<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 10, 1997
Commission File Number: 1-12546
PACIFIC GULF PROPERTIES INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 33-0577520
(State of Incorporation) (I.R.S. Employer Identification No.)
4220 VON KARMAN, 2ND FLOOR, NEWPORT BEACH, CALIFORNIA, 92660-2002
(Address of principal executive offices, including zip code)
714-223-5000
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 2. ACQUISITION OF ASSETS.
Pacific Gulf Properties Inc. (the "Company") anticipates completing the
following property acquisitions. Each of the properties is located
within a region where the Company currently maintains a regional
office:
PROBABLE ACQUISITIONS
CALIFORNIA COMMERCE PARKS PORTFOLIO
On September 10, 1997, the Company entered into agreements to
purchase the following four industrial properties (collectively
referred to as the "California Commerce Parks Portfolio") for an
estimated purchase price of $57,600,000:
<TABLE>
<CAPTION>
Leasable
Property Name Location Square Feet
------------------------ -------------- -----------
<S> <C> <C>
Sacramento Business Park Sacramento, CA 269,146
Anaheim Business Park Anaheim, CA 145,745
Santa Clara Business Park Santa Clara, CA 188,777
Sunnyvale Business Park Sunnyvale, CA 129,513
-------
733,181
=======
</TABLE>
The Company contracted to acquire these four industrial
properties from KIP Properties, a real estate investor. The
Company plans to spend an aggregate of $2,130,000 in capital
expenditures to rehabilitate these properties.
BRADSHAW BUSINESS CENTRE
On October 29, 1997, the Company executed a letter of intent to
purchase a warehouse/distribution business center containing
approximately 114,400 leasable square feet located in Sacramento,
California (the "Bradshaw Business Centre"). The Company
contracted to purchase Bradshaw Business Centre from Sammis
Sacramento Associates, a real estate partnership, for a total
cash consideration of $8,700,000. The Company plans to spend
approximately $155,000 in capital expenditures to rehabilitate
this property.
HORN ROAD BUSINESS COMPLEX
On October 30, 1997, the Company entered into an agreement to
purchase a business complex consisting of 14 industrial buildings
containing approximately 221,300 leasable square feet located in
Sacramento, California (the "Horn Road Business Complex"). The
Company contracted to purchase Horn Road Business Complex from
JPI XI, LP, a California limited partnership controlled by
Jackson Properties (an industrial developer), for a total cash
consideration of $9,500,000. In connection with this acquisition,
the Company is assuming an existing loan with an outstanding
balance of $2,890,000 which is secured by this property. This
loan bears interest at a fixed rate of 7.95% and matures in
February 2006. The Company plans to spend approximately $210,000
in capital expenditures to rehabilitate this property.
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<PAGE> 3
FULLERTON BUSINESS CENTER
On December 10, 1997, the Company entered into an agreement to
purchase a warehouse/ distribution business park consisting of 8
multi-tenant buildings containing approximately 110,900 leasable
square feet located in Fullerton, California ("Fullerton Business
Center"). The Company contracted to purchase Fullerton Business
Center from Fullerton Business Center, 1976, a California limited
partnership controlled by Meyer Asset Management (a real estate
investment and asset management company), for a total cash
consideration of $5,500,000. The Company plans to spend
approximately $112,000 in capital expenditures to rehabilitate
this property.
NORWOOD INDUSTRIAL PARKS
On December 10, 1997, the Company entered into an agreement to
purchase a multi-tenant industrial parks consisting of four
building containing approximately 168,300 leasable square feet
located in Sacramento, California ("Norwood Industrial Parks").
The Company contracted to purchase Norwood Industrial Parks from
PMRA III, a group trust controlled by PM Realty Advisors, a
pension fund advisor, for a total cash consideration of
$4,700,000. The Company plans to spend approximately $427,000 in
capital expenditures to rehabilitate this property.
The California Commerce Parks Portfolio, the Bradshaw Business Centre,
the Horn Road Business Complex, the Fullerton Business Center and the
Norwood Industrial Parks are collectively referred to herein as the
"Probable Acquisitions."
The Company anticipates completing these acquisitions with proceeds
from an additional issuance of shares of Class A and B Senior
Cumulative Convertible Preferred Stock which the Company remains
obligated to issue prior to January 1, 1998, pursuant to certain
agreements and borrowings under its $65,000,000 revolving line of
credit or other capital transactions.
All Probable Acquisitions remain subject to certain conditions to
closing. Accordingly, there can be no assurance that the Probable
Acquisitions will be consummated.
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<PAGE> 4
ITEM 5. OTHER INFORMATION.
POSSIBLE ACQUISITIONS
The Company has entered into agreements with Northwestern Mutual Life,
a life insurance company, to acquire the properties listed below for an
estimated purchase price of $23,500,000. The Company has not yet
completed sufficient due diligence to determine the probability of
these acquisitions and as a result has not included the effect of such
acquisitions in the accompanying pro forma financial information.
<TABLE>
<CAPTION>
Leasable
Property Name Location Square Feet
------------------------ ------------------------ -----------
<S> <C> <C>
Business Park Portfolio
Business Park Anaheim, CA 91,200
Business Park Montebello, CA 143,391
Business Park Cerritos, CA 213,755
Business Park Irvine, CA 170,305
---------
618,651
=========
</TABLE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) See Index to Financial Statements attached hereto.
(b) Exhibits
Acquisition Agreements
10.1 Purchase and Sale Agreement between Pacific Gulf Properties
Inc. and KIP Properties for the acquisition of the
California Commerce Parks Portfolio.
10.2 Purchase and Sale Agreement between Pacific Gulf Properties
Inc. and Sammis Sacramento Associates for the acquisition
of the Bradshaw Business Centre.
10.3 Purchase and Sale Agreement and Escrow Instructions between
Pacific Gulf Properties Inc. and Fullerton Business Center,
1976, a California limited partnership for the acquisition
of the Fullerton Business Center.
10.4 Agreement of Purchase and Sale and Joint Escrow
Instructions between Pacific Gulf Properties Inc. and PMRA
III, a group trust, for the acquisition of the Norwood
Industrial Parks.
10.5 Real Estate Purchase Contract between Pacific Gulf
Properties Inc. and JPI XI, LP, a California limited
partnership for the acquisition of the Horn Road Business
Complex.
23.1 Consent of Independent Auditors.
99.1 Pacific Gulf Properties Inc. Press Release dated
December 11, 1997 announcing the adoption of a stockholder
rights plan
99.2 Form of Pacific Gulf Properties Inc. Press Release dated
December __, 1997 announcing the change of the record date
for the distribution of the rights under the stockholder
rights plan to December 29, 1997
99.3 Form of Letter to Stockholders regarding the adoption
of a stockholder rights plan and transmitting a summary of
the rights
99.4 Summary of the Rights issued pursuant to the Rights
Agreement
99.5 Rights Agreement, dated as of December 11, 1997,
between Pacific Gulf Properties Inc. and Harris Trust
Company of California, as Rights Agent (incorporated by
reference to Pacific Gulf Properties Inc.'s registration
statement on Form 8-A (commission file no. 1-12546) filed
December 17, 1997)
-3-
<PAGE> 5
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 hereunto duly authorized.
PACIFIC GULF PROPERTIES INC.
/s/Donald G. Herrman
- ---------------------------------------
Donald G. Herrman
Executive Vice President,
Chief Financial Officer and Secretary
DATED: December 18, 1997
-4-
<PAGE> 6
Other Exhibits
99.1 Pacific Gulf Properties Inc. Press Release dated December 11, 1997
announcing the adoption of a stockholder rights plan
99.2 Pacific Gulf Properties Inc. Press Release dated December 17, 1997
announcing the change of the record date for the distribution of the
rights under the stockholder rights plan to December 29, 1997
99.3 Form of Letter to Stockholders regarding the adoption of a stockholder
rights plan and transmitting a summary of the rights*
99.4 Summary of the Rights issued pursuant to the Rights Agreement*
99.5 Rights Agreement, dated as of December 11, 1997, between Pacific Gulf
Properties Inc. and Harris Trust Company of California, as Rights
Agent (incorporated by reference to Pacific Gulf Properties Inc.'s
registration statement on Form 8-A (commission file no. 1-12546) filed
December __, 1997)
- ---------------
* To be filed by amendment
<PAGE> 7
PACIFIC GULF PROPERTIES INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PRO FORMA FINANCIAL INFORMATION (UNAUDITED) ............................................ 5
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1997 ................ 6
Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended
September 30, 1997 ................................................................. 7
Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31,
1996 ............................................................................... 8
Notes to Pro Forma Condensed Consolidated Financial Statements ......................... 9
CALIFORNIA COMMERCE PARKS PORTFOLIO
Report of Independent Auditors ......................................................... 29
Combined Statement of Revenues and Certain Expenses for the Year Ended December 31, 1996
and the Nine Months Ended September 30, 1997 (Unaudited) ........................... 30
Notes to Combined Statement of Revenues and Certain Expenses ........................... 31
</TABLE>
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<PAGE> 8
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS ADJUSTED
BEFORE
COMPANY PROBABLE PROBABLE COMPANY
HISTORICAL ADJUSTMENTS ACQUISITIONS ACQUISITIONS PRO FORMA
----------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Real estate, net
Operating properties $ 486,922 $ 58,000(A) $ 544,922 $ 86,000(F) $ 630,922
Properties under
development 43,328 -- 43,328 -- 43,328
Cash and cash equivalents 1,258 22,958(B) 24,216 (22,685)(F) 1,531
Accounts receivable 2,501 -- 2,501 2,501
Other assets 14,567 670(A) 15,237 (550)(F) 14,687
--------- --------- --------- --------- ---------
$ 548,576 $ 81,628 $ 630,204 62,765 $ 692,969
========= ========= ========= ========= =========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Loans payable $ 211,638 $ 45,840(C) $ 257,478 $ 2,890(F) $ 260,368
Line of credit 32,120 9,300(A)(B) -- 24,002(F) 24,002
(41,420)(D)
Acquisition facility 33,625 (33,625)(C) -- -- --
Accounts payable and
accrued liabilities 8,711 292(A) 9,003 873(F) 9,876
Dividends payable 6,139 -- 6,139 -- 6,139
Convertible subordinated
debentures 12,652 -- 12,652 -- 12,652
--------- --------- --------- --------- ---------
Total liabilities 304,885 (19,613) 285,272 27,765 313,037
Minority interest in
consolidated
partnerships 8,465 2,869(A) 11,334 -- 11,334
Shareholders' equity
Preferred stock 7 2(E) 9 18(G) 27
Common shares 143 48(E) 191 -- 191
Outstanding restricted
stock (865) -- (865) -- (865)
Additional paid-in
capital 259,558 98,322(E) 357,880 34,982(G) 392,862
Distributions in
excess of earnings (23,617) -- (23,617) (23,617)
--------- --------- --------- --------- ---------
235,226 98,372(E) 333,598 35,000(G) 368,598
--------- --------- --------- --------- ---------
$ 548,576 $ 81,628 $ 630,204 $ 62,765 $ 692,969
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the pro forma condensed
consolidated financial statements.
-6-
<PAGE> 9
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AS ADJUSTED
BEFORE
COMPANY PROBABLE PROBABLE COMPANY
HISTORICAL ADJUSTMENTS ACQUISITIONS ACQUISITIONS PRO FORMA
------------ --------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income
Industrial
properties $ 24,850 $ 9,633(H) $ 34,483 $ 7,625(R) $ 42,108
Multifamily
properties 24,339 1,665(H) 26,004 --(R) 26,004
------------ --------- --------- -------- ----------
49,189 11,298 60,487 7,625 68,112
EXPENSES
Rental property
expenses
Industrial
properties 5,864 1,937(H) 7,801 2,819(R) 10,620
Multifamily
properties 9,421 583(H) 10,004 --(R) 10,004
------------ --------- --------- -------- ----------
15,285 2,520 17,805 2,819 20,624
Depreciation 8,073 2,447(I) 10,520 1,292(S) 11,812
Interest 12,621 4,559(J) 14,614 1,548(T) 16,162
(197)(K)
(2,369)(L)
General and
administrative 2,238 -- 2,238 -- 2,238
Minority interest in
earnings of
consolidated
partnerships 114 507(M) 621 -- 621
------------ --------- --------- -------- ----------
NET INCOME (Y) 10,858 3,831 14,689 1,966 16,655
Preferred dividends
requirements (390) (855)(N) (1,245) (2,277)(U) (3,522)
------------ --------- --------- -------- ----------
INCOME AVAILABLE TO
COMMON
SHAREHOLDERS $ 10,468 2,976 $ 13,444 $ (311) $ 13,133
============ ========= ========= ========= ============
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING (W) 12,843,805 19,025,283
============ ============
NET INCOME PER COMMON
SHARE (Y) $ 0.82 $ 0.69
============ ============
</TABLE>
The accompanying notes are an integral part of the pro forma financial
statements.
-7-
<PAGE> 10
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AS ADJUSTED
BEFORE
COMPANY PROBABLE PROBABLE COMPANY
HISTORICAL ADJUSTMENTS ACQUISITIONS ACQUISITIONS PRO FORMA
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income
Industrial properties $ 20,783 $ 22,683(H) $ 43,466 $ 9,832(R) $ 53,298
Multifamily properties 29,104 4,470(H) 33,574 --(R) 33,574
------------ ---------- ---------- --------- ------------
49,887 27,153 77,040 9,832 86,872
EXPENSES
Rental property expenses
Industrial properties 5,308 5,124(H) 10,432 3,829(R) 14,261
Multifamily properties 11,554 1,885(H) 13,439 --(R) 13,439
------------ ---------- ---------- --------- ------------
16,862 7,009 23,871 3,829 27,700
Depreciation 8,236 5,240(O) 13,476 1,720(S) 15,196
Interest 18,411 (648)(K) 21,267 2,063(T) 23,330
3,158(L)
10,554(P)
(3,892)(Q)
General and administrative 2,974 -- 2,974 -- 2,974
Minority interest in
earnings in
consolidated
partnerships -- 676(M) 676 -- 676
------------ ---------- ---------- --------- ------------
NET INCOME(V)(X) 3,404 11,372 14,776 2,220 16,996
Preferred dividends
requirements -- (1,659)(N) (1,659) (3,038)(U) (4,697)
------------ ---------- ---------- --------- ------------
INCOME AVAILABLE TO COMMON
SHAREHOLDERS
$ 3,404 $ 9,713 $ 13,117 $ (818) $ 12,299
============ ========== ========== ========= ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING(W) 6,340,748 18,954,225
============ ============
NET INCOME PER COMMON
SHARE (V)(X) $ 0.54 $ 0.65
============ ============
</TABLE>
The accompanying notes are an integral part of the pro forma financial
statements.
-8-
<PAGE> 11
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 1 - BASIS OF PRESENTATION
Pacific Gulf Properties Inc. (the "Company") was formed in 1993 and completed
its initial public offering in February 1994.
The Company anticipates purchasing the following industrial properties which are
collectively referred to as the "Probable Acquisitions": (i) a portfolio of four
properties containing approximately 733,181 square feet of industrial space
located in California ("California Commerce Parks Portfolio"); (ii) a
warehouse/distribution business center containing approximately 114,400 leasable
square feet located in Sacramento, California ("Bradshaw Business Center");
(iii) a business complex consisting of 14 industrial buildings containing
approximately 221,300 leasable square feet located in Sacramento, California
("Horn Road Business Complex"); (iv) a warehouse/distribution business park
consisting of eight multi-tenant buildings containing approximately 110,900
leasable square feet located in Fullerton, California ("Fullerton Business
Center"); and (v) two multi-tenant industrial parks consisting of four buildings
containing approximately 168,300 leasable square feet located in Sacramento,
California (Norwood Industrial Parks"). The Company anticipates completing the
purchase of the Probable Acquisitions with proceeds from the issuance of
additional shares of Class A and Class B Senior Cumulative Convertible Preferred
Stock which the Company is obligated to issue prior to January 1, 1998 pursuant
to certain agreements and borrowings under its $65,000,000 revolving line of
credit or other capital transactions.
The pro forma consolidated financial statements of the Company have been
adjusted to reflect the effect of purchasing the Probable Acquisitions. Further,
the pro forma consolidated financial statements have also been adjusted to
reflect the effect of certain transactions which the Company completed or will
complete subsequent to September 30, 1997 as if those transactions occurred as
of the beginning of the periods indicated.
Pro Forma Consolidated Balance Sheet
The Company's pro forma condensed consolidated balance sheet, presented as of
September 30, 1997, is based on the unaudited historical financial statements of
the Company included in the Company's Quarterly Report on Form 10-Q, and has
been adjusted to reflect the following transactions completed subsequent to
September 30, 1997:
(i) the acquisition in October 1997 of a controlling general partner
interest in PGP Northern Industrial, LP, a California limited
partnership to which the previous owners contributed two industrial
properties containing approximately 500,739 leasable square feet ("Eden
Plaza/Eden Industrial");
-9-
<PAGE> 12
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 1 - BASIS OF PRESENTATION (continued)
(ii) the borrowings in October 1997 under the Company's revolving line of
credit to complete the purchase of Eden Plaza/Eden Industrial and to
repay a maturing loan payable and the borrowings under the Company's
$35,000 credit facility established with a bank for acquisition purposes
(the "Acquisition Facility") to pay certain pre-acquisition costs
related to a portfolio of industrial properties containing an aggregate
of 843,215 leasable square feet located in California and Las Vegas,
Nevada (the "Industrial Portfolio Acquisition Properties") (see also the
Company's Current Report on Form 8-K/A dated November 21, 1997);
(iii) the issuance in November 1997 of 4,776,300 shares of the Company's
Common Stock, including 526,300 shares of Common Stock pursuant to the
exercise of an overallotment option granted to the underwriter (the
"November 1997 Common Stock Offering"); and
(iv) the acquisition of the four Industrial Portfolio Acquisition Properties,
three of which were acquired in December 1997.
The pro forma condensed consolidated balance sheet of the Company as of
September 30, 1997 has been further adjusted to reflect the pro forma effect of
purchasing the Probable Acquisitions as if such purchases had occurred on
September 30, 1997.
Pro Forma Consolidated Statement of Operations for the Year Ended December 31,
1996
The pro forma condensed consolidated statement of operations of the Company for
the year ended December 31, 1996 is based on the historical financial statements
of the Company and has been adjusted to reflect the effect of the following
transactions completed by the Company within the periods reported herein or
subsequent to September 30, 1997, as if these transactions had occurred as of
the beginning of the period:
(i) the purchase in March 1996 of an industrial property containing
approximately 189,000 leasable square feet located in Garden Grove,
California (the "Pacific Gulf Business Park");
(ii) the purchase in June and July 1996 of nine industrial properties
containing approximately 1,400,000 leasable square feet located in
California (the "1996 Industrial Acquisitions") utilizing proceeds from
a public offering of 2,435,481 shares of the Company's Common Stock
consummated in May 1996 (the "May 1996 Common Stock Offering");
(iii) the completion of the May 1996 Common Stock Offering and the application
of net proceeds thereof as more fully described in a Prospectus
Supplement filed with the Securities and Exchange Commission;
-10-
<PAGE> 13
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 1 - BASIS OF PRESENTATION (continued)
(iv) the sale of a 14.3-acre parcel and an industrial building containing
approximately 56,000 leasable square feet in August 1996 to an existing
tenant at the Company's Baldwin Industrial Park property pursuant to
purchase options contained in the existing tenant's lease (the "Tenant
Sale");
(v) the exchange in December 1996 of $42,069 aggregate principal amount of
the Company's 8.375% Convertible Subordinated Debentures due 2001 (the
"Debentures") for 2,440,002 shares of the Company's Common Stock
pursuant to a tender offer to exchange such Debentures as more fully
described in a registration statement filed with the Securities and
Exchange Commission (the "Debenture-for-Stock Exchange");
(vi) the acquisition of two additional properties in late 1996: (a) an
industrial property containing approximately 186,000 square feet located
in San Diego, California in October 1996 (Miramar Business Park), and
(b) a 165-unit multifamily community located in Ontario, California
(Raintree Apartments) in November 1996 (collectively, the "Other 1996
Acquisitions");
(vii) the purchase in January and February 1997 of three
warehouse/distribution facilities containing an aggregate of 521,000
leasable square feet located in Washington and California ("1997
Industrial Acquisitions") with proceeds from a public offering of
2,300,000 shares of the Company's Common Stock consummated in January
1997 (the "January 1997 Common Stock Offering");
(viii) the completion of the January 1997 Common Stock Offering and the
application of net proceeds thereof as more fully described in a
Prospectus Supplement filed with the Securities and Exchange Commission;
(ix) the purchase of a warehouse/distribution facility in March 1997
containing approximately 570,000 leasable square feet located in
Woodland, California ("Woodland Distribution Center");
(x) the repayment in April 1997 of certain indebtedness totaling $7,000 with
proceeds from the issuance of 270,270 shares of Class A Senior
Cumulative Convertible Preferred Stock (the "Class A Preferred Stock");
-11-
<PAGE> 14
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 1 - BASIS OF PRESENTATION (continued)
(xi) the purchase of the following properties utilizing proceeds from a
public offering of 2,131,700 shares of the Company's Common Stock
consummated in June 1997 (the "June 1997 Common Stock Offering"): (a)
Algona Distribution Center, a warehouse/distribution facility containing
approximately 250,000 leasable square feet located in Algona, Washington
purchased for redevelopment purposes in January 1997; (b) a 12.8-acre
land parcel located in Lake Forest, California purchased in May 1997,
currently being developed as a multi-tenant industrial complex that will
contain approximately 203,500 leasable square feet (the "Lake Forest
Land Parcel"); (c) a 17.1-acre land parcel located within the Spectrum
master-planned business community located in Irvine, California,
currently being developed as a warehouse/distribution business park that
will contain approximately 235,000 leasable square feet (the "Pacific
Gulf Spectrum Land"); (d) a warehouse/ distribution center purchased in
August 1997 containing approximately 360,000 leasable square feet of
industrial space which the Company redeveloped for multi-tenant use (the
"Vons Distribution Center" which together with the "Algona Distribution
Center," the "Lake Forest Land Parcel," and the "Pacific Gulf Spectrum
Land" are collectively referred to as the "Properties Under
Development"); and (e) a controlling general partner interest in two
partnerships that own two "active senior" apartment communities
consisting of 551 apartment units located in Escondido, California (the
"Senior Apartments");
(xii) the completion of the June 1997 Common Stock Offering and the
application of the net proceeds thereof as more fully described in a
Prospectus Supplement filed with the Securities and Exchange Commission;
(xiii) the purchase in July 1997 of an industrial portfolio of five industrial
properties containing approximately 1,532,000 leasable square feet
located in California (the "AEW/Lincoln Properties") utilizing
borrowings under the Acquisition Facility and proceeds from the issuance
of 470,588 shares of Class B Senior Cumulative Convertible Preferred
Stock (the "Class B Preferred Stock");
(xiv) the purchase in September 1997 of an industrial park containing
approximately 142,000 leasable square feet located in Concord,
California (the "Concord Industrial Park");
(xv) the purchase in October 1997 of a controlling general partner interest
in the partnership that owns Eden Plaza/Eden Industrial Park;
(xvi) the borrowings in October 1997 under the Company's revolving line of
credit to repay a maturing loan payable and the borrowings under the
Acquisition Facility to pay certain preacquisition costs (primarily
refundable deposits) of the Industrial Portfolio Acquisition Properties;
-12-
<PAGE> 15
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 1 - BASIS OF PRESENTATION (continued)
(xvii) the repayment in October 1997 of outstanding balances under the
Acquisition Facility with proceeds from a $34,000,000 term loan;
(xviii) The issuance in October 1997 of an additional 235,294 shares of Class B
Preferred Stock;
(xix) the completion of the November 1997 Common Stock Offering and the
application of the net proceeds thereof as more fully described in a
Prospectus Supplement filed with the Securities and Exchange Commission;
and
(xx) the purchase of Industrial Portfolio Acquisition Properties as more
fully described in the Company's Current Report on Form 8-K/A filed with
the Securities and Exchange Commission on November 21, 1997.
The pro forma condensed consolidated financial statements of the Company for the
year ended December 31, 1996 has been further adjusted to reflect the pro forma
effect of purchasing the Probable Acquisitions as if such purchases had occurred
as of the beginning of the period.
Pro Forma Consolidated Statement of Operations for the Nine Months Ended
September 30, 1997
The pro forma condensed consolidated statement of operations of the Company for
the nine months ended September 30, 1997 is based on the unaudited historical
financial statements included in the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997, and has been adjusted to reflect the
effect of the following transactions completed by the Company during the periods
reported herein or subsequent to September 30, 1997, as if the transactions had
occurred as of the beginning of the period:
(i) the purchase in January and February 1997 of the 1997 Industrial
Acquisitions;
(ii) the completion of the January 1997 Common Stock Offering and the
application of net proceeds thereof as more fully described in a
Prospectus Supplement filed with the Securities and Exchange Commission;
(iii) the purchase in March 1997 of the Woodland Distribution Center;
(iv) the repayment of certain indebtedness totaling $7,000 in April 1997 with
proceeds from the issuance of 270,270 shares of Class A Preferred Stock;
(v) the purchase of the Properties Under Development and the Senior
Apartments completed by the Company during the second quarter of 1997
and June 1997, respectively;
-13-
<PAGE> 16
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 1 - BASIS OF PRESENTATION (continued)
(vi) the completion of the June 1997 Common Stock Offering and the
application of net proceeds thereof as more fully described in a
Prospectus Supplement filed with the Securities and Exchange Commission;
(vii) the purchase in July 1997 of the AEW/Lincoln Properties with funds from
borrowings under the Acquisition Facility and the issuance of 470,288
shares of Class B Preferred Stock;
(viii) the purchase in September 1997 of the Concord Business Center;
(ix) the purchase in October 1997 of a controlling general partner interest
in the partnership that owns the Eden Plaza/Eden Industrial Park
Properties;
(x) the borrowings in October 1997 under the Company's revolving line of
credit to repay a maturing loan payable and the borrowings under the
Acquisition Facility to pay certain preacquisition costs (primarily
refundable deposits) of the Industrial Portfolio Acquisition Properties;
(xi) the repayment in October 1997 of outstanding balances under the
Acquisition Facility with proceeds from a $34,000,000 term loan;
(xii) the issuance in October 1997 of an additional 235,294 shares of Class B
Preferred Stock;
(xiii) the completion of the November 1997 Common Stock Offering and the
application of the net proceeds thereof as more fully described in a
Prospectus Supplement filed with the Securities and Exchange Commission;
and
(xiv) the purchase of Industrial Portfolio Acquisition Properties as more
fully described in the Company's Current Report on Form 8-K/A filed with
the Securities and Exchange Commission on November 21, 1997.
The pro forma condensed consolidated financial statements of the Company for the
nine months ended September 30, 1997 have been further adjusted to reflect the
pro forma effect of purchasing the Probable Acquisitions as if such purchase had
occurred as of the beginning of the periods presented.
-14-
<PAGE> 17
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 1 - BASIS OF PRESENTATION (continued)
The pro forma condensed consolidated financial statements of the Company are not
necessarily indicative of what the Company's financial position or results of
operations would have been assuming the completion of the described transactions
as of the beginning of the periods indicated, nor does it purport to project the
Company's financial position or results of operations at any future date or for
any future period. In addition, the historical operating results for the nine
months ended September 30,1997 are not necessarily indicative of the results to
be obtained by the Company for the year ending December 31, 1997. The following
pro forma information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
all of the financial statements and notes thereto contained in the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,1997, the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
NOTE 2 - PRO FORMA ADJUSTMENTS
(A) Includes the following purchases by the Company totaling $58,000 which
occurred or will occur subsequent to September 30, 1997:
(i) Purchase of a controlling general partner interest in PGP
Northern Industrial, L.P., a California limited partnership (the
"Partnership") that owns the Eden Plaza/Eden Industrial
Properties. The properties were contributed to the Partnership by
the previous owners at an agreed-upon value of $19,000 subject to
approximately $15,641 of existing indebtedness and $154 of
security deposits. In connection with the Eden Plaza/Eden
Industrial transaction, the Company became the sole general
partner in the Partnership with an ownership interest of 63% in
exchange for its cash contribution of $3,977. The previous owners
became limited partners in the Partnership and received
approximately 144,016 limited partnership units in exchange for
their $2,869 minority equity interest. Proceeds for the Company's
acquisition were borrowed under the Company's revolving line of
credit ($3,977) and then contributed to the Partnership to reduce
the properties' existing indebtedness balance from $15,641 to
$12,000 and pay certain closing and other costs. Capitalizable
financing costs totaling $120 were incurred in connection with
such refinancing.
-15-
<PAGE> 18
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(ii) Purchase of the Industrial Portfolio Acquisition Properties
as follows:
<TABLE>
<CAPTION>
Date of Leasable Purchase
Property Name Acquisition Location Square Feet Price
- ------------------------------------------------ ------------- ----------- --------
<S> <C> <C> <C> <C>
Industrial Portfolio Acquisition Properties
Tower Park December 1997 Anaheim, CA 205,238 $ 8,900
611 Cerritos December 1997 Fullerton, CA 202,551 6,100
Acacia Business Center December 1997 Anaheim, CA 129,426 9,900
Valley View Business Center Pending Las Vegas, NV 300,000 14,100
------- -------
837,219 $39,000
======= =======
</TABLE>
The Company has completed or anticipates completing these purchases with
proceeds from the November 1997 Common Stock Offering (see Note E). In
connection with these purchases, the Company will assume a $4,448 existing loan
encumbering the Valley View Business Center property. In addition, the
Company received credit through escrow for the assumption of tenant security
deposits related to these properties totaling approximately $138. The purchases
which are currently pending remain subject to certain conditions to closing,
thus, there can be no assurance that these purchases will be consummated.
In addition to the above acquisitions, the Company paid $550 of
pre-acquisition costs related to the purchase of the Probable Acquisitions.
(B) Includes the effect of the following transactions:
(i) Net proceeds of $6,620 remaining from the November 1997 Common
Offering (see Note E) after the purchase of the Industrial
Portfolio Acquisition Properties and the repayment of outstanding
balances under the Company's revolving line of credit and the
Acquisition Facility.
(ii) $10,368 of proceeds resulting from the issuance of 526,300 shares
of $.01 par value Common Stock at $20.75 per share (net of
underwriting discounts and commission and offering costs)
pursuant to the exercise of an overallotment option granted to
the underwriter under the November 1997 Common Stock Offering;
(iii) $5,000 of net proceeds resulting from the issuance of 235,294
shares of $.01 par value Class B Preferred Stock at $21.25 per
share in October 1997 (see Note N);
-16-
<PAGE> 19
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(iv) $375 in proceeds remaining after from the repayment of
outstanding balances under the Company's Acquisition Facility
($33,625) from borrowings under new loan payable which bears
interest at a fixed rate of 7.11% and matures in ten years
($34,000 - Note C);
(v) $715 in net proceeds remaining after the repayment of a maturing
loan payable ($4,608) with borrowings under the Company's line of
credit ($5,323);
(vi) Payment of $120 for capitalizable financing costs related to the
refinancing of indebtedness encumbering the Eden Plaza/Eden
Industrial properties (see Note A above)
(C) Includes the following loans payable transactions completed subsequent
to September 30, 1997:
(i) Assumption of $12,000 existing mortgage loan payable encumbering
the Eden Plaza/Eden Industrial properties (see Note A).
(ii) Borrowings under a $34,000 new loan obtained by the Company in
October 1997 for the purpose of repaying outstanding balances
under the Company's Acquisition Facility. The loan bears interest
at a fixed rate of 7.11% and matures in ten years.
(iii) Assumption of a $4,448 existing loan related to the purchase of
the Industrial Portfolio Acquisition Properties (see Note A).
(iv) Repayment of a $4,608 maturing loan payable with borrowings under
the Company's revolving line of credit.
(D) Repayment of the Company's revolving line of credit with net proceeds
from the November 1997 Common Stock Offering ($41,420).
-17-
<PAGE> 20
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(E) Includes the following capital transactions completed by the Company
subsequent to September 30, 1997:
(i) Issuance of 4,250,000 shares of $.01 par value Common Stock at
$20.75 per share as part of the November 1997 Common Stock
Offering, net of underwriting discounts and commissions and
offering costs ($83,004);
(ii) Issuance of 576,300 shares of $.01 par value Common Stock at
$20.75 per share pursuant to the exercise of an overallotment
option granted to the underwriter under the November 1997 Common
Stock Offering, net of underwriting discounts and commissions and
offering costs ($10,368);
(iii) Issuance of 235,294 shares of $.01 par value Class B Preferred
Stock at $21.25 per share in October 1997 ($5,000).
(F) Purchase of the Probable Acquisitions currently under contract:
<TABLE>
<CAPTION>
Leasable
Property Name Location Square Feet Purchase Price
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
California Commerce Parks Portfolio $ 57,600
Sacramento Business Park Sacramento, CA 269,146
Anaheim Business Park Anaheim, CA 145,745
Santa Clara Business Park Santa Clara, CA 188,777
Sunnyvale Business Park Sunnyvale, CA 129,513
Bradshaw Business Centre Sacramento, CA 114,400 8,700
Horn Road Business Complex Sacramento, CA 221,300 9,500
Fullerton Business Center Fullerton, CA 110,900 5,500
Norwood Industrial Parks Sacramento, CA 168,300 4,700
--------- ---------
1,348,081 $ 86,000
========= =========
</TABLE>
The Company completed or anticipates completing the purchase of the
Probable Acquisitions with proceeds from additional issuances of shares
of Class A and Class B Preferred Stock ($35,000), the assumption of an
existing loan encumbering the Horn Road Business Complex property
($2,890), borrowings under its $65,000 revolving line of credit
($24,002), certain preacquisition costs ($550) and available cash
($22,685). The existing loan encumbering the Horn Road Business Complex
property bears interest at a fixed rate of 7.95% and matures in February
2006. In addition, the Company will receive credits through escrow for
the assumption of tenant security deposits related to these properties
totaling $873.
-18-
<PAGE> 21
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
The Probable Acquisitions remain subject to certain conditions to
closing, thus, there can be no assurance that these acquisitions will be
consummated.
(G) Issuance of 1,081,081 shares of $.01 par value Class A Preferred Stock
at $18.50 per share ($20,000) and 705,882 shares of $.01 par value Class
B Preferred Stock at $21.25 per share ($15,000), which the Company
remains obligated to issue prior to January 1, 1998 pursuant to certain
agreements entered during 1997.
(H) Revenues and certain expenses of the following properties acquired by
the Company in 1996 and 1997 for the period prior to their acquisition
(adjusted to reflect increased property taxes based on the properties'
acquisition cost and current property tax rates):
<TABLE>
<CAPTION>
For the Nine Months Ended September 30, 1997
-------------------------------------------------------------------------------------------------------------------
Industrial
1997 Woodland Concord Portfolio
Industrial Distribution Senior AEW/Lincoln Industrial Eden Plaza/ Acquisition Total
Acquisitions Center Apartments Properties Park Eden Industrial Properties
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental Income
Industrial
Properties $ 183 $ 60 $ -- $ 3,753 $ 797 $ 1,745 $ 3,095 $ 9,633
Multifamily
Properties -- -- 1,665 -- -- -- -- 1,665
------- ------- ------- ------- ------- ------- ------- -------
183 60 1,665 3,753 797 1,790 3,095 11,298
Rental Property
Expenses
Industrial
Properties 59 27 -- 737 129 413 578 1,937
Multifamily
Properties -- -- 583 -- -- -- -- 583
------- ------- ------- ------- ------- ------- ------- -------
59 27 583 737 129 413 578 2,520
$ 124 $ 33 $ 1,082 $ 3,016 $ 668 $ 1,332 $ 2,517 $ 8,778
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31, 1996
---------------------------------------------------------------------------------------------------------
Pacific
Gulf 1996 Other 1997 Woodland AEW/ Concord
Business Industrial 1996 Industrial Distribution Senior Lincoln Industrial
Park Acquisitions Acquisitions Acquisitions Center Apartments Properties Park
------------- ------------ ------------ ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental Income
Industrial
Properties $ 195 $ 3,217 $ 1,228 $ 2,703 $ 1,432 $ -- $ 6,811 $ 1,020
Multifamily
Properties -- -- 918 -- -- 3,552 -- --
------ -------- -------- -------- ------- -------- -------- --------
195 3,217 2,146 2,703 1,432 3,522 6,811 1,020
Rental Property
Expenses
Industrial 72 809 455 864 160 -- 1,332 174
Properties
Multifamily
Properties -- -- 542 -- -- 1,343 -- --
------ -------- -------- -------- ------- -------- -------- --------
72 809 997 864 160 1,343 1,332 2,174
$ 123 $ 2,408 $ 1,149 $ 1,839 $ 1,272 $ 2,209 $ 5,479 $ 846
====== ======== ======== ======== ======= ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31, 1996
-------------------------------------------------
Eden Industrial
Plaza/ Portfolio
Eden Acquisition Tenant
Industrial Properties Sale Total
---------- ------------ --------- ------
<S> <C> <C> <C> <C>
Rental Income
Industrial
Properties $ 2,397 $ 4,371 $ (691) $ 22,683
Multifamily
Properties -- -- -- 4,470
-------- -------- -------- --------
2,397 4,371 (691) 27,153
Rental Property
Expenses
Industrial
Properties 546 744 (32) 5,124
Multifamily
Properties -- -- -- 1,885
-------- -------- -------- --------
546 744 (32) 7,009
$ 1,851 $ 3,627 $ 659 $ 20,144
======== ======== ======== ========
</TABLE>
-19-
<PAGE> 22
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)\
(I) Depreciation expense of $2,447 during the nine months ended September
30, 1997 relating to the purchase of the 1997 Industrial Acquisitions,
Woodland Distribution Center, the Senior Apartments, the AEW/Lincoln
Properties, Concord Industrial Park, Eden Plaza/Eden Industrial and the
Industrial Portfolio Acquisition Properties. The depreciation expense
relative to the purchase of these properties for the period prior to
their acquisition was calculated utilizing estimated remaining useful
lives of 40 years and the depreciable basis of the properties as
follows:
<TABLE>
<CAPTION>
Purchase Depreciable Depreciation
Property Name Price Basis Expense
-------------------------------------------- --------- ---------- ------------
<S> <C> <C> <C>
1997 Industrial Acquisitions
Algona Warehouse $ 9,450 $ 7,640 $ 11
Harbor Business Park/Harbor Warner
Business Park 14,600 12,160 22
Woodland Distribution Center 12,875 10,923 46
Senior Apartments
Terrace Gardens Apartments 10,000 7,950 91
Morning View Terrace Apartments 15,000 10,109 116
AEW/Lincoln Properties 67,308 53,512 966
Concord Industrial Park 7,645 6,051 135
Eden Plaza/Eden Industrial 19,000 15,200 380
Industrial Portfolio Acquisition Properties
Tower Park 8,900 7,120 178
611 Cerritos 6,100 4,880 92
Acacia Business Center 9,900 7,920 198
Valley View Business Center 14,100 11,280 212
-------
$ 2,447
=======
</TABLE>
-20-
<PAGE> 23
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(J) Interest expense of $4,559 relating to the purchase of Woodland
Distribution Center, the Senior Apartments, the AEW/Lincoln Properties,
Concord Industrial Park and Eden Plaza/Eden Industrial and the
Industrial Portfolio Acquisition Properties. The interest expense
associated with the borrowings used to finance the purchase of these
properties for the period prior to these acquisitions is based on the
actual interest rate on the related debt, as follows:
<TABLE>
<CAPTION>
Pro Forma
Interest Interest
Property Name Debt Rate Expense
- --------------------------------------------- ----------- ---------- -----------
<S> <C> <C> <C>
Woodland Distribution Center
Revolving line of credit $12,483 8.50% $ 177
Senior Apartments
Terrace Garden Apartments
Loan payable 8,100 6.60% 245
Morning View Terrace Apartments
Loan payable 11,000 6.60% 333
AEW/Lincoln Properties
Revolving line of credit 12,000 7.25% 471
Acquisition Facility 41,625 7.50% 1,691
Concord Industrial Park
Loan payable 4,625 8.50% 262
Revolving line of credit 2,870 9.00% 172
Eden Plaza/Eden Industrial
Loan payable 12,000 7.05% 635
Revolving line of credit 3,977 7.63% 227
Industrial Portfolio Acquisition Properties
Loan Payable 4,448 8.38% 279
Amortization of financing costs 67
-------
$ 4,559
=======
</TABLE>
(K) Represents the net decrease in interest expense resulting from the debt
repayments and refinancings completed by the Company in October 1997,
prior to the November 1997 Common Stock Offering.
-21-
<PAGE> 24
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(L) Represents interest savings associated with the repayment of outstanding
balances on the Company's revolving line of credit ($41,420), including
October 1997 borrowings ($9,300) bearing interest at 7.625% (the
effective rate on the line) with net proceeds from the November 1997
Common Stock Offering.
(M) Represents minority equity interest in earnings of the two partnerships
that own the Senior Apartments and the Partnership that owns the Eden
Plaza/Eden Industrial properties. Profits and losses are allocated
between the Company and the limited partners based on the relative
balances of their respective capital accounts. In connection with these
partnerships which are controlled by the Company, the limited partners
are entitled to cash distributions on their limited partnership units to
the extent of available cash flow up to an amount on each unit equal to
the dividend payable on the Company's Common Stock.
(N) Represents the preferred stock dividend requirements of $0.425 per share
per quarter related to 270,270 shares of Class A Preferred Stock issued
by the Company in April 1997, 470,588 shares of Class B Preferred Stock
issued in July 1997 and 235,294 shares of Class B Preferred Stock issued
in October 1997.
The 270,270 shares of $.01 par value Class A Preferred Stock were issued
pursuant to an agreement to issue up to 1,351,351 shares executed by the
Company on December 31, 1996. The 705,882 shares of $.01 par value Class
B Preferred Stock were issued pursuant to an agreement to issue up to
1,411,765 shares executed by the Company in May 1997. Pursuant to the
agreements entered by the Company, the Class A Preferred Stock, which
will be issued in up to three installments prior to January 1, 1998 at a
price of $18.50 per share and the Class B Preferred Stock shares which
will be issued in up to three separate issuances prior to January 1,
1998 at $21.25 per share, are redeemable by the Company in whole or
part, five years from the date of issuance and are convertible into
shares of Common Stock, at any time, at the option of the holders based
on an initial conversion ratio of one-to-one, subject to adjustment
under certain circumstances.
-22-
<PAGE> 25
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(O) Depreciation expense of $5,240 relating to the following properties
acquired by the Company: Pacific Gulf Business Park, the 1996 Industrial
Acquisitions, the Other 1996 Acquisitions, the 1997 Industrial
Acquisitions, Woodland Distribution Center, the Senior Apartments, the
AEW/Lincoln Properties, Concord Industrial Park and Eden Plaza/Eden
Industrial, the Industrial Portfolio Acquisition Properties and Woodland
Distribution Center II, net of $328 depreciation reduction from the
Tenant Sale (the actual depreciation relating to the Tenant Sale during
the year ended December 31, 1996). The depreciation expense relating to
these properties, for the period prior to their purchase, was computed
utilizing the estimated remaining useful lives and depreciable basis of
the properties follows:
<TABLE>
<CAPTION>
Purchase Depreciable Depreciation
Property Name Price Basis Expense
-------------------------------------- ---------- ------------- ------------
<S> <C> <C> <C>
Pacific Gulf Business Park $ 6,800 $ 3,009 $ 16
1996 Industrial Acquisitions
Eden Landing Commerce Park 7,300 5,460 --
Riverview Industrial Park 6,442 5,281 66
Bay San Marcos Industrial Center 4,678 2,942 32
Escondido Business Center 10,372 6,523 70
Bell Ranch Industrial Park 3,750 3,000 35
North County Business Park 6,350 3,169 35
San Marcos Commerce Center 2,710 1,871 20
Pacific Park 6,900 3,001 28
La Mirada Business Center 3,600 2,453 26
Other 1996 Acquisitions
Miramar Business Park 7,242 7,242 181
Raintree Apartments 6,259 4,511 113
1997 Industrial Acquisitions
Algona Warehouse 9,450 7,640 191
Harbor Business Park/Harbor Warner 14,600 12,160 304
Business Park
Woodland Distribution Center 12,875 10,923 273
Senior Apartments
Terrace Garden Apartments 10,000 7,950 199
Morning View Apartments 15,000 10,109 253
AEW/Lincoln Properties 67,308 53,512 1,784
Concord Industrial Park 7,645 6,051 202
Eden Plaza/Eden Industrial 19,000 15,200 507
</TABLE>
-23-
<PAGE> 26
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
<TABLE>
<CAPTION>
Purchase Depreciable Depreciation
Property Name Price Basis Expense
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
Industrial Portfolio Acquisition Properties
Tower Park 8,900 7,120 237
611 Cerritos 6,100 4,880 122
Acacia Business Center 9,900 7,920 264
Valley View Business Center 14,100 11,280 282
------
$5,240
======
</TABLE>
(P) Interest expense of $10,554 relating to the purchase of Pacific Gulf
Business Park, the 1996 Industrial Acquisitions, the Other 1996
Acquisitions, the 1997 Industrial Acquisitions, Woodland Distribution
Center, the Development Properties, the Senior Apartments, the
AEW/Lincoln Properties, Concord Industrial Park and Eden Plaza/Eden
Industrial, less reduction of interest expense resulting from the Tenant
Sale of $567 (the actual interest relating to the Tenant Sale during the
year ended December 31, 1996). Interest expense associated with the
borrowings used to finance the purchase of these properties for the
period prior to these acquisitions is based on the actual interest rates
on the related debt, as follows:
<TABLE>
<CAPTION>
Pro Forma
Interest Interest
Property Name Debt Rate Expense
- -------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
Pacific Gulf Business Park
Loan payable $ 8,000 7.30% $ 124
1996 Industrial Acquisitions
Acquisition facility 19,475 7.50% 997
Other 1996 Acquisitions
Miramar Business Park
Revolving line of credit 7,100 7.13% 370
Raintree Apartments
Revolving line of credit 6,200 8.40% 437
Woodland Distribution Center
Revolving line of credit 12,483 8.50% 1,061
Senior Apartments
Terrace Garden Apartments
Loan payable 8,100 6.60% 535
</TABLE>
-24-
<PAGE> 27
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
<TABLE>
<CAPTION>
Pro Forma
Interest Interest
Property Name Debt Rate Expense
- ---------------------------------------------- ---------- --------- -----------
<S> <C> <C> <C>
Morning View Apartments
Loan payable 11,000 6.60% 726
AEW/Lincoln Properties
Revolving line of credit 12,000 7.25% 870
Acquisition facility 41,625 7.50% 3,121
Concord Industrial Park
Loan payable 4,625 8.50% 393
Revolving line of credit 2,870 9.00% 258
Eden Plaza/Eden Industrial
Loan payable 12,000 7.05% 846
Acquisition facility 3,977 7.63% 302
Industrial Portfolio Acquisition Properties
Loan payable 4,448 8.38% 373
Amortization of Financing Costs 141
-------
$10,554
=======
</TABLE>
The interest expense on the Company's revolving line of credit
borrowings and on borrowings under the Company's Acquisition Facility is
calculated for the period indicated at an interest rate of LIBOR + 1.75%
and LIBOR + 2.0%, respectively. The interest rates reflected above
represent the actual rates on the date of the borrowings. A 0.125%
change in the interest rate on all of the Company's variable rate
indebtedness would increase the Company's pro forma interest expense by
$99 for the nine months ended September 30, 1997 and $132 for the year
ended December 31, 1996.
(Q) Reduction in interest expense, resulting from the exchange of the
Debentures into 2,440,002 shares of the Company's Common Stock as of the
beginning of the period presented (including the related amortization of
debenture discount and costs of $417 for the year ended December 31,
1996).
-25-
<PAGE> 28
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(R) Revenues and certain expenses of the industrial properties comprising
the Probable Acquisitions, for the period prior to their acquisition by
the Company (adjusted to reflect increased property taxes based on the
properties' acquisition cost and current property tax rates):
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1997
------------------------------------------------------------------
California
Commerce Bradshaw Horn Road Fullerton Norwood
Parks Business Business Business Industrial
Portfolio Centre Complex Center Parks Total
---------- --------- --------- --------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Rental income $ 5,217 $ 861 $ 645 $ 446 $ 456 $7,625
Rental property
expenses 2,067 208 269 131 144 2,819
------ ------ ------ ------ ------ ------
$3,150 $ 653 $ 376 $ 315 $ 312 $4,806
====== ====== ====== ====== ====== ======
Year Ended December 31, 1996
------------------------------------------------------------------
California
Commerce Bradshaw Horn Road Fullerton Norwood
Parks Business Business Business Industrial
Portfolio Centre Complex Center Parks Total
---------- --------- --------- --------- ----------- ------
Rental income $6,693 $1,146 $ 850 $ 545 $ 598 $9,832
Rental property
expenses 2,762 287 370 196 214 3,829
------ ------ ------ ------ ------ ------
$3,931 $ 859 $ 480 $ 349 $ 384 $6,003
====== ====== ====== ====== ====== ======
</TABLE>
(S) Depreciation expense relating to the purchase of the Probable
Acquisitions for the period prior to their acquisition, was calculated
utilizing estimated remaining useful lives and the depreciable basis of
the properties as follows:
<TABLE>
<CAPTION>
Pro Forma Depreciation Expense
------------------------------
Nine Months
Ended Year Ended
Purchase Depreciable September 30, December 31,
Property Name Price Basis 1997 1996
- ----------------------------- ---------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
California Commerce Parks
Portfolio $ 57,600 $ 46,080 $ 864 $ 1,152
Bradshaw Business Centre 8,700 6,960 131 174
Horn Road Business Complex 9,500 7,600 143 190
Fullerton Business Center 5,500 4,400 83 110
Norwood Industrial Parks 4,700 3,760 71 94
-------- --------
$ 1,292 $ 1,720
======== ========
</TABLE>
-26
<PAGE> 29
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(T) Interest expense relating to the purchase of the Probable Acquisitions.
The interest expense associated with the borrowings used to finance the
purchase of these properties for the period prior to these acquisitions
is based on the actual interest rate on the related debt, as follows:
<TABLE>
<CAPTION>
Pro Forma Interest Expense
-----------------------------
Nine Months
Ended Year Ended
Interest September 30, December 31,
Property Name Debt Rate 1997 1996
------------------------------------- ------- -------- ------------- --------------
<S> <C> <C> <C> <C>
California Commerce Parks Portfolio
Revolving Line of Credit $ 24,002 7.63% $ 1,373 $ 1,830
Horn Road Business Complex
Loan Payable 2,890 7.95% 175 233
------------ -----------
$ 1,548 $ 2,063
=========== ===========
</TABLE>
(U) Represents the preferred stock dividend requirements of $0.425 per share
per quarter related to the issuance of 1,081,081 shares of $.01 par
value Class A Preferred Stock and 705,883 shares of $.01 par value Class
B Preferred Stock to fund the Probable Acquisitions. The Company is
obligated to issue such shares prior to January 1, 1998 (see Note G).
(V) Excludes the effect of a $74 nonrecurring gain from the sale of land and
buildings comprising the Tenant Sale in August 1996.
(W) Represents the weighted average of common shares and common stock
equivalents outstanding during the period indicated. Common Stock
equivalents include stock options which are considered dilutive for
purposes of computing primary earnings per common share. Pro forma
weighted average common shares include 2,435,581 shares of Common Stock
issued by the Company in conjunction with its May 1996 Common Stock
Offering, 2,440,002 shares of Common Stock issued as part of the
Debenture-for-Stock Exchange, 2,300,000 shares issued as part of the
January 1997 Common Stock Offering, 2,131,700 shares issued as part of
the June 1997 Common Stock Offering and 4,776,300 shares (including
526,300 shares pursuant to the underwriter's exercise of the
Over-Allotment Option) issued as part of the November 1997 Common Stock
Offering.
-27-
<PAGE> 30
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)(continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(X) Excludes the effect of the loss of $3,596 on the December 31, 1996
Debenture-for-Stock Exchange resulting from the issuance of 180,956
excess common shares at $19.875 per share (the closing price per share
on December 26, 1996, the date of the exchange). These shares represent
the additional shares issued at the exchange rate of 58 shares of Common
Stock per each $1 principal amount of Debentures, representing 4.3014
additional shares over the original conversion rate of 53.6986 shares.
(Y) Excludes the effect of a $111 nonrecurring loss on the sale of the
Company's corporate headquarters during the second quarter of 1997.
-28-
<PAGE> 31
Report of Independent Auditors
To the Shareholders and Board of Directors
Pacific Gulf Properties Inc.
We have audited the accompanying combined statement of revenues and certain
expenses of Sacramento Business Park, Anaheim Business Park, Santa Clara
Business Park and Sunnyvale Business Park, four commercial properties to be
acquired by Pacific Gulf Properties Inc. from KIP Properties (collectively
referred to as the "California Commerce Parks Portfolio") for the year ended
December 31, 1996. The statement is the responsibility of management. Our
responsibility is to express an opinion on the statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the combined statement. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the combined statement. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying combined statement was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in a Form 8-K filing) as described in Note 2 to the combined statement
and is not intended to be a complete presentation of the revenues and expenses
of the California Commerce Parks Portfolio.
In our opinion, the statement referred to above presents fairly, in all material
respects, the combined revenues and certain expenses, as defined above, of the
California Commerce Parks Portfolio for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
\S\ ERNST & YOUNG LLP
Newport Beach, California
December 10, 1997
-29-
<PAGE> 32
CALIFORNIA COMMERCE PARKS PORTFOLIO
Combined Statement of Revenues and Certain Expenses
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended September 30,
December 31, 1997
1996 (Unaudited)
------------- --------------
<S> <C> <C>
REVENUES
Rental and other income (Notes 2 and 3) $ 6,693,000 $ 5,217,000
CERTAIN EXPENSES
Property operating and maintenance (Note 2) 2,060,000 1,518,000
Real estate taxes 235,000 164,000
Management fees (Note 4) 300,000 234,000
------------- -------------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 4,098,000 $ 3,301,000
============= =============
</TABLE>
See accompanying notes.
-30-
<PAGE> 33
CALIFORNIA COMMERCE PARKS PORTFOLIO
Notes to Combined Statement of Revenues and Certain Expenses
For the Year Ended December 31, 1996 and the
Nine Months Ended September 30, 1997 (Unaudited)
1. DESCRIPTION OF THE TRANSACTION
Pacific Gulf Properties Inc. (the "Company") has contracted to acquire
Sacramento Business Park, Anaheim Business Park, Santa Clara Business Park and
Sunnyvale Business Park, four commercial properties containing over 733,000
square feet of industrial space located in California (the "California Commerce
Parks Portfolio"). The Company has entered into an agreement to acquire the
California Commerce Parks Portfolio from KIP Properties, a real estate investor.
2. BASIS OF PRESENTATION
The combined statement of revenues and certain expenses presents the operations
of the California Commerce Parks Portfolio, as defined above, for the year ended
December 31, 1996 and for the nine months ended September 30, 1997 (unaudited).
The combined statement has been prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission (for inclusion
in a Form 8-K filing).
Certain expenses that are dependent on the property owner and the cost basis of
the California Commerce Parks Portfolio have been excluded from the combined
statement. The excluded expenses consist primarily of depreciation, interest,
and loan fee amortization. Consequently, the revenues in excess of certain
expenses as presented in the combined statement are not intended to be a
complete presentation of the California Commerce Parks Portfolio's revenues and
expenses nor is it intended to be comparable to the proposed future operations
of the California Commerce Parks Portfolio.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
The California Commerce Parks Portfolio is generally leased to tenants with
lease terms which exceed one year and are accounted for as operating leases.
Revenues from leases are recognized on a straight-line basis over the term of
the related leases. Cost recoveries from tenants are recognized as income in the
period the related costs are accrued.
-31-
<PAGE> 34
CALIFORNIA COMMERCE PARKS PORTFOLIO
Notes to Combined Statement of Revenues and Certain Expenses (continued)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Capitalization Policy
Recurring repair and maintenance costs are expensed as incurred. Replacements
and betterments are capitalized and depreciated over their useful lives.
Use of Estimates
The preparation of the combined statement in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the combined statement. Actual results could
differ from these estimates in the near term.
4. MANAGEMENT FEES
The California Commerce Parks Portfolio is managed by R&B Commercial Real Estate
Services. Management fees are 4.5% of total income, as defined. For the year
ended December 31, 1996 and the nine months ended September 30, 1997, the
properties incurred $300,000 and $234,000, respectively, in management fees.
R&B Commercial Real Estate Services' role as the property manager of the
California Commerce Parks Portfolio will terminate upon the Company's
acquisition of the portfolio of the Company.
5. FUTURE MINIMUM LEASE PAYMENTS
The California Commerce Parks Portfolio is leased to tenants under leases which
expire at various dates and contain provisions for rent increases based on cost
of living indices. Certain leases also contain renewal options. The minimum
future lease payments to be received under the terms of these operating leases
for each of the next five years ending December 31, are as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 6,808,000
1998 5,726,000
1999 3,255,000
2000 1,526,000
2001 467,000
2002 and thereafter 393,000
</TABLE>
-32-
<PAGE> 1
EXHIBIT 10.1
================================================================================
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
by and between
KIP PROPERTIES LLC, A CALIFORNIA LIMITED LIABILITY COMPANY,
as Seller
and
PACIFIC GULF PROPERTIES, INC,
-----------------------------
as Buyer
dated
September 10, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS ................... 1
1. Purchase and Sale .................................................... 2
2. Purchase Price ....................................................... 2
2.1 Initial Deposit ................................................ 2
2.2 Additional Deposit.............................................. 2
2.3 Closing Funds................................................... 3
2.4 Interest on Deposits............................................ 3
3. Escrow................................................................ 3
3.1 Opening of Escrow............................................... 3
3.2 Closing......................................................... 4
4. Extension of Original Closing Date.................................... 4
5. Buyer's Examination/Reviews/Inspections............................... 4
5.1 Buyer's Approvals............................................... 4
(a) Title Examination....................................... 4
(b) Buyer's Reviews......................................... 5
(c) Buyer's Inspection...................................... 6
5.2 Funding Approval................................................ 7
5.3 Termination..................................................... 7
5.4 Allocation of Purchase Price.................................... 8
5.5 NO OBLIGATION BY SELLER TO CORRECT DEFECTS...................... 8
6. Deposits by Seller.................................................... 8
7. Deposits by Buyer..................................................... 9
8. Conditions of Closing................................................. 9
8.1 Buyer's Conditions.............................................. 9
8.1.1 Title Insurance........................................... 9
8.1.2 Delivery of Documents by Seller........................... 9
8.1.3 Tenant Estoppel Certificates.............................. 9
8.2 Seller's Condition.............................................. 10
9. Damage or Condemnation Prior to Closing............................... 11
9.1 Condemnation.................................................... 11
9.2 Casualty Loss................................................... 11
9.2.1 Casualty Over $1,000,000................................ 11
9.2.2 Casualty Under $1,000,000............................... 11
9.2.3 Cost of Repair.......................................... 12
9.2.4 Insurance............................................... 12
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
10. Costs and Expenses.................................................... 12
10.1 Seller's Costs................................................ 12
10.2 Buyer's Costs................................................. 12
11. Prorations; Credits................................................... 12
12. Disbursements and Other Actions by Escrow Holder...................... 14
12.1 Closing....................................................... 14
12.2 Deliveries.................................................... 15
13. Operations During Escrow.............................................. 15
14. Conduct of Rental Activity Prior to Closing........................... 15
14.1 Rental Activity Prior to the Contingency Date................. 15
14.2 Rental Activity After the Contingency Date.................... 15
14.3 Certain Definitions........................................... 16
(a) Approved New Lease..................................... 16
(b) New Lease Commission................................... 16
(c) Tenant Improvement Costs............................... 16
(d) Approved New Lease Costs............................... 17
(e) Approved New Lease Term................................ 17
(f) Buyer's Share.......................................... 17
(g) Buyer's Share of Approved New Lease Costs.............. 17
(h) Buyer's Total Share of Approved New Lease Costs........ 17
14.4 Credit to Seller for Buyer's Total Share of Approved
New Lease Costs............................................... 17
15. Representations and Warranties........................................ 17
15.1 Seller's Representations...................................... 17
15.1.1 Authority; Binding On Seller; Enforceability........... 17
15.1.2 Conflict with Existing Laws or Contracts............... 17
15.2 Buyer's Representation........................................ 18
15.2.1 Authority; Enforceability.............................. 18
15.2.2 Conflict with Existing Laws or Contracts............... 18
15.2.3 Decision to Purchase................................... 18
15.2.4 Information Furnished to Seller........................ 18
16. Hazardous Material.................................................... 18
16.1 Definition of Hazardous Material................................. 18
16.2 Presence of Hazardous Material................................... 19
16.3 Indemnification.................................................. 19
17. Disclaimer/As Is Sale/Release......................................... 19
17.1 AS IS......................................................... 19
17.2 BUYER'S INDEPENDENT DUE DILIGENCE............................. 21
17.2.1 PHYSICAL INSPECTION.................................... 21
17.2.2 REVIEW OF RECORDS...................................... 21
17.2.3 PURCHASE FOR BUYER'S ACCOUNT........................... 22
17.3 Release ...................................................... 22
17.4 Waiver ....................................................... 22
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
17.5 Certain Obligations Not Released.............................. 23
18. Legal Fees............................................................ 23
19. Notices............................................................... 24
20. Brokers............................................................... 25
21. No Survival........................................................... 25
22. Tax-Deferred Exchange................................................. 25
23. No Offer.............................................................. 26
24. Time of Essence....................................................... 26
25. Counterparts.......................................................... 26
26. Captions.............................................................. 26
27. No Obligations to Third Parties....................................... 26
28. Exhibits.............................................................. 26
29. Amendment to this Agreement........................................... 26
30. Waiver................................................................ 26
31. Applicable Law........................................................ 27
32. Entire Agreement...................................................... 27
33. Successors and Assigns................................................ 27
34. CERTAIN REMEDIES...................................................... 27
34.1 LIQUIDATED DAMAGES............................................ 27
34.2 LIMITATION ON LIABILITY....................................... 27
35. No Third Party Beneficiaries . . ..................................... 28
36. Interpretation; Computation of Periods................................ 28
37. Confidentiality....................................................... 28
38. AGENCY RELATIONSHIP................................................... 29
39. WAIVER OF TRIAL BY JURY............................................... 29
40. REVIEW WITH INDEPENDENT COUNSEL....................................... 29
</TABLE>
iii
<PAGE> 5
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS
("AGREEMENT"), dated September 10, 1997 for reference purposes only, constitutes
an agreement by which_____________________________________________ ("BUYER"),
agrees to purchase, and KIP PROPERTIES LLC, a California limited liability
company ("SELLER"), agrees to sell the following described real and personal
property:
A. That certain improved real property located in the City of Anaheim,
County of Orange, State of California, commonly known as Commerce Park -
Anaheim, 1440 South State College Boulevard, Anaheim, California, consisting of
(i) that certain real property more particularly described in EXHIBIT "A-1"
attached hereto (the "ANAHEIM LAND"), (ii) any and all improvements owned by
Seller and located on the Anaheim Land (the "ANAHEIM IMPROVEMENTS"), and (iii)
the personal property owned by Seller and located on the Anaheim Land listed on
EXHIBIT "A-2" attached hereto (collectively, the "ANAHEIM PERSONAL PROPERTY").
The Anaheim Land, Anaheim Improvements, and Anaheim Personal Property are herein
referred to collectively as the "ANAHEIM PROPERTY."
B. That certain improved real property located in the City of Sunnyvale,
County of Santa Clara, State of California, commonly known as Commerce Park -
Sunnyvale, 1095 East Duane Avenue, Sunnyvale, California, consisting of (i) that
certain real property more particularly described in EXHIBIT "B-1" attached
hereto (the "SUNNYVALE LAND"), (ii) any and all improvements owned by Seller and
located on the Sunnyvale Land (the "SUNNYVALE IMPROVEMENTS"), and (iii) the
personal property owned by Seller and located on the Sunnyvale Land listed on
EXHIBIT "B-2" attached hereto (collectively, the "SUNNYVALE PERSONAL PROPERTY").
The Sunnyvale Land, Sunnyvale Improvements, and Sunnyvale Personal Property are
herein referred to collectively as the "SUNNYVALE PROPERTY."
C. That certain improved real property located in the City of Santa
Clara, County of Santa Clara, State of California, commonly known as Commerce
Park - San Tomas, 3000 Scott Boulevard, Santa Clara, California, consisting of
(i) that certain real property more particularly described in EXHIBIT "C-1"
attached hereto (the "SAN TOMAS LAND"), (ii) any and all improvements owned by
Seller and located on the San Tomas Land (the "SAN TOMAS IMPROVEMENTS"), and
(iii) the personal property owned by Seller and located on the San Tomas Land
listed on EXHIBIT "C-2" attached hereto (collectively, the "SAN TOMAS PERSONAL
PROPERTY"). The San Tomas Land, San Tomas Improvements, and San Tomas Personal
Property are herein referred to collectively as the "SAN TOMAS PROPERTY."
D. That certain improved real property located in the City of
Sacramento, County of Sacramento, State of California, commonly known as
Commerce Park - Sacramento, 1787 Tribute Road, Sacramento, California,
consisting of (i) that certain real property more particularly described in
EXHIBIT "D-1" attached hereto (the "SACRAMENTO LAND"), (ii) any and all
improvements owned by Seller and located on the Sacramento Land (the "SACRAMENTO
IMPROVEMENTS"), and (iii) the personal property owned by Seller and located on
the Sacramento Land and listed on EXHIBIT "D-2" attached hereto (collectively,
1
<PAGE> 6
the "SACRAMENTO PERSONAL PROPERTY"). The Sacramento Land, Sacramento
Improvements, and Sacramento Personal Property are herein referred to
collectively as the "SACRAMENTO PROPERTY."
The Anaheim Land, Sunnyvale Land, San Tomas Land and Sacramento Land are
sometimes hereinafter referred to collectively as the "LAND" and individually as
a "REAL PROPERTY SITE." The Anaheim Improvements, Sunnyvale Improvements, San
Tomas Improvements and Sacramento Improvements are sometimes hereinafter
referred to collectively as the "IMPROVEMENTS." The Anaheim Personal Property,
Sunnyvale Personal Property, San Tomas Personal Property and Sacramento Personal
Property are sometimes hereinafter referred to collectively as the "PERSONAL
PROPERTY." The Anaheim Property, Sunnyvale Property, San Tomas Property and
Sacramento Property are sometimes hereinafter referred to collectively as the
"PROPERTY" or "PROPERTIES" and individually as a "PROJECT SITE."
The terms and conditions of this Agreement and the instructions to
Chicago Title Insurance Company ("ESCROW HOLDER") with regard to the escrow
("ESCROW") created pursuant hereto are as follows:
1. PURCHASE AND SALE. FOR VALUABLE CONSIDERATION, the receipt and
sufficiency of which are hereby acknowledged, Seller agrees to sell the Property
to Buyer, and Buyer agrees to purchase the Property from Seller, upon the terms
and conditions set forth in this Agreement.
2. PURCHASE PRICE. The purchase price for the Property shall be
Fifty-seven million-six-hundred thousand Dollars ($57,600,000) ("PURCHASE
PRICE"), payable as set forth in this Section 2.
2.1 Initial Deposit. Concurrent with Buyers execution and delivery of
this Agreement to Seller, Buyer shall deposit or cause to be deposited with
Escrow Holder in good and immediately available federal funds, the sum of Six
Hundred Twenty-Five Thousand Dollars ($625,000.00) ("INITIAL DEPOSIT"), which
Initial Deposit (together with all accrued interest thereon) shall be applied
toward payment of the Purchase Price upon the Close of Escrow (as hereafter
defined). If Buyer fails to timely deliver the Initial Deposit in accordance
with this Section, Seller shall have the unilateral right at any time to
terminate this Agreement by delivery of written termination notice to Buyer and
Escrow Holder. On the Contingency Date (as defined in Section 5.2 hereof),
unless Buyer has timely elected to terminate this Agreement and the Escrow
pursuant to and in accordance with Section 5 hereof, Escrow Holder is
irrevocably authorized and instructed, without further instructions from Buyer,
to immediately release the Initial Deposit to Seller. Buyer acknowledges that
the Initial Deposit shall be released to Seller prior to the Closing, and Buyer
releases the Escrow Holder from all liabilities and claims arising out of Escrow
Holder's compliance with the terms of this Section 2.1.
2.2 Additional Deposit.
(a) On the Contingency Date (as defined in Section 5.2 hereof),
unless Buyer has timely elected to terminate this Agreement and the Escrow
pursuant to and in accordance with Section 5 hereof, Buyer shall deposit with
Escrow Holder in good and immediately available federal funds the additional
amount of One Million Two
2
<PAGE> 7
Hundred Fifty Thousand Dollars ($1,250,000.00) (the "ADDITIONAL DEPOSIT"), and
Escrow Holder is irrevocably authorized and instructed, without further
instructions from Buyer, to immediately upon receipt release the Additional
Deposit to Seller. Buyer acknowledges that the Additional Deposit shall be
released to Seller prior to the Closing, and Buyer releases the Escrow Holder
from all liabilities and claims arising out of Escrow Holder's compliance with
the terms of this Section 2.2. The Additional Deposit and the Initial Deposit
totaling One Million Eight Hundred Seventy-Five Thousand Dollars ($1,875,000)
are collectively referred to herein as the "DEPOSIT," and the term Deposit shall
include and refer to both the Initial Deposit and, from and after the
Contingency Date, the Additional Deposit. The Additional Deposit shall for all
purposes be treated the same as the Initial Deposit.
(b) If Buyer fails to timely deliver the Additional Deposit in
accordance with this Section, Seller shall have the unilateral right to
terminate this Agreement and the Escrow by delivering written termination notice
to Buyer and Escrow Holder at any time. In the event Seller terminates this
Agreement and the Escrow pursuant to this Section, the Initial Deposit shall be
released to Seller in accordance with Section 2.1 above on the Contingency Date
(if not already released) and retained by Seller in accordance with Section 34
of this Agreement as Seller's sole remedy for Buyer's breach of this Section.
2.3 CLOSING FUNDS. Not later than 10:00 a.m. Pacific Time one (1)
Business Day prior to the Close of Escrow, Buyer shall deposit or cause to be
deposited with Escrow Holder, in the form of a confirmed wire transfer of
immediately available federal funds, the balance of the Purchase Price, plus
such amounts, if any, in immediately available funds as may be required to pay
Buyer's share of prorations and closing costs as hereinafter set forth.
2.4 INTEREST ON DEPOSITS. Pending the release of the Initial Deposit
to Seller, all funds received from Buyer shall be deposited by Escrow Holder in
an interest-bearing account with a federally-insured state or national bank or
savings and loan association (the "Account"). All interest on funds in the
Account shall accrue for the benefit of Buyer (provided that Buyer provides an
acceptable Form 1099 to Escrow Holder) and shall be held in Escrow as part of
the Initial Deposit. Seller shall have no obligation to pay or credit Buyer with
any interest on the Initial Deposit or the Additional Deposit whether or not
released to Seller, except that Buyer shall receive a credit for interest on the
Initial Deposit held in the Account which accrues prior to the release of such
funds to Seller pursuant to Section 2.1 above.
3. Escrow.
3.1 OPENING OF ESCROW. By not later than 5:00 p.m. Pacific Time
on the first (1st) Business Day after this Agreement is executed by Buyer and
Seller, Buyer and Seller shall open the Escrow with Escrow Holder by delivering
or causing to be delivered to Escrow Holder (a) a fully executed original of
this Agreement (or executed original counterparts of this Agreement); and (b)
Escrow Holder's standard escrow provisions in the form attached hereto as
EXHIBIT "3.1" (the "STANDARD PROVISIONS"). Provided the Escrow Holder has
received the Initial Deposit in accordance with Section 2.1 above, the deposit
with Escrow Holder of the documents described in the preceding sentence shall
constitute the opening of Escrow (the "OPENING OF ESCROW") and authorization to
Escrow Holder to act in accordance with the terms of this Agreement. In the
event of any inconsistencies between
3
<PAGE> 8
the terms and conditions of the Standard Provisions and the terms of this
Agreement, the terms of this Agreement shall control.
3.2 CLOSING. For purposes of this Agreement, the "CLOSING" or "CLOSE
OF ESCROW" shall be defined as the date that the Grant Deeds, the form of which
are attached hereto as EXHIBIT "3.2" ("DEEDS"), conveying the Land and
Improvements to Buyer, are recorded in the Official Records of Orange County,
Santa Clara County and Sacramento County, respectively, State of California and
the Purchase Price is received by Seller. This Escrow shall close on the
following date (the "Original Closing Date") (a) January 6, 1998; or (b) such
earlier date as Buyer and Seller may agree upon in writing. Not later than two
(2) Business Days before the Closing Date (as defined in Section 4 below),
Seller shall prepare and submit to Escrow Holder and Buyer a proforma closing
statement setting forth the estimated adjustments and prorations; as of the
scheduled Closing Date (the "PRORATION SCHEDULE", which adjustments and
proration shall be calculated in accordance with Section 11 below. Escrow Holder
is authorized and instructed to base its final adjustments and prorations on the
Proration Schedule.
4. EXTENSION OF ORIGINAL CLOSING DATE. Seller, at its option but without
any obligation to do so, shall have the right to extend the Original Closing
Date for three (3) consecutive periods of up to thirty (30) days each
(collectively, the "EXTENSION OPTIONS"). If Seller elects to exercise an
Extension Option, Seller shall do so by delivering written notice (the
"EXTENSION NOTICE") of Seller's election to exercise such Extension Option to
Buyer and Escrow Holder not later than five (5) Business Days prior to the
Original Closing Date or the then existing Closing Date, as applicable. The
Extension Notice shall specify the new Closing Date. For purposes of this
Agreement, the term "CLOSING DATE" shall mean the Original Closing Date, as the
same may be extended in accordance with this Section 4. Notwithstanding anything
to the contrary contained in this Agreement, Seller shall have no obligation to
exercise any or ail of the Extension Options, and the Extension Options may be
exercised by Seller in its discretion.
5. BUYER'S EXAMINATION/REVIEWS/INSPECTIONS.
5.1 BUYER'S APPROVALS. The Close of Escrow is subject to and
contingent on the satisfaction of the following conditions within the applicable
time periods set forth in this Section 5 for the satisfaction of such
conditions:
(a) TITLE EXAMINATION. Buyer's approval of preliminary title
reports issued by Chicago Title Insurance Company ("TITLE COMPANY") for the Real
Property Sites together with copies of all exceptions set forth therein
(collectively, the "REPORTS"). Escrow Holder is authorized and instructed to
cause the Reports to be delivered to Buyer within ten (10) Business Days after
the Opening of Escrow. If, on or before fifteen (15) days following Buyer's
receipt of the Reports, Buyer delivers to Seller written notice disapproving any
items therein described (other than the Title Company's standard exceptions),
Seller shall thereafter have the right, in its discretion but without any
obligation to do so, to elect to attempt to cure such matters as Buyer shall
have so disapproved on or before thirty (30) days following Seller's receipt of
Buyer's written disapproval notice. Seller shall give a written notice to Buyer
within said thirty (30) day period stating whether or not Seller elects to
attempt to cure said disapproved matters. If Seller fails to give written notice
within such thirty (30) day period that Seller elects to attempt to cure such
disapproved matters, Seller shall be deemed to have elected not to attempt to
cure such matters. If Seller notifies (or is
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deemed to have notified) Buyer that it elects not to attempt to cure any such
disapproved matters, Buyer shall have the right, by a writing delivered to
Seller and Escrow Holder on or before the date which is three (3) Business Days
following the date Buyer receives Seller's notice electing not to cure or the
date on which Seller is deemed to have elected not to cure if Seller provides no
notice, whichever occurs first, to terminate the Escrow and this Agreement by
giving written notice of such termination to Seller and Escrow Holder within
such three (3) Business Day period. If Seller notifies Buyer that Seller elects
to attempt to cure any such disapproved matter, and Seller thereafter determines
in its discretion that it is unable or unwilling to continue to attempt to cure
any such matter, Seller shall notify Buyer of such fact (the "Cure Cessation
Notice") not later than seven (7) Business Days before the Closing Date, Buyer's
sole and exclusive right in the event that Seller so notifies Buyer is to
terminate the Escrow and this Agreement by giving written notice to Seller and
Escrow Holder on or before the date which is three (3) Business Days following
the date Buyer receives the Cure Cessation Notice. Buyer's failure to timely
give any written disapproval in accordance with this Section 5.1 conclusively
shall be deemed Buyer's approval of all matters set forth on the Reports, other
than delinquent taxes and Seller's mortgages which Seller shall remove on or
before the Closing Date, and Buyers failure to timely deliver a written
termination notice following (i) Seller's election not to attempt to cure any
disapproved items, or (ii) Seller's delivery to Buyer of the Cure Cessation
Notice, conclusively shall be deemed Buyer's waiver and approval of all such
previously disapproved matters in accordance with this Section.
(b) BUYER'S REVIEWS. Buyer's approval of the documents and items
set forth in this Section 5.1 (b) ("REVIEW MATTERS") by no later than 5:00 p.m.
Pacific Time on November 20th, 1997 (the "CONTINGENCY DATE"). Seller shall make
the Review Matters available to Buyer within five (5) days after the Opening of
Escrow; provided, however, that the Review Matters shall only be available to
the extent such items exist (either copies or originals) and are located either
at Seller's property management office at the Improvements or at the Seller's
office at 2222 Corinth, Second Floor, Los Angeles California ("REVIEW
LOCATIONS"). Further, the Review Matters shall only be available at the Review
Locations for copying and inspection by Buyer at Buyer's expense and upon prior
reasonable notice to Seller, and the Review Matters may not be removed from such
locations. If Buyer, on or before the Contingency Date, fails to disapprove, in
a writing delivered to Seller and Escrow Holder, any of the following Review
Matters, Buyer conclusively shall have been deemed to have approved all such
Review Matters and all information contained or referred to therein:
(i) All existing leases and amendments thereto currently
affecting the Land and Improvements ("LEASES");
(ii) Plans and specifications for the Improvements;
(iii) All existing service agreements, maintenance
agreements, brokerage contracts, and listing agreements currently affecting the
Land and Improvement which will survive the Closing Date, all of which the
Property shall be subject to when the Property is transferred to Buyer on the
Closing Date (collectively, the "CONTRACTS");
(iv) A schedule or schedules ("Rent Roll") prepared by
Seller containing (A) the names of the tenants, identification of the premises,
and current rental income payable under each of the Leases; (B) expiration date
of each of the Leases;
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and (C) the amount of any security deposits currently held by Seller under each
of the Leases (the "Tenant Security Deposits"); and
(v) The most recent real property tax statements for the
Land and Improvements;
(vi) A general description of the Personal Property, if
Exhibits A-2, B-2, C-2 and D-2 indicate that the description of the Personal
Property is to be provided by Seller after the date of this Agreement;
(vii) Operating statements for the Property prepared by or
for Seller in the ordinary course of business for the eighteen (18) month period
preceding the date of the Opening of Escrow; and
(viii) Such other books, records, documents, and other
information relating to the Property which Seller makes available at the Review
Locations for Buyer's examination or which Seller has otherwise delivered or
caused to be delivered to Buyer.
Seller makes no representations or warranties of any kind, either express or
implied, including without limitation as to the accuracy and/or content, with
regard to any of the foregoing Review Matters. Buyer agrees and acknowledges
that each and all of the Review Matters are confidential, and Buyer covenants
and agrees not to report, publish, share, circulate, disseminate or otherwise
reveal or cause or permit to be reported, published, shared, circulated,
disseminated or otherwise revealed, to any party, person or entity any or all of
the Review Matters or any information therein or item or circumstance relating
thereto, except to Buyer's contractors and advisors as and only to the extent
necessary for this transaction. Further, prior to delivery of any of the
foregoing to such contractors and advisors, Buyer (i) shall inform each and
every such party that such information is confidential and is subject to a
prohibition on further dissemination or circulation by any means and may only be
used as necessary for Buyer's review purposes pursuant to this Section 5.1 (b)
relating to this transaction; and (ii) shall obtain such party's agreement to
maintain the confidentiality of the Review Matters in accordance with the terms
of this Agreement. In the event this Agreement terminates for any reason, and as
a condition to the release of the Deposit to Buyer if Buyer is otherwise
entitled to such release under this Agreement, Buyer shall return to Seller all
Review Matters previously provided to or obtained by or on behalf of Buyer or
any of its agents from or at Seller's direction, without Buyer maintaining any
copies thereof. Buyer agrees that if the confidentiality provisions contained in
this Section 5.1(b) are breached, the remedy at law may be inadequate and,
therefore, without limiting any other remedy available at law or equity, an
injunction, specific performance or other forms of equitable relief, or any
combination thereof, shall be available to Seller.
(c) BUYER'S INSPECTION. Buyer's approval of a physical inspection
of the Property on or before the Contingency Date, including all conditions
relating to the presence, existence, or use of Hazardous Materials (as such term
is defined in Section 16 below) on or under the Property. Buyer and its agents
shall have the right to make up to three (3) visits of no more than two (2)
consecutive days each to each Project Site during normal business hours at a
time mutually acceptable to Buyer and Seller and upon not less than forty-eight
(48) hours prior written request to Seller, to make, at Buyer's sole cost and
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expense, those inspections and surveys of the Property as Buyer may desire;
provided, however, that without Seller's prior written consent (which consent
may be withheld in Seller's discretion), Buyer shall not be entitled (1) to
perform or cause to be performed any invasive or destructive actions, punctures
or drilling of any kind; and (2) to initiate any inquiry or request (including
any inquiry or request relating to any zoning variance, zone change, or
conditional use permit) directed at any governmental official with respect to
the Property; provided, however, that nothing in this clause (2) shall be deemed
to prevent Buyer from inspecting or reviewing any or all records of any federal,
state, or local governmental authority. Buyer shall not be entitled to enter the
Property without being accompanied by a designated representative of Seller.
Buyer shall use all due care and consideration in connection with its
inspections and shall comply with all applicable laws. Buyer shall immediately
repair any and all damage resulting from the acts or omissions of Buyer or
Buyer's agents, employees, contractors, representatives or subcontractors
relating to the whole or any part of the Property. Buyer shall indemnify, defend
and hold Seller harmless from and against any and all expenses, costs, fees,
suits, actions, obligations, liabilities and damages (including attorneys' fees
and costs) directly or indirectly resulting from such entry, acts or omissions
by Buyer, its agents, employees, representatives, contractors or subcontractors.
Buyer shall not cause or permit in any way any liens or encumbrances upon or
relating to any Property or any interest therein as a result of Buyer's or
Buyer's agents', employees', contractors', subcontractors' or representatives'
acts or omissions with regard to the Property. Buyer may, not later than the
Contingency Date, give a written termination notice to Seller disapproving (with
specific detail) the results of any such surveys and inspections. If Buyer does
not timely give notice of disapproval as aforesaid, then Buyer conclusively
shall be deemed to have approved the results of the inspections and the
condition of the Property. Any qualified or conditional approval of any of the
matters set forth in this Section 5.1(c) shall conclusively be deemed to
constitute Buyer's disapproval of such matter. Commencing with Buyer's execution
of this Agreement and at all times prior to the Close of Escrow, Buyer shall
have in effect workers compensation and employer's liability insurance with
statutory limits of coverage as required by law, and with a limit of liability
for coverage B of at least $1,000,000 each occurrence/aggregate, and commercial
general liability insurance naming Seller as an additional insured, with (i)
commercially reasonable coverage; (ii) waiver of subrogation; and (iii) limits
of not less than $1,000,000 combined single limit for bodily and personal injury
and property damage. Prior to entering the Property, Buyer shall deliver to
Seller certificates of insurance evidencing such coverage and further evidencing
that such coverage may only be terminated or modified upon thirty (30) day's
prior written notice to Seller. Buyer's indemnity, defense and other obligations
and covenants in this Section shall survive any termination of this Agreement or
the Closing, as applicable.
5.2 FUNDING APPROVAL. The obligations of Buyer under this Agreement
are not subject to or contingent upon in any way Buyers receipt of approval of
funding or obtaining any financing from any source, and Buyer covenants and
agrees to pay the Purchase Price in all cash regardless of any financing
arrangements Buyer may pursue.
5.3 TERMINATION. This Agreement and the Escrow shall terminate upon
(a) Buyer's disapproval of any of the matters described in Sections 5.1(a)
(subject to Seller's right to cure disapproved title matters), 5.1(b) or 5.1(c)
above or Section 14.1, below within the applicable time periods set forth in
such Sections; or (b) failure of the condition set forth in Section 8.1.3 below
to occur within the applicable time period set forth in such Section, and
Buyer's failure to waive such condition. Upon any termination of this Agreement
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pursuant to this Section 5.3, or pursuant to Section 9 below, (i) each party
shall execute such documents as Escrow Holder may reasonably require to evidence
such termination, (ii) Escrow Holder shall return all documents to the party who
deposited them, (iii) Escrow Holder shall return to Buyer all funds held in
Escrow previously deposited in Escrow by Buyer (plus any accrued interest to
which Buyer is entitled), less Escrow Holder's, termination fees and the Title
Company's cancellation fees, (iv) Buyer shall return to Seller all documents
delivered to it by Seller relating to the Property, (v) Seller shall return to
Buyer any portion of the Deposit previously delivered to Seller, and (vi) except
as specifically set forth in this Agreement, all of the respective obligations
of Buyer and Seller relating to this Agreement and the Property shall terminate.
5.4 ALLOCATION OF PURCHASE PRICE. Not later than ten (10) Business
Days prior to the Contingency Date, Seller shall have the right to provide Buyer
with a written statement showing Seller's allocation of the Purchase Price among
each of the Properties (the "Allocation Schedule"). If Seller elects to provide
the Allocation Schedule to Buyer, then Buyer shall report the transactions
contemplated by this Agreement for state and federal tax purposes in a manner
consistent with the allocation of the Purchase Price shown in the Allocation
Schedule.
5.5 NO OBLIGATION BY SELLER TO CORRECT DEFECTS. WITHOUT LIMITING ANY
OF THE OTHER TERMS OF THIS AGREEMENT, BUYER ACKNOWLEDGES AND AGREES THAT SELLER
SHALL HAVE NO OBLIGATION OF ANY KIND TO CORRECT OR OTHERWISE ADDRESS ANY
DEFICIENCY OR DEFECT OF ANY KIND WHICH BUYER CLAIMS TO EXIST BASED UPON BUYER'S
INSPECTION OR REVIEW OF ANY OR ALL OF THE MATTERS WHICH ARE THE SUBJECT OF THIS
SECTION 5.
6. DEPOSITS BY SELLER. Seller shall execute and acknowledge (where
appropriate), and deposit with Escrow Holder not later than 2:00 p.m. Pacific
Time one Business Day prior to the Closing Date for delivery to Buyer upon the
Closing Date or, if applicable, for recordation upon the Closing Date the
following documents and instruments:
(a) The Deeds conveying the Land and Improvements to Buyer;
(b) An Assignment of Leases ("ASSIGNMENT OF LEASES"), the form of
which is attached hereto as EXHIBIT "6(b)," pursuant to which (i) Seller assigns
to Buyer all of Seller's right, title and interest in and to the Leases; and
(ii) Buyer assumes Seller's obligations under the Leases as of the Closing Date;
(c) The Contracts;
(d) An Assignment of Contracts ("ASSIGNMENT OF CONTRACTS"), the form
of which is attached hereto as EXHIBIT "6(d)", pursuant to which (i) Seller
assigns to Buyer all of Seller's right, title and interest in and to the
Contracts; and (ii) Buyer assumes all of Seller's obligations under such
Contracts as of the Closing Date;
(e) A Bill of Sale ("BILL OF SALE"), the form of which is attached
hereto as EXHIBIT "6(e)", conveying all of Seller's right, title and interest in
and to any and all Personal Property; and
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(f) A Certification of Non-Foreign Status, executed by Seller
pursuant to Section 1445 et seq. of the Internal Revenue Code of 1986, as
amended, the form of which is attached hereto as EXHIBIT "6(f)".
7. DEPOSITS BY BUYER. Buyer shall deposit or cause to be deposited with
Escrow Holder the funds which are to be applied towards the payment of the
Purchase Price in the manner and in the amounts and at the times designated in
Section 2 above, less the aggregate of all unapplied Tenant Security Deposits
and increased or decreased by such other adjustments resulting from the
prorations conducted pursuant to this Agreement and reflected on the Proration
Schedule. In addition, Buyer shall execute and acknowledge where appropriate and
deposit with Escrow Holder not later than one (1) Business Day prior to the
Closing Date for delivery to Seller upon the Closing Date counterparts of (i)
the Assignment of Leases, and (ii) the Assignment of Contracts.
8. CONDITIONS OF CLOSING.
8.1 BUYER'S CONDITIONS. In addition to the other terms and provisions
of this Agreement which give Buyer the express right to terminate this Agreement
and the Escrow created pursuant to this Agreement, Buyer's obligation to
purchase the Property from Seller at the Close of Escrow shall be subject to the
satisfaction of the following conditions (or Buyer's written waiver thereof, it
being agreed that Buyer may waive any or all of such conditions) within the
applicable periods set forth in this Agreement for the satisfaction of such
conditions:
8.1.1 TITLE INSURANCE. It shall be a condition to Buyer's
obligation to purchase the Property at the Close of Escrow that, on the Closing
Date, the Title Company be prepared and committed to issue to Buyer a CLTA
Standard Coverage Owner's Title Insurance Policy for each of the Real Property
Sites (collectively "TITLE POLICIES" and individually "TITLE POLICY"), each
written with liability in the amount of that portion of the Purchase Price
allocated to the applicable Project Site pursuant to Section 5.4 above, showing
fee title vested in Buyer, subject only to (i) liens to secure payment of
general and special property taxes, not delinquent, (ii) supplemental taxes, if
any, assessed pursuant to the provisions of Part 0.5, Chapter 3.5 or Part 2,
Chapter 3, Articles 3 and 4, respectively (commencing with Section 75) of the
California Revenue and Taxation Code; (iii) the Title Company's standard and
customary exceptions set forth in said Title Policy, (iv) matters affecting the
condition of title created by, with the consent of, or which attach through
Buyer or as a result of Buyer's or Buyer's agents', employees', contractors' or
representatives' activities, (v) the Leases and all matters relating to
tenants-in-possession under the Leases, (vi) the Contracts, and (vii) those
title matters approved or waived (or deemed approved or waived) by Buyer
pursuant to Section 5 above;
8.1.2 DELIVERY OF DOCUMENTS BY SELLER. Seller shall have
delivered or caused to be delivered to the Escrow Holder all of the documents
described in Section 6 above; and
8.1.3 TENANT ESTOPPEL CERTIFICATES. Buyer shall have received
tenant estoppel certificates substantially in the form of EXHIBIT "8.1.3"
attached hereto or in a form containing information substantially comparable to
the information contained in EXHIBIT "8.1.3" attached hereto (collectively, the
"ESTOPPEL CERTIFICATES") from tenants under the Leases (collectively, the
"TENANTS") who, collectively, occupy a total of at
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least sixty percent (60%) of the total rentable square footage in the
Improvements occupied by all Tenants as of the Opening of Escrow (the "TARGET
PERCENTAGE"). Seller shall use its reasonable efforts to deliver the Target
Percentage of completed Estoppel Certificates to Buyer on or before the date
which is ten (10) days prior to the Closing Date (the "ESTOPPEL DELIVERY
DATE"); provided, however, that (i) Seller conclusively shall be deemed to have
used its reasonable efforts to deliver the Target Percentage of Estoppel
Certificates to Buyer in accordance with this Section if Seller has submitted a
written request to Tenants who, collectively, occupy at least sixty percent
(60%) of the total rentable square footage in the Improvements occupied by
Tenants as of the Opening of Escrow requesting that each of such Tenants
complete, sign and return an Estoppel Certificate to Seller not later than one
(1) day before the Estoppel Delivery Date; and (ii) Seller shall have no
liability of any kind to Buyer as a result of Seller's failure for any reason to
obtain or deliver any or all of the Estoppel Certificates to Buyer pursuant to
this Section, as long as (A] Seller has complied with clause (i) of this Section
8.1.3; and [B] Seller delivers to Buyer all signed and completed Estoppel
Certificates actually received by Seller from the Tenants as of the last
Business Day prior to the Estoppel Delivery Date. If Seller determines that it
is unable to obtain an Estoppel Certificate from one or more Tenants, Seller, in
its discretion but without any obligation to do so, shall have the right to
deliver to Buyer on or before the Estoppel Delivery Date Seller's written
certification as to the truth and accuracy of the matters set forth in the
Estoppel Certificate for any or all Tenants who have not executed an Estoppel
Certificate (such certification by Seller is referred to as a "Substitute
Estoppel Certificate"), and any such Substitute Estoppel Certificates shall be
accepted by Buyer in lieu of Estoppel Certificates, signed by the applicable
Tenants, provided that the information contained in such Substitute Estoppel
Certificates is consistent with the information in the applicable Leases which
have been approved by Buyer. Nothing contained in this Section shall be deemed
to obligate Seller to make any monetary payment or pay any other consideration
of any kind to a Tenant in order to obtain an Estoppel Certificate from such
Tenant. If Seller fails to deliver the Target Percentage of Estoppel
Certificates (including any Substitute Estoppel Certificates) to Buyer by the
Estoppel Delivery Date (the delivery of the Target Percentage of Estoppel
Certificates (including any Substitute Estoppel Certificates) is referred to as
the "ESTOPPEL CONDITION"), Buyer may give written notice to Seller and Escrow
Holder on or before 5:00 p.m. Pacific Time on the day which is two (2) Business
Days after the Estoppel Delivery Date (the "ESTOPPEL NOTICE DATE") of Buyer's
election to terminate this Agreement based on the failure to satisfy the
Estoppel Condition. Upon such notification by Buyer, this Agreement and the
Escrow shall terminate, subject to the remaining terms of this Section. Buyer's
failure to notify Seller and Escrow Holder that the Estoppel Condition has not
been satisfied within the time period described in this Section conclusively
shall be deemed to constitute Buyer's waiver of the Estoppel Condition. Buyer's
sole and exclusive right in the event that the Estoppel Condition is not
satisfied shall be to terminate this Agreement in accordance with this Section.
If the Estoppel Condition is not satisfied and Buyer elects to terminate this
Agreement, then notwithstanding anything to the contrary contained in this
Agreement, this Agreement and the Escrow shall not terminate and shall remain in
full force and effect, and the Estoppel Condition shall be deemed to be
satisfied, if (1) within two (2) Business Days after the Estoppel Notice Date,
Seller, in its discretion but without any obligation to do so, delivers to Buyer
Substitute Estoppel Certificates which, when considered together with the signed
Estoppel Certificates and any other Substitute Estoppel Certificates previously
delivered to Buyer, will result in Buyer having received the Target Percentage
of Estoppel Certificates (including any Substitutes Estoppel Certificates); and
(2) the information contained in such Substitute Estoppel Certificates is
consistent with the information in the applicable Leases which have been
approved by Buyer. The certifications by Seller
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contained in any and all Substitute Estoppel Certificates shall expire and
terminate upon Buyer's subsequent receipt of an Estoppel Certificate signed by
the applicable Tenant containing information which is consistent with Seller's
certifications. Nothing contained in this Section shall be deemed to obligate
Seller to provide Buyer with any Substitute Estoppel Certificate or other
certification with respect to any unsigned Estoppel Certificate, and Seller may
decline to provide any such Substitute Estoppel Certificate or certification to
Buyer in Seller's discretion.
If any of the foregoing are not timely satisfied or waived by Buyer,
Buyer shall have the right to terminate this Agreement on the Closing Date by
delivering written termination notice to Seller.
8.2 SELLER'S CONDITION. In addition to the other terms and provisions
of this Agreement which give Seller the right to terminate this Agreement and
the Escrow created pursuant hereto, Seller's obligation to sell the Property to
Buyer shall be subject to the satisfaction of the following condition (or
Seller's written waiver thereof, it being agreed that Seller may waive such
condition): As of the Closing Date, Buyer shall have delivered or caused to be
delivered to the Escrow Holder all of the documents and funds described in
Sections 2 and 7 above, including the full Purchase Price. If the foregoing is
not timely satisfied or waived by Seller, Seller shall have the right to
terminate this Agreement on the Closing Date by delivering written termination
notice to Buyer.
9. DAMAGE OR CONDEMNATION PRIOR TO CLOSING. This Agreement is subject to
the provisions of California Civil Code Sections 1662 (the "Statute").
9.1 CONDEMNATION. For the purposes of the Statute, a taking by
eminent domain of a portion of the Property shall be deemed to affect a
"material part" of the Property if (a) the taking would result in the inability
to occupy any or all of the rentable space in the Improvements: (b) the taking
would materially interfere with access to the Property; or (c) the taking would
reduce the number of parking spaces now located on the Property. In the event of
a taking of a "material part" of the Property prior to the Closing Date, Buyer
and Seller shall each have the right to terminate this Agreement by giving
written notice to Escrow Holder and the other party within three (3) Business
Days after the party giving such notice learns of such taking. In the event of a
taking by eminent domain of less than a "material part" of the Property, this
Agreement shall remain in full force and effect, and Buyer and Seller shall
proceed to the Close of Escrow without reduction or abatement of the Purchase
Price, except that Seller shall assign to Buyer all of Seller's rights against
the condemning authority at the Close of Escrow. Seller shall execute such
documents or instruments as may reasonably be required to effect such an
assignment. Any such assignment shall be without representation or warranty by,
or recourse to, Seller.
9.2 CASUALTY LOSS.
9.2.1 CASUALTY OVER $1,000,000. For the purposes of the Statute,
a casualty shall be deemed to be "material" if the estimated cost of repair of
such casualty exceeds $1,000,000. In the event of any casualty to the Property
prior to the Close of Escrow having an estimated cost of repair which equals or
exceeds $1,000,000, Buyer and Seller shall each have the right to terminate this
Agreement by giving written notice to Escrow Holder and the other party within
three (3) Business Days after the party giving such notice learns of such
casualty and the estimated cost of repair thereof. In the event Buyer or
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Seller terminates this Agreement because of such casualty, the Escrow shall
terminate in accordance with Section 5.6 above. If neither Buyer nor Seller
elects to terminate this Agreement, then this Agreement shall remain in full
force and effect and there shall be no reduction or abatement in the Purchase
Price of the Property, except that Seller shall, at the Close of Escrow, assign
to Buyer all insurance proceeds payable with respect to such casualty under the
policies of insurance maintained by Seller and credit Buyer with the lesser of
(i) the amount of any applicable deductible under such policies; or (ii) an
amount equal to the estimated cost of repair of such casualty. Any such
assignment shall be without representation or warranty by, or recourse to,
Seller.
9.2.2 CASUALTY UNDER $1,000,000. In the event of a casualty to
the Property prior to the Close of Escrow having an estimated cost of repair
which is less than $1,000,000, this Agreement shall remain in full force and
effect and there shall be no reduction or abatement in the Purchase Price of the
Property, except that Seller shall, at the Close of Escrow, assign to Buyer all
insurance proceeds payable with respect to such casualty under the policies of
insurance maintained by Seller and credit Buyer with the lesser of ((a) the
amount of any applicable deductible under such policies; or (b) an amount equal
to the estimated cost of repair of such casualty. Any such assignment shall be
without representation or warranty by, or recourse to, Seller.
9.2.3 COST OF REPAIR. For purposes of this Section 9.2, the
phrase "estimated cost of repair" shall mean an estimate obtained from a
reputable independent contractor selected by Seller and approved by Buyer, which
approval Buyer agrees not to unreasonably withhold or delay. In the event of a
casualty to the Property prior to the Close of Escrow, the Closing Date shall
automatically be extended by a period equal to five (5) Business Days plus the
period of time reasonably required for Seller to obtain an estimate of the cost
of repair of such casualty (which period of time shall not exceed thirty (30)
days).
9.2.4 INSURANCE. Pending the Close of Escrow, Seller, at its
expense, shall maintain the existing standard fire and extended coverage
insurance policies or maintain comparable casualty insurance coverage; provided,
however, that Seller shall have no obligation to modify or supplement any
existing insurance policies.
10. COSTS AND EXPENSES.
10.1 SELLER'S COSTS. Seller shall pay (a) one-half of Escrow Holder's
fees (except upon termination of this Agreement pursuant to Section 5 above, in
which case Escrow Holder's cancellation fee shall be paid by Buyer); (b)
one-half of the county documentary transfer taxes for the Deeds; (c) one-half of
any city documentary transfer taxes; (d) the cost of the Title Policies; and (e)
any other closing costs customarily charged to sellers for recording documents.
10.2 BUYER'S COSTS. Buyer shall pay (a) one-half of Escrow Holder's
fees (except upon termination of this Agreement pursuant to Section 5 above, in
which case Escrow Holder's cancellation fee shall be paid by Buyer); (b) any
other closing costs customarily charged to buyers for document preparation,
recording documents, and miscellaneous items; (c) Buyer's pro rata portion of
taxes and other items pursuant to the prorations described in Section 11 of this
Agreement; (d) one-half of the county documentary transfer taxes for the Deeds;
(e) one-half of any city documentary transfer taxes; and (f) the
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cost of any endorsements to the Title Policy requested by Buyer and the
additional cost of ALTA owner's policies of title insurance, if Buyer desires to
obtain such a policies in place of the Title Policies; provided, however, that
the issuance of any such endorsements and the issuance of ALTA owner's policies
of title insurance shall not constitute conditions or contingencies to the Close
of Escrow or delay the Closing Date.
11. PRORATIONS CREDITS. All prorations under this Section (i) shall be
made as of 12:00 midnight on the day immediately preceding the Close of Escrow
(the "Proration Cutoff'); and (ii) shall be made on the basis of a thirty (30)
day month. The following items shall be credited to the parties or shall be
prorated by the parties as of the Close of Escrow, as applicable, with the
Seller responsible for expenses and entitled to revenues accruing prior to the
Proration Cutoff, and Buyer responsible for expenses and entitled to revenues
accruing after the Proration Cutoff:
(a) Escrow Holder shall prorate the real estate taxes with respect to
the Land and Improvements for the current fiscal year as of the Close of Escrow
based upon the most current real estate tax information available:
(b) Buyer and Seller acknowledge that if there has been completion of
construction of improvements to the Property, additional or supplemental taxes
("Supplemental Taxes") may be assessed against the Property pursuant to Chapter
498, Statutes of 1983, of the State of California. Any bill for Supplemental
Taxes which is not provided to Escrow Holder or which is issued after the Close
of Escrow shall be prorated between Buyer and Seller outside of Escrow after the
Close of Escrow, and Escrow Holder shall have no liability or responsibility
whatsoever with respect to such Supplemental Taxes. Buyer shall remit its pro
rata share of any such Supplemental Taxes, as reasonably determined by Seller,
to Seller outside of Escrow within ten (10) days after Buyer's receipt of a copy
of the bill for such Supplemental Taxes;
(c) Rents and other receivables under the Leases (collectively,
"Rents") shall be prorated based on the Proration Schedule delivered to the
Escrow Holder. If Seller collects any Rents after the Closing which are
attributable to any period of time from and after the Closing Date, Seller shall
remit such Rents directly to Buyer. If Buyer collects any Rents after the Close
of Escrow which are attributable to any period of time prior to the Close of
Escrow, Buyer shall promptly remit such Rents directly to Seller. If Seller has
been unable to collect all Rents due and owing for periods preceding the Close
of Escrow, Buyer shall use its reasonable efforts (without obligation to
institute or prosecute any litigation) to collect such amounts from the
applicable Tenants which are in occupancy as of the Close of Escrow and upon
collection thereof shall remit the same to Seller (net of all reasonable costs
of collection incurred by Buyer);
(d) Utilities, services, operating and all other expenses with
respect to the Property shall be prorated based upon the latest available
information, such that Seller shall be responsible for all such costs and
expenses relating to the period up to and including the day prior to the Closing
Date and Buyer shall be responsible for all such costs and expenses relating to
the period from and after the day prior to the Closing Date. Seller shall
endeavor to have all meters read for all utilities servicing the Property
including, without limitation, water, sewer, gas and electricity for the period
to and including the day prior to the Closing Date and shall pay all bills
rendered on the basis of such readings (provided, however, Buyer shall be
responsible for any and all fees and charges relating to the
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changeover of all such services and utilities). If, on the Closing Date, Seller
is unable to have any utility meters read, Buyer and Seller shall estimate the
amount of such bills based on the immediately preceding utility bills. Premiums
for casualty and liability insurance shall not be prorated as Buyer will be
obtaining its own such insurance upon the Closing Date;
(e) Buyer shall be credited and Seller shall be charged with any
Tenant Security Deposits (not actually applied by Seller in accordance with the
Leases prior to the Closing Date in the ordinary course of business) made by the
Tenants under the Leases;
(f) Seller will receive a credit for all prepaid amounts of any type
relating to the Property and refundable deposits, if any, from utilities,
governmental agencies or others relating to or arising from the Property;
(g) Seller shall be responsible for insurance provided up to the
Closing Date;
(h) Income and expenses under the Contracts and all other expenses of
operating the Property which relate to the period prior to the Close of Escrow
shall accrue to or be paid by Seller, as applicable. Income and expenses under
the Contracts and all other expenses of operating the Property which relate to
the period from and after the Close of Escrow shall accrue to or be paid by
Buyer, as applicable; and
(i) Seller shall be credited and Buyer shall be charged with "Buyer's
Total Share of Approved New Lease Costs" (as such term is defined in Section
14.4 below).
If any errors or omissions are made regarding adjustments and prorations
as aforesaid, the parties shall make the appropriate corrections promptly upon
the discovery thereof, provided that the party entitled to the correction makes
a written request for such correction to the other party (accompanied by
reasonably detailed information which substantiates the error) within one
hundred twenty (120) days after the Closing Date. If any estimations are made at
the Closing Date regarding adjustments or prorations (including any with respect
to utility charges, and operating costs and expenses relating to the Property),
the parties shall make the appropriate correction on a mutually acceptable date
which is approximately one hundred twenty (120) days after the Closing Date.
Notwithstanding the previous sentence to the contrary, any adjustment required
with respect to Supplemental Taxes shall be made pursuant to Section 11(b)
above without regard to the time limitations contained in this Section. Any
mutually agreed upon corrected adjustment or proration shall be paid in cash to
the party entitled thereto promptly upon demand.
12. DISBURSEMENTS AND OTHER ACTIONS BY ESCROW HOLDER.
12.1 CLOSING. Upon the Closing Date, Escrow Holder shall promptly
undertake all of the following in the manner indicated:
(a) Disburse to Seller all funds deposited with Escrow Holder by
Buyer towards payment of the Purchase Price for the Property as follows:
(i) Deduct therefrom all items chargeable to the account
of Seller pursuant hereto;
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(ii) The remaining balance of the funds so deposited by Buyer
towards payment of the Purchase Price shall be disbursed to Seller or as Seller
may direct;
(b) Cause the Deeds and any other documents which the parties
hereto may mutually direct, to be recorded in the Official Records of Orange
County, Santa Clara County and Sacramento County, respectively, State of
California;
(c) Disburse from funds deposited by Buyer with Escrow Holder
towards payment of all closing costs chargeable to the account of Buyer pursuant
hereto such monies as are necessary to pay all said closing costs of Buyer, and
disburse the balance of such funds, if any, to Buyer;
(d) Deliver the Title Policies to Buyer.
12.2 DELIVERIES. Upon confirmation of recordation of the Deeds,
Escrow Holder shall:
(a) Deliver to Buyer the counterparts of the Bill of Sale,
Assignment of Leases, and Assignment of Contracts executed by Seller;
(b) Deliver to Seller counterparts of the Bill of Sale,
Assignment of Leases and Assignment of Contracts executed by Buyer, and
(c) Deliver to both Buyer and Seller copies of all documents
delivered to Escrow Holder or recorded pursuant to this Agreement.
13. OPERATIONS DURING ESCROW. Seller shall (and Seller shall so instruct
the Property Manager to) operate and maintain the Property from and after the
date hereof until the Closing Date in the ordinary course in substantially the
same manner and fashion (other than as may be required as a result of the sale
of the Property) as prior to this Agreement. Notwithstanding anything to the
contrary in this Agreement, from and after the Contingency Date Seller agrees
that it will not (and Seller will instruct the Property Manager not to) without
the prior written consent of the Buyer: (i) enter into any new contract (except
automatic renewals) which affects the Property or goods or services provided to
the Land or Improvements or its tenants ("Operating Contract") having a term
that extends beyond the Closing Date, except for Operating Contracts terminable
by Buyer on not more than thirty (30) days' notice to the respective vendor or
contractor without penalty to Buyer. Buyer will be deemed to have approved
matters submitted to Buyer under this Section 13 for approval if within three
(3) Business Days of notice and request for approval Buyer has not objected to
the proposed action.
14. CONDUCT OF RENTAL ACTIVITY PRIOR TO CLOSING.
14.1 RENTAL ACTIVITY PRIOR TO THE CONTINGENCY DATE. On or before the
Contingency Date, Seller shall have the right to enter into (a) any new Lease
for space in the Improvements ("New Lease"); and (b) any modification or
supplement to any existing lease ("Lease Modification") without Buyer's prior
approval. Within three (3) Business Days after executing any New Lease or Lease
Modification, Seller shall provide Buyer with a copy of such New Lease or Lease
Modification. Buyer shall have the right to approve or
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disapprove such documents as part of the Review Matters by notice given to
Seller and Escrow Holder prior to the later of (i) three (3) Business Days after
Buyer's receipt of such documents; or (ii) the Contingency Date. Buyer's failure
to disapprove any of such documents in the manner described in this Section
within the applicable time period shall conclusively be deemed to constitute
Buyer's approval of such documents. Any conditional or qualified approval by
Buyer of any of such documents shall be deemed to constitute Buyer's approval of
such documents. This Agreement and the Escrow shall terminate upon Buyer's
disapproval of any of such documents within the applicable time period set forth
in this Section.
14.2 RENTAL ACTIVITY AFTER THE CONTINGENCY DATE. Provided that Buyer
is not in default under this Agreement and this Agreement has not been
terminated pursuant to any of the terms of this Agreement, and except as
otherwise provided in this Section, between the Contingency Date and the Closing
Date Seller shall not enter into any New Lease or Lease Modification without
Buyer's approval, which approval shall not be unreasonably withheld.
Notwithstanding the immediately preceding sentence, Seller shall be entitled to
enter into any New Lease or Lease Modification without Buyer's approval,
provided that (a) in the case of a New Lease, the (i) New Lease is prepared on
Seller's standard form of lease agreement, with only such modifications as are
commercially reasonable or not material in nature; (ii) the rental rate for such
New Lease is not less than ninety-five percent (95%) of the asking rental rate
as shown on a pro forma rental rate schedule delivered by Seller to Buyer not
later than five (5) Business Days prior to the Contingency Date (such schedule
is referred to as the "Pro Forma Leasing Schedule"); (iii) the allowance for
costs of tenant improvements to be completed or paid for by Seller under the New
Lease does not exceed the pro forma tenant improvement allowance shown in the
Pro Forma Leasing Schedule; and (iv) the leasing commission payable by Seller in
connection with the New Lease does not exceed the pro forma leasing commission
shown in the Pro Forma Leasing Schedule; and (b) in the case of a Lease
Modification, the Lease Modification is not material in nature. For purposes of
this Section, a Lease Modification which is not material in nature shall be
deemed to include, without limitation, an existing Lease which is renewed or
extended on a month-to-month basis or renewal or extension of an existing Lease
pursuant to the terms of such Lease or notices of renewal or extension given
pursuant to the terms of such Lease. With respect to any New Lease or Lease
Modification which requires Buyer's approval under the terms of this Section,
Buyer shall notify Seller in writing of Buyer's approval or disapproval of each
such New Lease or Lease Modification submitted to Buyer within three (3)
Business Days after Buyer's receipt thereof. Buyer's failure to disapprove any
New Lease or Lease Modification in accordance with the procedure and within the
three-day period specified in this Section shall conclusively be deemed to
constitute Buyer's approval of such New Lease or Lease Modification. Any notice
of disapproval of a New Lease or Lease Modification by Buyer shall set forth
Buyer's specific objections thereto. Any conditional or qualified approval by
Buyer of any New Lease shall be deemed to constitute Buyer's approval of such
New Lease or Lease Modification. Seller shall have the right to submit a New
Lease or Lease Modification to Buyer for approval after Seller's execution
thereof, provided that the New Lease or Lease Modification contains appropriate
conditions regarding Buyer's approval of the New Lease or Lease Modification.
14.3 CERTAIN DEFINITIONS. For purposes of this Section 14, the
following terms shall have the following definitions:
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(a) APPROVED NEW LEASE. "Approved New Lease" means a New Lease
which (i) has been approved or deemed approved by Buyer pursuant to either
Section 14.1 or 14.2 above; or (ii) which Seller is entitled to enter into
without Buyer's approval pursuant to Section 14.2 above.
(b) NEW LEASE COMMISSION. "New Lease Commission" means, with
respect to an Approved New Lease, the total of all leasing commissions paid or
payable by Seller in connection with such Approved New Lease.
(c) TENANT IMPROVEMENT COSTS. "Tenant Improvement Costs" means,
with respect to an Approved New Lease, the total of all tenant improvement costs
paid or payable by Seller in connection with such Approved New Lease.
(d) APPROVED NEW LEASE COSTS. "Approved New Lease Costs" means,
with respect to an Approved New Lease, the total of (i) the New Lease Commission
payable in connection with such Approved New Lease; and (ii) the Tenant
Improvement Costs payable in connection with such Approved New Lease.
(e) APPROVED NEW LEASE TERM. "Approved New Lease Term" means,
with respect to an Approved New Lease, the original term of such Approved New
Lease, expressed in the form of the number of calendar days included in such
original term.
(f) BUYER'S SHARE. "Buyer's Share" means, with respect to an
Approved New Lease, a fraction, (i) the numerator of which is the number of
calendar days in the Approved New Lease Term measured from the Close of Escrow
to the end of the Approved New Lease term; and (ii) the denominator of which is
the Approved New Lease Term.
(g) BUYER'S SHARE OF APPROVED NEW LEASE COSTS. "Buyer's Share of
Approved New Lease Costs" means, with respect to an Approved New Lease, (i)
Buyer's Share (calculated based on the Approved New Lease Term for such Approved
New Lease), multiplied by (ii) the Approved New Lease Costs for such Approved
New Lease.
(h) BUYER'S TOTAL SHARE OF APPROVED NEW LEASE COSTS. "Buyer's
Total Share of Approved New Lease Costs" means to total of Buyer's Share of
Approved New Lease Costs for all Approved New Leases.
14.4 CREDIT TO SELLER FOR BUYER'S TOTAL SHARE OF APPROVED NEW LEASE
COSTS. At the Close of Escrow, Seller shall receive a credit and Buyer shall be
charged for Buyer's Total Share of Approved New Lease Costs.
15. REPRESENTATIONS AND WARRANTIES.
15.1 SELLER'S REPRESENTATIONS. Seller makes the following
representations and warranties, each and all of which are expressly subject to
any and all matters contained or referred to in any or all of the Review Matters
and matters discovered during Buyer's inspections:
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15.1.1 AUTHORITY; BINDING ON SELLER; ENFORCEABILITY. Seller is a
limited liability company and is duly organized, validly existing and in good
standing under the laws of California. Seller has taken all necessary action to
authorize its execution, delivery and performance of, and has the power and
authority to execute, deliver and perform its obligations under, this Agreement
and all related documents executed by Seller in connection herewith and to
consummate all the transactions contemplated hereby and thereby, including the
power and authority to sell, assign and transfer the Property in accordance with
this Agreement.
15.1.2 CONFLICT WITH EXISTING LAWS OR CONTRACTS. The execution
and delivery of this Agreement does not, and the performance by Seller of its
obligations hereunder will not, to Seller's actual knowledge, conflict with any
provision of any law or regulation to which Seller is subject or conflict with
or result in a material breach of or constitute a material default under any of
the terms, conditions or provisions of any enforceable agreement or instrument
to which Seller is a party or which is known to Seller and by which it is bound
or any order or decree applicable and known to Seller, nor will such execution,
delivery and performance result in the creation or imposition of any lien on any
of Seller's assets or properties that could materially and adversely affect the
ability of Seller to discharge its obligations under and complete the
transactions contemplated by this Agreement.
15.2 BUYER'S REPRESENTATION. Buyer makes the following
representations and warranties:
15.2.1 AUTHORITY; ENFORCEABILITY. Buyer is a Maryland corporation
and is duly organized, validly existing and in good standing under the laws of
the state in which Buyer was organized. Buyer has taken all necessary action to
authorize its execution, delivery and performance of, and has the power and
authority to execute, deliver and perform its obligations under, this Agreement
and all related documents and all the transactions contemplated hereby and
thereby.
15.2.2 CONFLICT WITH EXISTING LAWS OR CONTRACTS. The execution
and delivery of this Agreement does not, and the performance by Buyer of its
obligations hereunder will not, to Buyer's actual knowledge, conflict with any
provision of any law or regulation to which Buyer is subject or conflict with or
result in a material breach of or constitute a material default under any of the
terms, conditions or provisions of any enforceable agreement or instrument to
which Buyer is a party or which is known to Buyer and by which it is bound, or
any order or decree applicable and known to Buyer, or result in the creation of
imposition of any lien on any of its assets or property which could materially
and adversely affect the ability of Buyer to discharge its obligations under and
complete the transactions contemplated by this Agreement.
15.2.3 DECISION TO PURCHASE. Buyer is a sophisticated investor,
and Buyer's offer and decision to purchase the Property are based upon its own
independent expert evaluations of the Property, the Review Matters, and other
materials deemed relevant by Buyer and its agents. In entering into this
Agreement, Buyer has not relied upon any oral or written information from
Seller, or any of its respective employees, affiliates, brokers, agents, legal
counsel or other representatives, other than the representations and warranties
set forth in Section 15.1 of this Agreement (subject, however, to the
limitations set forth in Section 21 below). Buyer further acknowledges that no
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employee, agent, broker, legal counsel or other representative of Seller has
been authorized to make, and that Buyer has not relied upon, any statements or
representations other than those specifically contained in Section 15.1 of this
Agreement.
15.2.4 INFORMATION FURNISHED TO SELLER. All information submitted
by or on behalf of Buyer to Seller or Seller's agents in connection with Buyer's
purchase of the Property, including any financial information submitted in
connection with any bids submitted by Buyer to Seller, is true and correct in
all material respects.
16. HAZARDOUS MATERIAL.
16.1 DEFINITION OF HAZARDOUS MATERIAL. As used herein, the term
"Hazardous Material" means any hazardous or toxic substance, material, or waste
which is or becomes regulated by any local governmental authority, the State of
California or the United States Government. The term "Hazardous Material"
includes, without limitation, any material or substance which is (i) defined as
"hazardous waste," "extremely hazardous waste," or "restricted hazardous waste"
under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140,
of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous
Waste Control Law), (ii) defined as a "hazardous substance" under Section 25316
of the California Health and Safety Code, Division 20, Chapter 6.8
(Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a
"hazardous material," "Hazardous substance," or "hazardous waste" under Section
25501 of the California Health and Safety Code, Division 20, Chapter 6.95
(Hazardous Materials Release Response Plans and Inventory), (iv) defined as a
"hazardous substance" under Section 25281 of the California Health and Safety
Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances),
(v) petroleum, (vi) asbestos, (vii) listed under Article 9 or defined as
"hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the
California Administrative Code, Division 4, Chapter 20, (viii) defined as a
"hazardous waste," "hazardous substance" or similar term under the Federal Water
Pollution Control Act (33 U.S.C. ss.1317), (ix) defined as a "hazardous waste"
pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act,
42 U.S.C. ss.6901 et seq. (42 U.S.C. ss.6903), or (x) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss.9601 et seq. (42 U.S.C. ss.9601).
16.2 PRESENCE OF HAZARDOUS MATERIAL. Buyer acknowledges that the
Property may or may not contain certain Hazardous Materials and that Seller
makes no representation or warranty to Buyer regarding the presence or absence
of any Hazardous Materials on or under the Property. It shall be Buyer's
responsibility under Sections 5.1(b) and 5.1(c) above to examine the Property
and to review such reports or other documents it deems necessary to satisfy
itself as to the presence or absence of any Hazardous Materials.
16.3 INDEMNIFICATION. If following Buyer's inspection of the
Property, the parties proceed to the Close of Escrow, Buyer shall indemnify,
defend and hold Seller harmless from any and all claims, demands (including
demands by any governmental agency), liabilities, costs, expenses, penalties,
damages, losses and liens, including without limitation reasonable attorneys'
fees, arising out of or with respect to (1) Hazardous Material on or under the
Property at the Close of Escrow or released on or under the Property subsequent
thereto, and (2) any clean-up of any and all Hazardous Material which might
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remain or subsequently be placed on or under the Property. The indemnity
provided for herein shall survive the Close of Escrow hereunder and shall not be
merged into the Deeds.
17. DISCLAIMER/AS IS SALE/RELEASE.
17.1 AS IS. AS A MATERIAL INDUCEMENT TO AND PART CONSIDERATION FOR
THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY SELLER AND THE PERFORMANCE BY
SELLER OF ITS DUTIES AND OBLIGATIONS HEREUNDER, AND NOTWITHSTANDING ANY CONTRARY
TERM OR PROVISION OF THIS AGREEMENT OR OTHERWISE, BUYER DOES HEREBY EXPRESSLY
ACKNOWLEDGE, REPRESENT, WARRANT AND AGREE, TO AND WITH SELLER, THAT: (i) BUYER
IS PURCHASING THE PROPERTY IN ITS "AS IS" CONDITION, WITH ALL FAULTS, AS OF THE
CLOSE OF ESCROW WITH RESPECT TO ANY AND ALL KNOWN OR UNKNOWN FACTS,
CIRCUMSTANCES, CONDITIONS AND DEFECTS, SPECIFICALLY AND EXPRESSLY WITHOUT ANY
WARRANTIES, REPRESENTATIONS OR GUARANTIES, EITHER EXPRESS OR IMPLIED, ORAL OR
WRITTEN, OF ANY KIND, NATURE OR TYPE WHATSOEVER FROM OR ON BEHALF OF SELLER OR
ANYONE PURPORTING TO ACT ON BEHALF OF OR FOR OR AT THE DIRECTION OF SELLER,
INCLUDING, BUT IN NO WAY LIMITED TO, ANY WARRANTY OF CONDITION, MERCHANTABILITY,
HABITABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR THE VALUE, ACCURACY
OF INFORMATION, MARKETABILITY, PROSPECTS FOR FUTURE DEVELOPMENT, USE OR
OCCUPANCY OR MATTERS AFFECTING SAME, AND BUYER HEREBY WAIVES ANY SUCH IMPLIED
WARRANTIES OR REPRESENTATIONS RELATING TO THE PROPERTY, THE LEASES OR ANY OTHER
MATTER AFFECTING THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE VALUE OF THE
PROPERTY OR FUTURE INCOME OR EXPENSES FOR THE PROPERTY; (ii) SELLER HAS NO
OBLIGATION TO REPAIR OR CORRECT ANY SUCH FACTS, CIRCUMSTANCES, CONDITIONS OR
DEFECTS OR COMPENSATE BUYER FOR SAME; (iii) BUYER HAS HERETOFORE UNDERTAKEN AND
WILL AS OF THE CLOSING DATE HAVE MADE ALL SUCH INQUIRIES AND INVESTIGATIONS
REGARDING THE PROPERTY AND ALL MATTERS RELATING THERETO AS BUYER DEEMS NECESSARY
OR APPROPRIATE UNDER THE CIRCUMSTANCES, AND THAT BASED UPON THE SAME, BUYER WILL
BE RELYING STRICTLY AND SOLELY UPON SUCH INQUIRIES AND THE ADVICE AND COUNSEL OF
ITS OWN AGENTS AND NOT ON ANY INFORMATION OR MATERIAL SUPPLIED BY OR ON BEHALF
OF SELLER, AND BUYER IS AND WILL BE FULLY SATISFIED THAT THE PURCHASE PRICE IS
FAIR AND ADEQUATE CONSIDERATION FOR THE PROPERTY; (iv) SELLER IS NOT MAKING AND
HAS NOT MADE AND HEREBY DISCLAIMS ANY AND ALL WARRANTIES OR REPRESENTATIONS WITH
RESPECT TO THE CONDITION OR USE OF OR OTHERWISE RELATING TO ALL OR ANY PART OF
THE PROPERTY; AND (v) BY REASON OF ALL OF THE FOREGOING, BUYER SHALL ASSUME THE
FULL RISK OF ANY LOSS OR DAMAGE OCCASIONED BY ANY FACT, CIRCUMSTANCE, CONDITION
OR DEFECT PERTAINING TO THE CONDITION OR USE OF ALL OR ANY PART OF THE PROPERTY
WHETHER KNOWN OR UNKNOWN. SELLER HEREBY EXPRESSLY DISCLAIMS ANY AND ALL
RESPONSIBILITY FOR ANY AND ALL LOSSES, CLAIMS, EXPENSES, DAMAGES, SUITS,
ACTIONS, JUDGMENTS, COSTS, OBLIGATIONS AND LIABILITIES OF ANY KIND, WHETHER
FORESEEABLE OR UNFORESEEABLE, CONSEQUENTIAL OR OTHERWISE, WITH RESPECT TO OR IN
ANY WAY RELATING TO OR INDIRECTLY OR DIRECTLY ARISING OUT OF THE PROPERTY, OR
ANY PART THEREOF OR ANY MATTER RELATING THERETO. THE PURCHASE PRICE AND OTHER
TERMS AND CONDITIONS CONTAINED IN THIS AGREEMENT ARE THE RESULT OF ARM'S-LENGTH
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NEGOTIATIONS BETWEEN PARTIES FAMILIAR WITH TRANSACTIONS OF THIS KIND, AND THE
PURCHASE PRICE AND OTHER TERMS AND CONDITIONS CONTAINED IN THIS AGREEMENT TAKE
INTO ACCOUNT THE FACT THAT BUYER IS NOT ENTITLED TO RELY ON ANY INFORMATION
PROVIDED BY SELLER, ANY OF ITS AGENTS, OR ANY OTHER PERSON ACTING FOR OR ON
BEHALF OF SELLER. ALL INFORMATION, WHETHER WRITTEN OR ORAL, PREVIOUSLY, NOW, OR
HEREAFTER MADE AVAILABLE TO BUYER BY SELLER, ITS AGENTS, OR ANY OTHER PERSON
ACTING FOR OR ON BEHALF OF SELLER, WHETHER IN THE FORM OF APPRAISALS, OFFERING
MATERIALS (INCLUDING THE INVESTMENT PROPERTY OFFERINGS DATED JUNE 1997 AND JULY
1997, RESPECTIVELY, PREPARED BY OR DISTRIBUTED THROUGH J.B. GRANT REALTY
ADVISORS AND PM REALTY GROUP), BROCHURES, MAPS, SURVEYS, SOIL REPORTS,
ENGINEERING STUDIES, ENVIRONMENTAL STUDIES, INSPECTION REPORTS, PLANS AND
SPECIFICATIONS, AND ALL OTHER REVIEW MATTERS HAVE BEEN OR WILL BE FURNISHED BY
SELLER TO BUYER SOLELY AS A COURTESY, AND NEITHER SELLER NOR ITS AGENTS HAS
VERIFIED THE ACCURACY OF SUCH INFORMATION OR THE QUALIFICATIONS OF THE PERSONS
PREPARING SUCH INFORMATION, AND BUYER IS NOT RELYING ON, AND SHALL NOT BE
ENTITLED TO RELY ON, SUCH INFORMATION IN ENTERING INTO THIS AGREEMENT AND
COMPLETING ITS PURCHASE OF THE PROPERTY PURSUANT TO THIS AGREEMENT.
17.2 BUYER'S INDEPENDENT DUE DILIGENCE. BY ENTERING INTO THIS
AGREEMENT, BUYER HAS AGREED TO PERFORM (AND BUYER REPRESENTS AND WARRANTS TO
SELLER THAT BUYER IS CAPABLE OF PERFORMING) A SOPHISTICATED, EXPERT, THOROUGH,
AND INDEPENDENT INVESTIGATION, ANALYSIS AND EVALUATION OF THE PROPERTY AND ALL
OTHER ASPECTS OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND BUYER
AGREES THAT BUYER SHALL BE CHARGED WITH KNOWLEDGE OF ALL INFORMATION WHICH IS
ACQUIRED BY BUYER AS A RESULT OF SUCH AN INVESTIGATION, ANALYSIS, AND EVALUATION
OR WHICH WOULD OR SHOULD HAVE BEEN ACQUIRED BY BUYER AS A RESULT OF SUCH AN
INVESTIGATION, ANALYSIS, AND EVALUATION. AS A MATERIAL INDUCEMENT TO AND PART
CONSIDERATION FOR THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY SELLER AND THE
PERFORMANCE BY SELLER OF ITS DUTIES AND OBLIGATIONS HEREUNDER, NOTWITHSTANDING
ANY CONTRARY TERM OR PROVISION OF THIS AGREEMENT OR OTHERWISE, AND WITHOUT
LIMITING THE GENERALITY OF THIS SECTION OR ANY OTHER PROVISION OF THIS
AGREEMENT, BUYER WARRANTS AND REPRESENTS TO SELLER AND AGREES AS FOLLOWS:
17.2.1 PHYSICAL INSPECTION. PRIOR TO THE CONTINGENCY DATE, BUYER WILL
HAVE CONDUCTED ITS OWN EXPERT, THOROUGH, AND INDEPENDENT INSPECTION,
INVESTIGATION, ANALYSIS AND EVALUATION OF THE PROPERTY AND WILL HAVE DETERMINED
SOLELY IN RELIANCE THEREON THAT THE PHYSICAL CONDITION OF THE PROPERTY IS
ACCEPTABLE TO BUYER, INCLUDING (1) ALL STRUCTURAL ELEMENTS OF THE IMPROVEMENTS
AND ALL MECHANICAL, ELECTRICAL, HEATING, AIR CONDITIONING, VENTILATION, FIRE
SAFETY, SECURITY, PLUMBING AND OTHER SYSTEMS IN THE IMPROVEMENTS OR ON OR UNDER
THE LAND; (2) ALL SOIL AND GEOLOGICAL CONDITIONS OF THE LAND; AND (3) THE
PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS IN, ON, UNDER OR AROUND ANY OR
ALL OF THE PROPERTIES. IF THE PHYSICAL CONDITION OF THE PROPERTY IS NOT
ACCEPTABLE TO BUYER, BUYER'S SOLE AND
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EXCLUSIVE REMEDY SHALL BE TO TERMINATE THIS AGREEMENT IN ACCORDANCE WITH SECTION
5.1(c) ABOVE.
17.2.2 REVIEW OF RECORDS. PRIOR TO THE CONTINGENCY DATE, BUYER
WILL HAVE HAD ACCESS TO AND WILL HAVE CONDUCTED ITS OWN EXPERT, THOROUGH, AND
INDEPENDENT INSPECTION, INVESTIGATION, ANALYSIS AND EVALUATION OF ALL
INSTRUMENTS, RECORDS AND DOCUMENTS WHICH BUYER HAS DETERMINED TO BE APPROPRIATE
OR ADVISABLE TO REVIEW IN CONNECTION WITH BUYER'S PURCHASE OF THE PROPERTY AND
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING THOSE RELATING TO ALL
ZONING REGULATIONS AND OTHER GOVERNMENTAL REQUIREMENTS, SITE AND PHYSICAL
CONDITIONS, TITLE MATTERS, AND ALL OTHER MATTERS AFFECTING THE USE, OCCUPANCY,
VALUE, AND CONDITION OF THE PROPERTY, AND BUYER WILL HAVE DETERMINED SOLELY IN
RELIANCE THEREON THAT THE INFORMATION AND DATA CONTAINED THEREIN OR EVIDENCED
THEREBY IS SATISFACTORY TO BUYER. BUYER SPECIFICALLY ACKNOWLEDGES THAT BUYER IS
NOT RELYING ON SELLER TO INDICATE THE RELATIVE IMPORTANCE OR MATERIALITY OF ANY
OF THE INSTRUMENTS, RECORDS, DOCUMENTS AND OTHER INFORMATION MADE AVAILABLE TO
BUYER FOR REVIEW AND BUYER SHALL MAKE ITS OWN DETERMINATION AS TO THE LEVEL OF
SCRUTINY IT APPLIES TO SUCH INSTRUMENTS, RECORDS AND DOCUMENTS MADE AVAILABLE TO
BUYER. WITHOUT LIMITING THE GENERALITY OF THE IMMEDIATELY PRECEDING SENTENCE, IF
AND TO THE EXTENT THAT ANY REVIEW MATTERS MADE AVAILABLE TO BUYER INCLUDE A
DISCLOSURE OF ANY POSSIBLE DEFECTS, DEFICIENCIES, OR SIMILAR MATTERS RELATING TO
THE PROPERTY, SUCH DISCLOSURE DOES NOT CONSTITUTE A COMPLETE STATEMENT OF ALL
SUCH MATTERS RELATING TO THE PROPERTY, AND BUYER ASSUMES FULL AND COMPLETE
RESPONSIBILITY FOR DETERMINING THE PRESENCE OR ABSENCE, AND NATURE AND EXTENT
OF, ANY AND ALL DEFECTS, DEFICIENCIES, OR SIMILAR MATTERS RELATING TO THE
PROPERTY AS PART OF BUYER'S INSPECTIONS AND REVIEWS UNDER SECTION 5.1 ABOVE. IF
BUYER IS NOT SATISFIED WITH ITS REVIEW OF ANY OF THE REVIEW MATTERS OR TITLE
MATTERS RELATING TO THE PROPERTY, BUYER'S SOLE AND EXCLUSIVE REMEDY SHALL BE TO
TERMINATE THIS AGREEMENT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.1(a) OR
5.1(b) ABOVE, AS APPLICABLE.
17.2.3 PURCHASE FOR BUYER'S ACCOUNT. BUYER IS PURCHASING THE
PROPERTY FOR ITS OWN ACCOUNT; PROVIDED, HOWEVER, THAT BUYER SHALL NOT BE DEEMED
TO BE IN BREACH OF THIS SECTION IF AN AUTHORIZED INVESTMENT ADVISOR OR
REPRESENTATIVE OF BUYER HAS ACTED AS AGENT FOR AND ON BEHALF OF BUYER IN THIS
TRANSACTION.
17.3 RELEASE. As a material inducement to and part consideration for
the execution and delivery of this Agreement by Seller and the performance by
Seller of its duties and obligations under this Agreement, and effective as of
the date set forth in Section 17.5 below, Buyer, on behalf of Buyer and Buyer's
partners, officers, directors, predecessors, successors and assigns, hereby
expressly, fully and forever releases and discharges (which release and
discharge shall be continuing and shall survive the Closing and the transfer of
the Property and/or any termination of this Agreement) Seller, its members,
managers, employees, officers, consultants, attorneys, and agents, from any and
all losses, expenses, claims, costs, damages, rights of subrogation, debts,
attorneys' fees,
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<PAGE> 27
actions, suits, judgments, awards, obligations and/or liabilities of any kind,
whether foreseeable or unforeseeable, known or unknown, or suspected or
unsuspected, with respect to or in any way relating to or indirectly or directly
arising out of (1) the whole or any part of the Property, Leases, and/or
Contracts or any fact, event, circumstance, omission, occurrence of any kind or
nature relating thereto, based on any theory of law, equity or tort now existing
or coming into existence in the future, (2) any Hazardous Material on or under
the Property at the Close of Escrow or released on or under the Property
subsequent thereto, and (3) any required clean-up of any and all Hazardous
Material which might remain or subsequently be placed on or under the Property,
including without limitation any personal injuries suffered by any person or
persons.
17.4 WAIVER. Buyer and its successors, assigns, heirs, devisees and
executors, agrees, represents and warrants that the matters released in Section
17.3 hereof are not limited to matters which are known or disclosed, and hereby
waives any and all rights and benefits which it now has, or in the future may
have, conferred upon it by virtue of the provisions of Section 1542 of the Civil
Code of the State of California which provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
Buyer, on its behalf and on behalf of its officers, directors, partners and
their respective predecessors, successors and assigns, hereby knowingly and
voluntarily waives and relinquishes all rights and benefits afforded by Section
1542 of the California Civil Code as set forth hereinabove, or any comparable,
equivalent or similar statutes and principles of common law of all the states of
the United States, and of the United States, if applicable, and of any foreign
country, if applicable. Buyer, on its behalf and on behalf of its officers,
directors, partners and their respective predecessors, successors and assigns,
understands that the facts in respect of which the releases in this Section 17
are given may hereafter turn out to be other than or different from the facts in
that connection now known or believed by Buyer to be true or that Buyer may
hereafter discover facts or documents in addition to or different from those
which Buyer now knows or believes to be true or exist with respect to any matter
covered by this release, and Buyer, on its behalf and on behalf of its officers,
directors, partners and their respective predecessors, successors and assigns,
accepts and assumes the risk of the facts turning out to be different and no
party or person being released by this release shall have any duty to disclose
or provide any such facts or documents (whether material or immaterial, known or
unknown, or suspected or unsuspected), and that this release shall be and remain
in all respects effective and not subject to termination or rescission by virtue
of any such difference in facts, even if any facts were not disclosed.
17.5 CERTAIN OBLIGATIONS NOT RELEASED. Notwithstanding anything to
the contrary contained in Sections 17.3 or 17.4 above, the release contained in
this Section 17:
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(i) shall become effectively only on the Close of Escrow; and
(ii) shall not be deemed to release the Seller from or otherwise
affect its representations, warranties, and obligations under this Agreement or
any of the documents executed by Seller in connection with this Agreement.
The provisions of this Section 17, including the release set forth
herein, shall survive the Closing Date and the transfer of the Property from
Seller to Buyer and any termination of the Agreement and shall not be merged
into the grant deed.
18. LEGAL FEES. In the event of the bringing of any action or suit by
a party hereto against another party hereunder by reason of any breach of any of
the obligations, covenants or agreements or any inaccuracies in any of the
representations and warranties on the part of the other party arising out of
this Agreement, then in that event, the prevailing party in such action shall be
entitled to have and recover from the other party all costs and expenses of suit
including actual attorneys' fees as directed by the court.
19. NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, return receipt requested,
delivered or sent by telex, telecopy, cable or via a reliable overnight courier,
and shall be deemed received upon the earliest of (i) if personally delivered or
via overnight courier, the date of delivery to the person to receive such
notice; (ii) if mailed, upon the date of receipt as disclosed on the return
receipt; or (iii) if given by telecopy then on the day sent unless after normal
business hours in which event it shall be the next business day; provided,
however, that any notice, request, demand, direction or other communication sent
by telecopy must be confirmed within twenty-four (24) hours by registered or
certified letter mailed or delivered in accordance with the foregoing:
To Buyer: _____________________________________
_____________________________________
Attentionn: _______________________
Phone: (___)__________________
Telecopy: (___)__________________
With a copy to: _____________________________________
_____________________________________
Attentionn: _______________________
Phone: (___)__________________
Telecopy: (___)__________________
To Seller: KIP Properties LLC
c/o R & B Realty Group
2222 Corinth Avenue
Los Angeles, California 90064
Attention: Ms. Maria Stamolis
Phone: 310/ 478-1021
Telecopy: 310/ 479-1451
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<PAGE> 29
With a Copy to: KIP Properties LLC
c/o R & B Realty Group
2222 Corinth Avenue
Los Angeles, California 90064
Attention: Mr. Darby T. Keen
Phone: 310/ 444-2241
Telecopy: 310/ 479-1451
With a copy to: William S. Small, Esq.
Alschuler Grossman & Pines LLP
2049 Century Park East, 39th Floor
Los Angeles, California 90067-3213
Phone: 310/ 277-1226
Telecopy: 310/ 552-6077
With a copy to: Steven Thomas, Esq.
Irell & Manella LLP
1800 Avenue of the Stars
Los Angeles, California 90067
Escrow Officer:___________________
Phone: 310/ 203-7694
Telecopy: 310/ 203-7199
To Escrow Holder: Chicago Title Insurance Company
Escrow Department
700 South Flower Street, Suite 900
Los Angeles, California 90017
Escrow Officer:___________________
Phone: 213/ 488-4300
Telecopy: 213/ 488-4384
Notice of change of address shall be given by written notice in the manner
detailed in this Section. Refusal to accept or the inability to deliver because
of changed address of which no notice was given shall be deemed to constitute
receipt of the notice, demand, request or communication sent.
20. Brokers. Except for (a) the commission payable upon the Close of
Escrow to J.B. Grant Realty Advisors ("Seller's Broker"), as Seller's broker,
pursuant to a separate written listing agreement between Seller and Seller's
Broker, which listing agreement may authorize Seller's Broker to utilize the
services of PM Realty Group; and (b) the finder's fee or brokerage fee payable
to R & B Realty Group ("R & B Realty") pursuant to a separate written agreement
between Seller and R & B Realty, each party warrants and represents to the other
that no broker, salesman, or finder has been engaged by it in connection with
the transaction contemplated by this Agreement. Buyer shall indemnify, hold
harmless and defend Seller against each and every claim for any such fees,
commissions or other amounts, if such claims are based upon any statement or
representation or agreement of Buyer or if such claimant is claiming by, through
or under Buyer. Seller shall indemnify, hold harmless and defend Buyer against
each and every claim for any such fees, commissions or other amounts if such
claims are based upon any statement or representations or agreement of Seller or
if such claimant is claiming by, through or under
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<PAGE> 30
Seller. The foregoing indemnities shall survive the Closing Date or any
termination of this Agreement.
21. NO SURVIVAL. The representations and warranties of both Buyer and
Seller set forth in this Agreement shall, unless expressly stated otherwise
herein to the contrary, not survive the Closing Date; provided, however, all of
the representations and warranties of the Seller and Buyer made in Section 15
are and will be continuous and continuing and all of the same shall remain true
and correct in all material respects through the Closing.
22. TAX-DEFERRED EXCHANGE. Buyer acknowledges and agrees that Seller
may transfer the Property to Buyer as part of a tax-deferred exchange by Seller
pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended (the
"Code"), and that Seller has the right to restructure all or part of the
transaction contemplated by this Agreement as provided in Section 1031 of the
Code as a concurrent or delayed (non-simultaneous) tax deferred exchange for the
benefit of Seller. Buyer shall cooperate with Seller if Seller elects to convey
the Property in connection with a tax-deferred exchange within the meaning of
Section 1031 of the Code and, if requested by Seller, to accommodate Seller in
any such exchange, provided that Seller's election to effect a tax-deferred
exchange shall not create any additional conditions to the Close of Escrow or
extend the Closing Date. Seller, in electing to structure the sale as an
exchange, shall have the right to substitute, assign, or delegate its rights and
duties to one or more entities or persons who will be Seller's accommodator as
seller in the Escrow in Seller's place and stead. Any such exchange shall be
accomplished by supplemental instructions reasonably acceptable to both parties
(the "Exchange Instructions"), including any exchange documents and instructions
with an exchange accommodator. Buyer shall execute and deliver to Seller or
Escrow Holder any and all Exchange Instructions provided to Buyer by Seller
within three (3) Business Days after Buyer's receipt of such Exchange
Instructions. Each party shall bear its own costs and expenses (including
attorneys' fees and costs) incurred in connection with the preparation and
review of the Exchange Instructions.
23. NO OFFER. Submission of this Agreement for examination or
signature by Buyer is not effective as an agreement to sell the Property or
otherwise until execution by and delivery to both Buyer and Seller of an
original of this Agreement.
24. TIME OF ESSENCE. Notwithstanding anything to the contrary
contained in the Standard Provisions, time is of the essence of each and every
term, condition, obligation and provision hereof.
25. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute one and the same instrument.
26. CAPTIONS. Any captions to, or headings of, the paragraphs or
subparagraphs of this Agreement are solely for the convenience of the parties
hereto, are not a part of this Agreement, and shall not be used for the
interpretation or determination of the validity of this Agreement or any
provision hereof.
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<PAGE> 31
27. NO OBLIGATIONS TO THIRD PARTIES. The execution and delivery of
this Agreement shall not be deemed to confer any rights upon, nor obligate any
of the parties thereto, to any person or entity other than the parties hereto.
28. EXHIBITS. The Exhibits and Schedules attached hereto are hereby
incorporated herein by this reference.
29. AMENDMENT TO THIS AGREEMENT. The terms of this Agreement may not
be modified or amended except by an instrument in writing executed by each of
the parties hereto.
30. WAIVER. The waiver or failure to enforce any provision of this
Agreement shall not operate as a waiver of any future breach of any such
provision or any other provision hereof. Except as otherwise expressly provided
in this Agreement (including matters which may be deemed approved by Buyer under
Section 5 above), no waiver by Buyer or Seller of any of the terms or conditions
of this Agreement or any of their respective rights hereunder shall be effective
unless such waiver is in writing and signed by the party charged with the
waiver.
31. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
32. ENTIRE AGREEMENT. This Agreement and attached Schedules and
Exhibits together supersede any prior agreement, negotiations and
communications, oral or written, and contains the entire agreement between Buyer
and Seller as to the subject matter hereof. No subsequent agreement,
representation, or promise made by either party hereto, or by or to an employee,
officer, agent or representative of either party shall be of any effect unless
it is in writing and executed by the party to be bound thereby.
33. SUCCESSORS AND ASSIGNS. This Agreement and all of the terms,
conditions and provisions hereof shall inure to the benefit of and be binding
upon the respective permitted successors and assigns of the parties hereto.
Without Seller's prior written consent, which consent may be withheld by Seller
in its discretion, Buyer shall not (a) assign any of Buyer's rights or delegate
any of Buyer's duties under this Agreement; or (b) enter into any agreement or
escrow for the resale of the Property. If Buyer attempts or purports to enter
into any assignment, agreement or escrow in violation of this Section, Seller,
at its option, shall have the right to immediately terminate this Agreement.
34. CERTAIN REMEDIES.
34.1 LIQUIDATED DAMAGES. NOTWITHSTANDING ANY OTHER PROVISION
CONTAINED IN THIS AGREEMENT, IF THE SALE OF THE PROPERTY IS NOT CONSUMMATED BY
REASON OF ANY DEFAULT BY BUYER UNDER THIS AGREEMENT, THEN SELLER SHALL BE
ENTITLED TO RETAIN BUYER'S INITIAL DEPOSIT IN THE AMOUNT OF $625,000 AND BUYER'S
ADDITIONAL DEPOSIT IN THE AMOUNT OF $1,250,000 AS SELLER'S LIQUIDATED DAMAGES.
BUYER AND SELLER AGREE THAT SELLER'S DAMAGES WHICH WOULD RESULT FROM BUYER'S
FAILURE TO ACQUIRE THE PROPERTY FOR ANY REASON ARE IMPRACTICABLE AND EXTREMELY
DIFFICULT TO ASCERTAIN, AND THAT UNDER THE CIRCUMSTANCES EXISTING AS OF THE DATE
OF THIS AGREEMENT, THE LIQUIDATED DAMAGES IN THE
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<PAGE> 32
AMOUNT OF THE DEPOSIT REPRESENTS A REASONABLE ESTIMATE OF SUCH DAMAGES. THE
PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES FOR THE BREACH OF BUYER'S
OBLIGATION TO PURCHASE THE PROPERTY UNDER THIS AGREEMENT IS NOT INTENDED AS A
FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275
OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO
CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677. THE PARTIES HAVE SET FORTH
THEIR INITIALS BELOW TO INDICATE THEIR AGREEMENT WITH THE LIQUIDATED DAMAGES
PROVISION CONTAINED IN THIS SECTION.
SELLER'S INITIALS BUYER'S INITIALS
[SIG]
- ------------------------ ------------------------
34.2 LIMITATION ON LIABILITY. BUYER AGREES THAT, IN THE EVENT OF
ANY DEFAULT BY SELLER HEREUNDER, BUYER'S SOLE AND EXCLUSIVE REMEDY SHALL BE AN
ACTION AT LAW FOR DAMAGES (PROVIDED, HOWEVER, BUYER SHALL NOT BE ENTITLED TO,
AND BUYER HEREBY WAIVES, ANY AND ALL PUNITIVE, INCIDENTAL, SPECULATIVE AND
CONSEQUENTIAL DAMAGES AND DAMAGES FOR BUYER'S LOSS OF ITS BARGAIN). ACCORDINGLY,
BUYER AGREES THAT, IN THE EVENT OF ANY SUCH DEFAULT BY SELLER, BUYER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES AND SHALL HAVE NO RIGHT TO (A) SPECIFIC
PERFORMANCE OR ANY OTHER EQUITABLE REMEDY; (B) RECORD OR FILE A LIS PENDENS OR
ANY OTHER MATTER AFFECTING TITLE TO THE PROPERTY; OR (C) CLAIM A VENDEE'S LIEN
OR ANY OTHER LIEN UPON THE PROPERTY. THE OBLIGATIONS OF SELLER UNDER THIS
AGREEMENT DO NOT CONSTITUTE PERSONAL OBLIGATIONS OF THE MEMBER'S, PARTNERS,
DIRECTORS, OFFICERS OR SHAREHOLDERS OF SELLER, AND BUYER SHALL NOT SEEK RECOURSE
AGAINST THE MEMBERS, PARTNERS, DIRECTORS, OFFICERS, OR SHAREHOLDERS OF SELLER OR
ANY OF THEIR PERSONAL ASSETS FOR SATISFACTION OF ANY LIABILITY IN RESPECT TO
THIS AGREEMENT. THE PROVISIONS OF THIS SECTION ARE A MATERIAL INDUCEMENT TO
SELLER TO EXECUTE THIS AGREEMENT, WITHOUT WHICH SELLER WOULD NOT HAVE BEEN
WILLING TO EXECUTE THIS AGREEMENT. BUYER AND SELLER SHALL INITIAL BELOW THIS
SECTION INDICATING THEIR SPECIFIC AGREEMENT TO THIS PROVISION.
SELLER'S INITIALS BUYER'S INITIALS
[SIG]
- ------------------------ ------------------------
35. NO THIRD PARTY BENEFICIARIES. Nothing contained in this Agreement,
express or implied, is intended to confer upon any person other than the parties
hereto and their permitted successors and assigns any rights or remedies under
or by reason of this Agreement.
36. INTERPRETATION; COMPUTATION OF PERIODS. All periods of time
referred to in this Agreement shall include all Saturdays, Sundays, and
California or national holidays, unless the period of time specifies Business
Days, provided that if the date or last date to
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<PAGE> 33
perform any act or give a notice with respect to this Agreement shall fall on a
Saturday, Sunday or a California or national holiday, such act or notice may be
timely performed or given on the next succeeding day which is not a Saturday,
Sunday or a California or national holiday. Whenever the context of this
Agreement reasonably requires, all words used in the singular shall be deemed to
have been used in the plural, and the neuter gender shall be deemed to include
the masculine and feminine gender, and vice versa. This Agreement (including the
Exhibits attached hereto) has been drafted through a joint effort of the parties
and their respective counsel and, therefore, shall not be construed in favor of
or against any of the parties as the person who prepared this Agreement and such
Exhibits. For purposes of this Agreement, (a) the term "including" shall be
deemed to mean "including without limitation;" (b) the term "Business Day" means
any day other than a Saturday, a Sunday, or a federal or California State
holiday; (c) the term "Pacific Time" means Pacific Standard Time or Pacific
Daylight Savings Time, whichever is then applicable in Los Angeles, California
on the date in question; (d) the term "discretion" means sole and absolute
discretion; and (e) the phrase "to Seller's actual knowledge," as used in this
Agreement, shall mean the present actual knowledge, without duty of inquiry or
investigation, of the managing members of Seller.
37. CONFIDENTIALITY. Seller and Buyer each shall keep the terms and
conditions of this Agreement confidential, except for (a) such disclosures to
third persons as may be reasonably necessary in order to consummate the
transactions contemplated by this Agreement; (b) privileged communications by
the respective parties, including communications with the parties' respective
counsel and advisors; (c) such disclosures as may be necessary or required by
those governmental agencies, authorities, or examiners having jurisdiction over
Seller and Buyer, respectively; and (d) such disclosures as may be required by
subpoena or any other similar court order or discovery request in any civil or
criminal proceeding or investigation. With respect to any disclosures otherwise
permitted under this Section 37(a) and (b), prior to any such disclosures or
communications, the party making such disclosure or communication shall (1)
inform each and every such receiving party that such information is confidential
and is subject to a prohibition on further dissemination or circulation by any
means, and (2) shall obtain such receiving party's agreement to maintain the
confidentiality of this Agreement in accordance with the terms herein. This
Section shall survive the Close of Escrow and any termination of this Agreement.
38. AGENCY RELATIONSHIP. Buyer acknowledges and agrees that (a) R & 8
Realty is affiliated, directly or indirectly, with Seller and one or more of
Seller's members and is also acting as a broker or finder with respect to
Seller; and (b) R & B Realty is only acting for or representing Seller in the
transactions contemplated by this Agreement, and has no duty of any kind to
Buyer.
39. WAIVER OF TRIAL BY JURY. SELLER AND BUYER KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT
THEY MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO
THIS AGREEMENT, AND THE PARTIES AGREE THAT ANY SUCH DISPUTE SHALL BE TRIED
BEFORE A JUDGE SITTING WITHOUT A JURY.
40. REVIEW WITH INDEPENDENT COUNSEL. EACH OF THE PARTIES ACKNOWLEDGES
AND AGREES THAT (A) IT HAS CAREFULLY READ AND UNDERSTANDS ALL OF THE TERMS OF
THIS AGREEMENT; (B) IT HAS ENTERED INTO
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<PAGE> 34
THIS AGREEMENT FREELY AND VOLUNTARILY, AFTER HAVING CONSULTED WITH ITS OWN
INDEPENDENT LEGAL COUNSEL; (C) EACH OF THE WAIVERS AND RELEASES CONTAINED IN
THIS AGREEMENT IS REASONABLE, NOT CONTRARY TO PUBLIC POLICY OR LAW, AND HAS BEEN
INTENTIONALLY, KNOWINGLY, AND VOLUNTARILY AGREED TO BY THE PARTIES; AND (D) EACH
OF THE WAIVERS AND RELEASES CONTAINED IN THIS AGREEMENT HAS BEEN AGREED TO BY
SUCH PARTY WITH FULL KNOWLEDGE OF ITS SIGNIFICANCE AND CONSEQUENCES.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"Buyer" PACIFIC GULF PROPERTIES
By: [SIG]
------------------------------------
Its: President - CEO
-----------------------------------
By: [SIG]
------------------------------------
Its: Senior Vice President
-----------------------------------
"Seller" KIP PROPERTIES LLC, a California
limited liability company
By:
------------------------------------
Its:
-----------------------------------
By:
------------------------------------
Its:
-----------------------------------
30
<PAGE> 35
ACKNOWLEDGMENT OF RECEIPT AND ACCEPTANCE BY ESCROW HOLDER
---------------------------------------------------------
The undersigned Escrow Holder hereby agrees to act as Escrow Holder pursuant to
the terms and conditions set forth in this Agreement.
Dated: September __, 1997.
CHICAGO TITLE INSURANCE COMPANY
By:
------------------------------------
Its:
-----------------------------------
31
<PAGE> 36
AGREEMENT OF PURCHASE AND SALE
------------------------------
AND JOINT ESCROW INSTRUCTIONS
-----------------------------
SCHEDULE OF EXHIBITS
--------------------
LEGAL DESCRIPTION ANAHEIM PROPERTY Exhibit A-1
DESCRIPTION ANAHEIM PERSONAL PROPERTY Exhibit A-2
LEGAL DESCRIPTION SUNNYVALE PROPERTY Exhibit B-1
DESCRIPTION SUNNYVALE PERSONAL PROPERTY Exhibit B-2
LEGAL DESCRIPTION SAN TOMAS PROPERTY Exhibit C-1
DESCRIPTION SAN TOMAS PERSONAL PROPERTY Exhibit C-2
LEGAL DESCRIPTION SACRAMENTO PROPERTY Exhibit D-1
DESCRIPTION SACRAMENTO PERSONAL PROPERTY Exhibit D-2
STANDARD ESCROW PROVISIONS Exhibit 3.1
FORM OF GRANT DEED Exhibit 3.2
ASSIGNMENT OF LEASES Exhibit 6(b)
ASSIGNMENT OF CONTRACTS Exhibit 6(d)
BILL OF SALE AND ASSIGNMENT OF PERSONAL PROPERTY Exhibit 6(e)
TRANSFEROR'S CERTIFICATE OF NON-FOREIGN STATUS Exhibit 6(f)
TENANT ESTOPPEL CERTIFICATE Exhibit 8.1.3
<PAGE> 37
AGREEMENT OF PURCHASE AND SALE
------------------------------
AND JOINT ESCROW INSTRUCTIONS
-----------------------------
EXHIBIT "A-1"
-------------
LEGAL DESCRIPTION OF ANAHEIM PROPERTY
-------------------------------------
All of that certain real property in the City of Anaheim, County of Orange,
State of California, described as follows:
PARCEL 1:
The West 10.00 acres of the South half of the Southwest quarter of the Northwest
quarter of Section 24, Township 4 South, Range 10 West, in the Rancho San Juan
Cajon de Santa Ana, City of Anaheim, County of Orange, State of California, as
per map recorded in Book 51, Page 10 of Miscellaneous Maps, in the Office of the
County Recorder of said County.
Except the North 320.00 feet thereof.
PARCEL 2:
The North 320.00 feet of the West 10.00 acres of the South half of the Southwest
quarter of the Northwest quarter of Section 24, Township 4 South, Range 10 West,
in the Rancho San Juan Cajon de Santa Ana, City of Anaheim, County of Orange,
State of California, as per map recorded in Book 51, Page 10 of Miscellaneous
Maps, in the Office of the County Recorder of said County.
<PAGE> 38
AGREEMENT OF PURCHASE AND SALE
------------------------------
AND JOINT ESCROW INSTRUCTIONS
-----------------------------
EXHIBIT "A-2"
-------------
DESCRIPTION OF ANAHEIM PERSONAL PROPERTY
----------------------------------------
Description to be provided pursuant to Section 5.1(b) as part of "Review
Matters."
<PAGE> 39
AGREEMENT OF PURCHASE AND SALE
------------------------------
AND JOINT ESCROW INSTRUCTIONS
-----------------------------
EXHIBIT "B-1"
-------------
LEGAL DESCRIPTION OF SUNNYVALE PROPERTY
---------------------------------------
All of that certain real property in the City of Sunnyvale, County of Santa
Clara, State of California, described as follows:
All that certain real property in Section 29, Township 6 South, Range 1 West,
Mount Diablo Base and Meridian, in the City of Sunnyvale, County of Santa Clara,
State of California; being a portion of that certain 7.642 acre parcel shown on
the Record of Survey Map recorded in Book 263 of Maps at Page 30, Santa Clara
County Records, said portion being more particularly described as follows:
Beginning at a Northwesterly corner of said 7.642 acre parcel, from which corner
the intersection of the center line of Duane Court and the "Q" line in Lawrence
Expressway, as shown on said Map, bears North 88 deg. 18 degrees 10" East 767.67
feet; thence from said point of beginning, along a boundary of said Parcel,
South 1 degree 41' 50" East, 20.00 feet to the true point of commencement, along
the boundaries of said 7.642 acre parcel, on the following courses: Westerly,
along a curve with a radius of 55.00 feet, deflecting to the left from a tangent
bearing South 88 deg. 18 degrees 10: West, through a central angle of 59 deg.
50' 23" an arc distance of 57.44 feet to a point of compound curve; thence from
said point of compound curve, Southerly along a curve with a radius of 110.00
feet, deflecting to the left from a tangent bearing 28 deg. 27 degrees 47" West,
through a central angle of 59 deg. 37', 07", an arc distance of 114.46 feet to a
point of tangency on the Northeasterly boundary of East Duane Avenue, as shown
on said Map; thence along said Northeasterly boundary South 31 deg. 09' 20" East
320.51 feet; thence Southeasterly along a tangent curve to the left, having a
radius of 307.00 feet through a central angle of 66 deg. 26 degrees 17", an arc
distance of 355.99 feet to the point of tangency; thence North 82 deg. 24' 23"
East 35.38 feet 190.00 feet to the Westerly line of Lawrence Expressway as shown
on said Map; thence along said line of Lawrence Expressway, North 0 deg. 20' 51"
West 218.05 feet; thence North 0 deg. 02'00" East 108.16 feet; thence along a
tangent curve to the left, having a radius of 60.00 feet, through a central
angle of 47 deg. 32' 37", an arc distance of 49.79 feet to a point of CUSP with
a circular curve which has a radius of 61.00 feet; thence leaving said
boundaries of said 7.642 acre parcel, Westerly along last said curve, deflecting
to the right from a tangent bearing South 47 deg. 12 degrees 51" West, through a
central angle of 98 deg. 53 degrees 39: an arc length of 105.29 feet to a point
of reverse curvature; thence Westerly along a curve which has A radius of 61.00
feet, deflecting to the left, from a tangent bearing North 33 degrees 53' 30"
West through a central angle of 57 deg. 48' 20 an arc length of 61.54 feet to
the point of tangency on the Southerly boundary of Duane Court, as shown on said
Map; thence along said Southerly boundary South 88 deg. 18 degrees 10" West
517.93 feet to the true point of commencement.
<PAGE> 40
AGREEMENT OF PURCHASE AND SALE
------------------------------
AND JOINT ESCROW INSTRUCTIONS
-----------------------------
EXHIBIT "B-2"
-------------
DESCRIPTION OF SUNNYVALE PERSONAL PROPERTY
------------------------------------------
Description to be provided pursuant to Section 5.1(b) as part of "Review
Matters."
<PAGE> 41
AGREEMENT OF PURCHASE AND SALE
------------------------------
AND JOINT ESCROW INSTRUCTIONS
-----------------------------
EXHIBIT "C-1"
-------------
LEGAL DESCRIPTION OF SAN TOMAS PROPERTY
---------------------------------------
All that certain real property in the City of Santa Clara, County of Santa
Clara, State of California, described as follows:
All of Parcel A, as shown upon that certain Map entitled, "Parcel Map Lots 1-4
of Tract 2971 City of Santa Clara, California for Don Koll Co., Inc.," which Map
was filed for record in the Office of the Recorder of the County of Santa Clara,
State of California, on August 7, 1970 in Book 271 of Maps, at Page 22.
<PAGE> 42
AGREEMENT OF PURCHASE AND SALE
------------------------------
AND JOINT ESCROW INSTRUCTIONS
-----------------------------
EXHIBIT "C-2"
-------------
DESCRIPTION OF SAN TOMAS PERSONAL PROPERTY
------------------------------------------
Description to be provided pursuant to Section 5.1(b) as part of "Review
Matters."
<PAGE> 43
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
EXHIBIT "D-1"
LEGAL DESCRIPTION OF SACRAMENTO PROPERTY
All of that certain real property in the City of Sacramento, County of
Sacramento, State of California, described as follows:
PARCEL NO. 1:
All that portion of Parcel F, as said Parcel is shown on the "Plat of Point
West," recorded in Book 82 of Maps, Map No. 17, Records of Sacramento County,
described as follows:
Beginning at the most Southerly corner of said Parcel F, thence from said point
of beginning along the Westerly boundary of said Parcel F the following six (6)
courses and distances: (1) North 12 degrees 20' 00" West 211.45 feet (2)
Northeasterly, curving to the left on arc of 70.00 feet radius, said arc being
subtended by a chord bearing North 48 degrees 55" 25" East 67.32 feet, (3)
continuing on a curve to the left on an arc of 70.00 feet radius, said arc being
subtended by a chord bearing North 57 degrees 58' 44" West 137.03 feet (4)
curving to the right on an arc of 70.00 feet radius, said arc being subtended by
a chord bearing South 71 degrees 11' 53" West 64.27 feet (5) North 15 degrees
38' 13" East 90.00 feet and (6) North 74 degrees 21' 47" West 20.00 feet to a
point located on the Northerly line of a 5.00 foot public utility easement as
shown on the Official Plan of said point West; thence along said North line the
following four (4) courses and distances: (1) North Easterly, curving to the
right of an arc of 2950.00 feet radius, said arc being subtended by a chord
bearing North 86 degrees 35' 56" East 202.19 feet (3) North 88 DG 33' 46" East
158.76 feet and (4) North 00 degrees 17' 32" West 11.83 feet to a point located
on the Northerly boundary of said Parcel F; thence along said Northerly boundary
North 89 degrees 42' 28" East 685.63 feet to the most easterly corner of said
Parcel F, thence along the Southerly boundary of said Parcel F the following
four (4) courses and distances: (1) South 51 degrees 42' 50" West 631.04 feet
(2) curving to the right of an arc of 450.00 feet radius, said arc being
subtended by a chord bearing North 61 degrees 29' 34" East 353.71 feet (2)
curving to the right on an arc of 420.00 feet radius, said arc being subtended
by a chord bearing South 69 degrees 29' 00" West 254.26 feet (3) South 86
degrees 57' 09" West 199.81 feet and (4) curving to the left on an arc of 430.00
feet radius said arc being subtended by a chord bearing South 68 degrees 06' 27"
West 277.79 feet to the point of beginning.
Excepting therefrom all deposits of minerals, including oil and gas, lying below
the depth of 500 feet, without however, the right to drill or mine through the
surface thereof as excepted in the quitclaim deed recorded in Book 71-06-30,
Page 525, Official Records.
Assessor's Parcel Number 277-0282-005-0000
<PAGE> 44
PARCEL NO. 2:
Parcel 1, as shown on the Official Plat of point West, as recorded in the Office
of the County Recorder of Sacramento County, June 20, 1968, in Book 82 of Maps,
Map No. 17.
Excepting therefrom all deposits of minerals, including oil and gas, lying below
the depth of five hundred feet, without however, the right to drill through the
surface thereof, as excepted in quitclaim deed executed by the State of
California, recorded June 30, 1971, in Book 71-06-30, Page 525, Official
Records.
Assessor's Parcel Number 277-0284-001-0000.
<PAGE> 45
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
EXHIBIT "D-2"
DESCRIPTION OF SACRAMENTO PERSONAL PROPERTY
Description to be provided pursuant to Section 5.1(b) as part of "Review
Matters."
<PAGE> 46
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
EXHIBIT "3.1"
FORM OF STANDARD ESCROW PROVISIONS
1. The phrase "close of escrow" (or COE) as used in this escrow means the
date on which documents are recorded, unless otherwise specified.
2. Recordation of any instruments delivered through this escrow, if
necessary or proper for the issuance of the policy of title insurance
called for, is authorized.
3. No examination or insurance as to the amount or payment of personal
property taxes is required unless specifically requested.
4. You and any of your affiliates or employees are authorized to use the
information and documents in this escrow for any purpose. You are further
authorized to furnished to any broker or lender identified with this
transaction or anyone acting on behalf of such broker or lender, any
instructions, amendments, statements, or notices of cancellation given in
connection with this escrow.
5. All written notices, communications, change of instructions and documents
are required to be delivered timely at the office of Chicago Title
Company as set forth herein.
6. All funds received in this escrow shall be deposited with other escrow
funds in one or more escrow (demand) accounts of Chicago Title Company in
any state or national bank. The parties to this escrow understand that
the escrow accounts you maintain with the depository institutions
contribute to your value as a customer of these institutions which, in
turn, may make available to Chicago Title Company an array of bank
services, accommodations or other benefits. You shall have no obligation
to account for the value realized by Chicago Title Company from these
services, accommodations or other benefits. All disbursements shall be
made by your check, unless otherwise instructed. You shall not be
responsible for any delay in closing if funds received by escrow are not
available for immediate withdrawal. Chicago Title Company may, at its
option, require concurrent instructions from all principals prior to
release of any funds on deposit in this escrow.
7. If demand to cancel is submitted after the Time Limit Date, any principal
so requesting you to cancel this escrow shall file notice of demand to
cancel in your office in writing. You shall within three (3) working days
thereafter mail by certified mail one copy of such notice to each of the
other principals at the address stated in this escrow. Unless written
objection thereto is filed in your office by a principal within fifteen
(15) calendar days after the date of such mailing, you are instructed to
cancel this escrow.
<PAGE> 47
If this is a sale escrow, you may return the lender's papers and/or funds
upon lender's demand.
8. In the event that this escrow is canceled, any fees or charges due
Chicago Title Company including cancellation fees and any expenditures
incurred or authorized shall be paid from funds on deposit unless
otherwise specifically agreed to or determined by a court of competent
jurisdiction. Upon payment thereof, return documents and monies to the
respective parties depositing same, or as ordered by the court, and void
any executed instruments.
9. If there is no written activity by a principal to this escrow within any
six-month period after the Time Limit Date set forth herein, Chicago
Title Company may, at its option, terminate its agency obligation and
cancel this escrow, returning all documents, monies or other items held,
to the respective parties entitled thereto, less any fees and charges as
provided herein.
10. If for any reason, funds are retained or remain in escrow after the
closing date, you may deduct therefrom a reasonable charge as custodian,
of not less than $25.00 per month, unless otherwise specified.
11. In the event that you should receive or become aware of conflicting
demands or claims with respect to this escrow, or the rights of any of
the parties hereto, or any money or property deposited herein, you shall
have the absolute right at your option to discontinue any or all further
acts until such conflict is resolved to your satisfaction.
12. You are released from and shall have no liability, obligation or
responsibility with respect to (a) withholding funds pursuant to Section
1445 of the Internal Revenue Code of 1986 as amended, and to Sections
18662 and 18668 of the California Revenue and Taxation Code, (b) advising
the parties as to the requirements of said Section 1445, (c) determining
whether the transferor is a foreign person or a non-resident under such
Section, nor (d) obtaining a non-foreign affidavit or other exemption
from withholding under said Sections nor otherwise making any inquiry
concerning compliance with such Sections by any party to the transaction.
13. The parties hereto, by execution of these instructions, acknowledge that
the escrow holder assume no responsibility or liability whatsoever for
the supervision of any act or the performance of any condition which is a
condition subsequent to the closing of this escrow.
14. In the absence of instructions to the contrary, you are hereby authorized
to utilize wire services, overnight, next day, or other expedited
delivery services (as opposed to the regular U.S. Mail) and to charge the
respective party's account accordingly.
15. If you pay a demand to reconvey line of credit or equityline deed of
trust, you are hereby instructed on my behalf and for my benefit, to
request that the lender issuing said demand cancel said revolving line or
equityline of credit.
16. You are authorized to destroy or otherwise dispose of any and all
documents, papers, instructions, correspondence and other material
pertaining to this escrow at the expiration of six (6) years from the
close of escrow or cancellation thereof, without liability and without
further notice.
<PAGE> 48
IMPORTANT NOTICE
Except for wire transfer, funds remitted to this escrow are subject to
availability requirements imposed by Section 12413.1 of the California Insurance
Code. CASHIER'S, CERTIFIED or TELLER'S checks, payable to CHICAGO TITLE COMPANY
are generally available for disbursement on the next business day following the
date of deposit.
Other forms of payment may cause extended delays in the closing of your
transaction pursuant to the requirements imposed by State Law.
(Wire transfer information available upon request)
ALL PARTIES TO THIS ESCROW ACKNOWLEDGE THAT CHICAGO TITLE COMPANY DOES NOT
PROVIDE LEGAL ADVICE NOR HAS IT MADE ANY INVESTIGATION, REPRESENTATIONS OR
ASSURANCES WHATSOEVER REGARDING THE LEGAL ASPECTS OR COMPLIANCE OF THIS
TRANSACTION WITH ANY TAX, SECURITIES OR ANY OTHER STATE OR FEDERAL LAWS. IT IS
RECOMMENDED THAT THE PARTIES OBTAIN INDEPENDENT LEGAL COUNSEL AS TO SUCH
MATTERS.
IN THE EVENT OF ANY INCONSISTENCY BETWEEN THESE STANDARD PROVISIONS AND THE
TERMS OF THE AGREEMENT TO WHICH THIS EXHIBIT "3.1" IS ATTACHED, THE TERMS OF
SUCH AGREEMENT SHALL CONTROL.
<PAGE> 49
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
EXHIBIT "3.2"
FORM OF GRANT DEED
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
______ __ ___________________________________________________________________
SPACE ABOVE THIS LINE FOR RECORDERS USE
DOCUMENTARY TRANSFER TAX
$______________________________
...Computed on the consideration or value of
property conveyed; OR
...Computed on the consideration or value less ___________________________
liens or encumbrances remaining at time of sale Signature of Declarant or
Agent determining tax -
Firm Name
________________________________________________________________________________
LIMITED LIABILITY COMPANY GRANT DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
KIP PROPERTIES LLC,
a limited liability company organized under the laws of the State of California,
does hereby GRANT to
____________________________,
the real property in the City of________________, County of ____________, State
of California, described as:
See Exhibit "1" attached hereto and incorporated herein by reference.
The foregoing grant of real property is subject to non-delinquent taxes, all
easements, covenants, conditions and restrictions, and all other matters of
record affecting all or part of the real property which is described in this
Grant Deed and any matters that would be disclosed by a survey of the real
property which is described in this Grant Deed.
Dated:___________________________ ___________________________
<PAGE> 50
}
STATE OF CALIFORNIA }ss ___________________________
COUNTY OF__________________________}____ , Managing Member
On _______________________________before ___________________________
me,____________________________________, , Managing Member
personally appeared____________________,
personally known to me (or proved to me
on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are
subscribed to the within instrument and
acknowledged to me that he/she/they
executed the same in his/her/their
authorized capacity(ies), and that by
his/her/their signature(s) on the
instrument the person(s) or the entity
upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature
______________________________________
(This area for official notarial seal)
MAIL TAX STATEMENTS TO:
______________________________________
______________________________________
______________________________________
<PAGE> 51
FORM OF GRANT DEED
EXHIBIT "1"
LEGAL DESCRIPTION
<PAGE> 52
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
EXHIBIT "6(B)"
ASSIGNMENT OF LEASES
This Assignment of Leases (the "Assignment") is executed by KIP
Properties LLC, a California limited liability company ("Seller"), in favor
of_____________________________ (the "Buyer"), with reference to the following
facts:
A. Seller and Buyer have entered into that certain Agreement of
Purchase and Sale and Joint Escrow Instructions dated September 10, 1997 (the
"Purchase Agreement") in which Seller has agreed to sell and Buyer has agreed to
purchase the real property described in Exhibit "1" attached hereto and the
improvements located thereon (collectively, the "Project").
B. Pursuant to the Purchase Agreement, Seller has agreed to assign to
Buyer all of Seller's right, title and interest in and to all leases of space in
the Project (collectively, the "Leases"). THEREFORE, for valuable consideration,
the parties agree as follows:
1. Assignment. Subject to the terms of the Purchase Agreement, Seller
assigns and transfers to Buyer all of Seller's right, title and interest in and
to the Leases effective as of the Close of Escrow (as defined in the Purchase
Agreement). Such assignment is without representation or warranty by, or
recourse to, Seller.
2. Assumption by Buyer. Buyer assumes and agrees to perform all
obligations of the landlord under the Leases arising or accruing from and after
the Close of Escrow (as defined in the Purchase Agreement).
3. Counterparts. This Assignment may be executed in counterparts, each
of which shall be deemed an original, and both of which together shall
constitute one and the same instrument.
4. Miscellaneous. This Assignment shall be binding on the parties and
their respective successors and assigns. The headings to sections of this
Assignment are for convenient reference only and shall not be used in
interpreting this Assignment.
5. Attorneys' Fees. If any action or proceeding is commenced by either
party to enforce its rights under this Assignment, the prevailing party in such
action or proceeding shall be entitled to recover all reasonable costs and
expenses incurred in such action or proceeding, including reasonable attorneys'
fees and costs, in addition to any other relief awarded by the court.
<PAGE> 53
6. Indemnification. Buyer agrees to and shall indemnify, defend and
hold Seller harmless from and against any and all claims, costs, demands,
losses, damages, liabilities, lawsuits, actions and other proceedings in law or
in equity or otherwise, judgments, awards and expenses of every kind and nature
whatsoever, including without limitation, attorneys' fees, arising out of or
relating to, directly or indirectly, in whole or in part, the Leases, arising,
occurring and/or relating to the period from and after the Close of Escrow (as
defined in the Purchase Agreement).
7. California Law. This Assignment shall be governed by and
interpreted in accordance with the laws of the State of California.
Dated: ______________________,1997.
BUYER: SELLER:
KIP PROPERTIES LLC,
a California limited liability company
By:___________________________________
Title:________________________________
<PAGE> 54
ASSIGNMENT OF LEASES
EXHIBIT "1"
LEGAL DESCRIPTION
All of that certain real property in the City of ________________, County of
___________________ , State of California, described as follows:
<PAGE> 55
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
EXHIBIT "6(d)"
ASSIGNMENT OF CONTRACTS
This Assignment of Contracts (this "Assignment") is executed by KIP
Properties LLC, a California limited liability company (the "Assignor"), in
favor of _______________(the "Assignee"), with reference to the following facts:
A. Seller and Buyer have entered into that certain Agreement of
Purchase and Sale and Joint Escrow Instructions dated September 10, 1997 (the
"Purchase Agreement") in which Seller has agreed to sell and Buyer has agreed to
purchase the real property and improvements more particularly described in the
Purchase Agreement (collectively, the "Project").
B. Pursuant to the Purchase Agreement, Seller has agreed to assign to
Buyer those certain service agreements, maintenance agreements, and other
contracts listed on Exhibit "1" attached hereto (collectively, the "Contracts").
THEREFORE, for valuable consideration, the parties agree as follows:
1. Assignment. Subject to the terms of the Purchase Agreement,
Assignor hereby assigns and transfers to Assignee, effective as of the Close of
Escrow (as defined in the Purchase Agreement), all of Assignor's right, title
and interest in each of the Contracts effective as of the Close of Escrow (as
defined in the Purchase Agreement). Such assignment is without representation or
warranty by, or recourse to, Seller.
2. Assumption. Assignee hereby agrees to and accepts the assignment of
Assignor's rights under each of the Contracts as provided in Section 1 above,
and Assignee assumes and agrees to perform all obligations required to be kept
and performed by Assignor under each of the Contracts arising or accruing from
and after the Close of Escrow (as defined in the Purchase Agreement).
3. Counterparts. This Assignment may be executed in counterparts, each
of which shall be deemed an original, and both of which together shall
constitute one and the same instrument.
4. Miscellaneous. This Assignment shall be binding on the parties and
their respective successors and assigns. The headings to sections of this
Assignment are for convenient reference only and shall not be used in
interpreting this Assignment.
<PAGE> 56
5.Indemnification. Assignee agrees to and shall indemnify, defend and
hold Assignor harmless from and against any and all claims, costs, demands,
losses, damages, liabilities, lawsuits, actions and other proceedings in law or
in equity or otherwise, judgments, awards and expenses of every kind and nature
whatsoever, including without limitation, attorneys' fees, arising out of or
relating to, directly or indirectly, in whole or in part, the Contracts,
arising, occurring and/or relating to the period from and after the Close of
Escrow (as defined in the Purchase Agreement).
6.Attorneys' Fees. If any action or proceeding is commenced by either
party to enforce its rights under this Assignment, the prevailing party in such
action or proceeding shall be entitled to recover all reasonable costs and
expenses incurred in such action or proceeding, including reasonable attorneys'
fees and costs, in addition to any other relief awarded by the court.
Dated:_________________, 1997.
ASSIGNOR:
KIP PROPERTIES LLC, a California limited
liability company
By:_____________________________________
Title:__________________________________
ASSIGNEE:
________________________________________
By:_____________________________________
Title:__________________________________
<PAGE> 57
ASSIGNMENT OF CONTRACTS
EXHIBIT "1"
CONTRACTS
[TO BE PROVIDED]
<PAGE> 58
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
EXHIBIT "6(e)"
BILL OF SALE AND ASSIGNMENT OF PERSONAL PROPERTY
This Bill of Sale and Assignment of Personal Property (the
"Assignment") is executed by KIP Properties LLC, a California limited liability
company (the "Seller"), in favor of _____________________________(the "Buyer"),
with reference to the following facts:
A. Seller and Buyer have entered into that certain Agreement of
Purchase and Sale and Joint Escrow Instructions dated September 10, 1997 (the
"Purchase Agreement") in which Seller has agreed to sell and Buyer has agreed to
purchase the real property and improvements more particularly described in the
Purchase Agreement (collectively, the "Project").
B.Pursuant to the Purchase Agreement, Seller has agreed to sell and
assign to Buyer all of Seller's right, title and interest in and to the personal
property described in Exhibit "1" attached hereto (the "Personal Property").
THEREFORE, for valuable consideration, Seller agrees as follows:
1. Assignment. Subject to the terms of the Purchase Agreement, Seller
assigns, sells and transfers to Buyer all of Seller's right, title and interest
in and to the Personal Property effective as of the Close of Escrow (as defined
in the Purchase Agreement). Such assignment, sale and transfer are without
representation or warranty by, or recourse to, Seller.
2. Counterparts. This Assignment may be executed in counterparts, each
of which shall be deemed an original, and both of which together shall
constitute one and the same instrument.
3. Miscellaneous. This Assignment shall be binding on the parties and
their respective successors and assigns. The headings to sections of this
Assignment are for convenient reference only and shall not be used in
interpreting this Assignment.
4.Attorneys' Fees. If any action or proceeding is commenced by either
party to enforce its rights under this Assignment, the prevailing party in such
action or proceeding shall be entitled to recover all reasonable costs and
expenses incurred in such action or proceeding, including reasonable attorneys'
fees and costs, in addition to any other relief awarded by the court.
<PAGE> 59
5. California Law. This Assignment shall be governed by and
interpreted in accordance with the laws of the State of California.
Dated:______________, 1997.
SELLER:
KIP PROPERTIES LLC,
a California limited liability company
By:____________________________________
Title:_________________________________
Accepted and Agreed:
BUYER:
______________________________________
By:___________________________________
Title:________________________________
<PAGE> 60
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
EXHIBIT "6(F)"
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
To inform_____________________________ ("Transferee"), that withholding of tax
under Section 1445 of the Internal Revenue Code (the "Code") will not be
required upon the transfer of certain real property to the Transferee by KIP
Properties LLC, a California limited liability company ("Transferor"), the
undersigned hereby certifies the following on behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Code and the
Income Tax Regulations promulgated thereunder);
2. The Transferor's U.S. tax identification number
is__________________ ; and
3 .The Transferor's office address is 2222 Corinth Avenue, Los
Angeles, California 90064.
The Transferor understands that this Certification may be disclosed to
the Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
The Transferor understands that the Transferee is relying on this
Certification in determining whether withholding is required upon said transfer.
Under penalty of perjury I declare that I have examined this
Certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of the Transferor.
Dated:__________________, 1997.
KIP PROPERTIES LLC,
a California limited liability company
By:____________________________________
Title:_________________________________
<PAGE> 61
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
EXHIBIT "8.1.3"
TENANT ESTOPPEL CERTIFICATE
TO WHOM IT MAY CONCERN:
The undersigned certifies and confirms that as of the date of this
Certificate:
1 The undersigned is the tenant under that certain lease
dated_______________ , 19______, as modified by amendments dated_______________
(collectively, the "Lease") by and between KIP Properties LLC, a California
limited liability company ("Landlord"), as the successor-in-interest to the
original landlord under the Lease if the original landlord was not Landlord, and
________________________________________________________ ("Tenant") covering
those certain premises commonly known and designated
as______________________________________________________________________
California (the "Premises"), and located in the building or improvements (the
"Building") on the real property commonly known as______________________________
_______________________________________________________ (the "Real Property").
The Building and Real Property are referred to collectively as the "Property".
2. The following information regarding the Lease is true and correct:
(a) Lease term expiration date: ________________________, 19__
(b) Current minimum monthly base rent: $______________________
(c) Minimum monthly base rent is paid to and including:
_________________________, 19__
(d) Additional rent or monthly charges are being paid to
Landlord for, among other things, operating expenses,
common area maintenance and real property taxes, in the
following amount per month: $ ____________________________
(e) Amount of security deposit held by Landlord under the
Lease: $__________________________________________________
3. Tenant has unexercised options to extend or renew the Lease term
for a total of_____________________ years [if no options exist, insert "None"].
4. The Lease represents the entire agreement between Tenant and
Landlord regarding the Premises. The Lease has not been modified in any respect,
except for the amendments which are part of the Lease as noted in Section 1
above.
5. The Lease is in full force and effect and to Tenant's knowledge,
there are no uncured defaults on the part of Landlord, or events or conditions
that with the passage of time, the giving of notice, or both, would constitute a
default by Landlord under the Lease.
<PAGE> 62
6. Tenant acknowledges and agrees that this certificate may be relied
upon by (a) any prospective purchaser of the Property in connection with such
purchaser's acquisition of the Property from Landlord; and (b) any lender
financing such purchaser's acquisition of the Property.
Dated:_________________, 1997.
TENANT:
_______________________________________
By:____________________________________
Title:_________________________________
<PAGE> 1
EXHIBIT 10.2
AGREEMENT FOR PURCHASE AND SALE
OF SACRAMENTO PROPERTIES
THIS AGREEMENT FOR PURCHASE AND SALE (this "Agreement") is made and entered
into as of November 24, 1997, by and between Sammis Sacramento Associates, a
California general partnership ("Seller"), and Pacific Gulf Properties Inc., a
Maryland corporation ("Buyer").
RECITALS
A. Seller is the owner of certain improved real property consisting
generally of the business parks situated in Sacramento, California at 9912, 9940
and 9960 Business Park Drive, commonly known as Highway 50 Business Center, and
9828 Business Park Drive, commonly known as Bradshaw Business Center (each
separately, a "Property", and the Properties collectively and as more
specifically described below, the "Sacto Portfolio").
B. Buyer desires to purchase the Sacto Portfolio from Seller and Seller
desires to sell the Sacto Portfolio to Buyer, subject to the terms and
conditions contained in this Agreement.
AGREEMENT
NOW, THEREFORE, Buyer and Seller do hereby agree as follows:
ARTICLE I
BASIC DEFINITIONS
Closing Date: The term "Closing Date" shall mean the earliest of (a) the
date that is fifteen (15) days following the expiration or earlier termination
of the Inspection Period, (b) any earlier date approved in writing by Buyer and
Seller for the close of escrow with respect to the purchase and sale of the
Sacto Portfolio or (c) December 31, 1997.
Code. The term "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I BASIC DEFINITIONS................................................. 1
ARTICLE II PURCHASE AND SALE................................................ 3
ARTICLE III CONDITIONS PRECEDENT............................................ 7
ARTICLE IV COVENANTS, WARRANTIES AND REPRESENTATIONS........................ 9
ARTICLE V DEPOSIT...........................................................14
ARTICLE VI ESCROW AND CLOSING...............................................15
ARTICLE VII MISCELLANEOUS...................................................19
EXHIBIT A DISCLOSURE STATEMENT
EXHIBIT B INSPECTION LETTER
EXHIBIT C LEGAL DESCRIPTION OF LAND
EXHIBIT D LIST OF TENANT LEASES
EXHIBIT E LIST OF CONTRACTS
EXHIBIT F FORM OF GRANT DEED
EXHIBIT G FORM OF BILL OF SALE
EXHIBIT H FORM OF ASSIGNMENT AND ASSUMPTION OF INTANGIBLE PROPERTY
</TABLE>
i
<PAGE> 3
Contract Period. The term "Contract Period" shall mean the period from the
date of this Agreement through and including the Closing Date.
Contracts. The term "Contracts" shall mean all maintenance, service and
other operating contracts, equipment leases and other arrangements or agreements
to which Seller is a party affecting the ownership, repair, maintenance,
management, leasing or operation of the Sacto Portfolio.
Disclosure Statement. The term "Disclosure Statement" shall mean the
statement attached to this Agreement as Exhibit A.
Escrow Company. The term "Escrow Company" shall mean Commonwealth Land
Title Insurance Company, 50 Federal Street, Boston, Massachusetts 02110; Attn:
Mr. Terrance Miklis (telephone no. 617-695-0042).
Improvements. The term "Improvements" shall mean all buildings, structures
and other improvements located on the Land.
Inspection Letter. The term "Inspection Letter" shall mean a letter in the
form attached as Exhibit B to this Agreement, to be delivered by Buyer to Seller
on or prior to the close of the Inspection Period pursuant to Section 2.5 below.
Inspection Period. The term "Inspection Period" shall mean the period
commencing on the date of this Agreement, and expiring at 5:00 p.m. Pacific Time
on December 3, 1997, provided that the Inspection Period may end earlier at
Buyer's election upon delivery by Buyer to Seller of the Inspection Letter
(representing the conclusive waiver by Buyer of any further Inspection Period).
Intangible Property. The term "Intangible Property" shall mean Seller's
rights and interests, if any, in: (a) the Tenant Leases, (b) the Contracts; (c)
any and all transferable or assignable permits, building plans and
specifications, certificates of occupancy, operating permits, sign permits,
development rights and approvals, certificates, licenses, warranties and
guarantees, trade names, service marks, engineering, soils, pest control and
other reports relating to the Sacto Portfolio, tenant lists, advertising
materials, and telephone exchange numbers identified with the Sacto Portfolio;
and (d) all other transferable intangible property, miscellaneous rights,
benefits or privileges of any kind or character with respect to the Sacto
Portfolio, including, without limitation, the right to use the names "Highway 50
Business Center," "Bradshaw Business Center" and any other trade name now used
in connection with any Property.
Land. The term "Land" shall mean, collectively, the several parcels of land
described on Exhibit C to this Agreement, together with all of Seller's rights,
if any (including mineral, air and water rights), privileges and easements
appurtenant to or used in connection with the beneficial use and enjoyment of
said parcels of land, and all of
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Seller's right, title and interest, if any, in and to all roads, easements,
rights of way and alleys adjoining or servicing said parcels of land.
Sacto Portfolio. The term "Sacto Portfolio" shall mean all of Seller's
right, title and interest in and to the Real Property, the Personal Property and
the Intangible Property.
Personal Property. The term "Personal Property" shall mean all furniture,
furnishings, trade fixtures, building systems and equipment (including, without
limitation, HVAC, security and life safety systems) and other tangible personal
property owned by Seller that is located at and used in connection with the
operation of the Real Property.
Property. The term "Property" shall have the meaning set forth in Recital A
above.
Real Property. The term "Real Property" shall mean, collectively, the Land
and the Improvements.
Seller's Knowledge. The term "Seller's knowledge" shall have the meaning
set forth in Section 4.1 below.
Tenant Leases. The term "Tenant Leases" shall mean all leases, rental
agreements or other agreements (including all amendments or modifications
thereto and guaranties thereof) to which Seller is a party or the
successor-in-interest of a party which entitle any person to the occupancy or
use of any portion of the Real Property.
Title Company. The term "Title Company" shall mean Commonwealth Land Title
Company, 50 Federal Street, Boston, Massachusetts 02110; Attn: Mr. Terrance
Miklis (telephone no. 617-695-0042).
ARTICLE 11
PURCHASE AND SALE
Section 2.1 Purchase and Sale. Seller agrees to sell the Sacto Portfolio to
Buyer, and Buyer agrees to purchase the Sacto Portfolio upon all of the terms,
covenants and conditions set forth in this Agreement.
Section 2.2 Purchase Price. The aggregate purchase price for the Sacto
Portfolio (the "Purchase Price") shall be the sum of Eight Million Seven Hundred
Thousand Dollars ($8,700,000). The entire amount of the Purchase Price (less the
Deposit delivered pursuant to Article V below) shall be payable by Buyer to
Seller in cash on the Closing Date through the escrow described in Section 6.1
below.
Section 2.3 Buyer's Review and Seller's Disclaimer.
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(a) Subject to the provisions of subsection 2.3(c) below, during the
Inspection Period Buyer shall be permitted to make a complete review and
inspection of the physical, legal, economic and environmental condition of the
Sacto Portfolio, including, without limitation, any Tenant Leases and Contracts,
books and records maintained by Seller or its agents relating to the Sacto
Portfolio, boundary and other survey-related issues relating to the Real
Property, pest control matters, soil condition, asbestos, PCB, hazardous waste,
toxic substance or other environmental matters, compliance with building,
health, safety, land use and zoning laws, regulations and orders, plans and
specifications, structural, life safety, HVAC and other building system and
engineering characteristics, traffic patterns and all other information
pertaining to the Sacto Portfolio. Without representation or warranty, except as
expressly set forth in Section 4.1 below, Seller shall cooperate in Buyer's
review and provide Buyer with the opportunity to review books and records
maintained by Seller or its agents relating to the Sacto Portfolio, leases,
financial reports, surveys and other third-party inspection reports and similar
non-proprietary or confidential materials in Seller's possession relating to the
Sacto Portfolio (the "Seller's Records"). In addition, Seller shall exercise
reasonable efforts to obtain 3 days prior to the close of the Inspection Period
any tenant estoppel certificates and subordination agreements that Buyer and its
lender may reasonably request. Buyer acknowledges (i) that Seller played no role
in the development or construction of any of the Properties comprising the Sacto
Portfolio, (ii) that Buyer has entered into this Agreement with the intention of
making and relying upon its own investigation of the physical, environmental,
economic and legal condition of the Sacto Portfolio, and (iii) that Buyer is not
relying upon any representations and warranties, other than those specifically
set forth in Section 4.1 below, made by Seller or anyone acting or claiming to
act on Seller's behalf concerning the Sacto Portfolio. Buyer further
acknowledges that it has not received from Seller any accounting, tax, legal,
architectural, engineering, property management or other advice with respect to
this transaction and is relying solely upon the advice of its own accounting,
tax, legal, architectural, engineering, property management and other advisors.
Buyer specifically undertakes and assumes all risks associated with the matters
disclosed by Seller on the Disclosure Statement. Subject to the provisions of
Section 4.1 of this Agreement, Buyer shall purchase the Sacto Portfolio in its
"as is" condition on the Closing Date and assumes the risk that adverse
physical, environmental, economic or legal conditions may not have been revealed
by its investigation. Without limiting the generality of the foregoing, if
Seller has not already done so, then within three (3) days after the date of
this Agreement, Seller shall deliver or cause to be delivered to Buyer, or
otherwise make available for review by Buyer at the applicable property
manager's offices in Sacramento, California, to the extent available from
Seller's Records, and in the possession or control of Seller, the following:
(i) Survey. Any existing, most recent survey of the Real Property.
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(ii) Tax Bills. Copies of the most recent property tax bills and
assessments of the Property.
(iii) Leases. Copies of all Tenant Leases and tenant files.
(iv) Contracts. Copies of all Contracts.
(v) All third party generated reports relating to the condition of the
Sacto Portfolio, including environmental reports, environmental audits, soils
reports, physical and engineering reports, building and improvement plans, and
structural calculations.
(vi) Overating Statements. All income and expense statements, year-end
financial and monthly operating statements and maintenance records for the
three (3) most recent calendar years prior to the Closing Date and, to the
extent available, the current calendar year to date. Buyer shall have the right,
during the Inspection Period, to audit Seller's Records for these time periods,
following reasonable notice and during normal business hours.
(vii) Rent Roll. A current rent roll, together with a rent delinquency
report (the "Rent Roll").
(viii) Permits All government permits and approvals relating to the
Sacto Portfolio (the "Permits").
(b) Except with respect to any claims arising out of any breach of this
Agreement, including, without limitation, covenants, representations or
warranties set forth in Section 4.1 below, Buyer, for itself and its agents,
affiliates, successors and assigns, hereby releases and forever discharges
Seller, ITS agents, affiliates, successors and assigns from any and all rights,
claims and demands at law or in equity, whether known or unknown at the time of
this Agreement, which Buyer has or may have in the future, arising out of the
physical, environmental, economic or legal condition of the Sacto Portfolio (or
any individual Property), including, without limitation, any claim for
indemnification or contribution arising under the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601, et. seq.) or
any similar federal, state or local statute, rule or ordinance relating to
liability of property owners for environmental matters.
Buyer hereby specifically acknowledges that Buyer has carefully reviewed
this subsection and discussed its import with legal counsel and that the
provisions of this subsection are a material part of this Agreement.
-------------------------------------
Buyer
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(c) Seller shall cause its agents to cooperate reasonably with Buyer to
facilitate Buyer's exercise of the rights of review and inspection set forth in
subsection (a) above, and Buyer acknowledges and agrees that its exercise of
such rights shall be subject to the following limitations: (i) any entry onto
the Real Property by Buyer, its agents or representatives, shall be during
normal business hours, following reasonable prior notice to Seller and delivery
to Seller of satisfactory evidence of Buyer's general liability insurance, and,
at Seller's discretion, accompanied by a representative of Seller; (ii) Buyer
shall not conduct any drilling, test borings or other disturbance of the Real
Property for review of soils, compaction, environmental, structural or other
conditions without Seller's prior written consent; (iii) any discussions or
'interviews with any tenants of the Real Property or their personnel shall be
conducted in the presence of Seller or its representatives; (iv) Buyer shall
exercise reasonable diligence not to disturb the use or occupancy of any
occupant of any Property; and (v) Buyer shall indemnify, defend and hold Seller
harmless from all loss, cost, and expense resulting from any entry or
inspections performed by Buyer, its agents or representatives. The provisions of
Section 2.3(c)(v) shall survive any termination of this Agreement, but only for
a period of 24 months after such termination.
Section 2.4 Permitted Title Exceptions. Seller has previously obtained from
Title Company and delivered to Buyer for its review a current preliminary title
report with respect to each Property (collectively, the "Title Reports"),
together with all documents and information pertaining to the exceptions to
title listed in the Title Reports. Buyer shall, at its expense, obtain during
the Inspection Period any surveys of the Real Property desired by Buyer or
required by Title Company as a condition to the issuance of the Title Policies
described in Section 3.1(a)(iii) below (collectively, the "Surveys"). Seller
shall have no obligation to pay the fees or costs of the Surveys. The foregoing
obligation of Buyer shall survive any termination of this Agreement. Buyer may
advise Seller in writing and in reasonable detail, preferably not later than ten
business days prior to the close of the Inspection Period, what exceptions to
title, if any, listed in the then-current Title Reports or disclosed on the
Surveys are not acceptable to Buyer (the "Title Objections"). Buyer shall not,
however, unreasonably express disapproval of any exceptions to title and, prior
to notifying Seller of any Title Objections, shall endeavor in good faith to
cause Title Company to modify and update the Title Reports to reflect requested
corrections and revisions. Seller shall have the remaining period of the
Inspection Period, if any, to give Buyer notice that (a) Seller will remove any
Title Objections from title (or afford the Title Company necessary information
or certifications to permit it to insure over such exceptions), or (b) Seller
elects not to cause such exceptions to be removed. Seller's failure to provide
notice to Buyer prior to the expiration of the Inspection Period as to any Title
Objection shall be deemed an election by Seller not to remove the Title
Objection. If Seller so notifies or is deemed to have notified Buyer that Seller
shall not remove any or all of the Title Objections, Buyer shall have until the
close of the Inspection Period to determine whether (i) to proceed with the
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purchase and take the Sacto Portfolio subject to such exceptions or (ii) to
terminate this Agreement. Buyer's delivery of the Inspection Letter shall
constitute Buyer's conclusive agreement to accept the Sacto Portfolio subject to
the Permitted Exceptions. "Permitted Exceptions" shall include and refer to (x)
any and all exceptions to title disclosed by the Title Reports or the Surveys,
excepting solely Title Objections timely identified by Buyer which Seller has
notified Buyer pursuant to this Section that Seller is willing to remove, and
(y) any other exceptions to title approved by or resulting from the acts,
omissions or status of Buyer. Anything contained herein to the contrary
notwithstanding and notwithstanding any approval or deemed approval given by
Buyer hereunder, except for real estate taxes not yet due or payable, Seller
shall cause all mortgages, deeds of trust and other monetary encumbrances,
including without limitation all mechanics' liens, to be released and reconveyed
from the Property on or prior to the Closing Date. Nothing contained in this
paragraph shall be understood to require Buyer to make any decision with respect
to the condition of title to any Property prior to the expiration of the
Inspection Period, nor to require Seller to respond to any notice from Buyer of
Title Objections.
Section 2.5 Inspection Letter. At any time on or prior to the close of the
Inspection Period and if and when Buyer has completed to its satisfaction the
inspection and review contemplated by Sections 2.3 and 2.4 hereof, Buyer shall
deliver to Seller an executed Inspection Letter in the form attached hereto as
Exhibit B. Buyer's delivery of the executed Inspection Letter shall (i) confirm
satisfaction of the conditions precedent described in Sections 3.1(a)(i) and 3.
1(a)(ii) below, (ii) represent the conclusive waiver by Buyer of any further
Inspection Period, (iii) constitute Buyer's conclusive agreement to accept the
Sacto Portfolio subject to any Permitted Exceptions and (iv) constitute Buyer's
conclusive agreement to accept or waive any matters disclosed to Buyer in
writing prior to the close of the Inspection Period.
Section 2.6 Adequate Consideration. Notwithstanding anything in this
Agreement to the contrary, to induce Buyer to enter into this Agreement and to
expend the time and resources necessary to evaluate the Sacto Portfolio and
possibly forego other opportunities while doing so, Seller hereby grants to
Buyer the rights to terminate this Agreement that are expressly provided in this
Agreement. Such expenditures of time and resources and possible loss of
opportunity by Buyer constitute adequate consideration for Seller's remaining
bound by this Agreement, notwithstanding such termination rights in Buyer.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Conditions.
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(a) Notwithstanding anything in this Agreement to the contrary, Buyer's
obligation to purchase the Sacto Portfolio shall be subject to and contingent
upon the satisfaction or waiver of the following conditions precedent:
(i) Buyer's inspection and approval, within the Inspection Period, of
all physical, environmental, economic and legal matters relating to the Sacto
Portfolio, pursuant to Sections 2.3 and 2.4 above;
(ii) Buyer's receipt and approval, within the Inspection Period, of
such tenant estoppel certificates and subordination agreements as Buyer and its
lender may deem necessary;
(iii) The willingness of Title Company to issue for each of the
Properties constituting the Sacto Portfolio, upon the sole condition of the
payment of its regularly scheduled premium, its American Land Title Association
extended coverage Owner's Policy of Title Insurance [1970 Form] (the "Title
Policy", or if separate policies are obtained for individual Properties, the
"Title Policies"), with such endorsements as may have been requested by Buyer
and agreed to by Title Company during the Inspection Period (collectively, the
"Endorsements"), with such Title Policy insuring Buyer in the amount of the
Purchase Price (or, in the case of individual policies, in the amount of the
portion of the Purchase Price allocated to the applicable Property), that fee
simple title to the Real Property is vested of record in Buyer on the Closing
Date subject only to the printed conditions and exceptions of such policy and
the Permitted Exceptions; and
(iv) Seller's performance or tender of performance of all material
obligations under this Agreement and the material truth and accuracy of Seller's
express representations and warranties as of the date of this Agreement, as
updated under the provision of Section 4.5 hereof.
(b) Notwithstanding anything in this Agreement to the contrary, Seller's
obligation to sell the Sacto Portfolio shall be subject to and contingent upon
the satisfaction or waiver of the following conditions precedent:
(i) Buyer's performance or tender of performance of all material
obligations under this Agreement and the material truth and accuracy of Buyer's
express representations and warranties as of the date of this Agreement and as
of the Closing Date; and
(ii) The satisfaction or Buyer's written waiver of the conditions set
forth in subparagraphs (a)(i), (ii), (iii) and (iv) above.
Section 3.2 Portfolio Acquisition. Except as expressly provided in Section
7.1 below, the satisfaction or Buyer's waiver of the conditions precedent to
Buyer's obligation to purchase the Sacto Portfolio shall be determined with
respect to the
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Sacto Portfolio as a whole, rather than with respect to any individual Property,
and Buyer shall not have the right to acquire less than all of the Properties.
Section 3.3 Failure or Waiver of Conditions Precedent. In the event any of
the conditions set forth in Section 3.1 are not fulfilled or waived, the party
benefited by such condition may, by written notice to the other party, terminate
this Agreement, whereupon all rights and obligations hereunder of each party
shall be at an end. Either party may, at its election, at any time or times on
or before the date specified for the satisfaction of the condition, waive in
writing the benefit of any of the conditions set forth in Section 3.1(a) and
3.1(b) above. Notwithstanding the foregoing, Buyer's failure to deliver to
Seller on or prior to the close of the Inspection Period an executed Inspection
Letter in the form attached as Exhibit B, without modification or qualification
in any manner whatsoever, shall be deemed a failure of the condition set forth
in Section 3.1(a)(i) above. In the event this Agreement is terminated as a
result of the failure of any condition set forth in Section 3.l(a), Seller shall
return the full amount of the Deposit to Buyer. In any event, Buyer's consent to
the close of escrow pursuant to this Agreement shall waive any remaining
unfulfilled conditions.
ARTICLE IV
COVENANTS, WARRANTIES AND REPRESENTATIONS
Section 4.1 Seller's Warranties and Representations. Seller hereby
makes the following representations and warranties to Buyer as of the date of
this Agreement; provided that each of such representations and warranties shall
be deemed to be modified by any contrary or qualifying information contained in
any reports, schedules or other informational materials delivered or made
available to Buyer on or before the date of this Agreement or set forth in the
Disclosure Statement:
(a) Seller has full power and lawful authority to enter into and
carry out the terms and provisions of this Agreement and to execute and deliver
all documents which are contemplated by this Agreement, and all actions of
Seller necessary to confer such power and authority upon the persons executing
this Agreement (and all documents which are contemplated by this Agreement) on
behalf of Seller have been taken;
(b) To Seller's knowledge, the Tenant Leases listed on the attached
Exhibit D constitute all of the leases and rental agreements presently in effect
with respect to the Real Property;
(c) To Seller's knowledge, the copies of the Tenant Leases which
Seller has delivered or made available to Buyer pursuant to this Agreement are
true, correct and complete in all material respects;
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(d) To Seller's knowledge, the Rent Roll, including the rent delinquency
report, is complete and accurate. To Seller's knowledge, Seller has not received
written notice (i) of any default by the tenant or Seller under any of the
Tenant Leases, or (ii) that any tenant intends to terminate its Tenant Lease
prior to the expiration of its scheduled term;
(e) To Seller's knowledge, Seller has received no written notice from any
governmental authority that any of the improvements located on the Real Property
are presently in violation of any applicable building codes, zoning or land use
laws, or other law, order, ordinance, rule or regulation affecting the Real
Property (collectively, "Applicable Laws");
(f) To Seller's knowledge, (i) the Contracts listed on the attached Exhibit
E constitute all of the service and equipment contracts affecting the Sacto
Portfolio which may be binding upon Buyer following the Closing Date, (ii) the
copies of all such Contracts which Seller has delivered or made available to
Buyer pursuant to this Agreement are true, correct and complete in all material
respects; and (iii) there exists no material default by Seller or any other
party to any Contract;
(g) To Seller's knowledge, there are no pending condemnation proceedings
against the Real Property, and Seller has received no written notice from any
governmental authorities that any such proceedings are threatened;
(h) To Seller's knowledge, there is no pending litigation, and Seller has
received no written notice of any threatened litigation, (i) affecting any of
the Sacto Portfolio (other than litigation arising in the ordinary course of the
operation of the Properties and fully covered by insurance, all of which
ordinary course and fully insured litigation, to Seller's knowledge, is set
forth on the Disclosure Statement) or (ii) against Seller which would materially
and adversely affect Seller's capacity to perform under this Agreement,
(i) Seller is not a "foreign person" within the meaning of Section
1445(f)(3)) of the Code; and
(j) To Seller's knowledge, there are no underground or other storage tanks
situated on the Real Property, and Seller has received no written notice of the
existence of any Hazardous Materials at the Real Property in violation of
Applicable Laws. For purposes of this Agreement, "Hazardous Materials" shall
mean inflammable explosives, radioactive materials, asbestos, polychlorinated
biphenyls, hazardous materials, hazardous wastes, hazardous or toxic substances,
oil, or related materials, which are listed in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Resource
Conservation and Recovery Act, the Clean Water Act, the Clean Air Act, the Toxic
Substances Control Act, the Safe Drinking Water Act or California's
Carpenter-Presley-Tanner Hazardous Substance Account Act,
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Hazardous Waste Control Law, Safe Drinking Water and Toxic Enforcement Act of
1986, or in the regulations adopted and publications promulgated pursuant
thereto, or in any other federal, state or local environmental law, ordinance,
rule or regulation.
As used herein, the term "Seller's knowledge" or words of similar effect shall
mean the current actual, subjective knowledge of Mr. Jeffrey Donnelly and Ms.
Cindy Zimmerman after inquiry of the property managers of each Property. Buyer
acknowledges, however, that such property managers may fail to respond or
respond inaccurately to such inquiry and that Seller shall bear no
responsibility based upon such non response or inaccurate response. Neither Mr.
Donnelly, Ms. Zimmerman nor any property manager or any party other than Seller
shall bear responsibility for any breach of representation. Seller, however,
represents and warrants that Mr. Donnelly and Ms. Zimmerman are the individuals
within Seller's investment advisory organization with principal administrative
and oversight responsibility, respectively, for the disposition of the Sacto
Portfolio and the asset management of the Sacto Portfolio.
Section 4.2 Seller's Covenants. Seller hereby covenants and agrees as
follows:
(a) during the Contract Period, Seller shall ensure that the Sacto
Portfolio is operated and maintained in a manner consistent with past practices
and maintain reasonable and customary levels and coverages of insurance and
Seller shall not create or acquiesce in the creation of liens or exceptions to
title other than the Permitted Exceptions or voluntarily take any action (other
than as may be permitted pursuant to subparagraph (b) of this Section 4.2) to
render any of the representations or warranties of Seller set forth in Section
4.1 materially incorrect; and
(b) during the Contract Period, Seller will not execute or modify any
Tenant Leases or Contracts, (i) without promptly notifying Buyer thereof and
providing Buyer with copies of the relevant contract documents, and (ii) as to
any Tenant Lease or Contract (or modification thereof) executed during the
period between the expiration of the Inspection Period and the Closing Date,
without Buyer's prior approval, which approval shall not be unreasonably
withheld and shall be deemed given if Buyer should fail to approve or disapprove
any such matter in writing within 5 days following Seller's request for such
action.
(c) Seller shall terminate on or before the Closing Date, at no cost or
expense to Buyer, any and all Contracts that are not approved by Buyer prior to
the expiration of the Inspection Period. In particular, Buyer will not retain
the existing management agents of Seller for the Sacto Portfolio, and,
accordingly, on the Closing Date, Seller shall (i) cause all management
agreements respecting the Sacto Portfolio to be terminated, and deliver evidence
of such termination to Buyer, and (ii) remove all management personnel from the
Real Property.
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Section 4.3 Buyer's Warranties and Representations. Buyer hereby represents
and warrants to Seller that (a) Buyer has and as of the Closing Date shall have,
full power and lawful authority to enter into and carry out the terms and
conditions of this Agreement and to execute and deliver all documents which are
contemplated by this Agreement, (b) all actions necessary to confer such power
and authority upon the persons executing this Agreement and all documents which
are contemplated by this Agreement to be executed on behalf of Buyer or its
assignee have been taken, and (c) Buyer has received no written notice of any
threatened or pending litigation which would materially and adversely affect
Buyer's capacity to perform under this Agreement.
Section 4.4 Limitations. The parties agree that (a) Seller's
indemnification obligations, warranties and representations contained in this
Agreement and in any document executed by Seller pursuant to this Agreement
shall survive Buyer's purchase of the Sacto Portfolio only for a period of 12
months after the Closing Date (the "Limitation Period"), (b) Seller shall be
liable solely for claims arising out of such representations and warranties if
such claims have reached an aggregate $20,000 (i.e., Seller shall be liable for
the first dollar of such claims if the aggregate reaches the $20,000 figure),
(c) Seller's aggregate liability for claims arising out of such representations
and warranties shall not exceed $400,000, and (d) Buyer shall provide actual
written notice to Seller of any breach of such warranties or representations and
shall allow Seller 30 days within which to cure such breach, or, if such breach
cannot reasonably be cured within 30 days, an additional reasonable time period,
so long as such cure has been commenced within such 30 days and thereafter is
diligently pursued to completion. If Seller fails to cure such breach after
actual written notice and within such cure period, Buyer's sole remedy shall be
an action at law for damages as a consequence thereof, which must be commenced,
if at all, within the Limitation Period; provided however, that if within the
Limitation Period Buyer gives Seller written notice of such a breach and Seller
refuses to cure or commences to cure and thereafter terminates such cure effort,
Buyer shall have an additional 30 days from the date Buyer receives written
notice from Seller of such refusal or termination within which to commence an
action at law for damages as a consequence of Seller's failure to cure, in which
case any representation or warranty that is expressly set forth in the notice
delivered pursuant to clause (c) immediately above and is material to such
litigation shall survive until all liabilities arising out of the alleged breach
have been finally determined. The Limitation Period referred to herein shall
apply to known as well as unknown breaches of such warranties or
representations. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 4.1 OF THIS AGREEMENT,
BUYER ACKNOWLEDGES THAT BUYER IS ACQUIRING THE SACTO PORTFOLIO SOLELY IN
RELIANCE ON BUYER'S OWN INVESTIGATION AND "AS IS," "WHERE IS" AND WITH ALL
FAULTS AND DEFECTS, LATENT OR OTHERWISE. BUYER EXPRESSLY ACKNOWLEDGES THAT, IN
CONSIDERATION OF THE AGREEMENT OF SELLER TO PERFORM AS SET FORTH IN THIS
AGREEMENT, SELLER MAKES AND HAS MADE NO REPRESENTATIONS OR WARRANTIES, EXPRESS
OR IMPLIED, OR ARISING BY
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OPERATION OF LAW, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY AS TO TITLE, LAND
USE CLASSIFICATION OR ENTITLEMENT, ENVIRONMENTAL OR OTHER CONDITION,
MERCHANTABILITY OF FITNESS FOR ANY PARTICULAR USE OR PURPOSE, WITH RESPECT TO
THE SACTO PORTFOLIO OR ANY MATTER RELATED THERETO, EXCEPT AS EXPRESSLY OTHERWISE
SET FORTH IN SECTION 4.1 HEREOF. IF BUYER OBTAINS ANY KNOWLEDGE, WHETHER
PURSUANT TO THE PROVISIONS OF THIS AGREEMENT OR OTHERWISE, PRIOR TO THE CLOSING
DATE, THAT REASONABLY INDICATES THAT ANY WARRANTY SET FORTH HEREIN HAS BEEN
BREACHED, ANY REPRESENTATION SET FORTH HEREIN IS NOT ACCURATE, OR THAT THERE ARE
ANY PHYSICAL, TITLE OR OTHER DEFECTS IN OR ADVERSE CONDITIONS RELATING TO ANY
PROPERTY, YET BUYER ELECTS TO CLOSE THE TRANSACTION CONTEMPLATED BY THIS
AGREEMENT WITH RESPECT TO SUCH PROPERTY (NOTWITHSTANDING SUCH KNOWLEDGE), SELLER
SHALL HAVE NO LIABILITY FOR ANY SUCH BREACH, INACCURACY, DEFECT OR ADVERSE
CONDITION, AND BUYER SHALL BE DEEMED TO HAVE WAIVED SUCH BREACH, INACCURACY,
DEFECT OR ADVERSE CONDITION.
Section 4.5 Seller's Certificate. Seller shall deliver to Buyer on the
Closing Date a certificate (the "Seller's Certificate") updating the
representations and warranties of Seller set forth in Section 4.1 through the
Closing Date; provided, however, that if Seller becomes aware during the
Contract Period of any matters which make any of such representations or
warranties untrue, Seller shall disclose such matters in the Seller's
Certificate. In the event the Seller's Certificate discloses any matters which
make any of Seller's representations or warranties untrue as of the date of such
Certificate in any respect or in the event that Buyer otherwise becomes aware
during the Contract Period of any matters which make any of Seller's
representations or warranties materially untrue in any material respect, Seller
shall bear no liability for such matters (provided that Seller has not breached
an express covenant set forth in this Agreement), but Buyer shall have the right
to elect in writing on or before the Closing Date, (a) to waive such matters and
complete the purchase of the Sacto Portfolio in accordance with the terms of
this Agreement, or (b) as to any matters disclosed or discovered following the
expiration of the Inspection Period, to terminate this Agreement. Buyer's
delivery of the Inspection Letter shall constitute Buyer's conclusive agreement
to accept or waive any such matters disclosed to Buyer in writing prior to the
close of the Inspection Period.
Section 4.6. Indemnifications. Subject to the foregoing limitations and the
provisions of Sections 6.3, 6.4 and 7.12:
(a) Seller shall indemnify and defend Buyer against and hold Buyer harmless
from any and all claims, liabilities, losses, damage, costs and expenses,
including, without limitation, all reasonable attorneys' fees, asserted against
or suffered
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by Buyer resulting from (i) any breach by Seller of this Agreement, (ii) the
untruth, inaccuracy or breach of any of the representations and warranties made
by Seller pursuant to this Agreement and (iii) any liability or obligation
arising in connection with the Sacto Portfolio accruing prior to the Closing
Date. The survival of Seller's obligations under this Section 4.6(a) shall be
governed by Section 4.4 above.
(b) Buyer shall indemnify and defend Seller against and hold Seller
harmless from any claim, loss, damage, or expense, including any reasonable
attorneys' fees, asserted against or suffered by Seller resulting from (i) any
breach by Buyer of this Agreement, (ii) the untruth, inaccuracy or breach of any
of the representations or warranties made by Buyer pursuant to this Agreement
and (iii) any liability or obligation arising in connection with the Sacto
Portfolio accruing following the Closing Date. Buyer's obligations under this
Section 4.6(b) shall survive the Closing Date for a period of twelve (12)
months, but not thereafter.
ARTICLE V
DEPOSIT
Upon execution of this Agreement, Buyer shall deliver to Escrow Company,
for deposit into the escrow described in Section 6.1 below, an amount equal to
$100,000 (the "Initial Deposit"). At the close of the Inspection Period, if
Buyer has not then elected to terminate this Agreement as provided herein, Buyer
shall deliver to Title Company, for deposit into the escrow described in Section
6.1 below, the additional sum of $100,000 (which amount, together with the
Initial Deposit and any interest that may accrue thereon in escrow, referred to
herein as the "Deposit"). In the event that this transaction is consummated as
contemplated by this Agreement, then the entire amount of the Deposit shall be
credited against the Purchase Price. The entire amount of the Deposit shall be
returned immediately to Buyer in the event of the failure of any of the
conditions precedent set forth in Section 3.l(a) above or in the event that (a)
the conditions precedent set forth in Section 3.l(b) shall have been satisfied
or waived, (b) Buyer shall have performed fully or tendered performance of its
obligations hereunder and (c) Seller shall be unable or fail to perform its
obligations under this Agreement. IN ALL OTHER EVENTS, THE ENTIRE AMOUNT OF THE
DEPOSIT SHALL BE RETAINED BY SELLER AS LIQUIDATED DAMAGES. BUYER AND SELLER
HEREBY ACKNOWLEDGE AND AGREE THAT SELLER'S DAMAGES IN THE EVENT OF SUCH A BREACH
OF THIS AGREEMENT BY BUYER WOULD BE DIFFICULT OR IMPOSSIBLE TO DETERMINE, THAT
THE AMOUNT OF THE DEPOSIT IS THE PARTIES' BEST AND MOST ACCURATE ESTIMATE OF THE
DAMAGES SELLER WOULD SUFFER IN THE EVENT THE TRANSACTION PROVIDED FOR IN THIS
AGREEMENT FAILS TO CLOSE, AND THAT SUCH ESTIMATE IS REASONABLE UNDER THE
CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT. BUYER AND SELLER AGREE
THAT SELLER'S
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RIGHT TO RETAIN THE DEPOSIT SHALL BE THE SOLE REMEDY OF SELLER AT LAW IN THE
EVENT OF A BREACH OF THIS AGREEMENT BY BUYER. THE FOREGOING SHALL NOT BE
UNDERSTOOD TO LIMIT BUYER'S OBLIGATIONS TO SELLER UNDER THE PROVISIONS OF
SECTION 2.3(c)(v) OF THIS AGREEMENT OR BUYER'S OBLIGATION TO REIMBURSE SELLER
FOR ATTORNEYS' FEES UNDER THE PROVISIONS OF SECTION 7.9 OF THIS AGREEMENT TO THE
EXTENT INCURRED TO SECURE THE RELEASE OF THE DEPOSIT TO SELLER.
ACCEPTED AND AGREED TO:
- ---------------------------------- ---------------------------------
Seller Buyer
ARTICLE VI
ESCROW AND CLOSING
Section 6.1 Escrow Arrangements. An escrow for the purchase and sale
contemplated by this Agreement has been opened by Buyer and Seller with Escrow
Company. At least one business day prior to the Closing Date, Seller and Buyer
shall each deliver escrow instructions to Escrow Company consistent with this
Article VI, and designating Escrow Company as the "Reporting Person" for the
transaction pursuant to Section 6045(e) of the Code. In addition, the parties
shall deposit in escrow, at least one business day prior to the Closing Date
(unless otherwise provided below in this Section 6.1) the funds and documents
described below:
(a) Seller shall deposit (or cause to be deposited):
(i) a duly executed and acknowledged grant deed pertaining to the Real
Property portion of each of the Properties constituting the Sacto Portfolio,
each in the form attached to this Agreement as Exhibit F (collectively, the
"Deeds");
(ii) a duly executed bill of sale pertaining to the Personal Property
portion of each of the Properties constituting the Sacto Portfolio, each in the
form attached to this Agreement as Exhibit G (collectively, the "Bills of
Sale");
(iii) a duly executed counterpart assignment and assumption pertaining
to the Intangible Property portion of each of the Properties constituting the
Sacto Portfolio, each in the form attached to this Agreement as Exhibit H
(collectively, the "Assignments and Assumption of Intangible Property");
(iv) the duly executed Seller's Certificate described in Section 4.1;
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(v) a certificate from Seller certifying the information required by
Section 18660 of the California Revenue and Taxation Code and the regulations
issued thereunder to establish that the transaction contemplated by this
Agreement is exempt from the tax withholding requirements of such provisions
(the "California Certificate"); and
(vi) a certificate from Seller certifying the information required by
Section 1445 of the Code to establish, for the purposes of avoiding Buyer's tax
withholding obligations, that Seller is not a "foreign person" as defined in
Section 1445(f)(3) of the Code (the "FIRPTA Certificate").
In addition, Seller shall deliver to Buyer on the Closing Date, outside of
escrow, to the extent in Seller's possession or control, the originals of all
Tenant Leases and tenant files and all keys to the Property.
(b) Buyer shall deposit:
(i) at or before 11:30 a.m. (Pacific Time) on the Closing Date,
immediately available funds sufficient to pay the balance of the Purchase Price,
plus sufficient additional cash to pay Buyer's share of all escrow costs and
closing expenses;
(ii) a duly executed counterpart for each of the Assignments and
Assumption of Intangible Property; and
(iii) a certificate duly executed by Buyer in favor of Seller
confirming the waivers and acknowledgments set forth in Sections 2.3(a) and (b)
above.
Section 6.2 Closing. Escrow Company shall close escrow on the Closing Date
by:
(a) recording the Deeds;
(b) causing Title Company to issue the Title Policies to Buyer;
(c) delivering to Buyer the Bills of Sale, the Seller's Certificate, the
FIRPTA Certificate, the California Certificate, and a counterpart for each of
the Assignments and Assumption of Intangible Property executed by Seller; and
(d) delivering to Seller (i) a counterpart for each of the Assignments and
Assumption of Intangible Property executed by Buyer, (ii) the certificate
described in Section 6.l(b)(iii) above, and (iii) funds in the amount of the
Purchase Price, as adjusted for credits, prorations and closing costs in
accordance with this Article VI.
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Section 6.3 Prorations.
(a) Real estate taxes and assessments, personal property taxes, if any,
rental income and all other items of income and expense with respect to the
Sacto Portfolio shall be prorated between Seller and Buyer as of the Closing
Date. Income and expenses shall be prorated on the basis of a 30-day month and
on a cash basis (except for items of income and expense that are payable less
frequently than monthly, which shall be prorated on an accrual basis). All such
items attributable to the period prior to the Closing Date shall be credited to
Seller; all such items attributable to the period on and following the Closing
Date shall be credited to Buyer. Buyer shall be credited in escrow with (a) any
portion of rental agreement or lease deposits in Seller's possession with
respect to the Sacto Portfolio which are refundable to the tenants and (b) rent
prepaid beyond the Closing Date. Buyer shall not be entitled to any interest on
rental agreement or lease deposits or prepaid rent accrued on or before the
Closing Date, except to the extent any such amount of interest is refundable or
payable to any tenant under a Lease. Seller shall be credited in escrow with any
refundable deposits or bonds held by any utility, governmental agency or service
contractor with respect to the Sacto Portfolio, to the extent such deposits or
bonds are assigned to and accepted by Buyer on the Closing Date. In addition,
Seller shall be credited in escrow with any leasing commissions, free rental
periods or tenant improvement or other allowances paid or endured by Seller
during the portion of the Contract Period after the expiration of the Inspection
Period to the extent such relate to Tenant Leases executed after the expiration
of the Inspection Period and are equitably allocable to that portion of the
stabilized term (i.e. the term following the tenant's entry into occupancy and
commencement of unabated rental obligations) of any such Tenant Lease of the
Sacto Portfolio following the Closing Date. To the extent approved by Buyer or
applicable under any Tenant Lease with respect to any extension term or
expansion of premises that is exercised after the expiration of the Inspection
Period, Buyer shall assume all obligations for any such leasing commissions,
free rental periods or tenant improvement or other allowances payable following
the Closing Date. Buyer shall be credited in escrow with any leasing
commissions, free rental periods or tenant improvements or other allowances to
be paid or endured by Buyer on or after the Closing Date with respect to the
current term of any Tenant Lease executed, or any extension term or expansion of
premises exercised, in each case, prior to the expiration of the Inspection
Period, and Seller shall pay on or before the Closing Date all such items
payable prior to the Closing Date.
(b) Buyer and Seller shall cooperate to produce prior to the Closing Date a
schedule of prorations to be made on and after the Closing Date as complete and
accurate as reasonably possible. With respect to taxes or other expenses payable
or reimbursable by the tenants of the Sacto Portfolio, the amounts prorated
between Buyer and Seller shall be the net amounts (if any) not subject to
payment or reimbursement by or to the tenants. All prorations which can be
liquidated accurately or reasonably estimated as of the Closing Date shall be
made in escrow on the Closing Date. All other
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prorations, and adjustments to initial estimated prorations, shall be made by
the parties with due diligence and cooperation within 30 days following the
Closing Date, or such later time as may be required to obtain necessary
information for proration, by immediate cash payment to the party yielding a net
credit from such prorations from the other party.
(c) Buyer shall, consistent with reasonable business judgment, exert its
best efforts to collect for Seller following the Closing Date all rental income
which is delinquent on the Closing Date; provided, however, that Buyer shall not
be required to commence legal proceedings to collect such rents. Notwithstanding
the foregoing proviso, Seller reserves the right to pursue any remedy Seller may
have against any tenant with respect to such delinquent rents; provided,
however, that Buyer shall not incur any cost, expense or liability in connection
therewith, and provided further that Seller shall not commence any legal or
equitable proceedings in the nature of an unlawful detainer, eviction or other
proceeding which would have the effect of interfering with any tenant's quiet
enjoyment of its leased premises or result in a lien or encumbrance on such
leased premises. Any sums collected on account of rents after the Closing Date
shall be successively applied to the payment of (i) rent due and payable in the
months succeeding the month in which the closing occurs, (ii) rent due and
payable in the month in which the closing occurs, and (iii) rent due and payable
in the months preceding the month in which the closing occurs.
Section 6.4 Other Closing Costs.
(a) Buyer shall pay (i) any sales or use taxes determined to be payable in
connection with this transaction, (ii) all fees and expenses of Buyer's legal
counsel and other third party consultants engaged by or on behalf of Buyer in
connection with this transaction, (iii) any excess portion of the premium for
any Title Policy beyond that which would have been required had the Title Policy
been a CLTA standard coverage policy of title insurance without any
endorsements, (iv) 50% of any Sacramento city documentary transfer tax and (v)
50% of any escrow charges or other fees or costs charged by or reimbursable to
Escrow Company or Title Company and recording fees.
(b) Seller shall pay (i) all fees and expenses of Seller's legal counsel
and other third party consultants engaged by or on behalf of Seller in
connection with this transaction, (ii) any Sacramento County documentary
transfer tax, (iii) 50% of any Sacramento city documentary transfer tax, (iii)
50% of any escrow charges or other fees or costs charged by or reimbursable to
Escrow Company or Title Company and recording fees, (iv) the premium for any
Title Policy that would have been charged had such Title Policy been a CLTA
standard coverage owners' policy of title insurance without any endorsements and
(v) any prepayment fee or other charge in connection with the payoff of any
monetary encumbrance.
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(c) Any costs and expenses of closing that are not expressly identified in
subparagraph (a) or (b) above shall be allocated between the parties in
accordance with prevailing custom in the county in which the Property to which
the costs and expenses are attributable is located, or if such costs and
expenses are not attributable to any particular Property, then such costs or
expenses shall be allocated equally between Buyer and Seller.
Section 6.5 Further Documentation. Promptly after the close of escrow,
Buyer and Seller shall deliver to each tenant of the Real Property written
notice advising the tenant of the sale of the Real Property by Seller to Buyer,
and otherwise complying with the provisions of California Civil Code
Section1950.7(d)(1). Each such notice shall be delivered in the manner set forth
in such Section of the Civil Code. At or following the close of escrow, Buyer
and Seller each shall execute any certificate or other instruments required by
law or local custom or otherwise reasonably requested by the other party to
effect the transaction contemplated by this Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Cooperation in Exchange. Buyer acknowledges and agrees that
Seller may assign its interest in this Agreement to an exchange facilitator for
the purpose of completing an exchange of the Real Property in a transaction
which will qualify for treatment as a tax deferred exchange pursuant to the
provisions of Section 1031 of the Internal Revenue Code of 1986 and applicable
state revenue and taxation code sections (a "1031 Exchange"). Buyer agrees to
cooperate with the Seller in implementing any such assignment and 1031 Exchange
provided that such cooperation shall not entail any additional expense to Buyer
or cause Buyer any liability whatsoever beyond its existing obligations under
this Agreement. No such assignment by Seller shall relieve it from any of its
obligations hereunder, nor shall Seller's ability to consummate a tax deferred
exchange be a condition to the performance of Seller's obligations under this
Agreement.
Section 7.2 Damage or Destruction.
(a) Buyer shall be bound to purchase each of the Properties within the
Sacto Portfolio for the Purchase Price as required by the terms of this
Agreement without regard to the occurrence or effect of any damage to or
destruction of any of the Properties or condemnation of any Property by right of
eminent domain, provided that the occurrence of any damage or destruction
involves repair costs of $250,000 or less, and any condemnation does not affect
a material portion for each affected Property. If Buyer is so bound to purchase
a Property notwithstanding the occurrence of damage, destruction or
condemnation, then upon the close of escrow: (A) in the event of damage covered
by insurance or an immaterial condemnation, Buyer shall receive a credit against
the
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Purchase Price in the amount (net of collection costs and costs of repair
reasonably incurred by Seller and not then reimbursed) of any insurance proceeds
or condemnation award collected and retained by Seller as a result of any such
damage or destruction or condemnation plus (in the case of damage) the amount of
the deductible portion of Seller's insurance policy, and Seller shall assign to
Buyer all rights to such net insurance proceeds or condemnation awards as shall
not have been collected prior to the close of escrow; and (B) in the event of
damage not covered by insurance, Buyer shall receive a credit (not to exceed
$250,000 for each affected Property) in the amount of the estimated cost to
repair the damage.
(b) In the event that any Property suffers damage or destruction
or condemnation prior to the Closing Date that involves repair costs in excess
of $250,000 or, in the case of condemnation, a material portion of the affected
Property, then either Buyer or Seller may elect to terminate this Agreement by
giving written notice of such election to the other party promptly following
the event of damage or destruction.
Section 7.3 Brokerage-Commissions and Finder's Fees.
(a) Each party to this Agreement warrants to the other that, except as
otherwise provided in subparagraph (b) below, no person or entity can properly
claim a right to a real estate commission, real estate finder's fee, real estate
acquisition fee or other real estate brokerage-type compensation (collectively,
"Real Estate Compensation") based upon the acts of that party with respect to
the transaction contemplated by this Agreement. Each party hereby agrees to
indemnify and defend the other against and to hold the other harmless from any
and all loss, cost, liability or expense (including but not limited to
attorneys' fees and returned commissions) resulting from any claim for Real
Estate Compensation by any person or entity based upon such acts.
(b) The parties hereby acknowledge that CB Commercial ("Broker") has acted
as a broker in connection with this transaction. Seller shall be responsible for
paying any commission due to Broker in connection with this transaction pursuant
to their separate written agreement.
Section 7.4 Successors and Assigns. Buyer may not assign any of Buyer's
rights or duties hereunder without the prior written consent of Seller. No
assignment by Buyer shall relieve Buyer of its obligations under this Agreement.
Subject to the limitations on assignment expressed in this Section 7.3, this
Agreement shall be binding upon, and inure to the benefit of, Buyer and Seller
and their respective successors and assigns.
Section 7.5 Notices. All notices or other communications required or
provided to be sent by either party shall be in writing and shall be sent by
United States Postal Service, postage prepaid, registered or certified mail,
return receipt requested, by
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any nationally known overnight delivery service, by courier, in person or by
telecopy, with an electronic confirmation of receipt. All notices shall be
deemed to have been given forty-eight (48) hours following deposit in the United
States Postal Service or upon personal delivery if sent by overnight delivery
service, telecopy, courier or personally delivered; provided, however, that any
notice or other communication delivered other than during normal business hours
shall be deemed delivered on the next following business day. All notices shall
be addressed to the party at the address or telecopier number below:
To Seller:
c/o AEW Capital Management, L.P.
225 Franklin Street
Boston, Massachusetts 02110
Attn: General Counsel
Telecopy No.: (617) 261-9555
Telephone No.: (617) 261-9000
with a copy to: Mr. Jeffrey Donnelly
AEW Capital Management, L.P.
225 Franklin Street
Boston, Massachusetts 02110
Telecopy No.: (617) 261-9555
Telephone No.: (617) 261-9000
with a copy to: Heller Ehrman White & McAuliffe
333 Bush Street
San Francisco, California 94104
Attn: Brian Smith, Esq.
Telecopy No.: (415) 772-6268
Telephone No.: (415) 772-6000
To Buyer: Pacific Gulf Properties Inc.
4220 Von Karman, 2nd Floor
Newport Beach, California 92660
Attn: Mr. Lonnie P. Nadal
Telecopy No.: (714) 223-5033
Telephone No.: (714) 223-5000
with a copy to: John H. Kuhl, Esq.
Cox, Castle & Nicholson LLP
2049 Century Park East, 28th Floor
Los Angeles, California 90067
Telecopy No.: (310) 277-7889
Telephone No.: (310) 277-4222
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Any address, telecopy number or name specified above may be changed by notice
given to the addressee by the other party in accordance with this Section 7.4.
The inability to deliver because of a changed address or telecopy number of
which no notice was given, or rejection or other refusal to accept any notice,
shall be deemed to be the receipt of the notice as of the date of such inability
to deliver or rejection or refusal to accept. Any notice to be given by any
party hereto may be given by the counsel for such party.
Section 7.6 Time. Time is of the essence of every provision contained in
this Agreement.
Section 7.7 Possession. The rights of possession of the Real Property
(subject to the Tenant Leases and the Permitted Exceptions) shall be delivered
by Seller to Buyer on the Closing Date.
Section 7.8 Incorporation by Reference. All of the exhibits attached to
this Agreement or referred to herein and all documents in the nature of such
exhibits, when executed, are by this reference incorporated in and made a part
of this Agreement.
Section 7.9 No Deductions or Off-Sets. Buyer acknowledges that the Purchase
Price to be paid for the Sacto Portfolio pursuant to this Agreement is a net
amount and shall not be subject to any off-sets or deductions.
Section 7.10 Attorneys' Fees. In the event any dispute between Buyer and
Seller should result in litigation, the prevailing party shall be reimbursed for
all reasonable costs incurred in connection with such litigation, including,
without limitation, reasonable attorneys' fees, court costs and fees of experts.
Section 7.11 Construction. The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments or exhibits hereto.
Section 7.12 Governing Law. This Agreement shall be construed and
interpreted in accordance with and shall be governed and enforced in all
respects according to the laws of the State of California.
Section 7.13 Damages. Buyer agrees that any liability of Seller under any
claim brought prior to the Closing Date pursuant to this Agreement or any
document or instrument delivered simultaneously or in connection with, or
pursuant to this Agreement, shall be limited solely to its interest in the Sacto
Portfolio, and no other assets of Seller shall be subject to levy or execution.
With respect to any such claim brought following the Closing Date, any liability
of Seller shall be limited solely to the assets of Seller. In
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no event shall Buyer seek satisfaction for any such obligation from any of
Seller's trustees, beneficiaries, shareholders, officers, directors, employees,
agents, legal representatives or successors or assigns (or from any of their
trustees, beneficiaries, shareholders, officers, directors, employees, agents,
legal representatives, successors or assigns), nor shall any such person or
entity have any personal liability for any such obligations of Seller.
Section 7.14 Confidentiality. The parties hereby acknowledge and agree
that, prior to the Closing Date, the existence of this Agreement, the terms and
conditions set forth herein, and any materials delivered in connection with this
transaction are to be kept strictly confidential. Accordingly, except (a) for
the Title and Escrow Companies, (b) in connection with the enforcement of any
rights hereunder, (c) for the delivery and recordation of instruments, notices
or other documents to implement this Agreement, and (d) as may in good faith be
believed to be required by law or court order, neither party shall, without the
prior written consent of the other, release, publish or otherwise distribute
(and shall not authorize or permit any other person or entity to release,
publish or otherwise distribute) any information concerning this Agreement or
the transaction contemplated herein, or any materials so delivered, to any
person or entity other than Buyer's prospective lenders, such party's legal,
accounting and financial advisors, Seller's property managers and Buyer's due
diligence consultants, each of whom shall agree to hold such information or
materials strictly confidential as if such persons were bound by the provisions
of this Section 7.13. Following the Closing Date, either party may make
reasonable and customary announcements and press releases regarding the
transaction.
Section 7.15 Counterparts. This Agreement may be executed in one or more
counterparts. All counterparts so executed shall constitute one contract,
binding on all parties, even though all parties are not signatory to the same
counterpart.
Section 7.16 Entire Agreement. This Agreement and the attached exhibits,
which are by this reference incorporated herein, and all documents in the nature
of such
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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exhibits, when executed, contain the entire understanding of the parties and
supersede any and all other written or oral understanding.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of the
day and year first written above.
SELLER:
SAMMIS SACRAMENTO ASSOCIATES, a California general partnership
By: METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
(successor by merger to New England Mutual Life Insurance
Company, a Massachusetts corporation), on behalf of its
Developmental Properties Account ("DPA"), Managing Partner
By: AEW Real Estate Advisors, Inc., a Massachusetts corporation
(formerly known as Copley Real Estate Advisors, Inc.), its asset
manager and advisor hereunto duly authorized
By:
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Name:
Title:
BUYER:
Pacific Gulf Properties Inc., a Maryland corporation
By:
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Name:
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Its:
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By:
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Name:
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Its:
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EXHIBIT A
DISCLOSURE STATEMENT
Any additions to the attached form of Disclosure
Statement to be provided by 5:00 P.M. Los Angeles
time on November 26, 1997.
<PAGE> 27
EXHIBIT A
DISCLOSURE STATEMENT
All capitalized terms used herein but not otherwise defined shall have the
meanings given them in the Agreement.
1. Matters disclosed by the environmental reports and audits and the
structural reports and other physical inspection reports delivered to Buyer
prior to the end of the Inspection Period or included in the materials
delivered to or made available to Buyer pursuant to Section 2.3 of the
Agreement.
2. The applicable Personal Property and the improvements, located on the Real
Property, and their structural components, the building systems and other
mechanical systems, and the parking and loading areas are, and have been,
subject to normal wear and tear and obsolescence as the result of the age
of such items.
3. All the matters set forth on this Disclosure Statement are limited to
Seller's Knowledge. Seller does not make any representations or warranties,
other than as expressly set forth in Section 4.1 of the Agreement,
regarding the scope or content of the matters referenced in this Disclosure
Statement. Neither the foregoing list nor the materials referred to therein
are intended to be an exhaustive enumeration of issues relevant to the
Sacto Portfolio, nor are they intended to fully inform you of any
particular issue or its ramifications. Rather this Disclosure Statement is
presented to you pursuant to Section 4.1 of the Agreement and is merely
intended to assist you with your investigation of the Sacto Portfolio by
flagging for you those matters which, to Seller's Knowledge, may affect the
Sacto Portfolio or Seller's warranties and representations set forth in
Section 4.1 of the Agreement.
<PAGE> 28
EXHIBIT B
INSPECTION LETTER
_________, 1997
Sammis Sacramento Associates
c/o AEW Capital Management, L.P.
225 Franklin Street
Boston, Massachusetts 02110
Attn: General Counsel
Re: Agreement for Purchase and Sale of the Sacramento Properties,
dated November _, 1997 (the "Purchase Agreement") between Sammis
Sacramento Associates ("Seller") and Pacific Gulf Properties Inc.
("Buyer")
Gentlemen & Ladies:
This letter constitutes the Inspection Letter contemplated by the
above-referenced Purchase Agreement and is delivered to confirm the satisfaction
of the conditions precedent described in Sections 3.1(a)(i) and 3.1(a)(ii) of
the Purchase Agreement.
Buyer hereby expressly confirms to Seller (and to its officers,
directors, shareholders, trustees and beneficiaries and their respective
agents, employees, successors and assigns) that Buyer has completed to its
satisfaction the inspection and review contemplated by Sections 2.3 and 2.4 of
the Purchase Agreement. Buyer, moreover, hereby ratifies and affirms all of the
acknowledgments, waivers and releases set forth in Section 2.3.
Accordingly, based on its inspection and review of the Sacto
Portfolio, Buyer is prepared to proceed with the purchase of the Sacto Portfolio
in accordance with the terms of the Purchase Agreement subject only to the
satisfaction of the conditions described in Sections 3.1(a)(iii) and 3.1(a)(iv)
of the Purchase Agreement.
Very truly yours,
Pacific Gulf Properties Inc.
By:
-------------------------------
Its
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<PAGE> 29
EXHIBIT C
LEGAL DESCRIPTION OF LAND
PARCEL ONE:
All that portion of Parcel "C" as shown on the parcel map entitled "Folsom
Industrial Park being a portion of Rancho Rio de los Americanos in projected
Township 8 North, Range 6 East, M.D.M.", recorded in the office of the County
Recorder of Sacramento County on April 29, 1976 in Book 26 of Parcel Maps, at
Page 3, described as follows:
COMMENCING at the Southeasterly corner of said Parcel "C", thence South 57
degrees 34'12" West along the Southerly line of said Parcel "C" 1.05 feet;
thence South 58 degrees 43'14" West 298.95 feet to the point of beginning,
thence South 58 degrees 43'14" West continuing along the Southerly line of said
Parcel "C" 199.12 feet; thence South 57 degrees 34'12" West 100.88 feet; thence
North 32 degrees 25'48" West 315.00 feet; thence North 57 degrees 34'13" East
187.77 feet; thence along the arc of a curve to the left, with a radius of
530.00 feet and a central angle of 12 degrees 13'14" the chord of which bears
North 51 degrees 27'34" East 112.83 feet; thence South 32 degrees 25'48" East
331.01 feet to the point of beginning, and being the same as Parcel 11,
described in that certain "Certificate of Compliance", recorded in Book
77-09-08, Page 1302 of Official Records.
Assessor's Parcel Number: 068-0160-058-0000
PARCEL TWO:
Parcels 14 thru 19, as shown on the Parcel Map entitled "All that portion of
Parcel C as shown on the Parcel Map entitled Folsom Industrial Park, filed in
Book 26 of Parcel Maps, Page 3", recorded in Book 52 of Parcel Maps, at page 15,
records of said County.
EXCEPTING FROM the above described Parcels 1, 2, 3 and 4, one-half of all
mineral rights in and to the herein described land, as reserved in deed from the
Federal Land Bank of Berkeley to Vesper C. Utterback, et ux, recorded January
10, 1941 in Book 862, Page 202 of Official Records. By Quitclaim Deed recorded
March 7, 1969, in Book 6903-07, Page 746 of Official Records, The Federal Land
Bank of Berkeley, a corporation, quitclaimed their interest "in, upon and to a
depth of 500 feet below the surface" of the herein described land.
Portion of Assessor's Parcel Number: 068-0530-020-0000
<PAGE> 30
PARCEL THREE:
All that real property situated in the County of Sacramento, State of California
and being all of Parcel 3 as said Parcel is described in that certain Grant Deed
to the County of Sacramento, a political subdivision of the State of California,
recorded in Book 6611-21, Official Records, Pages 146 and 147, more particularly
described as follows:
All that portion of the subdivision designated "Wm. Crites No. 2, 156.56 A: of
Rancho Rio De Los Americanos, the official plat of which is recorded in the
office of the Recorder of Sacramento County in Book 1 of Maps, Map No. 2,
described as follows:
BEGINNING at a point located on the Northerly boundary of Silva Vineyards, the
official plat of which is recorded in said Recorder's Office in Book 19 of Maps,
Map No. 29, from which the Northwest corner thereof bears North 89 degree 52'43"
West 29.98 feet, thence from said point of beginning, Northerly curving to the
right of an arc of 136.00 feet radius, said arc being subtended by a chord
bearing North 03 degrees 34'21" West 16.37 feet; thence North 89 degrees 52'48"
East 8.00 feet; thence North 00 degrees 07'12" West 1296.25 feet; thence North
00 degrees 12'10" East 496.03 feet; thence curving to the left on an arc of
85.93 feet radius, said arc being subtended by a chord bearing North 16 degrees
21'02" West 48.96 feet; thence North 32 degrees 54'15" West 40.05 feet to a
point located on the Southeasterly right of way line of the Southern Pacific
Railroad Company; thence along said right of way line South 57 degrees 11'57"
West 1.43 feet to the Northwesterly corner of that certain Parcel No. I
described in Deed to Walker and Donant, a partnership, recorded in said
Recorder's Office on August 9, 1956, in Book 3135, Page 90; thence along the
Westerly line of said parcel South 00 degrees 12'10" West 575.78 feet and South
00 degrees 07'12" East 1312.56 feet to the said Northwest corner of said Silva
Vineyards; thence North 89 degrees 52'43" East 29.98 feet along the said
Northerly boundary of Silva Vineyards to the point of beginning.
EXCEPTING THEREFROM all that portion of said Parcel 3 described hereinabove
lying North of the Easterly prolongation of the South line of Parcel 20 as said
Parcel is shown and so designated on that certain Parcel Map entitled "All that
portion of Parcel "C" as shown on Parcel Map entitled 'Folsom Industrial Park'
filed in Book 26 of Parcel Maps, Page 3 and being a portion of Rancho Rio De Los
Americanos 1 BM 2", filed in said Recorder's Office in Book 52 of Parcel Maps,
Page 15.
ALSO EXCEPTING THEREFROM all that portion of said Parcel 3 described hereinabove
lying South of the Easterly prolongation of the South line of Parcel 14 as said
Parcel is shown and so designated on said Parcel Map.
Balance of Assessor's Parcel Number: 068-0530-020-0000
-2-
<PAGE> 31
EXHIBIT D
TENANT LIST
<TABLE>
<CAPTION>
TENANT ADDRESS SUITE SQUARE FEET
- ------ ------- ----- -----------
<S> <C> <C> <C>
1. Imbsen & Associates 9912 Business Park Dr. 130/2 11,566
2. Imbsen & Associates 9912 Business Park Dr. 145 3,232
3. Mercy Home Health 9912 Business Park Dr. 170/1 11,540
4. Product Development Corp. 9912 Business Park Dr. 180/1 1,920
5. Guerrilla Graphics 9912 Business Park Dr. 185/2 1,920
6. Landgraf, Gierke, et al 9912 Business Park Dr. 195/1 2,560
7. Zimmer Samudio 9940 Business Park Dr. 125/3 2,241
8. Brown & Mills, Inc. 9940 Business Park Dr. 140/2 1,560
9. Integrated Electronics 9940 Business Park Dr. 145/1 1,560
10. Monroe Systems for Bus 9940 Business Park Dr. 150/3 1,496
11. Innovative Imaging 9940 Business Park Dr. 155/1 1,496
12. Mercy Hospice 9940 Business Park Dr. 165/2 6,420
13. William Chesaum 9940 Business Park Dr. 185/2 1,440
14. Assured Processing 9960 Business Park Dr. 100 3,378
15. Pinkerton Security 9960 Business Park Dr. 110/2 1,800
16. Marketing Works 9960 Business Park Dr. 120/1 2,400
17. Donald Celli & Associates 9960 Business Park Dr. 140/1 1,643
18. Master Computer Systems 9960 Business Park Dr. 150/1 3,120
</TABLE>
<PAGE> 32
EXHIBIT E
VENDORS
<TABLE>
<CAPTION>
WHO BLDG ADDRESS SERVICE DATE OF
AGREEMENT
<S> <C> <C> <C>
Pestnet 9912, 9940, 9960 Business Park Dr. Pest Control 6/26/96
(sold to Terminex)
Progressive Bldg Maintenance 9912, 9940, 9960 Business Park Dr. Window Cleaning 2/6/97
Sares-Regis 9912, 9940, 9960 Business Park Dr. Property Manager 1/16/96
Procida Landscape 9912, 9940, 9960 Business Park Dr. Landscape Service No contract
Sac-Val 9912, 9940, 9960 Business Park Dr. Trash Removal No contract
Pinkerton Security 9912, 9940, 9960 Business Park Dr. Security Patrol No contract
Sacramento Control System 9912, 9940, 9960 Business Park Dr. Fire/Life Monitoring No contract
Capitol Sweep Service 9912, 9940, 9960 Business Park Dr. Puking Lot Sweep No contract
Universal Building 9912, 9940, 9960 Business Park Dr. Janitorial No contract
Maintenance
Indoor Environmental 9912, 9940, 9960 Business Park Dr. HVAC No contract
Services
Madsen Roofing 9912, 9940, 9960 Business Park Dr Roof Repairs No contract
Diversified Plumbing 9912, 9940, 9960 Business Park Dr. Plumbing Repairs No contract
Joel Lackner Painting 9912, 9940, 9960 Business Park Dr. Painting No contract
Tonda Sales 9912, 9940, 9960 Business Park Dr. Flooring Contractor No contract
Wiedner House of Signs 9912, 9940, 9960 Business Park Dr. Signage No contract
Pride Industries 9912, 9940, 9960 Business Park Dr. Dayporter No contract
Reliable Glass 9912, 9940, 9960 Business Park Dr. Glass No contract
Delta Lighting Services 9912, 9940, 9960 Business Park Dr. Electrical No contract
Stafford Space Planning 9912, 9940, 9960 Business Park Dr. Space Planner No contract
Van's Chem Dry 9912, 9940, 9960 Business Park Dr. Carpet Cleaning No contract
</TABLE>
<PAGE> 33
EXHIBIT F
FORM OF GRANT DEED
Assessor's Parcel No.
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
MAIL TAX STATEMENTS TO:
- --------------------------------------------------------------------------------
FORM OF GRANT DEED
In accordance with Section 11932 of the California Revenue and Taxation Code,
the grantor has declared the amount of transfer tax which is due and payable by
a separate statement which is not being recorded with this Grant Deed.
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged, Sammis Sacramento Associates, a ________________________, HEREBY
GRANTS to Pacific Gulf Properties Inc., a Maryland corporation, all that real
property in the City of ____________________________________________, County
of ________________, State of California, described as follows:
This conveyance is made subject to all liens and encumbrances of record.
Date:________,1997 GRANTOR:
Sammis Sacramento Associates, a
________
By:
MAIL TAX STATEMENTS AS DIRECTED ABOVE
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
<PAGE> 34
On_______________________ before me, __________________________________________
(here insert name and title of the notary public), personally appeared ________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature ___________________________________ (SEAL)
-2-
<PAGE> 35
EXHIBIT G
FORM OF BILL OF SALE
THIS BILL OF SALE (this "Bill of Sale") is made this _________
day of ________________________________, 1997 by Sammis Sacramento Associates
("Seller") in favor of Pacific Gulf Properties Inc. ("Buyer").
Seller and Buyer entered into that certain Agreement for Purchase
and Sale dated as of November _, 1997 (the "Agreement") respecting the sale of
certain real property, described on Exhibit C attached to the Agreement (the
"Real Property").
Under the Agreement, Seller is obligated to transfer to Buyer any
and all of its right, title and interest in and to any and all equipment,
appliances, tools, machinery, supplies, building materials and other personal
property of every kind and character owned by Seller and attached to,
appurtenant to, located in or used in connection with the operation of the
improvements ("Improvements") located on the Real Property (the "Personal
Property").
NOW, THEREFORE, for good and valuable consideration, the receipt of
which are hereby acknowledged, Seller does hereby absolutely and unconditionally
give, grant, bargain, sell, transfer, set over, assign, convey, release, confirm
and deliver to Buyer all of the Seller's right, title and interest in and to the
Personal Property, WITHOUT WARRANTY, EXPRESS OR IMPLIED, except for the
covenants, representations and warranties of the Seller with respect to the
Personal Property as set forth in the applicable provisions of the Agreement,
all of which are hereby deemed to be incorporated by reference the same as those
set forth in full herein.
Seller hereby covenants that Seller will, at any time and from time
to time upon written request therefor, execute and deliver to Buyer, Buyer's
successors, nominees or assigns, such documents as Buyer or they may reasonably
request in order to fully assign and transfer to and vest in Buyer or Buyer's
successors, nominees and assigns, and protect Buyer's or their right, title and
interest in and to all of the Personal Property and rights of Seller intended to
be transferred and assigned hereby, or to enable Buyer, Buyer's successors,
nominees and assigns to realize upon or otherwise enjoy such rights and
property.
All defined terms used herein shall have the same meaning as set
forth in the Agreement, and are hereby incorporated herein by reference.
This Bill of Sale shall be binding upon and inure to the benefit of
the successors, assigns, personal representatives, heirs and legatees of Buyer
and Seller,
<PAGE> 36
This Bill of Sale shall be governed by, interpreted under, and
construed and enforceable in accordance with, the laws of the State of
California.
This Bill of Sale is intended to supplement the terms and
provisions of the Agreement and shall be construed as consistent therewith to
the greatest extent possible. This Bill of Sale shall not be deemed to modify or
amend the Agreement. In the event of an irreconcilable conflict between the
provisions of the Agreement and this Bill of Sale, the provisions of the
Agreement shall prevail.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of
the date first set forth above.
SELLER:
Sammis Sacramento Associates
By
---------------------------------------------
Its
--------------------------------------------
-2-
<PAGE> 37
EXHIBIT H
FORM OF ASSIGNMENT AND ASSUMPTION OF INTANGIBLE PROPERTY
THIS ASSIGNMENT AND ASSUMPTION OF INTANGIBLE PROPERTY (this
"Assignment") is made this day of , 1997 by and between Sammis
Sacramento Associates ("Assignor") and Pacific Gulf Properties Inc.
("Assignee").
Assignor and Assignee entered into that certain Agreement for
Purchase and Sale dated as of November , 1997 ("Agreement") respecting the sale
of certain real property described in Exhibit "C" attached to the Agreement (the
"Real Property") and the improvements located thereon (the "Improvements").
Under the Agreement, Assignor is obligated to assign to Assignee
any and all of its right, title and interest in and to the Intangible Property
(as defined in the Agreement), which Intangible Property includes:
(a) the Tenant Leases (as defined in the Agreement);
(b) certain service agreements, maintenance contracts,
warranties, guarantees, management contracts and bonds, together with all
supplements, amendments and modifications thereto, relating to the Real Property
(the "Service Contracts");
(c) any interest of Seller in the licenses, permits, certificates
of occupancy, approvals, dedications, subdivision maps and entitlement issued,
approved or granted by governmental authorities or otherwise in connection with
the Real Property, trade names, trademarks, and logos used by Assignor in the
operation and identification of the Improvements and/or the Real Property,
including, without limitation, the right to use the names "Highway 50 Business
Center," "Bradshaw Business Center" and any other trade name now used in
connection with the Real Property, any and all development rights and other
intangible rights, titles, interests, privileges and appurtenances owned by
Assignor and in any way related to or used in connection with the Real Property
and its operation, and all licenses, consents, easements, rights of way and
approvals required from private parties to make use of utilities and to insure
vehicular and pedestrian ingress and egress to the Real Property and the
Improvements ("Licenses and Permits"); and
(d) all non-confidential books and records maintained by Seller
in connection with the operation of the Real Property, all preliminary, final
and proposed building plans and specifications (including "as built" drawings)
respecting Improvements, and all structural reviews, architectural drawings and
engineering, soils, seismic, geological and architectural reports, studies and
certificates and other documents pertaining to the Property which are within the
possession of, under the control of or reasonably available to Assignor and such
additional books, records, plans, specifications,
<PAGE> 38
reports, studies and other documents maintained or prepared after the date of
the Agreement ("Records and Plans").
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Assignor hereby assigns,
sells, transfers, sets over and delivers unto Assignee all of Assignor's estate,
rights, title and interest in and to the Intangible Property and Assignee hereby
accepts such assignment, subject to the covenants, representations and
warranties of Seller (and all limitations thereof) with respect to the
Intangible Property as set forth in the applicable provisions of the Agreement,
all of which are hereby deemed to be incorporated by reference the same as those
set forth in full herein.
Assignor hereby covenants that Assignor will, at any time and
from time to time upon written request therefrom, execute and deliver to
Assignee, Assignee's successors, nominees and assigns, any new or confirmatory
instruments which Assignee, Assignee's successors, nominees, and assigns may
reasonably request in order to fully assign and transfer to and vest in
Assignee, or Assignee's successors, nominees and assigns, and protect Assignee's
or Assignee's successors, nominees and assigns right, title and interest in and
to the Intangible Property or to otherwise realize upon or enjoy such rights in
and to the Intangible Property.
Assignee hereby assumes the performance of all of the terms,
covenants and conditions imposed upon Assignor under the Intangible Property
(including the obligations of the landlord under the Tenant Leases) accruing or
arising on or after the date of this Agreement.
Subject to the limitations on Assignee's liability set forth in
the Agreement, Assignee hereby agrees to indemnify and hold harmless Assignor,
Assignor's agents and their respective successors and assigns from and against
any and all claims, losses, liabilities and expenses, including reasonable
attorneys' fees, suffered or incurred by Assignor by reason of any breach or
alleged breach by Assignee from and after the Closing Date (as defined in the
Agreement) of any of Assignee's obligations under the Tenant Leases, Service
Contracts, Licenses and Permits or Records and Plans.
Subject to the limitations on Assignor's liability set forth in
the Agreement, Assignor hereby agrees to indemnify and hold harmless Assignee,
Assignee's agents and their respective successors and assigns from and against
any and all claims, losses, liabilities and expenses, including reasonable
attorneys' fees, suffered or incurred by Assignee by reason of any breach or
alleged breach by Assignor prior to the Closing Date of any of Assignor's
obligations under the Tenant Leases, Service Contracts, Licenses and Permits or
Records and Plans.
In the event of the bringing of any action or suit by a party
hereto against another party hereunder by reason of any breach of any of the
covenants, conditions, agreements or provisions on the part of the other party
arising out of this Assignment,
<PAGE> 39
then in that event the prevailing party shall be entitled to have and recover of
and from the other party all costs and expenses of the action or suit including
reasonable attorneys' fees, court costs and fees of experts.
All defined terms used herein shall have meanings given such terms
in the Agreement, and are hereby incorporated herein by reference.
This Assignment may be executed in counterparts, each of which
shall be deemed an original, but all of which, together, shall constitute on and
the same instrument.
This Assignment shall be binding upon and inure to the benefit of
the successors, assignees, personal representatives, heirs and legatees of all
of the respective parties hereto.
This Assignment shall be governed by, interpreted under, and
construed and enforceable in accordance with, the laws of the State of
California.
This Assignment is intended to supplement the terms and provisions
of the Agreement and shall be construed as consistent therewith to the greatest
extent possible. This Assignment shall not be deemed to modify or amend the
Agreement. In the event of an irreconcilable conflict between the provisions of
the Agreement and this Assignment, the provisions of the Agreement shall
prevail.
IN WITNESS WHEREOF, Assignor and Assignee have executed this
Assignment and Assumption of Intangible Property as of the date first written
above.
ASSIGNOR: Sammis Sacramento Associates,
By:
---------------------------------------------
Its:
--------------------------------------
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
<PAGE> 40
ASSIGNEE: Pacific Gulf Properties Inc., a Maryland corporation
By:
----------------------------------------
Its:
----------------------------------------
By:
----------------------------------------
Its:
----------------------------------------
<PAGE> 1
EXHIBIT 10.3
PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (this
"Agreement"), dated December 10, 1997 for reference purposes, is entered into
by and between PACIFIC GULF PROPERTIES INC., a Maryland corporation, or its
nominee ("Buyer"), and FULLERTON BUSINESS CENTER, 1976, a California limited
partnership ("Seller").
IN CONSIDERATION of the respective agreements hereinafter set forth,
Seller and Buyer hereby agree as follows:
1. Property. Seller hereby agrees to sell and convey to Buyer, and
Buyer hereby agrees to purchase from Seller, subject to the terms and conditions
set forth herein, the following:
(a) that certain real property located at 4010-4080 N. Palm
Street, in the City of Fullerton, County of Orange, State of California, more
particularly described in Schedule 1 to the "Deed" (as hereinafter defined)
attached hereto as Exhibit A and consisting of approximately 6.86 acres (the
"Land");
(b) all rights, privileges and easements appurtenant to the Land,
including, without limitation, all minerals, oil, gas and other hydrocarbon
substances, as well as all development rights, land use entitlements, building
permits, licenses, permits and certificates, utilities commitments, air rights,
water, water rights, riparian rights, and water stock relating to the Land, and
any rights-of-way or other appurtenances used in connection with the beneficial
use and enjoyment of the Land and all of Seller's right, title and interest in
and to all roads, easements, rights of way and alleys adjoining or servicing the
Land (collectively, the "Appurtenances");
(c) all improvements and fixtures located on the Land and
Appurtenances, including, without limitation, the building(s) located on the
Land, consisting of eight (8) separate industrial buildings containing
approximately 110,900 rentable square feet, and all apparatus, equipment and
appliances used in connection with the operation or occupancy of the Land and
Appurtenances, and along with all on-site parking (collectively, the
"Improvements", and together with the Land and Appurtenances, the "Real
Property");
(d) all tangible personal property owned by Seller located on or
in or used in connection with the Real Property as of the date hereof and as of
the "Closing Date" (as hereinafter defined) (collectively, the "Tangible
Personal Property"); and
(e) all lease rights (including, without limitation, the lessor's
interest in and to all tenant leases, rental agreements, subleases and
tenancies, including all amendments, modifications, agreements, records,
substantive correspondence, and other documents affecting in any way a right to
occupy any portion of the Real Property (individually and collectively, the
"Leases"), and Seller's interest in all security deposits and prepaid rent, if
any, under the Leases and any and all guaranties of the Leases, and, to the
extent approved by Buyer pursuant to this Agreement, all "Service Contracts" (as
hereinafter defined), and any intangible personal property now or hereafter
owned by Seller and used in the ownership, use or operation or development of
the Real Property, and Tangible Personal Property, including, without
limitation, the right to use the name "Fullerton Business Center" and any other
trade name now used in connection with the Real Property (collectively, the
"Intangible Property", and together with the Tangible Personal Property, the
"Personal Property").
All of the items referred to in Subparagraphs (a), (b), (c), (d), (e)
and (f) above are collectively referred to herein as the "Property".
<PAGE> 2
2. Purchase Price.
(a) The purchase price of the Property is $5,500,000 (the
Purchase Price").
(b) The Purchase Price shall be paid through "Escrow" (as herein-
after defined) as follows:
(i) Concurrently with the execution and delivery of this
Agreement by Buyer, Seller and Fidelity National Title Insurance Company (the
"Escrow Holder") an escrow in connection herewith (the "Escrow"), shall be
opened at the Escrow Holder. Within three (3) business days of the opening of
Escrow, Buyer shall deposit into Escrow cash in the amount of $50,000 (the
"Deposit"). The Deposit shall be held by Escrow Holder in an interest-bearing
account.
(ii) The Deposit and all interest accrued thereon shall
either (1) be released to Seller and applied towards the Purchase Price at the
"Closing" (as hereinafter defined); (2) be returned to the Buyer if the Closing
fails to occur for any reason other than the Buyer's default; or (3) be
disbursed to Seller as liquidated damages in the event of Buyer's default
pursuant to the provisions of Paragraph 7 below. Interest earned on the Deposit
shall follow and become a part of the Deposit in all events be paid to or for
the account of Buyer.
(iii) On or before the Closing, if this Agreement has not
been earlier terminated, Buyer shall deposit into Escrow cash or other
immediately available funds in the amount of the balance of the Purchase Price,
adjusted for the prorations and any other adjustments provided elsewhere in this
Agreement (the "Closing Amount").
3. Title to the Property.
(a) At the Closing, Seller shall convey to Buyer fee simple title
to the Real Property and Improvements, by a duly executed and acknowledged grant
deed substantially in the form attached hereto as Exhibit A (the "Deed"). A
condition to Buyer's obligations under this Agreement shall be the issuance by
Fidelity National Title Insurance Company (the "Title Company") to Buyer of an
ALTA extended coverage Owner's Policy of Title Insurance (Form B, rev. 10/17/70
with Endorsement Form 1 coverage) in the amount of the Purchase Price, insuring
fee simple title to the Real Property and Improvements in Buyer, subject only to
such exceptions as Buyer shall have approved pursuant to Paragraph 4 below (the
"Approved Title Exceptions") and without boundary, encroachment or survey
exceptions (the "Title Policy"). The Title Policy shall provide full coverage
against mechanics' and materialmen's liens and shall contain, to the extent
required by Buyer, the CLTA 100 (modified for an owner), 101.4, 103.7, 116,
116.1, 116.4, 116.7 and such other special endorsements as Buyer may reasonably
require upon completion of review of the preliminary title report, including,
without limitation, any endorsements required as a condition to Buyer's approval
of any title exceptions pursuant to Paragraph 4 below (the "Endorsements").
(b) At the Closing (i) Seller shall transfer title to the
Tangible Personal Property by bill of sale in the form attached hereto as
Exhibit B (the "Bill of Sale"); (ii) Seller shall transfer title to the
Intangible Property, the "Assigned Contracts" (as hereinafter defined) and the
"Permits" (as hereinafter defined) by assignment of intangible property in the
form attached hereto as Exhibit C (the "Assignment of Intangibles"); and (iii)
Seller shall transfer title to the Leases by assignment of Leases in the form
attached hereto as Exhibit D (the "Assignment of Leases"), such title in each
case to be free of any liens, encumbrances or interests.
(c) Anything contained herein to the contrary notwithstanding and
notwithstanding any approval or consent given by Buyer hereunder, except for
real estate taxes not yet due or payable, Seller shall cause all mortgages,
deeds of trust and other monetary encumbrances, including without limitation all
mechanics' liens, to be released and reconveyed from the Property on or prior to
-2-
<PAGE> 3
the Closing and shall cause the Title Company to insure title to the Property as
vested in Buyer without any exception for such matters.
4. Due Diligence.
(a) As used herein, the term "Due Diligence Period" shall refer
to a period of time to expire at 5:00 p.m. on December 11, 1997.
(b) Buyer may elect, by written notice to Seller at any time
prior to the expiration of the Due Diligence Period, to terminate this
Agreement, which election shall be in Buyer's sole and absolute discretion. If
Buyer desires to proceed with the purchase of the Property subject to the
remaining conditions set forth in this Agreement (including, without limitation,
pursuant to Paragraph 6 below), then on or before the expiration of the Due
Diligence Period, Buyer shall deliver written notice to Seller of such election
to proceed (the "Buyer's Notice to Proceed"), electing to waive Buyer's right of
termination pursuant to this Paragraph 4(b) and proceed with the Closing
subject to the remaining conditions set forth in this Agreement; provided,
however, that, notwithstanding any such election to proceed, Seller must comply
with all of Seller's other obligations and duties under this Agreement. Buyer's
Notice to Proceed shall specify in writing the requirements for the Title Policy
(including, without limitation, the Approved Title Exceptions and any required
Endorsements). If Buyer fails to deliver Buyer's Notice to Proceed to Seller
prior to the expiration of the Due Diligence Period electing to waive Buyer's
right of termination pursuant to this Paragraph 4(b), then Buyer shall be
deemed to have elected to terminate this Agreement.
(c) In the event of the termination of this Agreement pursuant to
this Paragraph 4, the Deposit shall be returned to Buyer and neither party shall
have any further obligations to the other hereunder (except under provisions of
this Agreement which specifically state that they survive termination).
(d) Notwithstanding anything in this Agreement to the contrary,
to induce Buyer to enter into this Agreement and to expend the time and
resources necessary to evaluate the Property and possibly forego other
opportunities while doing so, Seller hereby grants to Buyer the rights to
terminate this Agreement provided herein. Such expenditures of time and
resources and possible loss of opportunity by Buyer constitute adequate
consideration for Seller's remaining bound by this Agreement notwithstanding
such termination rights in Buyer.
5. Seller's Deliveries. To the extent the following materials are in
the Seller's possession or control, Seller shall deliver or cause to be
delivered to Buyer (collectively, the "Due Diligence Materials") at Seller's
sole cost and expense:
(a) Surveys. Any existing surveys of the Property.
(b) Tax Bills. Copies of the most recent property tax bills and
assessments for the Property.
(c) Warranties. All presently effective warranties or guaranties
from any contractors, subcontractors, suppliers, servicemen or materialmen in
connection with any of the Tangible Personal Property or any construction,
renovation, repairs or alterations of the Improvements or any tenant
improvements (collectively, the "Warranties").
(d) Service Contracts. A schedule (the "Schedule of Agreements")
setting forth a list of all of the service contracts, utility contracts,
maintenance contracts, management contracts, leasing contracts, equipment
leases, brokerage and leasing commission agreements and other agreements or
rights related to the ownership, use or operation of the Property (collectively,
the "Service Contracts"). From this Schedule of Agreements, Buyer shall
designate those contracts that Seller shall assign to Buyer and that Buyer shall
assume as of Closing (such designated Service Contracts together with the
Warranties are collectively referred to herein as the "Assigned Contracts").
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(e) Plans. Copies of all as-built plans and specifications for
the Improvements, including without limitation the plans and specifications for
and a complete description of all existing renovations and improvements to the
Real Property and all rentable space therein, and as-built drawings for all
underground utilities.
(f) Reports. All reports in Seller's possession or control
relating to the Property, including environmental reports, environmental audits,
soils reports, site plans, engineering reports and plans, landscape plans,
structural calculations, floor plans, construction contracts, a current
inspection report by a licensed Structural Pest Control Operator, and other
reports or documents of significance to the Property.
(g) Inventory. A complete inventory of all Tangible personal
Property used at or in connection with the Property.
(h) Operating Statements. All income and expense statements,
year-end financial and monthly operating statements and year to date statements
for the two (2) most recent calendar years prior to Closing and, to the extent
available, the current year, all of which shall be certified by Seller's
Property Manager, as true and correct and an accurate representation of the
financial condition of the Property.
(i) Budget. A copy of the budget for the Property for the current
year.
(j) Rent Roll. A current rent roll certified by Seller to be
accurate and complete, listing for each tenant (i) the tenant's name, and
location of leased premises, (ii) the commencement and expiration dates of each
lease, (iii) rent and rent escalation clauses, if any, (iv) the date on which
rent is payable, (v) the last date on which rent has been paid, (vi) the amount
of any security deposit, prepaid rent, and whether landlord is obligated to pay
interest on the same, (vii) any extension options, any options to terminate or
lease additional space and any rights of first refusal, and the business terms
of the foregoing, and (viii) a description of any uncured defaults (the "Rent
Roll").
(k) Leases. All (i) copies of existing and pending Leases, lease
files and tenant correspondence; (ii) copies of tenant financial statements;
(iii) a schedule of leasing commissions on a space by space basis; and (iv) a
copy of the current standard lease form.
(1) Permits. To the extent that the following are in the Seller's
possession or control, all governmental permits and approvals relating to the
construction, operation, use or occupancy of the Property, including without
limitation, all building permits, certificates of completion, certificates of
occupancy, environmental permits and licenses (including, without limitation,
permits relating to the existence or removal of underground storage tanks), and
sign permits (individually and collectively "Permits").
(m) Deposits. A list of all deposits and bonds posted by Seller
with utility providers, sureties, governmental agencies or others in connection
with the Property (the "Seller Deposits and Bonds").
6. Conditions Precedent to Closing.
(a) Buyer's conditions. The following are conditions precedent to
Buyer's obligations under this Agreement (the "Buyer Conditions Precedent").
The Buyer Conditions Precedent are intended solely for the benefit of Buyer and
may be waived only by Buyer in writing. In the event any Buyer Condition
Precedent is not satisfied, Buyer may, in its sole and absolute discretion,
terminate this Agreement, and, subject to the provisions of Paragraph 7, all
obligations of Buyer and Seller hereunder (except provisions of this Agreement
which recite that they survive termination) shall terminate and be of no
further force or effect.
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(i) Buyer's inspection, review and approval, within the Due
Diligence Period, of all aspects of the Property.
(ii) The issuance by the Title Company to Buyer of the Title
Policy subject only to the Approved Title Exceptions and including the
Endorsements.
(iii) All of Seller's representations and warranties
contained in or made pursuant to this Agreement shall have been true and correct
when made and shall be true and correct as of the Closing Date.
(iv) Seller shall have fully complied with all of Seller's
duties and obligations contained in this Agreement.
(v) As of the Closing Date, there shall be no litigation or
administrative agency or other governmental proceeding pending or threatened,
which after Closing would, materially adversely affect the value of the Property
or the ability of Buyer to operate the Property in the manner in which it is
currently being operated, and no proceedings shall be pending or threatened
which would cause the redesignation or other modification of the zoning
classification of, or of any building or environmental code requirements
applicable to, any of the Property.
(vi) Seller shall have provided Buyer with an updated Rent
Roll three (3) business days prior to Closing, which updated Rent Roll must not
indicate any material adverse change from the Rent Roll last approved by Buyer.
Seller shall specifically identify any changes from the most recently approved
Rent Roll, and Buyer shall have performed a closing audit which confirms the
updated Rent Roll.
(vii) Prior to Closing, Buyer shall provide Seller a list of
Service Contracts that Buyer wishes to make Assigned Contracts. Within 30 days
of receiving said list, Seller shall terminate, at no cost or expense to Buyer,
any and all Service Contracts affecting the Property that are not Assigned
Contracts.
(viii) There shall have been no material adverse change in
or addition to the information or items reviewed and approved by Buyer during
the Due Diligence Period.
(ix) Buyer's review and approval of estoppel certificates
covering all rentable space within the Property. Seller shall use reasonable
efforts to obtain and deliver to Buyer by no later than December 10, 1997,
tenant estoppel certificates in form and substance satisfactory to Buyer
representing no less than seventy-five percent (75%) of the rentable square
footage of space occupied by tenants (collectively, "Tenants"), provided,
however, Seller shall include in the 75% requirement, any Tenant who
independently leases five thousand (5000) or more rentable square feet of the
Property. Certificates substantially in the form attached hereto as Exhibit E
(as modified to address specific reasonable concerns arising as a result of
Buyer's review of the Leases) shall be deemed acceptable to Buyer. For any
Tenant that Seller is not able to deliver a Tenant estoppel certificate, Seller
shall deliver to Buyer a landlord's estoppel certificate covering the
information which would otherwise have been included in the Tenant's estoppel
certificate; provided, however, that Buyer shall not be obligated to accept or
approve any estoppel provided by Seller if Buyer has reason to believe any
statement contained therein would be disputed or denied by the applicable
Tenant; and provided further that Buyer shall not be obligated to accept or
approve estoppels provided by Seller representing more than 25% of the rentable
square footage of space occupied by Tenants, or representing a Tenant who leases
5000 or more rentable square feet. Said certificates shall be delivered at least
five (5) days prior to the Closing and shall be dated no earlier than fifteen
(15) days prior to the Closing Date.
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(x) Except as set forth in the Leases, as of the Closing
Date, there be no free rent, abatements or other unexpired concessions that
apply to any period after Closing;
(xi) Buyer's receipt of a Certificate from the California
Secretary of State indicating that, as of the Closing Date, there are no filings
against Seller under the California Uniform Commercial Code which would be a
lien on any of the Personal Property (other than any filings as to which Buyer
is given satisfactory evidence that such filings are being released as of the
Closing);
(xii) if any agreement for leasing commissions and/or
locator fees payable on any Lease shows a commission or locator fee which would
be due or payable after the Closing Date, an executed release from the broker or
finder releasing Buyer and its successors and assigns from any obligation to pay
such commission or locator fee and agreeing to look solely to Seller for
payment;
(xiii) notwithstanding anything to the contrary contained in
this Agreement, Buyer's obligation to purchase the Property is conditioned upon
the approval by Buyer's Executive Committee during the Due Diligence Period of
the transactions contemplated by this Agreement.
(b) Seller's Conditions. The following are conditions precedent
to Seller's obligations under this Agreement (the "Seller Conditions
Precedent"). The Seller Conditions Precedent are intended solely for the benefit
of Seller and may be waived only by Seller in writing. In the event any Seller
Condition Precedent is not satisfied, Seller may, in its sole and absolute
discretion, terminate this Agreement, and, subject to the provisions of
Paragraph 7, all obligations of Buyer and Seller hereunder (except provisions of
this Agreement which recite that they survive termination) shall terminate and
be of no further force or effect.
(i) All of Buyer's representations and warranties contained in or
made pursuant to this Agreement shall have been true and correct when made and
shall be true and correct as of the Closing Date.
(ii) Buyer shall have fully complied with all of Buyer's duties
and obligations contained in this Agreement.
7. REMEDIES. IN THE EVENT THE SALE OF THE PROPERTY IS NOT CONSUMMATED
BECAUSE OF THE FAILURE OF ANY CONDITION OR ANY OTHER REASON EXCEPT A DEFAULT
UNDER THIS AGREEMENT SOLELY ON THE PART OF BUYER, THE DEPOSIT SHALL IMMEDIATELY
BE RETURNED TO BUYER. IF SAID SALE IS NOT CONSUMMATED SOLELY BECAUSE OF A
DEFAULT UNDER THIS AGREEMENT ON THE PART OF BUYER, THE DEPOSIT SHALL BE PAID TO
AND RETAINED BY SELLER AS LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT
SELLER'S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY BUYER, WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS
BELOW, THE PARTIES ACKNOWLEDGE THAT THE DEPOSIT HAS BEEN AGREED UPON, AFTER
NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES AND AS
SELLER'S SOLE AND EXCLUSIVE REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE
EVENT OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF BUYER. SELLER HEREBY
WAIVES ANY AND ALL BENEFITS IT MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION
3389.
INITIALS: Seller Buyer [SIG]
---------- ----------
8. Escrow; Closing.
(a) Escrow Instructions. Upon mutual execution of this Agreement,
the parties hereto shall deposit an executed counterpart of this Agreement with
Escrow Holder and this Agreement shall serve as instructions to Escrow Holder
for consummation of the purchase and sale contemplated hereby. Seller and Buyer
shall execute such supplemental Escrow instructions as may be appropriate to
enable Escrow Holder to comply with the terms of this Agreement, provided such
supplemental Escrow instructions are not in conflict with this Agreement as it
may be amended in writing from time to time. In the event of any conflict
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between the provisions of this Agreement and any supplementary Escrow
instructions signed by Buyer and Seller, the terms of this Agreement shall
control.
(b) Closing. The recordation of the Deed and the delivery of the
other documents and funds contemplated hereby (the "Closing") shall take place
on December 16, 1997, or at an earlier date agreed upon by Buyer and Seller. The
date on which the Closing occurs is herein referred to as the "Closing Date".
Buyer may elect, by written notice to Seller at any time prior to December 16,
1997, to extend the Closing Date by up to two (2) business days. In the event
the Closing does not occur on or before December 18, 1997, Escrow Holder shall,
unless it is notified by both parties to the contrary within five (5) days after
such date, return to the depositor thereof items which were deposited hereunder,
except for the Deposit, which shall be dealt with pursuant to section 2(b)(ii).
Any such return shall not, however, relieve either party of any liability it may
have for its wrongful failure to Close.
(c) Seller Deliveries. At or before the Closing, Seller shall
deliver to Escrow Holder or Buyer the following:
(i) the duly executed and acknowledged Deed;
(ii) the duly executed Bill of Sale;
(iii) originals of the Assigned Contracts and duly executed
Assignment of Intangibles, together with evidence of termination of any Service
Contracts and Other Agreements that are not Assigned Contracts;
(iv) originals of all Leases and tenant files and the duly
executed and acknowledged Assignment of Leases;
(v) duly executed Tenant Estoppel Certificates and, if
applicable, Seller estoppel certificates;
(vi) notices to the Tenants of the occurrence of the sale of
the Property in the form attached hereto as Exhibit F;
(vii) a duly executed affidavit that Seller is not a
"foreign person" within the meaning of Section 1445(e)(3) of the Internal
Revenue Code of 1986 in the form attached hereto as Exhibit G together with a
duly executed California Franchise Tax Board Form 590;
(viii) a closing statement in form and content satisfactory
to Buyer and Seller (the "Closing Statement") duly executed by Seller;
(ix) originals of the building permits and certificates of
occupancy for the Improvements and all tenant-occupied space included within the
Improvements;
(x) all keys to the Property;
(xi) a full release and reconveyance of all monetary
encumbrances affecting the Property and any mechanics' liens;
(xii) any other documents or agreements required by the
Title Company to issue the Title Policy in the form required by this Agreement;
(xiii) any other instruments, records or correspondence
called for hereunder to be delivered by Seller which have not previously been
delivered.
Buyer may waive compliance on Seller's part under any of the foregoing items by
an instrument in writing.
(d) Buyer Deliveries. At or before the Closing, Buyer shall deliver to
Escrow Holder or Seller the following:
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(i) the duly executed Assignment of Leases;
(ii) the duly executed Assignment of Intangibles;
(iii) the Closing Statement, duly executed by Buyer;
(iv) the Closing Amount; and
(v) any other instruments, records or correspondence
called for hereunder to be delivered by Buyer which have not previously been
delivered.
Seller may waive compliance on Buyer's part under any of the foregoing items by
an instrument in writing.
(e) Additional Documents. Seller and Buyer shall each deposit
such other instruments as are reasonably required by Escrow Holder or the Title
Company or otherwise required to close the escrow and consummate the purchase of
the Property in accordance with the terms hereof.
(f) Prorations. The following are to be apportioned as of the
Closing Date, with Buyer receiving credit for or charged with the entire day of
the Closing, as follows:
(i) Rent. Rent under the Leases shall be apportioned as of
the Closing Date. With respect to any rent arrearages existing at the Closing,
after Closing Buyer shall pay to Seller any rent actually collected which is
applicable to the period preceding the Closing Date; provided, however, that all
rent collected by Buyer shall be applied first to all unpaid rent accruing after
the Closing Date, and then to unpaid rent accruing prior to the Closing Date.
Buyer shall take reasonable steps to recover any rent arrearages; provided,
however, that Buyer shall have no obligation to commence any legal or equitable
proceedings to recover rent arrearages, and provided further that Buyer shall
not incur any, and Seller shall indemnify Buyer against all, cost, expense or
liability in connection with Buyer's reasonable efforts to recover rent
arrearages. Seller shall be permitted to pursue collection of any rent
arrearages applicable to the period prior to the Closing, provided that Buyer
shall not incur any, and Seller shall indemnify Buyer against all, cost, expense
or liability in connection therewith, and provided further that Seller shall not
commence any legal or equitable proceedings in the nature of an unlawful
detainer, eviction or other proceeding which would have the effect of
interfering with any tenant's quiet enjoyment of its leased premises or result
in a lien or encumbrance on such leased premises.
(ii) Leasing Costs; Free Rent. Seller shall pay prior to
Closing all leasing commission and tenant improvement costs or allowances due or
payable at or prior to Closing, if any, in connection with any Lease executed on
or before the Closing that are or will become due and payable as of the Closing.
Buyer shall be entitled to a credit against the Purchase Price for any such
unpaid commissions, costs or allowances due after the Closing but incurred in
connection with any lease executed on or before the Closing, and for any free
rent, rent abatements or other unexpired concessions that apply to any period
after Closing; provided, however, Buyer shall accept and receive no credit for
free rent provisions contained in the lease of Walters Wholesale Electric
Company, tenant of Suite 101 at 4010 N. Palm Street, to the extent that such
free rent provision (s) do not exceed the amount of $4050.00 per month, and
shall apply only to the months of January and February, 1998.
(iii) Security Deposits. Buyer shall be entitled to a
credit against the Purchase Price for the total sum of all security and other
deposits provided for in the Leases, and any interest earned thereon which by
law or the terms of the Leases could be required to be refunded to tenants.
(iv) Utility Charges. Seller shall cause all the utility
meters to be read on the Closing Date, and will be responsible for the cost of
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all utilities used prior to the Closing Date, except to the extent such utility
charges are billed to and paid by tenants directly.
(v) Real Estate Taxes and Special Assessments. Seller shall
pay prior to Closing any and all delinquent real estate taxes and assessments
with respect to the Property. General real estate taxes and assessments payable
for the fiscal year in which the Closing occurs shall be prorated as of the
Closing Date.
(vi) Seller Deposits and Bonds. At Buyer's election, Seller
shall either receive credit for Seller Deposits and Bonds, in which case all
such Seller Deposits and Bonds for which Seller receives credit shall remain in
place for the benefit of the Buyer and Seller shall execute and deliver such
documents as shall be necessary to assign such Seller Deposits and Bonds to
Buyer and Seller shall execute and deliver such documentation as shall be
necessary to assign such Seller and Bonds to Buyer, or not receive credit for
Seller Deposits and Bonds, in which case Seller may obtain a return or refund of
any Seller Deposits and Bonds for which Seller does not receive credit, but only
after the Closing.
(vii) Other Apportionments. Amounts payable under the
Assigned Contracts, annual or periodic permit and/or inspection fees (calculated
on the basis of the period covered), and liability for other Property operation
and maintenance expenses and other recurring costs shall be apportioned as of
the Closing Date.
(viii) Preliminary Closing Statement. Seller and Buyer shall
jointly prepare and approve a preliminary Closing Statement on the basis of the
Leases and other sources of income and expenses, and shall deliver such
computation to Escrow Holder prior to Closing.
(ix) Post-Closing Reconciliation. If any of the aforesaid
prorations cannot be definitely calculated on the Closing Date, then they shall
be estimated at the Closing and definitely calculated as soon after the Closing
Date as feasible. As soon as the necessary information is available, Buyer shall
conduct a post-Closing audit to determine the accuracy of all prorations made to
the Purchase Price (the "Post-Closing Audit"). Either party owing the other
party a sum of money based on such subsequent proration(s) or the Post-Closing
Audit shall promptly pay said sum to the other party, together with interest
thereon at the rate of two percent over the "prime rate" (as announced from time
to time in the Wall Street Journal) per annum from the Closing Date to the date
of payment if payment is not made within ten (10) days after delivery of a bill
therefor.
(g) Closing-costs. Seller shall pay for the portion of the
premium for the Title Policy equal to the premium that would be charged for a
CLTA Policy, any sales taxes, any transfer taxes applicable to the sale and
recording fees for recording of the Deed. In addition, Seller shall be liable
for any prepayment fee or other charge payable in connection with any payoff of
monetary encumbrances. Buyer shall pay the portion of the premium for the Title
Policy not paid by Seller and for any Endorsements. Buyer shall also pay the
cost of any survey Buyer elects to have performed. Any escrow fees shall be paid
fifty percent (50%) by Buyer and fifty percent (50%) by Seller. All other costs
and charges of the Escrow not otherwise provided for in this Agreement shall be
allocated in accordance with the closing customs for the County where the
Property is located. Buyer and Seller shall each be responsible for their
respective legal fees to negotiate and execute this Agreement.
(h) Reporting Requirements. The Escrow Holder shall comply with
all applicable federal, state and local reporting and withholding requirements
relating to the close of the transactions contemplated herein. Without limiting
the generality of the foregoing, to the extent the transactions contemplated by
this Agreement involve a real estate transaction within the purview of Section
6045 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code"), Escrow Holder shall have sole responsibility to comply with the
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requirements of Section 6045 of the Internal Revenue Code (and any similar
requirements imposed by state or local law). For purposes hereof, Seller's tax
identification number is 95-3709408. Escrow Holder shall hold Buyer, seller and
their counsel free and harmless from and against any and all liability, claims"
demands, damages and costs, including reasonable attorney's fees and other
litigation expenses, arising or resulting from the failure or refusal of Escrow
Holder to comply with such reporting requirements.
9. Representations, Warranties and Covenants of Seller. As used in this
Agreement, the phrase "Seller's knowledge" (or words of similar import) means
the actual knowledge of any of Richard J. Meyer, Robert E. Meyer or Mary
Novikoff. As of the date hereof and again as of Closing, Seller represents and
warrants to, and covenants with, Buyer as follows:
(a) To Seller's knowledge, (i) there are no material physical or
mechanical defects in, or shortage or deficiency in utilities supplied to, the
Property, (ii) the Property and its current use and operation are in compliance
with applicable laws, rules, permits and regulations as well as private
covenants, conditions and restrictions, (iii) all licenses, permits, variances,
easements and approvals, including without limitation final certificates of
occupancy (or the equivalent) necessary for the current use, operation and
occupancy of the Property have been issued and are in effect, and (iv) the
Property is not dependent on any other property for compliance with zoning or
other land use regulations.
(b) To Seller's knowledge, all documents delivered by Seller to
Buyer, or made available to Buyer for review, including without limitation the
Due Diligence Materials, are true and complete copies of all documents related
to the Property in Seller's possession or control. With the exception of
insurance policies related to the Property, all of Seller's books, files and
records related to the Property were delivered to or made available to Buyer for
Buyer's review.
(c) To Seller's knowledge, there are no (i) condemnation,
environmental, zoning or other land-use proceedings, instituted or to Seller's
knowledge threatened against the Property, (ii) special assessment proceedings
affecting the Property, or (iii) existing or proposed easements, covenants,
restrictions, agreements or other documents which affect title to the Property
and which are not reflected on title.
(d) To Seller's knowledge, there are no litigation, arbitration
or reference proceedings pending or threatened against the Property or against
Seller with respect to the Property.
(e) On the Closing Date there will be no outstanding written or
oral contracts made for any improvements to the Property, or for offsite
improvements related to the Property, which have not been fully completed and
paid for. Seller shall cause to be discharged all mechanics' and materialmen's
liens arising from any labor or materials furnished to the Property prior to the
Close of Escrow.
(f) To Seller's knowledge, except as disclosed by that certain
environmental report dated September 4, 1997, completed by Remediation
Technology Inc., Retet Project No. CO.CAR.03903, and disclosed and turned over
to Buyer, and any environmental report with respect to the Property obtained by
the Buyer and disclosed to Seller, (i) no hazardous or toxic substance, waste or
material (including without limitation PCB's, petroleum, petroleum products and
fractions thereof) has existed or currently exists in, on or under, or has been
or is being disposed of or released from, the Property or any property adjacent
to the Property except in compliance with applicable laws, orders, rules and
regulations; and (ii) no underground storage tanks (whether existing or
abandoned) exist or have existed on or under the Property or on or under any
property adjacent to the Property.
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(g) Neither Seller nor, to Seller's knowledge, any tenant of the
Property has either filed or been the subject of any filing of a petition under
any federal or state bankruptcy or insolvency laws.
(h) The Rent Roll attached hereto as Exhibit H is complete and
accurate as of the date of this Agreement. The most current Rent Roll provided
to Buyer is complete and accurate as of the date provided. To Seller's
knowledge, except as disclosed on Exhibit I, attached hereto, there are no
unpaid leasing costs or obligations, including, without limitation, broker's
commissions and costs in connection with tenant improvements. Seller has
provided to Buyer complete and accurate copies of all Leases.
(i) To Seller's knowledge, there exists no defaults or events
which, with the giving of notice or passage of time, or both, would constitute a
default by Seller or any of the tenants under any of the Leases.
(j) To Seller's knowledge, the Operating Statements certified by
Seller's Property Manager pursuant to paragraph 5 (h) of this Agreement, are
true and correct and an accurate representation of the financial condition of
the Property.
(k) The Schedule of Agreements is a complete and accurate list of
all Service Contracts. Seller has provided to Buyer complete and accurate copies
of all Service Contracts. To Seller's knowledge, there exists no defaults or
events which, with the giving of notice or passage of time, or both, would
constitute a default by Seller or any of the other parties to the Service
Contracts under the Service Contracts.
(1) The list of Seller Deposits and Bonds provided to Buyer is a
complete and accurate list of all such items. To Seller's knowledge, there
exists no defaults or events which, with the giving of notice or passage of
time, or both, would constitute under such items.
(m) Seller has (i) completed all obligations with respect to any
remodeling, renovating and tenant improvements to be completed by Seller as
landlord under the Leases; and (ii) paid all obligations of the landlord
pursuant to the Leases, including, without limitation, tenant improvement,
remodeling and refurbishment costs, leasing commissions and other concessions.
(n) Seller is a limited partnership, duly organized and validly
existing and in good standing under the laws of the State of California and
qualified to do business in the State of California; this Agreement and all
documents executed by Seller and delivered to Buyer pursuant to this Agreement
are and will be duly authorized, executed and delivered by Seller, are and will
be legal, valid and binding obligations of Seller enforceable against Seller in
accordance with their respective terms, and do not and will not violate any
provision of any agreement or judicial order to which Seller or the Property is
subject. Seller has obtained all necessary authorizations, approvals and
consents to the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby.
(0) Seller is not a "foreign person" within the meaning of
Internal Revenue Code Section 1445(f)(3).
(p) Seller has not granted any option or right of first refusal
or first opportunity to any party to acquire any interest in any of the
Property.
(q) All statements contained in any certificate delivered at any
time by Seller or its agents in conjunction with the transactions contemplated
hereby shall constitute representations and warranties hereunder.
10. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller as follows: Buyer is a corporation duly organized and validly
existing and in good standing under the laws of the State of Maryland and
qualified to do business in the State of California; this Agreement and all
docu-
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ments executed by Buyer pursuant to this Agreement are or will be duly
authorized, executed and delivered by Buyer, and are or will be legal, valid and
binding obligations of Buyer, and do not and will not violate any provisions of
any agreement or judicial order to which Buyer is subject.
11. Continuation and Survival. All representations, warranties and
covenants by the respective parties contained herein or made in writing pursuant
to this Agreement are intended to and shall be deemed made as of the date of
this Agreement or such writing and again at the Closing, shall be deemed to be
material, and unless expressly provided to the contrary shall survive the
execution and delivery of this Agreement, the Deed and the Closing.
Notwithstanding the immediately preceding sentence, the representations and
warranties of Seller shall only survive for a period of three (3) years after
the Closing (the "Survival Period") , except in the case of fraud or willful
misrepresentation, in which case such representations and warranties shall
survive independent of this limitation; provided, however that for matters as
to which Buyer has given Seller written notice within the Survival Period, the
representation and warranties of Seller that are related to the matters in such
written notice shall survive until all liabilities arising out of the matters
described in such written notice have been satisfied.
12. Casualty or Condemnation.
(a) In the event any of the Property is damaged and/or destroyed
by fire or other casualty prior to the Closing Date, and the cost to repair
and/or restore such damage and/or destruction (which cost, for purposes of this
paragraph, shall be deemed to include reasonably anticipated post-Closing rental
loss through to completion of such repair and/or restoration) exceeds One
Hundred Thousand Dollars ($100,000), then Buyer shall have the right to
terminate this Agreement by written notice to Seller within ten (10) business
days after Buyer's first learning of the occurrence of such casualty and the
cost of such repair and/or restoration. In the event of any such termination,
the Deposit shall be returned to Buyer, Buyer and Seller shall each be liable
for one-half of any escrow fees or charges, and neither party shall have any
further liability or obligation under this Agreement.
(b) In the event any of the Property is damaged and/or destroyed
by fire or other casualty prior to the Closing Date where (i) the cost to repair
and/or restore such damage and/or destruction does not exceed One Hundred
Thousand Dollars ($100,000.00) , or (ii) the cost to repair and/or restore such
damage and/or destruction exceeds One Hundred Thousand Dollars ($100,000.00) but
this Agreement is not terminated pursuant to (a) above as a result thereof, then
the Closing Date shall occur as scheduled notwithstanding such damage; provided,
however, that Seller's interest in all proceeds of insurance payable by reason
of such casualty shall be assigned to Buyer as of the Closing Date or credited
to Buyer if previously received by Seller, and Buyer shall receive a credit
toward the Purchase Price for any cost of repair not covered by such insurance
(whether by reason of insurance deductible, co-insurance, uninsured casualty or
otherwise).
(c) In the event a governmental entity commences eminent domain
proceedings to take any material (in Buyer's reasonable discretion) portion of
the Property after the date hereof and prior to the Closing Date, then Buyer
shall have the option to terminate this Agreement by written notice to Seller
within ten (10) business days after Buyer first learns of such commencement. In
the event of any such termination, the Deposit shall be returned to Buyer, Buyer
and Seller shall each be liable for one-half of any escrow fees or charges, and
neither party shall have any further liability or obligation under this
Agreement.
(d) In the event a governmental entity commences eminent domain
proceedings to take any part of the Property after the date hereof and prior to
the Closing Date and this Agreement is not terminated pursuant to (c) above as a
result thereof, then the Closing Date shall occur as scheduled notwithstanding
such proceeding; provided, however, that Seller's interest in all awards
arising
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<PAGE> 13
out of such proceedings shall be assigned to Buyer as of the Closing Date or
credited to Buyer if previously received by Seller.
13. Possession. Possession of the Property shall be delivered by Seller
to Buyer on the Closing Date, provided, however, that prior to the Closing Date
Seller shall afford authorized representatives of Buyer access to the Property
(during normal business hours and subject to the rights of the current tenants)
for purposes of satisfying Buyer with respect to the representations, warranties
and covenants of Seller contained herein and with respect to satisfaction of any
Buyer Condition Precedent to the Closing contained herein, including without
limitation an environmental investigation. Buyer hereby agrees to indemnify and
hold Seller harmless from any damage or injury to persons or property caused by
Buyer or its authorized representatives during their entry and investigations
prior to Closing.
14. Maintenance of the Property and Property Personnel. Between Seller's
execution of this Agreement and the Closing, Seller shall maintain the Property
in good order, condition and repair, reasonable wear and tear excepted, shall
perform all work required to be performed by the landlord under the terms of any
Lease, and shall make all repairs, maintenance and replacements of the
Improvements and any Tangible Personal Property and otherwise operate the
Property in the same manner as before the making of this Agreement, as if Seller
were retaining the Property. After full execution of this Agreement and until
the Closing, Seller shall maintain all existing personnel on the Property in
their current employment positions at not less than their current rate of
compensation. Without limiting the effectiveness of the foregoing provisions or
the other provisions of this Agreement with respect to such Service Contracts,
in the event of the Closing of the purchase of the Property, Buyer shall not
retain the existing employees and management agents of Seller for the Property,
and, accordingly, on the Closing, Seller shall (i) cause all employment and
management agreements respecting the Property to be terminated, and deliver
evidence of such termination to Buyer, and (ii) remove all employees and
management personnel from the Property.
15. Leasing; Buyer's Consent to New Contracts Affecting the Property;
Termination of Existing Contracts. Seller shall use, or cause the Property's
manager to use, commercially reasonable efforts until Closing to lease any
vacant space, or space becoming vacant, in the Real Property to creditworthy
tenants at current market rents and terms. Seller shall not, after the date of
this Agreement, enter into any lease or contract affecting the Property, or any
amendment thereof, or permit any tenant to enter into any sublease, assignment
or agreement pertaining to the Property (except as expressly authorized by such
tenant's Lease), or waive, compromise or settle any rights of Seller under any
contract or Lease, or agree to return any security deposit, or modify, amend, or
terminate any Assigned Contract, without in each case obtaining Buyer's prior
written consent thereto. Seller shall terminate prior to the Closing, at no cost
or expense to Buyer, any and all Service Contracts that are not Assigned
Contracts.
16. Insurance. Through the Closing Date, Seller shall maintain or cause
to be maintained, at Seller's sole cost and expense- and each in the amount and
form maintained by Seller prior to the date of this Agreement:
(a) a policy or policies of insurance (subject only to
commercially reasonable deductibles) insuring the Improvements and Tangible
Personal Property against all insurable risks customarily covered by casualty
insurance and the costs of demolition and debris removal; and
(b) a policy or policies of workers' compensation and employers'
liability insurance, commercial general liability insurance, and automobile
liability insurance.
17. Cooperation with Buyer. Seller's representations and warranties
shall not be affected or released by Buyer's waiver or fulfillment of any Buyer
Condition Precedent: Seller hereby irrevocably authorizes Buyer and its agents
-13-
<PAGE> 14
to make all inquiries with and applications to any third party, including any
governmental authority, as Buyer may reasonably require to complete its due
diligence.
18. Brokers and Finders. Neither party has had any contact or dealings
regarding the Property, or any communication in connection with the subject
matter of this transaction, through any real estate broker or other person who
can claim a right to a commission or finder's fee in connection with the sale
contemplated herein except for CB Commercial ("Broker") , whose entire
commission shall be the responsibility of Seller. In the event that any other
broker or finder claims a commission or finder's fee based upon any contact,
dealings or communication, the party through whom the broker or finder makes its
claim shall be responsible for said commission or fee and all costs and expenses
(including, without limitation, reasonable attorneys' fees) incurred by the
other party in defending against the same. The party through whom any other
broker or finder makes a claim shall hold harmless, indemnify and defend the
other party hereto, its successors and assigns, agents, employees, officers and
directors, and the Property from and against any and all obligations,
liabilities, claims, demands, liens, encumbrances and losses (including, without
limitation, attorneys' fees), whether direct, contingent or consequential,
arising out of, based on, or incurred as a result of such claim. The provisions
of this Paragraph shall survive the termination of this Agreement.
19. REIT. Buyer hereby advises Seller that Buyer is qualified as a real
estate investment trust under the provisions of the Internal Revenue Code of
1986, as amended, and that, by reason thereof, the maintaining of such status
and the avoiding of any activity which might cause a penalty tax to be applied
is of material concern to Buyer. Accordingly, Seller agrees to make any
modifications or amendments to this Agreement requested by Buyer prior to the
expiration of the Due Diligence Period that may be necessary for Buyer to
maintain its status as a real estate investment trust or in order for it to
avoid a penalty tax; provided, however, that Seller shall have no obligation to
enter into any such modification or amendment that would materially alter or
affect, in Seller's sole judgment, Seller's rights, duties, or obligations
under this Agreement, or would cause Seller to incur any material costs.
20. Miscellaneous.
(a) Notices. Any notice, consent or approval required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given upon (i) hand delivery or facsimile transmission, (ii)
one business day after being deposited with Federal Express or another reliable
overnight courier service for next day delivery, or (iii) the date of receipt or
refusal of delivery if deposited in the United States mail, registered or
certified mail, postage prepaid, return receipt required, and addressed as
follows:
If to Seller: c/o Meyer Asset Management, Inc.
4040 North Palm Street, Suite 401
Fullerton, California 92835
Attention: Mary Novikoff
Phone: (714) 578-2670
Fax: (714) 773-9212
with a copy to: Sonnenschein, Nath & Rosenthal
601 South Figueroa Street,
Suite 1500
Los Angeles, California 90017
Attention: Charles R. Campbell
Phone: (213) 623-9300
Fax: (213) 623-9924
-14-
<PAGE> 15
If to Buyer: Pacific Gulf Properties Inc.
4220 Von Karman, Second Floor
Newport Beach, CA 92660
Attention: Mr. Lonnie Nadal
Phone: (714) 223-5000
Fax: (714) 223-5033
With a copy to: Cox, Castle & Nicholson LLP
2049 Century Park East
Suite 2800
Los Angeles, CA 90067
Attention: John H. Kuhl
Phone: (310) 284-2267
Fax: (310) 277-7889
If to Escrow
Holder: Janelle Cowan
Fidelity National Title Insurance Company
17911 Von Karman, Suite 540
Phone: (714) 622-4925
Fax: (714) 477-6814
or such other address as either party may from time to time specify in writing
to the other.
(b) Successors and Assigns. Buyer shall not have the right to
assign this Agreement without the consent or approval of Seller except to a
person or entity affiliated with Buyer. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors,
heirs, administrators and assigns.
(c) Amendments. Except as otherwise provided herein, this
Agreement may be amended or modified only by a written instrument executed by
Seller and Buyer.
(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
(e) Merger of Prior Agreements. This Agreement and the exhibits
hereto constitute the entire agreement between the parties and supersede all
prior agreements and understandings between the parties relating to the subject
matter hereof, including without limitation any letter of intent which shall be
of no further force or effect upon execution of this Agreement by Buyer and
Seller.
(f) Timing. For purposes of this Agreement "business day" shall
mean any day other than a Saturday, Sunday, California State or national holiday
or other day on which commercial bankers in California are generally not open
for business.
(g) Severability. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect.
(h) Counterparts. This Agreement, and any document executed in
connection with this Agreement, may be executed in any number of counterparts
each of which shall be deemed an original and all of which shall constitute one
and the same agreement with the same effect as if all parties had signed the
same signature page. It shall not be necessary that the signatures of, or on
behalf of, each party, or that the signatures of all persons required to bind
any party, appear on a single counterpart, but it shall be sufficient that the
signature of, or on behalf of, each party, appear on one or more of the
counterparts. Any signature page of this Agreement, and any document executed in
connection with this Agreement, may be detached from any counterpart of this
Agreement or such other document and reattached to any other counterpart of this
Agreement or such
-15-
<PAGE> 16
other document identical in form hereto or thereto but having attached to it one
or more additional signature pages. This Agreement, and any document executed in
connection with this Agreement (except for the Deed or any other document to be
recorded), shall be deemed executed and delivered upon each party's delivery of
executed signature pages of this Agreement or such other document, which
signature pages may be delivered by facsimile with the same effect as delivery
of the originals.
(i) No Waiver. Except with respect to items which must be
approved or disapproved by Buyer prior to the expiration of the Due Diligence
period, no delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Agreement or under any other instrument or
document given in connection with or pursuant to this Agreement shall impair any
such right, power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power or privilege.
No waiver shall be valid against any party hereto unless made in writing and
signed by the party against whom enforcement of such waiver is sought and then
only to the extent expressly specified herein.
(j) Legal Representation. Each party has been represented by
legal counsel in connection with the negotiation of the transactions herein
contemplated and the drafting and negotiation of this Agreement. Each party and
its counsel has had an opportunity to review and suggest revisions to the
language of this Agreement. Accordingly, no provision of this Agreement shall be
construed for or against or interpreted to the benefit or disadvantage of any
party by reason of any party having or being deemed to have structured or
drafted such provision.
(k) Enforcement. In the event a dispute arises concerning the
performance, meaning or interpretation of any provision of this Agreement, the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party in enforcing or establishing
its rights hereunder, including, without limitation, court costs and attorneys'
fees. In addition to the foregoing award of attorneys' fees to the prevailing
party, the prevailing party in any lawsuit on this Agreement shall be entitled
to its attorneys' fees incurred in any post judgment proceedings to collect or
enforce the judgment. This provision is separate and several and shall survive
the merger of this Agreement into any judgment on this Agreement.
(1) Exhibits. All exhibits attached hereto are
incorporated herein as though fully set forth herein.
[rest of page left intentionally blank)
-16-
<PAGE> 17
(m) Joint and Several Liability. All entities constituting
"Seller" hereunder shall be jointly and severally liable for the faithful
performance of the terms and conditions hereof, and of any other document
executed in connection herewith, to be performed by Seller.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
BUYER: SELLER:
PACIFIC GULF PROPERTIES INC., FULLERTON BUSINESS CENTER, 1976, a
a Maryland corporation California limited partnership
By: By: MEYER INDUSTRIAL PROPERTIES -
------------------------------ FULLERTON 1976, a California general
partnership, general partner
------------------------------
(Print Name and Title)
By:
-----------------------------------
By: [SIG] Richard J. Meyer, General Partner
-----------------------------
LO Nadal, S.V.P. By:
----------------------------- -----------------------------------
(Print Name and Title) Robert E. Meyer, General Partner
[BUYER AND SELLER TO INITIAL PARAGRAPH 7]
Fidelity National Title Insurance Company agrees to act as Escrow Holder in
accordance with the terms of this Agreement.
FIDELITY NATIONAL TITLE INSURANCE COMPANY
By:
--------------------------------------
--------------------------------------
(Print Name and Title)
-17-
<PAGE> 18
EXHIBIT A
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Pacific Gulf Properties Inc.
4220 Von Karman, Second Floor
Newport Beach, California 92660-2002
Attention: Mr. Lonnie Nadal
MAIL TAX STATEMENT TO:
Pacific Gulf Properties Inc.
4220 Von Karman, Second Floor
Newport Beach, California 92660-2002
Attention: Mr. Lonnie Nadal
- --------------------------------------------------------------------------------
(Space Above Line for Recorder's Use Only)
GRANT DEED
(Fullerton)
In accordance with Section 11932 of the California Revenue and Taxation Code,
Grantor has declared the amount of the transfer tax which is due by a separate
statement which is not being recorded with this Grant Deed.
FOR VALUE RECEIVED, FULLERTON BUSINESS CENTER, 1976, a California
limited partnership, grants to PACIFIC GULF PROPERTIES INC., a Maryland
corporation ("Grantee") , all that certain real property situated in the City of
Fullerton, County of Orange, State of California, described on Schedule 1
attached hereto and by this reference incorporated herein (the "Property")
IN WITNESS WHEREOF, the undersigned has executed this Grant Deed as of
__________________,1997.
FULLERTON BUSINESS CENTER, 1976, a California limited
partnership
By: MEYER INDUSTRIAL PROPERTIES - FULLERTON 1976,
a California general partnership, general partner
By:
---------------------------------------------------
Richard J. Meyer, General Partner
By:
---------------------------------------------------
Robert E. Meyer, General Partner
<PAGE> 19
STATE OF CALIFORNIA)
) ss.
COUNTY OF )
On _________________, 1997, before me, the undersigned, a Notary
Public in and for said County and State, personally appeared _________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/ their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s) , or the entity upon behalf of which the person(s)
acted, executed the within instrument.
WITNESS my hand and official seal.
------------------------------------
Notary Public
STATE OF CALIFORNIA
) ss.
COUNTY OF )
On __________________, 1997, before me, the undersigned, a
Notary Public in and for said County and State, personally appeared
__________________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) , or the entity upon behalf of
which the person(s) acted, executed the within instrument.
WITNESS my hand and official seal.
-------------------------------------
Notary Public
<PAGE> 20
SCHEDULE 1 TO DEED
LEGAL DESCRIPTION
<PAGE> 21
DECLARATION OF DOCUMENTARY TRANSFER TAX
DO NOT RECORD
County Recorder
Orange County, California
It is hereby requested that this Declaration of Documentary Transfer Tax
not be recorded with the attached Grant Deed, but be affixed to the Grant Deed
after it is recorded and before it is returned.
The Grant Deed names FULLERTON BUSINESS CENTER, 1976, as Grantor, and
PACIFIC GULF PROPERTIES INC., as Grantee. The property being transferred is
located in the City of Fullerton, County of Orange, State of California. The
Assessor's Parcel No. is __________________.
The undersigned Grantor hereby declares that the amount of Documentary
Transfer Tax due on the attached Grant Deed is $________, computed on the full
value of the interest or property conveyed.
I declare under penalty of perjury that the foregoing is true and
correct.
FULLERTON BUSINESS CENTER, 1976, a California limited
partnership
By: MEYER INDUSTRIAL PROPERTIES - FULLERTON 1976, a
California general partnership, general partner
By:
-----------------------------------------------------
Richard J. Meyer, General Partner
By:
-----------------------------------------------------
Robert E. Meyer, General Partner
<PAGE> 22
EXHIBIT B
BILL OF SALE
(Fullerton)
FOR VALUE RECEIVED, FULLERTON BUSINESS CENTER, 1976, ("Seller") hereby
sells, conveys and assigns to PACIFIC GULF PROPERTIES INC., a Maryland
corporation, all of Seller's right, title and interest in and to any personal
property located upon or used in the ownership, operation, management,
maintenance and/or repair of that certain real property commonly known as
"Fullerton Business Center" and described in Schedule 1 attached hereto and
incorporated herein by this reference and the improvements thereon
(collectively, the "Personal Property").
TO HAVE AND TO HOLD the Personal Property unto the grantee and its
successors and assigns forever.
Seller warrants that it owns good and marketable title to the Personal
Property and will defend title to the Personal Property against all persons
claiming a prior right thereto to the extent that such prior right is alleged to
exist on or before the date of this Bill of Sale.
All entities constituting Seller shall be jointly and severally liable for
the faithful performance of the terms and conditions hereof to be performed by
Seller.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale on this ____ day
of ___________________, 1997.
FULLERTON BUSINESS CENTER, 1976, a California limited
partnership
By: MEYER INDUSTRIAL PROPERTIES - FULLERTON 1976, a
California general partnership, general partner
By:
-----------------------------------------------------
Richard J. Meyer, General Partner
By:
-----------------------------------------------------
Robert E. Meyer, General Partner
<PAGE> 23
LEGAL DESCRIPTION OF THE PROPERTY
<PAGE> 24
EXHIBIT C
ASSIGNMENT OF SERVICE CONTRACTS, WARRANTIES,
GUARANTIES, PERMITS AND OTHER INTANGIBLE PROPERTY
(Fullerton)
THIS ASSIGNMENT OF SERVICE CONTRACTS, WARRANTIES, GUARANTIES AND OTHER
INTANGIBLE PROPERTY (this "Assignment") is made as of ________________________
1997, by FULLERTON BUSINESS CENTER, 1976, a California limited partnership
("Assignor"), to PACIFIC GULF PROPERTIES INC., a Maryland corporation
("Assignee").
WITNESSETH:
WHEREAS, Assignor is contemporaneously herewith selling pursuant to that
certain Purchase and Sale Agreement and Escrow Instructions dated as of
____________, 1997, by and between Assignor and Assignee (the "Purchase
Agreement") that certain real property and improvements thereon located in the
City of Fullerton, County of Orange, State of California, the real property of
which is more particularly described on Schedule 1 attached hereto and
incorporated herein by this reference. Terms used in this Assignment and not
otherwise defined shall be given the meanings defined in the Purchase Agreement.
WHEREAS, Assignor desires to assign its interest in and to the following
to Assignee as of the date on which title to the Real Property is vested in
Assignee (the "Transfer Date"):
All service contracts described in Schedule 2 attached hereto and
incorporated herein by this reference (the "Contracts");
a) All "Warranties and Guaranties" (hereinafter defined);
b) All "Names and Marks" (hereinafter defined);
c) All "Intangible Property" (hereinafter defined); and
d) All "Permits" (hereinafter defined).
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1) As of the Transfer Date, Assignor hereby assigns and transfers unto
Assignee all of its right, title, claim and interest in, to and under the (a)
Contracts; (b) Warranties and Guarantees; (c) Names and Marks; (d) Intangible
Property and (e) Permits (collectively the "Assigned Interests") .
2) The following terms shall have the following meanings:
(A) The term "Warranties and Guaranties" as used herein shall mean
and include all warranties and guarantees to the extent assignable, whether or
not written, for all or any portion of the Property, including without
limitation the Improvements and the Tangible Personal Property, including
without limitation construction warranties from contractors and subcontractors.
(B) The term "Names and Marks" as used herein shall mean and include
all patents, licenses, trademarks, service marks and names used in connection
with the operation of the Property, and all symbols, emblems and logos used in
connection with the ownership or operation of the Property, whether in black and
white or in color, and irrespective of size, and all of Assignor's right, title
and interest in and to all goodwill associated therewith, including, without
limitation the name "Fullerton Business Center".
(C) The term "Intangible Property" as used herein shall mean and
include all intangible property relating to or used in connection with the
Property, as defined in the Purchase Agreement.
<PAGE> 25
(D) The term "Permits" as used herein shall mean and include all
governmental permits and approvals relating to the construction, operation, use
or occupancy of the Property.
3) In the event of any litigation between Assignor and Assignee arising
out of the obligations of the parties under this Assignment or concerning the
meaning or interpretation of any provision contained herein, the losing party
shall pay the prevailing party's costs and expenses in such litigation,
including, without limitation, reasonable attorneys' fees and expenses. In
addition to the foregoing award of attorneys' fees to the prevailing party, the
prevailing party in any lawsuit on this Agreement shall be entitled to its
reasonable attorneys' fees incurred in any post judgment proceedings to collect
or enforce the judgment. This provision is separate and several and shall
survive the merger of this Assignment into any judgment on this Assignment.
4) This Assignment shall be binding on and inure to the benefit of
Assignee and Assignor, and their respective heirs, executors, administrators,
successors-in-interest and assigns.
5) This Assignment shall be governed by and construed in accordance with
the laws of the State of California.
[rest of page left intentionally blank]
<PAGE> 26
6) Nothing contained herein shall be deemed or construed as relieving
the Assignor or Assignee of their respective duties and obligations under the
Purchase Agreement.
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date
first above written.
ASSIGNOR: FULLERTON BUSINESS CENTER, 1976, a California limited
partnership
By: MEYER INDUSTRIAL PROPERTIES - FULLERTON 1976, a
California general partnership, general partner
By:
-----------------------------------------------------
Richard J. Meyer, General Partner
By:
-----------------------------------------------------
Robert E. Meyer, General Partner
ASSIGNEE: PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By: [SIG]
-------------------------------------------------------
(Name) Vice President
--------------------------------------------------------
(Print Name and/Title)
By: [SIG]
--------------------------------------------------------
(Name) S.V.P.
--------------------------------------------------------
(Print Name and Title)
<PAGE> 27
Schedule 1
LEGAL DESCRIPTION OF REAL PROPERTY
<PAGE> 28
Schedule 2
DESCRIPTION OF THE CONTRACTS
<PAGE> 29
EXHIBIT D
ASSIGNMENT OF LEASES
(Fullerton)
THIS ASSIGNMENT OF LEASES (this "Assignment") dated as of
______________, 1997, is made by FULLERTON BUSINESS CENTER, 1976, a California
limited partnership ("Assignor"), to PACIFIC GULF PROPERTIES INC., a Maryland
corporation ("Assignee").
WITNESSETH:
WHEREAS, Assignor is the lessor under certain leases executed with
respect to that certain real property located in the City of Fullerton, County
of Orange, State of California (the "Property") more particularly described on
Schedule 1 attached hereto and incorporated herein by this reference, which
leases are described in Schedule 2 attached hereto and incorporated herein by
this reference (the "Leases").
WHEREAS, Assignor is contemporaneously herewith selling the Property to
Assignee pursuant to that certain Purchase and Sale Agreement and Escrow
Instructions dated as of ______________, 1997, by and between Assignor and
Assignee (the "Purchase Agreement").
WHEREAS, Assignor desires to assign its interest in and to the Leases to
Assignee as of the date on which title to the Property is vested in Assignee
(the "Transfer Date").
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereby agree as follows:
1. As of the Transfer Date, Assignor hereby assigns to Assignee all of
its right, title and interest in and to the Leases.
2. Assignor warrants and represents that as of the Transfer Date, the
attached Schedule 2 includes all of the Leases affecting the Property and there
are no assignments of or agreements to assign the Leases to any other party.
3. In the event of any litigation between Assignor and Assignee arising
out of the obligations of the parties under this Assignment or concerning the
meaning or interpretation of any provision contained herein, the losing party
shall pay the prevailing party's costs and expenses in such litigation,
including, without limitation, reasonable attorneys' fees and expenses. In
addition to the foregoing award of attorneys' fees to the prevailing party, the
prevailing party in any lawsuit on this Agreement shall be entitled to its
reasonable attorneys' fees incurred in any post judgment proceedings to collect
or enforce the judgment. This provision is separate and several and shall
survive the merger of this Assignment into any judgment on this Assignment.
4. This Assignment shall be binding on and inure to the benefit of the
Assignee and Assignor and their respective heirs, executors, administrators,
successors-in-interest and assigns.
5. This Assignment shall be governed by and construed in accordance with
the laws of the State of California.
<PAGE> 30
6. Nothing contained herein shall be deemed or construed as relieving
the Assignor or Assignee of their respective duties and obligations under the
Purchase Agreement.
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date
first above written.
ASSIGNOR: FULLERTON BUSINESS CENTER, 1976, a California limited
partnership
By: MEYER INDUSTRIAL PROPERTIES - FULLERTON 1976, a
California general partnership, general partner
By:
-----------------------------------------------------
Richard J. Meyer, General Partner
By:
-----------------------------------------------------
Robert E. Meyer, General Partner
ASSIGNEE: PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By: [SIG]
-------------------------------------------------------
(Name) Vice President
--------------------------------------------------------
(Print Name and/Title)
By: [SIG]
--------------------------------------------------------
(Name) S.V.P.
--------------------------------------------------------
(Print Name and Title)
<PAGE> 31
Schedule 1
LEGAL DESCRIPTION OF REAL PROPERTY
<PAGE> 32
Schedule 2
DESCRIPTION OF THE LEASES
<PAGE> 33
EXHIBIT E
ESTOPPEL CERTIFICATE
Tenant:_______________________________
Date: ___________________________, 1997
Address: _____________________________
______________________________________
Lease Date:___________________________
Commencement Date:____________________
Square Footage:_______________________
Expiration Date:______________________
Term In Years:________________________
Current Monthly Payments: $___________
Base Rental: $________________________
Operating Expenses: $_________________
Rent & OE Pmts Are Due:_______________
Tax Pmts Are Due:_____________________
Taxes: $______________________________
Security Deposit:_____________________
OPTIONS
Check appropriate box below
[ ] Extension option
[ ] Expansion option
[ ] Termination Option
[ ] Purchase Option
and provide details in Paragraph 7 below
[ ] None
[ ] Check here if you have rental escalations and provide details in Paragraph
4 below.
Tenants Proportionate Share Of Taxes And Operating Expenses _________%
================================================================================
THE UNDERSIGNED, AS TENANT UNDER THE LEASE OF THE ABOVE REFERENCED PREMISES
("PREMISES") EXECUTED BY _________________ ("LANDLORD"), AS LANDLORD, AND TENANT
ON THE ABOVE-REFERENCED LEASE DATE, DOES HEREBY STATE, DECLARE, REPRESENT AND
WARRANT TO PACIFIC GULF PROPERTIES INC. ("BUYER") AND ITS ASSIGNEES AS FOLLOWS:
1. Accuracy. That the information contained in this Tenant's Estoppel
Certificate is true and correct as of the date above written.
2. Lease. That the copy of the Lease attached hereto as Schedule 1 is a true and
correct copy of the Lease which is in full force and effect and which has not
been amended, supplemented or changed by letter agreement or otherwise, except
as follows [if none, indicate so by writing "NONE" below]:
3. Completion of Premises/No Disputes. Tenant has accepted possession of the
Premises, and all conditions to be satisfied by Landlord under the Lease have
been completed pursuant to the terms of the Lease, including, but not limited
to, completion of construction of the Premises (and all other improvements
required under the Lease) in accordance with applicable plans and specifications
and within the time periods set forth in the Lease; there are no unreimbursed
expenses (except the annual operating expense and tax expense adjustment)
including, but not limited to, capital expenses reimbursements; and Tenant has
no complaints or disputes with Landlord regarding the overall operation,
<PAGE> 34
maintenance or condition of the Premises or the property within which the
Premises is located (the "Property"), or otherwise.
4. Rental Escalation. Base Rental is subject to the following escalation
adjustments (if none, indicate so by writing "NONE" below):
________________________________________________________
________________________________________________________
________________________________________________________
5. No Defaults/Claims. Neither Tenant nor, to Tenant's knowledge, Landlord
under the Lease is in default under any terms of the Lease nor has any event
occurred which with the passage of time (after notice, if any, required by the
Lease) would become an event of default under the Lease. Tenant has no claims,
counterclaims, defenses or setoffs against Landlord arising from the Lease, the
Premises or the Property, nor is Tenant entitled to any concession, rebate,
allowance or free rent for any period after this certification.
6. No Advance Payments. No rent has been paid more than one (1) month in advance
by Tenant except for the current month's rent, and no security (other than a
security deposit in the amount of $___________ has been deposited with Landlord.
7. No Options/Purchase Rights. Tenant has no right of first refusal to purchase
the Property or any interest therein and no right to cancel or terminate the
Lease except as follows [if none, indicate so by writing "NONE" below]:
________________________________________________________
________________________________________________________
________________________________________________________
8. No modification of Lease. From the date of this Estoppel Certificate through
_____________, 19__, no modification or amendment to the Lease, forgiveness of
payment of rent or other amount due under the Lease, grant of extension or
option, or prepayment of rents may be made except upon the written consent
thereto executed by Buyer, which consent may be unreasonably withheld if not
otherwise provided in the Lease.
9. Parking. The number of parking spaces allotted to Tenant under the terms of
the Lease, for the use of its employees, agents, invitees and licensees is
__________________________; of these spaces, ________ are reserved for Tenant's
exclusive use.
10. No Sublease/Assignment. Tenant has not entered into any sublease,
assignment or any other agreement transferring any of its interest in the Lease
o r t h e P r e m i s e s, e x c e p t a s f o 1 1 o w s:
________________________________________________________
11. No Notice. Tenant has not received written notice of any assignment,
hypothecation, mortgage, or pledge of Landlord's interest in the Lease or the
rents or other amounts payable thereunder, except those listed below.
________________________________________________________
________________________________________________________
________________________________________________________
12. Hazardous Materials. No hazardous or toxic substance (including without
limitation PCB's, petroleum, petroleum products and fractions thereof) has been
used, treated, stored or disposed of on the Premises or Property in violation of
environmental laws by Tenant or, to Tenant's knowledge, any other party. No
underground storage tanks exist or, to Tenant's knowledge, have existed on or
under the Property. Tenant does not have any permits or identification numbers
issued by any environmental or governmental agency with respect to its
operations on the Premises, except those listed below.
________________________________________________________
________________________________________________________
________________________________________________________
<PAGE> 35
13. Reliance. Tenant recognizes and acknowledges it is making these
representations to Buyer with the intent that Buyer and any assigns of Buyer
will fully rely on Tenant's representations.
14. Binding. The provisions hereof shall be binding upon and inure to the
benefit of the successors, assigns, personal representatives and heirs of Tenant
and Buyer.
EXECUTED BY TENANT, IF TENANT IS A SOLE PROPRIETOR OR A GENERAL PARTNERSHIP, OR
BY AN OFFICER OF TENANT, IF TENANT IS A CORPORATION, ON THE DATE FIRST WRITTEN
ABOVE.
BY:
----------------------------------------
a
-------------------------------
BY:
-------------------------------
NAME:
-------------------------------
TITLE:
-------------------------------
<PAGE> 36
Schedule 1 to Estoppel Certificate
LEASE
<PAGE> 37
EXHIBIT F
FORM OF NOTICE TO TENANTS
__________________, 1997
To: ____________________________
____________________________
____________________________
____________________________
RE: Notice of Lease Assignment
This letter is to notify you that the property commonly known as the
_____________________ ("Property") has this date been sold and ownership
transferred.
In connection with this sale, all of the interest of the lessor under
your lease of space in the Property has been transferred. You are hereby
notified that, from and after the date hereof and until further notice, all
future payments under your lease should be made payable to "_________________ "
(the "Property manager") and mailed to the Property Manager, whose address is
________________ ____________________________ . In addition, all questions or
other matters regarding your lease should be directed to the Property Manager at
(____) ____________________.
Also in connection with this sale, if you have paid a security deposit
in connection with your lease, it has been transferred to the Property Manager.
The return of any such security deposit will be conditioned upon and subject to
the terms and conditions of the lease and the legal requirements of the State of
California. All future inquiries regarding security deposits are to be directed
to the Property Manager.
Thank you for your cooperation.
Very truly yours,
---------------------------------------------
---------------------------------------------
---------------------------------------------
<PAGE> 38
EXHIBIT G
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
To inform PACIFIC GULF PROPERTIES INC., a Maryland corporation
("Transferee"), that withholding of tax under Section 1445 of the Internal
Revenue Code of 1986, as amended ("Code"), will not be required upon the
transfer of certain real property to the Transferee by FULLERTON BUSINESS
CENTER, 1976 ("Transferor"), the undersigned hereby certifies the following on
behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign partnership,
foreign trust, foreign estate or foreign person (as those terms are defined in
the Code and the Income Tax Regulations promulgated thereunder);
2. The Transferor's U.S. employer or tax (social security)
identification number is 95-3709408;
The Transferor understands that this Certification may be disclosed to
the Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
The Transferor understands that the Transferee is relying on this
Certification in determining whether withholding is required upon said transfer.
The Transferor hereby agrees to indemnify, defend and hold the
Transferee harmless from and against any and all obligations, liabilities,
claims, losses, actions, causes of action, rights, demands, damages, costs and
expenses of every kind, nature or character whatsoever (including, without
limitation, reasonable attorneys' fees and court costs) incurred by the
Transferee as a result of: (i) the Transferor's failure to pay U. S. Federal
income tax which the Transferor is required to pay under applicable U.S. law;
or (ii) any false or misleading statement contained herein.
Under penalty of perjury I declare that I have examined this
Certification and to the best of my knowledge and belief it is true and correct
and complete, and I further declare that I have authority to sign this document
on behalf of the Transferor.
Date:_______________________, 1997
FULLERTON BUSINESS CENTER, 1976, a California limited
partnership
By: MEYER INDUSTRIAL PROPERTIES - FULLERTON 1976, a
California general partnership, general partner
By:
-----------------------------------------------------
Richard J. Meyer, General Partner
By:
-----------------------------------------------------
Robert E. Meyer, General Partner
<PAGE> 39
EXHIBIT H
RENT ROLL
<PAGE> 40
EXHIBIT I
DISCLOSURE OF UNPAID COSTS AND OBLIGATIONS
<PAGE> 1
EXHIBIT 10.4
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
(Norwood Industrial Park Disposition)
THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS
("Agreement") is made and entered into as of this 10 day of December, 1997
("Execution Date"), by and between PMRA III, a group trust ("Seller") and
PACIFIC GULF PROPERTIES INC., a Maryland corporation ("Buyer"), with respect to
the following.
RECITALS
A. WHEREAS, Seller owns certain improved real property, which is
commonly known as Norwood Industrial Parks I and II, located at 251, 261 and 271
Opportunity Street, 3950 Development Drive and 3951 Research Drive in the city
of Sacramento ("City"), county of Sacramento ("County"), state of California
("State"), which is more particularly described on Exhibit "A" attached hereto
(the "Land"), together with (i) the building and all other improvements located
on the Land (the "Improvements") (ii) all rights, easements, and appurtenances
pertaining to the Real Property, including any right, title and interest of
Seller in and to adjacent streets, roads, alleys and rights of way; (iii) all
the personal property owned by Seller, if any, located upon or in the Real
Property and the Improvements and used exclusively in connection with the
operation thereof ("Personal Property"); (iv) all of Seller's right, title and
interest in and to any rental agreements with occupants, tenants and leases of
the Improvements and/or the Real Property, including, but not limited to, all
refundable and nonrefundable security, rental and cleaning deposits, and prepaid
rent held by Seller (hereinafter collectively referred to as "Tenant Leases";
all tenants under such Tenant Leases are hereinafter collectively referred to as
"Tenants"); and (v) such other rights, interests, and properties as may be
specified in this Agreement to be sold, transferred, assigned, or conveyed by
Seller to Buyer.
B. WHEREAS, the Real Property, together with the Improvements, Personal
Property, Tenant Leases and other rights, interests, easement, appurtenances,
and properties described in this Agreement, are hereinafter collectively called
the "Property."
C. WHEREAS, Seller desires to sell the Property to Buyer, and Buyer
desires to purchase the Property from Seller, upon the terms and conditions set
forth in this Agreement.
AGREEMENT
NOW, THEREFORE, incorporating the foregoing recitals, and in
consideration of the mutual covenants and agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller and Buyer agree that the terms and conditions of
this Agreement and the instructions to Chicago Title
<PAGE> 2
Insurance Company ("Escrow Holder"), with regard to the escrow ("Escrow")
created pursuant hereto are as follows.
1. Purchase and Sale. Seller hereby agrees to sell the Property to
Buyer, and Buyer hereby agrees to purchase the Property from Seller, upon the
terms and conditions set forth in this Agreement.
2. Purchase Price. The purchase price ("Purchase Price") for the
Property shall be Four Million Seven Hundred Thousand Dollars ($4,700,000.00),
which shall be paid in accordance with the terms of Paragraph 3 below.
3. Payment of Purchase Price. The Purchase Price for the Property shall
be paid by Buyer as set forth below in this Paragraph 3.
3.1 Deposit. Within one (1) day after the "Opening of Escrow" (as
defined below in Paragraph 4.1), Buyer shall deposit, or cause to be
deposited, with Escrow Holder the sum of One Hundred Thousand and
No/100 Dollars ($100,000.00) in immediately available funds (the
"Initial Deposit"). Until 5:00 p.m. Pacific Standard time on December
17, 1997 ("Contingency Date"), the Initial Deposit shall remain
immediately refundable to Buyer upon demand if the transaction
contemplated by this Agreement is not consummated for any reason
whatsoever. If this Agreement has not previously terminated, then
within one (1) business day after the Contingency Date, Buyer shall
deposit, or cause to be deposited, with Escrow Holder the additional
sum of One Hundred Thousand and No/100 Dollars ($100,000.00)
("Additional Deposit") (together with any interest which accrues
thereon, the Initial Deposit and the Additional Deposit are
hereinafter collectively referred to as the "Deposit"). Escrow Holder
shall immediately invest the Deposit in a federally-insured,
interest-bearing account and all interest accruing thereon shall be
credited to Buyer. From and after the Contingency Date, the Deposit
shall not be refundable unless the transaction contemplated by this
Agreement is not consummated solely as the result of Seller's default
or the failure of a condition precedent to the Close of Escrow for the
benefit of Buyer. Upon the "Close of Escrow" (as defined below in
Paragraph 4.2), the Deposit shall be credited toward payment of the
Purchase Price.
3.2 Cash Balance. Not later than 11:00 a.m. Pacific Standard time
on the Closing Date, Buyer shall deposit or cause to be deposited,
with Escrow Holder, in immediately available funds, the balance of the
Purchase Price, plus or minus Buyer's share of closing costs and
charges set forth in Paragraph 10 below and Buyer's share of
prorations set forth on the Proration and Expense Schedule (as defined
below in paragraph 11) payable pursuant to this Agreement.
4. Escrow.
4.1 Opening of Escrow. For the purposes of this Agreement, the
Escrow shall be deemed opened ("Opening of Escrow") on the date Escrow
Holder receives an original of this Agreement fully executed by Buyer
and Seller, which shall
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<PAGE> 3
occur no later than December 10, 1997, or such later date as the parties
may agree in writing, or this Agreement shall automatically and
irrevocably terminate. Escrow Holder shall promptly notify Buyer and
Seller in writing of the Opening of Escrow. Buyer and Seller agree to
execute, deliver and be bound by any reasonable or customary
supplemental escrow instructions or other instruments reasonably
required by Escrow Holder to consummate the transaction contemplated by
this Agreement; provided, however, that no such instruments shall be
inconsistent or in conflict with, amend or supersede any portion of this
Agreement. If there is any conflict or inconsistency between the terms
of such instruments and the terms of this Agreement, then the terms of
this Agreement shall control.
4.2 Close of Escrow. For purposes of this Agreement, the "Close
of Escrow" shall be the date that the Deed (as defined below in
Paragraph 9.1.1) is recorded in the Official Records of the County
(the "Official Records"). Unless changed in writing by Buyer and
Seller, the Close of Escrow shall occur on or before December 23, 1997
(the "Closing Date").
4.3 Delivery and Possession. At the Close of Escrow, Seller shall
deliver to Buyer (a) possession of the Property, subject to all
title-matters of record or apparent, including, without limitation,
all Approved Title Conditions (as defined below in Paragraph 5), and
(b) all keys to the Improvements in Seller's possession or control
(which Seller may cause to occur through its property manager).
5. Condition of Title. As a condition precedent to the Close of Escrow
for Buyer's benefit, title to the Property shall be conveyed to Buyer by
Seller by the Deed subject only to the following approved conditions of title
(collectively, the "Approved Title Conditions").
5.1 Taxes. A lien to secure payment of real estate taxes not
delinquent shall constitute an Approved Title Condition.
5.2 Approved Matters. Matters affecting the Property created by
or with the written consent of Buyer shall constitute Approved Title
Conditions.
5.3 Additional Matters. Exceptions which are disclosed by the
Report (as defined below in Paragraph 7.1) and which are approved or
deemed approved by Buyer in accordance with the terms of Paragraph 7.1
shall constitute Approved Title Conditions.
5.4 Monetary Encumbrances. Notwithstanding anything to the
contrary contained herein and notwithstanding any approval or consent
given by Buyer hereunder, Seller shall use good faith efforts to cause
all mortgages, deeds of trust and other monetary encumbrances caused
by Seller, including, without limitation, all mechanics' liens, but
excluding non-delinquent real property taxes, to be released and
reconveyed from the Property on or prior to the Closing Date.
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<PAGE> 4
6. Buyer's Title Policy. Provided that Buyer has timely obtained and
delivered to Title Company (as defined below in Section 7.1) an ALTA survey of
the Land ("Survey"), at Buyer's sole expense, in form and substance satisfactory
to Title Company and in time for Title Company to confirm, by the Contingency
Date, its willingness to issue an ALTA Owner's Policy of Title Insurance (Form
B, rev. 10/17/70, with Endorsement Form 1 coverage) in the amount of the
Purchase Price showing title to the Real Property vested in Buyer subject only
to the Approved Title Conditions and with CLTA endorsement nos. 100 (modified
for an owner), 101.4, 103.7, 116, 116.1 and 116.7, then as a condition
precedent to Buyer's obligations under this Agreement, Title Company shall
issue the Title Policy in such form upon the Close of Escrow. If Buyer fails to
timely deliver the Survey to Title Company, then Title Company's willingness to
issue an ALTA Owner's Policy of Title Insurance, but with a general survey
exception, shall constitute satisfaction of this condition precedent to Buyer's
obligations under this Agreement with respect to matters of title to the Real
Property (as applicable, the "Title Policy"). To facilitate the process of
procuring the Survey, Seller shall deliver to Buyer the most recent ALTA survey
of the Property in Seller's possession within two (2) business days after the
Opening of Escrow.
7. Conditions Precedent to the Close of Escrow for the Benefit of Buyer.
The Close of Escrow and Buyer's obligation to consummate the transaction
contemplated by this Agreement are subject to the timely satisfaction or written
waiver of the following conditions precedent for Buyer's benefit by the dates
designated below. Unless otherwise specified below, Buyer's failure to timely
deliver written notice of its disapproval of the matter(s) set forth below in
this Paragraph 7 shall be deemed to constitute Buyer's irrevocable approval
thereof
7.1 Title. Buyer shall have approved the legal description of the
Land and any matters of title disclosed by the following documents
(collectively, the "Title Documents") prepared and delivered to Buyer by
Chicago Title Insurance Company, National Business Unit (Mr. John Premac)
(the "Title Company"): (A) a standard preliminary title report issued by
the Title Company with respect to the Property (the "Report"); and (B)
copies of all recorded documents referred to in the Report. Buyer shall
have until 5:00 p.m. Pacific Standard time on the Contingency Date, to
deliver to Seller written notice ("Buyer's Title Notice") of Buyer's
disapproval or conditional approval of any matters shown in or disclosed by
the Title Documents or the survey, if Buyer obtains a survey of the
Property in a timely manner. Buyer's failure to timely deliver Buyer's
Title Notice shall be deemed to constitute Buyer's disapproval of all
matters of title. Upon the Closing Date, the Title Company shall be
prepared to issue to Buyer the Buyer's Title Policy in the form and
substance required by the provisions of Paragraph 6, subject only to the
Approved Title Conditions.
7.2 Physical Inspections and Studies. Buyer shall have the right to
approve or disapprove, in Buyer's sole discretion, the results of Buyer's
inspections, investigations, tests and studies, including, without
limitation, investigations with regard to zoning, building codes and other
governmental regulations, architectural inspections, engineering tests, and
soils, seismic and geologic reports with respect to the Property,
inspections of all or any portion of the Improvements (including, without
limitation,
-4-
<PAGE> 5
structural, mechanical and electrical systems, roofs, pavement, landscaping
and public utilities), and any other physical inspections and/or
investigations as Buyer may elect to make or obtain (collectively, the
"Tests") by delivering written notice thereof to Seller and Escrow Holder
by the Contingency Date. Buyer's failure to timely approve in writing the
results of the Tests shall be deemed to constitute Buyer's disapproval
thereof
7.3 Seller's Deliveries. At least one (1) business day prior to the
Closing Date, Seller shall have delivered to Escrow Holder the documents
described in Paragraph 9.1.
7.4 Representations and Warranties. All representations and warranties
of Seller contained in this Agreement shall be true and correct as of the
date made and as of the Close of Escrow with the same effect as if those
representations and warranties were made at and as of the Close of Escrow.
7.5 Covenants. By the Closing Date, Seller shall not be in default in
the performance of any covenant or agreement to be performed by Seller
under this Agreement.
7.6 Tenant Estoppels. As a condition precedent to Buyer's obligation
to close this transaction, Seller shall obtain and deliver to Buyer, by
December 16, 1997, Tenant Estoppel Certificates in the form attached hereto
as Exhibit "G" executed by all Tenants of the Property as of the Execution
Date, which Buyer shall have the right to disapprove only if a Tenant
Estoppel Certificate discloses (A) a material default of the landlord or
Tenant under the applicable Tenant Lease, or (B) a material discrepancy
with the corresponding Tenant Lease. Seller shall have the right, but not
the obligation, to satisfy the foregoing requirement for Tenant's
occupying, in the aggregate, up to, but not more than, 30% of the leased
area of the Improvements, by executing Tenant Estoppel Certificates,
modified as follows ("Landlord Estoppel Certificate"): (X) qualified to
Seller's actual knowledge (as defined in this Agreement), and (Y) to
survive only until the expiration of the representations and warranties in
this Agreement or the earlier receipt by Buyer of a Tenant Estoppel
Certificate for the corresponding Tenant Lease to the extent that such
Tenant Estoppel Certificate does not materially deviate from the matters
set forth in the corresponding Landlord Estoppel Certificate.
Notwithstanding anything to the contrary contained herein, the failure of
the condition precedent set forth in this Paragraph 7.6 shall not be deemed
to constitute a default by Seller under this Agreement.
7.7 New Matters. If, after the Contingency Date, there shall come to
exist or if Seller or Buyer shall then learn, discover or become aware of
the disposal or discharge after the end of the Due Diligence Period on the
Property of any hazardous or toxic materials or wastes (as such terms are
defined under federal, State or local law) or of any new, changed, or
additional item, matter, fact or circumstance affecting title to the
Property or rendering a representation and/or warranty by Seller hereunder
untrue (collectively, "New Matter"), then the party who has learned,
discovered, or become aware of such New Matter shall promptly give written
notice to the other of same. Buyer shall have two (2) business days after
(a) receipt of notice from Seller, or (b) delivery of Buyer's notice to
Seller, of a New Matter within which to disapprove such New
-5-
<PAGE> 6
Matter by delivering written notice to Seller. Buyer's failure to timely
disapprove any New Matter shall be deemed to constitute Buyer's approval
thereof. If Buyer disapproves or is deemed to disapprove a New Matter in
accordance with this Section 7.7, then within two (2) business days
thereafter, Seller shall have the right to either (i) accept Buyer's
disapproval by delivering written notice thereof to Buyer (or failing to
provide timely written notice of item (ii) below), whereupon this Agreement
shall terminate, the Deposit shall be promptly refunded by Escrow Holder to
Buyer and neither party shall have any further rights or obligations
hereunder, except to the extent that such matters expressly survive the
termination of this Agreement, or (ii) notify Buyer that it has elected to
extend the Close of Escrow for a period of up to thirty (30) days within
which Seller may pursue cure of the New Matter by delivering written notice
thereof to Buyer. If Seller exercises its right to delay the Close of
Escrow and does not cure the New Matter by the delayed Closing Date, then a
condition precedent to Buyer's obligations under this Agreement shall be
deemed to have failed, Seller shall not be deemed to have defaulted under
this Agreement, and this Agreement shall terminate as described above in
subsection (i).
8. Conditions Precedent to the Close of Escrow for the Benefit of Seller.
The Close of Escrow and Seller's obligations with respect to the transaction
contemplated by this Agreement are subject to the timely satisfaction or
written waiver of the following conditions precedent for Seller's benefit by the
dates designated below.
8.1 Buyer's Deliveries. At least one (1) business day prior to the
Closing Date, Buyer shall have delivered to Escrow Holder the documents
described in Paragraph 9.2.
8.2 Representations and Warranties. All representations and warranties
of Buyer contained in this Agreement shall be true and correct as of the
date made and as of the Close of Escrow with the same effect as if those
representations and warranties were made at and as of the Close of Escrow.
8.3 Covenants. By the Closing Date, Buyer shall not be in default in
the performance of any covenant or agreement to be performed by Buyer under
this Agreement.
9. Deliveries to Escrow Holder.
9.1 Deliveries by Seller. At least one (1) business day prior to the
Close of Escrow, Seller shall deposit or cause to be deposited with Escrow
Holder the following documents and instruments.
9.1.1 Deed. Seller shall deliver to Escrow Holder a grant deed in
the form attached hereto as Exhibit "B", duly executed by Seller and
acknowledged ("Deed").
9.1.2 FIRPTA. Seller shall deliver to Escrow Holder an executed
Transferor's Certification of Non-Foreign Status and an executed
California Real Estate Withholding Exemption (Form 590), in the forms
attached hereto,
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<PAGE> 7
respectively, as Exhibits "C-1" and "C-2", duly executed by
Seller (collectively, "FIRPTA Certificates").
9.1.3 Lease Assignmment. Seller shall deliver to
Escrow Holder four (4) original counterparts of the Assignment
and Assumption of Leases in the form attached hereto as Exhibit
"D" ("Lease Assignment"), duly executed by Seller.
9.1.4 General Assigrunent. Seller shall deliver to
Escrow Holder four (4) original counterparts of the General
Assignment and Bill of Sale in the form attached hereto as
Exhibit "E" ("General Assignment"), duly executed by Seller.
9.1.5 Notices to Tenants. Seller shall deliver to
Escrow Holder notices to the Tenants of the Property in the form
attached hereto as Exhibit "F" ("Tenant Notices"), executed by
Seller.
9.2 Deliveries by Buyer. Unless otherwise provided, at
least one (1) business day prior to the Close of Escrow, Buyer shall
deposit or cause to be deposited with Escrow Holder the following.
9.2.1 Funds. Prior to the Close of Escrow, Buyer
shall deliver to Escrow Holder funds which are to be applied
toward payment of the Purchase Price in the amounts and at the
times designated above in Paragraph 3 (as adjusted by the
Proration and Expense Schedule).
9.2.2 Lease Assignment. Buyer shall deliver to
Escrow Holder four (4) original counterparts of the Lease
Assignment duly executed by Buyer.
9.2.3 General Assignment. Buyer shall deliver to
Escrow Holder four (4) original counterparts of the General
Assignment duly executed by Buyer.
10. Costs and Expenses. If the transaction contemplated by this
Agreement is consummated, then Seller shall bear the following costs and
expenses: (A) one-half (1/2) of Escrow Holder's fees, (B) County and City
documentary transfer taxes, (C) the premium for the Title Policy attributable to
the CLTA coverage only, and (D) Seller's share of prorations. If the transaction
contemplated by this Agreement is consummated, then Buyer shall bear the
following costs and expenses: (i) the cost of the Title Policy in excess of the
CLTA premium, including the cost of all endorsements, any premium attributable
to ALTA coverage, if any, and the cost of any survey, (ii) document recording
fees relating to documents conveying title or property interests to Buyer, (iii)
one-half (1/2) of Escrow Holder's fee, and (iv) Buyer's share of prorations.
Buyer and Seller shall pay, respectively, the Escrow Holder's customary charges
to buyers and sellers for document drafting, recording and miscellaneous
charges. If, as a result of no fault of Buyer or Seller, Escrow fails to close,
Buyer and Seller shall share equally all of Escrow Holder's fees and charges;
however, if the transaction fails to close as the result of the default of
either party, then such defaulting party shall bear all Escrow Holder's fees and
expenses. Subject to the provisions
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<PAGE> 8
of Paragraph 19 below, each party shall bear the cost of its own attorneys and
consultants. All other costs and expenses shall be allocated between Buyer and
Seller in accordance with the customary practice of the City and County.
11. Prorations. All revenues and expenses relating to the
Property, including without limitation, real property taxes and assessments.
utility charges, insurance premiums and the like, shall be prorated on a cash
basis as of the Close of Escrow. If the parties are unable to obtain final meter
readings from all applicable meters as of the Close of Escrow, such expenses
shall be reasonably estimated as of the Close of Escrow on the basis of the
prior operating history of the Property. Notwithstanding anything to the
contrary contained herein, rentals or other amounts due by the Tenants pursuant
to the terms of the Tenant Leases which are delinquent as of the Closing Date
shall be prorated between Buyer and Seller as of the Closing Date but only upon
receipt by Buyer. Buyer shall use commercially reasonable efforts to collect any
delinquent rentals, including sending invoices to Tenants for delinquent rent
disclosed to Buyer by Seller, on a monthly basis for six (6) months following
the Closing Date. However, Buyer shall not be obligated to commence any legal
action or incur any cost or expense (other than the delivery of such notices) to
collect any delinquent rent. Seller shall be permitted to pursue collection of
any rent arrearages applicable to the period prior to the Closing Date, provided
that Buyer shall not incur any, and Seller shall indemnify Buyer against all
cost, expense or liability in connection therewith, and provided further that
Seller shall not commence any legal or equitable proceedings in the nature of an
unlawful detainer, eviction or other proceeding, which would have the effect of
interfering with any tenant's quiet enjoyment of its leased premises or result
in a lien or encumbrance on such leased premises. Delinquent rentals and other
amounts collected by Buyer, net of the actual, documented, third-party costs of
collection incurred by Buyer, shall be applied first to amounts currently due
and then to amounts most recently overdue. In addition, operating cost
pass-throughs, percentage rentals, additional rentals, other retroactive rental
escalations, sums, charges payable by Tenants ("Additional Rentals"), shall be
prorated on a cash basis as of the Close of Escrow. If, at the Close of Escrow,
it is determined that Seller has collected Additional Rentals in excess of
amounts actually owed by Tenants, Buyer shall be credited for such excess.
Payments of Additional Rentals collected by Buyer and due Seller shall be made
to Seller promptly following receipt and shall be accompanied by a report
showing how same was calculated and such supporting documentation as Seller
reasonably requests. In addition, Buyer shall be credited and Seller shall be
debited with (or, if a deposit is not a cash deposit then Seller shall transfer
such instrument to Buyer) an amount equal to the Tenant deposits listed on the
Rent Roll (as defined below in Paragraph 13.1.11) (together with any interest
accrued for the benefit of any tenant pursuant to its Lease) and any prepaid
rent actually received by Seller. In addition, Seller shall be responsible for
obtaining a refund of all refundable deposits, retentions, holdbacks being held
by any governmental entity, any utility company, or other third party under
contract and Buyer shall be responsible for initiating any utility service with
respect to the Property, and posting deposits or other funds required in
connection therewith or in connection with any other contract. Not less than one
(1) business day prior to the Close of Escrow, Seller shall deliver to Buyer a
tentative schedule of expenses and prorations ("Proration and Expense Schedule")
for Buyer's approval, which approval shall not be unreasonably withheld. If any
prorations, apportionments or computations made under this Paragraph 11 shall
require final adjustment, then the parties shall make the appropriate
adjustments promptly when accurate information becomes
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<PAGE> 9
available and either party hereto shall be entitled to an adjustment to correct
the same. Any corrected adjustment or proration shall be paid promptly in cash
to the party entitled thereto. Notwithstanding any other provision of this
Agreement to the contrary, the parties hereto hereby agree that if any new
Tenant Leases are executed after the Execution Date pursuant to the provisions
of Paragraph 23 of this Agreement, then Buyer shall bear all leasing commission
costs, tenant improvement costs, free rent or other landlord concession expenses
under such Tenant Lease without contribution from Seller regardless of when such
expenses arise.
12. Disbursements and Other Actions by Escrow Holder. Upon the
Close of Escrow, Escrow Holder shall promptly undertake all of the following in
the manner and order set forth.
12.1 Disburse Funds. Escrow Holder shall credit all
matters addressed in Paragraphs 3 and 10 and prorate all matters
addressed in Paragraph 11 based upon the Proration and Expense Schedule
and disburse the balance of the Purchase Price to Seller promptly upon
the Close of Escrow and remaining funds, if any, to Buyer.
12.2 Recording. Escrow Holder shall cause the Deed, and
any other documents which the parties hereto may mutually direct, to be
recorded in the Official Records and obtain conformed copies thereof for
distribution to Buyer and Seller.
12.3 Documents to Seller. Escrow Holder shall disburse to
Seller two (2) original Lease Assignments and General Assignment and
conformed copies of the Deed.
12.4 Documents to Buyer. Escrow Holder shall deliver to
Buyer the original FIRPTA Certificates, the original Tenant Notices and
two (2) originals of the Lease Assignment and the General Assignment and
each other document (or copies thereof) deposited into Escrow by Seller
pursuant hereto and a conformed copy of the Deed.
12.5 Title Company. Escrow Holder shall direct the Title
Company to issue the Title Policy to Buyer.
13. Representations and Warranties.
13.1 Seller's Representations and Warranties. In
consideration of Buyer entering into this Agreement and as an inducement
to Buyer to purchase the Property, Seller makes the following
representations and warranties, each of which is material and is being
relied upon by Buyer (and the truth and accuracy of which shall
constitute a condition precedent to Buyer's obligations hereunder,
subject to the provisions of Paragraph 7.7 and the provisions set forth
below in Paragraph 13.1 and 14.2).
13.1.1 Power. Seller has the legal power, right
and authority to enter into this Agreement and the instruments
referenced herein, and to consummate the transaction contemplated
hereby.
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<PAGE> 10
13.1.2 Requisite Action. AU requisite action (corporate,
trust, partnership or otherwise) has been taken by Seller in connection
with entering into this Agreement, the instruments referenced herein,
and the consummation of the transaction contemplated hereby. No consent
of any partner, shareholder, trustee, trustor, beneficiary, creditor,
investor, judicial or administrative body, governmental authority or
other party is required for Seller to consummate the transaction
contemplated by this Agreement.
13.1.3 Individual Authority. The individuals executing
this Agreement and the instruments referenced herein on behalf of Seller
and the partners of Seller, if any, have the legal power, right, and
actual authority to bind Seller to the terms and conditions hereof and
thereof.
13.1.4 No Conflict. Neither the execution and delivery of
this Agreement and the documents and instruments referenced herein, nor
the incurrence of the obligations set forth herein, nor the consummation
of the transaction contemplated herein, nor compliance with the terms of
this Agreement and the documents and instruments referenced herein
conflict with or result in the material breach of any terms, conditions
or provisions of, or constitute a default under, any bond, note, or
other evidence of indebtedness or any contract, indenture, mortgage,
deed of trust, loan, partnership agreement, lease or other agreement or
instrument to which Seller is a party or affecting the Property.
13.1.5 Litigation. Except as otherwise disclosed in
writing by Seller to Buyer, or as may be disclosed in the due diligence
documents made available to Buyer pursuant to this Agreement ("Due
Diligence Documents"), Seller has not received written notice of any
pending legal proceedings or administrative actions of any kind or
character adversely affecting the Property or Seller's interest therein.
13.1.6 Government Notices. Except as set forth in the Due
Diligence Documents or otherwise disclosed in writing by Seller, Seller
has received no written notice from any City, County, State or any
government authority of any order or directive requiring any work of
repair, maintenance or improvement to be performed on the Property which
has not been performed.
13.1.7 Hazardous Materials. Except as set forth in the Due
Diligence Documents, or as otherwise disclosed in writing by Seller to
Buyer, Seller has received no written notice that the Property is in
violation of any federal, state or local laws, ordinances and
regulations applicable to the Property with respect to hazardous or
toxic substances or industrial hygiene (collectively, "Environmental
Laws"), which violation has not been corrected.
13.1.8 Insolvency. To Seller's actual knowledge, there are
no actions or proceedings pending to liquidate or reorganize under any
bankruptcy or insolvency law or to appoint a receiver for Seller, and,
except as set forth in the
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<PAGE> 11
Due Diligence Documents, or as otherwise disclosed in writing by
Seller to Buyer, Seller has received no written notice of any
bankruptcy of any Tenant.
13.1.9 Violations. Except as set forth in the Due
Diligence Documents, or as otherwise described in writing by
Seller to Buyer, Seller has not received any written notice that
the Property, or its current use and operation, is in violation
of any laws, rules, permits or regulations applicable thereto.
13.1.10 No Notice. Except as set forth in the
Due Diligence Documents, or as otherwise described in writing by
Seller to Buyer, Seller has not received any written notice of
any condemnation, environmental, zoning or other land use
proceedings instituted or to be instituted against the Property,
nor has Seller received written notice of any special assessment
proceedings affecting the Property (other than as set forth in
the Report).
13.1.11. Rent Roll. To Seller's actual knowledge,
the rent roll attached hereto as Exhibit "H" ("Rent Roll") is
accurate.
13.1.12 Notices of Default. To Seller's actual
knowledge, other than as noted on the Rent Roll or as disclosed
in the Due Diligence Documents, and other than rent which is less
than thirty (30) days overdue, Seller has not given any uncured
written notice of default to any Tenant.
13.1.13 Arm's Length. Seller has negotiated and
determined the terms of the transaction contemplated hereunder at
arm's length as such terms would be negotiated and determined by
Seller with unrelated parties.
For purposes of this Section 13.1, "to Seller's actual knowledge"
and all such similar phrases shall mean the actual, present knowledge of Patrick
Scruggs, without any duty of investigation or inquiry in connection with this
transaction beyond exercising his ordinary duties as Seller's asset manager of
the Property. Additionally, as used in this Agreement, the phrase "Seller has
not received any written notice" shall mean that Patrick Scruggs does not have
actual knowledge of receiving the subject written notice. Seller hereby
represents that Patrick Scruggs is the employee of Seller's investment manager,
PMRealty Advisors, Inc. ("PM"), who is primarily responsible for the management
of the Property and is charged with primary responsibility of the operation and
maintenance of the Property and, as such, is the individual employed by PM most
likely to have acquired knowledge about the Property. The representations and
warranties of Seller set forth in this Section 13.1 shall not merge with the
Deed and shall survive the Closing Date for a period of nine (9) months after
the Closing Date, and shall thereupon expire except with respect to claims for
which Buyer, on or before the expiration of such nine (9)- month period, had
commenced legal action for such "Representation Matter" as defined below;
provided, however, that in the case of fraud or willful misrepresentation only,
such representations and warranties shall survive the Closing Date independent
of this limitation. Notwithstanding the foregoing, if, prior to the Closing
Date, Buyer or Seller should learn, discover or become aware of any existing or
new item, fact or circumstance which renders a representation or warranty of
Seller set forth herein incorrect or untrue in any material respect
(collectively, the "Representation
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<PAGE> 12
Matter"), then the party who has learned, discovered or become aware of such
Representation Matter shall promptly give written notice thereof to the other
party and Seller's representations and warranties shall be automatically limited
to account for the Representation Matter. If, prior to the Closing Date, Buyer
discovers or is notified of a Representation Matter, then Buyer shall have the
right to terminate this Agreement and obtain a refund of the Deposit by
providing written notice thereof to Seller no later than ten (10) business days
after Buyer learns or is notified of such Representation Matter. Upon such
termination, neither party hereunder shall have any further obligations or
liabilities under this Agreement except as specifically set forth herein. If
Buyer proceeds to the Closing after discovering or being notified of a
Representation Matter, then Seller's representations and warranties shall be
automatically limited to account for the Representation Matter, Buyer shall be
deemed to have waived Buyer's right to pursue any remedy for breach of the
representation or warranty made untrue on account of such Representation Matter.
13.2 Buyer's Representations and Warranties. In
consideration of Seller entering into this Agreement and as an
inducement to Seller to sell the Property, Buyer makes the following
representations and warranties, each of which is material and is being
relied upon by Seller (and the truth and accuracy of which shall
constitute a condition precedent to Seller's obligations hereunder).
13.2.1 Power. Buyer has the legal power, right and
authority to enter into this Agreement and the instruments
referenced herein, and to consummate the transaction contemplated
hereby.
13.2.2 Requisite Action. All requisite action
(corporate, trust, partnership or otherwise) has been taken by
Buyer in connection with entering into this Agreement and the
instruments referenced herein; and, by the Close of Escrow all
such necessary action will have been taken to authorize the
consummation of the transaction contemplated hereby. By the Close
of Escrow no additional consent of any partner, shareholder,
trustee, trustor, beneficiary, creditor, investor, judicial or
administrative body, governmental authority or other party shall
be required for Buyer to consummate the transaction contemplated
by this Agreement.
13.2.3 Individual Authority. The individuals
executing this Agreement and the instruments referenced herein on
behalf of Buyer have the legal power, right, and actual authority
to bind Buyer to the terms and conditions hereof and thereof.
13.2.4 No Conflict. Neither the execution and
delivery of this Agreement and the documents and instruments
referenced herein, nor the incurrence of the obligations set
forth herein, nor the consummation of the transaction
contemplated herein, nor compliance with the terms of this
Agreement and the documents and instruments referenced herein
conflict with or result in the material breach of any terms,
conditions or provisions of, or constitute a default under, any
bond, note, or other evidence of indebtedness or any contract,
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<PAGE> 13
indenture, mortgage, deed of trust, loan, partnership agreement, lease
or other agreement or instrument to which Buyer is a party.
13.2.5 ERISA. Buyer represents and warrants to Seller, to
comply with (A) the Employee Retirement Income Security Act of 1974, as
amended and (B) state statutes regulating investments of and fiduciary
obligations with respect to governmental plans, that: (i) neither Buyer
nor any of its affiliates has, or during the immediately preceding year
has exercised, the authority to: (A) appoint or terminate Seller as an
investment manager of the employee benefit plans that have been
identified by Seller to Buyer and Buyer's counsel as having an interest
in the Separate Account on whose behalf the purchase is being made, and
whose funds are being used to effectuate the transaction contemplated in
this Agreement; or (B) negotiate the terms of any management agreement
with Seller on behalf of any such plan; and (ii) Buyer has negotiated
and determined the terms of the transaction contemplated hereunder at
arm's length as such terms would be negotiated and determined by Buyer
with unrelated parties.
13.3 As-Is. As a material inducement to the execution and
delivery of this Agreement by Seller and the performance by Seller of its duties
and obligations hereunder, Buyer does hereby acknowledge, represent, warrant and
agree, to and with the Seller that except as expressly provided in Paragraph
13.1, and for the duration set forth in Paragraph 13.1 (i) Buyer is purchasing
the Property in an "AS-IS" condition as of the date of the Close of Escrow with
respect to any facts, circumstances, conditions and defects; ii) Seller has no
obligation to repair or correct any such facts, circumstances, conditions or
defects or compensate Buyer for same; (iii) by the Close of Escrow, Buyer shall
have undertaken all such physical inspections and examinations of the Property
as Buyer deems necessary or appropriate under the circumstances, and that based
upon same, Buyer is and will be relying strictly and solely upon such
inspections and examinations and the advice and counsel of its agents and
officers, and Buyer is and will be fully satisfied that the purchase price is
fair and adequate consideration for the Property, (iv) Seller is not making and
has not made any warranty or representation with respect to all or any part of
the Property (including, but not limited to, any matters contained in documents
made available or delivered to Buyer in connection with this Agreement,
including, without limitation, the Report) as an inducement to Buyer to enter
into this Escrow and thereafter to purchase the Property or for any other
purpose; and (v) by reason of all of the foregoing, Buyer shall assume the full
risk of any loss or damage occasioned by any fact, circumstance, condition or
defect pertaining to the physical and financial condition of the Property,
including without limitation the presence of any asbestos containing material,
hazardous toxic or radioactive waste, substance or materials in, on, under or
about the Property, and Buyer hereby expressly and unconditionally waives and
releases Seller and all of its parents, subsidiaries, affiliates and
partnerships, and its and their respective officers, directors, shareholders,
partners, agents and employees, and their respective successors, heirs and
assigns and each of them (individually and collectively, the "Released Parties")
from any and all rights and claims against Seller and/or the Released Parties
with respect to the condition of the Property, including without limitation any
rights of Buyer under the State or Federal Comprehensive Environmental Response,
Compensation and Liability
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<PAGE> 14
Act, as amended from time to time, or similar laws. Buyer acknowledges and
agrees that the foregoing waiver and release includes all rights and claims of
Buyer against Seller pertaining to the condition of the Property, whether
heretofore or now existing or hereafter arising, or which could, might, or may
be claimed to exist, of whatever kind or nature, whether known or unknown,
suspected or unsuspected, liquidated or unliquidated, each as though fully set
forth herein at length, which in any way arise out of, or are connected with, or
relate to, the condition of the Property.
14. Due Diligence.
14.1 Right of Entry. Provided that Buyer is not in default of its
obligations under this Agreement, from and after the Opening of Escrow through
the earlier of the termination of this Agreement or the Contingency Date, Buyer,
its agents, consultants, contractors and subcontractors shall have the right to
enter upon the Property to conduct or make any and all inspections and tests as
may be necessary or desirable, subject to the rights of any tenants or occupants
of the Property and the limitations set forth below in this Paragraph 14. The
scope of any environmental analysis which requires physical sampling of all or
any part of the Property in excess of a Phase I environmental assessment shall
be subject to: (A) the prior approval of Seller, which Seller may withhold or
condition in its sole discretion, (B) Seller's receipt of written evidence that
Buyer has procured the insurance required pursuant to this Paragraph 14, and (C)
the requirement that Buyer dispose of all such test samples in accordance with
applicable law and at no cost or liability to Seller. Nothing herein shall
authorize any subsurface testing or drilling on the Property by Buyer or its
environmental consultant unless specifically approved by Seller, which Seller
may condition or deny in its sole discretion. Buyer shall obtain or cause its
consultants to obtain, at Buyer's sole cost and expense, prior to commencement
of any investigative activities on the Property, a policy of commercial general
liability insurance covering any and all liability of Buyer and Seller with
respect to or arising out of any investigative activities. Such policy of
insurance shall be kept and maintained in force during the term of this
Agreement and so long thereafter as necessary to cover any claims of damages
suffered by persons or property resulting from any acts or omissions of Buyer,
Buyer's employees, agents, contractors, suppliers, consultants or other related
parties. Such policy of insurance shall have liability limits of not less than
One Million Dollars ($1,000,000.00) combined single limit per occurrence for
bodily injury, personal injury and property damage liability, and shall name
Seller as an additional insured.
If this Agreement terminates, then Buyer shall deliver a copy of
all tests, reports, analysis and the like, excluding financial analysis,
obtained and/or prepared pursuant to the provisions of this Paragraph 14. Buyer
shall keep the results of all such inspections, studies, investigations,
analysis, reports and the like confidential except as required by law. Buyer
hereby indemnifies and holds the Property, Seller and Seller's officers,
directors, shareholders, participants, affiliates, employers, representatives,
invitees, agents and contractors free and harmless from and against any and all
claims, costs, losses, damages or expenses arising out of or resulting from such
entry by Buyer, its agents, consultants, contractors and subcontractors. Buyer
shall keep the Property free and clear of any mechanics' liens or materialmen's
liens related to Buyer's right of
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<PAGE> 15
inspection and the activities contemplated in this Paragraph 14. The
Buyer's indemnification obligations set forth in this Paragraph 14 shall
survive the Close of Escrow and shall not be merged with the Deed, and
shall survive the termination of this Agreement and Escrow prior to the
Close of Escrow, and shall not be limited by any provision of this
Agreement.
14.2 Inquiries. From and after the Execution Date until
the Contingency Date and provided that Buyer is not in default of this
Agreement, Buyer shall have the right to make reasonable inquiries to
the Seller's property manager in writing (with a copy concurrently
delivered to Seller) in person or by telephone. In the event of any
in-person conversation between Buyer and Seller's property manager
related to issues concerning the Property, Buyer shall give Seller
reasonable advance telephonic notice of, and Seller shall have the right
to participate in, such conversation. Notwithstanding any other
provision of this Agreement to the contrary, any information or
disclosures made by Seller's property manager and delivered to Buyer
pursuant to the provisions of this Paragraph 14.2 shall, to the extent
that such disclosures indicate that Seller's representations and
warranties are inaccurate in any respect, be deemed a "Representation
Matter" pursuant to the last paragraph of Section 13.1. Except as set
forth in the foregoing sentence, in no event shall a verbal or written
statement by Seller's property manager be deemed a representation or
warranty by Seller.
15. Waiver and Release. Except as set forth in Seller's
representations and warranties contained in Paragraph 13.1 of this Agreement
(and only for the duration thereof), Buyer is relying solely upon Buyer's own
knowledge of the Property based on its investigation of the Property and its own
inspection of the Property in determining the Property's physical condition.
Buyer and anyone claiming by, through or under Buyer hereby waives its right to
recover from and fully and irrevocably releases Seller, its employees, officers,
directors, property manager, brokers (including, without limitation, Broker),
affiliates, parent, subsidiaries, successors and assigns ("Released Parties")
from any and all claims that it may now have or hereafter acquire against any of
the Released Parties for any claims, costs, loss, liability, damage, expenses,
demand, action or cause of action arising from or related to any matters
relating to the Property, including, without limitation, construction defects,
construction errors, construction omissions or other physical conditions of the
Property, latent or otherwise, including environmental matters, affecting the
Property, or any portion thereof. Notwithstanding the foregoing, this release
shall not apply to any claims which Buyer may now or hereafter have on account
of: (i) fraud or willful misrepresentation, or (ii) any claim arising out of a
breach or default by Seller under this Agreement which is brought in a timely
manner. This release includes claims of which Buyer is presently unaware or
which Buyer does not presently suspect to exist which, if known by Buyer, would
materially affect Buyer's release to Seller. Buyer specifically waives the
provision of California Civil Code Section 1542, which provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR EXPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN TO HIM MUST HAVE MATERIALLY
AFFECTED THE SETTLEMENT WITH THE DEBTOR."
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<PAGE> 16
In this connection and to the extent permitted by law, Buyer hereby
agrees, represents and warrants, which representation and warranty shall survive
the Close of Escrow and not be merged with the Deed, that Buyer realizes and
acknowledges that factual matters now unknown to it may have given or may
hereafter give rise to causes of action, claims, demands, debts, controversies,
damages, costs, losses and expenses which are presently unknown, unanticipated
and unsuspected, and Buyer further agrees, represents and warrants, which
representation and warranty shall survive the Close of Escrow and not be merged
with the Deed, that the waivers and releases herein have been negotiated and
agreed upon in light of that realization and that Buyer nevertheless hereby
intends to release, discharge and acquit Seller from any such unknown causes of
action, claims, demands, debts, controversies, damages, costs, losses and
expenses which might in any way be included as a material portion of the
consideration given to Seller by Buyer in exchange for Seller's performance
hereunder.
Seller has given Buyer material concessions regarding this
transaction in exchange for Buyer agreeing to the provisions of this Paragraph
15. Seller and Buyer have each initialed this Paragraph 15 to further indicate
their awareness and acceptance of each and every provision hereof.
[SIG]
------------------------- ---------------------------
SELLER'S INITIALS BUYER'S INITIALS
16. Enforcement and Legal Fees.
16.1 BUYER'S DEFAULT. BUYER AND SELLER AGREE THAT IT WOULD BE
IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLER MAY
SUFFER IN THE EVENT BUYER DEFAULTS HEREUNDER AND FAILS TO COMPLETE THE PURCHASE
OF THE PROPERTY AS HEREIN PROVIDED. BUYER AND SELLER THEREFORE AGREE THAT A
REASONABLE PRESENT ESTIMATE OF THE NET DETRIMENT THAT SELLER WOULD SUFFER IN THE
EVENT OF BUYER'S DEFAULT OR BREACH HEREUNDER IS AN AMOUNT OF MONEY EQUAL TO THE
DEPOSIT WHICH SHALL BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR THE BREACH OF
THIS AGREEMENT BY BUYER. THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT
INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE
SECTION 3275 OR 3369 BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER
PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671, 1676 AND 1677. SELLER HEREBY
WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389. UPON DEFAULT SOLELY
BY BUYER, THIS AGREEMENT SHALL BE TERMINATED AND NEITHER PARTY SHALL HAVE ANY
FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT FOR THE RIGHT
OF SELLER TO COLLECT SUCH LIQUIDATED DAMAGES FROM BUYER AND ESCROW HOLDER. THE
FOREGOING SHALL NOT LIMIT SELLER'S REMEDIES WITH RESPECT TO THE INDEMNITY
PROVIDED BY BUYER PURSUANT TO THE PROVISIONS OF PARAGRAPHS 14 AND 18 OF THIS
AGREEMENT.
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<PAGE> 17
SELLER'S INITIALS BUYER'S INITIALS
[SIG]
------------------------ -----------------------
16.2 SELLER'S DEFAULT. IF SELLER DEFAULTS UNDER THIS
AGREEMENT AND FAILS TO COMPLETE THE PURCHASE AS PROVIDED
HEREIN, THEN BUYER SHALL BE ENTITLED, AS ITS SOLE AND EXCLUSIVE
REMEDY, WHETHER AT LAW OR IN EQUITY, TO TERMINATE THIS
AGREEMENT AND RECOVER FROM SELLER ONLY THE AMOUNT OF BUYER'S ACTUAL
OUT-OF-POCKET EXPENSES INCURRED AND SUMS PAID IN CONNECTION WITH THE
TRANSACTION CONTEMPLATED HEREIN, INCLUDING, WITHOUT LIMITATION, ALL OF
THE SUMS ACTUALLY PAID BY BUYER PURSUANT TO PARAGRAPH 3 HEREOF AND
BUYER'S REASONABLE ATTORNEYS' FEES; PROVIDED, HOWEVER, THAT IN LIEU OF
TERMINATING THE AGREEMENT AND RECOVERING SUCH EXPENSES AND SUMS, BUYER
SHALL BE ENTITLED TO PURSUE SPECIFIC PERFORMANCE OF THIS AGREEMENT
WITHOUT DAMAGES. FROM AND AFTER THE CLOSING DATE, THIS SECTION 16.2
SHALL NOT LIMIT ANY RIGHT OR REMEDY BUYER MAY HAVE ON ACCOUNT OF ANY
BREACH OR DEFAULT UNDER ANY REPRESENTATION OR WARRANTY CONTAINED IN
SECTION 13.1 OF THIS AGREEMENT.
SELLER'S INITIALS BUYER'S INITIALS
[SIG]
------------------------ -----------------------
17. Notices. All notices or other communications required or
permitted hereunder shall be in writing, and shall be personally delivered, sent
by overnight mail (Federal Express or the like) or sent by registered or
certified mail, postage prepaid, return receipt requested, telegraphed,
delivered or sent by telex, telecopy, facsimile, fax or cable and shall be
effective upon receipt at the appropriate address.
To Buyer: Pacific Gulf Properties Inc.
4220 Von Karman
Second Floor
Newport Beach, California 92660
Attention: Lonnie P. Nadal
Telephone: (714) 223-5000
Fax No.: (714) 223-5033
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<PAGE> 18
<TABLE>
<S> <C>
With a copy to: Cox, Castle & Nicholson
2049 Century Park East
28th Floor
Los Angeles, California 90067
Attn: John H. Kuhl, Esq.
Phone: (310) 284-2267
Fax No.: (310) 277-7889
To Seller: c/o PMRealty Advisors, Inc.
800 Newport Center Drive, Suite 300
Newport Beach, California 92660
Attention: Ms. Colette Temmink
Phone No. (714) 721-5050
Fax No. (714) 721-5494
With a copy to: Allen, Matkins, Leck, Gamble & Mallory
515 South Figueroa Street, 7th Floor
Los Angeles, California 90017
Attention: Anthony S. Bouza, Esq.
Phone No. (213) 955-5614
Fax No. (213) 620-8816
To Escrow Holder: Chicago Title Insurance Company
2901 "K" Street, Suite 390
Sacramento, California 95816
Attention: Vivian Sellers
Phone No. (916) 444-6470
Fax No. (916) 448-7484
Escrow No. -___________________
</TABLE>
Notice of change of address shall be given by written notice in the manner
detailed in this Paragraph 17. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given
shall be deemed to constitute receipt of the notice, demand, request or
communication sent.
18. Brokers. Upon the Close of Escrow, Seller shall pay a real
estate brokerage commission to CB Commercial ("Broker") with respect to this
transaction in accordance with Seller's separate agreement. Each party hereto
agrees to indemnify and hold harmless the other party from and against any and
all losses, lien, claims, judgments, liabilities, costs, expenses or damages
(including reasonable attorneys' fees and court costs) of any kind of character
arising out of or resulting from any agreement, arrangement or understanding
alleged to have been made by such party or on its behalf with any broker or
finder in connection with this Agreement or transaction contemplated hereby. The
foregoing indemnity shall survive the Closing or the earlier termination of this
Agreement and shall not be limited by any provision of this Agreement.
-18-
<PAGE> 19
19. Legal Fees. If either Buyer or Seller brings any action or
suit against the other for any matter relating to or arising out of this
Agreement, then the prevailing party in such action or dispute, whether by final
judgment or out of court settlement, shall be entitled to recover from the other
party all costs and expenses of suit, including actual attorneys' fees. Any
judgment or order entered in any final judgment shall contain a specific
provision providing for the recovery of all costs and expenses of suit,
including actual attorneys' fees incurred in enforcing, perfecting and executing
such judgment. For the purposes of this paragraph, such costs shall include,
without limitation, in-house or outside attorneys' fees, costs and expenses
incurred in the following: (A) postjudgment motions; (B) contempt proceeding;
(C) garnishment, levy, and debtor and third party examination; (D) discovery;
and (E) bankruptcy litigation.
20. Assignment. Buyer may not assign, transfer or convey its rights
or obligations under this Agreement at any time without the prior written
consent of Seller, which Seller may withhold in its sole discretion.
21. Miscellaneous.
21.1 Survival. The covenants, representations and
warranties of both Buyer and Seller set forth in this Agreement shall
survive the recordation of the Deed and the Close of Escrow.
21.2 Required Actions of Buyer and Seller. Buyer and
Seller agree to execute such instruments and documents and to diligently
undertake such actions as may be required in order to consummate the
purchase and sale herein contemplated and shall use their best efforts
to accomplish the Close of Escrow in accordance with the provisions
hereof.
21.3 Computation of Time Periods. If the date upon which
the Contingency Date occurs, the Closing Date occurs or any other date
or time period provided for in this Agreement is or ends on a Saturday,
Sunday or federal, state or legal holiday, then such date shall
automatically be delayed until the next day which is not a Saturday,
Sunday or federal, state or legal holiday.
21.4 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but
all of which, together, shall constitute but one and the same
instrument.
21.5 Captions. Any captions to, or headings of, the
paragraphs or subparagraphs of this Agreement are solely for the
convenience of the parties hereto, are not a part of this Agreement, and
shall not be used for the interpretation or determination of the
validity of this Agreement or any provision hereof.
21.6 No Obligations to Third Parties. Except as otherwise
expressly provided herein, the execution and delivery of this Agreement
shall not be deemed to confer any rights upon, nor obligate any of the
parties hereto, to any person or entity other than the parties hereto.
-19-
<PAGE> 20
21.7 Exhibits and Schedules. The exhibits and schedules
attached hereto are hereby incorporated herein by this reference for all
purposes.
21.8 Amendment to this Agreement. The terms of this
Agreement may not be modified or amended except by an instrument in
writing executed by each of the parties hereto.
21.9 Waiver. The waiver or failure to enforce any
provision of this Agreement shall not operate as a waiver of any future
breach of any such provision or any other provision hereof.
21.10 Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of California,
except for any choice-of-law principles which provide for the
application of the law's of another jurisdiction.
21.11 Fees and Other Expenses. Except as otherwise
expressly provided herein, each of the parties hereto shall pay its own
fees and expenses in connection with this Agreement.
21.12 Entire Agreement. This Agreement (including all
Exhibits attached hereto) supersedes any prior agreements, negotiations
and communications, oral or written, including without limitation
Seller's offer letter dated November 6, 1997, and contains the entire
agreement between, and the final expression of, Buyer and Seller with
respect to the subject matter hereof. No subsequent agreement,
representation, or promise made by either party hereto, or by or to an
employee, officer, agent or representative of either party hereto shall
be of any effect unless it is in writing and executed by the party to be
bound thereby.
21.13 Successors and Assigns. Subject to the restrictions
set forth in Paragraph 20 hereof, this Agreement shall be binding upon
and shall inure to the benefit of the permitted successors and assigns
of the parties hereto.
21.14 Construction. The parties hereto hereby acknowledge
and agree that (A) each party hereto is of equal bargaining strength,
(B) each such party has actively participated in the drafting,
preparation and negotiation of this Agreement, (C) each such party has
consulted with such party's own, independent counsel, and such other
professional advisors as such party has deemed appropriate, relating to
any and all matters contemplated under this Agreement, (D) each such
party and such party's counsel and advisors have reviewed this
Agreement, (E) each such party has agreed to enter into this Agreement
following such review and the rendering of such advice, and (F) any rule
of construction to the effect that ambiguities are to be resolved
against the drafting parties shall not apply in the interpretation of
this Agreement, or any portions hereof, or any amendments hereto.
21.15 Limitation of Liability of Trustees, Shareholders
and Officers of Seller. BUYER AGREES THAT IT SHALL NOT LOOK TO THE
ASSETS OF
-20-
<PAGE> 21
SELLER'S TRUSTEES OR ITS INVESTMENT MANAGER FOR THE ENFORCEMENT OF ANY
CLAIM AGAINST SELLER.
21.16 Termination. Notwithstanding anything in this
Agreement to the contrary, to induce Buyer to enter into this Agreement
and to expend the time and resources necessary to evaluate the Property
and possibly forego other opportunities while doing so, Seller hereby
grants to Buyer the rights to terminate this Agreement specifically
provided in this Agreement. Such expenditures of time and resources and
possible loss of opportunity by Buyer constitute adequate consideration
for Seller remaining bound by this Agreement notwithstanding such
termination rights in Buyer.
22. Risk of Loss. In the event any of the Property is damaged or
destroyed prior to the Closing Date, and such damage or destruction would cost
less than One Hundred Thousand Dollars ($100,000) to repair or restore, then
this Agreement shall remain in full force and effect and Buyer shall acquire the
Property upon the terms and conditions set forth herein. In such event, if the
damage or loss is insured, then Buyer shall receive a credit against the
Purchase Price equal to such deductible amount under Seller's applicable
insurance policy, and Seller shall assign to Buyer all of Seller's right, title
and interest in and to all proceeds of insurance on account of such damage or
destruction. In the event any of the Property is damaged or destroyed prior to
the Closing, and such damage or destruction would cost One Hundred Thousand
Dollars ($100,000), or more, to repair or restore, then Buyer shall have the
right to terminate this Agreement by delivering written notice to Seller with a
copy to the Escrow Holder within five (5) business days after Buyer acquires
knowledge of such damage (the Closing shall be extended as necessary to afford
Buyer such five (5) business day period). If Buyer timely delivers its
termination notice, then Buyer shall be entitled to the return of the Deposit,
less one-half (1/2) of the escrow and title cancellation fees, if any, whereupon
Buyer and Seller shall each be released from all obligations hereunder, except
as set forth in Paragraphs 14 and 18 above. If this Agreement is not so
terminated, and if the damage or loss is insured, then Seller shall assign to
Buyer all of Seller's right, title and interest in and to all proceeds of
insurance, if any, on account of such damage or destruction, and Buyer shall
receive a credit toward payment of the Purchase Price in the amount of the
deductible under any applicable insurance policy.
23. Seller's Covenants During Contract Period. Between Seller's
execution of this Agreement and the Close of Escrow, or earlier termination of
this Agreement as permitted hereunder, Seller shall (i) maintain the Property in
good order, condition and repair, reasonable wear and tear excepted; (ii) not
make any material physical changes to the Improvements except as required by
law, insurance carriers or applicable Leases; (iii) continue to manage and lease
the Property in the manner its been operated and continue to provide all
services previously provided in connection with the Property, (iv) not enter
into any contracts or agreements affecting the Property unless such contracts
can be completed or terminated prior to the Closing or Buyer, in its sole
discretion, agrees to assume such contract or agreement as of the Closing Date,
in which case such contracts shall be included within the term "Service
Contracts"; (v) use due diligence to keep in full force all Licenses and
Permits; (vi) not remove any Personal Property from the Property (unless the
Personal Property so removed is simultaneously replaced with Personal Property
of similar quality and utility); (vii) notify Buyer of any proposed new Tenant
Leases; and (viii) maintain or cause to be maintained, at Seller's sole cost and
expense, all insurance coverages
-21-
<PAGE> 22
applicable to the Property in the amount and form maintained by Seller prior to
the Execution Date. From and after the Execution Date and until the Closing Date
or earlier termination of this Agreement, Seller shall not execute any new
Leases, and shall not modify, extend, or otherwise change the terms of the
Leases without the prior written consent of the Buyer, which consent prior to
the Contingency Date shall not be unreasonably withheld and shall be deemed
given if not denied, with the reasons therefor, in a written notice delivered to
Seller within two (2) business days after a request therefor; after the
Contingency Date Buyer may withhold its consent in its sole discretion. Seller
shall terminate all Service Contracts upon the Closing Date unless Buyer
provides written notice thereof to the contrary to Seller before the Contingency
Date.
24. REIT. Buyer hereby represents and warrants to Seller, which
representation and warranty shall survive the Close of Escrow, that Buyer is
qualified as a real estate investment trust under the provisions of the Internal
Revenue Code of 1986, as amended, and that, by reason thereof, maintaining such
status and avoiding any activity that might cause a penalty tax to be applied as
a result thereof is of material concern to Buyer. Accordingly, Seller agrees to
make any modifications or amendments to this Agreement specifically requested by
Buyer in writing delivered to Seller before the Contingency Date that may be
necessary for Buyer to maintain its status as a real estate investment trust or
in order for it to avoid a penalty tax; provided; provided, however, that Seller
shall have no obligation to make any such modification or amendment that would
alter or affect, in Seller's sole judgment, Buyer's or Seller's rights, duties,
or obligations under this Agreement, and Seller's failure to do so shall result
in the termination of this Agreement.
25. Reporting Requirements. Escrow Holder shall comply with all
applicable federal, state and local reporting and withholding requirements
relating to the close of the transactions contemplated herein. Without limiting
the generality of the foregoing, to the extent the transactions contemplated by
this Agreement involve a real estate transaction within the purview of Section
6045 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code"), Escrow Holder shall have sole responsibility for complying with the
requirements of Section 6045 of the Internal Revenue Code (and any similar
requirements imposed by State or local law), which in part requires Escrow
Holder to report real estate transactions closing after December 31, 1986 by,
among other things, preparing and causing to be filed Internal Revenue Service
Form 1099-B and any applicable additional statements in connection therewith.
Escrow Holder shall hold Buyer, Seller and their counsel free and harmless from
and against any and all liability, claims, demands, damages and costs, including
reasonable attorneys' fees and other litigation expenses, arising or resulting
from the failure or refusal of Escrow Holder to comply with such reporting
requirements.
-22-
<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first written above.
"Buyer" PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By: [SIG]
---------------------------------
Its: Vice President
----------------------------
By: [SIG]
---------------------------------
Its: Senior Vice President
----------------------------
"Seller" PMRA III, a group trust
By: PMRealty Advisors, Inc.,
its investment manager
By:
---------------------------------
Its:
----------------------------
By:
---------------------------------
Its:
----------------------------
-23-
<PAGE> 24
Acceptance by Escrow Holder:
Chicago Title Insurance Company hereby acknowledges that it has
received a fully executed original or original executed counterparts of the
foregoing Agreement of Purchase and Sale and Joint Escrow Instructions and
agrees to act as Escrow Holder thereunder and to be bound by and strictly
perform the terms thereof as such terms apply to Escrow Holder.
Dated: , 1997 Chicago Title Insurance Company
By:
---------------------------------
Its Authorized Agent
-24-
<PAGE> 25
EXHIBIT "A"
-----------
LEGAL DESCRIPTION
-----------------
LOTS 7 THROUGH 9 INCLUSIVE, AS SHOWN ON THE "PLAT OF NORWOOD-TECH BUSINESS
PARK", RECORDED IN BOOK 147 OF MAPS, MAP NO. 15, RECORDS OF SACRAMENTO COUNTY,
CALIFORNIA.
LOTS 28 THROUGH 32, AS SHOWN ON THE PLAT OF NORWOOD-TECH BUSINESS PARK, FILED IN
BOOK 147 OF MAPS, MAP NO. 15, OFFICIAL RECORDS OF SACRAMENTO COUNTY, DESCRIBED
AS FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF SAID LOT 27; THENCE, FROM SAID POINT OF
BEGINNING, ALONG THE LINE COMMON TO LOTS 27 AND 28, AND ALONG THE LINE COMMON TO
LOTS 32 AND 33, SOUTH 00*33'23" WEST 514.03 FEET TO THE SOUTHWEST CORNER OF SAID
LOT 33, THENCE, ALONG THE SOUTHERLY LINE OF SAID LOTS 32 AND 3 1, ALONG THE
WESTERLY LINE OF SAID LOTS 31, 30 AND 29, AND ALONG THE NORTHERLY LINE OF SAID
LOTS 29 AND 28, THE FOLLOWING SIX (6) COURSES: (1) ALONG THE ARC OF A CURVE TO
THE RIGHT, CONCAVE NORTHERLY, HAVING A RADIUS OF 2971.00 FEET, SUBTENDED BY A
CHORD BEARING SOUTH 88*44'25" WEST 188.33 FEET; (2) NORTH 89*26'37" WEST 95.91
FEET; (3) ALONG THE ARC OF A TANGENT CURVE TO THE RIGHT, CONCAVE NORTHEASTERLY,
HAVING A RADIUS OF 25.00 FEET, SUBTENDED BY A CHORD BEARING NORTH 44*26'37" WEST
35.36 FEET, (4) NORTH 00*33'23" EAST 470.00 FEET; (5) ALONG THE ARC OF A TANGENT
CURVE TO THE RIGHT, CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 25.00 FEET,
SUBTENDED BY A CHORD BEARING NORTH 45*33'23" EAST 35.36 FEET; AND (6) SOUTH
89*26'37" EAST 284.14 FEET TO THE POINT OF BEGINNING, AND BEING THE SAME AS "LOT
A" IN THAT CERTAIN CERTIFICATE OF COMPLIANCE, RECORDED IN BOOK 84-05-04, AT PAGE
1199, OFFICIAL RECORDS.
LOTS 24 THROUGH 27, TOGETHER WITH LOT 33, AS SHOWN ON THE PLAT OF NORWOOD-TECH
BUSINESS PARK, FILED IN BOOK 147 OF MAPS, MAP NO. 15, OFFICIAL RECORDS OF
SACRAMENTO COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHWEST CORNER OF SAID LOT 27; THENCE, FROM SAID POINT OF
BEGINNING, ALONG THE NORTHERLY LINE OF SAID LOTS 27 AND 26, AND ALONG THE
EASTERLY LINE OF SAID LOTS 26, 25 AND 24, AND ALONG THE SOUTHERLY LINE OF SAID
LOTS 24 AND 33, THE FOLLOWING SIX (6) COURSES: (1) SOUTH 89*26'37" EAST 285.86
FEET; (2) ALONG THE ARC OF A TANGENT CURVE TO THE RIGHT, CONCAVE SOUTHWESTERLY,
HAVING A RADIUS OF 25.00 FEET, SUBTENDED BY A CHORD BEARING SOUTH 44*26'37" EAST
35.36 FEET; (3) SOUTH 00*33'23" WEST 443.61 FEET; (4) ALONG THE ARC OF A
TANGENT CURVE TO THE RIGHT, CONCAVE NORTHWESTERLY, HAVING A RADIUS OF 25.00
FEET, SUBTENDED BY A CHORD BEARING SOUTH 44*32'35" WEST 34.72 FEET TO A POINT
- -----------------
* = degree (degrees)
EXHIBIT "A"
-----------
-1-
<PAGE> 26
OF REVERSE CURVATURE; (5) ALONG THE ARC OF A TANGENT CURVE TO THE LEFT, CONCAVE
SOUTHERLY, HAVING A RADIUS OF 3029.00 FEET, SUBTENDED BY A CHORD BEARING SOUTH
86*45'34" WEST 187.16 FEET TO A POINT OF REVERSE CURVATURE, AND (6) ALONG THE
ARC OF A TANGENT CURVE TO THE RIGHT, CONCAVE NORTHERLY, HAVING A RADIUS OF
2971.00 FEET, SUBTENDED BY A CHORD BEARING SOUTH 85*57'28" WEST 100.32 FEET TO
THE SOUTHWEST CORNER OF SAID LOT 33; THENCE, ALONG THE LINE COMMON TO SAID LOTS
33 AND 32, AND ALONG THE LINE COMMON TO SAID LOTS 27 AND 28, NORTH 00*33'23"
EAST 514.03 FEET TO THE POINT OF BEGINNING, AND BEING THE SAME AS "LOT B" IN
THAT CERTAIN CERTIFICATE OF COMPLIANCE, RECORDED IN BOOK 84-05-04, PAGE 1199,
OFFICIAL RECORDS.
- -----------------
* = degree (degrees)
EXHIBIT "A"
-----------
-2-
<PAGE> 27
EXHIBIT "B"
-----------
RECORDING REQUESTED BY:
- --------------------------------
WHEN RECORDED MAIL
TO AND MAIL TAX STATEMENTS TO:
Pacific Gulf Properties Inc.
4220 Von Karman
Second Floor
Newport Beach, California 92660
Attention: Lonnie P. Nadal
- --------------------------------------------------------------------------------
(Above Space for Recorder's Use Only)
GRANT DEED
----------
The undersigned grantor declares:
Documentary Transfer Tax not shown pursuant
to Section 11932 of the Revenue and
Taxation Code, as amended
County of Sacramento
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
___________________ , a Delaware corporation, hereby GRANTS to PACIFIC GULF
PROPERTIES INC., a Maryland corporation, that certain real property in the
County of Sacramento, State of California, which is more particularly described
on Schedule "1" ("Property") which is attached hereto, subject to all matters of
record.
EXHIBIT "B"
-----------
-1-
<PAGE> 28
IN WITNESS WHEREOF, the Grantor has caused this Grant Deed to be
executed as of the day of , 1997.
PMRA III, a group trust
By: PMRealty Advisors, Inc.,
its investment manager
By:
---------------------------------
Its:
----------------------------
By:
---------------------------------
Its:
----------------------------
EXHIBIT "B"
-----------
-2-
<PAGE> 29
STATE OF ____________________)
)ss.
COUNTY OF ___________________)
On ___________________________ before me, ________________________, a
Notary Public in and for said state, personally appeared ______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument, the person, or the entity upon behalf
of which the person acted, executed the instrument.
WITNESS my hand and official seal.
------------------------------------
Notary Public in and for said State
STATE OF ____________________)
)ss.
COUNTY OF ___________________)
On ___________________________ before me, ________________________, a
Notary Public in and for said state, personally appeared ______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument, the person, or the entity upon behalf
of which the person acted, executed the instrument.
WITNESS my hand and official seal.
------------------------------------
Notary Public in and for said State
EXHIBIT "B"
-3-
<PAGE> 30
SCHEDULE "1"
------------
LEGAL DESCRIPTION OF PROPERTY
-----------------------------
[TO BE SUPPLIED]
----------------
SCHEDULE "1" TO EXHIBIT "B"
-1-
<PAGE> 31
EXHIBIT "C-1"
-------------
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
------------------------------------------------
To inform PACIFIC GULF PROPERTIES INC., a Maryland corporation (the
"Transferee") that withholding of tax under Section 1445 of the Internal Revenue
Code of 1986, as amended ("Code") will not be required upon the transfer by PMRA
III, a group trust,("Transferor") of certain interests in real property to the
Transferee, the undersigned hereby certifies the following on behalf of the
Transferor:
1. The Transferor is not a foreign corporation, foreign partnership,
foreign trust, foreign estate or foreign person (as those terms are defined in
the Code and the Income Tax Regulations promulgated thereunder); and
2. The Transferor's U.S. employer or tax (social security)
identification number is _______________________.
The Transferor understands that this Certification may be disclosed to
the Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury I declare that I have examined this
Certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of the Transferor.
"TRANSFEROR" PMRA III, a group trust
By: PMRealty Advisors, Inc.,
its investment manager
By:
-------------------------------
Its:
---------------------------
By:
-------------------------------
Its:
---------------------------
Dated: _______________, 1997
EXHIBIT "C-1"
<PAGE> 32
96-6 1-707
YEAR WITHHOLDING EXEMPTION CERTIFICATE FOR CALIFORNIA FORM
- ----- REAL ESTATE SALES ---------------
19___ (For use by sellers of California real estate) 590-RE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
<S> <C>
File this form with your withholding agent or buyer Withholding agent's name
- ---------------------------------------------------------------------------------------------------------
Seller's name
- ---------------------------------------------------------------------------------------------------------
Seller's address (number and street) Seller's daytime telephone number
( )
- ---------------------------------------------------------------------------------------------------------
City State Zip code
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Read the following carefully and check the box that applies to the seller:
[ ] CERTIFICATE OF RESIDENCY - INDIVIDUALS:
I am a resident of California and I reside at the address shown above.
See Side 2 for the definition of a resident.
[ ] CERTIFICATE OF PRINCIPAL RESIDENCE - INDIVIDUALS:
The California real property located at _____________________________
qualifies as my principal residence within the meaning of the Internal
Revenue Code Section 1034. See Side 2 for the definition of a principal
residence.
[ ] CORPORATIONS:
The above-named corporation has a permanent place of business in
California at the address shown above or is qualified to do business in
California. See Side 2 for the definition of permanent place of
business.
[ ] PARTNERSHIPS:
The above-named entity is a partnership and the recorded title to the
property is in the name of the partnership. The partnership will file a
California return to report the sale and will withhold on foreign and
domestic nonresident partners when required.
[ ] LIMITED LIABILITY COMPANIES (LLCs):
The above-named entity is an LLC and the recorded title to the property
is in the name of the LLC. The LLC will file a California return to
report the sale and will withhold on foreign and domestic nonresident
partners when required.
[ ] TAX-EXEMPT ENTITIES AND NONPROFIT ORGANIZATIONS:
The above-named entity is exempt from tax under California or federal
law.
[ ] IRREVOCABLE TRUSTS:
At least one trustee of the above-named irrevocable trust is a
California resident. The trust will file a California fiduciary return
reporting the sale and will withhold on foreign and domestic nonresident
beneficiaries when required.
[ ] CERTIFICATE OF RESIDENCY OF DECEASED PERSON - ESTATES:
I am the executor of the above-named person's estate. The decedent was a
California resident at the time of death. The estate will file a
California fiduciary return reporting the sale and will withhold on
foreign and domestic nonresident beneficiaries when required.
[ ] BANK:
The above-named entity is a bank or a bank acting as a fiduciary for a
trust.
- --------------------------------------------------------------------------------
CERTIFICATE: Please complete and sign below.
Under penalties of perjury, I hereby certify that the information provided
herein is, to the best of my knowledge, true and correct. If conditions change,
I will promptly inform the withholding agent.
Sellers name and title (type or print) _________________________________________
Seller's social security number, California corporation number,
FEIN or California Secretary of State file number ______________________________
(NOTE: Failure to provide your identification number will render this
certificate void.)
Seller's signature _______________________________________ Date ________________
For Privacy Act Notice, see Form FTB 1131 (individuals only).
- --------------------------------------------------------------------------------
Form 590-RE C2 (REV. 1996) Side 1
EXHIBIT "C-2"
<PAGE> 33
EXHIBIT "D"
-----------
ASSIGNMENT AND ASSUMPTION OF LEASES
-----------------------------------
THIS ASSIGNMENT AND ASSUMPTION OF LEASES ("Assignment") is made
this ______ day of ______________ 1997, by and between PMRA III, a group trust
("Assignor") and PACIFIC GULF PROPERTIES INC., a Maryland corporation
("Assignee").
WITNESSETH
----------
Assignor and Assignee entered into that certain Agreement of
Purchase and Sale and Joint Escrow Instructions, dated as of ________________
("Agreement"), respecting the sale of certain "Property" (as defined in the
Agreement). Unless otherwise indicated herein, all capitalized terms in this
Assignment shall have the meaning ascribed to them in the Agreement.
Assignor, as Lessor, and those certain tenants listed in Exhibit
"A" attached hereto (collectively, the "Tenants") have entered into leases
listed in Exhibit "A" attached hereto (collectively, the "Leases") covering
certain premises located on the Property.
Under the Agreement, Assignor is obligated to assign to Assignee
any and all of its right, title and interest in and to all Leases and Tenants'
deposits held by Assignor under the Leases (collectively, "Tenant Deposits").
AGREEMENT
---------
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows.
Assignor hereby assigns, sells, transfers, sets over and
delivers unto Assignee all of Assignor's estate, right, title and interest in
and to the Leases and Tenant Deposits and Assignee hereby accepts such
assignment. Assignor represents and warrants to Assignee, which shall survive
the Closing Date for nine (9) months and any claim therefor must be asserted by
Assignee by delivering specific written notice thereof to Assignor within such
period, (a) that Assignor is the owner of the lessor's interest in the Leases,
(b) that the lessor's interest in the Leases and the Tenant Deposits are
assigned and transferred to Assignee free of all liens, encumbrances and third
party interests or claims intentionally caused or created by Assignor, and (c)
that Assignor has the lawful right and authority to assign and transfer the
lessor's interest in the Leases and the Tenant Deposits to Assignee.
Assignor hereby covenants that Assignor will, at any time and
from time to time upon written request therefor, execute and deliver to
Assignee, Assignee's successors, nominees or assigns, such documents as Assignee
or they may reasonably request in order to fully assign and transfer to and
vest in Assignee or Assignee's successors, nominees and assigns, and protect
EXHIBIT "D"
-1-
<PAGE> 34
Assignee's or their right, title and interest in and to the Leases and the
Tenant Deposits and the rights of Assignor intended to be transferred and
assigned hereby, or to enable Assignee, Assignee's successors, nominees and
assigns to realize upon or to otherwise enjoy such rights in and to the Leases
and the Tenant Deposits. Assignee hereby assumes the performance of all of the
terms, covenants and conditions imposed upon Assignor as landlord under the
Leases from and after the Closing Date.
Assignee hereby agrees to indemnify, defend and hold harmless
Assignor, Assignor's agents and Assignor's and their successors and assigns from
and against any and all claims, losses, liabilities and expenses, including
reasonable attorneys' fees, suffered or incurred by Assignor by reason of (i)
any breach by Assignee, of any of Assignee's obligations under the Leases or
with respect to the Tenant Deposits from and after the Closing Date, or (ii) any
leasing commissions or tenant improvements with respect to the Leases for which
Assignee is responsible pursuant to the Agreement. Notwithstanding anything
herein contained to the contrary, Assignee's liability under the foregoing
indemnity shall be limited to matters arising or accruing after the Close of
Escrow.
Assignor hereby agrees to indemnify, defend and hold harmless
Assignee, Assignees, agents and Assignee's, Assignee's and their successors and
assigns from and against any and all claims, losses, liabilities and expenses,
including reasonable attorneys' fees, suffered or incurred by Assignee by reason
of (i) any breach by Assignor, of any Assignor's obligations under the Leases or
with respect to the Tenant Deposits prior to the Closing Date, or (ii) any
leasing commissions or tenant improvements with respect to the Leases for which
Assignor is responsible pursuant to the Agreement. Notwithstanding anything
herein contained to the contrary, the liability of Assignor under the foregoing
indemnity shall be limited to matters occurring or accruing before the Close of
Escrow.
In the event of the bringing of any action or suit by a party
hereto against another party hereunder by reason of any breach of any of the
covenants, conditions, agreements or provisions on the part of the other party
arising out of this Assignment, then in that event the prevailing party shall be
entitled to have and recover of and from the other party all costs and expenses
of the action or suit, including actual attorneys' fees and costs.
This Assignment may be executed simultaneously in counterparts,
each of which shall be deemed an original, but all of which, together, shall
constitute one and the same instrument.
This Assignment shall be binding upon and inure to the benefit of
the successors, assignees, personal representatives, heirs and legatees of all
the respective parties hereto.
EXHIBIT "D"
-2-
<PAGE> 35
This Assignment shall be governed by, interpreted under, and
construed and enforceable in accordance with, the laws of the state of
California.
"ASSIGNEE" "ASSIGNOR"
PMRA III, a group trust
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation By: PMRealty Advisors, Inc.,
its investment manager
By: By:
------------------------------- -------------------------------
Its: Its:
--------------------------- --------------------------
By: By:
------------------------------- -------------------------------
Its: Its:
--------------------------- --------------------------
EXHIBIT "D"
-3-
<PAGE> 36
EXHIBIT "A"
-----------
LIST OF LEASES AND DEPOSITS
---------------------------
EXHIBIT "A" TO EXHIBIT "D"
<PAGE> 37
EXHIBIT "E"
-----------
GENERAL ASSIGNMENT AND BELL OF SALE
-----------------------------------
THIS GENERAL ASSIGNMENT AND BILL OF SALE ("Assignment") is made
this ______ day of _______ , 19 , by and between PMRA III, a group trust
("Assignor"), and PACIFIC GULF PROPERTIES INC., a Maryland corporation
("Assignee"), with respect to the following matters.
WITNESSETH:
-----------
WHEREAS, Assignor and Assignee entered into that certain
Agreement of Purchase and Sale and Escrow Instructions dated as of _____________
("Agreement"), respecting the sale of certain "Property" (as described and
defined in the Agreement). Unless otherwise indicated herein, all capitalized
terms in this Assignment shall have the meanings ascribed to them in the
Agreement.
WHEREAS, under the Agreement, Assignor is obligated to assign any
and all of its right, title and interest and delegate any and all of its
obligations and responsibilities in each of the following to Assignee:
(a) any and all service contracts as are listed on Schedule
1 attached hereto, warranties, guarantees, together with all
supplements, amendments and modifications thereto, relating to the
Property ("Contract(s)");
(b) any and all (i) licenses, permits and entitlements
necessary for the construction, rehabilitation and operation of the
Property in accordance with its current use; (ii) right, title and
interest of Assignor in and to the use of any and all trade names and
logos used by Assignor in the operation and identification of the
improvements located on the Property; and (iii) development rights and
other intangible rights, titles, interests, privileges and appurtenances
owned by Assignor and in any way related to or housed in connection with
the Property and its operation (collectively "License(s)"); and
(c) all fixtures, fittings, furniture, furnishings,
appliances, apparatus, equipment, machinery, building materials, and
other items of tangible personal property owned by Assignor and affixed
or attached to the Property (all of such properties and assets being
collectively called the "Assigned Properties").
AGREEMENT
---------
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows.
EXHIBIT "E"
<PAGE> 38
Assignor hereby assigns, sells, transfers, sets over and delivers
unto Assignee all of Assignor's estate, right, title and interest in and to the
Contracts, Licenses and Assigned Properties and Assignee hereby accepts such
assignment. Assignor represents and warrants to Assignee, which shall survive
the Closing Date for nine (9) months and any claim therefor must be asserted by
Assignee by delivering specific written notice thereof to Assignor within such
period, (a) that Assignor is the owner of the owner's interest in the Contracts,
(b) that the owner's interest in the Contract has not been previously conveyed
or encumbered, and (c) subject to the terms of the applicable Contracts,
Assignor has the lawful right and authority to assign and transfer the owner's
interest in the Contracts to Assignee.
Assignor hereby covenants that Assignor will, at any time and
from time to time, upon written request therefor, execute and deliver to
Assignee, Assignee's successors, nominees and assigns, such documents as
Assignee, Assignee's successors, nominees and assigns may reasonably request in
order to fully assign and transfer to and vest in Assignee, or Assignee's
successors, nominees and assigns, and to protect Assignee's or their right,
title and interest in and to the Parking Agreement, Contracts, Licenses and
Assigned Properties. By accepting this Assignment, Assignee hereby assumes the
performance of all of the terms, covenants and conditions imposed upon Assignor
in connection with the Contracts, Licenses and/or Assigned Properties from and
after the Closing Date.
Assignor hereby agrees to indemnify, defend and hold harmless
Assignee, Assignee's agents and Assignee's and Assignee's and their successors
and assigns from and against any and all obligations, causes of actions, claims,
losses, liabilities and expenses, including reasonable attorneys' fees, suffered
or incurred by Assignee by reason of any breach by Assignor of any of its
obligations under the Contracts or Licenses prior to the Closing Date.
Notwithstanding anything herein contained to the contrary, Assignor's liability
under the foregoing indemnity shall be limited to matters arising or accruing
before the Close of Escrow.
Assignee hereby agrees to indemnify, defend and hold harmless
Assignor, Assignor's agents and Assignor's and their successors and assigns from
and against any and all obligations, causes of actions, claims, losses,
liabilities and expenses, including reasonable attorneys' fees, suffered or
incurred by Assignor by reason of any breach by Assignee of any of its
obligations under the Contracts or Licenses from and after the Closing Date.
Notwithstanding anything herein contained to the contrary, Assignee's liability
under the foregoing indemnity shall be limited to matters arising or accruing
after the Close of Escrow. Assignee hereby agrees that it shall not use the
Licenses for any project other than the Property.
In the event of the bringing of any action or suit by a party
hereto against another party hereunder by reason of any breach of any of the
covenants, conditions, agreements or provisions on the part of the other party
arising out of this Assignment, then in that event the prevailing party shall be
entitled to have and recover of and from the other party all costs and expenses
of the action or suit, including reasonable attorneys' fees.
This Assignment shall be binding upon and inure to the benefit of
the successors, assignees, personal representatives, heirs and legatees of all
the respective parties hereto.
EXHIBIT "E"
-2-
<PAGE> 39
This Assignment shall be governed by, interpreted under, and
construed and enforceable in accordance with, the laws of the state of
California.
This Assignment may be executed in counterparts, each of which
shall be deemed an original, but all of which, together, shall constitute one
and the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have executed and
delivered this Assignment as of the day and year first above written.
"ASSIGNOR" "ASSIGNEE"
PMRA III, a group trust PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By: PMRealty Advisors, Inc.,
its investment manager
By: By:
------------------------------- -------------------------------
Its: Its:
-------------------------- --------------------------
By: By:
------------------------------- -------------------------------
Its: Its:
-------------------------- --------------------------
EXHIBIT E
-3-
<PAGE> 40
EXHIBIT "F"
-----------
FORM OF NOTICE TO TENANTS
-------------------------
To:
------------------
------------------
------------------
------------------
RE: Notice of Lease Assignment
--------------------------
Please be advised that the property commonly known as the _________
("Property") has been sold today and the ownership has been transferred to
Pacific Gulf Properties Inc.
You are hereby notified that, from and after the date hereof, and
until further notice, all future payments under your lease should be made
payable to "Pacific Gulf Properties Inc." and mailed to: _____________________
Also, in connection with this sale, your security deposit in the
amount of $ ____________ has been transferred to Pacific Gulf Properties. The
return of any such security deposit will be conditioned upon and subject to the
terms and conditions of the lease and the legal requirements of the State of
California.
Henceforth, all questions or other matters regarding your lease or
security deposit should be directed to _____________________, the property
manager, at (___) ________________.
Thank you for your cooperation.
Very truly yours,
EXHIBIT "F"
<PAGE> 41
EXHIBIT "G"
-----------
ESTOPPEL CERTIFICATE
--------------------
The undersigned, the tenant ("Tenant") under a certain lease
agreement, a complete, true and correct copy of which is attached hereto as
Exhibit "A" ("Lease"), does hereby certify to ___________ [Buyer] as purchaser
of the property affected by the Lease from PMRA III, ("Landlord") as follows:
1. The Lease is presently in full force and affect and unmodified
except as may be evidenced by written instrument attached hereto as part of
Exhibit "A". The Lease constitutes the only agreement between the Landlord and
Tenant with respect to the premises.
2. The lease term commenced on _______________, 199_ and full
rental is now accruing thereunder. The Lease term shall end on ______________,
199_. The Tenant has the following options to extend the term: None.
3. The Tenant has accepted possession of the leased premises
under the Lease and is paying _____ per month as rental under the Lease and
monthly installments have been paid through _______________, 19__. Tenant's
proportionate share is set forth in the Lease.
4. No rent under said lease has been paid more than thirty (30)
days in advance of its due date. Landlord is not in default in the performance
of the terms and provisions of the Lease, the Tenant has not assigned,
transferred, or hypothecated its interest under the Lease.
5. The Tenant, as of the date hereof, has no claim, charge,
defense or offset under the Lease against Landlord or against rents or other
charges due or to become due thereunder. As of the date hereof, Tenant has not
asserted any such offset or credit. To the best of Tenant's knowledge, there are
no defaults under the Lease.
6. Tenant has not made any payment to Landlord as a security
deposit or rental deposit except any payment expressly provided for in the Lease
as follows: $ ____________________.
7. All of Landlord's obligations under the Lease which have
accrued prior to the date hereof have been performed.
8. The individual executing this Certificate has the authority to
do so on behalf of Tenant and to bind Tenant to the terms hereof.
9. Pursuant to the Lease, Tenant is entitled to the use of
______ unreserved parking spaces.
Tenant makes this Certificate with the understanding that
Landlord is contemplating selling the premises, and the purchaser of the
premises will do so in material reliance on this Certificate.
<PAGE> 42
DATED: __________________ ,1997 By:
-------------------------------
Name:
------------------------
Title:
------------------------
<PAGE> 43
EXHIBIT "A"
-----------
EXHIBIT "A" TO EXHIBIT "G"
<PAGE> 1
EXHIBIT 10.5
REAL ESTATE PURCHASE CONTRACT
AND DEPOSIT RECEIPT
1. OFFER TO PURCHASE: Purchaser hereby offers to purchase the Property
described below, for the price and upon the terms and conditions set
forth herein.
2. PARTIES:
JPI XI, L.P., a California limited partnership, is referred to herein as
"Seller." Pacific Gulf Properties Inc. is referred to herein as
"Purchaser."
3. PROPERTY DESCRIPTION: That certain property located in the County of
Sacramento, and State of California, described as follows: approximately
221,300 square feet of industrial buildings with addresses of 9881 -
9969 Horn Road.
APN Number: 077-0330-052/53/54/55/55/57/63/64/65/66/67/68
The above described property, including all rights, title and interest,
remainder easements, development rights, rights of way and other rights
appurtenant and/or of benefit thereto, is described herein as the
"Property."
The "Property" shall also include (a) all tangible personal property
owned by Seller located on or in or used in connection with the Property
as of the date hereof and as of closing (the "Tangible Personal
Property"); (b) all intangible personal property now or hereafter owned
by Seller in connection with the Property, including, without
limitation, the right use the name "Horn Road Business Complex" and any
other trade name now used in connection with the Property (the
"Intangible Personal Property"); (c) all leases, rental agreements and
other agreements for the use or occupancy of the Property or any portion
thereof (the "Leases"); and (d) to the extent approved by Purchaser all
service, utility and other agreements and contracts relating to the use
and operation of the Property (the "Assigned Contracts"). The Tangible
Personal Property, Intangible Personal Property, Leases and Assigned
Contracts are collectively referred to as the "Personal Property".
4. PURCHASE PRICE: The Purchase Price shall equal the difference between
Nine Million Five Hundred Thousand and No/100 Dollars ($9,500,000) and
the outstanding principal balance of the Existing Loan (as that term is
defined in Section 6 of this Contract).
5. INITIAL DEPOSIT: This Contract is expressly contingent upon receipt of
the Initial Deposit from Purchaser, in the form of a check made payable
to First American Title, 1860 Howe Avenue, #120, Sacramento, CA
(hereinafter referred to as "Escrow Holder") in the amount of One
Hundred Thousand ($100,000)Dollars, as follows:
_________ hereby received from Purchaser [or]
X shall be delivered to Escrow Holder no later than 5:00 PM three
-------- (3) business days from mutual execution of the Contract; and
if the deposit is not so delivered, this Contract shall become null and
void.
The deposit shall be held by First American Title Insurance Company in
an interest bearing account pursuant to separate written instructions
from Purchaser. All interest accrued on the deposit shall be for the
Purchaser's account alone. The deposit (and such interest thereon as
Purchaser may direct), shall be applied toward the purchase price at
close of escrow.
6. EXISTING LOAN: This Purchase Contract is expressly conditioned upon
Purchaser's assumption of the existing note and the first Deed of Trust
and Assignment of Rents in favor of Ameritas Life Insurance Company
("Lender"), the outstanding balance being approximately $2,890,000.00,
payable in monthly installments of $25,000.00, including interest at the
rate of 7.95% (fixed), all due and payable February 1, 2006 (the
"Existing Loan"). Within five (5) days of mutual execution of this
Contract, Purchaser shall submit to Lender and/or its loan servicing
agent (Mason McDuffie Financial Corporation), the information required
by Lender to obtain Lender's consent. Any fees or costs associated with
the loan assumption shall be Purchaser's obligation.
7. TITLE REPORT AND ESCROW INSTRUCTIONS: Upon mutual execution hereof and
delivery of the initial Deposit as set forth herein, Broker shall order
a Preliminary Title Report regarding the Property from Escrow Holder and
shall establish escrow with Escrow Holder. Upon receipt of the
Preliminary Title Report, including full copies of all exceptions set
forth therein including but not limited to covenants, conditions and
restrictions (CC&Rs), reservations, easements, rights and rights of way
of record, liens, and other matters of record, and a current Alta Survey
on the Property in a form acceptable to Purchaser, Purchaser shall have
thirty (30) calendar days in which to approve or disapprove of said
Report and secure a commitment from the title company in a form required
by Section 10 of the Contract, including any endorsements reasonably
required by Purchaser, provided, that if Purchaser fails to disapprove
said Report in writing within such time, then Purchaser shall be
conclusively deemed to have approved thereof. The provisions of this
Contract shall constitute joint escrow instructions to the escrow
holder; provided, that the parties shall execute such further or
additional escrow instructions as requested by Escrow Holder not in
conflict with this Contract except as agreed to by Seller and Purchaser.
8. CLOSE OF ESCROW AND DELIVERY OF POSSESSIONS: Closing shall occur within
fifteen (15) days after the end of the Due Diligence Period. Time is of
the essence of this Contract. Possession of the Property shall be
delivered to Purchaser on the date of close of escrow unless otherwise
provided herein. On or before close of escrow Seller shall supply to
Purchaser keys to all lockable doors, compartments, systems, closets,
and alarms on the Property in Seller's possession and to the extent that
they are in the Seller's possession, the following: original leases and
tenant files and the original of any assigned contract, originals of all
licenses, permits and variances, and certificates of occupancy for all
occupied space within the property, notices to the tenants of the
occurrence of the sale of the property in the form approved by
Purchaser. A closing statement as provided by the escrow holder shall
also be provided by the escrow holder, which closing statement shall be
approved by Seller and Purchaser.
9. ESTOPPEL CERTIFICATES: Not later than five (5) calendar days before
close of escrow, Seller shall deliver to Purchaser an executed estoppel
certificate in the form attached from the tenants representing a minimum
of eighty percent (80%) of the square footage of the improvements, and
Seller will provide its own estoppels from any missing tenant estoppel.
Purchaser shall have three (3) calendar days after receipt of said
tenants' and landlord's estoppels in which to disapprove, in writing,
the estoppel certificate; which right may be exercised in Purchaser's
reasonable discretion, but only if, the certificate(s) reflect a
discrepancy materially affecting the economics of the transaction or a
previously undisclosed material breach of the lease(s). Upon such
disapproval, this Contract shall be immediately terminated. In the event
that Purchaser terminates this Contract pursuant to these terms,
Purchaser's deposit(s) shall, upon demand and without further agreement
of Seller, be returned to Purchaser in full.
1
<PAGE> 2
10. TITLE INSURANCE: The Policy of Title Insurance shall be a California
Land Title Association (CLTA) Standard Coverage Policy with a liability
not exceeding the total purchase price; provided the Purchaser may, at
Purchase's option, elect (at Purchaser's own additional cost) an
American Land Title Association (ALTA) Policy.
11. COSTS AND FEES:
A. Title Insurance: CLTA title insurance fees shall be paid by Seller,
provided that if Purchaser elects an ALTA policy, then the cost
difference between an ALTA policy and a CLTA policy shall be paid by
Purchaser. Seller shall order and pay for a chain of title search and
pay any personal property sales taxes applicable to the sale.
B. Escrow Fees and Recording Costs shall be paid equally by Seller and
Purchaser. C. Documentary transfer taxes required by any lawful
authority shall be paid by Seller to Purchaser.
12. ASSUMPTION OF BONDS AND ASSESSMENTS: All bonds and assessments which are
a lien as of the date of mutual execution of this Contract shall be
assumed by Purchaser, to the extent that they are reflected on current
tax bills as direct levies.
13. DUE DILIGENCE CONTINGENCY: Purchaser shall have a period of thirty (30)
days from mutual execution of this Contract and the delivery of the
items to be supplied by Seller under this Paragraph 13, in which to
conduct its due diligence investigation of the information provided by
Seller and of the Property (which period shall be considered the Due
Diligence Period). At any time during the Due Diligence Period,
Purchaser may elect to terminate this Contract in the sole and absolute
discretion, by delivering written notice thereof to Seller.
Not later than five (5) business days from the date of mutual execution
of this Contract, Seller shall deliver to Purchaser the following listed
items if existing. If Seller does not have in its possession any of the
listed items, or if such item(s) does not exist or is not reasonably
obtainable, then Seller shall so notify Purchaser in writing of its
unavailability in lieu of production thereof:
A. Any notes and/or security agreements which will or may affect or
encumber the Property at close of escrow.
B. All rental agreements, leases, and other written contracts or
agreements which will or may affect the Property at close of escrow.
C. All accounting ledgers and operating statements for the prior twelve
(12) months to date of mutual execution of this Contract, including all
property tax bills (paid or unpaid) for said period.
D. Most recent operating expense invoices and/or billings.
E. Any existing plat maps, surveys, certificates of occupancy,
construction plans, tentative or final maps, and other like plans, maps
or documentation concerning the Property that is currently existing and
in Seller's possession.
F. A form of Estoppel Certificate reasonably acceptable to Purchaser to
be executed by the tenant(s) pursuant to paragraph 9 above.
G. Any existing inspection reports, test results, soils and engineering
reports, environmental assessments, Phase I or Phase II reports, or like
documents or information in any form or nature currently existing and in
Seller's possession, which reflect upon the condition of the Property
including, without limitation, the existence or nonexistence of
asbestos, PCB transformers, residential lead paint hazards, or other
toxic, hazardous or contaminated substances or underground storage tanks
in, on, or about the Property (all collectively referred to herein as
"Reports").
H. All contracts relating to the operation, maintenance, or management
of the Property.
I. True, complete and correct copies of all documents evidencing or
securing the Loan.
J. Copies of whatever documents Seller may have regarding the financial
condition, business prospects or prospective continued occupancy of any
tenant (including, but not limited to, financial statements, credit
reports, etc.).
K. All presently effective warranties or guaranties relating to the
Property or any portion thereof.
L. Reports of insurance carriers respecting the claims history of the
Property. Copies of maintenance records for the Property for 1995, 1996
and year to date 1997 if available.
M. A list of all Personal Property included within the Property.
N. A copy of the Property budget for the current year.
O. A current rent roll certified by the Seller to be accurate and
complete in form and content reasonably satisfactory to Purchaser, and
copies of all lease files.
P. All licenses, permits, variances and other governmental
authorizations relating to the use or occupancy of the Property, and
copies of all building and improvement plans relating to the Property.
Q. Annual statements of operations for the Property for 1995, 1996, and
year to date 1997. Purchaser shall have the right to audit Seller's
records for these periods.
R. A current ALTA/ACSM survey of the Property if one is in existence.
14. PROPERTY INSPECTION: Purchaser shall have the right to inspect books and
records concerning the Property including, but not limited to, records
of income and expenses; and to conduct, at any time before the
expiration of the Due Diligence Period as described above, at its sole
cost and expense, inspections, tests, surveys, and other studies, for
the purpose of identifying the existence in, on, or about the Property
of asbestos, PCB transformers, other hazardous or contaminated
substances, underground storage tanks, residential lead paint hazards,
flooding issues, ADA, earthquake standards and other matters concerning
any and all aspects of the Property. Seller hereby grants permission for
Purchaser to talk with Seller's contractors, tenants, and governmental
agencies regarding the Property. Contacts with tenants shall be in the
presence of Seller's Property Manager. Seller shall allow Purchaser and
Purchaser's agents the right to enter upon the Property at all
reasonable times for the purpose of conducting such inspections, tests,
surveys and studies; provided, however, that Purchaser shall protect,
defend, indemnify and hold Seller harmless from and against any and all
expenses and liabilities that may result from such inspections, and
shall take no action which may result in the imposition of any liens
against the Property. Any claim for indemnity shall be made within six
(6) months from the date of said inspections, tests, surveys, or studies
and Purchaser's indemnity shall be not to exceed Two Hundred Fifty
Thousand Dollars ($250,000).
2
<PAGE> 3
15. MATERIAL DAMAGE AND TAKING BY EMINENT DOMAIN: If the improvements on the
Property are destroyed or materially damaged prior to the close of
escrow, or if a material taking by eminent domain occurs prior to close
of escrow, this Contract shall, at Purchaser's election, immediately
terminate. In the event any damage or taking does not result in a
termination of the Contract, Purchaser shall receive a credit toward the
purchase price in an amount equal to the cost of any repairs which are
not covered by insurance (due to deductible or otherwise), or the
deficiency in any condemnation award. A destruction shall be considered
material if the cost of repair or replacement without deduction for
depreciation exceeds Two Hundred Thousand Dollars ($200,000) of the
purchase price, provided that, if applicable building codes or other
laws or regulations require work exceeding the repair or replacement of
the actual damage, the cost shall be considered to include all the work.
A taking by eminent domain is material if the diminution of market value
exceeds Two hundred Thousand Dollars ($200,000) of the purchase price.
This Contract shall be governed by the Uniform Vendor and Purchaser Risk
Act, California Civil Code Section 1662 in effect at the date of this
Contract to the extent said Act is not in conflict with express
provisions of this Contract. If Purchaser elects to accept the Property
in its then condition, all proceeds of insurance payable to Seller by
reason of such damage shall be paid to Purchaser.
16. ATTORNEYS' FEES: In any litigation, arbitration or other legal
proceeding which may arise between or among any of the parties hereto,
including their Brokers or agents, the prevailing party shall be
entitled to recover its costs, including costs of arbitration, and
reasonable attorneys' fees in addition to any other relief to which such
party may be entitled.
17. REPRESENTATIONS TO THE BEST OF SELLER'S ACTUAL KNOWLEDGE:
A. To the best of Seller's actual knowledge, there is no suit, action or
arbitration, proposed bond issuance, proposal for public improvement
assessments; pay-back agreement, paving agreement, road expansion or
improvement agreement, utility, use, or improvement moratorium; or
legal, administrative, or other proceeding or governmental investigation
or requirement, formal or informal, pending or threatened that affects
the Property or which adversely affects Seller's ability to perform
hereunder, or other change or expense upon or related to the Property
which has not been disclosed to Purchaser in writing prior to the date
of this contract. In addition, to the best of Seller's actual knowledge,
there is no suit, action, arbitration, or other proceeding affecting or
involving any tenant with respect to the Property.
B. To the best of Seller's actual knowledge, there are no charges or
other expenses upon or relating to the Property which have not been
disclosed to Purchaser in writing other than those which are reflected
in the items to be delivered to Purchaser during Purchaser's Due
Diligence Period under paragraph 13 above.
C. To the best of Seller's actual knowledge, there is no asbestos, PCB
transformer, residential lead paint hazard, or other toxic, hazardous or
contaminated waste or substance, as defined by applicable state, federal
or local law, statute, ordinance or regulation, released upon or
disposed of onto, stored, or otherwise held on, under or about the
Property, and Seller has received no notice of any violation or claimed
violation of any law, rule or regulation relating to such hazardous
waste. To the best of Seller's knowledge there is no occurrence or
condition on any other real property that could cause the Property or
any part thereof to be classified as a "Border Zone Property" under the
provisions of California Health and Safety Code Sections 225220, et
seq., or any regulation adopted in accordance therewith. Seller's
knowledge relies upon the Level I Environmental Assessment prepared by
Lush Geosciences dated January 9, 1996.
D. To the best of Seller's actual knowledge, there are no agreements
with any taxing authority respecting the imposition or deferment of any
taxes or assessments respecting the Property and Seller has no knowledge
of any unrecorded taxes, assessments (special,l general or otherwise) or
bonds of any nature affecting the Property, except as disclosed on the
tax bill.
E. To the best of Seller's actual knowledge, the Property and all
components thereof (including, but not limited to, parking lots,
electrical systems, roofs, heating, ventilating and air conditioning
systems) are, and at close of escrow shall be, in good condition and
working order and shall perform the work or function for which they were
intended. To the best of Seller's actual knowledge the improvements, and
all component parts thereof, were constructed in substantial conformance
with the plans and specifications as well as documents approved by
appropriate public officials and are free of material construction,
design and/or structural defects.
F. To the best of Seller's actual knowledge, Seller has not received,
nor is aware of any notification from any building department, health
department, or such other City, County or State authority having
jurisdiction, requiring any work to be done on or affecting the
Property. Seller agrees that in the event such notice is received by
Seller prior to the close of escrow and Seller is unable to or elects
not to perform the work required in said notice, at Seller's sole cost
and expense, on or before the close of escrow, said notice shall be
submitted to Purchaser for Purchaser's examination and approval. In the
event such a notice is submitted to Purchaser, Purchaser shall have a
period of five (5) calendar days from delivery in which to disapprove
said notice and thereby elect to terminate this Contract. In the event
that Purchaser terminates this Contract pursuant to these terms,
Purchaser's deposit(s) shall, upon demand and without further agreement
of Seller, be returned to Purchaser in full, and neither party shall
have any further liability under this Contract.
G. To the best of Seller's actual knowledge, the Property, building, and
improvements thereon do not violate any applicable building, zoning,
environmental or other statutes or regulations, and Seller is unaware of
any material defect in the Property or improvements thereon.
H. All documents delivered by Seller to Purchaser or made available to
Purchaser for review, including without limitation the items described
in Paragraph 17 of the Contract as supplemented hereby, are true and
complete copies of all documents relating to the Property in Seller's
possession or control. All of Seller's books, files and records related
to the Property were made available to Purchaser for Purchaser's review
at Seller's offices.
I. At the closing, there will be no outstanding written or oral
contracts made for any improvements to the Property (including without
limitation tenant improvements), or for the offsite improvements related
to the Property, which have not been fully completed and paid for,
except as described herein or by Seller's files and records. Seller
shall cause to be discharged all mechanics' and materialmen's liens
arising from any labor or materials furnished to the property prior to
the close of escrow. (NOTE: LINE ON COPY UNINTELLIGIBLE)
in connection with tenant improvements, remodeling and renovation and
Seller shall cause to be discharged any and all such costs and
obligations with respect to all Leases executed prior to Closing unless
agreed otherwise between Seller and Purchaser. New leases entered into
after the date hereof and before closing shall be agreed upon between
Seller and Purchaser. The responsibility for commissions and tenant
improvements for any such new leases will be the obligation of
Purchaser.
3
<PAGE> 4
J. The most current Rent Roll provided to Purchaser is a complete and
accurate list of all Leases. There are no (1) free rent, operating
expense abatements, incomplete tenant improvements, rebates, allowances,
or other unexpired concessions (collectively referred to as "Offsets"),
(2) rights of first refusal or rights to purchase the Property, or (3)
rights of termination, extension, cancellation or expansion, under any
Lease except as specifically set forth on the most current Rent Roll.
Seller has provided to Purchaser complete and accurate copies of all
Leases. To the best of Seller's actual knowledge, there exists no
defaults or events which, with the giving of notice or passage of time,
or both, would constitute a default by Seller or any tenant under any
Leases.
K. Seller has provided to Purchaser complete and accurate copies of all
contracts, bonds and other agreements affecting the Property. To the
best of Seller's actual knowledge, there exists no defaults or events
which, with the giving of notice or passage of time, or both, would
constitute a default by Seller or any of the other parties to such
contracts, bonds or agreements.
L. There is no default or event which, with the giving of notice or
passage of time would constitute a default under the loan ("Loan")
secured by the Property from Ameritas Life Insurance Company ("Lender")
to Seller, as "Borrowers". Seller has delivered to Purchaser true and
complete copies of all documents evidencing or securing the Loan. Seller
agrees to provide to the Lender all information necessary for the Lender
to agree to the assignment of the Loan and the transfer of the Property,
and agrees to execute such documentation as may be reasonably required
by the Lender in connection with that assignment.
All representations, warranties and covenants contained in this Contract
or made in writing pursuant to this Contract are intended to and shall
be deemed made as of the date of this Contract and again at the close of
escrow and shall survive the execution and delivery of this Contract,
the recording of the grant deed and the close of escrow.
18. LIQUIDATED DAMAGES: IF PURCHASER MATERIALLY BREACHES THIS CONTRACT, THE
PARTIES AGREE THAT THE SUM OF ONE HUNDRED THOUSAND AND NO/100 ($100,000)
DOLLARS WILL CONSTITUTE LIQUIDATED DAMAGES, WHICH SUM THE PARTIES AGREE
IS A REASONABLE SUM CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING ON THE
DATE OF THIS CONTRACT, INCLUDING THE RELATIONSHIP OF THE SUM TO THE
RANGE OF HARM TO PURCHASER THAT REASONABLY WOULD BE ANTICIPATED AND THE
ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR
INCONVENIENT. IN PLACING THEIR INITIALS AT THE PLACES PROVIDED, EACH
PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE
AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED
THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION AT THE TIME THIS
CONTRACT WAS MADE.
_______ Purchaser's initials _____ Seller's initials
19. FIRPTA: Seller shall execute and deliver to Purchaser at the Closing a
Certificate of NonForeign Status, and a California Real Estate
Withholding Exemption (Form 590) in form approved by Purchaser.
20. SPECIAL EARTHQUAKE STUDIES ZONE: To the best of Seller's knowledge and
according to State of California - Department of Conservation-Division
of Mines and Geology - Special Publication 42 - "Fault Rupture Hazard
Zones", the Property ___ is [or] x is not situated in a Special Studies
Zone as designated under the Alquist Priolo Special Earthquake Studies
Zone Act, Sections 2621-2630, inclusive, of the California Public
Resources Code, and Purchaser acknowledges that any such designation may
impact Purchaser's intended use of the Property. Purchaser shall be
solely responsible for confirming the above stated earthquake status of
the Property and for investigation of the impact of such status on
Purchaser's intended use of the Property.
21. FLOOD HAZARD AREA: To the best of Seller's knowledge and according to
Flood Map Panel 060262-0205D Grid E-5 the Property __ is [or] x is not
---
situated in a Special Flood Hazard Area. federal law requires that as a
condition for obtaining federally related financing on most properties
located in Special Flood Hazard Areas, banks, savings and loan
associations, and some insurance lenders required flood insurance to be
carried where the property, real or personal, is security for the loan;
this requirement is mandated by the National Flood Insurance Act of 1968
and the Flood Disaster Protection Act of 1973. The purpose of the
program is to provide flood insurance to property owners at a reasonable
cost. Cities or counties participating in the National Flood Insurance
Program may have adopted building or zoning restrictions or other
measures, as part of their participating in the Program. Purchaser
acknowledges that such designation may impact Purchaser's intended use
of the Property.
22. AMERICANS WITH DISABILITIES ACT (ADA): Neither Seller nor CB Commercial
Real Estate Group, Inc. (hereinafter "Broker") makes any representations
concerning the impact or applicability of the Americans with
Disabilities Act (the ADA), a Federal law codified at 42 USC Section
12101 et seq. Purchaser acknowledges that the ADA requires owners of
"Public accommodations" to remove barriers to access by disabled persons
and provide auxiliary aids and services for hearing, vision or speech
impaired persons. Purchaser agrees that any modifications to the
Property, structural or otherwise, required by the ADA shall be at the
sole cost and responsibility of Purchaser.
23. BROKER COMMISSIONS: Seller agrees to pay and hereby irrevocably assigns
to CB Commercial ("Broker") a commission equal to three and one-half
(3.5%) percent of the gross purchase price as and for a commission for
Broker's services rendered in effecting the sale. This commission is
earned as of the close of escrow, and escrow holder is hereby
irrevocably instructed to pay said commission to broker out of Seller's
proceeds upon the close of escrow and through escrow. This instruction
shall not be withdrawn or modified without Broker's written consent and
Purchaser and Seller agree that broker is a third party beneficiary of
the Contract with respect to such commission. Notwithstanding anything
to the contrary contained herein, this commission agreement shall not
supersede or waive any rights Broker may have under any listing
agreement with Seller. Seller and Purchaser each warrant that they have
dealt with no other real estate broker in connection with this
transaction except CB Commercial Real Estate Group, Inc.
In the event that any other broker or finder claims a commission or
finder's fee based upon any contact, dealings or communication, the
party through whom the broker or finder makes its claim shall be
responsible for said commission or fee and all costs and expenses
(including, without limitation, reasonable attorneys' fees) incurred by
the other party in defending against the same. the party through whom
any other broker or finder makes a claim shall hold harmless, indemnify
and defend the other party hereto, its successors and assigns, agents,
employees, officers and directors, and the Property from and against any
and all liabilities and losses (including, without limitation,
attorneys' fees) arising out of such claim. The provisions of this
Section shall survive the termination of this Agreement.
4
<PAGE> 5
24. INTEGRATION; COUNTERPARTS; TELECOPIED SIGNATURES: This Contract shall
constitute the entire Real Estate Purchase Contract between Purchaser
and Seller and supersedes any and all agreements between the parties
hereto regarding the subject Property. This Contract may be executed in
counterpart, each of which shall be deemed an original but all of which
when taken together shall constitute one and the same instrument. In
order to expedite the transaction contemplated herein, the parties
hereto agree that a telecopied signature shall be deemed to constitute
an original signature evidencing the signing party's offer or
acceptance; provided, however, that each party shall thereafter sign a
sufficient number of originals of this Contract, in duplicate, so that
each party shall be provided a fully executed original of this Contract.
The telecopied signature(s) shall be retained as a part of the Contract
in order to establish conclusively the date of mutual execution and
commencement of the Due Diligence Period. The undersigned intends to be
bound by its signature on the telecopied document is aware that parties
will rely on the telecopied signature and hereby waives any defenses to
the enforcement of the terms of this Contract based on the transmission
of signature by telecopy.
25. PURCHASER'S CONDITIONS TO CLOSING: At least three (3) business days
prior to closing, Seller shall execute, where appropriate acknowledge
and deliver into escrow for recording and/or delivery to Purchaser as
appropriate at the close of escrow a grant deed, a bill of sale, an
assignment of intangible property, an assignment of leases and a
certificate of non-foreign status (collectively the "Closing
Documents"). Purchaser shall also execute and deliver to Seller, through
escrow at the closing, the assignment of intangible property and
assignment of leases. The form of the Closing Documents shall be
prepared by Purchaser and approved by Seller during the Due Diligence
Period. In addition, the following are conditions precedent to
Purchaser's obligation to purchase the Property. In the event any
condition precedent is not satisfied, Purchaser may, in its sole and
absolute discretion, terminate this Contract, whereupon escrow holder is
hereby irrevocably instructed to return to Purchaser all funds
previously deposited, and the parties shall have any further rights or
obligations to each other.
A. The issuance by the Title Company to the Purchaser of an ALTA
Extended Coverage Owner's Policy of Title Insurance (Form B, revised
10/17/70, with Endorsement Form 1 Coverage) in the amount of the
Purchase Price insuring fee simple title to the Property in Purchaser,
subject only to such exceptions as Purchaser shall have approved, and
containing such endorsements as Purchaser may specify pursuant to
Section 7 of the Contract.
B. At least three (3) and no more than five (5) business days prior to
closing, Seller shall provide (and Seller hereby covenants to provide)
to Purchaser an updated Rent Roll which updated Rent Roll must not
indicate any material adverse change from the Rent Roll last approved by
Purchaser, and Purchaser shall have performed a closing audit which
confirms the updated Rent Roll. Seller shall certify the Rent Roll as
true and complete and shall identify any events which with the passage
of time and/or the giving of notice would constitute a tenant default.
C. Seller shall have terminated prior to the closing, at no cost or
expense to Purchaser, any and all contracts affecting the Property that
are not approved by Purchaser.
D. In Purchaser's reasonable determination, there shall have been no
material adverse change in or to the Property or the information or
items reviewed and approved by Purchaser during the Due Diligence
Period.
E. Receipt by Purchaser of a certificate from the California Secretary
of State indicating that, as of the closing, there are no filings
against Seller or any of the Personal Property under the California
Uniform Commercial Code which would be a lien on any of the Personal
property following the closing.
F. Receipt by Purchaser of (i) a Beneficiary Statement from Lender; (ii)
an estoppel from Lender confirming that no default exists under the
loan; (iii) a Loan assignment and assumption agreement in form and
content reasonably satisfactory to Purchaser.
26. ACKNOWLEDGEMENT OF RECEIPT: By execution hereof, each signing party
acknowledges receipt of a copy of this Contract.
27. WARRANTY OF AUTHORITY: By execution hereof, each signatory hereto
warrants that he/she has the authority to do so and to bind the party on
whose behalf he or she has executed this Contract.
28. ACCEPTANCE: By execution hereof, each party approves and accepts the
terms of the foregoing Contract and agrees to the transaction described
herein.
29. ACCEPTANCE DEADLINE: Unless both Purchaser and Seller accept this offer
to purchase the subject Property by mutual execution and delivery of
this Contract to the other on or before 5 PM on October 14, 1997, this
offer shall become null and void, and any deposit made herewith shall be
immediately returned to Purchaser.
30. RELEASE OF LIENS: Anything contained herein to the contrary
notwithstanding, and notwithstanding any approval or consent by
Purchaser hereunder, Seller shall cause all mortgages, deeds of trust
and other monetary encumbrances, with the exception of the Deed of
Trust, Security Contracts, and Assignment of Rents in favor of Ameritas
Life Insurance Company including without limitation all mechanics'
liens, to be released and reconveyed from the Property on or prior to
the close of escrow.
31. PRORATIONS: The following are to be apportioned as of the close of
escrow, with Purchaser receiving credit for the entire day of the
closing, as follows:
A. Rent. Rent under the Leases shall be apportioned as of the close of
escrow for the current month, regardless of whether or not such rent has
been received by Seller. With respect to any rent arrearages arising
under the Leases, after closing, Purchaser shall pay to Seller any rent
actually collected which is applicable to the period preceding the close
of escrow; provided, however, that all rent collected by Purchaser shall
be applied first to all unpaid rent accruing after the close of escrow,
and then to unpaid rent accruing prior to the close of escrow. Purchaser
shall not be obligated to take any steps to recover any rent arrearages.
Seller shall take no steps to attempt to collect any delinquent rent
following the closing.
B. LEASING COSTS. Seller shall pay as of the closing of all leasing
commission and tenant improvement costs. If any, in connection with any
Lease executed on or before the date of this contract that are or will
become due and payable as of the closing. Purchaser shall be entitled to
a credit against the Purchase Price of any such unpaid commissions or
costs due after the closing but incurred in connection with any lease
executed on or before the date of this contract.
C. SECURITY DEPOSITS. Purchaser shall be entitled to a credit against
the Purchase Price for the total sum of all security and other deposits
paid to Seller by tenants under any Leases, and any interest earned
thereon which by law or the terms of the Leases could be required to be
refunded to tenants.
D. FREE RENT, ABATEMENTS OR OTHER UNEXPIRED CONCESSIONS. Purchaser shall
be entitled to a credit against the Purchase Price for any free rent,
abatements, or other unexpired concessions under any Leases to the
extent they apply to any period after the closing.
E. UTILITY CHARGES. Seller shall use its best efforts to cause all the
utility meters to be read on the close of escrow, and will be
responsible for the cost of all utilities used prior to the close of
escrow, except to the extent such utility charges are billed to and paid
by tenants directly.
5
<PAGE> 6
F. REAL ESTATE TAXES AND SPECIAL ASSESSMENTS. General real estate taxes
payable for the fiscal year in which the closing occurs shall be
prorated between Seller and Purchaser as of the close of escrow by the
Escrow Holder. Seller shall pay on or before closing the full amount of
any bonds or assessments against the Property that are not included in
the yearly tax bills including interest payable therewith, including any
bonds or assessments that may be payable after the close of escrow as a
result of or in relation to the construction or operation of any
improvements or any public improvements that took place or for which any
assessment was levied prior to the close of escrow which levies are not
included in the yearly tax bills as direct levies. Purchaser shall be
responsible for the payment of any bonds or assessments that are
included in the yearly tax bills or incurred after the close of escrow
that are not subject to the immediately preceding sentence.
G. OTHER APPORTIONMENTS. Amounts payable under the Assigned Agreements,
annual or periodic permit and/or inspection feed (calculated on the
basis of the period covered), and liability for other Property operation
and maintenance expenses, amounts payable under the Loan, and other
recurring costs shall be apportioned as of the close of escrow.
H. PRELIMINARY CLOSING STATEMENTS. Seller and Purchaser shall jointly
prepare and approved a preliminary Closing Statement on the basis of the
Leases and other sources of income and expenses, and shall deliver such
computation to Escrow Holder prior to closing.
I. POST-CLOSING RECONCILIATION. If any of the aforesaid prorations
cannot be definitely calculated on the close of escrow, then they shall
be estimated at the closing and definitely calculated as soon after the
close of escrow as feasible. As soon as the necessary information is
available, Purchaser and Seller shall conduct a post-closing audit to
determine the accuracy of all prorations made to the Purchase Price (the
"Post-Closing Audit"). Either party owing the other party a sum of money
based on such subsequent proration(s) or the Post-Closing Audit shall
promptly pay said sum to the other party, together with interest thereon
at the rate of two percent of the "prime rate" (as announced from time
to time in the Wall Street Journal) per annum from the close of escrow
to the date of payment if payment is not made with ten (10) days after
delivery of a bill therefor.
J. EXISTING LOAN. Seller shall pay as of Closing all amounts under the
Existing Loan that have accrued on or prior to the Closing Date.
Purchaser shall pay all amounts under the Existing Loan, and any costs
of assuming the Existing Loan, accruing after the Closing Date.
32. INDEMNITY:
A. Seller shall hold harmless, indemnify and defend Purchase, its
successors and assigns and their respective agents, employees, officers
and directors, and the Property form and against any and all liability,
claims, demands, damages, and costs (including, without limitation,
attorneys' fees and expenses), whether direct, contingent or
nonconsequential, and no matter how arising ("Liabilities"), in any way
(i) related to the Property and arising or occurring prior to the close
of escrow; (ii) related to or arising from any act, conduct, omission,
contract or commitment of Seller, or (iii) resulting from any material
breach of representation or warranty by Seller or resulting from any
material breach or default by Seller under this Contract.
B. Except for Liabilities arising directly or indirectly from a breach
of any of Seller's representations or warranties, or which shall have
arisen out of any of Seller's representations or warranties, or which
shall have arisen out of any aspect of the Property, its management or
operations with respect to the period prior to the close of escrow,
Purchaser shall hold harmless, indemnify and defend Seller, its
successors and assigns and their respective agents, employees, officers,
directors and partners, from and against any and all liabilities in any
way (i) related to the Property and arising or occurring after the close
of escrow and during such time as the Purchaser owns or has any interest
in the Property; (ii) related to or arising from any act, conduct,
omission, contract or commitment of Purchaser; or (iii) resulting from
any material breach of representation or warranty by Purchaser or
resulting from any material breach or default by Purchaser under this
Contract.
33. MAINTENANCE OF THE PROPERTY AND PROPERTY PERSONNEL: Between the date of
this Contract and the close of escrow, Seller shall maintain the
Property in good order, condition and repair, reasonable wear and tear
excepted, shall perform all work required to be performed by the
landlord under the terms of any Lease, and shall make all repairs,
maintenance and replacements of the Property and otherwise operate the
Property in the same manner as before the making of this Contract, as if
Seller were retaining the Property. After full execution of this
Contract and until the close of escrow, Seller shall maintain all
existing personnel on the Property in their current employment positions
at not less than their current rate of compensation. Without limiting
the effectiveness of the foregoing provision or the other provision of
this Contract with respect to such contacts, unless Purchaser
specifically provides Seller with "written notice to the contrary" (as
hereinafter defined), Purchaser shall not retain the existing employees
and management agents of Seller for the Property, and, accordingly, at
the close of escrow, Seller shall cause all employment and management
agreements respecting the Property to be terminated, and deliver
evidence of such termination to Purchaser and remove all employees and
management personnel from the Property. Purchaser's "written notice to
the contrary" pursuant hereto shall be made only by delivery to Seller
of a copy of a written agreement, lease or letter of employment with or
to such employee and/or management agent executed by Purchaser.
34. LEASING; PURCHASER'S CONSENT TO NEW CONTRACTS AFFECTING THE PROPERTY;
TERMINATION OF EXISTING CONTRACTS: Seller shall use commercially
reasonable efforts until closing to lease any vacant space, or space
becoming vacant, in the Property. Seller shall not, after the date of
this Contract enter into any lease (other than a lease in accordance
with the immediately preceding sentence) or contract affecting the
Property, or any amendment thereof, or permit any tenant to enter into
any sublease, assignment or agreement pertaining to the Property, or
waive, compromise or settle any rights of Seller under any contract or
Lease, or agree to return any security deposit, or modify, amend, or
terminate any Assigned Contract, without in each case obtaining
Purchaser's prior written consent thereto which consent shall not be
unreasonably withheld or delayed. Seller shall terminate prior to the
closing, at no cost or expense to Purchaser, any and all agreements and
contracts affecting the Property that are not Assigned Contracts.
35. INSURANCE. Through the close of escrow, Seller shall maintain or cause
to be maintained, at Seller's sole cost and expense:
A. The existing policy or policies of insurance now covering the
Property.
B. A policy or policies of workers' compensation and employers'
liability insurance, commercial general liability insurance, and
automobile liability insurance, each in the amount and form maintained
by Seller prior to the date of this Contract.
36. MARKETING. After the end of the Due Diligence Period Seller agrees not
to market or show the Property to, or solicit offers from, any other
prospective purchasers during the remaining term of this Contract.
6
<PAGE> 7
37. PUBLICITY AND CONFIDENTIALITY: Seller agrees that the terms of the
transaction contemplated by this Contract, the identity of the Purchaser
and all information made available by Purchaser to Seller or in any way
relating to the Purchaser's interest in this transaction, shall be
maintained in strict confidence and no disclosure of such information
will be made by Seller, whether or not the transaction contemplated by
this Contract shall close, except to such attorneys, accountants,
investment advisors, lenders, and others as are reasonably required to
evaluate and consummate that transaction.
38. ATTORNEYS' FEES: In the event a dispute arises concerning the
performance, meaning or interpretation of any provisions of this
Contract, the defaulting party or the party not prevailing in such
dispute shall pay any and all costs and expenses incurred by the other
party in enforcing or establishing its rights hereunder, including,
without limitation, court costs and attorneys' fees. In addition to the
foregoing award of attorneys' fees to the prevailing party, the
prevailing party in any lawsuit on this Contract shall be entitled to
its attorneys' fees incurred in any post judgment proceedings to collect
or enforce the judgment. This provision is separate and several and
shall survive the merger of this Contract into any judgment on this
Contract.
CB COMMERCIAL REAL ESTATE GROUP, INC. SELLER: JPI XI, L.P.,
LICENSED REAL ESTATE BROKER A CALIFORNIA LIMITED PARTNERSHIP
555 Capitol Mall, Suite 100
Sacramento, CA 95814 By: JACKSON PROPERTIES, INC.
(916) 446-8274/phone
(916) 446-8708/fax By
--------------------------------------
John M. Jackson, Jr., President
By
----------------------------- Title: Managing General Partner
Bill Palmer ----------------------------------
Date: 10-30-97
-----------------------------------
Address: 5665 Power Inn Road, #140
Sacramento, CA 95824
Phone #: (916) 381-8113
Fax #: (916) 381-3153
PURCHASER: PACIFIC GULF PROPERTIES INC.
By
--------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
By:
-------------------------------------
Print Name:
-----------------------------
Title:
----------------------------------
Date:
-----------------------------------
Address: 4220 Von Karman Boulevard,
2nd Floor
Newport Beach, CA 92660
Phone #: (714) 223-5000
Fax #: (714) 223-5033
7
<PAGE> 8
CONSULT YOUR ADVISORS. It is recommended that both Purchaser and Seller consult
with their respective advisors. This document has been prepared for approval by
your attorney, and no representation is made by CB Commercial Real Estate Group,
Inc. as to the legal sufficiency or tax consequences of this document, or the
transaction to which it relates. In any real estate transaction, it is
recommended that you consult with a professional, such as a civil engineer,
industrial hygienist or other person, with experience in evaluating the
condition of the property, including the possible presence of asbestos,
hazardous materials and underground storage tanks. No representation is made by
CB Commercial Real Estate Group[, Inc. or its agents or employees, as to the
legal effect, interpretation, or economic consequences of the National Flood
Insurance Program, Alquist- Priolo Special Studies Zone Act, California Public
Resources code, Americans with Disabilities Act, or related legislation. THESE
ARE QUESTIONS YOU SHOULD ADDRESS WITH YOUR LENDER, ATTORNEY, ACCOUNTANT,
ADVISORS, ENGINEERS, AND OTHER QUALIFIED PROFESSIONALS.
8
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-23611) and related Prospectus of
Pacific Gulf Properties Inc. for the registration of $250,000,000 of common
stock, preferred stock, debt securities and warrants and in the related
Prospectus Supplement dated December 18, 1997 for the registration of 888,889
shares of the Company's common stock. We also consent to the incorporation by
reference therein of our report dated February 13, 1997, with respect to the
consolidated and combined financial statements and schedule of Pacific Gulf
Properties Inc. included in its Annual Report (Form 10-K) for the year ended
December 31, 1996 filed with the Securities and Exchange Commission and our
report dated December 10, 1997, with respect to the combined statement of
revenues and certain expenses of the California Commerce Parks Portfolio for
the year ended December 31, 1996, included in the Company's Current Report on
Form 8-K dated December 18, 1997, filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
Newport Beach, California
December 18, 1997
<PAGE> 1
EXHIBIT 99.1
[PACIFIC GULF PROPERTIES INC. LETTERHEAD]
CONTACT: Cindy L. Smith
Investor Relations
FOR IMMEDIATE RELEASE
PACIFIC GULF PROPERTIES ANNOUNCES
ADOPTION OF STOCKHOLDER RIGHTS PLAN
NEWPORT BEACH, California (December 11, 1997) -- Pacific Gulf
Properties Inc. (NYSE PAG) today announced that its Board of Directors has
adopted a Stockholder Rights Plan designed to assure that all of its
stockholders would receive fair treatment in the event of any threatened hostile
acquisition of the Company.
Glenn L. Carpenter, Chairman of the Board and Chief Executive Officer,
stated that "This Plan has been adopted to protect the interests of our
shareholders and to assist our Board of Directors in responding properly and
effectively in the event of any hostile or coercive takeover attempt of Pacific
Gulf Properties. The Plan is not being adopted in response to any takeover
attempt; rather, the Plan is an attempt to provide the Board of Directors with
adequate time and a full opportunity to consider any and all alternatives to
such hostile action."
The Rights Plan provides each stockholder of the Company with one right
for each share of common stock held.
Generally, should any person or entity become the beneficial owner of
10% or more of the Company's outstanding common stock (with the exception of
those persons who hold 10% or more of the Company's common stock, or securities
convertible into 10% or more of the Company's common stock, on December 11,
1997), each right (other than those held by that new 10% stockholder) would be
exercisable to purchase that number of shares of the Company's common stock
having, at that time, a market value equal to two times the then current
exercise price (initially $100).
-more-
<PAGE> 2
Pacific Gulf Properties Inc. -- Page 2
The record date set for distribution of the rights under the Rights
Plan is December 22, 1997, after which any shares of common stock traded will
automatically be accompanied by the associated rights. The rights expire on
December 11, 2007 (unless previously triggered), and are subject to redemption
by the Board of Directors of the Company at $.001 per right at any time prior
to the first date upon which they become exercisable.
Pacific Gulf Properties Inc., a self-administered and self-managed
equity real estate investment trust, owns, operates, leases, acquires,
rehabilitates and develops industrial and multifamily properties located in
selected markets within the western United States.
###
December 11, 1997
<PAGE> 1
EXHIBIT 99.2
FORM OF PRESS RELEASE
PACIFIC GULF PROPERTIES
ANNOUNCES CHANGE OF RECORD DATE
FOR DISTRIBUTION RIGHTS
NEWPORT BEACH, Calif., Dec. [__]/PRNewswire/--Pacific Gulf Properties Inc.
(NYSE: PAG) today announced that the record date set for distribution of the
rights under the previously announced Stockholder Rights Plan has been changed
from December 22, 1997 to December 29, 1997. The remaining terms of the
previously announced Rights Plan remain unchanged. As previously announced,
Pacific Gulf Properties will provide stockholders with further details of the
Rights Plan in a letter to be mailed in the next several weeks.
Pacific Gulf Properties Inc., a self-administered and self-managed equity real
estate investment trust, owns, operates, leases, acquires, rehabilitates and
develops industrial and multifamily properties located in selected markets
within the western United States.
SOURCE: Pacific Gulf Properties Inc.
<PAGE> 1
EXHIBIT 2
FORM OF
LETTER TO STOCKHOLDERS
<PAGE> 2
EXHIBIT 99.3
FORM OF LETTER TO STOCKHOLDERS
[PACIFIC GULF PROPERTIES INC. LETTERHEAD]
December __, 1997
Dear Pacific Gulf Stockholder:
The Board of Directors of Pacific Gulf Properties Inc. has adopted a
Stockholder Rights Plan intended to help assure that all stockholders would
receive fair treatment in the event of any threatened hostile acquisition of the
Company. A summary of the Stockholder Rights Plan is enclosed for your
information. NO ACTION ON YOUR PART IS REQUIRED AT THIS TIME. YOU WILL BE
NOTIFIED IF THE RIGHTS ARE EVER TRIGGERED AND BECOME EXERCISABLE.
The Rights Plan has been adopted to protect the interests of our
stockholders and to assist the Board of Directors in responding properly and
effectively on behalf of the stockholders in the event of any hostile or
coercive takeover attempt of the Company. The Rights Plan is not being adopted
in response to any takeover attempt; rather, the Rights Plan is an attempt to
provide the Board of Directors with adequate time and a full opportunity to
consider any and all alternatives to such hostile action.
It is worth noting that over 1,500 public United States companies and a
great many REITs have already adopted comparable rights plans.
The Rights will expire (unless previously triggered) on December 11,
2007 and, in certain circumstances, are subject to amendment or to redemption at
$.001 per Right by the Board. The adoption of the Pacific Gulf Rights Plan does
not weaken the financial strength of the current Company or interfere with its
business plans. The issuance of the Rights has no current dilutive effect and
will not affect earnings per share or change the way in which you can currently
trade the Company's shares.
In adopting the Rights Plan, the Board has expressed its confidence in
the Company's future and its determination that our stockholders be given every
opportunity to participate fully in that future. As always, our primary
obligation is to enhance stockholder values.
We appreciate your continuing support. Thank you.
Sincerely,
GLENN L. CARPENTER
Chairman of the Board,
Chief Executive Officer
and President
Enclosure
<PAGE> 1
EXHIBIT 3
SUMMARY OF THE RIGHTS
<PAGE> 2
EXHIBIT 99.4
SUMMARY OF THE RIGHTS
On December 10, 1997, the Board of Directors of Pacific Gulf
Properties Inc. (the "Company") authorized and declared a dividend of one
preferred stock purchase right (a "Right") for each share of common stock, par
value $.01 per share, of the Company (the "Common Shares"). The dividend is
payable on December 29, 1997 (the "Record Date") to the holders of record of
Common Shares as of the close of business on such date.
The following is a brief description of the Rights. It is intended to
provide a general description only and is subject to the detailed terms and
conditions of the Rights Agreement (the "Rights Agreement") dated as of December
11, 1997 by and between the Company and Harris Trust Company of California, as
Rights Agent (the "Rights Agent").
1. COMMON SHARE CERTIFICATES REPRESENTING RIGHTS
Until the Distribution Date (as defined in Section 2 below), (a)
the Rights shall not be exercisable, (b) the Rights shall be attached to and
trade only together with the Common Shares and (c) the stock certificates
representing Common Shares also shall represent the Rights attached to such
Common Shares. Common Share certificates issued after the Record Date and prior
to the Distribution Date shall contain a notation incorporating the Rights
Agreement by reference.
2. DISTRIBUTION DATE
The "Distribution Date" is the earliest of (a) the tenth business
day following the date of the first public announcement that any person (other
than the Company or certain related entities, and with certain additional
exceptions) has become the beneficial owner of 10% or more of the then
outstanding Voting Shares (such person is a "10% Stockholder" and the date of
such public announcement is the "10% Ownership Date"), (b) the tenth business
day (or such later day as shall be designated by the Board of Directors)
following the date of the commencement of, or the announcement of an intention
to make, a tender offer or exchange offer, the consummation of which would cause
any person to become a 10% Stockholder or (c) the first date, on or after the
10% Ownership Date, upon which the Company is acquired in a merger or other
business combination in which the Company is not the surviving corporation or in
which the outstanding Common Shares are changed into or exchanged for stock or
assets of another person, or upon which 50% or more of the Company's
consolidated assets or earning power are sold (other than in transactions in the
ordinary course of business). In calculating the percentage of outstanding
Voting Shares that are beneficially owned by any person, such person shall be
deemed to beneficially own any Voting Shares issuable upon the exercise,
exchange or conversion of any options, warrants or other securities beneficially
owned by such person; provided, however, that such Voting Shares issuable upon
such exercise shall not be deemed outstanding for the purpose of calculating the
percentage of Voting Shares that are beneficially owned by any other person.
Upon the close of business of the Distribution Date, the Rights
shall separate from the Common Shares, Right certificates shall be issued and
the Rights shall become exercisable to purchase Preferred Shares as described in
Section 5 below.
<PAGE> 3
No Person who is the Beneficial Owner of 10% or more of the
outstanding Voting Shares as of December 11, 1997 shall be deemed a 10%
Stockholder unless or until such Person shall acquire, without the prior
approval of the Board of Directors, Beneficial Ownership of an additional 1% of
the Voting Shares then outstanding and, following such acquisition, is the
Beneficial Owner of more than 10% of the Voting Shares then outstanding. In
addition, any Person (a "Transferee") who purchases Voting Shares from such
Person shall not be deemed a 10% Stockholder if, after giving effect to such
acquisition, such Transferee holds no more than the sum of the Voting Shares so
acquired plus 1% of the Voting Shares then outstanding.
3. ISSUANCE OF RIGHT CERTIFICATES
As soon as practicable following the Distribution Date, separate
certificates representing only Rights shall be mailed to the holders of record
of Common Shares as of the close of business on the Distribution Date, and such
separate Right certificates alone shall represent such Rights from and after the
Distribution Date.
4. EXPIRATION OF RIGHTS
The Rights shall expire on December 11, 2007, unless earlier
redeemed or exchanged, unless the Distribution Date has previously occurred and
the Rights have separated from the Common Shares, in which case the Rights will
remain outstanding for ten years.
5. EXERCISE OF RIGHTS
Unless the Rights have expired or been redeemed or exchanged,
they may be exercised, at the option of the holders, pursuant to paragraphs (a),
(b) or (c) below. No Right may be exercised more than once or pursuant to more
than one of such paragraphs. From and after the first event of the type
described in paragraphs (b) or (c) below, each Right that is beneficially owned
by a 10% Stockholder or that was attached to a Common Share that is subject to
an option beneficially owned by a 10% Stockholder shall be void.
(a) Right to Purchase Preferred Shares. From and after the close
of business on the Distribution Date, each Right (other than a Right that has
become void) shall be exercisable to purchase one one-hundredth of a share of
Class C Junior Participating Cumulative Preferred Stock, par value $.01 per
share, of the Company (the "Preferred Shares"), at an exercise price of $100.00
(One Hundred Dollars) (the "Exercise Price"). Prior to the Distribution Date,
the Company may substitute for all or any portion of the Preferred Shares that
would otherwise be issuable upon exercise of the Rights, cash, assets or other
securities having the same aggregate value as such Preferred Shares. The
Preferred Shares are nonredeemable and, unless otherwise provided in connection
with the creation of a subsequent series of preferred stock, are subordinate to
any other series of the Company's preferred stock whether issued before or after
the issuance of the Preferred Shares. The Preferred Shares may not be issued
except upon exercise of Rights. The holder of a Preferred Share is entitled to
receive when, as and if declared, the greater of (i) cash and non-cash dividends
in an amount equal to 100 times the dividends declared on each Common Share or
(ii) a preferential annual dividend of $.01 per Preferred Share ($.0001 per one
one-hundredth of a Preferred Share). In the event of liquidation, the holders of
Preferred Shares
<PAGE> 4
shall be entitled to receive a liquidation payment in an amount equal to the
greater of (1) $.01 per Preferred Share ($.0001 per one one-hundredth of a
Preferred Share), plus all accrued and unpaid dividends and distributions on the
Preferred Shares, or (2) an amount equal to 100 times the aggregate amount to be
distributed per Common Share. Each Preferred Share has one (1) vote per share,
voting together with the Common Shares. In the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, the
holder of a Preferred Share shall be entitled to receive 100 times the amount
received per Common Share. The rights of the Preferred Shares as to dividends,
voting and liquidation preferences are protected by antidilution provisions. It
is anticipated that the value of one one-hundredth of a Preferred Share should
approximate the value of one Common Share.
(b) Right to Purchase Common Shares of the Company. From and
after the close of business on the tenth business day following the 10%
Ownership Date, each Right (other than a Right that has become void) shall be
exercisable to purchase, at the Exercise Price (initially $100.00), Common
Shares with a market value equal to two times the Exercise Price. If the Company
does not have sufficient Common Shares available for all Rights to be exercised,
the Company shall substitute for all or any portion of the Common Shares that
would otherwise be issuable upon the exercise of the Rights, cash, assets or
other securities having the same aggregate value as such Common Shares.
(c) Right to Purchase Common Stock of a Successor Corporation.
If, on or after the 10% Ownership Date, (i) the Company is acquired in a merger
or other business combination in which the Company is not the surviving
corporation, (ii) the Company is the surviving corporation in a merger or other
business combination in which all or part of the outstanding Common Shares are
changed into or exchanged for stock or assets of another person or (iii) 50% or
more of the Company's consolidated assets or earning power are sold (other than
in transactions in the ordinary course of business), then each Right (other than
a Right that has become void) shall thereafter be exercisable to purchase, at
the Exercise Price (initially $100.00), shares of common stock of the surviving
corporation or purchaser, respectively, with an aggregate market value equal to
two times the Exercise Price.
6. ADJUSTMENTS TO PREVENT DILUTION
The Exercise Price, the number of outstanding Rights and the
number of Preferred Shares or Common Shares issuable upon exercise of the Rights
are subject to adjustment from time to time as set forth in the Rights Agreement
in order to prevent dilution. With certain exceptions, no adjustment in the
Exercise Price shall be required until cumulative adjustments require an
adjustment of at least 1%.
7. CASH PAID INSTEAD OF ISSUING FRACTIONAL SECURITIES
No fractional securities shall be issued upon exercise of a Right
(other than fractions of Preferred Shares that are integral multiples of one
one-hundredth of a Preferred Share and that may, at the election of the Company,
be evidenced by depositary receipts) and in lieu
<PAGE> 5
thereof, an adjustment in cash shall be made based on the market price of such
securities on the last trading date prior to the date of exercise.
8. REDEMPTION
At any time prior to the earlier of (a) the tenth business day
(or such later day as shall be designated by the Board of Directors) following
the date of the commencement of, or the announcement of an intention to make, a
tender offer or exchange offer, the consummation of which would cause any person
to become a 10% Stockholder, (b) the tenth business day after the 10% Ownership
Date or (c) the first event of the type giving rise to exercise rights under
Section 5(c) above, the Board of Directors may, at its option, direct the
Company to redeem the Rights in whole, but not in part, at a price of $.001 per
Right (the "Redemption Price"), and the Company shall so redeem the Rights.
Immediately upon such action by the Board of Directors (the date of such action
being the "Redemption Date"), the only right of the holders of Rights thereafter
shall be to receive the Redemption Price.
9. EXCHANGE
At any time during the period of 180 days after the 10% Ownership
Date, the Board of Directors of the Company may, at its option, authorize and
direct the exchange of all, but not less than all, of the then outstanding
Rights for Common Shares, one one-hundredths of Preferred Shares, debt
securities of the Company, other property or any combination of the foregoing,
which, as of the date of the Board of Directors' action, has a current market
price equal to the difference between the Exercise Price and the current market
price of the shares that would otherwise be issuable upon exercise of a Right on
such date (the "Exchange Ratio"), and the Company shall so exchange the Rights.
Immediately upon such action by the Board of Directors, the right to exercise
Rights shall terminate and the only right of the holders of Rights thereafter
shall be to receive a number of Common Shares equal to the Exchange Ratio.
10. NO STOCKHOLDER RIGHTS PRIOR TO EXERCISE
Until a Right is exercised, the holder thereof, as such, shall
have no rights as a stockholder of the Company (other than rights resulting from
such holder's ownership of Common Shares), including, without limitation, the
right to vote or to receive dividends.
11. AMENDMENT OF RIGHTS AGREEMENT
The Board of Directors may, from time to time, without the
approval of any holder of Rights, direct the Company and the Rights Agent to
supplement or amend any provision of the Rights Agreement in any manner, whether
or not such supplement or amendment is adverse to any holder of Rights, and the
Company and the Rights Agent shall so supplement or amend such provision;
provided, however, that from and after the earliest of (a) the tenth business
day (or such later day as shall be designated by the Board of Directors)
following the date of the commencement of, or the announcement of an intention
to make, a tender offer or exchange offer, the consummation of which would cause
any person to become a 10% Stockholder, (b) the 10% Ownership Date, (c) the
first event of the type giving rise to exercise rights under
<PAGE> 6
Section 5(c) above or (d) the Redemption Date, the Rights Agreement shall not be
supplemented or amended in any manner that would materially and adversely affect
any holder of outstanding Rights other than a 10% Stockholder.
