Section 4.1, or in any certificate
delivered by such Contributor pursuant to Section 8.4, shall cease to survive
the Closing to the extent specifically confirmed by an estoppel certificate
delivered by a Tenant or any other applicable third party.
SECTION 4.4 LIMITATION ON CLAIMS; SURVIVAL OF REPRESENTATIONS AND
WARRANTIES
(a) Notwithstanding anything to the contrary provided herein, the
sole recourse of Spieker with respect to Contributors' representations,
warranties and covenants to be performed prior to or concurrent with the
applicable Closing set forth herein or in any Contributor estoppel certificate,
any Deed, any Assignment of Partnership Interests and any representation and
warranty "date-down" certificate, or made pursuant to this Agreement or any such
document, shall be against the OP Units and Shares issued to the Contributors
(and/or their designated recipients of such OP Units and/or Shares) hereunder
and each such Contributor's (and/or each designated recipient's) right, title
and interest as a partner in
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Spieker, together with any and all Shares acquired upon conversion of such OP
Units, and any proceeds obtained in connection with such OP Units or Shares
(collectively, the "Collateral"), and, other than with respect to the
Collateral, no Contributor shall have any personal liability with respect
thereto. Any transfer of any Collateral shall be subject to such recourse, and
at each Closing, each Contributor (and designated recipient) receiving OP Units
or Shares shall execute a Security Agreement in the form attached hereto as
Exhibit O and execute one or more UCC-1 financing statements evidencing such
security interest; provided that upon the occurrence of the Expiration Date with
respect to all obligations of a Contributor hereunder, Spieker shall execute and
deliver a release of any and all such financing statements that relate to the OP
Units or Shares of such Contributor or its designated recipients, in form
reasonably satisfactory to such Contributor (and/or the designated recipients
respecting such Contributor, as the case may be). Notwithstanding the foregoing,
any such Contributor may elect to satisfy a claim against such Contributor
hereunder in cash rather than OP Units. In addition, no Contributor shall have
any liability whatsoever with respect to any Claims under any of the
representations, warranties and covenants to be performed prior to or concurrent
with the applicable Closing set forth in this Agreement or in any Contributor
estoppel certificate, any Deed and any representation and warranty "date-down"
certificate, or made pursuant to this Agreement or any such document, except to
the extent (and only to the extent) that with respect to Claims for breach of
such representations, warranties and covenants relating to a specific Property
or Contributor, the amount of such Claims exceed fifty thousand dollars
($50,000) with respect to such single Property or Contributor; provided that the
foregoing minimum threshold shall not apply to any covenants to pay any amounts
due hereunder (including prorations and allocations of Lease expenses). Spieker
shall not make or commence suit with respect to any Claim unless it in good
faith believes the Claims would exceed the minimum threshold to recovery
provided in this Section 4.4(a).
(b) Except as otherwise specifically set forth in this Agreement,
the representations, warranties and covenants to be performed prior to or
concurrent with the applicable Closing of the Contributors set forth in this
Agreement or in any Contributor estoppel certificate, any Deed and any
representation and warranty "date-down" certificate shall survive only until
that date which is eighteen months following the applicable Closing (an
"Expiration Date"). Any Claim that Spieker may have at any time against a
Contributor for a breach of any such representation, warranty or covenant,
whether known or unknown, with respect to which Spieker has not commenced suit
against the applicable Contributor or Contributors prior to the applicable
Expiration Date shall not be valid or effective, and the party against whom such
Claim is asserted shall have no liability with respect thereto. Notwithstanding
the foregoing to the contrary, in the event Spieker commences suit with respect
a Claim against a Contributor within the eighteen month period described above,
then the term "Expiration Date" with respect to any covenant, indemnity,
representation or warranty that is alleged to have been breached in a connection
with such Claim shall mean the date that such suit is either (i) dismissed with
prejudice, (ii) conclusively settled pursuant to a binding agreement between (or
among, as the case may be) the litigants, and all amounts owing under such
settlement shall have been paid, or (iii) resolved pursuant to a final
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judgment (and all rights to appeal shall have been exhausted or shall have
lapsed), and all amounts owing under such judgment shall have been paid.
(c) This Section 4.4 shall survive the Closing.
SECTION 4.5 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SPIEKER AND THE
REIT. To induce the Contributors to enter into this Agreement and undertake the
transactions contemplated herein, Spieker and the REIT jointly and severally
hereby make the following representations, warranties and covenants, upon each
of which the Contributors are entitled to rely and have relied:
(a) Spieker is a limited partnership duly organized and validly
existing and in good standing under the laws of the State of California. The
REIT is a corporation duly organized and validly existing under the laws of the
State of Maryland. Spieker and the REIT further represent and warrant to the
Contributors that this Agreement and all documents executed by them that are to
be delivered to the Contributors at Closing (i) are, or at the time of Closing
will be, duly authorized, executed and delivered by them, (ii) do not, and at
the time of Closing will not, violate any provision of any agreement or judicial
order to which they are a party or to which they or any property owned by them
is subject and (iii) constitutes (or in the case of Closing documents will
constitute) a valid and legally binding obligation of each of them, enforceable
in accordance with its terms.
(b) Neither Spieker nor the REIT has (i) made a general assignment
for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or
suffered the filing, of any involuntary petition by their creditors, (iii)
suffered the appointment of a receiver to take possession of all, or
substantially all, of their assets, (iv) suffered the attachment or other
judicial seizure of all, or substantially all, of their assets, (v) admitted in
writing their inability to pay their debts as they come due, or (vi) made an
offer of settlement, extension or composition to their creditors generally. As
of the Closing Date, Spieker will have sufficient funds to satisfy the cash
portion of the Adjusted Contribution Amount, fulfill its immediate payment
obligations under the Spieker Ground Lease Agreements, and consummate the
transactions contemplated by this Agreement.
(c) Spieker and the REIT have full and complete power and authority
to enter into this Agreement and to perform their obligations hereunder.
(d) Spieker and the REIT (i) are sophisticated investors, (ii) are
represented by competent counsel and (iii) understand the risks and liabilities
associated with the transactions described in this Agreement.
(e) No consents are required to be obtained from, and no filings are
required to be made with, any Governmental Authority or third party in
connection with the execution and delivery of this Agreement by Spieker or the
REIT or the consummation by Spieker or the REIT of the transactions contemplated
hereby (including the limited partners
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of Spieker or the shareholders of the REIT), other than such consents as shall
be obtained, if at all, prior to the Due Diligence Termination Date.
(f) Spieker has delivered to the Contributors true, correct and
complete copies of the Spieker Partnership Agreement and the REIT's Articles of
Incorporation (including all Articles Supplementary) and Bylaws (the
"Organizational Documents"). The Organizational Documents are in full force and
effect and the REIT is in material compliance with all of its material
obligations under the Organizational Documents. The Organizational Documents
represent the true, correct and complete copies of such agreements with respect
to such matters, and have not been modified or amended except as set forth
therein.
(g) Subject to the terms and provisions of this Agreement, the OP
Units may be redeemed for to Shares in accordance with the terms of the
Conversion, Registration Rights and Lock-up Agreements. The OP Units when issued
will be duly and validly issued partnership units in Spieker. Any Shares which
may be issued in redemption of OP Units ("Redemption Shares") will, when issued
be duly and validly issued, fully paid, non-assessable and shall not be subject
to any preemptive or similar rights.
(h) Spieker agrees to cause each Person receiving OP Units hereunder
to be admitted as a limited partner of Spieker simultaneously with the
applicable Closing. The REIT shall at all times take all such action as may be
required to authorize and reserve for issuance all of the Redemption Shares that
are to be issued to a holder of OP Units hereunder upon conversion of OP Units
into Shares, and shall take all such action as may be required to issue and
deliver the Redemption Shares to Spieker at such times or in such manner as may
reasonably be required in order for Spieker to deliver the Redemption Shares to
a Contributor, and its permitted transferees, as provided in the Conversion,
Registration Rights and Lock-up Agreements.
(i) The REIT has complied in all material respects with all
disclosure and reporting requirements under the federal securities laws,
including filing all reports, schedules, forms, statements and other documents
required to be filed by the REIT with the SEC pursuant to the reporting
requirements of Section 13 of the Securities Exchange Act of 1934, as amended,
except to the extent that such non-compliance could not reasonably be
anticipated to have any material adverse effect on the price of a Share.
(j) From its inception through the applicable Closing Date, the REIT
has been properly taxed as a real estate investment trust and no act or event
has occurred that could reasonably be expected to cause its tax classification
as a real estate investment trust to be revoked.
(k) Spieker will treat the transactions contemplated in the
Concurrent Transactions Exhibit as contributions under Section 721 of the Code
in which no gain or loss has been recognized in all of its tax returns and
filings (except for any individual who has received cash or Shares only),
provided that in no event shall Spieker or the REIT have any liability if such
contributions do not in fact qualify as contributions under such Section.
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Each of the representations and warranties of Spieker and the REIT
contained in this Section (i) is made on the Effective Date; (ii) shall be
deemed remade by Spieker and the REIT, as applicable and appropriate, and shall
be true in all material respects, as of the applicable Closing Date (provided
that Spieker shall update the representation contained in Section 4.5(f) as of
the applicable Closing Date by delivering to the Contributors true, correct and
complete copies of any modifications to the Organizational Documents, and no
consent shall be required with respect to such modification, unless consent
would have been required had the Contributors been partners under the Spieker
Partnership Agreement), and (iii) shall survive the applicable Closing until the
applicable Expiration Date, except for Section 4.5(g), (h), (j) and (k), all of
which shall survive indefinitely.
SECTION 4.6 SPIEKER'S INDEPENDENT INVESTIGATION
(a) Spieker acknowledges and agrees that it is being given the full
opportunity during the Due Diligence Period to inspect and investigate each and
every aspect of each Property and the transactions contemplated by this
Agreement, either independently or through agents, representatives or experts of
Spieker's choosing, as Spieker considers necessary or appropriate.
(b) Spieker acknowledges and agrees that, except as expressly
provided in or contemplated by the terms of this Agreement: (i) it is acquiring
the Properties based on its independent investigation and subject to all
information disclosed in the Due Diligence Materials (and also in reliance on
Contributors' representations and warranties contained herein), and (ii) shall
have no right after the Due Diligence Termination Date to terminate this
Agreement based on any further investigations of the Properties or the Due
Diligence Materials. The foregoing shall not limit or impair any other rights or
remedies available to Spieker to the extent expressly set forth in this
Agreement. Notwithstanding anything to the contrary contained in this Agreement,
for the purposes of Sections 3.4 and 4.1 above, Spieker shall be deemed to have
actual knowledge of any information, facts or circumstances disclosed in the Due
Diligence Materials delivered to Spieker as set forth on Schedule 4.6(b) hereto.
(c) SPIEKER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT EXCEPT AS
EXPRESSLY SET FORTH IN SECTION 4.1, SPIEKER IS NOT RELYING ON ANY DUTY TO
DISCLOSE OR ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, WHETHER
ORAL OR WRITTEN, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, FROM OR BY ANY
CONTRIBUTOR, OR ANY PARTNER, OFFICER, EMPLOYEE, ATTORNEY, AGENT OR BROKER OF ANY
CONTRIBUTOR, AS TO ANY MATTER, CONCERNING ANY PROPERTY, OR SET FORTH, CONTAINED
OR ADDRESSED IN THE DUE DILIGENCE MATERIALS (INCLUDING WITHOUT LIMITATIONS, THE
COMPLETENESS THEREOF), INCLUDING WITHOUT LIMITATION: (i) the quality, nature,
habitability, merchantability, use, operation, value, marketability, adequacy or
physical condition of any Property or any aspect or portion thereof, including
structural elements, foundation, roof, appurtenances, access, landscaping,
parking facilities, electrical,
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mechanical, HVAC, plumbing, sewage, and utility systems, facilities and
appliances, soils, geology and groundwater, (ii) the dimensions or lot size of
any Property or the square footage of the Fee Parcel Improvements, Ground Lease
Parcel Improvements or Leasehold Improvements thereon or of any tenant space
therein, (iii) the development or income potential, or rights of or relating to,
any Property, or any Property's use, habitability, merchantability, or fitness,
or the suitability, value or adequacy of such Property for any particular
purpose, (iv) the zoning or other legal status of any Property or any other
public or private restrictions on the use of such Property, (v) the compliance
of any Property or its operation with any applicable codes, laws, regulations,
statutes, ordinances, covenants, conditions and restrictions of any Governmental
Authority or of any other person or entity (including without limitation, the
Americans with Disabilities Act), (vi) the ability of Spieker to obtain any
necessary governmental approvals, licenses or permits for Spieker's intended use
or development of any Property, (vii) the presence or absence of Hazardous
Materials on, in, under, above or about any Property or any adjoining or
neighboring property, (viii) the quality of any labor and materials used in any
Fee Parcel Improvements, Ground Lease Parcel Improvements or Leasehold Fee
Parcel Improvements, (ix) the condition of title to any Property, (x) the
Leases, Contracts or any other agreements affecting any Property or the
intentions of any party with respect to the negotiation and/or execution of any
lease or contract with respect to any Property, (xi) any Contributor's ownership
of any Property or any portion thereof or (xii) the economics of, or the income
and expenses, revenue or expense projections or other financial matters,
relating to, the operation of any Property. Without limiting the generality of
the foregoing, Spieker expressly acknowledges and agrees that Spieker is not
relying on any representation or warranty of any Contributor, nor any partner,
officer, employee, attorney, agent or broker of any Contributor, whether
implied, presumed or expressly provided at law or otherwise, arising by virtue
of any statute, common law or other legally binding right or remedy in favor of
Spieker, except as expressly set forth herein. This Section 4.6(c) shall survive
the Closing, or, if the Closing does not occur, beyond the termination of this
Agreement.
SECTION 4.7 ENTRY AND INDEMNITY; LIMITS ON GOVERNMENT CONTACTS
(a) In connection with any entry by Spieker or any of its agents,
employees or contractors (collectively, the "Spieker Parties" and each a
"Spieker Party") onto a Real Property, Spieker shall give the applicable
Contributor reasonable advance notice of such entry and shall conduct such entry
and any inspections in connection therewith so as to minimize, to the greatest
extent possible, interference with such Contributor's business and the business
of the Tenants and otherwise in a manner reasonably acceptable to such
Contributor. Without limiting the foregoing, prior to any entry to perform any
necessary on-site testing, Spieker shall give the applicable Contributor written
notice thereof, including the identity of the company or persons who will
perform such testing and the proposed scope of the testing and the party
performing the testing. Such Contributor shall approve or disapprove any
proposed testing and the party performing the same within three (3) Business
Days after receipt of such notice. If a Spieker Party takes any sample from a
Real Property in connection with any such approved testing, Spieker shall
provide to the applicable Contributor, at such Contributor's additional expense,
a portion of such sample being tested
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to allow such Contributor, if it so chooses, to perform its own testing. The
applicable Contributor or its representative may be present to observe any
testing, or other inspection performed on any Property. Spieker shall promptly
deliver to the applicable Contributor copies of any reports relating to any
testing or other inspection of any Property performed by or on behalf of any
Spieker Party. Spieker shall maintain, and shall ensure that its contractors
maintain, public liability and property damage insurance insuring the Spieker
Parties against any liability arising out of any entry or inspections of any
Property pursuant to the provisions hereof. Such insurance maintained by Spieker
shall be in the amount of ten million dollars ($10,000,000) combined single
limit for injury to or death of one or more persons in an occurrence, and for
damage to tangible property (including loss of use) in an occurrence. The policy
maintained by Spieker shall insure the contractual liability of Spieker covering
the indemnities herein and shall (i) name such Contributor and TDC as additional
insureds, (ii) contain a cross-liability provision, and (iii) contain a
provision that "the insurance provided by Spieker hereunder shall be primary and
noncontributing with any other insurance available to [such Contributor]."
Spieker shall provide such Contributor with evidence of such insurance coverage
prior to any entry or inspection of any Property. Spieker shall indemnify,
defend, and hold the Contributor Parties harmless from and against any Claims of
personal injury or property damage to the extent arising out of or resulting
from any entry on any Property by any Spieker Party, in the course of performing
any inspections, testings or inquiries, provided that in no event shall Spieker
be obligated to indemnify the Contributor Parties or any other person with
respect to any environmental or physical condition that is discovered on or
about a Property by a Spieker Party and not caused by a Spieker Party. The
foregoing indemnity shall survive the Closing, or, if the Closing does not
occur, beyond the termination of this Agreement.
(b) Notwithstanding any provision in this Agreement to the contrary,
neither Spieker nor any other Spieker Party shall contact any Governmental
Authority regarding Spieker's discovery of any Hazardous Materials on or any
environmental conditions at any Real Property without the applicable
Contributor's prior written consent thereto. In addition, if the applicable
Contributor's consent is obtained by Spieker, such Contributor shall be entitled
to receive at least five (5) Business Days prior written notice of the intended
contact and to have a representative present when Spieker has any such contact
with any governmental official or representative.
SECTION 4.8 RELEASE. Spieker, for itself and any successors or assigns of
Spieker, waives its right to recover from and forever releases and discharges,
and covenants not to sue, the Contributors, the Contributors' Affiliates, TDC
and its Affiliates, the partners, trustees, shareholders, members, controlling
persons, directors, officers, attorneys, employees and agents of each of them,
and their respective heirs, successors, personal representatives and assigns
(each such Contributor and each such other Person being referred to herein as a
"Contributor Party") with respect to any and all Claims, whether direct or
indirect, known or unknown, foreseen or unforeseen, that may arise on account of
or in any way be connected with any Property, including the physical,
environmental and structural condition of the Property or any law or regulation
applicable thereto; provided, however, Spieker does not waive its rights, if
any, to recover from, and does not release or discharge
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or covenant not to sue any Contributor Party for (i) any breach of such
Contributor Party's representations or warranties set forth in this Agreement or
any document delivered pursuant to this Agreement, subject to the limitations
and conditions provided for in this Agreement, (ii) any breach of such
Contributor Party's obligations set forth in this Agreement or any document
delivered pursuant to this Agreement, (iii) third party Claims covered by such
Contributor Party's policies of insurance, (iv) litigation actually commenced
against any Contributor Party by one or more third parties prior to the
applicable Closing, and (v) subject to the limitations and conditions provided
for in this Agreement, any third party Claim (including any third party Claim
relating to the use, presence, discharge, release or existence of Hazardous
Materials on, under, in, above or about any Real Property), excluding, however,
(A) any third party Claim with respect to the use, presence, discharge, release
or existence of Hazardous Materials on, under, in, above or about the Santa
Monica Business Park Property (i.e., the Properties currently owned by Santa
Monica Associates and by Barclay-Curci Investment Company) to the extent such
Claim is a Claim the satisfaction of which McDonnell-Douglas Corporation is or
becomes responsible under the McDonnell-Douglas Indemnity Agreement, if ever
(and Spieker hereby agrees solely for the benefit of the Contributor Parties
that it will pursue any such Claim against McDonnell-Douglas Corporation only
under and in accordance with the McDonnell-Douglas Indemnity Agreement), and (B)
any other third party Claim with respect to the use, presence, discharge,
release or existence of Hazardous Materials on, under, in, above or about any
Property to the extent the Claim does not arise out of actions taken by, or the
willful misconduct or negligence of, the applicable Contributor that owned such
Property, or any of its Affiliates agents, contractors, employees or
representatives, or by tenants, subtenants, licensees, or concessionaires of
such Contributor or Affiliate at such Property, during the period the applicable
Contributor or its Affiliates owned such Property. In connection with this
Section 4.8, but only to the extent expressly provided in this Section 4.8,
Spieker expressly waives the benefits of Section 1542 of the California Civil
Code (or any similar provision or principle of law which may apply in any
Arizona) which provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR EXPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED THE
SETTLEMENT WITH THE DEBTOR."
ARTICLE V
TITLE
SECTION 5.1 CONVEVANCE OF TITLE. At the Closing, the Contributors shall
(or in the case of BCIC, the applicable Contributors shall cause BCIC to)
deliver to Spieker (a) a grant deed (or special warranty deed in Arizona) for
each Fee Property, Leasehold Improvements and Ground Lease Parcel Improvements
in the form of Exhibit P for the applicable jurisdiction (each, a "Deed") and
(b) an assignment and assumption for each Leasehold Estate in the form required
by the ground lessor thereunder and mutually satisfactory to
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Spieker and the applicable Contributors (each, an "Assignment of Contribution
Ground Lease"), each subject to no exceptions other than the Permitted
Exceptions. In addition, at the applicable Closing, the applicable Contributors
shall (i) convey the Partnership Interests to Spieker free and clear of any
defects, liens, encumbrances or claims of any kind, except as created by the
applicable partnership agreement, and subject to any Permitted Exceptions (or
approved title exceptions, in the case of the Michelson Property) to which the
applicable Partnership's property is subject, by an assignment in the form of
Exhibit R (the "Assignment of Partnership Interest"), and (ii) convey the
Michelson Purchase Agreement Rights to Spieker pursuant to the Michelson
Assignment Agreement.
SECTION 5.2 REVIEW OF TITLE. Spieker has delivered written notice (the
"Objection Notice") to the Contributors prior to the date hereof that certain of
the exceptions to title disclosed by the title commitments, preliminary title
reports and surveys delivered to Spieker as part of the Due Diligence Materials
or otherwise obtained by Spieker in connection with its due diligence hereunder
prior to such date are objectionable to Spieker ("Objections"). Attached hereto
as Schedule 5.2(a) are Schedules B to the Proforma policies of title insurance
for the Properties which show all exceptions to title that have been approved by
Spieker as of the date hereof (and all such exceptions shall constitute
"Permitted Exceptions," as hereinafter defined). Schedule 5.2(b) hereto sets
forth certain Objections that the applicable Contributors shall use their
reasonable efforts to cause the Title Company to delete as a title exception or
to insure over to Spieker's satisfaction (if the same is an exception to title),
or to otherwise resolve in the manner prescribed by Schedule 5.2(b), before the
applicable Closing Date. If, after using such reasonable efforts, the applicable
Contributors are unable, with respect to any of the Objections set forth in Part
I of Schedule 5.2(b), to cause such Objection to be deleted, insured over, or
otherwise resolved as aforesaid, then the same shall constitute Permitted
Exceptions hereunder (if the same were title exceptions) and Spieker shall
accept title to the applicable Property subject thereto, and the Contributors'
failure to otherwise resolve such Objections shall be deemed, waived by Spieker
and Spieker shall proceed with the contribution or leasing of the applicable
Property notwithstanding the same. If, after using such reasonable efforts, the
applicable Contributors are unable, with respect to any of the Objections set
forth in Part II of Schedule 5.2(b), to cause such Objection to be deleted,
insured over, or otherwise, resolved as aforesaid, then the applicable
Contributors shall provide written notice to Spieker thereof. If Contributors
give Spieker such notice, Spieker shall have two (2) Business Days to elect to
proceed with the contribution or leasing of the applicable Property or terminate
this Agreement in its entirety, in the event none of the Closings have occurred,
or solely with respect to all contemporaneous and future Closings in the event
the First Closing has occurred. If Spieker fails to give Contributors written
notice of its election within said two (2) Business Days, Spieker shall be
deemed to have elected to waive such Objections and to proceed with the
contribution or leasing of the applicable Property. In the event that Spieker
terminates this Agreement pursuant to this paragraph, the Deposit (to the extent
it has not been theretofore released in accordance with this Agreement) shall be
immediately returned to Spieker, and the parties hereto shall have no further
liability under this Agreement, except under the Termination Surviving
Provisions. If Spieker elects or is deemed to have elected to proceed with the
contribution or leasing of the applicable Property, then all such Objections
that Spieker waives or is deemed to have
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waived shall be Permitted Exceptions hereunder, and Spieker shall accept title
to the applicable Property subject to all such Permitted Exceptions. In the
event the Title Company issues any supplement ("Supplement") to the title
commitments or preliminary title reports provided by Contributors during the
term of this Agreement and prior to the applicable Closing Date for the Property
or Properties in question, Spieker shall have until three (3) Business Days
following delivery of such Supplement to Spieker to deliver an Objection Notice
to Contributors setting forth any Objections to any exceptions contained in such
Supplement and not disclosed in the original title commitments or preliminary
title reports for the applicable Property or Properties; provided, however, that
Spieker shall not have the right to deliver an Objection Notice as to matters
first disclosed by a Supplement if such matter (i) is apparent on a survey
obtained by Spieker prior to the Effective Date and Spieker nonetheless delivers
the Deposit or (ii) does not adversely affect the use, operation, development,
marketability or financeability of any Property in anything other than an
immaterial respect. Thereafter, Contributors shall have five (5) days after
receipt of such Objection Notice to give Spieker: (x) written notice that
Contributors shall attempt to remove all Objections from title on or before the
applicable Closing Date; or (y) written notice that Contributors elect not to
attempt to cause the Objections to be removed. If Contributors give Spieker
notice under clause (y), Spieker shall have two (2) Business Days to elect to
proceed with the purchase or terminate this Agreement. If Spieker shall fail to
give Contributors written notice of its election within said two (2) Business
Days, Spieker shall be deemed to have elected to waive such Objections. If
Contributors give notice under clause (x) above and fail to remove all the
Objections prior to the Closing Date and Spieker is unwilling to accept title
subject to such Objections in its sole and absolute discretion, Spieker shall
have the right to terminate this Agreement. In the event that Spieker terminates
this Agreement pursuant to this paragraph, the Deposit shall be immediately
returned to Spieker, and the parties hereto shall have no further liability
under this Agreement, except under the Termination Surviving Provisions. If
Spieker elects or is deemed to have elected to proceed with the contribution or
leasing of the applicable Property, then all such Objections that Spieker waives
or is deemed to have waived shall be Permitted Exceptions hereunder, and Spieker
shall accept title to the applicable Property subject to all such Permitted
Exceptions. As used herein, "Permitted Exceptions" shall mean those exceptions
to title approved or deemed approved by Spieker hereunder.
ARTICLE VI
BROKERS
SECTION 6.1 BROKERS. Contributors and Spieker represent and warrant to
each other that no broker or finder (other than MS, whose fees shall be
reimbursed by Spieker pursuant to Section 2.4(b), and TDC, whose costs and
expenses shall be reimbursed by the Contributors) was instrumental in arranging
or bringing about this transaction and that there are no claims or rights for
brokerage commissions or finders' fees in connection with the transactions
contemplated hereby by any person or entity other than MS and TDC. If any other
person brings a claim for a commission or finder's fee based upon any contact,
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dealings or communication with Spieker, TDC or any Contributor, then the party
through whom such person makes its claim shall defend the other party (the
"Indemnified Party") from such claim, and shall indemnify the Indemnified Party
and hold the Indemnified Party harmless from any and all costs, damages, claims,
liabilities or expenses (including reasonable attorneys' fees and disbursements)
incurred by the Indemnified Party in defending against the claim. The provisions
of this Section 6.1 shall survive the Closing or, if the Closing does not occur,
any termination of this Agreement.
ARTICLE VII
INTERIM OPERATION OF THE PROPERTIES
SECTION 7.1 INTERIM OPERATION OF THE PROPERTIES
(a) Except as otherwise contemplated or permitted by this Agreement
or approved by Spieker in writing, from the Effective Date to the applicable
Closing Date, each Contributor agrees that it will (and, with respect to BCIC,
the applicable Contributors will cause BCIC to) operate, maintain, repair and
lease the Property owned by it in a prudent manner, in the ordinary course, on
an arm's-length basis and consistent with such Contributor's past practices and
will not dispose of or encumber any Property, except for dispositions of
immaterial quantities of obsolete or worn out personal property that are
replaced in the ordinary course of business or as otherwise permitted by this
Section 7.1 or Section 7.3. Without limiting the foregoing, the Contributors
shall, in the ordinary course, negotiate with prospective Tenants and enter into
New Leases on terms that the Contributors believe, in their good faith business
judgment to be market terms, enforce Leases in all material respects, perform in
all material respects all material landlord obligations under the Leases, all
material ground lessee obligations under the Contribution Ground Leases, and all
material obligations under the New York Life Loan Documents, and pay all costs
and expenses of the Properties prior to delinquency or penalty, including debt
service and Real Estate Taxes.
(b) Contributors shall not, after the Effective Date, enter into any
New Lease or Contracts, or any amendments thereof, or consent to any Tenant's
entering into any sublease, assignment or agreement pertaining to any Property
or any portion thereof (where the consent of Contributors is required
thereunder), terminate, amend, extend, renew, modify or accept the surrender of
any Lease or waive any material rights of Contributors under any Contract or
Lease, without in each case obtaining Spieker's prior written consent thereto,
which consent Spieker may withhold only in its good faith discretion, and which
shall be deemed given if Spieker does not disapprove the same within three (3)
Business Days of a Contributor's written request therefor. Notwithstanding the
foregoing, Contributors shall be entitled, without the consent of Spieker, (i)
to enter into, amend or otherwise deal with Excluded Leases and Contracts that
are not Assumed Contracts and any other Contracts in the ordinary course of
business that shall not be binding on Spieker after the applicable Closing Date,
and (ii) to enter into, amend or otherwise deal with Contracts that are
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terminable on not more than thirty (30) days' prior notice, and that involve
payment of less than five thousand dollars ($5,000). Contributors shall deliver
to Spieker, together with any request for approval of a New Lease or Lease
amendment a copy of the proposed Lease or amendment and, if reasonably requested
by Spieker in writing with respect to a Tenant under a proposed New Lease, a
description of the proposed Tenant and its proposed use of the premises and
whatever financial information on the proposed Tenant Contributors have
received, as well as any additional information reasonably requested by Spieker
in writing (including if applicable, an environmental questionnaire).
(c) At least three (3) Business Days prior to becoming legally bound
with respect to any matter requiring the approval of Spieker under Section
7.1(b) above, the applicable Contributor shall consult with and seek the consent
of Spieker, and shall provide reasonable detail to Spieker (including copies of
the relevant documentation and financial information on the proposed Tenant
under a New Lease, if available and applicable), with respect thereto. Any
consent to be given by Spieker pursuant to this Section 7.1(c) shall be deemed
granted if Spieker does not respond in writing to Contributors' request for
consent within three (3) Business Days. Notwithstanding anything to the contrary
provided herein, the parties hereto agree that they shall cooperate in good
faith with respect to the marketing and negotiation of Leases at the Spec
Building.
(d) Except for New Leases or other agreements entered into in
accordance with this Section 7.1, no Contributor shall enter into any agreement
to create a lien or encumbrance on any Property without Spieker's prior written
consent (which consent shall not be unreasonably withheld or delayed with
respect to any utility or similar easement necessary for the operation of a
Property, and which shall be deemed granted if Spieker does not respond in
writing to a Contributor's request for consent within three (3) Business Days).
(e) Prior to the Closing Date or the earlier termination of this
Agreement, no Contributor shall sell any Property or portion thereof or any
interest therein, except as expressly permitted or contemplated by this
Agreement.
(f) Prior to Closing, the Contributors shall (with reasonable
promptness) provide Spieker with copies of all Contracts entered into by a
Contributor affecting any Property (whether or not Spieker's consent is required
thereto) and all operating statements, rent rolls, receivable aging reports,
leasing reports and other periodic reports prepared by or delivered to such
Contributors or their agents after the Effective Date.
(g) Prior to the Closing Date, the Contributors shall not enter into
any amendment, modification or termination of the Partnership Agreements, any
Contribution Ground Lease or the New York Life Loan Documents without Spieker's
prior written consent (which consent shall not be unreasonably withheld or
delayed so long as such amendment or modification will not alter Spieker's
obligations thereunder in any material respect), except as expressly
contemplated by this Agreement. Spieker's consent to any such matter shall be
deemed given if Spieker does not disapprove the same within three (3) Business
Days of a Contributor's written request therefor.
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SECTION 7.2 TENANT IMPROVEMENT COSTS, LEASING COMMISSIONS AND FREE
RENT. Except as set forth on Schedule 7.2, if the Closing occurs, Spieker shall
be responsible and shall pay for the costs of tenant improvement work or
allowances, third-party leasing commissions and other leasing costs
(collectively, "Leasing Costs") relating to or arising from (i) those Leases or
modifications of Leases entered into on or after the Lease Cost Shift Date (as
defined below) and (ii) the exercise by a Tenant of a renewal, expansion or
extension option contained in any Lease, which renewal or extension period
commences, or which expansion space such Tenant first has the right to occupy,
on or after the Lease Cost Shift Date (notwithstanding that such Tenant may have
exercised such option prior to the Lease Cost Shift Date), and any amounts paid
by the Contributors in respect of such Leasing Costs shall result in an upward
adjustment to the Adjusted Contribution Amount at Closing equal to the amounts
so paid. As used herein, the term "Lease Cost Shift Date" shall mean with
respect to the First Closing Properties, the date thirty (30) days prior to the
First Closing. Except as set forth on Schedule 7.2, the Contributors shall be
responsible and shall pay for all other Leasing Costs, and any such other
Leasing Costs otherwise remaining unpaid by the Contributors shall result in a
downward adjustment to the Adjusted Contribution Amount at Closing. In no event
shall Spieker be responsible for the payment of any tenant improvement work,
tenant allowances, leasing commissions or other tenant inducements or leasing
costs on account of any obligations incurred by the Contributors with respect to
the Second Closing Properties (other than the Spec Building), unless Spieker and
the applicable Contributor or Contributors agree otherwise in writing. Free rent
periods provided for in Leases entered into by a Contributor that occur, in
whole or in part, after the Closing Date shall be for the account of, and borne
by, the Contributors (and shall be an adjustment to the Adjusted Contribution
Amount at Closing). The provisions of this Section 7.2 shall survive the
applicable Closing.
SECTION 7.3 CONTRIBUTORS' INSURANCE. Between the Effective Date and the
Closing Date, the applicable Contributor shall continue to maintain its existing
insurance coverage.
SECTION 7.4 CAPITAL IMPROVEMENTS. Notwithstanding anything to the
contrary provided herein, the applicable Contributors agree to undertake and
complete as soon as reasonably possible, and at their sole cost and expense,
those certain items described on Schedule 7.4 hereto (the "Capital Improvement
Items"). Each of the Capital Improvement Items shall be completed in a good and
workmanlike manner using new materials and shall be undertaken in accordance
with a reasonably detailed description thereof approved by Spieker and with all
applicable legal requirements. The applicable Contributors shall indemnify,
defend and hold Spieker harmless from and against any and all Claims of
mechanics or materialmen providing services or materials with respect to the
Capital Improvement Items. Except as expressly set forth in or contemplated by
this Agreement, the Contributors shall have no obligation to make any repairs or
improvements to the Properties. The obligations of the applicable Contributors
under this Section 7.4 shall survive the applicable Closings.
SECTION 7.5 SECOND CLOSING PROPERTIES. Notwithstanding anything to the
contrary contained herein, the applicable Contributors agree to diligently
prosecute the completion as
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soon as reasonably possible, but in no event later than June 30, 1998 (subject
to customary force majeure events), at their sole cost and expense, of the
development and construction of (i) the Spec Building, and (ii) the expansion of
the existing building commonly known as the Delta Dental Building to add
approximately 30,000 rentable square feet to the existing rentable square
footage of approximately 50,000 (the "Delta Dental Expansion") (the Spec
Building and Delta Dental Expansion and any and all improvements to be
constructed related thereto shall sometimes hereinafter by collectively referred
to as the "Second Closing Development Projects"). The applicable Contributors
shall use all reasonable efforts to cause the construction and completion of
each of the Second Closing Development Projects substantially in accordance with
the Final Plans (as defined in Schedule 7.5 hereto), as such Final Plans may be
modified from time to time in accordance with Schedule 7.5, in a good and
workmanlike manner, using only new materials, free from design, material and
workmanship defects, and in compliance with all legal requirements and the
provisions of Schedule 7.5 hereto.
SECTION 7.6 TENANT NOTICES. At the Closing, each Contributor shall
furnish Spieker with a signed notice to be given to each Tenant. Such notice
shall disclose that the applicable Property has been contributed or leased to
Spieker and that, after the Closing, all rents should be paid to Spieker.
SECTION 7.7 RISK OF LOSS AND INSURANCE PROCEEDS. Spieker shall be bound
to accept contribution of the Contribution Properties for the full Adjusted
Contribution Amount as required by the terms hereof and to lease or accept the
assignment of the lease of the Ground Lease Parcels under the terms of the
Spieker Ground Lease Agreements, without regard to the occurrence or effect of
any damage to the related Real Properties or destruction of any improvements
thereon or condemnation of any portion of any Property, provided that upon the
Closing, there shall be a credit against the Adjusted Contribution Amount due
hereunder equal to the amount of any insurance proceeds or condemnation awards
collected by the applicable Contributor as a result of any such damage or
destruction or condemnation, plus the amount of any insurance deductible or any
uninsured amount or retention, less any sums reasonably expended by such
Contributor prior to the Closing for the restoration or repair of any Property
or in collecting such insurance proceeds or condemnation award. The Contributors
have provided Spieker with a certificate of insurance for the Contributors'
casualty insurance policy(ies) so that Spieker can confirm its satisfaction with
such policy(ies). The Contributors agree that they will maintain such
policy(ies) in full force and effect until the applicable Closing. If the
proceeds or awards have not been collected as of the Closing, then such proceeds
or awards shall be assigned to Spieker, except to the extent needed to reimburse
the applicable Contributor for sums it reasonably expended prior to the Closing
for the restoration or repair of such Property or in collecting such insurance
proceeds or condemnation awards. Notwithstanding the foregoing, (i) the
Contributors shall not settle, compromise or otherwise stipulate any
condemnation award whatsoever, or any award or recovery in connection with any
damage or destruction in each case if such damage or destruction impairs the
value of a Property by at least one hundred thousand dollars ($100,000), without
the prior written approval of Spieker, which approval shall not be unreasonably
withheld, (ii) Spieker shall have the right to participate in any such
settlement
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or other proceedings, and (iii) if the amount of the damage, destruction or
condemnation as described in this Section 7.7 constitutes a Material Event (as
defined below), then Spieker may, at its option to be exercised within ten (10)
Business Days of Contributors' written notice of the occurrence of the damage,
destruction or condemnation, either terminate this Agreement or consummate the
contribution and leasing of the Properties for the full Adjusted Contribution
Amount as required by the terms hereof. If Spieker elects to terminate this
Agreement, then the Deposit shall be immediately returned to Spieker and neither
party shall have any further rights or obligations hereunder except under the
Termination Surviving Provisions. If Spieker elects to proceed with the
transaction, then upon the applicable Closing, Spieker shall be entitled to a
credit against the Adjusted Contribution Amount and shall receive an assignment
of any uncollected proceeds or awards, all as set forth in this Section 7.7
above. Further, without limitation of the foregoing, with respect to the
environmental condition at the Santa Monica Business Park that the Contributors
have disclosed to Spieker, the Contributors will assign to Spieker upon the
Closing of such Property any insurance proceeds recovered (or uncollected
proceeds recoverable) by the Contributors in connection with such matter under
the Contributors' environmental insurance policy (that have not previously been
applied by the Contributors to remediate such condition). The provisions of this
Section 7.7 shall survive the Closing. As used herein, the term "Material Event"
shall mean (i) any damage or destruction where the cost of repair is greater
than the lesser of five percent (5%) of the allocated Adjusted Contribution
Amount for that Property or two million dollars ($2,000,000) (as determined by a
reputable contractor selected by Contributors and reasonably approved by
Spieker), (ii) any damage or destruction that cannot be substantially repaired
within 180 days (as determined by a reputable contractor selected by
Contributors and reasonably approved by Spieker), (iii) any damage, destruction
or condemnation that results in any Tenant or Tenants renting more than the
Rentable Area Floor in the Property terminating its or their Leases, other than
Excluded Leases or Leases that will or may terminate prior to the applicable
Closing Date (provided that in each case the balance of the Tenant's rental
obligations under the lease is not covered by rental interruption insurance),
(iv) any condemnation, where the value of the land taken is greater than the
lesser of five percent (5%) of the allocated Adjusted Contribution Amount for
that Property or two million dollars ($2,000,000) (as determined by a reputable
appraiser selected by Contributors and reasonably approved by Spieker), or (v)
any condemnation of the Property that materially adversely impacts the use,
operation or further development potential of such Property.
SECTION 7.8 NOTIFICATIONS. Between the Effective Date and the Closing,
each Contributor shall promptly notify Spieker of any condemnation,
environmental, zoning or other land-use regulation proceedings relating to any
of the Properties of which such Contributor obtains knowledge, any notices of
violations of any legal requirements relating to any of the Properties received
by such Contributor, any litigation to which such Contributor is a party and of
which such Contributor obtains knowledge that arises out of the ownership of any
of the Properties unless fully covered by insurance (subject to customary
deductibles).
SECTION 7.9 ASSUMED CONTRACTS. Prior to the Extended Due Diligence
Termination Date, Spieker shall advise Contributors in writing which of the
Contracts Spieker desires to
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assume at Closing (the "Assumed Contracts"), and Contributors shall terminate
prior to or effective as of the applicable Closing, at no cost or expense to
Spieker, any and all Contracts that are not Assumed Contracts, provided that in
no event shall Contributors be obligated to terminate any Contract unless (i)
such Contract is terminable by Contributors without the payment of any fee or
penalty, (ii) such Contract provides for termination upon no more than thirty
(30) days' prior written notice, and (iii) such thirty (30) day period will
expire prior to the applicable Closing Date. In any event, Spieker shall be
required to assume all Non-Terminable Contracts on the applicable Closing Date,
and the same shall constitute Assumed Contracts hereunder. Under all
circumstances, Contributors shall cause to be terminated as of the applicable
Closing all property management agreements with respect to the Property and all
Contracts where the provider, supplier or contractor is an Affiliate of any
Contributor or any partner of any Contributor.
SECTION 7.10 MICHELSON PURCHASE AGREEMENT
(a) From the Effective Date to the First Closing Date, the
applicable Contributor shall fully and faithfully perform and discharge, as and
when performance and discharge are due, all of its material obligations under
the Michelson Purchase Agreement, and shall take all actions as may be
reasonably necessary to avoid any material default by such Contributor under the
Michelson Purchase Agreement, subject to the provisions of Sections 7.10(b) and
(c) below and shall coordinate with Spieker to effectuate the Closing
thereunder.
(b) From the Effective Date to the First Closing Date, the
applicable Contributor shall not amend, modify, supplement or terminate the
Michelson Purchase Agreement, exercise any rights or remedies under the
Michelson Purchase Agreement, waive any of its rights under the Michelson
Purchase Agreement or give any consents or approvals called for or arising out
of the Michelson Purchase Agreement without first obtaining the prior written
approval of Spieker, which approval shall not be unreasonably withheld,
conditioned or delayed provided that such action shall not have any material
adverse effect with respect to the value of Michelson Property or the use or
operation of the Michelson Property by Spieker after Closing. The obligation to
seek the consent of Spieker with regard to any rights or remedies under the
Michelson Purchase Agreement, shall include, without limitation, (i) approving
and/or waiving all closing conditions and contingencies set forth in the
Michelson Purchase Agreement, and (ii) exercising any approval rights granted to
such Contributor in the Michelson Purchase Agreement with respect to new leases,
contracts, operational matters relating to the applicable Property or any other
matters. In exercising such rights and entitlements such Contributor shall
promptly notify Spieker of any approval or waiver needed or requested from such
Contributor or needed or requested from Spieker hereunder and the time period
within which such approval is needed; provided that Spieker shall not be
obligated to respond to any such request in less than three (3) Business Days
unless failure to respond sooner would materially and adversely impact such
Contributor's rights or remedies under the Michelson Purchase Agreement or
result in the imposition of liability on such Contributor thereunder (in which
event, Spieker shall respond in a timely manner so as to avoid such impact or
the imposition of such liability). Together with
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notifying Spieker of any such approval or waiver needed or requested under the
Michelson Purchase Agreement, such Contributor shall provide to Spieker all
information in such Contributor's possession relating to the subject matter of
such consent or waiver that is specifically requested by Spieker in writing, and
such Contributor shall otherwise consult with Spieker in good faith with respect
to the merits or need for such approval or waiver. Spieker shall notify the
applicable Contributor in writing of its decisions as soon as reasonably
possible, and in all events at least two (2) Business Days prior to the time
that the applicable Contributor is required to exercise such right or such
consent or approval under the Michelson Purchase Agreement, subject to the three
(3) Business Day minimum response period referenced above (as modified above).
Such Contributor shall, promptly following its receipt thereof, transmit to
Spieker all material notices, demands and requests such Contributor receives
from the Michelson Seller or its agents. Such Contributor shall use all
reasonable efforts to at all times keep Spieker informed on a current basis of
the status of the transactions contemplated by the Michelson Purchase Agreement.
(c) In the event that the Michelson Seller defaults in any of its
material obligations thereunder, the applicable Contributor, at its sole cost
and expense, shall enforce the provisions thereof to the fullest extent
permitted by law, subject, however, to obtaining the consent of Spieker as set
forth in Section 7.10(b) above; provided that any costs or expenses incurred by
the applicable Contributor will be reimbursed by Spieker in accordance with
Section 2.4(b)(iii).
SECTION 7.11 BCIC MATTERS. The applicable Contributors shall cause BCIC
to comply with the foregoing provisions of this Article VII as if BCIC were a
"Contributor" with respect to the Property currently owned by it.
ARTICLE VIII
CLOSING AND ESCROW
SECTION 8.1 ESCROW INSTRUCTIONS. Upon execution of this Agreement, the
parties hereto shall deposit an executed counterpart of this Agreement with the
Title Company, and this instrument shall serve as the instructions to the Title
Company as the escrow holder for consummation of the purchase and sale
contemplated hereby. The Contributors and Spieker agree to execute such
reasonable additional and supplementary escrow instructions as may be
appropriate to enable the Title Company to comply with the terms of this
Agreement; provided, however, that in the event of any conflict between the
provisions of this Agreement and any supplementary escrow instructions, the
terms of this Agreement shall control, unless the terms of this Agreement are
expressly contravened in such supplementary instructions with reference to the
provisions or portions of this Agreement that are being expressly contravened.
SECTION 8.2 CLOSING. Any Closing hereunder shall be held and delivery of
all items to be made at a Closing under the terms of this Agreement shall be
made at the Los Angeles
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offices of O'Melveny & Myers (or such other location as the parties may agree)
at 9:00 A.M. (Los Angeles time), on the applicable Closing Date or such earlier
or later date and time as Spieker and the Contributors may mutually agree upon
in writing, in either case, with time being of the essence. Notwithstanding the
foregoing, the Contributors and Spieker shall each have the right in its good
faith business judgment (relating to consummation of the subject transaction or
the financing thereof) to postpone a Closing Date until such date that is not
later than two (2) Business Days following the date from which the Closing was
postponed (with time being of the essence) so long as Spieker or the
Contributors, as the case may be, delivers written notice to the other party not
less than five (5) Business Days prior to the then scheduled Closing Date.
Except as otherwise permitted under this Agreement, such date and time may not
be extended without the prior written approval of both the Contributors and
Spieker.
SECTION 8.3 DEPOSIT OF DOCUMENTS
(a) At or before the applicable Closing, the Contributors shall
deposit into escrow the following items:
(i) a duly executed and acknowledged Deed for each Fee
Property, Leasehold Improvements and Ground Lease Parcel Improvements;
(ii) four (4) duly executed and acknowledged counterparts
of an Assignment of Contribution Ground Lease for each Leasehold Estate;
(iii) four (4) duly executed counterparts of the Assignment
of Partnership Interests;
(iv) four (4) duly executed counterparts of a Bill of Sale
for each Fee Property, each Leasehold Property and the Ground Lease Parcel
Improvements in the form attached hereto as Exhibit S (each, a "Bill of Sale");
(v) four (4) duty executed counterparts of an Assignment
and Assumption of Leases for each Contribution Property in the form attached
hereto as Exhibit T (each, an "Assignment of Leases");
(vi) four (4) duly executed counterparts of an Assignment
and Assumption of Contracts, Warranties and Guaranties and Other Intangible
Property for each Contribution Property in the form attached hereto as Exhibit U
(each, an "Assignment of Contracts");
(vii) four (4) duly executed counterparts of the Michelson
Assignment Agreement;
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(viii) four (4) duly executed counterparts of such
disclosures and reports (including withholding certificates, such as, for
example, CA Form 590-RE) as are required by applicable state and local law in
connection with the conveyance of the Properties;
(ix) an affidavit pursuant to Section 1445(b)(2) of the
Code, and on which Spieker is entitled to rely, that no Contributor is a
"foreign person" within the meaning of Section 1445(f)(3) of the Code;
(x) four (4) duly executed counterparts of each Spieker
Ground Lease Agreement;
(xi) four (4) duly executed counterparts of each
Conversion, Registration Rights and Lock-up Agreement, Subscription Agreement,
Counterpart OP Signature Page and Lock-up Agreement;
(xii) one (1) duly executed counterpart of an Affidavit of
Property Value in the form prepared by the Title Company (the "Affidavit of
Property Value") for the Property commonly known as Biltmore Commerce Center;
(xiii) to the extent applicable, certificates evidencing
registration with the Arizona Department of Environmental Quality for each dry
well located at the Property commonly known as Biltmore Commerce Center;
(xiv) current municipal and state tax clearance
certificates for the Property commonly known as Biltmore Commerce Center;
(xv) a duly executed Michelson Indemnity Agreement; and
(xvi) in the event that New York Life consents to the
contribution of the applicable Property to Spieker subject to the New York Life
Loan and Spieker accepts contribution of such Property subject to such debt as
of the applicable Closing, four (4) duly executed counterparts of each document
required by New York Life to evidence the assignment of the New York Life to
Spieker and Spieker's assumption thereof (the "New York Life Loan Assumption
Documents"). Spieker and the applicable Contributor shall execute and deliver a
mutual indemnity agreement in form reasonably satisfactory to such parties,
wherein each such party indemnifies the other for any liability under any and
all "nonrecourse carve-outs" and other obligations under the New York Life Loan
Assumption Documents for which the borrower has personal liability to the extent
such liability accrues during the indemnifying party's period of ownership of
the applicable Property, or arises by reason of any act or omission of the
indemnifying party (but solely to the extent such mutual indemnity is not
incorporated into the New York Life Loan Assumption Documents).
(b) At or before Closing, Spieker shall deposit into escrow the
following items:
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(i) the Adjusted Contribution Amount (including
certificates of OP Units equal to the OP Unit Amount, Shares and cash sufficient
to pay all amounts due under Section 2.4(b) in accordance with the Concurrent
Transactions Exhibit);
(ii) four (4) duly executed and acknowledged counterparts
of an Assignment of Contribution Ground Lease for each Leasehold Estate;
(iii) four (4) duly executed counterparts of each
Assignment of Partnership Interests;
(iv) four (4) duly executed counterparts of each Bill of
Sale;
(v) four (4) duly executed counterparts of each Assignment
of Leases;
(vi) four (4) duly executed counterparts of each Assignment
of Contracts;
(vii) four (4) duly executed counterparts of the Michelson
Assignment Agreement;
(viii) four (4) duly executed counterparts of such
disclosures and reports as are required by applicable state and local law in
connection with the conveyance of the Properties;
(ix) four (4) duly executed counterparts of each
Conversion, Registration Rights and Lock-up Agreement, Subscription Agreement,
Counterpart OP Signature Page and Lock-up Agreement;
(x) four (4) duly executed counterparts of each Spieker
Ground Lease Agreement;
(xi) four (4) duly executed counterparts of each Guarantee;
(xii) an executed opinion of the REIT's tax counsel in the
form attached hereto as Exhibit V;
(xiii) one (1) duly executed counterpart of the Affidavit
of Property Value; and
(xiv) to the extent applicable, four (4) duly executed
counterparts of each New York Life Loan Assumption Document.
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(c) Spieker and the Contributors shall endeavor in good faith to
agree on the final, execution form of all of the documents referred to above at
least three (3) Business Days prior to the applicable Closing. Spieker and the
Contributors shall each deposit such other instruments as are reasonably
required by the Title Company or otherwise required to close the escrow and
consummate the transactions contemplated herein in accordance with the terms
hereof; provided, that the Contributors shall not be required to provide any
indemnities or affidavits or to escrow any funds other than as provided herein.
The parties hereto hereby designate Title Company as the "Reporting Person" for
the transaction pursuant to Section 6045(e) of the Code and the regulations
promulgated thereunder and agree to execute such documentation as is reasonably
necessary to effectuate such designation.
(d) The Contributors shall deliver to Spieker originals of the
Leases (or, if originals are not available, copies certified by the applicable
Contributor to be true and correct to such Contributor's knowledge), copies (or,
if available, originals) of the tenant correspondence files of the Real
Properties in Contributors' possession or control, a set of keys to each Real
Property and originals (or copies, if originals are not available) of any other
items in Contributors' possession or control relating to the use, ownership,
operation, maintenance, leasing, repair, alteration, management or development
of the Real Properties, promptly after the Closing Date (and in all events
within three (3) Business Days). Following the Closing, Spieker shall make all
Leases, Contracts, other documents, books, records and any other materials in
its possession, to the extent the same relate to the period of the Contributors'
ownership of the Properties, available to the Contributors or their
representatives for inspection and/or copying at reasonable times and upon
reasonable notice.
SECTION 8.4 ESTOPPEL CERTIFICATES
(a) The Contributors shall use their reasonable efforts (without
incurring any additional expense, except to the extent that a Lease requires
payment of a fee in connection therewith) to obtain as soon as practicable
tenant estoppel certificates from each Tenant in the form attached hereto as
Exhibit W; provided, however, that if the form of an estoppel certificate is
attached to or otherwise prescribed in a particular lease document, that form
(the "Prescribed Form") shall be deemed to be acceptable to Spieker in the event
that any Tenant is unwilling to sign the form attached hereto as Exhibit W. It
shall be a condition to Spieker's obligation to close the transactions
contemplated herein with respect to a Property that on or before the applicable
Closing the applicable Contributor delivers to Spieker tenant estoppel
certificates substantially in the form attached hereto as Exhibit W (or in the
Prescribed Form, if applicable) from (i) Tenants occupying eighty percent (85%)
of the total leased square footage of such Property; and (ii) Significant
Tenants occupying eighty percent (85%) of the total leased square footage
covered by such Significant Tenants' Leases (85%) with respect to each of
preceding clauses (i) and (ii), the "Required Percentage"); provided, however,
if such Contributor is unable to obtain the aforesaid tenant estoppel
certificates from Tenants or Significant Tenants (as the case may be) occupying
the Required Percentage, such Contributor may, but shall not be obligated to,
provide a certificate to Spieker, with respect to such missing estoppel
certificates, as chosen by Spieker, representing those Tenants or Significant
Tenants (as the case may be) whose Leases cover not more than
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ten percent (10%) of the total leased square footage of such Property or number
of Significant Tenants at such Property, as applicable, to equal or exceed the
difference between the Required Percentage and the percentage of the gross
leasable area or number of Significant Tenants, as applicable, covered by the
estoppel certificates received by Spieker as to all other Tenants or Significant
Tenants (as the case may be) to the effect that: (i) the Leases for those
Tenants or Significant Tenants (as the case may be) are in full force and
effect; (ii) the amount of the Tenants' or Significant Tenants' security
deposits; (iii) the dates through which rent has been paid; (iv) neither such
Contributor nor, to such Contributor's knowledge, any of those Tenants or
Significant Tenants (as the case may be) is in default thereunder; (v) a true,
correct and complete copy of the Leases are attached. Spieker shall be obligated
to accept such Contributor's certification in lieu of any missing estoppel
certificates up to such ten percent (10%) level. Such Contributor's
representations and warranties in any such certificate shall survive the Closing
until the Expiration Date.
(b) Contributors shall use all reasonable efforts (without incurring
any additional expense) to obtain as soon as practicable estoppel certificates
from the ground lessor of each Contribution Ground Lease, substantially in the
form attached hereto as Exhibit X. It shall be a condition to Spieker's
obligation to close the transactions contemplated herein with respect to a
Ground Leasehold Property that on or before the applicable Closing Date the
applicable Contributor delivers to Spieker a ground lessor estoppel certificate
with respect to each Contribution Ground Lease that confirms (i) that the
Contribution Ground Lease is in full force and effect, (ii) the dates through
which rent has been paid, and (iii) that, to the lessor's knowledge, no party
thereto is in default.
SECTION 8.5 PRORATIONS
(a) Rents, including percentage rents, escalation charges for Real
Estate Taxes, parking charges, operating expenses, maintenance escalation rents
or charges, cost-of-living increases or other charges of a similar nature
("Additional Rents"), and any additional charges and expenses payable under
Leases, regardless of whether or not the same has been paid for the month of
Closing; Real Estate Taxes and personal property taxes, including refunds with
respect to the current tax year received subsequent to the applicable Closing,
if any; the current installment (only) of any improvement bond or assessment
that is a lien on any Property or that is pending and may become a lien on any
Property; water, sewer and utility charges; amounts payable under any Assumed
Contract or Contribution Ground Lease; debt service under the New York Life Loan
(in the event that New York Life consents to the contribution of the applicable
Property to Spieker subject to such debt and Spieker accepts contribution of
such Property subject to such debt as of the applicable Closing), annual permits
and/or inspection fees (calculated on the basis of the period covered); and any
other income or expenses relating to the operation and maintenance of each
Property (other than any Leasing Costs and free rent which shall be prorated as
provided in Section 7.2), shall all be prorated as of 12:01 a.m. Pacific
Standard Time on the applicable Closing Date, on the basis of a 365-day year,
with Spieker deemed the owner of the applicable Properties on the entire Closing
Date. Any delinquent rents or expense reimbursements collected after the Closing
shall be applied as follows (after deducting reasonable costs of collection):
(A) first
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to the calendar month in which the Closing Date occurs; (B) then to obligations
due and unpaid accruing after the calendar month in which the Closing Date
occurs; and (C) then to unpaid rent accruing prior to the calendar month in
which the Closing Date occurs. Spieker shall use reasonable efforts for six (6)
months after the applicable Closing Date to collect any delinquent rents that
accrued prior to the Closing Date, provided that in no event shall Spieker be
required to sue any Tenant, terminate any Lease or threaten to do same (but the
Contributors shall have the right to commence and pursue litigation against any
Tenant to collect delinquent rents and/or expense reimbursements, provided that
(i) the Contributors may not seek as a remedy in any such litigation the
termination of any Leases or the dispossession of any Tenant, (ii) the
Contributors may not initiate such litigation prior to the expiration of such
six (6) month period and (iii) the Contributors shall not initiate litigation
with respect to any Tenant where the amount in dispute is less than twenty-five
thousand dollars ($25,000.00). Each Contributor agrees to forward any rents
received by it after the Closing Date to Spieker for application in accordance
with the provisions hereof. The amount of any security deposits that are
required to be returned to Tenants under Leases, as well as any prepaid rents,
shall be credited against the Adjusted Contribution Amount (and the Contributors
shall be entitled to retain such security deposits and prepaid rents).
Notwithstanding the foregoing terms of this Section 8.5(a), no Contributor shall
have any obligation to pay (and Spieker shall not receive a credit at Closing
for) any Real Estate Taxes, personal property taxes or any other expense
relating to the operation and maintenance of any Property, to the extent that
Spieker is entitled to receive after Closing reimbursement of such amounts from
Tenants under the Leases. With respect to all expense reimbursements and
recoveries from Tenants, to the extent that any Contributor has collected from
the Tenants amounts in excess of that owed by the Tenants under the terms of
their Leases with respect to the period prior to the Closing Date, Spieker shall
receive a credit at Closing in the amount of such over-collection. In the event
any Property has been assessed for property taxes purposes at such rates as
would result in reassessment (i.e., "escape assessment" or "roll-back taxes")
based upon the change in land usage or ownership of such Property resulting from
or after the consummation of the transactions described in this Agreement, as
between Spieker and Contributors, Spieker hereby agrees to pay all such taxes.
(b) The Contributors and Spieker hereby agree that if any of the
aforesaid prorations cannot be calculated accurately on the Closing Date
(including if any supplemental assessments are issued after the Closing as a
result of events occurring prior to the Closing), then the same shall be
calculated as soon as reasonably practicable after the Closing Date, and that if
any Tenant is required to pay Additional Rents and such Additional Rents are not
finally adjusted between the landlord and tenant under the applicable Lease
until after the end of the 1997 calendar year, then such prorations shall be
calculated as soon as reasonably practicable after such Additional Rents have
been finally adjusted. Either party owing the other party a sum of money based
on proration(s) calculated after the Closing Date shall promptly pay said sum to
the other party, together with interest thereon at the rate of two percent (2%)
per annum over the Prime Rate from the date received to the date of payment, if
payment is not made within ten (10) days after delivery of a bill therefor,
provided that if any amounts are owing to the Contributors, the Contributors
shall have the right to elect to
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receive such amounts in the form of OP Units, which OP Units shall be valued in
the manner set forth in Section 2.4(b). If the real estate and/or personal
property tax rate and assessments have not been set for the calendar year in
which the Closing occurs, then the proration of such taxes shall be based upon
the rate and assessments for the preceding calendar year, and such proration
shall be adjusted between the applicable Contributor and Spieker as soon as
reasonably practicable after such tax rate or assessment has been set.
(c) Spieker shall calculate the prorations contemplated by Section
8.5(b). Contributors and their representatives and auditors shall be afforded
the opportunity to review all underlying financial records and work papers
pertaining to the preparation of Spieker's proration statements, and Spieker
shall permit Contributors and their representatives and auditors during regular
business hours and upon reasonable prior written notice to have reasonable
access to the books and records in the possession of Spieker or any party to
whom Spieker has given custody of the same relating to the Properties to permit
the Contributors to review Spieker's proration statements. Spieker's proration
statements shall be final and binding for purposes of this Agreement unless a
Contributor shall in good faith give written notice to Spieker of disagreement
with the prorations contained therein within sixty (60) days following its
receipt of Spieker's proration statements, specifying in reasonable detail the
nature and extent of such disagreement; provided that if all such good faith
disagreements with all Contributors total less than $25,000 in the aggregate, no
further adjustments will be made. If Spieker and the applicable Contributor are
unable to resolve any disagreement with respect to Spieker's proration
statements within ten (10) Business Days following receipt by Spieker of the
notice referred to above and the total amount remaining in dispute is greater
than twenty-five thousand dollars ($25,000), either party may pursue any remedy
available for the resolution of such dispute. If the total amount remaining in
dispute is no more than twenty-five thousand dollars ($25,000), the dispute
shall be deemed to have been resolved in favor of Spieker's proration statements
prepared by Spieker and as modified to reflect the resolution of the disputes,
if any, upon which the parties have agreed.
(d) Notwithstanding anything to the contrary herein, to the extent
set forth in Section 8.6, the Contributors reserve the right to protest any Real
Estate Taxes relating to the period prior to the Closing Date and to receive and
retain any refunds on account of such Real Estate Taxes.
(e) Any deposits, impounds, or other cash or cash equivalent
collateral held by the lender under any Existing Indebtedness shall be paid over
and belong to the applicable Contributor upon the satisfaction of such Existing
Indebtedness and the Closing of the contribution of the Property to which it
relates, and the same shall not be taken into account in connection with any
calculations under Section 2.4 above.
(f) All proration credits to which either party may become entitled
hereunder shall be paid in cash, and shall not adjust the amounts calculated
under Section 2.4(b) above.
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(g) The obligations of the Contributors and Spieker under this
Section 8.5 shall survive the Closing.
SECTION 8.6 TAX CERTIORARI PROCEEDINGS. The Contributors are hereby
authorized, but not obligated, to (a) commence (prior to the applicable Closing
Date) or continue (after the Effective Date and after the Closing Date) any
proceeding for the reduction of the assessed valuation of any Property for any
tax year which, in accordance with the laws and regulations applicable to such
Property, requires that, to preserve the right to bring a tax certiorari
proceeding with respect to such tax year, such proceeding be commenced prior to
the Closing Date and (b) endeavor to settle any such proceeding in the
Contributors' discretion, provided, however, that if such proceeding is (i) for
a tax year in which the Closing Date occurs or would affect such tax year or any
subsequent tax year, such settlement shall not be made without Spieker's prior
consent, which consent shall not be unreasonably withheld or delayed, and (ii)
for a tax year which commences after the Closing Date, the right to continue and
settle such proceeding, including any contracts or agreements with tax
certiorari counsel with respect to any such tax year, shall be deemed assigned
to and assumed by Spieker at the Closing. After the Closing, with respect to any
Property, (i) the Contributors shall retain all rights (subject to any rights of
Tenants under their Leases) with respect to any tax year ending prior to the tax
year (and all refunds relating thereto) in which the Closing Date occurs, and
shall have the sole right to participate in and settle any proceeding relating
thereto (provided, that such settlement does not affect the assessed tax value
for any subsequent tax year), and (ii) Spieker shall have all rights (subject to
any rights of Tenants under their Leases) with respect to any tax year (and all
refunds relating thereto) which ends after the Closing Date; provided, however,
that if the proceeding is for a tax year in which the Closing Date occurs, such
settlement shall not be made without Spieker's prior consent, which consent
shall not be unreasonably withheld or delayed. With respect to any such
proceeding for a tax year in which the Closing Date occurs (whether commenced by
the Contributors or Spieker), any refund or credit of taxes for such tax year
shall be applied first to the unreimbursed out-of-pocket expenses, including
reasonable counsel fees, necessarily incurred in obtaining such refund or
credit, and second, to any Tenant entitled to same, and the balance shall be
apportioned between the Contributors and Spieker as of the Closing Date in
accordance with the proportion of the applicable tax year occurring before and
after the Closing Date. In each case, the party which prosecuted the proceeding
shall deliver to the other copies of receipted tax bills and any decision or
settlement agreement evidencing the reduction in taxes. If any refund shall be
received by the Contributors which is for the account of Spieker as provided in
this Section 8.6, then the Contributors shall hold Spieker's share thereof in
trust for Spieker and, promptly upon receipt thereof, pay such share to Spieker
or any other party entitled to same as provided above. If any refund shall be
received by Spieker which is for the account of the Contributors as provided in
this Section 8.6, then Spieker shall hold Contributors' share thereof in trust
for the Contributors and, promptly upon receipt thereof, pay such share to the
Contributors or any other party entitled to same as provided above. Each party
shall execute any and all consents or other documents as may be reasonably
necessary to be executed by such party so as to permit the other party to
commence or continue any tax certiorari proceeding which such other party is
authorized to commence or continue pursuant to the terms of this Section 8.6, or
to collect
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any refund or credit with respect to any such tax proceeding. The provisions of
this Section 8.6 shall survive the Closing.
SECTION 8.7 CLOSING COSTS. Subject to Section 2.4(b) above, Contributors
shall pay all real property transfer taxes, the premiums for the Title Policies
that are properly allocable to the CLTA portion thereof and fifty percent (50%)
of all escrow and recording and notary fees. Spieker shall pay the portion of
the premiums for the Title Policies that are properly allocable to the ALTA
portion (as well as the cost of the endorsements, other than any endorsements
that are proffered by Contributors to insure over title defects), and fifty
percent (50%) of all escrow and recording and notary fees. Notwithstanding the
forgoing to the contrary, Spieker shall pay for all premiums for the Title
Policies and all endorsement costs (other than for endorsements that are
proffered by Contributors to insure over title defects) with respect to all
Properties located in Foster City, California. The parties hereto acknowledge
and agree that no portion of the Adjusted Contribution Amount is allocated to
any Personal Property. Any other closing costs not specifically provided for in
this Section 8.7 shall be allocated between Contributors and Spieker in
accordance with the customs of the respective counties in which the Properties
are located. The provisions of this Section 8.7 shall survive the Closing.
SECTION 8.8 CC&R MATTERS. At the First Closing, the applicable
Contributors and Spieker shall execute and deliver in recordable form
instruments in form reasonably satisfactory to such parties (i) to convey to
Spieker all rights of the "Declarant" under each of the Santa Monica CC&Rs
(subject to a reversion and assignment to SC Enterprises or its successors as
the fee owner of the applicable Ground Lease Parcel in the event that the
applicable Spieker Ground Lease Agreement terminates), (ii) to provide that the
"Declarant" under each of the Foster City C&Rs shall not exercise any of its
rights under the Foster City CC&Rs to the extent such exercise of rights would
have any adverse effect on any of the Foster City Properties without the prior
approval of Spieker (such approval not to be unreasonably, withheld, delayed or
conditioned) and (iii) to implement the resignation of Town Center East, a
California general partnership, as "Manager" under each of the Foster City
CC&Rs, and to appoint Spieker as such "Manager," all in the manner prescribed by
such Foster City CC&Rs (subject to "reversion" (i.e., resignation and
appointment as aforesaid), to (x) the owner of the "retail" Ground Lease Parcel
located in Foster City in the event that the "retail" Foster City Spieker Ground
Lease Agreement terminates, and (y) the owner of the largest non-"retail" Ground
Lease Parcel located in Foster City in the event that one or more of the
non-"retail" Spieker Ground Lease Agreements covering a majority of the
aggregate rentable square footage of the improvements on such Ground Lease
Parcels terminate). In addition, at the First Closing, Spieker and SC
Enterprises shall take all reasonable actions in their power to vest in Spieker
all of the rights, powers and obligations of the "Committee" under each of the
Santa Monica CC&Rs (subject to "reversion" (i.e., resignation and appointment as
aforesaid) to the fee owner of the applicable Ground Lease Parcel in the event
that the applicable Spieker Ground Lease Agreement terminates).
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ARTICLE IX
CERTAIN TAX MATTERS
SECTION 9.1 PROTECTION OF NEGATIVE CAPITAL ACCOUNTS
(a) It is the intent of the parties that the Applicable Partners be
able to defer taxes fully as a result of the contribution of the Properties. The
Contributors and the Applicable Partners have disclosed to Spieker that if,
following a Closing, Spieker takes one of the following restricted actions (the
"Restricted Actions"): (i) makes any taxable sale, transfer, exchange,
distribution or other taxable disposition of a Property (or any substituted
basis property for the Property as defined and specified in Treasury Regulations
'1.704-3(a)(8)), or (ii) reduces the principal balance of the Original Spieker
Unsecured Debt or Traceable Debt (or Acceptable Replacement Debt thereto) to
which some or all of the individual Contributors and the constituent partners,
shareholders or members of the Contributors (collectively, the "Applicable
Partners") have executed either guarantees in the forms attached hereto as
Exhibit Y (relating to present Spieker publicly-traded, unsecured debt with a
remaining maturity date at the time of guaranty of not more than ten (10) years
("Original Spieker Unsecured Debt") and Exhibit Z (relating to the Traceable
Debt) (collectively, the "Guarantees"), or Replacement Guarantees, in a manner
that would cause any Applicable Partner's share of such debt (or Acceptable
Replacement Debt) under the Code to be reduced below the amount which has been
guaranteed by the Applicable Partner under the Guarantees (or Replacement
Guarantees), or (iii) causes or permits the modification of the terms of that
debt (or Acceptable Replacement Debt) or of the Guarantees (or Replacement
Guarantees) in such a manner that would cause any Applicable Partner's share of
such debt (or Acceptable Replacement Debt) under the Code to be reduced below
the amount which has been guaranteed by the Applicable Partner under the
Guarantees (or Replacement Guarantees), then the Applicable Partner may
recognize substantial amounts of taxable income or gains under the Code, unless,
in the case of an event described in item (ii) or (iii) above, the Applicable
Partner is provided a reasonable opportunity to execute Replacement Guarantees
with respect to Acceptable Replacement Debt of Spieker at least equal to such
reduction. Spieker agrees to give the Applicable Partners written notice at
least twenty (20) Business Days prior to any of the events or occurrences
described in this Section 9.1(a).
(b) To protect and preserve the basis and at risk amounts relating
to the negative tax capital accounts of the Applicable Partners (the "Negative
Accounts"), Spieker hereby covenants that it (i) shall maintain Original Spieker
Unsecured Debt and Traceable Debt (or Acceptable Replacement Debt thereto) in an
amount (the "Minimum Debt Level") that is equal to or greater than the Negative
Accounts immediately after the transactions contemplated at the First and Second
Closings (as set forth on Schedule 9.1(b) hereto), and (ii) shall not take any
Restricted Action, in each case for a period of ten (10) years from and after
the applicable Closing (the "Initial Protection Period"); provided that such
period shall be automatically extended for another ten (10) years (the
"Additional Protection Period," and together with the Initial Protection Period,
the "Full Protection Period") unless a Contributor affirmatively elects in
writing, within fifteen (15) Business Days prior to the expiration of the
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Initial Protection Period, not to participate in the extension. The Minimum Debt
Level shall initially be $132,203,085. The Minimum Debt Level shall be allocated
to each of the Applicable Partners (the Applicable Partner's "Allocable Minimum
Debt Level") as set forth in Schedule 9.1(b) hereto. Notwithstanding the
foregoing, an Applicable Partner's Allocable Minimum Debt Level shall be
appropriately reduced upon the redemption of the OP Units of the Applicable
Partner for cash or Shares and shall be reduced dollar-for-dollar (but not below
zero) by any increase in the federal tax basis of the OP Units of the Applicable
Partner (or of his estate, transferee or successor-in-interest) by reason of
death or the taxable transfer of such OP Units by the Applicable Partner to such
transferee or successor-in-interest. The Minimum Debt Level will also be reduced
by an amount identical to that of the reduction of the Applicable Partner's
Allocable Minimum Debt Level provided that such reduction shall not reduce the
Minimum Debt Level allocable to the other Applicable Partners. In addition,
Spieker agrees to borrow, at the time of the First Closing, an amount equal to
$26,026,500 from a lender mutually acceptable to the parties on an unsecured
basis under Spieker's Existing Trust Indenture ("Traceable Debt"). Such
Traceable Debt shall be pari passu in right of payment to all other existing
Spieker publicly-traded unsecured debt and shall have a maturity date of at
least eight (8) years, but no more than ten (10) years after the First Closing
Date. Any proceeds of the Traceable Debt shall be directly traceable to any
amounts distributed to certain Contributors as set forth in Section 2.4(b)(v)
hereof and the Concurrent Transactions Exhibit. The amount of Original Spieker
Unsecured Debt and Traceable Debt guaranteed by the Applicable Partners shall be
separately set forth on Schedule 9.1(b). Without otherwise diminishing any
rights of any Applicable Partner, or any obligations of Spieker, under Section
9.1 hereof, during the Full Protection Period, each of the Applicable Partners
shall have the right, but not the obligation, to execute Guarantees or
Replacement Guarantees in respect of Original Spieker Unsecured Debt or
Acceptable Replacement Debt with a maturity date occurring after the expiration
of the Full Protection Period ("Additional Maturity Date Debt"), but only to the
extent such Additional Maturity Date Debt is otherwise available for the
Applicable Partner to so guarantee. Nothing contained in the immediately prior
sentence shall be construed in any manner as requiring Spieker to (1) incur,
before or after the Full Protection Period, any Additional Maturity Date Debt,
or (2) maintain, after the Full Protection Period, any Additional Maturity Date
Debt that has been guaranteed during the Full Protection Period by an Applicable
Partner.
(c) As a material inducement to the Contributors to enter into this
Agreement, Spieker covenants that if Spieker takes any Restricted Action within
the Full Protection Period ("Tax Default"), then (unless in the case of a
Restricted Action described in (ii) or (iii) of Section 9.1(a) above, the
Applicable Partners are provided a reasonable opportunity (which shall not be
less than ten (10) Business Days) prior to such event to execute Replacement
Guarantees of Acceptable Replacement Debt), Spieker shall be liable to each
Applicable Partner in an amount equal to any damages suffered by the Applicable
Partner (including reasonable attorneys' fees and costs, and interest on the
amount of damages owed by Spieker from the date the Applicable Partner paid such
damages to the time Spieker pays such amounts to the Applicable Partner at the
rate(s) established from time to time under Section 6621(a) of the Code)
provided that in no event shall any Contributor or Applicable Partner have any
right to enjoin, delay, prevent or impede any action that Spieker may take
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in breach of its obligations under Sections 9.1(a) and 9(b) above, and each
Contributor and Applicable Partner hereby waives any and all rights and remedies
it may have in equity with respect to any such breach by Spieker, but will
retain any and all rights and remedies to recover damages at law as set forth in
this Section 9.1(c) with respect to such breach. After the Full Protection
Period, the Applicable Partners shall be afforded the right to guarantee Spieker
debt on a pro rata basis with all other "GA Limited Partners" as set forth in
that certain Guaranty Agreement dated as of October 13, 1997 among Spieker, the
REIT and certain limited partners in Spieker.
(d) (i) As used herein, "Acceptable Replacement Debt" shall mean any
debt of Spieker having each of the following characteristics as of the date
Spieker presents a prospective Acceptable Replacement Debt to the Contributors:
(A) The debt is not in default or delinquent in
any respect;
(B) The incurrence of such debt shall not put
Spieker in default under any other agreement, including the Indenture, dated as
of December 6, 1995, between Spieker, the REIT and State Street Bank and Trust
Company (or First Trust of California, or any other successor trustee), as
supplemented through the Effective Date (the "Existing Indenture");
(C) The lender has required that, or otherwise
provided for, the guarantee of the debt by one or more Persons; and
(D) The debt meets the conditions set forth in
items (A), (B) or (C) of Section 9.1(d)(ii) and is available for the Applicable
Partners to guarantee.
(ii) Subject to the conditions set forth in the definition
of Acceptable Replacement Debt in Section 9.1(d)(i), the following categories of
debt will be considered Acceptable Replacement Debt, it being understood and
agreed by the parties that such categories are presented in descending order of
preference, and that debt that falls into a category of lower preference shall
not be utilized as Acceptable Replacement Debt unless and until Spieker has
provided a certificate signed by the president or chief financial officer of the
REIT certifying that, in the good faith belief of such officer, Spieker is
unable to obtain debt in any higher preference category:
(A) publicly-traded, unsecured debt of Spieker
which, at the time of guarantee, is investment grade and has a remaining
maturity of not more than ten (10) years;
(B) at the election of Spieker, in its sole and
absolute discretion, either (1) debt borrowed by Spieker from an unrelated
party, secured by one or more Spieker properties, provided (a) the interest rate
on such debt is no greater than the interest rate that would be obtainable on
newly-issued Spieker unsecured debt with a comparable maturity date, and (b) the
debt service and financial ratio covenants set forth in Spieker's Existing
Indenture will be satisfied with respect to such debt at the time of guarantee
by the
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Applicable Partners, taking into account the debt service, income, expenses,
reserves and assets relating solely to the Spieker properties serving as
collateral for such debt; or (2) debt borrowed by Spieker from an Affiliate,
secured by one or more Spieker properties, provided (a) the debt service and
financial ratio covenants set forth in Spieker's Existing Indenture will be
satisfied with respect to such debt at the time of guarantee by the Applicable
Partners, taking into account the debt service, income, expenses, reserves and
assets relating solely to the Spieker properties serving as collateral for such
debt, and (b) that the tax adviser to the Applicable Partners is able to opine
that such debt will be treated as indebtedness for federal income tax purposes
and that there has been no change in current law (including provisions of the
Code, Treasury Regulations promulgated thereunder, published pronouncements of
the IRS and case law) causing the Applicable Partners to not be "at risk" under
Section 465 of the Code by reason of the relationship of the lender to borrower
or the lender (or a related person thereto) possessing an interest (other than
as a creditor) in any activity of Spieker or its Affiliates;
(C) debt borrowed by Spieker from an unrelated
party, secured by one or more Spieker properties, provided (1) such debt can be
obtained on "commercially reasonable terms" and (2) the debt service and
financial ratio covenants set forth in Spieker's Existing Indenture will be
satisfied, at the time of guarantee by the Applicable Partners, taking into
account the debt service, income, expenses, reserves and assets relating solely
to the Spieker properties serving as collateral for such debt.
(e) As used herein, the term "Replacement Guarantees" shall mean (i)
with respect to Acceptable Replacement Debt described in Section 9.1(d)(ii)(A),
a guarantee substantially in the form of the Guarantees as set forth in Exhibit
Y, and (ii) with respect to Acceptable Replacement Debt described in Section
9.1(d)(ii)(B) or (C), a guarantee substantially in the form of the Guarantees as
set forth in Exhibit Z, except that the lender of such Acceptable Replacement
Debt shall be permitted to proceed directly against the Applicable Partner
guarantors, but only after exhausting its remedies against the Spieker
properties serving as collateral for the Acceptable Replacement Debt that has
been so guaranteed.
SECTION 9.2 BOOK-TAX-DISPARITY. Promptly following the execution hereof,
Contributors shall prepare a schedule detailing the gross asset value and
adjusted tax basis for federal income tax purposes of each of the Contributed
Properties (and any separate property thereof); provided that such schedule
shall be consistent with the Adjusted Contribution Amount for each Contributed
Property and the valuation of each separate property thereof shall be
reasonable. The difference between such gross asset value of the Contributed
Properties (and any separate portion thereof) and all adjusted tax basis for
each such property (or separate property thereof) is referred to herein as the
"Book/Tax Disparity." This Book/Tax Disparity as set forth in this schedule
shall be used for purposes of applying the traditional method hereunder in
accordance with Section 3(c) of Exhibit B of the Spieker Partnership Agreement.
Spieker shall elect the traditional method of Treasury Regulations Section
1.704-3 for purposes of applying the provisions of Section 704(c) of the Code to
reduce the Book-Tax Disparity of each Contributed Property (or separate property
thereof) as reflected
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on Schedule 9.2. Spieker agrees to apply the provisions of Code Section 704(c)
on a strict property by property basis.
SECTION 9.3 TAX RETURN REVIEW. In order to monitor compliance with the
strict property by property methodology described in Section 9.2, Spieker will
allow the Contributors' tax accountants to review relevant schedules and
portions of Spieker's tax returns within a reasonable period of time after
filing.
SECTION 9.4 REIT STATUS. In addition to access to its tax returns
required under Section 9.3, prior to the Closing Date for the First Closing,
Spieker will provide the Contributors or their tax accountants and counsel with
access to any materials, information and/or records reasonably requested to
confirm the REIT's qualification as a real estate investment trust; provided
that such returns, materials, information or records are presently in existence
and would not be unreasonably burdensome, time consuming or expensive for
Spieker or the REIT to produce.
SECTION 9.5 TERMINATION TRANSACTION. Notwithstanding anything to the
contrary contained in the Spieker Partnership Agreement, if the REIT and/or
Spieker engage in any merger, consolidation or other combination with or into
another Person, sale of all or substantially all of its assets, or any
reclassification, recapitalization or change of its outstanding equity interests
during the Full Protection Period (a "Termination Transaction"), without
diminishing any rights of any Applicable Partner, or any obligations of Spieker,
under Section 9.1 above, the REIT and Spieker agree to use their best efforts to
accomplish the Termination Transaction and all related transactions in manner
that provides tax-deferred or non-taxable treatment for the Contributors and the
Applicable Partners, provided that in no event shall any Contributor or
Applicable Partner have any right to enjoin, delay, prevent or impede any such
Termination Transaction, and each Contributor and Applicable Partner hereby
waives any and all rights and remedies it may have in equity with respect to any
breach by Spieker of any of its obligations under this Section 9.5, but will
retain any and all rights and remedies to recover damages at law in the event
that Spieker breaches this Section 9.5 (including reasonable attorneys' fees and
costs, and interest on the amount of damages owed by Spieker from the date the
Applicable Partner paid such damages to the time Spieker pays such amounts to
the Applicable Partner at the rate(s) established from time to time under
Section 6621(a) of the Code), or as set forth in Section 9.1(c) above if such
Termination Transaction results in Spieker breaching any of its obligations set
forth in Section 9.1(a) or (b) above.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 NOTICES. Any notices required or permitted to be given
hereunder shall be given in writing and shall be delivered (a) in person, (b) by
certified mail, postage prepaid, return receipt requested, (c) by a commercial
overnight courier that guarantees next
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day delivery and provides a receipt, or (d) by legible facsimile (followed by
hard copy delivered in accordance with preceding subsections (a)-(c)), and such
notices shall be addressed as follows:
To Spieker:
Spieker Properties, L.P.
2180 Sand Hill Road, Suite 200
Menlo Park, California 94025
Attn: Eli Khouri
Sara Reynolds, Esq.
Facsimile No. (650) 233-3838
with copies to:
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111-3143
Attn: David S. Fries, Esq.
Facsimile No. (415) 773-5759
To the Contributors:
SC Enterprises
2377 Crenshaw Boulevard, Suite 300
Torrance, California 90501
Attn: Shurl Curci
Facsimile No.: (310) 782-8428
with a copy to:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, CA 90071
Attn: Frederick B. McLane, Esq.
Facsimile No.: (213) 669-6407
or to such other address as either party may from time to time specify in
writing to the other party. Any notice shall be effective only upon receipt (or
refusal by the intended recipient to accept delivery).
SECTION 10.2 ENTIRE AGREEMENT. This Agreement, together with the Exhibits
and Schedules hereto, contains all representations, warranties and covenants
made by Spieker and the Contributors and constitutes the entire understanding
between the parties hereto with
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respect to the subject matter hereof. Any correspondence, memoranda or
agreements between the parties, including the Confidentiality Agreement, the
Letters of Intent, or any oral or written statements made by a Contributor, its
Affiliates, consultants, contractors, partners, members, officers, employees or
agents, are not binding on or enforceable against any party, and are superseded
and replaced in total by this Agreement together with the Exhibits and Schedules
hereto.
SECTION 10.3 TIME. Time is of the essence in the performance of each of
the parties' respective obligations contained herein.
SECTION 10.4 ATTORNEYS' FEES. If either party hereto fails to perform any
of its obligations under this Agreement or if any dispute arises between the
parties hereto concerning the meaning or interpretation of any provision of this
Agreement, then the defaulting party or the party not prevailing in such
dispute, as the case may be, shall pay any and all costs and expenses incurred
by the other party on account of such default and/or in enforcing or
establishing its rights hereunder, including court costs (including costs of any
trial or appeal therefrom) and reasonable attorneys' fees and disbursements.
SECTION 10.5 NO MERGER. The obligations contained herein, the performance
of which is contemplated after the Closing, shall not merge with the transfer of
title to the Properties but shall remain in effect until fulfilled.
SECTION 10.6 ASSIGNMENTS. Spieker's rights and obligations hereunder
shall not be assignable without the prior written consent of the Contributors
(which consent may be granted or withheld in the sole and absolute discretion of
the Contributors). Subject to the limitations described herein, this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns.
SECTION 10.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
SECTION 10.8 GOVERNING LAW; JURISDICTION AND VENUE
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA.
(b) For the purposes of any suit, action or proceeding involving
this Agreement, each party hereto hereby expressly submits to the jurisdiction
of all federal and state courts sitting in the State of California and consents
that any order, process, notice of motion or other application to or by any such
court or a judge thereof may be served within or without such court's
jurisdiction by registered mail or by personal service, provided that a
reasonable time for appearance is allowed, and each party hereto agrees that
such courts shall have the exclusive jurisdiction over any such suit, action or
proceeding commenced by any
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party. In furtherance of such agreement, each party hereto agrees upon the
request of any other party hereto to discontinue (or agree to the discontinuance
of) any such suit, action or proceeding pending in any other jurisdiction.
(c) Each party hereto hereby irrevocably waives any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any federal
or state court sitting in the State of California and hereby further irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
SECTION 10.9 CONFIDENTIALITY AND RETURN OF DOCUMENTS
(a) As a condition to Contributors' agreement to furnish and/or
disclose Contributors' Evaluation Material (as defined below) to Spieker and its
Affiliates and representatives for review and inspection, Spieker (on behalf of
itself and its Affiliates and representatives) hereby agrees to be bound by the
terms set forth in this Section 10.9(a).
(i) "Contributors' Evaluation Material" shall include all
documents, and other written or oral information, as well as diskettes and other
forms of electronically transmitted data, furnished to Spieker or its officers,
directors, employees, agents, advisors, Affiliates or representatives
(collectively "Representatives") by the Contributors or their Affiliates
relating to the Properties, as well as written memoranda, notes, analyses,
reports, compilations, or studies prepared by Spieker or its Representatives (in
whatever form of medium) that contain, or are derived from, such information
provided by the Contributors. Notwithstanding the foregoing, information
provided by the Contributors shall not constitute "Contributors' Evaluation
Material" if such information (i) is or becomes generally available to the
public other than as a result of a disclosure by or through Spieker or its
Representatives in contravention of this Section 10.9(a), or (ii) is or becomes
available to Spieker from a source (other than the Contributors) not bound, to
the knowledge of Spieker, by any legal or contractual obligation prohibiting the
disclosure of Contributors' Evaluation Material by such source to Spieker.
(ii) Spieker agrees that it and its Representatives will
use Contributors' Evaluation Material exclusively for the purpose of evaluating
the merits of a possible acquisition or leasing of the Properties as
contemplated by this Agreement and not for any other purpose whatsoever. Spieker
(on behalf of itself and its Representatives) further agrees that it will not
disclose any of Contributors' Evaluation Material or use it to the detriment of
the Contributors or their Affiliates; provided, however, that Spieker may
without liability disclose Contributors' Evaluation Material (x) to any
Representative of Spieker who needs to know such Contributors' Evaluation
Material for the purpose of evaluating the transactions described in this
Agreement involving the Contributors and the Properties and Spieker (it being
understood and agreed that Spieker shall be fully responsible for any
disclosures by any such Person) and (y) pursuant to administrative order or as
otherwise required by law.
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(iii) In the event that Spieker desires to disclose
Contributors' Evaluation Material under the circumstances contemplated by clause
(y) of the preceding paragraph, Spieker will (x) provide the Contributors with
prompt notice thereof, (y) consult with the Contributors on the advisability of
taking steps to resist or narrow such disclosure, and (z) cooperate with the
Contributors (at the Contributors' cost) in any attempt that the Contributors
may make to obtain an order or other reliable assurance that confidential
treatment will be accorded to designated portions of Contributors' Evaluation
Material.
(iv) Spieker agrees that, in the event this Agreement is
terminated prior to the consummation of the transactions contemplated hereunder,
all written Contributors' Evaluation Material and all copies thereof will be
returned to the Contributors promptly upon the Contributors' request. All
analyses, compilations, studies or other documents prepared by or for Spieker
and reflecting Contributors' Evaluation Material or otherwise based thereon will
be (at Spieker's option) either (x) destroyed or (y) retained by Spieker in
accordance with the confidentiality restrictions set forth in this Section
10.9(a).
(v) Spieker acknowledges that significant portions of the
Contributors' Evaluation Material are proprietary in nature and that the
Contributors and their Affiliates would suffer significant and irreparable harm
in the event of the misuse or disclosure of Contributors' Evaluation Material.
Without affecting any other rights or remedies that either party may have,
Spieker acknowledges and agrees that the Contributors shall be entitled to seek
the remedies of injunction, specific performance and other equitable relief for
any breach, threatened breach or anticipatory breach of the provisions of this
Agreement by Spieker or its Representatives.
(vi) Spieker agrees to indemnify and hold harmless the
Contributors from and against all loss, liability, claim, damage and expense
arising out of any breach of this Section 10.9(a) by Spieker or any of its
Representatives.
(vii) This Section 10.9(a) shall survive, if the Closing
does not occur, any termination of this Agreement, but shall terminate upon the
Closing.
(b) The parties hereto acknowledge that Spieker has furnished and/or
disclosed to Contributors and their Affiliates and representatives for review
and inspection certain Spieker's Evaluation Material (as defined below), and, in
connection therewith, Contributors (on behalf of themselves, and their
respective Affiliates and representatives) hereby agree to be bound by the terms
set forth in this Section 10.9(b).
(i) "Spieker's Evaluation Material" shall include all
documents, and other written or oral information, as well as diskettes and other
forms of electronically transmitted data, furnished to Contributors or their
Representatives by Spieker, the REIT or their Affiliates relating to Spieker or
the REIT, as well as written memoranda, notes, analyses, reports, compilations,
or studies prepared by Contributors or their Representatives (in whatever form
of medium) that contain, or are derived from, such information provided by
Spieker, the REIT, or their Affiliates. Notwithstanding the foregoing,
information
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provided by Spieker shall not constitute "Spieker's Evaluation Material" if such
information (i) is or becomes generally available to the public other than as a
result of a disclosure by or through Contributors or their Representatives in
contravention of this Section 10.9(b), or (ii) is or becomes available to
Contributors from a source (other than the Spieker or the REIT) not bound, to
the knowledge of the Contributors, by any legal or contractual obligation
prohibiting the disclosure of Spieker's Evaluation Material by such source to
Contributors.
(ii) Contributors agree that they and their Representatives
will use Spieker's Evaluation Material exclusively for the purpose of evaluating
the merits of the transactions contemplated by this Agreement and not for any
other purpose whatsoever. Contributors (on behalf of themselves and their
Representatives) further agree that they will not disclose any of Spieker's
Evaluation Material or use it to the detriment of the Spieker, the REIT, or
their Affiliates; provided, however, that Contributors may without liability
disclose Spieker's Evaluation Material (x) to any Representative of Contributors
who needs to know such Spieker's Evaluation Material for the purpose of
evaluating the transactions described in this Agreement involving the
Contributors and Spieker (it being understood and agreed that Contributors shall
be fully responsible for any disclosures by any such Person) and (y) pursuant to
administrative order or as otherwise required by law.
(iii) In the event that Contributors desire to disclose
Spieker's Evaluation Material under the circumstances contemplated by clause (y)
of the preceding paragraph, Contributors will (x) provide Spieker with prompt
notice thereof, (y) consult with Spieker on the advisability of taking steps to
resist or narrow such disclosure, and (z) cooperate with Spieker (at Spieker's
cost) in any attempt that Spieker may make to obtain an order or other reliable
assurance that confidential treatment will be accorded to designated portions of
Spieker's Evaluation Material.
(iv) Contributors agree that all written forms of Spieker's
Evaluation Material and all copies thereof will be returned to Spieker promptly
upon Spieker's request. All analyses, compilations, studies or other documents
prepared by or for Contributors and reflecting Spieker's Evaluation Material or
otherwise based thereon will be (at Contributors' option) either (x) destroyed
or (y) retained by Contributors in accordance with the confidentiality
restrictions set forth in this Section 10.9(b).
(v) Contributors acknowledge that significant portions of
Spieker's Evaluation Material are proprietary in nature and that Spieker, the
REIT, and their Affiliates would suffer significant and irreparable harm in the
event of the misuse or disclosure of Spieker's Evaluation Material. Without
affecting any other rights or remedies that either party may have, Contributors
acknowledge and agree that Spieker shall be entitled to seek the remedies of
injunction, specific performance and other equitable relief for any breach,
threatened breach or anticipatory breach of the provisions of this Agreement by
Contributors or their Representatives.
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(vi) Contributors agree to indemnify and hold harmless
Spieker and the REIT from and against all loss, liability, claim, damage and
expense arising out of any breach of this Section 10.9(b) by Contributors or any
of their Representatives.
(vii) This Section 10.9(b) shall survive the Closing or any
termination of this Agreement.
(viii) Nothing contained in this Section 10.9(b) shall be
deemed to imply that Contributors shall have any due diligence rights or any due
diligence conditions with respect to Spieker, the OP Units or any other matter
not expressly set forth in this Agreement.
(c) Each Contributor and Spieker hereby covenant that (i) prior to
the Closing it shall not issue any press release or public statement (a
"Release") applicable with respect to the transactions contemplated by this
Agreement at such Closing without the prior consent of all parties to this
Agreement, except to the extent required by law or the regulations of the SEC,
and (ii) after the Closing, any Release issued by any Contributor or Spieker
shall be subject to the review and approval of all such parties (which approval
shall not be unreasonably withheld).
(d) Spieker acknowledges that all of the partners, shareholders or
members of each of the Contributors (and their constituent partners,
shareholders or members), as well as other interested parties, have been
informed of the transactions contemplated herein.
SECTION 10.10 INTERPRETATION OF AGREEMENT. The article, section and other
headings of this Agreement are for convenience of reference only and shall not
be construed to affect the meaning of any provision contained herein. Where the
context so requires, the use of the singular shall include the plural and vice
versa and the use of the masculine shall include the feminine and the neuter.
The term "person" shall include any individual partnership, joint venture,
corporation, trust, limited liability company, unincorporated association, any
other entity and any government or any department or agency thereof, whether
acting in an individual, fiduciary or other capacity.
SECTION 10.11 AMENDMENTS. This Agreement may be amended or modified only
by a written instrument signed by each of Spieker and TDC; provided that if any
such amendment or modification shall have a material and adverse impact on any
Contributor, in which event such instrument must also be signed by such
Contributor.
SECTION 10.12 NO RECORDING. Neither this Agreement nor any memorandum or
short form thereof may be recorded by Spieker.
SECTION 10.13 THIRD PARTY BENEFICIARY; CONTRIBUTORS' OBLIGATIONS
SEVERAL10.
(a) The provisions of this Agreement are not intended to benefit any
third parties other than the Applicable Partners and TDC. In the case of TDC, in
addition to the
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other benefits expressly provided in this Agreement, TDC shall be indemnified by
the Contributors against any Claims asserted against TDC arising out of this
Agreement.
(b) The obligations of the Contributors hereunder shall be several
and not joint with respect to each other Contributor and with respect to each
Property, and each Contributor shall only be responsible for all those
covenants, agreements, representations, warranties and indemnities made by the
Contributors hereunder to the extent within the control of such Contributor or
to the extent applicable to either such Contributor or the Property owned
directly or indirectly by such Contributor (provided that with respect to the
Property currently owned by BCIC, the applicable Contributors shall be liable
severally in proportion to their respective direct or indirect interests in
BCIC).
SECTION 10.14 SEVERABILITY. If any provision of this Agreement, or the
application thereof to any person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect.
SECTION 10.15 DRAFTS NOT AN OFFER TO ENTER INTO A LEGALLY BINDING
CONTRACT. The parties hereto agree that the submission of a draft of this
Agreement by one party to another is not intended by either party to be an offer
to enter into a legally binding contract with respect to the acquisition or
leasing of the Properties. The parties shall be legally bound with respect to
the acquisition of the Properties pursuant to the terms of this Agreement only
if and when the parties have been able to negotiate all of the terms and
provisions of this Agreement in a manner acceptable to each of the parties in
their respective sole discretion, including all of the Exhibits and Schedules
hereto, and each of each Contributor and Spieker have fully executed and
delivered to each other a counterpart of this Agreement, including all Exhibits
and Schedules hereto.
SECTION 10.16 FURTHER ASSURANCES. Each party shall, whenever and as
often as it shall be requested to do so by the other party, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, any and all
such other documents and do any and all other acts as may be necessary to carry
out the intent and purpose of this Agreement.
SECTION 10.17 SEC COMPLIANCE. If it becomes reasonably necessary to do so
in order to comply with applicable securities laws or the rules or regulations
of the SEC, for a period of four (4) years after the applicable Closing Date,
Spieker and its agents shall have the right, at Spieker's sole cost and expense,
to inspect and obtain copies of the Contributors' books and records supporting
the operation of the Properties for the period of three (3) full calendar years
preceding the calendar year which includes the Closing Date. Spieker shall give
reasonable prior written notice to the Contributors when Spieker wishes to
exercise its right to inspect such books and records. Such inspection shall take
place at the office of the Contributors during normal business hours on a date
and at a time reasonably convenient to the Contributors and Spieker. The
provisions of this Section 10.17 shall survive the Closing.
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SECTION 10.18 NO MARKETING. Prior to the applicable Closing Date or the
earlier termination of this Agreement, the Contributors shall not list any
Property with any broker or otherwise, make or accept any offers to sell any
Property, or enter into any contracts or agreements (whether binding or not)
regarding any disposition of any Property.
SECTION 10.19 POSESSION. On the applicable Closing Date, possession of
the Property shall be delivered by the applicable Contributor to Spieker.
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The parties hereto have executed this Agreement as of the date first
written above.
SPIEKER: SPIEKER PROPERTIES, L.P.,
a California limited partnership
By: Spieker Properties, Inc.,
a Maryland corporation,
its General Partner
By: /s/ Eli Khouri III
-------------------------------
Its: Vice President, Investment
------------------------------
REIT: SPIEKER PROPERTIES, INC.,
a Maryland corporation
By: /s/ Eli Khouri III
--------------------------------
Its: Vice President, Investment
-------------------------------
S-1
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CONTRIBUTORS: L.A.X. BUSINESS CENTER,
a California general partnership
By: SC Enterprises,
a California limited
partnership, its General
Partner
By: Shurl Curci
its General Partner,
whose signature appears
below
By: Shurl Curci,
its General Partner,
whose signature appears below
SC ENTERPRISES,
a California limited partnership,
By: Shurl Curci
its General Partner,
whose signature appears below
S-2
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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,
its General Partner,
whose signature appears below
By: SC Enterprises,
a California limited partnership,
its General Partner
By: Shurl Curci
its General Partner,
whose signature appears below
By: Shurl Curci,
its General Partner,
whose signature appears below
By: John Curci, as Trustee of the Curci
Revocable
Trust No. 2,
its General Partner
/s/ JOHN CURCI
-------------------------------------------
John Curci, Trustee
S-3
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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,
its General Partner,
whose signature appears below
BLOOMFIELD ASSOCIATES,
a California general partnership
By: SC Enterprises,
a California limited partnership,
its General Partner
By: Shurl Curci,
its General Partner,
whose signature appears below
By: Roberta L. Irish (f/k/a Roberta L.
Pechner),
its General Partner
/s/ ROBERTA L. IRISH
----------------------------------
S-4
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BARCLAY-CURCI INVESTMENT COMPANY,
a California general partnership
By: SC Enterprises,
a California limited partnership,
its General Partner
By: Shurl Curci,
its General Partner,
whose signature appears below
By: Robert Blumin and Carolee Blumin,
as Trustees of the Blumin Family Trust
U/T/A dated October 12, 1988,
its General Partner
/s/ROBERT BLUMIN
-------------------------------------------
Robert Blumin
/s/CAROLEE BLUMIN
-------------------------------------------
Carolee Blumin
By: B & B Enterprises,
a California general partnership,
its General Partner
By: SC Enterprises
----------------------------------------
Its: General Partner
By: Shurl Curci,
Its General Partner,
whose signature appears below
S-5
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MARJORIE BARCLAY, AS TRUSTEE OF THE
RICHARD AND MARJORIE BARCLAY
TRUST OF 1988 (RESTATED)
/s/MARJORIE BARCLAY
-------------------------------------------------
Marjorie Barclay, Trustee
STEVEN BARCLAY, AS TRUSTEE OF THE
BARCLAY FAMILY TRUST
/s/STEVEN BARCLAY
-------------------------------------------------
Steven Barclay, Trustee
ROBERT BLUMIN AND CAROLEE BLUMIN,
AS TRUSTEES OF THE BLUMIN FAMILY TRUST
U/T/A DATED OCTOBER 12, 1988,
/s/ROBERT BLUMIN
-------------------------------------------------
Robert Blumin, Trustee
/s/CAROLEE BLUMIN
-------------------------------------------------
Carolee Blumin, Trustee
S-6
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SANTA MONICA ASSOCIATES,
a California general partnership
By: Barclay-Curci Investment Company
a California general partnership,
its General Partner
By: SC Enterprises,
a California limited partnership,
its General Partner
By: Shurl Curci,
its General Partner,
whose signature appears below
By: Robert Blumin and Carolee Blumin,
as Trustees of the Blumin Family
Trust
U/T/A dated October 12, 1988,
its General Partner
/s/ROBERT BLUMIN
-------------------------------------------
Robert Blumin
/s/CAROLEE BLUMIN
-------------------------------------------
Carolee Blumin
By: B & B Enterprises,
a California general partnership,
its General Partner
By: SC Enterprises
----------------------------------------
Its: General Partner
By: Shurl Curci,
Its General Partner,
whose signature appears below
S-7
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By: Matlow-Kennedy Enterprises,
a California general partnership,
its General Partner
By: Cliffshire Properties,
a California general partnership
By:/s/ HOWARD R. MATLOW
----------------------------------
Howard R. Matlow
Its: General Partner
By: Fountain Properties,
a California general partnership
By:/s/K.E. KENNEDY
----------------------------------
K.E. Kennedy
Its: General Partner
TOWN CENTER EAST LLC,
a California limited liability company
By: Shurl Curci,
its Manager,
whose signature appears below
METRO CENTER TOWER LLC,
a California limited liability company
By: Shurl Curci,
its Manager,
whose signature appears below
OB-1 ASSOCIATES LLC,
a California limited liability company
By: Shurl Curci,
its Manager,
whose signature appears below
S-8
<PAGE> 83
I, Shurl Curci, hereby affix my signature to evidence my execution of
this Agreement in each of the capacities indicated above with respect to my
signature.
/s/SHURL CURCI
---------------------------
Shurl Curci
S-9
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Title Company agrees to act as escrow holder and Title Company in
accordance with the terms of this Agreement and to act as the "Reporting Person"
in accordance with Section 6045(e) of the Code and the regulations promulgated
thereunder. Title Company shall file any and all 1099 or similar forms in
accordance with all reasonable instructions received by Title Company from the
Contributors, and shall not file any Form 1099 without first providing the
Contributors a reasonable opportunity to comment on the same.
Title Company: COMMONWEALTH LAND TITLE COMPANY
By: /s/ LEE A. MELLEN
------------------------------------------
Name: Lee A. Mellen
Title: Escrow Manager
S-10
<PAGE> 85
January 12, 1998
VIA FACSIMILE AND FEDERAL EXPRESS
SC Enterprises
2577 Crenshaw Boulevard, Suite 300
Torrance, California 90501
Attn: Mr. Shurl Curci and Mr. Randall Boggan
Re: Extended Due Diligence Items
Dear Shurl and Randy:
Reference is made to that certain Contribution Agreement dated as of
January 7, 1998 by and among Spieker Properties, L.P., Spieker Properties, Inc.,
SC Enterprises and certain other parties with respect to certain properties
managed by Transpacific Development Company (the "Contribution Agreement").
Capitalized terms used herein and not otherwise defined herein shall have the
same meanings as set forth in the Contribution Agreement.
Pursuant to Section 4.2 of the Contribution Agreement, the Due
Diligence Period was extended to the Extended Due Diligence Termination Date
with respect to the Extended Due Diligence Items. We would appreciate your
countersigning this letter where indicated below to signify your agreement that
the parties have agreed to the resolution of the Extended Due Diligence Items in
the manner set forth in this letter agreement, that this letter agreement
constitutes an amendment of the Contribution Agreement pursuant to Section 10.11
thereof, that the Contribution Agreement (as amended hereby) remains in full
force and effect, subject to the terms and conditions set forth therein, and
that the termination right set forth in Section 4.2 of the Contribution
Agreement shall be of no further force or effect. In the event that you fail to
countersign this letter where indicated below, this letter shall constitute an
election by Spieker to terminate the Contribution Agreement.
Accordingly, the Extended Due Diligence Items are resolved as follows:
1. Physical Issues. Spieker shall be entitled to the following credits:
(i) $46,470 to repair the sealant joints at OBA; and (ii) $70,000 for roof
replacement at Marina Business Center. Additionally, in the event that the
applicable Contributors fail to deliver reasonably satisfactory documentation to
Spieker relating to the emergency power connections at Metro Tower Center,
Spieker shall be entitled to an additional credit of $135,000. The two Extended
Due Diligence Items relating to the Michelson Property will be dealt with under
the terms of the Michelson Purchase Agreement. Contributors agree that they will
reimburse Spieker for its actual costs incurred in the repair of the moment
frame connections at Metro Center Tower, however, said reimbursements for costs
shall not exceed $300,000.
<PAGE> 86
2. Financial Issues. Spieker shall be entitled to the following
credits: (i) $500,000 for all financial Extended Due Diligence Items at BCIC;
(ii) $573,789 for Rudolph & Sletten CPI cap at OB-1. Additionally the parties
will enter into a reasonably satisfactory side letter pursuant to which the
applicable Contributors will agree to pay for all applicable commissions, tenant
improvement allowances and below market rent per the attached schedule payable
only in the event American Express exercises said options. No credit will be
given for the Santa Monica Associates financial Extended Due Diligence Item.
3. Other Issues. The parking situation at Biltmore Commerce Center
shall continue to be handled in the manner set forth in Section 2.3(d) of the
Contribution Agreement and Schedule 4.2 thereto and Lot 9 shall be contributed
to Spieker in fee at the Closing for One Dollar. All Extended Due Diligence
Items other than those set forth above are resolved without further modification
of the Contribution Agreement.
We appreciate all of your cooperation over the past few days, and we
look forward to a successful closing in early February.
Very truly yours,
Spieker Properties, L.P.
By: Spieker Properties, Inc.
By: /s/ELI KHOURI III
----------------------
Its: Vice President, Investment
THE UNDERSIGNED ACKNOWLEDGES
AND AGREES TO THE FOREGOING
Transpacific Development Company
By: /s/CHURL CURCI
----------------------
Its: Chairman of the Board
cc: David Fries, Esquire
Fred McLane, Esquire
2
<PAGE> 87
AMENDMENT TO CONTRIBUTION AGREEMENT
THIS AMENDMENT TO CONTRIBUTION AGREEMENT (this "Amendment"), is made
as of February 2, 1998, by and between SPIEKER PROPERTIES, L.P., a California
limited partnership ("Spieker"), and TRANSPACIFIC DEVELOPMENT COMPANY, a
California corporation ("TDC").
WHEREAS, Spieker, Spieker Properties, Inc., a Maryland corporation, SC
Enterprises, a California general partnership, and certain other parties entered
into that certain Contribution Agreement dated as of January 7, 1998, with
respect to certain properties managed by TDC (as such Contribution Agreement was
amended by that certain letter agreement dated January 12, 1998 with respect to
the "Extended Due Diligence Items," the "Contribution Agreement"). Capitalized
terms used herein and not otherwise defined herein shall have the same meanings
set forth in the Contribution Agreement.
WHEREAS, Section 10.11 of the Contribution Agreement provides that the
Contribution Agreement may be amended or modified by a written instrument signed
by Spieker and TDC as well as any Contributor that is materially and adversely
impacted by such amendment or modification.
WHEREAS, TDC has determined that this Amendment does not materially
and adversely impact any Contributor other than the Contributors executing this
Amendment.
NOW, THEREFORE, the parties hereby agree as follow:
1. Defined Terms. Section 1.1 of the Contribution Agreement is
hereby amended to add the following additional defined terms:
(a) "Final Closing" shall have the meaning set forth in Section
2.3(a)(v).
(b) "Final Closing Properties" shall have the meaning set forth in
Section 2.3(a)(v).
(c) "Michelson Closing" shall have the meaning set forth in Section
2.3(a)(iv).
(d) "L.A.X. Closing" shall have the meaning set forth in Section
2.3(a)(ii).
(e) "L.A.X. Closing Property" shall have the meaning set forth in
Section 2.3(a)(ii).
(f) "Second Closing" shall have the meaning set forth in Section
2.3(a)(iii).
(g) "Second Closing Properties" shall have the meaning set forth in
Section 2.3(a)(iii).
<PAGE> 88
2. Section 2.3. Section 2.3 of the Contribution Agreement is hereby
deleted in its entirety, and the following Section 2.3 is hereby inserted in the
place thereof:
SECTION 2.3 TIMING.
(a) The Contribution and leasing of the Properties under the
terms of this Agreement will take place on the following schedule:
(i) With respect to the Properties commonly known as Santa
Monica Business Park and Marina Business Center (the "First Closing
Properties"), on February 4, 1998 or such earlier date mutually agreed by
the parties hereto (the "First Closing");
(ii) With respect to the Property commonly known as
Biltmore Commerce Center (the "L.A.X. Closing Property"), on March 30, 1998
or such earlier date mutually agreed by the parties hereto (the "L.A.X.
Closing");
(iii) With respect to the Properties located in Foster City,
California and the Properties commonly known as 12750 Center Court Drive,
17785 Center Court Drive and the ADP Building located in Cerritos Towne
Center (the "Second Closing Properties"), on March 30, 1998 or such earlier
date mutually agreed by the parties hereto (the "Second Closing");
(iv) With respect to the Michelson Property, on the closing
date set forth in the Michelson Purchase Agreement (the "Michelson
Closing"), as such may be amended; and
(v) With respect to the Properties commonly known as the
Delta Dental Property and the Spec Building described on Exhibit H hereto
(the "Final Closing Properties"), on June 30, 1998 or such earlier date
mutually agreed by the parties hereto (the "Final Closing").
(b) As used herein, the term "Closing" or "Closing Date" means
the "First Closing," the "L.A.X. Closing," the "Second Closing," the
"Michelson Closing" or the "Final Closing," or some combination thereof, as
the context dictates.
(c) The parties hereto acknowledge and agree that,
notwithstanding anything to the contrary provided in Section 3.1 or 3.2
below, but subject to Section 2.3(d) below, or any other provision of this
Agreement, in the event that any condition to Spieker's or any
Contributor's obligations hereunder is not satisfied or waived prior to the
applicable Closing and such party elects to terminate this Agreement
pursuant to the terms hereof, such party shall be obligated to terminate
this Agreement as to all Properties included within such Closing (and this
Agreement shall terminate as to all subsequent Closings and the Properties
applicable thereto), but neither party shall have the right to unwind or
otherwise rescind this Agreement as to any previously consummated
Closing(s) or the Properties transferred thereat.
(d) With respect to the Property commonly known as Biltmore
Commerce Center, the parties shall attempt to resolve the parking matter
identified on Schedule 4.2 (the "Biltmore Parking Matter") prior to the
L.A.X. Closing in the manner prescribed on such Schedule. In the event that
the Biltmore Parking Matter is not so resolved in sufficient time prior to
the scheduled date of the L.A.X. Closing to enable such Closing to timely
occur, the parties shall consummate the
2
<PAGE> 89
Closing of the Biltmore Commerce Center reasonably promptly following such
resolution of the Biltmore Parking Matter. In the event that the Biltmore
Parking Matter is not so resolved prior to the Final Closing, the parties
shall consummate the Final Closing with respect to all Final Closing
Properties, but shall terminate this Agreement with respect to the Closing
of the Biltmore Commerce Center, and the parties shall have no further
obligations hereunder with respect to the Biltmore Commerce Center except
under the Termination Surviving Provisions, but neither party shall have
the right to unwind or otherwise rescind this Agreement as to the
consummated First, Second, Michelson and/or Final Closings or the
Properties transferred thereat.
3. Second Closing; Second Closing Properties; Second Closing Development
Projects.
(a) The definitions of the terms "Second Closings" and "Second
Closing Properties" in Section 1.1 of the Contribution Agreement are hereby
deleted in their entireties.
(b) In each and every instance where the term "Second Closing" is
currently used in the Contribution Agreement (other than the definition of such
term in Section 1.1 or in Section 2.3, as amended hereby), the term "Second
Closing" shall be deleted and the term "Final Closing" shall be substituted in
the place thereof.
(c) In each and every instance where the term "Second Closing
Property" or "Second Closing Properties" is currently used in the Contribution
Agreement (other than the definition of such term in Section 1.1 or in Section
2.3, as amended hereby), the term "Second Closing Property" or "Second Closing
Properties," as applicable, shall be deleted and the term "Final Closing
Property" or "Final Closing Properties," as applicable, shall be substituted in
the place thereof.
(d) In each and every instance where the term "Second Closing
Development Project" is currently used in the Contribution Agreement, the term
"Second Closing Development Project" shall be deleted and the term "Final
Closing Development Project" shall be substituted in the place thereof.
4. Sections 2.4(b) and 3.1(g) Amendments.
(a) The first sentence of Section 2.4(b) shall be amended to insert
the words "taken subject to," after the words "all of which will be."
(b) The last sentence of Section 2.4(b)(i) shall be amended and
restated in its entirety to read as follows: "The parties hereto acknowledge and
agree that Spieker shall acquire the Properties subject to the Existing
Indebtedness, but shall not be required to assume any portion of the Existing
Indebtedness, other than the New York Life Loan; provided, however, that if
Spieker elects, in its sole and absolute discretion, to not pay off in full any
such Existing Indebtedness (excluding the New York Life Loan) upon the Closing
of the applicable Property, Spieker shall, upon such Closing, indemnify the
applicable Contributor (and any affiliates of such Contributor, to the extent
such affiliates have any personal liability under the applicable Existing
Indebtedness) from and against any and all claims thereafter arising under such
Existing Indebtedness or the documents evidencing or securing the same, pursuant
to an indemnity
3
<PAGE> 90
agreement in form mutually satisfactory to Spieker and such Contributor in each
such party's reasonable judgment."
(c) Section 2.4(b)(v) shall be amended as follows: (a) the first
sentence thereof shall be amended and restated to read as follows: "The amount
of the proceeds of the Traceable Debt incurred by Spieker at the applicable
Closing."; (b) the third sentence thereof shall be amended and restated to read
as follows: "These proceeds shall be distributed to such Contributors in respect
of their capital accounts in Spieker in accordance with the applicable
provisions of this Section 2.4(b)(v), and Sections 2.4(e)(ii) and 9.1 and the
Concurrent Transactions Exhibit:" and (c) subsection (1) of Section 2.4(b)(v)
shall be amended and restated to read as follows: "To reimburse certain of such
Contributors (or their partners, shareholders or members) for their repayment of
certain principal and/or accrued interest relating to debt associated with,
and/or certain other expenses relating to, those certain Properties commonly
known as Cerritos Towne Center, Biltmore Commerce Center and Marina Business
Center."
(d) The following phrase shall be inserted at the beginning of
Section 3.1(g) before the word "Pay-off": "At Spieker's election, in its sole
and absolute discretion,."
5. Michelson Closing.
(a) Sections 3.1(k) and 3.2(i) of the Contribution Agreement are each
hereby amended by deleting the term "First Closing" in the sixth (6th) line of
said Section and substituting the term "Michelson Closing" in the place thereof.
(b) Sections 7.10(a) and (b) of the Contribution Agreement are each
hereby amended by deleting the term "First Closing Date" in the first (1st) line
of said Section and substituting the term "Michelson Closing" in the place
thereof.
6. Lease Cost Shift Date. Section 7.2 of the Contribution Agreement is
hereby amended by deleting the second sentence of said Section in its entirety
and substituting the following sentence in the place thereof: As used herein,
the term "Lease Cost Shift Date" shall mean with respect to all Properties other
than the Property commonly known as the Delta Dental Property (including, but
not limited to, the expansion thereof), the date thirty (30) days prior to the
First Closing."
7. Foster City Capital Improvements. Spieker and the applicable
Contributors shall execute at the Second Closing an agreement in form reasonably
satisfactory to the parties thereto, that will: (a) provide the applicable
Contributors access to the applicable Properties located in Foster City,
California, in order to permit them to undertake their further investigations
and repairs (as reflected in Schedule 7.4), (b) define in reasonable detail the
scope of such repairs consistent with the intent of such Schedule 7.4, and (c)
amend the applicable conveyancing documents for such Properties in order to
grant to the applicable Contributors (or their affiliates) the right to continue
lawsuits with respect to such capital improvements and
4
<PAGE> 91
retain any past or future claims with respect thereto consistent with the intent
of such Schedule 7.4.
8. SM Business Park Prorations. Notwithstanding the provisions of Section
8.5, rents, Additional Rents and other items of revenue with respect to the
Properties owned by BCIC and Santa Monica Associates shall not be prorated on an
accrual basis, but rather shall be prorated on a cash basis in accordance with
mutually approved closing statements. In addition, SC Enterprises shall be
responsible for 50% (i.e., with respect to the 50% interest currently held by
BCIC) of all post-Closing proration payments for which Santa Monica Associates
is responsible, and shall be entitled to 50% of all post-Closing payments to
which Santa Monica Associates becomes entitled.
9. CC&R Matters. Section 8.8 of the Contribution Agreement is hereby
amended by deleting the term "First Closing" in each of the two (2) places where
such term appears in said Section and substituting the words "applicable
Closing" in the place thereof.
10. Traceable Debt Amount. Notwithstanding anything to the contrary
provided in Section 9.1(b) of the Contribution Agreement, the parties hereto
agree that Spieker shall not be obligated to borrow prior to each Closing only
an amount of Traceable Debt that will yield net proceeds in amounts to be
distributed pursuant to the terms of the Concurrent Transactions Exhibit at such
Closing, provided that each borrowing shall be evidenced by a separate and
distinct borrowing (with a separate and distinct promissory note that has a
separate and distinct maturity and interest rate).
11. Signature Blocks. Whereas Steven Barclay, as Trustee of The Barclay
Family Trust did not become a Contributor, the signature block for such trust
shall be deemed deleted. In addition, in each case in the signature block for
Marina Business Center, a California general partnership, that Shurl Curci
executed the Contribution Agreement (excluding, however, each case where he
executed such signature block for Marina Business Center in his capacity as a
general partner of SC Enterprises), such signature block shall instead be deemed
to have been executed by Shurl Curci and Kay Curci as Trustees of the Curci
Trust of 1983 (Restated).
12. Barclay Trust Security Agreement. Notwithstanding anything to the
contrary set forth in the Contribution Agreement, Marjorie Barclay, as Trustee
of the Richard and Marjorie Barclay Trust of 1988 (Restated), shall not be
required to execute or deliver a Security Agreement or grant a security interest
in any Shares.
13. Concurrent Transactions Exhibit. Exhibit A to the Contribution
Agreement is hereby deleted in its entirety, and the attached Exhibit A is
hereby inserted in the place thereof.
14. Schedules. Schedules 1, 2, 2.4(d), 2.4(e)(i)(1), 2.4(e)(ii) and 9.1(b)
are hereby deleted in their entirety and replaced with the versions of such
Schedules attached hereto.
15. PCOR's and Change of Ownership Statements. Spieker shall not submit
any preliminary change of ownership report or change of ownership statement with
respect to the acquisition of any Property pursuant to the Contribution
Agreement, without the prior written approval of TDC of such report or
statement, which approval shall not be withheld unless such
5
<PAGE> 92
report or statement conflicts or is inconsistent with the intent or terms of the
Contribution Agreement (including, without limitation, the portions of the
Concurrent Transactions Exhibit applicable to such Property). TDC shall render
its approval or disapproval of any such report or statement promptly and in a
timely manner, taking into account any applicable deadlines for the submission
of the same of which Spieker notifies TDC.
16. No Other Amendment; Conflict. Except as set forth in this Amendment,
the provisions of the Contribution Agreement shall remain in full force. If any
provision of this Amendment conflicts with any provision of the Contribution
Agreement, then the provisions of this Amendment shall prevail. At TDC's written
request made at any time hereafter, but no later than 30 days after the Final
Closing, Spieker shall (and shall cause the REIT to) execute and deliver an
amended and restated version of the Contribution Agreement that incorporates and
reflects all amendments thereto (including any and all exhibits and schedules
thereto) theretofore made by the parties.
17. Counterparts. This Amendment may be signed in multiple counterparts
(including facsimile counterparts) which, when signed by all parties, shall
constitute a binding agreement.
6
<PAGE> 93
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.
SPIEKER: SPIEKER PROPERTIES, L.P., a California
limited partnership
By: Spieker Properties, Inc.
a Maryland corporation,
its General Partner
By: /s/ JEFFREY K. NICKELL
----------------------
Its: Vice President
----------------------
TDC: TRANSPACIFIC DEVELOPMENT
COMPANY,
a California corporation
By: /s/ SHURL CURCI
--------------------------
Its: Chairman of the Board
--------------------------
7
<PAGE> 94
L.A.X. BUSINESS CENTER,
a California general partnership
By: SC Enterprises,
a California limited partnership,
its General Partner
By: Shurl Curci
its General Partner,
whose signature appears below
By: Shurl Curci
its General Partner,
whose signature appears below
SC ENTERPRISES,
a California limited partnership,
By: Shurl Curci
its General Partner,
whose signature appears below
BLOOMFIELD ASSOCIATES,
a California general partnership,
By: SC Enterprises,
a California limited partnership,
its General Partner
By: Shurl Curci
its General Partner,
whose signature appears below
TOWN CENTER EAST LLC,
a California limited liability company,
By: Shurl Curci
its Manager
whose signature appears below
8
<PAGE> 95
METRO CENTER TOWER LLC,
a California limited liability company
By: Shurl Curci,
its Manager,
whose signature appears below
OB-1 ASSOCIATES LLC,
a California limited liability company
By: Shurl Curci,
its Manager,
whose signature appears below
SHURL CURCI
CURCI TRUST OF 1983 (RESTATED)
By: Shurl Curci, Trustee
By: /s/ KAY CURCI
--------------------------
Kay Curci, Trustee
9
<PAGE> 96
I, Shurl Curci, hereby affix my signature to evidence my execution of this
Agreement in each of the capacities indicated above with respect to my
signature.
/s/ SHURL CURCI
-----------
Shurl Curci
10
<PAGE> 97
AMENDMENT TO CONTRIBUTION AGREEMENT
THIS AMENDMENT TO CONTRIBUTION AGREEMENT (this "Amendment"), is made
as of March 30, 1998, by and between SPIEKER PROPERTIES, L.P., a California
limited partnership ("Spieker"), and TRANSPACIFIC DEVELOPMENT COMPANY, a
California corporation ("TDC") and the Contributors listed on the signature
pages attached hereto.
WHEREAS, Spieker, Spieker Properties, Inc., a Maryland corporation, SC
Enterprises, a California general partnership, and certain other parties entered
into that certain Contribution Agreement dated as of January 7, 1998, with
respect to certain properties managed by TDC (as such Contribution Agreement was
amended by that certain letter agreement dated January 12, 1998 with respect to
the "Extended Due Diligence Items," and by that certain Amendment to
Contribution Agreement dated as of February 2, 1998, the "Contribution
Agreement"). Capitalized terms used herein and not otherwise defined herein
shall have the same meanings set forth in the Contribution Agreement.
WHEREAS, Section 10.11 of the Contribution Agreement provides that the
Contribution Agreement may be amended or modified by a written instrument signed
by Spieker and TDC as well as any Contributor that is materially and adversely
impacted by such amendment or modification.
WHEREAS, TDC has determined that this Amendment does not materially
and adversely impact any Contributor other than the Contributors executing this
Amendment.
NOW, THEREFORE, the parties hereby agree as follow:
1. Sections 2.3(a)(ii), 2.3(a)(iii) and 2.3(a)(v) Amendments.
(a) Section 2.3(a)(ii) is hereby deleted in its entirety, and
the following Section 2.3(a)(ii) is hereby inserted in the place thereof:
"(ii) With respect to the Property commonly known as
Biltmore Commerce Center (the "L.A.X. Closing Property"), on April 29,
1998 or such earlier date mutually agreed by the parties hereto the
"L.A.X. Closing")";
(b) Section 2.3(a)(iii) is hereby deleted in its entirety, and
the following Section 2.3(a)(iii) is hereby inserted in the place thereof:
"(iii) With respect to the Properties located in Foster
City, California and the Properties commonly know as 12750 Center
Court Drive, 17785 Center Court Drive and the ADP building located in
Cerritos Town Center (the "Second Closing Properties"), on April 30,
1998 or such earlier date mutually agreed by the parties hereto (the
"Second Closing")";
<PAGE> 98
(c) Section 2.3(a)(v) is hereby deleted in its entirety, and the following
Section 2.3(a)(v) is hereby inserted in the place thereof:
"(v) With respect to the Properties commonly known as the Delta Dental
Property and the Spec Building described on Exhibit H hereto (the "Final
Closing Properties"), on July 31, 1998 or such earlier date mutually agreed
by the parties hereto (the "Final Closing")".
2. Schedules. Schedules 4.1(i), 9.1(b) and 7.4 are hereby deleted in
their entirety and replaced with the versions of such Schedules attached hereto.
3. No Other Amendment; Conflict. Except as set forth in this Amendment,
the provisions of the Contribution Agreement shall remain in full force. If any
provision of this Amendment conflicts with any provision of the Contribution
Agreement, then the provisions of this Amendment shall prevail.
4. Counterparts. This Amendment may be signed in multiple counterparts
(including facsimile counterparts) which, when signed by all parties, shall
constitute a binding agreement.
2
<PAGE> 99
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.
SPIEKER: SPIEKER PROPERTIES, L.P., a California
limited partnership
By: Spieker Properties, Inc.
a Maryland corporation,
its General Partner
By: /s/ JEFFREY K. NICKELL
----------------------
Its: Vice President
----------------------
TDC: TRANSPACIFIC DEVELOPMENT
COMPANY,
a California corporation
By: /s/ SHURL CURCI
--------------------------
Its: Chairman of the Board
--------------------------
3
<PAGE> 100
L.A.X. BUSINESS CENTER,
a California general partnership
By: SC Enterprises,
a California limited partnership,
its General Partner
By: Shurl Curci
its General Partner,
whose signature appears below
By: Shurl Curci
its General Partner,
whose signature appears below
SC ENTERPRISES,
a California limited partnership,
By: Shurl Curci
its General Partner,
whose signature appears below
BLOOMFIELD ASSOCIATES,
a California general partnership,
By: SC Enterprises,
a California limited partnership,
its General Partner
By: Shurl Curci
its General Partner,
whose signature appears below
TOWN CENTER EAST LLC,
a California limited liability company,
By: Shurl Curci
its Manager,
whose signature appears below
4
<PAGE> 101
METRO CENTER TOWER LLC,
a California limited liability company
By: Shurl Curci,
its Manager,
whose signature appears below
OB-1 ASSOCIATES LLC,
a California limited liability company
By: Shurl Curci,
its Manager,
whose signature appears below
SHURL CURCI AND KAY CURCI OF THE
CURCI TRUST OF 1983 (RESTATED)
By: Shurl Curci, Trustee
By: /s/ KAY CURCI
--------------------------
Kay Curci, Trustee
5
<PAGE> 102
I, Shurl Curci, hereby affix my signature to evidence my execution of this
Agreement in each of the capacities indicated above with respect to my
signature.
/s/ SHURL CURCI
-------------------
Shurl Curci
6
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated May 25, 1998 included in this Form 8-K, into the Company's
previously filed Registration Statements File Nos. 33-90318, 333-00346,
333-09425, 333-14325, 333-21709, 333-35997, 333-43707, and
333-51269.
San Francisco, California ARTHUR ANDERSEN LLP
June 19, 1998
