SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended August 17, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. 1-11274
FRED MEYER, INC.
(Exact name of registrant as specified in its charter)
Delaware 93-0798201
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3800 S.E. 22nd Avenue
Portland, Oregon 97202
(Address of principal executive offices) (Zip Code)
(503) 232-8844
(Registrant's telephone number, including area code)
Not applicable.
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports); and (2) has
been subject to such filing requirements for the past 90 days.
Yes XX No
---- ----
Shares of Common Stock Outstanding at August 17, 1996: 26,730,071
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Part I - Financial Information
<TABLE>
<CAPTION>
FRED MEYER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
August 17, February 3,
1996 1996
---------- ----------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents..................... $ 44,837 $ 41,849
Receivables-net............................... 46,752 24,683
Inventories................................... 560,790 520,555
Prepaid expenses and other.................... 20,572 23,680
Current portion of deferred taxes............. 22,039 22,046
---------- ----------
Total current assets....................... 694,990 632,813
---------- ----------
PROPERTY AND EQUIPMENT-NET....................... 1,037,081 1,014,148
---------- ----------
OTHER ASSETS..................................... 45,256 24,631
---------- ----------
TOTAL................................... $1,777,327 $1,671,592
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and outstanding checks....... $ 343,631 $ 257,073
Current portion of long-term debt
and lease obligations...................... 1,468 1,468
Income taxes payable.......................... 15,939 4,857
Accrued expenses and other.................... 94,363 86,333
---------- ----------
Total current liabilities.................. 455,401 349,731
---------- ----------
LONG-TERM DEBT AND MORTGAGES..................... 636,469 656,260
---------- ----------
CAPITAL LEASE OBLIGATIONS........................ 13,250 13,298
---------- ----------
DEFERRED LEASE TRANSACTIONS...................... 39,392 42,271
---------- ----------
DEFERRED INCOME TAXES............................ 29,423 30,814
---------- ----------
OTHER LONG-TERM LIABILITIES...................... 7,219 7,984
---------- ----------
STOCKHOLDERS' EQUITY
Common stock.................................. 270 270
Additional paid-in capital.................... 200,064 199,363
Retained earnings............................. 400,193 375,577
Treasury stock and other...................... (4,354) (3,976)
---------- ----------
Total stockholders' equity................. 596,173 571,234
---------- ----------
TOTAL................................... $1,777,327 $1,671,592
========== ==========
See notes to consolidated financial statements.
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2
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<CAPTION>
FRED MEYER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
12 Weeks Ended
----------------------------
August 17, August 12,
1996 1995
--------- ---------
<S> <C> <C>
NET SALES........................................ $853,914 $774,702
-------- --------
COST OF MERCHANDISE SOLD:
General...................................... 597,244 552,635
Related party lease.......................... 1,284 1,284
-------- --------
Total cost of merchandise sold............... 598,528 553,919
-------- --------
GROSS MARGIN..................................... 255,386 220,783
-------- --------
OPERATING AND ADMINISTRATIVE EXPENSES:
General...................................... 210,622 183,124
Related party leases......................... 11,113 12,426
-------- --------
Total operating and administrative expenses.. 221,735 195,550
-------- --------
INCOME FROM OPERATIONS........................... 33,651 25,233
INTEREST EXPENSE-NET............................. 9,178 8,019
-------- --------
INCOME BEFORE INCOME TAXES....................... 24,473 17,214
PROVISION FOR INCOME TAXES....................... 9,300 6,541
-------- --------
NET INCOME....................................... $ 15,173 $ 10,673
======== ========
EARNINGS PER COMMON SHARE........................ $.53 $.38
==== ====
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING............................ 28,703 28,369
======== ========
See notes to consolidated financial statements.
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3
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<CAPTION>
FRED MEYER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
28 Weeks Ended
----------------------------
August 17, August 12,
1996 1995
---------- ---------
<S> <C> <C>
NET SALES........................................ $1,893,942 $1,710,053
---------- ----------
COST OF MERCHANDISE SOLD:
General...................................... 1,333,487 1,221,561
Related party lease.......................... 2,997 2,997
---------- ----------
Total cost of merchandise sold............... 1,336,484 1,224,558
---------- ----------
GROSS MARGIN..................................... 557,458 485,495
---------- ----------
OPERATING AND ADMINISTRATIVE EXPENSES:
General...................................... 467,711 414,297
Related party leases......................... 27,760 29,840
---------- ----------
Total operating and administrative expenses 495,471 444,137
---------- ----------
INCOME FROM OPERATIONS........................... 61,987 41,358
INTEREST EXPENSE-NET............................. 22,282 19,171
---------- ----------
INCOME BEFORE INCOME TAXES....................... 39,705 22,187
PROVISION FOR INCOME TAXES....................... 15,088 8,431
---------- ----------
NET INCOME....................................... $ 24,617 $ 13,756
========== ==========
EARNINGS PER COMMON SHARE........................ $.86 $.48
==== ====
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING............................ 28,609 28,424
========== ==========
See notes to consolidated financial statements.
</TABLE>
4
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<CAPTION>
FRED MEYER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
28 Weeks Ended
--------------------------
August 17, August 12,
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................... $ 24,617 $ 13,756
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of
property and equipment....................... 62,560 55,607
Amortization of goodwill........................ 166 166
Deferred lease transactions..................... (2,879) (2,094)
Deferred income taxes........................... (1,384) ---
Other liabilities............................... (765) (1,285)
Income taxes.................................... 11,082 13,670
Inventories..................................... (40,235) 12,549
Other current assets............................ (18,961) 8,098
Accounts payable and accrued expenses........... 85,670 8,515
Other........................................... (3,488) 920
-------- --------
Net cash provided by operating activities.......... 116,383 109,902
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock-net....................... 285 2,137
Increase (decrease) in outstanding checks.......... 8,918 (17,522)
Increase in notes receivable....................... (22,396) (432)
Long-term financing:
Borrowings...................................... 22,930 70,000
Repayments...................................... (42,769) (29,887)
-------- --------
Net cash (repaid) provided
through financing activities..................... (33,032) 24,296
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net sales of investment securities................. 5,080 1,510
Purchases of property and equipment................ (93,910) (136,617)
Net proceeds from sale of real property............ 8,467 2,089
-------- --------
Net cash used for investing activities............. (80,363) (133,018)
-------- --------
CASH AND CASH EQUIVALENTS:
Net increase for the period........................ 2,988 1,180
Beginning of period................................ 41,849 34,868
-------- --------
End of period...................................... $ 44,837 $ 36,048
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (refunded) during the period for:
Interest........................................ $ 21,510 $ 13,328
Income taxes.................................... 5,335 (5,389)
See notes to consolidated financial statements.
</TABLE>
5
<PAGE>
FRED MEYER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Interim Reporting Periods
-------------------------
The Company's interim reporting periods for reports to stockholders are
the 16th, 28th, and 40th weeks of its fiscal year.
2. Reclassifications
-----------------
Certain prior year balances have been reclassified to conform to
current year presentation.
3. Inventories
-----------
Inventories consist mainly of merchandise held for sale. Substantially
all the inventories are valued at the lower of last-in, first-out
(LIFO) cost or market. Estimated gross margins have been used for
determining the cost of merchandise sold for those operating
departments not taking physical inventories at the end of the interim
periods.
4. Income Taxes
------------
Income taxes have been provided for based upon the current estimate of
the Company's annual effective tax rate.
5. Stockholders' Equity
--------------------
Changes in stockholders' equity for the twenty-eight weeks ended August
17, 1996 were:
(In thousands)
--------------
Stockholders' equity, February 3, 1996 $571,234
Issuance of common stock-net 285
Amortization of unearned compensation 37
Net income 24,617
--------
Stockholders' equity, August 17, 1996 $596,173
========
6. Earnings Per Common Share
-------------------------
Fully diluted earnings per common share are computed by dividing net
income by the weighted average number of common and common equivalent
shares outstanding. Weighted average shares reflect the dilutive effect
of outstanding stock options (ranging in exercise price from $3.24 to
$41.25 per share) which was determined by using the "treasury stock"
method.
7. Commitments and Contingencies
-----------------------------
The Company and its subsidiaries are parties to various legal claims,
actions, and complaints, certain of which involve material amounts.
Although the Company is unable to predict with certainty whether or not
it will ultimately be successful in these legal proceedings or, if not,
what the impact might be, management presently believes that
disposition of these matters will not have a material adverse effect on
the Company's consolidated financial position or consolidated results
of operations.
8. Subsequent Events
-----------------
On September 5, 1996, the Company will close a sale/leaseback with
respect to ten of its stores and will generate approximately $108
million in net proceeds that will be used to pay down its credit lines.
Concurrently with an offering of the Company's stock by FMI Associates,
the Company plans to repurchase approximately $70,000,000 of Common
Stock from FMI Associates at a price equal to the public offering
price, less the underwriting discount. The Company plans to finance the
cost of the share repurchase with borrowings through its credit
facilities.
---------------
6
<PAGE>
The financial information furnished in this Form 10-Q reflects all
adjustments of a normal recurring nature, which, in the opinion of
management, are necessary for a fair presentation of the results for the 12
and 28 weeks ended August 17, 1996 and August 12, 1995.
The consolidated results of operations presented herein are not necessarily
indicative of the results to be expected for the year due to the
seasonality of the Company's business. These consolidated financial
statements should be read in conjunction with the financial statements and
related notes incorporated by reference in the Company's latest annual
report filed on Form 10-K.
FRED MEYER, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Company funded its working capital and capital expenditure needs in
1996 and 1995 primarily through internally generated cash flow and
available lease facilities, supplemented by borrowings under committed and
uncommitted bank lines of credit, unrated commercial paper and the sale of
fixed rate five- and seven-year term notes.
On April 25, 1995, the Company issued $50,000,000 of unsecured seven-year
senior 7.77 percent notes to a major insurance company. On May 17, 1995,
the Company borrowed $20,000,000 from a major international bank, with a
maturity of May 17, 2000 and bearing interest at 6.775 percent. In May 1995
and December 1995 the Company also put into place two lease lines of credit
for land and buildings for up to $100,000,000 and $60,000,000,
respectively.
The Company entered into a new credit facility in 1995 with several
domestic and foreign banks for a committed line of credit which provides
for borrowings of up to $500,000,000. This agreement continues through June
30, 2000, at which time the agreement terminates; and any outstanding
amounts must be paid in full. In addition to this committed credit
facility, the Company has $105,000,000 of uncommitted money market lines of
credit with several foreign banks and $145,000,000 of uncommitted money
market lines of credit with banks who are in the committed credit facility.
The bank lines of credit and unrated commercial paper are used primarily
for seasonal inventory requirements, new store construction and financing,
existing store remodeling, acquisition of land, and major projects such as
MIS development. At August 17, 1996, the Company had unrated commercial
paper outstanding in the amount of approximately $342,494,000, borrowings
under money market lines with committed line banks of $21,000,000, and a
total of approximately $136,506,000 available for borrowings that would be
supported by its committed credit facilities.
On September 5, 1996, the Company will close a sale/leaseback with respect
to ten of its stores and will generate approximately $108,000,000 in net
proceeds that will be used to pay down its credit lines, which will increase
the available capacity under those lines. The leases are for an initial
term of 21 years, subject to renewal at the option of the Company; and the
average annual rent, including amortization of fees and deferred gain, will
be approximately $7,700,000 annually.
The Company has entered into interest rate swap and cap agreements to
reduce the impact of changes in interest rates on its floating rate
long-term debt. At August 17, 1996, the Company had outstanding six
interest rate contracts with commercial banks, having a total notional
principal amount of $100,000,000. Three of these agreements effectively fix
the Company's interest rate on unrated commercial paper, floating rate
facilities, and uncommitted lines of credit at rates between 4.625 percent
and 7.595 percent on a notional principal amount of $50,000,000. These
contracts expire in 1996, 1997, and 1998. The remaining three agreements
effectively limit the maximum interest rate the Company will pay at rates
between 5.00 percent and 9.00 percent on notional principal amounts
totaling $50,000,000. These three agreements mature in 1996, 1998, and
1999.
7
<PAGE>
The Company has entered into swap and cap agreements to reduce the impact
of changes in rent expense on its two lease lines of credit. At August 17,
1996, the Company had outstanding seven interest rate contracts with
commercial banks, having a total notional principal amount of $80,000,000.
Three of these agreements effectively fix the Company's rental rate on the
lease lines at rates between 6.2775 percent and 6.48 percent on notional
principal amounts of $40,000,000. The remaining four agreements effectively
limit the maximum rental rate the Company will pay at 7.25 percent on
notional principal amounts totaling $40,000,000. All seven of these
contracts expire in 2000.
The Company is exposed to credit loss in the event of nonperformance by the
other counterparties to the interest/rent rate swap agreements. However,
the Company does not anticipate nonperformance by the counterparties.
The Company believes that a combination of cash flow from operations,
proceeds from sale and leasebacks and borrowings under its credit
facilities will permit it to finance its capital expenditure requirements
for 1996, currently budgeted to be approximately $160,000,000, net of
estimated land sales and real estate financed on leases. If the Company
determines that it is preferable, it may fund its capital expenditure
requirements by mortgaging facilities, or by issuing additional debt.
The Company plans to file a registration statement with the Securities and
Exchange Commission relating to a proposed public offering of 4,000,000
shares of its Common Stock (including a 400,000 share overallotment option)
to be sold by FMI Associates, an affiliate of Kohlberg Kravis Roberts &
Co., L.P. The Company will not sell any shares in the offering.
Concurrently, with the consummation of the offering, the Company plans to
repurchase approximately $70,000,000 of Common Stock from FMI Associates at
a price equal to the public offering price, less the underwriting
discount. The Company plans to finance the cost of the share repurchase
with borrowings through its existing credit facilities. Prior to the
offering and share repurchase, FMI Associates beneficially owned 10,700,038
shares.
RESULTS OF OPERATIONS
COMPARISON OF THE 12 WEEKS ENDED AUGUST 17, 1996 WITH THE 12 WEEKS ENDED
AUGUST 12, 1995.
Net sales for the second quarter of 1996 increased $79,212,000 or 10.2
percent over the corresponding quarter in 1995. The 1996 increase in sales
reflects openings of new stores, strong food sales, and the acquisition of
71 mall jewelry stores, including the July 12, 1996 acquisition of 49 mall
jewelry stores from Merksamer Jewelers, Inc. Comparable store sales
increased 2.9 percent for the second quarter of 1996. Food comparable store
sales increased 5.1 percent, and nonfood comparable store sales increased
1.3 percent. The Company's food operations accounted for 42.6 percent of
the overall sales in 1996 and 41.7 percent in 1995.
Gross margin as a percent of net sales was 29.9 percent for the second
quarter of 1996, compared with 28.5 percent for 1995's second quarter.
Gross margins increased in the second quarter of 1996 due to lower
markdowns, an improved sales mix of nonfood products, the impact on margins
of two multistore jewelry acquisitions, lower distribution center and
delivery costs as a percent of sales, and improved manufacturing plant
efficiencies.
Operating and administrative expenses as a percent of net sales were 26.0
percent for the second quarter of 1996, compared with 25.2 percent for
1995's second quarter. Expenses as a percent of sales increased in 1996's
second quarter due to costs associated with the opening of five new stores
in 1996's second quarter versus none in 1995, an investment in improved
customer service through added staffing at store level, the impact on
expenses of two multistore jewelry acquisitions, and higher maintenance
costs.
Net interest expense in the second quarter of 1996 was $9,178,000, an
increase of 14.5 percent from the $8,019,000 reported for 1995. The
increase reflects
8
<PAGE>
higher interest rates and higher borrowings related to
new store construction and remodels and last year's completion of our
distribution center projects.
The effective tax rate for the second quarters of 1996 and 1995 was 38.0
percent.
Net income increased 42.2 percent to $15,173,000 in the second quarter of
1996 from $10,673,000 in the second quarter of 1995. Earnings per share
were $.53 for the second quarter of 1996 based on 28,703,000 shares
outstanding, compared with $.38 for the prior year's second quarter based
on 28,369,000 shares outstanding.
COMPARISON OF THE 28 WEEKS ENDED AUGUST 17, 1996 WITH THE 28 WEEKS ENDED
AUGUST 12, 1995.
Net sales for the first 28 weeks of 1996 increased $183,889,000 or 10.8
percent to $1,893,942,000. This increase reflects openings of new stores,
strong food sales, and the acquisition of 71 mall jewelry stores.
Comparable store sales increased 4.1 percent for this 28-week period due in
part to particularly strong comparable sales in the Portland area markets.
Food comparable store sales increased 5.9 percent, and nonfood comparable
store sales increased 2.9 percent. The Company's food operations accounted
for 42.7 percent of the overall sales for the first 28 weeks of 1996
compared with 41.9 percent for the first 28 weeks of 1995.
Gross margin as a percent of net sales was 29.4 percent for the first 28
weeks of 1996 compared with 28.4 percent for 1995. Gross margins increased
in the first 28 weeks of 1996 due to lower markdowns, improved food
margins, lower distribution center and delivery costs as a percent of sales
and the impact on margins of two multistore jewelry acquisitions.
Operating and administrative expenses as a percent of net sales were 26.2
percent for the first 28 weeks of 1996 compared with 26.0 percent for the
first 28 weeks of 1995. Expenses as a percent of net sales increased in
1996's first 28 weeks due to opening costs associated with six new stores
in the first 28 weeks of 1996 versus one in 1995, the impact on expenses of
the two multistore jewelry acquisitons and higher maintenance costs.
Preopening expenses for new stores are expensed in the quarter during which
the stores are opened.
Net interest expense in the first 28 weeks of 1996 was $22,282,000, an
increase of 16.2 percent from the $19,171,000 for 1995. The increase
reflects higher interest rates and higher borrowings related to new store
construction and remodels and last year's completion of our distribution
center projects.
The effective tax rate for the first 28 weeks of 1996 and 1995 was 38.0
percent.
Net income increased 79.0 percent to $24,617,000 in the first 28 weeks of
1996 from $13,756,000 in the first 28 weeks of 1995. Earnings per share
were $.86 for the first 28 weeks of 1996 based on 28,609,000 shares
outstanding, compared with $.48 for the prior year's period based on
28,424,000 shares outstanding.
In the first 28 weeks of 1996, the Company acquired 22 mall jewelry stores,
located primarily in California, which operated under various names and are
now operating under the names "Fred Meyer Jewelers" and "Merksamer
Jewelers," as well as 49 mall Merksamer Jewelers stores operating in 10
states, which will continue to operate under that name.
EFFECT OF LIFO
Each year, the Company estimates the LIFO adjustment for the year based on
estimates of three factors: inflation rates (calculated by reference to the
Department Stores Inventory Price Index published by the Bureau of Labor
Statistics for softgoods and jewelry, and to internally generated indices
based on Company purchases during the year for all other departments),
expected inventory levels, and expected markup levels (after reflecting
permanent markdowns and cash discounts). The Company reviewed these
year-to-date indices at the end of the second quarter and adjusted its LIFO
reserve on a year-to-date basis to reflect the Company's overall product
mix, anticipated year-end inventory levels, and the Company's expectations
of the indices for the remainder of the year. At year-end, the Company
makes the final adjustment reflecting the difference between its prior
quarterly estimates and actual LIFO amount for the year.
9
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of matters to a vote of Security Holders.
At the annual meeting of the stockholders of the Company held on
June 27, 1996, action was taken with respect to the election of
directors. As of the record date, May 1, 1996, 26,704,755 shares
of common stock were outstanding and entitled to vote. The voting
results are shown below:
Election of Directors:
For Withheld
---------- --------
James J. Curran 23,132,623 339,083
Saul A. Fox 23,018,367 453,339
A.M. Gleason 23,134,231 337,468
Jerome Kohlberg, Jr. 23,003,630 468,076
Roger S. Meier 23,132,958 338,748
Michael W. Michelson 23,028,625 443,081
Robert G. Miller 23,025,257 446,449
Paul E. Raether 23,028,393 443,306
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit
-------
10X. Real Estate Purchase and Sale Agreement dated April 5, 1996
between REC Resolution Company and Fred Meyer, Inc.
concerning seven Portland-area Fred Meyer properties.
10Y. Leasehold Assignment and Modification Agreement dated April
5, 1996 between Real Estate Properties Limited Partnership
and Fred Meyer, Inc. concerning the Assignor's leasehold
interests in various Fred Meyer properties.
10Z. Letter Agreement dated August 15, 1996 between REC
Resolution Company and Fred Meyer, Inc. concerning seven
Portland-area Fred Meyer properties.
11. Computation of Earnings per Common Share.
27. Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K have been filed during the period for which
this report is filed.
10
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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.
FRED MEYER, INC.
(Registrant)
Dated: September 4, 1996 KENNETH THRASHER
----------------- -----------------------------------
Kenneth Thrasher
Senior Vice President - Finance
Chief Financial Officer
11
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
Number Document Description Page Number
- ------ -------------------- -----------
10X. Real Estate Purchase and Sale Agreement dated
April 5, 1996 between REC Resolution Company
and Fred Meyer, Inc. concerning seven Portland-
area Fred Meyer properties.
10Y. Leasehold Assignment and Modification Agreement
dated April 5, 1996 between Real Estate
Properties Limited Partnership and Fred Meyer, Inc.
concerning the Assignor's leasehold interests in
various Fred Meyer properties.
10Z. Letter Agreement dated August 15, 1996 between
REC Resolution Company and Fred Meyer, Inc.
concerning seven Portland-area Fred Meyer
properties.
11. Computation of Earnings per Common Share.
27. Financial Data Schedule.
================================================================================
REAL ESTATE PURCHASE AND
SALE AGREEMENT
between
REC RESOLUTION COMPANY
SELLER
AND
FRED MEYER, INC.
PURCHASER
Concerning Seven Portland-Area Fred Meyer Properties
================================================================================
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
<PAGE>
TABLE OF CONTENTS
Page
1. PURCHASE AND SALE OF THE PROPERTIES.....................................2
2. TOTAL PURCHASE PRICE....................................................2
3. EFFECTIVE DATE..........................................................2
4. PRECONDITIONS TO PURCHASER'S OBLIGATIONS................................3
4.1 Certain Transactions..............................................3
4.2 Title.............................................................3
4.3 Hazardous or Toxic Materials......................................4
4.4 No Material Changes...............................................4
4.5 Board Approval....................................................4
5. CONDEMNATION............................................................4
6. LEGAL LOT; OUTPARCELS...................................................5
7. CLOSING.................................................................6
7.1 Closing Date......................................................6
7.2 Manner and Place of Closing.......................................6
7.3 Prorations. .....................................................6
7.4 Conveyance of Properties..........................................6
7.5 FIRPTA. ..........................................................6
7.6 Events of Closing.................................................6
7.7 Title Insurance...................................................7
7.8 Lease. ..........................................................7
8. REPRESENTATIONS, WARRANTIES AND COVENANTS...............................7
8.1 Seller's Representations, Warranties and Covenants................7
8.2 Purchaser's Representations and Warranties........................8
9. CONDUCT UNTIL CLOSING; SELLER'S COOPERATION; DISCLAIMER.................9
10. FAILURE TO CLOSE........................................................9
10.1 Seller's Remedies.................................................9
10.2 Purchaser's Remedies.............................................10
11. GENERAL PROVISIONS.....................................................10
11.1 Binding Effect; Assignment.......................................10
11.2 Time of Essence..................................................10
11.3 Notices..........................................................10
11.4 Waiver...........................................................11
11.5 Attorneys' Fees..................................................11
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
i
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Page
11.6 Prior Agreements.................................................11
11.7 Applicable Law...................................................11
11.8 Brokers..........................................................11
11.9 Changes in Writing...............................................11
11.10 Counterparts.....................................................11
11.12 Survival.........................................................11
11.13 Effect of Extensions and Modifications; Backup Offers............11
11.14 Oregon Statutory Disclaimer......................................12
11.15 Disclaimer; Duty to Disclose. ..................................12
11.16 Representations; Condition of Properties.........................12
11.17 Related Agreement................................................12
11.18 Certain Obligations. ...........................................13
12. APPROVAL BY SELLER.....................................................13
EXHIBIT A-1 Legal Description of Burlingame Property
EXHIBIT A-2 Legal Description of Glisan Property
EXHIBIT A-3 Legal Description of Gresham Property
EXHIBIT A-4 Legal Description of Interstate Property
EXHIBIT A-5(a) Legal Description of Oak Grove Property
EXHIBIT A-5(b) Legal Description of Oak Grove PL Property
EXHIBIT A-6 Legal Description of Stadium Property
EXHIBIT A-7 Legal Description of Tigard Property
EXHIBIT B - Reports
EXHIBIT C - Form of Lease Assignment
EXHIBIT D - Site Plans (Depicting Pads)
EXHIBIT E - Use Restrictions
EXHIBIT F - Pad Agreement (Gateway)
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REAL ESTATE PURCHASE AND SALE AGREEMENT
(Seven Portland-Area Fred Meyer Properties)
This REAL ESTATE PURCHASE AND SALE AGREEMENT (this "Agreement"),
dated as of April 5, 1996, between REC RESOLUTION COMPANY, an Oregon
corporation ("Seller"), and FRED MEYER, INC., a Delaware corporation, or
its assign ("Purchaser"), recites and provides as follows:
RECITALS
A. Seller, as successor to Fifth Avenue Corporation, owns the real
property located in Portland, Multnomah County, Oregon, described in the
attached Exhibit A-1 (the "Burlingame Property"). The Burlingame Property
is currently leased by Seller to Purchaser, pursuant to a lease agreement
dated as of December 12, 1988 (the "Burlingame Lease"). For purposes of
this Agreement, the Burlingame Property will exclude the "Burger King
Building" as such term is defined in the Burlingame Lease; the parties
intend that Seller will retain ownership of the Burger King Building as
contemplated by Section 6.5 of this Agreement.
B. Seller, as successor to Union Central Company, owns the real
property located in Portland, Multnomah County, Oregon, described in the
attached Exhibit A-2 (the "Glisan Property"). The Glisan Property is
currently leased by Seller to REPL pursuant to two lease agreements dated
as of September 20, 1961 and October 7, 1983. REPL subleases the Glisan
Property to Purchaser pursuant to a lease agreement dated as of October 22,
1986.
C. Seller, as successor to EFEM Company, owns the real property
located in Gresham, Multnomah County, Oregon, described in the attached
Exhibit A-3 (the "Gresham Property"). The Gresham Property is currently
leased by Seller to REPL pursuant to a lease agreement dated as of July 1,
1974. REPL subleases the Gresham Property to Purchaser pursuant to a lease
agreement dated as of October 22, 1986.
D. Seller, as successor to Fourth Avenue Corporation, owns the real
property located in Portland, Multnomah County, Oregon, described in the
attached Exhibit A-4 (the "Interstate Property"). The Interstate Property
is currently leased by Seller to REPL pursuant to a lease agreement dated
as of January 7, 1966. REPL subleases the Interstate Property to Purchaser
pursuant to a lease agreement dated as of October 22, 1986.
E. Seller, as successor to Vanoak Corporation, owns the real property
located in Milwaukie, Clackamas County, Oregon, described in the attached
Exhibit A-5(a) (the "Oak Grove Store Property"). The Oak Grove Property is
currently leased by Seller to REPL pursuant to a lease agreement dated as
of April 28, 1960 REPL subleases the Oak Grove Property to Purchaser
pursuant to a lease agreement dated as of October 22, 1986. Seller, as
successor to Vanoak Corporation, owns the real property located in
Portland, Multnomah County, Oregon, described in the attached Exhibit
A-5(b) (the "Oak Grove PL Property"). The Oak Grove PL Property is
currently leased by Seller to Purchaser, pursuant to a lease agreement
dated as of December February 1, 1990 (the "Oak Grove PL Lease").
F. Seller, as successor to Fifth Avenue Corporation, owns the real
property located in Portland, Multnomah County, Oregon, described in the
attached Exhibit A-6 (the "Stadium Property", which includes the parking
lot located across a public street from the store). The Stadium Property is
currently leased by Seller to REPL pursuant to two lease agreements dated
as of February 14, 1968 and June 20, 1984. REPL subleases the Stadium
Property to Purchaser pursuant to a lease agreement dated as of October 22,
1986.
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G. Seller, as successor to Duane Company, owns the real property
located in Tigard, Washington County, Oregon, described in the attached
Exhibit A-7 (the "Tigard Property"). The Tigard Property is currently
leased by Seller to REPL pursuant to a lease agreement dated as of February
14, 1967. REPL subleases the Tigard Property to Purchaser pursuant to a
lease agreement dated as of October 22, 1986.
H. The above-referenced properties, together with all buildings and
other improvements located thereon and all rights and appurtenances
belonging thereto or in any way appertaining thereto and all right, title
and interest of Seller in and to any and all roads, streets, alleys and
ways, bounding such property are collectively referred to herein as the
"Properties." The above-referenced master leases (other than the Burlingame
Lease) are sometimes collectively referred to as the "Master Leases" or
individually as a "Master Lease." The above-referenced subleases are
sometimes collectively referred to as the "Subleases" or individually as a
"Sublease."
I. Seller desires to sell the Properties to Purchaser, and Purchaser
desires to purchase the Properties from Seller, on the terms and conditions
set forth in this Agreement.
AGREEMENTS
The parties agree as follows:
1. PURCHASE AND SALE OF THE PROPERTIES. Seller agrees to sell the
Properties to Purchaser, and Purchaser agrees to purchase the Properties
from Seller, on the terms and conditions set forth in this Agreement.
2. TOTAL PURCHASE PRICE. The total purchase price for the Properties
is TWENTY ONE MILLION ONE HUNDRED SEVENTY THREE HUNDRED THIRTY FIVE DOLLARS
($21,170,335). The purchase price is allocated among the various portions
of the Properties as follows:
<TABLE>
<CAPTION>
PROPERTY LAND IMPROVEMENTS TOTAL
- -------- ---- ------------ -----
<S> <C> <C> <C>
Burlingame Property $2,115,736.00 $2,115,736.00 $4,231,472.00
Glisan Property $1,980,848.00 $3,231,911.00 $5,212,759.00
Gresham Property $829,563.00 $1,055,808.00 $1,885,371.00
Interstate Property $1,434,161.00 $1,271,804.00 $2,705,965.00
Oak Grove Property $492,763.00 $1,332,287.00 $1,825,050.00
Stadium Property $1,429,591.00 $993,444.00 $2,423,035.00
Tigard Property $952,605.00 $1,934,078.00 $2,886,683.00
TOTAL $9,235,267.00 $11,935,068.00 $21,170,335.00
</TABLE>
3. EFFECTIVE DATE. The "Effective Date" for purposes of this
Agreement is the date that this Agreement is mutually executed and
delivered.
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4. PRECONDITIONS TO PURCHASER'S OBLIGATIONS. The close of escrow and
Purchaser's obligation to purchase the Properties are subject to the
satisfaction, not later than the Closing Date (unless otherwise provided),
of the following conditions, and the obligations of the parties with
respect to such conditions are as set forth in this Section 4. The
conditions set forth in this Section 4 are solely for the benefit of
Purchaser and may be waived only by Purchaser. Purchaser shall at all times
have the right to waive any condition. Such waiver or waivers shall be in
writing to Seller.
4.1 CERTAIN TRANSACTIONS.
(a) Purchaser shall have completed and closed (1) a
sale-leaseback transaction of between nine and thirteen properties
currently owned by Purchaser or its subsidiaries, and (2) a purchase of
certain properties currently owned by Metropolitan Life Insurance Company
and leased by Purchaser or its subsidiaries. If either of these
transactions has not closed by December 31, 1996, then, unless Purchaser
waives this condition in writing on or before December 31, 1996, this
Agreement shall terminate.
(b) Each of the Properties shall have been accepted as
financeable by any institutional lender or equity investor providing
financing for this transaction. If this has not occurred by December 31,
1996, then, unless Purchaser waives this condition in writing delivered to
Seller on or before December 31, 1996, this Agreement shall terminate.
4.2 TITLE. At closing Seller shall convey fee simple title to the
Properties by special warranty deeds, subject to no encumbrances created or
suffered by Seller other than nondelinquent real property taxes, and other
matters which may be approved in writing by Purchaser in accordance with
this Section.
(a) TITLE REPORT, SURVEY, ETC. Purchaser shall within 10 days
after the Effective Date obtain current preliminary title reports on the
Properties, from First American Title Insurance Company ("Title Company").
Purchaser shall also, within 90 days after the Effective Date, obtain
current ALTA surveys of the Properties meeting Purchaser's survey
requirements. The cost of the surveyor's work will be paid by Purchaser.
Seller and Purchaser will each review the surveys and if necessary the
legal descriptions of the Properties will be adjusted based on such
surveys.
(b) TITLE APPROVAL PROCEDURE.
(1) Within 30 days after receipt of all of the title
reports and surveys, Purchaser will review such materials and notify Seller
in writing of Purchaser's approval (or disapproval) of any exceptions shown
in the title reports, other than an exception for current property taxes,
and of such surveys. Failure to notify Seller than an item is approved
shall be deemed to be disapproval of such item. In the event of such
disapproval: (i) Seller shall be obligated to remove (or commit to remove)
any disapproved lien or other financial encumbrance (a "Lien"), at or prior
to closing; and (ii) Seller agrees to exert its best efforts to remove any
other disapproved matter (but Seller is not absolutely obligated to remove
a disapproved matter other than a Lien).
(2) Seller shall have 20 days from the date that items
are disapproved or deemed disapproved to eliminate any disapproved title
exceptions or survey matters (or as to any Liens, to commit in writing to
eliminate such Liens at or prior to closing). If Seller is unable to
eliminate a disapproved title exception or survey matter within such
twenty-day period, despite Seller's best efforts to do
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so, either party may elect to rescind this Agreement by notice to the other
party within ten days after the expiration of the twenty-day period. In
such event, all obligations of the parties under this Agreement shall
thereafter cease. Purchaser may preserve this Agreement, however, if
Purchaser notifies Seller within twenty days after delivery of a notice of
termination by Seller, that either: (a) Purchaser waives its objection to
the relevant encumbrance(s); or (b) as to encumbrances that can be removed
by the payment of money, Purchaser intends at closing to pay the amount
necessary to remove such encumbrances. If Purchaser so preserves this
Agreement, this Agreement shall remain in full force and effect, and
Purchaser will receive a credit at closing in the amount of any sum paid by
Purchaser to remove such encumbrances on title.
(3) As to any exceptions to title placed of record or
first identified after issuance of the preliminary title report or revealed
by any supplemental report, there shall be a 10-day period for Purchaser to
review and approve or disapprove such exceptions on the same basis as
provided above.
4.3 HAZARDOUS OR TOXIC MATERIALS. Exhibit B sets forth a complete
list of all written soils, environmental or other reports or studies
currently in Seller's possession concerning any hazardous waste or
hazardous substances (as defined in Section 8.1) on, in or under the
Properties or any underground storage tanks on the Properties
(collectively, the "Reports"). Seller has provided or will promptly provide
complete copies of the Reports and any other such reports discovered by
Seller after the date hereof. Purchaser will cause to be conducted such
investigations or audits of the environmental condition of the Properties
as Purchaser deems prudent. Purchaser will on request provide to Seller
copies of any reports prepared by third parties in connection with such
investigations or audits. In the event that, prior to the Closing Date, any
hazardous substances in amounts or of kinds that violate or could give rise
to liability under environmental laws (as defined in Section 8.1) are
discovered on, in, or under any of the Properties, or any underground
storage tanks are discovered on any of the Properties, Purchaser may elect,
within ten days after learning of the discovery of such matter, to
terminate this Agreement by notice to the Seller; provided, however, that
Seller may preserve this Agreement by notifying Purchaser (within 10 days
after receipt of the Purchaser's termination notice) that Seller commits at
its expense to perform any remediation necessary to correct the problem to
the satisfaction of Purchaser (in Purchaser's discretion) and any
governmental agency with jurisdiction over the Properties, and the parties
thereafter document such remediation commitment in a manner acceptable to
Purchaser. If this Agreement is so terminated, the parties shall thereafter
have no further obligations under this Agreement.
4.4 NO MATERIAL CHANGES. At the Closing Date, there shall have
been no material adverse changes in the physical condition of or legal
requirements applicable to the Properties.
4.5 BOARD APPROVAL. Purchaser's Board of Directors shall have
approved this transaction in its discretion. If this condition is not
satisfied by December 31, 1996, this Agreement shall terminate.
5. CONDEMNATION. If, prior to closing, any part of the Properties is
condemned or appropriated by public authority or any party exercising the
right of eminent domain, or is threatened thereby, then this Agreement
shall, at the election of the Purchaser, become null and void. In the event
the Purchaser elects not to terminate this Agreement, the purchase price
shall not be affected, but Purchaser shall be entitled to all proceeds of
such award (or, if the award is made prior to closing, Seller shall receive
such proceeds but Purchaser shall receive a credit against the purchase
price in the net amount of such proceeds). Seller will promptly notify
Purchaser as to the commencement of any such action or any communication
from a condemning authority that a condemnation or appropriation is
contemplated, and will cooperate with
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Purchaser in the response to or defense of such actions, and permit
Purchaser to participate fully in, and approve any settlement of, any such
proceedings.
6. LEGAL LOT; OUTPARCELS.
6.1 If any of the Properties is not currently a separate legal lot
or lots and tax parcel(s), Seller (with the cooperation of Purchaser) shall
complete and obtain final approval of any necessary plat, partition, lot
line adjustment or subdivision, so that as of closing the Property will be
a separate legal lot or lots and tax parcel or parcels. Any conditions
imposed in connection with such action must be acceptable to Purchaser. The
costs incurred will be paid by Seller.
6.2 The parties intend that the following "pad" outparcels, which
are depicted generally on the site plans attached as Exhibit "D" hereto,
are to be excluded from the purchase:
Property Pad(s) excluded
-------- ---------------
Gresham Newport Bay Restaurant
Tigard U.S. Bancorp
6.3 During the 60 days following the Effective Date, the parties
will negotiate in good faith a set of reciprocal easements and restrictions
with respect to these pads (the "REAs"). The REAs will prohibit use of the
pads as specified on Exhibit E hereto, and will contain customary
reciprocal access and utility easements on terms acceptable to each of the
parties. The REAs will include cross parking easements, as well as a
requirement for maintenance of adequate parking on the pads (consistent
with law and customary retail development parking standards)
notwithstanding such cross parking easements.
6.4 Seller, as successor to Duane Company, is the owner of the
Gateway shopping center development, in which Purchaser is a tenant. The
parties will, at closing, execute and deliver an Agreement Regarding Pad
Development in the form attached hereto as Exhibit F,
6.5 During the 60 days following the Effective Date, the parties
will negotiate in good faith a condominium agreement and related
documentation, or other legal arrangements acceptable to the parties and
their counsel, so as to separate fee ownership of the Burger King Building
from the remainder of the Burlingame Property. Seller will retain ownership
of the Burger King Building under the terms of such documents, which will
contain customary and mutually acceptable terms and conditions relating to
common area maintenance, taxes and similar matters. The terms of such
documents will include use restrictions prohibiting use of the Burger King
Building as specified on Exhibit E hereto, and will provide to the Burger
King Building nonexclusive parking rights in the common areas of the
development consistent with those stated in the Burlingame Lease. The
documents will also include an "exclusive use" provision to the effect that
no portion of the Burlingame Property will be developed as a fast food
hamburger restaurant, subject to the following: the restriction will not
apply to or limit in any manner any business operation within the Fred
Meyer anchor store building; and the restriction shall terminate if the
occupant of the Burger King Building ceases to operate a fast food
hamburger restaurant therein for a period of more than one year for reasons
other than remodeling, reconstruction or "force majeure" causes such as
strikes, lockouts, fire or other casualty, or acts of God. Such documents
will also permit the owner of the Burlingame Property to redevelop the
Burlingame Property from time to time provided that the physical support,
access, visibility and parking rights
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afforded to the Burger King Building are not materially adversely affected.
It is a mutual condition to closing that the parties reach final agreement
on the terms of such documents.
7. CLOSING.
7.1 CLOSING DATE. This transaction will be closed (the
"Closing") on a date to be selected by Purchaser and reasonably acceptable
to Seller, but not later than 30 days after satisfaction or written waiver
of the conditions specified in Section 4 of this Agreement, and in any
event not later than January 30, 1997 (the "Closing Date"). Purchaser will
give Seller at least 30 days notice to close.
7.2 MANNER AND PLACE OF CLOSING. This transaction will be closed
by an escrow officer of First American Title Insurance Company (or other
Title Company selected pursuant to Section 4.2) (the "Escrow Officer") at
its office in Portland, Oregon, or at such other place as the parties may
mutually select. Closing shall take place in the manner and in accordance
with the provisions set forth in this Agreement.
7.3 PRORATIONS. There shall be no prorations of taxes or
expenses, as Purchaser or Purchaser's subsidiary is under the Subleases
responsible for taxes and expenses, and is entitled to all income derived
from, the Properties, other than rent owing under the Master Leases, the
Oak Grove PL Lease and the Burlingame Lease. Rent owing under the Master
Leases, the Oak Grove PL Lease and the Burlingame Lease shall be prorated
as of 12:01 a.m. on the Closing Date, with Seller entitled to such rents
through such time and Purchaser entitled to such rents commencing on the
Closing Date and thereafter.
7.4 CONVEYANCE OF PROPERTIES. Conveyance of the Properties shall
be by statutory special warranty deeds. All municipal, county, state and
federal transfer and documentary stamp taxes shall be paid by Seller at the
time of closing. The conveyance shall be free from all liens and
encumbrances of any kind, without exceptions, unless otherwise specified
herein or approved pursuant to Section 4.2, and except for the lien of real
estate taxes not yet payable, so as to convey to Purchaser good and
marketable title to all the Properties. The conveyance will be free of all
tenancies other than (1) the rights of REPL pursuant to the Master Leases,
and the occupancy of Fred Meyer, Inc. pursuant to the Subleases, the Oak
Grove PL Lease and the Burlingame Lease; and (2) subleases, rental
agreements or licenses in which Fred Meyer, Inc., or its subsidiary is the
sublessor, landlord or licensor. Seller shall also assign to Purchaser its
interest as lessor under the Master Leases and the Burlingame Lease,
pursuant to a lease assignment in the form of Exhibit C.
7.5 FIRPTA. Seller shall deliver to Purchaser at closing an
affidavit that Seller is not a "foreign person" under FIRPTA, in form
satisfactory to Purchaser.
7.6 EVENTS OF CLOSING. Provided the Escrow Officer has received
the sums and is in a position to cause the title insurance policy to be
issued as described below, this transaction will be closed on the Closing
Date as follows:
(a) Purchaser shall pay the total purchase price for the
Properties in immediately available funds, adjusted for the charges and
credits set forth in this section.
(b) Any liens or other encumbrances on title required by
this Agreement to be paid or removed by Seller at closing shall be paid and
satisfied or removed of record at Seller's expense.
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(c) Seller shall convey the real property to Purchaser by
special warranty deed(s), subject to no encumbrances created or suffered by
Seller other than the encumbrances accepted pursuant to Section 4.2 and the
lien for real estate taxes not yet payable.
(d) Title Company will commit to issue the policy described
in Section 7.7, upon recordation of the closing documents.
(e) The parties will execute the documents contemplated by
Section 6 and any additional documentation required with respect to the
matters described in Sections 7.4 and 7.5.
(f) The Escrow Officer will record the deeds, the lease
termination agreements, if any, and the REAs and the recordable documents
contemplated by Section 6.
(g) The escrow fee and the recording fees for the REAs shall
be paid equally by the parties. Any real estate excise or transfer tax will
be paid by Seller. The recording fees for the deeds will be paid by
Purchaser. Seller shall be charged with the premium (including any sales or
excise tax) for the title insurance policies to be delivered to Purchaser,
except that Purchaser shall be responsible for the portion of the premium
(including any sales or excise tax) attributable to extended coverage if
Purchaser elects to obtain it, and for the cost of any endorsements
requested by Purchaser.
(h) There are no brokerage fees.
(i) If any other closing costs not specifically provided for
herein are due at closing of this transaction, each party shall pay such
closing costs as are normally and customarily the responsibility of such
party. In addition to any other items required to be paid by either party
pursuant to this Agreement, each party shall pay its own attorneys' fees.
7.7 TITLE INSURANCE. As soon as possible after the Closing Date,
Seller shall cause the Title Company to furnish Purchaser with a standard
policy of title insurance in the amount of the total purchase price for
each property, in form acceptable to Purchaser, subject only to exceptions
for the matters accepted by Purchaser pursuant to Section 4.2 or referenced
in Section 7.4. At Purchaser's option, such policies shall be in ALTA
extended coverage form (full or partial), in which case Seller and
Purchaser will execute such affidavits as may be necessary to obtain the
extended coverage. Extra title premiums attributable to extended coverage
shall be Purchaser's expense.
7.8 LEASE. If Purchaser elects to assign this Agreement and the
right to purchase the Properties to a third party that will lease the
Properties to Seller, the parties will execute any additional documentation
necessary to implement such assignment and lease, provided that Seller
shall not be required to incur any additional expense or any material risk
in connection therewith.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS.
8.1 SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Seller
represents and warrants to Purchaser that:
(a) To the Seller's actual knowledge and without independent
investigation, and except as disclosed on the Reports or in other reports
in Buyer's possession: (1) there are no hazardous
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substances (as defined below) on, within, under or upon the Properties, in
amounts or of kinds that in their current condition pose a threat to human
health or the environment or pose a risk of liability under environmental
laws (provided, however, that due to the age of the improvements on the
Properties, there may be asbestos containing materials used in the
construction of such improvements); and (2) there are no underground
storage tanks within the Properties. Seller does hereby assign to Purchaser
(effective at and as of the Closing Date) any and all environmental
warranties, indemnification agreements and rights of action Seller may have
against third parties (if any) relating to the presence of any such
hazardous substances or underground tanks. As used in this Agreement, the
term "environmental laws" includes any and all state, federal and local
statutes, regulations, and ordinances to which the Properties are subject
and relating to the protection of human health and the environment, as well
as any judgments, orders, injunctions, awards, decrees, covenants,
conditions, or other restrictions or standards relating to same; and the
term "hazardous substances" includes all hazardous and toxic substances,
wastes, or materials, including without limitation all substances, wastes,
and materials containing either petroleum, including crude oil or any
fraction thereof, or any of the substances referenced in Section 101(14) of
the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. Section 9601(14), and similar or comparable state or local laws.
As tenant under the Subleases, Purchaser is presently responsible for
asbestos auditing to the extent required by applicable law, and is not
looking to Seller to provide any such audits.
(b) Except as disclosed to Purchaser in writing, Seller has
received no written notice of any condemnation, environmental, zoning or
other land-use regulation proceedings which would detrimentally affect the
use and operation of the Properties or the value of the Properties, nor has
Seller received written notice of any special assessment proceedings
affecting the Properties.
(c) There is no litigation pending or to the Seller's actual
knowledge threatened against Seller that arises out of the ownership of the
Properties and would be binding on the Purchaser or might detrimentally
affect the use or operation of the Properties for their intended purpose or
the value of the Properties or adversely affect the ability of Seller to
perform its obligations under this Agreement.
(d) The persons who have executed this Agreement have been
duly authorized to do so by Seller. All documents delivered at closing will
be executed by a duly authorized person. Seller has a good and legal right
to enter into this Agreement and to perform all covenants of Seller
contained in this Agreement in accordance with its terms.
(e) This Agreement and all documents required by it to be
executed by Seller are and shall be valid, legally binding obligations of,
and enforceable against, the Seller in accordance with their terms.
(f) Neither the execution and delivery of this Agreement and
the documents referred to herein, nor the incurring of the obligations set
forth herein, nor the consummation of the transactions contemplated hereby,
nor compliance with the terms of this Agreement and the documents referred
to herein, conflicts with or results in the material breach of any terms,
conditions or provisions of or constitute a default under, any bond, note
or other evidence of debt, or any contract, indenture, mortgage, deed of
trust or other agreement to which Seller is a party.
8.2 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser
represents and warrants to Seller that:
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(a) The persons who have executed this Agreement have been
duly authorized to do so by Purchaser, and all requisite corporate action
has been taken by Purchaser in connection with the entering into of this
Agreement and the consummation of the transaction contemplated hereby
(subject to the provisions of Section 4.5, which references the fact that
board of directors approval has not been obtained as yet, and 12).
(b) All documents delivered at closing will be executed by a
duly authorized person. Purchaser has a good and legal right to enter into
this Agreement and to perform all covenants of Purchaser contained in this
Agreement in accordance with its terms.
(c) This Agreement and all documents required by it to be
executed by Purchaser are and shall be valid, legally binding obligations
of, and enforceable against, Purchaser in accordance with their terms.
(d) Neither the execution and delivery of this Agreement and
the documents referred to herein, nor the incurring of the obligations set
forth herein, nor the consummation of the transactions contemplated hereby,
nor compliance with the terms of this Agreement and the documents referred
to herein, conflicts with or results in the material breach of any terms,
conditions or provisions of or constitute a default under, any bond, note
or other evidence of debt, or any contract, indenture, mortgage, deed of
trust or other agreement to which Purchaser is a party.
9. CONDUCT UNTIL CLOSING; SELLER'S COOPERATION; DISCLAIMER. From the
date of this Agreement until the Closing Date, Seller shall cause all liens
on the Properties incurred by Seller to be paid current, and will not
further mortgage or encumber the Properties or increase the amount of any
current indebtedness on the Properties. No provision of this Agreement or
previous (or subsequent) conduct or activities of the parties will be
construed: (i) as making either party an agent, principal, partner or joint
venturer with the other party, (ii) as creating any express or implied
obligation for Purchaser to operate the Properties as a Fred Meyer retail
facility or otherwise, or (iii) as making either party responsible for
payment or reimbursement of any costs incurred by the other, whether or not
such development occurs (except as may be expressly set forth herein or in
its attached exhibits). WHETHER AND HOW PURCHASER MAY DEVELOP, REDEVELOP OR
OPERATE THE PROPERTIES POST-CLOSING IS AT PURCHASER'S DISCRETION. SELLER
WILL NOT HAVE ANY CLAIM AGAINST (OR RIGHT TO RECOVER ANY DAMAGES OR COSTS
FROM) PURCHASER IN THE EVENT PURCHASER DOES NOT DEVELOP, REDEVELOP OR
CONTINUE TO OPERATE THE PROPERTIES.
10. FAILURE TO CLOSE.
10.1 SELLER'S REMEDIES. In the event that this transaction fails
to close on account of Purchaser's fault or inability to close, and
Purchaser has not exercised any right to terminate or rescind this
Agreement as provided herein, Purchaser shall pay to Seller the sum of
$25,000 as full liquidated damages. SUCH AMOUNT HAS BEEN AGREED BY THE
PARTIES TO BE REASONABLE COMPENSATION AND THE EXCLUSIVE REMEDY FOR
PURCHASER'S DEFAULT, SINCE THE PRECISE AMOUNT OF SUCH COMPENSATION WOULD BE
DIFFICULT TO DETERMINE. Seller hereby waives any right to specific
enforcement of this Agreement, and any right to sue for damages (including
lost profits or consequential damages) other than the liquidated damages
provided for in this Section. The parties are
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
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initialing this Section for purposes of acknowledging and agreeing to such
exclusive remedy and liquidated damages provision.
INITIALS OF: SELLER DWR PURCHASER SCOTT
----- -------
10.2 PURCHASER'S REMEDIES. In the event that the transaction
fails to close on account of Seller's fault or Seller's inability to
deliver title acceptable to Purchaser pursuant to Section 4.2, Purchaser
shall be entitled to such remedies for breach of contract as may be
available under applicable law, including (without limitation) the remedy
of specific performance, collection of damages (provided such damages will
not exceed $25,000), recovery of costs and attorneys' fees.
11. GENERAL PROVISIONS.
11.1 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties, and their respective heirs,
personal representatives, successors, and assigns. Purchaser reserves the
right to assign the right to purchase the Properties to any third party at
closing. Purchaser also reserves the right to assign the Agreement at or
prior to closing to an entity that will lease the Properties to Purchaser.
Unless otherwise agreed, however, no such assignment shall release
Purchaser from its obligations under this Agreement, or increase Seller's
obligations in any respect. Any such assignment must include assignment of
the Related Agreement referenced in Section 11.17. After assignment, the
purchasing party will be imputed with Purchaser's knowledge regarding the
matters set forth in Section 11.16, and will be bound by the waiver set
forth in Section 11.18, for all defects that would have been Purchaser's
obligation to remedy under the Subleases.
11.2 TIME OF ESSENCE. Time is of the essence of each and every
provision of this Agreement.
11.3 NOTICES. All demands or notices required or permitted to be
given under this Agreement shall be in writing. Notices may be served by
certified or registered mail, postage paid with return receipt requested;
by facsimile, or other telecommunication device capable of transmitting or
creating a written record (provided that a copy is also sent by U.S. Mail,
first class); or personally. Mailed notices shall be deemed delivered five
(5) days after mailing, properly addressed. Telex or telecommunicated
notices shall be deemed delivered when receipt is either confirmed by
confirming transmission equipment or acknowledged by the addressee or its
office. Personal delivery shall be effective when accomplished. Unless a
party changes its address by giving notice to the other party as provided
herein, notices shall be delivered to the parties at the following
addresses:
Seller: REC RESOLUTION COMPANY
Suite 200
15115 SW Sequoia Parkway
Portland, OR 97224
Attn: Dave Ramus
Facsimile No. (503) 624-7755
April 5, 1996
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Purchaser: Fred Meyer, Inc.
P.O. Box 42121
Portland, Oregon 97242-0121
(Street Address - 3800 S.E. 22nd Avenue,
Portland, Oregon 97202)
Attn: Scott L. Wippel
Facsimile No.: (503) 797-3539
11.4 WAIVER. Failure of either party at any time to require
performance of any provision of this Agreement shall not limit the party's
right to enforce the provision. Waiver of any breach of any provision shall
not be a waiver of any succeeding breach of the provision or a waiver of
the provision itself or any other provision.
11.5 ATTORNEYS' FEES. In the event suit or action is instituted
to interpret or enforce the terms of this Agreement or to rescind this
Agreement, the prevailing party shall be entitled to recover from the other
party such sum as the court may adjudge reasonable as attorneys' fees at
trial, on any appeal, and on any petition for review, in addition to all
other sums provided by law.
11.6 PRIOR AGREEMENTS. This Agreement supersedes and replaces
all written and oral agreements previously made or existing between the
parties (including, without limitation, all previous letters of intent and
addenda thereto and all verbal agreements and understandings).
11.7 APPLICABLE LAW. This Agreement shall be construed, applied
and enforced in accordance with the laws of the State of Oregon.
11.8 BROKERS. Each party will defend, indemnify, and hold the
other party harmless from any claim, loss, or liability made or imposed by
any other party claiming a commission or fee in connection with this
transaction and arising out of its own conduct.
11.9 CHANGES IN WRITING. This Agreement and any of its terms may
only be changed, waived, discharged or terminated by a written instrument
signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
11.10 COUNTERPARTS. This Agreement may be executed
simultaneously or in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
Agreement.
11.11 INVALIDITY OF PROVISIONS. In the event any provision of
this Agreement is declared invalid or is unenforceable for any reason, such
provision shall be deleted from such document and shall not invalidate any
other provision contained in the document.
11.12 SURVIVAL. All representations, warranties and obligations
of the parties in this Agreement shall survive the Closing Date and
delivery of the deed contemplated in this Agreement and be fully
enforceable thereafter (provided, survival of representations and
warranties other than deed title warranties shall be limited to a period of
two years).
11.13 EFFECT OF EXTENSIONS AND MODIFICATIONS; BACKUP OFFERS. Any
amendment to this agreement (including any extension of time for waiver of
conditions or closing) shall be deemed to be a
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
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modification of the continuing existing agreement, rather than a rescission
or termination of such agreement. Seller will not accept any "backup",
"standby" or other additional offers to purchase the Properties without
Purchaser's written consent. In any event, any such additional offer shall
be subordinate to this Agreement as it may be extended or modified.
11.14 OREGON STATUTORY DISCLAIMER. THE PROPERTY DESCRIBED IN
THIS INSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING
STRUCTURES. THE PROPERTY IS SUBJECT TO LAND USE LAWS AND REGULATIONS,
WHICH, IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING A
RESIDENCE AND WHICH LIMIT LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS
DEFINED IN ORS 30.930 IN ALL ZONES. BEFORE SIGNING OR ACCEPTING THIS
INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK
WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED
USES AND EXISTENCE OF FIRE PROTECTION FOR STRUCTURES.
11.15 DISCLAIMER; DUTY TO DISCLOSE. As to any reports or other
materials provided by one party to the other party herein, the party
providing such reports or materials is not warranting (and will not be
liable or responsible for) the accuracy, fitness or usability of such
reports or materials or any recommendations or conclusions stated therein.
All representations and warranties of the parties in this Agreement are
limited to the best of the party's actual knowledge, without independent
investigation or examination. If either party obtains actual knowledge
prior to the Closing Date of a fact which would make any of the
representations and warranties in this Agreement false, such party will
notify the other party of such fact. A party will not be deemed in breach
of a representation or warranty in this Agreement or liable to the other
party for any claimed misrepresentation in this Agreement after the Closing
Date unless the party had actual knowledge on the Closing Date that the
representation or warranty was false and failed to disclose to the other
party the fact known to the party which made the representation or warranty
false.
11.16 REPRESENTATIONS; CONDITION OF PROPERTIES. Purchaser or
Purchaser's affiliate has heretofore operated and occupied the Properties
and has thoroughly and completely examined and is fully aware of the
physical condition of the Properties as well as any governmental permits or
approvals required in connection with Purchaser's use of the Properties,
the suitability of the Properties for Purchaser's intended use, the
availability of utilities and services, the applicable zoning, building,
housing and other ordinances, restrictions, laws, and regulations affecting
the Properties or other matters. Except as otherwise specifically set forth
in this Agreement or in any instrument delivered at Closing, Purchaser
accepts the land and property and all other aspects of the Properties in
their present condition, AS IS, without any representations or warranties
by Seller, expressed or implied. Purchaser acknowledges that Purchaser has
ascertained for itself the value and condition of the Properties and
Purchaser is not relying on, nor has Purchaser been influenced by, any
representation of Seller regarding the value or condition of the
Properties.
11.17 RELATED AGREEMENT. Purchaser is party to a Leasehold
Assignment Agreement, dated on or about the date hereof, pursuant to which
Purchaser intends to acquire the leasehold interest of REPL in the
Properties (the "Related Agreement"), which the parties thereto intend to
close simultaneously with closing under this Agreement. Purchaser's
obligation to close under this Agreement is subject to the performance by
REPL of REPL's obligations under the Related Agreement, such that a
simultaneous closing may occur. Seller's obligation to close under this
Agreement is subject to the performance by Purchaser of Purchaser's
obligations under the Related Agreement, such that a simultaneous closing
may occur.
April 5, 1996
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11.18 CERTAIN OBLIGATIONS. Under the terms of the Subleases,
Purchaser is obligated to (i) maintain the Properties (Paragraph 9.1) and
(ii) cause the Properties to comply with all legal requirements (Paragraph
6.2). In addition to Purchaser's acknowledgment that it is accepting the
Properties AS IS, Purchaser hereby waives, releases, acquits and forever
discharges Seller and its officers, directors, partners, employees, agents,
and any other person acting on behalf of Seller, from any and all claims,
actions, causes of action, demands, rights, damages expenses or
compensation whatsoever, arising from any defects in the Properties, to the
extent such defects would have been Purchaser's responsibility to remedy
under the Subleases.
12. APPROVAL BY SELLER.
Seller will have until 5 p.m. (Pacific Time) on April 5, 1996,
in which to execute and return to Purchaser a fully signed counterpart of
this Agreement. Neither the delivery of this Agreement to Seller for
execution nor the delivery of any signed Agreement to Purchaser will create
a binding contract, or contract by estoppel or otherwise, between the
parties. Purchaser will have 10 days after receipt of this Agreement signed
by Seller to execute and deliver or transmit (by facsimile or otherwise) to
Seller at its address hereunder a fully executed counterpart of this
Agreement, and if not executed and delivered within such time period, this
Agreement will be null and void and neither party will thereafter have any
obligation or liability to the other party pursuant to this Agreement.
IN WITNESS WHEREOF, the parties have caused this instrument to
be duly executed as of the date set forth above.
SELLER: REC RESOLUTION COMPANY, AN OREGON CORPORATION
By: DAVID W. RAMUS
-----------------------------------------
Title: VP
--------------------------------------
Date Executed: 4/5/96
------------------------------
PURCHASER: FRED MEYER, INC., A DELAWARE CORPORATION
By: SCOTT L. WIPPEL
-----------------------------------------
Scott L. Wippel, Senior Vice President
Date Executed: 4-8-96
------------------------------
April 5, 1996
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EXHIBIT A-1
A tract of land in Section 21, Township 1 South, Range 1 East of the
Willamette Meridian, in the City of Portland, County of Multnomah and State
of Oregon, described as follows:
Beginning at the intersection of the North line of S.W. Custer Street with
the East line of S.W. 13th Avenue as these streets are now laid out and
established; thence Northerly along the East line of S.W. 13th Avenue to
the intersection of the East line of S.W. 13th Avenue with the South line
of South Bertha Boulevard, as now laid out and established; thence in a
Northeasterly by Easterly direction along the South line of S.W. Bertha
Boulevard to the intersection of the South line of S.W. Bertha Boulevard
with the Westerly corner of that tract conveyed to the City of Portland for
street purposes recorded October 16, 1952 in Book 1564, page 53, Deed
Records; thence following the Southwesterly line of said street tract along
a curve right the central angle of which is 89 degrees 29' and a radius of
14 feet, a distance of 21.86 feet to a point in the West line of S.W. 10th
Avenue as now laid out and established; thence South to the intersection of
the West line of S.W. 10th Avenue with the Northerly line of S.W. Barbur
Boulevard as now laid out and established; thence in a Southwesterly
direction along the Northerly line of S.W. Barbur Boulevard to the
intersection of the Northerly line of S.W. Barbur Boulevard with the North
line of S.W. Custer Street as now laid out and established; thence Westerly
along the North line of S.W. Custer Street to the point of beginning.
BURLINGAME PROPERTY PAGE 1
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EXHIBIT A-2
A tract of land in the Northwest 1/4 of Section 32, Township 1 North, Range
2 East of the Willamette Meridian, in the City of Portland, County of
Multnomah and State of Oregon, being Blocks 16 and 17 and all of Blocks 15
and 18 of North Mt. Tabor and adjacent portions of vacated Country Road No.
534, Liberty Street and N. E. 66th Avenue; also a portion of Block 9,
Marchmont Addition, recorded plats, in the County of Multnomah and State of
Oregon; described as follows:
PARCEL NO. I
Beginning at the intersection of the North line of N. E. Glisan Street and
the West line of N. E. 67th Avenue; thence Northerly along said West line
of N. E. 67th Avenue 572.32 feet, more or less, to the intersection with
the South line of N. E. Oregon Street; thence Westerly along the South line
of N.E. Oregon 634 feet, more or less, to the intersection with the center
line of vacated Country Road No. 534; thence Southerly along the center
line of said Country Road #534, 572 feet, more or less, to the intersection
with the North line of N. E. Glisan Street; thence Easterly along said
North line of N. E. Glisan Street 15 feet to a point; thence Northerly
parallel to said center line of said Country Road No. 534, 100 feet to a
point; thence Easterly parallel to the North line of N. E. Glisan Street
100 feet to a point; thence Southerly parallel to the center line of said
County Road No. 534, 100 feet to the North line of N. E. Glisan Street;
thence Easterly along said North line of N. E. Glisan Street 519 feet, more
or less, to the point of beginning.
PARCEL NO. II
Lots 8, 9, 10 and that portion of Lots 11, 12, 13, 14 and 15, lying
Easterly of the East line of a deeded street, recorded December 1, 1960, in
Book 2039, page 256, Multnomah County, Oregon, all in said Marchmont
Addition.
PARCEL NO. III
A perpetual easement for ingress and egress over the following tract of
land in Section 32, Township 1 North, Range 2 East of the Willamette
Meridian: Beginning at the center line of vacated County Road #534 (N. E.
65th Avenue) and the North line of N. E. Glisan Street; thence South 89
degrees 48' West 15.00 feet; thence North 0 degrees 01' 30" West 215.69;
thence North 89 degrees 48' East, 15 feet; thence South 0 degrees 01' 30"
East 215.69 feet to the point of beginning, in the City of Portland, County
of Multnomah and State of Oregon.
SUBJECT TO:
1. A perpetual easement over the West 15 feet of the South 215.69 feet, for
the purpose of ingress, egress and regress as set forth in agreement
between Gibbons and Reed Company, a Utah corporation,
GLISAN PROPERTY PAGE 1
<PAGE>
and Union Central Co., an Oregon corporation, dated September 5, 1961,
recorded October 3, 1961 in PS Deed book 2084, page 1.
2. Easement for ingress and egress from Union Central Company to Humble Oil
and Refining Company for the benefit of adjoining property disclosed in an
unrecorded lease dated July 5, 1961, amended by letter dated September 12,
1961, and by instrument dated October 20, 1961, described as follows: A
tract of land in the Northwest 1/4 of Section 32, Township 1, North, Range
2 East, Willamette Meridian, Multnomah County, Oregon, more particularly
described as follows: Beginning at the center line of County Road No. 534
(N.E. 65th Avenue), now vacated and the north line of N. E. Glisan Street;
thence North 89 degrees 48' East 115.00 feet along said north line to the
true point of beginning; thence North 89 degrees 48' East 24.00 feet along
said north line; thence North 45 degrees 10' 30" West 33.94 feet; thence
South 0 degrees 01' 30" East 24.00 feet to the true point of beginning.
3. Easement for ingress and egress from Union Central Company to Humble Oil
and Refining Company for the benefit of adjoining property disclosed in an
unrecorded lease dated July 5, 1961, amended by letter dated September 12,
1961, and by instrument dated October 20, 1961, described as follows: A
tract of land in the Northwest 1/4 of Section 32, Township 1 North, Range 2
East, Willamette Meridian, Multnomah County, Oregon more particularly
described as follows: Beginning at the intersection of the center line of
County Road No. 534 (N. E. 65th Avenue), now vacated, and the north line of
N. E. Glisan Street; thence North 89 degrees 48' East 15.0 feet to the true
point of beginning; thence North 0 degrees 01' 30" West 30.0 feet; thence
Southwesterly to a point on the north line of N. E. Glisan Street which is
30 feet west of the true point of beginning; thence along the north line of
N. E. Glisan Street 30.0 feet to the true point of beginning.
GLISAN PROPERTY PAGE 2
<PAGE>
(Former gas station parcel)
A tract of land in the northwest 1/4 of Section 32, Township 1
North, Range 2 East, W.M., Multnomah County, Oregon, more
particularly described as follows:
Beginning at the center line of County Road No. 534 (N.E. 65th
Avenue), now vacated, and the north line of the N. E. Glisan
Street; thence North 89 degrees 48' East, 15.0 feet to the true
point of beginning; thence North 89 degrees 48' East, 100.00 feet
along said north street line; thence North 0 degrees 01' 30" West,
100.00 feet; thence South 89 degrees 48' 00" West, 100.00 feet;
thence South 0 degrees 01' 30" East, 100.00 feet to the true point
of beginning.
together with the joint use in common of an easement over the following
described real property:
A tract of land in the northwest 1/4 of Section 32, Township 1
North, Range 2 East, W.M., Multnomah County, Oregon, more
particularly described as follows:
Beginning at the center line of County Road No. 534 (N.E. 65th
Avenue), now vacated and the north line of N. E. Glisan Street,
thence North 89 degrees 48' East, 115.00 feet along said north
line to the true point of beginning; thence North 89 degrees 48'
East, 24.00 feet along said north line; thence North 45 degrees
10' 30" West, 33.94 feet; thence South 0 degrees 01' 30" East,
24.00 feet to the true point of beginning.
Commonly known as 6515 N.E. Glisan, Portland, Oregon
GLISAN PROPERTY PAGE 3
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EXHIBIT A-3
A tract of land in Section 11, Township 1 South, Range 3 East of the
Willamette Meridian, in the City of Gresham, County of Multnomah and State
of Oregon described as follows:
Beginning at a point on the westerly line of that tract of land described
in Book 2191, page 341, Multnomah County Record of Deeds, 5.00 feet
southerly from the southerly right-of-way line of Bull Run Road, said point
bears South 2 degrees 44' 22" West 14.47 feet and South 87 degrees 15' 38"
East 252.33 feet and South 89 degrees 38' 02" East 434.96 feet from the
Northeast corner of the J.H. Lambert Donation Land Claim, Township 1 South,
Range 3 East, Willamette Meridian, Multnomah County, Oregon:
Thence South 0 degrees 30' 55" East 185.19 feet to the southwesterly corner
of that tract of land described in Book 2191, page 341, Multnomah County
Record of Deeds; Thence South 89 degrees 38' 35" East 404.95 feet to a
point situated North 89 degrees 38' 35" West 20.00 feet from the East line
of that tract of land described in PS Miscellaneous Book 188, page 511,
Multnomah County Record of Deeds; thence South 0 degrees 27' 56" East
190.00 feet to a point; thence South 21 degrees 30' 03" East 334.70 feet to
a point; thence South 32 degrees 04' 14" East 220.83 feet to a 1-inch iron
pipe on the westerly boundary of that tract of land described in PS Deed
Book 990, page 130; thence South 0 degrees 28' 16" East 661.58 feet along
said boundary line to the Northeast corner of that tract of land described
in Volume 1106, page 283, Multnomah County Book of Deed Records; thence
North 71 degrees 51' 12" West, coincident with the northerly line of the
aforementioned described tract, 122.03 feet to a point; thence North 0
degrees 28' 31" West 427.13 feet to a point; thence South 89 degrees 29'
30" West 252.94 feet to a point; thence South 60 degrees 57' 27" West
235.66 feet to the easterly right-of-way line of S.E. Burnside Road; thence
northwesterly along said right-of-way as follows: North 39 degrees 07' 34"
West 299.29 feet along the Northeast boundary of that parcel of land
described in Book 1701, page 3, Deed Records, and North 28 degrees 49' 10"
West 116.95 feet and northwesterly along the arc of a 5,809.58-foot radius
curve left, of which the long chord bears North 29 degrees 50' 21" West
226.35 feet and North 58 degrees 59' 11" East 10.00 feet and northwesterly
along the arc of a 5,819.58-foot radius curve left, of which the long chord
bears North 32 degrees 47' 02" West 371.74 feet to the intersection of the
easterly right-of-way line of East Burnside Road and the southerly
right-of-way line of Third Street; thence northeasterly along the southerly
right-of-way line of Third Street as follows: Northeasterly along the arc
of a 1,732.77-foot radius curve left, the long chord bears North 48 degrees
06' East 246.87 feet; North 44 degrees 00' 53" East 163.77 feet,
northeasterly along the arc of a 211.00-foot radius curve right of which
the long chord bears North 60 degrees 56' 29" East 122.86 feet, South 89
degrees 38' 02" East 70.65 feet to the point of beginning.
GRESHAM PROPERTY PAGE 1
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EXHIBIT A-4
Property Description August 12, 1974
Tract A Fred Meyer, Inc.
A tract of land located in the northwest quarter of Section 15, Township 1
North, Range 1 East, Willamette Meridian, City of Portland, Multnomah
County, Oregon, more particularly described as follows:
Beginning at a point on the north line of Lot 1, Block 1, Kenmore, said
point bears North 87 degrees 54' 00" East, 20.61 feet from the northwest
corner thereof; thence North 87 degrees 54 ` 00" East, 432.02 feet to a
point on the north line of Lot 2, Block 1, Van Buren's Addition, said point
bears South 87 degrees 54' 00" West, 32.97 feet from the northeast corner
thereof; thence on a 22.00 foot radius curve to the right, which chord
bears South 45 degrees 52' 30" East, 31.77 feet, an arc length of 35.50
feet to a point 10.00 feet westerly from, when measured at right angles,
the east line of said Block 1, Van Buren's Addition; thence South 00
degrees 21' 00" West, parallel with the said east line of Block 1, 462.94
feet to a point 10.00 feet westerly from, when measured at right angles,
the east line of Block 4, said Van Buren's Addition; thence on a 199.01
foot radius curve to the left, which chord bears South 13 degrees 28' 00"
East, 95.05 feet, an arc length of 95.98 feet; thence on a 129.01 foot
radius curve to the right, which chord bears South 20 degrees 48' 30" East,
29.09 feet, an arc length of 29.15 feet to a point 10.00 feet westerly
from, when measured on a radial line to said curve, the said east line of
Block 4, Van Buren's Addition; thence on a 23.00 foot radius curve to the
right, which chord bears South 18 degrees 45' 57" West, 25.12 feet, an arc
length of 26.57 feet to a point 10.00 northerly from, when measured at
right angles, the south line of Lot 8, Block 4, said Van Buren's Addition;
thence North 89 degrees 38' 20" West, parallel with the said south line of
Block 4, 500.19 feet to a point on the west line of Lot 1, Block 1,
Northview, said point bears North 00 degrees 18' 49" East, 10.00 feet from
the southwest corner thereof; thence North 00 degrees 19' 40" East, along
the west line of Block 1, Northview, and the west line of Blocks 1 and 2
said Kenmore, 588.13 feet to a point that bears South 00 degrees 19' 40"
West, 20.61 feet from the said northwest corner of Lot 1, Block 1, Kenmore;
thence on a 21.50 foot radius curve to the right, which chord bears North
44 degrees 06' 50" East, 29.75 feet, an arc length of 32.86 feet to the
point of beginning.
The above described tract of land contains 296,036.34 square feet or 6.7960
acres, more or less.
PETTIJOHN ENGINEERING COMPANY, INC.
74-99
INTERSTATE PROPERTY PAGE 1
<PAGE>
Property Description August 12, 1974
Tract B Fred Meyer, Inc.
A tract of land located in the northwest quarter of Section 15, Township 1
North, Range 1 East, Willamette Meridian, City of Portland, Multnomah
County, Oregon, more particularly described as follows:
Beginning at a point on the west line of Lot 1, Block 2, Van Buren's
Addition, said point bears South 00 degrees 21' 00" West, 28.33 feet from
the northwest corner thereof, said point also located at the intersection
of the westerly right-of-way line of the Minnesota Freeway and the east
right-of-way line of North Montana Avenue; thence tracing the said westerly
freeway right-of-way line the following courses: South 60 degrees 42' 04"
East, 122.73 feet, South 25 degrees 49' 30" East, 56.67 feet; South 00
degrees 21' 00" West, 45.00 feet; South 15 degrees 11' 48" East, 55.96
feet; South 00 degrees 21' 00" West, 100.00 feet; South 00 degrees 51' 11"
East, 100.01 feet; South 00 degrees 36' 51" West, 50.00 feet; South 04
degrees 56' 08" East, 77.41 feet to a point on the south line of Lot 13,
Block 1, Shannon Tract; thence North 89 degrees 38' 20" West, 24.00 feet to
the southwest corner of said Lot 13; thence leaving said freeway
right-of-way line and continuing North 89 degrees 38' 20" West, 50.00 feet
to the southwest corner of Lot 11, said Block 1, Shannon Tract, said point
also located on the east line of Lot 2, Block 5, Van Buren's Addition;
thence North 00 degrees 21' 00" East, 21.90 feet to the northeast corner of
said Lot 2; thence North 89 degrees 58' 00" West, 71.23 feet to the
northwest corner of said Lot 2, said point also located on the easterly
right-of-way line of North Montana Avenue; thence along the said easterly
right-of-way line on a 139.01 foot radius curve to the right, which chord
bears North 11 degrees 12' 49" West, 55.73 feet, an arc length of 56.11
feet; thence North 00 degrees 21' 00" East, 460.14 feet to the point of
beginning.
The above described tract of land contains 69,634.68 square feet or 1.5986
acres, more or less.
PETTIJOHN ENGINEERING COMPANY, INC.
74-99
INTERSTATE PROPERTY PAGE 2
<PAGE>
EXHIBIT A-5(A)
Property Description FRED MEYER, INC. September 17, 1974
Parcel A
A parcel of land in Section 12, Township 2 South, Range 1 East,
Willamette Meridian, Clackamas County, Oregon, more particularly described
as follows:
Beginning at the northeast corner of the intersection of S. E.
McLoughlin Boulevard and S. E. Oak Grove Boulevard; thence in a
northwesterly direction along the east line of said S. E. McLoughlin
Boulevard on a 2805.00 foot radius curve to the right, which chord bears
North 20 degrees 02' 48" West, 606.46 feet, an arc length of 607.65 feet to
the north line of a tract of land conveyed to Robert M. Taylor and Imal O.
Taylor by C. R. Moe, single man, in P S Deed Book 466, page 555, dated
March 12, 1953 and recorded on March 17, 1953, records of Clackamas County;
thence North 88 degrees 34' 30" East along said north line 163.52 feet to
the west line of Lot 5, Camplan Addition, a duly recorded plat in Clackamas
County; thence North 1 degrees 21' 40" West along the said west line of Lot
5, 31.00 feet to a point 25.00' Southerly from the northwest corner
thereof; thence North 88 degrees 34' 30" East, parallel with the north line
of said Lot 5, 189.97 feet to the intersection of said line with the
northwesterly right of way line of the re-located 30.00 foot radius
cul-de-sac at the south terminus of Camplan Court; thence along said
cul-de-sac on a 30.00 foot radius curve to the left, which chord bears
North 88 degrees 36' 00" East, 50.02 feet, an arc length of 129.35 feet to
a point on the west line of Lot 8, said Camplan Addition, 70.03 feet
southerly from the northwest corner thereof; thence North 1 degrees 21' 40"
West along the west line of said Lot 8, 0.03 feet; thence North 88 degrees
34' 30" East, parallel with the north line thereof, 100.00 feet; thence
South 1 degrees 21' 40" East, 5.00 feet; thence North 88 degrees 34' 30"
East, 20.00 feet; thence South 46 degrees 25' 30" East, 35.36 feet; thence
North 88 degrees 34' 30" East, 147.28 feet; thence South 36 degrees 10' 10"
East, 225.24 feet to the said northerly right of way line of S. E. Oak
Grove Boulevard; thence South 47 degrees 35' 40" West along said northerly
line 595.02 feet to an angle point in said line; thence South 88 degrees
26' 40" West, 181.35 feet to the point of beginning.
The above described parcel of land contains 7.6734 acres more or less.
PETTIJOHN ENGINEERING COMPANY, INC.
Job No. 74-121
OAK GROVE PROPERTY PAGE 1
<PAGE>
Property Description FRED MEYER, INC. September 17, 1974
Parcel B
A parcel of land in Sections 1 and 12, Township 2 South, Range 1 East,
Willamette Meridian, Clackamas County, Oregon, more particularly described
as follows:
Beginning at the northwest corner of Lot 8, Camplan Addition, a duly
recorded plat in Clackamas County, said point also being on the East right
of way line of Camplan Court; thence North 88 degrees 34' 30" East along
the north line of said Lot 8 and its easterly extension thereof, 377.99
feet; thence North 1 degrees 13' 38" W, 200.00 feet to a point on the south
right of way line of Maple Street; thence North 88 degrees 34' 30" East
along said line, 114.89 feet to the intersection of said line with the
westerly right of way line of Oatfield Road; thence South 25 degrees 19'
30" East along said westerly line, 198.43 feet to an angle point in said
line; thence South 36 degrees 10' 10" East, 129.43 feet to the intersection
of said line with the northerly right of way line of Oak Grove Boulevard;
thence South 47 degrees 35' 40" West along said northerly line, 300.89
feet; thence leaving said line and running North 36 degrees 10' 10" West,
225.24 feet; thence South 88 degrees 34' 30" West, 147.28 feet; thence
North 46 degrees 25' 30" West, 35.36 feet; thence South 88 degrees 34' 30"
West, 20.00 feet; thence North 1 degrees 21' 40" West, 5.00 feet to a point
70.00 feet south of, when measured at right angles, the said north line of
Lot 8, Camplan Addition; thence South 88 degrees 34' 30" West, parallel
with said line, 100.00 feet to a point on the east right of way line of
said Camplan Court; thence North 1 degrees 21' 40" West, 70.00 feet to the
point of beginning.
The above described parcel of land contains 2.7953 acres more or less.
PETTIJOHN ENGINEERING COMPANY, INC.
Job No. 74-121
OAK GROVE PROPERTY PAGE 2
<PAGE>
PARCEL C
A parcel of land in Section 12, Township 2 South, Range 1 East,
Willamette Meridian, Clackamas County, Oregon, more particularly described
as follows:
The Westerly 90 feet of the following described parcel: The South 55
feet of Lot 4 and the North 25 feet of Lot 5, Camplan Addition, according
to the duly recorded plat thereof, in Clackamas County, Oregon; and
Parts of Tracts "M" and "J" of Kuehl's Acres, described as: Beginning
on the east line of the East Portland-Oregon City Highway, known as the
Super Highway, 164 feet Northerly from the south line of Tract "K", Kuehl's
Acres; thence Northerly along the East line of said Super Highway 100 feet;
thence East parallel with Maple Avenue 184.80 feet, more or less, to the
east boundary of Tract "J", Kuehl's Acres; thence South along the east
boundary of said Tract "J", 100 feet, more or less, to a point East of the
point of beginning; thence West parallel with Maple Avenue 164.20 feet,
more or less, to the point of beginning. Situate in Clackamas County,
Oregon.
OAK GROVE PROPERTY PAGE 3
<PAGE>
EXHIBIT A-5
Order No. C53078
Page No. 2
DESCRIPTION
The East 100 feet of the South 55 feet of Lot 4 and the East 100 feet of
the North 25 feet of Lot 5, all to be cut off by lines parallel with the
line between Lots 4 and 5, and the South line of Lot 4, in CAMPLAN
ADDITION, in Clackamas County, Oregon.
OAK GROVE PARKING LOT PAGE 1
<PAGE>
EXHIBIT A-6
STADIUM
(Parking Lot)
1. Part of Block 30 in King's Second Addition to the City of Portland, in
the City of Portland, County of Multnomah and State of Oregon:
Commencing at a point where the West line of N. W. 20th Place,
formerly Ella Street, would intersect the North line of N. W. Davis
Street, formerly "D" Street if extended; running thence Northerly on
the West line of N. W. 20th Place, 55 feet; thence Westerly and
parallel to the North line of N. E. Davis Street, formerly "D" Street,
if extended 100 feet; thence Southerly parallel to N. W. 20th Place,
55 feet to the North line of N. W. Davis Street, if extended; thence
East 100 feet to the place of beginning.
Beginning on the West boundary line of N. W. 20th Place at a point 50
feet Southerly from the intersection of the South line of N. W.
Everett Street with the West line of said N. W. 20th Place; running
thence Southerly along the West line of N. W. 20th Place, 50 feet;
thence running Westerly parallel with the South boundary line of N. W.
Everett Street, 100 feet; thence running Northerly parallel with the
West line of N. W. 20th Place, 50 feet; thence running Easterly
parallel with the South line of N. W. Everett Street, 100 feet to the
point of beginning; also described as South 50 feet of the North 100
feet of the East 100 feet of Block 30, King's Second Addition to the
City of Portland.
Part of Block Thirty (30) King's Second Addition, described as
follows: Commencing at a point where the West line of N. W. 20th
Place, formerly Ella Street, would intersect the North line of N. W.
Davis Street, formerly "D" Street, if extended; and running thence
Northerly on the West line of N.W. 20th Place, 55 feet to the true
place of beginning of the tract herein to be described; thence
Westerly and parallel to the North line of N. W. Davis Street,
formerly "D" Street, if extended, 100 feet; thence Northerly and
parallel with the West line of N. W. 20th Place, 45 feet; thence
Easterly and parallel to the North line of N. W. Davis Street,
formerly "D" Street, if extended, 100 feet to the West line of N. W.
20th Place; thence Southerly along the West line of N. W. 20th Place,
45 feet to the true place of beginning.
STADIUM PROPERTY PAGE 1
<PAGE>
(Store)
2. A part of Block 29, King's 2nd Addition to the City of Portland, in
the City of Portland, County of Multnomah, and State of Oregon, more
particularly described as follows:
Beginning at a point in the West line of Northwest 20th Avenue, which
is 60 feet South of the South lineof Northwest Everett Street; thence
West along a line parallel with the South line of Northwest Everett
Street, 112.5 feet; thence South along a line parallel with the West
line of Northwest 20th Avenue, 40 feet to a point; thence West along a
line parallel with the South line of Northwest Everett Street, 87.5
feet to a point in the East line of Northwest 20th Place, which is 100
feet South of the South line of Northwest Everett Street; thence South
along the East line of Northwest 20th Place, 472.64 feet to a point in
the North lineof West Burnside Street; thence Easterly along the
Northerly line of West Burnside Street, 200.92 feet to an intersection
with the East line of Northwest 20th Avenue; thence North along the
West line of Northwest 20th Avenue 532.22 feet to the point of
beginning.
STADIUM PROPERTY PAGE 2
<PAGE>
EXHIBIT A-7
A tract of land in Section 36, Township 1 South, Range 1 West,
Willamette Meridian, Washington County, Oregon, more particularly described
as follows:
Beginning at the intersection of the south line of the Thomas Stott
D.L.C. No. 53 with the west line of S.W. 71st Avenue as established by
County Road survey No. 2042; thence southerly along said road on a 316.18
foot radius curve to the left, which chord bears South 16 degrees 47' 32"
East, 129.06 feet, an arc length of 129.97 feet; thence continuing along
said road South 28 degrees 32' 12" East, 23.25 feet to the top edge of a
rock bank; thence leaving said road and running southwesterly along said
rock bank the following courses: South 33 degrees 28' 10" West, 51.81 feet;
South 35 degrees 54' 20" West, 44.87 feet; South 40 degrees 09' 50" West,
40.34 feet, South 34 degrees 33' 00" West, 16.51 feet; thence leaving said
rock bank and running South 36 degrees 12' 40" East, 64.59 feet to the
northwesterly line of S. W. Pacific Highway West; thence southwesterly
along said highway the following courses: South 53 degrees 47' 20" West,
567.15 feet, South 36 degrees 12' 40" East, 10.00 feet; South 53 degrees
47' 20" West, 222.13 feet; thence leaving said highway and running North 36
degrees 12' 40" West, 98.29 feet; thence North 89 degrees 48' 00" West,
78.47 feet; thence North 0 degrees 12' 00" East, 265.24 feet; thence South
89 degrees 10' 00" East, 20.60 feet; thence North 0 degrees 12' 00" East,
452.00 feet to the said south line of Thomas Stott D.L.C. No. 53, thence
South 89 degrees 00' 00" East along said D.L.C. line 328.10 feet; thence
leaving said D.L.C. line and running North 0 degrees 15' 00" West, 131.94
feet to the south line of S. W. Spruce Street; thence North 89 degrees 52'
00" East along said street 419.95 feet to the intersection of said street
with the said west line of S. W. 71st Avenue; thence South 0 degrees 18'
54" West, 99.89 feet; thence on a 316.18 foot radius curve to the left,
which chord bears South 2 degrees 21' 02" East, 29.41 feet, an arm length
of 29.62 feet to the point of beginning.
The above described tract of land contains 11.40 acres more or less.
TIGARD PROPERTY PAGE 1
<PAGE>
The following is the description of a portion of Lot B Metzger Acre tracts.
Beginning at a 3/4-inch iron pipe marking the northeasterly corner of Lot B
Metzger Acre tracts, Township 1 South, Range 1 West of the Willamette
Meridian, Washington County, Oregon, as recorded in Volume 2, Page 41 in
the Plat Books of said county, said northeasterly corner is recorded as
bearing North 45 degrees 10' East 875.3 feet and North 00 degrees 11' West
1784.5 feet and South 89 degrees 03' East 3688.5 feet and North 00 degrees
05' West 138.5 feet and North 89 degrees 48' West 447.2 feet from the most
southerly southwest corner of the Thomas Scott Donation.
Land Claim No. 53, Township 1 South, Range 1 West of the Willamette
Meridian, Washington County, Oregon, and running thence;
North 89 degrees 48' West 200.00 feet along the southerly right-of-way line
of Spruce Street to an iron rod;
thence southerly 127.75 feet paralle to the easterly boundary line of said
Lot B to a 5/8-inch iron rod with an aluminum cap on the southerly boundary
line of Metzger Acre tracts;
thence South 89 degrees 03' East 200.11 feet along said southerly boundary
line to the southeasterly corner of said Lot B;
thence northerly along said easterly boundary line of Lot B 131.07 feet to
the point of beginning and containing 0.6 acres of land, more or less.
TIGARD PROPERTY PAGE 2
<PAGE>
All of Block "B" METZGER ACRE TRACTS, EXCEPT the East 200 feet thereof, in
the County of Washington and State of Oregon. Known as Tax Lot 3700.
TIGARD PROPERTY PAGE 3
<PAGE>
EXHIBIT B
Environmental Reports
None.
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
<PAGE>
EXHIBIT C - LEASE ASSIGNMENT FORM
RECORDING REQUESTED
BY AND WHEN RECORDED
RETURN TO:
- --------------------
P.O. Box 42121
Portland, Oregon 97242
Attn: RTC MO/CLD
LEASE ASSIGNMENT AGREEMENT
This Lease Assignment Agreement (this "Agreement"), dated as of ,
between REC RESOLUTION COMPANY, an Oregon corporation whose address is
Suite 200, 15115 SW Sequoia Parkway, Portland, OR 97224 ("Assignor"), and
____________________, a Delaware corporation, whose address is
____________________ ("Assignee"), recites and provides as follows:
FOR good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Assignor hereby sells, assigns, transfers,
conveys and delivers to Assignee all of Assignor's right, title and
interest in and to each of the lease agreements referenced on Exhibit A
hereto (the "Lease Agreements"). The rights conveyed hereby are referred to
herein as the "Leasehold Interests".
Assignee hereby accepts the foregoing assignment. Assignee agrees to
assume Assignor's obligations under the Lease Agreements, provided,
however, that Assignee does not assume, and Assignor shall remain fully
responsible for, and agrees to discharge, any obligations or liabilities
under such Lease Agreements that either (i) are not disclosed on the face
of the copies of such Lease Agreements provided by Assignor to Assignee, or
(ii) accrued or arose from or out of a set of facts existing prior to the
date hereof ("Assignor's Liabilities"). Assignee will indemnify, defend and
hold harmless Assignor from and against liabilities, costs, expenses and
damages, including attorneys' fees, arising from Assignee's failure to
perform its obligations hereunder, except for liabilities that arise from
Assignor's failure to perform its obligations hereunder or to discharge
Assignor's Liabilities. Assignee assumes no liabilities or obligations of
Assignor of any nature whatsoever, whether or not accrued or affixed,
absolute or contingent, known or unknown, determined or determinable, or
incurred prior to, on or after the Closing Date.
Assignor represents, warrants and covenants to and with Assignee
that: (1) Assignor has good and indefeasible title to the Leasehold
Interests, subject to no encumbrances created or suffered by Assignor other
than the matters identified on Exhibit B hereto; (2) Assignor has the full
right, power and authority to assign the Leasehold Interests to Assignee in
accordance herewith; and (3) Assignor will defend Assignee's right, title
and interest in and to the Leasehold Interests from and against any claim
by, through or under Assignor.
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
<PAGE>
This Agreement shall bind and inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors, heirs,
and permitted assigns. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement
binding on all the parties. Each party agrees, at the request of the other
party, at any time and from time to time after the date hereof, to execute
and deliver all such further documents, and to take and forbear from all
such action, as may be reasonably necessary or appropriate in order more
effectively to perfect the transfers of rights contemplated herein or
otherwise to confirm or carry out the provisions of this Agreement.
EXECUTED effective the date first written above.
[signature and acknowledgment forms]
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
2
<PAGE>
[graphic map depicting existing Fred Meyer Shopping Center setting out
US Bank Pad]
<PAGE>
EXHIBIT D
[graphic map depicting Gresham Retail Store setting out Newport Bay Pad]
<PAGE>
EXHIBIT E - USE RESTRICTIONS
----------------------------
1. Restrictions on Certain Parcels. No Parcel other than the [FRED
MEYER PARCEL] will be leased, subleased, operated or otherwise used for:
(i) any jewelry store; (ii) any supermarket (which for purposes of this
Declaration means any store, department or area within a store, containing
at least 5,000 square feet of gross floor area, including aisle space and
storage, primarily devoted to the retail sale of food for off-premises
consumption); (iii) any bakery or delicatessen (provided, this shall not be
deemed to prohibit bakery or delicatessen operations that are ancillary to
another primary use such as a submarine or bagel sandwich restaurant); (iv)
the sale of fresh or frozen meat, fish, poultry or produce for off-premises
consumption; (v) any convenience store (except that a convenience store
being operated in conjunction with a gasoline product service station
approved in writing by Declarant and which contains not more than 1,500
square feet of gross floor area for product display, or such greater area
as Declarant may approve from time to time, will not be a prohibited use);
or (vi) the sale of any pharmaceutical products requiring the services of a
registered pharmacist. The restriction in clause (i) above shall terminate
if the occupant of the Fred Meyer Parcel ceases to operate a jewelry store
on the Fred Meyer Parcel for a period of more than one year for reasons
other than remodeling, reconstruction or "force majeure" causes such as
strikes, lockouts, fire or other casualty, or acts of God. The restrictions
in clauses (ii), (iii), (iv), and (v) above shall terminate if the occupant
of the Fred Meyer Parcel ceases to operate a supermarket on the Fred Meyer
Parcel for a period of more than one year for reasons other than
remodeling, reconstruction or "force majeure" causes. The restriction in
clause (vi) above shall terminate if the occupant of the Fred Meyer Parcel
ceases to operate a pharmacy on the Fred Meyer Parcel for a period of more
than one year for reasons other than remodeling, reconstruction or "force
majeure" causes.
2. General Restrictions on Use. The Parcels shall not in any event be
leased, subleased, operated or otherwise used for: (i) the display,
distribution or sale of any "adult" books, "adult" films, "adult"
periodicals or "adult" entertainment; (ii) the establishment or maintenance
of a massage parlor, gambling operation, "adult" theater, "adult"
bookstore, "sex" shop, "peep show" or bawdy house or brothel, or any use in
violation of applicable zoning and other governmental laws and regulations;
(iii) any use which emits an obnoxious odor, noise or sound which can be
heard or smelled outside of any building in the Development, or which is a
public or private nuisance, or which, in Declarant's judgment, is likely to
generate public protests or controversy interfering with the operation of
the Development as a retail center; (iv) any distilling, refining,
smelting, agricultural, animal raising or boarding (other than consumer pet
shops), or mining operation; (v) any short or long-term residential use;
(vi) any primary use as a warehousing, assembling, manufacturing, waste
processing or other industrial operation; (vii) any motor vehicle, truck,
trailer, recreational vehicle or boat sales, leasing or display; or (viii)
any place for public assembly (such as a church, mortuary or meeting hall).
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
1
<PAGE>
EXHIBIT F
AGREEMENT REGARDING PAD DEVELOPMENT
THIS AGREEMENT REGARDING PAD DEVELOPMENT (this "Agreement") is made
and entered into this __________ day of _____________, 1996, by and between
REC RESOLUTION COMPANY, an Oregon corporation ("Landlord"), and FRED MEYER,
INC., a Delaware corporation ("Tenant").
R E C I T A L S
This Agreement is made with reference to the following facts and
objectives:
A. Landlord is the fee owner of certain property in Portland, Oregon,
which is a part of the Gateway Shopping Center in Portland, Oregon (the
"Shopping Center").
B. Pursuant to a lease dated February 19, 1987 and amended by
agreements dated December 28, 1987 and February 22, 1991 (as amended, the
"Lease") Landlord leased to Tenant a portion of the Shopping Center (the
"Premises"), which is more particularly described in the Lease.
C. On or about January 23, 1991, Landlord and Mervyn's, Inc.
("Mervyn's") entered into a Reciprocal Easement Agreement (the "REA") for
the common development, use and operation of the Shopping Center. Tenant
subordinated the Lease to the REA as part of the February 22, 1991
amendment.
D. On or about December 20, 1994, Landlord and Mervyn's entered into
an amendment to the REA (the "REA Amendment") to incorporate additional
property consisting of approximately six thousand four hundred (6,400)
square feet at the corner of 102nd Avenue and Pacific Avenue (the
"Additional Property") into the Shopping Center and allow the development
of an additional pad area ("Pad Area 4") in the Shopping Center.
E. Landlord and Tenant have reached an agreement whereby Tenant will
subordinate the Lease to the terms of the REA Amendment and consent to the
development of Pad Area 4 upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing facts and for good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:
1. Subordination to the REA Amendment. Subject to the terms of this
Agreement, Tenant hereby consents to and agrees to subordinate the Lease to
the terms of the REA Amendment.
Facility No. 200-01/GY-1
04/05/1996 Portland, OR
Page 1 of 4
<PAGE>
2. Development of Pad Area 4. Tenant consents to the development of
Pad Area 4 as permitted under the REA and the REA Amendment subject to the
following:
2.1 Prohibition of Certain Retail Uses. During the term of the
Lease, Pad Area 4 will under no circumstances be sold, leased, subleased,
operated or otherwise used for: (i) any jewelry store; (ii) any supermarket
(which for purposes of this Agreement means any store, department or area
within a store, containing at least five thousand (5,000) square feet of
gross floor area, including aisle space and storage, primarily devoted to
the retail sale of food for off-premises consumption); (iii) any bakery or
delicatessen (provided this shall not be deemed to prohibit bakery or
delicatessen operations that are ancillary to another primary use such as a
submarine or bagel sandwich restaurant); (iv) the sale of fresh or frozen
meat, fish, poultry or produce for off-premises consumption; (v) any
convenience store (except that a convenience store being operated in
conjunction with a gasoline product service station and which contains not
more than one thousand five hundred (1,500) square feet of gross floor area
for product display, or such greater area as Tenant may approve from time
to time, will not be a prohibited use; or (vi) the sale of any
pharmaceutical products requiring the services of a registered pharmacist.
The restriction in clause (i) above shall terminate if the
occupant of the Premises ceases to operate a jewelry store on the Premises
for a period of more than one year for reasons other than remodeling,
reconstruction or "force majeure" causes such as strikes, lockouts, fire or
other casualty, or acts of God. The restrictions in clauses (ii), (iii),
(iv) and (v) above shall terminate if the occupant of the Premises ceases
to operate a supermarket on the Premises for a period of more than one year
for reasons other than remodeling, reconstruction or "force majeure"
causes. The restriction in clause (vi) above shall terminate if the
occupant of the Premises ceases to operate a pharmacy on the Premises for a
period of more than one year for reasons other than remodeling,
reconstruction or "force majeure" causes.
3. Site Plan Approval. Tenant shall have the right to reasonably
approve the site plan for the development of Pad Area 4 to ensure that the
development of Pad Area 4 does not materially adversely impact the parking
and circulation of the common area adjacent to the Premises. In addition,
Landlord's development of Pad Area 4 shall not cause the parking ratio on
the Fred Meyer Parcel (as defined in the REA) to fall below 4.1 per 1,000
square feet of Allowed Gross Floor Area (as defined in the REA).
Facility No. 200-01/GY-1
04/05/1996 Portland, OR
Page 2 of 4
<PAGE>
4. Entire Agreement. This Agreement embodies the entire agreement of
the parties hereto. There are no promises, terms, conditions or obligations
other than those contained herein. This Agreement supersedes all prior
communications, representations or agreements, verbal or written, between
the parties hereto and shall not be amended except in writing subscribed to
by the parties hereto.
5. Successors and Assigns. Each and all of the covenants, terms,
agreements and obligations of this Agreement shall extend to and bind and
inure to the benefit of the successors and/or assigns of said parties
hereto.
6. Ratification. Except as herein expressly modified all the terms and
conditions of the Lease shall remain in full force and effect.
7. Time of Essence. Time is of the essence with respect to the
performance of every provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the respective dates set opposite their signatures below, but this
Agreement on behalf of such party shall be deemed to have been dated as of
the date first above written.
LANDLORD:
REC RESOLUTION COMPANY,
an Oregon corporation,
Dated: ______________, 1996 By
--------------------------------
David W. Ramus
--------------------------------
(typed or printed name)
Its Vice President
----------------------------
TENANT:
FRED MEYER, INC.,
a Delaware corporation
Dated: ______________, 1996 By
--------------------------------
--------------------------------
(typed or printed name)
Its
----------------------------
(ACKNOWLEDGMENTS ON FOLLOWING PAGE)
Facility No. 200-01/GY-1
04/05/1996 Portland, OR
Page 3 of 4
<PAGE>
(ACKNOWLEDGMENT FOR LANDLORD)
STATE OF OREGON )
) ss.
County of Washington )
This instrument was acknowledged before me on this ___________ day of
________________, 1996 by David W. Ramus as Vice President of REC
RESOLUTION COMPANY, an Oregon corporation.
------------------------------------------
Notary Public for Oregon
My Commission Expires: ___________________
(ACKNOWLEDGMENT FOR TENANT)
STATE OF OREGON )
) ss.
County of ______________ )
This instrument was acknowledged before me on this __________ day of
________________, 1996 by _____________________________________________ as
_______________________________ of FRED MEYER, INC., a Delaware
corporation.
------------------------------------------
Notary Public for Oregon
My Commission Expires: ___________________
Facility No. 200-01/GY-1
04/05/1996 Portland, OR
Page 4 of 4
================================================================================
LEASEHOLD ASSIGNMENT AND MODIFICATION
AGREEMENT
between
REAL ESTATE PROPERTIES LIMITED PARTNERSHIP
Assignor
AND
FRED MEYER, INC.
Assignee
Concerning the Assignor's leasehold interests in
Various Fred Meyer Properties
================================================================================
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
<PAGE>
TABLE OF CONTENTS
Page
----
1. SALE AND ASSIGNMENT OF THE LEASEHOLD INTERESTS. ...................2
2. CONSIDERATION.......................................................2
3. EFFECTIVE DATE......................................................2
4. PRECONDITIONS TO ASSIGNEE'S OBLIGATIONS.............................3
4.1 Certain Transactions.........................................3
4.2 Conveyance; Title Review. ..................................3
4.3 Hazardous or Toxic Materials.................................4
4.4 No Material Changes..........................................4
4.5 Board Approval...............................................4
5. CONDEMNATION........................................................4
6. MODIFICATION AND TERMINATION OF CERTAIN LEASES......................5
7. CLOSING.............................................................5
7.1 Closing Date.................................................5
7.2 Manner and Place of Closing..................................5
7.3 Prorations. ................................................5
7.4 Conveyance of Leasehold Interests............................6
7.5 FIRPTA. .....................................................6
7.6 Events of Closing............................................6
7.7 Title Insurance..............................................7
7.8 Lease. .....................................................7
8. REPRESENTATIONS, WARRANTIES AND COVENANTS...........................7
8.1 Assignor's Representations, Warranties and Covenants.........7
8.2 Assignee's Representations and Warranties....................8
9. CONDUCT UNTIL CLOSING; ASSIGNOR'S COOPERATION; DISCLAIMER...........9
10. FAILURE TO CLOSE....................................................9
10.1 Assignor's Remedies..........................................9
10.2 Assignee's Remedies.........................................10
11. GENERAL PROVISIONS.................................................10
11.1 Binding Effect; Assignment..................................10
11.2 Time of Essence.............................................10
11.3 Notices.....................................................10
11.4 Waiver......................................................11
11.5 Attorneys' Fees.............................................11
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
i
<PAGE>
11.6 Prior Agreements............................................11
11.7 Applicable Law..............................................11
11.8 Brokers.....................................................11
11.9 Changes in Writing..........................................11
11.10 Counterparts................................................11
11.12 Survival....................................................11
11.13 Effect of Extensions and Modifications; Backup Offers.......11
11.14 Disclaimer; Duty to Disclose. .............................12
11.15 Representations; Condition of Properties....................12
11.16 Related Agreement...........................................12
11.17 Certain Obligations. ......................................12
11.18 Indemnity. ................................................13
12. APPROVAL BY ASSIGNOR...............................................13
EXHIBIT A-2 Legal Description of Glisan Property
EXHIBIT A-3 Legal Description of Gresham Property
EXHIBIT A-4 Legal Description of Interstate Property
EXHIBIT A-5 Legal Description of Oak Grove Property
EXHIBIT A-6 Legal Description of Stadium Property
EXHIBIT A-7 Legal Description of Tigard Property
EXHIBIT B - Reports
EXHIBIT C - Form of Lease Assignment
EXHIBIT D - Leases to be Modified
EXHIBIT E - Form of Lease Modification Agreement
EXHIBIT F - Stark Sublease
April 5, 1996
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<PAGE>
LEASEHOLD ASSIGNMENT AND MODIFICATION AGREEMENT
-----------------------------------------------
This LEASEHOLD ASSIGNMENT AND MODIFICATION AGREEMENT (this
"Agreement"), dated for reference purposes as of April 5, 1996, between
REAL ESTATE PROPERTIES LIMITED PARTNERSHIP, an Oregon limited partnership
("Assignor"), and FRED MEYER, INC., a Delaware corporation, or its assign
("Assignee"), recites and provides as follows:
RECITALS
A. Assignor currently leases the real property located in Portland,
Multnomah County, Oregon, described in the attached Exhibit A-2 (the
"Glisan Property") from REC Resolution Company ("REC") pursuant to two
lease agreements dated as of September 20, 1961 and October 7, 1983.
Assignor subleases the Glisan Property to Assignee pursuant to a lease
agreement dated as of October 22, 1986.
B. Assignor currently leases the real property located in Gresham,
Multnomah County, Oregon, described in the attached Exhibit A-3 (the
"Gresham Property") from REC pursuant to a lease agreement dated as of July
1, 1974. Assignor subleases the Gresham Property to Assignee pursuant to a
lease agreement dated as of October 22, 1986.
C. Assignor currently leases the real property located in Portland,
Multnomah County, Oregon, described in the attached Exhibit A-4 (the
"Interstate Property") from pursuant to a lease agreement dated as of
January 7, 1966. Assignor subleases the Interstate Property to Assignee
pursuant to a lease agreement dated as of October 22, 1986.
D. Assignor currently leases the real property located in Milwaukie,
Clackamas County, Oregon, described in the attached Exhibit A-5 (the "Oak
Grove Property") from REC pursuant to a lease agreement dated as of April
28, 1960. Assignor subleases the Oak Grove Property to Assignee pursuant to
a lease agreement dated as of October 22, 1986.
E. Assignor currently leases the real property located in Portland,
Multnomah County, Oregon, described in the attached Exhibit A-6 (the
"Stadium Property", which includes the parking lot located across a public
street from the store) from REC pursuant to two lease agreements dated as
of February 14, 1968 and June 20, 1984. Assignor subleases the Stadium
Property to Assignee pursuant to a lease agreement dated as of October 22,
1986.
F. Assignor currently leases the real property located in Tigard,
Washington County, Oregon, described in the attached Exhibit A-7 (the
"Tigard Property") from REC pursuant to a lease agreement dated as of
February 14, 1967. Assignor subleases the Tigard Property to Assignee
pursuant to a lease agreement dated as of October 22, 1986.
G. The above-referenced properties, together with all buildings and
other improvements located thereon and all rights and appurtenances
belonging thereto or in any way appertaining thereto and all right, title
and interest of Seller in and to any and all roads, streets, alleys and
ways, bounding such property are collectively referred to herein as the
"Properties." The above-referenced master leases are sometimes collectively
referred to as the "Master Leases" or individually as a "Master Lease." The
above-referenced subleases are sometimes collectively referred to as the
"Subleases" or individually as a "Sublease."
April 5, 1996
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H. Assignor desires to sell and assign to Assignee the Assignor's
interests under the Master Leases and the Subleases to Assignee, and
Assignee desires to purchase and assume such interests from Assignor, on
the terms and conditions set forth in this Agreement.
I. In addition, concurrently with and as a condition to the closing
of the foregoing assignments, the parties desire to modify the terms of
certain other lease agreements, as detailed more particularly in Section 6
below.
AGREEMENTS
NOW, THEREFORE, for value received and in consideration of the mutual
promises set forth in this Agreement, the parties agree as follows:
1. SALE AND ASSIGNMENT OF THE LEASEHOLD INTERESTS. Assignor agrees to
sell and assign to Assignee, and Assignee agrees to purchase and assume
from Assignor, the interests of Assignor as lessee under the Master Leases
and the interests of Assignor as sublessor under the Subleases, on the
terms and conditions set forth in this Agreement. The interests to be sold
and assigned pursuant to this Agreement are referred to below as the
"Leasehold Interests".
2. CONSIDERATION. The total cash consideration to be paid by Assignee
for the assignment of the Leasehold Interests is TWENTY SEVEN MILLION SIX
HUNDRED TWENTY NINE THOUSAND SIX HUNDRED SIXTY FIVE DOLLARS ($27,692,665).
The consideration is allocated among the various portions of the Leasehold
Interests as follows:
<TABLE>
<CAPTION>
Land Improvements Total
---- ------------ -----
<S> <C> <C> <C>
Glisan Property $394,533.00 $643,711.00 $1,038,244.00
Gresham Property $4,237,768.00 $5,393,522.00 $9,631,290.00
Interstate Property $1,769,734.00 $1,569,386.00 $3,339,120.00
Oak Grove Property $1,422,946.00 $3,847,224.00 $5,270,170.00
Stadium Property $1,339,672.00 $930,958.00 $2,270,630.00
Tigard Property $1,783,060.00 $3,620,151.00 $5,403,211.00
Stark Lease Termination* $677,000.00
TOTAL $10,947,713.00 $16,004,952.00 $27,629,665.00
*The parties agree to allocate $677,000 of the above-stated
consideration to the agreement of Assignor to terminate the Stark lease and
assume the Stark sublease, as set forth in Section 6.2 below.
</TABLE>
3. EFFECTIVE DATE. The "Effective Date" for purposes of this
Agreement is the date that this Agreement is mutually executed and
delivered.
April 5, 1996
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4. PRECONDITIONS TO ASSIGNEE'S OBLIGATIONS. The close of escrow and
Assignee's obligation to purchase and assume the Leasehold Interests are
subject to the satisfaction, not later than the Closing Date (unless
otherwise provided), of the following conditions, and the obligations of
the parties with respect to such conditions are as set forth in this
Section 4. The conditions set forth in this Section 4 are solely for the
benefit of Assignee and may be waived only by Assignee. Assignee shall at
all times have the right to waive any condition. Such waiver or waivers
shall be in writing to Assignor.
4.1 CERTAIN TRANSACTIONS.
(a) Assignee shall have completed and closed (1) a
sale-leaseback transaction of approximately nine or thirteen properties
currently owned by Assignee or its subsidiaries, and (2) a purchase of
certain properties currently owned by Metropolitan Life Insurance Company
and leased by Assignee or its subsidiaries. If either of these transactions
has not closed by December 31, 1996, then, unless Assignee waives this
condition in writing on or before December 31, 1996, this Agreement shall
terminate.
(b) Each of the Properties shall have been accepted as
financeable by any institutional lender or equity investor providing
financing for this transaction. If this has not occurred by December 31,
1996, then, unless Assignee waives this condition in writing delivered to
Seller on or before December 31, 1996, this Agreement shall terminate.
4.2 CONVEYANCE; TITLE REVIEW. At closing Assignor shall assign
and convey the Leasehold Interests to Assignee pursuant to lease
assignments in the form attached as Exhibit C.
(a) TITLE REPORT, SURVEY, ETC. Assignee shall within 10 days
after the Effective Date obtain current preliminary title reports on the
Leasehold Interests, from First American Title Insurance Company ("Title
Company"). Assignee shall also, within 90 days after the Effective Date,
obtain current ALTA surveys of the Properties meeting Assignee's survey
requirements. The cost of the surveyor's work will be paid by Assignee.
Assignor and Assignee will each review the surveys and if necessary the
legal descriptions of the Properties will be adjusted based on such
surveys.
(b) TITLE APPROVAL PROCEDURE.
(1) Within 20 days after receipt of all of the title
reports and surveys, Assignee will review such materials and notify
Assignor in writing of Assignee's approval (or disapproval) of any
exceptions shown in the title reports, other than an exception for current
property taxes, and of such surveys. Failure to notify Assignor than an
item is approved shall be deemed to be disapproval of such item. In the
event of such disapproval: (i) Assignor shall be obligated to remove (or
commit to remove) any disapproved lien or other financial encumbrance (a
"Lien"), at or prior to closing; and (ii) Assignor agrees to exert its best
efforts to remove any other disapproved matter (but Assignor is not
absolutely obligated to remove a disapproved matter other than a Lien).
(2) Assignor shall have 20 days from the date that
items are disapproved or deemed disapproved to eliminate any disapproved
title exceptions or survey matters (or as to any Liens, to commit in
writing to eliminate such Liens at or prior to closing). If Assignor is
unable to eliminate a disapproved title exception or survey matter within
such twenty-day period, despite Assignor's best efforts to do so, either
party may elect to rescind this Agreement by notice to the other party
within ten days after the expiration of the twenty-day period. In such
event, all obligations of the parties under this Agreement shall
April 5, 1996
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<PAGE>
thereafter cease. Assignee may preserve this Agreement, however, if
Assignee notifies Assignor within twenty days after delivery of a notice of
termination by Assignor, that either: (a) Assignee waives its objection to
the relevant encumbrance(s); or (b) as to encumbrances that can be removed
by the payment of money, Assignee intends at closing to pay the amount
necessary to remove such encumbrances. If Assignee so preserves this
Agreement, this Agreement shall remain in full force and effect, and
Assignee will receive a credit at closing in the amount of any sum paid by
Assignee to remove such encumbrances on title.
(3) As to any exceptions to title placed of record or
first identified after issuance of the preliminary title report or revealed
by any supplemental report, there shall be a 10- day period for Assignee to
review and approve or disapprove such exceptions on the same basis as
provided above.
(c) MASTER LEASES. Within 10 days after the Effective Date,
Assignor shall deliver to Assignee true and complete copies of the Master
Leases together with all amendments, supplements or addenda thereto.
Assignee shall review the Master Leases as part of its due diligence
review.
4.3 HAZARDOUS OR TOXIC MATERIALS. Exhibit B sets forth a complete
list of all written soils, environmental or other reports or studies
currently in Assignor's possession concerning any hazardous waste or
hazardous substances (as defined in Section 8.1) on, in or under the
Properties or any underground storage tanks on the Properties
(collectively, the "Reports"). Assignor has provided or will promptly
provide complete copies of the Reports and any other such reports
discovered by Assignor after the date hereof. Assignee will cause to be
conducted such investigations or audits of the environmental condition of
the Properties as Assignee deems prudent. Assignee will on request provide
to Assignor copies of any reports prepared by third parties in connection
with such investigations or audits. In the event that, prior to the Closing
Date, any hazardous substances in amounts or of kinds that violate or could
give rise to liability under environmental laws (as defined in Section 8.1)
are discovered on, in, or under any of the Properties, or any underground
storage tanks are discovered on any of the Properties, Assignee may elect,
within ten days after learning of the discovery of such matter, to
terminate this Agreement by notice to the Assignor; provided, however, that
Assignor may preserve this Agreement by notifying Assignee (within 10 days
after receipt of the Assignee's termination notice) that Assignor commits
at its expense to perform any remediation necessary to correct the problem
to the satisfaction of Assignee (in Assignee's discretion) and any
governmental agency with jurisdiction over the Properties, and the parties
thereafter document such remediation commitment in a manner acceptable to
Assignee. If this Agreement is so terminated, the parties shall thereafter
have no further obligations under this Agreement.
4.4 NO MATERIAL CHANGES. At the Closing Date, there shall have
been no material adverse changes in the physical condition of or legal
requirements applicable to the Properties.
4.5 BOARD APPROVAL. Purchaser's Board of Directors shall have
approved this transaction in its discretion. If this condition is not
satisfied by December 31, 1996, this Agreement shall terminate.
5. CONDEMNATION. If, prior to closing, any part of the Property is
condemned or appropriated by public authority or any party exercising the
right of eminent domain, or is threatened thereby, then this Agreement
shall, at the election of the Assignee, become null and void. In the event
the Assignee elects not to terminate this Agreement, the consideration to
be paid by Assignor shall not be affected, but Assignee shall be entitled
to all proceeds of such award attributable to the Leasehold Interests (or,
if the award is made prior to closing, Assignor shall receive such proceeds
but Assignee shall receive a credit against the consideration to be paid in
the net amount of such proceeds). Assignor will promptly notify Assignee as
to
April 5, 1996
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<PAGE>
the commencement of any such action or any communication from a
condemning authority that a condemnation or appropriation is contemplated,
and will cooperate with Assignee in the response to or defense of such
actions, and permit Assignee to participate fully in, and approve any
settlement of, any such proceedings.
6. MODIFICATION AND TERMINATION OF CERTAIN LEASES. Provided that this
transaction closes, the parties agree to make the following lease
modifications and terminations.
6.1 The lease agreements referenced on Exhibit D will be modified
to provide Assignee (or its applicable subsidiary corporation as to leases
of properties located in Washington) with the additional option terms
stated in Exhibit D. Such modification agreements will be in the form
attached as Exhibit E.
6.2 Assignee leases certain property located at 700 SE 122nd,
Portland, Oregon, from Assignor, pursuant to a lease agreement dated
October 22, 1986 (the "Stark Lease"). Assignee subleases this property to
Fabric Depot Inc. pursuant to a sublease dated December 31, 1991 (the
"Stark Sublease"), a copy of which is attached as Exhibit F. At closing,
Assignee will convey its interest in the Stark Sublease to Assignor,
Assignor will assume the obligations of Assignee under the Stark Sublease,
effective as of the closing date, and Assignor will release Assignee from
any and all liabilities and obligations accruing under the Stark Lease
after Closing, pursuant to an assignment agreement substantially in the
form attached as Exhibit C. . Any security deposit under the Stark Sublease
will be transferred to Assignor at closing. In addition, it is a condition
to Assignor's obligation to assume the Stark Sublease that (1) Assignee's
interest in the Stark Sublease be free and clear of liens at the time of
assignment and assumption thereof, and (2) Assignee shall deliver to
Assignor an estoppel from the subtenant confirming (a) that there are no
defaults under the Stark Sublease, (b) that the Stark Sublease is in full
force and effect, (c) the term, security deposit and rent under the Stark
Sublease, and (d) that rent has not been paid more than one month in
advance.
7. CLOSING.
7.1 CLOSING DATE. This transaction will be closed (the "Closing")
on a date to be selected by Assignee and reasonably acceptable to Assignor,
but not later than 30 days after satisfaction or written waiver of the
conditions specified in Section 4 of this Agreement, and in any event not
later than January 30, 1997 (the "Closing Date"). Assignee will give Seller
at least 30 days notice to close.
7.2 MANNER AND PLACE OF CLOSING. This transaction will be closed
by an escrow officer of First American Title Insurance Company (or other
Title Company selected pursuant to Section 4.2) (the "Escrow Officer") at
its office in Portland, Oregon, or at such other place as the parties may
mutually select. Closing shall take place in the manner and in accordance
with the provisions set forth in this Agreement.
7.3 PRORATIONS.
(a) There shall be no prorations of taxes or expenses with
respect to the Master Leases or the Subleases, as Assignee is under the
Subleases responsible for taxes and expenses, and is entitled to all income
derived from, the Properties other than rent owing under the Master Leases
and the Subleases.
(b) Rent owing under the Master Leases and the Subleases
shall be prorated as of 12:01 a.m. on the Closing Date, with Assignor
entitled to the rents under the Subleases and obligated with
April 5, 1996
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<PAGE>
respect to the rents under the Master Leases through such time, and with
Assignee obligated with respect to the rents under the Subleases through
such time.
(c) Rent owing under the Stark Lease and the Stark Sublease
will be prorated as of 12:01 a.m. on the Closing Date, with Assignor
entitled to the rent under the Stark Lease through such time, and with
Assignee obligated with respect to the rent under the Stark Lease and
entitled to the rent under the Stark Sublease through such time.
7.4 CONVEYANCE OF LEASEHOLD INTERESTS. Conveyance of the
Leasehold Interests shall be by delivery of lease assignment agreements in
the form attached as exhibit C. All municipal, county, state and federal
transfer and documentary stamp taxes, if any, shall be paid by Assignor at
the time of closing. The assignment shall be free of encumbrances of any
kind, without exceptions, unless otherwise specified herein or approved
pursuant to Section 4.2, and except for the lien of real estate taxes not
yet payable, so as to convey to Assignee good and marketable title to the
Leasehold Interests. The conveyance will be free of all tenancies other
than (1) the occupancy of Fred Meyer, Inc. pursuant to the Subleases; and
(2) subleases, rental agreements or licenses in which Fred Meyer, Inc., or
its subsidiary is the sublessor, landlord or licensor.
7.5 FIRPTA. Assignor shall deliver to Assignee at closing an
affidavit that Assignor is not a "foreign person" under FIRPTA, in form
satisfactory to Assignee.
7.6 EVENTS OF CLOSING. Provided the Escrow Officer has received
the sums and is in a position to cause the title insurance policy to be
issued as described below, this transaction will be closed on the Closing
Date as follows:
(a) Assignee shall pay the total cash consideration for the
Leasehold Interests in immediately available funds, adjusted for the
charges and credits set forth in this section.
(b) Any liens or other encumbrances on title required by
this Agreement to be paid or removed by Assignor at closing shall be paid
and satisfied or removed of record at Assignor's expense.
(c) Assignor and Assignee shall execute and deliver the
lease assignment agreements contemplated by Section 7.4 and Section 6.2.
(d) Title Company will commit to issue the policy described
in Section 7.7, upon recordation of the closing documents.
(e) The parties will execute any additional documentation
required with respect to the matters described in Sections 7.4 and 7.5.
(f) The Escrow Officer will record the lease assignment
agreement(s).
(g) The parties will execute and deliver the lease
modification and termination agreements referenced in Section 6.
(h) The escrow fee shall be paid equally by the parties. Any
real estate excise or transfer tax will be paid by Assignor. The recording
fees for the lease assignment agreements will be paid by Assignee. Assignor
shall be charged with the premium (including any sales or excise tax) for
the title
April 5, 1996
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insurance policies to be delivered to Assignee, except that Assignee shall
be responsible for the portion of the premium (including any sales or
excise tax) attributable to extended coverage if Assignee elects to obtain
it, and for the cost of any endorsements requested by Assignee.
(i) There are no brokerage fees.
(j) If any other closing costs not specifically provided for
herein are due at closing of this transaction, each party shall pay such
closing costs as are normally and customarily the responsibility of such
party. In addition to any other items required to be paid by either party
pursuant to this Agreement, each party shall pay its own attorneys' fees.
7.7 TITLE INSURANCE. As soon as possible after the Closing Date,
Assignor shall cause the Title Company to furnish Assignee with a standard
policy of title insurance in the amount of the total cash consideration for
each Leasehold Interest, in form acceptable to Assignee, subject only to
exceptions for the matters accepted by Assignee pursuant to Section 4.2. At
Assignee's option, such policies shall be in ALTA extended coverage form
(full or partial), in which case Assignor and Assignee will execute such
affidavits as may be necessary to obtain the extended coverage. Extra title
premiums attributable to extended coverage shall be Assignee's expense.
7.8 LEASE. If Assignee elects to assign this Agreement and the
right to purchase the Leasehold Interests to a third party that will lease
the Properties to Assignor, the parties will execute any additional
documentation necessary to implement such assignment and lease, provided
that Assignor shall not be required to incur any additional expense or any
material risk in connection therewith.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS.
8.1 ASSIGNOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
Assignor represents and warrants to Assignee that:
(a) To the Assignor's actual knowledge and without
independent investigation, and except as disclosed on the Reports or in
other reports in Buyer's possession: (1) there are no hazardous substances
(as defined below) on, within, under or upon the Properties, in amounts or
of kinds that in their current condition pose a threat to human health or
the environment or pose a risk of liability under environmental laws
(provided, however, that due to the age of the improvements on the
Properties, there may be asbestos containing materials used in the
construction of such improvements); and (2) there are no underground
storage tanks within the Properties. Assignor does hereby assign to
Assignee (effective at and as of the Closing Date) any and all
environmental warranties, indemnification agreements and rights of action
Assignor may have against third parties (if any) relating to the presence
of any such hazardous substances or underground tanks. As used in this
Agreement, the term "environmental laws" includes any and all state,
federal and local statutes, regulations, and ordinances to which the
Properties are subject and relating to the protection of human health and
the environment, as well as any judgments, orders, injunctions, awards,
decrees, covenants, conditions, or other restrictions or standards relating
to same; and the term "hazardous substances" includes all hazardous and
toxic substances, wastes, or materials, including without limitation all
substances, wastes, and materials containing either petroleum, including
crude oil or any fraction thereof, or any of the substances referenced in
Section 101(14) of the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Section 9601(14), and similar or comparable
state or local laws.
April 5, 1996
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<PAGE>
As tenant under the Subleases, Assignee is presently responsible for
asbestos auditing to the extent required by applicable law, and is not
looking to Assignor to provide any such audits.
(b) Except as disclosed to Assignee in writing, Assignor has
received no written notice of any condemnation, environmental, zoning or
other land-use regulation proceedings which would detrimentally affect the
use and operation of the Properties or the value of the Properties nor has
Assignor received written notice of any special assessment proceedings
affecting the Properties.
(c) There is no litigation pending or to the Assignor's
actual knowledge threatened against Assignor that arises out of the
ownership of the Leasehold Interests and would be binding on the Assignee
or might detrimentally affect the use or operation of the Properties for
their intended purpose or the value of the Leasehold Interests or adversely
affect the ability of Assignor to perform its obligations under this
Agreement.
(d) The persons who have executed this Agreement have been
duly authorized to do so by Assignor. All documents delivered at closing
will be executed by a duly authorized person. Assignor has a good and legal
right to enter into this Agreement and to perform all covenants of Assignor
contained in this Agreement in accordance with its terms.
(e) The copies of the Master Leases provided to Assignee by
Assignor have been and/or will be true and complete. There are no
liabilities or obligations binding on holder of the Leasehold Interests
that are not reflected in the copies of the Master Leases to be provided by
Assignor. As of Closing, Assignor's interest in the Master Leases, the
Subleases and the rentals due or to become due thereunder will be free of
any assignments, encumbrances or liens, except for encumbrances accepted by
Assignee pursuant to Section 4.2. No leasing or brokerage fees or
commissions of any nature whatsoever are currently or shall become due or
owing at or after Closing to any person, firm, corporation, or entity with
respect to the Master Leases, the Subleases, or the Leasehold Interests.
(f) This Agreement and all documents required by it to be
executed by Assignor are and shall be valid, legally binding obligations
of, and enforceable against, the Assignor in accordance with their terms.
(g) Neither the execution and delivery of this Agreement and
the documents referred to herein, nor the incurring of the obligations set
forth herein, nor the consummation of the transactions contemplated hereby,
nor compliance with the terms of this Agreement and the documents referred
to herein, conflicts with or results in the material breach of any terms,
conditions or provisions of or constitute a default under, any bond, note
or other evidence of debt, or any contract, indenture, mortgage, deed of
trust or other agreement to which Assignor is a party.
8.2 ASSIGNEE'S REPRESENTATIONS AND WARRANTIES. Assignee
represents and warrants to Assignor that:
(a) The persons who have executed this Agreement have been
duly authorized to do so by Assignee, and all requisite corporate action
has been taken by Assignee in connection with the entering into of this
Agreement and the consummation of the transaction contemplated hereby
(subject to the provisions of Sections 4.5, which references the fact that
board of directors approval has not been obtained as yet, and 12).
April 5, 1996
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(b) All documents delivered at closing will be executed by a
duly authorized person. Assignee has a good and legal right to enter into
this Agreement and to perform all covenants of Assignee contained in this
Agreement in accordance with its terms.
(c) This Agreement and all documents required by it to be
executed by Assignee are and shall be valid, legally binding obligations
of, and enforceable against, Assignee in accordance with their terms.
(d) Neither the execution and delivery of this Agreement and
the documents referred to herein, nor the incurring of the obligations set
forth herein, nor the consummation of the transactions contemplated hereby,
nor compliance with the terms of this Agreement and the documents referred
to herein, conflicts with or results in the material breach of any terms,
conditions or provisions of or constitute a default under, any bond, note
or other evidence of debt, or any contract, indenture, mortgage, deed of
trust or other agreement to which Assignee is a party.
(e) The copy of the Stark Sublease attached hereto is true
and complete. There are no liabilities or obligations binding on sublessor
under the Stark Sublease that are not reflected in the copy attached
hereto. As of Closing, Assignor's interest in the Stark Sublease and the
rentals due or to become due thereunder will be free of any assignments,
encumbrances or liens, except for encumbrances affecting Assignor's
interest under the Stark Lease. No leasing or brokerage fees or commissions
of any nature whatsoever are currently or shall become due or owing at or
after Closing to any person, firm, corporation, or entity with respect to
the Stark Sublease.
9. CONDUCT UNTIL CLOSING; ASSIGNOR'S COOPERATION; DISCLAIMER. From
the date of this Agreement until the Closing Date, Assignor shall cause all
liens on the Leasehold Interests incurred by Assignor to be paid current,
and will not further mortgage or encumber the Leasehold Interests or
increase the amount of any current indebtedness on the Leasehold Interests.
No provision of this Agreement or previous (or subsequent) conduct or
activities of the parties will be construed: (i) as making either party an
agent, principal, partner or joint venturer with the other party, (ii) as
creating any express or implied obligation for Assignee to operate the
Properties as a Fred Meyer retail facility or otherwise, or (iii) as making
either party responsible for payment or reimbursement of any costs incurred
by the other, whether or not such development occurs (except as may be
expressly set forth herein or in its attached exhibits). WHETHER AND HOW
ASSIGNEE MAY DEVELOP, REDEVELOP OR OPERATE THE PROPERTIES POST-CLOSING IS
AT ASSIGNEE'S DISCRETION. ASSIGNOR WILL NOT HAVE ANY CLAIM AGAINST (OR
RIGHT TO RECOVER ANY DAMAGES OR COSTS FROM) ASSIGNEE IN THE EVENT ASSIGNEE
DOES NOT DEVELOP, REDEVELOP OR CONTINUE TO OPERATE THE PROPERTIES.
10. FAILURE TO CLOSE.
10.1 ASSIGNOR'S REMEDIES. In the event that this transaction
fails to close on account of Assignee's fault or inability to close, and
Assignee has not exercised any right to terminate or rescind this Agreement
as provided herein, Assignee shall pay to Assignor the sum of $25,000 as
full liquidated damages. SUCH AMOUNT HAS BEEN AGREED BY THE PARTIES TO BE
REASONABLE COMPENSATION AND THE EXCLUSIVE REMEDY FOR Assignee'S DEFAULT,
SINCE THE PRECISE AMOUNT OF SUCH COMPENSATION WOULD BE DIFFICULT TO
DETERMINE. Assignor hereby waives any right to specific enforcement of this
Agreement, and any right to sue for damages (including lost profits or
April 5, 1996
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consequential damages) other than the liquidated damages provided for in
this Section. The parties are initialing this Section for purposes of
acknowledging and agreeing to such exclusive remedy and liquidated damages
provision.
INITIALS OF: ASSIGNOR DWR ASSIGNEE SCOTT
----- -------
10.2 ASSIGNEE'S REMEDIES. In the event that the transaction fails
to close on account of Assignor's fault or Assignor's inability to deliver
title acceptable to Assignee pursuant to Section 4.2, Assignee shall be
entitled to such remedies for breach of contract as may be available under
applicable law, including (without limitation) the remedy of specific
performance, collection of damages (provided such damages will not exceed
$25,000), recovery of costs and attorneys' fees.
11. GENERAL PROVISIONS.
11.1 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties, and their respective heirs,
personal representatives, successors, and assigns. Assignee reserves the
right to assign the right to purchase the Leasehold Interests to any third
party at closing. Assignee also reserves the right to assign the Agreement
at or prior to closing to an entity that will lease the Leasehold Interests
to Assignee. Unless otherwise agreed, however, no such assignment shall
release Assignee from its obligations under this Agreement, or increase
Assignor's obligations in any respect. Any such assignment must include
assignment of the Related Agreement referenced in Section 11.16. After
assignment, the purchasing party will be imputed with Assignee's knowledge
regarding the matters set forth in Section 11.15, and will be bound by the
waiver set forth in Section 11.17, for all defects that would have been
Assignee's obligation to remedy under the Subleases.
11.2 TIME OF ESSENCE. Time is of the essence of each and every
provision of this Agreement.
11.3 NOTICES. All demands or notices required or permitted to be
given under this Agreement shall be in writing. Notices may be served by
certified or registered mail, postage paid with return receipt requested;
by facsimile, or other telecommunication device capable of transmitting or
creating a written record (provided that a copy is also sent by U.S. Mail,
first class); or personally. Mailed notices shall be deemed delivered five
(5) days after mailing, properly addressed. Telex or telecommunicated
notices shall be deemed delivered when receipt is either confirmed by
confirming transmission equipment or acknowledged by the addressee or its
office. Personal delivery shall be effective when accomplished. Unless a
party changes its address by giving notice to the other party as provided
herein, notices shall be delivered to the parties at the following
addresses:
Assignor: REAL ESTATE PROPERTIES LIMITED PARTNERSHIP
Suite 300
15350 SW Sequoia Parkway
Portland, OR 97224
Attn: Dave Ramus
Facsimile No. (503) 624-7755
April 5, 1996
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Assignee: Fred Meyer, Inc.
P.O. Box 42121
Portland, Oregon 97242-0121
(Street Address - 3800 S.E. 22nd Avenue,
Portland, Oregon 97202)
Attn: Scott L. Wippel
Facsimile No.: (503) 797-3539
11.4 WAIVER. Failure of either party at any time to require
performance of any provision of this Agreement shall not limit the party's
right to enforce the provision. Waiver of any breach of any provision shall
not be a waiver of any succeeding breach of the provision or a waiver of
the provision itself or any other provision.
11.5 ATTORNEYS' FEES. In the event suit or action is instituted
to interpret or enforce the terms of this Agreement or to rescind this
Agreement, the prevailing party shall be entitled to recover from the other
party such sum as the court may adjudge reasonable as attorneys' fees at
trial, on any appeal, and on any petition for review, in addition to all
other sums provided by law.
11.6 PRIOR AGREEMENTS. This Agreement supersedes and replaces
all written and oral agreements previously made or existing between the
parties (including, without limitation, all previous letters of intent and
addenda thereto and all verbal agreements and understandings).
11.7 APPLICABLE LAW. This Agreement shall be construed, applied
and enforced in accordance with the laws of the State of Oregon.
11.8 BROKERS. Each party will defend, indemnify, and hold the
other party harmless from any claim, loss, or liability made or imposed by
any other party claiming a commission or fee in connection with this
transaction and arising out of its own conduct.
11.9 CHANGES IN WRITING. This Agreement and any of its terms may
only be changed, waived, discharged or terminated by a written instrument
signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
11.10 COUNTERPARTS. This Agreement may be executed
simultaneously or in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
Agreement.
11.11 INVALIDITY OF PROVISIONS. In the event any provision of
this Agreement is declared invalid or is unenforceable for any reason, such
provision shall be deleted from such document and shall not invalidate any
other provision contained in the document.
11.12 SURVIVAL. All representations, warranties and obligations
of the parties in this Agreement shall survive the Closing Date and
delivery of the lease assignment agreements contemplated in this Agreement
and be fully enforceable thereafter (provided, survival of representations
and warranties other than deed title warranties shall be limited to a
period of two years).
11.13 EFFECT OF EXTENSIONS AND MODIFICATIONS; BACKUP OFFERS. Any
amendment to this agreement (including any extension of time for waiver of
conditions or closing) shall be deemed to be a
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
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modification of the continuing existing agreement, rather than a rescission
or termination of such agreement. Assignor will not accept any "backup",
"standby" or other additional offers to purchase the Leasehold Interests
without Assignee's written consent. In any event, any such additional offer
shall be subordinate to this Agreement as it may be extended or modified.
11.14 DISCLAIMER; DUTY TO DISCLOSE. As to any reports or other
materials provided by one party to the other party herein, the party
providing such reports or materials is not warranting (and will not be
liable or responsible for) the accuracy, fitness or usability of such
reports or materials or any recommendations or conclusions stated therein.
All representations and warranties of the parties in this Agreement are
limited to the best of the party's actual knowledge, without independent
investigation or examination. If either party obtains actual knowledge
prior to the Closing Date of a fact which would make any of the
representations and warranties in this Agreement false, such party will
notify the other party of such fact. A party will not be deemed in breach
of a representation or warranty in this Agreement or liable to the other
party for any claimed misrepresentation in this Agreement after the Closing
Date unless the party had actual knowledge on the Closing Date that the
representation or warranty was false and failed to disclose to the other
party the fact known to the party which made the representation or warranty
false.
11.15 REPRESENTATIONS; CONDITION OF PROPERTIES. Assignee or
Assignee's affiliate has heretofore operated and occupied the Properties
and has thoroughly and completely examined and is fully aware of the
physical condition of the Properties as well as any governmental permits or
approvals required in connection with Assignee's use of the Properties, the
suitability of the Properties for Assignee's intended use, the availability
of utilities and services, the applicable zoning, building, housing and
other ordinances, restrictions, laws, and regulations affecting the
Properties or other matters. Except as otherwise specifically set forth in
this Agreement or in any instrument delivered at Closing, Assignee accepts
the land and property and all other aspects of the Properties in their
present condition, AS IS, without any representations or warranties by
Assignor, expressed or implied. Assignee acknowledges that Assignee has
ascertained for itself the value and condition of the Properties and
Assignee is not relying on, nor has Assignee been influenced by, any
representation of Assignor regarding the value or condition of the
Properties.
11.16 RELATED AGREEMENT. Assignee is party to a Real Estate
Purchase and Sale Agreement, dated on or about the date hereof, pursuant to
which Assignee intends to acquire the fee interest of REC in the Properties
(the "Related Agreement"), which the parties thereto intend to close
simultaneously with closing under this Agreement. Assignee's obligation to
close under this Agreement is subject to the performance by REC of REC's
obligations under the Related Agreement, such that a simultaneous closing
may occur. Assignor's obligation to close under this Agreement is subject
to the performance by Assignee of Assignee's obligations under the Related
Agreement, such that a simultaneous closing may occur.
11.17 CERTAIN OBLIGATIONS. Under the terms of the Subleases,
Assignee is obligated to (i) maintain the Properties (Paragraph 9.1) and
(ii) cause the Properties to comply with all legal requirements (Paragraph
6.2). In addition to Assignee's acknowledgment that it is accepting the
Properties AS IS, Assignee hereby waives, releases, acquits and forever
discharges Assignor and its officers, directors, partners, employees,
agents, and any other person acting on behalf of Assignor, from any and all
claims, actions, causes of action, demands, rights, damages expenses or
compensation whatsoever, arising from any defects in the Properties, to the
extent such defects would have been Assignee's responsibility to remedy
under the Subleases.
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
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11.18 INDEMNITY. Paragraph 12.2 of each Sublease requires
Assignee to indemnify Assignor against claims for injury to persons and
damage to property occurring on the Properties. The parties acknowledge
that Assignee's indemnity obligation to Assignor under Paragraph 12.2 of
the Subleases shall survive the assignment or termination of the Subleases
or both, and further agrees that such obligation shall extend to REC, as if
REC were the landlord under the Subleases.
12. APPROVAL BY ASSIGNOR.
Assignor will have until 5 p.m. (Pacific Time) on April 5, 1996
in which to execute and return to Assignee a fully signed counterpart of
this Agreement. Neither the delivery of this Agreement to Assignor for
execution nor the delivery of any signed Agreement to Assignee will create
a binding contract, or contract by estoppel or otherwise, between the
parties. Assignee will have 10 days after receipt of this Agreement signed
by Assignor to execute and deliver or transmit (by facsimile or otherwise)
to Assignor at its address hereunder a fully executed counterpart of this
Agreement, and if not executed and delivered within such time period, this
Agreement will be null and void and neither party will thereafter have any
obligation or liability to the other party pursuant to this Agreement.
IN WITNESS WHEREOF, the parties have caused this instrument to
be duly executed as of the date set forth above.
Assignor: REAL ESTATE PROPERTIES LIMITED PARTNERSHIP,
AN OREGON LIMITED PARTNERSHIP, BY FMGP
ASSOCIATES, AN OREGON LIMITED PARTNERSHIP,
ITS GENERAL PARTNER, BY FMGP INCORPORATED, A
DELAWARE CORPORATION, ITS GENERAL PARTNER
By: David W. Ramus
--------------------------------------
Title: VP
-----------------------------------
Date Executed: 4/5/96
---------------------------
Assignee: FRED MEYER, INC., A DELAWARE CORPORATION
By: SCOTT L. WIPPEL
--------------------------------------
Scott L. Wippel, Senior Vice President
Date Executed: 4-8-96
---------------------------
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
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<PAGE>
EXHIBIT A-2
A tract of land in the Northwest 1/4 of Section 32, Township 1 North, Range
2 East of the Willamette Meridian, in the City of Portland, County of
Multnomah and State of Oregon, being Blocks 16 and 17 and all of Blocks 15
and 18 of North Mt. Tabor and adjacent portions of vacated Country Road No.
534, Liberty Street and N. E. 66th Avenue; also a portion of Block 9,
Marchmont Addition, recorded plats, in the County of Multnomah and State of
Oregon; described as follows:
PARCEL NO. I
Beginning at the intersection of the North line of N. E. Glisan Street and
the West line of N. E. 67th Avenue; thence Northerly along said West line
of N. E. 67th Avenue 572.32 feet, more or less, to the intersection with
the South line of N. E. Oregon Street; thence Westerly along the South line
of N.E. Oregon 634 feet, more or less, to the intersection with the center
line of vacated Country Road No. 534; thence Southerly along the center
line of said Country Road #534, 572 feet, more or less, to the intersection
with the North line of N. E. Glisan Street; thence Easterly along said
North line of N. E. Glisan Street 15 feet to a point; thence Northerly
parallel to said center line of said Country Road No. 534, 100 feet to a
point; thence Easterly parallel to the North line of N. E. Glisan Street
100 feet to a point; thence Southerly parallel to the center line of said
County Road No. 534, 100 feet to the North line of N. E. Glisan Street;
thence Easterly along said North line of N. E. Glisan Street 519 feet, more
or less, to the point of beginning.
PARCEL NO. II
Lots 8, 9, 10 and that portion of Lots 11, 12, 13, 14 and 15, lying
Easterly of the East line of a deeded street, recorded December 1, 1960, in
Book 2039, page 256, Multnomah County, Oregon, all in said Marchmont
Addition.
PARCEL NO. III
A perpetual easement for ingress and egress over the following tract of
land in Section 32, Township 1 North, Range 2 East of the Willamette
Meridian: Beginning at the center line of vacated County Road #534 (N. E.
65th Avenue) and the North line of N. E. Glisan Street; thence South 89
degrees 48' West 15.00 feet; thence North 0 degrees 01' 30" West 215.69;
thence North 89 degrees 48' East, 15 feet; thence South 0 degrees 01' 30"
East 215.69 feet to the point of beginning, in the City of Portland, County
of Multnomah and State of Oregon.
SUBJECT TO:
1. A perpetual easement over the West 15 feet of the South 215.69 feet, for
the purpose of ingress, egress and regress as set forth in agreement
between Gibbons and Reed Company, a Utah corporation,
GLISAN PROPERTY PAGE 1
<PAGE>
and Union Central Co., an Oregon corporation, dated September 5, 1961,
recorded October 3, 1961 in PS Deed book 2084, page 1.
2. Easement for ingress and egress from Union Central Company to Humble Oil
and Refining Company for the benefit of adjoining property disclosed in an
unrecorded lease dated July 5, 1961, amended by letter dated September 12,
1961, and by instrument dated October 20, 1961, described as follows: A
tract of land in the Northwest 1/4 of Section 32, Township 1, North, Range
2 East, Willamette Meridian, Multnomah County, Oregon, more particularly
described as follows: Beginning at the center line of County Road No. 534
(N.E. 65th Avenue), now vacated and the north line of N. E. Glisan Street;
thence North 89 degrees 48' East 115.00 feet along said north line to the
true point of beginning; thence North 89 degrees 48' East 24.00 feet along
said north line; thence North 45 degrees 10' 30" West 33.94 feet; thence
South 0 degrees 01' 30" East 24.00 feet to the true point of beginning.
3. Easement for ingress and egress from Union Central Company to Humble Oil
and Refining Company for the benefit of adjoining property disclosed in an
unrecorded lease dated July 5, 1961, amended by letter dated September 12,
1961, and by instrument dated October 20, 1961, described as follows: A
tract of land in the Northwest 1/4 of Section 32, Township 1 North, Range 2
East, Willamette Meridian, Multnomah County, Oregon more particularly
described as follows: Beginning at the intersection of the center line of
County Road No. 534 (N. E. 65th Avenue), now vacated, and the north line of
N. E. Glisan Street; thence North 89 degrees 48' East 15.0 feet to the true
point of beginning; thence North 0 degrees 01' 30" West 30.0 feet; thence
Southwesterly to a point on the north line of N. E. Glisan Street which is
30 feet west of the true point of beginning; thence along the north line of
N. E. Glisan Street 30.0 feet to the true point of beginning.
GLISAN PROPERTY PAGE 2
<PAGE>
(Former gas station parcel)
A tract of land in the northwest 1/4 of Section 32, Township 1
North, Range 2 East, W.M., Multnomah County, Oregon, more
particularly described as follows:
Beginning at the center line of County Road No. 534 (N.E. 65th
Avenue), now vacated, and the north line of the N. E. Glisan
Street; thence North 89 degrees 48' East, 15.0 feet to the true
point of beginning; thence North 89 degrees 48' East, 100.00 feet
along said north street line; thence North 0 degrees 01' 30" West,
100.00 feet; thence South 89 degrees 48' 00" West, 100.00 feet;
thence South 0 degrees 01' 30" East, 100.00 feet to the true point
of beginning.
together with the joint use in common of an easement over the following
described real property:
A tract of land in the northwest 1/4 of Section 32, Township 1
North, Range 2 East, W.M., Multnomah County, Oregon, more
particularly described as follows:
Beginning at the center line of County Road No. 534 (N.E. 65th
Avenue), now vacated and the north line of N. E. Glisan Street,
thence North 89 degrees 48' East, 115.00 feet along said north
line to the true point of beginning; thence North 89 degrees 48'
East, 24.00 feet along said north line; thence North 45 degrees
10' 30" West, 33.94 feet; thence South 0 degrees 01' 30" East,
24.00 feet to the true point of beginning.
Commonly known as 6515 N.E. Glisan, Portland, Oregon
GLISAN PROPERTY PAGE 3
<PAGE>
EXHIBIT A-3
A tract of land in Section 11, Township 1 South, Range 3 East of the
Willamette Meridian, in the City of Gresham, County of Multnomah and State
of Oregon described as follows:
Beginning at a point on the westerly line of that tract of land described
in Book 2191, page 341, Multnomah County Record of Deeds, 5.00 feet
southerly from the southerly right-of-way line of Bull Run Road, said point
bears South 2 degrees 44' 22" West 14.47 feet and South 87 degrees 15' 38"
East 252.33 feet and South 89 degrees 38' 02" East 434.96 feet from the
Northeast corner of the J.H. Lambert Donation Land Claim, Township 1 South,
Range 3 East, Willamette Meridian, Multnomah County, Oregon:
Thence South 0 degrees 30' 55" East 185.19 feet to the southwesterly corner
of that tract of land described in Book 2191, page 341, Multnomah County
Record of Deeds; Thence South 89 degrees 38' 35" East 404.95 feet to a
point situated North 89 degrees 38' 35" West 20.00 feet from the East line
of that tract of land described in PS Miscellaneous Book 188, page 511,
Multnomah County Record of Deeds; thence South 0 degrees 27' 56" East
190.00 feet to a point; thence South 21 degrees 30' 03" East 334.70 feet to
a point; thence South 32 degrees 04' 14" East 220.83 feet to a 1-inch iron
pipe on the westerly boundary of that tract of land described in PS Deed
Book 990, page 130; thence South 0 degrees 28' 16" East 661.58 feet along
said boundary line to the Northeast corner of that tract of land described
in Volume 1106, page 283, Multnomah County Book of Deed Records; thence
North 71 degrees 51' 12" West, coincident with the northerly line of the
aforementioned described tract, 122.03 feet to a point; thence North 0
degrees 28' 31" West 427.13 feet to a point; thence South 89 degrees 29'
30" West 252.94 feet to a point; thence South 60 degrees 57' 27" West
235.66 feet to the easterly right-of-way line of S.E. Burnside Road; thence
northwesterly along said right-of-way as follows: North 39 degrees 07' 34"
West 299.29 feet along the Northeast boundary of that parcel of land
described in Book 1701, page 3, Deed Records, and North 28 degrees 49' 10"
West 116.95 feet and northwesterly along the arc of a 5,809.58-foot radius
curve left, of which the long chord bears North 29 degrees 50' 21" West
226.35 feet and North 58 degrees 59' 11" East 10.00 feet and northwesterly
along the arc of a 5,819.58-foot radius curve left, of which the long chord
bears North 32 degrees 47' 02" West 371.74 feet to the intersection of the
easterly right-of-way line of East Burnside Road and the southerly
right-of-way line of Third Street; thence northeasterly along the southerly
right-of-way line of Third Street as follows: Northeasterly along the arc
of a 1,732.77-foot radius curve left, the long chord bears North 48 degrees
06' East 246.87 feet; North 44 degrees 00' 53" East 163.77 feet,
northeasterly along the arc of a 211.00-foot radius curve right of which
the long chord bears North 60 degrees 56' 29" East 122.86 feet, South 89
degrees 38' 02" East 70.65 feet to the point of beginning.
GRESHAM PROPERTY PAGE 1
<PAGE>
EXHIBIT A-4
Property Description August 12, 1974
Tract A Fred Meyer, Inc.
A tract of land located in the northwest quarter of Section 15, Township 1
North, Range 1 East, Willamette Meridian, City of Portland, Multnomah
County, Oregon, more particularly described as follows:
Beginning at a point on the north line of Lot 1, Block 1, Kenmore, said
point bears North 87 degrees 54' 00" East, 20.61 feet from the northwest
corner thereof; thence North 87 degrees 54 ` 00" East, 432.02 feet to a
point on the north line of Lot 2, Block 1, Van Buren's Addition, said point
bears South 87 degrees 54' 00" West, 32.97 feet from the northeast corner
thereof; thence on a 22.00 foot radius curve to the right, which chord
bears South 45 degrees 52' 30" East, 31.77 feet, an arc length of 35.50
feet to a point 10.00 feet westerly from, when measured at right angles,
the east line of said Block 1, Van Buren's Addition; thence South 00
degrees 21' 00" West, parallel with the said east line of Block 1, 462.94
feet to a point 10.00 feet westerly from, when measured at right angles,
the east line of Block 4, said Van Buren's Addition; thence on a 199.01
foot radius curve to the left, which chord bears South 13 degrees 28' 00"
East, 95.05 feet, an arc length of 95.98 feet; thence on a 129.01 foot
radius curve to the right, which chord bears South 20 degrees 48' 30" East,
29.09 feet, an arc length of 29.15 feet to a point 10.00 feet westerly
from, when measured on a radial line to said curve, the said east line of
Block 4, Van Buren's Addition; thence on a 23.00 foot radius curve to the
right, which chord bears South 18 degrees 45' 57" West, 25.12 feet, an arc
length of 26.57 feet to a point 10.00 northerly from, when measured at
right angles, the south line of Lot 8, Block 4, said Van Buren's Addition;
thence North 89 degrees 38' 20" West, parallel with the said south line of
Block 4, 500.19 feet to a point on the west line of Lot 1, Block 1,
Northview, said point bears North 00 degrees 18' 49" East, 10.00 feet from
the southwest corner thereof; thence North 00 degrees 19' 40" East, along
the west line of Block 1, Northview, and the west line of Blocks 1 and 2
said Kenmore, 588.13 feet to a point that bears South 00 degrees 19' 40"
West, 20.61 feet from the said northwest corner of Lot 1, Block 1, Kenmore;
thence on a 21.50 foot radius curve to the right, which chord bears North
44 degrees 06' 50" East, 29.75 feet, an arc length of 32.86 feet to the
point of beginning.
The above described tract of land contains 296,036.34 square feet or 6.7960
acres, more or less.
PETTIJOHN ENGINEERING COMPANY, INC.
74-99
INTERSTATE PROPERTY PAGE 1
<PAGE>
Property Description August 12, 1974
Tract B Fred Meyer, Inc.
A tract of land located in the northwest quarter of Section 15, Township 1
North, Range 1 East, Willamette Meridian, City of Portland, Multnomah
County, Oregon, more particularly described as follows:
Beginning at a point on the west line of Lot 1, Block 2, Van Buren's
Addition, said point bears South 00 degrees 21' 00" West, 28.33 feet from
the northwest corner thereof, said point also located at the intersection
of the westerly right-of-way line of the Minnesota Freeway and the east
right-of-way line of North Montana Avenue; thence tracing the said westerly
freeway right-of-way line the following courses: South 60 degrees 42' 04"
East, 122.73 feet, South 25 degrees 49' 30" East, 56.67 feet; South 00
degrees 21' 00" West, 45.00 feet; South 15 degrees 11' 48" East, 55.96
feet; South 00 degrees 21' 00" West, 100.00 feet; South 00 degrees 51' 11"
East, 100.01 feet; South 00 degrees 36' 51" West, 50.00 feet; South 04
degrees 56' 08" East, 77.41 feet to a point on the south line of Lot 13,
Block 1, Shannon Tract; thence North 89 degrees 38' 20" West, 24.00 feet to
the southwest corner of said Lot 13; thence leaving said freeway
right-of-way line and continuing North 89 degrees 38' 20" West, 50.00 feet
to the southwest corner of Lot 11, said Block 1, Shannon Tract, said point
also located on the east line of Lot 2, Block 5, Van Buren's Addition;
thence North 00 degrees 21' 00" East, 21.90 feet to the northeast corner of
said Lot 2; thence North 89 degrees 58' 00" West, 71.23 feet to the
northwest corner of said Lot 2, said point also located on the easterly
right-of-way line of North Montana Avenue; thence along the said easterly
right-of-way line on a 139.01 foot radius curve to the right, which chord
bears North 11 degrees 12' 49" West, 55.73 feet, an arc length of 56.11
feet; thence North 00 degrees 21' 00" East, 460.14 feet to the point of
beginning.
The above described tract of land contains 69,634.68 square feet or 1.5986
acres, more or less.
PETTIJOHN ENGINEERING COMPANY, INC.
74-99
INTERSTATE PROPERTY PAGE 2
<PAGE>
EXHIBIT A-5(A)
Property Description FRED MEYER, INC. September 17, 1974
Parcel A
A parcel of land in Section 12, Township 2 South, Range 1 East,
Willamette Meridian, Clackamas County, Oregon, more particularly described
as follows:
Beginning at the northeast corner of the intersection of S. E.
McLoughlin Boulevard and S. E. Oak Grove Boulevard; thence in a
northwesterly direction along the east line of said S. E. McLoughlin
Boulevard on a 2805.00 foot radius curve to the right, which chord bears
North 20 degrees 02' 48" West, 606.46 feet, an arc length of 607.65 feet to
the north line of a tract of land conveyed to Robert M. Taylor and Imal O.
Taylor by C. R. Moe, single man, in P S Deed Book 466, page 555, dated
March 12, 1953 and recorded on March 17, 1953, records of Clackamas County;
thence North 88 degrees 34' 30" East along said north line 163.52 feet to
the west line of Lot 5, Camplan Addition, a duly recorded plat in Clackamas
County; thence North 1 degrees 21' 40" West along the said west line of Lot
5, 31.00 feet to a point 25.00' Southerly from the northwest corner
thereof; thence North 88 degrees 34' 30" East, parallel with the north line
of said Lot 5, 189.97 feet to the intersection of said line with the
northwesterly right of way line of the re-located 30.00 foot radius
cul-de-sac at the south terminus of Camplan Court; thence along said
cul-de-sac on a 30.00 foot radius curve to the left, which chord bears
North 88 degrees 36' 00" East, 50.02 feet, an arc length of 129.35 feet to
a point on the west line of Lot 8, said Camplan Addition, 70.03 feet
southerly from the northwest corner thereof; thence North 1 degrees 21' 40"
West along the west line of said Lot 8, 0.03 feet; thence North 88 degrees
34' 30" East, parallel with the north line thereof, 100.00 feet; thence
South 1 degrees 21' 40" East, 5.00 feet; thence North 88 degrees 34' 30"
East, 20.00 feet; thence South 46 degrees 25' 30" East, 35.36 feet; thence
North 88 degrees 34' 30" East, 147.28 feet; thence South 36 degrees 10' 10"
East, 225.24 feet to the said northerly right of way line of S. E. Oak
Grove Boulevard; thence South 47 degrees 35' 40" West along said northerly
line 595.02 feet to an angle point in said line; thence South 88 degrees
26' 40" West, 181.35 feet to the point of beginning.
The above described parcel of land contains 7.6734 acres more or less.
PETTIJOHN ENGINEERING COMPANY, INC.
Job No. 74-121
OAK GROVE PROPERTY PAGE 1
<PAGE>
Property Description FRED MEYER, INC. September 17, 1974
Parcel B
A parcel of land in Sections 1 and 12, Township 2 South, Range 1 East,
Willamette Meridian, Clackamas County, Oregon, more particularly described
as follows:
Beginning at the northwest corner of Lot 8, Camplan Addition, a duly
recorded plat in Clackamas County, said point also being on the East right
of way line of Camplan Court; thence North 88 degrees 34' 30" East along
the north line of said Lot 8 and its easterly extension thereof, 377.99
feet; thence North 1 degrees 13' 38" W, 200.00 feet to a point on the south
right of way line of Maple Street; thence North 88 degrees 34' 30" East
along said line, 114.89 feet to the intersection of said line with the
westerly right of way line of Oatfield Road; thence South 25 degrees 19'
30" East along said westerly line, 198.43 feet to an angle point in said
line; thence South 36 degrees 10' 10" East, 129.43 feet to the intersection
of said line with the northerly right of way line of Oak Grove Boulevard;
thence South 47 degrees 35' 40" West along said northerly line, 300.89
feet; thence leaving said line and running North 36 degrees 10' 10" West,
225.24 feet; thence South 88 degrees 34' 30" West, 147.28 feet; thence
North 46 degrees 25' 30" West, 35.36 feet; thence South 88 degrees 34' 30"
West, 20.00 feet; thence North 1 degrees 21' 40" West, 5.00 feet to a point
70.00 feet south of, when measured at right angles, the said north line of
Lot 8, Camplan Addition; thence South 88 degrees 34' 30" West, parallel
with said line, 100.00 feet to a point on the east right of way line of
said Camplan Court; thence North 1 degrees 21' 40" West, 70.00 feet to the
point of beginning.
The above described parcel of land contains 2.7953 acres more or less.
PETTIJOHN ENGINEERING COMPANY, INC.
Job No. 74-121
OAK GROVE PROPERTY PAGE 2
<PAGE>
PARCEL C
A parcel of land in Section 12, Township 2 South, Range 1 East,
Willamette Meridian, Clackamas County, Oregon, more particularly described
as follows:
The Westerly 90 feet of the following described parcel: The South 55
feet of Lot 4 and the North 25 feet of Lot 5, Camplan Addition, according
to the duly recorded plat thereof, in Clackamas County, Oregon; and
Parts of Tracts "M" and "J" of Kuehl's Acres, described as: Beginning
on the east line of the East Portland-Oregon City Highway, known as the
Super Highway, 164 feet Northerly from the south line of Tract "K", Kuehl's
Acres; thence Northerly along the East line of said Super Highway 100 feet;
thence East parallel with Maple Avenue 184.80 feet, more or less, to the
east boundary of Tract "J", Kuehl's Acres; thence South along the east
boundary of said Tract "J", 100 feet, more or less, to a point East of the
point of beginning; thence West parallel with Maple Avenue 164.20 feet,
more or less, to the point of beginning. Situate in Clackamas County,
Oregon.
OAK GROVE PROPERTY PAGE 3
<PAGE>
EXHIBIT A-6
STADIUM
(Parking Lot)
1. Part of Block 30 in King's Second Addition to the City of Portland, in
the City of Portland, County of Multnomah and State of Oregon:
Commencing at a point where the West line of N. W. 20th Place,
formerly Ella Street, would intersect the North line of N. W. Davis
Street, formerly "D" Street if extended; running thence Northerly on
the West line of N. W. 20th Place, 55 feet; thence Westerly and
parallel to the North line of N. E. Davis Street, formerly "D" Street,
if extended 100 feet; thence Southerly parallel to N. W. 20th Place,
55 feet to the North line of N. W. Davis Street, if extended; thence
East 100 feet to the place of beginning.
Beginning on the West boundary line of N. W. 20th Place at a point 50
feet Southerly from the intersection of the South line of N. W.
Everett Street with the West line of said N. W. 20th Place; running
thence Southerly along the West line of N. W. 20th Place, 50 feet;
thence running Westerly parallel with the South boundary line of N. W.
Everett Street, 100 feet; thence running Northerly parallel with the
West line of N. W. 20th Place, 50 feet; thence running Easterly
parallel with the South line of N. W. Everett Street, 100 feet to the
point of beginning; also described as South 50 feet of the North 100
feet of the East 100 feet of Block 30, King's Second Addition to the
City of Portland.
Part of Block Thirty (30) King's Second Addition, described as
follows: Commencing at a point where the West line of N. W. 20th
Place, formerly Ella Street, would intersect the North line of N. W.
Davis Street, formerly "D" Street, if extended; and running thence
Northerly on the West line of N.W. 20th Place, 55 feet to the true
place of beginning of the tract herein to be described; thence
Westerly and parallel to the North line of N. W. Davis Street,
formerly "D" Street, if extended, 100 feet; thence Northerly and
parallel with the West line of N. W. 20th Place, 45 feet; thence
Easterly and parallel to the North line of N. W. Davis Street,
formerly "D" Street, if extended, 100 feet to the West line of N. W.
20th Place; thence Southerly along the West line of N. W. 20th Place,
45 feet to the true place of beginning.
STADIUM PROPERTY PAGE 1
<PAGE>
(Store)
2. A part of Block 29, King's 2nd Addition to the City of Portland, in
the City of Portland, County of Multnomah, and State of Oregon, more
particularly described as follows:
Beginning at a point in the West line of Northwest 20th Avenue, which
is 60 feet South of the South lineof Northwest Everett Street; thence
West along a line parallel with the South line of Northwest Everett
Street, 112.5 feet; thence South along a line parallel with the West
line of Northwest 20th Avenue, 40 feet to a point; thence West along a
line parallel with the South line of Northwest Everett Street, 87.5
feet to a point in the East line of Northwest 20th Place, which is 100
feet South of the South line of Northwest Everett Street; thence South
along the East line of Northwest 20th Place, 472.64 feet to a point in
the North lineof West Burnside Street; thence Easterly along the
Northerly line of West Burnside Street, 200.92 feet to an intersection
with the East line of Northwest 20th Avenue; thence North along the
West line of Northwest 20th Avenue 532.22 feet to the point of
beginning.
STADIUM PROPERTY PAGE 2
<PAGE>
EXHIBIT A-7
A tract of land in Section 36, Township 1 South, Range 1 West,
Willamette Meridian, Washington County, Oregon, more particularly described
as follows:
Beginning at the intersection of the south line of the Thomas Stott
D.L.C. No. 53 with the west line of S.W. 71st Avenue as established by
County Road survey No. 2042; thence southerly along said road on a 316.18
foot radius curve to the left, which chord bears South 16 degrees 47' 32"
East, 129.06 feet, an arc length of 129.97 feet; thence continuing along
said road South 28 degrees 32' 12" East, 23.25 feet to the top edge of a
rock bank; thence leaving said road and running southwesterly along said
rock bank the following courses: South 33 degrees 28' 10" West, 51.81 feet;
South 35 degrees 54' 20" West, 44.87 feet; South 40 degrees 09' 50" West,
40.34 feet, South 34 degrees 33' 00" West, 16.51 feet; thence leaving said
rock bank and running South 36 degrees 12' 40" East, 64.59 feet to the
northwesterly line of S. W. Pacific Highway West; thence southwesterly
along said highway the following courses: South 53 degrees 47' 20" West,
567.15 feet, South 36 degrees 12' 40" East, 10.00 feet; South 53 degrees
47' 20" West, 222.13 feet; thence leaving said highway and running North 36
degrees 12' 40" West, 98.29 feet; thence North 89 degrees 48' 00" West,
78.47 feet; thence North 0 degrees 12' 00" East, 265.24 feet; thence South
89 degrees 10' 00" East, 20.60 feet; thence North 0 degrees 12' 00" East,
452.00 feet to the said south line of Thomas Stott D.L.C. No. 53, thence
South 89 degrees 00' 00" East along said D.L.C. line 328.10 feet; thence
leaving said D.L.C. line and running North 0 degrees 15' 00" West, 131.94
feet to the south line of S. W. Spruce Street; thence North 89 degrees 52'
00" East along said street 419.95 feet to the intersection of said street
with the said west line of S. W. 71st Avenue; thence South 0 degrees 18'
54" West, 99.89 feet; thence on a 316.18 foot radius curve to the left,
which chord bears South 2 degrees 21' 02" East, 29.41 feet, an arm length
of 29.62 feet to the point of beginning.
The above described tract of land contains 11.40 acres more or less.
TIGARD PROPERTY PAGE 1
<PAGE>
The following is the description of a portion of Lot B Metzger Acre tracts.
Beginning at a 3/4-inch iron pipe marking the northeasterly corner of Lot B
Metzger Acre tracts, Township 1 South, Range 1 West of the Willamette
Meridian, Washington County, Oregon, as recorded in Volume 2, Page 41 in
the Plat Books of said county, said northeasterly corner is recorded as
bearing North 45 degrees 10' East 875.3 feet and North 00 degrees 11' West
1784.5 feet and South 89 degrees 03' East 3688.5 feet and North 00 degrees
05' West 138.5 feet and North 89 degrees 48' West 447.2 feet from the most
southerly southwest corner of the Thomas Scott Donation.
Land Claim No. 53, Township 1 South, Range 1 West of the Willamette
Meridian, Washington County, Oregon, and running thence;
North 89 degrees 48' West 200.00 feet along the southerly right-of-way line
of Spruce Street to an iron rod;
thence southerly 127.75 feet paralle to the easterly boundary line of said
Lot B to a 5/8-inch iron rod with an aluminum cap on the southerly boundary
line of Metzger Acre tracts;
thence South 89 degrees 03' East 200.11 feet along said southerly boundary
line to the southeasterly corner of said Lot B;
thence northerly along said easterly boundary line of Lot B 131.07 feet to
the point of beginning and containing 0.6 acres of land, more or less.
TIGARD PROPERTY PAGE 2
<PAGE>
All of Block "B" METZGER ACRE TRACTS, EXCEPT the East 200 feet thereof, in
the County of Washington and State of Oregon. Known as Tax Lot 3700.
TIGARD PROPERTY PAGE 3
<PAGE>
EXHIBIT B
Environmental Reports
NONE.
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
<PAGE>
EXHIBIT C - LEASE ASSIGNMENT FORM
- ---------------------------------
RECORDING REQUESTED
BY AND WHEN RECORDED
RETURN TO:
- --------------------
P.O. Box 42121
Portland, Oregon 97242
Attn: RTC MO/CLD
- --------------------------------------------------------------------------------
LEASE ASSIGNMENT AGREEMENT
This Lease Assignment Agreement (this "Agreement"), dated as of
__________, between REAL ESTATE PROPERTIES LIMITED PARTNERSHIP, an Oregon
limited partnership whose address is Suite 300, 15350 SW Sequoia Parkway,
Portland, OR 97224 ("Assignor"), and _________________, a Delaware
corporation, whose address is ____________________ ("Assignee"), recites
and provides as follows:
FOR good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Assignor hereby sells, assigns, transfers,
conveys and delivers to Assignee all of Assignor's right, title and
interest in and to each of the lease agreements referenced on Exhibit A
hereto (the "Lease Agreements"). The rights conveyed hereby are referred to
herein as the "Leasehold Interests".
Assignee hereby accepts the foregoing assignment. Assignee agrees to
assume Assignor's obligations under the Lease Agreements, provided,
however, that Assignee does not assume, and Assignor shall remain fully
responsible for, and agrees to discharge, any obligations or liabilities
under such Lease Agreements that either (i) are not disclosed on the face
of the copies of such Lease Agreements provided by Assignor to Assignee, or
(ii) accrued or arose from or out of a set of facts existing prior to the
date hereof ("Assignor's Liabilities"). Assignee will indemnify, defend and
hold harmless Assignor from and against liabilities, costs, expenses and
damages, including attorneys' fees, arising from Assignee's failure to
perform its obligations hereunder, except for liabilities that arise from
Assignor's failure to perform its obligations hereunder or to discharge
Assignor's Liabilities. Assignee assumes no liabilities or obligations of
Assignor of any nature whatsoever, whether or not accrued or affixed,
absolute or contingent, known or unknown, determined or determinable, or
incurred prior to, on or after the Closing Date.
Assignor represents, warrants and covenants to and with Assignee that:
(1) Assignor has good and indefeasible title to the Leasehold Interests,
subject to no encumbrances created or suffered by Assignor other than the
matters identified on Exhibit B hereto; (2) Assignor has the full right,
power and authority to assign the Leasehold Interests to Assignee in
accordance herewith; and (3) Assignor will defend Assignee's right, title
and interest in and to the Leasehold Interests from and against any claim
by, through or under Assignor.
This Agreement shall bind and inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors, heirs,
and permitted assigns. This Agreement may be executed in any number of
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
<PAGE>
counterparts, all of which taken together shall constitute one agreement
binding on all the parties. Each party agrees, at the request of the other
party, at any time and from time to time after the date hereof, to execute
and deliver all such further documents, and to take and forbear from all
such action, as may be reasonably necessary or appropriate in order more
effectively to perfect the transfers of rights contemplated herein or
otherwise to confirm or carry out the provisions of this Agreement.
EXECUTED effective the date first written above.
[signature and acknowledgment forms]
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
2
<PAGE>
EXHIBIT D - LEASES TO BE MODIFIED
---------------------------------
The lease agreements between Assignor as lessor and Assignee (or Assignee's
subsidiary) as lessee, covering the Fred Meyer retail stores referenced
below, will, provided the transaction closes, be modified as contemplated
by Section 6. "FMV" means fair market value, determined in accordance with
the form of lease modification agreement attached as Exhibit E to this
Agreement except as specifically stated below.
<TABLE>
<CAPTION>
- --------------------------------- --------------------------------------------------------------
Fred Meyer Retail Location Modification
- --------------------------------- --------------------------------------------------------------
<S> <C>
Anchorage (Northern Lights Blvd) Add one ten-year option term at the greater of (1) FMV, or
(2) the rent owing under Assignor's underlying lease of the
property from the fee owner (including any percentage rent
and/or stipulated step increases). The procedure for
determining FMV of the entire property will be the same as
the procedure for determining fair market value for the ground
under the underlying lease.
- --------------------------------- --------------------------------------------------------------
Burien, Washington Add six 5-year option terms at FMV
- --------------------------------- --------------------------------------------------------------
Clackamas, Oregon Add one 5-year option terms at FMV
- --------------------------------- --------------------------------------------------------------
Cornelius, Oregon Add three 10-year option terms at the greater of (1) FMV, or
(2) the rent owing under Assignor's underlying lease of the
property from the fee owner (including any percentage rent
and/or stipulated step increases). The procedure for
determining FMV of the entire property will be the same as
the procedure for determining fair market value for the ground
under the underlying lease.
- --------------------------------- --------------------------------------------------------------
Fairbanks, Alaska Add three 5-year option terms at the greater of (1) FMV or
(2) the rent owing under Assignor's underlying lease of the
property from the fee owner.
- --------------------------------- --------------------------------------------------------------
Midway, Washington Add seven 5-year option terms at FMV, in replacement of all
existing renewal options.
- --------------------------------- --------------------------------------------------------------
Peninsula, Portland, Oregon Add six 5-year option terms at FMV
- --------------------------------- --------------------------------------------------------------
</TABLE>
April 5, 1996
SITE PURCHASE AGREEMENT - FM Form A-3 Rev. 3/94
1
<PAGE>
EXHIBIT E - FORM OF LEASE AMENDMENT
- -----------------------------------
RECORDING REQUESTED
BY AND WHEN RECORDED
RETURN TO:
- --------------------
P.O. Box 42121
Portland, Oregon 97242
Attn: RTC MO/CLD
- --------------------------------------------------------------------------------
LEASE AMENDMENT NO. _____
(__________,__________)
THIS LEASE AMENDMENT NO. ___ (the "Amendment") is made as of this
_____ day of ______________, 199___, by and between REAL ESTATE PROPERTIES
LIMITED PARTNERSHIP, successor to FRED MEYER REAL ESTATE PROPERTIES, LTD.,
whose address is Suite 300, 15350 SW Sequoia Parkway, Portland, OR 97224
("Landlord"), and _________________, a ___________ corporation, whose
address is P.O. Box 42121, Portland, Oregon 97242-0121 (Street address 3800
SE 22nd Avenue, Portland, Oregon 97202) ("Tenant").
R E C I T A L S
A. By a certain Lease dated __________, as amended by ________________
(as so amended, the "Lease"), Landlord leased to Tenant certain land,
described on Exhibit A, and the related improvements described in the Lease
(the "Premises"). Capitalized terms not otherwise defined herein have the
meanings set forth in the Lease.
B. The Lease currently provides for a Primary Term that ends on
__________________. [In addition, the Lease currently provides for _____
Renewal Terms of ______ years each.]
C. The parties desire to modify certain terms of the Lease, as set
forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. [In addition to the Renewal Terms currently provided for in the
Lease,] Landlord agrees that Tenant shall have the right to [an additional]
____ Renewal Terms of ____ years each, which shall be exercised in the
manner and subject to the conditions set forth in Section 3.2 of the Lease;
provided, however, that the "Fixed Rent" during the additional Renewal
Terms provided in this Amendment shall be [the Fair Market Rental Value]
for the Premises, determined in the manner provided in Section 2 of this
Amendment. [Terms of each Amendment to reflect terms stated in Exhibit D]
April 5, 1996
LEASE TERMINATION AGREEMENT - FORM NO. Q-3 Rev. 8/93
<PAGE>
2. Fair Market Rental Value of the Premises will be determined in the
following manner:
2.1 Tenant will provide Tenant's opinion of the Fair Market Rental
Value of the Premises at or prior to the time of exercise of the applicable
option for a Renewal Term. The Fair Market Rental Value shall be based on
the retail use of the Premises subject to the terms of the Lease.
2.2 If Landlord does not accept Tenant's opinion of the
Fair Market Rental Value of the Premises, Landlord shall state its opinion
of the Fair Market Rental Value in a notice delivered to Tenant within 30
days of receipt of Tenant's notice. The parties shall then seek an
agreement on the Fair Market Rental Value.
2.3 If Landlord and Tenant are unable to agree on the Fair Market
Rental Value within forty-five (45) days after Tenant's receipt of
Landlord's notice, Landlord and Tenant shall each appoint an appraiser who
shall be a member of the American Institute of Real Estate Appraisers with
at least five (5) years' experience in appraising commercial real property
in the applicable market area (an "M.A.I. appraiser") and notify the other
party in writing of the name and address of said appraiser. If a party
fails or refuses to appoint an appraiser and provide written notice thereof
to the other party within fifteen (15) days after receipt of the name and
address of the other party's appraiser, the single appraiser appointed
shall constitute the sole appraiser for the purpose of determining the
applicable Fair Market Rental Value. If both parties appoint an appraiser
in accordance with the foregoing procedure, the two (2) appraisers shall
immediately proceed to determine and agree upon the Fair Market Rental
Value. If the two appraisers cannot agree and if the higher of the two
appraisals is no more than 110% of the lower appraisal, the Fair Market
Rental Value shall be the average of the two appraisals. If the higher of
the two appraisals is more than 110% of the lower appraisal, the two
appraisers shall together promptly appoint a third M.A.I. appraiser. If the
two appraisers are unable to agree upon a third appraiser, either party
shall have the right, upon ten (10) days prior written notice to the other
party, to apply to the American Institute of Real Estate Appraisers or to
the presiding judge of the court of general jurisdiction in the county in
which the Premises are located, or other appropriate tribunal, for
appointment of the third appraiser. That appraiser shall immediately
proceed to determine the applicable Fair Market Rental Value and a value
agreed upon by a majority of the three appraisers shall be the Fair Market
Rental Value. If a majority of the three appraisers are unable to agree
upon the Fair Market Rental Value, the value obtained by averaging the
three appraisals shall constitute the Fair Market Rental Value. Each party
will pay its respective appraiser's fee plus one-half (1/2) of the third
appraiser's fee (if any) plus all reasonable costs and attorney's fees
incurred by it in any judicial proceeding or any proceeding before the
American Institute of Real Estate Appraisers which is not attributable to
the default of the other party. The appraisal process described in this
clause 2.3 shall be completed within one hundred twenty (120) days after
Tenant's receipt of Landlord's notice.
3. Continuing Agreement. This Amendment amends and supplements the
Lease and the terms of this Amendment are hereby incorporated into the
Lease. Except as expressly amended or supplemented by this Amendment, the
Lease is and shall remain in full force and effect according to its terms.
April 5, 1996
LEASE TERMINATION AGREEMENT - FORM NO. Q-3 Rev. 8/93
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first hereinabove set forth.
LANDLORD: _____________________________________________
By: ____________________________________
Title: _________________________________
TENANT: _____________________________________________
By: ____________________________________
Title: _________________________________
[ACKNOWLEDGMENTS]
[ATTACH EXHIBIT A - LEGAL DESCRIPTION]
April 5, 1996
LEASE TERMINATION AGREEMENT - FORM NO. Q-3 Rev. 8/93
-3-
<PAGE>
EXHIBIT F
- --------------------------------------------------------------------------------
-----------------------------
SUBLEASE AGREEMENT
-----------------------------
LANDLORD: FRED MEYER, INC.
TENANT: FABRIC DEPOT, INC.
Covering property at
700 SE 122nd Avenue
in Multnomah County, Oregon
- --------------------------------------------------------------------------------
SUMMARY OF LEASE TERMS
1. Leased Property. Land and building located at 700 SE 122nd Avenue,
Portland, Oregon.
2. Lease Term. Commencing with the "Commencement Date" specified in
the Lease and ending on November 30, 1994, unless renewed or sooner
terminated in accordance with its terms.
3. Base Rent. The initial base rent is $18,150 per month, payable on
the first day of each month, subject to adjustment.
4. Services, Utilities. Tenant will pay for all services and utilities
serving the Property.
5. Real Property Taxes. Tenant will pay all property taxes and
assessments on the Property attributable to the Lease term.
6. Net Sublease. The sublease of the Property to Tenant shall be an
"net" lease, except as otherwise specifically set forth in this Lease.
Commencement Date: December 31, 1991
Termination Date: November 30, 1994 (unless renewed)
- --------------------------------------------------------------------------------
<PAGE>
INDEX
for
SUBLEASE AGREEMENT
SECTION 1. Term; Possession Page
1.1 Term 1
1.2 Tenant's Work 1
1.3 Landlord's Work 1
1.4 Acceptance of Property 2
1.5 Underlying Lease Rent Payments 2
1.6 Renewal Options 2
1.7 Compliance with Underlying Leases 2
1.8 Leases; Key Shop Lease 3
SECTION 2. Rental
2.1 Rental 3
2.2 Renewal Period Base Rental 3
2.3 Definition of Gross Sales 3
2.4 Calculation, Time and Place of Payment 4
2.5 Records 4
2.6 Reporting 4
2.7 Landlord's Right to Audit 4
2.8 Interest and Late Charges 4
2.9 Additional Rent, No Offsets 5
2.10 Partial or Delinquent Payments 5
2.11 Net Lease 5
SECTION 3. Use of Property
3.1 Permitted Use 5
3.2 Compliance with Laws 5
3.3 Hazardous Substances 5
3.4 No Offensive Activities 6
3.5 Sign 6
3.6 Supervision 6
3.7 Covenant of Continuous Operation
and Full Merchandising 6
3.8 Name of Business 7
3.9 Storage, Trash 7
3.10 Competitive Business 7
SECTION 4. Maintenance and Alterations
4.1 Landlord's Obligations 7
4.2 Work by Landlord 7
4.3 Tenant's Obligations 7
4.4 Alterations 8
SECTION 5. Taxes; Utilities
5.1 Personal Property Taxes 8
5.2 Taxes and Assessments 8
5.3 Substitute Impositions 8
5.4 Payment in Installments 8
5.5 Tenant's Election to Contest 9
5.6 Utilities 9
i
<PAGE>
SECTION 6. Liens, Indemnification and Liability
6.1 Liens 9
6.2 Indemnification by Tenant 9
6.3 Landlord's Liability 9
6.4 Disclaimer of Landlord's
Responsibilities 9
SECTION 7. Insurance and Damage
7.1 Liability Insurance 10
7.2 Casualty Insurance 10
7.3 Waiver of Subrogation 10
7.4 Restoration of Damage 10
SECTION 8. Condemnation 11
SECTION 9. Transfers by Tenant
9.1 Prohibition of Transfer 11
9.2 Obligations After Transfer 12
SECTION 10. Default
10.1 Payment Default 12
10.2 Unauthorized Transfer 12
10.3 Abandonment of Property 12
10.4 Default in Other Covenants 12
10.5 Insolvency Defaults 12
SECTION 11. Remedies on Default
11.1 Retake Possession 12
11.2 Damages for Default 13
11.3 Cure of Tenant's Default 13
11.4 Percentage Rent 13
SECTION 12. Surrender at Expiration
12.1 Condition of Property 13
12.2 Fixtures 13
12.3 Holdover 14
SECTION 13. Warranty of Quiet Enjoyment 14
SECTION 14. General Provisions
14.1 Time of Essence 14
14.2 Modifications 14
14.3 No Appurtenances or Subordination 14
14.4 Relationship of Parties 14
14.5 Authorization of Lease 14
14.6 Brokers 14
14.7 Nonwaiver 15
14.8 Succession 15
14.9 Inspection 15
14.10 Underlying Leases 15
14.11 Attornment 15
14.12 Estoppel Certificates 15
14.13 Notices 15
14.14 Attorneys' Fees 15
14.15 Applicable Law 15
14.16 Prior Agreements 15
14.17 Validity of Provisions 16
14.18 Joint and Several Liability 16
14.19 Nonoccupancy and Concession Recapture 16
14.20 No Recording 16
14.21 Consent or Approval 16
ii
<PAGE>
SIGNATURES
ATTACHED EXHIBITS
-----------------
EXHIBIT A - Legal Description and Known Exceptions
EXHIBIT B - Construction of Building and Improvements
GUARANTY OF LEASE
iii
<PAGE>
SUBLEASE AGREEMENT
(Stark, Portland, Oregon)
DATED: December 30, 1991
BETWEEN: FRED MEYER, INC.
Riverside Center, Suite 500
5100 SW Macadam Avenue
Portland, Oregon 97201-3831 LANDLORD
AND: FABRIC DEPOT, INC.,
an Oregon corporation
whose address is: _________
____________________________
____________________________ TENANT
Tenant wishes to lease from Landlord the following property (the
"Property") located in the State of Oregon, described as follows:
Certain land and building ("Building") located at 700 SE
122nd Avenue, Portland, as described on the attached
Exhibit A.
NOW, THEREFORE, Landlord hereby leases the Property to Tenant on
the following terms:
1. Term; Possession.
1.1 Term. The lease term shall commence on the Commencement
Date described below and continue until November 30, 1994, unless renewed
or sooner terminated. The "Commencement Date" will be the date of mutual
execution of this Lease, which is December 30, 1991. Possession of the
Property will be delivered to Tenant on the Commencement Date.
1.2 Tenant's Work. Tenant will be developing and using the
Property for the operation of a retail fabric store. Tenant will promptly
perform the work required to ready the Property for Tenant's possession and
use, in accordance with the terms attached as Exhibit B.
1.3 Landlord's Work. Landlord will pay or reimburse Tenant for
up to $35,000 for costs incurred by Tenant to do the following work at the
start of the lease term:
(i) the former gas station building on a portion of the
Property will be demolished and the debris removed;
(ii) the exterior of the Building will be painted;
(iii) the outside lighting, including lighting in the
parking lot, and the heating, ventilation and air
conditioning ("HVAC") system will be put in good
working order; and/or
(iv) any other costs necessary to renovate the Building
to meet Tenants' needs (including, but not limited
to, interior painting, interior lights, sheetrock
replacement or repairs, emergency lighting,
replacement of sprinkler heads, and repair of
plumbing and renovation of restrooms) that can
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reasonably be categorized as improvements to the
structure.
Prior to commencement of such work, Tenant will provide to
landlord a specific description of the work to be performed and the
estimated or quoted costs to perform such work. The cost of all of the
foregoing work (and any additional work or tenant improvements which
Landlord may subsequently agree to perform) to be paid by Landlord will not
in any event exceed $35,000. Landlord will make disbursements as the work
is performed by Tenant, in the manner in which proceeds of a construction
loan are customarily disbursed. Tenant will provide to Landlord copies of
invoices and lien waivers covering the work performed for which payment is
requested.
1.4 Acceptance of Property. Tenant accepts the land and
Property in its present condition, AS IS. Acceptance of the land and
Property will not be deemed a waiver of any right of action Tenant may have
against third parties (if any) because of any condition of the Property or
waive Tenant's right to require that the work referenced in paragraph 1.3
is performed. Landlord shall not be required to perform any work to ready
the Property for Tenant's occupancy, except as otherwise specifically set
forth in this Lease.
1.5 Underlying Lease Rent Payments. Notwithstanding any other
provision contained in this Lease, Landlord represents and warrants to
Tenant that Landlord will pay the base rent due to Real Estate Properties
Limited Partnership ("REPLP") under the underlying lease between REPLP and
Landlord (the "REPLP Lease") and will take all reasonable steps to cause
REPLP to pay the base rent to be paid to the fee owner which comes due
under the underlying lease (the "Fee Owner Lease") between REPLP and the
fee owner of the Property ("Fee Owner"), and will perform or cause to be
performed any other obligations under the REPLP Lease and Fee Owner Lease
other than those to be performed by Tenant hereunder, provided that Tenant
is not in default under this Lease. The REPLP Lease and the Fee Owner Lease
are collectively the "Underlying Leases."
1.6 Renewal Options. Tenant will have options to renew this
Lease for two additional renewal terms, as provided below, so long as this
Lease is not in default at the time the option is exercised and at the time
the renewal term is to commence. The renewal terms will be as follows: a
first renewal option period starting January 1, 1995 and ending November
30, 2001 and a second renewal option period starting December 1, 2001 and
ending July 15, 2006. Each renewal option will commence on the day
following expiration of the preceding term. The other terms and conditions
of this Lease will remain the same during the renewal terms, except that
the minimum base rent shall be as provided in paragraph 2.2 below and
Tenant will have no further option to renew this Lease. Exercise of a
renewal option shall be by notice given at least 120 days prior to
expiration of the preceding term.
1.7 Compliance with Underlying Leases; Key Shop Lease. Tenant
has received and approved the terms of the Underlying Leases and agrees to
comply with all terms, requirements, restrictions and other provisions of
the Underlying Leases. No provision of this Lease will be deemed to modify
any provision of the Underlying Leases.
Landlord will have no duty or obligation to extend, or cause
to be extended, the Underlying Leases. If Tenant negotiates a continuation
by Tenant of a lease of the Property after July 15, 2006, the Underlying
Leases will be terminated as of July 15, 2006 and REPLP and Landlord will
be released
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from any further liability from and after that date. If Tenant does not
agree to lease the Property directly from Fee Owner after July 15, 2006,
then this Lease will terminate on July 15, 2006, and the remaining renewal
option(s) in the Underlying Leases will remain unaffected and unimpaired
for the benefit of REPLP and Landlord. Landlord will reasonably cooperate
(at no out-of-pocket cost to Landlord) in assigning interests in the
Underlying Lease(s) to Tenant if Fee Owner and REPLP consent to such
assignment, so long as Landlord is fully released from all liability
thereunder.
Tenant has also received and approved the terms of the key
shop lease ("Key Shop Lease") covering a portion of the Property and,
during the term of this Lease, Tenant will be entitled to collect all
revenue under such Key Shop Lease and will perform all obligations of the
lessor/landlord thereunder.
2. Rental.
2.1 Rental. During the original lease term, Tenant will pay to
Landlord on a monthly basis a base rent initially in the amount of $18,150
per month. Provided that this Lease is executed and delivered by Tenant to
Landlord by December 18, 1991, Landlord will grant an initial "free rent"
period of 30 days from and after the date on which possession is delivered
to Tenant during which no base rent or percentage rent will be owed.
In addition to the base rent, Tenant will pay to Landlord on
an annual basis a percentage rent equal to 5% of Gross Sales (as defined
below) for the prior calendar year (or partial year), to the extent such
percentage rent amount exceeds the base rent paid during the same period.
2.2 Renewal Period Base Rental. During the renewal terms (if
options are exercised in accordance with the terms of this Lease), the base
rental amount will be as follows:
January 1, 1995-November 30, 1997 $21,175 per month
($254,100 per annum)
December 1, 1997-November 30, 2001 $24,200 per month
($290,400 per annum)
December 1, 2001-July 15, 2006 $27,225 per month
($326,700 per annum)
2.3 Definition of Gross Sales. As used in this Lease, "Gross
Sales" will mean all sales of merchandise and services, whether for cash or
credit, including all gift and merchandise certificates, all credit charges
and carrying charges, and all other receipts of business conducted in or
from the Property. Gross Sales will include (without limitation) all sales
to employees, all mail or telephone orders received or filled at or from
the Property, all deposits not refunded to the customer, and all orders
taken in and from the Property (whether or not such orders are filled
elsewhere). However, Gross Sales shall not include any rebates or refunds
to customers or the amount of any sales tax.
Gross Sales by subtenants are included in Gross Sales from
business conducted on the Property. Gross Sales will not include revenues
received by licensees of Tenant for the conducting of classes within the
Property or received by persons (such as scissor sharpeners) who provide
services in connection with special promotions or on only certain days
and/or times of the week, but shall include the license fees or other
revenue received by Tenant (if any) from such licensees
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and persons. Sales by the operator under the Key Shop Lease will not be
included, but the lease revenue payable to Tenant thereunder will be
included.
Receipts of business with respect to any warehouse
distribution operation of Tenant's own business will be excluded from Gross
Sales so long as at least 40,000 sq. ft. of area in the Building on the
Property is actively being used by Tenant for Tenant's retailing
activities.
2.4 Calculation, Time and Place of Payment. The minimum base
rent will be paid in advance on the first day of each month at the address
for Landlord set forth in this Lease. Base rent is uniformly apportionable
day to day. Base rent for the partial month (if any) in which the Lease
commences shall be prorated and paid at commencement of the lease term.
Percentage rent will be calculated as of the last day of each calendar year
(except that the final calculation will be made as of the last day of the
lease term) and paid by Tenant within 60 days thereafter, less a credit for
the minimum base rent for the period previously paid by Tenant. Whether or
not any percentage rent is owed, Tenant shall submit to Landlord a written
statement of Gross Sales for each calendar year (or partial calendar year)
during the lease term, within 60 days after the end of such calendar year
(or partial calendar year), which statement will constitute a certificate
by Tenant as to Gross Sales for the period in question. Failure to submit
the statement by such date will constitute a payment default under this
Lease.
2.5 Records. Tenant shall maintain accurate records showing
Gross Sales from the Property on a monthly basis, in accordance with
industry standards for comparable businesses. Such records, consisting of
cash register tapes, ledgers, bank deposit slips, and any other similar
accounts, shall be preserved for a period of 3 years after the end of the
year in question and shall be available for inspection by Landlord
following reasonable advance notice.
2.6 Reporting. Tenant shall submit to Landlord an annual
statement of Gross Sales for each calendar year and partial calendar year
during the lease term within 60 days after the end of the year. The
statement will be certified by Tenant and will show Gross Sales during the
prior calendar year or partial calendar year, recapitulated on a monthly
basis. Landlord agrees to hold in confidence all information obtained from
the records of Tenant, except that Landlord may furnish copies to any party
providing financing to Landlord.
2.7 Landlord's Right to Audit. Landlord may cause Tenant's
records of Gross Sales and percentage rent computation to be examined at
any time by an accountant selected by Landlord. If such examination
discloses that the percentage rent was understated, Tenant shall
immediately pay the percentage rent to Landlord together with interest on
the shortage of percentage rent from the dates such rent should have been
paid by Tenant. If the percentage rent was understated by more than five
percent (5%), Tenant shall pay for the cost of the audit, and if the
percentage rent was intentionally understated by more than ten percent
(10%), Landlord will also have the right to terminate this Lease.
2.8 Interest and Late Charges. All rent and other payments not
paid when due shall bear interest from the due date until fully paid at the
same rate as specified in paragraph 11.3 below. In addition, if Tenant
fails to make any rent or other payment required by this Lease to be paid
to Landlord within 10 days after it is due, Landlord may elect to impose a
late charge of 5 cents per dollar of the overdue
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payment, which may be imposed on a one-time only basis with respect to a
specific late payment, to reimburse Landlord for the costs of collecting
the overdue payment. Tenant shall pay the late charge upon demand by
Landlord. Landlord may levy and collect a late charge in addition to all
other remedies available for Tenant's default, and collection of a late
charge shall not waive the breach caused by the late payment.
2.9 Additional Rent, No Offsets. All payments required to be
paid by Tenant under this Lease, other than base and percentage rent, will
constitute additional rent. All rent (including base, percentage and
additional rent) shall be received by Landlord without set-off, offset,
abatement, or deduction of any kind.
2.10 Partial or Delinquent Payments. Payment by Tenant or
receipt by Landlord of any amount less than the full monthly rental or
other changes due from Tenant, or any endorsement or statement on any check
or letter accompanying any check or rent payment, shall not in any event be
deemed an accord and satisfaction. Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of
such rental or pursue any other remedy provided in this Lease. Any payments
required under this Lease which are not paid on or before the date for
payment in this Lease (subject to any permitted grace period or notice
requirement) shall be considered delinquent.
2.11 Net Lease. It is the intent and effect of this Lease that
rental paid by Tenant shall be a net return to Landlord. Tenant shall pay
all costs, expenses and charges of every kind and nature relating to the
Building and Property which may arise or become due or payable during or
after (but attributable to a period falling within) the lease term, except
as otherwise specifically set forth in this Lease.
The provisions of this paragraph will not, however, be
construed to modify the express agreement between the parties with respect
to the matters stated in paragraph 1.5 (concerning payment of rent on the
Underlying Leases), paragraph 4.1 (concerning structural repair) and
paragraphs 7.4 and 8 below (concerning certain circumstances in which this
Lease may be terminated, in which event Tenant's obligations hereunder will
terminate as of the effective date of such termination).
3. Use of Property.
3.1 Permitted Use. Tenant shall use the Property only for such
purpose(s) as are permitted under the Underlying Leases and applicable law.
3.2 Compliance with Laws. In connection with its use, Tenant
shall comply at its expense with all applicable laws, regulations and
requirements of any public authority, including those regarding
maintenance, operation, and use of the Property and appliances on the
Property (including signs).
3.3 Hazardous Substances. Tenant shall comply fully with all
applicble laws and regulations pertaining to the protection of human health
and the environment, including but not limited to employee and community
right-to-know laws and all applicable laws and regulations regarding the
use, generation, storage, transportation, treatment, disposal or other
handling of Hazardous Substances (collectively, "Environmental laws").
Tenant shall promptly advise Landlord in writing of any Hazardous
Substances regulated by such laws that are used, generated, manufactured,
stored, transported or otherwise handled on the Property. Tenant shall
exercise due
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care in handling any Hazardous Substances and shall not cause or permit
hazardous substances to be spilled, leaked, disposed of or otherwise
released on the Property. As to any such actions by third parties or any
condition of the Property, Tenant's responsibility will be only to cause
the Property to be maintained in accordance with applicable Environmental
Laws and the requirements of the Underlying Leases. The term shall include,
but is not limited to, all hazardous substances, hazardous materials and
hazardous wastes listed by the U.S. Environmental Protection Agency and the
state in which the Property is located under the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA), the
Resource Conservation and Recovery Act (RCRA), the Toxic Substances Control
Act (TSCA), and the Federal Water Pollution Control Act (FWPCA), and
comparable State statutes.
Tenant will perform such soils, environmental, underground
tank and hazardous substance investigations and studies as Tenant desires.
Landlord will make available for Tenant's review any such written
investigations and studies in Landlord's possession (but is not thereby
warranting, and shall not be responsible for, the accuracy, completeness,
fitness or usability of any such investigation or study or the conclusions
or recommendations stated therein). As of the date of this Lease, Landlord
represents and warrants to Tenant that, to the best of Landlord's actual
knowledge, based solely on the investigations or studies referenced above,
no hazardous substances have been leaked, spilled, released or disposed of
on the Property during the term of its lease, except as have been made
available to Tenant or as have been remediated in accordance with
applicable environmental law requirements as of the date hereof, and except
that the foregoing excludes the use of landscape fertilizer, cleaning
products and other products in ordinary quantities in the ordinary course
of operating and maintaining a property. The parties intend by the
reference and limitation stated above concerning Landlord's "actual
knowledge," that Landlord will not be liable to Tenant on the
representation and warranty unless Landlord had actual knowledge at the
time this Lease is executed by Landlord that the representation or warranty
was false and Landlord failed to disclose to Tenant the fact known to
Landlord which made the representation or warranty false when made.
3.4 No Nuisance. Tenant shall not conduct or permit any
activities on the Property that create a nuisance.
3.5 Sign. Any sign on the Property will be designed and
constructed in compliance with city and county sign codes. Landlord will
cooperate (at no out-of-pocket expense to Landlord) with Tenant in
connection with its efforts to obtain approval of its sign(s).
3.6 Supervision. Tenant shall keep the Property clean and
orderly and will cause its business to be conducted in accordance with a
first-class, professional operation. Tenant will supervise its employees
and cause Tenant's agents, independent contractors, employees, customers,
suppliers and invitees to conduct their activities in such a manner as to
comply with the requirements of this Lease.
3.7 Covenant of Continuous Operation and Full Merchandising.
Tenant shall continuously use and conduct its merchandising business on the
Property during all normal business hours for retailing operations of a
like kind in the geographic area in which the Property is situated. Tenant
shall carry and offer for sale at all times a complete stock and maintain
adequate personnel for the efficient serving of its customers. Tenant shall
use commercially reasonable efforts to operate the business conducted on
the Property in a
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diligent manner that will produce the maximum volume of Gross Sales.
3.8 Name of Business. The advertised name of the business
operated at the Property shall be "Fabric Depot."
3.9 Storage, Trash. Tenant shall not store anything outside
except in areas approved by Landlord. Tenant will dispose of trash and
other matter at Tenant's expense.
4. Maintenance and Alterations.
4.1 Landlord's Obligations. Landlord will perform all required
structural repair and maintenance of the foundation, structure, exterior
load-bearing walls, roof and roof membrane and structural part of floors of
the Building at Landlord's own expense; provided, however, that if Landlord
is required to make such repairs by reason of Tenant's negligent act or
omission to act, Landlord shall have the right to recover from Tenant the
cost of the repairs, plus interest as provided in paragraph 11.3 below.
Landlord shall be under no obligation to make any repairs, alterations or
improvements on the Property at any time, except as otherwise expressly
required in this Lease.
4.2 Work by Landlord. Landlord shall have the right to erect
scaffolding and apparatus for the purpose of making alterations,
improvements and repairs. Landlord shall have no liability for failure to
perform required maintenance and repair on or about the Property for which
Landlord may be responsible under this Lease, unless notice of the needed
maintenance or repair is given by Tenant, and Landlord fails to remedy the
problem within a reasonable time. Landlord shall have no liability for
interference with Tenant's use by needed repairs and installations, or
modifications required by any governmental body, provided the work is
performed in a manner designed to cause a reasonable minimum of
interference to Tenant.
In the event Tenant believes that Landlord has not performed
its obligations under paragraph 4.1, Tenant will notify Landlord, REPLP and
Fee Owner of the needed maintenance or repair that Landlord has failed to
perform. Subject to the necessity for Tenant to comply with the terms and
requirements of the Underlying Leases, Tenant may perform maintenance or
repair that Landlord fails to perform and that is obligated to perform
under paragraph 4.1, after 30 days' notice to Landlord of Tenant's intent
to pursue this remedy if the obligation is not satisfied within such time
period; provided, however, that 30 days' notice will not be required in
cases of emergency where immediate action is required to protect lives or
property of Tenant, subtenants or others on the Property and Landlord is
not proceeding to take appropriate remedial action (but Tenant in any event
will attempt to notify Landlord, REPLP and Fee Owner, by telephone or in
writing, as to the emergency and what actions Tenant is taking or proposes
to take and Tenant must observe all restrictions and requirements of the
Underlying Leases). The reasonable out-of-pocket costs of performance shall
be repaid to Tenant by Landlord within 10 days after receipt of a written
invoice and appropriate back-up documentation covering the work performed,
the costs incurred and the completion of such work. If not so paid within
such 10-day period, the costs incurred will bear interest from the date of
such invoice until fully paid at the rate set forth in paragraph 11.3
below.
4.3 Tenant's Obligations. Except for the structural repair and
maintenance which is the Landlord's responsibility under paragraph 4.1,
Tenant, at its expense, shall keep the
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Property (including the land, parking areas, sidewalks, landscaping,
Building, improvements, HVAC system, roof, doors, drains, glass and all
personal property, fixtures and equipment) in good repair, operating
condition, working order and appearance, and shall make all exterior and
interior repairs, renewals, and replacements necessary to that end. After
commencement of the lease term, Landlord shall have no obligation to make
any repairs or perform any maintenance on the Property (except only the
work required under paragraph 4.1).
4.4 Alterations. After the Commencement Date, other than the
initial renovation work referenced in paragraph 1.2, Tenant shall not alter
the Property, make any changes, modifications or additional improvements to
the structure or that may affect the Building systems or adversely affect
the value of the Property, without Landlord's prior written consent in each
instance, which consent will not be unreasonably withheld or delayed. All
alterations shall be made in a good and workmanlike manner, in compliance
with applicable laws and building codes, and in accordance with the
requirements of the attached Exhibit B and the Underlying Leases.
Alterations, improvements and fixtures installed by Tenant (other than
trade fixtures and equipment) shall become part of the Property, and will
become the property of Landlord on expiration or termination of this Lease,
except as Landlord may otherwise require pursuant to paragraph 12.2 or as
specifically approved in writing.
5. Taxes; Utilities.
5.1 Personal Property Taxes. Tenant shall pay when due all
personal property taxes assessed against its personal property, equipment
or trade fixtures on the Property. Such taxes may be paid in accordance
with any available installment method provided by law for payment without
interest or penalties.
5.2 Taxes and Assessments. Tenant shall pay, when due, all
taxes, assessments and public charges ("taxes") on the Property and the
improvements thereon attributable to the term of this Lease. Such taxes may
be paid in accordance with any available installment method provided by law
for payment without interest or penalties. Property taxes for the year in
which the Lease commences and terminates will be prorated and adjusted for
any partial year. Any bondable L.I.D. assessments affecting the Property
will be prorated so that Tenant shall only be responsible for those
portions of such assessments which would fall due during the lease term if
the assessments were bonded under provisions commonly known as "Bancroft
Bonding."
5.3 Substitute Impositions. If at any time during the lease
term, a tax, excise or assessment is levied or assessed against the
Building or other improvements, or against Landlord by reason of Landlord's
interest in such property or the rentals payable under this Lease, or with
respect to the development of income by this Lease, which are a substitute
in whole or in part for taxes and assessments specified in paragraph 5.2,
such taxes, excises on rent or assessments shall, to the extent of the
amount, be deemed to be additional "taxes" which are the obligation of
Tenant to pay pursuant to this Lease.
5.4 Payment in Installments. If the taxes or assessments are
payable in installments, only installments allocable to the lease term will
be the responsibility of Tenant under this Lease. If either party's consent
is required to cause the bonding of any assessment or to contest any taxes,
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the party will not unreasonably withhold or delay its consent upon request.
5.5 Tenant's Election to Contest. If the Property is
separately assessed, Tenant may withhold payment of any tax or assessment
on the Property if a good faith dispute exists as to the obligation to pay,
so long as Landlord's property interest is not jeopardized, and subject to
the requirements of the Underlying Leases. If the Property is subjected to
a lien as a result of nonpayment, Tenant shall provide Landlord with
security or assurances reasonably acceptable to Landlord that Tenant will
satisfy the lien before enforcement against the Property.
5.6 Utilities. Tenant will be responsible for any and all
charges for services and utilities incurred in connection with the use,
occupancy and operation of the Property, including (without limitation)
charges for electricity, gas, telephone service, water and sewer.
6. Liens, Indemnification and Liability.
6.1 Liens. Tenant shall pay as due all claims for work done on
or for services rendered or material furnished to the Property, and shall
keep the Property free from any liens other than liens created by Landlord.
If Tenant fails to pay such claim or to discharge any lien, Landlord may do
so and collect such amount as additional rent. Amounts paid by Landlord
shall bear interest and be repaid by Tenant as provided in paragraph 11.3
below. Such payment by Landlord shall not constitute a waiver of any right
or remedy Landlord may have because of Tenant's default.
6.2 Indemnification by Tenant. Tenant shall indemnify and
defend Landlord, REPLP and Fee Owner from any claim, loss, or liability
arising out of or related to any action or inaction of Tenant or its
agents, independent contractors, employees, customers, suppliers or
invitees, any condition of the Property, which is the responsibility of
Tenant under this Lease, or any goods sold by Tenant from the Property
(including product liability and other claims).
6.3 Landlord's Liability. Landlord shall have no liability to
Tenant for acts of other users of adjacent property or acts of any third
party, or for any defect in the Property which is the responsibility of
Tenant under this Lease, or for any interruption or failure in the supply
of utilities or services to the Property.
6.4 Disclaimer of Landlord's Responsibilities. Landlord shall
not under any circumstances be liable to pay for any work, labor or
services rendered or materials furnished to or for the account of Tenant,
and no mechanic's or other lien for such work, labor or services or
material furnished shall, under any circumstances, attach to or affect the
reversionary interest of Landlord in the Building or any alterations,
repairs, or improvements to be erected or made on the Property. Nothing
contained in this Lease shall be deemed or construed in any way as
constituting the request of consent of Landlord, either express or implied,
to any contractor, subcontractor, laborer or materialman for the
performance of any labor or the furnishing of any materials for any
specific improvement, alteration to or repair of the Building or Property
or any part thereof, nor as giving Tenant any right, power or authority to
contract for or permit the rendering of any services or the furnishing of
any materials on behalf of Landlord that would give rise to the filing of
any lien against Landlord's (or REPLP's or Fee Owner's) interest in the
Building and Property.
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7. Insurance and Damage.
7.1 Liability Insurance. Tenant shall continuously maintain at
its expense comprehensive general liability insurance with a combined
single limit of $2,000,000, or such higher limits as Landlord may
reasonably require from time to time or as may be required under the
Underlying Leases. Tenant shall also maintain product liability insurance
and such other insurance on Tenant's operation as Landlord may require
during the lease term. Such insurance shall name Landlord, REPLP and Fee
Owner as additional insureds and shall contain a contractual liability
endorsement referring to this Lease. The policies shall be in a form,
amounts and with companies reasonably acceptable to Landlord and (to the
extent required by the Underlying Leases) REPLP and Fee Owner. Certificates
evidencing such insurance and bearing endorsements requiring 10 days'
written notice to Landlord, REPLP and Fee Owner prior to any change or
cancellation shall be furnished to Landlord prior to Tenant's occupancy of
the Property.
7.2 Casualty Insurance. Tenant shall be responsible for
insuring the Property, and all improvements, personal property, equipment
and fixtures located on the Property, including (without limitation) any
damage to the floor, doors, interior or other portions of the Property
caused by any break-in or burglary. Tenant shall maintain builder's
all-risk course-of-construction insurance during the period of any
construction and thereafter maintain property damage insurance on the
improvements covering all risks of physical loss or damage, on a
replacement cost basis and in an amount sufficient to avoid the application
of any coinsurance clause. Landlord, REPLP and Fee Owner will be named as
additional insureds. The policies shall be in form, amount, and with
companies reasonably acceptable to Landlord and (to the extent required by
the Underlying Leases) REPLP and Fee Owner. Tenant will deliver
certificates of coverage bearing endorsements requiring 10 days' written
notice to Landlord, REPLP and Fee Owner prior to any cancellation or
reduction of coverage.
7.3 Waiver of Subrogation. Neither party shall be liable to
the other for any loss or damage caused by water damage or any of the risks
covered by a standard fire insurance policy with extended coverage
endorsements, and there shall be no subrogated claim by one party's
insurance carrier against the other party arising out of any such loss.
7.4 Restoration of Damage. If fire or other casualty causes
damage to the Property, there shall be no rent abatement or reduction,
except to the extent and in the amount of any abatement of rent Landlord
receives under the Underlying Leases. Tenant shall proceed promptly to
restore the Property to a condition comparable in function and value to
that existing prior to the damage. If fire or other casualty which is
covered by insurance pursuant to paragraph 7.2 during the last year of the
lease term causes damage in an amount exceeding forty percent (40%) of the
full construction-replacement cost of the Property, and provided that the
Fee Owner Lease provides for or permits (or Fee Owner otherwise agrees to
a) termination of such lease on account of such casualty, Tenant may elect
to terminate this Lease by giving written notice of such termination to
Landlord within 90 days following the date of damage. In such event, the
entire insurance award pertaining to the Building and other improvements
shall belong to and be assigned to Landlord (or, if Landlord and REPLP have
terminated the respective Underlying Leases, then to Fee Owner).
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8. Condemnation.
If the entire Property is condemned, or if a portion is taken
which causes the remainder to be unsuited to the use permitted hereunder
and the Fee Owner Lease provides for or permits (or Fee Owner otherwise
agrees to) a termination of such lease on account of such taking, then this
Lease shall terminate as of the date upon which possession of the Property
is taken by the condemning authority. The net condemnation proceeds, after
payment of amounts required to be paid to Fee Owner and Landlord, shall be
divided between Landlord and Tenant in proportion to the value of their
respective interests in the Property immediately prior to the taking. If
only a portion of the Property is taken and this Lease is not terminated,
Tenant shall use the condemnation proceeds to make necessary repairs and
alterations to the Property to permit Tenant to continue its operations
thereon, and the balance shall be paid to Landlord, except for any award
specifically made to Tenant for interruption of business, moving expenses,
or the taking of Tenant's trade fixtures. Rent shall not be abated during
the period of restoration, except to the extent and in the amount of any
abatement of rent Landlord receives under the Underlying Leases. Rent shall
be reduced for the remainder of the lease term to the extent and in the
same amount as reduction in rent that Landlord receives under the
Underlying Leases. Sale of all or a part of the Property to a purchaser
with the power of eminent domain in the face of a threat or the probability
of the exercise of the power shall be treated as a taking by condemnation.
9. Transfers by Tenant.
9.1 Prohibition of Transfer. Tenant shall not assign or convey
this Lease or Tenant's leasehold estate, or sublet any portion of the
Property, or license the use of any portion of the Property, or otherwise
transfer any interest in the Property (whether voluntary, involuntary, by
operation of law or otherwise), without the prior written consent of
Landlord and (to the extent required by the Underlying Leases) REPLP and
Fee Owner. Landlord may withhold consent in its discretion for any reason
whatsoever and shall not be liable in any respect for failure to give such
consent. If Tenant is a corporation, any transfer of a controlling interest
in the stock of Tenant shall be deemed an assignment of this Lease except
that transfer of stock or a controlling interest therein will not be deemed
a transfer of an interest under this Lease if the stock is publicly traded
on a recognized national or regional stock exchange. Any attempted transfer
without consent shall be null and void and, at the option of Landlord, will
cause termination of this Lease. If Tenant requests consent to a proposed
transfer or other matter requiring Landlord's consent or approval in
connection with any transfer or any financing by Tenant as described above,
Tenant or the prospective transferee will pay a review fee of $250 at the
time of the request, for application to Landlord's expenses (legal and
administrative) in reviewing the matter, which expenses will be paid by
Tenant or any prospective transferee, but will not exceed $1,000.
Notwithstanding the above, Landlord consents to subleases or
license agreements covering portions of the Property to industry-related
business for purposes of craft classes or service providers as referenced
in paragraph 2.3, provided that the revenue received by Tenant from such
subtenants and licensees will be included in Gross Sales hereunder and the
area and/or time periods covered by such subleases and license agreements
do not result in a diminishment of Tenant's overall Gross Sales.
11
<PAGE>
9.2 Obligations After Transfer. The giving of such consent in
one instance shall not preclude the need for Tenant to obtain Landlord's
consent to further transfers. If Tenant is permitted to make any transfer,
Tenant and any Guarantor(s) of this Lease shall not be relieved of their
respective obligations, but shall remain primarily liable to Landlord for
performance of all such obligations.
10. Default.
The following shall be events of default:
10.1 Payment Default. Failure of Tenant to make any rent or
other payment under this Lease within 10 days after the effective date of
written notice of nonpayment under this Lease.
10.2 Unauthorized Transfer. Tenant makes any transfer without
Landlord's prior written consent as required under paragraph 9.1.
10.3 Abandonment of Property. Tenant abandons the Property,
for which purpose "abandons" means a failure by Tenant to occupy and use
the Property for a total of 10 consecutive days or more during the lease
term, unless such failure is excused under other provisions of this Lease,
provided, that Tenant will not be deemed to have abandoned the Property if,
after paying rent and performing obligations under this Lease for five
years (60 months), Tenant closes the retail operation on the Property so
long as the following conditions are met: (i) Tenant continues to pay base
rent and percentage rent to Landlord for the period during which Tenant is
not open for business, with the percentage rent calculated to be equal to
the average monthly percentage rent paid by Tenant during the last full
reporting year; (ii) Tenant secures the Property from vandalism and
continues to maintain the condition of the Property and perform other
obligations (other than being open for business) in accordance with this
Lease; and (iii) Landlord will have the right to terminate this Lease upon
30 days' notice to Tenant at any time after Tenant's retail operation is
discontinued for any reason for 60 days (except as a result of remodeling
or repair of casualty or other events which Landlord has approved) unless
Tenant re-opens its business operation within such 30-day period after
receipt of Landlord's notice.
10.4 Default in Other Covenants. Failure of Tenant to comply
with any other term or condition or fulfill any other obligation of this
Lease within 20 days after written notice by Landlord specifying the nature
of the default with reasonable particularity. If the default is of such a
nature that it cannot be remedied fully within the 20-day period, this
requirement shall be satisfied if Tenant begins correction of the default
within the 20-day period and thereafter proceeds with reasonable diligence
and in good faith to effect the remedy as soon as practicable.
10.5 Insolvency Defaults. Dissolution, termination of
existence, insolvency on a balance sheet basis or business failure of
Tenant; the commencement by Tenant of a voluntary case under the federal
bankruptcy laws or under any other federal or state law relating to
insolvency or debtor's relief; the entry of a decree or order for relief
against Tenant in an involuntary case under the federal bankruptcy laws or
under any other applicable federal or state law relating to insolvency or
debtor's relief; the appointment of or the consent by Tenant to the
appointment of a receiver, trustee, or custodian of Tenant or of any of
Tenant's property; an assignment for the benefit of creditors by Tenant;
Tenant's failure generally to pay its debts as such debts become due; the
making or suffering by Tenant of a fraudulent transfer under applicable
federal or state law; concealment by Tenant of any of its property in
12
<PAGE>
fraud of creditors; the making or suffering by Tenant of a preference
within the meaning of the federal bankruptcy law; or the imposition of a
lien through legal proceedings or distraint upon any of the property of
Tenant which is not discharged or bonded. During any period in which there
is a Guarantor(s) of this Lease, each reference to "Tenant" in this
paragraph shall be deemed to refer to "Guarantor or Tenant," separately.
11. Remedies on Default.
Upon default, Landlord may exercise any one or more of the
following remedies, or any other remedy available under applicable law:
11.1 Retake Possession. Landlord may reenter and retake
possession of the Property, without notice, either by summary proceedings,
force, any other applicable action or proceeding, or otherwise. Landlord
may use the Property for Landlord's own purposes or relet it upon any
reasonable terms without prejudice to any other remedies that Landlord may
have by reason of Tenant's default. None of these actions will be deemed an
acceptance of surrender by Tenant.
11.2 Damages for Default. Whether or not Landlord retakes
possession or relets the Property, Landlord may recover all damages caused
by the default (including but not limited to unpaid rent, attorneys' fees
relating to the default, and costs of reletting). Landlord may sue
periodically to recover damages as they accrue during the remainder of the
lease term without barring a later action for further damages. Landlord may
at any time bring an action for accrued damages plus damages for the
remaining lease term equal to the difference between the rent specified in
this Lease and the reasonable rental value of the Property for the
remainder of the term, discounted to the time of judgment at the rate of 9
percent per annum.
11.3 Cure of Tenant's Default. Without prejudice to any other
remedy for default, Landlord may perform any obligation or make any payment
required to cure a default by Tenant. The cost of performance, including
attorneys' fees and all disbursements, shall immediately be repaid by
Tenant upon demand, together with interest from the date of expenditure
until fully paid at the rate of 12 percent per annum, but not in any event
at a rate greater than the maximum rate of interest permitted by law.
11.4 Percentage Rent. If at the time of any default Gross
Sales from the Property are sufficient to cause percentage rent in excess
of the minimum base rent amount to be payable, or if Tenant has previously
made such payments to Landlord, then in computing damages the monthly Gross
Sales for purposes of computing percentage rent for the remainder of the
calendar year and subsequent calendar years will be regarded as the lower
of (i) the average Gross Sales for the 12 months immediately prior to the
default, or (ii) the average Gross Sales for the prior 2 full calendar
years. Any damage computation shall consider that percentage rent would
have been paid during the remainder of the lease term based upon such
average monthly Gross Sales.
12. Surrender at Expiration.
12.1 Condition of Property. Upon expiration of the lease term
or earlier termination on account of default, Tenant shall deliver all keys
to Landlord and surrender the leased Property in first-class condition.
Depreciation and wear from ordinary use for the purpose for which the
Property was let need not be restored, but all repair for which Tenant is
13
<PAGE>
responsible shall be completed to the latest practical date prior to such
surrender.
12.2 Fixtures. Tenant shall remove all of its furnishings,
furniture, and trade fixtures that remain the property of Tenant and
restore all damage caused by such removal. Landlord will also have the
right to require Tenant to remove any alterations or improvements
constructed on the Property by Tenant, in which case Tenant will restore
all damage caused by such removal. If Tenant fails to do so, this shall be
an abandonment of the property and Landlord may retain the property and all
rights of Tenant with respect to it shall cease or, by notice in writing
given to Tenant within 20 days after removal was required, Landlord may
elect to hold Tenant to its obligation of removal. If Landlord elects to
require Tenant to remove, Landlord may effect a removal and place the
property in public storage for Tenant's account. Tenant shall be liable to
Landlord for the cost of removal, restoration, transportation to storage,
and storage, with interest on all such expenses as provided in paragraph
11.3 above.
12.3 Holdover. If Tenant does not vacate the Property at the
time required, Landlord shall have the option to treat Tenant as a tenant
from month to month, subject to all of the provisions of this Lease (except
that the term will be month to month and the initial base rent will be 125
percent of the amount of base rent then being paid by Tenant), or to eject
Tenant from the Property and recover damages caused by wrongful holdover.
Failure of Tenant to remove improvements, trade fixtures or personal
property which Tenant is required to remove under this Lease shall
constitute a failure to vacate to which this paragraph shall apply if the
property not removed substantially interferes with occupancy of the
Property by another tenant or with occupancy by Landlord for any purpose
including preparation for a new tenant. If a month-to-month tenancy results
from a holdover by Tenant, the tenancy shall be terminable at the end of
any monthly rental period on written notice from Landlord given not less
than 10 days prior to the termination date which shall be specified in the
notice. Tenant waives any notice which would otherwise be provided by law
with respect to month-to-month tenancy.
13. Warranty of Quiet Enjoyment.
So long as Tenant complies with all terms of this Lease,
Tenant shall be entitled to peaceable and undisturbed possession of the
Property free from any interference by Landlord or those claiming through
Landlord.
14. General Provisions.
14.1 Time of Essence. Time is of the essence of the
performance of each of Tenant's obligations under this Lease.
14.2 Modifications. This Lease may not be modified except by
endorsement in writing attached to this Lease, dated and signed by the
parties. Landlord shall not be bound by any statement of any agent or
employee modifying this Lease, except for any person which Landlord has
specifically designated in writing as Landlord's representative.
14.3 No Appurtenances or Subordination. This Lease does not
create any rights, easements or licenses, by implication or otherwise,
except as expressly set forth in this Lease or its exhibits. This Lease is
an unsubordinated lease covering the Property, and Landlord will not be
subordinating the fee title or Landlord's interest to any mortgage or other
lien securing any financing by Tenant.
14
<PAGE>
14.4 Relationship of Parties. The relationship of the parties
to this Lease is Landlord and Tenant. Landlord is not a partner or joint
venturer with Tenant in any respect or for any purpose in the conduct of
Tenant's business or otherwise.
14.5 Authorization of Lease. Each party covenants and
warrants to the other that the person(s) executing this Lease on behalf of
the party is duly authorized to execute and bind the party under this
Lease.
14.6 Brokers. Landlord will be responsible for paying the
real estate brokerage commission totalling $29,204.00 payable to Cushman &
Wakefield upon execution of this Lease and removal of contingencies by
Tenant. Each party will defend, indemnify and hold harmless from any claim,
loss or liability made or imposed by any other party claiming a commission
or fee in connection with this transaction and arising out of its own
conduct.
14.7 Nonwaiver. Waiver of performance of any provision shall
not be a waiver of nor prejudice the party's right otherwise to require
performance of the same provision or any other provision.
14.8 Succession. Subject to the limitations on transfer of
Tenant's interest, this Lease shall bind and inure to the benefit of the
parties, their respective heirs, successors, and assigns.
14.9 Inspection. Landlord or its authorized representatives
may enter at any time to determine Tenant's compliance with this Lease, to
make necessary repairs, to show the Property to a prospective party
desiring to acquire Landlord's interest, or (during the last 18 months of
the Lease term) to show the Property to any prospective tenants.
14.10 Underlying Leases. This Lease is and shall be subject
and subordinate to the Underlying Leases. Upon Landlord's request, Tenant
will promptly execute any tenant estoppel certificate required by Fee Owner
or REPLP with respect to this Lease.
14.11 Attornment. In the event any proceedings are brought
for foreclosure, or in the event of the exercise of the power of sale under
any mortgage or trust deed made covering the Property, Tenant shall attorn
to the purchaser upon any such foreclosure or sale and recognize such
purchaser as Landlord under this Lease.
14.12 Estoppel Certificates. Within 10 days after Landlord's
written request, Tenant shall deliver a written statement stating the date
to which the rent and other charges have been paid, whether the Lease is
unmodified and in full force and effect, and any other matters that may
reasonably be requested by Landlord.
14.13 Notices. Notices under this Lease shall be in writing,
effective when delivered, or if mailed, effective on the second day after
mailed postage prepaid to the address for the party stated in this Lease,
or to such other address as either party may specify by notice to the
other. Rent shall be payable to Landlord at the same address and in the
same manner.
14.14 Attorneys' Fees. In the event suit or action is
instituted to interpret or enforce the terms of this Lease, the prevailing
party shall be entitled to recover from the other party such sum as the
court may adjudge reasonable as
15
<PAGE>
attorneys' fees at trial, upon appeal and on any petition for review, in
addition to all other sums provided by law.
14.15 Applicable Law. The Property is located in the State of
Oregon. The parties agree that the law of that state shall be applicable
for all purposes, including construing and determining the validity of this
Lease, determining the rights and remedies of Landlord in the event of
default by Tenant and other matters.
14.16 Prior Agreements. The parties have attached various
exhibits to this Lease containing additional terms, which are incorporated
in this Lease by this reference as though fully set forth in this Lease.
This Lease is the entire, final, and complete agreement of the parties with
respect to the matters set forth in this Lease, and supersedes and replaces
all written and oral agreements previously made or existing by and between
the parties or their representatives (including, without limitation, the
letter of intent) with respect to such matters.
14.17 Validity of Provisions. If any of the provisions
contained in this Lease shall be invalid, illegal, or unenforceable in any
respect, the validity of the remaining provisions contained in this Lease
shall not be affected.
14.18 Joint and Several Liability. In the event Tenant now or
hereafter consists of more than one person, firm or corporation, then all
such persons, firms or corporations shall be jointly and severally liable
as Tenant under this Lease.
14.19 Nonoccupancy and Concession Recapture. Landlord has
provided certain concessions and agreed to incur certain expenses
(including, without limitation, the initial "free rent" period, broker's
commissions and certain tenant improvement and other work) in reliance upon
Tenant's warranty that Tenant shall faithfully and fully perform in a
timely manner all terms and conditions of this Lease. Accordingly, if
Tenant fails to occupy the Property or subsequently defaults in performance
of its obligations hereunder during the first 12 months of the Lease term,
the concessions and such expenses will be immediately due and payable to
Landlord as additional rent and will be paid to Landlord on demand. This
paragraph will not apply after the first 12 months of the Lease term if
Tenant continues to occupy and is not in default through the first 12
months of the Lease term.
14.20 No Recording. This Lease (and any memorandum hereof)
will not be recorded without the specific prior written consent of Landlord
and Fee Owner. If Fee Owner approves a recordation, Landlord will promptly
execute a suitable memorandum of lease to be prepared by Tenant to evidence
this Lease of record.
14.21 Consent or Approval. Where consent or approval of a
party to this Lease is required pursuant to the terms of this Lease, the
party will promptly exercise its judgment in a commercially reasonable
manner. Landlord may condition its consent or approval to Tenant's
obtaining any consent or approval required under the Underlying Leases.
16
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Lease as
of the date first above written.
LANDLORD: TENANT:
FRED MEYER, INC. FABRIC DEPOT, INC.
By MICHAEL DON By MAY MARIE BOSBOOM, PRESIDENT
------------------------------- --------------------------------
VP/Treasurer May Marie Bosboom, President
Address and telephone number at
which a representative of Tenant
can be contacted outside of
business hours:
1105 N.E. 135
--------------------------------
Portland, OR Zip: 97230
-------------------- ------
Phone: 252-7358
-------------------------
Facsimile No. (if any):
--------
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
AND
KNOWN EXCEPTIONS
the Lease covers the following property:
Beginning at a point 40.00 feet South of the North
line of Section 2 and on the East line of the N.W.
1/4 of the N.W. 1/4 of the N.W. 1/4 of said Section
2, T. 1 S., R. 2 E., W.M. Multnomah County, Oregon;
thence Southerly from said point of beginning along
the East line of the N.W. 1/4 of the N.W. 1/4 of
the N.W. 1/4 a distance of 651.29 feet to a point
in the South line of N.W. 1/4 of the N.W. 1/4 of
the N.W. 1/4; thence Westerly along said South line
a distance of 613.13 feet to a point in the East
line of S.E. 122nd Ave., said point being 45.00
feet Westerly of the West line of said Section 2;
thence Northerly along the East line of S.E. 122nd
Ave. and parallel to the West line of said Section
a distance of 235.96 feet; thence Easterly and
parallel to the North line of said Section a
distance of 180.00 feet; thence Northerly and
parallel to the West line of said Section a
distance of 30.00 feet; thence Easterly and
parallel to the North line of said Section a
distance of 100.00 feet; thence Northerly and
parallel to the West line of said Section a
distance of 390.00 feet to a point in the South
line of S.E. Stark St. said point being 40.00 feet
south of the North line of said Section; thence
Easterly along the South line of S.E. Stark St. and
parallel to the North line of said Section a
distance of 337.23 feet to the point of beginning.
Subject to:
1. Current property taxes and assessments affecting the Property.
2. Current installments of any LID assessments affecting the Property.
3. Rights of the public to any portion thereof located within a public
street or right of way.
4. Easements, covenants and conditions of record affecting the Property.
5. The Underlying Leases with Fee Owner and with REPLP.
<PAGE>
EXHIBIT B
CONSTRUCTION OF IMPROVEMENTS
1. Preparation and Approval of Plans. Tenant shall design and
construct any improvements to be constructed by Tenant in connection with
its renovation and development of the building ("Building") on the
Property, any site improvements and landscaping. Tenant will promptly
provide to Landlord plans and other information concerning the site plan,
layout, design, construction and operation of Tenant's improvements on the
Property, the selection of the general contractor, construction budget and
bondings and related matters as Landlord may reasonably require, which will
be subject to Landlord's review and approval. Prior to commencement of
construction, Tenant will cause the work to be performed to be covered by a
bond, in form and with a surety reasonably acceptable to Landlord, with
Landlord named as a dual obligee on the bond. Tenant will be responsible
for obtaining the building permit and all governmental permits and
approvals required in connection with the work, and for complying with all
terms and requirements of the Underlying Leases.
2. Performance of Work by Tenant. After approval of the plans and
related information, Tenant shall commence, perform and complete
construction of the Building and other improvements in accordance with
plans approved by Landlord and in a good and workmanlike manner. Tenant
shall cooperate with Landlord in providing promptly upon Landlord's request
any additional information required by Landlord during the course of
construction. Tenant shall notify Landlord when the work is completed. The
notice of completion shall be accompanied by an architect's certificate
attesting to the completion of the Building and improvements in accordance
with the plans and specifications approved by Landlord. Tenant will be
solely responsible for paying all direct and indirect construction costs,
and Landlord may post (and Tenant will maintain) notices of
nonresponsibility on the Property. Tenant shall be responsible for
providing "as-built" plans and specifications and blue-prints to the
Landlord upon the completion of the construction.
3. Work Product to Landlord. If for any reason this Lease is
terminated prior to completion of construction of the Building and other
improvements, Tenant shall deliver Tenant's entire written work product
pertaining to the construction work to Landlord, including all plans,
drawings, supporting data, studies, and any surveys.
<PAGE>
GUARANTY OF LEASE
In consideration of FRED MEYER, INC. ("Obligee") entering into a
Lease Agreement, dated the same date as this Guaranty, and other agreements
(the "Lease") with FABRIC DEPOT, INC. ("Tenant"), pertaining to the former
Stark Street Fred Meyer store in Portland, Oregon, the undersigned
Guarantor, jointly and severally, hereby unconditionally guarantees
punctual payment of all rent and other payments required to be paid under
the Lease when due, and prompt performance of all other obligations under
the Lease. Guarantor shall be directly liable to Obligee for any sum due
from Tenant under such Lease without requiring that Obligee first proceed
against Tenant. Guarantor agrees that Obligee may deal with Tenant in any
manner in which Obligee sees fit in connection with the Lease, without any
further consent of Guarantor. Specifically, but without limitation,
Guarantor agrees that any extension of time, amendment or modification to
the Lease or compromise of the amount of any obligation or lability under
the Lease shall not affect Guarantor's liability under this Guaranty.
Guarantor hereby irrevocably waives presentment, protest, notice of
default, demand for payment and all other suretyship defenses whatsoever
with respect to any payment guaranteed under this Guaranty, and hereby
irrevocably waives, disclaims and relinquishes all claims against Tenant
which Guarantor otherwise has or would have by virtue of having executed
this Guaranty or otherwise, specifically including but not limited to all
rights of indemnity, contribution and exoneration, and agrees to pay
unconditionally upon demand all amounts owed under the Lease.
If any action or any appeal is necessary in connection with this
Guaranty, the Lease or the collection of any payment under this Guaranty or
the Lease, Obligee shall be entitled to reasonable attorneys' fees, costs
and necessary disbursements, whether at trial, upon appeal or any petition
for review, or in connection with any action seeking rescission, in
addition to any other relief to which Obligee may be entitled. Guarantor
agrees that Guarantor will promptly reimburse Obligee, to the extent that
the payment of such attorneys' fees, costs and necessary disbursements are
due from, and not made by, Tenant.
Each reference in this Guaranty to "Obligee" shall be deemed to
include the successors and assigns of Obligee, in whose favor the
provisions of this Guaranty shall also inure. Each reference in this
Guaranty to the "Guarantor" shall be deemed to include the successors and
assigns of Guarantor, all of whom shall be bound by the provisions of the
Guaranty.
GUARANTOR:
MAY MARIE BOSBOOM
----------------------------------------
May Marie Bosboom
Dated: December 18, 1991
---------------------------------
Address: 1105 NE 135
-------------------------------
Portland, OR 972340
-------------------------------
1. Driver's license:
(a) State of
--------------------
(b) License No.
-----------------
2. Date of Birth:
--------------------
3. Soc. Sec. No.:
--------------------
<PAGE>
NON-RECOURSE GUARANTY
OF SPOUSE
FRED MEYER, INC. ("Obligee") is entering into a Lease Agreement,
dated the same date as this Guaranty, and other agreements (the "Lease")
with FABRIC DEPOT, INC. ("Tenant"), pertaining to the former Stark Street
Fred Meyer store in Portland, Oregon, which is being guaranteed by Mae
Marie Bosboom (the "Lease Guarantor") pursuant to a Guaranty of Lease
("Lease Guaranty"). The undersigned Guarantor is not a party in any way to
such Lease. However, to induce Obligee to accept the sufficiency of Lease
Guarantor's Lease Guaranty, the undersigned Guarantor, jointly and
severally, hereby unconditionally joins in such Lease Guaranty solely for
the purpose of permitting Obligee to obtain payment of all payments
required to be paid under the Lease Guaranty when due, from property and
assets which Guarantor owns (whether as community or jointly held property
or as separate property). The entire proceeds of such property obtained by
Obligee may be applied to the satisfaction of any and all obligations of
Lease Guarantor to Obligee. Guarantor does not assume personal liability
for such obligations and nothing contained herein shall be deemed to bind
Guarantor personally to the performance of the Lease or Lease Guaranty (but
Guarantor unconditionally agrees that all property and assets of Guarantor
will be subject to Obligee's claims, as to any obligation due from, and not
paid or performed by, Lease Guarantor).
Guarantor agrees that Obligee may deal with Lease Guarantor in any
manner in which Obligee sees fit in connection with the Lease Guaranty, and
with Tenant under the Lease, without any further consent of Guarantor.
Specifically, but without limitation, Guarantor agrees that any extension
of time, amendment or modification to the Lease or Lease Guaranty or
compromise of the amount of any obligation or lability under the Lease or
Lease Guaranty shall not affect Guarantor's liability under this Guaranty.
Guarantor hereby irrevocably waives presentment, protest, notice
of default, demand for payment and all other suretyship defenses whatsoever
with respect to any payment guaranteed under this Guaranty, and hereby
irrevocably waives, disclaims and relinquishes all claims against Tenant or
Lease Guarantor which Guarantor otherwise has or would have by virtue of
having executed this Guaranty or otherwise, specifically including but not
limited to all rights of indemnity, contribution and exoneration, and
agrees to pay unconditionally upon demand all amounts owed under the Lease
Guaranty.
If any action or any appeal is necessary in connection with this
Guaranty, the Lease, the Lease Guaranty or the collection of any payment
under this Guaranty or the Lease or the Lease Guaranty, Obligee shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements,
whether at trial, upon appeal or any petition for review, or in connection
with any action seeking rescission, in addition to any other relief to
which Obligee may be entitled. Guarantor agrees that Guarantor will
promptly reimburse Obligee, to the extent that the payment of such
attorneys' fees, costs and necessary disbursements are due from, and not
made by, Lease Guarantor.
Each reference in this Guaranty to "Obligee" shall be deemed to
include the successors and assigns of Obligee, in whose favor the
provisions of this Guaranty shall also inure. Each reference in this
Guaranty to the "Guarantor" shall be
<PAGE>
deemed to include the successors and assigns of Guarantor, all of whom
shall be bound by the provisions of the Guaranty.
GUARANTOR:
TONY BOSBOOM
----------------------------------------
Tony Bosboom
Dated: Dec. 18, 1991
---------------------------------
Address: 1105 NE 135th
-------------------------------
Portland Oregon USA 97230
----------------------------------------
1. Driver's license:
(a) State of
--------------------
(b) License No.
-----------------
2. Date of Birth:
--------------------
3. Soc. Sec. No.:
--------------------
2
<PAGE>
[Graphic sketch of SE Stark and SE 122nd Avenue property]
<PAGE>
EXHIBIT A
---------
The Lease covers the following property:
Beginning at a point 40.00 feet South of the
North line of Section 2 and on the East line
of the N.W. 1/4 of the N.W. 1/4 of the N.W.
1/4 of said Section 2, T. 1 S., R. 2 E., W.M.
Multnomah County, Oregon; thence Southerly
from said point of beginning along the East
line of the N.W. 1/4 of the N.W. 1/4 of the
N.W. 1/4 a distance of 631.29 feet to a point
in the South line of N.W. 1/4 of the N.W. 1/4
of the N.W. 1/4; thence Westerly along said
South line a distance of 613.13 feet to a
point in the East line of S.E. 122nd Ave.,
said point being 43.00 feet Westerly of the
West line of said Section 2; thence Northerly
along the East line of S.E. 122nd Ave. and
parallel to the West line of said Section a
distance of 235.96 feet; thence Easterly and
parallel to the North line of said Section a
distance of 180.00 feet; thence Northerly and
parallel to the West line of said Section a
distance of 30.00 feet; thence Easterly and
parallel to the North line of said Section a
distance of 100.00 feet; thence Northerly and
parallel to the West line of said Section a
distance of 390.00 feet to a point in the
South line of S.E. Stark St. said point being
40.00 feet south of the North line of said
Section; thence Easterly along the South line
of S.E. Stark St. and parallel to the North
line of said Section a distance of 337.23 feet
to the point of beginning.
The Lease also contains certain options and restrictions on use affecting
the following described property:
Beginning at a point which is 40.00 feet South
of the North line of Section 2 and on the East
line of the N.W. 1/4 of the N.W. 1/4 of the
N.W. 1/4 of said Section 2, T. 1 S., R. 2 E.,
W.M., Multnomah County, Oregon; thence
Westerly along the South line of S.E. Stark
St. and parallel to the North line of said
Section a distance of 337.23 feet to the true
point of beginning of this description; thence
Southerly and parallel to the West line of
said Section a distance of 390.00 feet; thence
Westerly and parallel to the North line of
said Section a distance of 100.00 feet; thence
Southerly and paral- lel to the West line of
said Section a dis- tance of 30.00 feet;
thence Westerly and parallel to the North line
of said Section a distance of 180.00 feet to a
point in the East line of S.E. 122nd Ave.,
said point being 45.00 feet Westerly of the
West line of said Section 2; thence Northerly
along the East line of S.E. 122nd Ave. and
paral- lel to the West line of said Section to
a point which is 45.00 feet Westerly of the
West line of said Section 2 and 40.00 feet
South of the North line of said Section;
thence Easterly along the South line of S.E.
Stark St. and parallel to the North line of
said Section a distance of 260.00 feet more or
less to the true point of beginning of this
description.
FRED MEYER, INC.
P.O. Box 42121 3800 S.E. 22nd Avenue
Portland, OR 97242
(503) 232-8844 TLX 360415
- ------------------------------------------------------------------------------
KENNETH THRASHER
SENIOR VICE PRESIDENT--FINANCE
& CHIEF FINANCIAL OFFICER
FRED MEYER, INC. -- MOGON
P.O. BOX 42121
PORTLAND, OR 97242
PHONE: (503) 797-7900
FAX: (503) 797-5299
August 15, 1996
Mr. Dave Ramus
PacTrust, Suite 300
15350 SW Sequoia Pkwy.
Portland, OR 97224
Dear Dave:
Pursuant to our phone conversation on August 6, 1996, I am sending you this
confirming letter of our agreement. We will take down the purchase of seven
store locations, termination of the Stark lease, and various other lease
amendments in a two-step transaction to occur as follows:
ON OR BEFORE AUGUST 16, 1996:
Purchase the following three locations, with the
transfer of ownership made to Fred Meyer, Inc.: Interstate $ 6,045,085
Oak Grove $ 7,095,220
Stadium $ 4,693,665
[PAYMENT TO BE MADE BY FRED MEYER, INC.] TOTAL, Aug. 1996 $17,833,970
===========
ON OR BEFORE DECEMBER 31, 1996:
We plan on closing on the four other store locations, the Stark lease
cancellation (and assignment of sub-tenant to Properties, Ltd.), and the
agreed-upon amendments to various lease terms in this time frame. The four
locations being purchased will go into one of our lease lines with
NationsBank, and include:
Burlingame $ 4,231,472
Glisan $ 6,251,003
Gresham $11,516,661
Tigard $ 8,289,894
-----------
[PAYMENT TO BE MADE BY NATIONSBANK] SUB-TOTAL $30,289,030
-----------
Plus: Stark lease
[PAYMENT TO BE MADE BY FRED MEYER, INC.] cancellation $ 677,000
-----------
TOTAL, Dec. 1996 $30,966,030
===========
[CONT'D]
<PAGE>
These two closings will result in payments of $40,000,000 to Properties,
Ltd., (payment being made to parties designated by you) pursuant to our
agreement to close the purchases on or before December 31, 1996.
I did receive your phone-mail message regarding contingencies and believe
that we still need to be diligent with respect to property purchases
considering the accelerated closing of the transactions, which gets you
funds earlier than planned. We will waive the contingencies relation to the
sale-leaseback and MET property deals and do have Board approval of the
transaction. I only know of two current issues that we need to work with
you to resolve, those being:
i.) clarification and assurance that the Gresham property lines
give us control of the property based on what we expected when
this transaction was negotiated; and
ii.) we have proposed a "condominium," form of agreement at the
Burlingame site for your Burger King tenant that we believe is
reasonable and needs your acceptance.
Assuming these two issues are resolved in a timely manner, I see no reason
why the second closing cannot occur in the time line proposed.
Please execute and return a copy of this letter so we can proceed to achieving
the first closing by the end of next week. If you have questions concerning
this letter, please call me at 797-7900. Thank you.
Sincerely,
KENNETH THRASHER
Kenneth Thrasher
Senior Vice President - Finance
& Chief Financial Officer
APPROVED BY: DAVID W. RAMUS
--------------------------------------
Name
Real Estate Prop. L.P./REC Resolutions
--------------------------------------
Company
Date: 8/15/96
--------------------------------
cc: Robert G. Miller
Scott Wippel
Bob Currey-Wilson
Jim Aalberg
EXHIBIT 11
<TABLE>
<CAPTION>
FRED MEYER, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
(Unaudited)
12 Weeks Ended 28 Weeks Ended
------------------- -------------------
Aug. 17, Aug. 12, Aug. 17, Aug. 12,
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Weighted average number of
shares outstanding............................... 26,722 26,704 26,713 26,663
Weighted average number of
shares under option.............................. 4,218 2,790 3,935 2,904
Shares assumed to have been
purchased under the
treasury stock method............................ (2,237) (1,125) (2,039) (1,143)
------- ------- ------- -------
Weighted average number of
common and common equivalent
shares outstanding............................... 28,703 28,369 28,609 28,424
======= ======= ======= =======
Net income ........................................ $15,173 $10,673 $24,617 $13,756
======= ======= ======= =======
Earnings per common share.......................... $.53 $.38 $.86 $.48
==== ==== ==== ====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-1-1997
<PERIOD-END> AUG-17-1996
<CASH> 44,837
<SECURITIES> 0
<RECEIVABLES> 46,752
<ALLOWANCES> 0
<INVENTORY> 560,790
<CURRENT-ASSETS> 694,990
<PP&E> 1,629,617
<DEPRECIATION> (592,536)
<TOTAL-ASSETS> 1,777,327
<CURRENT-LIABILITIES> 455,401
<BONDS> 636,469<F1>
0
0
<COMMON> 270
<OTHER-SE> 595,903
<TOTAL-LIABILITY-AND-EQUITY> 1,777,327
<SALES> 1,893,942
<TOTAL-REVENUES> 1,893,942
<CGS> 1,336,484
<TOTAL-COSTS> 495,471
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,282
<INCOME-PRETAX> 39,705
<INCOME-TAX> 15,088
<INCOME-CONTINUING> 24,617
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,617
<EPS-PRIMARY> .86
<EPS-DILUTED> .86
<FN>
<F1> Long-term debt and mortgages.
</FN>
</TABLE>
