AMENDMENT TO ACQUISITION AGREEMENT
This Amendment to Acquisition Agreement is made and entered into as of
July 1, 1998, by and among Mission West Properties, a California corporation
(the "Company"), Mission West Properties, L.P., a Delaware limited partnership
("MWP"), Berg Family Partners, L.P., a Delaware limited partnership ("MWP I"),
Berg & Berg Developers, L.P., a Delaware limited partnership ("MWP II"),
Kontrabecki Associates, a California limited partnership ("MWP III"), and each
of the partners of the respective partnerships (the "Partners"), holders of
equity interests in the other entities and certain other persons who are listed
on the signature pages hereto.
RECITALS
WHEREAS, the parties hereto entered into an Acquisition Agreement dated
May 14, 1998 (the "Acquisition Agreement") pursuant to which the parties thereto
may amend the Acquisition Agreement by a writing executed by the party or
parties against whom enforcement is sought in accordance with Section 14.4
thereof.
WHEREAS, the parties wish to amend the Acquisition Agreement and their
respective performance thereunder to permit the occurrence of the Berg
Acquisition (as defined xtherein) and the organization of the Operating
Partnership (as defined therein) prior to the Special Meeting (as defined
therein) so that the accounting period for which the Company reports the
operations of the Operating Partnership in 1998 shall commence on July 1,
1998.
WHEREAS, such parties now desire to amend the terms of the Acquisition
Agreement to provide for the changes set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
conditions and promises hereinafter set forth, the parties agree as follows:
1. DEFINITIONS. Unless otherwise defined or specified in this Amendment, all
capitalized terms used herein will have the meanings set forth in the
Acquisition Agreement.
2. AMENDMENT TO CERTAIN SECTIONS OF ACQUISITION AGREEMENT. The following
sections of the Acquisition Agreement will be amended as follows:
2.1 DEFINITIONS. Section 1.10 shall be amended to read in its entirety as
follows:
1.10 "CLOSING" shall have the meaning ascribed to it in Section 4.1,
and "PARTNERSHIP CLOSING" shall mean the closing of the transactions
described in Section 3 (THE TRANSACTIONS SUBJECT TO THIS AGREEMENT),
as amended hereby.
Section 1.11 shall be amended to read in its entirety as follows:
1.11 "CLOSING DATE" shall mean the date and time of the Closing.
"PARTNERSHIP CLOSING DATE" shall mean July 1, 1998.
Section 1.51 shall be amended to read in its entirety as follows:
1.51 "SHAREHOLDER APPROVAL" shall mean the vote of the shareholders
of the Company approving or ratifying a Proposed Transaction at the
Special Meeting.
2.2 THE TRANSACTIONS SUBJECT TO THIS AGREEMENT. Sections 3.1-3.3 shall be
amended to read in their entirety as follows:
3.1 AGREEMENT TO FORM THE OPERATING PARTNERSHIP. Each of the
Constituent Partnerships hereby agrees to adopt the Operating
Partnership Agreement and to be managed and operated as a
participant in the Operating Partnership. Upon the occurrence of the
Partnership Closing, the Company thereafter shall manage the
Operating Partnership, in its capacity as general partner of each of
the Constituent Partnerships, in accordance with the principles and
procedures contained in Section 9.7. Upon the Partnership Closing,
all of the limited partnership interests and the existing general
partner interests in each of the Constituent Partnerships shall be
converted automatically into the number of L.P. Units set forth
opposite the name of each Constituent Partnership on Schedule 6
(provided that 3,061,427 L.P. Units of MWP shall not be issued
unless and until Carl E. Berg has acquired the properties set forth
opposite his name on Schedule 5 (the "Fremont Properties") and has
contributed them, subject to secured indebtedness of approximately
Five Million Nine Hundred Thousand Dollars ($5,900,000) in
principal), by grant deed to MWP; MWP III shall elect to become a
Delaware limited partnership pursuant to Section 17-217(b) of the
Delaware Revised Uniform Limited Partnership Act; and the existing
limited partnership agreement of each of the limited partnerships
shall be amended and restated to substantially conform to the
provisions of the Operating Partnership Agreement.
3.2 ACQUISITION OF THE CONTRIBUTED PROPERTIES.
Subject to the terms and conditions hereof and in reliance
upon the representations, warranties, and agreements contained
herein, at the Partnership Closing, the Operating Partnership shall
acquire the Contributed Properties and the Contributing Entities
(other than MWP III) shall convey their respective Contributed
Properties to MWP. In exchange, each Contributing Entity shall be
entitled to receive that number of L.P. Units set forth opposite its
name on Schedule 5 at the Partnership Closing. Notwithstanding the
foregoing, Carl E. Berg shall not contribute the Fremont Properties
to MWP at the Partnership Closing and shall not be entitled to
receive 3,061,427 L.P. Units of MWP limited partnership interest, as
set forth on Schedule 5, unless and until he has contributed the
Fremont Properties, subject to indebtedness in the approximate
principal amount of $5,900,000, to MWP by grant deed.
3.3 THE BERG ACQUISITION.
(a) Subject to the terms and conditions hereof and in reliance upon
the representations, warranties, and agreements contained herein, at
the Partnership Closing: (i) the Company shall acquire the general
partnership interests in each of the Constituent Partnerships for
the total amount of Thirty-Three Million Five Hundred Eighty-Nine
Thousand Three Hundred Thirty-Three Dollars ($33,589,333) payable by
delivery of a demand note ("Demand Note") to each of the Constituent
Partnerships in the amounts set forth opposite the name of such
Constituent Partnership (the "Contribution Amount") in the form
attached hereto Exhibit G; (ii) Berg & Berg Enterprises, Inc., Berg
Family Partners LLC, Berg & Berg Developers LLC, and John T.
Kontrabecki shall resign as the general partner of MWP, MWP I, MWP
II, and MWP III, respectively; and (iii) the Company shall receive a
general partner interest equal to 10.91% of the capital, profits,
losses and distributions of each Constituent Partnership (or 10.91%
of the Operating Partnership) in accordance with the terms of the
Operating Partnership Agreement. The capital contribution and amount
of the Demand Note payable by the Company set forth below for its
general partner interest in each of the Constituent Partnerships at
the Partnership Closing is subject to adjustment as provided in
Section 3.3(b).
PARTNERSHIP DEMAND NOTE AMOUNT
MWP $ 6,927,195
MWP I 6,693,607
MWP II 18,965,750
MWP III 1,002,781
(b) At or prior to the Partnership Closing, the Operating
Partnership may obtain new loans or refinance existing debt of the
Constituent Partnerships, which will be, or is secured by, certain
Existing Properties and/or Contributed Properties. The amount of
debt encumbering such Properties will affect the value of each of
the Constituent Partnerships and the percentage of the total
Contribution Amount allocable to each such Partnership. Accordingly,
the parties agree that appropriate adjustment, if any, will be made
in the amount of each of the Demand Notes set forth in the table in
Section 3.3(a) to reflect the difference between the amount of
indebtedness for borrowed funds which encumbers the Properties of a
Constituent Partnership as of the Partnership Closing Date and the
amount of such indebtedness as of the date of this Agreement.
Furthermore, the parties acknowledge and agree that for income tax
purposes, limited partners in the Operating Partnership, and the
partners or other equity owners in such limited partners have
assumed or guaranteed, or will wish to assume or guaranty certain
indebtedness of their respective Constituent Partnerships. All
parties acknowledge and agree that all limited partners or owners of
interests therein shall be entitled to assume or guaranty
indebtedness of the Operating Partnership as of the Partnership
Closing Date and any refinancing date in such proportions as they
request.
2.3 THE CLOSING. Sections 4.1-4.3 shall be amended to read in their
entirety as follows:
4.1 THE CLOSING DATE.
Subject to Shareholder Approval, the closing of the transactions
contemplated by this Agreement, excluding the transactions described
in Sections 3.1, 3.2, and 3.3 to be concluded on the Partnership
Closing Date, shall take place (the "Closing") at the offices of
Berg & Berg Enterprises, Inc., 10050 Bandley Drive, Cupertino,
California at 10:00 a.m., P.D.T., on the last business day of the
calendar month in which the Special Meeting is held (the "Closing
Date"). The Partnership Closing for the transactions described in
Sections 3.1, 3.2 and 3.3 shall take place at the same offices,
effective at the close of business on July 1, 1998 (the "Partnership
Closing Date").
4.2 DELIVERIES.
(a) On the Partnership Closing Date: (i) the Company shall
deliver a Demand Note to each Constituent Partnership as provided in
Section 3.3, and the Company shall receive the general partner
interest in each of the Constituent Partnerships and such
certificates representing the same as shall be available; (ii) the
Contributing Entities shall deliver good and marketable title to the
Contributed Properties (other than the Fremont Properties) by grant
deeds executed and acknowledged by the applicable Contributing
Entity, and the Operating Partnership shall deliver to the
Contributing Entities certificates representing the number of L.P.
Units set forth opposite each respective Contributing Entity's name
on Schedule 5 hereto (other than L.P. Units issuable in exchange for
the contribution of the Fremont Properties); (iii) the Company and
all other partners in each of the Constituent Partnerships shall
sign and deliver the Operating Partnership Agreement to
representatives of the respective parties at the Partnership
Closing; and (iv) each of the general partners in each of the
Constituent Partnerships shall execute and deliver a certificate of
amendment of certificate of limited partnership designating the
Company as the new sole general partner in the partnership.
(b) On the Closing Date, (i) the parties to the Pending
Projects Acquisition Agreement and the Berg Land Holdings Option
Agreement shall deliver duly executed copies of the agreements to
each party thereto; (ii) the Company, each Constituent Partnership
and all of the Limited Partners shall sign and deliver the Exchange
Rights Agreement to the representatives of the respective parties at
the Closing; (iii) Carl E. Berg shall deliver good and marketable
title to the Fremont Properties by duly executed and acknowledged
grant deeds, and the Operating Partnership shall deliver to Carl E.
Berg a certificate representing 3,061,427 L.P. Units; and (iv) the
Company shall pay in immediately available funds to the Operating
Partnership One Million Six Hundred Ten Thousand Six Hundred
Sixty-Seven Dollars ($1,610,667) as a contribution which equals
10.91% of the net equity value of the Fremont Properties, as the
contribution amount to be paid for the remainder of the Company's
10.91% general partner interest in MWP, and shall pay in immediately
available funds all other amounts payable on demand made by the
Operating Partnership pursuant to the terms of the Demand Notes.
4.3 ADJUSTMENTS. The amounts receivable by or payable to the
Contributing Entities (other than MWP III) at the Partnership
Closing based upon the pro rations required under this Section 4.3
shall be determined and the net amount shall be paid in cash at the
Partnership Closing by or to the Contributing Entity that owns the
particular Contributed Property to which the adjustment relates. The
items to be pro rated as of the Partnership Closing Date include the
following: real estate taxes (on the basis of the due dates of the
tax bills for the period for which such taxes are assessed) on the
Contributed Properties, personal property taxes on the Personal
Property, minimum water and sewer rentals, rents, including without
limitation, expense pass-throughs, percentage rents, income from and
expenses for electricity and other sums paid by tenants, licensees
and concessionaires and collected by the Contributing Entities prior
to the Partnership Closing Date under the Leases covering the
Contributed Properties, payments due under service agreements which
are to be assigned to the benefit of the Operating Partnership,
prepaid license fees and other charges for licenses and permits for
its Contributed Properties, which will remain in effect for the
benefit of the Operating Partnership after the Partnership Closing
Date, rental under any ground lease, municipal rubbish removal
charges, lease rejection awards made in any bankruptcy proceedings
of a tenant, and prepaid insurance premiums for insurance which will
remain in effect for the benefit of the Operating Partnership after
the Partnership Closing Date, if any, shall be apportioned pro rata
between the Contributing Entity and the Operating Partnership, on a
per diem basis as of midnight on the day before the Partnership
Closing Date, so that the Contributing Entity shall bear all
expenses with respect to its Contributed Properties and benefit from
all items of income with respect to its Contributed Properties
through the day before the Partnership Closing Date. To the extent
that the amounts of the items to be adjusted are not reasonably
ascertainable as of the Partnership Closing Date or there are any
other items which should properly be allocated at that time, they
shall be adjusted or taken into account by the affected Contributing
Entity and the Operating Partnership as promptly after the
Partnership Closing Date as the amounts thereof are ascertained.
2.4 CONDITIONS TO CLOSING. Section 5.2 is hereby amended to apply only to
the Partnership Closing as of the Partnership Closing Date. Section 5.2(d) shall
be amended by deleting such provision in its entirety and replacing it with the
following:
"PAYMENT OF CONTRIBUTION AMOUNT." The Company shall have executed
and delivered Demand Notes to the Operating Partnership in the
aggregate amount of Thirty-Three Million Five Hundred Eighty-nine
Thousand Three Hundred Thirty-three Dollars ($33,589,733)
substantially in the form attached hereto as Exhibit G."
Sections 5.3(a), (c) and (d) shall apply to the Partnership Closing and
the Closing, and Section 5.3(b) and Section 5.4, in its entirety, shall apply
only to the Partnership Closing.
2.5 REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE PROPERTIES. Section
7 is hereby amended to be applicable with respect to both the Partnership
Closing, and the Closing and compliance with any representation or warranty
waived by the parties with respect to the Partnership Closing shall be required
as of the Closing Date; provided, further that all such provisions shall apply
with respect to Carl E. Berg's contribution of the Fremont Properties to MWP
only as of the date such contribution occurs.
2.6 COMPANY CORPORATE ACTIONS. Section 8.3(a) is hereby amended to read in
its entirety as follows:
(a) SPECIAL MEETING. As soon as practicable, in accordance
with the CGCL and the Company's articles of incorporation and
bylaws, and the policies and regulations of the AMEX, the Company
shall take all action necessary to convene the Special Meeting as
soon as practicable to consider and vote to approve or ratify the
Proposed Transactions. The Company and all other parties to this
Agreement agree to use their respective ultimate best efforts to
obtain Shareholder Approval.
2.7 CORPORATE OPPORTUNITIES; FREEDOM OF ACTION. The provisions of Section
9.2 shall take effect as of the Partnership Closing Date immediately upon
completion of the Partnership Closing.
2.8 OPERATION OF THE OPERATING PARTNERSHIP. The provisions of Section 9.7
shall take effect as of the Partnership Closing Date immediately upon completion
of the Partnership Closing.
2.9 TERMINATION. Section 11.1 is amended to read in its entirety as
follows:
11.1 TERMINATION. This Agreement may be terminated by the Company or
by Carl E. Berg before the Closing occurs, whether before or after
the Shareholder Meeting only if the consummation of the Proposed
Transactions by the Company would violate any non-appealable final
order, decree or judgment of any Governmental Body having competent
jurisdiction.
Section 11.2 is amended to add the following sentence at the end thereof:
11.2 EFFECT OF TERMINATION. In the event of termination pursuant to
Section 11.1 as amended, the Company, the Constituent Partnerships
and the Contributing Entities shall take all actions and execute all
documents deemed reasonable or necessary to unwind the transactions
concluded at the Partnership Closing and, to the extent practicable
at the time, to restore each of the parties to the Agreement to the
position that such party was in on the date immediately preceding
the Partnership Closing Date, as if the Partnership Closing had not
occurred with respect to such party.
3. WAIVER OF CERTAIN CLOSING CONDITIONS. The parties hereto agree that the
conditions to Closing set forth in Sections 5.1(a) and (d) of the Acquisition
Agreement are hereby waived with respect to the Partnership Closing and need not
be completed prior to the Partnership Closing Date.
4. AMENDMENT OF EXHIBITS TO ACQUISITION AGREEMENT. The parties hereto agree that
any and all agreements attached as exhibits to the Acquisition Agreement shall
be amended as recommended by legal counsel to the extent necessary to conform to
the Acquisition Agreement as amended hereby.
5. CONTINUED EFFECT. Except as otherwise expressly provided herein, the
Acquisition Agreement will continue in full force and effect, in accordance with
its terms.
6. MISCELLANEOUS.
This Amendment and (unless otherwise provided) and waivers and consents
hereunder shall be governed by the internal laws of the State of California,
without regard to the conflicts of law principles thereof. This Amendment
constitutes the full and entire understanding and agreement among the parties
with regard to the subject matter contained herein, and supersedes all prior
written and oral agreements, representations and commitments, if any, among the
parties with respect to such subject matter, provided that each party hereto
hereby agrees to take such other actions and execute such additional documents
as may be necessary to effectuate the terms of this Amendment. This Amendment
may be executed in counterparts and delivered by electronic facsimile
transmission, and each signed counterpart transmitted by electronic facsimile
shall be considered an original, but all of which together shall constitute the
same instrument. Any provision of this Amendment may be waived or modified only
in accordance with Section 14.4 of the Acquisition Agreement.
[Remainder of the page intentionally left blank]
SIGNATURE PAGES OF AMENDMENT TO ACQUISITION AGREEMENT
IN WITNESS WHEREOF, the parties hereto have hereunto executed this
Amendment as of the first date written above, and a party's signature hereon in
any capacity shall constitute such party's execution of this Amendment in all
capacities which the party holds for purposes of this Amendment.
CONSTITUENT PARTNERSHIPS
MISSION WEST PROPERTIES, L.P., A DELAWARE LIMITED PARTNERSHIP
By:
Berg & Berg Enterprises, Inc., a California corporation
Its: General Partner
By:
Carl E. Berg
Its: President
By:
Thelmer Aalgaard
Its: Limited Partner
By:
Clyde J. Berg, Trustee, 1981 Kara Ann Berg Trust
Its: Limited Partner
By:
Michael L. Knapp
Its: Limited Partner
By:
Thelmer Aalgaard, Trustee of the Sonya L. Berg Trust
Its: Limited Partner
By:
Thelmer Aalgaard, Trustee of the Sherri L. Berg Trust
Its: Limited Partner
BERG FAMILY PARTNERS L.P., A DELAWARE LIMITED PARTNERSHIP
By:
Berg Family Partners, LLC
Its: General Partner
By:
Carl E. Berg
Its: Manager
By:
Berg Living Trust UTA dated May 1, 1981
Its: Limited Partner
By:
Carl E. Berg
Its: Trustee
By:
Mary Ann Berg
Its: Trustee
By:
Clyde J. Berg, Trustee, 1995 Clyde J. Berg Revocable Trust, dated
April 4, 1995
Its: Limited Partner
By:
Clyde J. Berg
Its: Trustee
By:
Clyde J. Berg, Trustee, Carl Berg Child's Trust UTA dated June 2, 1978
Its: Limited Partner
By:
Clyde J. Berg
Its: Trustee
BERG & BERG DEVELOPERS, L.P., A DELAWARE LIMITED PARTNERSHIP
By:
Berg & Berg Developers, LLC, a Delaware limited liability company
Its: General Partner
By:
Carl E. Berg
Its: Manager
By:
Carl E. Berg
Its: Limited Partner
By:
Mary Ann Berg
Its: Limited Partner
By:
Clyde J. Berg
Its: Limited Partner
KONTRABECKI ASSOCIATES, A CALIFORNIA LIMITED PARTNERSHIP
By:
John T. Kontrabecki
Its: General Partner
CONTRIBUTING ENTITIES
KONTRABECKI ASSOCIATES, A CALIFORNIA LIMITED PARTNERSHIP
By:
John T. Kontrabecki
Its: General Partner
TRIANGLE DEVELOPMENT, A CALIFORNIA LIMITED PARTNERSHIP
By:
Berg Ventures I
Its: General Partner
By:
John T. Kontrabecki
Its: General Partner
BERG VENTURES II, A CALIFORNIA LIMITED PARTNERSHIP
By:
John T. Kontrabecki
Its: General Partner
BACCARAT FREMONT DEVELOPERS, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY
By:
Michael L. Knapp
Its: Managing Member
BACCARAT CAMBRIAN, A CALIFORNIA GENERAL PARTNERSHIP
By:
Carl E. Berg
Its: General Partner
BERG & BERG ENTERPRISES INC., A CALIFORNIA CORPORATION
By:
Carl E. Berg
Its: President
DE ANZA OFFICE PARTNERS, A CALIFORNIA GENERAL PARTNERSHIP
By:
Carl E. Berg
Its: General Partner
THE COMPANY
MISSION WEST PROPERTIES, A CALIFORNIA CORPORATION
By:
Michael J. Anderson
Its: Vice President and Chief Operating Officer