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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 18, 1996
THE PEREGRINE REAL ESTATE TRUST
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(Exact name of registrant as specified in its charter)
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California 0-9097 94-2255677
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification
incorporation or organization) Number)
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1300 Ethan Way, Suite 200
Sacramento, California 95825
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(Address of principal executive offices) (Zip Code)
(916) 929-8244
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENT
On September 18, 1996, The Peregrine Real Estate Trust (the "Trust")
entered into a Stock Purchase Agreement (the "Purchase Agreement") with MDC REIT
Holdings LLC ("MDC"), an affiliate of the investment banking firm McCown De
Leeuw & Co., for the sale of the Trust's 76% interest in the California Real
Estate Investment Trust ("CalREIT"). Under the terms of the Purchase Agreement,
MDC would purchase the stock for $20.5 million in cash plus a deferred payment
contingent on the value of one of CalREIT's assets. Closing of the transaction
is subject to financing and various other closing conditions. Following the
closing, CalREIT is expected to adopt a new business strategy involving the
acquisition and disposition of loans secured by real property.
ITEM 7. EXHIBITS
Exhibit No. Description
1. Stock Purchase Agreement, dated as of September 18,
1996, by and between The Peregrine Real Estate Trust
and MDC REIT Holdings LLC.
2. Escrow Agreement, dated as of September 18, 1996,
among The Peregrine Real Estate Trust, MDC REIT
Holdings LLC and Norwest Bank Colorado, N.A.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE PEREGRINE REAL ESTATE TRUST
(Registrant)
Date: September 27, 1996 /s/ Joseph M. Mock
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Joseph M. Mock
President and Chief Executive Officer
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EXHIBIT 1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of the 18th
day of September, 1996, between MDC REIT HOLDINGS LLC, a Delaware limited
liability company ("Buyer"), and THE PEREGRINE REAL ESTATE TRUST, a California
business trust ("Seller").
W I T N E S S E T H
WHEREAS, Seller owns 6,959,593 common shares of beneficial interest
(the "Shares") of California Real Estate Investment Trust ("CalREIT");
WHEREAS, the Shares represent approximately seventy-six percent (76%)
of the outstanding common shares of beneficial interest of CalREIT;
WHEREAS, Buyer has experience in the real estate industry and in the
operation of REITs and has presented to Seller the Business Plan, which is
designed to increase value for all shareholders of CalREIT and which is
contingent upon Buyer's purchase of the Shares; and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, the Shares;
NOW, THEREFORE, in consideration of the premises and of their mutual
covenants and agreements set forth in this Agreement, Buyer and Seller hereby
agree as follows:
ARTICLE 1
Section 1.1 Certain Defined Terms. Capitalized terms not otherwise
defined in this Agreement shall have the meanings specified in Exhibit 1.1 to
this Agreement.
Section 1.2 Agreement to Sell and to Purchase. On the terms and subject
to the conditions of this Agreement, Seller shall sell, convey, assign, transfer
and deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller,
at the Closing, the Shares.
ARTICLE 2
PURCHASE PRICE AND PAYMENT
Section 2.1 Purchase Price. In consideration for the Shares, upon the
terms and subject to the conditions of this Agreement, Buyer shall pay to Seller
the Purchase Price. The "Purchase Price" shall consist of (a) Twenty Million
Five Hundred Thousand Dollars ($20,500,000) in immediately available funds (the
"Cash Payment"), together with (b) the South Coast Note Payment. Buyer shall pay
the Cash Payment at the Closing by wire transfer pursuant to written
instructions of Seller delivered at lease two (2) days prior to the Closing. The
South Coast Note Payment shall be paid as set forth in Section 3.4 (South Coast
Note) of this Agreement.
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ARTICLE 3
CLOSING
Section 3.1 Closing Date. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place in the offices of Farella
Braun & Martel LLP, 235 Montgomery Street, 30th Floor, San Francisco, California
94104, on or before the Schedule Date (as the Schedule Date may be extended
pursuant to Section 9.2(b) (Extension of Schedule Date) of this Agreement), or
at such other place or time as the parties may agree (the "Closing Date").
Section 3.2 Seller's Deliveries at Closing. At the Closing, in addition
to any other documents specifically required to be delivered pursuant to this
Agreement, Seller shall deliver or cause to be delivered to Buyer the following:
(a) A stock certificate or certificates representing all of
the Shares, accompanied by a stock power or stock powers duly executed in blank
or duly executed instruments of transfer and any other documents necessary to
transfer title to the Shares to Buyer;
(b) A certificate of the Secretary of Seller dated as of the
Closing Date certifying the resolutions of the Board of Trustees of Seller
authorizing and approving this Agreement and the transactions contemplated by
this Agreement;
(c) A receipt, executed by Seller, acknowledging receipt of
the Cash Payment; and
(d) Such other documents, officers' certificates, other
certificates or instruments consistent with this Agreement as are reasonably
requested by Buyer.
Section 3.3 Buyer's Deliveries at Closing. At the Closing, in addition
to any other documents specifically required to be delivered pursuant to this
Agreement, Buyer shall deliver or cause to be delivered to Seller:
(a) The Cash Payment;
(b) A certificate of the Secretary of Buyer dated as of the
Closing Date certifying the resolutions of the Board of Directors of Buyer
authorizing and approving this Agreement and the transactions contemplated by
this Agreement;
(c) A receipt, executed by Buyer, acknowledging receipt of the
documents by which the Sellers sell, convey, assign, transfer and deliver the
Shares to Buyer; and
(d) Such other documents, officers' certificates, other
certificates or instruments consistent with this Agreement as are reasonably
requested by Seller.
Section 3.4 South Coast Note.
(a) Buyer's Control of CalREIT. After the Closing, Buyer shall
use its best efforts to cause CalREIT to take or refrain from such actions as
are necessary to carry out the provisions of this Section 3.4.
(b) Determination of South Coast Note Value by Sale. Prior to
the South Coast Note Determination Date, CalREIT will make a commercially
reasonable effort to market
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the South Coast Note, provided, that CalREIT shall not sell or transfer any
portion of the South Coast Note before the South Coast Note Determination Date
other than in an arms-length, all-cash sale of all of CalREIT's interest in the
South Coast Note. The proceeds of any sale of the South Coast Note which closes
before the South Coast Note Determination Date, net of reasonable and customary
actual broker and escrow fees and other closing costs, shall be deemed to be the
South Coast Note Value.
(c) Determination of South Coast Note Value by the Parties.
If, on the South Coast Determination Date, the South Coast Note has not been
sold as set forth in subsection (b) of this Section 3.4, then CalREIT and Seller
shall determine the South Coast Note Value, as of the South Coast Determination
Note Date, by the following procedure: CalREIT shall promptly provide Seller
with access to all documents or information within the control of CalREIT or
Buyer related to the South Coast Note, the obligor thereunder and the collateral
therefor. Within fifteen (15) Business Days of the South Coast Note
Determination Date, CalREIT and Seller shall each submit to the other in writing
a proposed valuation of the South Coast Note and any justification for such
valuation. If Seller's proposed valuation is equal to or less than one hundred
ten percent (110%) of CalREIT's proposed valuation, then the South Coast Note
Value shall be deemed to be equal to the average of the proposed valuations. If
Seller's proposed valuation is greater than one hundred ten percent (110%) of
CalREIT's proposed valuation, then the parties shall attempt to determine the
South Coast Note Value by good faith negotiation, failing which either party may
elect that the matter be submitted to binding arbitration, as set forth in
subsection (d) of this Section 3.4.
(d) Determination of South Coast Note Value by Arbitration. If
determination of the South Coast Note Value has been submitted to binding
arbitration by either party pursuant to subsection (c) of this Section 3.4, the
arbitration shall be conducted by a single arbitrator in San Francisco,
California, under the rules of the American Arbitration Association (the "AAA"),
modified as provided in this Agreement. The arbitrator shall be limited to an
award equal to one or the other of the proposed valuations submitted by the
parties pursuant to subsection (c), by choosing the proposed valuation closest
to the arbitrator's own valuation of the South Coast Note. The arbitrator shall
have at least five (5) years experience in the valuation of promissory notes
secured by real property and shall be selected in accordance with the rules of
the AAA. The arbitration award may be confirmed in any court of competent
jurisdiction. Notwithstanding the provisions of Section 11.10 (Attorney's Fees)
of this Agreement, each party shall bear the expense of its own attorney's fees,
witness fees, and costs for the preparation and presentation of evidence related
to the arbitration, except that fees and expenses payable to AAA shall be borne
by the parties equally.
(e) South Coast Note Payment. Within ten (10) Business Days
after the South Coast Note Value has been determined pursuant to this Section
3.4, Buyer shall make the South Coast Note Payment to Seller.
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ARTICLE 4
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Except to the extent expressly waived in writing by Buyer, all
obligations of Buyer under this Agreement are subject to the fulfillment, at or
before the Closing, of all of the following conditions:
Section 4.1 Representations and Warranties True at Closing. Each of the
representations and warranties of Seller contained in this Agreement shall be
true in all material respects on and as of the Closing Date with the same effect
as though made on and as of such date.
Section 4.2 Performance. Seller shall have performed in all material
respects each of the obligations of Seller to be performed on or prior to the
Closing pursuant to this Agreement.
Section 4.3 CalREIT Board Approval. The Trustees of CalREIT shall have
duly (a) approved transfer of the Shares to Buyer on the records of CalREIT
promptly upon the Closing, and (b) exempted from the "Limit" (as defined in the
CalREIT Declaration of Trust) and from the filing requirements of Section
4.10(f) of the CalREIT Declaration of Trust the ownership by Buyer of the Shares
following the Closing.
Section 4.4 CalREIT Secretary's Certificate. Buyer shall have received
a certificate of the Secretary of CalREIT, dated as of the Closing Date,
certifying the resolutions of the Board of Trustees of CalREIT which satisfy the
conditions set forth in Section 4.3 (CalREIT Board Approval) of this Agreement.
Section 4.5 Opinion of CalREIT's Counsel. Buyer shall have received an
opinion of counsel to CalREIT, Greenberg Glusker Fields Claman & Machtinger LLP,
dated as of the Closing Date, reasonably satisfactory to Buyer, covering the
matters set forth on Exhibit 4.5 attached to this Agreement (the "Greenberg
Letter").
Section 4.6 Opinion of CalREIT's Auditor. Buyer shall have received an
opinion of CalREIT's auditor, Coopers & Lybrand L.L.P., dated as of the Closing
Date, reasonably satisfactory to Buyer, covering the matters set forth on
Exhibit 4.6 attached to this Agreement (the "Coopers Letter").
Section 4.7 Opinion of Seller's Counsel. Buyer shall have received an
opinion of counsel to Seller, Farella Braun & Martel LLP, dated as of the
Closing Date, reasonably satisfactory to Buyer, covering the matters set forth
on Exhibit 4.7 attached to this Agreement (the "Farella Letter").
Section 4.8 No Material Adverse Change. From and after the date of this
Agreement, there shall not have been any change in or effect on the business of
CalREIT or any occurrence, development or event of any nature, that has had or
may reasonably be expected to have a material adverse effect on the financial
condition, results of operation or prospects of CalREIT.
Section 4.9 Buyer's Financing. Buyer shall have arranged financing for
its acquisition of the Shares, on terms and conditions acceptable to Buyer.
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Section 4.10 Trustees' Tender of Resignations. Each Trustee of CalREIT
who is also a Trustee of Peregrine shall have tendered his or her resignation as
a Trustee of CalREIT, effective as of the Closing Date.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
Except to the extent expressly waived in writing by Seller, the
obligations of Seller set forth in this Agreement are subject to the
fulfillment, at or before the Closing, of all of the following conditions:
Section 5.1 Representations and Warranties True at Closing. Each of the
representations and warranties of Buyer contained in this Agreement shall be
true in all material respects on and as of the closing Date with the same effect
as though made on and as of such date.
Section 5.2 Performance. Buyer shall have performed in all material
respects each of the obligations of Buyer to be performed on or prior to the
Closing pursuant to this Agreement.
Section 5.3 Fairness Opinion. Seller shall have received a "bringdown,"
as of the Closing Date, to the opinion of Dillon, Read, previously delivered to
Seller, as to the fairness, from a financial point of view, of the Purchase
Price for the Shares.
Section 5.4 Consents. Seller shall have received consents and approvals
regarding this Agreement and the transactions contemplated in this Agreement, in
form and substance satisfactory to Seller, from (a) Seller's secured lenders,
including but not limited to a release of the Shares and the proceeds of the
sale of the Shares to Buyer, and (b) CalREIT, including but not limited to
resolution of any existing business arrangements between CalREIT and Seller.
Section 5.5 Opinion of Buyer's Counsel. Seller shall have received an
opinion of counsel to Buyer, Gibson, Dunn & Crutcher LLP, dated as of the
Closing Date, reasonably satisfactory to Seller, covering the matters set forth
on Exhibit 5.5 attached to this Agreement (the "Gibson Letter").
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF BOTH PARTIES
The obligations of Seller and Buyer pursuant to this Agreement are
subject to the fulfillment at or prior to the Closing Date of each of the
following conditions:
Section 6.1 No Legal Impediments. No law, rule, regulation, order,
judgment, decree or injunction (including any order entered in the Bankruptcy
Case) shall have been enacted, entered, promulgated, enforced or deemed
applicable by any court or governmental or regulatory authority which prohibits
the consummation of the transactions contemplated hereby; provided, however,
that the parties shall use their best efforts, and shall have a reasonable
period of time not to exceed thirty (30) calendar days, to have any such order,
judgment, decree or injunction vacated or reversed; nor shall there be any
pending or threatened actions or proceedings by any person or entity challenging
or in any manner seeking to restrict or prohibit the transactions contemplated
hereby or seeking to obtain any damages against any person or entity as a result
of the transactions contemplated hereby.
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Section 6.2 REIT Status. Neither the transfer of the Shares to Buyer pursuant to
the terms of this Agreement, nor the ownership of such Shares by Buyer after the
Closing, will jeopardize the qualification of CalREIT as a REIT.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
Section 7.1 Trust Existence and Power. Seller is a business trust duly
organized, validly existing and in good standing under the laws of the State of
California. Seller has full power and authority to enter into this Agreement and
perform its obligations under this Agreement.
Section 7.2 Trust Authorization. Seller's execution, delivery and
performance of this Agreement and the consummation by Seller of the transactions
contemplated by this Agreement have been duly authorized by all requisite trust
action of Seller.
Section 7.3 Binding Effect and Authority. This Agreement has been duly
executed and delivered by Seller, and constitutes a valid and binding agreement
of Seller.
Section 7.4 Consents and Approvals; No Violation. Except as set forth
in Section 5.4 (Consents) and Section 4.3 (CalREIT Board Approval) of this
Agreement, neither the execution and delivery of this Agreement by Seller nor
the consummation by Seller of the transactions contemplated hereby will (a)
conflict with or result in any breach of any provision of Seller's Declaration
of Trust or the bylaws of Seller, or, to the best of Seller's knowledge, the
CalREIT Declaration of Trust or the bylaws of CalREIT, (b) require any filing
with, or the obtaining of any permit, authorization, consent or approval of, any
court or governmental or regulatory authority, (c) to the best knowledge of
Seller, result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, agreement, lease or other
instrument or obligation to which Seller or CalREIT is a party or by which
Seller or CalREIT may be bound, except for defaults (or rights of termination,
cancellation or acceleration) as to which requisite waivers or consents have
been obtained, or (d) to the best knowledge of Seller, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Seller or CalREIT;
provided, that the foregoing clauses (b), (c) and (d) shall not apply to
requirements, defaults or violations which would not have a material adverse
effect on the business, operations or financial condition of Seller or CalREIT,
as the case may be.
Section 7.5 Title to Shares. At the Closing, Seller will convey the
Shares to Buyer free and clear of any and all Liens, except for restrictions on
transfer pursuant to federal or applicable state securities laws.
Section 7.6 Brokers' Fees. Except for the engagement of Dillon, Read,
whose fees are the responsibility of Seller, no investment banker, broker,
finder or other intermediary has been retained by or is authorized to act on
behalf of Seller who might be entitled to any fee or commission from Buyer or
any of its Affiliates upon consummation of the transactions contemplated by this
Agreement.
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ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
Section 8.1 Existence and Power. Buyer is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full power and authority to enter into this Agreement
and perform its obligations under this Agreement.
Section 8.2 Authorization. Buyer's execution, delivery and performance
of this Agreement and the consummation by Buyer of the transactions contemplated
by this Agreement have been duly authorized by all requisite action of Buyer.
Section 8.3 Binding Effect. This Agreement has been duly executed and
delivered by Buyer, and constitutes a valid and binding agreement of Buyer.
Section 8.4 Consents and Approvals; No Violation. Neither the execution
and delivery of this Agreement by Buyer nor the consummation by Buyer of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of the certificate of formation or operating agreement of
Buyer; (b) require any filing with, or the obtaining of any permit,
authorization, consent or approval of, any court or governmental or regulatory
authority; (c) to the best knowledge of Buyer, result in a default (or give rise
to any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which Buyer is a party or
by which Buyer or any of its assets may be bound, except for defaults (or rights
of termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained; or (d) to the best knowledge of Buyer, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Buyer, or any of its assets; provided, that the foregoing clauses (b), (c) and
(d) shall not apply to requirements, defaults or violations which would not have
a material adverse effect on the business, operations or financial condition of
Buyer.
Section 8.5 Brokers' Fees. No investment banker, broker, finder or
other intermediary has been retained by or is authorized to act on behalf of
Buyer who might be entitled to any fee or commission from Seller, CalREIT or any
of Seller's other Affiliates upon consummation of the transactions contemplated
by this Agreement.
Section 8.6 Investment. Buyer is acquiring the Shares for investment
for its own account and not with a view to, or for resale in connection with,
any distribution of the Shares, and it has no present intention of selling or
distributing the Shares. Buyer understands that the Shares have not been
registered under the Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent as expressed herein.
Section 8.7 Rule 144. Buyer acknowledges that, because they have not
been registered under the Securities Act, the Shares constitute "restricted
securities" under Rule 144 and must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available. Buyer is aware of the provisions of Rule 144 promulgated under the
Securities Act which permits limited resale of shares purchased in a
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private placement subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the shares, the
availability of certain current public information about CalREIT, the resale
occurring not less than two years after a party has purchased and paid for the
security to be sold, the sale being through a "broker's transaction" or in
transactions directly with a "market maker" (as provided by Rule 144(f)) and the
number of shares being sold during any three-month period not exceeding
specified limitations (unless the sale is within the requirements of Rule
144(k)).
Section 8.8 Investigation by Buyer. Buyer has conducted its own
independent investigation, review and analysis of the business assets, financial
condition, legal and REIT status and prospects of CalREIT ("Buyer's
Investigation"). Buyer acknowledges that, to its knowledge, it has had full
access to all documents, records, reports, tax returns, properties, personnel
and other information relating to CalREIT that it has requested for purposes of
Buyer's Investigation. In entering into this Agreement, Buyer has relied solely
upon Buyer's Investigation, and Buyer acknowledges (a) that none of Seller, or
any of its respective trustees, directors, officers, employees, agents,
representatives, attorneys, advisers or shareholders, makes any representation
or warranty, either express or implied, as to the accuracy or completeness of
any of the information provided or made available to Buyer or its agents or
representatives, and (b) to the fullest extent permitted by law, that none of
Seller, or any of its respective trustees, directors, officers, employees,
agents, representatives, attorneys, advisers or shareholders, shall have any
liability or responsibility to Buyer or any of its agents or representatives on
any basis (including, without limitation, in contract or tort, under federal or
state securities laws) based upon any information provided or made available, or
statements made, to Buyer or its agents or representatives, except for the
specific representations and warranties of Seller set forth in Article 7
(Representations and Warranties of Seller) of this Agreement. Nothing in this
Section 8.8 shall affect the liability of any party (i) for fraud or intentional
misrepresentations or (ii) with respect to the opinions to be delivered to Buyer
under Sections 4.5, 4.6 or 4.7 of this Agreement.
Section 8.9 Transfer of Shares to Buyer. Neither the transfer of the
Shares to Buyer pursuant to the terms of this Agreement, nor the ownership and
operation of CalREIT after the Closing pursuant to the Business Plan, will
jeopardize the qualification of CalREIT as a REIT.
ARTICLE 9
COVENANTS AND AGREEMENTS
Section 9.1 Covenant of Seller. Seller shall not, directly or
indirectly, initiate contact with, solicit or encourage any inquiries or
proposals by, or negotiations with, any person or entity (other than Buyer) in
connection with any possible proposal regarding a sale of all or any of the
Shares.
Section 9.2 Covenants of Buyer.
(a) Deposit. Concurrent with Buyer's execution of this
Agreement, Buyer shall deposit with the Escrow Agent pursuant to the Escrow
Agreement attached hereto as Exhibit 9.2 the sum of One Hundred Fifty Thousand
Dollars ($150,000) (the "Deposit") for the benefit of Seller.
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(b) Extension of Schedule Date. If the IRS Letter has been
received and the parties have agreed on the final form of the REIT Status
Letters on or before 5:00 p.m., Pacific Time on Friday, October 4, 1996, then
(i) Buyer shall have the right, on or before the Schedule Date, to deposit with
the Escrow Agent for the benefit of Seller Fifty Thousand Dollars ($50,000) (the
"First Progress Payment") to extend the Schedule Date for fourteen (14) calendar
days, and (ii) Buyer shall have the right, on or before the end of such
extension period, to deposit with the Escrow Agent for the benefit of Seller an
additional Fifty Thousand Dollars ($50,000) (the "Second Progress Payment") to
extend the Schedule Date until the later of either the expiration of an
additional fourteen (14) calendar day period or October 15, 1996. If the IRS
Letter has not been received or the parties have not agreed upon the final form
of the REIT Status Letters on or before 5:00 p.m., Pacific Time on October 4,
1996, then Buyer shall have the right, on or before the Schedule Date, to
deposit with the Escrow Agent for the benefit of Seller the First Progress
Payment to extend the Schedule Date for fourteen (14) calendar days, but Buyer
shall not have the right to make the Second Progress Payment to obtain an
additional extension. In the event that any law, rule, regulation, order,
judgment, decree or injunction (including any order entered in the Bankruptcy
Case) has been enacted, entered, promulgated, enforced or deemed applicable by
any court or governmental or regulatory authority which prohibits the
consummation of the transactions contemplated by this Agreement, the time
periods set forth in this Section 9.2(b) shall be tolled one day for each day
(not to exceed thirty (30) calendar days) that such law, rule, regulation,
order, judgment, decree or injunction remains in force.
(c) No Receipt of REIT Status Letters. If the IRS Letter has
not been received or the parties have not agreed upon the final form of the REIT
Status Letters on or before 5:00 p.m., Pacific Time on Tuesday, October 22,
1996, then either Buyer or Seller may terminate this Agreement by notice to the
other party.
(d) Liquidated Damages. The parties acknowledge that, in the
event Buyer defaults in the due and timely performance of its obligations under
this Agreement, or if any of its representations or warranties set forth in this
Agreement are untrue in any material respect (each, a "Buyer's Default"), or if
Buyer fails to satisfy the Financing Condition or the REIT Status Condition,
Seller's damages would be extremely difficult or impracticable to determine. If
the transactions contemplated by this Agreement fail to close on or before the
Schedule Date, as extended, due to Buyer's Default or to Buyer's failure to
satisfy either the Financing Condition or the REIT Status Condition, Seller
shall be entitled to receive from the Escrow Agent the Deposit and the First and
Second Progress Payments as liquidated damages. If the transactions contemplated
by this Agreement fail to close due to reasons other than Buyer's Default or to
Buyer's failure to satisfy either the Financing Condition or the REIT Status
Condition, then the Deposit and the First and Second Progress Payments shall be
promptly returned to Buyer by the Escrow Agent.
(e) Buyer's Business Plan. Buyer has delivered to Seller a
true and complete copy of the Business Plan. Pursuant to the Business Plan,
after the Closing Date, CalREIT intends to acquire, hold, and dispose of loans
secured by real property. Buyer (i) believes that the Business Plan is
achievable and intends to carry out the Business Plan as delivered and (ii)
represents that the Business Plan (including any amendment, modification or
successor plan adopted after the Closing Date by the Board of Trustees of
CalREIT in its good faith business
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judgment based upon changes in business, market, industry or economic
conditions) is designed to increase the value of common shares of beneficial
interest for all CalREIT shareholders.
Section 9.3 Mutual Covenants.
(a) Closing Conditions. Seller and Buyer shall use their
respective reasonable best efforts to cause the conditions precedent to Closing
to be fulfilled.
(b) Consents and Approvals. Prior to the Closing, Seller and
Buyer shall use their respective reasonable efforts to obtain the
authorizations, consents, orders and approvals of federal, state, local and
foreign regulatory bodies and officials, courts and other third parties that may
be necessary for the performance of their respective obligations under this
Agreement and the consummation of the transactions contemplated by this
Agreement, and shall cooperate fully with each other in seeking promptly to
obtain such authorizations, consents, orders and approvals as may be necessary
for the performance of their respective obligations pursuant to this Agreement.
Seller and Buyer shall not take any action that is likely to have the effect of
delaying, impairing or impeding the receipt of any required approvals and shall
use all reasonable efforts to secure such approvals as promptly as possible.
(c) Confidentiality; Public Announcements. Through the
Closing, the terms and conditions of the Confidentiality Agreement (which is
incorporated in full by this reference) shall continue to bind Seller and Buyer.
Except to the extent required by applicable law or stock exchange rules, and
except for the press release to be issued upon execution of this Agreement, in a
form to be agreed upon by the parties, neither party to this Agreement shall
make any public announcement with respect to this Agreement or the transactions
contemplated in this Agreement or otherwise communicate with any third party,
including, without limitation, news media, without prior notification to the
other party, and the parties shall cooperate as to the timing and contents of
any such announcement.
(d) Further Action. Each of the parties to this Agreement
shall execute such documents and other papers and take such further actions as
may be reasonably required or desirable to carry out the provisions of this
Agreement and the transactions contemplated in this Agreement or, at or after
the Closing, to evidence the consummation of the transactions contemplated in
this Agreement.
ARTICLE 10
TERMINATION
Section 10.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned on the earlier to occur of the
following:
(a) at any time, by mutual written agreement of Seller and
Buyer;
(b) by either Buyer or Seller, if within five (5) Business
Days after execution of this Agreement, the parties have not agreed on the final
form, including all qualifications and assumptions, of the Coopers Letter, the
Greenberg Letter, the Farella Letter, and the Gibson Letter;
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(c) by either Buyer or Seller, if the Trustees of CalREIT have
not taken the actions described in Section 4.3 (CalREIT Board Approval) of this
Agreement on or before Monday, September 30, 1996;
(d) by Seller, if all conditions precedent to its obligations
have not been satisfied or waived as of the Closing Date;
(e) by Buyer, if all conditions precedent to its obligations
have not been satisfied or waived as of the Closing Date;
(f) by either Buyer or Seller, if the Closing has not occurred
on or before November 15, 1996;
(g) at any time, if Buyer shall default in the observance, or
in the due and timely performance, of any of the agreements or covenants
contained in this Agreement, or if any of Buyer's representations or warranties
set forth in this Agreement were untrue in any material respect as of the date
of this Agreement or became untrue in any material respect as of a subsequent
date, Seller may terminate this Agreement upon five (5) Business Days' notice to
Buyer, during which time Buyer shall have an opportunity to cure the default or
breach; and
(h) at any time, if Seller shall default in the observance, or
in the due and timely performance, of any of the agreements or covenants
contained in this Agreement or Seller's representations or warranties set forth
in this Agreement were untrue in any material respect as of the date of this
Agreement or became untrue in any material respect as of a subsequent date,
Buyer may terminate this Agreement upon five (5) Business Days' notice to
Seller, during which time Seller shall have an opportunity to cure the default
or breach; and
Section 10.2 Effect of Termination. In the event of termination of this
Agreement, (a) each party shall re-deliver all documents and information of the
other party relating to the transactions completed hereby and all confidential
information received by any party to this Agreement with respect to the other
party or to CalREIT shall be treated in accordance with Section 9.3(c)
(Confidentiality; Public Announcements) of this Agreement and the
Confidentiality Agreement; (b) to the extent practicable, all filings,
applications and other submissions with any court or governmental or regulatory
authority made pursuant to this Agreement shall, at the option of Seller, be
withdrawn from the court or governmental or regulatory authority to which made;
(c) if this Agreement has been terminated due to Buyer's Default or Buyer's
failure to satisfy the Financing Condition or the REIT Status Condition, the
parties' rights with respect to the Deposit and the First and the Second
Progress Payments shall be as set forth in Section 9.2(d) (Application of
Deposit) of this Agreement and Seller shall have no other remedies; (d) if this
Agreement has been terminated by either party for reasons other than Buyer's
Default or Buyer's failure to satisfy the Financing Condition or the REIT Status
Condition, the Deposit and the First and Second Progress Payments shall be
returned to Buyer and the parties shall retain all rights and remedies available
to each of them at law or in equity, including but not limited to the right to
bring an action against the defaulting party for specific performance.
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ARTICLE 11
GENERAL
Section 11.1 Survival Beyond Closing. Notwithstanding any other
provision of this Agreement, the representations, warranties and covenants made
by Seller and Buyer in this Agreement, and the provisions of this Article 11,
shall survive the Closing.
Section 11.2 Binding Effect; Assignment. All of the terms of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
and against the successors and permitted assigns of Seller and Buyer. Neither
Seller nor Buyer shall assign any of their respective rights or obligations
under this Agreement to any other person, firm or corporation without the prior
written consent of the other party to this Agreement.
Section 11.3 Governing Law. This Agreement shall be governed by the
laws of the State of California applicable to contracts entered into and to be
performed in California.
Section 11.4 Notices. All notices, requests, demands and other
communications to be given pursuant to the terms of this Agreement shall be in
writing and shall be delivered personally, telecopied or sent by recognized
overnight delivery service, and shall be deemed given and effective when so
delivered personally, telecopied or received, as follows:
(a) If to Buyer:
MDC REIT Holdings LLC
c/o McCown De Leeuw & Co.
3000 Sand Hill Road
Building 3, Suite 280
Menlo Park, California 94025
Telecopier: (415) 854-0853
Attention: Brian Kerester
with a copy to:
Gibson, Dunn & Crutcher
One Montgomery Street, Telesis Tower
San Francisco, California 94104-4505
Telecopier: (415) 393-8333
Attention: Robert E. Mellor, Esq.
(b) If to Seller:
The Peregrine Real Estate Trust
1300 Ethan Way, Suite 200
Sacramento, California 95825-1211
Telecopier: (916) 929-1122
Attention: Joseph M. Mock, President
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with a copy to:
Farella Braun & Martel LLP
235 Montgomery Street, 30th Floor
San Francisco, California 94104
Telecopier: (415) 954-4480
Attention: Morgan P. Guenther, Esq.
Any party may change its address or telecopier number by prior written
notice to the other party.
Section 11.5 Counterparts. This Agreement may be executed by facsimile
and in counterparts, each of which when so executed shall be deemed to be an
original, and s uch counterparts shall together constitute one and the same
instrument.
Section 11.6 Expenses. Buyer and Seller shall pay their own respective
expenses, costs and fees (including, without limitation, attorney and
accountants' fees) incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement.
Section 11.7 Entire Agreement. This Agreement sets forth the entire
agreement and understanding of Seller and Buyer with respect to the transactions
contemplated by this Agreement, and supersedes all prior agreements,
arrangements and understandings relating to the subject matter of this
Agreement.
Section 11.8 Amendment and Waiver. This Agreement may be amended,
modified, superseded or canceled, and any of the terms, covenants,
representations, warranties or conditions of this Agreement may be waived, only
by a written instrument executed by Seller and Buyer or, in the case of a
waiver, by or on behalf of the party waiving compliance. The failure of any
party at any time to require performance of any provision of this Agreement
shall in no manner affect the right at a later time to enforce the same. No
waiver by any party of any condition or of any breach of any term, covenant,
representation or warranty contained in this Agreement, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such condition or of any breach of any such term, covenant,
representation or warranty or any other term, covenant, representation or
warranty set forth in this Agreement.
Section 11.9 Headings. The headings of the sections and paragraphs of
this Agreement have been inserted for convenience of reference only and shall in
no way restrict or otherwise modify any of the terms or provisions of this
Agreement.
Section 11.10 Attorney's Fees. If any legal action or any arbitration
or other proceeding is brought for the enforcement of this Agreement or because
of any alleged dispute, breach, default, or misrepresentation in connection with
any of the provisions of this Agreement, the successful or prevailing party
shall be entitled to recover reasonable attorney's fees, witness fees, and other
costs incurred in such action or proceeding, in addition to any other relief to
which the party may be entitled.
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Section 11.11 No Liability of Seller's Shareholders. Buyer acknowledges
that the shareholders of Seller are not personally liable for Seller's
obligations under this Agreement.
Section 11.12 No Third Party Beneficiaries. Nothing in this Agreement
is intended to confer upon any third party any rights or remedies under or by
reason of this Agreement, except as expressly set forth in this Agreement.
IN WITNESS WHEREOF, each of Seller and Buyer have executed this
Agreement as of the day and year first above written.
BUYER: MDC REIT HOLDINGS LLC,
a Delaware limited liability company
By:_____________________________________
Name:___________________________________
Title:__________________________________
SELLER: THE PEREGRINE REAL ESTATE TRUST, a
California business trust
By:_____________________________________
Name:___________________________________
Title:__________________________________
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<PAGE> 15
EXHIBIT 1.1
Certain Defined Terms
"Affiliate" means an entity controlling, controlled by or under common
control with, a party and any agent, representative, attorney, successor,
assign, employee, trustee, officer, director and shareholder of such party or
such entity.
"Agreement" has the meaning ascribed to it in the preamble to this
Agreement.
"Bankruptcy Case" means the case captioned In re Commonwealth Equity
Trust, pending as case no. 93-26727-C11 in the Bankruptcy Court, in which Seller
currently is a post-reorganization debtor-in-possession.
"Bankruptcy Court" means the United States Bankruptcy Court for the
Eastern District of California.
"Business Day" means a day of the year on which banks are not closed
and are not authorized to be closed in San Francisco, California.
"Business Plan" means the business plan for CalREIT developed by Buyer
for implementation after the Closing Date, as summarized in the "Summary Points
on Business Strategy" part of the "Discussion Materials," dated July 18, 1996,
and delivered by Buyer's Affiliate, McCown De Leeuw & Co., to Seller's Board of
Trustees.
"Buyer" has the meaning ascribed to it in the preamble to this
Agreement.
"Buyer's Default" has the meaning ascribed to it in Section 9.2 of this
Agreement.
"Buyer's Investigation" has the meaning ascribed to it in Section 8.8
of this Agreement.
"CalREIT" has the meaning ascribed to it in the Recitals to this
Agreement.
"CalREIT Declaration of Trust" means the Declaration of Trust of
CalREIT, dated June 4, 1986, as amended.
"Cash Payment" has the meaning ascribed to it in Section 2.1 of this
Agreement.
"Closing" has the meaning ascribed to it in Section 3.1 of this
Agreement.
"Closing Date" has the meaning ascribed to it in Section 3.1 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means the Confidentiality Agreement
previously entered between Buyer's Affiliate, McCown De Leeuw & Co., and Seller
with respect to a possible sale of the Shares to an Affiliate of McCown De Leeuw
& Co.
"Coopers Letter" has the meaning ascribed to it in Section 4.6 of this
Agreement.
"Deposit" has the meaning ascribed to it in Section 9.2 (a) of this
Agreement.
"Dillon, Read" means Dillon, Read & Co. Inc., an investment banking
firm.
"Escrow Agent" means Norwest Bank Colorado, N.A.
"Farella Letter" has the meaning ascribed to it in Section 4.7 of this
Agreement.
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"Financing Condition" means the condition precedent to the obligations
of Buyer set forth in Section 4.9 of this Agreement.
"First Progress Payment" has the meaning ascribed to it in Section
9.2(b) of this Agreement.
"Gibson Letter" has the meaning ascribed to it in Section 5.5 of this
Agreement
"Greenberg Letter" has the meaning ascribed to it in Section 4.5 of
this Agreement.
"IRS Letter" means the closure letter or similar agreement from the
Internal Revenue Service which confirms that CalREIT's status as a REIT has not
been adversely affected by past failures to follow the "demand letter"
procedures set forth in Treasury Regulation Section 1.857- 8.
"Liens" means any assignment, chattel mortgage, pledge or other
security interest or any mortgage, deed of trust or other lien (including,
without limitation, any federal, state or local tax lien), or other charge or
encumbrance or interest in or upon property or rights (including after-acquired
property or rights), or any preferential arrangement with respect to property or
rights (including after-acquired property or rights) which has the practical
effect of constituting a security interest or lien.
"Purchase Price" has the meaning ascribed to it in Section 2.1 of this
Agreement.
"REIT" means a "real estate investment trust" as defined in Section 856
of the Code.
"REIT Status Condition" means the condition precedent to the
obligations of both parties set forth in Section 6.2 (REIT Status) of this
Agreement.
"REIT Status Letters" means, collectively (a) the Coopers Letter, (b)
the Greenberg Letter and (c) the Farella Letter.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Schedule Date" means the first Business Day which is ten (10) calendar
days after the date by which the IRS Letter has been received and the parties
have agreed upon the final form of the REIT Status Letters.
"Second Progress Payment" has the meaning ascribed to it in Section
9.2(b) of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning ascribed to it in the preamble to this
Agreement.
"Seller's Declaration of Trust" means the Restated Declaration of Trust
of Seller, dated as of October 7, 1994.
"Shares" has the meaning ascribed to it in the Recitals to this
Agreement.
"South Coast Note" means the Promissory Note, dated September 11, 1986,
in the stated original principal amount of $5,000,000, made by South Coast
Commercenter, a California limited partnership, to the order of CalREIT.
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"South Coast Note Determination Date" means the first Business Day
which occurs after the expiration of the six (6) month period commencing on the
Closing Date.
"South Coast Note Payment" means a payment in immediately available
funds in an amount equal to seventy-six percent (76%) of the South Coast Note
Value.
"South Coast Note Value" means the valuation of the South Coast Note
determined in accordance with Section 3.4 of this Agreement.
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EXHIBIT 4.5
Matters to be Covered in Opinion of CalREIT's Counsel
The opinion referenced in Section 4.5 will cover the following matters,
subject to appropriate and customary qualifications:
1. California Real Estate Investment Trust ("CalREIT") has all legal
right, power and authority necessary to qualify as a "real estate investment
trust" under the Internal Revenue Code of 1986, as amended (the "Code'). CalREIT
is organized and is operating, and since at least January 1, 1991 has operated,
in conformity with the requirements for qualification as a "real estate
investment trust" under the Code for each taxable year after said date.
2. Neither the transfer of the Shares to Buyer pursuant to the terms of
the Stock Purchase Agreement, nor the ownership of such Shares by Buyer after
the Closing, will jeopardize the qualification of CalREIT as a "real estate
investment trust" under the Code so long as the beneficial ownership of Buyer
are not so changed as to cause five or fewer individuals to own, directly or
indirectly, fifty percent or more of the value of all CalREIT shares.
3. CalREIT is duly organized and validly existing as a business trust
in good standing in the state of California and is duly qualified in each other
jurisdiction where it owns assets, except where the failure so to qualify would
not have a material adverse effect on CalREIT.
4. The Board of Trustees of CalREIT has duly exempted from the "Limit"
provisions of Section 4.10 of the Declaration of Trust the ownership of the
Shares while owned by Buyer. Thus, the Shares will not be deemed to be "Excess
Shares" under Section 4.10 of the Declaration of Trust.
5. The authorized and issued capital stock of CalREIT consists of
unlimited shares of common stock of which ________________ shares are issued and
outstanding as of the Closing Date and unlimited shares of preferred stock, of
which no shares are issued and outstanding. As of the Closing Date, no options,
warrants or other rights to acquire shares of common stock were outstanding,
other than options to purchase an aggregate of 450,000 shares of common stock
under CalREIT's stock option plans, all of which options are canceled and of no
further force and effect unless the stock option plans are approved by the
shareholders on or before November 15, 1996.
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EXHIBIT 4.6
Matters to be Covered in Opinion of CalREIT's Auditor
The opinion referenced in Section 4.6 will cover the following matters,
subject to appropriate and customary qualifications:
Our firm was engaged to provide tax services to CalREIT on March 13,
1995. Accordingly, the following comments are restricted only to the work we
have performed or to the information that came to our attention on or after such
date:
1. We prepared the CalREIT federal (U.S.) and Arizona income tax
returns and California franchise tax returns for calendar years 1994 and 1995.
These returns were delivered to CalREIT management prior to the statutory due
dates for such returns, and we understand from management of CalREIT that they
were timely filed. The federal income tax returns for both 1994 and 1995 showed
a zero tax liability. The Arizona income tax returns and the California
franchise tax returns showed only the annual minimum tax liabilities of $50 and
$800, respectively, for both 1994 and 1995.
2. We did not prepare the CalREIT income and franchise tax returns for
years prior to 1994; however, nothing has come to our attention that would cause
us to believe that such returns were not timely filed nor that income and
franchise taxes due, if any, were not timely paid.
3. To our knowledge, there are no actual or threatened assessments of
taxes by any taxing authority against CalREIT. This was confirmed to us by Frank
Morrow, CEO of CalREIT, on September ____, 1996.
4. CalREIT financial personnel have recently completed calculations for
calendar years 1991 through 1995 to verify compliance with the so-called asset
and income tests of Internal Revenue Code section 856(c) that must be satisfied
to maintain status as a real estate investment trust for income tax purposes.
We reviewed the calculations prepared by CalREIT financial personnel in
connection with the annual income tests and the quarterly asset tests for
calendar years 1991 through 1995. As a part of our review, we verified the
mathematical accuracy of the computations and the threshold percentages that
apply to each of the tests.
As described below, our review did not include procedures, or included
only limited procedures, to verify the following critical elements of the
calculations as required by Internal Revenue Code section 856(c):
(a) we did not conduct any procedures to verify the fair market value
of CalREIT's assets on any of the testing dates,
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(b) we conducted only limited procedures to verify whether CalREIT's
assets were properly categorized as qualifying or non-qualifying for purposes of
the asset and income tests, and
(c) we conducted only limited procedures to verify whether CalREIT's
income items were properly categorized as qualifying or non-qualifying for
purposes of the income tests.
The fair market values of assets used in the test calculations were
provided by CalREIT personnel and, accordingly, we express no opinion on them.
The identification of types of assets and types of income items were
also provided by CalREIT personnel and, accordingly, we express no opinion on
them. Our procedures did include a review of whether each type of asset and each
type of income item, as identified by CalREIT personnel without verification by
us, were properly categorized as qualifying or non-qualifying for purposes of
the asset and income tests.
From our review of the asset and income test calculations for 1991
through 1995, as prepared by CalREIT, nothing came to our attention indicating
that CalREIT was not in compliance throughout such periods with Internal Revenue
Code section 856(c) requirements.
5. We have recently become aware that CalREIT was not in compliance
with the requirements of section 1.857-8 of the U.S. Treasury Income Tax
Regulations to make a timely demand for shareholder information for calendar
years 1994 and 1995 and possibly for some or all prior years. In this
connection, we were engaged by CalREIT to prepare and submit a request to enter
into a closing agreement with the Internal Revenue Service. The proposed closing
agreement would state that the failure of CalREIT to make a timely demand for
shareholder information pursuant to the requirements of section 1.857-8 of the
U.S. Treasury Income Tax Regulations would not affect its qualification as a
real estate investment trust for taxable years 1991 through 1995. The written
request was submitted to the Internal Revenue Service on or about August 1,
1996. We expect to receive a response to such request on or before September 13,
1996.
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EXHIBIT 4.7
Matters to be Covered in Opinion of Seller's Counsel
The opinion referenced in Section 4.7 will cover the following matters, subject
to appropriate and customary qualifications:
1. Peregrine is a business trust, duly organized, validly existing and in
good standing under the laws of the State of California. Peregrine has
full power and authority to execute, deliver and perform its obligations
under the Stock Purchase Agreement.
2. The Stock Purchase Agreement has been duly authorized by all trust and
shareholder action and is enforceable against Peregrine in accordance
with its terms.
3. Although Peregrine remains subject to bankruptcy court jurisdiction,
under the terms of the bankruptcy reorganization plan, and under
subsequent orders of the bankruptcy court which have been entered and
which are actually known to us, if any, no bankruptcy court approval is
required in connection with Peregrine's execution, delivery and
performance under the Stock Purchase Agreement.
4. All consents from third parties required under the material agreements
listed on Exhibit A attached hereto by which Peregrine or its assets are
bound have been obtained. Neither the execution and delivery by Peregrine
of the Stock Purchase Agreement nor the performance of all obligations of
Peregrine thereunder to be performed as of the date hereof, will
constitute a material default under, or material violation or material
breach of, the material agreements.
5. Upon receipt of the Cash Payment, Buyer shall receive the Shares free and
clear of any Liens, except for restrictions on transfer pursuant to
federal or applicable state securities laws.
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EXHIBIT 5.5
Matters to be Covered in Opinion of Buyer's Counsel
The opinion referenced in Section 5.5 will cover the following matters, subject
to appropriate and customary qualifications:
1. Buyer is a limited liability company, duly organized, validly existing
and in good standing under the laws of the State of Delaware. Buyer has
full power and authority to execute, deliver and perform its obligations
under the Stock Purchase Agreement.
2. The Stock Purchase Agreement has been duly authorized by all necessary
action under the organizational documents of Buyer and is enforceable
against Buyer in accordance with its terms.
3. Neither the transfer of the Shares to Buyer pursuant to the terms of the
Stock Purchase Agreement, nor the ownership of such Shares by Buyer after
the Closing, will jeopardize the qualification of CalREIT as a REIT.
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EXHIBIT 9.2(a)
Escrow Agreement
<PAGE> 1
EXHIBIT 2
ESCROW AGREEMENT (the "Agreement"), dated as of September 18, 1996,
among The Peregrine Real Estate Trust, a California business trust
("Peregrine"), MDC REIT Holdings, LLC, a Delaware limited liability company
("Holdings") and Norwest Bank Colorado, N.A., as escrow agent (the "Escrow
Agent").
INTRODUCTION
Under the Stock Purchase Agreement dated as of September 18, 1996 (the
"Stock Purchase Agreement"), between Peregrine and Holdings, Holdings is
acquiring 6,959,593 common shares of beneficial interest (the "Shares") of
California Real Estate Investment Trust ("CalReit"), from Peregrine; and
The Stock Purchase Agreement requires as a condition to the sale of the
Shares that Peregrine, Holdings and the Escrow Agent enter into this Agreement
and that Holdings deposit the Escrow Amount (as defined below) with the Escrow
Agent in order to provide a mechanism for the payment of liquidated damages to
Peregrine that Holdings may become obligated to pay to Peregrine as and to the
extent provided in Sections 9.2 and 10.2 of the Stock Purchase Agreement.
Peregrine, Holdings and the Escrow Agent agree as follows:
1. Appointment of the Escrow Agent; Deposit of Initial Escrow Amount.
Peregrine and Holdings constitute and appoint the Escrow Agent as, and the
Escrow Agent agrees to assume and perform the duties of, the escrow agent under
and pursuant to this Agreement. The Escrow Agent acknowledges receipt of an
executed copy of the Stock Purchase Agreement and cash in the amount of one
hundred and fifty thousand dollars ($150,000) (the "Initial Escrow Amount") from
Holdings as provided in Section 9.2 of the Stock Purchase Agreement. In
accordance with the provisions of Section 9.2 of the Stock Purchase Agreement,
Holdings may deposit additional cash with respect to the First Progress Payment
and the Second Progress Payment in the aggregate amount of $100,000. The Initial
Escrow Amount and any additional deposits with respect to the First Progress
Payment and the Second Progress Payment are hereinafter collectively referred to
as the "Escrow Amount".
2. The Escrow Amount. The Escrow Amount and all earnings thereon shall
be held by the Escrow Agent as a trust fund in a separate account maintained for
the purpose, on the terms and subject to the conditions of this Agreement. The
Escrow Amount shall not be subject to lien, attachment, trustee process or any
other judicial process by any creditor of any party to this Agreement and shall
be used solely for the purpose set forth in this Agreement. The Escrow Amount
shall not be available to, and shall not be used by, the Escrow Agent to set off
any obligations of either Peregrine or Holdings owing to the Escrow Agent in any
capacity.
<PAGE> 2
3. Investment of the Escrow Amount; Taxes.
(a) Promptly after receipt of the funds to be held by the Escrow Agent
pursuant to this Agreement, and until otherwise directed by written notification
signed by Peregrine and Holdings, the Escrow Agent shall invest and reinvest all
amounts held from time to time as part of the Escrow Amount, in a money market
account with Norwest Bank Colorado. The Escrow Agent shall have no
responsibility for the review of proposed investments designated in writing by
Peregrine and Holdings and may rely conclusively upon an investment instruction
received from Peregrine and Holdings.
(b) All earnings on the Escrow Amount that are not used to pay the
expenses of the Escrow Agent shall be paid to Peregrine upon termination of this
Agreement.
(c) All taxes in respect of earnings on the Escrow Amount shall be the
obligation of and shall be paid when due by Holdings, who shall indemnify and
hold Peregrine and the Escrow Agent harmless from and against all such taxes.
Holdings' tax identification number shall be used for any filings related to the
Escrow Amount.
4. Claims Against the Escrow Amount.
(a) In the event that the Closing of the transactions contemplated by
the Stock Purchase Agreement do not occur as a result of a Buyer Default or if
Holdings fails to satisfy the Financing Condition or the REIT Status Condition ,
Peregrine will deliver to Holdings and to the Escrow Agent a certificate in
substantially the form of Annex I attached to this Agreement (a "Certificate of
Instruction"). No Certificate of Instruction may be delivered by Peregrine after
the close of business on the fifth business day immediately following the date
upon which written notice of termination of the Stock Purchase Agreement has
been delivered to the parties in accordance with Section 11.4 thereof. The
Escrow Agent shall give written notice to Holdings of its receipt of a
Certificate of Instruction not later than the second business day next following
receipt thereof, together with a copy of such Certificate of Instruction.
(b) If the Escrow Agent (i) shall not, within five (5) calendar days
following its receipt of a Certificate of Instruction (the "Objection Period"),
have received from Holdings a certificate in substantially the form of Annex II
attached to this Agreement (an "Objection Certificate") disputing the facts set
forth in such Certificate of Instruction, or (ii) shall have received such an
Objection Certificate within the Objection Period and shall thereafter have
received either (x) a certificate from Holdings and Peregrine substantially in
the form of Annex III attached to this Agreement (a "Resolution Certificate")
stating that Holdings and Peregrine have agreed that the Escrow Amount is
payable to Peregrine or (y) a copy of the Arbitration Award (as defined in
Section 13) accompanied by a certificate of Peregrine substantially in the form
of Annex IV attached to this Agreement (an "Arbitration Certificate")) to the
effect that the Escrow Amount is payable to Peregrine, then the Escrow Agent
shall, on the second business day next following (x) the expiration of the
Objection Period or (y) the Escrow Agent's receipt of a Resolution Certificate
or an Arbitration Certificate, as the case may be, pay to Peregrine the Escrow
Amount by wire transfer of immediately available funds to a bank account of
Peregrine's designation set forth in the Certificate of Instruction, the amount
set forth in said Certificate of
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<PAGE> 3
Instruction or, if such Resolution Certificate or Arbitration Certificate
specifies that a lesser amount is payable, such lesser amount.
(c) The Escrow Agent shall give written notice to Peregrine of its
receipt of an Objection Certificate not later than the second business day next
following receipt thereof, together with a copy of such Objection Certificate.
The Escrow Agent shall given written notice to Holdings of its receipt of an
Arbitration Certificate not later than the second business day next following
receipt thereof, together with a copy of such Arbitration Certificate.
(d) Upon the payment by the Escrow Agent of the Escrow Amount referred
to in a Certificate of Instruction, such Certificate of Instruction shall be
deemed satisfied. Upon the receipt by the Escrow Agent of a Resolution
Certificate or an Arbitration Certificate and the payment by the Escrow Agent of
the Escrow Amount or other amount referred to therein, the related Certificate
of Instruction shall be deemed satisfied.
(e) Upon Peregrine's determination that it has no claim or has released
its claim with respect to a Certificate of Instruction, Peregrine will deliver
to the Escrow Agent a certificate substantially in the form of Annex V attached
to this Agreement (a "Peregrine Cancellation Certificate") canceling such
Certificate of Instruction (or such specified portion thereof, as the case may
be), and such Certificate of Instruction shall thereupon be deemed satisfied.
The Escrow Agent shall give written notice to Holdings of its receipt of a
Peregrine Cancellation Certificate not later than the second business day next
following receipt thereof, together with a copy of such Peregrine Cancellation
Certificate.
(f) Upon receipt of an Arbitration Award to the effect that none of the
Escrow Amount referred to in a Certificate of Instruction as to which Holdings
has delivered an Objection Certificate within the Objection Period is payable to
Peregrine, Holdings may deliver a copy of such order (accompanied by a
certificate of Holdings substantially in the form of Annex VI attached to this
Agreement (a "Holdings Cancellation Certificate")) canceling such Certificate of
Instruction, and such Certificate of Instruction shall thereupon be deemed
satisfied. The Escrow Agent shall give written notice to Peregrine of its
receipt of a Holdings Cancellation Certificate not later than the second
business day next following receipt thereof, together with a copy of such
Holdings Cancellation Certificate.
5. Termination Date. If the Stock Purchase Agreement will be
consummated, Peregrine and Holdings shall notify the Escrow Agent in writing at
least two business days prior to the scheduled closing and shall instruct the
Escrow Agent to wire transfer the Escrow Amount to an account designated by
Peregrine at the closing. If the Stock Purchase Agreement is terminated for
reasons other than Buyer Default or failure of Holdings to satisfy the Financing
Condition or the REIT Status Condition, upon receipt of written notice from
Holdings (a "Holdings Termination Notice") to such effect (with a copy to
Peregrine), the Escrow Agent shall pay to Holdings on the second business day
following expiration of the Objection Period, the Escrow Amount by wire transfer
of immediately available funds to a bank account designated in writing by
Holdings. Notwithstanding the above, Peregrine may, within the Objection Period
specified in Section 4 (i.e. five (5) calendar days after Peregrine's receipt of
a Holdings
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<PAGE> 4
Termination Notice), file an objection to the payment of the Escrow Amount to
Holdings in which case the provisions of Section 4 shall apply mutatis mutandis
with respect to the Escrow Amount until the Escrow Agent has received either a
Resolution Certificate or an Arbitration Certificate from the appropriate party.
Upon payment of the Escrow Amount and any earnings thereon pursuant to the terms
of this Agreement, this Agreement (other than Sections 6, 7 and 8 which shall
survive the termination of this Agreement) shall automatically terminate.
6. Duties and Obligations of the Escrow Agent. The duties and
obligations of the Escrow Agent shall be limited to and determined solely by the
provisions of this Agreement and the certificates delivered in accordance with
this Agreement, and the Escrow Agent is not charged with knowledge of or any
duties or responsibilities in respect of any other agreement or document. In
furtherance and not in limitation of the foregoing:
(i) the Escrow Agent shall not be liable for any loss of
interest sustained as a result of investments made under this Agreement
in accordance with the terms of this Agreement, including any
liquidation of any investment of the Escrow Fund prior to its maturity
effected in order to make a payment required by the terms of this
Agreement;
(ii) the Escrow Agent shall be fully protected in relying in
good faith upon any written certification, notice, direction, request,
waiver, consent, receipt or other document that the Escrow Agent
reasonably believes to be genuine and duly authorized, executed and
delivered and the Escrow Agent shall have no responsibility to
determine whether notices required to be sent by Peregrine and Holdings
to each other were actually sent;
(iii) the Escrow Agent shall not be liable for any error of
judgment, or for any act done or omitted by it, or for any mistake in
fact or law, or for anything that it may do or refrain from doing in
connection this Agreement; provided, however, that notwithstanding any
other provision in this Agreement, the Escrow Agent shall be liable for
its willful misconduct or gross negligence or breach of this Agreement;
(iv) the Escrow Agent may seek the advice of legal counsel
selected with reasonable care in the event of any dispute or question
as to the construction of any of the provisions of this Agreement or
its duties under this Agreement, and it shall incur no liability and
shall be fully protected in respect of any action taken, omitted or
suffered by it in good faith in accordance with the opinion of such
counsel;
(v) in the event that the Escrow Agent shall in any instance,
after seeking the advice of legal counsel pursuant to the immediately
preceding clause, in good faith be uncertain as to its duties or rights
under this Agreement, it shall be entitled to refrain from taking any
action in that instance and its sole obligation, in addition to those
of its duties under this Agreement as to which there is no such
uncertainty, shall be to keep safely all property held in the Escrow
Fund until it shall be directed otherwise in writing by each of the
parties to this Agreement or by a final, nonappealable order of a court
of competent jurisdiction; provided, that in the event that the Escrow
Agent has not received such written direction or court order within 30
calendar days after requesting the same, it shall
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<PAGE> 5
have the right to interplead Peregrine and Holdings in any court of
competent jurisdiction and request that such court determine its rights
and duties under this Agreement; and
(vi) the Escrow Agent may execute any of its powers or
responsibilities under this Agreement and exercise any rights under
this Agreement either directly or by or through agents or attorneys
selected with reasonable care, nothing in this Agreement shall be
deemed to impose upon the Escrow Agent any duty to qualify to do
business or to act as fiduciary or otherwise in any jurisdiction other
than the State of California and the Escrow Agent shall not be
responsible for and shall not be under a duty to examine into or pass
upon the validity, binding effect, execution or sufficiency of this
Agreement or of any agreement amendatory or supplemental to this
Agreement.
7. Cooperation. Peregrine and Holdings shall provide to the Escrow
Agent all instruments and documents within their respective powers to provide
that are necessary for the Escrow Agent to perform its duties and
responsibilities under this Agreement.
8. Fees and Expenses; Indemnity. Holdings shall pay the fees and
expenses of the Escrow Agent for its services under this Agreement as and when
billed by the Escrow Agent as set forth on Annex VII. Subject to the preceding
sentence, each of Peregrine and Holdings (to the extent of the Escrow Amount)
shall reimburse and indemnify the Escrow Agent for, and hold it harmless
against, one-half of any loss, damages, cost or expense (collectively "Losses"),
including but not limited to reasonable attorneys' fees, reasonably incurred by
the Escrow Agent in connection with the Escrow Agent's performance of its duties
and obligations under this Agreement, as well as the reasonable costs and
expenses of defending against any claim or liability relating to this Agreement;
provided that notwithstanding the foregoing, neither Peregrine nor Holdings
shall be required to indemnify the Escrow Agent for any such Losses (i) arising
as a result of the Escrow Agent's willful misconduct or gross negligence or
breach of this Agreement or (ii) incurred by the Escrow Agent as a consequence
of actions of the other. Fees and expenses of the Escrow Agent shall be first
paid from earnings on the Escrow Amount, if any.
9. Resignation and Removal of the Escrow Agent.
(a) The Escrow Agent may resign as such 30 calendar days following the
giving of prior written notice thereof to the Peregrine and Holdings. In
addition, the Escrow Agent may be removed and replaced on a date designated in a
written instrument signed by Peregrine and Holdings and delivered to the Escrow
Agent. Notwithstanding the foregoing, no such resignation or removal shall be
effective until a successor escrow agent has acknowledged its appointment as
such as provided in paragraph (c) below. In either event, upon the effective
date of such resignation or removal, the Escrow Agent shall deliver the property
comprising the Escrow Fund to such successor escrow agent, together with such
records maintained by the Escrow Agent in connection with its duties under this
Agreement and other information with respect to the Escrow Fund as such
successor may reasonably request.
(b) If a successor escrow agent shall not have acknowledged its
appointment as such as provided in paragraph (c) below, in the case of a
resignation, prior to the expiration of 30
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<PAGE> 6
calendar days following the date of a notice of resignation or, in the case of a
removal, on the date designated for the Escrow Agent's removal, as the case may
be, because Peregrine and Holdings are unable to agree on a successor escrow
agent, or for any other reason, the Escrow Agent may select a successor escrow
agent and any such resulting appointment shall be binding upon all of the
parties to this Agreement.
(c) Upon written acknowledgment by a successor escrow agent appointed
in accordance with the foregoing provisions of this Section 9 of its agreement
to serve as escrow agent under this Agreement and the receipt of the property
then comprising the Escrow Amount, the Escrow Agent shall be fully released and
relieved of all duties, responsibilities and obligations under this Agreement,
subject to the proviso contained in clause (iii) of Section 6, and such
successor escrow agent shall for all purposes of this Agreement be the Escrow
Agent.
10. Notices. All notices, requests and other communications under this
Agreement must be in writing and will be deemed to have been duly given
if-delivered personally, by overnight courier or by facsimile transmission or
mailed (first class postage prepaid) to the parties at the following addresses
or facsimile numbers:
if to Peregrine, to:
The Peregrine Real Estate Trust
1300 Ethan Way, Suite 200
Sacramento, California 95825
Telecopy: (916) 929-1122
Attention: President
with a copy to
Farella Braun & Martel LLP
235 Montgomery Street, 30th Floor
San Francisco, California 94104
Telecopy: (415) 954-4480
Attention: Morgan P. Guenther
if to Holdings, to:
MDC Reit Holdings LLC
c/o McCown De Leeuw & Co.
3000 Sand Hill Road
Building 3, Suite 280
Menlo Park, California 94025
Facsimile No.:(415) 854-0853
Attn: George McCown
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<PAGE> 7
with a copy to:
Gibson, Dunn & Crutcher
One Montgomery Street, 26th Floor
San Francisco, California 94104
Facsimile No. (415) 986-5309
Attn: Lawrence Calof
If to the Escrow Agent, to:
Norwest Bank Colorado, N.A.
Corporate Trust & Escrow Services
1740 Broadway
Denver, Colorado 80274-8693
Facsimile No.:(303) 863-5645
Attn:Mike DeBois
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail or overnight courier in the manner described above to the address as
provided in this Section, be deemed given upon receipt (in each case regardless
of whether such notice, request or other communication is received by any other
person to whom a copy of such notice is to be delivered pursuant to this
Section). Any party from time to time may change its address, facsimile number
or other information for the purpose of notices to that party by giving notice
specifying such change to the other parties to this Agreement.
11. Amendments etc. This Agreement may be amended or modified, and any
of the terms of this Agreement may be waived, only by a written instrument duly
executed by or on behalf of Peregrine and Holdings and, with respect to any
amendment that would adversely affect the Escrow Agent, the Escrow Agent. The
Escrow Agent shall be furnished with a copy of all amendment entered into by
Peregrine and Holdings. No waiver by any party of any term or condition
contained of this Agreement, in any one or more instances, shall be deemed to be
or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion.
12. Governing Law Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to a
contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof. THE PARTIES HERETO EACH IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT SUCH PARTY MAY EFFECTIVELY DO SO UNDER APPLICABLE
LAW, TRIAL BY JURY.
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<PAGE> 8
13. Arbitration Procedures. Any controversy or claim arising out of or
relating to payment of the Escrow Amount (including, without limitation, any
controversy or claim as to whether the transactions contemplated by the Stock
Purchase Agreement have not occurred as a result of a Buyer Default or because
Holdings has failed to satisfy the Financing Condition of the REIT Status
Condition) shall be settled by the following procedures: Either party may send
the other written notice identifying the matter in dispute and involving the
procedures of this Section 13. Within five (5) business days after such written
notice is given, one or more principals of each party shall meet at a mutually
agreeable location in San Francisco, California, for the purpose of determining
whether they can resolve the dispute themselves by written agreement, and, if
not, whether they can agree upon a third-party impartial arbitrator (the
"Arbitrator") to whom to submit the matter in dispute for final and binding
arbitration. If the parties fail to resolve the dispute by written agreement or
agree on the Arbitrator within such five business day period, either party may
make written application to the Judicial Arbitration and Mediation Service
("JAMS"), Two Embarcadero Center, Suite 1100, San Francisco, California 94111
for the appointment of a single Arbitrator to resolve the dispute by arbitration
and at the request of JAMS, the parties shall meet with JAMS at its offices or
confer with JAMS by telephone within ten (10) calendar days of such request to
discuss the dispute and the qualifications and experience which each party
respectively believes the Arbitrator should have; provided, however, the
selection of the Arbitrator shall be the exclusive decision of JAMS and shall be
made within 10 days of the written application to JAMS. Within 10 days of the
selection of the Arbitrator, the parties shall meet in San Francisco, California
with such Arbitrator at a place and time designated by the Arbitrator after
consultation with the parties and present their respective positions on the
dispute. Each party shall have no longer than two hours to present its position,
the entire proceedings before the Arbitrator shall be on no more than one day,
and the award (the "Arbitration Award") shall be made in writing no more than 10
days following the end of the proceedings. The Arbitrator shall not be bound by
rules of evidence or judicial procedures relative to the conduct of the
proceedings but shall be required to follow California substantive law. The
Arbitration Award shall be a final and binding determination of the dispute and
shall be fully enforceable as an arbitration award in any court having
jurisdiction and venue over the parties. The prevailing party (as determined by
the Arbitrator) shall in addition be awarded by the Arbitrator such party's own
attorneys' fees and expenses in connection with such proceeding. The
non-prevailing party (as determined by the Arbitrator) shall pay the
Arbitrator's fees and expenses.
14. Business Day. For all purposes of this Agreement, the term
"business day" shall mean a day other than Saturday, Sunday or any day on which
banks located in the States of Colorado or California are authorized or
obligated to close.
15. Definition of Certain Terms. Capitalized terms used by not defined
herein shall have the meanings ascribed to such terms in the Stock Purchase
Agreement.
16. Miscellaneous. This Agreement is binding upon and will inure to the
benefit of the parties to this Agreement and their respective successors and
permitted assigns. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions of this
Agreement. This Agreement may be executed in any
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<PAGE> 9
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
The parties to this Agreement have caused this Agreement to be executed
as of the date first above written.
THE PEREGRINE REAL ESTATE TRUST
By:_____________________________________
Name:
Title:
MDC REIT HOLDINGS LLC
By:_____________________________________
Name
Title
NORWEST BANK COLORADO, N.A.
as Escrow Agent
By:_____________________________________
Name:
Title:
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<PAGE> 10
ANNEX I
CERTIFICATE OF INSTRUCTION
to
NORWEST BANK COLORADO, N.A.
as Escrow Agent
The undersigned, The Peregrine Real Estate Trust ("Peregrine"),
pursuant to Section 4(a) of the Escrow Agreement dated as of _______ __, 1996
among Peregrine, MDC REIT Holdings LLC, a Delaware limited liability company
("Holdings") and , and you (terms defined in said Escrow Agreement have the same
meanings when used herein), hereby:
(a) certifies that (i) Peregrine has sent to Holdings a notice that the
transactions contemplated by the Stock Purchase Agreement have not
occurred as a result of a Buyer Default or that Holdings has failed to
satisfy the Financing Condition or the Reit Status Condition, a copy of
which is attached hereto, and (ii) the Escrow Amount is payable to
Peregrine by reason of the matter described in such notice; and
(b) instructs you to pay to Peregrine the Escrow Amount, by wire
transfer of immediately available funds to Peregrine's account at
_____________, _______________, ____________, (Account
No.:____________), (i) unless you receive an Objection Certificate from
Holdings prior to the expiration of the Objection Period, within two
business days following the expiration of the Objection Period, or (ii)
if you receive an Objection Certificate within the Objection Period,
within two business days following your receipt of a Resolution
Certificate or a Arbitration Certificate.
THE PEREGRINE REAL ESTATE TRUST
By:____________________________________
Name:
Title:
Dated:_________________, _______
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<PAGE> 11
ANNEX II
OBJECTION CERTIFICATE
to
NORWEST BANK COLORADO, N.A.
as Escrow Agent
The undersigned, MDC Reit Holdings LLC, a Delaware limited liability
company ("Holdings"), pursuant to Section 4(b) of the Escrow Agreement dated as
of ________ 1996 among The Peregrine Real Estate Trust., a California business
trust ("Peregrine"), Holdings, and you (terms defined in said Escrow Agreement
have the same meanings when used herein), hereby:
(a) disputes that the Escrow Amount referred to in the Certificate of
Instruction dated ________ __, is payable to Peregrine by the
undersigned pursuant to Sections 9.2 or 10.2 of the Stock Purchase
Agreement;
(b) certifies that the undersigned has sent to Peregrine a written
statement dated _______ __, of the undersigned, a copy of which is
attached hereto, disputing its liability to Peregrine for the Escrow
Amount; and
(c) objects to your making payment to Peregrine as provided in such
Certificate of Instruction.
MDC REIT HOLDINGS LLC
By: ______________________________
Title
Dated: _________________, ____
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<PAGE> 12
ANNEX III
RESOLUTION CERTIFICATE
to
NORWEST BANK COLORADO, N.A.
as Escrow Agent
The undersigned, The Peregrine Real Trust, a California business trust
("Peregrine"), and MDC Reit Holdings LLC, a Delaware limited liability company
("Holdings"), pursuant to Section 4(b) of the Escrow Agreement dated as of
_______ 1996 among Peregrine, Holdings and you (terms defined in said Escrow
Agreement have the same meanings when used herein), hereby:
(a) certify that (i) Peregrine and Holdings have resolved their dispute
as to the matter described in the Certificate of Instruction dated
_______________, ____ and the related Objection Certificate dated
__________, _____ and (ii) the final amount with respect to the matter
described in such Certificate is $___________________.
(b) instruct you to pay to Peregrine the amount referred to in clause
(ii) of paragraph (a) above, by wire transfer of immediately available
funds to Peregrine's account at ---------------------,
------------------, ---------------, ________________, (Account
No.:_____________), within two business days following your receipt of
this Certificate; and
(c) agree that the amount designated in such Certificate of
Instruction, to the extent, if any, it exceeds the amount referred to
in clause (ii) of paragraph (a) above, shall be deemed not payable to
Peregrine and such Certificate of Instruction is hereby satisfied.
THE PEREGRINE REAL ESTATE TRUST
By:____________________________________
Name:
Title:
MDC REIT HOLDINGS LLC
By:____________________________________
Name:
Title:
Dated: __________________, ____
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<PAGE> 13
ANNEX IV
ARBITRATION CERTIFICATE
to
NORWEST BANK COLORADO, N.A.
as Escrow agent
The undersigned, The Peregrine Real Estate Trust, a California business
trust ("Peregrine"), MDC Reit Holdings LLC, a Delaware limited liability company
("Holdings"), pursuant to Section 4(b) of the Escrow Agreement dated as of
_______ __, 1996 among Peregrine, Holdings and you (terms defined in said Escrow
Agreement have the same meanings when used herein), hereby:
(a) certify that (i) attached hereto is the Arbitration Award resolving
the dispute between Peregrine and Holdings as to the matter described
in the Certificate of Instruction dated ____________, ______ and the
Related Objection Certificate dated __________, _____ and (ii) the
final amount with respect to the matter described in such Certificate,
as provided in such order, is $______________;
(b) instructs you to pay to Peregrine the amount referred to in clause
(ii) of paragraph (a) above, by wire transfer of immediately available
ends to Purchaser's account at ---------------------,
-----------------, ---------------, _________________, (Account
No.:_____________________), within two business days following your
receipt of this Certificate; and
(c) agrees that the amount designated in such Certificate of
Instruction, to the extent, if any, it exceeds the amount referred to
in clause (ii) of paragraph (a) above, shall be deemed not payable to
Peregrine and such Certificate of Instruction is hereby satisfied.
THE PEREGRINE REAL ESTATE TRUST
By:_____________________________________
Name:
Title:
Dated: _________________, _____
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<PAGE> 14
ANNEX V
PEREGRINE CANCELLATION CERTIFICATE
to
NORWEST BANK COLORADO, N.A.
as Escrow Agent
The undersigned, The Peregrine Real Estate Trust, a California business
trust ("Peregrine"), pursuant to Section 4(e) of the Escrow Agreement dated as
of _______ ___, 1996 among Peregrine, MDC Reit Holdings LLC, a Delaware limited
liability company ("Holdings"), and you (terms defined in said Escrow Agreement
have the same meanings when used herein), hereby:
(a) certifies that (i) it hereby releases its claim against Holdings
with respect to [all] [specify portion] of the Escrow Amount designated
in the Certificate of Instruction dated _____, _____ and (ii) as a
result the amount with respect to such Certificate of Instruction is
$___________; and
(b) agrees that such Certificate of Instruction is, to the extent
released as provided in clause (i) of paragraph (a) above, satisfied.
THE PEREGRINE REAL ESTATE TRUST
By:_____________________________________
Name:
Title:
Dated: ___________________, ____
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<PAGE> 15
ANNEX VI
HOLDINGS CANCELLATION CERTIFICATE
to
NORWEST BANK COLORADO, N.A.
as Escrow Agent
The undersigned, MDC Reit Holdings LLC, a Delaware limited liability
company ("Holdings"), pursuant to Section 4(f) of the Escrow Agreement dated as
of ________ 1996 among Holdings, The Peregrine Real Estate Trust, a California
business trust ("Peregrine"), , and you (terms defined in said Escrow Agreement
have the same meanings when used herein), hereby certifies that (i) attached
hereto is the Arbitration Award resolving the dispute between Peregrine and
Holdings as to the matter described in the Certificate of Instruction dated
____________, ____ and the related Objection Certificate dated ___________,
_____ and (ii) as provided in such order, there is no amount owed with respect
to the matter described in such Certificate.
MDC REIT HOLDINGS LLC
By: __________________________
Title
Dated: _________________ _____
15
