CONTRIBUTION AGREEMENT By and Among GOLDMAN SACHS 2006 EXCHANGE PLACE FUND, L.P., GSEP 2006 REALTY CORP., PS BUSINESS PARKS, L.P., and PS BUSINESS PARKS, INC. Dated: As of March 12, 2007
Exhibit 10.3
By and Among
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ FUND, L.P.,
GSEP 2006 REALTY CORP.,
PS BUSINESS PARKS, L.P.,
and
PS BUSINESS PARKS, INC.
Dated: As of March 12, 2007
Contribution Agreement (this “Agreement”) made as of the 12th day of March 2007
(“Agreement Date”), by and among ▇▇▇▇▇▇▇ Sachs ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Fund, L.P., a Delaware
limited partnership (“Parent”), GSEP 2006 Realty Corp., a Delaware corporation
(“Contributor”), PS Business Parks, L.P., a California limited partnership (“Operating
Partnership”), and PS Business Parks, Inc., a California corporation (“Company”).
WITNESSETH:
WHEREAS, Contributor desires to contribute to Operating Partnership cash in return for Series
Q Preferred Units (as defined below) 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:
“Agreement” has the meaning set forth in the initial paragraph hereof.
“Agreement Date” has the meaning set forth in the initial paragraph hereof.
“Amendment” means the Amendment to the Partnership Agreement, substantially in the
form attached as Exhibit A hereto.
“Broker” has the meaning set forth in Paragraph 10.
“Bylaws” means the Bylaws of the Company, as amended from time to time.
“Certificate of Determination” means the Certificate of Determination of Preferences
of Series Q Cumulative Redeemable Preferred Stock of the Company substantially in the form attached
hereto as Exhibit B.
“Charter” means the Restated Articles of Incorporation of Company, as amended and
restated from time to time including, as supplemented by the Certificate of Determination.
“Closing” has the meaning set forth in Paragraph 6(a).
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” has the meaning set forth in the initial paragraph hereof.
“Contribution Amount” means 12 million and No/100 Dollars ($12,000,000).
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“Contributor” has the meaning set forth in the initial paragraph hereof.
“Contributor’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 Series Q Preferred Unit, the date on which
the exchange of such Series Q Preferred Unit for a Series Q Preferred Share shall occur in
accordance with the Partnership Agreement.
“GAAP” means generally accepted accounting principles consistently applied as in
effect as of the date of the financial statements to which such principles are 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.
“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).
“Partner” has the meaning ascribed to such term in the Partnership Agreement.
“Partnership Agreement” means the Agreement of Limited Partnership of Operating
Partnership, dated as of March 17, 1998 as amended from time to time, including as amended by the
Amendment.
“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.
“PTP” means a “publicly traded partnership” within the meaning of Section 7704 of the
Code.
“Securities Act” means the Securities Act of 1933, as amended.
“Series G Preferred Shares” has the meaning set forth in Paragraph 8(l).
“Series G Preferred Units” has the meaning set forth in Paragraph 8(l).
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“Series J Preferred Shares” has the meaning set forth in Paragraph 8(l).
“Series J Preferred Units” has the meaning set forth in Paragraph 8(l).
“Series N Preferred Shares” has the meaning set forth in Paragraph 8(l).
“Series N Preferred Units” has the meaning set forth in Paragraph 8(l).
“Series Q Preferred Shares” means shares of Company’s 6.55% Series Q Cumulative
Redeemable Preferred Stock, par value $.01 per share, with the terms and provisions set forth in
the Certificate of Determination.
“Series Q Preferred Units” means Series Q Preferred Units as such term is defined in
the Amendment.
“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 held or owned, directly or
indirectly, by such Person, or (b) of which such Person is a general partner or managing member.
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 480,000 Series Q Preferred Units in Operating Partnership.
Subject to the terms and provisions of this Agreement, Operating Partnership hereby agrees to
accept the Contribution Amount and to issue to Contributor 480,000 Series Q 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 Series Q Preferred Units and otherwise consummate the transactions
contemplated herein are subject to the satisfaction (or waiver in writing by Operating Partnership
and 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 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. Contributor shall have performed, in all
material respects, all of its 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.
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(iv) Delivery of Closing Documents. Operating Partnership and Company shall
have received the Contributor’s Closing Documents.
If 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, Parent and Contributor shall be released from their obligations
under this Agreement and none of Operating Partnership, Company, Parent or Contributor shall have
any further liability hereunder.
(b) Conditions to Contributor’s and Parent’s Obligations. Contributor’s and Parent’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 and Parent) of the following conditions on or before the Closing:
(i) Pending Litigation. Contributor and Parent shall have determined in
Contributor’s and Parent’s sole judgment that there is no temporary restraining order or
preliminary or permanent injunction of any court or administrative agency of competent
jurisdiction and no pending litigation or like proceeding with respect to Operating
Partnership or Company which, if successfully pursued, would prevent the consummation of the
transactions contemplated herein.
(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 it prior to or at
the Closing.
(iv) Delivery of Closing Documents. Contributor and Parent shall have received
the Operating Partnership’s Closing Documents.
If 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 Parent at or prior to the Closing, at
Contributor’s or Parent’s option, this Agreement shall be terminated and Contributor, Operating
Partnership, Parent and Company shall be released from their obligations under this Agreement and
none of Contributor, Operating Partnership, Parent or Company shall have any further liability
hereunder.
4. Covenants.
(a) On the Exchange Date, Company shall issue Series Q Preferred Shares in a number equal to
the number of Series Q Preferred Shares into which the Series Q Preferred Units are exchangeable
pursuant to the terms of the Partnership Agreement. Upon consummation of such exchange in
accordance with the terms of the Partnership Agreement, and issuance in
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accordance with the Charter, the Series Q Preferred Shares shall be validly issued, fully paid
and non-assessable pursuant to the Certificate of Determination.
(b) 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 it shall record the Contributor as the holder of the Series Q Preferred Units on its books and
records and shall admit Contributor as a limited partner to Operating Partnership on the date of
the Closing in accordance with the Partnership Agreement.
(c) Operating Partnership shall not issue any Series Q Preferred Units to any Person other
than Contributor and the Company shall not issue any Series Q Preferred Shares to any Person other
than a holder of Series Q Preferred Units upon exchange of such Series Q Preferred Units.
(d) Through December 31, 2008, Operating Partnership shall notify holders of Series Q
Preferred Units promptly if Company or Operating Partnership anticipates or realizes either that
(i) the value of Operating Partnership’s assets constituting “stock and securities” within the
meaning of Section 351(e)(1) of the Code will equal 17% or more of Operating Partnership’s total
assets, or (ii) there is a material increase in the percentage of Operating Partnership’s assets
constituting “stock and securities” (based on value) if immediately preceding such material
increase the percentage of Operating Partnership’s assets constituting “stock and securities” is
equal to 15% or more of the Operating Partnership’s total assets.
(e) Operating Partnership shall notify holders of Series Q Preferred Units promptly if Company
or Operating Partnership anticipates or realizes that the Series Q Preferred Units will represent
more than 19.5% of the total profits or capital interest in the Operating Partnership. For
purposes of this Agreement, profits will be treated as including special allocations of gross
income and capital will be determined based upon the estimated proceeds distributable upon a
hypothetical current liquidation of the Operating Partnership.
(f) Through December 31, 2007, Operating Partnership (i) shall take all actions reasonably
available to it under the Partnership Agreement to satisfy the private placement safe harbor of
Treasury Regulation Section 1.7704-1(h)(1) (taking into account any person treated as a partner
under Treasury Regulation Section 1.7704-1(h)(3) and treating Contributor for this purpose as one
partner) 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)(1) immediately after such issuance
(taking into account any person treated as a partner under Treasury Regulation Section
1.7704-1(h)(3) and treating Contributor for this purpose as one partner) and substituting “90” for
“100.” Through March 31, 2008, Operating Partnership shall take all actions reasonably available
to it under the Partnership Agreement to avoid treatment as a PTP.
(g) Operating Partnership shall notify holders of the Series Q Preferred Units promptly in the
event that Company or Operating Partnership (i) becomes aware of any facts that will or likely will
cause Operating Partnership to become a PTP or (ii) takes the position that Operating Partnership
is, or upon consummation of an identified event in the immediate future will be, a PTP.
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(h) Operating Partnership shall promptly provide notice to the holders of the Series Q
Preferred Units in the event Company or Operating Partnership anticipates or realizes that, if
Operating Partnership were taxable as a real estate investment trust, Operating Partnership would
fail to satisfy the income and asset requirements under Sections 856(c)(2), (3) and (4) of the
Code.
(i) Operating Partnership shall notify any holder of the Series Q Preferred Units promptly in
the event that Operating Partnership or Company anticipates or realizes that such holder’s interest
in the Series Q Preferred Units will represent 10% or more of the total capital interests in
Operating Partnership or 5% or more of the value of the Operating Partnership’s total assets are
represented by securities of a taxable REIT subsidiary. Operating Partnership shall use its best
efforts to permit such a holder to make a taxable REIT subsidiary election with respect to any
corporation (other than a corporation taxable as a real estate investment trust) for which the
holder, solely as a result of its ownership of Series Q Preferred Units, would be deemed to own
(for purposes of Section 856(c)(4) of the Code) securities of such corporation (i) with a value
equal to more than 5% of the Contributor’s total assets, (ii) possessing more than 10% of the total
voting power of such corporation, or (iii) having a value of more than 10% of the total value of,
the outstanding securities of such corporation. Operating Partnership shall use its best efforts
to cause each corporation referred to in the preceding sentence to jointly make a taxable REIT
subsidiary election with such holder.
(j) Operating Partnership and Company will not take any position inconsistent with the form of
the transaction set forth in the Operating Partnership’s Closing Documents, including without
limitation, any position that Operating Partnership is not a partnership for federal income tax
purposes or that Contributor is not a partner of Operating Partnership for federal income tax
purposes.
(k) Through December 31, 2008, Operating Partnership will not make an election under Treas.
Reg. Section 301.7701-3 to be classified as an association.
(l) Operating Partnership covenants that it shall use reasonable efforts to deliver to holders
of Series Q Preferred Units the following information to the extent provided to all other holders
of the Company’s Common Shares, par value $0.01 per share (the “Common Shares”), and/or
Partners of the Operating Partnership:
(i) as soon as reasonably practicable, a complete copy of Company’s annual report on
Form 10-K, or such other applicable form (“Form 10-K”), filed in respect of a fiscal
year with the Securities and Exchange Commission (the “Commission”) (or, if
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 10-K, a complete copy
of Operating Partnership’ s Form 10-K);
(ii) as soon as reasonably practicable, a complete copy of the Company’s quarterly
report on Form 10-Q, or such other applicable form (“Form 10-Q”), filed in respect
of a fiscal quarter with the Commission (or, if Operating Partnership is required under
rules and regulations promulgated by the Commission to file with the Commission
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a Form 10-Q separate from Company’s Form 10-Q, a complete copy of Operating
Partnership’s 10-Q);
(iii) as soon as reasonably practicable, copies of all other communications of the
Company or Operating Partnership, but only if provided to all the holders of the Company’s
Common Shares and/or Partners; and
(iv) upon the request of a holder of Series Q Preferred Units, a copy of the most
recent annual tax return for the Operating Partnership.
(m) Operating Partnership covenants that it shall use reasonable efforts to deliver to holders
of Series Q Preferred Units the following information, whether or not provided to all other holders
of the Company’s Common Shares: (x) the percentage of total profits and capital interests
represented by the Series Q Preferred Units and (y) the percentage of the value of the Operating
Partnership’s assets which consist of “stock and securities” within the meaning of Section
351(e)(1) of the Code. The information in clause (x) shall be provided to the holders of Series Q
Preferred Units on an annual basis at the time a Schedule K-1 is issued to each holder of Series Q
Preferred Units. The information in clause (y) shall be provided to the holders of Series Q
Preferred Units at the time Schedule K-1’s are issued to each holder of Series Q Preferred Units
for the tax years ending December 31, 2007 and December 31, 2008.
(n) Upon request of Contributor, but not more frequently than once per year (excluding the
certificate contemplated by Paragraph 4(s)), Operating Partnership and Company agree to deliver a
certificate to Contributor or any of its permitted transferees, including Parent, bringing down the
representations and warranties made by Operating Partnership and Company in ▇▇▇▇▇▇▇▇▇▇ ▇(▇), (▇),
(▇), (▇), (▇), (▇), (▇), (▇), (▇), (▇) and (w) to a date requested by Contributor, Parent or such
transferee, if and to the extent, after due inquiry, Operating Partnership and Company can make
such representations and warranties as of such date; provided, however, Operating Partnership and
Company shall not be required to deliver such certificate with respect to any matter described in
Paragraph 8(d) after December 31, 2008.
(o) The Company shall not modify, rescind or revoke the waiver by the Board of Directors of
the “Ownership Limit” (set forth in Section 4.01(a) of the Company’s Charter) pursuant to
resolutions of the Board of Directors, dated February 23, 2007 and of the Special Committee of the
Board of Directors, having an effective date of March 12, 2007 with respect to the Contributor’s
ownership of the Series Q Preferred Shares. The Company agrees not to withhold the waiver of such
Ownership Limit in favor of any transferees of Contributor (or subsequent transferees) if such
transferees (or subsequent transferees) provide to the Company a representation that, “to the best
of such transferee’s knowledge, applying the REIT stock ownership rules of Section 856(h) of the
Code and the applicable regulations, if at the time of such transfer all outstanding Series Q
Preferred Units had been exchanged for Series Q Preferred Shares, no ‘individual’ would be treated
as owning more than 9.9% of the outstanding shares of Series Q Preferred Shares (except potentially
two individuals who would each be treated as owning less than 15% of the outstanding shares of
Series Q Preferred Shares, provided that neither such individual would be treated as owning more
than 9.9% of the combined number of Series Q Preferred Shares, Series N Preferred Shares, Series J
Preferred Shares and Series G
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Preferred Shares that are or would be outstanding, treating all such shares that may be issued
in exchange for corresponding Series Q Preferred Units, Series N Preferred Units, Series J
Preferred Units and Series G Preferred Units as if then outstanding, whether or not the exchange is
then permitted).” The Company agrees not to unreasonably withhold the waiver of such Ownership
Limit in favor of any transferee of Contributor (or subsequent transferee) if such transferee
provides to the Company reasonable representations and undertakings appropriate to establish that
the ownership by the transferee will not adversely affect the Company’s status as a REIT (defined
in Paragraph 8(j)).
(p) After any exchange of Series Q Preferred Units under Section 8 of the Amendment, 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 California 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 shareholder approval, in order to permit the holders of Series Q Preferred
Shares (and shares on parity therewith) to elect two additional Directors upon the occurrence of a
Dividend Default (as that term is defined in the Certificate of Determination attached hereto as
Exhibit B) and in accordance with the provisions of such Certificate of Determination.
(q) Operating Partnership and Company hereby consent to any pledge and release of such pledge
of the Series Q Preferred Units, and to any pledge and release of such pledge of any Series Q
Preferred Shares into which such Series Q Preferred Units are exchanged, to secure the obligations
of Contributor and/or Parent; so long as the pledge and exercise of remedies thereunder shall be
subject in all respects to the provisions of the Partnership Agreement and the Charter and such
pledge is to a bona fide financial institution; provided that for purposes of this Paragraph 4(q),
Parent and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and its affiliates shall be deemed to be bona fide financial
institutions.
(r) Company covenants that it shall file the Certificate of Determination with the Secretary
of State of the State of California promptly following Closing and shall deliver to the Contributor
a certified copy of such filing promptly upon receipt thereof by the Company.
(s) At any time and from time to time after the Closing (but in no event more than five (5)
times, excluding the certificate contemplated by Paragraph 4(n)) and prior to December 31, 2007,
upon request of the Contributor, Operating Partnership and Company agree to deliver an additional
certificate to Contributor and Parent bringing down the representations and warranties made by
Operating Partnership and Company in Article 8 to a date requested by Contributor (if and to the
extent, after due inquiry, such representations and warranties are true and correct as of such
date), provided that such certificate is requested by Contributor in connection with the
contribution of additional capital to Parent. Contributor shall provide at least five (5) business
days written notice of any request for a certificate hereunder.
The covenants set forth in this Paragraph 4 shall survive the Closing for the period set forth
in this Paragraph 4. If no time period is set forth in this Paragraph 4, the covenants shall
survive for so long as the Series Q Preferred Units and/or Series Q Preferred Shares are
outstanding.
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5. Transaction Costs. Each of the parties hereto shall bear its own costs and expenses
with respect to the transactions contemplated hereby.
6. Closing.
(a) The closing of the transactions contemplated by this Agreement shall be consummated on
March 12, 2007 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 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 by Operating Partnership and Company;
(ii) The Amendment, duly executed by all persons necessary to make such amendment
binding on and enforceable against all Partners in Operating Partnership;
(iii) Certificate of Determination of Company duly executed and delivered by Company;
(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 Company and dated as of the date of the Closing;
(vi) Opinions of counsel or counsels to Company and Operating Partnership substantially
in the form set forth on Exhibit E;
(vii) A Cross-Receipt, substantially in the form set forth on Exhibit F;
(viii) Evidence of the written waiver of the ownership limitation contained in the
Charter with respect to the Series Q Preferred Shares; and
(ix) Those other closing documents required to be executed by it or as may be otherwise
reasonably necessary or appropriate to consummate the transactions contemplated herein.
(c) At the Closing, Contributor and/or Parent 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
Closing Documents”):
(i) Counterparts of documents listed in Paragraphs 6(b)(i), (iv) and (vii), duly
executed by Contributor and/or Parent; and
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(ii) Those other closing documents required to be executed by it or as may be otherwise
reasonably necessary or appropriate to consummate the transaction contemplated herein.
7. Representations and Warranties of Parent. Parent makes the following representations and
warranties 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) Parent is duly organized and validly existing under the laws of the state of Delaware and
has been duly authorized by all necessary and appropriate action to enter into this Agreement and
to consummate the transactions contemplated herein. This Agreement is a valid and binding
obligation of Parent, enforceable against Parent in accordance with its terms, except insofar as
such 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 herein 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 Parent or (ii) any agreement, order, judgment, decree,
arbitration award, statute, law, rule, regulation or instrument to which Parent is a party or by
which it or its assets are bound, or (b) constitutes or will constitute (with or without due notice
or lapse of time or both) a breach, violation or default (or give rise to any right of termination,
cancellation or acceleration) under any of the foregoing, or result in the creation of any lien,
charge or encumbrance pursuant to any of the foregoing. No consent or approval, authorization,
order, regulation or qualification of any governmental entity or any third-party is required for
the execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby by Parent.
(c) Parent acknowledges that the Series Q 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 Section 4(2) of the Securities Act and similar
state law exceptions. Parent hereby acknowledges receipt of a copy of the Partnership Agreement
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) Parent 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 Series Q Preferred Units Contributor will receive in accordance
with the provisions hereof or any Series Q Preferred Shares to be acquired in exchange therefor.
(e) Parent is not an employee benefit plan subject to ERISA or Section 4975 of the Code.
(f) To the best of Parent’s knowledge, applying the REIT stock ownership rules described
below, if the Series Q Preferred Shares were issued to Contributor at the time of (and
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instead of) the issuance of the Series Q Preferred Units, and to no other Person, no
“individual” would be treated as owning more than 9.9% of the outstanding shares of the Series Q
Preferred Shares (except potentially two individuals who would each be treated as owning less than
15% of the outstanding shares of the Series Q Preferred Shares, provided that neither such
individual would be treated as owning more than 9.9% of the combined number of outstanding shares
of the Series Q Preferred Shares, the Series N Preferred Shares, the Series J Preferred Shares and
the Series G Preferred Shares, also evaluating the Series N Preferred Units, the Series J Preferred
Units and the Series G Preferred Units as if each such outstanding unit had been exchanged for a
corresponding Series N Preferred Share, Series J Preferred Share or Series G Preferred Share, as
applicable). For this purpose, ownership shall be determined under Section 856(h) of the Code and
the applicable regulations, which apply Code Sections 542(a)(2) and 544, as modified.
7A. Representations and Warranties of Contributor. Contributor and Parent make the
following representations and warranties 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) Contributor is duly organized and validly existing under the laws of the state of Delaware
and has been duly authorized by all necessary and appropriate action to enter into this Agreement
and to consummate the transactions contemplated herein. This Agreement is a valid and binding
obligation of Contributor, enforceable against Contributor in accordance with its terms, except
insofar as such 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 herein 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 Contributor or (ii) any agreement, order, judgment, decree,
arbitration award, statute, law, rule, regulation or instrument to which Contributor is a party or
by which it or its assets are bound, or (b) constitutes or will constitute (with or without due
notice or lapse of time or both) a breach, violation or default (or give rise to any right of
termination, cancellation or acceleration) under any of the foregoing, or result in the creation of
any lien, charge or encumbrance pursuant to any of the foregoing. No consent or approval,
authorization, order, regulation or qualification of any governmental entity or any third-party is
required for the execution and delivery of this Agreement and the consummation of the transactions
contemplated hereby by Contributor.
(c) Contributor acknowledges that the Series Q 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 Section 4(2) of the Securities Act and similar
state law exceptions. The Series Q Preferred Units to be received by Contributor hereunder and any
Series Q Preferred Shares acquired in exchange therefor shall be held by Contributor for investment
purposes only for its own account, and not with a view to or for sale in connection with any
distribution of the Series Q Preferred Units or such Series Q Preferred Shares, and Contributor
acknowledges that the Series Q Preferred Units and Series Q Preferred Shares cannot be sold or
otherwise disposed of by the holders thereof unless they are subsequently registered under the
Securities Act or sold or otherwise disposed of pursuant to an
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exemption therefrom; and the Series Q Preferred Units may not be sold, assigned or otherwise
transferred except in compliance with the Partnership Agreement. Contributor hereby acknowledges
receipt of a copy of the Partnership Agreement and represents that it has reviewed same and
understands the provisions thereof which have a bearing on the representations made in this
Paragraph 7A(c).
(d) Contributor 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 Series Q Preferred Units it will receive in accordance
with the provisions hereof or any Series Q Preferred Shares to be acquired in exchange therefor.
(e) Contributor 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 Series Q Preferred Units and
Contributor is able to bear the economic risk of such ownership.
(f) Contributor is not an employee benefit plan subject to ERISA or Section 4975 of the Code.
(g) In making this investment, Contributor 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) To the best of Contributor’s and Parent’s knowledge, applying the REIT stock ownership
rules described below, if the Series Q Preferred Shares were issued to Contributor at the time of
(and instead of) the issuance of the Series Q Preferred Units, and to no other Person, no
“individual” would be treated as owning more than 9.9% of the outstanding shares of the Series Q
Preferred Shares (except potentially two individuals who would each be treated as owning less than
15% of the outstanding shares of the Series Q Preferred Shares, provided that neither such
individual would be treated as owning more than 9.9% of the combined number of outstanding shares
of the Series Q Preferred Shares, the Series N Preferred Shares, the Series J Preferred Shares and
the Series G Preferred Shares, also evaluating the Series N Preferred Units, the Series J Preferred
Units and the Series G Preferred Units as if each such outstanding unit had been exchanged for a
corresponding Series N Preferred Share, Series J Preferred Share or Series G Preferred Share, as
applicable). For this purpose, ownership shall be determined under Section 856(h) of the Code and
the applicable regulations, which apply Code Sections 542(a)(2) and 544, as modified.
8. Representations and Warranties of Operating Partnership and Company. Operating
Partnership and Company make the following representations and warranties to Contributor and
Parent, 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 California and is duly registered and qualified to do business in each jurisdiction where
12
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 Amendment and the Registration Rights Agreement (each a
“Transaction Document” and, collectively, the “Transaction Documents”), to issue,
sell and deliver the Series Q Preferred Units and to consummate the transactions contemplated by
the Transaction Documents, and the individuals executing each of the Transaction Documents on
behalf of Operating Partnership have been duly authorized by all necessary and appropriate action
on behalf of Operating Partnership and no other proceedings on the part of the Operating
Partnership are necessary to authorize this Agreement or the other Transaction Documents or to
consummate the transactions contemplated hereby and, except as contemplated by the applicable
Transaction Document, thereby. This Agreement and each other Transaction Document to which it is a
party is a valid and binding obligation of Operating Partnership, enforceable against Operating
Partnership in accordance with its terms, except insofar as such 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 California
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 Certificate of Determination and each of the other Transaction Documents, to issue and deliver,
upon exchange of the Series Q Preferred Units, in accordance with the Amendment, the Series Q
Preferred Shares and to consummate the transactions contemplated by the Transaction Documents and
the Certificate of Determination, and the individuals executing the Certificate of Determination
and each of the Transaction Documents on behalf of Company have been duly authorized by all
necessary and appropriate action on behalf of Company, except for the filing of the Certificate of
Determination with the Secretary of State of the State of California, and no other proceedings on
the part of the Company are necessary to authorize this Agreement, the Certificate of Determination
or the other Transaction Documents or to consummate the transactions contemplated hereby and,
except as contemplated by the Certificate of Determination or other applicable Transaction
Document, thereby. This Agreement, the Certificate of Determination and each other Transaction
Document to which it is a party is a valid and binding obligation of Company, enforceable against
Company in accordance with its terms, except insofar as such enforceability may be affected by
bankruptcy, insolvency or similar laws affecting creditor’s rights generally and the availability
of any particular equitable remedy.
(c) Neither the execution nor the delivery of this Agreement, the other Transaction Documents
and the Certificate of Determination nor the consummation of the transactions contemplated herein
or therein nor fulfillment of or compliance with the terms and conditions hereof or thereof (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, law, rule, 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 (with or without due notice or lapse of time or both) a breach,
violation or default (or give rise to any right of termination, cancellation or acceleration) under
any of the foregoing, or result in the creation of any lien, charge or encumbrance pursuant to any
of the foregoing. Except for the filing of the Certificate
13
of Determination with the Secretary of State of the State of California, no consent or
approval, authorization, order, registration or qualification of any governmental entity or any
third-party is required for the execution and delivery of this Agreement, the other Transaction
Documents and the Certificate of Determination and the consummation of the transactions
contemplated herein or therein by Operating Partnership or Company, as the case may be.
(d) Immediately following the issuance of the Series Q Preferred Units pursuant to this
Agreement, less than 15% of Operating Partnership’s assets (giving effect to Contributor’s
investment in Operating Partnership) will consist of “stock and securities” within the meaning of
Section 351(e)(1) of the Code, and Operating Partnership and Company have no plan or intention to
acquire or dispose of assets that would increase the amount of its assets constituting “stock and
securities” to an amount equal to or greater than 17%.
(e) Operating Partnership is classified as a partnership for U. S. federal income tax purposes
and is not taxable as a corporation under the Code. Operating Partnership has not been since its
organization and is not presently a PTP, and neither Operating Partnership nor Company has reported
or taken a position with the Internal Revenue Service or its partners that Operating Partnership is
a PTP. Operating Partnership will treat the Series Q Preferred Units as equity for U.S. federal
income tax purposes. The Series Q Preferred Units are not convertible or exchangeable into any
other asset except as provided in the Partnership Agreement.
(f) Neither Company nor Operating Partnership has any present plan or intention, and neither
Company nor Operating Partnership 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 (i) failing to qualify for the private placement safe harbor of Treasury
Regulation Section 1.7704-(h)(1) or (ii) becoming classified as a corporation under the Code or a
PTP in the foreseeable future. Neither Company nor Operating Partnership has actual knowledge of
facts that reasonably would cause it to expect that Operating Partnership would or likely would (i)
fail to qualify for the private placement safe harbor of Treasury Regulation Section 1.7704-(h)(1)
or (ii) become classified as a corporation under the Code or a PTP in the foreseeable future.
(g) Equity interests in the Operating Partnership are not traded on an “established securities
market” as defined in Treas. Reg. Section 1.7704-1(b).
(h) [Intentionally Omitted]
(i) All interests in Operating Partnership were issued in a transaction (or transactions) that
was not required to be registered under the Securities Act or that would not have been required to
be registered if interests had been offered and sold in the United States, and during the current
tax year of Operating Partnership, Operating Partnership has not had at any time more than 90
partners (including the Contributor, which for the purposes hereof, is being counted as one
partner) within the meaning of Treas. Reg. Section 1.7704-1(h).
(j) The Company has properly elected to be taxed as a real estate investment trust
(“REIT”) in accordance with Sections 856 to 860 of the Code, currently qualifies for
taxation as
14
a REIT and has no 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.
(k) The Series Q 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 California Revised Limited Partnership Act, as amended, non- assessable,
and free and clear of all liens, claims, charges, security interests, options, or any other
encumbrances. Attached as an exhibit to the Secretary’s Certificate, which is attached hereto as
Exhibit D, is a true and complete copy of the Partnership Agreement of Operating
Partnership dated as of March 17, 1998, as amended to date, including the Amendment. Except as set
forth on Exhibit D, the Partnership Agreement has not been amended, superseded or revoked
and is in full force and effect on the date hereof.
(l) As of the date hereof, the entire authorized capital stock of the Company consists of
50,000,000 shares of preferred stock, of which 22,900 shares were issued and outstanding
(represented by 22,900,000 depositary shares), 100,000,000 shares of equity stock, of which no
shares were outstanding, and 100,000,000 shares of common stock. As of the date hereof,
approximately 21,318,363 shares of the Company’s common stock were issued and outstanding. Except
as described in the Company’s annual report on Form 10-K for the year ended December 31, 2006 and
except for options and restricted shares to acquire shares of the Company’s common stock under the
Company’s employee stock option and incentive plan granted since December 31, 2006 (no such options
or restricted shares have been granted since December 31, 2006), there are 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 as
of the date hereof providing for the issuance or acquisition of any of the Company’s capital stock
and no options, warrants, rights, contracts, rights to subscribe, conversion rights or other such
agreements or commitments have been issued since December 31, 2006. Except as described in the
Company’s annual report on Form 10-K for the year ended December 31, 2006, there are no outstanding
or authorized stock appreciation, phantom stock or similar rights with respect to the Company. The
Series Q Preferred Shares rank on a parity with the 7.95% Series G Cumulative Redeemable Preferred
Stock (the “Series G Preferred Shares”), the 7.000% Cumulative Preferred Stock, Series H, the
6.875% Cumulative Preferred Stock, Series I, the 7.50% Series J Cumulative Redeemable Preferred
Stock (the “Series J Preferred Shares”), the 7.950% Cumulative Preferred Stock, Series K, the 7.60%
Cumulative Preferred Stock, Series L, the 7.20% Cumulative Preferred Stock, Series M, the 7?%
Cumulative Preferred Stock, Series N, the 7.375% Cumulative Preferred Stock, Series O, and the
6.70% Cumulative Preferred Stock, Series P with respect to distributions and rights upon voluntary
or involuntary liquidation, winding-up or dissolution of Company. No outstanding class or series
of equity securities of Company ranks senior to the Series Q Preferred Shares with respect to
distributions and rights upon voluntary or involuntary liquidation, winding-up or dissolution of
Company. Operating Partnership has not issued any preferred units to any Person except for the 91/4%
Series A Cumulative Redeemable Preferred Units (which were redeemed by Operating Partnership in
April 2004), the 8?% Series B Cumulative Redeemable Preferred Units (which were redeemed by
Operating Partnership in April 2004), the 83/4% Series C Cumulative Redeemable Preferred Units (which
were redeemed by Operating Partnership in September 2004), the 91/2 Series D Cumulative Redeemable
Preferred Units (which were redeemed by the Operating Partnership in May 2006), the 91/4 Series E
Cumulative Redeemable
15
Preferred Units (which were redeemed by the Operating Partnership in September 2006), the 83/4%
Series F Cumulative Redeemable Preferred Units (which were redeemed by the Operating Partnership in
January 2007), the 7.95% Series G Cumulative Redeemable Preferred Units (the “Series G Preferred
Units”), the 7.000% Series H Cumulative Redeemable Preferred Units, the 6.875% Series I Cumulative
Redeemable Preferred Units, the 7.50% Series J Cumulative Redeemable Preferred Units (the “Series J
Preferred Units”), the 7.950% Series K Cumulative Redeemable Preferred Units, the 7.60% Series L
Cumulative Redeemable Preferred Units and the 7.20% Series M Cumulative Redeemable Preferred Units,
the 7?% Series N Cumulative Redeemable Preferred Units, the 7.375% Series O Cumulative Redeemable
Preferred Units, the 6.70% Series P Cumulative Redeemable Preferred Units, the 8?% Series X
Cumulative Redeemable Preferred Units (which were redeemed by Operating Partnership in September
2004) and the 8?% Series Y Cumulative Redeemable Preferred Units (which were redeemed by Operating
Partnership in July 2005). The Series Q Preferred Units rank on a parity with the 7.95% Series G
Cumulative Redeemable Preferred Units, the 7.000% Series H Cumulative Redeemable Preferred Units,
the 6.875% Series I Cumulative Redeemable Preferred Units, the 7.50% Series J Cumulative Redeemable
Preferred Units, the 7.950% Series K Cumulative Redeemable Preferred Units, the 7.60% Series L
Cumulative Redeemable Preferred Units, the 7.20% Series M Cumulative Redeemable Preferred Units,
the 7?% Series N Cumulative Redeemable Preferred Units, the 7.375% Series O Cumulative Redeemable
Preferred Units and the 6.70% Series P Cumulative Redeemable Preferred Units with respect to
distributions and rights upon voluntary or involuntary liquidation, winding-up or dissolution of
Operating Partnership. Subject to the differing allocation rights of the Cumulative Redeemable
Preferred Units referred to in the previous sentence, which such allocation rights are set forth in
Section 4 of the Amendment, no outstanding class or series of Partnership Interests (as defined in
the Partnership Agreement of Operating Partnership) of Operating Partnership ranks senior to the
Series Q Preferred Units with respect to distributions and rights upon voluntary or involuntary
liquidation, winding-up or dissolution of Operating Partnership. Company has not issued any
preferred shares to any Person except for the 91/4% Cumulative Preferred Stock, Series A (which were
redeemed by Company in April 2004), the 9.500% Cumulative Preferred Stock, Series D (which were
redeemed by the Company in May 2006), the 8.750% Cumulative Preferred Stock, Series F (which were
redeemed by the Company in January 2007), the 7.000% Cumulative Preferred Stock, Series H, the
6.875% Cumulative Preferred Stock, Series I, the 7.950% Cumulative Preferred Stock, Series K, the
7.60% Cumulative Preferred Stock, Series L, the 7.20% Cumulative Preferred Stock, Series M, the
7.375% Cumulative Preferred Stock, Series O and the 6.70% Cumulative Preferred Stock, Series P.
(m) The Series Q Preferred Shares issuable upon exchange of the Series Q Preferred Units in
accordance with the Partnership Agreement have been duly and validly reserved for issuance, and
upon issuance in accordance with this Agreement, the Partnership Agreement and the Charter, shall
be duly and validly issued, fully paid and non-assessable, and free and clear of all liens, claims,
charges, security interests, options or any other encumbrances.
(n) Neither the issuance, sale or delivery of the Series Q Preferred Units nor, upon exchange,
the issuance and delivery of the Series Q Preferred Shares, is subject to any preemptive right of
any Partner of Operating Partnership arising under law or the Partnership Agreement 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
16
Person. With the exception of the Charter, the Partnership Agreement, and the Registration
Rights Agreement, there are no agreements or understandings in effect restricting the voting
rights, the distribution rights or any other rights of the holders of the Series Q Preferred Units,
or upon exchange, the Series Q Preferred Shares.
(o) There is no action, suit, claim, proceeding or investigation pending or, to Operating
Partnership’s or Company’s knowledge, currently threatened against Operating Partnership or Company
that questions the validity of the Certificate of Determination or any of the Transaction Documents
or the right of Operating Partnership or Company to enter into the Certificate of Determination or
any of the Transaction Documents, to consummate the transactions contemplated by the Certificate or
Determination or any of the Transaction Documents, or that would reasonably be expected to, either
individually or in the aggregate, have a material adverse affect on the business, operations,
properties or condition (financially or otherwise) of Operating Partnership or Company, or result
in any change in the current equity ownership of Operating Partnership or Company, nor is Company
or Operating Partnership aware that there is any basis for the foregoing.
(p) Immediately after the consummation of the transactions contemplated by this Agreement,
Contributor shall own less than 13% of the total profits and capital interest of Operating
Partnership. Operating Partnership and Company have no present plan or intention that will have the
effect of causing Contributor to own 13% or more of the total profits and capital interest of
Operating Partnership. Operating Partnership and Company have no present plan or intention to
cause Operating Partnership to liquidate or sell substantially all of Operating Partnership’s
assets.
(q) Nothing has come to the attention of Operating Partnership and Company to cause it to
believe and Operating Partnership and Company do not believe that (i) Operating Partnership will
fail to have sufficient cash flow to satisfy the payment of the return on the Series Q Preferred
Units (and hence cause the exchange right contained in the Partnership Agreement relating to the
failure to pay full distributions in six (6) quarterly distribution periods to be exercisable) and
(ii) Operating Partnership’s income will fall to a level that would cause the exchange right
contained in the Partnership Agreement relating to an imminent and substantial risk that the
Contributor’s interest in Operating Partnership represents or will represent 19.5% of the total
profits or capital interests of the Operating Partnership to be exercisable.
(r) Based on annual revenue, in excess of 85% of the business of the Company is conducted
through the Operating Partnership and its Subsidiaries. The Company has no present plan or
intention to acquire real property except through the Operating Partnership.
(s) Neither Operating Partnership nor Company nor any Subsidiary of either is in default,
conflict with 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,
17
have a material adverse effect on the business, operations, properties or condition
(financially or otherwise) of Operating Partnership or Company or any Subsidiary of either.
(t) The Company, Operating Partnership and their Subsidiaries have good and marketable title
in fee simple to all property owned by them listed in the SEC Reports (defined below), subject only
to liens, encumbrances and/or defects which would not have a material adverse effect on the value
of the Operating Partnership taken as a whole. All filings made by the Company, Operating
Partnership and their Subsidiaries with the Commission within the last three (3) years (“SEC
Reports”) were prepared and filed in compliance in all material respects with the Exchange Act,
or the Securities Act, as applicable, and the rules and regulations promulgated by the Commission
thereunder, and did not, as of their respective dates, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not misleading. During the last
12 months all such filings required to be made under the Exchange Act or Securities Act were timely
made and there has been no material adverse change in the business, assets or financial condition
of the Company, Operating Partnership or their Subsidiaries since the most recent such filing. The
consolidated financial statements and the interim consolidated financial statements of the Company,
Operating Partnership and their Subsidiaries included in the SEC Reports were prepared in
accordance with GAAP (except as may be indicated in the notes thereto) and fairly presented the
consolidated financial condition and results of operations of the Company, Operating Partnership
and their Subsidiaries as at the dates thereof and for the periods then ended, subject, in the case
of the interim consolidated financial statements, to normal year-end adjustments and any other
adjustments described therein.
(u) Operating Partnership is not, and is not expected to be, treated for U.S. income tax
purposes as (i) a “regulated investment company” within the meaning of Section 851 of the Code;
(ii) a “real estate investment trust” within the meaning of Section 856 of the Code; or (iii) a
“common trust fund” within the meaning of Section 584 of the Code.
(v) Operating Partnership would presently satisfy, and nothing has come to the attention of
Company or Operating Partnership to cause it to believe that the Operating Partnership will fail to
satisfy, the income and asset requirements under Sections 856(c)(2), (3) and (4) of the Code, if
Operating Partnership were otherwise taxable as a real estate investment trust under the Code.
Operating Partnership and Company expect that from and after the date hereof Operating Partnership
will satisfy the income and asset requirements under Sections 856(c)(2), (3) and (4) of the Code,
if Operating Partnership were otherwise taxable as a real estate investment trust under the Code,
and Operating Partnership and Company do not know of any existing facts or circumstances that
would cause Operating Partnership to fail to satisfy the income and asset requirements under
Sections 856(c)(2), (3) and (4) of the Code, if Operating Partnership were otherwise taxable as a
real estate investment trust.
(w) Operating Partnership has no plan or intention and Company has no plan or intention to
cause Operating Partnership to elect under Treasury Regulation Section 301.7701-3 to be classified
as an association.
18
Operating Partnership and Company hereby expressly permit Fried, Frank, Harris, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, as counsel to Contributor and Parent, to rely upon the representations and warranties
set forth in Paragraph 8 as if such representations and warranties were made by Operating
Partnership and Company directly to Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP.
9. Survival of Representations and Warranties. The representations and warranties set
forth in Paragraphs 7, 7A and 8 shall survive the Closing.
10. Brokers. Each party represents and warrants to the other that such party has dealt
with no broker, finder or other person (collectively, “Broker”) with respect to this
Agreement or the transactions contemplated herein and that no Broker is entitled to a commission as
a result of this transaction except that the Contributor has been represented by ▇▇▇▇▇▇▇, Sachs &
Co., and the parties agree that the Operating Partnership shall pay a commission to ▇▇▇▇▇▇▇, ▇▇▇▇▇
& Co. on behalf of the Contributor in an amount equal to 2.5% of the Contribution Amount. Such
amount shall be paid by the Operating Partnership immediately following the Closing by wire
transfer to the account previously designated in writing by ▇▇▇▇▇▇▇, Sachs & Co. Each of (a)
Operating Partnership and Company, severally and not jointly, on the one hand, and (b) Contributor
on the other hand, agrees 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 attorneys’ fees and court
costs incurred in defending any such claim. The provisions of this Paragraph 10 shall survive the
Closing.
11. Complete Agreement. Together with the Registration Rights Agreement, the Amendment,
the Certificate of Determination and the other documents, the form of which are attached hereto as
exhibits, this Agreement represents the entire agreement between Parent, Contributor, Operating
Partnership and Company covering everything agreed upon or understood in this transaction and all
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 Parent, Contributor, Operating Partnership and Company.
12. Authorized Signatories. The Persons executing this Agreement for and on behalf of
Contributor, Parent, 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.
19
(a) Governing Law. This Agreement shall be interpreted and enforced according to the
internal laws of the State of California.
(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 provision 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. If facsimile signatures are delivered, originals of such
signatures shall be delivered to the other party within three (3) business days after execution,
but the failure to deliver such originals within three business days shall not affect the validity
or enforceability of this Agreement.
(d) No Benefit for Third Parties. Except as provided in the last paragraph of
Paragraph 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, and 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, including any purchaser of interests in Contributor, except that the Parent 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 Paragraph 6 (b)(vi)
hereof shall acknowledge that Parent may rely on the opinions, in addition 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 other third party.
(e) Rights and Obligations. The rights and obligations of Contributor, Parent,
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 11 of the Partnership Agreement.
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 (a) if
personally delivered or via nationally recognized overnight courier, then one business day
following receipt by the receiving party, or (b) if mailed, then three (3) business days after
being postmarked, or (c) if sent via telephonic facsimile transmission, then one business day
following the date of confirmed receipt 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. Each of Operating Partnership, Company, Parent and Contributor may rely on the facsimile
numbers set forth below for purposes of providing notice under the Amendment and
20
the Certificate of Determination (unless the applicable party provides notice of a different
fax number in accordance with the notice provisions set forth in this Paragraph 15). Until further
notice, notice and other communications hereunder shall be addressed to the parties listed below as
follows:
| If to Parent: | ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Fund, L.P. | |||
| c/o Goldman Sachs & Co. | ||||
| ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇ | ||||
| Fax: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| with a copy to: | Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP | |||
| ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||||
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. | ||||
| Fax: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| If to Contributor: | GSEP 2006 Realty Corp. | |||
| c/o Goldman ▇▇▇▇▇ & Co. | ||||
| ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ | ||||
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇ | ||||
| Fax: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| with a copy to: | Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP | |||
| ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||||
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. | ||||
| Fax: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| If to Operating Partnership | c/o PS Business Parks, Inc. | |||
| or Company: | ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | |||
| ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | ||||
| Fax: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| with a copy to: | c/o PS Business Parks, Inc. | |||
| ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||||
| ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ | ||||
| Fax: (▇▇▇) ▇▇▇-▇▇▇▇ |
16. Press Releases. Contributor, Operating Partnership and Company each agrees that it will
not issue any press release, advertisement or other public communication with respect to this
21
Agreement or transaction contemplated therein without the prior consent of the other party hereto,
except to the extent such communication is required by applicable law or stock exchange rules. With
respect to the initial press release in connection with this Agreement or the transaction
contemplated herein, Operating Partnership and Company shall deliver a copy of such proposed press
release to Contributor prior to the publication thereof and shall grant Contributor an opportunity
to review the same and shall make reasonable revisions to such proposed press release requested by
Contributor.
[SIGNATURE PAGE FOLLOWS]
22
IN WITNESS WHEREOF the parties have caused this Agreement to be executed as of the day first
written above.
| PARENT: | ||||
| ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ | ||||
| ▇▇▇▇▇ FUND, L.P. | ||||
| By: | ▇▇▇▇▇▇▇ Sachs 2006 Exchange Fund Advisors, | |||
| L.L.C., as general partner | ||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇ | |||
| Name: ▇▇▇▇ ▇▇▇▇ | ||||
| Title: Authorized Person | ||||
| CONTRIBUTOR: | ||||
| GSEP 2006 REALTY CORP. | ||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ | |||
| Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Title: Authorized Person | ||||
Signature Page to Series Q Contribution Agreement
| OPERATING PARTNERSHIP: | ||||
| PS BUSINESS PARKS, L.P. | ||||
| By: | PS BUSINESS PARKS, INC., its general partner | |||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. | |||
| Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. | ||||
| Title: President & Chief Executive Officer | ||||
| COMPANY: | ||||
| PS BUSINESS PARKS, INC. | ||||
| By: | /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. | |||
| Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. | ||||
| Title: President & Chief Executive Officer | ||||
Signature Page to Series Q Contribution Agreement