<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 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 number: 0-12045
PRUDENTIAL ACQUISITION FUND I, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3173903
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
One Seaport Plaza, New York, NY 10292-0116
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-1016
N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check CK 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 _CK_ No __
<PAGE>
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUDENTIAL ACQUISITION FUND I, L.P.
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
ASSETS
Property held for sale $ 17,746,323 $17,712,532
Investment in joint venture, net 220,583 9,057,964
Cash and cash equivalents 1,490,410 750,153
Deferred rent 328,606 391,978
Other assets, net 45,726 48,236
------------- ------------
Total assets $ 19,831,648 $27,960,863
------------- ------------
------------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 409,961 $ 513,226
Tenant security deposits 19,624 18,724
------------- ------------
Total liabilities 429,585 531,950
------------- ------------
Partners' capital
Limited partners (70,124 units issued and outstanding) 19,402,063 27,428,913
General partners -- --
------------- ------------
Total partners' capital 19,402,063 27,428,913
------------- ------------
Total liabilities and partners' capital $ 19,831,648 $27,960,863
------------- ------------
------------- ------------
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<CAPTION>
The accompanying notes are an integral part of these statements
</TABLE>
2
<PAGE>
PRUDENTIAL ACQUISITION FUND I, L.P.
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six months Three months
ended June 30, ended June 30,
------------------------- -------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
REVENUES
Rental income $1,547,168 $1,466,723 $ 775,299 $ 731,370
Recovery of expenses 440,121 425,862 224,352 212,384
Interest income 25,228 23,200 16,421 12,453
Joint venture equity income (loss) 180,619 (182,584) (1,561) (332,948)
---------- ---------- ---------- ----------
2,193,136 1,733,201 1,014,511 623,259
---------- ---------- ---------- ----------
EXPENSES
Property operating 644,349 637,218 307,233 347,982
Real estate taxes 230,395 265,331 97,576 122,576
General and administrative 171,919 136,377 91,693 74,710
Depreciation and amortization -- 596,824 -- 293,750
---------- ---------- ---------- ----------
1,046,663 1,635,750 496,502 839,018
---------- ---------- ---------- ----------
Net income (loss) $1,146,473 $ 97,451 $ 518,009 $ (215,759)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
ALLOCATION OF NET INCOME (LOSS)
Limited partners $1,019,146 $ (18,448) $ 453,015 $ (278,091)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
General partners $ 127,327 $ 115,899 $ 64,994 $ 62,332
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income (loss) per limited partnership
unit $ 14.53 $ (.26) $ 6.46 $ (3.97)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
LIMITED GENERAL
PARTNERS PARTNERS TOTAL
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1995 $27,428,913 $ -- $27,428,913
Net income 1,019,146 127,327 1,146,473
Distributions (9,045,996) (127,327) (9,173,323)
----------- -------- -----------
Partners' capital--June 30, 1996 $19,402,063 $ -- $19,402,063
----------- -------- -----------
----------- -------- -----------
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The accompanying notes are an integral part of these statements
</TABLE>
3
<PAGE>
PRUDENTIAL ACQUISITION FUND I, L.P.
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months
ended June 30,
-------------------------
<S> <C> <C>
1996 1995
- --------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Rental income received $1,582,928 $1,496,308
Recovery of expenses received 433,926 430,558
Interest received 25,228 23,200
Tenant security deposits received 900 1,654
Real estate taxes paid (239,650) (260,725)
Property operating expenses paid (650,409) (762,891)
General and administrative expenses paid (223,552) (149,229)
Distributions from joint venture income 180,619 --
---------- ----------
Net cash provided by operating activities 1,109,990 778,875
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalized property expenditures (33,791) (99,205)
Distributions from joint venture in excess of income 8,837,381 540,000
---------- ----------
Net cash provided by investing activities 8,803,590 440,795
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (9,173,323) (1,159,006)
---------- ----------
Net increase in cash and cash equivalents 740,257 60,664
Cash and cash equivalents at beginning of period 750,153 646,346
---------- ----------
Cash and cash equivalents at the end of period $1,490,410 $ 707,010
---------- ----------
---------- ----------
- --------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
Net income $1,146,473 $ 97,451
---------- ----------
Adjustments to reconcile net income to net cash provided by
operating activities:
Distributions from joint venture income 180,619 --
Joint venture equity loss (income) (180,619) 182,584
Depreciation and amortization -- 596,824
Changes in:
Deferred rent 63,372 53,622
Other assets 2,510 (14,283)
Accounts payable and accrued expenses (103,265) (138,977)
Tenant security deposits 900 1,654
---------- ----------
Total adjustments (36,483) 681,424
---------- ----------
Net cash provided by operating activities $1,109,990 $ 778,875
---------- ----------
---------- ----------
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
4
<PAGE>
PRUDENTIAL ACQUISITION FUND I, L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
A. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions for Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for annual financial
statements. In the opinion of management, all adjustments (consisting of only
normal recurring adjustments as well as those adjustments relating to the sale
of the Ridge Plaza joint venture (``Joint Venture'') as reflected in Note C)
considered necessary for a fair presentation of the financial position of
Prudential Acquisition Fund I, L.P. (the ``Partnership'') as of June 30, 1996,
the results of its operations for the six and three months ended June 30, 1996
and 1995 and its cash flows for the six months ended June 30, 1996 and 1995 have
been included. Operating results for the interim periods may not be indicative
of the results expected for the full year. It is suggested that these financial
statements be read in conjunction with the financial statements and footnotes
thereto included in the Partnership's Annual Report on Form 10-K filed with the
Securities and Exchange Commission for the year ended December 31, 1995.
B. Related Parties
Prudential-Bache Properties, Inc. (``PBP'') and Prudential Realty
Partnerships, Inc. (collectively, the
``General Partners'') and their affiliates perform services for the Partnership
which include, but are not limited to: accounting and financial management,
registrar, transfer and assignment functions, asset management, investor
communications, printing and other administrative services. The amount of
reimbursement from the Partnership is limited by the provisions of the
Partnership Agreement. The costs and expenses incurred on behalf of the
Partnership which are reimbursable to the General Partners and their affiliates
are:
<TABLE>
<CAPTION>
Six months Three months
ended June 30, ended June 30,
--------------------- --------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Prudential Realty Partnerships, Inc. and affiliates $ 43,900 $ 30,800 $ 23,800 $ 19,200
Prudential-Bache Properties, Inc. and affiliates 70,600 47,200 37,400 24,600
--------- -------- -------- --------
$ 114,500 $ 78,000 $ 61,200 $ 43,800
--------- -------- -------- --------
--------- -------- -------- --------
</TABLE>
Expenses payable to the General Partners and their affiliates (which are
included in accounts payable and accrued expenses) as of June 30, 1996 and
December 31, 1995 are $135,500 and $74,000, respectively.
In addition, the General Partners and their affiliates performed similar
services for the Joint Venture. The Partnership's allocable share of the costs
and expenses incurred on behalf of the Joint Venture which are reimbursable to
the General Partners and their affiliates were $12,000 and $19,200,
respectively, for the six months ended June 30, 1996 and 1995 and $3,200 and
$10,100, respectively, for the three months ended June 30, 1996 and 1995.
Prudential Securities Incorporated (``PSI''), an affiliate of the General
Partners, owns 175 limited partnership units at June 30, 1996.
5
<PAGE>
C. Investment in Joint Venture
The Partnership has a 54% interest in a joint venture with an affiliated
limited partnership. Presented below is summarized financial information for the
Joint Venture:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
Assets
Property held for sale $ -- $ 14,978,372
Accounts receivable, net 223,400 688,279
Cash and cash equivalents 376,273 1,427,420
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Total assets $ 599,673 $ 17,094,071
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------------- ------------
Liabilities and partners' capital
Total liabilities $ 107,587 $ 326,699
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Partners' capital:
Prudential Acquisition Fund I, L.P. 220,583 9,009,238
Prudential Realty Acquisition Fund II, L.P. 271,503 7,758,134
------------- ------------
Total partners' capital 492,086 16,767,372
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Total liabilities and partners' capital $ 599,673 $ 17,094,071
------------- ------------
------------- ------------
</TABLE>
<TABLE>
<CAPTION>
Six months Three months
ended June 30, ended June 30,
------------------------- -------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Revenues
Rental income $ 769,900 $1,374,733 $ -- $ 698,927
Recovery of expenses 250,341 515,782 -- 232,994
Interest income 46,632 49,253 25,744 23,768
---------- ---------- ---------- ----------
1,066,873 1,939,768 25,744 955,689
---------- ---------- ---------- ----------
Expenses
Property operating 430,759 529,255 -- 279,307
Real estate taxes 113,475 253,444 -- 91,537
General and administrative 41,387 60,511 28,637 31,054
Loss on sale of assets 56,540 -- -- --
Provisions for loss on impairment of
assets -- 850,000 -- 850,000
Depreciation and amortization -- 580,399 -- 318,223
---------- ---------- ---------- ----------
642,161 2,273,609 28,637 1,570,121
---------- ---------- ---------- ----------
Net income (loss) $ 424,712 $ (333,841) $ (2,893) $ (614,432)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The two shopping centers owned by the Joint Venture (``Shopping Centers'')
were sold on March 26, 1996 for a gross sales price of $15,500,000 less costs to
sell.
Joint venture equity income includes a write-off of $49,000 during the six
months ended June 30, 1996 of the remaining Partnership costs incurred in the
acquisition of the Joint Venture investment that were in excess of its basis in
the Joint Venture. These excess costs were previously being amortized over an
eighteen-year period and were written-off as a result of the sale of the Joint
Venture properties.
6
<PAGE>
D. Subsequent Events
In August 1996, a distribution of $623,000 was made to the partners for the
quarter ended June 30, 1996. Limited partners received $561,000, which
represents $8.00 per unit, and the General Partners received the remainder.
An offer to purchase the One Executive Center property, a 114,000 square foot
five-story office building located in Albuquerque, New Mexico, was accepted in
June 1996 for a gross sales price of $7,300,000 less costs to sell. A contract
of sale is expected to be signed in mid-August with closing within sixty days of
signing. The sales price is in excess of the property's appraised value. There
can be no assurance that this transaction will close or, if closed, that the
terms of the sale will not change.
The Partnership sold its interest in Norwalk Industrial, a 180,000 square
foot industrial warehouse located in Norwalk, California, on August 6, 1996 for
a gross sales price of $6,600,000 less costs to sell of approximately $300,000.
In addition, approximately $300,000 of deferred rent and other assets will be
written-off relating to the sale of the property. The gross sales price
represents 100% of the appraised value of the property based upon an appraisal
dated as of December 31, 1995. The purchaser of the Norwalk property was NNW
Real Estate, Inc., a California corporation and an affiliate of the
property's sole tenant, Weber Distribution, under a Purchase and Sale
Agreement dated April 11, 1996. On August 13, 1996, as a result of this
sale, a distribution of $89.82 per unit was made to limited partners.
On a pro forma basis, if the sale of the Norwalk Industrial property had been
consummated on June 30, 1996, the Partnership's Statement of Financial Condition
as of such date would have reflected an increase in cash of approximately
$6,300,000 and decreases in property held for sale of approximately $6,000,000
and deferred rent and other assets of approximately $300,000. For the
Statement of Operations, if the transaction were consummated on January
1, 1995, the Partnership's net loss for 1995 would have increased by
approximately $290,000 or $4.13 to $12.45 per limited partnership unit.
For the Statement of Operations, if the transaction were consummated on
January 1, 1996, the Partnership's net income for the six months ended
June 30, 1996 would have decreased approximately $300,000 or $4.28 to
$10.25 per limited partnership unit. These pro forma adjustments for
the Statement of Operations exclude the Partnership's non-recurring
gain on the sale.
7
<PAGE>
PRUDENTIAL ACQUISITION FUND I, L.P.
(a limited partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership has a real estate investment portfolio consisting of two
office buildings, a warehouse and an equity interest in a joint venture (the
``Joint Venture'') which owned two shopping centers (``Shopping Centers''). The
Shopping Centers were sold on March 26, 1996 for a gross sales price of
15,500,000 less costs to sell.
In January 1996, the General Partners mailed to all limited partners a
Consent Solicitation Statement (the ``Statement'') asking for their written
consent to approve (i) a plan of sale of the remaining assets of the Partnership
and (ii) the complete liquidation and dissolution of the Partnership, as more
fully described in the Statement. On March 11, 1996, the limited partners
holding a majority of the limited partnership units approved the plan of sale
and complete liquidation and dissolution of the Partnership. The General
Partners are attempting to sell the remaining properties and liquidate the
Partnership as soon as possible. It is not expected that the Partnership's
eventual total distributions, including sales proceeds, will equal the partners'
initial investments. Pursuant to the plan of liquidation, the Norwalk Industrial
property was sold on August 6, 1996 and an offer to purchase the One Executive
Center property was accepted in June 1996 with the signing of a contract for
sale expected in mid-August.
Cash distributions from the Joint Venture, rental revenue from the
Partnership's directly-owned properties and interest earned on short-term
investments have provided sufficient liquidity to meet expenses incurred by the
Partnership and its properties.
During the six months ended June 30, 1996, the Partnership's cash and cash
equivalents increased $740,000 because cash generated by operating activities
and distributions from the Joint Venture exceeded capital expenditures and
distributions paid to the partners.
In connection with the capital improvements which are discussed below, the
amount of actual expenditures and their timing will depend on the success of
sales and leasing efforts, the nature and timing of new leases and lease
renewals, ongoing evaluation of the need for the planned improvements and
optimal timing of their implementation as well as general market conditions.
Cash Distributions
Cash distributions during the six months ended June 30, 1996 totalled
$9,173,000, of which the limited partners received $9,046,000 ($129.00 per unit)
and the General Partners received the remainder. These distributions consisted
of $112.66 per unit paid in April 1996 from the sale of the Shopping Centers and
$16.34 per unit funded from current and prior undistributed cash flow from
operations of the directly-owned and Joint Venture properties. Additionally,
during August 1996, a distribution of $89.82 was made to limited partners as a
result of the sale of the Norwalk Industrial property.
As a result of the sale of the Shopping Centers and the approval by
the limited partners of the plan of sale and liquidation of the
Partnership, future cash distributions may be significantly impacted. However,
it is expected that as properties are sold, a significant portion of the net
sales proceeds will be distributed shortly after each closing.
Furthermore, the amount of cash generated by the Partnership from operations
of the directly-owned properties, the amount expended for capital improvements,
and the amount of reserves set aside for anticipated capital improvements as
well as the timing of the sale of the Partnership's properties could affect the
Partnership's ability to make future distributions to the partners and the
amount of the distributions that may be made.
Capital Improvements--Directly-Owned Properties
For the six months ended June 30, 1996, the Partnership expended $34,000 on
capital improvements ($16,000 at One Executive Center and $18,000 at Norwest
Center) which were necessary to maintain the properties. Projected capital
expenditures for the directly-owned properties for the remainder of 1996 are
estimated at $97,000. This includes $66,000 in anticipated tenant improvements
and leasing commissions
8
<PAGE>
<PAGE>
and $31,000 for improvements necessary to maintain the properties. These capital
improvements will be funded from undistributed cash balances or cash derived
from future operations.
Results of Operations
The Partnership's net income for the six and three months ended June 30, 1996
increased $1,049,000 and $734,000, respectively, as compared to 1995. The
variances for the directly-owned properties and Joint Venture properties are
discussed below.
Directly-Owned Properties
The Norwalk Industrial Park in Norwalk, California was 100% leased to one
tenant as of June 30, 1996 and 1995. Rental income for the six and three months
ended June 30, 1996 was comparable to 1995. Property operating expenses for the
six and three months ended June 30, 1996 decreased $8,000 and $2,000,
respectively, as compared to 1995 mainly due to lower professional fees. The
Norwalk property, a 180,000 square foot industrial warehouse facility, was sold
on August 6, 1996 to an affiliate of the sole tenant of that facility for a
gross sales price of $6,600,000 which represented 100% of the appraised value of
the property.
The Norwest Center property in Rochester, Minnesota was 93% and 91% leased as
of June 30, 1996 and 1995, respectively. During the next twelve months, four
leases representing 22% of the rentable space are scheduled to expire. Rental
income for the six and three months ended June 30, 1996 both increased $7,000 as
compared to 1995 due to increased occupancy. Property operating expenses for the
six and three months ended June 30, 1996 decreased $15,000 and $23,000,
respectively, as compared to 1995 mainly due to lower repairs and maintenance
costs and professional fees.
The One Executive Center office property in Albuquerque, New Mexico was 99%
and 98% leased as of June 30, 1996 and 1995, respectively. During the next
twelve months, four leases representing 50% of the rentable space are scheduled
to expire. One tenant representing 42% of the rentable space has indicated that
it will vacate its space when its lease expires in February 1997. Rental income
for the six and three months ended June 30, 1996 increased $73,000 and $37,000,
respectively, as compared to 1995 mainly due to increased rental rates. Property
operating expenses for the six months ended June 30, 1996 increased $30,000 as
compared to 1995 mainly due to increased security and utilities costs. Property
operating expenses for the three months ended June 30, 1996 decreased $16,000 as
compared to 1995 due to lower repairs and maintenance and professional fees. An
offer for the purchase of the One Executive Center property was accepted in June
1996. The sales price is in excess of its appraised value. A contract of sale
is expected to be signed in mid-August with closing to occur within sixty days
of signing. There can be no assurance that this transaction will close or, if
closed, that the terms of the sale will not change.
Real estate taxes for the six and three months ended June 30, 1996 decreased
$35,000 and $25,000, respectively, as compared to 1995 due to lower assessments
at the Norwalk and Norwest properties.
General and administrative expenses for the six and three months ended June
30, 1996 increased $36,000 and $17,000, respectively, compared to 1995 primarily
due to increased costs to administer the Partnership as its properties are being
sold.
Depreciation expense for the six and three months ended June 30, 1996
decreased $597,000 and $294,000, respectively, as compared to 1995 due to the
reclassification of the Partnership's properties from held for use to held for
sale as of December 31, 1995. Under generally accepted accounting principles,
such properties are no longer depreciated and, therefore, no depreciation
expense has been recorded for the six months ended June 30, 1996.
Joint Venture Properties
The sale of the two shopping centers owned by the Joint Venture occurred on
March 26, 1996 at a gross sales price of $15,500,000 less costs to sell,
resulting in a $56,000 loss on the sale.
Joint venture equity income includes a write-off of $49,000 during the six
months ended June 30, 1996 of the remaining Partnership costs incurred in the
acquisition of the Joint Venture investment that were in excess of its basis in
the Joint Venture. These excess costs were previously being amortized over an
eighteen-year period and were written-off as a result of the sale of the Joint
Venture properties.
9
<PAGE>
The Joint Venture recorded a provision for loss on impairment of assets of
$850,000 during the three months ended June 30, 1995 to reflect a diminution in
value resulting from lease defaults and market indications.
10
<PAGE>
PART II. OTHER INFORMATION
<TABLE>
<S> <C>
Item 1. Legal Proceedings--None
Item 2. Changes in Securities--None
Item 3. Defaults Upon Senior Securities--Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders--None
Item 5. Other Information--None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Description:
3 and 4 Amended and Restated Agreement of Limited Partnership(1)
Amendment to Limited Partnership Agreement dated as of January 1, 1987(2)
10 Material Contracts:
I. Purchase and Sale Agreement dated April 11, 1996 between Registrant and NNW Real
Estate, Inc. (filed herewith)
J. First Amendment to Purchase and Sale Agreement and Escrow Instructions dated June 25,
1996 between Registrant and NNW Real Estate, Inc. (filed herewith)
27 Financial Data Schedule (filed herewith)
b. Reports on Form 8-K--None
</TABLE>
- ---------------
(1) Incorporated by reference to Prospectus dated July 1, 1983 as filed with the
Commission pursuant to Rule 424(b) under the Securities Act of 1933
(2) Incorporated by reference to Exhibits 3 and 4 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1988
11
<PAGE>
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.
Prudential Acquisition Fund I, L.P.
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/ Eugene D. Burak Date: August 14, 1996
-----------------------------------------
Eugene D. Burak
Vice President
Chief Accounting Officer for the
Registrant
12
<PAGE>
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT, dated (for reference purposes only) this 11th
day of April, 1996, is made by and between PRUDENTIAL ACQUISITIONS FUND I,
L.P. ("Seller") and NNW REAL ESTATE, INC., a California corporation
("Buyer"), who for valuable consideration received agree as follows:
1. Purchase and Sale of Property. Subject to the terms and
conditions herein, Seller agrees to sell and Buyer agrees to purchase all
of Seller's right, title and interest in the property commonly known as
15301 Shoemaker Avenue, Norwalk, California, which is more particularly
described as follows:
1..1 Land. All of the land situated in Los Angeles County,
State of California, which is legally described in Exhibit A attached
hereto (the "Land");
1..2 Improvements. All of Seller's right, title, and interest
in and to the buildings, structures, fixtures and other improvements
located on the Land (the "Improvements");
1..3 Personal Property. All of Seller's right, title, and
interest, if any, in the tangible personal property, if any, located in the
Improvements or on the Land as of the date hereof, and used in connection
with the ownership and operation of the Land and Improvements (the
"Personal Property"); and
1..4 Lease. All of Seller's interest as lessor and landlord
under that certain Lease (the "Lease") dated January 29, 1993, by and
between Weber Distribution Warehouses, Inc., a California corporation
("Weber") as "Lessee" and Seller as "Lessor" pursuant to which Weber leases
the Land and Improvements.
The Land and Improvements are herein collectively referred to
as the "Real Property". The Land, Improvements, Personal Property and
Lease are herein collectively referred to as the "Property".
2. Purchase Price. Subject to the closing adjustments and
prorations described below, Buyer shall pay to Seller as the purchase price
for the Property the sum of SIX MILLION SIX HUNDRED THOUSAND AND NO/100THS
DOLLARS ($6,600,000.00) (the "Purchase Price"), in the following manner:
2..1 Earnest Money. Upon execution of this Agreement, Buyer
shall deposit an amount equal to FIFTY THOUSAND AND NO/100THS DOLLARS
($50,000.00) (the "Earnest Money Deposit") with Stewart Title Insurance
Company (the "Escrow Holder"). Escrow Holder shall place the deposit of
the Earnest Money Deposit in an interest bearing account. Interest shall
inure to Buyer. Upon the Close of Escrow (as hereinafter defined), the
Earnest Money Deposit and interest earned in Escrow thereon shall be
applied against the Purchase Price.
2..2 Cash at Closing. On or before the Closing Date (as here-
inafter defined) or such earlier date as may be required by Escrow Holder,
Buyer shall deposit with Escrow Holder, in immediately available funds, the
balance of the Purchase Price, plus any closing costs payable hereunder by
Buyer and plus or minus closing adjustments and prorations.
3. Close of Escrow. An escrow (the "Escrow") for the purchase and
sale contemplated by this Agreement shall be opened with Escrow Holder.
Buyer and Seller agree that such Escrow shall be closed and the purchase
and sale shall be consummated ("Close of Escrow" or "Closing") on a date
(the "Closing Date") mutually acceptable to Buyer and Seller but in any
1
<PAGE>
event not later than the date ("Outside Closing Date") that is sixty (60)
days after the expiration of the Inspection Contingency Period as defined
in Section 4.1, below, in the following manner:
3..1 Seller's Deliveries into Escrow. Prior to the Closing
Date, Seller shall deliver to Escrow Holder the following (all documents
shall be duly executed by Seller and shall be acknowledged where required):
(a) A grant deed to the Real Property (the "Deed"), in
the form attached hereto as Exhibit B;
(b) A bill of sale with respect to Seller's right,
title, and interest, if any, in the Personal Property, in the form
attached hereto as Exhibit C;
(c) Certificates from Seller establishing that Seller is
not a "foreign person" within the meaning of Section 1445(f)(3) of
the Internal Revenue Code, in the form attached hereto as Exhibit F,
and if necessary, that Seller is not subject to withholding under
corresponding provisions of state law;
(d) Seller's written instructions to close Escrow not
inconsistent with the terms of this Agreement;
(e) A duplicate original of an assignment and assumption
of the Lease ("Assignment of Lease") in the form attached hereto as
Exhibit D; and
(f) Seller's originals of the Lease and the letter of
credit posted by Weber as the security deposit under the Lease.
Upon the Closing, Seller shall also deliver to Buyer, outside of Escrow,
all documents, records, files and other property owned by or possessed or
controlled by Seller and which relate or pertain to the Property, including
all keys, plans and specifications, reports, files, and guaranties and
warranties, together with any assignments of the foregoing reasonably
requested by Buyer and any assignment of intangible property relating or
pertaining to the Property which is reasonably requested by Buyer.
3..2 Buyer's Deliveries into Escrow. Prior to the Closing
Date, Buyer shall deliver to Escrow Holder the following (all documents
shall be duly executed by Buyer and shall be acknowledged where required):
(a) The Purchase Price (net of the Earnest Money Deposit
and interest earned in escrow thereon), plus any closing costs
payable hereunder by Buyer and plus or minus closing adjustments and
prorations;
(b) Buyer's written instructions to close Escrow not
inconsistent with the terms of this Agreement;
(c) A duplicate original of the Assignment of Lease; and
(d) Acknowledgment of Tenant in the form of Exhibit E
hereto, executed by Weber.
3..3 Escrow Holder's Duties. On the Closing Date, Escrow
Holder shall close escrow by taking the following actions in the following
order:
(a) Recording all documents as may be necessary to
clear title in accordance with the requirements of this Agreement;
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(b) Recording the Deed;
(c) Paying all closing costs and making all prorations
in accordance with the terms of this Agreement and a statement of
adjustments and prorations prepared by Buyer and Seller and delivered
to Escrow Holder prior to the Closing Date;
(d) Delivering to Buyer the Title Policy (as hereinafter
defined), Escrow Holder's certified closing statement, and an
original of each of the documents described in Sections 3.1(a)
through 3.1(c), 3.1(e) and 3.1(f); and
(e) Delivering to Seller, by wire transfer, the
Purchase Price plus or minus closing adjustments and prorations; and
delivering to Seller, on or promptly after the Closing Date, Escrow
Holder's certified closing statement, a duplicate original of the
Title Policy, conformed copies of the Deed, and an original of each
of the documents described in Sections 3.2(c) and 3.2(d).
3..4 Escrow Instructions. In the event that Buyer or Seller
execute separate escrow instructions prepared or requested by Escrow
Holder, such separate escrow instructions shall constitute separate
agreements between Escrow Holder on the one hand, and Buyer or Seller, as
the case may be, on the other hand, and shall not constitute agreements
between Buyer and Seller. Such separate escrow instructions shall be
enforceable only to the extent not inconsistent with this Agreement.
4. Inspection Contingency Period.
4..1 Within 15 days following execution of this Agreement by
Buyer and Seller, Seller shall deliver to Buyer or make available in
Los Angeles true copies of all of the following documents:
(a) A current preliminary title report or preliminary
title commitment (the "Title Report") issued by Stewart Title
Insurance Company (the "Title Company"), and copies prepared by the
Title Company of all documents identified as exceptions in the Title
Report;
(b) A current ALTA survey or current ALTA update of a
prior survey of the Real Property, in a form acceptable to the Title
Company for use in issuing an ALTA extended coverage form of the
Title Policy (the "Survey"), and any earlier ALTA surveys of the Real
Property in Seller's files or, to Seller's actual knowledge, under
its control; and
(c) Any other documents in Seller's possession or, to
Seller's actual knowledge, under Seller's control and which relate to
the Property, including all environmental reports, plans and
specifications, guarantees, and warranties.
Buyer shall have the right to have unrestricted access during
normal business hours to all of Seller's files which relate to the
Property, such access to be given upon reasonable advance notice by Buyer
of Buyer's desire for such access from time to time. Anything to the
contrary in the foregoing notwithstanding, Buyer shall not have access to,
and Seller shall not be obligated to deliver to Buyer, any documents that
are confidential, proprietary or privileged.
Buyer shall have a period of time (the "Inspection Contingency
Period") to conduct its due diligence review, inspection, and investigation
of the Property, as described below. The Inspection Contingency Period
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shall commence upon execution of this Agreement by Buyer and Seller, and
shall continue for forty-five (45) days.
4..2 During the Inspection Contingency Period Buyer, Seller
and the Title Company shall negotiate in good faith to resolve any title
issues identified by Buyer, and to develop a form of a final title
commitment or pro-forma title policy (the "Title Commitment") acceptable to
Buyer in its sole discretion, including the form of any indorsements
required by Buyer. Neither Buyer nor Seller shall be required to bear any
expense in resolving title issues. If agreement has not been reached as to
the form of the Title Commitment by the conclusion of the Inspection
Contingency Period, Buyer shall by written notice to Seller either
terminate this Agreement or waive its objections to the Title Company's
Title Commitment within five (5) days after the expiration of the
Inspection Contingency Period. Buyer's failure to deliver that notice
shall be deemed Buyer's election to terminate this Agreement.
4..3 During the Inspection Contingency Period, Buyer shall
have an opportunity to review all of the documents delivered or made
available to Buyer pursuant to Section 4.1, and shall have an opportunity
to conduct a thorough review, investigation, and inspection of the
physical, environmental, economic, and legal condition of the Property, the
laws, regulations, covenants, conditions, and restrictions affecting or
governing the use of the Property, the rentable square footage of the
Property, and all other matters which Buyer deems necessary to review,
investigate, or inspect; provided, however, that the scope of Buyer's
physical inspections which would result in or involve any destructive
testing or damage of or to the Property shall be subject to Seller's
approval, which shall not be unreasonably withheld. Buyer shall restore
each area tested or inspected to the condition existing before the testing
or inspection, as applicable. All such reviews, investigations, inspect-
ions and restoration shall be at Buyer's sole expense. Buyer shall in
writing approve or disapprove its due diligence investigation of the
Property on or before the last day of the Inspection Contingency Period.
Buyer's failure to either disapprove or approve in writing such
investigation within the time period allotted to such item shall be deemed
to constitute Buyer's disapproval of same. Such approval or disapproval
may be granted or withheld in the sole discretion of Buyer. If Buyer
disapproves, Buyer shall be deemed to have elected to terminate this
Agreement. If Buyer does not so terminate this Agreement, then, on such
date, Buyer's right of termination shall expire and Buyer shall be deemed
to have approved its due diligence investigation of the Property.
4..4 From the date of this Agreement and until the date Escrow
closes or the date of termination of this Agreement, Seller shall send
Buyer a copy of any correspondence concerning the Property which Seller
receives from any governmental agency or which Seller sends to any
governmental agency.
4..5 Buyer hereby indemnifies, and shall protect, defend, and
hold harmless Seller from and against any claims, demands, causes of
action, and liabilities, including without limitation personal injuries and
property damage, and shall immediately discharge any liens and
encumbrances, arising out of any acts or omissions by Buyer or its agents,
contractors, or representatives, committed on or about the Property in the
course of Buyer's due diligence reviews, investigations and inspections.
In the case of Buyer's contractors or representatives who propose to enter
areas of the Property not ordinarily accessible to the public (including
without limitation the roof) or conduct activities which give rise to
material risks of damage or injury to persons or property, Seller reserves
the right to require delivery of certificates of insurance, protecting
against the risks arising from the proposed reviews, investigations and
inspections, issued by insurance companies reasonably acceptable to Seller
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and in form, substance, and amounts reasonably acceptable to Seller, naming
Seller as an additional insured.
4..6 Seller's Disclaimer.
(a) Except as otherwise expressly provided in Section 6
below, Seller disclaims the making of any covenants, representations,
or warranties, express or implied, regarding the Property or matters
affecting the Property, including, without limitation, the physical
condition of the Real Property, title to or the boundaries of the
Real Property, pest control matters, soil condition, hazardous waste,
toxic substance or other environmental matters, compliance with
building, health, safety, land use and zoning laws, regulations and
orders, structural and other engineering characteristics, traffic
patterns, the rentable square footage of the Property, and any other
matters which may be or could have been the subject of Buyer's due
diligence review, investigations, or inspections. Except as provided
in Section 6.2 below, Seller disclaims any covenants,
representations, or warranties as to the accuracy or completeness of
any document delivered to Buyer pursuant to Section 4.1. Buyer,
moreover, acknowledges that (i) an affiliate of Buyer is the tenant
on the Property under the Lease and pursuant to the Lease has been
responsible for the maintenance and operation of the Property as set
forth in the Lease and Seller has not had any significant role in
operating the Property; (ii) Buyer is capable of evaluating the
merits and risks of entering into this Agreement and purchasing the
Property; (iii) subject to the covenants, representations and
warranties set forth in Section 6 below, Buyer has entered into this
Agreement with the intention of making and relying upon its own (or
its experts') reviews, investigations, and inspections of the
physical, environmental, economic and legal condition of the
Property, including, without limitation, the mechanical, electrical,
HVAC and other systems, the other documents relating to the Property,
the compliance of the Property with laws and governmental
regulations, the operation of the Property and all other matters
which may be or could have been the subject of Buyer's due diligence
review, investigations, or inspections, and at Closing Buyer shall be
deemed to be on notice of all such matters; and (iv) Buyer is not
relying upon any covenants, representations, or warranties, other
than those specifically set forth in Section 6 below, made by Seller
or anyone acting or claiming to act on Seller's behalf concerning the
Property. Buyer acknowledges that Seller does not guaranty the
enforceability of any lease or contract, or the attainment of any
income or expense projection. Buyer further acknowledges that it has
not received from Seller any accounting, tax, legal, architectural,
engineering, property management or other advice with respect to this
transaction and is relying upon the advice of its own accounting,
tax, legal, architectural, engineering, property management and other
advisors. Subject to the provisions of Section 6 and Section 8 of
this Agreement, Buyer shall purchase the Property in its "AS IS"
condition as of the date of this Agreement, and assumes the risk that
adverse physical, environmental, economic or legal conditions may not
have been revealed by its reviews, investigations, and inspections.
Buyer's agreement to purchase the Property "AS IS" is a material
inducement to Seller to agree to sell the Property at the Purchase
Price provided herein. Seller shall have no obligation to repair,
improve, or modify the Property prior to the Closing Date, and no
liability for any subsequently discovered defects, whether latent or
patent.
(b) From and after the Closing Date, Buyer shall assume
all risks with respect to the Property, known and unknown, suspected
and unsuspected. Buyer shall be solely liable for, and shall
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indemnify, defend and hold harmless Seller, its agents, employees,
affiliates, successors and assigns from any and all claims, demands,
causes of action, and liabilities, at law or in equity, known or
unknown, suspected or unsuspected, relating to personal injury,
property damage, economic loss, or other damages suffered by Buyer or
any third party on or after the Closing Date arising out of the Lease
and/or the physical, environmental, economic, legal or other
condition of the Property (collectively referred to hereinafter as
"Claims"), even if the proximate or legal cause of such Claims relate
to a condition, known or unknown to Buyer, which was in existence
prior to the Closing Date, except to the extent any such Claim arises
out of the intentional tortious misconduct of Seller or Seller's
breach of this Agreement or any warranty or representation set forth
herein. Effective as of the Closing Date, Buyer, on behalf of itself
and its successors and assigns, generally releases Seller and its
agents, partners, employees, affiliates, successors, and assigns,
from any and all such Claims, known or unknown, suspected or
unsuspected, other than those arising out of the intentional tortious
misconduct of Seller or Seller's breach of this Agreement or any
warranty or representation set forth herein. Buyer's agreements
herein to assume all risks with respect to the Property, and release
and indemnify Seller with respect to all actual or potential Claims,
are a material inducement to Seller to agree to sell the Property at
the Purchase Price provided herein. Buyer is familiar with
California Civil Code Section 1542, the text of which is set forth in
the footnote. For valuable consideration, Buyer hereby waives its
rights, if any, under said Section 1542 with respect to such Claims.
(c) By its initials below, Buyer acknowledges that it
fully understands, appreciates, and accepts all of the terms of this
Section 4.6 ("Seller's Disclaimer").
________________
Buyer's Initials
4..7 Estoppel Certificates. Due to an affiliate of Buyer
being the sole tenant of the Property, Seller shall have no obligation to
provide Buyer with an estoppel certificate or any documentation concerning
the Lease.
5. Conditions of Closing.
5..1 Buyer's Conditions. In addition to the conditions of
Section 4, Buyer's obligation to purchase the Property shall be subject to
the following conditions:
(a) The Title Company shall issue or shall be
unconditionally committed to issue a standard coverage, or at Buyer's
option an ALTA extended coverage, owner's policy of title insurance
(the "Title Policy"), with liability in the amount of the Purchase
Price, showing fee title to the Real Property vested in Buyer, in the
form of the Title Commitment developed pursuant to Section 4.2.
- -------------------------
1/ Section 1542 of the California Civil Code, which Buyer hereby waives
- with respect to such Claims, provides as follows: "A general release
does not extend to claims which the creditor does not know or suspect to
exist in his favor at the time of executing the release, which if known
by him must have materially affected his settlement with the debtor."
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(b) All representations and warranties of Seller herein
or in connection with this transaction, if any, shall be true and
complete as of the Closing Date; and Seller shall have performed all
of its covenants herein or in connection with this transaction, if
any, as of the Closing Date.
(c) There has been no material adverse change since the
date of this Agreement in the physical condition of the Property
other than for changes caused by Buyer or Weber or which would be the
obligation of Weber under the Lease to repair or restore or which
would be covered by the terms of Sections 8.2 or 8.3, below.
(d) There is no material adverse litigation or other
claim pending or, to the knowledge of Seller or Buyer, threatened,
against the Property or Seller in connection with the Property.
In the event that all of the above conditions are not satisfied
at or prior to the Closing, Buyer may either waive any unsatisfied
condition or conditions or terminate this Agreement by written notice to
Seller.
5..2 Seller's Conditions. Seller's obligation to sell the
Property shall be subject to the following condition:
(a) All representations and warranties of Buyer herein
or in connection with this transaction, if any, shall be true and
complete as of the Closing Date; and Buyer shall have performed all
of its covenants herein or in connection with this transaction, if
any, as of the Closing Date.
6. Covenants, Representations and Warranties.
6..1 Seller's Covenants. Seller covenants and agrees as
follows:
(a) During the period (the "Contract Period") from the
date of this Agreement through the Closing Date or the date of
termination of this Agreement, whichever is earlier, Seller shall not
make or consent to any material alterations to the Real Property,
nor modify or terminate any of the licenses, permits, legal
classification, or other governmental approvals or any warranties
pertaining to the Property or the Lease (unless agreed to by Weber),
nor enter into any new lease or agreement pertaining to the Property
(except as required by law or governmental order, or in the event of
an emergency) or change the physical condition of the Property,
except as required under the Lease or for health or safety reasons or
as approved by Weber, without Buyer's consent, which consent shall
not be unreasonably withheld or delayed and shall be deemed given if
Buyer's written objection is not delivered within ten (10) days of
Seller's request for such consent.
(b) During the Contract Period, Seller shall not
voluntarily cause to be recorded any encumbrance, lien, deed of
trust, easement or the like against the title to the Property,
without the prior written consent of Buyer, which consent shall not
be unreasonably withheld or delayed and shall be deemed given if
Buyer's written objection is not delivered within ten (10) days of
Seller's request for such consent.
(c) During the Contract Period, Seller may continue to
market the Property, solicit or respond to offers and inquiries,
engage in negotiations with other prospective purchasers, and enter
into any agreements in connection therewith; however, any written
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agreement with a prospective purchaser other than Buyer that is
concluded during the Contract Period must disclose the existence of
this Agreement, and must provide that the prospective purchaser shall
not acquire any right, title or interest in or to the Property unless
and until this Agreement is duly terminated, in accordance with its
terms and conditions, without a conveyance of the Property.
6..2 Seller's Representations and Warranties. Seller
represents and warrants to Buyer as follows:
(a) Seller has full power and authority to enter into
and carry out the terms and provisions of this Agreement and to
execute and deliver all documents which are contemplated by this
Agreement, and all actions of Seller necessary to confer such
authority upon the persons executing this Agreement and such other
documents have been taken.
(b) Except as has otherwise been or may otherwise be
communicated by Seller to Buyer prior to Closing, in writing or in
documents delivered or made available pursuant to Section 4.1, to
Seller's actual knowledge:
(i) Seller has not received any written
notice from any governmental authorities of, and does not
otherwise have actual knowledge of, any eminent domain
proceedings for the condemnation of the Real Property which
would materially and adversely affect the Real Property are
pending;
(ii) Seller has not received any written
notice of, and does not otherwise have actual knowledge of,
pending or threatened litigation which would materially and
adversely affect the Real Property;
(iii) Seller has not received any written
notice from any governmental authority that, and does not
otherwise have actual knowledge that, the improvements located
on the Real Property are presently in violation of any
applicable building codes or other applicable laws, or that
Seller's use of the Real Property is presently in violation of
any applicable zoning, land use or other law, order, ordinance
or regulation affecting the Real Property;
(iv) All reports in Seller's possession
or under Seller's control, and other information actually known
to Seller, concerning hazardous or toxic materials have been
made available to Buyer;
(v) The documents and information delivered
or made available to Buyer pursuant to Section 4.1 hereof are
complete copies; and
(vi) Other than the Lease and any items
appearing in the Title Report, there are no other agreements or
contracts in effect that relate to the ownership, sale, use or
maintenance of the Real Property that are not terminable
without penalty on less than 31 days' notice.
6..3 Buyer's Representations and Warranties. Buyer represents
and warrants to Seller as follows:
(a) Buyer is a corporation duly formed and organized,
validly existing and in good standing under the laws of the State of
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California, and is duly authorized to conduct business in this state
where the Property is located; and
(b) Buyer has, and as of the Closing Date shall have,
full power and authority to enter into and carry out the terms and
provisions of this Agreement and to execute and deliver all documents
which are contemplated by this Agreement, and all actions of Buyer
necessary to confer such authority upon the persons executing this
Agreement and such other documents have or will have been taken.
6..4 Limitations on Actions. Notwithstanding anything to the
contrary in this Agreement or in any other document or communication
relating to this transaction:
(a) Prior to Closing, if Seller is in breach or default
of any representation, warranty, or condition in this Agreement or
relating to this transaction, and if such breach or default is known
to Buyer, then Buyer shall deliver written notice thereof to Seller.
Seller shall have until the Closing Date to cure any such breaches or
defaults to Buyer's reasonable satisfaction. In the event that
Seller does not cure such breaches or defaults to Buyer's reasonable
satisfaction, Buyer's sole remedies shall be to (a) proceed to
closing, in which case such breach shall be deemed waived, or
(b) terminate this Agreement pursuant to Section 9 hereof and receive
liquidated damages as provided in Section 6.4(e). In no event shall
Buyer be entitled to delay Closing or extend the Closing Date as a
result of such breaches or defaults.
(b) Following the Closing, neither party shall have any
liability to the other party which (a) arises out of an inaccuracy in
or a breach of a representation, warranty, or covenant in this
Agreement or relating to this transaction which was known to the
other party on the Closing Date, or (b) to the extent such liability
was materially augmented by the other party's failure to use
commercially reasonable efforts to mitigate damages, or (c) is based
on a representation, warranty, covenant, or condition which the other
party did not materially rely upon in entering into this Agreement
and in proceeding to close the transaction contemplated by this
Agreement.
(c) Following the Closing, except for actions or
proceedings based solely upon intentional misrepresentation or
intentional fraud by the other party, neither party shall commence a
legal action or proceeding against the other party relating to
(a) the Property, or (b) a breach of a representation, warranty,
covenant, or condition made in this Agreement or in connection with
the transaction contemplated herein; unless (i) the factual basis of
the claim or cause of action asserted in the action or proceeding was
first identified with reasonable clarity in a written notice
delivered to the other party not later than two (2) years after the
Closing, and (ii) the action or proceeding is commenced and duly
served on the other party within two (2) years after the Closing.
The covenants, conditions, representations and warranties in this
Agreement or otherwise made in connection with this transaction (if
any) are personal to Buyer and Seller, and shall not run with the
Land, and no person or entity other than Buyer and Seller,
respectively, shall be entitled to bring any action based thereon.
(d) If the parties proceed to Closing, then effective
from and after the Closing, all conditions of Closing shall be deemed
satisfied or waived, and neither party shall have any liability to
the other if it is subsequently discovered that a condition was not
satisfied at Closing; provided, however, that (i) the foregoing shall
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not apply to the conditions at Sections 5.1(b) and 5.2(a), and
(ii) nothing in this Section shall relieve Escrow Holder or Title
Company of any liability for failure to comply with this Agreement or
with instructions from either Buyer or Seller.
(e) IN THE EVENT OF DEFAULT BY SELLER PRIOR TO CLOSING
IN THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER AND SUCH DEFAULT IS
KNOWN BY BUYER PRIOR TO CLOSING, BUYER SHALL HAVE THE RIGHT TO
TERMINATE THIS AGREEMENT FORTHWITH AND WITHOUT FURTHER OBLIGATIONS TO
SELLER AND TO OBTAIN IMMEDIATE RETURN OF THE EARNEST MONEY DEPOSIT
THEN HELD BY ESCROW HOLDER (INCLUDING INTEREST ACCRUED IN ESCROW
THEREON) AND LIQUIDATED DAMAGES IN THE AMOUNT OF $50,000.00. THE
PARTIES ACKNOWLEDGE THAT THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED
BY BUYER AS A RESULT OF SUCH DEFAULT WOULD BE EXTREMELY DIFFICULT TO
ESTABLISH. IN ADDITION, SELLER DESIRES TO HAVE A LIMITATION PUT UPON
ITS POTENTIAL LIABILITY TO BUYER IN THE EVENT THAT THIS TRANSACTION
SHALL FAIL TO CLOSE UNDER SUCH CIRCUMSTANCES. BY PLACING THEIR
RESPECTIVE INITIALS IN THE SPACES HEREINAFTER PROVIDED, THE PARTIES
ACKNOWLEDGE THAT UPON A DEFAULT BY SELLER UNDER THE TERMS OF THIS
AGREEMENT PRIOR TO CLOSING AND WHERE SUCH DEFAULT IS KNOWN BY BUYER
PRIOR TO THE CLOSING AND IS THE BASIS FOR BUYER'S TERMINATION OF THIS
AGREEMENT UNDER SECTION 6.4(a) ABOVE, BUYER SHALL AS ITS SOLE REMEDY
FOR ANY DEFAULT BY SELLER BE ENTITLED TO LIQUIDATED DAMAGES IN THE
AMOUNT OF $50,000.00. NOTWITHSTANDING THE FOREGOING, THE FOREGOING
SHALL NOT LIMIT IN ANY WAY ANY DAMAGES BUYER MAY RECOVER AS A RESULT
OF SELLER'S BREACH OF SECTION 11 OF THIS AGREEMENT.
BUYER ( ) AND SELLER ( ) AGREE.
6..5 Material New Matters. If on or after the last day of the
Inspection Contingency Period and prior to the Closing Seller discloses or
communicates any information or facts to Buyer that (a) were not disclosed
or made available to Buyer pursuant to Section 4.1, or otherwise, prior to
the last day of the Inspection Contingency Period, (b) would materially
change any of Seller's representations or warranties under Section 6.2, and
(c) would be material to the decision of a reasonably prudent buyer to
complete the purchase of the Property on the terms and conditions contained
in this Agreement (a "Material New Matter"), then Buyer shall have ten (10)
days after disclosure or communication of the Material New Matter in which
to elect to terminate the Escrow and this Agreement. If Buyer does not so
elect to terminate the Escrow and this Agreement, Buyer shall be deemed to
have approved the Material New Matter.
7. Closing Adjustments and Prorations. The adjustments and
prorations set forth below shall be made at the Close of Escrow and
allocated as of 11:59 p.m. Los Angeles Time on the day prior to the date
upon which the Closing takes place, so that Seller shall be charged with or
will have benefit of the items described in Sections 7.3 through 7.8,
below, accrued through the day prior to the Closing, and Buyer shall be
charged with or will have the benefit of such items from and after the
Closing.
7..1 Seller's Closing Costs. Seller shall pay (a) any
documentary or transfer taxes due on the transfer of the Property from
Seller to Buyer, (b) one-half of the escrow fee charged by Escrow Holder,
(c) the premium for the standard coverage portion of Title Policy, (d) its
own attorneys' fees, and (e) all other closing costs customarily paid by
sellers of commercial real property in the County where the Property is
located.
7..2 Buyer's Closing Costs. Buyer shall pay (a) all recording
costs, (b) one-half of the fee charged by Escrow Holder, (c) the premium
for the extended coverage portion of the Title Policy if requested by
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Buyer, (d) the premium for any endorsements to the Title Policy, (e) its
own attorney's fees, (f) all sales taxes, if any, incurred in connection
with the conveyance of the Personal Property, (g) the cost of any new
surveys (other than the survey to be delivered by Seller to Buyer pursuant
to Section 4.1(b)), and (h) all other closing costs customarily paid by
buyers of commercial real property in the County where the Property is
located.
7..3 Lease Rentals. All rent actually collected by Seller
(including all operating expense and tax escalations and recoveries,
charges, and revenues of any kind under the Lease) shall be prorated as of
the Closing Date based on the actual number of days in the month of
Closing.
7..4 Unpaid Rent and Additional Rent. Seller shall receive a
credit, prorated through the Closing Date, for all unpaid rent and other
charges payable by Weber to Seller under the Lease (including without
limitation amounts for Real Estate Taxes (as defined below), insurance and
utilities) due or attributable to the period ending on or before the
Closing Date. Buyer shall have the right to collect all such amounts from
Weber under the Lease after the Closing.
7..5 Real Estate Taxes. All real and personal property taxes,
and installments of bonds and special taxes and assessments attributable to
the Property (collectively "Real Estate Taxes") shall be prorated as of the
Closing Date based on a 365-day year and the assessed value of the Real
Property in effect immediately prior to the Close of Escrow. Seller shall
pay all such real estate taxes attributable to periods through and
including the Closing Date. This Section shall not apply to the extent
that Weber under the Lease is required to pay Real Estate Taxes directly to
the taxing authorities.
7..6 Insurance. Seller shall not assign to Buyer any
insurance policies in connection with the Property.
7..7 Utilities. Buyer shall arrange with all utility services
and companies serving the Real Property on behalf of Seller to have
accounts started in Buyer's name beginning at 12:01 a.m. on the Closing
Date. Buyer and Seller shall cooperate to have the utility services and
companies make utility readings as of the Closing Date, if necessary. If
readings can be made, utility charges shall not be prorated. If readings
cannot be made, utility charges shall be prorated as of the Closing Date
based on estimates from the latest bills available. In either event,
Seller shall pay, through and including the Closing Date, all utility
charges attributable to the Real Property which are not payable directly by
tenants. To the extent possible, Buyer shall purchase from Seller all
utility deposits, and Seller shall notify the respective utility companies
of the assignment of the deposits. This Section shall not apply to the
extent that Weber under the Lease pays for its own separately metered
utilities.
7..8 Calculations for Closing. Seller and Buyer shall make
their best efforts to provide Escrow Holder with a preliminary calculation
of prorations no later than five (5) days prior to the Closing Date, and
shall provide a final calculation immediately prior to the Closing Date.
The final calculation shall be signed by each party and may be relied upon
by Escrow Holder in completing the closing adjustments and prorations. In
the event incomplete information is available, or estimates have been
utilized to calculate prorations as of the Closing Date, any prorations
relating thereto shall be further adjusted and completed outside of escrow
within sixty (60) days after the Closing Date or as and when complete
information becomes available to Buyer and Seller.
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7..9 Other Adjustments. Any items which customarily are
prorated but which are not specifically mentioned herein shall be prorated
or adjusted, either prior to or as soon as practicable after Closing, in
accordance with appropriate customs and practices.
8. Delivery of Possession and Risk of Loss.
8..1 Delivery of Possession. At Close of Escrow, Seller,
except as provided in this Section 8, shall surrender to Buyer possession
of the Property and each part thereof.
8..2 Material Casualty or Condemnation. If, prior to Close of
Escrow, (i) the Property shall sustain damage caused by fire or other
casualty with respect to which either party reasonably estimates that the
cost of repair or replacement and the anticipated loss of use would exceed
$330,000.00 (a "Material Casualty") or (ii) if a taking or condemnation of
any portion of the Property has occurred, or is threatened, which would
materially affect the value of the Property, either Buyer or Seller may, at
its option, terminate this Agreement in accordance with Section 9 within
ten (10) days after notice of such event. If neither party provides said
termination notice within such 10-day period, the Close of Escrow shall
take place as set forth in this Agreement provided that (x) Buyer shall
receive a credit against the Purchase Price in an amount equal to any
insurance proceeds or condemnation awards actually collected by Seller
prior to Closing plus an amount reasonably estimated by Seller as the
uninsured portion of such loss and any deductible under the applicable
insurance policy or policies, and (y) Seller shall assign to Buyer at Close
of Escrow all of Seller's interest in and to any insurance proceeds or
condemnation awards which may be due but unpaid to Seller on account of
such occurrence. After the expiration of the Inspection Contingency Period
and prior to the Close of Escrow, Seller shall not settle any insurance or
condemnation claim without the prior consent and approval of Buyer.
8..3 Immaterial Casualty or Condemnation. If prior to Close
of Escrow the Property shall sustain damage caused by fire or other
casualty which is not a Material Casualty described in Section 8.2, or a
taking or condemnation has occurred, or is threatened, which is not
described in Section 8.2, neither Buyer nor Seller shall have the right to
terminate this Agreement and Close of Escrow shall take place as set forth
in this Agreement, provided that (i) Buyer shall receive a credit against
the Purchase Price equal to the insurance proceeds or condemnation awards
actually collected by Seller prior to Closing plus an amount reasonably
estimated by Seller as the uninsured portion of such loss and any
deductible under the applicable insurance policy or policies, and
(ii) Seller shall assign to Buyer at Close of Escrow all of Seller's
interest in and to any insurance proceeds or condemnation awards which may
be due but unpaid to Seller on account of any such occurrence.
9. Termination. In the event either party elects to exercise any
right to terminate this Agreement, whether on account of an express right
of termination provided herein, or on account of a failure or
non-satisfaction of a condition of Closing as of the latest Closing Date
contemplated herein or in any extension thereof agreed to in writing by
Buyer and Seller, then such party shall give written notice of such
termination and the reason therefor to the other party. Thereafter and
effective as of the effective date of such notice, if the Agreement has
been duly terminated in accordance with the terms and conditions hereof,
then each party shall be released from its obligations hereunder and all
monies and documents deposited into Escrow shall be returned to the party
which deposited them, all documents delivered by Seller to Buyer relating
to the Property shall be returned. At Seller's option, Buyer shall deliver
and assign to Seller all reports, studies, analyses and tests prepared by
or for Buyer by third parties (other than attorneys) relating to the
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Property, provided that concurrently with such delivery Seller shall
reimburse Buyer for its actual out-of-pocket costs of obtaining such
reports, etc; unless Seller exercises this option, Buyer shall not be
entitled to any compensation from Seller for the costs of obtaining such
reports, etc. Nothing herein shall limit Buyer's obligations set forth in
Section 4.5 hereof, which obligations shall survive termination for any
reason.
10. Liquidated Damages. IN THE EVENT OF DEFAULT BY BUYER IN THE
PERFORMANCE OF ITS OBLIGATIONS HEREUNDER, SELLER SHALL HAVE THE RIGHT TO
TERMINATE THIS AGREEMENT FORTHWITH AND WITHOUT FURTHER OBLIGATIONS TO BUYER
AND TO OBTAIN IMMEDIATE DISBURSEMENT OF AND TO RETAIN THE EARNEST MONEY
DEPOSIT THEN HELD BY ESCROW HOLDER (INCLUDING INTEREST ACCRUED IN ESCROW
THEREON). SUCH RETENTION OF THE EARNEST MONEY DEPOSIT IS NOT INTENDED AS A
FORFEITURE OR PENALTY, BUT INSTEAD, IS INTENDED TO CONSTITUTE LIQUIDATED
DAMAGES TO SELLER. THE PARTIES ACKNOWLEDGE THAT THE ACTUAL DAMAGES WHICH
WOULD BE SUFFERED BY SELLER AS A RESULT OF SUCH DEFAULT WOULD BE EXTREMELY
DIFFICULT TO ESTABLISH. IN ADDITION, BUYER DESIRES TO HAVE A LIMITATION
PUT UPON ITS POTENTIAL LIABILITY TO SELLER IN THE EVENT THAT THIS
TRANSACTION SHALL FAIL TO CLOSE. BY PLACING THEIR RESPECTIVE INITIALS IN
THE SPACES HEREINAFTER PROVIDED, THE PARTIES ACKNOWLEDGE THAT UPON A
DEFAULT BY BUYER UNDER THE TERMS OF THIS AGREEMENT SELLER SHALL AS ITS SOLE
REMEDY FOR ANY DEFAULT BY BUYER BE ENTITLED TO LIQUIDATED DAMAGES IN THE
AMOUNT OF THE EARNEST MONEY DEPOSIT; PROVIDED, HOWEVER, THAT THIS PROVISION
WILL NOT LIMIT SELLER'S RIGHT TO RECEIVE REIMBURSEMENT FOR ATTORNEYS' FEES,
NOR WAIVE OR AFFECT SELLER'S RIGHTS AND BUYER'S OBLIGATIONS UNDER
SECTIONS 4.3, 4.5, 9.1, 11 AND 14.16 OF THIS AGREEMENT.
BUYER ( ) AND SELLER ( ) AGREE.
11. Commissions. Seller shall pay a brokerage commission to
Cushman & Wakefield of California, Inc. ("Seller's Broker"), in accordance
with and subject to the terms and conditions of a separate agreement
between Seller and Seller's Broker. Buyer and Seller represent and warrant
that no other broker, finder, or agent has been involved in this
transaction and each shall indemnify, defend, protect, and hold the other
harmless from all claims for fees or commissions based upon any statement
or representation or agreement of the indemnifying party.
12. Assignment. Buyer's interest in this Agreement may be assigned
to any entity which is controlled by, or under common control with, Buyer
or in which Buyer or Nicholas N. Weber, directly or indirectly, holds at
least a 50% ownership and voting interest. Any other assignment shall
require the consent of Seller, which shall not be unreasonably withheld or
delayed. No assignment by Buyer shall release Buyer of its obligations
under this Agreement.
13. Definitions.
Whenever Seller, in this Agreement or in any other
communication, makes a representation, warranty, or disclosure that is
limited or qualified by terms such as "Seller's actual knowledge", or "to
the actual knowledge of Seller", such representation, warranty, or
disclosure shall be construed to mean that based solely on written notices
actually received by, or facts in question being actually known (as opposed
to imputed, inquiry or constructive knowledge) to John Woo or Mark
Harryman, without any due diligence or duty of inquiry, except as expressly
provided in this Section 13, the representation, warranty, or disclosure is
true and complete. Seller hereby represents and warrants that the persons
listed in the previous sentence are the officers or employees of Seller or
Seller's manager who are responsible for administering Seller's interest in
the Property during the 12-month period immediately preceding the date of
this Agreement, and who are likely to have, in Seller's good faith belief,
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any material knowledge of the Property or the operations or physical
condition of the Improvements. When a representation, warranty, or
disclosure is qualified by such terminology, it shall be presumed that
Seller's representatives with respect to this particular transaction made
reasonable inquiries to ascertain the truth and completeness thereof; but
such inquiries were limited to contacting and questioning only such persons
who (i) were actually employed during the Contract Period by Seller through
its agent's Dallas Office or by Seller's property manager, and (ii) had, at
any time during their employment by Seller or its property manager,
meaningful hands-on responsibility for leasing, managing, or selling the
Property. No further inquiries shall be required or presumed; Buyer
acknowledges that, in an organization as large and diverse as Seller's and
Seller's agent's organization, further inquiries would not be practical.
Seller's and Seller's agent's representatives in this particular
transaction, and each person responding to such an inquiry, shall be
presumed to have disclosed what he or she actually knows with respect to
the representation, warranty, or disclosure; but such persons shall not be
expected to make, nor shall they be presumed to have made, any new or
independent investigation of the Property merely to support the
representation, warranty, or disclosure. Seller shall not be held
responsible or liable for what such persons "should" or "ought to" have
known.
14. Miscellaneous.
14..1 Time of the Essence. Time is of the essence of every
provision of this Agreement.
14..2 Notices. Whenever any party hereto shall desire to give
or serve upon the other any formal notice, hereunder, each such notice
shall be in writing and shall be given or served upon the other party by
personal service or by certified, registered or Express United States Mail,
or Federal Express or any other delivery service providing evidence of
delivery or attempted delivery, postage or delivery fees prepaid, or by
telecopier, addressed as follows:
TO BUYER:
NNW REAL ESTATE, INC.
13530 Rosecrans Avenue
Santa Fe Springs, California 90670
Attention: Mr. Nicholas Weber
Fax No.: (310) 921-5522
WITH A COPY TO:
Anthony W. Pierotti, Esq.
Irell & Manella
840 Newport Center Drive #500
Newport Beach, California 92660
Fax No.: (714) 760-5200
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TO SELLER:
c/o The Prudential Real Estate Investors
2029 Century Park East, Suite 3600
Los Angeles, California 90067
Attention: John Woo
Fax No.: (310) 552-4571
WITH A COPY TO:
The Prudential Insurance Company of America
2029 Century Park East, Suite 3600
Los Angeles, California 90067
Attention: David Cher, Esq.
Fax No.: (310) 201-0445
Any such notice shall be deemed to have been received upon the
earlier of actual delivery thereof or two (2) business days after the date
of attempted delivery evidenced as provided above. If the notice is sent
via telecopier, it shall be deemed to have been received at the time of
transmission as evidenced by the sender's telecopier machine's written
confirmation of completion of connection and transmission.
14..3 Attorneys' Fees. If any legal proceeding is commenced
to enforce or interpret this Agreement or as a result of an alleged
dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Agreement, then the prevailing party shall be
entitled to recover its attorneys' fees, court costs, and other expenses
incurred in such legal proceeding, in addition to any other relief to which
such party may be entitled.
14..4 Successors. This Agreement shall be binding upon the
heirs, executors, administrators, successors and assigns of Seller and
Buyer.
14..5 Exhibits. All exhibits attached hereto shall be
incorporated herein by reference as if set out herein in full.
14..6 Binding Effect. Regardless of which party prepared or
communicated this Agreement, this Agreement shall be of binding effect
between Buyer and Seller only upon its execution by an authorized
representative of each such party.
14..7 Construction. The parties acknowledge that each party
and its counsel have reviewed and revised this Agreement and that the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendment or exhibits hereto.
14..8 Counterparts. This Agreement may be executed in several
counterparts each of which shall be an original, but all of such
counterparts shall constitute one such Agreement.
14..9 Not Recordable. This Agreement shall not be recorded.
14..10 Further Assurances. Buyer and Seller shall make,
execute, and deliver such documents and undertake such other and further
acts as may be reasonably necessary to carry out the intent of the parties
hereto.
14..11 Governing Laws. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of California.
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14..12 ENTIRE AGREEMENT. THIS AGREEMENT EMBODIES THE ENTIRE
AGREEMENT BETWEEN THE BUYER AND SELLER IN CONNECTION WITH THIS TRANSACTION,
AND ANY ORAL OR PAROL AGREEMENTS, REPRESENTATIONS OR WARRANTIES EXISTING
BETWEEN THE BUYER AND SELLER RELATING TO THIS TRANSACTION WHICH ARE NOT
EXPRESSLY SET FORTH HEREIN AND COVERED HEREBY SHALL BE DEEMED CANCELED AND
OF NO FURTHER FORCE AND EFFECT. THIS AGREEMENT CANNOT BE MODIFIED EXCEPT
BY A WRITING SIGNED BY THE PARTY CHARGED WITH THE MODIFICATION.
14..13 Waiver. The waiver by one party of the performance of
any condition or promise shall not invalidate this Agreement, nor shall it
be considered to be a waiver by it of any other covenant, condition, or
promise. The waiver by either or both parties of the time for performing
any act shall not constitute a waiver of the time for performing any other
act or an identical act required to be performed at a later time. Except
as specifically provided in the Section of this Agreement pertaining to
liquidated damages, the exercise of any remedy provided in this Agreement
shall not be a waiver of any other legal or equitable remedy.
14..14 Third Parties. Nothing contained in this Agreement,
expressed or implied, is intended to confer upon any person, other than the
parties hereto and their successors and assigns, any rights or remedies
under or by reason of this Agreement.
14..15 Joint Venture. It is not intended by this Agreement to
create, and nothing contained in this Agreement shall create, any
partnership, joint venture or other fiduciary relationship between Buyer
and Seller.
14..16 Confidentiality. To the extent reasonably practical,
the contents of this Agreement and all information, studies and reports
relating to the Property obtained by Buyer, either by the observations and
examinations of its agents and representatives or as disclosed to it by
Seller, shall remain confidential except as required by applicable law or
as necessary to consummate this transaction. Buyer shall request its
consultants likewise not to disclose any such information. No publicity or
press release to the general public with respect to this transaction shall
be made by either party without the prior written consent of the other
party.
14..17 Tax-Deferred Exchange. Either Seller or Buyer may
consummate this transaction as part of a simultaneous or delayed
tax-deferred exchange (an "Exchange") pursuant to Section 1031 of the
Internal Revenue Code of 1986, as amended. In such event, and upon written
notification, the parties agree to cooperate reasonably in consummating the
sale transaction as part of an Exchange; provided, however, that the party
conducting the exchange shall reimburse the other party for any out-of-
pocket costs, including reasonable attorneys' fees, incurred by the other
party as a result of the Exchange, to the extent such costs exceed those
which would have been incurred by the other party had there been no
Exchange, and the party conducting the Exchange shall indemnify, defend and
hold the other party harmless from and against any and all loss, damage,
liability or expense incurred as a result of the participation by other
party in such Exchange. Neither party shall be required to take title to
any property other than the Property or to incur any additional liability
as a result of any such Exchange. No such Exchange shall delay the
Closing.
14..18 Invalid Provisions. If any one or more of the
provisions of this Agreement, or the applicability of any such provision to
a specific situation, shall be held invalid or unenforceable, such
provision shall be modified to the minimum extent necessary to make it or
its application valid and enforceable, and the validity and enforceability
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of all other provisions of this Agreement and all other applications of any
such provision shall not be affected thereby.
14..19 Survival. Except as otherwise provided herein, all
agreements contained herein to be performed after the Closing Date and all
representations and warranties of the parties shall survive the delivery
and recordation of the Deed, the payment and delivery of the Purchase
Price, and the closing of the purchase and sale of the Property.
14..20 Computation of Time. The time in which any act under
this Agreement is to be done shall be computed by excluding the first day
and including the last day. Unless preceded by the word "business", the
word "day" shall mean a calendar day. The phrase "business day" or
"business days" shall mean those days on which the Superior Court of
Los Angeles County is open for business.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
SELLER:
PRUDENTIAL ACQUISITIONS FUND I, L.P.
By: PRUDENTIAL REALTY PARTNERSHIPS, INC.,
general partner
By: The Prudential Insurance Company
of America, as agent
By _________________________
_________________________
[Printed Name and Title]
BUYER:
NNW REAL ESTATE, INC.,
a California corporation
By ______________________________
______________________________
[Printed Name and Title]
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<PAGE>
Weber hereby waives its rights to a Landlord's Sale Notice (as
defined in the Lease) with respect to this Agreement and agrees that Seller
shall have no further obligation to give Weber a Landlord's Sale Notice
except in the event the Closing fails to occur due to a default by Seller
in the performance of its obligations under this Agreement. Seller hereby
agrees for the benefit of Weber that Seller shall continue to have an
obligation to give Weber a Landlord's Sale Notice in the event the Closing
fails to occur due to a default by Seller in the performance of its
obligations under this Agreement.
WEBER DISTRIBUTION WAREHOUSE, INC.,
a California corporation
By ______________________________
______________________________
[Printed Name and Title]
PRUDENTIAL ACQUISITIONS FUND I, L.P.
By: PRUDENTIAL REALTY PARTNERSHIPS, INC.,
general partner
By: The Prudential Insurance Company
of America, as agent
By _________________________
_________________________
[Printed Name and Title]
18
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ESCROW HOLDER agrees to perform its duties in accordance with
the terms and conditions hereof.
Date: _____________, 1996
ESCROW HOLDER:
STEWART TITLE INSURANCE COMPANY
By ___________________________________
a _________________________________
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[EXHIBIT A]
LEGAL DESCRIPTION OF LAND
PARCEL 1, AS SHOWN ON PARCEL MAP NO. 6634, IN THE CITY OF NORWALK, COUNTY
OF LOS ANGELES, STATE OF CALIFORNIA, FILED IN BOOK 68, PAGES 88 AND 89 OF
PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT FROM THAT PORTION OF SAID LAND FORMERLY LYING WITHIN THE SOUTH
ONE-HALF OF THE NORTHEAST ONE-FOURTH OF THE SOUTHWEST ONE-FOURTH OF SAID
SECTION 20, ONE-HALF OF ALL OIL, GAS, PETROLEUM AND OTHER KINDRED
SUBSTANCES, IN AND UNDER SAID LAND, BUT WITHOUT RIGHT OF SURFACE OR
SUBSURFACE ENTRY AT OR ABOVE A DEPTH OF 500 FEET MEASURED VERTICALLY FROM
THE SURFACE OF SAID LAND, AS RESERVED BY JOHN VAN DER HEIDE AND JENNIE VAN
DER HEIDE, HUSBAND AND WIFE, IN DEED RECORDED JUNE 15, 1959, IN BOOK D501
PAGE 412, OF OFFICIAL RECORDS, AS INSTRUMENT NO. 998, OFFICIAL RECORDS.
BY AGREEMENT RECORDED OCTOBER 6, 1959, IN BOOK M369 PAGE 292, OF OFFICIAL
RECORDS, THE USE OF THE SURFACE OF SAID LAND WAS RELINQUISHED.
ALSO EXCEPT THE REMAINING ONE-HALF OF ALL OF THE MINERALS AND MINERAL ORES
OF EVERY KIND AND CHARACTER NOW KNOWN TO EXIST OR HEREAFTER DISCOVERED,
UPON, WITHIN OR UNDERLYING ALL OF SAID LAND OR THAT MAY BE PRODUCED
THEREFROM, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ALL
PETROLEUM, OIL, NATURAL GAS AND OTHER HYDROCARBON SUBSTANCES AND PRODUCTS
DERIVED THEREFROM, TOGETHER WITH THE EXCLUSIVE AND PERPETUAL RIGHT OF
INGRESS AND EGRESS BENEATH THE SURFACE OF SAID LAND TO EXPLORE FOR,
EXTRACT, MINE AND REMOVE THE SAME, AND TO MAKE SUCH USE OF THE SAID LAND
BENEATH THE SURFACE AS IS NECESSARY OR USEFUL IN CONNECTION THEREWITH,
WHICH USE MAY INCLUDE LATERAL OR SLANT DRILLING, BORING, DIGGING OR SINKING
WELLS, SHAFTS OR TUNNELS, WITHOUT, HOWEVER, THE RIGHT TO USE THE SURFACE OF
SAID LAND IN THE EXERCISE OF ANY OF SAID RIGHTS, AND WITHOUT THE RIGHT TO
DISTURB THE SURFACE OF SAID LAND OR ANY IMPROVEMENTS THEREON, AS RESERVED
IN THE DEED FROM SOUTHERN PACIFIC TRANSPORTATION COMPANY, A DELAWARE
CORPORATION, RECORDED NOVEMBER 6, 1970, AS INSTRUMENT NO. 229, OF OFFICIAL
RECORDS.
ALSO EXCEPT FROM THAT PORTION OF SAID LAND, FORMERLY LYING WITHIN THE NORTH
ONE-HALF OF THE SOUTHEAST ONE-FOURTH OF THE SOUTHWEST ONE-FOURTH OF SAID
SECTION 20, ONE-HALF OF ALL OIL, GAS, PETROLEUM AND OTHER HYDROCARBONS AND
OTHER KINDRED SUBSTANCES, IN AND UNDER SAID LAND, BUT WITHOUT RIGHT OF
ENTRY AT OR ABOVE A DEPTH OF 500 FEET, MEASURED VERTICALLY FROM THE SURFACE
OF SAID LAND, AS RESERVED BY HARM HEIDA, A WIDOWER, IN DEED RECORDED
JUNE 15, 1959, AS INSTRUMENT NO. 1002, IN BOOK D501, PAGE 416, OFFICIAL
RECORDS.
BY AGREEMENT RECORDED OCTOBER 6, 1959, IN BOOK M369, PAGE 288, OFFICIAL
RECORDS, THE USE OF THE SURFACE OF SAID LAND WAS RELINQUISHED.
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[EXHIBIT B]
RECORDING REQUESTED BY, AND
WHEN RECORDED MAIL THIS DEED
AND MAIL TAX STATEMENTS TO:
__________________________________
13530 Rosecrans Avenue
Santa Fe Springs, California 90670
Attention: Mr. Nicholas Weber
GRANT DEED
THE UNDERSIGNED GRANTOR DECLARES:
DOCUMENTARY TRANSFER TAX is $____________ CITY TAX $__________
____ computed on full value of property conveyed, or
____ computed on full value less value of liens or encumbrances
remaining at time of sale,
____ Unincorporated area: ____ City of Norwalk, and
For valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, PRUDENTIAL ACQUISITIONS FUND I, L.P.,
("Grantor"), hereby grants, sells and conveys to
_______________________________________________ ("Grantee"), that real
property located in Los Angeles County, California, and legally described
in Exhibit A attached hereto and incorporated herein by this reference,
together with all interests, privileges and easements appurtenant thereto
and all of Grantor's right, title, and interest in any and all improvements
located thereon (the "Property").
SUBJECT TO: current taxes not yet due and payable, assessments
and any other liens arising therefrom, all reservations in patents, deed
restrictions, if any, and all easements, rights of way, covenants,
conditions, restrictions, encroachments, liens and encumbrances, to the
extent each of the foregoing appear of record or Grantee has otherwise
agreed to take title subject thereto.
DATED as of this ____ day of _____________ 1996.
PRUDENTIAL ACQUISITIONS FUND I, L.P.
By: PRUDENTIAL REALTY PARTNERSHIPS, INC.,
general partner
By: The Prudential Insurance Company
of America, as agent
By _________________________
_________________________
[Printed Name and Title]
21
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<PAGE>
[EXHIBIT C]
BILL OF SALE
For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, PRUDENTIAL ACQUISITIONS
FUND I, L.P. ("Seller"), does hereby transfer, sell, set over and assign
unto ________________________________ _______________________ ("Buyer"),
all of Seller's right, title and interest, if any, in and to all of the
furniture, furnishings, equipment, fixtures, inventory, supplies and other
items of personal property (collectively the "Personal Property") located
upon the real property in Los Angeles County, California and described in
Exhibit A attached hereto. All Personal Property conveyed hereby, if any,
is conveyed AS IS, and Seller disclaims any implied warranties, including
without limitation, any implied warranties of merchantability or fitness
for any particular purpose.
DATED as of the ____ day of _______________, 1996.
PRUDENTIAL ACQUISITIONS FUND I, L.P.
By: PRUDENTIAL REALTY PARTNERSHIPS, INC.,
general partner
By: The Prudential Insurance Company
of America, as agent
By _________________________
_________________________
[Printed Name and Title]
22
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[EXHIBIT D]
ASSIGNMENT AND ASSUMPTION OF LEASE
BY THIS ASSIGNMENT AND ASSUMPTION OF LEASE (the "Assignment"),
entered into as of this ____ day of ___________, 1996, PRUDENTIAL
ACQUISITIONS FUND I, L.P., ("Assignor"), agrees with
______________________________________________ _______________________
("Assignee"), as follows:
I.
RECITALS
A. Assignor is conveying to Assignee the real property located in
Los Angeles County, California, described in Exhibit A attached hereto,
together with the improvements thereon (collectively the "Real Property").
B. In connection with the foregoing conveyance, Assignor desires to
simultaneously assign to Assignee, and Assignee desires to accept and
assume from Assignor, Assignor's entire right, title and interest in that
certain Lease (the "Lease") dated January 29, 1993, by and between Weber
Distribution Warehouses, Inc., a California corporation, as "Lessee" and
Assignor as "Lessor," upon the terms and conditions set forth in this
Assignment.
NOW THEREFORE, in consideration of the mutual covenants and
conditions set forth in this Assignment, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
II.
AGREEMENTS
1. Assignment and Assumption. Assignor hereby absolutely
and irrevocably sells, transfers and assigns to Assignee, all of Assignor's
right, title, and interest as Lessor or landlord in and to the Lease.
Assignee hereby assumes, and agrees to perform, all of the Obligations of
Lessor and landlord under the Lease.
2. Indemnification. Assignee shall indemnify, defend,
protect and hold harmless Assignor from and against any and all claims,
liabilities, obligations, causes of action, costs and expenses (including
reasonable attorneys fees and costs), arising in connection with any
breach, default, or alleged breach or default by Assignee of its
obligations under the Lease, that accrue on or after the date of this
Assignment ("Post-Closing Claims"). The foregoing indemnification shall be
a personal obligation of Assignee and shall not run with the Real Property.
3. California Law. This Assignment shall be interpreted
according to, and governed by, the laws of the State of California.
4. Attorneys' Fees. If any legal action or other legal
proceeding is brought by any of the parties hereto concerning any provision
of this Assignment or the rights or duties of any person or entity in
relation hereto, the prevailing party shall be entitled, in addition to
such other relief as may be granted, to recover its costs, expert witness
23
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consulting fees and reasonable attorneys' fees incurred in such action or
proceeding, which amounts shall be determined by the court and not a jury.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment as of the date set forth above.
"ASSIGNOR"
PRUDENTIAL ACQUISITIONS FUND I, L.P.
By: PRUDENTIAL REALTY PARTNERSHIPS, INC.,
general partner
By: The Prudential Insurance Company
of America, as agent
By _________________________
_________________________
[Printed Name and Title]
"ASSIGNEE"
_________________________________
By ______________________________
______________________________
[Printed Name and Title]
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<PAGE>
[EXHIBIT E]
ACKNOWLEDGMENT OF TENANT
Weber Distribution Warehouses, Inc., a California corporation
("Weber"), for valuable consideration, hereby agrees for the benefit of
Prudential Acquisitions Fund I, L.P. ("Seller"), as follows:
1. Weber is the tenant under that certain Lease (the
"Lease") dated January 29, 1993, by and between Weber as "Lessee" and
Seller as "Lessor".
2. Weber, on behalf of itself and its successors and
assigns, generally releases Seller and its agents, partners, employees,
affiliates, successors, and assigns, from any and all claims, demands,
causes of action, and liabilities, at law or in equity, known or unknown,
suspected or unsuspected, involving personal injury, property damage,
economic loss or other damages suffered by Weber on or after the date
hereof arising out of the Lease and/or the condition of the property (the
"Property") demised by the Lease (collectively, "Claims"). Weber's
agreement herein to release Seller with respect to all actual or potential
Claims is a material inducement to Seller to agree to sell the Property on
certain terms to an affiliate of Weber. Weber is familiar with California
Civil Code Section 1542, the text of which is set forth in the footnote.
For valuable consideration, Weber hereby waives its rights, if any, under
said Section 1542, with respect to such Claims.
3. Without limiting the foregoing provisions, as of the date
hereof, Seller's obligations under Paragraph 59.3 of the Lease shall
terminate and be of no further force or effect.
DATED this ____ day of _______________, 1996.
WEBER DISTRIBUTION WAREHOUSES, INC.
By ________________________________
________________________________
[Printed Name and Title]
25
<PAGE>
<PAGE>
[EXHIBIT F]
NON-FOREIGN AFFIDAVIT
Section 1445 of the Internal Revenue Service Code of 1986
provides that a transferee of a United States real property interest must
withhold tax if the transferor is a foreign person. To inform the
transferee that withholding tax is not required upon disposition of a U.S.
real property interest by PRUDENTIAL ACQUISITIONS FUND I, L.P.
("Transferor"), to _________________ ______________________________________
("Transferee"), the undersigned hereby certifies the following on behalf of
the Transferor:
Transferor is not a foreign corporation, partnership, trust,
estate, or individual as those terms are defined in the Internal Revenue
Code and Income Tax Regulations;
1. Transferor's U.S. Employer Identification Number is
___________________; and
2. Transferor's principal office is ______________
__________________________________________.
Transferor understands that this certification may be disclosed
to the Internal Revenue Service by the Transferee and that any false
statement made herein could be punished by fine, imprisonment, or both.
Under the penalties of perjury, I, the undersigned, declare
that I have examined this certification and to the best of my knowledge and
belief it is true, correct and complete, and I further declare that I have
all authority to sign on behalf of Transferor.
DATED this ____ day of _______________, 1996.
PRUDENTIAL ACQUISITIONS FUND I, L.P.
By: PRUDENTIAL REALTY PARTNERSHIPS, INC.,
general partner
By: The Prudential Insurance Company
of America, as agent
By _________________________
_________________________
[Printed Name and Title]
THIS AFFIDAVIT must be retained until the end of the fifth
(5th) taxable year following the taxable year in which the transfer
referred to above takes place.
[notarization to be attached]
26
<PAGE>
FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
THIS AGREEMENT, dated (for reference purposes only)
this 25th day of June, 1996, is made by and between PRUDENTIAL
ACQUISITIONS FUND I, L.P. ("Seller") and NNW REAL ESTATE, INC.,
a California corporation ("Buyer"), with respect to the
following facts and circumstances:
A. Buyer and Seller have previously entered into
that certain Purchase and Sale Agreement (the "Original
Agreement") dated April 11, 1996. Capitalized terms used but
not otherwise defined herein shall have the meanings given
those terms in the Original Agreement.
B. Pursuant to the Original Agreement, Buyer and
Seller have executed joint Escrow Instructions (the "Escrow
Instructions") to Escrow Holder dated April 24, 1996.
C. Pursuant to the Original Agreement, Buyer
disapproved of its inspection of the Property prior to the last
day of the Inspection Contingency Period for various reasons,
including without limitation the structural condition of the
Improvements and the presence of asbestos containing materials
in the Improvements.
D. In consideration of the credit against the
Purchase Price provided for herein, Buyer desires to reinstate
the Original Agreement and the Escrow, and approve and accept
the condition of the Improvements.
IT IS, THEREFORE, AGREED AS FOLLOWS:
1. The Escrow Instructions and Paragraph 2 of the
Original Agreement are hereby amended to provide that at
Closing Seller shall give Buyer a $100,000.00 credit against
the Purchase Price.
2. Buyer acknowledges that it has reached an
agreement with the Title Company as to the Title Commitment.
Accordingly, Buyer's termination right under Section 4.2 of the
Original Agreement is no longer effective.
3. The Inspection Contingency Period has expired
and Buyer hereby approves of its due diligence inspection under
Section 4.3 of the Original Agreement. Accordingly, Buyer
shall have no further right to disapprove of any matters and
terminate the Original Agreement or the Escrow under
Section 4.3 of the Original Agreement.
1
<PAGE>
4. No information or facts disclosed or
communicated to Buyer prior to the date hereof shall constitute
Material New Matters for purposes of Section 6.5 of the
Original Agreement.
5. Sellers' addresses for notice under Section 14.2
are modified by changing the suite numbers from "3600" to
"2050."
6. The Original Agreement and the Escrow
Instructions, each as amended by this Agreement are hereby
reinstated and in full force and effect. Without limiting the
foregoing, the Outside Closing Date shall remain July 30, 1996.
7. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of
such counterparts shall constitute one such Agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
SELLER:
PRUDENTIAL ACQUISITIONS FUND I, L.P.
By: PRUDENTIAL REALTY PARTNERSHIPS,
INC., general partner
By: The Prudential Insurance
Company of America, as agent
By _______________________
_______________________
Printed Name and Title
BUYER:
NNW REAL ESTATE, INC.,
a California corporation
By _________________________________
_________________________________
Printed Name and Title
2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for Prudential Acquisition
Fund I, L.P. and is qualified in its entirety
by reference to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000717319
<NAME> Prudential Acquisition Fund I, L.P.
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-1-1996
<PERIOD-END> Jun-30-1996
<PERIOD-TYPE> 6-Mos
<CASH> 1,490,410
<SECURITIES> 0
<RECEIVABLES> 374,332
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,864,742
<PP&E> 17,746,323
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,831,648
<CURRENT-LIABILITIES> 429,585
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 19,402,063
<TOTAL-LIABILITY-AND-EQUITY> 19,831,648
<SALES> 2,193,136
<TOTAL-REVENUES> 2,193,136
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,046,663
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,146,473
<EPS-PRIMARY> 14.53
<EPS-DILUTED> 0
</TABLE>
