EXHIBIT 10.12
[Exhibits to this Agreement have been omitted
and will be furnished to the Securities and
Exchange Commission upon request]
NON-COMPETITION AGREEMENT
-------------------------
This NON-COMPETITION AGREEMENT (this "Agreement") is made and entered
into effective as of the 23rd day of December, 1997, by and between Public
Storage, Inc., a California corporation ("PSA"), American Office Park
Properties, Inc., a California corporation ("AOPP"), American Office Park
Properties, L.P., a California limited partnership (the "OP"), and Acquiport Two
Corporation, a Delaware corporation ("Acquiport").
RECITALS
A. This Agreement is entered into pursuant to that certain Merger and
Contribution Agreement dated December 23, 1997, among AOPP, the OP, Acquiport
and others (the "Contribution Agreement"). Terms used and not otherwise defined
herein shall have the meanings given thereto in the Contribution Agreement,
which definitions are incorporated herein by this reference as though set forth
in full and shall apply notwithstanding that "Closing" (as defined in the
Contribution Agreement) has occurred.
B. Pursuant to the Contribution Agreement, Acquiport Two contributed the
Acquiport Two Properties and cash to the OP and Acquiport Three Corporation, a
Delaware corporation affiliated with Acquiport, merged with and into a wholly
owned subsidiary of AOPP in exchange for which stock in AOPP and OP Units in the
OP were issued to Acquiport Two, all as more particularly described in the
Contribution Agreement. AOPP is the sole general partner of the OP and a
limited partner in the OP. PSA is a major shareholder in AOPP and a limited
partner in the OP.
C. The parties intend that a Listing will be accomplished with respect
to AOPP. It is currently contemplated that the Listing will be accomplished by
the Merger of AOPP and PSP11, with the surviving real estate investment trust
being renamed "PS Business Parks, Inc." "PSBP" shall mean the corporate entity
that is the successor by merger to AOPP and PSP11. It is also currently
contemplated that, in connection with the Merger, the name of the OP will be
changed to "PS Business Parks, L.P."
D. In the event the Merger cannot or does not occur, the parties hereto
have agreed to certain alternative steps to achieve the Listing, as more fully
set forth in the Agreement Among Shareholders and Company. "Resulting Entity"
shall mean
PSBP, or any other entity, including without limitation AOPP, in which PSA and
Acquiport own shares as a result of the Listing being accomplished through means
other than the Merger.
E. It is contemplated that AOPP, the OP, PSBP and/or the Resulting
Entity will be in the business of acquiring, owning, operating, leasing,
managing, repairing, developing, investing in and divesting of "Business Park"
(as hereinafter defined) properties, and engaging in all activities incidental
to such primary activities, including, without limitation, the location,
identification, development and negotiation of new "Business Park" opportunities
throughout the entire United States and its territories (the "Competing
Business").
F. In order to induce Acquiport to enter into the Contribution Agreement
and consummate the Transactions, and in consideration therefor, PSA has agreed
to refrain from competing with AOPP, the OP, PSBP and any Resulting Entity on
and subject to the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. In this Agreement, the following terms shall have the
-----------
following meanings:
1.1 "Business Park" shall mean a commercial real property in which
the majority of the occupied rentable square footage (a) is occupied by tenants
under leases covering less than 10,000 square feet, and (b) is used for light
manufacturing, warehouse, showroom, R&D, retail or office uses (other than self
storage, strip malls or warehouses used for portable self storage in connection
with PSA's "pick-up and delivery" business).
1.2 "Common Equity Market Capitalization" shall mean the closing
price, for the common stock of AOPP, PSBP or other Resulting Entity on the New
York or American Stock Exchange, as applicable, multiplied by the sum of (a) the
number of issued and outstanding shares of common stock of AOPP, PSBP or other
Resulting Entity on the date of determination, and (b) the number of additional
shares of common stock of AOPP, PSBP or other Resulting Entity which would be
issued if all OP Units were converted to common stock
-2-
of AOPP, PSBP or other Resulting Entity on the date of determination.
1.3 "Competing Business" shall have the meaning set forth in Recital
E, above.
1.4 "Competing Entity" shall mean any person or entity, other than
AOPP, the OP, PSBP or any other Resulting Entity, which is engaged in the
Competing Business anywhere in the United States or any of its territories.
Notwithstanding the foregoing, the term "Competing Entity" shall not include (a)
any entity listed on Exhibit A attached hereto (a "Scheduled Entity") but only
so long as such Scheduled Entity does not (i) acquire, own, operate, lease,
manage, repair, develop or invest in, directly or indirectly, any Business Park
property other than the Business Park properties listed on Exhibit A attached
hereto (a "Scheduled Property"), or (ii) increase the number of rentable square
feet devoted to uses which are included in the definition of Business Park in
any property, including without limitation any Scheduled Property, owned,
operated, leased or managed by such Scheduled Entity; (b) any company the shares
in which are publicly traded and in which PSA, in the aggregate, both directly
and indirectly, owns no more than five percent (5%) of any class of issued and
outstanding shares of stock; (c) any Non-Business Park Entity; or (d) any
property which has been rejected by a majority of the "independent directors""
(as defined in Section 5.2 below) (a "Rejected Property").
1.5 "Non-Business Park Entity" shall mean any entity (a) which does
not own, operate, lease, manage, repair or invest in, directly or indirectly,
any property in which fifty percent (50%) or more of the rentable square footage
therein is devoted to uses which are included in the definition of Business
Park, or (b) with twenty percent (20%) or less of its properties' rentable
square footage devoted to uses which are included in the definition of Business
Park.
1.6 "Scheduled Entity/Property" shall mean any project or entity
listed or described in Schedule A, attached hereto.
2. Non-Competition. PSA hereby covenants and agrees that it shall not
---------------
directly or indirectly, as an owner, employee, officer, director, shareholder,
partner, member, manager, investor, consultant, agent, advisor or any other
capacity whatsoever, (a) engage in the Competing Business; or (b) own any
interest in any Competing Entity; provided, however, that this Section 2 shall
not preclude investment in
-3-
or ownership of a Scheduled Entity or Scheduled Property so long as such
Scheduled Entity or Scheduled Property continues to qualify for exclusion from
the definition of Competing Entity.
3. Non-Disclosure.
--------------
3.1 PSA agrees, and agrees to use reasonable efforts to cause its
officers and executive directors, not to divulge, communicate, use to the
detriment of AOPP, the OP, PSBP or any Resulting Entity, or for the benefit of
any Competing Entity, Scheduled Entity, Scheduled Property or Non-Business Park
Entity, any of AOPP's, the OP's, PSBP's or any Resulting Entity's confidential
information, data or trade secrets, including, without limitation, financial or
technical data, personnel information or property information. PSA acknowledges
and agrees, on behalf of itself and its officers and executive directors, that
any such information or data that it or any of its officers or executive
directors may hereafter acquire was or will be received as a fiduciary of AOPP,
the OP, PSBP and any Resulting Entity and that PSA shall keep, and agrees to use
reasonable efforts to cause its officers and executive directors to keep, all
such information and data confidential. PSA shall keep, and agrees to use
reasonable efforts to cause its officers and executive directors to keep, its
knowledge and information of and related to any Competing Business opportunities
confidential and agrees, and agrees to use reasonable efforts to cause its
officers and executive directors, not to divulge, communicate, use to the
detriment of AOPP, the OP, PSBP or any other Resulting Entity, or for the
benefit of any Competing Entity, Scheduled Entity, Scheduled Property or Non-
Business Park Entity, any such knowledge or information. The foregoing
restrictions shall not apply to any property after it has become a Rejected
Property.
3.2 PSA agrees to direct and use reasonable efforts to cause its non-
executive directors and its agents, shareholders, employees and affiliates to
(a) not divulge, communicate, use to the detriment of AOPP, the OP, PSBP or any
Resulting Entity, or for the benefit of any Competing Entity, Scheduled Entity,
Scheduled Property or Non-Business Park Entity, any of AOPP's, the OP's, PSBP's
or any Resulting Entity's confidential information, data or trade secrets,
including, without limitation, financial or technical data, personnel
information or property information; (b) keep all such information and data
confidential; (c) keep their knowledge and information of and related to any
Competing Business opportunities confidential; and (d) not divulge,
-4-
communicate, use to the detriment of AOPP, the OP, PSBP or any other Resulting
Entity, or for the benefit of any Competing Entity, Scheduled Entity, Scheduled
Property or Non-Business Park Entity, any such knowledge or information. The
foregoing restrictions shall not apply to any property after it has become a
Rejected Property.
4. Term of Agreement. This Agreement shall commence on the Closing.
-----------------
This Agreement shall terminate on the first to occur of: (a) the Unwind Date;
(b) three (3) years from the date a Listing is accomplished; (c) Acquiport's
Fully Diluted ownership interest in AOPP, PSBP or other Resulting Entity and the
OP falls below 7.5% (excluding, for this purpose, any "Shares" which have been
issued pursuant to an "Equity for Property Exchange" or a "Shareholder Approval
Issuance" unless and until Acquiport has been provided the opportunity to
acquire AOPP Shares pursuant to a "Cash Offering" on account thereof pursuant to
Section 4(c) of the Agreement Among Shareholders and Company, as such terms used
in this parenthetical are defined in the Agreement Among Shareholders and
Company); (d) PSA's Fully Diluted ownership interest in AOPP, PSPB or other
Resulting Entity and the OP falls below 7.5%; or (f) the Common Equity Market
Capitalization of AOPP, PSBP or other Resulting Entity and the OP exceeds $1
billion.
5. Consent by Board.
----------------
5.1 Prior to Listing. Prior to a Listing being accomplished, none of
----------------
the provisions or restrictions contained in this Agreement may be waived or
modified by any party hereto without the written consent of Acquiport, which
consent may be given or withheld in Acquiport's sole and absolute discretion.
5.2 Following Listing. After a Listing has been accomplished, the
-----------------
independent directors of AOPP, PSBP or other Resulting Entity (with any director
affiliated with Acquiport or who Acquiport has the right to require PSA to vote
for pursuant to the Agreement Among Shareholders and Company being deemed an
independent director for this purpose if the authorized number of directors of
AOPP, PSBP or other Resulting Entity ever exceeds seven (7)) shall have the
right, by majority vote of such independent directors only, in their sole and
absolute discretion, to (a) waive or modify the provisions and restrictions
contained in this Agreement, or (b) refuse to waive or modify the provisions and
restrictions contained in this Agreement. The vote of the independent directors
shall be on a transaction-by-transaction basis.
-5-
6. Equitable Remedies. PSA agrees that the other parties hereto will be
------------------
irreparably injured by any breach or default of the terms of this Agreement, and
that the damages caused by any such breach or default cannot be adequately
remedied by monetary damages. Therefore, without limitation of any other rights
or remedies that any party may have at law or equity, AOPP, the OP, PSBP, any
Resulting Entity and Acquiport shall each be entitled to specifically enforce
the provisions of this Agreement by injunction, specific performance or other
equitable remedies.
7. General.
-------
7.1 Notices. Any notice, consent or approval required or permitted
-------
to be given under this Agreement shall be in writing and shall be deemed to have
been given (a) upon hand delivery to the recipient; (b) by facsimile
transmission, upon receipt by the sender of confirmation of such transmission,
(c) one (1) business day after being deposited with Federal Express or another
reliable overnight courier service for next day delivery; or (d) if deposited in
the United States mail, registered or certified mail, postage prepaid, return
receipt required, on the date of receipt or refusal to accept delivery; and
addressed or telecopied as follows:
If to AOPP or the OP: American Office Park Properties, Inc.
-------------------- 000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxx, Xx.
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
--------------
Xxxx and Xxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to Acquiport: Office of the State Comptroller
--------------- 000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Chief Real Estate Investment
Officer - Equity Program
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
-6-
With a copy to:
--------------
Office of the State Comptroller
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxxxx Xxxxx, Esq.
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
and a copy to:
-------------
Xxx, Castle & Xxxxxxxxx LLP
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxx X. Xxxxx, Esq.
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
And a copy to:
-------------
Heitman Capital Management Corporation
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxx, Esq.
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
If to PSA: Public Storage, Inc.
--------- 000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
--------------
Xxxx and Xxxx LLP
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
or such other address or telephone number as any party may from time to time
specify in writing to the others; provided, however, that the foregoing
addresses and numbers shall remain
-7-
in effect unless and until notice of and change is deemed to have been given in
the manner required by this Section.
7.2 Execution of Documents by Acquiport. Acquiport has informed the
-----------------------------------
other parties hereto, and the other parties hereto understand and agree, that
for administrative reasons Acquiport requires up to five (5) business days to
execute any document and an additional one (1) business day to deliver such
document. Therefore, all documents to be executed by Acquiport shall be agreed
to and prepared in final execution form and received by Acquiport for execution
not less than six (6) business days prior to the scheduled delivery date.
7.3 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their successors and assigns.
7.4 Amendments. This Agreement may be amended or modified only by a
----------
written instrument executed and delivered by the parties hereto.
7.5 Governing Law. Notwithstanding that California law, with respect to
-------------
choice of law, or the Constitution, laws or treaties of the United States of
America, may dictate that this Agreement should be governed by or construed in
accordance with the laws of another jurisdiction, this Agreement, and all
documents and instruments executed and delivered in connection herewith, shall
be governed by and construed in accordance with the laws of the State of
California.
7.6 Enforcement. If any party hereto institutes any action or
-----------
proceeding to interpret or enforce any provision of this Agreement or for an
alleged breach of any provision of this Agreement, the prevailing party shall be
entitled to recover its reasonable attorneys' fees and all fees, costs and
expenses incurred in connection with such action or proceeding. Such reasonable
attorneys' fees, fees, costs and expenses shall include post judgment reasonable
attorneys' fees, fees, costs and expenses incurred on appeal or in collection of
any judgment. This provision is separate and several and shall survive the
merger of this provision into any judgment on this Agreement. No person or
entity other than the parties hereto is or shall be entitled to bring any action
to enforce any provision of this Agreement against any of the parties hereto,
and the covenants and agreements set forth in this Agreement shall be solely for
the benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns as permitted hereunder.
-8-
7.7 Jurisdiction and Venue. Any action initiated by any party under
----------------------
this Agreement shall be brought and prosecuted in the United States District
Court for the Central District of California which the parties acknowledge and
agree is a convenient forum in which to litigate such action, and the parties
waive any right to commence or transfer such action in or to any other court.
Should said District Court find that it has no jurisdiction over such action,
then such action shall be brought and prosecuted in the Superior Court of the
County of Los Angeles, State of California. Each party hereto expressly
consents and submits to personal jurisdiction in the federal or state courts, as
the case may be, in the State of California, County of Los Angeles and to
permanent and exclusive venue in Los Angeles County, State of California. In
addition, in any action under this Agreement, each party hereto expressly
consents to service of process by any manner set forth in this Agreement for the
giving of notice.
7.8 Time of the Essence. Time is of the essence of this Agreement.
-------------------
7.9 Severability. If any provision of this Agreement, or the application
------------
thereof to any person, place, or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the remainder of
this Agreement and such provisions as applied to other persons, places and
circumstances shall remain in full force and effect.
7.10 Exhibits. All exhibits attached hereto are incorporated herein as
--------
though fully set forth herein.
7.11 Further Assurances. Each party agrees to cooperate fully with the
------------------
other parties and to prepare, execute, and deliver such further instruments of
conveyance, contribution, assignment, or transfer and shall take or cause to be
taken such other or further action as either party shall reasonably request at
any time or from time to time in order to consummate the terms and provisions
and to carry into effect the intents and purposes of this Agreement.
7.12 Counterparts. To facilitate execution, this Agreement may be
------------
executed in as many counterparts as may be required. It shall not be necessary
that the signatures of, or on behalf of, each party, or that the signatures of
all persons required to bind any party, appear on each counterpart, but it shall
be sufficient that the signature of, or on behalf of, each party, appear on one
or more of the counterparts. All counterparts shall collectively constitute
-9-
a single agreement. It shall not be necessary in making proof of this Agreement
to produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereof.
7.13 No Waiver. No delay or failure on the part of any party hereto in
---------
exercising any right, power or privilege under this Agreement or under any other
instrument or document given in connection with or pursuant to this Agreement
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of such
right, power or privilege. No waiver shall be valid against any party hereto
unless made in writing and signed by the party against whom enforcement of such
waiver is sought and then only to the extent expressly specified herein.
7.14 Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement regarding the subject matter hereof. There
are no covenants, agreements, promises, warranties or understandings other than
those set forth or referred to herein, with respect to such subject matter.
This Agreement, together with its exhibits and the other documents and
agreements referred to herein, supersede all prior agreements and understandings
between the parties with respect to the subject matter hereof and thereof. This
Agreement shall not be modified or amended except in a written document signed
by the parties hereto.
7.15 Legal Representation and Construction. Each party hereto has been
-------------------------------------
represented by legal counsel in connection with the negotiation and drafting of
this Agreement. The parties acknowledge that each party and its counsel have
reviewed and revised this Agreement, and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement.
-10-
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be duly executed and delivered on its behalf as of the date first above
written.
ACQUIPORT TWO CORPORATION, a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx
______________________________
Xxxxxx X. Xxxxxxx Vice President
______________________________
(Print Name and Title)
ACQUIPORT THREE CORPORATION, a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx
______________________________
Xxxxxx X. Xxxxxxx Vice President
______________________________
(Print Name and Title)
[Signatures Continued On Next Page]
-11-
[Signatures Continued From Previous Page]
AMERICAN OFFICE PARK PROPERTIES, INC., a California
corporation
By: /s/ Xxxxxx X. Xxxxxx, Xx.
___________________________________
Xxxxxx X. Xxxxxx, Xx., President
and Chief Executive Officer
AMERICAN OFFICE PARK PROPERTIES, L.P., a California
limited partnership
By: AMERICAN OFFICE PARK PROPERTIES, INC., a California
corporation, sole general partner
By: /s/ Xxxxxx X. Xxxxxx, Xx.
______________________________
Xxxxxx X. Xxxxxx, Xx.,
President and Chief
Executive Officer
PUBLIC STORAGE, INC., a California corporation
By: /s/ Xxxxx Xxxxxxxx
________________________________
Xxxxx Xxxxxxxx, Sr. V.P.
________________________________
(Print Name and Title)
-12-
