<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 20, 1997
Commission File Number: 1-12546
PACIFIC GULF PROPERTIES INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 33-0577520
(State of Incorporation) (I.R.S. Employer Identification No.)
4220 VON KARMAN, 2ND FLOOR, NEWPORT BEACH, CALIFORNIA, 92660-2002
(Address of principal executive offices, including zip code)
714-223-5000
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS.
Pacific Gulf Properties Inc. (the "Company") completed or anticipates
completing the following property acquisitions:
NEW ACQUISITION
EDEN PLAZA/EDEN INDUSTRIAL
On October 20, 1997, the Company acquired a controlling general partner
interest in PGP Northern Industrial, L.P., a newly-formed California
limited partnership (the "Partnership") to which the previous owners
contributed two industrial properties known as Eden Plaza/Eden
Industrial Park. The Eden Plaza/Eden Industrial Properties contain
approximately 500,739 leasable square feet located in Hayward,
California in Northern California and was previously owned by Eden
Plaza Associates LLC, a California limited liability corporation
controlled by Almaden Equities. The asset values upon contribution to
the Partnership by the previous owners of the Eden Plaza/Eden
Industrial properties were as follows:
<TABLE>
<CAPTION>
Asset
Leasable Value Upon
Property Name Location Square Feet Contribution
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Eden Plaza Hayward, CA 101,184 $ 3,838,000
Eden Industrial Hayward, CA 399,555 15,162,000
----------------------------
500,739 $ 19,000,000
============================
</TABLE>
The Company became the sole general partner of the Partnership with a
62% ownership interest in exchange for a cash contribution of
approximately $3,977,000. The previous owners of the Eden Plaza/Eden
Industrial properties became limited partners in the Partnership upon
their contribution of the properties and received 144,016 limited
partnership units in exchange for their minority interest of
approximately $2,869,000. The limited partner units which represent a
combined ownership interest in the Partnership of 38% 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. In connection with the
properties' contribution at a gross asset value of $19,000,000, the
Partnership assumed existing indebtedness with an outstanding balance
of approximately $15,641,000 secured by the properties and $154,000 in
tenant security deposits. The Company's cash contribution was used to
refinance and reduce the indebtedness assumed by the Partnership from
$15,641,000 to $12,000,000. Capitalizable financing costs totaling $120
were incurred in connection with such refinancing.
-1-
<PAGE> 3
PROBABLE ACQUISITIONS
Industrial Portfolio Acquisition Properties
On October 23, 1997 and September 19, 1997, the Company entered
into agreements to purchase the following industrial portfolio
consisting of four properties (collectively referred to as the
"Industrial Portfolio Acquisition Properties") for an estimated
purchase price of $39,000,000:
<TABLE>
<CAPTION>
Leasable
Property Name Location Square Feet
---------------------------------------------------------------------
<S> <C> <C>
Tower Park Anaheim, CA 211,238
611 Cerritos Anaheim, CA 129,426
Acacia Business Center Fullerton, CA 202,551
Valley View Distribution Center Las Vegas, NV 300,000
-------
843,215
=======
</TABLE>
The Company contracted to acquire these four industrial properties from
AMRESCO Southern California, LLC, and MSC Valley View, Inc.,
affiliates of AMRESCO Advisors, a pension fund advisor. In connection
with this acquisition, the Company is assuming an existing loan
totaling $4,448,000 which is secured by Valley View Distribution
Center. This loan bears interest at a fixed rate of interest of 8.375%
and matures January 2004. The Company plans to spend $495,000 in
capital expenditures to rehabilitate these properties.
Woodland Distribution Center
On August 1, 1997, the Company entered into an agreement to purchase a
warehouse/distribution center containing approximately 319,800 leasable
square feet located in Woodland, California ("Woodland Distribution
Center"). The Company contracted to purchase Woodland Distribution
Center from Woodland 54 Venture, a California General Partnership,
for a total cash consideration of $8,600,000.
The Company anticipates purchasing the Probable Acquisitions with
proceeds from a proposed public offering of 4,250,000 shares of the
Company's Common Stock to be completed in November 1997 under the
Company's $250,000,000 shelf registration statement declared effective
in April 1997.
All Probable Acquisitions remain subject to certain conditions to
closing. Accordingly, there can be no assurance that the Probable
Acquisitions will be consummated.
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<PAGE> 4
ITEM 5. OTHER INFORMATION.
POSSIBLE ACQUISITIONS
The Company has entered into agreements to acquire the properties
listed below for an estimated purchase price of $57,500,000. The Company has
not yet completed sufficient due diligence to determine the probability of
these acquisitions and as a result has not included the effect of such
acquisitions in the accompanying pro forma financial information.
LEASABLE
SQUARE
PROPERTY NAME LOCATION FEET
- ------------- -------- --------
BUSINESS PARK PORTFOLIO
Business Park ................... Anaheim, CA 145,745
Business Park ................... Sacramento, CA 269,146
Business Park ................... Santa Clara, CA 188,777
Business Park ................... Sunnyvale, CA 129,513
-------
733,181
=======
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) See Index to Financial Statements attached hereto.
(b) Exhibits
10.1 Master Contribution Agreement Amendment for Eden Plaza/Eden
Industrial between Pacific Gulf Properties Inc. and Eden
Plaza Associates, LLC.
10.2 Purchase and Sale Agreement for Acacia Business Center, 611
Cerritos and Tower Park between Pacific Gulf Properties Inc.
and AMRESCO Southern California LLC, c/o AMRESCO Advisors.
10.3 Purchase and Sale Agreement for Valley View Business Center
between Pacific Gulf Properties Inc. and MSC Valley View,
Inc., c/o AMRESCO Advisors.
10.4 Purchase and Sale Agreement and Escrow Instructions for
Woodland Distribution Center between Pacific Gulf Properties
Inc. and Woodland 54 Venture.
23.1 Consent of Independent Auditors
-3-
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PACIFIC GULF PROPERTIES INC.
/s/Donald G. Herrman
- ------------------------------------------
Donald G. Herrman
Executive Vice President,
Chief Financial Officer and Secretary
DATED: October 31, 1997
- ------------------------------------------
-4-
<PAGE> 6
PACIFIC GULF PROPERTIES INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
---------
<S> <C>
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)........................................................... 5
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1997............................... 6
Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended
September 30, 1997............................................................................... 7
Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31,
1996............................................................................................. 8
Notes to Pro Forma Condensed Consolidated Financial Statements........................................ 9
EDEN PLAZA/EDEN INDUSTRIAL
Report of Independent Auditors........................................................................ 24
Combined Statement of Revenues and Certain Expenses for the Year Ended December 31, 1996
and the Nine Months Ended September 30, 1997 (Unaudited)......................................... 25
Notes to Combined Statement of Revenues and Certain Expenses.......................................... 26
INDUSTRIAL PORTFOLIO ACQUISITION PROPERTIES
Report of Independent Auditors........................................................................ 28
Combined Statement of Revenues and Certain Expenses for the Year Ended December 31, 1996
and the Nine Months Ended September 30, 1997 (Unaudited)......................................... 29
Notes to Combined Statement of Revenues and Certain Expenses.......................................... 30
</TABLE>
-5-
<PAGE> 7
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS ADJUSTED
BEFORE
PRO FORMA
PROBABLE PRO FORMA
ACQUISITIONS PROBABLE
AND ACQUISITIONS
COMMON AND COMMON
COMPANY STOCK STOCK COMPANY
HISTORICAL ADJUSTMENTS OFFERING OFFERING PRO FORMA
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Real estate, net
Operating properties $ 486,922 $ 19,000 (A) $ 505,922 $ 47,600 (E) $ 553,522
Properties under development 43,328 - 43,328 - 43,328
Cash and cash equivalents 1,258 255 (A)(B) 2,228 5,446 (F) 7,674
715 (C)
Accounts receivable 2,501 - 2,501 - 2,501
Other assets 14,567 120 (A) 16,687 (1,450)(E) 15,237
2,000 (D)
---------------------------------------------------------------------------------
$ 548,576 $ 22,090 $ 570,666 $ 51,596 $ 622,262
=================================================================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Loans payable $ 211,638 $ 41,392 (A)(B)(C) $ 253,030 $ 4,448 (E) $ 257,478
Line of credit 32,120 9,300 (A)(C) 41,420 (41,420)(F) -
Acquisition facility 33,625 (31,625)(B)(D) 2,000 (2,000)(F) -
Accounts payable and accrued
liabilities 8,711 154 (A) 8,865 181 (E) 9,046
Dividends payable 6,139 - 6,139 - 6,139
Convertible subordinated
debentures 12,652 - 12,652 - 12,652
---------------------------------------------------------------------------------
Total liabilities 304,885 19,221 324,106 (38,791) 285,315
Minority interest in consolidated
partnerships 8,465 2,869 (A) 11,334 - 11,334
Shareholders' equity
Preferred stock 7 - 7 - 7
Common shares 143 - 143 43 (F) 186
Outstanding restricted stock (865) - (865) - (865)
Additional paid-in capital 259,558 - 259,558 90,344 (F) 349,902
Distributions in excess of
earnings (23,617) - (23,617) - (23,617)
---------------------------------------------------------------------------------
235,226 - 235,226 90,387 325,613
---------------------------------------------------------------------------------
$ 548,576 $ 22,090 $ 570,666 $ 51,596 $ 622,262
=================================================================================
</TABLE>
The accompanying notes are an integral part of the pro forma condensed
consolidated financial statements.
-6-
<PAGE> 8
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AS ADJUSTED PRO FORMA
BEFORE PROBABLE
PRO FORMA ACQUISITIONS
PROBABLE AND
ACQUISITIONS COMMON
COMPANY AND COMMON STOCK COMPANY
HISTORICAL ADJUSTMENTS STOCK OFFERING OFFERING PRO FORMA
------------------------------- ----------------------------------- --------------
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income
Industrial properties $ 24,850 $ 6,538 (G) $ 31,388 $ 3,600 (M) $ 34,988
Multifamily properties 24,339 1,665 (G) 26,004 - 26,004
------------------------------- ---------------------------------- --------------
49,189 8,203 57,392 3,600 60,992
EXPENSES
Rental property expenses
Industrial properties 5,864 1,365 (G) 7,229 709 (M) 7,938
Multifamily properties 9,421 583 (G) 10,004 - 10,004
------------------------------- ---------------------------------- ---------------
15,285 1,948 17,233 709 17,942
Depreciation 8,073 1,767 (H) 9,840 809 (N) 10,649
Interest 12,621 4,277 (I) 16,839 (2,221) (O) 14,618
(59) (J) -
General and administrative 2,238 - 2,238 - 2,238
Minority interest in earnings
of consolidated partnerships 114 507 (K) 621 - 621
------------------------------- ---------------------------------- ---------------
NET INCOME (V) 10,858 (237) 10,621 4,303 14,924
Preferred dividend
requirements (390) (554) (L) (944) - (944)
------------------------------- ---------------------------------- ---------------
INCOME AVAILABLE
TO COMMON SHAREHOLDERS (V) $ 10,468 $ (791) $ 9,677 $ 4,303 $ 13,980
=========================================================================================
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING (S) 12,843,805 18,498,983
============= ===============
INCOME AVAILABLE PER
COMMON SHARE (V) $ 0.82 $ 0.76
============= ===============
</TABLE>
The accompanying notes are an integral part of the pro forma financial
statements.
-7-
<PAGE> 9
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AS ADJUSTED
BEFORE
PRO FORMA PRO FORMA
PROBABLE PROBABLE
ACQUISITIONS ACQUISITIONS
AND COMMON AND COMMON
COMPANY STOCK STOCK COMPANY
HISTORICAL ADJUSTMENTS OFFERING OFFERING PRO FORMA
------------------------------- ---------------------------------- --------------
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income
Industrial properties $ 20,783 $ 18,312 (G) $ 39,095 $ 4,371 (M) $ 43,466
Multifamily properties 29,104 4,470 (G) 33,574 - 33,574
------------------------------- ---------------------------------- --------------
49,887 22,782 72,669 4,371 77,040
EXPENSES
Rental property expenses
Industrial properties 5,308 4,380 (G) 9,688 744 (M) 10,432
Multifamily properties 11,554 1,885 (G) 13,439 - 13,439
------------------------------- ---------------------------------- --------------
16,862 6,265 23,127 744 23,871
Depreciation 8,236 4,335 (P) 12,571 1,077 (N) 13,648
Interest 18,411 (468)(J) 24,227 (2,960)(O) 21,267
10,176 (Q)
(3,892)(R)
General and administrative 2,974 - 2,974 - 2,974
Minority interest in earnings
in consolidated partnerships - 676 (K) 676 - 676
------------------------------- ---------------------------------- --------------
NET INCOME (T)(U) 3,404 5,690 9,094 5,510 14,604
Preferred dividend
requirements - 1,259 (L) 1,259 - 1,259
------------------------------- ---------------------------------- --------------
INCOME AVAILABLE TO
COMMON
SHAREHOLDERS (T)(U) $ 3,404 $ 4,431 $ 7,835 $ 5,510 $ 13,345
=====================================================================================
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING (S) 6,340,748 18,427,925
============== ==============
INCOME AVAILABLE PER
COMMON SHARE (T)(U) $ 0.54 $ 0.72
============== ==============
</TABLE>
The accompanying notes are an integral part of the pro forma financial
statements.
-8-
<PAGE> 10
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 1 - BASIS OF PRESENTATION
Pacific Gulf Properties Inc. (the "Company") was formed in 1993 and completed
its initial public offering in February 1994.
On October 16, 1997, the Company acquired a controlling general partner interest
in a newly-formed California limited partnership to which the previous owners
contributed two industrial properties containing approximately 500,739 leasable
square feet located in Hayward, California ("Eden Plaza/Eden Industrial"). The
Company anticipates that it will acquire (i) an industrial portfolio of four
warehouse/distribution properties (the "Industrial Portfolio Acquisition
Properties"), three of which contain approximately 543,215 leasable square feet
located in Southern California (Tower Park, 611 Cerritos, and Acacia Business
Center) and a fourth property which contains approximately 300,000 leasable
square feet located in Las Vegas (Valley View Business Center) and (ii) a
warehouse/distribution center containing approximately 319,800 leasable square
feet located in Woodland, California ((Woodland Distribution Center" which
together with the "Industrial Portfolio Acquisition Properties" are collectively
referred to as the "Probable Acquisitions"). It is anticipated that the Company
will complete the purchase of the Probable Acquisitions and repay certain
indebtedness utilizing proceeds from the proposed issuance of 4,250,000 shares
of the Company's Common Stock in November 1997, plus up to 637,500 shares
subject to an overallotment option granted to the underwriter (the "Proposed
Common Stock Offering") under the Company's $250,000,000 shelf registration
statement declared effective April 1997.
The condensed pro forma consolidated financial statements of the Company have
been adjusted to reflect the effect of completing the Proposed Common Stock
Offering, purchasing the Probable Acquisitions and repaying certain indebtedness
as more fully described below. The Company's pro forma consolidated financial
statements have been further adjusted to reflect the effect of certain
transactions which the Company completed subsequent to September 30, 1997 or
during the periods reported herein as if those transactions occurred as of the
dates indicated.
The Company's pro forma condensed consolidated balance sheet as of September 30,
1997 is based on the unaudited historical financial statements of the Company
and has been adjusted to reflect the following transactions completed by the
Company subsequent to September 30, 1997 as if these transactions occurred on
September 30, 1997: (i) the Company's acquisition of a controlling general
partner interest in the partnership that owns Eden Plaza/Eden Industrial;
(ii) the repayment of $33,625 on the Company's Acquisition Facility with
proceeds from a new $34,000 term loan obtained in October 1997; (iii) increased
borrowings in October 1997 under the Company's Line of Credit obtained by the
Company to repay a maturing loan payable and (iv) increased borrowings in
October 1997 under the Company's Acquisition Facility to pay certain
pre-acquisition costs related to the Probable Acquisitions. The Company's
pro forma condensed consolidated balance sheet as of September 30, 1997 has
been further adjusted to reflect the pro forma effect of the following
transactions as if the transactions had occurred on September 30, 1997: (i) the
purchase of the Probable Acquisitions and (ii) the completion of the Proposed
-9-
<PAGE> 11
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (continued)
NOTE 1 - BASIS OF PRESENTATION (continued)
Common Stock Offering in November 1997 and the application of net proceeds
thereof as described in a Prospectus Supplement filed with the Securities and
Exchange Commission.
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 adjusted to reflect the effect of the following
transactions completed by the Company during the periods reported herein or
subsequent to September 30, 1997, as if these transactions had occurred as of
the beginning of the period presented: (i) the purchase in March 1996 of an
industrial property containing approximately 189,000 leasable square feet
located in Garden Grove, California (the "Pacific Gulf Business Park"); (ii) the
purchase in June and July 1996 of nine industrial properties containing
approximately 1,400,000 leasable square feet located in California (the "1996
Industrial Acquisitions") utilizing proceeds from a public offering of 2,435,481
shares of the Company's Common Stock consummated in May 1996 (the "May 1996
Common Stock Offering"); (iii) the completion of the May 1996 Common Stock
Offering and the application of net proceeds thereof; (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"); (v) the exchange in December 1996
of $42,069 aggregate principal amount of the Company's 8.375% convertible
Subordinated Debentures due 2001 (the "Debentures") for 2,440,002 shares of the
Company's Common Stock pursuant to the Company's offer to exchange such
Debentures filed with the Securities and Exchange Commission on 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 (Miramar Business Park), and (b) a 165-unit multifamily community located
in Ontario, California (Raintree Apartments) in November 1996 (collectively, the
"Other 1996 Acquisitions"); (vii) the purchase in January and February 1997 of
three warehouse/distribution facilities containing an aggregate of 521,000
leasable square feet located in Washington and California ("1997 Industrial
Acquisitions") with proceeds from a public offering of 2,300,000 shares of the
Company's Common Stock consummated in January 1997 (the "January 1997 Common
Stock Offering"); (viii) the completion of the January 1997 Common Stock
Offering and the application of net proceeds thereof; (ix) the purchase of a
warehouse/distribution facility in March 1997 containing approximately 570,000
leasable square feet located in Woodland, California ("Woodland Distribution
Center"); (x) the repayment in April 1997 of certain indebtedness totaling
$7,000 with proceeds from the issuance of 270,270 shares of Class A Senior
Cumulative Convertible Preferred Stock (the "Class A Preferred Stock") the
proceeds of which were used to repay such indebtedness; (xi) the purchase of the
following properties utilizing proceeds from a public offering of 2,131,700
shares of the Company's Common Stock completed in June 1997 (the "June 1997
-10-
<PAGE> 12
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (continued)
NOTE 1 - BASIS OF PRESENTATION (continued)
Common Stock Offering"): (a) the Algona Distribution Center, a
warehouse/distribution facility containing approximately 250,000 leasable square
feet located in Algona, Washington purchased for redevelopment purposes in
January, 1997, (b) the 12.8-acre land parcel located in Lake Forest, California
purchased in May, 1997 for the development of a multitenant industrial complex
that will contain approximately 203,500 leasable square feet, ("Lake Forest Land
Parcel") (c) the 17.1 acre land parcel located within the Spectrum
master-planned business community located in Irvine, California for the
development of a warehouse/distribution business park that will contain
approximately 235,000 leasable square feet (Pacific Gulf Spectrum Land"); (d) a
warehouse/ distribution center purchased in August 1997 for the redevelopment of
approximately 360,000 leasable square feet of industrial space ("Vons
Distribution Center" which together with the "Algona Distribution Center," the
"Lake Forest Land Parcel," and the "Pacific Gulf Spectrum Land" are collectively
referred to as the "Properties Under Development") and (d) a controlling general
partner interest in two partnerships that own active senior apartment
communities containing 551 apartment units located in Escondido, California (the
"Senior Apartments"; (xii) the completion of the June 1997 Common Stock Offering
and the application of the net proceeds thereof to complete the purchase of the
Development Properties and the Senior Apartments; (xiii) the purchase in July
1997 of an industrial portfolio of five industrial properties containing
approximately 1,532,000 leasable square feet located in California (the
"AEW/Lincoln Properties") utilizing borrowings under the Company's Acquisition
Facility and proceeds from the issuance of 470,588 shares of Class B Senior
Cumulative Convertible preferred stock (the "Class B Preferred Stock"); and
(xiv) the purchase in September 1997 of an industrial park containing
approximately 142,000 leasable square feet located in Concord, California
("Concord Business Center"); (xv) the purchase in October 1997 of a controlling
general partner interest in the partnership that owns Eden Plaza/Eden Industrial
and (xvi) the borrowings obtained by the Company in October 1997 under the
revolving line of credit to repay a maturing loan payable and under the
Acquisition Facility to pay certain pre-acquisition costs (primarily refundable
deposits) of the Probable Acquisitions.
The Company's pro forma condensed consolidated financial statements for the year
ended December 31, 1996 has been further adjusted to reflect the pro forma
effect of the following transactions which the Company anticipates completing as
part of the Proposed Common Stock Offering as if these transactions occurred as
of the beginning of the period presented: (i) the purchase of the Probable
Acquisitions and (ii) the completion of the Proposed Common Stock Offering of
4,250,000 shares of the Company's Common Stock in November 1997 and the
application of net proceeds as described in a Prospectus Supplement filed with
the Securities and Exchange Commission.
-11-
<PAGE> 13
'
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (continued)
NOTE 1 - BASIS OF PRESENTATION (continued)
The Company's pro forma condensed consolidated statement of operations for the
nine months ended September 30, 1997 is based on the historical financial
statements of the Company and has been adjusted to reflect the effect of the
following transactions completed by the Company during the periods reported
herein or subsequent to September 30, 1997 as if the transactions had occurred
as of the beginning of the period presented: (i) the purchase in January and
February 1997 of the 1997 Industrial Acquisitions; (ii) the completion of the
January 1997 Common Stock Offering and the application of net proceeds thereof;
(iii) the purchase in March 1997 of the Woodland Distribution Center; (iv) the
repayment of certain indebtedness totaling $7,000 in April 1997 with proceeds
from the issuance of 270,270 Class A Preferred Stock shares; (v) the purchase of
the Properties Under Development and the Senior Apartments completed by the
Company in the second quarter of 1997 and June 1997, respectively; (vi) the
completion of the June 1997 Common Stock Offering and the application of net
proceeds thereof to complete the purchase of the Properties Under Development
and the Senior Apartments; (vii) the purchase in July 1997 of the AEW/Lincoln
Properties with proceeds from both borrowings under the Acquisition Facility and
the issuance of 470,288 Class B Preferred Stock shares; (viii) the purchase in
September 1997 of Concord Business Center; (ix) the purchase of a controlling
general partner interest in the partnership that owns Eden Rock Industrial
Park in October 1997 and (x) the borrowings obtained by the Company in October
1997 under the revolving line of credit to repay a maturing loan payable and
under the Acquisition Facility to pay certain pre-aquisition costs (primarily
refundable deposits) of the Probable Acquisitions.
The Company's pro forma condensed consolidated financial statements for the nine
months ended September 30, 1997 have been further adjusted to reflect the pro
forma effect of the following transactions which the Company anticipates
completing as part of the Proposed Common Stock Offering as if these
transactions occurred as of the beginning of the periods presented; (ix) the
purchase of the Probable Acquisitions and (x) the completion of the Proposed
Common Stock Offering of 4,250,000 shares of the Company's Common Stock in
November 1997 and the application of net proceeds as described in a Prospectus
Supplement filed with the Securities and Exchange Commission.
The pro forma condensed consolidated financial statements are not necessarily
indicative of what the Company's financial position or results of operations
would have been assuming the completion of the described transactions as of the
beginning of the periods indicated, nor does it purport to project the Company's
financial position or results of operations at any future date or for any future
period. In addition, the historical operating results for the nine months ended
September 30,1997 are not necessarily indicative of the results to be obtained
by the Company for the year ending December 31, 1997. The following pro forma
information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and all of the
financial statements and notes thereto contained in the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,1997, the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
-12-
<PAGE> 14
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS
(A) Purchase of a controlling general partner interest in a newly-formed
California limited partnership that owns two industrial properties
(referred to as "Eden Plaza/Eden Industrial"). The properties were
contributed to the Partnership by the previous owners at an agreed-upon
value of $19,000 subject to approximately $15,641 of existing
indebtedness and $154 of security deposits. In connection with the Eden
Plaza/Eden Industrial transaction, the Company became the sole general
partner in the new partnership with an ownership interest of 62% in
exchange for its cash contribution of $3,977 which was funded by the
Company's revolving line of credit. The previous owners became limited
partners in this partnership and received approximately 144,016 limited
partnership units in exchange for their $2,869 minority equity
interest. Proceeds for the Company's acquisition were borrowed under
the Acquisition Facility and contributed to the partnership which then
used the funds to reduce the properties' existing indebtedness balance
from $15,641 to $12,000. Capitalizable financing costs totaling $120
were incurred in connection with such refinancing.
(B) Repayment of the $33,625 outstanding balance on the Company's
Acquisition Facility which bears interest at LIBOR + 2.00% in October
1997 with proceeds from a new $34,000 loan payable which bears interest
at a fixed rate of 7.11% and matures in ten years.
(C) Borrowings under the Company's revolving line of credit obtained in
October 1997 ($5,323); the proceeds of which were utilized to repay a
maturing loan payable ($4,608) and for general corporate purposes
($715).
(D) Borrowings under the Company's Acquisition Facility obtained in
October 1997 ($2,000) utilized to pay certain pre-acquisition costs
(primarily refundable deposits) including $1,450 related to the
Probable Acquisitions.
(E) Purchase of the following Probable Acquisitions currently under
contract:
<TABLE>
<CAPTION>
Leasable Purchase
Property Name Location Square Feet Price
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Industrial Portfolio Acquisition Properties
Tower Park Anaheim, CA 205,238 $ 8,900
611 Cerritos Fullerton, CA 202,551 6,100
Acacia Business Center Anaheim, CA 129,426 9,900
Valley View Business Center Las Vegas, NV 300,000 14,100
Woodland Distribution Center Woodland, CA 319,800 8,600
----------------------
1,157,015 $47,600
======================
</TABLE>
-13-
<PAGE> 15
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
The Company anticipates completing the purchases with proceeds from the
Proposed Common Stock Offering to be completed in November 1997 (See
Note F below) and $1,450 of pre-acquisition costs (see Note D above).
In connection with the proposed purchases, the Company will assume a
$4,448 existing loan encumbering the Valley View Distribution Center
property. In addition, the Company will receive credit through escrow
for the assumption of tenant security deposits related to these
properties totaling approximately $181. The Probable Acquisitions
remain subject to certain conditions to closing, thus, there can be no
assurance that these acquisitions will be consummated.
(F) Issuance of 4,250,000 shares of $.01 per value Common Stock at $22.625
per share resulting in net proceeds totaling $90,387 net of
underwriting discounts and commissions and offering costs. Proceeds
from this Proposed Common Stock Offering will be used to fund the
purchase of the Probable Acquisitions net of indebtedness and security
deposits assumed and pre-acquisition costs ($41,521), repay balances
currently outstanding on the Company's revolving line of credit
($41,420) and currently outstanding on the Company's Acquisition
Facility ($2,000).
(G) Revenues and certain expenses of the following properties acquired by
the Company in 1996 and 1997 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 Nine Months Ended September 30, 1997
----------------------------------------------------------------------------------------
1997 Woodland AEW/ Concord Eden Plaza/
Industrial Distribution Senior Lincoln Business Eden
Acquisitions Center Apartments Properties Center Industrial Total
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rental Income
Industrial Properties $ 183 $ 60 $ - $ 3,753 $ 797 $ 1,745 $ 6,538
Multifamily Properties - - 1,665 - - - 1,665
----------------------------------------------------------------------------------------
183 60 1,665 3,753 797 1,745 8,203
Rental Property Expenses
Industrial Properties 59 27 - 737 129 413 1,365
Multifamily Properties - - 583 - - - 583
----------------------------------------------------------------------------------------
59 27 583 737 129 413 1,948
$ 124 $ 33 $ 1,082 $ 3,016 $ 668 $ 1,332 $ 6,255
========================================================================================
</TABLE>
-14-
<PAGE> 16
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
<TABLE>
<CAPTION>
For the Year Ended December 31, 1996
--------------------------------------------------------------------
Pacific
Gulf 1996 Other 1997 Woodland
Business Industrial 1996 Industrial Distribution
Park Acquisitions Acquisitions Acquisitions Center
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rental Income
Industrial Properties $ 195 $3,217 $1,228 $2,703 $1,432
Multifamily Properties -- -- 918 -- --
--------------------------------------------------------------------
195 3,217 2,146 2,703 1,432
Rental Property Expenses
Industrial Properties 72 809 455 864 160
Multifamily Properties -- -- 542 -- --
--------------------------------------------------------------------
72 809 997 864 160
$ 123 $2,408 $1,149 $1,839 $1,272
====================================================================
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31, 1996 (continued)
-------------------------------------------------------------------------------------------
AEW/ Concord Eden Plaza/
Senior Lincoln Business Eden Tenant
Apartments Properties Center Industrial Sale Total
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Rental Income
Industrial Properties $ -- $ 6,811 $ 1,020 $ 2,397 $ (691) $ 18,312
Multifamily Properties 3,552 -- -- -- -- 4,470
--------------------------------------------------------------------------------------------
3,552 6,811 1,020 2,397 (691) 22,782
Rental Property Expenses
Industrial Properties -- 1,332 174 546 (32) 4,380
Multifamily Properties 1,343 -- -- -- -- 1,885
--------------------------------------------------------------------------------------------
1,343 1,332 174 546 (32) 6,265
$ 2,209 $ 5,479 $ 846 $ 1,851 $ (659) $ 16,517
============================================================================================
</TABLE>
Algona Distribution Center, the Lake Forest Land Parcel, the Pacific
Gulf Spectrum Land, and Vons Distribution Center acquisitions completed
in 1997 were purchased by the Company for development purposes and had
not been previously operated as rental properties. Accordingly, the
accompanying pro forma consolidated statements of operations for the
year ended December 31, 1996 and nine months ended September 30, 1997
do not reflect historical revenues and expenses for these development
properties.
(H) Depreciation expense of $1,767 during the nine months ended September
30, 1997 relating to the purchase of the 1997 Industrial Acquisitions,
Woodland Distribution Center, the Senior Apartments, the AEW/Lincoln
Properties, Concord Business Center and Eden Plaza/Eden Industrial. The
depreciation expense relative to the purchase of these properties for
the period prior to their acquisition was calculated utilizing
estimated remaining useful lives of 40 years and the depreciable basis
of the properties as follows:
<TABLE>
<CAPTION>
Purchase Depreciable Depreciation
Property Name Price Basis Expense
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1997 Industrial Acquisitions
Algona Warehouse $ 9,450 $ 7,640 $ 11
Harbor Business Park/Harbor Warner Business Park
14,600 12,160 22
Woodland Distribution Center 12,875 10,923 46
Senior Apartments
Terrace Gardens Apartments 10,000 7,950 91
Morning View Terrace Apartments 15,000 10,109 116
AEW/Lincoln Properties 67,308 53,512 966
Concord Business Center 7,645 6,051 135
Eden Plaza/Eden Industrial 19,000 15,200 380
---------------
$ 1,767
===============
</TABLE>
-15-
<PAGE> 17
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(I) Interest expense of $4,277 relating to the purchase of Woodland
Distribution Center, the Senior Apartments, the AEW/Lincoln Properties,
Concord Business Center and Eden Plaza/Eden Industrial. The interest
expense associated with the borrowings used to finance the purchase of
these properties for the period prior to these acquisitions is based on
the actual interest rate on the related debt, as follows:
<TABLE>
<CAPTION>
Pro Forma
Interest Interest
Property Name Debt Rate Expense
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
Woodland Distribution Center
Revolving line of credit $ 12,483 8.50% $ 177
Senior Apartments
Terrace Garden Apartments
Loan payable 8,100 6.60% 245
Morning View Terrace Apartments
Loan payable 11,000 6.60% 333
AEW/Lincoln Properties
Revolving line of credit 12,000 7.25% 471
Acquisition facility 41,625 7.50% 1,691
Concord Industrial Park
Loan payable 4,625 8.50% 262
Revolving line of credit 2,870 9.00% 172
Eden Rock Industrial Park
Loan payable 12,000 7.05% 635
Revolving line of credit 3,977 7.63% 227
Amortization of financing costs 64
---------------
$ 4,277
===============
</TABLE>
-16-
<PAGE> 18
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(J) Represents the net decrease in interest expense resulting from the
debt repayments, refinancings and borrowings described herein.
(K) Represents minority equity interest in earnings of the two partnerships
that own the Senior Apartments and the partnership that owns Eden
Plaza/Eden Industrial. Profits and losses are allocated between the
Company and the limited partners based on the relative balances of
their respective capital accounts. In connection with these
partnerships which are controlled by the Company, the limited partners
are entitled to cash distributions on their limited partnership units
to the extent of available cash flow up to an amount on each unit equal
to the dividend on the Company's Common Stock.
(L) Represents the preferred stock dividend requirements of $0.425 per
share per quarter related to 270,270 shares of Class A Preferred Stock
issued by the Company in April 1997 and 470,588 shares of Class B
Preferred Stock issued in July 1997. The 270,270 shares of Class A
Preferred Stock with a par value of $.01 per share were issued pursuant
to an agreement to issue up to 1,351,351 shares executed by the Company
on December 31, 1996. The Class B Preferred Stock with a par value of
$.01 per share were issued pursuant to an agreement to issue up to
1,411,765 shares executed by the Company in May 1997. The Class A
Preferred Stock Shares, which will be issued in up to three
installments at a price of $18.50 per share and the Class B Preferred
Stock shares which will be issued in up to three separate issuances at
$21.25 per share, are redeemable by the Company in whole or part, five
years from the date of issuance and are convertible into shares of
Common Stock, at any time, at the option of the holders based on an
initial conversion ratio of one-to-one, subject to adjustment under
certain circumstances.
-17-
<PAGE> 19
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(M) Revenues and certain expenses of the industrial properties comprising
the Probable Acquisitions, for the period prior to their acquisition by
the Company (adjusted to reflect increased property taxes based on the
properties' acquisition cost and current property tax rates):
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1997
----------------------------------------------
Industrial
Portfolio Woodland
Acquisition Distribution Total
Properties Center
----------------------------------------------
<S> <C> <C> <C>
Rental income $ 3,095 $ 505 $ 3,600
Rental property expenses 578 131 709
----------------------------------------------
$ 2,517 $ 374 $ 2,891
==============================================
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1996
----------------------------------------------
Industrial
Portfolio Woodland
Acquisition Distribution Total
Properties Center
----------------------------------------------
<S> <C> <C> <C>
Rental income $ 4,371 $ - $ 4,371
Rental property expenses 744 - 744
----------------------------------------------
$ 3,627 $ - $ 3,627
==============================================
</TABLE>
The accompanying pro forma consolidated statement of operations for the
year ended December 31, 1996 does not include revenues and expenses for
Woodland Distribution Center since the property was not previously
used for rental operations prior to 1997.
-18-
<PAGE> 20
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(N) Depreciation expense relating to the purchase of the Probable
Acquisitions for the period prior to their acquisition, was calculated
utilizing estimated remaining useful lives and the depreciable basis
of the properties as follows:
<TABLE>
<CAPTION>
Nine Months Ended September 30,1997
-------------------------------------------
Purchase Depreciable Depreciation
Property Name Price Basis Expense
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Industrial Portfolio Acquisition Properties
Tower Park $ 8,900 $ 7,120 $ 178
611 Cerritos 6,100 4,880 92
Acacia Business Center 9,900 7,920 198
Valley View Business Center 14,100 11,280 212
Woodland Distribution Center 8,600 6,880 129
------
$ 809
======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1996
-------------------------------------------
Purchase Depreciable Depreciation
Property Name Price Basis Expense
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Industrial Portfolio Acquisition Properties
Tower Park $ 8,900 $ 7,120 $ 237
611 Cerritos 6,100 4,880 122
Acacia Business Center 9,900 7,920 264
Valley View Business Center 14,100 11,280 282
Woodland Distribution 8,600 6,880 172
------
$1,077
======
</TABLE>
(O) Represents net decrease in interest expense associated with
indebtedness repaid with net proceeds from the Proposed Common Stock
Offering offset by new borrowings assumed with the Probable
Acquisitions as follows: (i) repayment of $41,420 outstanding balances
on the Company's revolving line of credit, including October 1997
borrowings bearing interest at 7.625% (the effective rate on the line),
(ii) repayment of $2,000 outstanding balance on the Company's
Acquisition Facility, including October 1997 borrowings bearing
interest at 9.00% (the actual rate on the borrowing) and (iii) new
indebtedness totaling $4,448 bearing interest at 8.375% assumed in
connection with the purchase of one of the Probable Acquisitions.
-19-
<PAGE> 21
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(P) Depreciation expense of $4,355 relating to the following properties
acquired by the Company: Pacific Gulf Business Park, the 1996
Industrial Acquisitions, the Other 1996 Acquisitions, the 1997
Industrial Acquisitions, Woodland Distribution Center, the Senior
Apartments, the AEW/Lincoln Properties, Concord Business Center and
Eden Plaza/Eden Industrial, net of $328 depreciation reduction from the
Tenant Sale (the actual depreciation relating to the Tenant Sale during
the year ended December 31, 1996). The depreciation expense relating to
these properties, for the period prior to their purchase, was computed
utilizing the estimated remaining useful lives and depreciable basis of
the properties follows:
<TABLE>
<CAPTION>
Purchase Depreciable Depreciation
Property Name Price Basis Expense
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Gulf Business Park $ 6,800 $ 3,009 $ 16
1996 Industrial Acquisitions
Eden Landing Commerce Park 7,300 5,460 -
Riverview Industrial Park 6,442 5,281 66
Bay San Marcos Industrial Center 4,678 2,942 32
Escondido Business Center 10,372 6,523 70
Bell Ranch Industrial Park 3,750 3,000 35
North County Business Park 6,350 3,169 35
San Marcos Commerce Center 2,710 1,871 20
Pacific Park 6,900 3,001 28
La Mirada Business Center 3,600 2,453 26
Other 1996 Acquisitions
Miramar Business Park 7,242 7,242 181
Raintree Apartments 6,259 4,511 113
1997 Industrial Acquisitions
Algona Warehouse 9,450 7,640 191
Harbor Business Park/Harbor Warner 14,600 12,160 304
Business Park
Woodland Distribution Center 12,875 10,923 273
Senior Apartments
Terrace Garden Apartments 10,000 7,950 199
Morning View Apartments 15,000 10,109 253
AEW/Lincoln Properties 67,308 53,512 1,784
Concord Business Center 7,645 6,051 202
Eden Plaza/Eden Industrial 19,000 15,200 507
-----------------
$ 4,335
=================
</TABLE>
-20-
<PAGE> 22
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(Q) Interest expense of $10,176 relating to the purchase of Pacific Gulf
Business Park, the 1996 Industrial Acquisitions, the Other 1996
Acquisitions, the 1997 Industrial Acquisitions, Woodland Distribution
Center, the Development Properties, the Senior Apartments, the
AEW/Lincoln Properties, Concord Business Center and Eden Plaza/Eden
Industrial, less reduction of interest expense resulting from the
Tenant Sale of $567 (the actual interest relating to the Tenant Sale
during the year ended December 31, 1996). Interest expense associated
with the borrowings used to finance the purchase of these properties
for the period prior to these acquisitions is based on the actual
interest rates on the related debt, as follows:
<TABLE>
<CAPTION>
Pro Forma
Interest Interest
Property Name Debt Rate Expense
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Gulf Business Park
Loan payable $ 8,000 7.30% $ 124
1996 Industrial Acquisitions
Acquisition facility 19,475 7.50% 997
Other 1996 Acquisitions
Miramar Business Park
Revolving line of credit 7,100 7.13% 370
Raintree Apartments
Revolving line of credit 6,200 8.40% 437
Woodland Distribution Center
Revolving line of credit 12,483 8.50% 1,061
Senior Apartments
Terrace Garden Apartments
Loan payable 8,100 6.60% 535
Morning View Apartments
Loan payable 11,000 6.60% 726
AEW/Lincoln Properties
Revolving line of credit 12,000 7.25% 870
Acquisition facility 41,625 7.50% 3,121
Concord Business Center
Loan payable 4,625 8.50% 393
Revolving line of credit 2,870 9.00% 258
Eden Plaza/Eden Industrial
Loan payable 12,000 7.05% 846
Acquisition facility 3,977 7.63% 302
Amortization of Financing Costs 136
-------
$10,176
=======
</TABLE>
-21-
<PAGE> 23
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(Q) continued
The interest expense on the Company's revolving line of credit
borrowings and on borrowings under the Company's Acquisition Facility
is calculated for the period indicated at an interest rate of LIBOR +
1.75% and LIBOR + 2.0%, respectively. The interest rates reflected
above represent the actual rates on the date of the borrowings. A
0.125% change in the interest rate on all of the Company's variable
rate indebtedness would increase the Company's pro forma interest
expense by $99 for the nine months ended September 30, 1997 and $132
for the year ended December 31, 1996.
(R) Reduction in interest expense resulting from the exchange of the
Debentures into 2,440,002 shares of the Company's Common Stock as of
the beginning of the period (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. Pro forma
weighted average common shares include 2,435,581 shares of Common Stock
issued by the Company in conjunction with its May 1996 Offering,
2,440,002 shares of Common Stock issued as part of the
Debenture-for-Stock Exchange, 2,300,000 shares issued as part of the
January 1997 Common Stock Offering, 2,131,700 shares issued as part of
the June 1997 Common Stock Offering and 4,250,000 shares issued as part
of the Proposed Common Stock Offering the Company anticipates
completing in November 1997.
-22-
<PAGE> 24
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(T) Excludes the effect of a $74 nonrecurring gain from the sale of land
and buildings to an existing tenant in August 1996.
(U) Excludes the effect of the loss of $3,596 on the December 31, 1996
Debenture-for-Stock Exchange resulting from the issuance of 180,956
excess common shares at $19.875 per share (the closing price per share
on December 26, 1996, the date of the exchange). These shares represent
the additional shares issued at the exchange rate of 58 shares of
Common Stock per each $1 principal amount of Debentures, representing
4.3014 additional shares over the original conversion rate of 53.6986
shares.
(V) Excludes the effect of a $111 nonrecurring loss on the sale of the
Company's corporate headquarters during the second quarter of 1997.
-23-
<PAGE> 25
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 Eden Plaza and Eden Industrial ("Eden Plaza/Eden Industrial"), two
industrial properties owned by a partnership in which Pacific Gulf Properties
Inc. (the "Company") acquired a controlling general partner interest. The
statement is the responsibility of Eden Plaza/Eden Industrial 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 Eden
Plaza/Eden Industrial.
In our opinion, the statement referred to above presents fairly, in all material
respects, the combined revenues and certain expenses, as defined above, of Eden
Plaza/Eden Industrial for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Newport Beach, California
October 15, 1997
-24-
<PAGE> 26
EDEN PLAZA/EDEN INDUSTRIAL
Combined Statement of Revenues and Certain Expenses
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended September 30,
December 31, 1997
1996 (Unaudited)
---------------------------------------
<S> <C> <C>
REVENUES
Rental and other income (Notes 3 and 5) $ 2,397,000 $ 1,745,000
CERTAIN EXPENSES
Property operating and maintenance (Notes 2 and 3) 291,000 235,000
Real estate taxes 205,000 150,000
Management fees (Note 4) 101,000 76,000
---------------------------------------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 1,800,000 $ 1,284,000
=======================================
</TABLE>
See accompanying notes.
-25-
<PAGE> 27
EDEN PLAZA/EDEN INDUSTRIAL
Notes to Combined Statement of Revenues and Certain Expenses
For the Year Ended December 31, 1996 and the
Nine Months Ended September 30, 1997 (Unaudited)
1. DESCRIPTION OF THE TRANSACTION
On October 20, 1997, Pacific Gulf Properties Inc. (the "Company") acquired a
controlling general partner interest in a newly-formed California limited
partnership that owns the following two industrial properties: Eden Plaza/Eden
Industrial (collectively, the "Properties"). The Properties which contain
approximately 501,000 leasable square feet and are located in Hayward,
California was contributed to the new partnership by Eden Plaza Associates LP,
the previous owners. The Company became the sole general partner in the new
partnership in exchange for its cash contribution of approximately $3,977,000.
The previous owners of Eden Plaza/Eden Industrial became limited partners in
the new partnership and received 144,016 limited partnership units valued at
$2,869,000 in exchange for their contribution of the Properties.
2. BASIS OF PRESENTATION
The combined statement of revenues and certain expenses presents the operations
of Eden Plaza/Eden Industrial, as defined above, for the year ended December 31,
1996 and for the nine months ended September 30, 1997 (unaudited). The combined
statement has been prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in a Form
8-K filing).
Certain expenses that are dependent on the property owner and the cost basis of
the Properties have been excluded from the combined statement. The excluded
expenses consist primarily of depreciation and interest. Consequently, the
revenues in excess of certain expenses as presented in the combined statement
are not intended to be a complete presentation of the Properties' revenues and
expenses nor is it intended to be comparable to their proposed future
operations.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
The Properties are generally leased to tenants with lease terms which exceed
one year and are accounted for as operating leases. Revenues from leases are
recognized on a straight-line basis over the term of the related leases.
Expense recoveries from tenants are recognized as income in the period the
related expenses are accrued.
-26-
<PAGE> 28
EDEN PLAZA/EDEN INDUSTRIAL
Notes to Combined Statement of Revenues and Certain Expenses (continued)
For the Year Ended December 31, 1996 and the
Nine Months Ended September 30, 1997 (Unaudited)
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.
Tenant Concentration
At December 31, 1996, two tenants leased 56% of Eden Plaza/Eden Industrial's
leasable square footage. The rental income earned from each of these tenants
during the year ended December 31, 1996 totaled $569,000 and $298,000,
respectively.
4. MANAGEMENT FEES
The Properties are managed by Intereal. Associates L.P. Management fees are 4%
of total income from the properties, as defined. For the year ended December 31,
1996 and the nine months ended September 30, 1997, Eden Plaza/Eden Industrial
incurred $101,000 and $76,000, respectively, in management fees. Intereal's role
as the property manager of Eden Plaza/Eden Industrial was terminated upon the
consummation of the Company's acquisition.
5. FUTURE MINIMUM LEASE RECEIVABLES
The Properties are leased to tenants under leases which expire at various dates
and contain provisions for rent increases based on cost of living indices.
Certain leases also contain renewal options. Minimum future lease payments to be
received from Eden Plaza/Eden Industrial under the terms of these operating
leases for each of the next five years ending December 31, are as follows:
<TABLE>
<S> <C>
1997 $1,481,000
1998 1,048,000
1999 442,000
2000 269,000
2001 224,000
2002 and thereafter 231,000
</TABLE>
-27-
<PAGE> 29
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 Tower Park, 611 Cerritos, Acacia Business Center and Valley View
Business Center, which are to be acquired by Pacific Gulf
Properties Inc. from AMRESCO Southern California, LLC (collectively referred to
as the "Industrial Portfolio Acquisition Properties"), for the year ended
December 31, 1996. The statement is the responsibility of the Industrial
Portfolio Acquisition Properties' 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 the
Industrial Portfolio Acquisition Properties.
In our opinion, the statement referred to above presents fairly, in all material
respects, the combined revenues and certain expenses, as defined above, of the
Industrial Portfolio Acquisition Properties for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
\s\ ERNST & YOUNG LLP
Newport Beach, California
October 17, 1997
-28-
<PAGE> 30
INDUSTRIAL PORTFOLIO ACQUISITION PROPERTIES
Combined Statement of Revenues and Certain Expenses
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended September 30,
December 31, 1997
1996 (Unaudited)
---------------------------------------
<S> <C> <C>
REVENUES
Rental and other income (Notes 3 and 5) $ 4,371,000 $ 3,095,000
CERTAIN EXPENSES
Property operating and maintenance (Notes 2 and 3) 501,000 374,000
Real estate taxes 316,000 236,000
Management fees (Note 4) 76,000 91,000
---------------------------------------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 3,478,000 $ 2,394,000
=======================================
</TABLE>
See accompanying notes.
-29-
<PAGE> 31
INDUSTRIAL PORTFOLIO ACQUISITION PROPERTIES
Notes to Combined Statement of Revenues and Certain Expenses
For the Year Ended December 31, 1996 and the
Nine Months Ended September 30, 1997 (Unaudited)
1. DESCRIPTION OF THE TRANSACTION
Pacific Gulf Properties Inc. (the "Company") has contracted to acquire Tower
Park, 611 Cerritos, Acacia Business Center and Valley View Business Center, four
industrial properties containing approximately 837,215 leasable square feet,
located in Orange County, California and Las Vegas, Nevada (the "Industrial
Portfolio Acquisition Properties"). The Company has entered into an agreement to
acquire the Industrial Portfolio Acquisition Properties from AMRESCO Southern
California, LLC, and MSC Valley View, Inc., affiliates of AMRESCO Advisors.
2. BASIS OF PRESENTATION
The combined statement of revenues and certain expenses presents the operations
of the Industrial Portfolio Acquisition Properties, as defined above, for the
year ended December 31, 1996 and for the nine months ended September 30, 1997
(unaudited). The combined statements have been prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission (for inclusion in a Form 8-K filing).
Certain expenses that are dependent on the property owner and the cost basis of
the Industrial Portfolio Acquisition Properties have been excluded from the
combined statement. The excluded expenses consist primarily of depreciation,
interest. Consequently, the revenues in excess of certain expenses as presented
in the combined statement are not intended to be a complete presentation of the
Industrial Portfolio Acquisition Properties' revenues and expenses nor is it
intended to be comparable to future operations.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
The Industrial Portfolio Acquisition Properties are generally leased to tenants
with lease terms which exceed one year which are accounted for as operating
leases. Revenues from leases are recognized on a straight-line basis over the
term of the related leases. Expense recoveries from tenants are recognized as
income in the period the related Expenses are accrued.
-30-
<PAGE> 32
INDUSTRIAL PORTFOLIO ACQUISITION PROPERTIES
Notes to Combined Statement of Revenues and Certain Expenses (continued)
For the Year Ended December 31, 1996 and the
Nine Months Ended September 30, 1997 (Unaudited)
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.
Tenant Concentration
At December 31, 1996 four tenants leased 71% of the properties' leasable square
footage. The rental revenue earned from each of these tenants during the year
ended December 31, 1996 totaled $830,000, $677,000, $248,000 and $240,000,
respectively.
4. MANAGEMENT FEES
During the period January 1, 1996 through February 28, 1997, the following
properties (Tower Park, 611 Cerritos and Acacia Business Center) were managed by
C.B. Commercial Group. Management fees were 2.5% of total income, as defined,
from these properties. Subsequent to February 28, 1997, these three
properties were managed by Sares-Regis Group. Management fees increased to 3% of
total income as defined, plus payroll and onsite costs. For the year ended
December 31, 1996 and the nine months ended September 30, 1997, Tower Park, 611
Cerritos and Acacia Business Center incurred $40,000 and $58,000, respectively,
in management fees.
Valley View Business Center is managed by C.B. Commercial Group. Management fees
are 2.5% of total income, as defined, through August 31, 1997 and 3% of total
income thereafter. For the year ended December 31, 1996 and the nine months
ended September 30, 1997, Valley View Business Center incurred $36,000 and
$33,000, respectively, in management fees.
Sares-Regis Group's role as the property manager of Tower Park, 611 Cerritos
and Acacia Business Center and C.B. Commercial Group's role as the property
manager of Valley View Business Center will terminate upon the Company's
acquisition of the properties.
-31-
<PAGE> 33
INDUSTRIAL PORTFOLIO ACQUISITION PROPERTIES
Notes to Combined Statement of Revenues and Certain Expenses (continued)
For the Year Ended December 31, 1996 and the
Nine Months Ended September 30, 1997 (Unaudited)
5. FUTURE MINIMUM LEASE PAYMENTS
The Industrial Portfolio Acquisition Properties are leased to tenants under
leases which expire at various dates and contain provisions for rent increases
based on cost of living indices. Certain leases also contain renewal options.
The minimum future lease payments to be received under the terms of these
operating leases for each of the next five years ending December 31, are as
follows:
<TABLE>
<S> <C>
1997 $ 3,300,000
1998 2,754,000
1999 1,980,000
2000 1,294,000
2001 653,000
2002 and thereafter 1,393,000
</TABLE>
-32-
<PAGE> 1
EXHIBIT 10.1
MASTER CONTRIBUTION AGREEMENT AMENDMENT
THIS MASTER CONTRIBUTION AGREEMENT AMENDMENT (this "Amendment")
is made and entered into as of September 15, 1997, by and between Pacific Gulf
Properties Inc., a Maryland corporation ("PGP"), and Eden Plaza Associates, LLC,
a California limited liability company ("Eden").
RECITALS
A. PGP and Eden have entered into that certain Master
Contribution Agreement (the "Agreement"). The terms used in this Amendment and
not otherwise defined shall have the meanings given thereto in the Agreement.
B. PGP and Eden desire to supplement and amend the Agreement as
hereinafter provided.
AGREEMENT
NOW, THEREFORE in consideration of the foregoing and the mutual
promises and covenants set forth herein, the parties hereto hereby agree as
follows:
1. Debt Restructure. Anything contained in the Agreement to the
contrary notwithstanding, the "Debt Restructure" (as defined in the Agreement)
may, at PGP's election which may be made in PGP's sole and absolute discretion,
consist of the following:
(a) the reduction of the Closing Cigna Debt by an amount to
be agreed upon by PGP and Cigna, not to exceed the amount set forth in Section
1.39(i) of the Agreement;
(b) the extension of the maturity date of the Cigna Debt to
a date after the Closing Date mutually agreed upon by PGP and Cigna;
(c) to the extent required by PGP, the agreement by Cigna
that all existing defaults under the Cigna Debt have been cured or waived;
(d) to the extent required by Cigna, the assumption of the
modified Cigna Debt by the Operating Partnership and, at Cigna's election,
either (i) the retention of Eden's liability for the modified Cigna Debt, or
(ii) the release of Eden's liability for the Cigna Debt combined with Eden's
guaranty of at least $12,000,000 of the modified Cigna Debt, which guaranty is
nonrecourse to the partners and members of Eden; and
<PAGE> 2
(e) such other terms and conditions as PGP may reasonably
approve.
Eden and PGP have determined that restructuring the Cigna Debt on
substantially the terms set forth above will be acceptable if PGP elects to do
so. However, nothing contained herein shall obligate PGP to cause the Cigna Debt
to be so restructured and PGP retains the right to pursue any and all other
possible Debt Restructures, subject to the other provisions of the Agreement.
Anything contained herein to the contrary notwithstanding, neither party shall
be obligated to accept the Debt Restructure outlined above if such Debt
Restructure (i) does not provide that the debt shall be secured by the
Properties; or (ii) would result in less than $12,000,000 (including any
holdback described in the Agreement) of debt encumbering the Property at the
Closing.
2. Eden Landing Certificate. Section 7.12(b) is deleted from the
Agreement.
3. Closing. PGP and Eden each agree to work diligently and in
good faith to cause the Closing to occur as soon as reasonably possible, but in
any event on or before the Outside Closing Date.
4. Closing Costs. In the event the Debt Restructure outlined in
Section 1 above is implemented at the Closing, Eden's obligations to pay the
amounts described in Sections 9.5(a)(iv)(A) and 9.5(b) of the Agreement shall
survive the Closing and, to the extent applicable, apply to the first
refinancing of the modified Cigna Debt that occurs after the Closing; provided,
however, that in no event shall Eden be required to pay any amounts described in
such Sections of the Agreement that exceed the amounts Eden would have been
required to pay pursuant to those Sections if the Debt Restructure outlined in
Section 1 above had not been implemented.
5. Exhibit B. In the event the Debt Restructure outlined in
Section 1 above is implemented at the Closing, Item 14 of Schedule B of the
Approved Title Form which is attached as Exhibit B to the Agreement shall be
deemed to refer to the recorded loan documents currently securing the Cigna
Debt, as modified.
6. Exhibit P. The following revisions are made to the form of
the OP Agreement which is attached as Exhibit P to the Agreement:
(a) The words ", as amended," are added after the words
"Master Contribution Agreement" in Section 1.42 of the OP Agreement.
(b) In Section 4.2 of the OP Agreement, the existing clause
(b) is relettered to be clause (c) and the following new clause (b) is added ";
(b) financing, refinancing
-2-
<PAGE> 3
and paying off or down Partnership debt (subject to the limitations in Section
7.2 hereof;".
7. Counterparts; Facsimile. 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.
8. Agreement. Except as expressly set forth herein, the
Agreement remains unmodified and in full force and effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be duly executed and delivered on its behalf as of the date first
above written.
"PGP"
PACIFIC GULF PROPERTIES INC., a Maryland
corporation
By: /s/ Donald G. Herrman
---------------------------------------------
Donald G. Herrman, Executive Vice
President, Chief Financial Officer
and Secretary
"EDEN"
EDEN PLAZA ASSOCIATES, LLC, a California
limited liability company
By: /s/Elbert P. Bressie
---------------------------------------------
Elbert P. Bressie, Managing
Member
-3-
<PAGE> 4
MASTER CONTRIBUTION AGREEMENT
BETWEEN
PACIFIC GULF PROPERTIES INC.
AND
EDEN PLAZA ASSOCIATES, LLC
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I DEFINITIONS.......................................................... 1
ARTICLE II CONTRIBUTIONS........................................................ 10
2.1 Eden's Contribution......................................................... 10
2.2 Consideration For Eden Contribution......................................... 10
2.3 PGP Capital Contribution.................................................... 11
2.4 Consideration for PGP Contribution.......................................... 11
2.5 Closing Time and Place...................................................... 11
2.6 Title....................................................................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PGP................................ 12
3.1 Organization, Power and Authority, and Qualifi-
cation...................................................................... 12
3.2 Authority Relative to this Agreement........................................ 12
3.3 Binding Obligation.......................................................... 12
3.4 No Violation................................................................ 12
3.5 Bankruptcy.................................................................. 12
3.6 Disclosure.................................................................. 13
3.7 Reports..................................................................... 13
3.8 Brokers..................................................................... 13
ARTICLE IV INTENTIONALLY OMITTED................................................ 13
ARTICLE V REPRESENTATIONS AND WARRANTIES OF EDEN............................... 13
5.1 Organization, Power and Authority, and Qualifi-
cation...................................................................... 13
5.2 Authority Relative to this Agreement........................................ 13
5.3 Binding Obligation.......................................................... 13
5.4 No Violation................................................................ 14
5.5 Adequate Disclosure......................................................... 14
5.6 Absence of Undisclosed Liabilities.......................................... 14
5.7 Compliance with Laws/Certificates of Substandard
Structure................................................................... 14
5.8 Environmental Matters....................................................... 15
5.9 Physical Condition.......................................................... 15
5.10 Leases...................................................................... 15
5.11 No Litigation or Adverse Events............................................. 16
5.12 Contracts and Agreements.................................................... 16
5.13 No Other Agreements......................................................... 17
5.14 Non-Foreign Person.......................................................... 17
5.15 Employees................................................................... 17
5.16 Brokers..................................................................... 17
5.17 Operating Statements........................................................ 17
5.18 Security Deposits........................................................... 18
5.19 Deposits and Reimbursements................................................. 18
5.20 Bankruptcy.................................................................. 18
5.21 Disclosure.................................................................. 18
5.22 Prospectus.................................................................. 18
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
5.23 No Public Offering.......................................................... 19
5.24 Knowledge and Experience.................................................... 19
5.25 No Distribution............................................................. 20
ARTICLE VI COVENANTS AND AGREEMENTS OF EDEN..................................... 20
6.1 Actions Affecting Properties................................................ 20
6.2 Access to Properties and Records; Contact with
Officials................................................................... 21
6.3 License and Entitlements.................................................... 21
6.4 No Extraordinary Transactions............................................... 21
6.5 Debt Restructure............................................................ 22
6.6 Insurance................................................................... 23
6.7 Taxes and Assessments....................................................... 23
6.8 Operation of Properties..................................................... 23
6.9 Compliance With Hayward Resolution.......................................... 23
6.10 Closing Information.......................................................... 24
6.11 Tax and Securities Issues................................................... 24
ARTICLE VII PGP's CONDITIONS PRECEDENT........................................... 24
7.1 Representations and Warranties.............................................. 24
7.2 No Material Adverse Change.................................................. 24
7.3 Delivery of Closing Requirements............................................ 25
7.4 No Order or Injunction...................................................... 25
7.5 Debt Restructure............................................................ 25
7.6 Maximum PGP Capital Contribution............................................ 25
7.7 Full Participation.......................................................... 25
7.8 Title Insurance............................................................. 25
7.9 Eden Compliance............................................................. 25
7.12 Certificates of Substandard Structure....................................... 26
ARTICLE VIII EDEN'S CONDITIONS PRECEDENT.......................................... 26
8.1 Representations, Warranties and Covenants................................... 26
8.2 Delivery of Closing Requirements............................................ 26
8.3 No Order or Injunction...................................................... 26
8.4 PGP Capital Contribution.................................................... 27
8.5 Debt Restructure............................................................ 27
8.6 PGP Compliance.............................................................. 27
ARTICLE IX THE CLOSING.......................................................... 27
9.1 Deliveries by Eden. ....................................................... 27
9.2 Deliveries by OP. ......................................................... 28
9.3 Closing Prorations.......................................................... 29
9.4 Deposits and Reimbursements................................................. 31
9.5 Closing Costs............................................................... 31
9.6 Eden Brokerage Commission................................................... 32
9.7 Shared Expenses............................................................. 33
9.8 Possession.................................................................. 34
9.9 Notices to Tenants.......................................................... 34
9.10 Reporting Requirements...................................................... 34
ARTICLE X INDEMNITY............................................................ 35
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE XI GENERAL PROVISIONS.................................................... 36
11.1 Survival of Representations and Warranties.................................. 36
11.2 Confidentiality............................................................. 36
11.3 Notices..................................................................... 36
11.4 Successors and Assigns...................................................... 37
11.5 Amendments.................................................................. 37
11.6 Governing Law............................................................... 37
11.7 Enforcement................................................................. 38
11.8 Time of the Essence......................................................... 38
11.9 Severability................................................................ 38
11.10 Exhibits.................................................................... 38
11.11 Further Assurances.......................................................... 38
11.12 Risk of Loss................................................................ 38
11.13 Counterparts................................................................ 39
11.14 No Waiver................................................................... 39
11.15 Legal Representation........................................................ 39
11.16 REIT........................................................................ 39
11.17 Entire Agreement............................................................ 40
</TABLE>
<PAGE> 8
MASTER CONTRIBUTION AGREEMENT
THIS MASTER CONTRIBUTION AGREEMENT (this "Agreement") is made and entered
into as of _________, 1997, by and between Pacific Gulf Properties Inc., a
Maryland corporation ("PGP"), and Eden Plaza Associates, LLC, a California
limited liability company ("Eden").
RECITALS
A. PGP and Eden desire to enter into the transactions herein described
for, among other things, the formation of the "Operating Partnership" and the
contribution to the Operating Partnership at the "Closing" of the four parcels
of land identified on Exhibit A (collectively, the "Land"). Each parcel of Land
is improved with an industrial building or buildings and related improvements.
The parcels of Land and all "Appurtenances", "Improvements", "Tangible Personal
Property" and "Intangible Personal Property" (as those terms are hereafter
defined) located thereon or associated therewith are individually referred to as
a "Property" and collectively referred to as the "Properties".
B. Pursuant hereto, the parties wish to provide for, among other
things, the contribution of cash by PGP to the Operating Partnership and the
contribution of the Properties by Eden to the Operating Partnership.
AGREEMENT
NOW, THEREFORE in consideration of the foregoing and the mutual promises
and covenants set forth herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Certain of the terms used in this Agreement that are not otherwise defined
herein shall have the meanings set forth below.
1.1 "Act" shall mean the Securities Act of 1933, as amended.
1.2 "Approved Title Form" shall mean a title insurance policy issued in
the form of, and containing only the Permitted Exceptions described on, Exhibit
B, including any handwritten notations thereon.
<PAGE> 9
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 of Eden's rights in and to streets, sidewalks, alleys, gores, strips,
driveways, parking areas and areas adjacent thereto or used in connection
therewith, and all of Eden's rights in any land lying in the bed of any existing
or proposed street adjacent to any Land.
1.4 "Assignment of Intangible Property" shall have the meaning set forth
in Section 9.1(d).
1.5 "Assignment of Leases" shall have the meaning set forth in Section
9.1(e).
1.6 "Assumed Contracts" shall mean those Contracts identified on
Schedule 1 to Exhibit C that Eden will assign to, and that the Operating
Partnership will assume, as of the Closing Date.
1.7 "Base Value" shall mean $19,000,000.
1.8 "BT Commercial" shall mean, individually and collectively, BT
Commercial Real Estate, Inc., and Martin Dalton, Steve Kapp and Mike Kamm of BT
Commercial Real Estate, Inc.
1.9 "Capital Improvements" shall mean those items of deferred
maintenance and capital improvements to the Properties described on Exhibit D.
1.10 "Certificates of Substandard Structure" shall mean, collectively,
the Certificate of Substandard Structure recorded (i) March 3, 1994 as Series
No. 94-083727 with respect to 26500 Corporate Avenue, Hayward, California (the
"Corporate Avenue Certificate"), (ii) March 3, 1994 as Series No. 94-083733 with
respect to 3541-3583 Investment Blvd., Hayward, California (the "Investment
Blvd. Certificate"), and (iii) March 3, 1994 as Series No. 94-083734 with
respect to 26102-142 Eden Landing Road, Hayward, California (the "Eden Landing
Certificate").
1.11 "Cigna Debt" shall mean the total amount of all principal, interest
and other amounts outstanding under that certain loan held by Connecticut
General Life Insurance Company ("Cigna"), as successor to Connecticut General
Life Insurance Company, a Connecticut corporation, in the original principal
amount of $16,700,000, and secured, in part, by that certain Deed
-2-
<PAGE> 10
of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated
January 16, 1990, and recorded January 17, 1990 as Series No. 90-013417 in the
Official Records of Alameda County, California.
1.12 "Cigna Restructure Proposal" shall have the meaning set forth in
Section 6.5.
1.13 "Conditions Precedent" shall mean collectively, the PGP Conditions
Precedent and Eden Conditions Precedent, each set forth in Article VII and
Article VIII, respectively, of this Agreement.
1.14 "Closing" shall mean the date and time at which title to all Real
Property has vested in the Operating Partnership, provided that all Properties
shall be conveyed to the Operating Partnership in a single Closing.
1.15 "Closing Cigna Debt" shall mean the outstanding amount of all
principal, interest and other amounts outstanding under the Cigna Debt on the
Closing Date prior to any pay down or refinancing of the Cigna Debt at the
Closing.
1.16 "Closing Date" shall mean the date on which the Closing of all
Properties occurs.
1.17 "Commissions" shall mean an amount equal to $390,000 in the
aggregate, of which (i) $195,000 shall be payable to BT Commercial, Martin
Dalton, Michael Camm and Steve Kapp (collectively), and (ii) $195,000 shall be
payable to Bressie & Co. upon Closing.
1.18 "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 Properties or any part thereof.
1.19 "Debt Restructure" shall have the meaning set forth in Section 6.5.
1.20 "Debt Restructure Documents" shall have the meaning set forth in
Section 6.5.
1.21 "Deposits and Reimbursements" shall mean the following with respect
to the Properties: (i) deposits made with or tendered to utility companies to
secure service or to permit Eden or its 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,
-3-
<PAGE> 11
(ii) deposits made by Eden or its 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 Eden or its
predecessors in interest or in connection with any development agreement,
subdivision agreement, parcel map or tract map, and (iii) any refundable fees,
payments or reimbursements which Eden or its predecessors in interest or the
then-current owner or occupant of the Properties 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 "Determination Date" shall mean July 25, 1997 provided that on or
before August 1, 1997 this Agreement has been executed and delivered by Eden.
Otherwise the "Determination Date" shall be the Closing Date.
1.23 "Earnest Money" shall mean the sum of Two Hundred Fifty Thousand
Dollars ($250,000), to be deposited with the Escrow Holder by PGP and to be
disbursed as provided in this Agreement.
1.24 "Eden Capital Contribution" shall be equal to the Base Value, less
each of the following: (i) the actual amount at Closing of all debts and
liabilities assumed by the Operating Partnership or encumbering any of the
Properties as of the Closing Date determined prior to any reduction in the
Closing Cigna Debt by refinancing or application of the portion of the PGP
Capital Contribution used to pay down the Cigna Debt, (ii) the Commissions, and
(iii) the Qualifying Eden Closing Costs.
1.25 "Eden Conditions Precedent" shall have the meaning contained in
Article VIII.
1.26 "Eden Entity" shall mean any person or entity who or which directly
or indirectly through one or more intermediate entities owns, controls or
benefits from any interest in or to Eden.
1.27 "Environmental Reports" shall mean those certain Phase I
Environmental Site Assessments dated June 6, 1997, prepared by Dames & Moore
under D&M Job No. 29146-026-128, titled 3521-3583 Investment Blvd. & 26102-26142
Eden Landing Road, 3157- 3167 Corporate Place, 3129-3146 Corporate Place and
3191 Corporate Place & 26500 Corporate Way, Hayward, California, and that
certain environmental report prepared by Hazardous Materials Mitigation
Professionals Incorporated, addressed to CLS Realty Advisors, Inc. under cover
letter dated April 9, 1987 and identified as Project No. H221-01A.
-4-
<PAGE> 12
1.28 "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 (as such term is defined below), 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.
1.29 "Escrow Holder" shall mean Chicago Title Company of Alameda County.
1.30 "Estoppel Certificates" shall mean estoppel certificates in the form
attached hereto as Exhibit Q, from all Tenants of the Improvements.
1.31 "Exchange Rights Agreement" shall mean that certain Exchange Rights
Agreement attached hereto as Exhibit E.
1.32 "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
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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.
1.33 "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 which become the property of the lessor upon
termination of a Lease.
1.34 "Intangible Personal Property" shall mean all right, title, claim,
interest and estate in, to and under any and all (i) intangible personal
property owned by Eden 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 Eden 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, 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,
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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; provided that the
Seller shall be entitled to retain insurance proceeds in an amount equal to
funds spent by Seller pre-Closing to repair or restore damage to the Property or
Improvements covered by such insurance proceeds; (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.
1.35 "Land" shall mean the parcels of real property described on Exhibit
A attached hereto.
1.36 "Law(s)" shall mean all applicable building codes, environmental,
life safety, laws, rules and regulations including without limitation, those
related to handicapped or disabled (including without limitation ADA) and land
use and zoning laws and regulations, and other applicable local, state and
federal laws and regulations.
1.37 "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 Properties, all of which are described on a Rent Roll.
1.38 "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 Properties, and all
applications, filings and submittals therefor, in each case relating to the
operation, ownership, subdivision, development, use or maintenance of the
Properties or any part thereof, including, without limitation, construction
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.
1.39 "Maximum PGP Capital Contribution" shall mean the total of (i) cash
in an amount not to exceed $4,000,000 to be applied to reduce the Closing Cigna
Debt to $12,000,000, and (ii) cash in an amount not to exceed $570,000 to be
applied to pay the Commissions and the Qualifying Eden Closing Costs.
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1.40 "OP Agreement" shall mean the Agreement of Limited Partnership of
PGP Northern Industrial, L.P., between PGP as the sole general partner and Eden
as the initial limited partner, a copy of which is attached hereto as Exhibit P.
1.41 "OP Units" shall mean limited partnership units in the Operating
Partnership.
1.42 "Opening of Escrow" shall mean the date this Agreement is fully
executed and deposited with the Escrow Holder (as evidenced by the Escrow
Holders' written confirmation thereof).
1.43 "Operating Partnership" shall mean PGP Northern Industrial, L.P., a
Delaware limited partnership.
1.44 "Outside Closing Date" shall mean the date which is ninety (90) days
after the Opening of Escrow, or such other date as is mutually agreed upon by
PGP and Eden in writing.
1.45 "Permitted Exceptions" shall mean those exceptions to title
reflected in the Approved Title Form.
1.46 "Personal Property" shall mean the Tangible Personal Property and
the Intangible Personal Property.
1.47 "PGP Capital Contribution" shall mean cash to be contributed at
Closing by PGP to the Operating Partnership in an amount of not more than the
Maximum PGP Capital Contribution. The PGP Capital Contribution is subject to
reduction in the event of reduction of the Maximum PGP Capital Contribution.
1.48 "PGP Conditions Precedent" shall mean the conditions precedent
described in Article VII.
1.49 "PGP Share Price" shall mean, with respect to the common stock of
PGP, $18.50 per share, provided that the average closing price on the New York
Stock Exchange for the five (5) consecutive trading days immediately preceding
the Determination Date is not less than $17.50 per share and not greater than
$19.50 per share. In the event the average closing price for the common stock of
PGP on the New York Stock Exchange for the five (5) consecutive trading days
immediately preceding the Determination Date is less than $17.50 per share, then
the PGP Share Price shall be calculated by (i) determining the difference
between the average closing price for the common stock of PGP on the New York
Stock Exchange for the five (5) consecutive trading days immediately preceding
the Determination Date and $17.50 per share (the "Lower Differential"), and (ii)
deducting fifty percent (50%) of the Lower Differential from $18.50 per share.
For example, if the average closing price for the common stock of PGP on the New
York Stock Exchange for the five (5) consecutive trading days immediately
preceding the Determination Date is $17.00 per share, then the Lower
Differential shall equal $17.50
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- - $17.00 = $.50, and the PGP Share Price shall equal $18.50 - $.25 = $18.25 per
share. In the event the average closing price for the common stock of PGP on the
New York Stock Exchange for the five (5) consecutive trading days immediately
preceding the Determination Date is greater than $19.50 per share, then the PGP
Share Price shall be calculated by (iii) determining the difference between the
average closing price for the common stock of PGP on the New York Stock Exchange
for the five (5) consecutive trading days immediately preceding the
Determination Date and $19.50 per share (the "Upper Differential"), and (iv)
adding fifty percent (50%) of the Upper Differential to $18.50 per share. For
example, if the average closing price for the common stock of PGP on the New
York Stock Exchange for the five (5) consecutive trading days immediately
preceding the Determination Date is $21.00, then the Upper Differential is
$21.00 - $19.50 = $1.50, and the PGP Share Price shall equal $18.50 + $.75 =
$19.25 per share.
1.50 "Property" and "Properties" shall have the meanings contained in
Recital A.
1.51 "Qualifying Eden Closing Costs" shall mean closing costs payable by
Eden pursuant to Section 9.5(a) and 9.5(b) of this Agreement and prorations
debited to Eden pursuant to Sections 9.3(c), (d) and (f) of this Agreement to
the extent that all such closing costs and proration debits do not exceed
$190,000. All other costs or expenses of Eden and proration debits to Eden shall
be paid in cash by Eden at the Closing.
1.52 "Real Property" shall mean collectively the Land, Improvements and
Appurtenances.
1.53 "Rent Roll" shall mean, for each Property, a current gross rent roll
of the Property, listing for each Tenant the name, location of leased premises,
rent, obligation for reimbursement of expenses, amount of security deposit, rent
paid more than thirty (30) days in advance, lease commencement date, lease
termination date, any free rent, or other unexpired concessions, if any, and a
description of any uncured defaults, certified by Eden as true, complete and
correct, and delivered to PGP by Eden concurrently with the execution and
delivery hereof. All references to a "Rent Roll" for a Property shall include
the update Rent Roll delivered pursuant to Section 6.10, which shall supersede
any prior Rent Roll for that Property.
1.54 "Securities Issues" shall have the meaning set forth in Section
6.11.
1.55 "Tangible Personal Property" shall mean and include any and all
tangible personal property owned by Eden 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,
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<PAGE> 17
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, including,
without limitation, plumbing equipment, HVAC, electric wiring and fixtures, gas
distribution system, and water and sewage systems, 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, including
without limitation, the Personal Property.
1.56 "Tax Issues" shall have the meaning set forth in Section 6.11.
1.57 "Tenant" shall mean each lessee or tenant occupying any portion of
the Properties.
1.58 "Title Company" shall mean Chicago Title Company of Alameda County.
1.59 "Title Policy" shall mean an ALTA Owner's Extended Coverage Policy
of Title Insurance for the Properties, in the form of the Approved Title Form,
issued to the Operating Partnership by the Title Company promptly after Closing.
1.60 "Transactions" shall mean all the transactions contemplated under
this Agreement and the other agreements referred to herein.
ARTICLE II
CONTRIBUTIONS/CLOSING
2.1 Eden's Contribution. Subject to the terms and conditions set forth
herein, Eden shall contribute to the Operating Partnership at Closing all of
Eden's right, title and interest in and to the Properties.
2.2 Consideration For Eden Contribution. In consideration of the
contribution of the Properties to the Operating Partnership, at Closing Eden
shall receive limited partner OP Units equal in number to the Eden Capital
Contribution divided by the PGP Share Price.
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2.3 PGP Capital Contribution. Subject to the terms and conditions set
forth herein, PGP shall contribute cash to the Operating Partnership at Closing
in the amount of the PGP Capital Contribution.
2.4 Consideration for PGP Contribution. In consideration of the PGP
Capital Contribution made by PGP to the Operating Partnership, at Closing PGP
shall receive its interest as General Partner in the Operating Partnership.
2.5 Closing Time and Place. The Closing shall occur on the Closing Date.
If the Closing has not occurred on or before the Outside Closing Date, then any
party to this Agreement who is not then in default or breach under any term or
provision of this Agreement, by written notice to the other party and the Escrow
Holder, may terminate this Agreement. In the event of any such termination, the
Earnest Money shall be returned to PGP.
2.6 Title. On the Closing Date, Eden will convey to the Operating
Partnership marketable, fee simple title to the Properties. Title to all
contributed Real Property will be insured by issuance at Closing by the Title
Company to the Operating Partnership of the Title Policy in the form of the
Approved Title Form.
2.7 Earnest Money. Three business days after a fully executed copy of
this Agreement has been deposited with the Escrow Holder (as evidenced by the
Escrow Holder's written confirmation thereof), PGP shall deposit the Earnest
Money into escrow with the Escrow Holder. The Earnest Money shall be held by the
Escrow Holder in an interest-bearing account, interest to remain with the
Earnest Money.
2.8 LIQUIDATED DAMAGES. IN THE EVENT THE TRANSACTIONS ARE NOT
CONSUMMATED BECAUSE OF THE FAILURE OF ANY CONDITION OR ANY OTHER REASON EXCEPT A
DEFAULT UNDER THIS AGREEMENT SOLELY ON THE PART OF PGP, THE EARNEST MONEY SHALL
IMMEDIATELY BE RETURNED TO PGP. IF THE TRANSACTIONS ARE NOT CONSUMMATED SOLELY
BECAUSE OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF PGP, THE EARNEST MONEY
SHALL BE PAID TO AND RETAINED BY EDEN AS LIQUIDATED DAMAGES. THE PARTIES HAVE
AGREED THAT EDEN'S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PGP, WOULD BE
EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR
INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED
UPON, AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF EDEN'S DAMAGES
AND AS EDEN'S SOLE AND EXCLUSIVE REMEDY AGAINST PGP, AT LAW OR IN EQUITY, IN THE
EVENT OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF PGP. EDEN HEREBY WAIVES
ANY AND ALL BENEFITS IT MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 3389.
INITIALS: EDEN [SIG] PGP [SIG]
------ ------
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PGP
PGP makes the following representations and warranties as of the date
hereof and again on the Closing Date.
3.1 Organization, Power and Authority, and Qualification. 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 own all
of its assets and to carry on its business as it is now being conducted.
3.2 Authority Relative to this Agreement. PGP has taken all actions
necessary to authorize the execution, delivery and performance of this Agreement
by PGP, and no other actions on the part of PGP are necessary in this regard,
except the approval of the Board of Directors of PGP.
3.3 Binding Obligation. 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.
3.4 No Violation. The execution and delivery of this Agreement by PGP
and the consummation of the Transactions 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 or any promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of trust, or
other agreement, instrument or arrangement to which PGP is a party; (ii) an
event that would permit any party to accelerate the maturity of any indebtedness
or other obligation of 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.
3.5 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. Without limiting the generality of the foregoing, none of the
following have been done by, against or with respect to PGP: (i) 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
of other similar law; (ii) the appointment of a trustee or receiver of any
property interest; (iii) an assignment for the benefit of creditors; (iv) an
attachment, execution or other judicial seizure of a substantial property
interest; (v) the taking of, failure to take, or submission to, any action
indicating an inability to meet its financial obligations as they accrue; or
(vi) a dissolution or liquidation.
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3.6 Disclosure. No representation or warranty of PGP in this Agreement,
or any information, statement or certificate furnished or to be furnished by or
on behalf of PGP pursuant to this Agreement or in connection with the
Transactions 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 to Eden, or made available to Eden
for review in connection with the Transactions, 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's possession or control.
3.7 Reports. PGP has filed all reports required by the Securities
Exchange Act of 1934 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 since the last of
such reports so filed.
3.8 Brokers. PGP has not employed any broker or finder, or incurred any
liability therefor, in connection with the Transactions.
ARTICLE IV
INTENTIONALLY OMITTED
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF EDEN
Eden makes the following representations and warranties as of the date
hereof and again on the Closing Date, and each is applicable to all Properties.
5.1 Organization, Power and Authority, and Qualification. Eden is a
limited liability company duly organized, validly existing, and in good standing
under the laws of the State of California, and has the requisite power and
authority to own all the Properties and all of its assets and to carry on its
business as presently conducted.
5.2 Authority Relative to this Agreement. Eden has obtained the approval
of the Transactions by all Eden Entities. Eden has taken all action necessary to
authorize the execution, delivery and performance of the Transactions and this
Agreement, and no other proceedings, consents or approvals are needed to
authorize the execution and delivery of this Agreement and the consummation by
Eden of the Transactions contemplated hereunder.
5.3 Binding Obligation. This Agreement has been duly and validly
executed and delivered by Eden and constitutes a
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<PAGE> 21
valid and binding agreement of Eden enforceable against Eden in accordance with
its terms.
5.4 No Violation. The execution and delivery of this Agreement by Eden
and the consummation of the Transactions 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
Eden's partnership agreement or any Contract or any Lease, License or
Entitlement, promissory note, conditional sales contract, commitment, indenture,
mortgage, deed of trust, or other agreement, instrument or arrangement to which
Eden is a party or by which it or the Properties are bound; (ii) an event that
would permit any party to terminate any Assumed Contract or to accelerate the
maturity of any indebtedness or other obligation of Eden; (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 Eden or the
Properties; or (iv) the creation or imposition of any lien, charge or
encumbrance on the Properties.
5.5 Adequate Disclosure. All Eden Entities have been provided with, and
have given their consents and approvals on the basis of, disclosure materials
prepared by Eden, setting forth all relevant, material facts concerning Eden and
Properties, the Operating Partnership, and the Transactions, and (excluding any
statements of material fact made in such disclosure materials in reliance on
written information provided by PGP for inclusion in such disclosure materials)
none of such disclosures misstated any material facts or omitted to state any
material facts necessary to make the statements made, in the light of the
circumstances under which they were made, not misleading.
5.6 Absence of Undisclosed Liabilities. Except for the Cigna Debt,
obligations under the Contracts and Leases, and liabilities arising in the
ordinary course, Eden 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 Properties or be binding on PGP or
the Operating Partnership or which would have an adverse effect upon PGP, the
Operating Partnership or the Properties.
5.7 Compliance with Laws/Certificates of Substandard Structure. Other
than as disclosed by the Corporate Avenue Certificate and Investment Blvd.
Certificate (i) the use and operation of the Properties now are, and at the time
of Closing will be, in compliance with all Laws which are material to the
ownership and operation of the Properties; and (ii) all Licenses and
Entitlements required in connection with the construction, use, or occupancy of
the Properties have been obtained and are in full force and effect and in good
standing. The violations
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<PAGE> 22
referred to in the Eden Landing Certificate have been fully remedied.
5.8 Environmental Matters. Except as expressly provided in the
Environmental Reports, (i) neither Eden nor, to the knowledge of Eden, any
previous owner or tenant or any other person, has engaged in or permitted any
operations or activities in any way involving the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or
disposal of any Hazardous Materials on, under, in or about the Properties, or
transported any Hazardous Materials to, from or across the Properties, except in
all cases in compliance with Environmental Requirements; and (ii) to Eden's
knowledge, no Hazardous Materials are presently constructed, deposited, stored,
or otherwise located on, under, in or about the Properties, except in all cases
in compliance with Environmental Requirements.
5.9 Physical Condition. To Eden's knowledge, other than the Capital
Improvements, and other than as disclosed by the Corporate Avenue Certificate
and the Investment Blvd. Certificate, there are no structural defects or
deficiencies in the Improvements which individually or in the aggregate on a
Property by Property basis would have a material adverse effect on Eden or on
the value of any of the Properties. To Eden's knowledge, the Improvements and
Tangible Personal Property are in good working order and condition and are
sufficient to serve the needs of such Property. To Eden's knowledge all water,
sewer, gas, electric, telephone, and drainage facilities and all other utilities
required by law or by the normal use and operation of each of the Properties,
including, without limitation, waste water treatment facilities permanently
dedicated to and reserved for the Properties, 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 each of the Properties and to
permit compliance with all Laws.
5.10 Leases. The Rent Roll for each Property is true, complete and
accurate. Except for the Leases, there are no other leases, licenses or other
agreements affecting the occupancy of any of the Properties which would become
an obligation of PGP or the Operating Partnership after the Closing. With
respect to each Lease: (i) it has been duly and validly executed and delivered
by Eden and, to Eden's knowledge, by the other parties thereto; (ii) to Eden's
knowledge, it is in full force and effect; (iii) the copy thereof delivered by
Eden to PGP is true and accurate and is unmodified; (iv) Eden is not in default
thereunder 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 Eden, (v) to
Eden's knowledge, no other party thereto is in default thereunder, nor has any
event occurred which, with the passage of time or the giving of notice or both,
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<PAGE> 23
would become a default thereunder, and (vi) each Lease may validly be assigned
to and assumed by the Operating Partnership, and any and all consents to such
assignment and assumption have been obtained by Eden.
5.11 No Litigation or Adverse Events. There are no investigations,
actions, suits, proceedings or claims pending or, to the knowledge of Eden,
threatened against or affecting Eden or any of the Properties, 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.
Other than the Certificates of Substandard Construction, Eden has not received
notice of any, and to Eden's knowledge, is 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.
5.12 Contracts and Agreements. Eden shall terminate at or prior to
Closing all Contracts (other than Leases) affecting the Properties that are not
Assumed Contracts. Eden acknowledges that the Operating Partnership and PGP are
entering into a management agreement in connection with the Property
concurrently with Closing, and that no property management agreement or
agreements existing prior to Closing shall constitute Assumed Contracts. In the
event of the Closing of the purchase of the Property, Buyer shall not retain the
existing employees and management agents of Seller for the Property, and,
accordingly, on the Closing, Seller shall (i) cause all employment and
management agreements respecting the Property to be terminated, and deliver
evidence of such termination to Buyer, and (ii) remove all employees and
management personnel from the Property. On the Closing Date, there will be no
outstanding written or oral Contracts made by Eden in connection with the
Properties which in any way binds or affects PGP, the Property or the Operating
Partnership other than the Assumed Contracts and Leases. There are no Contracts
for any improvements to any of the Properties which have not been fully paid
for, and Eden shall cause to be discharged all mechanics' and materialmen's
liens, if any, arising from any labor or materials furnished to any of the
Properties prior to the Closing Date. As of Closing, Eden will terminate any
Contract that is not designated by PGP as an Assumed Contract, and pay all
unpaid fees, costs or expenses in connection with such Contracts, including such
fees, costs or expenses resulting from such termination. Without limiting the
generality of the foregoing, Eden specifically acknowledges that Eden shall be
solely responsible for all unpaid fees, costs and expenses, and all termination
fees, costs and expenses, incurred in connection with any property management
agreement existing prior to Closing. With respect to each Assumed Contract: (i)
it has been duly and validly executed and delivered by the parties thereto; (ii)
it is in full force and effect; (iii) the copy thereof delivered by Eden to PGP
is true and accurate and is unmodified; (iv) Eden is not in default thereunder
and no event
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<PAGE> 24
exists which, with the passage of time or the giving of notice or both, would
become a default thereunder on the part of Eden, (v) to Eden's knowledge, no
other party thereto is in default thereunder, nor has any event occurred which,
with the passage of time or the giving of notice or both, would become a default
thereunder, and (vi) each Assumed Contract may validly be assigned to and
assumed by the Operating Partnership, and any and all consents to such
assignment and assumption have been obtained by Eden.
5.13 No Other Agreements. To Eden's knowledge, there are no obligations
in connection with any of the Properties which will be binding upon PGP or the
Operating Partnership or affect the Properties after Closing and there are no
assessments or bonds assessed or proposed to be assessed, against any of the
Properties, except: (i) matters which are set forth in the Approved Title Form;
(ii) Assumed Contracts; and (iii) the Leases. To Eden's knowledge there are no
existing or proposed easements, covenants, restrictions, agreements or other
documents which affect title to any of the Properties and which are not
disclosed by the Approved Title Form.
5.14 Non-Foreign Person. Eden is not a "foreign person" as such term is
defined in Section 1445(f) of the Internal Revenue Code of 1986, as amended, and
Eden is not subject to withholding under Section 26131 of the California Revenue
and Taxation Code.
5.15 Employees. No employee of Eden in connection with any of the
Properties 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 Eden's knowledge, threatened against Eden and Eden does not know
of any basis for any such trouble, dispute, grievance, controversy or strike.
5.16 Brokers. Eden has not employed any broker or finder, or incurred any
liability therefor, in connection with the Transactions other than BT Commercial
and Bressie & Co.
5.17 Operating Statements. All operating statements and other financial
statements provided by Eden to PGP fully reflect the matters stated therein,
including operation of each of the Properties for the periods covered and, in
all material respects, accurately reflect all rents and other gross receipts,
and all amounts paid by Eden for electricity, water, sewer, other utility
services, insurance, fuel, maintenance and repairs (whether capitalized or
expended), real estate taxes, payroll and payroll taxes and all other operating
and other expenses associated with the Properties. 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 Properties. The
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foregoing does not constitute a representation and warranty as to future income
or expenses of the Properties.
5.18 Security Deposits. All Tenant security deposits are reflected on the
Rent Roll. There are no other deposits held by Eden in connection with any of
the Properties.
5.19 Deposits and Reimbursements. All Deposits and Reimbursements are
reflected on Exhibit F.
5.20 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 Eden or any Eden Entity. Without limiting the generality of the
foregoing, none of the following have been done by, against or with respect to
Eden or any Eden Entity: (i) 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 of other similar law; (ii) the
appointment of a trustee or receiver of any property interest; (iii) an
assignment for the benefit of creditors; (iv) an attachment, execution or other
judicial seizure of a substantial property interest; (v) the taking of, failure
to take, or submission to, any action indicating an inability to meet its
financial obligations as they accrue; or (vi) a dissolution or liquidation.
5.21 Disclosure. No representation or warranty of Eden in this Agreement,
or any information, statement or certificate furnished or to be furnished by or
on behalf of Eden pursuant to this Agreement or in connection with the
Transactions 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 Eden to PGP or made available to PGP for
review in connection with the Transactions 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 Eden's possession or control. To Eden's knowledge, all
of Eden's files in connection with the Properties in its possession or control
were delivered to or made available to PGP for its review and there are no
documents required for a complete understanding of or which are otherwise of
significance in evaluating the Properties which are not contained in Eden's
files or which have not been delivered or made available to PGP.
5.22 Prospectus. Eden, and each Eden Entity, has received and reviewed
that certain Prospectus of PGP dated May 29, 1997, that certain Prospectus
Supplement dated June 5, 1997, and that certain Registration Statement, filed
March 19, 1997, as amended and filed April 10, 1997, of which the Prospectus and
Prospectus Supplement are a part, filed with the Securities and Exchange
Commission under the Act and has had access to such additional financial and
other information, including without limitation PGP's most current Form 10-Q and
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Form 10-K, PGP's 1996 Annual Report to Shareholders' and PGP's Notice of 1997
Annual Meeting of Shareholders and accompanying Proxy Statement, and has been
afforded the opportunity to ask questions of representatives of PGP, and to
receive answers to those questions, as they have deemed necessary in connection
with the Transactions.
5.23 No Public Offering. Eden, and each Eden Entity, acknowledges that
the OP Units being acquired pursuant hereto are being acquired in a transaction
not involving any public offering within the meaning of the Act and that the OP
Units have not been registered under the Act and agrees not to offer, sell,
transfer or otherwise dispose of the OP Units (except for such transfers as
described in Section 5.25, below) in the absence of registration under the Act
unless Eden delivers to the Operating Partnership and PGP an opinion of a lawyer
reasonably satisfactory to the Operating Partnership and PGP, in form and
substance satisfactory to the Operating Partnership and PGP, to the effect that
the proposed sale, transfer or other disposition may be effected without
registration under the Act and under applicable state securities or blue sky
laws. Eden acknowledges that the OP Units, to the extent in the form of physical
certificates, will bear a legend to the following effect:
"NEITHER THE LIMITED PARTNERSHIP UNITS IN THE PARTNERSHIP REPRESENTED BY
THIS CERTIFICATE OR INSTRUMENT NOR ANY PART THEREOF OR INTEREST THEREIN
HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (the
'ACT'), AND NEITHER MAY BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, IN WHOLE OR IN PART, UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE AGREEMENT OF LIMITED PARTNERSHIP OF
PGP NORTHERN INDUSTRIAL, L.P., AS AMENDED FROM TIME TO TIME (A COPY OF
WHICH IS ON FILE WITH THE PARTNERSHIP); AND, IN ALL EVENTS, NO TRANSFER,
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE
LIMITED PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE (OR ANY SECURITY
ISSUED ON ACCOUNT HEREOF OR WITH RESPECT HERETO) MAY BE MADE UNLESS THE
PARTNERSHIP HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL (WHICH COUNSEL
AND OPINION BOTH MUST BE ACCEPTABLE TO THE PARTNERSHIP IN ITS SOLE
DISCRETION) FOR THE HOLDER THAT, BECAUSE OF THE AVAILABILITY OF AN
EXEMPTION, NO SUCH REGISTRATION, QUALIFICATION OR OTHER COMPLIANCE IS
REQUIRED UNDER THE ACT, APPLICABLE BLUE SKY OR STATE SECURITIES LAWS, OR
OTHERWISE."
5.24 Knowledge and Experience. Eden and each Eden Entity is either (a) an
"accredited investor" within the meaning of Rule 501(a) of Regulation D
under the Act, or (b) a person who either alone or with his, her or its
purchaser representative (as defined in Rule 501(h) of Regulation D under
the Act) has such
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knowledge and experience in financial and business matters that he, she or it is
capable of evaluating the merits and risks of an investment in the OP Units or
any other security acquired hereunder. Eden and each Eden Entity has such
knowledge and experience in financial and business matters as to be capable of
evaluating alone, or together with his, her or its purchaser representative or
personal advisor the merits and risks of an investment in the OP Units or any
other security delivered hereunder and protecting his, her or its own interests
in connection with the investment and has obtained, in his, her or its judgment,
alone, or together with his, her or its purchaser representative or personal
advisor sufficient information from PGP to evaluate the merits and risks of an
investment in the OP Units or any other security delivered hereunder. Eden and
each Eden Entity acknowledges that he, she, or it has the financial ability to
bear the economic risk of his, her or its investment in the OP Units, has
adequate means for providing for his, her or its current needs and personal
contingencies and has no need for liquidity with respect to the investment in
the OP Units. If other than an individual, Eden and each Eden Entity has not
been organized solely for the purpose of acquiring the OP Units or other
security acquired under this Agreement.
5.25 No Distribution. Although Eden may elect to transfer the OP Units to
its constituent Eden Entities, and those constituent Eden Entities may, in turn,
elect to transfer the OP Units to their respective constituent Eden Entities,
they are not acquiring any OP Units with a view to the distribution of the OP
Units or any present intention of offering or selling any of the OP Units in a
transaction that would violate the Act or the securities laws of any State or
any other applicable jurisdiction.
ARTICLE VI
COVENANTS AND AGREEMENTS OF EDEN
Eden hereby covenants and agrees as follows.
6.1 Actions Affecting Properties. Eden shall not initiate or solicit any
inquiries or offers with respect to, and shall not agree to, sell, assign,
lease, pledge, transfer or encumber any of the Properties, or enter into any
other consent, commitment, understanding or other agreement, or incur any
obligation or liability (contingent or absolute) with respect to any of the
Properties, or merge or consolidate with or into any other entity or enter into
any agreements relating thereto. Eden 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 PGP, the
Operating Partnership or the Properties without PGP's prior written consent in
each case. Eden shall use diligent
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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.
6.2 Access to Properties and Records; Contact with Officials. Upon
reasonable notice and during regular business hours, Eden shall give PGP, and
authorized representatives of PGP, full access to Eden's personnel, properties,
documents, contracts, facilities, books, equipment and records and to the
Properties. In addition, Eden authorizes PGP to make all inquiries with and
applications to any third party, including any governmental authority, as PGP
deems necessary or appropriate in connection with the completion of the
Transactions and satisfaction of the PGP Conditions Precedent, including,
without limitation, the negotiation of an extension of time to comply with the
Certificates of Substandard Structure; provided, however, that PGP shall have no
power or authority to bind Eden or any of the Properties prior to the Closing
without Eden's prior written consent, which shall not be unreasonably withheld,
conditioned or delayed. Notwithstanding Eden's agreement that PGP may make such
inquiries and applications, Eden agrees to fully and promptly cooperate in such
inquiries and applications to the extent requested by PGP and to promptly
provide all information, and upon five (5) business days notice to execute and
deliver such documents, as reasonably requested by PGP.
6.3 License and Entitlements. Through the Closing, Eden 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.
6.4 No Extraordinary Transactions. Until the Closing Eden will conduct
its business in the ordinary and usual course as such business was conducted
prior to the date hereof, including, without limitation, using diligent efforts
to lease any vacant space in the Improvements to creditworthy tenants at market
rates and terms; provided, however, that Eden shall not engage in any
extraordinary transactions without PGP'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, terminating or modifying any existing contract or agreement)
unless such is cancelable by Eden (and after the Closing, by the Operating
Partnership) in their discretion on a maximum of thirty (30) days' notice.
Extraordinary transactions shall also include entering into any new lease,
occupancy agreement or other similar agreement of all or any portion of the
Properties or extending, terminating, amending or supplementing
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any existing Lease. Should Eden wish to engage in any extraordinary transaction,
Eden shall provide written notice thereof to PGP in detail sufficient to allow
PGP to evaluate the merits of the proposed transaction. PGP shall be deemed to
have approved the proposed transaction unless within ten (10) days of PGP's
receipt of such written notice PGP has provided Eden with a written response
setting forth in reasonable detail PGP's reasons for disapproving the proposed
transaction. In addition, Eden authorizes PGP to independently conduct such
discussions and negotiations with existing and prospective Tenants and others as
PGP deems necessary or appropriate to implement any extraordinary transaction;
provided, however, that PGP shall have no power or authority to bind Eden or any
of the Properties prior to the Closing without Eden's prior written consent,
which shall not be unreasonably withheld, conditioned or delayed. Any request
for consent pursuant to the preceding sentence shall be responded to by Eden in
writing within ten (10) days after Eden's receipt thereof, and any failure by
Eden to so respond shall be deemed to constitute Eden's consent to the request.
Extraordinary transactions shall not include the Debt Restructure.
6.5 Debt Restructure. PGP has received a proposal from Trowbridge,
Kieselhorst & Company, Inc. in a letter to Lonnie Nadal dated May 27, 1997
regarding restructuring the Cigna Debt, a copy of which is attached hereto as
Exhibit O (the "Cigna Restructure Proposal"). Eden and PGP have determined that
restructuring the Cigna Debt (either through modifying the terms of the existing
Cigna Debt or refinancing the existing Cigna Debt with a new loan from Cigna) on
substantially the terms reflected in the Cigna Restructure Proposal is
acceptable. However, PGP may also determine that another lending institution
other than Cigna may be willing to provide financing for the Properties (thereby
replacing the Cigna Debt with a new loan from a new lender) on terms which, in
the aggregate, are more favorable to the Operating Partnership than those
available from Cigna. Eden authorizes PGP to conduct such discussions and
negotiations with Cigna and other potential lenders as PGP deems necessary or
appropriate to finalize the Cigna Restructure Proposal or obtain such
alternative financing, and to review and negotiate loan documents prepared by
Cigna or another lender to implement the Cigna Restructure Proposal or such
other financing (collectively, the "Debt Restructure Documents"), such that the
Cigna Debt will be restructured or refinanced by either Cigna or another lender
concurrently with Closing on terms acceptable to PGP in its sole and absolute
discretion (the "Debt Restructure"); provided, however, that PGP shall have no
power or authority to bind Eden or any of the Properties prior to Closing
without Eden's prior written consent, which shall not be unreasonably withheld,
conditioned or delayed. Anything contained herein to the contrary
notwithstanding, neither party shall be obligated to accept the Debt Restructure
if the Debt Restructure (a) does not provide that the debt shall be guaranteed
in an amount equal to $12,000,000 by Eden, but without recourse to the partners
or members of Eden; (b) does not provide that the debt shall be
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secured by the Properties; or (c) would result in less than $12,000,000
(including any holdback hereinafter described) of debt encumbering the Property
at the Closing; provided, however that the Debt Restructure may result in funds
being held back by the lender to pay for capital improvements, deferred
maintenance and/or seismic retrofit or compliance as the lender may require.
Notwithstanding Eden's agreement that PGP may conduct such discussions and
negotiations to reach final agreement with Cigna or another lender regarding the
Debt Restructure, Eden agrees to fully and promptly cooperate in such
discussions and negotiations with Cigna and other potential lenders to the
extent requested by PGP and to promptly provide all information, and to execute
such Debt Restructure Documents as requested by PGP, Cigna or such other lender.
In connection with the Debt Restructure, the Operating Partnership will also
execute such documentation as is necessary to implement the Debt Restructure. In
the event notwithstanding the good faith efforts of Eden and PGP, the Debt
Restructure cannot be accomplished in accordance with the foregoing and the Debt
Restructure Documents cannot be executed, delivered and recorded, as applicable,
concurrently with the Closing, then Eden and/or PGP may, in its sole and
absolute discretion terminate this Agreement and the Transactions contemplated
hereby, without any liability or further obligation whatsoever to the other.
6.6 Insurance. Through the Closing, Eden shall maintain in full force
and effect substantially the same public liability and casualty insurance
coverage now in effect with respect to each of the Properties, at its own
expense.
6.7 Taxes and Assessments. Eden 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 Closing Date.
6.8 Operation of Properties. Eden shall continue to operate and maintain
the Properties in the ordinary course of its business, consistent with past
practice, and will maintain the Properties in substantially their present order
and condition, and deliver the Properties on the Closing in substantially the
same condition it was on the date this Agreement was executed by PGP, reasonable
wear and tear excepted. Without limiting the generality of the foregoing, no
fixtures, equipment or other Personal Property shall be removed from the
Properties unless prior to the Closing Date the same are replaced with similar
items of at least equal quality and value.
6.9 Compliance With Hayward Resolution. On or prior to Closing, Eden
shall cause the recordation of a quitclaim deed (the "Quitclaim Deed") by the
City Manager of the City of Hayward, a municipal corporation, pursuant to
Resolution No. 94-222 of the Hayward City Council, adopted October 11, 1994, a
certified copy of which was recorded December 19, 1994, as Series
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No. 94-386958 in the Official Records of Alameda County, California.
6.10 Closing Information. Five (5) business days prior to Closing, Eden
shall deliver to PGP a current Rent Roll for each Property.
6.11 Tax and Securities Issues. Eden acknowledges that: (i) all state and
federal income tax considerations, issues, analyses, and consequences relevant
to Eden and/or the Eden Entities ("Tax Issues"), and (ii) all state and federal
securities law considerations, issues, analyses, and consequences relevant to
Eden and/or the Eden Entities ("Securities Issues"), are solely the
responsibility of Eden and/or the Eden Entities. It is further acknowledged that
neither PGP nor the Operating Partnership or the agents or representatives
(including legal counsel and accountants) of PGP or the Operating Partnership
has provided advice, representations, or guidance to Eden and/or any Eden Entity
regarding the Tax Issues or the Securities Issues, and neither Eden, nor any
Eden Entity has relied or will rely on PGP or the Operating Partnership or the
agents or representatives of such parties with regard thereto, but instead will
rely on their own securities, tax, business and legal advisors therefor and with
respect thereto. Nothing contained in this Section 6.11 shall preclude reliance
by Eden or any Eden Entity on public documents, reports and registration
statements filed by PGP under the Act or the Securities Exchange Act of 1934 to
the same extent as the general public. PGP has not provided Eden, or any Eden
Entity, and neither Eden nor any Eden Entity may rely on, any non-public
information. Nothing contained in this Section 6.11 shall apply to limit the
obligations of PGP or the Operating Partnership to Eden or the Eden Entities
with respect to the operation of the Operating Partnership subsequent to the
Closing.
ARTICLE VII
PGP's CONDITIONS PRECEDENT
The obligation of PGP to consummate the Transactions shall be subject to
fulfillment (or waiver) at or prior to the Closing of the following conditions
precedent (the "PGP Conditions Precedent"):
7.1 Representations and Warranties. The representations and warranties
made in this Agreement or in any document delivered pursuant to this Agreement
by any person or entity other than PGP shall be true and correct in all material
respects when made and on and as of the Closing Date as though such
representations and warranties were made on and as of the Closing Date.
7.2 No Material Adverse Change. None of the following shall have
occurred: (i) any actual, pending, or threatened taking of any portion of any of
the Properties by condemnation or
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eminent domain; (ii) destruction of any portion of any of the Properties,
regardless of cause; (iii) the discovery of any Hazardous Materials on any of
the Properties other than as disclosed in the Environmental Reports; (iv) any
data, information, facts or material provided to or obtained by PGP regarding
Eden, any Property, or the Cigna 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; (v) significant adverse or worsening local, regional,
national or international business conditions, including without limitation
rising interest rates; or (vi) Eden fails to comply with the provisions of this
Agreement.
7.3 Delivery of Closing Requirements. Prior to or concurrently with
Closing, Eden shall have executed and delivered, or caused to be executed and
delivered, to Escrow Holder each of the documents and items identified in
Article IX, below to be executed and delivered by it.
7.4 No Order or Injunction. The consummation of the Transactions shall
not have been restrained, enjoined or prohibited by any order or injunction of
any court or governmental authority of competent jurisdiction.
7.5 Debt Restructure. The Debt Restructure shall be in a position to be
closed and the Debt Restructure Documents shall have been executed and delivered
by all parties thereto, and, where appropriate, recorded on the Closing Date.
7.6 Maximum PGP Capital Contribution. The total of all cash contributed
by PGP to the Operating Partnership shall not exceed the Maximum PGP Capital
Contribution.
7.7 Full Participation. All Properties are transferred to the Operating
Partnership at Closing.
7.8 Title Insurance. The grant deeds conveying title to the Real
Property to the Operating Partnership shall have been recorded and the Title
Company shall be irrevocably committed to issue the Title Policy.
7.9 Eden Compliance. Eden shall have fully complied with all of Eden's
duties and obligations contained in this Agreement.
7.10 Estoppel Certificates. Estoppel Certificates executed by each Tenant
of the Improvements shall have been delivered to PGP. The Estoppel Certificates
shall be dated not more that three (3) weeks prior to the Closing. The Estoppel
Certificates shall not have been materially modified from the form of Estoppel
Certificate attached hereto as Exhibit Q, and shall reflect information
acceptable to PGP.
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7.11 E&Y Audit. PGP shall have received an audit of the Property prepared
by Ernst & Young, sufficient to comply with PGP's reporting requirements to the
Securities and Exchange Commission.
7.12 Certificates of Substandard Structure.
(a) The appropriate governmental agency or agencies shall have
granted an extension of time (which extension shall be for a duration and shall
be documented in a manner reasonably acceptable to PGP) such that any currently
uncured violations noted in the Certificates of Substandard Construction may be
remedied in an orderly fashion following the Closing without any negative impact
on the Properties or their operations.
(b) On or prior to the Closing there shall have been recorded such
documents as shall be necessary to clear the Eden Landing Certificate from title
to the Properties and cause the Title Company to issue Title Policy without
exception therefor.
In the event the failure of any condition set forth on this Article VII
also constitutes a breach or default by Eden, the identification of any of the
foregoing as a condition precedent shall not limit or diminish in any way PGP's
rights or remedies on account of such breach or default.
ARTICLE VIII
EDEN'S CONDITIONS PRECEDENT
The obligation of Eden to consummate the Transactions shall be subject to
fulfillment (or waiver) at or prior to the Closing Date of the following
conditions precedent (the "Eden's Conditions Precedent"):
8.1 Representations, Warranties and Covenants. The representations and
warranties made by PGP in this Agreement or in any document delivered pursuant
to this Agreement shall be true and correct in all material respects when made
and on and as of the Closing Date as though such representations and warranties
were made on and as of the Closing Date.
8.2 Delivery of Closing Requirements. Prior to or concurrently with
Closing, PGP shall have executed and delivered, or caused to be executed and
delivered, to Escrow Holder each of the documents and items identified in
Article IX, below to be executed and delivered by it.
8.3 No Order or Injunction. The consummation of the Transactions shall
not have been restrained, enjoined or prohi-
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bited by any order or injunction of any court or governmental authority of
competent jurisdiction.
8.4 PGP Capital Contribution. Concurrently with Closing, PGP shall
contribute cash to the Operating Partnership in the amount of the PGP Capital
Contribution.
8.5 Debt Restructure. The Debt Restructure shall be in a position to be
closed and the Debt Restructure Documents shall have been executed and delivered
by all parties thereto, and, where appropriate, recorded on the Closing Date.
8.6 PGP Compliance. PGP shall have fully complied with all of PGP's
duties and obligations contained in this Agreement.
In the event the failure of any condition set forth on this Article VIII
also constitutes a breach or default by PGP, the enumeration of such as a
condition shall not diminish in any way Eden's rights or remedies on account of
such breach or default.
ARTICLE IX
THE CLOSING
9.1 Deliveries by Eden. At Closing, Eden shall deliver or cause to be
delivered to Escrow Holder (except where specified to remain at the management
office of the applicable Property) the following:
(a) The duly executed OP Agreement;
(b) A duly executed grant deed conveying to the Operating
Partnership good and marketable fee simple title to the Real Property (subject
only to Permitted Exceptions), in the form attached hereto as Exhibit G;
(c) A duly executed warranty bill of sale in the form attached
hereto as Exhibit H, conveying to the Operating Partnership title to its
Tangible Personal Property, such title to be free of any liens, encumbrances or
interests;
(d) A duly executed assignment to the Operating Partnership of the
Assumed Contracts, warranties, guaranties, permits and the Intangible Personal
Property in the form attached hereto as Exhibit C (the "Assignment of Intangible
Property");
(e) A duly executed assignment and assumption of Leases affecting
the Property to the Operating Partnership in the form of Exhibit I (the
"Assignment of Leases"), such title to be free of any liens, encumbrances or
interests;
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(f) A duly executed affidavit that Eden is not a "foreign person"
within the meaning of Section 1445(e)(3) of the Internal Revenue Code of 1986
(the "Internal Revenue Code") in the form of Exhibit J;
(g) A duly executed California Real Estate Withholding Exemption
Certificates (Form 590-RE) in the form of Exhibit K;
(h) A full release and reconveyance of all monetary encumbrances
affecting the Properties (other than the restructured Cigna Debt if the Debt
Restructure is to be accomplished by a modification of the existing Cigna loan
documents), including, without limitation, any mechanics' liens and such bond,
indemnity or other arrangements, and any other documents or agreements as shall
be necessary to cause the Title Company to insure title to the Properties as
vested in the Operating Partnership without any exception for such matters, and
in the form of the Approved Title Form;
(i) A duly executed legal opinion from counsel to Eden expressing
the opinions described in Exhibit L attached hereto;
(j) All keys to the Properties that are not in possession of
Tenants and originals of all Assumed Contracts and all Leases (each of which may
be left at the applicable Property management office);
(k) Cash in the amount of any net credits owed by Eden as a result
of the prorations described below, if any in excess of the Qualifying Eden
Closing Costs to be paid by PGP;
(l) Evidence of termination of any Contracts affecting the
Property and that are not Assumed Contracts;
(m) A duly executed Exchange Rights Agreement;
(n) Duly executed Debt Restructure Documents to the extent
execution thereof is required of Eden or any Eden Entity;
(o) Duly executed releases from BT Commercial and Bressie & Co.
acknowledging full payment of all brokerage commissions or other fees in
connection with the Property and the transactions contemplated hereby; and
(p) Such other documents and instruments as are necessary or
appropriate to consummate the Transactions in accordance with this Agreement.
9.2 Deliveries by OP. At Closing, PGP, as the newly constituted general
partner of the Operating Partnership, shall
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deliver to Escrow Holder the following on behalf of the Operating Partnership:
(a) The duly executed OP Agreement;
(b) A duly executed Assignment of Leases;
(c) A duly executed Assignment of Intangible Property;
(d) Cash in the amount of the PGP Capital Contribution and any net
amounts owed by the Operating Partnership as a result of the prorations
described below, if any, limited, however, by the Maximum PGP Capital
Contribution;
(e) A duly executed legal opinion from counsel to PGP expressing
the opinions described in Exhibit M attached hereto;
(f) A duly executed (by both the Operating Partnership and PGP)
Exchange Rights Agreement;
(g) Duly executed Debt Restructure Documents;
(h) Such other documents and instruments as are necessary or
appropriate to consummate the Transactions in accordance with this Agreement.
9.3 Closing Prorations. The items below are to be apportioned as of
12:01 AM on the Closing Date. No prorations, credits or transfer of deposits
shall be considered a capital contribution or advance by Eden or PGP to the
Operating Partnership, and the Operating Partnership shall not be obligated to
pay or reimburse Eden or PGP for such amounts; provided, however, that to the
extent PGP pays or otherwise gives Eden credit for Commissions and/or Qualifying
Eden Closing Costs, such payments or credits by PGP shall reduce the Eden
Capital Contribution and increase the PGP Capital Contribution. All prorations
shall be settled at Closing in cash, subject to subsequent adjustment as
provided in Section 9.3(j) below.
(a) Cigna Debt. Eden shall pay as of Closing all amounts under the
Cigna Debt that have accrued on or prior to the Closing Date. The Operating
Partnership shall pay all amounts under the restructured Cigna Debt or any
refinancing debt accruing after the Closing Date.
(b) Rent. Rent and all other charges payable by Tenants pursuant
to the Leases (collectively referred to herein as "rent") under the Leases
listed on the Rent Rolls shall be apportioned as of the Closing Date, regardless
of whether or not such rent has been received by Eden. Neither PGP nor the
Operating Partnership shall be obligated to take any steps to recover any rent
arrearages. Eden shall be permitted to pursue
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its remedies for collection of any rent arrearages applicable to the period
prior to the Closing Date, provided that neither PGP nor the Operating
Partnership shall incur any cost, expense or liability in connection therewith,
but Eden shall not be permitted to enforce any other legal or equitable remedies
specifically including commencing eviction procedures.
(c) Leasing Costs. Eden shall either pay as of the Closing Date or
be charged with all leasing commissions and tenant improvement costs and
allowances, if any, in connection with any Lease either executed on or before
the Opening of Escrow, or executed after the Opening of Escrow unless approved
by PGP pursuant to Section 6.4, whether due or to become due before or after the
Closing Date. With respect to any such commission, cost or allowance due in
connection with a Lease entered into after the Opening of Escrow but prior to
Closing and which has been approved by PGP pursuant to Section 6.4, such
commission, cost or allowance shall be prorated between Eden and the Operating
Partnership based on the number of months of the lease term prior to the Closing
Date and number of months of the lease term after the Closing Date and prior to
the end of the "No Sale Period" (as defined in the OP Agreement), exclusive of
any un-exercised options to renew or extend the term.
(d) Security Deposits. Eden shall deliver to the Operating
Partnership in cash at Closing the sum of all security deposits or other
deposits paid by Tenants under any Leases, and any interest earned thereon which
by law or the terms of such Leases are or could become refundable to tenants
(collectively, "Security Deposits").
(e) Utility Charges. Eden shall cause all the utility meters at
each of the Properties to be read on the Closing Date, and will be responsible
for the cost of all utilities used prior to the Closing Date not specifically
payable by tenants.
(f) Real Estate Taxes and Special Assessments. All unpaid real
estate taxes, special assessments, bonds and personal property taxes payable for
all calendar years prior to the year in which Closing occurs (together with
interest thereon) shall be paid by Eden at or prior to the Closing. Unpaid
general real estate taxes, special assessments, bonds and personal property
taxes payable on account of the calendar year in which Closing occurs (but no
prior calendar year) shall be prorated between Eden and the Operating
Partnership as of the Closing Date.
(g) Shared Expenses. Eden shall pay to PGP through escrow at the
Closing the net amount due from Eden to PGP on account of the Shared Expenses
pursuant to Section 9.7 below.
(h) Other Apportionments. Amounts payable under the Assumed
Contracts, annual or periodic permit and/or
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inspection fees (calculated on the basis of the period covered), and liability
for other Property operation and maintenance expenses and other recurring costs
shall be apportioned as of the day following the Closing Date. Effective upon
the Closing, Eden shall cancel all insurance it maintains on the Properties, and
premiums on any policy of insurance maintained by Eden in connection with the
Properties shall not be prorated.
(i) Preliminary Closing Adjustment. Eden and PGP shall jointly
prepare and approve a preliminary Closing adjustment on the basis of the Leases,
Assumed Contracts and other sources of income and expenses, and shall deliver
such computation to Escrow Holder prior to Closing.
(j) Post-Closing Reconciliation. If any of the aforesaid
prorations cannot be definitely calculated on the Closing Date, then they shall
be estimated at the Closing and definitely calculated as soon after the Closing
Date as feasible, but in any event within forty five (45) days after the Closing
Date. As soon as the necessary information is available, the Operating
Partnership and Eden shall conduct a post-Closing review to determine the
accuracy of all prorations made pursuant to this Agreement (the "Post-Closing
Review"). Either party owing the other party a sum of money based on such
subsequent proration(s) or the Post-Closing Review shall promptly pay said sum
to the other party, together with interest thereon at the rate of two percent
(2%) over the "prime rate" (as announced from time to time in the Wall Street
Journal) per annum from the Closing Date to the date of payment if payment is
not made within ten (10) days after delivery of a bill therefor.
(k) Payment of Qualifying Eden Closing Costs. The foregoing to the
contrary notwithstanding, PGP agrees to pay or give Eden credit for Qualifying
Eden Closing Costs which would otherwise be payable by or charged to Eden, and
the Eden Capital Contribution shall be reduced, and the PGP Capital Contribution
shall be increased, on account thereof.
9.4 Deposits and Reimbursements. Eden shall receive credit for, but
shall not be entitled to the return of, any Deposits and Reimbursements, all of
which shall remain in place for the benefit of the Operating Partnership with
such utility companies, bonding or surety companies or other governmental or
private body.
9.5 Closing Costs.
(a) Eden shall pay for (i) an as-built survey of each Property in
a form sufficient to enable the Title Company to issue an ALTA Owner's Policy of
Title Insurance in accordance with the Approved Title Form, provided, however,
the maximum amount Eden shall pay, in the aggregate, for such surveys shall be
Seven Thousand Five Hundred Dollars ($7,500), (ii) the premium for the Title
Policy (but only to the extent of the cost of a
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standard California Land Title Association Owner's Policy of Title Insurance)
and the cost of such CLTA endorsements as may be reasonably requested by PGP,
(iii) any county documentary transfer taxes applicable to the contribution of
the Properties, and (iv) recording fees in connection with the release of (A)
any monetary encumbrance affecting the Properties, (B) any Certificate of
Substandard Structure, and (C) the Quitclaim Deed in connection with Resolution
No. 94-222 of the Hayward City Council. PGP shall pay any additional costs to
obtain the Title Policy in ALTA extended coverage form, any costs of the surveys
in excess of Seven Thousand Five Hundred Dollars ($7,500), and any escrow fees
and costs and recording fees (other than recording fees in connection with the
release of any monetary encumbrance affecting the Properties, which shall be
paid by Eden). Sales tax (if any), and any city or state documentary transfer
taxes applicable to the contribution of the Properties, shall be paid fifty
percent (50%) by PGP and fifty percent (50%) by Eden. 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 Alameda County. The
foregoing to the contrary notwithstanding, in the event Closing occurs, PGP
agrees, to the extent requested by Eden, to pay or give Eden credit for any of
the foregoing costs or expenses which are Qualifying Eden Closing Costs which
would otherwise be payable by or charged to Eden. The Eden Capital Contribution
shall be reduced, and the PGP Capital Contribution shall be increased, to the
extent of any such payment by PGP and/or credit given to Eden.
(b) Except as provided in section 9.5(c), below, Eden shall be
responsible for all costs incurred in connection with the prepayment or
satisfaction of any loan or bond secured by any of the Properties, provided that
any such cost is commercially reasonable and normally incurred in the prepayment
or satisfaction of similar loans or bonds, or otherwise provided in the
applicable loan or bond documents.
(c) The Operating Partnership shall be responsible for all costs
incurred in connection with the Debt Restructure, including, without limitation,
any title insurance costs, legal fees of Cigna's or other lender's counsel and
other fees, costs or expenses in connection with the Debt Restructure.
9.6 Eden Brokerage Commission. If, and only if, Closing occurs, PGP will
pay through escrow the Commissions otherwise payable by Eden in connection with
the Transactions in the amount of $195,000 payable to BT Commercial and $195,000
payable to Bressie & Co and the Eden Capital Contribution shall be reduced, and
the PGP Capital Contribution shall be increased, on account thereof. In the
event the commission or fees payable to BT Commercial or Bressie & Co. in
connection with the Transactions exceed such amounts, then Eden shall pay such
excess. Eden shall not be credited with a capital contribution or other advance
to the Operating Partnership in connection with
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payment of such excess, and neither PGP nor the Operating Partnership will be
obligated to pay or reimburse Eden for the amount of such excess. In the event
that any broker or finder other than BT Commercial or Bressie & Co. claims a
commission or finder's fee based upon any contact, dealings or communication,
the party through whom the broker or finder makes its claim shall be responsible
for said commission or fee and all costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred by the other party in defending
against the same. The party through whom any other broker or finder makes a
claim shall hold harmless, indemnify and defend the other party hereto, its
successors and assigns, agents, employees, officers and directors, and the
Property from and against any and all obligations, liabilities, claims, demands,
liens, encumbrances and losses (including, without limitation, attorneys' fees),
whether direct, contingent or consequential, arising out of, based on, or
incurred as a result of such claim. The provisions of this Section shall survive
the Closing or termination of this Agreement.
9.7 Shared Expenses.
(a) PGP, on the one hand, and Eden, on the other hand, agree to
share equally all fees, costs and expenses (including legal and accounting)
incurred in connection with the negotiation, drafting and completion of the Term
Sheet dated November 13, 1996 in connection with the Transactions. The foregoing
fees, costs and expenses are referred to collectively as the "Shared Expenses".
Shared Expenses does not include (and such excluded expenses shall be the
separate liability and obligation of the respective incurring parties), among
other things, the following: (i) PGP's and/or Eden's costs, fees, and expenses
associated with its due diligence review of the Properties, (ii) PGP's and/or
Eden's costs, fees, and expenses associated with the analysis of the tax,
economic, securities law compliance or other impact of the Transactions upon any
of the Eden Entities, and (iii) PGP's and/or Eden's costs, fees, and expenses
associated with soliciting and obtaining any consents or approvals for the
Transactions, including the costs, fees, and expenses associated with the
preparation and dissemination of any disclosure documents or materials to any of
the Eden Entities, each of which shall be paid by the party incurring the same.
Shared Expenses also does not include the cost of the audit of the financial and
operating statements for the Properties referred to in Section 7.11 above, the
cost of which shall be paid by PGP through a capital contribution to the
Operating Partnership.
(b) Eden and PGP have agreed that all fees, costs and expenses
(including both Eden's and PGP's legal and accounting) incurred in connection
with the negotiation, drafting and completion of the OP Agreement, this Master
Contribution Agreement and the conveyancing documents prepared in connection
therewith, and the Exchange Rights Agreement shall be expenses of
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the Operating Partnership. Any expense that is excluded from the definition of
Shared Expenses in Section (a), above, shall not be an expense of the Operating
Partnership.
(c) In the event the Closing does not occur due to the breach or
default by Eden, or any act or omission within the control of Eden, then
notwithstanding the provisions of Sections (a) and (b), above, Eden agrees to
pay all costs and expenses incurred by PGP (including legal and accounting) in
connection with the negotiation, due diligence, documentation and the like
relating to the Transactions. In the event the Closing does not occur due to the
breach or default of PGP, or any act or omission within the control of PGP,
then, notwithstanding the provisions of Sections (a) and (b), above, PGP agrees
to pay all costs and expenses incurred by Eden in connection with the
Transactions. In the event this Agreement is terminated due to the failure of a
Condition Precedent which does not result from an act or omission within the
control of any party hereto, and absent any breach or default by any of the
parties hereto, then the provisions of (a) above shall apply, and the fees,
costs and expenses described in Section (b), above, shall be deemed to be Shared
Expenses and shall be shared equally by PGP and Eden in accordance with Section
(a) above as though fully set forth therein.
9.8 Possession. At Closing, Eden shall deliver possession of the
Properties to the Operating Partnership (subject to the rights of Tenants under
the Leases), which Properties shall be in the same condition as of the date of
execution of this Agreement, reasonable wear and tear excepted.
9.9 Notices to Tenants. Eden shall mail (or cause to be mailed) via
first-class mail (postage prepaid) or personally deliver to each Tenant, within
20 days after the Closing, a letter in substantially the form attached hereto as
Exhibit N advising each Tenant of the applicable change of ownership and the
holding of security deposits, all in conformity with the requirements of
California Civil Code Section 1950.5(g)(1). If the notice to the Tenant is made
by personal delivery, the Tenant shall acknowledge receipt of the notice and
sign his or her name on Eden's copy of the notice.
9.10 Reporting Requirements. The Escrow Holder shall comply with all
applicable federal, state and local reporting and withholding requirements
relating to the close of the transactions contemplated herein. Without limiting
the generality of the foregoing, to the extent the transactions contemplated by
this Agreement involve a real estate transaction within the purview of Section
6045 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code"), Escrow Holder shall have sole responsibility to comply with the
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 33-0404407. Escrow
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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.
ARTICLE X
INDEMNITY
10.1 Eden shall save, hold harmless, indemnify and defend PGP and the
Operating Partnership, their respective successors and assigns and their
respective officers, directors, employees, partners, agents and representatives,
from and against 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 of them
("Losses and Liabilities"): (i) resulting from the ownership or operation of the
Properties or the business affairs and transactions of Eden prior to the
Closing, excluding, however, any act or omission by Eden with respect to any new
or existing lease but only to the extent such act or omission was specifically
approved by PGP pursuant to Section 6.4; (ii) resulting from any
misrepresentation or inaccuracy in or breach of any representation, warranty or
covenant by Eden in this Agreement; (iii) resulting from any claim, cause of
action, or the like, by Eden or by any Eden Entity or by any representative,
successor or assign of Eden or any Eden Entity (whether made individually, as a
class, or derivatively, or any other way) as a result of this Agreement or the
Transactions, other than a claim for breach of a representation, warranty or
covenant by PGP or the Operating Partnership in this Agreement, (iv) resulting
from any Tax Issues or Securities Issues and including without limitation, (a)
the issuance of the OP Units to Eden, (b) the dissolution of Eden and/or any
Eden Entity, (c) the distribution or issuance of OP Units to any Eden Entity,
(d) the conversion of OP Units to REIT shares or the redemption of OP Units for
cash, but excluding violations of securities laws arising solely from the
initial formation of the Operating Partnership and the initial issuance of OP
Units to Eden to the extent, and only to the extent, of that initial transaction
as if that initial transaction were the only transaction taking place pursuant
hereto with no other Eden Entity ever receiving OP Units, (v) resulting from or
arising out of any Contract that is not an Assumed Contract, including, without
limitation, any claim of unpaid fees or costs, including, without limitation,
termination fees and costs, (vi) resulting from or arising out of any dispute
regarding the amount of the Commission payable to BT Commercial or Bressie & Co.
10.2 Except for Losses and Liabilities covered by Section 10.1, PGP shall
cause the Operating Partnership to save, hold harmless, indemnify and defend
Eden, its successors and
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assigns and its officers, directors, employees, partners, agents and
representatives from and against any and all Losses and Liabilities in any way:
(i) resulting from the ownership or operation of the Properties or the business
affairs and transactions of the Operating Partnership after the Closing; or (ii)
resulting from any misrepresentation or inaccuracy in or breach of any
representation, warranty or covenant of the Operating Partnership in this
Agreement. Additionally, PGP shall indemnify and defend Eden, its respective
successors and assigns and its respective officers, directors, employees,
partners, agents and representatives from and against any and all Losses and
Liabilities in any way resulting from any misrepresentation or inaccuracy in or
breach of any representation, warranty or covenant of PGP in this Agreement.
10.3 No payments made pursuant to any of the provisions of Article X
shall entitle the paying parties to any repayment or reimbursement from, or any
capital account credit in, the Operating Partnership. The provisions of this
Article X shall survive the Closing.
ARTICLE XI
GENERAL PROVISIONS
11.1 Survival of Representations and Warranties. All representations and
warranties in this Agreement shall survive the Closing.
11.2 Confidentiality. Eden agrees to maintain as confidential and, except
as required by law, to not disclose to any third parties, other than Eden
Entities, attorneys, and accounting and business advisors, all information in
their possession concerning the Transactions. Eden shall not make any public
announcement by way of press release or otherwise of the Transactions, but they
shall be entitled to describe the Transactions contemplated hereunder to the
Eden Entities. PGP and the Operating Partnership shall have the right to
disclose any and all information in its possession (confidential or otherwise)
concerning Eden and/or the Transactions for purposes of making any press release
concerning the Transactions as PGP or the Operating Partnership deems necessary
or appropriate in its sole and absolute discretion.
11.3 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:
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If to Eden: Eden Plaza Associates
520 Third Street, Suite 555
San Francisco, California 94107
Attn: Mr. Elbert P. Bressie
Fax No.: (415) 778-3909
Telephone No.: (415) 778-3900
With a copy to: Leland, Parachini, Steinberg,
Flinn, Matzger & Melnick, LLP
333 Market Street, 27th Floor
San Francisco, California 94105
Attn: Craig Kepler, Esq.
Fax No.: (415) 974-1520
Telephone No.: (415) 957-1800
If to the Operating
Partnership : Pacific Gulf Properties Inc.
4220 Von Karman, Second Floor
Newport Beach, California 92660
Attn: Mr. Lonnie P. Nadal
Fax No.: (714) 223-5032
Telephone No.: (714) 223-5000
With a copy to: Cox, Castle & Nicholson, LLP
2049 Century Park East, Suite 2800
Los Angeles, California 90067
Attn: Amy H. Wells, Esq.
Fax No.: (310) 277-7889
Telephone No.: (310) 284-2233
or such other address as either party may from time to time specify in writing
to the other.
11.4 Successors and Assigns. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors,
heirs, administrators and permitted assigns. Any assignee of OP Units shall also
be an assignee hereunder and shall have the benefits of and be bound by the
terms and provisions of this Agreement (including those relating to indemnities
as hereinabove provided). Neither Eden nor PGP shall assign its right, title or
interest in or to this Agreement.
11.5 Amendments. Except as otherwise provided herein, this Agreement may
be amended or modified only by a written instrument executed by Eden and PGP.
11.6 Governing Law. This Agreement, and all documents and instruments
executed and delivered in connection herewith (except the OP Agreement, which
shall be governed by Delaware law), shall be governed by and construed in
accordance with the laws of the State of California.
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11.7 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 attor- neys' 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.
11.8 Time of the Essence. Time is of the essence of this Agreement.
11.9 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.
11.10 Exhibits. All exhibits attached hereto are incorporated herein as
though fully set forth herein.
11.11 Further Assurances. Each party agrees to cooperate fully with the
other parties and to prepare, execute, and deliver such further instruments of
conveyance, contribution, assignment, or transfer 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.
11.12 Risk of Loss. In the event of any of loss or damage to all or any
part of any individual Property by fire or other casualty prior to the Closing
that PGP reasonably believes could be in excess of $50,000 on that Property, or
which materially impedes access to such Property, then notwithstanding the
existence of any casualty insurance, PGP shall have the option in its sole
discretion to: (i) terminate this Agreement in its entirety; or (ii) continue
this Agreement, whereupon Eden shall assign to the Operating Partnership all
available insurance and will pay to the Operating Partnership any deductible
amount thereunder (or such deductible amount shall reduce the Base Value of the
Properties in determining the Eden Capital Contribution and any cost thereof
paid by PGP shall increase the PGP Capital Contribution). The provisions of
subsection (ii), above, shall
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apply (and survive Closing) in the event of any loss or damage in an amount less
than $50,000.
11.13 Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required. It shall not be necessary
that the signatures of, or on behalf of, each party, or that the signatures of
all persons required to bind any party, appear on each counterpart, but it shall
be sufficient that the signature of, or on behalf of, each party, appear on one
or more of the counterparts. All counterparts shall collectively constitute a
single agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereof.
11.14 No Waiver. No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
instrument or document given in connection with or pursuant to this Agreement
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of such
right, power or privilege. No waiver shall be valid against any party hereto
unless made in writing and signed by the party against whom enforcement of such
waiver is sought and then only to the extent expressly specified herein.
11.15 Legal Representation. Each party has been represented by legal
counsel in connection with the negotiation of the Transactions and the drafting
and negotiation of this Agreement and the other agreements referred to herein.
Cox, Castle & Nicholson, LLP ("CCN") has represented solely PGP, and Leland,
Parachini, Steinberg, Matzger & Melnick, LLP has represented solely Eden, in
connection with the Transactions, any other agreements previously existing among
the parties relating to the Transactions, this Agreement, all exhibits hereto
and all agreements referred to herein. CCN has not provided legal services to or
been legal counsel for the Operating Partnership, Eden, any Eden Entity and none
of the foregoing has relied on CCN 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.
11.16 REIT. PGP is qualified as a real estate investment trust under the
provisions of the Internal Revenue Code of 1986, as amended, and, 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 PGP. Eden also
acknowledges that PGP's status as a real estate investment trust also inures to
the benefit of Eden, and not just PGP. Accordingly, Eden agrees to make any
modifications or amendments to this Agreement requested by PGP prior to Closing
that may be
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necessary for PGP to maintain its status as a real estate investment trust or in
order for it to avoid a penalty tax; provided, however, that Eden shall have no
obligation to enter into any such modification or amendment that would
materially alter or affect, in Eden's sole judgment, Eden's rights, duties, or
obligations under this Agreement. If Eden declines to modify or amend this
Agreement for any reason in a manner which PGP determines, in the good faith
exercise of its reasonable business judgment, is necessary to maintain its
status as a real estate investment trust or avoid a penalty tax, PGP shall have
the right to terminate this Agreement by written notice delivered to Eden prior
to Closing and thereafter shall have no liability or further obligation
whatsoever to Eden.
11.17 Entire Agreement. This Agreement, including its exhibits and the
other documents and agreements referred to herein, are intended by the parties
as a final expression of their agreement and intended to be the complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
covenants, agreements, promises, warranties or understandings other than those
set forth or referred to herein, with respect to such subject matter. This
Agreement, together with its exhibits and the other documents and agreements
referred to herein, supersede all prior agreements and
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understandings between the parties with respect to the subject matter hereof and
thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be duly executed and delivered on its behalf as of the date first above
written.
"PGP"
PACIFIC GULF PROPERTIES INC., a Maryland
corporation
By: /s/ GLENN L. CARPENTER
----------------------------------------
Glenn L. Carpenter, President and
Chief Executive Officer
By: /s/ ROBERT A. DEWEY
----------------------------------------
Robert A. Dewey, Vice President
"EDEN"
EDEN PLAZA ASSOCIATES, LLC, a California
limited liability company
By: /s/ ELBERT P. BRESSIE
----------------------------------------
Elbert P. Bressie, Managing
Member
Chicago Title Company of Alameda County agrees to act as Escrow Holder in
accordance with the terms of this Agreement. Escrow Holder shall provide written
notice to PGP and Eden of the date on which this Agreement is fully executed and
deposited with Escrow Holder.
CHICAGO TITLE COMPANY OF ALAMEDA COUNTY
By: /s/ LAURIE BALDING 8-11-97
----------------------------------------
LAURIE BALDING, VICE PRESIDENT
----------------------------------------
(Print Name and Title)
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<PAGE> 49
EXHIBIT LIST
<TABLE>
<CAPTION>
Section(s)
----------
<S> <C> <C> <C>
Exhibit A - Legal Descriptions Recital A
Exhibit B - Approved Title Form 1.2
Exhibit C - Assignment of Intangible Property 1.6, 9.1(d)
Exhibit D - Capital Improvements 1.9
Exhibit E - Exchange Rights Agreement 1.31
Exhibit F - Deposits and Reimbursements 5.19
Exhibit G - Grant Deed 9.1(b)
Exhibit H - Bill of Sale 9.1(c)
Exhibit I - Assignment of Leases 9.1(e)
Exhibit J - Nonforeign Status Certificate 9.1(f)
Exhibit K - Form 590 9.1(g)
Exhibit L - Eden's Legal Opinion 9.1(i)
Exhibit M - PGP Legal Opinion 9.2(e)
Exhibit N - Notice of Lease Assignment 9.9
Exhibit O - Cigna Restructure Proposal 6.5
Exhibit P - OP Agreement 1.40
Exhibit Q - Form Estoppel Certificate 1.30, 7.10
</TABLE>
<PAGE> 50
EXHIBIT A
LEGAL DESCRIPTIONS OF ALL PROPERTY
THE LAND REFERRED TO IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ALAMEDA,
CITY OF HAYWARD, DESCRIBED AS FOLLOWS:
PARCEL 1:
PARCEL 1, PARCEL MAP 1288, FILED SEPTEMBER 25, 1973, BOOK 80 OF PARCEL MAPS,
PAGE 27, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 461-0015-028
PARCEL 2:
PARCEL 1, PARCEL MAP 939, FILED JULY 13, 1972, BOOK 76 OF PARCEL MAPS, PAGE 10,
ALAMEDA COUNTY RECORDS.
EXCEPTING THEREFROM THAT PORTION DESCRIBED IN THE DEED TO EDEN ROCK CO. NO. 3, A
JOINT VENTURE, RECORDED JULY 31, 1978, REEL 5508, IMAGE 378, SERIES NO.
78-145175, OFFICIAL RECORDS.
ASSESSOR'S PARCEL NO. 461-0015-020-2
PARCEL 3:
PARCEL 2, PARCEL MAP NO. 939, FILED JULY 13, 1972, IN BOOK 76 OF PARCEL MAPS,
PAGE 10, ALAMEDA COUNTY RECORDS.
TOGETHER WITH:
ALL THAT CERTAIN REAL PROPERTY BEING A PORTION OF PARCEL 1 AS SHOWN ON "PARCEL
MAP NO. 939" WHICH MAP IS FILED IN BOOK 76 OF PARCEL MAPS AT PAGE 10, ALAMEDA
COUNTY RECORDS, SAID REAL PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE CORNER COMMON TO PARCELS 1 AND 2 ON THE NORTHWESTERLY LINE OF
CORPORATE PLACE, AS SHOWN ON THE ABOVE MENTIONED PARCEL MAP, THENCE FROM SAID
POINT OF BEGINNING ALONG SAID NORTHERLY LINE SOUTH 76 DEGREES 38'05" WEST 8.22
FEET; THENCE LEAVING THE LAST SAID LINE AND RUNNING ALONG A LINE PARALLEL TO AND
7.806 FEET SOUTHWESTERLY AT RIGHT ANGLES, FROM THE DIVIDING LINE BETWEEN SAID
PARCELS 1 AND 2 NORTH 31 DEGREES 37'51" WEST 205.78 FEET; THENCE LEAVING SAID
PARALLEL LINE NORTH 58 DEGREES 22'09" EAST 7.806 FEET TO SAID DIVIDING LINE;
THENCE ALONG THE LAST SAID LINE SOUTH 31 DEGREES 37'51" EAST 208.356 FEET TO THE
POINT OF BEGINNING.
SAID REAL PROPERTY IS THE SAME AS "LOT LINE ADJUSTMENT NO. 77-4" APPROVED BY THE
CITY OF HAYWARD PLANNING COMMISSION ON SEPTEMBER 22, 1977.
ASSESSOR'S PARCEL NO. 461-0015-021-01
1
<PAGE> 51
PARCEL 4:
PARCEL ONE OF AMENDED PARCEL MAP 1035 FILED SEPTEMBER 5, 1975 IN BOOK 80 OF
PARCEL MAPS ON PAGE 15, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 461-0085-018-03 (PORTION).
PARCEL 5:
PORTION OF INVESTMENT BOULEVARD, AS SAID BOULEVARD WAS ESTABLISHED BY THE GRANT
OF EASEMENT FROM EDEN LANDING CORPORATION, A CALIFORNIA CORPORATION, TO THE CITY
OF HAYWARD, A MUNICIPAL CORPORATION, DATED JUNE 20, 1967, AND RECORDED JULY 24,
1967 IN REEL 2005 OF OFFICIAL RECORDS OF ALAMEDA COUNTY AT IMAGE 500 (AZ-71982),
DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHERLY RIGHT OF WAY LINE OF INVESTMENT
BOULEVARD WITH THE EASTERLY RIGHT OF WAY LINE OF EDEN LANDING ROAD AS SHOWN ON
PARCEL MAP NO. 1035 FILED IN BOOK 79 OF PARCEL MAPS, PAGE 28, IN THE OFFICE OF
THE ALAMEDA COUNTY RECORDER; THENCE ALONG SAID NORTHERLY RIGHT OF WAY LINE OF
INVESTMENT BOULEVARD THE FOLLOWING THREE COURSES: 1) SOUTH 81 DEGREES 53'26"
EAST 40.130 FEET; 2) SOUTH 48 DEGREES 12'02" EAST 61.294 FEET; 3) SOUTH 08
DEGREES 06'34" WEST 40.000 FEET; THENCE LEAVING SAID NORTHERLY RIGHT OF WAY LINE
NORTH 81 DEGREES 53'26" WEST 67.124 FEET TO A TANGENT CURVE TO THE RIGHT; THENCE
ALONG SAID TANGENT CURVE TO THE RIGHT HAVING A RADIUS OF 24.000 FEET THROUGH A
CENTRAL ANGLE OF 89 DEGREES 59'35" AN ARC DISTANCE OF 37.696 FEET; THENCE NORTH
08 DEGREES 06'09" EAST 50.003 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 416-0085-018-03
2
<PAGE> 52
EXHIBIT B
APPROVED TITLE FORM
1
<PAGE> 53
AMERICAN LAND TITLE ASSOCIATION
OWNER'S POLICY FORM B-1970
(Amended 10-17-70)
CHICAGO TITLE INSURANCE COMPANY
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS CONTAINED IN SCHEDULE B
AND THE PROVISIONS OF THE CONDITIONS AND STIPULATIONS HEREOF, CHICAGO TITLE
INSURANCE COMPANY, a Missouri corporation, herein called the Company, insures,
as of Date of Policy shown in Schedule A, against loss or damage, not exceeding
the amount of insurance stated in Schedule A, and costs, attorneys' fees and
expenses which the Company may become obligated to pay hereunder, sustained or
incurred by the insured by reason of:
1. Title to the estate or interest described in Schedule A being
vested otherwise than as stated therein;
2. Any defect in or lien or encumbrance on such title;
3. Lack of a right of access to and from the land; or
4. Unmarketability of such title.
In Witness Whereof, CHICAGO TITLE INSURANCE COMPANY has caused this policy to be
signed and sealed as of the date of policy shown in Schedule A, the policy to
become valid when countersigned by an authorized signatory.
Issued by: CHICAGO TITLE INSURANCE COMPANY
CHICAGO TITLE COMPANY By: [SIG}
590 YGNACIO VALLEY ROAD, SUITE 300 President
WALNUT CREEK, CALIFORNIA 94596
(510) 938-7100
[SEAL]
By: [SIG]
President
IMPORTANT
This policy necessarily relates solely to the title as of the date of the
policy. In order that a purchaser of the real estate described herein may be
insured against defects, liens or encumbrances, this policy should be reissued
in the name of such purchaser.
<PAGE> 54
CONDITIONS AND STIPULATIONS
1. DEFINITION OF TERMS
The following terms when used in this policy mean:
(a) "insured": the insured named in Schedule A, and, subject to any
rights or defenses the Company may have had against the named insured, those who
succeed to the interest of such insured by operation of law as distinguished
from purchase including, but not limited to, heirs, distributees, devisees,
survivors, personal representatives, next of kin, or corporate or fiduciary
successors.
(b) "insured claimant": an insured claiming loss or damage hereunder.
(c) "knowledge": actual knowledge, not constructive knowledge or notice
which may be imputed to an insured by reason of any public records.
(d) "land": the land described, specifically or by reference in
Schedule A, and improvements affixed thereto which by law constitute real
property; provided, however, the term "land" does not include any property
beyond the lines of the area specifically described or referred to in Schedule
A, nor any right, title, interest, estate or easement in abutting streets,
roads, avenues, alleys, lanes, ways or waterways, but nothing herein shall
modify or limit the extent to which a right of access to and from the land is
insured by this policy.
(e) "mortgage": mortgage, deed of trust, trust deed, or other security
instrument.
(f) "public records": those records which by law impart constructive
notice of matters relating to said land.
2. CONTINUATION OF INSURANCE AFTER CONVEYANCE OF TITLE
The coverage of this policy shall continue in force as of Date of
Policy in favor of an insured so long as such insured retains an estate or
interest in the land, or holds an indebtedness secured by a purchase money
mortgage given by a purchaser from such insured, or so long as such insured
shall have liability by reason of covenants of warranty made by such insured in
any transfer or conveyance of such estate or interest; provided, however, this
policy shall not continue in force in favor of any purchaser from such insured
of either said estate or interest or the indebtedness secured by a purchase
money mortgage given to such insured.
3. DEFENSE AND PROSECUTION OF ACTIONS---NOTICE OF CLAIM TO BE GIVEN BY AN
INSURED CLAIMANT
(a) The Company, at its own cost and without undue delay, shall provide
for the defense of an insured in all litigation consisting of actions or
proceedings commenced against such insured, or a defense interposed against an
insured in an action to enforce a contract for a sale of the estate or interest
in said land, to the extent that such litigation is founded upon an alleged
defect, lien, encumbrance, or other matter insured against by this policy.
(b) The insured shall notify the Company promptly in writing (i) in
case any action or proceeding is begun or defense is interposed as set forth in
(a) above, (ii) in case knowledge shall come to an insured hereunder of any
claim of title or interest which is adverse to the title to the estate or
interest, as insured, and which might cause loss or damage for which the Company
may be liable by virtue of this policy, or (iii) if title to the estate or
interest, as insured, is rejected as unmarketable. If such prompt notice shall
not be given to the Company, then as to such insured all liability of the
Company shall cease and terminate in regard to the matter or matters for which
such prompt notice is required; provided, however, that failure to notify shall
in no case prejudice the rights of any such insured under this policy unless the
Company shall be prejudiced by such failure and then only to the extent of such
prejudice.
(c) The Company shall have the right at its own cost to institute and
without undue delay prosecute any action or proceeding or to do any other act
which in its opinion may be necessary or desirable to establish the title to the
estate or interest as insured, and the Company may take any appropriate action
under the terms of this policy, whether or not it shall be liable thereunder,
and shall not thereby concede liability or waive any provision of this policy.
(d) Whenever the Company shall have brought any action or interposed a
defense as required or permitted by the provisions of this policy, the Company
may pursue any such litigation to final determination by a court of competent
jurisdiction and expressly reserves the right, in its sole discretion, to appeal
from any adverse judgment or order.
(e) In all cases where this policy permits or requires the Company to
prosecute or provide for the defense of any action or proceeding, the insured
hereunder shall secure to the Company the right to so prosecute or provide
defense in such action or proceeding, and all appeals therein, and permit the
Company to use, at its option, the name of such insured for such purpose.
Whenever requested by the Company, such insured shall give the Company all
reasonable aid in any such action or proceeding, in effecting settlement,
securing evidence, obtaining witnesses, or prosecuting or defending such action
or proceeding, and the Company shall reimburse such insured for any expense so
incurred.
4. NOTICE OF LOSS---LIMITATION OF ACTION
In addition to the notices required under paragraph 3(b) of these
Conditions and Stipulations, a statement in writing of any loss or damage for
which it is claimed the Company is liable under this policy shall be furnished
to the Company within 90 days after such loss or damage shall have been
determined and no right of action shall accrue to an insured claimant until 30
days after such statement shall have been furnished. Failure to furnish such
statement of loss or damage shall terminate any liability of the Company under
this policy as to such loss or damage.
5. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS
The Company shall have the option to pay or otherwise settle for or in
the name of an insured claimant any claim insured against or to terminate all
liability and obligations of the Company hereunder by paying or tendering
payment of the amount of insurance under this policy together with any costs,
attorneys' fees and expenses incurred up to the time of such payment or tender
of payment, by the insured claimant and authorized by the Company.
6. DETERMINATION AND PAYMENT OF LOSS
(a) The liability of the Company under this policy shall in no case
exceed the least of:
(i) the actual loss of the insured claimant; or
(ii) the amount of insurance stated in Schedule A.
(b) The Company will pay, in addition to any loss insured against by
this policy, all costs imposed upon an insured in litigation carried on by the
Company for such insured, and all costs, attorneys' fees and expenses in
litigation carried on by such insured with the written authorization of the
Company.
(c) When liability has been definitely fixed in accordance with the
conditions of this policy, the loss or damage shall be payable within 30 days
thereafter.
7. LIMITATION OF LIABILITY
No claim shall arise or be maintainable under this policy (a) if the
Company, after having received notice of an alleged defect, lien or encumbrance
insured against hereunder, by litigation or otherwise, removes such defect, lien
or encumbrance or establishes the title, as insured, within a reasonable time
after receipt of such notice; (b) in the event of litigation until there has
been a final determination by a court of competent jurisdiction, and disposition
of all appeals therefrom, adverse to the title, as insured, as provided in
paragraph 3 hereof; or (c) for liability voluntarily assumed by an insured in
settling any claim or suit without prior written consent of the Company.
8. REDUCTION OF LIABILITY
All payments under this policy, except payments made for costs,
attorneys' fees and expenses, shall reduce the amount of the insurance pro
tanto. No payment shall be made without producing this policy for endorsement of
such payment unless the policy be lost or destroyed, in which case proof of such
loss or destruction shall be furnished to the satisfaction of the Company.
9. LIABILITY NONCUMULATIVE
It is expressly understood that the amount of insurance under this
policy shall be reduced by any amount the Company may pay under any policy
insuring either (a) a mortgage shown or referred to in Schedule B hereof which
is a lien on the estate or interest covered by this policy, or (b) a mortgage
hereafter executed by an insured which is a charge or lien on the estate or
interest described or referred to in Schedule A, and the amount so paid shall be
deemed a payment under this policy. The Company shall have the option to apply
to the payment of any such mortgages any amount that otherwise would be payable
hereunder to the insured owner of the estate or interest covered by this policy
and the amount so paid shall be deemed a payment under this policy to said
insured owner.
CONDITIONS AND STIPULATIONS (CONTINUED ON REVERSE SIDE)
<PAGE> 55
SCHEDULE A
Your Ref:
Policy No. 05 0057-60-9690019 ORDER NO. 9690019
Premium: $___________
Amount of Insurance: $19,000,000.00
Date of Policy: at 8:00 A.M.
1. Name of Insured:
PGP NORTHERN INDUSTRIAL L.P., A DELAWARE LIMITED PARTNERSHIP
2. The estate or interest in the land which is covered by this policy is:
A FEE
3. Title to the estate or interest in the land is vested in:
PGP NORTHERN INDUSTRIAL L.P., A DELAWARE LIMITED PARTNERSHIP
4. The land referred to in this policy is situated in the State of
California, County of Alameda and is described as follows:
SEE ATTACHED DESCRIPTION
This Policy valid only if Schedule B is attached
<PAGE> 56
DESCRIPTION
Page 1
POLICY NO.: 05 0057-60-9690019
CITY OF HAYWARD
PARCEL 1:
PARCEL 1, PARCEL MAP 1288, FILED SEPTEMBER 25, 1973, BOOK 80 OF PARCEL
MAPS, PAGE 27, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO.: 481-0015-028
PARCEL 2:
PARCEL 1, PARCEL MAP 939, FILED JULY 13, 1972, BOOK 76 OF PARCEL MAPS,
PAGE 10, ALAMEDA COUNTY RECORDS.
EXCEPTING THEREFROM THAT PORTION DESCRIBED IN THE DEED TO EDEN ROCK
COMPANY. NO. 3, A JOINT VENTURE RECORDED JULY 31, 1978, REEL 5508,
IMAGE 378, SERIES NO. 78-145175, OFFICIAL RECORDS.
ASSESSOR'S PARCEL NO.: 461-0015-020-02
PARCEL 3:
PARCEL 2, PARCEL MAP NO 939, FILED JULY 13, 1972, IN BOOK 76 OF PARCEL
MAPS, PAGE 10, ALAMEDA COUNTY RECORDS.
TOGETHER WITH:
ALL THAT CERTAIN REAL PROPERTY BEING A PORTION OF PARCEL 1 AS SHOWN IN
"PARCEL MAP NO 939" WHICH MAP IS FILED IN BOOK 76 OF PARCEL MAPS AT
PAGE 10, ALAMEDA COUNTY RECORDS, SAID REAL PROPERTY BEING MORE
PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE CORNER COMMON TO PARCELS 1 AND 2 ON THE NORTHWESTERLY
LINE OF CORPORATE PLACE, AS SHOWN ON THE ABOVE MENTIONED PARCEL MAP,
THENCE FROM SAID POINT OF BEGINNING ALONG SAID NORTHERLY LINE SOUTH 76
degrees 38'05" WEST 8.22 FEET; THENCE LEAVING THE LAST SAID LINE AND
RUNNING ALONG A LINE PARALLEL TO AND 7.806 FEET SOUTHWESTERLY AT RIGHT
ANGLES, FROM THE DIVIDING LINE BETWEEN SAID PARCELS 1 AND 2 NORTH 31
degrees 37'51" WEST 205.78 FEET; THENCE LEAVING SAID PARALLEL LINE
NORTH 58 degrees 22'09" EAST 7.806 FEET TO SAID DIVIDING LINE; THENCE
ALONG THE LAST SAID LINE SOUTH 31 degrees 37'51" EAST 208.356 FEET TO
THE POINT OF BEGINNING.
SAID REAL PROPERTY IS THE SAME AS LOT LINE ADJUSTMENT NO. 77-4 APPROVED
BY THE CITY OF HAYWARD PLANNING COMMISSION ON SEPTEMBER 22, 1977.
ASSESSOR'S PARCEL NO: 461-0015-021-01
PARCEL 4:
PARCEL ONE OF AMENDED PARCEL MAP 1035 FILED SEPTEMBER 5, 1975, IN BOOK
80 OF PARCEL MAPS PAGE 15, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO.: 461-0085-018-03 (PORTION)
<PAGE> 57
DESCRIPTION
Page 2
POLICY NO: 05 0057-60-9690019
PARCEL 5:
PORTION OF INVESTMENT BOULEVARD, AS SAID BOULEVARD WAS ESTABLISHED BY
THE GRANT OF EASEMENT FROM EDEN LANDING CORPORATION, A CALIFORNIA
CORPORATION, TO THE CITY OF HAYWARD, A MUNICIPAL CORPORATION, DATED
JUNE 20, 1967, AND RECORDED July 24, 1967, IN REEL 2005 OF OFFICIAL
RECORDS OF ALAMEDA COUNTY AT IMAGE 500 (AS-71982), DESCRIBED AS
FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHERLY RIGHT OF WAY LINE OF
INVESTMENT BOULEVARD WITH THE EASTERLY RIGHT OF WAY LINE OF EDEN
LANDING ROAD AS SHOWN ON PARCEL MAP NO. 1035 FILED IN BOOK 79 OF PARCEL
MAPS, PAGE 28, IN THE OFFICE OF THE ALAMEDA COUNTY RECORDER; THENCE
ALONG SAID NORTHERLY RIGHT OF WAY LINE OF INVESTMENT BOULEVARD THE
FOLLOWING THREE COURSES: 1) SOUTH 81 degrees 53'26" EAST 40.130 FEET;
2) SOUTH 48 degrees 12'02" EAST 61.294 FEET; 3) SOUTH 08 degrees 06'34"
WEST 40.000 FEET; THENCE LEAVING SAID NORTHERLY RIGHT OF WAY LINE NORTH
81 degrees 53'26" WEST 67.124 FEET TO A TANGENT CURVE TO THE RIGHT;
THENCE ALONG SAID TANGENT CURVE TO THE RIGHT HAVING A RADIUS OF 24.000
FEET THROUGH A CENTRAL ANGEL OF 89 degrees 59'35" AN ARC DISTANCE OF
37.696 FEET; THENCE NORTH 08 degrees 06'09" EAST 50.003 FEET TO THE
POINT OF BEGINNING.
ASSESSOR'S PARCEL NO.: 461-0085-018-03
<PAGE> 58
SCHEDULE B
Your Ref.
POLICY NO.: 05 0057-60-9690019
EXCEPTIONS FROM COVERAGE
This policy does not insure against loss or damage (and the Company
will not pay costs, attorneys' fees or expenses) which arise by reason of:
AF 1. County and city taxes for the Fiscal Year 1997-1998, a lien not yet
due or payable.
A 2. The Lien of Supplemental Taxes, if any, assessed pursuant to the
provisions of Chapter 3.5, Revenue and Taxation Code, Sections 75 et
seq.
F 3. Easement, upon the terms covenants and conditions thereof, for the
purposes stated herein and incidental purposes created in that certain
instrument
Recorded : MARCH 5, 1958, BOOK 8611, PAGE 321, SERIES NO.
AP/22367, OFFICIAL RECORDS
Granted to : PACIFIC GAS AND ELECTRIC COMPANY, A CALIFORNIA
CORPORATION
Purpose : TOWER LINES
Affects : NORTHEASTERLY PORTION OF PARCEL 4
a 4. Easement, upon the terms, covenants and conditions thereof, for the
purposes stated herein and incidental purposes created in that certain
instrument
Recorded : MARCH 5, 1958, BOOK 8611, PAGE 323, SERIES NO. AP/22368,
OFFICIAL RECORDS
Granted to : PACIFIC GAS AND ELECTRIC COMPANY, A CALIFORNIA
CORPORATION
Purpose : TOWER LINES
Affects : NORTHEASTERLY PORTION OF PARCEL 4
M 5. Easement as follows as shown of the filed map of Trace 2898, filed
June 30, 1967, Book 55 of Maps, Page 25, Alameda County Records
For : PUBLIC SERVICE
Affects : WESTERLY 10 FEET OF PARCEL 1, ADJACENT TO CORPORATE PLACE;
SOUTHWESTERLY 10 FEET OF PARCEL 2, ADJACENT TO CORPORATE
AVENUE AND THE SOUTHEASTERLY 10 FEET OF PARCEL 2 AND 3,
ADJACENT TO CORPORATE PLACE
I 6. Covenants, conditions and restrictions, but omitting any covenant or
restriction, if any, based on race, color, religion, sex, handicap,
familial status or national origin unless and only to the extent that
said covenant (a) is exempt under Chapter 42, Section 3607 of the
United States Code or (b) relates to handicap but does not discriminate
against handicapped persons, contained in the Declaration
By : EDEN LANDING CORPORATION, A CALIFORNIA CORPORATION
<PAGE> 59
SCHEDULE B
(Continued)
Page 1 POLICY NO.: 009690019
Recorded : JUNE 30, 1967, REEL 1991, IMAGE 793, SERIES NO. AZ/62977,
OFFICIAL RECORDS
J Modification and/or amendment thereof, recorded MARCH 30, 1973, REEL
3378, IMAGE 850, SERIES NO., 73-42409, OFFICIAL RECORDS, but omitting
any covenant or restriction, if any, based on race, color, religion,
sex, handicap, familial status or national origin unless and only to
the extent that said covenant (a) is exempt under Chapter 42, Section
3607 of the United States Code or (b) relates to handicap but does not
discriminate against handicapped persons.
R Modification an/or amendment thereof, recorded MAY 8, 1973, REEL 3420,
IMAGE 499, SERIES NO. 73-68230, OFFICIAL RECORDS, but omitting any
covenant or restriction, if any, based on race, color, religion, sex,
handicap, familial status or national origin unless and only to the
extent that said covenant (a) is exempt under Chapter 42, Section 3607
of the United States Code or (b) relates to handicap but does not
discriminate against handicapped persons.
L Contains no reversionary clause.
O Contains no mortgagee protection clause.
AF 7. Easement, upon the terms, covenants and conditions thereof, for the
purposes stated herein and incidental purposes created in that certain
instrument
Recorded : JUNE 28, 1972, REEL 3168, IMAGE 294, SERIES NO. 72-86979,
OFFICIAL RECORDS
Granted to: PACIFIC GAS AND ELECTRIC COMPANY, A CALIFORNIA
CORPORATION
Purpose : UNDERGROUND FACILITIES, CONSISTING OF UNDERGROUND CONDUITS,
PIPES, MANHOLES, SERVICE BOXES, WIRES, CABLES AND OTHER
ELECTRICAL CONDUCTORS; ABOVE GROUND MARKER POSTS, RISERS
AND SERVICE PEDESTALS; UNDERGROUND AND ABOVE GROUND
SWITCHES, FUSES, TERMINALS AND TRANSFORMERS WITH ASSOCIATED
CONCRETE PADS Affects: NORTHERLY PORTION OF PARCEL 4
N 8. Easement, upon the terms, covenants and conditions thereof, for the
purposes stated herein and incidental purposes created in that certain
instrument
Recorded : AUGUST 1, 1972, REEL 3195, IMAGE 721, SERIES NO. 72-104271,
OFFICIAL RECORDS
Granted to: PACIFIC GAS AND ELECTRIC COMPANY, A CALIFORNIA
CORPORATION
Purpose : UNDERGROUND CONDUITS, PIPES, AND SERVICE BOXES; ABOVE
GROUND MARKER POSTS, RISERS AND SERVICE PEDESTALS;
UNDERGROUND AND ABOVE GROUND SWITCHES, FUSES, TERMINALS AND
TRANSFORMERS WITH ASSOCIATED CONCRETE PADS
<PAGE> 60
SCHEDULE B
(Continued)
Page 2 POLICY NO.: 009690019 969
Affects : WESTERLY 10 FEET OF PARCEL 1, ADJACENT TO CORPORATE PLACE;
SOUTHWESTERLY 10 FEET OF PARCEL 2, ADJACENT TO CORPORATE
AVENUE AND THE SOUTHEASTERLY 10 FEET OF PARCELS 2 AND 3,
ADJACENT TO CORPORATE PLACE.
P 9. Easement, upon the terms, covenants and conditions thereof, for the
purposes stated herein and incidental purposes created in that certain
instrument
Recorded : DECEMBER 26, 1974, REEL 3840, IMAGE 504, SERIES
NO. 74-161557, OFFICIAL RECORDS
Granted to : PACIFIC GAS AND ELECTRIC COMPANY, A CALIFORNIA
CORPORATION
Purpose : UNDERGROUND CONDUITS, PIPES AND SERVICE BOXES,
ABOVE GROUND MARKER POSTS, RISERS AND SERVICE
PEDESTALS; UNDERGROUND AND ABOVE GROUND SWITCHES,
FUSES, TERMINALS AND TRANSFORMERS WITH ASSOCIATED
CONCRETE PADS
Affects : PORTIONS OF PARCEL 4
g 10. Easement, upon the terms, covenants and conditions thereof, for the
purposes stated herein and incidental purposes created in that certain
instrument
Recorded : APRIL 10, 1975, REEL 3930, IMAGE 177, SERIES NO.
75-45978, OFFICIAL RECORDS
Granted to : THE PACIFIC TELEPHONE AND TELEGRAPH COMPANY,
A CORPORATION
Purpose : COMMUNICATION FACILITIES
Affects : PORTIONS OF PARCEL 4
T 11. Easement, upon the terms, covenants and conditions thereof, for the
purposes stated herein and incidental purposes created in that certain
instrument
Recorded : JULY 11, 1991, SERIES NO. 91-179447, OFFICIAL
RECORDS
Granted to : PACIFIC BELL
Purpose : UNDERGROUND COMMUNICATION FACILITIES
Affects : PORTION OF PARCEL 4
AH 12. Unrecorded lease upon the terms and conditions contained therein
Lessor : EDEN PLAZA ASSOCIATES, A CALIFORNIA LIMITED
PARTNERSHIP
Lessee : INSIGHT HEALTH SERVICES
Disclosed by : NOTICE OF NON-RESPONSIBILITY
Recorded : FEBRUARY 20, 1997, SERIES NO. 97048274,
OFFICIAL RECORDS
AJ 13. Unrecorded lease upon the terms and conditions contained therein
Lessor : EDEN PLAZA ASSOCIATES, A CALIFORNIA GENERAL
PARTNERSHIP
<PAGE> 61
SCHEDULE B
(CONTINUED)
Page 3
POLICY NO.: 009690019 969
Lessee : ADICOM WIRELESS, INC.
Disclosed by: FINANCING STATEMENT
Recorded : FEBRUARY 26, 1997, SERIES NO. 97053291, OFFICIAL RECORDS
AS 14. Deed of Trust to secure an Indebtedness in the original amount
shown below
Amount : $12,000,000.00
Dated : TO BE DETERMINED
Trustor : PGP NORTHERN INDUSTRIAL, L.P., A DELAWARE LIMITED
PARTNERSHIP
Trustee : PROFORMA
Beneficiary : CIGNA INVESTMENT, INC., A CONNECTICUT CORPORATION
Address : PROFORMA
Loan No. : PROFORMA
Recorded : PROFORMA
AK 15. The following matters disclosed by Alta Survey, Pacific Gulf
Properties, dated FEBRUARY 13, 1997, prepared by Nolte and Associates,
Inc., Job No. SJ0403:
A) EASEMENT OR LESSER SERVITUDE, IF ANY, AS MAY EXIST FOR
RAILROAD PURPOSES OVER A NORTHEASTERLY PORTION OF PARCEL 1.
B) EASEMENT OR LESSER SERVITUDE, IF ANY, AS MAY EXIST FOR GUY
WIRE PURPOSES OVER A NORTHERLY PORTION OF PARCEL 4.
AO 16. Rights of parties in possession, as Tenants only, as disclosed by
(NAME OF TENANTS TO BE LISTED AS SHOWN ON RENT ROLL).
AF "NOTE: This is a Pro Forma Policy furnished to or on behalf of the
party to be insured. It does not reflect the present status of title
and is not a commitment to insure the estate or interest as shown
herein, nor does it evidence the willingness of the company to provide
any affirmative coverage shown herein Any such commitment must be an
express written undertaking on appropriate forms of the company."
AO NOTE:
TAXES FOR THE FISCAL YEAR 1996-1997 PAID IN FULL.
ASSESSOR'S PARCEL NOS.: 461-0015-020-02 (AFFECTS PARCEL 2)
461-0015-021-01 (AFFECTS PARCEL 3)
461-0015-028 (AFFECTS PARCEL 1)
461-0085-018-03 (AFFECTS PARCELS 4 AND 5)
AR CAC
<PAGE> 62
ENDORSEMENT
ATTACHED TO AND FORMING A PART OF
POLICY NO. 9690019SDC
ISSUED BY
CHICAGO TITLE INSURANCE COMPANY
Dated as of the date of the policy to which this endorsement is attached.
The Company hereby insures against loss which the Insured shall sustain by
reason of any incorrectness in the following assurances:
(1) That there are no covenants, conditions or restrictions containing
express provisions which will cause a forfeiture or reversion of title,
unless same also provide that a violation thereof shall not defeat the
lien of a mortgage or deed of trust made in good faith and for value;
(2) That there are no present violations on said land of any enforceable
covenants, conditions or restrictions;
(3) That, except as shown in Schedule B, there are no encroachments on to
said land of buildings, structures or improvements located on adjoining
land; and
(4) That there is no right to use the surface of the land for the
extraction or development of the minerals excepted from the description
of said land or shown as a reservation in Schedule B.
Wherever in this endorsement any or all of the words, "covenants, conditions or
restrictions" appear, they shall not be deemed to refer to or include the terms,
covenants and conditions contained in any lease referred to in Schedule A.
No coverage is provided under this endorsement as to any covenant, condition,
restriction, or other provision relating to environmental protection.
This endorsement is made a part of the policy and is subject to all of the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated it neither modifies any of the terms and provisions of
the policy and any prior endorsements, nor does it extend the effective date of
the policy and any prior endorsements, nor does it increase the face amount
thereof.
CHICAGO TITLE INSURANCE COMPANY
By:_______________________________________
Authorized Signatory
CLTA Form 100 (Modified)
<PAGE> 63
ENDORSEMENT
ATTACHED TO POLICY NO. 009690019
ISSUED BY
CHICAGO TITLE INSURANCE COMPANY
The Company hereby assures the insured that the land abuts upon a physically
open street known as Corporate Avenue, Corporate Place and Investment Boulevard.
The Company hereby insures the insured against loss which the insured shall
sustain in the event the assurance herein shall prove to be incorrect.
This endorsement is made a part of the policy and is subject to all of the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated it neither modifies any of the terms and provisions of
the policy and any prior endorsements, nor does it extend the effective date of
the policy and any prior endorsements, nor does it increase the face amount
thereof.
Dated: TO BE DETERMINED CHICAGO TITLE INSURANCE COMPANY
By:_______________________________________
Authorized Signatory
CLTA Form 103.7 (Rev. 9-10-93)
<PAGE> 64
ENDORSEMENT
ATTACHED TO AND FORMING A PART OF
POLICY NO. 9690019SDC
ISSUED BY
CHICAGO TITLE INSURANCE COMPANY
The Company assures the insured that at Date of Policy there is located
on the land Commercial Structures
known as 3167 Corporate Place, 26500 Corporate Ave., 352 Investment, Hayward,
California.
and that the map attached to this policy shows the correct location and
dimensions of the land according to the public records.
The Company hereby insures the insured against loss which the insured
shall sustain in the event that the assurance herein shall prove to be
incorrect.
This endorsement is made a part of the policy and is subject to all of
the terms and provisions thereof and of any prior endorsements thereto. Except
to the extent expressly stated it neither modifies any of the terms and
provisions of the policy and any prior endorsements, nor does it extend the
effective date of the policy and any prior endorsements, nor does it increase
the face amount thereof.
Dated: TO BE DETERMINDED CHICAGO TITLE INSURANCE COMPANY
By:_______________________________________
Authorized Signatory
CLTA Form 116 (Rev. 9-10-93)
ALTA-Lender
<PAGE> 65
ENDORSEMENT
ATTACHED TO AND FORMING A PART OF POLICY NO.009690019
ISSUED BY
CHICAGO TITLE INSURANCE COMPANY
The Company assures the insured that the land described in Schedule A is
contiguous as follows:
PARCEL 1 IS CONTIGUOUS TO PARCEL 3; PARCEL 2 IS CONTIGUOUS TO PARCEL 3 AND
PARCEL 4 IS CONTIGUOUS TO PARCEL 5.
The Company hereby insures the insured against loss which the insured shall
sustain in the event that the assurance herein shall prove to be incorrect.
This endorsement is made a part of the policy and is subject to all of the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated it neither modifies any of the terms and provisions of
the policy and any prior endorsements, nor does it extend the effective date of
the policy and any prior endorsements, nor does it increase the face amount
thereof.
Dated: TO BE DETERMINED CHICAGO TITLE INSURANCE COMPANY
By:_______________________________________
Authorized Signatory
CLTA Form 116.4 (9-10-93)
<PAGE> 66
ENDORSEMENT
ATTACHED TO AND FORMING A PART OF
POLICY NO. 9690019SDC
ISSUED BY
CHICAGO TITLE INSURANCE COMPANY
The Company assures the insured that the land is the same as that
delineated on the plat of a survey made by NOLTE AND ASSOCIATES, INC. on
FEBRUARY 13, 1997, designated Job No. SJ0403.
The Company hereby insures the insured against loss which the insured
shall sustain in the event that the assurance herein shall prove to be
incorrect.
This endorsement is made a part of the policy and is subject to all of
the terms and provisions thereof and of any prior endorsements thereto. Except
to the extent expressly stated it neither modifies any of the terms and
provisions of the policy and any prior endorsements, nor does it extend the
effective date of the policy and any prior endorsements, nor does it increase
the face amount thereof.
Dated:
CHICAGO TITLE INSURANCE COMPANY
By:_______________________________________
Authorized Signatory
CLTA Form 116.1 (Rev. 9-10-93)
<PAGE> 67
ENDORSEMENT
ATTACHED TO POLICY NO. 009690019
ISSUED BY
CHICAGO TITLE INSURANCE COMPANY
The Company assures the insured that the land described as Parcel(s) 1, 2, 3, 4
and 5 in Schedule A are lawfully created parcels according to the Subdivision
Map Act (Section 66410, et seq., of the California Government Code) and local
ordinances adopted pursuant thereto.
The Company hereby insures the insured against loss which the insured shall
sustain in the event that the assurance herein shall prove to be incorrect.
This endorsement is made a part of the policy and is subject to all of the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated it neither modifies any of the terms and provisions of
the policy and any prior endorsements, nor does it extend the effective date of
the policy and any prior endorsements, nor does it increase the face amount
thereof.
Dated: TO BE DETERMINED CHICAGO TITLE INSURANCE COMPANY
By:_______________________________________
Authorized Signatory
CLTA Form 116.7 (Rev. 9-10-93)
<PAGE> 68
ENDORSEMENT
ATTACHED TO POLICY NO. 009690019
ISSUED BY
CHICAGO TITLE INSURANCE COMPANY
Dated as of the date of the policy to which this endorsement is attached.
The Company hereby assures the insured that neither the withdrawal of a partner
or partners nor the admission of a partner or partners in the named insured
partnership will cause a termination of coverage under this policy. Provided,
however, that this assurance shall not be construed so as to continue policy
coverage after either of the following:
(A) if the named insured is a general partnership, a change in form to a
limited partnership; or
(B) if the named insured is a limited partnership, a change in form to a
general partnership.
This endorsement is made a part of the policy and is subject to all of the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated it neither modifies any of the terms and provisions of
the policy and any prior endorsements, nor does it extend the effective date of
the policy and any prior endorsements, nor does it increase the face amount
thereof.
CHICAGO TITLE INSURANCE COMPANY
By:_______________________________________
Authorized Signatory
CIT Form 3032
(Fairway Endorsement)
<PAGE> 69
ENDORSEMENT
ATTACHED TO POLICY NO. 009690019
ISSUED BY
CHICAGO TITLE INSURANCE COMPANY
The Company hereby assures PGP Northern Industrial, L.P., a Delaware Limited
Partnership and Pacific Gulf Properties, Inc., a Maryland Corporation,
notwithstanding the terms of the Conditions and Stipulations or schedule of
Exclusions from coverage to the contrary, that in the event of loss or damage
insured against under the terms of the policy, the Company will not deny its
liability thereunder to said assured on the grounds that said assured had
knowledge of any matter solely by reason of notice thereof imputed to it through
Eden Plaza Associates, a California General Partnership, or Eden Plaza
Associates, LLC, by operation of law.
The total liability of the Company under said policy and any endorsements
therein shall not exceed, in the aggregate, the face amount of said policy and
costs which the Company is obligated under the conditions and stipulations
thereof to pay.
This endorsement is made a part of said policy and is subject to the exclusions
from coverage, schedules, conditions and stipulations therein, except as
modified by the provisions hereof.
IN WITNESS WHEREOF, the Company has caused this endorsement to be signed and
sealed as of the ______ day of ______________, 1997, to be valid when
countersigned by an authorized officer or agent of the Company, all in
accordance with its by-laws.
Dated: TO BE DETERMINED CHICAGO TITLE INSURANCE COMPANY
By:_______________________________________
Authorized Signatory
NON-IMPUTATION ENDORSEMENT
<PAGE> 70
ENDORSEMENT
ATTACHED TO POLICY NO. 009690019
ISSUED BY
CHICAGO TITLE INSURANCE COMPANY
1. The Company insures the Insured against loss or damage sustained by
reason of any incorrectness in the assurance that, at Date of Policy:
(a) According to applicable zoning ordinances and amendments
thereto, the land is classified Zone I (INDUSTRIAL).
(b) The following use or uses are allowed under that
classification subject to compliances with any conditions,
restrictions, or requirements contained in the zoning
ordinances and amendments thereto, including but not limited
to the securing of necessary consents or authorizations as a
prerequisite to the use or uses.
2. The Company further insures against loss or damage arising from a final
decree of a court of competent jurisdiction:
(a) prohibiting the use of the land, with any structure presently
located thereon, as specified in paragraph 1(b); or
(b) requiring the removal or alteration of the structure on the
basis that, at Date of Policy, the ordinances and amendments
thereto have been violated with respect to any of the
following matters:
(i) Area, width or depth of the land as a building site
for the structure;
(ii) Floor space area of the structure;
(iii) Setback of the structure from the property lines of
the land; or
(iv) Height of the structure.
(v) Parking.
There shall be no liability under this endorsement based on the invalidity of
the ordinances and amendments thereto until after a final decree of a court of
competent jurisdiction adjudicating the invalidity, the effect of which is to
prohibit the use or uses. Loss or damage as to the matters insured against by
this endorsement shall not include loss or damage sustained or incurred by
reason of the refusal of any person to purchase, lease or lend money on the
estate or interest covered by this policy.
This endorsement is made a part of the policy and is subject to all of the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated it neither modifies any of the terms and provisions of
the policy and any prior endorsements, nor does it extend the effective date of
the policy and any prior endorsements, nor does it increase the face amount
thereof.
Dated: TO BE DETERMINED CHICAGO TITLE INSURANCE COMPANY
By:_______________________________________
Authorized Signatory
CLTA Form 123.2 (Rev. 3-13-87)
<PAGE> 71
ASSESSOR'S MAP 461 15
[MAP]
<PAGE> 72
ASSESSOR'S MAP 461 85
[MAP]
<PAGE> 73
[CITY OF HAYWARD PARCEL MAP]
<PAGE> 74
[CITY OF HAYWARD PARCEL MAP NO. 1288]
<PAGE> 75
[CITY OF HAYWARD PARCEL MAP NO. 103**]]
<PAGE> 76
[CITY OF HAYWARD PARCEL MAP NO. 3526]
<PAGE> 77
EXCLUSIONS FROM COVERAGE
The following matters are expressly excluded from the coverage of this policy:
1. Any law, ordinance or governmental regulation (including but not
limited to building and zoning ordinances) restricting or regulating or
prohibiting the occupancy, use or enjoyment of the land, or regulating
the character, dimensions or location of any improvement now or
hereafter erected on the land, or prohibiting a separation in ownership
or a reduction in the dimensions or area of the land, or the effect of
any violation of any such law, ordinance or governmental regulation.
2. Rights of eminent domain or governmental rights of police power unless
notice of the exercise of such rights appears in the public records at
Date of Policy.
3. Defects, liens, encumbrances, adverse claims, or other matters (a)
created, suffered, assumed or agreed to by the insured claimant; (b)
not known to the Company and not shown by the public records but known
to the insured claimant either at Date of Policy or at the date such
claimant acquired an estate or interest insured by this policy and not
disclosed in writing by the insured claimant to the Company prior to
the date such insured claimant became an insured hereunder; (c)
resulting in no loss or damage to the insured claimant; (d) attaching
or created subsequent to Date of Policy; or (e) resulting in loss or
damage which would not have been sustained if the insured claimant had
paid value for the estate or interest insured by this policy.
<PAGE> 78
American Land Title Association
Owner's Policy Form B--1970
(Amended 10-17-70)
POLICY
OF
TITLE
INSURANCE
[CHICAGO TITLE INSURANCE COMPANY LOGO]
CHICAGO
TITLE INSURANCE
COMPANY
171 North Clark Street
Chicago, IL 60601
CONDITIONS AND STIPULATIONS (CONTINUED)
10. APPORTIONMENT
If the land described in Schedule A consists of two or more parcels which are
not used as a single site, and a loss is established affecting one or more of
said parcels but not all, the loss shall be computed and settled on a pro rata
basis as if the amount of insurance under this policy was divided pro rata as to
the value on Date of Policy of each separate parcel to the whole, exclusive of
any improvements made subsequent to Date of Policy, unless a liability or value
has otherwise been agreed upon as to each such parcel by the Company and the
insured at the time of the issuance of this policy and shown by an express
statement herein or by an endorsement attached hereto.
11. SUBROGATION UPON PAYMENT OR SETTLEMENT
Whenever the Company shall have settled a claim under this policy, all right
of subrogation shall vest in the Company unaffected by any act of the insured
claimant. The Company shall be subrogated to and be entitled to all rights and
remedies which such insured claimant would have had against any person or
property in respect to such claim had this policy not been issued, and if
requested by the Company, such insured claimant shall transfer to the Company
all rights and remedies against any person or property necessary in order to
perfect such right of subrogation and shall permit the Company to use the name
of such insured claimant in any transaction or litigation involving such rights
or remedies. If the payment does not cover the loss of such insured claimant,
the Company shall be subrogated to such rights and remedies in the proportion
which said payment bears to the amount of said loss. If loss should result from
any act of such insured claimant, such act shall not void this policy, but the
Company, in that event, shall be required to pay only that part of any losses
insured against hereunder which shall exceed the amount, if any, lost to the
Company by reason of the impairment of the right of subrogation.
12. LIABILITY LIMITED TO THIS POLICY
This instrument together with all endorsements and other instruments, if any,
attached hereto by the Company is the entire policy and contract between the
insured and the Company.
Any claim of loss or damage, whether or not based on negligence, and which
arises out of the status of the title to the estate or interest covered hereby
or any action asserting such claim, shall be restricted to the provisions and
conditions and stipulations of this policy.
No amendment of or endorsement to this policy can be made except by writing
endorsed hereon or attached hereto signed by either the President, a Vice
President, the Secretary, an Assistant Secretary, or validating officer or
authorized signatory of the Company.
13. NOTICES, WHERE SENT
All notices required to be given the Company and any statement in writing
required to be furnished the Company shall include the number of this policy and
shall be addressed to the Company at the issuing office or to:
CHICAGO TITLE INSURANCE COMPANY
CLAIMS DEPARTMENT
171 NORTH CLARK STREET
CHICAGO, ILLINOIS 60601-3294
Form No. 3607
<PAGE> 79
EXHIBIT C
ASSIGNMENT AND ASSUMPTION OF
SERVICE CONTRACTS, WARRANTIES,
GUARANTIES, PERMITS AND OTHER INTANGIBLE PROPERTY
THIS ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS, WARRANTIES,
GUARANTIES AND OTHER INTANGIBLE PROPERTY (this "Assignment") is made and entered
into as of the ____ day of ___________, 1997, by Eden Plaza Associates, LLC, a
California limited liability company ("Assignor"), to PGP Northern Industrial,
L.P., a Delaware limited partnership ("Assignee").
WITNESSETH:
WHEREAS, Assignor is contemporaneously herewith conveying, pursuant to
that certain Master Contribution Agreement dated ______________, 1997 (the
"Master Agreement") by and among Assignor and Pacific Gulf Properties Inc., a
Maryland corporation and the general partner of Assignee, certain real property
and improvements more particularly described therein, located in the County of
Alameda, State of California, the real property of which is more particularly
described on Exhibit A attached hereto and incorporated herein by this reference
(collectively, the "Real Property", which Real Property together with all
personal property related to the Real Property is collectively the "Property").
Terms used in this Agreement and not otherwise defined shall be given the
meanings defined in the Master Agreement.
WHEREAS, Assignor desires to assign its interest in and to the following
to Assignee as of the date on which title to the Real Property is vested in
Assignee (the "Transfer Date"), and Assignee desires to accept the assignment
thereof and assume Assignor's obligations thereunder from and after the Transfer
Date:
(a) All service contracts described in Schedule 1 attached hereto
and incorporated herein by this reference (the "Contracts");
(b) All Warranties and Guaranties (the "Warranties and
Guaranties", hereafter defined);
(c) All Names and Marks (the "Names and Marks", hereafter
defined);
(d) All Intangible Property (the "Intangible Property", hereafter
defined);
(e) All Licenses and Entitlements (the "Licenses and Entitlements"
as hereafter defined); and
1
<PAGE> 80
(f) All Deposits and Reimbursements.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. As of the Transfer Date, Assignor hereby assigns and transfers unto
Assignee all of its right, title, claim and interest in, to and under the (a)
Contracts; (b) Warranties and Guarantees; (c) Names and Marks; (d) Intangible
Property; (e) Licenses and Entitlements; and (f) Deposits and Reimbursements
(collectively the "Assigned Interests"). Assignor hereby agrees to indemnify,
defend and hold harmless Assignee from and against any and all cost, liability,
loss, damage or expense, including, without limitation, reasonable attorneys'
fees and expenses (collectively, "Losses and Liabilities"), arising out of or in
any way related to the Assigned Interests prior to or on the Transfer Date or
which arise out of or are in any way related to the Assigned Interests after the
Transfer Date on account of any fact or circumstance occurring or existing on or
prior to the Transfer Date.
2. Assignee, as of the Transfer Date, hereby accepts the foregoing
assignment and assumes all of the Assignor's obligations under the Assigned
Interests which arise or relate to the period after the Transfer Date. Assignee
hereby agrees to indemnify, defend and hold harmless Assignor from and against
any and all Losses and Liabilities arising out of or in any way related to the
Assigned Interests after the Transfer Date, except for Losses and Liabilities
which arise out of or are in any way related to the Assigned Interests after the
Transfer Date on account of any fact or circumstance occurring or existing on or
prior to the Transfer Date.
3. The following terms shall have the following meanings:
(a) The term "Warranties and Guaranties" as used herein shall mean
and include all warranties and guarantees to the extent assignable, whether or
not written, for all or any portion of the Properties, including, without
limitation, the Improvements and the Tangible Personal Property. The term
"Warranties and Guaranties" shall expressly include, without limitation,
construction warranties from contractors and subcontractors, including without
limitation all warranties and guaranties covering the roofs of the Improvements
or any portion thereof.
(b) The term "Names and Marks" as used herein shall mean and
include all patents, licenses, trademarks, logos, service marks and names used
in connection with the operation of the Properties, and all symbols, emblems
with the operation of the Properties, and all symbols, emblems and logos used in
connection with the ownership or operation of the Properties, whether in black
and white or in color, and irrespective of size,
2
<PAGE> 81
and all of Assignor's right, title and interest in and to all goodwill
associated therewith.
(c) The term "Intangible Property" as used herein shall mean and
include all intangible property relating to or used in connection with the
Properties, as defined in the Master Agreement.
(d) The term "Licenses and Entitlements" as used herein shall mean
and include all governmental permits and approvals relating to the construction,
operation, use or occupancy of the Properties, including without limitation, 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
Properties, and all applications, filings and submittals therefor, in each case
relating to the operation, ownership, subdivision, development, use or
maintenance of the Properties 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 of Improvements at any of the Properties.
(e) The term "Deposits and Reimbursements" as used herein shall
have the meaning set forth in the Master Agreement.
4. In the event of any litigation between Assignor and Assignee arising
out of the obligations of the parties under this Assignment or concerning the
meaning or interpretation of any provision contained herein, the losing party
shall pay the prevailing party's costs and expenses of such litigation,
including, without limitation, reasonable attorneys' fees and expenses. In
addition to the foregoing award of attorneys' fees to the prevailing party, the
prevailing party in any lawsuit on this Agreement shall be entitled to its
reasonable attorneys' fees incurred in any post judgment proceedings to collect
or enforce the judgment. This provision is separate and several and shall
survive the merger of this Assignment into any judgment on this Assignment.
5. This Assignment shall be binding on and inure to the benefit of the
parties herein, their heirs, executors, administrators, successors-in-interest
and assigns.
6. This Assignment may be executed in any number of counterparts, each
of which shall be deemed an original and all
3
<PAGE> 82
of which taken together shall constitute one and the same agreement.
7. Nothing contained herein shall be deemed or construed as relieving
the Assignor or Assignee of their respective duties and obligations under the
Master Agreement.
8. All entities constituting Assignor hereunder shall be jointly and
severally liable for the faithful performance of the terms and conditions hereof
to be performed by Assignor.
ASSIGNOR: "EDEN"
EDEN PLAZA ASSOCIATES, LLC, a California
limited liability company
By:_____________________________________
Elbert P. Bressie, Managing
Member
ASSIGNEE: PGP NORTHERN INDUSTRIAL, L.P., a
Delaware limited partnership
By: PACIFIC GULF PROPERTIES INC., a
Maryland corporation
By: ____________________________________
____________________________________
(Print Name and Title)
By: ____________________________________
____________________________________
(Print Name and Title)
4
<PAGE> 83
Exhibit A to Assignment
LEGAL DESCRIPTION OF REAL PROPERTY
THE LAND REFERRED TO IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ALAMEDA,
CITY OF HAYWARD, DESCRIBED AS FOLLOWS:
PARCEL 1:
PARCEL 1, PARCEL MAP 1288, FILED SEPTEMBER 25, 1973, BOOK 80 OF PARCEL MAPS,
PAGE 27, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 461-0015-028
PARCEL 2:
PARCEL 1, PARCEL MAP 939, FILED JULY 13, 1972, BOOK 76 OF PARCEL MAPS, PAGE 10,
ALAMEDA COUNTY RECORDS.
EXCEPTING THEREFROM THAT PORTION DESCRIBED IN THE DEED TO EDEN ROCK CO. NO. 3, A
JOINT VENTURE, RECORDED JULY 31, 1978, REEL 5508, IMAGE 378, SERIES NO.
78-145175, OFFICIAL RECORDS.
ASSESSOR'S PARCEL NO. 461-0015-020-2
PARCEL 3:
PARCEL 2, PARCEL MAP NO. 939, FILED JULY 13, 1972, IN BOOK 76 OF PARCEL MAPS,
PAGE 10, ALAMEDA COUNTY RECORDS.
TOGETHER WITH:
ALL THAT CERTAIN REAL PROPERTY BEING A PORTION OF PARCEL 1 AS SHOWN ON "PARCEL
MAP NO. 939" WHICH MAP IS FILED IN BOOK 76 OF PARCEL MAPS AT PAGE 10, ALAMEDA
COUNTY RECORDS, SAID REAL PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE CORNER COMMON TO PARCELS 1 AND 2 ON THE NORTHWESTERLY LINE OF
CORPORATE PLACE, AS SHOWN ON THE ABOVE MENTIONED PARCEL MAP, THENCE FROM SAID
POINT OF BEGINNING ALONG SAID NORTHERLY LINE SOUTH 76 DEGREES 38'05" WEST 8.22
FEET; THENCE LEAVING THE LAST SAID LINE AND RUNNING ALONG A LINE PARALLEL TO AND
7.806 FEET SOUTHWESTERLY AT RIGHT ANGLES, FROM THE DIVIDING LINE BETWEEN SAID
PARCELS 1 AND 2 NORTH 31 DEGREES 37'51" WEST 205.78 FEET; THENCE LEAVING SAID
PARALLEL LINE NORTH 58 DEGREES 22'09" EAST 7.806 FEET TO SAID DIVIDING LINE;
THENCE ALONG THE LAST SAID LINE SOUTH 31 DEGREES 37'51" EAST 208.356 FEET TO THE
POINT OF BEGINNING.
SAID REAL PROPERTY IS THE SAME AS "LOT LINE ADJUSTMENT NO. 77-4" APPROVED BY THE
CITY OF HAYWARD PLANNING COMMISSION ON SEPTEMBER 22, 1977.
ASSESSOR'S PARCEL NO. 461-0015-021-01
<PAGE> 84
PARCEL 4:
PARCEL ONE OF AMENDED PARCEL MAP 1035 FILED SEPTEMBER 5, 1975 IN BOOK 80 OF
PARCEL MAPS ON PAGE 15, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 461-0085-018-03 (PORTION).
PARCEL 5:
PORTION OF INVESTMENT BOULEVARD, AS SAID BOULEVARD WAS ESTABLISHED BY THE GRANT
OF EASEMENT FROM EDEN LANDING CORPORATION, A CALIFORNIA CORPORATION, TO THE CITY
OF HAYWARD, A MUNICIPAL CORPORATION, DATED JUNE 20, 1967, AND RECORDED JULY 24,
1967 IN REEL 2005 OF OFFICIAL RECORDS OF ALAMEDA COUNTY AT IMAGE 500 (AZ-71982),
DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHERLY RIGHT OF WAY LINE OF INVESTMENT
BOULEVARD WITH THE EASTERLY RIGHT OF WAY LINE OF EDEN LANDING ROAD AS SHOWN ON
PARCEL MAP NO. 1035 FILED IN BOOK 79 OF PARCEL MAPS, PAGE 28, IN THE OFFICE OF
THE ALAMEDA COUNTY RECORDER; THENCE ALONG SAID NORTHERLY RIGHT OF WAY LINE OF
INVESTMENT BOULEVARD THE FOLLOWING THREE COURSES: 1) SOUTH 81 DEGREES 53'26"
EAST 40.130 FEET; 2) SOUTH 48 DEGREES 12'02" EAST 61.294 FEET; 3) SOUTH 08
DEGREES 06'34" WEST 40.000 FEET; THENCE LEAVING SAID NORTHERLY RIGHT OF WAY LINE
NORTH 81 DEGREES 53'26" WEST 67.124 FEET TO A TANGENT CURVE TO THE RIGHT; THENCE
ALONG SAID TANGENT CURVE TO THE RIGHT HAVING A RADIUS OF 24.000 FEET THROUGH A
CENTRAL ANGLE OF 89 DEGREES 59'35" AN ARC DISTANCE OF 37.696 FEET; THENCE NORTH
08 DEGREES 06'09" EAST 50.003 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 416-0085-018-03
<PAGE> 85
Schedule 1 to Assignment
DESCRIPTION OF THE CONTRACTS
NONE
<PAGE> 86
EXHIBIT D
CAPITAL IMPROVEMENTS
Those improvements required by the Certificates of Substandard Structure.
1
<PAGE> 87
EXHIBIT E
EXCHANGE RIGHTS AGREEMENT
This Exchange Rights Agreement (this "Agreement") is made as of
_____________, 1997 among Pacific Gulf Properties Inc., a Maryland corporation
(the "Company"), PGP Northern Industrial, L.P., a Delaware limited partnership
(the "Operating Partnership"), and Eden Plaza Associates, LLC, a California
limited liability company ("Eden").
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Definitions.
The following terms shall have the following meanings:
"Act" means the Securities Act of 1933, as amended, and the rules
and regulations of the Securities and Exchange Commission thereunder, all as the
same shall be in effect at the relevant time.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in Los Angeles, California are authorized or required
by law to close.
"Common Stock" means the common stock of the Company, par value $.01
per share.
"Company" means Pacific Gulf Properties Inc., a Maryland
corporation.
"Board of Directors" means the board of directors of the Company and
any committee thereof duly granted specific authority with respect to this
Agreement.
"Eden" means Eden Plaza Associates, LLC, a California limited
liability company.
"Effective Date" shall mean the date of "Closing" as defined in the
Master Contribution Agreement.
"Election Notice" shall have the meaning set forth in Section 4.
"Entitled Unitholder" shall mean each of the following named
individuals, but only the following named individuals, and, as to each
individual, only as long as he personally remains a Unitholder. "Entitled
Unitholder" shall not include any heir, executor, successor or assign of any of
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following named individuals. The "Entitled Unitholders" are Elbert P. Bressie
and The San Francisco Opera Association.
"Excess Partnership Units" shall have the meaning set forth in
Section 5.
"Excess Shares" has the meaning assigned to such term in the
Articles of Incorporation of the Company, as amended from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
thereunder, all as the same shall be in effect at the relevant time.
"Exchange Factor" means the number used to calculate the amount of
cash and/or Common Stock to be delivered by the Company (i) pursuant to Section
2 or Section 3 upon the valid delivery to the Company by a Unitholder of an
Exercise Notice, or (ii) pursuant to Section 5 upon the occurrence of a
Mandatory Exchange Event, and in either case an election by the Company to pay
in cash and/or Common Stock as herein provided, and shall initially be equal to
one (1); provided, however, that the Exchange Factor shall be subject to
adjustment, from time to time, as follows:
(a) In the event the Company (i) shall issue rights or warrants to
all holders of Common Stock entitling them to subscribe for or purchase Common
Stock at a price per share less than the Value per share on the date fixed for
the determination of shareholders entitled to receive such rights or warrants,
and (ii) shall not issue similar rights or warrants to all Unitholders entitling
them to subscribe for or purchase Common Stock or Partnership Units at a
comparable price and in comparable amounts per share (determined, in the case of
Partnership Units, by reference to the Exchange Factor) in the event Unitholders
receive Common Stock under this Agreement, then the Exchange Factor in effect
immediately after the time fixed for the determination of shareholders entitled
to receive such rights or warrants shall be increased by multiplying such
Exchange Factor then in effect by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding at the time fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, and the denominator of which shall be the number of
shares of Common Stock outstanding at the time fixed for such determination plus
the number of shares of Common Stock which the aggregate offering price of the
total number of shares of Common Stock so offered for subscription would
purchase at the Value on such day.
(b) In the event the Company shall, by dividend or otherwise (in
either case not involving the Company's receipt of consideration therefor),
distribute to all holders of Common Stock (i) shares of capital stock of any
class other than Common
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Stock or other than shares of capital stock convertible into Common Stock, (ii)
evidences of its indebtedness or (iii) assets (excluding any regular cash
dividend or distribution lawfully paid under the laws of the state of
incorporation of the Company, any regular dividend or distribution on
outstanding Common Stock, in Common Stock (or any capital stock of the Company
convertible into Common Stock), and any rights or warrants referred to in
paragraph (a) of this definition) and shall not cause a corresponding
distribution to be made to all Unitholders, then the Exchange Factor in effect
immediately after the time fixed for the determination of shareholders entitled
to receive such distribution shall be increased by multiplying such Exchange
Factor then in effect by a fraction, the numerator of which shall be the Value
on the day fixed for such determination, and the denominator of which shall be
such Value less the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive, and as described in a resolution of the
Board of Directors, a copy of which shall be certified by the Secretary of the
Company and promptly delivered to the holders of the Partnership Units) of the
portion of the aggregate shares of capital stock, evidences of indebtedness or
assets so distributed attributable to one share of Common Stock.
(c) In the event that the Company (i) declares or pays a dividend
on its outstanding Common Stock with Common Stock or makes a distribution to all
holders of its outstanding Common Stock in Common Stock, (ii) subdivides its
outstanding Common Stock, or (iii) combines its outstanding Common Stock into a
smaller number of Common Stock, the Exchange Factor shall be adjusted by
multiplying the Exchange Factor by a fraction, the numerator of which shall be
the number of shares of Common Stock issued and outstanding on the record date
for such dividend, distribution, subdivision or combination (assuming for such
purpose that such dividend, distribution, subdivision or combination has
occurred as of such time), and the denominator of which shall be the actual
number of shares of Common Stock (determined without the above assumption)
issued and outstanding on the record date for such dividend, distribution,
subdivision or combination. Any adjustment to the Exchange Factor so made shall
become effective immediately after the effective date of such event, retroactive
to the record date, if any, for such event.
(d) In the event of any reclassification of the Common Stock into
securities other than Common Stock (other than a distribution, subdivision or
combination provided for elsewhere in this definition of "Exchange Factor") then
(i) the "Value" shall thereafter be the exchange price, quoted price, or value
as determined by the Board of Directors, as applicable, of a share or other unit
of the kind of such securities receivable upon such reclassification by a holder
of Common Stock, and (ii) the Exchange Factor in effect immediately after the
effective time of such reclassification shall be adjusted by multiplying such
Exchange Factor then in effect by a number equal to the number of
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shares or other units of such securities receivable upon such reclassification
by a holder of one share of Common Stock. In the event of any such
reclassification, appropriate adjustment shall be made in the application of
this definition of "Exchange Factor" after the reclassification to the end that
the provisions of this definition shall be applicable after the reclassification
as nearly equivalent as may be practicable.
(e) If the number of outstanding shares of Common Stock of the
Company are exchanged for a different number or kind of shares or securities of
the Company through reorganization, merger, recapitalization, combination of
shares, or other similar transaction, the Exchange Factor shall be appropriately
and proportionately adjusted to give effect thereto upon consummation of such
event.
(f) For purposes of this definition, the term "Common Stock" shall
include all Common Stock outstanding plus all Excess Shares outstanding.
All determinations of the Exchange Factor will be made by the Board
of Directors, in its sole and absolute discretion but in accordance with the
provisions hereof, and any such determination shall, in the absence of manifest
error, be binding upon each tendering Unitholder.
"Exercise Notice" means an exercise notice in substantially the form
attached hereto as Exhibit C.
"Fractional Interest" shall have the meaning set forth in Section 4.
"Gross Sale Price" shall have the meaning set forth in Section 4.
"HSR" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as the same shall be in effect at the relevant time.
"Liquidating Event" shall have the meaning ascribed to such term in
the Partnership Agreement.
"Mandatory Exchange Event" means either: (i) the close of escrow for
a sale, transfer or other disposition by the Operating Partnership of an
Original Property; or (ii) a Liquidating Event.
"Mandatory Units" shall have the meaning set forth in Section 5.
"Maryland GCL" means the Maryland General Corporation Law, as
amended, as the same shall be in effect at the relevant time.
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"Master Contribution Agreement" means that certain Master
Contribution Agreement of even date herewith by and between the Company and
Eden.
"No Exchange Period" means a period expiring two (2) years after the
Effective Date, except where a Unitholder dies (or, in the case of Units owned
as community property by the holder and the holder's spouse, then where either
the holder or the holder's spouse dies) prior to the relevant two (2) year
period, the "No Exchange Period", shall, as to such Unitholder only, expire on
the later of either (i) one (1) year after the Effective Date, or (ii) the death
of such holder.
"Non-Excess Partnership Units" shall have the meaning set forth in
Section 5.
"Operating Partnership" means PGP Northern Industrial, L.P., a
Delaware limited partnership.
"Original Property" shall have the meaning ascribed to such term in
the Partnership Agreement.
"Original Property Ratio" means, for each Original Property, the
ratio of (a) the "Agreed Value" (as defined in the Partnership Agreement) for
that Original Property as set forth on Exhibit D to the Partnership Agreement,
to (b) the aggregate of the Agreed Values for all Original Properties as set
forth on Exhibit D to the Partnership Agreement.
"Partnership Agreement" means the Agreement of Limited Partnership
of the Operating Partnership, as the same may be amended from time to time.
"Partnership Unit" shall have the meaning ascribed to such term in
the Partnership Agreement.
"Person" means an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Proposed Sale" shall have the meaning set forth in Section 4.
"Remaining Original Property Ratio" means the sum of the Original
Property Ratios for all Original Properties which at any time remain owned by
the Operating Partnership; provided however, that, in connection with a
Liquidating Event, the "Remaining Original Property Ratio" shall be zero.
"Response Notice" means a response notice in substantially the form
attached hereto as Exhibit B.
"Sale Notice" shall have the meaning set forth in Section 4.
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"Settlement Date" means:
(a) with respect to any tender governed by Section 2 or Section 3,
that date which is the later of either of the following:
(i) seven (7) calendar days after the Tender Date; provided,
however, that if the Company does not elect to deliver only shares of Common
Stock to the tendering Unitholder (or such other Person designated in the
Exercise Notice relating to the tender) in satisfaction of all of the Company's
obligations under Sections 2 and 3, this subparagraph (i) shall read "fifteen
(15) calendar days after the Tender Date"; or
(ii) the expiration or termination of the waiting period
applicable to such tender, if any, under HSR.
(b) with respect to any mandatory exchange or redemption governed
by Section 5, the date of the applicable Mandatory Exchange Event; provided,
however, that any such mandatory exchange or redemption shall be deemed to occur
immediately prior to such Mandatory Exchange Event and receipt by the Operating
Partnership of any consideration in connection with such Mandatory Exchange
Event.
"Tender Date" means (a) with respect to any tender governed by
Section 2 or Section 3, the date an Exercise Notice in proper form is received
by the Company; or (b) with respect to any mandatory exchange or redemption
governed by Section 5, the date which is three (3) Business Days prior to the
applicable Mandatory Exchange Event.
"Unit Cash Amount" means, with respect to any tender governed by
Section 2 or Section 3 or any mandatory exchange or redemption governed by
Section 5, the Value, as of the applicable Tender Date, multiplied by the
Exchange Factor, as of the applicable Tender Date; provided, however, that if a
Tender Date shall occur after the record date and prior to the effective date of
any event giving rise to an adjustment to the Exchange Factor pursuant to the
definition thereof, an appropriate adjustment in the Unit Cash Amount shall be
made.
"Unitholder" means an "Original Limited Partner" (as defined in the
Partnership Agreement) who has executed and delivered to the Company a written
agreement to be bound by this Agreement. The initial Unitholder(s) are listed on
Exhibit A attached hereto. Upon any additional Original Limited Partners
becoming Unitholders under this Agreement, the Company shall amend Exhibit A to
reflect the name and address of such additional Unitholders.
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"Value" means, subject to paragraph (c) of the definition of
"Exchange Factor," the average of the daily market price for a single share of
Common Stock for the ten (10) consecutive trading days immediately preceding the
applicable valuation date. The market price for each such trading day shall be:
(i) if the Common Stock is listed or admitted to trading on any national
securities exchange or the NASDAQ-National Market System, the closing price,
regular way, on such day, or if no such sale takes place on such day, the
average of the closing bid and asked prices on such day, (ii) if the Common
Stock is not listed or admitted to trading on any national securities exchange
or the NASDAQ-National Market System, the last reported sale price on such day
or, if no sale takes place on such day, the average of the closing bid and asked
prices on such day, as reported by a reliable quotation source designated by the
Company, or (iii) if the Common Stock is not listed or admitted to trading on
any national securities exchange or the NASDAQ-National Market System and no
such last reported sale price or closing bid and asked prices are available, the
average of the reported high bid and low asked prices on such day, as reported
by a reliable quotation source designated by the Company, or if there shall be
no bid and asked prices on such day, the average of the high bid and low asked
prices, as so reported, on the most recent day (not more than 10 days prior to
the date in question) for which prices have been so reported; provided that if
there are no bid and asked prices reported during the 10 days prior to the date
in question, the Value of the Common Stock shall be determined by the Company
acting in good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate.
2. Company's Option to Acquire Partnership Units for Cash. After the No
Exchange Period, subject to the provisions of this Agreement, upon the valid
delivery to the Company by a Unitholder of an Exercise Notice and tendering of
the Partnership Units covered thereby, the Company shall have the right and
option, in its sole and absolute discretion, but not the obligation, to acquire
from the Unitholder all, or any portion, of the Unitholder's validly tendered
Partnership Units in exchange for payment, on the Settlement Date, in
immediately available United States funds, of an amount equal to the Unit Cash
Amount as of the Tender Date, multiplied by the number of Partnership Units to
be acquired for cash.
3. Company's Option to Deliver Common Stock
(a) After the No Exchange Period, subject to the provisions of
this Agreement, if, after the valid delivery to the Company by a Unitholder of
an Exercise Notice and tender of the Partnership Units covered thereby, the
Company does not elect pursuant to Section 2 above to purchase for cash all of
the Partnership Units specified in such Exercise Notice and tendered to the
Company, then the Company shall deliver shares of Common Stock to the tendering
Unitholder (or such other Person
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designated in the Exercise Notice relating to the tender). In that event, the
number of shares of Common Stock which shall be so delivered by the Company
shall be equal to the number of Partnership Units tendered in accordance with
the Exercise Notice for which the Company has not elected to pay cash pursuant
to Section 2, multiplied by the Exchange Factor as of the applicable Tender
Date. The Common Stock so delivered shall be duly authorized, validly issued,
fully paid and nonassessable, registered under the Act, and free of any pledge,
lien, encumbrance or restriction created or imposed by the Company or the
Operating Partnership, other than as provided in the Company's Articles of
Incorporation or Bylaws, the Securities Act, the Maryland GCL and relevant Blue
Sky or other state securities or real estate syndication laws and this
Agreement.
(b) In the event of any reclassification of Common Stock into
securities other than Common Stock, the Company's option to deliver Common Stock
pursuant to paragraph (a) of this Section 3 shall be an option to deliver shares
or other units of such securities receivable upon such reclassification by a
holder of Common Stock.
(c) The Unitholders acknowledge that the exchange of Partnership
Units into cash and/or Common Stock is subject to certain substantial
restrictions contained in the Partnership Agreement.
(d) The Unitholders also acknowledge that each certificate or
instrument representing Partnership Units shall bear the following legend and
any other legend required under any applicable state securities law:
"NEITHER THE PARTNERSHIP UNITS IN THE PARTNERSHIP REPRESENTED BY THIS
CERTIFICATE OR INSTRUMENT NOR ANY PART THEREOF OR INTEREST THEREIN MAY BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF, IN WHOLE OR IN PART, UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
AGREEMENT OF LIMITED PARTNERSHIP OF PGP NORTHERN INDUSTRIAL, L.P., AS
AMENDED FROM TIME TO TIME (A COPY OF WHICH IS ON FILE WITH THE OPERATING
PARTNERSHIP); AND, IN ALL EVENTS, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE PARTNERSHIP UNITS REPRESENTED BY
THIS CERTIFICATE (OR ANY SECURITY ISSUED ON ACCOUNT HEREOF OR WITH RESPECT
HERETO) MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND IN
COMPLIANCE WITH ANY APPLICABLE STATE
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SECURITIES LAWS, OR (B) IF THE PARTNERSHIP HAS BEEN FURNISHED WITH AN
OPINION OF COUNSEL (WHICH COUNSEL AND OPINION BOTH MUST BE ACCEPTABLE TO
THE PARTNERSHIP IN ITS SOLE DISCRETION) FOR THE HOLDER THAT NO SUCH
REGISTRATION IS REQUIRED BECAUSE OF THE AVAILABILITY OF AN EXEMPTION FROM
REGISTRATION UNDER THE ACT OR OTHERWISE, AND QUALIFICATION OR OTHER
COMPLIANCE UNDER APPLICABLE BLUE SKY OR STATE SECURITIES LAWS."
(e) The Unitholder further acknowledges that each certificate or
instrument obtained under the terms of this Agreement shall bear the following
legend and any other legend required under applicable law:
The Corporation is authorized to issue three classes of capital stock
which are designated as Common Stock, Preferred Stock and Excess Stock.
The Board of Directors is authorized to determine the preferences,
limitations and relative rights of the Preferred Stock before the issuance
of any Preferred Stock. The corporation will furnish, without charge, to
any stockholder making a written request therefor, a copy of the
Corporation's Charter and a written statement of the designations, and any
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption applicable to each class of stock. Requests for such written
statement may be directed to Pacific Gulf Properties Inc. at its principal
executive offices, Attention: Secretary.
The shares of Common Stock represented by this certificate are subject to
restrictions on ownership and transfer for the purpose of the
Corporation's maintenance of its status as a Real Estate Investment Trust
under the Internal Revenue Code of 1986, as amended. No Person may
Beneficially Own Capital Stock in excess of 9.8% (in value or in number of
shares, whichever is more restrictive) of the outstanding Capital Stock of
the Corporation, with certain further restrictions and exceptions set
forth in the Corporation's Charter. Capital Stock that may be acquired
upon conversion of convertible securities of the Corporation held,
directly or constructively, by an investor, but not Capital Stock issuable
with respect to
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convertible securities held by others, is deemed to be owned by the
investor and outstanding prior to conversion for purposes of determining
the percentage of Capital Stock held by that Investor. Any Person who
attempts to Beneficially Own Capital Stock in excess of the above
limitations must immediately notify the Corporation. All capitalized terms
in this legend have the meanings detained in the Corporation's Charter.
Transfer or other events in violation of the restrictions described above
shall be null and void ab initio, and the purported transferee or
purported owner shall acquire or retain no rights to, or economic
interests in, any Common Stock held in violation of these restrictions.
The Corporation may redeem such shares upon the terms and conditions
specified by the Board of Directors in its sole discretion if the Board of
Directors determines that a Transfer or other event would violate the
restrictions described above.
In addition, upon the occurrence of certain events, if the restrictions on
ownership are violated, the Common Stock represented hereby may be
automatically exchanged for Excess Stock which will be held in trust for
the exclusive benefit of the transferee or transferees to whom such Common
Stock may ultimately be transferred (without violating these ownership
restrictions). The Corporation has an option to acquire Excess Stock under
certain circumstances. The Board of Directors shall determine the terms,
limitations, and any rights of the Excess Stock as required or prudent to
obtain an IRS Ruling Satisfactory to the Corporation regarding such Excess
Stock, which determination shall be set forth in Articles Supplementary to
the Corporation's Charter. The Corporation will furnish to the holder
hereof upon request and without charge a complete written statement of the
terms and conditions of the Excess Stock. Requests for such statement may
be directed to Pacific Gulf Properties Inc. at its principal executive
offices, Attention: Secretary.
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4. Entitled Unitholder's Option to Receive Property Interest.
(a) In the event of a Mandatory Exchange Event that consists of a
proposed sale of an Original Property or Properties and that would result in
Mandatory Units owned by an Entitled Unitholder being deemed tendered to the
Company pursuant to Section 5 below (the "Proposed Sale"), the Company shall
give written notice (the "Sale Notice") of the Proposed Sale to each such
Entitled Unitholder not less than sixty (60) days prior to the projected closing
date of the Proposed Sale. The Sale Notice shall identify the Original Property
or Properties proposed to be sold, the proposed gross sale price (the "Gross
Sale Price") and the projected closing date of the Proposed Sale. Each such
Entitled Unitholder may elect to exercise its rights pursuant to this Section 4
by giving written notice of such election (the "Election Notice") to the Company
not more that thirty (30) days after the date of the Sale Notice. If the Company
has not received an Entitled Unitholder's written Election Notice within said
thirty (30) days, that Entitled Unitholder shall be conclusively and irrevocably
deemed to have elected to not exercise its rights pursuant to this Section 4
with respect to the Proposed Sale and the Company and the Operating Partnership
shall be free to consummate the Proposed Sale without the provisions of this
Section 4 being applied to that Entitled Unitholder, provided that the Proposed
Sale is consummated within one (1) year after the projected closing date
originally set forth in the Sale Notice. If the Proposed Sale is to be
consummated more than one (1) year after the originally projected closing date,
then any Sale Notice and any Election Notice previously given with respect to
that Proposed Sale shall be of no force or effect and the provisions of this
Section 4 shall apply anew with respect to that Proposed Sale as if no such
previous notices had been given.
(b) The Unitholders, including without limitation the Entitled
Unitholders, shall have no right to approve or object to (i) the proposed Gross
Sale Price or any adjustments thereto; (ii) the closing date of the Proposed
Sale; (iii) the proposed buyer under the Proposed Sale; or (iv) any other term
or provision of the Proposed Sale or any modification or amendment thereof. The
Company, as the general partner of the Operating Partnership, shall have
absolute and exclusive discretion to determine the terms and conditions of, and
the buyer under, any Proposed Sale and may agree to change such terms and
conditions or buyer in its sole and absolute discretion without notice. Except
as provided in the last sentence of Section 4(a), any Election Notice given by a
Unitholder shall be unconditional and irrevocable if the Proposed Sale is
consummated. However, nothing contained herein shall obligate the Company or
Operating Partnership to consummate a Proposed Sale. The Company, as the general
partner of the Operating Partnership, may, in its sole and absolute discretion
and without any liability, elect to terminate or abandon any Proposed Sale,
notwithstanding the
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giving of any Sale Notice or Election Notice with respect thereto or otherwise.
(c) If an Entitled Unitholder timely delivers an Election Notice
pursuant to Section 4(a) with respect to a Proposed Sale, then on the Settlement
Date with respect to such Proposed Sale (such Proposed Sale also being a
Mandatory Exchange Event) the provisions of this Section 4 shall apply to the
extent this Section 4 is inconsistent with Section 5 below. On the Settlement
Date with respect to such Proposed Sale, and immediately prior to the
consummation of such Proposed Sale, the Operating Partnership shall deed an
undivided "Fractional Interest" in the Original Property or Properties which are
the subject of such Proposed Sale to each Entitled Unitholder who has timely
delivered an Election Notice pursuant to Section 4(a) with respect to such
Proposed Sale and to any other Unitholder to whom the Company, in its sole and
absolute discretion, extends the benefits of this Section 4. The Fractional
Interest deeded to each such Unitholder shall be calculated by dividing (i) the
product of the Unit Cash Amount as of the Tender Date multiplied by the number
of Mandatory Units deemed tendered by such Unitholder to the Company with
respect to such Proposed Sale pursuant to Section 5, below; by (ii) the actual
final Gross Sale Price with respect to such Proposed Sale (regardless of the
proposed Gross Sale Price projected in the Sale Notice).
(d) In the event a Fractional Interest in the Original Property or
Properties which are the subject of a Proposed Sale is deeded to a Unitholder,
then that Unitholder shall (i) execute, deliver and acknowledge all deeds,
assignments, agreements and other documents required to be executed, delivered
or acknowledged by the seller under the Proposed Sale to the full extent
necessary to consummate the Proposed Sale as if that Unitholder were the seller
under the Proposed Sale; (ii) pay a share, equal to its Fractional Interest, of
all of the fees, commissions, costs and expenses that would have been incurred
in implementing the Proposed Sale without deeding Fractional Interests to
Unitholders pursuant to this Section 4; (iii) pay its share, equal to a fraction
the numerator of which is its Fractional Interest and the denominator of which
is the sum of all Fractional Interests of all Unitholders receiving Fractional
Interests in connection with the Proposed Sale, of all of the fees, commissions,
costs and expenses that would not have been incurred in implementing the
Proposed Sale but for the deeding of one or more Fractional Interests to
Unitholders pursuant to this Section 4; (iv) upon, and only upon, the
consummation of the Proposed Sale, receive its Fractional Interest of the net
proceeds generated by the Proposed Sale which such Unitholder may direct be held
in or by an exchange escrow or accommodator at such Unitholder's sole cost and
expense; and (v) otherwise diligently cooperate with the Company and Operating
Partnership to implement the Proposed Sale.
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(e) The right of any Entitled Unitholder to participate in a
Proposed Sale in the manner provided in this Section 4 is expressly conditioned
upon the Company's determination, in the Company's reasonable discretion, that
none of the conditions set forth in this Section 4(e) exist with respect to such
Entitled Unitholder. In addition, and without in any way imposing any duty on
the Company to do so, if the Company, in its sole and absolute discretion,
extends the benefits of this Section 4 to any other Unitholder, the Company may
nevertheless subsequently deny the benefits of this Section 4 to any such
Unitholder if the Company, in its reasonable discretion, determines that any of
the conditions set forth in this Section 4(e) exist with respect to such
Unitholder. The conditions of this Section 4(e) are that: (i) there is then
outstanding against such Unitholder any judgement or decree that could attach to
or become a lien upon any property acquired by such Unitholder; (ii) such
Unitholder is the subject of any bankruptcy, insolvency or other proceedings
related to the consolidation, adjustment, discharge, arrangement or
reorganization of its debts or obligations; (iii) the title company issuing
title insurance in connection with the Proposed Sale refuses to insure title, or
adds any exception to the title insurance it does issue, on account of the
deeding of the Fractional Interest to such Unitholder; (iv) any lis pendens,
injunction or other action is filed seeking to prevent the Proposed Sale on
account of the deeding of the Fractional Interest to such Unitholder; (v) the
Company reasonably determines that the implementation of this Section 4 will
materially delay, impede or jeopardize (and such delay, impediment or
jeopardization would be reasonable) the Proposed Sale or result in the Operating
Partnership receiving materially less favorable terms in the Proposed Sale than
would otherwise be the case; or (vi) there has been a change in any law, rule or
regulation such that, in the Company's reasonable determination, the
implementation of the provisions of this Section 4 would result in a materially
adverse consequence to the Company or Operating Partnership, including without
limitation, jeopardize the Company's status as a REIT or the imposition of a
penalty upon the Company or Operating Partnership. Any Unitholder seeking the
benefits of this Section 4 shall, on or before the consummation of the Proposed
Sale, reimburse the Company for all reasonable fees, costs and expenses incurred
by the Company in making the determinations described in this Section 4(e),
including without limitation costs of title insurance, reports and commitments,
litigation searches and credit checks.
(f) Each deed for a Fractional Interest shall be deposited by the
Company into the escrow established for the Proposed Sale with instructions to
the escrow to cause the Fractional Interest deed(s) to be recorded immediately
prior to the recordation of the deed conveying the Original Property or
Properties to the buyer. Such escrow instructions shall give the Company the
right, in its sole and absolute discretion, to unilaterally withdraw from such
escrow at any time prior to
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recordation any Fractional Interest deed to any Unitholder with respect to whom
the Company determines any of the conditions set forth in Section 4(e) exist.
Except as expressly provided in Section 4(g) below, no Unitholder shall have any
right to contest, object to or seek to prevent any such withdrawal of a
Fractional Interest deed from escrow. If the Company determines that any of the
conditions set forth in Section 4(e) exist with respect to a Unitholder, then
the Mandatory Units held by such Unitholder shall be automatically subject to
mandatory exchange or redemption pursuant to Section 5 below.
(g) The sole and exclusive remedy of any Unitholder who contends
that the Company or the Operating Partnership has failed to comply with the
provisions of this Section 4 shall be an action at law for monetary damages
against only the Company and/or the Operating Partnership. Each Unitholder
hereby expressly waives any right or privilege it may now or hereafter have to
(i) name or join any person or entity, including without limitation any
prospective buyer under a Proposed Sale, in any such action for damages; (ii)
seek specific performance of this Section 4; (iii) seek an injunction to enforce
the provisions of this Section 4 or to prevent, delay or impede any Proposed
Sale; (iv) file a lis pendens against any property that is the subject of a
Proposed Sale; or (v) in any other way prevent, delay or impede a Proposed Sale.
Each Unitholder acknowledges (vi) the absolute and paramount need of the Company
and Operating Partnership to be able to consummate any Proposed Sale the Company
deems appropriate without delay or hinderance of any kind on account of any
Unitholder's contention that the Company or the Operating Partnership may not
have complied with this Section 4; and (vii) that an action at law for monetary
damages against only the Company and/or the Operating Partnership is an adequate
remedy on account of the Company's and/or the Operating Partnership's failure to
comply with the provisions of this Section 4.
(h) The Company's sole duty pursuant to this Section 4 shall be to
comply with the provisions of this Section 4. Neither the Company nor the
Operating Partnership makes any representation or provides any assurance that
compliance with the provisions of this Section 4 will be respected or upheld by
any agency or authority or achieve the result desired by any Unitholder. The
monetary damages recoverable by a Unitholder if the Company or the Operating
Partnership fails to comply with the provisions of this Section 4 shall be
limited to the marginal additional income tax liability such Unitholder incurs
as a result of the Mandatory Units deemed tendered by such Unitholder to the
Company in connection with the Proposed Sale being exchanged or redeemed
pursuant to Section 5 rather than this Section 4. It is agreed that any such
failure to comply would not result in any other damages being incurred or
recoverable by a Unitholder, whether consequential, compensatory or otherwise.
Each Unitholder claiming monetary damages under this Section 4
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shall have the burden of proving such damages and shall have the duty to
mitigate those damages to the extent reasonably possible.
(i) Nothing contained herein shall preclude the Company from
extending the benefits of this Section 4 to Unitholders other than Entitled
Unitholders. However, any such extension shall be in the Company's sole and
absolute discretion and subject to any additional terms or conditions as the
Company, in its sole and absolute discretion, may impose. Neither the Company
nor the Operating Partnership shall have any duty or obligation, and neither the
Company nor the Operating Partnership shall incur any liability if the Company
fails, to extend the benefits of this Section 4 to any Unitholders other than
Entitled Unitholders.
(j) Anything contained herein or in any other document to the
contrary notwithstanding, the provisions of this Section 4 may be supplemented
and amended by the mutual agreement of the Company and the Entitled Unitholders
without the need for notice to or consent of any other Unitholder.
5. Mandatory Exchange.
(a) If, on the Settlement Date with respect to a Mandatory
Exchange Event, the aggregate number of Partnership Units which have not been
acquired or converted pursuant to Section 2, Section 3 or Section 4 above
exceeds the product (such product being herein called the "Non-Excess
Partnership Units") of the number of Partnership Units outstanding on the
Effective Date multiplied by the Remaining Original Property Ratio (calculated
without including the Original Property Ratio of any Original Property then
being sold, transferred or otherwise disposed of), then Partnership Units in the
number of such excess (the "Excess Partnership Units") shall automatically be
deemed tendered to the Company, whereupon the provisions of Section 2 and 3
above shall apply without the need of any Exercise Notice or actual tendering of
Partnership Units. In the event of an automatic tender pursuant to this Section
5, each Unitholder holding Partnership Units on the Settlement Date for such
Mandatory Exchange Event shall automatically be deemed to have tendered to the
Company a number of Partnership Units (the "Mandatory Units") equal to the total
number of Partnership Units then held by such Unitholder multiplied by a
fraction, the numerator of which is the number of Excess Partnership Units then
existing, and the denominator of which is the number of then existing
Partnership Units which have not been acquired or converted pursuant to Section
2, Section 3 or Section 4 above.
(b) If, on the Settlement Date with respect to a Mandatory
Exchange Event there has been a voluntary tender of Partnership Units for which
the Settlement Date has not yet occurred, then the Settlement Date for such
voluntary tender shall instead be the Settlement Date with respect to such
Mandatory Exchange Event, but the Tender Date and Unit Cash
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Amount with respect to such voluntary tender shall remain unchanged.
(c) The settlement of any mandatory exchange or redemption
pursuant to this Section 5 shall be deemed to have occurred prior to the
Mandatory Exchange Event giving rise to such mandatory exchange or redemption.
All Operating Partnership allocations and distributions made pursuant to the
Partnership Agreement on account of any such Mandatory Exchange Event shall be
calculated and made on the basis that the settlement of any mandatory exchange
or redemption pursuant to this Section 5 occurred prior to such Mandatory
Exchange Event.
(d) As of the Settlement Date with respect to a Mandatory Exchange
Event, all certificates representing Partnership Units which have not actually
been surrendered to the Company shall thereafter represent only the Partnership
Units or other securities to which the Unitholder remains entitled under this
Section 5. Upon being notified by the Company of a Mandatory Exchange Event each
Unitholder shall promptly deliver to the Company a completed and duly executed
Exercise Notice with respect to any Excess Partnership Units held by such
Unitholder.
(e) Except as modified by this Section 5, all other provisions of
this Agreement shall apply to an acquisition or conversion of the Partnership
Units pursuant to this Section 5, and any deemed tender of Partnership Units
pursuant to this Section 5 shall be treated as an actual tender for purposes of
the other provisions of this Agreement.
6. Procedure for Exercising Company's Right to Acquire Partnership
Units.
(a) Promptly upon receipt of an Exercise Notice from a tendering
Unitholder (and in no event later than three (3) Business Days after such
receipt), or on or before the Tender Date with respect to any Mandatory Exchange
Event, the Company shall exercise its right to acquire the validly or deemed
tendered Partnership Units by delivering to the tendering Unitholder a completed
and duly executed Response Notice. The Company shall simultaneously deliver to
the Operating Partnership a copy of any such duly executed Response Notice.
(b) Unless an exception applies under applicable law and
regulations, the Company, if it exercises its rights hereunder, will be required
to withhold, and will withhold, thirty one percent (31%) (or such other amount
as applicable law may require) of the gross proceeds (including dollar
equivalent of shares of Common Stock) paid to a tendering Unitholder pursuant to
this Agreement unless the Unitholder provides his, her or its tax identification
number (employer identification number or Social Security Number) and certifies
that such number is correct. Therefore, unless such an exception exists and is
provided in a manner satisfactory to the Company, each tendering
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Unitholder should complete and sign the main signature form on the Exercise
Notice and sign the Substitute Form W-9 included as part of the Exercise Notice,
so as to provide the information and certification necessary to avoid backup
withholding.
(c) All determinations as to the validity and form of any tender
pursuant to this Agreement will be made by the Board of Directors of the
Company, in its sole and absolute discretion but in accordance with the
provisions hereof, and any such determination shall, in the absence of manifest
error, be binding upon each tendering Unitholder and on the Company.
7. Payment.
(a) On the Settlement Date, the Company shall deliver to the
tendering Unitholder (or such other Person designated in the Exercise Notice),
pursuant to the instructions in the Exercise Notice, the cash and/or Common
Stock required to be delivered pursuant to this Agreement.
(b) In all cases, payment for the Partnership Units tendered
pursuant to this Agreement shall be made only after timely receipt by the
Company of the partnership interest certificate(s) relating to such Partnership
Units, a properly completed and duly executed Exercise Notice, appropriate
investment representations concerning the recipient's investment intent with
regard to any Common Stock received hereunder, and any other documents required
by the Exercise Notice.
(c) The Company agrees to use reasonable commercial efforts to
obtain an early termination of the waiting period applicable to each tender, if
any, under the HSR.
(d) Anything in this Agreement to the contrary notwithstanding,
the Company shall not be required to tender or deliver cash, or to issue, tender
or deliver any Common Stock if to do so would cause any violation of the
Securities Act, the Exchange Act, the Maryland GCL, or any applicable Blue Sky
or other state securities or real estate syndication laws. Upon the reasonable
request by the Company, a tendering Unitholder shall deliver to the Company such
other and further documents to ensure compliance with such laws. Both the
Company and the tendering Unitholder shall use commercially reasonable efforts
to permit such tender and delivery to be in compliance with all of the foregoing
laws.
8. Rights as a Partner.
(a) Until the Settlement Date, each tendering Unitholder shall
continue to own such Unitholder's tendered Partnership Units, and will continue
to be treated as the holder of such tendered Partnership Units for all purposes
of the Partnership Agreement, including, without limitation, for purposes of
voting, consent, allocations and distributions.
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(b) On the Settlement Date, all Partnership Units acquired by the
Company pursuant to this Agreement shall automatically, and without further
action required, be converted into and deemed to be an equal number of general
partner interests in the Operating Partnership owned by the Company, and all
rights, title, interest, claim, cause of action, and the like of the Unitholder
arising out of such Unitholder's Partnership Units so acquired and/or status and
interest as a partner as a result thereof shall become the property of the
Company in its entirety, and the Unitholder shall have no further claim of
interest therein or thereto.
9. Rights as a Shareholder. No tendering Unitholder (or other Person
designated in the Exercise Notice, if applicable) shall have any rights as a
shareholder of the Company with respect to shares of Common Stock, if any, to be
received pursuant to this Agreement until the Settlement Date, at which time
such tendering Unitholder (or other Person designated in the Exercise Notice, if
applicable) shall become the holder of record of such shares of Common Stock.
10. Consistent Treatment. Each of the Company, any tendering
Unitholder, and the Operating Partnership shall treat the transaction between
the tendering Unitholder and the Company for Federal income tax purposes as a
sale of the tendering Unitholder's Partnership Units to the Company.
11. Representations and Warranties of Unitholders. On the Effective Date
and on each date that a Unitholder receives Common Stock or other securities or
cash under this Agreement, each Unitholder represents and warrants to the
Company as follows (and each such representation and warranty also constitutes a
condition precedent to the Company's obligation to pay the cash and/or issue the
Common Stock as provided under this Agreement):
(a) Unitholder has the authority to exercise all rights and powers
under this Agreement, including the right and power to deliver the Exercise
Notice, tender Partnership Units and receive all consideration provided
hereunder, and has obtained all consents, approvals, permits and other
clearances required to complete the transactions contemplated hereunder.
(b) Unitholder is delivering good and marketable title to each and
every Partnership Unit tendered hereunder, free and clear of any liens, claims,
encumbrances, restrictions, interests or rights of any other Person, except for
the restrictions on transfer of Partnership Units described in this Agreement.
(c) Unitholder is either (a) an "accredited investor" within the
meaning of Rule 501(a) of Regulation D under the Act, or (b) a person who either
alone or with his, her or its purchaser representative (as defined in Rule
501(h) of Regulation D under the Act) has such knowledge and experience in
financial
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and business matters that he or she is capable of evaluating the merits and
risks of an investment in the Partnership Units, Common Stock or any other
security acquired hereunder. The Unitholder has such knowledge and experience in
financial and business matters as to be capable of evaluating alone, or together
with his, her or its purchaser representative or personal advisor the merits and
risks of an investment in the Partnership Units, Common Stock or any other
security delivered hereunder and protecting his, her or its own interests in
connection with the investment and has obtained, in his, her or its judgment,
alone, or together with his, her or its purchaser representative or personal
advisor sufficient information from the Company to evaluate the merits and risks
of an investment in the Partnership Units, Common Stock or any other security
delivered hereunder. The Unitholder acknowledges that he, she, or it has the
financial ability to bear the economic risk of his, her or its investment in the
Company, has adequate means for providing for his, her or its current needs and
personal contingencies and has no need for liquidity with respect to the
investment in the Company. If other than an individual, the Unitholder also
represents it has not been organized solely for the purpose of acquiring the
Partnership Units, Common Stock or other security acquired under this Agreement.
12. Indemnification. Each Unitholder agrees to indemnify the Company,
the Operating Partnership and their affiliates, officers, directors, partners,
employees, agents and representatives against all losses, claims, damages,
liabilities and expenses whatsoever and reasonable fees and expenses of counsel
incurred in investigating, preparing or defending against, and aggregate amounts
paid in settlement of, any litigation, action, investigation or proceeding by
any governmental agency or body, commenced or threatened, in each case whether
or not a party, or any claim whatsoever based upon, arising from or in
connection with any third party's or such Unitholder's claim against such
Unitholder's Partnership Units at any time prior to delivery to the Company
under this Agreement which arise prior to such delivery, or based upon, rising
from or in connection with the breach of any representation or warranty made by
Unitholder under this Agreement.
13. Miscellaneous.
13.1 Governing Law. This Agreement shall be governed, construed and
enforced in all respects by the laws of the State of California applicable to
contracts made and wholly performed within the State of California by Persons
domiciled in California, without regard to choice of law rules.
13.2 Entire Agreement. This Agreement and the provisions of the
forms of Exercise Notice and Response Notice attached hereto, together with the
Partnership Agreement, and other agreements and documents specifically referred
to herein, constitute the full and entire understanding and agreement with
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regard to the subjects hereof and thereof, and supersede any previous agreements
regarding the matters covered herein.
13.3 Notices. Each notice, demand, request, request for approval,
consent, approval, disapproval, designation or other communication (each of the
foregoing being referred to herein as a "notice") required or desired to be
given or made under this Agreement shall be in writing (except as otherwise
provided in this Agreement) and shall be effective and deemed to have been
received (i) when delivered in person, or (ii) when sent by facsimile
transmission with receipt acknowledged (a) if to a Unitholder, at such
Unitholder's address or telefax number set forth in Exhibit A hereto or, if not
set forth in Exhibit A, in the records of the Operating Partnership, or at such
other address or to the telefax number as such Unitholder shall have furnished
to the Company and the Operating Partnership in writing, (b) if to the Company,
at the address of the Company's principal executive offices and addressed to the
attention of the President and Chief Executive Officer, or at such other address
or to the telefax number as the Company shall have furnished to each Unitholder
and the Operating Partnership in writing or (c) if to the Operating Partnership,
at the address of the Company's principal executive offices and addressed to the
attention of the Corporate Secretary, or at such other address or to the telefax
number as the Operating Partnership shall have furnished to each Unitholder and
the Company in writing.
13.4 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided, however, that no such severability
shall be effective if it materially changes the economic benefit of this
Agreement to any Person.
13.5 Construction. The words such as "herein," "hereinafter,"
"hereof" and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.
Whenever the context so indicates, the singular or plural number shall each be
deemed to include the other.
13.6 Use of Term "Assignee". Whenever in this Agreement the term
"assignee" is used, it shall include each assignee, transferee, distributee
(whether or not in liquidation of the distributing Person), assignee of an
assignee through one or more predecessor assignments and, by way of illustration
and not limitation, each Person who becomes an assignee as a result of a secured
creditor exercising its rights under a security agreement and/or applicable law,
in each case, whether the assignment creating the assignee was effected with or
without consideration, by gift or bequest, by operation of law or otherwise. The
terms "assign," "assigned" and "assignment" shall be similarly construed.
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13.7 Effectiveness and Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the Company, the Operating Partnership
and all Unitholders who sign and deliver counterparts of this Agreement. Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefits
of all parties and their successors, assigns, heirs, executors, administrators
and legal representatives.
13.8 Additional Unitholders. If the Operating Partnership issues
Partnership Units to Persons who are not parties to this Agreement, the Company
may elect to cause such Persons to become parties to this Agreement, in which
case (a) this Agreement shall be amended without the consent of any other party
to make such Persons parties to this Agreement, and (b) such persons shall
execute a counterpart of this Agreement.
13.9 Section Titles. Section titles are for descriptive purposes
only and shall not control or alter the meaning of this Agreement as set forth
in the text.
13.10 Attorney Fees. In the event of any litigation among the
parties hereto to enforce or interpret any provision or right hereunder, the
unsuccessful party to such litigation covenants and agrees to pay the successful
party all costs and expenses reasonably incurred, including without limitation
reasonable attorneys' fees. For the purpose of this Agreement, the term
"attorneys' fees" shall mean the fees and expenses of counsel to the parties
hereto, which may include printing, photostating, duplicating and other
expenses, air freight charges and fees billed for law clerks, paralegals,
librarians and others not admitted to the bar but performing services under the
supervision of an attorney. Such term shall also include all such fees and
expenses incurred with respect to appeals, arbitrations, reference out and
bankruptcy proceedings, and whether or not any action or proceeding is brought
with
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respect to the matter for which said fees and expenses were incurred.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement.
PACIFIC GULF PROPERTIES INC., a Maryland
corporation
By:_________________________________________
Glenn L. Carpenter, President and Chief
Executive officer
By:_________________________________________
Donald G. Herrman, Executive Vice
President, Chief Financial Officer and
Secretary
PGP NORTHERN INDUSTRIAL, L. P., a Delaware
limited partnership
By: PACIFIC GULF PROPERTIES INC., a Maryland
corporation, general partner
By:_____________________________________
Glenn L. Carpenter, President and
Chief Executive Officer
By:_____________________________________
Donald G. Herrman, Executive Vice
President, Chief Financial Officer
and Secretary
EDEN PLAZA ASSOCIATES, LLC, a California
limited liability company
By:_________________________________________
Elbert P. Bressi, Managing Member
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EXHIBIT A
UNITHOLDERS
NAME ADDRESS AND TELEFAX
- ---- -------------------
EDEN PLAZA ASSOCIATES, LLC, a 520 Third Street, Suite 555
California limited liability San Francisco, CA 94107
company Telefax: (415) 778-3909
Telephone: (415) 778-3900
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EXHIBIT B
RESPONSE NOTICE
[Date] _______________, ____, ____
TO: [Tendering Unitholder] and __________________________, L.P.
On and subject to the terms, provisions, and conditions of that certain
Exchange Rights Agreement ("Agreement") dated as of _____________, 1997 among
Pacific Gulf Properties Inc., a Maryland corporation (the "Company"), PGP
Northern Industrial, L.P., a Delaware limited partnership (the "Operating
Partnership"), and each of the limited partners of the Operating Partnership
listed on Exhibit A thereto, the Company hereby exercises its right to acquire
____________ Partnership Units from (the "Unitholder") pursuant to that certain
Notice of Exercise delivered to the Company by the Unitholder, by delivery of
$_____________ in cash and/or _____________ shares of Common Stock of the
Company.
PACIFIC GULF PROPERTIES INC., a
Maryland corporation
By: ______________________________________
Its: _____________________________________
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EXHIBIT C
EXERCISE NOTICE
[Date] _______________, ____, ____
TO: Pacific Gulf Properties Inc.
On and subject to the terms, provisions, and conditions of that certain
Exchange Rights Agreement ("Agreement"), dated as of _____________, 1997 among
Pacific Gulf Properties Inc., a Maryland corporation (the "Company"), PGP
Northern Industrial, L.P., a Delaware limited partnership (the "Operating
Partnership"), and each of the limited partners of the Operating Partnership
listed on Exhibit A thereto, the undersigned Unitholder hereby exercises such
Unitholder's right to tender _____________ Partnership Units owned by such
Unitholder pursuant to this Notice of Exercise. The undersigned Unitholder
hereby affirms each of the representations and warranties contained in the
Agreement, intending that the Company shall rely hereon as a material inducement
to pay the cash and/or issue the shares of Common Stock called for under the
Agreement. Such representations and warranties are true and correct as of the
date hereof, and shall be true and correct as of the "Settlement Date" (as such
term is defined in the Agreement).
________________________, 199_
To: PGP NORTHERN INDUSTRIAL, L. P.
Description of Partnership Units
- --------------------------------------------------------------------------------
Name(s) and Partnership Interest Certificate(s)
Address(es) of Enclosed (Attach additional list if
Registered Owner(s) necessary)
Partnership Units of Units of
Interest Partnership Partnership
Certificate Interests Interests
Number(s) Represented by Being
Partnership Tendered
Interest
Certificate(s)
-----------------------------------------------------
Total
Unless otherwise indicated, it will be assumed that all Partnership Units
evidenced by any Partnership Interest Certificate(s) delivered to the Company
are being tendered. See instruction 4.
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NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Gentlemen:
The undersigned hereby provides notice to the Company of the undersigned's
tender of the above-described Partnership Units. All capitalized terms used
herein but not defined herein are used as defined in the Partnership Agreement
or Exchange Rights Agreement.
Subject to, and effective upon, payment (i.e., payment of cash and/or
issuance of shares of common stock of the Company ("Common Stock")) for the
Partnership Units tendered herewith, the undersigned hereby sells, assigns,
transfers, and conveys to the Company, in the event the Company exercises its
rights to purchase the above-described Units pursuant to the Exchange Rights
Agreement, all right, title and interest in and to all the Partnership Units
that are being tendered hereby, together with all rights, claims, interests,
privileges, entitlements, rights to distributions of any and all kinds, causes
of action, and the like in, to, and against the Operating Partnership and any of
its general or limited partners, and hereby irrevocably constitutes and appoints
the Company its attorney in fact, with full power of substitution and
resubstitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), (a) to present such Partnership Units for transfer on
the Operating Partnership's books, and (b) to receive all benefits and otherwise
exercise all rights of beneficial ownership of such Partnership Units all in
accordance with the terms and conditions of the Exchange Rights Agreement.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Partnership Units and that, upon payment, the Company will acquire good,
marketable and unencumbered title thereto, free and clear of all liens, claims,
restrictions, charges and encumbrances whatsoever, and the same will not be
subject to any adverse claim. The undersigned will, upon request, execute any
additional documents deemed by the Company to be necessary or desirable to
complete the sale, assignment and transfer of the tendered Partnership Units.
The undersigned further represents that he, she or it is either (a) an
"accredited investor" within the meaning of Rule 501(a) of Regulation D under
the Act, or (b) a person who either alone or with his, her or its purchaser
representative (as defined in Rule 501(h) of Regulation D under the Act) has
such knowledge and experience in financial and business matters that he, she or
it is capable of evaluating the merits and risks of an investment in the
Partnership Units, Common Stock or any other security acquired under the
Exchange Rights Agreement. The Unitholder has such knowledge and experience in
financial and
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business matters as to be capable of evaluating alone, or together with his, her
or its purchaser representative or personal advisor the merits and risks of an
investment in the Partnership Units, Common Stock or any other security
delivered under the Exchange Rights Agreement and protecting his, her or its own
interests in connection with the investment and has obtained, in his, her or its
judgment, alone, or together with his, her or its purchaser representative or
personal advisor sufficient information from the Company to evaluate the merits
and risks of an investment in the Partnership Units, Common Stock or any other
security delivered under the Exchange Rights Agreement. The Unitholder
acknowledges that he, she, or it has the financial ability to bear the economic
risk of his, her or its investment in the Company, has adequate means for
providing for his, her or its current needs and personal contingencies and has
no need for liquidity with respect to the investment in the Company. If other
than an individual, the Unitholder also represents it has not been organized
solely for the purpose of acquiring the Partnership Units, Common Stock or other
security acquired under the Exchange Rights Agreement.
The effectiveness of this Notice of Exercise shall not be affected by, and
shall survive, the death or incapacity of the undersigned, and any obligation of
the undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators and legal representatives of the undersigned. Except
as provided in the Exchange Rights Agreement, this tender is irrevocable.
The undersigned understands that a tender of Partnership Units pursuant to
the Exchange Rights Agreement constitutes a binding agreement between the
undersigned and the Company, upon the terms and subject to the conditions of the
Exchange Rights Agreement.
Unless otherwise indicated under "Special Delivery Instructions", please
mail the cash and/or shares of Common Stock for the purchase price and, if
applicable, return the Partnership Interest Certificate(s) for Partnership Units
not tendered (and accompanying documents, as appropriate) to the address(es) of
the registered holder(s) appearing under "Description of Partnership Units
Tendered." In the event that the Special Delivery Instructions are completed,
please issue and deliver the cash and/or the shares of Common Stock for the
purchase price, and any Partnership Interest Certificate for Partnership
Interests not tendered, if applicable, in the name of the registered holder(s)
and transmit the same to the person(s) so indicated.
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SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 5 and 6)
To be completed ONLY if Partnership Interest Certificate(s) for
Partnership Units not tendered and/or cash and/or shares of Common Stock for the
purchase price of Partnership Units purchased are to be sent to someone other
than the undersigned or to the undersigned at an address other than that above.
Mail:
[ ] certificate(s) for shares of Common Stock
[ ] Partnership Interest Certificate(s) for Partnership Units not tendered
to:
Name____________________________________________________________________________
(Please Print)
Address_________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
________________________________________________________________________________
(Tax Identification or Social Security Number)
SIGN HERE
Complete Substitute Form W-9 Included
________________________________________________________________________________
________________________________________________________________________________
(Signature(s) of holder of Partnership Units)
(Must be signed by registered holder(s) as name(s) appear(s) on Partnership
Interest Certificate(s). If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please set forth full title and see
Instruction 5.)
Dated___________________________________________________________________________
Name(s)_________________________________________________________________________
(Please Print)
Capacity________________________________________________________________________
(Full Title)
Address_________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Area Code and Tel. No.__________________________________________________________
Tax Identification or
Social Security No._____________________________________________________________
(Complete Substitute Form W-9)
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Guarantee of Signature(s)
(See Instruction 1)
Authorized
Signature_______________________________________________________________________
Name of Firm____________________________________________________________________
Dated___________________________________________________________________________
INSTRUCTIONS
Forming Part of the Terms and Conditions
of the Exchange Rights Agreement
1. Guarantee of Signature. No signature guarantee on this Notice of
Exercise is required unless the registered holder of the Partnership Units has
completed the box entitled "Special Delivery Instructions." In such case all
signatures on this Notice of Exercise must be guaranteed by a member firm of any
registered national securities exchange in the United States or of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
(not a savings bank or a savings and loan association) having an office, branch
or agency in the United States.
2. Delivery of Notice of Exercise and Partnership Interest
Certificate(s) or Exchange Rights Agreement Evidencing Rights. This Notice of
Exercise is to be completed by the holder of Partnership Units. Partnership
Interest Certificate(s) for all Partnership Units as well as a properly
completed and duly executed Notice of Exercise, and any other documents required
by this Notice of Exercise, must be received by the Company. No alternative,
conditional or contingent tenders will be accepted.
3. Inadequate Space. If the space provided herein is inadequate, the
Partnership Interest Certificate number(s) and/or other information required
should be listed on a separate schedule attached hereto.
4. Partial Tenders. If fewer than all the Partnership Units evidenced
by any Partnership Interest Certificate(s) submitted are to be tendered, fill in
the number of Partnership Units which are to be tendered in the box entitled
"Partnership Units Being Tendered." In such case, a new Partnership Interest
Certificate for the remainder of the Partnership Interests that was evidenced by
old certificate(s) will be sent to the registered holder, unless otherwise
provided in the appropriate box on this Notice of Exercise, as soon as
practicable. All Partnership Units represented by Partnership Interest
Certificate(s) delivered to the Company will be deemed to have been tendered
unless otherwise indicated.
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<PAGE> 116
5. Signatures on Notice of Exercise. The signature(s) must correspond
with the name as written on the face of the Partnership Interest Certificate(s)
without any change whatsoever. If any of the Partnership Units tendered hereby
are owned of record by two or more joint owners, all such owners must sign the
Notice of Exercise. If this Notice of Exercise is signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, each person should so indicate
when signing, and proper evidence satisfactory to the Company of the authority
of each such person so to act must be submitted.
6. Special Delivery Instructions. If Partnership Interest
Certificate(s) for unpurchased Partnership Units are to be returned to a person
other than the signer of this Notice of Exercise or if a certificate for shares
of Common Stock is to be sent to someone other than the signer of this Notice of
Exercise or to an address other than that shown above, the appropriate boxes on
this Notice of Exercise should be completed.
7. Waiver of Conditions. The Company reserves the absolute right to
waive any of the specified conditions of the Offer in the case of the
Partnership Units tendered.
8. Backup Withholding. Under Federal income tax law, a person
surrendering Partnership Units must provide the Company with his, her or its
correct taxpayer identification number ("TIN") on Substitute Form W-9 below
unless an exemption applies. If the correct TIN is not provided, a $50 penalty
may be imposed by the Internal Revenue Service and payments made in exchange for
the surrendered Partnership Units may be subject to backup withholding of that
rate provided by Federal income tax law (such rate being on the date of the
Partnership Agreement and the Exchange Rights Agreement, thirty one percent
(31%)). The TIN that must be provided is that of the registered holder of the
Partnership Units. The TIN for an individual is his or her social security
number.
9. Requests for Assistance or Additional Copies. Questions and requests
for assistance or additional copies of the Partnership Agreement, the Exchange
Rights Agreement and the Notice of Exercise may be directed to the Company.
IMPORTANT TAX INFORMATION
Under Federal income tax laws, a holder whose tendered Partnership Units
are accepted for payment is required by law to provide the Company (as payer)
with his, her or its correct taxpayer identification number on Substitute Form
W-9 below. If such holder is an individual, the taxpayer identification number
is his or her social security number. If the Operating Partnership or the
Company, as applicable, is not provided with the correct taxpayer identification
number, the holder may be
C-6
<PAGE> 117
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such holder with respect to Partnership Units
purchased pursuant to the Offer may be subject to backup withholding.
If backup withholding applies, the Company is required to withhold that
rate provided by the Federal income tax law (such rate being on the date of the
Partnership Agreement, the Exchange Rights Agreement, thirty one percent (31%)
of any such payments made to the holder of Partnership Units. Backup withholding
is not an additional tax; rather, the tax liability of a person subject to
backup withholding will be reduced by the amount of tax withheld and, if
withholding results in an overpayment of taxes, a refund may be obtained.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a holder of
Partnership Units purchased pursuant to the Offer, the holder is required to
notify the Company of his, her or its correct taxpayer identification number by
completing the form below certifying that the taxpayer identification number
provided on Substitute Form W-9 is correct.
What Number to Give the Company.
The holder is required to give the Company the social security number or
employer identification number of the record owner of the Partnership Units.
C-7
<PAGE> 118
PAYER'S NAME: PGP NORTHERN INDUSTRIAL, L.P. AND
PACIFIC GULF PROPERTIES INC.
Substitute Form Part 1 - Please provide your TIN in Social Security
W-9 the box at right and certify by Number; Employer
signing and dating below Identification
Number
----------------
Department of Certification - Under penalties of
the Treasury Perjury, (i) I certify that the
Internal information provided on this form
Revenue Service is true, correct and complete and
(ii) I am not subject to backup
withholding because: (a) I am
exempt from backup withholding or
(b) I have not been notified by the
Internal Revenue Service (IRS) that
I am subject to backup withholding
as a result of a failure to report
all interest or dividends or (c)
the IRS has notified me that I am
no longer subject to backup
withholding.
Signature ________________________________ Date ____________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF THAT RATE PROVIDED BY THE FEDERAL INCOME TAX LAW
(SUCH RATE BEING ON THE DATE OF THE PARTNERSHIP AGREEMENT AND THE
EXCHANGE RIGHTS AGREEMENT, THIRTY ONE PERCENT (31%)) OF ANY PAYMENTS
MADE TO YOU PURSUANT TO THE EXCHANGE RIGHTS AGREEMENT.
C-8
<PAGE> 119
EXHIBIT F
DEPOSITS AND REIMBURSEMENTS
NONE
1
<PAGE> 120
EXHIBIT G
GRANT DEED
RECORDING REQUESTED BY
______________________
WHEN RECORDED MAIL TO:
___________________________
___________________________
___________________________
___________________________
___________________________
Attention: _______________
MAIL TAX STATEMENTS TO:
______________________________
______________________________
______________________________
______________________________
________________________________________________________________________________
(Space Above Line for Recorder's Use Only)
GRANT DEED
In accordance with Section 11932 of the California Revenue and Taxation Code,
Grantor has declared the amount of the transfer tax which is due by a separate
statement which is not being recorded with this Grant Deed.
FOR VALUE RECEIVED, EDEN PLAZA ASSOCIATES, LLC, a California limited
liability company, grants to PGP NORTHERN INDUSTRIAL, L.P., a Delaware limited
partnership ("Grantee"), all that certain real property situated in the County
of Alameda, State of California, described on Exhibit A attached hereto and by
this reference incorporated herein (the "Property"), subject to matters of
record or which would be revealed by a survey of the Property.
IN WITNESS WHEREOF, the undersigned has executed this Grant Deed as of
___________________,1997.
EDEN PLAZA ASSOCIATES, LLC, a California
limited liability company
By:_____________________________________
Elbert P. Bressie, Managing Member
1
<PAGE> 121
STATE OF _______________ )
) ss.
COUNTY OF ______________ )
On ________________, 199__, before me, the undersigned, a Notary Public in
and for said County and State, personally appeared
_____________________________________________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and acknowledged to me
that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the within instrument.
WITNESS my hand and official seal.
____________________________________________
Notary Public
<PAGE> 122
EXHIBIT H
BILL OF SALE
FOR VALUE RECEIVED, the undersigned ("Transferor") hereby conveys and
assigns to PGP NORTHERN INDUSTRIAL, L.P., a Delaware limited partnership, all of
the undersigned's right, title and interest in and to all of Transferor's
personal property used in connection with that certain real property described
on Exhibit A attached hereto (the "Property"), including without limitation,
miscellaneous janitorial supplies, office furniture and rental brochures.
TO HAVE AND TO HOLD the foregoing personal property unto the grantee and
its successors and assigns forever.
The undersigned warrants that it owns good and marketable title to the
foregoing personal property and will defend title to said personal property
against all persons claiming a prior right thereto to the extent that such prior
right is alleged to exist on or before the date of this Bill of Sale.
All entities constituting Transferor shall be jointly and severally liable
for the faithful performance of the terms and conditions hereof to be performed
by Transferor.
IN WITNESS WHEREOF, the undersigned has executed this Bill of Sale on this
____ day of ____________, 1997.
EDEN PLAZA ASSOCIATES, LLC, a California
limited liability company
By: ________________________________________
Elbert P. Bressie, Managing Member
3
<PAGE> 123
Exhibit A to Bill of Sale
Legal Description
THE LAND REFERRED TO IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ALAMEDA,
CITY OF HAYWARD, DESCRIBED AS FOLLOWS:
PARCEL 1:
PARCEL 1, PARCEL MAP 1288, FILED SEPTEMBER 25, 1973, BOOK 80 OF PARCEL MAPS,
PAGE 27, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 461-0015-028
PARCEL 2:
PARCEL 1, PARCEL MAP 939, FILED JULY 13, 1972, BOOK 76 OF PARCEL MAPS, PAGE 10,
ALAMEDA COUNTY RECORDS.
EXCEPTING THEREFROM THAT PORTION DESCRIBED IN THE DEED TO EDEN ROCK CO. NO. 3, A
JOINT VENTURE, RECORDED JULY 31, 1978, REEL 5508, IMAGE 378, SERIES NO.
78-145175, OFFICIAL RECORDS.
ASSESSOR'S PARCEL NO. 461-0015-020-2
PARCEL 3:
PARCEL 2, PARCEL MAP NO. 939, FILED JULY 13, 1972, IN BOOK 76 OF PARCEL MAPS,
PAGE 10, ALAMEDA COUNTY RECORDS.
TOGETHER WITH:
ALL THAT CERTAIN REAL PROPERTY BEING A PORTION OF PARCEL 1 AS SHOWN ON "PARCEL
MAP NO. 939" WHICH MAP IS FILED IN BOOK 76 OF PARCEL MAPS AT PAGE 10, ALAMEDA
COUNTY RECORDS, SAID REAL PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE CORNER COMMON TO PARCELS 1 AND 2 ON THE NORTHWESTERLY LINE OF
CORPORATE PLACE, AS SHOWN ON THE ABOVE MENTIONED PARCEL MAP, THENCE FROM SAID
POINT OF BEGINNING ALONG SAID NORTHERLY LINE SOUTH 76 DEGREES 38'05" WEST 8.22
FEET; THENCE LEAVING THE LAST SAID LINE AND RUNNING ALONG A LINE PARALLEL TO AND
7.806 FEET SOUTHWESTERLY AT RIGHT ANGLES, FROM THE DIVIDING LINE BETWEEN SAID
PARCELS 1 AND 2 NORTH 31 DEGREES 37'51" WEST 205.78 FEET; THENCE LEAVING SAID
PARALLEL LINE NORTH 58 DEGREES 22'09" EAST 7.806 FEET TO SAID DIVIDING LINE;
THENCE ALONG THE LAST SAID LINE SOUTH 31 DEGREES 37'51" EAST 208.356 FEET TO THE
POINT OF BEGINNING.
SAID REAL PROPERTY IS THE SAME AS "LOT LINE ADJUSTMENT NO. 77-4" APPROVED BY THE
CITY OF HAYWARD PLANNING COMMISSION ON SEPTEMBER 22, 1977.
ASSESSOR'S PARCEL NO. 461-0015-021-01
<PAGE> 124
PARCEL 4:
PARCEL ONE OF AMENDED PARCEL MAP 1035 FILED SEPTEMBER 5, 1975 IN BOOK 80 OF
PARCEL MAPS ON PAGE 15, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 461-0085-018-03 (PORTION).
PARCEL 5:
PORTION OF INVESTMENT BOULEVARD, AS SAID BOULEVARD WAS ESTABLISHED BY THE GRANT
OF EASEMENT FROM EDEN LANDING CORPORATION, A CALIFORNIA CORPORATION, TO THE CITY
OF HAYWARD, A MUNICIPAL CORPORATION, DATED JUNE 20, 1967, AND RECORDED JULY 24,
1967 IN REEL 2005 OF OFFICIAL RECORDS OF ALAMEDA COUNTY AT IMAGE 500 (AZ-71982),
DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHERLY RIGHT OF WAY LINE OF INVESTMENT
BOULEVARD WITH THE EASTERLY RIGHT OF WAY LINE OF EDEN LANDING ROAD AS SHOWN ON
PARCEL MAP NO. 1035 FILED IN BOOK 79 OF PARCEL MAPS, PAGE 28, IN THE OFFICE OF
THE ALAMEDA COUNTY RECORDER; THENCE ALONG SAID NORTHERLY RIGHT OF WAY LINE OF
INVESTMENT BOULEVARD THE FOLLOWING THREE COURSES: 1) SOUTH 81 DEGREES 53'26"
EAST 40.130 FEET; 2) SOUTH 48 DEGREES 12'02" EAST 61.294 FEET; 3) SOUTH 08
DEGREES 06'34" WEST 40.000 FEET; THENCE LEAVING SAID NORTHERLY RIGHT OF WAY LINE
NORTH 81 DEGREES 53'26" WEST 67.124 FEET TO A TANGENT CURVE TO THE RIGHT; THENCE
ALONG SAID TANGENT CURVE TO THE RIGHT HAVING A RADIUS OF 24.000 FEET THROUGH A
CENTRAL ANGLE OF 89 DEGREES 59'35" AN ARC DISTANCE OF 37.696 FEET; THENCE NORTH
08 DEGREES 06'09" EAST 50.003 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 416-0085-018-03
<PAGE> 125
EXHIBIT I
ASSIGNMENT AND ASSUMPTION OF LEASES
THIS ASSIGNMENT AND ASSUMPTION OF LEASES (this "Assignment") dated as of
the ____ day of ______________, 1997, is made and entered into by and between
Eden Plaza Associates, LLC, a California limited liability company ("Assignor"),
and PGP Northern Industrial, L.P., a Delaware limited partnership ("Assignee").
WITNESSETH:
WHEREAS, Assignor is the lessor under certain leases executed with respect
to those certain real properties located in the County of Alameda, State of
California, incorporated herein by this reference (individually and
collectively, the "Properties") more particularly described on Exhibit A,
attached hereto and incorporated herein by this reference, which leases are
described in Exhibit B attached hereto and incorporated herein by this reference
(the "Leases").
WHEREAS, Assignor is contemporaneously herewith conveying the Properties
to Assignee pursuant to that certain Master Contribution Agreement dated
_____________ (the "Master Agreement") by and between Assignor and Pacific Gulf
Properties Inc., a Maryland corporation and the general partner of Assignee.
WHEREAS, Assignor desires to assign its interest in and to the Leases to
Assignee as of the date on which title to the Properties is vested in Assignee
(the "Transfer Date"), and Assignee desires to accept the assignment thereof and
assume Assignor's obligations thereunder from and after the Transfer Date.
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, the parties hereby agree as follows:
1. As of the Transfer Date, Assignor hereby assigns to Assignee all of
its right, title and interest in and to the Leases.
2. Assignor warrants and represents that as of the Transfer Date, the
attached Exhibit B includes all of the Leases affecting the Properties and there
are no assignments of or agreements to assign the Leases to any other party.
3. Assignor hereby agrees to indemnify, defend and hold harmless
Assignee from and against any and all cost, liability, loss, damage or expense,
including, without limitation, reasonable attorneys' fees and expenses
(collectively, "Losses and Liabilities"), arising out of or in any way related
to the lessor's obligations under the Leases described in Exhibit B and related
to the period prior to or on the Transfer Date or
<PAGE> 126
which arise out of or are in any way related to the lessor's obligations under
said Leases after the Transfer Date on account of any breach or default by
Assignor occurring or existing on or prior to the Transfer Date.
4. Assignee, as of the Transfer Date, hereby accepts the foregoing
assignment and assumes all of the lessor's obligations under the Leases
described in Exhibit B relating to the period from and after the Transfer Date.
Assignee hereby agrees to indemnify, defend and hold harmless Assignor from and
against any and all Losses and Liabilities arising out of Lessor's obligations
under the Leases described in Exhibit B and related to the period after the
Transfer Date, except for Losses and Liabilities on account of any fact or
circumstance occurring or existing on or prior to the Transfer Date.
5. In the event of any litigation between Assignor and Assignee arising
out of the obligations of the parties under this Assignment or concerning the
meaning or interpretation of any provision contained herein, the losing party
shall pay the prevailing party's costs and expenses in such litigation,
including, without limitation, reasonable attorneys' fees and expenses. In
addition to the foregoing award of attorneys' fees to the prevailing party, the
prevailing party in any lawsuit on this Agreement shall be entitled to its
reasonable attorneys' fees incurred in any post judgment proceedings to collect
or enforce the judgment. This provision is separate and several and shall
survive the merger of this Assignment into any judgment on this Assignment.
6. This Assignment shall be binding on and inure to the benefit of the
parties herein, their heirs, executors, administrators, successors-in-interest
and assigns.
7. This Assignment may be executed in any number of counterparts, each
of which shall be deemed an original and all of which taken together shall
constitute one and the same agreement.
8. Nothing contained herein shall be deemed or construed as relieving
the Assignor or Assignee of their respective duties and obligations under the
Master Agreement.
9. All entities constituting Assignor hereunder shall be jointly and
severally liable for the faithful performance of the terms and conditions hereof
to be performed by Assignor.
<PAGE> 127
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
the date and year first above written.
ASSIGNOR: "EDEN"
EDEN PLAZA ASSOCIATES, LLC, a California
limited liability company
By:_________________________________________
Elbert P. Bressie, Managing Member
ASSIGNEE: PGP NORTHERN INDUSTRIAL, L.P., a
Delaware limited partnership
By: Pacific Gulf Properties Inc., a
Maryland corporation, general
partner
By: ____________________________________
____________________________________
(Print Name and Title)
By: ____________________________________
____________________________________
(Print Name and Title)
<PAGE> 128
Exhibit A
LEGAL DESCRIPTION OF REAL PROPERTY
THE LAND REFERRED TO IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ALAMEDA,
CITY OF HAYWARD, DESCRIBED AS FOLLOWS:
PARCEL 1:
PARCEL 1, PARCEL MAP 1288, FILED SEPTEMBER 25, 1973, BOOK 80 OF PARCEL MAPS,
PAGE 27, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 461-0015-028
PARCEL 2:
PARCEL 1, PARCEL MAP 939, FILED JULY 13, 1972, BOOK 76 OF PARCEL MAPS, PAGE 10,
ALAMEDA COUNTY RECORDS.
EXCEPTING THEREFROM THAT PORTION DESCRIBED IN THE DEED TO EDEN ROCK CO. NO. 3, A
JOINT VENTURE, RECORDED JULY 31, 1978, REEL 5508, IMAGE 378, SERIES NO.
78-145175, OFFICIAL RECORDS.
ASSESSOR'S PARCEL NO. 461-0015-020-2
PARCEL 3:
PARCEL 2, PARCEL MAP NO. 939, FILED JULY 13, 1972, IN BOOK 76 OF PARCEL MAPS,
PAGE 10, ALAMEDA COUNTY RECORDS.
TOGETHER WITH:
ALL THAT CERTAIN REAL PROPERTY BEING A PORTION OF PARCEL 1 AS SHOWN ON "PARCEL
MAP NO. 939" WHICH MAP IS FILED IN BOOK 76 OF PARCEL MAPS AT PAGE 10, ALAMEDA
COUNTY RECORDS, SAID REAL PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE CORNER COMMON TO PARCELS 1 AND 2 ON THE NORTHWESTERLY LINE OF
CORPORATE PLACE, AS SHOWN ON THE ABOVE MENTIONED PARCEL MAP, THENCE FROM SAID
POINT OF BEGINNING ALONG SAID NORTHERLY LINE SOUTH 76 DEGREES 38'05" WEST 8.22
FEET; THENCE LEAVING THE LAST SAID LINE AND RUNNING ALONG A LINE PARALLEL TO AND
7.806 FEET SOUTHWESTERLY AT RIGHT ANGLES, FROM THE DIVIDING LINE BETWEEN SAID
PARCELS 1 AND 2 NORTH 31 DEGREES 37'51" WEST 205.78 FEET; THENCE LEAVING SAID
PARALLEL LINE NORTH 58 DEGREES 22'09" EAST 7.806 FEET TO SAID DIVIDING LINE;
THENCE ALONG THE LAST SAID LINE SOUTH 31 DEGREES 37'51" EAST 208.356 FEET TO THE
POINT OF BEGINNING.
SAID REAL PROPERTY IS THE SAME AS "LOT LINE ADJUSTMENT NO. 77-4" APPROVED BY THE
CITY OF HAYWARD PLANNING COMMISSION ON SEPTEMBER 22, 1977.
ASSESSOR'S PARCEL NO. 461-0015-021-01
<PAGE> 129
PARCEL 4:
PARCEL ONE OF AMENDED PARCEL MAP 1035 FILED SEPTEMBER 5, 1975 IN BOOK 80 OF
PARCEL MAPS ON PAGE 15, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 461-0085-018-03 (PORTION).
PARCEL 5:
PORTION OF INVESTMENT BOULEVARD, AS SAID BOULEVARD WAS ESTABLISHED BY THE GRANT
OF EASEMENT FROM EDEN LANDING CORPORATION, A CALIFORNIA CORPORATION, TO THE CITY
OF HAYWARD, A MUNICIPAL CORPORATION, DATED JUNE 20, 1967, AND RECORDED JULY 24,
1967 IN REEL 2005 OF OFFICIAL RECORDS OF ALAMEDA COUNTY AT IMAGE 500 (AZ-71982),
DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHERLY RIGHT OF WAY LINE OF INVESTMENT
BOULEVARD WITH THE EASTERLY RIGHT OF WAY LINE OF EDEN LANDING ROAD AS SHOWN ON
PARCEL MAP NO. 1035 FILED IN BOOK 79 OF PARCEL MAPS, PAGE 28, IN THE OFFICE OF
THE ALAMEDA COUNTY RECORDER; THENCE ALONG SAID NORTHERLY RIGHT OF WAY LINE OF
INVESTMENT BOULEVARD THE FOLLOWING THREE COURSES: 1) SOUTH 81 DEGREES 53'26"
EAST 40.130 FEET; 2) SOUTH 48 DEGREES 12'02" EAST 61.294 FEET; 3) SOUTH 08
DEGREES 06'34" WEST 40.000 FEET; THENCE LEAVING SAID NORTHERLY RIGHT OF WAY LINE
NORTH 81 DEGREES 53'26" WEST 67.124 FEET TO A TANGENT CURVE TO THE RIGHT; THENCE
ALONG SAID TANGENT CURVE TO THE RIGHT HAVING A RADIUS OF 24.000 FEET THROUGH A
CENTRAL ANGLE OF 89 DEGREES 59'35" AN ARC DISTANCE OF 37.696 FEET; THENCE NORTH
08 DEGREES 06'09" EAST 50.003 FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 416-0085-018-03
<PAGE> 130
Exhibit B
DESCRIPTION OF THE LEASES
<PAGE> 131
EXHIBIT J
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
To inform PGP NORTHERN INDUSTRIAL, L.P., a Delaware limited partnership
("Transferee"), that withholding of tax under Section 1445 of the Internal
Revenue Code of 1954, as amended ("Code"), will not be required upon the
transfer of certain real property to the Transferee by Eden Plaza Associates,
LLC, a California limited liability company ("Transferor"), the undersigned
hereby certifies the following on behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign partnership,
foreign trust, foreign estate or foreign person (as those terms are defined in
the Code and the Income Tax Regulations promulgated thereunder);
2. The Transferor's U.S. employer or tax (social security)
identification number is 33-0404407.
The Transferor understands that this Certification may be disclosed to the
Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
The Transferor understands that the Transferee is relying on this
Certification in determining whether withholding is required upon said transfer.
The Transferor hereby agrees to indemnify, defend and hold the Transferee
harmless from and against any and all obligations, liabilities, claims, losses,
actions, causes of action, rights, demands, damages, costs and expenses of every
kind, nature or character whatsoever (including, without limitation, reasonable
attorneys' fees and court costs) incurred by the Transferee as a result of: (i)
the Transferor's failure to pay U.S. Federal income tax which the Transferor is
required to pay under applicable U.S. law; or (ii) any false or misleading
statement contained herein.
All entities constituting Transferor hereunder shall be jointly and
severally liable for the faithful performance of the terms and conditions hereof
to be performed by Transferor.
Under penalty of perjury I declare that I have examined this Certification
and to the best of my knowledge and belief it
1
<PAGE> 132
is true and correct and complete, and I further declare that I have authority to
sign this document on behalf of the Transferor.
Date: _________________, 1997
EDEN PLAZA ASSOCIATES, LLC, a California
limited liability company
By: ________________________________________
Elbert P. Bressie, Managing Member
2
<PAGE> 133
<TABLE>
<S> <C>
EXHIBIT K
94-1 FORM 590 1-701
YEAR CALIFORNIA FORM
- -------- WITHHOLDING EXEMPTION CERTIFICATE -------------------
590
19__ (For use by individuals, corporations, partnerships, estates, trusts, tax-exempt entities and nonprofit organizations)
===================================================================================================================================
File this form with your withholding agent.
- -----------------------------------------------------------------------------------------------------------------------------------
Name
- -----------------------------------------------------------------------------------------------------------------------------------
Address (number and street) Daytime telephone number
( )
- -----------------------------------------------------------------------------------------------------------------------------------
City State ZIP Code
- -----------------------------------------------------------------------------------------------------------------------------------
Complete the appropriate line: Individuals - Social security number __________________ [ ] Married [ ] Single
Corporations - California corporation number (issued by Secretary of State) or F.E.I.N. ___________
Partnerships, Estates, Irrevocable Trusts and Tax-Exempt Entities - F.E.I.N. ______________________
NOTE: Failure to provide your identification number will render this certificate void.
To ___________________________________________________________________________________
(Withholding Agent or Payer)
INDIVIDUALS:
CERTIFICATE OF RESIDENCY
Under penalties of perjury, I hereby certify I am a resident of California and I reside at the address shown above. Should I become
a nonresident at any time, I will promptly inform you. See Side 2 for the definition of a resident.
Signature _________________________________________________________________________________ Date _________________________________
CERTIFICATE OF RESIDENCY OF DECEASED PERSON
Under penalties of perjury, I hereby certify as executor of the above named person's estate, the decedent was a California resident
at the time of death.
Name of executor (type or print) _________________________________________________________________________________________________
Signature _________________________________________________________________________________ Date _________________________________
CORPORATIONS:
Under penalties of perjury, I hereby certify the above-named corporation has a permanent place of business in California at the
address shown above or is qualified to do business in California. Should this corporation cease to have a permanent place of
business in California or be qualified to do business in California, I will promptly inform you. See Side 2 for the definition of
permanent place of business.
Name and Title of corporate officer (type or print) ______________________________________________________________________________
Signature _________________________________________________________________________________ Date _________________________________
PARTNERSHIPS:
Under penalties of perjury, I hereby certify the above-named partnership has a permanent place of business in California at the
address shown above, and that it is subject to the laws of California. I further certify that the partnership will file California
returns and withhold on foreign and domestic nonresident partners when required. Should the partnership cease to do any of the
above, I will promptly inform you.
Name and Title (type or print) ___________________________________________________________________________________________________
Signature _________________________________________________________________________________ Date _________________________________
TAX-EXEMPT ENTITIES AND NONPROFIT ORGANIZATIONS:
Under penalties of perjury, I hereby certify that the above-named entity is exempt from tax under California or federal law. Should
this entity cease to be exempt from tax, I will promptly inform you.
Name and Title (type or print) ___________________________________________________________________________________________________
Signature _________________________________________________________________________________ Date _________________________________
IRREVOCABLE TRUSTS:
Under penalties of perjury, I hereby certify that at least one trustee of the above-named irrevocable trust is a California
resident. Should the trustee become a nonresident at any time, I will promptly inform you.
Name and Title (type or print) ___________________________________________________________________________________________________
Signature _________________________________________________________________________________ Date _________________________________
For Privacy Act Notice, see form FTB 1131 (individuals only).
- ----------------------------------------------------------------------------------------------------------------------------------
Form 590 (REV. 1993) Side 1
</TABLE>
<PAGE> 134
EXHIBIT L
EDEN LEGAL OPINION
At the Closing, Eden shall cause to be delivered to PGP and the Operating
Partnership an opinion of counsel, in form and substance reasonably acceptable
to PGP and the Operating Partnership, containing the legal opinion that: (i)
Eden has the power and authority to enter into and perform its obligations under
this agreement, the OP Agreement, and the Exchange Rights Agreement
(collectively, the "Agreements"); (ii) the Agreements have been duly authorized
by all necessary action on the part of Eden, and have been duly executed and
delivered by Eden; and (iii) the Agreements constitute the legally valid and
binding obligation of Eden, 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; (iv) Eden and each of its
constituent entities are duly organized and validly existing under the laws of
the state of their incorporation, and each are qualified to do business in the
State of California. Additionally, in rendering the enforceability opinion
described in clause (iii) above, counsel for Eden shall be entitled to rely on
the representation of Eden, without further investigation, that the solicitation
materials utilized by Eden to obtain the approval of the Eden Entities to this
agreement 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.
1
<PAGE> 135
EXHIBIT M
LEGAL OPINION OF PGP
At the Closing, PGP shall cause to be delivered to Eden an opinion of
counsel, in form and substance reasonably acceptable to Eden, containing the
legal opinion that: (i) PGP has the power and authority to enter into and
perform its obligations under this agreement, the OP Agreement, and the Exchange
Rights Agreement (collectively, the "Agreements"); (ii) the Agreements have been
duly authorized by all necessary action on the part of PGP, and have been duly
executed and delivered by PGP; (iii) the Agreements constitute the legally valid
and binding obligations of PGP, 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; (iv) PGP is duly organized and
validly existing under the laws of the state of its incorporation, and is
qualified to do business in the State of California. Additionally, in rendering
the enforceability opinion described in clause (iii) above, counsel for PGP
shall be entitled to rely on the representation of PGP, without further
investigation, that the solicitation materials utilized by Eden to obtain the
approval of the Eden Entities to this agreement 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.
2
<PAGE> 136
EXHIBIT N
NOTICE OF LEASE ASSIGNMENT
_________________, 1997
To: _______________________
_______________________
_______________________
_______________________
RE: Notice of Lease Assignment
This letter is to notify you that the property commonly known as the
__________________ ("Property") has this date been sold and ownership
transferred.
In connection with this sale, all of the interest of the lessor under your
lease of space in the Properties has been transferred. You are hereby notified
that, from and after the date hereof and until further notice, all future
payments under your lease should be made payable to "______________" (the
"Property Manager") and mailed to the Properties Manager, whose address is
___________ ____________________. In addition, all questions or other matters
regarding your lease should be directed to the Properties Manager at (____)
__________.
Also in connection with this sale, your security deposit in connection
with your lease in the amount of ______ has been transferred to the Properties
Manager. The return of any such security deposit will be conditioned upon and
subject to the terms and conditions of the lease and the legal requirements of
the State of California. All future inquiries regarding security deposits are to
be directed to the Properties Manager.
Thank you for your cooperation.
Very truly yours,
______________________________
______________________________
______________________________
1
<PAGE> 137
EXHIBIT 0
CIGNA RESTRUCTURE PROPOSAL
MORTGAGE LOAN APPLICATION AND AGREEMENT
EDEN PLAZA
<PAGE> 138
AGREEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION I - PRINCIPAL LOAN TERMS
1.1 Borrower.................................................................1
1.2 Lender Definition........................................................1
1.3 Loan Amount..............................................................1
1.4 Term.....................................................................1
1.5 Interest Rate............................................................1
1.6 Monthly Installments.....................................................1
1.7 Prepayment and Prepayment Fee..........................................2-3
1.8 Late Payments/Charges/Defaults...........................................3
1.9 No Personal Liability..................................................3-4
SECTION 2 - CLOSING PROCEDURE
2.1 Good Faith Deposit.....................................................4-5
2.2 Lender Fee...............................................................5
2.3 Engineering Costs Deposit................................................5
2.4 Closing Date/Expiration..................................................5
2.5 Material Adverse Change..................................................5
SECTION 3 - SECURITY AND BORROWER'S COVENANTS
3.1 Security...............................................................5-6
3.2 Leasing..................................................................6
3.3 Restrictions on Transfer.................................................6
3.4 No Secondary Financing...................................................6
3.5 UCC Security Interest....................................................6
3.6 Taxes....................................................................6
3.7 Insurance................................................................6
3.8 Annual Reports...........................................................7
3.9 Disposition of Condemnation/Insurance Proceeds.........................7-8
3.10 Management Agreement.....................................................8
SECTION 4 - DUE DILIGENCE
4.1 Submissions..............................................................8
4.2 Title, Documents, Borrower's Counsel Opinion and Other Matters...........8
4.3 Survey.................................................................8-9
4.4 Property Condition And Use Requirements..................................9
4.4.1 Engineering Requirements...........................................9
4.4.2 Earthquake Requirements.........................................9-10
4.4.3 Environmental, Asbestos and Land Use Matters...................10-11
4.4.4 Americans with Disabilities Act ("ADA") Requirements..............11
4.5 Evidence of Approvals...................................................12
SECTION 5 - MISCELLANEOUS PROVISIONS
5.1 Interpretation..........................................................12
5.2 Costs...................................................................12
5.3 No Commitment...........................................................12
5.4 No Prior Agreement......................................................12
5.5 Entire Agreement........................................................12
5.6 Choice of Law...........................................................12
5.7 No Assignment...........................................................12
5.8 Status of Principals....................................................13
</TABLE>
<PAGE> 139
<TABLE>
<S> <C> <C>
Signatures..........................................................................13
Exhibit A SPECIAL PROVISIONS (if Applicable)
Exhibit B DESCRIPTION OF PROPERTY
Exhibit C RENTS AND LEASES
Exhibit D FORM OF LETTER OF CREDIT
Exhibit E STANDARD FORMS
E-1 Survey Checklist
E-2 Lease Estoppel Certificate
E-3 Subordination, Non-Disturbance and Attornment Agreement
</TABLE>
<PAGE> 140
MORTGAGE LOAN APPLICATION AND AGREEMENT
This Mortgage Loan Application and Agreement and any exhibits attached hereto
(this "Agreement") is an irrevocable offer by Borrower (as hereinafter defined)
to borrow from Lender (as hereinafter defined) under the terms and conditions
contained herein (the "Loan"). Borrower's offer shall be irrevocable for the
period ending at 5:00 p.m. on July 30, 1997 ("Lender Acceptance Date"), and may
be accepted by Lender at any time during this period. If Lender approves the
Loan and executes this Agreement, then Lender agrees to lend and Borrower agrees
to borrow on the terms and conditions herein set forth. If Lender does not
accept this Agreement on or before the Lender Acceptance Date, then such offer
shall be automatically revoked as of such date and the Good Faith Deposit,
Engineering Cost Deposit and Lender Fee (as hereinafter defined) received by
CIGNA Investments, Inc. ("CII") shall be returned to Borrower and this Agreement
shall be null and void.
SECTION I - PRINCIPAL LOAN TERMS
1.1 Borrower. The Borrower is _____________________________________.
Holders of substantial interest in the Borrower or the Real Property are
identified in Exhibit A ("Special Provisions").
1.2 Lender Definition: The term "Lender" as used herein shall include CII,
its affiliate(s), separate account(s), nominee(s) or subsidiary(ies),
and any investor, participant or assignee to whom the Loan, in whole or
in part, may be sold prior to or subsequent to the Closing Date
(hereinafter defined). Any such sale will not modify Borrower's or
Lender's rights or obligations hereunder or under the loan documents.
1.3 Loan Amount: $12,000,000.
1.4 Term: The Loan shall be for a term (the "Term") of 5 years, commencing
on the date funds are first advanced to or for the benefit of Borrower
(the "Closing Date") and ending on a date (the "Maturity Date") which
shall be the first day of the first calendar month following the end of
the Term.
1.5 Interest Rate: ______% per annum (the "Interest Rate"). In no event will
Lender receive interest in excess of that allowed by applicable state
law.
1.6 Monthly Installments: Monthly installments in the amount of $______
(based on a 25 year amortization schedule), (interest only), shall be
due on the first day of each month (the "Monthly Payment Date")
commencing on the first calendar day of the second month following the
Closing Date. Such payments shall be applied first to interest with the
remainder, if any, to be applied to principal. Interest will be applied
on the basis of a 360-day year and 30-day month. Borrower shall pay at
closing interest from and including the Closing Date to the first day of
the first calendar month after the Closing Date occurs; interest paid at
closing shall be calculated on the basis of a 365-day year and the
actual number of days from the Closing Date to the first day of the
first calendar month following closing.
June 26, 1997
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<PAGE> 141
1.7 Prepayment and Prepayment Fee: The Loan is closed to prepayment (the
"Closed Period") until the third anniversary of the first Monthly
Payment Date, each such annual period being hereinafter referred to as a
"Loan Year".
Borrower may prepay the Loan in full, but not in part, on any Monthly
Payment Date after the Closed Period provided Borrower gives Lender 60
days' prior written notice and pays a prepayment fee (the "Prepayment
Fee") calculated as follows:
The greater of (a) 1% of the then-existing balance of the Loan,
or (b) Yield Maintenance as defined below.
In the event of a prepayment during the Closed Period resulting from a
default, acceleration or any other reason, Borrower shall pay the Lender
a prepayment fee (the "Default Prepayment Fee") calculated as follows:
(a) 2% of the then existing balance of the Loan, plus
(b) Yield Maintenance as defined below.
Yield Maintenance: Yield Maintenance is defined as the sum of Present
Values on the date of prepayment of each Monthly Interest Shortfall for
the remaining Term of the Loan discounted at the monthly Treasury Yield.
The Monthly Interest Shortfall is calculated for each monthly payment
date and is the product of (i) the positive difference, if any, of the
Semi-Annual Equivalent Rate less the Treasury Yield, divided by 12,
times (ii) the outstanding principal balance of the Loan on the Monthly
Payment Date for which the calculation is made for each full and partial
month remaining in the Term.
The Present Value is then determined by discounting each Monthly
Interest Shortfall at the Treasury Yield divided by twelve.
FOR EXAMPLE: If a 9% loan were prepaid with 24 months remaining in the
Term, at a time when Federal Reserve Statistical Release H. 15 (519)
reported a two-year Treasury Yield of 7.0%; and the outstanding loan
balance was $10,000,000, then:
Semi-Annual Equivalent Rate .0917
less the Treasury Yield -.0700
------------
equals the positive rate difference .0217
divided by 12
equals the monthly rate difference .001808
times the principal balance x$10,000,000
------------
equals the Monthly Interest Shortfall $18,080.00
The sum of the Present Values of all the Monthly Interest Shortfalls
($18,080) discounted at the monthly Treasury Yield (7% divided by 12 or
.58333%) equals $403,818.60.
The "Semi-Annual Equivalent Rate" for this loan is ____%.
The "Treasury Yield" will be determined by reference to the Federal
Reserve Statistical Release H.15 (519) of Selected Interest Rates (or
any similar successor publication of
June 26, 1997
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<PAGE> 142
the Federal Reserve) for the first week ending not less than two full
weeks prior to the prepayment date. If the remaining Term is less than
one year, the Treasury Yield will equal the yield for 1-Year Treasury
Constant Maturities. If the remaining Term is equal to one of the
maturities of the Treasury Constant Maturities (e.g., 1-year, 2-year,
etc.), then the Treasury Yield will equal the yield for the Treasury
Constant Maturity with a maturity equaling the remaining Term. If the
remaining Term is longer than one year but does not equal one of the
maturities of the Treasury Constant Maturities, then the Treasury Yield
will equal the yield for the Treasury Constant Maturity closest to but
not exceeding the remaining Term.
1.8 Late Payments/Charges/Defaults. All payments of principal, interest and
applicable escrow amounts not received within five (5) business days
following the due date of such payments shall constitute an event of
default. The failure by Borrower to perform any other duty of a monetary
or non-monetary nature under the loan documents, which failure to
perform is not cured within thirty (30) days after notice from Lender of
such failure to perform, shall also constitute an event of default
except if such failure is not susceptible of cure within such period, so
long as Borrower has commenced and thereafter diligently pursues such
cure and provided further that such cure occurs within a reasonable
period of time but in no event greater than 120 days. In such event,
Lender may exercise any and all remedies to which it may be entitled,
including without limitation, acceleration of the principal
indebtedness. Delinquent payments of principal, interest and applicable
escrow amounts not received by the due date of such payments shall bear
a one-time late charge equal to the lesser of four percent (4%) of the
delinquent payment or the maximum amount which shall be permitted by
applicable state law. Upon acceleration of the Loan, the entire amount
of principal, interest and other charges due as of the date of
acceleration shall bear interest at a rate equal to the lesser of (i)
the Interest Rate plus four percent (4%) per annum, or (ii) the maximum
amount permitted by law.
1.9 No Personal Liability: No judgment for the repayment of the indebtedness
evidenced by the note or in any action to foreclose the Mortgage (as
hereinafter defined) or to collect any amount payable under the loan
documents will be satisfied out of the personal assets of Borrower or of
any other holders of beneficial interest in the Borrower, except that
Lender's sole recourse for such judgment(s) shall be against the Real
Property (hereinafter defined) and other collateral as provided pursuant
to this Agreement. The foregoing limitation on liability shall not
apply, and Borrower [and Pacific Gulf Properties) shall be personally
liable, [jointly and severally], for the following acts or omissions, to
the extent described:
<TABLE>
<CAPTION>
ACT OR OMISSION LIABILITY
--------------- ---------
<S> <C> <C>
(i) Borrower misapplies any To the extent of such misapplication;
condemnation or insurance
proceeds attributable to the Real
Property,
(ii) Borrower misapplies any security To the extent of such misapplication;
deposits attributable to the Real
Property,
</TABLE>
June 26, 1997
Page 3
<PAGE> 143
<TABLE>
<S> <C> <C>
(iii) Borrower collects rents in advance To the extent of such rents collected in
in violation of any covenant under advance;
the loan documents,
(iv) Borrower commits any fraud, To the extent of any remedies available at
misrepresentation or waste, law or equity;
(v) Gross revenues from the Real To the extent of any funds diverted from such
Property are sufficient to pay any payments or expenses (during the period 12 months
portion of the indebtedness, prior to Lender's notice of
operating and maintenance acceleration through the date Lender takes
expenses, insurance premiums title to the Real Property);
deposits into a reserve account, or
other sums required by the loan
documents, and Borrower fails to
make such payments or deposits
when due,
(vi) Borrower enters into any guarantee As provided in such guarantee,
and/or indemnification agreement(s) indemnification or master lease;
and/or master lease(s), as may be
required under this Agreement,
(vii) Borrower fails to pay real estate To the extent of any unpaid taxes,
taxes and assessments which are a assessments and any additional interest,
lien against the Real Property during penalties or other charges assessed as a
the period of Borrower's ownership, result of such non-payment;
(viii) Borrower fails to maintain the level In the amount of the loss incurred as the
of insurance required under the loan result of such uninsured casualty or
documents, to the extent that a uninsured liability.
casualty or liability occurs or arises
and insurance proceeds would have
been available had such insurance
been maintained,
</TABLE>
The provisions of this paragraph will not affect other remedies
available to Lender or Lender's rights in the Real Property.
SECTION 2 - CLOSING PROCEDURE
2.1 Good Faith Deposit: This Agreement must be accompanied by a good faith
deposit ("Deposit") in the form of cash or certified check of $240,000
made payable to Connecticut General Life Insurance Company to be
retained by Lender as consideration for the holding of funds for future
disbursement.
Instead of submitting the Deposit in cash or certified check, Borrower
may submit $120,000 in cash or certified check and an unconditional and
irrevocable sight draft letter of credit in the amount of $120,000,
drawn on a bank satisfactory to Lender, payable to Lender, expiring no
earlier than 30 days beyond the Expiration Date (as
June 26, 1997
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<PAGE> 144
hereinafter defined) of this Agreement and substantially in the form
attached hereto as Exhibit D ("Form of Letter of Credit").
The Deposit shall be held free of trust as security for Borrower's
obligations under this Agreement, and any interest earned on the cash
portion of the Deposit will be retained by Lender. The Deposit will be
returned if and when the Loan closes, or if the Lender fails to accept
this Agreement as provided herein.
Should the Loan fail to close prior to the Expiration Date for any
reason (except for the Lender's sole default) or in the event Borrower
does not fulfill Borrower's obligations under this Agreement: (i) the
Deposit (including any payments obtained by cashing a letter of credit)
will be retained by Lender as partial compensation for holding funds for
future disbursement; (ii) Lender shall have the right to exercise any
rights and remedies Lender may have at law or in equity, which rights
and remedies shall include (without limitation) the right to seek
damages, expenses, loss of bargain, and/or the right of specific
performance; and (iii) unless Lender's obligation to fund the Loan has
already expired, Lender may, at Lender's sole option, terminate Lender's
obligation to fund the Loan.
2.2 Lender Fee: This agreement must be accompanied by a Fee (the "Lender
Fee") in cash or certified check of $15,000 made payable to CIGNA
Investments, Inc. If Lender executes the Agreement as provided herein,
the Lender Fee will be earned by Lender whether or not the Loan closes
except for failure of Lender to fulfill its obligations under this
Agreement. In the event Lender does not accept this Agreement, the
Lender Fee will be returned to Borrower.
2.3 Engineering Costs Deposit: This Agreement must also be accompanied by a
deposit (the "Engineering Costs Deposit") of $15,000 in cash or
certified check made payable to CIGNA Investments, Inc. to be applied to
the costs of the inspections and reports to be prepared by third parties
required under the provisions of Section 4.4, exclusive of the ADA
Survey (Sec. 4.4.4).
The Engineering Costs Deposit is only an estimate of the costs of said
inspections and reports. Borrower will receive a refund if the costs are
less, and shall pay any excess at or before Closing, if the costs are
more than the amount estimated.
2.4 Closing Date/Expiration: Under no circumstances will Lender be obligated
to close the loan and disburse loan funds before August 1, 1997, or
after August 31, 1997, (the "Expiration Date") unless these dates are
changed in writing by Lender at Lender's sole option.
In the event this loan has not closed by the Expiration Date, Lender
shall, at Borrower's request and upon Borrower's payment of a fee
("Extension Fee"), extend the Expiration Date for one additional thirty
(30) day period ("Extension Period"), provided that such request and
such Extension Fee is received by Lender on or before the Expiration
Date. The Extension Fee shall be $25,000.
2.5 Material Adverse Change: Lender shall not be obligated to close the Loan
if there is any material adverse change in Borrower's financial position
(or that of any guarantor or principal of Borrower), the Real Property
(as hereinafter defined), rental income, the rent roll attached hereto
as Exhibit C-1, or any other features of the transaction from
June 26, 1997
Page 5
<PAGE> 145
that which existed on the date of this Agreement or from the
representations of Borrower contained herein. From the date of this
Agreement, neither the Borrower nor any guarantor or principal of
Borrower nor any lessee shall be involved in any bankruptcy,
reorganization or insolvency proceedings, or in any criminal proceedings
or in government receivership or in a FDIC or FSLIC proceeding.
SECTION 3 - SECURITY AND BORROWER'S COVENANTS
3.1 Security: REAL PROPERTY NAME: Eden Plaza/Eden Rack
REAL PROPERTY LOCATION: Hayward, California
The Loan shall be secured by (a) a first priority mortgage or deed of
trust (the "Mortgage") on Borrower's interest in the Land and
Improvements (together, the "Real Property") described in Exhibit B, (b)
a first priority security interest in the Personal Property described in
Exhibit B, and (c) a first priority Assignment of Rents and Leases
described in Exhibit C.
3.2 Leasing: Borrower will meet Lender's leasing requirements prior to
closing as described in the attached Exhibit C ("Rents and Leases").
3.3 Restrictions on Transfer Borrower shall not transfer, sell or assign the
Real Property, any interest in the Real Property or any interest in
Borrower.
3.4 No Secondary Financing: Borrower shall not encumber the Land or the
Improvements with any lien other than the lien of the Mortgage.
3.5 UCC Security Interest: Lender shall require a first priority security
interest on all personal property, fixtures and equipment now or
hereafter used in the operation of the Real Property, with security
agreements and Uniform Commercial Code ("UCC") Financing Statements to
be executed and filed with the appropriate county and/or state offices.
Not less than thirty (30) days prior to closing Borrower agrees to
furnish a detailed and certified schedule satisfactory in form and
substance to Lender of all personal property, fixtures and equipment
which will be used in the operation of the Real Property and owned by
Borrower.
3.6 Taxes: The Real Property must be a separate tax parcel, separate and
apart from any other property owned by Borrower or anyone else. The loan
documents will provide for monthly deposits equal to one-twelfth of the
annual estimated real estate taxes and assessments. At the loan closing
an initial deposit will be made in an amount which, when added to the
monthly deposits to be paid within the current tax and assessment
period, will be sufficient to satisfy the next succeeding periodic tax
and assessment payment. All deposits will be made directly into an
interest-bearing account (the "Escrow Account") at a bank selected by
Borrower and approved by Lender under an agreement satisfactory in form
and substance to Lender with interest being retained by Lender and free
of trust except to the extent, if any, that applicable law shall
otherwise require. The loan documents will also provide that escrow
agent will, within 30 days after the final date that taxes can be paid
without penalty, furnish Lender with such evidence as may be reasonably
required that all taxes have been paid in full.
June 26, 1997
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<PAGE> 146
So long as Borrower holds title to and controls the Real Property, tax
payments are paid in full when due and there has been no default, or any
state of facts which, with the passage of time or giving of notice, or
both, would constitute a default under the loan documents, the interest
earned by such escrows, less reasonable escrow costs, will be paid to
Borrower following Lender's receipt of confirmation that taxes have been
paid.
3.7 insurance: Borrower will be required to maintain and deposit with Lender
policies of All Risk Replacement Cost Insurance with Agreed Amount
Endorsement, flood insurance (if the Real Property is in an area which
is considered a flood risk area by the U.S. Department of Housing and
Urban Development), rent insurance or business interruption insurance,
comprehensive general and excess or umbrella liability insurance,
earthquake insurance (if required), and other appropriate insurance as
Lender may require from time to time in amounts, form, and substance
satisfactory to Lender, with companies acceptable to Lender which have a
Best's rating of at least A:XII. Lender will require that Lender be
named an additional insured under all of the aforementioned policies,
and loss payee on all such policies except those pertaining to general
and excess liability coverage.
3.8 Annual Reports: Borrower will furnish Lender, within 90 days after the
end of each of Borrower's fiscal years, the following financial reports
and information: (a) balance sheet, (b) statement of sources and uses,
(c) rent roll certified and otherwise conforming to Exhibit C-1, (d)
statement of operating cash flow and accounts receivable, and (e) such
other financial information as Lender shall reasonably request. Such
reports and information shall be in reasonable detail and shall be
accompanied by the unqualified opinion of independent certified public
accountants who are satisfactory to Lender confirming that they have
been prepared in accordance with generally accepted accounting
principles together with any "Notes to Financial Statements".
In addition, Borrower agrees upon request to provide Lender with (a) a
current rent roll in detail similar to that shown in Exhibit C-1, (b) a
balance sheet and year-to-date operating statements for the Property
certified by the Chief Financial Officer of the Borrower, and (c) if
retail, all sales information of tenants and anchors that make up the
center (total sales and sales per square foot) that report sales to
Borrower.
3.9 Disposition of Condemnation/Insurance Proceeds: If, at any time during
the Term, all or any part of the Real Property is taken in a
condemnation proceeding or damaged by fire or other hazard, any
insurance or condemnation proceeds shall be paid directly to Lender for
application to reduction of the principal indebtedness at par or
restoration or repair of the Real Property at Lender's sole option.
Notwithstanding the foregoing, Lender agrees to make casualty insurance
proceeds available to Borrower for restoration or repair of the Real
Property, provided:
(i) Not more than 20% of the Real Property is damaged, and, in the
case of condemnation, that portion remaining after the taking is
still economically in the reasonable opinion of Lender;
(ii) There has been no event of default under the loan documents in
the prior twelve (12) months, and there does not then exist a
state of facts which, with
June 26, 1997
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<PAGE> 147
the passage of time or the giving of notice, or both, would
constitute an event of default;
(iii) Borrower can demonstrate to Lender's satisfaction that Borrower
has the financial ability to make all scheduled payments when
due under the loan documents during reconstruction, whether from
the proceeds of rent insurance or otherwise;
(iv) Such damage or destruction occurs prior to the last two (2) Loan
Years;
(v) The funds are released under escrow/construction funding
arrangements satisfactory to Lender;
(vi) Annual income from leases in place and approved by Lender that
are not terminable as a result of the casualty or condemnation
provide coverage of at least 1.25 times the annual debt service;
and
(vii) The repairs and restoration will restore the Improvements to
substantially the size, design and utility as existed
immediately prior to the casualty.
Any principal reduction at par from an early involuntary prepayment as a
result of a condemnation proceeding or insurance settlement will cause a
re-calculation of debt service payments based upon the reduced loan
balance, the remaining amortization schedule and the Interest Rate.
3.10 Management Agreement: During the term of the Loan, the Real Property
will be managed under a management agreement (the "Management
Agreement"). Said agreement shall be subject to Lender's written
approval, and in form and substance satisfactory to Lender. The
Management Agreement may not be modified or amended and any successor
agreement may not be entered into or any management company appointed
without Lender's prior written approval. The Management Agreement and
any successor management agreement and any liens to which the manager
may be entitled, shall be expressly subordinate to the lien of the
Mortgage.
SECTION 4 - DUE DILIGENCE
4.1 Submissions: All items required under this Agreement to be submitted
to Lender for approval by Lender prior to closing shall be delivered by
Borrower to Lender not less than twenty days prior to closing (unless
another time limit is specified herein).
4.2 Title, Documents, Borrower's Counsel Opinion and Other Matters: All
closing documents will be in form and substance satisfactory to Lender
with such provisions as may be reasonably required to protect Lender's
interests. Title to the Real Property, the legal descriptions, and all
documents and other matters relating in any way to the Loan or to the
Real Property must be to Lender's satisfaction. Not less than 30 days
prior to closing, Borrower will furnish Lender with a commitment for an
ALTA title insurance policy to be issued at closing containing no
exceptions other than those
June 26, 1997
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approved by Lender, issued by a company acceptable to Lender and in
substance and form acceptable to Lender.
Borrower shall provide Lender with a favorable opinion of Borrower's
counsel to the following effects:
(i) Borrower is duly organized and in good standing under applicable
state law,
(ii) all loan documents are duly authorized and executed and shall
constitute valid, binding and enforceable agreements in
accordance with their respective terms, subject only to any
applicable bankruptcy, insolvency, reorganization, moratorium
law or other laws affecting creditors' rights generally;
(iii) all permits and approvals that are required for the
construction, use and occupancy of the Real Property under any
and all applicable laws, ordinances, rules, regulations,
covenants and restrictions have been duly and validly issued by
the governmental authorities or persons having jurisdiction or
rights with respect thereto, are in full force and effect, and
nothing has come to counsel's attention which would question the
validity of such permits and approvals;
(iv) the loan documents and all other matters relating to the Loan do
not violate any usury or other applicable laws; and
(v) such other matters as Lender may reasonably require.
4.3 Survey: Borrower will furnish Lender an up-to-date engineer's survey of
the Real Property by a registered surveyor acceptable to Lender and the
title insurance company and certified in a manner satisfactory to Lender
and the title insurance company, showing no state of facts objectionable
to Lender or the title insurance company. Specifically, the survey must
show that all buildings and proposed buildings (if any) are within lot
and building lines and must locate all above or below ground easements,
improvements, appurtenances, utilities and rights of way, and ingress
and egress, number and size of parking spaces and otherwise contain the
information outlined in the Survey Checklist in Exhibit E-1 (attached).
4.4 Property Condition And Use Requirements: As a condition to Lender's
obligation to close the Loan, Borrower shall comply with the
requirements in provisions 4.4.1, 4.4.2, 4.4.3 and 4.4.4.
4.4.1 Engineering Requirements:
(a) Within ten business days after the date this Agreement
is executed by Lender, Borrower shall make the final
plans and specifications for the Real Property available
to Lender (in such form as Lender shall prescribe),
together with copies of geotechnical or soil borings
reports, materials inspection and testing reports, and
other tests and inspections in Borrower's possession
relating to the condition of the Real Property, for
review and approval by Lender's in-house
Architect/Engineer ("A/E") or an independent A/E engaged
by Lender.
June 26, 1997
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(b) Lender will have the right to engage, at Borrower's
cost, an independent A/E to review the plans and
specifications for the Real Property, to perform a
physical inspection of the Real Property, and to prepare
a report documenting the A/E's findings.
(c) Borrower shall provide a certification, at least ten
days prior to closing, by the project's design Architect
or Engineer, that the Improvements have been completed
in accordance with plans and specifications provided to
Lender. The certification will also state whether the
Real Property meets current building codes and is served
by all necessary utilities.
4.4.2 Earthquake Requirements: (Applicable if the Real Property is
located within Seismic Zones 3 or 4 as defined by the latest
edition of the Uniform Building Code, Seismic Zone Map)
(a) Lender's A/E, at Borrower's cost, shall furnish a report
on the design and construction of the Real Property
relative to probable damage from probable earthquake
events affecting the location of the Real Property. The
report shall be based on the A/E's review of all
information deemed necessary by the A/E to assess the
proper design and construction of the Real Property to
minimize damage from earthquake risk at the site. The
report should assess the relative risk of the site as
compared to the local metropolitan area overall. The
report must assess the probable monetary loss, as a
percentage of replacement cost, and an absolute dollar
amount resulting from the maximum probable earthquake
event affecting the location of the Real Property.
(b) The report will identify any physically practical
repairs or improvements that would reduce the estimated
probable monetary loss significantly. The report will
assess the likelihood of foundation, structural, or
other damage, regardless of monetary level, that would
result in the required demolition of the Improvements or
prevent the occupancy of the Improvements for extended
periods.
(c) If the report identifies, in Lender's sole judgement,
unacceptable risks; or if Lender is not satisfied with
any remedies proposed by Borrower to address problems
disclosed in said report, then Lender may terminate
Lender's obligations hereunder.
(d) Lender shall at all times retain the right to require
earthquake insurance if and when it becomes available at
a reasonable price and is customarily required by
Lenders as a condition for closing new loans.
In the event this Agreement is terminated by Lender pursuant to
subparagraph (c) above then the Deposit shall be returned to
Borrower after deducting all costs incurred by Lender in
connection with the contemplated transaction including but not
limited to attorney's fees, A/E inspections fees and any other
out-of-pocket costs.
4.4.3 Environmental, Asbestos and Land Use Matters:
June 26, 1997
Page 10
<PAGE> 150
(a) Lender will engage, at Borrower's cost, an environmental
consultant to perform a Phase I Environmental Site
Assessment ("ESA") of the Real Property and prepare a
report presenting related findings. The ESA shall be
conducted and the report shall be prepared in accordance
with ASTM E 1527-94, "Standard Practice for
Environmental Site Assessments: Phase I Environmental
Site Assessment Process." Borrower shall make available
to Lender and its environmental consultant all prior
environmental reports, including Phase I and Phase II
ESAs, documentation of environmental investigation and
remediation, Asbestos Surveys, records of any asbestos
abatement activities, or Operation and Maintenance
("O&M") programs for asbestos-containing building.
(b) If deemed necessary by Lender as a result of the
findings of the ESA, Lender may require its
environmental consultant to perform additional testing
and/or investigation as may be required to ascertain
whether the Real Property has been contaminated and to
what extent. In addition, based on the characteristics
and location of the Real Property, Lender may require
its consultant to conduct testing for recognized
environmental concerns, including, without limitation,
radon, lead paint, lead-in-water, and indoor air
quality. Costs of such additional investigation shall be
borne by Borrower, and may require an additional fee to
be paid to Lender.
(c) Lender may require its consultant to perform an asbestos
assessment ("Asbestos Assessment") as a part of the ESA,
based upon the age, use and condition of the Real
Property and the existence of a prior asbestos
assessment to confirm that there are no
asbestos-containing materials ("ACM") at the Real
Property, or that any ACM present is not friable.
(d) Borrower shall provide Lender a representation, warranty
and covenant that Borrower and any holders of a
substantial beneficial or ownership interest in Borrower
that are designated by Lender in its reasonable
discretion have not, and to the best of Borrower's
knowledge, no prior owner or current or prior tenant,
subtenant, or other occupant of all or any part of the
Real Property, has used Hazardous Materials on, from or
affecting the Real Property in any manner that violates
federal, state or local laws, ordinances, rules,
regulation or policies governing the use, storage,
treatment, transportation, manufacture, refinement,
handling, production, or disposal of Hazardous Materials
(collectively, the "Environmental Laws"), and that to
the best of Borrower's knowledge, no Hazardous Materials
have been disposed of on the Real Property.
(e) Lender shall also require a representation and warranty
that, to the best of Borrower's knowledge and belief,
except for any ACM identified in the Asbestos
Assessment, the Real Property does not contain, and has
not in the past contained, any ACM and there is no
current or potential airborne contamination of the Real
Property by asbestos fiber, including any potential
contamination that would be caused by maintenance or
tenant finish activities in the building(s).
June 26, 1997
Page 11
<PAGE> 151
(f) An agreement (the "Environmental Indemnification
Agreement") that Borrower, and any holders of
substantial beneficial or ownership interests in
Borrower that are designated by Lender in its reasonable
discretion, will indemnify Lender and its agents
against, and hold Lender and its agents harmless from,
any and all loss, cost, expense, claim or liability that
Lender or its agents may incur as a result of violations
of Environmental Laws in connection with the Real
Property or the disposal of Hazardous Materials on the
Real Property or migration of Hazardous Materials onto
the Real Property and such indemnity shall survive the
transaction contemplated herein and shall survive the
event of foreclosure of the Mortgage or conveyance of
the Real Property in lieu thereof as to violations or
disposal or migration occurring prior to such
foreclosure or conveyance.
In the event that all provisions of this paragraph are not
provided to Lender's satisfaction, then Lender may terminate
Lender's obligations hereunder and the Deposit, the Engineering
Cost Deposit and the Lender Fee shall be retained by Lender as
consideration for evaluating this Agreement, agreeing to make
the loan and holding the funds for future disbursements.
However, in the event Lender is not satisfied with either the
report required in subparagraph 4.4.3 (a) and (c) herein or with
any remedies proposed by Borrower to address problems disclosed
by said report and Lender therefore terminates Lender's
obligations hereunder, then Borrower shall be entitled to a
return of the Deposit and the Engineering Cost Deposit after
deduction of all costs incurred by Lender in connection with the
contemplated transaction. Lender shall also retain the Lender
Fee.
4.4.4 Americans with Disabilities Act ("ADA") Requirements:
Prior to Lender's acceptance of this Agreement, if available,
and in no event less than forty-five (45) days prior to closing,
the Borrower shall submit a plan of action (the "ADA Compliance
Plan"), in form and substance acceptable to Lender based upon an
ADA Survey. Such ADA Compliance Plan shall include a prioritized
list of the items to be accomplished, including a timetable for
completion thereof, prepared and carried out so as to bring the
Real Property into compliance with ADA. The ADA Compliance Plan
shall be based upon an ADA Survey prepared by a consultant
acceptable to Lender. The ADA Survey shall detail the extent to
which the Real Property complies and does not comply with Title
III of the ADA and identify those non-compliance items that are
"readily achievable" as that term is defined under the ADA. The
loan documents shall contain a provision requiring Borrower to
implement the ADA Compliance Plan in accordance with its terms.
4.5 Evidence of Approvals: Borrower will be required to obtain and at all
times keep in full force and effect such governmental approvals as may
be necessary to comply with all governmental requirements, including all
environmental and land use matters relating to the Real Property and its
occupancy, as such requirements may exist from time to time. At closing,
Borrower will provide Lender with proof, including without limitation,
attorneys' opinions and architects' or engineers' certifications, that
such approvals have been obtained and that all applicable appeal periods
have expired and that the Real Property complies with all laws and
regulations including, without limitation,
June 26, 1997
Page 12
<PAGE> 152
building and zoning laws and regulations; all such proof and any
conditions thereto must be acceptable to Lender.
SECTION 5 - MISCELLANEOUS PROVISIONS
5.1 Interpretation: All of Borrower's representations and agreements and all
other terms and conditions contained in this Agreement are material
conditions to the closing of the Loan, or any subsequent advance of Loan
proceeds after the Closing Date, and are established for the protection
of Lender. Lender may, at its sole discretion, waive any such
conditions.
5.2 Costs: Whether or not closing occurs, Borrower agrees to pay all costs
incidental to the transaction contemplated hereby, including without
limitation all costs of title insurance; appraisal and engineering fees;
revenue stamps; recording fees; attorneys' fees (whether charged by
Lender's staff counsel or local counsel) for preparation of documents,
legal research, legal opinions or any other legal services Lender seeks
in connection with this transaction; mortgage tax, if any; survey cost;
and any and all other incidental expenses incurred by Lender relating to
the Loan. Excluded from the foregoing are the expenses of Lender's loan
department and personnel.
5.3 No Commitment: Borrower agrees not to apply for, or accept, a commitment
for any other financing for the Real Property during the pendency of
this Agreement.
5.4 No Prior Agreement: Upon execution by Lender this Agreement will
supersede all other prior dealings between Borrower and Lender with
regard to the Loan, except to the extent Borrower has made prior
representations to Lender regarding any aspect of the transaction
contemplated hereby. Prior receipt of any document will not constitute
approval of that document unless expressly stated otherwise within this
Agreement.
5.5 Entire Agreement: The entire agreement between Borrower and Lender
consists of the Mortgage Loan Application and Agreement, Special
Provisions (Exhibit A), Description of Real Property (Exhibit B), Rents
and Leases (Exhibit C), Form of Letter of Credit (Exhibit D), Standard
Forms (Exhibit E), and the following exhibits attached hereto (if any):
n/a.
5.6 Choice of Law: This Agreement is governed by the laws of the State of
Connecticut. Unless Lender requires that the loan documents be governed
by the laws of another state having significant contacts with the loan
transaction, the loan documents will be governed by the laws of the
state in which the Real Property is located.
5.7 No Assignment: This Agreement may not be assigned by Borrower without
the prior written consent of Lender. Any change in the composition of
any beneficial ownership interest in Borrower shall be considered an
assignment.
5.8 Status of Principals: If any signatory of the loan documents is a
partnership, limited partnership, joint venture, corporation or other
business entity, Borrower shall furnish Lender with such documents as
Lender may require to determine that the entity is legally formed and
existing and able to enter into the Loan, and that the individuals
executing the loan documents are empowered to do so; said documents
shall include
June 26, 1997
Page 13
<PAGE> 153
without limitation partnership agreements, charters, by-laws,
resolutions and evidence of good standing. If the entity which is to be
the Borrower under this Agreement is not already formed, it must be duly
and legally constituted in accordance with all applicable laws, rules
and regulations before closing, Borrower's obligations under this
Agreement must be performed by an entity satisfactory to Lender and this
Agreement must be executed by such entity on behalf of Borrower.
The undersigned has the authority to execute this Agreement and to bind the
Borrower with respect to the terms and conditions herein contained. The Borrower
agrees to be bound by and to perform the terms, conditions and covenants of this
Agreement.
BORROWER:
__________________________________________
By:_______________________________________ Date:__________________
Name:_____________________________________
Title:____________________________________
Address:__________________________________
The above offer is hereby accepted.
CIGNA Investments, Inc.
By:_______________________________________ Date:__________________
Name:_____________________________________
Title:____________________________________
June 26, 1997
Page 14
<PAGE> 154
EXHIBIT A
1. BORROWER
Borrower/(Partnership): Borrower is _____________________________, a
California limited partnership, the general partner(s) and ownership
percentage(s) of which is (are):
Pacific Gulf Properties (___%), a California general partnership.
Borrower's address is: 4220 Von Karman Drive, Newport Beach, California
92660.
Borrower's United States Taxpayer identification Number is
("TIN")________________
The addresses of Borrower's General partners are:
Name Address TIN
---- ------- ---
Pacific Gulf Properties, Inc. 4220 Von Karman Drive
Newport Beach, CA 92660
Borrower's limited partners are:
Name Address TIN
---- ------- ---
Eden Plaza Associates (_%), a California general partnership
220 Sansome Street, San Francisco, CA 94104
2. DEFERRED MAINTENANCE
Borrower agrees that the items shown on the attached Exhibit ___ and
detailed in the Marx/Okubo Report of January 21, 1997, shall be
corrected within ___ days of the closing of the loan. Items ___ will be
completed within ___ days of closing. In the event the items are not
completed by the scheduled deadlines, Lender will require that borrower
deposit 100% of the monthly Project Cash Flow bearing escrow for the
benefit of Lender until said items are completed.
Project Cash Flow is defined as net cash flow available after payment of
operating expenses and debt service on the subject loan.
Mortgage Loan Application and Agreement
Exhibit A - Special Provisions June 26, 1997
<PAGE> 155
3. TRANSFERS
Notwithstanding the provisions of Section 3.3 of this Agreement,
Borrower shall have the right with prior written notice to Lender to
transfer limited partnership interests in the Borrower to Pacific Gulf
Properties, Inc.
Mortgage Loan Application and Agreement
Exhibit A - Special Provisions June 26, 1997
<PAGE> 156
EXHIBIT B
DESCRIPTION OF REAL PROPERTY
The Loan is to be secured by a first mortgage lien on the unencumbered fee
simple interest in the Land, all present and future Improvements thereon and the
Personal Property described below:
Land: EDEN PLAZA EDEN ROCK #5 & #9 EDEN ROCK #10
- ---- ---------- ----------------- -------------
7.89 Acres 4.96 Acres 26.4 Acres
Improvements: 101,230 sf NRA 71,840 sf NRA 327,715 sf NRA
- ------------ Sales & Service Office/Research Warehouse
Parking: 322 Cars 236 Cars 206 Cars
- -------
There are at least 764 parking spaces on the Real Property. The Loan documents
will provide that there will be on the Real Property throughout the term of the
Loan the greater of: (a) the above figures, or (b) sufficient parking spaces to
comply with applicable government regulations.
Personal
Property:
All personal property now or hereafter owned by Borrower and used in the
operation or maintenance of the Land and Improvements.
The Loan will be further secured by a first mortgage lien on Borrower's interest
in any and all easements and appurtenances, including without limitation, (i)
any drainage ponds or other like drainage areas not located on the Real Property
which may be required for water run off, (ii) any easements necessary to obtain
access from the Real Property to such drainage areas or to any other location to
which Borrower has a right to drain water or sewage, (iii) any land required to
be maintained as undeveloped land by the zoning rules and regulations applicable
to the Real Property and (iv) any easements and agreements which are or may be
established to allow satisfactory ingress to, egress from and operation of the
Real Property.
Lender will require that all Personal Property be owned lien-free by Borrower
and paid in full, and not be subject to any equipment leases, conditional sales
contracts or any other types of financing. All exceptions to this must be
approved by Lender.
May 30, 1997
<PAGE> 157
EXHIBIT C
RENTS AND LEASES
Approval of Leases Prior to Closing Date: Prior to the Closing Date, all leases
and sub-leases (and any amendments, modifications, extensions or renewals
thereof) affecting the Real Property must be submitted to Lender for written
approval. All leases identified on the Rent Roll described herein shall be
submitted to Lender at least thirty (30) days prior to the Closing Date. Prior
to closing Borrower shall deliver to Lender for Lender's review and approval
Borrower's standard form of tenant lease.
Rent Roll: On the Closing Date the tenants listed in Exhibit C-1 must be in
occupancy of the premises under Approved Leases providing for the terms set
forth in the Rent Roll attached as Exhibit C-1, in form as set forth herein. An
"Approved Lease" shall mean a lease which meets all of the following
requirements:
(a) The lease must be in form and substance satisfactory to Lender.
(b) The tenant thereunder must be satisfactory to Lender.
(c) The tenant and their guarantors are solvent and not subject to
any bankruptcy, insolvency or reorganization proceedings, or any
FDIC or FSLIC proceedings, investigations or reviews.
(d) The lease must be in full force and effect with the tenant in
occupancy of the premises and paying rent on a current basis
with no offsets or defenses; there must be no prepayment of rent
other than as provided in the Lease; the landlord and tenant
must not be in default in any of their obligations under such
lease.
Rental concessions such as free rent, above standard tenant improvements, moving
allowances, lease buyouts, or any other monetary tenant inducement must be noted
on the Rent Roll. On the Closing Date, Borrower shall deliver a Rent Roll
certified by Borrower to be true and complete.
Estoppels: Not less than five (5) days prior to closing Borrower will furnish
Lender with lease ratification agreements executed by both the tenant and the
landlord under all leases. Each ratification agreement is to be satisfactory to
Lender dated within forty-five (45) days of closing, and substantially in the
form attached hereto as Exhibit E-2 with such additions and modifications as
Lender shall require or approve.
Subordination, Non-Disturbance and Attornment: All leases must be subordinate to
the lien of the Mortgage unless Lender may otherwise specify; Lender may require
that specific leases be made superior to the lien of the Mortgage and that
certain provisions of such superior leases be made subject to the lien of the
Mortgage. Lender shall require the execution of subordination, attornment and
non-disturbance agreements substantially in the form attached hereto as Exhibit
E-3 from all tenants unless specifically waived by Lender. The loan documents
shall permit Lender to require subordination, non-disturbance and attornment
agreements for all leases executed during the Term.
May 30, 1997
<PAGE> 158
Assignment of Leases: Lender will receive an assignment of lessor's interest in
leases which shall be in form and substance satisfactory to Lender and shall
provide Lender with a perfected first lien security interest in all rents,
royalties, issues, profits, license fees, concession fees, lease termination
fees, option payments, reimbursements, charges, deposits, and other revenues of
every kind and nature or due by virtue of the leases (collectively, the
"Rents"). Lender will be authorized to notify tenants of the existence of such
assignment, but Lender will not exercise its right to collect Rents unless a
default occurs in the Loan.
Lease Approval After Closing Date: After the Closing Date, all leases and
sub-leases (and any amendments, modifications, extensions or renewals thereof)
executed after the Closing Date must be submitted to Lender for prior written
approval, and Borrower shall promptly deliver to Lender a fully-executed copy of
all such approved leases.
Notwithstanding the foregoing, for so long as there is no event of default under
any of the loan documents, Lender shall waive its requirement to receive and
approve all leases and subleases (and any amendments, modifications, extensions
or renewals thereof) by separate agreement provided the following requirements
are met ("Approval Waiver Requirements"):
(a) The lease covers an area no greater than 10,000 square feet of
net rentable area;
(b) The lease is written on a standard form of lease which Lender
has previously approved in writing with no material changes;
(c) The length of the lease term is not less than one (1) year and
no greater than ten (10) years, including any renewal or
extension options;
(d) The effective rent provided for over the lease term is
consistent with the then current market effective rent of
comparable space in competitive properties. The schedule of rent
shall not decline over the lease term, including any extension.
At Lender's option, an effective rent schedule shall be provided
by borrower annually for written approval by Lender;
(e) The lease does not (a) grant the tenant any purchase option or
right of first refusal to purchase the property, (b) grant the
tenant any interest in the ownership of the Real Property or
provide any incentives equivalent to an ownership interest in
the Real Property, or (c) otherwise contain terms that would
cause a material impairment of Lender's security;
(f) The lease does not provide for the payment for tenant
improvement work or leasing commissions at any time other than
at commencement of the lease;
(g) The lease shall be an arms length transaction and not be to
Borrower, an affiliate of Borrower, or a creditor of Borrower
and the Borrower shall not assign any portion of the rental to
any third party.
Notwithstanding the Approval Waiver Requirements set forth above, Lender agrees
to conditionally modify subsection (a ) above by increasing the square footage
requirement to 25,000 square feet, provided that all other requirements of
subsections (b) through (i) are met. Borrower acknowledges that Lender will from
time to time review and evaluate the status of the Loan and that Lender shall
retain the right, in its sole discretion, to re-instate the lower square
May 30, 1997
<PAGE> 159
footage requirement at any time and for any reason. Upon Borrower's receipt of
Lender's notice to reinstate the lower square footage requirement, the square
footage requirement shown in subsection (a) above shall be immediately
reinstated
May 30, 1997
<PAGE> 160
EXHIBIT C-1
RENT ROLL
<TABLE>
<CAPTION>
Annual Rent Termination Landlord Tenant
Initial Lease Commencement Expiration Minimum Escalation or Renewal Rental Security Improvement Lease
Tenant Term Date Date Rental Provisions Options Concessions* Deposit Costs Commissions
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
SEE ATTACHED
* Rental concessions include but are not limited to such concessions as free
rent, above standard improvements, moving allowances or any other monetary
tenant lease inducement.
May 30, 1997
<PAGE> 161
EXHIBIT D
FORM OF LETTER OF CREDIT
(Issuing Bank's Letterhead)
Beneficiary - CIGNA Investments, Inc.
Irrevocable Credit No.: __________________________
Date: ___________________________
Gentlemen:
For the account of (Borrower), we hereby authorize you or your transferee to
draw on us at sight up to an aggregate amount of $_________________ *U.S.).
This credit is irrevocable, unconditional and transferable. This credit may be
transferred without charge one or more times upon receipt of your written
instructions submitted in accordance with the attached transfer form.
Drafts drawn under this Credit must specify the number of this Credit and be
presented at this office not later than (expiration date).
We agree that we will not be subrogated to your rights in any collateral held by
you unless and until the loan in connection with which this Letter of Credit is
issued has been paid in full.
This Credit sets forth in full the terms of our obligation to you, and such
undertaking shall not in any way be modified or amplified by any agreement in
which this Credit is referred to or to which this Credit relates, and any such
reference shall not be deemed to incorporate herein by reference any agreement.
Drafts drawn under this Letter of Credit will be duly honored.
(Authorized Signature)
[Add the following if applicable] Any letter of credit submitted in connection
with (choose all applicable: [tenant improvements] [rental achievement]
[leasing] [as additional security]) shall contain an "evergreen clause"
obligating the issuer to renew the letter of credit for one (1) year unless that
issuer has notified Lender at least thirty (30) days in advance that it intends
not to renew the letter of credit.
<PAGE> 162
EXHIBIT E-1
STANDARD CHECKLISTS/FORMS
The following checklists and forms are incorporated as part of this
Agreement:
1. Survey Checklist
2. Lease Estoppel Certificate
3. Subordination, Non-Disturbance and Attornment Agreement.
<PAGE> 163
EXHIBIT E-2
[OFFICE AND INDUSTRIAL PROPERTIES]
LEASE ESTOPPEL CERTIFICATE
Landlord:
Tenant:
Tenant Trade Name:
Lender: Connecticut General Life Insurance Company
Premises:
Area:__________________________Sq. Ft. Lease Date:_____________________
The undersigned Landlord and Tenant of the above-referenced lease (the "Lease")
hereby ratify the Lease and certifies to Lender as mortgagee of the Real
Property of which the premises demised under the Lease (the "Premises") is a
part, as follows:
1. That the term of the Lease commenced on___________________, 19__
and the Tenant is in full and complete possession of the
premises demised under the Lease and has commenced full
occupancy and use of the Premises, such possession having been
delivered by the original landlord and having been accepted by
the Tenant.
2. That the Lease calls for monthly rent installments of
$__________________ to date and that the Tenant is paying
monthly installments of rent of $________________ which
commenced to accrue on the___________ day of____________, 19___.
3. That no advance rental or other payment has been made in
connection with the Lease, except rental for the current month,
there is no "free rent" or other concession under the remaining
term of the lease and the rent has been paid to and including
________________,19___.
4. That a security deposit in the amount $_____________ is being
held by Landlord, which amount is not subject to any set-off or
reduction or to any increase for interest or other credit due to
Tenant.
5. That all obligations and conditions under said Lease to be
performed to date by Landlord or Tenant have been satisfied,
free of defenses and set-offs including all construction work in
the Premises.
6. That the Lease is a valid lease and in full force and effect and
represents the entire agreement between the parties; that there
is no existing default on the part of the Landlord or the Tenant
in any of the terms and conditions thereof and no event has
occurred which, with the passing of time or giving of notice or
both, would constitute an event of default; and that said Lease
has: (initial one)
[ ] not been amended, modified, supplemented, extended, renewed
or assigned.
May 30, 1997
<PAGE> 164
[ ] been amended, modified, supplemented, extended, renewed or
assigned as follows by the following described agreements:
________________________________________________________________
________________________________________________________________
________________________________________________________________
____________________________
7. That the Lease provides for a primary term of ____________
months; the term of the Lease expires on the ____________ day of
___________, 19___; and that: _________ (initial all applicable
subparagraphs)
[ ] neither the Lease nor any of the documents listed above in
Paragraph 6, (if any), contain an option for any additional term
or terms or an option to terminate the Lease prior to the
expiration date set forth above.
[ ] the Lease and/or the documents listed above in Paragraph 6
contain an option for ___________ additional term(s) of
___________ year(s) and ___________ months(s) (each) at a rent
to be determined as follows:
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
[ ] the Lease and/or the documents listed above in Paragraph 6
contain an option to terminate the lease prior to the date set
forth above as follows:
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
8. That Landlord has not rebated, reduced or waived any amounts due
from Tenant under the lease, either orally or in writing, nor
has Landlord provided financing for, made loans or advances to,
or invested in the business of Tenant.
9. That, to the best of Tenant's knowledge, there is no apparent or
likely contamination of the Real Property of the Premises by
Hazardous Materials, and Tenant does not use, nor has Tenant
disposed of Hazardous Materials in violation of Environmental
Laws on the Real Property or the Premises.
10. That there are no actions, voluntary or involuntary, pending
against the Tenant under the bankruptcy laws of the United
States or any state thereof.
11. That this certification is made knowing that Lender is relying
upon the representations herein made.
May 30, 1997
<PAGE> 165
Tenant: Landlord:
By: ________________________________ By: ________________________________
Typed Name: Typed Name:
Title: Title:
Attest _____________________________
Typed Name:
Title:
Date: ________________________, 1996
Borrower's Initial________
Lender's Initial__________
May 30, 1997
<PAGE> 166
EXHIBIT E-3
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
Tenant Name: _________________________________
Trade Name: __________________________________
Room/Unit No.: _______________________________
THIS AGREEMENT is dated the _____ day of ________________, 19___, and is
made by and among CONNECTICUT GENERAL LIFE INSURANCE COMPANY, having an address
c/o CIGNA Investments, Inc., 900 Cottage Grove Road, Bloomfield, Connecticut
06002, Attn: Real Estate Investment Services S-319 ("Mortgagee"),
_________________________________________________________,
d/b/a_____________________________________________________, having an address of
_________________________________________________________ ("Tenant"), and
_______________________________________________________, having an address of
_________________________________________________________ ("Landlord).
RECITALS:
A. Tenant has entered into a lease ("Lease") dated
_____________________________, 19__ with _______________________ as lessor
("Landlord"), covering the premises known as ________________________ (the
"Premises") within the property known as ________________________, more
particularly described as shown on Exhibit A, attached hereto (the "Real
Property").
B. Mortgagee has agreed to make or has made a mortgage loan in the
amount of ________________________ to Landlord, secured by a mortgage of the
Real Property (the "Mortgage"), and the parties desire to set forth their
agreement herein.
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. The Lease and all extensions, renewals, replacements or
modifications thereof are and shall be subject and subordinate to the Mortgage
and all terms and conditions thereof insofar as it affects the Real Property of
which the Premises form a part, and to all renewals, modifications,
consolidations, replacements and extensions thereof, to the full extent of
amounts secured thereby and interest thereon.
2. Tenant shall attorn to and recognize any purchaser at a
foreclosure sale under the Mortgage, any transferee who acquires the Premises by
deed in lieu of foreclosure, and the successors and assigns of such
purchaser(s), as its landlord for the unexpired balance (and any extensions, if
exercised) of the term of the Lease on the same terms and conditions set forth
in the Lease.
May 30, 1997
<PAGE> 167
3. If it becomes necessary to foreclose the Mortgage, Mortgagee
shall neither terminate the Lease nor join Tenant in summary or foreclosure
proceedings so long as Tenant is not in default under any of the terms,
covenants, or conditions of the Lease.
4. If Mortgagee succeeds to the interest of Landlord under the
Lease, Mortgagee shall not be:
a. liable for any act or omission of any prior landlord
(including Landlord);
b. liable for the return of any security deposit unless
such deposit has been delivered to Mortgagee by Landlord or is in an escrow fund
available to Mortgagee;
c. subject to any offsets or defenses that Tenant might
have against any prior landlord (including Landlord);
d. bound by any rent or additional rent that Tenant might
have paid for more than the current month to any prior landlord (including
Landlord);
e. bound by any amendment, modification, or termination of
the Lease made without Mortgagee's consent;
f. personally liable under the Lease, Mortgagee's liability
thereunder being limited to its interest in the Real Property; or
g. bound by any notice of termination given by Landlord to
Tenant without Mortgagee's prior written consent thereto.
5. This Agreement shall be binding on and shall inure to the
benefit of the parties hereto and their successors and assigns.
6. Tenant shall give Mortgagee, by certified mail, return receipt
requested, or by commercial overnight delivery service, a copy of any notice of
default served on Landlord, at Mortgagee's address set forth above or at such
other address as to which Tenant has been notified in writing. If Landlord shall
have failed to cure such default within the time provided for in the Lease, then
Mortgagee shall have an additional ten (10) days within which to cure any
default capable of being cured by the payment of money and an additional thirty
(30) days within which to cure any other default or if such default cannot be
cured within that time, then such additional time as may be necessary to cure
such default shall be granted if within such thirty (30) days Mortgagee has
commenced and is diligently pursuing the remedies necessary to cure such default
(including, but not limited to, commencement of foreclosure proceedings, if
necessary to effect such cure), in which event the Lease shall not be terminated
while such remedies are being so diligently pursued.
7. Landlord has agreed under the Mortgage and other loan documents that
rentals payable under the Lease shall be paid directly by Tenant to Mortgagee
upon default by Landlord under the Mortgage. After receipt of notice from
Mortgagee to Tenant, at the address set forth above or at such other address as
to which Mortgagee has been notified in writing, that rentals under the Lease
should be paid to Mortgagee, Tenant shall pay to Mortgagee, or at the direction
of Mortgagee, all monies due or to become due to Landlord under the Lease.
Tenant shall have no responsibility to ascertain whether such demand by
May 30, 1997
<PAGE> 168
Mortgagee is permitted under the Mortgage, or to inquire into the existence of a
default. Landlord hereby waives any right, claim, or demand it may now or
hereafter have against Tenant by reason of such payment to Mortgagee, and any
such payment shall discharge the obligations of Tenant to make such payment to
Landlord.
8. Tenant declares, agrees and acknowledges that Mortgagee, in
making disbursements pursuant to any agreement relating to the Loan, is under no
obligation or duty to, nor has Mortgagee represented that it will, see to the
application of such proceeds by the person or persons to whom Mortgagee
disburses such proceeds, and any application or use of such proceeds for
purposes other than those provided for in such agreement shall not defeat the
subordination herein made in whole or in part.
IN WITNESS WHEREOF, the parties hereto have executed these presents as
of the day and year first above written.
Mortgagee:__________________ ___________________
Date
By:_________________________
Its:________________________
Tenant:_____________________ ___________________
Date
By:_________________________
Its:________________________
Landlord:___________________ ___________________
Date
By:_________________________
Its:________________________
May 30, 1997
<PAGE> 169
[CORPORATION]
[STATE OR COMMONWEALTH OF ___________]
:ss.
[COUNTY OF ____________]
On this, the ___ day of ______________, before me, notary public, the
undersigned officer, personally appears _____________, who acknowledged himself
to be the ___________________ of ________________ , a corporation, and the
foregoing instrument for the purposes therein contained, by signing the name of
the corporation by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal the day and
year aforesaid.
______________________________
Notary Public
My Commission Expires:
[PARTNERSHIP]
STATE OF )
)
COUNTY OF )
On this _____ day of ________________ in the year ______ before me,
________________, a Notary Public of said State, duly commissioned and sworn,
personally appeared _____________, known to me (or proved to me on the oath of
___________) to be a general partner of a limited partnership that executed the
within instrument, and acknowledged to me that such partnership executed the
same.
______________________________
Notary Public in and for said State
May 30, 1997
<PAGE> 170
[CII ON BEHALF OF CGLIC]
STATE OF CONNECTICUT )
)SS.
COUNTY OF HARTFORD )
On this ________ day of __________, 19__, personally appeared
_______________ who acknowledged himself to be the _____________ of CIGNA
Investments, Inc., a corporation, duty authorized to sign on behalf of
____________, a corporation, and that he, being authorized so to do, executed
the foregoing instrument for the purposes therein contained by signing the name
of the corporation.
IN WITNESS WHEREOF, I hereunto set my hand.
______________________________
Notary Public
My Commission Expires:
May 30, 1997
<PAGE> 171
EXHIBIT A
(SNDA-MTG)
Description of Premises
May 30, 1997
<PAGE> 172
EXHIBIT P
OP AGREEMENT
AGREEMENT OF LIMITED PARTNERSHIP
OF
PGP NORTHERN INDUSTRIAL, L.P.
<PAGE> 173
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C> <C> <C>
ARTICLE 1 DEFINED TERMS .................................................... 1
ARTICLE 2 ORGANIZATIONAL MATTERS ........................................... 13
Section 2.1 Organization ............................................ 13
Section 2.2 Name .................................................... 13
Section 2.3 Registered Office and Agent; Principal Office ........... 13
Section 2.4 Power of Attorney ....................................... 14
Section 2.5 Term .................................................... 15
ARTICLE 3 PURPOSE .......................................................... 15
Section 3.1 Purpose and Business .................................... 15
Section 3.2 Powers .................................................. 16
Section 3.3 Technical Revisions ..................................... 16
ARTICLE 4 CAPITAL CONTRIBUTIONS ............................................ 16
Section 4.1 Initial Capital Contributions of the Partners ........... 16
Section 4.2 Additional Capital Contributions by the
General Partner ......................................... 18
Section 4.3 Issuances of Additional Partnership Interests ........... 18
Section 4.4 Preemptive Rights ....................................... 20
ARTICLE 5 DISTRIBUTIONS .................................................... 21
Section 5.1 Requirement and Characterization of Distributions ....... 21
Section 5.2 General Partner Election ................................ 22
Section 5.3 Amounts Withheld ........................................ 22
Section 5.4 Distributions Upon Liquidation .......................... 22
Section 5.5 Other Assets Present .................................... 22
Section 5.6 Seismic Costs ........................................... 23
ARTICLE 6 ALLOCATIONS ...................................................... 23
Section 6.1 Allocations of Net Income and Net Loss .................. 23
Section 6.2 Other Allocations ....................................... 25
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS ............................ 25
Section 7.1 Management .............................................. 25
Section 7.2 Limitations on General Partner .......................... 29
Section 7.3 Certificate of Limited Partnership ...................... 30
Section 7.4 Management Fee and Reimbursement of the
General Partner ......................................... 31
Section 7.5 Outside Activities of the General Partner ............... 33
Section 7.6 Contracts with Affiliates ............................... 33
Section 7.7 Indemnification ......................................... 34
Section 7.8 Liability of the General Partner ........................ 36
Section 7.9 Other Matters Concerning the General Partner ............ 37
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C> <C> <C> <C>
Partner ................................................. 37
Section 7.10 Title to Partnership Assets ............................. 38
Section 7.11 Reliance by Third Parties ............................... 38
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS ....................... 39
Section 8.1 Limitation of Liability ................................. 39
Section 8.2 Management of Business .................................. 39
Section 8.3 Outside Activities of Limited Partners .................. 39
Section 8.4 Return of Capital ....................................... 40
Section 8.5 Rights of Limited Partners Relating to the Partnership .. 40
Section 8.6 No Redemption Right ..................................... 41
Section 8.7 Representations and Warranties .......................... 41
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS ........................... 43
Section 9.1 Records and Accounting .................................. 43
Section 9.2 Fiscal Year ............................................. 43
Section 9.3 Reports ................................................. 43
ARTICLE 10 TAX MATTERS ...................................................... 44
Section 10.1 Preparation of Tax Returns .............................. 44
Section 10.2 Tax Elections ........................................... 44
Section 10.3 Tax Matters Partner ..................................... 45
Section 10.4 Organizational Expenses ................................. 46
Section 10.5 Withholding ............................................. 46
ARTICLE 11 TRANSFERS AND WITHDRAWALS ........................................ 47
Section 11.1 Transfer ................................................ 47
Section 11.2 Transfer of the General Partner's Partner
Interest and Limited Partner Interest ................... 48
Section 11.3 Limited Partners' Rights to Transfer .................... 48
Section 11.4 Substituted Limited Partners ............................ 50
Section 11.5 Assignees ............................................... 51
Section 11.6 General Provisions ...................................... 51
Section 11.7 No Exchange ............................................. 52
ARTICLE 12 ADMISSION OF PARTNERS ............................................ 52
Section 12.1 Admission of Successor General Partner .................. 52
Section 12.2 Admission of Additional Limited Partners ................ 53
Section 12.3 Amendment of Agreement and Certificate
of Limited Partnership .................................. 53
ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION ......................... 54
Section 13.1 Dissolution ............................................. 54
Section 13.2 Winding Up .............................................. 55
Section 13.3 Compliance with Timing Requirements of Regulations ...... 57
Section 13.4 Deemed Distribution and Re-contribution ................. 57
Section 13.5 Rights of Limited Partners .............................. 57
Section 13.6 Notice of Dissolution ................................... 58
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C> <C> <C>
Section 13.7 Termination of Partnership and Cancellation
of Certificate of Limited Partnership ................... 58
Section 13.8 Reasonable Time for Winding-Up .......................... 58
Section 13.9 Waiver of Partition ..................................... 58
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS ..................... 58
Section 14.1 Amendments .............................................. 58
Section 14.2 Meetings of the Partners ................................ 60
ARTICLE 15 GENERAL PROVISIONS ............................................... 61
Section 15.1 No Assurances ........................................... 61
Section 15.2 Addresses and Notices ................................... 62
Section 15.3 Titles and Captions ..................................... 62
Section 15.4 Pronouns and Plurals .................................... 62
Section 15.5 Further Action .......................................... 62
Section 15.6 Binding Effect .......................................... 62
Section 15.7 Creditors ............................................... 62
Section 15.8 Waiver .................................................. 63
Section 15.9 Counterparts ............................................ 63
Section 15.10 Applicable Law .......................................... 63
Section 15.11 Invalidity of Provisions ................................ 63
Section 15.12 Entire Agreement ........................................ 63
Section 15.13 No Rights as Shareholders ............................... 63
Section 15.14 Venue ................................................... 64
</TABLE>
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<PAGE> 176
AGREEMENT OF LIMITED PARTNERSHIP
OF
PGP NORTHERN INDUSTRIAL, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP OF PGP NORTHERN INDUSTRIAL, L.P.
(this "Agreement"), dated as of 1997, is entered into by and between Pacific
Gulf Properties Inc., a Maryland corporation, as the sole general partner (the
"General Partner"), and Eden Plaza Associates, LLC, a California limited
liability company ("Eden"), as the initial "Original Limited Partner" (as
hereafter defined).
WHEREAS, the General Partner and Eden desire to form a Delaware limited
partnership (the "Partnership") pursuant to this Agreement of Limited
Partnership and the "Act" (as hereinafter defined);
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
Section 1.1 "Act" means the Delaware Revised Uniform Limited Partnership
Act, as it may be amended from time to time, and any successor to such statute.
Section 1.2 "Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 4.3 hereof and who is shown
as such on the books and records of the Partnership.
Section 1.3 "Adjusted Capital Account" means the Capital Account
maintained for each Partner as of the end of each Partnership taxable year: (i)
increased by any amounts which such Partner is obligated to restore pursuant to
any provision of this Agreement or is deemed to be obligated to restore pursuant
to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and (ii) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
<PAGE> 177
Section 1.4 "Adjusted Capital Account Deficit" means, with respect to
any Partner, the deficit balance, if any, in such Partner's Adjusted Capital
Account as of the end of the relevant Partnership taxable year.
Section 1.5 "Adjusted Property" means any property, the Carrying Value
of which has been adjusted pursuant to Exhibit "B" hereof.
Section 1.6 "Affiliate" means, with respect to any Person: (i) any
Person directly or indirectly controlling, controlled by or under common control
with such Person; (ii) any Person owning or controlling ten percent (10%) or
more of the outstanding voting interests of such Person; (iii) any Person of
which such Person owns or controls ten percent (10%) or more of the voting
interests; or (iv) any officer, director, general partner or trustee of such
Person or of any Person referred to in clauses (i), (ii), and (iii) above.
Section 1.7 "Agreed Value" means: (i) in the case of any Contributed
Property set forth on Exhibit "D" and as of the time of its contribution to the
Partnership, the Agreed Value of such property as set forth in Exhibit "D";
(ii) in the case of any Contributed Property not set forth in Exhibit "D" and
as of the time of its contribution to the Partnership, the 704(c) Value of such
property, reduced by any liabilities either assumed by the Partnership upon such
contribution or to which such property is subject when contributed; and (iii) in
the case of any property distributed to a Partner by the Partnership, the
Partnership's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752 of the Code and the Regulations
thereunder.
Section 1.8 "Agreement" means this Agreement of Limited Partnership, as
it may be amended, supplemented or restated from time to time.
Section 1.9 "Assignee" means a Person to whom one or more Limited
Partnership Units have been transferred in a manner permitted under this
Agreement, but who has not become a Substituted Limited Partner, and who has the
rights set forth in Section 11.5.
Section 1.10 "Available Cash" means, with respect to any period for
which such calculation is being made, (i) the sum of:
(a) the Partnership's gross revenues for such period from all sources
related to the operation of the Partnership assets (excluding the proceeds of
the sale or financing of Partnership assets); and
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<PAGE> 178
(b) the amount of any reduction during such period in the reserves of
the Partnership referred to in clause (ii)(d) below (including, without
limitation, reductions resulting from the General Partner's determination that
such amounts are no longer necessary);
(ii) less the sum of:
(a) all payments made by the Partnership during such period on
Partnership debts;
(b) all costs and expenses of operating the Partnership and owning,
operating, maintaining, repairing, improving, acquiring and selling Partnership
assets paid during such period;
(c) to the extent not already including in clause (ii)(b) above, any
management fee paid during such period pursuant to Section 7.4; and
(d) the amount of any reserves and other cash or similar balances
(including, but not limited to, reserves for working capital, reserves, debt
service, property taxes, insurance and capital improvements reserves) set aside
during such period which the General Partner determines to be necessary or
appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.
Additionally, if and after the Partnership acquires NonOriginal Limited
Partner Related Assets, or becomes obligated, indebted or liable for or on
account of Non-Original Limited Partner Related Assets or the ownership or
operation thereof, and so long as the General Partner has not consummated the
transactions and made the election described in Sections 4.3B and 5.2,
respectively, of this Agreement, then for purposes of determining distributions
of Available Cash to the Original Limited Partners and their heirs, successors
and assigns under the terms of this Agreement, Available Cash shall be
calculated separately with respect to Original Limited Partner Related Assets
and the ownership and operation thereof, together with the operation and
existence of the Partnership insofar as such concerns the Original Limited
Partner Related Assets, and shall not include any revenues, expenses, assets, or
liabilities of the Partnership relating to the Non-Original Limited Partner
Related Assets, the ownership or operation thereof, or the operation or
existence of the Partnership with respect thereto. (Without limiting the
foregoing, Available Cash shall not take into account any items referred to in
Paragraph 1.10(ii) which were
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<PAGE> 179
not incurred or otherwise attributable to the Original Limited Partner Related
Assets.)
Section 1.11 "Book-Tax Disparities" means, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any determination,
the difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax purposes
as of such date. A Partner's share of the Partnership's Book-Tax Disparities in
all of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit "B" and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
Section 1.12 "Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Los Angeles, California are authorized
or required by law to close.
Section 1.13 "Capital Account" means the Capital Account maintained for
a Partner pursuant to Exhibit "B" hereof.
Section 1.14 "Capital Contribution" means, with respect to any Partner,
any cash, cash equivalents or the Agreed Value of Contributed Property which
such Partner contributes or is deemed to contribute to the Partnership pursuant
to Article 4 hereof.
Section 1.15 "Carrying Value" means: (i) with respect to a Contributed
Property or Adjusted Property, the 704(c) Value of such property, reduced (but
not below zero) by all Depreciation with respect to such property charged to the
Partners' Capital Accounts following the contribution of or adjustment with
respect to such property; and (ii) with respect to any other Partnership
property, the adjusted basis of such property for federal income tax purposes,
all as of the time of determination. The Carrying Value of any property shall be
adjusted from time to time in accordance with Exhibit "B" hereof, and to reflect
changes, additions or other adjustments to the Carrying Value for dispositions
and acquisitions of Partnership properties, as deemed appropriate by the General
Partner.
Section 1.16 "Certificate" means a Certificate of Limited Partnership
relating to the Partnership filed in the office of the Delaware Secretary of
State, as amended from time to time in accordance with the terms hereof and the
Act.
Section 1.17 "Cigna Debt" shall have the meaning given thereto in the
Master Contribution Agreement.
Section 1.18 "Closing" shall have the meaning given thereto in the
Master Contribution Agreement.
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<PAGE> 180
Section 1.19 "Code" means the Internal Revenue Code of 1986, as amended
and in effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provisions of future
law.
Section 1.20 "Consent" means the consent or approval of a proposed
action by a Partner given in accordance with Section 14.2 hereof.
Section 1.21 "Contributed Property" means each property or other asset,
in such form as may be permitted by the Act (but excluding cash), contributed or
deemed contributed to the Partnership (including deemed contributions to the
Partnership on termination pursuant to Section 708 of the Code) . Once the
Carrying Value of a Contributed Property is adjusted pursuant to Exhibit "B"
hereof, such property shall no longer constitute a Contributed Property for
purposes of Exhibit "B" hereof, but shall be deemed an Adjusted Property for
such purposes.
Section 1.22 "Current Year Deficit" means with respect to any calendar
year, the amount, if any, by which the aggregate cash dividend paid to the
common shareholders of the General Partner on account of one share of common
stock of the General Partner for such calendar year exceeds the aggregate cash
distributed to the Limited Partners pursuant to Sections 5.1A(1) and 5.1A(2) on
account of one Limited Partnership Unit for such calendar year. A Current Year
Deficit for any calendar year shall not carry forward or be used in calculating
the Current Year Deficit for any subsequent calendar year.
Section 1.23 "Depreciation" means, for each taxable year, an amount
equal to the federal income tax depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such year, except that
if the Carrying Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Carrying Value
as the federal income tax depreciation, amortization, or other cost recovery
deduction for such year bears to such beginning adjusted tax basis; provided
however, that if the federal income tax depreciation, amortization, or other
cost recovery deduction for such year is zero, Depreciation shall be determined
with reference to such beginning Carrying Value using any reasonable method
selected by the General Partner.
Section 1.24 "Eden" shall mean Eden Plaza Associates, LLC, a California
limited liability company.
Section 1.25 "Effective Date" shall mean the date of the Closing.
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<PAGE> 181
Section 1.26 "Equity Affiliate" means any Subsidiary of the General
Partner, and any entity in which the General Partner has a direct or indirect
equity interest.
Section 1.27 "Excess Distributions" means distributions to a Limited
Partner for all periods in excess of allocations of Net Income to the Limited
Partner for all periods pursuant to Sections 6.1B(2), (3) and (4) .
Section 1.28 "Exchange Rights Agreement" means that certain Exchange
Rights Agreement entered into concurrently herewith by and between the
Partnership, the General Partner, and Eden concurrently herewith.
Section 1.29 "General Partner" shall mean Pacific Gulf Properties Inc.,
a Maryland corporation, or any successor general partner of the Partnership in
compliance with this Agreement.
Section 1.30 "General Partner Interest" means a Partnership Interest
held by the General Partner, in its capacity as general partner.
Section 1.31 "General Partner Security Rights" has the meaning set forth
in Section 4.3B.
Section 1.32 "Incapacity" or "Incapacitated" means: (i) as to any
individual Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating him incompetent to manage his Person or his
estate; (ii) as to any corporation which is a Partner, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up the partnership; (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership; (v) as to any trustee of a trust which is a
Partner, the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner shall be deemed to have
occurred when: (a) the Partner commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect; (b) the Partner is adjudged as
bankrupt or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner; (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors; (d) the Partner files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above; (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any
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<PAGE> 182
substantial part of the Partner's properties; (f) any proceeding seeking
liquidation, reorganization or other relief of or against such Partner under any
bankruptcy, insolvency or other similar law now or hereafter in effect which has
not been dismissed within one hundred twenty (120) days after the commencement
thereof; (g) the appointment without the Partner's consent or acquiescence of a
trustee, receiver or liquidator which has not been vacated or stayed within
ninety (90) days of such appointment; or (h) an appointment referred to in
clause (g) which has been stayed is not vacated within ninety (90) days after
the expiration of any such stay.
Section 1.33 "Indemnitee" means any Person made a party to a proceeding
by reason of (i) his status as the General Partner, an Affiliate of the General
Partner, or as a director, officer, employee, partner, agent or representative
of the General Partner or an Affiliate of the General Partner, or (ii) his or
its liabilities pursuant to a loan guarantee or otherwise for or as a result of
any indebtedness or obligation of the Partnership or any Subsidiary of the
Partnership (including, without limitation, any indebtedness or obligation which
the Partnership or any Subsidiary of the Partnership has assumed or taken assets
subject to).
Section 1.34 "IRS" means the Internal Revenue Service, which administers
the internal revenue laws of the United States.
Section 1.35 "Limited Partner" means any Person named as a Limited
Partner on Exhibit "A" attached hereto, as such Exhibit may be amended from
time to time, or any Substituted Limited Partner or Additional Limited Partner,
in such Person's capacity as a Limited Partner of the Partnership.
Section 1.36 "Limited Partner Interest" means a Partnership Interest of
a Limited Partner in the Partnership. A Limited Partner Interest may be
expressed as a number of Limited Partnership Units.
Section 1.37 "Limited Partner Percentage Interest" means, as to a
Limited Partner, its interest in the Partnership relative to all other Limited
Partners, as determined by dividing the Limited Partnership Units owned by such
Limited Partner by the total number of Limited Partnership Units then
outstanding and as specified in Exhibit "A" attached hereto, as such Exhibit
may be amended from time to time.
Section 1.38 "Limited Partnership Unit" means a fractional, undivided
share of the Limited Partnership Interests of all Limited Partners issued
pursuant to Article 4 hereof. The number of Limited Partnership Units
outstanding and the Limited Partner Percentage Interest represented by such
Limited Partnership Units are set forth in Exhibit "A" attached hereto, as such
Exhibit may be amended from time to time. The ownership of Limited Partnership
Units shall be evidenced by such form of
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<PAGE> 183
certificate for units as the General Partner adopts from time to time unless the
General Partner determines that the Limited Partnership Units shall be
uncertificated securities. If the General Partner elects to evidence the Limited
Partnership Units with a certificate, such certificate may be imprinted with a
legend setting forth such restrictions placed on the units as specified in this
Agreement and such restrictions will be binding upon all holders of the
certificate along with the terms and conditions set forth in this Agreement.
Section 1.39 "Liquidation Event," has the meaning set forth in Section
13.1.
Section 1.40 "Liquidator" has the meaning set forth in Section 13.2.
Section 1.41 "Management Agreement" means a Property Management.
Agreement between the Partnership and the General Partner or an Affiliate of the
General Partner substantially in the form of Exhibit "E" attached hereto.
Section 1.42 "Master Contribution Agrreement" means that certain Master
Contribution Agreement by and between the General Partner and Eden providing for
the formation of this Partnership and the contributions of cash by the General
Partner and the Original Properties by Eden.
Section 1.43 "Net Income" means, for any taxable period, the excess, if
any, of the Partnership's items of income and gain for such taxable period over
the Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit "B".
Additionally, if and after the Partnership acquires Non-Original Limited
Partner Related Assets, or becomes obligated, indebted or liable for or on
account of Non-Original Limited Partner Related Assets or the ownership or
operation thereof, and so long as the General Partner has not consummated the
transactions and made the election described in Sections 4.3B and 5.2,
respectively, of this Agreement, then for purposes of determining allocations of
Net Income to the Original Limited Partners and their heirs, successors and
assigns under this Agreement, Net Income shall be calculated separately with
respect to Original Limited Partner Related Assets and the ownership and
operation thereof, together with the operation and existence of the Partnership
insofar as such concerns the Original Limited Partner Related Assets and the
ownership and operation thereof, and shall not include any revenues, expenses,
assets, or liabilities of the Partnership relating to the Non-Original Limited
Partner Related Assets, the ownership or operation thereof, or the operation or
existence of the Partnership with respect thereto.
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Section 1.44 "Net Loss" means, for any taxable period, the excess, if
any, of the Partnership's items of loss and deduction for such taxable period
over the Partnership's items of income and gain for such taxable period. The
items included in the calculation of Net Loss shall be determined in accordance
with federal income tax accounting principles, subject to the specific
adjustments provided for in Exhibit "B".
Additionally, if and after the Partnership acquires Non-Original Limited
Partner Related Assets, or becomes obligated, indebted or liable for or on
account of Non-Original Limited Partner Related Assets or the ownership or
operation thereof, and so long as the General Partner has not consummated the
transactions and made the election described in Sections 4.3B and 5.2,
respectively, of this Agreement, then for purposes of determining allocations of
Net Loss to the Original Limited Partners and their heirs, successors and
assigns under this Agreement, Net Loss shall be calculated separately with
respect to Original Limited Partner Related Assets and the ownership and
operation thereof, together with the operation and existence of the Partnership
insofar as such concerns the Original Limited Partner Related Assets and the
ownership and operation thereof, and shall not include any revenues, expenses,
assets, or liabilities of the Partnership relating to the Non-Original Limited
Partner Related Assets, the ownership or operation thereof, or the operation or
existence of the Partnership with respect thereto.
Section 1.45 "No Exchange Period" shall have the meaning given thereto
in the Exchange Rights Agreement.
Section 1.46 "Non-Original Limited Partner Related Assets" means all of
the real properties and all other assets and property of the Partnership other
than such as constitute "Original Limited Partner Related Assets" (as defined
below).
Section 1.47 "Nonrecourse Built-in-Gain" means, with respect to any
Contributed Properties or Adjusted Properties that are subject to a Nonrecourse
Liability, the amount of any taxable gain that would be allocated to the
Partners pursuant to Section 2.B of Exhibit "C" if such properties were
disposed of in a taxable transaction in full satisfaction of such liabilities
and for no other consideration.
Section.1.48 "Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for
a Partnership taxable year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
Section 1.49 "Nonrecourse Liability" has the meaning set forth in
Regulations Section 1.752-1(a)(2).
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Section 1.50 "No Sale Period" means the period from the date hereof to
the date which is four (4) years after the Effective Date.
Section 1.51 "Original Limited Partners" means the parties listed on
Exhibit "A" as attached hereto at the time of the initial execution and
delivery of this Agreement, without regard to any subsequent changes to said
Exhibit, and with respect to any such parties which are partnerships or limited
liability companies, the partners or members, directly or indirectly, of such
partnerships or limited liability companies (or the partners or members thereof)
if and when the Limited Partnership Units received by such partnerships or
limited liability companies under the Master Contribution Agreement are
distributed by such partnerships or limited liability companies to such partners
or members and the provisions of Section 11.3, below, have been satisfied.
Section 1.52 "Original Limited Partner Related Assets" means all of the
real properties and all other assets and property contributed, assigned,
transferred or conveyed to the Partnership in connection with the transactions
contemplated by the Master Contribution Agreement, together with all other
assets and properties acquired, owned, or used by the Partnership in any way
relating thereto, as well as all replacements thereof and substitutions
therefor.
Section 1.53 "Original Property" or "Original Properties" means the
"Property" or "Properties" (as defined in the Master Contribution Agreement),
together with all other assets and properties contributed to the Partnership by
Eden pursuant to the terms and provisions of the Master Contribution Agreement.
Section 1.54 "Partner" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and all Limited Partners collectively.
Section 1.55 "Partner Minimum Gain" means an amount, with respect to
each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
Section 1.56 "Partner Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b)(4).
Section 1.57 "Partner Nonrecourse Deductions" has the meaning set forth
in Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership taxable
year shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2)
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Section 1.58 "Partnership" means the limited partnership formed under
this Agreement and any successor thereto.
Section 1.59 "Partnership Interest" means an ownership interest in the
Partnership representing a Capital Contribution by either a Limited Partner or
the General Partner, and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement.
Section 1.60 "Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in a Partnership Minimum Gain, for a
Partnership taxable year shall be determined in accordance with the rules of
Regulations Section 1.704-2(d).
Section 1.61 "Partnership Record Date" means the record date established
by the General Partner for the distribution of Available Cash pursuant to
Article 5 hereof with respect to a calendar quarter, which record date shall be
the same as the record date established by the General Partner for the making of
dividend distributions to its shareholders on account of their common stock
holdings in the General Partner with respect to the same calendar quarter.
Section 1.62 "Partnership Year" means the fiscal year of the
Partnership, which shall be the calendar year.
Section 1.63 "Person" means an individual or a corporation, partnership,
trust, limited liability company, unincorporated organization, association or
other entity.
Section 1.64 "Plan" means any plan or arrangement, whether or not
approved by shareholders or partners, and whether formal or informal, utilized
by the General Partner to provide incentives, benefits or other compensation to
its employees, consultants or advisors, or the employees, consultants or
advisors of any Equity Affiliate.
Section 1.65 "Recapture Income" means any gain recognized by the
Partnership upon the disposition of any property or asset of the Partnership,
which gain is characterized as ordinary income because it represents the
recapture of deductions previously taken with respect to such property or asset.
Section 1.66 "Regulations" means the Income Tax Regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
Section 1.67 "REIT" means a real estate investment trust under Section
856 of the Code.
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Section 1.68 "REIT Share" shall mean a share of common stock of the
General Partner, par value $.01 per share.
Section 1.69 "Residual Gain" or "Residual Loss" means any item of gain
or loss, as the case may be, of the Partnership recognized for federal income
tax purposes resulting from a sale, exchange or other disposition of Contributed
Property or Adjusted Property, to the extent such item of gain or loss is not
allocated pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit "C" to eliminate
Book-Tax Disparities.
Section 1.70 "Securities Act" shall mean the Securities Act of 1933, as
amended.
Section 1.71 "704(c) Value" of any Contributed Property means the value
of such property as set forth in Exhibit "D", or if no value is set forth in
Exhibit "D", the fair market value of such property or other consideration at
the time of contribution, as determined by the General Partner using such
reasonable method of valuation as it may adopt. Subject to Exhibit "B" hereof,
the General Partner shall, in its sole and absolute discretion, use such method
as it deems reasonable and appropriate to allocate the aggregate of the 704(c)
Values of Contributed Properties in a single or integrated transaction among the
separate properties on a basis proportional to their respective fair market
values.
Section 1.72 "Seismic Costs" means all costs and expenses paid or
incurred by the Partnership or the General Partner on or after the Closing to
repair, retrofit or upgrading the Original Properties to cause the Original
Properties to be in compliance with all federal, state, county and city
statutes, laws, ordinances, orders, rules and regulations related to seismic
safety and compliance as such statutes, laws, ordinances, orders, rules and
regulations existed as of the Closing; provided, however, that the total amount
of all Seismic Costs shall not exceed $200,000.
Section 1.73 "Subscription Documents" means those certain "Subscription
Documents for OP Units in the Partnership" executed and delivered by the
Original Limited Partners concurrently herewith.
Section 1.74 "Subsidiary" means, with respect to any Person, any
corporation, partnership or other entity of which a majority of (i) the voting
power of the voting equity securities, or (ii) the outstanding equity interests,
is owned, directly or indirectly, by such Person.
Section 1.75 "Substituted Limited Partner" means a Person who is
admitted as a Limited Partner to the Partnership pursuant to Section 11.4.
Section 1.76 "Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the
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excess, if any, of (i) the fair market value of such property (as determined
under Exhibit "B" hereof) as of such date, over (ii) the Carrying Value of such
property (prior to any adjustment to be made pursuant to Exhibit "B" hereof) as
of such date.
ARTICLE 2
ORGANIZATIONAL MATTERS
Section 2.1 Organization
The Partnership is a limited partnership organized pursuant to the
provisions of the Act and upon the terms and conditions set forth in this
Agreement. Except as expressly provided herein to the contrary, the rights and
obligations of the Partners and the administration and termination of the
Partnership shall be governed by the Act. The Partnership Interest of each
Partner shall be personal property for all purposes.
Section 2.2 Name
The name of the Partnership shall be PGP Northern Industrial, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner. The words "Limited Partnership," "L.P.,"
"Ltd." or similar words or letters shall be included in the Partnership's name
where necessary for the purpose of complying with the laws of any jurisdiction
that so requires. The General Partner in its sole and absolute discretion may
change the name of the Partnership at any time and from time to time, and shall
notify the Limited Partners of such change in the next regular communication to
the Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the State of
Delaware and the name and address of the registered agent for service of process
on the Partnership in the State of Delaware is The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The
principal office of the Partnership shall be c/o Pacific Gulf Properties Inc.,
4220 Von Karman, Second Floor, Newport Beach, California 92660-2002, or such
other place as the General Partner may from time to time designate by notice to
the Limited Partners. The Partnership may maintain offices at such other place
or places within or outside the State of Delaware as the General Partner deems
advisable.
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Section 2.4 Power of Attorney
A. Each Limited Partner and each Assignee hereby constitutes and
appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices: (a) all certificates, documents and other
instruments (including, without limitation, this Agreement and the Certificate
and all amendments or restatement thereof) that the General Partner or the
Liquidator deems appropriate or necessary to form, qualify or continue the
existence or qualification of the Partnership as a limited partnership (or a
partnership in which the Limited Partners have limited liability) in the State
of Delaware and in all other jurisdictions in which the Partnership may or plans
to conduct business or own property; (b) all instruments that the General
Partner deems appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance with its terms; (c)
all conveyances and other instruments or documents that the General Partner or
the Liquidator deems appropriate or necessary to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this Agreement,
including, without limitation, a certificate of cancellation; (d) all
instruments relating to the admission, withdrawal, removal or substitution of
any Partner pursuant to, or other events described in, Article 11, 12 or 13
hereof or the Capital Contribution of any Partner; (e) all certificates,
documents and other instruments relating to the determination of the rights,
preferences and privileges of Partnership Interest; and (f) any and all
financing statements, continuation statements and other documents necessary or
desirable to create, perfect, continue or validate the security interest granted
by a Limited Partner pursuant to Section 10.5 of this Agreement or to exercise
or enforce the Partnership's rights with respect to such security interest; and
(2) execute, swear to, seal, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole and absolute discretion of the General Partner or any
Liquidator, to make, evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action which is made or given by the Partners
hereunder or is consistent with the terms of this agreement or appropriate or
necessary, in the sole discretion of the General Partner or any Liquidator, to
effectuate the terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except
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in accordance with Article 14 hereof or as may be otherwise expressly provided
for in this Agreement.
B. The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, in recognition of the fact that each of
the Partners will be relying upon the power of the General Partner and any
Liquidator to act as contemplated by this Agreement in any filing or other
action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's Assignee's Limited
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney, and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney in accordance with the provisions of this Agreement. Each Limited
Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within fifteen (15) days after receipt of the General Partner's or
Liquidator's request therefor, such further designation, powers of attorney and
other instruments as the General Partner or the Liquidator, as the case may be,
deems necessary to effectuate this Agreement and the purposes of the
Partnership.
Section 2.5 Term
The term of the Partnership shall commence on the Effective Date and
shall continue until December 31, 2097, unless the Partnership is dissolved
sooner pursuant to the provisions of Article 13 or as otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is: (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner at all times to be classified as a REIT, unless the General
Partner ceases to qualify as a REIT for reasons other than the conduct of the
business of the Partnership; (ii) to enter into any partnership, joint venture
or other similar arrangement to engage in any of the foregoing or to own
interests in any entity engaged in any of the foregoing; and (iii) to do
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anything necessary or incidental to the foregoing. In connection with the
foregoing, and without limiting the General Partner's right, in its sole
discretion, to cease qualifying as a REIT, the Partners acknowledge the General
Partner's current status as a REIT inures to the benefit of all of the Partners
and not solely the General Partner.
Section 3.2 Powers
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership; provided, however, that the
Partnership shall not take, or refrain from taking, any action which, in the
judgment of the General Partner, in its sole and absolute discretion: (i) could
adversely affect the ability of the General Partner to continue to qualify as a
REIT; (ii) could subject the General Partner to any additional taxes under
Section 857 or Section 4981 of the Code; or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over the
General Partner or its securities, unless such action (or inaction) shall have
been specifically consented to by the General Partner in writing.
Section 3.3 Technical Revisions
The Limited Partners agree to, and the General Partner is hereby
authorized to make, any modifications or amendments to this Agreement that may
be necessary for the General Partner to maintain its status as a real estate
investment trust or in order for it to avoid a penalty or tax; provided,
however, that such modification or amendment does not materially alter or affect
adversely any Limited Partner's rights, duties, or obligations under this
Agreement.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 Initial Capital Contributions of the Partners
A.(1) Concurrently with the Closing, the General Partner shall
contribute to the Partnership cash up to, but not exceeding, a maximum of
$4,000,000, as described and in accordance with the terms, provisions, and
conditions of the Master Contribution Agreement as necessary for the purposes of
paying down and/or restructuring the Cigna Debt.
(2) Concurrently with the Closing, the General Partner shall pay or
credit Eden with the "Commissions" and "Qualifying Eden Closing Costs" (pursuant
to and as defined in the Master Contribution Agreement). The Commissions and
Qualifying Eden
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Closing Costs paid or credited to Eden by the General Partner shall constitute
Capital Contributions by the General Partner.
(3) Concurrently with the Closing, the General Partner shall contribute
to (or pay on behalf of) the Partnership or the General Partner the cash
necessary to pay the transaction costs, closing costs and prorations to be paid
by the Partnership or the General Partner or which are designated as Partnership
or General Partner expenses pursuant to the Master Contribution Agreement. The
amounts so contributed or paid by the General Partner shall constitute Capital
Contributions by the General Partner.
B. Concurrently with the Closing, Eden shall transfer, assign, convey,
and deliver all right, title, and interest in and to the real properties,
improvements, and other assets relating to the Original Properties as described
and in accordance with the terms, provisions, and conditions of the Master
Contribution Agreement. As stated therein, the Original Properties shall be
subject to debt in an amount no less than $12,000,000 (including holdbacks as
described therein) at the Closing, $12,000,000 of which shall be guaranteed by
Eden, but without recourse to the partners or members of Eden; provided,
however, that nothing contained herein shall preclude amortization of such debt
in accordance with the applicable loan documents. The Agreed Value of the
Original Properties is set forth on Exhibit "D". The Capital Contribution of
the Original Limited Partners to the Partnership shall be equal to the Agreed
Value of the Original Properties. The number of Limited Partnership Units issued
to the Original Limited Partners on account of such Capital Contribution shall
be equal to the Agreed Value of the Original Properties divided by the "PGP
Share Price" (as defined in the Master Contribution Agreement).
C. In consideration of their initial Capital Contributions, the Limited
Partners shall receive Limited Partnership Units in the amounts set forth on
Exhibit "A", and such amounts shall represent the initial Limited Partner
Percentage Interests shown on said Exhibit. The Limited Partner Percentage
Interests shall be adjusted in Exhibit "A" from time to time by the General
Partner to the extent necessary to reflect accurately redemptions, additional
Capital Contributions, the issuance of additional Limited Partnership Units
(pursuant to any merger or otherwise), or similar or other events having an
effect on any Limited Partner's Limited Partner Percentage Interest. Except as
provided hereinabove and as expressly provided in Sections 4.3 and 10.5, the
Partners shall have no obligation whatsoever to make any additional or further
Capital Contributions, loans, or advances of any kind to the Partnership, or to
in any way finance the operation of the Partnership or any of the debt or
obligations of the Partnership.
D. Except as provided in Section 13.3 of this Agreement and as otherwise
expressly provided herein, the Capital Contribution of each Partner will be
returned to that Partner
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only in the manner and to the extent provided in Article 5 and Article 13
hereof, and no Partner may withdraw from the Partnership or otherwise have any
right to demand or receive the return of its Capital Contribution to the
Partnership, except as specifically provided herein. Under circumstances
requiring a return of any Capital Contribution, no Partner shall have the right
to receive property other than cash, except as specifically provided herein. No
Partner shall be entitled to interest on any Capital Contribution or Capital
Account. The General Partner shall not be liable for the return of any portion
of the Capital Contribution of any Limited Partner, and the return of such
Capital Contributions shall remain solely from Partnership assets.
E. No Limited Partner shall have any further personal liability-to
contribute money to, or in respect of, the liabilities or the obligations of the
Partnership, nor shall any Limited Partner be personally liable for any
obligations of the Partnership, except as otherwise provided in this Agreement
or in the Act. No Limited Partner shall be required to make any contributions to
the capital of the Partnership other than as expressly, provided in this
Agreement.
Section 4.2 Additional Capital Contributions by the General Partner
From time to time at or following the Closing, the General Partner may,
but shall not be obligated to, contribute additional capital to the Partnership
to pay for any and all costs and expenses of (a) operating the Partnership and
(b) owning, operating, maintaining, repairing, improving, acquiring and selling
both Original and Non-Original Limited Partner Related Assets, including but not
limited to Seismic Costs and any other Capital Contributions made to correct or
repair any items of seismic compliance, deferred maintenance and capital
improvements to the Original Properties.
Section 4.3 Issuances of Additional Partnership Interests
A. The General Partner is hereby authorized to cause the Partnership
from time to time to issue to the Partners (including the General Partner) or
other Persons additional Limited Partnership Units or other Partnership
Interests in one or more classes, or one or more series of any of such classes,
with such designations, preferences and relative, participating, optional or
other special rights, powers and duties, including, rights, powers and duties
senior to the Limited Partners (including the Original Limited Partners and
their heirs, successors and assigns), except that, notwithstanding the
foregoing, with respect to the Original Limited Partners Related Assets, any
such additional Limited Partnership Units or Partnership Interests shall, if at
all, only carry or give to their holders rights to receive distributions (as to
amount, timing, and priority) junior to the rights of the Original Limited
Partners as set forth in
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this Agreement with respect to the Original Limited Partners Related Assets
unless and until (and not before) the General Partner has made the election
provided for in Section 5.2 of this Agreement. Following the making of such
election, the rights as to distributions pertaining to such additional Limited
Partnership Units or Partnership Interests may be equal or junior to those of
the Original Limited Partners and their heirs, successors and assigns. Subject
to the foregoing, the rights, privileges, benefits, burdens, and restrictions
relating to any such additional Limited Partnership Units or Partnership
Interests shall be determined by the General Partner in its sole and absolute
discretion (but without creating different priorities as between the Limited
Partner Interests and the General Partner Interests received by the General
Partner and the Original Limited Partners in connection with the contributions
provided for under the Master Contribution Agreement), subject to Delaware law,
including, without limitation: (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or series of
Partnership Interests; (ii) the right of each such class or series of
Partnership Interests to share in Partnership distributions; and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership; provided that no such additional Limited
Partnership Units or other Partnership Interests shall be issued to the General
Partner, as the General Partner, or a Limited Partner, or to an Affiliate of
either the General Partner or a Limited Partner, unless the additional
Partnership Interests are issued for a fair economic consideration determined at
the time of or within ninety (90) days prior to the issuance, or unless the
issuance of such additional Partnership Interests is otherwise permitted under
the terms and provisions of this Agreement. A determination by an independent
investment banker or financial advisor that the consideration paid or proposed
to be paid by the General Partner in this regard is a fair economic
consideration, or is otherwise fair from a financial point of view, to the
Partnership shall be conclusive and binding upon all parties hereto for all
purposes, and shall constitute a conclusive, non-rebuttable presumption that the
consideration so paid represented fair, good faith, and proper action by the
General Partner with the Partnership as concerns the General Partner's dealings
and transactions with the Partnership in relation to such issuance.
B. If the General Partner makes the election provided for in Section 5.2
of this Agreement, then thereafter the General Partner shall be authorized at
any time, in its sole discretion, and without the need for any vote, consent or
approval from, or consultation with, any Limited Partner, and further without
the need for any appraisal, valuation, or any other analysis or evaluation of
any property, assets, rights, debts, liabilities, obligations, claims, title,
encumbrances, or any other matters of any sort from any person, to contribute,
assign, convey, and transfer all, but not less than all, of the General
Partner's rights, title, claims, interests, debts, duties, liabilities, and
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obligations, in, to, and relating to all, but not less than all, of the General
Partner's assets, properties, debts, liabilities, and obligations (excluding the
General Partner's rights, title, claims, interests, debts, duties, liabilities,
and obligations in, to, and relating to its interest in the Partnership, and
also excluding same as such relates to any other entity in which the General
Partner has an interest but which does not own a direct or indirect interest in
real property) to the Partnership. In exchange therefor, the Partnership shall
immediately issue to the General Partner (A) that number of Limited Partnership
Units equal to the number of the outstanding shares of common stock of the
General Partner at the time of such contribution by the General Partner to the
Partnership, and (B) options, warrants, and other rights to acquire additional
Limited Partnership Units in the Partnership and other securities of the
Partnership on a unit-for-unit basis equivalent to, and on the same terms and
conditions as, all options, warrants, and other rights and securities issued and
then outstanding ("General Partner Security Rights") with regard to any shares
of capital stock or other securities of any kind of the General Partner then or
thereafter issued. After consolidation of the General Partner's affairs into the
Partnership as described in this Section, upon the exercise by any holder of
any General Partner Security Rights and the General Partner's issuance of its
securities to the exercising party with respect thereto, or the issuance of any
other securities of the General Partner, the General Partner promptly shall
contribute to the Partnership any consideration received upon such exercise (net
of all costs, fees, expenses, and commissions relating thereto), and the
Partnership shall thereupon issue to the General Partner an equivalent number of
Limited Partnership Units (in the case of issuances by the General Partner of
shares of its common stock) or an equivalent number of other interests in the
Partnership which have parallel and comparable rights and privileges to the
rights and privileges of the securities issued by the General Partner (in the
case of issuances by the General Partners other than shares of its common
stock.)
Section 4.4 Preemptive Rights
Only the General Partner shall have the right to make the additional
Capital Contributions described in Section 4.2. Except as provided in Section
4.2 hereof, no Person shall have any preemptive, preferential or other similar
right with respect to: (i) the making of additional Capital Contributions or
loans to the Partnership; or (ii) the issuance or sale of any Limited
Partnership Units or other Partnership Interests.
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ARTICLE 5
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
A. Subject to Section 5.6, on or before ninety (90) days after the end
of each calendar quarter the General Partner shall distribute to the Partners
who are partners on the Partnership Record Date for such calendar quarter an
amount equal to 100% of the Available Cash for such calendar quarter in the
following order of priority:
(1) First, to the Limited Partners pro rata in accordance with their
respective Limited Partner Percentage Interests, until such time as the
distribution made pursuant to this Section 5.1A(1) on account of each Limited
Partnership Unit held by a Limited Partner for the calendar quarter in which the
distributions are made equals the cash dividend paid to the common shareholders
of the General Partner on account of one share of common stock of the General
Partner for such calendar quarter;
(2) Second, if there then exists a Current Year Deficit, to the Limited
Partners pro rata in accordance with their respective Limited Partner Percentage
Interests until such time as the distribution made pursuant to this Section
5.1A(2) eliminates the Current Year Deficit; provided, however, that if
Available Cash is not sufficient to eliminate the Current Year Deficit for the
calendar year on account of which the distributions are made, any remaining
Current Year Deficit shall not be carried forward and shall be disregarded in
determining distributions to be made pursuant to this Section 5.1A in subsequent
quarters; and
(3) Thereafter, to the General Partner.
B. Distributions made pursuant to this Section 5.1 shall be made in the
foregoing order of priority, with all Available Cash being distributed at the
highest level of priority until that level of priority is completely satisfied
before any Available Cash is distributed at a lower level of priority, and
distributions at a lower level of priority not being made or being only
partially made if Available Cash is insufficient therefor.
C. Anything contained herein to the contrary notwithstanding, the
quarterly distribution of Available Cash made on account of each Limited
Partnership Unit for the calendar quarter which contains the Effective Date
shall not exceed the dividend paid to common shareholders of the General Partner
on account of a share of common stock of the General Partner for the calendar
quarter which contains the Effective Date, multiplied by
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a fraction (x) the numerator of which is the number of days from and including
the Effective Date to and including the last day of such calendar quarter, and
(y) the denominator of which is the total number of days in such calendar
quarter.
Section 5.2 General Partner Election
The General Partner may elect, at any time, in its sole and absolute
discretion, to have all future calculations of Available Cash based upon all
Partnership assets without distinction between Original and Non-Original Limited
Partner Related Assets, and to have all future distributions to Limited Partners
made pursuant to the following terms in lieu of the terms of Section 5.1 (an
election under this Section, once made, shall be irrevocable):
A. First, the General Partner shall make distributions or payments to
the Limited Partners regardless of the availability or amount of Available Cash,
in an amount, on account of each Limited Partnership Unit held by a Limited
Partner for the calendar quarter in which the distributions are made, equal to
the cash dividend paid to the common shareholders of the General Partner on
account of one share of common stock of the General Partner for such calendar
quarter; and
B. Thereafter, to the General Partner.
Section 5.3 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of any state
or local tax law and Section 10.5 hereof with respect to any allocation, payment
or distribution to the Partners or Assignees shall be treated as amounts
distributed to the Partners or Assignees pursuant to Sections 5.1 or 5.2 for all
purposes under this Agreement.
Section 5.4 Distributions Upon Liquidation
Proceeds from a Liquidating Event, if any, and any other cash received
or reductions in reserves made after commencement of the liquidation of the
Partnership shall be distributed to the Partners in accordance with Section
13.2.
Section 5.5 Other Assets Present
Notwithstanding the foregoing, if and after the Partnership acquires
Non-Original Limited Partner Related Assets, or becomes obligated, indebted or
liable for or on account of Non-Original Limited Partner Related Assets or the
ownership or operation thereof, and so long as the General Partner has not
consummated the transactions and made the election described in Sections 4.3B
and 5.2, respectively, of this Agreement, then distributions of Available Cash
to the General Partner and the Original Limited Partners (and the Original
Limited Partners' heirs, successors
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and assigns) under the terms of the foregoing shall be calculated and made only
with respect to Original Limited Partner Related Assets and the ownership and
operation thereof, together with the operation and existence of the Partnership
insofar as such concerns the Original Limited Partner Related Assets.
Distributions under the terms of the foregoing shall not include any revenues,
expenses, assets, or liabilities of the Partnership relating to the Non-Original
Limited Partner Related Assets, the ownership or operation thereof, or the
operation or existence of the Partnership with respect thereto, all of which
shall be as separately determined by the General Partner in its sole and
absolute discretion.
Section 5.6 Seismic Costs
Anything contained herein to the contrary notwithstanding, from the
amounts otherwise distributable to the Original Limited Partners pursuant to
Sections 5.1A(1), 5.1A(2) and 5-2A, the General Partner shall instead pay or
establish a reserve to pay (or to reimburse the General Partner to the extent
the General Partner has paid) the Seismic Costs. The amount so reserved or paid
(or reimbursed to the General Partner) in each calendar quarter shall equal the
greater of either (a) $25,000; or (b) the amount which, when added to all
amounts previously reserved or paid (or reimbursed to the General Partner)
equals the total amount of all Seismic Costs incurred by the Partnership and the
General Partner to the date of such quarterly distribution. The Seismic Costs
shall be incurred and paid (or reimbursed to the General Partner) in such order
as the General Partner may determine in its sole and absolute discretion. No
amounts shall be distributed to the Limited Partners pursuant to Sections
5.1A(1), 5.1A(2) or 5.2A unless and until the full amount set forth in the
second sentence of this Section 5.6 has been reserved or paid (or reimbursed to
the General Partner) in full. Nevertheless, all amounts on account of Seismic
Costs which would otherwise have been distributed to the Limited Partners but
for the provisions of this Section 5.6 shall be treated as having been
distributed to the Limited Partners pursuant to Sections 5.1A(1), 5.1A(2) or 5.2
for all purposes under this Agreement. When all Seismic Costs have been paid (or
reimbursed to the General Partner) in full, any funds remaining in such Seismic
Costs reserve shall be distributed to the Original Limited Partners pro rata in
accordance with their respective Limited Partner Percentage Interests.
ARTICLE 6
ALLOCATIONS
Section 6.1 Allocations of Net Income and Net Loss
For purposes of maintaining the Capital Accounts and in determining the
rights of the General and Limited Partners among
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themselves, the Partnership's items of income, gain, loss and deduction
(computed in accordance with Exhibit "B" hereof) shall be allocated among the
General and Limited Partners in each taxable year (or portion thereof) as
provided herein below.
A. Net Loss for a particular period shall be allocated as follows:
(1) First, to the General and Limited Partners in proportion to and to
the extent of their positive Capital Account balances, if any.
(2) Second, to the Limited Partners, in proportion to and to the extent
of, their respective aggregate Excess Distributions, until the amount allocated
under this Section 6.1A(2) for the current fiscal year and all prior fiscal
years equals the Excess Distributions of all Limited Partners.
(3) Third, to the General Partner.
B. Net Income for a particular period shall be allocated as follows:
(1) First, to the Partners that have previously been allocated Net Loss
pursuant to Section 6.1A in amounts and among such Partners in the reverse order
(and in the corresponding amounts) of all Net Loss previously allocated to them
until the amount of Net Income allocated pursuant to this Section 6.1B(1)
equals the aggregate amount of all Net Loss theretofore allocated pursuant to
Section 6.1A.
(2) Second, if applicable, to the Limited Partners in proportion to
their respective Limited Partner Percentage Interests until the aggregate Net
Income allocated pursuant to this Section 6.1B(2) for the current taxable period
and all previous taxable periods equals the aggregate amount of Available Cash
distributed to the Limited Partners pursuant to Section 5.1A(1).
(3) Third, if applicable, to the Limited Partners in proportion to
their respective Limited Partner Percentage Interests until the aggregate Net
Income allocated pursuant to this Section 6.1B(3) for the current taxable period
and all previous taxable periods equals the aggregate amount of Available Cash
distributed to the Limited Partners pursuant to Section 5.1A(2).
(4) Fourth, if applicable, to the Limited Partners in proportion to
their respective Limited Partner Percentage Interests until the aggregate Net
income allocated pursuant to this Section 6.1B(4) for the current taxable period
and all previous taxable periods equals the aggregate amount of Available Cash
distributed to the Partners pursuant to Section 5.2A; and
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(5) Fifth, to the General Partner.
Section 6.2 Other Allocations
A. For purposes of Regulations Section 1.752, the Partners agree that
$12,000,000 of the Partnership debt secured by the Original Properties at the
Closing shall be allocated to Eden as a result of Eden's guaranty of $12,000,000
of such debt, which guaranty is nonrecourse to the partners and members of Eden;
provided, however, that nothing contained herein shall preclude amortization of
such debt in accordance with the applicable loan documents.
B. Any gain allocated to the General Partner and the Original Limited
Partners upon the sale or other taxable disposition of any Partnership asset
shall, to the extent possible, after taking into account other required
allocations of gain pursuant to Exhibit "C", be characterized as Recapture
Income in the same proportions and to the same extent as such Partners have
been allocated any deductions directly or indirectly giving rise to the
treatment of such gains as Recapture Income.
C. If and after the Partnership acquires Non-Original Limited Partner
Related Assets, or becomes obligated, indebted or liable for or on account of
Non-Original Limited Partner Related Assets or the ownership or operation
thereof, and so long as the General Partner has not consummated the transactions
and made the election described in Sections 4.3B and 5.2, respectively, of this
Agreement, then allocations of Net Income, Net Loss, and any other items to the
Original Limited Partners and their heirs, successors and assigns under this
Agreement shall be calculated separately with respect to Original Limited
Partner Related Assets and the ownership and operation thereof, together with
the operation and existence of the Partnership insofar as such concerns the
Original Limited Partner Related Assets and the ownership and operation thereof.
Such allocations and calculations shall not include any revenues, expenses,
assets, or liabilities of the Partnership relating to the Non-Original Limited
Partner Related Assets, the ownership or operation thereof, or the operation or
existence of the Partnership with respect thereto, all of which shall be as
separately determined by the General Partner in its sole and absolute
discretion.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and shall
be exclusively vested in the
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General Partner, and no Limited Partner shall have any right to participate in
or exercise control or management power over the business and affairs of the
Partnership. The General Partner may not be removed by the Limited Partners with
or without cause. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner, shall have full power and authority to do all things deemed necessary
or desirable by it to conduct the business of the Partnership, to exercise all
powers set forth in Section 3.2 hereof and to effectuate the purposes set forth
in Section 3.1 hereof, including, without limitation:
(1) the making of any expenditures, the lending or borrowing of money
(including, without limitation, making prepayments on loans and borrowing money
to permit the Partnership to make distributions to its Partners in such amounts
as will permit the General Partner (so long as the General Partner qualifies as
a REIT) to avoid the payment of any federal income tax (including, for this
purpose, any excise tax pursuant to Section 4981 of the Code) and to make
distributions to its shareholders in amounts sufficient to permit the General
Partner to maintain REIT status), the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance of evidence of
indebtedness (including the securing of the same by deed, mortgage, deed of
trust or other lien or encumbrance on the Partnership's assets) and the
incurring of any obligations it deems necessary for the conduct of the
activities of the Partnership;
(2) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having jurisdiction
over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any assets of the Partnership (including the
exercise or grant of any conversion, option, privilege, or subscription right or
other right available in connection with any assets at any time held by the
Partnership) or the merger or other combination of the Partnership with or into
another entity;
(4) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the terms of this
Agreement and on any terms it sees fit, including, without limitation, the
financing of the conduct of the operations of the General Partner, the
Partnership or any of the Partnership's Subsidiaries, the lending of funds to
other Persons (including, without limitation, the Subsidiaries of the
Partnership and/or the General Partner) and the repayment of obligations of the
Partnership and its Subsidiaries and any other Person in which it has an equity
investment, and the making of capital contributions to its Subsidiaries, the
holding of any
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real, personal and mixed property of the Partnership in the name of the
Partnership or in the name of a nominee or trustee and the creation, by grant or
otherwise, of easements or servitudes;
(5) the management, operation, leasing, collection of rents, marketing,
landscaping, repair, alteration, renovation, rehabilitation, demolition or
improvement of the original Properties or any other real property or
improvements owned by the Partnership or any Subsidiary of the Partnership and
the performance of any and other acts necessary or appropriate to the operation
of such properties, including, without limitation, applications for rezoning or
objections to rezoning of such properties;
(6) the negotiation, execution, and performance of any contracts,
conveyances or other instruments that the General Partner considers useful or
necessary to the conduct of the Partnership's operations or the implementation
of the General Partner's powers under this Agreement, including, without
limitation, the execution and delivery of leases on behalf of or in the name of
the Partnership, contracting with contractors, developers, consultants,
accountants, legal counsel, other professional advisors and other agents and the
payment of their expenses and compensation out of the Partnership's assets;
(7) the opening and closing of bank accounts, the investment Of
Partnership funds in securities, certificates of deposit and other instruments,
and the distribution of Partnership cash or other Partnership assets in
accordance with this Agreement;
(8) the holding, managing, investing and reinvesting cash and other
assets of the Partnership;
(9) the collection and receipt of revenues and income of the
Partnership;
(10) the establishment of one or more divisions of the Partnership, the
selection and dismissal of employees of the Partnership (including, without
limitation, employees having titles such as "president," "vice president,"
"secretary" and "treasurer" of the Partnership), and agents, outside attorneys,
accountants, consultants and contractors of the Partnership, and the
determination of their compensation and other terms of employment or hiring
(whether or not any of the foregoing are also employed by, consultants to,
independent contractors for, or otherwise do business with the General Partner
or its Affiliates in related or unrelated matters);
(11) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or appropriate (whether or
not such is done as part of a group, combined or other policy or policies under
which the Partnership and the General Partner (or its Affiliates) are also
insured, so
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long as the General Partner fairly allocates the expense thereof among the
covered parties);
(12) the formation of, or acquisition of an interest in, and the
contribution of some or all of property (or any part thereof or interest
therein) to, any further limited or general partnerships, joint ventures or
other relationships that it deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property to, its
Subsidiaries and any other Person in which it has an equity investment from
time to time);
(13) the control of any and all matters affecting the rights and
obligations of the Partnership, including the settlement, compromise, submission
to arbitration or any other form of dispute resolution, or abandonment of, any
claim, cause of action, liability, debt or damages, due or owing to or from the
Partnership, the commencement or defense of suits, legal proceedings,
administrative proceedings, arbitration or other forms of dispute resolution,
and the representation of the Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other forms of dispute resolution,
the incurring of legal expense, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law and consistent with
the terms of this Agreement, including in each and all of the foregoing
instances any such matter or thing in which the General Partner or its
Affiliates have a direct interest;
(14) the undertaking of any action in connection with the Partnership's
direct or indirect investment in its Subsidiaries or any other Person (including
without limitation, the contribution or loan of funds by the Partnership to such
Persons);
(15) the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of valuation as the
General Partner may adopt;
(16) the exercise, directly or indirectly, through any attorney-in-fact
acting under a general or limited power of attorney, of any right, including the
right to vote, appurtenant to any asset or investment held by the Partnership;
(17) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with any Subsidiary
of the Partnership or any other Person in which the Partnership has a direct or
indirect interest, or an interest jointly with any such Subsidiary or other
Person;
(18) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in
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which the Partnership does not have an interest pursuant to contractual or
other arrangements with such Person;
(19) the making, execution and delivery of any and all deeds, leases,
notes, mortgages, deeds of trust, security agreements, conveyances, contracts,
guarantees, warranties, indemnities, waivers, releases or legal instruments or
agreements in writing necessary or appropriate, in the judgment of the General
Partner, for the accomplishment of any of the powers of the General Partner
enumerated in this Agreement; and
(20) the issuance of additional Limited Partnership Units or
Partnership Interests, as appropriate, in connection with Capital Contributions
by Additional Limited Partners and additional Capital Contributions by Partners
pursuant to Article 4 hereof.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement, the
Act or any applicable law, rule or regulation, to the fullest extent permitted
under the Act or other applicable law, rule or regulation. The execution,
delivery or performance by the General Partner or the Partnership of any
agreement authorized or permitted under this Agreement shall not constitute a
breach by the General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or any other Persons under this Agreement or
of any duty stated or implied by law or equity.
C. At all times from and after the date hereof, the General Partner may
cause the Partnership to establish and maintain at any and all times working
capital accounts and other cash or similar balances in such amounts as the
General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
D. In exercising its authority under this Agreement, the General Partner
may, but shall be under no obligation to, take into account the tax consequences
to any Partner of any action taken by it. The General Partner and the
Partnership shall not have liability to a Limited Partner under any
circumstances as a result of an income tax liability incurred by such Limited
Partner as a result of an action (or inaction) by the General Partner taken
pursuant to its authority under this Agreement and in accordance with the terms
hereof.
Section 7.2 Limitations on General Partner
Anything contained herein to the contrary notwithstanding, without the
prior Consent of all Original Limited Partners, the General Partner shall not
cause the Partnership to do any of the
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following during the No Sale Period unless and until (on a property-by-property
basis if applicable) such is accomplished in a manner which is fully tax
deferred to, and does not produce any income tax liability for, an Original
Limited Partner as a result thereof:
A. sell, transfer or otherwise dispose of any of the Original
Properties;
B. pay down the Cigna Debt or, if the Cigna Debt is refinanced, any
refinanced debt, or change any of the terms of the Cigna Debt or refinanced debt
such as the debt is less than $12,000,000, not secured by the Original
Properties, or not guaranteed by Eden (other than as contemplated by the Master
Contribution Agreement or as required by the loan documents or any other
agreement ancillary thereto), nor take any other action which would result in a
reduction of the allocation of debt to the Original Limited Partners for
purposes of computing such parties' basis for income tax purposes; provided,
however, that nothing contained herein shall preclude amortization of such debt
in accordance with the applicable loan documents;
C. fail to use reasonable, good faith and diligent efforts to avoid a
foreclosure of the Cigna Debt or, if the Cigna Debt is refinanced, any
refinanced debt, or a bankruptcy filing by or against the Partnership;
D. elect to dissolve the Partnership.
Section 7.3 Certificate of Limited Partnership
The General Partner has filed the Certificate with the Secretary of
State of Delaware as required by the Act. The General Partner shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be reasonable and necessary or appropriate for the continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware and any
other state, or the District of Columbia, in which the Partnership may elect to
do business or own property. To the extent that such action is determined by the
General Partner to be reasonable and necessary or appropriate, the General
Partner shall file amendments to and restatements of the Certificate and do all
of the things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware and each other state, or the District of Columbia, in
which the Partnership may elect to do business or own property. Subject to the
terms of Section 8.5.A(4) hereof, the General Partner shall not be required,
before or after filing, to deliver or mail a copy of the Certificate or any
amendment thereto to any Limited Partner.
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Section 7.4 Management Fee and Reimbursement of the General Partner
A. The General Partner and/or its Affiliates shall have the right, but
not the obligation, in the sole discretion of the General Partner, to perform
all or any of the property management services on account of the property owned
or managed by the Partnership. If the General Partner elects to so perform, or
to have an Affiliate so perform, the property management services, then the
General Partner or its Affiliate shall be reimbursed by the Partnership for the
expenses it incurs in providing such services in amounts determined by the
General Partner, in its good faith discretion, to be comparable to amounts which
would be reimbursable on account of expenses to reputable unrelated third party
property management companies which have substantial experience in performing
property management services for properties of the type owned or managed by the
Partnership for institutional owners with portfolios under management which are
substantially similar in size, nature, and condition of property owned or
managed by the Partnership. In addition, if the General Partner elects to so
perform, or to have an Affiliate so perform, the property management services
described herein, it is agreed that a management fee of four percent (4%) of
gross income shall be paid by the Partnership to the General Partner or its
Affiliates for the property management services as contemplated hereunder. The
reimbursements and fees payable to the General Partner or its Affiliates under
this Section shall be paid no less frequently than monthly. Except as provided
in this Section 7.4A and elsewhere in this Agreement (including the provisions
of Articles 5 and 6 regarding distributions, payments, and allocations to which
it may be entitled), the General Partner shall not be compensated for its
services as general partner of the Partnership. In furtherance of this Section,
the General Partner may cause the Partnership to enter into one or more property
management agreements with the General Partner or an Affiliate of the General
Partner, substantially in the form of the Management Agreement.
B. The General Partner shall be reimbursed on a monthly basis, or such
other basis as it may determine in its sole and absolute discretion, for all
costs and expenses that it incurs relating to the ownership and operation of, or
for the benefit of, the Original Properties, the Partnership or any of its other
assets or related to the administration of the Partnership and the Limited
Partnership Units. After consummation of the transactions and election described
in, respectively, Sections 4.3B and 5.2 of this Agreement as a result of which
the assets of the General Partner are conveyed to the Partnership, such
reimbursement shall include reimbursement to the General Partner for all general
and administrative costs, fees, and expenses incurred by the General Partner due
to its status as a public company, a qualified real estate investment trust, or
otherwise, and any and all other expenses incurred by the General Partner for
any matter, reason or thing whatsoever. Any reimbursement
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under this Section shall be in addition to any reimbursement made as a result of
indemnification pursuant to Section 7.7 hereof.
C. It is also acknowledged and agreed that, after consummation of the
transactions and election described in, respectively, Sections 4.3B and 5.2 of
this Agreement as a result of which the assets of the General Partner are
conveyed to the Partnership, the General Partner will directly or indirectly
incur costs and expenses, and may issue stock or other securities, or both, to
persons employed or not employed, or retained or not retained, directly by the
Partnership. Such costs, expenses, and issuances may include, but not be limited
to, payment of general and administrative expenses by the General Partner,
including compensation and bonuses to its officers and directors, and the award
of stock grants and options to purchase securities of the General Partner. In
light of the foregoing, it is agreed that, after consummation of the
transactions and election described in, respectively, Section 4.3B and 5.2 of
this Agreement, appropriate actions shall be taken by the Partnership, as
determined by the General Partner, in its sole discretion, to either (i)
reimburse the General Partner an appropriate portion of any such cost, expense,
or issuance, or (ii) adjust the General Partner's Interest in the Partnership so
as to prevent dilution of the General Partner's Interest.
D. Without limiting the generality of Section 7.4C above, it is agreed
that if, at any time or from time to time after consummation of the transactions
and election described in, respectively, Sections 4.3B and 5.2 of this
Agreement, options to purchase REIT Shares or any other securities granted to
employees, consultants or advisors of the General Partner or any Equity
Affiliate under any Plan or otherwise as compensation or incentive are
exercised, or REIT Shares or any other securities are granted or awarded to
employees, consultants or advisors of the General Partner or any Equity
Affiliate under any Plan or otherwise as compensation or incentive, then the
Partnership promptly shall issue to the General Partner Limited Partnership
Units or other interests in the Partnership with comparable rights, benefits,
and privileges in an amount equal to the REIT Shares or other securities granted
and/or issued, as the case may be. If Limited Partnership Units or other
interests in the Partnership are issued to the General Partner as a result of
the exercise of options to purchase REIT Shares or other securities, then
concurrently with the issuance of the Limited Partnership Units or other
interests to the General Partner, the General Partner shall pay to the
Partnership the cash consideration received by the General Partner on account of
such exercise.
E. After consummation of the transactions and elections described in
Sections 4.3B and 5.2 of this Agreement, in the event that the General Partner
shall elect to purchase from its shareholders REIT Shares for the purpose of
delivering such REIT Shares to satisfy an obligation under any dividend
reinvestment program adopted by the General Partner, any employee stock
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purchase plan adopted by the Company, or any similar obligation or arrangement
undertaken by the General Partner in the future, the purchase price paid by the
General Partner for such REIT Shares and any other expenses incurred by the
General Partner in connection with such purchase shall be considered expenses of
the Partnership and shall be reimbursed to the General Partner, subject to the
conditions that: (i) if such REIT Shares subsequently are to be sold by the
General Partner, the General Partner shall pay to the Partnership any proceeds
received by the General Partner for such REIT Shares (provided that a transfer
of REIT Shares for Limited Partnership Units pursuant to the Exchange Rights
Agreement would not be considered a sale for such purposes); and (ii) if such
REIT Shares are not re-transferred by the General Partner within 30 days after
the purchase thereof, the General Partner shall cause the Partnership to cancel
a number of Limited Partnership Units held by the General Partner equal to the
number of such REIT Shares (adjusted for stock dividends, stock splits,
reorganizations, reclassifications, mergers, and the like with regard to the
REIT Shares prior to such cancellation of Limited Partnership Units).
Section 7.5 Outside Activities of the General Partner
The General Partner and its Affiliates shall be permitted to purchase,
own, operate, manage and otherwise deal with and profit from any property, real,
personal or mixed, not owned by the Partnership for their own account and
benefit, whether or not competitive with the business and affairs of the
Partnership, and neither the Partnership, any Limited Partner, or any other
Person shall have any right, claim, interest or cause of action therein or as a
result thereof. Without limiting the generality of the above, nothing in this
Agreement shall obligate the General Partner or its Affiliates to first offer
the Partnership an opportunity to invest in any investment which has been
offered to or found by the General Partner or its Affiliates, whether or not
such investment is of a nature that may be invested in by the Partnership or
would compete directly or indirectly with the business of the Partnership. The
Limited Partners hereby acknowledge that the General Partner currently owns a
variety of real estate investments and may in the future acquire additional real
estate investments that may be competitive with the business of the Partnership.
Section 7.6 Contracts with Affiliates
A. The Partnership may lend or contribute funds or other assets to its
Subsidiaries or other Persons in which it has an equity investment and such
Persons may borrow funds from the Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person.
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B. Subject to the restrictions contained in Section 7.2 hereof, the
Partnership may transfer assets to joint ventures, other partnerships,
corporations or other business entities in which it is or thereby becomes a
participant upon such terms and subject to such conditions consistent with this
Agreement and applicable law as the General Partner, in its sole and absolute
discretion, believes are advisable.
C. Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property
to, or purchase or otherwise acquire any property from, the Partnership,
directly or indirectly, except pursuant to transactions that are determined by
the General Partner in good faith to be fair and reasonable.
D. The General Partner, in its sole and absolute discretion and without
the approval of the Limited Partners, may propose and adopt, on behalf of the
Partnership, employee benefit plans, stock option plans, and similar plans
funded by the Partnership for the benefit of employees of the Partnership,
Subsidiaries of the Partnership or any Affiliate of any of them in respect of
services performed, directly or indirectly, for the benefit of the Partnership
or any Subsidiaries of the Partnership. Any or all of the foregoing may be
jointly established with the General Partner or its Affiliates, provided that in
such case the allocation of expense shall be shared among the parties on whose
behalf such plans exist as determined by the General Partner in good faith to be
fair and reasonable.
Section 7.7 Indemnification
A. To the fullest extent permitted by Delaware law, the Partnership
shall indemnify each Indemnitee from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including, without limitation,
attorneys' fees and other legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership or the General Partner in its
capacity as general partner of the Partnership as set forth in this Agreement,
in which such Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise, whether or not suit or other legal proceedings are
commenced, unless it is established by a court of competent jurisdiction, and
all appeals relating thereto have been fully completed or the applicable appeal
periods have expired, that: (i) the act or omission of the Indemnitee was
material to the matter giving rise to the proceedings and either was committed
in intentional bad faith or was the result of active and deliberate dishonesty;
(ii) the Indemnitee actually received an improper and unpermitted personal
benefit in money, property or services; or (iii) in the case of any criminal
proceeding, the Indemnitee knew, or was reckless in not knowing, that the act or
omission was unlawful. Without limitation, the
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foregoing indemnity shall extend to any liability of any Indemnitee pursuant to
a loan guaranty, recourse obligation, general partner liability, or otherwise
for any indebtedness of the Partnership or any Subsidiary of the Partnership
(including, without limitation, any indebtedness which the Partnership or any
Subsidiary of the Partnership has assumed or taken subject to), and the General
Partner is hereby authorized and empowered, on behalf of the Partnership, to
enter into one or more indemnity agreements consistent with the provisions of
this Section 7.7 in favor of any Indemnitee having or potentially having
liability for any such indebtedness. The termination of any proceeding by
judgment, order or settlement does not create a presumption that the Indemnitee
did not meet the requisite standard of conduct as set forth in this Section
7.7A. The termination of any proceeding by conviction of an Indemnitee, or an
entry of an order of probation against an Indemnitee prior to judgment, in each
case after all appeals relating thereto have been fully completed or the
applicable appeal periods have expired, creates a rebuttable presumption that
such Indemnitee acted in a manner contrary to that specified in this Section
7.7A with respect to the subject matter of such proceeding. Any indemnification
pursuant to this Section 7.7 shall be made only out of the assets of the
Partnership, and neither the General Partner nor any Limited Partner shall have
any obligation to contribute to the capital of the Partnership, or otherwise
provide funds, to enable the Partnership to fund its obligations under this
Section 7.7.
B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding shall be paid or reimbursed by the Partnership in advance of the
final disposition of the proceeding.
C. The indemnification provided by this Section 7.7 shall be in addition
to any other rights to which an Indemnitee or any other Person may be entitled
under any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity unless otherwise provided in a written agreement pursuant to which
such Indemnitees are indemnified.
D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of the Indemnitees and such other Persons as the
General Partner shall determine, against any liability that may be asserted
against or expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
E. For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
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beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines
within the meaning of this Section 7.7; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.
F. In no event may an Indemnitee subject any of the Partners to personal
liability by reason of the Indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators, and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the Partnerships
liability to any Indemnitee under this Section 7.7, as in effect immediately
prior to such amendment, modification, or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
Section 7.8 Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this Agreement,
the General Partner and its officers and directors shall not be liable for
monetary damages to the Partnership, any Partners or any Assignees for losses
sustained or liabilities incurred as a result of errors in judgment or any act
or omission of the General partner undertaken in good faith.
B. The Limited Partners expressly acknowledge that the General Partner
is acting on behalf of the Partnership and the shareholders of the General
Partner collectively, that the General Partner is under no obligation to
consider the separate interests of the Limited Partners (except as otherwise
provided herein) in deciding whether to cause the Partnership to take (or
decline to take) any actions, and that the General Partner shall not be liable
for monetary damages for losses sustained, liabilities incurred, or benefits not
derived by Limited Partners in connection with such decisions, provided that the
General Partner has acted in good faith.
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C. Subject to its obligations and duties as General Partner set forth in
Section 7.1.A hereof, the General Partner may exercise any of the powers granted
to it by this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents. The General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's and its officers and directors' liability
to the Partnership and the Limited Partners under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
Section 7.9 Other Matters Concerning the General Partner
A. The General Partner may rely and shall be protected in acting, or
refraining from acting, upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties.
B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance upon the opinion of such
Persons as to matters which such General Partner reasonably believes to be
within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
C. The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and duly appointed attorneys-in-fact. Each such attorney shall, to the
extent provided by the General Partner in the power of attorney, have full power
and authority to do and perform all and every act and duty which is permitted or
required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this Agreement or the Act,
any action of the General Partner on behalf of the Partnership or any decision
of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order: (i) to protect the ability of the General Partner to
continue to qualify as a REIT; or (ii) to avoid the
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General Partner incurring any taxes under Section 857 or Section 4981 of the
Code, is expressly authorized under this Agreement and is deemed approved by all
of the Limited Partners.
Section 7.10 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all
of the Partnership assets may be held in the name of the Partnership, the
General Partner or one or more nominees, as the General Partner may determine,
including Affiliates of the General Partner. The General Partner hereby declares
and warrants that any Partnership assets for which legal title is being held in
the name of the General Partner or any nominee or Affiliate of the General
Partner shall be held by the General Partner for the use and benefit of the
Partnership in accordance with the provisions of this Agreement. All Partnership
assets shall be recorded as the property of the Partnership in its books and
records, irrespective of the name in which legal title to such Partnership
assets is held.
Section 7.11 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without consent or approval of any other
Partner or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Partnership and to enter into any contracts on behalf of the
Partnership, and take any and all actions on behalf of the Partnership and such
Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, engage or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that: (i)
at the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect; (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership; and
(iii) such certificate, document or instrument was duly executed
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and delivered in accordance with the terms and provisions of this Agreement, and
is binding upon the Partnership.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this Agreement,
except as expressly provided in this Agreement (including Section 10.5 hereof)
or under the Act.
Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, employee, agent or trustee of the
General Partner, the Partnership or any of their Affiliates, in their capacity
as such) shall take part in the operation, management or control (within the
meaning of the Act) of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise bind the
Partnership. The transaction of any such business by the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Affiliates, in their
capacity as such, shall not affect, impair or eliminate the limitations on the
liability of the Limited Partners or Assignees under this Agreement.
Section 8.3 Outside Activities of Limited Partners
A. Subject to the terms and provisions hereof, it is agreed that any
Partner (General and/or Limited) and any Affiliate of any Partner (including any
officer, director, employee, agent, or representative of any Partner) shall be
entitled to and may have business interests and engage in business activities in
addition to those relating to the Partnership, including business interests and
activities that are in direct competition with the Partnership or that are
enhanced by the activities of the Partnership. Neither the Partnership nor any
Partners shall have any rights, claims, or interests by virtue of this Agreement
or any relationships, duties or obligations hereunder (including, but not
limited to, any fiduciary or similar duties created by this Agreement, under the
Act, or otherwise existing at law or in equity) in any business ventures or
investments of any General Partner or Limited Partner, or any Affiliate of any
of the foregoing. None of the Limited Partners nor any other Person shall have
any rights by virtue of this Agreement or the Partnership relationship
established hereby in any business ventures of any other Person, and such Person
shall have no obligation pursuant to this Agreement to offer any interest in any
such business ventures to
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the Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person could be taken by such Person.
B. It is further agreed that none of the Partners, General or Limited,
or any of their Affiliates, have any duty, obligation, or liability to present
to the Partnership any business or investment opportunity which may arise in the
course of activity for or on behalf of the Partnership, or otherwise, for
investment by the Partnership or any of the Partners (even if within the line
and scope of the business and affairs of the Partnership), and instead any
Partner, General or Limited, and any Affiliate may pursue such opportunity for
such Partner's or Affiliate's own benefit and account, without any
participation, right, or claim therein by the Partnership or any other Partner,
and without notification or disclosure to the Partnership or any other Partner.
Section 8.4 Return of Capital
No Limited Partner shall be entitled to the withdrawal or return of its
Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. Except
to the extent provided by Exhibit "C" hereof or as otherwise expressly provided
in this Agreement, no Limited Partner or Assignee shall have priority over any
other Limited Partner or Assignee, either as to the return of Capital
Contributions or as to profits, losses or distributions.
Section 8.5 Rights of Limited Partners Relating to the Partnership
A. In addition to the other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5.B hereof, each Limited Partner shall
have the right, for a purpose reasonably related to such Limited Partner's
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at such Limited Partner's own
expense (including such copying and administrative charges as the General
Partner may establish from time to time):
(1) to obtain a copy of the most recent annual and quarterly balance
sheet, income statement, and related financial statements prepared by the
Partnership;
(2) to obtain a copy of the Partnership's federal, state and local
income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known business,
residence or mailing address of each Partner;
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(4) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all powers of attorney
pursuant to which this Agreement, the Certificate and all amendments thereto
have been executed; and
(5) to obtain true and full information regarding the amount of cash
and a description and statement of any other property or services contributed by
each Partner and which each Partner has agreed to contribute in the future, and
the date on which each became a Partner to the extent the foregoing is
materially different from information contained in financial statements or other
reports provided to Limited Partners.
(6) to obtain quarterly and annual balance sheets and income statements
regularly prepared by the Partnership in order to verify the correctness of
distributions of cash, if any, to the Limited Partner in accordance with the
terms and provisions of this Agreement.
B. Notwithstanding any other provision of this Section 8.5, the General
Partner may keep confidential from the Limited Partners, for such period of time
as the General Partner determines in its sole and absolute discretion to be
reasonable, desirable or necessary any information that: )(i) the General
Partner reasonably believes to be in the nature of trade secrets or other
information, the disclosure of which the General Partner in good faith believes
is not in the best interests of the Partnership or could damage the Partnership
or its business; or (ii) the Partnership is required by law or by agreement with
an unaffiliated third party to keep confidential. If the General Partner desires
to disclose any information of the type described in the preceding paragraphs
(i) or (ii) to a Limited Partner, the General Partner may require, as a
condition to such disclosure, that the Limited Partner agree in writing that
such information will be held in strictest confidence and no distribution of
such information will be made.
Section 8.6 No Redemption Right
No Limited Partner (other than the General Partner) shall have the right
to require the Partnership to redeem all or a portion of the Limited Partnership
Units held by such Limited Partner.
Section 8.7 Representations and Warranties
Each Limited Partner represents and warrants to the General Partner and
the Partnership that:
A. He, she or it has received and reviewed that certain Prospectus Of
the General Partner dated May 27, 1997, that certain Prospectus Supplement dated
June 5, 1997, and that certain Registration Statement, filed March 19, 1997, as
amended
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and filed April 10, 1997, of which the Prospectus and Prospectus Supplement are
a part, filed with the Securities and Exchange Commission under the Act and has
had access to such additional financial and other information, including without
limitation the General Partner's most current Form 10-Q and Form 10-K, the
General Partners' 1996 Annual Report to Shareholders' and the General Partners'
Notice of 1997 Annual Meeting of Shareholders and accompanying Proxy Statement,
and has been afforded the opportunity to ask questions of representatives of the
General Partner, and to receive answers to those questions, as they have deemed
necessary.
B. He, she or it acknowledges that the Limited Partnership Units are
being acquired in a transaction not involving any public offering within the
meaning of the Securities Act and that the Limited Partnership Units have not
been registered under the Securities Act and agrees not to offer, sell, transfer
or otherwise dispose of the Limited Partnership Units (except for such transfer
as described in subsection D, below) in the absence of registration under the
Securities Act unless such Limited Partner delivers to the Partnership and the
General Partner an opinion of a lawyer reasonably satisfactory to the
Partnership and the General Partner, in form and substance satisfactory to the
Partnership and the General Partner, to the effect that the proposed sale,
transfer or other disposition may be effected without registration under the
Securities Act and under applicable state securities or blue sky laws.
C. He, she or it is either (a) an "accredited investor" within the
meaning of Rule 501(a) of Regulation D under the Securities Act, or (b) a person
who either alone or with his, her or its purchaser representative (as defined in
Rule 501(h) of Regulation D under the Securities Act) has such knowledge and
experience in financial and business matters that he, she or it is capable of
evaluating the merits and risks of an investment in the Limited Partnership
Units or any other security acquired hereunder. He, she or it has such knowledge
and experience in financial and business matters as to be capable of evaluating
alone, or together with his, her or its purchaser representative or personal
advisor the merits and risks of an investment in the Limited Partnership Units
or any other security delivered hereunder and protecting his, her or its own
interests in connection with the investment and has obtained, in his, her or its
judgment, alone, or together with his, her or its purchaser representative or
personal advisor sufficient information from the General Partner to evaluate the
merits and risks of an investment in the Limited Partnership Units or any other
security delivered hereunder. He, she or it acknowledges that he, she or it has
the financial ability to bear the economic risk of his, her or its investment in
the Limited Partnership Units, has adequate means for providing for his, her or
its current needs and personal contingencies and has no need for liquidity with
respect to the investment in the Limited Partnership Units. If other than an
individual, it has not been organized solely for
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the purpose of acquiring the Limited Partnership Units or other security
acquired under this Agreement.
D. Although Eden may elect to transfer the Limited Partnership Units to
its constituent entities, and those constituent entities may, in turn, elect
to transfer the Limited Partnership Units to their respective constituent
entities, they are not acquiring any Limited Partnership Units with a view to
the distribution of the Limited Partnership Units or any present intention of
offering or selling any of the Limited Partnership Units in a transaction that
would violate the Securities Act or the securities laws of any State or any
other applicable jurisdiction.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep or cause to be kept at the principal
office of the Partnership those records and documents required to be
maintained by the Act and other books and records deemed by the General
Partner to be appropriate with respect to the Partnership's business. Any
records maintained by or on behalf of the Partnership in the regular course of
its business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device, provided
that the records so maintained are convertible into clearly legible written
form within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles, or such other basis
as the General Partner determines to be necessary or appropriate.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. The Partnership shall mail to each Limited Partner no later than
ninety (90) days after the close of each Partnership Year an annual report
containing financial statements of the Partnership, or of the General Partner
if such statements are prepared solely on a consolidated basis with the
General Partner, for such Partnership year, presented in accordance with
generally accepted accounting principles, such statements to be audited by a
nationally recognized firm of independent public accountants selected by the
General Partner in its discretion (such selection may include any such
accountants who also perform accounting or auditing work for the General
Partner and its Affiliates).
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B. The Partnership shall mail to each Limited Partner no later than ninety
(90) days after the close of each calendar quarter (except the last calendar
quarter of each year), a report containing unaudited financial statements of the
Partnership, or of the General Partner if such statements are prepared solely on
a consolidated basis with the General Partner, and such other information as may
be required by applicable law or regulation, or as the General Partner
determines to be appropriate.
C. All accounting and other professional fees associated with the
preparation, compilation, review, audit, and any other matters relating to the
Partnership's records, financial statements and reports, tax returns, and any
other Partnership items described in the preceding paragraphs shall be at the
expense of the Partnership, not the General Partner.
ARTICLE 10
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and timely filing
of all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within ninety (90) days of the close of
each taxable year, the tax information reasonably required by the Limited
Partners for federal and state income tax reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code; provided, however, that if requested by a transferee of a
Partnership Interest, the General Partner shall file an election on behalf of
the Partnership pursuant to Section 754 of the Code to adjust the basis of the
Partnership property in the case of a transfer of a Partnership Interest made in
accordance with the provisions of this Agreement. The General Partner intends to
elect the so-called "traditional method" of making Section 704(c) allocations
pursuant to Regulations Section 1.704-3 with respect to property contributed as
of the date hereof. The General Partner shall have the right to seek to revoke
any tax election it makes (including, without limitation, the election under
Section 754 of the Code) upon the General Partner's determination, in its sole
and absolute discretion, that such revocation is in the best interest of the
Partners.
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Section 10.3 Tax Matters Partner
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income purposes. Pursuant to Section 6230(e) of the
Code, upon receipt of notice from the IRS of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the IRS with the name, address, taxpayer identification number, and
profit interest of each of the Limited Partners and the Assignees; provided,
however, that such information is provided to the Partnership by the Limited
Partners and the Assignees.
B. The tax matters partner is authorized, but not required:
(1) to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of Partnership items
required to be taken into account by a Partner for income tax purposes (such
administrative proceedings being referred to as a "tax audit" and such judicial
proceedings being referred to as "judicial review"), and in the settlement
agreement the tax matters partner may expressly state that such agreement shall
bind all Partners, except that such settlement agreement shall not bind any
Partner: (i) who (within the time period prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing that the tax matters
partner shall not have the authority to enter into a settlement agreement on
behalf of such Partner; or (ii) who is a "notice partner" (as defined in Section
6231(a)(8) of the Code) or a member of a "notice group" (as defined in Section
6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative adjustment
at the Partnership level of any item required to be taken into account by a
Partner for tax purposes (a "final adjustment") is mailed to the tax matters
partner, to seek judicial review of such final adjustment, including the filing
of a petition for readjustment with the Tax Court or the District Court of the
United States for the district in which the Partnership's principal place of
business is located;
(3) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with the IRS
and, if any part of such request is not allowed by the IRS, to file an
appropriate pleading (petition or complaint) for judicial review with respect to
such request;
(5) to enter into an agreement with the IRS to extend the period for
assessing any tax which is attributable to any item required to be taken account
of by a Partner for tax purposes, or an item affected by such item; and
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(6) to take any other action of behalf of the Partners or the
Partnership in connection with any tax audit or judicial review proceeding to
the extent permitted by applicable law or regulations.
C. The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 of this Agreement shall be fully applicable to
the tax matters partner in its capacity as such.
D. The tax matters partner shall receive no special compensation for its
services as such. All third party costs and expenses incurred by the tax matters
partner in performing its duties as such (including legal and accounting fees
and expenses) shall be borne or reimbursed by the Partnership. Nothing herein
shall be construed to restrict the Partnership from engaging an accounting firm
to assist the tax matters partner in discharging its duties hereunder, including
an accounting firm which also renders services to the General Partner and its
Affiliates.
Section 10.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a sixty (60) month period as provided
in Section 709 of the Code.
Section 10.5 Withholding
Each Limited Partner hereby authorizes the Partnership to withhold from,
or pay on behalf of or with respect to, such Limited Partner any amount of
federal, state, local or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the Code and
similar state and local income tax laws, if any. Any amount paid on behalf of or
with respect to a Limited Partner shall constitute a loan by the Partnership to
such Limited Partner, which loan shall be repaid by such Limited Partner within
fifteen (15) days after notice from the General Partner that such payment must
be made, unless: (i) the Partnership withholds such payment from a distribution
which would otherwise be made to the Limited Partner; or (ii) the General
Partner determines, in its sole and absolute discretion, that such payment may
be satisfied out of the available funds of the Partnership which would, but for
such payment, be distributed to the Limited Partner. Any amounts withheld
pursuant to the foregoing clauses (i) or (ii) shall be treated as having been
distributed to such Limited Partner. Each Limited Partner hereby unconditionally
and irrevocably grants to the Partnership a
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security interest in such Limited Partner's Partnership Interest to secure such
Limited Partner's obligation to pay to the Partnership any amounts required to
be paid pursuant to this Section 10.5. In the event that a Limited Partner fails
to pay any amounts owed to the Partnership pursuant to this Section 10.5 when
due, the General Partner may, in its sole and absolute discretion, elect to make
the payment to the Partnership on behalf of such defaulting Limited Partner, and
shall succeed to all rights and remedies of the Partnership as against such
defaulting Limited Partner. Without limitation, in such event the General
Partner shall have the right to receive distributions that would otherwise be
distributable to such defaulting Limited Partner until such time as such loan,
together with all interest thereon, has been paid in full, and any such
distributions so received by the General Partner shall be treated as having been
distributed to the defaulting Limited Partner and immediately paid by the
defaulting Limited Partner to the General Partner in repayment of such loan. Any
amounts payable by a Limited Partner hereunder shall bear interest at the lesser
of (A) the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in the Wall Street Journal,
plus four (4) percentage points, or (B) the maximum lawful rate of interest on
such obligation, such interest to accrue from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each Limited
Partner shall at its own expense take such actions as the Partnership or the
General Partner shall request in order to perfect or enforce the security
interest created hereunder.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. The term "transfer" when used in this Article 11 with respect to a
Limited Partnership Unit shall be deemed to refer to a transaction by which the
General Partner purports to assign all or any part of its General Partner
Interest to another Person or by which a Limited Partner purports to assign all
or any part of its Limited Partner Interest to another Person, and includes a
sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange
or any other disposition by law or otherwise. The term "transfer" when used in
this Article 11 does not include any acquisition of Partnership Interests or
Limited Partnership Units by the General Partner from any Limited Partner, nor
does it include any grant of a security interest or any related action involving
levy, execution, or the like contemplated under Section 10.5 of this Agreement.
B. No Partnership Interest shall be transferred, in whole or in part
(including any interest therein), except in accordance with the terms and
conditions set forth in this Article 11. Any
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transfer or purported transfer of a Partnership Interest not made in accordance
with this Article 11 shall be null and void ab initio, and the Partnership shall
have no duty or obligation to recognize the transferee as a partner or holder of
any interest whatsoever in the Partnership, and the transferee shall have no
rights, interests or claims in or against the Partnership or any Partner.
Section 11.2 Transfer of the General Partner's Partner
Interest and Limited Partner Interest
The General Partner may transfer any of its General Partner Interest or
withdraw as General Partner, or transfer any of its Limited Partner Interest,
without consent or approval from any Limited Partners. Such transfer includes
transfer to an entity which is wholly-owned by the General Partner and is a
Qualified REIT Subsidiary under Section 856(d) of the Code.
Section 11.3 Limited Partners' Rights to Transfer
A. Subject to the provisions of Sections 11.3C, 11.3D, 11.3E, 11.3F and
11.4, a Limited Partner (other than the General Partner) may transfer, with or
without the consent of the General Partner, all or any portion of its
Partnership Interest, or any of such Limited Partner's economic rights as a
Limited Partner. In addition, those Original Limited Partners which are
themselves partnerships or limited liability companies shall have the right to
transfer, assign, and convey their Limited Partnership Units to their
constituent partners, provided that such constituent partners or members shall
first have executed and delivered the Subscription Documents and a written
agreement to be bound by the terms, provisions, and conditions of this
Agreement, the Exchange Rights Agreement, and the Master Contribution Agreement,
and that at the time of such transfer, assignment, and conveyance to such
constituent partners, the representations and warranties made by such
constituent partners or members in the aforementioned Subscription Documents and
the related agreement are true and correct in all material respects.
B. If a Limited Partner is subject to Incapacity, the partners,
executor, administrator, trustee, committee, guardian, conservator or receiver
of such Limited Partner's estate shall have all of the rights of a Limited
Partner, but not more rights than those enjoyed by other Limited Partners, for
the purpose of settling or managing the estate and such power as the
Incapacitated Limited Partner possessed to transfer all or any part of his or
its interest in the Partnership. The Incapacity of a Limited Partner, in and of
itself, shall not dissolve or terminate the Partnership.
C. The General Partner may prohibit any transfer by a Limited Partner
if, in the opinion of legal counsel to the Partnership or the General Partner,
such transfer would require filing of a registration statement under the
Securities Act of
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1933 or would otherwise violate any federal or state securities laws or
regulations applicable to the Partnership or the Limited Partnership Units.
D. No transfer by a Limited Partner of its Limited Partnership Units may
be made to any Person if: (i) in the opinion of legal counsel for the
Partnership or the General Partner, it would result in the Partnership being
treated as an association taxable as a corporation; (ii) such transfer is
effectuated through an "established securities market" or a "secondary market
(or the substantial equivalent thereof)" within the meaning of Section 7704 of
the Code; (iii) such transfer would cause the Partnership to become, with
respect to any employee benefit plan subject to Title I of ERISA, a
"party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified
person" (as defined in Section 4975(c) of the Code); (iv) such transfer would,
in the opinion of legal counsel for the Partnership or the General Partner,
cause any portion of the assets of the Partnership to constitute assets of any
employee benefit plan pursuant to Department of Labor Regulations Section
2510.2-101; (v) such transfer would subject the Partnership to be regulated
under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or
the Employee Retirement Income Security Act of 1974, each as amended; or (vi) in
the opinion of legal counsel for the Partnership or the General Partner, it
would adversely affect the ability of the General Partner to continue to qualify
as a REIT or subject the General Partner to any additional taxes under Section
857 or Section 4981 of the Code.
E. No transfer of any Limited Partnership Unit may be made to a lender
to the Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability, without the consent of the General Partner,
in its sole and absolute discretion. Without limiting the restriction of the
foregoing sentence, if any such consent is given, a condition to such consent
shall be that the lender enter into an arrangement with the Partnership or the
General Partner to exchange or redeem at a price agreeable to the lender, the
General Partner, and the transferring Partner (each in their respective
discretion) all Limited Partnership Units in which a security interest is held
immediately prior to the time at which such lender would be deemed to be a
partner in the Partnership for purposes of allocating liabilities to such lender
under Section 752 of the Code.
F. The Limited Partners acknowledge that each certificate or instrument
representing Limited Partnership Units shall bear the following legend and any
other legend required under any applicable state securities law:
"NEITHER THE LIMITED PARTNERSHIP UNITS IN THE PARTNERSHIP REPRESENTED
BY THIS CERTIFICATE OR
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INSTRUMENT NOR ANY PART THEREOF OR INTEREST THEREIN HAS BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT') AND NEITHER MAY
BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, IN WHOLE OR IN PART, UNLESS SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE
PROVISIONS OF THE AGREEMENT OF LIMITED PARTNERSHIP OF PGP NORTHERN
INDUSTRIAL, L.P., AS AMENDED FROM TIME TO TIME (A COPY OF WHICH IS ON
FILE WITH THE PARTNERSHIP); AND, IN ALL EVENTS, NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE LIMITED
PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE (OR ANY SECURITY
ISSUED ON ACCOUNT HEREOF OR WITH RESPECT HERETO) MAY BE MADE UNLESS THE
PARTNERSHIP HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL (WHICH COUNSEL
AND OPINION BOTH MUST BE ACCEPTABLE TO THE PARTNERSHIP IN ITS SOLE
DISCRETION) FOR THE HOLDER THAT, BECAUSE OF THE AVAILABILITY OF AN
EXEMPTION, NO SUCH REGISTRATION, QUALIFICATION OR OTHER COMPLIANCE IS
REQUIRED UNDER THE ACT, APPLICABLE BLUE SKY OR STATE SECURITIES LAWS, OR
OTHERWISE."
Section 11.4 Substituted Limited Partners
A. No Limited Partner shall have the right to substitute a transferee
as a Limited Partner in his place. The General Partner shall, however, have the
right to consent to the admission of a transferee of the interest of a Limited
Partner pursuant to this, Section 11.4 as a Substituted Limited Partner, which
Consent may be given or withheld by the General Partner in its sole and absolute
discretion. The General Partner's failure or refusal to permit a transferee of
any such interests to become a Substituted Limited Partner shall not give rise
to any cause of action against the Partnership or any Partner. Notwithstanding
the foregoing in the event of transfers of Limited Partnership Units by Original
Limited Partners in accordance with the second sentence of Section 11.3A, the
transferees shall be admitted as Substituted Limited Partners, and the General
Partner hereby consents to such.
B. A transferee who has been admitted as a Substituted Limited Partner
in accordance with this Article 11 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Limited Partner under this
Agreement.
C. Upon admission of a Substituted Limited Partner, the General Partner
shall amend Exhibit "A" to reflect the name, address, number of Limited
Partnership Units, and Limited Partner Percentage Interest of such Substituted
Limited Partner.
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Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee as a Substituted Limited
Partner, as described in Section 11.4, such transferee shall be considered an
Assignee for purposes of this Agreement. An Assignee shall be deemed to have had
assigned to it, and shall be entitled to receive distributions from the
Partnership and the share of Net Income, Net Losses, Recapture Income, and any
other items, gain, loss deduction and credit of the Partnership attributable to
the Limited Partnership Units assigned to such transferee, but shall not be
deemed to be a holder of Limited Partnership Units for any other purpose under
this Agreement, and shall not be entitled to vote such Limited Partnership Units
for any other purpose under this Agreement, and shall not be entitled to vote
such Limited Partnership Units in any matter presented to the Limited Partners
for a vote (such Limited Partnership Units being deemed to have been voted on
such matters in the same proportion as all other Limited Partnership Units held
by Limited Partners are voted). In the event any such transferee desires to make
a further assignment of any such Limited Partnership Units, such transferee
shall be subject to all of the provisions of this Article 11 to the same extent
and in the same manner as any Limited Partner desiring to make an assignment of
Limited Partnership Units.
Section 11.6 General Provisions
A. No Limited Partner may withdraw from the Partnership other than as a
result of a permitted transfer of all such Limited Partner's Limited Partnership
Units in accordance with this Article 11 or pursuant to any agreement consented
to by the Partnership pursuant to which the Limited Partner's interests in the
Partnership are conveyed and the Limited Partner's withdrawal is provided for.
B. Any Limited Partner who shall transfer all of its Limited
Partnership Units in a transfer permitted pursuant to this Article 11 shall
cease to be a Limited Partner upon the admission of all Assignees of such
Limited Partnership Units as Substitute Limited Partners. Similarly, any Limited
Partner who shall transfer all of its Limited Partnership Units pursuant to any
agreement of the type referred to in the preceding paragraph shall cease to be a
Limited Partner.
C. Transfers pursuant to this Article 11 may only be made on the first
day of a fiscal quarter of the Partnership, unless the General Partner otherwise
agrees.
D. Without limiting the restriction of Section 11.6C, if any
Partnership Interest is transferred or assigned during any quarterly segment of
the Partnership's fiscal year in compliance with the provisions of this Article
11 on any day other than the first day of a Partnership Year, then Net Income,
Net Losses,
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each item thereof and all other items attributable to such interest for such
Partnership Year shall be divided and allocated between the transferor Partner
and the transferee Partner by taking into account their varying interests during
the Partnership Year in accordance with Section 706(d) of the Code, using the
interim closing of the books method. Solely for purposes of making such
allocations, each of such items for the calendar month in which the transfer or
assignment occurs shall be allocated to the transferee Partner, and none of such
items for the calendar month in which a redemption occurs shall be allocated to
a redeeming Partner. All distributions of Available Cash attributable to such
Limited Partnership Unit with respect to which the Partnership Record Date is
before the date of such transfer, assignment, or redemption shall be made to the
transferor Partner, all distributions of Available Cash thereafter attributable
to such Limited Partnership Unit shall be made to the transferee Partner.
Section 11.7 No Exchange
Notwithstanding anything in this Section 11 to the contrary, each of the
Limited Partners hereby agrees that, during the No Exchange Period, it shall be
prohibited from tendering its Limited Partnership Units for exchange or
redemption under the Exchange Rights Agreement.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A Successor to all of the General Partner Interest pursuant to Section
11.2 hereof who is proposed to be admitted as successor General Partner shall be
admitted to the Partnership as the General Partner, effective upon such
transfer. The admission of any such transferee shall not cause a dissolution of
the Partnership and such transferee shall carry on the business of the
Partnership in accordance with the forms and provisions of this Agreement. In
each case, the admission shall be subject to the Successor General Partner
executing and delivering to the Partnership an acceptance of all of the terms
and conditions of this Agreement and such other documents or instruments as may
be required to effect the admission. In the case of such admission on any day
other than the first day of a Partnership Year, all items attributable to the
General Partner Interest for such Partnership Year shall be allocated between
the transferring General Partner and such successor as provided in Section
11.6-D hereof.
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Section 12.2 Admission of Additional Limited Partners
A. Except as otherwise provided elsewhere in this Agreement, after the
admission of Eden to the Partnership as the initial original Limited Partner on
the date hereof, a Person who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including, without limitation, the power
of attorney granted in Section 2.4 hereof, and (ii) such other documents or
instruments as may be required in the discretion of the General Partner in order
to effect such Person's admission as an Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the Partnership on
any day other than the first day of a Partnership Year, then Net Income, Net
Losses, each item thereof and all other items allocable among Partners and
Assignees for such Partnership Year shall be allocated among such Additional
Limited Partner and all other Partners and Assignees by taking into account
their varying interests during the Partnership Year in accordance with Section
706(d) of the Code, using the interim closing of the books method. Solely for
purposes of making such allocations, each of such items for the calendar month
in which an admission of any Additional Limited Partner occurs shall be
allocated among all of the Partners and Assignees, including such Additional
Limited Partner. All distributions of Available Cash with respect to which the
Partnership Record Date is before the date of such admission shall be made
solely to Partners and assignees, other than the Additional Limited Partner, and
all distributions of Available Cash thereafter shall be made to all of the
Partners and Assignees, including such Additional Limited Partner.
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment to this Agreement (including an amendment of Exhibit
"A") and, if
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required by law, shall prepare and file an amendment to the Certificate and may
for this purpose exercise the power of attorney granted pursuant to Section 2.4
hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs be wound up, only upon the first to occur of any of the following
("Liquidating Events"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal of the General Partner, as defined in the
Act (other than an event of bankruptcy), unless within ninety (90) days after
such event of withdrawal a majority in interest in capital and profits of the
remaining Partners agree in writing to continue the business of the Partnership
and to the appointment, effective as of the date of withdrawal of a successor
General Partner;
C. an election to dissolve the Partnership made by the General
Partner, in its sole and absolute discretion;
D. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
E. the sale of all or substantially all of the assets and properties
of the Partnership; provided, however, that the sale of one or more, but less
than all, of the Original Properties shall not be a Liquidating Event so long
as the Partnership retains at least one of the Original Properties; or
F. a final and non-appealable judgment is entered by a court of
competent jurisdiction ruling that the General Partner is bankrupt or insolvent,
or a final and non-appealable order for relief is entered by a court with
appropriate jurisdiction against the General Partner, in each case under any
federal or state bankruptcy or insolvency laws as now or hereafter in effect,
unless prior to the entry of such order or judgment all of the remaining
Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of a date prior to the date of such order or judgment,
of a substitute General Partner.
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Section 13.2 Winding Up
A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's business and affairs.
The General Partner, or in the event there is no remaining General Partner, any
Person elected by a majority in interest Of the Limited Partners (the General
Partner or such other Person being referred to herein as the "Liquidator"),
shall be responsible for overseeing the winding up and dissolution of the
Partnership and shall take full account of the Partnership's liabilities and
property and the Partnership property shall be liquidated as promptly as is
consistent with obtaining the fair value thereof, and the proceeds therefrom
(which may, to the extent determined by the General Partner, include shares of
common stock in the General Partner) shall be applied and distributed in the
following order:
(1) First, to the satisfaction of all of the Partnership's debts
and liabilities to creditors other than the Partners (whether by payment or the
reasonable provision for payment thereof);
(2) Second, to the satisfaction of all of the Partnership's debts
and liabilities to the General Partner and its Affiliates (whether by payment or
the reasonable provision for payment thereof);
(3) Third, to the satisfaction of all of the Partnership's debts
and liabilities to the other Partners (whether by payment or the reasonable
provision for payment thereof); and
(4) The balance, if any, to the General Partner and Limited
Partners in accordance with their Capital Accounts, after giving effect to all
contributions, distributions, and allocations for all periods.
The General Partner shall not receive any special compensation for
any services performed pursuant to this Article 13.
B. Notwithstanding the foregoing, if and after the Partnership
acquires Non-Original Limited Partner Related Assets, or becomes obligated,
indebted or liable for or on account of Non-original Limited Partner Related
Assets or the ownership or operation thereof, and so long as the General Partner
has not consummated the transactions and made the election described in Sections
4.3B and 5.2, respectively, of this Agreement, then distributions under the
terms of Section 13.2A shall be calculated and made only with respect to
Original Limited Partner
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Related Assets and the ownership and operation thereof, together with the
operation and existence of the Partnership insofar as such concerns the original
Limited Partner Related Assets. Distributions under the terms of Section 13.2A
shall not include any revenues, expenses, assets, or liabilities of the
Partnership relating to the Non-Original Limited Partner Related Assets, the
ownership or operation thereof, or the operation or existence of the Partnership
with respect thereto, all of which shall be as separately determined by the
General Partner in its sole and absolute discretion.
C. Anything contained herein to the contrary notwithstanding,
pursuant to the Exchange Rights Agreement all Limited Partnership Units then
held by any Limited Partner (other than Limited Partnership Units held by the
General Partner) will be mandatorily exchanged or redeemed prior to any
distribution, or the determination of any entitlement to any distribution,
pursuant to Section 13.2A. As a result of such mandatory exchange or redemption
of Limited Partnership Units, no Limited Partner (other than the General Partner
in its capacity as a Limited Partner) will receive, nor shall he, she or it be
entitled to receive, any distribution upon a Liquidating Event.
D. Notwithstanding the provisions of Section 13.2A hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners and their Affiliates
as creditors) and/or distribute to the Partners, in lieu of cash, as tenants in
common and in accordance with the provisions of Section 13.2A hereof, undivided
interests in such Partnership assets as the Liquidator deems not suitable for
liquidation. Any such distributions in kind shall be made only if, in the good
faith judgment of the Liquidator, such distributions in kind are in the best
interest of the Partners, and shall be subject to such conditions relating to
the disposition and management of such properties as the Liquidator deems
reasonable and equitable and to any agreements governing the operation of such
properties at such time. The Liquidator shall determine the fair market value of
any property distributed in kind using such reasonable method of valuation as it
may adopt.
E. In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made pursuant to this Article 13 may be:
(1) distributed to one or more trust(s) established for the benefit
of the creditors and the General Partner and Limited Partners for the purposes
of liquidating Partnership
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assets, collecting amounts owed to the Partnership, and paying any contingent,
conditional or unmatured liabilities or obligations of the Partnership or the
General Partner arising out of or in connection with the Partnership. The assets
of any such trust(s) shall be distributed to the creditors and General Partner
and Limited Partners from time to time, in the reasonable direction of the
Liquidator, in the same manner and proportions as the amount distributed to such
trust(s) by the Partnership would otherwise have been distributed to the
creditors and General Partner and Limited Partners pursuant to this Agreement;
and
(2) withheld or escrowed to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Partnership, provided that
such withheld or escrowed amounts shall be distributed to the creditors and
General Partner and Limited Partners in the manner and order of priority set
forth in Section 13.2A as soon as practicable.
Section 13.3 Compliance with Timing Requirements of Regulations
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article 13 to the General Partner and Limited Partners who have positive
Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2)
(provided, however, in no event shall the Partnership be liquidated prior to the
date which would be the Settlement Date within the meaning of the Exchange
Rights Agreement for Partners who tender an Exchange Notice (within the meaning
of the Exchange Rights Agreement) on or before the fifth (5th) day after the
date of receipt of the notice of liquidation by the Partnership.
Section 13.4 Deemed Distribution and Re-contribution
Notwithstanding any other provision of this Article 13, in the event
the Partnership is considered "liquidated" within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged, and the Partnership's affairs shall not be
wound up.
Section 13.5 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right, power or claim to demand or receive
property other than cash from the Partnership. Except as otherwise provided in
this Agreement, no Limited Partner shall have priority over any other Partner as
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to the return of its Capital Contributions, distributions, or allocations.
Section 13.6 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that would,
but for the provisions of an election or objection by one or more Partners
pursuant to Section 13.1, result in a dissolution of the Partnership, the
General Partner shall, within thirty (30) days thereafter, provide written
notice thereof to each of the Partners.
Section 13.7 Termination of Partnership and Cancellation of
Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership's assets, as
provided in Section 13.2 hereof, a certificate of cancellation shall be filed,
the Partnership shall be terminated, and all qualifications of the Partnership
as a foreign limited partnership in jurisdictions other than the State of
Delaware shall be canceled and such other actions as may be necessary to
terminate the Partnership shall be taken.
Section 13.8 Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
A. Amendments to this Agreement may be proposed by the General
Partner or by any Limited Partners (other than the General Partner) holding
twenty-five percent (25%) or more of the Limited Partner Percentage Interests.
Following such proposal, the General Partner shall submit any proposed amendment
to the Limited Partners. The General Partner shall seek the written vote of the
Partners on the proposed amendment or shall call a meeting to vote thereon and
to transact any other business that it may deem appropriate. For purposes of
obtaining a written vote, the General Partner may require a response within a
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reasonable specified time, but not less than fifteen (15) days, and failure
to respond in such time period shall constitute a vote which is consistent with
the General Partner's recommendation with respect to the proposal. Except as
provided in Section 13.1C, 14.1B, 14.1C, or 14.1D, a proposed amendment shall be
adopted and be effective as an amendment hereto if it is approved by the General
Partner and it receives the Consent of Partners holding a majority of the
Limited Partner Percentage Interests of all Limited Partners; provided, however,
that, except as otherwise provided in Sections 4.3A and 5.2 hereof, any
amendment which materially and adversely alters the right of a Limited Partner
(including an original Limited Partner) to receive distributions of Available
Cash or allocations of Net Income, Net Loss or any other items in the amounts,
in the priorities or at the times described in this Agreement shall require the
consent of such Limited Partner in order to become effective.
B. Notwithstanding Section 14.1.A, the General Partner shall have
the power, without the consent or approval of the Limited Partners, to amend
this Agreement as may be required to facilitate or implement any of the
following purposes:
(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or any Affiliate of
the General Partner for the benefit of the Limited Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement;
(3) to set forth the designations, rights, powers, duties, and
preferences of other holders of any additional Partnership Interests issued
pursuant to Section 4.3, or otherwise pursuant to the terms of this Agreement;
(4) to reflect a change that is of an inconsequential nature and
does not adversely affect the Limited Partners in any material respect, or to
cure any ambiguity, correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions of this Agreement, or make any
other changes with respect to matters arising under this Agreement that will not
be inconsistent with law or with the provisions of this Agreement;
(5) to satisfy any requirements, conditions, or guidelines,
contained in any order, directive, opinion, ruling or regulation of a federal or
state agency or contained in federal or state law; and
(6) the purposes set forth in Section 3.3.
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The General Partner shall provide notice to the Limited Partners when
any action under this Section 14.1.B is taken.
C. Notwithstanding Section 14.1.A and 14.1.B hereof, this Agreement
shall not be amended without Consent of each Partner adversely affected if such
amendment would: (i) convert a Limited Partner's interest in the Partnership
into a General Partner Interest; (ii) modify the limited liability of a Limited
Partner in a manner adverse to such Limited Partner; (iii) alter rights of the
Partner to receive distributions pursuant to Article 5 or Article 13, or the
allocations specified in Article 6 (except as permitted pursuant to Section 4.3
and Section 14.1.B(3) hereof); (iv) cause the termination of the Partnership
prior to the time set forth in Sections 2.5. or 13.1; or (v) amend this Section
14.1.C.
D. Notwithstanding Section 14.1.A and 14.1.B hereof, the General
Partner shall not amend Sections 7.4, 7.5, 14.1A, 14.1C or 14.2 without Consent
of Limited Partners holding a majority of the Limited Partner Percentage
Interests of the Limited Partners, excluding Limited Partner Interests held by
the General Partner; and, to the extent that any such amendment would affect the
amount, priority, or timing of distributions to any of the Original Limited
Partners or their heirs, successors and assigns under this Agreement, the
General Partner shall not amend Sections 7.4, 7.5, 14.1A, 14.1C, or 14.2
without Consent of original Elmited Partners holding a majority of the Limited
Partner Percentage Interests of the Original Limited Partners (in each case
including their heirs, successors and assigns), unless the transactions and
election described in, respectively, Sections 4.3B and 5.2 of this Agreement
have occurred and been made, in which case the special Consent of the Original
Limited Partners as herein provided shall not be required.
Section 14.2 Meetings of the Partners
A. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners (other than the General Partner) holding twenty-five percent
(25%) or more of the Limited Partner Percentage Interests. The request shall
state the nature of the business to be transacted. Notice of any such meeting
shall be given to all Partners not less than seven (7) days nor more than thirty
(30) days prior to the date of such meeting. Partners may vote in person or by
proxy at such meeting. Whenever the vote or consent of the Partners is permitted
or required under this Agreement, such vote or consent may be given at a meeting
of the Partners or may be given in accordance with the procedures prescribed in
Sections 14.1A or 14.2B hereof. Except as otherwise expressly provided in his
Agreement, whenever the Consent of the Limited Partners is required the Consent
of holders of a majority of the Limited Partner Percentage Interests held by
Limited Partners (including
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Limited Partnership Interests held by the General Partner) shall control.
B. Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth the
action so taken is signed by Limited Partners holding a majority of the Limited
Partner Percentage Interests (or such other percentage as is expressly required
by this Agreement). Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of Limited
Partners holding a majority of the Limited Partner Percentage Interests (or such
other percentage as is expressly required by this Agreement). Such consent shall
be filed with the General Partner. An action so taken shall be deemed to have
been taken at a meeting held on the effective date so certified.
C. Each Limited Partner may authorize any Person or Persons to act for
him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Limited Partner executing it, such
revocation to be effective upon the Partnership's receipt of written notice of
such revocation from the Limited Partner executing such proxy.
D. Each meeting of the Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate. Without limitation, meetings of Partners may be conducted in
the same manner as meetings of the shareholders of the General Partner and may
be held at the same time, and as part of, meetings of the shareholders of the
General Partner. Anything contained herein to the contrary notwithstanding, all
meetings of the Partners shall be held within the State of California at such
location as may be designated by the General Partner.
ARTICLE 15
GENERAL PROVISIONS
Section 15.1 No Assurances. Eden acknowledges and agrees that it is
solely responsible for its tax planning and the structuring of this Agreement to
accommodate such tax planning, and that neither the Partnership nor the General
Partner makes any representation or provides any assurance to Eden that the
provisions of this Agreement affecting or impacting Eden's tax planning,
structuring or liability will be respected or upheld by any agency or authority
or achieve the result desired by the
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Limited Partners. Therefore, notwithstanding the provisions of this Agreement,
and without limiting the generality of the foregoing, Eden acknowledges and
agrees that neither the Partnership nor the General Partner makes any
representation or provides any assurance that the allocation provided in section
6.2 will be respected or upheld by any agency or authority or achieve the result
desired by the Limited Partners, or that the Cigna Debt or any refinanced debt
terms or allocation will be respected or upheld by any agency or authority or
achieve the result desired by the Limited Partners.
Section 15.2 Addresses and Notices
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in Exhibit "A" or such other
address of which the Partner shall notify the General Partner in writing.
Section 15.3 Titles and Captions
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 15.4 Pronouns and Plurals
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
Section 15.5 Further Action
The parties shall execute and deliver all documents, provide all
information and take or refrain form taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.6 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.7 Creditors
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Other than as expressly set forth herein with respect to the
Indemnitees, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
Section 15.8 Waiver
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any covenant, duty, agreement or condition.
Section 15.9 Counterparts
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all of the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section 15.10 Applicable Law
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.
Section 15.11 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality or enforceability of other
remaining provisions contained herein shall not be affected thereby.
Section 15.12 Entire Agreement
This Agreement contains the entire understanding and agreement: among
the Partners with respect to the subject matter hereof and supersedes any other
prior written or oral understandings or agreements among them with respect
thereto.
Section 15.13 No Rights as Shareholders
Nothing contained in this Agreement shall be construed as conferring
upon the holders of the Limited Partnership Units any rights whatsoever as
shareholders of the General Partner, including, without limitation, any right to
receive dividends or other distributions made to shareholders of the General
Partner or to vote or to consent or to receive notice as shareholders in respect
of any meeting of shareholders for the election of directors of the General
Partner or any other matter. Nothing contained in this Section shall be deemed a
waiver or
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relinquishment of any parties rights under the Exchange Rights Agreement.
Section 15.14 Venue
Any action initiated by any party under this Agreement shall be
brought and prosecuted in the State of California which the parties acknowledge
and agree is a convenient forum in which to
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litigate such action, and the parties waive any right to commence or transfer
such action in or to any other state.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
as of the day first above written.
GENERAL PARTNER:
PACIFIC GULF PROPERTIES INC., a Maryland
corporation
By:_____________________________________
Glenn L. Carpenter, President and
Chief Executive Officer
By:_____________________________________
Donald G. Herrman, Executive Vice
President, Chief Financial Officer and
Secretary
EDEN:
EDEN PLAZA ASSOCIATES, LLC, a California
limited liability company
By:_____________________________________
Elbert P. Bressie, Managing Member
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EXHIBIT A
Partners Contributions and Partnership Interests
<TABLE>
<CAPTION>
Limited
Limited Partner
Name and Address Cash Agreed Value of Total Partnership Percentage
of Partner Contribution Contributed Property Contribution Units Interest
----------------- ------------ -------------------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
General Partner
Pacific Gulf $ N/A $ N/A N/A
Properties Inc. -------- -------
------------------
------------------
------------------
Limited Partners
Eden Plaza N/A $ * $ 100%
Associates, LLC -------- -------- -----
-------------------
-------------------
-------------------
*SEE NOTE ON EXHIBIT D
</TABLE>
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EXHIBIT B
Capital Account Maintenance
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section 1.704-1(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement; and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance with
Section 1.B hereof and allocated. to such Partner pursuant to Section 6.1B of
the Agreement and Exhibit "C" hereof and decreased by (x) the amount of cash
or Agreed Value of all actual and deemed distributions of cash or property made
to such Partner pursuant to this Agreement; and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and allocated
to such Partner pursuant to Section 6.1A of the Agreement and Exhibit "C"
hereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal tax purposes determined in accordance
with Section 703(a) of the Code (for this purpose all items of income, gain,
loss or deduction required to be stated separately pursuant to Section 703(a)(1)
of the Code shall be included in taxable income or loss), with the following
adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section 754 of the
Code which may be made by the Partnership, provided that the amounts of any
adjustments to the adjusted bases of the assets of the Partnership made pursuant
to Section 734 of the Code as a result of the distribution of property by the
Partnership to a Partner (to the extent that such adjustments have not
previously been reflected in the Partners' Capital Accounts) shall be reflected
in the Capital Accounts of the Partners in the manner and subject to the
limitations prescribed in Regulations Section 1.704-1(b)(2)(iv)(m)(4).
(2) The computation of all items of income, gain, and deduction
shall be made without regard to the fact that items described in Sections
705(a)(1)(B) or 705(a)(2)(B) of the Code are not includable in gross income or
are neither currently deductible nor capitalized for federal income tax
purposes.
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<PAGE> 243
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the adjusted
basis of such property as of such date of disposition were equal in amount to
the Partnership's Carrying Value with respect to such property as of such date.
(4) In lieu of depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such fiscal year.
(5) In the event the Carrying Value of any Partnership Asset is
adjusted pursuant to Section 1.D hereof, the amount of any such adjustment
shall be taken into account as gain or loss from the disposition of such asset.
(6) Any items specifically allocated under Section 1 of Exhibit
"C" hereof shall not be taken into account.
C. Generally, a transferee (including an Assignee) of a Limited
Partnership Unit shall succeed to a pro rata portion of the Capital Account of
the transferor; provided, however, that if the transfer causes a termination of
the Partnership under Section 708(b)(1)(B) of the Code, the Partnership's
properties shall be deemed solely for federal income tax purposes, to have been
contributed to the successor Partnership. The Capital Accounts of such successor
Partnership shall be maintained in accordance with the principles of this
Exhibit "B".
D. (1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 1.D.(2), the Carrying Value of
all Partnership assets shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership property, as
of the times of the adjustments provided in Section 1.D.(2) hereof, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each
such property and allocated pursuant to Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times: (a)
immediately prior to the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a de
minimis Capital Contribution; (b) immediately prior to the distribution by the
Partnership to a Partner of more than a de minimis amount of property as
consideration for an interest in the Partnership; and (c) immediately prior to
the liquidation of the Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), provided, however, that adjustments pursuant to clauses
(a) and (b) above shall be made only if the General Partner determines that such
adjustments are necessary or appropriate to reflect economic interests of the
Partners in the Partnership.
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<PAGE> 244
(3) In accordance with Regulations Section 1.704-1(b)(2)(iv)(e), the
Carrying Value of Partnership assets distributed in kind shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as of the time any such asset is
distributed.
(4) In determining Unrealized Gain or Unrealized Loss for purposes of
this Exhibit "B", the aggregate cash amount and fair market value of all
Partnership assets (including cash or cash equivalents) shall be determined by
the General Partner using such reasonable method of valuation as it may adopt,
or in the case of a liquidating distribution pursuant to Article 13 of the
Agreement, shall be determined and allocated by the Liquidator using such
reasonable methods of valuation as it may adopt. The General Partner, or the
Liquidator, as the case may be, shall allocate such aggregate value among the
assets of the Partnership (in such manner as it determines in its sole and
absolute discretion to arrive at a fair market value for individual properties).
E. The provisions of this Agreement (including this Exhibit "B" and other
Exhibits to this Agreement) relating to the maintenance of Capital Accounts are
intended to comply with Regulations Section 1.704-1(b), and shall be interpreted
and applied in a manner consistent with such Regulations. In the event the
General Partner shall determine that it is prudent to modify (i) the manner in
which the Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership, the
General Partner, or the Limited Partners) are computed; or (ii) the manner in
which items are allocated among the Partners for federal income tax purposes in
order to comply with such Regulations or to comply with Section 704(c) of the
Code, the General Partner may make such modification without regard to Article
14 of the Agreement, provided that it is not likely to have a material effect on
the amounts distributable to any Person pursuant to Article 13 of the Agreement
upon the dissolution of the Partnership. The General Partner also shall (i)
where appropriate, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q),
make any adjustments that are necessary or appropriate to maintain equality
between Capital Accounts of the Partners and the amount of Partnership capital
reflected on the Partnership's balance sheet, as computed for book purposes; and
(ii) make any appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to Comply With Regulations Section
1.704-1(b). In addition, the General Partner may adopt and employ such methods
and procedures for (i) the maintenance of book and tax capital accounts; (ii)
the determination and allocation of adjustments under Sections 704(c), '734 and
743 of the Code; (iii) the determination of Net Income, Net Loss, taxable loss
and items thereof under this Agreement: and pursuant to the Code; (iv)
conventions for the
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<PAGE> 245
determination of cost recovery, depreciation and amortization deductions, as it
determines in its sole discretion are necessary or appropriate to execute the
provisions of this Agreement, to comply with federal and state tax laws, and are
in the best interest of the Partners.
2. No Interest
No interest shall be paid by the Partnership on Capital .Contributions or
on balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of his Capital
Contribution or his Capital Account or to receive any distribution from the
Partnership, except as provided in Articles 4, 5, 7 and 13 of the Agreement.
4. Non-Original Limited Partner Related Assets
Notwithstanding the foregoing, if and after the Partnership acquires
Non-Original Limited Partner Related Assets, or becomes obligated, indebted or
liable for or on account of Non-Original Limited Partner Related Assets or the
ownership or operation thereof, and so long as the General Partner has not
consummated the transactions and made the election described in Sections 4.3B
and 5.2, respectively, of this Agreement, then allocations provided for in this
Exhibit "B" shall be calculated separately with respect to Original Limited
Partner Related Assets and the ownership and operation thereof, together with
the operation and existence of the Partnership insofar as such concerns the
Original Limited Partner Related Assets and the ownership and operation thereof.
Such allocations and calculations shall not include any revenues, expenses,
assets, or liabilities of the Partnership relating to the Non-Original Limited
Partner Related Assets, the ownership or operation thereof, or the operation or
existence Of the Partnership with respect thereto, all of which shall be
separately determined by the General Partner in its sole and absolute
discretion.
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<PAGE> 246
EXHIBIT C
Special Allocation Rules
1. Special Allocation Rules
Notwithstanding any other provision of the Agreement or this Exhibit "C",
the following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of Section 6.1
of the Agreement or any other provisions of this Exhibit "C", if there is a net
decrease in Partnership Minimum Gain during any Partnership taxable year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.7042(f)(6). This Section
1.A is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.
Solely for purposes of this Section 1.A, each Partner's Adjusted Capital Account
Deficit shall be determined prior to any other allocations pursuant to Section
6.1 of Partner Minimum Gain during such Partnership taxable year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other provision
of Section 6.1 of this Agreement or any other provisions of this Exhibit "C"
(except Section 1.A hereof), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership taxable year,
each Partner who has a share of the Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.702-2(i)(5), shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Section 1.704-2(i)(4). This Section 1.B is intended to comply
with the minimum gain chargeback requirement in such Section of the Regulations
and shall be interpreted consistently therewith. Solely for purposes of this
Section 1.B, each Partner's Adjusted Capital Account Deficit shall be determined
prior to any other allocations pursuant to Section 6.1 of the Agreement or this
Exhibit with respect to such
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<PAGE> 247
Partnership taxable year, other than allocations pursuant to Section 1.A hereof.
C. Qualified Income offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2) (ii) (d)(5), or 1.704-1
(b) (2) (ii) (d) (6) , and after giving effect to the allocations required under
Sections 1.A and 1.B hereof such Partner has an Adjusted Capital Account
Deficit, items of Partnership income and gain (consisting of a pro rata portion
of each item of Partnership income, including gross income and gain for the
Partnership taxable year) shall be specifically allocated to such Partner in an
amount and manner sufficient to eliminate, to the extent required by the
Regulations, its Adjusted Capital Account Deficit created by such adjustments,
allocations or distributions as quickly as possible.
D. Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
taxable year shall be allocated to the General Partner. If the General Partner
determines in its good faith discretion that the Partnership's Nonrecourse
Deductions must be allocated in a different ratio to satisfy the safe harbor
requirements of the Regulations promulgated under Section 704(b) of the Code,
the General Partner is authorized, upon notice to the Limited Partners, to
revise the prescribed ratio to the numerically closest ratio for such
Partnership taxable year which satisfy such requirements.
E. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions for
any Partnership taxable year shall be specially allocated to the Partner who
bears the economic risk of loss with respect to the Partner Nonrecourse Debt to
which such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i).
F. Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.
G. Curative Allocations. The allocations set forth in Section 1.A through
1.F of this Exhibit "C" (the "Regulatory Allocations") are intended to comply
with certain requirements of the Regulations under Section 704(b) of the Code.
The Regulatory Allocations may not be consistent with the manner in which the
Partners intend to divide Partnership distributions. Accord-
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ingly, the General Partner is hereby authorized to divide other allocations of
income, gain, deduction and loss among the Partners so as to prevent the
Regulatory Allocations from distorting the manner in which Partnership
distributions will be divided among the Partners. In general, the Partners
anticipate that this will be accomplished by specially allocating other items of
income, gain, loss and deduction among the Partners so that the net amount of
the Regulatory Allocations and such special allocations to each person is zero.
However, the General .Partner will have discretion to accomplish this result in
any reasonable manner; Provided, however, that no allocation pursuant to this
Section 1.G shall cause the Partnership to fail to comply with the requirements
of Regulations Sections 1.7041(b)(2)(ii)(d),-2(e)or-2(i)
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated among
the Partners in the same manner as its correlative item of "book" income, gain,
loss or deduction is allocated pursuant to Section 6.1 of the Agreement and
Section 1 of this Exhibit "C".
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners,
consistent with the principles of Section 704(c) of the Code
and the Regulations thereunder, to take into account the
variation between the 704(c) Value of such property and its
adjusted basis at the time of contribution; and
(b) any item of Residual Gain or Residual Loss attributable to a
Contributed Property shall be allocated among the Partners
in the same manner as its correlative item of "book" gain or
loss is allocated pursuant to Section 6.1 of the Agreement
and Section 1 of this Exhibit "C".
(2) (a) In the, case of an Adjusted Property, such items shall
(1) first, be allocated among the Partners in a manner
consistent with the principals of Section 704(c) of the Code
and the Regulations thereunder to take into account the
Unrealized Gain or Unrealized Loss attribut-
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<PAGE> 249
able to such property and the allocations thereof pursuant
to Exhibit "B"; and
(2) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in a
manner consistent with Section 2.B(1) of this Exhibit "C";
and
(b) any item of Residual Gain or Residual Loss attributable to
an Adjusted Property shall be allocated among the Partners
in the same manner its correlative item of "book" gain or
loss is allocated pursuant to Section 6.1 of the Agreement
and Section 1 of this Exhibit "C".
(3) all other items of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as their
correlative item of "book" gain or loss is allocated
pursuant to Section 6.1 of the Agreement and Section 1 of
this Exhibit "C".
C. To the extent that the Treasury Regulations promulgated pursuant to
Section 704(c) of the Code permit the Partnership to utilize alternative methods
to eliminate the disparities between the Carrying Value of property and its
adjusted basis, the General Partner shall have the authority to elect the method
to be used by the Partnership and such election shall be binding on all
Partners.
3. No Withdrawal
No Partner shall be entitled to withdrawal any part of his Capital
Contribution or his Capital Account or to receive any distribution from the
Partnership, except as provided in Articles 4, 5, 8 and 13 of the Agreement.
4. Non-Original Limited Partner Related Assets
Notwithstanding the foregoing, if and after the Partnership acquires
Non-original Limited Partner Related Assets, or becomes obligated, indebted or
liable for or on account of Non-Original Limited Partner Related Assets or the
ownership or operation thereof, and so long as the General Partner has not
consummated the transactions and made the election described in Sections 4.3B
and 5.2, respectively, of this Agreement, then allocations provided for in this
Exhibit "C" shall be calculated separately with respect to Original Limited
Partner Related Assets and the ownership and operation thereof, together with
the operation and existence of the Partnership insofar as such concerns the
Original Limited Partner Related Assets and the ownership and operation thereof.
Such allocations and calculations shall not
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include any revenues, expenses, assets, or liabilities of the Partnership
relating to the Non-Original Limited Partner Related Assets, the ownership or
operation thereof, or the operation or existence of the Partnership with respect
thereto, all of which shall be separately determined by the General Partner in
its sole and absolute discretion.
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EXHIBIT D
Value of Contributed Property
Underlyinq Property 704(c) Value* Agreed Value**
------------------- ------------- --------------
[*704(C) VALUE IS THE AGREED VALUE PLUS THE AMOUNT OF THE CIGNA
DEBT AT CLOSING PRIOR TO ANY REDUCTION]
[**THE AGREED VALUE OF THE ORIGINAL PROPERTIES SHALL BE THE "EDEN CAPITAL
CONTRIBUTION" AS DEFINED IN THE MASTER CONTRIBUTION AGREEMENT]
<PAGE> 252
EXHIBIT E
PROPERTY MANAGEMENT AGREEMENT
(EDEN PLAZA INDUSTRIAL PARKS)
THIS PROPERTY MANAGEMENT AGREEMENT (this "AGREEMENT") is
made and entered into as of ______________, by and between PGP NORTHERN
INDUSTRIAL, L.P., a Delaware limited partnership ("OWNER") and Pacific Gulf
Properties Inc., a Maryland corporation ("MANAGER") with reference to the
following.
RECITALS
A. The Owner is the owner of an industrial park located on the land
identified in Exhibit A attached hereto (the "PROJECT"). Manager is the sole
general partner of owner.
B. Manager is experienced in managing and operating properties similar to
the Project, and Manager possesses the personnel, skills and experience
necessary for the efficient management and operation of the Project.
C. Owner desires to engage Manager to manage and operate the Project, and
Manager desires to render such management services to Owner, upon and subject to
the terms and conditions set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, Owner and Manager agree as follows:
1. ENGAGEMENT OF MANAGER.
1.1 Exclusive Manager. Owner engages Manager as, and Manager agrees
to serve as, the sole and exclusive manager of the Project, with the authority
to direct, supervise and manage the operation of the Project, for the period of
time and upon the terms and conditions hereinafter set forth.
1.2 Employment of Personnel. Manager shall investigate, hire,
train, pay, supervise and discharge the personnel reasonably necessary to be
employed in order to properly maintain and operate the Project. All salaries,
wages and other compensation of personnel employed by Manager hereunder,
including so-called fringe benefits, medical health insurance, pension plans,
social security taxes, Worker's Compensation insurance and the like
(collectively, the "PERSONNEL COMPENSATION"), shall be payable by Manager from,
and reimbursable to Manager out of, gross revenues generated from the operation
of the Project, including, without limitation, all rent and/or lease payments,
security, cleaning, and other deposits, common area maintenance charges, taxes,
insurance, casualty
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and/or condemnation loss proceeds and other income due to Owner from each
Project ("PROJECT REVENUES"). Personnel Compensation shall not reduce the
"MANAGEMENT FEE", (defined below).
2. DUTIES OF MANAGER.
2.1 Performance of Duties. During the term of this Agreement,
Manager agrees, for and in consideration of the compensation set forth herein,
to supervise and direct the management and operation of the Project on behalf of
Owner and for the account of owner in an efficient and satisfactory manner as an
industrial park. Manager shall at all times maintain an organization, systems
and personnel sufficient to enable it to carry out all its duties, obligations
and functions under this Agreement. Manager will perform its duties under this
Agreement in accordance with all laws, codes and regulations applicable to the
Project.
2.2 Service Contracts. Manager shall make or renew in Owner's name
as agent of Owner and at Owner's expense, contracts and/or leases for water,
electricity, gas, telephone, vermin extermination, landscape, trash removal and
other services deemed by Manager or Owner to be necessary or advisable for the
operation of the Project. In entering into any contracts or leases herein
contemplated, Manager shall include as a condition thereof the right to
terminate on thirty (30) calendar days, prior written notice with or without
cause, unless Manager obtains the prior written consent of Owner.
2.3 Leasing. Manager shall be responsible for coordinating the
leasing activities of the Project. Manager is hereby authorized to contract, in
Owner's name as agent of Owner and at Owner's expense, with such brokers and
leasing agents as Manager deems necessary or appropriate to facilitate the
leasing activities of the Project. Manager is hereby authorized to prepare,
execute, deliver and renew all leases, lease amendments and lease renewals and
extensions, and to terminate tenancies, evict tenants and recover possession of
rented space within the Project, prosecute legal actions in the name of Owner in
connection with the foregoing, settle, compromise and/or release such actions or
reinstate such tenancies, as Manager deems necessary or appropriate, all on
owner's behalf and as agent of Owner and at Owner's expense. References of all
prospective tenants shall be investigated carefully by Manager, and Manager
shall use reasonable efforts to ensure that space in the Projects is rented to
desirable and financially responsible tenants.
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<PAGE> 254
2.4 Payment of Expenses. Manager shall establish and maintain on
behalf of Owner at a bank or banks as Manager may, from time to time, determine,
an account for the Project (an "Account"). Manager shall collect all Project
Revenue, and deposit all such income in the Account for the Project. From the
Account, Manager shall make such disbursements to pay Project operating
expenses, including, without limitation, Personnel Compensation, as are
necessary, in Manager's reasonable judgment, to manage, operate and maintain the
Project as provided in this Agreement. All items specified herein to be at
Owner's expense shall be considered operating expenses of the Project.
2.5 Funding Of Account. Owner agrees to deposit moneys into the
Account in the amount and to the extent that Project Revenues are insufficient
to pay any operating expenses, including Personnel Compensation, hereunder.
Manager shall notify owner in writing as to the amount of any such
insufficiency.
3. INSURANCE. The Manager shall obtain, upon Owner's request and
approval, at Owner's cost and expense, such insurance as may be required by
Owner in connection with the Project, including, without limitation,
comprehensive general public liability, contractual liability and such other
insurance as Owner deems necessary or desirable. Owner shall designate Manager
as an additional named insured on each such insurance policy.
4. MANAGER'S COMPENSATION.
4.1 Management Fee. In consideration of the management services to
be rendered by Manager pursuant to Article 2 of this Agreement, Manager shall
receive as compensation a monthly sum equal to four percent (4%) of all Project
Revenues from the Project collected during each month during the term of this
Agreement (the "MANAGEMENT FEE").
4.2 Payment of Management Fee. The Management Fee shall be paid on
the first day of each calendar month during the term of this Agreement, based
upon the Project Revenues from the Project collected for the preceding calendar
month. If the term of this Agreement begins on a date other than the first day
of a month or ends on a date other than the last day of a month, the Management
Fee shall be prorated based on the number of days in such month.
4.3 Other Compensation. Manager shall be separately compensated for
any services other than the usual and customary services performed in its
capacity as the manager of the Project; provided that Manager shall not perform
any extraordinary services without obtaining the prior written approval of
Owner.
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<PAGE> 255
5. BOOKS, RECORDS AND STATEMENTS.
5.1 Maintenance and Access of Records. Manager agrees to maintain
adequate accounting records (which records shall be and remain the property of
Owner) in connection with all matters contemplated by this Agreement in
accordance with the provisions of this Agreement.
5.2 Operating Budget. Within thirty (30) calendar ,days after the
execution of this Agreement, Manager shall prepare and submit to owner for its
approval a proposed operating budget setting forth in reasonable detail the
estimated income and operating expenses of the Project, by month, for the
remainder of the then calendar year for which this Agreement is in effect. on or
before thirty (30) calendar days before each subsequent calendar year during the
term of this Agreement, Manager shall prepare and submit to Owner for its
approval a proposed operating budget setting forth in reasonable detail the
estimated income and operating expenses of the Project, by month, for the
succeeding calendar year.
Owner will consider the proposed budgets and then will consult with the
Manager in the ensuing period prior to the commencement of the forthcoming
calendar year in order to agree on an "APPROVED OPERATING BUDGET." The parties
will use reasonable efforts to agree upon an Approved Operating Budget for the
forthcoming calendar year on or before December 15th of the then current
calendar year. If the parties are unable to reach such agreement, the Approved
Operating Budget for the forthcoming calendar year will be established by Owner.
Manager agrees to employ reasonable efforts to ensure that the actual costs
of maintaining and operating the Project shall not exceed the Approved Operating
Budget, either in total or in any one accounting category. In the event it
appears to Manager that the actual costs of maintaining and operating the
Project shall exceed the Approved Operating Budget, Manager shall submit a
revised budget proposal for owner's approval as provided above. Upon approval,
such revised budget shall become the Approved Operating Budget. In all events,
Owner shall pay all actual costs of maintaining and operating the Project.
5.3 Capital Expenditure Budget. Within thirty (30) calendar days after
the execution of this Agreement, Manager shall prepare and submit to owner for
its approval a proposed capital expenditure budget setting forth in reasonable
detail the estimated capital expenditures of the Project, by month, for the
remainder of the then calendar year for which this Agreement is in effect. On or
before thirty (30) calendar days before each subsequent calendar year during the
term of this Agreement, Manager shall prepare and submit to Owner for its
approval a proposed capital expenditure budget setting forth in reasonable
detail the estimated capital expenditures of the Project, by month, for the
succeeding calendar year.
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<PAGE> 256
Owner will consider the proposed budgets and then will consult with
Manager in the ensuing period prior to the commencement of the forthcoming
calendar year in order to agree on an "APPROVED CAPITAL BUDGET." The parties
will use reasonable efforts to agree upon an Approved Capital Budget for the
succeeding calendar year on or before December 15th of the then current calendar
year. If the parties are unable to reach such agreement, the Approved Capital
Budget for the forthcoming calendar year will be established by Owner.
6. TERM.
6.1 Initial Term. The term of this Agreement shall commence as of
the date first set forth above and shall continue for an initial term ending on
__________ . Unless written notice to terminate is given by either party to the
other at least thirty (230) days prior to the end of the initial term, this
Agreement: shall be automatically renewed for another ____ year term, upon and
subject to the terms and conditions set forth in this Agreement.
6.2 Termination. This Agreement may be terminated for "cause" at
any time by Owner upon thirty (30) days prior written notice to Manager setting
forth in detail the "cause" for such termination. The term "cause" shall mean
(i) any material breach of this Agreement by Manager, (ii) any willful
misconduct, intentional misrepresentation or gross negligence of Manager related
to, or in connection with, the management and operation of the Project, (iii)
the commencement of a case under Title 11 U.S.C., or under any similar
insolvency proceeding under applicable state or federal law, involving Manager
as debtor, (iv) Owner's transfer or sale of the Property to an independent third
party, (v) the occurrence of a total destruction of the Project, and (vi) the
taking of the Project by condemnation, eminent domain, or by agreement in lieu
thereof.
7. INDEMNIFICATION AND HOLD HARMLESS. Neither Manager nor any employee of
Manager shall be liable, responsible or accountable in damages or otherwise to
owner for any acts performed by it, him or her in good faith and within the
scope of this Agreement if any such act or failure to act is not attributable to
Manager's or such employee's gross negligence or willful misconduct. Owner shall
indemnify, defend and hold Manager (and each employee thereof) harmless for any
loss, damage, liability, cost or expense (including reasonable attorneys' fees)
arising out of any act or failure to act by Manager (or any employee thereof) if
such act or failure to act is in good faith, is within the scope of this
Agreement, and is not attributable to Manager's or such employee's gross
negligence or willful misconduct.
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<PAGE> 257
8. MISCELLANEOUS.
8.1 Applicable Law. This Agreement shall be construed in accordance with
the laws of the State of California.
8.2 Severability. Each provision of this Agreement is intended to be
severable. If any term or provision of this Agreement shall be determined by a
court of competent jurisdiction to be illegal or invalid for any reason
whatsoever, that provision shall be severed from this Agreement and shall not
affect the validity of the remainder of this Agreement.
8.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall comprise but a single instrument.
IN WITNESS OF THE FOREGOING, Owner and Manager have caused their duly
authorized representatives to execute this Agreement as of the date first above
written.
OWNER:
PGP NORTHERN INDUSTRIAL, L.P.,
a Delaware limited partnership
By: Pacific Gulf Properties Inc., a Maryland
corporation,
its General Partner
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
MANAGER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
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<PAGE> 258
EXHIBIT A
LEGAL DESCRIPTION
THE LAND REFERRED TO IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ALAMEDA,
CITY OF HAYWARD, DESCRIBED AS FOLLOWS:
PARCEL 1:
PARCEL 1, PARCEL MAP 1288, FILED SEPTEMBER 25, 1973, BOOK 80 OF PARCEL MAPS,
PAGE 27, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 461-0015-028
PARCEL 2:
PARCEL 1, PARCEL MAP 939, FILED JULY 13, 1972, BOOK 76 OF PARCEL MAPS, PAGE 10,
ALAMEDA COUNTY RECORDS.
EXCEPTING THEREFROM THAT PORTION DESCRIBED IN THE DEED TO EDEN ROCK CO. NO. 3,
A JOINT VENTURE, RECORDED JULY 31, 1978, REEL 5508, IMAGE 378, SERIES NO.
78-145175, OFFICIAL RECORDS.
ASSESSOR'S PARCEL NO. 461-0015-020-2
PARCEL 3:
PARCEL 2, PARCEL MAP NO. 939, FILED JULY 13, 1972, IN BOOK 76 OF PARCEL MAPS,
PAGE 10, ALAMEDA COUNTY RECORDS.
TOGETHER WITH:
ALL THAT CERTAIN REAL PROPERTY BEING A PORTION OF PARCEL 1 AS SHOWN ON "PARCEL
MAP NO. 939" WHICH MAP IS FILED IN BOOK 76 OF PARCEL MAPS AT PAGE 10, ALAMEDA
COUNTY RECORDS, SAID REAL PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE CORNER COMMON TO PARCELS 1 AND 2 ON THE NORTHWESTERLY LINE OF
CORPORATE PLACE, AS SHOWN ON THE ABOVE MENTIONED PARCEL MAP, THENCE FROM SAID
POINT OF BEGINNING ALONG SAID NORTHERLY LINE SOUTH 76 degrees 38' 05" WEST 8.22
FEET; THENCE LEAVING THE LAST SAID LINE AND RUNNING ALONG A LINE PARALLEL TO AND
7.806 FEET SOUTHWESTERLY AT RIGHT ANGLES, FROM THE DIVIDING LINE BETWEEN SAID
PARCELS 1 AND 2 NORTH 31 DEGREES 37' 51" WEST 205.78 FEET; THENCE LEAVING SAID
PARALLEL LINE NORTH 58 DEGREES 22' 09" EAST 7.806 FEET TO SAID DIVIDING LINE;
THENCE ALONG THE LAST SAID LINE SOUTH 31 degrees 37 feet 51 inches EAST 208.356
FEET TO THE POINT OF BEGINNING.
SAID REAL PROPERTY IS THE SAME AS "LOT LINE ADJUSTMENT NO. 77-4" APPROVED BY THE
CITY OF HAYWARD PLANNING COMMISSION ON SEPTEMBER 22, 1977.
ASSESSOR'S PARCEL NO. 461-0015-021-01
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<PAGE> 259
PARCEL 4:
PARCEL ONE OF AMENDED PARCEL MAP 1035 FILED SEPTEMBER 5, 1975 IN BOOK 80 OF
PARCEL MAPS ON PAGE 15, ALAMEDA COUNTY RECORDS.
ASSESSOR'S PARCEL NO. 461-0085-018-03 (PORTION).
PARCEL 5:
PORTION OF INVESTMENT BOULEVARD, AS SAID BOULEVARD WAS ESTABLISHED BY THE GRANT
OF EASEMENT FROM EDEN LANDING CORPORATION, A CALIFORNIA CORPORATION, TO THE CITY
OF HAYWARD, A MUNICIPAL CORPORATION, DATED JUNE 20, 1967, AND RECORDED JULY 24,
1967 IN REEL 2005 OF OFFICIAL RECORDS OF ALAMEDA COUNTY AT IMAGE 500 (AZ-71982),
DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE NORTHERLY RIGHT OF WAY LINE OF INVESTMENT
BOULEVARD WITH THE EASTERLY RIGHT OF WAY LINE OF EDEN LANDING ROAD AS SHOWN ON
PARCEL MAP NO. 1035 FILED IN BOOK 79 OF PARCEL MAPS, PAGE 28, IN THE OFFICE OF
THE ALAMEDA COUNTY RECORDER; THENCE ALONG SAID NORTHERLY RIGHT OF WAY LINE OF
INVESTMENT BOULEVARD THE FOLLOWING THREE COURSES: 1) SOUTH 81 DEGREES 53 FEET 26
INCHES EAST 40.130 FEET; 2) SOUTH 48 DEGREES 12 FEET 02 INCHES EAST 61.294 FEET;
3) SOUTH 08 DEGREES 6'34" WEST 40.000 FEET; THENCE LEAVING SAID NORTHERLY RIGHT
OF WAY LINE NORTH 81 DEGREES 53 FEET 26 INCHES WEST 67.124 FEET TO A TANGENT
CURVE TO THE RIGHT; THENCE ALONG SAID TANGENT CURVE TO THE RIGHT HAVING A RADIUS
OF 24.000 FEET THROUGH A CENTRAL ANGLE OF 89 DEGREES 59 FEET 35 INCHES AN ARC
DISTANCE OF 37.696 FEET; THENCE NORTH 08 DEGREES 6 FEET 09 INCHES EAST 50.003
FEET TO THE POINT OF BEGINNING.
ASSESSOR'S PARCEL NO. 416-0085-018-03
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<PAGE> 260
EXHIBIT Q
FORM ESTOPPEL CERTIFICATE
LEASE ESTOPPEL CERTIFICATE
Landlord:
Tenant:
Tenant Trade Name:
Lender: Connecticut General Life Insurance Company
Premises:
Area:______________________________ Sq. Ft. Lease Date:_______________________
The undersigned Landlord and Tenant of the above-referenced lease (the "Lease")
hereby ratify the Lease and certifies to Lender as mortgagee of the Real
Property of which the premises demised under the Lease (the "Premises") is a
part, as follows:
1. That the term of the Lease commenced on ________________, 19__ and
the Tenant is in full and complete possession of the premises demised
under the Lease and has commenced full occupancy and use of the
Premises, such possession having been delivered by the original
landlord and having been accepted by the Tenant.
2. That the Lease calls for monthly rent installments of $_________ to
date and that the Tenant is paying monthly installments of rent of
$_________ which commenced to accrue an the ______________ day of
_____________ 19__.
3. That no advance rental or other payment has been made in connection
with the Lease, except rental for the current month, there is no "free
rent" or other concession under the remaining term of the lease and
the rent has been paid to and including
4. That a security deposit in the amount $________ is being held by
Landlord, which amount is not subject to any set-off or reduction or
to any increase for interest or other credit due to Tenant.
5. That all obligations and conditions under said Lease to be performed
to date by Landlord or Tenant have been satisfied, free of defenses
and set-offs including all construction work in the Premises.
6. That the Lease is a valid lease and in full force and effect and
represents the entire agreement between the parties; that there is no
existing default on the part of the Landlord or the Tenant in any of
the terms and conditions thereof and no event has
July 16, 1997
<PAGE> 1
<PAGE> 2
Exhibit 10.2
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (the "Agreement") is entered into as of the
Effective Date by and among Buyer, Seller and Escrow Agent. For good and
valuable consideration, the receipt and sufficiency of which is acknowledged,
the parties hereto agree as follows:
1. Defined Terms. As used in this Agreement the terms listed
below shall have the following meanings:
EFFECTIVE DATE: September 19, 1997
SELLER: AMRESCO Southern California LLC
c/o AMRESCO Advisors
265 Franklin Street, Suite 1800
Boston, Massachusetts 02110
Attn: Mark E. Bratt and John H. Baxter
Phone: (617) 526-8800
Fax: (617) 526-8810
BUYER: Pacific Gulf Properties Inc.
4220 Von Karman, Second Floor
Newport Beach, California 92660-2002
Attn: Lonnie P. Nadal
Phone: (714) 233-5000
Fax: (714) 233-5033
PROPERTY:
(a) those certain real properties located at 1415 & 1425 S.
Acacia Street, Fullerton, CA (Acacia Business Center), 611 Cerritos, Anaheim,
CA, and 333, 353 and 373 N. Euclid Way, Anaheim, CA (Tower Park), on which is
constructed six (6) multi-tenant industrial and commercial buildings containing
approximately 543,215 rentable square feet of space, plus that certain real
property located at 313 Euclid Way, Anaheim, CA (the "313 Euclid Land") (all of
the foregoing is referred to collectively as the "Land and is more particularly
described in Exhibit A). (The 313 Euclid Land is subject to the CalTrans Taking
(defined below));
(b) all of Seller's right, title and interest in and to all
improvements, fixtures and personal property located on the Land (collectively,
the "Improvements");
(c) all rights, appurtenances, streets, alleys, easements,
rights-of-way in or to all streets or other interests in, on, across, in front
of, abutting, servicing or adjoining the Land, including, without limitation,
all minerals, oil, gas and other hydrocarbon substances, all development rights,
land use entitlements, building permits, licenses, permits and certificates
utilities commitments, air rights, water, water rights, and other appurtenances
used in connection
<PAGE> 3
with the beneficial use and enjoyment of the Land (collectively, the
"Appurtenances", which, together with the Land and Improvements is referred to
herein as the "Real Property");
(d) all lease rights (including, without limitation, the
lessor's interest in and to all tenant leases, rental agreements, subleases and
tenancies, including all amendments, modifications, agreements, records,
substantive correspondence, and other documents affecting in any way a right to
occupy any portion of the Real Property (individually and collectively, the
"Leases"), and Seller's interest in all security deposits and prepaid rent, if
any, under the Leases and any and all guaranties of the Leases, and, to the
extent approved by Buyer pursuant to this Agreement, all "Service Contracts" (as
hereinafter defined) (collectively, the "Assigned Contracts"), and all
intangible personal property now or hereafter owned by Seller and used in the
ownership, use or operation or development of the Real Property and Improvements
including, without limitation, the right to use the names "Tower Park" and
"Acacia Business Park" and any other trade name (exclusive of the names
"Sammis", "Sares", "Regis" and "AMRESCO" and variations thereof) now used in
connection with the Real Property (collectively, the "Intangible Property"), and
together with all tangible personal property owned by Seller located on or in or
used in connection with the Real Property as of the date hereof, such title to
be free of any liens, encumbrances or interests (the "Tangible Property"). The
Intangible Property together with the Tangible Property is collectively the
"Personal Property".
PURCHASE PRICE: Twenty-Four Million Nine Hundred Thousand Dollars
($24,900,000).
DEPOSIT: Two Hundred Fifty Thousand and 00/100 Dollars
($250,000.00), together with interest accrued thereon
(collectively, the "Deposit").
ESCROW AGENT/
TITLE COMPANY: Fidelity National Title Insurance Company
2510 North Redhill Avenue
Santa Ana, CA 92705
Attn: Kurt Taplin
(714) 622-4919
Fax: (714) 477-6813
CALTRANS TAKING: That certain taking of a portion of the Property
initiated by the California Department of
Transportation (the "DOT") currently in process
pursuant to which (i) the DOT has razed the
improvements known as Building Number 4 formerly
located at 313 Euclid Way, Anaheim, CA, (ii) the
DOT has indicated its intention to take for road
widening purposes a portion of the property
located at 313 Euclid Way, Anaheim, CA consisting
of the fee interest in approximately 14,784 square
feet of the property, a utility easement of
approximately 1,063 square feet, a utility
easement of approximately 173 square feet, and a
temporary construction
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<PAGE> 4
easement of approximately 3,804 square feet,
and (iii) Seller has contested the amount of
the award offered by DOT in a case pending
in Orange County Superior Court, Case No.
773080.
2. Agreement to Sell. Purchase and Sale Agreement. Seller
hereby agrees to sell and convey the Property to Buyer, and Buyer hereby agrees
to purchase the Property from Seller, subject to the terms and conditions set
forth in this Agreement.
3. Deposit. Three days after receipt by Buyer of a fully
executed copy of this Agreement, Buyer shall deposit the Deposit with Escrow
Agent, as escrow agent for Buyer and Seller. The Deposit will be held in an
interest-bearing account with interest to follow the Deposit. The Deposit shall
either (a) be applied towards the Purchase Price at "Closing" (as hereinafter
defined); (b) be returned to the Buyer if the Closing fails to occur for any
reason other than the Buyer's default; or (c) be disbursed to Seller as
liquidated damages in the event of Buyer's default pursuant to the provisions of
this paragraph. Escrow Agent agrees to act as escrow agent for Buyer and Seller
hereunder and to administer the Deposit in accordance with the terms of this
Agreement. Escrow Agent may also rely on instructions jointly given by Buyer and
Seller as to the disposition of the Deposit.
IN THE EVENT THE SALE OF THE PROPERTY IS NOT CONSUMMATED BECAUSE OF THE FAILURE
OF ANY CONDITION OR ANY OTHER REASON EXCEPT A DEFAULT UNDER THIS AGREEMENT
SOLELY ON THE PART OF BUYER, THE DEPOSIT SHALL IMMEDIATELY BE RETURNED TO BUYER.
IF SAID SALE IS NOT CONSUMMATED SOLELY BECAUSE OF A DEFAULT UNDER THIS AGREEMENT
ON THE PART OF BUYER, THE DEPOSIT SHALL BE PAID TO AND RETAINED BY SELLER AS
LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE
EVENT OF A DEFAULT BY BUYER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO
DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE
THAT THE DEPOSIT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF SELLER'S DAMAGES AND AS SELLER'S SOLE AND EXCLUSIVE
REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE EVENT OF A DEFAULT UNDER THIS
AGREEMENT ON THE PART OF BUYER. SELLER HEREBY WAIVES ANY AND ALL BENEFITS IT MAY
HAVE UNDER CALIFORNIA CIVIL CODE SECTION 3389.
INITIALS: Seller Buyer [sig]
-------- ---------
4. Closing. The recordation of the deed and the delivery of
other documents and funds contemplated hereby (the "Closing") shall take place,
unless otherwise agreed upon in writing or extended, on October 21, 1997 (the
"Closing Date").
(a) At the Closing, which shall occur pursuant to escrow
instructions mutually satisfactory to Buyer and Seller, Seller shall deliver to
Buyer:
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<PAGE> 5
(i) A deed in the form attached hereto as Exhibit C
(the "Deed"); an assignment of leases in the form
attached hereto as Exhibit D (the "Assignment of
Leases"); an assignment of contracts designated by
Buyer to be assumed pursuant to this Agreement
(the "Assumed Contracts"), warranties, permits,
guaranties and other intangible property, in the
form attached hereto as Exhibit E (the "Assignment
of Contracts and Intangible Property"); a bill of
sale in the form attached hereto as Exhibit F (the
"Bill of Sale"), each duly executed by Seller;
(ii) At Buyer's request, such title affidavits and
related documents as Buyer may reasonably request
or as may be required by the Title Company to
issue the Title Policy to Buyer at Closing in the
form required pursuant to this Agreement;
(iii) Any and all original documents in the possession
of Seller and/or Seller's property management
company relating to the Property, including,
without limitation, all Leases and tenant files,
Assigned Contracts, evidence of termination of any
Service Contracts and other agreements that are
not Assigned Contracts, originals of the building
permits and certificates of occupancy for the
Improvements and all tenant-occupied space
included within the Improvements: all keys to the
Property;
(iv) Tenant Estoppel Certificates from tenants leasing
not less than 75% of the net rentable area of the
Property, dated not earlier than 30 days prior to
Closing, in the form attached hereto as Exhibit G
(as modified by Buyer to address specific
reasonable concerns arising as a result of Buyer's
review of the Leases and as delivered to tenants
by Seller) (the "Required Estoppel Certificates"),
and notices to the Tenants of the occurrence of
the sale of the Property in the form attached
hereto as Exhibit H (the "Notice to Tenants");
(v) a duly executed affidavit that Seller is not a
"foreign person" within the meaning of Section
1445(e)(3) of the Internal Revenue Code of 1986 in
the form attached hereto as Exhibit I together
with a duly executed California Franchise Tax
Board Form 590;
(vi) a closing statement in form and content reasonably
satisfactory to Buyer and Seller (the "Closing
Statement") duly executed by Seller;
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<PAGE> 6
(vii) any other instruments, records or correspondence
specifically called for hereunder to be delivered
by Seller which have not previously been
delivered.
(b) At the Closing, Buyer shall pay the Purchase Price by
federal wire transfer to Escrow Holder. The Deposit shall be credited against
the Purchase Price. Seller may use the Purchase Price or any portion thereof to
clear the title of any or all encumbrances or interests, provided that all
instruments necessary for this purpose are recorded or registered simultaneously
with the Deed, except that where an institutional lender has provided a payoff
letter the actual reconveyance of the lender's deed of trust may be recorded
when received provided that the Seller has provide such bond, indemnity or other
arrangements as shall be necessary to cause the Title Company to insure title to
the Property as vested in Buyer without any exception for such matters. Except
for real estate taxes not yet due or payable, Seller shall cause all mortgages,
deeds of trust and other monetary encumbrances, including without limitation all
mechanics' liens, to be released and reconveyed from the Property on or prior to
the Closing and shall cause the Title Company to insure title to the Property as
vested in Buyer without any exception for such matters.
5. Adjustments.
(a) The following are to be apportioned as of the Closing Date,
with Buyer receiving credit for or being charged with the entire day of the
Closing, as follows:
(i) Rent. Collected rent under the Leases shall be
apportioned as of the Closing Date. With respect to any rent which is
uncollected as of the Closing Date, after Closing Buyer shall pay to Seller any
rent actually collected which is applicable to the period preceding the Closing
Date, provided, however, that all rent collected by Buyer shall be applied first
to all unpaid rent accruing after the Closing Date, and then to unpaid rent
accruing prior to the Closing Date. Buyer shall not be obligated to take any
steps to recover any rent arrearages. Seller shall be permitted to pursue
collection of any rent arrearages applicable to the period prior to the Closing,
provided that Buyer shall not incur any, and Seller shall indemnify Buyer
against all cost, expense or liability in connection therewith, and provided
further that Seller shall not commence any legal or equitable proceedings in the
nature of an unlawful detainer, eviction or other proceeding which seek to
terminate any tenant's right of possession of its leased premises or result in a
lien or encumbrance on such leased premises. If any tenants are required to pay
percentage rent, escalation charges for real estate taxes, operating expenses,
CPI adjustments or other charges of a similar nature ("Additional Rent") and any
Additional Rent is collected by Buyer or Seller which is attributable in whole
or in part to any period during which the respective party did not own the
Property, such party shall promptly pay to the other party the other party's
proportionate share thereof, less a proportionate share of any reasonable
attorney's fees, costs and expenses of collection thereof. All Additional Rent
collected by Buyer shall be applied first to unpaid Additional Rent accruing
after the Closing Date, and then to unpaid Additional Rent accruing prior to the
Closing Date. If tenants pay Additional Rent on an estimated basis, then
promptly following the end of the underlying fiscal period Buyer shall reconcile
actual expenses
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<PAGE> 7
with tenants' estimated payments of Additional Rent and any net debit or credit
to the landlord resulting from such reconciliation shall be apportioned between
Buyer and Seller. Any sums received from the tenant on account of the
termination of the United States Postal Service lease shall be paid to Seller.
(ii) Leasing Costs. Seller is responsible for leasing
commissions, tenant improvement costs, tenant inducements or other leasing costs
(collectively, "Leasing Costs") payable with respect to the current term of the
presently existing leases (the "Present Leases") listed in Exhibit J attached
hereto (the "Lease Schedule"). To the extent any Leasing Costs of Present Leases
are due and payable at or before Closing they shall be paid from Seller's
proceeds. Seller and Buyer shall pay their respective shares of all Leasing
Costs with respect to any renewal, extension or expansion rights under any
Present Leases which are exercised on or after the date hereof and for any such
Leasing Costs relative to Leases amended or executed (with the approval of Buyer
as set out in Section 18 hereof) on or after the date hereof, with such shares
being based on the proportion of rent paid or payable prior to and following the
Closing Date with respect to such renewal, extension, expansion, amended Lease
or new Lease. To the extent any such Leasing Costs are due and payable as of or
after the Closing Date, but are not paid by the responsible party, then such
responsible party shall protect and indemnify the nonresponsible party from and
against any such Leasing Costs. In the event Buyer leases the Vacant Space (as
defined in Section 8) within 365 days following the Closing Date, then Buyer
shall pay to Seller any excess of $300,000 over the Leasing Costs incurred by
Buyer in leasing the Vacant Space.
(iii) Security Deposits. Buyer shall be entitled to a credit
against the Purchase Price for the total sum of all security and other deposits
provided for in the Leases which are retained by Seller and not delivered in
kind to Buyer at Closing, and any interest earned thereon which by law or the
terms of the Leases is required to be refunded to tenants.
(iv) Utility Charges. Seller shall cause all the utility
meters to be read on the Closing Date, and will be responsible for the cost of
all utilities used prior to the Closing Date, except to the extent such utility
charges are billed to and paid by tenants directly. Buyer shall be responsible
for all post-Closing utility charges.
(v) Real Estate Taxes and Special Assessments. Seller shall
pay prior to Closing any and all delinquent real estate taxes and assessments
with respect to the Property. General real estate taxes and assessments payable
for the fiscal year in which the Closing occurs shall be prorated as of the
Closing Date.
(vi) Other Apportionments. Amounts payable under the
Assigned Contracts, annual or periodic permit and/or inspection fees (calculated
on the basis of the period covered), and liability for other Property operation
and maintenance expenses and other recurring costs shall be apportioned as of
the Closing Date.
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(vii) Deferred Maintenance Credit. Seller shall receive a
credit at Closing in the amount of Three Hundred Sixty Thousand Dollars
($360,000) on account of any and all deferred maintenance and/or physical
defects or deficiencies in the Property, including those identified on Exhibit
K.
(b) Preliminary Closing Statement. Seller and Buyer shall
jointly prepare and approve a preliminary Closing Statement on the basis of the
Leases and other sources of income and expenses, and shall deliver such
computation to Escrow Holder prior to Closing.
(c) Post-Closing Reconciliation. If any of the aforesaid
prorations cannot be definitely calculated on the Closing Date, then they shall
be estimated at the Closing and definitely calculated as soon after the Closing
Date as feasible. As soon as the necessary information is available, Buyer shall
conduct a post-Closing audit to determine the accuracy of all prorations made to
the Purchase Price (the "Post-Closing Audit"). Either party owing the other
party a sum of money based on such subsequent proration(s) or the Post-Closing
Audit shall promptly pay said sum to the other party.
6. Closing Costs. Seller shall pay for the Preliminary Report,
the premium for the CLTA portion of the Title Policy, the chain of title search,
any sales taxes, any transfer taxes applicable to the sale and recording fees
for recording of the Deed. In addition, Seller shall be liable for any
prepayment fee or other charge payable in connection with any payoff of monetary
encumbrances. Buyer shall pay for the ALTA portion of the Title Policy, the cost
of any endorsements to the Title Policy, the cost of any survey or surveyor's
certificate, the cost of its due diligence examination of the Real Property, and
the cost of its counsel and other professional advisors. Any escrow fees shall
be paid fifty percent (50%) by Buyer and fifty percent (50%) by Seller. All
other costs and charges of the Escrow not otherwise provided for in this
Agreement shall be allocated in accordance with the closing customs for the
County where the Property is located. Buyer and Seller shall each be responsible
for their respective legal fees to negotiate and execute this Agreement. The
provisions of this Section 6 shall survive the Closing.
7. Reporting Requirements. The Escrow Holder shall comply with
all applicable federal, state and local reporting and withholding requirements
relating to the close of the transactions contemplated herein. Without limiting
the generality of the foregoing, to the extent the transactions contemplated by
this Agreement involve a real estate transaction within the purview of Section
6045 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code"), Escrow Holder shall have sole responsibility to comply with the
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 04-3358056. 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. The provisions of this
Section 7 shall survive the Closing.
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8. Master Lease. If, at Closing, the presently vacant
approximately 107,223 square feet of space in the Tower Park property located at
353 and 373 North Euclid Way, Anaheim, California (the "Vacant Space") has not
been leased pursuant to one or more leases approved by Buyer pursuant to Section
18 hereof, then as a condition precedent to the Buyer's obligation to close as
provided in this Agreement, Brian Malliet, or a nominee thereof reasonably
acceptable to Buyer, as tenant, for the benefit of Buyer, will execute and
deliver to Buyer at Closing (i) a lease in the form of Exhibit L for the Vacant
Space, and (ii) an escrow agreement (the "Escrow Agreement") in the form of
Exhibit M pursuant to which the "Escrowed Funds" (defined below) are to be
released by the Escrow Holder to pay rent under the lease. Provided that such
conditions are satisfied, on the Closing Date, Seller shall instruct the Escrow
Holder to retain an amount equal to Three Hundred Thousand Dollars ($300,000)
from the Purchase Price (the "Escrowed Funds"), which Escrowed Funds shall be
held in Escrow pursuant to the terms of the Escrow Agreement.
9. Title. At the Closing, Seller shall convey to Buyer
marketable and insurable fee simple title to the Real Property and Improvements,
by duly executed and acknowledged grant deed in the form attached hereto as
Exhibit C. A condition to Buyer's obligations under this Agreement shall be the
issuance by the Title Company to Buyer of an ALTA extended coverage Owner's
Policy of Title Insurance (Form B, rev. 10/17/70 with Endorsement Form 1
coverage) in the amount of the Purchase Price, insuring fee simple title to the
Real Property and Improvements in Buyer, subject only to such exceptions as
Buyer shall have approved pursuant to Paragraph 16 below (the "Approved Title
Exceptions") and without boundary, encroachment or survey exceptions, except as
Buyer shall have approved pursuant to Paragraph 16 below (the "Title Policy").
The Title Policy shall provide full coverage against mechanics' and
materialmen's liens (including liens arising out of work done for tenants) and
shall contain, to the extent Buyer has obtained from the Title Company during
the Inspection Period the commitment of the Title Company to issue such
endorsements at Closing, the CLTA 100 (modified for an owner), 101.4, 103.7,
116, 116.1, 116.4, 116.7 and such other special endorsements as Buyer may
reasonably require, including, without limitation, any endorsements required as
a condition to Buyer's approval of any title exceptions pursuant to Paragraph 16
below (the "Endorsements").
10. Possession and Condition. Full possession, subject only to
the rights of tenants under Leases and Approved Title Exceptions shall be
delivered to the Buyer at Closing, the Property to be in the same condition as
it now is, reasonable use and wear thereof excepted. The Property is to be
conveyed "as is" without any representation or warranty except as expressly set
forth herein. Buyer acknowledges that it is a sophisticated real estate
investor, advised by counsel, and that its decision to acquire the Property is
based primarily upon its own investigation of the Property, the Leases and the
market.
11. Seller Defaults. If Seller shall be unable to convey
title, or to deliver possession of the Property, all as herein stipulated, or if
on the Closing Date the Property does not conform with the provisions hereof,
then Seller shall use reasonable efforts to remove all
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defects in title, and to deliver possession as provided herein, and to make the
Property conform to the provisions hereof, as the case may be, and the Closing
Date may be extended by mutual agreement of Seller and Buyer to a date not later
than thirty (30) days after the previously scheduled Closing Date.
If at the expiration of the extended time Seller shall have
failed so to remove any defects in title (other than monetary liens, which are
covered in paragraph 4(b)), deliver possession, or to make the Property conform,
as the case may be, all as herein agreed, then, at Buyer's option, the Deposit
shall be forthwith refunded and all other obligations of all parties hereto
shall cease and this Agreement shall be void and without recourse to the parties
hereto; provided, however, that if Buyer is satisfied with the Property and the
purchase price, then Buyer shall have the election in its sole and absolute
discretion, at either the original or extended Closing Date, to accept such
title as the Seller can deliver to the Property in its then condition and to pay
therefor the Purchase Price without deduction, except that in the event of such
conveyance:
(a) if the Property shall have been damaged by fire or casualty
insured against, then Seller shall, unless Seller has previously restored the
Property to its former condition, pay over or assign to Buyer, at the Closing
Date, all amounts recovered or recoverable on account of such insurance, less
any amounts reasonably expended by Seller for partial restoration, up to an
amount equal to the Purchase Price; and
(b) if any portion of the Property shall have been taken by
exercise of the power of eminent domain (exclusive of the CalTrans Taking),
Seller shall pay over or assign to Buyer at the Closing Date, all awards
recovered or recoverable on account of such taking, less any amounts reasonably
expended by Seller for partial restoration.
12. Insurance. Until the Closing, Seller shall retain the risk
of loss and shall maintain insurance on the Property against fire and hazards
covered by "All-Risk" insurance coverage in an amount at least equal to the
Purchase Price.
13. Broker. Seller and Buyer mutually represent that Voit
Commercial Brokerage (the "Broker") is the only broker with whom they have dealt
in connection with this Agreement. The commission of the Broker shall be paid by
Seller pursuant to a separate agreement. Seller and Buyer each agree to
indemnify and hold the other harmless from and against any liability, loss,
cost, damage, or expense, including court costs and attorneys' fees, resulting
from a breach of the representation and warranty set forth in this Paragraph.
The provisions of this Paragraph shall survive the Closing or termination of
this Agreement.
Buyer acknowledges that Broker is acting as Seller's agent and
that Broker makes no, and Seller has not authorized Broker to make any,
representations or warranties of any kind regarding the condition, permitted
use, or value of the Property.
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14. Seller's Warranties. Seller represents and warrants:
(a) Seller is the fee owner of the Property and has full power
and authority to sell the Property to the Buyer pursuant to the terms of this
Agreement. Seller is a limited liability company, duly organized and validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts; this Agreement and all documents executed by Seller and delivered
to Buyer pursuant to this Agreement are and will be duly authorized, executed
and delivered by Seller, are and will be legal, valid and binding obligations of
Seller enforceable against Seller in accordance with their respective terms, and
do not and will not violate any provision of any written agreement to which
Seller is a party. To Seller's knowledge, this Agreement and all documents
executed by Seller and delivered to Buyer pursuant to this Agreement do not
violate any judicial order to which Seller or the Property is subject. Seller
has obtained all necessary authorizations, approvals and consents to the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
(b) Seller is not a foreign entity subject to withholding under
the Internal Revenue Code.
(c) To Seller's knowledge, all documents delivered by Seller to
Buyer, or made available to Buyer for review, including without limitation the
Due Diligence Materials listed on Exhibit N, are true and complete. To Seller's
knowledge, the books, files and records relating to the Property that were
delivered to or made available to Buyer for Buyer's review do not contain any
deliberate or material omission, exclusive of information relating to the
entities which own the Property, to the relationship between the Seller and its
investors and advisors, and to Seller's financial projections and market
assumptions, whether contained in Seller's internal memoranda, financial
projections, budgets, accounting and tax records or similar proprietary,
confidential or privileged information.
(d) To Seller's knowledge, during the period of Seller's
ownership of the Real Property Seller has not received notice of any (i)
condemnation (exclusive of the CalTrans Taking), environmental, zoning or other
land-use proceedings, instituted or to be instituted, against the Real Property,
(ii) special assessment proceedings affecting the Real Property (other than as
set forth in the Preliminary Report), or (iii) existing or proposed easements,
covenants, restrictions, agreements or other documents which affect title to the
Real Property and which are not disclosed by the Preliminary Report.
(e) To Seller's knowledge, during the period of Seller's
ownership of the Real Property Seller has not received notice of any litigation,
arbitration or reference proceedings pending or threatened against the Real
Property or against Seller with respect to the Real Property.
(f) The most current Lease Schedule provided to Buyer is a
complete and accurate list of all Leases. To Seller's knowledge, except for free
rent allowed to tenants under their respective Leases, there are no leasing
costs or obligations which will remain unpaid at
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Closing, including, without limitation, broker's commissions and costs in
connection with tenant improvements.
(g) To Seller's knowledge, there exists no defaults or events
which, with the giving of notice or passage of time, or both, would constitute a
default by Seller or any of the tenants under any of the Leases. To Seller's
knowledge, there exists no defaults or events which, with the giving of notice
or passage of time, or both, would constitute a default by Seller or any of the
other parties to the Service Contracts under the Service Contracts.
Seller will indemnify, defend with counsel of Buyer's choice,
and hold Buyer its successors and assigns and their respective agents,
employees, officers, directors and partners, and the Real Property harmless from
all expense, loss, damage and claims, including Buyer's attorney's fees, if
necessary, arising out of the breach of any of the Seller's warranties,
covenants and representations, related to the Real Property and arising or
occurring prior to the Closing, or related to or arising from any act, conduct,
omission, contract or commitment of Seller arising or occurring prior to the
Closing, in each case notice of which is delivered to Seller not later than
twelve (12) months following the Time of Closing, provided, however, that in no
event shall Seller's liability hereunder exceed the sum of Five Hundred Thousand
Dollars ($500,000).
As used herein the term "Seller's knowledge" or any similar
phrase shall mean the actual, not constructive or implied, knowledge of John H.
Baxter or Mark E. Bratt after having made reasonable inquiry of current
employee(s) of AMRESCO Advisors, Inc., but without any further obligation on his
part to make any independent investigation of the matters being represented and
warranted, or to make any further inquiry of any other persons, or to search or
examine any files, records, books or correspondence. To the extent any
representation or warranty which is made to "Seller's knowledge" is contravened
by any information contained in the due diligence materials delivered to Buyer
by Seller and Seller's agents during the Inspection Period, then any such
representation or warranty shall be deemed modified by any such information.
15. No Financing Contingency. Buyer's obligations hereunder are
not conditioned upon Buyer's receipt of financing.
16. Due Diligence.
(a) From the Effective Date until the date thirty (30) days
after the Effective Date, but not later than the Closing Date (the "Inspection
Period"), Seller shall allow Buyer, its agents and consultants access to the
Real Property upon not more than 24 hours' advance telephonic notice for the
purposes of conducting surveys, tests, and inspections, provided that they shall
be conducted in such a manner as not to unreasonably interfere with normal
business operations on the Real Property. Such inspections may include, without
implied limitation, inspections and investigations relating to the general
building, the sewage disposal system, the water and water distribution systems,
the heating and air conditioning systems, power distribution, roof, foundation,
soils and the presence of radon, asbestos, hydrocarbons or other
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contaminants. All inspections and investigations shall be conducted at Buyer's
cost. All inspections and investigations shall be conducted by qualified
professionals in accordance with applicable legal requirements. Unless Buyer
acquires the Real Property, Buyer shall promptly restore the Real Property to
its prior condition. Buyer agrees to indemnify and hold Seller harmless from all
liability, loss, cost, damage or expense arising from the conduct of any such
survey, test, or inspection by Buyer or Buyer's agents or contractors. Buyer (i)
shall permit a representative of Seller to accompany Buyer on any interviews
with tenants or governmental agencies; (ii) shall not permit any inspections,
investigations or other due diligence activities to result in any liens,
judgments or other encumbrances being filed against the Real Property and shall,
at its sole cost and expense, promptly discharge of record any such liens or
encumbrances that are so filed or recorded; (iii) shall not permit any borings,
drillings or samplings to be done without the prior written consent of Seller;
(iv) shall maintain, with insurance companies satisfactory to Seller, a policy
of comprehensive general public liability insurance, with a broad form
contractual liability endorsement covering Buyer's indemnification obligations
hereunder, and with a combined single limit of not less than $1,000,000 per
occurrence for bodily injury and property damage, automobile liability coverage
including owned and hired vehicles with a combined single limit of $1,000,000
per occurrence for bodily injury and property damage, and an excess umbrella
liability policy for bodily injury and property damage in the amount of
$5,000,000, insuring Seller and its affiliates as additional insureds
(certificates of which shall be given to Seller prior to Buyer's first entry on
the Real Property), all of which insurance shall be written on an "occurrence
form"; and (v) shall return to Seller all materials with respect to the Real
Property provided by Seller if Buyer fails to acquire the Real Property for any
reason. The provisions of this Section shall survive the termination of this
Agreement.
(b) Seller has previously provided to Buyer or will, on or
before September 16, 1997, provide to Buyer complete copies of the items listed
on Exhibit N attached hereto and made a part hereof.
(c) Buyer may obtain, at its sole cost, and review a
non-invasive Phase I environmental report prepared by a professional
environmental assessment firm reasonably acceptable to Seller.
(d) Buyer may, at its sole and absolute discretion, terminate
its obligations under this Agreement by giving written notice to Seller on or
prior to the end of the Inspection Period. In that case, (i) Escrow Holder is
instructed to return the Deposit, together with any accrued interest, to Buyer
and (ii) except for obligations that survive termination pursuant to the express
terms of this Agreement, neither party shall have any further rights hereunder
against the other. Failure of Buyer to elect to terminate its obligation will
constitute a waiver of the condition by Buyer. If Buyer does not terminate this
Agreement pursuant to this Paragraph, Buyer shall have agreed to accept the Real
Property subject to all of the conditions disclosed in the items listed on
Exhibit N and to the environmental and physical condition of the Real Property;
provided, however, that, notwithstanding any such election to proceed, Seller
must comply with all of Seller's other obligations and duties under this
Agreement.
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17. Conditions Precedent to Closing. The following are
conditions precedent to Buyer's obligations under this Agreement (the "Buyer
Conditions Precedent"). The Buyer Conditions Precedent are intended solely for
the benefit of Buyer and may be waived only by Buyer in writing. In the event
any Buyer Condition Precedent is not satisfied, Buyer may, in its sole and
absolute discretion, terminate this Agreement and all obligations of Buyer and
Seller hereunder (except provisions of this Agreement which recite that they
survive termination) shall terminate and be of no further force or effect.
(a) Buyer's inspection, review and approval, within the
Inspection Period, of all aspects of the Real Property.
(b) The issuance by the Title Company to Buyer of the Title
Policy subject only to the Approved Title Exceptions and including the
Endorsements.
(c) Buyer's receipt, within the Inspection Period, of an
"as-built" ALTA/ACSM survey (the "Survey") of the Real Property, reflecting all
plottable items referred to in the Preliminary Report (defined on Exhibit N),
prepared by a surveyor or civil engineer licensed in the State of California,
complying with the requirements, and containing the certification, set forth in
Exhibit O attached hereto.
(d) All of Seller's representations and warranties contained in
or made pursuant to this Agreement shall have been true and correct when made
and shall be true and correct as of the Closing Date.
(e) Seller shall have fully complied with all of Seller's duties
and obligations contained in this Agreement.
(f) There shall not have first arisen between the end of the
Inspection Period and the Closing Date, any litigation or administrative agency
action or other pending governmental proceeding which, after Closing, would, in
Buyer's reasonable discretion, materially adversely affect the value of the Real
Property or the ability of Buyer to operate the Real Property in the manner in
which it is currently being operated, nor any pending proceedings which would
cause the redesignation or other modification of the zoning classification of,
or of any building or environmental code requirements applicable to, any of the
Real Property. Seller shall notify Buyer promptly upon Seller's having knowledge
of any litigation to which Seller is a party or of any administrative proceeding
specifically relating to the Real Property.
(g) Seller shall have provided Buyer with an updated Lease
Schedule three (3) business days prior to Closing, which updated Lease Schedule
must not indicate any material adverse change from the Lease Schedule last
approved by Buyer. Seller shall specifically identify any changes from the most
recently approved Lease Schedule, and Buyer shall have performed a closing audit
which confirms the Lease Schedule.
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(h) Seller shall terminate prior to the Closing, at no cost or
expense to Buyer, any and all Service Contracts or Other Documents affecting the
Real Property that are not Assigned Contracts.
(i) In Buyer's reasonable determination there shall not have
occurred, between the end of the Inspection Period and the Closing Date, any
material adverse change in or addition to the information or items reviewed and
approved by Buyer during the Inspection Period.
(j) Buyer's review of the Required Estoppel Certificates to
confirm that they contain the documentation and/or information reasonably
requested by Seller, that they have not been modified in any material way, and
that they do not contain any assertion of a material default by the Seller.
Notwithstanding the foregoing, Estoppel Certificates will not be considered
non-conforming if the tenant has revised or deleted Paragraph 12 of the estoppel
certificate (which relates to environmental matters) or if the tenant delivers
an estoppel certificate substantially in the form required by such tenant's
lease; provided, however, that if the tenant revises Paragraph 12 in a manner
that discloses a material breach of the Seller's legal obligations relative to
environmental matters, such revision will be subject to Buyer's review and
approval.
(k) Buyer's receipt of the Master Lease and Escrow Agreement.
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18. Operation of Real Property. Seller shall have the right to
operate, manage, lease and maintain the Real Property utilizing the criteria
Seller used prior to execution of this Agreement. Notwithstanding the foregoing,
provided this Agreement is in full force and effect, Buyer shall have the right
to approve any new leases, lease extensions, lease modifications, sublease
agreements, assignments or contracts affecting the Real Property and Seller
shall not execute any new leases, lease extensions or lease modifications
without the prior written approval of Buyer which shall not be unreasonably
withheld. If Buyer does not respond within five (5) business days of Buyer's
receipt of Seller's request for approval, Buyer shall be deemed to have approved
such lease, lease extension or lease modification. Upon the expiration of the
Inspection Period, Seller shall not waive, compromise or settle any rights of
Seller under any contract or Lease, or agree to return any security deposit, or
modify, amend, or terminate any Assigned Contract, without in each case
obtaining Buyer's prior written consent thereto, which Seller agrees not to
unreasonably withhold, condition or delay. Seller shall terminate prior to the
Closing, at no cost or expense to Buyer, any and all Service Contracts that are
not Assigned Contracts. Between Seller's execution of this Agreement and the
Closing, Seller shall maintain the Real Property in good order, condition and
repair, reasonable wear and tear excepted, shall perform all work required to be
performed by the landlord under the terms of any Lease, and shall make all
repairs, maintenance and replacements of the Improvements and any Tangible
Personal Property and otherwise operate the Real Property in substantially the
same manner as before the making of this Agreement, as if Seller were retaining
the Real Property. In the event of the Closing of the purchase of the Real
Property, Buyer shall not retain the existing employees and management agents of
Seller for the Real Property, and, accordingly, on the Closing, Seller shall (i)
cause all employment and management agreements respecting the Real Property to
be terminated, and deliver evidence of such termination to Buyer, and (ii)
remove all employees and management personnel from the Real Property.
19. Confidentiality. Buyer shall hold in strict confidence, and
shall cause its officers, directors and other personnel, representatives and
agents to hold in strict confidence, and not to disclose to any other party
without the express written consent of Seller, any of the information respecting
the Real Property or provided to Buyer by Seller or any of its agents,
representatives or employees. Notwithstanding the foregoing, Buyer's obligation
to keep such information confidential shall expire upon the occurrence of the
Closing, and during the escrow period Buyer may disclose such information on a
need-to-know basis to its professional advisors who are providing assistance in
connection with the acquisition of the Real Property, and to governmental bodies
in order to comply with applicable law. If Buyer acquires the Real Property from
Seller, Seller shall have the right, subsequent to the Closing, to publicize the
transaction in whatever manner it deems appropriate. The provisions of this
Paragraph 16 shall survive the termination of this Agreement.
20. Authority. The execution of this Agreement and the
performance of each party's obligations hereunder have been approved by any
necessary board of directors, members, general partner or other authorizing body
and is not subject to any further approval or contingency other than as set
forth herein.
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21. Notices. All notices given hereunder shall be in writing and
shall be deemed received when delivered in hand, delivered by recognized
overnight delivery service, received by facsimile, or 72 hours after the same
have been deposited in the United States mail, postage prepaid, certified or
registered mail, return receipt requested, addressed to Buyer and Seller (and in
the case of Seller, with a copy to Lerner & Holmes, 265 Franklin Street, 18th
Floor, Boston, Massachusetts 02110, Fax: (617) 433-9471); and in the case of
Buyer, with a copy to Cox, Castle & Nicholson LLP, 2049 Century Park East, 28th
Floor, Los Angeles, California 90067, Attn: Amy H. Wells, Esq., Fax: (310)
277-7889, at their respective addresses appearing on the first page hereof, or
to such other address or addresses as the parties may from time to time specify
by notice so given.
22. Escrow Instructions. If requested by the Escrow Agent,
Seller and Buyer shall simultaneously upon execution of this Agreement execute
standard form printed escrow instructions of Escrow Agent.
23. Attorney's Fees. If litigation evolves between the parties
concerning this Agreement, the unsuccessful party shall pay to the prevailing
party all costs of suit, including reasonable attorneys' fees.
24. Assignment of this Agreement. Buyer may assign this
Agreement to a nominee so long as (a) Seller has given its express written
approval of such nominee, which consent shall not be unreasonably withheld, (b)
such nominee agrees in writing to assume all of Buyer's obligations hereunder
and (c) Buyer acknowledges in writing that an assignment of this Agreement does
not relieve Buyer of any of its obligations under this Agreement.
25. General. Time is of the essence of this Agreement. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto, their successors, personal representatives, and assigns. No member,
officer, director, shareholder, trustee, or beneficiary of a trust, if any,
under which the Seller or Buyer acts in executing this Agreement shall be
personally liable for any obligation, express or implied, hereunder. Any
liability of Seller hereunder is limited to Seller's interest in the Real
Property. If more than one person are named herein as Buyer, their obligations
are joint and several. This Agreement is to be construed as a California
contract sets forth entire contact between the parties, may not be canceled,
amended, or waived except in writing, is the complete and exclusive expression
of the parties' agreement respecting the Real Property (any and all prior
statements, representations, warranties and/or agreements, if any, being merged
into this Agreement), and no party hereto is relying on any statement,
representation or warranty made by or on behalf of any other party except as
expressly set forth herein. This Agreement may be executed in one or more
counterparts, and signatures transmitted by facsimile shall be treated as
original signatures.
26. WAIVER OF TRIAL BY JURY. BUYER AND SELLER DO EACH HEREBY
KNOWINGLY, VOLUNTARILY, UNCONDITIONALLY, IRREVOCABLY AND INTENTIONALLY FOREVER
WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT
-16-
<PAGE> 18
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR CONNECTED WITH, IN
ANY MANNER WHATSOEVER, THIS AGREEMENT.
27. CalTrans Taking. Buyer and Seller acknowledge that fee and
easement interests in and to a portion of the Real Property are in the process
of being taken by the State of California pursuant to the CalTrans Taking.
Seller has received certain provisional compensation in return for such
interests and reserves the right to seek additional compensation from the State
of California on account of the interests being taken pursuant to the CalTrans
Taking. Buyer releases, relinquishes and transfers to Seller any right, title
and interest it may now or hereafter have to any claim for compensation against
the State of California on account of the interests being taken pursuant to the
CalTrans Taking. Seller will indemnify, defend with counsel of Buyer's choice,
and hold Buyer its successors and assigns and their respective agents,
employees, officers, directors and partners, and the Real Property harmless from
all expense, loss, damage and claims, including Buyer's attorney's fees, if
necessary, arising out of Seller's seeking of additional compensation from the
State of California on account of the interests being taken pursuant to the
CalTrans Taking. Seller makes no claim to, and Buyer shall have the right to
seek (i) any additional compensation which may accrue to the owner of the Real
Property in the event the DOT, on or after the date hereof, seeks to take
additional interests in the Real Property and (ii) compensation for any claim
which may accrue to the Buyer on or after the Closing Date on account of the
DOT's activities on or about the Real Property.
28. Merger. The occurrence of the Closing shall be deemed to be
a full performance and discharge of every agreement and obligation of Buyer and
Seller hereunder, except as to any agreements which by their terms are to be
performed after the Closing.
-17-
<PAGE> 19
Executed under seal as of the Effective Date.
SELLER:
AMRESCO Southern California LLC
By: AMRESCO Investments, Inc.,
managing member
By:______________________________________
Name:___________________________________
Title:__________________________________
BUYER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By: [SIG]
---------------------------------------
EVP
-----------------------------------------
(Print Name and Title)
By: [SIG]
---------------------------------------
S.V.P.
-----------------------------------------
(Print Name and Title)
FIDELITY NATIONAL TITLE INSURANCE COMPANY agrees to act as Escrow Agent in
accordance with the terms of this Agreement.
FIDELITY NATIONAL TITLE INSURANCE
COMPANY
By:______________________________________
Name:___________________________________
Title:__________________________________
-18-
<PAGE> 20
<TABLE>
<S> <C>
EXHIBIT A LEGAL DESCRIPTION
EXHIBIT B Intentionally Omitted
EXHIBIT C GRANT DEED
EXHIBIT D ASSIGNMENT OF LEASES
EXHIBIT E ASSIGNMENT OF SERVICES CONTRACTS, WARRANTIES,
GUARANTIES, PERMITS AND OTHER INTANGIBLE PROPERTY
EXHIBIT F BILL OF SALE
EXHIBIT G ESTOPPEL CERTIFICATE
EXHIBIT H FORM OF NOTICE TO TENANTS
EXHIBIT I TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
EXHIBIT J LEASE SCHEDULE
EXHIBIT K DEFERRED MAINTENANCE OR DEFICIENCIES
EXHIBIT L MASTER LEASE
EXHIBIT M JOINT LEASE ESCROW INSTRUCTIONS
EXHIBIT N DUE DILIGENCE DELIVERIES
EXHIBIT O SURVEY REQUIREMENTS
</TABLE>
-19-
<PAGE> 21
EXHIBIT A
LEGAL DESCRIPTION
<PAGE> 22
FILE NO. 60975-CT
BINDER NO. 27-81-88-13334
SCHEDULE C
THE LAND REFERRED TO IN THIS POLICY IS SITUATED IN THE STATE OF CALIFORNIA,
COUNTY OF ORANGE, AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
That portion of the fractional Northwest quarter of Section 2, Township 4 South
Range 10 West, in the Rancho San Juan Cajon de Santa Ana, as per map recorded in
Book 51 Pages 10 of Miscellaneous Maps, records of Orange County, California,
described as follows:
Parcel 2, as shown on a map filed in Book 137, Pages 7 and 8 of Parcel Maps, in
the office of the County Recorder of Orange County, California.
PARCEL B:
An easement to construct and maintain a railway spur over that portion of Parcel
1, as shown on a map filed in Book 137, Pages 7 and 8 of Parcel Maps, in the
office of the County Recorder of Orange County, California, described as
follows:
Commencing at the Southwesterly corner of said Parcel 1, thence along Westerly
line of said Parcel 1, North 0 degrees 09'04" East 60.56 feet to the true point
of beginning; thence leaving said Westerly line, North 53 degrees 04'22" East
84.24 feet to the beginning of tangent curve, concave Southeasterly, having a
radius of 490.34 feet; thence Northeasterly along said curve through a central
angle of 11 degrees 48'00", an arc distance of 100.98 feet, to a point in the
Westerly line of Parcel 2, having a bearing of North 0 degrees 16'51" East and a
distance of 210.67 feet, a radial line to said point bears North 25 degrees
07'38" West; thence, along said Westerly line, South 0 degrees 16'51" West 26.73
feet to the beginning of a non-tangent curve, concave Southeasterly having a
radius of 466.34 feet, a radial line to said point bears North 26 degrees 32'11"
West; thence Southwesterly along said curve, through a central angle of 10
degrees 23'27", an arc distance of 84.57 feet; thence tangent to said curve,
South 53 degrees 04'22" West 102.37 feet to the Westerly line of said Parcel 1;
thence North 0 degrees 09'04" East 30.08 feet to the true point of beginning.
8
<PAGE> 23
FILE NO. 60976-CT
BINDER NO. (PROFORMA)
SCHEDULE C
THIS LAND REFERRED TO IN THIS POLICY IS SITUATED IN THE STATE OF CALIFORNIA,
COUNTY OF ORANGE, AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
Parcel 1 of Parcel Map No. 88-361, in the City of Anaheim, County of Orange,
State of California, as shown on a map filed in Book 241, Pages 27 and 28 of
Parcel Maps, in the office of the County Recorder of Orange County, California.
PARCEL B:
A non-exclusive reciprocal easement for the benefit of the affected properties
for ingress/egress, surface and subsurface drainage purposes, together with the
right to convey easements for public utility purposes over said easement, in the
City of Anaheim, County of Orange, State of California, over a portion of
Parcels 1 and 2 of Parcel Map No. 88-361, filed in Book 241, Pages 27 & 28, of
Parcel Maps, in the office of the County Recorder of said County, said easement
being more particularly described as follows and as shown on the sketch attached
thereto;
Beginning at the Southeast corner of Parcel 2, thence South 0 degrees 08'43"
East along the Easterly line of said Parcel 1 a distance of 12.50 feet; thence
South 89 degrees 51'17" West, 160.95 feet along a line parallel with and distant
12.50 feet Southerly of the South line of said Parcel 2; thence North 64 degrees
19'40" West 63.55 feet to a point North 15 degrees 26'00" West, 15.00 feet from
the Northeasterly corner of an existing building; thence South 74 degrees 34'00"
West 363.11 feet along a line parallel with and distant 15.00 feet Northerly of
the North wall of said existing building to a point on the Westerly line of said
Parcel 1; thence North 15 degrees 26'18" West along said Westerly line, a
distance of 45.00 feet to the Southwest corner of said Parcel 2; thence North 74
degrees 34'00" East along the Southerly line of said Parcel 2, a distance of
63.11 feet; thence South 15 degrees 26'00" East 20.00 feet; thence North 74
degrees 34'00" East 309.45 feet along a line parallel with and distant 20.00
feet Southerly of the South line of said Parcel 2; thence South 64 degrees
19'40" East 67.19 feet to a point of the Southerly line of said Parcel 2; thence
North 89 degrees 51'17" East, 155.22 feet along a line parallel with and distant
12.50 feet Northerly of the South line of said Parcel 2 to a point on the
Easterly line of said Parcel 2; thence South 0 degrees 08'43" East, 12.50 feet
along said Easterly line to the point of beginning.
EXCEPTING THEREFROM any portion thereof within Parcel A above.
8
<PAGE> 24
FILE NO. 60976-CT
BINDER NO. (PROFORMA)
PARCEL C:
An appurtenant exclusive easement for railroad purposes over that portion of
Parcel 2, as shown on a map filed in Book 241, Pages 27 and 28 of Parcel Maps,
in the office of the County Recorder of said Orange County, California, being a
strip of land, 20.00 feet in width, the centerline of which is described as
follows:
Beginning at the Southwest corner of said Parcel 2; thence North 15 degrees 26'
18" West 83.48 feet along the Westerly line of said Parcel 2 to the true point
of beginning; thence Southeasterly along a non-tangent curve, concave
Northeasterly having a radius of 1040.20 feet and a radial bearing through the
true point of beginning of South 60 degrees 14' 15" West, through a central
angle of 2 degrees 55' 15" an arc distance of 53.02 feet, thence South
32 degrees 41' 00" East 34.00 feet to a point on the Southerly of said Parcel 2
distant thereon North 74 degrees 34' 00" East 24.50 feet from the Southwest
corner of said Parcel 2.
The sideline of said easement shall be prolonged or shortened so as to begin on
the Westerly line of said Parcel 2 and to terminate on the Southerly line of
said Parcel 2.
9
<PAGE> 25
FILE NO. 60983-CT
BINDER NO. 27-81-88-13327
SCHEDULE C
THE LAND REFERRED TO IN THIS POLICY IS SITUATED IN THE STATE OF CALIFORNIA,
COUNTY OF ORANGE, AND IS DESCRIBED AS FOLLOWS:
Parcel 3, in the City of Anaheim, County of Orange, State of California, as
Shown on a Map filed in Book 90, Page 37 of Parcel Maps, in the Office of the
County Recorder of Orange County, California.
8
<PAGE> 26
EXHIBIT B
INTENTIONALLY OMITTED
<PAGE> 27
EXHIBIT C
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Pacific Gulf Properties Inc.
4220 Von Karman, Second Floor
Newport Beach, California 92660-2002
Attention: Mr. Lonnie Nadal
MAIL TAX STATEMENT TO:
Pacific Gulf Properties Inc.
4220 Von Karman, Second Floor
Newport Beach, California 92660-2002
Attention: Mr. Lonnie Nadal
- --------------------------------------------------------------------------------
(Space Above Line for Recorder's Use Only)
GRANT DEED
In accordance with Section 11932 of the California Revenue and Taxation Code,
Grantor has declared the amount of the transfer tax which is due by a separate
statement which is not being recorded with this Grant Deed.
FOR VALUE RECEIVED, AMRESCO Southern California LLC, a Massachusetts
limited liability company, grants to PACIFIC GULF PROPERTIES INC., a Maryland
corporation ("Grantee"), all that certain real property situated in the City of
__________, County of ___________, State of California, described on Schedule 1
attached hereto and by this reference incorporated herein (the "Property"). The
above-described premises are conveyed subject to and with the benefit of all
agreements, restrictions and other matters of record.
IN WITNESS WHEREOF, the undersigned has executed this Grant Deed as
of , 1997.
AMRESCO Southern California LLC
By: AMRESCO Investments, Inc.,
managing member
By:
----------------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE> 28
STATE OF ____________)
) ss.
COUNTY OF ___________)
On ____________, 199__, before me, the undersigned, a Notary Public in and
for said County and State, personally appeared _______________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signatures) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the within instrument.
WITNESS my hand and official seal.
----------------------------------------
Notary Public
STATE OF ____________)
) ss.
COUNTY OF ___________)
On _____________, 199____, before me, the undersigned, a Notary Public in
and for said County and State, personally appeared ___________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signatures) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the within instrument.
WITNESS my hand and official seal.
----------------------------------------
Notary Public
<PAGE> 29
SCHEDULE 1 TO DEED
LEGAL DESCRIPTION
<PAGE> 30
DECLARATION OF DOCUMENTARY TRANSFER TAX
DO NOT RECORD
County Recorder
_______________ 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 AMRESCO Southern California LLC, as Grantor, and
PACIFIC GULF PROPERTIES INC., as Grantee. The property being transferred is
located in the [City of ___________________] [unincorporated area of the] County
of ______________, 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] [less the value of liens and
encumbrances remaining at the time of sale].
I declare under penalty of perjury that the foregoing is true and
correct.
BY:
-------------------------------------
---------------------
(Print Name and Title)
<PAGE> 31
EXHIBIT D
ASSIGNMENT OF LEASES
THIS ASSIGNMENT OF LEASES (this "Assignment") dated as of _______________,
1997, is made by AMRESCO Southern California LLC, a __________________________
("Assignor"), to PACIFIC GULF PROPERTIES INC., a Maryland corporation
("Assignee").
WITNESSETH:
WHEREAS, Assignor is the lessor under certain leases executed with respect
to that certain real property located in the City of ______________, County of
______________, State of California (the "Property") more particularly described
on Schedule 1 attached hereto and incorporated herein by this reference, which
leases are described in Schedule 2 attached hereto and incorporated herein by
this reference (the "Leases").
WHEREAS, Assignor is contemporaneously herewith selling the Property to
Assignee pursuant to that certain Purchase and Sale Agreement and Escrow
Instructions dated as of 1997, by and between Assignor and Assignee (the
"Purchase Agreement").
WHEREAS, Assignor desires to assign its interest in and to the Leases to
Assignee as of the date on which title to the Property is vested in Assignee
(the "Transfer Date").
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, the parties hereby agree as follows:
1. As of the Transfer Date, Assignor hereby assigns to Assignee all of its
right, title and interest in and to the Leases.
2. As of the Transfer Date, Assignee hereby assumes all of Assignor's
right, title and interest in and to the Leases.
3. Assignor hereby agrees to indemnify, defend and hold harmless Assignee
from and against any and all liabilities, claims, demands, damages and costs,
including, without limitation, attorneys' fees and expenses (collectively,
"Liabilities"), arising out of the lessor's obligations under the Leases
described in Schedule 2 and related to the period prior to or on the Transfer
Date or which arise out of the lessor's obligations under said Leases after the
Transfer Date on account of any fact or circumstance occurring or existing on or
prior to the Transfer Date.
4. Assignee hereby agrees to indemnify, defend and hold harmless Assignor
from and against any and all Liabilities arising out of the lessor's obligations
under the Leases described in Schedule 2 and related to the period after the
Transfer Date, except for Liabilities which arise out of the lessor's
obligations under said Leases after the Transfer Date on account of any fact or
circumstance occurring or existing on or prior to the Transfer Date.
<PAGE> 32
5. In the event of any litigation between Assignor and Assignee arising
out of the obligations of the parties under this Assignment or concerning the
meaning or interpretation of any provision contained herein, the losing party
shall pay the prevailing party's costs and expenses in such litigation,
including, without limitation, reasonable attorneys' fees and expenses. In
addition to the foregoing award of attorneys' fees to the prevailing party, the
prevailing party in any lawsuit on this Agreement shall be entitled to its
reasonable attorneys' fees incurred in any post judgment proceedings to collect
or enforce the judgment. This provision is separate and several and shall
survive the merger of this Assignment into any judgment on this Assignment.
6. This Assignment shall be binding on and inure to the benefit of the
Assignee and Assignor and their respective heirs, executors, administrators,
successors-in-interest and assigns.
7. This Assignment shall be governed by and construed in accordance with
the laws of the State of California.
8. Nothing contained herein shall be deemed or construed as relieving
the Assignor or Assignee of their respective duties and obligations under the
Purchase Agreement.
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date
first above written.
ASSIGNOR: AMRESCO Southern California LLC
By: AMRESCO Investments, Inc.,
managing member
By:
-------------------------------------
Name:
-----------------------------
Title:
-----------------------------
ASSIGNEE: PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
-------------------------------------
-------------------------------------------
(Print Name and Title)
By:
-------------------------------------
-------------------------------------------
(Print Name and Title)
<PAGE> 33
Schedule 1
LEGAL DESCRIPTION OF REAL PROPERTY
<PAGE> 34
Schedule 2
DESCRIPTION OF THE LEASES
<PAGE> 35
EXHIBIT E
ASSIGNMENT OF SERVICE CONTRACTS, WARRANTIES
GUARANTIES, PERMITS AND OTHER INTANGIBLE PROPERTY
THIS ASSIGNMENT OF SERVICE CONTRACTS, WARRANTIES, GUARANTIES AND OTHER
INTANGIBLE PROPERTY (this "Assignment") is made as of ____________, 199__, by
AMRESCO Southern California LLC, a _____________ ("Assignor"), to PACIFIC GULF
PROPERTIES INC., a Maryland corporation ("Assignee").
WITNESSETH:
WHEREAS, Assignor is contemporaneously herewith selling pursuant to that
certain Purchase and Sale Agreement and Escrow Instructions dated as of _______,
199___, by and between Assignor and Assignee (the "Purchase Agreement") that
certain real property and improvements thereon located in the City of
_____________, County of _________________, State of California, the real
property of which is more particularly described on Schedule 1 attached hereto
and incorporated herein by this reference. Terms used in this Assignment and not
otherwise defined shall be given the meanings defined in the Purchase Agreement.
WHEREAS, Assignor desires to assign its interest in and to the following
to Assignee as of the date on which title to the Real Property is vested in
Assignee (the "Transfer Date"):
(a) All service contracts described in Schedule 2 attached hereto
and incorporated herein by this reference (the "Contracts");
(b) All "Warranties and Guaranties" (hereinafter defined);
(c) All "Names and Marks" (hereinafter defined);
(d) All "Intangible Property" (hereinafter defined); and
(e) All "Permits" (hereinafter defined).
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. As of the Transfer Date, Assignor hereby assigns and transfers
unto Assignee all of its right, title, claim and interest in, to and
under the (a) Contracts; (b) Warranties and Guarantees; (c) Names and
Marks; (d) Intangible Property and (e) Permits (collectively the
"Assigned Interests").
2. As of the Transfer Date, Assignee hereby assumes all of
Assignor's right, title and interest in and to the Assigned Interests.
<PAGE> 36
3. The following terms shall have the following meanings:
(a) The term "Warranties and Guaranties" as used herein
shall mean and include all warranties and guarantees to the extent assignable,
whether or not written, for all or any portion of the Property, including
without limitation the Improvements and the Tangible Personal Property,
including without limitation construction warranties from contractors and
subcontractors.
(b) The term "Names and Marks" as used herein shall mean
and include all patents, licenses, trademarks, service marks and names used in
connection with the operation of the Property, and all symbols, emblems and
logos used in connection with the ownership or operation of the Property,
whether in black and white or in color, and irrespective of size, and all of
Assignor's right, title and interest in and to all goodwill associated
therewith, including, without limitation the name "__________________".
(c) The term "Intangible Property" as used herein shall
mean and include all intangible property relating to or used in connection with
the Property, as defined in the Purchase Agreement.
(d) The term "Permits" as used herein shall mean and
include all governmental permits and approvals relating to the construction,
operation, use or occupancy of the Property.
4. Assignor hereby agrees to indemnify, defend and hold harmless
Assignee from and against any and all liabilities, claims, demands, damages and
costs, including, without limitation, attorneys' fees and expenses
(collectively, "Liabilities"), arising out of the Assigned Interests and related
to the period prior to or on the Transfer Date or which arise out of the
Assigned Interests after the Transfer Date on account of any fact or
circumstance occurring or existing on or prior to the Transfer Date.
5. Assignee hereby agrees to indemnify, defend and hold harmless
Assignor from and against any and all Liabilities arising out of the Assigned
Interests after the Transfer Date, except for Liabilities which arise out of the
Assigned Interests after the Transfer Date on account of any fact or
circumstance occurring or existing on or prior to the Transfer Date.
6. In the event of any litigation between Assignor and Assignee
arising out of the obligations of the parties under this Assignment or
concerning the meaning or interpretation of any provision contained herein, the
losing party shall pay the prevailing party's costs and expenses in such
litigation, including, without limitation, reasonable attorneys' fees and
expenses. In addition to the foregoing award of attorneys' fees to the
prevailing party, the prevailing party in any lawsuit on this Agreement shall be
entitled to its reasonable attorneys' fees incurred in any post judgment
proceedings to collect or enforce the judgment. This provision is separate and
several and shall survive the merger of this Assignment into any judgment on
this Assignment.
<PAGE> 37
7. 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.
8. This Assignment shall be governed by and construed in
accordance with the laws of the State of California.
9. Nothing contained herein shall be deemed or construed as
relieving the Assignor or Assignee of their respective duties and obligations
under the Purchase Agreement.
IN WITNESS WHEREOF, Assignor has executed this Assignment as of
the date first above written.
ASSIGNOR: AMRESCO Southern California LLC
By: AMRESCO Investments, Inc.,
managing member
By:
-------------------------------------
Name:
-----------------------------
Title:
-----------------------------
ASSIGNEE: PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
-------------------------------------
-------------------------------------
(Print Name and Title)
By:
-------------------------------------
-------------------------------------
(Print Name and Title)
<PAGE> 38
Schedule l
LEGAL DESCRIPTION OF REAL PROPERTY
<PAGE> 39
Schedule 2
DESCRIPTION OF THE CONTRACTS
<PAGE> 40
EXHIBIT F
BILL OF SALE
FOR VALUE RECEIVED, AMRESCO Southern California LLC ("Seller") hereby
sells, conveys and assigns to PACIFIC GULF PROPERTIES INC., a Maryland
corporation, all of Seller's right, title and interest in and to all personal
property located upon or used in the ownership, operation, management,
maintenance and/or repair of that certain real property commonly known as
"___________________________" and described in Schedule 1 attached hereto and
incorporated herein by this reference and the improvements thereon
(collectively, the "Personal Property"), which Personal Property shall include,
without limitation, the items described on Schedule 2 attached hereto and
incorporated herein by this reference.
TO HAVE AND TO HOLD the Personal Property unto the grantee and its
successors and assigns forever.
Seller warrants that it owns good and marketable title to the Personal
Property and will defend title to the Personal Property against all persons
claiming a prior right thereto to the extent that such prior right is alleged to
exist on or before the date of this Bill of Sale. Seller makes no representation
or warranty, express or implied, of merchantablilty, fitness for a particular
purpose, or otherwise except as set forth herein.
All entities constituting Seller shall be jointly and severally liable
for the faithful performance of the terms and conditions hereof to be performed
by Seller.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale on this
____ day of ___________,1997.
AMRESCO Southern California LLC
By: AMRESCO Investments, Inc.,
managing member
By:
-------------------------------------
Name:
-----------------------------
Title:
-----------------------------
1
<PAGE> 41
Schedule 1
LEGAL DESCRIPTION OF THE PROPERTY
2
<PAGE> 42
Schedule 2
DESCRIPTION OF ITEMS INCLUDED IN THE PERSONAL PROPERTY
3
<PAGE> 43
EXHIBIT G
ESTOPPEL CERTIFICATE
Tenant:____________________________________
Date:_________________________________199__
Address:___________________________________
___________________________________
___________________________________
Lease Date:________________________________
Commencement Date:_________________________
Square Footage:____________________________
Expiration Date:___________________________
Term In Years:_____________________________
Current Monthly Payments:$_________________
Base Rental:$______________________________
Operating Expenses:$_______________________
Rent & OE Pmts Are Due:____________________
Tax Pmts Are Due:__________________________
Taxes:$____________________________________
Security Deposit:__________________________
OPTIONS
Check appropriate box below
__ Extension Option
__ Expansion Option
__ Termination Option
__ Purchase Option
and provide details in Paragraph 7 below
__ None
__ Check here if you have rental escalations and
provide details in Paragraph 4 below.
Tenants Proportionate Share Of Taxes And Operating Expenses ___%
================================================================================
THE UNDERSIGNED, AS TENANT UNDER THE LEASE OF THE ABOVE REFERENCED PREMISES
("PREMISES") EXECUTED BY ____________________ ("LANDLORD"), AS LANDLORD, AND
TENANT ON THE ABOVE-REFERENCED LEASE DATE, DOES HEREBY STATE, DECLARE, REPRESENT
AND WARRANT TO LANDLORD, PACIFIC
<PAGE> 44
GULF PROPERTIES INC. ("BUYER"), THEIR ASSIGNEES AND ANY PARTY PROVIDING
FINANCING ON THE PREMISES AS FOLLOWS:
1. Accuracy. That the information contained in this Tenant's Estoppel
Certificate is true and correct as of the date above written.
2. Lease. That the copy of the Lease attached hereto as Schedule 1 is a true and
correct copy of the Lease which is in full force and effect and which has not
been amended, supplemented or changed by letter agreement or otherwise, except
as follows [if none, indicate so by writing "NONE" below]:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. Completion of Premises/No Disputes. Tenant has accepted possession of the
Premises, and all conditions to be satisfied by Landlord under the Lease have
been completed pursuant to the terms of the Lease, including, but not limited
to, completion of construction of the Premises (and all other improvements
required under the Lease) in accordance with applicable plans and specifications
and within the time periods set forth in the Lease; there are no unreimbursed
expenses (except the annual operating expense and tax expense adjustment)
including, but not limited to, capital expenses reimbursements; and Tenant has
no complaints or disputes with Landlord regarding the overall operation,
maintenance or condition of the Premises or the property within which the
Premises is located (the "Property"), or otherwise.
4. Rental Escalation. Base Rental is subject to the following escalation
adjustments (if none, indicate so by writing "NONE" below):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. No Defaults/Claims. Neither Tenant nor, to Tenant's knowledge, Landlord under
the Lease is in default under any terms of the Lease nor has any event occurred
which with the passage of time (after notice, if any, required by the Lease)
would become an event of default under the Lease. Tenant has no claims,
counterclaims, defenses or setoffs against Landlord arising from the Lease, the
Premises or the Property, nor is Tenant entitled to any concession, rebate,
allowance or free rent for any period after this certification.
6. No Advance Payments. No rent has been paid more than one (1) month in advance
by Tenant except for the current month's rent, and no security (other than a
security deposit in the amount of $____________ has been deposited with
Landlord.
<PAGE> 45
7. No Options/Purchase Rights. Tenant has no right of first refusal to purchase
the Property or any interest therein and no right to cancel or terminate the
Lease except as follows [if none, indicate so by writing "NONE" below]:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. No Modification of Lease. From the date of this Estoppel Certificate through
October 21, 1997, no modification or amendment to the Lease, forgiveness of
payment of rent or other amount due under the Lease, grant of extension or
option, or prepayment of rents may be made except upon the written consent
thereto executed by Buyer, which consent may be unreasonably withheld if not
otherwise provided in the Lease.
9. Parking. The number of parking spaces allotted to Tenant under the terms of
the Lease, for the use of its employees, agents, invitees and licensees is
____________; of these spaces, _______________ are reserved for Tenant's
exclusive use.
10. No Sublease/Assignment. Tenant has not entered into any sublease, assignment
or any other agreement transferring any of its interest in the Lease or the
Premises, except as follows:
- --------------------------------------------------------------------------------
11. No Notice. Tenant has not received written notice of any assignment,
hypothecation, mortgage, or pledge of Landlord's interest in the Lease or the
rents or other amounts payable thereunder, except those listed below.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
12. Hazardous Materials. No hazardous or toxic substance (including without
limitation PCB's, petroleum, petroleum products and fractions thereof) has been
used, treated, stored or disposed of on the Premises or Property in violation of
environmental laws by Tenant or, to Tenant's knowledge, any other party. No
underground storage tanks exist or, to Tenant's knowledge, have existed on or
under the Property. Tenant does not have any permits or identification numbers
issued by any environmental or governmental agency with respect to its
operations on the Premises, except those listed below.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
13. Reliance. Tenant recognizes and acknowledges it is making these
representations to Buyer with the intent that Buyer and any assigns of Buyer
will fully rely on Tenant's representations.
14. Binding. The provisions hereof shall be binding upon and inure to the
benefit of the successors, assigns, personal representatives and heirs of Tenant
and Buyer.
<PAGE> 46
EXECUTED BY TENANT, IF TENANT IS A SOLE PROPRIETOR OR A GENERAL PARTNERSHIP, OR
BY AN OFFICER OF TENANT, IF TENANT IS A CORPORATION, ON THE DATE FIRST WRITTEN
ABOVE.
BY:
--------------------------------
a
-------------------------
BY:
-------------------------
NAME:
-------------------------
TITLE:
-------------------------
<PAGE> 47
Schedule 1 to Estoppel Certificate
LEASE
<PAGE> 48
EXHIBIT H
FORM OF NOTICE TO TENANTS
___________, 1997
To:
-------------------------------
-------------------------------
-------------------------------
RE: Notice of Lease Assignment
This letter is to notify you that the property commonly known as the
__________________ ("Property") has this date been sold and ownership
transferred.
In connection with this sale, all of the interest of the lessor under
your lease of space in the Property has been transferred. You are hereby
notified that, from and after the date hereof and until further notice, all
future payments under your lease should be made payable to "________________"
(the "Property Manager") and mailed to the Property Manager, whose address is
______________________. In addition, all questions or other matters regarding
your lease should be directed to the Property Manager at (____) __________.
Also in connection with this sale, if you have paid a security deposit in
connection with your lease, it has been transferred to the Property Manager. The
return of any such security deposit will be conditioned upon and subject to the
terms and conditions of the lease and the legal requirements of the State of
____________. All future inquiries regarding security deposits are to be
directed to the Property Manager.
Thank you for your cooperation.
Very truly yours,
-------------------------------------
-------------------------------------
-------------------------------------
<PAGE> 49
EXHIBIT I
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
To inform PACIFIC GULF PROPERTIES INC., a Maryland corporation
("Transferee"), that withholding of tax under Section 1445 of the Internal
Revenue Code of 1986, as amended ("Code"), will not be required upon the
transfer of certain real property to the Transferee by AMRESCO Southern
California LLC ("Transferor"), the undersigned hereby certifies the following on
behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign partnership,
foreign trust, foreign estate or foreign person (as those terms are defined in
the Code and the Income Tax Regulations promulgated thereunder);
2. The Transferor's U.S. employer or tax (social security)
identification number is;
The Transferor understands that this Certification may be disclosed to
the Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
The Transferor understands that the Transferee is relying on this
Certification in determining whether withholding is required upon said transfer.
The Transferor hereby agrees to indemnify, defend and hold the
Transferee harmless from and against any and all obligations, liabilities,
claims, losses, actions, causes of action, rights, demands, damages, costs and
expenses of every kind, nature or character whatsoever (including, without
limitation, reasonable attorneys' fees and court costs) incurred by the
Transferee as a result of: (i) the Transferor's failure to pay U.S. Federal
income tax which the Transferor is required to pay under applicable U.S. law; or
(ii) any false statement contained herein.
Under penalty of perjury I declare that I have examined this
Certification and to the best of my knowledge and belief it is true and correct
and complete, and I further declare that I have authority to sign this document
on behalf of the Transferor.
Date:____________, 1997
AMRESCO Southern California LLC
By: AMRESCO Investments, Inc.,
managing member
By:
-----------------------------
<PAGE> 50
Name:
-----------------------------
Title:
-----------------------------
<PAGE> 51
EXHIBIT J
LEASE SCHEDULE
<PAGE> 52
EXHIBIT K
DEFERRED MAINTENANCE OR DEFICIENCIES
Matters disclosed by the "Report of 10 Existing Office/Warehouse Properties,
California Trust Portfolio" dated as of January 23, 1997 and prepared by Merritt
& Harris, Inc., 301 E. Glenoaks Blvd., Suite 4, Glendale, CA 91207 (Document
18-611E).
<PAGE> 53
EXHIBIT L
MASTER LEASE
<PAGE> 54
STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE--GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
[LOGO]
1. BASIC PROVISIONS ("BASIC PROVISIONS").
1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
__________ , 1997, is made by and between Pacific Gulf Properties Inc., a
Maryland corporation ("Lessor") and Brian Malliet, an individual ("Lessee"),
(collectively the "Parties," or individually a "Party").
1.2(a) Premises: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 373 and 353 North Euclid Way, located
in the City of Anaheim, County of Orange, State of California, with zip code
________ , as outlined on Exhibit n/a attached hereto ("Premises"). The
"Building" is that certain building containing the premises and generally
described as (describe briefly the nature of the Building): approximately
107,223 total square feet of space.
In addition to Lessee's rights to use and occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive rights to the Common Areas (as
defined in Paragraph 2.7 below) as hereinafter specified, but shall not have
any rights to the roof, exterior walls or utility raceways of the Building or
to any other buildings in the Industrial Center. The premises, the Building,
the Common Areas, the land upon which they are located, along with all other
buildings and improvements thereon, are herein collectively referred to as the
"Industrial Center." (Also see Paragraph 2.)
1.2(b) Parking: ___________ unreserved vehicle parking spaces
("Unreserved Parking Spaces"); and 0 reserved vehicle parking spaces ("Reserved
Parking Spaces"). (Also see Paragraph 2.5.)
1.3 Term: 0 years and 12 months ("Original Term") commencing ________,
1997 ("Commencement Date") and ending __________ ("Expiration Date"). (Also see
Paragraph 3.)
1.4 Early Possession: N/A ("Early Possession Date"). (Also see
Paragraphs 3.2 and 3.3.)
1.5 Base Rent: $________ per month ("Base Rent"), payable on the first
day of each month commencing _________ , 1997 (also see Paragraph 4.)
[ ] If this box is checked, this Lease provides for the Base Rent to be
adjusted per Addendum _________ , attached hereto.
1.6(a) Base Rent Paid Upon Execution: $0 as Base Rent for the period
____________________ .
1.6(b) Lessee's Share of Common Area Operating Expenses: 0 percent ( %)
("Lessee's Share") as determined by
[ ] prorata square footage of the Premises as compared to the total square
footage of the Building or [ ] other criteria as described in
Addendum ____.
1.7 Security Deposit: $0 ("Security Deposit"). (Also see Paragraph 5.)
1.8 Permitted Use: Book Storage ("Permitted Use") (Also see
Paragraph 6.)
1.9 Insuring Party. Lessor is the "Insuring Party." (Also see
Paragraph 8.)
1.10(a) Real Estate Brokers. The following real estate broker(s)
(collectively, the "Brokers") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):
[ ] None represents Lessor exclusively ("Lessor's Broker");
[ ] None represents Lessee exclusively ("Lessee's Broker"); or
[ ] None represents both Lessor and Lessee ("Dual Agency"); (also see
Paragraph 15.)
1.10(b) Payment to Brokers. Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may mutually designate in writing, a fee as set forth in a separate
written agreement between Lessor and said Broker(s) (or in the event there is no
separate written agreement between Lessor and said Broker(s), the sum of $ N/A)
for brokerage services rendered by said Broker(s) in connection with this
transaction.
1.11 Guarantor. The obligations of the Lessee under this Lease are to
be guaranteed by None ("Guarantor"). (Also see Paragraph 37.)
1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 61, and Exhibits n/a through ________, all
of which constitute a part of this Lease.
2. Premises, Parking and Common Areas.
2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental and/or Common Area Operating
Expenses, is an approximation which Lessor and Lessee agree is reasonable and
the rental and Lessee's Share (as defined in Paragraph 1.6(b)) based thereon is
not subject to revision whether or not the actual square footage is more or
less.
2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that it
has been advised by the Brokers) to satisfy itself with respect to the
condition of the Premises (including but not limited to the electrical and fire
sonniuer systems, security, environmental aspects, seismic and earthquake
requirements, and compliance with the Americans with Disabilities Act and
applicable zoning, municipal, county, state and federal laws, ordinances and
regulations and any covenants or restrictions of record (collectively,
"Applicable Laws") and the present and future suitability of the Premises for
Lessee's intended use; (b) that Lessee has made such investigation as it deems
necessary with reference to such matters, is satisfied with reference thereto,
and assumes all responsibility therefore as the same relate to Lessee's
occupancy of the Premises and/or the terms of this Lease; and (c) that neither
Lessor, nor any of Lessor's agents, has made any oral or written
representations or warranties with respect to said matters other than as set
forth in this Lease.
Initials: ___________
(c) American Industrial Real Estate Association 1993
MULTI-TENANT - GROSS
<PAGE> 55
2.6 Vehicle Parking. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than said number.
Said parking spaces shall be used for parking by vehicles no larger than
full-size passenger automobiles or pick-up trucks, herein called "Permitted
Size Vehicles." Vehicles other than Permitted Size Vehicles shall be parked and
loaded or unloaded as directed by Lessor in the Rules and Regulations (as
defined in Paragraph 40) issued by Lessor. (Also see Paragraph 2.9)
(a) Lessee shall not permit or allow any vehicles that belong to or
are controlled by Lessee or Lessee's employees, suppliers, shippers,
customers, contractors or invitees to be loaded, unloaded, or parked in areas
other than those designated by Lessor for such activities.
(b) If Lessee permits or allows any of the prohibited activities
described in this Paragraph 2.6 then Lessor shall have the right, without
notice, in addition to such other rights and remedies that it may have, to
remove or tow away the vehicle involved and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.
(c) Lessor shall at the Commencement Date of this Lease, provide the
parking facilities required by Applicable Law.
2.7 Common Areas - Definition. The term "Common Areas" is defined as all
areas and facilities outside the Premises and within the exterior boundary line
of the Industrial Center and interior utility raceways within the Premises that
are provided and designated by the Lessor from time to time for the general
non-exclusive use of Lessor, Lessee and other lessees of the Industrial Center
and their respective employees, suppliers, shippers, customers, contractors and
invitees including parking areas, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways, driveways and landscaped areas.
2.8 Common Areas - Lessee's Rights. Lessor hereby grants to Lessee, for
the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and regulations
or restrictions governing the use of the Industrial Center. Under no
circumstances shall the right herein granted to use the Common Areas be deemed
to include the right to store any property, temporary or permanently, in the
Common Areas. Any such storage shall be permitted only by the prior written
consent of Lessor or Lessor's designated agent, which consent may be revoked at
any time. In the event that any unauthorized storage shall occur then Lessor
shall have the right, without notice in addition to such other rights and
remedies that it may have, to remove the property and charge the cost to Lessee,
which cost shall be immediately payable upon demand by Lessor.
2.9 Common Areas - Rules and Regulations. Lessor or such other person(s)
as Lessor may appoint shall have the exclusive control and management of the
Common Areas and shall have the right, from time to time, to establish, modify,
amend and enforce reasonable Rules and Regulations with respect thereto in
accordance with Paragraph 40. Lessee agrees to abide by and conform to all
such Rules and Regulations, and to cause its employees, suppliers, shippers,
customers, contractors and invitees to so abide and conform. Lessor shall not
be responsible to Lessee for the non-compliance with said rules and regulations
by other lessees of the Industrial Center.
2.10 Common Areas - Changes. Lessor shall have the right, in Lessor's sole
discretion, from time to time:
(a) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways and utility raceways;
(b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;
(c) To designate other land outside the boundaries of the Industrial
Center to be a part of the Common Areas;
(d) To add additional buildings and improvements to the Common
Areas;
(e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Industrial Center, or any portion
thereof; and
(f) To do and perform such other acts and make such other changes in,
to or with respect to the Common Areas and Industrial Center as Lessor may, in
the exercise of sound business judgment, deem to be appropriate.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term on
this Lease are as specified in Paragraph 1.3.
3.2 Early Possession. If an Early Possession Date is specified in
Paragraph 1.4 and if Lessee totally or partially occupies the Premises after
the Early Possession Date but prior to the Commencement Date, the obligation to
pay Base Rent shall be abated for the period of such early occupancy. All other
terms of this Lease, however, (including but not limited to the obligations to
pay Lessee's Share of Common Area Operating Expenses and to carry the insurance
required by Paragraph 8) shall be in effect during such period. Any such early
possession shall not affect nor advance the Expiration Date of the Original
Term.
3.3 Delay in Possession. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified, by the
Commencement Date, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but in such case, Lessee shall not,
except as otherwise provided herein, be obligated to pay rent or perform any
other obligation of Lessee under the terms of this Lease until Lessor delivers
possession of the Premises to Lessee. If possession of the Premises is not
delivered to Lessee within sixty (60) days after the Commencement Date, Lessee
may, at its option, by notice in writing to Lessor within ten (10) days after
the end of said sixty (60) day period, cancel this Lease, in which event the
parties shall be discharged from all obligations hereunder; provided further,
however, that if such written notice of Lessee is not received by Lessor within
said ten (10) day period, Lessee's right to cancel this Lease hereunder shall
terminate and be of no further force or effect. Except as may be otherwise
provided, and regardless of when the Original Term actually commences, if
possession is not tendered to Lessee when required by this Lease and Lessee does
not terminate this Lease, as aforesaid, the period free of the obligation to pay
Base Rent, if any, that Lessee would otherwise have enjoyed shall run from the
date of delivery of possession and continue for a period equal to the period
during which the Lessee would have otherwise enjoyed under the terms hereof, but
minus any days of delay caused by the acts, changes or omissions of Lessee.
4. Rent.
4.1 Base Rent. Lessee shall pay Base Rent to Lessor in lawful money of
the United States, without offset or deduction, on or before the day on which
it is due under the terms of this Lease. Base Rent for any period during the
term hereof which is for less than one full month shall be prorated based upon
the actual number of days of the month involved. Payment of Base Rent shall be
made to Lessor at its address stated herein or to such other persons or at such
other addresses as Lessor may from time to time designate in writing to Lessee.
<PAGE> 56
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon Lessee's
execution hereof the Security Deposit set forth in Paragraph 1.7 as security for
Lessee's faithful performance of Lessee's obligations under this Lease. If
Lessee fails to pay Base Rent or other rent or changes due hereunder, or
otherwise Defaults under this Lease (as defined in Paragraph 13.1), Lessor may
use, apply or retain all or any portion of said Security Deposit for the payment
of any amount due Lessor or to reimburse or compensate Lessor for any liability,
cost, expense, loss or damage (including attorneys' fees) which Lessor may
suffer or incur by reason thereof. If Lessor uses or accesses all or any portion
of said Security Deposit, Lessee shall within ten (10) days after written
request therefore deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease. Any time the Base Rent
increases during the term of this lease, Lessee shall, upon written request from
Lessor, deposit additional monies with Lessor as an addition to the Security
Deposit so that the total amount of the Security Deposit shall at all times bear
the same proportion to the then current Base Rent as the initial Security
Deposit bears to the initial Base Rent set forth in Paragraph 1.5. Lessor shall
not be required to keep all or any part of the Security Deposit separate from
its general accounts. Lessor shall, at the expiration or earlier termination of
the term hereof and after Lessee has vacated the Premises, return to Lessee (or,
at Lessor's option, to the last assignee, if any, of Lessee's interest herein),
that portion of the Security Deposit not used or applied by Lessor. Unless
otherwise expressly agreed in writing by Lessor, no part of the Security Deposit
shall be considered to be held in trust, to bear interest or other increment for
its use, or to be prepayment for any monies to be paid by Lessee under this
Lease.
6. USE.
6.1 PERMITTED USE.
(a) Lessee shall use and occupy the Premises only for the Permitted
Use set forth in Paragraph 1.8. or any other legal use which is reasonably
comparable thereto, and for no other purpose. Lessee shall not use or permit
the use of the Premises in a manner that is unlawful, creates waste or a
nuisance, or that disturbs owners and/or occupants of, or causes damage to the
Premises or neighboring premises or properties. Lessee agrees that there is no
storage or work activity or any kind allowed outside of Lessee's premises. Any
automotive work is prohibited.
(b) Lessor hereby agrees to not unreasonably withhold or delay its
consent to any written request by Lessee. Lessee's assignees or subtenants, and
by prospective assignees and subtenants of Lessee, its assignees and
subtenants, for a modification of said Permitted Use, so long as the same will
not impair the structural integrity of the improvements on the Premises or in
the Building or the mechanical or electrical systems therein, does not conflict
with uses by other lessees, is not significantly more burdensome to the
Premises or the Building and the improvements thereon, and is otherwise
permissible pursuant to this Paragraph 6. If Lessor elects to withhold such
consent, Lessor shall within five (5) business days after such request give a
written notification of same, which notice shall include an explanation of
Lessor's reasonable objections to the change in use.
6.2 HAZARDOUS SUBSTANCES.
(a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS SUBSTANCE"
as used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity or existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment, or the Premises; (ii) regulated or monitored by any governmental
authority; or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products or by-products thereof. Lessee
shall not engage in any activity in or about the Premises which constitutes a
Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Requirements (as defined in
Paragraph 6.3). "REPORTABLE USE" shall mean (i) the installation or use of any
above or below ground storage tank, (ii) the generation, possession, storage,
use, transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority, and (iii) the presence
in, on or about the Premises with respect to which any Applicable Laws require
that a notice be given to persons entering or occupying the Premises or
neighboring properties. Notwithstanding the foregoing, Lessee may, without
Lessor's prior consent, but upon notice to Lessor and in compliance with all
Applicable Requirements, use any ordinary and customary materials reasonably
required to be used by Lessee in the normal course of the Permitted Use, so long
as such use is not a Reportable Use and does not expose the Premises or
neighboring properties to any meaningful risk of contamination or damage or
expose Lessor to any liability therefor. In addition, Lessor may (but without
any obligation to do so) condition is consent to any Reportable Use of any
Hazardous Substance by Lessee upon Lessee's giving Lessor such additional
assurances as Lessor, in its reasonable discretion, deems necessary to protect
itself, the public, the Premises and the environment against damage,
contamination or injury and/or liability therefor, including but not limited to
the installation (and, at Lessor's option, removal on or before Lease expiration
or earlier termination) of reasonably necessary protective modifications to the
Premises (such as concrete encasements) and/or the deposit of an additional
Security Deposit under Paragraph 5 hereof.
(c) INDEMNIFICATION. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all damages, liabilities,
judgments, costs, claims, liens, expenses, penalties, loss of permits and
attorneys' and consultants' fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee or by anyone under
Lessee's control. Lessee's obligations under this Paragraph 6.2(c) shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Lessee, and the cost
of investigation (including consultants' and attorneys' fees and testing),
removal, remediation, restoration and/or abatement thereof, or of any
contamination therein involved, and shall survive the expiration or earlier
termination of this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances, unless specifically
so agreed by Lessor in writing at the time of such agreement.
6.3 LESSOR'S COMPLIANCE WITH REQUIREMENTS. Lessor shall, at Lessor's sole
cost and expense, fully diligently and in a timely manner, comply with all
"APPLICABLE REQUIREMENTS," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants, relating in any manner to the Premises (including
but not limited to matters pertaining to (i) industrial hygiene, (ii)
environmental conditions on, in, under or about the Premises, including soil
and groundwater conditions, and (iii) the use, generation, manufacture,
production, installation, maintenance, removal, transportation, storage, spill,
or release of any Hazardous Substance), now in effect or which may hereafter
come into effect.
6.4 INSPECTION: COMPLIANCE WITH LAW. Lessor, Lessor's agents, employees,
contractors and designated representatives, and the holders of any mortgages,
deeds of trust or ground leases on the Premises ("LENDERS") shall have the
right to enter the Premises at any time in the case of an emergency, and
otherwise at reasonable times, for the purpose of inspecting the condition of
the Premises.
7. MAINTENANCE, REPAIRS, UTILITY INSTALLATIONS, TRADE FIXTURES AND
ALTERATIONS.
7.1 LESSEE'S OBLIGATIONS.
7.2 LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition). 2.3 (Compliance with Covenants. Restrictions and Building Code),
4.2 (Common Area Operating Expenses), 6 (Use),Option Grants in Last Fiscal Year
7.1 (Lessee's Obligations), 9 (Damage or Destruction) and 14 (Condemnation),
Lessor, shall keep in good order, condition and repair the foundations, exterior
walls, structural condition of interior bearing walls, exterior root, fire
sprinkler and/or standpipe and hose (if located in the Common Areas) or other
automatic fire extinguishing system including fire alarm and/or smoke detection
<PAGE> 57
systems and equipment, fire hydrants, parking lots, walkways, parkways,
driveways, landscaping, fences, signs and utility systems serving the Common
Areas and all parts thereof, as well as providing the services for which there
is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shall not
be obligated to paint the exterior or interior surfaces of exterior walls nor
shall Lessor be obligated to maintain, repair or replace windows, doors or
plate glass of the Premises. Lessee expressly waives the benefit of any statute
now or hereafter in effect which would otherwise afford Lessee the right to
make repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Building, Industrial Center or Common Areas in good order,
condition and repair.
7.3 UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS.
(a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY
INSTALLATIONS" is used in this Lease to refer to all air lines, power panels,
electrical distribution, security, fire protection systems, communications
systems, lighting fixtures, heating, ventilating and air conditioning
equipment, plumbing, and fencing in, on or about the Premises. The term "TRADE
FIXTURES" shall mean Lessee's machinery and equipment which can be removed
without doing material damage to the Premises. The term "ALTERATIONS" shall
mean any modification of the improvements on the Premises which are provided by
Lessor under the terms of this Lease, other than Utility Installations or Trade
Fixtures. "LESSEE-OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined s
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause to be
made any Alterations or Utility Installations in, on, under or about the
Premises without Lessor's prior written consent. Lessee may, however, make
non-structural Utility Installations to the interior of the Premises (excluding
the roof) without Lessor's consent but upon notice to Lessor, so long as they
are not visible from the outside of the Premises, do not involve puncturing,
relocating or removing the roof or any existing walls, or changing or
interfering with the fire sprinkler or fire detection systems and the
cumulative cost thereof during the term of this Lease as extended does not
exceed $2,500.000.
(b) CONSENT. Any Alterations or Utility Installations that
Lessee shall desire to make and which require the consent of the Lessor shall
be presented to Lessor in written form with detailed plans. All consents given
by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific
consent, shall be deemed conditioned upon: (i) Lessee's acquiring all
applicable permits required by governmental authorities; (ii) the furnishing of
copies of such permits together with a copy of the plans and specifications
for the Alteration or Utility Installation to Lessor prior to commencement of
the work thereon; and (iii) the compliance by Lessee with all conditions of
said permits in a prompt and expeditious manner. Any Alterations or Utility
Installations by Lessee during the term of this Lease shall be done in a good
and workmanlike manner, with good and sufficient materials, and be in
compliance with all Applicable Requirements. Lessee shall promptly upon
completion thereof furnish Lessor with as-built plans and specifications
therefor. Lessor may, (but without obligation to do so) condition its consent
to any requested Alteration or Utility Installation that costs $2,500.00 or
more upon Lessee's providing Lessor with a lien and completion bond in an
amount equal to one and one-half times the estimated cost of such Alteration or
Utility Installation.
(c) LIEN PROTECTION. Lessee shall pay when due all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on, or about the Premises, and Lessor have the
right to post notices of non-responsibility in or on the Premises as provided
by law. If Lessee shall, in good faith, contest the validity of any such lien,
claim or demand, then Lessee shall, at its sole expense, defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises. If Lessor shall require, Lessee
shall furnish to Lessor a surety bond satisfactory to Lessor in an amount equal
to one and one-half times the amount of such contested lien claim or demand,
indemnifying Lessor against liability for the same, as required by law for the
holding of the Premises free from the effect of such lien or claim. In
addition, Lessor may required Lessee to pay Lessor's attorneys' fees and costs
in participating in such action if Lessor shall decide it is to its best
interest to do so.
7.4 OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.
(a) OWNERSHIP. Subject to Lessor's right to require their
removal and to cause Lessee to become the owner thereof as hereinafter provided
in this Paragraph 7.4, all Alterations and Utility Installations made to the
Premises by Lessee shall be the property of and owned by Lessee, but considered
a part of the Premises. Lessor may, at any time and at its option, elect in
writing to Lessee to be the owner of all or any specified part of the
Lessee-Owned Alterations and Utility Installations. Unless otherwise instructed
per Subparagraph 7.4(b) hereof, all Lessee-Owned Alterations and Utility
Installations shall, at the expiration or earlier termination of this Lease,
become the property of Lessor and remain upon the Premises and be surrendered
with the Premises by Lessee.
(b) REMOVAL. Unless otherwise agreed in writing, Lessor may
require that any or all Lessee-Owned Alterations or Utility Installations be
removed by the expiration or earlier termination of this Lease, notwithstanding
that their installation may have been consented to by Lessor. Lessor may
require the removal at any time of all or any part of any Alterations or
Utility Installations made without the required consent of Lessor.
(c) SURRENDER/RESTORATION. Lessee shall surrender the Premises
by the end of the last day of the Lease term or any earlier termination date,
clean and free of debris and in good operating order, condition and state of
repair, ordinary wear and tear excepted. Ordinary wear and tear shall not
include any damage or deterioration that would have been prevented by good
maintenance practice or by Lessee performing all of its obligations under this
Lease. Except as otherwise agreed or specified herein, the Premises, as
surrendered, shall include the Alterations and Utility Installations. The
obligation of Lessee shall include the repair of any damage occasioned by the
installation, maintenance or removal of Lessee's Trade Fixtures, furnishings,
equipment, and Lessee-Owned Alterations and Utility Installations, as well as
the removal of any storage tank installed by or for Lessee, and the removal,
replacement, or remediation of any soil, material or ground water contaminated
by Lessee, all as may then be required by Applicable Requirements and/or good
practice. Lessee's Trade Fixtures shall remain the property of Lessee and shall
be removed by Lessee subject to its obligation to repair and restore the
Premises per this Lease.
8. INSURANCE; INDEMNITY.
8.1 PAYMENT OF PREMIUM INCREASES.
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8.7 Indemnity. Except for Lessor's negligence and/or breach of express
warranties, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners
and Lenders, from and against any and all claims, loss of rents and/or
damages, costs, liens, judgments, penalties, loss of permits, attorneys and
consultants' fees, expenses and/or liabilities arising out of, involving, or in
connection with, the occupancy of the Premises by Lessee, the conduct of
Lessee's business, any act, omission or neglect of Lessee, its agents,
contractors, employees or invitees, and out of any Default or Breach by Lessee
in the performance in a timely manner of any obligation on Lessee's part to be
performed under this Lease. The foregoing shall include, but not be limited to,
the defense or pursuit of any claim or any action or proceeding involved
therein, and whether or not (in the case of claims made against Lessor)
litigated and/or reduced to judgment. In case any action or proceeding be
brought against Lessor by reason of any of the foregoing matters, Lessee upon
notice from Lessor shall defend the same at Lessee's expense by counsel
reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in
such defense. Lessor need not have first paid any such claim in order to be so
indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property
of Lessee. Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether said injury or damage results from conditions arising upon
the Premises or upon other portions of the Building of which the Premises are a
part, from other sources of places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not.
Lessor shall not be liable for any damages arising from any act or neglect of
any other lessee of Lessor nor from the failure by Lessor to enforce the
provisions of any other lease in the Industrial Center. Notwithstanding
Lessor's negligence or breach of this Lease, Lessor shall under no
circumstances be liable for injury to Lessee's business or for any loss of
income or profit therefrom.
9. Damage or Destruction.
9.1 Definitions
(a) "Premises Partial Damage" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations,
the repair cost of which damage or destruction is less than fifty percent (50%)
of the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures) immediately prior to such damage or destruction.
(b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations,
the repair cost of which damage or destruction is fifty percent (50%) or more
of the then Replacement Cost of the Premises (excluding Lessee-Owned
Alterations and Utility Installations and Trade Fixtures) immediately prior to
such damage or destruction. In addition, damage or destruction to the Building,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures of any lessees of the Building, the cost of which damage or
destruction is fifty percent (50%) or more of the then Replacement Cost
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures of any lessees of the Building) of the Building shall, at the option
of Lessor, be deemed to be Premises Total Destruction.
(c) "Insured Loss" shall mean damage or destruction to the Premises,
other than Lessee-Owned Alterations and Utility Installations and Trade
Fixtures, which was caused by an event required to be covered by the insurance
described in Paragraph 8.3(a) irrespective of any deductible amounts or
coverage limits involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.
9.2 Premises Partial Damage -- Insured Loss. If Premises Partial Damage
that is an insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect. In the event, however, that there is a
shortage of insurance proceeds and such shortage is due to the fact that, by
reason of the unique nature of the improvements in the Premises, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, Lessor shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full
force and effect. If Lessor does not receive such funds or assurance within
such ten (10) day period, and if Lessor does not so elect to restore and
repair, then this Lease shall terminate sixty (60) days following the
occurrence of the damage or destruction. Unless otherwise agreed, Lessee shall
in no event have any right to reimbursement from Lessor for any funds
contributed by Lessee to repair any such damage or destruction. Premises
Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3
rather than Paragraph 9.2 notwithstanding that there may be some insurance
coverage, but the net proceeds of any such insurance shall be made available
for the repairs if made by either Party.
9.3 Partial Damage -- Uninsured Loss. If Premises Partial Damage that is
not an insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect), Lessor may at Lessor's
option, either (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) give written notice to Lessee within thirty (30) days after
receipt by Lessor of knowledge of the occurrence of such damage of Lessor's
desire to terminate this Lease as of the date sixty (60) days following the
date of such notice. In the event Lessor elects to give such notice of Lessor's
intention to terminate this Lease, Lessee shall have the right within ten (10)
days after the receipt of such notice to give written notice to Lessor of
Lessees commitment to pay for the repair of such damage totally at Lessee's
expense and without reimbursement from Lessor. Lessee shall provide Lessor with
the required funds or satisfactory assurance thereof within thirty (30) days
following such commitment from Lessee. In such event this Lease shall continue
in full force and effect, and Lessor shall proceed to make such repairs as soon
as reasonably possible after the required funds are available. If Lessee does
not give such notice and provide the funds or assurance thereof within the
times specified above, this Lease shall terminate as of the date specified in
Lessor's notice of termination.
9.4 Total Destruction. Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the
damage or destruction is an insured Loss or was caused by a negligent or
willful act of Lessee. In the event, however,, that the damage or destruction
was caused by Lessee, Lessor shall have the right to recover Lessor's damages
from Lessee except as released and waived in Paragraph 9.7.
9.5 Damage Near End of Term. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to repair
exceeds one month's Base Rent, whether or not an insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by (a) exercising such option, and (b) providing Lessor with any shortage
in insurance proceeds for adequate assurance thereof) needed to make the repairs
on or before the earlier of (i) the date which is ten (10) days after Lessee's
receipt of Lessor's written notice purporting to terminate this Lease, or (ii)
the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall, at Lessor's expense repair such damage as soon as reasonably possible and
this Lease shall continue in full force and effect. If Lessee fails to exercise
such option and provide such funds or assurance during such period, then this
Lease shall terminate as of the date set forth in the first sentence of this
Paragraph 9.5.
9.6 Abatement of Rent; Lessee's Remedies.
(a) in the event of (i) Premises Partial Damage or (ii) Hazardous
Substance Condition for which Lessee is not legally responsible, the Base
Rent, Common Area Operating Expenses and other charges, if any, payable by
Lessee hereunder for the period during which such damage or condition, its
repair, remediation or restoration continues, shall be abated in proportion to
the degree to which Lessee's use of the Premises is impaired, but not in
excess of proceeds from insurance required to be carried under Paragraph
8.3(b). Except for abatement of Base Rent, Common Area Operating Expenses and
other charges, if any, as aforesaid, all other obligations of Lessee hereunder
shall be performed by Lessee, and Lessee shall have no claim against Lessor for
any damage suffered by reason of any such damage, destruction, repair,
remediation or restoration.
Initials: ________
<PAGE> 59
(b) If Lessor shall be obligated to repair or restore the Premises under
the provisions of this Paragraph 9 and shall not commence, in a substantial and
meaningful way, the repair or restoration of the Premises within ninety (90)
days after such obligation shall accrue, Lessee may, at any time prior to the
commencement of such repair or restoration, give written notice to Lessor and
to any Lenders of which Lessee has actual notice of Lessee's election to
terminate this Lease on a date not less than sixty (60) days following the
giving of such notice. If Lessee gives such notice to Lessor and such Lenders
and such repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice. If Lessor or a Lender commences the repair or restoration of the
Premises within thirty (30) days after the receipt of such notice, this Lease
shall continue in full force and effect. "Commence" as used in this Paragraph
9.6 shall mean either the unconditional authorization of the preparation of the
required plans, or the beginning of the actual work on the Premises, whichever
occurs first.
9.7 HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance Condition
occurs, Lessor may at Lessor's option either (i) investigate and remediate such
Hazardous Substance Condition, if required, as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) if the estimated cost to investigate and remediate such
condition exceeds twelve (12) times the then monthly Base Rent or $100,000
whichever is greater, give written notice to Lessee within thirty (30) days
after receipt by Lessor of knowledge of the occurrence of such Hazardous
Substance Condition of Lessor's desire to terminate this Lease as of the date
sixty (60) days following the date of such notice. In the event Lessor elects
to give such notice of Lessor's intention to terminate this Lease, Lessee shall
have the right within ten (10) days after the receipt of such notice to give
written notice to Lessor of Lessee's commitment to pay for the excess costs of
(a) investigation and remediation of such Hazardous Substance Condition to the
extent required by Applicable Requirements, over (b) an amount equal to twelve
(12) times the then monthly Base Rent or $100,000, whichever is greater. Lessee
shall provide Lessor with the funds required of Lessee or satisfactory
assurance thereof within thirty (30) days following said commitment by Lessee.
In such event this Lease shall continue in full force and effect, and Lessor
shall proceed to make such investigation and remediation as soon as reasonably
possible after the required funds are available. If Lessee does not give such
notice and provide the required funds or assurance thereof within the time
period specified above, this Lease shall terminate as of the date specified in
Lessor's notice of termination.
9.8 TERMINATION--ADVANCE PAYMENTS. Upon termination of this Lease pursuant
to this Paragraph 9, Lessor shall return to Lessee any advance payment made by
Lessee to Lessor and so much of Lessee's Security Deposit as has not been, or
is not then required to be, used by Lessor under the terms of this Lease.
9.9 WAIVER OF STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
and the Building with respect to the termination of this Lease and hereby waive
the provisions of any present or future statute to the extent it is
inconsistent herewith.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessor shall pay the Real Property Taxes, as
defined in Paragraph 10.2(a), applicable to the Industrial Center.
10.2 LESSEE'S PROPERTY TAXES. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or stored within the Industrial Center.
When possible, Lessee shall cause its Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
If any of Lessee's said property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee's property within ten
(10) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.
11. UTILITIES. Lessor shall pay directly for all utilities and services
supplied to the Premises, including but not limited to electricity, telephone,
security, gas and cleaning of the Premises, together with any taxes thereon.
12. ASSIGNMENT AND SUBLETTING.
<PAGE> 60
13. DEFAULT: BREACH: REMEDIES.
13.1 DEFAULT: BREACH. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350,000 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said default. A "Default" by Lessee is
defined as a failure by Lessee to observe, comply with or perform any of the
terms, covenants, conditions or rules applicable to Lessee under this Lease. A
"Breach" by Lessee is defined as the occurrence of any one or more of the
following Defaults, and, where a grade period for cure after notice is specified
herein, the failure by Lessee to cure such Default prior to the expiration of
the applicable grace period, and shall entitle Lessor to pursue the remedies set
forth in Paragraphs 13.2 and/or 13.3:
(b) Except as expressly otherwise provided in this Lease, the failure
by Lessee to make any payment of Base Rent, as and when due. Reasonable evidence
of surety bond required under this Lease, or the failure of Lessee to fulfill
any obligation under this Lease which endangers or threatens life or property,
where such failure continues for a period of three (3) days following written
notice thereof by or on behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the failure
by Lessee to provide Lessor with reasonable written evidence (in duly executed
original form, if applicable) of (iii) the rescission of an unauthorized
assignment or subletting per Paragraph 12.1, (iv) a Tenancy Statement per
Paragraphs 16 or 37, (v) the subordination or non-subordination of this Lease
per Paragraph 30, (vi) the guaranty of the performance of Lessee's obligations
under this Lease if required under Paragraphs 1.11 and 37, (vii) the execution
of any document requested under Paragraph 42 (easements), or (viii) any other
documentation or information which Lessor may reasonably require of Lessee under
the terms of this lease, where any such failure continues for a period of ten
(10) days following written notice by or on behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or at the rules adopted under Paragraph 40 hereof that
are to be observed, complied with or performed by Lessee, other than those
described in Subparagraphs 13.1(a), (b) or (c), above, where such Default
continues for a period of thirty (30) days after written notice thereof by or on
behalf of Lessor to Lessee: provided, however, that if the nature of Lessee's
Default is such that more than thirty (30) days are reasonably required for its
cure, then it shall not be deemed to be a Breach of this Lease by Lessee if
Lessee commences such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion.
(e) The occurrence of any of the following events: (i) the making by
Lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section 101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of
a trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within thirty (30) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days; provided, however, in the
event that any provision of this Subparagraph 13.1(e) is contrary to any
applicable law, such provision shall be of no force or effect, and shall not
affect the validity of the remaining provisions.
(f) The discovery by Lessor that any financial statement of Lessee or
of any Guarantor, given to Lessor by Lessee or any Guarantor, was materially
false.
(g) If the performance of Lessee's obligations under this Lease is
guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a
bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a
Guarantor's breach of its guaranty obligation on an anticipatory breach basis,
and Lessee's failure, within sixty (60) days following written notice by or on
behalf of Lessor to Lessee of any such event, to provide Lessor with written
alternative assurances of security, which, when coupled with the then existing
resources of Lessees of any such event, to provide Lessor with written
alternative assurances of security, which, when coupled with the then existing
resources of Lessee, equals or exceeds the combined financial resources of
Lessee and the Guarantors that existed at the time of execution of this Lease.
13.2 REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefor. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its own
option, may require all future payments to be made under this Lease by Lessee to
be made only by cashier's check. In the event of a Breach of this Lease by
Lessee (as defined in Paragraph 13.1), with or without further notice or demand,
and without limiting Lessor in the exercise of any right or remedy which Lessor
may have by reason of such Breach, Lessor may:
(a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the worth at the time
or the award of the unpaid rent which had been earned at the time of
termination: (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting,, including necessary
renovation and alteration of the Premises, reasonable attorneys fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco or the Federal Reserve Bank District
in which the Premises are located at the time of award plus one percent (1%).
Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach of
this Lease shall not waive Lessor's right to recover damages under this
Paragraph 13.2. If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such pro-
<PAGE> 61
ceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit for such
rent and/or damages. If a notice and grace period required under Subparagraph
13.1(b), (c) or (d) was not previously given, a notice to pay rent or quit, or
to perform or quit, as the case may be, given to Lessee under any statute
authorizing the forfeiture of leases for unlawful detainer shall also constitute
the applicable notice for grace period purposes required by Subparagraph
13.1(b), (c) or (d). In such case, the applicable grace period under the
unlawful detainer statute shall run concurrently after the one such statutory
notice, and the failure of Lessee to cure the Default within the greater of the
two (2) such grace periods shall constitute both an unlawful detainer and a
Breach of this Lease entitling Lessor to the remedies provided for in this Lease
and/or by said statute.
(b) Continue the Lease and Lessee's right to possession in effect (in
California under California Civil Code Section 1951.4) after Lessee's Breach and
recover the rent as it becomes due, provided Lessee has the right to sublet or
assign, subject only to reasonable limitations. Lessor and Lessee agree that the
limitations on assignment and subletting in this Lease are reasonable. Acts of
maintenance or preservation, efforts to relet the Premises, or the appointment
of a receiver to protect the Lessor's interest under this Lease, shall not
constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to Lessor under
the laws or judicial decisions of the state wherein the Premises are located.
(d) The expiration or termination of this Lease and/or the termination
of Lessee's right to possession shall not relieve Lessee from liability under
any indemnity provisions of this Lease as to matters occurring or accruing
during the term hereof or by reason of Lessee's occupancy of the Premises.
13.3 INDUCEMENT RECAPTURE IN EVENT OF BREACH. Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this lease, all of which
concessions are hereinafter referred to as "INDUCEMENT PROVISIONS" shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach (as defined in Paragraph 13.1) of this Lease by Lessee, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor, as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph 13.3 shall not be deemed a waiver by Lessor of the provisions of this
Paragraph 13.3 unless specifically so stated in writing by Lessor at the time of
such acceptance.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon Lessor by the
terms of any ground lease, mortgage or deed of trust covering the Premises.
Accordingly, if any installment of rent or other sum due from Lessee shall not
be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to six percent (6%) of such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of late payment by
Lessee. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for three (3) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.
13.5 BREACH BY LESSOR. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation required
to be performed by Lessor. For purposes of this Paragraph 13.5, a reasonable
time shall in no event be less than thirty (30) days after receipt by Lessor,
and by any Lender(s) whose name and address shall have been furnished to Lessee
in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed: provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after such
notice are reasonably required for its performance, then Lessor shall not be in
breach of this Lease if performance is commenced within such thirty (30) day
period and thereafter diligently pursued to completion.
14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises, or more than twenty-five percent (25%) of the portion of
the Common Areas designated for Lessee's parking, is taken by condemnation,
Lessee may, at Lessee's option, to be exercised in writing within ten (10) days
after Lessor shall have given Lessee written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the Premises. No reduction of Base
Rent shall occur if the condemnation does not apply to any portion of the
Premises. Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of such
power shall be the property of Lessor, whether such award shall be made as
compensation for diminution of value of the leasehold or for the taking of the
fee, or as severance damages: provided, however, that Lessee shall be entitled
to any compensation, separately awarded to Lessee for Lessee's relocation
expenses and/or loss of Lessee's Trade Fixtures. In the event that this Lease is
not terminated by reason of such condemnation, Lessor shall to the extent of its
net severance damages received, over and above Lessee's Share of the legal and
other expenses incurred by Lessor in the condemnation matter, repair any damage
to the Premises caused by such condemnation authority. Lessee shall be
responsible for the payment of any amount in excess of such net severance
damages required to complete such repair.
15. BROKERS' FEES.
15.1 PROCURING CAUSE. The Broker(s) named in Paragraph 1.10 is/are the
procuring cause of this Lease.
15.2 ADDITIONAL TERMS. Unless Lessee and Broker(s) have otherwise agreed in
writing, Lessor agrees that: (a) if Lessee exercises any Option (as defined in
Paragraph 39.1) granted under this Lease or any Option subsequently granted, or
(b) if Lessee acquires any rights to the Premises or other premises in which
Lessor has an interest, or (c) if Lessee remains in possession of the Premises
with the consent of Lessor after the expiration of the term of this Lease after
having failed to exercise an Option, or (d) if said Brokers are the procuring
cause of any other lease or sale entered into between the Parties pertaining to
the Premises and/or any adjacent property in which Lessor has an interest, or
(e) if Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then as to any of said transactions, Lessor shall pay
said Broker(s) a fee in accordance with the schedule of said Broker(s) in effect
at the time of the execution of this Lease.
15.3 ASSUMPTION OF OBLIGATIONS. Any buyer or transferee of Lessor's
interest in this Lease, whether such transfer is by agreement or by operation of
law, shall be deemed to have assumed Lessor's obligation under this Paragraph
15. Each Broker shall be an intended third party beneficiary of the provisions
of Paragraph 1.10 and of this Paragraph 15 to the extent of its interest in any
commission arising from this Lease and may enforce that right directly against
Lessor and its successors.
15.4 REPRESENTATIONS AND WARRANTIES. Lessee and Lessor each represent and
warrant to the other that it has had no dealings with any person, firm, broker
or finder other than as named in Paragraph 1.10(a) in connection with the
negotiation of this lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm or entity other
than said named Broker(s) is entitled to any commission or finder's fee in
connection with said transaction. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or actions of
the Indemnifying Party, including any costs, expenses, and/or attorneys' fees
reasonably incurred with respect thereto.
16. TENANCY AND FINANCIAL STATEMENTS.
16.1 TENANCY STATEMENT. Each Party (as "RESPONDING PARTY") shall within ten
(10) days after written notice from the other Party (the "REQUESTING PARTY")
execute, acknowledge and deliver to the Requesting Party a statement in
writing in a form similar to the then most current "TENANCY STATEMENT" form
published by the American Industrial Real Estate Association, plus such
additional information, confirmation and/or statements as may be reasonably
requested by the Requesting Party.
16.2 FINANCIAL STATEMENT. If Lessor desires to finance, refinance, or sell
the Premises or the Building, or any part thereof, Lessee and all Guarantors
shall deliver to any potential lender or purchaser designated by Lessor such
financial statements of Lessee and such Guarantors as may be reasonably required
by such lender or purchaser, including but not limited to Lessee's financial
statements for the past three (3) years. All such financial statements shall be
received by Lessor and such lender or purchaser in confidence and shall be used
only for the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises. In the event
of a transfer of Lessor's title or interest in the Premises or in this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15.3, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined.
18. SEVERABILITY. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor
hereunder, other than late charges, not received by lessor within ten (10) days
following the date on which it was due, shall bear interest from the date due at
the prime rate charged by the largest state chartered bank in the state in which
the Premises are located plus four percent (4%) per annum, but not exceeding the
maximum rate allowed by law, in addition to the potential late charge provided
for in Paragraph 13.4.
20. TIME OF ESSENCE. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
21. RENT DEFINED. All monetary obligations of Lessee to Lessor under the terms
of this Lease are deemed to be rent.
22. NO PRIOR OR OTHER AGREEMENTS: BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying upon, its own investigation as to the nature, quality, character
and financial responsibility of the other Party to this Lease and as to the
nature, quality and character of the Premises. Brokers have no responsibility
with respect thereto or with respect to any default or breach hereof by either
Party. Each Broker shall be an intended third party beneficiary of the
provisions of this Paragraph 22.
Initials: _____
MULTI-TENANT--GROSS
(c) American Industrial Real Estate Association 1993
8
<PAGE> 62
23. NOTICES.
23.1 NOTICE REQUIREMENTS. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by messenger or
courier service) or may be sent by regular, certified or registered mail or
U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission during normal business hours, and shall be deemed sufficiently
given if served in a manner specified in this Paragraph 23. The addresses noted
adjacent to a Party's signature on this Lease shall be that Party's address for
delivery or mailing of notice purposes. Either Party may by written notice to
the other specify a different address for notice purposes, except that upon
Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for the purpose of mailing or delivering notices to Lessee. A
copy of all notices required or permitted to be given to Lessor hereunder shall
be concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate by written notice to Lessee.
23.2 DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown
on the receipt card, or if no delivery date is shown, the postmark thereon. If
sent by regular mail, the notice shall be deemed given forty-eight (48) hours
after the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantees next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the United States Postal Service or courier. If any
notice is transmitted by facsimile transmission or similar means, the same
shall be deemed served or delivered upon telephone or facsimile confirmation
or receipt of the transmission thereof, provided a copy is also delivered via
delivery or mail. If notice is received on a Saturday or a Sunday or a legal
holiday, it shall be deemed received on the next business day.
24. WAIVERS. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any such act shall not be deemed to render
unnecessary the obtaining of Lessor's consent to, or approval of, any
subsequent or similar act by Lessee, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such
consent. Regardless of Lessor's knowledge of a Default or Breach at the time of
accepting rent, the acceptance of rent by Lessor shall not be a waiver of any
Default or Breach by Lessee of any provision hereof. Any payment given Lessor
by Lessee may be accepted by Lessor on account of moneys or damages due Lessor,
notwithstanding any qualifying statements or conditions made by Lessee in
connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor
at or before the time of deposit of such payment.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.
26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to two hundred percent
(200%) of the Base Rent applicable during the month immediately preceding such
expiration or earlier termination. Nothing contained herein shall be construed
as a consent by Lessor to any holding over by Lessee. If Lessee holds over such
holding over shall be construed to be a month-to-month tenancy and Lessee shall
give Lessor thirty (30) days written notice.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
at law or in equity.
28. COVENANTS AND CONDITIONS. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
29. BINDING EFFECT: CHOICE OF LAW. This Lease shall be binding upon the
Parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.
30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.
30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Lessee agrees that the Lenders holding any such Security Device shall have no
duty, liability or obligation to perform any of the obligations of Lessor under
this Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default
pursuant to Paragraph 13.5. If any Lender shall elect to have this Lease and/or
any Option granted hereby superior to the lien of its Security Device and shall
give written notice thereof to Lessee, this Lease and such Options shall be
deemed prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof.
30.2 ATTORNMENT. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership, (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor, or (iii) be bound by
prepayment of more than one month's rent.
30.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor after the execution of this lease, Lessee's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from
the Lender that Lessee's possession and this Lease, including any options to
extend the term hereof, will not be disturbed so long as Lessee is not in
Breach hereof and attorns to the record owner of the Premises.
30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents; provided, however,
that upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or non-disturbance agreement
as is provided for herein.
31. ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereafter defined) in any such proceeding, action, or appeal thereon, shall be
entitled to reasonable attorneys' fees. Such fees may be awarded in the same
suit or recovered in a separate suit, whether or not such action or proceeding
is pursued to decision or judgment. The term "Prevailing Party" shall include,
without limitation, a Party or Broker who substantially obtains or defeats the
relief sought, as the case may be, whether by compromise, settlement, judgment,
or the abandonment by the other Party or Broker of its claim or defense. The
attorneys' fee award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse all attorneys' fees
reasonably incurred. Lessor shall be entitled to attorneys fees, costs and
expenses incurred in preparation and service of notices of Default and
consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting Breach,
Broker(s) shall be intended third party beneficiaries of this Paragraph 31.
32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the
same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
Building, as Lessor may reasonably deem necessary. Lessor may at any time place
on or about the Premises or Building any ordinary "For Sale" signs and Lessor
may at any time during the last one hundred eighty (180) days of the term
hereof place on or about the Premises any ordinary "For Lease" signs. All such
activities of Lessor shall be without abatement of rent or liability to Lessee.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first
having obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. SIGNS. Lessee shall not place any sign upon the exterior of the Premises
or the Building, except that Lessee may, with Lessor's prior written consent,
install (but not on the roof) such signs as are reasonably required to
advertise Lessee's own business so long as such signs are in a location
designated by Lessor and comply with Applicable Requirements and the signage
criteria established for the Industrial Center by Lessor. The installation of
any sign on the Premises by or for Lessee shall be subject to the provisions of
Paragraph 7 (Maintenance, Repairs, Utility Installations, Trade Fixtures and
Alterations). Unless otherwise expressly agreed herein, Lessor reserves all
rights to the use of the roof of the Building, and the right to install
advertising signs on the Building, including the roof, which do not
unreasonably interfere with the conduct of Lessee's business; Lessor shall be
entitled to all revenues from such advertising signs.
35. TERMINATION: MERGER. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for
Breach by Lessee, shall automatically terminate any sublease or lessor estate
in the Premises: provided, however, Lessor shall, in the event of any such
surrender, termination or cancellation, have the option to continue any one or
all of any existing subtenancies. Lessor's failure within ten (10) days
following any such event to make a written election to the contrary by written
notice to the holder of any such lesser interest, shall constitute Lessor's
election to have such event constitute the termination of such interest.
36. CONSENTS.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to
an act by or for the other Party, such consent shall not be unreasonably
withheld or delayed. Lessor's actual reasonable costs and expenses (including
but not limited to architects', attorneys', engineers' and other consultants'
fees) incurred in the consideration of, or response to, a request by Lessee for
any Lessor consent pertaining to this Lease or the Premises, including but not
limited to consents to an assignment a subletting or the presence or use of a
Hazardous Substance, shall be paid by Lessee to Lessor upon receipt of an
invoice and supporting documentation therefor. In addition to the deposit
described in Paragraph 12.2(e), Lessor may, as a condition to considering any
such request by Lessee, require that Lessee deposit with Lessor an amount of
money (in addition to the Security Deposit held under Paragraph 5) reasonably
calculated by Lessor to represent the cost Lessor will incur in considering and
responding to Lessee's request. Any unused portion of said deposit shall be
refunded to Lessee without interest. Lessor's consent to any act, assignment of
this Lease or subletting of the Premises by Lessee shall not constitute an
acknowledgment that no Default or Breach by Lessee of this Lease exists, nor
shall such consent be deemed a waiver of any then existing Default or Breach,
except as may be otherwise specifically stated in writing by Lessor at the time
of such consent.
(b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the impositions by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.
Initials:_____
MULTI-TENANT - GROSS
(C)American Industrial Real Estate Association 1993
<PAGE> 63
38. Quiet Possession. Upon payment by Lessee of the rent for the Premises and
the performance of all of the covenants, conditions and provisions on Lessee's
part to be observed and performed under this Lease, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option, notwithstanding any
provision in the grant of Option to the contrary (i) during the period
commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed Default is cured, or (ii) during the period of
time any monetary obligation due Lessor from Lessee is unpaid (without regard
to whether notice thereof is given Lessee), or (iii) during the time Lessee is
in Breach of this Lease, or (iv) in the event that Lessor has given to Lessee
three (3) or more notices of separate Defaults under Paragraph 13.1 during the
twelve (12) month period immediately proceeding the exercises of the Option,
whether or not the Defaults are cured.
(b) The period of time within which an Option may be exercised shall not
be extended or enlarged by reason of Lessees inability to exercise an Option
because of the provisions of Paragraph 39.4(a)
(c) All rights of Lessee under the provisions of an Option shall terminate
and be of no further force or effect, notwithstanding Lessees due and timely
exercise of the Option. If, after such exercise and during the term of this
Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee for a
period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three (3) or more notices of separate Defaults under Paragraph 13.1
during any twelve (12) month period, whether or not the Defaults are cured, or
(iii) if Lessee commits a Breach of this Lease.
40. Rules and Regulations. Lessee agrees that it will abide by, and keep and
observe all reasonable rules and regulations ("Rules and Regulations") which
Lessor may make from time to time for the management, safety, care, and
cleanliness of the grounds, the parking and unloading of vehicles and the
preservation of good order, as well as for the convenience of other occupants
or tenants of the Building and the Industrial Center and their invitees.
41. Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
42. Reservations. Lessor reserves the right, from time to time, to grant,
without the consent or joinder of Lessee, such easements, rights of way,
utility raceways, and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights
of way, utility raceways, dedications, maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement
rights, dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay under the
provisions of this Lease.
44. Authority. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.
45. Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
46. Offer. Preparation of this Lease by either Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not be
deemed an offer to lease. This Lease is not intended to be binding until
executed and delivered by all Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the
property of which the Premises are a part.
48. Multiple Parties. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.
<PAGE> 64
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY
REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH
RESPECT TO THE PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR
ATTORNEY'S REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO
EVALUATE THE CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF
ASBESTOS, UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO
REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL
ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKERS OR THEIR CONTRACTORS,
AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE
PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE
LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS IN
A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE
PROPERTY IS LOCATED SHOULD BE CONSULTED.
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.
Executed at: Newport Beach, California Executed at:
------------------------- -------------------------
on: on: , 1997
---------------------------------- ----------------------------------
By LESSOR: By LESSEE:
Pacific Gulf Properties Inc. Brian Malliet
- -------------------------------------- --------------------------------------
a Maryland Corporation
- -------------------------------------- --------------------------------------
By: By:
----------------------------------- ----------------------------------
Name Printed: Name Printed:
------------------------ ------------------------
Title: Title:
------------------------------- -------------------------------
By: By:
---------------------------------- ----------------------------------
Name Printed: Name Printed:
------------------------ ------------------------
Title: Title:
------------------------------- -------------------------------
Address: Pacific Gulf Properties Inc. Address:
4220 Von Karman, 2nd Fl. -----------------------------
Newport Beach, CA 92660-2002
-------------------------------------
Telephone: ( ) Telephone: ( )
--------------------- ---------------------
Facsimile: ( ) Facsimile: ( )
--------------------- ---------------------
BROKER: BROKER:
Executed at: Executed at:
------------------------- -------------------------
on: on:
---------------------------------- ----------------------------------
By: By:
---------------------------------- ----------------------------------
Name Printed: Name Printed:
------------------------ ------------------------
Title: Title:
------------------------------- -------------------------------
Address: Address:
----------------------------- -----------------------------
- -------------------------------------- --------------------------------------
Telephone: ( ) Telephone: ( )
--------------------- ---------------------
Facsimile: ( ) Facsimile: ( )
--------------------- ---------------------
NOTE: These terms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are
utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION, 345 So. Figueroa St., M-1, Los Angeles, CA 90071.
(213) 687-8777.
Initials:
-------
MULTI-TENANT -- GROSS
(C) American Industrial Real Estate Association 1993
<PAGE> 65
ADDENDUM to lease dated______________, 1997 by and between
Pacific Gulf Properties Inc., a Maryland Corporation, as "Lessor", and Brian
Malliet, as "Lessee", on the premises known as 373 and 353 North Euclid Way,
Anaheim, California.
The above referenced Lease is hereby amended as follows:
49. TRASH DISPOSAL: Lessee agrees that all trash and debris are
to be deposited in receptacles provided by Lessee at Lessee's expense within the
premises parking lot and all receptacles shall remain inside enclosures. If it
is determined that Lessee is regularly disposing of an unusually large amount of
refuse Lessee shall, within ten (10) days receipt of written notice from Lessor
and at Lessee's sole expense, provide for an additional trash bin and pickup
service at his or her leased premises. Lessor reserves the right to stipulate
location of storage for Lessee's additional receptacle. Lessee agrees not to
store any items or leave any debris outside premises in any of the common area,
including the parking lot and in the event Lessor must remove items or debris,
Lessor shall charge the cost of removing said items or debris to Lessee, and
Lessee shall pay same upon demand or be in default of this Lease as defined in
Paragraph 13 of this Lease.
50. GOVERNMENTAL AUTHORITY COMPLIANCE: Lessee shall, at Lessee's
expense, comply promptly with all governmental authorities and all applicable
statutes, ordinances, rules, regulations, orders, covenants and restrictions of
record, and requirements in effect during the term or any part of the term
hereof, regulating the use by Lessee of the Premises, including compliance with
the Uniform Fire Code. Lessee shall have the sole responsibility to secure any
and all governmental approvals relating to Lessee's use of the premises,
including but not necessarily limited to an Occupancy Permit issued by the City
of Industry. Lessee shall secure such approvals promptly and hold Lessor
harmless from any costs and fees incurred in the process, and from any fines or
penalties arising from Lessee's nonconformance with applicable law or
regulations.
51. EFFECT OF DEFAULT ON FREE OR ABATED RENT: In the event of
Lessee's default under Paragraph 13 of this Lease, and said default by Lessee is
not cured by Lessee, any previous free rent, abated rent, or early possession
free occupancy, shall be due and payable to Lessor immediately.
52. WAIVER OF JURY TRIAL: The parties hereto shall and they
hereby do waive trial by jury in any action, proceeding or counterclaim brought
by either of the parties hereto against the other on any matters whatsoever
arising out of or in any way related to this Lease, the relationship of Lessor
and Lessee, Lessee's use or occupancy of the Premises, the Building or the Park,
and/or any claim of injury, loss or damage.
53. COUNTERCLAIMS: In the event Lessor commences any proceedings
for nonpayment of rent, or any other sums or amounts due hereunder, Lessee shall
not interpose any counterclaim of whatever nature or description in any such
proceedings, provided, however, nothing contained herein shall be deemed or
construed as a waiver of the Lessee's right to assert such claims in any
separate action brought by Lessee or the right to offset the amount of any final
judgment owed by Lessor to Lessee.
54. WARRANTY OF AUTHORITY: Each person executing this agreement
on behalf of a party represents and warrants that (1) such person is duly and
validly authorized to do so on behalf of the entity it purports to so bind, and
(2) if such party is a partnership, corporation or trustee, that such
partnership, corporation or trustee has full right and authority to enter into
this Lease and perform all of its obligations hereunder.
<PAGE> 66
55. LESSOR'S PERSONAL LIABILITY: The liability of Lessor (which,
for purposes of this Lease, shall include Lessor and the owner of the Building
if other than Lessor) to Lessee for any default by Lessor under the terms of
this Lease shall be limited to the actual interest of Lessor and its present or
future partners in the Premises or the Building and Lessee agrees to look solely
to the Premises for satisfaction of any liability and shall not look to other
assets of Lessor nor seek any recourse against the assets of the individual
partners, directors, officers, shareholders, agents or employees of Lessor; it
being intended that Lessor and the individual partners, directors, officers,
shareholders, agents or employees of Lessor shall not be personally liable in
any manner whatsoever for any judgment or deficiency. The liability of Lessor
under this Lease is limited to its actual period of ownership of title to the
Building, and Lessor shall be automatically released from further performance
under this Lease and from all further liabilities and expenses hereunder upon
transfer of Lessor's interest in the Premises or the Building. Lessee agrees to
attorn to any entity purchasing or otherwise acquiring the Premises.
56. RECORDATION: Lessee shall not record this Lease or a short
form memorandum hereof without the prior written consent of the Lessor.
57. WARRANTIES OF LESSEE: Lessee hereby warrants and represents
to Lessor, for the express benefit of Lessor, that Lessee has undertaken a
complete and independent evaluation of the risks inherent in the execution of
this Lease and the operation of the Premises for the use permitted hereby, and
that, based upon said independent evaluation, Lessee has elected to enter into
this Lease and hereby assumes all risks with respect thereto. Lessee hereby
further warrants and represents to Lessor, for the express benefit of Lessor,
that in entering into this Lease, Lessee has not relied upon any statement,
fact, promise or representation (whether express or implied, written or oral)
not specifically set forth herein in writing and that any statement, fact,
promise or representation (whether express or implied, written or oral) made at
any time to Lessee, which is not expressly incorporated herein in writing is
hereby waived by Lessee.
58. MODIFICATIONS FOR LENDER: If, in connection with obtaining
financing for the Premises or any portion thereof, Lessor's lender shall request
reasonable modification(s) to this Lease as a condition to such financing,
Lessee shall not unreasonably withhold, delay or defer its consent thereto,
provided such modifications do not materially adversely affect Lessee's rights
hereunder or the use, occupancy or quiet enjoyment of Lessee hereunder.
59. LESSOR AS REAL ESTATE INVESTMENT TRUST: Pacific Gulf
Properties, Inc. ("PGP"), is a real estate investment trust, and all rental
income received by Lessor must therefore qualify as "rents from real property"
within the meaning of Section 856(d) of the Internal Revenue Code of 1954, as
amended. In order to insure such qualification, Lessee agrees that in the event
Lessee shall assign its interest in this Lease or sublet the Premises in
accordance with the provisions of Paragraph 12, no amount received or accrued,
directly or indirectly, with respect to such assignment or sublease shall depend
in whole or part on the income or profits of the assignee or sublessee, or any
other person deriving income from the Premises. If PGP notifies Lessee that PGP
has in good faith determined that its status as a real estate investment trust
under the provisions of the Internal Revenue Code of 1954, as heretofore or
hereafter amended, will be jeopardized because of any provision of this Lease,
Lessor may request reasonable amendments to this Lease and Lessee will not
unreasonably withhold, delay or defer its consent thereto, provided that such
modifications do not (i) increase the monetary obligations of Lessee pursuant to
this Lease, or (ii) in any other manner adversely affect its interest in the
Premises.
-2-
<PAGE> 67
60. Relocation of Tenant. At Landlord's written request, Tenant
shall move from the Premises to any other premises and location in the Project.
In the event of such move, the new location and premises shall be substituted
for the Premises described in the Lease above, but all other terms of this Lease
shall remain the same. It is understood and agreed that Landlord will relocate
Tenant only for sound business practices and consideration.
61. Prohibition on Assignment and Subletting. Notwithstanding
any other provision in this Lease, Lessee shall not voluntarily or by operation
of law assign, transfer, mortgage or otherwise transfer or encumber
(collectively, "assign") or sublet all or any part of Lessee's interest in this
Lease or in the Premises.
"LESSOR" "LESSEE"
PACIFIC GULF PROPERTIES INC., BRIAN MALLIET
a Maryland corporation
By:______________________________ By:______________________________
Robert A. Dewey Brian Malliet
Its: Vice President
Dated:________________________ Dated:________________________
-3-
<PAGE> 68
EXHIBIT M
JOINT LEASE ESCROW INSTRUCTIONS
THESE JOINT LEASE ESCROW INSTRUCTIONS (these "INSTRUCTIONS") are dated
as of___________ , 1997, and are entered into by and between PACIFIC GULF
PROPERTIES INC. ("LESSOR"),_______________ ("LESSEE"), and FIDELITY NATIONAL
TITLE INSURANCE COMPANY ("ESCROW HOLDER"), with respect to that certain lease
between Lessor and Lessee in the form attached hereto as Exhibit "A" (the
"LEASE"). All terms used herein and not otherwise defined shall have the
meanings given thereto in the Lease. Lessor and Lessee desire by these
Instructions to make provisions for the payment of the Rent due under the Lease
for the Lease Term through Escrow Holder's Escrow No._____________ ("LEASE
ESCROW").
This Lease Escrow shall open and become effective only upon the
occurrence of the following: (a) the successful close of Fidelity National Title
Insurance Company's Escrow No. ___________________(the "CLOSING ESCROW") and (b)
the deposit into this Lease Escrow from the Closing Escrow of $300,000.00 (the
"DEPOSIT") by or on behalf of Lessee. Escrow Holder shall immediately notify
Lessor and Lessee upon the occurrence of the foregoing events.
The Deposit shall be held in escrow by the Escrow Holder and disbursed
pursuant to these instructions. Pending disbursement, the Deposit shall be
deposited by Escrow Holder in an interest-bearing demand deposit account with a
federally insured state or national bank located in California. All interest
accrued on the Deposit shall be for the Lessee's account.
On ______________, 1997 and on the first day of each calendar month
thereafter until the expiration of the Lease Term, the Escrow Holder shall
disburse to Lessor from the Deposit the sum of $_______ in payment of the Rent
then due under the Lease. Any such payment shall be deemed payment of Rent under
the Lease.
Unless Escrow Holder receives written notice from Lessor changing such
address, Lessor's address for the delivery of the payment(s) provided for herein
is 4200 Von Karman, 2nd Floor, Suite 100, Newport Beach, California 92660-2002,
Attention: Lonnie Nadal.
Upon the full disbursement of the Deposit in accordance with these
Instructions, Escrow Holder shall promptly release to the Lessee all interest
accrued on the Deposit, and this escrow shall terminate. Lessee's address for
delivery of interest accrued as provided herein is_______________________.
These Instructions may be executed in any number of counterparts, each
of which shall be deemed an original and all of which shall constitute one and
the same agreement with the same effect as if all parties had signed the same
signature page. Any signature page of these Instructions may be detached from
any counterpart of these Instructions and reattached to any other counterpart of
these Instructions identical in form hereto but having attached to it one or
<PAGE> 69
more additional signature pages. These Instructions shall be deemed executed and
delivered upon each party's delivery of an executed signature page of these
Instructions, which signature pages may be delivered by facsimile with the same
effect as delivery of the originals.
IN WITNESS WHEREOF, the parties have executed and delivered these
Instructions.
LESSOR
PACIFIC GULF PROPERTIES INC., a Maryland corporation
By:____________________________________________
Robert A. Dewey
Vice President, Asset Management
LESSEE
____________________________________________
Fidelity National Title Company agrees to act as Escrow Holder in accordance
with these Instructions.
FIDELITY NATIONAL TITLE COMPANY
By:____________________________________________
____________________________________________
_____________________, Escrow Officer
<PAGE> 70
EXHIBIT N
DUE DILIGENCE DELIVERIES**
Seller shall deliver true, complete and correct copies of each of the following
to Buyer on or before September 16, 1997:
1. Current Lease Schedule showing the name of each lessee, the
approximate square footage occupied, and a specific description of the lease
(the "Lease Schedule").
2. Copies of all Leases.
3. A schedule (the "Schedule of Agreements") setting forth a list of
all of the service contracts and other agreements or rights related to the
ownership, use or operation of the Property, including utility contracts,
maintenance contracts, lease brokerage or commission agreements and equipment
leases (collectively, the "Service Contracts"), but excluding any property
management agreements that Seller will have terminated at or before Closing.
From this Schedule of Agreements, Buyer shall designate those contracts that
Seller shall assign to Buyer and that Buyer shall assume as of Closing (such
designated Service Contracts together with the Warranties and any Other
Documents designated by Buyer for assignment are collectively referred to herein
as the "Assigned Contracts").
4. A copy of Seller's Owner's Policy of Title Insurance, and a current
ALTA extended coverage preliminary title report on the Real Property, issued by
Title Company, accompanied by copies of all documents referred to in the report
(collectively, the "Preliminary Report").
5. A copy of any survey of the Real Property in Seller's possession.
6. Available governmental permits and approvals relating to the
construction, operation, use or occupancy of the Property, including without
limitation, all building permits, certificates of completion, certificates of
occupancy, environmental permits and licenses (individually and collectively
"Permits").
7. A copy of a year-to-date (through July 30, 1997) operating
statement. Copies of the most recent property tax bills and assessments for the
Property. A copy of the budget for the Property for the current year.
8. Available, presently effective warranties or guaranties from any
contractors, subcontractors, suppliers, servicemen or materialmen in connection
with any of the Tangible Personal Property or any construction, renovation,
repairs or alterations of the Improvements or any tenant improvements
(collectively, the "Warranties").
9. Available reports in Seller's possession relating to the Property,
including environmental reports, environmental audits, soils reports, site
plans, engineering reports and plans, landscape
<PAGE> 71
plans, structural calculations, floor plans, construction contracts, and other
reports or documents of significance to the Property, including without implied
limitation all court filings relative to the CalTrans Taking in the possession
of Seller or its counsel.
- -----------------------------------
*All due diligence deliveries (excluding items 3 and 4) shall be only of
materials that are in the possession of Seller and/or Seller's agents.
<PAGE> 72
EXHIBIT O
SURVEY REQUIREMENTS
OWNER: PACIFIC GULF PROPERTIES INC.
TITLE COMPANY: FIDELITY NATIONAL TITLE INSURANCE COMPANY
1. Certification: Survey to be certified to (i) Owner and (ii) Title
Company by a Registered Land Surveyor or a licensed Civil Engineer
using the attached long-form certification. Survey (a) is to have
surveyor's seal affixed and (b) is to reflect a current date; provided
that older surveys are acceptable if updated and recertified within 90
days of Closing.
2. Legal Description and Address: The full legal description and street
address must be shown. The legal description must be identical to that
shown in Title Company's most recent title report (the "Title Report")
or discrepancies explained. If the Property is described as being on a
filed map, the survey should contain a legend relating the parcel to
the map on which it is shown. With regard to a metes and bounds
description, a monument or a reference to a nearby monument should
establish the beginning point.
3. Properly Identified: All perimeter property lines must be specifically
identified. Show the location by courses and distances of: (a) the fee
parcel; (b) the relation of the point of beginning of said parcel to
the monument from which it is fixed; (c) all servient easements; (d)
the established building line; (e) all easements appurtenant to said
parcel; and (f) the line of the street or streets abutting the parcel
and the width of said streets.
4. Parcel Size: The number of square feet or acres contained in the parcel
covered by the survey must be specifically identified.
5. Distances and Access: All streets adjacent to the property, R.O.W.
lines, and the distance from the nearest major intersecting streets
must be specifically identified and distances shown. The survey must
disclose that access to the adjacent streets exists.
6. Curb Cuts, Driveways, and Other Matters Identified: All curb cuts,
driveways, fences, and location of major trees and shrubbery to be
protected must be shown.
7. Title Company Exceptions Plotted: All exceptions on the Title Report
must be plotted (or identified on the face of the survey as not
plottable). Indicate reason that any exception (except liens) is not
plottable.
8. Easements: All easements affecting the Property identified by recording
information (Book and Page or document number of instrument creating
the easement) must be
<PAGE> 73
shown. All evidence of prescriptive easements or other visible evidence
of possible third-party rights must also be shown.
9. Structures and Distances Shown (Spotted, In-Place Survey): All
structures, foundations, improvements including sidewalks, stoops,
overhangs, fences, and parking areas must be shown. The square footage
of all structures must be listed. Show all structures and improvements
on said parcel with horizontal lengths of all sides and the relation
thereof by distances to: (a) all boundary lines of the parcel; (b)
servient easements; (c) established building lines; (d) street lines;
and (e) square foot area of all structures. Show all improvements on
adjoining property which are within five (5) feet of the property lines
of the Land.
10. Utility Lines: Identify all utility lines as they service the Property
and improvements (sewer, water, gas, electric, and telephone). Indicate
whether the utility line is above or below grade, show the sizes of the
respective service, and indicate the point of installation to the
improvements and to offsite mains.
11. Set-back Lines: Show building restriction lines and applicable yard and
setback requirements and distances.
12. Party Walls and Encroachments: Show and describe all party walls and
encroachments (either onto or from the Land) or make positive statement
that there are no party walls or encroachments.
13. Parking: List parking requirements of applicable zoning ordinances
based on intended use of the parcel. Identify parking and paved areas.
Identify the number of vehicles that may be parked in each parking
area. A total of the parking spaces should be given in the Notes,
including how many are designated for handicapped parking and compact
cars.
14. Floodplain Note: State whether or not property appears on any U.S.
Department of HUD Flood Insurance Boundary Map, and if so, further
state map number and whether or not property appears in the "Flood
Hazard Area" shown on the map.
15. Watercourse Flow: Show the location and direction of flow for existing
streams, rivers, or surface drainage system, if applicable.
16. Railroad Tracks: Show the location of railroad tracks and sidings, if
applicable.
17. Adverse Soil Conditions: The location of rubbish fills, sloughs,
springs, any underground tanks, filled-in walls or cisterns and seep
holes should be charted whenever possible.
18. Mineral Rights: Identify mineral rights and if there is right to
surface entry.
<PAGE> 74
19. Seismic Hazard Note: Include in Notes a statement that the property is
not in a Special Study Zone as designated under the Alquist-Priolo
Special Studies Zone Act, California Public Resources Code Section 2621,
et seq.
REQUIRED CERTIFICATION
I hereby certify to PACIFIC GULF PROPERTIES INC. and TITLE COMPANY that:
a) This map or plat and the survey on which it is placed (i) were made
in accordance with the "Minimum Standard Requirements for ALTA/ACSM Land Title
Surveys," jointly established and adopted by ALTA and ACSM in 1992, and includes
items 1 through 4, 6 through 11 and 13 of Table A thereof, (ii) meet the
Accuracy Standards (as adopted by ALTA and ACSM and in effect on the date of
this Certification) of an Urban Survey; and (iii) in all respects meets the
requirements of all applicable law.
b) On the __ day of _______19_, this survey was made on the ground as
per the field notes shown on this survey, and correctly shows (i) the boundaries
and areas of the subject property and the size, location, and type of buildings
and improvements thereon and the distance therefrom to the nearest facing
exterior property lines of the subject property, (ii) the location of all
rights-of-way, easements, and any other matters of record (or of which I have
knowledge or have been advised, whether or not of record) or appearing from
careful visual inspection of the property, affecting or benefiting the subject
property, (iii) the location of the parking areas on the subject property, (iv)
all abutting dedicated public streets providing access to the subject property,
together with the width the name thereof, and (v) all other significant items on
the subject property;
c) The description of the subject property shown hereon corresponds to
the boundaries of the subject property shown on the survey, and such description
closes by engineering calculation;
d) The subject property contains ____ [square feet] [acres] and a total
of ____ striped parking stalls, ____ regular, ____ compact and ____ handicapped;
e) No covenants. restrictions or easements that are of record,
discoverable upon visual inspection, or otherwise known to me appear to me to
have been violated in any respect except as shown;
f) Except as set forth below (including under the subject property to
the extent known to me or ascertainable upon physical inspection without
excavation) there are no (i) encroachments upon the subject property by
improvements on adjacent property, (ii) encroachments on any easements or on
adjacent property, streets, or alleys by any improvements on the subject
property, (iii) party walls, (iv) conflicts or protrusions. The exceptions to
the above statements are as follows: [if none, so state];
<PAGE> 75
g) Adequate ingress to and egress from the subject property is provided
by [name of streets], the same being paved, dedicated public right(s)-of-way
maintained by [name of maintaining authority];
h) All required building set-back lines on the subject property are
located as shown hereon, and there are no violations of the set-back lines by
any improvements on the subject property. The exceptions to the above statements
are as follows: (if none, so state];
i) There are no violations of zoning ordinances, restrictions or other
rules and regulations with reference to the location of said buildings and
improvements, and the number and configuration of parking spaces;
j) All utility services required for the operation of the subject
property enter the subject property through the adjoining public streets, or if
they do not, this survey shows the point of entry and location of any utilities
which pass through or are located on adjoining private land and contains a legal
description of area occupied by such utilities; and
k) No portion of the subject property shown hereon lies within the
100-year flood plain or any area subject to special flood hazards, and the
subject property lies within Flood Zone ____ (defined in Survey Notes), as shown
on the Flood Insurance Rate Map published by the Federal Emergency Management
Agency for the City of _____ Community Panel Number ____ Effective Date_____,
and this survey shows the location and direction of all storm drainage systems
serving the property.
---------------------------------------------
[Signature of Surveyor]
Registered Public Surveyor
[Name, address, telephone number and job number of Surveyor]
<PAGE> 1
Exhibit 10.3
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (the "Agreement") is entered into as of the
Effective Date by and among Buyer, Seller and Escrow Agent. For good and
valuable consideration, the receipt and sufficiency of which is acknowledged,
the parties hereto agree as follows:
1. Defined Terms. As used in this Agreement the terms listed
below shall have the following meanings:
EFFECTIVE DATE: October 23, 1997
SELLER: MSC Valley View, Inc.
c/o AMRESCO Advisors
265 Franklin Street, Suite 1800
Boston, Massachusetts 02110
Attn: Mark E. Bratt and John H. Baxter
Phone: (617) 526-8800
Fax: (617) 526-8810
BUYER: Pacific Gulf Properties Inc.
4220 Von Karman, Second Floor
Newport Beach, California 92660-2002
Attn: Lonnie P. Nadal
Phone: (714) 233-5000
Fax: (714) 233-5033
PROPERTY:
(a) that certain real property known as Valley View Industrial
Center located at 4445 S. Valley View Boulevard, 3950 W. Harmon Avenue and 4050
W. Harmon Avenue, Las Vegas, Nevada multi-tenant industrial and commercial
buildings containing approximately 300,000 rentable square feet of space (all of
the foregoing is referred to collectively as the "Land" and is more particularly
described in Exhibit A);
(b) all of Seller's right, title and interest in and to all
improvements, fixtures and personal property located on the Land (collectively,
the "Improvements");
(c) all rights, appurtenances, streets, alleys, easements,
rights-of-way in or to all streets or other interests in, on, across, in front
of, abutting, servicing or adjoining the Land, including, without limitation,
all minerals, oil, gas and other hydrocarbon substances, all development rights,
land use entitlements, building permits, licenses, permits and certificates,
utilities commitments, air rights, water, water rights, and other appurtenances
used in connection
<PAGE> 2
with the beneficial use and enjoyment of the Land (collectively, the
"Appurtenances", which, together with the Land and Improvements is referred to
herein as the "Real Property");
(d) all lease rights (including, without limitation, the
lessor's interest in and to all tenant leases, rental agreements, subleases and
tenancies, including all amendments, modifications, agreements, records,
substantive correspondence, and other documents affecting in any way a right to
occupy any portion of the Real Property (individually and collectively, the
"Leases") and Seller's interest in all security deposits and prepaid rent, if
any, under the Leases and any and all guaranties of the Leases, and, to the
extent approved by Buyer pursuant to this Agreement, all "Service Contracts" (as
hereinafter defined) (collectively, the "Assigned Contracts"), and all
intangible personal property now or hereafter owned by Seller and used in the
ownership, use or operation or development of the Real Property and Improvements
including, without limitation, the right to use the name "Valley View Industrial
Center" and any other trade name (exclusive of the name "AMRESCO" and variations
thereof) now used in connection with the Real Property (collectively, the
"Intangible Property" and together with all tangible personal property owned by
Seller located on or in or used in connection with the Real Property as of the
date hereof, such title to be free of any liens, encumbrances or interests (the
"Tangible Property"). The Intangible Property together with the Tangible
Property is collectively the "Personal Property".
PURCHASE PRICE: Fourteen Million One Hundred Thousand Dollars ($14,100,000).
DEPOSIT: One Hundred Thousand and 00/100 Dollars ($100,000.00),
together with interest accrued thereon (collectively,
the "Deposit").
ESCROW AGENT/
TITLE COMPANY: First American Title Insurance Company
One Financial Center, 16th Floor
Boston, MA 02111
Attn: Annette Bennett
Manager, National Accounts
Fax: 617.951.0104
2. Agreement to Sell Purchase and Sale Agreement. Seller hereby
agrees to sell and convey the Property to Buyer, and Buyer hereby agrees to
purchase the Property from Seller, subject to the terms and conditions set forth
in this Agreement.
3. Deposit. Three days after receipt by Buyer of a fully
executed copy of this Agreement, Buyer shall deposit the Deposit with Escrow
Agent, as escrow agent for Buyer and Seller. The Deposit will be held in an
interest-bearing account with interest to follow the Deposit. The Deposit shall
either (a) be applied towards the Purchase Price at "Closing" (as hereinafter
defined); (b) be returned to the Buyer if the Closing fails to occur for any
reason other than the Buyer's default; or (c) be disbursed to Seller as
liquidated damages in the event of Buyers default pursuant to the provisions of
this paragraph. Escrow Agent agrees to act as
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<PAGE> 3
\escrow agent for Buyer and Seller hereunder and to administer the Deposit in
accordance with the terms of this Agreement. Escrow Agent may also rely on
instructions jointly given by Buyer and Seller as to the disposition of the
Deposit.
IN THE EVENT THE SALE OF THE PROPERTY IS NOT CONSUMMATED BECAUSE OF THE FAILURE
OF ANY CONDITION OR ANY OTHER REASON EXCEPT A DEFAULT UNDER THIS AGREEMENT
SOLELY ON THE PART OF BUYER, THE DEPOSIT SHALL IMMEDIATELY BE RETURNED TO BUYER.
IF SAID SALE IS NOT CONSUMMATED SOLELY BECAUSE OF A DEFAULT UNDER THIS AGREEMENT
ON THE PART OF BUYER, THE DEPOSIT SHALL BE PAID TO AND RETAINED BY SELLER AS
LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE
EVENT OF A DEFAULT BY BUYER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO
DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE
THAT THE DEPOSIT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF SELLER'S DAMAGES AND AS SELLER'S SOLE AND EXCLUSIVE
REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE EVENT OF A DEFAULT UNDER THIS
AGREEMENT ON THE PART OF BUYER.
INITIALS: Seller Buyer [SIG]
---------- -----------
4. Closing. The recordation of the deed and the delivery of
other documents and funds contemplated hereby (the "Closing") shall take place,
unless otherwise agreed upon in writing or extended, on the date which is the
earlier of (i) fifteen (I 5) days after the end of the Inspection Period (as
defined in Section 16) and (ii) November 26, 1997 (the "Closing Date").
(a) At the Closing, which shall occur pursuant to escrow
instructions mutually satisfactory to Buyer and Seller, Seller shall deliver to
Buyer:
(i) A deed in the form attached hereto as Exhibit C (the
"Deed"); an assignment of leases in the form attached
hereto as Exhibit D (the "Assignment of Leases"); an
assignment of contracts designated by Buyer to be
assumed pursuant to this Agreement (the "Assumed
Contracts"), warranties, permits, guaranties and other
intangible property, in the form attached hereto as
Exhibit E (the "Assignment of Contracts and Intangible
Property"); a bill of in the form attached hereto as
Exhibit F (the "Bill of Sale"), each duly executed by
Seller;
(ii) At Buyer's request, such title affidavits and related
documents as Buyer may reasonably request or as may be
required by the Title Company to issue the Title Policy
to Buyer at Closing in the form required pursuant to
this Agreement;
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(iii) Any and all original documents in the possession of
Seller and/or Seller's property management company
relating to the Property, including, without
limitation, all Leases and tenant files, Assigned
Contracts, evidence of termination of any Service
Contracts and other agreements that are not Assigned
Contracts, originals of the building permits and
certificates of occupancy for the Improvements and all
tenant-occupied space included within the Improvements;
all keys to the Property;
(iv) Tenant Estoppel Certificates from tenants leasing not
less than 75% of the net rentable area of the Property,
dated not earlier than 30 days prior to Closing, in the
form attached hereto as Exhibit G (as modified by Buyer
to address specific reasonable concerns arising as a
result of Buyer's review of the Leases and as delivered
to tenants by Seller) (the "Required Estoppel
Certificates'), and notices to the Tenants of the
occurrence of the sale of the Property in the form
attached hereto as Exhibit H (the "Notice to Tenants");
(v) a duly executed affidavit that Seller is not a "foreign
person" within the meaning of Section 1445(e)(3) of
the Internal Revenue Code of 1986 in the form attached
hereto as Exhibit I;
(vi) a closing statement in form and content reasonably
satisfactory to Buyer and Seller (the "Closing
Statement") duly executed by Seller; and
(vii) any other instruments, records or correspondence
specifically called for hereunder to be delivered by
Seller which have not previously been delivered.
(b) At the Closing, Buyer shall pay the Purchase Price by
federal wire transfer to Escrow Holder. The Deposit shall be credited against
the Purchase Price. Seller may use the Purchase Price or any portion thereof to
clear the title of any or all encumbrances or interests, provided that all
instruments necessary for this purpose are recorded or registered simultaneously
with the Deed, except that where an institutional lender has provided a payoff
letter the actual reconveyance of the lender's deed of trust may be recorded
when received provided that the Seller has provided such bond, indemnity or
other arrangements as shall be necessary to cause the Title Company to insure
title to the Property as vested in Buyer without any exception for such matters.
Except for real estate taxes not yet due or payable, Seller shall cause all
mortgages, deeds of trust and other monetary encumbrances, including without
limitation all mechanics' liens, to be released and reconveyed from the Property
on or prior to the Closing and shall cause the Title Company to insure title to
the Property as vested in Buyer without any exception for such matters.
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5. Adjustments.
(a) The following are to be apportioned as of the Closing Date,
with Buyer receiving credit for or being charged with the entire day of the
Closing, as follows:
(i) Rent. Collected rent under the Leases shall be
apportioned as of the Closing Date. With respect to any rent which is
uncollected as of the Closing Date, after Closing Buyer shall pay to Seller any
rent actually collected which is applicable to the period preceding the Closing
Date, provided, however, that all rent collected by Buyer shall be applied first
to all unpaid rent accruing after the Closing Date, and then to unpaid rent
accruing prior to the Closing Date. Buyer shall not be obligated to take any
steps to recover any rent arrearages. Seller shall be permitted to pursue
collection of any rent arrearages applicable to the period prior to the Closing,
provided that Buyer shall not incur any, and Seller shall indemnify Buyer
against all, cost, expense or liability in connection therewith, and provided
further that Seller shall not commence any legal or equitable proceedings in the
nature of an unlawful detainer, eviction or other proceeding which seek to
terminate any tenant's right of possession of its leased premises or result in a
lien or encumbrance on such leased premises. If any tenants are required to pay
percentage rent, escalation charges for real estate taxes, operating expenses,
CPI adjustments or other charges of a similar nature ("Additional Rent") and any
Additional Rent is collected by Buyer or Seller which is attributable in whole
or in part to any period during which the respective party did not own the
Property, such party shall promptly pay to the other party the other party's
proportionate share thereof, less a proportionate share of any reasonable
attorney's fees, costs and expenses of collection thereof. All Additional Rent
collected by Buyer shall be applied first to unpaid Additional Rent accruing
after the Closing Date, and then to unpaid Additional Rent accruing prior to the
Closing Date. If tenants pay Additional Rent on an estimated basis, then
promptly following the end of the underlying fiscal period Buyer shall reconcile
actual expenses with tenants' estimated payments of Additional Rent and any net
debit or credit to the landlord resulting from such reconciliation shall be
apportioned between Buyer and Seller. Any sums received from the tenant on
account of the termination of the United States Postal Service lease shall be
paid to Seller.
(ii) Leasing Costs. Seller is responsible for leasing
commissions, tenant improvement costs, tenant inducements or other leasing costs
(collectively, "Leasing Costs") payable with respect to the current term of the
presently existing leases (the "Present Leases") listed in Exhibit J attached
hereto (the "Lease Schedule"). To the extent any Leasing Costs of Present Leases
are due and payable at or before Closing they shall be paid from Seller's
proceeds. Seller and Buyer shall pay their respective shares of all Leasing
Costs with respect to any renewal, extension or expansion rights under any
Present Leases which are exercised on or after the date hereof and for any such
Leasing Costs relative to Leases amended or executed (with the approval of Buyer
as set out in Section 18 hereof) on or after the date hereof, with such shares
being based on the proportion of rent paid or payable prior to and following the
Closing Date with respect to such renewal, extension, expansion, amended Lease
or new Lease. To the extent any such Leasing Costs are due and payable as of or
after the Closing Date, but are not
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paid by the responsible party, then such responsible party shall protect and
indemnify the nonresponsible party from and against any such Leasing Costs.
(iii) Security Deposits. Buyer shall be entitled to a credit
against the Purchase Price for the total sum of all security and other deposits
provided for in the Leases which are retained by Seller and not delivered in
kind to Buyer at Closing, and any interest earned thereon which by law or the
terms of the Leases is required to be refunded to tenants.
(iv) Utility Costs. Seller shall cause all the utility
meters to be read or estimated on the Closing Date, and will be responsible for
the cost of all utilities used prior to the Closing Date, except to the extent
such utility charges are billed to and paid by tenants directly. Buyer shall be
responsible for all post-Closing utility charges.
(v) Real Estate Taxes and Special Assessments. Seller shall
pay prior to Closing any and all delinquent real estate taxes and assessments
with respect to the Property. General real estate taxes and assessments payable
for the fiscal year in which the Closing occurs shall be prorated as of the
Closing Date.
(vi) Other Apportionments. Amounts payable under the
Assigned Contracts, annual or periodic permit and/or inspection fees (calculated
on the basis of the period covered), and liability for other Property operation
and maintenance expenses and other recurring costs shall be apportioned as of
the Closing Date.
(b) Preliminary Closing Statement. Seller and Buyer shall
jointly prepare and approve a preliminary Closing Statement on the basis of the
Leases and other sources of income and expenses, and shall deliver such
computation to Escrow Holder prior to Closing.
(c)Post-Closing Reconciliation. If any of the aforesaid
prorations cannot be definitely calculated on the Closing Date, then they shall
be estimated at the Closing and definitely calculated as soon after the Closing
Date as feasible. As soon as the necessary information is available, Buyer shall
conduct a post-Closing audit to determine the accuracy of all prorations made to
the Purchase Price (the "Post-Closing Audit"). Either party owing the other
party a sum of money based on such subsequent proration(s) or the Post-Closing
Audit shall promptly pay said sum to the other party.
6. Closing Costs. Seller shall pay for the Preliminary Report,
the premium for the CLTA portion of the Title Policy, any sales taxes, any
transfer taxes applicable to the sale and recording fees for recording of the
Deed. In addition, Seller shall be liable for any prepayment fee or other charge
payable in connection with any payoff of monetary encumbrances. Buyer shall pay
for the ALTA portion of the Title Policy, the cost of any endorsements to the
Title Policy, the cost of any survey or surveyor's certificate, the cost of its
due diligence examination of the Real Property, and the cost of its counsel and
other professional advisors. Any escrow fees shall be paid fifty percent (50%)
by Buyer and fifty percent (50%) by Seller. All other costs and charges of the
Escrow not otherwise provided for in this Agreement
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shall be allocated in accordance with the closing customs for the County where
the Property is located. Buyer and Seller shall each be responsible for their
respective legal fees to negotiate and execute this Agreement.
The provisions of this Section 6 shall survive the Closing.
7. Reporting Requirernents. The Escrow Holder shall comply with
all applicable federal, state and local reporting and withholding requirements
relating to the close of the transactions contemplated herein. Without limiting
the generality of the foregoing, to the extent the transactions contemplated by
this Agreement involve a real estate transaction within the purview of Section
6045 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code"), Escrow Holder shall have sole responsibility to comply with the
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 75-2600482. 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. The provisions of this
Section 7 shall survive the Closing.
8. INTENTIONALLY OMITTED
9. Title. At the Closing, Seller shall convey to Buyer
marketable and insurable fee simple title to the Real Property and Improvements,
by duly executed and acknowledged grant, bargain and sale deed in the form
attached hereto as Exhibit C. A condition to Buyer's obligations under this
Agreement shall be the issuance by the Title Company to Buyer of an ALTA
extended coverage Owner's Policy of Title Insurance (Form B, rev. 10/17/7O with
Endorsement Form 1 coverage) in the amount of the Purchase Price, insuring fee
simple title to the Real Property and Improvements in Buyer, subject only to
such exceptions as Buyer shall have approved pursuant to Paragraph 16 below (the
"Approved Title Exceptions") and without boundary, encroachment or survey
exceptions, except as Buyer shall have approved pursuant to Paragraph 16 below
(the "Title Policy"). The Title Policy shall provide full coverage against
mechanics' and materialmen's liens (including liens arising out of work done for
tenants) and shall contain, to the extent Buyer has obtained from the Title
Company during the Inspection Period the commitment of the Title Company to
issue such endorsements at Closing, the CLTA 100 (modified for an owner), 101.4,
103.7, 116, 116.1, 116.4, 116.7 and such other special endorsements as Buyer may
reasonably require, including, without limitation, any endorsements required as
a condition to Buyer's approval of any title exceptions pursuant to Paragraph 16
below (the "Endorsements").
10. Possession and Condition. Full possession, subject only to
the rights of tenants under Leases and Approved Title Exceptions shall be
delivered to the Buyer at Closing, the Property to be in the same condition as
it now is, reasonable use and wear thereof excepted. The Property is to be
conveyed "as is" without any representation or warranty except as expressly set
forth herein. Buyer acknowledges that it is a sophisticated real estate
investor, advised by counsel, and that its decision to acquire the Property is
based primarily upon its own investigation of the Property, the Leases and the
market.
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11. Seller Defaults. If Seller shall be unable to convey title,
or to deliver possession of the Property, all as herein stipulated, or if on the
Closing Date the Property does not conform with the provisions hereof, then
Seller shall use reasonable efforts to remove all defects in title, and to
deliver possession as provided herein, and to make the Property conform to the
provisions hereof, as the case may be, and the Closing Date may be extended by
mutual agreement of Seller and Buyer to a date not later than thirty (30) days
after the previously scheduled Closing Date.
If at the expiration of the extended time Seller shall have
failed so to remove any defects in title (other than monetary liens, which are
covered in paragraph 4(b)), deliver possession, or to make the Property conform,
as the case may be, all as herein agreed, then, at Buyer's option, the Deposit
shall be forthwith refunded and all other obligations of all parties hereto
shall cease and this Agreement shall be void and without recourse to the parties
hereto; provided, however, that if Buyer is satisfied with the Property and the
purchase price, then Buyer shall have the election in its sole and absolute
discretion, at either the original or extended Closing Date, to accept such
title as the Seller can deliver to the Property in its then condition and to pay
therefor the Purchase Price without deduction, except that in the event of such
conveyance:
(a) if the Property shall have been damaged by fire or casualty
insured against, then Seller shall, unless Seller has previously restored the
Property to its former condition, pay over or assign to Buyer, at the Closing
Date, all amounts recovered or recoverable on account of such insurance, less
any amounts reasonably expended by Seller for partial restoration, up to an
amount equal to the Purchase Price; and
(b) if any portion of the Property shall have been taken by
exercise of the power of eminent domain, Seller shall pay over or assign to
Buyer at the Closing Date, all awards recovered or recoverable on account of
such taking, less any amounts reasonably expended by Seller for partial
restoration.
12. Insurance. Until the Closing, Seller shall retain the risk
of loss and shall maintain insurance on the Property against fire and hazards
covered by "All-Risk" insurance coverage in an amount at least equal to the
Purchase Price.
13. Broker. Seller and Buyer mutually represent that CB
Commercial Real Estate Group, Inc. (the "Broker") is the only broker with whom
they have dealt in connection with this Agreement. The commission of the Broker
shall be paid by Seller pursuant to a separate agreement. Seller and Buyer each
agree to indemnify and hold the other harmless from and against any liability,
loss, cost, damage, or expense, including court costs and attorneys' fees,
resulting from a breach of the representation and warranty set forth in this
Paragraph. The provisions of this Paragraph shall survive the Closing or
termination of this Agreement.
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Buyer acknowledges that Broker is acting as Seller's agent and
that Broker makes no, and Seller has not authorized Broker to make any,
representations or warranties of any kind regarding the condition, permitted
use, or value of the Property.
14. Seller's Warranties. Seller represents and warrants:
(a) Seller is the fee owner of the Property and has full power
and authority to sell the Property to the Buyer pursuant to the terms of this
Agreement. Seller is a corporation, duly organized and validly existing and in
good standing under the laws of the State of Delaware; this Agreement and all
documents executed by Seller and delivered to Buyer pursuant to this Agreement
are and will be duly authorized, executed and delivered by Seller, are and will
be legal, valid and binding obligations of Seller enforceable against Seller in
accordance with their respective terms, and do not and will not violate any
provision of any written agreement to which Seller is a party. To Seller's
knowledge, this Agreement and all documents executed by Seller and delivered to
Buyer pursuant to this Agreement do not violate any judicial order to which
Seller or the Property is subject. Seller has obtained all necessary
authorizations, approvals and consents to the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
(b) Seller is not a foreign entity subject to withholding under
the Internal Revenue Code.
(c) To Seller's knowledge, all documents delivered by Seller to
Buyer, or made available to Buyer for review, including without limitation the
Due Diligence Materials listed on Exhibit K, are true and complete. To Seller's
knowledge, the books, files and records relating to the Property that were
delivered to or made available to Buyer for Buyer's review do not contain any
deliberate or material omission, exclusive of information relating to the
entities which own the Property, to the relationship between the Seller and its
investors and advisors, and to Seller's financial projections and market
assumptions, whether contained in Seller's internal memoranda, financial
projections, budgets, accounting and tax records or similar proprietary,
confidential or privileged information.
(d) To Seller's knowledge, during the period of Seller's
ownership of the Real Property Seller has not received written notice of any (i)
condemnation, environmental, zoning or other land-use proceedings, instituted or
to be instituted, against the Real Property, (ii) special assessment proceedings
affecting the Real Property (other than as set forth in the Preliminary Report),
or (iii) existing or proposed easements, covenants, restrictions, agreements or
other documents which affect title to the Real Property and which are not
disclosed by the Preliminary Report.
(e) To Seller's knowledge, during the period of Seller's
ownership of the Real Property, and except as disclosed on Schedule 14(e)
attached hereto, Seller has not received
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notice of any litigation, arbitration or reference proceedings pending or
threatened against the Real Property or against Seller with respect to the Real
Property.
(f) The most current Lease Schedule provided to Buyer is a
complete and accurate list of all Leases. To Seller's knowledge, except for free
rent allowed to tenants under their respective Leases, there are no leasing
costs or obligations which will remain unpaid at Closing, including, without
limitation, broker's commissions and costs in connection with tenant
improvements.
(g) To Seller's knowledge, there exists no defaults or events
which, with the giving of notice or passage of time, or both, would constitute a
default by Seller or any of the tenants under any of the Leases. To Seller's
knowledge, there exists no defaults or events which, with the giving of notice
or passage of time, or both, would constitute a default by Seller or any of the
other parties to the Service Contracts under the Service Contracts.
Seller will indemnify, defend with counsel of Buyer's choice,
and hold Buyer its successors and assigns and their respective agents,
employees, officers, directors and partners, and the Real Property harmless from
all expense, loss, damage and claims, including Buyer's attorney's fees, if
necessary, arising out of (i) the breach of any of the Seller's warranties,
covenants and representations, related to the Real Property and arising or
occurring prior to the Closing, or related to or arising from any act, conduct,
omission, contract or commitment of Seller arising or occurring prior to the
Closing, and (ii) the litigation listed on Schedule 14(e), in each case notice
of which is delivered to Seller not later than twelve (12) months following the
Time of Closing, provided, however, that in no event shall Seller's liability
hereunder exceed the sum of Three Hundred Ninety Thousand Dollars ($390,000).
As used herein the term "Seller's knowledge" or any similar
phrase shall mean the actual, not constructive or implied, knowledge of John H.
Baxter or Mark E. Bratt after having made reasonable inquiry of current
employee(s) of AMRESCO Advisors, Inc., but without any further obligation on his
part to make any independent investigation of the matters being represented and
warranted, or to make any further inquiry of any other persons, or to search or
examine any files, records, books or correspondence. To the extent any
representation or warranty which is made to "Seller's knowledge" is contravened
by any information contained in the due diligence materials delivered to Buyer
by Seller and Seller's agents during the Inspection Period, then any such
representation or warranty shall be deemed modified by any such information.
15. Assumption of Existing Financing. Buyer shall assume the
existing mortgage financing (the "Existing Loan") on the Property presently held
by Banker's United Life Assurance Company ("Lender"). On or before October 25,
1997, Buyer shall supply to AEGON USA Realty Advisors, Inc. ("AEGON") agent for
Lender, all information necessary for Lender and/or AEGON to agree to the
assignment to and assumption by Buyer of the Existing Loan. Seller shall also
supply AEGON with all information necessary for Lender and/or AEGON to agree to
the assignment of the Existing Loan. Buyer shall have until the expiration of
the
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Inspection Period to negotiate with AEGON and Lender an assumption and
modification agreement acceptable to Lender, Buyer and Seller. Seller agrees
that it will execute the assignment and assumption agreement and such other
documentation as may be reasonably required by AEGON and Lender, including
making representations that (a) no default exists under the Existing Loan and
(b) Seller is not indebted to Lender other than the Existing Loan. As a
condition to Closing, Buyer shall receive from Lender (x) a beneficiary
statement, (y) an estoppel confirming that no default exists under the Existing
Loan and (z) an assignment and assumption agreement, all in form and content
reasonably satisfactory to Buyer (collectively, the "Assumption Documentation").
Seller shall pay (i) the one percent (1%) assumption fee payable to Lender upon
the assignment and assumption of the Existing Loan and (ii) any costs incurred
by Lender or AEGON up to $ 1 0,000.00. Buyer shall pay any of AEGON's costs in
excess of $10,000.00 as well as its own attorneys' fees and other costs in
connection with the assignment and assumption of the Existing Loan.
16. Due Diligence.
(a) From the Effective Date until the date thirty (30) days
after the Effective Date, but not later than the Closing Date (the "Inspection
Period"), Seller shall allow Buyer, its agents and consultants access to the
Real Property upon not more than 24 hours' advance telephonic notice for the
purposes of conducting surveys, tests, and inspections, provided that they shall
be conducted in such a manner as not to unreasonably interfere with normal
business operations on the Real Property. Such inspections may include, without
implied limitation, inspections and investigations relating to the general
building, the sewage disposal system, the water and water distribution systems,
the heating and air conditioning systems, power distribution, roof, foundation,
soils and the presence of radon, asbestos, hydrocarbons or other contaminants.
All inspections and investigations shall be conducted at Buyer's cost. All
inspections and investigations shall be conducted by qualified professionals in
accordance with applicable legal requirements. Unless Buyer acquires the Real
Property, Buyer shall promptly restore the Real Property to its prior condition.
Buyer agrees to indemnify and hold Seller harmless from all liability, loss,
cost, damage or expense arising from the conduct of any such survey, test, or
inspection by Buyer or Buyer's agents or contractors. Buyer (i) shall permit a
representative of Seller to accompany Buyer on any interviews with tenants or
governmental agencies; (ii) shall not permit any inspections, investigations or
other due diligence activities to result in any liens, judgments or other
encumbrances being filed against the Real Property and shall, at its sole cost
and expense, promptly discharge of record any such liens or encumbrances that
are so filed or recorded; (iii) shall not permit any borings, drillings or
samplings to be done without the prior written consent of Seller; (iv) shall
maintain, with insurance companies satisfactory to Seller, a policy of
comprehensive general public liability insurance, with a broad form contractual
liability endorsement covering Buyer's indemnification obligations hereunder,
and with a combined single limit of not less than $1,000,000 per occurrence for
bodily injury and property damage, automobile liability coverage including owned
and hired vehicles with a combined single limit of $1,000,000 per occurrence for
bodily injury and property damage, and an excess umbrella liability policy for
bodily injury and property damage in the amount of $5,000,000, insuring Seller
and its affiliates as additional insureds (certificates of which shall be
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given to Seller prior to Buyer's first entry on the Real Property), all of which
insurance shall be written on an "occurrence form"; and (v) shall return to
Seller all materials with respect to the Real Property provided by Seller if
Buyer fails to acquire the Real Property for any reason. The provisions of this
Section shall survive the termination of this Agreement.
(b) Seller has previously provided to Buyer or will, on or
before October 31, 1997, provide to Buyer complete copies of the items listed on
Exhibit K attached hereto and made a part hereof.
(c) Buyer may obtain, at its sole cost, and review a
non-invasive Phase I environmental report prepared by a professional
environmental assessment firm reasonably acceptable to Seller.
(d) Buyer may, at its sole and absolute discretion, terminate
its obligations under this Agreement by giving written notice to Seller on or
prior to the end of the Inspection Period. In that case, (i) Escrow Holder is
instructed to return the Deposit, together with any accrued interest, to Buyer
and (ii) except for obligations that survive termination pursuant to the express
terms of this Agreement, neither party shall have any further rights hereunder
against the other. Failure of Buyer to elect to terminate its obligation will
constitute a waiver of the condition by Buyer. If Buyer does not terminate this
Agreement pursuant to this Paragraph, Buyer shall have agreed to accept the Real
Property subject to all of the conditions disclosed in the items listed on
Exhibit K and to the environmental and physical condition of the Real Property;
provided, however, that, notwithstanding any such election to proceed, Seller
must comply with all of Seller's other obligations and duties under this
Agreement.
(e) Notwithstanding the foregoing Buyer acknowledges that it has
been made aware of the poor condition of the roof at 4445 S. Valley View
Boulevard and shall not terminate this Agreement as a result thereof.
17. Conditions Precedent to Closing. The following are
conditions precedent to Buyers obligations under this Agreement (the "Buyer
Conditions Precedent"). The Buyer Conditions Precedent are intended solely for
the benefit of Buyer and may be waived only by Buyer in writing. In the event
any Buyer Condition Precedent is not satisfied, Buyer may, in its sole and
absolute discretion, terminate this Agreement and all obligations of Buyer and
Seller hereunder (except provisions of this Agreement which recite that they
survive termination) shall terminate and be of no further force or effect.
(a) Buyer's inspection, review and approval, within the
Inspection Period, of all aspects of the Real Property.
(b) The issuance by the Title Company to Buyer of the Title
Policy subject only to the Approved Title Exceptions and including the
Endorsements.
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(c) Buyer's receipt, within the Inspection Period, of an
"as-built", ALTA/ACSM survey (the "Survey") of the Real Property, reflecting all
plottable items referred to in the Preliminary Report, prepared by a surveyor or
civil engineer licensed in the State of California, complying with the
requirements, and containing the certification, set forth in Exhibit L attached
hereto.
(d) All of Seller's representations and warranties contained in
or made pursuant to this Agreement shall have been true and correct when made
and shall be true and correct as of the Closing Date.
(e) Seller shall have fully complied with all of Seller's duties
and obligations contained in this Agreement.
(f) There shall not have first arisen between the end of the
Inspection Period and the Closing Date, any litigation or administrative agency
action or other pending governmental proceeding which, after Closing, would, in
Buyer's reasonable discretion, materially adversely affect the value of the Real
Property or the ability of Buyer to operate the Real Property in the manner in
which it is currently being operated, nor any pending proceedings which would
cause the redesignation or other modification of the zoning classification of,
or of any building or environmental code requirements applicable to, any of the
Real Property. Seller shall notify Buyer promptly upon Seller's having knowledge
of any litigation to which Seller is a party or of any administrative proceeding
specifically relating to the Real Property.
(g) Seller shall have provided Buyer with an updated Lease
Schedule three (3) business days prior to Closing, which updated Lease Schedule
must not indicate any material adverse change from the Lease Schedule last
approved by Buyer. Seller shall specifically identify any changes from the most
recently approved Lease Schedule, and Buyer shall have performed a closing audit
which confirms the Lease Schedule.
(h) Seller shall terminate prior to the Closing, at no cost or
expense to Buyer, any and all Service Contracts or Other Documents affecting the
Real Property that are not Assigned Contracts. Concurrently with the expiration
of the Inspection Period, Buyer shall provide to Seller a list of the Assigned
Contracts.
(i) In Buyer's reasonable determination there shall not have
occurred, between the end of the Inspection Period and the Closing Date, any
material adverse change in or addition to the information or items reviewed and
approved by Buyer during the Inspection Period.
(j) Buyers review of the Required Estoppel Certificates to
confirm that they contain the documentation and/or information reasonably
requested by Seller, that they have not been modified in any material way, and
that they do not contain any assertion of a material default by the Seller.
Notwithstanding the foregoing, Estoppel Certificates will not be considered
non-conforming if the tenant has revised or deleted Paragraph 12 of the estoppel
certificate (which relates to environmental matters) or if the tenant delivers
an estoppel certificate
-13 -
<PAGE> 14
substantially in the form required by such tenant's lease; provided, however,
that if the tenant revises Paragraph 12 in a manner that discloses a material
breach of the Seller's legal obligations relative to environmental matters, such
revision will be subject to Buyer's review and approval.
(k) Buyer's receipt of the Assumption Documentation.
18. Operation of Real Property. Seller shall have the right to
operate, manage, lease and maintain the Real Property utilizing the criteria
Seller used prior to execution of this Agreement. Notwithstanding the foregoing,
provided this Agreement is in full force and effect, Buyer shall have the right
to approve any new leases, lease extensions, lease modifications, sublease
agreements, assignments or contracts affecting the Real Property and Seller
shall not execute any new leases, lease extensions or lease modifications
without the prior written approval of Buyer which shall not be unreasonably
withheld. If Buyer does not respond within five (5) business days of Buyer's
receipt of Seller's request for approval, Buyer shall be deemed to have approved
such lease, lease extension or lease modification. Upon the expiration of the
Inspection Period, Seller shall not waive, compromise or settle any rights of
Seller under any contract or Lease, or agree to return any security deposit, or
modify, amend, or terminate any Assigned Contract, without in each case
obtaining Buyer's prior written consent thereto, which Seller agrees not to
unreasonably withhold, condition or delay. Seller shall terminate prior to the
Closing, at no cost or expense to Buyer, any and all Service Contracts that are
not Assigned Contracts. Between Seller's execution of this Agreement and the
Closing, Seller shall maintain the Real Property in good order, condition and
repair, reasonable wear and tear excepted, shall perform all work required to be
performed by the landlord under the terms of any Lease, and shall make all
repairs, maintenance and replacements of the Improvements and any Tangible
Property and otherwise operate the Real Property in substantially the same
manner as before the making of this Agreement, as if Seller were retaining the
Real Property. In the event of the Closing of the purchase of the Real Property,
Buyer shall not retain the existing employees and management agents of Seller
for the Real Property, and, accordingly, on the Closing, Seller shall (i) cause
all employment and management agreements respecting the Real Property to be
terminated, and deliver evidence of such termination to Buyer, and (ii) remove
all employees and management personnel from the Real Property.
19. Confidentiality. Buyer shall hold in strict confidence, and
shall cause its officers, directors and other personnel, representatives and
agents to hold in strict confidence, and not to disclose to any other party
without the express written consent of Seller, any of the information respecting
the Real Property or provided to Buyer by Seller or any of its agents,
representatives or employees. Notwithstanding the foregoing, Buyer's obligation
to keep such information confidential shall expire upon the occurrence of the
Closing, and during the escrow period Buyer may disclose such information on a
need-to-know basis to its professional advisors who are providing assistance in
connection with the acquisition of the Real Property, and to governmental bodies
in order to comply with applicable law. If Buyer acquires the Real Property from
Seller, Seller shall have the right, subsequent to the Closing, to publicize the
transaction in whatever manner it deems appropriate. The provisions of this
Paragraph 19 shall survive the termination of this Agreement.
-14-
<PAGE> 15
20. Authority. The execution of this Agreement and the
performance of each party's obligations hereunder have been approved by any
necessary board of directors, members, general partner or other authorizing body
and is not subject to any further approval or contingency other than as set
forth herein.
21. Notices. All notices given hereunder shall be in writing and
shall be deemed received when delivered in hand, delivered by recognized
overnight delivery service, received by facsimile, or 72 hours after the same
have been deposited in the United States mail, postage prepaid, certified or
registered mail, return receipt requested, addressed to Buyer and Seller (and in
the case of Seller, with a copy to Lerner & Holmes, 265 Franklin Street, 18th
Floor, Boston, Massachusetts 02110, Fax: (617) 433-9471); and in the case of
Buyer, with a copy to Cox, Castle & Nicholson LLP, 2040 Century Park East, 28th
Floor, Los Angeles, CA 90067, Attn: Amy H. Wells, Esq., Fax: (310) 277-7889, at
their respective addresses appearing on the first page hereof, or to such other
address or addresses as the parties may from time to time specify by notice so
given.
22. Escrow Instructions. If requested by the Escrow Agent,
Seller and Buyer shall simultaneously upon execution of this Agreement execute
standard form printed escrow instructions of Escrow Agent.
23. Attorney's Fees. If litigation evolves between the parties
concerning this Agreement, the unsuccessful party shall pay to the prevailing
party all costs of suit, including reasonable attorneys' fees.
24. Assignment of this Agreement. Buyer may assign this
Agreement to a nominee so long as (a) Seller has given its express written
approval of such nominee, which consent shall not be unreasonably withheld, (b)
such nominee agrees in writing to assume all of Buyer's obligations hereunder
and (c) Buyer acknowledges in writing that an assignment of this Agreement does
not relieve Buyer of any of its obligations under this Agreement.
25. General. Time is of the essence of this Agreement. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto, their successors, personal representatives, and assigns. No member,
officer, director, shareholder, trustee, or beneficiary of a trust, if any,
under which the Seller or Buyer acts in executing this Agreement shall be
personally liable for any obligation, express or implied, hereunder. Any
liability of Seller hereunder is limited to Seller's interest in the Real
Property. If more than one person are named herein as Buyer, their obligations
are joint and several. This Agreement is to be construed as a Nevada contract,
sets forth entire contact between the parties, may not be canceled, amended, or
waived except in writing, is the complete and exclusive expression of the
parties' agreement respecting the Real Property (any and all prior statements,
representations, warranties and/or agreements, if any, being merged into this
Agreement), and no party hereto is relying on any statement, representation or
warranty made by or on behalf of any other party except as expressly
- 15-
<PAGE> 16
set forth herein. This Agreement may be executed in one or more counterparts,
and signatures transmitted by facsimile shall be treated as original signatures.
26. WAIVER OF TRIAL BY JURY. BUYER AND SELLER DO EACH HEREBY
KNOWINGLY, VOLUNTARILY, UNCONDITIONALLY, IRREVOCABLY AND INTENTIONALLY FOREVER
WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR CONNECTED WITH, IN ANY MANNER WHATSOEVER, THIS
AGREEMENT.
27. Merger. The occurrence of the Closing shall be deemed to be
a full performance and discharge of every agreement and obligation of Buyer and
Seller hereunder, except as to any agreements which by their terms are to be
performed after the Closing.
-16-
<PAGE> 17
Executed under seal as of the Effective Date.
SELLER:
MSC VALLEY VIEW, INC.,
a Delaware corporation
By:_______________________________
Name:__________________________
Title:_________________________
BUYER:
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By: /s/ DONALD G. HERRMAN
--------------------------------------------
Donald G. Herrman EVP
-----------------------------------------------
(Print Name and Title)
By: [SIG]
--------------------------------------------
-----------------------------------------------
(Print Name and Title)
__________________________agrees to act as Escrow Agent in accordance with the
terms of this Agreement.
-----------------------------------------------
By:
--------------------------------------------
Name:
Title:
-17-
<PAGE> 18
<TABLE>
<S> <C>
EXHIBIT A LEGAL DESCRIPTION
EXHIBIT B Intentionally Omitted
EXHIBIT C GRANT, BARGAIN, AND SALE DEED
EXHIBIT D ASSIGNMENT OF LEASES
EXHIBIT E ASSIGNMENT OF SERVICE CONTRACTS, WARRANTIES,
GUARANTIES, PERMITS AND OTHER INTANGIBLE PROPERTY
EXHIBIT F BILL OF SALE
EXHIBIT G ESTOPPEL CERTIFICATE
EXHIBIT H FORM OF NOTICE TO TENANTS
EXHIBIT I TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
EXHIBIT J LEASE SCHEDULE
EXHIBIT K DUE DILIGENCE DELIVERIES
EXHIBIT L SURVEY REQUIREMENTS
SCHEDULE 14(c) LIST OF LITIGATION
</TABLE>
-18-
<PAGE> 19
EXHIBIT A
LEGAL DESCRIPTION
<PAGE> 20
LV-759351C-RD
PRO-FORMA POLICY
SCHEDULE C
THE LAND REFERRED TO IN THIS POLICY IS SITUATED IN THE STATE OF NEVADA, COUNTY
OF CLARK, AND IS DESCRIBED AS FOLLOWS:
PARCEL 1:
THAT PORTION OF THE SOUTHWEST QUARTER (SW 1/4) OF THE SOUTHEAST QUARTER (SE 1/4)
OF THE NORTHEAST QUARTER (NE 1/4) OF SECTION 19, TOWNSHIP 21 SOUTH, RANGE 61
EAST, M.D.B. & M., SITUATE IN THE COUNTY OF CLARK, STATE OF NEVADA, DESCRIBED AS
FOLLOWS:
COMMENCING AT THE EAST QUARTER (E 1/4) CORNER OF SAID SECTION 19; THENCE SOUTH
89 DEGREES 36'43" WEST ALONG THE EAST-WEST QUARTER (E-W 1/4) SECTION LINE
1,027.84 FEET; THENCE NORTH 00 DEGREES 59'21" WEST 40.00 FEET TO THE TRUE POINT
OF BEGINNING, SAID POINT ALSO BEING ON THE NORTHERLY RIGHT OF WAY LINE OF HARMON
AVENUE;
NOTE: DOCUMENTS OF RECORD INDICATE THAT SAID POINT OF BEGINNING IS LOCATED AS
FOLLOWS: COMMENCING AT THE EAST QUARTER (E 1/4) OF SAID SECTION 19;
THENCE SOUTH 89 DEGREES 36'43" WEST ALONG TIM EAST-WEST QUARTER (E-W 1/4)
SECTION LINE 695.94 FEET; THENCE NORTH 01 DEGREE 09'02" WEST 40.00 FEET
TO A POINT, SAID POINT ALSO BEING ON THE NORTHERLY RIGHT OF WAY LINE OF
HARMON AVENUE.
THENCE SOUTH 89 DEGREES 36'43" WEST ALONG SAID NORTHERLY RIGHT OF WAY LINE
331.75 FEET TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING SOUTH 89 DEGREES
36'43" WEST ALONG SAID NORTHERLY RIGHT OF WAY LINE 364.09 FEET; THENCE NORTH
00 DEGREES 59'21" WEST 621.62 FEET; THENCE NORTH 89 DEGREES 36'30" EAST,
364.08 FEET; THENCE SOUTH 00 DEGREES 59'21" EAST, 621.65 FEET TO THE TRUE POINT
OF BEGINNING.
"CONTINUED ON NEXT PAGE"
<PAGE> 21
LV-759351C-RD
PARCEL 2:
TOGETHER WITH A PERPETUAL EASEMENT FOR RAILROAD SPUR OVER THE FOLLOWING
DESCRIBED PROPERTY, FOR PURPOSES OF A RAILROAD SPUR, AS MORE PARTICULARLY
DESCRIBED AS FOLLOWS:
PARCEL A:
THAT PORTION OF THE FOLLOWING DESCRIBED PROPERTY LYING EAST OF THE EAST BOUNDARY
LINE OF THE ABOVE DESCRIBED PARCEL:
THAT PORTION OF THE SOUTHWEST QUARTER (SW 1/4) OF THE SOUTHEAST QUARTER (SE 1/4)
OF THE NORTHEAST QUARTER (NE 1/4) OF SECTION 19, TOWNSHIP 21 SOUTH, RANGE 61
EAST, M.D.B. & M., SITUATE IN THE COUNTY OF CLARK, STATE OF NEVADA, BEING A
STRIP OF LAND 20.00 FEET WIDE AND LYING 10.00 FEET ON EACH SIDE OF THE
FOLLOWING DESCRIBED CENTERLINE:
COMMENCING AT THE CENTER QUARTER CORNER OF SAID SECTION 19, THENCE NORTH 89
DEGREES 36'43" EAST ALONG THE EAST-WEST QUARTER SECTION LINE 1,391.93 FEET
(RECORDED 1,391.89 FEET); THENCE NORTH 00 DEGREES 59'21" WEST, 661.62 FEET;
THENCE NORTH 89 DEGREES 36'30" EAST, ALONG THE NORTH LINE OF THE SOUTHWEST
QUARTER (SW 1/4) OF THE SOUTHEAST QUARTER (SE 1/4) OF THE NORTHEAST QUARTER
(NE 1/4) OF SAID SECTION 19. A DISTANCE OF 386.57 FEET TO THE TRUE POINT OF
BEGINNING; SAID POINT ALSO BEING ON A CURVE CONCAVE TO THE SOUTHEAST HAVING A
RADIUS OF 409.24 FEET; A RADIAL LINE TO SAID POINT BEARS NORTH 64 DEGREES 01'28"
WEST; THENCE SOUTHWESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 26
DEGREES 57'53" AN ARC LENGTH OF 192.60 FEET; THENCE SOUTH 00 DEGREES 59'21"
EAST, 37.89 FEET TO THE POINT OF TERMINATION.
PARCEL B:
THAT PORTION OF THE NORTH HALF (N 1/2) OF THE SOUTHEAST QUARTER (SE 1/4) OF THE
NORTHEAST QUARTER (NE 1/4) OF SECTION 19, TOWNSHIP 21 SOUTH, RANGE 61 EAST,
M.D.B. & M., SITUATE IN THE COUNTY OF CLARK, STATE OF NEVADA, BEING A STRIP OF
LAND 20.00 FEET WIDE AND LYING 10.00 FEET ON EACH SIDE OF THE FOLLOWING
DESCRIBED CENTERLINE:
COMMENCING AT THE CENTER QUARTER CORNER OF SAID SECTION 19, THENCE NORTH
89 DEGREES 36'43" EAST, ALONG THE EAST-WEST QUARTER SECTION LINE, 1391.93 FEET
(RECORDED 1,391.89 FEET); THENCE NORTH 00 DEGREES 59'21" WEST, 661.62 FEET;
THENCE NORTH 89 DEGREES 36'30" EAST ALONG THE NORTH LINE OF THE SOUTHWEST
QUARTER (SW 1/4) OF THE SOUTHEAST QUARTER (SE 1/4)
"CONTINUED ON NEXT PAGE"
<PAGE> 22
LV-759351C-RD
OF THE NORTHEAST QUARTER (NE 1/4) OF SAID SECTION 19, A DISTANCE OF 386.57 FEET
TO THE TRUE POINT OF BEGINNING; SAID POINT ALSO BEING ON A CURVE CONCAVE TO THE
SOUTHEAST HAVING A RADIUS OF 409.24 FEET, A RADIAL LINE TO SAID POINT BEARS
NORTH 64 DEGREES 01'28" WEST; THENCE NORTHEASTERLY ALONG AN ARC OF SAID CURVE
THROUGH A CENTRAL ANGLE OF 09 DEGREES 07'46" AN ARC LENGTH OF 65.21 FEET; THENCE
NORTH 35 DEGREES 06'18" EAST, 72.99 FEET TO THE POINT OF TERMINATION.
PARCEL C:
THAT PORTION OF THE FOLLOWING DESCRIBED PARCEL OF LAND EXTENDING FROM AND
COMMENCING AT THE POINT OF THE INTERSECTION WITH PARCEL B ABOVE:
THAT PORTION OF THE NORTH HALF (N 1/2) OF THE SOUTHEAST QUARTER (SE 1/4) OF THE
NORTHEAST QUARTER (NE 1/4) OF SECTION 19, TOWNSHIP 21 SOUTH, RANGE 61 EAST,
M.D.B. & M., SITUATE IN THE COUNTY OF CLARK, STATE OF NEVADA, BEING A STRIP OF
LAND 20.00 FEET WIDE AND LYING 10.00 FEET ON EACH SIDE OF THE FOLLOWING
DESCRIBED CENTERLINE:
COMMENCING AT THE CENTER QUARTER OF SAID SECTION 19, THENCE NORTH 89 DEGREES
36'43" EAST, ALONG THE EAST-WEST QUARTER SECTION LINE, 1391.93 FEET (RECORDED
1,391.89 FEET); THENCE NORTH 00 DEGREES 59'21" WEST, 661.62 FEET; THENCE NORTH
89 DEGREES 36'30" EAST, ALONG THE NORTH LINE OF THE SOUTHWEST QUARTER (SW 1/4)
OF THE SOUTHEAST QUARTER (SE 1/4) OF THE NORTHEAST QUARTER (NE 1/4) OF SAID
SECTION 19, A DISTANCE OF 405.09 FEET TO THE TRUE POINT OF BEGINNING; SAID POINT
ALSO BEING ON A CURVE CONCAVE TO THE SOUTHEAST HAVING A RADIUS OF 409.24 FEET, A
RADIAL LINE TO SAID POINT BEARS NORTH 72 DEGREES 59'58" WEST; THENCE
NORTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 61 DEGREES 13'31" AN
ARC LENGTH OF 437.30 FEET; THENCE NORTH 78 DEGREES 13'33" EAST, 245.47 FEET TO A
POINT OF TANGENCY TO A CURVE CONCAVE TO THE SOUTH HAVING A RADIUS OF 461.67
FEET; THENCE EASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 12 DEGREES
26'09" AN ARC LENGTH OF 100.20 FEET TO THE POINT OF TERMINATION.
PARCEL D:
THAT PORTION OF THE NORTH HALF (N 1/2) OF THE SOUTHEAST QUARTER (SE 1/4) OF THE
NORTHEAST QUARTER (NE 1/4) OF SECTION 19, TOWNSHIP 21 SOUTH, RANGE 61 EAST,
M.D.B & M., SITUATE IN THE COUNTY OF CLARK, STATE OF NEVADA, BEING A STRIP OF
LAND 20.00 FEET WIDE AND LYING 10.00 FEET ON EACH SIDE OF THE FOLLOWING
DESCRIBED CENTERLINE:
"CONTINUED ON NEXT PAGE"
<PAGE> 23
LV-759351C-RD
COMMENCING AT THE CENTER QUARTER CORNER OF SECTION 19, THENCE NORTH 89 DEGREES
36'43" EAST ALONG THE EAST-WEST QUARTER SECTION LINE, 1391.93 FEET (RECORDED
1,391.89 FEET); THENCE NORTH 00 DEGREES 59'21" WEST, 661.62 FEET TO THE
NORTHWEST CORNER (NW COR.) OF THE SOUTHWEST QUARTER (SW 1/4) OF THE SOUTHEAST
QUARTER (SE 1/4) OF THE NORTHEAST QUARTER (NE 1/4) OF SAID SECTION 19; THENCE
NORTH 69 DEGREES 42'42" EAST, 569.98 FEET TO THE TRUE POINT OF BEGINNING; THENCE
SOUTH 50 DEGREES 13'33" WEST, 122.86 FEET TO A POINT OF TANGENCY TO A CURVE
CONCAVE TO THE NORTHWEST HAVING A RADIUS OF 466.94 FEET; THENCE SOUTHWESTERLY
ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 15 DEGREES 36'03" AN ARC LENGTH OF
127.14 FEET TO THE POINT OF TERMINATION.
EXCEPTING THEREFROM ANY PORTION OF PARCELS A, B C AND D OF PARCEL 2 WHICH LIE
WITHIN THE BOUNDS OF PARCEL 1 ABOVE.
PARCEL 3:
A NON-EXCLUSIVE EASEMENT FOR VEHICULAR AND PEDESTRIAN INGRESS AND EGRESS AS
CREATED BY THAT CERTAIN RECIPROCAL EASEMENT RECORDED DECEMBER 7, 1989 IN BOOK
891207 OF OFFICIAL RECORDS, CLARK COUNTY NEVADA, AS DOCUMENT NO. 00078 AND
RE-RECORDED DECEMBER 28, 1989 IN BOOK 891228 OF OFFICIAL RECORDS, CLARK COUNTY
NEVADA, AS DOCUMENT NO. 00325 AND RE-RECORDED JANUARY 10, 1990 IN BOOK 900110 OF
OFFICIAL RECORDS, CLARK COUNTY NEVADA, AS DOCUMENT NO. 00509 OVER THE WESTERLY
TWENTY (20') FEET OF THE FOLLOWING:
PARCEL I:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 19; THENCE SOUTH 89
DEGREES 36'43" WEST ALONG THE EAST-WEST QUARTER SECTION LINE 695.94 FEET; THENCE
NORTH 01 DEGREE 09'02" WEST 40.00 FEET TO THE TRUE POINT OF BEGINNING, SAID
POINT ALSO BEING ON THE NORTHERLY RIGHT-OF-WAY LINE OF HARMON AVENUE; THENCE
SOUTH 89 DEGREES 36'43" WEST ALONG SAID NORTHERLY RIGHT-OF-WAY LINE 331.75
FEET;' THENCE NORTH 00 DEGREES 59'21" WEST, 497.69 FEET; THENCE NORTH 89 DEGREES
00'139" EAST, 210.00 FEET; THENCE NORTH 88 DEGREES 50'58" EAST, 120.32 FEET;
THENCE SOUTH 01 DEGREE 09'02" EAST 501.51 FEET TO THE TRUE POINT OF BEGINNING.
PARCEL II:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 19; THENCE SOUTH 89
DEGREES 36'43" WEST ALONG THE EAST-WEST QUARTER SECTION LINE 695.94 FEET; THENCE
NORTH 01 DEGREE 09'02" WEST, 541.51 FEET TO THE TRUE POINT OF BEGINNING; THENCE
CONTINUING NORTH 01 DEGREE 09'02" WEST 120.18 THENCE SOUTH 89 DEGREES 36'30"
WEST, 330.00 FEET; THENCE SOUTH 00 DEGREES 59'21" EAST, 123.96 FEET; THENCE
NORTH 89 DEGREES 00'39" EAST, 210.00 FEET; THENCE NORTH 88 DEGREES 50'58" EAST,
120.32 FEET TO THE POINT OF BEGINNING.
<PAGE> 24
LV-7593SIE-RD
PRO-FORMA POLICY
SCHEDULE C
THE LAND REFERRED TO IN THIS POLICY IS SITUATED IN THE STATE OF NEVADA, COUNTY
OF CLARK, AND IS DESCRIBED AS FOLLOWS:
LOT TWO (2), AS SHOWN BY MAP THEREOF ON FILE IN FILE 19 OF PARCEL MAPS, PAGE 5,
RECORDED MAY 1, 1978, AS DOCUMENT NO. 839636, IN THE OFFICE OF THE COUNTY
RECORDER OF CLARK COUNTY, NEVADA.
EXCEPTING AND RESERVING ALSO TO THE UNITED STATES ALL OIL, GAS, AND POTASH AND
SODIUM IN THE LAND SO PATENTED, AND TO IT OR PERSONS AUTHORIZED BY IT, THE RIGHT
TO PROSPECT FOR, MINE, AND REMOVE SUCH DEPOSITS FROM THE SAME UPON COMPLIANCE
WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF THE ACT OF
JULY 17, 1914 (38 STAT. 509), AS AMENDED BY THE ACT OF MARCH 4, 1933 (47 STAT.
1570), AS RESERVED IN PATENT RECORDED JULY 17, 1964 IN BOOK 555 OF OFFICIAL
RECORDS, CLARK COUNTY, NEVADA, AS DOCUMENT NO. 446703.
* * * * * * * *
DMJ
<PAGE> 25
LV-759351A-RD
PRO-FORMA POLICY
SCHEDULE C
THE LAND REFERRED TO IN THIS POLICY IS SITUATED IN THE STATE OF NEVADA, COUNTY
OF CLARK, AND IS DESCRIBED AS FOLLOWS:
LOT ONE (1) , AS SHOWN BY MAP THEREOF ON FILE IN FILE 19 OF PARCEL MAPS, PAGE 5,
RECORDED MAY 1, 1978, AS DOCUMENT NO. 839636, IN THE OFFICE OF THE COUNTY
RECORDER OF CLARK COUNTY, NEVADA.
EXCEPTING AND RESERVING ALSO TO THE UNITED STATES ALL OIL, GAS, AND POTASH AND
SODIUM, IN THE LAND SO PATENTED, AND TO IT OR PERSONS AUTHORIZED BY IT, THE
RIGHT TO PROSPECT FOR, MINE AND REMOVE SUCH DEPOSITS FROM THE SAME UPON
COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF
THE ACT OF JULY 17, 1914 (38 STAT. 509), AS AMENDED BY THE ACT OF MARCH 4, 1933
(47 STAT. 1570), AS RESERVED IN THE PATENT AND RECORDED JULY 17, 1964 IN BOOK
555 OF OFFICIAL RECORDS, CLARK COUNTY, NEVADA, AS DOCUMENT NO. 446703, CLARK
COUNTY, NEVADA RECORDS.
DMJ
<PAGE> 26
EXHIBIT B
INTENTIONALLY OMITTED
<PAGE> 27
EXHIBIT C
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Pacific Gulf Properties Inc.
4220 Von Karman, Second Floor
Newport Beach, California 92660-2002
Attention: Mr. Lonnie Nadal
GRANT BARGAIN AND SALE DEED
THIS INDENTURE WITNESSETH: That MSC VALLEY VIEW, INC., a Delaware corporation,
whose address is c/o AMRESCO Advisors, Inc., 265 Franklin Street, Suite 1800,
Boston, MA 02110, in consideration of Ten Dollars ($10.00), the receipt of
which is hereby acknowledged, does hereby Grant, Bargain, Sell and Convey to
PACIFIC GULF PROPERTIES INC., a Maryland corporation, whose address is 4220 Von
Karman, Second Floor, Newport Beach, CA 92660-2002, all that real property
situate in the County of Clark, State of Nevada, bounded and described on
Schedule 1 attached hereto and incorporated herein by this reference. Current
Assessor's Parcel Numbers: 470-162-19-601-022; 470-162-19-601-021;
470-162-19-601-018.
SUBJECT ONLY TO those items shown on Schedule 2 attached hereto and incorporated
herein.
Together with all and singular the tenements, hereditaments and appurtenances
thereunto belonging or in anywise appertaining.
IN WITNESS WHEREOF, the undersigned has executed this Grant, Bargain
and Sale Deed as of _________, 1997.
MSC VALLEY VIEW, INC.
By:____________________________________________
Name:_______________________________________
Title:______________________________________
<PAGE> 28
STATE OF_______________)
) SS.
COUNTY OF______________)
On _____________, 199__, before me, the undersigned, a Notary
Public in and for said County and State, personally appeared_________________
of MSC Valley View, Inc., personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person,
or the entity upon behalf of which the person acted, executed the within
instrument.
WITNESS my hand and official seal.
-------------------------------
Notary Public
<PAGE> 29
LEGAL DESCRIPTION
<PAGE> 30
EXCEPTIONS TO TITLE
<PAGE> 31
EXHIBIT D
ASSIGNMENT OF LEASES
THIS ASSIGNMENT OF LEASES (this "Assignment") dated as of_________, 1997,
is made by MSC VALLEY VIEW, INC., a Delaware corporation ("Assignor"), to
PACIFIC GULF PROPERTIES INC., a Maryland corporation ("Assignee").
WITNESSETH:
WHEREAS, Assignor is the lessor under certain leases executed with
respect to that certain real property located in the City of Las Vegas, County
of Clark, State of Nevada (the "Property") more particularly described on
Schedule 1 attached hereto and incorporated herein by this reference, which
leases are described in Schedule 2 attached hereto and incorporated herein by
this reference (the "Leases").
WHEREAS, Assignor is contemporaneously herewith selling the Property to
Assignee pursuant to that certain Purchase and Sale Agreement and Escrow
Instructions dated as of _________, 1997, by and between Assignor and Assignee
(the "Purchase Agreement").
WHEREAS, Assignor desires to assign its interest in and to the Leases to
Assignee as of the date on which title to the Property is vested in Assignee
(the "Transfer Date").
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereby agree as follows:
1. As of the Transfer Date, Assignor hereby assigns to Assignee all of
its right, title and interest in and to the Leases.
2. As of the Transfer Date, Assignee hereby assumes all of Assignor's
right, title and interest in and to the Leases.
3. Assignor hereby agrees to indemnify, defend and hold harmless
Assignee from and against any and all liabilities, claims, demands, damages and
costs, including, without limitation, attorneys' fees and expenses
(collectively, "Liabilities"), arising out of the lessor's obligations under the
Leases described in Schedule 2 and related to the period prior to or on the
Transfer Date or which arise out of the lessor's obligations under said Leases
after the Transfer Date on account of any fact or circumstance occurring or
existing on or prior to the Transfer Date.
4. Assignee hereby agrees to indemnify, defend and hold harmless
Assignor from and against any and all Liabilities arising out of the lessor's
obligations under the leases described in Schedule 2 and related to the period
after the Transfer Date, except for Liabilities which arise out of the lessor's
obligations under said Leases after the Transfer Date on account of any fact or
circumstance occurring or existing on or prior to the Transfer Date.
<PAGE> 32
5. In the event of any litigation between Assignor and Assignee arising
out of the obligations of the parties under this Assignment or concerning the
meaning or interpretation of any provision contained herein, the losing party
shall pay the prevailing party's costs and expenses in such litigation,
including, without limitation, reasonable attorneys' fees and expenses. In
addition to the foregoing award of attorneys' fees to the prevailing party, the
prevailing party in any lawsuit on this Agreement shall be entitled to its
reasonable attorneys' fees incurred in any post judgment proceedings to collect
or enforce the judgment. This provision is separate and several and shall
survive the merger of this Assignment into any judgment on this Assignment.
6. This Assignment shall be binding on and inure to the benefit of the
Assignee and Assignor and their respective heirs, executors, administrators,
successors-in-interest and assigns.
7. This Assignment shall be governed by and construed in accordance with
the laws of the State of Nevada.
8. Nothing contained herein shall be deemed or construed as relieving
the Assignor or Assignee of their respective duties and obligations under the
Purchase Agreement.
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date
first above written.
ASSIGNOR: MSC VALLEY VIEW, INC.,
a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------
Title:
-----------------------------
ASSIGNEE: PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
-------------------------------------
-------------------------------------------
(Print Name and Title)
By:
-------------------------------------
-------------------------------------------
(Print Name and Title)
<PAGE> 33
Schedule 1
LEGAL DESCRIPTION OF REAL PROPERTY
<PAGE> 34
Schedule 2
DESCRIPTION OF THE LEASES
<PAGE> 35
EXHIBIT E
ASSIGNMENT OF SERVICE CONTRACTS, WARRANTIES,
GUARANTIES, PERMITS AND OTHER INTANGIBLE PROPERTY
THIS ASSIGNMENT OF SERVICE CONTRACTS, WARRANTIES, GUARANTIES AND OTHER
INTANGIBLE PROPERTY (this "Assignment") is made as of ___________, 199__, by
MSC VALLEY VIEW, INC., a Delaware corporation ("Assignor"), to PACIFIC GULF
PROPERTIES INC., a Maryland corporation ("Assignee").
WITNESSETH:
WHEREAS, Assignor is contemporaneously herewith selling pursuant to that
certain Purchase and Sale Agreement and Escrow Instructions dated as of
___________, 199___, by and between Assignor and Assignee (the "Purchase
Agreement") that certain real property and improvements thereon located in the
City of Las Vegas, County of Clark, State of Nevada, the real property of which
is more particularly described on Schedule 1 attached hereto and incorporated
herein by this reference. Terms used in this Assignment and not otherwise
defined shall be given the meanings defined in the Purchase Agreement.
WHEREAS, Assignor desires to assign its interest in and to the following
to Assignee as of the date on which title to the Real Property is vested in
Assignee (the "Transfer Date"):
(a) All service contracts described in Schedule 2 attached
hereto and incorporated herein by this reference (the "Contracts");
(b) All "Warranties and Guaranties" (hereinafter defined);
(c) All "Names and Marks" (hereinafter defined);
(d) All "Intangible Property" (hereinafter defined); and
(e) All "Permits" (hereinafter defined).
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. As of the Transfer Date, Assignor hereby assigns and
transfers unto Assignee all of its right, title, claim and interest in,
to and under the (a) Contracts; (b) Warranties and Guarantees; (c) Names
and Marks; (d) Intangible Property and (e) Permits (collectively the
"Assigned Interests").
2. As of the Transfer Date, Assignee hereby assumes all of
Assignor's right, title and interest in and to the Assigned Interests.
<PAGE> 36
3. The following terms shall have the following meanings:
(a) The term "Warranties and Guaranties" as used herein
shall mean and include all warranties and guarantees to the extent assignable,
whether or not written, for all or any portion of the Property, including
without limitation the Improvements and the Tangible Personal Property,
including without limitation construction warranties from contractors and
subcontractors.
(b) The term "Names and Marks" as used herein shall mean
and include all patents, licenses, trademarks, service marks and names used in
connection with the operation of the Property, and all symbols, emblems and
logos used in connection with the ownership or operation of the Property,
whether in black and white or in color, and irrespective of size, and all of
Assignor's right, title and interest in and to all goodwill associated
therewith, including, without limitation the name "Valley View Industrial
Center".
(c) The term "Intangible Property" as used herein shall
mean and include all intangible property relating to or used in connection with
the Property, as defined in the Purchase Agreement.
(d) The term "Permits" as used herein shall mean and
include all governmental permits and approvals relating to the construction,
operation, use or occupancy of the Property.
4. Assignor hereby agrees to indemnify, defend and hold harmless
Assignee from and against any and all liabilities, claims, demands, damages and
costs, including, without limitation, attorneys' fees and expenses
(collectively, "Liabilities"), arising out of the Assigned Interests and related
to the period prior to or on the Transfer Date or which arise out of the
Assigned Interests after the Transfer Date on account of any fact or
circumstance occurring or existing on or prior to the Transfer Date.
5. Assignee hereby agrees to indemnify, defend and hold harmless
Assignor from and against any and all Liabilities arising out of the Assigned
Interests after the Transfer Date, except for Liabilities which arise out of the
Assigned Interests after the Transfer Date on account of any fact or
circumstance occurring or existing on or prior to the Transfer Date.
6. In the event of any litigation between Assignor and Assignee
arising out of the obligations of the parties under this Assignment or
concerning the meaning or interpretation of any provision contained herein, the
losing party shall pay the prevailing party's costs and expenses in such
litigation, including, without limitation, reasonable attorneys' fees and
expenses. In addition to the foregoing award of attorneys' fees to the
prevailing party, the prevailing party in any lawsuit on this Agreement shall be
entitled to its reasonable attorneys' fees incurred in any post judgment
proceedings to collect or enforce the judgment. This provision is separate and
several and shall survive the merger of this Assignment into any judgment on
this Assignment.
<PAGE> 37
7. 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.
8. This Assignment shall be governed by and construed in accordance
with the laws of the State of Nevada.
9. Nothing contained herein shall be deemed or construed as
relieving the Assignor or Assignee of their respective duties and obligations
under the Purchase Agreement.
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the
date first above written.
ASSIGNOR: MSC VALLEY VIEW, INC.,
a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------
Title:
-----------------------------
ASSIGNEE: PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
-------------------------------------
-------------------------------------------
(Print Name and Title)
By:
-------------------------------------
-------------------------------------------
(Print Name and Title)
<PAGE> 38
Schedule 1
LEGAL DESCRIPTION OF REAL PROPERTY
<PAGE> 39
Schedule 2
DESCRIPTION OF THE CONTRACTS
<PAGE> 40
EXHIBIT F
BILL OF SALE
FOR VALUE RECEIVED, MSC VALLEY VIEW, INC., a Delaware corporation
"Seller") hereby sells, conveys and assigns to PACIFIC GULF PROPERTIES INC., a
Maryland corporation, all of Seller's right, title and interest in and to all
personal property located upon or used in the ownership, operation, management,
maintenance and/or repair of that certain real property commonly known as
"Valley View Industrial Center" and described in Schedule I attached hereto and
incorporated herein by this reference and the improvements thereon
(collectively, the "Personal Property" which Personal Property shall include,
without limitation, the items described on Schedule 2 attached hereto and
incorporated herein by this reference.
TO HAVE AND TO HOLD the Personal Property unto the grantee and its
successors and assigns forever.
Seller warrants that it owns good and marketable title to the Personal
Property and will defend title to the Personal Property against all persons
claiming a prior right thereto to the extent that such prior right is alleged to
exist on or before the date of this Bill of Sale. Seller makes no representation
or warranty, express or implied, of merchantability, fitness for a particular
purpose, or otherwise except as set forth herein.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale on this
_______ day of _____________, 1997.
MSC VALLEY VIEW, INC.,
a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------
Title:
-----------------------------
<PAGE> 41
Schedule 1
LEGAL DESCRIPTION OF THE PROPERTY
<PAGE> 42
Schedule 2
DESCRIPTION OF ITEMS INCLUDED IN THE PERSONAL PROPERTY
<PAGE> 43
EXHIBIT G
ESTOPPEL CERTIFICATE
Tenant:____________________________________
Date:_________________________________199__
Address:___________________________________
___________________________________________
___________________________________________
Lease Date:________________________________
Commencement Date:_________________________
Square Footage:____________________________
Expiration Date:___________________________
Term In Years:_____________________________
Current Monthly Payments:$_________________
Base Rental:$______________________________
Operating Expenses:$_______________________
Rent & OE Pmts Are Due:____________________
Tax Pmts Are Due:__________________________
Taxes:$____________________________________
Security Deposit:__________________________
OPTIONS
Check appropriate box below
__ Extension Option
__ Expansion Option
__ Termination Option
__ Purchase Option
and provide details in Paragraph 7 below
__ None
__ Check here if you have rental escalations and
provide details in Paragraph 4 below.
Tenants Proportionate Share Of Taxes And Operating Expenses ___%
================================================================================
THE UNDERSIGNED, AS TENANT UNDER THE LEASE OF THE ABOVE REFERENCED
PREMISES ("PREMISES") EXECUTED BY __________________("LANDLORD"), AS LANDLORD,
AND TENANT ON THE ABOVE-REFERENCED LEASE DATE, DOES HEREBY STATE, DECLARE,
REPRESENT AND WARRANT TO LANDLORD, PACIFIC
<PAGE> 44
GULF PROPERTIES INC. ("BUYER"), THEIR ASSIGNEES AND ANY PARTY PROVIDING
FINANCING ON THE PREMISES AS FOLLOWS:
1. Accuracy. That the information contained in this Tenant's Estoppel
Certificate is true and correct as of the date above written.
2. Lease. That the copy of the Lease attached hereto as Schedule I is a true and
correct copy of the Lease which is in full force and effect and which has not
been amended, supplemented or changed by letter agreement or otherwise, except
as follows [if none, indicate so by writing "NONE" below]:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. Completion of Premises/No Disputes. Tenant has accepted possession of the
Premises, and all conditions to be satisfied by Landlord under the Lease have
been completed pursuant to the terms of the Lease, including, but not limited
to, completion of construction of the Premises (and all other improvements
required under the Lease) in accordance with applicable plans and specifications
and within the time periods set forth in the Lease; there are no unreimbursed
expenses (except the annual operating expense and tax expense adjustment)
including, but not limited to, capital expenses reimbursements; and Tenant has
no complaints or disputes with Landlord regarding the overall operation,
maintenance or condition of the Premises or the property within which the
Premises is located (the "Property"), or otherwise.
4. Rental Escalation. Base Rental is subject to the following escalation
adjustments (if none, indicate so by writing "NONE" below):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. No Defaults/Claims. Neither Tenant nor, to Tenant's knowledge, Landlord under
the Lease is in default under any terms of the Lease nor has any event occurred
which with the passage of time (after notice, if any, required by the Lease)
would become an event of default under the Lease. Tenant has no claims,
counterclaims, defenses or setoffs against Landlord arising from the Lease, the
Premises or the Property, nor is Tenant entitled to any concession, rebate,
allowance or free rent for any period after this certification.
6. No Advance Payments. No rent has been paid more than one (1) month in advance
by Tenant except for the current month's rent, and no security (other than a
security deposit in the amount of $___________ has been deposited with Landlord.
<PAGE> 45
7. No Options/Purchase Rights. Tenant has no right of first refusal to purchase
the Property or any interest therein and no right to cancel or terminate the
Lease except as follows [if none, indicate so by writing "NONE" below]:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. No Modification of Lease. From the date of this Estoppel Certificate through
_________, 1997, no modification or amendment to the Lease, forgiveness of
payment of rent or other amount due under the Lease, grant of extension or
option, or prepayment of rents may be made except upon the written consent
thereto executed by Buyer, which consent may be unreasonably withheld if not
otherwise provided in the Lease.
9. Parking. The number of parking spaces allotted to Tenant under the terms of
the Lease, for the use of its employees, agents, invitees and licensees is
________; of these spaces, ________ are reserved for Tenant's exclusive use.
10. No Sublease/Assignment. Tenant has not entered into any sublease, assignment
or any other agreement transferring any of its interest in the Lease or the
Premises, except as follows:
- --------------------------------------------------------------------------------
11. No Notice. Tenant has not received written notice of any assignment,
hypothecation, mortgage, or pledge of Landlord's interest in the Lease or the
rents or other amounts payable thereunder, except those listed below.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
12. Hazardous Materials. No hazardous or toxic substance (including without
limitation PCB's, petroleum, petroleum products and fractions thereof) has been
used, treated, stored or disposed of on the Premises or Property in violation
of environmental laws by Tenant or, to Tenant's knowledge, any other party. No
underground storage tanks exist or, to Tenant's knowledge, have existed on or
under the Property. Tenant does not have any permits or identification numbers
issued by any environmental or governmental agency with respect to its
operations on the Premises, except those listed below.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
13. Reliance. Tenant recognizes and acknowledges it is making these
representations to Buyer with the intent that Buyer and any assigns of Buyer
will fully rely on Tenant's representations.
14. Binding. The provisions hereof shall be binding upon and inure to the
benefit of the successors, assigns, personal representatives and heirs of Tenant
and Buyer.
<PAGE> 46
EXECUTED BY TENANT, IF TENANT IS A SOLE PROPRIETOR OR A GENERAL PARTNERSHIP, OR
BY AN OFFICER OF TENANT, IF TENANT IS A CORPORATION, ON THE DATE FIRST WRITTEN
ABOVE.
BY:
--------------------------------
a
-------------------------
BY:
-------------------------
NAME:
-------------------------
TITLE:
-------------------------
<PAGE> 47
Schedule 1 to Estoppel Certificate
LEASE
<PAGE> 48
EXHIBIT H
FORM OF NOTICE TO TENANTS
________________ ,1997
To:
-------------------------------
-------------------------------
-------------------------------
RE: Notice of Lease Assignment
This letter is to notify you that the property commonly known as the
_________________ ("Property") has this date been sold and ownership
transferred.
In connection with this sale, all of the interest of the lessor under
your lease of space in the Property has been transferred. You are hereby
notified that, from and after the date hereof and until further notice, all
future payments under your lease should be made payable to "________________"
(the "Property Manager") and mailed to the Property Manager, whose address is
________________ __________________. In addition, all questions or other matters
regarding your lease should be directed to the Property Manager at (___)
__________.
Also in connection with this sale, if you have paid a security deposit
in connection with your lease, it has been transferred to the Property Manager.
The return of any such security deposit will be conditioned upon and subject to
the terms and conditions of the lease and the legal requirements of the State of
____________. All future inquiries regarding security deposits are to be
directed to the Property Manager.
Thank you for your cooperation.
Very truly yours,
-------------------------------------------
-------------------------------------------
-------------------------------------------
<PAGE> 49
EXHIBIT I
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
To inform PACIFIC GULF PROPERTIES INC., a Maryland corporation
("Transferee"), that withholding of tax under Section 1445 of the Internal
Revenue Code of 1986, as amended ("Code"), will not be required upon the
transfer of certain real property to the Transferee by MSC VALLEY VIEW, INC., a
Delaware 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 foreign person (as those terms are defined in
the Code and the Income Tax Regulations promulgated thereunder);
2. The Transferor's U.S. employer or tax (social security)
identification number is _________________.
The Transferor understands that this Certification may be disclosed to
the Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
The Transferor understands that the Transferee is relying on this
Certification in determining whether withholding is required upon said transfer.
The Transferor hereby agrees to indemnify, defend and hold the
Transferee harmless from and against any and all obligations, liabilities,
claims, losses, actions, causes of action, rights, demands, damages, costs and
expenses of every kind, nature or character whatsoever (including, without
limitation, reasonable attorneys' fees and court costs) incurred by the
Transferee as a result of: (i) the Transferor's failure to pay U.S. Federal
income tax which the Transferor is required to pay under applicable U.S. law; or
(ii) any false statement contained herein.
Under penalty of perjury I declare that I have examined this Certification
and to the best of my knowledge and belief it is true and correct and complete,
and I further declare that I have authority to sign this document on behalf of
the Transferor.
Date:_____________,1997
MSC VALLEY VIEW, INC.
By:
-------------------------------------
Name:
-----------------------------
Title:
-----------------------------
<PAGE> 50
EXHIBIT J
LEASE SCHEDULE
<PAGE> 51
RENT ROLL
Valley View Industrial Center
OPERATING BUDGET FOR THE YEAR ENDING: 1998
<TABLE>
<CAPTION>
RENT DATES
SUITE ESCAL. TERM/ ------------------ ANNUAL NOTICE TYPE
TENANT # AREA % OPTIONS BEGIN END RENT-PSF (mos) NNN/GROSS
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CM Reprographics 1 10,000 3.3% 64 mos 11/1/93 10/31/94 $4.20 NNN
11/1/94 10/31/95 4.41
11/1/95 10/31/96 4.63
11/1/96 10/31/97 4.86
11/1/97 2/28/99 5.11
5 yr option 3/1/99 2/28/04 Market Rate 12
5 yr option 3/1/04 2/28/09 Market Rate 12
- ------------------------------------------------------------------------------------------------------------------------------
Holmans of Nevada 2 10,000 3.3% 64 mos 11/1/93 10/31/94 $4.20 NNN
11/1/94 10/31/95 4.41
11/1/95 10/31/96 4.63
11/1/96 10/31/97 4.86
11/1/97 2/28/99 5.11
5 yr option 3/1/99 2/28/04 Market Rate 12
5 yr option 3/1/04 2/28/09 Market Rate 12
- ------------------------------------------------------------------------------------------------------------------------------
Hill Enterprises 3 10,000 3.3% 30 mos 4/15/97 9/30/97 $4.80 NNN
10/1/97 9/30/98 $5.04
10/1/98 9/30/99 $5.28
- ------------------------------------------------------------------------------------------------------------------------------
Maui Toys 4 10,000 3.3% 36 mos 4/15/97 3/31/98 $5.28 NNN
4/1/98 3/31/99 $5.48
4/1/99 3/31/00 $5.68
- ------------------------------------------------------------------------------------------------------------------------------
Art & Frame Supply 5 10,000 3.3% 65 mos 2/1/93 2/28/93 $3.72 NNN
3/1/93 6/30/93 $1.98
7/1/93 7/31/93 $3.96
8/1/93 1/31/94 $4.08
2/1/94 1/31/95 $4.28
2/1/95 1/31/96 $4.50
2/1/96 1/31/97 $4.72
2/1/97 6/30/98 $4.96
5 yr. option 7/1/98 6/30/03 Market Rate 6
5 yr. option 7/1/03 6/30/08 Market Rate 6
- ------------------------------------------------------------------------------------------------------------------------------
Cinema Services 6-8 30,000 10.0% 3/1/97 10/31/97 $5.04 NNN
- ------------------------------------------------------------------------------------------------------------------------------
Watkins Shepard 9-10 20,000 6.7% 3 yrs 2/1/95 1/31/96 $4.41
2/1/96 1/31/97 $4.79
2/1/97 1/31/98 $5.03
3 yr renewal 2/1/98 1/31/99 $5.52
2/1/99 1/31/00 $5.76
2/1/00 1/31/01 $6.00
3 yr option 2/1/01 1/31/04 Market Rate 12
3 yr option 2/1/04 1/31/07 Market Rate 12
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
EXPENSE SECURITY
TENANT STOP-PSF DEPOSIT OPTIONS/RIGHTS/COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CM Reprographics $4,500.00 Landlord may not enter into a lease with another tenant
that allows sales/services/rental of blue printing, drafting
supplies, xerography, plotting service bureau, color plotter
bureau, scanning service bureau and specifications or quick
printing excluding Holmans of Nevada and the existing tenants
as of July, 1993.
Option rate at market with 5% annual increases
Option rate at market with 5% annual increases
- ------------------------------------------------------------------------------------------------------------------------------
Holmans of Nevada $4,500.00 Landlord may not enter into a lease with another tenant that
allows sales/service/rental of computers and related printers
or equipment, drafting supplies and surveying systems, except
for CM Reprographics and the existing tenants as of July, 1993
Option rate at market with 5% annual increases
Option rate at market with 5% annual increases
- ------------------------------------------------------------------------------------------------------------------------------
Hill Enterprises $4,800.00 Lease guaranteed by Robert Hill
- ------------------------------------------------------------------------------------------------------------------------------
Maui Toys $4,400.00 Lease guaranteed by Brian Kessler
- ------------------------------------------------------------------------------------------------------------------------------
Art & Frame Supply $3,800.00 Lease guaranteed by Michael G. Sullivan
Option rate at market with 5% annual increases
Option rate at market with 5% annual increases
- ------------------------------------------------------------------------------------------------------------------------------
Cinema Services 0.00 Lease assigned to Harris Productions 4/5/96
Lease was extended 3/1/97 Tenant building new building
- ------------------------------------------------------------------------------------------------------------------------------
Watkins Shepard 4,200.00
Option rate at market with 5% annual increases
Option rate at market with 5% annual increases
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 of 3
<PAGE> 52
RENT ROLL
Valley View Industrial Center
OPERATING BUDGET FOR THE YEAR ENDING: 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
RENT DATES
SUITE ESCAL. TERM/ ----------- ANNUAL NOTICE TYPE EXPENSE SECURITY OPTIONS/RIGHTS/
TENANT # AREA % OPTIONS BEGIN END RENT-PSF (mos) NNN/GROSS STOP/PSF DEPOSIT COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3950
Coremark 1-9 90,000 30.0% 76 mos 1/1/94 4/30/94 $1.49 NNN $23,085.00 Tenant has first
International 5/1/94 3/31/95 $3.13 right of refusal
4/1/95 4/30/95 $3.46 on any available
space in 3950
building
5/1/95 4/30/96 $2.84 Tenant leased
5/1/96 4/30/97 $3.20 additional 10,000
5/1/97 4/30/99 $3.28 sq. ft. 2/1/96
5/1/99 4/30/00 $3.36 Received three
months free rent
5 yr option 5/1/00 4/30/05 Lower of 12 Option rate the
Market or lower of market
5% over or 5% increase
last years last years rent,
rent 2% annul
increases
5 yr option 5/1/05 4/30/10 Lower of 12 Option rate the
Maket or lower of market
5% over or 5% increase
last years last years rent,
rent 2% annual
increases
- ------------------------------------------------------------------------------------------------------------------------------------
Hill Enterprises 10 10,000 3.3% 29 mos 5/1/95 9/30/95 $5.62 NNN $4,500.00
10/1/95 9/30/96 $4.56
10/1/96 9/30/97 $4.79
24 mos 10/1/97 9/30/98 $5.04 Tenant renewed
10/1/98 9/30/99 $5.28 lease for two
years 10/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
4050.00
Star Nursery 1-2 20,000 6.7% 64 mos 11/22/91 5/31/92 $0.82 $0.00 Tenant has first
6/1/92 3/31/95 $3.72 right of refusal
4/1/95 3/31/96 $3.94 on any available
4/1/96 3/31/97 $4.08 adjacent space
1 yr option 4/1/97 3/31/98 $4.39 6 Option rents were
stated in lease
1 yr option 4/1/98 3/31/99 $4.54 6 Option rents were
stated in lease
- ------------------------------------------------------------------------------------------------------------------------------------
All American 3,4,6 30,000 10.0% 61 mos 1/1/95 6/30/95 $4.34 $12,000.00 Lease guaranteed
7/1/95 6/30/96 $4.55 by Scott Svinning
7/1/96 3/31/97 $4.85 & Robert Hill
4/1/97 3/31/98 $5.12
4/1/98 3/31/99 $5.41
5 yr option 4/1/99 3/31/04 Lower of 12 Option rate the
Market or lower of market
5% over or 5% increase
last last years rent,
years rent 5% annual
increases
5 yr option 4/1/04 3/31/09 Lower of 12 Option rate the
Market or lower of market
5% over or 5% increase
last last years rent,
years rent 5% annual
increases
- ------------------------------------------------------------------------------------------------------------------------------------
Sho-Aids 5 10,000 3.3% 75 mos 1/1/93 6/30/93 $1.92 $3,500.00
7/1/93 12/31/93 $3.84
1/1/94 12/31/94 $4.01
1/1/95 3/31/96 $4.19
4/1/96 3/31/97 $5.04
4/1/97 3/31/98 $5.27
4/1/98 3/31/99 $5.50
3 yr option 4/1/99 3/31/02 Lower of 12 Option rate the
4/1/02 3/31/05 Market or lower of market
4.5% over or 4.5% increase
last years last years rent,
rent 4.5% annual
Lower of 12 increases
Market or Option rate the
4.5% over lower of market
last years or 4.5% increase
rent last years rent,
4.5% annual
increases
- ------------------------------------------------------------------------------------------------------------------------------------
Watkins Sheperd 7 10,000 3.3% 3 yrs 2/1/95 1/31/96 $4.56 $0.00
2/1/96 1/31/97 $4.79
2/1/97 1/31/98 $5.03
3 yr option 2/1/98 1/31/01 Lower of 12 Option rate the
Market or lower of market
5% over or 5% increase
last last years rent,
years rent 5% annual
increases
3 yr option 2/1/01 1/31/04 Lower of 12 Option rate the
Market or lower of market
5% over or 5% increase
last last years rent,
years rent 5% annual
increases
</TABLE>
<PAGE> 53
<TABLE>
<S><C>
RENT ROLL
Valley View Industrial Center
OPERATING BUDGET FOR THE YEAR ENDING: 1998
- -----------------------------------------------------------------------------------------------------------------------------------
RENT DATES
SUITE ESCAL. TERM ------------ ANNUAL NOTICE TYPE EXPENSE SECURITY
TENANT # AREA % OPTIONS BEGIN END RENT-PSF (mos) NNN/GROSS STOP-PSF DEPOSIT OPTIONS/RIGHTS/COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Reading Tube 8-10 30,000 10% 38 mos. 7/1/93 8/31/94 $4.20 $20,000.00
9/1/94 8/31/95 $4.41
9/1/95 8/31/96 $4.63
36 mos. 9/1/96 8/31/97 $5.04 Tenant exercised option
9/1/97 8/31/98 $5.29 from first lease
9/1/98 8/31/99 $5.56 New lease gave tenant
two new options
3 yr. 9/1/99 8/31/02 Lower of 12 Option rate the lower
option market of market or 5% increase
or 5% last years rent,
over 5% annual increases
last
years
rent
3 year 9/1/02 8/31/05 Lower of 12 Option rate the lower
option market of market or 5% increase
or 5% last years rent,
over 5% annual increases
last
years
rent
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
300,000 100.0% Average Rent
- -----------------------------------------------------------------------------------------------------------------------------------
Total Leased SF: 300,000 100.0%
TOTAL VACANT SF: -- 0.0%
-------
300,000 100.0%
=======
</TABLE>
<PAGE> 54
EXHIBIT K
DUE DILIGENCE DELIVERIES**
Seller shall deliver true, complete and correct copies of each of the following
to Buyer:
1. Current Lease Schedule showing the name of each lessee, the approximate
square footage occupied, and a specific description of the lease (the "Lease
Schedule").
2. Copies of all Leases.
3. A schedule (the "Schedule of Agreements") setting forth a list of all of
the service contracts and other agreements or rights related to the ownership,
use or operation of the Property, including utility contracts, maintenance
contracts, lease brokerage or commission agreements and equipment leases
(collectively, the "Service Contracts"), but excluding any property management
agreements that Seller will have terminated at or before Closing. From this
Schedule of Agreements, Buyer shall designate those contracts that Seller shall
assign to Buyer and that Buyer shall assume as of Closing (such designated
Service Contracts together with the Warranties and any Other Documents
designated by Buyer for assignment are collectively referred to herein as the
"Assigned Contracts").
4. A current ALTA extended coverage preliminary title report on the Real
Property, issued by Title Company, accompanied by copies of all documents
referred to in the report (collectively, the "Preliminary Report").
5. A copy of any survey of the Real Property in Seller's possession.
6. Available governmental permits and approvals relating to the
construction, operation, use or occupancy of the Property, including without
limitation, all building permits, certificates of completion, certificates of
occupancy, environmental permits and licenses (individually and collectively
"Permits").
7. A copy of a year-to-date (through July 30, 1997) operating statement.
Copies of the most recent property tax bills and assessments for the Property. A
copy of the budget for the Property for the current year.
8. Available, presently effective warranties or guaranties from any
contractors, subcontractors, suppliers, servicemen or materialmen in connection
with any of the Tangible Personal Property or any construction, renovation,
repairs or alterations of the Improvements or any tenant improvements
(collectively, the "Warranties").
9. Available reports in Seller's possession relating to the Property,
including environmental reports, environmental audits, soils reports, site
plans, engineering reports and plans, landscape
<PAGE> 55
plans, structural calculations, floor plans, construction contracts, and other
reports or documents of significance to the Property.
- ----------
** All due diligence deliveries shall be only of materials that are in the
possession of Seller and/or Seller's agents.
<PAGE> 56
EXHIBIT L
SURVEY REQUIREMENTS
OWNER: PACIFIC GULF PROPERTIES INC.
TITLE COMPANY: ____________________________
1. Certification: Survey to be certified to (i) Owner and (ii) Title
Company by a Registered Land Surveyor or a licensed Civil Engineer using
the attached long-form certification. Survey (a) is to have surveyor's
seal affixed and (b) is to reflect a current date; provided that older
surveys are acceptable if updated and recertified within 90 days of
Closing.
2. Legal Description and Address: The full legal description and street
address must be shown. The legal description must be identical to that
shown in Title Company's most recent title report (the "Title Report")
or discrepancies explained. If the Property is described as being on a
filed map, the survey should contain a legend relating the parcel to the
map on which it is shown. With regard to a metes and bounds description,
a monument or a reference to a nearby monument should establish the
beginning point.
3. Properly Identified: All perimeter property lines must be specifically
identified. Show the location by courses and distances of: (a) the fee
parcel; (b) the relation of the point of beginning of said parcel to the
monument from which it is fixed; (c) all servient easements; (d) the
established building line; (e) all easements appurtenant to said parcel;
and (f) the line of the street or streets abutting the parcel and the
width of said streets.
4. Parcel Size: The number of square feet or acres contained in the parcel
covered by the survey must be specifically identified.
5. Distances and Access: All streets adjacent to the property, R.O.W.
lines, and the distance from the nearest major intersecting streets must
be specifically identified and distances shown. The survey must disclose
that access to the adjacent streets exists.
6. Curb Cuts, Driveways, and Other Matters Identified: All curb cuts,
driveways, fences, and location of major trees and shrubbery to be
protected must be shown.
7. Title Company Exceptions Plotted: All exceptions on the Title Report
must be plotted (or identified on the face of the survey as not
plottable). Indicate reason that any exception (except liens) is not
plottable.
8. Easements: All easements affecting the Property identified by recording
information (Book and Page or document number of instrument creating the
easement) must be
<PAGE> 57
shown. All evidence of prescriptive easements or other visible evidence
of possible third-party rights must also be shown.
9. Structures and Distances Shown (Spotted, In-Place Survey): All
structures, foundations, improvements including sidewalks, stoops,
overhangs, fences, and parking areas must be shown. The square footage
of all structures must be listed. Show all structures and improvements
on said parcel with horizontal lengths of all sides and the relation
thereof by distances to: (a) all boundary lines of the parcel; (b)
servient easements; (c) established building lines; (d) street lines;
and (e) square foot area of all structures. Show all improvements on
adjoining property which are within five (5) feet of the property lines
of the Land.
10. Utility Lines: Identify all utility lines as they service the Property
and improvements (sewer, water, gas, electric, and telephone). Indicate
whether the utility line is above or below grade, show the sizes of the
respective service, and indicate the point of installation to the
improvements and to offsite mains.
11. Set-back Lines: Show building restriction lines and applicable yard and
setback requirements and distances.
12. Party Walls and Encroachments: Show and describe all party walls and
encroachments (either onto or from the Land) or make positive statement
that there are no party walls or encroachments.
13. Parking: List parking requirements of applicable zoning ordinances based
on intended use of the parcel. Identify parking and paved areas.
Identify the number of vehicles that may be parked in each parking area.
A total of the parking spaces should be given in the Notes, including
how many are designated for handicapped parking and compact cars.
14. Floodplain Note: State whether or not property appears on any U.S.
Department of HUD Flood Insurance Boundary Map, and if so, further state
map number and whether or not property appears in the "Flood Hazard
Area" shown on the map.
15. Watercourse Flow: Show the location and direction of flow for existing
streams, rivers, or surface drainage system, if applicable.
16. Railroad Tracks: Show the location of railroad tracks and sidings, if
applicable.
17. Adverse Soil Conditions: The location of rubbish fills, sloughs,
springs, any underground tanks, filled-in walls or cisterns and seep
holes should be charted whenever possible.
18. Mineral Rights: Identify mineral rights and if there is right to surface
entry.
<PAGE> 58
19. Seismic Hazard Note: Include in Notes a statement that the property is
not in a Special Study Zone as designated under the Alquist-Priolo
Special Studies Zone Act, California Public Resources Code Section 2621,
et seq.
REQUIRED CERTIFICATION
I hereby certify to PACIFIC GULF PROPERTIES INC. and TITLE COMPANY that:
a) This map or plat and the survey on which it is placed (i) were made in
accordance with the "Minimum Standard Requirements for ALTA/ACSM Land Title
Surveys," jointly established and adopted by ALTA and ACSM in 1992, and includes
items 1 through 4, 6 through 11 and 13 of Table A thereof, (ii) meet the
Accuracy Standards (as adopted by ALTA and ACSM and in effect on the date of
this Certification) of an Urban Survey; and (iii) in all respects meets the
requirements of all applicable law.
b) On the ________ day of 19___, this survey was made on the ground as per
the field notes shown on this survey, and correctly shows (i) the boundaries and
areas of the subject property and the size, location, and type of buildings and
improvements thereon and the distance therefrom to the nearest facing exterior
property lines of the subject property, (ii) the location of all rights-of-way,
easements, and any other matters of record (or of which I have knowledge or have
been advised, whether or not of record) or appearing from careful visual
inspection of the property, affecting or benefiting the subject property, (iii)
the location of the parking areas on the subject property, (iv) all abutting
dedicated public streets providing access to the subject property, together with
the width the name thereof, and (v) all other significant items on the subject
property;
c) The description of the subject property shown hereon corresponds to the
boundaries of the subject property shown on the survey, and such description
closes by engineering calculation;
d) The subject property contains _______ [square feet] ________ [acres]
and a total of ________ striped parking stalls, _________ regular, __________
compact and __________ handicapped;
e) No covenants, restrictions, or easements that are of record,
discoverable upon visual inspection, or otherwise known to me appear to me to
have been violated in any respect except as shown;
f) Except as set forth below (including under the subject property to the
extent known to me or ascertainable upon physical inspection without excavation)
there are no (i) encroachments upon the subject property by improvements on
adjacent property, (ii) encroachments on any easements or on adjacent property,
streets, or alleys by any improvements on the subject property, (iii) party
walls, (iv) conflicts or protrusions. The exceptions to the above statements are
as follows: [if none, so state];
<PAGE> 59
g) Adequate ingress to and egress from the subject property is provided by
[name of streets], the same being paved, dedicated public right(s)-of-way
maintained by [name of maintaining authority];
h) All required building set-back lines on the subject property are
located as shown hereon, and there are no violations of the set-back lines by
any improvements on the subject property. The exceptions to the above statements
are as follows: [if none, so state];
i) There are no violations of zoning ordinances, restrictions or other
rules and regulations with reference to the location of said buildings and
improvements, and the number and configuration of parking spaces;
j) All utility services required for the operation of the subject property
enter the subject property through the adjoining public streets, or if they do
not, this survey shows the point of entry and location of any utilities which
pass through or are located on adjoining private land and contains a legal
description of area occupied by such utilities; and
k) No portion of the subject property shown hereon lies within the
100-year flood plain or any area subject to special flood hazards, and the
subject property lies within Flood Zone _________ (defined in Survey Notes), as
shown on the Flood Insurance Rate Map published by the Federal Emergency
Management Agency for the City of __________, Community Panel Number___,
Effective Date___, and this survey shows the location and direction of all storm
drainage systems serving the property.
-------------------------------------------
[Signature of Surveyor]
Registered Public Surveyor
[Name, address, telephone number and job number of Surveyor]
<PAGE> 60
SCHEDULE 14(C)
LIST OF LITIGATION
MSC Valley View, Inc. adv. Tech-Mail LLC, Case No. A370656, District Court,
Clark County, Nevada
<PAGE> 1
EXHIBIT 10.4
PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (this
"Agreement") , dated August 1, 1997 for reference purposes, is entered into by
and between WOODLAND 54 VENTURE, a California general partnership ("Seller") and
PACIFIC GULF PROPERTIES INC., a Maryland corporation, or its nominee ("Buyer").
IN CONSIDERATION of the respective agreements hereinafter set forth,
Seller and Buyer hereby agree as follows:
1. Property. Seller hereby agrees to sell and convey to Buyer, and Buyer
hereby agrees to purchase from Seller, subject to the terms and conditions set
forth herein, the following:
(a) that certain real property located at 550 N. Pioneer Avenue,
Woodland, California, more particularly described in schedule 1 to the "Deed"
(as hereinafter defined) attached hereto as Exhibit A and consisting of
approximately 14.92 acres (the "Land");
(b) 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");
(c) all improvements and fixtures located on the Land and
Appurtenances, including, without limitation, the building(s) located on the
Land, consisting of one industrial building containing approximately 319,800
rentable square feet, and all apparatus, equipment and appliances used in
connection with the operation or occupancy of the Land and Appurtenances, such
as heating and air conditioning systems and facilities used to provide any
utility, refrigeration, ventilation, garbage disposal, recreation or other
services on the Land and Appurtenances, and along with all on-site parking
(currently, 160 striped and existing parking spaces on the Land) (collectively,
the "Improvements", and together with the Land and Appurtenances, the "Real
Property");
(d) all tangible personal property owned by Seller located on or in
or used in connection with the Real Property as of the date hereof and as of the
"Closing Date" (as hereinafter defined) including, without limitation, all
those items described in Schedule 2 to the "Bill of Sale" (as hereinafter
defined) attached hereto as Exhibit B (collectively, the "Tangible Personal
Property"); and
(e) all lease rights (including, without limitation, the lessor's
interest in and to all tenant leases, rental agreements, subleases and
tenancies, including all amendments, modifications, agreements, records,
substantive correspondence, and other documents affecting in any way a right to
occupy any portion of the Real Property (individually and collectively, the
"Leases") , and Seller's interest in all security deposits and prepaid rent, if
any, under the Leases and any and all guaranties of the Leases, and, to the
extent approved by Buyer pursuant to this Agreement, all "Service Contracts" (as
hereinafter defined), and any intangible personal property now or hereafter
owned by Seller and used in the ownership, use or operation or development of
the Real Property, and Tangible Personal Property, including, without
limitation, any trade name now used in connection with the Real
<PAGE> 2
Property (collectively, the "Intangible Property", and together with the
Tangible Personal Property, the "Personal Property").
All of the items referred to in Subparagraphs (a), (b), (c), (d) and
(e) above are collectively referred to herein as the "Property".
2. Purchase Price.
(a) The purchase price of the Property is Eight Million Six
Hundred Thousand Dollars ($8,600,000) (the "Purchase Price").
(b) The Purchase Price shall be paid through "Escrow" (as
hereinafter defined) as follows:
(i) Concurrently with the execution and delivery of this
Agreement by Buyer, Seller and First American Title Insurance Company (the
"Escrow Holder") an escrow in connection herewith (the "Escrow"), shall be
opened at the Escrow Holder. Within three (3) business days of the opening of
Escrow, Buyer shall deposit into Escrow cash in the amount of One Hundred
Thousand Dollars $100, 000 (the "Deposit"). The Deposit shall be held by Escrow
Holder in an interest-bearing account.
(ii) The Deposit and all interest accrued thereon shall
either (1) apply towards the Purchase Price at "Closing" (as hereinafter
defined); (2) be returned to the Buyer if the Closing fails to occur for any
reason other than the Buyer's default; or (3) be disbursed to Seller as
liquidated damages in the event of Buyer's default pursuant to the provisions of
Paragraph 7(a) below. Interest earned on the Deposit shall follow the Deposit.
(iii) on or before the Closing, if this Agreement has not
been earlier terminated, Buyer shall deposit into Escrow cash or other
immediately available funds in the amount of the balance of the Purchase Price,
adjusted for the prorations and any other adjustments provided elsewhere in this
Agreement (the "Closing Amount").
3. Title to the Property.
(a) At the Closing, Seller shall convey to Buyer fee simple title
to the Real Property and Improvements, by duly executed and acknowledged grant
deed substantially in the form attached hereto as Exhibit A (the "Deed"). A
condition to Buyer's obligations under this Agreement shall be the issuance by
First American Title Insurance Company (the "Title Company") to Buyer of an ALTA
extended coverage Owner's Policy of Title Insurance (Form B, rev. 10/17/70 with
Endorsement Form 1 coverage) in the amount of the Purchase Price, insuring fee
simple title to the Real Property and Improvements in Buyer, subject only to
such exceptions as Buyer shall have approved pursuant to Paragraph 4 below (the
"Approved Title Exceptions") and without boundary, encroachment or survey
exceptions (the "Title Policy"). The Title Policy shall provide full coverage
against mechanics' and materialmen's liens and shall contain, to the extent
required by Buyer, the CLTA 100 (modified for an owner), 101.4, 103.7, 116,
116.1, 116.4, 116.7 and such other special endorsements as Buyer may reasonably
require, including, without limitation, any endorsements required as a condition
to Buyer's approval of any title exceptions pursuant to Paragraph 4 below (the
"Endorsements").
(b) At the Closing, Seller shall transfer title to the Tangible
Personal Property by a bill of sale in the form attached hereto as Exhibit B
(the "Bill of Sale"), such title to be free of any liens, encumbrances or
interests.
(c) At the closing (i) Seller shall transfer title to the
Intangible Property, the "Assigned Contracts" (as hereinafter defined) and the
"Permits" (as hereinafter defined) by an assignment of intangible property in
the form attached hereto as Exhibit C (the "Assignment of Intangible
-2-
<PAGE> 3
"Property") and (ii) Seller shall transfer title to the Leases by an assignment
of Leases in the form attached hereto as Exhibit D (the "Assignment of Leases"),
such title in each case to be free of any liens, encumbrances or interests.
(d) Anything contained herein to the contrary notwithstanding and
notwithstanding any approval or consent given by Buyer hereunder, except for
real estate taxes not yet due or payable, Seller shall cause all mortgages,
deeds of trust and other monetary encumbrances, including without limitation all
mechanics' liens, to be released and reconveyed from the Property on or prior to
the Closing and shall cause the Title Company to insure title to the Property as
vested in Buyer without any exception for such matters. Buyer shall have the
opportunity to review any bond financing affecting the Property during the "Due
Diligence Period" (hereafter defined). In the event Buyer elects to proceed with
the transaction after conducting Buyer's due diligence review of the Property
during the Due Diligence Period, Buyer shall assume the current portion of such
bond financing affecting the Property, prorated as of the Closing Date.
4. Due Diligence.
(a) As used herein, the term "Due Diligence Period" shall refer
to a period of time to expire at 5:00 p.m. on the date which is seventy (70)
days after the date this Agreement is fully executed and delivered by Buyer and
Seller to Escrow Holder, as evidenced by Escrow Holder's written confirmation of
same. Within ten (10) business days after Seller's execution of this Agreement,
Seller shall provide to Buyer the items specified for Seller's delivery in
Paragraph 5 below (excluding the "Other Documents" referenced in the last
paragraph of Paragraph 5 below). Buyer may, at its sole election, terminate this
Agreement in the event Seller does not deliver the items specified for Seller's
delivery, in which event the Deposit shall be promptly returned to Buyer.
(b) Buyer may elect, by written notice to Seller at any time
prior to the expiration of the Due Diligence Period, to terminate this
Agreement, which election shall be in Buyer's sole and absolute discretion. If
Buyer desires to proceed with the purchase of the Property subject to the
remaining conditions set forth in this Agreement (including, without limitation,
pursuant to Paragraph 6 below), then on or before the expiration of the Due
Diligence Period, Buyer shall deliver written notice to Seller of such election
to proceed (the "Buyer's Notice to Proceed"), electing to waive Buyer's right
of termination pursuant to this Paragraph 4(b) and proceed with the Closing
subject to the remaining conditions set forth in this Agreement; provided,
however, that, notwithstanding any such election to proceed, Seller must comply
with all of Seller's other obligations and duties under this Agreement. Buyer's
Notice to Proceed shall specify in writing the requirements for the Title Policy
(including, without limitation, the Approved Title Exceptions and any required
Endorsements). If Buyer fails to deliver Buyer's Notice to Proceed to Seller
prior to the expiration of the Due Diligence Period electing to waive Buyer's
right of termination pursuant to this Paragraph 4(b), then Buyer shall be
deemed to have elected to terminate this Agreement.
(c) In the event of the termination of this Agreement pursuant to
this Paragraph 4, the Deposit shall be returned to Buyer and neither party shall
have any further obligations to the other hereunder (except under provisions of
this Agreement which specifically state that they survive termination).
(d) In the event this Agreement is terminated pursuant to this
Paragraph 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.
-3-
<PAGE> 4
5. Seller's Deliveries. Seller shall use its best efforts to deliver or
cause to be delivered to Buyer all of the following (collectively, the "Due
Diligence materials") at Seller's sole cost and expense, to the extent such
information either is in the possession or control of Seller. Seller shall also
make Seller's files in connection with the Property available to Buyer for
Buyer's inspection at Seller's place of business.
(a) Preliminary Report. A current extended coverage preliminary
title report on the Real Property, issued by Title Company, accompanied by
copies of all documents referred to in the report (collectively, the
"Preliminary Report").
(b) Unrecorded Easements. Copies of any and all existing and
proposed easements, covenants, restrictions, agreements or other documents known
to Seller which affect title to the Property and which are not disclosed by the
Preliminary Report.
(c) Survey. Any existing survey of the Real Property.
(d) Tax Bills. Copies of the most recent property tax bills and
assessments for the Property.
(e) Warranties. All presently effective warranties or guaranties
from any contractors, subcontractors, suppliers, servicemen or materialmen in
connection with any of the Tangible Personal Property or any construction,
renovation, repairs or alterations of the Improvements or any tenant
improvements (collectively, the "Warranties").
(f) Service Contracts. A schedule (the "Schedule of Agreements")
setting forth a list of all of the service contracts, utility contracts,
maintenance contracts, management contracts, leasing contracts, equipment
leases, brokerage and leasing commission agreements and other agreements or
rights related to the ownership, use or operation of the Property (collectively,
the "Service Contracts"). From this Schedule of Agreements, Buyer shall
designate those contracts that Seller shall assign to Buyer and that Buyer shall
assume as of Closing (such designated Service Contracts together with the
warranties and any Other Documents designated by Buyer for assignment are
collectively referred to herein as the "Assigned Contracts").
(g) Plans. Copies of all as-built plans and specifications for
the Improvements, including without limitation the plans and specifications for
and a complete description of all existing renovations and improvements to the
Real Property and all rentable space therein, and as-built drawings for all
underground utilities.
(h) Insurance. Certificates of insurance and/or copies of
insurance policies and the insurance claims history for the three (3) most
recent calendar years prior to Closing and, to the extent available, for the
current year.
(i) Reports. All reports in Seller's possession or control
relating to the Property, including environmental reports, environmental audits,
soils reports, site plans, engineering reports and plans, traffic reports,
demographic information, landscape plans, structural calculations, floor plans,
construction contracts, a current inspection report by a licensed Structural
Pest Control Operator, and other reports or documents of significance to the
Property.
(j) Inventory. An inventory of all Tangible Personal Property
used at or in connection with the Property.
(k) Operating Statements. All income and expense statements,
year-end financial and monthly operating statements and year to date statements
for 1996 and, to the extent available, the current year, all of
-4-
<PAGE> 5
which shall be in the form customarily prepared by Seller and shall be
certified by Seller as true and correct and an accurate representation of the
financial condition of the Property.
(1) Budget. A copy of the budget for the Property for the current
year.
(m) Rent Roll. A current rent roll certified by Seller to be
accurate and complete, listing for each tenant (i) the tenant's name, and
location of leased premises, (ii) the commencement and expiration dates of each
lease, (iii) rent and rent escalation clauses, if any, (iv) any free rent,
operating expense abatements or other unexpired concessions or inducements to
lease, (v) any refurbishment or renovation obligations, (vi) any obligation for
reimbursement of expenses, (vii) the date on which rent is payable, (viii) the
last date on which rent has been paid, (ix) the amount of any security deposit,
prepaid rent, and whether landlord is obligated to pay interest on the same, (x)
any extension options, any options to terminate or lease additional space and
any rights of first refusal, and the business terms of the foregoing, and (xi) a
description of any uncured defaults (the "Rent Roll"), specifically identifying
any changes from the Rent Roll attached hereto as Exhibit E or a certificate of
Seller that there have been no such changes.
(n) Leases. (i) copies of all existing and pending Leases, lease
files and tenant correspondence (ii) copies of all non-confidential tenant
financial statements; (iii) a schedule of leasing commissions on a space by
space basis; and (iv) a copy of the current standard lease form.
(o) Permits. All governmental permits and approvals relating to the
construction, operation, use or occupancy of the Property, including without
limitation, all building permits, certificates of completion, certificates of
occupancy, environmental permits and licenses (including, without limitation,
permits relating to the existence or removal of underground storage tanks), and
sign permits (individually and collectively "Permits").
(p) Deposits. A list of all deposits and bonds posted by Seller
with utility providers, sureties, governmental agencies or others in connection
with the Property (the "Seller Deposits and Bonds").
In addition, Seller shall promptly deliver to Buyer such other information
relating to the Property that is specifically requested by Buyer of Seller in
writing during the Due Diligence Period to the extent such information either is
in the possession or control of Seller (collectively, the "Other Documents").
6. Conditions Precedent to Closing.
(a) Buyer's Conditions. The following are conditions Precedent to
Buyer's obligations under this Agreement (the "Buyer Conditions Precedent").
The Buyer Conditions Precedent are intended solely for the benefit of Buyer and
may be waived only by Buyer in writing. In the event any Buyer Condition
Precedent is not satisfied, Buyer may, in its sole and absolute discretion,
terminate this Agreement, and, subject to the provisions of Paragraph 7, all
obligations of Buyer and Seller hereunder (except provisions of this Agreement
which recite that they survive termination) shall terminate and be of no further
force or effect.
(i) Buyer's inspection, review and approval, within the
Due Diligence Period, of all aspects of the Property.
(ii) The issuance by the Title Company to Buyer of the
Title Policy subject only to the Approved Title Exceptions and including the
Endorsements specified by Buyer during the Due Diligence Period.
-5-
<PAGE> 6
(iii) Receipt by Buyer within the Due Diligence Period of
an "as-built" ALTA/ACSM survey (the "Survey") in form and content reasonably
accented to Buyer and in sufficient detail to provide the basis for the required
Title Policy without boundary, encroachment or survey exceptions, to be obtained
by Buyer at Buyer's sole expense.
(iv) All of Seller's representations and warranties
contained in or made pursuant to this Agreement shall have been true and correct
when made and shall be true and correct as of the Closing Date; provided that,
in the event of any change in Seller's representations and warranties prior to
Closing, Seller may update such representations and warranties by delivery of
written notice to Buyer. In the event Seller's updated representations and
warranties are unacceptable to Buyer, Buyer shall have the right, in its sole
discretion, to terminate this Agreement, and the Deposit shall be promptly
returned to Buyer.
(v) Seller shall have fully complied with all of Seller's
duties and obligations contained in this Agreement.
(vi) As of the Closing Date, there shall be no litigation
or administrative agency or other governmental proceeding pending which after
Closing would, in Buyer's reasonable discretion, materially adversely affect the
value of the Property or the ability of Buyer to operate the Property in the
manner in which it is currently being operated, and no proceedings shall be
pending which would cause the redesignation or other modification of the zoning
classification of, or of any building or environmental code requirements
applicable to, any of the Property.
(vii) Seller shall have provided Buyer with an updated
Rent Roll three (3) business days prior to Closing, which updated Rent Roll must
not indicate any material adverse change from the Rent Roll last approved by
Buyer. Seller shall specifically identify any changes from the most recently
approved Rent Roll and provide a certificate executed by Seller certifying that
such updated Rent Roll is true and correct (including, without limitation, the
amount of Security Deposits and description of uncured tenant defaults and
delinquencies listed thereon), and stating whether there exist any events which
with the passage of time and/or the giving of notice would constitute a tenant
default under a Lease, and Buyer shall have performed a closing audit which
confirms the updated Rent Roll.
(viii) Seller shall terminate prior to the Closing, at no
cost or expense to Buyer, any and all Service Contracts or Other Documents
affecting the Property that are not Assigned Contracts.
(ix) There shall have been no material adverse change in
or addition to the information or items reviewed and approved by Buyer during
the Due Diligence Period.
(x) Buyer's review and approval of estoppel certificates
(1) covering eighty percent (80%) of the leased space within the Property, and
(2) from all tenants of all leases entered into after the date of this Agreement
but prior to Closing. Seller shall use good faith efforts to obtain and deliver
to Buyer tenant estoppel certificates in form and substance satisfactory to
Buyer from any and all tenants occupying any portion of the Property
(collectively, "Tenants"). Certificates substantially in the form attached
hereto as Exhibit F (as modified to address specific reasonable concerns arising
as a result of Buyer's review of the Leases) shall be deemed acceptable to
Buyer. For any Tenant that Seller is not able to deliver a Tenant estoppel
certificate, Seller shall deliver to Buyer a landlord's estoppel certificate
covering the information which would otherwise have been included in the
Tenant's estoppel certificate; provided, however, that Buyer shall not be
obligated to accept or approve any estoppel provided by Seller if Buyer has
reason to believe any statement contained therein would be disputed or denied by
the applicable Tenant; and provided further that Buyer shall not be obligated to
accept or approve estoppels provided by Seller representing
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more than thirty percent (30% of the estoppels covered by section (1), above.
Said certificates shall be delivered at least five (5) days prior to the Closing
and shall be dated no earlier than fifteen (15) days prior to the Closing Date.
(b) Seller's Conditions. The following are conditions precedent
to Seller's obligations under this Agreement (the "Seller Conditions
Precedent"). The Seller Conditions Precedent are intended solely for the benefit
of Seller and may be waived only by Seller in writing. In the event any Seller
Condition Precedent is not satisfied, Seller may, in its sole and absolute
discretion, terminate this Agreement, and, subject to the provisions of
Paragraph 7, all obligations of Buyer and Seller hereunder (except provisions of
this Agreement which recite that they survive termination) shall terminate and
be of no further force or effect.
(i) All of Buyer's representations and warranties
contained in or made pursuant to this Agreement shall have been true and correct
when made and shall be true and correct as of the Closing Date.
(ii) Buyer shall have fully complied with all of Buyer's
duties and obligations contained in this Agreement.
7. Remedies.
(a) IN THE EVENT THE SALE OF THE PROPERTY IS NOT CONSUMMATED
BECAUSE OF THE FAILURE OF ANY CONDITION PRECEDENT TO CLOSING OR A DEFAULT UNDER
THIS AGREEMENT ON THE PART OF SELLER, THE DEPOSIT SHALL IMMEDIATELY BE RETURNED
TO BUYER. IF SAID SALE IS NOT CONSUMMATED SOLELY BECAUSE OF A DEFAULT UNDER THIS
AGREEMENT ON THE PART OF BUYER, THE DEPOSIT SHALL BE PAID TO AND RETAINED BY
SELLER AS LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL
DAMAGES, IN THE EVENT OF A DEFAULT BY BUYER, WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE
PARTIES ACKNOWLEDGE THAT THE DEPOSIT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS
THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES AND AS SELLER'S SOLE AND
EXCLUSIVE REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE EVENT OF A DEFAULT
UNDER THIS AGREEMENT ON THE PART OF BUYER. SELLER HEREBY WAIVES ANY AND ALL
BENEFITS IT MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 3389.
INITIALS: Seller Buyer [illegible]
------------ -----------
(b) In the event the sale of the Property is not consummated due
to seller's default under this Agreement, the Deposit shall be immediately
returned to Buyer and Buyer may, in its sole and absolute discretion, either (1)
terminate this Agreement and recover all actual out of pocket costs, including,
without limitation, attorney fees and costs, and other damages incurred by
Buyer, in the amount not to exceed forty thousand dollars ($40,000), or (2)
continue this Agreement pending Buyer's action for specific performance, each
such remedy shall be deemed exclusive or to preclude the pursuit of any other
remedy. Any damages to which Buyer is entitled shall include, without
limitation, all title, escrow, legal and inspection fees incurred by Buyer and
any other expenses incurred by Buyer in connection with the performance of its
due diligence review of the Property, including, without limitation,
environmental and engineering consultants, fees and the fees incurred in
connection with the preparation and negotiation of this Agreement.
B. Escrow; Closing.
(a) Escrow Instructions. Upon mutual execution of this Agreement,
the parties hereto shall deposit an executed counterpart of this Agreement with
Escrow Holder and this Agreement shall serve as instructions to Escrow Holder
for consummation of the purchase and sale contemplated hereby. Seller and Buyer
shall execute such supplemental Escrow instructions as may be appropriate to
enable Escrow Holder to comply with the terms of this
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Agreement, provided such supplemental Escrow instructions are not in conflict
with this Agreement as it may be amended in writing from time to time. In the
event of any conflict between the provisions of this Agreement and any
supplementary Escrow instructions signed by Buyer and Seller, the terms of this
Agreement shall control.
(b) Closing. The recordation of the Deed and the delivery of the
other documents and funds contemplated hereby (the "Closing") shall take place
on a date mutually reasonably agreed upon by the parties within fifteen (15)
days following the expiration of the Due Diligence Period. The date on which the
Closing occurs is herein referred to as the "Closing Date". In the event the
Closing does not occur on or before the date which is fifteen (15) days
following the expiration of the Due Diligence Period, Escrow Holder shall,
unless it is notified by both parties to the contrary within five (5) days after
such date, return to the depositor thereof items which were deposited hereunder.
Any such return shall not, however, relieve either party of any liability it may
have for its wrongful failure to Close.
(c) Seller Deliveries. At or before the Closing, Seller shall
deliver to Escrow Holder or Buyer the following:
(i) a duly executed and acknowledged Deed;
(ii) a duly executed Bill of Sale;
(iii) originals of the Assigned Contracts and a duly
executed Assignment of Service Contracts, Warranties, Guaranties and other
Intangible Property (in the form of Exhibit C), together with evidence of
termination of any Service Contracts and Other Agreements that are not Assigned
Contracts;
(iv) originals of all Leases and tenant files and a duly
executed and acknowledged Assignment of Leases;
(v) duly executed Tenant Estoppel Certificates and, if
applicable, Seller estoppel certificates;
(vi) notices to the Tenants of the occurrence of the sale
of the Property in the form attached hereto as Exhibit G;
(vii) a duly executed affidavit that Seller is not a
"foreign person" within the meaning of Section 1445(e)(3) of the Internal
Revenue Code of 1986 in the form attached hereto as Exhibit H together with a
duly executed California Franchise Tax Board Form 590;
(viii) a full release and reconveyance of all monetary
encumbrances affecting the Property and any mechanics' liens;
(ix) any other documents or agreements required by the
Title Company to issue the Title Policy in the form required by this Agreement;
(x) a closing statement in form and content satisfactory
to Buyer and Seller (the "Closing Statement") duly executed by Seller;
(xi) originals of the building permits and certificates of
occupancy for the Improvements and all tenant-occupied space included within the
Improvements;
(xii) all keys to the Property;
(xiii) subject to the provisions of paragraph 8(f)(ii),
below, if any agreement for leasing commissions and/or locator fees payable on
any Lease shows a commission or locator fee which would be due or payable after
the Closing Date, an executed release from the broker or finder
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<PAGE> 9
releasing Buyer and its successors and assigns from any obligation to pay such
commission or locator fee and agreeing to look solely to Seller for payment;
(xiv) any other instruments, records or correspondence
called for hereunder to be delivered by Seller which have not previously been
delivered.
Buyer may waive compliance on Seller's part under any of the foregoing items by
an instrument in writing.
(d) Buyer Deliveries. At or before the Closing, Buyer shall deliver
to Escrow Holder or Seller the following:
(i) A duly executed Assignment of Leases;
(ii) A duly executed Assignment of Intangible Property;
(iii) the Closing Statement, duly executed by Buyer;
(iv) the Closing Amount; and
(v) any other instruments, records or correspondence
called for hereunder to be delivered by Buyer which have not previously been
delivered.
Seller may waive compliance on Buyer's part under any of the foregoing items by
an instrument in writing.
(e) Additional Documents. Seller and Buyer shall each deposit such
other instruments as are reasonably required by Escrow Holder or otherwise
required to close the escrow and consummate the purchase of the Property in
accordance with the terms hereof.
(f) Prorations. The following are to be apportioned as of the
Closing Date, with Buyer receiving credit for the entire day of the Closing, as
follows:
(i) Rent. Rent under the Leases shall be apportioned as of
the Closing Date, regardless of whether or not such rent has been received by
Seller. With respect to any rent arrearages existing at the Closing, after
Closing Buyer shall pay to Seller any rent actually collected which is
applicable to the period preceding the Closing Date; provided, however, that all
rent collected by Buyer shall be applied first to all unpaid rent accruing after
the Closing Date, and then to unpaid rent accruing prior to the Closing Date.
Buyer shall not be obligated to take any steps to recover any rent arrearages.
Seller shall be permitted to pursue collection of any rent arrearages applicable
to the period prior to the Closing, provided that Buyer shall not incur any, and
Seller shall indemnify Buyer against all, cost, expense or liability in
connection therewith, and provided further that Seller shall not commence any
legal or equitable proceedings in the nature of an unlawful detainer, eviction
or other proceeding which would have the effect of interfering with any tenant's
quiet enjoyment of its leased premises or result in a lien or encumbrance on
such leased premises.
(ii) Leasing Costs. Seller shall either pay prior to
Closing or provide Buyer with a credit toward the Purchase Price for any leasing
commission or tenant improvement cost or allowance (collectively "Tenant Costs")
in connection with any lease existing on the date of this Agreement, subject to
the following:
(1) Leasing commissions payable in connection
with a commission agreement entered into by Seller with respect to the following
amendments to that certain Lease dated as of September 1, 1996 by and between
Seller and Excel Logistics (the "Excel Lease") shall be paid and prorated as
follows. Seller shall provide Buyer with a copy of the commission agreement
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applicable to the Excel Lease and all amendments thereto as a condition to the
implementation of this paragraph 8(f) (ii)(1).
(A) Seller represents to Buyer that
Seller has, prior to the date hereof, paid in full all Tenant Costs in
connection with Lease Amendment #2, dated as of March 15, 1997. At Closing,
Buyer shall reimburse Seller for a portion of the leasing commission paid by
Seller in connection with Lease Amendment #2 applicable to the period after the
Closing Date, such portion to be calculated by multiplying the total leasing
commission paid by Seller in connection with Lease Amendment #2 by a fraction,
the numerator of which is the number of days of the term of Lease Amendment #2
which occur after the Closing Date, and the denominator of which is the total
number of days of the term of Lease Amendment #2.
(B) The monthly leasing commissions
payable for the month in which Closing occurs in connection with the Excel Lease
(i) Lease Amendment #3, dated as of April 21, 1997, and (ii) Lease Amendment #4
for an additional 45,000 square feet of space (provided Lease Amendment #4 is
executed by Seller and Excel and provided to Buyer by Seller, and Excel
commences paying rent thereunder) , shall be prorated between Buyer and Seller
as of the Closing Date. Seller shall pay on or prior to Closing all monthly
commissions in connection with Lease Amendment #3 and Lease Amendment #4 for all
periods prior to the Closing Date. Buyer shall be responsible for the payment of
monthly commissions (as and when earned pursuant to the commission agreement) in
connection with Lease Amendment #3 and Lease Amendment #4 for all periods after
the month in which Closing occurs. Any leasing commissions payable in connection
with the Excel Lease that are not described in paragraph (A), above, or this
paragraph (B) shall be Seller's sole responsibility.
(2) Tenant Costs in connection with leases
listed on Exhibit I ("New Approved Lease (s)") shall be prorated as hereafter
provided. Any Tenant Costs due in connection with a New Approved Lease or a
lease entered into after the date of this Agreement but prior to Closing and
which has been approved by Buyer pursuant to Paragraph 16, below, shall be
prorated between Buyer and Seller at Closing based on the number of months of
the lease term prior to the Closing Date and number of months of the lease term
after the Closing Date, exclusive of any un-exercised options to renew or extend
the term.
(iii) Security Deposits. Buyer shall be entitled to a
credit against the Purchase Price for the total sum of all security and other
deposits provided for in the Leases, and any interest earned thereon which by
law or the terms of the Leases could be required to be refunded to tenants.
(iv) Free Rent, Abatements or Other Unexpired Concessions.
Buyer shall be entitled to a credit against the Purchase Price for any free
rent, abatements, or other unexpired concessions under any Leases to the extent
they apply to any period after the Closing.
(v) Utility Charges. Seller shall cause all the utility
meters to be read on the Closing Date, and will be responsible for the cost of
all utilities used prior to the Closing Date, except to the extent such utility
charges are billed to and paid by tenants directly.
(vi) Real Estate Taxes and Special Assessments. Seller
shall pay prior to Closing any and all delinquent real estate taxes and
assessments with respect to the Property. General real estate taxes and
assessments payable for the fiscal year in which the Closing occurs shall be
prorated as of the Closing Date.
(vii) Other Apportionments. Amounts payable under the
Assigned Contracts, annual or periodic permit and/or inspection fees (calculated
on the basis of the period covered) and liability for other Property operation
and maintenance expenses and other recurring costs shall be apportioned as of
the Closing Date.
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(viii) Preliminary Closing statement. Seller and Buyer
shall jointly prepare and approve a preliminary Closing Statement on the basis
of the Leases and other sources of income and expenses, and shall deliver such
computation to Escrow Holder prior to Closing.
(ix) Post-Closing Reconciliation. if any of the aforesaid
prorations cannot be definitely calculated on the Closing Date, then they shall
be estimated at the Closing and definitely calculated as soon after the closing
Date as feasible. As soon as the necessary information is available, Buyer shall
conduct a post-Closing review to determine the accuracy of all prorations made
to the Purchase Price (the "Post-Closing Review"). Either party owing the other
party a sum of money based on such subsequent proration(s) or the Post-closing
Review shall promptly pay said sum to the other party, together with interest
thereon at the rate of two percent over the "prime rate" (as announced from
time to time in the Wall Street Journal) per annum from the Closing Date to the
date of payment if payment is not made within ten (10) days after delivery of a
bill therefor.
(g) Closing Costs. Seller shall pay for the Preliminary Report,
the CLTA portion of the premium for the Title Policy, any sales taxes, any
transfer taxes applicable to the sale and recording fees for recording of the
Deed. In addition, Seller shall be liable for any prepayment fee or other charge
payable in connection with any payoff of monetary encumbrances. Buyer shall pay
any additional premium necessary to obtain the Title Policy in ALTA form and the
cost of any Endorsements. Buyer shall pay the cost of a new ALTA survey or the
cost of updating Seller's existing survey, as applicable. Any excrow fees shall
be paid fifty percent (50%) by Buyer and fifty percent (50%) by Seller. All
other costs and charges of the Escrow not otherwise provided for in this
Agreement shall be allocated in accordance with the closing customs for the
County where the Property is located. Buyer and Seller shall each be responsible
for their respective legal fees to negotiate and execute this Agreement.
(h) Reporting Recruitements. The Escrow Holder shall comply with
all applicable federal, state and local reporting and withholding requirements
relating to the close of the transactions contemplated herein. Without limiting
the generality of the foregoing, to the extent the transactions contemplated by
this Agreement involve a real estate transaction within the purview of Section
6045 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code"), Escrow Holder shall have sole responsibility to comply with the
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 680244846. Escrow Holder shall hold Buyer, Seller and
their counsel free and harmless from and against any and all liability, claims,
demands, damages and costs, including reasonable attorney's fees and other
litigation expenses, arising or resulting from the failure or refusal of Escrow
Holder to comply with such reporting requirements.
9. Representations, Warranties and Covenants of Seller. As of the date
hereof and again as of Closing, Seller represents and warrants to, and covenants
with, Buyer as follows:
(a) To Seller's knowledge, (i) there are no material physical or
mechanical defects in, or shortage or deficiency in utilities supplied to, the
Property, (ii) the Property and its current use and operation are in compliance
with applicable laws, rules, permits and regulations as well as private
covenants, conditions and restrictions, (iii) all licenses, permits, variances,
easements and approvals, including without limitation final certificates of
occupancy (or the equivalent) necessary for the current use, operation and
occupancy of the Property have been issued and are in effect, (iv) the Property
is not dependent on any other property for compliance with zoning or other land
use regulations, and (v) the improvements located on Property conform to the
plans and specifications therefor provided to Buyer.
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<PAGE> 12
(b) To Seller's knowledge, all documents delivered by Seller to
Buyer, or made available by Seller to Buyer for review, including without
limitation the Due Diligence Materials, are true and complete copies of all
documents related to the Property in Seller's possession or control. All of
Seller's books, files and records related to the Property were delivered to or
made available to Buyer for Buyer's review.
(c) To Seller's knowledge, there are no (i) condemnation,
environmental, zoning or other land-use proceedings, instituted or to be
instituted, against the Property, (ii) special assessment proceedings affecting
the Property (other than as set forth in the Preliminary Report), or (iii)
existing or proposed easements, covenants, restrictions, agreements or other
documents which affect title to the Property and which are not disclosed by the
Preliminary Report.
(d) To Seller's knowledge, there are no litigation, arbitration
or reference proceedings pending or, to Seller's knowledge threatened, against
the Property or against Seller with respect to the Property.
(e) To Seller's knowledge, on the Closing Date there will be no
outstanding written or oral contracts made for any improvements to the Property,
or for offsite improvements related to the Property, which have not been fully
completed and paid for. Seller shall cause to be discharged all mechanics' and
materialmen's liens arising from any labor or materials furnished to the
Property prior to the Close of Escrow.
(f) To Seller's knowledge (i) no hazardous or toxic substance,
waste or material (including without limitation PCB's, petroleum, petroleum
products and fractions thereof) has existed or currently exists in, on or under,
or has been or is being disposed of or released from, the Property or any
property adjacent to the Property except in compliance with applicable laws,
orders, rules and regulations; and (ii) no underground storage tanks (whether
existing or abandoned) exist or have existed on or under the Property or on or
under any property adjacent to the Property.
(g) To Seller's knowledge, neither Seller nor, any tenant of the
Property has either filed or been the subject of any filing of a petition under
any federal or state bankruptcy or insolvency laws.
(h) The most current Rent Roll provided to Buyer is a complete
and accurate list of all Leases. To Seller's knowledge, there are no (a) free
rent, operating expense abatements, incomplete tenant improvements, rebates,
allowances, or other unexpired concessions, (b) rights of first refusal or
rights to purchase the Property, or (c) rights of termination, extension,
cancellation or expansion, under any Lease except as specifically noted on the
most current Rent Roll. To Seller's knowledge, there are no unpaid leasing costs
or obligations, including, without limitation, broker's commissions and costs in
connection with tenant improvements, except as specifically noted on the most
current Rent Roll. Seller has provided to Buyer complete and accurate copies of
all Leases.
(i) To Seller's knowledge, there exists no defaults or events
which, with the giving of notice or passage of time, or both, would constitute a
default by Seller or any of the tenants under any of the Leases.
(j) To Seller's knowledge, the Schedule of Agreements is a
complete and accurate list of all Service Contracts. Seller has provided to
Buyer complete and accurate copies of all Service Contracts. To Seller's
knowledge, there exists no defaults or events which, with the giving of notice
or passage of time, or both, would constitute a default by Seller or any of the
other parties to the Service Contracts under the Service Contracts.
(k) To Seller's knowledge, Seller has (i) completed all
obligations with respect to any remodeling or renovating to be completed by
Seller as landlord under the Leases; and (ii) paid all obligations of the
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landlord pursuant to the Leases, including, without limitation, tenant
remodeling or refurbishment costs, leasing commissions and other concessions.
(1) Seller is a general partnership, duly organized and validly
existing and in good standing under the laws of the State of California; this
Agreement and all documents executed by Seller and delivered to Buyer pursuant
to this Agreement are and will be duly authorized, executed and delivered by
Seller, are and will be legal, valid and binding obligations of Seller
enforceable against Seller in accordance with their respective terms, and do not
and will not violate any provision of any agreement or judicial order to which
Seller or the Property is subject. Seller has obtained all necessary
authorizations, approvals and consents to the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
(m) Seller is not a "foreign person" within the meaning of
Internal Revenue Code Section 1445(f)(3).
(n) Seller has not granted any option or right of first refusal
or first opportunity to any party to acquire any interest in any of the
Property.
(o) All statements contained in any certificate delivered at any
time by Seller or its agents in conjunction with the transactions contemplated
hereby shall constitute representations and warranties hereunder.
10. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller as follows: Buyer is a corporation duly organized and validly
existing and in good standing under the laws of the State of Maryland and in
good standing under the laws of the State of California; this Agreement and all
documents executed by Buyer pursuant to this Agreement are or will be duly
authorized, executed and delivered by Buyer, and are or will be legal, valid and
binding obligations of Buyer, and do not and will not violate any provisions of
any agreement or judicial order to which Buyer is subject.
11. Continuation and Survival. All representations, warranties and
covenants by the respective parties contained herein or made in writing pursuant
to this Agreement are intended to and shall be deemed made as of the date of
this Agreement or such writing and again at the Closing, shall be deemed to be
material, and unless expressly provided to the contrary shall survive the
execution and delivery of this Agreement, the Deed and the Closing for a period
of three (3) years after the Closing (the "Survival Period"), except in the
case of fraud or willful misrepresentation, in which case such representations
and warranties shall survive independent of this limitation; provided, however,
that for matters as to which Buyer has given Seller written notice within the
Survival Period, the representation and warranties of Seller that are related to
the matters in such written notice shall survive until all liabilities arising
out of the matters described in such written notice have been satisfied.
12. Indemnity.
(a) Seller shall hold harmless, indemnify and defend Buyer, its
successors and assigns and their respective agents, employees, officers,
directors and partners, and the Property from and against any and all
liabilities, claims, demands, damages and costs (including, without limitation,
attorneys' fees and expenses), whether direct, contingent or consequential and
no matter how arising ("Liabilities") in any way (i) related to the Property and
arising or occurring prior to the Closing; (ii) related to or arising from any
act, conduct, omission, contract or commitment of Seller; or (iii) resulting
from any breach of representation or warranty by Seller or resulting from any
breach or default by Seller under this Agreement.
(b) Except for Liabilities that are covered by Paragraph 12(a),
above, Buyer shall hold harmless, indemnify and defend Seller, its successors
and assigns and their respective agents, employees, officers and partners,
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<PAGE> 14
from and against any and all Liabilities in any way (i) related to the Property
and arising or occurring after the Closing; (ii) related to or arising from any
act, conduct, omission, contract or commitment of Buyer; or (iii) resulting from
any breach of representation or warranty by Buyer or resulting from any breach
or default by Buyer under this Agreement.
13. Casualty or Condemnation.
(a) In the event any of the Property is damaged and/or destroyed
by fire or other casualty prior to the Closing Date, and the cost to repair
and/or restore such damage and/or destruction (which cost, for purposes of this
paragraph, shall be deemed to include reasonably anticipated post-Closing rental
loss through to completion of such repair and/or restoration) exceeds One
Hundred Thousand Dollars ($100,000), then Buyer shall have the right to
terminate this Agreement by written notice to Seller within ten (10) business
days after Buyer's first learning of the occurrence of such casualty and the
cost of such repair and/or restoration. In the event of any such termination,
the Deposit shall be returned to Buyer, Buyer and Seller shall each be liable
for one-half of any escrow fees or charges, and neither party shall have any
further liability or obligation under this Agreement.
(b) In the event any of the Property is damaged and/or destroyed
by fire or other casualty prior to the Closing Date where (i) the cost to repair
and/or restore such damage and/or destruction does not exceed one Hundred
Thousand Dollars ($100,000.00), or (ii) the cost to repair and/or restore
such damage and/or destruction exceeds One Hundred Thousand Dollars
($100,000.00) but this Agreement is not terminated pursuant to (a) above as a
result thereof, then the Closing Date shall occur as scheduled notwithstanding
such damage; provided, however, that Seller's interest in all proceeds of
insurance payable by reason of such casualty shall be assigned to Buyer as of
the Closing Date or credited to Buyer if previously received by Seller, and
Buyer shall receive a credit toward the Purchase Price for any insurance
deductible or co-insurance payment.
(c) In the event a governmental entity commences eminent domain
proceedings to take any material (in Buyer's reasonable discretion) portion of
the Property after the date hereof and prior to the Closing Date, then Buyer
shall have the option to terminate this Agreement by written notice to Seller
within ten (10) business days after Buyer first learns of such commencement. In
the event of any such termination, the Deposit shall be returned to Buyer, Buyer
and Seller shall each be liable for one-half of any escrow fees or charges, and
neither party shall have any further liability or obligation under this
Agreement.
(d) In the event a governmental entity commences eminent domain
proceedings to take any part of the Property after the date hereof and prior to
the Closing Date and this Agreement is not terminated pursuant to (c) above as a
result thereof, then the Closing Date shall occur as scheduled notwithstanding
such proceeding; provided, however, that Seller's interest in all awards arising
out of such proceedings shall be assigned to Buyer as of the Closing Date or
credited to Buyer if previously received by Seller.
14. Possession. Possession of the Property (subject to the Leases) shall
be delivered by Seller to Buyer on the Closing Date, provided, however, that
prior to the Closing Date Seller shall afford authorized representatives of
Buyer access to the Property for purposes of satisfying Buyer with respect to
the representations, warranties and covenants of Seller contained herein and
with respect to satisfaction of any Buyer Condition Precedent to the Closing
contained herein, including without limitation an environmental investigation.
Buyer hereby agrees to indemnify and hold Seller harmless from any damage or
injury to persons or property caused by Buyer or its authorized representatives
during their entry and investigations prior to Closing. Buyer's liability under
the indemnity contained in this Paragraph shall expire (6) months following the
completion of Buyer's physical inspections or termination of this Agreement,
whichever is earlier.
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15. Maintenance of the Property and Property Personnel. Between Seller's
execution of this Agreement and the Closing, Seller shall maintain the Property
in good order, condition and repair, reasonable wear and tear excepted, shall
perform all work required to be Performed by the landlord under the terms of any
Lease, and shall make all repairs, maintenance and replacements of the
Improvements and any Tangible Personal Property and otherwise operate the
Property in the same manner as before the making of this Agreement, as if Seller
were retaining the Property. After full execution of this Agreement and until
the Closing, Seller shall maintain all existing personnel on the Property in
their current employment positions at not less than their current rate of
compensation. Without limiting the effectiveness of the foregoing provisions or
the other provisions of this Agreement with respect to such Service Contracts,
unless Buyer specifically provides Seller with written notice to the contrary,
in the event of the Closing of the purchase of the Property, Buyer shall not
retain the existing employees and management agents of Seller for the Property,
and, accordingly, on the Closing, Seller shall (i) cause all employment and
management agreements respecting the Property to be terminated, and deliver
evidence of such termination to Buyer, and (ii) remove all employees and
management personnel from the Property.
16. Leasing; Buyer's Consent to New Contracts Affecting the Property;
Termination of Existing Contracts. Seller shall use commercially reasonable
efforts until Closing to lease any vacant space, or space becoming vacant, in
the Real Property to tenants utilizing the criteria Seller used prior to
execution of this Agreement. Seller shall not, after the expiration of the Due
Diligence Period, enter into any lease of the Property or any portion thereof
without obtaining Buyer's prior written consent thereto, provided that Buyer
shall be deemed to have consented to any such lease if Buyer has not delivered
written notice to Seller of Buyer's objection to such lease within five (5)
business days of Buyer's receipt of the proposed lease and such information as
would normally and reasonably be required to evaluate the prospective tenant,
including, without limitation, such tenant's proposed use of the space and
financial information concerning such tenant. Buyer may enter into a lease of
space to Lamson & Sessions and/or Excel Logistics, provided that to the extent
either such lease is executed after the expiration of the Due Diligence Period,
Buyer is provided with written notice thereof in detail sufficient to allow
Buyer to evaluate the merits of the proposed transaction. Buyer shall be deemed
to have approved the proposed transaction unless within ten (10) days of Buyer's
receipt of such written notice Buyer has provided Seller with a written response
setting forth in reasonable detail Buyer's reasons for disapproving the proposed
transaction. Buyer shall not enter into any contract affecting the Property, or
any amendment thereof, or permit any tenant to enter into any sublease,
assignment or agreement pertaining to the Property (except as expressly
authorized by such tenant's Lease), or waive, compromise or settle any rights of
Seller under any contract or Lease, or agree to return any security deposit, or
modify, amend, or terminate any Assigned Contract, without in each case
obtaining Buyer's prior written consent thereto. Seller shall terminate prior to
the Closing, at no cost or expense to Buyer, any and all Service Contracts that
are not Assigned Contracts.
17. Insurance. Through the Closing Date, Seller shall maintain or cause
to be maintained, at Seller's sole cost and expense, and each in the amount and
form maintained by Seller prior to the date of this Agreement:
(a) a policy or policies of insurance (subject only to
commercially reasonable deductibles) insuring the improvements and Tangible
Personal Property against all insurable risks, including, without limitation,
fire, vandalism, malicious mischief, lightning, windstorm, water, earthquake and
other perils customarily covered by casualty insurance and the costs of
demolition and debris removal; and
-15-
<PAGE> 16
(b) a policy or policies of workers, compensation and employers,
liability insurance, commercial general liability insurance, and automobile
liability insurance.
18. Cooperation with Buyer. Seller shall cooperate and do all acts as
may be reasonably required or requested by Buyer with regard to the fulfillment
of any Buyer Condition Precedent but Seller's representations and warranties
shall not be affected or released by Buyer's waiver or fulfillment of any Buyer
Condition Precedent. Seller hereby irrevocably authorizes Buyer and its agents
to make all inquiries with and applications to any third party, including any
governmental authority, as Buyer may reasonably require to complete its due
diligence.
19. Brokers and Finders. Neither party has had any contact or dealings
regarding the Property, or any communication in connection with the subject
matter of this transaction, through any real estate broker or other person who
can claim a right to a commission or finder's fee in connection with the sale
contemplated herein except for Steve Marino and Trenton Bonner ("Brokers") ,
whose entire commission shall be the responsibility of Seller. In the event that
any other broker or finder claims a commission or finder's fee based upon any
contact, dealings or communication, the party through whom the broker or finder
makes its claim shall be responsible for said commission or fee and all costs
and expenses (including, without limitation, reasonable attorneys, fees)
incurred by the other party in defending against the same. The party through
whom any other broker or finder makes a claim shall hold harmless, indemnify and
defend the other party hereto, its successors and assigns, agents, employees,
officers and directors, and the Property from and against any and all
obligations, liabilities, claims, demands, liens, encumbrances and losses
(including, without limitation, attorneys' fees) , whether direct, contingent or
consequential, arising out of, based on, or incurred as a result of such claim.
The provisions of this Paragraph shall survive the termination of this
Agreement.
20. Marketing. Seller agrees not to market or show the Property to,
or solicit offers from, any other prospective purchasers during the term of this
Agreement.
21. REIT. Buyer hereby advises Seller that Buyer is qualified as a real
estate investment trust under the provisions of the Internal Revenue Code of
1986, as amended, and that, by reason thereof, the maintaining of such status
and the avoiding of any activity which might cause a penalty tax to be applied
is of material concern to Buyer. Accordingly, Seller agrees to make any
modifications or amendments to this Agreement requested by Buyer prior to
Closing that may be necessary for Buyer to maintain its status as a real estate
investment trust or in order for it to avoid a penalty tax; provided, however,
that Seller shall have no obligation to enter into any such modification or
amendment that would materially alter or affect, in Seller's sole judgment,
Seller's rights, duties, or obligations under this Agreement. If Seller declines
to modify or amend this Agreement for any reason in a manner which Buyer
determines, in the good faith exercise of its reasonable business judgment, is
necessary to maintain its status as a real estate investment trust or avoid a
penalty tax, Buyer shall have the right to terminate this Agreement by written
notice delivered to Seller prior to Closing. In the event Buyer exercises such
termination right, neither party shall have any further rights or obligations
hereunder, the Deposit shall be returned to Buyer and all other funds and
documents deposited in escrow shall be returned to the party depositing the
same.
22. Miscellaneous.
(a) Notices. Any notice, consent or approval required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given upon (i) hand delivery or facsimile transmission, (ii)
one business day after being deposited with Federal Express or another reliable
overnight courier service for next day delivery, or (iii) the date of
-16-
<PAGE> 17
receipt or refusal of delivery if deposited in the United States mail,
registered or certified mail, postage prepaid, return receipt required, and
addressed as follows:
If to Seller: Buzz Oates Enterprises
8615 Elder Creek Road, Suite 100
Sacramento, California 95828
Attention: Mr. Kevin Ramos
Phone: (916) 381-3600
Fax: (916) 381-1834
With a CODY to: William B. Brodovsky, Esq.
Brodovsky & Brodovsky
2856 Arden Way, Suite 200
Sacramento, California 95825-1374
Phone: (916) 971-8800
Fax: (916) 971-8811
If to Buyer: Pacific Gulf Properties Inc.
4220 Von Karman, Second Floor
Newport Beach, California 92660-2002
Attention: Mr. Lonnie Nadal
Phone: (714) 223-5000
Fax: (714) 223-5033
With a copy to: Cox, Castle & Nicholson, LLP
2049 Century Park East, Suite 2800
Los Angeles, California 90067
Attention: Amy H. Wells, Esq.
Phone: (310) 284-2267
Fax: (310) 277-7889
If to Escrow First American Title Insurance Company
Holder: 1860 Howe Avenue, Suite 120
Sacramento, CA 95825
Attention: Ms. Lisa Blasquez
Phone: (916) 920-3100
Fax: (916) 927-8712
Escrow No. 905883-LB
or such other address as either party may from time to time specify in writing
to the other.
(b) Successors and Assigns. Buyer shall not have the right to
assign this Agreement without the consent or approval of Seller except to a
person or entity affiliated with Buyer. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors,
heirs, administrators and assigns.
(c) Amendments. Except as otherwise provided herein, this
Agreement may be amended or modified only by a written instrument executed by
Seller and Buyer.
(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
(e) Merger of Prior Agreements. This Agreement and the exhibits
hereto constitute the entire agreement between the parties and supersede all
prior agreements and understandings between the parties relating to the subject
matter hereof, including without limitation any letter of intent which shall be
of no further force or effect upon execution of this Agreement by Buyer and
Seller.
(f) Timing. For purposes of this Agreement "business day" shall
mean any day other than a Saturday, Sunday, California state or national holiday
or other day on which commercial bankers in California are generally not open
for business.
-17-
<PAGE> 18
(g) Severability. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect.
(h) Counterparts. This Agreement, and any document executed in
connection with this Agreement, may be executed in any number of counterparts
each of which shall be deemed an original and all of which shall constitute one
and the same agreement with the same effect as if all parties had signed the
same signature page. It shall not be necessary that the signatures of, or on
behalf of, each party, or that the signatures of all persons required to bind
any party, appear on a single counterpart, but it shall be sufficient that the
signature of, or on behalf of, each party, appear on one or more of the
counterparts. Any signature page of this Agreement, and any document executed in
connection with this Agreement, may be detached from any counterpart of this
Agreement or such other document and reattached to any other counterpart of this
Agreement or such other document identical in form hereto or thereto but having
attached to it one or more additional signature pages. This Agreement, and any
document executed in connection with this Agreement (except for the Deed or any
other document to be recorded), shall be deemed executed and delivered upon
each party's delivery of executed signature pages of this Agreement or such
other document, which signature pages may be delivered by facsimile with the
same effect as delivery of the originals.
(i) No Waiver. No delay or failure on the part of any party
hereto in exercising any right, power or privilege under this Agreement or under
any other instrument or document given in connection with or pursuant to this
Agreement shall impair any such right, power or privilege or be construed as a
waiver of any default or any acquiescence therein. No single or partial exercise
of any such right, power or privilege shall preclude the further exercise of
such right, power or privilege. No waiver shall be valid against any party
hereto unless made in writing and signed by the party against whom enforcement
of such waiver is sought and then only to the extent expressly specified herein.
(j) Legal Representation. Each party has been represented by
legal counsel in connection with the negotiation of the transactions herein
contemplated and the drafting and negotiation of this Agreement. Each party and
its counsel has had an opportunity to review and suggest revisions to the
language of this Agreement. Accordingly, no provision of this Agreement shall be
construed for or against or interpreted to the benefit or disadvantage of any
party by reason of any party having or being deemed to have structured or
drafted such provision.
(k) Enforcement. In the event a dispute arises concerning the
performance, meaning or interpretation of any provision of this Agreement, the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party in enforcing or establishing
its rights hereunder, including, without limitation, court costs and attorneys,
fees. In addition to the foregoing award of attorneys, fees to the prevailing
party, the prevailing party in any lawsuit on this Agreement shall be entitled
to its attorneys' fees incurred in any post judgment proceedings to collect or
enforce the judgment. This provision is separate and several and shall survive
the merger of this Agreement into any judgment on this Agreement.
(l) Exhibits. All exhibits attached hereto are incorporated
herein as though fully set forth herein.
(m) Joint and Several Liability. All entities constituting
"Seller" hereunder shall be jointly and severally liable for the faithful
-18-
<PAGE> 19
performance of the terms and conditions hereof, and of any other document
executed in connection herewith, to be performed by Seller.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
BUYER: SELLER:
PACIFIC GULF PROPERTIES INC., WOODLAND 54 VENTURE,
a Maryland corporation a California general partnership
By: BY:
------------------------------ -------------------------------------
William C. Cummings
------------------------------ General Partner
(Print Name and Title)
By: BY:
------------------------------ -------------------------------------
John H. Sievers
General Partner
-----------------------------
(Print Name and-Title)
By:
-------------------------------------
Douglas W. Barkdull
General Partner
By: Buzz Oates Enterprises II,
a California general partnership
General Partner
By:
--------------------------------
Marvin L. Oates, as Trustee of
the Marvin L. Oates Trust
Dated March 7, 1995
General Partner
By: OBF, a California general
partnership General Partner
By:
--------------------------------
Philip D. Oates
General Partner
[BUYER AND SELLER TO INITIAL SUB-PARAGRAPH 7 (a)]
FIRST AMERICAN TITLE INSURANCE COMPANY agrees to act as Escrow Holder in
accordance with the terms of this Agreement.
FIRST AMERICAN TITLE INSURANCE COMPANY
By:
-------------------------------------
-------------------------------------
(Print Name and Title)
-19-
<PAGE> 20
EXHIBIT A
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Pacific Gulf Properties Inc.
4220 Von Karman, Second Floor
Newport Beach, California 92660-2002
Attention: Mr. Lonnie Nadal
MAIL TAX STATEMENT TO:
Pacific Gulf Properties Inc.
4220 Von Karman, Second Floor
Newport Beach, California 92660-2002
Attention: Mr. Lonnie Nadal
- --------------------------------------------------------------------------------
(SPACE ABOVE LINE FOR RECORDER'S USE ONLY)
GRANT DEED
In accordance with Section 11932 of the California Revenue and Taxation Code,
Grantor has declared the amount of the transfer tax which is due by a separate
statement which is not being recorded with this Grant Deed.
FOR VALUE RECEIVED, WOODLAND 54 VENTURE, a California general
partnership, grants to PACIFIC GULF PROPERTIES INC., a Maryland corporation
("Grantee"), all that certain real property situated in the City of Woodland,
County of Yolo, State of California, described on Schedule 1 attached hereto and
by this reference incorporated herein (the "Property").
<PAGE> 21
IN WITNESS WHEREOF, the undersigned has executed this Grant Deed as of
_________ 1997.
WOODLAND 54 VENTURE,
a California general partnership
By:
-------------------------------------
William C. Cummings
General Partner
By:
-------------------------------------
John H. Sievers
General Partner
By:
-------------------------------------
Douglas W. Barkdull
General Partner
By: Buzz Oates Enterprises 11,
a California general partnership
General Partner
By:
-------------------------------------
Marvin L. Oates, as Trustee of the
Marvin L. Oates
Trust Dated March 7, 1995
General Partner
By: OBF
a California general partnership
General Partner
By:
-------------------------------------
Philip D. Oates
General Partner
<PAGE> 22
STATE OF ____________)
) ss.
COUNTY OF ___________)
On __________ 1997, before me, the undersigned, a Notary Public
in and for said County and State, personally appeared
__________________________________________, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/ their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the within instrument.
WITNESS my hand and official seal.
----------------------------------------
Notary Public
STATE OF ____________)
) ss.
COUNTY OF ___________)
On __________ 1997, before me, the undersigned, a Notary Public
in and for said County and State, personally appeared
__________________________________________, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the within instrument.
WITNESS my hand and official seal.
----------------------------------------
Notary Public
<PAGE> 23
STATE OF ____________)
) ss.
COUNTY OF ___________)
On __________ 1997, before me, the undersigned, a Notary Public
in and for said County and State, personally appeared
__________________________________________, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the within instrument.
WITNESS my hand and official seal.
----------------------------------------
Notary Public
STATE OF ____________)
) ss.
COUNTY OF ___________)
On __________ 1997, before me, the undersigned, a Notary Public
in and for said County and State, personally appeared
__________________________________________, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the within instrument.
WITNESS my hand and official seal.
----------------------------------------
Notary Public
<PAGE> 24
STATE OF ____________)
) ss.
COUNTY OF ___________)
On __________ 1997, before me, the undersigned, a Notary Public
in and for said County and State, personally appeared
__________________________________________, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the within instrument.
WITNESS my hand and official seal.
----------------------------------------
Notary Public
<PAGE> 25
SCHEDULE 1 TO DEED
LEGAL DESCRIPTION
That certain real property situated in the State of California, County of Yolo,
City of Woodland, described as follows:
Parcel 2, Parcel Map No. 3978, filed September 25, 1991, in book 10 of Parcel
Maps, page 41, in the Office of the Yolo County Recorder.
<PAGE> 26
DECLARATION OF DOCUMENTARY TRANSFER TAX
DO NOT RECORD
County Recorder
Yolo 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 WOODLAND 54 VENTURE, as Grantor, and PACIFIC GULF
PROPERTIES INC., as Grantee. The property being transferred is located in the
City of Woodland, County of Yolo, State of California. The Assessor's Parcel No.
is 27-210-21.
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.
WOODLAND 54 VENTURE,
a California general partnership
By:
-------------------------------------
William C. Cummings
General Partner
By:
-------------------------------------
John H. Sievers
General Partner
By:
-------------------------------------
Douglas W. Barkdull
General Partner
By: Buzz Oates Enterprises II,
a California general partnership
General Partner
By:
-------------------------------------
Marvin L. Oates, as Trustee of the
Marvin L. Oates Trust
Dated March 7, 1995
General Partner
By:OBF
a California general partnership
General Partner
By:
-------------------------------------
Philip D. Oates
General Partner
<PAGE> 27
EXHIBIT B
BILL OF SALE
FOR VALUE RECEIVED, WOODLAND 54 VENTURE, a California general
partnership, hereby sells, conveys and assigns to PACIFIC GULF PROPERTIES INC.,
a Maryland corporation, all of Seller's right, title and interest in and to all
personal property located upon or used in the ownership, operation, management,
maintenance and/or repair of that certain real property described in Schedule 1
attached hereto and incorporated herein by this reference and the improvements
thereon (collectively, the "Personal Property"), which Personal Property shall
include, without limitation, the items described on Schedule 2 attached hereto
and incorporated herein by this reference.
TO HAVE AND TO HOLD the Personal Property unto the grantee and its
successors and assigns forever.
Seller warrants that it owns good and marketable title to the Personal
Property and will defend title to the Personal Property against all persons
claiming a prior right thereto to the extent that such prior right is alleged to
exist on or before the date of this Bill of Sale.
All entities constituting Seller shall be jointly and severally liable
for the faithful performance of the terms and conditions hereof to be performed
by Seller.
<PAGE> 28
IN WITNESS WHEREOF, Seller has executed this Bill of Sale on this day of
1997.
WOODLAND 54 VENTURE,
a California general partnership
By:
-------------------------------------
William C. Cummings
General Partner
By:
-------------------------------------
John H. Sievers
General Partner
By:
-------------------------------------
Douglas W. Barkdull
General Partner
By: Buzz Oates Enterprises II,
a California general partnership
General Partner
By:
-------------------------------------
Marvin L. Oates, as Trustee of the
Marvin L. Oates Trust Dated March 7,
1995 General Partner
By:OBF
a California general partnership
General Partner
By:
-------------------------------------
Philip D. Oates
General Partner
<PAGE> 29
Schedule 1
LEGAL DESCRIPTION OF THE PROPERTY
<PAGE> 30
Schedule 2
DESCRIPTION OF ITEMS INCLUDED IN THE PERSONAL PROPERTY
<PAGE> 31
EXHIBIT C
ASSIGNMENT OF SERVICE CONTRACTS, WARRANTIES,
GUARANTIES, PERMITS AND OTHER INTANGIBLE PROPERTY
THIS ASSIGNMENT OF SERVICE CONTRACTS, WARRANTIES, GUARANTIES AND OTHER
INTANGIBLE PROPERTY (this "Assignment") is made as of ________________, 1997, by
WOODLAND 54 VENTURE, a California general partnership ("Assignor"), to PACIFIC
GULF PROPERTIES INC., a Maryland corporation ("Assignee").
WITNESSETH:
WHEREAS, Assignor is contemporaneously herewith selling pursuant to that
certain Purchase and Sale Agreement and Escrow Instructions dated as of
______________________ , 199__, by and between Assignor and Assignee (the
"Purchase Agreement") that certain real property and improvements thereon
located in the City of Woodland, County of Yolo, State of California, the real
property of which is more particularly described on Schedule 1 attached hereto
and incorporated herein by this reference. Terms used in this Assignment and not
otherwise defined shall be given the meanings defined in the Purchase Agreement.
WHEREAS, Assignor desires to assign its interest in and to the following
to Assignee as of the date on which title to the Real Property is vested in
Assignee (the "Transfer Date"):
(a) All service contracts described in Schedule 2 attached hereto and
incorporated herein by this reference (the "Contracts");
(b) All "Warranties and Guaranties" (hereinafter defined);
(c) All "Names and Marks" (hereinafter defined);
(d) All "Intangible Property" (hereinafter defined); and
(e) All "Permits" (hereinafter defined).
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. As of the Transfer Date, Assignor hereby assigns and transfers unto
Assignee all of its right, title, claim and interest in, to and under the (a)
Contracts; (b) Warranties and Guarantees; (c) Names and Marks; (d) Intangible
Property and (e) Permits (collectively the "Assigned Interests").
2. The following terms shall have the following meanings:
(a) The term "Warranties and Guaranties" as used herein shall
mean and include all warranties and guarantees to the extent assignable, whether
or not written, for all or any portion of the Property, including without
limitation the Improvements and the Tangible Personal Property, including
without limitation construction warranties from contractors and subcontractors.
(b) The term "Names and Marks" as used herein shall mean and
include all patents, licenses, trademarks, service marks and names used in
connection with the operation of the Property, and all symbols, emblems and
logos used in connection with the ownership or operation of the Property,
whether in black and white or in color, and irrespective of size, and all of
Assignor's right, title and interest in and to all goodwill associated
therewith, including, without limitation the name " _________________________"
1
<PAGE> 32
(c) The term "Intangible Property" as used herein shall mean and
include all intangible property relating to or used in connection with the
Property, as defined in the Purchase Agreement.
(d) The term "Permits" as used herein shall mean and include all
governmental permits and approvals relating to the construction, operation, use
or occupancy of the Property.
3. Assignor hereby agrees to indemnify, defend and hold harmless
Assignee from and against any and all liabilities, claims, demands, damages and
costs, including, without limitation, attorneys' fees and expenses
(collectively, "Liabilities"), arising out of or in any way related to the
Assigned Interests prior to or on the Transfer Date or which arise out of or are
in any way related to the Assigned Interests after the Transfer Date on account
of any fact or circumstance occurring or existing on or prior to the Transfer
Date.
4. Assignee hereby agrees to indemnify, defend and hold harmless
Assignor from and against any and all Liabilities arising out of or in any way
related to the Assigned Interests after the Transfer Date, except for
Liabilities which arise out of or are in any way related to the Assigned
Interests after the Transfer Date on account of any fact or circumstance
occurring or existing on or prior to the Transfer Date.
5. In the event of any litigation between Assignor and Assignee arising
out of the obligations of the parties under this Assignment or concerning the
meaning or interpretation of any provision contained herein, the losing party
shall pay the prevailing party's costs and expenses in such litigation,
including, without limitation, reasonable attorneys, fees and expenses. In
addition to the foregoing award of attorneys' fees to the prevailing party, the
prevailing party in any lawsuit on this Agreement shall be entitled to its
reasonable attorneys' fees incurred in any post judgment proceedings to collect
or enforce the judgment. This provision is separate and several and shall
survive the merger of this Assignment into any judgment on this Assignment.
6. 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.
7. This Assignment shall be governed by and construed in accordance with
the laws of the State of California.
2
<PAGE> 33
8. Nothing contained herein shall be deemed or construed as relieving the
Assignor or Assignee of their respective duties and obligations under the
Purchase Agreement.
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date
first above written.
ASSIGNOR: WOODLAND 54 VENTURE,
a California general partnership
By:
-------------------------------------
William C. Cummings
General Partner
By:
-------------------------------------
John H. Sievers
General Partner
By:
-------------------------------------
Douglas W. Barkdull
General Partner
By: Buzz Oates Enterprises II,
a California general partnership
General Partner
By:
-------------------------------------
Marvin L. Oates, as Trustee of the
Marvin L. Oates Trust Dated March 7,
1995
General Partner
By: OBF, a California general
partnership
General Partner
By:
-------------------------------------
Philip D. Oates
General Partner
ASSIGNEE: PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
-------------------------------------
-------------------------------------
(Print Name and Title)
By:
-------------------------------------
-------------------------------------
(Print Name and Title)
3
<PAGE> 34
Schedule 1
LEGAL DESCRIPTION OF REAL PROPERTY
<PAGE> 35
Schedule 2
DESCRIPTION OF THE CONTRACTS
<PAGE> 36
EXHIBIT D
ASSIGNMENT OF LEASES
THIS ASSIGNMENT OF LEASES (this "Assignment") dated as of
_________________________ , 1997, is made by WOODLAND 54 VENTURE, a California
general partnership ("Assignor") to PACIFIC GULF PROPERTIES INC., a Maryland
corporation ("Assignee").
WITNESSETH:
WHEREAS, Assignor is the lessor under certain leases executed with
respect to that certain real property located in the City of Woodland, County of
Yolo, State of California (the "Property") more particularly described on
Schedule 1 attached hereto and incorporated herein by this reference, which
leases are described in Schedule 2 attached hereto and incorporated herein by
this reference (the "Leases").
WHEREAS, Assignor is contemporaneously herewith selling the Property to
Assignee pursuant to that certain Purchase and Sale Agreement and Escrow
Instructions dated as of, 1997, by and between Assignor and Assignee (the
"Purchase Agreement").
WHEREAS, Assignor desires to assign its interest in and to the Leases to
Assignee as of the date on which title to the Property is vested in Assignee
(the "Transfer Date").
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereby agree as follows:
1. As of the Transfer Date, Assignor hereby assigns to Assignee all of
its right, title and interest in and to the Leases.
2. Assignor warrants and represents that as of the Transfer Date, the
attached Schedule 2 includes all of the Leases affecting the Property and there
are no assignments of or agreements to assign the Leases to any other party.
3. Assignor hereby agrees to indemnify, defend and hold harmless
Assignee from and against any and all liabilities, claims, demands, damages and
costs, including, without limitation, attorneys' fees and expenses
(collectively, "Liabilities"), arising out of or in any way related to the
lessor's obligations under the Leases described in Schedule 2 and related to the
period prior to or on the Transfer Date or which arise out of or are in any way
related to the lessor's obligations under said Leases after the Transfer Date on
account of any fact or circumstance occurring or existing on or prior to the
Transfer Date. The foregoing indemnity shall not apply to any Liabilities
described with specificity (and only to the extent of such description) in an
"Estoppel Certificate" executed by a tenant and delivered to Assignee prior to
the expiration "Due Diligence Period" (as such terms are defined in the Purchase
Agreement).
4. Assignee hereby agrees to indemnify, defend and hold harmless
Assignor from and against any and all Liabilities arising out of Lessor's
obligations under the Leases described in Schedule 2 and related to the period
after the Transfer Date, except for Liabilities on account of any fact or
circumstance occurring or existing on or prior to the Transfer Date.
5. In the event of any litigation between Assignor and Assignee arising
out of the obligations of the parties under this Assignment or concerning the
meaning or interpretation of any provision contained herein, the losing party
shall pay the prevailing party's costs and expenses in such litigation,
including, without limitation, reasonable attorneys' fees and expenses. In
addition to the foregoing award of attorneys' fees to the prevailing party, the
prevailing party in any lawsuit on this Agreement shall
1
<PAGE> 37
be entitled to its reasonable attorneys' fees incurred in any post judgment
proceedings to collect or enforce the judgment. This provision is separate and
several and shall survive the merger of this Assignment into any judgment on
this Assignment.
6. This Assignment shall be binding on and inure to the benefit of the
Assignee and Assignor and their respective heirs, executors, administrators,
successors-in-interest and assigns.
7. This Assignment shall be governed by and construed in accordance with
the laws of the State of California.
2
<PAGE> 38
8. Nothing contained herein shall be deemed or construed as relieving the
Assignor or Assignee of their respective duties and obligations under the
Purchase Agreement.
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date
first above written.
ASSIGNOR: WOODLAND 54 VENTURE,
a California general partnership
By:
-------------------------------------
William C. Cummings
General Partner
By:
-------------------------------------
John H. Sievers
General Partner
By:
-------------------------------------
Douglas W. Barkdull
General Partner
By: Buzz Oates Enterprises II,
a California general partnership
General Partner
By:
-------------------------------------
Marvin L. Oates, as Trustee of the
Marvin L. Oates Trust Dated March 7,
1995
General Partner
By: OBF, a California general
partnership
General Partner
By:
-------------------------------------
Philip D. Oates
General Partner
ASSIGNEE: PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
-------------------------------------
-------------------------------------
(Print Name and Title)
By:
-------------------------------------
-------------------------------------
(Print Name and Title)
3
<PAGE> 39
Schedule 1
LEGAL DESCRIPTION OF REAL PROPERTY
<PAGE> 40
Schedule 2
DESCRIPTION OF THE LEASES
<PAGE> 41
EXHIBIT E
RENT ROLL
<PAGE> 42
EXHIBIT F
ESTOPPEL CERTIFICATE
Tenant:_________________________________
Date:___________________________, 199___
Address:________________________________
________________________________________
________________________________________
Lease Date:_____________________________
Commencement Date:______________________
Square Footage:_________________________
Expiration Date:________________________
Term In Years:__________________________
Current Monthly Payments: $_____________
Base Rental: $__________________________
Base Year:______________________________
Base Amount:____________________________
Operating Expenses: $___________________
Rent & OE Pmts Are Due:_________________
Tax Pmts Are Due:_______________________
Taxes: $________________________________
Security Deposit:_______________________
OPTIONS
Check appropriate box below
____ Extension Option
____ Expansion Option
____ Termination Option
____ Purchase Option
and provide details in Paragraph 7 below
____ None
____ Check here if you have rental escalations and provide details in Paragraph
4 below.
Tenants Proportionate Share Of Taxes And Operating Expenses ______ %
================================================================================
THE UNDERSIGNED, AS TENANT UNDER THE LEASE OF THE ABOVE REFERENCED PREMISES
("PREMISES") EXECUTED BY __________________ ("LANDLORD"), AS LANDLORD, AND
TENANT ON THE ABOVE-REFERENCED LEASE DATE, DOES HEREBY STATE, DECLARE, REPRESENT
AND WARRANT TO PACIFIC GULF PROPERTIES INC. ("BUYER") AND ITS ASSIGNEES AS
FOLLOWS:
1. Accuracy. That the information contained in this Tenant's Estoppel
Certificate is true and correct as of the date above written.
2. Lease. That the copy of the Lease attached hereto as Schedule 1 is a true and
correct copy of the Lease which is in full force and effect and which has not
been amended, supplemented or changed by letter agreement or otherwise, except
as follows [if none, indicate so by writing "NONE" below]:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. Completion of Premises/No Disputes. Tenant has accepted possession of the
Premises, and all conditions to be satisfied by Landlord under the Lease have
been completed pursuant to the terms of the Lease, including, but not limited
to, completion of construction of the Premises (and all other improvements
required under the Lease) in accordance with applicable plans and specifications
and within the time periods set forth in the Lease; there are
<PAGE> 43
no unreimbursed expenses (except the annual operating expense and tax expense
adjustment) including, but not limited to, capital expenses reimbursements; and
Tenant has no complaints or disputes with Landlord regarding the overall
operation, maintenance or condition of the Premises or the property within which
the Premises is located (the "Property"), or otherwise.
4. Rental Escalation. Base Rental is subject to the following escalation
adjustments (if none, indicate so by writing "NONE" below):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. No Defaults/Claims. Neither Tenant nor, to Tenant's knowledge, Landlord under
the Lease is in default under any terms of the Lease nor has any event occurred
which with the passage of time (after notice, if any, required by the Lease)
would become an event of default under the Lease. Tenant has no claims,
counterclaims, defenses or setoffs against Landlord arising from the Lease, the
Premises or the Property, nor is Tenant entitled to any concession, rebate,
allowance or free rent for any period after this certification.
6. No Advance Payments. No rent has been paid more than one (1) month in advance
by Tenant except for the current month's rent, and no security (other than a
security deposit in the amount of $__________) has been deposited with Landlord.
7. No Options/Purchase Rights. Tenant has no right of first refusal to purchase
the Property or any interest therein and no right to cancel or terminate the
Lease except as follows (if none, indicate so by writing "NONE" below]:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
8. No Modification of Lease. From the date of this Estoppel Certificate
through ____________________, 19__, no modification or amendment to the Lease,
forgiveness of payment of rent or other amount due under the Lease, grant of
extension or option, or prepayment of rents may be made except upon the written
consent thereto executed by Buyer, which consent may be unreasonably withheld if
not otherwise provided in the Lease.
9. Parking. The number of parking spaces allotted to Tenant under the terms of
the Lease, for the use of its employees, agents, invitees and licensees is
_____________; of these spaces, _____ are reserved for Tenant's exclusive use.
10. No Sublease/Assignment. Tenant has not entered into any sublease, assignment
or any other agreement transferring any of its interest in the Lease or the
Premises, except as follows:
11. No Notice. Tenant has not received written notice of any assignment,
hypothecation, mortgage, or pledge of Landlord's interest in the Lease or the
rents or other amounts payable thereunder, except those listed below.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
12. Hazardous Materials. No hazardous or toxic substance (including without
limitation PCB's, petroleum, petroleum products and fractions thereof) has been
used, treated, stored or disposed of on the Premises or Property in violation of
environmental laws by Tenant or, to Tenant's knowledge, any other party. No
underground storage tanks exist or, to Tenant's knowledge, have existed on or
under the Property. Tenant does not have any permits or identification numbers
issued by any environmental or governmental agency with respect to its
operations on the Premises, except those listed below.
<PAGE> 44
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
13. Reliance. Tenant recognizes and acknowledges it is making these
representations to Buyer with the intent that Buyer and any assigns of Buyer
will fully rely on Tenant's representations.
14. Binding. The provisions hereof shall be binding upon and inure to the
benefit of the successors, assigns, personal representatives and heirs of Tenant
and Buyer.
EXECUTED BY TENANT, IF TENANT IS A SOLE PROPRIETOR OR A GENERAL PARTNERSHIP, OR
BY AN OFFICER OF TENANT, IF TENANT IS A CORPORATION, ON THE DATE FIRST WRITTEN
ABOVE.
BY:_______________________________________
a___________________________________
BY:_________________________________
NAME:_______________________________
TITLE:______________________________
<PAGE> 45
Schedule 1 to Estoppel Certificate
LEASE
<PAGE> 46
EXHIBIT G
FORM OF NOTICE TO TENANTS
____________, 1997
To:_______________________________________
_______________________________________
_______________________________________
_______________________________________
RE: Notice of Lease Assignment
This letter is to notify you that the property commonly known as the
_____________ ("Property") has this date been sold and ownership transferred.
In connection with this sale, all of the interest of the lessor under your
lease of space in the Property has been transferred. You are hereby notified
that, from and after the date hereof and until further notice, all future
payments under your lease should be made payable to "__________ " (the "Property
Manager") and mailed to the Property Manager, whose address is _____________
________________. In addition, all questions or other matters regarding
your lease should be directed to the Property manager at (____) _______________.
Also in connection with this sale, if you have paid a security deposit in
connection with your lease, it has been transferred to the Property Manager. The
return of any such security deposit will be conditioned upon and subject to the
terms and conditions of the lease and the legal requirements of
<PAGE> 47
the State of ______________ . All future inquiries regarding security deposits
are to be directed to the Property Manager.
Thank you for your cooperation.
Very truly yours,
WOODLAND 54 VENTURE,
a California general partnership
By:
-------------------------------------
William C. Cummings
General Partner
By:
-------------------------------------
John H. Sievers
General Partner
By:
-------------------------------------
Douglas W. Barkdull
General Partner
By: Buzz Oates Enterprises II,
a California general partnership
General Partner
By:
------------------------------------
Marvin L. Oates, as Trustee of the
Marvin L. Oates Trust
Dated March 7, 1995
General Partner
By: OBF, a California general partnership
General Partner
By:
-------------------------------------
Philip D. Oates
General Partner
<PAGE> 48
EXHIBIT H
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
To inform PACIFIC GULF PROPERTIES INC., a Maryland corporation
("Transferee"), that withholding of tax under Section 1445 of the Internal
Revenue Code of 1986, as amended ("Code"), will not be required upon the
transfer of certain real property to the Transferee by ("Transferor"), the
undersigned hereby certifies the following on behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign partnership,
foreign trust, foreign estate or foreign person (as those terms are defined in
the Code and the Income Tax Regulations promulgated thereunder);
2. The Transferor's U.S. employer or tax (social security)
identification number is 680244846;
The Transferor understands that this Certification may be disclosed to
the Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
The Transferor understands that the Transferee is relying on this
Certification in determining whether withholding is required upon said transfer.
The Transferor hereby agrees to indemnify, defend and hold the
Transferee harmless from and against any and all obligations, liabilities,
claims, losses, actions, causes of action, rights, demands, damages, costs and
expenses of every kind, nature or character whatsoever (including, without
limitation, reasonable attorneys' fees and court costs) incurred by the
Transferee as a result of: (i) the Transferor's failure to pay U.S. Federal
income tax which the Transferor is required to pay under applicable U.S. law; or
(ii) any false or misleading statement contained herein.
Under penalty of perjury I declare that I have examined this
Certification and to the best of my knowledge and belief it is true and
<PAGE> 49
correct and complete, and I further declare that I have authority to sign this
document on behalf of the Transferor.
Date:_______________, 1997
WOODLAND 54 VENTURE,
a California general partnership
By:
-------------------------------------
William C. Cummings
General Partner
By:
-------------------------------------
John H. Sievers
General Partner
By:
-------------------------------------
Douglas W. Barkdull
General Partner
By: Buzz Oates Enterprises II,
a California general partnership
General Partner
By:
-------------------------------------
Marvin L. Oates, as Trustee
of the Marvin L. Oates Trust Dated
March 7, 1995 General Partner
By: OBF, a California
general partnership
General Partner
By:
----------------------------------
Philip D. Oates
General Partner
<PAGE> 50
EXHIBIT I
LEASES - TENANT COSTS TO BE PRORATED AS OF THE CLOSING DATE
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-23611) and related Prospectus of
Pacific Gulf Properties Inc. for the registration of $250,000,000 of common
stock, preferred stock, debt securities and warrants and in the related
Prospectus Supplement dated October 31, 1997 for the registration of 4,250,000
shares of the Company's common stock. We also consent to the incorporation by
reference therein of our report dated February 13, 1997, with respect to the
consolidated and combined financial statements and schedule of Pacific Gulf
Properties Inc. included in its Annual Report (Form 10-K) for the year ended
December 31, 1996 filed with the Securities and Exchange Commission and our
reports: (a) dated October 17, 1997, with respect to the combined statement of
revenues and certain expenses of the Industrial Portfolio Acquisition Properties
for the year ended December 31, 1996 and (b) dated October 15, 1997, with
respect to the combined statement of revenues and certain expenses of Eden
Plaza/Eden Industrial for the year ended December 31, 1996, included in the
Company's Current Report on Form 8-K dated October 31, 1997, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Newport Beach, California
October 31, 1997
