EXHIBIT 10.2
AGREEMENT TO CONTRIBUTE
AMONG
XXXXXXX PACIFIC PROPERTIES, INC.,
XXXXXXX PACIFIC OPERATING PARTNERSHIP, L.P.
AND
EACH OF THE CONTRIBUTORS AND EXISTING PARTNERS
LISTED ON EXHIBIT A-1 TO THIS AGREEMENT
TABLE OF CONTENTS
DEFINITIONS
ARTICLE 1
CONTRIBUTION OF PROPERTY AND CAPITAL
1.1 Contribution of Interests and Determination of Equity Value
1.2 Components and Allocation of Contribution Consideration; Calculation of
Units and
Preferred Units; Cash Reimbursement Component
1.3 Capital Contribution of the General Partner
1.4 Limited Partners in the Operating Partnership
ARTICLE 2
CERTAIN COVENANTS AND CONDITIONS TO CLOSING
2.1 Certain Covenants and Conditions to BPP's and the Operating
Partnership's Obligations
2.2 Conditions to the Obligations of the Contributors
ARTICLE 3
REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS
3.1 Representations and Warranties of the Contributors; Certain Covenants
of the Contributors
3.2 Representations and Warranties of BPP
ARTICLE 4
MAINTENANCE AND OPERATION OF THE PROPERTY; CERTAIN COVENANTS
4.1 Maintenance and Operation
4.2 Insurance
4.3 Personal Property
4.4 Leasing
4.5 Operating Agreements
4.6 Damage or Destruction; Condemnation
4.7 Tests and Inspections
4.8 Mortgage Debt
4.9 Disposition of Properties
4.10 Availability of Records
4.11 Ongoing Capital and Tenant Improvement Work
4.12 A. Title
4.13 Payoff Letters/ Discharges on Mortgage Debt
4.14 Cooperation Regarding Closing Conditions
4.15 Articles Supplementary
4.16 [Intentionally Omitted]
4.17 Conduct of the Business
i
4.18 Intentionally Omitted
4.19 Notification of Certain Matters
4.20 Approval of Company Shareholders
4.21 REIT Status
4.22 Payments
4.23 First Offer Rights
4.24 Board of Directors
4.25 Retained Property
4.26 Post-Closing Delivery of Schedules and Exhibits
4.27 Operating Partnership Preferred Units
4.28 Company Rent Roll
4.29 Changes to Existing Partners and Allocation of Contribution
Consideration
4.30 Xxxxxxxxx Registration Rights Agreement
4.31 REOC Status
4.32 80% Ownership Condition
4.33 Board of Directors Resolutions
ARTICLE 5
CLOSING ADJUSTMENTS
5.1 Taxes, Assessments and Utilities
5.2 Rent
5.3 Common Area Reimbursement Adjustment
5.4 Payments on Permitted Exceptions
5.5 Operating Agreement Payments and Other Expenses
5.6 Partners' Consents
5.7 Post Closing Audit
5.8 Survival
ARTICLE 6
DEFAULTS AND REMEDIES
6.1 Breakup Fee
6.2 Deposit
6.3 Breakup Damages Amount as Liquidated Damages
ARTICLE 7
INDEMNIFICATION
7.1 By the Contributors and Existing Partners
7.2 By the Operating Partnership and BPP
7.3 Indemnification Procedure
7.4 Cooperation in Defense
7.5 Survival
7.6 Interest
7.7 Exclusivity
7.8 Mutual Pursuit of Claims
ii
ARTICLE 8
TERMINATION
8.1 Termination
8.2 Effect of Termination
ARTICLE 9
MISCELLANEOUS
9.1 Brokers
9.2 Marketing
9.3 Entire Agreement; No Amendment
9.4 Certain Expenses
9.5 Notices
9.6 No Assignment
9.7 Governing Law; Waiver of Jury Trial
9.8 Multiple Counterparts
9.9 Further Assurances
9.10 Miscellaneous
9.11 Invalid Provisions
9.12 Confidentiality; Publicity
9.13 Time of Essence
9.14 Authorized Representatives
9.15 Conflict
9.16 Applicable Contribution Agreement
9.17 Schedules
Exhibit A-1
Schedule OF CONTRIBUTORS
AND EXISTING PARTNERS
Exhibit A-2
LIST OF PROPERTIES
Exhibit A-3
ORGANIZATIONAL CHART
Exhibit A-4
EXISTING PARTNER OWNERSHIP
SHARE RE: ADDITIONAL CONSIDERATION
Exhibit B
[Intentionally Deleted]
Exhibit C
ARTICLES SUPPLEMENTARY
iii
Exhibit D
[INTENTIONALLY OMITTED]
Exhibit E
[INTENTIONALLY OMITTED]
Exhibit F
MORTGAGE DEBT
Exhibit G
LIST OF COMPANY PROPERTIES
WHERE NEW COMPANY TITLE
POLICIES WILL BE OBTAINED
Exhibit H-1
OPERATING PARTNERSHIP AGREEMENT
Exhibit H-2
OPERATING PARTNERSHIP AMENDMENT
Exhibit I
LIST OF CONTRIBUTORS' PERSONAL
PROPERTY RELATING TO THE
PROPERTIES
Exhibit J
PROSPECTIVE SUBSCRIBER
QUESTIONNAIRE
Exhibit K
LEGAL DESCRIPTION OF LAND
Exhibit L
REGISTRATION RIGHTS AGREEMENT
Exhibit M
STABILIZED LEASING PLAN
Exhibit N
CONTRIBUTORS' RENT ROLL
Exhibit O
INVESTOR REPRESENTATIONS
AND WARRANTIES
iv
Exhibit P
TITLE OBJECTIONS
Exhibit Q
FORM OF PAYMENT ESTOPPEL
Exhibit R
FORM OF CONTRIBUTORS' PAYMENT ESTOPPEL
Exhibit S
LIST OF EXISTING PARTNERS
Exhibit T
FORM OF MASTER LEASE
Exhibit U
LIST OF TENANT'S WITH OPTIONS TO PURCHASE
Exhibit V
FORM OF GROUND LESSOR ESTOPPEL
Exhibit W
FORM OF TENANT ESTOPPEL
Exhibit X
FORM OF REA ESTOPPEL
Exhibit Y-1
FORM OF DEED
Exhibit Y-2
FORM OF XXXX OF SALE
AND ASSIGNMENT
Exhibit Z
FORM OF ASSIGNMENT
OF LEASES
Exhibit AA
FORM OF POST-CLOSING
LEASING AGREEMENT
Exhibit BB
FORM OF REDEMPTION
NOTICE
v
Exhibit CC
AMENDED COMPANY BYLAWS
Exhibit DD
[INTENTIONALLY OMITTED]
Exhibit EE-1
DESCRIPTION OF RETAINED
PROPERTIES: REDONDO BEACH
Exhibit EE-2
DESCRIPTION OF RETAINED
PROPERTIES: WESTMINSTER
vi
AGREEMENT TO CONTRIBUTE
This AGREEMENT TO CONTRIBUTE (this "Agreement") is entered into as of
this 5th day of December, 1997, by the entities listed as Contributors and
the entities and individuals listed as Existing Partners on Exhibit A-1
attached hereto, each having an address of c/o Highridge Partners, Inc., 000
Xxxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xx Xxxxxxx, Xxxxxxxxxx 00000 (each a
"Contributor" and, collectively, the "Contributors"), Xxxxxxx Pacific
Properties, Inc., a Maryland corporation, having an address of 000 Xxxx Xxx
Xxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx 00000-0000 ("BPP" or the "Company")
and Xxxxxxx Pacific Operating Partnership, L.P., a Delaware limited
partnership having an address of 000 Xxxx Xxx Xxxxxx, Xxxxx 0000, Xxx Xxxxx,
Xxxxxxxxxx 00000-0000 (the "Operating Partnership").
RECITALS
WHEREAS, each Contributor owns the Property (as defined below) set forth
opposite such Contributor's name on Exhibit A-2.
WHEREAS, BPP has formed Xxxxxxx Pacific Operating Partnership, L.P., a
Delaware limited partnership (the "Operating Partnership") having BPP as its
general partner and BPP and a wholly-owned subsidiary of BPP as its sole
limited partners;
WHEREAS, the Contributors wish to contribute all of the Properties,
subject to the Mortgage Debt (as defined below) to the Operating Partnership
in exchange for a combination of (i) cash reimbursements, (ii) units of
limited partner interest in the Operating Partnership (the "Operating
Partnership Units" or "Units") and (iii) units of preferred limited partner
interest in the Operating Partnership (the "Operating Partnership Preferred
Units" or "Preferred Units");
WHEREAS upon Closing, the Operating Partnership will accept contribution
of the Properties from the Contributors, and the Operating Partnership will
issue to the Existing Partners (as defined below) (who will, subject to
Section 1.4 of this Agreement, then automatically be admitted as partners of
the Operating Partnership) the Contribution Consideration (as defined below)
in respect of such contributions, as more fully set forth below;
WHEREAS, BPP, the Operating Partnership, the Contributors and the
Existing Partners also desire that, contemporaneously with the admission of
the Existing Partners as limited partners of the Operating Partnership, BPP,
the Operating Partnership and such Existing Partners shall enter into a
registration rights agreement and an amendment to the agreement of limited
partnership of the Operating Partnership in each case as provided below; and
1
WHEREAS, each of the parties hereto has been advised by the other
parties and acknowledges that the parties hereto would not be entering into
this Agreement without the representations, warranties and covenants which
are being made and agreed to herein by each party hereto and that each party
is entering into this Agreement in reliance on such representations,
warranties and other covenants.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in reliance on all
representations, warranties and covenants made by each of the parties hereto,
the Contributors, BPP and the Operating Partnership hereby agree as follows:
DEFINITIONS
The following terms as used in this Agreement will have the meanings
attributed to them as set forth below unless the context clearly requires
another meaning. The terms set forth below do not constitute all defined
terms set forth in this Agreement. Such other defined terms shall have the
meanings ascribed to them elsewhere in this Agreement.
"Access Agreement" shall mean that certain Access Agreement between the
Contributors and BPP, dated as of November 20, 1997.
"Accountants" has the meaning set forth in Section 4.10.
"Accredited Investor" means a person who qualifies as an "accredited"
investor as defined in relevant securities Laws, including, without
limitation, under Rule 501 of the Securities Act.
"Action" shall mean any claim, suit, litigation, labor dispute,
arbitration, condemnation proceeding, investigation or other action or
proceeding.
"Additional Consideration" has the meaning set forth in Section 1.6.
"Additional Equity Value" has the meaning set forth in Section 1.6.
"Additional NOI Lease Expenses" has the meaning set forth in Section 1.6.
"Additional NOI Lease Income" has the meaning set forth in Section 1.6.
"Additional Valuation Date" has the meaning set forth in Section 1.6.
"ADA" has the meaning set forth in Section 3.2(j)(ii).
2
"Affiliate" shall mean any entity in which the Person in question owns
directly or indirectly more than fifty percent (50%) of any class of
securities or interest issued by such entity or any entity controlling,
controlled by or under common control with the Person in question.
"Agreement" shall mean this Agreement to Contribute, as it may be
amended from time to time.
"Amended Company By-Laws" shall mean the amended by-laws of BPP
substantially in the form attached hereto as Exhibit CC.
"Anchor Tenant" shall mean any tenant identified as an Anchor Tenant on
the Stabilized Leasing Plan attached to this Agreement as Exhibit M.
"Annual Valuation Period" has the meaning set forth in Section
3.2(q)(vii).
"Annualized Rental Payments" shall have the meaning set forth in Section
1.6.
"Applicable Contribution Agreement" has the meaning set forth in Section
9.16.
"Articles Supplementary" means the articles supplementary to the Company
Charter to be filed with the Maryland State Department of Taxation prior to
or at Closing which sets forth the rights, privileges and preferences of the
Preferred Stock, in the form attached hereto as Exhibit C.
"Assigned Contracts" means all Contracts other than Contracts with an
Affiliate of any Contributor.
"Authority" shall mean a governmental body or agency having jurisdiction
over BPP, the Operating Partnership, a Contributor, an Existing Partner or a
Property, as applicable.
"Authorized Representatives" has the meaning set forth in Section 9.14.
"Benefit Arrangements" has the meaning set forth in Section 3.2(l)(vi).
"Blue Sky Laws" has the meaning set forth in Section 3.2(b)(vi)(G).
"BPP" has the meaning set forth in the Introductory Paragraph of this
Agreement.
"BPP Indemnified Parties" shall mean BPP, the Operating Partnership and
their respective subsidiaries, Affiliates, officers, directors, stockholders,
employees, representatives and agents.
"BPP Notice" has the meaning set forth in Section 4.23.
3
"Breakup Damages Amount" has the meaning set forth in Section 6.1.
"BSMC" shall mean Blackacre SMC Holdings, L.P., a Delaware limited
partnership.
"BSMC II" shall mean Blackacre SMC II Holdings, LLC, a Delaware limited
liability company.
"Business Day" means any weekday that is not an official holiday in the
State of California.
"California REIT" has the meaning set forth in Section 3.2(q).
"Capital Expenditures Budget and Schedule" has the meaning set forth in
Section 3.2(j)(viii).
"Cash Reimbursement Component" has the meaning set forth in Section 1.1.
"CERCLA" has the meaning set forth in Section 3.2(o).
"Closing" and "Closing Date" have the meaning set forth in Section 1.5.
"Code" shall mean the Internal Revenue Code of 1986, as in effect from
time to time, and applicable rules and regulations thereunder. Any reference
herein to a specific section or sections of the Code shall be deemed to
include a reference to any corresponding provision of future law.
"Commission" shall mean the Securities and Exchange Commission.
"Commitment" has the meaning set forth in Section 3.2(g).
"Common Stock" shall mean shares of BPP's common stock, par value $.01
per share.
"Company" shall have the meaning set forth in the introductory paragraph
of this Agreement.
"Company Charter" shall mean the Articles of Amendment and Restatement
of BPP and any amendment or supplement thereto, as in effect on the date
hereof.
"Company Excess Stock" has the meaning set forth in Section 3.2(c).
"Company Leases" shall mean all retail property leases relating to the
Company Properties.
4
"Company Permitted Exceptions" has the meaning set forth in Section
3.2(j)(i).
"Company Permitted Liens" shall mean (i) Liens (other than liens imposed
under ERISA) for Taxes or other assessments or charges of Authorities that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings, in each case, with respect to which adequate
reserves or other appropriate provisions are being maintained by BPP or its
Subsidiaries to the extent required by GAAP, (ii) statutory Liens of
landlords, carriers, warehousemen, mechanics, materialmen and other Liens
imposed by law and created in the ordinary course of business for amounts not
yet overdue or which are being contested in good faith by appropriate
proceedings, in each case, with respect to which adequate reserves or other
appropriate provisions are being maintained by the Company or its
Subsidiaries to the extent required by GAAP, (iii) the Company Leases, (iv)
easements, rights-of-way, covenants and restrictions which are customary and
typical for office or commercial properties similar to the Company Properties
and which do not (x) interfere materially with the ordinary conduct of any
Company Property or the business of BPP and its Subsidiaries as a whole or
(y) detract materially from the value or usefulness of the Company Property
to which they apply, (v) the Liens which were granted by BPP or any of its
Subsidiaries to lenders pursuant to financings in existence on the date
hereof which are described in the Company Reports or Schedule 3.2(j)(xii) or
which otherwise provide for the financing of the Company Properties in the
ordinary course of business of BPP or any Subsidiary, as applicable.
"Company Plans" has the meaning set forth in Section 3.2(l)(i).
"Company Properties" has the meaning set forth in Section 3.2(j)(i).
"Company Registration Statement" has the meaning set forth in Section
3.2(e)(i).
"Company Rent Roll" shall have the meaning set forth in Section
3.2(j)(v).
"Company Reports" has the meaning set forth in Section 3.2(e)(i).
"Consents" has the meaning set forth in Section 3.1(b).
"Contracts" shall mean, subject to the terms of this definition below,
all contracts, undertakings, commitments, agreements, obligations, guarantees
and warranties as of the date of this Agreement (i) relating to a Property,
and (ii) to which a Contributor is a party or by which a Contributor or a
Property is bound. "Contracts" includes, without limitation, utility
contracts, management contracts, maintenance and service contracts, parking
contracts, employment contracts, equipment leases and brokerage and leasing
agreements, but excludes the Leases (as defined below) and the documents
evidencing, governing or securing the Mortgage Debt.
"Contract Rent" has the meaning set forth in Section 1.7.
5
"Contribution Agreement" has the meaning set forth in Section 9.16.
"Contribution Consideration" shall mean the consideration of Units,
Preferred Units and the Cash Reimbursement Component to the Existing Partners
which reflect the payment of the Equity Value pursuant to Article I hereof.
"Contributor" has the meaning set forth in the Introductory Paragraph of
this Agreement.
"Contributors Estoppel" has the meaning set forth in Section 2.1(h).
"Contributors Ground Lessor Estoppel" has the meaning set forth in
Section 2.1(g).
"Contributors REA Estoppel" has the meaning set forth in Section 2.1(i).
"Controlled Group Liability" has the meaning set forth in Section
3.2(l)(vi).
"Current Market Price" shall mean, as of any date of determination, the
average of the volume weighted average price per share of the Common Stock
(the "VWAP") on each of the twenty Trading Days (as defined below)
immediately preceding such date, as the VWAP for each day is reported for a
nationally-recognized market quotation or information service that is
selected by BPP and approved by the holders of a majority in interest of the
Preferred Units (exclusive of the units held by BPP) which approval will not
be unreasonably withheld.
"Debt Instruments" shall mean all notes, mortgages, deeds of trust or
similar instruments which evidence or secure any indebtedness owing to BPP or
any subsidiary.
"Deposit" has the meaning set forth in Section 6.2.
"Development Budget and Schedule" has the meaning set forth in Section
3.2(j)(ix).
"Development Properties" has the meaning set forth in Section 3.2(j)(ix).
"DLJ" has the meaning set forth in Section 9.1.
"DLJ Fee" shall mean a fee of $4,009,530 that will be paid to DLJ by the
Operating Partnership as provided in Section 9.1.
"Effective NOI" has the meaning set forth in Section 1.1.
"Employee Benefit Plans" has the meaning set forth in Section 3.2(1)(vi).
"Employees" has the meaning set forth in Section 3.2(1)(vi).
6
"Environmental Claim" shall mean any claim, investigation or written
notice by any person alleging potential liability (including potential
liability for investigatory costs, cleanup costs, governmental response
costs, natural resources damages, property damages, loss of value,
consequential damages, personal injuries or fatalities, or penalties) of BPP,
the Operating Partnership or its Subsidiaries arising out of, based on or
resulting from (A) the presence, generation, transportation, management,
recycling, reuse, treatment, use, storage, disposal or release of materials
of environmental concern or the threatened release of materials of
environmental concern at any location, or (B) activities or conditions upon
which any violation, or alleged violation of, or liability or alleged
liability under, any Environmental Law.
"Environmental Laws" shall mean federal, state, local, and municipal
laws, ordinances, principles of common law, rules, by-laws, orders,
governmental policies, statutes and regulations relating to the condition,
pollution or protection of the environment or of flora or fauna or their
habitat or of human (including employee and worker) health and safety, or to
the cleanup or restoration of the environment, including, but not limited to,
any laws relating to (A) generation, treatment, storage, disposal,
management, recycling, reuse or transportation of chemicals, materials,
wastes, emissions or discharges or protection of the environment from the
same, (B) exposure of persons to, or release or threat of release of,
Hazardous Wastes or Hazardous Substances, and (C) the safety and health of
workers and employees.
"Equity Value" has the meaning set forth in Section 1.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as in
effect from time to time, and applicable rules and regulations thereunder.
Any reference herein to specific section or sections of the Exchange Act
shall be deemed to include a reference to any corresponding provision of
future law.
"Exercise Restriction" has the meaning set forth in Section 4.23.
"Existing Partners" means with respect to a Contributor the direct or
indirect partners or members of such Contributor which will be issued the
Contribution Consideration, Additional Equity Value and Additional
Consideration pursuant to this Agreement, as set forth in Exhibit A-1 hereto.
"Federal Clean Water Act" has the meaning set forth in Section 3.2(o).
"Final Fiscal Year" has the meaning set forth in Section 4.10(h).
"Foreign Person" has the meaning set forth in Section 3.2(r).
"GAAP" has the meaning set forth in Section 3.2(e)(ii).
"Ground Leases" has the meaning set forth in Section 3.1(dd).
7
"Ground Lessor Estoppels" has the meaning set forth in Section 2.1.
"GSF" shall mean GSF Associates, L.L.C., a Delaware limited liability
company.
"GSF II" shall mean GSF II Associates, L.L.C., a Delaware limited
liability company.
"Hazardous Substances" and "Hazardous Wastes" have the meanings set
forth in Section 3.1(o).
"Holders" shall have the meaning set forth in Section 4.23(a).
"HPBA" shall mean HPBA, LLC, a Delaware limited liability company.
"HPBA II" shall mean HPBA II, LLC, a Delaware limited liability company.
"HQ Space" has the meaning set forth in Section 3.2(j)(i).
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
"Identified Space" has the meaning set forth in Section 1.6.
"Incentive Plan" has the meaning set forth in Section 3.2(c)(i).
"Indemnitee" has the meaning set forth in Section 7.3(a).
"Indemnitor" has the meaning set forth in Section 7.3(a).
"Inherited Properties" has the meaning set forth in Section 3.2(k).
"Insurance Policies" has the meaning set forth in Section 3.2(o).
"Intangibles" shall mean all intangible property owned or used by any
Contributor in connection with the ownership, use, operation or development
of any Property, including, without limitation: (i) any right the Contributor
may have to use the name currently used with respect to such Property and any
other trade name by which such Property is known, (ii) the Assigned
Contracts, (iii) the Leases, all guaranties of the Leases, all security
deposits under the Leases (unless BPP elects instead to have them credited to
the Operating Partnership at Closing), all other security, if any, under the
Leases and any rent prepaid under the Leases, (iv) all Licenses and any
warranties, guaranties and other rights relating to the ownership, use,
operation or development of the Property to the extent transferrable
(collectively, the "Other Rights").
"Investment Company Act" shall mean the Investment Company Act of 1940,
as in effect from time to time, and applicable rules and regulations
thereunder. Any reference herein to a
8
specific section or sections of the Investment Company Act shall be deemed to
include a reference to any corresponding provision of future law.
"Last Revaluation Month" has the meaning set forth in Section 1.6.
"Law" or "Laws" has the meaning set forth in Section 3.1(e).
"Leases" has the meaning set forth in Section 3.1(c).
"Licenses" has the meaning set forth in Section 3.1(e).
"Liens" shall mean all liens, mortgages, deeds of trust, deeds to secure
debt, security interests, pledges, claims, charges, easements and other
encumbrances on an asset of any nature whatsoever.
"Loss" or "Losses" shall mean any and all claims, losses, damages,
costs, liabilities, obligations, causes of action and expenses, including,
without limitation, reasonable attorney's fees and disbursements of a party.
In no event shall a Loss include a party's incidental or consequential
damages.
"Major Tenants" shall mean a tenant leasing 10,000 square feet or more
of space.
"Master Lease" has the meaning set forth in Section 1.7.
"Material Company Lease" has the meaning set forth in Section 3.2(j)(v).
"Mortgage Debt" means the mortgage loans secured by one or more of the
Properties, which mortgage loans, including the current holder thereof, the
original principal amount and the estimated outstanding balance thereof as of
the date of this Agreement (including any accrued interest), are set forth in
Exhibit F attached to this Agreement.
"New Company Title Policies" means the new ALTA owner's title insurance
policies or date-down endorsements to existing owner's title insurance
policies, in the case of new policies, in an amount equal to the fair market
value of the applicable Company Property and including customary owner's
endorsements, in each case dated as of the Closing Date, obtained or to be
obtained by BPP or the Operating Partnership with respect to those Company
Properties where (i) there is no existing owner's title insurance policy or
(ii) the existing owner's title insurance policy is more than one (1) year
old. A schedule of those Company Properties where New Company Title Policies
have been or will be obtained is attached to this Agreement as Exhibit G.
Such policies or endorsements shall show title to the applicable Company
Property vested in the applicable entitle described on such Schedule
3.2(j)(i) with respect thereto or in the Operating Partnership, subject to no
liens or encumbrances other than (a) Permitted Liens, (b) those matters shown
on Schedule B-1 of the Old Company Title Policies, and (c) those additional
9
encumbrances (excluding monetary Liens other than those listed on Schedule
3.2(j)(xii)) which do not materially affect the value or utility of the
applicable Company Property, and which would be acceptable to institutional
life insurance companies and commercial bank mortgage lenders in a similar
context.
"Nomination Rights" has the meaning set forth in Section 4.24.
"Notice" has the meaning set forth in Section 7.3(a).
"NYSE" shall mean the New York Stock Exchange, Inc.
"Offered Securities" has the meaning set forth in Section 4.23(b).
"Ongoing Improvements Work" has the meaning set forth in Section 4.11.
"Operating Partnership" has the meaning set forth in the Recitals.
"Operating Partnership Agreement" shall mean the Agreement of Limited
Partnership of the Operating Partnership, a copy of which is attached hereto
as Exhibit H-1.
"Operating Partnership Amendment" shall mean the First Amendment to
Agreement of Limited Partnership of the Operating Partnership, dated as of
the Closing Date, to be executed and delivered by BPP, Xxxxxxx Pacific
Properties L.P., Inc., the Contributors, HPBA, HPBA II, GSF, GSF II and the
Existing Partners as of the Closing, to admit the Existing Partners as
limited partners and to issue Units and Preferred Units to the Existing
Partners in the form attached to this Agreement as Exhibit H-2.
"Operating Partnership Units" or "Units" has the meaning set forth in
the Recitals. The terms and conditions of the Preferred Units are as set
forth in the Operating Partnership Amendment.
"Operating Partnership Preferred Units" or "Preferred Units" has the
meaning set forth in the Recitals.
"Other Company Properties" has the meaning set forth in Section
3.2(j)(i).
"Other Company Title Policies" means the owner's title insurance
policies naming BPP or, if applicable, a Subsidiary as insured, the date of
which policy or the date of the most recent date-down endorsement to such
policy is not more than one (1) year prior to the date of this Agreement.
"Payment Estoppel" has the meaning set forth in Section 1.6.
10
"Pension Plans" has the meaning set forth in Section 3.2(l)(vi).
"Permitted Exceptions" means, with respect to a Property, (i) all
matters listed as exceptions in the Preliminary Report (including, without
limitation, all standard preprinted exceptions in a CLTA form of owner's
title insurance policy other than exceptions relating to so-called creditors'
rights, mechanics' liens or parties in possession other than tenants under
the Leases set forth in the Rent Roll and other than delinquent real estate
taxes) with respect to such Property and including any mortgage lien
encumbering such Property which secures any portion of the Mortgage Debt and
matters shown on any survey of such Property provided by the Contributors or
otherwise obtained by BPP or the Operating Partnership, in each case prior to
the date hereof except, in each case, with respect to the title objections
specifically identified to be cured or otherwise satisfied by the
Contributors in the attached Exhibit P, (ii) all title matters reflecting
the existence or terms of Leases shown on the Rent Roll, (iii) all matters
whether or not of record, to the extent caused by BPP or the Operating
Partnership or their agents, representatives or contractors, (iv) zoning,
building, fire, health, environmental and pollution control laws and other
land use laws, ordinances, rules and regulations, (v) all other easements,
covenants, rights-of-way or other restrictions consented to in writing by BPP
or the Operating Partnership, (vi) prohibition against the interference with
the natural and unobstructed flow of any applicable brook currently crossing
the Property or other riparian rights existing as of the date hereof, and
(vii) inchoate mechanics' carriers', workers', and other like liens arising
or incurred in the ordinary course of business which are not yet delinquent
and which, in any event, shall not be listed as exceptions in the Title
Policy. In addition, with respect to the Properties shown on Exhibit A-2 as
leaseholds, the provisions of the ground leases with respect to such
Properties whereby a Contributor holds a leasehold interest in each such
Property.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, business trust, limited liability
company, trust, unincorporated organization or government or a political
subdivision, agency or instrumentality thereof or other entity or
organization of any kind.
"Personal Property" shall mean all tangible personal property owned by
any Contributor and located on or in or used in connection with the Real
Property as of the date of this Agreement or the Closing Date, including,
without limitation, all equipment, building systems and appliances relating
to the Real Property and other items listed in Exhibit I hereto.
"Post-Closing Audit" has the meaning set forth in Section 5.7.
"Post-Closing Leasing Agreement" has the meaning set forth in Section
2.1(q)(xiii).
"Preferred Stock" means the Series 1997-A Convertible Preferred Stock of
BPP to be issued pursuant to the Preferred Stock Purchase Agreement
consistent with and upon the effectiveness of the Articles Supplementary.
11
"Preferred Stock Purchase Agreement" shall mean the Preferred Stock
Purchase Agreement, dated as of the date hereof, by and between BPP and
Xxxxxxxxx Partners, L.L.C.
"Preferred Stock Termination Event" has the meaning set forth in Section
1.2.
"Preliminary Report" means the extended coverage preliminary title
report on the Real Property and the commitment to issue the Title Policy
obtained by the Contributors from the Title Company and delivered to BPP,
together with all documents referred to in such preliminary title report.
"Projects" has the meaning set forth in Section 3.2(j)(ix).
"Property" shall mean, each of the shopping center properties listed on
Exhibit A-2 attached to this Agreement including the applicable Real Property
and all Personal Property and Intangibles related thereto, and "Properties"
shall mean all such shopping center properties collectively, including all of
the Real Property, Personal Property and Intangibles.
"Property Condition Reports" has the meaning set forth in Section
3.2(j)(ix).
"Prospective Subscriber Questionnaire" shall mean the questionnaire in
the form attached hereto as Exhibit J.
"Proxy Statement" has the meaning set forth in Section 3.2(t).
"Qualified New Lease" has the meaning set forth in Section 1.6.
"Qualified Replacement Lease" has the meaning set forth in Section 1.6.
"RCRA" has the meaning set forth in Section 3.4(i).
"REA Estoppels" shall have the meaning set forth in Section 2.1(i).
"Real Property" shall mean the land described in Exhibit K hereto with
respect to each Property (the "Land"), together with all rights, licenses,
privileges and easements appurtenant thereto, including, without limitation,
all minerals, oil, gas and other hydrocarbon substances on and under and that
may be produced from the Land, as well as all development rights, land use
entitlements and rights in off-site facilities and amenities servicing the
Land or any improvements located thereon, including, without limitation, air
rights, water, water rights and riparian rights relating to the Land and any
rights-of-way or other appurtenances used in connection with the beneficial
use and enjoyment of the Land and all of each Contributor's right, title and
interest in and to all roads, easements, rights of way, strips or gores and
alleys adjoining or servicing the Land (collectively, the "Appurtenances")
and all improvements and fixtures which are affixed to the Land or the
Appurtenances or which are otherwise integral to the
12
occupancy of the Land or the operation of the buildings, structures or other
improvements thereon (other than trade fixtures of tenants which by the terms
of the applicable Leases are owned by such tenants and may be removed by such
tenants upon the expiration of such Leases) including, without limitation,
the building(s) located on the Land and all fixtures and equipment used in
connection with the operation or occupancy of the Land, such improvements or
the Appurtenances, including, without limitation, heating and air
conditioning systems and facilities used to provide any services on the Land
or the Appurtenances or for the improvements, and all parking and related
facilities and amenities (collectively, the "Improvements"); subject,
however, to the Permitted Exceptions.
"Reallocation Amount" has the meaning set forth in Section 1.4.
"Reference Rate" has the meaning set forth in Section 7.6.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement to be entered into between the Existing Partners and BPP in the
form attached hereto as Exhibit L.
"Regulatory Filings" has the meaning set forth in Section 3.2(b)(vi)(G).
"REIT" shall mean a real estate investment trust withing the meaning of
Section 856 of the Code.
"Rejection Notice" has the meaning set forth in Section 1.6.
"Related Agreements" means, collectively, all documents to be executed
and delivered in connection with this Agreement, including, without
limitation, the Operating Partnership Amendment, the Post-Closing Leasing
Agreement, the Master Leases, if any, the Registration Rights Agreement and
all other documents referred to in Section 2.1(q).
"REOC Qualification Date" has the meaning set forth in Section
3.2(q)(ii).
"Rent Roll" has the meaning set forth in Section 3.1(i).
"Retained Properties" has the meaning set forth in Section 4.25.
"Rights Exercise Notice" has the meaning set forth in 4.23.
"Securities Act" shall mean the Securities Act of 1933, as in effect
from time to time, and applicable rules and regulations thereunder. Any
reference herein to a specific section or sections of the Securities Act
shall be deemed to include a reference to any corresponding provision of
future law.
"Schedule of Members" has the meaning set forth in Section 1.4.
13
"Spillover Amount" has the meaning set forth in Section 1.6.
"Stabilized Leasing Plan" means the Stabilized Leasing Plan for each
Property attached to this Agreement as Exhibit M.
"Subsidiaries" shall mean with respect to BPP and the Operating
Partnership, any corporation, partnership, limited liability company, joint
venture, business trust or other entity, of which BPP or the Operating
Partnership, directly or indirectly, owns or controls 50% or more of the
securities or other interests entitled to vote in the election of directors
or others performing similar functions with respect to such corporation or
other organization, or to otherwise control such corporation, partnership,
limited liability company, joint venture, business trust or other entity.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not. The term
"Tax" also includes any amounts payable pursuant to any tax sharing agreement
to which any relevant entity is liable as a successor or pursuant to contract.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Tenancy Leases" has the meaning set forth in Section 3.2(j).
"Tenant Estoppels" shall have the meaning set forth in Section 2.1(h).
"Title Company" means Fidelity National Title Insurance Company.
"Title Policy" has the meaning set forth in Section 2.1(b).
"Trading Day" shall mean (A) if the Common Stock is listed on at least
one stock exchange, a day on which there is trading on the principal stock
exchange on the Common Stock is listed, (B) if the Common Stock is not listed
on a stock exchange, but sale prices of the Common Stock are reported on an
automated quotation system a day on which trading is reported on the
principal automated quotation system on which sales of the Common Stock are
reported, (C) if the Common Stock is not listed on a stock exchange and sale
prices of the Common Stock are not reported on an automated quotation system,
a day on which quotations are reported by National Quotation Bureau
Incorporated, or (D) if the Common Stock is not so
14
listed and sale prices are not so reported, any day other than a Saturday, a
Sunday or a bank holiday in New York, New York.
"Unit Distribution" has the meaning set forth in Section 1.4.
"UPREIT Transaction" shall mean the transactions pursuant to which (i)
BPP and its Subsidiaries transfer legal or beneficial ownership of (a) all
real property and related personal property owned by BPP or any Subsidiary
of BPP directly and (b) at least 99% of the beneficial interest owned by BPP
and/or BPP's Subsidiaries in any partnership or limited liability company
that owns a direct or indirect interest in real property and related personal
property (in each case as provided in Section 7.5 of the Operating
Partnership Agreement) to the Operating Partnership in exchange for a general
partner interest and a limited partner interest therein and (ii) a
wholly-owned corporate subsidiary of BPP will contribute cash in the amount
of $1,000 to the Operating Partnership in exchange for a limited partner
interest therein. Notwithstanding the foregoing, it shall not be a
requirement of the UPREIT Transaction that there be transferred to the
Operating Partnership any real property and related personal property or
interests therein owned by so-called "downREIT partnerships" in which the
general partner is BPP or an Affiliate of BPP and the limited partners are
third parties or any real property and related personal property or interest
therein required by the terms of mortgage debt thereon to be held in a single
purpose bankruptcy remote subsidiary of BPP; provided, however, that BPP
shall have the right to cause legal or beneficial ownership of any such real
property and related personal property or interest therein to be so
contributed to the Operating Partnership or a Subsidiary of the Operating
Partnership as part of the UPREIT Transaction or thereafter.
"Valuation" has the meaning set forth in Section 1.1.
"Voting Stock" has the meaning set forth in Section 3.2(b)(ii).
"Warranties" has the meaning set forth in Section 3.1(a)(v).
"Welfare Plans" has the meaning set forth in Section 3.2(l).
"Xxxxxxxxx" has the meaning set forth in Section 7.8.
ARTICLE 1
CONTRIBUTION OF PROPERTY AND CAPITAL
1.1 Contribution of Interests and Determination of Equity Value. In
consideration of the agreement of BPP and the Operating Partnership to pay
the Contribution Consideration, Additional Equity Value and Additional
Consideration to the Existing Partners as set forth below, the Contributors
agree to contribute and convey the Properties to the Operating Partnership on
the Closing Date, subject only to the Permitted Exceptions, including the
15
mortgage liens securing the Mortgage Debt. In consideration of such
contribution and conveyance and in reliance on the representations and
warranties of the Contributors contained in or made pursuant to the terms of
this Agreement, BPP agrees to cause the Operating Partnership to issue at
Closing the Units and the Preferred Units and to pay the cash reimbursement
component of the consideration (the "Cash Reimbursement Component") to the
Existing Partners, as more particularly provided below.
Except as set forth in Section 1.6, the total value of the Units,
Preferred Units and Cash Reimbursement Component to be issued or paid to the
Existing Partners in exchange for the contribution of the Properties to the
Operating Partnership, calculated as provided below, shall be equal to the
following (the "Equity Value"): the Valuation (as defined below), minus
$4,010,000, minus all unpaid principal of and accrued interest and other
charges and amounts outstanding on the Mortgage Debt as of the Closing Date,
minus any prorations described in Article 5 and any other closing adjustments
or costs which are the responsibility of the Contributors, plus any
prorations described in Article 5 and any other adjustments to be credited as
of the Closing Date to the Contributors. "Valuation" means the aggregate
Effective NOI (as defined below) for all of the Properties as of the Closing
Date divided by 0.09, but in no event more than $314,000,000. "Effective
NOI" means with respect to each Property (i) the Annualized Rental Payments
from Leases in full force and effect relating to such Property set forth on
the updated Rent Roll delivered at Closing and from Master Leases in full
force and effect relating to such Property at Closing, plus (ii) the
"other/percentage" rent revenues of $615,000 as set forth on Schedule 1.1(a),
less (iii) the Operating Expenses set forth in Schedule 3 to Exhibit M for
such Property, less (iv), and an amount equal to 2.0% of the aggregate amount
determined pursuant to clauses (i) and (ii) above. Based on the Annualized
Rental Payments from Leases from the Properties set forth on the Rent Roll
attached to this Agreement as Exhibit N, other operating revenues from the
Properties as set forth in Schedule 1.1(a), and the expected execution and
delivery of Master Leases relating to the underlying Leases identified for
Master Leases on Schedule 1.1(b), the parties agree that the Valuation
(taking into account such expected Master Leases) as of the date of this
Agreement is $294,779,250, which Valuation shall be recalculated as of the
Closing Date to take into account the difference between such revenue amounts
as of the Closing Date over such revenue amounts as of the date of this
Agreement. The parties agree that the Valuation shall be as of the date five
(5) days prior to the Closing Date (but proration and other adjustments
provided for herein shall be as of the Closing Date).
1.2 Components and Allocation of Contribution Consideration;
Calculation of Units and Preferred Units; Cash Reimbursement Component. The
Equity Value pursuant to Section 1.1 shall be paid to the Existing Partners
as follows:
(a) first, except as otherwise provided below in the event there
is a Preferred Stock Termination Event, $50,000,000 of the Equity Value shall
be paid by issuing to the Existing Partners 2,000,000 Preferred Units at an
agreed upon price of $25.00 per Preferred Unit;
16
(b) second, an amount up to 20% of the Valuation shall be paid in
cash and shall represent the Cash Reimbursement Component; and
(c) the balance of the Equity Value, if any, shall be paid by
issuing to the Existing Partners Units at an agreed upon price of $14.375 per
Unit.
Each Existing Partner shall be entitled to receive upon Closing the
percentage of each component of the Contribution Consideration to be set
forth for such Existing Partner in a supplement to Exhibit A-1 which the
Contributors hereby covenant to deliver to BPP at least two (2) Business Days
prior to the Closing Date and upon which supplement BPP and the Operating
Partnership may conclusively rely. For the purposes of valuing the
consideration paid in Units and Preferred Units, each Unit shall be deemed to
have a value of $14.375 and each Preferred Unit shall be deemed to have a
value of $25.00. The Cash Reimbursement Component shall be paid by the
Operating Partnership at Closing to the Existing Partners by wire transfer in
immediately available funds pursuant to wiring instructions provided to BPP
by the Contributors, upon which BPP and the Operating Partnership may
conclusively rely. Each Contributor has represented to the Operating
Partnership that the portion of the Cash Reimbursement Component being
received by it constitutes a reimbursement for capital expenditures incurred
by it within the two-year period preceding the contribution of Property being
made by it to the Operating Partnership, and each Contributor and, solely in
reliance on such representation by the Contributors, the Operating
Partnership agree to report to the Internal Revenue Service (pursuant to
Treasury Regulation Section 1.707-8) the payment of the Cash Reimbursement
Component to each Contributor as a reimbursement of preformation expenditures
that qualifies for the exception described in Treasury Regulation Section
1.707-4(d). Notwithstanding anything to the contrary contained in this
Agreement, in the event the Preferred Stock Purchase Agreement terminates
without a closing or the Closing hereunder occurs prior to the closing under
the Preferred Stock Purchase Agreement (a "Preferred Stock Termination
Event"), then no Preferred Units shall be issued pursuant to this Agreement
but instead the entire Equity Value shall be paid as follows: (i) first, an
amount equal to 20% of the Valuation shall be paid in cash and shall
represent the Cash Reimbursement Component; and (ii) second, the balance of
the Equity Value shall be paid by issuing to the Existing Partners Units at
an agreed upon price $14.375 per Unit. In the event a Preferred Stock
Termination Event occurs, all Units issued to any Existing Partner shall be
redeemable by the holder of such Unit for cash (in the amount set forth in
the Operating Partnership Agreement) by such holder giving written notice of
such redemption to the Operating Partnership within two (2) Business Days
after the Closing Date. If such notice is given, such redemption shall occur
within two (2) Business Days after delivery of such notice to the Operating
Partnership. If the Operating Partnership fails to satisfy its redemption
obligation pursuant to this Section 1.2, the Operating Partnership shall pay
to the Existing Partners making such redemption request interest on the
redemption price at an annual rate of 15% (based on the actual number of days
elapsed from the date of the redemption request until the Units are redeemed
in accordance with this Agreement and the Operating Partnership Agreement)
less distributions paid on such Units from the date of such redemption
request (but in no event shall such amount be a negative number). If such
holder fails to give such redemption notice within
17
such two Business Day period, then such Unit shall be subject to such
restrictions on redemption as may be set forth in the Operating Partnership
Agreement.
1.3 Capital Contribution of the General Partner. Upon Closing, BPP
shall contribute to the Operating Partnership as a capital contribution such
amounts as may be required to pay the Cash Reimbursement Component and to
fund closing costs and other items for the account of the Operating
Partnership, pursuant to the terms of this Agreement.
1.4 Limited Partners in the Operating Partnership.
(a) Exhibit A-1 attached hereto (sometimes referred to herein as
the "Schedule of Members") sets forth, subject to Section 4.29, the
Contributors and Existing Partners which own, directly or indirectly through
intermediaries, the beneficial interests in such Contributor and, upon the
supplemental delivery of Exhibit A-1 pursuant to Section 1.2, an allocation
of the Equity Value among the Existing Partners. Such allocations shall be
made by the Contributors on the basis of the Existing Partners' pro rata
beneficial interest in the Contributors on a fully diluted basis (following
the buy out by the applicable Contributor of the interest of any beneficial
partner or member in the Contributors who is not an Accredited Investor).
Neither BPP nor the Operating Partnership shall have any liability or
responsibility in any way with the Schedule of Members or the allocations
described above and shall be entitled to rely on the Schedule of Members in
full and without inquiry. An Existing Partner will be entitled to receive
the Contribution Consideration and be admitted as a limited partner in the
Operating Partnership in accordance with the terms of the Limited Partnership
Agreement upon Closing (each admittance a "Unit Distribution") only if such
Existing Partner (i) agrees to be bound by and comply with the terms of the
Operating Partnership Agreement, (ii) makes such investment and other
representations and warranties as are set forth in Exhibit O hereto, (iii) is
an Accredited Investor and (iv) delivers a Prospective Subscriber
Questionnaire indicating that such Existing Partner is an Accredited
Investor. Each Contributor will distribute the Units, Preferred Units, Cash
Reimbursement Component, and rights to receive any Additional Equity Value
and Additional Consideration that it will be transferred from the Operating
Partnership in consideration of the contribution of the Properties to HPBA
Inc., HPBA II, Inc., HPBA and HPBA II, and each of HPBA Inc. and HPBA II Inc.
intend to thereupon distribute the portion of such Contribution Consideration
and such rights received by it to HPBA and HPBA II, respectively, each of
HPBA and HPBA II intend to thereupon distribute such Contribution
Consideration and such rights to its members (GSF and BSMC or its Affiliate
that is then a member of HPBA with respect to HPBA, and GSF II and BSMC II or
its Affiliate that is then a member of HPBA II with respect to HPBA II), and
each of GSF and GSF II intend to thereupon distribute such Contribution
Consideration and such rights to its members (with the Existing Partners
consisting of BSMC and BSMC II, (or their Affiliate that is then a member of
HPBA and/or HPBA II) and the members of GSF and GSF II); all of the foregoing
to occur immediately upon each Contributor's contribution to the Operating
Partnership of the Properties owned by it on the Closing Date. For
convenience, the parties to this Agreement are transferring the Contribution
Consideration and such rights directly to such Existing Partners and
admitting such Existing Partners as Limited
18
Partners of the Operating Partnership pursuant to the Operating Partnership
Agreement and the Operating Partnership Amendment; PROVIDED, HOWEVER, that
(x) such direct transfer of the Contribution Consideration and such rights to
the Existing Partners shall be treated for all purposes as the transfer of
such Contribution Consideration and such rights first by the Operating
Partnership to the Contributors, then a distribution thereof by the
Contributors to HPBA Inc., HPBA II Inc., HPBA and HPBA II immediately
thereafter, then a distribution thereof by HPBA Inc. and HPBA II Inc. to HPBA
and HPBA II, respectively, and by HPBA and HPBA II to GSF, GSF II, BSMC and
BSMC II (or their Affiliate who is then a member of HPBA and/or HPBA II)
immediately thereafter, then a distribution thereof by GSF and GSF II
respectively to their members, and (y) upon Closing, each Existing Partner
shall succeed to the rights of the Contributors under this Agreement with
respect to such Contribution Consideration and such rights received from the
Contributors for all purposes as if such Existing Partner were a party to
this Agreement.
(b) Each Existing Partner shall have the right to pledge and
hypothecate (including, without limitation, entering into equity swaps and
hedging transactions) his/her/its Units and/or Preferred Units at any time on
such terms as may be approved by such Existing Partner in its sole discretion
and in connection therewith, the Operating Partnership agrees to admit any
pledgee of such Units as a limited partner in the event such pledgee
exercises its rights as a secured party in respect of such Units subject,
however, to the provisions of the Operating Partnership Agreement and
Operating Partnership Amendment applicable to the admission of a limited
partner including, without limitation, the execution by such pledgee of a
counterpart signature page to the Operating Partnership Agreement, as
amended, agreeing to be bound by the provisions of the Operating Partnership
Agreement, as amended, and if requested by the Operating Partnership delivery
of a Prospective Subscriber Questionnaire executed by such pledgee which
indicates that such pledgee is an Accredited Investor.
(c) Reallocation Amount. The Contributors shall, notwithstanding
anything in this Agreement to the contrary, have the right at any time prior
to the transfer of the Contribution Consideration to the Existing Partners to
specify a portion of the Cash Reimbursement Component thereof (the
"Reallocation Amount") that shall be paid by the Operating Partnership to
HPBA and HPBA II (instead of paying all of the Cash Reimbursement Component
to the Existing Partners) so as to fund expenses of HPBA, HPBA II, HPBA Inc.,
HPBA II Inc. and the Contributors. Notwithstanding Section 1.4(a), the
Reallocation Amount (if any) shall be deemed for all purposes to have been
paid to the Contributors, thereupon distributed by them to HPBA Inc., HPBA II
Inc., HPBA and HPBA II (in proportion to their respective shares of the
entire Cash Reimbursement Component otherwise payable to them), and the
portion thereof deemed distributed to HPBA Inc. and HPBA II Inc. thereupon
being distributed from HPBA Inc. and HPBA II Inc. to HPBA and HPBA, II
respectively (in lieu of further distributions thereof being deemed to have
occurred from HPBA and HPBA II to the members of HPBA and HPBA II).
19
1.5 Closing Date. Unless this Agreement is sooner terminated pursuant to
its terms, the closing of the transaction contemplated by this Agreement (the
"Closing") shall take place on the December 19, 1997 (which date may be extended
by either the Contributors or BPP to December 30, 1997 in the event all
conditions to Closing have not been satisfied by such date); provided, however,
if the condition set forth in Section 2.2(w) is not satisfied and if the
Contributors waive the condition set forth in Section 2.2(w), such date shall be
extended to February 28, 1998, or in each case such other date as the parties
mutually agree in writing. The Closing shall occur in the offices of Battle
Xxxxxx, LLP, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 a.m. (New
York City time) on the Closing Date, unless otherwise agreed in writing by the
Contributors and BPP. The Closing shall occur pursuant to closing escrow
arrangements reasonably agreed to among BPP, the Operating Partnership and the
Contributors or, if they do not agree, pursuant to a so-called "New York Style"
closing.
1.6 Additional Consideration. In addition to the Equity Value, the
Operating Partnership shall issue to the Existing Partners in the proportion set
forth on Exhibit A-3 (upon which BPP and the Operating Partnership may
conclusively rely) (i) Additional Equity Value ("Additional Equity Value") and
(ii) other additional consideration ("Additional Consideration"), in Units as
set forth below.
(a) Calculation of Additional Equity Value. If the Valuation
determined as of the Closing Date was less than $314,000,000, then as of the
last day of each full calendar month following the Closing Date the Valuation
and the Equity Value shall be recalculated in accordance with the provisions of
Section 1.1 by adding any Additional NOI Lease Income (as defined below) as of
such date to Effective NOI and dividing such sum by .09 and then recalculating
the Valuation and Equity Value based on such result.. If at the end of any
month the Valuation (calculated by adding the aggregate amount of Additional NOI
Lease Income generated to date to Effective NOI, and dividing such sum by .09)
is equal to or more than $314,000,000 (such month is the "Last Revaluation
Month"), then the Valuation and Equity Value shall not thereafter be
recalculated pursuant to this Section 1.6(a). Any increase in the Equity Value
resulting from any such recalculation, less amounts previously paid to the
Contributors as Additional Equity Value pursuant to this Section 1.6(a), shall
be paid to the Existing Partners in accordance with the provisions of Section
1.6(c). Notwithstanding the foregoing, if the recalculated Valuation as of the
last day of the Last Revaluation Month is more than $314,000,000, then the
amount of Additional NOI Lease Income included in the calculation which caused
the recalculated Valuation to exceed $314,000,000 (the amount of such Additional
NOI Lease Income is the "Spillover Amount") shall not be included in the
recalculation of Equity Value for the Last Revaluation Month with the effect
that in no event will the Additional Equity Value payable pursuant to this
Section 1.6(a) exceed an amount based on a recalculated Valuation of
$314,000,000. The Spillover Amount shall be added to the calculation as
Additional Consideration pursuant to Section 1.6(b).
Except as provided in Section 1.6(h) and Section 1.6(j), in no event shall
any amounts become payable pursuant to this Section 1.6(a) after June 30, 1999.
20
(b) Additional Consideration. If the Valuation determined pursuant
to Section 1.1, as adjusted pursuant to Section 1.6(a), equals or exceeds an
aggregate amount of $314,000,000 (without regard to the $314,000,000 limitation
set forth in such Sections), then on each of (i) December 31, 1998 (but only if
the recalculated Valuation pursuant to Section 1.6(a) equals or exceeds
$314,000,000 prior to December 31, 1998), (ii) June 30, 1999, and (iii) if
applicable, any date for payment of Additional Consideration pursuant to Section
1.6(h) (each an "Additional Valuation Date"), the Contributors shall be entitled
to the payment of Additional Consideration in an amount equal to the Additional
NOI Lease Income (as defined below) as of such Additional Valuation Date divided
by .09. The Operating Partnership shall pay any Additional Consideration
payable pursuant to this Section 1.6(b) in accordance with the provisions of
Section 1.6(c).
For purposes of this Section 1.6, the following capitalized terms
shall have the meanings set forth below:
"Additional NOI Lease Income" means the sum of the following:
(i) Annualized Rental Payments (as defined below) for the Identified Space
attributable to Qualified New Leases and Qualified Replacement Leases (but in
each case only such Qualified New Leases and Qualified Replacement Leases that
are included in the calculation of Annualized Rent Payments as set forth below
in the definition of such term) and Master Leases, in each case to the extent
not previously taken into account in determining Additional Equity Value or
Additional Consideration; provided, however, that with respect to Qualified
Replacement Leases (or Master Leases with respect to Qualified Replacement
Leases), only the amount by which such Annualized Rental Payments attributable
to such leases exceed the Annualized Rental Payments included in the calculation
of the Valuation at Closing shall be taken into account in determining
Additional NOI Lease Income, plus (ii) the Spillover Amount (if any) (allocated
among the Properties as designated by the Contributors, upon which allocation
BPP and the Operating Partnership may conclusively rely); provided, however,
that the Spillover Amount shall be included in Additional NOI Lease Income only
on the December 31, 1998 Additional Valuation Date unless the only Additional
Valuation Date is June 30, 1999 (other than any Additional Valuation Date which
may be applicable pursuant to Section 1.6(h)), in which event the Spillover
Amount shall be included with respect to such June 30, 1999 Additional Valuation
Date, less (iii) an amount equal to 2.0% of aggregate payments required to be
made under Qualified New Leases, Qualified Replacement Leases and Master Leases
set forth in clause (i) above as an adjustment for management fees, less (iv)
$0.10 per rentable square foot of premises leased pursuant to any Qualified New
Leases included in clause (i) above (without double counting any such space) and
less (v) $0.10 per rentable square foot of premises leased pursuant to any
Leases included in the calculation of Effective NOI at Closing and any Qualified
New Leases taken into account in the calculation of Additional Equity Value
pursuant to Section 1.6(a); provided, however, that the $0.10 per rentable
square foot deduction set forth in this clause (v) shall be deducted on the
December 31, 1998 Additional Valuation Date (and on any later Additional
Valuation Date only to the extent such amount was not previously fully deducted
in calculating Additional NOI Lease Income on an earlier Additional Valuation
Date with the
21
effect that such amount is deducted only once); provided, further, the
deductions set forth in clause (iv) and (v) shall not be taken into account in
the calculation of Valuation and Equity Value pursuant to Section 1.6(a).
"Annualized Rental Payments" means with respect to any Lease (in
connection with the calculation of Effective NOI, the Valuation and the Equity
Value at Closing only) or with respect to any Qualified New Lease, Qualified
Replacement Lease or Master Lease, all amounts payable under such lease to the
Property owner during the month in which determination is made (including,
without limitation, base rent, estimated common area maintenance and other
expense reimbursements determined as set forth in the Lease, and other recurring
fees and charges, but excluding percentage rent) multiplied by 12; provided,
however, that amounts payable under a Qualified New Lease or Qualified
Replacement Lease shall be included in the calculation of Annualized Rental
Payments only to the extent that the Operating Partnership has received a
Payment Estoppel (as defined below) with respect to such lease and the tenant
thereunder has actually made the first payment of the rent confirmed as
currently payable in such Payment Estoppel. For purposes of the calculation of
Annualized Rental Payments, (i) common area maintenance and expense
reimbursements shall be included based on the estimated amounts due under such
lease without regard to year-end adjustments, (ii) if common area maintenance
and other expense reimbursement amounts are paid on other than a monthly basis,
such payments shall be appropriately adjusted to reflect the pro rata amount
that would have required to have been paid during the applicable month and
(iv) if the amount of estimated payments for common area maintenance and other
expense reimbursement amounts are not specified in such lease but the lease
requires the tenant to pay its pro rata share thereof, the monthly amount shall
be calculated as the applicable share (expressed as a decimal fraction) of such
expenses that are the responsibility of the tenant times the annual Budgeted
Expenses for the applicable Property as set forth in Schedule 3 to Exhibit M
hereto (Operating Expenses) that are the subject to the reimbursement obligation
of the tenant, with the result being divided by 12.
"Identified Space" means only the leasable space in the
Properties identified for Qualified New Leases or Qualified Replacement Leases
in Schedule 2 to Exhibit M attached hereto.
"Master Lease" has the meaning set forth in Section 1.7.
"Payment Estoppel" means an original estoppel certificate with
respect to a Qualified New Lease or a Qualified Replacement Lease, that
satisfies the following criteria: the Estoppel Certificate is executed by the
tenant thereunder substantially in the form attached as Exhibit Q or by the
Contributors in the form attached as Exhibit R, in each case which confirms the
amount of rent then payable under such lease and the acceptance by the tenant of
the space demised under the Qualified New Lease or Qualified Replacement Lease
(subject only to customary reservations of rights typically included in estoppel
certificates at similar properties); provided, however, if (i) the Estoppel
Certificate is executed by a national or regional credit tenant in a form
substantially similar to the standard form of estoppel signed by those tenants
at
22
similar properties or (ii) the estoppel certificate signed by the tenant and it
is in substantially the same form as the estoppel certificate previously signed
by such tenant at the Property (a copy of which has previously been delivered by
Contributors to BPP), then, in either such case, such Estoppel Certificate shall
be deemed to satisfy the requirement for a Payment Estoppel. Any estoppel
certificate delivered by the Contributors shall constitute a continuing
representation and warranty of the Contributors with respect to the matters set
forth therein which shall survive the Closing until replaced by a Payment
Estoppel certificate from the applicable tenant as provided for in this
definition.
"Qualified New Lease" means a Lease that satisfies the following
conditions: (i) the income relating to such Lease was not included in the
calculation of Valuation under Section 1.1, (ii) the Lease relates to all or any
part of the Identified Space identified on Schedule 2 to Exhibit M for Qualified
New Leases, and (iii) the Lease satisfies the requirements for leasing such
space as set forth in the Stabilized Leasing Plan on Schedule 1 to Exhibit M.
"Qualified Replacement Lease" means the replacement of a Lease
identified for Qualified Replacement Leases in Schedule 2 to Exhibit M to this
Agreement which satisfies the requirements for leasing such space as set forth
in Schedule 1 to Exhibit M.
(c) Payments of Additional Equity Value and Additional Consideration.
As soon as practicable after (i) the end of each month with respect to which the
Valuation and Equity Value are recalculated pursuant to Section 1.6(a) and (ii)
each Additional Valuation Date, the Contributors shall deliver to the Operating
Partnership a written notice setting forth in reasonable detail the amount of
Additional Equity Value (calculated in accordance with Section 1.6(a)) or
Additional Consideration (calculated in accordance with Section 1.6(b)) which
the Contributors have determined they are entitled to as of such date and the
method by which such determination was made. Within ten (10) Business Days
after receipt of such notice, the Operating Partnership shall deliver to the
Contributors a written notice setting forth whether the Operating Partnership
concurs with or disputes the Contributors' determination of the Additional
Equity Value or Additional Consideration, as applicable, and, to the extent
there is a dispute, the basis for such dispute set forth in reasonable detail
and, within five (5) Business (in the case of Additional Equity Value) or ten
(10) Business Days (in the case of Additional Consideration) Days thereafter,
the Operating Partnership shall pay to the Existing Partners such amount of the
Additional Equity Value or Additional Consideration, as applicable, which is not
subject to dispute.
(d) Dispute Resolution. In the event of a dispute as to the amount
of Additional Equity Value or Additional Consideration payable, the Contributors
and the Operating Partnership shall direct the San Francisco, California office
of Xxxxxx Xxxxxxxx LLP (or its successor) to calculate the Additional Equity
Value or the Additional Consideration payable pursuant to the terms of Section
1.6(a) or Section 1.6(b), as applicable. In the event Xxxxxx Xxxxxxxx LLP
cannot accept this engagement, it shall designate another nationally recognized
accounting firm to calculate the amount of Additional Equity Value or Additional
23
Consideration that is payable. Each of the Operating Partnership, on the one
hand, and the Contributors, on the other hand, shall have the right to submit a
single package of information to the accounting firm calculating the Additional
Equity Value or Additional Consideration within five (5) Business Days after the
appointment of such accounting firm, and shall also simultaneously submit a copy
of such package to the other party. Each of the Operating Partnership and the
Contributors shall bear equally the fees and expenses of the accounting firm
making such determination and BPP, the Operating Partnership and the
Contributors shall provide such accounting firm with such releases and
indemnities as they may request in connection with their engagement for this
purpose. Such accounting firm shall be instructed to provide its written
calculation of the Additional Equity Value or Additional Consideration, as
applicable, within ten (10) Business Days after its appointment. The amount of
the disputed Additional Equity Value or Additional Consideration determined to
be payable by the accounting firm selected pursuant to this Section 1.6(d) shall
be binding on and shall be nonappealable by the Contributors and the Operating
Partnership and BPP. Within ten (10) Business Days after such determination,
the Operating Partnership shall pay to the Existing Partners the amount
determined to be owed, if any, with interest accruing on such amount from the
date on which such amount should have been paid pursuant to Section 1.6(a) or
Section 1.6(b), at a variable interest rate equal to the prime commercial
interest rate publicly announced by Bank of America at its Los Angeles office
plus two percent (2%).
(e) Tenant Improvements and Leasing Commissions. The Contributors
shall be responsible for the performance and prompt payment of the cost of all
tenant improvements (including all architect, engineering and related
construction fees and expenses) and all leasing commissions, brokerage fees and
similar amounts or reimbursements for any of the foregoing relating to any
Qualified New Lease or Qualified Replacement Lease (collectively, "Additional
NOI Lease Expenses") in accordance with the provisions of the Post-Closing
Leasing Agreement. Notwithstanding the foregoing, the Contributors shall have
the right to elect in their sole and absolute discretion not to lease any of the
space included in the Identified Space, in which event the Contributors shall
not have any liability with respect to any additional NOI Lease Expenses
relating to such space.
(f) Procedures for Approving Qualified New Leases and Qualified
Replacement Leases. Each potential Qualifying New Lease and potential Qualified
Replacement Lease must be submitted to the Operating Partnership in final form,
signed by the tenant, but with the effectiveness thereof conditioned upon and
subject to execution by the Operating Partnership. If such use requires a
permit from any governmental authority, then the tenant shall have acknowledged
in such Lease or otherwise in writing that such Lease is subject to its receipt
of such permit. Within five (5) Business Days after receipt of such proposed
Qualified New Lease or Qualified Replacement Lease and additional required
information, BPP, on behalf of the Operating Partnership, shall inform the
Contributors of any additional information it reasonably requires in order to
determine whether such proposed Lease satisfies the requirements for a
Qualifying New Lease or a Qualified Replacement Lease, as applicable. Within
five (5) Business Days after receipt of such additional requested information
(or within ten (10) Business
24
Days after receipt of the proposed Qualified New Lease or Qualified Replacement
Lease if no such additional information has been requested as set forth above),
the Operating Partnership shall either (i) execute such Lease and return it to
the Contributors (whereupon it shall automatically become a Qualified New Lease
or Qualified Replacement Lease) or (ii) reject such Lease by providing a written
notice to the Contributors (a "Rejection Notice") specifying in reasonable
detail the terms of such Lease that vary from the requirements set forth on
Schedule 1 of Exhibit M. The Operating Partnership agrees that it will sign all
potential Qualifying New Leases or Qualified Replacement Leases submitted by the
Contributors that satisfy the requirements set forth on Schedule 1 to Exhibit M.
If the Operating Partnership rejects a potential Qualifying New Lease or
Qualified Replacement Lease, the Contributors shall have the option of
(i) revising such Lease so that it satisfies all of the objections set forth in
the Rejection Notice and resubmitting such Lease to the Operating Partnership
for execution (which Lease shall then be signed by BPP on behalf of the
Operating Partnership within three (3) Business Days after receipt) or
(ii) conditionally entering into a new proposed Qualifying New Lease or
Qualifying Replacement Lease for such space and resubmitting such Lease to BPP
for approval in a manner consistent with the procedures set forth above.
Notwithstanding the foregoing, nothing herein shall constitute a waiver of the
Contributors' right to submit a potential Qualifying New Lease or Qualified
Replacement Lease to arbitration to determine if it should constitute a
Qualifying New Lease or Qualified Replacement Lease under this Agreement as set
forth below.
In the event the Operating Partnership and the Contributors disagree as to
whether a potential Qualifying New Lease or Qualified Replacement Lease
satisfies the requirements set forth in Schedule 1 to Exhibit M, and such
dispute is subsequently resolved in favor of the Contributors pursuant to
arbitration as set forth below, then the terms of such potential Qualifying New
Lease or Qualified Replacement Lease at the time submitted to the Operating
Partnership shall be deemed to constitute a Qualified New Lease or Qualified
Replacement Lease whether or not such proposed Lease is actually executed and
delivered by the Operating Partnership. Any arbitration conducted pursuant to
the provisions of this Section 1.6(f) shall be conducted in San Francisco,
California by an arbitrator mutually agreed to by the Contributors and the
Operating Partnership, or, if they cannot agree, by recognized independent
arbitrators each with not less than 10 years' experience arbitrating commercial
real estate disputes, one chosen by the Contributors, one chosen by the
Operating Partnership and the third selected by the two arbitrators so chosen,
provided that if either the Contributors or the Operating Partnership fail to
appoint an arbitrator within ten (10) days after receipt of written notice by
the other party to the effect that it has appointed an arbitrator, then the
arbitration shall be conducted by the arbitrator selected by the party giving
notice. Such arbitrators' sole determination shall be whether or not a proposed
Qualifying New Lease or Qualified Replacement Lease satisfies the standards for
such Leases as set forth in Schedule 1 to Exhibit M (New Tenant Standards), and
the arbitrators shall be instructed to render such determination within ten (10)
Business Days after their appointment. All costs of each arbitrator hereunder
shall be borne by the non-prevailing party. Any determination reached pursuant
to the foregoing procedure shall be final and binding on the parties absent
fraud. Any arbitration under this Section 1.6(d) is subject to the California
Arbitration Act.
25
(g) Additional Consideration Units. Any Unit issued pursuant to this
Section 1.6 shall be redeemable by the holder of such Unit for cash by such
holder giving written notice of such redemption to the Operating Partnership
within two (2) Business Days after the issuance thereof. If such holder fails
to give such redemption notice within such two Business Day period, then such
Unit shall be subject to such restrictions on redemption as may be set forth in
the Operating Partnership Agreement, the Operating Partnership Amendment or any
document executed pursuant thereof with respect to other Units, as applicable.
If such notice is given, BPP and the Operating Partnership shall satisfy such
redemption request within two (2) Business Days after delivery of such notice to
the Operating Partnership. For purposes of valuing the Additional
Consideration, the Units issued in respect thereto shall be deemed to have value
equal to the average closing price of BPP's Common Stock on the NYSE for the
twenty (20) trading days ending with and including the trading day immediately
preceding the day on which such Additional Consideration is determined. For
purposes of determining the Additional Equity Value, the Units issued in respect
thereof shall be deemed to have a value of $14.375. If the Operating
Partnership does not redeem the Units as provided above, the Operating
Partnership shall pay to the holders of such Units (i) interest on the value of
the Units as determined above at an annual rate of interest equal to 15%, based
on actual days elapsed from the date notice was given by the holder of such
Units until the date the Units are redeemed in accordance with this Agreement,
less (ii) any dividends paid by BPP on such Units from the date of such notice
until the date of such redemption of the Units.
(h) Casualty and Condemnation Events. If between the Closing Date
and June 30, 1999 any of the Identified Space with respect to which no
Additional Equity Value or Additional Consideration has previously been paid
pursuant to a Qualified New Lease, Qualified Replacement Lease or Master Lease
becomes unfit for occupancy as a result of a casualty or condemnation event,
then the Operating Partnership shall have the option either (a) to extend both
the June 30, 1999 outside date for payment of the Additional Equity Value set
forth in Section 1.6(a) and the June 30, 1999 Additional Valuation Date with
respect to such unfit premises until the date on which such space is restored
and rendered fit for occupancy (subject to completion of customary tenant
improvements) plus a period of time equal to the number of days such space
remained unfit for occupancy as a result of such casualty or condemnation event
prior to and including June 30, 1999, or (b) to pay to the Existing Partners (as
set forth on Exhibit S) an amount equal to the Additional Equity Value or
Additional Consideration, as applicable, which would be payable if such unfit
Identified Space was leased pursuant to a Qualified New Lease or Qualified
Replacement Lease, as applicable, in each case at 75% of the rent set forth for
such space in the Stabilized Leasing Plan. The Operating Partnership shall
provide notice to the Contributors within twelve months of the date of such
casualty or condemnation event of its good faith determination as to whether it
will or will not restore the damaged Identified Space. If the Operating
Partnership elects not to restore, then the Operating Partnership shall pay to
the Existing Partners at the time of such notice an amount equal to the product
of (A) the total net casualty insurance proceeds or net condemnation award
proceeds (or payments from a governmental authority in lieu thereof) received
(or which will be received) by the Operating Partnership as a result of such
casualty or condemnation event and (B) a fraction, the numerator
26
of which is the rentable area in square feet of the Identified Space rendered
unfit by such casualty or condemnation event and the denominator of which is the
total rentable area in square feet of the premises in the applicable Property
rendered unfit by such casualty or condemnation event, in satisfaction of its
obligation to pay the Additional Equity Value or Additional Consideration, as
applicable, with respect to such damaged Identified Space. Notwithstanding the
foregoing, if after giving such notice that it will not restore such damaged
Identified Space, the Operating Partnership does so restore such space and make
it fit for occupancy at any time within twenty-four (24) months after giving
such notice to the Contributors, then Contributors' rights to lease such
restored Identified Space pursuant to a Qualified New Lease, Qualified
Replacement Lease, or Master Lease shall be resurrected, the June 30, 1999
Additional Valuation Date shall be extended as set forth in clause (a) of the
first sentence of this Section 1.6(h) and the Contributors shall be entitled to
Additional Equity Value or Additional Consideration as applicable, with respect
thereto in accordance with the provisions of this Section 1.6, less the amount
of any insurance proceeds or condemnation award proceeds paid to Contributors as
set forth above. If the Operating Partnership has not paid the Existing
Partners pursuant to clause (b) in the first sentence of this Section 1.6(h) and
has elected to restore the damaged Identified Space as set forth above, but such
damaged space has not been restored and rendered fit for occupancy (subject to
completion of customary tenant improvements) within twenty-four (24) months
after the date of the casualty or condemnation event, then the Operating
Partnership shall pay to the Contributors, the amount set forth in such clause
(b) above. Notwithstanding anything to the contrary set forth herein, if in
restoring the damage caused by casualty or a condemnation event, the Operating
Partnership reconfigures the Property such that any of the unfit Identified
Space is no longer rentable space, then the Operating Partnership shall pay to
the Contributors the amount set forth in clause (b) in the first sentence of
this Section 1.6(h) with respect to such Identified Space.
(i) Example of Calculation of Additional Equity Value and Additional
Consideration. An example of the calculation of Additional Equity Value and
Additional Consideration is set forth in Schedule 1.6(i).
(j) Extension of Additional Valuation Dates. If the Closing occurs
after December 31, 1997 because the condition set forth in Section 2.2(w) is not
satisfied, each of the December 31, 1998 and June 30, 1999 Additional Valuation
Dates will each be extended for an additional 60 days.
1.7 Master Leases. To the extent that a tenant under a Lease, Qualified
New Lease or Qualified Replacement Lease is not obligated to pay full base rent
and full estimated common area maintenance and other expense reimbursements
(collectively, the "Contract Rent") as of the date the calculation of Effective
NOI (for the purposes of determining Equity Value at Closing) or Additional NOI
Lease Income (for the purposes of determining Additional Equity Value or
Additional Consideration) is made, then the Contributors shall have the right to
enter into a master lease (each, a "Master Lease") for the premises demised
pursuant to such Lease, Qualified New Lease or Qualified Replacement Lease with
the Operating Partnership for a term equal to
27
the remaining term of such Lease, Qualified New Lease or Qualified Replacement
Lease, as applicable, in the form attached to this Agreement as Exhibit T. The
Contributors shall pay rent to the Operating Partnership during the term of such
Master Lease equal to the Contract Rent under such Qualified New Lease or
Qualified Replacement Lease less any rent (including common area maintenance and
other estimated expense reimbursements) either (i) actually paid to the
Operating Partnership by the underlying tenant under such Lease, Qualified New
Lease or Qualified Replacement Lease or (ii) as to which the underlying tenant
has delivered to the Operating Partnership a Payment Estoppel and has actually
made the first payment of rent to the Operating Partnership. Such Master Lease
shall automatically terminate at such time as (x) there is delivered to the
Operating Partnership a Payment Estoppel relating to the Contract Rent then
payable under the Qualifying New Lease or Qualifying Replacement Lease, and
(y) the tenant has actually made the first payment of rent as specified in its
lease to the Operating Partnership thereunder.
1.8 Maximum Consideration. In no event shall the sum of (i) the Valuation
as determined pursuant to Section 1.1 or as recalculated pursuant to
Section 1.6(a) and (ii) the Additional Consideration determined pursuant to
Section 1.6(b) exceed $344,000,000.
ARTICLE 2
CERTAIN COVENANTS AND CONDITIONS TO CLOSING
2.1 Certain Covenants and Conditions to BPP's and the Operating
Partnership's Obligations. The obligation of BPP and the Operating Partnership
to consummate the transactions contemplated hereunder shall be subject to the
satisfaction or waiver by BPP and the Operating Partnership of each of the
conditions set forth below and the performance by the Contributors of their
obligations set forth below and elsewhere in this Agreement, in each case on or
before the Closing Date unless provided otherwise.
(a) [Intentionally Omitted]
(b) Title Insurance. The Contributors shall cause to be issued to
the Operating Partnership at Closing with respect to each Property at the
Contributors' expense an original CLTA policy of title insurance (Form B, rev.
10/17/70 issued by the Title Company in the amount of the Valuation with respect
to such Property dated as of the Closing Date, insuring fee simple title to the
Real Property in the Operating Partnership, subject only to the Permitted
Exceptions (other than those relating to the Mortgage Debt provided that the
Operating Partnership causes the Mortgage Debt to be paid on the closing Date in
accordance with Section 4.13) and providing full coverage against mechanic's and
materialman's liens and parties in possession other than tenants under Leases as
tenants only except for the tenants with options as set forth in Exhibit U, and
the Title Company shall be prepared and willing to upgrade such
28
policy to ALTA coverage upon payment of the applicable increase in premium
therefor by the Operating Partnership. (Such title insurance policy is the
"Title Policy.")
(c) [Intentionally Omitted]
(d) UCC Search. The Contributors shall provide to BPP the results of
a UCC Search from the office of the Secretary of State of California and the
state of formation of each the Contributors, with no individual result dated
earlier than thirty (30) days prior to the Closing Date, showing any and all
filings against the Contributors with respect to the Personal Property and the
Intangibles, and shall remove and release from the public records all such
filings effective as of the Closing Date with respect to the Personal Property
and the Intangibles except for filings made in connection with the Mortgage Debt
and naming the mortgagee thereunder as secured party.
(e) [Intentionally Omitted]
(f) Prospective Subscriber Questionnaire. On or before the Closing
Date, each Existing Partner shall have delivered to BPP a prospective subscriber
questionnaire in the form attached hereto as Exhibit J (each, a "Prospective
Subscriber Questionnaire") showing that each Existing Partner is an Accredited
Investor.
(g) Ground Lessor Estoppels. The Contributors shall have delivered
to BPP and the Operating Partnership two (2) separate estoppel certificates (the
"Ground Lessor Estoppels"), from each ground lessor for each Property which is
shown as a leasehold on Exhibit A-2, dated no earlier than forty (40) days
before the Closing Date, in the two (2) separate forms attached to this
Agreement as Exhibit V prior to the date of this Agreement, which Ground Lessor
Estoppels do not (i) allege the existence of any material default or any
material unperformed obligation by the applicable Contributor or predecessor
ground lessee under such ground lease which has not been waived or cured to the
ground lessor's satisfaction or (ii) recite any material fact which contradicts
the representations and warranties of the Contributors in this Agreement. Each
Ground Lessor Estoppel shall be addressed to BPP and the Operating Partnership.
Notwithstanding the foregoing, if the Contributors are unable despite reasonable
efforts to obtain a Ground Lessor Estoppel, BPP and the Operating Partnership
shall have the right to require Contributors to substitute its estoppel
certificate (a "Contributors Ground Lessor Estoppel") addressing each of the
factual matters which would have been addressed in the applicable Ground Lessor
Estoppel, which Contributors Ground Lessor Estoppel shall constitute a
continuing representation and warranty of the Contributors with respect to the
matters set forth in such Contributors Ground Lessor Estoppel which shall
survive the Closing until replaced by an actual Ground Lessor Estoppel from the
ground lessor which is the subject matter thereof and which does not contradict
the Contributors Ground Lessor Estoppel in any material respect.
(h) Tenant Estoppels. Except as otherwise provided below, the
Contributors shall have delivered to BPP and the Operating Partnership estoppel
certificates (the "Tenant
29
Estoppels") from each tenant under each Lease, dated no earlier than forty (40)
days before the Closing Date, except as otherwise provided below in
substantially the form attached to this Agreement as Exhibit W (or, if such
tenant is a national or regional credit tenant, the form of estoppel customarily
signed by such tenants at similar properties or, if an estoppel certificate was
previously delivered to the Contributors and a reaffirmation and update thereof
is obtained and delivered to BPP) or otherwise acceptable to BPP in its
reasonable discretion, which Tenant Estoppels do not (i) allege the existence of
any material default or any material unperformed obligation by the landlord
under the Lease, (ii) recite any material fact which contradicts the Rent Roll,
or (iii) disclose the existence of any fixed rent, additional rent or other
material charges payable by the tenant which are delinquent by more than thirty
(30) Business Days, in each case which is not disclosed in the Rent Roll or in
Schedule 2.1(h)(i) attached to this Agreement. Notwithstanding the foregoing,
if the Contributors are unable despite reasonable efforts to obtain a Tenant
Estoppel, the Contributors shall substitute an estoppel certificate executed by
each Contributor (a "Contributors Estoppel") addressing each of the factual
matters addressed in Schedule 2.1(h)(i) for tenants who fail to deliver a Tenant
Estoppel. The Contributors shall request and use all reasonable efforts to
obtain a Tenant Estoppel from each tenant under a Lease, which reasonable
efforts shall continue after the Closing to the extent a Tenant Estoppel is not
obtained as of the Closing. Any Contributors Estoppel shall constitute a
continuing representation and warranty of the Contributors with respect to the
matters set forth in such Contributors Estoppel which shall survive the Closing
until replaced by an actual Tenant Estoppel from the tenant which is the subject
matter thereof and which does not contradict the estoppel certificate of the
Contributors. To the extent a tenant is actually paying the rent specified in
the Rent Roll set forth in Exhibit N without protest or an express reservation
of rights, and related common area maintenance and real estate taxes and other
expense reimbursements, the Contributors Estoppel shall be deemed to no longer
address such rent, common area maintenance and real estate taxes and other
expense reimbursements payable by the tenant, and the Contributors shall have no
further liability in respect of the estoppel with respect to such amounts
payable. Notwithstanding anything to the contrary set forth above, (i) to the
extent that a Contributor has agreed with an anchor tenant upon a form of Tenant
Estoppel which differs from the form attached to this Agreement as Exhibit W and
such alternative form has been provided to BPP prior to the date of this
Agreement, a Tenant Estoppel from the applicable anchor tenant in such
agreed-upon form shall be deemed to be acceptable in form to BPP and (ii) to the
extent a Lease specifies a form of tenant estoppel certificate, a Tenant
Estoppel from the applicable tenant in such specified form shall be deemed to be
acceptable in form to BPP. All Tenant Estoppels shall be addressed to BPP and
the Operating Partnership.
(i) Reciprocal Easement Estoppels. The Contributors shall have
delivered to BPP and the Operating Partnership estoppel certificates (the "REA
Estoppels") from all parties under any reciprocal easement agreements or
covenants, conditions and restrictions affecting the Property, dated no earlier
than forty (40) days before the Closing Date, in substantially the form attached
to this Agreement as Exhibit X, or, if an estoppel certificate was previously
delivered to the Contributors, a certificate reaffirming and updating such
estoppel certificate shall be acceptable or otherwise acceptable to BPP in its
reasonable discretion, which Estoppels do not (i)
30
allege the existence of any material default by the Contributor (or its
predecessor in interest) or any material unperformed obligation by any
Contributor (or its predecessor in interest), (ii) recite any material fact
which contradicts the representations and warranties of the Contributors in this
Agreement or (iii) disclose the existence of any other material adverse fact or
circumstance not disclosed in this Agreement or the materials delivered by the
Contributors to BPP prior to the date of this Agreement. Notwithstanding the
foregoing, if the Contributors are unable despite reasonable efforts to obtain a
REA Estoppel, the Contributors shall have the right to substitute its own
estoppel certificate (a "Contributors REA Estoppel") addressing each of the
factual matters which would have been addressed in the applicable REA Estoppel,
which Contributors REA Estoppel shall constitute a continuing representation and
warranty of the Contributors with respect to the matters set forth in such
Contributors REA Estoppel which shall survive the Closing until replaced by an
actual REA Estoppel from the applicable parties and which does not contradict
the Contributors REA Estoppel.
(j) Accuracy of Representations and Warranties. The representations
and warranties of the Contributors contained herein shall be true and correct in
all respects on and as of the date hereof, and shall be true and correct in all
respects on and as of the Closing Date, with the same effect as though such
representations and warranties have been made on and as of the Closing Date
(except for representations and warranties that speak of a specific date or time
other than the date of this Agreement, which need only be true and correct in
all respects as of such date or time) other than in all such cases, such
failures to be true and correct as would not in the aggregate reasonably be
expected to have a material adverse effect on the financial condition or results
of operations of the Properties taken as a whole or the ability of the
Contributors to fully perform their material obligations under this Agreement;
provided, however, that nothing contained in this sentence shall be deemed to
limit BPP's or the Operating Partnership's rights and remedies with respect to a
breach of any such representation and warranty as provided in this Agreement.
The Contributors shall have delivered to BPP and the Operating Partnership a
certificate of the appropriate corporate officers or the general partners of the
Contributors, dated the Closing Date, to such effect.
(k) Opinion of Counsel. The opinions of (i) Battle Xxxxxx LLP,
counsel to the Contributors, and (ii) Pircher, Xxxxxxx & Xxxxx, special
California counsel to the Contributors, in each case in form and substance
reasonably satisfactory to the Company.
(l) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated by this Agreement.
(m) [Intentionally Omitted]
(n) Absence of Material Change and Default; Compliance by
Contributors. Since the date of this Agreement, there shall not have been any
material adverse change in the condition, financial or otherwise, of the
Properties (taken as a whole), and the Contributors shall
31
so certify at Closing. The Contributors shall have complied in all material
respects with all of its material obligations hereunder.
(o) HSR Act. Any waiting period applicable to the consummation of
the transactions contemplated hereby under the HSR Act shall have expired or
been terminated, and no action shall have been instituted by the United States
Department of Justice or the United States Federal Trade Commission challenging
or seeking to enjoin the consummation of the transactions contemplated hereby,
which action shall not have been withdrawn or terminated, or BPP, the Operating
Partnership and the Contributors shall have mutually concluded that no filing
under the HSR Act is required with respect to the transactions contemplated
hereby
(p) Proceedings. All partnership and other proceedings to be taken
by the Contributors and the beneficial owners of the Contributors in connection
with the transactions contemplated hereby and all documents incident thereto
shall be reasonably satisfactory in form and substance to BPP and the Operating
Partnership, and BPP and the Operating Partnership shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
(q) Delivery of Contributor Documents. At the Closing, the
Contributors shall execute and deliver to BPP or the Operating Partnership, as
applicable, through customary escrow arrangements the following, in form and
substance as set forth below or as otherwise reasonably satisfactory to BPP and
the Operating Partnership:
(i) Deed. California grant deed, executed by the
applicable Contributor, in recordable form (and otherwise in the form attached
to this Agreement as Exhibit Y-1) conveying the Real Property to the Operating
Partnership free and clear of all liens, claims and encumbrances, except for the
Permitted Exceptions;
(ii) Xxxx of Sale and Assignment. A xxxx of sale
and assignment in the form attached to this Agreement as Exhibit Y-2,
executed by the applicable Contributor, assigning, conveying and warranting
to the Operating Partnership title to the Personal Property, free and clear
of all encumbrances, except for the Permitted Exceptions, together with any
original certificates of title applicable thereto if in Contributor's
possession or control;
(iii) [Intentionally Omitted]
(iv) [Intentionally Omitted]
(v) Assignment of Leases. An assignment and
assumption agreement in the form attached to this Agreement as Exhibit Z,
executed by the Contributors, whereby the applicable Contributor assigns the
Contributor's right, title and interest in and to the Leases (including,
without limitation, all security deposits and/or other deposits thereunder
not previously applied in accordance with the terms of the applicable Leases
and reflected on the
32
Rent Roll attached hereto as Exhibit N all of which interest in the security
deposits shall be delivered to the Operating Partnership) and the Operating
Partnership assumes the obligations accruing thereunder from and after the
Closing Date;
(vi) Operating Partnership Amendment. A
signature page to the Operating Partnership Amendment dated as of the Closing
Date, duly executed by each Existing Partner;
(vii) Entity Transfer Certificate(s). Entity
transfer certification confirming that no Contributor is a "foreign person" as
defined in Section 1445(f)(3) of the Code;
(viii) Original Documents and Files. To the extent
not previously delivered to BPP and to the extent such items are in the
Contributors' possession or control, originals of any of the Contracts, Leases
and the Licenses;
(ix) Updated Rent Roll. An updated Rent Roll for
the Properties dated no later than five (5) Business Days prior to Closing,
which updated Rent Roll will be used to identify all Leases of space at the
Property for purposes of this Agreement as of the Closing Date (except for
Leases as to which the Contributors have knowledge are no longer in full
force and effect as of the Closing Date) and shall reflect no material
adverse changes from the Rent Roll attached hereto as Exhibit N. The
Contributors shall deliver a certificate dated as of Closing Date certifying
that such updated Rent Roll is true, complete and correct in all material
respects (including, without limitation, the amount of unapplied security
deposits and, to the knowledge of the Contributors, a description of all
uncured material nonmonetary defaults of Major Tenants and delinquencies of
base rent of more than thirty (30) days;
(x) Title Insurance. The Title Policy or a
fully effective marked up commitment for each Property;
(xi) Opinion of Counsel. The opinion(s) of
counsel to the Contributors required pursuant to Section 2.1(k);
(xii) Master Leases. The Master Leases, if
applicable (including any Master Leases entered into after the date of this
Agreement in accordance with the provisions of this Agreement);
(xiii) Post-Closing Leasing Agreement. The
Post-Closing Leasing Agreement between the Contributors and the Operating
Partnership substantially in the form of Exhibit AA attached to this Agreement
(the "Post-Closing Leasing Agreement");
(xiv) Contributors' Closing Certificate. The
certificate to be delivered by the Contributors pursuant to Section 2.1(j).
33
(xv) Other. Such other documents, instruments,
consents, authorizations or approvals as may be reasonably required by, and
reasonably satisfactory to, BPP, its counsel or the Title Company and that
may be reasonably required to consummate the transactions that are the subject
of this Agreement and the Related Agreements and to otherwise give effect to the
agreements of the parties hereto, including, without limitation, as required
under this Section; provided that notice thereof and the form thereof are
delivered by BPP to the Contributors at least five (5) Business Days prior to
the Closing Date.
(r) BPP Stock Price. During the 20 trading days ending with and
including the trading date immediately preceding the Closing Date, the average
closing price per share of BPP's Common Stock on the New York Stock Exchange is
equal or more than $12.93.
(s) Execution of Operating Partnership Amendment, Registration Rights
Agreement and Other Related Agreements. The Existing Partners and BPP and/or
the Operating Partnership, as applicable, shall have executed the Registration
Rights Agreement, the Operating Partnership Amendment and the other Related
Agreements, and such agreements shall be in full force and effect.
(t) Waiver of Restrictions on Redemption. A certificate signed by an
appropriate officer of the general partner or manager of each of the
Contributors stating that the Contributors confirm that all conditions precedent
under the Operating Partnership Agreement and this Agreement to the immediate
redemptions of Units issued pursuant to Section 1.2 or Section 1.6(g) hereof
(including, without limitation, the conditions described in Sections 8(c) and
11.6(f) of the Operating Partnership Agreement) have occurred, other than the
requirement that the affected Existing Partner give timely to the Operating
Partnership the notice of redemption described in either such Section. The form
of the notice to be given for such redemption is attached hereto as Exhibit BB.
2.2 Conditions to the Obligations of the Contributors. The
obligation of the Contributors to consummate the transactions contemplated
under this Agreement is subject to the satisfaction or waiver by the
Contributors, on or before the Closing Date, of each of the conditions set
forth below.
(a) Accuracy of Representations and Warranties; Closing Certificate
of BPP and the Operating Partnership. The representations and warranties of BPP
and the Operating Partnership hereunder shall be true and correct in all
respects on and as of the date hereof, and shall be true and correct in all
respects on and as of the Closing Date, with the same effect as though such
representations and warranties had been made on and as of the Closing Date
(except for representations and warranties that speak as of a specific date or
time other than the date of this Agreement which need only be true and correct
as of such date or time) other than, in all such cases, such failures to be true
and correct as would not in the aggregate reasonably be expected to have a
material adverse effect on the financial conditions of BPP and the Operating
34
Partnership taken as a whole or the ability of BPP and the Operating Partnership
to fully perform their material obligations under this Agreement; provided,
however, that nothing contained in this sentence shall be deemed to limit the
Contributors' rights and remedies with respect to a breach of any such
representation and warranty as provided in this Agreement. BPP and the
Operating Partnership shall have delivered to the Contributors a certificate of
the appropriate officer of BPP or general partner of the Operating Partnership,
dated the Closing Date, to such effect.
(b) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby and there shall
be no pending Actions with respect to this Agreement or the transactions
contemplated by this Agreement.
(c) Execution of Operating Partnership Agreement, Operating
Partnership Amendment, Registration Rights Agreement and Other Related
Agreements. The Operating Partnership Agreement shall have been executed and
delivered and be in full force and effect, and shall not have been amended
(other than pursuant to the Operating Partnership Amendment). The Existing
Partners and BPP and/or the Operating Partnership, as applicable, shall have
executed and delivered the Registration Rights Agreement, the Operating
Partnership Amendment and the other Related Agreements and such agreements shall
be in full force and effect.
(d) Effectiveness of Articles Supplementary. The Articles
Supplementary to BPP's charter attached as Exhibit C hereto shall have been duly
adopted by BPP and shall have been duly filed with the State Department of
Assessments and Taxation of the State of Maryland and shall be in full force and
effect. The Contributors shall have received a certified copy of the Articles
Supplementary, as filed with the State Department of Assessments and Taxation of
the State of Maryland.
(e) Exemption from Ownership Restrictions; Board Resolutions. BPP's
Board of Directors' resolutions pertaining to (i) this Agreement, and the
procedures, findings and transactions contemplated hereby, and (ii) the
exemption of Blackacre Capital Group, L.P. and its Affiliates (collectively,
"Blackacre") from the ownership restrictions under Section 7.2.1(a)(i)(1) of
the Company Charter based upon the representations and agreements of Blackacre
previously delivered to BPP, shall have been duly approved and adopted by BPP's
Board of Directors, and BPP's corporate secretary shall have placed the record
of such action in such records and shall be in form and substance satisfactory
to the Contributors. The resolutions of BPP's Board of Directors relating to
the exemption of the Existing Partners from such ownership restrictions shall
not be amended, modified, rescinded or revoked without the prior consent of the
Existing Partners.
(f) HSR Act. Any waiting period applicable to the consummation of
the transactions contemplated hereby under the HSR Act shall have expired or
been terminated, and
35
no action shall have been instituted by the United States Department of Justice
or the United States Federal Trade Commission challenging or seeking to enjoin
the consummation of the transactions contemplated hereby, which action shall not
have been withdrawn or terminated, or BPP, the Operating Partnership and the
Contributors shall have reasonably mutually concluded that no filing under the
HSR Act is required with respect to the transactions contemplated hereby and
counsel to BPP and the Operating Partnership shall have rendered its opinion to
such effect.
(g) BPP Consents. BPP and the Operating Partnership shall have
obtained in writing the consents set forth in Schedule 2.2(g) and no approval of
the NYSE shall be necessary with respect to the authorization, issuance or
conversion (subject to obtaining the approval of the holders of Common Stock
referred to in Section 4.20) of Preferred Units which shall not have been
obtained.
(h) Contributor Consents. The Contributors shall have obtained in
writing the consents identified in Schedule 3.1(b).
(i) Contribution of Properties by BPP to Operating Partnership. BPP
and the Operating Partnership shall have completed the UPREIT Transaction to the
extent that the Operating Partnership and its Subsidiaries have legal or
beneficial ownership of at least 60% by value of the assets owned by BPP (other
than its interest in the Operating Partnership) and its Subsidiaries (including
the Operating Partnership) immediately prior to the effective time of the
Closing. In addition, the UPREIT Transaction shall then be proceeding to the
extent required by Section 7.5 of the Operating Partnership Agreement.
(j) Proceedings. All corporate and other proceedings to be taken by
BPP and the Operating Partnership in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Contributors and the Contributors
shall have received all such counterpart originals or certified or other copies
of such documents as they may reasonably request.
(k) REIT Status. BPP shall have elected to be taxed as a REIT in its
most recent federal income tax return, and shall be in compliance with all
applicable laws, rules and regulations, including the Code, necessary to permit
it to be taxed as a REIT. BPP shall not have taken any action or have failed to
take any action which would reasonably be expected to, alone or in conjunction
with any other factors, result in the loss of its status as a REIT for federal
income tax purposes.
(l) Authority. BPP shall have delivered to the Contributors evidence
of its and its officer's authority to execute and deliver this Agreement and all
Related Agreements (including on behalf of the Operating Partnership) and to
consummate the transactions which are the subject of this Agreement and to
perform its and the Operating Partnership's obligations hereunder and under the
Related Agreements.
36
(m) Absence of Material Change and Default. Since the date of this
Agreement (i) there shall not have been any material adverse change in the
financial condition of BPP and the Operating Partnership (taken together), (ii)
BPP and the Operating Partnership shall have complied in all material respects
with all of their material obligations hereunder, and (iii) BPP and the
Operating Partnership shall so certify (in form reasonably acceptable to the
Contributors) at Closing that the above conditions are true as of the Closing
Date.
(n) BPP Stock Price. During the 20 trading days ending with and
including the trading date immediately preceding the Closing Date, the average
closing price per share of BPP's Common Stock on the New York Stock Exchange is
equal or more than $12.93.
(o) Opinion of Counsel. The opinions of (i) Xxxxxxx, Procter & Xxxx
LLP, counsel to BPP and the Operating Partnership, (ii) Loeb & Loeb LLP, special
counsel to the BPP and the Operating Partnership, and (iii) Ballard, Spahr,
Xxxxxxx & Xxxxxxxxx, special Maryland counsel to BPP shall have been received,
in each case in form and substance reasonably satisfactory to the Contributors.
(p) Waiver of Restrictions on Redemptions. A certificate signed by
an appropriate officer of BPP and the Operating Partnership stating that (i)
such parties confirm that all conditions precedent under the Operating
Partnership Agreement and this Agreement to the redemptions of Preferred Units
and Common Units pursuant to Section 1.2 hereof (including, without limitation,
the conditions described in Sections 8(c) and 11.6(f) of the Operating
Partnership Agreement) have occurred other than the requirement that the
affected Existing Partner give timely to the Operating Partnership the notice of
redemption described in either such Section. The form of the notice to be given
for such redemption is attached hereto as Exhibit BB.
(q) Amended Company By-laws. The amendment to the Company By-laws in
the form attached as Exhibit CC (the "Amended Company By-laws") shall have been
approved by BPP's Board of Directors, all as required or permitted by and in
accordance with the Company Charter, duly filed if any filing thereof shall be
required by any Authority or NYSE, and shall be in full force and effect.
(r) Discharge of Mortgage Debt. If required pursuant to Section
4.13, BPP and the Operating Partnership shall have satisfied the Mortgage Debt
in full.
(s) NYSE Matters. BPP shall have received written advice from the
NYSE to the effect that the transactions contemplated herein and in the Related
Agreements will not result in the de-listing of the Common Stock.
(t) DLJ Fee. BPP or the Operating Partnership shall have paid to DLJ
in full, the DLJ Fee.
37
(u) New Company Title Policies. BPP shall have obtained the New
Company Title Policies for the Company Properties set forth on Exhibit G.
(v) Company Rent Roll. The Contributors shall have received the
Company Rent Roll, as updated, to a date not more than five Business Days prior
to the Closing Date in conformity with Section 3.2(j)(i).
(w) Preferred Stock Purchase Agreement. The purchase of the
Preferred Stock contemplated by the Preferred Stock Purchase Agreement shall
have been consummated.
(x) Accountants. BPP shall have caused to be supplied to the
Contributors a letter, satisfactory to the Contributors in scope, form and
substance, as to the financial statement matters referenced in Section 3.2(e) of
this Agreement.
(y) Schedule 3.2(c)(ii). The Contributors shall have received
Schedule 3.2(c)(ii), as updated to the Closing Date such that it is true,
correct and complete as of the Closing Date, as provided in Section 2.2(z) of
this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS
3.1 Representations and Warranties of the Contributors; Certain Covenants
of the Contributors. Each Contributor hereby represents and warrants to BPP and
the Operating Partnership as of the date of this Agreement and makes certain
covenants as follows:
(a) Existence and Power. Each Contributor is a
validly existing limited liability company under the laws of the State of
Delaware. Each Contributor and its managers has all power and authority to
enter into this Agreement and all other documents to be executed and delivered
in connection with the transactions that are the subject of this Agreement,
including, without limitation, all Related Agreements, to the extent they are
to be executed by the Contributors, and to enter into and deliver and to perform
its obligations hereunder and under the Operating Partnership Amendment and the
other Related Agreements executed by the Contributors. BSMC is a validly
existing limited partnership under the laws of the State of Delaware. BSMC II,
GSF and GSF II are each validly existing limited liability companies under the
laws of the State of Delaware. The Existing Partner, MJL Associates, A
California Limited Partnership, is a validly existing limited partnership under
the laws of the State of California. Each of BSMC, BSMC II, GSF, GSF II and
MJL Associates has all power and authority to enter into, deliver and perform
its obligations under the Operating Partnership Amendment and the other Related
Agreements to which it is a party. The names of all Existing Partners which
will receive Units or Preferred Units pursuant to this Agreement, are set
forth on Exhibit A-1 attached hereto and the supplement to such Exhibit A-1
to be delivered pursuant to Section 1.2 will set
38
forth the allocations thereof among such Existing Partners. Attached to this
Agreement as Exhibit A-3 to is an accurate and complete organizational chart of
each Contributor showing the ultimate beneficial owners of such Contributor and
all intermediate entity owners of such Contributor as at the date hereof (which
may be changed prior to Closing pursuant to Section 4.29).
(b) Authorization; No Contravention; Consents. The
execution and delivery of this Agreement, the Operating Partnership
Amendment, the Registration Rights Agreement and the other Related Agreements
executed by the Contributors and/or the Existing Partners and the performance
of their respective obligations under all of the foregoing has been duly
authorized by all requisite organizational action, including, without
limitation, by obtaining, to the extent required, the consent of all
applicable Existing Partners and the consent of all partners or members of
each Existing Partner which is a partnership or limited liability company.
This Agreement, the Operating Partnership Agreement, the Registration Rights
Agreement and the other Related Agreements executed by the Contributors
and/or the Existing Partners will constitute the valid, legal and binding
obligations of the Contributors or the Existing Partners, as applicable.
None of this Agreement, the Operating Partnership Agreement, the Registration
Rights Agreement or the other Related Agreements executed by the Contributors
or the Existing Partners will violate any term of any agreement, order or
decree to which it is a party or by which the Contributors or the Existing
Partners are bound or to which any Property is subject. Except as set forth
on Schedule 3.1(b), no consent of any lender, partner, member, shareholder,
beneficiary, tenant, creditor, investor, Authority or other Person which has
not been obtained is required in order for the Contributors to enter into
this Agreement and consummate the transactions contemplated herein or in
order for the Existing Partners to enter into any Related Agreement to which
it is a party and to consummate the transactions contemplated therein.
Except as set forth on Schedule 3.1(b), the Contributors have obtained all
other authorizations, consents, approvals and waivers from each of the
Existing Partners and from third parties (collectively, the "Consents"),
including, without limitation, Authorities, necessary to enable it to
transfer the Properties to the Operating Partnership in accordance with the
terms of this agreement and all other Agreements by which the Contributors,
or any Property is bound or to which the Contributors or the Property is
subject and to enable it to perform all of its obligations under this
Agreement and the Related Agreements.
(c) Descriptive Information; Diligence. To the
Contributor's knowledge, all documents delivered by or on behalf of the
Contributors to BPP, including, without limitation, all leases, tenancy and
occupancy agreements (including, without limitation, all amendments,
modifications, agreements, records, substantive correspondence and other
documents affecting in any way a right to occupy any portion of the Land or
the Improvements) affecting the Properties (collectively, the "Leases"), are
true, correct and complete copies of all such documents in the Contributors'
possession or control. To the Contributor's knowledge, the documents
described in the immediately preceding sentence have not been amended or
modified by any oral agreements.
39
(d) Defaults. The Contributors are not in monetary default, and
the Contributors have no knowledge of any material nonmonetary default, under
any of the documents, recorded or unrecorded, encumbering or affecting any
Property, including without limitation, the Licenses, the Leases and the
Contracts, any documents referred to in the Preliminary Report or any
documents or instruments executed in connection with all or any of the
foregoing.
(e) Compliance with Law. Except as set forth in Schedule
3.1(e)(i), no Contributor has knowledge that all or any portion of any
Property violates any law, rule, regulation, ordinance, code or
interpretation of any Authority (collectively, "Laws") (including, without
limitation, those relating to zoning and the requirements of Title III of the
Americans with Disabilities Act of 1990 (42 U.S.C. 12181, et seq.) and The
Provisions Governing Public Accommodations and Services Operated by Private
Entities), or any requirement of any insurer or board of fire underwriters or
similar entity. No Contributor has knowledge of any special assessment
proceedings affecting any Property except as set forth on Schedule 3.1(e)(ii)
or of any such assessment other than those listed in the Preliminary Report.
To the Contributors' knowledge, all licenses, permits, approvals, variances,
easements and rights of way, including, without limitation, proof of
dedication and authorizations all Authorities having jurisdiction over each
Property (collectively, the "Licenses") required for the ownership, use or
operation of such Property as presently used and operated or otherwise have
been validly issued and are in full force and effect, and no Contributor has
knowledge of any Action relating to the revocation or modification of any
such License. To the extent required under applicable Laws and, to the
knowledge of the Contributors, valid and final certificates of occupancy (or
equivalent) have been issued for each space in the Improvements at each
Property and no space has been leased in violation of any such certificates.
To the Contributors' knowledge, each of the Licenses required for the
ownership, use or operation of each Property as presently operated shall
remain in full force and effect following the contribution of the Interests
pursuant to this Agreement. To the Contributors' knowledge, each Property is
currently zoned for the buildings, businesses and parking included in such
Property and the Contributors have no knowledge of any pending or proposed
change in the zoning classification of such Property. Except as to normal
payments reflected in the financial statements provided to BPP for prior
periods that would be expected to reoccur in subsequent periods (which
subsequent payments may be in different amounts), to the Contributor's
knowledge no payments are owing to or on behalf of any Authority or are
anticipated to be payable to or on behalf of any Authority pursuant to the
Licenses required for the ownership, use or operation of the Property as
presently operated. Except as set forth on Schedule 3.1(e)(ii), the
Contributors have no knowledge of any betterment or special assessments
pending or contemplated with respect to any Property.
(f) Certain Title Matters. To the Contributor's knowledge, (i)
the Real Property is free of all liens and encumbrances except as disclosed
in the Preliminary Report, (ii) all of the easements, covenants or
restrictions affecting each Property are set forth in the Preliminary Report,
(iii) no Property is in violation in
40
any material respect of any of the easements, covenants or restrictions
affecting such Property and no other party is in violation in any material
respect of any such easements, covenants or restrictions, (iv) no Property is
subject to any covenant or restriction that materially impairs the utility of
any portion of the Property for its intended purpose or the ability to operate
the Property as currently operated, (v) except as may be shown on any survey
obtained by BPP, there are no encroachments of any of the Improvements at any
Property onto adjoining land nor any encroachments onto the Land at any Property
of existing improvements located on any adjoining land, and (vi) except as may
be reflected in the Preliminary Report and the Leases, each Property is not
dependent upon any adjacent property in order to be used for its current
purposes, for access, parking, utilities or any other matter except in
circumstances where there is an adequate, legally enforceable and insurable
permanent easement providing the Property with the required rights of use of the
adjacent property.
(g) Personal Property. The list of personal property for each
Property attached hereto as Schedule 3.1(g), is in all material respects an
accurate and complete list of all Personal Property.
(h) Leases. The Rent Roll lists all Leases for any portion of
each Property or otherwise affecting each Property, and is accurate and
complete in all material respects as of the date of the Rent Roll. The
copies of the Leases which have been delivered or made available to BPP are
true and complete, constitute all outstanding Leases and include all
subleases known to the Contributors relating to each Property. True,
complete and correct copies of all Leases in effect on the date of this
Agreement have been delivered or made available to BPP and the Contributors
shall promptly provide true, complete and correct copies of any Leases
entered into after the date of this Agreement to BPP. Each Lease (i) is in
full force and effect with respect to the applicable Contributor, and, to the
Contributors' knowledge, the applicable tenant; and (ii) constitutes the
entire agreement between the applicable Contributor and such tenant with
respect to the applicable Property and includes any other agreements between
such parties related in any way to such Property. To the Contributors'
knowledge, no Contributor is in default in the performance of any material
obligation under any of the Leases (or any agreements incorporated therein by
reference) and the Contributors have no knowledge of any circumstances which,
with the passage of time or the giving of notice, or both, would constitute
an event of default by landlord under any of the Leases. To the
Contributors' knowledge, no tenant is in monetary default under its Lease for
more than thirty (30) days in payment of base rent and the Contributors have
no knowledge of any material non-monetary default of Major Tenants. Except
as indicated in the Rent Roll, (x) no advance rent or other payment has been
made with respect to any Lease except rental for the current month, (y) there
is no free rent or other concession with respect to any Lease and (z) there
is no obligation under the Lease for the refunding of a security deposit.
Except as otherwise expressly set forth in the Rent Roll or as set forth on
Schedule 3.1(h), to the Contributors' knowledge (and without any duty to
investigate) there are no actions, voluntary or involuntary, pending against
any tenant under any bankruptcy or insolvency laws.
(i) Rent Roll. Attached hereto as Exhibit N is the rent roll
(including the attachments thereto, the "Rent Roll") which is true, complete
and correct as of the date thereof in
41
all material respects. The Rent Roll attached as Exhibit N shall be updated to
a date not more than five (5) Business Days prior to the Closing Date.
(j) Options. Except as shown on the Rent Roll or Schedule 3.1(j),
or in any of the Leases with tenants other than Major Tenants, no Contributor
has granted to any Person any option or right of first refusal or first
opportunity to acquire any interest in any Property or any portion thereof,
and the Contributors have no knowledge that any other Person has granted any
such option or right of first refusal or first opportunity to acquire which
remains in force and effect.
(k) Contracts. True, complete and correct copies of the
Contracts have been provided to BPP. To the Contributors' knowledge, the
Contracts are in full force and effect. There shall be no agreements or
other obligations or liabilities with respect to all or any portion of any
Property entered into by the Contributors or, to the Contributors' knowledge,
entered into by any other Persons that are binding on the Operating
Partnership or any Property following Closing, other than the Leases, the
Assigned Contracts, the Permitted Exceptions, the Licenses required for the
ownership, use or operation of the Property and other documents executed in
connection with the foregoing.
(l) Access. To the Contributor's knowledge, (i) each Property
has direct physical access to and from adjoining physically open public
streets and the Contributors have obtained all Licenses required from all
Authorities having jurisdiction over such Property, including, without
limitation, proof of dedication required from all Authorities having
jurisdiction over the Property, or from private parties, if any, required to
assure unrestricted vehicular and pedestrian ingress and egress to and from
such Property to public ways as currently operated, and (ii) all such rights
of ingress and egress to such Property including, without limitation, the
driveway entrances and exits to such Property, are permanent and there are no
existing facts or conditions that present a risk of termination of the
present rights of ingress and egress to such Property.
(m) Utilities. To the Contributor's knowledge, all water, sewer,
gas, electric, telephone and drainage facilities and all other utilities
required by Law or necessary for the use and operation of each Property as
currently operated (i) either enter the applicable Land through adjoining
public streets, or, if they enter through adjoining private lands, do so in
accordance with existing, valid, irrevocable and insurable easements running
to the benefit of the owner of such Property; (ii) are connected pursuant to
valid Licenses, if required; (iii) are currently in good working order; and
(iv) in the reasonable opinion of the Contributors are adequate to service
the Property as presently operated. The Contributors have not entered into
any contract with respect such utilities to pay any amounts in excess of the
nondiscriminatory metered charges therefor.
(n) Intentionally Omitted.
42
(o) Hazardous Substances. Except as disclosed on Schedule
3.1(o), the Contributors have not generated, stored, released, discharged or
disposed of, nor to the Contributors' knowledge used or handled Hazardous
Substances or Hazardous Wastes (as those terms are defined below) at, upon or
from any Property in violation of any Law or in connection with which
remedial action would be prudent or required under any Law. To the
Contributors' knowledge and except as set forth in any environmental report
provided by the Contributors to BPP or otherwise obtained by BPP, in each
case fifteen (15) days after the date of this Agreement, and except as
expressly disclosed on Schedule 3.1(o) attached hereto, no Hazardous
Substances or Hazardous Wastes are or have been generated, stored, released,
located, discharged or disposed of, used or handled from, at or upon any
Property, and no Hazardous Substance or Hazardous Waste is or has been
located on any Property, except for cleaning and maintenance supplies used in
connection with properties similar to the Properties and except for materials
sold in the retail Properties which are customarily sold in comparable retail
properties, in each case which have been used, stored and sold, as
applicable, in compliance with all applicable Laws. As used in this
Agreement, the terms "Hazardous Substances" and "Hazardous Wastes" shall have
the meanings set forth in the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sections 1251 et seq, as amended,
and the regulations thereunder (collectively, "CERCLA"), Solid Waste Disposal
Act, 42 U.S.C. Sections 6901 et seq., as amended, including amendments under
Resource Conservation and Recovery Act, and the regulations thereunder
(collectively, "RCRA"), and Federal Water Pollution Control Act, 33 U.S.C.
Sections 1251 et seq., as amended, and regulations thereunder (collectively,
"the Federal Clean Water Act"), and the regulations thereunder, and such
terms shall also include asbestos, petroleum products, radon, radioactive
materials, lead paint, UFFI and any other regulated substances under any Law.
To the Contributors' knowledge and except as set forth in any environmental
report provided by the Contributors to BPP or otherwise obtained by BPP, in
each case within fifteen (15) days after the date of this Agreement, and
except as expressly disclosed on Schedule 3.1(o) attached hereto, no
Hazardous Substances or Hazardous Wastes other than materials customarily
used in such types of properties in compliance with Environmental Laws are
located on property adjacent to any Property. Except as disclosed in the
environmental report(s) delivered to BPP pursuant to Section 3.1(z)(xiv)
hereof or in any report obtained by BPP fifteen (15) days after, neither the
Contributors, nor any Contributor has received written notice of, or has
knowledge of, any notice from any Authority concerning the removal, treatment
or management of any Hazardous Substances or Hazardous Wastes. BPP and the
Operating Partnership hereby waive any claim against the Contributors under
CERCLA and RCRA and any comparable state laws, entitling BPP and the
Operating Partnership to bring a claim against the Contributors.
(p) Physical Condition. To the Contributors' knowledge and
except as set forth in any engineering or similar report provided by the
Contributors to BPP or otherwise obtained by BPP, in each case prior to the
date of this Agreement, the Improvements do not contain any structural
defects or material defects in the plumbing, HVAC, electrical distribution,
gas distribution, water or sewer building systems.
(q) [Intentionally Omitted.]
43
(r) Non-Foreign Person. No Contributor or Existing Partner is a
"foreign person" as defined in Section 1445(f)(3) of the Code. No
Contributor or Existing Partner is subject to withholding under Section 26131
of the California Revenue and Taxation Code.
(s) Independent Unit. Except for matters included in the
Permitted Exceptions and as set forth in the Leases, to the Contributors'
knowledge each Property forms an independent unit which does not need to rely
on any facilities other than the facilities of public utility companies and
water or sewer departments or districts, located on any property not included
in such Property (i) to fulfill any requirement of any License or applicable
Law or (ii) for furnishing essential building systems or utilities,
including, without limitation, electrical, plumbing, mechanical, telephone,
cable television and heating, ventilating and air conditioning systems. To
the Contributors' knowledge, no building, other improvement or other land not
included in such Property relies on any portion of such Property to fulfill
any requirement of any License or applicable Law or the furnishing to such
building or improvement of any essential building system or utility.
(t) Disclosure. To the Contributors' knowledge, the
representations and warranties and the statements and information contained
in this Agreement, in the Exhibits and Schedules hereto and in all of the
materials delivered by the Contributors to BPP and its counsel, accountants,
appraisers and consultants pursuant to this Agreement or in connection with
the due diligence investigations conducted by or on behalf of BPP in
connection with this Agreement do not contain any untrue statement of a
material fact and, when taken together, do not omit to state a material fact
required to be stated therein or necessary in order to make such
representations, warranties, statements or information not misleading in
light of the circumstances under which they were made.
(u) Accredited Investors. Each of the Existing Partners is an
Accredited Investor.
(v) Financial Statements. All operating statements delivered to
BPP by the Contributors were prepared by or on behalf of the Contributors in
the ordinary course of business and accurately set forth in all material
respects the results of the operation of each Property for the periods
covered, except that such financial statements are unaudited, were not
prepared in accordance with GAAP and do not contain traditional footnotes
found in GAAP type reporting. Since the date of the most recent internally
prepared operating statements provided to BPP, there has been no material
adverse change in the condition, financial or otherwise, of the Properties
taken as a whole.
(w) Pending Actions; Labor Disputes. There is no existing or, to
the Contributor's knowledge, threatened Action of any kind involving any
Contributor or any Property or which, if determined adversely to it or its
assets, including, without limitation, any Property would materially
interfere with the ability of the Contributors to execute or deliver, or
perform each of its obligations under, this Agreement, the Operating
Partnership Agreement, the
44
Registration Rights Agreement or the other Related Agreements executed by it or
have a material adverse effect on the financial position, operations, business
or prospects of the Contributors or their assets, including, without limitation,
any Property or the use, occupancy, operation or value of any Property. To the
best of the Contributors' knowledge, there are no complaints of unfair labor
practices pending with respect to any Person which currently have a material
adverse effect on any Property.
(x) Tax Consequences. The Contributors acknowledge that neither
BPP, the Operating Partnership nor any Affiliate shall assume any
responsibility for the Contributors' or the Existing Partners' federal or
state tax consequences of the transactions contemplated by this Agreement,
the Operating Partnership Agreement and the other Related Agreements to the
Contributors or the Existing Partners, other than to agree to report the
transactions for federal and state tax purposes consistently with the manner
agreed to by BPP and the Contributors, and with respect to representations
and warranties made by the Operating Partnership and BPP to the Contributors
in this Agreement relating to tax matters. BPP acknowledges that the
Existing Partners desire that the transaction will be reported for federal
and state income tax purposes as to such Existing Partners as a non-taxable
transaction.
(y) Insurance. The Contributors currently have in place the
public liability casualty and other insurance coverage with respect to each
Property set forth in Exhibit DD, and each of such insurance policies is in full
force and effect and all premiums due and payable thereunder have been fully
paid when due. Upon request, the Contributors will deliver or make available to
BPP all copies of all insurance policies and arrangements with respect to the
Property.
(z) Additional Deliveries The Contributors have delivered or
made available to BPP the following with respect to each Property:
(i) copies of all title policies and copies of any and all
existing and proposed easements, covenants, restrictions, agreements or other
documents known to the Contributors which affect or may in the future affect
title to the Property and which are not disclosed by the Preliminary Report;
(ii) the most current version of any existing survey(s) of the
Real Property in the possession or control of the Contributors;
(iii) copies of the property tax bills and assessments for
each Property for the three (3) most recent years, and evidence of payment
thereof, except that with respect to any period prior to a Contributor's
ownership of a Property, only to the extent such documents are in the possession
or control of the Contributors;
(iv) to the knowledge of the Contributors, all presently
effective warranties or guaranties from any contractors, subcontractors,
suppliers, servicemen or
45
materialmen in connection with the Property in the possession or control of the
Contributors, including, without limitation, any construction, renovation,
repairs or alterations of any Improvements, any Personal Property or any tenant
improvements (collectively, the "Warranties");
(v) to the knowledge of the Contributors, a Schedule setting
forth a list of all of the Contracts relating to the Property, together with
copies of all of such Contracts. If requested in writing by BPP, the
Contributors shall on the Closing Date give notice to the applicable supplier or
service provider to terminate any Contract specified by BPP in such request to
be terminated. All Contracts with an Affiliate of a Contributor shall be
terminated by the Contributors effective as of the Closing Date unless otherwise
requested by BPP;
(vi) except as set forth in Schedule 3.1(z)(vi) or which are
included in the Permitted Exceptions there is no currently pending or, to the
Contributors' knowledge, threatened (in writing) (i) rezoning, condemnation or
eminent domain proceedings with respect to any Properties other than road
widenings or changes of grade of roads which would not have a material adverse
effect on the applicable Property's value or operations, (ii) change in the
assessed valuation of any Property which would have a material adverse effect on
the applicable Property's value, (iii) special assessment against any Property,
or (iv) so-called "impact fee" or any agreement with any Authority to hereafter
pay for sewer extension, oversizing utilities, lighting or like expenses or
charges for work or services by such Authority except as set forth in
Schedule 4.11 or any capital expenditure budget and except as reflected in the
current operating statements for the Properties, all of which have previously
been delivered or made available to BPP;
(vii) to the knowledge of the Contributors and to the extent
in the possession or control of the Contributors, soil reports, site plans (with
dimensions), seismographic reports, traffic reports, demographic information,
landscape plans, structural calculations, floor plans (identifying tenant and
vacancy locations), certified copies of the as-built plans and specifications,
architect's certificates certifying the square footage of the Improvements, all
items pertaining to any remodeling or renovation of the Property, construction
contracts, existing inspection reports with respect to pest control, other
reports or documents of significance to the Property, copies of the zoning
description applicable to the Property, and copies of final certificates of
occupancy (or equivalent) for all improvements at the Property;
(viii) a complete inventory of all material Personal Property
used at or in connection with the Property;
(ix) all income and expense statements and year-end financial
statements and monthly operating statements and year-to-date statements for the
period of the applicable Contributor's period of ownership and, to the extent in
the possession or control of any Contributor and to the Contributor's knowledge,
the three (3) most recent calendar years prior to Closing (audited, if in any
Contributor's possession or control).
46
(x) (A) copies of the operating and capital budgets for the
Property for 1997 and 1998, (B) a comparison of actual to budgeted results for
the current year and an explanation of significant variances, (C) a list of all
capital expenditures for the Property for the period of the applicable
Contributor's ownership and, if within such Contributor's possession or control
and to the knowledge of the Contributors, up to one (1) year and, to the extent
in the possession or control of any Contributor, the three (3) most recent
calendar years, (D) an aged receivables report indicated as part of the Rent
Roll.
(xi) (A) copies of all existing and pending Leases and to the
knowledge of the Contributors all lease files (including, without limitation,
all guarantees, subleases and assignments) and tenant correspondence, (B) copies
of all outstanding executed or pending letters of intent with prospective
tenants, (C) a current leasing status report from the leasing broker(s), (D) a
copy of the current standard lease form, (E) the "Rent Roll"; and (F)to the
extent in the Contributors' possession or control and to the knowledge of
Contributors, copies of the most recent financial statements and credit reports
or other credit information, if any, on any tenant and of any guarantors of any
Leases.
xii) to the knowledge of the Contributors, copies of all
Licenses;
(xiii) (A) a schedule setting forth all Actions (i) pending or
to the Contributors' knowledge threatened against any Contributor or any manager
of a Contributor which relates to a Property, or a Property, which (y) question
or could reasonably be expected to question the validity or legality of the
transaction contemplated hereunder or under the Related Agreements or (z) affect
or could reasonably be expected to affect the Property in any adverse way, and
(B) copies of all notices of any violations of any Law received by or otherwise
in the possession or control of the Contributors relating to the Property.
(xiv) To the extent in the possession or control of the
Contributors and to the knowledge of the Contributors, all environmental audits
and reports and building inspection reports (including, without limitation,
regarding foundation, walls, roofs, floors, supports and mechanical systems such
as HVAC to the extent available) and reports regarding the compliance of the
Property with the requirements of the Americans with Disabilities Act of 1990
(42 U.S.C. 12181, et seq.).
To the extent received by or made available to BPP, each of BPP and
the Operating Partnership has reviewed each of the foregoing materials and has
conducted such diligence with respect to the Properties as it has deemed
appropriate, and each of BPP and the Operating Partnership expressly
acknowledges that is has no right to terminate this Agreement based on the
results of its diligence on the Properties. However, nothing contained in this
Agreement shall be deemed to limit BPP's right to require information and
continue to perform due diligence pursuant to the terms of this Agreement after
the date hereof.
47
(aa) Blue Sky Cooperation. The Contributors and each Existing
Partner shall cooperate and do all acts as may be reasonably required or
requested by BPP with regard to the fulfillment of any requirement under
applicable state securities law to qualify the Units and the Preferred Units for
distribution pursuant to this Agreement, including but not limited to the making
of any and all representations or undertakings required by applicable state
securities law or state securities regulators in connection with a Unit
Distribution.
(bb) Ownership of All Beneficial Interests. Each Contributor
represents that the Existing Partners listed in Exhibit A-1 with respect to such
Contributor own, directly or indirectly through intermediaries, in the aggregate
all of the beneficial interests in such Contributor.
(cc) Reciprocal Easement Agreements. To the Contributor's
knowledge, all reciprocal easement agreements referenced as Permitted Exceptions
or otherwise with respect to which any Property is subject are in full force and
effect, without default in any material respect by any party thereto.
(dd) Ground Leases. The Contributors have provided or made
available to BPP accurate and complete copies of the ground leases underlying
the leasehold Properties referenced in Exhibit A-2, including all amendments and
modifications thereto (collectively, the "Ground Leases"). Each of the Ground
Leases is valid, binding and in full force and effect as against the applicable
Contributor, and, to the Contributor's knowledge, against any other party
thereto. Except for the Mortgage Debt with respect to such Ground Leases listed
in Exhibit F and except for tenants under the Leases and matters set forth in
the Permitted Exceptions, none of the Ground Leases is subject to any pledge,
lien, assignment, license or other agreement granting to any third party any
interest therein or any right to use or occupancy of any premises leased
thereunder. Except as set forth in Schedule 3.1(dd), there is no pending or, to
the Contributor's knowledge, threatened (in writing) proceeding which is
reasonably likely to interfere with the quiet enjoyment of the tenant under any
Ground Lease. No payments under any Ground Lease are delinquent, and no notice
of default thereunder has been sent or received by any of the Contributors which
has not been cured or waived prior to the date hereof, and to the knowledge of
the Contributors there does not exist under any of the Ground Leases any other
material default by a Contributor or any event which, merely with notice or
lapse of time or both, would constitute such a default by a Contributor.
(ee) Representations and Warranties of BPP and the Operating
Partnership. To the Contributors' knowledge, as of the date of this Agreement
the representations, warranties and statements of BPP and the Operating
Partnership in this Agreement and the information contained in this Agreement
and the Exhibits and Schedules hereto delivered by BPP and the Operating
Partnership to the Contributors do not contain any untrue statement of a
material fact and do not otherwise constitute a breach by BPP and the Operating
Partnership under this Agreement.
48
For purposes of this Section the term "to the Contributor's
knowledge" or words of similar import shall mean the actual knowledge (as
opposed to imputed or constructive knowledge) of Messrs. Xxxx X. Xxxx, Xxxx
X. Xxxxxxx and Xxxx X. Xxxxxxx and Xxxxxx Xxxxxxxxx who are all of the
individuals who are directors and executive officers of the general partners
of the Contributors who know or should know the matters referenced herein,
without duty of further inquiry, and also includes any matter of which BPP
informs the Contributors in writing prior to the date hereof or to which the
Contributors acknowledge or agree in writing to BPP. Except for the
representations and warranties of the Contributors set forth in this
Agreement and as may be set forth in any of the closing documents delivered
by the Contributors pursuant to Section 2.1(q), the Properties are being
contributed to Operating Partnership in their "as is" condition without any
express or implied warranty whatsoever from the Contributors.
3.2 Representations and Warranties of BPP. BPP and the Operating
Partnership jointly and severally represent and warrant to the Contributors and
the Existing Partners as of the date of this Agreement and make certain
covenants as follows:
(a) Organization and Qualification, Subsidiaries.
(i) BPP is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Maryland. BPP has all requisite
corporate power and authority to own, operate, lease and encumber its properties
and conduct the business in which it is engaged or proposes to engage through
the Operating Partnership and to enter into this Agreement, the Operating
Partnership Agreement and those other Related Agreements to which it is a party,
and to perform its obligations hereunder and thereunder and to consummate the
UPREIT Transaction.
(ii) The Operating Partnership is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Operating Partnership has all requisite partnership power and
authority to own, operate, lease and encumber its properties and conduct the
business in which it engages or proposes to engage and to enter into this
Agreement and each of the Related Agreements to which it is a party, and to
perform its obligations hereunder and thereunder.
(iii) Each of the Subsidiaries of BPP (other than the
Operating Partnership) is a corporation, partnership or limited liability
company duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization, and has the corporate,
partnership or limited liability company power and authority to own its
properties and carry on its business as it is now being conducted.
(iv) Each of BPP, the Operating Partnership and the Subsidiaries
is duly qualified to do business and in good standing in each jurisdiction in
which the ownership of its property or the conduct of its business requires such
qualification, except as set forth in Schedule 3.2 (a)(iv).
49
(v) Schedule 3.2(a)(v) sets forth the name of each Subsidiary of
BPP or the Operating Partnership (whether owned directly or indirectly through
one or more intermediaries). All of the outstanding shares of capital stock of,
or other equity interest in, each of the Subsidiaries owned by BPP or the
Operating Partnership are duly authorized, validly issued, fully paid and
nonassessable, and are owned, directly or indirectly, by BPP or the Operating
Partnership free and clear of all Liens, except as set forth in Schedule
3.2(a)(v). The following information for each Subsidiary is set forth in
Schedule 3.2(a)(v)(A), if applicable: (A) its name and jurisdiction of
incorporation or organization, (B) the type of and interest held by BPP or
Operating Partnership in the Subsidiary and, in the case of Subsidiaries, the
partnership agreement or other organizational documents of the Subsidiary, and
(C) any loans from BPP or the Operating Partnership to, or priority payments due
to BPP or the Operating Partnership from, the Subsidiary, and the rate of return
thereon. Except as set forth in Schedule 3.2(a)(v), there are no existing
options, warrants, calls, subscriptions, convertible securities or other rights,
agreements or commitments which obligate BPP or any of the Subsidiaries to
issue, transfer or sell any shares of capital stock or equity interests in any
of the Subsidiaries.
(b) Authority Relative to Agreements; Board of Approval; No
Conflicts; No Defaults, Required Filings and Consents.
(i) The execution, delivery and performance of this Agreement,
the Operating Partnership Agreement and the Related Agreements, the issuance of
the Units and Preferred Units in accordance herewith and the Operating
Partnership Amendment, the issuance and delivery of (A) shares of Preferred
Stock or Units upon redemption of the Preferred Units in accordance with the
provisions of the Operating Partnership Amendment, and (B) shares of Common
Stock upon the redemption of Units in accordance with the Operating Partnership
Agreement, and the filing with the Maryland Department of Assessments and
Taxation of the Articles Supplementary, have been duly and validly authorized by
all necessary corporate action on the part of BPP and all necessary partnership
action on the part of the Operating Partnership. This Agreement, the Operating
Partnership Agreement and the Related Agreements have been duly executed and
delivered by each of BPP and the Operating Partnership constitute the valid and
legally binding obligations of each of BPP and the Operating Partnership,
enforceable against each of BPP and the Operating Partnership in accordance with
its terms, subject to applicable bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights and general principles of equity.
Upon the issuance of shares of Preferred Stock pursuant to a redemption of
Preferred Units for Preferred Stock, the Articles Supplementary will constitute
a valid and legally binding obligation of BPP, enforceable against BPP in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights or general
principles of equity.
(ii) The Units and Preferred Units to be issued pursuant to this
Agreement have been duly authorized for issuance by all necessary partnership
action on the part of the Operating Partnership, and when issued by the
Operating Partnership will be duly and validly issued, fully paid and
nonassessable. When issued and delivered against payment
50
therefor as provided herein, the Existing Partners will receive good title to
such Units and Preferred Units, free and clear of all Liens, security interests,
pledges, charges, encumbrances, shareholders' agreements and voting trusts or
claim or rights of interest of any nature whatsoever, subject to any rights of
the Contributors or the Existing Partners hereunder and under the Registration
Rights Agreement, and except for those resulting from any action taken by the
Contributors or the Existing Partners. A sufficient number of shares of
Preferred Stock or Common Stock to be issued by BPP upon the redemption of the
Preferred Units or Units (as the case may be) issued pursuant to this Agreement
have been duly reserved by BPP out of its authorized shares of Common Stock and
Preferred Stock for issuance pursuant to duly adopted resolutions. The shares
of Common Stock and Preferred Stock issuable upon redemption of the Units and
Preferred Units in accordance with the provisions of the Operating Partnership
Amendment will, upon issuance upon such redemption, (A) be duly and validly
issued, fully paid and nonassessable, and (B) will be shares of "Voting Stock"
(as defined in the Company Charter).
(iii) BPP's Board of Directors has authorized the creation
and issuance of the Preferred Stock. At the Closing, the Articles Supplementary
will have been duly authorized, and filed with the State Department of
Assessments and Taxation of the State of Maryland such that no further actions
are required for the due and valid issuance of Preferred Stock in accordance
herewith and therewith.
(iv) The issue and sale of Preferred Units or Units hereunder
will not give any stockholder in BPP or any limited partner in the Operating
Partnership the right to demand payment for shares or partnership interests (as
the case may be) under applicable law or give rise to any preemptive or similar
rights.
(v) The UPREIT Transaction has been duly authorized by all
necessary corporate action on the part of BPP and all necessary partnership or
limited liability company action on the part of the Operating Partnership or any
Subsidiary except those Subsidiaries listed as downREIT partnerships on Schedule
3.2(b)(v).
(vi) Except as contemplated hereby, neither the execution and
delivery by BPP and the Operating Partnership of this Agreement, the Operating
Partnership Agreement and the Related Agreements nor the consummation by BPP,
the Operating Partnership or any Subsidiary of the transactions contemplated
hereby, including the UPREIT Transaction, in accordance with the terms hereof,
will:
(A) conflict with or result in a breach of any provisions
of the Company Charter or by-laws of BPP;
(B) conflict with or result in a breach of any provisions
of the Operating Partnership Agreement or the Operating Partnership Amendment;
51
(C) except as set forth in Schedule 3.2(b)(vi)(C), result
in a breach or violation of, a default under, or the triggering of any right,
payment or other obligation pursuant to, or accelerate vesting under, any of BPP
stock option plans or Operating Partnership unit option plans or similar
compensation plans or any grant or award made under any of the foregoing;
(D) violate or conflict with any regulation, rule, order,
or administrative position of the NYSE, or any other national securities
exchange on which the Common Stock is listed;
(E) except as set forth in Schedule 3.2(b)(vi)(E), violate
or conflict with any statute, regulation, judgment, order, writ, decree or
injunction applicable to BPP, the Operating Partnership or any Subsidiary;
(F) except as set forth in Schedule 3.2(b)(vi)(F), violate
or conflict with or result in a breach of any provision of, or constitute a
default (or any event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or accelerate the performance required by, or
result in the creation of any Lien upon any of the properties of BPP or its
Subsidiaries under, or result in being declared void, voidable or without
further binding effect, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust or any license, franchise, permit,
lease, contract, agreement or other instrument, commitment or obligation to
which BPP or its Subsidiaries is a party, or by which BPP or its Subsidiaries or
any of their properties is bound or affected;
(G) except as set forth in Schedule 3.2(b)(vi)(G), require
any consent, approval or authorization of, or declaration, filing or
registration with, any Authority, other than any filings required under the
Securities Act of 1933, the Exchange Act, the HSR Act , state securities laws
("Blue Sky Laws") (collectively, the "Regulatory Filings"), and any filings
required to be made with the Office of the Maryland Department of Taxation and
Assessments and the NYSE or any other national securities exchange on which the
Common Stock is listed; or
(H) conflict with or result in a breach of any provision of
the organizational documents of any Subsidiary.
(c) Capital Stock and Units.
(i) The authorized capital stock of BPP on the date hereof
consists of 75,000,000 shares of Common Stock, and 5,000,000 shares of preferred
stock, of which 4,800,000 shall be designated Preferred Stock upon the filing of
the Articles Supplementary, and 20,000,000 shares of excess stock of the Company
(the "Company Excess Stock"), par value $0.01 per share. As of September 30,
1997, there were 23,432,852 shares of Common Stock issued and outstanding, no
shares of such preferred stock issued and outstanding and no shares of
52
Company Excess Stock issued and outstanding, and as of the date of this
Agreement, there is no change except for an immaterial change in the number of
shares of Company Stock outstanding. All such issued and outstanding shares of
Common Stock are duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. In addition, as of the date of this Agreement, BPP
has reserved out of its authorized shares of Common Stock shares of Common Stock
sufficient for issuance upon redemption or conversion, as applicable, of the
shares of Preferred Stock, the Units and the Preferred Units issued pursuant to
this Agreement and the Preferred Stock Purchase Agreement. BPP has no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities the holders of which have the right to vote) with the stockholders of
BPP on any matter. Except for the options awarded and the Company's Stock
Option and Incentive Plan as amended on May 6, 1997 (the "Incentive Plan"),
there are no existing options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate BPP to
issue, transfer or sell any shares of capital stock or other equity interests of
BPP except with respect to certain "put" rights as disclosed in Schedule
3.2(a)(v) and with respect to the right to receive Units as Additional
Consideration as provided in this Agreement. The consummation of the
transactions contemplated in this Agreement will not give rise to any preemptive
rights or antidilution rights exercisable by any holder of Company Stock except
for any such rights which have been waived.
(ii) Schedule 3.2(c)(ii) will set forth the number of Units and
Preferred Units which will be outstanding immediately after the Closing (after
giving effect to the transactions contemplated hereby and by the Preferred Stock
Purchase Agreement). The Units set forth on such Schedule will equal the sum
of: (A) a number of Units to be held by BPP not in excess of the number of
shares of Common Stock then outstanding, (B) the number of Units then
outstanding and issued to the Existing Partners hereunder, (C) a number of
Preferred Units equal to that number of shares of Preferred Stock then
outstanding and issued to Xxxxxxxxx under the Preferred Stock Purchase
Agreement, (D) that number of Preferred Units equal to the number of Preferred
Units then outstanding and issued to the Existing Partners hereunder, (E) the
number of Units then held by other contributors of property to down REIT
Subsidiaries of BPP or the Operating Partnership which have exchanged Units in
such down REIT subsidiaries for Units, which number shall be set forth in
Schedule 3.2(c)(ii), and (F) that number of Units then held by other
contributors of property to downREIT partnership Subsidiaries of BPP or to the
Operating Partnership, which number shall be set forth in Schedule 3.2(c)(ii).
All such Units will be validly issued, fully paid and, in the case of limited
partnership units, nonassessable. Immediately after the Closing (after giving
effect to the transactions contemplated hereby and by the Preferred Stock
Purchase Agreement) (i) BPP will own the number of Units referred to in clause
(A) of the first sentence of this Section 3.2(c)(ii), and 2,800,000 Preferred
Units referred to in clause (C) of the first sentence of this Section
3.2(c)(ii). Except as aforesaid, there will be no other Units issued or
outstanding and no class of units, or any other form of general or limited
partnership interest, of the Operating Partnership issued or outstanding
immediately after the Closing (after giving effect to the transactions
contemplated hereby and by the Preferred Stock Purchase Agreement). Except as
set forth in the first sentence of this Section 3.2(c)(ii) or in
53
Schedule 3.2(c)(ii), as of the Closing Date the Operating Partnership will not
have issued or granted securities convertible into interests in the Operating
Partnership, and will not be a party to any outstanding commitments of any kind
relating to, or any agreements or understandings with respect to, interests in
the Operating Partnership, whether issued or unissued, except for contribution
agreements entered into for the acquisition of properties by the Operating
Partnership. The Preferred Units that will be owned by BPP from and after the
Closing will have the same distribution and liquidation preferences with respect
to the Operating Partnership as the Preferred Stock has with respect to BPP,
which distributions shall be applied by BPP exclusively to satisfy the rights of
the holders of Preferred Stock.
(iii) Except as set forth on Schedule 3.2(c)(iii) and except
for interests in the Subsidiaries of BPP and the Operating Partnership, none of
BPP or any of its Subsidiaries owns directly or indirectly any interest or
investment (whether equity or debt) in any corporation, partnership, joint
venture, business, trust or entity (other than investments in short-term
investment securities).
(d) Pending Actions. There is no existing or, to BPP's knowledge,
threatened Action of any kind involving BPP, its Affiliates, any of its assets
or the operation of any of the foregoing, which, if determined adversely to BPP,
its Affiliates or its assets, would have a material adverse effect on the
consolidated financial position, stockholders' equity, results of operations,
business or prospects of BPP or its assets or which would interfere with BPP's
ability to execute or deliver, or perform its obligations under this Agreement,
the Registration Rights Agreement or any of the Related Agreements executed by
it or the Operating Partnership.
(e) SEC and Other Documents, Financial Statements; Undisclosed
Liabilities.
(i) BPP has delivered or made available to the Contributors, or
there are commercially available to BPP in the ordinary course, all annual,
quarterly or current reports of BPP filed with the Commission under the Exchange
Act, and in connection with BPP's registration statement bearing number
333-31591, and all exhibits, amendments and supplements thereto (collectively,
the "Company Registration Statement"), and each registration statement, report,
proxy statement or information statement and all exhibits thereto prepared by it
or relating to its properties in each case (except the Company Registration
Statement, since January 1,1994 (except as to the Company Registration Statement
as to which the applicable date shall be the effective date thereof), which are
set forth in Schedule 3.2(e)(i), each in the form (including exhibits and any
amendments thereto) filed with the Commission (collectively, the "Company
Reports"). The Company Reports were filed with the Commission in a timely
manner and constitute all forms, reports and documents required to be filed by
BPP under the Securities Act, the Exchange Act and the rules and regulations
promulgated thereunder. As of their respective dates, the Company Reports (i)
complied as to form in all material respects with the applicable requirements of
the Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in
54
the light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that as to the compliance of the Company Reports with the
requirements of the Securities Act, the Exchange Act and the rules and
regulations promulgated thereunder, insofar as such representation is made as to
matters of form established in the Securities Act, the Exchange Act and the
rules and regulations promulgated hereunder, and assuming that such Company
Reports were prepared under the direction of and with the advice of independent
counsel and auditors to BPP, it is a representation made to BPP's knowledge.
There is no unresolved violation or position asserted by any Authority with
respect to any of the Company Reports.
(ii) Except as set forth in Schedule 3.2(e)(ii), each of the
balance sheets included in or incorporated by reference into the Company Reports
(including the related notes and Schedules) fairly presented the financial
position of the entity or entities to which it relates as of its date and each
of the statements of operations, stockholders' equity (deficit) and cash flows
included in or incorporated by reference into the Company Reports (including any
related notes and Schedules) fairly presented the results of operations,
retained earnings or cash flows, as the case may be, of the entity or entities
to which it relates for the periods set forth therein, in each case in
accordance with United States generally accepted accounting principles ("GAAP")
consistently applied during the periods involved except as may be noted therein
and except, in, the case of the unaudited statements, normal recurring year-end
adjustments.
(iii) Except as and to the extent set forth in the Company
Reports or any Schedule or Exhibit hereto, none of BPP, the Operating
Partnership or any of the Subsidiaries has any Liabilities.
(f) Litigation, Compliance With Law.
(i) Except as disclosed in Schedule 3.2(f)(i), there are no
Actions pending or, to BPP's knowledge, threatened against BPP, the Operating
Partnership or any of the Subsidiaries which question the validity hereof or any
action taken or to be taken in connection herewith (including, without
limitation, the UPREIT Transaction), and there are no continuing orders,
injunctions or decrees of any Authority to which BPP, the Operating Partnership
or any of its Subsidiaries is a party or by which any of its properties or
assets are bound.
(ii) To BPP's knowledge, none of BPP, the Operating Partnership
or its Subsidiaries is in violation of any statute, rule, regulation, order,
writ, decree or injunction of any Authority or any body having jurisdiction over
them or any of their respective properties, except as set forth in Schedule
3.2(f)(ii), provided, however, that this Section 3.2(f)(ii) shall not apply to
facts or matters otherwise set forth in (or by reference in) Sections 3.2(j) and
3.2(k) as to which Sections 3.2(j) and 3.2(k) shall apply.
(g) Absence of Certain Changes or Events. Except as disclosed in the
Company Reports filed with the Commission prior to the date hereof, as
contemplated by any of the Related Agreements or in Schedule 3.2(g) since
September 30, 1997, BPP, the Operating
55
Partnership and each of its Subsidiaries have conducted their business only in
the ordinary course of such business and have not acquired any real estate or
entered into any financing arrangements in connection therewith or conducted
their business, other than in each case, in the ordinary course of business, and
there has not been (A) any change, circumstance or event that would reasonably
be expected to result in an adverse effect on the business, operations or
condition (financial or otherwise) of BPP, the Operating Partnership and the
Subsidiaries, considered as a whole, (B) any declaration, setting aside or
payment of any dividend or other distribution with respect to the Common Stock,
except for dividends in the ordinary course of business consistent with past
practice or otherwise, (C) any commitment, contractual obligation, borrowing,
capital expenditure or transaction (each, a "Commitment") entered into by the
Company, the Operating Partnership or any of the Subsidiaries other than in the
ordinary course of business or (D) any change in the Company's accounting
principles, practices or methods other than as required by changes in GAAP and
related accounting practices or procedures. Except as set forth in Schedule
3.2(g), BPP is not now contemplating entering into any Commitment which, had it
occurred on or before the date hereof, would be required to be disclosed in the
Company Reports or in Schedule 3.2(g).
(h) Tax Matters; REIT and Partnership Status.
(i) BPP, the Operating Partnership and each of the Subsidiaries
has timely filed with the appropriate taxing authority all Tax Returns required
to be filed by it or has timely requested extensions and any such request has
been granted and has not expired. Each such Tax Return is complete and accurate
in all respects. All Taxes shown as owed by BPP, the Operating Partnership or
any of the Subsidiaries on any Tax Return have been paid or accrued, except for
Taxes being contested in good faith and for which adequate reserves have been
taken, in the reasonable opinion of BPP. BPP, the Operating Partnership and
each of the Subsidiaries has properly accrued all Taxes for such periods
subsequent to the periods covered by such Tax Returns as required by GAAP.
Except as set forth in Schedule 3.2(h)(i), none of BPP, the Operating
Partnership and any of the Subsidiaries has executed or filed with the IRS or
any other taxing authority any agreement now in effect extending the period for
assessment or collection of any Tax. Except as set forth in Schedule 3.2(h)(i),
none of BPP or any of the Subsidiaries is a party to any pending action or
proceedings by any taxing authority for assessment or collection of any Tax, and
no claim for assessment or collection of any Tax has been asserted against it.
True and complete copies of all federal, state and local income and franchise
Tax Returns, or any extensions applicable thereto, filed by BPP and each of the
Subsidiaries for the taxable years 1994 to the present and all communications
relating thereto, have been delivered to the Contributors or have been made
available for inspection by their representatives. Except as set forth in
Schedule 3.2(h)(i), no claim has been made by an authority in a jurisdiction
where BPP, the Operating Partnership or any of the Subsidiaries does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction.
Except as set forth in Schedule 3.2(h)(i), there is no dispute or claim
concerning any Tax liability of BPP, the Operating Partnership or any of the
Subsidiaries claimed or raised by any taxing authority in writing. As of the
date hereof, BPP is a "domestically-controlled" REIT within the meaning of Code
Section 897(h)(4)(B). Except as set
56
forth in Schedule 3.2(h)(i), to BPP's knowledge no person or entity which would
be treated as an "individual" for purposes of Section 542(a)(2) of the Code (as
modified by Section 856(h) of the Code) owns or would be considered to own
(taking into account the ownership attribution rules under Section 544 of the
Code, as modified by Section 856(h) of the Code) in excess of 9.8% of the value
of the outstanding equity interest in BPP. BPP is not a "Pension-Held REIT"
within the meaning of Section 856(h)(3)(D) of the Code.
(ii) BPP (A) intends in its federal income tax return for the tax
year ended December 31, 1997 and for the tax year that will end on December 31,
1998 to elect to be taxed as a REIT and has complied (or will comply) with all
applicable provisions of the Code relating to a REIT, (B) has operated, and
intends to continue to operate, in such a manner as to qualify as a REIT for
each of its taxable years, (C) has not taken or omitted to take any action which
would reasonably be expected to result in a challenge to its status as a REIT,
and no such challenge is pending or to BPP's knowledge, threatened, and (D) will
not be rendered unable to qualify as a REIT for federal income tax purposes as a
consequence of the transactions contemplated hereby, including, without
limitation, any exchange of Preferred Units by any holders thereof by BPP for
Preferred Stock or Common Stock, or both.
(iii) Any amount or other entitlement that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated hereby by any employee, officer, or director of
BPP or the Operating Partnership or any of their Affiliates who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.28OG-1) under any employment, severance or termination
agreement, other compensation arrangement or plan currently in effect would not
be characterized as an "excess parachute payment" (as such term is defined in
Section 28OG(b)(1) of the Code).
(iv) The disallowance of a deduction under Section 162(m) of the
Code for employee remuneration will not apply to any amount paid or payable by
BPP, the Operating Partnership or any of the Subsidiaries under any contract,
stock plan, program, arrangement or understanding currently in effect.
(v) BPP was eligible to and did validly elect to be taxed as a
REIT for federal income tax purposes for calendar year 1987 and all subsequent
taxable periods. The Operating Partnership is and each Subsidiary of BPP
organized as a partnership (and any other Subsidiary that files Tax Returns as a
partnership for federal income tax purposes) was, in the case of each
Subsidiary, and continues to be classified as a partnership for federal income
tax purposes.
(i) Compliance with Agreements; Liens.
(i) Neither BPP, the Operating Partnership nor any of the
Subsidiaries is in default under or in violation of any provision of the Company
Charter, the by-laws of BPP
57
or the Operating Partnership Agreement (or equivalent documents), except as set
forth in Schedule 3.2(i)(i).
(ii) BPP, the Operating Partnership and each of the Subsidiaries
have filed all material reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were required to
file with any Authority and all other material reports and statements required
to be filed by them, and have paid all fees or assessments due and payable in
connection therewith, except as set forth in Schedule 3.2(i)(ii). There is no
unresolved violation asserted by any regulatory agency, nor has BPP or the
Operating Partnership received notice from any regulatory agency with respect to
any report or statement relating to an examination of BPP, the Operating
Partnership or any of the Subsidiaries.
(iii) The Company Reports describe all material agreements
(other than agreements relating to or contemplated by this Agreement and other
than agreements entered into the ordinary course of business relating to Company
Leases, indebtedness of BPP, commitments with respect thereto, the acquisition
or development or construction of, additions or expansions to, or management or
leasing services for commercial buildings or other real properties) which are
currently in effect and under which BPP, the Operating Partnership or any
Subsidiaries currently has, or expects to incur any obligation. Schedule
3.2(i)(iii) sets forth a complete and accurate list of all material agreements
(other than those listed in the parenthetical above) entered into by BPP, the
Operating Partnership or any Subsidiary as of the date hereof which are not
listed in the Company Reports or any other Schedule or Exhibit hereto, including
material Debt Instruments and except for agreements providing for the
transactions contemplated by this Agreement, the Preferred Stock Purchase
Agreement and the Related Agreements. True and complete copies of each
agreement set forth on Schedule 3.2(i)(iii) have been delivered or made
available to the Contributors.
(iv) Subject to the provisions of Section 3.2(j), which as to
facts or matters otherwise set forth therein (or by reference therein) such
Section 3.2(j) shall be applicable and this Section 3.2(i)(iv) shall not be
applicable, each agreement and instrument of BPP (other than those related to
the matters addressed in Section 3.2(j) and 3.2(k), which are addressed in such
Sections) is in full force and effect as against BPP, the Operating Partnership
and, as against the other parties thereto, no payments, if any, thereunder are
delinquent, and no notice of default thereunder has been sent or received by the
Company or any of its Subsidiaries and there does not exist under any agreement
of BPP, the Operating Partnership or its Subsidiaries any default, and no event
has occurred which, with notice or lapse of time or both, would constitute such
a default by BPP or any Subsidiary.
(v) Schedule 3.2(i)(v) sets forth a true, complete and correct
list of all Liens which could materially adversely affect the value of BPP or
the Company Properties other than those described in the Company Reports and
Liens under credit agreements providing for the financing of the Company
Properties and entered into by BPP or its subsidiaries in the
58
ordinary course of business, Company Permitted Exceptions relating to Company
Properties and items (i) through (iv) in the definition of Company Permitted
Liens.
(j) Properties.
(i) Title Matters. Schedule 3.2(j)(i) sets forth as of the date
of this Agreement a complete and accurate list and the location of all real
property directly or indirectly owned, all or in part, by BPP, the Operating
Partnership or any of the Subsidiaries or as to which BPP or its Subsidiaries
has a leasehold interest (collectively, and together with the land thereunder,
all buildings, structures and other improvements and fixtures (other than trade
fixtures owned by tenants under the terms of the Company Leases (as defined
below)) located on or under such land, and all easements, rights and other
appurtenances to such land, (the "Company Properties"), other than the office
space leased by the Company from which the Company operates its business which
is listed separately on Schedule 3.2(j)(i) as HQ Space (the "HQ Space"). As of
the date of this Agreement, BPP or, in the case of Company Properties owned by
Subsidiaries, the Subsidiary indicated on Schedule 3.2(j)(i), owns good and
marketable fee simple title (or, if so indicated in Schedule 3.2(j)(i),
leasehold title) to each of the Company Properties, and such title is (i) in the
case of those Company Properties with respect to which New Company Title
Policies will be issued, to BPP's knowledge, free and clear of any Liens, title,
defects, restrictions or covenants, or reservation of interests in title, except
for (A) Company Permitted Liens, (B) zoning, building, fire, health,
environmental and pollution control laws and other land use laws, ordinances,
rules and regulations applicable to the Company Properties, (C) all matters,
whether or not of record, to the extent caused by the Contributors or their
agents, representatives or contractors, and (D) all other matters listed as
exceptions on Schedule (B-1) of the New Company Title Policies or shown on any
survey of the Company Properties listed on Schedule 3.2(j)(i) or obtained by the
Contributors, and (ii) in the case of all other Company Properties (the "Other
Company Properties"), to the Company's knowledge, free and clear any liens,
title defects, restrictions or covenants or reservation of interests in title,
except for (A) Company Permitted Liens, (B) zoning, building, fire, health,
environmental and pollution control laws and other land use laws, ordinances,
rules and regulations applicable to the Company Properties, (C) all matters
whether or not of record, to the extent caused by the Contributors or their
agents, representatives or contractors, and (D) all other matters listed as
exceptions in Schedule (B-1) of the existing title policies (lender's or
owner's) provided to or made available to the Contributors prior to the date of
this Agreement and issued with respect to the Other Company Properties (the
"Other Company Title Policies") or shown on any survey of the Company Properties
listed on Schedule 3.2(j)(i) or obtained by the Contributors (items (i) (A)
through (D) and (ii)(A) through (D) are collectively referred to as the "Company
Permitted Exceptions"). BPP and the Operating Partnership also represent and
warrant that, with respect to the Other Company Properties, they have not
voluntarily created any liens or encumbrances not listed as exceptions to title
to the Company Properties since the date of the Other Company Title Policies
other than items which constitute Permitted Liens. None of the Company
Permitted Exceptions interferes with, impairs, or is violated by the existence
of any building or other structure or improvement which constitutes a part of,
or the present use,
59
occupancy or operation (or, if currently under rehabilitation or development,
such rehabilitation or development) of the Company Properties in any material
respect taken as a whole. Except as shown or described in any of the Company
Permitted Exceptions, or any survey listed on Schedule 3.2(j)(i) or obtained by
the Contributors, no material improvements constituting a part of any Company
Property encroach on real property not constituting a part of such Company
Property or an abutting Company Property unless there is a valid easement for
the benefit of BPP with respect thereto, with customary duration and terms for
institutional quality shopping centers, of a type generally acceptable to
institutional lenders, nor, except as so described or disclosed, are there other
material adverse matters (which, in the case of Company Properties with respect
to which there is a survey listed on Schedule 3.2(j)(i) has arisen since the
date thereof, or at any time in the case of all other Company Properties) that
would be disclosed by a current ALTA survey. To BPP's knowledge and except as
may be shown or indicated in any of the Company Permitted Exceptions, all
parcels of land included in each Company Property that purport to be contiguous
are contiguous and are not separated by strips, gaps or gores. All applicable
premiums with respect to the title policies regarding the Company Properties
have been paid and to the knowledge of BPP such policies are in full force and
effect. Except as set forth in Schedule 3.2(j)(i), there is no material
outstanding claim, nor, to BPP's knowledge, has any claim been made by BPP or
its Subsidiaries, or by any other party, that would reduce the stated coverage
under any such policy. True and complete copies of all such policies and the
surveys listed on Schedule 3.2(j)(i) of each of the Company Properties in the
possession or control of BPP have been made available by BPP to the Contributors
or to their representatives, and as of the date of this Agreement neither BPP
nor any of the Subsidiaries has any more recent policies or surveys for the
Company Properties.
(ii) A. Permitting and Compliance with Laws; Uninsured Damage
from Casualty; Property Condition. Except as set forth in Schedule 3.2(j)(ii)
and except with respect to the Development Properties, to BPP's knowledge there
has been obtained and is in full force and effect (i) any material currently
required certificate, permit or license (including certificates of occupancy (or
equivalent) for tenant space) from any Authority having jurisdiction over any
Company Property and (ii) any agreement, easement or other right which is
necessary to permit the lawful use, occupancy or operation of the existing
buildings, structures or other improvements which constitute a part of any of
the Company Properties as currently used, occupied or operated or which are
necessary to permit the lawful use and operation of any current utility service
to any Company Property or of any currently utilized driveways, roads or other
currently utilized means of egress and ingress to and from any of the Company
Properties and there is not pending, or to BPP's knowledge, threatened (in
writing) Action against BPP for the cancellation or material adverse
modification of any of same. To BPP's knowledge (provided, however, that with
respect to the Properties listed on Schedule 3.2(j)(ii)(A), such representation
shall be absolute, and shall not be qualified by knowledge, with respect to uses
allowed under zoning laws ), each Company Property is in material compliance
(compliance being deemed to include for such purposes pre-existing lawful zoning
nonconformities) with each federal, state or municipal law, ordinance, order,
regulation or requirement, including any applicable zoning law or building code,
or any insurance requirements applicable to any Company Property. Except
as
60
set forth in Schedule 3.2(j)(ii)(A), neither BPP nor the Subsidiaries have
received notice, of any violation of the Americans with Disabilities Act (the
"ADA") from any Authority or any notice from any other Person as to a material
violation of the ADA which BPP believes, in good faith, is valid, in each case
which have not been cured (or settled, with no further payments or performance
due from BPP or any Subsidiary, in the case of private matters. Except as set
forth in Schedule 3.2(j)(ii)(A), there is no uninsured current physical damage
to any Company Property from casualty in excess of $100,000. Except for repairs
identified in the Capital Expenditure Budget and Schedule and as set forth in
the Company Reports or the Property Condition Reports (as defined below), to the
Company's knowledge each Company Property other than a Development Property
(i) is in good or better operating condition and repair and is structurally
sound, and (ii) consists of sufficient land, parking areas, driveways and other
improvements and lawful means of access and utility service and capacity to
permit the use thereof in the manner and for the purposes to which it is
presently devoted (or, in the case of the Development Property and except as
noted in Section 3.2(j)(ix) or Schedule 3.2(j)(ix), for the development and
operation thereon of the applicable Project), except, in each such case, to the
extent that failure to meet such standards would not materially and adversely
affect the use or occupancy of the Company Properties. BPP has made available
to the Contributors or to its representative true and complete copies of the
most recent existing third party engineering and other third party property
condition reports relating to the condition of any Company Property prepared for
BPP or otherwise in BPP's or any Subsidiary's possession, and all other such
reports in BPP's or any Subsidiary's possession that sets forth material adverse
facts with respect to the condition of any Company Property (collectively, the
"Property Condition Reports").
B. Condemnation and Other Property-Related Actions. Except as set forth
in Schedule 3.2(j)(ii)(B) the Company Reports or which are included in the
Company Permitted Exceptions there is no currently pending or, to BPP's
knowledge, threatened (in writing) (i) rezoning, condemnation or eminent domain
proceedings with respect to any Company Properties other than road widenings or
changes of grade of roads which would not have a material adverse effect on the
applicable Company Property's value or operations, (ii) change in the assessed
valuation of any Company Property which would have a material adverse effect on
the applicable Company Property's value, (iii) special assessment against any
Company Property, or (iv) so-called "impact fee" or any agreement with any
Authority to hereafter pay for sewer extension, oversizing utilities, lighting
or like expenses or charges for work or services by such Authority except as set
forth in the Capital Expenditure Budget and Schedule or any Development Budget
and Schedule and except as reflected in the current operating statements for the
Company Properties, all of which have previously been delivered or made
available to the Contributors.
(iii) Independent Unit. Except for matters included in the
Company Permitted Exceptions, each of the Company Properties is an independent
unit which does not rely on any facilities, other than the facilities of public
utility companies and water and sewer departments or districts, which are
connected to the Company Properties through valid and customary easements, if
necessary or appropriate, located on any property not included in such Company
Property to fulfill any municipal or governmental requirements or for the
furnishing to
61
such Company Property of any essential building systems or utilities, or access
or parking other than facilities the benefit of which inures to the Company
Properties pursuant to one or more valid easements, or facilities which are
located on or abutting Company Properties pursuant to one or more valid
easements and are sufficient to serve more than one property adequately and
lawfully. Each of the Company Properties other than the Development Properties
is served by adequate water and sanitary systems and other utilities currently
used in the operation of such Company Property, and each of the Company
Properties has lawful access to public roads, in all cases sufficient for the
current use and occupancy of each Company Property. To BPP's knowledge and
except as may be shown or described in any of the Company Permitted Exceptions,
no material portion of any building improvements included in any Company
Property lies in any area designated by the U.S. Army Corps of Engineers or
other Authority as a special flood hazard area unless BPP or the applicable
Subsidiary maintains all required flood insurance with respect thereto.
(iv) [Intentionally Omitted].
(v) Leasing Matters. Attached hereto as Schedule 3.2(j)(v) is a
rent roll covering each Company Property (the "Company Rent Roll") which the
Company Rent Roll is true, complete and correct as of October 31, 1997 in all
material respects. The Company Rent Roll attached as Schedule 3.2(j)(v) shall
be updated to a date not more than five (5) Business Days prior to the Closing,
and it shall be a condition to the Contributors' obligation to close that such
updated rent roll shall not show any material variations from the attached
Company Rent Roll other than variations in the ordinary course of the BPP's and
its Subsidiaries business, which variations from the version of the Rent Roll
attached hereto as Schedule 3.2(j)(vi) do not have a material adverse effect on
the Company Properties. As of the date thereof, the Rent Roll lists all Company
Leases for any portion of each Company Property or otherwise affecting each
Company Property, and is accurate and complete in all material respects as of
the date of the Company Rent Roll. The copies of the Company Leases which have
been delivered or made available to the Contributors are true, correct and
complete, and constitute all outstanding Company Leases known to BPP relating to
each Company Property. BPP shall promptly provide true, complete and correct
copies of any Company Leases entered into after the date of this Agreement to
the Contributors. Each Company Lease (i) is in full force and effect with
respect to BPP or the applicable Subsidiary, and, to BPP's knowledge, the
applicable tenant; and (ii) constitutes the entire agreement between BPP and the
applicable Subsidiary and such tenant with respect to the applicable Company
Property and includes any other agreements between such parties related in any
way to such Property. Except as set forth on the Company Rent Roll, Schedule
3.2(j)(v), or the Capital Expenditure Budget and Schedule, all tenant
improvements and other improvements required to be furnished, constructed or
installed or paid for by BPP or a Subsidiary as landlord under each Company
Lease (and to BPP's knowledge, by any predecessor landlord under such Company
Lease) has been fully performed and has been fully paid or will be fully
performed and paid on or before the Closing Date except as otherwise expressly
indicated on the Company Rent Roll, Schedule 3.2(j)(v) or the Capital
Expenditure Budget and Schedule. To BPP's knowledge, neither BPP nor any
Subsidiary is in default in the performance of any
62
material obligation under any of the Company Leases (or any agreements
incorporated therein by reference) and BPP has no knowledge of any circumstances
which, with the passage of time or the giving of notice, or both, would
constitute an event of default by landlord under any of the Company Leases.
Except as set forth on the Rent Rolls or Schedule 3.2(j)(v), to BPP's knowledge,
no tenant is in monetary default beyond 30 days or material nonmonetary default
under its Company Lease. Except as indicated in the Company Rent Roll or
Schedule 3.2(j)(v), (x) no advance rent or other payment has been made with
respect to any Company Lease except rental for the current month other than
security deposits in the ordinary course, (y) no tenant which is currently
paying rent, or which is reflected in BPP's balance sheets, financial
statements, other operating statements or Company Reports as paying rent, is
entitled to any unexpired free rent period or other unexpired concession under
its Company Lease and (z) there is no obligation under the Company Lease for the
refunding of a security deposit. Except as otherwise expressly set forth in the
Company Rent Roll or as set forth on Schedule 3.2(j)(v), to BPP's knowledge
there are no actions, voluntary or involuntary, pending against any tenant under
any bankruptcy or insolvency laws. Except as shown on the Company Rent Roll, on
Schedule 3.2(j)(v), or in any of the Company Leases and except for certain
rights of first refusal which are set forth in the sections of the partnership
agreements referenced in Schedule 3.2(a)(v) and which relate to partnerships in
which BPP and the Subsidiaries collectively, directly or indirectly, own less
than a 100% interest, neither BPP nor any Subsidiary has granted to any Person
(including, without limitation, tenants under Company Leases) or any option or
right of first refusal, first offer or first opportunity or comparable right to
acquire any interest in any Company Property or any portion thereof, and BPP has
no knowledge that any other Person has granted any such option or right of first
refusal or first opportunity to acquire which remains in force and effect. In
addition, and without limiting the generality of the foregoing, with respect to
each Company Lease for premises larger than 10,000 square feet of rentable space
(collectively, the "Material Company Leases"), except as set forth in
Exhibit 3.2(j)(vi) or in the Company Rent Rolls, (i) no tenant under any
Material Company Lease is more than 30 days in arrears in the payment of base
rent, and (ii) no tenant under any of the Material Company Leases has any
options, rights of first offer, rights of first refusal or first opportunity or
comparable rights to purchase any portion of any Company Property. None of the
Material Company Leases and none of the rents or other amounts payable
thereunder has been assigned, pledged or encumbered except in connection with
financing secured by the applicable Company Property which is described in
Section 3.2(j)(xii). Other than the tenants identified in the Company Rent
Rolls, licensees and month to month and other tenants with lease terms of less
than six (6) months or with respect to whom BPP or its Subsidiaries have the
right to terminate such occupancy rights upon no more than sixty days notice,
contractors pursuant to contracts entered into in the ordinary course, and
parties to easement agreements which constitute Company Permitted Exceptions, no
third party has any right to occupy or use any portion of any Company Property.
Except as otherwise set forth on Schedule 3.2(j)(v), the Capital Expenditure
Budget and Schedule includes all outstanding material tenant improvement and
similar material work required to be made by the lessor under each of the
Material Company Leases. There are no outstanding material brokerage
commissions or similar amounts payable in respect of any of the
63
Company leases other than amounts being paid in the ordinary course or which are
being diligently protested in good faith.
(vi) Material Commitments. Schedule 3.2(j)(vi) sets forth a
complete and accurate list of all material contracts, options, commitments,
letters of intent or similar written understandings made or entered into by BPP
or any of the Subsidiaries as of the date hereof (x) to enter into any Material
Company Lease, (y) to sell, mortgage, pledge, hypothecate any Company Property
or to otherwise enter into a material transaction in respect of the ownership or
financing of any Company Property, or (z) to purchase or acquire an option,
right of first refusal or similar right in respect of any real property, which,
in any such case, has not yet been reduced to a written lease or contract, and
sets forth with respect to each such commitment, letter of intent or other
understanding the principal business terms thereof, excluding however, in each
case such commitments, letters of intent or similar written understandings which
do not bind any party thereto. BPP has previously delivered or made available
to the Contributors a true and complete copy of each such commitment, letter of
intent or other understanding.
(vii) Options, Rights of First Refusal and Other Property
Related Contracts. Except as set forth in the Company Reports or
Schedule 3.2(j)(vii), none of BPP or any of its Subsidiaries has any outstanding
options or rights of first refusal or has entered into any outstanding contracts
with others for the purchase by BPP, the Operating Partnership or any Subsidiary
of any real property (other than easements related to any Company Property).
(viii) Capital Expenditure Budgets and Schedules. Attached to
this Agreement as Schedule 3.2(j)(viii) sets forth BPP's or any Subsidiary's
capital expenditure budget and Schedule for each Company Property (the "Capital
Expenditure Budget and Schedule"), which describes the material capital
expenditures which BPP or any Subsidiary has budgeted for such Company Property
for the calendar year 1998, excluding, however (except as otherwise provided in
Section 3.2(j)(v)), any tenant improvements required to be made under any
Company Lease. The Capital Expenditure Budget and Schedule for each Company
Property represents the good faith business judgment of BPP as to all known
reasonably foreseeable maintenance and capital expenditure items for such
Company Property.
(ix) Development Properties. Schedule 3.2(j)(ix) contains a list
of each Company Property, or property which BPP has under a letter of intent or
option, which consists of or includes material amounts of underdeveloped land or
which is intended to be or is in the process of being substantially redeveloped
or rehabilitated (collectively, the "Development Properties"), a brief
description of the development or rehabilitation intended by the Company or any
Subsidiary to be carried out or completed thereon (collectively, the
"Projects"), any budget and development or rehabilitation Schedule therefor
prepared by or for BPP or any Subsidiary (collectively, the "Development Budget
and Schedule"), if BPP or a Subsidiary does not own such Development Property, a
description of BPP's contract rights with respect thereto, the status of zoning
approvals and building permits for such Project, the status of design and major
construction contracts, and if such Project is under development, the
approximate percentage of
64
completion and any known material impediments to completion and opening for
operation. In the case of each Project the development of which has commenced,
the costs and expenses incurred in connection with such Project and the progress
thereof are, except as set forth in Schedule 3.2(j)(ix), consistent and in
compliance in all material respects with all aspects of the Development Budget
and Schedule applicable thereto. BPP has made available to the Contributors or
to their representative all feasibility studies, soil tests, due diligence
reports and other studies, tests or reports performed by or for BPP, or
otherwise in the possession of BPP, and all material architectural, engineering
and general construction contracts which relate to the Development Properties or
the Projects. Neither BPP nor any Subsidiary is in material default under any
development agreement, disposition agreement, disposition and development
agreement or comparable agreement affecting any of the Company Properties, and
all such agreements are in full force and effect or similar agreement with any
Authority with respect to the Development Properties.
(x) Ground Leases and HQ Leases. BPP has provided or made
available to the Contributors accurate and complete copies of the leases for the
HQ Space and the ground leases underlying the leased Company Properties
referenced in Schedule 3.2(j)(i), if any, including all amendments and other
modifications thereto (collectively, the "Tenancy Leases"). Each of the Tenancy
Leases is valid, binding and in full force and effect as against BPP or the
applicable Subsidiary and, to BPP's knowledge, against the other party thereto.
Except as indicated in the Company Reports or Schedule 3.2(j)(xii) or any other
Schedule or Exhibit to this Agreement and except for tenants under the Company
Leases and matters set forth in the Company Permitted Exceptions, none of the
Tenancy Leases is subject to any pledge, lien, assignment, license or other
agreement granting to any third party any interest therein or any right to the
use or occupancy of any premises leased thereunder. Except as set forth in the
Company Reports or Schedule 3.2(f)(i), there is no pending or, to BPP's
knowledge, threatened (in writing) proceeding which is reasonably likely to
interfere with the quiet enjoyment of the tenant under any of the Tenancy
Leases. No payments under any Tenancy Lease are delinquent and no notice of
default thereunder has been sent or received by BPP or any of its Subsidiaries
which has not been cured or waived prior to the date hereof, and to the
knowledge of BPP, there does not exist under any of the Tenancy Leases any
default by BPP or any Subsidiary or any event which merely with notice or lapse
of time or both, would constitute such a default by BPP.
(xi) Reciprocal Easement Agreements. To BPP's knowledge, all
reciprocal easement agreements referenced as Company Permitted Exceptions or
otherwise necessary for the operation of any Company Property or with respect to
which any Company Property is subject are in full force and effect, without
default in any material respect by any party thereto.
(xii) Company Mortgage and Other Debt. Schedule 3.2(j)(xii)
accurately describes and summarizes the approximate amount, term, interest rate,
payment terms, prepayment restrictions and restrictions on transfer that would
be applicable to the transactions contemplated by the Preferred Stock Purchase
Agreement and this Agreement of all mortgage
65
debt encumbering the Company Properties and all other indebtedness for borrowed
money of BPP and the Operating Partnership. There are no material defaults
thereunder by BPP or any of its Subsidiaries except as indicated on said
Schedule 3.2(j)(xii).
(k) Environmental Matters. Except as disclosed on Schedule 3.2(k),
BPP and its Subsidiaries have not generated, stored, released, discharged or
disposed of, nor the knowledge of BPP or its Subsidiaries, used or handled
Hazardous Substances or Hazardous Wastes at, upon or from any Property in
violation of any law regulation or directive, or in connection with which
remedial action would be prudent or required under any federal, state or local
law, regulation or directive. To BPP's knowledge and except as set forth in any
environmental report provided by BPP and its Subsidiaries to the Contributors
including those listed in Schedule 3.2(k), or otherwise provided to or obtained
by the Contributors, in each case prior to the date that is fifteen (15) days
after this Agreement, and except as expressly disclosed on Schedule 3.2(k)
attached hereto, no Hazardous Substances or Hazardous Wastes are or have been
generated, stored, released, located, discharged or disposed of, used or handled
from, at or upon any property, and no Hazardous Substance or Hazardous Substance
or Hazardous Waste is or has been located on any Property, except for cleaning
and maintenance supplies customarily used in connection with properties similar
to the Company Properties and except for materials sold in the retail Company
Properties which are customarily sold in comparable retail properties, in each
case which have been used, stored and sold, as applicable, in compliance with
all applicable laws, regulations and directives. To BPP's knowledge and except
as set forth in any environmental report provided by BPP and its Subsidiaries to
the Contributors or otherwise obtained by the Contributors, in each case prior
to the date of this Agreement, and except as expressly disclosed on Schedule
3.2(k) attached hereto, no Hazardous Substances or Hazardous Wastes other than
materials customarily used in such types of properties in compliance with
Environmental Laws are located on property adjacent to any Company Property.
Except as disclosed in the environmental report(s) delivered to the Contributors
hereunder or in any report obtained by the Contributors, in each case prior to
the date that is fifteen (15) days after this Agreement, neither BPP nor its
Subsidiaries has received written notice or, or has knowledge of, any notice
from any agency, authority or court concerning the removal, treatment or
management of any Hazardous Substances or Hazardous Wastes. For the Properties
listed in Schedule 3.2(k)(i) (the "Inherited Properties"), the facts and
circumstances on which an Environmental Claim related to a Property is based
shall be deemed to have been "known" to BPP for purposes of the representations
and warranties made under this Section 3.2(k) if (i) the Environmental Claim
results in liability of $1,000,000 or more for an individual Environmental
Claim, or $5,000,000 or more in the aggregate for any Environmental Claims
hereunder that individually may result in liability of less than $1,000,000, and
(ii) the facts or circumstances would have been detected or discovered if BPP
and its Subsidiaries had conducted an environmental assessment for the Property
or Properties in accordance with the ASTM Standard Practice for Environmental
Site Assessments: Phase I Environmental Assessment Process, E 1527-97 (the "ASTM
Standard"), on the Property. For purposes of the Agreement, the Phase I reports
listed in Schedule 3.2(k) are deemed to be reports of environmental assessments
conducted in accordance with the ASTM Standard.
66
(l) Employees and Employee Benefit Plans. (i) The Company Reports and
Schedule 3.2(l)(i) together set forth a complete and accurate list of all
Employee Benefit Plans and all material Benefit Arrangements which affect
Employees of BPP or any of its Subsidiaries (the "Company Plans"). With respect
to each Company Plan, (i) BPP and each of its Subsidiaries is in compliance in
all material respects with the terms of each Company Plan and with the
requirements prescribed by all applicable statutes, orders or governmental rules
or regulations, (ii) BPP and each of its Subsidiaries has contributed to each
Pension Plan included in the Company Plans not less than the amounts accrued for
such plan for all plan periods for which payment is due, and (iii) none of BPP
or any of its Subsidiaries has any funding commitment or other liabilities
except as reserved for in the financial statements in or incorporated by
reference into the Company Reports, or, in the case of clauses (i) through
(iii), as is set forth in Schedule 3.2(l)(i).
(ii) Other than in connection with the proposed substitution of
the Operating Partnership as the employer and paymaster of the employees of the
Company on or about January 1, 1998 or as set forth on Schedule 3.2(e)(i), none
of BPP or any of its Subsidiaries has made any commitment to establish any new
Employee Benefit Plan, to modify any Employee Benefit Plan, or to increase
benefits or compensation of Employees of BPP or any of its Subsidiaries (except
for normal increases in compensation consistent with past practices), and no
intention to do so has been communicated to Employees of BPP or any of its
Subsidiaries.
(iii) There are no pending or to BPP's knowledge, threatened
claims against or otherwise involving any of the Company Plans or any
fiduciaries thereof with respect to their duties to the Company Plans and no
suit, action or other litigation (excluding claims for benefits incurred in the
ordinary course of the Company Plan activities) has been brought against or with
respect to any such Company Plans.
(iv) Neither BPP, the Operating Partnership or any entity under
"common control" with BPP or the Operating Partnership within the meaning of
Section 4001 of ERISA has contributed to, or been required to contribute to, any
"multiemployer plan" (as defined in Section 3(37) and 4001(a)(3) of ERISA).
(v) Other than Company's Plans, BPP and its Subsidiaries do not
maintain or contribute to any plan or arrangement which provides or has any
liability to provide life insurance, medical or other employee welfare benefits
to any Employee or former Employee upon his retirement or termination of
employment and BPP and its Subsidiaries have never represented, promised or
contracted (whether in oral or written form) to any employee or former employee
that such benefits would be provided.
(vi) For purposes hereof, "Employee Benefit Plans" means each and
all "employee benefit plans" as defined in Section 3(3) of ERISA maintained or
contributed to by a party hereto or in which a party hereto participates or
participated and which provides benefits to Employees, including (i) any such
plans that are "employee welfare benefit plans" as defined in
67
Section 3(l) of ERISA, including retiree medical and life insurance plans
("Welfare Plans"), and (ii) any such plans that constitute "employee pension
benefit plans" as defined in Section 3(2) of ERISA ("Pension Plans"). "Benefit
Arrangements" means life and health insurance, hospitalization, savings, bonus,
deferred compensation, incentive compensation, holiday, vacation, severance pay,
sick pay, sick leave, disability, tuition refund, service award, Company car,
scholarship, relocation, patent award, fringe benefit, individual employment,
consultancy or severance contracts and other polices or practices of a party
hereto providing employee or executive compensation or benefits to Employees,
other than Employee Benefit Plans. "Employees" mean all current employees,
former employees and retired employees of a party hereto or any of its
Subsidiaries, including employees on disability, layoff or leave status.
"Controlled Group Liability" means any and all liabilities under (i) Title IV of
ERISA, (ii) Section 302 of ERISA, (iii) Sections 412 and 4971 of the Code, (iv)
the continuation coverage requirements of Section 601 et seq, of ERISA and
Section 4980B of the Code, other than such liabilities that arise solely out of,
or relate solely to, the Plans.
(vii) With respect to each plan that is subject to Title IV
or Section 302 of ERISA or Section 412 or 4971 of the Code: (i) there does not
exist any accumulated funding deficiency within the meaning of Section 412 of
the Code or Section 302 of ERISA, whether or not waived, (ii) the fair market
value of the assets of such plan equals or exceeds the actuarial present value
of all accrued benefits under plan (whether or not vested), on a termination
basis, (iii) no reportable event within the meaning of Section 4043(c) of ERISA
has occurred, and the consummation of the transactions contemplated by this
agreement will not result in the occurrence of any such reportable event, and
(iv) all premiums to the Pension Benefit Guaranty Corporation have been timely
paid in full.
(viii) There does not now exist, nor to BPP's knowledge, do
any circumstances exist that could result in, any Controlled Group liability
that would be a liability of BPP following the Buyer's (as such term is defined
in the Preferred Stock Purchase Agreement) purchase of Preferred Stock under the
Preferred Stock Purchase Agreement. Without limiting the generality of the
foregoing, neither BPP nor any ERISA Affiliate has engaged in any transaction
described in Section 4069 or Section 4204 of ERISA.
(ix) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or in
conjunction with any other event) result in, cause the accelerated vesting or
delivery of, or increase the amount or value of, any payment or benefit to any
employee of BPP.
(m) Labor Matters. Except as set forth in Schedule 3.2(m), none of
BPP or any of its Subsidiaries is a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor union organization. Except for the matters set forth in Schedule
3.2(m), there is no unfair labor practice or labor arbitration proceeding
pending or, to BPP's knowledge, threatened against BPP or any of its
Subsidiaries. To BPP's knowledge, there are no organizational efforts with
respect to the formation of a
68
collective bargaining unit presently being made or threatened involving
employees of BPP or any of its Subsidiaries.
(n) Affiliate Transactions. Schedule 3.2(n) sets
forth a complete and accurate list of (i) all relationships and transactions,
series of related transactions or currently proposed transactions or series
of related transactions entered into by BPP or any of its Subsidiaries since
December 31, 1995, which are of the type required to be disclosed by BPP
pursuant to Item 404 of Regulation S-K of the Securities Act, the Exchange
Act and the rules and regulations promulgated thereunder and (ii) all
agreements, arrangements or policies of BPP and/or the Subsidiaries of BPP
(including the Operating Partnership) concerning transactions with Affiliates
or other conflicts of interest. Each agreement, arrangement or policy
described in clause (ii) hereof and set forth in Schedule 3.2(n) is in full
force and effect, and BPP, each of its Subsidiaries, and the other parties
thereto are in compliance therewith, or such compliance has been waived by
BPP's Board of Directors as set forth in Schedule 3.2(n). A true and
complete copy of all agreements or contracts relating to any such transaction
has been made available for inspection by the Contributors. Schedule 3.2(n)
sets forth an accounting of such transactions regarding participatory
interests, the allocation of overhead and expenses thereunder, and all other
matters material to each of such agreements or contracts.
(o) Insurance. BPP and the Operating Partnership
maintain insurance policies covering the assets, business, equipment,
properties, operations and employees of BPP and each of its Subsidiaries
(collectively, the "Insurance Policies") which are of a type and in amounts
customarily carried by Persons of similar size and resources as of BPP
conducting businesses similar to those of BPP and the Operating Partnership.
There is no material claim by BPP or any of its Subsidiaries pending under
any of the material Insurance Policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies.
(p) Brokers or Finders. Except as provided
in Section 9.1, no agent, broker, investment banker or other firm or person,
including any of the foregoing that is an Affiliate of BPP with which BPP
dealt, is or will be entitled to any broker's or finder's fee or any other
commission or similar fee from BPP in connection with this Agreement or any
of the transactions contemplated hereby for which Contributor will be
responsible.
(q) REOC Status. (i) BPP was incorporated as a California
corporation on June 30, 1986 and from its date of incorporation until January 1,
1987, BPP conducted no business and owned no assets BPP subsequently reorganized
as a Maryland Corporation in 1997.
(ii) As of the date of BPP's first long-term investment that was
not a short-term investment of funds pending long-term commitment, i.e., January
1, 1998 (the "REOC Qualification Date"), and continuously thereafter to and
including the Closing Date, at least 50 percent of the assets of BPP (other than
short-term investments pending long-term commitment or distribution to
investors), valued at cost, have been invested in real estate which has been
under active development or management by BPP.
69
(iii) BPP has been actively engaged in the management or
development of real estate in the ordinary course of its business at all times
from the REOC Qualification Date to and including the Closing Date.
(iv) The "real estate" referenced above which was purchased on
the REOC Qualification Date and thereafter includes the Company Properties
except for any such real estate sold. To the extent any of the Company
Properties are subject to tenant leases (the "Leases"), BPP has substantial
responsibilities under each of the Leases, and none of the Leases provides that
substantially all management and maintenance activities with respect to BPP
Property in question or any portion thereof are the responsibility of the tenant
lessees.
(v) BPP has not merely passively assumed the risks of its real
estate ownership, but the return to its stockholders from its investment in BPP
Properties has been and is based in part on the cash flow and capital
appreciation of BPP Properties, and such return depends in substantial part on
the success of BPP's management and development efforts with respect to the
Company Properties.
(vi) The employees of BPP perform most of the development and
management functions of the real estate business described herein, except that
BPP has employed independent contractors, each of which is terminable without
cause and without substantial penalty upon reasonably short notice, to perform
certain of the day-to-day management activities associated with the Company
Properties. In any event, BPP represents and warrants that it has devoted
substantial resources to such management and development activities and to the
oversight of its independent contractors who perform such activities from the
REOC Qualification Date to and including the Closing Date.
(vii) Schedule 3.2(g)(vii) sets forth a complete and accurate
list of (1) the Articles of Incorporation and Bylaws, and all amendments to
each, of Xxxxxxx Sleepy Hollow, Inc., the name by which the California
corporation that is the corporate predecessor of BPP (hereinafter, the
"California REIT") was known at the time of its formation, and all amendments
thereto; (2) all material advisory and management agreements entered into by
the California REIT or BPP, and the Subsidiaries of each, from and after
January 1, 1987 with respect to the assets of the California REIT or BPP,
respectively; and (3) the annual reports for the California REIT or BPP, as
the case may be, filed with the Commission under the Exchange Act for the
years 1987 to 1996, inclusive, each of which accurately describes the
business of BPP or, as applicable, its predecessor, the California REIT, and
the types and values (by category) of real properties owned and operated by
them during the periods referenced in this Section 3.2(q).
(r) Knowledge Defined. As used herein, the phrase "to
BPP's knowledge" (or words of similar import) means actual knowledge of those
individuals identified in Schedule 3.2(r), without duty of further inquiry,
who are all of the individuals who are directors and executive officers of
BPP who knew or should know as to the matters referenced herein, and includes
any facts, matters or circumstances set forth in any written notice from any
Authority or
70
any other material written notice received by BPP or any Subsidiary, and also
includes any matter of which Contributors informs BPP in writing prior to the
date hereof or to which the BPP acknowledges or agrees.
(s) Maryland Takeover Law. The terms of Section 3-602 and 3-702 of
the Maryland General Corporation Law will not apply to the Contributors or
the Existing Partners or any acquisition of Units, Preferred Units and, if
applicable, Preferred Stock and Common Stock pursuant to this Agreement or as
a result of the exchange, conversion or redemption of Units or Preferred
Units pursuant to this Agreement or the Articles Supplementary, or any other
transaction contemplated by this Agreement. The resolutions substantially in
the form of Schedule 3.2(s) hereto have been adopted by BPP, remain in full
force and effect on the date hereof and will not be amended, modified,
rescinded or revoked in any manner that would cause such terms to apply to
the Contributors or the Existing Partners or any such acquisition.
(t) Proxy Statement. The proxy statement to be mailed to holders
of the Common Stock in connection with the vote of such holders as described
in Section 4.20 (the "Proxy Statement") and all of the information included
or incorporated by reference therein (other than any information supplied or
to be supplied by for inclusion or incorporation by reference therein) will
not, as of the date the Proxy Statement is first mailed to such holders and
as of the time of the meeting of such holders in connection with the
transactions contemplated hereby, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated by the Commission
thereunder.
(u) Vote Required. The affirmative vote of the holders of a majority
of the outstanding shares of Common Stock entitled to vote and duly present in
person or by proxy at a meeting duly called (and with each share of Common Stock
entitled to one vote per share) at which a quorum is present is the only vote of
the holders of any class or series of Company Stock necessary to approve, for
the purposes of the rules of the NYSE or otherwise, the redemption or exchange
by the Operating Partnership of Units and Preferred Units for Preferred Stock
or Common Stock (as applicable) pursuant to the Operating Partnership Amendment.
(v) Exemption from Ownership Restrictions. The Board of Directors of
BPP (or a special committee designated by BPP's Board of Directors) has adopted
the resolutions, in the form of Schedule 3.2(v), exempting the Blackacre from
the ownership restrictions under Section 7.2.1(a)(i)(1) of the Company Charter,
based upon representations and agreements of Blackacre delivered to BPP in the
form attached as Schedule 3.2(v), which resolutions remain in full force and
effect on the date hereof and will not be amended, modified, rescinded or
revoked without the prior written consent of Blackacre.
(w) Financial Records; Company Charter and By-laws; Corporate
Records.
71
(i) The books of account and other financial records of BPP, the
Operating Partnership and each of the Subsidiaries are in all respects true and
complete, have been maintained in accordance with good business practices, and
are accurately reflected in all respects to the extent required by GAAP in the
financial statements included in the Company Reports, except as set forth in
Schedule 3.2(w)(i).
(ii) BPP has previously delivered or made available to the
Contributors true and complete copies of the Company Charter and the by-laws
of BPP, as amended to date, the Operating Partnership Agreement, the form of
Operating Partnership Amendment and the charter, by-laws, organization
documents, partnership agreements and joint venture agreements of the
Subsidiaries, and all amendments thereto. All such documents are listed in
Schedule 3.2(w)(ii). A true, complete and correct chart of BPP, the
Operating Partnership, and the Subsidiaries showing ownership, voting rights
and contractual relationships affecting ownership and voting rights and
identifying the general partner of any limited partnership is set forth in
Schedule 3.2(w)(ii).
(iii) The minute books and other records of corporate or
partnership proceedings of BPP, the Operating Partnership and each of the
Subsidiaries have been made available to the Contributors, contain in all
material respects accurate records of all meetings and accurately reflect in all
material respects all other corporate action of the stockholders and directors
and any committees of BPP's Board of Directors and its Subsidiaries which are
corporations and all actions of the partners or members (as the case may be) of
the Operating Partnership and Subsidiaries which are partnerships or limited
liability company, and all actions of the members of Subsidiaries which are
limited liability companies except for documentation of discussions relating to
or in connection with the transactions contemplated hereby or matters related
thereto, except as set forth in Schedule 3.2(w)(iii).
(x) First Amendment. Each of the Operating Partnership and BPP
hereby represents that, on the date as of which the Operating Partnership
Amendment executed and delivered by the Contributors and the other parties
thereto is effective, such Operating Partnership Amendment will be the only
amendment that has been made to the Operating Partnership Agreement other
than amendments that reflect the transfers of assets to the Operating
Partnership and its Subsidiaries to implement the UPREIT Transaction or the
contribution of assets to the Operating Partnership or its Subsidiaries by
third parties on terms that are not adverse to the rights of the Contributors
described in this Agreement, copies of which amendments shall be delivered to
the Contributors at or prior to the Closing Date.
(y) Section 704(c) Method. In connection with the transfer of assets
to the Operating Partnership by each Contributor, the Operating Partnership
shall use the traditional Section 704(c) method with curative allocations
limited solely to allocations of gain and an equitable state of ordinary income
recapture, if any, recognized by the Operating Partnership upon the sale of such
assets to the extent allocations of depreciation (as computed for tax
72
purposes) with respect to such assets to the other Partners have been limited by
the "ceiling rule," as described in Regulations Section 1.704-3(c)(iii)(B).
(z) Section 707 Reporting. Based on the representations of the
Contributors contained in Section 1.2 of this Agreement, the Operating
Partnership shall (i) report, on its 1997 tax returns as required by Regulations
Section 1.707-8, the payment of the Cash Reimbursement Component to the
Contributors as a reimbursement of preformation expenditures that qualifies for
the exception to sale treatment described in Treasury Regulation Section
1.707-4(d), and (ii) not to report any of the transactions described in this
Agreement pursuant to which the Properties were contributed to the Operating
Partnership by the Contributors, or any transfer of redemption consideration to
any Existing Partner upon the redemption of Units or Preferred Units, as a sale
of all or part of the Properties to the Operating Partnership by the
Contributors or as compensation for services rendered by any of the
Contributors, the Existing Partners or their affiliates.
(aa) Disclosure. To BPP's and the Operating Partnership's knowledge,
the representations and warranties and the statements and information contained
in this Agreement, in the Exhibits and Schedules hereto and in all of the
materials delivered by BPP and the Operating Partnership to the Contributors and
their counsel, accountants, appraisers and consultants pursuant to this
Agreement or in connection with the due diligence investigations conducted by or
on behalf of the Contributors in connection with this Agreement, do not contain
any untrue statements of a material fact and, when taken together, do not omit
to state a material fact required to be stated therein or necessary in order to
make such representations, warranties, statements or information not misleading
in light of the circumstances under which they were made.
(bb) Resources. BPP and the Operating Partnership have or will have
at the Closing requisite cash, cash equivalents, equity commitments or other
sources of financing available to consummate the transactions contemplated
hereby.
(cc) Representations and Warranties of the Contributors and the
Existing Partners. To BPP and the Operating Partnership's knowledge, as of the
date of this Agreement, the representations, warranties of the Contributors
contained in this Agreement and the statements of the Contributors contained in
this Agreement and the information contained in this Agreement and the Exhibits
and Schedules hereto delivered by the Contributors to BPP and the Operating
Partnership do not contain any untrue statements of a material fact and do not
otherwise constitute a breach by the Contributors under this Agreement.
73
ARTICLE 4
AINTENANCE AND OPERATION OF THE PROPERTY;
CERTAIN COVENANTS
4.1 Maintenance and Operation. Through the Closing, the Contributors
shall maintain and operate each Property in accordance with the Contributors'
past operating policies and procedures and substantially in accordance with the
Stabilized Leasing Plan. Prior to the Closing Date, the Contributors shall
perform all work and other obligations required to be performed by the landlord
under the terms of any applicable Lease to the reasonable satisfaction of the
tenant(s) thereunder to the extent such obligations were required to be
performed prior to Closing. Until the Closing, the Contributors shall use
reasonable efforts to cause all existing personnel on the applicable Property to
be maintained in their current employment positions at their current rate of
compensation.
4.2 Insurance. Through the Closing Date, the Contributors shall maintain
at their sole cost and expense all insurance coverage in effect on the date of
this Agreement as set forth in Exhibit DD.
4.3 Personal Property. BPP and the Operating Partnership acknowledge that
the Contributors shall have the right, from and after the date of this Agreement
through the Closing with respect to each Property, to remove or replace items of
its Personal Property from time to time in the normal course of operation of
such Property. BPP and the Operating Partnership agree that the Contributors
may remove items of Personal Property from such Property if such items are
obsolete and replaced by Personal Property of equal or greater utility or value.
Any such Personal Property removed shall cease to constitute "Personal Property"
for all purposes under this Agreement. Any Personal Property replaced pursuant
to this Section 4.3 shall, to the extent not thereafter removed in accordance
with the terms of this Section 4.3, constitute "Personal Property" for all
purposes under this Agreement.
4.4 Leasing. The provisions of this Section 4.4 only apply to leasing
activities conducted prior to the Closing Date. The Contributors shall not
enter into any Lease which is inconsistent with the Stabilized Leasing Plan
without obtaining BPP's prior written consent thereto. If a Contributor enters
into a Lease prior to Closing in accordance with the Stabilized Leasing Plan,
the Contributors shall give notice to BPP of such new Lease within two (2)
Business Days of entering into such Lease, and in any event prior to the Closing
Date. The Contributors shall not amend or extend (other than extensions in
accordance with Stabilized Leasing Plan) any Lease, terminate or cancel any
Lease, accept a surrender of the tenant's premises under any Lease, or accept
any rent from any tenant more than one month in advance of its due date, without
in each case obtaining BPP's prior written consent thereto, which consent shall
not be unreasonably withheld.
74
4.5 Operating Agreements. Except as set forth in Section 4.4, the
Contributors shall not enter into any contract or other agreement affecting any
Property, or any amendment of any contract or agreement, that will be binding on
the Operating Partnership, any Property or BPP after Closing, in each case,
without BPP's prior written consent in its sole and absolute discretion;
PROVIDED, however, that the Contributors shall have the right to enter into
design and construction contracts in connection with new Leases and extensions
of Leases entered into between the date of this Agreement and the Closing Date,
in each case in accordance with the Stabilized Leasing Plan, and all such
contracts shall be governed by the provisions of the Post-Closing Leasing
Agreement. Nothing herein shall be deemed to limit a Contributor's ability to
enter into a contract or agreement which by its own terms shall terminate on or
prior to Closing and which shall not create any liability for or be binding on
the Operating Partnership, BPP or any Property on or after the Closing Date.
The Contributors shall not modify, amend or terminate any applicable Assigned
Contract or other such contract or agreement, without in each case obtaining
BPP's prior written consent thereto, which consent shall not be unreasonably
withheld, delayed or conditioned.
4.6 Damage or Destruction; Condemnation. The Contributors shall promptly
deliver to BPP written notice of any casualty or taking involving any Property.
If all or any part of the Property is damaged and/or destroyed by fire or other
casualty prior to the Closing, then subject to the provisions of Section 8.1(iv)
the Closing Date nevertheless shall occur as scheduled with respect to such
Property notwithstanding such damage or destruction, and the Contributors shall
waive all right or interest in all proceeds of insurance payable by reason of
such casualty or they shall be credited to the Operating Partnership if
previously received by the Contributors. In addition, the Contributors shall be
responsible for any cost of repair not covered by such insurance (whether by
reason of insurance deductible, uninsured casualty or otherwise). The
Contributors' obligations pursuant to the immediately preceding sentence shall
survive the Closing.
If, prior to the Closing Date, an Authority commences any eminent domain or
condemnation proceeding to take any portion of a Property or a Contributor
enters into an agreement in lieu thereof or becomes aware that any such
agreement may be offered, then the Closing Date nevertheless shall occur as
scheduled notwithstanding such proceeding, entry or offer, and the Contributors
shall waive all right or interest in all awards or payments arising out of such
proceedings or agreement or they shall be credited to the Operating Partnership
if previously received by the Contributors. The Contributor's obligations
pursuant to the immediately preceding sentence shall survive the Closing.
4.7 Tests and Inspections. BPP shall have the right to enter upon the
Properties to conduct tests and inspections as set forth in the Access
Agreement. In the event any of the Contributors elect to perform any property
level due diligence (including, without limitation, soil sampling and boring) of
the Company Properties, BPP shall permit such property level due diligence
PROVIDED that the Contributors execute and deliver an access agreement
substantially in
75
the form of the Access Agreement (which is for the benefit of BPP and the
Operating Partnership).
4.8 Mortgage Debt. Prior to the Closing, the Contributors will keep all
debt service payments and other payments owed in connection with the Mortgage
Debt current and will not permit or suffer to exist any monetary or material
nonmonetary default under any document evidencing, governing or securing any
Mortgage Debt. Any and all debts secured by any Property other than the
Mortgage Debt and any and all other liens or judgments filed against the
Property (except for the respective Permitted Exceptions shall be satisfied and
released of record by the Contributors at or prior to Closing.
4.9 Disposition of Properties. The Operating Partnership, BPP and their
Subsidiaries and Affiliates shall not (a) dispose of or distribute any of the
Properties, or (b) distribute any property (other than cash, Units, Preferred
Units, Additional Equity Value, or Additional Consideration) to the Contributors
or Existing Partners, in each case, prior to the third anniversary of the
Closing Date without the express written consent of the Contributors, except in
connection with a like-kind exchange under Section 1031 of the Code or other
transaction which does not result in recognition of any income or gain by any
holders of the Preferred Units or Units issued pursuant to this Agreement
(provided that no subsequent transaction results in the recognition of such
income or gain within such three year period).
4.10 Availability of Records. The Contributors agree to cooperate with
BPP to obtain any information needed from the Contributors or the Existing
Partners to enable BPP and the general partner to file any necessary tax
returns. Upon written request of BPP or the Operating Partnership,
continuing for a period of two (2) years after the Closing, the Contributors
shall (i) make its records pertaining to the period of such Contributor's
ownership of the Property available to BPP for inspection, copying and audit
by the BPP's designated accountants at BPP's or the Operating Partnership's
sole cost and expense, and (ii) cooperate with BPP and the Operating
Partnership or to the extent reasonably necessary to obtain any applicable
Licenses not in existence on the Closing Date and necessary for the operation
of all or any portion of the Property; provided, however, that BPP or the
Operating Partnership shall pay all out-of-pocket expenses incurred by the
Contributors in connection with any of the foregoing. Without limiting the
foregoing and in addition thereto, for the period of time commencing on the
date of this Agreement and continuing through the second (2nd) anniversary of
the Closing Date, the Contributors shall, from time to time, upon reasonable
advance notice from BPP, provide BPP and its designated accountants and
employees with access to all financial information in its possession
pertaining to the period of each Contributor's ownership in and operation of,
as the case may be, each Property, which information is relevant and
reasonably necessary, in the opinion of BPP's outside, third party
accountants (the "Accountants"), to enable BPP and its Accountants to prepare
financial statements in compliance with any or all of (a) Rule 3-14 of
Regulation S-X of the Commission; (b) any other rule issued by the Commission
and applicable to BPP; and (c) any registration statement, report or
disclosure statement filed with the Commission by, or on behalf of, BPP;
provided, however, that in any such event(s), BPP shall
76
reimburse the Contributors for those third party, out-of-pocket costs and
expenses that the Contributors incur in order to comply with the foregoing
requirements. The Contributors acknowledge and agree that the following is a
representative description of the information and documentation that BPP and the
Accountants may require to be provided (to the extent in the Contributors'
possession or control as of the date of this Agreement and not turned over to
BPP the Operating Partnership at Closing) in order to comply with (a), (b) and
(c) above.
(a) Applicable Rent Rolls for the eleven (11) calendar months
immediately preceding the calendar month in which the Closing occurs;
(b) The Contributors' internally-prepared operating statements;
(c) Access to applicable Leases.
(d) The Contributors' budgeted annual and monthly income and
expenses, and actual annual and monthly income and expenses;
(e) Access to Contributors' cash receipt journal(s) and bank
statements for the applicable Property;
(f) The Contributors' general ledger with respect to the applicable
Property;
(g) The Contributors' schedule of expense reimbursements required
under applicable Leases in effect on the Closing Date, if one exists;
(h) The Contributors' schedule, if one exists, of those items of
repairs and maintenance performed by, or at the direction of a Contributor,
during the Contributor's final fiscal year in which the Contributors owned and
operated the Property (the "Final Fiscal Year");
(i) The Contributors' schedule, if one exists, of those capital
improvements and fixed asset additions made by, or at the direction of, the
Contributors during the Final Fiscal Year;
(j) Access to Contributors' invoices with respect to expenditures
made during the Final Fiscal Year;
(k) Access (during normal and customary business hours) to
responsible personnel to answer accounting questions; and
(l) If requested by BPP's accountants, a representation letter with
respect to the Contributors' period of ownership of the applicable Property,
signed by the individual(s) responsible for the Contributors' financial
reporting, as prescribed by generally accepted auditing standards promulgated by
the Auditing Standards Division of the American Institute of Certified
77
Public Accountants, which representation letter may be required to assist the
Accountants in rendering an opinion on such financial statements.
4.11 Ongoing Capital and Tenant Improvement Work. The parties acknowledge
that Contributors are currently making certain capital improvements to the
Properties and constructing tenant improvements pursuant to certain Leases, all
as more fully described in Schedule 4.11 (collectively, the "Ongoing
Improvements Work"). Prior to and following the Closing, the Contributors shall
cause the Ongoing Improvements Work to be completed in accordance with the
requirements of any Lease and the plans, specifications and contracts therefor
provided to BPP, and otherwise diligently and in a good and workmanlike manner,
free and clear of any mechanics', suppliers' or other liens with respect
thereto. The maximum allowance which is directly across from the line item of
certain items of the work on Schedule 4.11 represents the maximum third party
cost obligation of the Contributors for the completion of the such work after
December 4, 1997. To the extent a particular line item of such work is
completed for less than the specified maximum allowance, the Contributors shall
be entitled to the benefits of such cost savings. If the cost of such
particular line item exceeds such maximum allowance, the Operating Partnership
shall be solely responsible for such excess cost, and the Contributors shall not
be responsible to complete the work in question until such time as BPP pays such
excess amount. All other items on Schedule 4.11 where the dollar amount has
been deleted are to be completed by the Contributors regardless of the cost
thereof. The parties agree that the scope of work to be performed for the
Ongoing Improvements Work is the scope set forth in the Xxxxxxx Group reports
which have been previously delivered to BPP as further described in the
Contributors' internal spread sheet entitled Capital Improvements, dated
December 2, 1997, for each individual center, a copy of which has been furnished
to BPP.
4.12 A. Title. The Contributors shall prior to Closing correct or resolve
the following title and survey matters so as to cause them not to be listed as
exceptions to title in the Title Policy:
(a) Any and all material title and survey matters first arising from
and after the date of the Preliminary Report as the result of any act or
omission by the Contributors; provided, however, that other than with respect to
liens voluntarily granted or assumed by any Contributor (which the Contributors
shall in any event be obligated to discharge at or prior to Closing), the
Contributors shall not be required to expend funds to discharge or otherwise
correct or resolve any such title or survey matter with respect to any Property
which exceed an amount equal to one percent (1%) of the Valuation with respect
to such Property;
(b) Any and all other title matters set forth in the Preliminary
Report or shown on a survey of the Real Property delivered by the Contributors
to BPP or obtained by BPP to the extent objected to BPP and which the
Contributors have agreed in writing to correct or resolve such objectionable
title or survey matter; and
78
(c) The matters identified to be cured on Exhibit P.
B. Survey Matters. In the event the Title Company refuses to issue an
ALTA title insurance policy without a survey exception, BPP and the Contributors
agree to cooperate with each other to cause the Title Company to issue an ALTA
title insurance policy without such survey exception or otherwise resolve the
survey issue in a manner reasonably satisfactory to BPP's lenders.
4.13 Payoff Letters/Discharges on Mortgage Debt. At least five (5) days
prior to the anticipated Closing Date, the Contributors shall, to the extent
practicable, cause the holders of the Mortgage Debt to provide to the Title
Company (with a copy to BPP) (i) to the extent that the Mortgage Debt is held
by a bank, insurance company or similar institutional lender, payoff letters
stating the amounts required to be paid to such holder to fully satisfy the
Mortgage Debt as of the anticipated Closing Date, with per diem amounts for a
reasonable period thereafter, or (ii) to the extent that the Mortgage Debt is
not held by a bank, insurance company or similar institutional holder, such
payoff letters together with discharges of the applicable mortgages and other
security documents to be held in escrow by the Title Company pending Closing,
and in any event shall deliver such documents and other items as the Title
Company may require to issue the Title Policy at Closing free and clear of
any mortgages or other encumbrances securing the Mortgage Debt. The
Operating Partnership shall cause all of the Mortgage Debt to be fully repaid
within two (2) Business Days following the Closing and thereby to be
discharged and fully released through closing escrow arrangements with the
Title Company reasonably satisfactory to the Contributors. In the event that
the Contributors do not obtain the consent of the existing holders of the
Mortgage Debt to transfer the Properties subject to the Mortgage Debt, then
BPP and the Operating Partnership shall satisfy the Mortgage Debt at Closing.
4.14 Cooperation Regarding Closing Conditions. The Contributors shall
cooperate and shall use reasonable good faith efforts to satisfy any condition
to BPP's and the Operating Partnership's obligations hereunder which are within
the Contributors' control, but the representations and warranties of the
Contributors to BPP shall not be affected or released by BPP's waiver or
fulfillment of any condition. BPP and the Operating Partnership shall cooperate
and shall use reasonable good faith efforts to satisfy any condition to the
Contributor's obligations hereunder, but BPP's and the Operating Partnership's
representations and warranties to the Contributors and the Existing Partners
shall not be affected or released by the Contributors' waiver or fulfillment of
any condition.
4.15 Articles Supplementary. Following authorization by BPP's Board of
Directors, at or before the Closing, BPP shall cause to be duly executed and
filed with the State Department of Assessments and Taxation of the State of
Maryland, the Articles Supplementary.
4.16 [Intentionally Omitted]
79
4.17 Conduct of the Business. Except for transactions contemplated
hereby or as disclosed in the Company Reports, during the period from the
date hereof to the Closing Date, and except for the following: (a) any
financings obtained by BPP in order that BPP may obtain sufficient funds to
finance the transactions contemplated hereby, (b) sale of Common Stock up to
$120,000,000 at an offering price to the ultimate purchaser not less than
$13.75 per share, (c) the UPREIT Transaction and any financings related
thereto, (d) the acquisition of real property or interests therein from time
to time in exchange for cash and/or the assumption of indebtedness, the
Units, or units in downREIT transactions, and the financing of such
acquisitions with institutional lenders and (e) the sale of the Company
Property located in Gilroy, California, BPP and the Operating Partnership
will, except as otherwise consented to or approved by the Contributors in
writing or as permitted or required hereby, which consent shall not be
unreasonably withheld, conduct the business of BPP, the Operating Partnership
and their Subsidiaries and engage in transactions only in the ordinary course.
4.18 Intentionally Omitted.
4.19 Notification of Certain Matters. Until the Closing Date, each of the
Contributors and BPP and the Operating Partnership shall use its good faith
efforts to notify the other parties in writing of its discovery of any matter
that would render any of such party's or the other party's representations and
warranties contained herein untrue or incorrect in any material respect, but the
failure of either party so to notify the other parties shall not be deemed a
breach of this Agreement.
4.20 Approval of Company Shareholders. BPP shall at its own expense (i)
exercise reasonable efforts to advance in time as much as is reasonably
practicable the date of, and duly call, its 1998 annual meeting of
shareholders, to a date not later than May 12, 1998, (ii) duly submit for
approval by the holders of a majority of the Common Stock entitled to vote at
such meeting on the issuance by BPP of Common Stock upon the conversion,
exchange of redemption of the Preferred Stock and of the Preferred Units and
Units, (iii) recommend approval thereof and exercise best efforts to obtain
such approval, including, without limitation, retaining a soliciting firm for
customary services in connection therewith, and (iv) in the event that such
approval is not obtained at said annual meeting, then BPP may, at its sole
discretion, convene a special meeting of shareholders for such purpose,
PROVIDED that that same shall be called and held in sufficient time to enable
BPP to satisfy its obligations set forth in Section 9 of Exhibit C to the
Operating Partnership Amendment, but in no event later June 30, 1998. At
such special meeting thereof, BPP shall submit such matter for approval by
the holders of BPP's Common Stock, recommend approval thereof and exercise
best efforts to obtain such approval including, without limitation, retaining
a soliciting firm for customary services in connection therewith. In the
event that approval of such matters by the holders of a majority of BPP's
Common Stock is not obtained BPP and the Operating Partnership shall redeem
the shares of Preferred Stock and Preferred Units in such aggregate number
(of which 7/12 shall be shares of Preferred Stock and 5/12 shall be Preferred
Units) as will result in the aggregate number of
80
shares of Common Stock issuable upon the conversion, exchange or redemption of
Preferred Stock and of Preferred Units and Units (issued pursuant to this
Agreement) after such redemption not exceeding 19.9% of the number of shares of
Common Stock outstanding immediately prior to the Closing hereunder and under
the Preferred Stock Purchase Agreement, in accordance with Section 9 of Exhibit
C to the Operating Partnership Amendment. BPP and the Contributors agree that
if BPP were to fail to comply with its obligations under Section 9 of Exhibit C
to the Operating Partnership Amendment, the Contributors would be irreparably
injured and that damages would not provide an adequate remedy for such failure
and accordingly, under those circumstances, that the Contributors shall be
entitled to equitable relief to enforce BPP's obligations under Section 9 of
Exhibit C to the Operating Partnership Amendment to comply therewith.
4.21 REIT Status. From and after the date hereof, BPP will elect to be
taxed as a REIT in its federal income tax returns, will comply with all
applicable laws, rules and regulations of the Code relating to a REIT, and will
not take any action or fail to take any action which would reasonably be
expected to, alone or in conjunction with any other factors, result in the loss
of its status as a REIT for federal income tax purposes or the failure of the
representations in Section 3.2(h) hereof to be true and correct.
4.22 Payments. Except as otherwise provided below, BPP acknowledges and
agrees to pay or reimburse from time to time upon the direction of the
Contributors, at and after the Closing, reasonable expenses of the Contributors
and third-party transaction costs to the Contributors, up to an aggregate amount
equal to $500,000 less any amounts paid to Xxxxxxxxx Partners, L.L.C. pursuant
to Section 6.3 of the Preferred Stock Purchase Agreement, incurred or paid by
the Contributors in completing this transaction including, without limitation,
any amendment or modification of, or waiver of, the transaction documents (as
invoiced by reasonably detailed statements or invoices). Notwithstanding any
termination of this Agreement pursuant to Section 8.1 hereof (other than
pursuant to clauses (ii) and (iii) thereof, in either event, such payment or
reimbursement shall not be required), BPP acknowledges and agrees to make the
payments as set forth above. BPP shall be relieved of its obligations set forth
in the preceding sentence if the termination of the Agreement results from the
Contributors breach of their obligation to consummate the transactions
contemplated by this Agreement.
4.23 First Offer Rights.
(a) The Existing Partners, as holders of Units or Preferred Units
(collectively in such capacity, the "Holders") shall have the rights set forth
in this Section 4.23 as the holder of the Units and Preferred Units. The rights
set forth herein are in favor of each Holder and its successors and assigns,
provided that any exercise procedures to be accomplished hereunder shall be
performed by each Holder or its nominee designated in writing to BPP
independently of any other Holder and no other Person may accomplish such
procedures or seek to exercise the preemptive rights set forth in this Section
4.23. Absent an express assignment of the rights of a
81
Holder under this Section 4.23, no transfer by a Holder of the Units and
Preferred Units or upon redemption or exchange, Preferred Stock or Common Stock
shall affect the rights of the Holders hereunder.
(b) In the case of the proposed issuance by BPP of, or the proposed
granting by BPP of shares of, any class of Company Stock, or any rights to
subscribe for or to purchase, or any warrants or options for the purchase of,
Company Stock or any stock or securities convertible into or exchangeable for
Company Stock to the public, other than an issuance or sale of Common Stock as
contemplated in Section 5(c)(v) of the Articles Supplementary (collectively, the
"Offered Securities") other than issuance of interests in the Operating
Partnership in connection with acquisitions, mergers, joint ventures and similar
transactions, each Holder shall have, at any time and from time to time, the
right to purchase such number of the Offered Securities equal to the product of
(i) the ratio of the total number of Units (on an "as redeemed" basis),
Preferred Units (on an "as redeemed" basis), Preferred Stock (on "as converted"
basis) and Common Stock owned by such Holder at the time such Holder received
the BPP Notice (as defined below) to the total number of Units (on an "as
converted" basis), Preferred Units (on an "as redeemed" basis), Preferred Stock
(on an "as converted" basis) and Common Stock outstanding at the time such
Holder receives the BPP Notice, and (ii) the number of Offered Securities. On
each occasion that BPP proposes to issue any Offered Securities to the public,
BPP shall give to each Holder prior written notice (the "BPP Notice") of its
intention, by first class mail, postage prepaid, addressed at its last address
as shown by the records of BPP or the Operating Partnership describing the same,
the price and the specific terms (or in the context of an offering of Offered
Securities, a range of price and terms) upon which BPP proposes to issue the
same. Each Holder shall have 15 Business Days (but in the case of a retail
"spot" offering, two Business Days so long as BPP has advised the Holders that
it is considering effecting such an offering, on the material terms thereof, as
promptly as is practical for BPP to do so and in any event not less than 10 days
prior to the beginning of such two Business Day period) from the date of the
receipt by such Holder of the BPP Notice to deliver a notice (the "Rights
Exercise Notice") notifying the Company of such Holder's intention to purchase
all or a part of its pro rata share of such Offered Securities in accordance
herewith for the price and upon the terms specified by the BPP Notice and at a
price or prices no less favorable to such Holder than the price or prices at
which such Offered Securities are proposed to be offered for sale to others,
less, in the event of any sale other than a public offering, the per unit or
share amount of any placement fees or commissions to the extent that the same
are not payable by BPP under the terms of any placement agent's or other similar
agreement not applicable to such sale, and provided, however, that the purchase
of such Offered Securities shall be consummated prior to the later of (i) 30
days after the date of the Rights Exercise Notice and (ii) the date that BPP
consummates the issuance of the Offered Securities described in the BPP Notice.
If, in connection with any proposed issue of Offered Securities, a Holder fails
to exercise in full its rights as set forth in this Section 4.23, then subject
to the next following sentence, BPP may sell the unsold Offered Securities at
any time within 180 days (90 days in the case of a public offering) thereafter
at a price and upon terms no more favorable to the purchasers thereof than
82
specified in the BPP Notice; PROVIDED, that BPP shall not sell or grant, or
permit conversion under, any Offered Securities after such 180-day period (or
90-day period in the case of a public offering) without renewed compliance with
this Section 4.23; provided, further, that in the case of a widely distributed
underwritten public offering of Offered Securities, if in the good faith opinion
of BPP and the underwriter, such renewed compliance by BPP with the procedural
requirements hereunder (i.e., timing of notices, etc.) would otherwise
materially impede the consummation of such public offering, the parties agree to
take such further action as may be reasonably necessary to effectuate such
offering while preserving each Holder's substantive rights hereunder. Each
Rights Exercise Notice delivered by a Holder to BPP hereunder shall be
irrevocable and binding on such Holder.
(c) The provisions of this Section 4.23 shall not apply to (i) any
shares of any class of the Company Stock or convertible securities, issuable
upon the redemption or exchange of the Units or Preferred Units issued pursuant
to this Agreement or Preferred Stock issued pursuant to the Preferred Stock
Purchase Agreement, (ii) any options to purchase shares of Company Stock
(determined at the time of the grant of such options) at an exercise price not
less than the fair market value of such shares on the date of the grant issued
from time to time to employees, consultants or directors as compensation or
incentives for services rendered to BPP or the Operating Partnership, whether
under BPP's amended Stock Option and Incentive Plan or any successor thereto and
(iii) any other issuance or sale of Common Stock as contemplated by clause (i)
of the parenthetical of the first sentence of Section 5(e)(v) of the Articles
Supplementary.
(d) Notwithstanding the foregoing, if and to the extent that a Holder
is prevented or prohibited from the exercise in full or in part of its rights to
purchase any Offered Securities under this Section 4.23 due to restrictions on
the ownership by a Holder (or any group of holders with which such Holder may be
affiliated or may be deemed to be affiliated) of any thereof, whether under
applicable Maryland law, or the charter or the bylaws of BPP, as amended, or by
reason of restrictions applicable for purposes of the BPP's continued
qualification as a REIT for purposes of the Code (the "Exercise Restriction"),
such number of Offered Securities required to be purchased pursuant to such
preemptive right shall automatically be reduced to such amount as to not exceed
the Exercise Restriction, and such Holder, from time to time thereafter may
exercise such right up to an aggregate number of Offered Securities as is equal
to such reduction, subject always to the restrictions as aforesaid.
(e) The rights of the Holders set forth in this Section 4.23 shall
commence on the date hereof and shall expire on that date when the Holders no
longer own 250,000 or more Preferred Units and/or shares of Preferred Stock,
except as to purchases as to which Holders may make on a deferred basis under
Section 4.23(d) which shall continue without time restriction.
83
4.24 Board of Directors.
(a) To the extent that Xxxxxxxxx Partners, L.L.C. no longer has the
"Nomination Rights" available to it under Section 6.5 of the Preferred Stock
Purchase Agreement, pursuant to the standards and procedures set forth in
Section 4.24(b), the Contributors shall, from time to time when there exists a
vacancy on BPP's Board of Directors with respect to a seat occupied or to be
occupied by the Preferred Stock nominee, but not less often than annually,
propose a person for nomination and election to BPP's Board of Directors (the
"Nomination Right"). Such member shall have a seat on a committee of BPP's
Board of Directors, as determined by BPP's Board of Directors, and thereafter,
as determined by the BPP's Board of Directors. If the Contributors are entitled
to the Nomination Right, and if a vacancy on BPP's Board of Directors should
exist prior to the date of the next annual meeting, a nominee proposed by the
Contributors approved by the nominations committee (or other committee with
appropriate authority of BPP's Board of Directors), will be appointed to such
vacancy in lieu of waiting until the next annual meeting. The Nomination Right
will no longer be available to the Contributors on the earlier to occur of: (a)
the date on which the Holders' ownership of Preferred Units (on an "as redeemed"
basis) and Preferred Stock (on an "as converted" basis) considered in the
aggregate, decreases to below 30% of the aggregate number of shares of Preferred
Stock then outstanding (on an "as converted" basis), together with the number of
Preferred Units then outstanding (on an "as converted" basis) and Preferred
Stock (on an "as converted" basis) considered in the aggregate, decreases to
below 30% of the number of shares of Preferred Stock then outstanding (on an "as
converted" basis), together with the number of Preferred Units then outstanding
(on an "as converted" basis); and (b) the date on which (i) the Holders'
ownership of Preferred Units (on an "as redeemed" basis) and Preferred Stock (on
an "as converted" basis), decreases to below 50% of the number of Preferred
Units (on an "as redeemed" basis) issued pursuant to this Agreement and (ii) the
Holders' ownership of Units (on an "as redeemed" basis), Preferred Units (on an
"as redeemed" basis) and shares of Preferred Stock (on an "as-converted" basis),
considered in the aggregate, is less than 2% of outstanding shares of the Common
Stock on a fully-diluted basis and (c) the Current Market Price of the Common
Stock relative to the Base Price (as such term is defined in the Articles
Supplementary) has achieved or exceeded 7% per annum price increases from a
price of $14.38 per share of Common Stock, measured from the Closing Date to the
date of determination of whether the Nomination Right has terminated, and (d) a
publicly underwritten, widely distributed offering (one in which at least 50% of
the shares sold are distributed to retail purchasers) of Preferred Stock.
Blackacre Capital Group, L.P. will be permitted to have representatives attend
BPP's Board of Directors and significant committee meetings, except executive
sessions of the BPP's Board of Directors or the committees until the later of
the Nomination Right (assuming it is activated) terminates or until no Units,
Preferred Units, or shares of Preferred Stock remain outstanding.
(b) All nominees proposed by the Contributors under paragraph (a) of
this Section 4.23 shall be of such character, and shall have such educational
background, experience
84
and knowledge of complex financial and management issues and matters as to be
qualified, and shall otherwise be suitable, for membership on a board of
directors of a publicly held company engaged in real estate investment. Except
as hereinafter provided, the nomination committee (or any other committee with
appropriate authority) of BPP's Board of Directors shall have the right in its
discretion to reject any such nominee, provided that it so notifies the
Contributors within 20 days after the Contributors propose such nominee. In the
event committee (or such other committee) rejects a nominee, the Contributors
shall have the right to propose three alternate candidates meeting the criteria
set forth in this paragraph, one of which shall be approved by the nomination
committee (or such other committee of BPP's Board of Directors) as promptly as
practicable.
(c) BPP's obligation under this Section 4.24 shall be subject to the
performance by the directors of BPP of their duties in compliance with Maryland
law.
4.25 Retained Property. Notwithstanding anything contained in this
Agreement to the contrary, it is expressly acknowledged by BPP and the Operating
Partnership that the following properties (the "Retained Properties") shall be
excluded from the conveyance of Properties described herein: (i) 133,744 square
feet of land located at Ralph's Center, Redondo Beach, California, as shown on
Exhibit EE-1, and (ii) the Xxxxxxx'x pad site located at Westminister Center,
Westminister, California as shown on Exhibit EE-2. In the event a formal
subdivision of the Retained Properties is not completed by Closing, the
Contributors and the Operating Partnership shall apportion the real estate taxes
between the Retained Properties and the balance of each of such shopping centers
being conveyed pursuant to this Agreement. The Contributors shall use best
efforts to complete such subdivision as promptly as practicable at Contributors'
sole cost and expense, and the Operating Partnership agrees to cooperate with
the Contributors in connection with completing the subdivision, including
without limitation, executing and delivering confirmatory deeds and municipal
applications for the formal subdivision of the Retained Properties. Until such
time as the subdivision of the Retained Properties is finalized, the Operating
Partnership shall act as the Contributor's nominee and any conveyance of the
Retained Properties to the Contributors shall be for no consideration other than
reimbursement of any reasonable out-of-pocket expenses incurred by the Operating
Partnership in connection with such conveyance. If either of the Retained
Properties cannot be legally subdivided within 18 months of Closing, the
Operating Partnership agrees to ground lease the Retained Properties, subject
only to encumbrances existing as of the Closing Date (other than the Mortgage
Debt), to the Applicable Contributor for nominal consideration (i.e. $1 per
year) on a form of ground lease reasonably acceptable to the Contributors. The
Contributors expressly acknowledge and agree that the Operating Partnership
shall have the right to encumber the Retained Properties at or following the
Closing with secured financing encumbering the respective shopping center of
which the Retained Property forms a part; PROVIDED, HOWEVER, the Operating
Partnership shall have the express right to release such Retained Property
without the requirement of repaying a portion of the debt and notwithstanding
the occurrence of a default on the secured loan in question.
85
4.26 Post-Closing Delivery of Schedules and Exhibits. The Contributors
shall deliver to the Operating Partnership, within thirty (30) days after the
Closing Date, (a) a Schedule showing the tax basis as of the Closing Date of
each Contributor in the Property(ies) contributed by it to the Operating
Partnership and (b) revised Exhibit A-1 to the Operating Partnership Amendment
that correct any errors in the apportionment of Units, Preferred Units and the
Cash Reimbursement Component among the Existing Partners in light of closing
adjustments made after the date of this Agreement among the Existing Partners,
and BPP and the Operating Partnership shall have the right to conclusively rely
on such revised Exhibit A-1.
4.27 Operating Partnership Preferred Units. BPP and the Contributors
agree that, for so long as shares of Preferred Stock are outstanding, BPP (i)
shall own and hold the number of Preferred Units on behalf of the holders of
Preferred Stock in an amount equal to the number of shares of Preferred Stock
issued and outstanding and having in all material respects the same liquidation
and distribution preferences with respect to the Operating Partnership as
Preferred Stock has with respect to BPP, which distribution and preferences
shall be applied exclusively to the satisfaction of the rights of the holders of
the Preferred Stock , (ii) shall receive, hold and pay over to such holders the
proceeds of such Preferred Units, and (iii) shall act solely at the direction of
the holders of a majority of the Company Preferred Stock in exercising any right
or taking any action requested to be taken by it in its capacity as a holder of
the Preferred Units.
4.28 Company Rent Roll. BPP agrees to update the Company Rent Roll not
more than five (5) Business Days prior to the Closing Date.
4.29 Changes to Existing Partners and Allocation of Contribution
Consideration. The Contributors shall have the right, by giving notice to the
Operating Partnership at least five (5) prior to the Closing Date, to change the
identity of any of the Existing Partners (for example, because BSMC and BSMC II
may have contributed their interests in HPBA or HPBA II to another entity and
cause such entity to be designated as an Existing Partner in lieu of BSMC and
BSMC II) or the apportionment of Contribution Consideration or rights to receive
Additional Equity Value or Additional Consideration among the then Existing
Partners. To the extent Exhibits A-1 or A-2 have not been completed on or
before the date this Agreement is executed and delivered, the Contributors shall
have the right to provide such Schedules to the Operating Partnership not less
than two (2) Business Days prior to the Closing Date (upon which BPP and the
Operating Partnership shall conclusively rely).
4.30 Xxxxxxxxx Registration Rights Agreement. Without the approval of the
Existing Partners, BPP will not make or permit to occur any amendment to the
Xxxxxxxxx Registration Rights Agreement or the Operating Partnership Agreement,
nor waive or fail to observe in any material respect any provisions thereof, if
the effect thereof could adversely affect the rights of any Existing Partner or
other Person under the Registration Rights Agreement and BPP will afford such
Person the opportunity to obtain a similar benefit resulting from any amendment
or waiver of, or failure to observe, any material provisions of such Agreement.
86
4.31 REOC Status. BPP shall conduct its business in such fashion that the
representations made in Section 3.2(q) of this Agreement remain true and correct
after the Closing Date. BPP covenants and warrants that it will comply with all
requirements, and take all actions and cause it subsidiaries to take all actions
necessary, to maintain its status as a "real estate operating company" as such
term is defined in 29 C.F.R. Section 2510.3-101. Specifically, but without
limitation, BPP covenants that it has or it will establish an "annual valuation
period", which will be an annual period of no more than 90 days that will begin
no later than the anniversary of the REOC Qualification Date, and that on at
least one day within each annual valuation period, BPP will maintain the
investment of at least 50 percent of its assets (other than short-term
investments pending long-term commitment or distribution to investors), valued
at cost, in real estate which is under active development or management by BPP
as described above. BPP also covenants to devote substantial resources to the
management of the real estate it owns, and continuously to remain actively
engaged in the management or development of real estate in the ordinary course
of its business. BPP agrees to cooperate with the Contributors and to furnish
such additional information as may be reasonably requested by the Contributors
to evidence the actions indicated above.
4.32 80% Ownership Condition. To the extent that as of the effective time
of the Closing the Operating Partnership and its Subsidiaries do not have legal
or beneficial ownership of at least 80% of the then value of the assets of BPP
(other than its interest in the Operating Partnership) and its Subsidiaries
(including the Operating Partnership) immediately prior to the effective time of
Closing (the "80% Ownership Condition"), BPP shall use its best efforts to
satisfy the 80% Ownership Condition on or before December 31, 1998, including
repaying or refinancing any BPP Mortgage Debt (as defined in Section 7.5.A of
the Operating Partnership Agreement) if necessary to obtain (or to avoid the
need to obtain) any consent required to make the transfers necessary to satisfy
the 80% Ownership Condition on or before December 31, 1998. The parties hereto
acknowledge their intent that all transfers of legal or beneficial interests in
property that are necessary to satisfy the 80% Ownership Condition shall be
deemed to have occurred prior to the effective time of the Closing and,
consistent therewith, will treat any such transfers of property that are delayed
because of third party consent requirements and that occur on or before December
31, 1998 as having occurred immediately prior to the effective time of the
Closing for purposes of computing distributions to the Partners and filing the
parties' tax returns.
4.33 Board of Directors Resolutions. The resolutions of BPP's board of
directors referenced in Sections 3.2(s) and 3.2(v) will not be amended,
modified, rescinded or revoked in contravention of the last sentences of
Sections 3.2(s) and 3.2(v).
87
ARTICLE 5
CLOSING ADJUSTMENTS
5.1 Taxes, Assessments and Utilities. All real estate taxes, charges and
assessments (including betterment and other special assessments) affecting each
Property and all charges for water, sewer, electricity, gas, telephone and all
other utilities with respect to each Property, shall be apportioned on a per
diem basis between the Operating Partnership and the Contributors as provided
below. General real estate taxes with respect to each Property payable for the
year in which the Closing occurs and any amounts prepaid to any Authority,
including by way of example but without limitation, prepaid license and annual
permit and inspection fees, if any, shall be prorated by the Contributors and
the Operating Partnership as of the Closing Date. The Contributors shall cause
all the applicable utility meters to be read on the Closing Date and will be
responsible for the cost of all utilities used prior to the Closing Date, except
to the extent such utility charges are billed to and paid by tenants directly.
If the Closing shall occur before a new real estate or personal property tax
rate is fixed, the apportionment of taxes at the Closing shall be based upon the
old tax rate for the preceding fiscal year applied to the latest assessed
valuation. Promptly after the new tax rate is fixed, the apportionment of taxes
shall be recomputed and any discrepancy resulting from such recomputation or any
errors or omissions in computing apportionments at Closing shall be promptly
corrected and the proper party reimbursed by the other party, as the case may
be. If any prorations under this Section cannot be calculated finally on the
Closing Date, then they shall be estimated at the Closing and calculated finally
as soon after the Closing Date as feasible. The parties' obligations under this
Section shall survive the Closing.
5.2 Rent. Except for delinquent rent, all rent under the applicable
Leases and other income attributable to any Property shall be apportioned on a
per diem basis as of midnight on the date immediately preceding the Closing
Date. Payments received by the Operating Partnership from tenants of the
Property prior to the date which is six (6) months after the Closing Date with
respect to a Property shall be applied first to rents then due for any period
following Closing from such tenant and any excess then delivered to the
Contributors to the extent of such tenant's delinquent rent as of the time of
apportionment. Any amounts received by the Contributors on account of rent or
other income accruing from and after the Closing Date with respect to any
Property shall be turned over to the Operating Partnership for application in
accordance with the terms of this Section.
5.3 Common Area Reimbursement Adjustment.
(a) Within a reasonable period of time following the Closing and
periodically thereafter, Contributors shall prepare and deliver to the Operating
Partnership a Schedule demonstrating the computation of the common area
maintenance charges and other expense reimbursements payable by the tenants of
the Properties for calendar year 1997 and showing the
88
estimated payments made by all tenants with respect thereto. BPP shall
cooperate with Contributors to assist in preparing such Schedule.
(b) Upon a determination of the actual amount of common area
maintenance charges and other expense reimbursements as provided in Section
5.3(a) above, the Contributors shall remit to the tenants, or the Contributors
shall have the right to cause the Operating Partnership to demand payment from
the tenants, as the case may be, of an amount equal to the difference between
(x) the estimated common area maintenance charges and other expense
reimbursements paid by tenants and the actual common area maintenance charges
and other expense reimbursements for calendar year 1997. Any such amounts
received by BPP shall be received by BPP or the Operating Partnership as agent,
and in trust, for the Contributors and shall be paid over to the Contributors.
In the event the Closing is delayed to 1998 the Operating Partnership agrees to
perform a final reconciliation at the end of 1998 and the Operating Partnership
and the Contributors shall apportion any amounts either owed to tenants or owed
by tenants to the Operating Partnership, as landlord, and the Contributors shall
thereafter pay to the Operating Partnership its share of any amounts owed to
tenants and the Operating Partnership shall pay to the Contributors their share
of any amounts so owed by tenants when received. The Contributors' share of any
such amount shall be calculated as the total amount to be paid either to tenants
or received from tenants multiplied by a fraction which is the total number of
days Contributors owned the Properties in 1998 divided by 365. BPP and
Contributors shall remit amounts owed to the other party within ten (10) days of
the final reconciliation of common area maintenance charges and other expense
reimbursements.
5.4 Payments on Permitted Exceptions. Payments under the Permitted
Exceptions shall be apportioned on a per diem basis as of midnight on the date
immediately preceding the Closing Date. Such payments accruing prior to the
Closing Date shall be deemed to be the responsibility of the Applicable
Contributors, and, subject to the terms of this Agreement, any such payments
accruing on or after such Closing Date shall be deemed to be an expense of the
Operating Partnership.
5.5 Operating Agreement Payments and Other Expenses. Payments under all
Contracts and for each Property's operating maintenance expenses shall be
apportioned on a per diem basis as of midnight on the date immediately preceding
the Closing Date to the extent possible. All such expenses accruing prior to
such Closing Date shall be deemed to be the responsibility of the Contributors
and all such expenses accruing as of the Closing Date and thereafter shall be
expenses of the Operating Partnership. If final bills are not available as of
Closing, amounts to be prorated under this Section shall be prorated on the
basis of the most current bills then available and promptly re-prorated on
receipt of final bills.
5.6 Partners' Consents. All costs and expenses of obtaining any required
Partners' Consents shall be the responsibility of the applicable Contributors.
BPP shall be responsible for
89
any required filings for any securities laws in connection with the Partners'
Consents, and the cost thereof shall be paid 50% by each of BPP and the
Contributors.
5.7 Post-Closing Audit. The parties agree to apportion all prorations
made under this Article as of December 31, 1997 regardless of the actual date of
Closing. Within sixty (60) days after the Closing Date, the Operating
Partnership and the Contributors shall conduct a post-Closing reconciliation to
determine the actual prorations as of the actual Closing Date made under this
Article (the "Post-Closing Reconciliation"). Any party owing another party a
sum of money based on post-Closing prorations required under this Article or the
Post-Closing Reconciliation shall promptly pay such sum to the other party,
together with interest thereon at the Reference Rate commencing ten (10) days
after delivery of a xxxx therefor if not paid within such ten (10) day period.
5.8 Survival. The parties' obligations under this Article 5 shall survive
Closing.
ARTICLE 6
DEFAULTS AND REMEDIES
6.1 Breakup Fee. If the Contributors willfully default in their
obligations to contribute the Properties to the Operating Partnership or if BPP
and the Operating Partnership willfully default in their obligation to accept
such contribution and to issue the Contribution Consideration therefor, then the
nondefaulting party shall have the right to terminate its obligation to
consummate the transactions contemplated by this Agreement by delivery of notice
thereof to the other party, whereupon the Deposit shall be returned to BPP and
the defaulting party shall within fifteen (15) days of such termination pay to
the nondefaulting party Fifteen Million Dollars ($15,000,000) (the "Breakup
Damages Amount") as liquidated damages for such default.
6.2 Deposit. Within five (5) Business Days of the Date of this Agreement,
BPP shall deposit with the Title Company the amount of $25,000.00 (together with
all interest, if any, earned thereon, the "Deposit"). The Deposit shall be held
by the Title Company in an interest bearing account designated by BPP. Upon
Closing or termination of this Agreement pursuant to Section 6.1, BPP shall be
entitled to return of the Deposit .
6.3 BREAKUP DAMAGES AMOUNT AS LIQUIDATED DAMAGES. THE PARTIES HEREBY
AGREE THAT THEY SHALL NOT BE ENTITLED TO ACTUAL DAMAGES PURSUANT TO THE TERMS OF
THIS AGREEMENT IN THE EVENT OF A WILLFUL DEFAULT ENTITLING THE OTHER PARTY TO
THE BREAKUP DAMAGES AMOUNT AS SET FORTH IN SECTION 6.1, AND THAT IN SUCH EVENT
IT SHALL ONLY BE ENTITLED TO THE BREAKUP DAMAGES AMOUNT, AS
90
DESCRIBED ABOVE IN THIS ARTICLE. THE PARTIES AGREE THAT IT IS DIFFICULT OR
IMPOSSIBLE TO CALCULATE WHAT ITS ACTUAL DAMAGES WOULD BE IN THE EVENT OF ANY
SUCH WILLFUL DEFAULT AND AGREE THAT THE BREAKUP DAMAGES AMOUNT IS A REASONABLE
ESTIMATION THEREOF. THEREFORE, BY PLACING ITS INITIALS BELOW, THE PARTIES
ACKNOWLEDGES THAT ITS RIGHT TO THE BREAKUP DAMAGES AMOUNT SHALL CONSTITUTE
LIQUIDATED DAMAGES AND ITS SOLE RIGHT AND REMEDY IN CONNECTION WITH THIS
AGREEMENT IN THE EVENT OF SUCH A WILLFUL DEFAULT. NOTWITHSTANDING THE
FOREGOING, NEITHER THIS PARAGRAPH NOR SECTION 6.1 SHALL LIMIT A PARTY'S RIGHTS
WITH RESPECT TO A DEFAULT OR BREACH OCCURRING AFTER CLOSING OR WITH RESPECT TO
ANY OTHER DEFAULT.
INITIALS: CONTRIBUTORS BPP AND OPERATING PARTNERSHIP
----------------------- -----------------------
ARTICLE 7
INDEMNIFICATION
7.1 By the Contributors and Existing Partners.
(a) Subject to the limitations provided below, from and after the
Closing Date, the Existing Partners agree to indemnify, defend and hold harmless
the BPP Indemnified Parties from and against all Losses which are incurred or
suffered by any of them (A) arising out of or by reason of the breach of any of
the representations or warranties of the Contributors set forth in this
Agreement, (B) arising out of or by reason of any liability or obligation
relating to any Property arising or occurring prior to Closing that has not been
expressly assumed by BPP or the Operating Partnership pursuant to this Agreement
or any Related Agreement, (C) arising out of or by reason of the failure of the
Contributors to perform or comply, in whole or in part, with any of the
covenants or agreements contained herein or in any Related Agreement to be
performed or complied with by the Contributors including, without limitation,
under or pursuant to any Contributors Estoppel, Contributors Ground Lessor
Estoppel, Contributors REA Estoppel, any other estoppel certificate delivered by
the Contributors pursuant to this Agreement, any Master Lease, or any other
indemnity obligation of the Contributors or the Existing Partners expressly set
forth in this Agreement or in any of the Related Agreements, (D) arising from
any brokerage commission or similar compensation payable in respect of any of
the Leases entered into prior to the Closing Date, (E) all tenant improvements,
tenant concessions (including, without limitation, moving allowances, takeover
fees and other similar tenant inducements) and other improvements
91
required to be furnished, constructed or installed or paid for by the landlord
under each Lease entered into prior to the Closing Date (including by any
predecessor of a Contributor as landlord under such Lease), (F) arising with
respect to any labor performed or materials furnished to or for the benefit of a
Property prior to the Closing, (G) subject to the limitations set forth in
Section 4.11, arising out of the Contributors' performance of, or failure to
fully perform, the Ongoing Improvements Work, (H) arising out of BPP's and the
Operating Partnership's reliance on Exhibits A-1 and A-2 and any supplements or
amendments thereto (I) arising out of the failure to obtain any of the consents
or waivers set forth on Schedule 3.1(b) provided that any Losses shall be
limited to the positive difference, if any, between the value of the
Contribution Consideration paid to the Existing Partners for the applicable
Property (as set forth on Exhibit A to the Operating Partnership Agreement) and
the purchase price actually received by BPP or the Operating Partnership for
such Property pursuant to the exercise of the applicable right of first refusal
plus all legal fees and transfer taxes and other transactions costs incurred by
them and attributable to the applicable Property sale, (J) arising out of the
Contributors' failure to pay the Additional NOI Lease Expenses in circumstances
where the Contributors have leased the Identified Space pursuant to the
Post-Closing Leasing Agreement, and (K) arising from the Operating Partnership
acting as nominee for the Contributors with respect to the Retained Properties
provided such Losses did not result from the gross negligence or willful
misconduct of the Operating Partnership.
(b) Notwithstanding anything to the contrary contained herein or in
any Related Agreement or in any Contributor Estoppel delivered pursuant to the
Agreement, (i) the liability of the Existing Partners hereunder shall not be
joint but rather shall be several, with each Existing Partner being liable for a
pro rata portion of each claim for which the Existing Partners are liable under
this Article 7, which pro rata portion shall be based on the proportion to which
the Contribution Consideration received by an Existing Partner as of the date
the claim is made bears to the aggregate Contribution Consideration paid to the
Existing Partners as of such same date and (ii) except as set forth in the
following sentence, recourse against any individual Existing Partner for the
payment of any amount due hereunder shall be limited to an amount equal to the
product of (A) $15,000,000 and (B) a fraction, the numerator of which is the
amount of Contribution Consideration received by such Existing Partner and the
denominator of which is the aggregate amount of Contribution Consideration
received by all the Existing Partners. The limitation set forth in Clause (ii)
above shall not apply to liability in respect of any Master Lease, Payment
Estoppel delivered by the Contributors, or the matters decided in clauses (E),
(G), (H), (I), (J) and (K) of Section 7.1(a).
(c) Notwithstanding the preceding, the BPP Indemnified Parties shall
not be entitled to any recovery unless a claim for indemnification is made in
accordance with Section 7.3 and within the time period of survival set forth in
Section 7.5 and the person seeking indemnification complies with the procedures
set forth in Section 7.3.
92
(d) The Existing Partners shall have no liability (for
indemnification or otherwise) with respect to the matters described in clause
(A) of Section 7.1(a) until the total of all Losses with respect thereto exceeds
$1,000,000, and after the total of such Losses so exceeds $1,000,000, the
Existing Partners shall be liable for only those Losses in excess of $1,000,000.
The Existing Partners shall have no liability (for indemnification or otherwise)
under is Agreement, or any Related Agreement or any Contributor estoppel
delivered pursuant to this Agreement in an amount greater than $15,000,000. The
limitations on liability set forth in this Section 7.1 shall not apply to any
Losses resulting from any acts of fraud, or (ii) any Losses in respect of any
Master Lease, Payment Estoppel delivered by the Contributors, or the matters
described in Clauses (E), (G), (H), (I), (J) and (K) of Section 7.1(a).
7.2 By the Operating Partnership and BPP.
(a) Subject to the limitation provided below, from and after the
Closing Date BPP and the Operating Partnership shall indemnify and hold the
Contributors harmless from and against any and all Losses incurred by the
Contributors (A) arising out of or by reason of the breach of any of the
representations or warranties of BPP or the Operating Partnership under Sections
3.2(j) and 3.2(k), (B) arising out of or by reason of the breach of any of the
other representations or warranties of BPP or Operating Partnership, (C) arising
out of or by reason of the failure to perform or comply in whole or in part,
with any of the covenants or agreements contained herein or in any Related
Agreement to be performed or complied with by BPP or the Operating Partnership,
(D) arising out of or by reason of any liability or obligation relating to any
Property arising or occurring following Closing during BPP's, the Operating
Partnership's or any Subsidiary's period of ownership of the Property except to
the extent that the Contributors or Existing Partners have expressly agreed to
be responsible for such liability or perform such obligation pursuant to this
Agreement or any Related Agreement, (E) BPP's or the Operating Partnership's
failure to pay to DLJ the DLJ Fee or (F) resulting from the following actions or
inactions of BPP and the Operating Partnership with respect to the Retained
Properties: (i) encumbering the Retained Properties (other than the debt which
by its terms can be released without cost), (ii) the discharge of Hazardous
Substances on or otherwise affecting the Retained Properties by the Operating
Partnership or BPP or (iii) the failure to maintain reasonable amounts of
general liability insurance covering the Retained Properties.
(b) Notwithstanding the preceding, the Contributors and the
Existing Partners shall not be entitled to any recovery unless a claim for
indemnification is made in accordance with Section 7.3 and within the time
period of survival set forth in Section 7.5 and the person seeking
indemnification complies with the procedures set forth in Section 7.3.
(c) Neither BPP nor the Operating Partnership shall have any
liability (for indemnification or otherwise) with respect to the matters
described in clause (A) of Section 7.2(a) until the total of all Losses incurred
by the Contributors or the Existing Partners with respect thereto, exceeds
$1,250,000, and after the total of such Losses so exceeds $1,250,000,
93
BPP and the Operating Partnership shall be liable for only those Losses incurred
by the Contributors and the Existing Partners in excess of $1,250,000. Neither
BPP nor the Operating Partnership shall have any liability (for indemnification
or otherwise) with respect to the matters described in clause (B) of Section
7.2(a) until the total of all Losses incurred by the Contributors and the
Existing Partners with respect hereto exceeds $1,250,000, and after the total of
such Losses so exceeds $1,250,000, BPP and the Operating Partnership shall be
liable only for those Losses in excess of $1,250,000. The limitations on
liability set forth in this Section 7.2(c) shall not apply to any Losses
resulting from any acts of fraud.
7.3 Indemnification Procedure.
(a) In the event that any party shall incur or suffer any Losses in
respect of which indemnification may be sought by such party pursuant to the
provisions of this Article 7, the party seeking to be indemnified hereunder (the
"Indemnitee") shall assert a claim for indemnification by written notice (a
"Notice") to the party from whom indemnification is sought (the "Indemnitor")
stating the nature and basis of such claim. In the case of Losses arising by
reason of any third party claim, the Notice shall be given within 30 days of the
filing of any such claim against the Indemnitee or the determination by
Indemnitee that a claim will ripen into a claim for which indemnification will
be sought, but the failure of the Indemnitee to give the Notice within such time
period shall not relieve the Indemnitor of any liability that the Indemnitor may
have to the Indemnitee except to the extent that the Indemnitor is prejudiced
thereby and then only to the extent of such prejudice.
(b) The Indemnitee shall provide to the Indemnitor on request all
information and documentation reasonably necessary to support and verify any
Losses which the Indemnitee believes give rise to a claim for indemnification
hereunder and shall give the Indemnitor reasonable access to all books, records
and personnel in the possession or under the control of the Indemnitee which
would have bearing on such claim.
(c) In the case of third party claims for which indemnification is
sought, the Indemnitor shall have the option (x) to conduct any proceedings or
negotiations in connection therewith, (y) to take all other steps to settle or
defend any such claim (provided that the Indemnitor shall not, without the
consent of the Indemnitee, settle any such claim unless (A) there is no finding
or admission of any violation of law or any violation of the rights of any
Person and no effect on any other claims that may be made against the Indemnitee
and (B) the sole relief provided is monetary damages that are paid in full by
the Indemnitor) and (z) to employ counsel, which counsel shall be reasonably
acceptable to the Indemnitee, to contest any such claim or liability in the name
of the Indemnitee or otherwise. In any event, the Indemnitee shall be entitled
to participate at its own expense and by its own counsel in any proceedings
relating to any third party claim; PROVIDED, HOWEVER, that if the defendants in
any such action or claim include both the Indemnitee and the Indemnitor and the
Indemnitee shall have reasonably concluded that representation by the same
counsel creates a conflict of interest, the Indemnitee
94
shall be entitled to be represented by separate counsel at the Indemnitor's
expense; PROVIDED FURTHER, HOWEVER, that such action or claim shall not be
settled without the Indemnitor's consent. The Indemnitor shall, within 30 days
of receipt of the Notice, notify the Indemnitee of its intention to assume the
defense of such claim. Until the Indemnitee has received notice of the
Indemnitor's election whether to defend any claim (or if earlier, the expiration
of such 30 day period), the Indemnitee shall take reasonable steps to defend
(but may not settle) such claim. If the Indemnitor shall decline to assume the
defense of any such claim, or shall fail to notify the Indemnitee within 30 days
after receipt of the Notice of the Indemnitor's election to defend such claim,
the Indemnitee shall assume the exclusive right to defend against such claim
(provided that the Indemnitee shall not settle such claim without the consent of
the Indemnitor, which consent shall not be unreasonably withheld or delayed, and
which shall be granted unless the Indemnitor provides the Indemnitee in writing
specific reasons for its disapproval of the proposed settlement within 15 days
of its receipt of all of the material aspects of the proposed settlement.). The
expenses of all proceedings, contests or lawsuits in respect of the claims
described in the preceding sentence shall be borne by the Indemnitor but only if
the Indemnitor is responsible pursuant hereto to indemnify the Indemnitee in
respect of the third party claim and, if applicable, only as required within the
limitations set forth in Section 7.1 or Section 7.2 as the case may be.
Regardless of which party shall assume the defense of the claim, the parties
agree to cooperate fully with one another in connection therewith.
(d) In the case of a claim for indemnification made under Section 7.1
or 7.2, (i) if (and to the extent) the Indemnitor is responsible pursuant hereto
to indemnify the Indemnitee in respect of the third party claim, then within ten
days after the occurrence of a final non-appealable determination with respect
to such third party claim (or sooner if required by such determination), the
Indemnitor shall pay the Indemnitee (or sooner if required by such
determination), in immediately available funds, the amount of any Losses (or
such portion thereof as the Indemnitor shall be responsible for pursuant to the
provisions hereof) and (ii) in the event that any Losses incurred by the
Indemnitee do not involve payment by the Indemnitee of a third party claim,
then, if (and to the extent) the Indemnitor is responsible pursuant hereto to
indemnify the Indemnitee against such Losses, the Indemnitor shall within ten
days after agreement on the amount of Losses or the occurrence of a final
non-appealable determination of such amount pay to the Indemnitee, in
immediately available funds, the amount of such Losses (or such portion thereof
as the Indemnitor shall be responsible for pursuant to the provisions hereof).
(e) At the election of the Existing Partners, any amounts payable by
the Existing Partners pursuant to this Article 7 may be paid in any combination
of cash, Units, Preferred Units, BPP Preferred Stock and BPP Common Stock held
by the Existing Partners. For purposes of this Section 7.3(d), any Preferred
Units and Preferred Stock shall be valued at an amount equal to the product of
the Common Exchange Rate and the Current Market Price determined as of the date
immediately prior to the date on which the payment is made. Any Units and BPP
Common
95
Stock shall be valued at an amount equal to the Current Market Price determined
as of the date immediately prior to the date on which the payment is made.
7.4 Cooperation in Defense. Each party indemnified under any indemnity
contained in this Agreement shall cooperate in all reasonable respects in the
defense of the third-party claim pursuant to which the indemnifying party is
alleged to have liability.
7.5 Survival. This Article 7 shall survive Closing or the termination of
the parties' obligations to consummate the transactions contemplated by this
Agreement. Subject to the terms of this Section below, (i) all representations
and warranties of the Contributors contained in this Agreement (other than those
contained in Section 9.1 which shall survive Closing for a period of 60 days
after the expiration date of the applicable statute of limitations), and all
covenants and agreements to be complied with prior to the Closing Date shall
survive the Closing until that date which is eighteen (18) months after the
Closing and (ii) all representations and warranties of BPP and the Operating
Partnership (other than those contained in Sections 3.2(j) and 3.2(k) which
shall survive the Closing for a period of eighteen (18) months after the Closing
Date), and all covenants and agreements to be complied with prior to the Closing
Date shall survive Closing until that date which is sixty days after the
expiration of the applicable statute of limitations; provided, however, that, if
a written notice asserting a claim for breach of any such representation or
warranty or covenant or agreement or a claim for indemnification under
Section 7.3 shall have been given to the indemnifying party prior to the
expiration of such representation or warranty or covenant or agreement or claim
under Section 7.3, as the case may be, such representation and warranty and any
right to indemnification for breach thereof, shall survive, to the extent of
such claim only, until such claim is resolved. All covenants and agreements of
the parties to be performed and complied with after the Closing Date shall
survive indefinitely. No representation or warranty which is untrue as a result
of judicially determined fraud by the party making it shall terminate, but shall
survive indefinitely.
7.6 Interest. The indemnity against Losses pursuant to Section 7.1 and
Section 7.2 shall also include interest on cash disbursements in respect thereof
at an annual rate of interest equal to the prime lending rate of Bank of America
in effect from time to time plus 2% (the "Reference Rate"), based on actual days
elapsed from the later of the date a valid claim is made hereunder or the date
of such disbursement until the date the applicable party is fully reimbursed
therefor.
7.7 Exclusivity. From and after the Closing Date, the rights and remedies
provided in this Article 7 shall be the exclusive rights and remedies,
contractual or otherwise, of the Indemnitees with respect to any Losses, or any
other claim for breach of the Agreement and all other remedies, if any,
hereunder other than remedies in equity are hereby waived.
7.8 Mutual Pursuit of Claims. In the event of a claim by the Contributors
(which terms shall include their Affiliates for purposes of this Section 7.8)
under Section 7.2 of this
96
Agreement with respect to a representation or warranty of BPP and the Operating
Partnership under Section 3.2 hereof, Contributors will, prior to asserting such
claim, first advise Buyer under the Preferred Stock Purchase Agreement
("Xxxxxxxxx") of its intention to do so and will request that Xxxxxxxxx advise
Blackacre of whether it wishes to pursue such claim under the Preferred Stock
Purchase Agreement based on the representations and warranties of BPP
established thereunder. If Xxxxxxxxx does not so advise the Contributors that
it wishes to pursue such claim jointly with the Contributors by a written
notice, including provision for such sharing of expenses as Xxxxxxxxx and the
Contributors may jointly determine, within twenty (20) Business Days of the date
the Contributors advise Xxxxxxxxx of their intention to assert a claim, unless
any applicable statute of limitations shall require the assertion of a claim in
a lesser amount of time, the Contributors shall no longer consult with Xxxxxxxxx
as to such claim, their assertion or any resolution thereof. BPP and the
Operating Partnership acknowledge that, pursuant to Section 8.6 of the Preferred
Stock Purchase Agreement, Xxxxxxxxx has a reciprocal understanding with BPP.
The Contributors agree that, if the Contributors shall have not provided to
Xxxxxxxxx such written notice, then, if such claim is subsequently asserted in a
court of appropriate jurisdiction where the Contributors can also establish
appropriate venue, the Contributors will not seek separately to assert such
claim against BPP and the Operating Partnership, unless and to the extent that
the Contributors do not wish to pursue such claim jointly with Xxxxxxxxx because
of defenses or counterclaims which exist against Xxxxxxxxx under the Preferred
Stock Purchase Agreement which are not available to BPP and the Operating
Partnership with respect to the Contributors under this Agreement.
ARTICLE 8--TERMINATION
8.1 Termination. This Agreement may be terminated prior to the Closing as
provided below:
(i) at any time prior to Closing, by the mutual consent of the
Contributors, BPP and the Operating Partnership;
(ii) by the Contributors on or before fifteen days after the
date of this Agreement if the Contributors determine, in their sole discretion,
that they are not satisfied with their environmental due diligence investigation
of the Company Properties;
(iii) by BPP and the Operating Partnership on or before
fifteen days after the date of this Agreement if BPP and the Operating
Partnership determine, in their sole discretion, that they are not satisfied
with their environmental due diligence investigation of the Properties;
97
(iv) by BPP and the Operating Partnership if a material casualty
shall have occurred at a Property that causes damage to such Property in an
amount in excess of $1,000,000.
(v) by either the Contributors on the one hand or BPP and the
Operating Partnership on the other hand, if the Closing shall not occur prior to
December 31, 1997; provided, however, such date shall be automatically extended
to February 28, 1998 in the event the Closing does not occur as a result of the
failure of the condition set forth in Section 2.2(w) but the Contributors waive
the condition to closing set forth in Section 2.2(w).
(vi) by the Contributors in the event the Preferred Stock
Purchase Agreement is terminated prior to a closing occurring thereunder; or
(vii) by either the Contributors on the one hand or BPP or
the Operating Partnership on the other hand if a breach or failure of any
representation, warranty, covenant or agreement contained herein that is
material in the context of the transactions contemplated hereby has been
committed by the other party and such breach has not be waived.
8.2 Effect of Termination. In the event of termination of this Agreement
by either or both of the Contributors, on the one hand, and BPP and the
Operating Partnership, on the other hand, pursuant to Section 8.1, written
notice thereof shall be promptly given by the terminating party to the other
parties hereto, and this Agreement shall thereon terminate and become void and
have no effect and the transactions contemplated hereby shall be abandoned
without further action by the parties hereto, except that the Deposit shall be
returned to BPP and the provisions of Sections 4.22, 6.1, 9.4, 9.7, and 9.12 and
any related definitional, interpretive or other provisions necessary for the
logical interpretation of such provisions, shall survive the termination of this
Agreement; provided, however, that such termination shall not relieve any party
hereto of any liability for any breach of this Agreement. In the event of the
termination of this Agreement prior to the Closing, the parties acknowledge that
the sole remedy for breach of this Agreement shall be a claim for monetary
damages (including, if applicable, liquidated damages as set forth in Section
6.1). All other remedies in law or equity (including, without limitation,
injunction or lis pendens) are hereby waived.
ARTICLE 9--MISCELLANEOUS
9.1 Brokers. Each party to this Agreement represents and warrants that
neither it nor any of its Affiliates has had any contact or dealings regarding
any Property, or any communication in connection with the subject matter of the
transactions contemplated by this Agreement, through any real estate broker or
other person who can claim a right to a commission or finder's fee in connection
with therewith other than Xxxxxxxxx Xxxxxx & Xxxxxxxx ("DLJ"). All commissions
and other amounts required to be paid to DLJ in connection with the
98
transactions contemplated hereby, other than the DLJ Fee (as set forth below),
shall be paid by the Contributors . If the Closing occurs, the DLJ Fee shall be
paid to DLJ by BPP and the Operating Partnership. In the event that any other
broker or finder claims a commission or finder's fee based upon any contact,
dealings or communication, the party through whom or through whose Affiliate
such other broker or finder makes its claim shall be responsible for such
commission or fee and all costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) incurred by the other party and
its Affiliates in defending against the same. The party through whom or through
whose Affiliate such other broker or finder makes a claim shall hold harmless,
indemnify and defend the other party hereto, its successors and assigns, agents,
employees, officers and directors, and the Property from and against any and all
Losses, arising out of, based on, or incurred as a result of such claim. The
provisions of this Section shall survive the Closing or termination of the
parties' obligations to consummate the transactions contemplated by this
Agreement.
9.2 Marketing. The Contributors agree not to market any Property for sale
during the term of this Agreement or entertain solicit, discuss or negotiate for
the sale of any Property or any direct or indirect interest therein with any
Person other than BPP and its Affiliates.
9.3 Entire Agreement; No Amendment. This Agreement and the October 6,
1997 letter agreement referred to in Section 9.12 (and, when executed and
delivered, the Related Agreements) represents the entire agreement among each of
the parties hereto with respect to the subject matter hereof. It is expressly
understood that no representations, warranties, guarantees or other statements
shall be valid or binding upon a party unless expressly set forth in this
Agreement. Except as set forth in Section 9.12, and in the Access Agreement it
is further understood that any prior agreements or understandings between the
parties with respect to the subject matter hereof have merged in this Agreement,
which alone fully expresses all agreements of the parties hereto as to the
subject matter hereof and supersedes all such prior agreements and
understandings. This Agreement may not be amended, modified or otherwise
altered except by a written agreement signed by the party hereto against whom
enforcement is sought. It is agreed that no obligation under this Agreement
which by its terms is to be performed or continue to be performed after Closing
and no provision of this Agreement which is expressly to survive Closing shall
merge upon Closing, but shall survive Closing.
9.4 Certain Expenses. Except as otherwise set forth below and in Section
4.22, each party hereto will pay all of its own expenses incurred in connection
with this Agreement and the transactions contemplated hereby (whether or not the
Closing shall take place), including, without limitation, all costs and expenses
herein stated to be borne by such party and all of its respective accounting,
legal, investigatory and appraisal fees. The Contributors shall be responsible
for paying (i) all applicable State, County and City transfer taxes and/or
transfer fees due in connection with the transactions contemplated by this
Agreement, (ii) all costs associated with obtaining and issuing a CLTA standard
coverage Title Policy, including, without limitation, examination costs,
commitment fees and premiums. Any escrow fees incurred in connection
99
with the consummation of the transactions contemplated by this Agreement shall
be split evenly between BPP and the Contributors. BPP shall make capital
contributions to the Operating Partnership to pay (i) all costs associated with
obtaining any survey it may require, and the incremental increase in the cost of
upgrading the Title Policy from a standard form CLTA policy to ALTA coverage or
to obtain any extended coverage endorsement or any other endorsements required
by BPP. All other costs and charges in connection with the consummation of the
transactions contemplated by this Agreement not otherwise provided for in this
Agreement shall be allocated by standard accounting and conveyancing practices
in the relevant jurisdiction where each shopping center Property is located.
9.5 Notices. Any notice or communication required under or otherwise
delivered in connection with this Agreement to any of the parties hereto shall
be written and shall be delivered to such party as follows:
If to Contributors:
c/o Highridge Partners, Inc.
000 Xxxxxxxxxxx Xxxx.
Xxxxx 000
Xx Xxxxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxx
and Xx. Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
and to:
c/o Blackacre Capital
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
100
with a copy to:
Battle Xxxxxx LLP
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxxxx, Esq.
Fax: (000) 000-0000
If to BPP or the Operating Partnership to:
Xxxxxxx Pacific Properties, Inc.
000 Xxxx Xxx Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxxx, Chief Financial Officer
Fax: (000) 000-0000
with a copy to:
Xxxxxxx, Procter & Xxxx LLP
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
Each notice shall be in writing and shall be sent to the party to receive it
either by (i) postage prepaid by certified mail, return receipt requested, (ii)
by a nationally recognized overnight courier service that provides tracking and
proof of receipt or (iii) by facsimile as long as such notice sent by facsimile
is also sent the same Business Day by a nationally recognized overnight courier
service as set forth above. A Notice shall be deemed delivered upon deposit in
the U.S. mail or when given to such courier as aforesaid. The time to respond
shall commence to run on the Business Day it is received or refused as long as
it is received or refused by 6:00 p.m. on such Business Day. If received or
refused on a non-Business Day or if received or refused later than 6:00 p.m. on
a Business Day, then the time to respond to such notice shall commence to run on
the next Business Day.
9.6 No Assignment. Except as provided in this Section below, neither
this Agreement nor any of the rights or obligations hereunder may be assigned
by any party hereto without the prior written consent of the other parties.
BPP may, without such consent, assign any of its rights and obligations
hereunder to the Operating Partnership but such assignment shall not relieve
BPP of its obligations hereunder Contributors may, without such consent,
assign any of
101
its rights accruing after the Closing to the Existing Partners, but such
assignment shall not relieve the Contributors of their obligations hereunder
9.7 Governing Law; Waiver of Jury Trial. The laws of the State of
California shall govern the validity, enforcement and interpretation of this
Agreement.
IN THE EVENT OF ANY DISPUTE ARISING PURSUANT TO THIS AGREEMENT, INCLUDING THE
INTERPRETATION OR IMPLEMENTATION OF THIS AGREEMENT, THE PARTIES HERETO HEREBY
WAIVE ANY AND ALL RIGHTS THEY MAY HAVE TO A TRIAL BY JURY.
9.8 Multiple Counterparts. This Agreement may be executed in multiple
counterparts. If so executed, all of such counterparts shall constitute but one
agreement, and, in proving this Agreement, it shall not be necessary to produce
or account for more than one such counterpart.
9.9 Further Assurances. From and after the date of this Agreement and
after the Closing, the parties hereto shall take such further actions and
execute and deliver such further documents and instruments as may be reasonably
requested by the other party and are reasonably necessary to provide to the
respective parties hereto the benefits intended to be afforded hereby,
including, without limitation, all books and records relating to the Property
and the addresses of all parties.
9.10 Miscellaneous. Whenever herein the singular number is used, the same
shall include the plural, and the plural shall include the singular where
appropriate, and words of any gender shall include the other gender when
appropriate. The headings of the Articles and the Sections contained in this
Agreement are for convenience only and shall not be taken into account in
determining the meaning of any provision of this Agreement. The words "hereof"
and "herein" refer to this entire Agreement and not merely the Section in which
such words appear. If the last day for performance of any obligation hereunder
is not a Business Day, then the deadline for such performance or the expiration
of the applicable period or date shall be extended to the next Business Day.
9.11 Invalid Provisions. If any provision of this Agreement (except the
provision relating to the Contributors' obligation to contribute the Properties
and the Operating Partnership's obligation to issue the Units, Preferred Units,
Cash Consideration Component, Additional Equity Value or Additional
Consideration, the invalidity of which shall cause this Agreement to be null and
void) is held to be illegal, invalid or unenforceable under present or future
laws, such provision shall be fully severable, this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect
102
and shall not be affected by the illegal, invalid or unenforceable provision or
by its severance from this Agreement.
9.12 Confidentiality; Publicity. The parties agree that this Agreement
shall not be recorded in any public real estate registry. In the event this
Agreement is terminated, BPP shall promptly return to the Contributors all
materials delivered to BPP by the Contributors and the Contributors shall
promptly return to BPP all materials delivered to the Contributors or their
representatives by BPP. If the Closing occurs, the Contributors on behalf of
themselves and their affiliates (including Existing Partners) expressly agree to
comply with the standards for use of materials and information received from BPP
(other than materials filed with the Commission which are available to the
public) in connection with the transactions contemplated by this Agreement in
accordance with the confidentiality agreement entered into prior to the date of
this Agreement between BPP and the Contributors. Otherwise, the Contributors
and BPP agree that all materials and information received in connection with the
transactions contemplated by this Agreement shall be subject to the provisions
of a certain letter agreement between BPP and HPBA, LLC and HPBA II, LLC,
affiliates of the Contributors, dated as of October 6, 1997, the effectiveness
of which shall survive the Closing.
9.13 Time of Essence. Time is of the essence with respect to the
December 31, 1997 outside date set for Closing.
9.14 Authorized Representatives. Any notice, election, consent or approval
on behalf of the Contributors or the Existing Partners shall be valid only if
given in writing pursuant to the notice provisions of Section 9.5 and only if
signed (a) in the case of any Contributor, by any one of Xxxxxxx Xxxxxx, Xxxxxx
X. Xxxxxx, Xxxx X. Xxxx, Xxxxxx X. Xxxxxxxxx, Xxxx Xxxxxxx or Xxxx Xxxxxxx, (b)
in the case of Existing Partners BSMC or BSMC II, any one of Xxxxxxx Xxxxxx or
Xxxxxx X. Xxxxxx, or (c) in the case of any other Existing Partner, any one of
Xxxx X. Xxxx, Xxxxxx X. Xxxxxxxxx, Xxxx Xxxxxxx or Xxxx Xxxxxxx ("Authorized
Representatives"). Any Contributor or Existing Partner may, by notice to the
Operating Partnership and BPP in accordance with Section 9.5, change its
Authorized Representatives (or add additional Authorized Representatives) at any
time (effective upon the receipt of such notice by the Operating Partnership).
EACH AUTHORIZED REPRESENTATIVE IS ALSO AUTHORIZED TO INITIAL SECTION 6.3 HEREOF
ON BEHALF OF ALL OF THE CONTRIBUTORS AND THE EXISTING PARTNERS.
9.15 Conflict. In the event of any conflict between the provisions of this
Agreement and those of the Operating Partnership Agreement, the provisions of
this Agreement shall control.
9.16 Applicable Contribution Agreement. This Agreement shall be deemed to
constitute both an "Applicable Contribution Agreement" and a "Contribution
Agreement," as such terms are defined in the Operating Partnership Agreement.
103
9.17 Schedules. Any matter set forth on any Exhibit or Schedule to this
Agreement shall be deemed to refer to all other Exhibits and Schedules to which
such matter logically relates and where such reference would be appropriate and
can reasonably be inferred from the matters disclosed on the first Exhibit or
Schedule as if set forth on such other Exhibit or Schedule.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
104
IN WITNESS WHEREOF, the parties hereto have executed this Contribution
Agreement as an instrument under seal as of the date and year first above
written.
BPP:
XXXXXXX PACIFIC PROPERTIES, INC.
By: /s/ J. Xxxxx Xxxxxx
----------------------------------------
Name: J. Xxxxx Xxxxxx
Title: CEO
Xxxxxxx Pacific Operating Partnership, L.P.
By: Xxxxxxx Pacific Properties, Inc., its
general partner
By: /s/ J. Xxxxx Xxxxxx
----------------------------------------
Name: J. Xxxxx Xxxxxx
Title: CEO
CONTRIBUTORS:
HPBA - Benicia Associates, L.L.C.,
HPBA - Madera Associates, L.L.C.,
HPBA - Xxxxxx Associates, L.L.C.,
HPBA - Redondo Beach Associates, L.L.C.,
HPBA - Suisun Associates, L.L.C.,
HPBA - Xxxxxx Associates, L.L.C.,
HPBA - Sacramento Associates, L.L.C.,
HPBA - Westminster Associates, L.L.C.,
Delaware limited liability companies
By: HPBA, LLC, a Delaware limited liability
company, Managing Member
By: GSF Associates, L.L.C., a Delaware
limited liability company, Manager
Member
By: MJL Associates, a California
Limited Partnership, Managing
Member
By: MJL Investments, Inc., a
California corporation,
General Partner
By: /s/ Xxxx X. Xxxx
------------------------------------------
Name: Xxxx X. Xxxx
Title: President
HPBA II - AC Sacramento Associates, L.L.C.,
HPBA II - Xxxx Gardens Associates, L.L.C.,
HPBA II - Bellflower Associates, L.L.C.,
HPBA II - Fremont Associates, L.L.C.,
HPBA II - Menifee Associates, L.L.C.,
HPBA II - Placerville Associates, L.L.C.,
HPBA II - San Xxxx Associates, L.L.C.,
HPBA II - San Marcos Associates, L.L.C.,
HPBA II - Santa Xxxx Associates, L.L.C.,
HPBA II - Shasta Associates, L.L.C.,
HPBA II - SHP Sacramento Associates, L.L.C.,
HPBA II - Vacaville Associates, L.L.C.,
Delaware limited liability companies
By: HPBA II, LLC, a Delaware limited
liability company, Managing Member
By: GSF II Associates, L.L.C., a
Delaware limited liability company,
Managing Member
By: MJL Associates, a California
Limited Partnership, Managing
Member
By: MJL Investments, Inc., a
California corporation,
General Partner
By: /s/ Xxxx X. Xxxx
-------------------------------------
Name: Xxxx. X. Xxxx
Title: President
EXISTING PARTNERS:
MJL Associates, a California Limited
Partnership
By: MJL Investments, Inc., a California
corporation, General Partner
By: /s/ Xxxx X. Xxxx
-------------------------------------
Name: Xxxx X. Xxxx
Title: President
BLACKACRE SMC HOLDINGS, L.P.,
By: Blackacre Capital Group, L.P.,
its general partner
By: Blackacre Capital Management Corp.,
its general partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title:
BLACKACRE SMC II HOLDINGS LLC
By: Blackacre Capital Group, L.P.,
its managing member
By: Blackacre Capital Management Corp.,
its managing member
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title:
/s/ Xxxxxx X. Xxxxxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ Xxxx X. Xxxxxxx
---------------------------------------------
Xxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxxxx
---------------------------------------------
Xxxx X. Xxxxxxx
SAB ASSOCIATES, A CALIFORNIA LIMITED
PARTNERSHIP
By: SAB Investments, Inc.
as General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxxx
President
