EXHIBIT 10.15
COMMON STOCK PURCHASE AGREEMENT
5,740,741 SHARES OF COMMON STOCK
OF
AMERICAN OFFICE PARK PROPERTIES, INC.
Table of Contents
Page
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I. PURCHASE AND SALE OF STOCK.......................................... 2
1.1 Sale and Issuance of Common Stock.............................. 2
1.2 Closings....................................................... 2
1.3 Use of Proceeds; Acquisition Criterion......................... 3
1.4 Definitions.................................................... 4
II. REPRESENTATIONS AND WARRANTIES OF AOP............................... 4
2.1 Registration of PSP11 Common Stock............................. 5
2.2 Organization, Good Standing and Qualification.................. 5
2.3 Capitalization................................................. 7
2.4 Authorization; Enforcement..................................... 8
2.5 Valid Issuance of Shares....................................... 8
2.6 Compliance with Other Instruments.............................. 8
2.7 SEC Documents; Financial Statements; Other Information......... 9
2.8 Litigation..................................................... 10
2.9 Legal Compliance............................................... 10
2.10 Accountants.................................................... 11
2.11 Financial Statements........................................... 11
2.12 Registration Rights............................................ 11
2.13 Investment Company............................................. 12
2.14 Title to and Condition of the Properties and Assets............ 12
2.15 No Other Pending Transactions.................................. 13
2.16 Taxes.......................................................... 13
2.17 Licenses and Approvals......................................... 15
2.18 Legal Compliance............................................... 15
2.19 No Notices of Default.......................................... 15
2.20 Existing Financing............................................. 16
2.21 Material Contracts............................................. 16
2.22 Leases......................................................... 17
2.23 Labor Matters.................................................. 18
2.24 Employee Benefit Plans and Employee Pension Plans.............. 18
2.25 Insurance...................................................... 21
2.26 Environmental Compliance....................................... 22
2.27 Building, Subdivision and Land-Use Laws; Restrictive Covenants. 24
2.28 No Unpaid Assessments.......................................... 25
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2.29 Condemnation.................................................. 25
2.30 Unpaid Bills; Mechanics Liens................................. 25
2.31 Proffers; Other Commitments................................... 26
2.32 Books and Records............................................. 26
2.33 Bankruptcy.................................................... 26
2.34 Disclosure.................................................... 26
III. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS..................... 27
3.1 Organization, Good Standing and Qualification................. 27
3.2 Authorization; Enforcement.................................... 27
3.3 Compliance with Other Instruments............................. 28
3.4 Litigation.................................................... 28
3.5 Purchase Entirely for Own Account............................. 28
3.6 Acknowledgments............................................... 28
3.7 Accredited Investor........................................... 29
3.8 Restricted Securities......................................... 29
3.9 Certain Tax Matters........................................... 29
IV. CONDITIONS OF THE INVESTORS' OBLIGATIONS AT CLOSING................. 30
4.1 Representations and Warranties................................ 30
4.2 Performance................................................... 30
4.3 Compliance Certificate........................................ 31
4.4 Opinions of Company Counsel................................... 31
4.5 Opinion as to REIT Status..................................... 31
4.6 Opinion as to VCOC Status..................................... 31
4.7 No Material Change............................................ 32
4.8 Action by the Boards of Directors............................. 32
4.9 Affiliate Status.............................................. 32
4.10 Registration Rights Agreement................................. 33
4.11 Environmental Indemnity Agreement............................. 33
4.12 Reliance Letter............................................... 33
4.13 Signal Hill Indemnification Agreement......................... 33
4.14 Indemnification Agreement Concerning Title Issues............. 33
V. CONDITIONS OF AOP's OBLIGATIONS..................................... 33
5.1 Representations and Warranties................................ 33
5.2 Performance................................................... 34
VI. COVENANTS........................................................... 34
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6.1 REIT Status................................................... 34
6.2 Stop Orders................................................... 34
6.3 Use of Proceeds............................................... 34
6.4 Confidentiality............................................... 34
6.5 Changes to Charter and By-Laws................................ 35
6.6 Changes in Capitalization..................................... 35
6.7 Issuance of Additional Capital Stock.......................... 35
6.8 Future Offerings.............................................. 37
6.9 Information................................................... 37
6.10 VCOC Status................................................... 37
6.11 Merger and Exchange........................................... 37
6.12 Subsequent Closings........................................... 38
6.13 Removal of Legend............................................. 38
6.14 Environmental Actions......................................... 38
6.15 Ownership Limits.............................................. 38
VII. INDEMNIFICATION..................................................... 38
7.1 Obligations of AOP............................................ 38
7.2 Obligations of Investors...................................... 39
7.3 Procedure..................................................... 40
7.4 Survival...................................................... 41
7.5 Remedies...................................................... 41
VIII. MISCELLANEOUS...................................................... 41
8.1 Survival of Warranties........................................ 41
8.2 Successors and Assigns........................................ 42
8.3 Governing Law................................................. 42
8.4 Counterparts.................................................. 42
8.5 Titles and Subtitles.......................................... 42
8.6 Notices....................................................... 42
8.7 No Finders' Fees.............................................. 44
8.8 Expenses...................................................... 45
8.9 Amendments and Waivers........................................ 45
8.10 Severability.................................................. 46
8.11 Entire Agreement.............................................. 46
EXHIBIT A INVESTORS...................................................... 1
EXHIBIT A-1 FIRST CLOSING ALLOCATION..................................... 1
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EXHIBIT B FORM OF NOTICE OF SUBSEQUENT CLOSING........................... 1
EXHIBIT C INDEX OF DEFINITIONS........................................... 1
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COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT is made as of the 23rd day of January,
1998 by and among American Office Park Properties, Inc., a California
corporation ("AOP"), ABKB/LaSalle Securities Limited Partnership, a registered
investment adviser ("ABKB"), Harvard Private Capital Realty, Inc., a
Massachusetts corporation ("HPCR"), Xxxxx & Steers Capital Management, Inc., a
registered investment adviser ("C&S"), Xxxxxx Xxxxxxx Asset Management, a
registered investment adviser ("MSAM"), the Fidelity entities signatories hereto
(each a "Fidelity Entity," and collectively, "FIDO"), Stanford University ("SU")
and the State of Michigan Retirement Systems ("MICH"). AOP, Public Storage
Properties XI, Inc., a California corporation ("PSP11"), and Public Storage,
Inc., a California corporation ("PSI"), are each referred to herein as a
"Company," and collectively as the "Companies." ABKB, C&S and MSAM, are each
referred to herein as an "Agent Investor," and collectively as the "Agent
Investors." Each Agent Investor enters into this Agreement solely as agent for
and for the benefit of certain of such Agent Investor's clients (each a
"Pecuniary Owner," and collectively, the "Pecuniary Owners"). HPCR, each
Fidelity Entity, SU and MICH are each referred to herein as a "Direct Investor,"
and collectively as the "Direct Investors." The Agent Investors and the Direct
Investors are each referred to herein as an "Investor," and collectively as the
"Investors."
WHEREAS, the Companies have entered into an Amended and Restated Agreement
and Plan of Reorganization dated as of December 17, 1997 (the "Merger
Agreement") whereby, subject to the satisfaction of certain conditions,
including approval by the stockholders of PSP11, AOP will be merged with and
into PSP11 (the "Merger"), and PSP11 and PSI will exchange (the "Exchange") 13
predominantly mini-warehouse properties owned by PSP11 (the "Warehouse
Properties") for 11 commercial properties owned by PSI (the "Commercial
Properties");
WHEREAS, AOP has entered into an agreement (the "NYC Agreement") with the
New York Common Retirement Fund and certain of its subsidiaries (collectively,
"NYC") pursuant to which NYC transferred certain real estate (the "NYC
Properties") to AOP in exchange for the issuance of AOP's Common Stock, par
value $0.10 per share (the "AOP Common Stock"), and units representing limited
partnership interests in American Office Park Properties, L.P. (the "Operating
Partnership);
WHEREAS, in connection with the proposed Merger, each share of AOP Common
Stock would be converted into 1.18 shares of PSP11's Common Stock, par value
$0.01 per share (the "PSP11 Common Stock");
AND WHEREAS, each Direct Investor and each Agent Investor, as agent for and
for the benefit of certain Pecuniary Owners, desires to invest in AOP (or PSP11
after consummation of the Merger and the Exchange);
THE PARTIES HEREBY AGREE AS FOLLOWS:
I. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF COMMON STOCK.
Subject to the terms and conditions of this Agreement, the Investors agree
to purchase at one or more Closings (as defined below) and AOP agrees to sell
and issue to the Investors an aggregate of up to 5,740,741 shares (the "Shares")
of AOP Common Stock for an aggregate purchase price of up to $155,000,007 (the
"Purchase Price") based upon a per-share price of $27.00 (the "Per-Share
Price"). If the proposed Merger is consummated before all of the Shares have
been issued and purchased hereunder, the issuer of the Shares to be purchased
thereafter shall be PSP11, as the surviving corporation in the Merger, and the
Per-Share Price shall be adjusted to equal the Per-Share Price immediately prior
to the Merger divided by the number of shares of PSP11 Common Stock received in
the Merger for each share of AOP Common Stock. Following the Merger, references
to AOP throughout this Section I shall be read as references to PSP11 and the
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aggregate number of Shares shall be adjusted accordingly.
1.2 CLOSINGS.
The transactions contemplated by this Agreement will be effected at one or
more Closings (each, a "Closing"). The date for the first Closing (the "First
Closing") shall be January 30, 1998 (the "First Closing Date"), at which time
$50,000,031 of the Purchase Price will be funded. Each Closing other than the
First Closing (each, a "Subsequent Closing") shall be held upon ten (10) days'
written notice from AOP to the Investors setting forth the amount of the
Purchase Price to be funded at that Subsequent Closing (which amount shall be at
least $20,000,000, except in the case of the final Subsequent Closing) and
enclosing the information required by Section 1.3 below. At each Closing, each
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Investor shall deliver to AOP by means of a wire transfer to AOP's account the
same proportion of the amount of the Purchase Price being funded at that Closing
as the amount set forth opposite such Investor's name on Exhibit A bears to
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$155,000,007, against confirmation of physical delivery by AOP to each Investor
or its designee of certificates representing the Shares to be sold to such
Investor hereunder, in the names and amounts supplied in writing by the
Investors at least three (3) days prior to each Closing; provided that, if any
Shares are to be issued in names other than those of the
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Investors, such writing shall include a certification by the applicable Investor
that each such other name is that of a Pecuniary Owner or its nominee. Physical
delivery into escrow with counsel to the Investors of certificates representing
the Shares shall be made at least one (1) day prior to each Closing to the
addresses of the Investors shown in Section 8.6 hereof. Exhibit A-1 sets forth
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the amount of the Purchase Price to be funded and the number of Shares to be
issued in connection with the First Closing. No Subsequent Closing shall be
held after July 31, 1998.
1.3 USE OF PROCEEDS; ACQUISITION CRITERION.
(a) Use of Proceeds. AOP and PSP11, as the case may be, will use the net
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proceeds from each Closing for the acquisition, development and/or renovation
of, and to pay down debt and closing costs incurred in connection with the
acquisition after the date hereof of, commercial properties, including light
industrial, flex, industrial and office real estate located within the United
States (the "Acquisition Properties"). Except as provided below with respect to
the final Subsequent Closing, AOP shall not give notice of any Subsequent
Closing unless the proceeds therefrom will be used for Acquisition Properties
that are then owned or under contract of purchase and that meet the Acquisition
Criterion defined below. The notice of the final Subsequent Closing may include
funds needed to purchase Acquisition Properties meeting the Acquisition
Criterion and then under letter of intent so long as the aggregate funds so
included with respect to the Acquisition Properties under letter of intent do
not exceed $25,000,000.
(b) Acquisition Criterion. At the time of delivery of the notice by AOP
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of a Subsequent Closing, AOP shall represent and provide a pro forma analysis
indicating that the Acquisition Properties acquired or to be acquired with the
proceeds of such Subsequent Closing are expected, in its good faith judgment at
the time of such notice, to generate either an NOI Yield (as defined in (c)
below) of 9.25% or more for the first twelve calendar months following the
acquisition or an NOI Yield of 10.25% or more within 24 calendar months
following the acquisition (the "Acquisition Criterion"). AOP shall include with
the notice of each Subsequent Closing a schedule showing the calculation of the
projected NOI Yield for each of the Acquisition Properties and in the aggregate
for all of the Acquisition Properties acquired or to be acquired with the
proceeds of such Subsequent Closing. Any notice pursuant to this Section 1.3
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shall be in the form attached hereto as Exhibit B. NOI Yields for the
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Acquisition Properties subject to a particular Subsequent Closing shall be
determined on the basis of a weighted average yield for all the Acquisition
Properties acquired or to be acquired with the proceeds of a particular
Subsequent Closing, and not on an individual Acquisition Property basis. In the
event the Acquisition Criterion is not satisfied as to the Acquisition
Properties that are the subject of a particular Subsequent Closing, the
Subsequent Closing shall nevertheless be funded by all of the Investors if (i)
AOP provides information regarding those
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Acquisition Properties' expected NOI Yields to all Investors and (ii) receives
written approval of the proposed acquisition of those Acquisition Properties
from at least two of ABKB, HPCR, C&S, MSAM and FIDO. The delivery of the notice
required this Section 1.3(b) shall create no implication that AOP is making a
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representation as to, or guaranteeing, the actual NOI Yield of any Acquisition
Property and, provided any such notice is delivered in good faith by AOP, AOP
shall have no liability to the Investors, the Pecuniary Owners or to any other
person with respect to such notice or the financial projections contained
therein.
(c) NOI Yield. "NOI Yield" shall mean the gross revenues derived from an
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Acquisition Property over a given twelve month period less operating expenses
relating to such Acquisition Property (including AOP's (or PSP11's after the
Merger) expected management costs relating thereto, but excluding brokerage
commissions, tenant improvement costs, capital reserves and depreciation)
divided by the purchase price for such Acquisition Property (including closing
costs and deferred maintenance costs required to be funded at closing). The
calculation of NOI Yield shall employ generally accepted accounting principles
("GAAP"), except that rents shall not be calculated on a straight-line basis.
1.4 DEFINITIONS.
Exhibit C sets forth an index of defined terms used in this Agreement.
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II. REPRESENTATIONS AND WARRANTIES OF AOP.
AOP hereby makes the following representations and warranties to the
Investors and the Pecuniary Owners. As used in this Agreement, "AOP's
knowledge" or words of similar import, shall mean the knowledge of Xxxxxx X.
Xxxxxx, Xx., Xxxx Xxxxx Xxxxxx, Xxxx Xxxxx and Xxxxx Xxxxxxxx, after due
inquiry, except that with respect to the representations and warranties
contained in Sections 2.8, 2.14, 2.17, 2.18, 2.20, 2.22, 2.23, 2.26, 2.27, 2.28
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and 2.29, such term shall also include the knowledge of those persons identified
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on Schedule 2.0 with respect to matters relating directly to the Properties
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listed beside such person's name on Schedule 2.0. For purposes of the
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environmental representations in Section 2.26, the term "due inquiry" means that
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one or more of the persons listed in this Section or on Schedule 2.0 have
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performed an environmental site walk at each of the Properties within the six
(6) months prior to the date of this Agreement. The disclosures in any schedule
attached hereto in response to the following representations and warranties
shall qualify other schedules and other paragraphs of this Section II to the
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extent, and only to the extent, that it is clear from a reading of such
disclosure that such disclosure is applicable to such other schedules or
paragraphs.
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2.1 REGISTRATION OF PSP11 COMMON STOCK.
(a) A preliminary proxy statement in connection with the vote of
shareholders of PSP11 with respect to the Merger has been prepared and filed
with the Securities and Exchange Commission (the "Commission") by PSP11 in
conformity in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Exchange Act"). The second amended
copy of such preliminary proxy statement filed with the Commission on December
30, 1997 is referred to herein as the "Preliminary Proxy Statement." A
registration statement on Form S-4 (the "S-4 Registration Statement"),
containing a definitive proxy statement (the "Definitive Proxy Statement"), in
connection with the registration under the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder (collectively, the
"Securities Act"), of the PSP11 Common Stock to be issued in connection with the
Merger will be filed with the Commission and will be declared effective under
the Securities Act prior to consummation of the Merger. AOP has provided each
of the Investors with a copy of the Preliminary Proxy Statement as filed with
the Commission and any amendments thereto.
(b) PSP11 complies with the conditions for the use of Form S-4. The
Commission has not issued an order preventing or suspending the use of the
Preliminary Proxy Statement relating to the proposed offering of the PSP11
Common Stock nor instituted proceedings for that purpose. The Preliminary Proxy
Statement and any amendments or supplements thereto contain all statements which
are required to be stated therein by, and in all material respects conform to
the requirements of, the Securities Act or the Exchange Act, as applicable. The
documents incorporated by reference in the Preliminary Proxy Statement, at the
time they were filed with the Commission, conformed in all material respects to
the requirements of the Exchange Act or the Securities Act, as applicable.
Neither the Preliminary Proxy Statement nor any amendment thereto, including any
documents incorporated by reference therein, contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
2.2 ORGANIZATION, GOOD STANDING AND QUALIFICATION.
(a) Each of AOP, PSP11 and PSI has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
California with power and authority (corporate and other) to own its properties
and conduct its business as now being conducted, and as proposed to be
conducted. Each of AOP and PSP11 has been duly qualified as a foreign
corporation for the conduct of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties, or
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conducts any business so as to require such qualification, and which would cause
a Material Adverse Effect by reason of the failure to be so qualified in any
such jurisdiction. " Material Adverse Effect" means any material adverse effect
on the operations, assets, business, affairs, Properties (as defined below) or
financial or other condition of AOP and its Subsidiaries (as defined below)
taken as a whole prior to the Merger, or PSP11 and its Subsidiaries taken as a
whole following the Merger; provided that, if the context requires, Material
Adverse Effect prior to the Merger with respect to any of the Properties then
owned by PSP11 or PSI shall be determined assuming that the Merger and Exchange
have been consummated.
(b) Each "significant subsidiary" (as such term is defined in Rule 1-02 of
Regulation S-X) of AOP and PSP11 (each a "Subsidiary," and collectively, the
"Subsidiaries") is listed on Schedule 2.2 hereto. Each Subsidiary is a
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corporation, limited partnership, limited liability company or trust, as the
case may be, duly organized or formed and validly existing and in good standing
under the laws of its jurisdiction of incorporation or formation. Each
Subsidiary has the power and authority (corporate and other) to conduct its
businesses as now being conducted, and each Subsidiary has been duly qualified
as a foreign corporation for the conduct of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties,
or conducts any business, so as to require such qualification, and where the
failure to be so qualified in any such jurisdiction would cause a Material
Adverse Effect. All of the outstanding capital stock, partnership interests,
limited liability company membership interests or trust beneficial interests, as
the case may be, issued by the Subsidiaries or created by agreements to which
the Subsidiaries are parties (i) have been duly and validly issued or created
(and in the case of capital stock are fully paid and nonassessable) and (ii) are
owned or held, directly or indirectly by AOP or PSP11 in the percentage amounts
set forth on Schedule 2.2 hereto free and clear of any security interest, lien,
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adverse claim, equity or other encumbrance (each of the foregoing, a "Lien")
except for such Liens as (A) are set forth on Schedule 2.2 or (B) would not have
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a Material Adverse Effect.
(c) This Agreement constitutes the legal, valid and binding obligation of
AOP, enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
(d) References to the Companies or any Company in the representations and
warranties shall be deemed to include each Subsidiary of such Company or
Companies, as the case may be, unless the context otherwise requires.
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2.3 CAPITALIZATION.
(a) The authorized capital stock (collectively, the "AOP Capital Stock")
of AOP consists of 200,000,000 shares, consisting of 100,000,000 shares of AOP
Common Stock and 100,000,000 shares of Preferred Stock, par value $.10 per
share, of which 8,062,130 shares of AOP Common Stock are issued and outstanding
as of the date hereof. All of such outstanding shares have been duly authorized
and validly issued and are fully paid and nonassessable.
(b) The authorized capital stock (collectively, the "PSP11 Capital Stock")
of PSP11 consists of 3,356,000 shares currently classified as Common Stock, par
value $.01 per share, consisting of 2,828,929 of Series A Common Stock, of which
1,819,937 shares are issued and outstanding, 184,453 shares of Series B Common
Stock, all of which are issued and outstanding and 522,618 shares of Series C
Common Stock, all of which are issued and outstanding. All of such outstanding
shares have been duly authorized and validly issued and are fully paid and
nonassessable. The AOP Capital Stock and the PSP11 Capital Stock are
collectively referred to herein as the "Capital Stock."
(c) Except pursuant to the Agreement Among Shareholders and the Company
(the "NYC Shareholders Agreement") executed in connection with the NYC
Agreement, no shares of Capital Stock are entitled to preemptive rights. NYC
has waived all of its preemptive rights with respect to the transactions
contemplated by this Agreement. Except as set forth on Schedule 2.3, there are
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no outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of Capital Stock or stock of any of the
subsidiaries of AOP or PSP11, or contracts, commitments, understandings or
arrangements by which AOP, PSP11 or any Subsidiary thereof is or may become
bound to issue additional shares of capital stock of AOP, PSP11 or any
Subsidiary thereof, as the case may be. AOP has furnished to the Investors true
and correct copies of each Company's Articles of Incorporation, as amended as of
the date hereof (as to each, the "Charter") and each Company's Bylaws as in
effect on the date hereof (as to each, the "Bylaws").
(d) Except as set forth on Schedule 2.3, each of AOP and PSP11 has no
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obligation (contingent or other) to purchase, redeem or otherwise acquire any of
its respective Capital Stock or any interest therein or to pay any dividend or
make any other distribution in respect thereof, other than as required by the
Real Estate Investment Trust provisions of the Internal Revenue Code.
(e) Except as set forth on Schedule 2.3, AOP has no knowledge of any
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voting agreements, voting trusts, stockholders' agreements, proxies or other
agreements or
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understandings that are currently in effect or that are currently contemplated
with respect to the voting of any Capital Stock of AOP or PSP11.
(f) All of the outstanding securities of each of AOP and PSP11 were issued
in material compliance with all applicable federal and state securities laws.
2.4 AUTHORIZATION; ENFORCEMENT.
(a) AOP has the requisite corporate power and authority to enter into and
perform this Agreement. AOP has the requisite corporate power and authority to
issue the AOP Common Stock in accordance with the terms hereof. Except for the
Ownership Limit (as defined in the Charters of AOP and PSP11) and related
provisions, the AOP and PSP11 Charters do not in any way prevent or restrict the
transactions contemplated hereby or preclude the Investors, acting directly or
as agents on behalf of the Pecuniary Owners, from owning or holding the amount,
value or class of Capital Stock to be purchased hereby.
(b) The execution and delivery of this Agreement by AOP and the
consummation by it of the transactions contemplated hereby have been duly
authorized by the Board of Directors of AOP and no further consent or
authorization of AOP, PSP11 or PSI or any of their Boards of Directors or
stockholders is required.
(c) This Agreement has been duly executed and delivered by AOP.
2.5 VALID ISSUANCE OF SHARES.
(a) The AOP Common Stock (and PSP11 Common Stock after the Merger) being
purchased by the Investors hereunder, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein, will be
duly and validly issued, fully paid and nonassessable and will be issued in
material compliance with all applicable federal and state laws and stock
exchange requirements.
(b) The PSP11 Common Stock to be issued to the holders of AOP Common Stock
pursuant to the Merger Agreement, when issued, sold and delivered in accordance
with the terms thereof for the consideration expressed therein, will be duly and
validly issued, fully paid and nonassessable and will be issued in material
compliance with all applicable federal and state laws and stock exchange
requirements.
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2.6 COMPLIANCE WITH OTHER INSTRUMENTS.
The execution, delivery and performance of this Agreement by AOP and the
consummation by it of the transactions contemplated hereby do not (i) result in
a violation of the Charter or Bylaws of any of the Companies or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which any of the Companies or any of their Subsidiaries is a party
(including the NYC Agreement and the Merger Agreement), or result in a violation
of any law, rule, regulation, order, judgment or decree applicable to the
Companies, any of their Subsidiaries or by which any property or asset of the
Companies or any of their Subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect or materially impair the ability of AOP to perform its
obligations under the Agreement). AOP is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order to execute, deliver or perform any of its
obligations under this Agreement or issue and sell the AOP Common Stock in
accordance with the terms hereof, except such as have been or will be obtained
prior to the First Closing.
2.7 SEC DOCUMENTS; FINANCIAL STATEMENTS; OTHER INFORMATION.
(a) Since January 1, 1995, PSP11 has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the
Commission pursuant to the reporting requirements of Section 13 of the Exchange
Act (all of the foregoing filed prior to the date hereof, being hereinafter
referred to as the "SEC Documents"). AOP is not subject to the reporting
requirements of Section 13 of the Exchange Act. As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder applicable to such SEC Documents, and none of the SEC Documents (when
read together with all exhibits included therein and financial statement
schedules thereto and documents (other than exhibits) incorporated by reference)
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
(b) The financial statements of PSP11 included in the SEC Documents and
the financial statements of AOP for the three years ended December 31, 1996 and
the nine months ended September 30, 1997 comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the
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Commission with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the consolidated financial position of AOP and PSP11, as the case may
be, and their respective Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(c) Since January 1, 1997, (i) the business of each of AOP and PSP11 has
been conducted in the ordinary course and (ii) there has been no Material
Adverse Effect as to AOP, PSP11 or any of the Properties that has not been
described in the SEC Documents or other items provided to the Investors. As of
the First Closing and as of the date hereof, there are no material liabilities,
contingent or otherwise, of any of the Companies that have not been disclosed in
the financial statements (including the notes thereto) referred to above or
otherwise disclosed in the SEC Documents.
2.8 LITIGATION.
Except as disclosed to the Investors in connection with Section 2.26
------------
hereto:
(a) There is no action, suit, proceeding, investigation or claim pending
or, to the knowledge of AOP, threatened, against AOP or PSP11 in law, equity or
otherwise before any federal, state, municipal or local court, administrative
agency, commission, board, bureau, instrumentality or arbitrator (an "Applicable
Authority") which either (i) questions the validity of this Agreement or the AOP
Common Stock or any action taken or to be taken pursuant hereto, (ii) questions
the validity of the Merger Agreement or the NYC Agreement or any action taken or
to be taken pursuant thereto, (iii) may adversely affect the right, title or
interest of any Investor or Pecuniary Owner to the Shares or (iv) if decided
adversely to such Company, could be reasonably expected to individually or in
the aggregate have a Material Adverse Effect.
(b) AOP is not aware of facts or circumstances that could give rise to a
legal action that, if determined adversely, reasonably could be expected to have
a Material Adverse Effect. There is no action or suit by AOP or PSP11 pending
or threatened against others except litigation in the ordinary course of
business such as tenant eviction proceedings, none of which individually or in
the aggregate reasonably could be expected to result in a Material Adverse
Effect.
10
2.9 LEGAL COMPLIANCE.
Except as disclosed to the Investors in connection with Section 2.26
------------
hereto:
(a) Each of AOP and PSP11 have complied with all applicable laws, rules,
regulations, orders, licenses, judgments, writs, injunctions, decrees or demands
(the "Applicable Laws"), except to the extent that failure to comply would not
have a Material Adverse Effect. Each of AOP and PSP11 have all necessary
permits, licenses and other authorizations required to conduct its business as
currently conducted, and as proposed to be conducted, in all material respects.
(b) There are no adverse orders, judgments, writs, injunctions, decrees or
demands of any court or administrative body, domestic or foreign, or of any
other governmental agency or instrumentality, domestic or foreign, outstanding
against AOP or PSP11 which could reasonably be expected to result in a Material
Adverse Effect.
(c) There is no existing law, rule, regulation or order and AOP is not
aware of any proposed law, rule, regulation or order, which would prohibit or
materially restrict AOP or PSP11 from, or otherwise materially adversely affect
AOP or PSP11 in, conducting their business as now being conducted and as
proposed to be conducted.
2.10 ACCOUNTANTS.
Ernst & Young LLP, who have certified the financial statements included or
incorporated by reference in the SEC Documents (or any amendment or supplement
thereto) and the Preliminary Proxy Statement, are independent public accountants
with respect to PSP11 as required by the Securities Act.
2.11 FINANCIAL STATEMENTS.
Attached hereto as Schedule 2.11 is a pro forma balance sheet and income
-------------
statement of AOP and PSP11 as of September 30, 1997, and for the nine months
then ended, as adjusted to assume issuance of the Shares to be issued in the
First Closing in accordance with the terms and conditions of this Agreement and
consummation of the NYC transaction (the "Pro Forma Financial Statements"). The
Pro Forma Financial Statements have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, have been properly compiled on the pro forma basis described
therein, and, in the opinion of AOP, the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to give
effect to the transactions or circumstances referred to therein.
11
2.12 REGISTRATION RIGHTS.
No holder of any security of AOP and PSP11 has any unwaived right to
require registration of shares of Capital Stock or any other security of AOP or
PSP11 because of the filing of the S-4 Registration Statement or the
consummation of any of the transactions contemplated by this Agreement.
2.13 INVESTMENT COMPANY.
AOP and PSP11 are not now, and after the sale of the Common Stock to be
sold hereunder and application of the net proceeds from such sale as described
herein, neither of them will be, an "investment company" or an entity controlled
by an "investment company" as such terms are defined in the Investment Company
Act of 1940, as amended.
2.14 TITLE TO AND CONDITION OF THE PROPERTIES AND ASSETS.
(a) Except as set forth on Schedule 2.14 hereto, AOP, PSP11 or PSI, as the
-------------
case may be, hold (or upon consummation of the Merger will hold) fee simple
absolute or leasehold title to the Properties, free and clear of all mortgages
or deeds of trust, liens, claims, defects, restrictions and encumbrances which,
taken as a whole, reasonably could be expected to have a Material Adverse
Effect. To AOP's knowledge, title to each of the Properties shall be good,
marketable and insurable at rates customarily charged by nationally recognized
title insurance companies, without payment of additional premiums. The
"Properties" means all real property and improvements owned or leased as lessee
by AOP or PSP11, or that will be owned or leased as lessee by AOP or PSP11
(including the Commercial Properties) upon consummation of the transactions
contemplated by the Merger Agreement. Schedule 2.14 hereto sets forth a true
-------------
and correct list of the Properties as of the date hereof. AOP or PSP11, as the
case may be, hold good and valid title to all of the other Assets, in each case
free and clear of all liens, defects, restrictions and encumbrances which, taken
as a whole, reasonably could be expected to have a Material Adverse Effect. The
"Assets" means all of the assets, properties, licenses and other agreements
which are presently being used or are reasonably related to the business of AOP
or PSP11 or the Commercial Properties, and includes all assets, properties,
licenses and other agreements necessary to permit AOP, PSP11 or PSI (as to the
Commercial Properties) to conduct their business in the same manner as such
business has been conducted prior to the date hereof and the First Closing Date,
or that will be necessary to permit PSP11 to conduct its business after
consummation of the transactions contemplated by the Merger Agreement. Except
as disclosed to the Investors in connection with Section 2.26 hereto or as set
------------
forth on Schedule 2.14, the Assets and Properties comply with all applicable
-------------
requirements under
12
each of the Licenses and Approvals (as defined below) and Applicable Laws,
except for such non-compliance as reasonably would not be expected to cause a
Material Adverse Effect.
(b) Other than as disclosed in the engineering reports listed on Schedule
--------
2.14, to AOP's knowledge, no Property has suffered any unrepaired casualty,
----
damage or destruction of any kind whatsoever, nor does any Property contain any
defects in structural, mechanical (including HVAC systems), or physical portions
(including roofs) at, on, or of such Property, except to the extent any such
casualty, damage, destruction or defect, individually or in the aggregate, does
not cause and is not reasonably expected to cause a Material Adverse Effect.
(c) Certain of the Properties are held under lease, and AOP is not aware
of any material default by the lessor under any such lease or any pending or
threatened claim or action by any lessor of any such Property to terminate any
such lease. Each lease or agreement to which any of the Companies is a party
under which it is the lessee of any Property, or any Assets, is a valid and
subsisting lease agreement without any material default of the Company
thereunder and, to the best of AOP's knowledge, without any material default
thereunder of any other party thereto, except for such defaults as reasonably
would not be expected to cause a Material Adverse Effect. No event has occurred
and is continuing which, with due notice or lapse of time or both, would
constitute a default or event of default by AOP under any such lease or
agreement or, to the best of AOP's knowledge, by any party thereto, except for
such defaults that would not individually or in the aggregate have or cause a
Material Adverse Effect. AOP's possession of such property has not been
disturbed and, to the best of AOP's knowledge, no claim has been asserted
against it adverse to its rights in such leasehold interests, except for such
disturbances or claims as reasonably would not be expected to cause a Material
Adverse Effect.
2.15 NO OTHER PENDING TRANSACTIONS.
Except for the transactions contemplated by this Agreement, the NYC
Agreement and the Merger Agreement, or disclosed on Schedule 2.15 hereto, (a)
-------------
neither AOP nor PSP11 is a party to or bound by or subject to any agreement,
letter of intent, undertaking or commitment to merge or consolidate with, or
acquire all, substantially all or a material portion of the property and/or
assets of, any other person, corporation, or entity, or to sell, lease, convey,
assign or exchange all, substantially all or a material portion of their assets
to any other person, corporation, or entity, and (b) no person has an option,
right-of-first refusal, or other right to acquire any of the Properties or
Assets of either AOP or PSP11, or with respect to the Commercial Properties,
PSI.
13
2.16 TAXES.
(a) AOP, PSP11 and PSI (with respect to the Commercial Properties) have
filed all federal, state, local and other tax returns and reports (except for
foreign returns and reports the failure to file which will not result in any
material liability to AOP or PSP11), and any other material returns and reports
relating to taxes with any Applicable Authority, required to be filed by them.
AOP, PSP11 and PSI (with respect to the Commercial Properties) have paid or
caused to be paid all material taxes that are due and payable, except those
which are being contested by such Company in good faith by appropriate
proceedings and in respect of which adequate reserves are being maintained on
its books in accordance with generally accepted accounting principles
consistently applied. Except as disclosed on Schedule 2.16 hereto, no taxes are
-------------
being contested by AOP, PSP11 or PSI (with respect to the Commercial
Properties). AOP, PSP11 and PSI (with respect to the Commercial Properties) do
not have any material liabilities for taxes other than those incurred in the
ordinary course of business and in respect of which adequate reserves are being
maintained by them in accordance with generally accepted accounting principles
consistently applied. Except as described in Schedule 2.16, federal and state
-------------
income tax returns for AOP, PSP11 and PSI (with respect to the Commercial
Properties) have not been audited by the Internal Revenue Service or state
authorities. No deficiency assessment with respect to or proposed adjustment of
AOP's, PSP11's or PSI's (with respect to the Commercial Properties) federal,
state, local or other tax returns is pending or, to the best of AOP's knowledge,
threatened. There is no material tax lien, whether imposed by any federal,
state, local or other tax authority outstanding against the assets or business
of AOP or PSP11, or against any of the Properties. There are no applicable
taxes, fees or other governmental charges payable by AOP or PSP11 in connection
with the execution and delivery of this Agreement or the issuance by AOP or
PSP11 of the Shares, except for governmental fees paid in connection with
securities law filings. Except for provisions customary in the acquisition and
disposition of real estate, neither AOP, PSP11 nor PSI (with respect to the
Commercial Properties) have entered into any agreement to prorate the payment of
any currently unpaid taxes. The term "taxes" means any net income, alternative
or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, real property, personal property, or
windfall profit tax, custom, duty or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, addition to tax or additional
amounts imposed by any Applicable Authority responsible for the imposition of
any such tax (domestic or foreign), together with any interest or penalties
thereon.
(b) As to PSP11, with respect to all tax periods regarding which the
Internal Revenue Service is or will be entitled to assert any claim, and as to
AOP, with respect to 1997, each of AOP and PSP11 has met the requirements for
qualification as a real estate
14
investment trust under Sections 856 through 860 of the Internal Revenue Code, as
amended, and their present and contemplated operations, assets and income
continue to meet such requirements.
(c) AOP and PSP11 are not "foreign persons" within the meaning of Section
1445 of the Code, and AOP and PSP11, if requested by the Investors, will each
furnish to the Investors an affidavit in form satisfactory to the Investors
confirming the same.
2.17 LICENSES AND APPROVALS.
AOP and PSP11 hold all of the licenses, permits, certificates, franchises,
rights, variances, interim permits, approvals, authorizations or consents,
whether federal, state, local or foreign, required for the ownership of the
Properties or the operation of their respective businesses, except for such
Licenses and Approvals the lack of which reasonably would not be expected to
cause a Material Adverse Effect (the "Licenses and Approvals"). All of the
Licenses and Approvals are in full force and effect and the Companies are not in
violation with respect to any of them, except for such violations as reasonably
would not be expected to cause a Material Adverse Effect. No proceedings are
pending nor, to the best of AOP's knowledge, are any proceedings threatened or
in prospect by any Applicable Authority to revoke or limit the scope of any of
the Licenses and Approvals, except for such proceedings as reasonably would not
be expected to cause a Material Adverse Effect. None of the Licenses and
Approvals would be rendered ineffective or be required to be reissued as a
result of the consummation of the transactions contemplated hereby or by the NYC
Agreement or as a result of the Merger.
2.18 LEGAL COMPLIANCE.
Except as disclosed to the Investors in connection with Section 2.26
------------
hereto:
(a) AOP and PSP11 have not received notice from any Applicable Authority
that AOP or PSP11 are not in compliance with one or more Applicable Laws or that
the present condition of the Properties or any of their other Assets fails to
comply with one or more Applicable Laws, except for such noncompliance as
reasonably would not be expected to cause a Material Adverse Effect, and to the
best of AOP's knowledge, no such notice is pending or threatened to be given.
(b) Neither AOP, PSP11, the present condition of the Properties and the
other Assets, nor the operation of AOP's and PSP11's business violates any
judicial decree applicable to it or them or violates any Applicable Laws,
including those pertaining to occupational safety or health, environmental
protection, Americans with Disabilities Act, equal employment opportunity,
pension, and employee's retirement income security,
15
except for such violations as reasonably would not be expected to cause a
Material Adverse Effect. AOP does not have knowledge of any proposed changes in
any Applicable Laws that would or could reasonably be expected to have a
Material Adverse Effect.
2.19 NO NOTICES OF DEFAULT.
Except as disclosed to the Investors in connection with Section 2.26
------------
hereto, neither AOP, PSP11 nor PSI (with respect to the Commercial Properties)
has received any notice from any Applicable Authority, mortgagee, insurer or
insurance board of underwriters or any other person or entity of the existence
of any default or unsafe condition with respect to the Properties that remains
unsatisfied or uncured or that will remain unsatisfied or uncured as of the
First Closing Date, except for such default or condition as reasonably would not
be expected to cause a Material Adverse Effect.
2.20 EXISTING FINANCING.
Attached hereto as Schedule 2.20 is a true and complete list of all
--------------
instruments and documents to which AOP, PSP11 or PSI (as to the Commercial
Properties) is a party or is otherwise bound in connection with loans to or from
AOP or PSP11 or facilities for the borrowing of funds in excess of One Million
Dollars $1,000,000 (the "Existing Debt") including all amendments, modifications
and supplements thereto or substitutions therefor (collectively, the "Loan
Documents"). AOP has made available to the Investors true and complete copies
of each of the Loan Documents. AOP and PSP11 have not received any notice of
default with respect to the Existing Debt or any of the Loan Documents and, to
the best of AOP's knowledge, neither AOP nor PSP11 are in default thereunder,
nor to the best of AOP's knowledge, would AOP or PSP11 be in default after the
giving of any required notice and/or the expiration of any required cure period.
Neither AOP nor PSP11 have delivered any notice of default to any lender with
respect to the Existing Debt or under the Loan Documents and, to the best of
AOP's knowledge, no lender is in default with respect thereto, nor, to the best
of AOP's knowledge, would any lender be in default after the giving of any
required notice and/or the expiration of any required cure period. Except as
set forth on Schedule 2.20 hereto, the terms of the Loan Documents do not
-------------
require the payment of a prepayment penalty, prepayment premium or other
surcharge in connection with the repayment in full or in part of the Existing
Debt prior to maturity.
2.21 MATERIAL CONTRACTS.
(a) Attached hereto as Schedule 2.21 is a true and complete list of all
--------------
contracts, agreements or understandings to which either AOP or PSP11 is a party,
other
16
than Loan Documents and Leases (as hereinafter defined), that constitute
"material contracts" within the meaning of Item 601(b)(10) of Regulation S-K
(collectively, the "Material Contracts"), or to which PSI is a party that
constitute Material Contracts as to the Commercial Properties (the "PSI Material
Contracts"). The term "Material Contracts" shall be deemed to include (i) the
Amended Management Agreement dated as of February 21, 1995 between the
predecessor in interest to AOP and the predecessor in interest to PSI, (ii) the
NYC Agreement and (iii) the Merger Agreement.
(b) AOP has made available to the Investors true and complete copies
of all of the Material Contracts and the PSI Material Contracts and all
amendments, modifications and supplements thereto (or Schedule 2.21 attached
--------------
hereto contains an accurate and complete summary description of any such item
that is not in writing).
(c) Except as set forth in Schedule 2.21 attached hereto, all of the
--------------
Material Contracts and the PSI Material Contracts are in full force and effect,
the Companies are not in default or, to the knowledge of AOP, alleged to be in
default with respect to their obligations under any of the Material Contracts or
the PSI Material Contracts (nor would they be in default or, to the knowledge of
AOP, alleged to be in default with the giving of notice, passage of time, or
both), neither AOP nor PSP11 has delivered a notice of default to any other
party to any of the Material Contracts or the PSI Material Contracts, and, to
AOP's knowledge, no other party to any of the Material Contracts or the PSI
Material Contracts is in default with respect to its obligations thereunder (nor
would be in default with the giving of notice, passage of time, or both).
(d) Except as noted on Schedule 2.21 attached hereto, none of the
--------------
Material Contracts or the PSI Material Contracts requires the consent or
approval of any party thereto other than AOP or the consent or approval of any
third party in connection with the consummation of the transactions contemplated
hereby or by the NYC Agreement or as a result of the Merger.
2.22 LEASES.
(a) The rent roll dated as of December 27, 1997 as previously
delivered to the Investors is a true and complete rent roll for each of the
Properties, except that with respect to the NYC Properties such rent roll is
dated as of December 23, 1997 and with respect to the Property commonly known as
"Ammendale" (the "Ammendale Property") such rent roll is dated as of January 12,
1998 (all of the foregoing, collectively, the "Rent Roll"). The information set
forth in the Rent Roll is accurate in all material respects and current as of
December 27, 1997, except that in the case of the NYC Properties and the
Ammendale Property, such information is accurate in all material respects and
current as of the date such Property was acquired by AOP).
17
(b) One of the Companies is the landlord (or the successor landlord)
with respect to all of the leases, subleases, rental agreements, and other
occupancy agreements for the use or occupancy of portions of each of the
Properties, together with all amendments to, modifications of, renewals and
extensions thereof, all guaranties with respect thereto, all work letter
agreements for unfunded work, improvement agreements, and other present
agreements between AOP or PSP11 and any tenant (collectively, the "Leases"), and
is entitled to receive the rental payments from the Leases. AOP has made
available to the Investors true and complete copies of all of the Leases. The
Companies have not assigned or encumbered any of their rights, title or interest
under any of the Leases nor agreed to any material oral modifications of any of
the provisions of any of the Leases.
(c) Except as set forth on Schedule 2.22 hereto, all of the Leases
-------------
are in full force and effect, the Companies are not in material default with
respect to any of their obligations under any of the Leases (nor would be in
material default with the giving of notice, passage of time, or both), the
Companies have not delivered a notice of default to any other party to any of
the Leases, and, to the best of AOP's knowledge, no party other than the
landlord under any of the Leases is in material default with respect to such
party's obligations under any of the Leases (nor would be in material default
with the giving of notice, passage of time, or both). For purposes of this
subparagraph (c), a "material default" shall mean a default (i) entitling the
non-defaulting party to terminate the Lease or (ii) requiring the payment of
Fifty Thousand Dollars ($50,000) or more to cure.
(d) Except as noted on Schedule 2.22 attached hereto, none of the
-------------
Leases requires the consent or approval of any party thereto other than AOP or
the consent or approval of any third party in connection with the consummation
of the transactions contemplated hereby or by the NYC Agreement or as a result
of the Merger.
2.23 LABOR MATTERS.
AOP has complied in all material respects with all Applicable Laws relating
to the employment of labor, including the provisions thereof relating to wages,
hours, collective bargaining, and the payment of social security and taxes, and
AOP is not liable for any arrearages of wages or any penalties or taxes for
failure to comply with any of the foregoing, except for such noncompliance as
reasonably would not be expected to cause a Material Adverse Effect. No labor
dispute, strike, work stoppage, employee action or labor relations problem of
any kind which has affected or may affect AOP, or the operation of AOP's
business, is pending, has occurred since the inception of AOP or, to the best of
AOP's knowledge, is threatened, except as reasonably would not be expected to
cause a Material Adverse Effect. To the best of AOP's knowledge, no managerial
or
18
supervisory employees of AOP are planning or intend to terminate their
relationship with AOP or PSP11 or do not intend to continue with AOP or PSP11
(other than normal retirement) after the First Closing Date. Schedule 2.23
-------------
lists all employment agreements to which AOP or PSP11 are parties and such
agreements remain in full force and effect as of the date hereof.
2.24 EMPLOYEE BENEFIT PLANS AND EMPLOYEE PENSION PLANS.
(a) Attached hereto as Schedule 2.24 is a complete and correct list of
--------------
all material employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA")) and any other employee benefit
arrangements or payroll practices maintained by AOP or PSP11 or to which AOP or
PSP11 has contributed or is or was obligated to make payments, including
employment agreements, severance agreements, executive compensation
arrangements, incentive programs or arrangements, sick leave, vacation pay,
severance pay policies, plant closing benefits, salary continuation for
disability, consulting or other compensation arrangements, workers'
compensation, retirement, deferred compensation, bonus, stock purchase,
hospitalization, medical insurance, life insurance, tuition reimbursement or
scholarship programs, and any plans providing benefits or payments in the event
of a change of control, change in ownership, or sale of a substantial portion
(including all or substantially all) of the AOP Assets (collectively, the "AOP
Employee Benefit Plans"). Schedule 2.24(a) shall separately list all AOP
----------------
Employee Benefit Plans which are employee pension plans as defined in Section
3(2) of ERISA (collectively, the "AOP Employee Pension Plans").
(b) Except as set forth on Schedule 2.24 attached hereto:
--------------
(1) the AOP Employee Pension Plans intended to qualify under
Section 401 of the Code are so qualified and the trusts maintained pursuant
thereto are exempt from federal income taxation under Section 501 of the Code,
and nothing has occurred with respect to the operation of such plans which could
cause the loss of such qualification or exemption (except for any such loss that
could be corrected without causing a Material Adverse Effect) or the imposition
of any material liability, lien, penalty, or tax under ERISA or the Code;
(2) no AOP Employee Pension Plans have been amended in any
manner which would require the posting of any security under Section 401(a)(29)
of the Code or Section 307 of ERISA;
(3) AOP would have no withdrawal or other liability (contingent
or otherwise) under Sections 4201, 4063 or 4064 of ERISA to any multiemployer
plan as defined in Section 3(37) ("Multiemployer Plan") or multiple employer
plan subject to
19
Section 4063 and 4064 of ERISA ("Multiple Employer Plan") that would reasonably
be expected to cause a Material Adverse Effect if it ceased contributions and
withdrew from any Multiemployer Plan or Multiple Employer Plan as of the First
Closing;
(4) the benefit liabilities (as defined in Section 4001(a)(16)
of ERISA) of each of the AOP Employee Pension Plans which are "defined benefit
plans" (other than Multiemployer Plans) calculated using the actuarial
assumptions that would be used by the Pension Benefit Guaranty Corporation
("PBGC") in the event of the termination of each such plan do not exceed the
fair market value of the assets of such plan by an amount that would reasonably
be expected to cause a Material Adverse Effect;
(5) true, correct and complete copies of the following
documents, with respect to each of the AOP Employee Benefit Plans, have been
made available or delivered to the Investors: (i) all plan documents, including
trust agreements, insurance policies and service agreements and amendments
thereto; (ii) the most recent Forms 5500 and any financial statements attached
thereto and those for the prior three years; (iii) the last Internal Revenue
Service determination letter; (iv) summary plan descriptions; and (v) written
descriptions of all non-written agreements relating to any such plan;
(6) there are no material pending claims or lawsuits which have
been asserted or instituted by or against any the AOP Employee Benefit Plans,
against the assets of any of the trusts under such plans, or by or against the
plan sponsor, plan administrator, or any fiduciary of any of the AOP Employee
Benefit Plans (other than routine benefit claims) that, if determined adversely,
would reasonably be expected to cause a Material Adverse Effect, nor does AOP
have knowledge of facts which could form the basis for any such claim or
lawsuit;
(7) all amendments and actions required to bring the AOP
Employee Benefit Plans into conformity in all material respects with all of the
applicable provisions of ERISA, the Code and any other Applicable Laws
(including the rules and regulations thereunder) have been made or taken, except
to the extent that such amendments or actions are not required by law to be made
or taken until a date after the First Closing Date and are disclosed on Schedule
--------
2.24;
----
(8) the AOP Employee Benefit Plans have been maintained, in all
material respects, in accordance with their plan documents and with all
provisions of the Code and ERISA (including rules and regulations thereunder)
and other Applicable Laws, and none of AOP, PSP11 and, to the knowledge of AOP,
any parties in interest and disqualified persons with respect to the AOP
Employee Benefits Plans has engaged in a "prohibited transaction" within the
meaning of Section 4975 of the Code or Title I, Part 4 or ERISA that would
reasonably be expected to cause a Material Adverse Effect;
20
(9) neither AOP not PSP11 has incurred any material outstanding
liability under Section 4062 of ERISA to the PBGC, to a trust established under
Section 4041 or 4042 of ERISA, or to a trustee appointed under Section 4042 of
ERISA;
(10) none of the AOP Employee Benefit Plans contains any provisions
which would prohibit the transactions contemplated by this Agreement or which
would give rise to any severance, termination or other payments or liabilities
as a result of the transactions contemplated by this Agreement; and
(11) AOP has no liability (whether actual, contingent, with respect to
any of its assets, or otherwise) with respect to any employee benefit plan (as
defined in Section 3(3) of ERISA) maintained by any affiliate other than the AOP
Employee Benefit Plans disclosed in Schedule 2.24.
-------------
(c) Attached hereto as Schedule 2.24 is the most recent quarterly
-------------
listing of workers' compensation claims of AOP and a schedule of workers'
compensation claims of AOP for the last three (3) fiscal years.
(d) Except as disclosed on Schedule 2.24 attached hereto, neither AOP
-------------
nor PSP11 has prepaid or prefunded any AOP Employee Benefit Plan that is a
welfare benefit plan (as defined in Section 3(1) of ERISA) through a trust,
reserve, premium stabilization or similar account.
2.25 INSURANCE.
(a) Attached hereto as Schedule 2.25 are certificates or other
--------------
summaries that provide a description of all policies or binders of fire,
liability, compensation, business interruption, rent loss, directors' and
officers' liability, employee and title insurance held by AOP, PSP11 and PSI
insuring any of the Properties, AOP or PSP11 in each case, specifying the
insurer, policy number or covering note number (for binders), limits of
coverage, expiration dates, and describing each pending claim with respect to
AOP, PSP11 or PSI (with respect to the Commercial Properties) of more than One
Hundred Thousand Dollars ($100,000). All policies and binders described therein
are current and in full force and effect. AOP, PSP11 and PSI are each in
compliance in all material respects with the requirements and provisions of each
such policy or binder, each has paid all premiums due therefor, and has not
failed to give any notice or present any claim under any such policy or binder
in due and timely fashion, except for such failure as would not reasonably be
expected to cause a Material Adverse Effect. Except for claims set forth in
Schedule 2.25 attached hereto, there are no outstanding, material unpaid claims
-------------
under any such policy or binder. None of AOP or PSP11 has received a notice of
cancellation or non-renewal for any such policy or binder, except for such
cancellation or non-renewal as would not reasonably be expected to cause a
Material
21
Adverse Effect. AOP has no knowledge of any inaccuracy in any application for
such policies or binders or any similar basis of facts which might form the
basis for termination of any such insurance.
(b) AOP and PSP11 have maintained a commercially reasonable program of
insurance with respect to the Properties in such a manner as may be required by
any Material Contracts or Loan Documents or other franchises, licenses or
agreements applicable to the Properties. AOP has made available to the Investors
a complete and accurate list of all property damage or personal injury claims
asserted against AOP or PSP11 during the past two (2) years involving any claim
in excess of One Hundred Thousand Dollars ($100,000).
(c) AOP and PSP11 and their Subsidiaries maintain insurance with insurers
of recognized financial responsibility against losses and risks and in such
amounts as are generally deemed adequate for their respective businesses and
consistent with coverage maintained by similar companies in the businesses in
which they are engaged; and neither the Companies nor any Subsidiary has any
reason to believe that it will not be able to renew the coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.
2.26 ENVIRONMENTAL COMPLIANCE.
Except as disclosed on Schedule 2.26(a) hereto:
----------------
(a) AOP and PSP11, their Subsidiaries, all Properties, owned or leased, and
to AOP's knowledge, the operations conducted thereon comply and heretofore have
complied in all material respects with all applicable Environmental Laws (as
defined below), except as disclosed in the Environmental Reports (as defined
below) or as would not reasonably be expected to cause a Material Adverse
Effect.
(b) The Companies and their Subsidiaries have not at any time, and to AOP's
knowledge no other person has at any time, handled, buried, stored, retained,
refined, transported, processed, manufactured, generated, produced, spilled,
allowed to seep, leak, escape or xxxxx, or be pumped, poured, emitted, emptied,
discharged, injected, dumped, transferred or otherwise released or disposed of
Hazardous Materials (as defined below) into the environment at, on, adjacent to
or beneath the Properties, except as disclosed in the environmental site
assessment reports and other documents related to environmental matters at any
of the Properties obtained by AOP or PSP11 on or before the date hereof
(collectively, the "Environmental Reports") or as would not reasonably be
expected to cause a Material Adverse Effect on the relevant Property. All of
the Environmental Reports are identified on Schedule 2.26(b) hereto. Except as
----------------
to circumstances identified
22
in the Environmental Reports, neither AOP, PSP11 nor any of their Subsidiaries
shall use or permit the use of the Properties or any subsequently acquired
properties for the purpose of handling, storing, retaining, transporting,
processing, manufacturing, generating, producing or otherwise managing Hazardous
Materials except in accordance with Environmental Laws or burying, spilling,
seeping, leaking, escaping, leaching, pumping, pouring, emitting, emptying,
discharging, injecting, dumping, transferring or otherwise releasing or
disposing of Hazardous Materials into the environment at, on, adjacent to or
beneath the Properties except in accordance with Environmental Laws.
(c) To AOP's knowledge, no seepage, leak, escape, leaching, discharge,
injection, release, emission, spill, pumping, pouring, emptying, dumping or
disposing of Hazardous Materials into waters on, adjacent to or beneath the
Properties has occurred or is occurring except as disclosed in the Environmental
Reports or as would not reasonably be expected to cause a Material Adverse
Effect.
(d) AOP, PSP11, and their Subsidiaries have received no notice from any
Applicable Authority or other person, and to AOP's knowledge there is no pending
or threatened claim regarding any occurrence or circumstance which, with notice,
passage of time, or failure to act, would give rise to, any claim under or
pursuant to any Environmental Law or under common law pertaining to Hazardous
Materials on, affecting or originating from the Properties or arising out of the
conduct of any person with respect to Hazardous Materials on, affecting or
originating from the Properties, except as disclosed in the Environmental
Reports or as would not reasonably be expected to cause a Material Adverse
Effect.
(e) Except as disclosed in the Environmental Reports, to AOP's knowledge,
the Properties are not included or proposed for inclusion on any federal, state,
or local lists of sites which require or might require environmental cleanup,
including, but not limited to, the National Priorities List or CERCLIS List
issued pursuant to CERCLA (as defined below) by the United States Environmental
Protection Agency.
(f) No environmental approvals, clearances or consents are required under
applicable law from any governmental authority or entity in order to consummate
this transaction or for AOP, PSP11 or their Subsidiaries to continue owning and
leasing each of the Properties after the Closing Date.
(g) To AOP's knowledge, AOP has disclosed all environmental matters that
would reasonably be expected to cause a Material Adverse Effect and have
disclosed all reports, assessments, remedial action plans or similar documents
relating to environmental conditions at the Properties in the possession or
control of AOP, PSP11 or PSI.
23
As used herein, "Hazardous Material" means (i) any flammable, explosive or
radioactive materials, contaminants, or hazardous or toxic wastes, materials or
substances or related materials, whether solid, liquid or gaseous in nature,
including, without limitation, substances defined as "hazardous substances,"
"hazardous materials," toxic substances" or "solid waste" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601, et seq.; the Hazardous Materials Transportation Act, 49
-- ---
U.S.C. Section 1801, et seq.; the Toxic Substances Control Act, 15 U.S.C.,
-- ---
Section 2601 et seq.; the Resources Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901 et seq.; and in the regulations adopted and publications
-- ---
promulgated pursuant to said laws; (ii) those substances listed in the United
States Department of Transportation Table (49 C.F.R. 172.101 and amendments
thereto) or by the Environmental Protection Agency (or any successor agency) as
hazardous substances (40 C.F.R. Part 302 and amendments thereto); (iii) those
substances defined as "hazardous wastes," "hazardous substances" or "toxic
substances" in any similar federal, state or local laws or in the regulations
adopted and publications promulgated pursuant to any of the foregoing laws or
which otherwise are regulated by any governmental authority, agency, department,
commissions, board or instrumentality of the United States of America, the state
in which the applicable Property is situated, or any political subdivision
thereof; (iv) any pollutant or contaminant, hazardous, dangerous or toxic
chemicals, materials, or substances within the meaning of any other applicable
federal, state, or local law, regulation, ordinance, or requirement (including
consent decrees and administrative orders) relating to or imposing liability or
standards of conduct concerning any hazardous, toxic, or dangerous waste,
substance or material, all as amended; (v) petroleum or any by-products thereof;
(vi) any radioactive material, including any source, special nuclear or by-
product material as defined at 42 U.S.C. Sections 2011 et seq.; as amended, and
-- ---
in the regulations adopted and publications promulgated pursuant to said law;
(vii) asbestos in any form or condition; and (viii) polychlorinated biphenyls.
As used herein, "Environmental Law" shall mean all applicable federal,
state and local statutes, regulations, rules, ordinances, codes, licenses,
permits, orders, approvals, plans, authorizations, concessions, franchises and
similar items, of all governmental agencies, departments, commissions, boards,
bureaus or instrumentalities of the United States, states and political
subdivisions thereof and all applicable judicial and administrative and
regulatory decrees, judgments and orders relating to the protection of human
health or the environment, including, without limitation, all requirements,
including but not limited to those pertaining to reporting, licensing,
permitting, investigation and remediation of emissions, discharges, releases or
threatened releases of Hazardous Materials, chemical substances, materials or
wastes whether solid, liquid or gaseous in nature, into the air, surface water,
ground water or land, or relating to the manufacture, processing, distribution,
use, generation, treatment, storage, disposal, transportation or handling of
Hazardous Materials, chemical substances, pollutants,
24
contaminants or hazardous or toxic substances, materials, or wastes, whether
solid, liquid or gaseous in nature.
2.27 BUILDING, SUBDIVISION AND LAND-USE LAWS; RESTRICTIVE COVENANTS.
Except as disclosed to the Investors in connection with Section 2.26 or as
------------
set forth on Schedule 2.27 hereto:
-------------
(a) The improvements on the Properties (the "Improvements"), as currently
constructed, comply with all Applicable Laws, including those relating to
building, certificates of occupancy, subdivision, zoning and land-use and all
applicable restrictive covenants and other agreements (whether public or
private), except for such noncompliance as would not reasonably be expected to
cause a Material Adverse Effect. The use and occupancy of the Improvements by
the Companies, as currently used, operated and occupied by the Companies, and,
to the knowledge of AOP, the use, operation and occupancy of the Improvements by
others, as currently used, operated and occupied by them, all comply with all
Applicable Laws, including those relating to building, subdivision, zoning and
land-use, and comply with all applicable restrictive covenants and other
agreements (whether public or private), except for such noncompliance as would
not reasonably be expected to cause a Material Adverse Effect.
(b) Except as disclosed on Schedule 2.27, to AOP's knowledge without
-------------
inquiry, in the event of substantial damage to or destruction of any of the
Properties or Improvements, reconstruction of such improvements as currently
constructed or used will be permitted by Applicable Authorities without further
action on the part of AOP. To AOP's knowledge, no proceedings to "down-zone" or
otherwise change the zoning classification applicable to any of the Properties
are currently pending and, to the best of AOP's knowledge, none are threatened.
2.28 NO UNPAID ASSESSMENTS.
No material general or special assessments for public improvements have
been made against any of the Properties which are unpaid, and the Companies have
not received any notice of any material proposed, pending or anticipated general
or special assessments against any of the Properties, nor to the best of AOP's
knowledge, are any such assessments threatened or in prospect.
2.29 CONDEMNATION.
Except for a condemnation proceeding involving a portion of the PSP11
Warehouse Property located in Pasadena, California, no condemnation proceedings
have
25
been commenced or completed with respect to any portion of the Properties by any
Applicable Authority having or claiming jurisdiction and, to the best of AOP's
knowledge, no such proceedings are threatened or in prospect.
2.30 UNPAID BILLS; MECHANICS LIENS.
No material claims or bills for labor and/or materials provided to the
Properties are unpaid and none will remain unpaid or otherwise unsatisfied at
the First Closing, and there will be no material mechanics' or materialmens'
liens affecting the Properties as of the First Closing Date.
2.31 PROFFERS; OTHER COMMITMENTS.
As of the First Closing Date, all material commitments to Applicable
Authorities and utility companies, whether by proffer or otherwise, to make
contributions of money, dedications of land, rights of way or easements, or to
install or maintain any public instrumentality on the Properties shall have been
satisfied, and neither the Companies nor any of their subsidiaries shall have
any further obligations with respect thereto from and after First Closing Date.
2.32 BOOKS AND RECORDS.
The books of account, minute books, stock record books, and other records
of AOP, all of which have been made available to the Investors, are complete and
correct and have been maintained in accordance with sound business practices and
the requirements of Section 13(b)(2) of the Exchange Act (regardless of whether
or not AOP is subject to that Section), including the maintenance of an adequate
system of internal controls. The minute books of AOP contain accurate and
complete records of all meetings held of, and corporate action taken by, the
stockholders, the Board of Directors and committees of the Board of Directors of
AOP, and no meeting of any such stockholders, Board of Directors or committee
has been held for which minutes have not been prepared and are not contained in
such minute books. At the First Closing, all of those books and records will be
in the possession of AOP.
2.33 BANKRUPTCY.
There are no attachments, executions or assignments for the benefit of
creditors, or voluntary or involuntary proceedings in bankruptcy or under any
other debtor relief laws pending or, to the knowledge of AOP, contemplated by or
threatened against AOP (or PSP11 after the Merger). Without limiting the
generality of the foregoing, none of the
26
following have been done by, against or with respect to AOP (or PSP11 after the
Merger): (a) the commencement of a case under Title 11 of the U.S. Code as now
constituted or hereafter amended, or under any applicable federal or state
bankruptcy law or other similar law, (b) the appointment of a trustee or
receiver of any property interest, (c) an assignment for the benefit of
creditors, (d) an attachment, execution or other judicial seizure of a
substantial property interest, (e) the taking of, failure to take, or submission
to, any action indicating an inability to meet its financial obligations as they
accrue or (f) a dissolution or liquidation.
2.34 DISCLOSURE.
All agreements, schedules, exhibits, documents, certificates, reports or
statements furnished or to be furnished to the Investors by or on behalf of the
Companies in connection with this Agreement or the transactions contemplated
hereby are true, complete and accurate in all material respects, and no
representation or warranty made in this Agreement or information furnished
pursuant hereto to the Investors (including information contained in the
schedules or documents referred to herein) contains any untrue statement of a
material fact or fails to include a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they are made, not misleading.
III. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.
Each Investor, severally and not jointly, with respect to itself and in the
case of any Agent Investor, as agent for and on behalf of each Pecuniary Owner
for which it acquires Shares, hereby makes the representations and warranties
set forth below to AOP.
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION.
(a) The Investor has been duly incorporated or formed and is validly
existing and in good standing under the laws of its jurisdiction of
incorporation or formation, as the case may be, with power and authority
(corporate and other) to conduct its business as now being conducted.
(b) This Agreement constitutes the legal, valid and binding obligation of
the Investor enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
27
3.2 AUTHORIZATION; ENFORCEMENT.
(a) The Investor has the requisite power and authority (corporate and
other) to enter into and perform this Agreement.
(b) The execution and delivery of this Agreement by the Investor and the
consummation by it of the transactions contemplated hereby have been duly
authorized by such Investor, and no further consent or authorization of such
Investor is required.
(c) This Agreement has been duly executed and delivered by the Investor.
3.3 COMPLIANCE WITH OTHER INSTRUMENTS.
The execution, delivery and performance of this Agreement by the Investor
and the consummation by it of the transactions contemplated hereby do not result
in a violation of the organizational documents of such Investor, or conflict
with or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Investor is a party, or result in a violation of any
law, rule, regulation, order, judgment or decree applicable to such Investor
(except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
materially impair the ability of such Investor to perform its obligations under
the Agreement). Such Investor is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order to execute, deliver or perform any of its
obligations under this Agreement, except such as have been or will be obtained
prior to the First Closing.
3.4 LITIGATION.
There is no action, suit, proceeding, investigation or claim pending
against or, to the knowledge of the Investor, threatened against the Investor in
law, equity or otherwise before any Applicable Authority which questions the
validity of this Agreement or any action taken or to be taken pursuant hereto.
3.5 PURCHASE ENTIRELY FOR OWN ACCOUNT.
This Agreement is made with each Investor in reliance upon the Investor's
representations to the Companies, which by such Investor's execution of this
Agreement such Investor hereby confirms, that the Shares will be acquired for
investment by the Investor for itself, or in the case of any Agent Investor, as
agent for and on behalf of the
28
Pecuniary Owners, for the Pecuniary Owners' own accounts, not as a nominee or
agent for any other person, and not with a view to the resale or distribution of
any part thereof in violation of any federal securities laws, and that neither
the Investors nor any Pecuniary Owners for which any Investor is acting as
agent, have any present intention of selling, granting any participation in, or
otherwise distributing the same, in violation of any federal securities laws.
3.6 ACKNOWLEDGMENTS.
The Investor, and if applicable, each Pecuniary Owner acknowledge that (i)
its investment is being made prior to and not conditioned upon the consummation
of the proposed Merger; (ii) the Investor has received and reviewed AOP's
business plan and financial projections; and (iii) it has been advised that
immediately prior to consummation of the transactions contemplated hereby, AOP
will be a "pension held REIT" within the meaning of the Code if NYC's ownership
is treated as held by a "qualified plan" within the meaning of the Code.
3.7 ACCREDITED INVESTOR.
The Investor and if applicable, each Pecuniary Owner, is an "accredited
investor" within the meaning of SEC Rule 501 of Regulation D and a "qualified
institutional buyer" with the meaning of SEC Rule 144A, as presently in effect,
and the Investor represents that the purchase of the Shares by it is made in the
ordinary course of business and is made solely for the purpose of investment.
3.8 RESTRICTED SECURITIES.
The Investor and if applicable, each Pecuniary Owner understand that the
Shares are characterized as "restricted securities" under the federal securities
laws inasmuch as they are being acquired from AOP (or PSP11 after the Merger) in
a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances. In this connection,
the Investor represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act and is aware that SEC Rule 144 is not presently available for use
by such Investor for resale of the Shares. The Investor acknowledges that the
certificates representing the Shares will contain a legend substantially in the
following form:
29
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD
OR TRANSFERRED UNLESS REGISTERED UNDER SUCH ACT OR LAWS OR PURSUANT TO AN
EXEMPTION FROM SUCH REGISTRATION.
3.9 CERTAIN TAX MATTERS.
Applying the stock ownership rules of Section 856(h) of the Internal
Revenue Code of 1986, as amended (the "Code") and the applicable regulations to
Sections 542(a)(2) and 544 as modified (relating to the restriction that
generally precludes any five or fewer individuals from owning more than 50% of
the value of the outstanding shares of a REIT), no "individual" will be treated
as owning more than two percent (2%) of any outstanding class or series of the
shares of AOP solely as a result of the ownership of Shares by any Investor or
Pecuniary Owner as a result of the transactions contemplated by this Agreement.
For this purpose, a qualified trust that qualifies for the look-through rule of
the Code Section 856(h)(3)(A)(i) shall not be considered an "individual." In
addition, no Investor or Pecuniary Owner will own 10% or more of any outstanding
class or series of the shares of AOP as a result of the completion of the
transactions contemplated by this Agreement. In lieu of the representation
contained in the first sentence of this section, C&S represents and warrants
that the Pecuniary Owners of the Shares of AOP which it owns as an Investor are
those parties listed on Schedule 3.9(a) hereto, which Schedule also shows the
---------------
number of Shares to be purchased by each Pecuniary Owner in this transaction,
and that no "individual" owns more than ten percent (10%) of the shares or
ownership interests (after applying the Code's attribution rules referenced in
this Section) of any of the Pecuniary Owners (excluding those Pecuniary Owners
which are either a governmental plan or qualified retirement trust as so
designated with respect to such Pecuniary Owner on Schedule 3.9(a) hereto)
---------------
as of the date hereof. In lieu of the representation contained in the first
sentence of this section, SU represents and warrants that the information
contained on Schedule 3.9(b) is true and correct as of the date hereof.
IV. CONDITIONS OF THE INVESTORS' OBLIGATIONS AT CLOSING.
The Investors' obligations at the First Closing and, unless otherwise
indicated, at each Subsequent Closing under Subsection 1.1 of this Agreement are
--------------
subject to the fulfillment on or before the date of such Closing of each of the
following conditions:
30
4.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of AOP contained in this Agreement shall
be and shall have been true in all material respects on and as of the First
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the First Closing. The representations and
warranties of AOP contained in Sections 2.2(a), 2.2(c), 2.4, 2.5(a), 2.6, 2.8(a)
-------------------------------------------------
(as to clauses (i) and (iii)) and 2.33) shall be and shall have been true in all
---------------------------------------
material respects on and as of each Subsequent Closing with the same effect as
though such representations and warranties had been made on and as of the date
of such Subsequent Closing.
4.2 PERFORMANCE.
AOP shall have performed and complied with all agreements, obligations and
conditions contained in this Agreement that are required to be performed or
complied with by it on or before such Closing.
4.3 COMPLIANCE CERTIFICATE.
The President of AOP shall have delivered to the Investors at the Closing a
certificate certifying that the conditions specified in Sections 4.1, 4.2, 4.7
----------------------
and 4.8, if applicable to such Closing, have been fulfilled, and that, in his
-------
good faith judgment at the time of such Closing, no action, suit, proceeding,
investigation or claim before any Applicable Authority that is of the type
described in clause (iv) of Section 2.8(a) hereof is pending, or to his
----------- --------------
knowledge threatened, against AOP or PSP11.
4.4 OPINIONS OF COMPANY COUNSEL.
The Investors shall have received on the date of the Closing the opinion of
counsel for AOP, dated as of the Closing, in the form attached hereto as Exhibit
-------
E.
-
4.5 OPINION AS TO REIT STATUS.
At or before the First Closing, the Investors and the Pecuniary Owners
shall have received from counsel for AOP and PSP11, respectively (or such other
counsel as shall be reasonably acceptable to the Investors and the Pecuniary
Owners), an opinion of counsel satisfactory to the Investors and the Pecuniary
Owners to the effect that (i) AOP should be classified as a "real estate
investment trust" under Section 856 of the Internal Revenue Code of 1986, as
amended (after giving effect to the investment contemplated by this Agreement)
and (ii) PSP11 should be classified as a "real estate investment trust" under
31
Section 856 of the Internal Revenue Code of 1986, as amended (after giving
effect to the Merger and the investment contemplated by this Agreement).
4.6 OPINION AS TO VCOC STATUS.
At or before the First Closing, the Investors and the Pecuniary Owners
shall have received from counsel for AOP (or such other counsel as shall be
reasonably acceptable to the Investors and the Pecuniary Owners) an opinion of
counsel satisfactory to the Investors and the Pecuniary Owners to the effect
that AOP qualifies as a venture capital operating company ("VCOC") as defined in
29 C.F.R. section 2510.3-101 (the "Plan Assets Regulation"). Commencing on the
last day of AOP's "first annual valuation period" described in paragraph
(d)(5)(ii) of the Plan Assets Regulation, and on each anniversary of such day
thereafter, unless and until such time as the Shares qualify as "publicly-
offered securities" as defined in the Plan Assets Regulation, such counsel for
AOP shall deliver an opinion to the effect that, as of the date the opinion is
to be delivered, the underlying assets of AOP would not be deemed to constitute
"plan assets" for purposes of the Plan Assets Regulation.
4.7 NO MATERIAL CHANGE.
In the case of the First Closing only, no event or change of circumstances
shall have occurred and be continuing at the time of the First Closing which, in
the reasonable opinion of the Investors, is likely to have a Material Adverse
Effect on AOP, PSP11 or the Properties.
4.8 ACTION BY THE BOARDS OF DIRECTORS.
The Boards of Directors of AOP and PSP11 shall have adopted a resolution
waiving the application of the Ownership Limit (as defined in such Company's
Charter) to the Investors and the Pecuniary Owners to the extent necessary to
permit the transactions contemplated hereby and with respect to any direct
transferee of any of the Investors; provided that such transferee first provides
--------
AOP (or PSP11 after the Merger) with representations and undertakings reasonably
deemed appropriate by AOP (or PSP11 after the Merger) or its counsel to
establish that (a) such transfer will not jeopardize AOP's (or PSP11's after the
Merger) REIT status and (b) that such transferee either (i) is controlled by,
controlling or under common control with, such transferor or (ii) on not more
than six occasions per Investor, that such transferee is a person or entity of
the type eligible to use Exchange Act Form 13G pursuant to Rule 13d-1(b)(1)(ii)
under the Exchange Act, as amended from time to time, or any successor
provision. The Boards of Directors of each of the Companies shall have agreed
to the issuance of the AOP Common Stock (or PSP11 Common Stock after the Merger)
contemplated hereby, and
32
the issuance of PSP11 Common Stock to the holders of AOP Common Stock in
connection with the Merger.
4.9 AFFILIATE STATUS.
Based solely on factual information provided to AOP by the Investors by
letter dated January 22, 1998 and other assumptions contemplated by such letter,
the Company shall have confirmed in writing that it will not take the position
under existing law that any of the Investors are, or will following the Merger
be, "affiliates" of AOP (or PSP11 after the Merger) as that term is defined in
Securities Act Rule 144(a)(1) after giving effect to the transactions
contemplated hereby; provided that the failure of this condition to be satisfied
with respect to any Investor shall not affect the obligation of the other
Investors to purchase their proportionate share of the Shares to be purchased in
the applicable Closing in accordance with Section 1.2.
-----------
4.10 REGISTRATION RIGHTS AGREEMENT.
AOP and the Investors shall have entered into a Registration Rights
Agreement substantially in the form attached hereto as Exhibit E.
---------
4.11 ENVIRONMENTAL INDEMNITY AGREEMENT.
PSI shall have entered into an Environmental Indemnification Agreement
substantially in the form attached hereto as Exhibit F.
---------
4.12 RELIANCE LETTER.
The Investors shall have received a Reliance Letter from ENSR and any other
environmental consultants who prepared any Environmental Reports substantially
in the form attached hereto as Exhibit G.
---------
4.13 SIGNAL HILL INDEMNIFICATION AGREEMENT.
PSI shall have entered into an Indemnification Agreement with respect to
the property commonly known as Signal Hill substantially in the form attached
hereto as Exhibit H.
---------
4.14 INDEMNIFICATION AGREEMENT CONCERNING TITLE ISSUES.
PSI shall have entered into an Indemnification Agreement Concerning Title
Issues substantially in the form attached hereto as Exhibit I.
---------
33
V. CONDITIONS OF AOP'S OBLIGATIONS.
5.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Investors contained in Section
-------
III shall be and shall have been true in all material respects on and as of the
---
First Closing with the same effect as though such representations and warranties
had been made on and as of the date of the First Closing.
5.2 PERFORMANCE.
Each of the Investors shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by them on or before such Closing.
VI. COVENANTS.
6.1 REIT STATUS.
Unless the respective boards of directors determine that it is no longer in
the best interests of their respective stockholders, each of AOP and PSP11 will
use all commercially reasonable efforts to operate in a manner which will not
cause them to be classified other than as a "real estate investment trust" under
Section 856 of the Internal Revenue Code of 1986, as amended (after giving
effect to the investment contemplated by this Agreement, and both before and
after consummation of the Merger).
6.2 STOP ORDERS.
AOP will use all commercially reasonable efforts to cause PSP11 to cause
the S-4 Registration Statement to be filed with and declared effective by the
Commission prior to the Merger. AOP will promptly advise the Investors in
writing of (i) any request by the Commission for amendment of or a supplement to
the Preliminary Proxy Statement or the S-4 Registration Statement, and (ii) any
issuance by the Commission of any stop order suspending the effectiveness of the
S-4 Registration Statement or of the suspension of qualification of the PSP11
Common Stock for offering or sale in any jurisdiction or the initiation of any
proceeding for such purpose. If at any time the Commission shall issue a stop
order suspending the effectiveness of the S-4 Registration Statement, AOP will
use all commercially reasonable efforts to cause PSP11 to obtain the withdrawal
of such order as soon as possible.
34
6.3 USE OF PROCEEDS.
AOP (and PSP11 after the Merger) will apply the net proceeds from the sale
of the Shares substantially in accordance with Section 1.3 hereof.
-----------
6.4 CONFIDENTIALITY.
The parties to this Agreement will not disclose to any other person any
information about this Agreement, the transactions contemplated hereby and the
parties hereto, except as required by law or regulation, the rules of the
Commission or the rules of any stock exchange or stock market on which capital
stock of AOP or PSP11 is listed or approved for trading, or with the prior
written consent of each of the other parties. Notwithstanding the foregoing,
any announcement of this Agreement or the parties' commitment must be approved
by AOP and a majority in interest of the Investors and/or their representatives
(except as required by applicable law, regulation, the rules of the Commission
or the rules of any stock exchange or stock market on which capital stock of AOP
or PSP11 is listed or approved for trading); provided that, except as required
by applicable law or regulation, each Investor shall have the right to have its
name, or the name of any Pecuniary Owner represented by such Investor, excluded
from any such publicity, and each Investor whose name is included in such
publicity shall have the right to approve the use of its name or the name of any
Pecuniary Owner represented by such Investor.
6.5 CHANGES TO CHARTER AND BY-LAWS.
Prior to the Merger, AOP and PSP11 will not make any alteration or
amendment to their respective Charters or By-Laws that would materially
adversely affect the Investors except as set forth on Schedule 6.5 without the
------------
prior written consent of the holders of at least two-thirds of the Shares
purchased by the Investors hereunder.
6.6 CHANGES IN CAPITALIZATION.
AOP (and PSP11 after the Merger) will cause to be issued to the Investors
additional Shares so as to maintain the Investors' percentage interest in the
Companies in the event that either of AOP or PSP11 undertake any stock splits,
mergers, stock dividends or other recapitalizations between the date hereof and
the First Closing Date or any Subsequent Closing Date. In the event of any of
the foregoing, the Per-Share Price for any future Closings shall be adjusted
accordingly. The Investors, as stockholders of AOP, will participate in the
Merger, if approved, and receive in accordance with the Merger Agreement the
shares of PSP11 Common Stock issuable with respect to each
35
share of AOP Common Stock held by such Investor immediately prior to
consummation of the Merger.
6.7 ISSUANCE OF ADDITIONAL CAPITAL STOCK.
(a) Prior to the earlier of (i) the Merger, (ii) a Qualifying Transaction
(as defined below), or (iii) April 30, 1998, AOP shall not issue AOP Common
Stock (or securities convertible into, exercisable or exchangeable for AOP
Common Stock), except pursuant to a Permitted Issuance (as defined below), at a
per share price below the Per-Share Price; regardless of whether the
consideration for the issuance is cash or assets.
(b) On or after April 30, 1998, if AOP has not then completed any of (i)
the Merger, (ii) a Qualifying Transaction or (iii) an IPO (as defined below) and
until the earlier of (i) the Merger, (ii) a Qualifying Transaction, (iii) an
IPO, or (iv) the second anniversary of the First Closing Date, AOP shall not
issue AOP Common Stock (or securities convertible into, exercisable or
exchangeable for AOP Common Stock), except pursuant to a Permitted Issuance, at
a per share price below the Per-Share Price, regardless of whether the
consideration for the issuance is cash or assets, except in an IPO, without the
written consent of a majority in interest of the Investors.
(c) After completion of the Merger or completion of an IPO (or the second
anniversary of the First Closing Date if AOP has not then completed the Merger
or an IPO), but prior to completion of a Qualifying Transaction, AOP (and PSP11
after the Merger) shall not issue AOP Common Stock (or PSP11 Common Stock, as
the case may be) or securities convertible into, exercisable or exchangeable for
AOP Common Stock (or PSP11 Common Stock, as the case may be), except pursuant to
a Permitted Issuance, at a per share price below the Per-Share Price (regardless
of whether the consideration for the issuance is cash or assets) without first
offering to each of the Investors (with 15 days' prior written notice) the right
to purchase for cash such AOP Common Stock (or PSP11 Common Stock, as the case
may be) or other securities on terms and conditions at least as favorable as
those offered to third parties in amounts sufficient to permit the Investors to
maintain their percentage ownership in AOP (or PSP11, as the case may be).
(d) After completion of a Qualifying Transaction, the Investors shall have
no further rights under this Section 6.7.
-----------
(e) An "IPO" shall mean a registered underwritten initial public offering
by AOP or PSP11 (after the Merger) of shares of Common Stock with gross proceeds
of at least $25 million. AOP and PSP11 are not guaranteeing the price for
shares offered publicly by them in an IPO and no additional Shares will be
issued to the Investors if the public offering price in the IPO is less than the
Per-Share Price. A "Qualifying Transaction" shall be deemed to have been
completed immediately after closing on (i) a
36
registered public offering by AOP (or PSP11 after the Merger) of shares of
Common Stock with gross proceeds of at least $155 million (or a series of such
offerings with aggregate gross proceeds of $155 million), or (ii) a merger with
another entity following which AOP (or PSP11 after the Merger) has a total
Equity Float of at least $310 million. For purposes of this provision, "Equity
Float" shall mean the market value of the outstanding publicly-traded shares of
AOP (or PSP11 after the Merger), excluding shares held by Affiliates, and
"Affiliates" shall include all executive officers, directors, and beneficial
owners (within the meaning of Rule 13d-3 of the Exchange Act) of more than 10%
of the outstanding shares of the Capital Stock of AOP (or PSP11 after the
Merger). A "Permitted Issuance" shall mean any issuance of AOP Common Stock,
PSP11 Common Stock or securities convertible into, exercisable for or
exchangeable for AOP Common Stock or PSP11 Common Stock (i) upon the conversion,
exercise or exchange of any convertible or exchangeable security or any option,
warrant or the like, (ii) as a dividend or distribution payable to all holders
of AOP Common Stock or PSP11 Common Stock or by reason of a stock split of AOP
Common Stock or PSP11 Common Stock or (iii) to employees or directors of, or
consultants to, AOP or PSP11 pursuant to a plan adopted by the Board of
Directors and approved by the stockholders of AOP or PSP11, as the case may be.
(f) Any waiver of part or all of this Section 6.7 must be by a vote of
-----------
Investors holding at least a majority of Shares held by all Investors.
6.8 FUTURE OFFERINGS.
AOP and PSP11 will use reasonable efforts to allow the Investors to
participate as buyers pro rata in any future underwritten offerings of the
Capital Stock of AOP (and PSP11 after the Merger) made prior to January 31,
1999, exclusive of "spot offerings."
6.9 INFORMATION.
Until the earlier of consummation of the Merger, consummation of a public
offering pursuant to a registration statement or AOP otherwise becoming subject
to the reporting requirements of the Exchange Act, AOP shall provide each
Investor with quarterly financial information customary for a company subject to
the reporting requirements of the Exchange Act and such other information as the
Investors shall reasonably request including, but not limited to, consolidating
financial statements and summaries of material litigation and other material
developments.
37
6.10 VCOC STATUS.
AOP shall use all commercially reasonable efforts to operate in a manner
which will cause it to be a VCOC for purposes of the Plan Assets Regulation,
unless and until such time as the Shares qualify as "publicly-offered
securities" as defined in the Plan Assets Regulation.
6.11 MERGER AND EXCHANGE.
AOP shall, and shall cause PSP11 and PSI to, use all commercially
reasonable efforts to consummate the transactions contemplated by the Merger and
the Exchange, if approved by PSP11's stockholders.
6.12 SUBSEQUENT CLOSINGS.
AOP (and PSP11 after the Merger) shall use all commercially reasonable
efforts to (a) locate potential Acquisition Properties meeting the Acquisition
Criterion and (b) call for the balance of the entire Purchase Price in
Subsequent Closings with respect to the acquisition of such properties on or
before July 31, 1998.
6.13 REMOVAL OF LEGEND.
AOP (and PSP11 after the Merger) shall promptly remove the legend set forth
in Section 3.8 from any certificates representing the Shares at such time as the
-----------
Shares represented thereby are registered under the Securities Act or, at the
request of the holder thereof, at such time as the Shares represented thereby
become eligible for resale pursuant to SEC Rule 144(k).
6.14 ENVIRONMENTAL ACTIONS.
AOP (and PSP11 after the Merger) shall use commercially reasonable efforts
to complete the actions listed on Exhibit J within 90 days after the First
---------
Closing.
6.15 OWNERSHIP LIMITS.
As soon as commercially practicable, AOP (or PSP11 after the Merger) shall
request its Board of Directors to consider the desirability of raising the
percentage Ownership Limitation contained in the Company's Charter in order to
make AOP (and PSP11 after the Merger) more attractive to institutional
investors.
38
VII. INDEMNIFICATION.
7.1 OBLIGATIONS OF AOP.
In partial consideration of the commitment of the Investors directly and as
agent for and on behalf of the Pecuniary Owners hereunder, AOP agrees to
indemnify and hold harmless each Investor and the Pecuniary Owners and any of
their respective affiliates, directors, officers, agents and employees and each
other person, if any, controlling the Investors or the Pecuniary Owners or any
of their respective affiliates (each an "Investor Indemnified Person") from and
against any losses (or actions in respect thereof) to which such Investor
Indemnified Person may become subject as a result of, or based upon or arising
out of, directly or indirectly, any inaccuracy in, breach or nonperformance of,
any of the representations, warranties, covenants or agreements made by AOP in
or pursuant to this Agreement, and will reimburse any Investor Indemnified
Person for all reasonable expenses (including the reasonable fees of counsel) as
they are incurred by any such Investor Indemnified Person in connection with
investigating, preparing or defending any such action or claim pending or
threatened, whether or not such Investor Indemnified Person is a party hereto.
In the event that the foregoing indemnity is unavailable or insufficient to hold
the Investor Indemnified Person harmless, AOP shall contribute to amounts paid
or payable by such Investor Indemnified Person in respect of such losses,
claims, damages, liabilities and expenses in such proportion as appropriately
reflects the relative benefits received by and fault of AOP, on the one hand,
and the Investors and the Pecuniary Owners, on the other hand, in connection
with the matters as to which such losses, claims, damages, liabilities or
expenses relate. Notwithstanding the foregoing, AOP shall have no liability
under this Section until such time as the aggregate losses and expenses of the
Investor Indemnified Persons as a group exceed $500,000; provided that the
aggregate amount of liability of AOP to the Investor Indemnified Persons as a
group under this Section shall not exceed the amount of the Purchase Price
funded pursuant to this Agreement.
7.2 OBLIGATIONS OF INVESTORS.
In partial consideration of the commitment of AOP hereunder, each Direct
Investor and each Agent Investor as agent for and on behalf of its respective
Pecuniary Owners agrees to indemnify and hold harmless AOP and any of its
respective affiliates, directors, officers, agents and employees and each other
person, if any, controlling AOP or any of its respective affiliates (each an
"AOP Indemnified Person") from and against any losses (or actions in respect
thereof) to which such AOP Indemnified Person may become subject as a result of,
or based upon or arising out of, directly or indirectly, any inaccuracy in,
breach or nonperformance of, any of the representations, warranties, covenants
or agreements made by such Investor in or pursuant to this Agreement, and
39
will reimburse any AOP Indemnified Person for all reasonable expenses (including
the reasonable fees of counsel) as they are incurred by any such AOP Indemnified
Person in connection with investigating, preparing or defending any such action
or claim pending or threatened, whether or not such AOP Indemnified Person is a
party hereto. In the event that the foregoing indemnity is unavailable or
insufficient to hold the AOP Indemnified Person harmless, such Investor shall
contribute to amounts paid or payable by such AOP Indemnified Person in respect
of such losses, claims, damages, liabilities and expenses in such proportion as
appropriately reflects the relative benefits received by and fault of such
Investor, on the one hand, and AOP, on the other hand, in connection with the
matters as to which such losses, claims, damages, liabilities or expenses
relate. Notwithstanding the foregoing, no Investor shall have liability under
this Section until such time as the aggregate losses and expenses of the AOP
Indemnified Persons as a group exceed $500,000; provided that the aggregate
--------
amount of liability of such Investor to the AOP Investor Indemnified Persons as
a group under this Section shall not exceed the amount of the Purchase Price
funded by such Investor pursuant to this Agreement.
7.3 PROCEDURE.
(a) Any Investor Indemnified Person and any AOP Indemnified Person shall
each be referred to collectively herein as an "Indemnified Person." Any
Indemnified Person seeking indemnification with respect to any losses, claims,
damages, liabilities or expenses shall give notice to the person from whom
indemnification is sought (each, an "Indemnifying Person") on or before the date
specified in Section 7.4.
-----------
(b) If any claim, demand or liability is asserted by any third party
against any Indemnified Person, the Indemnifying Person shall have the right,
unless otherwise precluded by applicable law, to conduct and control the
defense, compromise or settlement of any action or threatened action brought
against the Indemnified Person in respect of matters addressed by the indemnity
set forth in this Section 7 (an "Action"). The Indemnified Person shall have
---------
the right to employ counsel separate from counsel employed by the Indemnifying
Person in connection with any such Action or threatened Action and to
participate in the defense thereof, but the fees and expenses of such counsel
employed by the Indemnified Person shall be at the sole expense of the
Indemnified Person unless (i) the Indemnifying Person shall have elected not,
or, after reasonable written notice of any such Action or threatened Action,
shall have failed, to assume or participate in the defense thereof, (ii) the
employment thereof has been specifically authorized by the Indemnifying Person
in writing, or (iii) the parties to any such Action or threatened Action
(including any impleaded parties) include both the Indemnifying Person and the
Indemnified Person and the Indemnifying Person shall have been advised in
writing by counsel for the Indemnified Person that there may be one or more
defenses available to the Indemnified Person that are not available to the
Indemnifying Person or
40
legal conflicts of interest pursuant to applicable rules
of professional conduct between the Indemnifying Person and the Indemnified
Person (in any such case, the Indemnifying Person shall not have the right to
assume the defense of such Action on behalf of the Indemnified Person), in
either of which events referred to in clauses (i), (ii) and (iii) the fees and
expenses of one such separate counsel employed by the Indemnified Person shall
be at the expense of the Indemnifying Person. The Indemnifying Person shall not,
without the written consent of the Indemnified Person, settle or compromise any
such Action or threatened Action or consent to the entry of any judgment which
does not include as an unconditional term thereof the giving by the claimant or
the plaintiff to the Indemnified Person a release from all liability in respect
of such Action or threatened Action. Unless the Indemnifying Person shall have
elected not, or shall have after reasonable written notice of any such Action or
threatened Action failed, to assume or participate in the defense thereof, the
Indemnified Person may not settle or compromise any Action or threatened Action
without the written consent of the Indemnifying Person. If, after reasonable
written notice of any such Action or threatened Action, the Indemnifying Person
neglects to defend the Indemnified Person, a recovery against the latter for
damages suffered by it in good faith, is conclusive in its favor against the
Indemnifying Person; provided, however, that no such conclusive presumption
-------- -------
shall be made if the Indemnifying Person have not received reasonable written
notice of the Action against the Indemnified Person.
7.4 SURVIVAL.
The indemnity set forth in this Section 7 shall survive the Closings or any
termination of this Agreement and shall remain in effect (a) with respect to a
breach of a representation or warranty, except as provided in (b) below, for the
period through which such representation or warranty shall continue pursuant to
Section 8.1 (including such period of time through which such representation or
warranty shall be extended until resolution of a claim with respect thereto) and
(b) with respect to a breach of a representation or warranty referred to in
Sections 2.3 and 2.4, forever.
--------------------
7.5 REMEDIES.
The parties acknowledge and agree that the remedies set forth in this
Section 7 shall be the exclusive remedies of the parties under this Agreement,
---------
and the parties hereby waive any right to pursue any other remedy; provided that
--------
nothing in this Section shall prevent a party from bringing an action (a) on the
basis of fraud or (b) for specific performance of any of the covenants or
agreements of any of the other parties hereto. Each party hereto agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and
41
hereby agrees to waive the defense that a remedy at law would be adequate in any
action for specific performance hereunder.
VIII. MISCELLANEOUS.
8.1 SURVIVAL OF WARRANTIES.
The warranties, representations and covenants of AOP (or PSP11 after the
Merger) and the Investors contained in or made pursuant to this Agreement shall
survive for a period of two years after the date of this Agreement, and shall in
no way be affected by any investigation of the subject matter thereof made by or
on behalf of the Investors or AOP (or PSP11 after the Merger).
8.2 SUCCESSORS AND ASSIGNS.
Except as otherwise provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto, including the Pecuniary Owners.
Nothing in this Agreement, express or implied, is intended to confer upon any
person other than the parties hereto and the Pecuniary Owners or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except that each Investor
shall, in its discretion, be entitled to transfer Shares (and the rights
associated therewith) between the accounts of any of the Pecuniary Owners for
which it serves as agent. In the event that any Agent Investor is terminated as
agent by a Pecuniary Owner prior to the final Subsequent Closing, the Agent
Investor shall have the right to substitute another client for which it serves
as agent as a Pecuniary Owner. By making any such substitution, the Agent
Investor shall be deemed to have made, on behalf of and with respect to such
Pecuniary Owner, as of the date of such substitution, the representations set
forth in Article III to the extent they expressly relate to the Pecuniary
Owners.
8.3 GOVERNING LAW.
This Agreement shall be governed by and construed under the internal laws
of the State of Maryland.
8.4 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
42
8.5 TITLES AND SUBTITLES.
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
8.6 NOTICES.
Unless otherwise provided, any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given (a)
upon personal delivery to the party to be notified, (b) upon receipt after
deposit with the United States Post Office, by registered or certified mail,
postage prepaid return receipt requested, (c) on the next business day after
dispatch via nationally recognized overnight courier or (d) upon confirmation of
transmission by facsimile (provided such transmission is also contemporaneously
sent via one of the methods specified in clauses (a), (b) or (c)), all addressed
to the party to be notified at the address indicated for such party below, or at
such other address as such party may designate by ten (10) days' advance written
notice to the other parties. Notices should be provided in accordance with this
Section at the following addresses:
If to the Investors, to: With a copy to:
ABKB/LaSalle Securities Limited Partnership Piper & Marbury L.L.P.
000 Xxxx Xxxxx Xxxxxx 36 South Xxxxxxx Street
Baltimore, MD 21202 Xxxxxxxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx, Xx. Attn: Xxxxxxxxx Xxxxx, Esq.
Managing Director
And to: With a copy to:
Harvard Private Capital Realty, Inc. Ropes & Xxxx
000 Xxxxxxxx Xxxxxx One International Place
Boston, MA 02210-2203 Xxxxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxxx Attn: Xxxxx Xxxx, Esq.
And to: With a copy to:
Xxxxx & Steers Capital Management, Inc. Dechert, Price & Xxxxxx
000 Xxxxx Xxxxxx, 00xx Floor 00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000-0000 Xxx Xxxx, XX 00000
43
Fax: (000) 000-0000 Fax: (000) 000-0000
Attn: Xxxx X. XxXxxxxxxx Attn: Xxxx Xxxxx, Esq.
And to: With a copy to:
Xxxxxx Xxxxxxx Asset Management Xxxxxx Xxxxxxx Asset Management
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx 1221 Avenue of the Americas
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
Fax: (000) 000-0000 Fax: 000-000-0000
Attn: Xxxxxxxx X. Xxxxxx Attn: General Counsel
And to: With a copy to:
Fidelity Management & Research Co. Xxxxxxx, Procter & Xxxx
00 Xxxxxxxxxx Xxxxxx Exchange Place
Boston, MA 02109-3614 Xxxxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxx, Esq. Attn: Xxxxx Xxxxxx-Xxxxxx, Esq.
And to: With a copy to:
Stanford University McCutchen, Doyle, Xxxxx &
0000 Xxxx Xxxx Xxxx Xxxxxxx XXX
Xxxxx Xxxx, XX 00000 0 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Fax: (000) 000-0000 Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxx Fax: (000) 000-0000
Director of Real Estate Investments Attn: Xxxxxx Xxxxxxx, Esq.
And to: With a copy to:
State of Michigan Retirement Systems Department of Attorney General
Department of Treasury, Bureau of Investments Finance and Development Division
Mortgage and Real Estate Division One Michigan Building, 4th Floor
000 Xxxx Xxxxxxx Xxxxxx 000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
Attn: Administrator - Mortgage and Attn: Assistant in Charge
Real Estate Division
If to AOP (or PSP11 after the Merger), to: With copies to:
44
American Office Park Properties, Inc. American Office Park Properties
000 Xxxxxxx Xxxxxx, Xxxxx 000 000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, Xx. Attn: Xxxxx Xxxxxxxx, Esquire
And:
Xxxx and Xxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, Esquire
8.7 NO FINDERS' FEES.
Each party represents that it neither is nor will be obligated for any
finders' fee or commission in connection with this transaction, except that AOP
will be obligated to pay a finders' fee to Triton Pacific Capital ("Triton") and
Xxxxxxxxx, Xxxxxx & Xxxxxxxx ("DLJ"). Each Investor, severally and not jointly,
agrees to indemnify and to hold harmless AOP from any liability for any
commission or compensation in the nature of a finders' fee (and the costs and
expenses of defending against such liability or asserted-liability) for which
the Investor or any of its officers, partners, employees, or representatives is
responsible. AOP agrees to indemnify and hold harmless the Investors from any
liability for any commission or compensation in the nature of a finders' fee,
including any fees owed to Triton and DLJ (and the costs and expenses of
defending against such liability or asserted liability) for which AOP or any of
its officers, employees or representatives is responsible.
8.8 EXPENSES.
AOP shall pay all costs and expenses incident to the performance by AOP of
its obligations hereunder and pay (i) the Investors' costs associated with
engineering due diligence up to $25,000 in the aggregate, (ii) the fees and
expenses of Piper & Marbury L.L.P., lead counsel for the Investors, incurred in
connection with the transactions contemplated by this Agreement up to $125,000
in the aggregate, regardless of whether the First Closing shall occur and (iii)
the other fees and expenses of Piper & Marbury L.L.P. incurred in connection
with the transactions contemplated by this Agreement up to $100,000 in the
aggregate, but only if the First Closing shall occur. In addition, if the First
Closing occurs, AOP shall reimburse each Investor (other than ABKB) for the
reasonable fees of its separate counsel up to $20,000; provided that the amount
--------
so
45
reimbursed to all of the Investors shall not exceed $100,000; and provided
--------
further that for this purpose, all of the Fidelity Entities shall be treated
-------
together as one Investor. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
8.9 AMENDMENTS AND WAIVERS.
Any term of this Agreement may be amended, and the observance of any term
of this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of AOP
(or PSP11 after the Merger) and the Investors. Any amendment or waiver effected
in accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding, each future
holder of all such securities, and AOP (or PSP11 after the Merger).
8.10 SEVERABILITY.
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement and
the balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
8.11 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement among the parties and no
party shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth
herein.
46
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
"COMPANY" AMERICAN OFFICE PARK
PROPERTIES, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
-------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
-----------------------
Title: President/CEO
----------------------
Date: 1/23/98
----------------------
(Signatures continue on following pages)
47
"AGENT INVESTORS" ABKB/LA SALLE SECURITIES
LIMITED PARTNERSHIP
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
-----------------------------
Xxxxxxx X. Xxxxxx, Xx.
Managing Director
Date: 1\23\98
---------------------------
XXXXX & STEERS CAPITAL
MANAGEMENT, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------
Name: Xxxxxx Xxxxx
----------------------------
Title: President
---------------------------
Date: 1/28/98
----------------------------
XXXXXX XXXXXXX ASSET
MANAGEMENT
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxxxx X. Xxxxxx
--------------------------
Title: Principal
--------------------------
Date: 1\23\98
--------------------------
"DIRECT INVESTORS" HARVARD PRIVATE CAPITAL
REALTY, INC.
By: ABKB/LaSalle Securities Limited
Partnership, as Agent
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
-----------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
--------------------------
Title: Managing Director
--------------------------
Date: 1\23\98
---------------------------
(Signatures continue on following page)
48
THE BOARD OF TRUSTEES OF THE
XXXXXX XXXXXXXX JUNIOR
UNIVERSITY
By: /s/ Xxxxx X. Xxxx
-----------------------------
Name: Xxxxx X. Xxxx
----------------------------
Title: Director of Real Estate Investments
------------------------------------
Date: 1/26/98
----------------------------
STATE OF MICHIGAN RETIREMENT
SYSTEMS
By: /s/ Xxxxxxx X. Xxx Xxxxxx
-----------------------------
Name: Xxxxxxx X. Xxx Xxxxxx
----------------------------
Title: Administrator
---------------------------
Date: 1/21/98
---------------------------
"FIDELITY ENTITIES" THE FIDELITY REIT COLLECTIVE POOL
By: Fidelity Management Trust
Company, as Trustee of the Fidelity Group
Trust for Employee Benefits Plans
By: /s/ Xxxxx Xxxxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxxxx
----------------------------
Title: P.M. and S.V.P.- R.E.
---------------------------
Date: 1/23/98
----------------------------
(Signatures continue on following page)
49
STATE EMPLOYEES' RETIREMENT FUND
OF THE STATE OF DELAWARE
By: Fidelity Management Trust
Company, as Investment Manager
and Not Individually
By: /s/ Xxxxx Xxxxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxxxx
----------------------------
Title: S.V.P. and P.M.- R.E.
----------------------------
Date: 1/23/98
----------------------------
X.X. XXXXXXXXX FAMILY FOUNDATION
By: Fidelity Management Trust
Company, as Investment Manager
and Not Individually
By: /s/ Xxxxx Xxxxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxxxx
----------------------------
Title: S.V.P.- R.E. and P.M.
----------------------------
Date: 1/23/98
----------------------------
(Signatures continue on following page)
50
FIDELITY REAL ESTATE INVESTMENT
PORTFOLIO
By: /s/ Xxxxx Xxxxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxxxx
----------------------------
Title: P.M. and S.V.P. - R.E.
----------------------------
Date: 1/23/98
----------------------------
Representative Capacity.
-----------------------
Fidelity Real Estate Investment Portfolio (the "Fund") hereby gives
notice to the parties to this Agreement (the "Parties") that the Fund is a
portfolio of the Fidelity Devonshire Trust (the "Trust"), which is a
Massachusetts business trust, and that a copy of the Trust's Declaration of
Trust is on file with the Secretary of the Commonwealth of Massachusetts. Each
of the Parties hereto acknowledges and agrees that this Agreement is not
executed on behalf of the trustees of the Trust as individuals, and the
obligations of the Fund under this Agreement are not binding upon any of the
trustees, officers or shareholders of the Trust individually or upon any
portfolio or assets of the Trust except the assets and property of the Fund.
51
EXHIBIT A
INVESTORS
Investor Amount Shares
-------- ------ ------
ABKB* $ 20,000,007 740,741
HPCR $ 20,000,007 740,741
C&S** $ 29,999,997 1,111,111
MSAM $ 25,000,002 925,926
SU $ 9,999,990 370,370
MICH $ 29,999,997 1,111,111
FIDO:
Fidelity Real Estate Investment
Portfolio $17,602,488 651,944
The Fidelity REIT Collective
Pool $ 1,511,271 55,973
State Employees' Retirement
Fund of the State of Delaware $ 707,292 26,196
X.X. XxXxxxxxx Family
Foundation $ 178,956 6,628
---------- ----------- --------
FIDO Subtotal $ 20,000,007 740,741
============= ============ ===========
TOTAL $155,000,007 5,740,741
* The investment of ABKB and HPCR together shall not exceed 20% of the AOP
Common Stock outstanding
** The investment of C&S will not exceed 14.9% of the AOP Common Stock
outstanding
EXHIBIT A-1
FIRST CLOSING ALLOCATION
Investor Amount Shares
-------- ------ ------
ABKB* $ 6,451,623 238,949
HPCR $ 6,451,623 238,949
C&S** $ 9,677,421 358,423
MSAM $ 8,064,522 298,686
SU $ 3,225,798 119,474
MICH $ 9,677,421 358,423
FIDO:
Fidelity Real Estate Investment
Portfolio $5,678,235 210,305
The Fidelity REIT Collective
Pool $ 487,512 18,056
State Employees' Retirement
Fund of the State of Delaware $ 228,150 8,450
X.X. XxXxxxxxx Family
Foundation
---------- $ 57,726 2,138
---------- --------
FIDO Subtotal $ 6,451,623 238,949
============= =========== ==========
TOTAL $50,000,031 1,851,853
* The investment of ABKB and HPCR together shall not exceed 20% of the AOP
Common Stock outstanding
** The investment of C&S will not exceed 14.9% of the AOP Common Stock
outstanding
A-1
EXHIBIT B
FORM OF NOTICE OF SUBSEQUENT CLOSING
A. Subsequent Funding:
-------------------
Date of Proposed Funding:
Amount of Proposed Funding:
Number of Shares to be Issued:
Payment Instructions:
B. As to Each Acquisition Property:
--------------------------------
Description of Property:
Purchase Price:
In-Place NOI Yield:
Projected NOI Yield:
Time-Frame for Reaching Projected NOI Yield:
C. Aggregate for All Acquisition Properties Proposed to be Funded:
---------------------------------------------------------------
Purchase Price:
In-Place NOI Yield:
Projected NOI Yield:
Time-Frame for Reaching Projected NOI Yield:
D. Assumptions used for Projected NOI Yield:
-----------------------------------------
B-1
EXHIBIT C
INDEX OF DEFINITIONS
"ABKB" shall have the meaning set forth in the Recitals.
"Acquisition Properties" shall have the meaning set forth in Section 1.3 hereof.
"Acquisition Criterion" shall have the meaning set forth in Section 1.3 hereof.
"Action" shall have the meaning set forth in Section 7.2 hereof.
"Agent Investor" shall have the meaning set forth in the Recitals.
"AOP" shall have the meaning set forth in the Recitals.
"AOP Capital Stock" shall have the meaning set forth in Section 2.3 hereof.
"AOP Common Stock" shall have the meaning set forth in the Recitals.
"AOP Employee Benefit Plans" shall have the meaning set forth in Section
2.24 hereof.
"AOP Employee Pension Plans" shall have the meaning set forth in Section
2.24 hereof.
"AOP Indemnified Person" shall have the meaning set forth in Section 7.2
hereof.
"Applicable Authority" shall have the meaning set forth in Section 2.8
hereof.
"Applicable Laws" shall have the meaning set forth in Section 2.9 hereof.
"Assets" shall have the meaning set forth in Section 2.14 hereof.
"Bylaws" shall have the meaning set forth in Section 2.3 hereof.
"C&S" shall have the meaning set forth in the Recitals.
"CERCLA" shall have the meaning set forth in Section 2.26 hereof.
"Charter" shall have the meaning set forth in Section 2.3 hereof.
"Closing" shall have the meaning set forth in Section 1.2 hereof.
"Commercial Properties" shall have the meaning set forth in the Recitals.
"Commission" shall have the meaning set forth in Section 2.1 hereof.
"Company" shall have the meaning set forth in the Recitals.
"DLJ" shall have the meaning set forth in Section 8.7 hereof.
"Definitive Proxy Statement" shall have the meaning set forth in Section
2.1 hereof.
"Direct Investor" shall have the meaning set forth in the Recitals.
"Environmental Law" shall have the meaning set forth in Section 2.26
hereof.
"Environmental Reports" shall have the meaning set forth in Section 2.26
hereof.
"Equity Float" shall have the meaning set forth in Section 6.7 hereof.
"ERISA" shall have the meaning set forth in Section 2.24 hereof.
"Exchange" shall have the meaning set forth in the Recitals.
"Exchange Act" shall have the meaning set forth in Section 2.1 hereof.
"FIDO" shall have the meaning set forth in the Recitals.
"First Closing" shall have the meaning set forth in Section 1.2 hereof.
"First Closing Date" shall have the meaning set forth in Section 1.2
hereof.
"Financial Statements" shall have the meaning set forth in Section 2.11
hereof.
"GAAP" shall have the meaning set forth in Section 1.3 hereof.
"Hazardous Material" shall have the meaning set forth in Section 2.26
hereof.
"HPCR" shall have the meaning set forth in the Recitals.
"Improvements" shall have the meaning set forth in Section 2.27 hereof.
"Indemnified Person" shall have the meaning set forth in Section 7.3
hereof.
"Indemnifying Person" shall have the meaning set forth in Section 7.3
hereof.
"IPO" shall have the meaning set forth in Section 6.7 hereof.
"Investor Indemnified Person" shall have the meaning set forth in Section
7.1.
"Investors" shall have the meaning set forth in the Recitals.
"Leases" shall have the meaning set forth in Section 2.22 hereof.
"Lien" shall have the meaning set forth in Section 2.22 hereof.
"Licenses and Approvals" shall have the meaning set forth in Section 2.17
hereof
"Material Adverse Effect" shall have the meaning set forth in Section 2.2
hereof.
"Material Contracts" shall have the meaning set forth in Section 2.21
hereof.
"Merger Agreement" shall have the meaning set forth in the Recitals.
"MICH" shall have the meaning set forth in the Recitals.
"MSAM" shall have the meaning set forth in the Recitals.
"Multiemployer Plan" shall have the meaning set forth in Section 2.24
hereof.
"Multiple Employer Plan" shall have the meaning set forth in Section 2.24
hereof.
"NOI Yield" shall have the meaning set forth in Section 1.3 hereof.
"NYC" shall have the meaning set forth in the Recitals.
"NYC Agreement" shall have the meaning set forth in the Recitals.
"NYC Properties" shall have the meaning set forth in the Recitals.
"NYC Shareholders Agreement" shall have the meaning set forth in Section
2.3.
"Operating Partnership" shall have the meaning set forth in the recitals.
"PBGC" shall have the meaning set forth in Section 2.24 hereof.
"Pecuniary Owners" shall have the meaning set forth in the Recitals.
"Preliminary Proxy Statement" shall have the meaning set forth in Section
2.1 hereof.
"Pro Forma Financial Statements" shall have the meaning set forth in
Section 2.11 hereof.
"Properties" shall have the meaning set forth in Section 2.14 hereof.
"Proxy Statement" shall have the meaning set forth in Section 2.1 hereof.
"PSP11" shall have the meaning set forth in the Recitals.
"PSI" shall have the meaning set forth in the Recitals.
"PSP11 Capital Stock" shall have the meaning set forth in Section 2.3
hereof.
"PSP11 Common Stock" shall have the meaning set forth in the Recitals.
"PSI Material Contracts" shall have the meaning set forth in Section 2.24
hereof.
"Purchase Price" shall have the meaning set forth in Section 1.1 hereof.
"Qualifying Transaction" shall have the meaning set forth in Section 6.7
hereof.
"Rent Roll" shall have the meaning set forth in Section 2.22 hereof.
"S-4 Registration Statement" shall have the meaning set forth in Section
2.1 hereof.
"SEC Documents" shall have the meaning set forth in Section 2.7 hereof.
"Shares" shall have the meaning set forth in Section 1.1 hereof.
"SU" shall have the meaning set forth in the Recitals.
"Subsequent Closing" shall have the meaning set forth in Section 1.2
hereof.
"Subsidiary" shall have the meaning set forth in Section 2.2 hereof.
"Taxes" shall have the meaning set forth in Section 2.16 hereof.
"Triton" shall have the meaning set forth in Section 8.7 hereof.
"VCOC" shall have the meaning set forth in Section 4.6 hereof.
"Warehouse Properties" shall have the meaning set forth in the Recitals.
[Other exhibits to this agreement have been omitted and will be furnished to the
Securities and Exchange Commission upon request]
