<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): JANUARY 22, 1997 Commission File Number 1-8383
MISSION WEST PROPERTIES
Incorporated in California IRS Employer Identification Number: 95-2635431
Principal Executive Offices: Telephone: (619) 450-3135
6815 Flanders Drive, Suite 250
San Diego, California 92121-3914
<PAGE>
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
On December 6, 1996, Mission West Properties (seller and "the Company") entered
into an agreement (the "Agreement") to sell all its real estate assets to
Spieker Properties, L.P. (purchaser and "Spieker"), a California limited
partnership, for $50,500,000 cash. The Company's real estate constituted nearly
all of its assets. A special shareholder meeting was held December 16, 1996, at
which time the Company's shareholders approved the sale of the real estate
assets to Spieker.
A majority of the sale transaction was completed January 22, 1997, at which time
nine (9) of the Company's 11 real estate properties were sold. The remaining
two (2) properties are anticipated to close within 120 days after January 22,
1997. The nine (9) properties sold consisted of occupied office, light
industrial, and R&D buildings in San Diego and Riverside counties, California,
and occupied industrial buildings and vacant land in Chandler, Arizona. The
total building space sold approximated 685,000 square feet. The two (2)
remaining properties consist of leaseholds, together with hangar and office
buildings thereon, comprising approximately 25 percent of the land at
Palomar-McClellan airport in San Diego county, California.
Upon completion of sale of the nine (9) properties, the Company received
$47,500,000 in cash, from which it repaid all debt encumbering the properties
and paid a majority of the related transaction and closing costs. In accordance
with the Agreement, $300,000 was withheld from the proceeds to allow for
satisfaction of any post-closing breaches of representations and warranties made
by the Seller. If no such breaches occur, the $300,000 will be released to the
Company after 90 days. Also in accordance with the Agreement, upon completion
of sale of the two (2) leasehold properties, the Company will receive $3,000,000
in cash, subject to an additional $300,000 representation and warranty holdback
(for 90 days), and will repay related debt and transaction costs from the
proceeds.
There is no relationship between the Company and Spieker.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
(b) PRO FORMA FINANCIAL INFORMATION:
The following unaudited pro forma consolidated financial statements
are filed with this report:
Pro Forma Consolidated Balance Sheet as of August 31, 1996
Pro Forma Consolidated Statement of Operations for the Year Ended
November 30, 1995
Pro Forma Consolidated Statement of Operations for the Year Ended
November 30, 1994
Pro Forma Consolidated Statement of Operations for the Year Ended
November 30, 1993
Pro Forma Consolidated Statement of Operations for the Nine
Months Ended August 31, 1996
Pro Forma Consolidated Statement of Operations for the Nine
Months Ended August 31, 1995
The Pro Forma Consolidated Balance Sheet reflects the financial
position of the Company after giving effect to the sale of the nine
(9) real estate properties and satisfaction of the related liabilities
as discussed in Item 2 and assumes the sale took place on August 31,
1996. The Pro Forma Consolidated Statements of Operations assume that
the sale occurred on December 1, 1994, December 1, 1993, and December
1, 1992 for the years ended November 30, 1995, November 30, 1994, and
November 30, 1993, respectively, and that the sale occurred on
December 1, 1995 and December 1, 1994 for the nine- (9) month periods
ended August 31, 1996 and August 31, 1995, respectively.
The unaudited pro forma consolidated financial statements have been
prepared by the Company based upon assumptions deemed proper by
management. The unaudited pro forma consolidated financial statements
presented herein are shown for illustrative purposes only and are not
necessarily indicative of the future financial position or future
results of operations of the Company, or of the financial position
- 2 -
<PAGE>
or results of operations of the company that would have actually
occurred had the transaction been in effect as of the date or for the
pro forma periods presented.
The unaudited pro forma consolidated financial statements should be
read in conjunction with the historical financial statements and
related notes thereto.
(10) ADDITIONAL EXHIBITS:
Amendment No. 1 to Agreement of Purchase and Sale and Joint Escrow
Instructions
(99) ADDITIONAL EXHIBITS:
January 23, 1997 News Release announcing completion of the sale of
nine (9) properties
SIGNATURE
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.
MISSION WEST PROPERTIES
- -----------------------
Registrant
By: /s/ Katrina L. Thompson
------------------------------------------------
Katrina L. Thompson
Chief Financial Officer & Secretary
(Principal Financial and Accounting Officer)
February 6, 1997
- 3 -
<PAGE>
PRO FORMA FINANCIAL INFORMATION
MISSION WEST PROPERTIES
Pro Forma Consolidated Balance Sheet
As of August 31, 1996
<TABLE>
<CAPTION>
Pro Forma
Adjustments
Historical (a) Pro Forma
----------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 1,880,000 $ 13,654,000 $15,534,000
Short-term investments, held-to-maturity 1,123,000 - 1,123,000
Real estate investments:
Rental Properties, less accumulated depreciation of
$1,164,000 ($2,381,000 pledged) 46,154,000 (42,392,000) 3,762,000
Unimproved land 461,000 (461,000) -
Allowance for estimated losses (4,413,000) 3,759,000 (654,000)
----------- ------------ -----------
Net real estate investments 42,202,000 (39,094,000) 3,108,000
----------- ------------ -----------
Other assets, less allowances of $5,000 and accumulated
depreciation of $314,000 1,168,000 (767,000) 401,000
----------- ------------ -----------
$46,373,000 $(26,207,000) $20,166,000
----------- ------------ -----------
----------- ------------ -----------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Notes payable $30,982,000 $(29,295,000) $ 1,687,000
Accounts payable and accrued expenses 1,181,000 710,000 1,891,000
----------- ------------ -----------
Total liabilities 32,163,000 (28,585,000) 3,578,000
----------- ------------ -----------
Shareholders' equity:
Common stock, no par value; 10,000,000 shares auth-
orized, 1,371,121 shares issued and outstanding 19,456,000 - 19,456,000
Accumulated deficit (5,246,000) 2,378,000 (2,868,000)
----------- ------------ -----------
Total shareholders' equity 14,210,000 2,378,000 16,588,000
----------- ------------ -----------
$46,373,000 $(26,207,000) $20,166,000
----------- ------------ -----------
----------- ------------ -----------
</TABLE>
(a) Adjustments from the sale of real estate assets (includes the related tax
effects, the proceeds, and the paydown of debt).
- 4 -
<PAGE>
PRO FORMA FINANCIAL INFORMATION
MISSION WEST PROPERTIES
Pro Forma Consolidated Statement of Operations
Year Ended November 30, 1995
<TABLE>
<CAPTION>
Pro Forma
Adjustments
Historical (a) Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
Rental revenues from real estate $ 7,146,000 $(6,284,000) $ 862,000
Sales of real estate 400,000 - 400,000
Other, including interest 380,000 (102,000) 278,000
----------- ----------- -----------
7,926,000 (6,386,000) 1,540,000
----------- ----------- -----------
EXPENSES:
Operating expenses of real estate 1,783,000 (1,316,000) 467,000
Depreciation of real estate 1,352,000 (1,192,000) 160,000
Costs of real estate sold 324,000 - 324,000
General and administrative 945,000 (92,000) 853,000
Interest 3,435,000 (3,251,000) 184,000
----------- ----------- -----------
7,839,000 (5,851,000) 1,988,000
----------- ----------- -----------
Income (loss) before gain on sale of real estate 87,000 (535,000) (448,000)
Gain on sale of real estate - 3,928,000 3,928,000
----------- ----------- -----------
Income before income taxes 87,000 3,393,000 3,480,000
Provision for income taxes 35,000 1,335,000 1,370,000
----------- ----------- -----------
NET INCOME $ 52,000 $ 2,058,000 $ 2,110,000
----------- ----------- -----------
----------- ----------- -----------
NET INCOME PER SHARE $ 0.04 $ 1.47 $ 1.51
------ ------ ------
------ ------ ------
</TABLE>
(a) Adjustments from the sale of real estate assets.
- 5 -
<PAGE>
PRO FORMA FINANCIAL INFORMATION
MISSION WEST PROPERTIES
Pro Forma Consolidated Statement of Operations
Year Ended November 30, 1994
<TABLE>
<CAPTION>
Pro Forma
Adjustments
Historical (a) Pro Forma
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Rental revenues from real estate $ 6,637,000 $(5,846,000) $ 791,000
Sales of real estate 2,096,000 - 2,096,000
Other, including interest 564,000 (126,000) 438,000
----------- ----------- -----------
9,297,000 (5,972,000) 3,325,000
----------- ----------- -----------
EXPENSES:
Operating expenses of real estate 1,991,000 (1,579,000) 412,000
Depreciation of real estate 1,472,000 (1,306,000) 166,000
Costs of real estate sold 229,000 - 229,000
Provision for estimated losses on real estate 5,200,000 (4,546,000) 654,000
General and administrative 1,200,000 (108,000) 1,092,000
Interest 3,088,000 (2,927,000) 161,000
----------- ----------- -----------
13,180,000 (10,466,000) 2,714,000
----------- ----------- -----------
Income (loss) before loss on sale of real estate (3,883,000) 4,494,000 611,000
Loss on sale of real estate - (618,000) (618,000)
----------- ----------- -----------
Income (loss) before income taxes and cumulative effect of
of change in accounting (3,883,000) 3,876,000 (7,000)
Provision for (benefit from) income taxes (1,500,000) 1,497,000 (3,000)
----------- ----------- -----------
Income (loss) before cumulative effect of change in accounting (2,383,000) 2,379,000 (4,000)
Cumulative effect of change in accounting for income taxes 440,000 - 440,000
----------- ----------- -----------
NET INCOME (LOSS) $(1,943,000) $ 2,379,000 $ 436,000
----------- ----------- -----------
----------- ----------- -----------
PER SHARE:
Income (loss) before cumulative effect of change in accounting $(1.62) $ 1.62 $ -
Cumulative effect of change in accounting for income taxes 0.30 - 0.30
------ ------ -----
Net income (loss) per share $(1.32) $ 1.62 $ 0.30
------ ------ -----
------ ------ -----
</TABLE>
(a) Adjustments from the sale of real estate assets.
- 6 -
<PAGE>
PRO FORMA FINANCIAL INFORMATION
MISSION WEST PROPERTIES
Pro Forma Consolidated Statement of Operations
Year Ended November 30, 1993
<TABLE>
<CAPTION>
Pro Forma
Adjustments
Historical (a) Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
Rental revenues from real estate $ 6,678,000 $(5,883,000) $ 795,000
Sales of real estate 102,000 - 102,000
Other, including interest 362,000 (91,000) 271,000
----------- ----------- -----------
7,142,000 (5,974,000) 1,168,000
----------- ----------- -----------
EXPENSES:
Operating expenses of real estate 2,421,000 (2,001,000) 420,000
Depreciation of real estate 1,688,000 (1,483,000) 205,000
Costs of real estate sold 43,000 - 43,000
Provision for estimated losses on real estate 94,000 - 94,000
General and administrative 1,386,000 (108,000) 1,278,000
Interest 3,205,000 (3,021,000) 184,000
----------- ----------- -----------
8,837,000 (6,613,000) 2,224,000
----------- ----------- -----------
Income (loss) before loss on sale of real estate (1,695,000) 639,000 (1,056,000)
Loss on sale of real estate - (618,000) (618,000)
----------- ----------- -----------
Income (loss) before income taxes (1,695,000) 21,000 (1,674,000)
Provision for (benefit from) income taxes (630,000) 8,000 (622,000)
----------- ----------- -----------
NET INCOME (LOSS) $(1,065,000) $ 13,000 $(1,052,000)
----------- ----------- -----------
----------- ----------- -----------
NET INCOME (LOSS) PER SHARE $(0.73) $ 0.01 $(0.72)
------ ------ ------
------ ------ ------
</TABLE>
(a) Adjustments from the sale of real estate assets.
- 7 -
<PAGE>
PRO FORMA FINANCIAL INFORMATION
MISSION WEST PROPERTIES
Pro Forma Consolidated Statement of Operations
Nine Months Ended August 31, 1996
<TABLE>
<CAPTION>
Pro Forma
Adjustments
Historical (a) Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
Rental revenues from real estate $ 5,342,000 $(4,740,000) $ 602,000
Sales of real estate 86,000 - 86,000
Other, including interest 237,000 (78,000) 159,000
----------- ----------- -----------
5,665,000 (4,818,000) 847,000
----------- ----------- -----------
EXPENSES:
Operating expenses of real estate 1,224,000 (913,000) 311,000
Depreciation of real estate 1,026,000 (905,000) 121,000
General and administrative 987,000 (297,000) 690,000
Interest 2,319,000 (2,194,000) 125,000
----------- ----------- -----------
5,556,000 (4,309,000) 1,247,000
----------- ----------- -----------
Income (loss) before gain on sale of real estate 109,000 (509,000) (400,000)
Gain on sale of real estate - 3,928,000 3,928,000
----------- ----------- -----------
Income before income taxes 109,000 3,419,000 3,528,000
Provision for income taxes 46,000 1,335,000 1,381,000
----------- ----------- -----------
NET INCOME $ 63,000 $ 2,084,000 $ 2,147,000
----------- ----------- -----------
----------- ----------- -----------
NET INCOME PER SHARE $ 0.05 $ 1.52 $ 1.57
------ ------ ------
------ ------ ------
</TABLE>
(a) Adjustments from the sale of real estate assets.
- 8 -
<PAGE>
PRO FORMA FINANCIAL INFORMATION
MISSION WEST PROPERTIES
Pro Forma Consolidated Statement of Operations
Nine Months Ended August 31, 1995
<TABLE>
<CAPTION>
Pro Forma
Adjustments
Historical (a) Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
Rental revenues from real estate $ 5,320,000 $(4,675,000) $ 645,000
Sales of real estate 125,000 - 125,000
Other, including interest 282,000 (58,000) 224,000
----------- ----------- -----------
5,727,000 (4,733,000) 994,000
----------- ----------- -----------
EXPENSES:
Operating expenses of real estate 1,448,000 (1,112,000) 336,000
Depreciation of real estate 1,011,000 (891,000) 120,000
General and administrative 701,000 (60,000) 641,000
Interest 2,663,000 (2,528,000) 135,000
----------- ----------- -----------
5,823,000 (4,591,000) 1,232,000
----------- ----------- -----------
Income (loss) before gain on sale of real estate (96,000) (142,000) (238,000)
Gain on sale of real estate - 3,928,000 3,928,000
----------- ----------- -----------
Income (loss) before income taxes (96,000) 3,786,000 3,690,000
Provision for (benefit from) income taxes (40,000) 1,491,000 1,451,000
----------- ----------- -----------
NET INCOME (LOSS) $ (56,000) $ 2,295,000 $ 2,239,000
----------- ----------- -----------
----------- ----------- -----------
NET INCOME (LOSS) PER SHARE $(0.04) $ 1.64 $ 1.60
------ ------ ------
------ ------ ------
</TABLE>
(a) Adjustments from the sale of real estate assets.
- 9 -
<PAGE>
EXHIBIT (10)
AMENDMENT NO. 1
TO
AGREEMENT OF PURCHASE AND SALE
AND
JOINT ESCROW INSTRUCTIONS
This AMENDMENT NO. 1 TO AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW
INSTRUCTIONS (the "Amendment") is made as of this 8th day of January 1997 by and
among SPIEKER PROPERTIES, L.P., a California limited partnership ("SP"), SPIEKER
NORTHWEST, INC., a California corporation ("SPN"), MISSION WEST PROPERTIES, a
California corporation ("MWP"), and MISSION WEST EXECUTIVE AIRCRAFT CENTER,
INC., a California corporation ("MWEAC"), with reference to the facts set forth
in the Recitals below.
RECITALS
A. MWEAC is a wholly-owned subsidiary of MWP. Hereafter, MWP and MWEAC
may sometimes be collectively referred to as the "Seller."
B. SP and Seller are parties to a certain Agreement of Purchase and Sale
and Joint Escrow Instructions dated December 6, 1996 (the "Purchase Agreement").
C. SPN is an affiliate of SP. SP desires to assign to SPN SP's rights
under the Purchase Agreement to purchase certain of the Assets.
D. The parties desire to amend the Purchase Agreement to obtain Seller's
consent to such assignment and to address other concerns of the parties, all as
set forth below in this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the Purchase Agreement, this Amendment
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereby agree as follows:
1. INTERPRETATION. Terms with initial capital letters are defined terms
which shall have the meanings ascribed to them in the Purchase Agreement, unless
the context of this Amendment requires otherwise. Except as amended by this
Amendment, the Purchase Agreement shall remain in full force and effect. In the
event of a conflict between the provisions of this Amendment and those of the
Purchase Agreement, this Amendment shall control.
2. ASSIGNMENT BY SP. Pursuant to Section 14.6 of the Purchase Agreement,
SP has assigned its rights under the Purchase Agreement to purchase the Arizona
Corporate Center Property, the Unimproved Parcel and the Leasehold Properties to
SPN. Seller hereby consents to such assignment to SPN on the express condition
that SP shall remain responsible for the full performance of all obligations of
SPN under the Purchase Agreement through the Close of Escrow. By signing below,
SP expressly agrees to remain responsible for the full performance of all
obligations of SPN under the Purchase Agreement through the Close of Escrow. By
signing below, SPN agrees to be bound by the Purchase Agreement and to assume
all obligations of SP to purchase the Arizona Corporate Center Property, the
Unimproved Parcel and the Leasehold Properties in accordance with the terms and
conditions of the Purchase Agreement, as amended by this Amendment. Hereafter,
the term "Buyer" shall mean and include SP and SPN.
3. ARIZONA PROPERTY TAX APPEALS.
(a) BACKGROUND. In August 1995 Seller filed appeals (the "Arizona
Property Tax Appeals") with the Arizona Tax Court for the purpose of contesting
increases in the assessed value of the Arizona Corporate
1
<PAGE>
Center Property for calendar years 1995 and 1996. Pending resolution of the
Arizona Property Tax Appeals, Seller has been paying the property taxes levied
on the Arizona Corporate Center Property at the increased rates. The total
amounts of property taxes levied and paid on the Arizona Corporate Center
Property in 1995 and 1996 were $96,293 and $91,330, respectively. Any unpaid
property taxes allocable to calendar year 1997 will be subject to proration, as
provided elsewhere in the Purchase Agreement.
(b) REFUNDS. It is agreed that Seller shall be entitled to pursue,
at Seller's sole cost and expense, the Arizona Property Tax Appeals after the
Closing. It is also agreed that Seller shall be entitled to be paid the full
amount of any property tax refund(s) for calendar years 1995, 1996 and the
portion of 1997 during which Seller owned the Arizona Corporate Center Property
which may ultimately become payable, even if the refund(s) are paid after the
Closing. Buyer hereby agrees to pay to Seller any such refund(s) in the event
the refund(s) are inadvertently paid to Buyer. Buyer also agrees to cooperate
with Seller in pursuing the Arizona Property Tax Appeals.
(c) COLLECTION FROM TENANTS.
(1) Notwithstanding the amount of property taxes actually paid
by Seller during 1995 and 1996 with respect to the Arizona Corporate Center
Property, Seller has only collected from the Tenants of the Arizona Corporate
Center Property property taxes for such years in the aggregate amounts of
$37,252 and approximately $42,000, respectively. (The final amount of property
taxes actually collected for 1996 has not yet been finally ascertained.) The
difference (the "Property Tax Delta") between the amounts ultimately determined
to be owed by Seller to Arizona tax authorities and the amounts actually
collected by Seller from the subject Tenants for the subject years is presently
unknown. (The Property Tax Delta will become known only after Seller's refund
claims are resolved.)
(2) When the amount of the Property Tax Delta is finally
ascertained, two outcomes are possible. Under one scenario, the Property Tax
Delta could be such that the subject Tenants owe Seller money due to Seller's
under collection of property taxes from the subject Tenants. Under the second
scenario, the Property Tax Delta could be such that Seller owes the subject
Tenants money due to Seller's collection of property taxes in excess of the
amounts finally determined to be due and payable to Arizona taxing authorities.
The first scenario has been assumed to be more likely and Seller has billed the
subject Tenants the estimated amount of the Property Tax Delta.
(3) The actual amount of the Property Tax Delta will be
determined after the Closing. Once it is determined, Seller shall promptly
notify Buyer of the actual Property Tax Delta. If the first scenario does in
fact apply, Seller expects the Tenants of the Arizona Corporate Center Property
to reimburse Seller for the amount of the Property Tax Delta and Seller shall be
entitled to collect same from the subject Tenants by appropriate means -- to the
extent not previously collected -- excluding, however, any right to evict
delinquent Tenants or to terminate the subject Leases, at Seller's sole cost and
expense. Buyer agrees to cooperate with Seller in collecting the Property Tax
Delta with no cost to Buyer.
(4) If the second scenario applies, Seller shall promptly pay to
SPN outside of the Escrow the amount of excess property taxes collected by
Seller and Buyer shall credit such amount to the Tenants entitled thereto.
(5) If SPN sells the Arizona Corporate Center Property to a
third party before the Arizona Property Tax Appeals are resolved and the actual
amount of the Property Tax Delta is determined, Buyer shall cause the party
purchasing from Buyer to assume Buyer's obligations under this Section 3.
4. BIFURCATION OF TRANSACTION. The parties have agreed to bifurcate the
purchase of the Assets, as contemplated in Section 3.3 of the Purchase
Agreement. Accordingly, it is agreed that Buyer shall purchase all the Assets
other than the Leasehold Properties as soon as practicable after the date of
this Amendment, as more fully provided in the Purchase Agreement, as amended
hereby. It is also agreed that SPN shall purchase the Leasehold Properties at a
later date, subject to the MWEAC Contingencies being waived or satisfied on or
before the end of the MWEAC Contingency Period. The parties agree to further
amend the Purchase Agreement to fix a Scheduled Closing Date for the purchase of
the Leasehold Properties. SPN hereby affirms its intention to purchase the
2
<PAGE>
Leasehold Properties, notwithstanding such bifurcation of the subject
transaction.
5. CLOSING SCHEDULE. The parties have agreed that the Closing shall
begin at 8:00 a.m. (Arizona time) on Wednesday, January 22, 1997, with
recordation of the Grant Deeds (the "Arizona Grant Deeds") for the Arizona
Corporate Center Property and the Unimproved Parcel. The parties intend that
the Grant Deeds for the California Properties will be recorded at 8:00 a.m. (San
Diego time) so that Escrow Holder will have sufficient time in which to remit
funds due to encumbrancers of the Realty by 10:00 a.m. (San Diego time) on
January 22, 1997. In order to accomplish the foregoing, it is agreed that Buyer
shall deposit into the Escrow sufficient funds to cover its financial
obligations under the Purchase Agreement, as amended by this Amendment, by the
close of business on Tuesday, January 21, 1996. These funds shall be invested
overnight at the direction of Buyer.
6. AMENDMENT OF SECTION 6.8(b). Section 6.8(b) of the Purchase Agreement
is hereby amended and restated in its entirety to read as follows:
"(b) OPERATING EXPENSES.
(1) Most of Leases, both the A-Leases and the
B-Leases, are multi-tenant leases which are written on a net
or so-called "modified gross" basis which require the
Tenants thereunder to pay Seller, as landlord, estimates of
Operating Expenses for their respective premises. Seller
makes annual (calendar year) reconciliations of such
Operating Expenses in order to reconcile (on a cash basis)
the receipts of estimated Operating Expenses from the
Tenants with the Operating Expenses actually paid for the
relevant calendar year. The reconciliation of Operating
Expenses collected for calendar year 1995 has been
completed.
(2) It is agreed that Seller shall be responsible for
making the reconciliation of Operating Expenses for calendar
year 1996, even if such reconciliation occurs after the
Close of Escrow. This reconciliation will occur outside of
the Escrow and Escrow Holder shall have no responsibility
therefor. Seller shall use its best efforts to complete
such reconciliation within sixty (60) days after the
Closing. Seller anticipates that the amount of estimated
Operating Expenses collected for calendar year 1996 will be
less than the amount of actual Operating Expenses incurred
for such year and that, therefore, certain payments may be
due to Seller from certain Tenants.
(3) After the such 1996 reconciliation is completed,
Seller shall pay any amounts due to the Tenants directly to
such Tenants. Buyer shall receive no credit against the
Purchase Price for any such amounts that may be due to the
Tenants. Seller hereby agrees to indemnify, defend and hold
Buyer harmless from and against any claims by the Tenants
with respect to sums which may be due to the Tenants as a
result of excess billings of Operating Expenses. If the
Operating Expenses actually paid by Seller for calendar year
1996 exceed the receipts of estimated Operating Expenses
received by Seller for such year by more than One Thousand
Dollars ($1,000) in the aggregate, Buyer agrees to use
diligence to collect, after the Closing, any shortfall for
the account of Seller in the same manner as delinquent rent.
Buyer shall pay Seller any portion of such shortfall in
Operating Expenses as and when Buyer collects same, so long
as all other obligations of the paying Tenant to Buyer are
current. If the shortfall in the collection of Operating
Expenses from the Tenants is less than One Thousand Dollars
($1,000) in the aggregate, Seller shall have no right to
collect the shortfall and Buyer shall be entitled to keep
any portion of the shortfall which it may succeed in
collecting.
(4) Payments of Operating Expenses by Tenants for
calendar year 1997 shall be prorated in the same manner as
rent pursuant to Section 6.8(a).
3
<PAGE>
Any prepayments by Seller of Operating Expenses for the Realty which
are to be billed to the Tenants for calendar year 1997 shall be
prorated in the same manner as other items subject to proration."
7. MODIFICATION OF SECTION 4.1. Section 4.1 of the Purchase Agreement is
hereby amended to state that the Purchase Price for the Realty is $47,000,000,
which is apportioned as follows:
- Arizona Corporate Center $3,200,000
- Camino West Business Park $2,150,000
- Camino West-Carlsbad $4,500,000
- Carmel View Office Plaza $6,450,000
- Centerpark Plaza One $5,942,000
- Centerpark Plaza Two $8,450,000
- La Place Court $6,720,000
- Western Metal Lath $5,955,000
- Leasehold Properties $3,300,000
- Unimproved Parcel $ 333,000
8. ALLOCATION TO LEASEHOLD PROPERTIES. The parties have agreed that the
portion of the Purchase Price allocable to the Leasehold Properties will be
$3,300,000, provided that Buyer pays Seller $300,000 (the "MWEAC Advance
Payment") in cash at the first Closing as an advance payment on the portion of
the Purchase Price so allocable to the Leasehold Properties. The MWEAC Advance
Payment shall be non-refundable when paid as additional consideration for Seller
agreeing to bifurcate the transaction. Seller shall be entitled to retain the
full amount of the MWEAC Advance Payment, even if Buyer does not purchase the
Leasehold Properties for any reason whatsoever, including, without limitation,
the non-satisfaction of the MWEAC Contingencies in whole or in part.
9. MWEAC EXTENSION PERIOD. The length of the MWEAC Extension Period
specified in Section 3.3(a) of the Purchase Agreement is hereby extended to a
total of one hundred twenty (120) days.
[SIGNATURE PAGE FOLLOWS]
4
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IN WITNESS WHEREOF, the parties hereby execute this Amendment No. 1 to
Agreement of Purchase and Sale and Joint Escrow Instructions as of the date
first written above.
"MWP" MISSION WEST PROPERTIES,
a California corporation
By: /s/
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J. Gregory Kasun
President and Chief Executive Officer
"MWEAC" MISSION WEST EXECUTIVE AIRCRAFT CENTER, INC., a
California corporation
By: /s/
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J. Gregory Kasun
President and Chief Executive Officer
"SP" SPIEKER PROPERTIES, L.P.,
a California limited partnership
By: SPIEKER PROPERTIES, INC.
a Maryland corporation,
Its General Partner
By: /s/
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Richard L. Romney
Senior Vice President
"SPN" SPIEKER NORTHWEST, INC., a
California corporation
By: /s/
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Richard L. Romney
Vice President
5
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EXHIBIT (99)
FOR IMMEDIATE RELEASE
For Further Information Contact:
J. Gregory Kasun, President and CEO
Katrina L. Thompson, CFO
Telephone: (619) 450-3135
MISSION WEST PROPERTIES
ANNOUNCES
CLOSING OF REAL ESTATE SALE
SAN DIEGO, CALIFORNIA, January 22, 1997 -- Mission West Properties
(ASE/PSE: MSW) today announced that it had completed the sale of most of its
real estate assets to Spieker Properties, L.P. (NYSE: SPK); this transaction
was closed in accordance with terms of the related Purchase and Sale Agreement
dated December 6, 1996, as amended. As provided under terms of the Purchase and
Sale Agreement, completion of the sale of the Company's leasehold properties at
Palomar-McClellan Airport was deferred until a later period, not more than 120
days subsequent to the first closing, to allow for certain contingencies to be
satisfied.
The Company's Directors plan to meet shortly to consider a potential cash
distribution to shareholders from the proceeds of the sale transaction and to
consider future opportunities and a strategic course for the Company.
Mission West is 49-percent owned by Triton Group Ltd. (AMEX: TGL), a San
Diego holding company.
