Exhibit 10.8
CONTRIBUTION AGREEMENT
By and Among
THE TIMES MIRROR COMPANY
and
TMCT 11, LLC
and
CHELSEA GCA REALTY PARTNERSHIP, L.P.
and
CHELSEA GCA REALTY, INC.
Dated: As of September 3, 1999
CONTRIBUTION AGREEMENT
Contribution Agreement (this "AGREEMENT") made as of the 3rd day of
September, 1999 (the "AGREEMENT DATE"), by and among The Times Mirror Company, a
Delaware corporation (the "CONTRIBUTOR 9'), TMCT II, LLC, a Delaware limited
liability company ("LLC"), Chelsea GCA Realty Partnership, L.P., a Delaware
limited partnership (the "OPERATING PARTNERSHIP") and Chelsea GCA Realty, Inc.,
a Maryland corporation (the "COMPANY").
WITNESSETH:
WHEREAS, Contributor desires to contribute to Operating Partnership
cash in return for Preferred Units in Operating Partnership on the terms and
conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
"AFFILIATE" means with respect to any Person, any other Person
controlled by, controlling or under common control with such Person. For
purposes hereof, "control" shall include the power to direct the actions of a
Person, regardless of whether the same shall involve an ownership interest in
such Person.
"AGREEMENT" has the meaning set forth in the initial paragraph hereof.
"AGREEMENT DATE" has the meaning set forth in the initial paragraph
hereof.
"AGREEMENT OF LIMITED PARTNERSHIP" means the Agreement of Limited
Partnership of Operating Partnership, dated as of October 14, 1993, in the form
attached hereto as EXHIBIT A-1, as amended by Amendment No. 1, dated as of March
31, 1997, in the form attached hereto as EXHIBIT A-2, Amendment No. 2, dated as
of October 7, 1997, in the form attached hereto as EXHIBIT A-3, Amendment No. 3,
dated as of the date hereof, in the form attached hereto as EXHIBIT A-4, and as
further amended from time to time after the date hereof.
"ARTICLES SUPPLEMENTARY" means the Articles Supplementary of the
Company governing the Preferred Shares, substantially in the form attached
hereto as EXHIBIT B.
"BENEFIT PLAN" has the meaning set forth in PARAGRAPH 7(f).
"BROKER" has the meaning set forth in PARAGRAPH 10.
"BYLAWS" means the Bylaws of the Company, as amended from time to
time.
"CHARTER" means the Articles of Incorporation of the Company, as
amended and restated from time to time, including as supplemented by the
Articles Supplementary.
"CLOSING." has the meaning set forth in PARAGRAPH 6(a).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" has the meaning set forth in PARAGRAPH 4(f)(i).
"COMPANY" has the meaning set forth in the initial paragraph hereof
"CONTRIBUTION AMOUNT" means $65,000,000.
"CONTRIBUTOR" has the meaning set forth in the initial paragraph
hereof.
"CONTRIBUTOR'S AND LLC'S CLOSING DOCUMENTS" has the meaning set forth
in PARAGRAPH 6(c).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE DATE" means, with respect to any Preferred Unit, the date on
which the exchange of such Preferred Unit for a Preferred Share shall occur in
accordance with the Agreement of Limited Partnership.
"FORM 10-K" has the meaning set forth in PARAGRAPH 4(f)(i).
"FORM 10-Q" has the meaning set forth in PARAGRAPH 4(f)(ii).
"GAAP" means generally accepted accounting principles consistently
applied.
"GOVERNING DOCUMENTS" means, with respect to (i) a limited
partnership, such limited partnership's certificate of limited partnership and
the agreement of limited partnership, and any amendments or modifications of any
of the foregoing; (ii) a corporation, such corporation's articles or certificate
of incorporation, by-laws and any applicable authorizing resolutions, and any
amendments or modifications of any of the foregoing; (iii) a limited liability
company, such limited liability company's articles or certificate of
organization, by-laws and operating agreement or agreement of limited liability
company, and any amendments or modifications of any of the foregoing; and (iv) a
trust, such trust's declaration of trust and bylaws and any amendments or
modifications of any of the foregoing.
"I.R.S." means the United States Internal Revenue Service.
"LLC" has the meaning set forth in the initial paragraph hereof.
"OPERATING PARTNERSHIP" has the meaning set forth in the initial
paragraph hereof.
"OPERATING PARTNERSHIP'S CLOSING DOCUMENTS" has the meaning set forth
in PARAGRAPH 6(b).
"OWNERSHIP LIMIT" has the meaning set forth in PARAGRAPH 4(l).
"PARITY PREFERRED SHARES" has the meaning ascribed to such term in the
Articles Supplementary.
"PARTNER" has the meaning ascribed to such term in the Agreement of
Limited Partnership.
"PERSON" means a natural person, partnership (whether general or
limited), trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or representative capacity.
"PREFERRED DIVIDEND DEFAULT" has the meaning set forth in the Articles
Supplementary.
"PREFERRED UNITS" means the 9.00% Series B Cumulative Redeemable
Preferred Units as such term is defined in the Agreement of Limited Partnership.
"PREFERRED SHARES" means the 9.00% Series B Cumulative Redeemable
Preferred Stock of the Company more fully described in the Articles
Supplementary.
"PTP" means a "publicly traded partnership" within the meaning of
Section 7704 of the Code.
"REGISTRATION RIGHTS AGREEMENT" has the meaning set forth in PARAGRAPH
6(b)(iv) hereof.
"REIT" has the meaning set forth in PARAGRAPH 8(g) hereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SEC REPORTS" has the meaning set forth in Paragraph 8(o) hereof.
"SUBSIDIARY" means with respect to any Person, any corporation,
partnership, limited liability company, joint venture or other entity (a) of
which a majority of (i) voting power of the voting equity securities or (ii) the
outstanding equity interests, is owned, directly or indirectly, by such Person,
or (b) of which such Person is a general partner or managing member.
"US$" means United States dollars, lawful money of the United States
of America.
2. CONTRIBUTION OF CASH. Subject to the terms and provisions of this
Agreement, Contributor hereby agrees to contribute to Operating Partnership the
Contribution Amount on the date of the Closing in consideration for 1,300,000
Preferred Units in Operating Partnership to be issued to the LLC, unless, prior
to the Closing, Contributor designates otherwise. Subject to the terms and
provisions of this Agreement, Operating Partnership hereby agrees to accept the
Contribution Amount and to issue to LLC (or such other party as Contributor may
designate prior to the Closing) Preferred Units in exchange therefor on the date
of the Closing.
3. CONDITIONS TO CLOSING.
(a) CONDITIONS TO OPERATING PARTNERSHIP'S AND COMPANY'S OBLIGATIONS.
Operating Partnership's and Company's obligations under this Agreement to accept
the Contribution Amount, provide Contributor with Preferred Units and otherwise
consummate the transactions contemplated herein are subject to the satisfaction
(or waiver in writing by Operating Partnership and the Company) of the following
conditions on or before the Closing:
(i) NO INJUNCTION. No temporary restraining order or preliminary or
permanent injunction of any court or administrative agency of
competent jurisdiction prohibiting the consummation of the
transactions contemplated herein shall be in effect.
(ii) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Contributor and LLC contained in this Agreement
shall be true and correct in all material respects on the date of
the Closing with the same effect as though made on the date of
the Closing.
(iii) PERFORMANCE OF AGREEMENT. The Contributor and LLC shall have
performed, in all material respects, all of its respective
covenants, agreements and obligations required by this Agreement
to be performed or complied with by it prior to or at the
Closing, including, without limitation, delivery of the
Contribution Amount.
(iv) DELIVERY OF CLOSING DOCUMENTS. Operating Partnership and Company
shall have received the Contributor's and LLC's Closing
Documents.
In the event that for any reason any of the conditions set forth in
this PARAGRAPH 3(a) or elsewhere in this Agreement are not satisfied or waived
by Operating Partnership and Company at or prior to the Closing, at Operating
Partnership's or Company's option, this Agreement shall be terminated and
Operating Partnership, Company, LLC and Contributor shall be released from their
obligations under this Agreement and none of Operating Partnership, Company, LLC
or Contributor shall have any further liability hereunder.
(b) CONDITIONS TO CONTRIBUTOR'S AND LLC'S OBLIGATIONS. Contributor's
obligations under this Agreement to deliver the Contribution Amount and
otherwise consummate the transactions contemplated herein are subject to the
satisfaction (or waiver in writing by Contributor) of the following conditions
on or before the Closing:
(i) NO INJUNCTION. No temporary restraining order or preliminary or
permanent injunction of any court or administrative agency of
competent jurisdiction prohibiting the consummation of the
transactions contemplated herein shall be in effect.
(ii) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Operating Partnership and Company contained in
this Agreement shall be true and correct in all material respects
on the date of the Closing with the same effect as though made on
the date of the Closing.
(iii) PERFORMANCE OF AGREEMENT. Operating Partnership and Company
shall have performed, in all material respects, all of their
respective covenants, agreements and obligations required by this
Agreement to be performed or complied with by each of them prior
to or at the Closing.
(iv) DELIVERY OF CLOSING DOCUMENTS. Contributor and LLC shall have
received the Operating Partnership's Closing Documents.
(v) FUNDING OF LLC EXCHANGE FUND. The LLC Exchange Fund shall have
been funded by its members prior to or at the Closing.
In the event that for any reason any of the conditions set forth in
this PARAGRAPH 3(b) or elsewhere in this Agreement are not satisfied or waived
by Contributor and LLC at or prior to the Closing, at Contributor's option, this
Agreement shall be terminated and Contributor, LLC, Operating Partnership and
Company shall be released from their obligations under this Agreement and none
of Contributor, LLC, Operating Partnership or Company shall have any further
liability hereunder.
4. COVENANTS. The covenants set forth in this PARAGRAPH 4 shall
survive the Closing.
(a) On the Exchange Date, Company shall issue Preferred Shares in
Company in a number equal to the number of Preferred Shares into which the
Preferred Units are exchangeable pursuant to the terms of the Agreement of
Limited Partnership. Upon consummation of such exchange in accordance with the
terms of the Agreement of Limited Partnership, and issuance in accordance with
the Charter, the Preferred Shares shall be validly issued, fully paid and
non-assessable pursuant to the Articles Supplementary.
(b) Operating Partnership covenants to notify holders of Preferred
Units promptly in the event Company or any Subsidiary of Company anticipates or
realizes either that (i) on or prior to the second anniversary of the Closing,
the fair market value of its assets determined in accordance with Code ss.
856(c)(5)(A), constituting "stock and securities" within the meaning of Section
351(e)(1) of the Code will equal 10% or more of the value of the Operating
Partnership's total assets; (ii) on or prior to the second anniversary of the
Closing, there is a material increase in such percentage of Operating
Partnership's assets constituting "stock and securities" if immediately
preceding such material increase the percentage of Operating Partnership's
assets constituting "stock and securities" within the meaning of SECTION 351
(E)(1) of the code equaled 10% or more of the operating partnership's total
assets; (iii) the Preferred Units will represent more than 18% of the total
capital interest in the Operating Partnership; or (iv) the interest of the
Preferred Units in profits will represent more than 18% of the profits of the
Operating Partnership.
(c) Company agrees that it will notify holders of Preferred Units
promptly in the event it becomes aware of any facts that will or likely will
cause Operating Partnership to become a PTP.
(d) Through December 31, 2000, Operating Partnership: (i) shall take
all actions reasonably available to it under the Agreement of Limited
Partnership as presently in effect to avoid treatment as a PTP; and (ii) shall
not issue, or enter into binding agreements to issue, any Operating Partnership
units to the extent such issuance would cause it to fail to satisfy the private
placement safe harbor of Treasury Regulation Section 1.7704-1(h) immediately
after such issuance (taking into account any person treated as a partner under
Treasury Regulation Section 1.7704-1(h)(3) and substituting "80" for "100").
(e) For each taxable year, Company will promptly provide notice to the
holders of the Preferred Units in the event Company or any Subsidiary of Company
anticipates or realizes that less than 90% of the gross income of Operating
Partnership for such taxable year will or likely will constitute "qualifying
income" within the meaning of Section 7704(d) of the Code.
(f) Operating Partnership covenants that it shall deliver to holders
of Preferred Units the following:
(i) as soon as available, but in no event later than five business
days following the date on which Company files its annual report
in respect of a fiscal year on Form 10-K, or such other
applicable FORM ("FORM 10-K"), with the Securities and Exchange
Commission (the "COMMISSION") (or, in the event that Operating
Partnership is required under rules and regulations promulgated
by the Commission to file with the Commission a Form 10-K
separate from Company's Form 1O-K, five business days after the
filing of such report by Operating Partnership with the
Commission), a complete copy of Operating Partnership's audited
financial statements for such fiscal year, including a balance
sheet, income statement and cash flow statement for such fiscal
year prepared and audited by an independent certified public
accountant in accordance with GAAP;
(ii) as soon as available, but in no event later than five business
days following the date on which Company files its quarterly
report in respect of a fiscal quarter on Form 1O-Q, or such other
applicable FORM ("FORM 1O-Q"), with the Commission (or, in the
event the Operating Partnership is required under rules and
regulations promulgated by the Commission to file with the
Commission a Form 1O-Q separate from Company's Form 1O-Q, five
business days after the filing of such report by Operating
Partnership with the Commission), a complete copy of Operating
Partnership's unaudited quarterly financial statements for such
fiscal quarter including a balance sheet, income statement and
cash flow statement for such fiscal quarter prepared in
accordance with GAAP; and
(iii) on a quarterly basis, (as soon as possible, but in no event
later than sixty (60) days following the end of each fiscal
quarter of Operating Partnership and one hundred fifteen (115)
days following the end of each fiscal year of Operating
Partnership) a reasonable good faith written estimate of,
together with reasonable supporting information of, (1) the
percentage of the Operating Partnership's capital interest
represented by the Preferred Units, (2) the percentage of the
Operating Partnership's total profits represented by the interest
of the Preferred Units in profits, (3) the percentage of the
value of the Operating Partnership's assets which consist of
"stock or securities" within the meaning of Section 351(e)(1)
of the Code (provided that the Operating Partnership shall not be
required to deliver the information required by this subparagraph
4(f)(iii)(3) after the second anniversary of the Closing), and
(4) the percentage of gross income of the Operating Partnership
represented by "qualifying income" within the meaning of Section
7704(d) of the Code.
(g) Provided that all other conditions to Operating Partnership's and
Company's obligations set forth in this Agreement have been satisfied or
properly waived, Operating Partnership covenants that
(i) it shall record LLC (or such other party as Contributor may
designate prior to the Closing) as the holder of the Preferred
Units on its books and records and shall admit such record holder
as a limited partner to Operating Partnership on the Closing
Date; and
(ii) if the Preferred Units were not issued originally to LLC, it
shall permit, and the General Partner of the Operating
Partnership hereby approves, the transfer of the Preferred Units
to the LLC, in accordance with the Agreement of Limited
Partnership, and, upon such transfer, shall record the LLC as the
holder of the Preferred Units on its books and records and shall
admit the LLC as a limited partner to Operating Partnership,
provided that the LLC makes the representations and warranties
set forth in PARAGRAPHS 7(c), 7(d), 7(e), 7(f), 7(g), 7(h), 7(i),
7(j), 7(k) AND 7(l) hereof with respect to its acquisition of the
Preferred Units.
(h) Operating Partnership shall not issue any Preferred Units to any
Person other than Contributor or LLC, and Company shall not issue any Preferred
Shares to any Person other than a holder of Preferred Units upon exchange of
such Preferred Units.
(i) Upon request of Contributor, LLC or any of their respective
permitted transferees, each of the Operating Partnership and the Company agrees,
upon the reasonable request of Contributor or LLC made not more than twice in
any 12-month period, to deliver a certificate to Contributor, LLC or any of
their respective permittted transferees bringing down the representations and
warranties made by the Operating Partnership and the Company in PARAGRAPHS 8(d),
8(e), 8(f), 8(g) and 8(n) hereof, as to a date or dates requested by
Contributor, LLC or any of their respective permitted transferees if and to the
extent, after due inquiry, the Operating Partnership and the Company can make
such representations and warranties as of such date or dates.
(j) Operating Partnership will treat the Preferred Units as equity for
U.S. federal income tax purposes, unless and until such treatment is challenged
by the I.R.S. and a final determination within the meaning of Section 1313(a) of
the Code requires otherwise.
(k) After any exchange of Series B Preferred Units pursuant to Section
7 of Attachment 1 to the Third Amendment of the Agreement of Limited
Partnership, the Company shall at all times ensure that the number of members of
the Company's Board of Directors permitted pursuant to the Charter, the Bylaws
and the Maryland Corporations Code, as amended, is sufficient to allow the Board
of Directors to increase by two the number of members of the Board of Directors,
without stockholder approval, in order to permit the holders of Preferred Shares
(and shares on parity therewith) to elect two additional directors upon the
occurrence of a Preferred Dividend Default in accordance with the provisions of
the Articles Supplementary.
(1) The Company shall not modify, rescind or revoke the waiver by the
Board of Directors of the "OWNERSHIP LIMIT" (set forth in Article Third, Section
7 of the Articles Supplementary) pursuant to resolutions of the Board of
Directors dated August 31, 1999, with respect to the Contributor's or LLC's
ownership of the Preferred Shares. The Company agrees not to withhold a
corresponding waiver of such Ownership Limit in favor of any transferee of
Contributor or LLC (or any subsequent transferee) if such transferee provides to
the Company representations to the effect of Sections 7(k) and 7(l) hereof. The
Company further agrees not to withhold such corresponding waiver of such
Ownership Limit in favor of any transferee of Contributor or LLC (or subsequent
transferee) if such transferee provides to the Company reasonable
representations and undertakings, which in the sole discretion of the Company,
are appropriate to establish that the ownership by such transferee will not
adversely affect the Company's status as a REIT.
(m) The Company and Operating Partnership agree that in the event the
Company amends its Charter so as to increase the number of shares of preferred
stock that the Company is authorized to issue, the Company shall, upon the
written request of the holders of a majority in interest of the Preferred Units
and the Preferred Shares (counted together as a single class for the purposes of
this paragraph), take such actions as are reasonably necessary (i) to reduce the
$50 per Preferred Unit and $50 per Preferred Share liquidation preference to $25
per Preferred Unit and $25 per Preferred Share, (ii) to provide an appropriate
and proportional increase in the number of Preferred Units and Preferred Shares
issued and outstanding and (iii) to take all other steps reasonably necessary or
appropriate to give effect to the foregoing adjustment and to preserve the
economic value of the Preferred Units and the Preferred Shares.
5. TRANSACTION COSTS. Except as otherwise specifically set forth
herein, each of the parties hereto shall bear its own costs and expenses with
respect to the transaction contemplated hereby.
6. CLOSING.
(a) The closing of the transactions contemplated by this Agreement
shall be consummated on September 3, 1999 or on such other date as the parties
may mutually agree (the "CLOSING").
(b) At the Closing, Operating Partnership and Company shall deliver to
Contributor and LLC the following documents and the following other items (the
documents and other items described in this PARAGRAPH 6(b) being collectively
referred to herein as the "OPERATING PARTNERSHIP'S CLOSING DOCUMENTS"):
(i) This Agreement duly executed and delivered by Operating
Partnership and Company;
(ii) The Third Amendment to the Agreement of Limited Partnership, in
the form attached hereto as EXHIBIT A-4, duly executed and
delivered by all Persons necessary to make such amendment binding
on and enforceable against all Partners in Operating Partnership;
(iii) The Articles Supplementary of the Company, in the form set forth
on EXHIBIT B, duly approved, executed and delivered by the
Company in a form suitable for filing in the State Department of
Assessments and Taxation of Maryland, which filing shall occur no
later than September 7, 1999;
(iv) The Registration Rights Agreement, substantially in the form set
forth on EXHIBIT C, duly executed and delivered by Company;
(v) A Certificate of the Secretary of Company substantially in the
form set forth on EXHIBIT D, together with completed exhibits
attached thereto, executed by the secretary of the Company and
dated as of the date of the Closing;
(vi) Cross-Receipts, substantially in the form set forth on EXHIBIT E;
(vii) An opinion Of counsel to Company and Operating Partnership
substantially in the form set forth on EXHIBIT F;
(viii) Those other closing documents required to be executed by either
Operating Partnership or Company or as may be otherwise necessary
or appropriate to consummate the transactions contemplated
hereby.
(c) At the Closing, Contributor and LLC shall deliver to Operating
Partnership and Company the following documents and the following other items
(the documents and other items described in this PARAGRAPH 6(C) being
collectively referred to herein as the "CONTRIBUTOR'S AND LLC'S CLOSING
DOCUMENTS"):
(i) Counterparts of documents listed in PARAGRAPH 6(B)(i), (ii),
(iv), and (vi), duly executed and delivered by Contributor and
LLC; and
(ii) Those other closing documents required to be executed by it or as
may be otherwise necessary or appropriate to consummate the
transactions contemplated hereby.
7. REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR AND LLC. EACH of
Contributor and LLC makes the following representations and warranties as to
itself to Operating Partnership and Company, all of which (except as otherwise
designated) are true and correct in all material respects on the Agreement Date
and shall be true and correct in all material respects as of the date of the
Closing:
(a) It is duly organized and validly existing under the laws of the
state of its organization and has been duly authorized by all necessary and
appropriate action to enter into this Agreement and to consummate the
transactions contemplated herein. The individuals executing this Agreement on
its behalf have been duly authorized by all necessary and appropriate action on
its behalf. This Agreement is its valid and binding obligation, enforceable
against it in accordance with its terms, except insofar as enforceability may be
affected by bankruptcy, insolvency or similar laws affecting creditor's rights
generally and the availability of any particular equitable remedy.
(b) Neither the execution nor the delivery of this Agreement nor the
consummation of the transactions contemplated hereby nor fulfillment of or
compliance with the terms and conditions hereof (a) conflict with or will result
in a breach of any of the terms, conditions or provisions of (i) its Governing
Documents or (ii) any agreement, order, judgment, decree, arbitration award,
statute, regulation or instrument to which it is a party or by which it or its
assets are bound, or (b) constitutes or will constitute a breach, violation or
default under any of the foregoing. No consent or approval, authorization,
order, regulation or qualification of any governmental entity or any other
Person is required for its execution and delivery of this Agreement and its
consummation of the transactions contemplated hereby.
(c) It acknowledges that the Preferred Units have not been and will
not be registered or qualified under the Securities Act or any state securities
laws and are offered in reliance upon an exemption from registration under the
Securities Act and similar state law exemptions. The Preferred Units to be
received by LLC (or Contributor's alternate designee), and any Preferred Shares
acquired in exchange therefor shall be held by LLC (or Contributor's alternate
designee) for investment purposes only for its own account, and not with a view
to or for sale in connection with any distribution of the Preferred Units or
such Preferred Shares in violation of the Securities Act, and it acknowledges
that the Preferred Units and Preferred Shares cannot be sold or otherwise
disposed of by the holders thereof unless they are subsequently registered under
the Securities Act or pursuant to an exemption therefrom; and the Preferred
Units may not be sold, assigned or otherwise transferred except in compliance
with the Agreement of Limited Partnership. It hereby acknowledges receipt of a
copy of the Agreement of Limited Partnership, as amended to the date hereof, and
represents that it has reviewed same and understands the provisions thereof
which have a bearing on the representations made in this PARAGRAPH 7(c).
(d) It has no contract, understanding, agreement or arrangement with
any Person or entity to sell, transfer or grant a participation to such Person
or entity or any other Person or entity, with respect to any or all of the
Preferred Units it may receive in accordance with the provisions hereof or any
Preferred Shares to be acquired in exchange therefor, other than the transfer of
Preferred Units to LLC if the Preferred Units are not originally issued to LLC.
(e) It is an "accredited investor" within the meaning of Regulation D
under the Securities Act and has knowledge and experience in financial and
business matters such that it is capable of evaluating the merits and risks of
receiving and owning the Preferred Units, and it is able to bear the economic
risk of such ownership and understands that an investment in Preferred Units
involves substantial risks.
(f) No part of the funds to be used by Contributor to purchase the
Preferred Units constitutes "plan assets", as defined in Department of Labor
Regulation Section 2510.3-101 (29 C.F.R. 2510.3-101), of any "employee benefit
plan", as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") or individual retirement account or plan which is
subject to Section 4975 of the Code (collectively, a "BENEFIT PLAN"') or of any
account or entity whose underlying assets constitute "plan assets" of a Benefit
Plan by reason of the Benefit Plan's investment in the account or entity.
(g) In making this investment, it is relying upon the advice of its
own personal, legal and tax advisors with respect to the tax and other aspects
of an investment in Operating Partnership.
(h) There has been made available to it and its advisors the
opportunity to ask questions of, and receive answers from, Operating Partnership
and Company concerning the terms and conditions of the investment in the
Preferred Units, and to obtain Company's SEC Reports on Form 1O-K for the year
ended December 31, 1998 and on Form 1O-Q for the quarters ended March 31, 1999
and June 30, 1999, filed with the Securities and Exchange Commission, the
Agreement of Limited Partnership, and any additional information, to the extent
that any of them possess such information, or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of the
information given to it, or to otherwise make an informed investment decision,
and that it has had an opportunity to consult with counsel and other advisors
about the investment in the Preferred Units, and that all material documents,
records and books pertaining to such investment have, on request, been made
available to it and its advisors. It has reviewed the SEC Reports referenced
above, and any other documents filed by Company since December 31, 1998 in
accordance with the requirements of the Exchange Act of, including any business
plans or strategies of Company or of Operating Partnership set forth therein.
(i) Neither it nor any of its advisors is aware of or has engaged in
any form of general solicitation or advertising with respect to sales of the
Preferred Units, including (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio; and (ii) any seminar or meeting whose attendees were
invited by any general solicitation or general advertising.
(j) A principal purpose of using Contributor or LLC to invest in the
Operating Partnership was not to permit the Operating Partnership to satisfy the
100 partner limitation set forth in Treasury Regulations ss. 1.7704-1(h)(1)(ii).
(k) If the Preferred Shares were issued instead of or in exchange for
the Preferred Units, no "individual" who Beneficially Owns an interest in the
Contributor or LLC would Beneficially Own, by reason of its ownership interest
in the Contributor or LLC or otherwise, more than 7.0% of the value of the
outstanding stock of the Company. For this purpose, "individual" has the meaning
provided in Section 542(a)(2) of the Code as modified by Section 856(h)(3) of
the Code and "Beneficially Owns" means direct, indirect or constructive
ownership through the application of Section 544 of the Code, as modified by
Section 856(h) of the Code.
(1) If the Preferred Shares were issued instead of or in exchange for
the Preferred Units, none of the Contributor, LLC or any Person that
Constructively Owns Preferred Shares would own stock of the Company that would
cause the Company to fail to satisfy any of the gross income requirements of
Section 856 of the Code. For this purpose, "Constructively Owns" means direct,
indirect or constructive ownership through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code.
It hereby expressly permits Stroock & Stroock & Xxxxx LLP, as counsel
to Company and Operating Partnership, to rely upon the representations and
warranties set forth above as if such representations and warranties were made
by it directly to Stroock & Stroock & Xxxxx LLP.
8. REPRESENTATIONS AND WARRANTIES OF OPERATING PARTNERSHIP AND
COMPANY. Operating Partnership and Company make the following representations
and warranties to Contributor and LLC, all of which (except as otherwise
designated) are true and correct in all material respects on the Agreement Date
and shall be true and correct in all material respects as of the date of the
Closing:
(a) Operating Partnership is duly organized and validly existing under
the laws of the state of its organization and is duly registered and qualified
to do business in each jurisdiction where such registration or qualification is
material to the transactions contemplated hereby or to the conduct of its
business and has been duly authorized by all necessary and appropriate action to
enter into this Agreement, the Registration Rights Agreement and the Agreement
of Limited Partnership, to issue, sell and deliver the Preferred Units in
accordance with the Agreement of Limited Partnership and to consummate the
transactions contemplated herein, and the individuals executing this Agreement
on behalf of Operating Partnership have been duly authorized by all necessary
and appropriate action on behalf of Operating Partnership. This Agreement is a
valid and binding obligation of Operating Partnership, enforceable against
Operating Partnership in accordance with its terms, except insofar as
enforceability may be affected by bankruptcy, insolvency or similar laws
affecting creditor's rights generally and the availability of any particular
equitable remedy.
(b) Company is duly organized and validly existing under the laws of
the state of its organization and is duly registered and qualified to do
business in each jurisdiction where such registration or qualification is
material to the transactions contemplated herein or to the conduct of its
business and has been duly authorized by all necessary and appropriate action to
enter into this Agreement, the Agreement of Limited Partnership and the
Registration Rights Agreement, to issue and deliver, upon exchange of the
Preferred Units in accordance with the Agreement of Limited Partnership, the
Preferred Shares and to consummate the transactions contemplated herein, and the
individuals executing this Agreement on behalf of Company have been duly
authorized by all necessary and appropriate action on behalf of Company. This
Agreement is a valid and binding obligation of Company, enforceable against
Company in accordance with its terms, except insofar as enforceability may be
affected by bankruptcy, insolvency or similar laws affecting creditor's rights
generally and the availability of any particular equitable remedy.
Notwithstanding anything to the contrary in this Agreement, Company shall not be
obligated to issue Preferred Shares in violation of the provisions on stock
ownership limitations set forth in the Charter or the Agreement of Limited
Partnership.
(c) Neither the execution nor the delivery of this Agreement nor the
consummation of the transactions contemplated hereby nor fulfillment of or
compliance with the terms and conditions hereof (a) conflict with or will result
in a breach of any of the terms, conditions or provisions of (i) the Governing
Documents of Company or Operating Partnership or any of its general partners or
(ii) any agreement, order, judgment, decree, arbitration award, statute,
regulation or instrument to which Company or Operating Partnership is a party or
by which it or its assets are bound, or (b) constitutes or will constitute a
breach, violation or default under any of the foregoing. The Company and the
Operating Partnership have obtained all necessary consents, approvals,
authorizations, orders, registrations and qualifications of any governmental
entity or any other Person required for the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby by
Operating Partnership or Company.
(d) Immediately following the issuance of the Preferred Units pursuant
to this Agreement, (i) less than 8% of the value, which shall be the fair market
value of such assets as determined in accordance with Code ss. 856(c)(5)(A), of
the Operating Partnership's assets will consist of "stock and securities" within
the meaning of Section 351(e)(1) of the Code, and Operating Partnership has
no present plan to increase the amount of its assets constituting "stock and
securities" to a percentage equal to or greater than 10%, (ii) the Preferred
Units will represent less than 13% of the capital interest in the Operating
Partnership and Operating Partnership has no present plan to take any action
that would cause the Preferred Units to represent more than 13% of the capital
interest in the Operating Partnership, and (iii) the interest of the Preferred
Units in profits will represent less than 13% of the profits of the Operating
Partnership and the Operating Partnership has no present plan to take any action
that would cause the interest of the Preferred Units in profits to represent
more than 13% of the profits of the Operating Partnership. For the purposes of
this representation, Excluded Cash shall not be treated as "stock and
securities" within the meaning of Section 351(e)(1) of the Code. Excluded Cash
means the portion of the amount of cash received by the Operating Partnership
pursuant to this transaction from Contributor that will be used by the Operating
Partnership to repay outstanding indebtedness within fifteen (15) days of
Closing.
(e) Operating Partnership is and has been since its organization
treated as a partnership for federal income tax purposes and has no present plan
or intention to take any action to be treated other than as a partnership.
Operating Partnership has not been and is not presently a PTP.
(f) Neither the Company nor any Subsidiary of Company has any present
plan or intention, and neither the Company nor any Subsidiary of Company has any
actual knowledge of any present plan or intention of any Partner in Operating
Partnership, to take any action or actions that would or likely would result in
Operating Partnership becoming a PTP in the foreseeable future. Neither Company
nor any Subsidiary of Company has actual knowledge of facts that reasonably
would cause it to expect that Operating Partnership would or likely would become
a PTP in the foreseeable future.
(g) The Company has properly elected to be taxed as a real estate
investment trust ("REIT") under and in accordance with Sections 856 to 860 of
the Code, has qualified for taxation as a REIT for all taxable years ending on
or prior to December 31, 1998 and has no present plan or intention or knowledge
of facts that likely would cause it to fail to qualify for taxation as a REIT in
the foreseeable future.
(h) The Preferred Units have been duly authorized and upon
contribution of the Contribution Amount to the Operating Partnership will be
validly issued, fully paid and, to the extent permitted by the Revised Uniform
Limited Partnership Act of the State of Delaware, non-assessable. Attached
hereto as part of Exhibit D is a true and complete copy of the Agreement of
Limited Partnership. The Agreement of Limited Partnership has not been amended,
superseded or revoked and is in full force and effect on the date hereof.
(i) The Preferred Shares issuable upon exchange of the Preferred Units
in accordance with the Agreement of Limited Partnership have been duly and
validly reserved for issuance, and upon issuance in accordance with this
Agreement, the Agreement of Limited Partnership and the Charter, shall be duly
and validly issued, fully paid and non-assessable.
(j) Neither the issuance, sale or delivery of the Preferred Units nor,
upon exchange, the issuance and delivery of the Preferred Shares, is subject to
any preemptive right of any Partner of Operating Partnership arising under
applicable law or the Agreement of Limited Partnership or any stockholder of
Company arising under applicable law or the Charter or Bylaws of Company, or to
any contractual right of first refusal or other right in favor of any Person,
except such rights as have been effectively waived by the holder thereof in
connection with this transaction. With the exception of the Charter and the
Agreement of Limited Partnership, there are no agreements or understandings in
effect restricting the voting rights, the distribution rights or any other
rights or privileges of the holders of the Preferred Units, or upon exchange,
the Preferred Shares.
(k) There is no action, suit, proceeding or investigation pending or,
to Operating Partnership's and Company's knowledge, currently threatened against
Operating Partnership or Company or any Subsidiary of either that questions the
validity of this Agreement or the right of Operating Partnership or Company to
enter into this Agreement, to consummate the transactions contemplated herein,
or that would reasonably be expected to, either individually or in the
aggregate, have a material adverse affect on the business, capitalization,
operations, properties or condition (financial or otherwise) of Operating
Partnership or Company or any Subsidiary of either, or result in any change in
the current equity ownership of Operating Partnership or Company or any
Subsidiary of either, nor is Company or Operating Partnership aware that there
is any basis for the foregoing.
(1) Neither Operating Partnership nor Company nor any Subsidiary of
either is in conflict with, or in default or violation of, (i) any law, rule,
regulation, order, judgment or decree applicable to it or by which any of its
properties or assets is bound or affected, or (ii) any note, bond, mortgage,
indenture or obligation to which it is a party or by which Operating Partnership
or Company or any Subsidiary of either or any property or asset of Company or
Operating Partnership or any Subsidiary of either is bound or affected, except
for any such conflicts, defaults or violations that would not reasonably be
expected to, individually or in the aggregate, have a material adverse effect on
the business, operations, properties or condition (financial or otherwise) of
Operating Partnership or Company or any Subsidiary of either.
(m) Operating Partnership and Company hereby consent to any pledge and
release of such pledge of the Preferred Units and to any pledge and release of
such pledge of any Preferred Shares into which such Preferred Units are
exchanged, to secure the obligations of Contributor or LLC, so long as the
pledge and exercise of remedies thereunder shall be subject in all respects to
the provisions of the Agreement of Limited Partnership.
(n) For all taxable years ending on or prior to December 31, 1998, 90%
or more of Operating Partnership's gross income constituted "qualifying income"
within the meaning of Code Section 7704(d). Neither the Company nor the
Operating Partnership has taken or has any present plan or intention to take any
action that will result in 90% or more of the Operating Partnership's gross
income not constituting "qualifying income" within the meaning of Code Section
7704(d) for taxable years ending after December 31, 1998.
(o) All effective registration statements, reports, proxy statements
or information statements filed by either of the Company and Operating
Partnership with the Commission since December 31, 1998 (collectively, THE "SEC
REPORTS"), when they became effective or were filed with the Commission, as they
case may be, conformed in all material respects to the requirements of the
Securities Act, or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(p) The Company, Operating Partnership and their respective Affiliates
have good and marketable title to all real property and good and marketable
title to all personal property identified in the SEC Reports as being owned by
them, in each case free and clear of all liens, encumbrances and defects except
such as are described in the SEC Reports or such as do not materially affect the
value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company, the Operating Partnership
and their respective Affiliates; and all real property and buildings held under
lease by the Company, the Operating Partnership and their respective Affiliates
are held by them under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company, the Operating
Partnership and their respective Affiliates.
(q) As of December 31, 1998, the entire authorized capital stock of
the Company consists of 5,000,000 shares of preferred stock, of which 1,000,000
shares were issued and outstanding, and 50,000,000 shares of common stock, of
which 15,607,760 shares were issued and outstanding. Since December 31, 1998,
there has been no material change in the authorized, issued or outstanding
shares of capital stock of the Company and no shares have been redeemed or
converted into treasury shares, except as follows: (i) 123,683 shares have been
issued pursuant to the Company's Dividend Reinvestment Plan; (ii) Partnership
Units have been converted into 66,500 shares; options to purchase 2,300 shares
have been exercised; and 1,030 shares have been issued pursuant to the Employee
Stock Purchase Plan. Except as described in the Company's annual report on Form
10-K for the year ended December 31, 1998, as of the date thereof there were no
outstanding or authorized options, warrants, rights, contracts, rights to
subscribe, conversion rights or other agreements or commitments to which the
Company is a party or which were binding upon the Company providing for the
issuance or acquisition of any of the Company's capital stock. Except as set
forth above, no options, warrants, rights, contracts, rights to subscribe,
conversion rights or other such agreements or commitments have been issued since
December 31, 1998. Except as described in the Company's annual report on Form
10-K for the year ended December 31, 1998, there are no outstanding or
authorized stock appreciation, phantom stock or similar rights with respect to
the Company. Except for the Company's 8 3/8% Series A Cumulative Redeemable
Preferred Stock, no securities of the Company are pari passu or senior in right
to the Series B Preferred Shares as to payment of dividends and liquidation
preference. Neither the Company nor the Operating Partnership has issued any
Series B Preferred Units or Series B Preferred Shares to any Person.
Operating Partnership and Company hereby expressly permit Xxxxxx, Xxxx
& Xxxxxxxx LLP, as counsel to Contributor and LLC, Xxxxxx & Xxxxxxx, special
counsel to certain members of the LLC, and Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, special counsel to a special committee of the Board of Directors of
Contributor, to rely upon the representations and warranties set forth in this
PARAGRAPH 8 as if such representations and warranties were made by Operating
Partnership and Company directly to Xxxxxx, Xxxx & Xxxxxxxx LLP, Xxxxxx &
Xxxxxxx and Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. THE representations and
warranties set forth in PARAGRAPHS 7 AND 8 shall survive the Closing.
10. BROKERS. Each party represents and warrants to the other that it
has dealt with no broker, finder or other person (collectively, "BROKE") with
respect to this Agreement or the transactions contemplated hereby and that no
Broker is entitled to a commission as a result of this transaction, except for
Xxxxxxx, Sachs & Co. and Xxxxxxx Xxxxx & Co., whose commissions will be paid by
Operating Partnership and/or the Company. Each of (a) Operating Partnership and
Company, severally and not jointly, on the one hand, and (b) Contributor on the
other hand, agree to indemnify and hold harmless the other party against any
loss, liability, damage, expense or claim incurred by reason of any brokerage
commission or finder's fee alleged to be payable because of any act, omission or
statement of the indemnifying party. Such indemnity obligation shall be deemed
to include the payment of reasonable attorney's fees and court costs incurred in
defending any such claim. The provisions of this PARAGRAPH 10 shall survive the
Closing.
11. COMPLETE AGREEMENT. This Agreement (including the agreements
attached as exhibits hereto) represents the entire agreement between
Contributor, LLC, Operating Partnership and Company covering everything agreed
upon or understood in this transaction and all other prior agreements, written
or oral, including any prior subscription agreements or letters, are merged into
this Agreement. There are no oral promises, conditions, representations,
understandings, interpretations or terms of any kind as conditions or
inducements to the execution hereof in effect between the parties. No change or
addition shall be made to this Agreement except by a written agreement executed
by Contributor, LLC, Operating Partnership and Company.
12. AUTHORIZED SIGNATORIES. The Persons executing this Agreement for
and on behalf of Contributor, LLC, Operating Partnership and Company each
represent that they have the requisite authority to bind the entities on whose
behalf they are signing.
13. PARTIAL INVALIDITY. If any term, covenant or condition of this
Agreement is held to be invalid or unenforceable in any respect, such invalidity
or unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid or unenforceable provision had
never been contained herein.
14. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be interpreted and enforced
according to the laws of the State of Delaware.
(b) HEADINGS; SECTIONS. All headings and sections of this Agreement
are inserted for convenience only and do not form part of this Agreement or
limit, expand or otherwise alter the meaning of any provisions hereof.
(c) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same agreement. Facsimile signatures shall be
deemed effective execution of this Agreement and may be relied upon as such by
the other party. In the event facsimile signatures are delivered, originals of
such signatures shall be delivered to the other party within three (3) business
days after execution.
(d) NO BENEFIT FOR THIRD Parties. Except as set forth in the last
paragraph of Sections 7 and 8 hereof, the provisions of this Agreement are
intended to be for the sole benefit of the parties hereto and their respective
successors and permitted assigns, which shall be entitled to rely upon all
representations, warranties and agreements of Company and Operating Partnership
hereunder, as if made to it, and upon all of Operating Partnership's Closing
Documents, as if addressed to it. In addition, the legal opinions delivered
pursuant to Section 6(b)(vii) hereof shall be addressed and delivered to LLC in
addition to being addressed and delivered to Contributor. None of the provisions
of this Agreement are intended to be, nor shall they be construed to be, for the
benefit of any third party.
(e) RIGHTS AND OBLIGATIONS. The rights and obligations of Contributor,
LLC, Operating Partnership and Company shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns in accordance with the provisions of Article II of the Agreement of
Limited Partnership and Amendment No. 3 thereto in the form attached hereto as
Exhibit A-4.
(f) LIMITATION OF LIABILITY. The liability of Contributor and LLC
hereunder shall be limited to the Contribution Amount.
15. NOTICES. All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered, delivered by nationally recognized
overnight courier with proof of delivery thereof, sent by United States
registered or certified mail (postage prepaid, return receipt requested)
addressed as hereinafter provided or via telephonic facsimile transmission with
proof of delivery in the form of a telecopier's transmission confirmation
report. Notice shall be sent and deemed given when (a) if personally delivered
or via nationally recognized overnight courier, then upon receipt by the
receiving party, or (b) if mailed, then three (3) days after being postmarked,
or (c) if sent via telephonic facsimile transmission, then at the time set forth
in the telecopier's transmission confirmation report.
Any party listed below may change its address hereunder by notice to
the other party listed below. Until further notice, notice and other
communications hereunder shall be addressed to the parties listed below as
follows:
If to Contributor: The Times Mirror Company
000 Xxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Fax: 000-000-0000
With a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
If to LLC: TMCT II, LLC
c/o The Times Mirror Company,
its Managing Member
000 Xxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Fax: 000-000-0000
With a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
If to Operating Partnership
or Company: 000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Attention: President
With a copy to: Xxxxxx X. Xxxxxxx, Esq.
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000-0000
16. PRESS RELEASES. Each of Contributor and LLC, on the one hand, and
Operating Partnership and Company, on the other hand, agrees that such parties
will not issue any press release, advertisement or other public communication
with respect to this Agreement or transaction contemplated therein without the
prior consent of the other party hereto if such press release names or otherwise
identifies such other parties hereto (except to the extent such communication is
required by applicable law or by the New York Stock Exchange Rules). No prior
consent of the other parties hereto shall be required with respect to any press
release, advertisement or other public communication issued by Contributor and
LLC, on the one hand, and Operating Partnership and Company, on the other hand,
which does not name or otherwise identify the other parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day first written above.
CONTRIBUTOR:
THE TIMES MIRROR COMPANY
By:
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
LLC:
TMCT II, LLC
By: The Times Mirror Company,
Its Managing Member
By:
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
COMPANY
CHELSEA GCA REALTY, INC., a Maryland
corporation
By:
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
OPERATING PARTNERSHIP
CHELSEA GCA REALTY PARTNERSHIP, L.P.,
a Delaware limited partnership
By: CHELSEA GCA REALTY, INC., its
General Partner
By:
-------------------------------
Name:
-----------------------------
Title:
-----------------------------
