SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No.1)
Pursuant to Section 12 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event report) October 26, 1994
PACIFIC GATEWAY PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 1-8692 04-2816560
(State or other jurisdiction of (Commission (IRS Employer
incorporation File Number) Identification No.)
ONE RINCON CENTER, 101 SPEAR STREET, SUITE 215, SAN FRANCISCO, CA 94105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including are code (415)543-8600
Not Applicable
(Former name or former address and former fiscal year,
if changed since last report)
Not Applicable
(Former name or former address, if changed since last report)
Item 2. Disposition of Asset.
On October 19, 1994, the Registrant's 29.489% partnership interest in
Golden Gateway Center, a California limited partnership (the "Partnership"),
was redeemed by the Partnership for $21 million pursuant to a Redemption
Agreement dated September 30, 1994. The Redemption Agreement is subject to
the terms and conditions in that certain Agreement dated August 30, 1994
between the Registrant, as Seller, and the Partnership, as amended by
that certain First Amendment to Agreement, dated September 27, 1994
(as amended, the "Purchase Agreement").
The proceeds from the redemption will be used to repay $18.5 million
in debt to the Registrant's primary lender, approximately $2.3 million
in anticipated Federal and State income taxes, and expenses related to
the transaction. The Registrant will record a gain of approximately
$39 million for financial reporting purposes in connection with this
redemption.
The foregoing is only a summary of certain principal terms and
conditions of the Redemption and Purchase Agreements. A copy of the
Redemption and Purchase Agreements is filed as an Exhibit to this
Current Report on Form 8-K and incorporated herein by this reference.
The foregoing description is subject in all respects to the terms and
conditions of such Exhibits.
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information (Unaudited)
Consolidated Balance Sheet as of September 30, 1994
Consolidated Statement of Income for the nine months
ended September 30, 1994
Consolidated Statement of Income for the year ended
December 31, 1993
(c) Exhibits
1.1 Press Release Dated September 6, 1994
1.2 Press Release Dated October 24, 1994
1.3 Redemption Agreement dated September 30, 1994, between
Registrant and Golden Gateway Center, a California
limited partnership.
1.4 Purchase Agreement dated as of August 30, 1994, between
Registrant and Golden Gateway Center, a California limited
partnership.
1.5 First Amendment to Agreement dated September 27, 1994,
between the Registrant and Golden Gateway Center, a
California limited partnership.
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.
Dated: October 26, 1994
PACIFIC GATEWAY PROPERTIES, INC.
(Registrant)
Raymond V. Marino Raymond V. Marino
President and Chief Financial Officer
Item 7. (b)
Pacific Gateway Properties, Inc.
Consolidated Balance Sheet (Unaudited)
(In Thousands)
As Of Pro Forma As Of
September 30, 1994 Adjustments September 30, 1994
Cash $ 1,885 $ 1,885
Accounts receivable 1,088 1,088
Investment & hotel
Properties, net 75,541 75,541
Equity investment in rincon
center associates 5,298 5,298
Note receivable 231 231
Other assets 477 477
Total assets $84,520 $84,520
Accounts payable $ 2,274 $ 2,274
Accrued liabilities 2,197 2,197
Debt 97,906 (18,500) (1) 79,406
Excess of cash distributions
received over equity in earnings
to date in Golden Gateway
Center (GGC) 17,867 (17,867) (2) --
Total liabilities 120,244 (36,367) 83,877
Stockholders deficit (35,724) 36,367 (3) 643
Total liabilities and
stockholders deficit $84,520 $84,520
Footnotes:
1. Reduction in debt collateralized by GGC partnership interest.
2. Elimination of GGC negative investment account as a result of GGC
partnership redemption.
3. Reflects approximate amount of gain on redemption of GGC partnership
interest.
Item 7. (b)
Pacific Gateway Properties, Inc.
Consolidated Statement of Income (Unaudited)
(In Thousands, Except Per Share Data)
Nine Months Ended Pro Forma Nine Months Ended
September 30, 1994 Adjustments September 30, 1994
Investment properties loss $ (112) $ (112)
Hotel income 792 792
Equity in partnership income (loss):
Golden Gateway Center (GGC) 1,085 $(1,085) (1) --
Rincon Center Associates (RCA) (1,704) (1,704)
Equity in partnership losses (619) (1,085) (1,704)
General & administrative (992) (992)
Interest expense (732) 571 (2) (161)
Interest income 177 177
Other Income 430 430
Loss before sales and income taxes(1,056) (514) (1,570)
Gain on sale of real estate 661 661
Net loss before income taxes (395) (514) (909)
Income tax provision (10) -- (10)
Net Loss $ (405) $ (514) $ (919)
Net loss per share--
Primary $ (0.10) $ (0.22)
Fully diluted $ (0.10) $ (0.22)
Weighted average common
shares outstanding--
Primary 4,114 4,114
Fully diluted 4,241 4,241
Footnotes:
1. Elimination of equity share of GGC partnership income due to redemption.
2. Elimination of interest expense associated with debt collateralized by
GGC partneship interest.
3. The pro forma consolidated statement of income reflects the redemption of
the Registrant's GGCpartnership interest as if such transaction
had occured on January 1, 1993. In connection with such pro forma redemption,
the Registrant would have recorded a pro forma gain on
redemption on January 1, 1993 as follows (excluding the associated pro forma
income tax provision of $2,300):
Sales proceeds $21,000
Add: Excess of cash distributions received
over equity in earnings to date in GGC, and
reversal of accrued liabilities & reserves 18,511
Less: Estimated cost of redemption (75)
$39,436
Item 7. (b)
Pacific Gateway Properties, Inc.
Consolidated Statement of Income (Unaudited)
(In Thousands, Except Per Share Data)
For the Year Ende Pro Forma For the Year
December 31, 1993 Adjustments Ended December 31, 1993
Investment properties loss $(1,165) $ (1,165)
Hotel income 833 833
Equity in partnership income (loss):
Golden Gateway Center (GGC) 1,007 (1,007) (1) --
Rincon Center Associates (RCA)(2,726) (2,726)
Equity in partnership losses (1,719) (1,007) (2,726)
General & administrative (1,593) (1,593)
Interest expense (731) 570 (2) (161)
Interest income 18 18
Other Income 447 447
Loss before sales, reserves,
income taxes and extraordinary
item (3,910) (437) (4,347)
Gain on sale of partnership interest 3,602 3,602
Gain on sale of real estate 1,045 1,045
Provision for write-down to estimated
net realizable value (1,000) (1,000)
Net loss before income taxes
and extraordinary item (263) (437) (700)
Income tax provision (4) -- (4)
Net loss before
extraordinary item $ (267) (437) (3) $ (704)
Net loss before
extraordinary item--
Primary $ (0.07) $ (0.18)
Fully diluted $ (0.07) $ (0.18)
eighted average common
shares outstanding--
Primary 3,881 3,881
Fully diluted 3,904 3,904
Footnotes:
1. Elimination of equity share of GGC partnership income due to redemption.
2. Elimination of interest expense associated with debt collateralized by
GGC partneship interest.
3. The pro forma consolidated statement of income reflects the redemption of
the Registrant's GGC partnership interest as if such transaction
had occured on January 1, 1993. In connection with such pro forma
redemption, the Registrant would have recorded a pro forma gain on
redemption on January 1, 1993 as follows (excluding the associated pro
forma income tax provision
of $2,300):
Sales proceeds $21,000
Add: Excess of cash distributions received
over equity in earnings to date in GGC, and
reversal of accrued liabilities & reserves18,126
Less: Estimated cost of redemption (75)
$39,051
1.1
NEWS RELEASE
FOR RELEASE: SEPTEMBER 6, 1994
PACIFIC GATEWAY PROPERTIES TO RECEIVE $21 MILLION FOR PARTNERSHIP
INTEREST REDEMPTION
SAN FRANCISCO, CALIFORNIA.....Pacific Gateway Properties (PGP) (AMEX
PGP) announced today that it has entered into an agreement with Golden
Gateway Center, a California Limited Partnership (GGC), whereby GGC will
redeem PGP's 29.49% partnership interest in GGC for $21 million.
"The redemption of this partnership interest has important strategic
ramifications for Pacific Gateway Properties," said Roger Snell,
President and Chief Executive Officer. "The net proceeds will be
primarily used to retire debt which will significantly improve PGP's
balance sheet and liquidity. Furthermore, this transaction will utilize
nearly all of the Company's net operating loss carryover. The timing of
this transaction is important because other dispositions could
potentially have made it more difficult for the Company to dispose its
interests in GGC at a later date if the net operating loss carryover had
been applied to other gains. This redemption is an important step in
further strengthening the Company's financial position."
Pacific Gateway Properties' strategic investment focus is on West Coast
properties with a particular emphasis on the San Francisco Bay Area.
PGP owns approximately 1.6 million square feet of projects in the Bay
area including Rincon Center, Walnut Creek Executive Park, and the South
Bay Office Tower. PGP also owns properties in Arizona, Florida and
Massachusetts.
FOR MORE INFORMATION CONTACT: Roger Snell, President and CEO or
Raymond Marino, Vice President
<PAGE>
1.2
NEWS RELEASE
FOR RELEASE OCTOBER 24, 1994
PACIFIC GATEWAY PROPERTIES COMPLETES PARTNERSHIP REDEMPTION FOR
$21 MILLION
SAN FRANCISCO, CALIFORNIA...........Pacific Gateway Properties (PGP)
(AMEX-PGP) announced today that it completed its redemption of its
partnership interest in Golden Gateway Center for $21 million.
"This transaction is strategically important to PGP," said Roger Snell,
President and Chief Executive Officer. "As announced earlier, net
proceeds will primarily be utilized to retire debt. This transaction
will significantly improve PGP's balance sheet and liquidity."
Pacific Gateway Properties strategic investment focus is in the Western
United States. PGP's current portfolio consists of projects in the San
Francisco Bay Area, Arizona, Florida and Massachusetts.
FOR MORE INFORMATION CONTACT: Roger Snell, President and CEO or
Raymond Marino, Vice President
<PAGE>
1.3
REDEMPTION AGREEMENT
For valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, PACIFIC GATEWAY
PROPERTIES, INC., a New York corporation ("Redeemed Party"),
and GOLDEN GATEWAY CENTER, a California limited partnership
(the "Partnership"), hereby agree as follows:
1. The Partnership hereby redeems all of Redeemed
Party's legal and beneficial right, title and interest, in
and to Golden Gateway Center, a California limited
partnership (the "Partnership"), as established under the
Articles of Limited Partnership as Amended as of May 6,
1964, as said Articles were amended by agreement of all of
the Partners by Amendment No. 1, dated as of September 8,
1964, by Amendment No. 2, dated as of January 1, 1965, by
Amendment No. 3, dated as of June 30, 1965, by Amendment
No. 4, dated as of December 30, 1974, and by Amendment
No. 5, dated as of July 10, 1987, and Estoppels and Consents
executed by each of the then-partners of the Partnership
(and certain to-be-admitted partners of the Partnership)
during December 1991 and January 1992 (the "Partnership
Agreement"), which interest consists of a 29.489%
partnership interest in the Partnership (the "Partnership
Interest"), and Redeemed Party does hereby consent to such
redemption and hereby grants, assigns, transfers, sets over
and conveys to the Partnership the Partnership Interest.
The redemption hereunder shall include, without limitation,
all of Redeemed Party's right, title and interest arising
out of the Partnership Interest of, in and to the
Partnership's assets and the right to receive distributions
of money, profits and other assets from the Partnership. As
of the date hereof, the Partnership shall possess all legal
and beneficial right, title and interest in and to the
Partnership Interest.
2. Redeemed Party represents and warrants to the
Partnership that as of the date hereof the Partnership
Interest is free and clear of any and all liens, clouds,
encumbrances or other rights of third parties.
3. The Partnership hereby releases Redeemed Party
from, and hereby agrees to indemnify, defend and hold
Redeemed Party harmless against, any and all Released
Obligations, as such term is defined in that certain
Agreement dated as of August 30, 1994, between Redeemed
Party, as Seller, and the Partnership, as amended by that
certain First Amendment to Agreement, dated September 27,
1994 (as amended, the "Purchase Agreement").
<PAGE>
4. This Redemption Agreement shall be binding on
and shall inure to the benefit of and be enforceable by the
parties and their respective successors, assigns,
transferees, heirs, legatees, designees, legal
representatives, executors and administrators.
5. The provisions of Sections 10.2, 10.4, 10.6,
10.7, 10.8, 10.10, 10.11 and 10.14 of the Purchase Agreement
shall be incorporated herein as if set forth in their
entirety, except that references in said sections to the
Purchase Agreement (where applicable) shall be deemed to be
to this Redemption Agreement.
6. In the event of any inconsistency between the
Purchase Agreement and this Redemption Agreement, the
Purchase Agreement shall control. The parties hereto
acknowledge that the Purchase Agreement contains certain
indemnity provisions (including, without limitation,
relating to the Unreleased Obligations, as such term is
defined in the Purchase Agreement), and that the redemption
of the Partnership Interest hereunder is subject to such
provisions.
7. This Redemption Agreement may be executed in
any number of counterparts, each of which, when executed and
delivered, shall be deemed an original, but such
counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this
instrument to be executed as of September 30, 1994.
PACIFIC GATEWAY PROPERTIES, INC., a
New York corporation
By: Roger D. Snell
Its: President and CEO
GOLDEN GATEWAY CENTER, a California
limited partnership
By: Oakhill Gateway Partners, L.P.,
a California limited
partnership, its Managing
General Partner
By: Oak Hill Investments, Inc.,
a California corporation,
its General Partner
By: Timothy Foo
Its: President <PAGE>
AGREEMENT
This Agreement is made as of the 30th day of August,
1994, by and between PACIFIC GATEWAY PROPERTIES, INC., a
New York corporation ("Seller"), and GOLDEN GATEWAY CENTER,
a California limited partnership (the "Partnership").
R E C I T A L S:
A. Seller is a general partner holding a 29.489%
interest (the "PGP Partnership Interest") in the
Partnership, formed and governed pursuant to Articles of
Limited Partnership of Golden Gateway Center Amended as of
May 6, 1964, as said Articles were amended by agreement of
all of the partners by Amendment No. 1 dated as of
September 8, 1964, by Amendment No. 2, dated as of
January 1, 1965, by Amendment No. 3, dated as of June 30,
1965, by Amendment No. 4, dated as of December 30, 1974, and
by Amendment No. 5, dated as of July 10, 1987, and Estoppels
and Consents executed by each of the then-partners of the
Partnership (and certain to-be-admitted partners of the
Partnership) during December 1991 and January 1992 (the
"Partnership Agreement").
B. The primary asset of the Partnership is Golden
Gateway Center, a mixed use residential, office and retail
development including certain parking and recreational
facilities and a park, all located in the City and County of
San Francisco, California and more particularly described on
Exhibit A attached hereto (the "Property").
C. The Partnership desires to purchase and redeem
from Seller, and Seller desires to sell to the Partnership,
the PGP Partnership Interest, on the terms and conditions
set forth herein.
D. Prior to the Partnership's acquisition of the
PGP Partnership Interest, Seller desires to convert the PGP
Partnership Interest from a general partnership interest
into a limited partnership interest. If Seller fails to
convert the PGP Partnership Interest into a limited
partnership interest prior to Closing (as defined below),
the Partnership intends to convert the PGP Partnership
Interest from a general partnership interest into a limited
partnership interest concurrent with the Closing and the
redemption of the PGP Partnership Interest.
E. Upon the Closing, the Partnership shall have
redeemed all of Seller's interest in the Partnership and
Seller shall withdraw as a partner of the Partnership.
NOW, THEREFORE, in consideration of the
foregoing and of the covenants and agreements of the parties
provided below, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
Section 1.1. Purchase and Sale of PGP Partnership
Interest. On the terms and conditions set forth herein,
Seller shall sell to the Partnership, and the Partnership
shall purchase and redeem from Seller, the PGP Partnership
Interest. The Partnership shall have no rights to enforce
this Agreement to acquire less than the entire PGP
Partnership Interest, and Seller shall have no right to
enforce this Agreement to require the Partnership to acquire
less than the entire PGP Partnership Interest.
Section 1.2. Purchase Price.
Section 1.2.1. The purchase price (the "Purchase
Price") for the PGP Partnership Interest shall be Twenty-One
Million Dollars ($21,000,000.00), subject to adjustment as
provided in Section 1.2.2 below.
Section 1.2.2. The Partnership shall be entitled
at Closing to a credit against the Purchase Price in an
amount equal to any distributions made to Seller during the
period commencing on the date first written above and ending
on the Closing Date (as defined herein), which distributions
result from a return of capital to the Partnership resulting
from the refinancing of the existing debt on the Property or
the incurring of new debt secured by the Property. The
parties hereto acknowledge that the Partnership may incur
certain new indebtedness concurrent with the Closing
pursuant to Section 2.3.3 and that the Purchase Price shall
be reduced by any amounts that are distributed to Seller as
a result of the incurrence of such indebtedness.
Section 1.3. Manner of Payment. The Purchase Price
(less the Deposit, as hereinafter defined, and any interest
thereon) shall be paid by the Partnership at the Closing in
cash or other immediately available funds, as provided in
Section 4.1.
Section 1.4. Deposit. Within two (2) business days
after the latter of the Partnership and Seller executes this
Agreement, the Partnership shall deliver to Commonwealth
Land Title Company or such other escrow agent designated by
the Partnership (and reasonably acceptable to Seller)
("Escrow Agent") the sum of Five Hundred Thousand Dollars
($500,000.00) (the "Extension Option Amount"). At the
Closing, the Deposit (together with any interest earned
thereon) shall be delivered by Escrow Agent to Seller and
applied against the Purchase Price.
ARTICLE II
CONDITIONS PRECEDENT
Section 2.1. Waivers and Prior Consents. The parties
acknowledge and agree that the sale of the PGP Partnership
Interest as contemplated herein is contingent upon obtaining
the prior written consent of the partners in the Partnership
(other than Seller) and certain third parties listed in this
Section 2.1 who hold a security interest or other right in
the PGP Partnership Interest and/or the Property or the
partnership interest of certain other partners in the
Partnership (collectively the "Prior Consents" and
individually a "Prior Consent"). If any Prior Consent
required pursuant to documents evidencing such security
interests or other right in the PGP Partnership Interest,
the Property and/or such other partnership interests is not
obtained on or before the Closing Date, the Partnership and
Seller shall be released from their obligations to purchase
and sell the PGP Partnership Interest as further provided in
Section 4.1. The Remaining General Partners (as defined
below) shall attempt to obtain the Prior Consents described
in Sections 2.1.1, 2.1.2, 2.1.3(A) and 2.1.3(B), provided
that the failure to obtain any such Prior Consent shall not
be deemed a Default of the Partnership hereunder, provided
that the Remaining General Partners shall act diligently and
in good faith, using all reasonable efforts, to obtain all
of such required Prior Consents prior to the Closing Date.
The Partnership shall deliver written notice of obtaining
each such Prior Consent to Seller promptly upon the
Partnership's receipt of same. Seller shall attempt to
obtain the Prior Consent described in Sections 2.1.3(C) and
2.1.4, provided that the failure to obtain such Prior
Consent shall not be deemed a Default of Seller hereunder,
provided that Seller shall act diligently and in good faith,
using all reasonable efforts, to obtain such required Prior
Consent prior to the Closing Date. Seller shall deliver
written notice of obtaining such Prior Consent to the
Partnership promptly upon Seller's receipt of same.
Section 2.1.1. Waiver of First Right of Refusal.
All partners of the Partnership other than Seller must waive
in writing a first right of refusal granted pursuant to
Article 15 of the Partnership Agreement to purchase the PGP
Partnership Interest. Such waiver shall be included in the
consent provided for in Section 2.2 hereof (the "Consent").
Section 2.1.2. Partner Consents. Pursuant to
Articles 10 and 15 of the Partnership Agreement, all
partners of the Partnership must consent in writing to the
redemption of the PGP Partnership Interest by the
Partnership, the conversion of the PGP Partnership Interest
from a general partnership interest into a limited
partnership interest, and to the additional security
interests to be granted by the Remaining General Partners to
CREI (as defined below) in connection with the obtaining of
the Prior Consent described in Section 2.1.3(B). Such
consents shall be included in the Consent. A list of the
partners of the Partnership is attached hereto as Exhibit C.
Section 2.1.3. Lenders' Consents.
(a) The written consent of John
Hancock Mutual Life Insurance Company ("Hancock") to (i) the
sale of the PGP Partnership Interest must be provided
without Hancock requiring any adverse modification in the
existing deed of trust on the Property held by Hancock or
any of the loan documents secured thereby, and (ii) the
financing provided pursuant to Section 2.3.3 below must be
provided without Hancock requiring any adverse modification
in the existing deed of trust on the Property held by
Hancock or any of the loan documents secured thereby.
(b) The written consent of
Citicorp Real Estate Incorporated ("CREI") to the financing
provided pursuant to Section 2.3.3 below must be obtained
under the terms of that certain Loan Agreement dated as of
January 31, 1992, between CREI, as Lender, and Oakhill
Gateway Partners, L.P., C M Golden Gate, Inc., and Prime
Property Fund II, L.P., each a general partner in the
Partnership, as Borrowers (collectively, the "Remaining
General Partners"). The parties hereto acknowledge that the
Remaining General Partners obtaining of such consent will be
dependent upon CREI and the Remaining General Partners
agreeing to mutually acceptable modifications to the terms
of such Loan Agreement and the loan documents described
therein, which modifications such entities may approve or
disapprove in their sole and absolute discretion, and
nothing contained in this Agreement shall require the
Remaining General Partners or any other person or entity to
make such modifications other than on terms and conditions
acceptable to such person or entity in its sole and absolute
discretion.
(c) In addition to the loans
described above, CREI has made certain loans and extensions
of credit to Seller which are secured by the PGP Partnership
Interest. Pursuant to the loan agreements between CREI and
Seller, and on terms and conditions acceptable to Seller in
its sole and absolute discretion, CREI must consent in
writing to the sale contemplated herein and agree to release
the PGP Partnership Interest which is held by CREI as
security for such loans.
Section 2.1.4. Seller's Board of Directors
Consent. On or before 12:00 p.m. (p.s.t.) on September 10,
1994, the Board of Directors of Pacific Gateway Properties,
Inc. shall have approved the sale of the PGP Partnership
Interest to the Partnership pursuant to the terms of this
Agreement. Seller shall not be obligated to sell the PGP
Partnership Interest unless and until its Board of Directors
has provided such approval. Seller's Board of Directors
shall have the complete discretion to approve or disapprove
the transactions described herein. Prior to 12:00 p.m.
(p.s.t.) on September 10, 1994, Seller shall notify the
Partnership as to whether or not such approval has been
given.
Section 2.2. Partner Estoppel and Consent. The
parties acknowledge that the sale of the PGP Partnership
Interest as contemplated herein is contingent upon each of
the partners of the Partnership executing the Consent, which
Consent shall be in form reasonably approved by the parties
hereto and which Consent shall include such matters as the
lenders referred to in Sections 2.1.3 and 2.3.3 may require.
The Remaining General Partners shall use all reasonable
efforts to obtain the signature of all such partners of the
Partnership to such Consents on or before the Closing Date,
but the failure of the Partnership to obtain any such
signatures shall in no event be deemed a Default of the
Partnership under this Agreement, provided that such
reasonable efforts are used. Seller agrees to cooperate
with the Partnership and provide any information to the
partners which may reasonably be requested to facilitate
such partners' execution of the Consents. Nothing in this
paragraph shall require either Seller or any other partner
in the Partnership to provide compensation, concessions or
other considerations to the partners as a condition of
obtaining their signature to the Consent.
Section 2.3. Additional Conditions. The Partnership
and Seller acknowledge and agree that: (i) the
Partnership's obligation to purchase the PGP Partnership
Interest is conditioned upon the satisfaction of the matters
set forth in this Section 2.3 below (except to the extent
that Section 2.3.4 applies to the Partnership's
representations and warranties), and (ii) Seller's
obligation to sell the PGP Partnership Interest is
conditioned upon the satisfaction of the matters set forth
in Sections 2.3.4 (except to the extent that Section 2.3.4
applies to Seller's representations and warranties) and
2.3.6.
Section 2.3.1. Title Insurance. Unless waived
by the Partnership, Commonwealth Land Title Company or such
other title company selected by the Partnership shall be
irrevocably committed as of the Closing Date to issue to the
Partnership an ALTA Owner's Policy or Policies of Title
Insurance (Form B, rev. 10/17/70), in the amount of the
Purchase Price, insuring the Partnership and/or its
constituent partners that fee simple title to the Property
is vested in the Partnership, subject only to those
exceptions acceptable to the Partnership, and which shall
contain such special indorsements as the Partnership may
reasonably require, including, but not limited to, a non-imputation
indorsement for the benefit of the Partnership
and its constituent partners (collectively, the "Title
Policy").
Section 2.3.2. PGP Partnership Interest Free
From Liens. Unless waived by the Partnership, the PGP
Partnership Interest, and all rights appurtenant thereto,
shall be transferred and redeemed by the Partnership at
Closing pursuant to Exhibit D hereof, free and clear from
all liens, security interests or encumbrances of any nature,
except any created by the Partnership; it being understood
that this Section 2.3.2 shall not apply to any liens,
encumbrances or security interests on the Property (as
opposed to the PGP Partnership Interest).
Section 2.3.3. Financing Contingency. Unless
waived by the Partnership, prior to or concurrent with the
Closing, (i) the Partnership shall have obtained one or more
commitments (collectively, the "New Financing Commitment")
from one or more lenders (which lenders may be institutional
lenders and/or non-institutional lenders) to lend to the
Partnership an amount deemed sufficient in the Partnership's
sole discretion to enable the Partnership to purchase and
redeem the PGP Partnership Interest and obtain the Prior
Consent referred to in Sections 2.1.3(B), (ii) the New
Financing Commitment shall have closed in accordance with
its terms, and (iii) the lender(s) under the New Financing
Commitment shall have delivered to the Partnership the funds
described in the New Financing Commitment. The parties
hereto acknowledge that the terms and conditions of the New
Financing Commitment, including, without limitation, the
loan amount, interest rate, maturity date and amortization
schedule, shall be as the Partnership may approve in its
sole and absolute discretion. The parties hereto further
acknowledge that the closing of the New Financing Commitment
(including the funding of the loan(s)) will be dependent
upon the Partnership and such lender(s) negotiating mutually
acceptable forms of loan documents, which forms the
Partnership may approve or disapprove in its sole and
absolute discretion, and nothing contained in this Agreement
shall require the Partnership to close the funding of the
loan(s) described in the New Financing Commitment other than
on terms and conditions acceptable to the Partnership and
such lender(s) in their sole and absolute discretion. The
parties hereto acknowledge that as of the date hereof the
Partnership contemplates financing the purchase and
redemption of the PGP Partnership Interest generally in
accordance with those certain term sheets attached hereto as
Exhibit B (the "Term Sheets"), provided that the foregoing
shall not obligate the Partnership to close those
transactions described in the Term Sheets.
Section 2.3.4. Representations and Warranties as
of Closing. Each representation and warranty made by the
Partnership and Seller under Sections 6.1 and 6.2,
respectively, shall have been true and correct when made and
as of the Closing Date.
Section 2.3.5. No Material Change in Condition.
The physical condition of the Property shall be
substantially the same on the Closing Date as on the date of
the Partnership's execution of this Agreement, reasonable
wear and tear and loss by casualty excepted (subject to
Section 10.2 hereof), and there shall be no material adverse
change in the financial condition of the Property or the
Partnership between the date of the Partnership's execution
of this Agreement and the Closing Date.
Section 2.3.6. Releases. The Remaining General
Partners shall have executed and delivered to Seller a
general release substantially in the form of Exhibit E
attached hereto (the "Release of Seller") and a
certification substantially in the form of Exhibit F
attached hereto (the "Certificate"), and Seller shall have
executed and delivered to the Remaining General Partners a
general release substantially in the form of Exhibit G
attached hereto (the "Release of the Remaining General
Partners and the Partnership").
ARTICLE III
PARTNERSHIP ACCOUNTS AND OBLIGATIONS
Section 3.1. Redemption and Release by the
Partnership. As of the Closing Date and pursuant to
Section 5.1 hereof, the Partnership hereby agrees to redeem
the PGP Partnership and release Seller from, and to
indemnify, defend and hold Seller harmless against, all
obligations, liabilities, claims, causes of action and/or
damages respecting or relating to the Property or the
Partnership which (i) arise out of or accrue from any
action, omission, event or transaction occurring on or after
the Closing Date, (ii) have arisen or accrued prior to the
Closing Date, but only to the extent such obligations,
liabilities, claims, causes of action and/or damages
(a) arise from obligations or liabilities incurred by the
Partnership in the ordinary course of business or (b) arise
from existing contractual obligations, including, without
limitation, obligations under loans to or financings of the
Partnership, obligations under leases and service contracts,
and obligations to Partnership and Property employees, and
(iii) are undertaken by the Partnership pursuant to that
certain First Amended and Restated Agreement Regarding
Capital Improvement Work, dated as of January 30, 1992 (the
"CIW Agreement") (collectively, the "Released Obligations").
Except with respect to those portions of the Released
Obligations described in clauses (ii) and (iii) above,
Seller shall not be released from, and the Partnership shall
not indemnify, defend or hold Seller harmless from, any
other obligation, liability, claim and/or cause of action
relating to the Property or the Partnership which has arisen
out of or accrued from any action, omission, event or
transaction occurring prior to the Closing Date
(collectively, the "Unreleased Obligations"). Without
limiting the foregoing, the Partnership specifically shall
not release Seller from any liability or obligation which
has arisen or accrued prior to the Closing Date (whether
known or unknown) and which relates to or arises from the
presence of any Hazardous Material (as defined below)
(including, without limitation, asbestos) at, on, in, under
or about the Property prior to the Closing Date or the
removal of any Hazardous Material (including, without
limitation, asbestos) from or about the Property prior to
the Closing Date. However, the Seller's surviving
obligations with respect to Hazardous Materials shall not
extend to any work covered by the CIW Agreement. For the
purposes of this Agreement, "Hazardous Material" shall mean
any substance, chemical, waste or other material which is
listed, defined or otherwise identified as "hazardous" or
"toxic" under any federal, state, local or administrative
agency ordinance or law, as well as any formaldehyde, urea,
polychlorinated biphenyls, petroleum, petroleum product or
by-product, crude oil, natural gas, natural gas liquids,
liquefied natural gas, or synthetic gas usable for fuel or
mixture thereof, radon, asbestos, and "source," "special
nuclear" and "by-product" material as defined in the Atomic
Energy Act of 1985, 42 U.S.C. pp. 3011 et seq. The parties
hereto acknowledge and agree that the intent of this
Section 3.1 is that at Closing the Partnership shall release
Seller from all obligations, liabilities, claims, causes of
action and/or damages respecting the Property or the
Partnership and that would otherwise be allocable to the PGP
Partnership Interest other than with respect to
(a) Hazardous Materials (to the extent provided above) or
(b) extraordinary, unknown liabilities relating to events
occurring in whole or in part prior to the Closing Date and
involving an amount in controversy in excess of $10,000 in
the singular and $50,000 in the aggregate, and that this
Section 3.1 (and the Redemption Agreement referred to in
Section 5.1 below) shall be construed consistently with this
intent. Liabilities covered by clause (b) above shall
include, by way of illustration only, class action
litigation alleging rental overcharges or discrimination in
housing or employment. The provisions of this Section 3.1
shall survive the Closing.
Section 3.2. Proration of Income or Loss. All
income, loss, depreciation and credits accruing or
attributable to the PGP Partnership Interest for tax and
accounting purposes for the calendar year 1994 shall be
allocated between Seller and the Partnership as of the 12:01
a.m. on the Closing Date, based upon the relative number of
days in the 1994 calendar year before and after the Closing.
Section 3.3. Distributions. Seller shall be entitled
to retain all cash distributions of the Partnership actually
made to Seller prior to Closing. The partners in the
Partnership shall be deemed to own the PGP Partnership
Interest as of Closing and shall be entitled to receive all
cash distributions of the Partnership made with respect to
the PGP Partnership Interest on or after Closing in
proportion to their respective percentage interests in the
Partnership as such exist immediately prior to the Closing;
provided, however, that Seller shall be paid at Closing an
amount equal to (A) the product of (i) $1,238,538 (the
product of $4,200,000 multiplied by 0.29489) multiplied by
(ii) a fraction, the numerator of which is the number of
days in the period commencing on (and including) January 1,
1994 and ending on (but excluding) the Closing Date, and the
denominator of which is three hundred sixty-five (365),
minus (B) the amount of all distributions paid to Seller for
the calendar year 1994 (other than pursuant to Section 1.2.2
above).
Section 3.4. No Responsibility. The parties hereto
acknowledge and agree that Seller shall have no
responsibility for the payment of (by way of indemnity or
otherwise) any transfer taxes assessed against the Property
as a result of this transaction, whether this transaction is
considered alone or in combination with any prior transfer
or transfers of interests in the Partnership.
ARTICLE IV
CLOSING
Section 4.1. Closing Conference. The purchase and
sale of the PGP Partnership Interest provided herein shall
be consummated through a closing conference which shall be
held on or before September 30, 1994 (the "Closing Date,")
at the offices of Morrison & Foerster, 345 California
Street, San Francisco, California. Closing of the purchase
and sale of the PGP Partnership Interest shall be deemed to
have occurred when the conditions set forth in Article II
have been satisfied or waived, the documents described in
Article V and all other documents reasonably required by the
parties have been duly executed and delivered and the full
amount of the Purchase Price has been delivered to Seller in
cash or other immediately available funds (collectively, the
"Closing"). In the event that the Closing has not occurred
on or before September 30, 1994, this Agreement shall
automatically terminate, neither party shall have any
further obligation hereunder (except as otherwise expressly
set forth herein), the Deposit shall be returned to the
Partnership (unless the Closing does not occur as the sole
result of a Default of the Partnership hereunder), and
Seller may dispose of the PGP Partnership Interest in any
manner it deems acceptable (subject to any applicable
restrictions set forth in the Partnership Agreement).
Section 4.2. Closing Costs.
Section 4.2.1. Seller's Costs. Seller shall pay
(i) one half of all charges of Escrow Agent (if any),
(ii) all sales or transfer taxes, if any, imposed on the
transfer of the PGP Partnership Interest (provided that
Seller shall have no liability for any transfer taxes
assessed against the Property as opposed to the Partnership
Interest), and (iii) Seller's legal fees and expenses and
the costs of any opinions, instruments, documents and papers
required to be delivered by Seller hereunder, including,
without limitation, the costs of all performance by Seller
of its obligations hereunder.
Section 4.2.2. The Partnership's Closing Costs.
The Partnership shall pay (i) one half of all charges of
Escrow Agent (if any), (ii) the Title Policy premium, and
(iii) the Partnership's legal fees and expenses and the
costs of all opinions, instruments, documents and papers
required to be delivered by the Partnership hereunder,
including, without limitation, the costs of all performance
by the Partnership of its obligations hereunder.
ARTICLE V
ADDITIONAL AGREEMENTS TO BE EXECUTED
The following documents shall be executed by the
parties and delivered at the Closing (unless waived by
mutual written agreement of the parties).
Section 5.1. Redemption Agreement. The Partnership
and Seller shall execute a Redemption Agreement in the form
set forth on Exhibit D hereto.
Section 5.2. Closing Certificates. Seller shall
execute a closing certificate and the Partnership shall
execute a closing certificate, which documents shall certify
that Seller's and the Partnership's respective
representations and warranties contained in Section 6 below
were true and correct when made and are true and correct as
of the Closing Date.
Section 5.3. Amendment to Certificate of Limited
Partnership. All general partners of the Partnership (or
such lesser number as is required by the Partnership's
certificate of limited partnership) shall sign an amendment
to the Partnership's certificate of limited partnership
(Form LP-2), file the same with the Secretary of State of
California, and record the same in the official records of
the City and County of San Francisco, reflecting, to the
extent necessary, the withdrawal of Seller from the
Partnership.
Section 5.4. Tax Withholding.
Section 5.4.1. Federal Withholding. Seller
shall deliver to the Partnership either (a) an affidavit
pursuant to Section 1445(b)(2) of the United States Internal
Revenue Code (the "Federal Code"), and on which the
Partnership is entitled to rely, that Seller is not a
"foreign person" within the meaning of Section 1445(f)(3) of
the Federal Code, (b) a withholding certificate issued by
the Internal Revenue Service (the "IRS"), pursuant to
Section 1445(a)(4) of the Federal Code and the regulations
promulgated thereunder, which excuses the Partnership from
any withholding obligation under Section 1445 of the Federal
Code or (c) if Seller fails to deliver the affidavit
described in (a) above or the withholding certificate
described in (b) above, a certificate, affidavit or other
evidence sufficient to establish that the Partnership is not
otherwise required to deduct and withhold a portion of the
Purchase Price pursuant to the provisions of Section 1445 of
the Federal Code, together with any regulations now or
hereafter promulgated thereunder (collectively referred to
as the "Federal Withholding Provisions"), in connection with
the transactions contemplated herein.
If Seller fails to deliver such an affidavit,
withholding certificate, certificate or other evidence, the
Partnership shall not be excused from its obligation to
consummate the transactions contemplated herein, but rather
may deduct and withhold from the Purchase Price an amount
equal to ten percent (10%) of the "amount realized on the
disposition" of any "United States real property interest"
in connection with the transactions contemplated herein, all
as defined and required by the Federal Withholding
Provisions. Any amount so withheld shall be deemed to have
been paid by the Partnership as a part of the Purchase
Price. Should Seller deliver a withholding certificate
issued by the IRS pursuant to the Federal Withholding
Provisions which permits the Partnership to withhold an
amount less than 10% of the amount realized on the
disposition, the Partnership may withhold such lesser
amount, and the amount so withheld shall be deemed to have
been paid by the Partnership as part of the Purchase Price.
Section 5.4.2. State Withholding. Seller shall
deliver to the Partnership either (a) a properly executed
California Form 590 certifying that Seller has a permanent
place of business in California or is qualified to do
business in California or (b) a certificate or other
evidence sufficient to establish that, as contemplated by
Sections 18805 and 26131 of the California Revenue and
Taxation Code (the "State Code"), together with any
regulations now or hereafter promulgated thereunder
(collectively, the "State Withholding Provisions"),
(i) Seller is a bank acting as trustee other than a trustee
of a deed of trust, or (ii) Seller is a partnership, or
(c) evidence that the California Franchise Tax Board has
authorized a partial or total reduction in the amount
required to be withheld from the Purchase Price.
If Seller fails to deliver such Form 590,
certificate or other evidence, the Partnership shall not be
excused from its obligation to consummate the transactions
contemplated herein, but rather may deduct and withhold from
the Purchase Price an amount equal to three and one-third
percent (3-1/3%) of the "sales price of the California real
property conveyed" in connection with the transactions
contemplated herein, as defined and required by the State
Withholding Provisions. Any amount so withheld shall be
deemed to have been paid by the Partnership as a part of the
Purchase Price. Should Seller deliver evidence to the
Partnership that the California Franchise Tax Board has
authorized a partial or total reduction in the amount
required to be withheld from the Purchase Price pursuant to
the State Withholding Provisions, the Partnership may
withhold only the amount required by the Franchise Tax Board
to be withheld, if any, and any amount so withheld shall be
deemed to have been paid by the Partnership as part of the
Purchase Price.
The Partnership acknowledges and agrees that its
has received written notice of the withholding requirements
set forth in the State Withholding Provisions.
Section 5.5. Estoppel and Consent. Each of the
partners of the Partnership (including Seller) shall execute
the Consent.
Section 5.6. Releases. Seller and the Remaining
General Partners shall execute the Release of Seller and the
Release of the Remaining General Partners and the
Partnership, as applicable.
Section 5.7. Certificate. The Remaining General
Partners shall execute the Certificate.
Section 5.8. Further Assurances. The Partnership and
Seller hereby agree to cooperate with the other after the
date hereof and without further consideration to execute,
deliver, record and publish as may be necessary or
appropriate any certificates, instruments or documents of
sale, assignment, or transfer of the PGP Partnership
Interest from Seller to the Partnership and to take such
other action as may be reasonably necessary to effectively
sell and transfer or vest in the Partnership or put the
Partnership in possession of the PGP Partnership Interest as
of Closing, and the parties shall each do or perform such
further acts and things and execute and deliver such further
certificates, instruments and other documents as may be
reasonably necessary and proper to implement the intent of
the parties as expressed in this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.1. Representations and Warranties of The
Partnership. The Partnership hereby represents and warrants
to Seller as follows:
Section 6.1.1. Power and Authority. The
Partnership is a limited partnership duly organized and
validly existing and in good standing under the laws of the
State of California and is qualified to do business in the
State of California. This Agreement and all other
agreements, instruments and documents herein provided or
required to be executed or to be caused to be executed by
the Partnership are (or, in the case of documents to be
executed or effective on or before Closing, will be) duly
authorized, executed and delivered by and are binding upon
the same. The Partnership has the capacity and authority to
enter into this Agreement and all other agreements
contemplated herein and to consummate the transaction as
herein provided, and, other than the necessity of satisfying
certain of the conditions described in Article II above,
nothing prohibits or restricts the ability of the
Partnership to close the transaction contemplated hereunder
and carry out the terms hereof. Neither this Agreement nor
any other agreement, document or instrument executed or to
be executed in connection with the transaction contemplated
herein shall breach, invalidate, cancel, make inoperative or
interfere with, or result in the acceleration or maturity
of, any contract, agreement, lease, easement, right or
interest affecting or relating to the Partnership or the
Partnership's interest in the Partnership upon Closing.
Section 6.1.2. No Dissolution or Other
Proceedings. No action at law or in equity and no
investigation or proceeding is now pending or threatened
that may result in the liquidation, dissolution, or
disincorporation of the Partnership or result in the
declaration of any of the rights, powers, franchises or
privileges of the Partnership to be null and void or
otherwise not in full force and effect.
Section 6.1.3. No Restrictions On Transaction.
Except as described in Article II hereof, the Partnership is
not subject to any charter, provision, bylaw, indenture,
mortgage, lien, lease, agreement, instrument, law, rule,
regulation, order, judgment or decree or any other
restriction that would interfere with the consummation of
the transaction provided in or contemplated by this
Agreement. This Agreement has been duly authorized and
represents a legal, valid and binding obligation of the
Partnership, enforceable against the Partnership in
accordance with its terms.
Section 6.1.4. Litigation. The Partnership is
not party to any pending, and does not have any notice or
knowledge of any threatened, action, suit, proceeding or
investigation at law, in equity or otherwise, in, before or
by any court or any governmental board, commission, agency,
department or officer, in which an adverse determination
would have any material adverse effect upon the transaction
provided for herein or contemplated hereby.
Section 6.1.5. The Partnership's Inspection.
The Closing shall evidence that the Partnership and its
agents, consultants and contractors have had an opportunity
to conduct such examinations and inspections of the
Partnership and the Property as they have deemed or may deem
necessary or desirable. At Closing, the Partnership will be
purchasing the PGP Partnership Interest in reliance on its
own examination and inspection of the Partnership and the
Property; provided, however, the Partnership may rely on
Seller's representations and warranties contained in this
Agreement. Except as set forth in this Agreement, Seller
has not and is not making any representations or warranties
respecting the Partnership or the Property.
Section 6.2. Representations and Warranties of
Seller. Seller hereby represents and warrants to the
Partnership as follows:
Section 6.2.1. PGP Partnership Interest. Seller
holds the PGP Partnership Interest and will have the
authority to sell the PGP Partnership Interest, as of
Closing, free and clear of any liens, claims, charges,
encumbrances, or purchase options of any kind or character.
Section 6.2.2. Power and Authority. Seller is a
corporation duly organized and validly existing and in good
standing under the laws of the State of New York and is in
good standing under the laws of the State of California.
This Agreement and all other agreements, instruments and
documents herein provided or required to be executed or to
be caused to be executed by Seller are (or, in the case of
documents to be executed or effective on or before Closing,
will be) duly authorized, executed and delivered by and are
binding upon the same. Seller has the capacity and
authority to enter into this Agreement and all other
agreements contemplated herein and to consummate the
transaction as herein provided, and, other than the
necessity of satisfying certain of the conditions described
in Article II above, nothing prohibits or restricts the
ability of Seller to close the transaction contemplated
hereunder and carry out the terms hereof. Neither this
Agreement nor, as of Closing, any other agreement, document
or instrument executed or to be executed by Seller in
connection with the transaction contemplated herein shall
breach, invalidate, cancel, make inoperative or interfere
with, or result in the acceleration or maturity of, any
contract, agreement, lease, easement, right or interest
affecting or relating to Seller or the PGP Partnership
Interest.
Section 6.2.3. No Dissolution Or Other
Proceedings. No action at law or in equity and no
investigation or proceeding is now pending or threatened
that may result in the liquidation, dissolution, or
disincorporation of Seller or result in the declaration of
any of the rights, powers, franchises or privileges of
Seller to be null and void or otherwise not in full force
and effect.
Section 6.2.4. No Restrictions On Transaction.
Except as described in Article II hereof, Seller is not
subject to any charter, provision, by-law, indenture,
mortgage, lien, lease, agreement, instrument, law, rule,
regulation, order, judgment or decree or any other
restriction that would interfere with the consummation of
the transaction provided in or contemplated by this
Agreement. This Agreement has been duly authorized and
represents a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
Section 6.2.5. Litigation. Seller is not a
party to any pending, and does not have any notice or
knowledge of any threatened, action, suit, proceeding or
investigation, at law, in equity or otherwise, in, before or
by any court or any governmental board, commission, agency,
department or officer, in which an adverse determination
would have any material adverse effect on the transactions
provided for herein or contemplated hereby.
Section 6.2.6. No Other Representations and
Warranties. The representations and warranties in this
Section 6.2 are the sole representations and warranties of
Seller in respect to the transaction contemplated by this
Agreement. Without limiting the generality of the
foregoing, Seller expressly makes no representation or
warranty other than those set forth herein concerning the
condition of the Partnership or the Property.
ARTICLE VII
DEFAULT
Section 7.1. Seller's Default. Seller shall be
deemed to be in default hereunder upon the occurrence of any
one or more of the following events (each a "Default of
Seller"): (i) any of Seller's representations or warranties
set forth herein is materially untrue when made or becomes
materially untrue at any time on or before the Closing Date,
and same cannot be cured to the Partnership's satisfaction
prior to Closing; and (ii) Seller fails to meet, comply
with, or perform any covenant, agreement or obligation on
its part required within the time limits and in the manner
provided in this Agreement. In the event of a Default of
Seller hereunder, the Partnership shall be entitled to seek
any appropriate remedy available at law or in equity.
Section 7.2. The Partnership's Default; Disposition
of Deposit.
Section 7.2.1. The Partnership's Default. The
Partnership shall be deemed to be in default hereunder and
in breach of this Agreement upon the occurrence of any one
or more of the following events (each a "Default of the
Partnership"): (i) any of the Partnership's representations
or warranties set forth herein is materially untrue when
made or becomes materially untrue at any time on or before
the Closing Date, and same cannot be cured to Seller's
satisfaction prior to Closing; and (ii) the Partnership
fails to meet, comply with, or perform any covenant,
agreement or obligation on its part required within the time
limits and in the manner provided in this Agreement.
Section 7.2.2. Disposition of Deposit. In the
event that the sale of the Property is not consummated
because of the failure of any condition or any other reason
except as the sole result of a Default of the Partnership
hereunder, the Deposit plus interest accrued thereon shall
immediately be returned to the Partnership. If said sale is
not consummated solely because of a Default of the
Partnership hereunder, the Deposit but not the interest
accrued thereon shall be paid to and retained by Seller as
liquidated damages. The parties have agreed that Seller's
actual damages, in the event of a default by the
Partnership, would be extremely difficult or impracticable
to determine. THEREFORE, BY PLACING THEIR INITIALS BELOW,
THE PARTIES ACKNOWLEDGE THAT THE DEPOSIT HAS BEEN AGREED
UPON, AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE
OF SELLER'S DAMAGES AND AS SELLER'S EXCLUSIVE REMEDY AGAINST
THE PARTNERSHIP, AT LAW OR IN EQUITY, IN THE EVENT OF A
DEFAULT UNDER THIS AGREEMENT ON THE PART OF THE PARTNERSHIP
THAT RESULTS IN THE SALE OF THE PROPERTY NOT BEING
CONSUMMATED.
INITIALS: Seller RDS The Partnership TF
ARTICLE VIII
INDEMNIFICATION
Section 8.1. By Seller. Seller hereby agrees to
indemnify, defend and hold the Partnership harmless against
any and all loss, obligations, liabilities, claims, causes
of action and/or damages (i) that may arise as a result of
any Default of Seller, or (ii) that may arise or accrue out
of any Unreleased Obligations that are allocable to the PGP
Partnership Interest; provided, however, the foregoing shall
not require Seller to indemnify, defend or hold the
Partnership harmless from any claims against or losses of
the Partnership or the Property which are covered by
insurance carried by or benefitting the Partnership or the
Property. The provisions of this paragraph shall survive
the Closing.
Section 8.2. By The Partnership. In addition to the
indemnification set forth in Section 3.1 and elsewhere in
this Agreement, the Partnership hereby agrees to indemnify,
defend and hold Seller harmless against any and all loss,
obligations, liabilities, claims, causes of action and/or
damages that may arise as a result of any Default of the
Partnership; provided, however, the foregoing shall not
require the Partnership to indemnify, defend or hold Seller
harmless from any claims against or losses of the
Partnership or the Property which are covered by insurance
carried by or benefitting the Partnership or the Property to
the extent that proceeds of such insurance are actually paid
to Seller. The provisions of this paragraph shall survive
the Closing.
Section 8.3. Control of Defenses. Promptly upon
learning of any grounds that may reasonably and foreseeably
lead to a claim (a "Potential Claim") by any party hereto
(the "Indemnified Party") against the other party hereto
(the "Indemnifying Party") pursuant to this Article VIII or
any other provision of this Agreement (including, without
limitation, Section 3.1), the Indemnified Party shall
promptly notify the Indemnifying Party of such grounds in
writing. Provided that the Indemnifying Party can provide
evidence reasonably acceptable to the Indemnified Party that
the Indemnifying Party has the financial ability to satisfy
the Potential Claim, the Indemnifying Party shall have the
right, but not the obligation, to defend, contest, and
control the defense of any such Potential Claim, including
choosing counsel and controlling any settlement of the
Potential Claim. If, at any time prior to the conclusion of
such defense or contest, there are reasonable grounds to
believe that the Indemnifying Party does not have the
financial ability to satisfy the Potential Claim, the
Indemnified Party shall have the right to assume control of
such defense or contest, including replacing counsel and
controlling any settlement. If the Indemnifying Party
reasonably demonstrates the financial ability to satisfy the
Potential Claim but requests the Indemnified Party to
control the defense or contest, the Indemnified Party shall
contest any Potential Claim in good faith and shall forebear
from compromising or settling any Potential Claim without
the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld, delayed or
conditioned.
ARTICLE IX
BROKER COMMISSIONS AND FEES
Section 9.1. Brokerage Commissions. Each party
represents and warrants to the other that it has not had any
contacts or dealings regarding the PGP Partnership Interest,
or any communication in connection with the subject matter
of this transaction, through any real estate broker or other
person who can claim a right to a commission or finder's fee
in connection with the sale contemplated herein. In the
event that any broker or finder perfects a claim for a
commission or finder's fee based upon any such contact,
dealings or communication, the party through whom the broker
or finder makes his claim shall be responsible for said
commission or fee and all costs and expenses (including
reasonable attorneys' fees and disbursements) incurred by
the other party in defending against the same, and shall
indemnify and hold harmless the other party from and against
any cost, expense, claim, demand, damage, liability, loss or
expense (including reasonable attorneys' fees and
disbursements) in connection with the same. The provisions
of this paragraph shall survive the Closing or any
termination of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1. Risk of Loss. As between the
Partnership and Seller, all risk of loss or damage resulting
from casualty to or condemnation of the Property between the
execution hereof and the Closing Date shall remain with
Seller. In the event of any loss or damage to the Property,
or the preparation for or commencement of condemnation
proceedings against the Property, the Partnership may elect
either to take the PGP Partnership Interest together with
the proceeds of any insurance or condemnation award
allocable to such PGP Partnership Interest, or to terminate
this Agreement. If the Partnership elects to terminate this
Agreement pursuant to Section 10.1, the Deposit shall be
returned to the Partnership and all parties shall be
relieved of any further liability hereunder (except as
otherwise expressly set forth herein).
Section 10.2. Survival. Subject to Section 6.2.6
hereof, all covenants and agreements of the Partnership and
Seller made in this Agreement shall survive the Closing.
Section 10.3. Entire Agreement. This Agreement
contains the entire agreement of the parties and supersedes
any and all prior negotiations, correspondence, undertakings
and agreements among the parties regarding the subject
matter hereof.
Section 10.4. Time of the Essence. Time is of the
essence of this Agreement.
Section 10.5. Captions. Article and section headings
herein shall not be used in construing this Agreement and
are provided for reference only.
Section 10.6. Attorneys Fees. In any controversy,
claim, or dispute arising out of this Agreement or the
failure of any party to perform any of its obligations
hereunder, the prevailing party shall be entitled to
recover, in addition to any other relief, all reasonable
costs and expenses incurred in enforcing its rights
hereunder or recovering any damages to which it may be
entitled at law or in equity, including, without limitation,
reasonable attorneys' fees and costs of suit. Costs of suit
shall include, without limitation, reasonable costs
associated with arbitration, mediation, bankruptcy,
administrative or judicial proceedings, and all appeals
therefrom.
Section 10.7. No Waiver. No waiver by a party of any
breach or default of this Agreement or of any warranty or
representation hereunder by the other party shall be deemed
to be a waiver of any other breach or default by such other
party (whether preceding or succeeding and whether or not of
the same or similar nature), and no acceptance of payment or
performance by a party after any breach by the other party
shall be deemed to be a wavier of any breach of this
Agreement or of any representation or warranty hereunder by
such other party, whether or not the first party knows of
such breach at the time it accepts such payment or
performance. No failure or delay by a party to exercise any
right it may have by reason of the default of the other
party shall operate as a waiver of default or modification
of this Agreement or shall prevent the exercise of any right
by the first party while the other party continues to be in
default.
Section 10.8. Governing Law. This Agreement shall be
construed and enforced in accordance with the laws of the
state of California.
Section 10.9. Press Releases and Publicity. Any press
release issued with respect to the transactions contemplated
hereby shall be subject to the prior review of the
Partnership and Seller, which review shall not be
unreasonably delayed, withheld or conditioned; provided that
either party hereto shall have the right to withhold its
consent in its sole and absolute discretion to any publicly
released information that concerns matters other than
(i) the names of the entities that are the purchaser and
seller hereunder, (ii) the interest in the Partnership
transferred hereunder, (iii) the Closing Date and (iv) the
Purchase Price. In addition, the parties shall forbear, and
shall endeavor to instruct their respective agents and
representatives (including bankers, and attorneys involved
in this transaction) to forebear, from publicizing or
unnecessarily disclosing any information regarding, or any
terms of, this transaction, whether before or after the
Closing, including, without limitation, through the
preparation and distribution of "tombstones."
Section 10.10. Successors and Assigns. Neither the
Partnership nor Seller may assign or transfer its rights or
obligations under this Agreement, except as specifically
provided herein, without the prior written consent of the
other. This Agreement shall be binding on and shall inure
to the benefit of and be enforceable by the parties and
their respective successors, assigns, transferees, heirs,
legatees, designees, legal representatives, executors and
administrators.
Section 10.11. Notices. Any notice which a party is
required or may desire to give the other shall be in writing
and shall be sent by personal delivery or by mail, either
(i) by United States registered or certified mail, return
receipt requested, postage prepaid, or (ii) by Federal
Express or similar generally recognized overnight carrier
regularly providing proof of delivery, addressed as follows
(subject to the right of a party to designate a different
address for itself by notice similarly given):
To Seller: Pacific Gateway Properties, Inc.
101 Spear Street, Suite 215
San Francisco, California 94105
Attention: Roger D. Snell
With Copy To: Bronson, Bronson & McKinnon
505 Montgomery Street
San Francisco, California 94111-2514
Attention: William P. O'Connell, Esq.
To The Partnership: Golden Gateway Center
c/o Oakhill Gateway Partners, L.P.
601 Montgomery Street, Suite 1010
San Francisco, California 94111
Attention: Timothy W. Foo
With Copy To: Morrison & Foerster
345 California Street
San Francisco, California 94104-2675
Attention: David S. Fries, Esq.
Any notice given by mail shall be deemed to have been given
as of the date of delivery or attempted delivery (whether
accepted or refused) established by U.S. Post Office return
receipt or the overnight carrier's proof of delivery or
attempted delivery, as the case may be. Any notice given by
personal delivery shall be deemed given upon receipt of the
same by the party being notified.
Section 10.12. Confidentiality. Seller covenants and
agrees that following the Closing Seller and its agents,
employees and contractors shall each maintain as
confidential and shall each not disclose to any third party
any information concerning or relating to the Property or
the Partnership, except (i) pursuant to a valid court order,
(ii) as required by law, or (iii) to Seller's auditors, but
only to the extent necessary for such auditors to prepare
Seller's financial statements. Seller shall notify the
Partnership at least three (3) business days prior to
Seller's (or Seller's agents, employees or contractors)
making any disclosure which such person believes is required
under either clause (i) or clause (ii) above. The
provisions of this paragraph shall survive the Closing.
Section 10.13. Exhibits. All exhibits, schedules or
lists attached to this Agreement and referred to herein
shall be deemed to be a part of this Agreement and shall be
incorporated herein by their reference.
Section 10.14. Counterparts. This Agreement may be
executed in identical counterparts. Each such counterpart
shall be deemed an original and all counterparts shall
collectively constitute one agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date and year first above written.
PACIFIC GATEWAY PROPERTIES, INC.,
a New York corporation
By: Roger D. Snell
Its: President and CEO
GOLDEN GATEWAY CENTER,
a California limited partnership
By: Oakhill Gateway Partners, L.P.,
a California limited
partnership,
its Managing General Partner
By: Oak Hill Investments, Inc.,
a California corporation
its General Partner
By: Timothy Foo
Its: President <PAGE>
EXHIBIT LIST
Exhibit A: Intentionally omitted
Exhibit B: Intentionally omitted
Exhibit C: Intentionally omitted
Exhibit D: Included as a seperate exhibit to Form 8K
Exhibit E: Form of Release of Seller
Exhibit F: Form of Certificate
Exhibit G: Form of Release of Remaining General Partners
and the Partnership<PAGE>
EXHIBIT E
FORM OF RELEASE OF SELLER
ACKNOWLEDGEMENT AND RELEASE
Each of the undersigned, OAKHILL GATEWAY PARTNERS,
L.P., a California limited partnership, PRIME PROPERTY
FUND II, L.P., a California limited partnership, and C M
GOLDEN GATE, INC., a California corporation, (collectively,
the "ExCom Partners"), hereby covenants and agrees as
follows:
1. Each of the undersigned is a general partner in
the Partnership (as defined below).
2. Each of the undersigned acknowledges that
Pacific Gateway Properties, Inc., a New York corporation
(formerly known as Perini Investment Properties, Inc.)
("Seller"), is the "Seller" under that certain Agreement
dated as of August 30, 1994, between Seller and the
Partnership, as amended by that certain First Amendment to
Agreement, dated September 27, 1994 (as amended, the
"Purchase Agreement"), pursuant to which Seller has agreed
to sell to the Partnership all of Seller's partnership
interest (the "Partnership Interest") in Golden Gateway
Center, a California limited partnership (the
"Partnership"), which Partnership Interest consists of a
29.489% interest in the Partnership. Unless otherwise
defined herein, capitalized terms used herein shall have the
same meanings as set forth in the Purchase Agreement.
3. Each of the undersigned acknowledges that
substantially concurrent herewith, each of the undersigned
is executing and delivering to Seller a certificate dated as
of even date herewith containing certain representations and
warranties made by the ExCom Partners about the Property and
the Partnership, upon which certificate the undersigned
acknowledge that Seller is entitled to rely.
4. Except for the Unreleased Claims (as defined
below) and the Unreleased Obligations (as defined in the
Purchase Agreement), each of the undersigned hereby releases
and forever discharges Seller and each of its respective
affiliates, successors and assigns and each of them, and
each employee, agent, contractor, subcontractor,
representative, officer, director, stockholder, and
constituent partner of each of the foregoing (collectively,
the "Released Parties"), from any and all claims, damages,
malfeasance, actions, causes of action, suits, judgments,
demands, liabilities, obligations, costs, expenses, or
losses of any type (including attorneys' fees, costs and
expenses), whether known or unknown, fixed or contingent,
arising out of, resulting from, or in connection with the
Property or the Partnership, including, without limitation,
any claims that Seller has breached any fiduciary duty owed
to the ExCom Partners, any claims for adjustment of the
purchase price under the 1991 Agreement (as defined below),
any claims arising under any security agreements between
Seller and the ExCom Partners, and any claims or obligations
arising under and from that certain First Amended and
Restated Agreement Regarding Capital Improvement Work dated
as of January 31, 1992, among the ExCom Partners, Seller and
certain other persons. As used herein, the term "Unreleased
Claims" shall mean (i) those claims, liabilities and
obligations that are specifically excluded from the claims,
liabilities and obligations assumed by the ExCom Partners
pursuant to Section 3.1 of that certain Agreement dated as
of December 30, 1991, between Seller and certain other
entities, as "Seller," and the ExCom Partners' predecessors-in-interest, as
"Buyers," regarding the sale of a 46.99%
interest in the Partnership (the "1991 Agreement"), which
unassumed claims, liabilities and obligations are specified
in clauses (i), (ii) and (iii) of Section 3.1 of the 1991
Agreement (on page 27) and restated in Paragraph 3 of that
certain Assignment of Partnership Interest and Assumption
Related Thereto dated as of December 31, 1991, by and among
such parties, (ii) any claims, liabilities or obligations
arising out of any intentional misrepresentation of a
representation or warranty made by Seller in the 1991
Agreement, and (iii) those claims, liabilities and
obligations that are specifically excluded from the claims,
liabilities and obligations assumed by the ExCom Partners
pursuant to Section 4.1 of that certain Put and Call
Agreement dated as of December 31, 1991, between Seller, as
"Seller," and the ExCom Partners' predecessors-in-interest,
as "Buyers," regarding the granting of certain put and call
options affecting a 3.00% interest in the Partnership, as
amended (the "Put and Call Agreement"), which unassumed
claims, liabilities and obligations are specified in
clauses (i) and (iii) of Section 4.1 of the Put and Call
Agreement (on pages 7 and 8) and restated in Paragraph 3 of
that certain Assignment of Partnership Interest and
Assumption Related Thereto dated as of February 25, 1993, by
and among Seller and the ExCom Partners.
5. Concurrent with the execution of this
Acknowledgement and Release, the ExCom Partners each agree
to execute in favor of Seller documents or instruments
terminating all financing statements and any other filings
made to evidence or perfect security interests granted by
Seller to the ExCom Partners.
6. Each of the undersigned hereby acknowledges
that it is familiar with Section 1542 of the California
Civil Code, which 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.
Nevertheless, each of the ExCom Partners acknowledges that
this release has been agreed upon in light of this situation
and expressly waives any and all rights which it may have
under Section 1542 of the California Civil Code, or any
other state or federal statute or common law principle of
similar effect with respect to the matters released in
Paragraph 4 above.
OGP: TF PPFII: DJ CMGG: HG
7. Each of the undersigned acknowledges that its
execution and delivery of this Acknowledgement and Release
is a condition to Seller's obligation to sell the
Partnership Interest and that Seller is materially relying
on this Acknowledgement and Release in selling the
Partnership Interest.
IN WITNESS WHEREOF, each of the undersigned has
executed this Acknowledgement and Release as of the 30th day
of September, 1994.
OAKHILL GATEWAY PARTNERS, L.P.,
a California limited partnership
By: Oak Hill Investments, Inc.,
a California corporation,
its general partner
By: Timothy Foo
Its: President
PRIME PROPERTY FUND-II, L.P.,
a California limited partnership
By: GGC Acquisition, Inc.,
a California corporation,
its general partner
By: Daniel James
Its: Secretary
C M GOLDEN GATE, INC.,
a California corporation
By: Henry Gaw
Its: President
<PAGE>
EXHIBIT F
FORM OF CERTIFICATE
CERTIFICATE
Each of the undersigned, OAKHILL GATEWAY PARTNERS,
L.P., a California limited partnership, PRIME PROPERTY
FUND II, L.P., a California limited partnership, and
C M GOLDEN GATE, INC., a California corporation, hereby
severally (and not jointly) certifies, represents and
warrants to PACIFIC GATEWAY PROPERTIES, INC., a New York
corporation ("PGP"), as follows:
1. The undersigned has not received any bona fide
third party offers to purchase the Property (as defined
below) which remain in effect as of the date hereof and is
not engaged in any negotiations for the sale, transfer or
similar conveyance of all or any significant portion of the
Property (excluding residential and commercial lease
transactions) or any legal or equitable interest therein
(other than such interests that are insubstantial in value,
e.g., easements). As used herein, the term "Property" shall
mean that certain mixed-use residential, office and retail
development, including certain parking and recreational
facilities and a park, located in the City and County of San
Francisco, California and commonly known as Golden Gateway
Center, and the term "Partnership" shall mean Golden Gateway
Center, a California limited partnership.
2. The undersigned does not presently intend to
market the Property for sale within the forthcoming twelve
(12) month period.
3. The undersigned does not presently intend to
undertake a refinancing of all or substantially all of the
debt encumbering the Property within the forthcoming twelve
(12) month period or to further encumber the Property with
debt in excess of $5,000,000, other than any debt that is
(i) incurred substantially concurrent with the giving of
this Certificate, (ii) generally described in the term
sheets attached as "Exhibit B" to that certain Agreement
dated as of August 30, 1994, as amended by that certain
First Amendment to Agreement dated September 27, 1994,
between PGP and the Partnership regarding the Partnership's
redemption of all of PGP's interest in the Partnership (as
amended, the "Purchase Agreement") or (iii) disclosed to
PGP prior to the date hereof.
4. The undersigned does not presently intend to
develop a residential, commercial or entertainment complex
on that portion of the Property commonly known as "Lot 201"
within the forthcoming twelve (12) month period and is not
currently engaged in any negotiations (i) with Western
Athletic Club ("WAC") to modify the terms of the lease
between the Partnership and WAC (the "WAC Lease") that would
result in any substantial increase in the rental payments to
the Partnership thereunder, (ii) to accept a voluntary
termination of the WAC Lease and relet the premises demised
thereunder to another party, or (iii) with any other person
regarding a transaction on Lot 201 that would significantly
increase the value of the Partnership's assets. The
Partnership is, however, presently engaged in certain
discussions with WAC regarding certain modifications to the
WAC Lease, including modifications that would require WAC,
at its expense, to construct a new swimming pool.
5. The undersigned does not possess any actual
knowledge of any material inaccuracy in the Partnership's
fiscal year 1992 or 1993 audited financial statements or the
Partnership's unaudited monthly income statements for 1994.
6. The undersigned does not presently intend to
subdivide, initiate a condominium conversion, create a
community interest development, or create any similar plan,
parcelization, or mode of ownership which might materially
affect the value or marketability of all or any substantial
part of the Property within the forthcoming twelve (12)
month period.
7. Each of the undersigned understands,
acknowledges, and agrees that PGP is partially induced to
enter into the Purchase Agreement and to close the sale
provided for therein by the representations and warranties
made herein, and that PGP is relying on these
representations and warranties.
IN WITNESS WHEREOF, each of the undersigned has
executed this Certificate as of the 30th day of Septmeber,
1994.
OAKHILL GATEWAY PARTNERS, L.P.,
a California limited partnership
By: Oak Hill Investments, Inc.,
a California corporation,
its general partner
By: Timothy Foo
Its: President
PRIME PROPERTY FUND-II, L.P.,
a California limited partnership
By: GGC Acquisition, Inc.,
a California corporation,
its general partner
By: Daniel James
Its: Secretary
C M GOLDEN GATE, INC.,
a California corporation
By: Henry Gaw
Its: Presiden
<PAGE>
EXHIBIT G
FORM OF RELEASE OF REMAINING GENERAL PARTNERS
AND THE PARTNERSHIP
ACKNOWLEDGEMENT AND RELEASE
The undersigned, PACIFIC GATEWAY PROPERTIES, INC., a
New York corporation ("Seller"), hereby covenants and agrees
as follows:
1. Seller is the "Seller" under that certain
Agreement dated as of August 30, 1994, as amended by that
certain First Amendment to Agreement dated as of
September 27, 1994 (as amended, the "Purchase Agreement")
between Seller and Golden Gateway Center, a California
limited partnership (the "Partnership"), pursuant to which
Seller has agreed to sell to the Partnership all of Seller's
partnership interest (the "Partnership Interest") in the
Partnership, which Partnership Interest consists of a
29.489% interest in the Partnership. Unless otherwise
defined herein, capitalized terms used herein shall have the
same meanings as set forth in the Purchase Agreement.
2. Seller acknowledges that Oakhill Gateway Partners,
L.P., a California limited partnership, Prime Property Fund
II, L.P., a California limited partnership, and C M Golden
Gate, Inc., a California corporation (collectively, the
"ExCom Partners"), are each general partners in the
Partnership, and, upon the withdrawal of Seller from the
Partnership, the ExCom Partners will be the only general
partners in the Partnership.
3. Seller acknowledges that the ExCom Partners
have afforded Seller and its agents, consultants and
contractors with an opportunity to examine (and, if desired,
audit) the books and records of the Partnership and to
examine all other matters relating to the Partnership and
the Property that are or that could be relevant to
determining the value of the Partnership Interest. Seller
further acknowledges and agrees that the Closing shall
evidence that Seller and its agents, consultants and
contractors have had an opportunity to conduct such
examinations and inspections of the Partnership and the
Property as they have deemed or may deem necessary or
desirable to establish the Purchase Price for the
Partnership Interest. Seller further acknowledges that,
except as set forth in that certain Certificate dated as of
even date herewith and executed by the ExCom Partners (the
"ExCom Certificate"), Seller is not relying on any
statements or information provided to Seller by the ExCom
Partners, that Seller has established and agreed to the
amount of the Purchase Price based solely on Seller's
assessment of the fair market value of the Partnership
Interest, and that none of the ExCom Partners has or owes
Seller any fiduciary duties with respect to the sale of the
Partnership Interest to the Partnership (including with
respect to the value of the Partnership Interest). Except
for (i) any misrepresentations set forth in the ExCom
Certificate (which representations Seller acknowledges have
been made on a several basis by the ExCom Partners);
(ii) any Released Obligations; and (iii) any obligations
expressly assumed by the ExCom Partners' predecessors-in-interest in
that certain Agreement dated as of December 30,
1991 between Seller, the ExCom Partners' predecessors-in-interest and
certain other parties regarding the sale of a
46.99% interest in the Partnership (the "1991 Agreement")
and in that certain Put and Call Agreement dated as of
December 31, 1991 between Seller and the ExCom Partners'
predecessors-in-interest regarding the granting of certain
put and call options affecting a 3.00% interest in the
Partnership, Seller hereby releases and forever discharges
the Partnership and each of the ExCom Partners and each of
their respective affiliates, successors and assigns and each
of them, and each employee, agent, contractor,
subcontractor, representative, officer, director,
stockholder, and constituent partner of any of the foregoing
(collectively, the "Released Parties"), from any and all
claims, damages, malfeasance, actions, causes of action,
suits, judgments, demands, liabilities, obligations, costs,
expenses, or losses of any type (including attorneys' fees,
costs and expenses), whether known or unknown, fixed or
contingent, arising out of, resulting from, or in connection
with the Property or the Partnership or the redemption of
the Partnership Interest by the Partnership, including,
without limitation, any claims by Seller that the ExCom
Partners have breached any fiduciary duty owed to Seller.
Seller's release contained in this Paragraph 3 does not
prohibit or in any way limit Seller's right, and such right
is hereby reserved, (i) to pursue any claim or action,
including, but not limited to, any claim or action for
contribution or indemnity, against the ExCom Partners, or
any of them, for any damages, judgments, liabilities,
obligations, costs, expenses or losses of any kind
(including attorneys' fees, costs and expenses) incurred by
Seller as a result of any action or claim relating to the
Partnership or the Property made against Seller by a third
party, or (ii) to seek joinder of the ExCom Partners as a
defendant or defendants in any claims, actions, suits or
demands relating to the Partnership or the Property made
against Seller by any third party.
4. Seller acknowledges that since the closing of
the transactions described in the 1991 Agreement the ExCom
Partners, as the members of the "Executive Committee" of the
Partnership, have been vested with the power and authority
to carry out the day-to-day business of the Partnership and
to make and carry out major decisions of the Partnership.
Accordingly, Seller's release in Paragraph 3 above shall not
prohibit or in any way limit Seller's right to make a direct
claim against the ExCom Partners, or any of them, for costs,
expenses, liabilities, obligations or losses of any type
incurred by Seller to third parties, arising out of or
accruing from any acts of the ExCom Partners or any of them
prior to the date hereof, which claim Seller would otherwise
have had the right to assert against any of the ExCom
Partners had Seller not withdrawn from the Partnership (as
such might be limited under the terms of the Agreement of
Limited Partnership of the Partnership, as amended to the
date hereof).
5. Concurrent with the execution of this
Acknowledgment and Release, Seller agrees to execute in
favor of the ExCom Partners documents or instruments
terminating all financing statements and any other filings
made to evidence or perfect security interests granted by
the ExCom Partners to Seller.
6. The undersigned hereby acknowledges that it is
familiar with Section 1542 of the California Civil Code,
which 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.
Nevertheless, Seller acknowledges that this release has been
agreed upon in light of this situation and expressly waives
any and all rights which it may have under Section 1542 of
the California Civil Code, or any other state or federal
statute or common law principle of similar effect with
respect to the matters released in Paragraph 3 above.
SELLER: RDS
7. Seller acknowledges that Seller's execution and
delivery of this Acknowledgement and Release is a condition
to the Partnership's obligation to purchase the Partnership
Interest, that the Partnership is materially relying on this
Acknowledgement and Release in purchasing the Partnership
Interest and that the ExCom Partners are materially relying
on this Acknowledgement and Release in executing and
delivering certain certificates and releases in favor of
Seller.
IN WITNESS WHEREOF, the undersigned has executed
this Acknowledgement and Release as of the 30th day of
September, 1994.
PACIFIC GATEWAY PROPERTIES, INC.,
a New York corporation
By: Roger D. Snell
Its: President & CEO
<PAGE>
FIRST AMENDMENT TO AGREEMENT
This First Amendment to Agreement ("First
Amendment") is made as of the 27th day of September, 1994,
by and between PACIFIC GATEWAY PROPERTIES, INC., a New York
corporation ("Seller"), and GOLDEN GATEWAY CENTER, a
California limited partnership (the "Partnership").
WHEREAS, Seller and the Partnership entered into
that certain Agreement (the "Agreement") dated as of
August 30, 1994, pursuant to which the Partnership agreed to
redeem all of Seller's partnership interest in the
Partnership.
WHEREAS, Seller and the Partnership desire to
execute this First Amendment to extend the Closing Date and
to set forth the parties' agreement with respect to certain
other matters set forth herein.
NOW, THEREFORE, in consideration of the mutual
covenants and conditions herein set forth and other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Seller and the Partnership hereby
agree as follows:
1. Defined Terms. All capitalized terms contained
herein shall, unless otherwise indicated, have the same
meanings as set forth in the Agreement.
2. Closing Date. Section 4.1 of the Agreement is
hereby deleted in its entirety, and the following provision
Section 4.1 is hereby inserted in lieu thereof.
Section 4.1. Closing Conference.
The purchase and sale of the PGP
Partnership Interest provided
herein shall be consummated through
a closing conference which shall be
held on or before October 18, 1994
(the "Closing Date,") at the
offices of Morrison & Foerster,
345 California Street,
San Francisco, California. Closing
of the purchase and sale of the PGP
Partnership Interest shall be
deemed to have occurred when the
conditions set forth in Article II
have been satisfied or waived, the
documents described in Article V
and all other documents reasonably
required by the parties have been
duly executed and delivered and the
full amount of the Purchase Price
has been delivered to Seller in
cash or other immediately available
funds (collectively, the
"Closing"). In the event that the
Closing has not occurred on or
before October 18, 1994, this
Agreement shall automatically
terminate, neither party shall have
any further obligation hereunder
(except as otherwise expressly set
forth herein), the Deposit shall be
returned to the Partnership (unless
the Closing does not occur as the
sole result of a Default of the
Partnership hereunder), and Seller
may dispose of the PGP Partnership
Interest in any manner it deems
acceptable (subject to any
applicable restrictions set forth
in the Partnership Agreement).
3. Deposit of Closing Documents and Partnership
Note. Notwithstanding the extension of the Closing Date as
provided in Paragraph 2 of this First Amendment, the parties
hereto shall deposit (or cause to be deposited) with Escrow
Agent on or before September 30, 1994 executed originals of
the documents described in Article V of the Agreement and
the Partnership shall deposit with Escrow Agent on or before
September 30, 1994 an executed original of a promissory note
(the "Partnership Note") in the form of Exhibit A attached
hereto. The Partnership Note shall become due and payable
on the Closing Date, if, but only if, all conditions to
Closing set forth in the Agreement have been satisfied.
Interest shall accrue on the Partnership Note at a rate of
7.50% per annum from September 30, 1994 until paid, which
interest shall become due and payable on the Closing Date.
4. Proration of Income or Loss; Distributions.
Notwithstanding anything to the contrary set forth in
Sections 3.1, 3.2, 3.3 or any other provision of the
Agreement, and subject to the Closing occurring on or before
the Closing Date, (i) all income, loss, depreciation and
credits accruing or attributable to the PGP Partnership
Interest for tax and accounting purposes for the calendar
year 1994 shall be allocated between Seller and the
Partnership as of the 12:01 a.m. on September 30, 1994,
based upon the relative number of days in the 1994 calendar
year before and after such date, (ii) the Partnership shall
be deemed to have redeemed the PGP Partnership Interest as
of September 30, 1994, and (iii) Seller shall be paid at
Closing an amount equal to One Hundred Three Thousand Two
Hundred Eleven and 50/100 Dollars ($103,211.50).
5. Agreement In Effect. Except as expressly
provided above, all terms and conditions of the Agreement
remain in full force and effect. In the event of any direct
conflict between the Agreement and this First Amendment, the
terms and conditions of this First Amendment shall be
controlling.
6. Counterparts. This First Amendment may be
executed in any number of counterparts, each of which, when
executed and delivered, shall be deemed an original, but
such counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date and year first above written.
PACIFIC GATEWAY PROPERTIES, INC.,
a New York corporation
By: Roger D. Snell
Its: President & CEO
GOLDEN GATEWAY CENTER,
a California limited partnership
By: Oakhill Gateway Partners, L.P.,
a California limited
partnership,
its Managing General Partner
By: Oak Hill Investments, Inc.,
a California corporation
its General Partner
By: Timothy Foo
Its: President <PAGE>
EXHIBIT A
FORM OF PARTNERSHIP NOTE
PROMISSORY NOTE
(Balance of Purchase Price)
$20,500,000.00 San Francisco, California
September 30, 1994
FOR VALUE RECEIVED AND ACKNOWLEDGED, the
undersigned, GOLDEN GATEWAY CENTER, a California limited
partnership ("Maker"), hereby promises to pay to PACIFIC
GATEWAY PROPERTIES, INC., a New York corporation ("Holder"),
or order, the principal sum of Twenty Million Five Hundred
Thousand Dollars ($20,500,000.00), with interest accruing on
the unpaid principal balance at 7.50% per annum from the
date hereof until paid. All principal and accrued interest
under this Note shall be due and payable in full on the
Closing Date (as defined in that certain Agreement dated as
of August 30, 1994, between Maker and Holder regarding
Maker's redemption of all of Holder's partnership interest
in Maker (as such may have been or may be hereafter amended,
the "Agreement")).
If any part of the principal or interest of this
Note is not paid when due, it shall thereafter bear interest
at the lesser of the rate of 18 percent per annum or the
highest rate legally permissible from and after the date of
delinquency until paid.
1. Principal and interest shall be payable at such
place as Holder may designate in writing.
2. Principal and interest shall be payable in
lawful money of the United States of America which shall be
legal tender in payment of all debts and dues, public and
private, at the time of payment, and shall be paid in
immediately available cash funds. Maker waives presentment,
demand for payment, notice of non-payment, protest, notice
of protest, and any and all other notices or demands in
connection with the delivery, acceptance, performance,
default, or enforcement of this Note.
3. If action be instituted in connection with this
Note (including, without limitation, any proceedings for
collection hereof in any bankruptcy or similar matter or
case), Maker promises to pay Holder all fees and costs in
connection with such action, including, without limitation,
reasonable attorneys' fees incurred in good faith.
4. This Note shall inure to the benefit of
Holder's successors and assigns. This Note shall in all
respect be governed by and construed under the laws of the
State of California applicable to agreements made and
entirely performed therein by California residents.
5. This Note arises out of and is subject to the
terms and conditions of the Agreement.
MAKER:
GOLDEN GATEWAY CENTER,
a California limited partnership
By: Oakhill Gateway Partners,
L.P., a California limited
partnership its Managing
General Partner
By: Oak Hill Investments, Inc.,
a California corporation its
General Partner
By: Timothy Foo
Its: President
