<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 29, 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.)
363 SAN MIGUEL DRIVE, SUITE 100, NEWPORT BEACH, CALIFORNIA 92660-7805
(Address of principal executive offices, including zip code)
714-721-2700
(Registrant's telephone number, including area code)
<PAGE> 2
This report amends the Current Report on Form 8-K dated May 29, 1997
to reflect the Common Stock offering completed by Pacific Gulf
Properties on June 5, 1997 (the "June 1997 Common Stock Offering").
The proforma consolidated financial statements have been amended to
reflect an increase in the number of shares issued to 2,100,000, and
an increase in proceeds from the offering to $41,590,000.
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS.
Pacific Gulf Properties Inc. (the "Company") completed or
anticipates completing the following acquisitions:
NEW ACQUISITIONS
On May 28, 1997, the Company purchased a warehouse/distribution
facility containing 263,155 leasable square feet located in Algona,
Washington (the "Algona Distribution Center"). The Algona
Distribution Center was purchased from John Hancock Mutual Life
Insurance for a total consideration of $8,750,000. The Company plans
to spend approximately $1,280,000 million in capital expenditures to
rehabilitate the property which had no rental operations prior to the
Company's purchase.
On May 29, 1997, the Company acquired 12.8 acres of land located in
Lake Forest, California (the "Lake Forest Land Parcel"). The Company
purchased the parcel from PacTel Properties, a telecommunications
company, for a total consideration of $3,500,000 and plans to build a
multitenant industrial complex with several buildings expected to
contain, based on present plans, approximately 204,000 leasable
square feet at a total cost of approximately $12,300,000.
The above acquisitions were funded with proceeds from an unsecured
$35.0 million credit facility with a bank established by the Company
subsequent to March 31, 1997 for acquisition of qualifying properties
(the "Acquisition Facility").
PROBABLE ACQUISITIONS
On November 6, 1996, the Company entered into an agreement to
purchase a warehouse/distribution facility containing 360,320
leasable square feet located in San Diego, California (the "San Diego
Distribution Center"). The Company will purchase the San Diego
Distribution Center from The Vons Companies, Inc., a food/grocery
store chain, for a total consideration of $17,100,000. The Company
plans to spend approximately $2,350,000 in capital expenditures to
rehabilitate the property which has had no rental operations prior to
the Company's proposed purchase.
On April 4, 1997, the Company entered into an agreement to acquire a
controlling general partner interest in two partnerships that own two
active senior apartment communities containing 550 apartment units
located in Escondido, California ("Terrace Gardens Apartments and
Morning View Terrace Apartments"). The Company's general partner
interest will be acquired in exchange for a $1,250,000 cash
contribution which will be used by the partnerships to fund
capitalizable financing costs, fees and transaction costs. In
connection with the transaction, the Company will become the sole
general partner of the two partnerships. In addition, the existing
partners will become limited partners and will receive approximately
265,000 limited partnership units in such partnerships in exchange
for their $5,900,000 minority equity interest. The limited partners'
units may be tendered for redemption beginning, in most cases,
two years after the closing of the transaction. Upon tender, the
Company at its election, can either issue shares of its common stock
for the units on a one-for-one basis (subject to certain adjustments)
or pay cash based on the fair market value of the Company's Common
Stock. The properties have an agreed-upon value of $25,000,000 and
will be encumbered by approximately $19,100,000 in tax-exempt bond
financing.
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<PAGE> 3
These probable acquisitions remain subject to certain conditions to
closing. Accordingly, there can be no assurance that the acquisitions
will be consummated.
ITEM 5 - OTHER EVENTS
COMMON STOCK OFFERING
On June 5, 1997, the Company entered into an underwriting agreement
with Prudential Securities for the issuance of 2,100,000 shares of
Common Stock at a price of $21.00 per share. Net proceeds from the
offering totaled $41,590,000 (after underwriting discounts and
commissions and estimated expenses) which will be used to complete
the purchase of the two Probable Acquisitions (consisting of the San
Diego Distribution Center and the controlling general partner
interest in the two partnerships that own Terrace Gardens Apartments
and Mountain View Terrace Apartments), to repay borrowings on the
Acquisition Facility and to reduce outstanding indebtedness on the
Company's revolving line of credit.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The attached pro forma consolidated financial statements are provided
as an amendment to the Form 8-K dated May 29, 1997 primarily to
reflect increased net proceeds from the June 1997 Common Stock
Offering (2,100,000 shares at $21.00 per share) and the application
of those net proceeds as stated above.
(a) See Index to Financial Statements attached hereto.
(b) Exhibits
10.1 Acquisition Agreement and related Amendments (San Diego
Distribution Center) between Pacific Gulf Properties
Inc. and the Vons Companies
10.2 Restructuring Agreement (Terrace Gardens Apartments)
10.3 Restructuring Agreement (Morning View Apartments)
10.4 Lot Sale Acquisition Agreement and Amendment (Lake
Forest Land Parcel) between Pacific Gulf Properties
Inc. and PacTel Systems
10.5 Acquisition Agreement (Algona Distribution Center)
between Pacific Gulf Properties Inc. and John Hancock
Mutual Life Insurance
23.1 Consent of Independent Auditors
-2-
<PAGE> 4
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: June 9, 1997
- -------------------------------------
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<PAGE> 5
PACIFIC GULF PROPERTIES INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1997................5
Pro Forma Condensed Consolidated Statement of Operations for the
Three Months Ended March 31, 1997.............................................6
Pro Forma Condensed Consolidated Statement of Operations for the
Year Ended December 31, 1996..................................................7
Notes to Pro Forma Condensed Consolidated Financial Statements.....................8
TERRACE GARDENS APARTMENTS AND MORNING VIEW TERRACE APARTMENTS
Report of Independent Auditors....................................................20
Combined Statement of Revenues and Certain Expenses for the Year Ended
December 31, 1996 and the Three Months Ended March 31, 1997 (Unaudited)......21
Notes to Combined Statement of Revenues and Certain Expenses......................22
</TABLE>
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<PAGE> 6
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
BEFORE
COMMON COMMON
COMPANY PRO FORMA STOCK STOCK COMPANY
HISTORICAL ADJUSTMENTS OFFERING OFFERING PRO FORMA
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Real estate, net
Operating properties $ 389,996 $ -- $ 389,996 $ 25,000 (D) $ 414,996
Properties under development -- 12,250 (A) 12,250 17,100 (D)(E) 29,350
Cash and cash equivalents 7,302 (2,000)(B) 5,052 5,052
(250)(A)
Accounts receivable 1,506 -- 1,506 -- 1,506
Other assets 8,026 -- 8,026 1,250 (D)(E) 9,276
-----------------------------------------------------------------------------
$ 406,830 $ 10,000 $ 416,830 $ 43,350 $ 460,180
=============================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Loans payable $ 183,406 $ (7,000)(B) $ 176,406 $ 19,100 (D) $ 195,506
Revolving line of credit 12,483 -- 12,483 (11,240)(E) 1,243
Acquisition facility -- 12,000 (A) -- (12,000)(E) --
Accounts payable and accrued
liabilities 5,870 -- 5,870 -- 5,870
Dividends payable 4,972 -- 4,972 -- 4,972
Convertible subordinated
debentures 13,109 -- 13,109 -- 13,109
-----------------------------------------------------------------------------
219,840 5,000 224,840 (4,140) 220,700
Minority interest in
consolidated partnerships 3,518 -- 3,518 5,900 (D) 9,418
Shareholders' equity
Preferred stock -- 3 (B)(C) 3 -- 3
Common shares 122 -- 122 21 (E) 143
Outstanding restricted stock (836) -- (836) -- (836)
Additional paid-in capital 203,370 4,997 (B)(C) 208,367 41,569 (E) 249,936
Distributions in excess of
earnings (19,184) -- (19,184) -- (19,184)
-----------------------------------------------------------------------------
183,472 5,000 (B) 188,472 41,590 (E) 230,062
-----------------------------------------------------------------------------
$ 406,830 $ 10,000 $416,830 $ 43,350 $ 460,180
=============================================================================
</TABLE>
The accompanying notes are an integral part of the pro forma condensed
consolidated financial statements.
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<PAGE> 7
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
BEFORE
COMMON COMMON
COMPANY PRO FORMA STOCK STOCK COMPANY
HISTORICAL ADJUSTMENTS OFFERING OFFERING PRO FORMA
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income
Industrial properties $ 7,232 $ 243 (F) $ 7,475 $ -- $ 7,475
Multifamily properties 7,581 -- 7,581 908 (J) 8,489
----------------------------------------------------------------------
14,813 243 15,056 908 15,964
EXPENSES
Rental property expenses
Industrial properties 1,817 86 (F) 1,903 -- 1,903
Multifamily properties 2,918 -- 2,918 318 (J) 3,236
----------------------------------------------------------------------
4,735 86 4,821 318 5,139
Depreciation 2,356 79 (G) 2,435 113 (K) 2,548
Interest 3,952 (144)(H) 3,808 334 (L) 3,928
214 (M)
General and administrative 688 -- 688 -- 688
Minority interest in earnings -- -- -- 77 (N) 77
----------------------------------------------------------------------
NET INCOME 3,082 222 3,304 280 3,584
Preferred dividends -- (115)(I) (115) -- (115)
----------------------------------------------------------------------
INCOME AVAILABLE TO
COMMON SHAREHOLDERS $ 3,082 $ 107 $ 3,189 $ 280 $ 3,469
======================================================================
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING (S)(T) 11,533,865 14,179,497
=========== ==========
NET INCOME PER
COMMON SHARE $ 0.27 $ 0.24
=========== =========
</TABLE>
The accompanying notes are an integral part of the pro forma financial
statements.
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<PAGE> 8
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
BEFORE
COMMON COMMON COMPANY
COMPANY PRO FORMA STOCK STOCK PRO FORMA
HISTORICAL ADJUSTMENTS OFFERING OFFERING (U)(V)
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income
Industrial properties $ 20,783 $ 8,084 (O) $ 28,867 $ $ 28,867
Multifamily properties 29,104 918 (O) 30,022 3,552 (J) 33,574
-------------------------------------------------------------------
49,887 9,002 58,889 3,552 62,441
EXPENSES
Rental property expenses
Industrial properties 5,308 2,328 (O) 7,636 7,636
Multifamily properties 11,554 542 (O) 12,096 1,343 (J) 13,439
-------------------------------------------------------------------
16,862 2,870 19,732 1,343 21,075
Depreciation 8,236 1,062 (P) 9,298 451 (K) 9,749
Interest 18,411 1,361 (Q) 15,302 1,337 (L) 15,783
(3,892)(R) (856)(M)
(578)(H)
General and administrative 2,974 2,974 -- 2974
Minority interest in earnings -- -- -- 227 (N) 227
-------------------------------------------------------------------
NET INCOME 3,404 8,179 11,583 1050 12,633
Preferred dividends -- (459)(I) (459) -- (459)
-------------------------------------------------------------------
INCOME AVAILABLE TO
COMMON SHAREHOLDERS (U)(V) $ 3,404 $ 7,720 $ 11,124 $ 1050 $ 12,174
===================================================================
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING (S)(T) 6,340,748 14,146,225
========= ==========
NET INCOME PER
COMMON SHARE (U)(V) $ .54 $ .86
========= ========
</TABLE>
The accompanying notes are an integral part of the pro forma financial
statements.
-7-
<PAGE> 9
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS 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 acquired subsequent to
March 31, 1997 an industrial property for redevelopment purposes containing
approximately 263,000 leasable square feet located in Algona, Washington and a
land parcel for the development of a multitenant industrial complex located in
Lake Forest, California (collectively, these two acquisitions are referred to as
the "New Acquisitions"). The Company purchased the industrial property in
Algona, Washington and the land in Lake Forest with proceeds from an unsecured
credit facility from a bank which provides up to $35.0 million for the
acquisition of qualifying properties (the "Acquisition Facility"). In addition,
the Company anticipates that it will acquire an industrial property containing
approximately 360,000 leasable square feet located in San Diego, California and
a controlling general partner interest in two partnerships that own two active
senior multi-family communities containing 550 apartment units located in
Escondido, California (collectively, these two properties are referred to as the
"Probable Acquisitions"). The Company anticipates it will purchase the Probable
Acquisitions, repay the borrowings on the Acquisition Facility and reduce
outstanding indebtedness on the Company's revolving line of credit from proceeds
raised from a June 1997 offering of 2,100,000 shares of the Company's Common
Stock (the "June 1997 Common Stock Offering"). The June 1997 Common Stock
Offering was made under the Company's $250 million shelf registration statement
declared effective April 11, 1997.
The Company's pro forma condensed consolidated balance sheet as of March 31,
1997 is based on the unaudited historical financial statements of the Company
and has been prepared as if the following transactions had occurred as of March
31, 1997: (i) the purchase of the New Acquisitions subsequent to March 31, 1997
with proceeds from the Acquisition Facility: (a) Algona Distribution Center, a
warehouse/distribution facility containing approximately 263,000 square feet of
leasable space located in Algona, Washington, and (b) a 12.8 acre land parcel
located in Lake Forest, California for the development of a multitenant
industrial complex that will contain approximately, based on present plans,
142,700 leasable square feet; (ii) the issuance of 270,270 shares of Class A
Preferred Stock in April 1997; (iii) the repayment of certain indebtedness
totaling $7,000 which matured subsequent to March 31, 1997; (iv) the purchase of
the remaining Probable Acquisitions: (a) San Diego Distribution Center, a
warehouse/distribution facility containing approximately 360,000 square feet of
leasable space located in San Diego, California, and (b) a controlling general
partner interest in two partnerships that own two active senior apartment
communities located in Escondido, California (Terrace Gardens Apartments
containing 225 apartment units, and Morning View Terrace Apartments containing
325 apartment units), all of the Probable Acquisitions are subject to definitive
purchase agreements; (v) the repayment of borrowings under the Acquisition
Facility to purchase the Algona Distribution Center and the land parcel located
in Lake Forest; (vi) and the completion of the June 1997 Common Stock Offering
and the application of the net proceeds thereof to complete the purchase of the
Probable Acquisitions, to repay borrowings under the Acquisition Facility and to
reduce outstanding indebtedness on the Company's revolving line of credit.
The Company's pro forma condensed consolidated statement of operations for the
year ended December 31, 1996 is based on the historical financial statements of
the Company and has been prepared as if the following transactions had occurred
as of the beginning of the period presented: (i) the purchase completed by the
Company 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 of nine industrial properties containing
approximately 1,400,000 leasable square feet located in California completed by
the Company during June and July 1996 (the "1996 Industrial Acquisitions") using
proceeds from a public offering of 2,435,481 shares of the Company's Common
Stock consummated in May 1996 (the "1996 Common Stock Offering"); (iii) the
completion of the 1996 Common Stock Offering and the establishment of an
acquisition line of credit for the purchase of the nine 1996 Industrial
Acquisitions; (iv) the sale of a 14.3-acre parcel and a 56,000 square foot
building in August 1996 to an existing tenant at Baldwin Industrial Park
pursuant to purchase options contained in the existing tenant's lease (the
"Tenant Sale");
-8-
<PAGE> 10
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 1 - BASIS OF PRESENTATION (continued)
(v) the exchange 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 completed on December 26, 1996 pursuant to
the Company's offer to exchange such Debentures as filed with the Securities and
Exchange Commission in a registration statement dated December 11, 1996 (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, and (b) a
165-unit multifamily community located in Ontario, California in November 1996
(collectively, the "Other 1996 Acquisitions"); (vii) the purchase of three
warehouse/distribution facilities in Washington and California, respectively
during January 1997 containing an aggregate of 521,000 leasable square feet
("1997 Industrial Acquisitions") funded by the proceeds of a public offering of
2,300,000 shares of the Company's Common Stock consummated in January 1997 (the
"1997 Common Stock Offering"); (viii) the completion of the January 1997
Offering; (ix) the purchase of a warehouse/distribution facility containing
approximately 570,000 leasable square feet located in Woodland, California
("Woodland Distribution Center") completed in March 1997; (x) the repayment of
certain indebtedness totaling $7,000 which matured subsequent to March 31, 1997;
(xi) the purchase of the New Acquisitions subsequent to March 31, 1997 with
proceeds from the Acquisition Facility; (xii) the purchase of the Probable
Acquisitions; and (xiii) the completion of the June 1997 Common Stock Offering
and the application of the net proceeds thereof to complete the purchase of the
Probable Acquisitions, to repay borrowings under the Acquisition Facility and to
reduce outstanding indebtedness on the Company's revolving line of credit.
The Company's pro forma condensed consolidated statement of operations for the
three months ended March 31, 1997 is based on the historical financial
statements of the Company and has been prepared as if the following transactions
had occurred as of the beginning of the period presented: (i) the purchase of
the 1997 Industrial Acquisitions; (ii) the completion of the 1997 Common Stock
Offering; (iii) the purchase of the Woodland Distribution Center completed in
March 1997; (v) the repayment of certain indebtedness totaling $7,000 which
matured subsequent to March 31, 1997; (vi) the purchase of the New Acquisitions
subsequent to March 31, 1997 with proceeds from the Acquisition Facility; (vii)
the purchase of the Probable Acquisitions; and (viii) the completion of the June
1997 Common Stock Offering and the application of the net proceeds thereof to
complete the purchase of the Probable Acquisitions, to repay borrowings under
the Acquisition Facility and to reduce outstanding indebtedness on the Company's
revolving line of credit.
The following pro forma information is 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 three months ended March 31, 1997 are
not necessarily indicative of the results to be obtained by the Company for the
year ending December 31, 1997. The following 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
March 31, 1997 and in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996.
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<PAGE> 11
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 2 - PRO FORMA ADJUSTMENTS
(A) Purchase of the New Acquisitions which the Company completed utilizing
$12,000 in borrowings under the Acquisition Facility and $250 in
available cash: Algona Distribution Center for $8,750, and the
12.8-acre land parcel located in Lake Forest for $3,500.
Both of the New Acquisitions were acquired by the Company for
development purposes and were not previously operated as rental
properties. Accordingly, the accompanying pro forma statements of
operations for the year ended December 31, 1996 and the quarter ended
March 31, 1997 do not reflect any historical revenue and expenses for
these two new acquisitions.
(B) Repayment of a $7,000 loan payable bearing interest at 8.25% which
matured subsequent to March 31, 1997 using $5,000 of proceeds from the
issuance of 270,270 shares of Class A Senior Cumulative Convertible
Preferred Stock (the "Class A Preferred Stock") and $2,000 of
available cash.
(C) Issuance of 270,270 shares of Class A Preferred Stock with a par value
of $.01 per share pursuant to an agreement to issue up to 1,351,351
shares executed by the Company on December 31, 1996. The preferred
stock shares, which will be issued in up to three installments at a
price of $18.50 per share, (increasing thereafter as specified in the
related Prospectus Supplement), 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.
(D) Purchase of the Probable Acquisitions with proceeds from the June 1997
Common Stock Offering: San Diego Distribution Center for $17,100, and a
controlling general partner interest in two partnerships that own the
Terrace Gardens Apartments and Morning View Terrace Apartments at an
agreed-upon value of $25,000 subject to approximately $19,100 of
tax-exempt bond financing. In connection with the Terrace Gardens
Apartments and Morning View Terrace Apartments transaction, the Company
will become the sole general partner in the two partnerships that own
the properties. It is anticipated that the other partners will receive
approximately 265,000 limited partnership units in such partnerships in
exchange for their $5,900 minority equity interest. In connection with
the $19,100 of tax-exempt bond financing and the acquisition of a
controlling interest in Terrace Gardens Apartments and Morning View
Terrace Apartments, the Company will contribute approximately $1,250 to
the partnerships which will be used to fund capitalizable financing
costs, fees and transaction costs.
Of the Probable Acquisitions only the Terrace Gardens Apartments and
Morning View Terrace Apartments were previously operated as rental
properties. Accordingly, the accompanying pro forma condensed
consolidated statements of operations for the year ended December 31,
1996 and the quarter ended March 31, 1997 do not reflect any historical
revenues and expenses for the San Diego Distribution Center.
-10-
<PAGE> 12
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(E) Issuance of 2,100,000 shares of $.01 par value Common Stock at $21.00
per share (the last reported price on the New York Stock Exchange on
June 5, 1997), net of underwriting discounts and commissions and
estimated offering expenses resulting in net proceeds totaling $41,590.
Proceeds from this June 1997 Common Stock Offering will be used to
complete the purchase of the Probable Acquisitions ($18,350), to repay
borrowings under the Acquisition Facility ($12,000) and to reduce the
outstanding balance on the Company's revolving line of credit
($11,240).
(F) Revenues and certain expenses of the following industrial properties
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>
For the Three Months Ended
March 31, 1997
---------------------------------------
1997 Woodland
Industrial Distribution
Acquisitions Center Total
---------------------------------------
<S> <C> <C> <C>
Rental income $ 183 $ 60 $ 243
Rental property expenses 59 27 86
---------------------------------------
$ 124 $ 33 $ 157
=======================================
</TABLE>
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<PAGE> 13
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(G) Depreciation expense of $79 relating to the purchase of the 1997
Industrial Acquisitions and the Woodland Distribution Center. The
depreciation expense relative to the purchase of the 1997 Industrial
Acquisitions and the Woodland Distribution Center for the period prior
to their acquisition was computed utilizing estimated remaining useful
lives of 40 years and the depreciable basis of the properties as
follows:
<TABLE>
<CAPTION>
Purchase Depreciable Depreciation
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
-----
$ 79
=====
</TABLE>
(H) Reduction in interest expense associated with the repayment of a
$7,000 loan payable bearing interest at 8.25%, the actual borrowing
rate on the loan, completed in April 1997 with proceeds from the
issuance of Class A Preferred Stock. See Notes 2 (B) and (C) above.
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<PAGE> 14
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(I) Represents the preferred stock dividend requirement of $0.425
per share per quarter related to 270,270 shares of Class A
Preferred Stock issued by the Company in April 1997. See Note
2(C) above.
(J) Revenues and certain expenses of the Probable Acquisition with
prior rental operations (Terrace Gardens Apartments and Morning
View Terrace Apartments) 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>
For the Three Months Ended
March 31, 1997
------------------------------------------
Terrace Morning
Gardens View Terrace
Apartments Apartments Total
------------------------------------------
<S> <C> <C> <C>
Rental income $ 370 $ 538 $ 908
Rental property expenses 125 193 318
------------------------------------------
$ 245 $ 345 $ 590
==========================================
</TABLE>
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<PAGE> 15
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
<TABLE>
<CAPTION>
For the Year Ended
December 31, 1996
------------------------------------------
Terrace Morning
Gardens View Terrace
Apartments Apartments Total
------------------------------------------
<S> <C> <C> <C>
Rental income $ 1,426 $ 2,126 $ 3,552
Rental property expenses 545 798 1,343
------------------------------------------
$ 881 $ 1,328 $ 2,209
==========================================
</TABLE>
(K) Depreciation expense relating to the purchase of certain of the
Probable Acquisitions (excluding the New Acquisitions and the San Diego
Distribution Center which were purchased for rehabilitation or
development) for the period prior to their acquisition, was computed
utilizing estimated remaining useful lives of 40 years and the
depreciable basis of the properties as follows:
<TABLE>
<CAPTION>
For the Three Months Ended
March 31, 1997
----------------------------------------
Purchase Depreciable Depreciation
Price Basis Expense
----------------------------------------
<S> <C> <C> <C>
Probable Acquisitions
Terrace Garden Apartments $10,000 $ 7,950 $ 50
Morning View Terrace Apartments 15,000 10,109 63
-----
$ 113
=====
</TABLE>
-14-
<PAGE> 16
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
<TABLE>
<CAPTION>
For the Year Ended December 31, 1996
---------------------------------------
Purchase Depreciable Depreciation
Price Basis Expense
----------------------------------------
<S> <C> <C> <C>
Probable Acquisitions
Terrace Gardens Apartments $10,000 $ 7,950 $199
Morning View Terrace Apartments 15,000 10,109 252
----
$451
====
</TABLE>
(L) Interest expense relating to the Probable Acquisitions encumbered by
tax-exempt bond financing (Terrace Gardens Apartments and Morning
View Terrace Apartments) based on the actual interest rate of
the specific new borrowings:
<TABLE>
<CAPTION>
For the Three Months Ended March 31, 1997
-----------------------------------------
Interest Interest
Debt Rate Expense
-----------------------------------------
<S> <C> <C> <C>
Probable Acquisitions
Terrace Gardens Apartments $ 8,100 6.60% $133
Morning View Terrace Apartments 11,000 6.60% 182
Amortization of loan fees and costs 19
----
$334
====
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31, 1996
-------------------------------------
Interest Interest
Debt Rate Expense
-------------------------------------
<S> <C> <C> <C>
Probable Acquisitions
Terrace Gardens Apartments $ 8,100 6.60% $ 535
Morning View Terrace Apartments 11,000 6.60% 726
Amortization of loan fees and costs 76
------
$1,337
======
</TABLE>
(M) Reduction in interest expense associated with the repayment of $11,240
of indebtedness outstanding under the Company's revolving line of
credit bearing interest at 7.62%, the actual rate on the line)
with proceeds from the June 1997 Common Stock Offering.
-15-
<PAGE> 17
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(N) Represents minority equity interest in earnings of Terrace Gardens
Apartments and Morning View Terrace Gardens Apartments, a Probable
Acquisition owned by two partnerships which will be controlled by the
Company. 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, 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 on the Company's
Common Stock.
(O) Revenues and certain expenses of the following industrial and
multifamily properties 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), and
revenues and certain expenses of the property comprising the Tenant
Sale for the period prior to disposal by the Company:
<TABLE>
<CAPTION>
1996 1997 Woodland
Pacific Gulf Industrial Other 1996 Industrial Distribution
Business Park Acquisitions Acquisitions Acquisitions Center Tenant Sale Total
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rental income
Industrial properties $ 195 $ 3,217 $ 1,228 $ 2,703 $ 1,432 $ (691) $ 8,084
Multifamily properties - - 918 - - - 918
----------------------------------------------------------------------------------------------
195 3,217 2,146 2,703 1,432 (691) 9,002
----------------------------------------------------------------------------------------------
Rental property expenses
Industrial properties 72 809 455 864 160 (32) 2,328
Multifamily properties - - 542 - - - 542
----------------------------------------------------------------------------------------------
72 809 997 864 160 (32) 2,870
----------------------------------------------------------------------------------------------
$ 123 $ 2,408 $ 1,149 $ 1,839 $ 1,272 $ (659) $ 6,132
==============================================================================================
</TABLE>
-16-
<PAGE> 18
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(P) Depreciation expense of $1,390 relating to Pacific Gulf Business Park,
the 1996 Industrial Acquisitions, the Other 1996 Acquisitions, the 1997
Industrial Acquisitions and the Woodland Distribution Center, 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 Pacific Gulf Business
Park, the 1996 Industrial Acquisitions, the Other 1996 Acquisitions,
the 1997 Industrial Acquisitions and the Woodland Distribution Center,
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
Price Basis Expense
-------------------------------------------
<S> <C> <C> <C>
40-YEAR LIFE PROPERTY
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 Business Park 14,600 12,160 304
Woodland Distribution Center 12,875 10,923 273
-------
$ 1,390
=======
</TABLE>
-17-
<PAGE> 19
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(Q) Interest expense of $1,928 relating to Pacific Gulf Business Park, the
1996 Industrial Acquisitions and the Other 1996 Acquisitions, 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 Pacific Gulf Business Park and the
purchase of the 1996 Industrial Acquisitions and the Other 1996
Acquisitions 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
Debt Rate Expense
---------------------------------
<S> <C> <C> <C>
Pacific Gulf Business Park $ 8,000 7.300% $ 124
1996 Industrial Acquisitions 19,475 7.500% 997
Other 1996 Acquisitions
Miramar Business Park 7,100 7.125% 370
Raintree Apartments 6,200 8.400% 437
-------
$ 1,928
=======
</TABLE>
(R) Reduction in interest expense, resulting from the exchange of the
Debentures as of the beginning of the period (including the related
amortization of debenture discount and costs of $417 for the year ended
December 31, 1996).
(S) 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.
(T) Pro forma weighted average common shares include 2,435,581 shares of
Common Stock issued by the Company in conjunction with its 1996
Common Stock Offering, 2,440,002 shares of Common Stock issued as
part of the December 1996 Debenture-for-Stock Exchange, 2,300,000
shares issued as part of the January 1997 Common Stock Offering and
2,100,000 shares to be issued as part of the proposed June 1997
offering of the Company's Common Stock.
-18-
<PAGE> 20
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(U) Excludes the effect of a $74 nonrecurring gain from the sale of land
and buildings comprising the Tenant Sale in August 1996.
(V) 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 $1,000 principal amount of Debentures,
representing 4.3014 additional shares over the original conversion rate
of 53.6986 shares.
-19-
<PAGE> 21
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 Terrace Gardens Apartments and Morning View Terrace Apartments 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 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 statement. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying 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 statement and is not
intended to be a complete presentation of the revenues and expenses of Terrace
Gardens Apartments and Morning View Terrace Apartments.
In our opinion, the statement referred to above presents fairly, in all material
respects, the combined revenues and certain expenses, as defined above, of
Terrace Gardens Apartments and Morning View Terrace Apartments for the year
ended December 31, 1996, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Newport Beach, California
April 24, 1997
-20-
<PAGE> 22
TERRACE GARDENS APARTMENTS
AND MORNING VIEW TERRACE APARTMENTS
Combined Statement of Revenues and Certain Expenses
For the Year Ended December 31, 1996
and the Three Months Ended March 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
Three Months
Year Ended Ended
December 31, March 31, 1997
1996 (Unaudited)
------------------------------
<S> <C> <C>
REVENUES
Rental and other income (Notes 2 and 3) $3,552,000 $ 908,000
CERTAIN EXPENSES
Property operating and maintenance (Note 2) 1,075,000 279,000
Real estate taxes 234,000 67,000
Management fees (Note 4) 155,000 40,000
--------------------------
1,464,000 386,000
--------------------------
REVENUES IN EXCESS OF CERTAIN EXPENSES $2,088,000 $ 522,000
==========================
</TABLE>
See accompanying notes.
-21-
<PAGE> 23
TERRACE GARDENS APARTMENTS
AND MORNING VIEW TERRACE APARTMENTS
Notes to Combined Statement of Revenues and Certain Expenses
For the Year Ended December 31, 1996 and the
Three Months Ended March 31, 1997 (Unaudited)
1. ORGANIZATION
Terrace Gardens Apartments and Morning View Terrace Apartments (the
"Properties") contain 225 and 325 active senior apartments, respectively,
located in the city of Escondido, California. Pacific Gulf Properties Inc. has
entered into an agreement to acquire a controlling general partner interest in
the two partnerships that own the Properties.
2. BASIS OF PRESENTATION
The combined statement of revenues and certain expenses presents the operations
of the Properties for the year ended December 31, 1996 and for the three months
ended March 31, 1997 (unaudited) and 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 particular property owner and the
cost basis of the Properties have been excluded from the 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 is not intended to be a complete presentation of the
Properties' revenues and expenses of the Properties nor is it intended to be
comparable to the proposed future operations of the Properties.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Rental income from residential apartment leases is recognized when due from
tenants. Apartments are subject to lease agreements with terms of one year or
less.
-22-
<PAGE> 24
TERRACE GARDENS APARTMENTS
AND MORNING VIEW TERRACE APARTMENTS
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. Major
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 Properties are subject to an agreement with Land Trek, a property management
company, to maintain and manage the operations of the Properties. Management
fees are based on 3.25% of total income, as defined, from the Properties. The
agreements with Land Trek will terminate upon the Company's acquisition of the
Properties.
5. RELATED PARTIES
In connection with the management of the Properties, Mr. Don R. Short, the
current managing general partner of the partnerships that own the Properties,
received management fees totaling approximately $37,000 (1.75% of total income)
from Morning View Terrace Apartments for the year ended December 31, 1996 and
$9,000 for the three months ended March 31, 1997.
-23-
<PAGE> 1
EXHIBIT 10.1
AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY
AND JOINT ESCROW INSTRUCTIONS
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY AND JOINT ESCROW
INSTRUCTIONS ("AGREEMENT") is made and entered into as of NOVEMBER 6, 1996, by
and between THE VONS COMPANIES, INC., a Michigan corporation ("SELLER"), and
PACIFIC GULF PROPERTIES INC., a Maryland corporation ("BUYER"), with reference
to the following facts:
A. Seller is a general partner of the owner of certain real property (the
"LAND") located in the City of San Diego, San Diego County, California, more
particularly described on EXHIBIT "A" attached hereto. The Land is improved
with buildings containing approximately three hundred fifty thousand (350,000)
square feet and apparatus, equipment and appliances used in connection with the
operation or occupancy of the Land and said buildings, such as heating and air
conditioning systems and facilities used to provide utility services to the Land
and said buildings, and on-site parking (collectively, the "IMPROVEMENTS").
B. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller on the terms and conditions of this Agreement the Land, the Improvements,
and all of Seller's right, title and interest in and to all rights, privileges
and easements appurtenant to the Land, including, without limitation, all
minerals, oil, gas and other hydrocarbon substances on and under and that may be
produced from the Land, as well as all development rights, land use
entitlements, including, without limitation, 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"), and certain intangible property identified
on EXHIBIT "F" (the "INTANGIBLE PROPERTY"). All of the Land, the Improvements,
the Appurtenances and the Intangible Property are collectively referred to
herein as the "PROPERTY".
TERMS, CONDITIONS AND ESCROW HOLDER'S INSTRUCTIONS
1. Purchase and Sale. Subject to the terms and conditions of this
Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase from
Seller, the Property.
2. Purchase Price and Opening of Escrow.
2.1 Purchase Price. The purchase price for the Property (the
"PURCHASE PRICE") shall be Seventeen Million One Hundred Thousand Dollars
($17,100,000.00) and shall be payable by Buyer as follows:
2.1.1 Upon the Opening of Escrow (as defined in Section 2.2),
Buyer shall deposit or cause to be deposited with Escrow Holder (as defined in
Section 2.2) in cash, or certified or cashier's check made payable to Escrow
Holder, the sum of One Hundred Thousand Dollars ($100,000.00) (the "INITIAL
DEPOSIT"). Upon Escrow Holder's receipt of the Initial Deposit, Escrow Holder
shall immediately invest the Initial Deposit in an interest-bearing account of a
federally insured bank or savings and loan with all interest accruing thereon
credited to the Purchase Price upon the Close of Escrow (as defined in Section
5). The Initial Deposit shall be non-refundable to Buyer except in the event (i)
that Buyer terminates this Agreement during the Investigation Period (as defined
in Section 3. 1) pursuant to Section 3 in which event Escrow Holder shall return
the Initial Deposit to Buyer, or (ii) of Seller's default or of a failure of a
condition precedent under Section 4 for any reason not the fault of Buyer, in
either of which events Escrow holder shall disburse the Initial Deposit and all
interest earned thereon pursuant to Section 14.
2.1.2 If Buyer does not terminate this Agreement during the
Investigation Period (as defined in Section 3.1), then on the first day
following the Investigation Period Buyer shall deposit with Escrow Holder in
cash, or by certified or cashier's check made payable to Escrow Holder, the
additional sum of Fifty Thousand Dollars ($50,000.00) (the "ADDITIONAL
DEPOSIT"). Upon Escrow Holder's receipt of the Additional deposit, Escrow Holder
Execution
San Diego, CA (Miramar DistCntr)
-1-
<PAGE> 2
shall immediately invest the Additional Deposit in an interest-bearing account
of a federally insured bank or savings and loan association, with all interest
accruing thereon credited to the Purchase Price upon the Close of Escrow (as
defined in Section 5). The Additional Deposit shall be non-refundable to Buyer
except in the event of Seller's default or of a failure of a condition precedent
under Section 4 for any reason not the fault of Buyer, in either of which events
Escrow Holder Seller shall disburse the Additional Deposit and all interest
earned thereon in accordance with Section 14. The Initial Deposit and the
Additional Deposit are referred to herein collectively as the "DEPOSITS".
2.1.3 Prior to the Close of Escrow (as defined in Section 5)
Buyer shall deposit with Escrow Holder the remainder of the Purchase Price in
such a manner that Escrow Holder may collect the funds without delay of the
Close of Escrow (as defined in Section 5). Upon the Close of Escrow, Escrow
Holder shall apply the Deposits and all interest earned thereon to the payment
of the Purchase Price and any other sums required to be paid by Buyer under this
Agreement.
2.2 Opening of Escrow. Promptly following full execution of this
Agreement, Seller and Buyer shall open an escrow (the "ESCROW") for the
transaction with First American Title Insurance Company located at 114 East
Fifth Street, Santa Ana, California ("ESCROW HOLDER") by delivering a fully
signed original, or signed counterparts, of this Agreement to Escrow Holder.
Escrow shall be deemed to have opened on the date (the "OPENING OF ESCROW") that
Seller and Buyer receive from Escrow Holder the escrow number for the Escrow.
Promptly following Opening of Escrow, Buyer shall deposit the Initial Deposit
with Escrow Holder and Escrow Holder shall draw escrow instructions in
conformance with this Agreement. Escrow Holder shall notify Buyer and Seller in
writing of the date of the Opening of Escrow.
3. Investigation of the Property.
3.1 Investigation Period. Buyer shall have until 5:00 p.m. on the
day which is thirty (30) days following the Opening of Escrow (the
"INVESTIGATION PERIOD") to perform any and all investigations which Buyer deems
necessary to determine whether Buyer will purchase the Property, including,
without limitation, physical inspection of the Property, investigations with
respect to the existing zoning and use restrictions and phase I environmental
matters.
3.1.1 Seller hereby grants to Buyer, its agents and
contractors during the Investigation Period a limited license (the
"INVESTIGATIONS LICENSE") to enter upon the Property to conduct such surveys,
studies and investigations (collectively "INVESTIGATIONS") as Buyer deems
necessary, provided that in performing such Investigations Buyer shall not
(except as may be necessary for soils investigation or environmental
investigation, in either event with Seller's prior written consent) excavate or
otherwise disturb the condition of the Property. Buyer's conduct of the
Investigations shall not unreasonably interfere with Seller's business
operations on the Property. Prior to performing any of the Investigations, Buyer
shall obtain any and all permits or authorizations (including, without
limitation, the payment of all applicable fees) required by any public body or
agency in connection therewith. Buyer shall indemnify, defend, and hold Seller
and the Property harmless from and against all damage, loss or liability
(including, without limitation, reasonable attorneys' fees and costs of court
and mechanic's liens or claims) or claims or assertions thereof arising out of
or in connection with the entry onto the Property by Buyer and its agents and
contractors in the performance of the Investigations. The foregoing indemnity
shall survive the termination or expiration of this Agreement. After any entry,
Buyer shall promptly restore the Property to the same condition as before Buyer
entered upon the Property. The Investigations License shall be revocable by
Seller at any time (but only with good cause) by written notice to Buyer and
shall automatically expire upon expiration of the Investigation Period unless
Buyer either fails to deliver the Termination Notice (as defined in Section 3.2)
and is deemed to have elected to proceed with the transaction or Buyer elects by
written notice to Seller and Escrow Holder prior to the expiration of the
Investigation Period to continue with the transaction in either of which events
the Investigation License shall continue in force until the earlier to occur of
(i) termination of the Escrow or (ii) the Close of Escrow.
3.1.2 Promptly following the Opening of Escrow, Seller shall
make available in Seller's offices in Arcadia, California for inspection by
Buyer a copy of all information which Seller has in its possession or control
with respect to the Property (collectively, "SELLER'S INFORMATION"), including
any physical and environmental studies and reports, surveys, title
Execution
San Diego, CA (Miramar DistCntr)
-2-
<PAGE> 3
insurance policies, plans and specifications, service contracts, maintenance
records and contracts, and operating expense statements (including tax and
utility bills) for 1995 and year to date 1996. Buyer shall have the right to
inspect and audit Seller's Information in Seller's offices upon not less than
twenty-four (24) hours prior notice to Seller. Except as otherwise expressly set
forth in this Agreement, Buyer acknowledges and agrees that Seller's
presentation of Seller's Information is made without representation or warranty,
express or implied, as to the accuracy, completeness, truth or other property of
the Seller's Information and that Buyer's agreement to close Escrow and purchase
the Property shall be based solely on its own inspections, investigations and
analysis.
3.1.3 Buyer agrees to maintain workers' compensation and
comprehensive general liability insurance policies to cover its activities on
the Property and to keep the Property free and clear of all mechanics' and
materialmans' liens arising out of any activities conducted pursuant to this
Agreement. At least five (5) days before entering on the Property for any
reason, Buyer shall deliver to Seller a certificate of insurance complying with
the terms of this paragraph. The liability insurance policy shall have a
combined liability limit of not less than Two Million Dollars ($2,000,000.00)
bodily injury and property damage liability, shall be primary and
noncontributing with any insurance which may be carried by Seller, and shall
name Seller as an additional insured by an endorsement approved by Seller. The
insurance policies shall be maintained and kept in effect by Buyer, at Buyer's
sole expense, at all times during the term of the Investigations License. The
insurance policies shall provide that they may not be canceled or modified
without at least fifteen (15) days' prior written notice to Seller.
3.2 Right to Terminate. Buyer may terminate this Agreement in its
sole discretion by written notice (the "TERMINATION NOTICE") received by Seller
and Escrow Holder at any time during the Investigation Period.
3.2.1 If Seller receives the Termination Notice during the
Investigation Period, then:
3.2.1.1 On the date Seller receives the Termination
Notice, the Escrow shall automatically terminate without further action by
either party;
3.2.1.2 Buyer, upon Seller's request, shall deliver to
Seller and Escrow Holder an agreement signed by Buyer and in recordable form
which acknowledges that this Agreement is terminated;
3.2.1.3 Neither Seller nor Buyer shall have any further
rights, obligations or claims under this Agreement except for Buyer's
indemnification obligation under Section 3.1(a) and Buyer's right to the return
of the Deposits and all interest accrued thereon;
3.2.1.4 Any cloud on title or lien against the Property
which may have been created by Buyer's deposit of the Initial Deposit or payment
of any other sum under this Agreement shall wholly cease; and
3.2.1.5 Buyer shall pay all third party documented
charges (other than attorneys' fees which shall remain the responsibility of the
party which incurs such fees) which Buyer, Seller, Escrow Holder and Title
Company incurred in direct connection with this transaction. Such charges shall
include, without limitation, the cost of the preliminary title report, all
escrow charges and all courier and express delivery charges.
3.2.2 If Seller does not receive the Termination Notice during the
Investigation Period, then on or before the date that is the ninetieth (90th)
day (subject to extension for up to fifteen (15) additional days, if necessary,
to allow Seller to remove from title the lien of the deed of trust shown as
Exception No. 14 in the PTR (as defined in Section 9)) following the Opening of
Escrow (the "CLOSING DATE") Escrow Holder shall close the purchase of the
Property.
3.2.3 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.
Execution
San Diego, CA (Miramar DistCntr)
-3-
<PAGE> 4
4. Conditions Precedent to Close of Escrow. If buyer does not deliver the
Termination Notice prior to the expiration of the Investigation Period, then the
Close of Escrow (as defined in Section 5) and the parties' obligations under
this Agreement shall be thereafter be subject only to satisfaction of the
conditions set forth below within the time periods specified. If a specified
condition is not satisfied within the applicable time period provided below,
then the party for whose benefit the condition is drawn (the "BENEFITED PARTY")
may terminate this Agreement by written notice to the other party and to Escrow
Holder. The Benefited Party may waive any or all of the conditions, in whole or
in part, without prior notice to the other party or Escrow Holder. No waiver of
a condition shall constitute a waiver by the Benefited Party of any of its
rights or remedies, at law or in equity, if the other party shall be in default
of its covenants, representations or warranties under this Agreement.
4.1 Delivery of Documents. For each parties' benefit, the other
party shall have signed and acknowledged all documents and instruments and
delivered same and all monies to Escrow Holder as required in Sections 6 and 7.
4.2 Issuance of Title Policy. For Buyer's benefit, Buyer shall
receive title insurance on the Property from First American Title Insurance
Company (the "TITLE COMPANY"). At the Close of Escrow (as defined in Section 5)
the Title Company shall be committed to issue the Title Policy (as defined in
Section 9).
4.3 Buyer's Conditions. The following are conditions for Buyer's
benefit:
4.3.1 All of Seller's representations and warranties contained
in or made pursuant to this Agreement shall remain true and correct as of the
Close of Escrow.
4.3.2 Other than as Buyer may discover or as Seller may
disclose to Buyer during the Investigation Period, as of the Close of Escrow
there shall be no litigation or administrative agency or other governmental
proceeding, pending or threatened, which after Close of Escrow would materially
adversely affect the value of the Property or the ability of the Buyer to
operate the Property, 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, the
Property or any portion thereof.
4.3.3 There shall have been no material adverse change in or
addition to the information or items reviewed and approved by Buyer during the
Investigation Period.
4.3.4 The approval by Buyer's Executive Committee during the
Investigation Period of the transactions contemplated by this Agreement.
All approvals described in this Section 4 and elsewhere in this Agreement
shall be according to the reasonable good faith judgment of the approving party.
5. Close of Escrow. The term "CLOSE OF ESCROW" as used in this Agreement
shall mean the date upon which the grant deed transferring title to the Property
to Buyer in accordance with this Agreement is recorded in the Official Records
of San Diego County, California. The Close of Escrow shall occur no later than
one hundred five (105) days following the Opening of Escrow, unless otherwise
agreed to in writing by Buyer and Seller.
As of the Close of Escrow, Buyer shall have made its own independent
investigations and studies of the Property and, except as expressly provided in
this Agreement, Buyer will be relying thereon and on the advice of its
consultants concerning the purchase of the Property. Buyer agrees that except
with regard to any representations or warranties expressly set forth herein,
Buyer is acquiring the Property in its present "AS IS, WHERE IS" condition WITH
ANY AND ALL FAULTS. Buyer's agreement to close escrow and purchase the Property,
except as expressly provided in this Agreement, is based solely on its own
inspections, investigations and analysis, without any warranty on the part of
Seller as to the condition of the Property, its suitability for any use or the
fitness of the Property for development.
6. Seller's Delivery to Escrow. Seller hereby covenants and agrees to
deliver or cause to be delivered to Escrow no later than 12:00 o'clock noon on
the last business day
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immediately before the Close of Escrow the following instruments and documents,
the delivery of each of which shall be a condition to the Close of Escrow:
6.1 Grant Deed. A grant deed in the form attached hereto as EXHIBIT
"B" (the "GRANT DEED"), duly executed and acknowledged by Seller in recordable
form, conveying title to the Property to Buyer, subject only to those
encumbrances and exceptions to title approved, or deemed approved, by Buyer
pursuant to Section 9 below;
6.2 IRC Affidavit. An affidavit executed by Seller that Seller is
not a foreign person pursuant to Section 1445 of the United States Internal
Revenue Code, in the form attached hereto as EXHIBIT "D" (the "IRC AFFIDAVIT")
and California Franchise Tax Board Form 590 (the "FORM 590");
6.3 Assignment of Intangible Property. An assignment of intangible
property in the form attached hereto as EXHIBIT "F" (the "ASSIGNMENT"), duly
executed and acknowledged by Seller, transferring the Intangible Property to
Buyer;
6.4 Closing Statement. A counterpart of the Closing Statement (as
defined in Section 11.2.4) duly executed by Seller;
6.5 Licenses and Permits. If available, originals of the building
permits and certificates of occupancy for the Improvements and all occupied
space within the Improvements;
6.6 Keys. All keys to the Property; and
6.7 Other Required Instruments. Such other instruments or
instructions required by this Agreement or that Escrow Holder may reasonably
request in order to consummate the contemplated transaction.
7. Buyer's Delivery to Escrow. Buyer hereby covenants and agrees to
deliver or cause to be delivered to Escrow Holder before the Close of Escrow, in
such a manner that there shall be no delay of the Close of Escrow, the following
instruments and documents, the delivery of each of which shall be a condition to
the Close of Escrow:
7.1 Purchase Price. The balance of the Purchase Price after
application of the Initial Deposit, the Additional Deposit, and all interest
earned thereon, plus any additional funds that are required to pay charges
payable by Buyer under this Agreement in order to close the Escrow;
7.2 Closing Statement. A counterpart of the Closing Statement (as
defined in Section 11.2.4) duly executed by Buyer; and
7.3 Other Required Instruments. Such other instruments or
instructions required by this Agreement or that Escrow Holder may reasonably
request in order to consummate the contemplated transaction.
8. Cooperation in Effecting an Exchange. Seller hereby reserves the right,
at any time prior to the Close of Escrow, to assign Seller's rights and
obligations under this Agreement to a third-party intermediary and/or enter into
other transactions for the purpose of effecting a simultaneous or
non-simultaneous tax deferred exchange pursuant to Section 1031 of the Internal
Revenue Code of 1986 and like-conforming statutes of the State of California.
Buyer hereby consents to such an assignment and other transactions, subject to
the fulfillment of the terms and conditions contained in this Agreement. Buyer
agrees to cooperate with Seller in the exchange transaction; provided, however,
Buyer shall have no obligation to incur any out-of-pocket cost or expense with
respect to such transaction, all of which shall be paid by Seller; and provided
further that Buyer shall incur no liability in or as a result of any such
exchange transaction. No such exchange shall release Seller from any duty or
liability under this Agreement.
9. Title Policy. At the Close of Escrow Title Company shall issue and
deliver to Buyer (with a copy to Seller) an ALTA extended coverage owner's
policy of title insurance (rev. 10/17/90 with Form 1 coverage) (the "TITLE
POLICY") in the amount of the Purchase Price insuring good and marketable fee
simple title to the Property vested in Buyer, free and clear of all
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encumbrances and other exceptions ("TITLE EXCEPTIONS"), excepting only those
reasonably approved by Buyer during the Investigation Period (in which event the
list of encumbrances and exceptions attached hereto as EXHIBIT "C" as of the
execution date of this Agreement (the "PTR") shall be removed and replaced by
Escrow Holder with a list of the Title Exceptions so approved by Buyer) or if
Buyer fails or refuses to give notice to Seller and Escrow Holder during the
Investigation Period regarding which Title Exceptions are approved by Buyer,
then the list of encumbrances and exceptions attached hereto as EXHIBIT "C" on
the date of execution of this Agreement by both parties shall be deemed approved
by Buyer) and the matters set forth in the instruments to be recorded pursuant
to this Agreement at the Close of Escrow. The Title Policy shall provide full
coverage against mechanics' and materialmens' liens and shall be endorsed to
include, to the extent required by Buyer, CLTA 100 (modified for an owner),
101.4, 103.7, 116, 116.1, 116.4, 116.7 and such other endorsements as Buyer may
reasonably require, including without limitation, any endorsements required as a
condition to Buyer's approval of any Title Exceptions (the "ENDORSEMENTS").
Notwithstanding the foregoing, Buyer shall be deemed to have approved all liens
to secure payment of general and special real property taxes not delinquent and
the lien of supplemental taxes assessed pursuant to Chapter 3.5 commencing with
Section 75 of the California Revenue and Taxation Code. Anything contained
herein to the contrary notwithstanding and notwithstanding any approval or
consent given by Buyer hereunder, Seller shall acquire title to the Property
prior to the Close of Escrow and shall cause the exceptions to title shown as
items 13 through 19, inclusive, on the PTR and all mortgages, deeds of trust and
other monetary encumbrances in favor of Seller or arising from Seller's actions,
including, without limitation, all mechanic's liens related to any work
commenced or requested by Seller prior to the Close of Escrow, to be released
and reconveyed from the Property on or prior to the Close of Escrow and shall
cause the Title Company to insure title to the Property as vested in Buyer
without any exception for such matters.
10. Eminent Domain or Taking; Casually.
10.1 Eminent Domain.
10.1.1 Taking. If, prior to the Close of Escrow, any portion
of the Property is taken by eminent domain or otherwise (or is the subject of a
pending, threatened or contemplated taking which has not been consummated), then
Buyer shall have the option, in its sole and absolute discretion, to terminate
such Escrow and this Agreement upon written notice to Seller and Escrow Holder
given not later than ten (10) days after Buyer is notified of such taking.
10.1.2 Election to Terminate. If Buyer elects to terminate
such Escrow and this Agreement, then Escrow Holder shall promptly thereafter
return to each party all funds and documents deposited by that party into such
Escrow, including the return of the Deposits to Buyer and all interest earned
thereon, and neither party shall have any further rights or obligations
hereunder with respect to such Escrow or this Agreement, except the payment of
escrow cancellation fees which shall be borne equally by the parties and title
company costs which shall be borne by Seller.
10.1.3 Election to Proceed. If Buyer does not elect to
terminate this Agreement, then Seller shall assign and turnover, effective upon
the Close of Escrow, and Buyer shall be entitled to receive and keep, all awards
made by the condemning authority for the taking of the Property which accrue to
Seller and the parties shall proceed to close such Escrow pursuant to the terms
hereof, without modification of the terms of this Agreement and without any
reduction in the Purchase Price. Unless or until such Escrow and this Agreement
are terminated, Seller shall take no action with respect to any eminent domain
proceeding with respect to the Property without the prior written consent of
Buyer.
10.2 Casualty.
10.2.1 Damage or Destruction. In the event any of the Property
is damaged and/or destroyed by fire or other casualty prior to the Close of
Escrow, and the cost to repair and/or restore such damage and/or destruction
exceeds One Hundred Thousand Dollars ($100,000.00), then Buyer shall have the
option, in its sole and absolute discretion, to terminate the Escrow and this
Agreement upon written notice to Seller and Escrow Holder given not later than
ten (10) days after Buyer is notified of such occurrence and of the cost of such
repair and/or restoration.
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10.2.2 Election to Terminate. If Buyer elects to terminate the
Escrow and this Agreement under Section 10.2.1, then Escrow Holder shall
promptly thereafter return to each party all funds and documents deposited by
that party into such Escrow, including the return of the Deposits to Buyer and
all interest earned thereon, and neither party shall have any further rights or
obligations hereunder with respect to the Escrow or this Agreement, except that
Buyer and Seller shall each pay one-half (1/2) of any Escrow cancellation fee
and Seller shall pay any Title Company cancellation charge.
10.2.3 Election to Proceed. In the event any of the Property
is damaged and/or destroyed by fire or other casualty prior to the Close of
Escrow where (a) the cost to repair and/or restore such damage and/or
destruction does not exceed One Hundred Thousand Dollars ($100,000.00), or (b)
the cost to repair and/or restore such damage and/or destruction exceeds One
Hundred Thousand Dollars ($100,000.00), but Buyer does not terminate the Escrow
and this Agreement pursuant to Section 10.2.1, then Seller shall assign and turn
over, effective upon the Close of Escrow, and Buyer shall be entitled to receive
and keep, all insurance proceeds on account of such damage and/or destruction,
and the parties shall proceed to close the Escrow pursuant to the terms hereof,
without modification of the terms of this Agreement and without any reduction in
the Purchase Price; provided, however, that Buyer shall receive a credit against
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).
10.2.4 Settlement of Claim. Unless and until the Escrow and
this Agreement are terminated, Seller shall take no action with respect to any
insurance applicable to such damage and/or destruction without the prior written
consent of Buyer.
11. Escrow Provisions.
11.1 General Provisions. Notwithstanding anything to the contrary
contained in this Agreement, the General Provisions of Escrow Holder attached
hereto as EXHIBIT "E" are incorporated by reference to the extent they are not
inconsistent with the provisions of this Agreement. If there is any
inconsistency between the provisions of those General Provisions and any of the
provisions of this Agreement, then the provisions of this Agreement shall
control. If any requirements relating to the duties or obligations of Escrow
Holder are unacceptable to Escrow Holder, or if Escrow Holder requires
additional instructions, then the parties agree to make any deletions,
substitutions and additions as Buyer and Seller shall mutually approve and which
do not materially alter the terms of this Agreement. Any supplemental
instructions shall be signed only as an accommodation to Escrow Holder and shall
not be deemed to modify or amend the rights of Buyer or Seller as between Buyer
and Seller unless the supplemental instructions expressly so provide.
11.2 Prorations.
11.2.1 Taxes and Assessments. Real property taxes and
assessments on the Property shall be prorated between Buyer and Seller as of the
Close of Escrow based on the actual number of days in the month the transfer
occurs and the most current statement available to Escrow Holder. If any
supplemental real estate taxes are levied for any period preceding the Close of
Escrow and the bill for such supplemental taxes is received after the Close of
Escrow, then the parties will, immediately after issuance of the supplemental
real estate tax bill, prorate between themselves, in cash, without interest and
to the date of the Close of Escrow, the supplemental real estate taxes shown by
the bill; provided, however, that interest shall accrue on the amount so due at
the rate per annum of two percent (2%) over the "prime rate" (as announced from
time to time in the Wall Street Journal) from the date demand is received to the
date of payment if payment is not made within ten (10) business days after
demand therefor is received.
11.2.2 Utility Charges. Seller shall cause all the utility
meters to be read as of the date of the Close of Escrow and will be responsible
for the cost of all utilities used prior to the Close of Escrow.
11.2.3 Other Apportionments. Annual or periodic permit and/or
inspection fees and other recurring costs associated with the Property
(calculated on the basis of the period covered) shall be apportioned as of the
Close of Escrow.
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11.2.4 Closing Statement. Escrow Holder shall prepare and
Seller and Buyer shall jointly approve, execute and deliver to Escrow Holder
prior to the Close of Escrow a closing statement (the "CLOSING STATEMENT") for
the transaction contemplated by this Agreement.
11.2.5 Post-Closing Reconciliation. If any of the aforesaid
prorations cannot be definitely calculated as of the Close of Escrow, then
Escrow Holder shall estimate such prorations in the Closing Statement at the
Close of Escrow and definitely calculated as soon after the Close of Escrow as
feasible. Either party owing the other party a sum of money based upon such
subsequent proration(s) shall promptly pay such sum to the other party in cash
without interest; provided, however, that interest shall accrue on the amount so
due at the rate per annum of two percent (2%) over the "prime rate" (as
announced from time to time in the Wall Street Journal) from the date demand is
received to the date of payment if payment is not made within ten (10) business
days after demand therefor is received.
11.3 Payment of Costs. Seller shall pay the documentary transfer tax
or similar tax imposed in connection with the transfer of title whether
determined by the value of the consideration given by Buyer or otherwise. Seller
shall also pay for the Preliminary Report, the CLTA portion of the premium for
the Title Policy and any prepayment fee or other charge payable in connection
with any payoff of monetary encumbrances. Buyer shall pay any additional premium
necessary to obtain the Title Policy in ALTA form, the cost of all Endorsements
and the cost of the ALTA survey. Seller and Buyer shall each pay one-half (1/2)
of all recording fees and all Escrow fees and costs. 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, execute and implement this Agreement. Escrow Holder shall
notify Buyer and Seller of their respective shares of such fees and costs at
least three (3) business days prior to the Close of Escrow.
11.4 Recordation of Documents. When all of the conditions of Section
4 and Section 5 has been satisfied or waived, Escrow Holder shall cause the
Grant Deed to be recorded in the Official Records.
11.5 Delivery. Upon the Close of Escrow, Escrow Holder shall:
11.5.1 Original Documents. Deliver to Buyer the original IRC
Affidavit, the original Form 590 and the original Assignment, with a copy of
each document to Seller;
11.5.2 Purchase Price. Deliver to Seller all amounts deposited
in Escrow by Buyer in payment of the Purchase Price, less Seller's share of
Escrow closing costs and prorations;
11.5.3 Closing Statement. A counterpart of the Closing
Statement executed by Buyer to Seller, and a counterpart of the Closing
Statement executed by Seller to Buyer;
11.5.4 Keys and Permits. To the extent not delivered directly
to Buyer by Seller, the keys, licenses and permits; and
11.5.5 Grant Deed. When the original of the recorded Grant
Deed is returned to Buyer, Buyer shall deliver a copy of the document (showing
all recording information) to Seller.
11.6 Performance by Escrow Holder. Escrow Holder is to be concerned
only with those paragraphs under this Agreement where Escrow Holder is given
instructions to perform certain acts or with those paragraphs where escrow
holders generally and reasonably would be expected to act.
11.7 Possession. Seller shall deliver to Buyer possession of the
Property as of the Close of Escrow.
11.8 Reporting Requirements. Escrow Holder shall comply with all
applicable federal, state and local reporting and withholding requirements
relating to the close of the
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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 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
38-16239000. 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.
12. Representations and Warranties of Buyer. Buyer represents and warrants
as of the date of this Agreement and again as of the Close of Escrow that,
except as disclosed to Seller in writing:
12.1 Corporate Status. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland,
in good standing and qualified to do business in California and has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby.
12.2 Authorization. The execution and delivery of this Agreement by
Buyer and the consummation by Buyer of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Buyer. The
consummation of the transactions contemplated by this Agreement will not violate
any provisions of Buyer's Articles of Incorporation, or its Bylaws, or any other
agreement to which it is a party. This Agreement has been duly executed and
delivered by Buyer and constitutes a valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms.
12.3 Truth of Statements. No representation, warranty or statement
of Buyer in this Agreement contains any untrue statement of a material fact.
13. Representations and Warranties of Seller. Seller represents and
warrants as of the date of this Agreement and again as of the Close of Escrow
that, except as disclosed to Buyer in writing:
13.1 Corporate Status. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Michigan,
in good standing and qualified to do business in California and has the
requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.
13.2 Authorization. The execution and delivery of this Agreement by
Seller and the consummation by Seller of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of Seller. The
consummation of the transactions contemplated by this Agreement will not violate
any provisions of Seller's Articles of Incorporation or any other agreement to
which it is a party. This Agreement has been duly executed and delivered by
Seller and constitutes a valid and binding obligation of Seller enforceable
against Seller in accordance with its terms.
13.3 Further Actions. Between the date of this Agreement and the
Close of Escrow, Seller will not (a) sell, lease or otherwise dispose of or
encumber its fee interest in the Property or any portion thereof or (b) enter
into any contract affecting the Property, or any amendment thereof, that would
survive the Close of Escrow. Seller shall give notice of termination on the
Close of Escrow to all contracts and other agreements affecting the Property
other than those contracts and other agreements which Buyer identifies to Seller
in writing during the Investigation Period that Buyer desires not to so
terminate. Buyer acknowledges that one or more of such contracts or agreements
may contain notice periods which must expire prior to effective termination of
the affected contract or agreement and Buyer agrees to recognize and honor such
notice periods up to a maximum period of sixty (60) days.
13.4 Impairment. Between the date of this Agreement and the Close of
Escrow, Seller shall not do or fail to do, or suffer to be done or not done, any
act, omission or thing which would impair the value of the Property. Through the
Close of Escrow, Seller shall maintain or
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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
policy or policies of insurance covering damage or destruction of the
Improvements and providing workers' compensation and employers' liability
insurance, commercial general liability insurance, and automobile liability
insurance.
13.5 Pending Assessments. To the best of Seller's actual knowledge
without inquiry, there are not presently pending any special assessments against
the Property or any part thereof nor has Seller received any notice of any
special assessments or condemnation actions being contemplated.
13.6 Pending Actions. To the best of Seller's actual knowledge
without inquiry, there are no actions, suits, material claims, legal proceedings
or any other proceedings pending or threatened before any court, tribunal or
agency, affecting the Property.
13.7 Eminent Domain. To the best of Seller's actual knowledge
without inquiry, there are no pending eminent domain proceedings and Seller has
not received any written notice of any threatened eminent domain proceedings
which affect the Property.
13.8 Hazardous Materials. To the best of Seller's actual knowledge
without inquiry, Seller has not and does not, whether temporarily or
permanently, keep at or upon the Property, or permit anyone else to keep at the
Property, any regulated or dangerous chemical or other dangerous substance or
any hazardous or toxic substance (collectively, a "CONTROLLED MATERIAL") and, to
the best of Seller's actual knowledge without inquiry, no Controlled Material
has at any time been kept at or upon the Property, temporarily or permanently,
or have been kept at any nearby or adjacent property in such a manner as has or
may cause such Controlled Material to invade the surface or subsurface
(including groundwater) of the Property. The term "DANGEROUS SUBSTANCE" as used
herein means those substances which Buyer would be required by law to remove
from the Property after acquiring ownership thereof.
13.9 Compliance. To the best of Seller's actual knowledge without
inquiry, (a) Seller has received no notice that the Property or its current use
and operation are not in compliance with applicable laws, rules, permits and
regulations or any private covenants, conditions and restrictions and (b) Seller
has received no notice that 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 not been issued or are not in effect.
13.10 True and Complete Copies. To the best of Seller's actual
knowledge without inquiry, the Seller's Information made available to Buyer for
review included true and complete copies of all information related to the
Property in Seller's possession or control.
13.11 No Contracts. As of the Close of Escrow 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 at Seller's direction or request prior to the Close of Escrow.
13.12 No Occupancy Agreements. Seller has not entered into any, and
to the best of Seller's actual knowledge without inquiry there are no, leases,
rental agreements, or other arrangements for the use or occupancy of the
Property, or any portion thereof, which will survive the Close of Escrow.
13.13 Truth of Statements. No representation, warranty or statement
of Seller in this Agreement contains any untrue statement of a material fact.
Between the date of this Agreement and the Close of Escrow, Seller shall,
upon learning of any fact or condition which would cause any of the
representations, warranties or statements of Seller set forth in this Agreement
not to be true as of the Close of Escrow, immediately give Buyer written notice
of such fact or condition.
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14. Failure to Close Escrow.
14.1 Cancellation of Escrow. If the Close of Escrow fails to occur
because of either party's default, then the defaulting party shall pay all
Escrow cancellation and Title Company charges.
14.2 Seller's Default. If the Close of Escrow fails to occur solely
because of a default by Seller under this Agreement, then Escrow Holder shall
immediately return to Buyer the Deposits and all other amounts deposited into
Escrow by Buyer, together with all interest earned thereon. Escrow Holder's
return of the Deposits to Buyer shall constitute Buyer's sole remedy for
Seller's default excepting only Buyer's right to proceed thereafter against
Seller with an action seeking specific performance with respect to this
Agreement.
14.3 BUYER'S DEFAULT. IF THE CLOSE OF ESCROW FAILS TO OCCUR SOLELY
BECAUSE OF A DEFAULT BY BUYER UNDER THIS AGREEMENT, THEN SELLER MAY UNILATERALLY
INSTRUCT ESCROW HOLDER TO CANCEL THE ESCROW AND SELLER SHALL THEREUPON BE
RELEASED FROM ITS OBLIGATIONS HEREUNDER. BUYER AND SELLER AGREE THAT BASED UPON
THE CIRCUMSTANCES NOW EXISTING, KNOWN AND UNKNOWN, IT WOULD BE IMPRACTICAL OR
EXTREMELY DIFFICULT TO ESTABLISH SELLER'S DAMAGES BY REASON OF BUYER'S DEFAULT.
ACCORDINGLY, BUYER AND SELLER AGREE THAT IT WOULD BE REASONABLE AT SUCH TIME TO
AWARD SELLER "LIQUIDATED DAMAGES" EQUAL TO THE AMOUNT OF THE DEPOSITS AND ALL
INTEREST EARNED THEREON. SELLER AND BUYER ACKNOWLEDGE AND AGREE THAT THE
FOREGOING AMOUNT IS REASONABLE AS LIQUIDATED DAMAGES AND SHALL BE SELLER'S SOLE
AND EXCLUSIVE REMEDY IN LIEU OF ANY OTHER RELIEF, RIGHT OR REMEDY, AT LAW OR IN
EQUITY, TO WHICH SELLER MIGHT OTHERWISE BE ENTITLED BY REASON OF BUYER'S
DEFAULT.
ACCORDINGLY, PROMPTLY FOLLOWING ESCROW HOLDER'S RECEIPT OF SELLER'S
UNILATERAL INSTRUCTION TO TERMINATE THE ESCROW, ESCROW HOLDER SHALL CANCEL THE
ESCROW AND DISBURSE THE DEPOSITS AND INTEREST EARNED THEREON TO SELLER. FOR THE
PURPOSE OF THE FOREGOING PROVISIONS OF THIS SECTION 14.3, BUYER SHALL BE DEEMED
TO HAVE COMMITTED A MATERIAL DEFAULT UNDER THIS AGREEMENT AT THE TIME BUYER IS
IN FACT IN DEFAULT AND/OR BUYER NOTIFIES SELLER OF BUYER'S ELECTION TO TERMINATE
THIS AGREEMENT AND THE ESCROW AT A TIME WHEN BUYER DOES NOT HAVE THE RIGHT UNDER
THE TERMS OF THIS AGREEMENT TO SO TERMINATE THIS AGREEMENT OR THE ESCROW.
WITHOUT LIMITING THE FOREGOING PROVISIONS OF THIS SECTION, SELLER WAIVES
ANY AND ALL RIGHTS WHICH SELLER OTHERWISE WOULD HAVE UNDER CALIFORNIA CIVIL CODE
SECTION 3389 TO SPECIFICALLY ENFORCE THIS AGREEMENT. SELLER AND BUYER EACH
ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS SECTION
14.3 AND BY THEIR SIGNATURES IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS.
SELLER: BUYER:
THE VONS COMPANIES, INC., PACIFIC GULF PROPERTIES, INC.
a Michigan corporation a Maryland corporation
By: /s/ DONALD J. HOWARD By: /s/ DONALD G. HERRMAN
------------------------------- -----------------------------------
Print Name: DONALD J. HOWARD Print Name: DONALD G. HERRMAN
------------------------ ---------------------------
Its: SR. VICE-PRES Its: EVP
------------------------------ ----------------------------------
By: /s/ PATRICIA A. WEIMER By: /s/ LONNIE NADAL
------------------------------- -----------------------------------
Print Name: PATRICIA A. WEIMER Print Name: LONNIE NADAL
------------------------ ---------------------------
Its: ASSISTANT SECRETARY Its: S.V.P.
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Execution
San Diego, CA (Miramar DistCntr)
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<PAGE> 12
14.4 Non-Default Failure to Close. If the Close of escrow fails to
occur for any reason other than the default of Buyer or Seller under this
Agreement, then this Agreement shall terminate and Escrow Holder shall promptly
return to each party all monies, documents and other items deposited in Escrow,
including the Deposits and all interest earned thereon. In such event, Buyer and
Seller shall each pay one-half (1/2) of any Escrow cancellation charge and
Seller shall pay any Title Company cancellation charge, unless otherwise
expressly provided herein. Buyer and Seller will promptly sign and deliver to
Escrow Holder any Escrow cancellation instructions required hereunder.
15. Miscellaneous Provisions.
15.1 Approvals and Notices. All approvals, notices or other
communications required or permitted hereunder shall be in writing, and shall be
delivered only by overnight commercial carrier or sent by registered or
certified mail, postage prepaid, return receipt requested, and shall be deemed
effective upon the earlier of (a) if delivered by overnight commercial carrier,
one business day following the receipt of such communication by such carrier
from the sender, as shown on the sender's delivery receipt from such carrier; or
(b) if mailed, on the date of delivery as shown by the sender's registry or
certification receipt.
Notice of change of address shall be given by written notice in the
manner detailed in this Section. 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 approval, notice, demand, request
or communication sent.
To Seller: The Vons Companies, Inc.
618 Michillinda Avenue
Arcadia, California 91007-1734
Attention: Legal Department
(818) 821-7009 (telephone)
(818) 821-7914 (telecopier)
To Buyer: Pacific Gulf Properties Inc.
363 San Miguel Drive
Newport Beach, California 92660-7805
Attention: Lonnie P. Nadal
(714) 721-2700 (telephone)
(714) 719-1955 (telecopier)
15.2 Attorneys' Fees. If Buyer or Seller shall institute any legal
proceeding against the other in connection with any controversy related to,
concerning or arising out of this transaction, to enforce or interpret any of
the terms or provisions of this Agreement or the Escrow, or in connection with
the Property, then the prevailing party, (as determined by the court, agency or
other authority before which such suit or proceeding is commenced) whether in
court, through arbitration, or by way of out-of-court settlement, shall be
entitled, in addition to damages, injunctive relief or other relief, to recover
from the non-prevailing party such prevailing party's attorneys' fees, court
costs, expert witness fees and other expenses relating to such controversy,
including, without limitation, attorneys' fees, expenses and costs of
investigation incurred in appellate proceedings, in establishing the right to
indemnification, or in any action or participation in, or in connection with,
any case or proceeding under Chapter 7, 11 or 13 of the Bankruptcy Code, 11
United States Code Section 101 et seq., or any successor statutes.
15.3 Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of Buyer and Seller and their respective heirs, personal
representatives, successors and assigns.
15.4 Brokers' Commissions. Each party warrants to the other that it
has not incurred any obligation for finders' fees or brokers' commissions or
other similar payment in connection with this transaction. Each party agrees to
defend and hold harmless the other from any claim to any commission or fee
resulting from any action on its part.
Execution
San Diego, CA (Miramar DistCntr)
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<PAGE> 13
15.5 Captions. The captions and Section numbers used in this
Agreement are for the purpose of convenience and for reference only and shall
not be construed to define, limit or extend the scope or meaning of any part of
this Agreement. All references to Section numbers refer to Sections in this
Agreement.
15.6 Computation of Time. The time in which any act is to be done
under this Agreement is computed by excluding the first (1st) day (such as the
day Escrow opens), and including the last day, unless the last day is a holiday
or Saturday or Sunday, and then that day is also excluded.
15.7 Counterparts. This Agreement may be signed in counterparts,
each of which shall be deemed an original, but all of which shall constitute but
one document. Escrow Holder may remove the signature page from a counterpart and
attach such page to another counterpart in order to obtain a complete, executed
original of this Agreement.
15.8 Delivery. This Agreement shall only become effective and
binding upon both parties' execution hereof and delivery of a signed copy to
Escrow Holder.
15.9 Entire Agreement. This Agreement is the entire agreement
between the parties and supersedes any prior agreements, representations,
negotiations or correspondence between the parties except as expressed herein.
All prior or contemporaneous agreements, understandings, representations and
statements, oral or written, are merged into this Agreement and shall be of no
further force or effect.
15.10 Exhibits. All exhibits, amendments, riders and addenda
attached hereto are incorporated herein and made a part hereof.
15.11 Further Assurances. The parties agree to promptly sign all
documents reasonably required to give effect to the provisions of this Agreement
and the Escrow.
15.12 Gender; Singular, Plural. When the context of this Agreement
requires, the neuter gender includes the masculine, the feminine, partnership,
corporation, joint venture or trust, and the singular includes the plural.
15.13 Interpretation. This Agreement shall be construed and enforced
in accordance with the laws of the State of California. Should any provision of
this Agreement require interpretation by a court of law, the parties agree that
the court interpreting or construing this Agreement shall not apply a
presumption that the terms shall be more strictly construed against one party by
reason of the rule of construction that a document is to be construed more
strictly against the party who by itself or through its agent prepared such
document, it being agreed that the agents of the parties have participated in
the preparation of this Agreement.
15.14 Modifications. Any alteration, change or modification of or to
this Agreement, in order to become effective, shall be in writing and in each
instance signed on behalf of each party.
15.15 Nondisclosure. Seller and Buyer acknowledge that they have
exchanged information of a confidential nature and that the transaction
contemplated hereby is of a confidential nature. Up to the Close of Escrow, all
information given by any party hereto to the other shall be used only for the
purposes hereof and the transaction contemplated hereby and not disclosed except
as hereinafter set forth unless such data or information has been published or
is a matter of public knowledge or is required to be disclosed by laws or legal
process or is required for the conduct of the business of the recipient thereof
in the ordinary course of such business.
15.16 No Merger. The obligations herein contained shall not merge
with the transfer of title but shall remain in effect until fulfilled.
15.17 Riders. If any provisions contained in an exhibit, amendment,
rider or addendum to this Agreement is inconsistent with any other provision
herein, the provision contained in such exhibit, amendment, rider or addendum
shall control, unless otherwise provided.
Execution
San Diego, CA (Miramar DistCntr)
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<PAGE> 14
15.18 Severability. If any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not effect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had not been contained
herein.
15.19 Survival. All of the representations, warranties, covenants,
agreements and obligations of each party under this Agreement shall be true and
correct as of the Close of Escrow as though made at that time and shall survive
the Close of Escrow.
15.20 Time. Time is of the essence with respect to the performance
of each term, condition and covenant of this Agreement.
15.21 Waiver. A waiver by either party of a breach of any of the
covenants, conditions or agreements under this Agreement to be performed by the
other party shall not be construed as a waiver of any succeeding breach of the
same or other covenants, agreements, restrictions or conditions of this
Agreement.
15.22 REIT. Buyer hereby advises Seller that Buyer is qualified as a
real estate investment trust under the provisions of the Internal Revenue Code ,
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 cooperate with Buyer in
reviewing any modification or amendment to this Agreement requested by Buyer
prior to the Closing that Buyer asserts may be necessary for Buyer to maintain
its status as a real estate investment trust or in order for Buyer to avoid a
penalty tax; provided, however, that Seller shall be under no obligation to
accept or approve any such modification or amendment, any one or all of which
Seller may decline in Seller's sole, absolute and arbitrary discretion. If
Seller declines any modification or amendment proposed by Buyer in Buyer's good
faith exercise of its reasonable business judgment as necessary to maintain
Buyer's status as a real estate investment
Execution
San Diego, CA (Miramar DistCntr)
-14-
<PAGE> 15
trust or to avoid a penalty then Buyer may terminate this agreement by written
notice delivered to Seller and Escrow Holder prior to the Closing and such
termination shall be deemed a non-default failure to close under Section 14.4.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of
the day and year first above written.
SELLER:
THE VONS COMPANIES, INC.,
a Michigan corporation
By: /s/ DONALD J. HOWARD
----------------------------------
Print Name: DONALD J. HOWARD
--------------------------
Its: SR. VICE-PRES.
---------------------------------
By: /s/ PATRICIA A. WEIMER
----------------------------------
Print Name: PATRICIA A. WEIMER
--------------------------
Its: ASSISTANT SECRETARY
---------------------------------
BUYER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By: /s/ DONALD G. HERMAN
----------------------------------
Print Name: DONALD G. HERMAN
--------------------------
Its: EVP
---------------------------------
By: [SIG]
----------------------------------
Print Name:
--------------------------
Its: S.V.P.
---------------------------------
Acceptance by Escrow Holder:
First American Title Insurance Company hereby acknowledges that it has
received a fully executed counterpart of the foregoing Agreement for Purchase
and Sale of Real Property and Joint Escrow Instructions and agrees to act as
Escrow Holder thereunder and to be bound by and perform the terms thereof as
such terms apply to Escrow Holder.
Dated: __________, 1996 FIRST AMERICAN TITLE INSURANCE COMPANY,
a ____________ corporation
By:
-------------------------------------
Print Name:
------------------------------
Its:
-------------------------------------
Execution
San Diego, CA (Miramar DistCntr)
-15-
<PAGE> 16
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
All of that certain real property located in the State of California,
County of San Diego, and described as follows:
Parcel A and Parcel B of Parcel Map No. 927, in the City of San Diego,
County of San Diego, State of California, filed in the Office of the County
Recorder of San Diego County, August 7, 1972, as File No. 206523 of Official
Records.
<PAGE> 17
EXHIBIT "B"
RECORDING REQUESTED BY:
First American Title Insurance Company
114 East Fifth Street
Santa Ana, California
AND WHEN RECORDED RETURN TO:
Pacific Gulf Properties Inc.
363 San Miguel Drive, Suite 100
Newport Beach, California 92660-7805
Attention: Mr. Lonnie P. Nadal
MAIL TAX STATEMENTS TO:
Pacific Gulf Properties Inc.
363 San Miguel Drive, Suite 100
Newport Beach, California 92660-7805
Attention: Mr. Lonnie P. Nadal
(This Space for Recorder's Use)
- --------------------------------------------------------------------------------
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.
GRANT DEED
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, THE
VONS COMPANIES, INC., a Michigan corporation ("Grantor"), hereby grants to
PACIFIC GULF PROPERTIES INC., a Maryland corporation ("Grantee"), the real
property (the "Land") located in the City of San Diego, County of San Diego,
State of California, as more particularly described in Exhibit A attached
hereto and by this reference incorporated herein, together with all right,
title and interest of Grantor in and to all buildings and improvements now
located or hereafter constructed on the Land, subject to all matters of record
as of the date hereof.
IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of ________,
1996.
THE VONS COMPANIES, INC.,
a Michigan corporation
By:
-----------------------------
Print Name:
---------------------
Its:
----------------------------
By:
-----------------------------
Print Name:
---------------------
Its:
----------------------------
<PAGE> 18
DECLARATION OF DOCUMENTARY TRANSFER
DO NOT RECORD
County Recorder
San Diego 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 THE VONS COMPANIES, INC., a Michigan corporation, as
Grantor, and PACIFIC GULF PROPERTIES INC., a Maryland corporation, as Grantee.
The property being transferred is located in the City of San Diego, County of
San Diego, 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.
THE VONS COMPANIES, INC.,
a Michigan corporation
By:
-------------------------------------
Print Name:
------------------------------
Its:
------------------------------------
By:
-------------------------------------
Print Name:
------------------------------
Its:
------------------------------------
Execution
San Diego, CA (Miramar)
<PAGE> 19
EXHIBIT "C"
TITLE EXCEPTIONS
1. GENERAL AND SPECIAL TAXES FOR THE FISCAL YEAR 1996-1997, A LIEN, NOT YET
PAYABLE.
2. THE LIEN OF SUPPLEMENTAL TAXES OR ASSESSMENTS, IF ANY, ASSESSED PURSUANT
TO CHAPTER 3.5 COMMENCING WITH SECTION 75 OF THE CALIFORNIA REVENUE AND
TAXATION CODE AND ANY OTHER APPLICABLE STATUTES OF THE CALIFORNIA REVENUE
AND TAXATION CODE.
3. SUPPLEMENTAL TAXES:
------------------
THE REQUIREMENT THAT THIS COMPANY BE FURNISHED WITH ALL SUPPLEMENTAL TAX
BILLS, IF ANY, FROM THE OWNER OF THE HEREIN DESCRIBED PROPERTY BEFORE
CLOSE OF ESCROW
4. A NON-EXCLUSIVE EASEMENT FOR THE CONSTRUCTION, OPERATION, MAINTENANCE AND
REPAIR OF A PUBLIC SEWER OR SEWERS TOGETHER WITH THE RIGHT OF INGRESS AND
EGRESS AND INCIDENTAL PURPOSES IN FAVOR OF THE CITY OF SAN DIEGO, RECORDED
JANUARY 3, 1961 AS FILE NO. 286 OF OFFICIAL RECORDS, DESCRIBED AS FOLLOWS:
PARCEL 1:
---------
THAT PORTION OF THE WESTERLY 10.00 FEET OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SECTION 11, TOWNSHIP 15 SOUTH, RANGE 3 WEST, SAN
BERNARDINO BASE AND MERIDIAN, IN THE CITY OF SAN DIEGO, COUNTY OF SAN
DIEGO, STATE OF CALIFORNIA, ACCORDING TO UNITED STATES GOVERNMENT SURVEY,
APPROVED FEBRUARY 19, 1883, LYING NORTHERLY OF A LINE DESCRIBED AS
FOLLOWS:
COMMENCING AT THE NORTHWEST CORNER OF THE NORTHWEST QUARTER OF THE
SOUTHEAST QUARTER OF SAID SECTION 11; THENCE SOUTH 01 DEGREES 08'10" EAST,
ALONG THE WESTERLY LINE OF SAID NORTHWEST QUARTER, 1,241.42 FEET TO A
CORNER IN THE BOUNDARY OF LAND DESCRIBED IN DEED TO TITLE INSURANCE AND
TRUST COMPANY, A CORPORATION, RECORDED APRIL 22, 1960 AS FILE NO. 33502 OF
OFFICIAL RECORDS; THENCE NORTH 70 DEGREES 06'49" EAST, ALONG THE BOUNDARY
OF SAID LAND.
AND FOR THE CONSIDERATION STATED ABOVE, IT IS MUTUALLY UNDERSTOOD AND
AGREED THAT THE GRANTEE HEREIN, OR ITS LAWFUL REPRESENTATIVES, SHALL HAVE
THE PRIVILEGE AND RIGHT OF TEMPORARY USE OF A STRIP OF LAND 20.0 FEET IN
WIDTH, LYING CONTIGUOUS TO AND EASTERLY OF THE ABOVE DESCRIBED EASEMENT,
FOR THE PURPOSE OF CONSTRUCTION OF THE SEWER MAIN HEREBY CONTEMPLATED,
THIS PRIVILEGE AND RIGHT SHALL BE IN FORCE AND CONTINUE DURING
CONSTRUCTION OF THE SEWER MAIN, AND IS TO CLOSE AND TERMINATE UPON THE
COMPLETION OF THE CONTRACT THEREFOR. TOGETHER WITH A PERMANENT EASEMENT
AND RIGHT OF WAY FOR EARTH EMBANKMENT SLOPE OR SLOPES AND THE RIGHT TO
PLACE AND MAINTAIN THEREON A DRAINAGE STRUCTURE OR STRUCTURES AND
APPURTENANCES THERETO, TOGETHER WITH THE RIGHT OF INGRESS AND EGRESS,
OVER, ALONG AND ACROSS ALL THOSE PORTIONS OF FOLLOWING DESCRIBED PARCELS.
PARCEL 2:
---------
ALL THAT PORTION OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF
SECTION 11, TOWNSHIP 15 SOUTH, RANGE 3 WEST, SAN BERNARDINO BASE AND
MERIDIAN, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO UNITED STATES GOVERNMENT SURVEY, APPROVED
FEBRUARY 19, 1883, LYING WITHIN A STRIP OF LAND 50.00 FEET IN WIDTH, THE
WEST LINE OF WHICH IS PARALLEL WITH AND 10.00 FEET EAST OF, MEASURED AT
RIGHT ANGLES TO, THE NORTH 200.00 FEET OF THE SOUTH 1,010.03 FEET OF THE
WEST LINE OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SAID
SECTION 11.
<PAGE> 20
PARCEL 3:
---------
ALL THAT PORTION OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF
SECTION 11, TOWNSHIP 15 SOUTH, RANGE 3 WEST, SAN BERNARDINO BASE AND
MERIDIAN, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO UNITED STATES GOVERNMENT SURVEY, APPROVED
FEBRUARY 19, 1883, LYING WITHIN A STRIP OF LAND 60.00 FEET IN WIDTH, THE
WEST LINE OF WHICH IS PARALLEL WITH AND 10.00 FEET EAST OF, MEASURED AT
RIGHT ANGLES TO, THE NORTH 240.00 FEET OF THE SOUTH 640.03 FEET OF THE
WEST LINE OF THE NORTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SAID
SECTION 11.
SAID EASEMENT IS LOCATED AS SHOWN ON ALTA SURVEY PREPARED BY RICK
ENGINEERING COMPANY AS PROJECT NUMBER 10223, DATED JUNE 25, 1987, LAST
REVISED OCTOBER 23, 1987, A COPY OF WHICH IS ATTACHED HERETO AND MADE A
PART HEREOF.
5. A NON-EXCLUSIVE EASEMENT 25.00 FEET IN WIDTH FOR RAILROAD PURPOSES
AFFECTING FED-MART INDUSTRIAL PARK, AS GRANTED TO THE CITY OF SAN DIEGO BY
THE FILING OF THE MAP OF SAID FED-MART INDUSTRIAL PARK, IN THE CITY OF SAN
DIEGO COUNTY RECORDER, AS MAP NO. 6785 ON NOVEMBER 17, 1970, CONVEYED TO
ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, OCTOBER 5, 1971, BY
QUITCLAIM DEED RECORDED AS INSTRUMENT NO. 228918.
SAID EASEMENT IS LOCATED AS SHOWN ON ALTA SURVEY PREPARED BY RICK
ENGINEERING COMPANY AS PROJECT NUMBER 10223, DATED JUNE 25, 1987, LAST
REVISED OCTOBER 23, 1987, A COPY OF WHICH IS ATTACHED HERETO AND MADE A
PART HEREOF.
6. A NON-EXCLUSIVE EASEMENT FOR STORM DRAIN AND INCIDENTAL PURPOSES AS
DELINEATED AND DESIGNATED ON MAP NO. 6785 AND PARCEL MAP NO. 927, SUBJECT
TO ANY TERMS AND CONDITIONS CONTAINED THEREIN.
AFFECTS: A STRIP OF LAND 10 FEET WIDE AS SHOWN ON SAID MAPS.
SAID EASEMENT IS LOCATED AS SHOWN ON ALTA SURVEY PREPARED BY RICK
ENGINEERING COMPANY AS PROJECT NUMBER 10223, DATED JUNE 25, 1987, LAST
REVISED OCTOBER 23, 1987, A COPY OF WHICH IS ATTACHED HERETO AND MADE A
PART HEREOF.
7. A NON-EXCLUSIVE EASEMENT FOR STORM DRAIN AND INCIDENTAL PURPOSES AS
DELINEATED AND DESIGNATED ON MAP NO. 6785 AND PARCEL MAP NO. 927, SUBJECT
TO ANY TERMS AND CONDITIONS CONTAINED THEREIN.
AFFECTS: A STRIP OF LAND 15 FEET WIDE AS SHOWN ON SAID MAPS.
SAID EASEMENT IS LOCATED AS SHOWN ON ALTA SURVEY PREPARED BY RICK
ENGINEERING COMPANY AS PROJECT NUMBER 10223, DATED JUNE 25, 1987, LAST
REVISED OCTOBER 23, 1987, A COPY OF WHICH IS ATTACHED HERETO AND MADE A
PART HEREOF.
8. A NON-EXCLUSIVE EASEMENT FOR EITHER OR BOTH POLE LINES, UNDERGROUND
CONDUITS AND INCIDENTAL PURPOSES TOGETHER WITH THE RIGHT OF INGRESS AND
EGRESS IN FAVOR OF SAN DIEGO GAS AND ELECTRIC COMPANY BY INSTRUMENT
RECORDED AUGUST 7, 1972 AS FILE NO. 206155 OF OFFICIAL RECORDS, DESCRIBED
AS FOLLOWS:
COMMENCING THE MOST EASTERLY CORNER OF SAID LOT 1; THENCE ALONG THE
SOUTHEASTERLY LINE OF SAID LOT 1, SOUTH 55'33'33" WEST, 270.63 FEET;
THENCE LEAVING SAID SOUTHEASTERLY LINE NORTH 34[degrees]20'00" WEST,
161.87 FEET TO THE TRUE POINT OF BEGINNING OF THE CENTER LINE HEREIN
DESCRIBED; THENCE FROM SAID TRUE POINT OF BEGINNING AND CONTINUING NORTH
34[degrees]20'00" WEST, 70.34 FEET; THENCE NORTH 5[degrees]37'03" EAST,
35.00 FEET; THENCE NORTH 28[degrees]42'51" EAST, 246.90 FEET.
<PAGE> 21
ALSO: BEGINNING "SAID TRUE POINT OF BEGINNING; THENCE SOUTH
34 DEGREES 20'00" EAST, 181.87 FEET.
ALSO: BEGINNING AT SAID TRUE POINT OF BEGINNING, TRUE POINT OF
BEGINNING ALSO BEING THE BEGINNING OF A TANGENT 42.30 FOOT RADIUS CURVE,
CONCAVE SOUTHERLY; THENCE NORTHWESTERLY AND WESTERLY ALONG THE ARC OF
SAID CURVE, THROUGH A CENTRAL ANGLE OF 56 DEGREES 55'00" A DISTANCE OF
42.03 FEET; THENCE TANGENT TO SAID CURVE SOUTH 88 DEGREES 45'00" WEST,
527.83 FEET TO THE BEGINNING OF A TANGENT 43.56 FOOT RADIUS CURVE,
CONCAVE NORTHEASTERLY; THENCE WESTERLY AND NORTHWESTERLY ALONG THE ARC
OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 89 DEGREES 54'12" A DISTANCE
OF 68.36 FEET; THENCE NON-TANGENT TO SAID CURVE NORTH 89 DEGREES 39'12"
EAST 10.00 FEET.
SAID EASEMENT IS LOCATED AS SHOWN ON ALTA SURVEY PREPARED BY RICK
ENGINEERING COMPANY AS PROJECT NUMBER 10223, DATED JUNE 25, 1987, LAST
REVISED OCTOBER 23, 1987, A COPY OF WHICH IS ATTACHED HERETO AND MADE A
PART HEREOF.
9. A NON-EXCLUSIVE EASEMENT AND RIGHT OF WAY FOR VEHICULAR INGRESS AND
EGRESS TO SAID PARCEL C AND INCIDENTAL PURPOSES AS GRANTED BY INSTRUMENT
RECORDED AUGUST 31, 1978 AS FILE NO. 78-371857 OF OFFICIAL RECORDS, AND
THE RIGHT OF OTHERS TO USE SAID EASEMENT AS CONVEYED OR RESERVED IN
VARIOUS OTHER INSTRUMENTS OF RECORD, OVER, UNDER, ALONG AND ACROSS THAT
PORTION OF PARCEL B OF SAID PARCEL MAP NO. 927 LYING BETWEEN PARCEL D OF
SAID PARCEL MAP NO. 927 AND SAID PARCEL C, LYING SOUTHEASTERLY OF THE
SOUTHEASTERLY LINE OF THAT STRIP OF LAND SHOWN AND DESIGNATED AS "25'
EASEMENT FOR RAILROAD".
SAID EASEMENT IS LOCATED AS SHOWN ON ALTA SURVEY PREPARED BY RICK
ENGINEERING COMPANY AS PROJECT NUMBER 10223, DATED JUNE 25, 1987, LAST
REVISED OCTOBER 23, 1987, A COPY OF WHICH IS ATTACHED HERETO AND MADE A
PART HEREOF.
10. A NON-EXCLUSIVE EASEMENT AND RIGHT OF WAY FOR VEHICULAR INGRESS AND
EGRESS TO PARCEL D AND INCIDENTAL PURPOSES AS GRANTED BY INSTRUMENT
RECORDED AUGUST 31, 1978 AS FILE NO. 78-371856 OF OFFICIAL RECORDS, AND
THE RIGHT OF OTHERS TO USE SAID EASEMENT AS CONVEYED OR RESERVED IN
VARIOUS OTHER INSTRUMENTS OF RECORD, OVER, UNDER, ALONG AND ACROSS THAT
PORTION OF PARCEL B OF SAID PARCEL MAP NO. 927 LYING BETWEEN PARCEL C OF
SAID PARCEL MAP NO. 927 AND SAID PARCEL D, LYING SOUTHEASTERLY OF THE
SOUTHEASTERLY LINE OF THAT STRIP OF LAND SHOWN AND DESIGNATED AS "25'
EASEMENT FOR RAILROAD".
SAID EASEMENT IS LOCATED AS SHOWN ON ALTA SURVEY PREPARED BY RICK
ENGINEERING COMPANY A PROJECT NUMBER 10223, DATED JUNE 25, 1987, LAST
REVISED OCTOBER 23, 1987, A COPY OF WHICH IS ATTACHED HERETO AND MADE A
PART HEREOF.
11. A NON-EXCLUSIVE 6 FOOT EASEMENT FOR UNDERGROUND CONDUITS, VAULTS,
MANHOLES AND JUNCTION BOXES WITH WIRES AND CABLES PLACE THEREIN AND
NECESSARY ABOVE GROUND STRUCTURES, TOGETHER WITH THEIR NECESSARY
FIXTURES AND APPURTENANCES, FOR THE TRANSMISSION AND DISTRIBUTION OF
ELECTRICITY AND FOR ALL OTHER PURPOSES CONNECTED THEREWITH, AND ALSO FOR
PIPELINES FOR THE TRANSMISSION AND DISTRIBUTION OF GAS, TOGETHER WITH
ALL NECESSARY AND PROPER FIXTURES AND EQUIPMENT FOR USE IN CONNECTION
THEREWITH, WITH THE RIGHT OF INGRESS THERETO AND EGRESS THEREFROM BY A
PRACTICAL ROUTE OR ROUTES IN, UPON, OVER AND ACROSS THE HEREINAFTER
DESCRIBED LANDS AND INCIDENTAL PURPOSES IN FAVOR OF SAN DIEGO GAS AND
ELECTRIC COMPANY, RECORDED JULY 31, 1979 AS FILE NO. 79-317681 OF
OFFICIAL RECORDS, DESCRIBED AS FOLLOWS:
THAT PORTION OF PARCEL "B" OF PARCEL MAP NO. 927, FILED AUGUST 7, 1972
AS FILE NO. 206523 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY OF SAN DIEGO, BEING A PORTION OF LOT 1 OF
FED-MART INDUSTRIAL PARK, ACCORDING TO MAP THEREOF NO. 6785, FILED IN
SAID COUNTY RECORDER'S OFFICE, LYING ADJACENT TO, CONTIGUOUS WITH AND
SOUTHEASTERLY OF THE SOUTHEASTERLY LINE OF THAT CERTAIN "25 FOOT
EASEMENT FOR RAILROAD TO A.T. & S.F.R.R. CO., OCTOBER 5, 1971, FILE NO.
22891 8, BOOK 1971", AS SHOWN AND DELINEATED ON SAID PARCEL MAP NO.
927.
REFERENCE IS MADE TO SAID INSTRUMENT FOR FURTHER PARTICULARS.
<PAGE> 22
SAID EASEMENT IS LOCATED AS SHOWN ON ALTA SURVEY PREPARED BY RICK
ENGINEERING COMPANY AS PROJECT NUMBER 10223, DATED JUNE 25, 1987, LAST
REVISED OCTOBER 23, 1987, A COPY OF WHICH IS ATTACHED HERETO AND MADE A
PART HEREOF.
12. A NON-EXCLUSIVE EASEMENT FOR UNDERGROUND COMMUNICATION FACILITIES AS
GRANTEE MAY FROM TIME TO TIME REQUIRE (INCLUDING INGRESS THERETO AND
EGRESS THEREFROM) CONSISTING OF WIRES, CABLES, CONDUITS, MANHOLES,
HANDHOLES AND ABOVEGROUND MARKERS, PEDESTALS, TERMINAL EQUIPMENT
CABINETS, OTHER ASSOCIATED ELECTRICAL CONDUCTORS AND NECESSARY FIXTURES
AND APPURTENANCES AND INCIDENTAL PURPOSES IN FAVOR OF THE PACIFIC
TELEPHONE AND TELEGRAPH COMPANY, RECORDED NOVEMBER 8, 1979 AS FILE NO.
79-472072 OF OFFICIAL RECORDS, DESCRIBED AS FOLLOWS:
FIVE FOOT WIDE STRIP IS SAID PROPERTY AS SHOWN ON EXHIBIT "A" ATTACHED
THERETO AND MADE A PART THEREOF.
THE ROUTE OR LOCATION OF SAID EASEMENT CANNOT BE DETERMINED FROM THE
RECORD.
REFERENCE IS MADE TO SAID INSTRUMENT FOR FURTHER PARTICULARS.
AFFECTS PARCEL 1.
13. RIGHTS OF NON-DISTURBANCE CREATED IN THAT CERTAIN SUBORDINATION
NON-DISTURBANCE AND ATTORNMENT AGREEMENT DATED NOVEMBER 2, 1987, AMONG
METROPOLITAN LIFE INSURANCE COMPANY, AS BENEFICIARY, THE VONS COMPANIES,
INC., AS TENANT AND MIRAMAR ASSOCIATES AS LANDLORD, RECORDED NOVEMBER 2,
1987 AS FILE NO. 87-615369 OF OFFICIAL RECORDS.
14. A DEED OF TRUST TO SECURE AN INDEBTEDNESS IN THE ORIGINAL PRINCIPAL SUM
OF $15,100,000.00, AND ANY OTHER AMOUNTS OR OBLIGATIONS SECURED THEREBY,
RECORDED NOVEMBER 2, 1987 AS FILE NO. 87-615367 OF OFFICIAL RECORDS.
DATED: NOVEMBER 2, 1987
TRUSTOR: MIRAMAR ASSOCIATES, A CALIFORNIA GENERAL PARTNERSHIP
TRUSTEE: FIRST AMERICAN TITLE INSURANCE COMPANY,
A CALIFORNIA CORPORATION
BENEFICIARY: METROPOLITAN LIFE INSURANCE COMPANY,
A NEW YORK CORPORATION
AN ASSIGNMENT OF LEASES, DATED NOVEMBER 2, 1987, GIVEN AS ADDITIONAL
SECURITY FOR THE DEED OF TRUST RECORDED NOVEMBER 2, 1987 AS FILE NO.
87-615367 OF OFFICIAL RECORDS, EXECUTED BY AND BETWEEN MIRAMAR
ASSOCIATES, A CALIFORNIA GENERAL PARTNERSHIP AND METROPOLITAN LIFE
INSURANCE COMPANY, A NEW YORK CORPORATION, RECORDED NOVEMBER 2, 1987 AS
FILE NO. 87-615368 OF OFFICIAL RECORDS.
15. A LEASE DATED AUGUST 1, 1982, UPON THE TERMS, CONDITIONS AND COVENANTS
THEREIN PROVIDED.
LESSOR: FEDMART PROPERTIES, INC.
LESSEE: VONS GROCERY COMPANY
RECORDED: SEPTEMBER 16, 1982 AS FILE NO. 82-287035 OF OFFICIAL
RECORDS.
SAID LEASE WAS AMENDED BY THAT CERTAIN UNRECORDED AND UNDATED AMENDMENT
NUMBER ONE TO LEASE AND WAS FURTHER AMENDED BY THAT CERTAIN SECOND
AMENDMENT TO LEASE DATED NOVEMBER 2, 1987. A SHORT FORM OF SUCH SECOND
AMENDMENT WAS RECORDED NOVEMBER 2, 1987 AS FILE NO. 87-615370 OF
OFFICIAL RECORDS.
16. ASSIGNMENT OF RAILWAY CONTRACT DATED NOVEMBER 2, 1987
ASSIGNOR: THE VONS COMPANIES, INC.
ASSIGNEE: METROPOLITAN LIFE INSURANCE COMPANY
RECORDED: NOVEMBER 3, 1987 AS FILE NO. 87-619613 OF OFFICIAL
RECORDS
<PAGE> 23
17. THE TERMS, COVENANTS, AND PROVISIONS OF THE PARTNERSHIP REFERRED TO IN THE
VESTING HEREIN, AND THE EFFECT OF ANY FAILURE TO COMPLY WITH SUCH TERMS,
COVENANTS AND PROVISIONS.
18. THE REQUIREMENT THAT THIS COMPANY BE FURNISHED A COPY OF THE PARTNERSHIP
AGREEMENT FOR MIRAMAR ASSOCIATES REFERRED TO IN THE VESTING HEREIN AND ANY
AMENDMENTS THERETO.
19. THE LEASEHOLD INTEREST, IF ANY, OF PARTIES IN POSSESSION OF THE HEREIN
DESCRIBED PROPERTY. FIRST AMERICAN REQUESTS THAT A RENT ROLL/TENANT
STATEMENT BE SUBMITTED, SO THAT WE MAY CORRECTLY DISCLOSE THOSE INTERESTS,
IF ANY, CURRENTLY IN POSSESSION OF THE HEREIN DESCRIBED PROPERTY.
<PAGE> 24
EXHIBIT "D"
Non-Foreign Person Affidavit
(Miramar Distribution Center)
Section 1445 of the Internal Revenue Code provides that a transferee of a
United States real property interest must withhold tax if the transferor is a
foreign person. To information the transferee, Pacific Gulf Properties Inc., a
Maryland corporation, that withholding of tax is not required upon the
disposition of that certain real property located on Miramar Road in San Diego,
California, being transferred by The Vons Companies, Inc., a Michigan
corporation ("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 other foreign person (as those terms are
defined in the Internal Revenue Code and Income Tax Regulations);
2. The Transferor's U.S. Employer Identification No. is 38-1623900; and
3. The Transferor's office address is:
The Vons Companies, Inc.
618 Michillinda Avenue
Arcadia, California 91007-1734
Attention: Legal Department
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 we declare that we have examined this
certification and to the best of our knowledge and belief it is true, correct
and complete and we further declare that we have the authority to sign this
document on behalf of the Transferor.
Dated: _________, 1996 THE VONS COMPANIES, INC.,
a Michigan corporation
By:
-------------------------------------
Print Name:
-----------------------------
Its:
------------------------------------
By:
-------------------------------------
Print Name:
-----------------------------
Its:
------------------------------------
<PAGE> 25
EXHIBIT "E"
General Escrow Provisions
1. DEPOSIT OF FUNDS AND DISBURSEMENTS. You shall deposit all funds
received in this escrow in any bank insured by an agency of the United States
Government, including your affiliated bank, First American Trust Company, in one
or more of your general escrow demand accounts. These funds may be transferred
to any other general escrow demand account or accounts, in the bank or banks
named below in Section 18, including those maintained in your affiliated bank.
All disbursements shall be made by your check. You are authorized not to close
escrow or disburse until good funds have been confirmed in escrow.
2. PRORATIONS AND ADJUSTMENTS. The expression "close of escrow" used in
this escrow means the date of which instruments referred to herein are recorded
and relates only to prorations and/or adjustments unless otherwise specified.
All prorations and/or adjustments are to be made on the basis of a
30-day month unless otherwise instructed in writing.
3. RECORDATION OF INSTRUMENTS. You are authorized to record any documents
delivered through this escrow, the recording of which is necessary or proper in
the issuance of the requested policy of title insurance.
4. AUTHORIZATION TO EXECUTE ASSIGNMENT OF INSURANCE POLICIES. You are
authorized to execute on behalf of the parties hereto form assignments of
interest in any insurance policies (other than title insurance) called for in
this escrow; forward assignments and policies upon close of escrow to the agent
with the request, first, that insurer consent to such transfer and/or attach a
loss-payable clause and/or make such other additions or corrections as may have
been specifically required herein, and second, that the agent thereafter forward
such policies to the parties entitled to them.
In all acts in this escrow relating to insurance, including
adjustments, if any, you shall be fully protected in assuming that each policy
is in force and that the necessary premium therefor has been paid.
5. AUTHORIZATION TO FURNISH COPIES. You are to furnish a copy of these
instructions, amendments thereto, closing statement and/or any other documents
deposited in this escrow to the lender or lenders, the real estate broker or
brokers and/or the attorney or attorneys involved in this transaction upon
request of the lenders, brokers or attorneys.
6. PERSONAL PROPERTY TAXES. No examination or insurance as to the amount
or payment of personal property taxes is required unless specifically requested.
7. RIGHT OF CANCELLATION. Any party instructing you to cancel this escrow
shall file notice of cancellation in your office, in writing. You shall within a
reasonable time thereafter mail, by certified mail, one copy of the notice to
each of the other parties at the addresses stated in this escrow. Unless written
objection to cancellation is filed in your office by a party within ten (10)
days after date of mailing, you are authorized at your option to comply with the
notice and demand payment of your cancellation charges as provided in this
agreement. If written objection is filed, you are authorized at your option to
hold all money and instruments in this escrow and take no further action until
otherwise directed, either by the parties' mutual written instructions, or final
order of a court or competent jurisdiction.
8. ACTION IN INTERPLEADER. The parties hereto expressly agree that you, as
escrow holder, have the absolute right at your election to file an action in
interpleader requiring the parties to answer and litigate their several claims
and rights among themselves and you are authorized to deposit with the clerk of
the court all documents and funds held in this escrow. In the event such action
is filed, the parties jointly and severally agree to pay your cancellation
charges and costs, expenses and reasonable attorney's fees which you are
required to expend or incur in the interpleader action, the amount thereof to be
fixed and judgment therefor to be rendered by the
<PAGE> 26
court. Upon the filing of the action, you shall thereupon be fully released and
discharged from all obligations to further perform any duties or obligations
otherwise imposed by the terms of this escrow.
9. TERMINATION OF AGENCY OBLIGATIONS. If there is no action taken on this
escrow within six (6) months after the "time limit date" as set forth in the
escrow instructions or written extension thereof, your agency obligation shall
terminate at your option and all documents, monies or other items held by you
shall be returned to the parties depositing same.
In the event of cancellation of this escrow, whether it be at the
request of any of the parties or otherwise, the fees and charges due First
American Title Insurance Company, including expenditures incurred and/or
authorized, shall be borne equally by the parties hereto (unless otherwise
agreed to specifically).
10. CONFLICTING INSTRUCTIONS. Should you before or after close of escrow
receive or become aware of any 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 or affected hereby, you shall have the right to discontinue any
or all further acts on your part until the conflict is resolved to your
satisfaction, and you shall have the further right to commence or defend any
action or proceedings for the determination of the conflict as provided in
Paragraphs 7 and 8 of these General Provisions.
11. FUNDS RETAINED IN ESCROW. If for any reason funds are retained in
escrow, you may deduct therefrom $10.00 as a monthly charge as custodian
thereof.
12. USURY. You are not to be concerned with any question of usury in any
loan encumbrances involved in the processing of this escrow and you are hereby
released of any responsibility or liability therefor.
13. INDEMNIFY FOR ATTORNEYS' FEES AND COSTS. In the event suit is brought
by any party to this escrow, including the title company or any other party, as
against each other or others, including the title company, claiming any right
they may have as against each other or against the title company, then in that
event, the parties hereto agree to indemnify and hold harmless the title company
against any attorneys' fees and costs incurred by it.
14. AMENDMENTS TO ESCROW INSTRUCTIONS. Any amendment or supplement to
these escrow instructions must be in writing. These escrow instructions
constitute the entire escrow between the escrow holder and the parties hereto.
15. SUPPLEMENTAL TAXES. Seller and Buyer acknowledge that the subject
property may be subject to supplemental taxes due as a result of change of
ownership taking place through this escrow. Any necessary adjustment due either
party on receipt of a supplemental tax bill will be made by the parties outside
of this escrow and escrow holder is released of any liability in connection with
same.
16. PRELIMINARY CHANGE OF OWNERSHIP FORM. Prior to close of escrow, Buyer
will be sent a Preliminary Change of Ownership Report, which is required by the
County Recorder's office to accompany documents called for herein at the time of
recording, in accordance with Section 480.3 of the Revenue and Taxation Code.
Buyer is aware he must return the form completed and signed prior to close of
escrow. If escrow holder does not receive this report prior to close of escrow,
Buyer authorizes escrow holder to charge his account with $20.00 which is the
fee the County Recorder charges for recording the deed without the completed
form. Buyer is hereby put on notice that the Assessor is required to mail out
the form for completion later on if it has not been filed at close of escrow.
17. GOOD FUNDS LAW. The parties understand that all funds to close escrow
must be deposited a sufficient number of days prior to the close of escrow in
order to comply with Section 12413.1 of the California Insurance Code. Generally
speaking, wire transferred funds may be
EXHIBIT "E"
Page 2 of 4
<PAGE> 27
deposited into our escrow account anytime prior to the close of escrow.
Cashier's checks and certified checks (drawn on a local bank) must be deposited
into our escrow account no later than 12:00 noon the business day before the
close of escrow.
For information concerning holds on other types of checks, please
contact your escrow officer.
18. ESCROW TRUST FUNDS. Buyer and Seller acknowledge that escrow holder
will be depositing all funds in escrow in a fiduciary account at one of the
following banks:
<TABLE>
<S> <C>
Bank of America Marine National
Bank of Anaheim Metro Bank
Corporate National Bank Wells Fargo Bank
First Interstate Bank Union Bank
</TABLE>
19. REPORTING TO THE INTERNAL REVENUE SERVICE. The Tax Reform Act of 1986
provides that First American Title Insurance Company must report to the Internal
Revenue Service certain information regarding all real estate transactions. This
information includes, among other things, the seller's social security number
and/or tax identification number and forwarding address, and the gross sales
price of the transaction. This is not a requirement generated by First American
Title Insurance Company, but rather a means of complying with the new tax law.
This information must be provided to First American Title Insurance Company upon
the opening of escrow, and escrow cannot close, nor can the Deed or any other
documents be recorded until the information is provided and the seller certifies
the accuracy of the information in writing. By execution of these escrow
instructions, the parties acknowledge receipt of this notice.
AS OF JANUARY 1, 1991, IF THE TRANSACTION WHICH IS THE SUBJECT OF THIS
ESCROW IS A SALE, YOU, AS A PARTY TO THIS TRANSACTION, MAY HAVE CERTAIN TAX
REPORTING AND WITHHOLDING OBLIGATIONS PURSUANT TO THE STATE LAW OR FEDERAL LAW
REFERRED TO BELOW.
20. TAX REPORTING AND WITHHOLDING OBLIGATIONS OF THE PARTIES:
STATE LAW
IN ACCORDANCE WITH SECTIONS 18805 AND 26131 OF THE REVENUE AND TAXATION
CODE, A BUYER MAY BE REQUIRED TO WITHHOLD AN AMOUNT EQUAL TO THREE AND ONE-THIRD
PERCENT (3-1/3%) OF THE SALES PRICE IN THE CASE OF THE DISPOSITION OF CALIFORNIA
REAL PROPERTY INTEREST BY EITHER:
1. A SELLER WHO IS AN INDIVIDUAL WITH A LAST KNOWN STREET ADDRESS OUTSIDE OF
CALIFORNIA OR WHEN THE DISBURSEMENT INSTRUCTIONS AUTHORIZE THE PROCEEDS TO BE
SENT TO A FINANCIAL INTERMEDIARY OF THE SELLER, OR
2. A CORPORATE SELLER WHICH HAS NO PERMANENT PLACE OF BUSINESS IN CALIFORNIA.
THE BUYER MAY BECOME SUBJECT TO PENALTY FOR FAILURE TO WITHHOLD AN AMOUNT EQUAL
TO THE LESSER OF TEN PERCENT (10%) OF THE AMOUNT REQUIRED TO BE WITHHELD OR FIVE
HUNDRED DOLLARS ($500.00).
HOWEVER, NOTWITHSTANDING ANY OTHER PROVISIONS INCLUDED IN THE CALIFORNIA
STATUTES REFERENCED ABOVE, NO BUYER WILL BE REQUIRED TO WITHHOLD ANY AMOUNT OR
BE SUBJECT TO PENALTY FOR FAILURE TO WITHHOLD IF:
1. THE SALES PRICE OF THE CALIFORNIA REAL PROPERTY CONVEYED DOES NOT
EXCEED ONE HUNDRED THOUSAND DOLLARS ($100,000.00), OR
EXHIBIT "E"
Page 3 of 4
<PAGE> 28
2. THE SELLER EXECUTES A WRITTEN CERTIFICATE, UNDER THE PENALTY OF
PERJURY, CERTIFYING THAT THE SELLER IS A RESIDENT OF CALIFORNIA, OR IF A
CORPORATION, HAS A PERMANENT PLACE OF BUSINESS IN CALIFORNIA, OR
3. THE SELLER, WHO IS AN INDIVIDUAL, EXECUTES A WRITTEN CERTIFICATE, UNDER
THE PENALTY OF PERJURY, THAT THE CALIFORNIA REAL PROPERTY BEING CONVEYED IS THE
SELLER'S PRINCIPAL RESIDENCE (AS DEFINED IN SECTION 1034 OF THE INTERNAL REVENUE
CODE).
THE SELLER IS SUBJECT TO PENALTY FOR KNOWINGLY FILING A FRAUDULENT
CERTIFICATE FOR THE PURPOSE OF AVOIDING THE WITHHOLDING REQUIREMENT.
THE CALIFORNIA STATUTES REFERENCED ABOVE INCLUDE PROVISIONS WHICH
AUTHORIZE THE FRANCHISE TAX BOARD TO GRANT REDUCED WITHHOLDING AND WAIVERS FROM
WITHHOLDING ON A CASE-BY-CASE BASIS.
THE PARTIES TO THIS TRANSACTION SHOULD SEEK AN ATTORNEY'S, ACCOUNTANT'S,
OR OTHER TAX SPECIALIST'S OPINION CONCERNING THE EFFECT OF THIS LAW ON THIS
TRANSACTION AND SHOULD NOT ACT ON ANY STATEMENTS MADE OR OMITTED BY THE ESCROW
OR CLOSING OFFICER.
THE SELLER MAY REQUEST A WAIVER BY CONTACTING:
FRANCHISE TAX BOARD
WITHHOLD AT SOURCE UNIT
P.O. BOX 651
SACRAMENTO, CA 95812-0651
(916) 369-4900
FEDERAL LAW
INTERNAL REVENUE CODE SECTION 1445 PLACES SPECIAL REQUIREMENTS FOR
TAX REPORTING AND WITHHOLDING ON THE PARTIES TO A REAL ESTATE TRANSACTION WHERE
THE SELLER IS A NONRESIDENT ALIEN, A NONDOMESTIC CORPORATION OR PARTNERSHIP, A
DOMESTIC CORPORATION OR PARTNERSHIP CONTROLLED BY NONRESIDENTS OR NON RESIDENT
CORPORATIONS OR PARTNERSHIPS.
WITH RESPECT TO BOTH THE STATE LAW AND FEDERAL LAW REFERRED TO
ABOVE, THE PARTIES TO THIS TRANSACTION ARE SEEKING AN ATTORNEY'S, ACCOUNTANT'S
OR OTHER TAX SPECIALIST'S OPINION CONCERNING THE EFFECT OF THESE LAWS ON THIS
TRANSACTION OR ARE RELYING ON THEIR OWN KNOWLEDGE OF THESE LAWS. THE PARTIES TO
THIS TRANSACTION ARE NOT ACTING ON OR RELYING ON ANY STATEMENTS MADE OR OMITTED
BY THE ESCROW HOLDER, ESCROW OFFICER, TITLE OFFICER, OR OTHER CLOSING OFFICER
WITH RESPECT TO TAX REPORTING OR WITHHOLDING REQUIREMENTS.
BUYER'S INITIALS: SELLER'S INITIALS:
- ---------------- -------------------
EXHIBIT "E"
Page 4 of 4
<PAGE> 29
EXHIBIT "F"
ASSIGNMENT OF INTANGIBLE PROPERTY
THIS ASSIGNMENT OF INTANGIBLE PROPERTY (this "Assignment") is made as of
_____________, 1996, by THE VONS COMPANIES, INC., a Michigan corporation
("Assignor"), to PACIFIC GULF PROPERTIES INC., a Maryland corporation
("Assignee").
A. Pursuant to that certain Agreement for Purchase and Sale of Real
Property and Joint Escrow Instructions dated as of ______ , 1996, by and between
Assignor and Assignee (the "Purchase Agreement"), Assignor is contemporaneously
herewith selling to Assignee that certain real property and improvements thereon
located in the City of San Diego, County of San Diego, State of California, the
land 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.
B. Assignor desires to assign its interest in and to certain intangible
property to Assignee as of the date on which title to the Property is vested in
Assignee (the "Transfer Date"):
AGREEMENT
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and
sufficiency of which is hereby acknowledged:
1. As of the Transfer Date, Assignor hereby assigns and transfers unto
Assignee without recourse all of its right, title, claim and interest in, to and
under the following (collectively the "Assigned Interests"):
(a) all warranties and guarantees to the extent they may be
assigned, whether or not written, for all or any portion of the Property,
including, without limitation, the Improvements, including without limitation
construction warranties from contractors and subcontractors; and
(b) all governmental permits and approvals relating to the
construction, operation, use or occupancy of the Property.
2. 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.
3. This Assignment shall be governed by and construed in accordance with
the laws of the State of California.
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date first
above written.
ASSIGNOR:
THE VONS COMPANIES, INC.,
a Michigan corporation
By:
---------------------------------
Print Name:
-------------------------
Its:
--------------------------------
By:
---------------------------------
Print Name:
-------------------------
Its:
--------------------------------
<PAGE> 30
Schedule 1
LEGAL DESCRIPTION OF THE PROPERTY
All of that certain real property located in the State of California,
County of San Diego, and described as follows:
Parcel A and Parcel B of Parcel Map No. 927, in the City of San Diego,
County of San Diego, State of California, filed in the Office of the County
Recorder of San Diego County, August 7, 1972, as File No. 206523 of Official
Records.
<PAGE> 31
FIRST AMENDMENT TO
AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY
AND JOINT ESCROW INSTRUCTIONS
THIS FIRST AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF
REAL PROPERTY AND JOINT ESCROW INSTRUCTIONS (this "Amendment"), dated December
19, 1996 for reference purposes, is entered into by and between PACIFIC GULF
PROPERTIES INC., a Maryland corporation ("Buyer"), and THE VONS COMPANIES,
INC., a Michigan corporation ("Seller"), with reference to the following facts:
A. Seller and Buyer have previously executed and
delivered that certain Agreement for Purchase and Sale of Real Property and
Joint Escrow Instructions dated November 6, 1996 (the "Agreement"). Terms used
herein shall have the meanings given thereto in the Agreement.
B. Buyer and Seller now desire to amend the Agreement as
hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing recitals, and
the mutual covenants contained herein, Buyer and Seller hereby agree as
follows:
1. Investigation Period. Section 3.1 of the Agreement
is hereby amended and restated to read:
Buyer shall have until 5:00 p.m. on January 10, 1997 (the
"Investigation Period") to perform any and all investigations
which Buyer deems necessary to determine whether Buyer will
purchase the Property, including, without limitation, physical
inspection of the Property, investigations with respect to the
existing zoning and use restrictions and phase I environmental
matters.
2. This Amendment may be executed in 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. This Amendment shall be deemed executed and delivered upon
each party's delivery of executed signature pages, which signature pages may be
delivered by facsimile with the same effect as delivery of the originals.
-1-
<PAGE> 32
3. Except as expressly set forth herein, the Agreement
remains unmodified and in full force and effect.
IN WITNESS WHEREOF, Buyer and Seller have executed this
Amendment of the date first set forth above.
BUYER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
----------------------------------
Donald G. Herrman
Executive Vice President
By:
----------------------------------
Lonnie P. Nadal
Senior Vice President
SELLER:
THE VONS COMPANIES, INC.,
a Michigan corporation
By:
----------------------------------
Donald J. Howard,
Senior Vice President
By:
----------------------------------
Patricia A Weimer,
Assistant Secretary
-2-
<PAGE> 33
3. Except as expressly set forth herein, the Agreement
remains unmodified and in full force and effect.
IN WITNESS WHEREOF, Buyer and Seller have executed this
Amendment of the date first set forth above.
BUYER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
----------------------------------
Donald G. Herrman
Executive Vice President
By:
----------------------------------
Lonnie P. Nadal
Senior Vice President
SELLER:
THE VONS COMPANIES, INC.,
a Michigan corporation
By:
----------------------------------
Donald J. Howard,
Senior Vice President
By:
----------------------------------
Patricia A Weimer,
Assistant Secretary
-2-
<PAGE> 34
SECOND AMENDMENT TO
AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY
AND JOINT ESCROW INSTRUCTIONS
THIS SECOND AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF
REAL PROPERTY AND JOINT ESCROW INSTRUCTIONS (this "Amendment"), dated January
9, 1997 for reference purposes, is entered into by and between PACIFIC GULF
PROPERTIES INC., a Maryland corporation ("Buyer"), and THE VONS COMPANIES,
INC., a Michigan corporation ("Seller"), with reference to the following facts:
A. Seller and Buyer have previously executed and
delivered that certain Agreement for Purchase and Sale of Real Property and
Joint Escrow Instructions dated November 6, 1996 and that certain First
Amendment to Agreement for Purchase and Sale of Real Property and Joint Escrow
Instructions dated December 19, 1996 (collectively, the "Agreement"). Terms
used herein shall have the meanings given thereto in the Agreement.
B. Buyer and Seller now desire to further amend the
Agreement as hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing recitals, and
the mutual covenants contained herein, Buyer and Seller hereby agree as
follows:
1. Investigation Period. Section 3.1 of the Agreement
is hereby amended and restated to read:
Buyer shall have until 5:00 p.m. on January 24, 1997 (the
"Investigation Period") to perform any and all investigations
which Buyer deems necessary to determine whether Buyer will
purchase the Property, including, without limitation, physical
inspection of the Property, investigations with respect to the
existing zoning and use restrictions and phase I environmental
matters.
2. This Amendment may be executed in 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. This Amendment shall be deemed executed and delivered upon
each party's delivery of executed signature pages, which signature pages may be
delivered by facsimile with the same effect as delivery of the originals.
-1-
<PAGE> 35
3. Except as expressly set forth herein, the Agreement
remains unmodified and in full force and effect.
IN WITNESS WHEREOF, Buyer and Seller have executed this
Amendment of the date first set forth above.
BUYER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
----------------------------------
Donald G. Herrman
Executive Vice President
By:
----------------------------------
Lonnie P. Nadal
Senior Vice President
SELLER:
THE VONS COMPANIES, INC.,
a Michigan corporation
By:
----------------------------------
Terry J. Wollock,
Senior Vice President
By:
----------------------------------
Patricia A Weimer,
Assistant Secretary
-2-
<PAGE> 36
3. Except as expressly set forth herein, the Agreement
remains unmodified and in full force and effect.
IN WITNESS WHEREOF, Buyer and Seller have executed this
Amendment of the date first set forth above.
BUYER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
----------------------------------
Donald G. Herrman
Executive Vice President
By:
----------------------------------
Lonnie P. Nadal
Senior Vice President
SELLER:
THE VONS COMPANIES, INC.,
a Michigan corporation
By:
----------------------------------
Terry J. Wollock,
Senior Vice President
By:
----------------------------------
Patricia A Weimer,
Assistant Secretary
-2-
<PAGE> 37
THIRD AMENDMENT TO
AGREEMENT FOR PURCHASE AND SALE OF REAL
PROPERTY AND JOINT ESCROW INSTRUCTIONS
THIS THIRD AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF
REAL PROPERTY AND JOINT ESCROW INSTRUCTIONS (this "Amendment"), dated January
23, 1997 for reference purposes, is entered into by and between PACIFIC GULF
PROPERTIES INC., a Maryland corporation ("Buyer"), and THE VONS COMPANIES,
INC., a Michigan corporation ("Seller"), with reference to the following facts:
A. Seller and Buyer have previously executed and
delivered that certain Agreement for Purchase and Sale of Real Property and
Joint Escrow Instructions dated November 6, 1996 (as previously amended, the
"Agreement"). Terms used herein shall have the meanings given thereto in the
Agreement.
B. Buyer and Seller now desire to further amend the
Agreement as hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing recitals, and
the mutual covenants contained herein, Buyer and Seller hereby agree as
follows:
1. Investigation Period. Section 3.1 of the Agreement
is hereby amended and restated to read:
Buyer shall have until 5:00 p.m. on February 7, 1997 (the
"Investigation Period") to perform any and all investigations
which Buyer deems necessary to determine whether Buyer will
purchase the Property, including, without limitation, physical
inspection of the Property, investigations with respect to the
existing zoning and use restrictions and phase I environmental
matters.
2. Close of Escrow.
(a) Section 3.2.2 of the Agreement is hereby amended and restated to read:
If Seller does not receive the Termination Notice during the
Investigation Period, then on or before seventy five (75) days
after the expiration of the Investigation Period, as extended
from time to time (the "Closing Date"), Escrow Holder shall
close the purchase of the Property.
-1-
<PAGE> 38
(b) The second sentence of the first paragraph of
Section 5 of the Agreement is hereby amended and restated to read:
The Close of Escrow shall occur no later than seventy-five
(75) days following the expiration of the Investigation
Period, as extended from time to time.
3. Buyer's Conditions. A new Section 4.3.5 is added to
Section 4.3 of the Agreement to read:
4.3.5 Buyer shall have received and approved in writing that
certain Railway Contract referred to in Item 16 of Exhibit "C" to the Agreement
on or before the later of the expiration of the Investigation Period or five
(5) days after the date of Buyer's receipt of a complete and legible copy of
such Railway Contract.
4. This Amendment may be executed in 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. This Amendment shall be deemed executed and delivered upon
each party's delivery of executed signature pages, which signature pages may be
delivered by facsimile with the same effect as delivery of the originals.
5. Except as expressly set forth herein, the Agreement
remains unmodified and in full force and effect.
IN WITNESS WHEREOF, Buyer and Seller have executed this
Amendment of the date first set forth above.
BUYER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
----------------------------------
Donald G. Herrman
Executive Vice President
By:
----------------------------------
Lonnie P. Nadal
Senior Vice President
-2-
<PAGE> 39
SELLER:
THE VONS COMPANIES, INC.,
a Michigan corporation
By:
----------------------------------
Terrence J. Wollock,
Senior Vice President
By:
----------------------------------
Patricia A Weimer,
Assistant Secretary
-3-
<PAGE> 40
FOURTH AMENDMENT TO
AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY
AND JOINT ESCROW INSTRUCTIONS
THIS FOURTH AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF
REAL PROPERTY AND JOINT ESCROW INSTRUCTIONS (this "Amendment"), dated February
7, 1997 for reference purposes, is entered into by and between PACIFIC GULF
PROPERTIES INC., a Maryland corporation ("Buyer"), and THE VONS COMPANIES,
INC., a Michigan corporation ("Seller"), with reference to the following facts:
A. Seller and Buyer have previously executed and
delivered that certain Agreement for Purchase and Sale of Real Property and
Joint Escrow Instructions dated November 6, 1996 (as previously amended, the
"Agreement"). Terms used herein shall have the meanings given thereto in the
Agreement.
B. Buyer and Seller now desire to further amend the
Agreement as hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing recitals, and
the mutual covenants contained herein, Buyer and Seller hereby agree as
follows:
1. Investigation Period. Section 3.1 of the Agreement
is hereby amended and restated to read:
Buyer shall have until 5:00 p.m. on February 14, 1997 (the
"Investigation Period") to perform any and all investigations
which Buyer deems necessary to determine whether Buyer will
purchase the Property, including, without limitation, physical
inspection of the Property, investigations with respect to the
existing zoning and use restrictions and phase I environmental
matters.
2. This Amendment may be executed in 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. This Amendment shall be deemed executed and delivered upon
each party's delivery of executed signature pages, which signature pages may be
delivered by facsimile with the same effect as delivery of the originals.
-1-
<PAGE> 41
3. Except as expressly set forth herein, the Agreement
remains unmodified and in full force and effect.
IN WITNESS WHEREOF, Buyer and Seller have executed this
Amendment of the date first set forth above.
BUYER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
----------------------------------
Donald G. Herrman
Executive Vice President
By:
----------------------------------
Lonnie P. Nadal
Senior Vice President
SELLER:
THE VONS COMPANIES, INC.,
a Michigan corporation
By:
----------------------------------
Terrence J. Wollock,
Senior Vice President
By:
----------------------------------
Patricia A Weimer,
Assistant Secretary
-2-
<PAGE> 42
3. Except as expressly set forth herein, the Agreement
remains unmodified and in full force and effect.
IN WITNESS WHEREOF, Buyer and Seller have executed this
Amendment of the date first set forth above.
BUYER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
----------------------------------
Donald G. Herrman
Executive Vice President
By:
----------------------------------
Lonnie P. Nadal
Senior Vice President
SELLER:
THE VONS COMPANIES, INC.,
a Michigan corporation
By:
----------------------------------
Terrence J. Wollock,
Senior Vice President
By:
----------------------------------
Patricia A Weimer,
Assistant Secretary
-2-
<PAGE> 43
FIFTH AMENDMENT TO
AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY
AND JOINT ESCROW INSTRUCTIONS
THIS FIFTH AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF
REAL PROPERTY AND JOINT ESCROW INSTRUCTIONS (this "Amendment"), dated February
13, 1997 for reference purposes, is entered into by and between PACIFIC GULF
PROPERTIES INC., a Maryland corporation ("Buyer"), and THE VONS COMPANIES,
INC., a Michigan corporation ("Seller"), with reference to the following facts:
A. Seller and Buyer have previously executed and
delivered that certain Agreement for Purchase and Sale of Real Property and
Joint Escrow Instructions dated November 6, 1996 (as previously amended, the
"Agreement"). Terms used herein shall have the meanings given thereto in the
Agreement.
B. Buyer and Seller now desire to further amend the
Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing recitals, and
the mutual covenants contained herein, Buyer and Seller hereby agree as follows:
1. Property. The "Land" (as defined in the Agreement)
is expanded to include Parcel D of Parcel Map No. 927 in the City of San Diego,
County of San Diego, State of California, filed in the Office of the County
Recorder of San Diego County August 7, 1972, as File No. 206523 of Official
Records ("Parcel D"). The "Property" shall include Parcel D and all
Improvements, Appurtenances and Intangible Property located thereon or
associated therewith.
2. Purchase Price. The Purchase Price on account of the
existing Property is hereby decreased by $1,100,000, and the Purchase Price on
account of Parcel D is hereby increased by $750,000, for a net new Purchase
Price for all of the Property of $16,750,000.
3. Investigation Period. Section 3.1 of the Agreement
is hereby amended and restated to read:
Buyer shall have until 5:00 p.m. on the date which is five (5)
business days (i.e., not including Saturdays, Sundays and
state or national holidays) after the "Completion Date" (as
hereinafter defined) (the "Investigation Period") to perform
any and all investigations which Buyer deems necessary to
determine whether Buyer will purchase the Property, including,
without limitation, physical inspection of the Property,
investigations with respect to the
<PAGE> 44
existing zoning and use restrictions and environmental
matters. It is agreed that, with respect to the Property
other than Parcel D, except for the environmental
investigation and remediation described in Section 4.4, Buyer
has completed its due diligence. Buyer has the right to
conduct a complete due diligence of Parcel D during the
Investigation Period pursuant to Section 3.1 of this
Agreement.
4. Prior Amendments. For ease of reference, the
following revisions made by prior amendments to the Agreement are restated
herein:
(a) Section 3.2.2 of the Agreement has been amended and restated to read:
If Seller does not receive the Termination Notice during the
Investigation Period, then on or before seventy five (75) days
after the expiration of the Investigation Period, as extended
from time to time (the "Closing Date"), Escrow Holder shall
close the purchase of the Property.
(b) The second sentence of the first paragraph of
Section 5 of the Agreement has been amended and restated to read:
The Close of Escrow shall occur no later than seventy-five
(75) days following the expiration of the Investigation
Period, as extended from time to time.
5. Railroad Contract. New Section 4.3.5 which was
previously added to the Agreement is hereby amended and restated to read:
4.3.5 At the Close of Escrow, Buyer and Seller shall each
execute and deliver to the other through Escrow an Assignment
of Railroad Contract, in form and content reasonably
acceptable to both parties, assigning from Seller to Buyer the
rights under the Railroad Contract referred to in Item 16 of
Exhibit "C" to the Agreement, which Assignment shall have been
consented to in writing by the Railway Company under the
Railroad Contract, or its successor.
6. Title Exceptions. A new Section 4.3.6 is hereby
added to Section 4.3 of the Agreement to read:
4.3.6 Buyer shall have received and approved in writing (a) a
revised ALTA Survey of the Property to include Parcel D as
part of the Property, and (b) a supplement to the PTR showing
any additional Title Exceptions to be included in the Title
Policy
-2-
<PAGE> 45
(including any additional exceptions based on the revised
Survey) on account of Parcel D, on or before the later of the
expiration of the Investigation Period or five (5) days after
the date of Buyer's receipt of the revised ALTA Survey and
supplement to the PTR.
7. Remediation Work. A new Section 4.4 is hereby added
to Section 4 of the Agreement to read:
4.4 With respect to environmental matters, Dames & Moore
("Buyer's Consultant") has conducted an examination of the
Property for the presence of Controlled Material, and has
recommended in its report dated January 6, 1997, entitled
Remediation of Hydrocarbon Impacted Soil, that certain
environmental remediation work (the "Remediation Work") be
undertaken at the Property. The Remediation Work shall be
performed prior to the Close of Escrow by an environmental
engineering firm (the "Remediation Firm") selected by Buyer
(subject to Seller's reasonable approval) and engaged by
Seller. The cost of the Remediation Work shall be paid by
Buyer at the Close of Escrow. If, at any time during the
course of the Remediation Work, Buyer's Consultant advises
Buyer that the estimated cost of completing the Remediation
Work, together with all costs expended to date in connection
with the Remediation Work, is in excess of $125,000, Buyer
shall have the right, but not the obligation, to terminate the
Agreement pursuant to Section 3.2 of the Agreement, in which
event Buyer shall reimburse Seller promptly upon demand the
cost of the Remediation Work incurred prior to such
termination. The Remediation Firm shall coordinate all
Remediation Work with Buyer's Consultant and Buyer's
Consultant shall have the right to be present during, and to
oversee, all Remediation Work. Nevertheless, all permits for,
and manifests in connection with, the Remediation Work shall
be in Seller's name. The date upon which Buyer's Consultant
certifies to Buyer, Seller and the Escrow Holder that the
Remediation Work is complete and that all necessary
governmental approvals and closure reports with respect
thereto have been obtained shall be the "Completion Date".
Buyer shall have five (5) business days following the
Completion Date to review, in Buyer's sole discretion, the
results of the Remediation Work, including the Buyer's
Consultant's certificate and the governmental approvals and
closure reports. If Buyer does not elect to terminate the
Agreement during the Investigation Period, the Close of Escrow
shall proceed without a further reduction in the Purchase
Price on account of the Remediation Work.
-3-
<PAGE> 46
8. Commencement of Work. A new Section 15.23 is hereby
added to the Agreement to read:
15.23 Rehabilitation Work. If this Agreement has not been
terminated, following the expiration of the Investigation
Period and prior to the Close of Escrow, Seller hereby grants
to Buyer, its agents and contractors a limited license (the
"Rack Removal License") to enter upon the Property to remove
and dispose of, at Buyer's cost, the warehouse storage racking
from the Property (the "Rack Removal Work") as Buyer deems
necessary, provided that in performing such Rack Removal Work
Buyer shall not unreasonably interfere with Seller's business
operations on the Property. Prior to performing any of the
Rack Removal Work, Buyer shall obtain and deliver to Seller an
endorsement to Buyer's liability insurance, adding Seller as
an additional insured thereon with respect to the Property.
Buyer shall indemnify, defend, and hold Seller and the
Property harmless from and against all damage, loss or
liability (including, without limitation, reasonable
attorneys' fees and costs of court and mechanic's liens or
claims) or claims or assertions thereof arising out of or in
connection with the entry onto the Property by Buyer and its
agents and contractors in the performance of the Rack Removal
Work. The foregoing indemnity shall survive the termination
of expiration of this Agreement. The Rack Removal License
shall continue in force until the Close of Escrow.
9. This Amendment may be executed in 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. This Amendment shall be deemed executed and delivered upon
each party's delivery of executed signature pages, which signature pages may be
delivered by facsimile with the same effect as delivery of the originals.
-4-
<PAGE> 47
10. Except as expressly set forth herein, the Agreement
remains unmodified and in full force and effect.
IN WITNESS WHEREOF, Buyer and Seller have executed this
Amendment of the date first set forth above.
BUYER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
----------------------------------
Donald G. Herrman
Executive Vice President
By:
----------------------------------
Lonnie P. Nadal
Senior Vice President
SELLER:
THE VONS COMPANIES, INC.,
a Michigan corporation
By:
----------------------------------
Terrence J. Wollock,
Senior Vice President
By:
----------------------------------
Patricia A Weimer,
Assistant Secretary
-5-
<PAGE> 48
10. Except as expressly set forth herein, the Agreement
remains unmodified and in full force and effect.
IN WITNESS WHEREOF, Buyer and Seller have executed this
Amendment of the date first set forth above.
BUYER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
----------------------------------
Donald G. Herrman
Executive Vice President
By:
----------------------------------
Lonnie P. Nadal
Senior Vice President
SELLER:
THE VONS COMPANIES, INC.,
a Michigan corporation
By:
----------------------------------
Terrence J. Wollock,
Senior Vice President
By:
----------------------------------
Patricia A Weimer,
Assistant Secretary
-5-
<PAGE> 1
EXHIBIT 10.2
RESTRUCTURING AGREEMENT
TERRACE GARDENS TRANSACTION
<PAGE> 2
RESTRUCTURING AGREEMENT
-----------------------
THIS RESTRUCTURING AGREEMENT, dated as of May 23, 1997 (this
"Agreement"), by and among PGP TERRACE GARDENS HOLDINGS INC., a Delaware
corporation (herein, "PGP-TG"), PACIFIC GULF PROPERTIES INC., a Maryland
corporation (herein, "PGP"), TERRACE GARDENS APARTMENTS, a California general
partnership, and all of the general partners thereof, namely DONALD R. SHORT and
MARILYN M. SHORT, as trustees of the Short Family Trust under Declaration of
Trust dated May 1, 1989, BRUCE H. WHITE, BETTY C. WHITE, RICHARD M. STEWART, as
trustee of the Stewart Family Trust dated May 4, 1989, MATTIE M. STEWART, as
trustee of the Stewart Family Trust dated May 4, 1989, 225 UNITS LIMITED, a
California limited partnership (collectively, the "Existing Partners").
WITNESSETH:
WHEREAS, Terrace Gardens Apartments is a general partnership formed
pursuant to that certain Partnership Agreement, dated November 1, 1983, as
amended, and existing under the laws of the State of California (the "California
General Partnership");
WHEREAS, the California General Partnership owns and manages a 225-unit
apartment complex known as the Terrace Gardens Apartments (the "Property") in
the City of Escondido, County of San Diego, California;
WHEREAS, the California General Partnership desires to convert from a
California general partnership to a Delaware limited partnership (the "Delaware
Limited Partnership");
WHEREAS, Section 17-217 of the Delaware Revised Uniform Limited
Partnership Act, 6 Del.C. ss. 17-101, et seq., and Article 9 of the Uniform
Partnership Act of 1994 authorize thE conversion of the California General
Partnership to the Delaware Limited Partnership;
WHEREAS, PGP-TG will be admitted as a general partner of the California
General Partnership upon execution of the California General Partnership
Amendments, and will, upon Conversion, be the sole general partner of the
Delaware Limited Partnership; and
WHEREAS, the Existing Partners of the California General Partnership
will, upon Conversion, be the limited partners of the Delaware Limited
Partnership.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1
<PAGE> 3
ARTICLE 1
DEFINITIONS
Certain of the terms used in this Agreement that are not otherwise
defined herein shall have the meanings set forth below.
1.1. "Amended Statement of Partnership" means that certain amendment
to the Statement of Partnership currently on record with the County Recorder's
Office of San Diego County.
1.2. "Approved Title Form" shall mean the Preliminary Report for the
Property in the form of, and containing the exceptions, described on Exhibit K.
1.3. "Appurtenances" shall mean all rights, privileges, interests,
licenses, claims, easements, benefits, covenants, conditions and servitudes of
any type or nature which are appurtenant to or otherwise benefit a parcel of
Land and/or the Improvements located thereon, including without limitation, all
minerals, oil, gas and other hydrocarbon substances on or under the Land, as
well as all development rights, air rights, water, water rights and water stock
relating to a parcel of Land and any other easements, rights of way or
appurtenances and used in connection with the beneficial operation, use and
enjoyment of such Land and/or Improvements or any other appurtenance, together
with all rights of the California General Partnership in and to streets,
sidewalks, alleys, gores, strips, driveways, parking areas and areas adjacent
thereto or used in connection therewith, and all rights of the California
General Partnership in any land lying in the bed of any existing or proposed
street adjacent to any Land.
1.4. "Bankruptcy Code" shall mean Title 11 of the U.S. Code, as now
constituted or hereafter amended.
1.5. "California General Partnership Amendments" shall mean the
amendments to the general partnership agreement of the California General
Partnership substantially in the form attached hereto as Exhibit G and Exhibit
H.
1.6. "CAL. UPA" shall mean the California Uniform Partnership Act of
1994, Section 16100 et seq. of the California Corporations Code.
1.7. "Certificate of Limited Partnership" means the Certificate of
Limited Partnership required to be filed with the Secretary of State of the
State of Delaware pursuant to Section 17- 217 of the DEL. RULPA.
1.8. "Closing" shall mean the consummation of the Conversion. The
Conversion shall occur not later than the Closing Deadline.
2
<PAGE> 4
1.9. "Closing Deadline" shall mean June 16, 1997.
1.10. "Code" shall mean the Internal Revenue Code of 1986, as amended,
including all tax regulations promulgated thereunder.
1.11. "Conditions Precedent" shall mean, collectively, the PGP-TG
Conditions Precedent and the Existing Partners Conditions Precedent, each set
forth in Article 7 and Article 8, respectively, of this Agreement.
1.12. "Contracts" shall mean all written or oral management,
architectural, engineering, leasing, insurance, bonding, construction,
financing, guarantee, indemnity, service, maintenance, operating, repair,
collective bargaining, employment, employee benefit, equipment leasing, supply,
warranty, purchase, consulting, professional service, advertising, promotion,
public relations and other contracts and commitments (excluding the Leases) in
any way relating to the Property or any part thereof. The foregoing shall not,
however, include any contract of engagement for the legal services of Sheppard,
Mullin, Richter & Hampton.
1.13. "Conversion Agreement" shall mean the Agreement and Plan of
Conversion required to be executed by PGP-TG and the Existing Partners under the
DEL. RULPA and the CAL. UPA.
1.14. "Conversion" shall mean the conversion of the California General
Partnership to the Delaware Limited Partnership as contemplated under this
Agreement and the other Transaction Documents referred to herein, and shall also
include the refunding of the Tax Exempt Debt, the execution of the California
General Partnership Amendments, the execution of the LP Agreement and all other
transactions related to the foregoing.
1.15. "Deferred Maintenance" shall mean all costs identified by PGP-TG
as costs of deferred maintenance to the California General Partnership assets.
1.16. "Delaware Certificate of Conversion" shall mean the Certificate
of Conversion required to be filed with the Secretary of State of the State of
Delaware pursuant to Section 17- 217 of the DEL. RULPA.
1.17. "Delaware Limited Partnership" means Terrace Gardens - PGP, L.P.,
a Delaware limited partnership.
1.18. "DEL. RULPA" shall mean the Delaware Revised Uniform Limited
Partnership Act, 6 Del.C. ss. 17-101, et seq.
1.19. "Deposits and Reimbursements" shall mean (a) deposits made with
or tendered to utility companies to secure service or to permit the California
General Partnership or their predecessors in interest to tie in to existing
service grids or to cause a utility company to install
3
<PAGE> 5
connections or extensions necessary to provide service, (b) deposits made by the
California General Partnership or their predecessors in interest with any
bonding or surety company or deposits, bonds or other financial security devices
posted with or for the benefit of any governmental or quasi-governmental agency
in connection with subdivision or public improvement bonds obtained by the
California General Partnership or their predecessors in interest or in
connection with any development agreement, subdivision agreement, parcel map or
tract map, and (c) any refundable fees, payments or reimbursements which the
California General Partnership or its predecessors in interest or the
then-current owner or occupant of the Real Property or Improvements is entitled
to receive from any governmental or quasi-governmental or private body in
respect of the ownership and development of the Land or Improvements or any
public improvements made in connection with the Land or Improvements.
1.20. "Effective Date" shall mean the effective date set forth in the
Delaware Certificate of Conversion is filed with the Secretary of State of the
State of Delaware.
1.21. "Environmental Requirements" shall mean all applicable statutes,
regulations, rules, ordinances, codes, licenses, permits, orders, approvals,
plans, authorizations, concessions, franchises and similar items, of all
governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of human health or the
environment, including, without limitation: (i) all requirements, including but
not limited to those pertaining to reporting, licensing, permitting,
investigation and remediation of emissions, discharges, releases or threatened
releases of Hazardous Materials, chemical substances, pollutants, contaminants
or hazardous or toxic substances, materials or wastes whether solid, liquid or
gaseous in nature, into the air, surface water, groundwater or land, or relating
to the manufacture, processing, distribution, use, treatment, storage, disposal
transport or handling of chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials, or wastes, whether solid, liquid or
gaseous in nature; and (ii) all requirements pertaining to the protection of the
health and safety of employees or the public.
1.22. "Exchange Rights Agreement" shall mean that certain Exchange
Rights Agreement, in substantially the form attached hereto as Exhibit B.
1.23. "Existing Contracts" shall mean those Contracts identified on
Exhibit I.
1.24. "Existing Partners" shall mean the existing partners of the
California General Partnership and who will, upon Conversion, become the limited
partners of the Delaware Limited Partnership pursuant to the LP Agreement.
1.25. "Existing Partners' Conditions Precedent" shall have the meaning
contained in Article 8.
4
<PAGE> 6
1.26. "Hazardous Materials" shall mean (i) any flammables, explosive or
radioactive materials, contaminants or hazardous or toxic wastes, materials or
substances or related materials whether solid, liquid or gaseous in nature,
including, without limitation, substances defined as "hazardous substances,"
"hazardous materials," "toxic substances" or "solid waste" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sec. 9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq.; the Toxic Substances Control Act, 15 U.S.C., Section 2601
et seq.; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section
6901 et seq.; and in the regulations adopted and publications promulgated
pursuant to said laws; (ii) those substances listed in the United States
Department of Transportation Table (49 C.F.R. 172.101 and amendments thereto) or
by the Environmental Protection Agency (or any successor agency) as hazardous
substances (40 C.F.R. Part 302 and amendments thereto); (iii) those substances
defined as "hazardous wastes," "hazardous substances" or "toxic substances" in
any similar federal, state or local laws or in the regulations adopted and
publications promulgated pursuant to any of the foregoing laws or which
otherwise are regulated by any governmental authority, agency, department,
commission, board or instrumentality of the United States of America, the State
of California or any political subdivision thereof; (iv) any pollutant or
contaminant or hazardous, dangerous or toxic chemicals, materials, or substances
within the meaning of any other applicable federal, state, or local law,
regulation, ordinance, or requirement (including consent decrees and
administrative orders) relating to or imposing liability or standards of conduct
concerning any hazardous, toxic, or dangerous waste, substance or material all
as amended; (v) petroleum or any by-products thereof; (vi) any radioactive
material, including any source, special nuclear or by-product material as
defined at 42 U.S.C. Sections 2011 et seq., as amended, and in the regulations
adopted and publications promulgated pursuant to said law; (vii) asbestos in any
form or condition; and (viii) polychlorinated biphenyls.
1.27. "Improvements" shall mean all improvements, structures or fixtures
constructed upon the Land and/or Appurtenances, including without limitation,
all buildings and structures presently located on the Land and/or Appurtenances,
all apparatus, equipment and appliances presently located on the Land and/or
Appurtenances, and used in connection with the operation or occupancy thereof,
such as heating and air conditioning systems and facilities used to provide any
utility services, parking services, refrigeration, ventilation, garbage
disposal, recreation or other services thereto, and all landscaping and
leasehold improvements of tenants, if any, which become the property of the
lessor upon termination of a Lease.
1.28. "Indemnification Agreement" shall mean that certain
indemnification agreement, dated June 12, 1997, by and among PGP, the Delaware
Limited Partnership, Morning View Terrace - PGP, L.P., and Pacific Inland
Communities, LLC.
1.29. "Insolvency Laws" shall mean any applicable federal or state
bankruptcy law or other similar law.
5
<PAGE> 7
1.30. "Intangible Personal Property" shall mean all of the California
General Partnership's right, title, claim, interest and estate in, to and under
any and all (i) intangible personal property owned by the California General
Partnership which relates in any manner to or arises from or in connection with
the Real Property and/or Tangible Personal Property and any and all other
property, rights in or to property, general intangibles and contractual rights
which the California General Partnership may have which are necessary or useful
in connection with, or otherwise affect or relate to, the acquisition,
development, improvement, holding, use, operation, maintenance, leasing or sale
of the Real Property and/or Tangible Personal Property, including, but not
limited to, any and all plans, specifications, subdivision maps and filings with
respect thereto, applications, entitlements, Licenses and Entitlements,
subdivision or other bonds, Deposits and Reimbursements, engineering or soil
reports, environmental and hazardous and toxic waste reports and studies,
surveys, maps, correspondence, inspection reports, management reports, marketing
reports, marketing displays and brochures, all contract rights, warranties from
contractors, architects, engineers and material and labor suppliers whether
written or implied, copies of all books and records (provided all original
Leases and Lease files are included in this definition), all claims, choses in
action, judgments, remedies, damages and causes of action all easements,
licenses and rights-of-way, occupancy or use agreements and all other documents
affecting or relating to the Real Property and/or Tangible Personal Property;
(ii) insurance proceeds received after Closing on account of a pre-Closing
event, but only to the extent of costs or liabilities not covered by the
Existing Partners' indemnity; (iii) any trademark, service mark, trade name or
name customarily used or associated with the Real Property and/or Tangible
Personal Property, and (iv) any and all other warranties, guarantees, permits,
entitlements and other intangible rights of any type or nature.
1.31. "Land" shall mean the parcels of real property described on the
Approved Title Form in Exhibit K attached hereto.
1.32. "Law(s)" shall mean all applicable housing and building codes,
environmental, life safety, laws, rules and regulations including without
limitation, those related to handicapped or disabled (including without
limitation ADA and the Fair Housing Amendments Act of 1988) and land use and
zoning laws and regulations, and other applicable local, state and federal laws
and regulations.
1.33. "Leases" shall mean all leases, occupancy agreements and other
similar agreements, together with all modifications, extensions and renewals
thereof, and any guarantees of any of the foregoing with respect to or demising
any part of the Property, which are described on a Rent Roll.
1.34. "Licenses and Entitlements" shall mean all licenses, franchises,
certifications, authorizations, approvals, rights, privileges, entitlements and
permits issued or approved by any governmental or quasi-governmental authority
or other person or entity having authority over the Property, and all
applications, filings and submittals therefor, in each case relating to the
operation, ownership, subdivision, development, use or maintenance of the
Property or any part
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thereof, including, without limitation, construction permits, grading permits,
elevator permits, machinery permits, business licenses, ingress and egress
permits, development agreements, subdivision, parcel and tract maps and
approvals thereof, plans and/or permits required under the applicable zoning
regulations, variances, utility agreements and commitments, improvement
agreements, certificates of occupancy and the like, but excluding therefrom for
all purposes of this Agreement any licenses issued to or solely on behalf of any
Tenant.
1.35. "Losses and Liabilities" shall mean any and all obligations,
liabilities, claims, liens or encumbrances, demands, losses, damages, causes of
action, judgments, costs and expenses (including attorneys' fees), whether
direct, contingent or consequential, and no matter how arising, incurred or
suffered by any indemnified party.
1.36. "LP Agreement" shall mean the Limited Partnership Agreement among
PGP-TG and the Existing Partners governing the Delaware Limited Partnership,
substantially in the form attached hereto as Exhibit A, with such additions
thereto and changes therein as are approved by the parties executing the same,
with such approval to be conclusively evidenced by the execution and delivery
thereof.
1.37. "Net Value" shall mean $10,000,000 minus the outstanding principal
balance of the Tax Exempt Debt as of the Effective Date.
1.38. "Partnership Units" shall mean the partnership units granted upon
execution of the California General Partnership Amendments.
1.39. "Personal Property" shall mean the Tangible Personal Property and
the Intangible Personal Property.
1.40. "PGP" shall mean Pacific Gulf Properties Inc., a Maryland
corporation.
1.41. "PGP-TG Capital Contribution" shall mean cash to be contributed at
Closing by PGP-TG to the California General Partnership in the amount of up to
$250,000 to pay Transaction Expenses; provided, however, that, following a
reconcilliation of all Transaction Expenses following closing, should the
Transaction Expenses exceed $250,000, PGP-TG may contribute such additional
amounts as necessary to pay such Transaction Expenses and will receive a capital
account credit for such amount.
1.42. "PGP-TG Conditions Precedent" shall mean the conditions precedent
described in Article 7.
1.43. "PGP-TG" shall mean PGP Terrace Gardens Holdings Inc., a Delaware
corporation which will operate as the general partner of the Delaware Limited
Partnership.
1.44. "PGP Share Price" shall mean, with respect to the common stock of
Pacific Gulf
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Properties Inc., a Maryland corporation, the average closing price on the New
York Stock Exchange for the ten (10) consecutive trading days immediately
preceding the Effective Date.
1.45. "Property" shall mean the Terrace Gardens Apartments located in
the City of Escondido, County of San Diego, California, including all Real
Property and Personal Property.
1.46. "Property Tax Refunds" shall mean all amounts which the California
General Partnership or the Delaware Limited Partnership is entitled to receive
or receives with respect to property taxes, assessments or community facility
district taxes or assessments paid prior to the Effective Date. The California
General Partnership has assigned all right, title and interest in the Property
Tax Refunds to the Existing Partners.
1.47. "Qualified Project Costs" shall mean costs in connection with the
acquisition, construction and installation of the Property financed by Tax
Exempt Debt, but only to the extent that (i) such costs were paid or incurred by
or on account of the California General Partnership or any related person on or
after the applicable inducement date, the date of the first official action by
the issuer of the Tax Exempt Debt expressing its intent to issue revenue bonds
to assist in financing such Property, (ii) such costs are chargeable to such
Property's capital account or would be so chargeable either with a proper
election by the California General Partnership or but for a proper election by
the California General Partnership to deduct such costs, within the meaning of
old Treasury Regulation 1.103-8(a)(1); (iii) if any portion of the Property was
constructed by a related person of the California General Partnership (whether
as a general contractor or a subcontractor), such costs include only the actual
out-of-pocket costs incurred by such related person in constructing the Property
(or any portion thereof) and not, for example, intercompany profits resulting
from members of an affiliated group (within the meaning of Section 1504 of the
Code) participating in the construction of the Property or payments received by
such related person due to early completion of the Property (or any portion
thereof); (iv) such costs do not constitute leasing commissions, costs of
advertising for the Property or other cost related to the rental of units in the
Property or management fees for the management and operation of the Property
after the completion date of such Property; and (v) such costs are used to
finance residential rental property described in Section 103(b)(4)(A) of the
Code and Section 1.103-8(b) of the Treasury Regulations.
1.48. "Real Property" shall mean the Land, Improvements and
Appurtenances.
1.49. "Rent Roll" shall mean the current gross rent roll of the
Property, listing for each tenant the (a) name, (b) location of leased premises,
(c) rent, (d) obligation for reimbursement of expenses, (e) amount of security
deposit and rent paid more than thirty (30) days in advance, (f) lease
commencement date, (g) lease termination date, (h) any free rent, or other
unexpired concessions, if any, and (i) a description of any uncured defaults,
certified by the California General Partnership as true, complete and correct,
and delivered to PGP-TG under certificate of authenticity and accuracy by the
California General Partnership concurrently with the execution and delivery
hereof, a copy of which is set forth as Exhibit J. The omission of any
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item listed in (a)-(j), inclusive, from the Rent Roll (as certified by the
California General Partnership) shall be deemed to be intentional and shall
constitute a representation that the omitted items are not in existence or are
otherwise inapplicable.
1.50. "Tangible Personal Property" shall mean and include any and all
tangible personal property owned by the California General Partnership located
at, upon or about, or affixed or attached to, or installed in the Real Property,
or used or to be used in connection with or incorporated into or otherwise
relating to the Real Property or its ownership, use, development, construction,
maintenance, management, operation, marketing, leasing, occupancy, sale or
financing, including, but not limited to, fixtures, furniture, furnishings,
tools, machinery, appliances and other apparatus and equipment, supplies and
other inventories, office equipment, communications equipment, vehicles, storage
tanks, spare and replacement parts, fuel plans, specifications, operational
handbooks, machinery and/or equipment operational instructions and/or
specifications, surveys, drawings, and records, files and papers, whether in
hard copy or computer format, including, without limitation, structural and
engineering information, sales and promotional literature, manuals and data,
sales and purchase correspondence, lists of present and former suppliers, lists
of present and former lessees and clients, personnel and employment records, and
any information relating to taxes imposed on the Real Property.
1.51. "Tax Exempt Debt" shall mean the existing tax exempt financing
encumbering the Property which is to be refunded as a part of the Conversion.
1.52. "Tax Exempt Debt Instruments" shall mean the Tax Exempt Debt and
the agreements and other instruments described on Exhibit C entered into or
evidencing the Tax Exempt Debt.
1.53. "Tax Exempt Debt Refunding Instruments" shall mean the Tax Exempt
Refunding Debt and the agreements and other instruments to be entered into or
otherwise evidencing the Tax Exempt Refunding Debt.
1.54. "Tax Exempt Debt Reserves" shall mean all amounts deposited with
the City of Escondido or the Bank of America as a reserve in connection with the
Tax Exempt Debt. The California General Partnership has assigned all right,
title and interest in the Tax Exempt Debt Reserves to the Existing Partners.
1.55. "Tax Exempt Refunding Debt" shall mean the tax exempt financing
which will refund the Tax Exempt Debt and will thereafter encumber the Property.
1.56. "Tenant" shall mean each lessee or tenant occupying any portion of
the Property.
1.57. "Term Sheet" shall mean that certain Term Sheet for the Terrace
Gardens Transaction, effective as of April 4, 1997, and executed by PGP and all
Existing Partners.
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1.58. "Transaction Documents" shall mean this Agreement, the Conversion
Agreement, the California General Partnership Amendments, the LP Agreement, the
Exchange Rights Agreement, the Tax Exempt Debt Refunding Instruments and any
other document or agreement contemplated by the foregoing.
1.59. "Transaction Expenses" shall mean an amount of cash equal to the
sum of: (i) all fees, costs and expenses incurred in connection with the
negotiation, drafting and completion of the Transaction Documents; (ii) all
fees, costs and expenses incurred in connection with all agreements, documents
and other instruments relating to the admission of PGP-TG to the California
General Partnership; (iii) all fees, costs and expenses of an audited financial
statement and operating statement for the California General Partnership for the
year 1996 as prepared by Ernst & Young and necessary, in the judgment of PGP or
PGP-TG, to satisfy all applicable reporting requirements under Federal
securities laws; (iv) all costs of refinancing the outstanding principal balance
of the Tax Exempt Debt with debt that is credit-enhanced by the Federal National
Mortgage Association; and (v) all due diligence expenses, including out of
pocket expenses, of PGP or PGP-TG for inspection of the California General
Partnership's assets.
ARTICLE 2
AGREEMENTS REGARDING CONVERSION
SECTION 2.1. THE CALIFORNIA GENERAL PARTNERSHIP AMENDMENTS. Subject to
and upon the terms and conditions of this Agreement, at the Closing the Existing
Partners and PGP- TG do hereby agree to execute and deliver the California
General Partnership Amendments.
SECTION 2.2. THE CONVERSION.
(a) At Closing, after satisfaction or, to the extent permitted
hereunder, waiver by PGP-TG and the Existing Partners of the Conditions
Precedent and all conditions of the Conversion set forth in the Transaction
Documents, the California General Partnership shall file the following:
1. The Certificate of Limited Partnership with the Secretary
of State of the State of Delaware;
2. The Delaware Certificate of Conversion with the Secretary
of State of the State of Delaware;
3. Registration of Foreign Limited Partnership, filed with
the Secretary of State of the State of California;
4. The Amended and Restated Statement of Partnership with the
County Recorder of the County of San Diego; and
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5. All other filings or recordings required by either
California law or Delaware law in connection with the Conversion.
(b) The Conversion shall become effective on the Effective Date.
(c) At the Effective Date, the California General Partnership shall
be converted to the Delaware Limited Partnership in accordance with Section
17-217 of the DEL. RULPA and Article 9 of the CAL. UPA.
(d) The name of the Delaware Limited Partnership shall be "Terrace
Gardens - PGP, L.P."
(e) The Conversion Agreement shall be made available to PGP-TG and
any Existing Partner upon request.
(f) An executed copy of the Conversion Agreement shall be kept
permanently at the principal office of the Delaware Limited Partnership.
SECTION 2.3. CONTRIBUTION OF CAPITAL.
(a) At the Closing, PGP shall cause, and PGP-TG shall contribute, the
PGP-TG Capital Contribution to the California General Partnership.
SECTION 2.4. CONTINUATION OF INTERESTS.
(a) Upon execution of the California General Partnership Amendments,
the Existing Partners shall own Partnership Units. The number of Partnership
Units owned by Existing Partners shall be equal to the Net Value of the
California General Partnership divided by the PGP Share Price. The total
Partnership Units owned by the Existing Partners shall be allocated among the
individual Existing Partners as set forth in Exhibit N attached hereto. The
"ownership interest" of the individual Existing Partners shall be determined by
dividing the number of Partnership Units owned by such Existing Partner by the
total number of Partnership Units owned by all Existing Partners from time to
time.
(b) In conjunction with the refunding of the Tax Exempt Debt, if the
City of Escondido requires (i) any restrictions on the Property which are in
addition to the restrictions that currently encumber the Property or (ii) a
maturity date for the Tax Exempt Refunding Debt of sooner than the year 2027,
and either of which adversely affects the annual projected gross revenues from
the Property, the Net Value shall be readjusted by subtracting the annual
difference in gross revenue over the life of the Tax Exempt Refunding Debt
divided by .085. The Existing Partners' Partnership Units shall then be adjusted
correspondingly.
(c) The interests of PGP-TG and the Existing Partners in the Delaware
Limited
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Partnership shall be equivalent to the interests of PGP-TG and the Existing
Partners in the California General Partnership prior to the Conversion but after
execution of the California General Partnership Amendments.
(d) At the Effective Date, distributions from the Delaware Limited
Partnership shall be governed by the provisions set forth in the LP Agreement.
(e) At the Effective Date, allocations of profit and loss shall be
governed by the provisions set forth in the LP Agreement.
SECTION 2.5. EXCHANGE OF PARTNERSHIP INTERESTS. As provided in and
subject to the Exchange Rights Agreement, the Existing Partners of the Delaware
Limited Partnership shall have the right, exercisable in their discretion, to
sell their Partnership Units to PGP for common stock of PGP or cash, at PGP's
election. The Exchange Rights Agreement shall be substantially in the form
attached hereto as Exhibit B, with such additions thereto and changes therein as
are approved by the parties executing the same, with such approval to be
conclusively evidenced by the execution and delivery of the Exchange Rights
Agreement. Notwithstanding any provision herein to the contrary, if the Property
is sold, all Partnership Units held by the Existing Partners shall be
mandatorily converted to the common stock of PGP and shall be automatically
deemed tendered for acquisition by PGP pursuant to Section 4 of the Exchange
Rights Agreement; provided, however, that the immediately preceding sentence
shall not apply in the event the Property is sold for less than its Carrying
Value (as that term is defined in the LP Agreement) or is otherwise sold for a
loss for either book or tax purposes.
SECTION 2.6. SAME ENTITY. Pursuant to the CAL. UPA and for all
purposes, upon Conversion the Delaware Limited Partnership shall be the same
entity that existed before Conversion.
SECTION 2.7. RIGHTS UPON CONVERSION. At the Effective Date, for all
purposes of the laws of the State of Delaware and the State of California, all
of the rights, privileges and powers of the California General Partnership, and
all of the Property, real and personal and mixed, and all debts due to such
California General Partnership, as well as all other things and causes of action
belonging to the California General Partnership, shall be vested in the Delaware
Limited Partnership and shall thereafter be the Property of the Delaware Limited
Partnership, and the title to any Property vested by deed or otherwise in the
California General Partnership shall not revert or be in any way impaired by
reason of the DEL. RULPA; but all rights of creditors and all liens upon any
Property of the California General Partnership shall be preserved unimpaired,
and all debts, liabilities and duties of the California General Partnership
shall thenceforth attach to the Delaware Limited Partnership, and may be
enforced against it to the same extent as if said debts, liabilities and duties
had been incurred or contracted by it.
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SECTION 2.8. PRORATIONS.
(a) Nature and Purpose of Prorations. Even though the California
General Partnership and the Delaware Limited Partnership are the same entity and
the transaction provided herein does not involve the transfer of assets, the
parties have agreed to certain prorations as if assets were being transferred in
order to reflect the economic agreement of the parties. The prorations shall be
between the Existing Partners and the Delaware Limited Partnership. For the
purpose of determining the net proration credit and debit, the Existing Partners
shall be credited with all cash of the California General Partnership at the
Closing. As between the Existing Partners and the Delaware Limited Partnership,
the Delaware Limited Partnership shall be deemed to be the owner of the assets
of the Delaware Limited Partnership on the date of the Closing. The sum of the
amounts prorated to the Delaware Limited Partnership shall be subtracted from
the sum of the amounts prorated to the Existing Partners, and the difference (if
positive) shall be referred to herein as the "Net Credit to the Existing
Partners." The sum of the amounts prorated to the Existing Partners shall be
subtracted from the sum of the amounts prorated to the Delaware Limited
Partnership, and the difference (if positive) shall be referred to herein as the
"Net Credit to the Delaware Limited Partnership." The California General
Partnership has distributed to the Existing Partners all right, title and
interest in and to such Net Credit to the Existing Partners, and if the
prorations result in a Net Credit to the Existing Partners, the Delaware Limited
Partnership shall pay in cash an amount equal to the Net Credit to the Existing
Partners on the Closing. If the Delaware Limited Partnership does not have
sufficient cash to make such a payment, the Delaware Limited Partnership shall,
as soon as possible after the Closing, pay the deficiency to the Existing
Partners. If the prorations result in a Net Credit to the Delaware Limited
Partnership, the Existing Partners shall contribute cash to the California
General Partnership on the Closing in the amount thereof.
(b) Items to Prorate. All real estate taxes and assessments levied
against the Real Property, all personal property taxes levied with respect to
the Tangible Personal Property, if any, rents and other payments then due and
payable under any of the Tenant Leases and all other income from or charges
against any of the Property (including, without limitation, all operating
expenses) shall be prorated as of the Closing in accordance with the principles
contained in paragraph (c) below.
(c) Principles of Proration. The prorations shall be made in
accordance with the following principles:
1. The term "Current Month Rents" means Rents which are payable
under the Leases in the month ("Current Month") in which the Closing occurs.
Current Month Rents which have actually been received by the California General
Partnership shall be prorated as of the Closing. All Rents due prior to the
Current Month and unpaid, and the Existing Partners' pro rata share of any
unpaid Rents for the Current Month (collectively "Existing Partner Rents")
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shall be the property of the Existing Partners and shall be collected as
provided in paragraph (e) below.
2. As used herein, "Security Deposits" shall means the amount
of all money or other things of value (including without limitation,
certificates of deposit, letters of credit or the like), whether designated as
security deposits, prepaid rents or by some other name, given by tenants under
the Leases and which are conditionally repayable to such tenants or applicable
to future rent obligations under the terms of the Leases. Security Deposits
shall be credited to the Delaware Limited Partnership. The Delaware Limited
Partnership shall assume the Security Deposits to the extent of such credit.
3. Current Month Rents and other payments under the Leases
shall be prorated based only on the current ascertainable amounts of such rents.
4. Current Month Rents and other payments received that are due
under the Leases for that portion of the Current Month or any other month which
is on or after the date of the Closing shall be credited to the Delaware Limited
Partnership.
5. Any other prorated items shall similarly be prorated based
only on currently ascertainable amounts of such payments and items.
6. If possible, utility charges shall be prorated based on
meter readings taken on the date of the Closing, but if that does not occur,
utility charges will be prorated based on the assumption that utility charges
were uniformly incurred during the billing period.
7. All unpaid expenses associated with services provided, or
goods delivered and consumed, to the California General Partnership prior to the
Closing shall be allocated to the Existing Partners.
8. All costs associated with termite eradication which shall be
credited as an expense to the California General Partnership.
(d) Post-Closing Proration Adjustments. As soon after the Closing as
all of the relevant information is available, the Delaware Limited Partnership
and the Existing Partners shall adjust the prorations made on the date of the
Closing to prorate as of date of the Closing any items of proration as set forth
in paragraph (b) above (including subsequent or supplementary real estate tax
bills) if such items of proration relate to events occurring prior to the date
of the Closing.
(e) Post-Closing Collection of Existing Partner Rents. The Existing
Partners hereby appoint the Delaware Limited Partnership as their agent to
collect the Existing Partners' prorated portion of the Rents. The Delaware
Limited Partnership shall not be obligated to pursue any legal remedy or incur
any costs in order to collect the Existing Partners' prorated portion of the
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Rents other than the issuance of normal tenant billings. All rents collected by
the Delaware Limited Partnership shall be applied first against amounts due the
Delaware Limited Partnership and then to the Existing Partners' prorated portion
of the Rents. Within twenty (20) days after the end of each calendar month
starting with the month in which the Closing occurs (i) the Delaware Limited
Partnership shall submit to the Existing Partners a statement showing the amount
of the Existing Partners' pro rata portion of the Rents, if any, collected by
the Delaware Limited Partnership during such month, and (ii) the Delaware
Limited Partnership shall remit to Existing Partners all of the Existing
Partners' pro rata portion of the Rents collected by the Delaware Limited
Partnership during such month.
(f) Property Tax Refunds. Property Tax Refunds have been assigned by
the California General Partnership to the Existing Partners. In the event that
the Delaware Limited Partnership should receive any Property Tax Refunds, it
shall promptly, and in no event later than ten (10) days after receipt thereof,
remit the same to the Existing Partners.
(g) Tax Exempt Debt Reserves. Tax Exempt Debt Reserves have been
assigned by the California General Partnership to the Existing Partners. In the
event that the Delaware Limited Partnership should receive any Tax Exempt Debt
Reserves, it shall promptly, and in no event later than ten (10) days after
receipt thereof, remit the same to the Existing Partners.
(h) Remittance to Existing Partners. For all purposes of this Section
2.8, the obligation of the Delaware Limited Partnership to remit any funds or
submit any reports or statements to the Existing Partners shall be satisfied by
the remittance of funds or the submission of reports or statements to the person
identified in Section 12.3 herein. The Delaware Limited Partnership shall not be
required to distribute funds, reports or statements to any Existing Partner
other than the person identified in Section 12.3 herein. The Existing Partners
acknowledge and agree that (i) the person identified in Section 12.3 herein
shall be solely responsible for distributing all funds, reports or statements to
individual Existing Partners and (ii) the Existing Partners are responsible for
notifying, in writing, the Delaware Limited Partnership of any change in the
identity of the person identified in Section 12.3.
(i) Fees and Costs. Any fees, costs, or expenses associated with the
withdrawal, return or collection of the Property Tax Refunds and the Tax Exempt
Debt Reserves, including, without limitation, any investment breakage fees or
early withdrawal penalties, shall be borne solely by the Existing Partners.
SECTION 2.9. CONVERSION NOT A DISSOLUTION. Pursuant to Section 17-217 of
the DEL. RULPA and Section 16909 of the CAL. UPA, the Conversion of the
California General Partnership to the Delaware Limited Partnership shall not
constitute a dissolution of the California General Partnership, and the
California General Partnership shall not be required to wind up its affairs or
pay its liabilities and distribute its assets.
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SECTION 2.10. MANAGEMENT AND FEES.
(a) PGP shall provide property and entity level management and
services for the Delaware Limited Partnership in accordance with the management
agreement, the form of which is attached hereto as Exhibit M. The management
agreement shall be substantially in the form attached hereto as Exhibit M, with
such additions thereto and changes therein as are approved by the parties
executing the same, with such approval to be conclusively evidenced by the
execution and delivery of the management agreement.
(b) In exercising its management duties, PGP shall not retain the
existing employees and management agents of the California General Partnership
for the Property. Unless PGP-TG or PGP provides the Existing Partners with
written notice to the contrary, the California General Partnership shall (i)
cause all employment and management agreements respecting the Property to be
terminated effective as of the date of the Closing (but not before), and deliver
evidence of such termination to PGP-TG, and (ii) remove all employees and
management personnel from the Property on the date of the Closing (but not
before).
SECTION 2.11. THE LP AGREEMENT. At the Closing, the partnership
agreement of the California General Partnership shall be amended and restated in
its entirety by the execution of the LP Agreement. The LP Agreement shall be the
limited partnership agreement of the Delaware Limited Partnership unless and
until further amended in accordance with its terms and applicable law. The LP
Agreement shall be substantially in the form attached hereto as Exhibit A. At
the Closing, the LP Agreement shall be executed by PGP-TG and all Existing
Partners.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PGP-TG AND PGP
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF PGP-TG AND PGP. PGP-TG
and PGP hereby make the representations, warranties, and covenants, as
applicable, set forth in this Article 3.
SECTION 3.2. ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION.
PGP-TG is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has the requisite power and
authority to carry on its business as it is now being conducted. PGP is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland, and has the requisite power and authority to carry on
its business as it is now being conducted.
SECTION 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT. PGP-TG and PGP have
taken all actions necessary to authorize the execution, delivery and performance
by PGP-TG and PGP of this Agreement, and no other actions on the part of PGP-TG
or PGP are necessary in this regard.
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SECTION 3.4. BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by PGP-TG and constitutes a valid and binding
agreement of PGP-TG enforceable against PGP-TG in accordance with its terms.
This Agreement has been duly and validly executed and delivered by PGP and
constitutes a valid and binding agreement of PGP enforceable against PGP in
accordance with its terms.
SECTION 3.5. NO VIOLATION. The execution and delivery by PGP-TG and PGP
of this Agreement and the consummation of the Conversion will not result in or
constitute any of the following: (i) a default, breach, or violation, or an
event that, with notice or lapse of time or both, would be a default, breach, or
violation, of the corporate organizational documents of PGP-TG or PGP or any
promissory note, conditional sales contract, commitment, indenture, mortgage,
deed of trust, or other agreement, instrument or arrangement to which PGP-TG or
PGP is a party; (ii) an event that would permit any party to accelerate the
maturity of any indebtedness or other obligation of PGP-TG or PGP; or (iii) a
violation or conflict with any term or provision of any judgment, decree, order,
statute, injunction, rule or regulation of a governmental unit applicable to
PGP-TG or PGP.
SECTION 3.6. BANKRUPTCY. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws, contemplated
by or pending or threatened against PGP-TG or PGP. Without limiting the
generality of the foregoing, none of the following have been done by, against or
with respect to PGP-TG or PGP: (A) the commencement of a case under Title 11 of
the U.S. Code, as now constituted or hereafter amended, or under any other
applicable federal or state bankruptcy law or other similar law; (B) the
appointment of a trustee or receiver of any property interest; (C) an assignment
for the benefit of creditors; (D) an attachment, execution or other judicial
seizure of a substantial property interest; (E) the taking of, failure to take,
or submission to, any action indicating an inability to meet its financial
obligations as they accrue; or (F) a dissolution or liquidation.
SECTION 3.7. DISCLOSURE. No representation or warranty of PGP-TG or PGP
in this Agreement, or any information, statement or certificate furnished or to
be furnished by or on behalf of PGP-TG or PGP pursuant to this Agreement or any
Transaction Documents to which it is a party or in connection with the
Conversion contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained therein not misleading.
All documents delivered by PGP-TG or PGP to the Existing Partners, or made
available to the Existing Partners for review in connection with the this
Agreement and the Conversion, were at the time delivered or made available, and
will be at the time of Closing, true, correct and complete copies of all such
documents in PGP-TG's or PGP's possession or control.
SECTION 3.8. REPORTS. PGP-TG and PGP have filed all reports, if any,
required by the Securities Exchange Act of 1934, if any, and the information
contained therein is materially true and correct as of the date of each such
filing. There have been no material adverse
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developments in the business and operations of PGP-TG or PGP since the last of
such reports so filed, if any.
SECTION 3.9. BROKERS. Neither PGP-TG nor PGP have employed any broker
or finder, or incurred any liability therefor, in connection with the
Conversion.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE EXISTING PARTNERS
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE EXISTING PARTNERS.
The Existing Partners hereby make the representations, warranties, and
covenants, as applicable, set forth in this Article 4.
SECTION 4.2. ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION. The
California General Partnership is duly organized, validly existing, and in good
standing under the laws of the State of California, and has the power to own all
of the Property and assets and to carry on its business as heretofore conducted.
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT. The California
General Partnership and each Existing Partner have taken all action necessary to
authorize the execution, delivery and performance of this Agreement, and no
other proceedings, consents or approvals on the part of the Existing Partners
are needed to authorize the execution and delivery of this Agreement. Further,
the California General Partnership and each Existing Partner will take all
action necessary to authorize the execution, delivery and performance of the
Transaction Documents to which they are a party and the consummation by the
Existing Partners of the Conversion contemplated hereunder. The parties
executing this Agreement have obtained all consents for such execution and have
been duly authorized to so execute.
SECTION 4.4. CONSENTS AND APPROVALS. The Existing Partners have obtained
all consents and approvals of third parties necessary for the consummation of
the Conversion and the execution and delivery of this Agreement and the
Transaction Documents to which they are a party.
SECTION 4.5. BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by the California General Partnership and the
Existing Partners and constitutes a valid and binding agreement of the
California General Partnership and the Existing Partners enforceable against the
California General Partnership and the Existing Partners in accordance with its
terms.
SECTION 4.6. NO VIOLATION. The execution and delivery by the
California General Partnership and the Existing Partners of this Agreement and
the consummation of the Conversion will not result in or constitute any of the
following: (i) a default, breach, or violation, or an
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event that, with notice or lapse of time or both, would be a default, breach, or
violation, of any Contract or any Lease, License or Entitlement, promissory
note, conditional sales contract, commitment, indenture, mortgage, deed of
trust, or other agreement (including partnership agreements), instrument or
arrangement to which the California General Partnership is a party or by which
it or the Property is bound; (ii) an event that would permit any party to
terminate any contract or to accelerate the maturity of any indebtedness or
other obligation of the California General Partnership; (iii) a violation or
conflict with any term or provision of any judgment, decree, order, statute,
injunction, rule or regulation of a governmental unit applicable to the
California General Partnership or the Property; or (iv) the creation or
imposition of any lien, charge or encumbrance on the Property.
SECTION 4.7. ADEQUATE DISCLOSURE. The California General Partnership and
all Existing Partners have been provided with, reviewed, and consented to this
Agreement. All Existing Partners have reviewed all of the facts and
circumstances of this transaction, and on that basis have executed this
Agreement.
SECTION 4.8. ABSENCE OF UNDISCLOSED LIABILITIES. Except for the Tax
Exempt Debt, obligations under any Contracts and Leases, if any, and liabilities
arising in the ordinary course of business, the California General Partnership
has no material liabilities of any nature, whether matured or unmatured, fixed
or contingent, regardless of whether the disclosure thereof would otherwise be
required by generally accepted accounting principles, which liabilities could or
would remain with the Property or be binding on the Delaware Limited Partnership
upon Conversion or which would have an adverse effect upon the Delaware Limited
Partnership or the Property.
SECTION 4.9. COMPLIANCE WITH LAWS. The use and operation of the Property
now is, and at the time of Closing will be, in compliance with all Laws which
are material to the ownership and operation of the Property. There are no facts
which would prevent the Delaware Limited Partnership from using and operating
the Property after Closing in the manner in which it is intended to be operated.
SECTION 4.10. RENT CONTROL. Except for certain regulatory restrictions
pertaining to the Tax Exempt Debt, the Property is not subject to any applicable
rent control ordinance or law and, to the knowledge of the Existing Partners, no
such ordinance or law is pending or threatened by any governmental authority,
agency or quasi-governmental entity with jurisdiction over the Property.
SECTION 4.11. LICENSES, PERMITS, CERTIFICATES OF OCCUPANCY, ZONING, ETC.
All Licenses and Entitlements required in connection with the construction, use,
or occupancy of the Property have been obtained and are in full force and effect
and in good standing. Neither the California General Partnership nor the
Existing Partners have taken any action or failed to take any action that would
result in the revocation of such Licenses and Entitlements nor have they
received written notice that any governmental entity has revoked or intends to
revoke any of
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them due to a violation that has not been cured or otherwise resolved to the
complete satisfaction of such governmental entity. The California General
Partnership has obtained all necessary easements and approvals to insure
vehicular and pedestrian ingress to and egress from the Property. The California
General Partnership and Property are in compliance with the terms and provisions
of all of the covenants, conditions, restrictions, rights-of-way or easements
affecting the Property which are material to the ownership and operation of the
Property.
SECTION 4.12. ENVIRONMENTAL MATTERS. (i) Neither the California General
Partnership nor, to the knowledge of the Existing Partners, any previous owner,
tenant, occupant, user of the Property, or any other person, has engaged in or
permitted any operations or activities upon, or any use or occupancy of the
Property, or any portion thereof, for the purpose of or in any way involving the
handling, manufacture, treatment, storage, use, generation, release, discharge,
refining, dumping or disposal of any Hazardous Materials (whether legal or
illegal, accidental or intentional) on, under, in or about the Property, or
transported any Hazardous Materials to, from or across the Property, except in
all cases in compliance with Environmental Requirements; and (ii) to the
knowledge of the Existing Partners, no Hazardous Materials are presently
constructed, deposited, stored, or otherwise located on, under, in or about the
Property, except in all cases in compliance with Environmental Requirements. To
the knowledge of the Existing Partners, no real estate within 2,000 feet of the
Property is in material violation of Environmental Requirements.
SECTION 4.13. TAXES AND ASSESSMENTS. Neither the California General
Partnership nor the Existing Partners have received notice of and do not have
any knowledge of (i) any proposed increase in the assessed valuation of the
Property, or (ii) any existing or proposed assessment that has or may become a
lien on the Property.
SECTION 4.14. PHYSICAL CONDITION. To the knowledge of the Existing
Partners, there are no structural defects or deficiencies in the Improvements
which individually or in the aggregate would have a material adverse effect on
the California General Partnership or on the value of the Property. To the
knowledge of the Existing Partners, the Improvements and Tangible Personal
Property (including, without limitation, plumbing equipment, HVAC, electric
wiring and fixtures, gas distribution system, and water and sewage systems
presently on or in the Property) are in good working order and condition and are
sufficient to serve the needs of the Property. To the knowledge of the Existing
Partners, all water, sewer, gas, electric, telephone, and drainage facilities
and all other utilities required by law or by the normal use and operation of
the Property, including, without limitation, cable television service, and waste
water treatment facilities permanently dedicated to and reserved for the
Property, are and at the time of Closing will be installed to the property lines
of the Land, are and at the time of Closing will be connected pursuant to valid
unconditional permits, and are and at the time of Closing will be adequate to
service the Property and to permit compliance with all Laws.
SECTION 4.15. LEASES. The Rent Roll for the Property is true, complete
and accurate. Except for the Leases and the Tax Exempt Debt Instruments, there
are no other leases, licenses
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or other agreements affecting the occupancy of the Property which would become
an obligation of the Delaware Limited Partnership after the Closing. There is no
default by the California General Partnership under any Lease.
SECTION 4.16. NO LITIGATION OR ADVERSE EVENTS. There are no
investigations, actions, suits, proceedings or claims pending or, to the
knowledge of the Existing Partners, threatened against or affecting the
California General Partnership or the Property, at law or in equity or before or
by any federal, state, municipal or other governmental department, commission,
board, agency, or instrumentality, domestic or foreign. Neither the California
General Partnership nor the Existing Partners have received notice of any, and
to the knowledge of the Existing Partners are not subject to any, order, writ,
injunction or decree of any court or federal, state, municipal or other
governmental agency or department, commission, board, agency or instrumentality.
SECTION 4.17. CONTRACTS AND AGREEMENTS. On the Effective Date, there
will be no outstanding written or oral Contracts made by the California General
Partnership in connection with the Property which in any way binds or affects
the Property or the Delaware Limited Partnership other than the Existing
Contracts and Leases. There are no Contracts for any improvements to the
Property which have not been fully paid for, and the California General
Partnership shall cause to be discharged all mechanics' and materialmen's liens,
if any, arising from any labor or materials furnished to the Property prior to
the Effective Date. With respect to each Existing Contract: (i) it has been duly
and validly executed and delivered by the California General Partnership; (ii)
it is in full force and effect; (iii) the copy of the Existing Contract
delivered by the California General Partnership to PGP-TG is true and accurate
and is unmodified; and (iv) the California General Partnership is not in default
under any Existing Contract and no event exists which, with the passage of time
or the giving of notice or both, would become a default thereunder on the part
of the California General Partnership, and (v) to the knowledge of the Existing
Partners, no other party to any Existing Contract is in default under the
Existing Contract and nor has any event occurred which, with the passage of time
or the giving of notice or both, would become a default thereunder.
SECTION 4.18. NO OTHER AGREEMENTS. To the knowledge of the Existing
Partners, there are no obligations in connection with the Property which will be
binding upon the Delaware Limited Partnership or affect the Property after
Closing and there are no assessments or bonds assessed or proposed to be
assessed, against the Property, except: (i) matters which are set forth in the
Approved Title Form; (ii) Existing Contracts; (iii) the Leases; and (iv) the Tax
Exempt Debt Refunding Instruments. To the knowledge of the Existing Partners
there are no existing or proposed easements, covenants, restrictions, agreements
or other documents which affect title to the Property and which are not
disclosed by the Approved Title Form or described in the Tax Exempt Debt
Refunding Instruments.
SECTION 4.19. NON-FOREIGN PERSON. No Existing Partner is a "foreign
person" as such term is defined in Section 1445(f) of the Internal Revenue Code
of 1986, as amended, the
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California General Partnership is not subject to withholding under Section 26131
of the California Revenue and Taxation Code, and each Existing Partner is a
resident of California.
SECTION 4.20. EMPLOYEES. No employee of the California General
Partnership in connection with the Property is covered by a collective
bargaining agreement and there are no retroactive increases or other accrued and
unpaid sums owed to any such employee. There is no labor trouble, dispute,
grievance, controversy or strike pending or, to the knowledge of the Existing
Partners, threatened against the California General Partnership and the Existing
Partners do not know of any basis for any such trouble, dispute, grievance,
controversy or strike.
SECTION 4.21. BROKERS. Neither the California General Partnership nor
the Existing Partners have employed any broker or finder, or incurred any
liability therefor, in connection with the Conversion.
SECTION 4.22. OPERATING STATEMENTS. All operating statements and other
financial statements filed with any state or federal authority and provided by
the Existing Partners to PGP- TG fully reflect the matters stated therein,
including operation of the Property for the periods covered and, in all material
respects, accurately reflect all rents and other gross receipts, and all amounts
paid by the California General Partnership for electricity, water, sewer, other
utility services, insurance, fuel, maintenance and repairs (whether capitalized
or expensed), real estate taxes, payroll and payroll taxes and all other
operating and other expenses associated with the Property. Since the end of the
latest period covered by such financial statements, there have been no
transactions or occurrences materially affecting the operating expenses (or
items thereof) associated with the Property. The foregoing does not constitute a
representation and warranty as to future income or expenses of the Property.
SECTION 4.23. EXISTING DEBT. The only tax exempt debt encumbering the
Property is the Tax Exempt Debt. All Tax Exempt Debt Instruments are reflected
on Exhibit C. All of the information contained on the foregoing Exhibit is true,
accurate, and complete in all material respects.
SECTION 4.24. SECURITY DEPOSITS. All Tenant security deposits are
reflected on the Rent Roll. There are no other deposits held by the California
General Partnership, nor any of the Existing Partners, in connection with the
Property.
SECTION 4.25. DEPOSITS AND REIMBURSEMENTS. Except for the Property Tax
Refunds and the Tax Exempt Debt Reserves, all Deposits and Reimbursements are
the property of the California General Partnership and shall, by operation of
law, become the property of the Delaware Limited Partnership, and the Existing
Partners shall not be entitled to any such Deposits and Reimbursements. The
California General Partnership has assigned all right, title and interest in the
Property Tax Refunds and the Tax Exempt Debt Reserves to the Existing Partners
and the same are not now the property of the California General Partnership and
will not become the property of the Delaware Limited Partnership.
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SECTION 4.26. BANKRUPTCY. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws, contemplated
by or pending or threatened against the California General Partnership or any
Existing Partner. Without limiting the generality of the foregoing, none of the
following have been done by, against or with respect to the California General
Partnership or any Existing Partner or as concerns any right, claim or interest
of such California General Partnership or Existing Partner in or to any assets
or property of the California General Partnership as concerns any right, claim
or interest of such affiliate in or to any assets or property of the California
General Partnership: (A) the commencement of a case under the Bankruptcy Code or
any Insolvency Laws; (B) the appointment of a custodian, agent, trustee or
receiver of any property interest; (C) an assignment for the benefit of
creditors; (D) an attachment, execution or other judicial seizure of a
substantial property interest; (E) the taking of, failure to take, or submission
to, any action indicating an inability to meet its financial obligations as they
accrue; (F) a dissolution or liquidation; or (G) any property transferred,
concealed, or removed with intent to hinder, delay, or defraud creditors.
SECTION 4.27. DISCLOSURE. No representation or warranty of the Existing
Partners in this Agreement, or any information, statement or certificate
furnished or to be furnished by or on behalf of the Existing Partners pursuant
to this Agreement or in connection with the Conversion contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained therein not misleading. All documents delivered by the
Existing Partners to PGP-TG or PGP, or made available to PGP-TG or PGP for
review in connection with the Conversion, were at the time delivered or made
available, and will be at the time of Closing, true, correct and complete copies
of all such documents in the California General Partnership's or the Existing
Partners' possession or control. To the Existing Partners' knowledge, all of the
California General Partnership's files in connection with the Property in its
possession or control were delivered to or made available to PGP-TG or PGP for
its review and there are no documents required for a complete understanding of
or which are otherwise of significance in evaluating the Property which are not
contained in the California General Partnership's files or which have not been
delivered or made available to PGP-TG or PGP.
SECTION 4.28. SOLVENCY AND EQUIVALENCY OF VALUE REPRESENTATIONS.
(a) The California General Partnership is not or, by virtue of
the transactions contemplated by this Agreement, will not be, rendered any of
the following:
1. insolvent, as that term is used or defined under
any applicable Insolvency Law;
2. possessed of debts greater than the fair or salable
value of all of its Property;
3. generally not paying or unable to pay its debts as
they become due
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or mature; or
4. engaged in any business or transaction, or is about
to engage in any business or transaction, for which any
Property remaining with it after the Conversion is
unreasonably small capital.
SECTION 4.29. EXISTENCE OF TAX EXEMPTION; GOOD COSTS/BAD COSTS DURING
CONSTRUCTION. Nothing has come to the attention of the Existing Partners, and
the Existing Partners have no knowledge of any facts or claims which would lead
them to believe, that interest on the Tax Exempt Debt has at any time, or will
prior to, the Closing (i) not been excluded from gross income for federal income
tax purposes, and (ii) is an item of tax preference for purposes of the federal
alternative minimum tax imposed on individuals and corporations, and (iii) is
further not exempt from personal income taxation imposed by the State of
California. The California General Partnership has complied with all covenants
contained in any and all documents and laws required to be complied with to
ensure that such interest payable with respect to the Tax Exempt Debt is and
continues to be excluded from gross income for federal income tax purposes. At
least ninety percent (90%) of the proceeds of the Tax Exempt Debt have been
expended to pay for Qualified Project Costs.
SECTION 4.30. INDEPENDENT TAX ADVICE. Each and every Existing Partner
does hereby represent that said Existing Partner has sought, or knowingly
declined, independent tax advice and has not relied upon PGP, PGP-TG, or their
counsel for evaluating the merits of this transaction. Among other things, it is
acknowledged that all state and federal income tax considerations and
consequences relevant to the California General Partnership and/or the Existing
Partners are not the responsibility of PGP or PGP-TG, and neither the California
General Partnership nor the Existing Partners have relied or will rely on PGP or
PGP-TG with regard thereto, but instead will rely on their own tax, business and
legal advisors therefor and with respect thereto. Each and every Existing
Partner does hereby acknowledge and agree that PGP and PGP-TG shall have no
liability, obligation, duty, or responsibility to the California General
Partnership or the Existing Partners for any tax consequence, impact, or affect
resulting, directly or indirectly, from any of the transactions contemplated by
this Agreement. In addition, the parties hereto have mutually agreed upon the
Net Value and PGP and PGP-TG shall have no liability, obligation, duty or
responsibility to the General Partnership or the Existing Partners for any tax,
economic, contractual, or other consequence, impact, or affect resulting,
directly or indirectly, from the foregoing valuation. All such liability,
obligation, duty, and responsibility for the tax consequences and the valuation
of the Property shall be that of the California General Partnership and the
Existing Partners, and the California General Partnership shall indemnify,
defend, save, and hold harmless PGP, PGP-TG and their officers, directors,
employees, agents, attorneys, advisors, and the like with respect thereto.
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ARTICLE 5
COVENANTS AND AGREEMENTS OF PGP-TG
SECTION 5.1. NO TAX TERMINATION OR DISSOLUTION. As set forth in the LP
Agreement, PGP-TG and PGP hereby covenant and agree that for the five (5) year
period immediately following the Closing, PGP-TG and PGP will be restricted in
their ability to (i) sell, transfer or otherwise dispose of the Property, (ii)
pay down the Tax Exempt Refunding Debt, and (iii) in the case of PGP-TG, dispose
of its general partnership interest.
ARTICLE 6
COVENANTS AND AGREEMENTS OF THE EXISTING PARTNERS
SECTION 6.1. EXISTENCE OF TAX EXEMPTION; GOOD COSTS/BAD COSTS DURING
CONSTRUCTION. Prior to the Closing, the Existing Partners shall provide a
certificate regarding Qualified Project Costs substantially in the form of
Exhibit F attached hereto, with such back-up materials as requested by PGP-TG,
certifying that at least ninety percent (90%) of the proceeds of the Tax Exempt
Debt were expended to pay for Qualified Project Costs.
SECTION 6.2. ACTIONS AFFECTING ASSETS. The California General
Partnership shall not sell, assign, lease, pledge, transfer or encumber any of
the Property, or enter into any other consent, commitment, understanding or
other agreement, or incur any obligation or liability (contingent or absolute)
with respect to the Property or merge or consolidate with or into any other
entity or enter into any agreements relating thereto. The California General
Partnership and the Existing Partners shall use diligent efforts to avoid
knowingly committing or permitting to occur, any action which will result in a
violation of any Law between the date hereof and the Closing.
SECTION 6.3. ACCESS TO PROPERTY AND RECORDS. Upon reasonable notice and
during regular business hours, the California General Partnership shall give
PGP-TG, and its authorized representatives, full access to the California
General Partnership's personnel, properties, documents, contracts, facilities,
books, equipment and records and to the Property.
SECTION 6.4. LICENSE AND ENTITLEMENTS. Through the Closing, the
California General Partnership shall maintain all Licenses and Entitlements in
full force and effect, shall file timely all reports, statements, renewal
applications and other filings, and shall pay timely all fees and charges in
connection therewith that are required to keep the Licenses and Entitlements in
full force and effect.
SECTION 6.5. NO EXTRAORDINARY TRANSACTIONS. Until the Closing the
California General Partnership will conduct its business in the ordinary and
usual course as such business was conducted prior to the date hereof and not
engage in any extraordinary transactions without PGP-TG's prior written consent.
Extraordinary transactions shall include, without limitation,
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the sale of any real property or any material asset, increase in compensation of
any employees, implementation, modification or termination of any plan for the
benefit of employees, issuance of any options, warrants or securities, borrowing
of any funds under existing credit arrangements or otherwise, entering into any
new contract or agreement (or extending any existing contract or agreement)
unless such is cancelable by the California General Partnership (and after the
Closing, by the Delaware Limited Partnership) in their discretion on a maximum
of thirty (30) days' notice.
SECTION 6.6. SOLICITATION OR NEGOTIATION. Neither the California General
Partnership nor any of the Existing Partners shall initiate or solicit any
inquiries or offers with respect to, and shall not agree to, any merger,
acquisition or other offer involving the California General Partnership, any
interest in the California General Partnership, or any of its Property or
securities.
SECTION 6.7. INSURANCE. Through the Closing, the California General
Partnership shall maintain in full force and effect substantially the same
public liability and casualty insurance coverage now in effect with respect to
the Property, at its own expense.
SECTION 6.8. TAXES AND ASSESSMENTS. Except as otherwise provided in this
Agreement, the California General Partnership shall pay or discharge before
delinquent all tax liabilities and obligations, including, without limitation,
those for federal, state or local income, property, unemployment, withholding,
sales, use and other taxes that are payable prior to the date of the Closing.
SECTION 6.9. BINDING COMMITMENTS. The California General Partnership
shall not make any material commitments or representations to any applicable
government authorities, any adjoining or surrounding property owners, any civic
association, any utility or any other similar person or entity that would in any
manner be binding upon the Delaware Limited Partnership or the Property without
PGP-TG's prior written consent in each case.
SECTION 6.10. OPERATION OF PROPERTY. The California General Partnership
shall continue to operate and maintain the Property in the ordinary course of
its business, consistent with past practice, and will maintain the Property in
substantially its present order and condition (and make all emergency repairs
and replacements), and the Property on the date of the Closing shall be in
substantially the same condition it was on the date this Agreement was executed
by PGP-TG, reasonable wear and tear excepted. Without limiting the generality of
the foregoing, no fixtures, equipment or other Personal Property shall be
removed from the Property unless prior to the date of the Closing the same are
replaced with similar items of at least equal quality and value.
SECTION 6.11. CLOSING INFORMATION. Five (5) business days prior to
Closing the California General Partnership shall deliver to PGP-TG a current
Rent Roll for the Property.
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ARTICLE 7
PGP-TG'S CONDITIONS PRECEDENT
SECTION 7.1. PGP-TG'S CONDITIONS PRECEDENT. The obligation of PGP-TG to
consummate the Conversion shall be subject to fulfillment (or waiver) at or
prior to the Closing Deadline of the following conditions precedent (the "PGP-TG
Conditions Precedent"):
(a) Representations, Warranties and Covenants. The representations,
warranties and covenants made in this Agreement or in any other Transaction
Document by any person or entity other than PGP-TG shall be true and correct in
all material respects when made and on and as of the Effective Date as though
such representations, warranties and covenants were made on and as of the
Effective Date.
(b) No Material Adverse Change. None of the following shall have
occurred: (i) any actual, pending, or threatened taking of any portion of the
Property by condemnation or eminent domain; (ii) subject to Section 12.11,
destruction of any portion of the Property regardless of cause; (iii) the
discovery of any Hazardous Materials on the Property other than as disclosed in
writing by the Existing Partners to PGP-TG or PGP prior to the date hereof or
discussed in any environmental audit approved by PGP-TG for the Property prior
to the date hereof; (iv) if any data, information, facts or material provided to
or obtained by PGP-TG or PGP regarding the California General Partnership, the
Existing Partners, the Property, the Leases, the Rent Roll, the Transaction
Documents or the Tax Exempt Debt proves to be false or misleading in any
material respect, or if any new material adverse fact concerning the same comes
to the attention of PGP-TG, (v) significant adverse or worsening local,
regional, national or international business conditions, including without
limitation, rising interest rates; or (vi) any of the Existing Partners fail to
comply with the provisions of this Agreement or any other Transaction Document.
(c) PGP-TG Board Approval. The Board of Directors of PGP-TG shall have
approved this Agreement and the other Transaction Documents to which it is a
party and the Conversion.
(d) PGP Board Approval. The Board of Directors of PGP shall have
approved the Exchange Rights Agreement and any other Transaction Documents to
which it is a party.
(e) Delivery of Closing Requirements. Prior to or concurrently with the
Closing, the Existing Partners shall have executed and delivered, or caused to
be executed and delivered, each of the documents and items identified in Article
10, below to be executed and delivered by it.
(f) No Order or Injunction; Governmental Filings. The consummation of
the Conversion shall not have been restrained, enjoined or prohibited by any
order or injunction of
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any court or governmental authority of competent jurisdiction. All actions by or
in respect of or filings with any governmental body, agency, official or
authority required to permit the consummation of the Conversion shall have been
obtained.
(g) PGP-TG's Approval of Tax Exempt Debt Refunding Instruments. PGP-TG
shall have received all of the Tax Exempt Debt Refunding Instruments and
approved the terms thereof.
(h) Contingent Upon Closing Morning View Terrace Transaction. The
performance of the Conversion is contingent upon the closing of the "Conversion"
described in the Restructuring Agreement, dated as of May 23, 1997 for Morning
View Terrace, a California general partnership.
ARTICLE 8
EXISTING PARTNERS' CONDITIONS PRECEDENT
SECTION 8.1. EXISTING PARTNERS' CONDITIONS PRECEDENT. The obligation of
the Existing Partners to consummate the Conversion shall be subject to
fulfillment (or waiver) at or prior to the Closing Deadline of the following
conditions precedent (the "Existing Partners' Conditions Precedent"):
(a) Representations, Warranties and Covenants. The representations,
warranties and covenants made by PGP-TG in this Agreement or in any other
Transaction Document, and the representations, warranties and covenants made by
PGP-TG in the Exchange Rights Agreement or in any other Transaction Document to
which it is a party, shall be true and correct in all material respects when
made and on and as of the Effective Date as though such representations,
warranties and covenants were made on and as of the Effective Date.
(b) Delivery of Closing Requirements. Prior to or concurrently with
Closing, PGP- TG shall have executed and delivered, or caused to be executed and
delivered, each of the documents and items identified in Article 10, below to be
executed and delivered by it.
(c) No Order or Injunction; Governmental Filings. The consummation of
the Conversion shall not have been restrained, enjoined or prohibited by any
order or injunction of any court or governmental authority of competent
jurisdiction. All actions by or in respect of or filings with any governmental
body, agency, official or authority required to permit the consummation of the
Conversion shall have been obtained.
(d) PGP-TG Capital Contribution. Concurrently with Closing, PGP-TG shall
contribute cash to the Delaware Limited Partnership in the amount of the PGP-TG
Capital Contribution.
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(e) Refunding of Tax Exempt Debt. The refunding of the Tax Exempt Debt
shall have been consummated and all guarantees (or the equivalent) of the Tax
Exempt Debt or the credit enhancement relating to the Tax Exempt Debt shall have
been released.
(f) Contingent Upon Closing Morning View Terrace Transaction. The
performance of the Conversion is contingent upon the closing of the "Conversion"
described in the Restructuring Agreement, dated as of May 23, 1997 for Morning
View Terrace, a California general partnership.
ARTICLE 9
INDEMNITY
SECTION 9.1. INDEMNITY OF PGP-TG AND THE DELAWARE LIMITED PARTNERSHIP.
The Existing Partners jointly and severally shall save, hold harmless, indemnify
and defend PGP-TG and the Delaware Limited Partnership, their successors and
assigns and their officers, directors, employees, partners, agents and
representatives, from and against any Losses and Liabilities: (i) resulting from
the ownership or operation of the Property or the business affairs and
transactions of the California General Partnership or the Existing Partners,
prior to the Closing; (ii) resulting from any misrepresentation or inaccuracy in
or breach of any representation, warranty or covenant by the California General
Partnership or any of the Existing Partners in this Agreement or in the
Transaction Documents; or (iii) resulting from any claim, cause of action, or
the like, by the Existing Partners, the partners of 225 Units Limited, a
California limited partnership, or by any representative, successor or assign of
any such party (whether made individually, as a class, or derivatively, or any
other way) as a result of this Agreement, the Transaction Documents or the
Conversion, other than a claim for direct breach of an express representation,
warranty or covenant by PGP-TG, PGP or the Delaware Limited Partnership
hereunder or under the other Transaction Documents.
SECTION 9.2. INDEMNITY OF THE EXISTING PARTNERS. Except for Losses and
Liabilities covered by Section 9.1, PGP, PGP-TG or the Delaware Limited
Partnership, as the case may be, shall save, hold harmless, indemnify and defend
the Existing Partners, their respective successors and assigns and their
respective officers, directors, employees, partners, agents and representatives
from and against any and all Losses and Liabilities in any way resulting from
(i) any misrepresentation or inaccuracy in or breach of any representation,
warranty or covenant of PGP-TG, PGP or the Delaware Limited Partnership in this
Agreement or the Transaction Documents, or (ii) the failure of the Delaware
Limited Partnership to perform the obligations of the landlord under the Leases
(including, without limitation, the obligation to properly apply the Security
Deposits) and the Existing Contracts.
SECTION 9.3. OFFSET. Any Losses and Liabilities arising under Section
9.1 may be offset against all distributions and any other payments by the
Delaware Limited Partnership on account of (i) the Partnership Units held by the
Existing Partners (whether as an Existing
29
<PAGE> 31
Partner or as a partner (or former partner) of 225 Units Limited), and (ii) in
the case of Losses and Liabilities attributable to a breach of any
representation, warranty or covenant relating to the Tax Exempt Debt or the Tax
Exempt Debt Instruments (including, but not limited to, those set forth in
Sections 4.23 and 4.29), all Partnership Units regardless of who holds the same.
Neither PGP, PGP-TG or the Delaware Limited Partnership shall seek to impose
liability or recovery against any partner (each an "Other Partner") of 225 Units
Limited other than a partner who is also an Existing Partner, nor seek offset or
recovery against any Other Party for any breaches of representations,
warranties, covenants, or indemnities hereunder, other than those relating to or
described in paragraph (ii) above; and, as to those relating to or described in
paragraph (ii) above, such offset and liability shall be limited to offsets
against all rights to distributions and stock upon exchange of Partnership Units
for common stock in PGP. Any amounts recoverable with respect to Partnership
Units held by the Other Partners (or their successors and assigns) shall be
recoverable by offset from such Other Limited Partners pro rata based on the
relative number of Partnership Units distributed to the Other Partners.
Subject to the foregoing limitations on remedies for Losses and
Liabilities, PGP, PGP-TG and the Delaware Limited Partnership may pursue any
right hereunder against the Existing Partners, any Existing Partner which is
also a partner of 225 Units Limited, or any other person or entity in any order
or priority, and no such action shall be a waiver or release of any rights,
claims, or causes of action of PGP-TG or the Delaware Limited Partnership
against any person or entity.
Each Existing Partner hereby unconditionally and irrevocably grants a
security interest in its Partnership Units to secure the foregoing obligations,
and agrees to deliver such documentation as PGP-TG and the Delaware Limited
Partnership reasonably deems necessary or appropriate to perfect such security
interest. Any distribution or other transfer of any Partnership Units by the
Existing Partners (including to the partners of 225 Units Limited) shall be made
subject to such security interest, and any transferee of such Partnership Units
shall, as a condition precedent to receiving such Partnership Units, be
obligated to acknowledge the existence of and take subject to such security
interest. The power of attorney provisions contained in Section 2.4 of the LP
Agreement shall apply with regard to the grant of the security interest herein.
The liability for Losses and Liabilities arising under Section 9.1 shall be
joint and several. PGP-TG and the Delaware Limited Partnership shall be entitled
to the offset described herein upon its reasonable determination of the
existence and amount of the Losses and Liabilities described in Section 9.1.
Upon liquidation of the Losses and Liabilities, any offset in excess of such
liquidated amount shall promptly be distributed to the Existing Partners
affected by the offset, pro-rata.
Notwithstanding the limitations on liability for Losses and Liabilities,
the Existing Partners shall have personal liability for the legal fees and other
costs and expenses described in Section 12.6 hereof if either the action or
proceeding which resulted in same was brought against the Existing Partner on
account of acts or omissions of such persons or entities (other than their
indemnity agreements as hereinabove provided), or such action or proceeding was
30
<PAGE> 32
brought by such Existing Partners.
SECTION 9.4. EXCHANGE NOTICE. In the event any Losses and Liabilities
are outstanding at any time, if any party liable for such Losses and Liabilities
delivers an Exchange Notice pursuant to the terms of the Exchange Rights
Agreement, PGP-TG and the Delaware Limited Partnership will automatically obtain
a lien on the "Common Stock" (as defined in the Exchange Rights Agreement) and
any other securities received by the party delivering the Exchange Notice for
and to the extent of any such outstanding Losses and Liabilities. Any cash that
would have been received by the party delivering the Exchange Notice shall be
offset by PGP-TG and/or the Delaware Limited Partnership, as the case may be,
against any outstanding Losses and Liabilities of such party. Such party agrees
to take such actions and to execute any additional documentation that PGP-TG
deems appropriate or necessary to create, evidence or perfect such lien.
SECTION 9.5. SURVIVAL OF PROVISIONS. No payments made pursuant to any of
the provisions of this Article 9 shall entitle the paying parties to any
repayment or reimbursement from, or any capital account credit in, the Delaware
Limited Partnership. The provisions of this Article 9 shall survive the Closing.
ARTICLE 10
THE CLOSING
SECTION 10.1. THE CLOSING. Subject to the terms and conditions of this
Agreement, the Closing shall take place promptly after satisfaction or waiver of
the conditions set forth in Articles 7 and 8 and this Article 10.
SECTION 10.2. DELIVERIES BY THE EXISTING PARTNERS. At Closing, the
Existing Partners shall deliver or cause to be delivered (except where specified
to remain at the management office of the Property) the following:
(a) The duly executed California General Partnership
Amendments;
(b) The duly executed Conversion Agreement;
(c) The duly executed LP Agreement;
(d) The duly executed Exchange Rights Agreement;
(e) The duly executed Indemnification Agreement;
(f) A duly executed affidavit by each Existing Partner that
he, she or it is not a "foreign person" within the meaning of Section 1445(f)(3)
of the Code in the form of Exhibit L;
31
<PAGE> 33
(g) A duly executed Withholding Exemption Certificate (Form
590) for each Existing Partner;
(h) A "bring-down" certificate of the Existing Partners and
the California General Partnership certifying that the representations,
warranties and covenants made by the Existing Partners, individually and/or
collectively, in this Agreement or in any other Transaction Document were true
and correct in all material respects when made and are true and correct in all
material respects on and as of the date of the Closing as though such
representations, warranties and covenants were made on and as of the date of the
Closing;
(i) A duly executed legal opinion from Sheppard, Mullin,
Richter & Hampton expressing the opinions described in Exhibit D attached
hereto;
(j) Such other documents and instruments as are necessary or
appropriate to consummate the Conversion in accordance with the Transaction
Documents;
(k) Such other documents and instruments as are necessary or
appropriate to consummate the refunding of the Tax Exempt Debt;
(l) All Tax Exempt Debt Refunding Instruments;
(m) The "good costs/bad costs" certificate described in
Section 6.1 hereof;
(n) All keys to the Property that are not in possession of
Tenants and originals of all Existing Contracts and all Leases (each of which
may be left at the applicable Property's management office);
(o) A duly executed UCC-1 Financing Statement in form and
content reasonably satisfactory to PGP-TG in connection with the grant of the
security interest in the Partnership Units contained in Article 9; and
(p) The amount of $237,937.50 (or such other amount as
determined by the trustee of the Tax Exempt Debt) shall be paid to the trustee
of the Tax Exempt Debt, which amount represents the accrued, but unpaid,
interest on the Tax Exempt Debt to and including the date of the refunding of
the Tax Exempt Debt.
SECTION 10.3. DELIVERIES BY PGP-TG. At Closing, PGP-TG, as the newly
constituted general partner of the Delaware Limited Partnership, shall deliver
the following:
(a) The duly executed California General Partnership
Amendments;
(b) The duly executed Conversion Agreement;
32
<PAGE> 34
(c) The duly executed LP Agreement;
(d) The duly executed Indemnification Agreement;
(e) The Tax Exempt Debt Refunding Instruments to which it is a
party;
(f) A duly executed legal opinion from counsel to PGP-TG
expressing the opinions described in Exhibit E attached hereto;
(g) Such other documents and instruments as are necessary or
appropriate to consummate the Conversion in accordance with the Transaction
Documents; and
(h) A duly executed Exchange Rights Agreement.
SECTION 10.4. DELIVERIES BY PGP. At Closing, PGP shall deliver, or cause
to be delivered, the following:
(a) The duly executed Indemnification Agreement by PGP and
Morning View Terrace - PGP, L.P., a Delaware limited partnership; and
(b) A duly executed Exchange Rights Agreement.
SECTION 10.5. AUTHORIZED EXISTING PARTNERS SIGNATORY. The Existing
Partners do hereby authorize Donald R. Short, as trustee of the Short Family
Trust, to execute on behalf of all of the Existing Partners any and all
documents necessary to consummate the Conversion and the execution of the
Transaction Documents. Provided, however, that the California General
Partnership Amendments, the Conversion Agreement, the Delaware Certificate of
Conversion, and any other document which by law requires the signature of all
Existing Partners, must be signed by all of the Existing Partners.
SECTION 10.6. PAYMENT OF TRANSACTION EXPENSES AND DEFERRED MAINTENANCE.
The parties agree that if the Conversion is consummated, commencing from the
effective date of the Term Sheet, the Delaware Limited Partnership shall bear
all Transaction Expenses and Deferred Maintenance.
ARTICLE 11
TERMINATION
SECTION 11.1. TERMINATION. This Agreement may be terminated and the
Conversion may be abandoned at any time prior to the Effective Date:
(a) by mutual written consent of PGP-TG and all of the Existing
Partners; or
33
<PAGE> 35
(b) by PGP-TG and the Existing Partners if there shall be any law or
regulation that makes consummation of the Conversion illegal or otherwise
prohibited, or if any judgment, injunction, order or decree enjoining the
California General Partnership from consummating the Conversion is entered and
such judgment, injunction, order or decree shall become final and nonappealable.
(c) if the Closing does not occur on or before the Closing Deadline.
SECTION 11.2. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 11.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto.
SECTION 11.3. PAYMENT OF TRANSACTION EXPENSES UPON TERMINATION. Except
as provided below, if this Agreement is terminated pursuant to Section 11.1,
PGP-TG and the Existing Partners shall split 50/50 the Transaction Expenses,
except Transaction Expenses relating to the refinancing of the Tax Exempt Debt
which shall be paid fully by the California General Partnership. The foregoing
50/50 split of Transaction Expenses assumes neither party has a cause of action
for its expense reimbursement due to the breach of the other party, as described
in Section 11.4. If the Existing Partners terminate this Agreement due to
adverse tax ramifications caused by the Conversion, and PGP-TG consents to such
termination, the Existing Partners or the California General Partnership shall
pay all Transaction Expenses.
SECTION 11.4. UNILATERAL TERMINATION. In the event that PGP-TG or any of
the Existing Partners fails to perform or observe any of the covenants,
agreements or conditions on its or their part contained in this Agreement or
other Transaction Documents, said party shall be considered in default under
this Agreement.
If an event of default shall occur, any of the non-defaulting parties
may, in their discretion, proceed to protect or enforce their rights under this
Agreement and any of the other Transaction Documents by a suit in equity or
action at law, either for the specific performance of any covenant or agreement
contained herein or therein, or in aid of the execution of any power herein or
therein granted, or by mandamus or other appropriate proceeding for the
enforcement of any other legal or equitable remedy as the aggrieved party or
parties shall deem most effectual in support of any of their rights or duties
hereunder.
No delay or omission of any party to exercise any right or power arising
from any default shall impair any such right or power or shall be construed to
be a waiver of any such default or acquiescence therein, and every power and
remedy given by this Article 11 to the parties to this Agreement may be
exercised from time to time and as often as shall be deemed expedient. In case
any party shall have proceeded to enforce any right under this Agreement, and
such proceedings shall have been discontinued or abandoned because of waiver or
for any other reason, or shall have been determined adversely to said party,
then and in every such case all of the parties to this Agreement, severally and
respectively, shall be restored to their former
34
<PAGE> 36
positions and rights hereunder; and all remedies, rights and powers of the
parties shall continue as though no such proceedings had been taken.
No remedy herein conferred upon or reserved to any party hereunder is
intended to be exclusive of any other remedy, but each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The following
provisions shall survive the Closing: (i) all representations and warranties
contained in this Agreement, (ii) any indemnification provisions of this
Agreement, including, but not limited to, those set forth in Section 4.30 and
Article 9, and (iii) any provision in this Agreement which states that it shall
survive the Closing or a merger of this Agreement in any judgment.
SECTION 12.2. AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may, subject to applicable law,
be amended or waived prior to the Effective Date if, and only if, such amendment
or waiver is in writing and signed by PGP-TG and the Existing Partners.
(b) No failure or delay by any party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 12.3. 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, (ii) one (1) business day
after being deposited with Federal Express or another reliable overnight courier
service or next day delivery or transmitted by facsimile telecopy, or (iii) two
(2) business days after being deposited in the United States mail, registered or
certified mail, postage prepaid, return receipt required, and addressed as
follows:
35
<PAGE> 37
<TABLE>
<CAPTION>
<S> <C>
If to any of the
Existing Partners: The Existing Partners
c/o Donald R. Short
740 Metcalf Street, Suite 6
Escondido, CA 92025
Fax No.: (619) 746-0099
Telephone No.: (619) 746-4621
With a copy to: Sheppard, Mullin, Richter & Hampton
650 Town Center, 4th Floor
Costa Mesa, California 92626-1925
Attn: John R. Simon, Esq.
Fax No.: (714) 513-5130
Telephone No.: (714) 513-5100
If to the Delaware
Limited Partnership : Pacific Gulf Properties Inc.
363 San Miguel Drive, Suite 100
Newport Beach, California 92660
Attn: Mr. Donald G. Herrman
Fax No.: (714) 721-2714
Telephone No.: (714) 721-2700
With a copy to: Cox, Castle & Nicholson LLP
2049 Century Park East, Suite 2800
Los Angeles, California 90067
Attn: Lewis G. Feldman, Esq.
Fax No.: (310) 277-7889
Telephone No.: (310) 284-2221
</TABLE>
or such other address as either party may from time to time specify in writing
to the other.
SECTION 12.4. INTEGRATION. All prior or contemporaneous agreements,
contracts, promises, representations, and statements, if any, among PGP-TG and
the Existing Partners, or their representatives, are merged into this Agreement,
and this Agreement shall constitute the entire understanding between the General
Partners with respect to the subject matter hereof. Provided, however, any
agreement, contract, or document dated subsequent to the date of this Agreement
(whether or not executed contemporaneously with this Agreement) shall not be
merged into this Agreement, including, without limitation the Conversion
Agreement, the California General Partnership Amendments, the LP Agreement, the
Exchange Rights Agreement, and the Tax Exempt Debt Refunding Instruments.
36
<PAGE> 38
SECTION 12.5. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto.
SECTION 12.6. ENFORCEMENT. If any party hereto institutes any action or
proceeding to interpret or enforce any provision of this Agreement or for an
alleged breach of any provision of this Agreement, the prevailing party shall be
entitled to recover its actual attorneys' fees and all fees, costs and expenses
incurred in connection with such action or proceeding. Such attorneys' fees,
fees, costs and expenses shall include post judgment attorneys' fees, fees,
costs and expenses incurred on appeal or in collection of any judgment. This
provision is separate and several and shall survive the merger of this provision
into any judgment on this Agreement. No person or entity other than the parties
hereto is or shall be entitled to bring any action to enforce any provision of
this Agreement against any of the parties hereto, and the covenants and
agreements set forth in this Agreement shall be solely for the benefit of, and
shall be enforceable only by, the parties hereto or their respective successors
and assigns as permitted hereunder.
SECTION 12.7. CONFIDENTIALITY. The California General Partnership and
the Existing Partners agree to maintain as confidential and, except as required
by law, to not disclose to any third parties, other than to themselves,
attorneys, and accounting and business advisors, all information in their
possession concerning the Conversion. None of the Existing Partners shall make
any public announcement by way of press release or otherwise of the Conversion,
but they shall be entitled to describe the Conversion contemplated hereunder
amongst themselves and any constituent partners. PGP-TG shall have the right to
disclose any and all information in its possession (confidential or otherwise)
concerning the California General Partnership and/or the Conversion for purposes
of making any press release concerning the Conversion as PGP-TG deems necessary
or appropriate in its sole and absolute discretion to comply with laws, whether
securities, real estate or otherwise.
SECTION 12.8. 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.
SECTION 12.9. EXHIBITS. All exhibits attached hereto are incorporated
herein as though fully set forth herein.
SECTION 12.10. FURTHER ASSURANCES. Each party agrees to cooperate fully
with the other parties and to prepare, execute, and deliver any further required
instruments, and shall take or cause to be taken such other or further action as
either party shall reasonably request at any time or from time to time in order
to consummate the terms and provisions and to carry into effect the intents and
purposes of this Agreement and the Transaction Documents.
37
<PAGE> 39
SECTION 12.11. RISK OF LOSS. In the event of any of loss or damage to
all or any part of the Property by fire or other casualty prior to the Closing
that PGP or PGP-TG reasonably believes could be in excess of $200,000 on the
Property, or which materially impedes access to such Property, then
notwithstanding the existence of any casualty insurance, PGP or PGP-TG shall
have the option in their sole discretion to: (i) terminate this Agreement and
any other Transaction Document to which it is a party in their entirety; or (ii)
continue this Agreement and any Transaction Document to which it is a party,
whereupon all available insurance will be used to repair the damage (with
appropriate adjustments to the value of the Property to account for any
deductible). The provisions of subsection (ii) above shall apply (and survive
Closing) in the event of any loss or damage in an amount less than $200,000
provided that (a) said loss is an insurable loss, (b) the California General
Partnership is actually insured against such loss, and (c) any proceeds of said
insurance are assigned to the Delaware Limited Partnership to be used to repair
the damage at the discretion of PGP or PGP-TG. PGP or PGP-TG may terminate this
Agreement and any other Transaction Document to which it is a party in their
entirety for a loss of less than $200,000 which does not meet the conditions set
forth in paragraphs (a), (b) and (c) above.
SECTION 12.12. LEGAL REPRESENTATION. Each party has been represented by
legal counsel in connection with the negotiation of the Conversion herein
contemplated and the drafting and negotiation of this Agreement and the
Transaction Documents. Cox, Castle & Nicholson LLP ("CCN") has represented
solely PGP-TG, and Sheppard, Mullin, Richter & Hampton ("SMRH") has represented
solely the California General Partnership, in connection with the negotiation,
drafting, transactions and matters contemplated under this Agreement and any
other Transaction Documents relating to the transactions or matters covered
hereby, the LP Agreement and all matters, things, documents and transactions
contemplated under the LP Agreement and under this Agreement or the other
Transaction Documents. CCN has not provided legal services to or been legal
counsel for the California General Partnership, the Existing Partners, and none
of the foregoing has relied on CCN in that regard. SMRH has not provided legal
services to or been legal counsel for PGP or PGP-TG and none of the foregoing
has relied on SMRH in that regard. The normal rule of construction that
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any other Transaction Documents.
SECTION 12.13. TIME OF THE ESSENCE. Time is of the essence of this
Agreement.
SECTION 12.14. GOVERNING LAW. This Agreement shall be construed in
accordance with and government by the laws of the State of California, without
giving effect to principles of conflicts of law.
SECTION 12.15. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
The signature of each Existing Partner constitutes execution as an Existing
Partner on its own behalf and as a partner of the
38
<PAGE> 40
California General Partnership.
IN WITNESS WHEREOF, the parties hereto have caused this Restructuring
Agreement to be duly executed by their respective authorized representatives as
of the day and year first- above written.
TERRACE GARDENS APARTMENTS,
A CALIFORNIA GENERAL PARTNERSHIP
---------------------------------
Bruce H. White, an individual
---------------------------------
Betty C. White, an individual
THE SHORT FAMILY TRUST
By:
-----------------------------
Donald R. Short, Trustee
By:
----------------------------
Marilyn M. Short, Trustee
225 UNITS LIMITED,
A CALIFORNIA LIMITED PARTNERSHIP
By:
-----------------------------
Donald R. Short
General Partner
[signatures for Restructuring Agreement continued on page 40]
39
<PAGE> 41
[signatures for Restructuring Agreement continued from page 39]
THE STEWART FAMILY TRUST
By:
------------------------------------
Richard M. Stewart, Trustee
By:
------------------------------------
Mattie M. Stewart, Trustee
PGP TERRACE GARDENS HOLDINGS INC.,
A DELAWARE CORPORATION
By:
------------------------------------
Name:
Title:
PACIFIC GULF PROPERTIES INC.,
A MARYLAND CORPORATION
By:
------------------------------------
Name:
Title:
40
<PAGE> 42
EXHIBIT A
LP AGREEMENT
<PAGE> 43
EXHIBIT B
EXCHANGE RIGHTS AGREEMENT
<PAGE> 44
EXHIBIT C
TAX EXEMPT DEBT INSTRUMENTS
1. Indenture of Trust, dated as of June 1, 1985, as amended by the
First Supplemental Indenture, dated as of January 14, 1992,
between the Issuer and the Trustee;
2. Loan Agreement, dated as of June 1, 1985, among the Issuer, the
Trustee and the Developer;
3. Regulatory Agreement and Declaration of Restrictive Covenants,
dated as of June 1, 1985, among the Issuer, the Trustee and the
Developer;
4. Letter of Credit No. 101, dated June 4, 1985, issued by the
Credit Bank;
5. Reimbursement Agreement, dated as of June 1, 1985, between the
Credit Bank and the Developer; and
6. Surety Bond, dated June 4, 1985, issued by the Surety.
For purposes of this Exhibit, the following terms have the following
definitions:
"Issuer" shall mean the City of Escondido.
"Trustee" shall mean First Trust of California, National Association.
"Developer" shall mean Terrace Gardens Apartments, a California general
partnership.
"Credit Bank" shall mean Glendale Federal Bank, Federal Savings Bank.
"Surety" shall mean Industrial Indemnity Company.
<PAGE> 45
EXHIBIT D
CALIFORNIA GENERAL PARTNERSHIP LEGAL OPINION
At the Closing, the California General Partnership shall cause to be
delivered to PGP-TG an opinion of counsel, in form and substance reasonably
acceptable to PGP-TG, containing the legal opinion that: (i) each Existing
Partner has the power and authority to enter into and perform its obligations
under the Transaction Documents to which they are a party; (ii) all partners of
the Existing Partners (and all of the partners of Short Morning View Ltd., a
California limited partnership) have consented to the Conversion and the
execution of the Transaction Documents; (iii) the Transaction Documents to which
they are a party have been duly authorized by all necessary action on the part
of each Existing Partner, and have been duly executed and delivered by each
Existing Partner; and (iv) the Transaction Documents to which they are a party
constitute the legally valid and binding obligations of the Existing Partners,
enforceable in accordance with their respective terms, except as enforcement may
be limited by bankruptcy laws or the laws affecting the rights of creditors
generally. Additionally, in rendering the enforceability opinion described in
clause (iv) above, counsel for the Existing Partners shall be entitled to rely
on the representation of the Existing Partners, without further investigation,
that the solicitation materials utilized by the Existing Partners to obtain the
approval of the constituents of the Existing Partners to the Transaction
Documents to which they are a party and the transactions herein contemplated did
not misstate or omit to state any material fact, and were otherwise accurate and
complete in all material respects.
<PAGE> 46
EXHIBIT E
LEGAL OPINION OF PGP-TG
At the Closing, the PGP-TG shall cause to be delivered to the Existing
Partners an opinion of counsel, in form and substance reasonably acceptable to
the Existing Partners, containing the legal opinion that: (i) PGP-TG has the
power and authority to enter into and perform its obligations under the
Transaction Documents to which it is a party; (ii) the Transaction Documents to
which it is a party have been duly authorized by all necessary action on the
part of PGP-TG, and have been duly executed and delivered by PGP-TG; (iii) the
Transaction Documents to which it is a party constitute the legally valid and
binding obligations of PGP-TG, enforceable in accordance with their respective
terms, except as enforcement may be limited by bankruptcy laws or the laws
affecting the rights of creditors generally.
<PAGE> 47
EXHIBIT F
QUALIFIED PROJECT COSTS
Total "Proceeds"
Par Amount
Cost on Issuance
Paydown on Bonds
Investment Earnings
Total "Proceeds"
Project "Good Costs"
Land (Title and Closing)
Construction Costs
Interest/Taxes During Construction
Supervisor's and Contractor's Fees
Total "Good Costs"
Percentage of "Good Costs" to "Proceeds"
<PAGE> 48
EXHIBIT G
CALIFORNIA GENERAL PARTNERSHIP AMENDMENT NO. 1
<PAGE> 49
EXHIBIT H
CALIFORNIA GENERAL PARTNERSHIP AMENDMENT NO. 2
<PAGE> 50
EXHIBIT I
EXISTING CONTRACTS
<TABLE>
<CAPTION>
<S> <C> <C>
1. Vendor: Dewey Pest Control Co.
Date of Contract: 2/27/96
Term/Cancellation: 12 months, thereafter 30 days
written
Services: Pest Control
2. Vendor: Wells Fargo Guard Services
Date of Contract: 3/1/97
Term/Cancellation: 30 days written notice
Services: Security Services
</TABLE>
<PAGE> 51
EXHIBIT J
RENT ROLL
<PAGE> 52
EXHIBIT K
APPROVED TITLE FORM
<PAGE> 53
EXHIBIT L
CERTIFICATION OF NON-FOREIGN STATUS
The undersigned hereby certifies the following:
1. The undersigned is not a foreign corporation, foreign
partnership, foreign trust, foreign estate or foreign person (as those terms are
defined in the Internal Revenue Code of 1986, as amended (the "Code") and the
Income Tax Regulations promulgated thereunder);
2. The undersigned's U.S. employer or tax (social security)
identification number is ____________________.
The undersigned understands that this Certification of Non-Foreign
Status may be disclosed to the Internal Revenue Service by PGP Terrace Gardens
Holdings Inc., a Delaware corporation, general partner of Terrace Gardens - PGP,
L.P., a Delaware limited partnership (the "General Partner"), and that any false
statement contained herein could be punished by fine, imprisonment, or both.
The undersigned hereby agrees to indemnify, defend and hold the General
Partner 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 General Partner as a
result of: (i) the undersigned's failure to pay U.S. Federal income tax which
the undersigned 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 of Non-Foreign Status 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.
Date: June 12, 1997
_____________________________, a
------------------------
By: ________________________
________________________
(Print Name and Title)
<PAGE> 54
EXHIBIT M
PROPERTY MANAGEMENT AGREEMENT
<PAGE> 55
EXHIBIT N
INTEREST OF EXISTING PARTNERS
<TABLE>
<CAPTION>
EXISTING PARTNER INTEREST
---------------- --------
<S> <C>
Short Family Trust 33.196139%
Stewart Family Trust 42.190000%
Bruce and Betty White 16.841290%
225 Units Limited 7.772571%
</TABLE>
<PAGE> 56
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C> <C>
ARTICLE 1
DEFINITIONS................................................................................ 2
ARTICLE 2
AGREEMENTS REGARDING CONVERSION............................................................ 10
SECTION 2.1. THE CALIFORNIA GENERAL PARTNERSHIP AMENDMENTS................. 10
SECTION 2.2. THE CONVERSION................................................ 10
SECTION 2.3. CONTRIBUTION OF CAPITAL....................................... 11
SECTION 2.4. CONTINUATION OF INTERESTS..................................... 11
SECTION 2.5. EXCHANGE OF PARTNERSHIP INTERESTS............................. 12
SECTION 2.6. SAME ENTITY................................................... 12
SECTION 2.7. RIGHTS UPON CONVERSION........................................ 12
SECTION 2.8. PRORATIONS.................................................... 13
SECTION 2.9. CONVERSION NOT A DISSOLUTION.................................. 15
SECTION 2.10. MANAGEMENT AND FEES........................................... 16
SECTION 2.11. THE LP AGREEMENT.............................................. 16
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PGP-TG AND PGP........................................... 16
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF PGP-TG AND PGP.............. 16
SECTION 3.2. ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION.......... 16
SECTION 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT.......................... 16
SECTION 3.4. BINDING OBLIGATION............................................ 17
SECTION 3.5. NO VIOLATION.................................................. 17
SECTION 3.6. BANKRUPTCY.................................................... 17
SECTION 3.7. DISCLOSURE.................................................... 17
SECTION 3.8. REPORTS....................................................... 17
SECTION 3.9. BROKERS....................................................... 18
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE EXISTING PARTNERS.................................... 18
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE EXISTING PARTNERS....... 18
SECTION 4.2. ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION.......... 18
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT.......................... 18
SECTION 4.4. CONSENTS AND APPROVALS........................................ 18
SECTION 4.5. BINDING OBLIGATION............................................ 18
SECTION 4.6. NO VIOLATION.................................................. 18
SECTION 4.7. ADEQUATE DISCLOSURE........................................... 19
SECTION 4.8. ABSENCE OF UNDISCLOSED LIABILITIES............................ 19
SECTION 4.9. COMPLIANCE WITH LAWS.......................................... 19
SECTION 4.10. RENT CONTROL.................................................. 19
SECTION 4.11. LICENSES, PERMITS, CERTIFICATES OF OCCUPANCY, ZONING, ETC..... 19
SECTION 4.12. ENVIRONMENTAL MATTERS......................................... 20
SECTION 4.13. TAXES AND ASSESSMENTS......................................... 20
SECTION 4.14. PHYSICAL CONDITION............................................ 20
SECTION 4.15. LEASES........................................................ 20
SECTION 4.16. NO LITIGATION OR ADVERSE EVENTS............................... 21
SECTION 4.17. CONTRACTS AND AGREEMENTS...................................... 21
</TABLE>
<PAGE> 57
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SECTION 4.18. NO OTHER AGREEMENTS.......................................... 21
SECTION 4.19. NON-FOREIGN PERSON........................................... 21
SECTION 4.20. EMPLOYEES.................................................... 22
SECTION 4.21. BROKERS...................................................... 22
SECTION 4.22. OPERATING STATEMENTS......................................... 22
SECTION 4.23. EXISTING DEBT................................................ 22
SECTION 4.24. SECURITY DEPOSITS............................................ 22
SECTION 4.25. DEPOSITS AND REIMBURSEMENTS.................................. 22
SECTION 4.26. BANKRUPTCY................................................... 23
SECTION 4.27. DISCLOSURE................................................... 23
SECTION 4.28. SOLVENCY AND EQUIVALENCY OF VALUE REPRESENTATIONS............ 23
SECTION 4.29. EXISTENCE OF TAX EXEMPTION; GOOD COSTS/BAD COSTS
DURING CONSTRUCTION.......................................... 24
SECTION 4.30. INDEPENDENT TAX ADVICE....................................... 24
ARTICLE 5
COVENANTS AND AGREEMENTS OF PGP-TG......................................................... 25
SECTION 5.1. NO TAX TERMINATION OR DISSOLUTION............................. 25
ARTICLE 6
COVENANTS AND AGREEMENTS OF THE EXISTING PARTNERS.......................................... 25
SECTION 6.1. EXISTENCE OF TAX EXEMPTION; GOOD COSTS/BAD COSTS
DURING CONSTRUCTION........................................... 25
SECTION 6.2. ACTIONS AFFECTING ASSETS...................................... 25
SECTION 6.3. ACCESS TO PROPERTY AND RECORDS................................ 25
SECTION 6.4. LICENSE AND ENTITLEMENTS...................................... 25
SECTION 6.5. NO EXTRAORDINARY TRANSACTIONS................................. 25
SECTION 6.6. SOLICITATION OR NEGOTIATION................................... 26
SECTION 6.7. INSURANCE..................................................... 26
SECTION 6.8. TAXES AND ASSESSMENTS......................................... 26
SECTION 6.9. BINDING COMMITMENTS........................................... 26
SECTION 6.10. OPERATION OF PROPERTY......................................... 26
SECTION 6.11. CLOSING INFORMATION........................................... 26
ARTICLE 7
PGP-TG'S CONDITIONS PRECEDENT.............................................................. 27
SECTION 7.1. PGP-TG'S CONDITIONS PRECEDENT................................. 27
ARTICLE 8
EXISTING PARTNERS' CONDITIONS PRECEDENT.................................................... 28
SECTION 8.1. EXISTING PARTNERS' CONDITIONS PRECEDENT....................... 28
ARTICLE 9
INDEMNITY.................................................................................. 29
SECTION 9.1. INDEMNITY OF PGP-TG AND THE DELAWARE LIMITED PARTNERSHIP...... 29
SECTION 9.2. INDEMNITY OF THE EXISTING PARTNERS............................ 29
SECTION 9.3. OFFSET........................................................ 29
SECTION 9.4. EXCHANGE NOTICE............................................... 31
SECTION 9.5. SURVIVAL OF PROVISIONS........................................ 31
</TABLE>
<PAGE> 58
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ARTICLE 10
THE CLOSING................................................................................ 31
SECTION 10.1. THE CLOSING.................................................. 31
SECTION 10.2. DELIVERIES BY THE EXISTING PARTNERS.......................... 31
SECTION 10.3. DELIVERIES BY PGP-TG......................................... 32
SECTION 10.4. DELIVERIES BY PGP............................................ 33
SECTION 10.5. AUTHORIZED EXISTING PARTNERS SIGNATORY....................... 33
SECTION 10.6. PAYMENT OF TRANSACTION EXPENSES AND DEFERRED MAINTENANCE..... 33
ARTICLE 11
TERMINATION................................................................................ 33
SECTION 11.1. TERMINATION.................................................. 33
SECTION 11.2. EFFECT OF TERMINATION........................................ 34
SECTION 11.3. PAYMENT OF TRANSACTION EXPENSES UPON TERMINATION............. 34
SECTION 11.4. UNILATERAL TERMINATION....................................... 34
ARTICLE 12
MISCELLANEOUS.............................................................................. 35
SECTION 12.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES................... 35
SECTION 12.2. AMENDMENTS; NO WAIVERS....................................... 35
SECTION 12.3. NOTICES...................................................... 35
SECTION 12.4. INTEGRATION.................................................. 36
SECTION 12.5. SUCCESSORS AND ASSIGNS....................................... 37
SECTION 12.6. ENFORCEMENT.................................................. 37
SECTION 12.7. CONFIDENTIALITY.............................................. 37
SECTION 12.8. SEVERABILITY................................................. 37
SECTION 12.9. EXHIBITS..................................................... 37
SECTION 12.10. FURTHER ASSURANCES........................................... 37
SECTION 12.11. RISK OF LOSS................................................. 38
SECTION 12.12. LEGAL REPRESENTATION......................................... 38
SECTION 12.13. TIME OF THE ESSENCE.......................................... 38
SECTION 12.14. GOVERNING LAW................................................ 38
SECTION 12.15. COUNTERPARTS; EFFECTIVENESS.................................. 38
EXHIBIT A - LP AGREEMENT
EXHIBIT B - EXCHANGE RIGHTS AGREEMENT
EXHIBIT C - TAX EXEMPT DEBT INSTRUMENTS
EXHIBIT D - CALIFORNIA GENERAL PARTNERSHIP LEGAL OPINION
EXHIBIT E - LEGAL OPINION OF PGP
EXHIBIT F - QUALIFIED PROJECT COSTS
EXHIBIT G - CALIFORNIA GENERAL PARTNERSHIP AMENDMENT NO. 1
EXHIBIT H - CALIFORNIA GENERAL PARTNERSHIP AMENDMENT NO. 2
EXHIBIT I - EXISTING CONTRACTS
EXHIBIT J - RENT ROLL
EXHIBIT K - APPROVED TITLE FORM
EXHIBIT L - CERTIFICATION OF NON-FOREIGN STATUS
EXHIBIT M - PROPERTY MANAGEMENT AGREEMENT
EXHIBIT N - INTEREST OF EXISTING PARTNERS
</TABLE>
<PAGE> 1
EXHIBIT 10.3
RESTRUCTURING AGREEMENT
MORNING VIEW TERRACE TRANSACTION
<PAGE> 2
RESTRUCTURING AGREEMENT
THIS RESTRUCTURING AGREEMENT, dated as of May 23, 1997 (this
"Agreement"), by and among PGP MORNING VIEW TERRACE HOLDINGS INC., a Delaware
corporation (herein, "PGP-MVT"), PACIFIC GULF PROPERTIES INC., a Maryland
corporation (herein, "PGP"), MORNING VIEW TERRACE, a California general
partnership, and all of the general partners thereof, namely DONALD R. SHORT
and MARILYN M. SHORT, as trustees of the Short Family Trust under Declaration
of Trust dated May 1, 1989, and SHORT MORNING VIEW LTD., a California limited
partnership (collectively, the "Existing Partners").
WITNESSETH:
WHEREAS, Morning View Terrace is a general partnership formed pursuant
to that certain Partnership Agreement, dated November 6, 1984, as amended, and
existing under the laws of the State of California (the "California General
Partnership");
WHEREAS, the California General Partnership owns and manages a
326-unit apartment complex known as the Morning View Terrace Apartments (the
"Property") in the City of Escondido, County of San Diego, California;
WHEREAS, the California General Partnership desires to convert from a
California general partnership to a Delaware limited partnership (the "Delaware
Limited Partnership");
WHEREAS, Section 17-217 of the Delaware Revised Uniform Limited
Partnership Act, 6 Del.C. Section 17-101, et seq., and Article 9 of the
Uniform Partnership Act of 1994 authorize the conversion of the California
General Partnership to the Delaware Limited Partnership;
WHEREAS, PGP-MVT will be admitted as a general partner of the
California General Partnership upon execution of the California General
Partnership Amendments, and will, upon Conversion, be the sole general partner
of the Delaware Limited Partnership; and
WHEREAS, the Existing Partners of the California General Partnership
will, upon Conversion, be the limited partners of the Delaware Limited
Partnership.
NOW, THEREFORE, the parties hereto hereby agree as follows:
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<PAGE> 3
ARTICLE 1
DEFINITIONS
Certain of the terms used in this Agreement that are not otherwise
defined herein shall have the meanings set forth below.
1.1. "Added Net Value" shall mean an amount computed by dividing
(i) the positive difference, if any, of Available Cash for the period from and
including the Effective Date to and including the Date over $1,930,500,
multiplied by 50%, by (ii) .083.
1.2. "Amended Statement of Partnership" means that certain
amendment to the Statement of Partnership currently on record with the County
Recorder's Office of San Diego County.
1.3. "Approved Title Form" shall mean the Preliminary Report for
the Property in the form of, and containing the exceptions, described on
Exhibit K.
1.4. "Appurtenances" shall mean all rights, privileges, interests,
licenses, claims, easements, benefits, covenants, conditions and servitudes of
any type or nature which are appurtenant to or otherwise benefit a parcel of
Land and/or the Improvements located thereon, including without limitation, all
minerals, oil, gas and other hydrocarbon substances on or under the Land, as
well as all development rights, air rights, water, water rights and water stock
relating to a parcel of Land and any other easements, rights of way or
appurtenances and used in connection with the beneficial operation, use and
enjoyment of such Land and/or Improvements or any other appurtenance, together
with all rights of the California General Partnership in and to streets,
sidewalks, alleys, gores, strips, driveways, parking areas and areas adjacent
thereto or used in connection therewith, and all rights of the California
General Partnership in any land lying in the bed of any existing or proposed
street adjacent to any Land.
1.5. "Bankruptcy Code" shall mean Title 11 of the U.S. Code, as now
constituted or hereafter amended.
1.6. "California General Partnership Amendments" shall mean the
amendments to the general partnership agreement of the California General
Partnership substantially in the form attached hereto as Exhibit G and Exhibit
H.
1.7. "CAL. UPA" shall mean the California Uniform Partnership Act
of 1994, Section 16100 et seq. of the California Corporations Code.
1.8. "Certificate of Limited Partnership" means the Certificate of
Limited Partnership required to be filed with the Secretary of State of the
State of Delaware pursuant to Section 17-217 of the DEL. RULPA.
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<PAGE> 4
1.9. "Closing" shall mean the consummation of the Conversion. The
Conversion shall occur not later than the Closing Deadline.
1.10. "Closing Deadline" shall mean June 16, 1997.
1.11. "Code" shall mean the Internal Revenue Code of 1986, as
amended, including all tax regulations promulgated thereunder.
1.12. "Conditions Precedent" shall mean, collectively, the PGP-MVT
Conditions Precedent and the Existing Partners Conditions Precedent, each set
forth in Article 7 and Article 8, respectively, of this Agreement.
1.13. "Contracts" shall mean all written or oral management,
architectural, engineering, leasing, insurance, bonding, construction,
financing, guarantee, indemnity, service, maintenance, operating, repair,
collective bargaining, employment, employee benefit, equipment leasing, supply,
warranty, purchase, consulting, professional service, advertising, promotion,
public relations and other contracts and commitments (excluding the Leases) in
any way relating to the Property or any part thereof. The foregoing shall not,
however, include any contract of engagement for the legal services of Sheppard,
Mullin, Richter & Hampton.
1.14. "Conversion Agreement" shall mean the Agreement and Plan of
Conversion required to be executed by PGP-MVT and the Existing Partners under
the DEL. RULPA and the CAL. UPA.
1.15. "Conversion" shall mean the conversion of the California
General Partnership to the Delaware Limited Partnership as contemplated under
this Agreement and the other Transaction Documents referred to herein, and
shall also include the refunding of the Tax Exempt Debt, the execution of the
California General Partnership Amendments, the execution of the LP Agreement
and all other transactions related to the foregoing.
1.16. "Date" shall mean the date which is eighteen (18) months after
the Effective Date.
1.17. "Deferred Maintenance" shall mean all costs identified by
PGP-MVT as costs of deferred maintenance to the California General Partnership
assets.
1.18. "Delaware Certificate of Conversion" shall mean the
Certificate of Conversion required to be filed with the Secretary of State of
the State of Delaware pursuant to Section 17-217 of the DEL. RULPA.
1.19. "Delaware Limited Partnership" means Morning View Terrace -
PGP, L.P., a Delaware limited partnership.
1.20. "DEL. RULPA" shall mean the Delaware Revised Uniform Limited
Partnership
3
<PAGE> 5
Act, 6 Del.C. Section 17-101, et seq.
1.21. "Deposits and Reimbursements" shall mean (a) deposits made
with or tendered to utility companies to secure service or to permit the
California General Partnership or their predecessors in interest to tie in to
existing service grids or to cause a utility company to install connections or
extensions necessary to provide service, (b) deposits made by the California
General Partnership or their predecessors in interest with any bonding or
surety company or deposits, bonds or other financial security devices posted
with or for the benefit of any governmental or quasi-governmental agency in
connection with subdivision or public improvement bonds obtained by the
California General Partnership or their predecessors in interest or in
connection with any development agreement, subdivision agreement, parcel map or
tract map, and (c) any refundable fees, payments or reimbursements which the
California General Partnership or its predecessors in interest or the
then-current owner or occupant of the Real Property or Improvements is entitled
to receive from any governmental or quasi-governmental or private body in
respect of the ownership and development of the Land or Improvements or any
public improvements made in connection with the Land or Improvements.
1.22. "Effective Date" shall mean the effective date set forth in
the Delaware Certificate of Conversion filed with the Secretary of State of the
State of Delaware.
1.23. "Environmental Requirements" shall mean all applicable
statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises and similar items, of
all governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of human health or the
environment, including, without limitation: (i) all requirements, including
but not limited to those pertaining to reporting, licensing, permitting,
investigation and remediation of emissions, discharges, releases or threatened
releases of Hazardous Materials, chemical substances, pollutants, contaminants
or hazardous or toxic substances, materials or wastes whether solid, liquid or
gaseous in nature, into the air, surface water, groundwater or land, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal transport or handling of chemical substances, pollutants, contaminants
or hazardous or toxic substances, materials, or wastes, whether solid, liquid
or gaseous in nature; and (ii) all requirements pertaining to the protection of
the health and safety of employees or the public.
1.24. "Exchange Rights Agreement" shall mean that certain Exchange
Rights Agreement, in substantially the form attached hereto as Exhibit B.
1.25. "Existing Contracts" shall mean those Contracts identified on
Exhibit I.
1.26. "Existing Partners" shall mean the existing partners of the
California General Partnership and who will, upon Conversion, become the
limited partners of the Delaware
4
<PAGE> 6
Limited Partnership pursuant to the LP Agreement.
1.27. "Existing Partners' Conditions Precedent" shall have the
meaning contained in Article 8.
1.28. "Hazardous Materials" shall mean (i) any flammables, explosive
or radioactive materials, contaminants or hazardous or toxic wastes, materials
or substances or related materials whether solid, liquid or gaseous in nature,
including, without limitation, substances defined as "hazardous substances,"
"hazardous materials," "toxic substances" or "solid waste" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sec. 9601, et seq.; the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et seq.; the Toxic Substances Control Act, 15 U.S.C.,
Section 2601 et seq.; the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901 et seq.; and in the regulations adopted and publications
promulgated pursuant to said laws; (ii) those substances listed in the United
States Department of Transportation Table (49 C.F.R. 172.101 and amendments
thereto) or by the Environmental Protection Agency (or any successor agency) as
hazardous substances (40 C.F.R. Part 302 and amendments thereto); (iii) those
substances defined as "hazardous wastes," "hazardous substances" or "toxic
substances" in any similar federal, state or local laws or in the regulations
adopted and publications promulgated pursuant to any of the foregoing laws or
which otherwise are regulated by any governmental authority, agency,
department, commission, board or instrumentality of the United States of
America, the State of California or any political subdivision thereof; (iv) any
pollutant or contaminant or hazardous, dangerous or toxic chemicals, materials,
or substances within the meaning of any other applicable federal, state, or
local law, regulation, ordinance, or requirement (including consent decrees and
administrative orders) relating to or imposing liability or standards of
conduct concerning any hazardous, toxic, or dangerous waste, substance or
material all as amended; (v) petroleum or any by-products thereof; (vi) any
radioactive material, including any source, special nuclear or by-product
material as defined at 42 U.S.C. Sections 2011 et seq., as amended, and in the
regulations adopted and publications promulgated pursuant to said law; (vii)
asbestos in any form or condition; and (viii) polychlorinated biphenyls.
1.29. "Improvements" shall mean all improvements, structures or
fixtures constructed upon the Land and/or Appurtenances, including without
limitation, all buildings and structures presently located on the Land and/or
Appurtenances, all apparatus, equipment and appliances presently located on the
Land and/or Appurtenances, and used in connection with the operation or
occupancy thereof, such as heating and air conditioning systems and facilities
used to provide any utility services, parking services, refrigeration,
ventilation, garbage disposal, recreation or other services thereto, and all
landscaping and leasehold improvements of tenants, if any, which become the
property of the lessor upon termination of a Lease.
1.30. "Indemnification Agreement" shall mean that certain
indemnification agreement, dated June 12, 1997, by and among PGP, the Delaware
Limited Partnership, Terrace Gardens - PGP, L.P., and Pacific Inland
Communities, LLC.
5
<PAGE> 7
1.31. "Insolvency Laws" shall mean any applicable federal or state
bankruptcy law or other similar law.
1.32. "Intangible Personal Property" shall mean all of the
California General Partnership's right, title, claim, interest and estate in,
to and under any and all (i) intangible personal property owned by the
California General Partnership which relates in any manner to or arises from or
in connection with the Real Property and/or Tangible Personal Property and any
and all other property, rights in or to property, general intangibles and
contractual rights which the California General Partnership may have which are
necessary or useful in connection with, or otherwise affect or relate to, the
acquisition, development, improvement, holding, use, operation, maintenance,
leasing or sale of the Real Property and/or Tangible Personal Property,
including, but not limited to, any and all plans, specifications, subdivision
maps and filings with respect thereto, applications, entitlements, Licenses and
Entitlements, subdivision or other bonds, Deposits and Reimbursements,
engineering or soil reports, environmental and hazardous and toxic waste
reports and studies, surveys, maps, correspondence, inspection reports,
management reports, marketing reports, marketing displays and brochures, all
contract rights, warranties from contractors, architects, engineers and
material and labor suppliers whether written or implied, copies of all books
and records (provided all original Leases and Lease files are included in this
definition), all claims, choses in action, judgments, remedies, damages and
causes of action all easements, licenses and rights-of-way, occupancy or use
agreements and all other documents affecting or relating to the Real Property
and/or Tangible Personal Property; (ii) insurance proceeds received after
Closing on account of a pre-Closing event, but only to the extent of costs or
liabilities not covered by the Existing Partners' indemnity; (iii) any
trademark, service mark, trade name or name customarily used or associated with
the Real Property and/or Tangible Personal Property, and (iv) any and all other
warranties, guarantees, permits, entitlements and other intangible rights of
any type or nature.
1.33. "Land" shall mean the parcels of real property described on
the Approved Title Form in Exhibit K attached hereto.
1.34. "Law(s)" shall mean all applicable housing and building codes,
environmental, life safety, laws, rules and regulations including without
limitation, those related to handicapped or disabled (including without
limitation ADA and the Fair Housing Amendments Act of 1988) and land use and
zoning laws and regulations, and other applicable local, state and federal laws
and regulations.
1.35. "Leases" shall mean all leases, occupancy agreements and other
similar agreements, together with all modifications, extensions and renewals
thereof, and any guarantees of any of the foregoing with respect to or demising
any part of the Property, which are described on a Rent Roll.
1.36. "Licenses and Entitlements" shall mean all licenses,
franchises, certifications, authorizations, approvals, rights, privileges,
entitlements and permits issued or approved by any
6
<PAGE> 8
governmental or quasi-governmental authority or other person or entity having
authority over the Property, and all applications, filings and submittals
therefor, in each case relating to the operation, ownership, subdivision,
development, use or maintenance of the Property or any part thereof, including,
without limitation, construction permits, grading permits, elevator permits,
machinery permits, business licenses, ingress and egress permits, development
agreements, subdivision, parcel and tract maps and approvals thereof, plans
and/or permits required under the applicable zoning regulations, variances,
utility agreements and commitments, improvement agreements, certificates of
occupancy and the like, but excluding therefrom for all purposes of this
Agreement any licenses issued to or solely on behalf of any Tenant.
1.37. "Losses and Liabilities" shall mean any and all obligations,
liabilities, claims, liens or encumbrances, demands, losses, damages, causes of
action, judgments, costs and expenses (including attorneys' fees), whether
direct, contingent or consequential, and no matter how arising, incurred or
suffered by any indemnified party.
1.38. "LP Agreement" shall mean the Limited Partnership Agreement
among PGP-MVT and the Existing Partners governing the Delaware Limited
Partnership, substantially in the form attached hereto as Exhibit A, with such
additions thereto and changes therein as are approved by the parties executing
the same, with such approval to be conclusively evidenced by the execution and
delivery thereof.
1.39. "Net Value" shall mean $15,000,000 minus the outstanding
principal balance of the Tax Exempt Debt as of the Effective Date.
1.40. "Partnership Units" shall mean the partnership units granted
upon execution of the California General Partnership Amendments.
1.41. "Personal Property" shall mean the Tangible Personal Property
and the Intangible Personal Property.
1.42. "PGP" shall mean Pacific Gulf Properties Inc., a Maryland
corporation.
1.43. "PGP-MVT Capital Contribution" shall mean cash to be
contributed at Closing by PGP-MVT to the California General Partnership in the
amount of up to $250,000 to pay Transaction Expenses; provided, however, that,
following a reconcilliation of all Transaction Expenses following closing,
should the Transaction Expenses exceed $250,000, PGP-MVT may contribute such
additional amounts as necessary to pay such Transaction Expenses and will
receive a capital account credit for such amount.
1.44. "PGP-MVT Conditions Precedent" shall mean the conditions
precedent described in Article 7.
1.45. "PGP-MVT" shall mean PGP Morning View Terrace Holdings Inc., a
Delaware
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<PAGE> 9
corporation which will operate as the general partner of the Delaware Limited
Partnership.
1.46. "PGP Share Price" shall mean, with respect to the common stock
of Pacific Gulf Properties Inc., a Maryland corporation, the average closing
price on the New York Stock Exchange for the ten (10) consecutive trading days
immediately preceding the Effective Date.
1.47. "Property" shall mean the Morning View Terrace Apartments
located in the City of Escondido, County of San Diego, California, including
all Real Property and Personal Property.
1.48. "Property Tax Refunds" shall mean all amounts which the
California General Partnership or the Delaware Limited Partnership is entitled
to receive or receives with respect to property taxes, assessments or community
facility district taxes or assessments paid prior to the Effective Date. The
California General Partnership has assigned all right, title and interest in
the Property Tax Refunds to the Existing Partners.
1.49. "Qualified Project Costs" shall mean costs in connection with
the acquisition, construction and installation of the Property financed by Tax
Exempt Debt, but only to the extent that (i) such costs were paid or incurred
by or on account of the California General Partnership or any related person on
or after the applicable inducement date, the date of the first official action
by the issuer of the Tax Exempt Debt expressing its intent to issue revenue
bonds to assist in financing such Property, (ii) such costs are chargeable to
such Property's capital account or would be so chargeable either with a proper
election by the California General Partnership or but for a proper election by
the California General Partnership to deduct such costs, within the meaning of
old Treasury Regulation 1.103-8(a)(1); (iii) if any portion of the Property was
constructed by a related person of the California General Partnership (whether
as a general contractor or a subcontractor), such costs include only the actual
out-of-pocket costs incurred by such related person in constructing the
Property (or any portion thereof) and not, for example, intercompany profits
resulting from members of an affiliated group (within the meaning of Section
1504 of the Code) participating in the construction of the Property or payments
received by such related person due to early completion of the Property (or any
portion thereof); (iv) such costs do not constitute leasing commissions, costs
of advertising for the Property or other cost related to the rental of units in
the Property or management fees for the management and operation of the
Property after the completion date of such Property; and (v) such costs are
used to finance residential rental property described in Section 103(b)(4)(A)
of the Code and Section 1.103-8(b) of the Treasury Regulations.
1.50. "Real Property" shall mean the Land, Improvements and
Appurtenances.
1.51. "Rent Roll" shall mean the current gross rent roll of the
Property, listing for each tenant the (a) name, (b) location of leased
premises, (c) rent, (d) obligation for reimbursement of expenses, (e) amount of
security deposit and rent paid more than thirty (30) days in advance, (f) lease
commencement date, (g) lease termination date, (h) any free rent, or other
unexpired
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concessions, if any, and (i) a description of any uncured defaults, certified
by the California General Partnership as true, complete and correct, and
delivered to PGP-MVT under certificate of authenticity and accuracy by the
California General Partnership concurrently with the execution and delivery
hereof, a copy of which is set forth as Exhibit J. The omission of any item
listed in (a)-(j), inclusive, from the Rent Roll (as certified by the
California General Partnership) shall be deemed to be intentional and shall
constitute a representation that the omitted items are not in existence or are
otherwise inapplicable.
1.52. "Tangible Personal Property" shall mean and include any and
all tangible personal property owned by the California General Partnership
located at, upon or about, or affixed or attached to, or installed in the Real
Property, or used or to be used in connection with or incorporated into or
otherwise relating to the Real Property or its ownership, use, development,
construction, maintenance, management, operation, marketing, leasing,
occupancy, sale or financing, including, but not limited to, fixtures,
furniture, furnishings, tools, machinery, appliances and other apparatus and
equipment, supplies and other inventories, office equipment, communications
equipment, vehicles, storage tanks, spare and replacement parts, fuel plans,
specifications, operational handbooks, machinery and/or equipment operational
instructions and/or specifications, surveys, drawings, and records, files and
papers, whether in hard copy or computer format, including, without limitation,
structural and engineering information, sales and promotional literature,
manuals and data, sales and purchase correspondence, lists of present and
former suppliers, lists of present and former lessees and clients, personnel
and employment records, and any information relating to taxes imposed on the
Real Property.
1.53. "Tax Exempt Debt" shall mean the existing tax exempt financing
encumbering the Property which is to be refunded as a part of the Conversion.
1.54. "Tax Exempt Debt Instruments" shall mean the Tax Exempt Debt
and the agreements and other instruments described on Exhibit C entered into or
evidencing the Tax Exempt Debt.
1.55. "Tax Exempt Debt Refunding Instruments" shall mean the Tax
Exempt Refunding Debt and the agreements and other instruments to be entered
into or otherwise evidencing the Tax Exempt Refunding Debt.
1.56. "Tax Exempt Debt Reserves" shall mean all amounts deposited
with the City of Escondido or Bank of America as a reserve in connection with
the Tax Exempt Debt. The California General Partnership has assigned all right,
title and interest in the Tax Exempt Debt Reserves to the Existing Partners.
1.57. "Tax Exempt Refunding Debt" shall mean the tax exempt
financing which will refund the Tax Exempt Debt and will thereafter encumber
the Property.
1.58. "Tenant" shall mean each lessee or tenant occupying any
portion of the Property.
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1.59. "Term Sheet" shall mean that certain Term Sheet for the
Morning View Terrace Transaction, effective as of April 4, 1997, and executed
by PGP and all Existing Partners.
1.60. "Transaction Documents" shall mean this Agreement, the
Conversion Agreement, the California General Partnership Amendments, the LP
Agreement, the Exchange Rights Agreement, the Tax Exempt Debt Refunding
Instruments and any other document or agreement contemplated by the foregoing.
1.61. "Transaction Expenses" shall mean an amount of cash equal to
the sum of: (i) all fees, costs and expenses incurred in connection with the
negotiation, drafting and completion of the Transaction Documents; (ii) all
fees, costs and expenses incurred in connection with all agreements, documents
and other instruments relating to the admission of PGP-MVT to the California
General Partnership; (iii) all fees, costs and expenses of an audited financial
statement and operating statement for the California General Partnership for
the year 1996 as prepared by Ernst & Young and necessary, in the judgment of
PGP or PGP-MVT, to satisfy all applicable reporting requirements under Federal
securities laws; (iv) all costs of refinancing the outstanding principal
balance of the Tax Exempt Debt with debt that is credit-enhanced by the Federal
National Mortgage Association; and (v) all due diligence expenses, including
out of pocket expenses, of PGP or PGP-MVT for inspection of the California
General Partnership's assets.
ARTICLE 2
AGREEMENTS REGARDING CONVERSION
SECTION 2.1. THE CALIFORNIA GENERAL PARTNERSHIP AMENDMENTS. Subject
to and upon the terms and conditions of this Agreement, at the Closing the
Existing Partners and PGP-MVT do hereby agree to execute and deliver the
California General Partnership Amendments.
SECTION 2.2. THE CONVERSION.
(a) At Closing, after satisfaction or, to the extent permitted
hereunder, waiver by PGP-MVT and the Existing Partners of the Conditions
Precedent and all conditions of the Conversion set forth in the Transaction
Documents, the California General Partnership shall file the following:
1. The Certificate of Limited Partnership with the
Secretary of State of the State of Delaware;
2. The Delaware Certificate of Conversion with the
Secretary of State of the State of Delaware;
3. Registration of Foreign Limited Partnership with the
Secretary of State of the State of California;
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4. The Amended and Restated Statement of Partnership
with the County Recorder of the County of San Diego;
and
5. All other filings or recordings required by either
California law or Delaware law in connection with the
Conversion.
(b) The Conversion shall become effective on the Effective Date.
(c) At the Effective Date, the California General Partnership
shall be converted to the Delaware Limited Partnership in accordance with
Section 17-217 of the DEL. RULPA and Article 9 of the CAL. UPA.
(d) The name of the Delaware Limited Partnership shall be "Morning
View Terrace - PGP, L.P."
(e) The Conversion Agreement shall be made available to PGP-MVT
and any Existing Partner upon request.
(f) An executed copy of the Conversion Agreement shall be kept
permanently at the principal office of the Delaware Limited Partnership.
SECTION 2.3. CONTRIBUTION OF CAPITAL.
(a) At the Closing, PGP shall cause, and PGP-MVT shall contribute,
the PGP-MVT Capital Contribution to the California General Partnership.
SECTION 2.4. CONTINUATION OF INTERESTS.
(a) Upon execution of the California General Partnership
Amendments, the Existing Partners shall own Partnership Units. The number of
Partnership Units owned by Existing Partners shall be equal to the Net Value of
the California General Partnership divided by the PGP Share Price. The total
Partnership Units owned by the Existing Partners shall be allocated among the
individual Existing Partners as set forth in Exhibit N attached hereto. The
"ownership interest" of the individual Existing Partners shall be determined by
dividing the number of Partnership Units owned by such Existing Partner by the
total number of Partnership Units owned by all Existing Partners from time to
time.
(b) At the Date, any Added Net Value shall be ascertained, and if
Added Net Value exists, the Existing Partners shall be deemed to own, pro rata
in accordance with their initial Partnership Units, that additional number of
Partnership Units computed by dividing the Added Net Value by the PGP Share
Price (determined using the Date in lieu of the Effective Date). For any
Existing Partner which exchanges its Partnership Units for cash or PGP common
stock (in PGP's discretion) prior to the Date, (i) the Existing Partner shall
be credited with the number
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of additional Partnership Units that said Existing Partner would have received
had it retained its Partnership Units and (ii) PGP shall remit to said Existing
Partner cash, Partnership Units or PGP common stock (in its sole and absolute
discretion) as if such additional Partnership Units were exchanged pursuant to
the Exchange Rights Agreement on the Date.
(c) In conjunction with the refunding of the Tax Exempt Debt, if
the City of Escondido requires (i) any restrictions on the Property which are
in addition to the restrictions that currently encumber the Property or (ii) a
maturity date for the Tax Exempt Refunding Debt of sooner than the year 2027,
and either of which adversely affects the annual projected gross revenues from
the Property, the Net Value shall be readjusted by subtracting the annual
difference in gross revenue over the life of the Tax Exempt Refunding Debt
divided by .083. The Existing Partners' Partnership Units shall then be
adjusted correspondingly.
(d) The interests of PGP-MVT and the Existing Partners in the
Delaware Limited Partnership shall be equivalent to the interests of PGP-MVT
and the Existing Partners in the California General Partnership prior to the
Conversion but after execution of the California General Partnership
Amendments.
(e) At the Effective Date, distributions from the Delaware Limited
Partnership shall be governed by the provisions set forth in the LP Agreement.
(f) At the Effective Date, allocations of profit and loss shall be
governed by the provisions set forth in the LP Agreement.
SECTION 2.5. EXCHANGE OF PARTNERSHIP INTERESTS. As provided in and
subject to the Exchange Rights Agreement, the Existing Partners of the Delaware
Limited Partnership shall have the right, exercisable in their discretion, to
sell their Partnership Units to PGP for common stock of PGP or cash, at PGP's
election. The Exchange Rights Agreement shall be substantially in the form
attached hereto as Exhibit B, with such additions thereto and changes therein
as are approved by the parties executing the same, with such approval to be
conclusively evidenced by the execution and delivery of the Exchange Rights
Agreement. Notwithstanding any provision herein to the contrary, if the
Property is sold, all Partnership Units held by the Existing Partners shall be
mandatorily converted to the common stock of PGP and shall be automatically
deemed tendered for acquisition by PGP pursuant to Section 4 of the Exchange
Rights Agreement; provided, however, that the immediately preceding sentence
shall not apply in the event the Property is sold for less than its Carrying
Value (as that term is defined in the LP Agreement) or is otherwise sold for a
loss for either book or tax purposes.
SECTION 2.6. SAME ENTITY. Pursuant to the CAL. UPA and for all
purposes, upon Conversion the Delaware Limited Partnership shall be the same
entity that existed before Conversion.
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SECTION 2.7. RIGHTS UPON CONVERSION. At the Effective Date, for all
purposes of the laws of the State of Delaware and the State of California, all
of the rights, privileges and powers of the California General Partnership, and
all of the Property, real and personal and mixed, and all debts due to such
California General Partnership, as well as all other things and causes of
action belonging to the California General Partnership, shall be vested in the
Delaware Limited Partnership and shall thereafter be the Property of the
Delaware Limited Partnership, and the title to any Property vested by deed or
otherwise in the California General Partnership shall not revert or be in any
way impaired by reason of the DEL. RULPA; but all rights of creditors and all
liens upon any Property of the California General Partnership shall be
preserved unimpaired, and all debts, liabilities and duties of the California
General Partnership shall thenceforth attach to the Delaware Limited
Partnership, and may be enforced against it to the same extent as if said
debts, liabilities and duties had been incurred or contracted by it.
SECTION 2.8. PRORATIONS.
(a) Nature and Purpose of Prorations. Even though the California
General Partnership and the Delaware Limited Partnership are the same entity
and the transaction provided herein does not involve the transfer of assets,
the parties have agreed to certain prorations as if assets were being
transferred in order to reflect the economic agreement of the parties. The
prorations shall be between the Existing Partners and the Delaware Limited
Partnership. For the purpose of determining the net proration credit and
debit, the Existing Partners shall be credited with all cash of the California
General Partnership at the Closing. As between the Existing Partners and the
Delaware Limited Partnership, the Delaware Limited Partnership shall be deemed
to be the owner of the assets of the Delaware Limited Partnership on the date
of the Closing. The sum of the amounts prorated to the Delaware Limited
Partnership shall be subtracted from the sum of the amounts prorated to the
Existing Partners, and the difference (if positive) shall be referred to herein
as the "Net Credit to the Existing Partners." The sum of the amounts prorated
to the Existing Partners shall be subtracted from the sum of the amounts
prorated to the Delaware Limited Partnership, and the difference (if positive)
shall be referred to herein as the "Net Credit to the Delaware Limited
Partnership." The California General Partnership has distributed to the
Existing Partners all right, title and interest in and to such Net Credit to
the Existing Partners, and if the prorations result in a Net Credit to the
Existing Partners, the Delaware Limited Partnership shall pay in cash an amount
equal to the Net Credit to the Existing Partners on the Closing. If the
Delaware Limited Partnership does not have sufficient cash to make such a
payment, the Delaware Limited Partnership shall, as soon as possible after the
Closing, pay the deficiency to the Existing Partners. If the prorations result
in a Net Credit to the Delaware Limited Partnership, the Existing Partners
shall contribute cash to the California General Partnership on the Closing in
the amount thereof.
(b) Items to Prorate. All real estate taxes and assessments
levied against the Real Property, all personal property taxes levied with
respect to the Tangible Personal Property, if
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any, rents and other payments then due and payable under any of the Tenant
Leases and all other income from or charges against any of the Property
(including, without limitation, all operating expenses) shall be prorated as of
the Closing in accordance with the principles contained in paragraph (c) below.
(c) Principles of Proration. The prorations shall be made in
accordance with the following principles:
1. The term "Current Month Rents" means Rents which are
payable under the Leases in the month ("Current Month") in which the Closing
occurs. Current Month Rents which have actually been received by the
California General Partnership shall be prorated as of the Closing. All Rents
due prior to the Current Month and unpaid, and the Existing Partners' pro rata
share of any unpaid Rents for the Current Month (collectively "Existing Partner
Rents") shall be the property of the Existing Partners and shall be collected
as provided in paragraph (e) below.
2. As used herein, "Security Deposits" shall means the
amount of all money or other things of value (including without limitation,
certificates of deposit, letters of credit or the like), whether designated as
security deposits, prepaid rents or by some other name, given by tenants under
the Leases and which are conditionally repayable to such tenants or applicable
to future rent obligations under the terms of the Leases. Security Deposits
shall be credited to the Delaware Limited Partnership. The Delaware Limited
Partnership shall assume the Security Deposits to the extent of such credit.
3. Current Month Rents and other payments under the
Leases shall be prorated based only on the current ascertainable amounts of
such rents.
4. Current Month Rents and other payments received that
are due under the Leases for that portion of the Current Month or any other
month which is on or after the date of the Closing shall be credited to the
Delaware Limited Partnership.
5. Any other prorated items shall similarly be prorated
based only on currently ascertainable amounts of such payments and items.
6. If possible, utility charges shall be prorated based
on meter readings taken on the date of the Closing, but if that does not occur,
utility charges will be prorated based on the assumption that utility charges
were uniformly incurred during the billing period.
7. All unpaid expenses associated with services
provided, or goods delivered and consumed, to the California General
Partnership prior to the Closing shall be allocated to the Existing Partners.
8. All costs associated with termite eradication which
shall be credited as an
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expense to the California General Partnership.
(d) Post-Closing Proration Adjustments. As soon after the Closing
as all of the relevant information is available, the Delaware Limited
Partnership and the Existing Partners shall adjust the prorations made on the
date of the Closing to prorate as of date of the Closing any items of proration
as set forth in paragraph (b) above (including subsequent or supplementary real
estate tax bills) if such items of proration relate to events occurring prior
to the date of the Closing.
(e) Post-Closing Collection of Existing Partner Rents. The
Existing Partners hereby appoint the Delaware Limited Partnership as their
agent to collect the Existing Partners' prorated portion of the Rents. The
Delaware Limited Partnership shall not be obligated to pursue any legal remedy
or incur any costs in order to collect the Existing Partners' prorated portion
of the Rents other than the issuance of normal tenant billings. All rents
collected by the Delaware Limited Partnership shall be applied first against
amounts due the Delaware Limited Partnership and then to the Existing Partners'
prorated portion of the Rents. Within twenty (20) days after the end of each
calendar month starting with the month in which the Closing occurs (i) the
Delaware Limited Partnership shall submit to the Existing Partners a statement
showing the amount of the Existing Partners' pro rata portion of the Rents, if
any, collected by the Delaware Limited Partnership during such month, and (ii)
the Delaware Limited Partnership shall remit to Existing Partners all of the
Existing Partners' pro rata portion of the Rents collected by the Delaware
Limited Partnership during such month.
(f) Property Tax Refunds. Property Tax Refunds have been assigned
by the California General Partnership to the Existing Partners. In the event
that the Delaware Limited Partnership should receive any Property Tax Refunds,
it shall promptly, and in no event later than ten (10) days after receipt
thereof, remit the same to the Existing Partners.
(g) Tax Exempt Debt Reserves. Tax Exempt Debt Reserves have been
assigned by the California General Partnership to the Existing Partners. In the
event that the Delaware Limited Partnership should receive any Tax Exempt Debt
Reserves, it shall promptly, and in no event later than ten (10) days after
receipt thereof, remit the same to the Existing Partners.
(h) Remittance to Existing Partners. For all purposes of this
Section 2.8, the obligation of the Delaware Limited Partnership to remit any
funds or submit any reports or statements to the Existing Partners shall be
satisfied by the remittance of funds or the submission of reports or statements
to the person identified in Section 12.3 herein. The Delaware Limited
Partnership shall not be required to distribute funds, reports or statements to
any Existing Partner other than the person identified in Section 12.3 herein.
The Existing Partners acknowledge and agree that (i) the person identified in
Section 12.3 herein shall be solely responsible for distributing all funds,
reports or statements to individual Existing Partners and (ii) the Existing
Partners are responsible for notifying, in writing, the Delaware Limited
Partnership of any change in the identity of the person identified in Section
12.3.
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(i) Fees and Costs. Any fees, costs, or expenses associated with
the withdrawal, return or collection of the Property Tax Refunds and the Tax
Exempt Debt Reserves, including, without limitation, any investment breakage
fees or early withdrawal penalties, shall be borne solely by the Existing
Partners.
SECTION 2.9. CONVERSION NOT A DISSOLUTION. Pursuant to Section
17-217 of the DEL. RULPA and Section 16909 of the CAL. UPA, the Conversion of
the California General Partnership to the Delaware Limited Partnership shall
not constitute a dissolution of the California General Partnership, and the
California General Partnership shall not be required to wind up its affairs or
pay its liabilities and distribute its assets.
SECTION 2.10. MANAGEMENT AND FEES.
(a) PGP shall provide property and entity level management and
services for the Delaware Limited Partnership in accordance with the management
agreement, the form of which is attached hereto as Exhibit M. The management
agreement shall be substantially in the form attached hereto as Exhibit M, with
such additions thereto and changes therein as are approved by the parties
executing the same, with such approval to be conclusively evidenced by the
execution and delivery of the management agreement.
(b) In exercising its management duties, PGP shall not retain the
existing employees and management agents of the California General Partnership
for the Property. Unless PGP-MVT or PGP provides the Existing Partners with
written notice to the contrary, the California General Partnership shall (i)
cause all employment and management agreements respecting the Property to be
terminated effective as of the date of the Closing (but not before), and
deliver evidence of such termination to PGP-MVT, and (ii) remove all employees
and management personnel from the Property on the date of the Closing (but not
before).
SECTION 2.11. THE LP AGREEMENT. At the Closing, the partnership
agreement of the California General Partnership shall be amended and restated
in its entirety by the execution of the LP Agreement. The LP Agreement shall be
the limited partnership agreement of the Delaware Limited Partnership unless
and until further amended in accordance with its terms and applicable law. The
LP Agreement shall be substantially in the form attached hereto as Exhibit A.
At the Closing, the LP Agreement shall be executed by PGP-MVT and all Existing
Partners.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PGP-MVT AND PGP
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF PGP-MVT AND PGP.
PGP-MVT and PGP hereby make the representations, warranties, and covenants, as
applicable, set forth in this Article 3.
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SECTION 3.2. ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION.
PGP-MVT is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has the requisite power and
authority to carry on its business as it is now being conducted. PGP is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland, and has the requisite power and authority to
carry on its business as it is now being conducted.
SECTION 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT. PGP-MVT and PGP
have taken all actions necessary to authorize the execution, delivery and
performance by PGP-MVT and PGP of this Agreement, and no other actions on the
part of PGP-MVT or PGP are necessary in this regard.
SECTION 3.4. BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by PGP-MVT and constitutes a valid and binding
agreement of PGP-MVT enforceable against PGP-MVT in accordance with its terms.
This Agreement has been duly and validly executed and delivered by PGP and
constitutes a valid and binding agreement of PGP enforceable against PGP in
accordance with its terms.
SECTION 3.5. NO VIOLATION. The execution and delivery by PGP-MVT and
PGP of this Agreement and the consummation of the Conversion will not result in
or constitute any of the following: (i) a default, breach, or violation, or an
event that, with notice or lapse of time or both, would be a default, breach,
or violation, of the corporate organizational documents of PGP-MVT or PGP or
any promissory note, conditional sales contract, commitment, indenture,
mortgage, deed of trust, or other agreement, instrument or arrangement to which
PGP-MVT or PGP is a party; (ii) an event that would permit any party to
accelerate the maturity of any indebtedness or other obligation of PGP-MVT or
PGP; or (iii) a violation or conflict with any term or provision of any
judgment, decree, order, statute, injunction, rule or regulation of a
governmental unit applicable to PGP-MVT or PGP.
SECTION 3.6. BANKRUPTCY. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws, contemplated
by or pending or threatened against PGP-MVT or PGP. Without limiting the
generality of the foregoing, none of the following have been done by, against
or with respect to PGP-MVT or PGP: (A) the commencement of a case under Title
11 of the U.S. Code, as now constituted or hereafter amended, or under any
other applicable federal or state bankruptcy law or other similar law; (B) the
appointment of a trustee or receiver of any property interest; (C) an
assignment for the benefit of creditors; (D) an attachment, execution or other
judicial seizure of a substantial property interest; (E) the taking of, failure
to take, or submission to, any action indicating an inability to meet its
financial obligations as they accrue; or (F) a dissolution or liquidation.
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SECTION 3.7. DISCLOSURE. No representation or warranty of PGP-MVT or
PGP in this Agreement, or any information, statement or certificate furnished
or to be furnished by or on behalf of PGP-MVT or PGP pursuant to this Agreement
or any Transaction Documents to which it is a party or in connection with the
Conversion contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained therein not
misleading. All documents delivered by PGP-MVT or PGP to the Existing
Partners, or made available to the Existing Partners for review in connection
with this Agreement and the Conversion, were at the time delivered or made
available, and will be at the time of Closing, true, correct and complete
copies of all such documents in PGP-MVT's or PGP's possession or control.
SECTION 3.8. REPORTS. PGP-MVT and PGP have filed all reports, if
any, required by the Securities Exchange Act of 1934, if any, and the
information contained therein is materially true and correct as of the date of
each such filing. There have been no material adverse developments in the
business and operations of PGP-MVT or PGP since the last of such reports so
filed, if any.
SECTION 3.9. BROKERS. Neither PGP-MVT nor PGP have employed any
broker or finder, or incurred any liability therefor, in connection with the
Conversion.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE EXISTING PARTNERS
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE EXISTING PARTNERS.
The Existing Partners hereby make the representations, warranties, and
covenants, as applicable, set forth in this Article 4.
SECTION 4.2. ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION.
The California General Partnership is duly organized, validly existing, and in
good standing under the laws of the State of California, and has the power to
own all of the Property and assets and to carry on its business as heretofore
conducted.
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT. The California
General Partnership and each Existing Partner have taken all action necessary
to authorize the execution, delivery and performance of this Agreement, and no
other proceedings, consents or approvals on the part of the Existing Partners
are needed to authorize the execution and delivery of this Agreement. Further,
the California General Partnership and each Existing Partner will take all
action necessary to authorize the execution, delivery and performance of the
Transaction Documents to which they are a party and the consummation by the
Existing Partners of the Conversion contemplated hereunder. The parties
executing this Agreement have obtained all consents for such execution and have
been duly authorized to so execute.
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SECTION 4.4. CONSENTS AND APPROVALS. The Existing Partners have
obtained all consents and approvals of third parties necessary for the
consummation of the Conversion and the execution and delivery of this Agreement
and the Transaction Documents to which they are a party.
SECTION 4.5. BINDING OBLIGATION. This Agreement has been duly and
validly executed and delivered by the California General Partnership and the
Existing Partners and constitutes a valid and binding agreement of the
California General Partnership and the Existing Partners enforceable against
the California General Partnership and the Existing Partners in accordance with
its terms.
SECTION 4.6. NO VIOLATION. The execution and delivery by the
California General Partnership and the Existing Partners of this Agreement and
the consummation of the Conversion will not result in or constitute any of the
following: (i) a default, breach, or violation, or an event that, with notice
or lapse of time or both, would be a default, breach, or violation, of any
Contract or any Lease, License or Entitlement, promissory note, conditional
sales contract, commitment, indenture, mortgage, deed of trust, or other
agreement (including partnership agreements), instrument or arrangement to
which the California General Partnership is a party or by which it or the
Property is bound; (ii) an event that would permit any party to terminate any
contract or to accelerate the maturity of any indebtedness or other obligation
of the California General Partnership; (iii) a violation or conflict with any
term or provision of any judgment, decree, order, statute, injunction, rule or
regulation of a governmental unit applicable to the California General
Partnership or the Property; or (iv) the creation or imposition of any lien,
charge or encumbrance on the Property.
SECTION 4.7. ADEQUATE DISCLOSURE. The California General Partnership
and all Existing Partners have been provided with, reviewed, and consented to
this Agreement. All Existing Partners have reviewed all of the facts and
circumstances of this transaction, and on that basis have executed this
Agreement.
SECTION 4.8. ABSENCE OF UNDISCLOSED LIABILITIES. Except for the Tax
Exempt Debt, obligations under any Contracts and Leases, if any, and
liabilities arising in the ordinary course of business, the California General
Partnership has no material liabilities of any nature, whether matured or
unmatured, fixed or contingent, regardless of whether the disclosure thereof
would otherwise be required by generally accepted accounting principles, which
liabilities could or would remain with the Property or be binding on the
Delaware Limited Partnership upon Conversion or which would have an adverse
effect upon the Delaware Limited Partnership or the Property.
SECTION 4.9. COMPLIANCE WITH LAWS. The use and operation of the
Property now is, and at the time of Closing will be, in compliance with all
Laws which are material to the ownership and operation of the Property. There
are no facts which would prevent the Delaware Limited Partnership from using
and operating the Property after Closing in the manner in which
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it is intended to be operated.
SECTION 4.10. RENT CONTROL. Except for certain regulatory
restrictions pertaining to the Tax Exempt Debt, the Property is not subject to
any applicable rent control ordinance or law and, to the knowledge of the
Existing Partners, no such ordinance or law is pending or threatened by any
governmental authority, agency or quasi-governmental entity with jurisdiction
over the Property.
SECTION 4.11. LICENSES, PERMITS, CERTIFICATES OF OCCUPANCY, ZONING,
ETC. All Licenses and Entitlements required in connection with the
construction, use, or occupancy of the Property have been obtained and are in
full force and effect and in good standing. Neither the California General
Partnership nor the Existing Partners have taken any action or failed to take
any action that would result in the revocation of such Licenses and
Entitlements nor have they received written notice that any governmental entity
has revoked or intends to revoke any of them due to a violation that has not
been cured or otherwise resolved to the complete satisfaction of such
governmental entity. The California General Partnership has obtained all
necessary easements and approvals to insure vehicular and pedestrian ingress to
and egress from the Property. The California General Partnership and Property
are in compliance with the terms and provisions of all of the covenants,
conditions, restrictions, rights-of-way or easements affecting the Property
which are material to the ownership and operation of the Property.
SECTION 4.12. ENVIRONMENTAL MATTERS. (i) Neither the California
General Partnership nor, to the knowledge of the Existing Partners, any
previous owner, tenant, occupant, user of the Property, or any other person,
has engaged in or permitted any operations or activities upon, or any use or
occupancy of the Property, or any portion thereof, for the purpose of or in any
way involving the handling, manufacture, treatment, storage, use, generation,
release, discharge, refining, dumping or disposal of any Hazardous Materials
(whether legal or illegal, accidental or intentional) on, under, in or about
the Property, or transported any Hazardous Materials to, from or across the
Property, except in all cases in compliance with Environmental Requirements;
and (ii) to the knowledge of the Existing Partners, no Hazardous Materials are
presently constructed, deposited, stored, or otherwise located on, under, in or
about the Property, except in all cases in compliance with Environmental
Requirements. To the knowledge of the Existing Partners, no real estate within
2,000 feet of the Property is in material violation of Environmental
Requirements.
SECTION 4.13. TAXES AND ASSESSMENTS. Neither the California General
Partnership nor the Existing Partners have received notice of and do not have
any knowledge of (i) any proposed increase in the assessed valuation of the
Property, or (ii) any existing or proposed assessment that has or may become a
lien on the Property.
SECTION 4.14. PHYSICAL CONDITION. To the knowledge of the Existing
Partners, there are no structural defects or deficiencies in the Improvements
which individually or in the aggregate would have a material adverse effect on
the California General Partnership or on the
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value of the Property. To the knowledge of the Existing Partners, the
Improvements and Tangible Personal Property (including, without limitation,
plumbing equipment, HVAC, electric wiring and fixtures, gas distribution
system, and water and sewage systems presently on or in the Property) are in
good working order and condition and are sufficient to serve the needs of the
Property. To the knowledge of the Existing Partners, all water, sewer, gas,
electric, telephone, and drainage facilities and all other utilities required
by law or by the normal use and operation of the Property, including, without
limitation, cable television service, and waste water treatment facilities
permanently dedicated to and reserved for the Property, are and at the time of
Closing will be installed to the property lines of the Land, are and at the
time of Closing will be connected pursuant to valid unconditional permits, and
are and at the time of Closing will be adequate to service the Property and to
permit compliance with all Laws.
SECTION 4.15. LEASES. The Rent Roll for the Property is true,
complete and accurate. Except for the Leases and the Tax Exempt Debt
Instruments, there are no other leases, licenses or other agreements affecting
the occupancy of the Property which would become an obligation of the Delaware
Limited Partnership after the Closing. There is no default by the California
General Partnership under any Lease.
SECTION 4.16. NO LITIGATION OR ADVERSE EVENTS. There are no
investigations, actions, suits, proceedings or claims pending or, to the
knowledge of the Existing Partners, threatened against or affecting the
California General Partnership or the Property, at law or in equity or before
or by any federal, state, municipal or other governmental department,
commission, board, agency, or instrumentality, domestic or foreign. Neither
the California General Partnership nor the Existing Partners have received
notice of any, and to the knowledge of the Existing Partners are not subject to
any, order, writ, injunction or decree of any court or federal, state,
municipal or other governmental agency or department, commission, board, agency
or instrumentality.
SECTION 4.17. CONTRACTS AND AGREEMENTS. On the Effective Date, there
will be no outstanding written or oral Contracts made by the California General
Partnership in connection with the Property which in any way binds or affects
the Property or the Delaware Limited Partnership other than the Existing
Contracts and Leases. There are no Contracts for any improvements to the
Property which have not been fully paid for, and the California General
Partnership shall cause to be discharged all mechanics' and materialmen's
liens, if any, arising from any labor or materials furnished to the Property
prior to the Effective Date. With respect to each Existing Contract: (i) it
has been duly and validly executed and delivered by the California General
Partnership; (ii) it is in full force and effect; (iii) the copy of the
Existing Contract delivered by the California General Partnership to PGP-MVT is
true and accurate and is unmodified; and (iv) the California General
Partnership is not in default under any Existing Contract and no event exists
which, with the passage of time or the giving of notice or both, would become a
default thereunder on the part of the California General Partnership, and (v)
to the knowledge of the Existing Partners, no other party to any Existing
Contract is in default under the Existing Contract and nor has any event
occurred which, with the passage of time or
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the giving of notice or both, would become a default thereunder.
SECTION 4.18. NO OTHER AGREEMENTS. To the knowledge of the Existing
Partners, there are no obligations in connection with the Property which will
be binding upon the Delaware Limited Partnership or affect the Property after
Closing and there are no assessments or bonds assessed or proposed to be
assessed, against the Property, except: (i) matters which are set forth in the
Approved Title Form; (ii) Existing Contracts; (iii) the Leases; and (iv) the
Tax Exempt Debt Refunding Instruments. To the knowledge of the Existing
Partners there are no existing or proposed easements, covenants, restrictions,
agreements or other documents which affect title to the Property and which are
not disclosed by the Approved Title Form or described in the Tax Exempt Debt
Refunding Instruments.
SECTION 4.19. NON-FOREIGN PERSON. No Existing Partner is a "foreign
person" as such term is defined in Section 1445(f) of the Internal Revenue Code
of 1986, as amended, the California General Partnership is not subject to
withholding under Section 26131 of the California Revenue and Taxation Code,
and each Existing Partner is a resident of California.
SECTION 4.20. EMPLOYEES. No employee of the California General
Partnership in connection with the Property is covered by a collective
bargaining agreement and there are no retroactive increases or other accrued
and unpaid sums owed to any such employee. There is no labor trouble, dispute,
grievance, controversy or strike pending or, to the knowledge of the Existing
Partners, threatened against the California General Partnership and the
Existing Partners do not know of any basis for any such trouble, dispute,
grievance, controversy or strike.
SECTION 4.21. BROKERS. Neither the California General Partnership
nor the Existing Partners have employed any broker or finder, or incurred any
liability therefor, in connection with the Conversion.
SECTION 4.22. OPERATING STATEMENTS. All operating statements and
other financial statements filed with any state or federal authority and
provided by the Existing Partners to PGP-MVT fully reflect the matters stated
therein, including operation of the Property for the periods covered and, in
all material respects, accurately reflect all rents and other gross receipts,
and all amounts paid by the California General Partnership for electricity,
water, sewer, other utility services, insurance, fuel, maintenance and repairs
(whether capitalized or expensed), real estate taxes, payroll and payroll taxes
and all other operating and other expenses associated with the Property. Since
the end of the latest period covered by such financial statements, there have
been no transactions or occurrences materially affecting the operating expenses
(or items thereof) associated with the Property. The foregoing does not
constitute a representation and warranty as to future income or expenses of the
Property.
SECTION 4.23. EXISTING DEBT. The only tax exempt debt encumbering
the Property is the Tax Exempt Debt. All Tax Exempt Debt Instruments are
reflected on Exhibit C. All of the information contained on the foregoing
Exhibit is true, accurate, and complete in all material
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respects.
SECTION 4.24. SECURITY DEPOSITS. All Tenant security deposits are
reflected on the Rent Roll. There are no other deposits held by the California
General Partnership, nor any of the Existing Partners, in connection with the
Property.
SECTION 4.25. DEPOSITS AND REIMBURSEMENTS. Except for the Property
Tax Refunds and the Tax Exempt Debt Reserves, all Deposits and Reimbursements
are the property of the California General Partnership and shall, by operation
of law, become the property of the Delaware Limited Partnership, and the
Existing Partners shall not be entitled to any such Deposits and
Reimbursements. The California General Partnership has assigned all right,
title and interest in the Property Tax Refunds and the Tax Exempt Debt Reserves
to the Existing Partners and the same are not now the property of the
California General Partnership and will not become the property of the Delaware
Limited Partnership.
SECTION 4.26. BANKRUPTCY. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws, contemplated
by or pending or threatened against the California General Partnership or any
Existing Partner. Without limiting the generality of the foregoing, none of
the following have been done by, against or with respect to the California
General Partnership or any Existing Partner or as concerns any right, claim or
interest of such California General Partnership or Existing Partner in or to
any assets or property of the California General Partnership as concerns any
right, claim or interest of such affiliate in or to any assets or property of
the California General Partnership: (A) the commencement of a case under the
Bankruptcy Code or any Insolvency Laws; (B) the appointment of a custodian,
agent, trustee or receiver of any property interest; (C) an assignment for the
benefit of creditors; (D) an attachment, execution or other judicial seizure of
a substantial property interest; (E) the taking of, failure to take, or
submission to, any action indicating an inability to meet its financial
obligations as they accrue; (F) a dissolution or liquidation; or (G) any
property transferred, concealed, or removed with intent to hinder, delay, or
defraud creditors.
SECTION 4.27. DISCLOSURE. No representation or warranty of the
Existing Partners in this Agreement, or any information, statement or
certificate furnished or to be furnished by or on behalf of the Existing
Partners pursuant to this Agreement or in connection with the Conversion
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein not misleading. All
documents delivered by the Existing Partners to PGP-MVT or PGP, or made
available to PGP-MVT or PGP for review in connection with the Conversion, were
at the time delivered or made available, and will be at the time of Closing,
true, correct and complete copies of all such documents in the California
General Partnership's or the Existing Partners' possession or control. To the
Existing Partners' knowledge, all of the California General Partnership's files
in connection with the Property in its possession or control were delivered to
or made available to PGP-MVT or PGP for its review and there are no documents
required for a complete understanding of or which are otherwise of
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significance in evaluating the Property which are not contained in the
California General Partnership's files or which have not been delivered or made
available to PGP-MVT or PGP.
SECTION 4.28. SOLVENCY AND EQUIVALENCY OF VALUE REPRESENTATIONS.
(a) The California General Partnership is not or, by
virtue of the transactions contemplated by this Agreement, will not be,
rendered any of the following:
1. insolvent, as that term is used or defined
under any applicable Insolvency Law;
2. possessed of debts greater than the fair or
salable value of all of its Property;
3. generally not paying or unable to pay its
debts as they become due or mature; or
4. engaged in any business or transaction, or is
about to engage in any business or transaction, for which any
Property remaining with it after the Conversion is
unreasonably small capital.
SECTION 4.29. EXISTENCE OF TAX EXEMPTION; GOOD COSTS/BAD COSTS DURING
CONSTRUCTION. Nothing has come to the attention of the Existing Partners, and
the Existing Partners have no knowledge of any facts or claims which would lead
them to believe, that interest on the Tax Exempt Debt has at any time, or will
prior to, the Closing (i) not been excluded from gross income for federal
income tax purposes, and (ii) is an item of tax preference for purposes of the
federal alternative minimum tax imposed on individuals and corporations, and
(iii) is further not exempt from personal income taxation imposed by the State
of California. The California General Partnership has complied with all
covenants contained in any and all documents and laws required to be complied
with to ensure that such interest payable with respect to the Tax Exempt Debt
is and continues to be excluded from gross income for federal income tax
purposes. At least ninety percent (90%) of the proceeds of the Tax Exempt Debt
have been expended to pay for Qualified Project Costs.
SECTION 4.30. INDEPENDENT TAX ADVICE. Each and every Existing
Partner does hereby represent that said Existing Partner has sought, or
knowingly declined, independent tax advice and has not relied upon PGP,
PGP-MVT, or their counsel for evaluating the merits of this transaction. Among
other things, it is acknowledged that all state and federal income tax
considerations and consequences relevant to the California General Partnership
and/or the Existing Partners are not the responsibility of PGP or PGP-MVT, and
neither the California General Partnership nor the Existing Partners have
relied or will rely on PGP or PGP-MVT with regard thereto, but instead will
rely on their own tax, business and legal advisors therefor and with respect
thereto. Each and every Existing Partner does hereby acknowledge and agree that
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PGP and PGP-MVT shall have no liability, obligation, duty, or responsibility to
the California General Partnership or the Existing Partners for any tax
consequence, impact, or affect resulting, directly or indirectly, from any of
the transactions contemplated by this Agreement. In addition, the parties
hereto have mutually agreed upon the Net Value and PGP and PGP-MVT shall have
no liability, obligation, duty or responsibility to the General Partnership or
the Existing Partners for any tax, economic, contractual, or other consequence,
impact, or affect resulting, directly or indirectly, from the foregoing
valuation. All such liability, obligation, duty, and responsibility for the tax
consequences and the valuation of the Property shall be that of the California
General Partnership and the Existing Partners, and the California General
Partnership shall indemnify, defend, save, and hold harmless PGP, PGP-MVT and
their officers, directors, employees, agents, attorneys, advisors, and the like
with respect thereto.
ARTICLE 5
COVENANTS AND AGREEMENTS OF PGP-MVT
SECTION 5.1. NO TAX TERMINATION OR DISSOLUTION. As set forth in the
LP Agreement, PGP-MVT and PGP hereby covenant and agree that for the five (5)
year period immediately following the Closing, PGP-MVT and PGP will be
restricted in their ability to (i) sell, transfer or otherwise dispose of the
Property, (ii) pay down the Tax Exempt Refunding Debt, and (iii) in the case of
PGP-MVT, dispose of its general partnership interest.
ARTICLE 6
COVENANTS AND AGREEMENTS OF THE EXISTING PARTNERS
SECTION 6.1. EXISTENCE OF TAX EXEMPTION; GOOD COSTS/BAD COSTS DURING
CONSTRUCTION. Prior to the Closing, the Existing Partners shall provide a
certificate regarding Qualified Project Costs substantially in the form of
Exhibit F attached hereto, with such back-up materials as requested by PGP-MVT,
certifying that at least ninety percent (90%) of the proceeds of the Tax Exempt
Debt were expended to pay for Qualified Project Costs.
SECTION 6.2. ACTIONS AFFECTING ASSETS. The California General
Partnership shall not sell, assign, lease, pledge, transfer or encumber any of
the Property, or enter into any other consent, commitment, understanding or
other agreement, or incur any obligation or liability (contingent or absolute)
with respect to the Property or merge or consolidate with or into any other
entity or enter into any agreements relating thereto. The California General
Partnership and the Existing Partners shall use diligent efforts to avoid
knowingly committing or permitting to occur, any action which will result in a
violation of any Law between the date hereof and the Closing.
SECTION 6.3. ACCESS TO PROPERTY AND RECORDS. Upon reasonable notice
and during regular business hours, the California General Partnership shall
give PGP-MVT, and its authorized representatives, full access to the California
General Partnership's personnel, properties, documents, contracts, facilities,
books, equipment and records and to the Property.
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SECTION 6.4. LICENSE AND ENTITLEMENTS. Through the Closing, the
California General Partnership shall maintain all Licenses and Entitlements in
full force and effect, shall file timely all reports, statements, renewal
applications and other filings, and shall pay timely all fees and charges in
connection therewith that are required to keep the Licenses and Entitlements in
full force and effect.
SECTION 6.5. NO EXTRAORDINARY TRANSACTIONS. Until the Closing the
California General Partnership will conduct its business in the ordinary and
usual course as such business was conducted prior to the date hereof and not
engage in any extraordinary transactions without PGP-MVT's prior written
consent. Extraordinary transactions shall include, without limitation, the
sale of any real property or any material asset, increase in compensation of
any employees, implementation, modification or termination of any plan for the
benefit of employees, issuance of any options, warrants or securities,
borrowing of any funds under existing credit arrangements or otherwise,
entering into any new contract or agreement (or extending any existing contract
or agreement) unless such is cancelable by the California General Partnership
(and after the Closing, by the Delaware Limited Partnership) in their
discretion on a maximum of thirty (30) days' notice.
SECTION 6.6. SOLICITATION OR NEGOTIATION. Neither the California
General Partnership nor any of the Existing Partners shall initiate or solicit
any inquiries or offers with respect to, and shall not agree to, any merger,
acquisition or other offer involving the California General Partnership, any
interest in the California General Partnership, or any of its Property or
securities.
SECTION 6.7. INSURANCE. Through the Closing, the California General
Partnership shall maintain in full force and effect substantially the same
public liability and casualty insurance coverage now in effect with respect to
the Property, at its own expense.
SECTION 6.8. TAXES AND ASSESSMENTS. Except as otherwise provided in
this Agreement, the California General Partnership shall pay or discharge
before delinquent all tax liabilities and obligations, including, without
limitation, those for federal, state or local income, property, unemployment,
withholding, sales, use and other taxes that are payable prior to the date of
the Closing.
SECTION 6.9. BINDING COMMITMENTS. The California General Partnership
shall not make any material commitments or representations to any applicable
government authorities, any adjoining or surrounding property owners, any civic
association, any utility or any other similar person or entity that would in
any manner be binding upon the Delaware Limited Partnership or the Property
without PGP-MVT's prior written consent in each case.
SECTION 6.10. OPERATION OF PROPERTY. The California General
Partnership shall continue to operate and maintain the Property in the ordinary
course of its business, consistent with past practice, and will maintain the
Property in substantially its present order and condition
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(and make all emergency repairs and replacements), and the Property on the date
of the Closing shall be in substantially the same condition it was on the date
this Agreement was executed by PGP-MVT, reasonable wear and tear excepted.
Without limiting the generality of the foregoing, no fixtures, equipment or
other Personal Property shall be removed from the Property unless prior to the
date of the Closing the same are replaced with similar items of at least equal
quality and value.
SECTION 6.11. CLOSING INFORMATION. Five (5) business days prior to
Closing the California General Partnership shall deliver to PGP-MVT a current
Rent Roll for the Property.
ARTICLE 7
PGP-MVT'S CONDITIONS PRECEDENT
SECTION 7.1. PGP-MVT'S CONDITIONS PRECEDENT. The obligation of
PGP-MVT to consummate the Conversion shall be subject to fulfillment (or
waiver) at or prior to the Closing Deadline of the following conditions
precedent (the "PGP-MVT Conditions Precedent"):
(a) Representations, Warranties and Covenants. The
representations, warranties and covenants made in this Agreement or in any
other Transaction Document by any person or entity other than PGP-MVT shall be
true and correct in all material respects when made and on and as of the
Effective Date as though such representations, warranties and covenants were
made on and as of the Effective Date.
(b) No Material Adverse Change. None of the following shall have
occurred: (i) any actual, pending, or threatened taking of any portion of the
Property by condemnation or eminent domain; (ii) subject to Section 12.11,
destruction of any portion of the Property regardless of cause; (iii) the
discovery of any Hazardous Materials on the Property other than as disclosed in
writing by the Existing Partners to PGP-MVT or PGP prior to the date hereof or
discussed in any environmental audit approved by PGP-MVT for the Property prior
to the date hereof; (iv) if any data, information, facts or material provided
to or obtained by PGP-MVT or PGP regarding the California General Partnership,
the Existing Partners, the Property, the Leases, the Rent Roll, the Transaction
Documents or the Tax Exempt Debt proves to be false or misleading in any
material respect, or if any new material adverse fact concerning the same comes
to the attention of PGP-MVT, (v) significant adverse or worsening local,
regional, national or international business conditions, including without
limitation, rising interest rates; or (vi) any of the Existing Partners fail to
comply with the provisions of this Agreement or any other Transaction Document.
(c) PGP-MVT Board Approval. The Board of Directors of PGP-MVT
shall have approved this Agreement and the other Transaction Documents to which
it is a party and the Conversion.
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(d) PGP Board Approval. The Board of Directors of PGP shall have
approved the Exchange Rights Agreement and any other Transaction Documents to
which it is a party.
(e) Delivery of Closing Requirements. Prior to or concurrently
with the Closing, the Existing Partners shall have executed and delivered, or
caused to be executed and delivered, each of the documents and items identified
in Article 10, below to be executed and delivered by it.
(f) No Order or Injunction; Governmental Filings. The
consummation of the Conversion shall not have been restrained, enjoined or
prohibited by any order or injunction of any court or governmental authority of
competent jurisdiction. All actions by or in respect of or filings with any
governmental body, agency, official or authority required to permit the
consummation of the Conversion shall have been obtained.
(g) PGP-MVT's Approval of Tax Exempt Debt Refunding Instruments.
PGP-MVT shall have received all of the Tax Exempt Debt Refunding Instruments
and approved the terms thereof.
(h) Contingent Upon Closing Terrace Gardens Transaction. The
performance of the Conversion is contingent upon the closing of the
"Conversion" described in the Restructuring Agreement, dated as of May 23,
1997 for Terrace Gardens Apartments, a California general partnership.
ARTICLE 8
EXISTING PARTNERS' CONDITIONS PRECEDENT
SECTION 8.1. EXISTING PARTNERS' CONDITIONS PRECEDENT. The obligation
of the Existing Partners to consummate the Conversion shall be subject to
fulfillment (or waiver) at or prior to the Closing Deadline of the following
conditions precedent (the "Existing Partners' Conditions Precedent"):
(a) Representations, Warranties and Covenants. The
representations, warranties and covenants made by PGP-MVT in this Agreement or
in any other Transaction Document, and the representations, warranties and
covenants made by PGP-MVT in the Exchange Rights Agreement or in any other
Transaction Document to which it is a party, shall be true and correct in all
material respects when made and on and as of the Effective Date as though such
representations, warranties and covenants were made on and as of the Effective
Date.
(b) Delivery of Closing Requirements. Prior to or concurrently
with Closing, PGP-MVT shall have executed and delivered, or caused to be
executed and delivered, each of the documents and items identified in Article
10, below to be executed and delivered by it.
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(c) No Order or Injunction; Governmental Filings. The
consummation of the Conversion shall not have been restrained, enjoined or
prohibited by any order or injunction of any court or governmental authority of
competent jurisdiction. All actions by or in respect of or filings with any
governmental body, agency, official or authority required to permit the
consummation of the Conversion shall have been obtained.
(d) PGP-MVT Capital Contribution. Concurrently with Closing,
PGP-MVT shall contribute cash to the Delaware Limited Partnership in the amount
of the PGP-MVT Capital Contribution.
(e) Refunding of Tax Exempt Debt. The refunding of the Tax Exempt
Debt shall have been consummated and all guarantees (or the equivalent) of the
Tax Exempt Debt or the credit enhancement relating to the Tax Exempt Debt shall
have been released.
(f) Contingent Upon Closing Terrace Gardens Transaction. The
performance of the Conversion is contingent upon the closing of the
"Conversion" described in the Restructuring Agreement, dated as of May 23,
1997 for Terrace Gardens Apartments, a California general partnership.
ARTICLE 9
INDEMNITY
SECTION 9.1. INDEMNITY OF PGP-MVT AND THE DELAWARE LIMITED
PARTNERSHIP. The Existing Partners jointly and severally shall save, hold
harmless, indemnify and defend PGP-MVT and the Delaware Limited Partnership,
their successors and assigns and their officers, directors, employees,
partners, agents and representatives, from and against any Losses and
Liabilities: (i) resulting from the ownership or operation of the Property or
the business affairs and transactions of the California General Partnership or
the Existing Partners, prior to the Closing; (ii) resulting from any
misrepresentation or inaccuracy in or breach of any representation, warranty or
covenant by the California General Partnership or any of the Existing Partners
in this Agreement or in the Transaction Documents; or (iii) resulting from any
claim, cause of action, or the like, by the Existing Partners, the partners of
Short Morning View Ltd., a California limited partnership, or by any
representative, successor or assign of any such party (whether made
individually, as a class, or derivatively, or any other way) as a result of
this Agreement, the Transaction Documents or the Conversion, other than a claim
for direct breach of an express representation, warranty or covenant by
PGP-MVT, PGP or the Delaware Limited Partnership hereunder or under the other
Transaction Documents.
SECTION 9.2. INDEMNITY OF THE EXISTING PARTNERS. Except for Losses
and Liabilities covered by Section 9.1, PGP, PGP-MVT or the Delaware Limited
Partnership, as the case may be, shall save, hold harmless, indemnify and
defend the Existing Partners, their respective successors and assigns and their
respective officers, directors, employees, partners, agents and
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representatives from and against any and all Losses and Liabilities in any way
resulting from (i) any misrepresentation or inaccuracy in or breach of any
representation, warranty or covenant of PGP-MVT, PGP or the Delaware Limited
Partnership in this Agreement or the Transaction Documents, or (ii) the failure
of the Delaware Limited Partnership to perform the obligations of the landlord
under the Leases (including, without limitation, the obligation to properly
apply the Security Deposits) and the Existing Contracts.
SECTION 9.3. OFFSET. Any Losses and Liabilities arising under
Section 9.1 may be offset against all distributions and any other payments by
the Delaware Limited Partnership on account of (i) the Partnership Units held
by the Existing Partners or by the Short Family Trust (whether as an Existing
Partner or as a partner (or former partner) of an Existing Partner), and (ii)
in the case of Losses and Liabilities attributable to a breach of any
representation, warranty or covenant relating to the Tax Exempt Debt or the Tax
Exempt Debt Instruments (including, but not limited to, those set forth in
Sections 4.23 and 4.29), all Partnership Units regardless of who holds the
same. Neither PGP, PGP-MVT or the Delaware Limited Partnership shall seek to
impose liability or recovery against any partner (each an "Other Partner") of
Short Morning View Ltd. other than the Short Family Trust, nor seek offset or
recovery against any Other Party for any breaches of representations,
warranties, covenants, or indemnities hereunder, other than those relating to
or described in paragraph (ii) above; and, as to those relating to or described
in paragraph (ii) above, such offset and liability shall be limited to offsets
against all rights to distributions and stock upon exchange of Partnership
Units for common stock in PGP. Any amounts recoverable with respect to
Partnership Units held by the Other Partners (or their successors and assigns)
shall be recoverable by offset from such Other Limited Partners pro rata based
on the relative number of Partnership Units distributed to the Other Partners.
Subject to the foregoing limitations on remedies for Losses and
Liabilities, PGP, PGP-MVT and the Delaware Limited Partnership may pursue any
right hereunder against the Existing Partners, the Short Family Trust, or any
other person or entity in any order or priority, and no such action shall be a
waiver or release of any rights, claims, or causes of action of PGP-MVT or the
Delaware Limited Partnership against any person or entity.
Each Existing Partner hereby unconditionally and irrevocably grants a
security interest in its Partnership Units to secure the foregoing obligations,
and agrees to deliver such documentation as PGP-MVT and the Delaware Limited
Partnership reasonably deems necessary or appropriate to perfect such security
interest. Any distribution or other transfer of any Partnership Units by the
Existing Partners (including to the partners of Short Morning View Ltd.) shall
be made subject to such security interest, and any transferee of such
Partnership Units shall, as a condition precedent to receiving such Partnership
Units, be obligated to acknowledge the existence of and take subject to such
security interest. The power of attorney provisions contained in Section 2.4 of
the LP Agreement shall apply with regard to the grant of the security interest
herein. The liability for Losses and Liabilities arising under Section 9.1
shall be joint and several. PGP-MVT and the Delaware Limited Partnership shall
be entitled
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to the offset described herein upon its reasonable determination of the
existence and amount of the Losses and Liabilities described in Section 9.1.
Upon liquidation of the Losses and Liabilities, any offset in excess of such
liquidated amount shall promptly be distributed to the Existing Partners
affected by the offset, pro-rata.
Notwithstanding the limitations on liability for Losses and
Liabilities, the Existing Partners shall have personal liability for the legal
fees and other costs and expenses described in Section 12.6 hereof if either
the action or proceeding which resulted in same was brought against the
Existing Partner on account of acts or omissions of such persons or entities
(other than their indemnity agreements as hereinabove provided), or such action
or proceeding was brought by such Existing Partners.
SECTION 9.4. EXCHANGE NOTICE. In the event any Losses and
Liabilities are outstanding at any time, if any party liable for such Losses
and Liabilities delivers an Exchange Notice pursuant to the terms of the
Exchange Rights Agreement, PGP-MVT and the Delaware Limited Partnership will
automatically obtain a lien on the "Common Stock" (as defined in the Exchange
Rights Agreement) and any other securities received by the party delivering the
Exchange Notice for and to the extent of any such outstanding Losses and
Liabilities. Any cash that would have been received by the party delivering
the Exchange Notice shall be offset by PGP-MVT and/or the Delaware Limited
Partnership, as the case may be, against any outstanding Losses and Liabilities
of such party. Such party agrees to take such actions and to execute any
additional documentation that PGP-MVT deems appropriate or necessary to create,
evidence or perfect such lien.
SECTION 9.5. SURVIVAL OF PROVISIONS. No payments made pursuant to
any of the provisions of this Article 9 shall entitle the paying parties to any
repayment or reimbursement from, or any capital account credit in, the Delaware
Limited Partnership. The provisions of this Article 9 shall survive the
Closing.
ARTICLE 10
THE CLOSING
SECTION 10.1. THE CLOSING. Subject to the terms and conditions of
this Agreement, the Closing shall take place promptly after satisfaction or
waiver of the conditions set forth in Articles 7 and 8 and this Article 10.
SECTION 10.2. DELIVERIES BY THE EXISTING PARTNERS. At Closing, the
Existing Partners shall deliver or cause to be delivered (except where
specified to remain at the management office of the Property) the following:
(a) The duly executed California General Partnership
Amendments;
(b) The duly executed Conversion Agreement;
31
<PAGE> 33
(c) The duly executed LP Agreement;
(d) The duly executed Exchange Rights Agreement;
(e) The duly executed Indemnification Agreement;
(f) A duly executed affidavit by each Existing Partner
that he, she or it is not a "foreign person" within the meaning of Section
1445(f)(3) of the Code in the form of Exhibit L;
(g) A duly executed Withholding Exemption Certificate
(Form 590) for each Existing Partner;
(h) A "bring-down" certificate of the Existing Partners
and the California General Partnership certifying that the representations,
warranties and covenants made by the Existing Partners, individually and/or
collectively, in this Agreement or in any other Transaction Document were true
and correct in all material respects when made and are true and correct in all
material respects on and as of the date of the Closing as though such
representations, warranties and covenants were made on and as of the date of
the Closing;
(i) A duly executed legal opinion from Sheppard, Mullin,
Richter & Hampton expressing the opinions described in Exhibit D attached
hereto;
(j) Such other documents and instruments as are necessary
or appropriate to consummate the Conversion in accordance with the Transaction
Documents;
(k) Such other documents and instruments as are necessary
or appropriate to consummate the refunding of the Tax Exempt Debt;
(l) All Tax Exempt Debt Refunding Instruments;
(m) The "good costs/bad costs" certificate described in
Section 6.1 hereof;
(n) All keys to the Property that are not in possession
of Tenants and originals of all Existing Contracts and all Leases (each of
which may be left at the applicable Property's management office);
(o) A duly executed UCC-1 Financing Statement in form and
content reasonably satisfactory to PGP-MVT in connection with the grant of the
security interest in the Partnership Units contained in Article 9; and
(p) The amount of $44,602.74 (or such other amount as
determined by the trustee of the Tax Exempt Debt) shall be paid to the trustee
of the Tax Exempt Debt, which
32
<PAGE> 34
amount represents the accrued, but unpaid, interest on the Tax Exempt Debt to
and including the date of the refunding of the Tax Exempt Debt.
SECTION 10.3. DELIVERIES BY PGP-MVT. At Closing, PGP-MVT, as the
newly constituted general partner of the Delaware Limited Partnership, shall
deliver the following:
(a) The duly executed California General Partnership
Amendments;
(b) The duly executed Conversion Agreement;
(c) The duly executed LP Agreement;
(d) The duly executed Indemnification Agreement;
(e) The Tax Exempt Debt Refunding Instruments to which it
is a party;
(f) A duly executed legal opinion from counsel to PGP-MVT
expressing the opinions described in Exhibit E attached hereto;
(g) Such other documents and instruments as are necessary
or appropriate to consummate the Conversion in accordance with the Transaction
Documents; and
(h) A duly executed Exchange Rights Agreement.
SECTION 10.4. DELIVERIES BY PGP. At Closing, PGP shall deliver, or
cause to be delivered, the following:
(a) The duly executed Indemnification Agreement by PGP
and by Terrace Gardens - PGP, L.P., a Delaware limited partnership; and
(b) A duly executed Exchange Rights Agreement.
SECTION 10.5. AUTHORIZED EXISTING PARTNERS SIGNATORY. The Existing
Partners do hereby authorize Donald R. Short, as trustee of the Short Family
Trust, to execute on behalf of all of the Existing Partners any and all
documents necessary to consummate the Conversion and the execution of the
Transaction Documents. Provided, however, that the California General
Partnership Amendments, the Conversion Agreement, the Delaware Certificate of
Conversion, and any other document which by law requires the signature of all
Existing Partners, must be signed by all of the Existing Partners.
SECTION 10.6. PAYMENT OF TRANSACTION EXPENSES AND DEFERRED
MAINTENANCE. The parties agree that if the Conversion is consummated,
commencing from the effective date of the Term Sheet, the Delaware Limited
Partnership shall bear all Transaction Expenses and Deferred
33
<PAGE> 35
Maintenance.
ARTICLE 11
TERMINATION
SECTION 11.1. TERMINATION. This Agreement may be terminated and the
Conversion may be abandoned at any time prior to the Effective Date:
(a) by mutual written consent of PGP-MVT and all of the Existing
Partners; or
(b) by PGP-MVT and the Existing Partners if there shall be any law
or regulation that makes consummation of the Conversion illegal or otherwise
prohibited, or if any judgment, injunction, order or decree enjoining the
California General Partnership from consummating the Conversion is entered and
such judgment, injunction, order or decree shall become final and
nonappealable.
(c) if the Closing does not occur on or before the Closing
Deadline.
SECTION 11.2. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 11.1, this Agreement shall become void and of no effect
with no liability on the part of any party hereto.
SECTION 11.3. PAYMENT OF TRANSACTION EXPENSES UPON TERMINATION.
Except as provided below, if this Agreement is terminated pursuant to Section
11.1, PGP-MVT and the Existing Partners shall split 50/50 the Transaction
Expenses, except Transaction Expenses relating to the refinancing of the Tax
Exempt Debt which shall be paid fully by the California General Partnership.
The foregoing 50/50 split of Transaction Expenses assumes neither party has a
cause of action for its expense reimbursement due to the breach of the other
party, as described in Section 11.4. If the Existing Partners terminate this
Agreement due to adverse tax ramifications caused by the Conversion, and
PGP-MVT consents to such termination, the Existing Partners or the California
General Partnership shall pay all Transaction Expenses.
SECTION 11.4. UNILATERAL TERMINATION. In the event that PGP-MVT or
any of the Existing Partners fails to perform or observe any of the covenants,
agreements or conditions on its or their part contained in this Agreement or
other Transaction Documents, said party shall be considered in default under
this Agreement.
If an event of default shall occur, any of the non-defaulting parties
may, in their discretion, proceed to protect or enforce their rights under this
Agreement and any of the other Transaction Documents by a suit in equity or
action at law, either for the specific performance of any covenant or agreement
contained herein or therein, or in aid of the execution of any power herein or
therein granted, or by mandamus or other appropriate proceeding for the
enforcement of any other legal or equitable remedy as the aggrieved party or
parties shall deem
34
<PAGE> 36
most effectual in support of any of their rights or duties hereunder.
No delay or omission of any party to exercise any right or power
arising from any default shall impair any such right or power or shall be
construed to be a waiver of any such default or acquiescence therein, and every
power and remedy given by this Article 11 to the parties to this Agreement may
be exercised from time to time and as often as shall be deemed expedient. In
case any party shall have proceeded to enforce any right under this Agreement,
and such proceedings shall have been discontinued or abandoned because of
waiver or for any other reason, or shall have been determined adversely to said
party, then and in every such case all of the parties to this Agreement,
severally and respectively, shall be restored to their former positions and
rights hereunder; and all remedies, rights and powers of the parties shall
continue as though no such proceedings had been taken.
No remedy herein conferred upon or reserved to any party hereunder is
intended to be exclusive of any other remedy, but each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
following provisions shall survive the Closing: (i) all representations and
warranties contained in this Agreement, (ii) any indemnification provisions of
this Agreement, including, but not limited to, those set forth in Section 4.30
and Article 9, and (iii) any provision in this Agreement which states that it
shall survive the Closing or a merger of this Agreement in any judgment.
SECTION 12.2. AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may, subject to applicable
law, be amended or waived prior to the Effective Date if, and only if, such
amendment or waiver is in writing and signed by PGP-MVT and the Existing
Partners.
(b) No failure or delay by any party hereto in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 12.3. 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, (ii) one (1) business day
after being deposited with Federal Express or another
35
<PAGE> 37
reliable overnight courier service or next day delivery or transmitted by
facsimile telecopy, or (iii) two (2) business days after being deposited in the
United States mail, registered or certified mail, postage prepaid, return
receipt required, and addressed as follows:
<TABLE>
<S> <C>
If to any of the
Existing Partners: The Existing Partners
c/o Donald R. Short
740 Metcalf Street, Suite 6
Escondido, CA 92025
Fax No.: (619) 746-0099
Telephone No.: (619) 746-4621
With a copy to: Sheppard, Mullin, Richter & Hampton
650 Town Center, 4th Floor
Costa Mesa, California 92626-1925
Attn: John R. Simon, Esq.
Fax No.: (714) 513-5130
Telephone No.: (714) 513-5100
If to the Delaware
Limited Partnership : Pacific Gulf Properties Inc.
363 San Miguel Drive, Suite 100
Newport Beach, California 92660
Attn: Mr. Donald G. Herrman
Fax No.: (714) 721-2714
Telephone No.: (714) 721-2700
With a copy to: Cox, Castle & Nicholson LLP
2049 Century Park East, Suite 2800
Los Angeles, California 90067
Attn: Lewis G. Feldman, Esq.
Fax No.: (310) 277-7889
Telephone No.: (310) 284-2221
</TABLE>
or such other address as either party may from time to time specify in writing
to the other.
SECTION 12.4. INTEGRATION. All prior or contemporaneous agreements,
contracts, promises, representations, and statements, if any, among PGP-MVT and
the Existing Partners, or their representatives, are merged into this
Agreement, and this Agreement shall constitute the entire understanding between
the General Partners with respect to the subject matter hereof. Provided,
however, any agreement, contract, or document dated subsequent to the date of
this Agreement (whether or not executed contemporaneously with this Agreement)
shall not be merged into this Agreement, including, without limitation the
Conversion Agreement, the
36
<PAGE> 38
California General Partnership Amendments, the LP Agreement, the Exchange
Rights Agreement, and the Tax Exempt Debt Refunding Instruments.
SECTION 12.5. SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto.
SECTION 12.6. ENFORCEMENT. If any party hereto institutes any action
or proceeding to interpret or enforce any provision of this Agreement or for an
alleged breach of any provision of this Agreement, the prevailing party shall
be entitled to recover its actual attorneys' fees and all fees, costs and
expenses incurred in connection with such action or proceeding. Such
attorneys' fees, fees, costs and expenses shall include post judgment
attorneys' fees, fees, costs and expenses incurred on appeal or in collection
of any judgment. This provision is separate and several and shall survive the
merger of this provision into any judgment on this Agreement. No person or
entity other than the parties hereto is or shall be entitled to bring any
action to enforce any provision of this Agreement against any of the parties
hereto, and the covenants and agreements set forth in this Agreement shall be
solely for the benefit of, and shall be enforceable only by, the parties hereto
or their respective successors and assigns as permitted hereunder.
SECTION 12.7. CONFIDENTIALITY. The California General Partnership
and the Existing Partners agree to maintain as confidential and, except as
required by law, to not disclose to any third parties, other than to
themselves, attorneys, and accounting and business advisors, all information in
their possession concerning the Conversion. None of the Existing Partners
shall make any public announcement by way of press release or otherwise of the
Conversion, but they shall be entitled to describe the Conversion contemplated
hereunder amongst themselves and any constituent partners. PGP-MVT shall have
the right to disclose any and all information in its possession (confidential
or otherwise) concerning the California General Partnership and/or the
Conversion for purposes of making any press release concerning the Conversion
as PGP- MVT deems necessary or appropriate in its sole and absolute discretion
to comply with laws, whether securities, real estate or otherwise.
SECTION 12.8. 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.
SECTION 12.9. EXHIBITS. All exhibits attached hereto are
incorporated herein as though fully set forth herein.
SECTION 12.10. FURTHER ASSURANCES. Each party agrees to cooperate
fully with the other parties and to prepare, execute, and deliver any further
required instruments, and shall take or cause to be taken such other or further
action as either party shall reasonably request at any
37
<PAGE> 39
time or from time to time in order to consummate the terms and provisions and
to carry into effect the intents and purposes of this Agreement and the
Transaction Documents.
SECTION 12.11. RISK OF LOSS. In the event of any of loss or damage
to all or any part of the Property by fire or other casualty prior to the
Closing that PGP or PGP-MVT reasonably believes could be in excess of $200,000
on the Property, or which materially impedes access to such Property, then
notwithstanding the existence of any casualty insurance, PGP or PGP-MVT shall
have the option in their sole discretion to: (i) terminate this Agreement and
any other Transaction Document to which it is a party in their entirety; or
(ii) continue this Agreement and any Transaction Document to which it is a
party, whereupon all available insurance will be used to repair the damage
(with appropriate adjustments to the value of the Property to account for any
deductible). The provisions of subsection (ii) above shall apply (and survive
Closing) in the event of any loss or damage in an amount less than $200,000
provided that (a) said loss is an insurable loss, (b) the California General
Partnership is actually insured against such loss, and (c) any proceeds of said
insurance are assigned to the Delaware Limited Partnership to be used to repair
the damage at the discretion of PGP or PGP-MVT. PGP or PGP-MVT may terminate
this Agreement and any other Transaction Document to which it is a party in
their entirety for a loss of less than $200,000 which does not meet the
conditions set forth in paragraphs (a), (b) and (c) above.
SECTION 12.12. LEGAL REPRESENTATION. Each party has been represented
by legal counsel in connection with the negotiation of the Conversion herein
contemplated and the drafting and negotiation of this Agreement and the
Transaction Documents. Cox, Castle & Nicholson LLP ("CCN") has represented
solely PGP, and Sheppard, Mullin, Richter & Hampton ("SMRH") has represented
solely the California General Partnership, in connection with the negotiation,
drafting, transactions and matters contemplated under this Agreement and any
other Transaction Documents relating to the transactions or matters covered
hereby, the LP Agreement and all matters, things, documents and transactions
contemplated under the LP Agreement and under this Agreement or the other
Transaction Documents. CCN has not provided legal services to or been legal
counsel for the California General Partnership, the Existing Partners, and none
of the foregoing has relied on CCN in that regard. SMRH has not provided legal
services to or been legal counsel for PGP or PGP-MVT and none of the foregoing
has relied on SMRH in that regard. The normal rule of construction that
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any other Transaction Documents.
SECTION 12.13. TIME OF THE ESSENCE. Time is of the essence of this
Agreement.
SECTION 12.14. GOVERNING LAW. This Agreement shall be construed in
accordance with and government by the laws of the State of California, without
giving effect to principles of conflicts of law.
38
<PAGE> 40
SECTION 12.15. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. The signature of each Existing Partner constitutes execution as an
Existing Partner on its own behalf and as a partner of the California General
Partnership.
IN WITNESS WHEREOF, the parties hereto have caused this Restructuring
Agreement to be duly executed by their respective authorized representatives as
of the day and year first-above written.
<TABLE>
<S> <C>
MORNING VIEW TERRACE,
A CALIFORNIA GENERAL PARTNERSHIP
THE SHORT FAMILY TRUST
By: _______________________________
Donald R. Short, Trustee
By: ________________________________
Marilyn M. Short, Trustee
SHORT MORNING VIEW LTD.,
A CALIFORNIA LIMITED PARTNERSHIP
By: The Short Family Trust
By: _______________________________
Donald R. Short, Trustee
By: ________________________________
Marilyn M. Short, Trustee
PGP MORNING VIEW TERRACE HOLDINGS INC.,
A DELAWARE CORPORATION
By: _____________________
Name:
Title:
</TABLE>
39
<PAGE> 41
<TABLE>
<S> <C>
PACIFIC GULF PROPERTIES INC.,
A MARYLAND CORPORATION
By: _____________________
Name:
Title:
</TABLE>
40
<PAGE> 42
EXHIBIT A
LP AGREEMENT
<PAGE> 43
EXHIBIT B
EXCHANGE RIGHTS AGREEMENT
<PAGE> 44
EXHIBIT C
TAX EXEMPT DEBT INSTRUMENTS
1. Indenture of Trust, dated as of February 1, 1985, as amended
by Supplemental Indenture No. 1, dated as of April 1, 1988,
between the Issuer and the Trustee;
2. Loan Agreement, dated as of February 1, 1985, among the
Issuer, the Trustee and the Developer;
3. Regulatory Agreement and Declaration of Restrictive Covenants,
dated as of February 1, 1985, among the Issuer, the Trustee
and the Developer;
4. Letter of Credit No. LASB-216457 (formerly Security Pacific
National Bank No. 100-0063), dated February 15, 1985, as
amended December 28, 1994, issued by the Credit Bank;
5. Reimbursement Agreement, dated as of February 1, 1985, between
the Credit Bank and the Developer; and
For purposes of this Exhibit, the following terms have the following
definitions:
"Issuer" shall mean the City of Escondido.
"Trustee" shall mean First Trust of California, National Association.
"Developer" shall mean Morning View Terrace, a California general
partnership.
"Credit Bank" shall mean Bank of America National Trust and Savings
Association.
<PAGE> 45
EXHIBIT D
CALIFORNIA GENERAL PARTNERSHIP LEGAL OPINION
At the Closing, the California General Partnership shall cause to be
delivered to PGP-MVT an opinion of counsel, in form and substance reasonably
acceptable to PGP-MVT, containing the legal opinion that: (i) each Existing
Partner has the power and authority to enter into and perform its obligations
under the Transaction Documents to which they are a party; (ii) all partners of
the Existing Partners (and all of the partners of Short Morning View Ltd., a
California limited partnership) have consented to the Conversion and the
execution of the Transaction Documents; (iii) the Transaction Documents to
which they are a party have been duly authorized by all necessary action on the
part of each Existing Partner, and have been duly executed and delivered by
each Existing Partner; and (iv) the Transaction Documents to which they are a
party constitute the legally valid and binding obligations of the Existing
Partners, enforceable in accordance with their respective terms, except as
enforcement may be limited by bankruptcy laws or the laws affecting the rights
of creditors generally. Additionally, in rendering the enforceability opinion
described in clause (iv) above, counsel for the Existing Partners shall be
entitled to rely on the representation of the Existing Partners, without
further investigation, that the solicitation materials utilized by the Existing
Partners to obtain the approval of the constituents of the Existing Partners to
the Transaction Documents to which they are a party and the transactions herein
contemplated did not misstate or omit to state any material fact, and were
otherwise accurate and complete in all material respects.
<PAGE> 46
EXHIBIT E
LEGAL OPINION OF PGP-MVT
At the Closing, the PGP-MVT shall cause to be delivered to the Existing
Partners an opinion of counsel, in form and substance reasonably acceptable to
the Existing Partners, containing the legal opinion that: (i) PGP-MVT has the
power and authority to enter into and perform its obligations under the
Transaction Documents to which it is a party; (ii) the Transaction Documents to
which it is a party have been duly authorized by all necessary action on the
part of PGP-MVT, and have been duly executed and delivered by PGP-MVT; (iii)
the Transaction Documents to which it is a party constitute the legally valid
and binding obligations of PGP-MVT, enforceable in accordance with their
respective terms, except as enforcement may be limited by bankruptcy laws or
the laws affecting the rights of creditors generally.
<PAGE> 47
EXHIBIT F
QUALIFIED PROJECT COSTS
<TABLE>
<S> <C>
Total "Proceeds"
Par Amount
Cost on Issuance
Paydown on Bonds
Investment Earnings
Total "Proceeds"
Project "Good Costs"
Land (Title and Closing)
Construction Costs
Interest/Taxes During Construction
Supervisor's and Contractor's Fees
Total "Good Costs"
Percentage of "Good Costs" to "Proceeds"
</TABLE>
<PAGE> 48
EXHIBIT G
CALIFORNIA GENERAL PARTNERSHIP AMENDMENT NO. 1
<PAGE> 49
EXHIBIT H
CALIFORNIA GENERAL PARTNERSHIP AMENDMENT NO. 2
<PAGE> 50
EXHIBIT I
EXISTING CONTRACTS
<TABLE>
<S> <C> <C>
1. Vendor: Dewey Pest Control Co.
Date of Contract: 2/28/96
Term/Cancellation: 12 months, thereafter 30 days written
Services: Pest Control
2. Vendor: Wells Fargo Guard Services
Date of Contract: 3/1/97
Term/Cancellation: 30 days written notice
Services: Security Services
3. Vendor: Richey Pacific Cablevision, Inc.
Date of Contract: 1/1/89
Term/Cancellation: 12/31/98 (with automatic renewal for 5-year period)
Services: Cable Television Service
</TABLE>
<PAGE> 51
EXHIBIT J
RENT ROLL
<PAGE> 52
EXHIBIT K
APPROVED TITLE FORM
<PAGE> 53
EXHIBIT L
CERTIFICATION OF NON-FOREIGN STATUS
The undersigned hereby certifies the following:
1. The undersigned is not a foreign corporation, foreign
partnership, foreign trust, foreign estate or foreign person (as those terms
are defined in the Internal Revenue Code of 1986, as amended (the "Code") and
the Income Tax Regulations promulgated thereunder);
2. The undersigned's U.S. employer or tax (social security)
identification number is ____________________.
The undersigned understands that this Certification of Non-Foreign
Status may be disclosed to the Internal Revenue Service by PGP Morning View
Terrace Holdings Inc., a Delaware corporation, general partner of Morning View
Terrace - PGP, L.P., a Delaware limited partnership (the "General Partner"),
and that any false statement contained herein could be punished by fine,
imprisonment, or both.
The undersigned hereby agrees to indemnify, defend and hold the
General Partner 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 General
Partner as a result of: (i) the undersigned's failure to pay U.S. Federal
income tax which the undersigned 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 of Non-Foreign Status 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.
<TABLE>
<S> <C> <C> <C> <C>
Date: June 12, 1997
____ , a
-----------------------------
By: ________________________
________________________
(Print Name and Title)
</TABLE>
<PAGE> 54
EXHIBIT M
PROPERTY MANAGEMENT AGREEMENT
<PAGE> 55
EXHIBIT N
INTEREST OF EXISTING PARTNERS
<TABLE>
<S> <C>
EXISTING PARTNER INTEREST
---------------- --------
Short Family Trust 49%
Short Morning View Ltd. 51%
</TABLE>
<PAGE> 56
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2
AGREEMENTS REGARDING CONVERSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.1. THE CALIFORNIA GENERAL PARTNERSHIP AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.2. THE CONVERSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.3. CONTRIBUTION OF CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.4. CONTINUATION OF INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.5. EXCHANGE OF PARTNERSHIP INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.6. SAME ENTITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.7. RIGHTS UPON CONVERSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.8. PRORATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.9. CONVERSION NOT A DISSOLUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.10. MANAGEMENT AND FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.11. THE LP AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PGP-MVT AND PGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF PGP-MVT AND PGP. . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.2. ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.4. BINDING OBLIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.5. NO VIOLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.6. BANKRUPTCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.7. DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.8. REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.9. BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE EXISTING PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE EXISTING PARTNERS. . . . . . . . . . . . . . . . . . . . 18
SECTION 4.2. ORGANIZATION, POWER AND AUTHORITY, AND QUALIFICATION . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.4. CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.5. BINDING OBLIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.6. NO VIOLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.7. ADEQUATE DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.8. ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.9. COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.10. RENT CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.11. LICENSES, PERMITS, CERTIFICATES OF OCCUPANCY, ZONING, ETC . . . . . . . . . . . . . . . . . . 20
SECTION 4.12. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.13. TAXES AND ASSESSMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.14. PHYSICAL CONDITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.15. LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.16. NO LITIGATION OR ADVERSE EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.17. CONTRACTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.18. NO OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.19. NON-FOREIGN PERSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.20. EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
<PAGE> 57
<TABLE>
<S> <C>
SECTION 4.21. BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.22. OPERATING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.23. EXISTING DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.24. SECURITY DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.25. DEPOSITS AND REIMBURSEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.26. BANKRUPTCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.27. DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.28. SOLVENCY AND EQUIVALENCY OF VALUE REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.29. EXISTENCE OF TAX EXEMPTION; GOOD COSTS/BAD COSTS DURING CONSTRUCTION. . . . . . . . . . . . . 24
SECTION 4.30. INDEPENDENT TAX ADVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 5
COVENANTS AND AGREEMENTS OF PGP-MVT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.1. NO TAX TERMINATION OR DISSOLUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 6
COVENANTS AND AGREEMENTS OF THE EXISTING PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.1. EXISTENCE OF TAX EXEMPTION; GOOD COSTS/BAD COSTS DURING CONSTRUCTION. . . . . . . . . . . . . 25
SECTION 6.2. ACTIONS AFFECTING ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.3. ACCESS TO PROPERTY AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.4. LICENSE AND ENTITLEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.5. NO EXTRAORDINARY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.6. SOLICITATION OR NEGOTIATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.7. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.8. TAXES AND ASSESSMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.9. BINDING COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.10. OPERATION OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.11. CLOSING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 7
PGP-MVT'S CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.1. PGP-MVT'S CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 8
EXISTING PARTNERS' CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 8.1. EXISTING PARTNERS' CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 9
INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 9.1. INDEMNITY OF PGP-MVT AND THE DELAWARE LIMITED PARTNERSHIP. . . . . . . . . . . . . . . . . . . 29
SECTION 9.2. INDEMNITY OF THE EXISTING PARTNERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 9.3. OFFSET. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 9.4. EXCHANGE NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 9.5. SURVIVAL OF PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 10
THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 10.1. THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 10.2. DELIVERIES BY THE EXISTING PARTNERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 10.3. DELIVERIES BY PGP-MVT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
<PAGE> 58
<TABLE>
<S> <C>
SECTION 10.4. DELIVERIES BY PGP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 10.5. AUTHORIZED EXISTING PARTNERS SIGNATORY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 10.6. PAYMENT OF TRANSACTION EXPENSES AND DEFERRED MAINTENANCE. . . . . . . . . . . . . . . . . . . 33
ARTICLE 11
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.1. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.2. EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.3. PAYMENT OF TRANSACTION EXPENSES UPON TERMINATION. . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 11.4. UNILATERAL TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 12
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12.2. AMENDMENTS; NO WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12.3. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 12.4. INTEGRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 12.5. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 12.6. ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 12.7. CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 12.8. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 12.9. EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 12.10. FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 12.11. RISK OF LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 12.12. LEGAL REPRESENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 12.13. TIME OF THE ESSENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 12.14. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 12.15. COUNTERPARTS; EFFECTIVENESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
EXHIBIT A - LP AGREEMENT
EXHIBIT B - EXCHANGE RIGHTS AGREEMENT
EXHIBIT C - TAX EXEMPT DEBT INSTRUMENTS
EXHIBIT D - CALIFORNIA GENERAL PARTNERSHIP LEGAL OPINION
EXHIBIT E - LEGAL OPINION OF PGP
EXHIBIT F - QUALIFIED PROJECT COSTS
EXHIBIT G - CALIFORNIA GENERAL PARTNERSHIP AMENDMENT NO. 1
EXHIBIT H - CALIFORNIA GENERAL PARTNERSHIP AMENDMENT NO. 2
EXHIBIT I - EXISTING CONTRACTS
EXHIBIT J - RENT ROLL
EXHIBIT K - APPROVED TITLE FORM
EXHIBIT L - CERTIFICATION OF NON-FOREIGN STATUS
EXHIBIT M - PROPERTY MANAGEMENT AGREEMENT
EXHIBIT N - INTERESTS OF EXISTING PARTNERS
</TABLE>
<PAGE> 1
EXHIBIT 10.4
LOT SALE AGREEMENT
[Lots 6 and 7]
This Lot Sale Agreement (the "Agreement"), dated as of February 17,
1997 ("Effective Date"), is made between PacTel Systems, a California
corporation ("Seller") and Pacific Gulf Properties, Inc., a California
corporation ("Buyer").
RECITALS
Subject to the terms of this Agreement, Seller wishes to sell, and
Buyer wishes to purchase, the Property defined in section 1.3.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Seller and Buyer agree as follows:
1. PURCHASE AND SALE OF PROPERTY
1.1 Significant Definitions. The terms below are hereby defined as
follows:
<TABLE>
<S> <C> <C>
"Building Density" for each Lot: Tract-Lot No. Square Footage
------------- --------------
14316-1 (Brochure Lot No. 6) 162,043
14316-6 (Brochure Lot No. 7) 57,673
-------
219,716
</TABLE>
"Closing Date": April 29, 1997, or such other date for the Closing as
may be mutually agreed in writing to by the parties.
"Contingency Date": April 14, 1997.
"FCPP Credits": Foothill Circulation Phasing Program fee credit: Five
Hundred Fifty Four Thousand Eight Hundred Thirty Nine Dollars ($554,839).
"First Deposit": One Hundred Thousand Dollars ($100,000).
"Second Deposit": One Hundred Thousand Dollars ($100,000).
"Lots": Tract 14316 Lot Nos. 1 and 6 in the project commonly known as
Pacific Commercentre, in Lake Forest, California. (Pacific Commercentre
Brochure Lot Nos. 6 and 7)
"Purchase Price": Three Million Four Hundred Ninety Eight Thousand
Three Hundred Four Dollars ($3,498,304).
1
<PAGE> 2
"Buyer's Broker": Voit Commercial Brokerage.
1.2 Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, Seller shall sell to Buyer, and Buyer shall purchase from
Seller, the Property (as defined in section 1.3) at Closing (as defined in
section 8.2).
1.3 Description of Property. The "Property" shall consist of the
following:
(a) Land and Improvements. Each Lot specifically described in Exhibit A
(the "Land"), and any improvements thereon (the "Improvements").
(b) Appurtenances. The interest of Seller in all rights, privileges and
easements appurtenant to the Land and Improvements, including all minerals,
oil, gas and other hydrocarbon substances on and under the Land, as well as all
development rights, air rights, water, water rights and water stock relating to
the Land and Improvements and any other easements, rights-of-way or
appurtenances used in connection with the beneficial use or enjoyment of the
Land and Improvements and, to the extent that they relate to the Land and
Improvements, all of Seller's rights, easements or other interests, if any, in
and to adjacent streets, alleys and rights-of-way, and water and sewer taps,
sanitary or storm sewer capacity or reservations and rights under utility
agreements with any applicable governmental or quasi-governmental entities or
agencies with respect to the providing of utility services to the Land (the
"Appurtenances"). The Land, Improvements and Appurtenances are collectively
referred to as the "Real Property." The Real Property shall be transferred to
Buyer at Closing (as defined in section 8.2) pursuant to a grant deed in the
form of Exhibit B (the "Grant Deed").
(c) Credits. The FCPP Credits shall be assigned to Buyer.
(d) Pacific Commercentre Agreements. The interest of Seller in the
various agreements listed in Exhibit C with respect to the Property (the
"Property Agreements").
1.4 Intentionally omitted.
1.5 Additional Fee Credits. Total Foothill Circulation Phasing Program
fees payable in connection with the Property based on the Building Density
specified in section 1.1 less the amount of FCPP Credits is the "Excess Fees".
Seller owns credits available ("Credits") to pay such Excess Fees. At the
Closing, if Buyer and Seller mutually agree, Seller shall sell and assign to
Buyer at the Closing such credits in amounts up to the Excess Fees ("Additional
Credits") and Buyer shall pay Seller the amount of such Additional Credits
assigned. If Buyer and Seller so elect, Buyer and Seller shall give Escrow
Holder written notice on or prior to the Closing specifying the Additional
Credits to be assigned for Foothill Circulation Phasing Program fees.
2
<PAGE> 3
2. PURCHASE PRICE
2.1 Amount. Buyer shall pay the Purchase Price for the purchase of the
Property, Buyer shall deliver the Purchase Price to Seller through "Escrow" (as
defined in Section 8.1) in immediately available federal funds at Closing, in
accordance with Section 8.4.
2.2 Deposit. Within two (2) Business Days (as defined in Section 11.2)
of the full execution of this Agreement by the parties, Buyer shall deliver
the First Deposit in cash to Fidelity Title Insurance Company ("Escrow
Holder"). Within one Business Day after the Contingency Date, Buyer shall
deliver its Second Deposit in cash to the Escrow Holder. The First Deposit and
the Second Deposit, if applicable, is referred to as the "Deposit". After the
Contingency Date, the Deposit shall become non-refundable and Escrow Holder is
hereby instructed to release the Deposit to Seller immediately and without the
necessity of further instructions.
3. CONDITION OF PROPERTY
3.1 Buyer's Inspection of Property.
(a) Inspection Rights. Subject to the terms and condition of this
Section 3.1, Buyer and Buyer's consultants, agents, engineers, inspectors,
contractors and employees directed by Buyer (collectively, "Buyer's
Representatives") shall have reasonable access to the Property for the purpose
of performing inspections, examinations, tests, analyses, studies, surveys,
evaluations or any other investigations of the Property ("Inspections").
Notwithstanding the foregoing, Buyer shall not make excavations or test
borings, drill wells, disturb any plants, trees or shrubs, or engage in any
other activities in, on or around the Property that damage the Property, absent
specific written consent from Seller, which consent shall not be unreasonably
withheld or delayed. Buyer's right of entry onto the Property shall be for the
limited purpose of performing the Inspections, and Buyer shall have no right to
use the Property for any other purpose until after Closing.
(b) Terms and Conditions. Buyer shall give reasonable advance notice
(which may be written or oral) to Seller before any Inspections, and all
Inspections shall be performed at Buyer's sole cost and expense and subject to
such reasonable conditions as Seller may impose. Buyer shall permit Seller's
consultants, agents, engineers, inspectors, contractors or employees ("Seller's
Representatives") to accompany Buyer and Buyer's Representatives during all
such Inspections. Upon request by Seller and at Seller's cost, Buyer shall
divide and share with Seller all environmental testing samples taken from or
related to the Property for the purpose of performing separate testing. Seller
shall make Seller's Representatives reasonably available to Buyer for such
Inspections on a timely basis. Before any entry into the Property, Buyer shall
obtain and furnish to Seller a certificate of insurance showing that Buyer has
obtained a policy of commercial liability insurance with a combined single
limit coverage of not less than $1 million, naming Buyer as an insured and
Seller as an additional insured, issued by a responsible insurer approved by
Seller and licensed to conduct business in California. Such
3
<PAGE> 4
insurance policy shall expressly provide that such insurance may not be canceled
or reduced in scope or coverage without at least thirty (30) days' prior written
notice.
(c) Indemnification. Buyer shall indemnify, defend with counsel of
Seller's choice and hold Seller harmless from all claims (including claims of
lien for work or labor performed or materials or supplies furnished), demands,
liabilities, losses, damages, costs, fees and expenses, including Seller's
reasonable attorneys' fees, costs and expenses, arising out of the acts or
activities of Buyer, Buyer's Representatives in, on or about the Property or
arising in connection with the Inspections performed pursuant to this Section
3.1 or the review of Books and Records (as defined in Section 3.2) pursuant to
Section 3.2, subject, however, to the procedures set forth in Section 9.3.
Without limiting the generality of the foregoing, Buyer shall promptly repair,
at its sole cost and expense, any damage to the Property or the Books and
Records caused by any Inspection, the review of Books and Records or entry in,
on or around the Property, provided, however, Seller shall have the right to
supervise such repair. Buyer's obligations under this Section 3.1(c) shall
survive Closing or the earlier termination of this Agreement.
3.2 Books and Records. Seller shall make available for inspection,
review and copying by Buyer, at Buyer's sole cost and expense, such surveys,
documents, plans, records, files and other information respecting the Property
that are in Seller's or Seller's current representative's possession
(collectively, the "Books and Records"). Seller shall make the Books and Records
available to Buyer at the offices of Seller, or at the Pacific Commercentre
Marketing Office in Lake Forest, CA, for inspection on reasonable prior notice,
which may be written or oral; provided that the Books and Records may include an
index of certain other documents not maintained in such location, copies of
which will be delivered upon specific, reasonable request therefor. Except as
expressly set forth herein, Seller makes no representation or warranty regarding
the correctness, accuracy or completeness of the Books and Records. The term
"Books and Records" specifically excludes corporate, financial and accounting
records and documents regarding the operations of Seller or its predecessor in
title or their affiliates or subsidiaries as an entity, as opposed to records
concerning only the Property; attorney-client communications and attorney work
product and property valuation information; loan documents regarding loans no
longer encumbering any of the Property, information regarding potential buyers,
marketing records, accounting data regarding properties formerly owned by Seller
or its predecessor in title, and agreements and records regarding the
partnerships that own or formerly owned any other Property; and Books and
Records that have been lost or destroyed or not in the possession of Seller or
Seller's current representative.
3.3 Condition of the Property. Subject to the approval or waiver of the
Contingencies and Buyer's Closing Conditions described in Section 4 and Section
5.1, and as a material inducement to Seller's execution and delivery of this
Agreement and performance of its duties hereunder, but without limiting the
effect of Seller's representations and warranties set forth in Section 7.1,
Buyer agrees, and represents and warrants, that it will purchase the Property
"as is" and solely in reliance on its own investigation of the Property. Buyer
agrees, and represents and warrants, that it has conducted (or will conduct to
the extent it deems appropriate) an investigation and determine to its
satisfaction each and every matter of concern or relevance relating to the
4
<PAGE> 5
Property, including without limitation the financial, legal title, physical and
environmental condition of the Property, soils, settlement or subsidence
conditions, applicable governmental laws and regulations, zoning, building code,
access, environmental, Environmental Laws (as defined in Section 11.1(a)) and
land use laws and regulations and the extent to which the Property complies
therewith, and the fitness of the Property for Buyer's contemplated use, the
presence of Hazardous Materials (as defined in Section 11.1(b)) on the Property
and, in general, its environmental condition, title matters and contracts to be
assumed by Buyer including the Pacific Commercentre Agreements, (collectively,
the "Condition of the Property"). Subject to the other provisions of this
Agreement, Buyer agrees and represents and warrants, that (i) it will purchase
the Property subject to each and every Condition of the Property, including
adverse conditions that may not have been revealed by its investigation of the
Property, (ii) Seller has no obligation to repair, correct or compensate Buyer
for any Condition of the Property, and (iii) by acquiring the Property, Buyer
shall be deemed to have waived any and all objections to the Condition of the
Property, whether or not any Condition of the Property would have been disclosed
by inspection. By acknowledging approval or waiver of the Contingencies and
Buyer's Closing Conditions pursuant to Section 4 and Section 5.1 and without
limiting Seller's obligations under Section 3.2, Section 8.3 or elsewhere in
this Agreement, Buyer shall be deemed to agree that no Condition of the
Property, whether or not known or discovered by either Buyer or Seller at a
later date, shall affect this transaction and the Purchase Price paid for the
Property hereunder, and that Buyer shall be obligated to purchase the Property
notwithstanding the Condition of the Property.
3.4 Buyer's Due Diligence.
(a) Limited Representations and Warranties. Buyer acknowledges that
Seller makes no representations or warranties express or implied with respect to
the Property except as made in Section 7.1. In light of Buyer's investigations,
the parties have negotiated the representations and warranties by Seller set
forth in Section 7.1 hereof. By acknowledging satisfaction of the Conditions and
Buyer's Closing Conditions described in Section 4 and Section 5.1 (or waiving
one or more thereof), Buyer acknowledges that, except as provided in the
representations and warranties in Section 7.1, Buyer is purchasing the Property
without any other express or implied warranties of Seller.
(b) Seller's Disclosures. Buyer acknowledges that any and all Books
and Records or other information of any type which Buyer has received or may
receive from Seller or Seller's agents is furnished without any warranty
whatsoever except as may be specifically set forth in Section 7.1. Buyer agrees
that Buyer will not attempt to assert any liability against Seller for
furnishing such information. Any disclosure whatsoever to Buyer pursuant to this
Agreement shall not enlarge or add to the warranties and representations of
Seller beyond those specifically set forth in Section 7.1.
(c) Buyer's Investigations. Buyer acknowledges that (i) by
acknowledging satisfaction of the Contingencies and Buyer's Closing Conditions
described in Section 4 and Section 5.1 (or waiving one or more thereof), Buyer
will be acknowledging that Seller has provided Buyer with adequate access to the
Books and Records and the Property, (ii) provided that Seller fulfills its
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obligations hereunder, Buyer has had, or will have by the Contingency Date,
ample opportunity to review and inspect the Books and Records and the Property
and to make such independent factual, physical and legal examinations and
inquiries as Buyer deems necessary or desirable with respect to the Condition of
the Property and the transaction contemplated hereby, (iii) in undertaking its
investigation, Buyer has been and will be advised by its independent architects,
attorneys, engineers and other advisors selected by it, and (iv) Buyer is and,
upon waiver of all Contingencies, will be fully satisfied that the Purchase
Price hereunder is fair and adequate consideration for the Property.
3.5 Release. Except to the extent provided in Section 9.2, Buyer
hereby waives, releases, acquits, and forever discharges Seller, and Seller's
agents, directors, officers and employees to the maximum extent permitted by
law, of and from any and all claims, actions, causes of action, demands, rights,
liabilities, damages, losses, costs, expenses, or compensation whatsoever,
direct or indirect, known or unknown, foreseen or unforeseen, that it now has or
which may arise in the future on account of or in any way growing out of or
connected with the Condition of the Property. BUYER EXPRESSLY WAIVES ANY OF ITS
RIGHTS GRANTED UNDER CALIFORNIA CIVIL CODE SECTION 1542, 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."
Initials: Buyer: __________ Seller: ___________
4. BUYER'S INITIAL CONTINGENCIES
Buyer's obligation to purchase the Property is expressly conditioned on
the fulfillment of each of the initial conditions precedent ("Contingencies")
described below. Except with respect to the Contingencies described in Section
4.1, Buyer shall deliver written notice to Seller that it (a) approves or waives
each Contingency, or (b) disapproves such contingency by no later than 5:00 p.m.
California time on the Contingency Date.
4.1 Title
(a) Title Objections. Within 7 Business Days after the opening of
escrow, Buyer shall obtain, and deliver a copy to Seller of, a CLTA preliminary
report issued by Fidelity Title Insurance Company (the "Title Insurer") and all
underlying documents referred to therein (the "Preliminary Report") for the Real
Property. It shall be a Buyer's Contingency, that on or before the Contingency
Date, Buyer shall review and inform Seller of its approval or disapproval, in
its sole discretion, of the Preliminary Report by giving Seller notice ("Buyer's
Title Notice") of any objection to the Preliminary Report (the "Title
Objections"). If Buyer fails to deliver timely notice by the required date,
Buyer shall be deemed to have approved the Preliminary Report. On or before the
fifth (5th) day after receipt of Buyer's Title Notice ("Seller's Notice Date"),
Seller shall notify Buyer in writing whether Seller will eliminate or
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cure such Title Objections (the "Seller's Title Notice") provided the method of
curing such Title objection shall be subject to Buyer's reasonable approval. If
Seller elects to eliminate or cure a Title Objection, the elimination or curing
by Seller of the Title Objections shall be completed on or before the Closing
(as defined in Section 8.2). If Seller elects to eliminate or cure a Title
Objection but fails to do so by the Closing, Buyer may pursue its remedies
pursuant to Section 9.2. If Seller (A) does not deliver Seller's Title Notice on
or before Seller's Notice Date, or (B) notifies Buyer that Seller is unable or
unwilling to cure any Title Objections, Buyer shall elect on or before three (3)
days after Seller's Notice Date either to waive such existing Title Objections
or deliver to Seller written notice terminating this Agreement pursuant to the
Section 4 subsection entitled "Disapproval of Contingencies". If Buyer fails to
give Seller notice of its election within the required period, Buyer shall be
deemed to have elected to waive such Title Objections.
(b) Additional Title Objections. If, after delivery of Buyer's Title Notice,
Buyer receives notice from the Title Insurer that it intends to revise the
Preliminary Report to include one or more additional exceptions to title, Buyer
may, within five (5) days of such notice, notify Seller ("Buyer's Amended Title
Notice") of the additional title exceptions to which, in its sole discretion, it
objects("Additional Title Objections"). If Buyer fails to deliver timely notice
within the required period, Buyer shall be deemed to have approved the
Additional Title Objections. Seller shall have the shorter of five (5) days
after Buyer's Amended Title Notice, or until two (2) Business Days before the
Closing Date, within which to deliver to Buyer a notice ("Seller's Amended Title
Notice") indicating whether Seller will eliminate or cure such Additional Title
Objections by the Closing. If Seller elects to eliminate or cure an Additional
Title Objection, the elimination or curing by Seller of the Additional Title
Objections shall be completed on or before the Closing. Seller agrees to
eliminate or cure Additional Title Objections caused by Seller. If Seller elects
to eliminate or cure a Title Objection but fails to do so by the Closing, Buyer
may pursue its remedies pursuant to Section 9.2. If Seller (a) does not deliver
Seller's Amended Title Notice within the required time, or (b) notifies Buyer
that Seller is unable or unwilling to cure such Additional Title Objections,
Buyer shall have the lesser of three (3) days or until the Closing to elect to
waive such Additional Title Objections or deliver to Seller written notice
terminating this Agreement pursuant to the Section 4 subsection entitled
"Disapproval of Contingencies". If Buyer fails to give Seller notice of its
election within the time set forth in the previous sentence, Buyer shall be
deemed to have elected to waive such Additional Title Objections.
(e) Permitted Exceptions. The term "Permitted Exceptions" shall mean (i)
all exceptions to title listed in the Preliminary Report to which Buyer does not
object in Buyer's Title Notice; (ii) Title Objections and Additional Title
Objections that Buyer waives or is deemed to have waived in accordance with the
provisions of this Section 4.1; and (iii) any matter that is approved, caused,
permitted or suffered by Buyer, its employees, agents, representatives or
affiliates. Notwithstanding the foregoing, Seller shall eliminate any and all
title exceptions consisting of mechanics lions, judgment liens, delinquent tax
lions and/or loans secured by mortgages, deeds of trust, security agreements or
fixture filings other than those approved, caused, permitted or suffered by
Buyer, its employees, agents, representatives or affiliates.
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(d) Issuance of Policy, Prior to the Contingency Date: (i) Buyer shall
notify Seller and Title Insurer as to any particular extended coverage policy
form, extended coverage policy, and any endorsements which Buyer may reasonably
desire ("Special Coverage"), and (ii) Buyer shall have obtained verbal
assurances, without the obligation to purchase a title commitment, of Title
Insurer's willingness to issue to Buyer at the Closing any such Special Coverage
in addition to a CLTA standard coverage Owner's Policy ("Title Policy") insuring
title to the Real Property in an amount equal to the Purchase Price insuring
that fee title to the Real Property is vested in Buyer, subject only to the
Permitted Exceptions, As a condition to Closing for Buyer's benefit, Title
Insurer shall be irrevocably and unconditionally committed to issue to Buyer the
Title Policy plus such Special Coverage, and if for any reason (other than a
default by Buyer) Title Insurer is unwilling to do so, then Buyer shall be
entitled to deliver to Seller on or before the Closing Date written notice of
the failure of such condition and the provisions of Section 4.5 shall apply;
provided however, if Buyer timely delivers to Seller written notice, then Seller
shall have the right, but not the obligation, to designate Chicago Title Company
as the Title Insurer should it be willing to issue the Title Policy and such
Special Coverage, and in such case Seller shall have the right to extend the
Closing Date as reasonably necessary for up to 30 days.
4.2 Contingency Review. It shall be a Contingency that, on or before the
Contingency Date, Buyer shall investigate and approve, in its sole discretion,
the Condition of the Property, Buyer's Reports, Books and Records, and all other
aspects of this transaction.
4.3 REIT Status. 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, it is a Contingency that by the
Contingency Date, Buyer shall have determined to its satisfaction that purchase
of the Property will not affect its status as a real estate investment trust or
result in a penalty tax.
4.4 Executive Committee Approval. 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 on or
prior to the Contingency Date of the transactions contemplated by this
Agreement.
4.5 Disapproval of Contingencies. If Buyer timely disapproves any
Contingency in writing, this Agreement shall automatically terminate, and
thereafter the parties shall have no further obligation or liability under this
Agreement, except as provided in this subsection. Subject to Buyer's obligations
and covenants under Section 3.1, the Deposit shall be returned to Buyer. Buyer's
failure to provide timely written notice of disapproval of any Contingency shall
be deemed a waiver of such Contingency. Any cancellation fee or other costs of
the Escrow Holder and Title Insurer shall be borne equally by Seller and Buyer
and each party shall pay its own expenses.
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4.6 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 Property and possibly forego other
opportunities while doing so, Seller hereby grants to Buyer the rights to
terminate this Agreement on or before the Contingency Date. 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. In the event this Agreement is terminated
pursuant to this Section 4, all obligations of Buyer and Seller hereunder
(except the provisions of this Agreement which recite that they survive
termination) shall terminate and be of no further force or effect.
5. CONDITIONS TO CLOSING
5.1 Buyer's Closing Conditions. Buyer's obligation to purchase the Property
is expressly conditioned on the fulfillment of each of the conditions precedent
at or before Closing described below ("Buyer's Closing Conditions"). Buyer's
Closing Conditions are solely for Buyer's benefit and any and all of Buyer's
Closing Conditions may be waived in writing by Buyer in whole or in part without
prior notice.
(a) Delivery of Closing Documents. It shall be a Buyer's Closing Condition
that Seller shall deliver through escrow the documents specified in Section 8.3.
(b) Performance of Covenants. It shall be a Buyer's Closing Condition that
Seller shall perform the material covenants of Seller under this Agreement to be
performed by Seller before Closing.
5.2 Seller's Closing Conditions. Seller's obligation to sell the Property
is expressly conditioned upon the fulfillment of each of the conditions
precedent at or before Closing described below ("Seller's Closing Conditions").
Seller's Closing Conditions are solely for Seller's benefit and any or all of
Seller's Closing Conditions may be waived in writing by Seller in whole or in
part without prior notice.
(a) Waiver of Contingencies. It shall be a Seller's Closing Condition that
Buyer shall have acknowledged its approval or waiver of all the Contingencies by
delivering to Seller written notice thereof.
(b) Purchase Price. It shall be a Seller's Closing Condition that Buyer
shall have delivered to Seller through Escrow the Purchase Price, upon
satisfaction of Seller's closing obligations.
(c) Delivery of Closing Documents and Funds. It shall be a Seller's
Closing Condition that Buyer deliver through Escrow the documents and funds
specified in Section 8.4.
(d) Performance of Covenants. It shall be a Seller's Closing Condition that
Buyer shall have performed the material covenants of Buyer under this Agreement.
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5.3 Termination. If Buyer's Closing Conditions or Seller's Closing
Conditions, as the case may be, are not approved or waived (including a deemed
waiver) within the time period allowed, this Agreement may be terminated by the
party in whose favor the Closing Condition runs by written notice to the other.
If this Agreement is so terminated, the parties shall have no further obligation
or liability under this Agreement, except as provided in Section 9, and this
Section 5.3. Subject to Buyer's obligations and covenants under Section 3.1, the
Deposit shall be returned to Buyer. Any cancellation fee or other costs of the
Escrow Holder shall be borne equally by Seller and Buyer and each party shall
pay its own expenses.
6. CC&R
6.1 Changes. Buyer acknowledges and agrees that, either before or after the
close of escrow, Seller shall have the right, but not the obligation to amend
the CC&R (defined below) in order to accomplish any or all of the following
("Changes"): (i) add in the restriction described in Section 6.2; and (ii)
implement such other changes to the CC&R reasonably approved by Buyer. Buyer
agrees to cooperate with all of Seller's efforts to make the Changes, including,
if necessary, execution of any amendment or new or additional agreement to the
CC&R; provided however, Buyer shall have the right to reasonably disapprove any
Change which either (i) pertains to the Land, or (ii) increases Buyer's
liabilities or obligations. "CC&R" means the Declaration of Covenants,
Conditions and Restrictions for Pacific Commercentre between LADCO and Pacific
Commercentre Partners, recorded on January 10, 1991, as Document No. 91-013945
in the Official Records of Orange County, California, as amended from time to
time.
6.2 Self Storage Development Restriction. Seller shall have the right to
amend the CC&R to prohibit construction of a "self storage project" on some or
all of the lots specified below ("Restricted Lots") and to provide that such
provision cannot be modified without the consent of Lot 20 of Tract 13343
("Benefitted Lot"). Such prohibition shall commence on September 5, 1995 and
shall terminate on the later of termination of the CC&R or March 22, 2007. The
term "self storage project" means a project having more than 10,000 gross square
feet of individual storage rental units, partitioned for the exclusive use of
one tenant, with separate secure access. The Restricted Lots are the following:
Tract 13343, Lots 4-5, 12-19; Tract 14316, Lots 1-6, 10; Tract 13344, Lots 3-23,
27-29, 39-44; and Tract 13179, Lots 1-2.
7. REPRESENTATIONS AND WARRANTIES
7.1 Seller's Representations and Warranties. Seller hereby warrants and
represents as of the date hereof and as of the Closing as set forth below. To
the extent any representation or warranty made by Seller is actually known by
Buyer or its agents or employees before the Contingency Date to be untrue or
inaccurate (and Buyer fails to terminate this Agreement under Section 4), Buyer
shall have no right under this Agreement solely by reason of that particular
untruth or inaccuracy to terminate this Agreement or to seek relief against
Seller on account of such breach of representation.
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(a) Organization; Authority. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
Seller has full power and authority to enter into and perform under this
Agreement. Makena Properties is fully authorized to execute this Agreement on
behalf of Seller.
(b) Litigation. Seller has received no written notice of any pending
litigation or arbitration proceeding or threatened litigation or arbitration
directly affecting the Property or this transaction to which Seller is a party.
Seller shall notify Buyer of any pending or threatened litigation of which
Seller receives notice from time to time by Seller until immediately before
Closing, and the provisions of Section 7.3 shall apply to such revisions.
(c) Governmental Action. Seller has received no written notice from any
governmental agency concerning any governmental proceeding or investigation of
the Property, any violation of any laws with respect to the Property, any
pending condemnation proceeding or any formal notice of condemnation involving
the Property,
(d) Foreign Person. Seller is not a foreign person and is a "United States
Person" as such term is defined in ss.7701(a)(30) of the Internal Revenue Code
of 1986, as amended (the "Code").
(e) Hazardous Material. To Seller's knowledge, except as disclosed in the
Books and Records: (i) there is no Hazardous Material on the Real Property that
is in violation of any applicable law or requires investigation or remedial
action under applicable law; 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 now or previously owned by Seller adjacent to the Property.
(f) To Seller's knowledge, water, gas, sewer, electric, and telephone
utilities are available to the Property.
(g) The Books and Records delivered by Seller to Buyer, or made available
to Buyer for review, are true and complete copies of all Books and Records in
Seller's or Seller's current representative's possession or control.
(h) Except for the Permitted Exceptions, there are no outstanding written
or oral contracts which run with the Property or which will be binding upon
Buyer upon the Closing for: (i) any improvements to the Property, or (ii)
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 Closing other than by Buyer.
(i) The Books and Records include the Property Agreements and, to Seller's
knowledge, all amendments thereto.
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7.2 Seller's Knowledge. As used in this Agreement, the phrase "Seller's
knowledge" shall be limited to the actual knowledge of William M. Miller and
Norman N. Nowell, without having made any independent analysis, investigation or
inquiry with respect to the matter so qualified. Norman N. Nowell has been the
manager of the Property since approximately July 1995.
7.3 Subsequent Disclosures. If, after the date hereof and before Closing,
Seller or Buyer discovers facts, or facts arise, that make one or more of the
representations and warranties made by Seller in Section 7.1 materially
incorrect, Seller or Buyer (as the case may be) shall immediately notify the
other in writing of such facts. Thereafter, Seller may elect to correct the
representation and warranty and to cure the matter referred to so that its
representations and warranties are no longer incorrect, or may decline to do so.
If Seller declines so to cure such matter or if such cure is not completed by
Closing, Buyer may, at its option, (i) proceed to buy the Property pursuant to
this Agreement, in which case Buyer's objection to the incorrectness of Seller's
representations and warranties shall be deemed waived by Buyer, or (ii)
terminate this Agreement, implementing the termination provisions in the
Section 4 subsection entitled "Disapproval of Contingencies", except in the
event of Seller's actual fraud or intentional misrepresentation, in which case
the provisions of Section 9.2 shall control.
7.4 Buyer's Representations and Warranties. In addition to its
representations and warranties made elsewhere in this Agreement, Buyer hereby
warrants and represents as of the date hereof and as of the Closing Date that
Buyer: is the entity as described in the preamble, duly organized, validly
existing and in good standing under the laws of the State of California;
possesses full power and authority to enter into and perform this Agreement; and
has sufficient financial resources to fund payment of the Purchase Price at
Closing and to perform all of Buyer's assumed obligations.
7.5 Survival. All representations and warranties contained in this
Section 7 shall survive Closing for one (1) year and then shall automatically
terminate; provided however if Seller receives written notice from Buyer within
one year after the Closing Date, which notice sets forth a specific, alleged
breach of a representation and warranty ("Claim"), such Claim shall survive for
an additional six (6) month period, and thereafter as provided by applicable law
provided that an action has been filed and served on Seller within such six (6)
month period. Except to the extent permitted by Section 9.2, Buyer shall not be
entitled to bring any claim against Seller for misrepresentation or breach of
warranty if and to the extent Buyer had the right to terminate this Agreement
prior to the Closing Date without forfeiture of the Deposit by reason thereof.
8. CLOSING
8.1 Escrow. An escrow ("Escrow") shall be opened with the Escrow Holder at
its office in Irvine, California, within two (2) Business Days after the full
execution of this Agreement. Buyer and Seller shall promptly upon request
therefor execute such additional escrow
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instructions as are reasonably required to consummate the transaction
contemplated by this Agreement and are not inconsistent herewith.
8.2 Closing. The "Closing" means the exchange of money and documents as
described herein, and will be deemed to have occurred when Seller's Grant Deed
to Buyer has been recorded, the Escrow Holder holds and can record and deliver
the remaining documents described in this Section 8 and is irrevocably and
unconditionally committed to issue the Title Policy and Buyer has delivered the
Purchase Price in immediately available funds to the Escrow Holder. Seller and
Buyer agree that the Closing shall occur on the Closing Date. The Closing will
be at the offices of the Escrow Holder or such other place as the parties may
agree.
8.3 Seller's Closing Obligations Not later than one (1) Business Day before
the Closing Date, Seller shall deliver to the Escrow Holder for delivery to
Buyer (or the party noted below) through Escrow the following:
(a) The Grant Deed, duly executed and acknowledged by the Seller and in
recordable form;
(b) The Assignment and Assumption Agreement in the form of Exhibit C
hereto, duly executed by Seller in counterpart;
(c) Certificates required by Section 1445 of the Internal Revenue Code of
1986, as amended, and California Revenue and Taxation Code Section 18815
executed by Seller and in a form satisfactory to Buyer, to relieve Buyer of any
potential transferee withholding liability under such Section;
(d) Such proof of Seller's authority and authorization to enter into this
Agreement and perform hereunder, and such proof of power and authority of the
individuals executing and/or delivering any instruments, documents or
certificates on behalf of Seller to act for and bind Seller as may reasonably be
required by the Escrow Holder;
(e) The Supplement to Exhibit C-1 of Declaration of Covenants, Conditions
and Restrictions, duly executed and acknowledged by Seller and in recordable
form in the form of Exhibit F to reflect the Building Density for each Lot
("CC&R Amendment").
(f) Other documents reasonably required to properly consummate this
transaction.
8.4 Buyer's Closing Obligations. Not later than one (1) Business Day before
the Closing Date (except for the funds described in Section 8.4(a) which shall
be wire transferred to Escrow Holder the morning of the Closing), Buyer will
deliver to the Escrow Holder for delivery to Seller (or the party noted below)
through Escrow the following:
(a) Immediately available federal funds as are required to be paid by Buyer
under this Agreement in an amount equal to the Purchase Price, minus the amount
of the Deposit paid
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by Buyer and adjusted for estimated prorations and closing costs. plus, if
applicable, the additional monies described in Section 1.5;
(b) The Assignment and Assumption Agreement, duly executed by Buyer in
counterpart;
(c) A Special Tax Disclosure Agreement Re Community Facilities District
No. 87-7 of the County of Orange (Los Alisos) (the "Special Tax Disclosure
Agreement"), in form attached as Exhibit D, for delivery to the County of
Orange;
(d) Such proof of Buyer's authority and authorization to enter into this
Agreement and perform hereunder, and such proof of power and authority of the
individuals executing and/or delivering any instruments, documents or
certificates on behalf of Buyer to act for and bind Buyer as may reasonably be
required by the Escrow Holder; and
(e) Other documents reasonably required to properly consummate this
transaction.
8.5 Close of Escrow, If on the Closing Date, (i) the Escrow Holder holds
and can deliver the documents described in Section 8.3 and Section 8.4. (ii) the
Escrow Holder is irrevocably and unconditionally committed to issue the Title
Policy with respect to the Property, (iii) the Buyer has delivered the funds
required under Section 8.4(a), and (iv) the Escrow Holder can record the Grant
Deed for the Property, then the Escrow Holder shall:
(a) Record the CC&R Amendment and Grant Deed in that order;
(b) Deliver the Purchase Price (less Seller's share of any net prorations
and closing costs) as directed by Seller;
(c) Deliver the remaining documents to the parties specified in Section 8.3
and Section 8.4;
(d) Deliver the remaining funds to Seller or Buyer, as the case may be,
after taking into account all items chargeable to the account of Seller and
Buyer pursuant to Section 8.8 and Section 8.9; and
(e) Deliver the Special Tax Disclosure Agreement to the County of Orange.
8.6 Termination of Escrow. If Closing does not take place as set forth in
Section 8.2, then the Escrow shall terminate, all documents deposited into
Escrow shall be returned to the respective parties, and, subject to Section 9,
the Deposit shall be returned to Buyer.
8.7 Possession. Seller shall retain possession of the Property until
Closing and shall deliver possession to Buyer upon Closing.
8.8 Prorations.
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(a) Prorations Paid Through Escrow. Real property taxes and current
installments of assessments applicable to the Property and other expenses
applicable to the Property shall be prorated as of the Closing Date, with
expenses allocable to the period on and after Closing Date to be for Buyer's
account, and expenses allocable to the period before the Closing Date to be for
Seller's account. Any property taxes assessed against the Property after the
Closing Date, with respect to any period of time before the Closing Date, shall
be paid by Seller on demand. All prorations shall be made as of 12:01 a.m. on
the Closing Date and Buyer shall bear the burden of the expenses for such day.
(b) Adjustment After Closing. Any expense which cannot be ascertained with
certainty as of the Closing Date shall be prorated on the basis of the parties'
reasonable estimates of such amounts and shall be the subject of a final
proration as soon thereafter as the precise amounts can be ascertained but in no
event later than one hundred twenty (120) days after the Closing. A statement
setting forth such agreed proration for purposes of Closing shall be delivered
by Buyer and Seller to the Escrow Holder, provided Escrow Holder shall not be
required to calculate any prorations. Seller and Buyer shall each cooperate with
the other diligently and promptly to correct any errors in computations or
estimates under this Section 8.8 and shall promptly pay to the party entitled
thereto any refund, credit or other payment necessary to comply with this
Section 8.8. This Section 8.8 shall survive the Closing. Either party owing the
other party a sum of money based on adjustments made to prorations after the
Closing shall promptly pay that sum to the other party, together with interest
thereon at the rate of Ten Percent (10%) per annum from the date of demand of
payment to the date of payment if payment is not made within ten (10) days after
demand therefor.
8.9 Closing Costs. Seller shall pay the real property transfer taxes on
this transaction and the premium for a standard form (CLTA) owner's policy of
title insurance in the amount of the Purchase Price and any endorsement Seller
agrees to obtain to resolve any title objection. Buyer shall pay any additional
premiums or charges with respect to the Title Policy, including any extended
coverage and endorsements other than those specified in the prior sentence.
Seller and Buyer shall each pay one-half of the escrow fees. Seller shall pay
the costs of recording any necessary releases or reconveyances, and Buyer shall
pay the costs of recording the Grant Deed and any other documents. All other
closing costs shall be divided as is customary in Orange County. This Section
8.9 shall survive the Closing,
8.10 Commissions. Provided the transaction described in this Agreement
closes, Seller shall pay through Escrow at Closing real estate broker's
commissions to Cushman & Wakefield of California, Inc. ("Seller's Broker")
pursuant to a separate agreement ("C&W Agreement"). Buyer represents and
warrants to Seller that it has engaged Buyer's Broker to represent Buyer in
connection with this Agreement. Other than the payment under the C&W Agreement,
Buyer represents and warrants to Seller that no fee or commission shall be
payable by reason of this transaction either to Buyer, Buyer's Broker or to any
broker or finder representing Buyer. Seller agrees to defend, indemnify and hold
harmless Buyer from and against any and all liabilities, claims, demands,
damages, or costs of any kind (including attorneys' fees, costs and expenses)
arising from or connected with any broker's or finder's fee or commission or
charge
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<PAGE> 16
("Broker Claims") claimed to be due by Seller's Broker or any person other than
Buyer's Broker (other than payment under the C&W Agreement) arising from or by
reason Of Seller's conduct with respect to this transaction. Buyer agrees to
defend, indemnify and hold harmless Seller from and against any and all Broker
Claims claimed to be due by Buyer's Broker or any person other than Seller's
Broker arising from or by reason of Buyer's conduct with respect to this
transaction. The provisions of this Section 8.10 shall survive Closing
hereunder.
8.11 Parties to Bear Own Expense. Each of the parties hereto shall pay all
the costs and expenses incurred or to be incurred by them in negotiating and
preparing this Agreement and in carrying out the transaction contemplated
hereby.
8.12 General Escrow Instructions. The general escrow instructions in
Exhibit E are hereby incorporated herein by this reference. Any conflict between
this Agreement and Exhibit E shall be construed in favor of this Agreement.
8.13 Reporting Requirements. The Escrow Holder shall comply with all
applicable federal, state and local reporting 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 with 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 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
33-0231278. 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. DEFAULT
9.1 Buyer's Default.
(a) Default. Buyer shall be deemed to be in default hereunder if Buyer
fails, for any reason other than Seller's default hereunder or the failure of a
condition precedent to Buyer's obligation to perform hereunder, to meet, comply
with or perform any covenant, agreement or obligation on its part required
within the time limits and in the manner required in this Agreement, or there
shall have occurred a material breach of any representation or warranty made by
Buyer; provided, however, no such default shall be deemed to have occurred
unless and until Seller has given Buyer written notice thereof, describing the
nature of the default, and Buyer has failed to cure such default within five (5)
days of the receipt of such notice (but in any event before the Closing Date,
unless such default occurs after Closing).
(b) Liquidated Damages. IF THE CLOSING FAILS TO OCCUR BY REASON OF DEFAULT
OF BUYER UNDER THE TERMS OF THIS AGREEMENT, BUYER SHALL
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<PAGE> 17
BE RESPONSIBLE FOR ALL CANCELLATION CHARGES REQUIRED TO BE PAID TO ESCROW HOLDER
AND ANY ESCROW CHARGES. IN ADDITION, THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES SHALL TERMINATE AND THE DEPOSIT SHALL BE IMMEDIATELY
DELIVERED BY ESCROW HOLDER TO SELLER ON SELLER'S REQUEST. THE DEPOSIT SHALL BE
DEEMED LIQUIDATED DAMAGES FOR BUYER'S FAILURE TO ACQUIRE THE PROPERTY AS
SELLER'S SOLE AND EXCLUSIVE REMEDY AGAINST BUYER (INCLUDING, WITHOUT LIMITATION,
SELLER'S RIGHTS TO SEEK SPECIFIC PERFORMANCE OF THIS AGREEMENT AND TO RECEIVE
DAMAGES FOR FAILURE TO ACQUIRE THE PROPERTY) WHICH SUM SHALL BE PRESUMED TO BE A
REASONABLE ESTIMATE OF THE AMOUNT OF ACTUAL DAMAGES SUSTAINED BY SELLER BY
REASON OF BUYER'S BREACH OF ITS OBLIGATION TO ACQUIRE THE PROPERTY. FROM THE
NATURE OF THIS TRANSACTION, IT IS IMPRACTICABLE AND EXTREMELY DIFFICULT TO FIX
THE ACTUAL DAMAGES THAT SELLER WOULD SUSTAIN, SHOULD BUYER BREACH ANY OF ITS
OBLIGATIONS. THE IMPRACTICABILITY AND DIFFICULTY OF FIXING ACTUAL DAMAGES IS
CAUSED BY, WITHOUT LIMITATION, THE FACT THAT THE PROPERTY IS UNIQUE. GIVEN THE
FOREGOING, AMONG OTHERS, BUYER AND SELLER AGREE THAT LIQUIDATED DAMAGES ARE
PARTICULARLY APPROPRIATE FOR THIS TRANSACTION AND AGREE THAT SAID LIQUIDATED
DAMAGES SHALL BE PAID IN THE EVENT OF BREACH BY BUYER, NOTWITHSTANDING ANY WORDS
OR CHARACTERIZATIONS PREVIOUSLY USED OR HEREIN CONTAINED IMPLYING ANY CONTRARY
INTENT, THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES 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. NOTHING HEREIN SHALL,
HOWEVER, BE DEEMED TO LIMIT BUYER'S LIABILITY TO SELLER FOR DAMAGES OR
INJUNCTIVE RELIEF FOR BREACH OF ANY OTHER OBLIGATION OF BUYER HEREUNDER (OTHER
THAN ITS OBLIGATION TO ACQUIRE THE PROPERTY), INCLUDING INDEMNITY OBLIGATIONS OF
BUYER, OR FOR ATTORNEYS' FEES AND COSTS AS PROVIDED IN SECTION 1.14.
Buyer's Initials /s/ Seller's Initials /s/
------- -------
9.2 Seller's Default.
(a) Default. Seller shall be deemed to be in default hereunder if Seller
fails, for any reason other than Buyer's default hereunder or the failure of a
condition precedent to Seller's obligation to perform hereunder, to meet, comply
with, or perform any covenant, agreement or obligation on its part required
within the time limits and in the manner required in this Agreement, or there
shall have occurred a material breach of any representation or warranty (made by
Seller); provided, however, no such default shall be deemed to have occurred
unless and until Buyer has given Seller written notice thereof, describing the
nature of the default, and
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<PAGE> 18
Seller has failed to cure such default within five (5) days of receipt of such
notice (but in any event before the Closing Date, unless such default occurs
after Closing).
(b) Remedies. If Seller shall be deemed to be in default under Section
9.2(a) at or before Closing, and Buyer does not waive such default, Buyer may
pursue one of the following remedies, each of which shall be Buyer's sole and
exclusive remedy:
(i) Enforce specific performance of this Agreement against Seller, in
which case Buyer shall have no claim for damages or any other remedy
against Seller; or
(ii) Terminate this Agreement by written notice delivered to Seller on or
before the Closing Date, provided that:
(A) Buyer may seek damages in an amount equal to its actual out-of-
pocket expenses in conducting due diligence with respect to this
transaction, in an amount not to exceed the Deposit; and
(B) If Buyer establishes actual fraud or intentional misrepresentation
by Seller, Buyer may also seek from Seller other actual and/or "out of
pocket" damages by reason thereof and the difference between the price
agreed to be paid and the value of the Property at the time of the
breach, but no other consequential or other damages or exemplary
damages, and in any event such damages shall not exceed in total the
amount of the Deposit.
(c) Remedies After Closing.
(i) If the Closing has occurred, Buyer shall not be entitled to recovery
from Seller for breach of contract, for tort, or for any other reason
unless Buyer establishes, through actual fraud or intentional
misrepresentation by Seller, that Seller shall have breached a
representation or warranty contained in Section 7.1 that has not terminated
or Seller has not performed a covenant to eliminate or cure Title
Objections or Additional Title Objections pursuant to Section 4.1, in which
case Buyer may seek actual and/or "out of pocket" damages by reason
thereof, but shall not be entitled to consequential or other damages or
exemplary damages or any other damages or remedy, and in any event the
amount of such damages shall be equal to the lesser of (A) the cost to cure
or remove such default or (B) the amount of Deposit.
(ii) Buyer shall not be entitled to bring any claim against Seller for
misrepresentation or breach of warranty if and to the extent Buyer or
Buyer's agents or employees had actual knowledge before Closing of the
existence of any condition, fact or circumstance giving rise to such claim,
or with respect to any information described in or disclosed by any report
delivered to Buyer and despite such knowledge, still acquired the Property
affected by the misrepresentation or breach of warranty.
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<PAGE> 19
(d) Termination Procedure. Upon termination of this Agreement in accordance
with ss.9.2, the Deposit shall be promptly returned to Buyer by the Escrow
Holder upon receipt of written notice from Seller and Buyer that Seller has
defaulted under this Agreement. Seller shall be responsible for all cancellation
charges and escrow charges required to be paid to the Escrow Holder. Buyer shall
deliver copies of the Buyer's Reports to Seller pursuant to ss.3.1(d).
10. RISK OF LOSS. If before Closing either (i) any action or proceeding is
commenced for the condemnation or exercise of the rights of eminent domain of
the Property or any portion thereof, or if Seller is notified of a planned
condemnation by the duly authorized officer of a duly empowered condemning
authority, or (ii) there occurs any material and adverse physical change to the
Land, then at Buyer's option either (i) if applicable, at Closing Seller shall
assign and turn over, and Buyer shall be entitled to keep, all awards for the
taking by eminent domain which accrue to Seller and the parties shall proceed
with the Closing, without modifying the terms of this Agreement and without
reducing the Purchase Price; or (ii) Buyer may terminate this Agreement in which
case the Deposit shall be returned to Buyer. Seller shall not negotiate, resist
or stipulate to the condemning action without Buyer's written consent. In any
event, the Closing shall not be affected, delayed or prevented as a result of
such condemning action unless Buyer elects to terminate pursuant to subsection
(ii).
11. MISCELLANEOUS
11.1 Definition of Hazardous Material.
(a) Environmental Laws. "Environmental Laws" shall mean any and all present
and future federal, state and local law (whether under common law, statute,
rule, ordinance, agreement, regulation or otherwise), requirement under any
permit issued with respect thereto, and other requirements of agencies having
jurisdiction thereunder relating to the protection of human health or the
environment, including (without limitation) the Federal Insecticide, Fungicide,
and Rodenticide Act, 7 U.S.C. ss.ss.136, et seq.; the Toxic Substances Control
Act, 15. U.S.C. ss.ss.2601, et seq.; Federal Asbestos Hazard Emergency Response
Act, 15 U.S.C. ss.ss.2641 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C, ss.ss.9601, et seq.
("CERCLA"); the Resource Conservation and Recovery Act, 42 U.S.C. ss.ss.6901 et
seq. ("RCRA"); the Federal Water Pollution Prevention and Control Act, 33 U.S.C.
ss.ss. 1251 et seq. (the "Clean Water Act"); the Hazardous Materials
Transportation Act, 49 U.S.C. ss.ss.1801, et seq.; the Solid Waste Disposal Act,
42 U.S.C. ss.ss.6901, et seq.; the Federal Water Pollution Control Act, 33
U.S.C. ss.ss.1321; 42 U.S.C. ss.ss.7401 et seq. (the "Clean Air Act"); the
California Hazardous Waste Control Act, Cal. Health & Safety Code ("H.&S.C.")
ss.ss.25100 et seq.; the California Hazardous Substance Account Act, H.& S.C.
ss.ss.25300 et seq.; the California Safe Drinking Water and Toxic Enforcement
Act, H.& S.C., ss.ss.25249.5, et seq. ("Proposition 65"); the California
Hazardous Waste Management Act, H.&S.C. ss.ss.25170.1 et seq.; H.&S.C.
ss.ss.25501 et seq. (Hazardous Materials Response Plans and Inventory); the
Porter-Cologne Water Control Act, Cal. Water Code ss.ss.13000 et seq.; H.&S.C.
ss.ss.25280, et seq. (Underground Storage of Hazardous Substances); H.&S.C.
ss.25915 et seq. (the
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"Connelly Act"); H.&S.C. ss.25359,7; H.&S.C. ss.ss.2595 et seq.; Cal. Labor Code
ss.ss.6501.5 et seq.; and Title 22 of the California Code of Regulations; all as
amended to the date hereof,
(b) Hazardous Material. "Hazardous Material" shall include any chemical.
compound, material, mixture or substance which is now or hereafter defined or
listed in, or otherwise classified pursuant to, any Environmental Law as a
"hazardous substance," "hazardous material," "reproductive toxicant," "hazardous
waste," "extremely hazardous waste," "infectious waste," "biohazardous waste,"
"medical waste," "toxic substance," "toxic pollutant," "pollutant,"
"contaminant" or any other formulation intended to define, list, or classify
substances by reason of deleterious properties to human health, safety or the
environment, such as ignitability, corrosivity, reactivity, carcinogenicity,
radioactivity or toxicity, including all petroleum hydrocarbon,
petroleum-derived material, natural gas, natural gas liquids, liquified natural
gas, or synthetic gas usable for fuel (or mixtures of natural gas and such
synthetic gas), asbestos and those substances listed in the United States
Department of Transportation Table (49 CFR 172.101, as amended).
11.2 Definition of Business Day. For purposes of this Agreement, "Business
Day" means any day other than Saturday, Sunday or a holiday observed by national
or federally chartered banks. Any event specified to occur on a non-Business Day
shall be extended automatically to the end of the first Business Day thereafter.
11.3 Binding Effect. Subject to the restrictions on assignment contained
in ss.11.4, this Agreement shall be binding on and shall inure to the benefit of
the parties to it and their respective legal representatives, successors and
assigns.
11.4 Assignment. This Agreement may not be assigned by Buyer without
Seller's prior written consent which may be withheld in Seller's sole
discretion; provided that Buyer may assign this Agreement without Seller's
consent to an assignee provided that the assignee executes an assumption
agreement in form and substance reasonably acceptable to Seller. Seller shall
have the right to assign this Agreement at any time.
11.5 Severability. If any term, covenant, provision, paragraph or condition
of this Agreement shall be illegal, such illegality shall not invalidate the
whole Agreement, but, to the extent permitted by law, the Agreement shall be
construed to give effect to the intent manifested by the portion held
inoperative or invalid and the rights and obligations of the parties shall be
construed and enforced accordingly.
11.6 Entire Understanding. This Agreement represents the entire
understanding of Buyer and Seller and supersedes all prior and concurrent
written or oral agreements or representations, if any, relative to the subject
matter involved.
11.7 Amendments. This Agreement may not be modified, changed or
supplemented except by written instrument signed by both parties.
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<PAGE> 21
11.8 California Law. The interpretation and performance of this Agreement
shall be governed by the laws of the State of California applied to agreements
to be performed entirely within the State of California by residents of the
State of California.
11.9 Waiver. Other than deemed waivers provided for herein, all waivers
by either party shall be in writing. The waiver by either party of any breach of
any term, covenant or condition of this Agreement shall not be deemed a waiver
of such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition of this Agreement,
11.10 Notices. Any and all notices or other communication required or
permitted by this Agreement or by law to be served on or given to a party hereto
by the other party shall be in writing and given personally (including overnight
courier), by facsimile transmission or by registered or certified mail (postage
fully prepaid) addressed as follows:
To Buyer: Pacific Gulf Properties, Inc.
363 San Miguel Drive, Suite 100
Newport Beach CA 92660
Attn: Lonnie Nadal
Phone: (714) 721-2700
Facsimile No.: (714) 719-1955
Copy to: Cox, Castle & Nicholson
2049 Century Park East, 28th Floor
Los Angeles, CA 90067
Attn: John H. Kuhl
Phone: (310) 284-2267
Facsimile No.: (310) 277-7889
To Seller: PacTel Systems
c/o Makena Properties
23792 Rockfield, Suite 101
Lake Forest CA 92630
Attn: Norman Nowell
Phone: (714) 461-7161
Facsimile No.: (714) 461-7162
Copy to: Coontz & Matthews LLP
30448 Rancho Viejo Road, Suite 120
San Juan Capistrano, CA 92675
Attn: Milburn A. Matthews, Esq.
Phone: (714) 240-3040
Facsimile No.: (714) 240-7540
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To Escrow Holder: Fidelity National Title Insurance Company
17911 Von Karman, Suite 540
Irvine CA 92614
Attn: Joe St. John
Phone: 714 852 9770
Facsimile No.: 714 622 4167
Either party may change such address by written notice to the Other. Any notice
delivered as described above shall be deemed received on the date of delivery.
11.11 Captions. The captions inserted herein are inserted only as a matter
of convenience and for reference and in no way define, limit or describe the
scope of this Agreement or the intent of any of the provisions hereof.
11.12 Exhibits. All exhibits and schedules referred to herein are
incorporated by reference as though fully set forth herein.
11.13 Time of the Essence. Time is of the essence in this Agreement and
failure to comply with this provision shall be a material breach of this
Agreement.
11.14 Attorneys' Fees. Should any party institute any action, proceeding,
suit, arbitration, appeal or other similar proceeding or other non-judicial
dispute resolution mechanism ("Action") to enforce or interpret this Agreement
or any provision hereof, for damages by reason of any alleged breach of this
Agreement or of any provision hereof, or for a declaration of rights hereunder,
the prevailing party in such Action shall be entitled to receive from the other
party(s) all reasonable attorneys' fees, accountants' fees, expert witness fees,
and any and all other similar fees, costs and expenses incurred by the
prevailing party in connection with the Action and preparations therefor
("Fees"). If any party files for protection under, or voluntarily or
involuntarily becomes subject to, any chapter of the United States Bankruptcy
Code or similar state insolvency laws, any other party shall be entitled to any
and all Fees incurred to protect such party's interest and other rights under
this Agreement, whether or not such action results in a discharge.
11.15 Additional Cooperation. Seller and Buyer agree to execute such
additional documents or take such additional action, without cost or expense, as
may be reasonably necessary or desirable to carry out the provisions of this
Agreement or to further perfect the conveyance, transfer and assignment of the
Property to Buyer. This provision survives the Closing.
11.16 Confidentiality. Seller and Buyer agree that neither Seller nor Buyer
shall disclose to any third party (except as required to obtain consents
necessary to consummate the sale and to obtain governmental approvals) the
Purchase Price or the terms and conditions of this Agreement. This provision
shall not limit disclosure to the Escrow Holder, to Buyer's prospective partners
or lenders, or to the agents, consultants and attorneys retained by Seller
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and Buyer in connection with this transaction or disclosure required by
applicable laws. Notwithstanding anything to the contrary in this Agreement,
this ss.11.16 shall survive Closing or the earlier termination of this
Agreement.
11.17 Memorandum. Seller and Buyer agree that neither party shall record a
memorandum of this Agreement.
11.18 Consent to Jurisdiction. Seller and Buyer consent to suit with
respect to this Agreement and the transaction contemplated hereby, and accept
the jurisdiction of the Superior Court for the County of Orange, California, and
the U.S. District Court for the Central District of California, and the courts
to which appeals would be taken from each of the foregoing.
11.19 Counterparts. This Agreement may be executed in counterparts, each of
which when executed shall be deemed an original and all of which counterparts
taken together shall constitute but one and the same instrument. Signature pages
may be detached from the counterparts and attached to a single copy of this
Agreement to form one document.
11.20 Notice of Special Tax. Contemporaneously with the execution of this
Agreement, Buyer shall execute the Notice of Special Tax for Community
Facilities District No. 87-7, County of Orange, California, attached hereto
after the signature page.
11.21 Aircraft Environmental Impact Declaration. Pursuant to the Conditions
of Approval imposed by the County of Orange in connection with the Pacific
Commercentre, Seller makes the following Declaration:
We make this Declaration concerning aircraft environmental impact for the
purpose and subject to the same conditions and limitations as shown in that
certain notice concerning aircraft environmental impacts recorded December 1,
1983, as Instrument No. 83-549335 in the Official Records of Orange County,
California. The Pacific Commercentre property is subject to overflight, sight
and sound of aircraft operating from El Toro Marine Corps Air Station.
11.22 Tax Deferred Exchange. Buyer agrees to reasonably cooperate with the
acquisition of other property by Seller in exchange for the sale of the Property
to Buyer in a tax deferred exchange provided that (i) the Closing is not
delayed, (ii) Buyer shall not be required to hold legal or equitable title to
any real property other than the Property, (iii) Buyer shall not be required to
assume any liability whatsoever, whether liquidated or contingent, and (iv)
Buyer will not incur any additional out-of-pocket costs in complying with this
provision.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
"Buyer" Pacific Gulf Properties, Inc., a California
corporation
By: /s/ LONNIE NADAL
------------------------------------------
Lonnie Nadal, Senior Vice President
By: /s/ DONALD G. HERRMAN
------------------------------------------
Donald G. Herrman, Executive Vice President
"Seller" PacTel Systems, a California corporation
By: /s/ WILLIAM M. MILLER
------------------------------------------
William M. Miller, Vice President
[Parties must initial ss.3.5 and ss.9.1(b) and Buyer execute
the Notice of Special Tax following this page]
Acceptance:
Fidelity Title Insurance Company
By: /s/ DENNIS CHAPLIN
-----------------------------------
Dennis Chaplin, Escrow Officer
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NOTICE OF SPECIAL TAX
COMMUNITY FACILITIES DISTRICT NO. 87-7
COUNTY OF ORANGE, CALIFORNIA
TO: THE PROSPECTIVE PURCHASER OF THE REAL PROPERTY KNOWN AS:
Lots I and 6 of Tract Map No. 14316
THIS IS A NOTIFICATION TO YOU PRIOR TO YOUR ENTERING INTO A CONTRACT TO
PURCHASE THIS PROPERTY. THE SELLER IS REQUIRED TO GIVE YOU THIS NOTICE AND TO
OBTAIN A COPY SIGNED BY YOU TO INDICATE THAT YOU HAVE RECEIVED AND READ A COPY
OF THIS NOTICE.
(1) This property is subject to a special tax, which is in addition to the
regular property taxes and any other charges, fees, special taxes and benefit
assessments on the parcel. It is imposed on this property because it is a new
development, and may not be imposed generally upon property outside of this new
development. If you fail to pay this tax when due each year, the property may be
foreclosed upon and sold. The tax is used to provide public facilities or
services that are likely to particularly benefit the property. YOU SHOULD TAKE
THIS TAX AND THE BENEFITS FROM THE FACILITIES AND SERVICES FOR WHICH IT PAYS
INTO ACCOUNT IN DECIDING WHETHER TO BUY THIS PROPERTY.
(2) Since this parcel is currently Undeveloped Property, the maximum
special tax which may be levied against this parcel to pay for public facilities
and services is $10,432.69 per acre during the 1994-1995 tax year. If this
parcel was Developed Property (i.e., if a building permit had been issued by
March 1, 1994), then the maximum special tax which could have been levied
against this parcel to pay for public facilities and services during the
1994-1995 tax year would have been the greater of (a) $0.27 per square foot of
land or (b) $0.70 per square foot of improvements. This amount will be increased
by 3.5 percent per year after that. The special tax will be levied each year
until all of the authorized facilities are built and all special tax bonds are
repaid and may be levied forever thereafter to pay for ongoing service costs.
(3) The authorized facilities and fees which are being paid for by the
special taxes, and by the money received from the sale of bonds which are being
repaid by the special taxes, are:
Water and sewer acreage fees and the construction, purchase, modification,
expansion, improvement or rehabilitation of a local and regional park, fire
stations, sheriff substation, library, storm drains and the roadway improvements
to be constructed as part of the Foothill Circulation Phasing Program, which
roadway improvements include all related
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work for grading, paving, drainage, sewer and water facilities and utilities
together with improvements to intersections and other appurtenant work.
The facilities may not yet have all been constructed or acquired and it is
possible that some may never be constructed or acquired.
In addition, the special taxes may be used to pay for costs of the
following services:
Police protection, fire protection, ambulance, paramedic, flood and storm
protection, recreation program, library, park and open space services,
including, but not limited to, the operation and maintenance of storm drains,
parks and parkways.
YOU MAY OBTAIN A COPY OF THE RESOLUTION OF FORMATION WHICH AUTHORIZED
CREATION OF THE COMMUNITY FACILITIES DISTRICT AND WHICH SPECIFIES MORE PRECISELY
HOW THE SPECIAL TAX IS APPORTIONED AND HOW THE PROCEEDS OF THE TAX WILL BE USED,
FROM THE COUNTY OF ORANGE - COUNTY ADMINISTRATIVE OFFICE BY CALLING (714)
834-3055. THERE MAY BE A CHARGE FOR THIS DOCUMENT NOT TO EXCEED THE REASONABLE
COST OF PROVIDING THE DOCUMENT.
I (WE) ACKNOWLEDGE THAT I (WE) HAVE READ THIS NOTICE AND RECEIVED A COPY OF
THIS NOTICE PRIOR TO ENTERING INTO A CONTRACT TO PURCHASE OR DEPOSIT RECEIPT
WITH RESPECT TO THE ABOVE-REFERENCED PROPERTY. I (WE) UNDERSTAND THAT I (WE) MAY
TERMINATE THE CONTRACT TO PURCHASE OR DEPOSIT RECEIPT WITHIN THREE DAYS AFTER
RECEIVING THIS NOTICE IN PERSON OR WITHIN FIVE DAYS AFTER IT WAS DEPOSITED IN
THE MAIL BY GIVING WRITTEN NOTICE OF THAT TERMINATION TO THE OWNER, SUBDIVIDER
OR AGENT SELLING THE PROPERTY,
DATE: February 17, 1997 Pacific Gulf Properties, Inc., a California
corporation
By: /s/ LONNIE NADAL
------------------------------------------
Lonnie Nadal, Senior Vice President
By: /s/ DONALD G. HERRMAN
------------------------------------------
Donald G. Herrman, Executive Vice President
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<PAGE> 27
EXHIBIT A
(Legal Description of Real Property)
LOTS I AND 6 OF TRACT NO. 14316, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA,
AS SHOWN ON A MAP RECORDED IN BOOK 679, PAGES 15 THROUGH 23 INCLUSIVE OF
MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,
EXCEPT AN UNDIVIDED HALF INTEREST IN AND TO ANY AND ALL MINERALS, WITHOUT
LIMITATION, ALL OIL, GAS, HYDROCARBON AND SIMILAR RIGHTS, AND ALL WATER, WATER
RIGHTS, GEOTHERMAL STEAM AND STEAM POWER, WITHIN OR UNDERLYING SUCH REAL
PROPERTY, TOGETHER WITH THE PERPETUAL RIGHT OF DEVELOPMENT THEREOF; PROVIDED,
HOWEVER, THAT THE RIGHTS HEREIN CONVEYED DO NOT INCLUDE THE RIGHT TO ENTER UPON
THE SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SUCH REAL PROPERTY, AS
PROVIDED IN DEED RECORDED JULY 3, 1979 IN BOOK 13215, PAGE 646, OFFICIAL
RECORDS, AS INSTRUMENT NO. 3449.
ALSO EXCEPT AN UNDIVIDED HALF INTEREST IN AND TO ANY AND ALL MINERALS LOCATED
WITHIN THE REAL PROPERTY HEREINAFTER DESCRIBED, INCLUDING, WITHOUT LIMITATION,
ALL OIL, GAS, HYDROCARBON AND SIMILAR RIGHTS, AND ALL WATER, WATER RIGHTS,
GEOTHERMAL STEAM AND STEAM POWER, WITHIN OR UNDERLYING SUCH REAL PROPERTY,
TOGETHER WITH THE PERPETUAL RIGHT OF DEVELOPMENT THEREOF; PROVIDED, HOWEVER,
THAT THE RIGHTS HEREIN CONVEYED DO NOT INCLUDE THE RIGHT TO ENTER UPON THE
SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID REAL PROPERTY, AS PROVIDED IN
DEED RECORDED JULY 3, 1979 IN BOOK 13215, PAGE 649, OFFICIAL RECORDS, AS
INSTRUMENT NO. 3450.
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EXHIBIT B
RECORDING REQUESTED BY:
WHEN RECORDED RETURN TO:
- -----------------------------------
- -----------------------------------
- -----------------------------------
- --------------------------------------------------------------------------------
Transfer tax not to be shown of
public record. See attached
statement submitted herewith.
GRANT DEED
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
PacTel Systems, a California corporation ("Grantor"), hereby grants to Pacific
Gulf Properties, Inc. ("Grantee"), all that certain real property (the "Land")
located in the County of Orange, State of California, and described on Exhibit A
attached hereto and incorporated herein by this reference; subject, however, to:
(a) taxes and assessments, both general and special, not now due and payable;
(b) building and zoning ordinances, laws, regulations and restrictions by
municipal or other governmental authority; (c) any and all leases, easements,
rights-of-way, encumbrances, conditions, covenants, restrictions, reservations
and exceptions of record; and (d) all other matters affecting title to the Land,
whether or not of record including, but not limited to, road, highway, pipeline,
railroad and utility easements which would be disclosed by a survey and
inspection of the Property.
SUBJECT to Grantor's right, but not obligation, to amend the CC&R (defined
below) in order to accomplish any or all of the following ("Changes"): implement
such changes to the CC&R reasonably approved by Grantee. Grantee agrees to
cooperate with all of Grantor's efforts to make the Changes, including, if
necessary, execution of any amendment or new or additional agreement to the
CC&R; provided however, Grantee shall have the right to reasonably disapprove
any Change which either (i) pertains to the Land, or (ii) increases Grantee's
liabilities or obligations. "CC&R" means the Declaration of Covenants,
Conditions and Restrictions for Pacific Commercentre between LADCO and Pacific
Commercentre Partners, recorded on January 10, 1991, as Document No. 91-013945
in the Official Records of Orange County, California, as amended.
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FURTHER SUBJECT TO the following prohibition: Construction of a "self
storage project" on some or all of the Land is prohibited without the consent of
the owner of Lot 20 of Tract 13343 ("Benefitted Lot"). Such prohibition shall
commence on September 5, 1995 and shall terminate on the later of termination of
the CC&R or March 22, 2007. The term "self storage project" means a project
having more than 10,000 gross square feet of individual storage rental units,
partitioned for the exclusive use of one tenant, with separate secure access.
Dated: ____________________, 1997. PacTel Systems, a California corporation
By:__________________________________
William M. Miller, Vice President
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<PAGE> 30
EXHIBIT C
RECORDING REQUESTED BY:
WHEN RECORDED RETURN TO:
- --------------------------------------------------------------------------------
(Space above this line for Recorder's use)
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement ("Agreement") is made, as of
_______, 1997, by and between _________________________ ("Assignee"), and
PacTel Systems, a California corporation ("Assignor").
RECITALS
A. Assignor owns certain real property in Lake Forest, California described
on Exhibit A hereto (the "Property"), being a portion of that development
commonly known as Pacific Commercentre. In connection with the operation of the
Property, Assignor is a party to the certain agreements ("Contracts") described
below.
B. Assignor and Assignee entered into that certain Lot Sale Agreement dated
as of _________, 1997, ("Purchase Agreement"), pursuant to which Assignor has
agreed to sell and Assignee has agreed to purchase the Property and Assignor has
agreed to assign and Assignee has agreed to assume the Contracts.
AGREEMENT
For valuable consideration, receipt of which is acknowledged, Assignor and
Assignee agree as follows:
1. Assignor grants, sells, transfers and assigns to Assignee, as of the
date hereof, all of Assignor's right, title and interest in and to the following
contracts to the extent they relate to the development, use and operation of the
Property:
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a. Obligation to implement a transportation management program complying
with Condition of Approval No. 5, Board of Supervisors Resolution No.
87-1065, County of Orange.
b. Foothill Circulation Phasing Plan Fee Credit Agreement No. D89-294
between Pacific Commercentre Partners ("PCP") and the County of
Orange, approved June 26, 1990.
c. Fee Credit Agreement (Foothill Transportation Corridor) No. D89-305B
between the Foothill/Eastern Transportation Corridor Agency, PCP and
the County of Orange, approved July 17, 1990.
Assignee assumes, as of the date of Closing, all of Assignor's
obligations arising under, or in connection with, the Contracts to the extent
they relate to the Property, subject to the terms thereof. Assignor and Assignee
agree to execute any and all assignment and/or assumption agreements required by
public agencies to evidence Assignor's assignment and Assignee's assumption of
such obligations, and the release of Assignor from the duty to perform such
obligations from and after the date hereof. Assignee and Assignor shall
cooperate with one another in acknowledging such notices as may be required by
law in connection with the acquisition of the Property.
2. The Contracts are sold, conveyed and assigned "as is," "where is," "with
all faults" and without any warranty or representation, express or implied, of
any nature or sort, including, without limitation, any warranty of
merchantability, fitness of use for a particular purpose, or otherwise, except
as may specifically be provided otherwise in the Purchase Agreement.
3. Should either party hereto institute any legal action or proceeding to
enforce or interpret any provisions of this Agreement, the prevailing party
shall be entitled to receive from the losing party such amount as the court may
adjudge to be reasonable attorneys' fees for the services rendered to the
prevailing party in such action or proceeding.
4. This Agreement shall be binding on, and inure to the benefit of, the
parties hereto, their successors in interest and assigns, subject, however, to
the provisions of the Contracts regarding assignment.
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<PAGE> 32
5. The interpretation and performance of this Agreement shall be governed
by the laws of the State of California applied to agreements to be performed
entirely within the State of California by residents of the State of California.
ASSIGNEE:
-----------------------------------
-----------------------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ASSIGNOR:
PacTel Systems, a
California corporation
By:
--------------------------------
William M. Miller, Vice President
3
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EXHIBIT D
SPECIAL TAX DISCLOSURE AGREEMENT RE COMMUNITY
FACILITIES DISTRICT NO. 87-7 OF THE COUNTY OF
ORANGE (LOS ALISOS)
THIS SPECIAL TAX DISCLOSURE AGREEMENT RE COMMUNITY FACILITIES DISTRICT NO.
87-7 OF THE COUNTY OF ORANGE (LOS ALISOS) (the "Agreement") is entered into and
is effective as of the ___ day of ______________, 1997, by and between the
COUNTY OF ORANGE, a political subdivision of the State of California (the
"County"), for itself and on behalf of Community Facilities District No. 87-7 of
the County of Orange (Los Alisos) (the "District"), and ____________________, a
___________ (the "Company").
RECITALS
A. The Board of Supervisors of the County of Orange (the "Board of
Supervisors") has formed and established the District pursuant to the provisions
of the Mello-Roos Community Facilities Act of 1982, Chapter 2.5 (commencing with
Section 53311) of Part 1 of Division 2 of Title 5 of the California Government
Code (the "Act"). The parties hereto acknowledge that the District has been
established as a legally constituted governmental entity pursuant to the Act.
The land included within the District is described on the map attached to
Resolution No. 88-750 adopted by the Board of Supervisors on May 24, 1988, and
subsequently recorded with the County Recorder on May 27, 1988, in Book 41, Page
14 of the maps of assessment and community facilities districts.
B. The Company owns a portion of the land within the District and
acknowledges that the land is subject to the levy of a special tax (the "Special
Tax") in accordance with the Rate and Method of Apportionment contained in
Resolution No. 88-1007 adopted by the Board of Supervisors on June 29, 1988.
C. The purpose of this Agreement is to set forth the provisions under which
the Company will provide for disclosure of the Special Tax to prospective
purchasers of its land.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereto agree as follows:
1. Recitals. Each of the above recitals is incorporated herein and is true
and correct.
2. Disclosure of Special Tax.
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(a) In consideration of the County's and the District's willingness
to permit the financing of certain public improvements through the levy of the
Special Tax, and, in certain cases, through the issuance of bonds by the
District pursuant to the provisions of the Act, the Company agrees to provide
disclosure of the Special Tax in accordance with this Agreements, provided,
however, that nothing herein shall entitle the Company to compel the County or
the District to levy the Special Tax or issue bonds in any particular amount,
which actions shall remain within the sole discretion of the County and the
District. The Company covenants to deliver to each person or entity buying any
land or improvements within the District from the Company the disclosure notice
attached hereto as Attachment 1 and incorporated by reference herein (the
"Special Tax Notice"). In all cases, the Special Tax Notice shall be provided
prior to the opening of escrow for the purchase of any land or improvements and
shall be signed by all buyers prior to any party becoming contractually
obligated to purchase either land or improvements. The provision of the Special
Tax Notice to buyers of new homes shall be in addition to the disclosure
provided by any applicable Department of Real Estate reports. The Company shall
provide copies of the Special Tax Notices, signed by each buyer of any land or
improvements, to the County promptly upon execution by the buyer. The Company
shall include the Special Tax Notice in all of its applications for Final
Subdivision Reports required by the California Department of Real Estate.
(b) The Company covenants that, with respect to sales of real
property within the District by the Company to persons or entities who intend to
construct residential units or commercial or industrial facilities for sale, the
Company shall require as a condition precedent to its obligation to close an
escrow for the sale of real property that the buyer execute an agreement with
the County regarding disclosure of the Special Tax and that such agreement shall
be in the form of this Agreement.
3. Indemnification and Hold Harmless The Company hereby assumes the defense of,
and indemnifies and saves harmless the County, the District and each of their
respective officers, directors, employees and agents, from and against all
actions, damages, claims, losses or expenses of every type and description to
which they may be subjected or put, by reason of, or resulting form, the failure
by the Company to comply with this Agreement, provided that nothing in this
Section 3 shall be understood or construed to mean that the Company agrees to
indemnify the County or the District, or any of their respective officers,
directors, employees or agents, for any negligent or wrongful acts or omissions
to act of the County or the District, or any of their respective officers,
directors, employees or agents.
4. Governing Law. This Agreement and any dispute arising hereunder shall be
governed by and interpreted in accordance with the laws of the State of
California.
5. Waiver. Failure by a party to insist upon the strict performance of any
of the provisions of this Agreement by the other party, or the failure by a
party to exercise its rights upon the default of the other party, shall not
constitute a waiver of such party's right
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<PAGE> 35
to insist and demand strict compliance by the other party with the terms of this
Agreement thereafter.
6. Singular and Plural; Gender. As used herein, the singular of any word
includes the plural, and terms in the masculine gender shall include the
feminine.
7. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original. The delivery of an executed copy of this
Agreement by the Company to an escrow company shall be deemed to be an offer by
the Company to enter into this Agreement and shall be irrevocable by the Company
for a period of forty (40) days. This Agreement shall become binding upon the
County and the District upon execution by the County Administrative Officer or
his designee.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year written below.
Date: __________________, 19___
COUNTY OF ORANGE
By:
-------------------------------
County Administrative Officer
COMMUNITY FACILITIES DISTRICT
NO. 87-7 OF THE COUNTY OF
ORANGE (LOS ALISOS)
By:
-------------------------------
County Administrative Officer
APPROVED AS TO FORM:
ADRIAN KUYPER,
County Counsel
By:___________________________
Dated:__________________, 19__
-------------------------------
-------------------------------
By:
----------------------------
3
<PAGE> 36
Attachment 1
NOTICE OF SPECIAL TAX
COMMUNITY FACILITIES DISTRICT NO. 87-7
COUNTY OF ORANGE, CALIFORNIA
TO: THE PROSPECTIVE PURCHASER OF THE REAL PROPERTY KNOWN AS:
Lot _____ of Tract Map No. _____
THIS IS A NOTIFICATION TO YOU PRIOR TO YOUR ENTERING INTO A CONTRACT TO
PURCHASE THIS PROPERTY. THE SELLER IS REQUIRED TO GIVE YOU THIS NOTICE AND TO
OBTAIN A COPY SIGNED BY YOU TO INDICATE THAT YOU HAVE RECEIVED AND READ A COPY
OF THIS NOTICE.
(1) This property is subject to a special tax, which is in addition to the
regular property taxes and any other charges, fees, special taxes and benefit
assessments on the parcel. It is imposed on this property because it is a new
development, and may not be imposed generally upon property outside of this new
development. If you fail to pay this tax when due each year, the property may be
foreclosed upon and sold. The tax is used to provide public facilities or
services that are likely to particularly benefit the property. YOU SHOULD TAKE
THIS TAX AND THE BENEFITS FROM THE FACILITIES AND SERVICES FOR WHICH IT PAYS
INTO ACCOUNT IN DECIDING WHETHER TO BUY THIS PROPERTY.
(2) Since this parcel is currently Undeveloped Property, the maximum
special tax which may be levied against this parcel to pay for public facilities
and services is $10,432.69 per acre during the 1994-1995 tax year. If this
parcel was Developed Property (i.e., if a building permit had been issued by
March 1, 1994), then the maximum special tax which could have been levied
against this parcel to pay for public facilities and services during the
1994-1995 tax year would have been the greater of (a) $0.27 per square foot of
land or (b) $0.70 per square foot of improvements. This amount will be increased
by 3.5 percent per year after that. The special tax will be levied each year
until all of the authorized facilities are built and all special tax bonds are
repaid and may be levied forever thereafter to pay for ongoing service costs.
(3) The authorized facilities and fees which are being paid for by the
special taxes, and by the money received from the sale of bonds which are being
repaid by the special taxes, are:
Water and sewer acreage fees and the construction, purchase, modification,
expansion, improvement or rehabilitation of a local and regional park, fire
stations, sheriff substation, library, storm drains and the roadway improvements
to be constructed as part of the
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Foothill Circulation Phasing Program, which roadway improvements include all
related work for grading, paving, drainage, sewer and water facilities and
utilities, together with improvements to intersections and other appurtenant
work.
The facilities may not yet have all been constructed or acquired and it is
possible that some may never be constructed or acquired.
In addition, the special taxes may be used to pay for costs of the
following services:
Police protection, fire protection, ambulance, paramedic, flood and storm
protection, recreation program, library, park and open space services,
including, but not limited to, the operation and maintenance of storm drains,
parks and parkways.
YOU MAY OBTAIN A COPY OF THE RESOLUTION OF FORMATION WHICH AUTHORIZED
CREATION OF THE COMMUNITY FACILITIES DISTRICT AND WHICH SPECIFIES MORE PRECISELY
HOW THE SPECIAL TAX IS APPORTIONED AND HOW THE PROCEEDS OF THE TAX WILL BE USED,
FROM THE COUNTY OF ORANGE - COUNTY ADMINISTRATIVE OFFICE BY CALLING (714)
834-3055. THERE MAY BE A CHARGE FOR THIS DOCUMENT NOT TO EXCEED THE REASONABLE
COST OF PROVIDING THE DOCUMENT.
I (WE) ACKNOWLEDGE THAT I (WE) HAVE READ THIS NOTICE AND RECEIVED A COPY
OF THIS NOTICE PRIOR TO ENTERING INTO A CONTRACT TO PURCHASE OR DEPOSIT RECEIPT
WITH RESPECT TO THE ABOVE-REFERENCED PROPERTY. I (WE) UNDERSTAND THAT I (WE) MAY
TERMINATE THE CONTRACT TO PURCHASE OR DEPOSIT RECEIPT WITHIN THREE DAYS AFTER
RECEIVING THIS NOTICE IN PERSON OR WITHIN FIVE DAYS AFTER IT WAS DEPOSITED IN
THE MAIL BY GIVING WRITTEN NOTICE OF THAT TERMINATION TO THE OWNER, SUBDIVIDER
OR AGENT SELLING THE PROPERTY.
DATE: [EFFECTIVE DATE] -------------------------------
-------------------------------
By:____________________________
Name:__________________________
Title:_________________________
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EXHIBIT E
GENERAL ESCROW INSTRUCTIONS
The following instructions to Escrow Holder are applicable:
1. Escrow Holder shall prorate all items as of the Closing Date, assuming a
30 day month, using the information contained in the last available tax
statement without regard to any reassessments or subsequent changes, and
association statements delivered into escrow for proration purposes.
2. If any check submitted to escrow is dishonored when presented for
payment, Escrow Holder shall notify Buyer and Seller of such non payment.
3. All funds delivered to Escrow shall be deposited with other escrow funds
in a general escrow account or accounts of Escrow Holder with any state or
national bank. Escrow Holder shall have no obligation to account for the value
of any escrow-related accounting services and incidental benefits that may be
provided to Escrow Holder by any depository bank. All disbursements shall be
made by Escrow Holder check, unless otherwise instructed. Escrow Holder shall
not be responsible for any delay in closing if funds received by Escrow Holder
are not available for immediate withdrawal.
4. The phrase "close of escrow" (or COE) as used in this Exhibit means the
date on which documents are recorded, unless otherwise specified.
5. Recordation of any instruments delivered through escrow, if necessary or
proper for the issuance of the policy of title insurance called for, is
authorized.
6. No examination or insurance as to the amount or payment of personal
property taxes is required.
7. If a demand to cancel escrow is submitted after the Closing Date, the
party so requesting Escrow Holder to cancel escrow shall file notice of demand
to cancel in Escrow Holder's office in writing. Escrow Holder shall within three
(3) Business Days thereafter mail by certified mail one copy of such notice to
each of the other parties.
8. In the event Escrow Holder receive or become aware of any conflicting
demands or claims with respect to the escrow or the rights of any of the parties
hereto, or any money or property deposited herein, Escrow Holder shall have the
absolute right at its option to discontinue any or all further acts until such
conflict is resolved.
9. Escrow Holder is released from and shall have no liability, obligation
or responsibility with respect to: withholding of funds pursuant to Section 1445
of the Internal Revenue Code of 1954 as amended, and to Sections 18805 and 26131
of the California Revenue and Taxation
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<PAGE> 39
Code; advising the parties as to the requirements of Section 1445; determining
whether the transferor is a foreign person or a non-resident under such
Sections; or 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.
10. Escrow Holder is 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 years (6) from the close of
escrow or cancellation thereof, without liability and without further notice.
11. Buyer and Seller acknowledge that Escrow Holder 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 other state or federal laws. It is recommended that the
parties obtain independent legal counsel as to such matters.
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Exhibit F
RECORDING REQUESTED BY:
WHEN RECORDED RETURN TO:
Pacific Commercentre Owners Association
c/o Makena Properties
23792 Rockfield Blvd., Suite 101
Lake Forest CA 92630
Attention: Brad Kelly
- --------------------------------------------------------------------------------
(Space above provided for Recorder's use only)
SUPPLEMENT TO EXHIBIT C-1
OF DECLARATION OF COVENANTS,
CONDITIONS AND RESTRICTIONS
This Supplement to Exhibit C-1 of Declaration of Covenants, Conditions and
Restrictions is made as of _______________, 1997, by PacTel Systems, a
California corporation ("Declarant"), as follows:
1. Declarant is the sole owner of certain real property described on
attached Exhibit A ("Reallocated Lots"), a portion of the property covered by
that certain Declaration of Covenants, Conditions and Restrictions for Pacific
Commercentre recorded January 10, 1991, in the Official Records of Orange
County, California, as Document No. 91-013945 (as amended, "CC&R").
2. Pursuant to Article VI, Section 1, of the CC&R, the net usable building
area of Parcels (as defined in the CC&R) may be reallocated, from time to time,
among such Parcels, which reallocation will be effective upon the recordation of
a supplement to Exhibit C-1 to the CC&R setting forth the revised net usable
building areas for the Parcels, signed by the owners of all Parcels affected.
3. Declarant hereby reallocates the net usable building area of the
Reallocated Lots as follows:
Lot Identification Net Usable Bldg. Area
------------------ ---------------------
Tract 14316, Lot 1 162,043
Tract 14316, Lot 6 57,673
Tract _____, Lot
PacTel Systems, a California corporation
By:
---------------------------------
William M. Miller, Vice President
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<PAGE> 41
FIRST AMENDMENT TO LOT SALE AGREEMENT
-------------------------------------
[Lots 6 and 7]
This First Amendment to Lot Sale Agreement ("Amendment"), dated as of
April 21, 1997, is made between PacTel Systems, a California corporation
("Seller"), and Pacific Gulf Properties, Inc., a California corporation
("Buyer"), with respect to the Lot Sale Agreement by and between Buyer and
Seller dated as of February 17, 1997 ("Agreement"). All capitalized terms not
otherwise defined herein shall have the meaning ascribed in the Agreement. For
good and valuable consideration, the parties agree to amend the Agreement as
follows:
1. The Purchase Price is increased from Three Million Four Hundred
Ninety Eight Thousand Three Hundred Four Dollars ($3,498,304) by $18,067 to
Three Million Five Hundred Sixteen Thousand Three Hundred Seventy One Dollars
($3,516,371).
2. The Closing Date is changed to May 29, 1997.
3. Except as amended by this Amendment, the Agreement shall remain
unmodified and in full force and effect. This Amendment may be executed in
multiple counterparts, each of which shall constitute an original, but all of
which shall constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
"Buyer" Pacific Gulf Properties, Inc., a California corporation
By: /s/ LONNIE NADAL
---------------------------------------------------
Lonnie Nadal, Senior Vice President
By: /s/ DONALD G. HERRMAN
---------------------------------------------------
Donald G. Herrman, Executive Vice President
"Seller" PacTel Systems, a California corporation
By: /s/ WILLIAM M. MILLER
---------------------------------------------------
William M. Miller, Vice President
<PAGE> 1
EXHIBIT 10.5
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT made and entered into as of the 16th day of April 1997, by and
between JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a Massachusetts
corporation, having its principal address c/o The Real Estate Investment Group,
John Hancock Place, P.O. Box 111, Boston, Massachusetts 02117 (hereinafter
"Seller"), and PACIFIC GULF PROPERTIES INC., a Maryland corporation having an
office address at 363 San Miguel Drive, Suite 100, Newport Beach, California
92660-7805 (hereinafter "Buyer").
WITNESSETH THAT:
WHEREAS, Seller is the owner of the premises known as the John Hancock
Warehouse and located at 851 Milwaukee Avenue, Algona, Washington, containing
approximately 529,781 square feet of land improved with a building containing
approximately 263,045 square feet of space ("the Premises"), more particularly
described on Exhibit A attached hereto and made a part hereof; and
WHEREAS, Buyer desires to purchase the Premises and acquire possession
thereof in accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth the parties hereto mutually agree as follows:
1. Purchase Price. The Premises are to be sold to Buyer for the sum of
Eight Million Seven Hundred Fifty Thousand dollars ($8,750,000.00) ("the
Purchase Price"), which Buyer shall pay to Seller on the Date of Closing
through an escrow with the Title Company by wiring immediately available
Federal funds to such bank account as may be designated by Seller.
2. Deposit. Buyer shall deposit with the Title Company the sum of
$100,000.00 by official bank cashier's check, within two business days
after the last party's execution of this Agreement and delivery of a
fully executed original to the other party, as a good faith deposit
(hereinafter, said deposit and such interest as is earned thereon shall
be referred to as "the Deposit"), which Deposit shall be disposed of in
the manner herein provided. If Buyer performs all of its obligations
under this Agreement, the Deposit shall either be applied against the
Purchase Price or returned by Seller to Buyer on the Date of Closing, as
hereinafter provided. If Seller shall be unable to deliver title and
possession, as hereinafter provided, or if Buyer shall fail to perform
any of its agreements hereunder, the Deposit shall be disposed of in the
manner hereinafter provided.
3. Closing. Subject to the provisions of this Agreement, the deed
shall be delivered at 10 o'clock A.M., Seattle time, on May 20, 1997
("the Date of Closing") (subject to section 4, second paragraph,
hereof), at the offices of a Transnation Title Insurance Company,
Seattle, Washington ("the Title Company"), unless otherwise agreed upon
in writing.
4. Buyer's Review. Buyer shall have until 5 o'clock P.M., Seattle
time, on May 9, 1997 ("the Review Period"), (a) to obtain and review a
commitment for title insurance and a survey; (b) to make or have made
such reasonable non-destructive inspections as it desires of the
Premises, including, without limitation, the interior, exterior, and
structure of all improvements, and the condition of soils and
subsurfaces; and (c) to review all of Seller's financial records (other
than Seller's internal financial records) relating to the Premises. All
such items shall be obtained and reviewed at Buyer's sole cost and
expense, except as otherwise expressly provided herein. Any matters not
objected to in writing as herein provided shall be deemed waived. On or
before the last day of the Review Period, Buyer may, in its sole
discretion, give to Seller either notice that it has waived all possible
objections and will proceed to Closing ("Notice of Closing"), notice
that it has waived all objections other than title objections specified
in such notice, and will proceed to Closing subject to Seller's cure of
the designated title objections ("Conditional
<PAGE> 2
- 2 -
Notice of Closing"), or notice that this Agreement is terminated ("Notice of
Termination"). If Buyer fails to give either Notice of Closing or Conditional
Notice of Closing by the end of the Review Period, Buyer shall be deemed to
have given Notice of Termination. Upon Buyer's giving of Notice of Closing,
pursuant to either this paragraph or the following paragraph, or upon Seller's
cure of Buyer's objections, as provided in the following paragraph, the Deposit
will become nonrefundable, except in the case of Seller's default hereunder.
If Buyer gives Conditional Notice of Closing, the Closing shall be
postponed as set forth in this paragraph, and Seller shall have until 2 o'clock
P.M., Seattle time, on May 30, 1997 ("Seller's Response Date"), to respond to
the title objections in Buyer's Conditional Notice of Closing. If Seller agrees
to and does correct all title defects set forth in Buyer's Conditional Notice
of Closing, Seller shall so notify Buyer, and the Closing shall be held on the
tenth day after Seller gives notice to Buyer either that all such defects have
been corrected or that they will be corrected at the Closing. If Seller is
unwilling or unable to correct to Buyer's satisfaction all such defects
(provided that correction of defects objected to in the title commitment or
survey may be accomplished either by removing such defects or, with the express
consent of Buyer, by arranging for the title insurance policy to insure over
such defects; and provided further that Seller may use the Purchase Price or
any portion thereof to cure any such defects which may be cured by instruments
recorded on the Date of Closing), Seller shall, at any time on or before
Seller's Response Date, so notify Buyer, provided that if Seller fails to give
such notice, Seller shall be deemed to have notified Buyer that Seller is
unwilling or unable to cure all defects to which Buyer has objected. Buyer
shall, on or before the tenth day after Seller's notice, in its sole
discretion, either (i) notify Seller that it shall waive said defect(s) and
proceed the closing, as set out in section 3 hereof ("Notice of Closing"), in
which case the Closing shall be held on the tenth day after Buyer's notice, or
(ii) give Notice of Termination, provided that if Buyer fails to give such
notice, Buyer shall be deemed to have given Notice of Termination. If any day
specified in this paragraph falls on a holiday in King County, Washington, that
day shall automatically be continued to the next business day in said county.
Upon Buyer's actual or deemed giving Notice of Termination, the Deposit
shall be refunded and this Agreement shall become null and void, and neither
party shall be liable to the other for damages or otherwise, except as
otherwise expressly provided herein.
5. Condition of Premises. Except for express warranties in this Agreement or in
any of Seller's Closing Documents, Buyer and Seller agree that Buyer is
acquiring the Premises and any related personal property in their "AS IS"
condition, WITH ALL FAULTS, IF ANY, AND WITHOUT ANY WARRANTY, EXPRESS OR
IMPLIED. Except for express warranties in this Agreement or in any of Seller's
Closing Documents, neither Seller nor any agents, representatives, or employees
of Seller have made any representations or warranties, direct or indirect, oral
or written, express or implied, to Buyer or any agents, representatives, or
employees of Buyer with respect to the condition of the Premises or personal
property, their fitness for any particular purpose, or their compliance with
any laws, and Buyer is not aware of and does not rely upon any such
representation to any other party. Buyer acknowledges that the Purchase Price
might be higher if Buyer were not acquiring the Premises and personal property
in "as is" condition. Buyer acknowledges that it either has had or will have
before the Date of Closing the opportunity to make such inspections (or have
such inspections made by consultants) as it desires of the Premises and personal
property and all factors relevant to their use, including, without limitation,
the interior, exterior, and structure of all improvements, and the condition of
soils and subsurfaces (particularly with respect to the presence or absence of
hazardous substances).
<PAGE> 3
- 3 -
After its inspections are completed, Buyer shall restore the Premises
and personal property to their condition prior to Buyer's inspections. Buyer
agrees to indemnify Seller for all claims or damages arising out of Buyer's
inspections, including, without limitation, claims for personal injury or
property damage, and including all costs and attorneys' fees. The obligations
in this paragraph shall survive the Closing or the termination of this
Agreement for any reason, including without limitation pursuant to section 4,
9, or 14 hereof.
Except for breaches of express warranties set forth in this Agreement or
in any of Seller's Closing Documents, Buyer hereby releases Seller and its
agents, representatives, and employees from any and all claims, demands, and
causes of action, past, present, and future, that Buyer may have relating to (i)
the condition of the Premises and the personal property at any time, before or
after the Date of Closing, including, without limitation, the presence of any
hazardous substance, or (ii) any other matter pertaining to the Premises or the
personal property. This release shall not apply to any action brought by a
governmental entity or a third party, without the instigation of Buyer, in which
action Buyer may file a third-party or similar claim against Seller. This
release shall survive the Closing or the termination of this Agreement for any
reason.
Seller shall deliver possession to Buyer, subject to the matters set
forth in section 7(a)(1) hereof, not later than the Date of Closing, provided
that all the terms and conditions of this Agreement have been complied with.
Seller until the Date of Closing shall maintain, repair (subject to section 9
hereof), manage, and operate the Premises in a businesslike manner in
accordance with Seller's prior practices; shall comply with its contractual
obligations as owner of the Premises; shall maintain the types and amounts of
insurance that are in force on the date of execution hereof; shall not enter
into any new leases or other contracts that will be binding Buyer after Closing
without the prior express written consent of Buyer; and shall not dissipate the
Premises or remove any material property therefrom, except in the ordinary
course of business. Seller's agreement with the on-site property manager shall
be terminated as of the Date of Closing.
5.A Representations and Warranties. (a) Seller represents and warrants to
Buyer as follows:
(1) Seller is an insurance company, duly organized, validly existing, and in
good standing under the laws of the Commonwealth of Massachusetts and the State
in which the Premises are located.
(2) Subject to section 5B(b) hereof, Seller has all requisite power and
authority to execute and deliver this Agreement and to carry out its
obligations hereunder and the transactions contemplated hereby. This Agreement
has been, and the documents contemplated hereby will be, duly executed and
delivered by Seller and constitutes the Seller's legal, valid, and binding
obligation enforceable against Seller in accordance with its terms. The
consummation by Seller of the sale of the Premises is not in violation of or in
conflict with, nor does it constitute a default under any term or provision of,
the organizational documents of Seller, or any of the terms of any agreement or
instrument to which Seller is a party, or by which Seller is bound, or any
provision of any applicable law, ordinance, rule, or regulation of any
governmental authority or any provision of any applicable order, judgment, or
decree of any court, arbitrator, or governmental authority.
(3) Except as listed on Exhibit B hereto, Seller has not received, with
respect to the Premises, any notices from (i) any governmental agency of any
violations of building codes and/or zoning ordinances or other governmental
laws, regulations, or orders, (ii) any governmental agency of any pending or
threatened condemnation proceedings, or (iii) any party of pending or
threatened litigation affecting the Premises in any way. To the best of
Seller's knowledge, there are no pending or threatened condemnation proceedings
or pending or threatened litigation affecting the Premises.
<PAGE> 4
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(4) Seller has received no notice of the presence of any, and to the
best of Seller's knowledge there are no, hazardous substances, as
defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), 42 USC Section 9601(14), pollutants
or contaminants, as defined in CERCLA, 42 USC Section 9601(33), or
hazardous waste, as defined by the Resource Conservation and Recovery
Act ("RCRA"), 42 USC Section 6903)5), or other similar applicable
federal or state laws and regulations, including, but not limited to,
asbestos and PCB's, at the Premises, except as set forth in the report
prepared by Hart Crowser, Inc., and dated December 14, 1989, and except
for minor amounts of substances customarily used in the maintenance of
properties similar to the Premises and used and maintained in accordance
with applicable laws.
(5) There are no unrecorded contracts for services at the Premises which
will be binding upon Buyer after Closing.
(b) Buyer represents and warrants to Seller as follows:
(1) Buyer is a corporation, duly organized, validly existing, and in
good standing under the laws of Maryland and the State in which the
Premises are located.
(2) Subject to approval of this Agreement by Buyer's internal committees
on or before the last day of the Review Period, Buyer has all requisite
power and authority to execute and deliver this Agreement and to carry
out its obligations hereunder and the transactions contemplated hereby.
This Agreement has been, and the documents contemplated hereby will be,
duly executed and delivered by Buyer and constitutes its legal, valid,
and binding obligation enforceable against it in accordance with its
terms, and the consummation and performance by Buyer of the transactions
contemplated herein will not result in a violation of or be in conflict
with or constitute a default under any term or provision of the
organizational documents of Buyer, or any of the terms of provisions of
any agreement or instrument to which it is a party, or by which it is
bound, or of any term of any applicable law, ordinance, rule or
regulation of any governmental authority or of any term of any
applicable order, judgment, or decree of any court, arbitrator, or
governmental authority.
(3) Neither Buyer nor any affiliate of Buyer has at this time, nor has
it exercised during the immediately preceding year, any authority to
appoint or terminate Seller as manager of the assets of any pension
plan, or to negotiate other terms of Seller's management agreement on
behalf of any pension plan.
(c) The above-stated representations and warranties will survive
the Closing for a period of one year, before the expiration of which the
party claiming a breach must given the other party written notice,
stating with specificity the representation and warranty as to which a
breach is claimed and the facts upon which such allegation is based, and
any representation and warranty not specified in such notice shall
expire. Buyer acknowledges that Seller has maintained no employees at
the Premises and that the Premises have during Seller's ownership
thereof always been managed by a third-party manager, and that Seller
has relied upon such manager for knowledge and notice. The words "to the
best of Seller's knowledge" in this section 5A mean to the actual
knowledge of Scott Morrow and John Garrison, the two employees of Seller
who are most familiar with the Premises and who have had the most
contact with the management company.
5B. Conditions Precedent. (a) Representations and Warranties. Each
party's obligation to close hereunder shall be conditioned upon the
truth in all material respects as of the Date of Closing of the other
party's representations and warranties set forth in section 5A above. If
on the Date of Closing a representation and warranty is not true, and
such representation and warranty either was not true on the date of this
Agreement, or was true on the Date of this Agreement but has become
untrue as a result of a breach of this Agreement by the party making the
representation hereunder, the other party may either seek its remedy
pursuant to
<PAGE> 5
- 5 -
section 14 hereof, waive this condition and proceed to Closing, or terminate
this Agreement by notice to the representing party. If on the Date of Closing a
representation and warranty is not true, and such representation and warranty
was true on the date of this Agreement and has become untrue not as a result of
a breach of this Agreement by the representing party, the other party may
either waive this condition and proceed to Closing or terminate this Agreement
by notice to the representing party. Upon the representing party's receipt of
notice of termination pursuant to this section 5B(a), the Deposit shall be
refunded and this Agreement shall terminate, and neither party shall be liable
to the other for damages or otherwise except as otherwise expressly provided
herein.
(b) Seller's Approvals. Seller's obligation to close hereunder shall be
conditioned upon the approval of this transaction by Seller's internal
committees. If on or before the last day of the Review Period Seller has not
notified Buyer that such approval has been granted, such approval shall be
deemed not to have been granted, and the Deposit shall be refunded and this
Agreement shall terminate, and neither party shall be liable to the other for
damages or otherwise except as otherwise expressly provided herein.
6. Adjustments and Prorations. All taxes, including, without limitation, real
estate taxes and personal property taxes, charges for utilities, including
water, sewer, and fuel oil, and for utility services, maintenance services,
maintenance and service contracts, all operating costs and expenses (but not
including Seller's corporate overhead), and all other income, costs, and
charges of every kind which in any manner relate to the operation of the
Premises (but not including insurance premiums) shall be prorated to the Date
of Closing. If the amount of said taxes or assessments is not known on the Date
of Closing, they shall be apportioned on the basis of the amounts for the
preceding year, with a reapportionment as soon as the new amounts can be
ascertained. If such taxes and assessments shall thereafter be reduced by
abatement, the amount of such abatement, less the reasonable cost of obtaining
the same, shall be apportioned between the parties, provided that neither party
shall be obligated to institute or prosecute proceedings for an abatement
unless otherwise agreed. Buyer shall be responsible for all payments due after
the Date of Closing of any assessments or notice of assessments made after the
date of execution hereof for any public improvement, provided Buyer takes title
hereunder. Any deposits on utilities paid by Seller and refunded by the utility
company shall be returned to Seller. On the Date of Closing, Seller shall
deliver to Buyer all inventories of supplies on hand at the Premises owned by
Seller, if any, at no additional cost to Buyer.
7. Closing Documents. (a) Seller's Deliveries. Conditioned upon performance by
buyer hereunder, Seller shall execute and deliver to Buyer at the Closing the
following documents ("Seller's Closing Documents"):
(1) Deed. A special warranty deed conveying marketable title to the
Premises subject to all building and zoning laws, ordinances, and State and
Federal regulations, real estate taxes not yet due and payable on the Date of
Closing, and all other title, survey, and other matters waived by Buyer in
accordance with section 4 hereof.
(2) Bill of Sale. A bill of sale, assigning and transferring to Buyer
all of the right, title, and interest of Seller in and to all tangible personal
property, if any, owned by Seller and located upon the Premises.
(3) Non-Foreign Certificate. A certification that Seller is not a
non-resident alien (a foreign corporation, partnership, trust, or estate as
defined in the Internal Revenue Code and Treasury Regulations promulgated
thereunder).
<PAGE> 6
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(b) Other Closing Documents. Each party shall deliver to the other
party or the Title Company such duly executed and acknowledged or verified
certificates, affidavits, and other usual closing documents respecting the
power and authority to perform the obligations hereunder and as to the due
authorization thereof by the appropriate corporate, partnership, or other
representatives acting for it, as counsel for the other party or the Title
Company may reasonably request.
8. Costs. Buyer shall pay the personal property transfer tax or use tax,
Buyer's attorneys' fees, the premium for any title endorsements or extended
coverage, the cost of any survey desired by Buyer, all due diligence costs, and
one-half of the Title Company's escrow fee. Seller shall pay the real estate
transfer tax, the premium for a standard owner's title insurance policy without
endorsements or extended coverage, one-half of the Title Company's escrow fee,
the attorneys' fees, if any, incurred by Seller in connection with this
transaction, and, upon the conveyance of the Premises to Buyer, the fee due the
Broker. All other closing costs shall be divided as is customary for commercial
property in King County, Washington.
9. Casualty or Condemnation. In the event that prior to the Date of Closing
either the improvements on the Premises are damaged or destroyed, in whole or
in part, by fire or other cause, or any portion of the Premises becomes the
subject of a condemnation proceeding by a public or quasi-public authority
having the power of eminent domain, then either (a) the parties shall proceed
with the transaction contemplated herein, in which event Buyer shall be entitled
to receive any insurance proceeds or condemnation awards, or (b) Buyer, at its
option, may terminate this Agreement by notice to Seller within ten (10) days
of Buyer's receipt of Seller's notice of such damage or proceeding, in which
case the Deposit shall be refunded, and thereafter neither party shall have any
further obligation or liability to the other by virtue of this Agreement,
except as otherwise expressly provided herein.
10. Insurance. Seller shall not be obligated to assign to Buyer any fire,
hazard, or liability insurance policies which it holds respecting the Premises,
and Seller shall have the right to any and all refunds or rebates resulting
from the termination of such policies.
11. Broker's Commission. Buyer and Seller each hereby warrants and represents
to the other that it has dealt with no broker or finder in connection with this
transaction except Colliers Macaulay Nicolls International and Norris, Beggs &
Simpson ("the Broker"), and that it is not affiliated with the Broker in any
way Buyer and Seller each hereby agrees to indemnify and hold the other
harmless from and against any and all claims for brokerage or finder's fees or
other similar commissions or compensation made by any and all other brokers or
finders claiming to have dealt with the indemnifying party in connection with
this Agreement or the consummation of the transaction contemplated hereby. The
obligations in this section shall survive the Closing or the termination of
this Agreement for any reason, including without limitation pursuant to section
4, 9, or 14 hereof.
12. Seller's Performance. The acceptance of Seller's Closing Documents by Buyer
shall be deemed to be a full performance and discharge of every agreement and
obligation of Seller herein contained and expressed, except such as are, by the
terms hereof (including the representations and warranties, which survive to
the extent set forth in section 5A(c) hereof), to be performed after the
delivery of said instruments.
13. Recording Prohibited. This Agreement shall not be recorded with King County
Records or in any other office or place of public record. If Buyer shall record
this Agreement or cause or permit the same to be recorded, Seller may, at its
option, elect to treat such act as a default by Buyer under this Agreement.
<PAGE> 7
- 7 -
14. Remedies. In the event Seller fails, without legal excuse, to complete the
sale of the Premises, Buyer's sole remedy, at law or in equity, shall be one of
either (a) the return of the Deposit to Buyer, together with reimbursement by
Seller of Buyer's actual third-party due diligence costs up to $20,000,
whereupon the obligations of Seller under this Agreement shall terminate; or
(b) the right to obtain specific performance of Seller's obligation to convey
the Premises pursuant to this Agreement, provided that in no event shall Seller
be obligated to cure the defects objected to by Buyer pursuant to Section 4
hereof. In no event shall any officer, director, employee, agent, or
representative of Seller have any personal liability in connection with this
Agreement or transaction.
In the event Buyer fails, without legal excuse, to complete the
purchase of the Premises, the Deposit shall be forfeited to Seller as the sole
and exclusive remedy available to Seller for such failure. Nothing in this
paragraph shall limit the express provisions of this Agreement obligating Buyer
to indemnify Seller or to restore the Premises, including Sections 5 and 11
hereof.
15. Assignment. This Agreement may not be assigned by Buyer without the express
written consent of Seller, which consent Seller may in its sole discretion
withhold, except that Buyer may, without Seller's consent, assign this
Agreement to a limited partnership of which Buyer (or a principal of Buyer) or
any parent or any wholly owned subsidiary of Buyer are the sole general
partners. No such assignment shall operate to relieve Buyer from any obligation
hereunder.
16. Waiver. No waiver of any breach of any agreement or provision contained
herein shall be deemed a waiver of any preceding or succeeding breach of any
other agreement or provision herein contained. No extension of time for the
performance of any obligation or act shall be deemed an extension of time for
the performance of any other obligation or act.
17. Time. It is agreed that time is of the essence of this Agreement.
18. Governing Law. This Agreement shall be construed under the laws of the
state in which the Premises are located.
19. Notices. All notices required or permitted to be given hereunder shall be
in writing and sent by overnight delivery service (such as Federal Express), in
which case notice shall be deemed given on the day after the date sent, or by
personal delivery, in which case notice shall be deemed given on the date
received, or by certified mail, in which case notice shall be deemed given
three (3) days after the date sent, or by fax (with copy by overnight service)
in which case notice shall be deemed given on the date sent, to the appropriate
address indicated below or at such other place or places as either Buyer or
Seller may, from time to time, respectively, designate in a written notice
given to the other in the manner described above.
To Seller: c/o The Real Estate Development Group
John Hancock Place, P.O. Box 111
Boston, MA 02117
Re: File No. PF-1344
Attention: John Garrison
Fax No.: (617) 572-3860 or 3866
With Copy To: John Hancock Mutual Life Insurance Company
Law Department (T-50)
John Hancock Place, P.O. Box 111
Boston, MA 02117
Re: File No. PF-1344 (2127)
Attention: Malcolm Pittman
Fax No.: (617) 572-9268 or 9269
<PAGE> 8
- 8 -
To Buyer: Pacific Gulf Properties Inc.
363 San Miguel Drive, Suite 100
Newport Beach, CA 92660-7805
Attention: Lonnie P. Nadal,
Senior Vice President
Fax NO.: (714) 719-1955
With Copy To: Michael S. Courtnage, Esq.
Alston, Courtnage, MacAulay & Proctor LLP
1000 Second Ave., Suite 3900
Seattle, WA 98104-1045
Fax No.: (206) 623-1752
20. Confidentiality. Neither party shall disclose the financial and
economic terms and conditions of the transaction contemplated herein
except as may be necessary in the ordinary course of its business (which
in Seller's case may include notice to its investors). All press
releases or other dissemination of information to the media, or
responses to requests from the media, for information relating to the
transaction contemplated herein shall be subject to the other party's
prior written approval; provided that, following the Closing, such
approval shall not be unreasonably withheld or delayed. The obligations
in this section shall survive the Closing or termination of this
Agreement for any reason.
21. Attorneys' Fees. In any action to enforce this Agreement, the
prevailing party shall be entitled to an award of its attorneys' fees.
22. Entire Agreement. This instrument, executed in duplicate, sets forth
the entire agreement between the parties and may not be canceled,
modified, or amended except by a written instrument executed by both
Seller and Buyer.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed the day and year first above written.
SELLER:
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY
BY: /s/ JOHN GARRISON
--------------------------------
John Garrison
Investment Officer
BUYER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
BY: /s/ DONALD G. HERRMAN
--------------------------------
Donald G. Herrman, EVP
--------------------------------
(name) (title)
/s/ LONNIE P. NADAL
--------------------------------
Lonnie P. Nadal
Senior Vice President
<PAGE> 9
DESCRIPTION:
THAT PORTION OF LOT 5 OF THE PLAT OF AUBURN "400" CORPORATE PARK, DIVISION II
AS RECORDED IN VOLUME 129 OF PLATS, PAGES 29 AND 30; AND
THAT PORTION OF LOT D IN SHORT PLAT NO. ALG-87-6, ACCORDING TO THE SHORT PLAT
RECORDED UNDER KING COUNTY RECORDING NO. 8705211455, DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SECTION 24, TOWNSHIP 21 NORTH, RANGE 4
EAST W.M., SAID POINT ALSO BEING THE SOUTHWEST CORNER OF LOT 1 IN LOT LINE
ADJUSTMENT RECORDED UNDER RECORDING NO. 8803030157;
THENCE NORTH 00(degree)31'43" WEST, ALONG THE WESTERLY LINE OF SAID LOT D,
449.11 FEET TO THE TRUE POINT OF BEGINNING;
THENCE NORTHEASTERLY 133.41 FEET ALONG, THE ARC OF A TANGENT CURVE TO THE RIGHT
HAVING A RADIUS OF 85.00 FEET, THROUGH A CENTRAL ANGLE OF 89(degrees)55'44" TO
A POINT OF TANGENCY;
THENCE NORTH 89(degrees)24'01" EAST, PARALLEL WITH SAID SOUTHERLY LINE OF LOT
1, A DISTANCE OF 270.14 FEET TO A POINT OF CURVATURE;
THENCE NORTHEASTERLY 39.24 FEET, ALONG THE ARC OF A TANGENT CURVE TO THE LEFT
HAVING A RADIUS OF 25.00 FEET, THROUGH A CENTRAL ANGLE OF 89(degrees)55'44";
THENCE NORTH 00(degrees)31'43" WEST 1,365.22 FEET TO THE MOST NORTHERLY CORNER
OF SAID LOT 1;
THENCE ALONG THE NORTH LINE OF SAID LOT 1 SOUTH 89(degrees)28'17" WEST, 380.00
FEET TO THE NORTHWEST CORNER THEREOF;
THENCE ALONG THE WEST LINE OF SAID LOT 1 SOUTH 00(degrees)31'43" EAST 1,475.56
FEET TO THE TRUE POINT OF BEGINNING;
(ALSO BEING KNOWN AS LOT 1 IN CITY OF ALGONA APPROVED PROPERTY LINE CHANGE NO.
ALG-L09, ACCORDING TO THE INSTRUMENT RECORDED UNDER KING COUNTY RECORDING NO.
8803030157);
SITUATE IN THE CITY OF ALGONA, COUNTY OF KING, STATE OF WASHINGTON.
EXHIBIT A
<PAGE> 10
Exhibit B
Exceptions to Representations and Warranties
--------------------------------------------
None.
<PAGE> 11
AMENDMENT TO PURCHASE AND SALE AGREEMENT
THIS AMENDMENT entered into as of May 16, 1997, by and between John
Hancock Mutual Life Insurance Company ("Seller"), having its principal address
c/o The Real Estate Investment Group, John Hancock Place, P.O. Box 111, Boston,
Massachusetts 92117, and Pacific Gulf Properties Inc. ("Buyer"), a Maryland
corporation having its principal address at 363 San Miguel Drive, Suite 100,
Newport Beach, California 92660-7805:
WHEREAS, Buyer and Seller have heretofore entered into that certain
Purchase and Sale Agreement dated April 16, 1997 ("the Agreement") for the
purchase and sale of the premises known as the John Hancock Warehouse, located
at 851 Milwaukee Avenue, Algona, Washington, described more fully in the
Agreement; and
WHEREAS, the parties desire to amend the Agreement, as provided herein;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, the sufficiency of which as consideration is hereby acknowledged,
Buyer and Seller agree to amend the Agreement as follows:
1. The Date of Closing, pursuant to section 3 of the Agreement, shall
be May 28, 1997.
2. All of the other terms and conditions of the Agreement not modified
or amended hereby, including without limitation section 17 thereof, shall
remain in full force and effect.
3. This Amendment may be executed in counterparts, which together will
constitute one original, and may be executed by fax.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the date and year
first above written.
JOHN HANCOCK MUTUAL LIFE PACIFIC GULF PROPERTIES INC.
INSURANCE COMPANY
By: /s/ JOHN GARRISON By: /s/ DONALD G. HERRMAN
- ------------------------ -----------------------------
John Garrison Donald G. Herrman
Investment Officer
<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 declared effective April
11, 1997 and in the related Prospectus Supplement dated June 5, 1997 for the
registration of 2,100,000 shares of 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 April 24, 1997, with respect to the combined statement of
revenues and certain expenses of Terrace Gardens Apartments and Morning View
Terrace Apartments included in the Company's Current Report on Form 8-K/A dated
June 9, 1997, filed with the Securities and Exchange Commission.
Newport Beach, California
June 9, 1997
