MEMBERSHIP INTEREST PURCHASE
AGREEMENT
THIS
MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “
Agreement ”) is entered into as of August 14, 2008
(the “ Effective Date ”), by and between STIRR
SoCal Portfolio II, LLC, a Delaware limited liability company (the
“ Seller ”) and Pacific Office Properties, L.P.,
a Delaware limited partnership (the “ Purchaser
”) all of whom or which shall sometimes collectively be
referred to herein as the “ Parties ” and
individually as a “ Party .”
A. Seller is
a Member of and holds a Membership Interest in POP SoCal Partners,
LLC, a Delaware limited liability company (the “
Company ”). The affairs of the Company, its
management, and the rights, duties, privileges, preferences and
obligations of its members are currently set forth in and governed
by that certain POP SoCal Partners, LLC Limited Liability Agreement
dated as of September 26, 2007 (as amended from time to time,
the “ LLC Agreement ”). Capitalized terms used
in this Agreement without definition shall, unless the context
clearly indicates otherwise, have the meanings ascribed to such
terms in the LLC Agreement.
B. Seller
currently is the manager of the Company and currently owns a
membership interest in the company, in each case as more
particularly set forth in the LLC Agreement (such membership
interest of the Seller, as set forth in such LLC Agreement, being
referred to in this Agreement as the “ Seller’s
Membership Interest ”).
C. The
Company is the sole member of and owns all of the membership
interests in POP SoCal Mezzanine, LLC, a Delaware limited liability
company (“ POP Mezz ”), and POP Mezz is the sole
member of and owns all of the membership interests in both SoCal
GP, LLC, a Delaware limited liability company (“ GP
LLC ”) and SoCal GP II, LLC, a Delaware limited liability
company (“ GP II LLC ”).
D. GP LLC is
the sole general partner of (and owns an 0.5% economic interest in)
and POP Mezz is the sole limited partner of (and owns a 99.5%
economic interest in), each of the following Delaware limited
partnerships: (i) LaPalma Flex, LP; (ii) Poway Flex, LP;
(iii) Via Frontera, LP; (iv) SC Executive Center, LP;
(v) Yorba Linda BP, LP; (vi) Gateway Corporate Center,
LP; and (vii) Savi Tech Center, LP (collectively, the “
SoCal Project Owners ”).
E. GP II LLC
is the sole general partner of (and owns an 0.5% economic interest
in) and POP Mezz is the sole limited partner of (and owns a 99.5%
economic interest in) Carlsbad CC, LP, a Delaware limited
partnership (the “Carlsbad Project Owner” and, together
with the SoCal Project Owners, the “ Project Owners
”) (the Project Owners, together with the Company, GP LLC and
POP Mezz, are also sometimes collectively referred to as the
“ POP Affiliates ” and each individually as a
“ POP Affiliate ”).
F. The
Project Owners collectively own the Project (as defined in the LLC
Agreement).
G. Seller
desires to sell to Purchaser, and Purchaser desires to purchase
from Seller, all of Seller’s Membership Interest in the
Company upon the terms and conditions set forth in this
Agreement.
NOW
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby
agree as follows:
1.
Purchase, Sale and Assignment of Seller’s Membership
Interest . Purchaser hereby agrees to, and hereby does,
purchase and acquire from Seller, and Seller hereby agrees to, and
hereby does, sell, transfer and convey to Purchaser, all of the
Seller’s right, title and interest in and to the
Seller’s Membership Interest, subject to and in accordance
with the terms and conditions of this Agreement (the “
Assignment ”), which Assignment shall be and hereby is
effective as of the Effective Date of this Agreement. The term
“ Seller’s Membership Interest ” includes,
without limitation: (a) all of Seller’s right, title and
interest in and to the Seller’s Membership Interest,
including all capital, profits, losses and distributions of cash
flow of the Company relating thereto; (b) Seller’s
entitlement to any priority returns with respect thereto (including
amounts attributable to the STIRR Preferred Return Account and/or
Minimum Profit Amounts, as each term is defined in the LLC
Agreement), if any, from the Company; and (c) any and all
other rights, privileges, preferences and obligations granted to
Seller or that Seller may have or hold in the Company with respect
to such Seller’s Membership Interest, including, but not
limited to, the rights, privileges, preferences and obligations
granted to and/or imposed upon the Managing Member (provided,
however, that Purchaser’s rights with respect to any Minimum
Profit Amounts shall begin only with such Minimum Profit Amounts as
accrue pursuant to the LLC Agreement beginning with the last
business day of August, 2008, with any such prior accrued amounts
being for the benefit of the Seller).
2. Form
of Assignment . Concurrently herewith, Seller and Purchaser
shall each execute and deliver counterparts of the Assignment of
Membership Interests in the form attached hereto as
Exhibit A (the “ Assignment Instrument
”).
3.
Purchase Price . As consideration for the Assignment, on and
as of the Effective Date, Purchaser shall pay to Seller the sum of
Four Million Two Hundred Forty-Three Nine Hundred Eighteen Dollars
and No Cents ($4,243,918.00) (the “ Purchase Price
”). The Purchase Price shall be payable by Purchaser to
Seller by delivery to Seller of a Promissory Note in the amount of
the Purchase Price, in the form attached here to as
Exhibit B . The Promissory Note shall at all times be
an unsecured obligation of the maker thereunder.
4.
Representations and Warranties of Seller . Seller hereby
represents and warrants to Purchaser that the following matters are
true and correct as of the Effective Date and covenants as
follows:
4.1
Seller’s Membership Interest . Seller owns the
Seller’s Membership Interest, free and clear of any and all
liens, encumbrances and interests of any third parties. Seller has
good right and lawful authority to assign, transfer and deliver the
Seller’s Membership Interest and the Assignment Instrument as
provided herein.
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4.2
Title to Project . The Company owns (both beneficially and
of record) all of the issued and outstanding membership interests
of POP Mezz, free and clear of any and all liens, encumbrances and
interests of any third parties. POP Mezz owns (both beneficially
and of record) all of the issued and outstanding membership
interests of both GP LLC and GP II LLC, in each case, free and
clear of any and all liens, encumbrances and interests of any third
parties. POP Mezz owns (both beneficially and of record) all of the
issued and outstanding limited partnership interests of each
Project Owner, free and clear of any and all liens, encumbrances
and interests of any third parties. GP LLC owns (both beneficially
and of record) all of the general partnership interests in each
SoCal Project Owner, free and clear of any and all liens,
encumbrances and interests of any third parties. GP II LLC owns
(both beneficially and of record) all of the general partnership
interests in the Carlsbad Project Owner, free and clear of any and
all liens, encumbrances and interests of any third parties. The
Project Owners own fee simple title to the Project, subject only to
the Permitted Exceptions (as defined in Section 8.1,
below).
4.3
Seller’s Deliveries . All items delivered by Seller
pursuant to this Agreement, are, to Seller’s knowledge, true,
accurate, correct and complete in all material respects, and fairly
present the information set forth in a manner that is not
materially misleading. Seller has delivered or made available to
Purchaser copies of all of the material Leases and other material
agreements relating to or affecting the ownership and operation of
the Project and to Seller’s knowledge, such copies are true
and complete.
4.4
Defaults . To Seller’s knowledge, neither the
execution of this Agreement nor the consummation of the
transactions contemplated by this Agreement will: (a) conflict
with, or result in a breach of, the terms, conditions or provisions
of, or constitute a default under, any agreement or instrument to
which the Seller and/or any POP Affiliate is a party or by which
the Seller and/or any POP Affiliate or the Project is bound,
(b) violate any restriction, requirement, covenant or
condition to which Seller and/or any POP Affiliate is subject or by
which Seller and/or any POP Affiliate or the Project is bound,
(c) constitute a violation of any applicable code, resolution,
law, statute, regulation, ordinance, rule, judgment, decree or
order applicable to the Seller and/or any POP Affiliate, or
(d) result in the cancellation of any contract or Lease
pertaining to the Project; except in any instance in any of (a)
— (d) such as would not have a Material Adverse Effect.
To Seller’s knowledge, no authorization, approval or other
action by and, no notice to or filing with, any Governmental
Authority is required for assignment and transfer of the
Seller’s Membership Interest to Purchaser hereunder or for
the execution or delivery of the Assignment Instrument.
4.5
Contracts . To Seller’s knowledge, and except with
respect to property management agreements and other service
agreements that are normal and customary for the operation of the
Project, there are no contracts relating to the management,
leasing, operation, maintenance or repair of the Project, except
those which may be terminated without penalty or other payment by
one or more of the Project Owners (or its assignee, including
Purchaser, or successor) upon no more than thirty
(30) days’ prior notice.
4.6
Leases . With respect to each Lease and to Seller’s
knowledge:
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(a) such
Lease is legal, valid, binding, enforceable and in full force and
effect in accordance with its respective terms, subject to the
qualification that the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws, now or hereafter in effect, affecting
creditors’ rights generally, and except that the availability
of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding for the
enforcement thereof may be brought and further subject to any other
legal defenses to enforcement that may be available to the lessor
thereunder;
(b) neither
the landlord under such Lease nor any other party to such Lease is
in breach or default (subject to applicable notice and cure
periods) that would have a Material Adverse Effect; and no event
has occurred that permits termination, modification or
acceleration, such that any such termination, modification or
acceleration would have a Material Adverse Effect;
(c) neither
the landlord under the Lease nor any other party to such Lease has
repudiated (in writing) any provision thereof, such that any such
repudiation would have a Material Adverse Effect;
(d) neither
Seller nor any POP Affiliate has received any written notice of any
pending disputes under such Lease, nor is there any forbearance
program in effect as to such Lease, such that any such dispute or
forbearance program would have a Material Adverse Effect;
and
(e) neither
Seller, the Company, POP Mezz, GP LLC, nor the Project Owners have
received any written notice from any governmental authority having
jurisdiction over the Project (“ Governmental
Authority ”) alleging the failure of either or both of
the Project and the tenant under the applicable Lease to comply
with all applicable laws, rules and regulations in all material
respects, such that any such failure would have a Material Adverse
Effect.
4.7
Physical Condition . To Seller’s knowledge, all of the
Improvements (as defined in the LLC Agreement) that are material to
the operation of the Project are in good operating condition and
repair, subject only to ordinary wear and tear, maintenance and
capital expenditures in the ordinary and normal course of the
ownership and operation of the Project. To Seller’s
knowledge, there is no existing patent or latent structural or
other physical defect or deficiency in the condition of the
Project, or any component or portion thereof, that would have a
Material Adverse Effect.
4.8
Compliance with Laws and Codes . To Seller’s
knowledge, the Project, and the use and operation thereof, is (or
the use and operation of any component, portion or area of the
Project is) in material compliance with applicable municipal and
other governmental laws, ordinances, regulations, codes. Each of
the Project Owners possesses the material licenses, permits and
authorizations for the use, occupancy and operation of its
respective portion of the Project as it is presently being
operated, except where such violation or failure would not have a
Material Adverse Effect. To Seller’s knowledge, no notice,
citation, summons or order has been issued, nor has Seller or any
POP Affiliate received any written notice from any
Governmental
4
Authority that
any investigation or review is pending or threatened by such
Governmental Authority with respect to any alleged violation by
either of the Project Owners of any such laws, statutes, rules,
regulations or orders, except where the failure to comply with the
same would not have a Material Adverse Effect.
4.9
Litigation . There are no pending, or to Seller’s
knowledge, threatened judicial, municipal or administrative
proceedings affecting the Project or against either of the Project
Owners affecting the use, ownership or operation of the Project or
any portion thereof, except in any such case as would not have a
Material Adverse Effect.
4.10
Insurance . The Project Owners now have in force customary
insurance relating to the Project, or as may be required by any
lender in connection with the Property Indebtedness with respect to
the Project (the “ Insurance ”). To
Seller’s knowledge, none of the Project Owners have received
any written notice of cancellation or non-renew
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