UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of
The Securities Exchange Act of 1934
for the Quarterly Period ended March 31, 1998
----------------------
Commission File No. 0-19933
TMP INLAND EMPIRE IV, LTD.
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0341829
(State or other jurisdiction I.R.S.Employer Identification No.)
of incorporation or organization)
801 North Parkcenter Drive, Suite 235 92705
Santa Ana, California (Zip Code)
(Address of principal executive office)
(714) 836-5503
(Registrant's telephone number, including area code)
----------------------
Indicate by check mark whether Registrant has [1] filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports) and [2] has been subject to such filing requirements for
the past 90 days.
Yes [X] No [ ]
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following financial statements are filed as a part of this Form 10-Q:
Balance Sheets as of March 31, 1998 and December 31, 1997, Statements of Income
for the three months ended March 31, 1998 and 1997, Statements of Cash Flows for
the three months ended March 31, 1998 and 1997.
The accompanying unaudited interim financial statements include all adjustments
(consisting solely of normal recurring adjustments) which are, in the opinion of
management, necessary to fairly present the financial position of the
Partnership as of March 31, 1998 and the results of its operations, changes in
partners' equity, and cash flows for the periods then ended.
<PAGE>
<TABLE>
TMP INLAND EMPIRE IV, LTD.
A California Limited Partnership
<CAPTION>
Balance Sheets
March 31, December 31,
1998 1997
<S> <C> <C>
Assets
Cash $ 43,163 $ 75,651
Due from Affiliates 5,727
Accounts Receivables 323
Investment In Unimproved Land 2,375,556 2,350,715
----------- -----------
Total Assets $ 2,424,769 $2,426,366
=========== ==========
Liabilities and Partners Capital
Accounts Payable and Accrued
Liabilities $ 0 $ 1,900
Due to Manager 3,050
Due to Affiliates 203 963
Property Taxes Payable 138,602 124,047
Notes Payable (Note 3) 190,000 190,000
Commission Payable (Note 4) 70,560 70,560
Franchise Tax Payable 800 800
----------- ----------
Total Liabilities 403,215 388,270
Partners' Capital
General Partners (55,499) (55,334)
Limited Partners 8,500 equity
units authorized and outstanding 2,077,053 2,093,430
------------ -----------
Total Partners Capital 2,021,554 2,038,096
Total Liabilities and $ 2,424,769 $2,426,366
=========== ==========
Partners' Capital
</TABLE>
<PAGE>
<TABLE>
TMP INLAND EMPIRE IV, LTD.
A California Limited Partnership
Statements of Income
(Unaudited)
<CAPTION>
Three Months Ended
March 31 March 31
1998 1997
<S> <C> <C>
Interest and Other Income $ 392 $ 221
Administration Expenses 16,934 12,660
--------- ---------
Net Loss $(16,542) (12,439)
--------- ---------
Allocation of Net Income (Loss)
(Note 2)
General Partners: $ (165) $ (124)
========== =========
Limited Partners: $ (16,377) (12,315)
========== =========
Limited Partners. Per unit $ (1.92) $ (1.44)
========== =========
</TABLE>
<PAGE>
<TABLE>
TMP INLAND EMPIRE IV, LTD.
A California Limited Partnership
Statement of Cash Flows
(Unaudited)
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1998 March 31, 1997
<S> <C> <C>
Operating Activities:
Net Loss $(16,542) $(21,623)
Increase (Decrease) in Due to Manager 3,050 0
Increase in Receivables (323) 0
Increase (Decrease) in Accounts Payable
and Accrued Liabilities (4,068) 30,669
Increase in Due to/from Affiliates (6,487) 0
Increase (Decrease) in Taxes Payable 14,555 0
--------- --------
Net Cash Provided by (Used In)
Operating Activities (9,815) 9,046
---------- ---------
Investing Activities:
Net Cash Provided by (Used In)
Investing Activities (22,673) (20,143)
Financing Activities
Net Cash Provided by (Used In) -- --
Financing Activities
Increase (Decrease) In Cash $ (32,488) $(11,097)
Beginning Cash $ 75,651 $ 32,971
--------- --------
Ending Cash $ 43,163 $ 21,874
=========== ========
</TABLE>
<PAGE>
TMP INLAND EMPIRE IV, LTD
a California Limited Partnership
Notes to the Financial Statements
For the Three Months Ended March 31, 1998
(Unaudited)
NOTE 1 - Summary of Significant Accounting Policies
Accounting Method - TMP Inland Empire IV, Ltd. (the Partnership) prepares its
financial statements on the accrual basis of accounting.
Organization Costs - Organization costs include expenses incurred in the
formation of the Partnership that have been capitalized and that have been
amortized over a period of 40 years prior to 1992 and are being amortized over
five years beginning in 1992. These organization costs have been completely
amortized as of 1997.
Investment in Unimproved Land - The Partnership's land is stated at the lower of
actual cost or market value, based on specific identification. All costs
associated with the acquisition of a property are capitalized. In addition, the
Partnership capitalizes all carrying costs.
Income Taxes - The entity is treated as a partnership for income tax purposes
and any income or loss is passed through and taxable at the partner level.
Accordingly, no provision for federal income taxes is provided.
NOTE 2 - Allocation of Profits, Losses and Cash Distributions
Profits, losses, and cash distributions are allocated 99 percent to the limited
partners and one percent to the general partners until the limited partners have
received an amount equal to their capital contributions plus a cumulative,
non-compounded return of six percent per annum based on their adjusted capital
account balances. At that point, remaining profits, losses and cash
distributions are allocated 85 percent to the limited partners and 15 percent to
the general partners.
As of March 31, 1998 and 1997, profits, losses and cash distributions were
allocated 99 percent to the limited partners and one percent to the general
partners.
<PAGE>
NOTE 3 - Note Payable
As of March 31, 1998 and 1997, the Partnership had a note payable secured by
Partnership land. The note bears interest at 12 percent per annum and matures
February 1, 1999.
NOTE 4 - Commissions Payable
As of March 31, 1998 and 1997, the Partnership had a payable to a related party
for services rendered relating to sales of properties in 1989 and 1990.
NOTE 5 - Property Taxes Payable
Property taxes payable as of March 31, 1998 is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 $ 42,365
1996 27,711
1997 35,456
1998 33,070
--------
138,602
</TABLE>
If property taxes remain delinquent for five years, then the County can
foreclose on the property. Management plans to take necessary steps to prevent
foreclosures.
NOTE 6 - Restatement and reissuance of 1997 financial statements and the first
quarter ended March 31, 1998
In compliance with Statement of Financial Accounting Standards No. 121
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
e Disposed Of (SFAS 121), the 1996 financial statements reported an expense for
the decline in fair value of unimproved land of $3,254,195. The 1997 financial
statements originally issued with the auditor's report dated January 28, 1998
reported $1,741,509 of income due to appreciation in fair value of land.
Current clarifications reveals that SFAS 121 does not provide for recording
appreciation in fair value of an asset even in view of previously recording a
decline in value. Therefore, the 1997 financial statements were restated to
remove the appreciation in fair value of land.
In addition, certain carrying costs of land that were previously capitalized
were restated as current expenses in the amount of $12,660 for the quarter ended
March 31, 1997 and $16,934 for the quarter ended March 31, 1998.
<PAGE>
TMP INLAND EMPIRE IV, LTD.
a California Limited Partnership
For the Three Months Ended March 31, 1998
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Partnership revenues during the three month periods ended March 31, 1998 and
1997 consisted primarily of interest income. There were no properties sold
during the first quarters of 1998 and 1997. There was one property sold during
the second quarter of 1997.
Investing Activities used approximately $44,000 for the three months ended March
31, 1998 and $42,000 for the three months ended March 31, 1997, mainly for
carrying costs of the land held for investment.
The Partnership had six properties as of March 31, 1998 that are being held for
appreciation and resale. Upon the sale of each property, the Partnership intends
to distribute the sales proceeds, less any reserves needed for operations, to
the partners.
Management believes that the Partnership has sufficient cash to meet the
anticipated cash requirements of the Partnership for the next twelve months.
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.
Date: May 12, 1998
TMP INLAND EMPIRE IV, LTD.
a California Limited Partnership
By: TMP Investments, Inc., as General Partner
\s\ William O. Passo
By:___________________________________
William O. Passo, President
\s\ Anthony W. Thompson
By:__________________________________
Anthony W. Thompson, Exec. V.P.
By: TMP Properties, a California General
Partnership as General Partner
\s\ William O. Passo
By:___________________________________
William O. Passo, General Partner
\s\ Anthony W. Thompson
By:___________________________________
Anthony W. Thompson, General Partner
\s\ Scott E. McDaniel
By ____________________________________
Scott E. McDaniel
EXHIBIT 28
AGREEMENT
This Agreement ("Agreement") is made and entered into as of the 12th
day of March, 1998 by and among PACWEST INLAND EMPIRE, LLC, a Delaware limited
liability company ("PACWEST"), TMP INVESTMENTS, INC., a California corporation
("TMPI") and TMP PROPERTIES, a California general partnership ("TMPP"). TMPI and
TMPP are currently the general partners of the limited partnerships whose names
are set forth on Exhibit A hereto (the "Limited Partnerships"). TMPI and TMPP
and any affiliate of such general partners who may later be admitted to the
Partnerships as additional general partners are collectively hereinafter
referred to as the "General Partners". The Limited Partnerships are herein
sometimes also collectively hereinafter referred to as the "Partnerships."
PACWEST, TMPI, TMPP, the General Partners and the Partnerships are herein
sometimes collectively referred to as the "Parties."
WHEREAS, TMPI and TMPP are the managing general partners of the
Partnerships; and
WHEREAS, the parties hereto intend by this Agreement to provide a
basis whereby PACWEST shall receive from the General Partners distributions made
to them with respect to certain of their Ownership Interests (as hereinafter
defined) in the Limited Partnerships; and
WHEREAS, for the purposes of this Agreement, "Ownership Interests"
shall include the one percent (1%) interest in the Limited Partnership's
allocation of profits and losses and distributions of cash from any source,
whether held directly or indirectly, through a partnership, corporation or other
entity, or through a series or combination thereof.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained, the parties hereto agree as follows:
<PAGE>
1. Consideration Payable by PACWEST.
Consideration. As consideration for the execution of
this Agreement and the performance hereunder by TMPP, TMPI and the General
Partners:
(a) Cash Consideration. PACWEST shall pay to TMPI
$300,000 in cash; and
(b) Other Consideration. PACWEST agrees to pay the
deficit capital account restoration obligation that the General Partners may
have when the Partnerships liquidate and dissolve, in an amount not to exceed
an aggregate of $300,000 for all of the Partnerships.
2. Consideration Payable by General Partners.
<PAGE>
Distribution Fee. The General Partners are entitled to receive
distributions from the Partnerships described in Exhibit A, as a consequence of
their one percent (1%) general partner unsubordinated interests in the
Partnerships. The General Partners agree to pay to PACWEST an amount equal to
the total amount which all general partners, including but not limited to the
General Partners, shall receive at any time as Distributions to general partners
from the Partnerships. When at any time and as any General Partner receives any
of such Distributions, such General Partner shall forthwith pay to PACWEST an
amount equal to the amount received by such General Partner as a Distribution
within five (5) days after the General Partner's receipt thereof. Such amount
paid to PACWEST is referred to as the "Distribution Fee." It is the intention of
the parties that the reference to "Distribution" or "Distributions" herein is
intended to include only those one percent (1%) general partner unsubordinated
interests in each of the Partnerships set forth on Exhibit A and not any other
distribution to which the General Partners are entitled on account of their
interest in the Partnerships. Should the General Partners fail to pay PACWEST
any Distribution or part thereof, which General Partners have received from the
Partnerships within five (5) days after the Distribution is paid to the General
Partners, PACWEST shall have the right to immediately terminate this Agreement
and the Three Hundred Thousand Dollars ($300,000) consideration paid to the
General Partners by PACWEST hereunder shall be returned immediately to PACWEST.
<PAGE>
3. Indemnification by General Partners. Each General Partner for itself
alone, and not on behalf of any other General Partner, each hereby agrees (each
an "Indemnitor" and collectively the "Indemnitors") to save and hold PACWEST,
its officers, directors, shareholders, managers, members, employees and agents
("Indemnitees") harmless and defend and indemnify the Indemnitees from and
against any liability (including without limitation reasonable attorneys' fees
and other costs and expenses incident to any suit, action or proceeding) arising
out of or resulting from (a) any liability or obligation, contingent or
otherwise; (b) Indemnitor's negligence or act of omission in regard to any
Partnership occurring or arising from acts or failures to act prior to the
Effective Date; (c) the presence or suspected presence in, on, or about any real
property owned by any Partnership or which any Partnership may have an interest
in of any toxic or hazardous substance, material or waste (as defined in any
applicable Federal, State or local law or regulation), including, but not being
limited to, the costs of investigation, containment, removal and/or clean-up,
whether or not the presence, or alleged presence, of such toxic or hazardous
substance, material or waste constitutes a breach of any representation or
warranty contained herein provided, however, the Indemnitors shall have
liability under this subparagraph (c) only with respect to any incident
involving toxic or hazardous substances which occurred during the ownership of
the property in question by a Partnership at a time when such Indemnitor had an
interest therein or which such Indemnitor otherwise became aware of prior to the
Closing and shall not apply to any occurrence on or after the Effective Date, or
which occurred prior to the time the Indemnitor had an interest in the
Partnership which owned the property in question and such Indemnitor is not, as
of the Closing, aware thereof, or (d) any breach of this Agreement by such
Indemnitor, including, without limitation, the falsity of any representation or
warranty made herein by such Indemnitor. The Indemnitors shall have the right to
decide whether any suit, action or proceeding is settled, tried or appealed and
to select and supervise counsel in connection with any such suit, action or
proceeding provided they shall have given written notice to the Indemnitees and
such indemnitees shall not have reasonably objected to the proposed action
within five (5) days after receipt of such notice or the Indemnitors shall have
received the consent of the Indemnitees to the proposed action, which consent
will not be unreasonably withheld.
4. Closing.
The "Closing" provided for herein shall occur at the offices
of TMPP on March 12, 1998, at 11:00 a.m., (sometimes referred to as the "Closing
Date") or such other time or place that the parties hereto may otherwise
mutually agree, provided that, subject to completion of the Closing, the
Effective Date of this Agreement shall be April 1, 1998 and performance by the
parties under the Management Agreement shall commence at 12:01 a.m. April 1,
1998.
5. Deliveries by PACWEST. At the Closing, PACWEST shall deliver to the
General Partners cash consideration in the sum of THREE HUNDRED THOUSAND DOLLARS
($300,000) payable to TMPP.
Any other document necessary to complete performance of the
Closing obligations of PACWEST.
6. Deliveries by General Partners. At the Closing, the
General Partners and the Partnerships shall deliver to PACWEST the following:
<PAGE>
a. Certified resolutions of each General Partner
authorizing this Agreement and the transactions contemplated hereby;
b. Any other document necessary to complete performance of the
Closing obligations of the General Partners and the Partnerships.
7. Scope of Agreement. With respect to a given General Partner, this
Agreement is applicable solely to those Limited Partnerships in which such
General Partner has an Ownership Interest. This Agreement shall not under any
circumstances be construed as creating a partnership or any other relationship
between or among any of the Parties where no such relationship otherwise exists.
8. Effective Period. This Agreement shall be effective as of the
Effective Date and shall remain in effect as to each Partnership until the
winding up, termination or dissolution of such Partnership has been completed.
9. Representations and Warranties of General Partners. Each General
Partner, for itself alone and not on behalf of any other General Partner hereby
represents and warrants to and covenants with PACWEST as follows:
a. Except as otherwise disclosed in Schedule 9.a attached
hereto, each is duly authorized to execute this Agreement in the capacities
indicated; each General Partner owns the General Partner's Ownership Interest
held by it in each Partnership and its right to the Distribution free and clear
of all liens, encumbrances and adverse claims, has not encumbered, assigned,
transferred or otherwise impaired such General Partner's Ownership Interest or
right to Distributions from the Partnerships and is not in default under any
provision of the agreements establishing the Partnerships in which it serves as
General Partner;
<PAGE>
b. The execution and performance of this Agreement will not
materially violate any order, rule, judgment or decree to which such General
Partner is subject or breach any contract, agreement or commitment by which he
or it is bound;
c. Each of the Partnerships owns the real properties described
in Exhibit C hereto. d. Each General Partner is a partnership,
or a corporation and each of the Partnerships
is a limited partnership duly organized, validly existing and in good standing
under the laws of the State of its organization and is duly qualified to do
business in the State of California and is duly qualified in each other
jurisdiction where the failure to qualify would have a material adverse effect
upon its business or financial condition; and
e. Each of the Partnerships in which each General
Partner has an Ownership Interest:
i. Except as otherwise disclosed in Schedule
9e.i attached hereto, to the best ofthe General Partners' knowledge, after
due and diligent inquiry, is in full compliance in all material respects with
all Federal, State and local laws, and regulations applicable to the conduct of
its business, including, but not being limited to, all reporting requirements
under all Federal and State securities laws.
ii. Except as otherwise disclosed in Schedule
9e.vii attached hereto, there neither is, nor has been, any generation, handling
, manufacturing, treatment, storage, use, transportation, spillage, leaking,
dumping, discharge or disposal (whether accidental or intentional) of any
toxic or hazardous substance, material or waste on, over or in any of the
parcels of real property which are described in Exhibit C, hereto.
<PAGE>
iii. Except as otherwise disclosed in Schedule
9e.iii attached hereto, is not a party to any pending, to the best of any
General Partner's actual knowledge, after reasonable inquiry, any threatened
litigation, including, but not being limited to, any litigation arising out of
the use, operation or ownership of any property in which any such Partnership
may have an interest that might materially affect the use and operation of
any such property, or any portion hereof, for its intended purpose or might
detrimentally affect the value thereof or result in a material and adverse
change in the business or financial condition of such Partnership.
iv. Except as disclosed in Schedule 9e.iv
attached hereto, save and except for leases entered into in the ordinary course
of business covering all or a portion of the property owned by such Partnership,
each such Partnership is not a party to any material contract or other
commitment terminable on more than thirty (30)days' notice.
v. Except as disclosed in Schedule 9e.v
attached hereto, is not a party to any obligation for money borrowed which
is subject to recourse liability to the general assets of such Partnership or
of such General Partner.
vi. Is not a party to or subject to any
financing or refinancing which is in material violation of any provision of
the agreements establishing such Partnership.
<PAGE>
vii. Except as otherwise disclosed in Schedule
9e.vii attached hereto, has no material liability, fixed or contingent,
whether recourse or non-recourse, including without limitation unpaid property
taxes, except for the liabilities set forth on or otherwise disclosed in the
financial statements of each of the Partnerships for the fiscal year ended
December 31, 1997, as set forth in Exhibit D hereto, true and complete
copies of which have been delivered to PACWEST, or incurred in the ordinary
course of business after the date of the most recent balance sheet included on
such financial statements and except to the extent that any such liability,
individually or in the aggregate, would not materially and adversely affect the
financial condition, business, properties, assets or results of operations of
such Partnership.
viii. Except as otherwise disclosed in Schedule
9e.viii is not in material default under any lease to which it is a party and is
not a party to any lease covering more than Ten Thousand (10,000) square feet
of space wherein any party thereto is in default, except to the extent any such
default, individually or in the aggregate, would not materially and adversely
affect the financial condition, business, properties, assets, or results of
operations of such Partnership.
ix. Except as otherwise expressly disclosed in
Schedule 9e.ix attached hereto, is not a debtor in any proceeding under the
Bankruptcy Code or an assignee under an assignment for the benefit of creditors.
x. Is in substantial compliance with all
material covenants, conditions, restrictions and other agreements applicable
to any property owned by such Partnership, or in which such Partnership has an
interest, including, but not being limited to, the provisions of any applicable
association which holds rights in any common areas which form a part of any such
property except to the extent such failure to comply, individually or in the
aggregate, would not materially and adversely affect the financial condition,
business, properties, assets or results of operations of such General Partner.
<PAGE>
xi. Except as expressly disclosed in Schedule
9e.xi attached hereto, to each General Partner's and each Partnerships'
current actual knowledge, without further inquiry, there is no existing,
proposed or contemplated plan, study or effort of any governmental agency or
authority which, in any way, would materially affect the use of any property
owned by such Partnership, or in which such Partnership may have an interest, or
any portion thereof, for its presently intended use.
xii. Owns the assets described on Exhibit C hereto
and, with respect to interests in real property (based solely upon such title
insurance as such Partnership may hold with respect thereto), such Partnership
holds marketable fee title thereto, and with respect to all personal property
and intangible assets, holds title free and clear of all liens,
encumbrances and adverse claims, except as otherwise disclosed in Schedule
9e.xii attached hereto.
10. Representations and Warranties of PACWEST. PACWEST hereby
represents and warrants as follows: a. PACWEST is a limited liability company
duly organized, validly existing and in good standing under the laws of the
state of Delaware and is duly qualified in such other jurisdictions where the
failure to so qualify would have a material adverse effect upon its business
or financial condition.
b. PACWEST is duly authorized to execute this Agreement. The
execution and performance of this Agreement by PACWEST will not violate any
order, rule, judgment or decree to which PACWEST is subject or breach any
contract, agreement or commitment by which PACWEST is bound.
<PAGE>
c. The execution and delivery of this agreement and the
Management Agreement and the performance by PACWEST of its obligations hereunder
and thereunder will not conflict with or result in the breach or violation of or
constitute a default or an event of default under any law, rule or regulation,
or any judgment or order of any court or any of the terms or provisions of
PACWEST's Operating Agreement or of any agreement or contract to which PACWEST
is a party or to which PACWEST is subject.
d. PACWEST is not a party to any pending litigation or
regulatory action which would affect its ability to carry out its obligations
under this Agreement and the Management Agreement nor, to the best of the
knowledge of PACWEST, is any such action or proceeding currently threatened.
e. PACWEST is in compliance with all applicable laws and
regulations applicable to the conduct of its business.
11. Entire Agreement. This Agreement, contains the entire agreement of
the Parties with respect to the transactions contemplated hereby and shall not
be modified or amended except by an instrument signed by or on behalf of the
Parties.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
13. Governing Law. This Agreement shall be governed by and enforced in
accordance with the laws of the State of California.
14. Attorneys' Fees. In any dispute between or among the Parties
relating to or arising out of the interpretation or breach of this Agreement,
the prevailing party or parties shall be entitled to recover from the other
party or parties all reasonable expenses including without limitation attorneys'
fees and court costs.
<PAGE>
15. Severability. If one or more of the provisions contained in this
Agreement shall, for any reason, be held unenforceable in any respect, its
unenforceability shall not affect any other provisions, and the Agreement shall
be construed as if the unenforceable provision had not been included.
16. Other Acts. PACWEST and each Partnership and General Partner
covenants on behalf of itself and its successors, heirs and assigns to execute,
with acknowledgment, verification or affidavit if required, any and all
documents and writings and to perform any and all other acts that may be deemed
by any such Partnership, General Partner or PACWEST necessary or expedient in
connection with the creation of this Agreement (including the Management
Agreement), the achievement of its purposes or the consummation of any matter
covered hereby.
17. Successors and Assigns. PACWEST shall have the right to assign its
rights and obligations under this Agreement to an affiliate, as hereinafter is
defined in Section 150 of the General Corporation Law of the State of California
subject to the receipt of the consent of the General Partner or the General
Partners who have an interest in the Partnerships which would be affected
thereby, which consent will not be unreasonably withheld. Any assignment by
PACWEST to any other person of any of its rights and obligations shall be
subject to the consent of the General Partner or General Partners who have
interests in the Partnership affected thereby, which consent may be withheld in
the sole and absolute discretion of such General Partners. Subject to the
foregoing, the terms and conditions of this Agreement shall not be assignable
and shall be binding upon and inure to the benefit of the successors, heirs and
assigns of the respective Parties.
18. Notices. Any notices required or permitted to be given hereunder
shall be given in writing and sent by United States certified mail, return
receipt requested, addressed to the respective parties as follows:
<PAGE>
To PACWEST: Danny W. Stephenson
PACWEST Inland Empire, LLC
27740 Jefferson Avenue
Temecula, California 92590
With Copy to: Peter R. Pancione, Esq.
Gipson Hoffman & Pancione, P.C.
1901 Avenue of the Stars, Suite 1100
Los Angeles, California 90067
To Each of the William O. Passo
Other Parties: TMP Investments, Inc.
801 North Parkcenter Drive, Suite 235
Santa Ana, California 92705
With Copy to: Darryl L. Steinhause, Esq.
Luce, Forward, Hamilton & Scripps
600 West Broadway, 26th Floor
San Diego, California 92101
or at such other address as any Party may designate by written notice to the
other Party. Notices shall be deemed given on the third calendar day following
deposit in the United States Mail as aforesaid.
19. Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall,
together, constitute but one and the same instrument.
20. Exhibits. The following exhibits and schedules are attached to
this Agreement: A - Schedule of Limited Partnerships
B - INTENTIONALLY OMITTED
C - Schedule of Properties
D - Financial Statements as of December 31, 1997 of the
Partnerships Schedule 9a - Ownership Interests Encumbrances
<PAGE>
Schedule 9e.i - Legal Disclosures
Schedule 9e.iii - Litigation Disclosure
Schedule 9e.iv - Material Contracts Disclosure
Schedule 9e.v - Recourse Debt Disclosure
Schedule 9e.vii - Material Liabilities/Hazardous Substance
Disclosure
Schedule 9e.viii - Material Lease Defaults
Schedule 9e.ix - Bankruptcy Disclosure
Schedule 9e.xi - Governmental Action Disclosure
Schedule 9e.xii - Liens Disclosure
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement
as of the date first written above.
PACWEST INLAND EMPIRE, LLC
a Delaware limited liability company
/s/ Danny W. Stephenson
-----------------------
By:
Danny W. Stephenson,
Manager
TMP INVESTMENTS, INC.
/s/ William O. Passo
---------------------
By:
William O. Passo,
President
TMP PROPERTIES
/s/ William O. Passo
---------------------
By:
William O. Passo,
President
/s/ Scott E. McDaniel
---------------------
By:
Scott E. McDaniel,
Partner
/s/ Anthony W. Thompson
---------------------
By:
Anthony W. Thompson,
Partner
<PAGE>
EXHIBIT A
Schedule of Limited Partnerships
1. TMP Bloomington II LTD.
2. TMP Inland Empire II LTD.
3. TMP Inland Empire III LTD.
4. TMP Inland Empire IV LTD.
5. TMP Inland Empire V LTD.
6. TMP Inland Empire VI LTD.
7. TMP Inland Empire VII LTD.
8. TMP Tuscany Oaks LTD.
9. TMP Land Fund LTD.
10. TMP Land Mortgage Fund LTD.
11. TMP Mortgage Income Plus LP
<PAGE>
EXHIBIT B
Exhibit B has been INTENTIONALLY OMITTED.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT C
Schedule of Properties
Description of Partnership Property
Partnerships Location Acres Zoning
<S> <C> <C> <C>
TMP BLOOMINGTON II SEC Mission Blvd & Agate Street 4.22 C1
TMP INLAND EMPIRE II Baseline &Village Center 18 CC
TMP INLAND EMPIRE III River Rd & Ethanac 219 R1
TMP INLAND EMPIRE IV Circle C Road 320 R1
S Oleander & W Seaton 10 I
Perris Blvd & Markham St 6.44 C-2
Rodeo Dr & Green Tree/Pebble Beach 17 R-4
Village Drive & Armagosa 25 C1-R3
TMP INLAND EMPIRE V Ethanac & Sophie 8.93 R
S. Highland & Tamarind 10 M-1R
Airbase Rd & Beaver 40 R1
Mojave & Amethyst 7 C
Mojave & Amethyst 10 C
S Mojave Dr & Mesa Linda S 11 C2
SEC Amethyst & Rancho Rd 283 All
Bellflower & North Yucca 4.49 C
TMP INLAND EMPIRE VI State St & Romona Blvd 10.48 C-2
Baxter & Meadowlark Lane 38 5 min
I-10 Freeway & Chase School 76 CPS-IP
SWC River Rd & Mapes St. 31 R1
3rd St. & Old Ranch Rd 12.46 1/2 min
18.22 Adelanto 18.22 R1
NEC Koala & Crippen 42.44 R1
TMP INLAND EMPIRE VII SEC Nuevo & Evans 9.6 C2
NEC Cactus & Racoon 18.3 DL
Mesa Linda & Dos Palmas 70 41
SEC of Hwy 395 & Hopland Ave 19.5 C2
22305 Oleander Ave. 18 M1
TMP TUSCANY OAKS Wasson & Old Ranch Rd 200 R1
Brookside & Hannon 60 3/4 min.
Mesa Linda-Golden Triangle
Area 14 DS
TMP Land Fund I Cactus & Daisy-Aster 39 R
Palmdale & Bellflower 14.81 C
Richardson & Joshua 10 DS
Land Mortgage Fund San Jacinto Residential R1
NEC Newport and Bradley Rd 10.84 C
Fox Olsen Res. Newport and
Bradley Rd. 12.5 R1
Sunset Ave & Interstate 10 44.9 C
Remington Hills JV 50 R1
Peppertree J.V.
Mortgage Income Plus Maple Bus. Ctr Bellflower &
Verbina 10 R1
Rancho Cucamonga J.V.
TMP Homes 13 R1
Elsinore 73 ac. Wasson Canyon 171 R1
</TABLE>
<PAGE>
EXHIBIT D
Financial Statements as of December 31, 1997 of the Partnerships
<PAGE>
Schedule 9a - Ownership Interests Encumbrances
None
<PAGE>
Schedule 9e.i - Legal Disclosures
None
<PAGE>
Schedule 9e.iii - Litigation Disclosure
None
<PAGE>
Schedule 9e.iv - Material Contracts Disclosure
None
<PAGE>
Schedule 9e.v - Recourse Debt Disclosure
None
<PAGE>
Schedule 9e.vii - Material Liabilities/Hazardous Substance Disclosure
None
<PAGE>
Schedule 9e.viii - Material Lease Defaults
None
<PAGE>
Schedule 9e.ix - Bankruptcy Disclosure
None
<PAGE>
Schedule 9e.xi - Governmental Action Disclosure
None
<PAGE>
Schedule 9e.xii - Liens Disclosure
None
EXHIBIT 29
MANAGEMENT, ADMINISTRATION AND CONSULTING AGREEMENT
This Management, Administration and Consulting Agreement (the
"Agreement"), dated as of March 6, 1998 is made and entered into by and between
PacWest Inland Empire, LLC, a Delaware limited liability company ("PacWest"),
and each of those entities described on Exhibit A attached hereto (the "General
Partners") which constitute the general partners of the limited partnerships
described on Exhibit A attached hereto (the "Limited Partnerships"), and the
Limited Partnerships. The General Partners have entered into this Agreement on
their behalf and on behalf of each of the Limited Partnerships for which they
serve as general partners. Each of the Limited Partnerships is also referred to
herein as a "Partnership."
RECITALS
A. The parties intend by this Agreement to provide the terms and
conditions whereby PacWest will provide for the General Partners and the
Partnerships (i) property management services for the real estate properties
owned, operated or managed, in whole or in part, by the Partnerships; (ii)
partnership administrative services which the General Partners are obligated to
perform for or render to the Partnerships; (iii) consulting services concerning
the acquisition or disposition of property interests, including, without
limitation, leases; and (iv) provide asset management and development consulting
services to the Partnership.
B. This Agreement is drafted as if it were made and entered into by and
between PacWest and only one Partnership. However, notwithstanding the use of
the word "Partnership" in the singular form, each and every provision of this
Agreement applies to each and every Partnership listed on Exhibit A attached
hereto. Further, the provisions for the management, administration and
consulting services contained and defined herein shall apply to each Partnership
separately.
<PAGE>
AGREEMENT
NOW, THEREFORE, in consideration of their mutual covenants and
agreements set forth in this Agreement, the parties agree as follows:
1. GENERAL
1.1 Engagement. The Partnership hereby engages PacWest to perform or
contract for Management, Administration and Consulting services (defined below).
1.1.1 "Management" refers to the operation, maintenance,
leasing, renting and provision of other management services with respect to the
land and improvements (collectively the "Property") in which the Partnership has
an Ownership Interest (defined below). The Property is more particularly
described on Exhibit B attached hereto. The terms and conditions governing
PacWest's Management of the Property are set forth in the Business Plan (defined
in Section 2.4) and in this Agreement attached hereto as Exhibit C. PacWest
shall utilize trained, experienced personnel employing sound and professional
real estate management and mortgage/loan servicing practices and techniques
consistent with professional real property management and mortgage/loan
servicing standards prevailing in the region where the Property is located. For
the purposes of this Agreement, "Ownership Interests" shall include, without
limitation, all types of corporate or partnership equity or mortgage interests,
whether held directly or indirectly through a partnership, corporation or other
entity, or through a series or combination thereof.
1.1.2 "Administration" refers to the performance of all
administrative services required to be rendered by the General Partner under the
agreement establishing the Partnership ("Partnership Agreement"). Administration
includes without limitation (except the limitations specified in this Agreement)
the daily business affairs and ministerial acts of the Partnership; preparation
of the Business Plan; accounting services; cash management; make available legal
advice and services, including, without limitation, compliance with state and
federal regulatory requirements; maintenance of partner relations; printing,
duplicating and mailing services in connection with all reports and other
communications with the partners and computer services required in connection
with the operation of the Partnership; tax services including, without
limitation, the timely preparation, distribution to the Partnership and filing
of all required or necessary local, state and federal income tax materials;
preparation of appeal of real and personal property tax assessments; provision
of office space and facilities for PacWest personnel engaged in rendering the
services described in this Agreement; and purchasing of office supplies and
equipment used in connection with rendering the services described in this
Agreement. All Administration shall be conducted by PacWest in compliance with
the provisions of this Agreement, including, but not limited to, the provisions
of Section 8.
1.1.3 "Consulting" refers to consulting with and advising the
Partnership during reasonable business hours, concerning the management of the
Partnerships and the properties owned by the Partnerships and such changes as
should be made with respect thereto .
<PAGE>
1.2 Services Excluded. The General Partner shall be and remain
responsible for completing any specific administrative tasks which are
uncompleted as of the Commencement Date (defined below), such as the completion
of the filing of any federal or state income tax returns and any annual,
quarterly or other reports required to be filed with the Securities and Exchange
Commission or any other regulatory agency for any period ending prior to the
Commencement Date.
1.3 Commencement Date. PacWest's duties and responsibilities under this
Agreement shall begin on April 1, 1998 (the "Commencement Date") and shall
continue until termination as provided in Article 11.
1.4 Transition Agreement. The parties hereto agree to enter into a
Transition Agreement in the form attached hereto, marked Exhibit "D" providing
for the payment of costs incurred, and use of employees and assets of, each
party, and designating the tasks to be completed by each party related to the
transition of management duties from the managing partners to PacWest after the
Commencement Date.
2. PACWEST'S RESPONSIBILITIES
2.1 Management, Administration and Consulting. PacWest shall perform
the Management, Administration and Consulting services in an efficient and
satisfactory manner in conformance with the Business Plan and this Agreement.
PacWest shall undertake all activities reasonably necessary to implement each
approved Business Plan, subject to any express limitations on PacWest's
authority set forth in such approved Business Plan or otherwise in this
Agreement and subject to the provisions of the Partnership Agreement. In
performing such duties, PacWest shall act in a fiduciary capacity with respect
to the protection of the Partnership's assets.
2.2 Independent Contractor; Employees.
2.2.1 PacWest is hereby engaged by the Partnership as an
independent contractor.
2.2.2 PacWest shall have in its employ at all times a
sufficient number of employees to enable PacWest to professionally perform the
Management, Administration and Consulting services in accordance with the
Business Plan and this Agreement. All matters pertaining to the employment and
supervision of such employees shall be the sole and exclusive responsibility of
PacWest. All persons employed by PacWest in connection with the services to be
rendered hereunder shall be PacWest's employees. In summary, the Partnership
shall have neither any employees providing Management, Administration and
Consulting services nor any responsibilities nor liabilities with respect to
PacWest's employees, except as otherwise described herein.
2.3 Compliance With Obligations.
<PAGE>
2.3.1 PacWest shall use diligent efforts to fully comply and
to cause the Partnership to fully comply with federal, state and municipal laws,
ordinances, regulations and orders relative to the Management, Administration
and Consulting services and with the rules, regulations or orders of the local
Board of Fire Underwriters or other similar bodies. PacWest shall use diligent
efforts to remedy expeditiously any violation of any such law, ordinance, rule,
regulation or order. Expenses incurred in remedying violations shall be paid
from the Operating Account.
2.3.2 PacWest shall be responsible for the Partnership's full
compliance with all terms and conditions contained in any ground lease, space
lease, mortgage, deed of trust or other instrument affecting the Property, at
the expense of the Partnership and in accordance with this Agreement, unless
otherwise provided for in the Business Plan or by agreement with the General
Partner.
2.4 Business Plan.
2.4.1 Beginning with the calendar year 1999, PacWest shall, in
cooperation with the Partnership, prepare and submit to the Partnership, for the
Partnership's approval, a business plan for Management, Administration and
Consulting services (the "Business Plan"). The Business Plan shall include a
detailed budget of projected income and expenses, a capital expenditure budget,
leasing projections and guidelines, as well as a plan of the Administration and
Consulting services to be provided to the Partnership. The Partnership shall
have a reasonable period of time after PacWest's delivery to the Partnership of
the proposed Business Plan to approve or disapprove such Business Plan, which
approval or disapproval may not be unreasonably withheld. If the Partnership
disapproves the Plan, the Partnership shall specify in reasonable detail the
reasons for such disapproval. PacWest shall promptly revise the Business Plan as
may be necessary to address the reasons for the disapproval and shall resubmit
the Business Plan to the Partnership for approval. All references to the
Business Plan hereinafter used in this Agreement shall mean the approved
Business Plan.
2.4.2 For the period beginning on the Commencement Date
through December 31, 1998 (the "Interim Period"), the Partnership and PacWest
shall use their diligent efforts to jointly prepare a business plan for the
management, administration and consulting services (the "Interim Plan"). The
Interim Plan shall include a detailed budget prepared by the Partnership of
projected income and expenses, capital expenditure budget, leasing projections
and guidelines, as well as a plan of the administration and consulting services
to be provided to the Partnership. All references to the "Year," "Calendar
Year," or "Fiscal Year" in this Agreement, except those references in Section
2.4.1, shall refer to the Interim Period as well. All references in this
Agreement to the "Business Plan" or "Plan," except those references in Section
2.4.1, shall include and refer to the Interim Plan as well.
<PAGE>
2.4.3 PacWest shall use diligent and reasonable efforts to
ensure that the actual costs of Management, Administration and Consulting
services do not exceed the operating budget which is a part of the approved
Business Plan (the "Operating Budget"), in total. Subject to the provisions
hereof, PacWest shall have the authority, without the Partnership's prior
written consent, to expend sums specified in the budget and up to $5,000 for
non-budgeted items provided the amount expended on non-budgeted items shall not
exceed $20,000 in the aggregate in any calendar year and undertake such
activities as are expressly authorized in the Business Plan or in this
Agreement.
2.4.4 PacWest shall inform the Partnership of any major
anticipated increases or decreases in costs, expenses, income or needed capital
expenditures that were not reflected in the Business Plan.
2.4.5 PacWest shall perform periodic property visits to
determine that any property is not subject to conditions which may reduce the
value of a property such as squatters, prevention of dumping of trash, removal
of trash and similar conditions.
PacWest shall cooperate with the Partnership to prepare reasonable periodic
forecasts of operations for the balance of the current year.
2.5 Utilities. PacWest shall, on behalf of the Partnership, enter into,
renew and maintain contracts in the Partnership's name, for electricity, gas,
telephone, fuel oil and other necessary utility services for the Property.
PacWest shall not be responsible for interruption of any such utility services
or the inability to obtain any such utility services, unless such interruption
or inability is caused by PacWest's or PacWest's employees', officers' or
directors' negligence or willful misconduct.
2.6 Collection of Rents and Other Income. PacWest shall use diligent
efforts to collect all rents, interest and other charges which may become due at
any time from any tenant, borrower or from others for services provided in
connection with or for the use of any of the Property. PacWest shall collect and
identify any income due the Partnership from miscellaneous services provided to
tenants or the public including, but not limited to, parking income, tenant
storage and coin-operated machines of all types (e.g., washer, dryers, vending
machines and pay telephones). All monies to collected shall be deposited in the
Operating Account, as defined below.
2.7 Repairs, Maintenance and Entitlement Service. PacWest shall attend,
at the Partnership's expense, to the making and supervision of all ordinary and
extraordinary repairs, decorations and alterations, subject to the limits of the
approved Business Plan, including expenditures to refurbish, rehabilitate,
remodel or prepare space covered by new leases, selection and coordination of
consultants required to do any entitlement work on any property and premise and
provide for weed abatement on any property.
2.8 Capital Improvements. The approved Business Plan shall constitute
authorization for PacWest to expend money for those authorized capital projects
described in such Business Plan. PacWest shall submit to the Partnership as part
of the regular monthly operating reports, a description of the status of any
capital expenditure activity.
2.9 Real Estate and Personal Property Taxes. PacWest shall obtain and
verify bills for real estate and personal property taxes, improvement
assessments and other like charges which are or may become liens against the
Property and recommend payment or contest of the same as in its best judgment it
shall determine. PacWest shall pay such bills promptly, avoiding penalty for
late payment and taking advantage of discounts.
<PAGE>
PacWest shall coordinate any appeal of a real estate tax bill as directed and
approved by the Partnership.
2.10 Leasing. PacWest may secure the services of one or more leasing
agents on behalf of the Partnership and shall make every reasonable effort to
procure and keep desirable tenants for the Property, at the expense of the
Partnership. Immediately following notice of any impending vacancy, PacWest
shall use its diligent efforts to expeditiously secure a replacement tenant on a
commercially reasonable and competitive basis.
2.11 Execution of Leases. All leases are to be prepared in the name of
the Partnership and shall be executed by PacWest as agent for the Partnership.
2.12 Collection of Insurance Certificates From Tenants. PacWest shall
use reasonable efforts to collect from all tenants of the Property certificates
of insurance consistent with and evidencing all coverages required to be carried
by the terms of such tenants' leases. A new certificate of insurance shall be
collected from each tenant at least thirty (30) days prior to the date on which
any prior certificate of such tenant would expire. PacWest shall retain in trust
for the Partnership the originals of all certificates of insurance collected by
PacWest. In the event PacWest, after using reasonable efforts, is unable to
collect a certificate of insurance from a tenant, PacWest shall have no
liability in connection with such tenant's failure to provide a certificate of
insurance. PacWest agrees to inform the General Partner within ten (10) days
after PacWest becomes aware of a tenant's failure to provide a certificate of
insurance.
2.13 Investor Services. PacWest shall maintain the investor records of
the Partnership including any processing required to comply with investor
requests for transfer of units of limited partner interest and prepare a
semi-annual newsletter for the Partners of each Partnership. PacWest shall
charge a reasonable transfer fee for any transfer of units of limited
partnership interests made by a limited partner of the Partnerships.
2.14 Partner Relations. PacWest shall respond timely to all inquiries
from investors and shall prepare, and arrange for the printing, duplicating and
mailing services in connection with all reports and other communications with
the partners, including the processing, production and mailing of distribution
checks to the partners.
2.15 Tax Services. PacWest shall, on a timely basis, prepare or cause
to be prepared and file on behalf of the Partnership all required or necessary
local, state and federal income tax reports and returns and shall distribute all
required tax information to the partners. PacWest shall recommend to the
Partnership strategies for prudent and beneficial local, state and federal
income tax planning.
<PAGE>
2.16 Regulatory Filings. PacWest shall, on a timely basis, prepare and
file all filings, statements and records required by any applicable local, state
or federal regulatory agency, including without limitation, the Securities and
Exchange Commission. PacWest, at the direction of the General Partner, shall
file any and all amendments to such regulatory filings. All such regulatory
filings, statements and records shall be submitted to the General Partner on or
before submission to the applicable agency. Further, PacWest shall, within a
reasonable time prior to filing, furnish drafts of such regulatory filings to
the Partnership to the extent available and to the extent time permits. PacWest
shall execute all changes requested by the General Partner prior to filing or,
if not feasible, by amendment subsequent to filing. The General Partner's
failure or delay in furnishing requested changes to PacWest such that PacWest is
unable to timely file the regulatory filing, statements or records, shall not
create any liability for PacWest.
2.17 Service Contracts.
2.17.1 PacWest shall be able to enter into, on behalf of the
Partnership, any contract in connection with the Management, Administration and
Consulting services to be provided hereunder.
2.17.2 All contracts entered into in connection with
Management, Administration and Consulting services shall: (a) be in the name of
the Partnership; (b) be assignable, at the Partnership's option, to the
Partnership's nominee; (c) include a provision for cancellation thereof by the
Partnership upon not more than thirty (30) days written notice (any exception to
this provision must have the prior written consent of the Partnership); and (d)
if applicable, require that all contractors provide evidence of insurance
sufficient to meet the requirements of Section 3.3.
2.18 Contracts With Related Parties. PacWest may arrange for the
furnishing of Management, Administration or Consulting services contemplated
hereunder by any other person, corporation, partnership, trust or other entity
(hereinafter referred to as a "Related Party") related to or affiliated with
PacWest, provided such proposed related or affiliated party is professionally
qualified and competent and any fees charged by such Related Party shall-be
included herein and not in addition to the fees and reimbursements contemplated
hereunder. Unless the context or language indicates otherwise, the use of the
term "PacWest" in this Agreement shall be deemed to include any such Related
Party performing services hereunder.
2.19 Limitation of PacWest's Responsibility/Authority. Any advances
PacWest makes to the Partnership are valid debts of the Partnership. Further,
PacWest shall not be authorized to acquire any asset on behalf of the
Partnership, sell or otherwise dispose of any asset of the Partnership, amend
any Partnership Agreement, refinance any asset of the Partnership or otherwise
take any action unless such action has been specifically approved in the
Business Plan or otherwise.
2.20 Regulatory Filings. PacWest shall, on a timely basis, prepare and
file all filings, statements and records required by any applicable local, state
or federal regulatory agency, including without limitation, the Securities and
Exchange Commission. PacWest, at the direction of the General Partner, shall
file any and all amendments to such regulatory filings. All such regulatory
filings, statements and records shall be submitted to the General Partner on or
before submission to the applicable agency. Further, PacWest shall, within a
reasonable time prior to filing, furnish drafts of such regulatory filings to
the Partnership. PacWest shall execute all changes requested by the General
Partner prior to filing or, if not feasible, by amendment subsequent to the
filing.
3. INSURANCE
<PAGE>
3.1 Partnership's Insurance. PacWest, on behalf of the Partnership, and
the General Partner who shall be named insureds on all policies as an operating
expense, will obtain and keep in force adequate insurance against physical
damage and against liability for loss, damage or injury to property or persons
which might arise in connection with the business of the Partnership or
ownership or occupancy of the Property. The types and amounts of such insurance
shall be determined by the Partnership in the exercise of its reasonable
discretion based upon recommendations by PacWest, but shall provide minimum
liability coverage of $1,000,000 per person and $3,000,000 per incident, and
shall have umbrella coverage up to $5,000,000.. The insurance described in this
Section may be carried under a policy or policies covering other property
managed by PacWest, provided that such policy or policies do not reduce the
amount and type of coverage required by the Partnership pursuant to this
Section.
The Partnership shall indemnify, defend and hold PacWest harmless from any and
all claims, demands, causes of action, losses, damages, fines, penalties,
liabilities, costs and expenses, including attorneys' fees and court costs on
account of such loss, damage or injury, provided:
3.1.1 PacWest promptly notifies the Partnership and the
insurance carrier after PacWest receives notice or becomes aware of any such
loss, damage or injury;
3.1.2 PacWest and PacWest's employees, contractors and agents
take no action (such as admission of liability) which bars the Partnership from
obtaining any protection afforded by any policy the Partnership may hold or
which prejudices the Partnership in its defense of a claim based on such loss,
damage or injury; and
3.1.3 Such loss, damage or injury does not arise out of any
gross negligence, willful misconduct or breach of obligation under this
Agreement by PacWest or its employees, officers or directors or out of any acts
performed by PacWest or its employees, officers or directors outside the scope
of its authority hereunder.
Subject to the approval of the appropriate insurance carrier, PacWest shall
assist the Partnership in the defense of any claim, demand or suit arising out
of any such loss, damage or injury. Nothing herein shall be construed to affect
the general requirement of this Agreement that the Property shall be managed,
operated and maintained in a safe condition and in a proper and careful manner.
PacWest shall furnish all information in PacWest's possession or which PacWest
has access to as requested by the Partnership for the purpose of establishing
the placement of insurance coverage and shall aid and cooperate in every
reasonable way with respect to such insurance and any loss thereunder. The
Partnership shall include in its hazard policy covering the Property or any
personal property, fixtures and equipment located thereon, and PacWest shall
include in any fire policies for its furniture, furnishings or fixtures situated
at the Property, appropriate clauses pursuant to which the respective insurance
carriers shall waive all rights of subrogation with respect to losses payable
under such policies.
3.2 PacWest's Insurance. PacWest shall maintain, at its expense,
insurance coverage in the following minimum amounts:
3.2.1 Workers' Compensation -- Statutory Amount;
<PAGE>
3.2.2 Employer's Liability (in those states where it is
required) -- $100,000 minimum;
3.2.3 Comprehensive General Liability:
a. $500,000 per person, $1,000,000 per
occurrence for bodily injury, and $300,000 property damage or $1,000,000
combined single limit; and
b. Umbrella coverage of not less than
$2,000,000, and
3.2.4 A fidelity bond acceptable to the Partner-
ship in an amount not less than $500,000.
PacWest shall furnish the Partnership with certificates evidencing such
coverage, which shall include provisions to the effect that the Partnership will
be given at least thirty (30) days prior written notice of cancellation of or
any material changes in any of such policies.
3.3 Subcontractors' Insurance. PacWest shall require that all parties
performing work on or with respect to the Property, including, without
limitation, subcontractors and service vendors, maintain insurance coverage at
such parties' expense, in an amount satisfactory to the Partnership; provided,
however, such parties shall not be required to maintain insurance in amounts
greater than the amounts listed below unless the work to be performed is
sufficiently hazardous to warrant greater amounts:
3.3.1 Workers' Compensation -- Statutory Amount:
3.3.2 Employer's Liability (in those states where it is
required) -- $100,000 minimum;
3.3.3 Comprehensive General Liability
a. $500,000 per person and $1,000,000 per
occurrence for bodily injury, and
$300,000 for property damage or
b. $1,000,000 combined single limit; and
3.3.4 A fidelity bond acceptable to the Partnership in an
amount not less than $1,000,000.
PacWest shall obtain and keep on file a certificate of insurance which shows
that each such party is so insured.
4. FINANCIAL REPORTING AND RECORD KEEPING
<PAGE>
4.1 Books of Account of PacWest. PacWest shall maintain adequate and
separate books and records in connection with the Management, Administration and
Consulting services, the entries to which shall be supported by sufficient
documentation to ascertain that the entries are accurate.
Such books and records shall be maintained by PacWest at PacWest's address
stated herein or at such other reasonable location as PacWest may designate in
writing.
4.2 Partnership Books and Records.
4.2.1 PacWest shall prepare and maintain the books and records
set forth in the Partnership Agreement on behalf of the Partnership, which books
and records shall be available to the inspection of the Partnership. As part of
the books and records of the Partnership, PacWest shall maintain, without
limitation, (a) all bank statements, bank deposit slips and bank
reconciliations; (b) detailed cash receipts and disbursement records; (c)
general ledger listing or list of disbursements; (d) all invoices for capital
expenditures and nonrecurring items; (e) summaries of adjusting journal entries;
(f) copies of paid bills; (g) detailed trial balance; and (h) such other
documents as are reasonable or appropriate. In addition, PacWest shall maintain
for inspection in its offices (or such other reasonable location as it may
designate in writing to the Partnership) supporting documentation for payroll,
payroll taxes and employee benefits.
4.2.2 PacWest shall exert such control over accounting and
financial transactions as is reasonably prudent and required to protect the
Partnership's asset's from theft, negligence or fraudulent activity on the part
of PacWest's employees or other agents. Losses arising from such instances are
to be borne by PacWest to the extent not covered by insurance and shall include
but not be limited to: (a) theft of assets by PacWest's employees or other
agents; (b) penalties or loss of discount due to grossly negligent or willful
delay in payment of bills or invoices; (c) overpayment or duplicate payment of
invoices arising from either fraud or negligent or willful error; (d)
overpayment of labor costs arising from either fraud or negligent or willful
error; and (e) use of facilities by PacWest's employees, contractors or agents
except as set forth in the Business Plan, Monthly Report or as otherwise
approved by the Partnership.
4.3 Annual Reports. PacWest shall furnish reports ("Annual Reports") of
all transactions occurring from the first day of each calendar year to the last
day of such year. These reports are to be received by the Partnership no later
than twenty (20) calendar days after the end of each year and must show, as
applicable, all collections, delinquencies, uncollectible items, vacancies and
other matters pertaining to Management, Administration and Consulting services
during the year.
In addition to the above, Annual Reports shall include, as applicable, but not
be limited to a current detailed rent roll for the Property; update of ongoing
marketing programs, including leasing and prospect reports; capital improvement
program status, including details of expenditures and completions; statement of
income and expenses with variances from the approved budget; and update of
administrative, brokerage and consulting services provided. PacWest shall
provide necessary work papers and supporting documentation and assist in the
preparation of the annual audit if the Partnership is publicly held and
financial statements if the Partnership is privately held. Any such annual audit
and financial statements are to be issued within ninety (90) days after the end
of each fiscal year or as necessary to comply with regulatory requirements.
<PAGE>
4.4 Accounting Principles. All financial statements and reports
required by the Partnership will be prepared on an accrual basis, and quarterly
and annual statements shall be prepared in accordance with generally accepted
accounting principles.
4.5 Partnership's Property. All books, records, invoices and other
documents received or generated by PacWest or its agents or employees on behalf
of the Partnership pursuant to or in connection with this Agreement shall be the
property of the Partnership. If this Agreement is terminated for any reason,
then PacWest shall, within fifteen (15) days of the Commencement Date of
termination of PacWest's services, deliver to the Partnership the books,
records, invoices and other documents generated or received by PacWest or its
agents or employees in connection with the Management, Administration and
Consulting services pursuant to this Agreement.
5. PARTNERSHIP'S RIGHT TO AUDIT
5.1 Right to Audit. The Partnership reserves the right to conduct
examinations, by giving twenty-four (24) hours notice to PacWest, of the books
and records maintained for the Partnership by PacWest. The Partnership also
reserves the right to perform any and all additional audit tests relating to
PacWest's activities, provided such audit tests are reasonable under the
circumstances. Any and all such audits conducted by the Partnership will be at
the sole expense of the Partnership and shall take place on a day or days other
than weekends or holidays.
5.2 Cooperation and Correction of Errors. PacWest shall cooperate and
reasonably assist the Partnership and the Partnership's independent accountants
during such audit.
If the Partnership or its independent accountants discover either material
weaknesses in internal control or errors in record keeping, PacWest shall
correct such discrepancies either upon discovery or within a reasonable period.
PacWest shall inform the Partnership, in writing, of the action taken to correct
such audit discrepancies.
6. BANK ACCOUNTS
6.1 Partnership Accounts. PacWest shall have the right to select all
banks, savings and loan associations or other financial institutions for any of
the following described accounts; provided, however, all banks, savings and loan
associations or other financial institutions shall be FDIC insured unless the
funds deposited are secured by government securities or unless otherwise
authorized by the Partnership to invest in other instruments. All accounts shall
be in the name of the Partnership and shall name PacWest as agent for the
Partnership. PacWest shall give written notice to the Partnership of the number
and location of all of the Partnership's accounts. If reasonable, the
Partnership may direct PacWest to change any depository arrangement with respect
to any account.
6.1.1 Partnership Distribution Account. A separate account
will be opened by PacWest for partnership distributions (the "Partnership
Distribution Account"). PacWest shall pay out of such Partnership Distribution
Account such distributions to the partners as are permitted or required under
the terms of the Partnership Agreement or as directed by the General Partner.
PacWest shall maintain detailed records with respect to such distributions and
shall provide to the Partnership an annual statement with respect to the
Partnership Distribution Account.
<PAGE>
6.1.2 Special Purpose Accounts. If required by the terms of
any mortgage or loan document, a separate special purpose account (the "Special
Purpose Accounts") shall be established by PacWest for such purposes as are
designated in the mortgage or loan documents.
6.2 Transfers Between Accounts. PacWest may transfer funds between such
accounts as are established on behalf of the Partnership. PacWest shall maintain
detailed records with respect to any such transfer.
7. PAYMENT OF EXPENSES AND OF PERSONNEL
7.1 Costs Eligible for Payment From Operating Account. PacWest shall,
without the necessity of obtaining the Partnership's written consent, pay the
following expenses directly from the Operating Account to the extent such
expenses are directly related to the Management, Administration and Consulting
services, subject to any and all limitations and conditions set forth in this
Agreement, the Business Plan or the Partnership Agreement:
7.1.1 Costs to correct any violation of Federal, state and
municipal laws, ordinances, regulations and orders relative to the leasing, use,
repair and maintenance of the Property, or violations of any rules, regulations
or orders of the local Board of Fire Underwriters or similar body, provided such
costs are not the result of the negligence, willful misconduct or breach of this
Agreement by PacWest or its employees, officers or directors.
7.1.2 Actual and reasonable costs of making all repairs,
decorations and alterations to the Property, provided such cost is not the
result of the gross negligence, willful misconduct or breach of this Agreement
by PacWest or its employees or officers.
7.1.3 Costs incurred by PacWest in connection with all service
agreements.
7.1.4 Reasonable legal fees of attorneys other than attorneys
who are employees of PacWest.
7.1.5 Cost of capital expenditures on the properties.
7.1.6 Cost of printed checks for each bank account required by
the Partnership.
7.1.7 Leasing commissions and consultant fees.
7.1.8 All property operating expenses (including without
limitation and the cost of utility service, property taxes, insurance, and
service contracts) and mortgage debt service.
7.1.9 Cost of advertising, and any special postage charges.
7.1.10 Cost of printed forms and supplies required for use at
the Property or otherwise in connection with the Management, Administration or
Consulting services.
7.1.11 Incidental out-of-pocket expenses incurred in any sale
or refinance transaction.
<PAGE>
7.1.12 Cost of tax appeal services.
7.1.13 Cost of audit or tax return services provided by the
independent accountants.
7.1.14 Costs of salaries, expenses and travel for field
management and maintenance personnel.
7.1.15 All other reimbursable costs specifically designated as
such in writing by the Partnership or as set forth in the Business Plan
including without limitation reimbursement of the General Partners for expenses
incurred by the General Partners normally reimbursable under the Partnership
Agreement.
7.1.16 Any amounts to be paid to PacWest pursuant to Sections
10.1.1 or 10.1.2 may be paid from the Operating Account.
7.2 Non-Reimbursable Costs. Except as otherwise specifically provided
for in this Agreement, the following expenses or costs incurred by or on behalf
of PacWest in connection with the Management, Administration and Consulting
services shall be at the sole cost and expense of PacWest and shall not be
reimbursed by the Partnership, unless the Partnership has consented in writing
to such expense or cost, which consent may be given or withheld in the
Partnership's sole and absolute discretion:
7.2.1 Reimbursement for services for which PacWest is entitled
to compensation by way of a separate fee.
7.2.2 Cost of entertainment except as related to the promotion
or marketing of Property and to investor or broker relations.
7.2.3 Non-field office employees training expenses and
recruiting fees.
7.2.4 Costs attributable to losses arising from gross
negligence, willful misconduct, fraud or breach of this Agreement on the part of
PacWest, PacWest's employees, officers or directors.
7.3 Allocation of Costs and Expenses. In each instance where PacWest
incurs a cost or expense for Management, Administration and Consulting services
which benefit the Partnership and an asset owned by another entity, a portion of
such cost or expense shall be charged to the account of the Partnership on a pro
rata equitable basis.
80 AUTHORIZED AND UNAUTHORIZED ACTIVITIES
<PAGE>
8.1 Authorized Activities. Subject to any conditions and/or limitations
specified in this Agreement, the Business Plan, the Partnership Agreement or
loan documents, PacWest shall be permitted to undertake any of the activities
listed below without obtaining the written consent of the Partnership. In all
other instances, PacWest shall be required to obtain the Partnership's written
consent before undertaking any activity in connection with Management,
Administration and Consulting services. The Partnership may amend the following
list in its reasonable discretion.
8.1.1 Enter into, renew and maintain contracts for utilities.
8.1.2 Collect rent, expense reimbursement and other income
generated from the Property and other assets of the Partnership.
8.1.3 Keep records and develop a record-keeping system.
8.1.4 Arrange or contract for printing, duplicating and
mailing services in connection with all reports and report preparation and other
communications with the Partnership.
8.1.5 Open bank accounts, make deposits therein, and issue
checks thereon.
8.1.6 Pay bills and loan or mortgage payments.
8.1.7 Obtain and verify bills for real estate and personal
property taxes and improvement assessments and appeal assessments on behalf of
the Partnership or delegate to an retain a third party to do so.
8.1.8 Arrange or contract for day-to-day maintenance of the
Property.
8.1.9 Provide office space and facilities for field property
management and maintenance personnel and those positions permitted pursuant to
the Partnership Agreement.
8.1.10 Purchase office supplies.
8.1.11 Purchase supplies and services necessary for repair and
maintenance of the Property.
8.1.12 Comply with federal, state and local laws, rules,
orders and ordinances including filing of all reports.
8.1.13 Locate tenants to fill vacancies through advertising,
real estate brokers or rental agencies.
8.1.14 Select tenants which are, in PacWest's best judgment,
appropriate to fit in with existing tenants and check their financial
qualifications for indications of likely continuous, problem-free rental income.
8.1.15 Deal with tenant complaints.
8.1.16 Prepare and execute leases.
8.1.17 Prepare rental units for new tenant occupancy.
<PAGE>
8.1.18 Develop and execute a program of property improvements,
alterations and modernization.
8.1.19 Hire on behalf of PacWest and supervise personnel to
staff and maintain the Property.
8.1.20 Receive estimates and negotiate contracts with outside
maintenance people and independent contractors.
8.1.21 Commence suits for rent or for use and occupancy of the
Property (or any portion thereof) or commence suits for recovery of possession
of the Property (or any portion thereof) and where and to the extent provided by
law, terminate leases and lock out tenants.
8.1.22 Hire and/or terminate management companies and other
service vendors.
8.1.23 Delegate authority to sub-agents or employees.
8.2 Unauthorized Activities. The following activities, without
limitation, shall in no event be undertaken by PacWest without first obtaining
the written consent of the Partnership which consent may be obtained by General
Partner approval of matters covered under the Business Plan.
8.2.1 List for sale, sell or purchase real property.
8.2.2 Sell or purchase any Partnership asset with a fair
market value in excess of ($5,000). 8.2.3 Consummate the
refinancing, refinance or restructure any Partnership loan,
except in
accordance with Section 10.1.1 of this Agreement.
8.2.4 Discontinue any loan payments or take any other action
or omit to take any action constituting a default under a loan document.
8.2.5 Pledge any Partnership asset as collateral.
8.2.6 Make, execute or deliver for the Partnership any
guaranty, indemnity bond or surety bond.
8.2.7 Make, execute or deliver any general assignments for the
benefit of creditors.
8.2.8 Assign, transfer, pledge, compromise or release any
Partnership claim except for full payment or arbitrate or consent to the
arbitration of any disputes or controversies.
8.2.9 Do any act in contravention of this Agreement.
8.2.10 Do any act in contravention of the Partnership
Agreement or Certificate of Limited Partnership.
<PAGE>
8.2.11 Do any act which would make it impossible to carry on
the Partnership business.
8.2.12 Confess a judgment against the Partnership.
8.2.13 Possess Partnership property or assign the rights of
the Partnership in assets.
8.2.14 Commingle Partnership funds with those of any other
person.
8.2.15 Borrow any amount on behalf of the Partnership or any
General Partners except pursuant to Section 10.2 hereof.
8.3 Limits of Power of Attorney. To facilitate the rendition of the
Management, Administration and Consulting services by PacWest, the Partnership
hereby constitutes and appoints PacWest as the Partnership's true and lawful
attorney-in-fact, in the Partnership's name, place and stead and for the
Partnership's use and benefit, to do those activities expressly authorized
herein and to prepare and file all applicable filings, statements and records.
The foregoing grant of authority is a special power of attorney coupled with an
interest, is irrevocable and may be exercised by the attorney-in-fact in such
form and manner as the attorney-in-fact deems appropriate including, without
limitation, by signature or facsimile signature of the attorney-in-fact acting
for the Partnership.
The Partnership shall execute on behalf of the Partnership and deliver to
PacWest within ten (10) days after the Commencement Date, a limited power of
attorney in recordable form including the foregoing powers and, without
limitation, an express power to open bank accounts and make deposits and
withdrawals therefrom in the name, and on behalf, of the Partnership and to
bring all prosecute on behalf of the Partnership tax appeals and obtain all
information about the Partnership and its assets from taxing and other
governmental authorities.
9.0 INDEMNIFICATION AND COOPERATION
9.1 Indemnifications.
<PAGE>
9.1.1 Indemnification by PacWest. PacWest hereby agrees to
save and hold the General Partners executing this Agreement, and their
respective officers, directors, shareholders and general partners (collectively,
"Related Parties") harmless and defend and indemnify them from and against any
claim which may be made against any of them (including without limitation
reasonable attorneys' fees and other costs and expenses incident to any suit,
action or proceeding) arising out of or resulting from (i) the operation from
and after the Commencement Date of each Partnership, to the extent caused by a
grossly negligent act or omission of PacWest, expressly excluding, however,
liability arising from acts or omissions of the General Partners or the Related
Parties. PacWest shall have the right to decide whether any suit, action or
proceeding is settled, tried or appealed and to select and supervise counsel in
connection with any such suit, action or proceeding provided it shall have given
written notice to the indemnitees and such indemnitees shall not have reasonably
objected to the proposed action within five (5) days after receipt of such
notice or PacWest shall have received the consent of the indemnitees to the
proposed action, which consent will not be unreasonably withheld.
Notwithstanding the foregoing or any other provision of this Agreement,
no representation, warranty, undertaking or indemnity is provided under this
Agreement by PacWest to the General Partners or the Related Parties for matters
occurring or arising from acts or failures to act prior to the Commencement
Date. Neither PacWest nor any of its affiliates shall have any liability to the
General Partners or the Related Parties hereunder as a result of any fluctuation
or reduction in the market or cash value of any Ownership Interest for any
reason whatsoever other than gross negligence or intentional misconduct
committed by PacWest or its affiliates.
9.1.2 Indemnification by General Partners and Partnerships. The
Partnerships, and each General Partner for itself alone, and not on behalf of
any other General Partner, each hereby agrees (each an "Indemnitor" and
collectively the "Indemnitors") to save and hold PacWest, its officers,
directors, shareholders, employees and agents ("Indemnitees") harmless and
defend and indemnify the Indemnitees from and against any liability (including
without limitation reasonable attorneys' fees and other costs and expenses
incident to any suit, action or proceeding) arising out of or resulting from (a)
any liability or obligation, contingent or otherwise, including any deficit
capital account payment obligation in excess of $300,000, arising from the
Partnership of which that Indemnitor was a partner, or is in any way related by
contract, arising prior to the Commencement Date; (b) Indemnitor's grossly
negligent act or omission in regard to any Partnership occurring or arising from
acts or failures to act prior to the Commencement Date; (c) the presence or
suspected presence in, on, or about any real property owned by any Partnership
or which any Partnership may have an interest in of any toxic or hazardous
substance, material or waste (as defined in any applicable Federal, State or
local law or regulation), including, but not being limited to, the costs of
investigation, containment, removal and/or clean-up, whether or not the
presence, or alleged presence, of such toxic or hazardous substance, material or
waste constitutes a breach of any representation or warranty contained herein
provided, however, the Indemnitors shall have liability under this subparagraph
(c) only with respect to any incident involving toxic or hazardous substances
which occurred during the ownership of the property in question by a Partnership
at a time when such Indemnitor had an interest therein or which such Indemnitor
otherwise became aware of prior to the Commencement Date and shall not apply to
any occurrence on or after the Commencement Date, or which occurred prior to the
time the Indemnitor had an interest in the Partnership which owned the property
in question and such Indemnitor is not, as of the Commencement Date, aware
thereof; (d) losses, liabilities or expenses arising from or out of an alleged
violation of federal or state securities laws; or (e) any breach of this
Agreement by such Indemnitor, including, without limitation, the falsity of any
representation or warranty made herein by such Indemnitor. The Indemnitors shall
have the right to decide whether any suit, action or proceeding is settled,
tried or appealed and to select and supervise counsel in connection with any
such suit, action or proceeding provided they shall have given written notice to
the Indemnitees and such indemnitees shall not have reasonably objected to the
proposed action within five (5) days after receipt of such notice or the
Indemnitors shall have received the consent of the Indemnitees to the proposed
action, which consent will not be unreasonably withheld.
<PAGE>
9.2 Cooperation. Should any claims, demands, suits or other legal
proceedings be made or instituted by any person against the Partnership which
arise out of any of the matters relating to the Partnership or this Agreement,
PacWest shall give the Partnership all pertinent information possessed by
PacWest and reasonable assistance in the defense or other disposition thereof.
100 CONSIDERATION
10.1 Compensation to PacWest.
10.1.1 Property Management Fees. In consideration of the
services rendered by PacWest hereunder, the Partnership agrees to pay PacWest,
when and if any Partnership has properties to manage, in lawful money of the
United States, a fee for managing the property (the "Property Management Fee")
in a sum equal to 5% of the Gross Rental Revenue (defined below) of the
Property.
The Property Management Fee shall be payable monthly on the basis of the Gross
Rental Revenue achieved as set forth in the Monthly Report. "Gross Rental
Revenue" shall refer to all income collected by PacWest from tenants of the
Property and payable to or for the benefit of the Partnership (including rental
or business interruption insurance collected in-lieu of rental income, expense
pass-through items such as real property taxes and insurance, and rentals or
fees paid for parking), excluding, however:
a. Security deposits, until such deposits
are applied as rental income upon
termination of a lease;
b. Rents paid in advance of the date such rents
are due, until the date on which such
payments are due as rent;
c. Monies collected for capital items which are
paid for by tenants;
d. Interest on bank accounts maintained with
respect to the Property;
e. Settlements or recoveries in judicial
proceedings representing other than
compensation for lost rental;
f. Any income constituting debt service on a
tenant improvement loan.
<PAGE>
10.1.2 Asset Administration Fee. In consideration for the
services rendered by PacWest hereunder, the Partnership fee for administration
of the Partnership and its assets in the amounts set forth in regard to each
Partnership is set forth on Exhibit E attached hereto. Said fees are payable in
advance, quarterly, commencing on the commencement Date. For the Asset
Administration Fees, PacWest is required to provide the following specified
services to the Partnership: (i) Portfolio Management Services (cash
management), Partnership business plans, partnership long range forecasting,
review and approval of property budgets, supervision of property tax appeals,
annual Partnership and property valuations, loan administration, mortgage
receivable servicing, lease analysis and review, risk management, and
disposition timing analysis; (ii) Investors Services (preparation and
distribution of K-l's, preparation and distribution of quarterly and annual
reports, communications (telephone and written) processing of distribution
payments, maintenance of investor and account executive database; and (iii)
Accounting Services (preparation and filing with the Securities and Exchange
Commission of Forms 10-K, 10-Q and 8-K, preparation of annual financial
statements, coordination of audit and preparation of all audit schedules,
preparation of income tax schedules and coordination of tax returns, monthly
Partnership financial statements, routine loan administration). Reimbursement of
the following costs shall be paid to PacWest by the Partnership in addition to
the Asset Administration Fees described in Exhibit E hereto. The costs of
specific Partnership-related items provided by unaffiliated third parties (for
example, printing and postage for mass mailings) shall also be separately
reimbursed to PacWest by the Partnership.
10.1.3 Reimbursable Employee Costs. The Partnership shall
reimburse PacWest out of the Operating Account for the costs of gross salaries
and wages or pro rata share thereof, payroll taxes, insurance, workers'
compensation, travel, all office expenses, and other fringe benefits of those
field property management and maintenance personnel of PacWest engaged with
respect to the Property and personnel who provide services customarily provided
at the Property.
If any field property management or maintenance personnel of PacWest are
independent contractors of PacWest, then the Partnership shall similarly
reimburse PacWest for those independent contractors engaged with the respect to
the Property who provide such services. The employees' salaries and costs of
independent contractors of PacWest which constitute reimbursable operating
expenses shall be allocated between the Partnership in accordance with the terms
of the Partnership Agreement and all other partnerships and/or other entities
benefiting from the services of such employees on a pro rata equitable basis.
10.1.4 Participation Fee. As further consideration for the
services rendered and the funds to be advanced by PacWest hereunder, PacWest
shall receive a Participation Fee to be paid by the Partnerships upon the sale
of a Property by a Partnership. The Participation Fee for each property shall be
as set forth on Exhibit F hereto.
10.1.5 Joint Ventures. References herein to the property
acquired, owned or disposed of by the Partnership shall include the
Partnership's interest from time to time in any property held by any joint
venture, partnership or other entity or form of ownership in which the
Partnership has an interest ("Partnership's Share in Property").
Without limiting the generality of the foregoing, the property management fee,
asset administration fee, transaction fee, refinancing fee and any other fee
which may become payable to PacWest shall apply to and be based upon not only
any wholly owned property, but also the Partnership's share in property to the
extent of and in proportion to such Partnership's Share in Property.
10.1.6 Accrual Upon Change in Manager. If PacWest ceases to
serve under this Agreement for the Partnership as of any day for any reason,
PacWest shall be entitled to receive and retain all fees and reimbursements with
respect to the Partnership which have been earned and as to which PacWest is
entitled to payment as of the Commencement Date of the termination, irrespective
of the date on which the date on which the fee or reimbursement is effected.
10.2 Obligations of PacWest. In addition to the other obligations and
duties of PacWest described herein, PacWest shall also be obligated as follows:
<PAGE>
10.2.1 Loans. To assure the maintenance and preservation of
the Partnerships' assets, PacWest will provide to the Partnerships loans in the
aggregate amount of up to $2,500,000 (the "Loans"), which Loans will be
disbursed to the Partnerships in the amounts and for the uses and purposes set
forth in the Business Plan. The Loans will be secured by the borrowing
Partnerships' assets under the following terms and conditions, pursuant to the
form of promissory note (the "Note") and Deed of Trust set forth respectively as
Exhibits G and H hereto:
(a) Interest on such Note shall be paid at
the rate of 12% per annum, payable monthly
in arrears;
(b) Principal on such Note shall be paid solely
from the sale proceeds and/or a refinancing
of a property which secures the Note, or if
this Agreement is terminated prior to such a
sale, pursuant to Sections 11.3 and/or 11.7
hereof;
(c) The maximum amount of a Loan for any
Partnership shall not exceed a loan-to-value
ratio of fifty percent (50%); i.e., the
amount of funds loaned to any Partnership
shall be secured by properties owned by the
Partnership valued at an amount determined
in good faith by PacWest and the General
Partner thereof, which is equal to twice the
amount of the Loan, unless PacWest agrees in
writing to a higher loan-to-value ratio;
(d) The Loans shall be secured by a first deed
of trust on the properties which act as
security for such Loans; and
(e) The Loans shall be repaid in full prior to
the making of any distributions of any type
by the borrowing Partnership to any of its
Partners or the redemption of any
Partnership interest.
PacWest, at its option, may fund the Loans directly or may secure third party
financing for the Loans; provided, however, that if third party financing is
obtained by PacWest, PacWest will guarantee such Loan so that the Partnerships
will have no risk of repayment to the third party lender.
11.0 TERMINATION
11.1 Termination. This Agreement shall remain in effect, except as
otherwise proved herein, until the winding up, termination or dissolution of the
Partnership has been completed. This Agreement is severable and may be
terminated as set forth in this Article 11 as to any of the Partnerships listed
in Schedule A hereto without affecting the continued validity of this Agreement
as to the remaining partnerships.
<PAGE>
11.2 Termination by the Partnership for Cause. The General Partner
shall have the right to terminate this Agreement at any time with cause. For
purposes of this Section, "cause" shall mean the occurrence of any one or more
of the following events: (a) cessation on the part of PacWest to do business or,
if required by law, to qualify to do business; (b) failure of PacWest to deal
with and account for Partnership funds in a commercially reasonable and honest
manner, if such default continues for a period of thirty (30) days after written
notice thereof is given by the General Partner to PacWest; provided however,
that if a default is curable only within a period of time longer than thirty
(30) days, then "cause" shall not have occurred hereunder unless PacWest fails
to commence to cure the default with due diligence within the thirty (30) day
period or thereafter fails to prosecute said cure to completion with due
diligence within a reasonable period of time; (c) the occurrence of any default
in the performance of any material covenant or agreement of PacWest contained
herein, if such default continues for a period of thirty (30) days after written
notice thereof is given by the General Partner to PacWest; provided however,
that if a default is curable only within a period of time longer than thirty
(30) days, then "cause" shall not have occurred hereunder unless PacWest fails
to commence to cure the default with due diligence within the thirty (30) day
period or thereafter fails to prosecute said cure to completion with due
diligence within a reasonable period of time; (d) the performance by PacWest of
any act with respect to the Property which is outside the scope of PacWest's
rights or obligations hereunder, unless authorized by the Partnership. The
events of cause described in subsection (a) above, shall, at the sole election
of the General Partner, effect an immediate termination of this Agreement upon
thirty (30) days written notice to PacWest, provided PacWest does not, within
such notice period, qualify to do business or recommence business or correct any
failure to deal with the accounts as described so as to result in no economic
detriment to the Partnership.
Termination for an event of cause enumerated in subsections (b) and (c) above
shall be effected immediately upon the General Partner's written notice of
termination to PacWest. With respect to any event of cause enumerated in
subsection (d), the Partnership shall give written notice to PacWest of the
alleged occurrence of such event of cause. Within five (5) days thereafter,
PacWest shall either cure the alleged event of cause, or shall provide the
Partnership with written notice that PacWest disputes the existence of the event
of cause, giving PacWest's reason. Failure of PacWest to provide the notice as
specified herein shall permit the Partnership to effect immediate termination of
this Agreement upon the Partnership's written notice to PacWest of such
termination.
11.3 Termination by the Partnership Without Cause. The General Partner
shall have the right to terminate this Agreement with respect to any Partnership
at any time without cause by providing PacWest with a 90-day written notice of
termination for the terminating Partnership. During the 90-day period, PacWest
shall continue to provide its services under this Agreement and shall assist the
General Partner and any new manager with whatever is reasonably necessary to
insure a smooth management transition. During the 90-day period, PacWest shall
continue to be paid all of its fees set forth in this Agreement and shall also
be entitled to the liquidated damages set forth in Section 11.7 hereof. Upon
receipt of the 90-day written notice, PacWest shall no longer be required to
provide for or make any further Loans under Section 10.2.1 hereof to the
terminating Partnership, and the principal of any Loans previously made by
PacWest (but not third party Loans secured by PacWest) shall be due and payable
by the terminating Partnership three years from the date of the 90-day written
notice, with monthly payments of interest thereon, commencing 30-days after the
90-day written notice.
<PAGE>
11.4 Termination by PacWest. PacWest shall have the right to terminate
this Agreement in accordance with this Section in the event the Partnership
fails to pay PacWest any fee or reimbursement provided for herein or to perform
any material obligation under this Agreement. PacWest shall give written notice
to the Partnership of the Partnership's failure to pay any fee or reimbursement
to PacWest or to perform any material obligation under this Agreement. Within
fifteen (15) days thereafter, the Partnership shall either pay PacWest the
requisite fee or reimbursement or perform the obligation in question, as
appropriate, or shall provide PacWest with written notice that the Partnership
disputes that the fee, reimbursement or performance is due PacWest, giving the
Partnership's reason. Failure of the Partnership to provide PacWest with the
fee, reimbursement or performance or to provide the notice as specified herein
shall permit PacWest to effect immediate termination of this Agreement upon
PacWest's written notice to the Partnership of such termination.
11.5 Final Accounting. Upon termination of this Agreement, PacWest
shall deliver to the Partnership the following with respect to the Management,
Administration and Consulting services:
11.5.1 A final accounting, reflecting the balances of the
Partnership's assets, liabilities, capital, income and expense accounts as of
the date of termination, to be delivered within thirty (30) days after such
termination.
11.5.2 Any balance or monies of the Partnership or tenant
security deposits, or both, held by PacWest with respect to the Partnership's
assets, to be delivered within fifteen (15) days after such termination.
11.5.3 All records, contracts, leases, tenant correspondence
files, receipts for deposits, unpaid bills and other papers or documents which
pertain to the Partnership and the Partnership's assets, to be delivered within
fifteen (15) days after such termination.
Upon such termination, the Partnership will assume responsibility for payment of
all approved or authorized unpaid bills.,
11.6 Obligation to Vacate. Upon termination of this Agreement, PacWest
shall promptly vacate any office space provided by the Partnership for the
location of PacWest's personnel.
11.7 Liquidated Damages. In the event that this Agreement is terminated
as to any one or more of the Partnerships at any time prior to the date five (5)
years after the Commencement Date, PacWest shall receive from the Partnership as
to which the termination occurs the following payments and notices with respect
to the terminating Partnership:
11.7.1 Written notice from the terminating Partnership at
least 90-days prior to the termination date during which period PacWest shall
continue to receive all of the fees and payments due it under this Agreement.
11.7.2 If this Agreement is terminated for cause pursuant to
Section 11.2 hereof, PacWest shall not be entitled to any Participation Fee set
forth in Section 10.1.4 hereof. If this Agreement is terminated without cause
pursuant to Section 11.3, PacWest shall be entitled to the Participation Fee set
forth in Section 10.1.4 hereof, as set forth on Schedule F hereof when the
terminating Partnership sells its properties or any interest in any joint
venture in which a Partnership has participated pursuant to Section 10.5 hereof.
<PAGE>
11.7.3 All Loans made by PacWest shall be subject to the same
terms and conditions as if the Partnership had terminated this Agreement
pursuant to Section 11.3 hereof.
120 MISCELLANEOUS
12.1 Notices. All notices, demands, consents and reports provided for
in this Agreement shall be in writing and shall be given to the Partnership's or
PacWest at the addresses set forth below or at such other address as they
individually may specific thereafter in writing:
PacWest: 27740 Jefferson Avenue, Suite 200
Temecula, CA 92590
Attention: Dan Stephenson
GENERAL PARTNERS TMP Investments, Inc.
AND PARTNERSHIP: 801 N. Park Center Drive, #235
Santa Ana, CA 92705
Attention: William O. Passo
Such notice or other communications may be mailed by United States registered or
certified mail, return receipt requested, postage prepaid, and may be deposited
in a United States Post Office or a depository for the receipt of mail regularly
maintained by the post office. Such notices, demands, consents and reports may
also be delivered by hand, including Federal Express or other recognized
overnight delivery service regularly providing proof of delivery. For purposes
of this Agreement notices will be deemed to have been "given" upon personal
delivery hereof or upon the expiration of forty-eight (48) hours after deposit
in the United States mails as provided above.
12.2 No Assignment. This Agreement and all rights hereunder shall not
be assignable by PacWest, voluntarily or by operation of law, except to a
Related Party, without the prior written consent of the Partnership, which
consent may be withheld by the Partnership in its sole and absolute discretion
in the cause of any other proposed assignment.
12.3 Consents and Approvals. All consents or approvals shall be in
writing and shall not be unreasonably withheld unless otherwise specified.
12.4 Amendments. Except as otherwise provided, any and all amendments,
additions or deletions to this Agreement shall be null and void unless approved
by the parties in writing.
12.5 Headings. All headings are inserted only for convenience and ease
of reference and are not to be considered in the construction or interpretation
of any provision of this Agreement.
12.6 Representations. PacWest represents and warrants that it is fully
qualified and licensed, to the extent required by law, to perform the
Management, Administration and Consulting services and all obligations assumed
by PacWest hereunder. PacWest agrees to comply with all such laws now or
hereafter in effect.
<PAGE>
12.7 Time of Essence. Time is of the essence of this Agreement and each
and every term and provision hereof.
12.8 Governing Law. The performance and interpretation of this
Agreement shall be controlled by the laws of the State of California.
12.9 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which, together, shall
constitute one and the same instrument.
12.10 Attorneys' Fees. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or in the event of any other
alleged dispute, breach or default arising out of or in connection with this
Agreement, the unsuccessful party in any such action or dispute shall pay any
and all costs and expenses incurred by the other party in enforcing or
establishing its rights hereunder, including, without limitation, all court
costs and reasonable attorneys' fees.
12.11 No Third Parties Benefitted. This Agreement is made and entered
into for the sole protection and benefit of the Partnership and PacWest. No
other persons or entities will have any right of action under this Agreement or
any right to any funds payable hereunder.
12.12 Relationship of the Partnership and PacWest. The Partnership and
PacWest intend that the relationship between them shall be solely that of owner
and independent contractor manager for all purposes. Nothing contained in this
Agreement or its Exhibits shall be deemed or construed to create a partnership,
tenancy-in-common, joint tenancy, joint venture or co-ownership by or between
the Partnership and PacWest, or to give PacWest any equity interest in the
Partnership or the Partnership's assets.
12.13 Exhibits. The following exhibits are attached to this Agreement:
Exhibit A - General Partner and Partnership List Exhibit B -
Description of Partnership Property Exhibit C - Business Plan Exhibit D
- Transition Agreement Exhibit E - Asset Administration Fee Exhibit F -
Participation Fee Payable to PacWest Exhibit G - Form of Promissory
Note Exhibit H - Form of Deed of Trust
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement
as of the date first written above.
PACWEST Inland Empire, LLC
/s/ Daniel W. Stephenson
------------------------
By:
Daniel W. Stephenson,
Manager
<PAGE>
GENERAL PARTNERS:
The undersigned hereby join in the above Agreement.
TMP INVESTMENTS, INC.
/s/ William O. Passo
--------------------
By:
William O. Passo,
President
TMP PROPERTIES
/s/ William O. Passo
--------------------
By:
William O. Passo,President
/s/ Scott E. McDaniel
---------------------
By:
Scott E. McDaniel, Partner
/s/ Anthony W. Thompson
-----------------------
By:
Anthony W. Thompson, Partner
TMP BLOOMINGTON II, LTD.
By: Its General Partner
TMP INVESTMENTS, INC.
/s/ William O. Passo
---------------------
By:
William O. Passo,
President
<PAGE>
TMP INLAND EMPIRE II, LTD. By: Its General Partner
TMP INVESTMENTS, INC.
/s/ William O. Passo
---------------------
By:
William O. Passo,
President
TMP INLAND EMPIRE III, LTD. By: Its General Partner
TMP INVESTMENTS, INC.
/s/ William O. Passo
---------------------
By:
William O. Passo,
President
TMP INLAND EMPIRE IV, LTD. By: Its General Partner
TMP INVESTMENTS, INC.
/s/ William O. Passo
---------------------
By:
William O. Passo,
President
TMP INLAND EMPIRE V, LTD. By: Its General Partner
TMP INVESTMENTS, INC.
/s/ William O. Passo
---------------------
By:
William O. Passo,
President
TMP INLAND EMPIRE VI, LTD. By: Its General Partner
TMP INVESTMENTS, INC.
/s/ William O. Passo
---------------------
By:
William O. Passo,
President
<PAGE>
TMP INLAND EMPIRE VII, LTD. By: Its General Partner
TMP INVESTMENTS, INC.
/s/ William O. Passo
---------------------
By:
William O. Passo,
President
TMP TUSCANY OAKS, LTD. By: Its General Partner
TMP INVESTMENTS, INC.
/s/ William O. Passo
---------------------
By:
William O. Passo,
President
TMP LAND FUND, LTD. By: Its General Partner
TMP INVESTMENTS, INC.
/s/ William O. Passo
---------------------
By:
William O. Passo,
President
TMP LAND MORTGAGE FUND, LTD. By: Its General Partner
TMP INVESTMENTS, INC.
/s/ William O. Passo
---------------------
By:
William O. Passo,
President
TMP MORTGAGE INCOME PLUS, L.P. By: Its General Partner
TMP INVESTMENTS, INC.
/s/ William O. Passo
---------------------
By:
William O. Passo,
President
<PAGE>
EXHIBIT A
General Partners and Partnership List
Partnerships General Partner
TMP Bloomington II LTD, William O. Passo, Anthony W. Thompson,
a California limited partnership Scott E. McDaniel of TMP Properties, a
California General Partnership and TMP
Investments Inc.
TMP Inland Empire II LTD, William O. Passo, Anthony W. Thompson,
a California limited partnership Scott E. McDaniel of TMP Properties, a
California General Partnership and TMP
Investments Inc.
TMP Inland Empire III LTD, William O. Passo, Anthony W. Thompson,
a California limited partnership Scott E. McDaniel of TMP Properties, a
California General Partnership and TMP
Investments Inc.
TMP Inland Empire IV LTD, William O. Passo, Anthony W. Thompson,
a California limited partnership Scott E. McDaniel of TMP Properties, a
California General Partnership and TMP
Investments Inc..
TMP Inland Empire V LTD, William O. Passo, Anthony W. Thompson,
a California limited partnership Scott E. McDaniel of TMP Properties, a
California General Partnership and TMP
Investments Inc.
TMP Inland Empire VI LTD, William O. Passo, Anthony W. Thompson,
a California limited partnership Scott E. McDaniel of TMP Properties, a
California General Partnership and TMP
Investments Inc.
TMP Inland Empire VII LTD, William O. Passo, Anthony W. Thompson,
a California limited partnership Scott E. McDaniel of TMP Properties, a
California General Partnership and TMP
Investments Inc.
TMP Tuscany Oaks LTD, William O. Passo, Anthony W. Thompson,
a California limited partnership Scott E. McDaniel of TMP Properties, a
California General Partnership and TMP
Investments Inc.
TMP Land Fund LTD, William O. Passo, Anthony W. Thompson,
a California limited partnership Scott E. McDaniel of TMP Properties, a
California General Partnership and TMP
Investments Inc.
TMP Land Mortgage Fund LTD, William O. Passo, Anthony W. Thompson,
a California limited partnership Scott E. McDaniel of TMP Properties, a
California General Partnership and TMP
Investments Inc.
TMP Mortgage Income Plus LTD, William O. Passo, Anthony W. Thompson,
a California limited partnership Scott E. McDaniel of TMP Properties, a
California General Partnership and TMP
Investments Inc.
<PAGE>
EXHIBIT B
Description of Partnership Property
Partnerships Location Acres Zoning
TMP BLOOMINGTON II SEC Mission Blvd & Agate Street 4.22 C1
TMP INLAND EMPIRE II Baseline &Village Center 18 CC
TMP INLAND EMPIRE III River Rd & Ethanac 219 R1
TMP INLAND EMPIRE IV Circle C Road 320 R1
S Oleander & W Seaton 10 I
Perris Blvd & Markham St 6.44 C-2
Rodeo Dr & Green Tree/Pebble Beach 17 R-4
Village Drive & Armagosa 25 C1-R3
TMP INLAND EMPIRE V Ethanac & Sophie 8.93 R
S. Highland & Tamarind 10 M-1R
Airbase Rd & Beaver 40 R1
Mojave & Amethyst 7 C
Mojave & Amethyst 10 C
S Mojave Dr & Mesa Linda S 11 C2
SEC Amethyst & Rancho Rd 283 All
Bellflower & North Yucca 4.49 C
TMP INLAND EMPIRE VI State St & Romona Blvd 10.48 C-2
Baxter & Meadowlark Lane 38 5 min
I-10 Freeway & Chase School 76 CPS-IP
SWC River Rd & Mapes St. 31 R1
3rd St. & Old Ranch Rd 12.46 1/2 min.
18.22 Adelanto 18.22 R1
NEC Koala & Crippen 42.44 R1
TMP INLAND EMPIRE VII SEC Nuevo & Evans 9.6 C2
NEC Cactus & Racoon 18.3 DL
Mesa Linda & Dos Palmas 70 41
SEC of Hwy 395 & Hopland Ave 19.5 C2
22305 Oleander Ave. 18 M1
TMP TUSCANY OAKS Wasson & Old Ranch Rd 200 R1
Brookside & Hannon 60 3/4 min
Mesa Linda-Golden Triangle Area 14 DS
TMP Land Fund I Cactus & Daisy-Aster 39 R
Palmdale & Bellflower 14.81 C
Richardson & Joshua 10 DS
Land Mortgage Fund San Jacinto Residential R1
NEC Newport and Bradley Rd 10.84 C
Fox Olsen Res. Newport and Bradley Rd. 12.5 R1
Sunset Ave & Interstate 10 44.9 C
Remington Hills JV 50 R1
Peppertree J.V.
Mortgage Income Plus Maple Bus. Ctr Bellflower & Verbina 10 R1
Rancho Cucamonga J.V. TMP Homes 13 R1
Elsinore 73 ac. Wasson Canyon 171 R1
<PAGE>
EXHIBIT F
Participation Fee Payable to PacWest1
Amount of
-Subordinated
Partnership ticipation Fee
TMP BLOOMINGTON II 9%
TMP INLAND EMPIRE II 10%
TMP INLAND EMPIRE III 14%
TMP INLAND EMPIRE IV 14%
TMP INLAND EMPIRE V LTD 15%
TMP INLAND EMPIRE VI LTD 12%
TMP INLAND EMPIRE VII LTD 14%
TMP TUSCANY OAKS LTD 15%
TMP LAND FUND LTD 12%
TMP LAND FUND LTD 12%
TMP LAND MORTGAGE FUND LTD.
1. San Jacinto Residential 13%
2. C-1 NEC Newport and Bradley Rd 13%
3. 45 R-1 Newport and Bradley Rd 3%*
4. Sunset Ave. & Interstate 10 13%
5. Remington Hills J.V. 3%*
6. PepperTree J.V. 3%*
TMP MORTGAGE INCOME PLUS, LTD.
1. Maple Bus. Ctr Bellflower 14%
2. Rancho Cucamonga J.V. 3%*
3. Elsinore 73 Ac. Wasson Canyon 14%
*Calculated with reference to controlled la
Above percentages shall be applied to net partnership sales proceeds which shall
be calculated by taking the net property sale proceeds payable to the
Partnership after paying all loans, all interest, all unpaid taxes and the
closing costs and commissions and deducting all asset administration fees
previously paid to the Partnership.
1 A 12% non-subordinated participation fee will be paid for any
Partnership Property not described in Exhibit B.
