<PAGE> 1
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) December 23, 1998
PACIFIC GULF PROPERTIES INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 1-12546 33-0577520
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
4220 VON KARMAN, 2ND FLOOR, NEWPORT BEACH, CALIFORNIA, 92660-2002
(Address of principal executive offices, including zip code)
949-223-5000
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS.
Pacific Gulf Properties Inc. (the "Company") completed the
following transactions in December 1998.
DISPOSITION OF MULTIFAMILY PROPERTIES
On December 23, 1998, the Company sold the following five
multifamily apartment communities located in Seattle, Washington
(collectively referred to as "Northwest Multifamily Properties")
for a total cash consideration of $78,500,000:
<TABLE>
<CAPTION>
Apartment
Property Name Units Occupancy %
------------------------------------------------------
<S> <C> <C>
Hampton Bay Apartments 304 93%
Fultons Crossing Apartments 256 95
Fultons Landing Apartments 248 92
Heatherwood Apartments 368 95
Holly Ridge Apartments 146 90
-----
1,322
=====
</TABLE>
The Northwest Multifamily Properties constitute all of the
Company's multifamily properties in the Pacific Northwest and
were sold to SAP II Originating LLC, a New York limited liability
company ("SAP II"). As a result of the sale, the Company's
multifamily holdings decreased to 3,265 apartment units.
The sale of the Northwest Multifamily Properties generated a net
gain of approximately $29,000,000 and net proceeds of
approximately $75,000,000. Proceeds from the sale were deposited
into a deferred exchange account and were applied to the
acquisition of seven industrial properties (described below) on a
tax-deferred basis pursuant to Section 1031 of the Internal
Revenue Code. The transaction was an all-cash sale and the
Company has no continuing involvement, accordingly, the Company
recognized the sale using the full accrual method of accounting.
Prior to the sale, the Company completed the following loan
transactions:
The Company released Hollyridge Apartments and Heatherwood
Apartments from the security interest related to a
tax-exempt loan with a lender by substituting Applewood
Apartments, an unrelated multifamily property, as the new
collateral in satisfaction of the lender's requirements. Prior to
the substitution, the Company repaid outstanding indebtedness on
Applewood Apartments totaling $11,574,000 utilizing proceeds
borrowed under the Company's revolving line of credit with Wells
Fargo Bank.
The Company released Hampton Bay Apartments from the security
interest related to a loan from a life insurance company.
The Company substituted a letter of credit issued by a bank
totaling $9,400,000 and expiring December 1999 for the trust deed
on Hampton Bay Apartments. The Company remains obligated on the
life insurance company loan and anticipates pledging an unrelated
property as collateral prior to the letter of credit expiration
date.
-1-
<PAGE> 3
INDUSTRIAL ACQUISITIONS
On December 23, 1998, the Company reinvested the proceeds from
the sale of the Northwest Multifamily Properties by acquiring
seven industrial properties located in the states of Arizona,
California and Oregon for a total cash consideration of
$76,000,000. Six of the industrial properties were acquired from
RREEF Performance Partnership I - LP, an Illinois limited
partnership ("RREEF"), for a gross purchase price of $69,600,000.
The remaining industrial property was acquired from SPT Real
Estate Corp., a Maryland corporation ("SPT"), for a gross
purchase price of $6,400,000. RREEF and SPT are both affiliated
companies of RREEF America, a pension fund manager.
The industrial acquisitions (collectively referred to as the
"RREEF/SPT Industrial Portfolio") included the following
properties:
<TABLE>
<CAPTION>
Leasable Square
Property Name Location Feet Occupancy %
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RREEF ACQUISITIONS
Hohokam 10 East Tempe, Arizona 256,900 97%
Hohokam 10 West Phoenix, Arizona 65,900 95%
Hesperian Business Park Hayward, California 153,000 100%
Sierra Trinity Industrial Park Dublin, California 223,400 89%
Contra Costa Diablo Industrial Park Concord, California 146,300 69%
Airport Business Center Portland, Oregon 228,500 93%
SPT ACQUISITION
West Sacramento Industrial Center Sacramento, California 214,900 80%
---------
1,288,900
=========
</TABLE>
Each property constituting the RREEF/SPT Industrial Portfolio is
located within a region where the Company maintains a regional
office. As a result of this transaction, the Company increased
its industrial holdings to 15,513,000 leasable square feet
approximately. The Company plans to spend an aggregate of
$1,500,000 on capital improvements related to this portfolio
within 12 months.
The disposition and acquisition transactions referred to above
were consummated with unrelated parties. In each case, the
Company's acquisition was based upon an evaluation of a number
of factors, including a review of historical and projected
rental revenues and expenses, capitalization rates for similar
properties, prevailing market conditions in the area and studies
including a review of financial operations, environmental
conditions and site inspections.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) See Index to Financial Statements attached hereto.
Pro forma financial statements are included herein
pursuant to Article 11 of Regulation S-X. Audited
combined financial statements required by Article 3-14
of Regulation S-X for the Acquisitions will be filed
within 60 days as an amendment to this Form 8-K.
-2-
<PAGE> 4
(b) Exhibits
Agreements
10.1 Purchase Agreement and Escrow Instructions
and related amendments between Pacific Gulf
Properties Inc. (as seller) and SAP II
Originating LLC (as buyer) for the sale of
the Northwest Multifamily Properties.
10.2 Industrial Portfolio Agreement of Purchase
and Sale and related amendments between
Pacific Gulf Properties Inc. (as buyer) and
RREEF Performance Partnership I - LP (as
seller) for the acquisition of the RREEF
industrial properties.
10.3 Industrial Portfolio Agreement of Purchase
and Sale and related amendments between
Pacific Gulf Properties Inc. (as buyer) and
SPT Real Estate Corp. (as seller) for the
acquisition of the SPT industrial property.
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: January 7, 1999
------------------------------------
-3-
<PAGE> 5
PACIFIC GULF PROPERTIES INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1998........................................... 5
Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 1998............. 6
Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 1997..................... 7
Notes to Pro Forma Condensed Consolidated Financial Statements.................................................... 8
</TABLE>
-4-
<PAGE> 6
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
----------------------------
SALE OF ACQUISITION OF
NORTHWEST RREEF/SPT
COMPANY MULTIFAMILY INDUSTRIAL COMPANY
HISTORICAL PROPERTIES PORTFOLIO PRO FORMA
---------- ----------- -------------- ---------
(A) (B)
<S> <C> <C> <C> <C>
ASSETS
Real estate, net
Operating properties $ 780,168 $ (46,219) $ 76,000 $ 809,949
Properties under development 34,485 -- -- 34,485
Cash and cash equivalents 5,114 74,887 (75,466) 4,535
Accounts receivable 4,893 -- -- 4,893
Other assets 15,088 -- -- 15,088
--------- --------- --------- ---------
$ 839,748 $ 28,668 $ 534 $ 868,950
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Loans payable $ 278,440 $ (11,574) $ -- $ 266,866
Line of credit 116,600 11,574 -- 128,174
Accounts payable and accrued liabilities 15,882 (245) 534 16,171
Dividends payable 9,609 -- -- 9,609
Convertible subordinated debentures 12,261 -- -- 12,261
--------- --------- --------- ---------
432,792 (245) 534 433,081
========= ========= ========= =========
Minority interest in consolidated partnerships 17,821 -- -- 17,821
Shareholders' equity
Preferred stock 28 -- -- 28
Common shares 200 -- -- 200
Outstanding restricted stock (1,282) -- -- (1,282)
Additional paid-in capital 412,058 -- -- 412,058
Retained earnings (distributions in
excess of earnings) (21,869) 28,913 -- 7,044
--------- --------- --------- ---------
389,135 28,913 -- 418,048
--------- --------- --------- ---------
$ 839,748 $ 28,668 $ 534 $ 868,950
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the pro forma condensed
consolidated financial statements.
-5-
<PAGE> 7
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
--------------------------------
SALE OF ACQUISITION OF
NORTHWEST RREEF/SPT
COMPANY MULTIFAMILY INDUSTRIAL COMPANY
HISTORICAL ADJUSTMENTS ADJUSTED PROPERTIES PORTFOLIO PRO FORMA
------------ ------------ ------------ ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income
Industrial properties $ 54,993 $ 4,782 (C) $ 59,775 $ -- $ 6,430 (N) $ 66,205
Multifamily properties 27,916 (1,319)(C) 26,597 (7,671) (K) -- 18,926
------------ ------------ ------------ ----------- ------------ ------------
82,909 3,463 86,372 (7,671) 6,430 85,131
EXPENSES
Rental property expenses
Industrial properties 11,979 1,101 (C) 13,080 -- 1,649 (N) 14,729
Multifamily properties 10,290 (459)(C) 9,831 (2,869) (K) -- 6,962
------------ ------------ ------------ ----------- ------------ ------------
22,269 642 22,911 (2,869) 1,649 21,691
Depreciation 14,751 559 (D) 15,310 (999) (M) 1,520 (O) 15,831
Interest 18,965 2,533 (E) 20,659 (129) (L) -- 20,530
(129)(F)
(710)(P)
General and administrative 3,912 -- 3,912 -- -- 3,912
Minority interest in earnings of
consolidated partnerships 733 296 (G) 1,029 -- -- 1,029
------------ ------------ ------------ ----------- ------------ ------------
NET INCOME 22,279 272 22,551 (3,674) 3,261 22,138
Less preferred dividend
requirements 3,621 -- 3,621 -- -- 3,621
------------ ------------ ------------ ----------- ------------ ------------
INCOME AVAILABLE TO COMMON
SHAREHOLDERS (S)(T) $ 18,658 $ 272 $ 18,930 $ (3,674) $ 3,261 $ 18,517
============ ============ ============ =========== ============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (Q) 19,989,833 19,989,833
============ ============
NET INCOME PER COMMON SHARE $ .93 $ .93
============ ============
</TABLE>
The accompanying notes are an integral part of the pro forma financial
condensed consolidated statements.
-6-
<PAGE> 8
PACIFIC GULF PROPERTIES INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
--------------------------------
SALE OF ACQUISITION OF
NORTHWEST RREEF/SPT
COMPANY MULTIFAMILY INDUSTRIAL COMPANY
HISTORICAL ADJUSTMENTS ADJUSTED PROPERTIES PORTFOLIO PRO FORMA
------------ ------------ ------------ ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income
Industrial properties $ 36,410 $ 38,805 (C) $ 75,215 $ -- $ 8,473 (N) $ 83,688
Multifamily properties 33,096 (521)(C) 32,575 (9,568) (K) -- 23,007
------------ ------------ ----------- ---------- ------------ ------------
69,506 38,284 107,790 (9,568) 8,473 106,695
EXPENSES
Rental property expenses
Industrial properties 8,212 10,848 (C) 19,060 -- 2,179 (N) 21,239
Multifamily properties 12,754 (278)(C) 12,476 (3,716) (K) -- 8,760
------------ ------------ ----------- ---------- ------------ ------------
20,966 10,570 31,536 (3,716) 2,179 29,999
Depreciation 12,008 6,435 (I) 18,443 (1,289) (M) 2,027 (O) 19,181
Interest 17,337 (1,188)(P) 27,794 (173) (L) -- 27,621
11,927 (J)
(282)(E)
General and administrative 3,159 -- 3,159 -- -- 3,159
Minority interest in earnings in
consolidated partnerships 172 1,201 (G) 1,373 -- -- 1,373
------------ ------------ ----------- ---------- ------------ ------------
NET INCOME 15,864 9,621 25,485 (4,390) 4,267 25,362
Less preferred dividend
requirements 855 3,972 (H) 4,827 -- -- 4,827
------------ ------------ ----------- ---------- ------------ ------------
INCOME AVAILABLE TO COMMON
SHAREHOLDERS (R) $ 15,009 $ 5,649 $ 20,658 $ (4,390) $ 4,267 $ 20,535
============ ============ =========== ========== ============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (Q) 13,685,693 19,913,158
============ ============
NET INCOME PER COMMON SHARE $ 1.10 $ 1.03
============ ============
</TABLE>
The accompanying notes are an integral part of the pro forma condensed
consolidated financial statements.
-7-
<PAGE> 9
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA)
NOTE 1 - BASIS OF PRESENTATION
Pacific Gulf Properties Inc. is incorporated in Maryland and operates as a real
estate investment trust ("REIT") under the Internal Revenue Code of 1986, as
amended. Pacific Gulf Properties Inc. commenced operations on February 18, 1994
upon the completion of its initial public offerings and consummation of certain
formation transactions.
On December 23, 1998, the Company sold five multifamily properties constituting
all of its family apartments located in Seattle, Washington (collectively
referred to as the "Northwest Multifamily Properties"). On the same date, the
Company purchased seven industrial properties comprising the RREEF/SPT
Industrial Portfolio. Both transactions are more fully described in Item 2 of
this Form 8-K filing.
The pro forma condensed consolidated financial statements of the Company are not
necessarily indicative of what the Company's financial position or results of
operations would have been assuming the completion of the transactions described
below 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 30,1998 are not necessarily indicative of the
results to be obtained by the Company for the year ending December 31, 1998. 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 30,1998, and the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
Pro Forma Consolidated Balance Sheet
The Company's pro forma condensed consolidated balance sheet, presented as of
September 30, 1998, is based on the unaudited historical financial statements of
the Company as included in the Company's Quarterly Report on Form 10-Q, and
include the following pro forma adjustments to reflect the acquisitions,
dispositions and related transactions consummated by the Company subsequent to
September 30, 1998:
(i) the repayment in December 1998 of the outstanding indebtedness on the
Applewood Apartments totaling $11,574 with proceeds from the Company's
revolving line of credit to facilitate the sale of the Northwest
Multifamily Properties, as more fully described in Item 2 of this Form
8-K filing.
(ii) the sale of the Northwest Multifamily Properties in December 1998.
(iii) the acquisition of the RREEF/SPT Industrial Portfolio in December 1998.
-8-
<PAGE> 10
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA)
NOTE 1 - BASIS OF PRESENTATION (continued)
Pro Forma Consolidated Statement of Operations for the Nine Months Ended
September 30, 1998
The pro forma condensed consolidated statement of operations of the Company for
the nine months ended September 30, 1998 is based on the unaudited historical
financial statements included in the Company's Quarterly Report on Form 10-Q,
and includes pro forma adjustments to reflect the following acquisitions,
dispositions and related transactions consummated by the Company subsequent to
September 30, 1998 together with other adjustments to reflect the effect of
other transactions completed within the period reported herein, as if all of the
transactions had occurred as of the beginning of the period presented:
Pro Forma Adjustments (Transactions Completed Subsequent to September 30, 1998)
(i) the repayment of the outstanding indebtedness on the Applewood
Apartments with proceeds from the Company's revolving line of credit to
facilitate the sale of the Northwest Multifamily Properties.
(ii) the sale of the Northwest Multifamily Properties in December 1998.
(iii) the acquisition of the RREEF/SPT Industrial Portfolio in December 1998.
Other Adjustments (Transactions Completed During 1998)
(iv) the purchase of the following industrial properties during the quarter
ended March 31, 1998: (a) Mountain Avenue Business Park; (b) Lurline
Industrial Park; (c) Valley View Industrial Center; (d) Los Alamitos
Business Park; (e) Walnut Avenue Business; and (f) Madison West Business
Park;
(v) the purchase in March 1998 of a controlling general partner interest in
the partnership that owns NW-Garden Grove;
(vi) the repayment in March 1998 of the Company's revolving line of credit
from Bank of America using a $40,000 bridge loan facility;
(vii) the repayment in April 1998 of the $40,000 bridge loan facility with
proceeds from a $150,000 revolving credit line from Wells Fargo Bank;
(viii) the purchase in June 1998 of the Koll Industrial Portfolio and Eastman
Kodak Properties; and
(ix) the sale in August 1998 of the Lora Lakes Apartments, a multifamily
property containing 234 apartment units located in the state
of Oregon.
-9-
<PAGE> 11
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA)
NOTE 1 - BASIS OF PRESENTATION (continued)
Pro Forma Consolidated Statement of Operations for the Year Ended December 31,
1997
The Company's pro forma condensed consolidated statement of operations for the
year ended December 31, 1997 is based on the audited historical financial
statements of the Company as included in the Company's Annual Report on Form
10-K, and includes pro forma adjustments to reflect the following acquisitions,
disposition and related transactions which were consummated by the Company
subsequent to September 30, 1998 together with other adjustments to reflect the
effect of other transactions completed within the period reported herein, as if
all of the transactions had occurred as of the beginning of the period
presented:
Pro Forma Adjustments (Transactions Completed Subsequent to September 30, 1998)
(i) the repayment in December 1998 of the outstanding indebtedness on the
Applewood Apartments with proceeds from the Company's revolving line of
credit to facilitate the sale of the Northwest Multifamily Properties.
(ii) the sale of the Northwest Multifamily Properties in December 1998.
(iii) the acquisition of the RREEF/SPT Industrial Portfolio in December 1998.
Other Adjustments (Transactions Completed During 1997)
(iv) 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 (the "January
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");
(v) the completion of the January 1997 Common Stock Offering and the
application of the net proceeds thereof as more fully described in the
related Prospectus Supplement filed with the Securities and Exchange
Commission;
(vi) the purchase of a warehouse/distribution facility in March 1997
containing approximately 570,000 leasable square feet located in
Woodland, California ("Woodland Distribution Center");
-10-
<PAGE> 12
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA)
NOTE 1 - BASIS OF PRESENTATION (continued)
Pro Forma Consolidated Statement of Operations for the Year Ended December 31,
1997 (continued)
Other Adjustments (Transactions Completed During 1997) (continued)
(vii) the repayment in April 1997 of certain indebtedness totaling $7,000 with
proceeds from the issuance of 270,270 shares of $.01 par value Class A
Senior Cumulative Convertible Preferred Stock (the "Class A Preferred
Stock");
(viii) the purchase of the following properties utilizing proceeds from a
public offering of 2,131,700 shares of the Company's common stock
consummated in June 1997 (the "June 1997 Common Stock Offering"): (a)
Algona Distribution Center, a warehouse/distribution facility containing
approximately 250,000 leasable square feet located in Algona, Washington
purchased by the Company in January 1997 for redevelopment purposes; (b)
a 12.8-acre land parcel located in Lake Forest, California purchased by
the Company in May 1997, for the development of a multi-tenant
industrial complex containing approximately 204,000 leasable square feet
(the "Lake Forest Land Parcel"); (c) a 17.1-acre land parcel located in
Irvine, California purchased by the Company in July 1997 for the
development of a warehouse/distribution business park containing
approximately 235,000 leasable square feet (the "Pacific Gulf Spectrum
Land"); (d) Vons Distribution Center, a warehouse/distribution center
containing approximately 360,000 leasable square feet purchased by the
Company in August 1997 for redevelopment purposes (the "Vons
Distribution Center" together with the "Algona Distribution Center," the
"Lake Forest Land Parcel," and the "Pacific Gulf Spectrum Land" are
collectively referred to as the "Development Properties"); and (e) a
controlling general partner interest in two partnerships that own two
"active senior" multifamily properties containing 551 units located in
Escondido, California (the "Senior Apartments");
(ix) the completion of the June 1997 Common Stock Offering and the
application of the net proceeds thereof as more fully described in the
related Prospectus Supplement filed with the Securities and Exchange
Commission;
(x) 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 $.01 par value Class B Senior
Cumulative Convertible Preferred Stock (the "Class B Preferred Stock");
-11-
<PAGE> 13
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA)
NOTE 1 - BASIS OF PRESENTATION (continued)
Pro Forma Consolidated Statement of Operations for the Year Ended December 31,
1997 (continued)
Other Adjustments (Transactions Completed During 1997) (continued)
(xi) the purchase in September 1997 of an industrial park containing
approximately 142,000 leasable square feet located in Concord,
California (the "Concord Industrial Park");
(xii) the purchase in October 1997 of a controlling general partner interest
in the partnership that owns Eden Plaza/Eden Industrial Park, two
industrial properties containing approximately 501,000 leasable square
feet located in Hayward, California;
(xiii) the borrowings in October 1997 under the Company's revolving line of
credit which were used to repay a $4,000 maturing loan payable;
(xiv) the repayment in October 1997 of the outstanding balances under the
Company's acquisition facility with proceeds from a $34,000 term loan;
(xv) The issuance in October 1997 of an additional 235,294 shares of Class B
Preferred Stock;
(xvi) the purchase of the following properties utilizing, in part, the
proceeds from a public offering of 4,250,000 shares of the Company's
Common Stock (the "November 1997 Common Stock Offering"): (a) California
Commerce Parks Portfolio, consisting of four industrial properties
containing approximately 733,000 leasable square feet located in
California acquired by the Company in December 1997; (b) Bradshaw
Business Centre, a warehouse/distribution business center containing
approximately 114,000 leasable square feet located in Sacramento,
California acquired by the Company in December 1997; (c) Horn Road
Business Complex, a business complex consisting of 14 industrial
buildings containing approximately 221,000 leasable square feet located
in Sacramento, California acquired by the Company in December 1997; (d)
Fullerton Business Center, a warehouse/distribution business park
consisting of eight multi-tenant buildings containing 111,000 leasable
square feet located in Fullerton, California acquired by the Company in
December 1997; (e) Norwood Industrial Park, a multi-tenant industrial
park consisting of four building containing approximately 168,000
leasable square feet located in Sacramento, California acquired by the
Company in December 1997;
(xvii) the completion of the November 1997 Common Stock Offering and the
application of the net proceeds thereof as more fully described in the
related Prospectus Supplement filed with the Securities and Exchange
Commission;
-12-
<PAGE> 14
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA) (continued)
NOTE 1 - BASIS OF PRESENTATION (continued)
Pro Forma Consolidated Statement of Operations for the Year Ended December 31,
1997 (continued)
Other Adjustments (Transactions Completed During 1997) (continued)
(xviii) the acquisition of three industrial properties ("Amresco Portfolio")
containing approximately 543,000 leasable square feet located in Orange
County, California, two of which were acquired in November 1997 and the
other in December 1997;
(xix) the purchase in December 1997 of an "active senior" multifamily
property consisting of 273 apartment units located in Riverside,
California ("Tyler Springs Apartments");
(xx) the purchase in December 1997 of four industrial properties containing
approximately 619,000 leasable square feet located in California (the
"Northwestern Portfolio") utilizing proceeds from the issuance of
1,081,081 shares of Class A Preferred Stock and 705,883 shares of Class
B Preferred Stock.
(xxi) the sale in December 1997 of a 279 unit multifamily community apartment
located in Oregon ("Waterhouse Apartments");
(xxii) the purchase of the following industrial properties during the quarter
ended March 31, 1998: (a) Mountain Avenue Business Park, an industrial
park containing approximately 140,000 leasable square feet located in
Upland, California acquired by the Company in January 1998 ("Mountain
Avenue Business Park"); (b) Lurline Industrial Park, a multi-tenant
industrial park containing approximately 125,000 leasable square feet
located in Chatsworth, California acquired by the Company in January
1998 ("Lurline Industrial Park"); (c) Valley View Industrial Center, an
industrial center containing approximately 300,000 leasable square feet
located in Las Vegas, Nevada acquired by the Company in February 1998
("Valley View Distribution Center"); (d) Los Alamitos Business Park, a
business park containing approximately 125,000 leasable square feet
located in Los Alamitos, California acquired by the Company in March
1998("Los Alamitos Business Park); (e) Walnut Avenue Business Park, an
industrial building containing approximately 76,000 leasable square feet
located in Signal Hill, California acquired by the Company in March 1998
("Walnut Avenue Business Park"); and (f) Madison West Business Park, an
industrial project containing approximately 147,000 leasable square feet
located in Sacramento, California acquired by the Company in March 1998
("Madison West Business Park");
(xxiii) the purchase in March 1998 of a controlling general partner interest in
a partnership that owns a 168,000 square foot distribution facility
located in Garden Grove, California ("NW-Garden Grove");
-13-
<PAGE> 15
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA) (continued)
NOTE 1 - BASIS OF PRESENTATION (continued)
Pro Forma Consolidated Statement of Operations for the Year Ended December 31,
1997 (continued)
Other Adjustments (Transactions Completed During 1997) (continued)
(xxiv) the repayment of the outstanding balance on the Company's revolving line
of credit with Bank of America in March 1998 using a $40,000 bridge loan
facility from Wells Fargo Bank;
(xxv) the repayment in April 1998 of the $40,000 bridge loan facility with
proceeds from a $150,000 revolving credit line from Wells Fargo Bank;
(xxvi) the purchase in June 1998 of the four industrial properties ("Koll
Industrial Portfolio") containing approximately 696,000 leasable square
feet located in Orange County, California; and two warehouse/industrial
facilities (the "Eastman Kodak Properties") containing 476,000 leasable
feet for redevelopment purposes; and
(xxvii) the sale in August 1998 of Lora Lake Apartments, a multifamily apartment
community containing 234 apartment units located in Burien, Washington.
NOTE 2 - PRO FORMA ADJUSTMENTS
(A) Sale of the following multifamily apartment communities comprising the
Northwest Multifamily Properties in December 1998 for a sale price of
$78,500, resulting in net proceeds of $74,887 and a net gain of $28,913:
<TABLE>
<CAPTION>
Apartment
Property Name Units Cost
----- ---------
<S> <C> <C>
Hampton Bay Apartments 304 $12,374
Fulton Crossing Apartments 256 8,331
Fultons Landing Apartments 248 8,120
Heather Wood Apartments 368 12,650
Holly Ridge Apartments 146 4,744
----- -------
1,322 $46,219
===== =======
</TABLE>
-14-
<PAGE> 16
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
In connection with this sale, the Company transferred the liability for
tenant security deposits relating to the properties totaling $245 to the
buyer. The Company had maintained these funds in segregated cash
accounts.
Prior to this sale, the Company also repaid certain outstanding
indebtedness totaling $11,574 with proceeds from its line of credit as
more fully described in Item 2 of this Form 8-K filing.
(B) Purchase of the following industrial properties comprising the RREEF/SPT
Industrial Portfolio in December 1998 for an aggregate purchase price of
$76,000:
<TABLE>
<CAPTION>
Leasable Square Purchase
Property Name Location Feet Price
----------------------------------- ---------------------- --------------- ---------
<S> <C> <C> <C>
Hohokam 10 East (1) Tempe, Arizona 256,900 $ 19,500
Hohokam 10 West (1) Hayward, Arizona 65,900 --
Hesperian Business Park Hayward, California 153,000 8,000
Sierra Trinity Industrial Park Dublin, California 223,400 23,000
Contra Costa Diablo Industrial Park Concord, California 146,300 8,000
Airport Business Center Portland, Oregon 228,500 11,100
West Sacramento Industrial Park Sacramento, California 214,900 6,400
--------- ---------
1,288,900 $ 76,000
========= =========
</TABLE>
(1) Hohokam 10 East and Hohokam 10 West were acquired together for a
bulk purchase price of $19,500.
The Company funded the purchase price utilizing net proceeds from the
sale of the Northwest Multifamily Properties which were held in a
deferred exchange account prior to the purchase. In connection with the
acquisition, the Company received credit through escrow for the
assumption of tenant security deposits totaling approximately $534.
(C) Represents the revenues and certain expenses of the properties acquired
by the Company during 1997 and 1998 for the period prior to their
acquisition (adjusted to reflect increased property taxes based on the
properties' acquisition cost and current property tax rates) reduced by
revenue and expenses of Waterhouse Apartments and Lora Lakes Apartments
prior to their sale in December 1997 and August 1998, respectively:
-15-
<PAGE> 17
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
<TABLE>
<CAPTION>
For the Nine Months Ended September 30, 1998
------------------------------------------------------------------------------------------------------------------
Mountain Valley Los Walnut Madison
Ave. Lurline View NW- Alamitos Ave. West Ave. Koll Eastman Lora Lake
Business Industrial Industrial Garden Business Business Business Industrial Kodak Apartments
Total Park Park Center Grove Park Park Park Portfolio Properties Sale
------- --------- ---------- ---------- ------- -------- -------- -------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rental Income
Industrial
Properties $ 4,782 $ 34 $ 54 $ 137 $ 225 $ 219 $ 119 $ 236 $ 3,205 $ 553 $ --
Multifamily
Properties (1,319) -- -- -- -- -- -- -- -- -- (1,319)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
3,463 34 54 137 225 219 119 236 3,205 553 (1,319)
Rental Property
Expenses
Industrial
Properties 1,101 10 11 24 62 58 38 75 661 162 --
Multifamily
Properties (459) -- -- -- -- -- -- -- -- -- (459)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
642 10 11 24 62 58 38 75 661 162 (459)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
$ 2,821 $ 24 $ 43 $ 113 $ 163 $ 161 $ 81 $ 161 $ 2,544 $ 391 $ (860)
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31, 1997
----------------------------------------------------------------------------------------------------------
January Eden
1997 Woodland AEW/ Concord Plaza/
Industrial Distribution Senior Lincoln Industrial Eden Amresco
Total Acquisitions Center Apartments Properties Park Industrial Portfolio
-------- ------------ ------------ ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental Income
Industrial
Properties $ 38,805 $ 183 $ 60 $ -- $ 3,753 $ 797 $ 1,745 $ 1,946
Multifamily
Properties (521) -- -- 1,665 -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
38,284 183 60 1,665 3,753 797 1,745 1,946
Rental Property
Expenses
Industrial
Properties 10,848 59 27 -- 737 129 413 346
Multifamily
Properties (278) -- -- 583 -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
10,570 59 27 583 737 129 413 346
-------- -------- -------- -------- -------- -------- -------- --------
$ 27,714 $ 124 $ 33 $ 1,082 $ 3,016 $ 668 $ 1,332 $ 1,600
======== ======== ======== ======== ======== ======== ======== ========
<CAPTION>
For the Year Ended December 31, 1997 (continued)
-------------------------------------
California
Commerce Fullerton Horn Road
Park Business Business
Portfolio Center Complex
---------- --------- ---------
<S> <C> <C> <C>
Rental Income
Industrial
Properties $ 9,743 $ 613 $ 1,121
Multifamily
Properties -- -- --
-------- -------- --------
9,743 613 1,121
Rental Property
Expenses
Industrial
Properties 3,602 154 267
Multifamily
Properties -- -- --
-------- -------- --------
3,602 154 267
-------- -------- --------
$ 6,141 $ 459 $ 854
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31, 1997 (continued)
-------------------------------------------------------------------------------------------------------
Mountain Valley Los Walnut
Bradshaw Norwood North- Ave. Lurline View NW- Alamitos Ave
Business Industrial Tyler western Business Industrial Industrial Garden Business Business
Center Park Springs Portfolio Park Park Center Grove Park Park
-------- --------- ------- --------- -------- ---------- ---------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Rental Income
Industrial Properties $1,190 $ 676 $ -- $3,922 $ 583 $ 901 $1,532 $1,078 $ 972 $ 582
Multifamily Properties -- -- 1,598 -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
1,190 676 1,598 3,922 583 901 1,532 1,078 972 582
Rental Property Expenses
Industrial Properties 286 180 -- 1,563 148 178 335 149 314 97
Multifamily Properties -- -- 646 -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
286 180 646 1,563 148 178 335 149 314 97
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
$ 904 $ 496 $ 952 $2,359 $ 435 $ 723 $1,197 $ 929 $ 658 $ 485
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
-16-
<PAGE> 18
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
<TABLE>
<CAPTION>
For the Year Ended December 31, 1997 (continued)
---------------------------------------------------------------------------
Madison
West Ave. Koll Eastman Lora Lake Waterhouse
Business Industrial Kodak Apartments Apartments
Park Portfolio Properties Sale Sale
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Rental Income
Industrial Properties $ 789 $ 5,412 $ 1,207 $ -- $ --
Multifamily Properties -- -- -- (1,774) (2,010)
------- ------- ------- ------- -------
789 5,412 1,207 (1,774) (2,010)
Rental Property Expenses
Industrial Properties 299 1,213 352 -- --
Multifamily Properties -- -- -- (609) (898)
------- ------- ------- ------- -------
299 1,213 352 (609) (898)
------- ------- ------- ------- -------
$ 490 $ 4,199 $ 855 $(1,165) $(1,112)
======= ======= ======= ======= =======
</TABLE>
The accompanying pro forma consolidated statements of operations for the
nine months ended September 30, 1998 and the year ended December 31,
1997 do not include historical revenues and expenses for the Development
Properties (Algona Distribution Center, the Lake Forest Land Parcel, the
Pacific Gulf Spectrum Land and Vons Distribution Center) and Eastman
Kodak Properties, which previously had not been operated as rental
properties.
(D) Represents depreciation expense of $559 for the nine months ended
September 30, 1998 related to the purchase of the following properties,
net of $136 of depreciation reduction from the Lora Lake Apartments sale
(the actual depreciation related to the Lora Lake Apartments during the
nine months ended September 30, 1998). The depreciation expense relating
to these properties for the period prior to the date of their purchase
was computed utilizing estimated remaining useful lives and
depreciable basis as follows:
<TABLE>
<CAPTION>
Purchase Depreciable Depreciation
Property Name Price Basis Expense
----------------------------- -------- ----------- ------------
<S> <C> <C> <C>
Mountain Avenue Business Park $ 5,156 $ 4,035 $ 4
Lurline Industrial Park 7,668 5,264 11
Valley View Industrial Center 14,217 9,473 20
NW-Garden Grove 9,004 6,084 32
Los Alamitos Business Park 7,251 6,163 39
Walnut Avenue Business Park 4,834 3,137 26
Madison West Business Park 5,875 3,764 31
Koll Industrial Portfolio 41,800 31,906 432
Eastman Kodak Properties 14,307 6,546 100
-------
$ 695
=======
</TABLE>
-17-
<PAGE> 19
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(E) Interest expense related to borrowings utilized to purchase certain
properties acquired in 1998 as more fully described in Note 1. The
interest expense associated with these borrowings for the period prior
to the date of these acquisitions is based on the actual interest rate
on the specific borrowings, as follows:
<TABLE>
<CAPTION>
Pro Forma
Interest Interest
Property Name Debt Rate Expense
------------------------------ ------- -------- --------
<S> <C> <C> <C>
Mountain Avenue Business Park
Revolving line of credit $ 5,100 7.31% $ 16
Lurline Industrial Park
Revolving line of credit 7,500 7.38% 35
Valley View Industrial Center
Loan payable 4,524 8.38% 63
Revolving line of credit 9,350 7.38% 115
Los Alamitos Business Park
Revolving line of credit 7,251 7.44% 135
Walnut Avenue Business Park
Revolving line of credit 4,609 7.44% 86
Madison West Business Park
Revolving line of credit 5,725 7.44% 106
Koll Industrial Portfolio
Loan payable 2,428 8.00% 105
Revolving line of credit 39,152 6.94% 1,471
Eastman Kodak Properties
Revolving line of credit 12,500 7.00% 401
-------
$ 2,533
=======
</TABLE>
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 $120 for the nine months ended September 30, 1998.
(F) Represents net interest savings associated with the repayment in March
1998 of the outstanding balances on the Company's line of credit with
Bank of America ($39,885), which bore interest at 7.625% (the effective
rate on the line), utilizing borrowings under a $40,000 bridge loan
facility from Wells Fargo Bank bearing interest at 6.94%.
(G) Represents the minority interests in earnings of the two
partnerships that own the Senior Apartments, the partnership that owns
the Eden Plaza/Eden Industrial Park properties and the partnership that
owns NW-Garden Grove. Profits and losses are allocated between the
Company and the limited partners based on the relative balances of their
respective capital accounts. The limited partners in these partnerships
are entitled to cash distributions on their limited partnership units to
the extent of the lesser of (i) their share of available cash flow or
(ii) an amount on each limited partnership unit equal to the dividend
payable on the Company's Common Stock.
-18-
<PAGE> 20
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA) (continued)
NOTE 2 - PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS (continued)
(H) Represents preferred stock dividend requirements of $0.437 per share per
quarter related to the Company's Preferred Stock, issued in 1997 as
follows: (i) 270,270 shares of Class A Preferred Stock issued by the
Company in April 1997, (ii) 470,588 shares of Class B Preferred Stock
issued in July 1997, (iii) 235,294 shares of Class B Preferred Stock
issued in October 1997, and (iv) 705,883 shares of Class B Preferred
Stock and 1,081,081 shares of Class A Preferred Stock issued in December
1997. The Class A Preferred Stock was issued at $18.50 per share
pursuant to an agreement to issue up to 1,351,351 shares dated December
31, 1996. The Class B Preferred Stock was issued at $21.25 per share
pursuant to an agreement to issue up to 1,411,765 shares dated May 1997.
Pursuant to the agreements, the Class A Preferred Stock and the Class B
Preferred Stock shares 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.
(I) Represents depreciation expense of $6,435 for the year ended December
31, 1997 relating to the purchase of the following properties, net of
$289 and $189 depreciation reduction from the Waterhouse Apartments and
Lora Lake Apartments sales, respectively, (the actual depreciation
relating to the Waterhouse Apartments and Lora Lake Apartments during
the year ended December 31, 1997). 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
as follows:
<TABLE>
<CAPTION>
Purchase Depreciable Depreciation
Property Name Price Basis Expense
------------------------------------------------------- -------- ----------- ------------
<S> <C> <C> <C>
Mountain Avenue Business Park $ 5,156 $ 4,035 $ 101
Lurline Industrial Park 7,668 5,264 132
Valley View Industrial Center 14,217 9,473 237
NW-Garden Grove 9,004 6,084 152
Los Alamitos Business Park 7,251 6,163 154
Walnut Avenue Business Park 4,834 3,137 105
Madison West Business Park 5,875 3,764 125
Koll Industrial Portfolio 41,800 31,906 798
Eastman Kodak Properties 14,307 6,546 218
January 1997 Acquisitions
Algona Warehouse 9,450 7,640 8
Harbor Business Parks/Harbor Warner Business Park
14,600 12,160 25
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
</TABLE>
-19-
<PAGE> 21
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
<TABLE>
<CAPTION>
Purchase Depreciable Depreciation
Property Name Price Basis Expense
----------------------------------- -------- ----------- ------------
<S> <C> <C> <C>
AEW/Lincoln Properties 67,308 53,512 966
Concord Industrial Park 7,645 6,051 134
Eden Plaza/Eden Industrial 19,000 13,032 344
Amresco Portfolio
Tower Park 9,575 7,498 219
611 Cerritos 6,131 4,801 115
Acacia Business Center 9,101 7,127 208
California Commerce Parks portfolio 57,805 44,406 1,064
Fullerton Business Center 5,513 4,314 103
Horn Road Business Complex 9,525 6,731 215
Bradshaw Business Centre 8,722 6,631 212
Norwood Industrial Park 4,714 3,495 112
Tyler Springs 13,444 11,047 353
Northwestern Portfolio
PGDC - Anaheim 3,323 2,664 85
PGBP - Cerritos 8,476 6,794 217
PGDC - Montebello 4,809 3,855 123
PGBP - Irvine 7,020 5,627 135
-------
Total $ 6,913
=======
</TABLE>
(J) Interest expense of $11,927 related to the borrowings utilized to
purchase certain properties as described in Note 1, which is net of
interest savings resulting from the debt repayment associated with the
Waterhouse Apartments of $196 (the actual interest mortgage debt
relating to the Waterhouse Apartments during the year ended December 31,
1997). 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 specific
borrowings, as follows:
<TABLE>
<CAPTION>
Pro Forma
Interest Interest
Property Name Debt Rate Expense
------------------------------ ------ -------- ---------
<S> <C> <C> <C>
Mountain Avenue Business Park
Revolving line of credit $5,100 7.31% $ 373
Lurline Industrial Park
Revolving line of credit 7,500 7.38% 553
</TABLE>
-20-
<PAGE> 22
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
<TABLE>
<CAPTION>
Pro Forma
Interest Interest
Property Name Debt Rate Expense
------------------------------ ----- -------- ---------
<S> <C> <C> <C>
Valley View Industrial Center
Loan payable 4,524 8.38% 379
Revolving line of credit 9,350 7.38% 690
Los Alamitos Business Park
Revolving line of credit 7,251 7.44% 539
Walnut Avenue Business Park
Revolving line of credit 4,609 7.44% 343
Madison West Business Park
Revolving line of credit 5,725 7.44% 426
Koll Industrial Portfolio
Loan payable 2,428 8.00% 194
Revolving line of credit 39,152 6.94% 2,717
Eastman Kodak Properties
Revolving line of credit 12,500 7.00% 875
Woodland Distribution Center
Revolving line of credit 12,483 8.50% 177
Senior Apartments
Terrace Gardens
Loan payable 8,100 6.60% 245
Morning View Terrace
Loan payable 11,000 6.60% 333
AEW/Lincoln properties
Revolving line of credit 12,000 7.25% 471
Acquisition facility 41,625 7.50% 1,691
Concord Industrial Park
Loan payable 4,625 8.50% 262
Revolving line of credit 2,870 9.00% 172
Eden Plaza/Eden Industrial
Loan payable 12,000 7.05% 670
Acquisition facility 3,977 7.63% 240
Horn Road
Loan payable 2,879 7.950% 219
Tyler Springs
Loan payable 9,400 5.370% 483
Amortization of financing cost 69
-------
$12,123
=======
</TABLE>
-21-
<PAGE> 23
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
The interest expense on borrowings under the Company's revolving line of
credit and the Company's acquisition facility is calculated for the
period indicated at interest rates 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 $160 for the year ended December 31, 1997.
(K) Represents the historical revenues and certain expenses of the Northwest
Multifamily Properties sold by the Company in December 1998:
<TABLE>
<CAPTION>
For the Nine Months Ending September 30, 1998
----------------------------------------------------------------------------------
Hampton Fultons Fultons Holly
Bay Crossing Landing Heatherwood Ridge
Total Apartments Apartments Apartments Apartments Apartments
----- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Rental Income $7,671 $1,875 $1,486 $1,376 $2,000 $ 934
Rental property expense 2,869 709 532 490 790 348
------ ------ ------ ------ ------ ------
$4,802 $1,166 $ 954 $ 886 $1,210 $ 586
====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31, 1997
----------------------------------------------------------------------------------
Hampton Fultons Fultons Holly
Bay Crossing Landing Heatherwood Ridge
Total Apartments Apartments Apartments Apartments Apartments
----- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Rental Income $9,568 $2,451 $1,795 $1,699 $2,460 $1,163
Rental property expense 3,716 908 669 640 1,057 442
------ ------ ------ ------ ------ ------
$5,852 $1,543 $1,126 $1,059 $1,403 $ 721
====== ====== ====== ====== ====== ======
</TABLE>
-22-
<PAGE> 24
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(L) Represents the net decrease in interest expense resulting from the
repayment of the outstanding indebtedness related to Applewood
Apartments, as described in Note 1.
(M) Depreciation expense of the Northwest Multifamily Apartments sold by the
Company in December 1998:
<TABLE>
<CAPTION>
Nine
Month Ended Year Ended
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
Hampton Bay Apartments $ 235 $ 313
Fultons Crossing Apartments 178 240
Fultons Landing Apartments 169 227
Heather Wood Apartments 321 382
Holly Ridge Apartments 96 127
------ ------
$ 999 $1,289
====== ======
</TABLE>
(N) Represents the combined revenues and certain expenses of the RREEF/SPT
Industrial Portfolio acquired by the Company in December 1998 for the
period prior to its acquisition (adjusted to reflect increased property
taxes based on the properties' acquisition cost and current property tax
rates):
<TABLE>
<CAPTION>
Nine
Month Ended Year Ended
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
Rental income $6,430 $8,473
Rental property expenses 1,649 2,179
------ ------
$4,781 $6,294
====== ======
</TABLE>
-23-
<PAGE> 25
PACIFIC GULF PROPERTIES INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
AND THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE, SQUARE FOOTAGE AND UNIT DATA) (continued)
NOTE 2 - PRO FORMA ADJUSTMENTS (continued)
(O) Represents depreciation expense relating to the purchase in December
1998 of the RREEF/SPT Industrial Portfolio, for the period prior to its
acquisition, computed utilizing an estimated remaining useful life of 30
years and the depreciable basis of the properties as follows:
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30, 1998
-----------------------------------------------
Purchase Depreciable Depreciation
Price Basis Expense
------- ----------- ------------
<S> <C> <C> <C>
RREEF/SPT Industrial Portfolio $76,000 $60,800 $ 1,520
=======
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended
December 31, 1997
-----------------------------------------------
Purchase Depreciable Depreciation
Price Basis Expense
------- ----------- ------------
<S> <C> <C> <C>
RREEF/SPT Industrial Portfolio $76,000 $60,800 $ 2,027
=======
</TABLE>
(P) Represents the net decrease in interest expense resulting from the debt
repayments completed by the Company in 1997.
(Q) Represents the weighted average of Common Stock utilized to calculate
basic earnings per share. Pro forma weighted average common shares
include 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, 4,776,300 shares issued as part of the November 1997 Common
Stock Offering and 874,317 shares issued as part of the December 1997
Common Stock Offering.
(R) Excludes the effect of a $5,594 nonrecurring net gain on the sale of
Waterhouse Apartments.
(S) Excludes the effect of a $6,427 nonrecurring gain on the sale of the
Lora Lake Apartments.
(T) Excludes the effect of a $28,913 nonrecurring gain on the sale of the
Northwest Multifamily Properties.
-24-
<PAGE> 26
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- ---------------------------------------------------------------
10.1 Purchase Agreement and Escrow Instructions and related
amendments between Pacific Gulf Properties Inc. (as seller) and
SAP II Originating LLC (as buyer) for the sale of the Northwest
Multifamily Properties.
10.2 Industrial Portfolio Agreement of Purchase and Sale and related
amendments between Pacific Gulf Properties Inc. (as buyer) and
RREEF Performance Partnership I - LP (as seller) for the
acquisition of the RREEF industrial properties.
10.3 Industrial Portfolio Agreement of Purchase and Sale and related
amendments between Pacific Gulf Properties Inc. (as buyer) and
SPT Real Estate Corp. (as seller) for the acquisition of the SPT
industrial property.
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EXHIBIT 10.1
PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
WASHINGTON APARTMENT PORTFOLIO
THIS PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS (this "Agreement") is
dated as of September 28, 1998 (the "Effective Date"), and is entered into by
and between SAP II ORIGINATING LLC, a New York limited liability company
("Buyer"), and PACIFIC GULF PROPERTIES INC., a Maryland corporation ("Seller").
1. PURCHASE AND SALE OF PROPERTIES. Seller hereby agrees to sell, and
Buyer hereby agrees to acquire upon the terms and conditions herein stated, the
portfolio of real property located in Washington and commonly known as Fulton's
Crossing located in Snohomish County, Fulton's Landing located in Snohomish
County, Hampton Bay located in King County, Heatherwood located in King County,
and Holly Ridge located in King County, each of which is more particularly
described in Exhibit A-1 through A-5 (individually and collectively, the "Real
Property"), together with the following:
(a) All buildings, improvements and other structures presently
located on the Real Property (the "Improvements"), provided, however, that
"Improvements" shall not include any fixtures or other improvements owned by
"Tenants" (as hereinafter defined);
(b) All personal property (excluding cash and software) owned by
Seller, if any, located in or on, and used exclusively in connection with the
operation of, the Real Property or the Improvements (the "Personal Property");
(c) Any and all of Seller's right, title and interest in and to the
leases, licenses and occupancy agreements covering all or any portion of the
Real Property or Improvements (collectively the "Leases"), to the extent they
are in effect at "Closing" (as hereinafter defined) including any security
deposits thereunder in Seller's possession at Closing; and
(d) Any and all of Seller's right, title and interest in and to any
of the following existing at the Closing (i) all assignable contracts and
agreements (collectively, the "Operating Agreements") relating to the leasing,
operation, maintenance or repair of the Real Property, Improvements or Personal
Property, (ii) all assignable warranties and guaranties issued to Seller in
connection with the Improvements or the Personal Property, (iii) all assignable
permits, licenses, approvals and authorizations issued by any governmental
authority in connection with the Real Property, and (iv) the non-exclusive use
of the common name of each apartment project on the Real Property (the property
described in this Paragraph 1(d) being sometimes herein referred to collectively
as the "Intangibles").
(e) The Real Property described on Exhibits A-1 through A-5, and all
Improvements, Appurtenances and Personal Property in connection therewith, are
individually a "Property" and collectively the "Properties".
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2. PURCHASE PRICE. The purchase price for the Properties shall be
Seventy Eight Million Five Hundred Thousand Dollars ($78,500,000) (the "Purchase
Price"). The Purchase Price is payable as follows:
(a) Within three (3) business days after the execution of this
Agreement by Buyer and Seller, Buyer shall deposit in "Escrow" with the "Escrow
Holder" (as those terms are hereinafter defined), in cash or other immediately
available funds, the sum of Two Hundred Fifty Thousand Dollars ($250,000) (the
"Initial Deposit"). All references in this Agreement to the "Deposit" shall
refer only to the Initial Deposit; provided, however, that if the "Rate Lock
Deposit" is made and not returned to the Buyer pursuant to Paragraph 5(a) of
this Agreement, all references in this Agreement to the "Deposit" shall mean and
include both the Initial Deposit and the Rate Lock Deposit. The Escrow Holder
shall hold the Deposit or any portion thereof in an interest-bearing account
reasonably acceptable to Seller and Buyer, in accordance with the terms and
conditions of this Agreement. All interest on such sum shall be deemed income of
Buyer, and Buyer shall be responsible for the payment of all costs and fees
imposed on the Deposit account to the extent they exceed or are in addition to
the Escrow Holder's normal fees for the Escrow without such Deposit account, the
payment of which normal fees is separately dealt with in this Agreement.
Nevertheless, all interest accrued on such sum shall be held and disbursed with,
and deemed to be a part of, the "Deposit" for all purposes of this Agreement.
The Escrow Holder shall hold the Deposit in trust to be applied or disbursed in
accordance with this Agreement. At Closing, the Deposit and all interest accrued
thereon shall be applied toward the Purchase Price and paid through Escrow to
Seller. The Deposit is nonrefundable to the Buyer except as expressly provided
in this Agreement.
(b) The balance of the Purchase Price, plus or minus any applicable
prorations pursuant to Paragraph 8 hereof, shall be paid through Escrow to
Seller at Closing in cash or other immediately available funds.
3. CONDITIONS TO CLOSING.
(a) Buyer's Approvals. The "Due Diligence Period" shall expire at
5:00 p.m. Pacific Daylight Time on October 28, 1998. The Buyer's obligation to
consummate the transactions contemplated by this Agreement (the "Transactions")
is subject to and conditioned upon Buyer's approval in its sole discretion (or
deemed approval in the manner provided in Paragraph 3(c)) of the Properties for
purchase by it, including without limitation the following, all prior to the
expiration of the Due Diligence Period:
(i) Title and Survey Review. The condition of the title to the
Properties. For each Property, Seller shall provide to Buyer a preliminary title
report (the "Preliminary Title Report") prepared by Chicago Title Insurance
Company, National Accounts Desk, 888 Southwest 5th Avenue, Suite 930, Portland,
Oregon 97204 (the "Title Company"). Buyer shall obtain copies of all documents
referred to therein from the Title Company. Seller will provide to Buyer any
survey of the Properties in Seller's possession. Buyer may, at its sole cost and
expense, update Seller's survey(s) or obtain a current survey of the Real
Property (collectively, the "Surveys"). For each Property, Buyer shall identify
with the Title Company any exceptions to title which the Buyer will require the
Title Company to omit (whether the same appears in the Preliminary Title Report
or in any supplements or amendments thereto), and will reach agreement with the
Title Company regarding the form of the Owner's Policy of Title Insurance to be
issued to Buyer at the Closing, including without limitation, any exceptions
based on the Title Company's review of the Surveys, and including any special
endorsements required by Buyer (individually, the "Title Policy" and
collectively, the "Title Policies"). Seller
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shall cause any mortgage or deed of trust listed on Schedule 1 attached hereto
or first placed on any Property by Seller after the Effective Date to be
released and reconveyed from the affected Property at or prior to Closing. In
addition, for any mechanics lien for which Seller has the statutory right to
post a bond which will effect a release of such lien from the Property, Seller
agrees to post such bond on or before the Closing.
(ii) Condition of the Properties. The condition of the each
Property, including but not limited to the structure of the Improvements, the
boundaries and dimensions of the Real Property and Improvements, entitlements
and permits relating to each Property, the soils and environmental condition of
each Property, the physical and economic condition of each Property, the
suitability of each Property for Buyer's intended use, and any and all other
matters relating to the Properties deemed relevant by Buyer in its sole
discretion;
(iii) Books and Records. All Operating Agreements, Property
management files, reports, including engineering and environmental, warranties,
permits and other documents relating to the Properties in Seller's possession.
Seller shall use good faith efforts to make such books and records available for
Buyer's review ("Books and Records"). Notwithstanding anything to the contrary
in this Agreement, Seller shall not be obligated to provide Buyer with any of
Seller's internal memoranda or reports, any financial projections, budgets or
appraisals, or any other confidential, proprietary or privileged information. In
addition, Seller shall not have any liability, obligation or responsibility of
any kind with respect to the content or accuracy of any report, study, opinion,
projection or analysis;
(iv) Other Due Diligence Review. Buyer shall inspect and
review any and all other aspects of the Properties that Buyer deems appropriate
in its sole discretion.
(b) Mortgage Contingency. The Buyer's obligation to consummate the
Transactions is subject to and conditioned upon the issuance to Buyer on or
prior to November 12, 1998 of a commitment for a loan (the "Commitment") from an
institutional lender in form and substance acceptable to Buyer in its sole
discretion, pursuant to which such institutional lender agrees to make a
permanent mortgage loan to Buyer at a rate no higher than the then current
market interest rate for similar loans, in an amount of not less than 75% of the
Purchase Price (the "Loan"). Promptly after execution of this Agreement by Buyer
and Seller, Buyer shall submit an application for the Loan to the institutional
lender or lenders of Buyer's choosing, and shall use good faith efforts to
obtain the Commitment. Seller shall reasonably cooperate with Buyer to provide
information regarding the Properties that is required for Buyer's application
for the Loan, provided such cooperation shall be at no cost, expense or
liability to Seller. In the event Buyer is unable to obtain the Commitment,
Buyer shall deliver written notice to Seller and Escrow Holder on or prior to
November 12, 1998. In the event Buyer does not deliver such written notice to
Seller on or before November 12, 1998, Buyer shall be conclusively deemed to
have waived any and all conditions of this Paragraph 3(b). If Buyer delivers
such notice as hereinabove provided, this Agreement shall automatically
terminate and the provisions of Paragraph 3(d) shall apply.
(c) Notice of Disapproval and Termination. For purposes of this
Paragraph 3, an approval which is conditioned or qualified in any way shall be
deemed a disapproval. If Buyer disapproves the Properties for purchase by it,
Buyer shall deliver written notice of such
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disapproval to Seller on or before the expiration of the Due Diligence Period.
In the event Buyer does not deliver written notice to Seller disapproving the
Properties for purchase by it on or before the expiration of the Due Diligence
Period, Buyer shall be conclusively deemed to have approved the Properties for
purchase by it and all other aspects of the Properties, and to have waived any
right to terminate this Agreement pursuant to this Paragraph 3, except for
Paragraph 3(b). If Buyer does give written notice to Seller on or prior to the
expiration of the Due Diligence Period that Buyer disapproves the Property for
purchase by it, or if Buyer in any way conditions or qualifies its approval of
the Property for Purchase by it or of any other aspect of the Properties, this
Agreement shall automatically terminate and the provisions of Paragraph 3(d)
shall apply.
(d) Return of Deposit. In the event of any termination of this
Agreement pursuant to this Paragraph 3, Escrow shall be canceled, this Agreement
shall be terminated and become null and void, all parties hereto shall be
released from further performance of this Agreement (with the exception of those
provisions or paragraphs which recite that they survive termination of this
Agreement), and Escrow Holder shall promptly return to Buyer all or any portion
of the Deposit deposited with Escrow Holder and shall return to each party any
and all documents which such party had deposited with it.
(e) Seller Approval. Notwithstanding any other provision of this
Agreement, the obligation of Seller to consummate the Transactions shall be
subject to the condition that the Seller, in its sole and absolute discretion,
shall have approved the sale of all Properties pursuant to the terms and
conditions of this Agreement, on or prior to the expiration of the Due Diligence
Period. If the Seller disapproves of such sale, Seller shall deliver written
notice of such disapproval to Buyer on or before the expiration of the Due
Diligence Period. In the event Seller does not deliver such written notice to
Buyer on or before the expiration of the Due Diligence Period, Seller shall be
conclusively deemed to have approved such sale and to have waived this
condition. If Seller gives written notice to Buyer on or prior to the expiration
of the Due Diligence Period that Seller disapproves of such sale, this Agreement
shall automatically terminate and the provisions of Paragraph 3(d) shall apply.
In the event Seller elects to terminate this Agreement pursuant to this
Paragraph 3(e), Seller shall reimburse Buyer for all out of pocket expenses
incurred by Buyer for title, escrow, legal and inspection fees, including,
without limitation, environmental and engineering consultants' fees, in
connection with the performance of its due diligence review of the Property and
the preparation and negotiation of this Agreement, and for any non-refundable
deposits and fees paid to one institutional lender in the course of applying for
the Loan.
(f) Title Policies. Notwithstanding any other provision of this
Agreement, the obligation of Buyer to consummate the Transactions shall be
subject to the condition that the Title Company be irrevocably committed to
issue to Buyer the Title Policies in the form and with the exceptions and
endorsements agreed to by the Title Company pursuant to Paragraph 3(a)(i).
Buyer's depositing the balance of the Purchase Price in Escrow and the
distribution of the Purchase Price to Seller at the Closing shall, as between
Buyer and Seller, conclusively be deemed satisfaction of the condition of this
Paragraph 3(f).
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4. POSSESSION AND INSPECTION.
(a) Possession. Buyer shall be entitled to possession of the
Properties on the Closing Date.
(b) Inspection. Between the Effective Date and the expiration of the
Due Diligence Period, or the earlier termination of this Agreement, Seller shall
permit Buyer and Buyer Representatives reasonable access to each Property during
normal business hours upon at least twenty four (24) hours advance verbal notice
to Seller, or such longer notice as may be required to be delivered to tenants
under applicable laws, to the extent reasonably necessary for the purpose of
conducting Buyer's investigation of the Properties. At Seller's election, Seller
may have a representative present during any such inspection. Neither Buyer nor
Buyer Representatives shall be entitled to conduct any investigation that
involves boring or penetration into the Real Property or Improvements,
including, but not limited to, "Phase II" environmental testing, without the
express written consent of Seller which may be granted or denied in Seller's
sole and absolute discretion. Any request by Buyer to Seller for permission to
conduct any such intrusive testing shall be in writing and shall be accompanied
by a written scope of the intended work in sufficient detail to allow Seller to
reasonably evaluate the request. If granted, such consent shall not be construed
to and shall not release Buyer from its indemnification of Seller hereunder.
Buyer shall be exclusively responsible for all costs and fees associated with
its investigation and review of the Properties. Buyer agrees to conduct and to
cause Buyer Representatives to conduct its inspections and reviews in a manner
that does not cause any damage, loss, cost or expense to, or claims against
Seller or the Properties. Buyer agrees to repair any physical damage or
disturbance Buyer or Buyer Representatives shall cause to any Property in the
event this Agreement is terminated or Escrow fails to close in accordance with
its terms, and further Buyer agrees to indemnify, defend and hold Seller and the
Seller Parties harmless from any and all liability, claims, demands, damages and
costs (including attorneys' fees and expenses) resulting from the activities of
Buyer, Buyer Representatives and Buyer's agents, employees and contractors upon
the Properties and from and against all mechanics', materialmen's or other liens
resulting from the conduct of Buyer, Buyer Representatives or Buyer's agents,
employees and contractors upon the Properties. This provision shall survive
Closing or termination of this Agreement.
(c) Insurance. Prior to any entry by Buyer or any Buyer
Representatives onto any Property, Buyer shall provide to Seller evidence
reasonably satisfactory to Seller that Buyer has in force adequate liability and
worker's compensation insurance with coverage of not less than Five Million
Dollars ($5,000,000) naming Seller as an additional insured, to protect Seller
against any and all liability, claims, demands, damages and costs (including
attorneys' fees and expenses) which may occur as a result of any activity of
Buyer or Buyer Representatives on the Properties. The foregoing shall not limit
or release Buyer's indemnification contained in subparagraph (b), above.
(d) Reports. All written information, irrespective of the form of
communication, provided to or obtained by Buyer or its directors, officers,
shareholders, employees, trustees, members, agents, contractors,
representatives, attorneys or advisors (individually and collectively, the
"Buyer Representatives"), other than information that is a matter of public
record or otherwise in the public domain, whether prepared by or on behalf of
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Seller, by third party consultants engaged by Buyer, the Buyer Representatives
or otherwise, in connection with Buyer's investigation of the Properties shall
be kept in strict confidence by Buyer and the Buyer Representatives until
Closing. Notwithstanding the foregoing, Buyer may disclose such information to
its potential lenders and equity investors. In the event Buyer does not complete
the purchase of the Properties for any reason, (i) any and all studies, reports,
surveys and other matters provided to or obtained by Buyer or the Buyer
Representatives from Seller shall be immediately be delivered or returned to,
Seller without charge, and (ii) any and all studies, reports, surveys and other
matters provided to or obtained by Buyer or the Buyer Representatives from third
parties shall, at Seller's request, be delivered to Seller provided Seller
reimburses Buyer for Buyer's actual out of pocket cost for any such items to be
delivered to Seller. This provision shall survive termination of this Agreement.
(e) Tenants. In no event shall Buyer or Buyer Representatives be
authorized to conduct any activities pursuant to this Paragraph 4, or otherwise,
which would in any way unreasonably interfere with or disturb any Tenant of any
Property ("Tenant"). Buyer shall not communicate with any Tenant of any Property
without Seller's express written consent and Seller may have a representative
present during any such communication.
(f) Seller's Access. For a period of one (1) year after the Closing,
Buyer shall allow Seller and its agents and representatives access without
charge to all files, records and documents delivered by Seller to Buyer at or
prior to the Closing, upon reasonable advance notice and at all reasonable
times, to, at Seller's cost, examine and make copies of any and all such files,
records and documents. This right shall survive the Closing.
5. THE CLOSING.
(a) The Closing Date. The consummation of the purchase and sale of
all of the Properties ("Closing") shall occur at a time and on a date mutually
acceptable to Buyer and Seller, but in no event later than 10:00 a.m. Pacific
Daylight Time on the "Outside Closing Date". The date upon which Closing shall
occur is referred to as the "Closing Date". Closing shall occur through Escrow
as herein provided. The "Outside Closing Date" shall be December 23, 1998. On or
before December 15, 1998, Buyer shall (i) deposit into Escrow the documents
required to be delivered by Buyer pursuant to Section 5(b)(i) (other than the
balance of the Purchase Price), fully executed and acknowledged, where
appropriate, by Buyer; (ii) deliver directly to Seller evidence reasonably
satisfactory to Seller that the Commitment has been issued and remains in full
force and effect for a Loan to be funded as late as December 23, 1998; and (iii)
deposit into Escrow additional cash or other immediately available funds in the
amount of Two Hundred Fifty Thousand Dollars ($250,000) (the "Rate Lock
Deposit"), which Rate Lock Deposit shall be promptly returned to Buyer on the
earlier of (A) Seller's failure to comply with its obligations pursuant to the
last sentence of this Paragraph 5(a) or (B) Buyer's delivery to Seller and
Escrow Holder of written confirmation from the Lender that Buyer has locked the
interest rate on the Loan pursuant to the Commitment. If the Rate Lock Deposit
is not returned to the Buyer in accordance with the prior sentence, all
references in this Agreement to "Deposit" shall mean and include both the
Initial Deposit and the Rate Lock Deposit. On or before December 15, 1998,
Seller shall deposit into Escrow the Owner Affidavits together with the
documents required to be delivered by Seller pursuant to Section 5(b)(ii), fully
executed and acknowledged, where appropriate, by Seller, and shall cause the
holders of the deeds of trust listed on Schedule 1 attached to this Agreement to
deposit into Escrow documents sufficient to cause such deeds of trust to be
released and reconveyed from the affected Property upon the substitution of
collateral therefor.
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(b) Deliveries through Escrow. At Closing, Seller and Buyer shall
each deliver to the other through Escrow such documents, instruments and funds
consistent with this Agreement as are necessary to consummate the purchase and
sale of the Properties pursuant to this Agreement, including without limitation,
the following:
(i) Deliveries by Buyer. Buyer shall deliver the following:
(1) the Purchase Price in cash or other immediately
available funds;
(2) an Assignment and Assumption for all Properties in the
form of Exhibit C (the "Assignment and Assumption"), executed by Buyer;
(3) for each Property, a "Closing Statement" (as hereinafter
defined), in form and content satisfactory to Buyer and Seller, executed by
Buyer; and
(4) such evidence of Buyer's authority as the Title Company
may reasonably require.
(ii) Deliveries by Seller. Seller shall deliver the following:
(1) for each Property, a Deed in the form of Exhibit D with
respect to the Property (referred to herein as the "Deed"), executed and
acknowledged by Seller;
(2) a current rent roll for each Property, listing for each
tenant the tenant's name and location of leased premises (the "Rent Roll");
(3) a Bill of Sale for all Properties in the form of Exhibit
E, executed by Seller;
(4) the Assignment and Assumption, executed by Seller;
(5) Seller shall execute and deliver a Notice to Tenant in
the form of Exhibit G to the tenants then leasing space at the Properties;
(6) a Certificate of Non-Foreign Status in the form of
Exhibit F, executed by Seller;
(7) for each Property, a Closing Statement, in form and
content satisfactory to Buyer and Seller, executed by Seller;
(8) such evidence of Seller's authority as the Title Company
may reasonably require; and
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(9) a copy of the notice delivered to the Board as required
under Section 17.8 of that certain Amended and Restated Declaration of Covenants
for Lakes at Kent (the "Declaration") dated August 27, 1993 and recorded
November 15, 1993 as Instrument No. 9311152207. Seller shall also request from
the Organization a statement confirming that there are no outstanding
assessments/dues payable as provided in Section 10.1 of the Declaration and, if
received, will provide a copy of such statement to Buyer.
(c) Deliveries Outside Escrow. Seller and Buyer shall each deliver
to the other outside of Escrow such items as are necessary to consummate the
purchase and sale of the Properties pursuant to this Agreement, including
without limitation, the delivery by the Seller to the Buyer of the following to
the extent any of the following are in Seller's possession and have not been
previously delivered to Buyer:
(i) permits, warranties and plans and specifications relating to
each Property;
(ii) Operating Agreements, Tenant files and Leases; and
(iii) the keys to doors or locks on each Property.
(d) Simultaneous Delivery; Conditions Concurrent. All documents and
other items to be delivered at the Closing shall be deemed to have been
delivered simultaneously and no individual delivery shall be effective until all
such items have been delivered.
6. OPENING OF ESCROW. Concurrently with the execution of this
Agreement, Buyer and Seller shall open an escrow (the "Escrow") with Chicago
Title Insurance Company, of Oregon, 888 Southwest 5th Avenue, Suite 930,
Portland, Oregon 97204, Attention: Judy Yoresen ("Escrow Holder"), and provide
Escrow Holder with a fully executed copy of this Agreement. This Agreement,
together with any additional instructions executed by the parties as hereinafter
provided, shall constitute Escrow Holder's instructions in connection with the
Escrow.
(a) Duties of Escrow Holder. The duties of Escrow Holder shall be
as follows:
(i) retain and safely keep all funds, documents and instruments
deposited with it pursuant to this Agreement;
(ii) upon the Closing, deliver to the parties entitled thereto
all funds, documents and instruments to be delivered through Escrow pursuant to
this Agreement;
(iii) upon the Closing, cause the recordation of the Deeds to
each Property in the Office of the applicable County Recorder for the State of
Washington. Escrow Holder is instructed to request that the amount of the
documentary transfer tax or excise tax due be shown on a separate paper and
affixed to each Deed by the County Recorder, if required, after the permanent
record thereof is made, based on the purchase price allocations mutually agreed
to by Buyer and Seller or consistent with Buyer's lender's appraisals;
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(iv) comply with the terms of this Agreement which specifically
apply to Escrow Holder and comply with the terms of any additional instructions
jointly executed by Buyer and Seller;
(v) handle the Deposit and all other funds deposited with it
according to the terms of this Agreement; and
(vi) upon the Closing, cause the Title Company to issue the
Title Policies to Buyer.
(b) Additional Provisions. Escrow Holder's rights and obligations
shall be further specified in such additional instructions acceptable to Buyer
and Seller and not inconsistent with the terms of this Agreement as Escrow
Holder customarily requires in real property escrows administered by it;
provided, however, that notwithstanding the foregoing, Escrow Holder shall
disregard any additional instructions which prohibit or otherwise restrict
Escrow Holder from returning the Deposit to Buyer pursuant to Paragraph 3(d).
(c) No Extensions of Time. Any delay in the opening of the Escrow
or the execution of supplemental escrow instructions shall in no way delay or
extend the Effective Date, the expiration of the Due Diligence Period or the
Closing Date.
(d) Reporting. To the extent the Transactions involve a real estate
transaction within the purview of Section 6045 of the Internal Revenue Code of
1986 (the "IRC"), Escrow Holder shall have sole responsibility to comply with
the requirements of Section 6045 of the IRC (and any similar requirements
imposed by state or local law), which in part requires Escrow Holder to report
real estate transactions closing after December 31, 1986 by, among other things,
preparing and causing to be filed Internal Revenue Service Form 1099-B and any
applicable additional statements in connection therewith. For purposes hereof,
Seller's tax identification number is 33-6156122. 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 attorneys' fees and
expenses) arising or resulting from the failure or refusal of Escrow Holder to
comply with such reporting requirements.
7. COSTS.
(a) Seller. Seller shall pay the premium for a standard form
(without extended coverage) Owner's Policy of Title Insurance for the Properties
in the amount of the Purchase Price, without endorsements, one half of the
Escrow fee, if any, and all real estate transfer or excise taxes applicable to
the sale and transfer of the Property, if any.
(b) Buyer. Buyer shall pay one half of the Escrow fee, if any, all
recording charges, the premium for the Title Policies to the extent it exceeds
the cost thereof to be paid by Seller, including, but not limited to, premiums
for extended coverage and title endorsements desired by Buyer, if any, the cost
of the Surveys, and any sales or use taxes applicable to the sale and transfer
of the Property. In addition, any of Buyer's costs relating to Buyer's due
diligence, including without limitation, costs of Buyer's appraisers,
inspectors, auditors and environmental or engineering consultants, shall be
Buyer's sole responsibility.
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(c) Termination for Default. Notwithstanding anything contained in
this Paragraph 7 to the contrary: (i) if this Agreement is terminated on account
of the default by any party, then the defaulting party shall pay any
cancellation or termination fees chargeable by Escrow Holder or the Title
Company; (ii) if this Agreement is terminated by Buyer pursuant to any provision
of this Agreement giving Buyer the right to terminate, other than Seller's
default, Buyer and Seller shall each pay one half of any cancellation or
termination fees chargeable by the Escrow Holder or Title Company; and (iii) if
this Agreement is terminated by Seller pursuant to any provision of this
Agreement giving Seller the right to terminate, other than Buyer's Default,
Seller shall pay any cancellation or termination fees chargeable by the Escrow
Holder or Title Company. This paragraph shall survive termination of this
Agreement.
8. PRORATIONS AND DEPOSITS. The following shall be apportioned as of
12:01 a.m. on the Closing Date, with the Buyer being credited or charged, as the
case may be, with the Closing Date:
(a) Rent. Rent actually received under the Leases shall be
apportioned as of the Closing Date. With respect to any rent arrearages existing
under the Leases on the Closing Date, after Closing Buyer shall promptly pay to
Seller any rent actually collected by Buyer which is applicable to the period
preceding the Closing Date and Seller shall promptly pay to Buyer any rent
actually collected by Seller which is applicable to the period on or after the
Closing Date; provided, however, that (i) all rent received by Seller or Buyer
after the Closing shall be applied first to current rent, if any, and then to
delinquent rent, in the inverse order of maturity. After Closing, Buyer shall
make good faith efforts to collect all rent arrearages in accordance with
Buyer's normal collection practices (but Buyer shall not be obligated to
commence litigation or other legal action to recover same). Seller shall be
permitted to pursue its legal and equitable remedies for collection of any rent
arrearages applicable to the period prior to the Closing Date, provided,
however, Seller shall not commence any unlawful detainer or eviction
proceedings, and Buyer shall cooperate with Seller's efforts, provided that
Buyer shall incur no cost or expense in connection therewith.
(b) Leasing Costs. Seller shall pay as of the Closing all leasing
commission, finder or locator fees, Tenant improvement costs or allowances
("Leasing Costs") in connection with any Lease executed on or before the
Effective Date. Leasing Costs incurred in connection with any Lease executed, or
the extended term of any Lease extended, on or after the Effective Date but
prior to the Closing Date shall be paid by Buyer or, if paid by Seller prior to
Closing, credited to Seller.
(c) Deposits. At Closing, (i) Seller shall, at Seller's option,
either deliver to Buyer any security deposits actually held by Seller pursuant
to the Leases or credit to Buyer the amount of such security deposits (in each
case less the amount of such security deposits as have been applied against
delinquent rents or otherwise as provided in the Leases and in accordance with
Seller's customary practice but only for tenants no longer in possession), and
(ii) Buyer shall credit Seller with all refundable cash or other deposits posted
with utility companies serving each Property, or, at Seller's option, Seller
shall be entitled to receive and retain such refundable cash and deposits.
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(d) Utility Charges. Seller shall use reasonable efforts to cause
all the utility meters to be read on the day prior to the Closing Date, and will
be responsible for the cost of all utilities used prior to the Closing Date. If
the meters are not read as herein set forth, all such expenses shall be
prorated. The Seller and Buyer hereby waive any statutory duty of the Escrow
Holder to pay utilities through the Escrow at Closing.
(e) Real Estate Taxes and Assessments. Real estate taxes and
assessments for the tax year in which Closing occurs shall be prorated between
Seller and Buyer as of the Closing Date, based upon the most recently available
real estate tax information.
(f) Other Apportionments. Amounts payable under the Operating
Agreements, annual or periodic permit and/or inspection fees (calculated on the
basis of the period covered), assessments/dues payable pursuant to the
Declaration, and liability for other operation and maintenance expenses and
other recurring costs of the Properties shall be apportioned as of the Closing
Date. Provided that prior to Closing Buyer has provided to Seller written
evidence reasonably satisfactory to Seller that Buyer has, or upon Closing will
have, expended funds to extend the Commitment from November 30, 1998, to
December 17, 1998, then, upon Closing, in addition to all other credits provided
for herein, Buyer shall be credited with the amount so expended by Buyer, but
not more that $60,000.
(g) Preliminary Closing Adjustment. Seller and Buyer shall jointly
prepare and approve a preliminary Closing adjustment (the "Closing Statement")
on the basis of the Leases and other sources of income and expenses for each
Property, and shall deliver such computation to Escrow Holder prior to Closing.
(h) 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 and
Seller shall conduct a post-Closing review to determine the accuracy of all
prorations. Either party owing the other party a sum of money based on such
subsequent proration(s) or post-Closing review shall promptly pay said sum to
the other party, together with documentation to support such demand. The
provisions of this Paragraph 8 related to post-Closing adjustment of prorations
shall survive the Closing.
9. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to Seller as follows:
(a) Buyer's Representations and Warranties. Buyer is a limited
liability company, and has the full power and authority to enter into, be bound
by and comply with the terms of this Agreement;
(i) This Agreement and all documents executed by Buyer in
connection with this Agreement which are to be delivered to Seller at Closing
are, or at the time of Closing will be, duly authorized, executed and delivered
by Buyer, and are, or at Closing will be, legal, valid and binding obligations
of Buyer and do not, and at the time of Closing will not, violate any provisions
of any agreement or judicial order to which Buyer is a party or to which Buyer
is subject.
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(b) Seller's Representations and Warranties. Seller represents and
warrants to Buyer as follows:
(i) Seller is a Maryland corporation, and has the full power and
authority to enter into and comply with the terms of this Agreement;
(ii) This Agreement and all documents executed by Seller in
connection with this Agreement which are to be delivered to Buyer at Closing,
are or at the time of Closing will be, duly authorized, executed and delivered
by Seller, and are, or at Closing will be, legal, valid and binding obligations
of Seller and do not, and at the time of Closing will not, violate any
provisions of any agreement or judicial order to which Seller is a party or to
which Seller is subject.
(iii) Seller is not a "foreign person" within the meaning of
Section 1445(e)(3) of the Internal Revenue Code of 1986, as amended.
(iv) To Seller's knowledge, there is not now pending or
threatened, any action, suit, or proceeding (including, but not limited to,
condemnation or similar proceedings) before any court or governmental agency or
body whatsoever which would adversely affect the Property or the operation
thereof.
(v) To Seller's knowledge, Seller has delivered or will deliver
or has made available or will make available true and correct copies of the
Books and Records.
(vi) Seller shall not withdraw, settle or otherwise compromise
any protest or reduction proceeding affecting real estate taxes assessed against
the Properties for any fiscal period in which the Closing is to occur or any
subsequent fiscal period without the prior written consent of Buyer, which
consent shall not be unreasonably withheld; provided, however, if Buyer
withholds such consent then Buyer shall be solely responsible for any fees,
costs or expenses of Seller in connection with such protest or reduction
proceeding arising or accruing after the date Seller requested Buyer's consent.
Real estate tax refunds and credits received after the Closing which are
attributable to the fiscal tax year during which the Closing occurs shall be
apportioned between Seller and Buyer, after deducting the expenses of collection
thereof, which obligation shall survive the Closing.
(vii) As of the date thereof, Schedule 2 attached hereto is a
complete and accurate list of all Leases and complete and accurate copies of all
such Leases (the "Lease Documents") have been provided to Buyer or the Buyer
representatives or made available to Buyer or the Buyer representatives for
review.
(viii) To Seller's knowledge, all Leases are in full force and
effect and none of them have been modified, amended or extended except as
disclosed by the Lease Documents.
(ix) No renewal or extension options have been granted to any
tenants of the Property by Seller except as disclosed by the Lease Documents.
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(x) No tenant of the Property has an option to purchase all or a
portion of the Property granted to such Tenant by Seller except as disclosed in
the Lease Documents.
(xi) To Seller's knowledge, there are no security deposits by
tenants of the Property other than those disclosed by the Lease Documents.
(xii) To Seller's knowledge, the rent rolls and delinquency
reports for the Properties attached hereto as Schedules 3 and 4, respectively,
are complete and accurate as of the date thereof.
The term "Seller's knowledge" shall mean the current actual personal knowledge
of, and only of, Kimberly Solbakk, who is the asset manager of the Properties
and is an employee of Seller, and who would, in the ordinary course of her
responsibilities, receive notice of the matters described in the representations
and warranties in this Agreement which are limited by the knowledge of Seller,
with no imputation of knowledge and no duty of investigation or inquiry.
(c) Survival of Representations and Warranties. All representations
and warranties of Buyer and Seller made in this Agreement shall be deemed to
have been made as of the Effective Date and again as of the Closing Date. Such
representations and warranties shall survive the Closing, but only with respect
to any claim of breach or default thereunder for which the party asserting such
breach or default has, prior to the first anniversary of the Closing Date, both
(i) given written notice to the other party of the specific breach or default
claimed and (ii) commenced suit based specifically upon such claimed breach or
default. Any such representation or warranty for which such specific written
notice has not been given, or for which such specific suit has not been
commenced, on or before the first anniversary of the Closing Date shall
terminate and cease to be of any force or effect. The foregoing to the contrary
notwithstanding, no claim for a breach or default of any representation or
warranty of Seller shall be actionable or payable if the breach or default in
question results from or is based on a condition, state of facts or other matter
which was known to Buyer prior to Closing. The term "known to Buyer" shall mean
the actual personal knowledge of L. Thomas Osterman who would, in the ordinary
course of his responsibilities related to Buyer's due diligence review of the
Property and any and all aspects thereof, receive notice of the matters
described in the representations and warranties in this Agreement, with no
imputation of knowledge. Seller shall have no liability to Buyer for a breach or
default of any representation or warranty unless the valid claims for all such
breaches and defaults collectively aggregate more than One Hundred Thousand
Dollars ($100,000), in which event the full amount of such valid claims shall be
actionable. The maximum liability of Seller on account of all breaches and
defaults under all representations and warranties shall not exceed two percent
(2%) of the Purchase Price . Buyer agrees to first seek recovery under any
applicable insurance policies, service contracts, warranties, guaranties and
Leases prior to seeking recovery from Seller. Seller shall not be liable to
Buyer if Buyer's claim is satisfied from such insurance policies, service
contracts, warranties, guaranties or Leases and Buyer hereby waives any and all
rights of subrogation with respect thereto.
(d) Disclaimer of Seller Representations and Warranties. EXCEPT AS
SPECIFICALLY STATED IN PARAGRAPH 9(b), NEITHER SELLER NOR ANY ADVISOR, OFFICER,
DIRECTOR, MEMBER, SHAREHOLDER, REPRESENTATIVE, TRUSTEE,
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EMPLOYEE, AGENT, ATTORNEY OR CONTRACTOR THEREOF OR THEREFOR (INDIVIDUALLY AND
COLLECTIVELY, THE "SELLER PARTIES") IS MAKING OR SHALL BE DEEMED TO HAVE MADE
ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE AS TO
THE PROPERTIES OR THE TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT, INCLUDING,
WITHOUT LIMITATION, (I) THE FINANCIAL STATUS OF THE PROPERTIES, INCLUDING
WITHOUT LIMITATION, INCOME OR EXPENSES GENERATED, PAID OR INCURRED IN CONNECTION
WITH THE PROPERTIES, (II) THE NATURE, PHYSICAL OR ENVIRONMENTAL CONDITION,
SAFETY OR ANY OTHER ASPECT OF THE PROPERTIES OR THE PROPERTIES COMPLIANCE WITH
APPLICABLE LAWS, ORDINANCES, RULES AND REGULATIONS, INCLUDING, WITHOUT
LIMITATION, ZONING ORDINANCES, BUILDING CODES (INCLUDING, WITHOUT LIMITATION,
THE AMERICANS WITH DISABILITIES ACT) AND ENVIRONMENTAL, HAZARDOUS MATERIAL AND
ENDANGERED SPECIES STATUTES, (III) THE ACCURACY OR COMPLETENESS OF ANY
INFORMATION OR DATA PROVIDED OR TO BE PROVIDED BY SELLER PARTIES, INCLUDING,
WITHOUT LIMITATION, COPIES OF ANY REPORTS OR DOCUMENTS PREPARED FOR SELLER
PARTIES WHETHER BY THIRD PARTIES OR OTHERWISE WHICH MAY BE INCLUDED WITH SUCH
INFORMATION, OR (IV) ANY OTHER MATTER RELATING TO THE PROPERTIES OR SELLER.
WITHOUT LIMITING THE FOREGOING, BUYER HEREBY ACKNOWLEDGES THAT, EXCEPT AS
EXPRESSLY PROVIDED IN PARAGRAPH 9(b), THE PROPERTIES WILL BE SOLD TO BUYER IN
THEIR "AS IS", "WHERE IS" AND "WITH ALL FAULTS" CONDITION, AND EXCEPT FOR THE
EXPRESS SELLER REPRESENTATIONS AND WARRANTIES CONTAINED IN PARAGRAPH 9(b)
HEREOF, THERE ARE NO REPRESENTATIONS AND/OR WARRANTIES, EXPRESS OR IMPLIED, MADE
BY SELLER PARTIES IN CONNECTION WITH THE PROPERTIES OR TRANSACTIONS CONTEMPLATED
IN THIS AGREEMENT. BUYER ACKNOWLEDGES AND AGREES THAT (V) BUYER SHALL RELY UPON
BUYER'S OWN DUE DILIGENCE IN DETERMINING WHETHER THE PROPERTIES ARE SUITABLE FOR
PURCHASE BY BUYER; (VI) BUYER HAS BEEN GIVEN A REASONABLE OPPORTUNITY TO INSPECT
AND INVESTIGATE THE PROPERTIES, ALL IMPROVEMENTS THEREON, THE LEASES, THE
OPERATING AGREEMENTS AND ALL ASPECTS RELATING THERETO, EITHER INDEPENDENTLY OR
THROUGH AGENTS AND EXPERTS OF BUYER'S CHOOSING; (VII) BUYER IS ACQUIRING THE
PROPERTIES BASED EXCLUSIVELY UPON BUYER'S OWN INVESTIGATIONS AND INSPECTIONS
THEREOF; (VIII) SELLER HAS NO OBLIGATION TO REPAIR OR CORRECT ANY FACTS,
CIRCUMSTANCES, CONDITIONS OR DEFECTS OR COMPENSATE BUYER THEREFOR; AND (IX) BY
REASON OF ALL OF THE FOREGOING, BUYER SHALL ASSUME THE FULL RISK OF ANY LOSS OR
DAMAGE OCCASIONED BY ANY FACT, CIRCUMSTANCE, CONDITION OR DEFECT PERTAINING TO
THE PROPERTIES. BUYER FURTHER ACKNOWLEDGES THAT:
(i) BUYER HAS, OR BY THE EXPIRATION OF THE DUE DILIGENCE PERIOD
WILL HAVE, WITH THE ASSISTANCE OF SUCH EXPERTS AS BUYER HAS DEEMED APPROPRIATE,
MADE ITS OWN INDEPENDENT INVESTIGATIONS AND STUDIES, INCLUDING WITHOUT
LIMITATION, A PHYSICAL AND ENVIRONMENTAL INSPECTION, WITH RESPECT TO THE
PROPERTIES, THE
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TRANSACTIONS AND ALL ASPECTS THEREOF, AND IT WILL BE RELYING ENTIRELY THEREON,
ON THE EXPRESS REPRESENTATIONS AND WARRANTIES, BUT ONLY THE EXPRESS
REPRESENTATIONS AND WARRANTIES, OF SELLER SET FORTH IN PARAGRAPH 9(b) AND ON THE
ADVICE OF ITS COUNSEL, ADVISERS AND CONSULTANTS CONCERNING THE TRANSACTIONS.
BUYER IS NOT RELYING AND SHALL NOT RELY ON ANY INVESTIGATION, STUDY, PROJECTION
OR OTHER INFORMATION, ECONOMIC, PHYSICAL, ENVIRONMENTAL OR OTHERWISE, PREPARED
BY SELLER PARTIES OR ANY PERSON OR ENTITY AFFILIATED WITH SELLER;
(ii) BUYER HAS, OR BY THE EXPIRATION OF THE DUE DILIGENCE PERIOD
WILL HAVE, WITH THE ASSISTANCE OF SUCH EXPERTS AS BUYER HAS DEEMED APPROPRIATE,
REVIEWED ALL INSTRUMENTS, RECORDS AND DOCUMENTS, INCLUDING, BUT NOT LIMITED TO,
THE LEASES AND OPERATING AGREEMENTS, CONCERNING THE PROPERTIES WHICH BUYER DEEMS
APPROPRIATE OR ADVISABLE TO REVIEW IN CONNECTION WITH THE TRANSACTIONS;
(iii) BUYER HAS, OR BY THE EXPIRATION OF THE DUE DILIGENCE
PERIOD WILL HAVE, WITH THE ASSISTANCE OF SUCH EXPERTS AS BUYER HAS DEEMED
APPROPRIATE, EXAMINED AND INVESTIGATED THE STATUS OF ALL CIRCUMSTANCES
CONCERNING THE ZONING, LAND USE CONTROLS, REQUIRED PERMITS, BUILDING CODE
COMPLIANCE, ENVIRONMENTAL, HAZARDOUS MATERIAL AND ENDANGERED SPECIES REGULATIONS
AND CONDITION AND OTHER MATTERS WITH RESPECT TO THE PROPERTIES. EXCEPT AS
PROVIDED IN PARAGRAPH 9(b), SELLER MAKES NO REPRESENTATION OR WARRANTY REGARDING
THE PERMITTED USE OF THE PROPERTIES. IN PARTICULAR, SELLER MAKES NO
REPRESENTATION OR WARRANTY THAT THE PROPERTIES MAY CONTINUE TO BE USED FOR ITS
PRESENT USES, THAT ANY OF THE IMPROVEMENTS COMPLY WITH ANY ORDINANCES, CODES OR
REGULATIONS OR WERE OR ARE PROPERLY PERMITTED, THE CONDITION OF OR RIGHTS TO
INGRESS, EGRESS OR ACCESS TO AND FROM THE PROPERTIES, OR THE CONDITION OF OR ANY
RIGHTS WITH RESPECT TO THE WATER COURSES TRAVERSING THE PROPERTIES;
(iv) BUYER HAS, OR BY THE EXPIRATION OF THE DUE DILIGENCE PERIOD
WILL HAVE, WITH THE ASSISTANCE OF SUCH EXPERTS AS BUYER HAS DEEMED APPROPRIATE,
DETERMINED THE ASSIGNABILITY OF ANY DOCUMENTS OR AGREEMENTS TO BE ASSIGNED
HEREUNDER, INCLUDING WITHOUT LIMITATION, THE LEASES AND OPERATING AGREEMENTS AND
ALL WARRANTIES, LICENSES AND PERMITS AFFECTING THE PROPERTIES; AND
(v) SELLER HAS MADE OR WILL MAKE AVAILABLE FOR BUYER'S
INSPECTION COPIES OF CERTAIN STUDIES AND REPORTS IN SELLER'S POSSESSION
APPLICABLE TO THE PROPERTIES. BY FURNISHING THESE MATERIALS, NEITHER SELLER NOR
ANY SELLER PARTY SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY OF
ANY KIND OR NATURE
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WHATSOEVER WITH RESPECT TO ANY MATTER SET FORTH, CONTAINED OR ADDRESSED IN SUCH
MATERIALS, INCLUDING BUT NOT LIMITED TO THE ACCURACY, ADEQUACY OR COMPLETENESS
THEREOF. THE SELLER PARTIES SHALL INCUR NO LIABILITY TO BUYER BY REASON OF
FURNISHING ANY SUCH INFORMATION. CONSEQUENTLY, BUYER, FOR ITSELF AND ITS
SUCCESSORS IN INTEREST, HEREBY RELEASES THE SELLER PARTIES FROM, AND WAIVES ALL
CLAIMS AND LIABILITY AGAINST THE SELLER PARTIES FOR ANY AND ALL STATEMENTS OR
OPINIONS NOW OR HEREAFTER MADE, OR INFORMATION NOW OR HEREAFTER FURNISHED, BY
THE SELLER PARTIES TO BUYER OR ITS AGENTS OR REPRESENTATIVES.
Buyer's Initials: _______________
(e) RELEASE. EXCEPT AS EXPRESSLY PROVIDED IN PARAGRAPH 9(b), UPON
CLOSING, BUYER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT
LIMITED TO, CONSTRUCTION DEFECTS, ADVERSE PHYSICAL, ENVIRONMENTAL, HAZARDOUS
MATERIALS, ENDANGERED SPECIES, ZONING, ACCESS OR WATER COURSE ISSUES OR
CONDITIONS, MAY NOT HAVE BEEN REVEALED BY BUYER'S INVESTIGATIONS. BUYER RELEASES
ALL SELLER PARTIES FROM, AND WAIVES ANY AND ALL LIABILITY, CLAIMS, DEMANDS,
DAMAGES AND COSTS (INCLUDING ATTORNEYS' FEES AND EXPENSES) OF ANY AND EVERY KIND
OR CHARACTER, KNOWN OR UNKNOWN, FOR OR ATTRIBUTABLE TO, ANY LATENT OR PATENT
ISSUE OR CONDITION AT THE PROPERTIES, INCLUDING WITHOUT LIMITATION, CLAIMS,
LIABILITIES AND CONTRIBUTION RIGHTS RELATING TO THE PRESENCE, DISCOVERY OR
REMOVAL OF ANY HAZARDOUS MATERIALS IN, AT, ABOUT OR UNDER THE PROPERTIES, OR
FOR, CONNECTED WITH OR ARISING OUT OF ANY AND ALL CLAIMS OR CAUSES OF ACTION
BASED THEREON, INCLUDING, WITHOUT LIMITATION, CLAIMS AND CAUSES OF ACTION AND
RIGHTS OF CONTRIBUTION OR INDEMNITY UNDER OR WITH RESPECT TO TITLE 42 OF THE
UNITED STATES CODE, SECTION 9601 ET SEQ AND ALL OTHER LOCAL, STATE AND FEDERAL
LAWS, RULES AND REGULATIONS. FOR PURPOSES OF THIS AGREEMENT, THE TERM "HAZARDOUS
MATERIAL" SHALL MEAN ANY SUBSTANCE, CHEMICAL, WASTE OR MATERIAL THAT IS OR
BECOMES REGULATED BY ANY FEDERAL, STATE OR LOCAL GOVERNMENTAL AUTHORITY BECAUSE
OF ITS TOXICITY, INFECTIOUSNESS, RADIOACTIVITY, EXPLOSIVENESS, IGNITABILITY,
CORROSIVENESS OR REACTIVITY, INCLUDING, WITHOUT LIMITATION, ASBESTOS OR ASBESTOS
CONTAINING MATERIAL, THE GROUP OF COMPOUNDS KNOWN AS POLYCHLORINATED BIPHENYLS,
FLAMMABLE EXPLOSIVES, OIL, PETROLEUM OR ANY REFINED PETROLEUM PRODUCT. IT IS THE
INTENTION OF THE PARTIES THAT THE FOREGOING RELEASE SHALL BE EFFECTIVE WITH
RESPECT TO ALL MATTERS, PAST AND PRESENT, KNOWN AND UNKNOWN, SUSPECTED AND
UNSUSPECTED. BUYER REALIZES AND ACKNOWLEDGES THAT FACTUAL MATTERS NOW UNKNOWN TO
IT MAY HAVE GIVEN OR MAY HEREAFTER GIVE RISE TO LOSSES, DAMAGES, LIABILITIES,
COSTS AND EXPENSES WHICH ARE PRESENTLY UNKNOWN, UNANTICIPATED AND UNSUSPECTED,
AND BUYER FURTHER AGREES THAT THE WAIVERS AND
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RELEASES HEREIN HAVE BEEN NEGOTIATED AND AGREED UPON IN LIGHT OF THAT
REALIZATION AND THAT BUYER NEVERTHELESS HEREBY INTENDS TO RELEASE, DISCHARGE AND
ACQUIT SELLER FROM ANY SUCH UNKNOWN LOSSES, DAMAGES, LIABILITIES, COSTS AND
EXPENSES. IN FURTHERANCE OF THIS INTENTION, THE BUYER HEREBY EXPRESSLY AGREES
THAT THE FOREGOING RELEASE EXTENDS TO CLAIMS WHICH THE BUYER DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THIS RELEASE, WHICH IF
KNOWN BY THE BUYER WOULD HAVE MATERIALLY AFFECTED THE BUYER'S AGREEMENT. THE
BUYER ACKNOWLEDGES THAT THE FOREGOING ACKNOWLEDGMENTS, RELEASES AND WAIVERS WERE
EXPRESSLY BARGAINED FOR. THE PROVISIONS OF THIS PARAGRAPH 9(e) SHALL SURVIVE THE
CLOSING.
10. REMEDIES.
(a) REMEDIES FOR BUYER'S BREACH. IN THE EVENT THE SALE OF THE
PROPERTIES IS NOT CONSUMMATED BECAUSE OF A DEFAULT UNDER OR BREACH OF THIS
AGREEMENT ON THE PART OF THE BUYER, BUYER AND SELLER AGREE THAT IT WOULD BE
IMPRACTICABLE AND EXTREMELY DIFFICULT TO FIX THE ACTUAL DAMAGE TO SELLER. BUYER
AND SELLER THEREFORE AGREE THAT, IF BUYER FAILS TO COMPLETE THE PURCHASE OF THE
PROPERTIES AS HEREIN PROVIDED BY REASON OF BUYER'S BREACH OR DEFAULT, THE AMOUNT
OF THE DEPOSIT IS A REASONABLE ESTIMATE OF SELLER'S DAMAGES AND THAT SELLER
SHALL BE ENTITLED TO SAID SUM AS LIQUIDATED DAMAGES. THE FOREGOING IS SELLER'S
SOLE AND EXCLUSIVE RIGHT AND REMEDY, EITHER AT LAW OR IN EQUITY, ON ACCOUNT OF
SUCH DEFAULT BY BUYER. IN SUCH EVENT, THE ESCROW HOLDER SHALL, UPON WRITTEN
DEMAND BY SELLER WITHOUT JOINDER OF BUYER, IMMEDIATELY DELIVER THE DEPOSIT TO
SELLER IN CASH OR OTHER IMMEDIATELY AVAILABLE FUNDS. TO SIGNIFY THEIR AWARENESS
AND AGREEMENT TO BE BOUND BY THE TERMS AND PROVISIONS OF THIS PARAGRAPH 10(a)
BUYER AND SELLER HAVE SEPARATELY INITIALED THIS PARAGRAPH. THE FOREGOING DOES
NOT LIMIT BUYER'S LIABILITY UNDER ANY INDEMNITY OR OTHER PROVISION HEREOF WHICH
BY ITS TERMS SURVIVES A TERMINATION OF THIS AGREEMENT OR IS TO BE PERFORMED
AFTER CLOSING.
SELLER INITIALS: ________ BUYER'S INITIALS: __________
(b) Remedies for Seller's Breach. In the event the sale of the
Properties is not consummated because of default under or breach of this
Agreement on the part of Seller, Buyer shall have the option as its sole and
exclusive remedy at law or in equity to either (i) terminate this Agreement as
to all Properties by delivery of written notice of termination to Seller,
whereupon the Deposit and any interest accrued thereon will be returned to Buyer
and all parties hereto shall be released from further performance of this
Agreement (with the exception of those provisions or paragraphs which recite
that they survive termination of this Agreement); (ii) continue this Agreement
and seek the equitable remedy of specific performance under Washington law;
(iii) in the event Seller, by its own affirmative actions, has conveyed title to
the Property or has encumbered title to the Property with a mortgage or deed of
trust not listed on Schedule 1 attached to this Agreement, or in the event
Seller fails to post a bond pursuant to the
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last sentence of Paragraph 3(a)(i), terminate this Agreement as to all
Properties by delivery of written notice of termination to Seller (whereupon the
Deposit and any interest accrued thereon will be returned to Buyer) and sue
Seller for damages; (iv) in the event Seller defaults in its obligation pursuant
to the second to the last sentence of Section 3(a)(i) of this Agreement to cause
the deeds of trust listed on Schedule 1 attached to this Agreement to be
released and reconveyed from the affected Property at or prior to Closing,
terminate this Agreement as to all Properties by delivery of written notice of
termination to Seller (whereupon the Deposit and any interest accrued thereon
will be returned to Buyer) and sue Seller for damages; or(v) in the event Seller
defaults in its obligation pursuant to the last sentence of Section 5(a) of this
Agreement to deliver into Escrow or cause to be delivered into Escrow the
documents described therein, terminate this Agreement as to all Properties by
delivery of written notice of termination to Seller (whereupon the Deposit and
any interest accrued thereon will be returned to Buyer) and sue Seller for
damages. The foregoing options are mutually exclusive and are the exclusive
rights and remedies available to Buyer at law or in equity in the event of
Seller's default under or breach of this Agreement. The Buyer may elect one, but
only one, of the remedies identified in clauses (i), (ii), (iii), (iv) or (v);
provided, however, that if Buyer first elects the remedy identified in clause
(ii), clause (iii), clause (iv) or clause (v) and such remedy is not available,
Buyer may elect the remedy in clause (i). The foregoing does not limit Seller's
liability under any indemnity or other provision hereof which by its terms
survives a termination of this Agreement or is to be performed after closing.
The damages recoverable by Buyer under clause (iii), clause (iv) or clause (v)
shall include, without limitation, any non-refundable rate lock or extension fee
paid to one institutional lender under not more than one Commitment for each
Property; provided, however, that in no event may all damages recoverable by
Buyer under said clause (iii) or clause (iv) exceed $1,500,000 in the aggregate,
plus any fees and costs to which Buyer may be entitled pursuant to Section 21(1)
of this Agreement; and provided, further, however that in no event may all
damages recoverable by Buyer under said clause (v) exceed $500,000 in the
aggregate, plus any fees and costs to which Buyer may be entitled pursuant to
Section 21(1) of this Agreement. Seller acknowledges being hereby informed by
Buyer that: (a) Buyer will incur substantial damages in the event that the time
of the essence dates contained in this Agreement for pre-closing in escrow and
for Closing title are not met; and (b) without limitation on the generality of
the foregoing, the Commitment is subject to time of the essence rate lock and
termination dates of December 16, 1998 and December 23, 1998, respectively, and
that the Commitment will terminate in the event of Buyer's failure to meet
either of the Commitment lender's (the "Lender") imposed deadlines with Buyer
being liable to Lender (i) in the event of failure to timely rate lock, for
approximately $100,000 of Lender's out of pocket costs (exclusive of Buyer's own
due diligence expenses); and (ii) in the event that Buyer timely rate locks, but
thereafter fails to timely close title, for approximately $705,000, including a
$605,000 rate lock fee and approximately $100,000 of Lender's out of pocket
costs (exclusive of Buyer's own due diligence expenses). TO SIGNIFY THEIR
AWARENESS AND AGREEMENT TO BE BOUND BY THE TERMS AND PROVISIONS OF THIS
PARAGRAPH 10(b) BUYER AND SELLER HAVE SEPARATELY INITIALED THIS PARAGRAPH. THE
FOREGOING DOES NOT LIMIT SELLER'S LIABILITY UNDER ANY INDEMNITY OR OTHER
PROVISION HEREOF WHICH BY ITS TERMS SURVIVES A TERMINATION OF THIS AGREEMENT OR
IS TO BE PERFORMED AFTER CLOSING.
SELLER INITIALS: __________ BUYER'S INITIALS: _________
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(c) Survival of Indemnities. Notwithstanding subparagraphs (a) and
(b) of this paragraph, in no event shall the provisions of this Paragraph 10
limit the damages recoverable by either party against the other party due to any
indemnity obligation expressly set forth in this Agreement.
11. BUYER'S OBLIGATIONS PENDING CLOSING. Buyer shall not terminate,
supplement, amend or modify in any way any of the Leases, Operating Agreements
or other documents affecting the Properties prior to the Closing. In addition,
Buyer shall not file or cause to be filed any application or request with any
governmental or quasi-governmental agency which would or could lead to a hearing
before any governmental or quasi-governmental agency or which would or could
lead to any change in zoning, investigation or restriction on the use of the
Properties, or any part thereof; provided, however, that nothing contained
herein shall prevent the Buyer from making reasonable and customary inquiries of
governmental officials in the course of routine due diligence on the Property.
12. SELLER'S OBLIGATIONS PENDING CLOSING. Subject to the provisions of
Paragraphs 13 and 14 hereof, until Closing, Seller shall maintain the Properties
in their condition existing on the Effective Date, normal wear and tear
excepted. Prior to Closing, Seller shall also maintain its existing fire and
extended coverage insurance, if any, with respect to the Properties. Prior to
Closing, Seller may continue its normal leasing activities in accordance with
its standard criteria for tenant credit, rent, commissions and improvements, and
shall continue to operate the Properties in the manner operated as of the
Effective Date. Other than Leases of units as described above, Seller shall not
enter into any new Operating Agreement, or modify any existing Operating
Agreement, if such new Operating Agreement or modification would be binding on
Buyer or the Properties after Closing after the expiration of the Due Diligence
Period without Buyer's prior written consent which shall not be unreasonably
withheld or delayed. Seller agrees to deliver termination notices in connection
with any service contracts identified by Buyer prior to the expiration of the
Due Diligence Period if (and only if) such contracts are terminable without fee
or charge. At Closing, Seller will execute and deliver to the Title Company an
Affidavit and Indemnity in the form of Exhibit H attached hereto, completed for
each of the Properties (the "Owner Affidavits").
13. DAMAGE OR DESTRUCTION. If any of the Improvements are damaged or
destroyed prior to Closing, then by delivery of written notice of election
within five (5) business days after receipt of written notice of such damage or
destruction from Seller, Buyer may elect to either (a) terminate this Agreement
as to all Properties, or (b) elect to continue this Agreement in full force and
effect in which case Seller shall assign to Buyer at Closing any and all
proceeds and/or claims under any applicable insurance coverage, Buyer shall
receive a credit on the Purchase Price equal to the amount of any deductible
under any such insurance coverage, and Buyer shall take title to the Properties
subject to such damage and destruction; provided, however, that in the event the
cost to repair any such damage or destruction is reasonably estimated by Seller
to be less than Five Hundred Thousand Dollars ($500,000) individually or in the
aggregate for all Properties, then Buyer shall have no right to terminate this
Agreement, Seller shall assign to Buyer at Closing any and all proceeds and/or
claims under any applicable insurance coverage, Buyer shall receive a credit on
the Purchase Price equal to the amount of any deductible under any such
insurance coverage, and Buyer shall take title to the Properties subject to such
damage and destruction. If Buyer fails to deliver written notice to Seller and
Escrow Holder of Buyer's
19
<PAGE> 20
election within the time period specified in this Paragraph, Buyer shall be
deemed to have elected alternative (a) above. If Buyer properly delivers written
notice to Seller and Escrow Holder within the time period specified in this
Paragraph electing alternative (a) above, the Escrow shall be canceled, this
Agreement shall be terminated and become null and void as to all Properties, all
parties hereto shall be released from further performance of this Agreement
(with the exception of those provisions or Paragraphs which recite that they
survive termination of this Agreement), and Escrow Holder shall return to Buyer
the Deposit deposited with Escrow Holder and any and all interest thereon and
shall return to each party any and all documents which such party had deposited
with it.
14. EMINENT DOMAIN. If, at any time prior to the Closing, legal
proceedings under power of eminent domain are commenced with respect to all or
any portion of the Properties, then by delivery of written notice of election
within five (5) business days after receipt of written notice of such pending
condemnation from Seller, Buyer may elect to either (a) terminate this Agreement
as to all Properties, or (b) elect to continue this Agreement in full force and
effect and Seller shall assign to Buyer at the Closing any and all proceeds
and/or claims on account of such condemnation proceedings, and Buyer shall take
title to the Properties subject to such condemnation proceedings; provided,
however, that in the event the value of any Property or portion thereof, to be
taken is reasonably estimated by Seller to be less than Five Hundred Thousand
Dollars ($500,000), then Buyer shall have no right to terminate this Agreement,
Seller shall assign to Buyer any and all proceeds and/or claims on account of
such condemnation proceedings, and Buyer shall take title to all Properties
subject to such condemnation proceedings. If Buyer fails to deliver written
notice to Seller and Escrow Holder of Buyer's election within the time period
specified in this Paragraph, Buyer shall be deemed to have elected alternative
(b) above. If Buyer properly delivers written notice to Seller and Escrow Holder
within the time period specified in this Paragraph electing alternative (b)
above, the Escrow shall be canceled, this Agreement shall be terminated and
become null and void as to all Properties, all parties hereto shall be released
from further performance of this Agreement (with the exception of those
provisions or Paragraphs which recite that they survive termination of this
Agreement), and Escrow Holder shall return to Buyer all or any portion of the
Deposit deposited with Escrow Holder and any and all interest thereon and shall
return to each party any and all documents which such party had deposited with
it.
15. COMMISSIONS. Neither Seller nor Buyer has had any contact or
dealings regarding the Properties, or any communication in connection with the
subject matter of the Transactions, 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 other than CB Richard Ellis (the "Broker"). Seller
will pay a commission to the Broker in connection with the Transactions pursuant
to a separate written agreement between Seller and Broker (the "Commission
Agreement"). In the event of any claim for broker's or finder's fees or
commissions in connection with the negotiation, execution or consummation of
this Agreement other than pursuant to the Commission Agreement, Buyer shall
indemnify, hold harmless and defend Seller from and against any and all
liability, claims, demands, damages and costs (including attorneys' fees and
expenses) on account of such claim if it shall be based upon any statement,
representation or agreement claimed to have been made by Buyer, including,
without limitation, if such claim is made by CB Richard Ellis on account of
Buyer's separate agreement with CB Richard Ellis and Seller shall indemnify,
hold harmless and defend Buyer from and
20
<PAGE> 21
against any and all liability, claims, demands, damages and costs (including
attorneys' fees and expenses) on account of such claim if it shall be based upon
any statement, representation or agreement claimed to have been made by Seller.
The provisions of this paragraph shall survive Closing or termination of this
Agreement.
16. LIMITATION OF SELLER'S LIABILITY. Prior to Closing, Buyer and all
other persons dealing with Seller must look solely to Seller's equity in the
Properties for the payment of any claims hereunder or for performance of
Seller's obligations hereunder, and, after Closing, Buyer and all other persons
dealing with Seller shall be limited to the amount of the Purchase Price for the
payment of any claims hereunder or for the performance of Seller's obligations
hereunder, to the extent such claims are not otherwise limited in this
Agreement. No present or future Seller Parties shall have any personal
liability, directly or indirectly, and recourse shall not be had against any
Seller Party under or in connection with this Agreement or any other document or
instrument heretofore or hereafter executed in connection with this Agreement.
Buyer hereby waives and releases any and all such personal liability and
recourse. The limitations of liability provided in this paragraph are in
addition to, and not in limitation of, any limitation on liability applicable to
Seller provided by law or in any other contract, agreement or instrument.
17. PUBLICITY AND CONFIDENTIALITY. The parties shall at all times prior
to Closing keep the Transactions and any non-public documents received from each
other confidential, except to the extent necessary to (i) comply with applicable
law and regulations, (ii) carry out the obligations set forth in this Agreement
or (iii) provide information to such attorneys, accountants, potential lenders
and equity members, and other professionals as either party deems necessary in
connection with the Transactions contemplated in this Agreement. Any such
disclosure to third parties shall indicate that the information is confidential
and should be so treated by the third party. Prior to Closing, no press release
or other public announcement may be made by Buyer, Seller or any of their agents
concerning the details of the transactions except in a form approved by both
Buyer and Seller.
18. SOPHISTICATION OF THE PARTIES. Buyer and Seller are sophisticated in
the buying and selling of income producing property similar to the Properties
and each has engaged its own sophisticated real estate counsel and advisors.
Buyer and Seller each has knowledge and experience in financial and business
matters to enable them each to evaluate the merits and risks of the Transactions
contemplated hereby. Neither Buyer nor Seller is in a disparate bargaining
position vis-a-vis the other. The provisions of this Agreement shall be
construed as to their fair meaning, and not for or against any party based upon
any attribution to such party as the source of the language in question.
19. NOTICE. Any notice or other communication required or permitted to
be given under this Agreement, or by law, shall be in writing and either (a)
delivery by hand or by facsimile transmission, (b) sent by United States mail,
registered or certified, or express mail, postage prepaid, return receipt
requested, or (c) sent by any nationally-recognized overnight courier service
that provides receipted delivery service, delivery charges prepaid, return
receipt requested; and each such notice or communication shall be deemed to have
been given upon the date of delivery (or the date of refusal to accept delivery,
as the case may be) as indicated on the return receipt, at the addresses
specified below:
21
<PAGE> 22
If to Buyer: SAP II Originating LLC
c/o Sterling Advisors II Corp.
111 Great Neck Road
Great Neck, New York 11021
Attn: Tarak Patolia
Fax No.: (212) 986-3838
Telephone No.: (212) 986-3200
with a copy to: Rubin, Baum, Levin, Constant & Freidman
30 Rockefeller Plaza
New York, New York 10112
Attn: David Mandel, P.C.
Fax No.: (212) 698-7845
Telephone No.: (212) 698-7845
If to Seller: Pacific Gulf Properties Inc.
4220 Von Karman, Second Floor
Newport Beach, California 92660-2002
Attn: Mr. Lonnie Nadal
Fax No.: (714) 223-5033
Telephone No.: (714) 223-5000
With a copy to: Cox, Castle & Nicholson LLP
2049 Century Park East, Suite 2800
Los Angeles, California 90067
Attention: Amy H. Wells, Esq.
Fax No.: (310) 277-7889
Telephone No.: (310) 284-2233
If to Escrow Holder: Chicago Title Company
888 Southwest 5th Avenue
Suite 930
Portland, Oregon 97204
Attention: Judy Yoresen
Fax No.: (503) 248-0324
Telephone No. (503) 973-7400
or such other address as either party may from time to time specify in writing
to the other in the manner aforesaid.
20. REIT STATUS. Seller hereby advises Buyer that Seller 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 Seller. Accordingly, Buyer agrees to make any
modifications or amendments to this Agreement requested by Seller prior to the
expiration of the Due Diligence Period that may be necessary for Seller to
maintain its status as a real estate investment trust or in order for it to
avoid a penalty tax; provided, however, that Buyer shall have no obligation to
enter into any such modification or amendment that would alter or affect in any
respect, in Buyer's sole judgment, Buyer's rights, duties, or obligations under
this Agreement.
22
<PAGE> 23
21. MISCELLANEOUS.
(a) Time of the Essence. Time is of the essence of this Agreement.
However, if Closing does not occur on or before the Closing Date, then Escrow
Holder shall continue to comply with the instructions contained in this
Agreement unless Escrow Holder receives a contrary written demand from either
Buyer or Seller.
(b) Entire Agreement. This Agreement embodies the entire agreement
between the parties relative to the subject matter hereof, and there are no
other agreements existing between Seller and Buyer relative to the subject
matter hereof which are not expressly set forth herein and covered hereby.
(c) Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation hereof.
(d) Interpretation. Whenever the context hereof shall so require,
the singular shall include the plural, the male gender shall include the female
gender and the neuter, and vice versa. This Agreement shall not be construed
against either Buyer or Seller but shall be construed as a whole, in accordance
with its fair meaning, and as if prepared by Buyer and Seller jointly.
(e) Choice of Law/Venue. This Agreement shall be construed under and
governed by the laws of Washington without giving effect to, and notwithstanding
that the laws of another jurisdiction may be indicated by, the choice of law
rules of Washington. The parties irrevocably submit to the jurisdiction of King
County Superior Court or the Federal District for the Western District of
Washington in any action or proceeding arising out of or relating to this
Agreement. The parties irrevocably consent to the service of any and all process
in any such action or proceeding in the manner provided in this Agreement for
the giving of notices at the addresses set forth in this Agreement. The parties
agree that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on such judgment or in any
other manner provided by law.
(f) Severability. In case any one or more of the other provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and the remainder of the provisions
of this Agreement shall continue in full force and effect without impairment.
(g) Waiver. Any term, condition or provision of this Agreement which
is exclusively for the benefit of one party may unilaterally be waived by the
benefited party. No waiver of any term, condition or provision of this Agreement
shall be effective unless in writing. The waiver by either party of a breach of
any provision of this Agreement shall not be deemed a waiver of any subsequent
breach whether of the same or another provision of this Agreement.
23
<PAGE> 24
(h) No Obligation to Third Parties. The execution and delivery of
this Agreement shall not be deemed to confer any rights upon, nor obligate
either of the parties hereto to, any person or entity not a party to this
Agreement.
(i) Successors and Assigns/Assignment. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors, heirs, administrators and assigns. Buyer shall not assign
its right, title and interest in and to this Agreement, except that Buyer may
designate one or more entity affiliated with Buyer to take title to the Property
by delivery of written notice to Seller of such election not less than five (5)
days prior to the Closing Date except for the Hampton Bay Property where such
notice must be delivered not less than three (3) business days prior to the date
by which the Seller must deliver the notice required under Section 17.8 of the
Declaration. The designation of an affiliated entity to take title to the
Property shall not release Buyer from any representation, warranty or covenant
of Buyer, or diminish any right or remedy of Seller with respect to Buyer, and
shall not delay Closing. Seller shall not be obligated to incur any cost or
expense in connection with such designation, but will identify the designated
affiliate in the closing documents.
(j) Amendments in Writing. The provisions of this Agreement may not
be amended or altered except by a written instrument duly executed by each of
the parties hereto.
(k) Further Assurances. Each of the parties shall execute such other
and further documents and do such further acts as may be reasonably required to
effectuate the intent of the parties and carry out the terms of this Agreement.
(l) Attorneys' Fees. If legal action is commenced to enforce or to
declare the effect of any provision of this Agreement, or any document executed
in connection with this Agreement, the prevailing party shall be entitled to
recover from the non-prevailing party attorneys' fees and other litigation
costs. In addition to the foregoing award of attorneys' fees to the prevailing
party, the prevailing party in any lawsuit on this Agreement or any document
executed in connection with this Agreement shall be entitled to its attorneys'
fees incurred in any post judgement proceedings to collect or enforce the
judgment. This provision is separate and several and shall survive the merger of
this Agreement or any document executed in connection with this Agreement into
any judgment on this Agreement or any document executed in connection with this
Agreement. This provision shall survive Closing or termination of this
Agreement.
(m) Computation of Periods. All periods of time referred to in this
Agreement shall, unless otherwise expressly provided, include all days of the
calendar, provided that if the last date to perform any act or give any notice
with respect to this Agreement shall fall on a Saturday, Sunday, national
holiday or a Washington state holiday, such act or notice may be timely
performed or given on the next succeeding day which is not a Saturday, Sunday,
national holiday or a Washington state holiday. Saturdays, Sundays, national
holidays and Washington state holidays shall not be "business" days for purposes
of this Agreement.
(n) 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
24
<PAGE> 25
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.
(o) Exhibits. Unless otherwise expressly provided, all Exhibits
referred to in this Agreement are the exhibits attached hereto. All such
exhibits attached hereto are incorporated in this Agreement by reference thereto
as if set forth in this Agreement in their entirety.
22. EXCHANGE. Buyer acknowledges that Seller may engage in a
tax-deferred exchange ("Exchange") pursuant to Section 1031 of the Internal
Revenue Code with respect to Seller's sale of the Property. As an accommodation
to Seller, Buyer agrees to cooperate with Seller in connection with the
Exchange, but only on the condition that the followings terms and conditions are
satisfied:
(a) There shall be no liability to Buyer and Buyer shall have no
obligation to take title to any property in connection with the Exchange;
(b) Buyer shall in no way be obligated to pay any escrow costs,
brokerage commissions, title charges, survey costs, recording costs or other
charges incurred with respect to any exchange property and/or the Exchange;
(c) In no way shall the Closing be contingent upon or otherwise
subject to the consummation of the Exchange, and the Seller shall not be
relieved of its obligation to timely perform in accordance with the terms of
this Agreement notwithstanding any failure, for any reason, of the Exchange to
be consummated;
(d) If, for any reason, the Closing does not occur, Buyer shall have
no responsibility or liability to any third party involved in the Exchange and
Seller shall save, defend, indemnify and hold harmless Buyer therefrom;
(e) Buyer will not be required to make any representations or
warranties nor assume any obligations or liabilities, nor spend any sum or incur
any liability whatsoever in connection with the Exchange;
(f) The Exchange shall not release Seller from any representation,
warranty or covenant of Seller or diminish any right or remedy of Buyer with
respect to Seller; and
(g) Seller shall reimburse Buyer for Buyer's reasonable costs and
expenses, including without limitation, legal fees incurred in reviewing and, if
necessary, revising any documentation to be executed by Buyer in connection with
the Exchange.
25
<PAGE> 26
IN WITNESS WHEREOF, Buyer and Seller have executed and delivered this
Agreement as of the Effective Date.
"Seller"
PACIFIC GULF PROPERTIES INC., a Maryland
corporation
By:
---------------------------------------
---------------------------------------
(Print Name and Title)
By:
---------------------------------------
---------------------------------------
(Print Name and Title)
"Buyer"
SAP II ORIGINATING LLC, a New York limited
liability company
By: Sterling Advisors II Corp.,
a corporation
-----------------
By:
-----------------------------------
-----------------------------------
(Print Name and Title)
By:
-----------------------------------
-----------------------------------
(Print Name and Title)
26
<PAGE> 27
Chicago Title Insurance Company of Oregon agrees to act as Escrow Holder in
accordance with the terms of this Agreement, and to comply with the terms and
provisions of this Agreement. Chicago Title Insurance Company of Oregon agrees
to comply with all reporting requirements of Section 6045 of the United States
Internal Revenue Code and the regulations promulgated thereunder.
Chicago Title Insurance Company of Oregon
By:
-----------------------------------
-----------------------------------
(Print Name and Title)
27
<PAGE> 28
SCHEDULE OF EXHIBITS AND SCHEDULES
FIRST REFERRED
EXHIBIT TO IN PARAGRAPH
--------- ---------------
A-1 - A-5 Legal Description 1
B Intentionally Omitted
C Assignment and Assumption 5(b)(i)(2)
D Deed 5(b)(ii)(1)
E Bill of Sale 5(b)(ii)(2)
F Certificate of Non-Foreign Status 5(b)(ii)(4)
G Notice to Tenants 5(b)(ii)(5)
SCHEDULE
--------
1 Mortgage/Deeds of Trust 3(a)(I)
2 Lease List 9(b)(vii)
3 Rent Roll 9(b)(xii)
4 Delinquency Report 9(b)(xii)
<PAGE> 29
SCHEDULE 1
----------
EXISTING MORTGAGES/DEEDS OF TRUST
<PAGE> 30
SCHEDULE 2
----------
LEASE LIST
----------
<PAGE> 31
SCHEDULE 3
----------
RENT ROLL
---------
<PAGE> 32
SCHEDULE 4
----------
DELINQUENCY REPORT
------------------
<PAGE> 33
EXHIBIT A-1 THROUGH A-5
-----------------------
COMMON NAME AND LEGAL DESCRIPTION OF EACH PROJECT IN THE PORTFOLIO
------------------------------------------------------------------
A-1
<PAGE> 34
EXHIBIT B
---------
INTENTIONALLY OMITTED
---------------------
B-1
<PAGE> 35
EXHIBIT C
---------
ASSIGNMENT AND ASSUMPTION
-------------------------
THIS ASSIGNMENT AND ASSUMPTION (the "Assignment") is made as of this
_____ day of ________, 1998, by PACIFIC GULF PROPERTIES INC., a Maryland
corporation ("Assignor"), in favor of SAP II ORIGINATING LLC, a New York limited
liability company ("Assignee").
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Assignor hereby assigns and transfers to Assignee
as of the date title to the property described on Exhibits A-1 through A-__
hereto (the "Properties") is transferred to Assignee (the "Transfer Date"), all
of the following relating to the Properties, to the extent assignable, and
without representation or warranty of any kind whatsoever, express or implied:
(i) any and all of Assignor's right, title and interest, as lessor,
in, to and under all leases, licenses and occupancy agreements affecting the
Properties (the "Leases");
(ii) any and all of Assignor's right, title and interest in, to and
under all assignable contracts and agreements relating to the leasing,
operation, maintenance and repair of Properties (the "Operating Agreements");
(iii) any and all assignable governmental licenses, permits,
certificates (including certificates of completion and certificates of
occupancy), authorizations and approvals held by Assignor in connection with the
current occupancy, use and operation of, and construction upon, the Properties
(collectively, the "Permits");
(iv) any and all assignable warranties and guaranties including,
without limitation, contractor's, architect's and manufacturer's warranties and
guaranties held by Assignor and given by third parties with respect to the
Properties (collectively, the "Warranties"); and
(v) any and all of Seller's right, title and interest in and to the
non-exclusive use of the names "Fulton's Crossings", "Fulton's Landing",
"Hampton Bay", "Heatherwood" and "Holly Ridge"(collectively, the "Names").
Assignee accepts this Assignment and hereby assumes and agrees to perform from
and after the Transfer Date all of the covenants, agreements and obligations of
the lessor under the Leases to be performed from and after the Transfer Date and
all of Assignor's covenants, agreements and obligations under the Operating
Agreements, Permits, Warranties and Name.
C-1
<PAGE> 36
IN WITNESS WHEREOF, this Assignment and Assumption is made as of the day
and year first above written.
ASSIGNOR:
PACIFIC GULF PROPERTIES INC., a Maryland
corporation
By:
-----------------------------------
-----------------------------------
(Print Name and Title)
ASSIGNEE:
SAP II ORIGINATING LLC, a New York
limited liability company
By: Sterling Advisors II Corp.,
a ________________
By:
----------------------------------
(Print Name and Title)
C-2
<PAGE> 37
SCHEDULE 1
----------
LEGAL DESCRIPTION
-----------------
C-3
<PAGE> 38
EXHIBIT D
---------
Name_______________________________________
Address____________________________________
City, State, Zip___________________________
- --------------------------------------------------------------------------------
SPECIAL WARRANTY DEED
Reference # (if applicable):__________________
Grantor: PACIFIC GULF PROPERTIES INC., a Maryland corporation
Grantee:
________________________________________________________________________________
Legal Description
(abbreviated):__________________________________________________________________
___________________________________________Additional legal(s) on page _________
Assessor's Tax Parcel ID#________________________
THE GRANTOR
for and in consideration of Eighty Five Million Five Hundred Thousand Dollars
($85,500,000), in hand paid, grant, bargain, sell, convey, and confirm to SAP II
ORIGINATING LLC, a New York limited liability company, the real estate, situated
in the county of ________________, State of Washington more particularly
described on Schedule 1 hereto, subject expressly to the matters disclosed in
Schedule 2 hereto.
D-1
<PAGE> 39
The Grantor for itself and for its successors in interest does by these presents
expressly limit the covenants of the deed to those herein expressed, and exclude
all covenants arising or to arise by statutory or other implication, and do
hereby covenant that against all persons whomsoever lawfully claiming or to
claim by, through or under said Grantor and not otherwise, will forever warrant
and defend the said described real estate.
Dated_____________________, 1998
"GRANTOR"
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
--------------------------------
Its:
--------------------------------
By:
--------------------------------
Its:
--------------------------------
D-2
<PAGE> 40
STATE OF _________________)
) ss.
COUNTY OF ________________)
On _________, 1998, 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
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
STATE OF _________________)
) ss.
COUNTY OF ________________)
On _________, 1998, 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
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
D-3
<PAGE> 41
Schedule 1 to Exhibit D
-----------------------
Legal Description
D-4
<PAGE> 42
Schedule 2 to Exhibit D
-----------------------
All exceptions to Title
D-5
<PAGE> 43
EXHIBIT E
---------
BILL OF SALE
------------
This Bill of Sale is made as of this ____ day of ____________, 1998, by
PACIFIC GULF PROPERTIES INC., a Maryland corporation ("Seller"), in favor of SAP
II ORIGINATING LLC, a New York limited liability company ("Buyer").
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Seller hereby assigns and transfers to Buyer, its
successors and assigns, all of Seller's right, title and interest in and to all
the personal property (collectively, the "Personal Property") owned by Seller,
if any, located on the real property more particularly described on Exhibits A-1
through A-5 hereto (collectively, the "Property"), excluding, however, the
manager's operations manuals used in connection with the Property, which shall
remain the property of Seller and are not being assigned, licensed or
transferred to Buyer hereunder.
The Personal Property transferred hereby is transferred "AS IS", "WHERE
IS" and "WITH ALL FAULTS", and without any representation or warranty
whatsoever, except that Seller hereby represents and warrants that Seller has
not encumbered or conveyed any interest in the Personal Property to anyone other
than Buyer.
IN WITNESS WHEREOF, the undersigned has executed this Bill of Sale as of
the day and year first above written.
PACIFIC GULF PROPERTIES INC., a Maryland
corporation
By:
-----------------------------------
-----------------------------------
(Print Name and Title)
By:
-----------------------------------
-----------------------------------
(Print Name and Title)
E-1
<PAGE> 44
Exhibits A-1 to Exhibit A-
--------------------------
Legal Descriptions
E-1
<PAGE> 45
EXHIBIT F
---------
CERTIFICATE OF NON-FOREIGN STATUS
---------------------------------
The undersigned hereby certifies that:
1. PACIFIC GULF PROPERTIES INC., a Maryland corporation ("PGP"), is not
a foreign person (as defined in Section 1445 of the United States Internal
Revenue Code, 26 U.S.C.
ss.1445);
2. PGP's United States tax identification number is: 33-0577520.
Under penalty of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete.
Dated as of: __________________, 1998
PACIFIC GULF PROPERTIES INC, a Maryland
corporation
By:
-----------------------------------
-----------------------------------
(Print Name and Title)
By:
-----------------------------------
-----------------------------------
(Print Name and Title)
F-1
<PAGE> 46
EXHIBIT G
---------
NOTICE TO TENANT
----------------
_______________, 1998
Certified Mail
Return Receipt Requested
- ------------------------
____________________________
____________________________
____________________________
____________________________
Re: Sale of Property
This is to notify you that Pacific Gulf Properties Inc. ("Seller") has
sold its interest in the property located at ___________________________________
(the "Property") to ___________________ ("Buyer"), and in connection therewith
has assigned its interest as landlord under your Lease to Buyer.
Seller has also delivered your security deposit in the amount of
$____________ to Buyer. Buyer's address is ___________________. Please direct
all future rental and other payments and communications under your Lease to the
Buyer at that address.
PACIFIC GULF PROPERTIES INC., a Maryland
corporation
By:
-----------------------------------
-----------------------------------
(Print Name and Title)
By:
-----------------------------------
-----------------------------------
(Print Name and Title)
<PAGE> 47
EXHIBIT H
---------
AFFIDAVIT AND INDEMNITY BY OWNER
EXTENDED COVERAGE POLICIES
WHEREAS, the undersigned Affiant (if more than one, herein collectively called
the Affiant) is the owner of the land (the Land) described in that certain
Commitment for Title Insurance issued by [INSERT CHICAGO, TICOR OR SECURITY
UNION] TITLE INSURANCE COMPANY (the Company) under No. [insert local order
number] (the Commitment), for an ALTA Owner's and/or Loan Policy of title
insurance (the Policy or Policies),
AND WHEREAS, the Proposed Insured(s) under said Commitment is/are requesting the
Company to issues its Policy or Policies with Extended Coverage, and to delete
therefrom the General Exceptions relating to rights or claims of parties in
possession, survey matters, unrecorded easements and statutory lien rights for
labor or materials, or other matters determinable only by survey, inspection or
inquiry,
AND WHEREAS the Affiant acknowledges that the Company would refrain from issuing
said Policy or Policies without showing said General Exceptions in the absence
of the representations, agreements and undertakings contained herein.
Nothing contained herein shall be construed so as to obligate the Company to
issue said Policy or Policies without showing said General Exceptions. However,
should the Company do so, it will do so in part in reliance upon the
undertakings of the undersigned Affiant. The issuance of the Policy or Policies
shall be the consideration for the undertakings contained herein.
The Company reserves the right to require additional indemnification and/or a
survey in connection with analyzing its risk in deleting said General
Exceptions, and to take special exception for any adverse matters disclosed by
this affidavit, a survey or an inspection of the Land.
AFFIDAVIT
The Affiant represents that:
(vi) Said Land has been owned by the Affiant since _________, and
the Affiant's enjoyment thereof has been peaceable and undisturbed. There are no
other persons (including trusts, corporations, partnerships or limited liability
companies) which assert an interest in the property, except (if none, state
"NONE"):
(vii) The Land at present is in use as:
_______________________________________________________________________________
PROPERTY ADDRESS______________________________________________
(viii) Affiant has not entered into any oral or written leases,
tenancies or other occupancies, nor any rights of first refusal or options to
purchase said land, except (attach list, if necessary, and attach copies of any
written agreements or rent rolls, if any; if none, state "NONE"):
<PAGE> 48
(ix) Affiant has not entered into any contracts for the making of
repairs or for new construction on said Land or for the services of architects,
engineers or surveyors, nor has Affiant incurred any unpaid bills or claims for
labor or services performed or material furnished or delivered during the last
twelve (12) months for alterations, repair work or new construction on said
Land, including site preparation, soil tests, site surveys, demolition, etc.,
except (if none, state "NONE"):
(x) Neither the Affiant nor any principal of the Affiant has filed a
petition for bankruptcy, which action is pending, nor is Affiant a defendant in
any pending action affecting the Land; nor has Affiant been served with a
summons and complaint nor received any written notice of any action which is
pending against Affiant affecting the Land, except (if none, state "NONE"):
(xi) With respect to the Land (1) there are no unpaid or unsatisfied
mortgages, deeds of trust, contracts or security agreements executed by Affiant,
(2) written claims of lien received by Affiant, or judgments entered against
Affiant, (3) Affiant has not received written notice of any special assessments
for sewer, water, road or other local improvement districts, or taxes, including
taxes or special assessments which are not yet payable, which are not shown as
existing liens by the public records, or (4) there are no unpaid or unsatisfied
service, installation, connection, tap, capacity or construction charges for
sewer, water, electricity, natural gas or other utilities, or garbage collection
and disposal which are not shown by the public records, which are not shown in
the referenced commitment, except (if none, state "NONE"):
(xii) There are no unpaid amounts of public funds advanced under the
Hill-Burton Act (Title 42 USCA, ss.291, et seq.) (health care facilities) or any
state statutes enacted pursuant thereto, which would constitute a lien against
the Land.
(xiii) From and after the date that the Seller shall deposit into
escrow its documents in accordance with Section 5(a) of the Agreement and so
long as the Agreement remains in effect and the Buyer is in compliance with its
duties and obligations under the Agreement, Seller agrees to continue to comply
with its obligations under the Agreement, and not to place on the Property any
mortgage or deed of trust, not to convey the Property to any party other than
the Buyer, and, for any mechanic's liens for which the Seller has the statutory
right to post a bond which will effect a release of such lien from the Property,
to post such bond.
INDEMNITY
The Affiant hereby agrees to indemnify, protect, defend and save harmless the
Company from and against any and all loss, costs, damages, and attorney's fees
it may suffer, expend or incur under the Policy by reason, or in consequence of
or growing out of any material inaccuracy in any of the foregoing
representations.
-2-
<PAGE> 49
IN WITNESS WHEREOF, the undersigned has executed this Agreement this ____ day of
November, 1998.
PACIFIC GULF PROPERTIES INC., a Maryland
corporation
By:
-----------------------------------
-----------------------------------
(Print Name and Title)
By:
-----------------------------------
-----------------------------------
(Print Name and Title)
-3-
<PAGE> 50
STATE OF CALIFORNIA )
) ss:
COUNTY OF _______________ )
On __________, 1998, before me, the undersigned, a Notary Public in and for said
County and State, personally appeared __________________ and __________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
------------------------------
Notary Public
G-1
<PAGE> 51
PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
BY AND BETWEEN
SAP II ORIGINATING LLC,
A NEW YORK LIMITED LIABILITY COMPANY
("BUYER"),
AND
PACIFIC GULF PROPERTIES INC.,
A MARYLAND CORPORATION
<PAGE> 52
TABLE OF CONTENTS
Page
----
1. PURCHASE AND SALE OF PROPERTIES........................................ 1
2. PURCHASE PRICE......................................................... 1
3. CONDITIONS TO CLOSING.................................................. 2
(a) BUYER'S APPROVALS............................................ 2
(b) MORTGAGE CONTINGENCY......................................... 3
(c) NOTICE OF DISAPPROVAL AND TERMINATION........................ 4
(d) RETURN OF DEPOSIT............................................ 4
(e) SELLER APPROVAL.............................................. 4
(f) TITLE POLICIES............................................... 5
4. POSSESSION AND INSPECTION.............................................. 5
(a) POSSESSION................................................... 5
(b) INSPECTION................................................... 5
(c) INSURANCE.................................................... 5
(d) REPORTS...................................................... 5
(e) TENANTS...................................................... 6
(f) SELLER'S ACCESS.............................................. 6
5. THE CLOSING............................................................ 6
(a) THE CLOSING DATE............................................. 6
(b) DELIVERIES THROUGH ESCROW.................................... 7
(c) DELIVERIES OUTSIDE ESCROW.................................... 8
(d) SIMULTANEOUS DELIVERY; CONDITIONS CONCURRENT................. 8
6. OPENING OF ESCROW...................................................... 8
(a) DUTIES OF ESCROW HOLDER...................................... 8
(b) ADDITIONAL PROVISIONS......................................... 9
(c) NO EXTENSIONS OF TIME......................................... 9
(d) REPORTING..................................................... 9
7. COSTS................................................................... 9
(a) SELLER........................................................ 9
(b) BUYER......................................................... 9
(c) TERMINATION FOR DEFAULT.......................................10
8. PRORATIONS AND DEPOSITS.................................................10
(a) RENT..........................................................10
(b) LEASING COSTS.................................................10
(c) DEPOSITS......................................................10
(d) UTILITY CHARGES...............................................11
i
<PAGE> 53
(e) REAL ESTATE TAXES AND ASSESSMENTS.............................11
(f) OTHER APPORTIONMENTS..........................................11
(g) PRELIMINARY CLOSING ADJUSTMENT................................11
(h) POST-CLOSING RECONCILIATION...................................11
9. BUYER'S REPRESENTATIONS AND WARRANTIES..................................11
(a) BUYER'S REPRESENTATIONS AND WARRANTIES........................11
(b) SELLER'S REPRESENTATIONS AND WARRANTIES.......................12
(c) SURVIVAL OF REPRESENTATIONS AND WARRANTIES....................13
(d) DISCLAIMER OF SELLER REPRESENTATIONS AND WARRANTIES...........13
(e) RELEASE.......................................................16
10. REMEDIES................................................................17
(a) REMEDIES FOR BUYER'S BREACH...................................17
(b) SURVIVAL OF INDEMNITIES.......................................19
11. BUYER'S OBLIGATIONS PENDING CLOSING.....................................19
12. SELLER'S OBLIGATIONS PENDING CLOSING....................................19
13. DAMAGE OR DESTRUCTION...................................................19
14. EMINENT DOMAIN..........................................................20
15. COMMISSIONS.............................................................20
16. LIMITATION OF SELLER'S LIABILITY........................................21
17. PUBLICITY AND CONFIDENTIALITY...........................................21
18. SOPHISTICATION OF THE PARTIES...........................................21
19. NOTICE..................................................................21
20. REIT STATUS.............................................................22
21. MISCELLANEOUS...........................................................23
(a) TIME OF THE ESSENCE...........................................23
(b) ENTIRE AGREEMENT..............................................23
(c) HEADINGS......................................................23
(d) INTERPRETATION................................................23
(e) CHOICE OF LAW/VENUE...........................................23
(f) SEVERABILITY..................................................23
(g) WAIVER........................................................23
(h) NO OBLIGATION TO THIRD PARTIES................................24
(i) SUCCESSORS AND ASSIGNS/ASSIGNMENT.............................24
(j) AMENDMENTS IN WRITING.........................................24
(k) FURTHER ASSURANCES............................................24
(l) ATTORNEYS' FEES...............................................24
(m) COMPUTATION OF PERIODS........................................24
(n) COUNTERPARTS..................................................24
(o) EXHIBITS......................................................25
22. EXCHANGE................................................................25
ii
<PAGE> 54
FIRST AMENDMENT TO, AND REINSTATEMENT OF,
INDUSTRIAL PORTFOLIO
AGREEMENT OF PURCHASE AND SALE
This First Amendment to that certain Industrial Portfolio Agreement of
Purchase and Sale, dated as of December 11, 1998 (the "Amendment"), is between
RREEF Performance Partnership - I, LP, an Illinois limited partnership
("Seller"), and Pacific Gulf Properties Inc., a Maryland corporation ("Buyer").
RECITALS
A. Seller and Buyer entered into that certain Industrial Portfolio
Agreement of Purchase and Sale, dated as of October 2, 1998 (the "Purchase
Agreement"), with respect to certain industrial properties located in the States
of Arizona, California and Oregon described in the Purchase Agreement.
B. The Purchase Agreement has terminated and Seller and Buyer mutually
desire to reinstate and amend the Purchase Agreement as set forth below.
C. All initially-capitalized terms not otherwise defined herein shall
have the meanings set forth in the Purchase Agreement unless the context clearly
indicates otherwise.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledge, the parties hereto hereby agree as
follows:
AGREEMENT
1. Purchase Price Reduction. Section 1.2(a) of the Purchase Agreement is
hereby amended to reduce the Purchase Price to Sixty-Nine Million Six Hundred
Thousand Dollars ($69,600,000). EXHIBIT A-1 to the Purchase Agreement, setting
forth the allocated values of the indicated portions of the Property, is hereby
replaced with EXHIBIT A-1 hereto.
2. Deposit. Sections 1.2(b)(1), (2) and (3) of the Purchase Agreement
are hereby deleted in their entirety and replaced as follows:
"(b) The Purchase Price shall be paid as follows:
(1) Upon the execution of this Agreement by Buyer and Seller,
Buyer's cash on deposit in escrow with Chicago Title Company (the "Title
Company") shall be allocated in the amount of Two Hundred Thousand
Dollars ($200,000) (the "Deposit") to this Agreement.
(2) The Deposit shall be held in an interest bearing account and
all interest thereon shall in all events belong solely to Buyer. If the
sale of the Property as contemplated hereunder is consummated, then the
Deposit shall be paid to Seller at the closing and credited against the
purchase price. If the sale of the Property is not consummated due to
Seller's default hereunder, then, as Buyer's sole remedies, Buyer
<PAGE> 55
may either: (1) terminate this Agreement and receive a refund of the
Deposit, in which event neither party shall have any further rights or
obligations hereunder except as provided in Sections 6.1, 9.3 and 9.9
below, or (2) Buyer may enforce specific performance of this Agreement.
If the sale is not consummated due to any default by Buyer hereunder,
then Seller as its sole and exclusive remedy shall retain the Deposit as
liquidated damages. The parties have agreed that Seller's actual
damages, in the event of a failure to consummate this sale due to
Buyer's default, would be extremely difficult or impracticable to
determine. After negotiation, the parties have agreed that, considering
all the circumstances existing on the date of this Agreement, the amount
of the Deposit is a reasonable estimate of the damages that Seller would
incur in such event. By placing their initials below, each party
specifically confirms the accuracy of the statements made above and the
fact that each party was represented by counsel who explained, at the
time this Agreement was made, the consequences of this liquidated
damages provision. If the sale of the Property is not consummated due to
any reason other than Buyer or Seller's default hereunder, then, the
Deposit shall be returned to Buyer and neither party shall have any
further rights or obligations hereunder except as provided in Sections
6.1, 9.3 and 9.9 below. The foregoing is not intended to limit Buyer's
obligations under Sections 6.1, 9.3 and 9.9.
INITIALS: SELLER ________ BUYER _______
(3) The balance of the Purchase Price, which is Sixty-Nine
Million, Four Hundred Thousand Dollars ($69,400,000), shall be paid to
Seller all in cash at the consummation of the purchase and sale
contemplated hereunder (the "Closing")."
3. Contingency Period. Except as described in Paragraph 4 below, Buyer
acknowledges and agrees that it has reviewed and approved all of the Due
Diligence Materials, conditions and other items and matters described or
referred to in Section 2.1 of the Purchase Agreement and that the conditions
contained in Section 2.1 have been satisfied.
4. Title Review. Notwithstanding the foregoing, Buyer's review and
approval of title and survey matters as contemplated by Section 2.1(a) of the
Purchase Agreement shall be the only outstanding conditions to Buyer's
obligation to purchase the Property pursuant to Section 2.1 of the Purchase
Agreement. Accordingly, with respect to said review and approval, the
Contingency Period shall be extended to 5:00 p.m., December 17, 1998.
5. Silk Lease. No later than concurrently herewith, Seller, as landlord,
and Silk Communications ("Silk"), as tenant, shall enter into a one year lease
agreement (the "Silk Lease") in the form previously approved by Buyer, Seller
and Silk, for the lease of certain rooftop space in the Sierra Trinity
Industrial Park (the exact location of which to be mutually agreed upon by
Buyer, Seller, and Silk). In addition to Buyer's Contingency Period, as a
condition precedent to Buyer's obligations to purchase the Property (the
"Condition Precedent"), on or before 5:00 p.m. on December 17, 1998, Buyer and
Silk shall enter into a rent payment escrow (the "Rent Escrow") in a form
reasonably approved by Buyer, Silk and Title Company providing for the payment
of rent under the Silk Lease. In the event that the Condition Precedent is not
satisfied, Buyer shall have the right to either to waive in writing the
Condition Precedent and proceed with the purchase of the Property or to
terminate this Agreement. In the event that Buyer elects to terminate this
Agreement pursuant to the provisions of this Section, then the Deposit shall be
returned to Buyer and neither party shall have any further rights or obligations
hereunder except as provided in Sections 6.1, 9.3 and 9.9 of the Purchase
Agreement.
2
<PAGE> 56
6. Rent Guaranty. To guaranty the payment of rent due under the Silk
Lease, at Closing, Seller shall cause the Title Company to deposit Three Hundred
Eighty Thousand Dollars ($380,000) into the Rent Escrow from funds otherwise due
Seller.
7. Closing Date. Section 8.2 of the Purchase Agreement is hereby deleted
in its entirety and replaced as follows:
"The Closing hereunder shall be held and delivery of all items to be
made at the Closing under the terms of this Agreement shall be made at the
offices of the Title Company on December 22, 1998, or such other earlier date
and time as Buyer and Seller may mutually agree upon in writing (the "Closing
Date"). Notwithstanding the foregoing, Buyer shall have the right to extend the
Closing Date to December 28, 1998, before 10:00 a.m. local time, provided that
(a) on or before December 22, 1998, (i) Buyer delivers to Seller
and Title Company written notice of its election to extend the Closing
Date, (ii) Buyer deposits in escrow all documents to be executed and
delivered by Buyer at Closing, including without limitation the Closing
Statement, and (iii) Buyer delivers directly to Seller an all-cash
payment of Two Hundred Thousand Dollars ($200,000), which amount shall
be non-refundable to Buyer. Buyer acknowledges and agrees that said Two
Hundred Thousand Dollars ($200,000) shall not pass through escrow and
shall not be credited against the Purchase Price; and
(b) on or before December 24, 1998, the balance of the Purchase
Price, which is Sixty-Nine Million, Four Hundred Thousand Dollars
($69,400,000), shall be deposited in cash in escrow with the Title
Company.
Except as expressly provided in this Agreement, such date and time may not be
extended without the prior written approval of both Seller and Buyer. In the
event that Buyer extends the Closing Date as specified above, Seller agrees to
deposit in escrow on or before December 22, 1998, all documents to be executed
and delivered by Seller at Closing, including without limitation the Closing
Statement."
8. Deposit of Documents. In addition to the documents listed in
Paragraph 8.3(a) of the Purchase Agreement, at or before the Closing, Seller
shall deposit into escrow the following items:
(a) a duly executed and acknowledged Assignment, Assumption and
Fourth Amendment to Declaration of Restrictions (Hesperian Industrial
Park), substantially in the form attached hereto as EXHIBIT G;
(b) a duly executed and acknowledged Assignment, Assumption and
Fourth Amendment to Declaration of Restrictions (Portland Airport
Business Park), substantially in the form attached hereto as EXHIBIT H;
3
<PAGE> 57
(c) a duly executed and acknowledged Assignment, Assumption and
Third Amendment to Declaration of Restrictions (Contra Costa Industrial
Park), substantially in the form attached hereto as EXHIBIT I;
(d) a duly executed and acknowledged Assignment and Assumption
of Sign Easement Agreement (Hesperian Industrial Park), substantially in
the form attached hereto as EXHIBIT J;
9. Satisfaction of Section 8.4 - Estoppel Certificates. Buyer
acknowledges and agrees that all obligations of Seller under Section 8.4 of the
Purchase Agreement and the conditions to Buyer's obligation to close the sale
and purchase of the Property set forth in such Section 8.4 are hereby deemed
satisfied.
10. Exhibit A. The legal description for Sierra Trinity Industrial Park
attached as part of EXHIBIT A to the Purchase Agreement is hereby deleted in its
entirety and replace with the revised legal description attached hereto as
EXHIBIT A.
11. Schedule 1. SCHEDULE 1 to the Purchase Agreement is hereby deleted
in its entirety and the revised SCHEDULE 1 attached hereto is substituted
therefore.
12. Schedule 4. SCHEDULE 4 attached to the Purchase Agreement is hereby
deleted in its entirety and the revised SCHEDULE 4 attached hereto shall be
substituted therefore.
13. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one and the same instrument. Each counterpart
may be delivered by facsimile transmission. The signature page of any
counterpart may be detached therefrom without impairing the legal effect of the
signature(s) thereon provided such signature page is attached to any other
counterpart identical thereto.
4
<PAGE> 58
Ratification. Seller and Buyer hereby reinstate the Purchase Agreement
and ratify and confirm all of their obligations under the Purchase Agreement
except as amended hereby. Except as hereby amended, the Purchase Agreement is
not amended, modified, or altered in any way and remains in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date and year first above written.
SELLER: RREEF PERFORMANCE PARTNERSHIP - I, L.P.,
an Illinois limited partnership
By: RREEF Investment Partnership-I, L.P.,
an Illinois limited partnership
as its General Partner
By: RREEF Capital Incorporated,
an Illinois corporation,
as its General Partner
By:
-------------------------------
Stephen M. Steppe
Its: Vice-President
Date: December __, 1998
BUYER: PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
---------------------------------------
Its:
---------------------------------------
Date: December __, 1998
By:
---------------------------------------
Its:
---------------------------------------
Date: December __, 1998
5
<PAGE> 59
REVISED EXHIBIT A
-----------------
REVISED LEGAL DESCRIPTION
FOR
SIERRA TRINITY INDUSTRIAL PARK
A-1
<PAGE> 60
REVISED EXHIBIT A-1
-------------------
ALLOCATED VALUE OF PROPERTY
<TABLE>
<CAPTION>
PROPERTY LOCATION PRICE
-------- -------- -----------
<S> <C> <C>
Hohokam 10 East/ West Phoenix, AZ $19,500,000
Hesperian Industrial Park Hayward, CA $ 8,000,000
Sierra Trinity Industrial Park Dublin, CA $23,000,000
Contra Costa Diablo Industrial Park Concord, CA $ 8,000,000
Portland Airport Business Park Portland, OR $11,100,000
-----------
TOTAL: $69,600,000
===========
</TABLE>
A-2
<PAGE> 61
REVISED SCHEDULE 1
------------------
DISCLOSURE ITEMS
1. With respect to the properties located in California, natural hazards
described in the following California code sections (the "Natural Hazard
Laws") may affect such properties: (A) Govt. Code Section 8589.4; (B) Govt.
Code Section 51183.4 (Fire Hazard Severity Zone); (C) Public Resource Code
Section 2621.9 (Earthquake Fault Zone); (D) Public Resource Code Section
2694 (Seismic Hazard Zone); and (E) Public Resource Code Section 4136
(Wildland Area). Buyer acknowledges and agrees that Buyer will independently
evaluate and investigate whether any or all of such Natural Hazards affect
such properties and Seller shall have no liabilities or obligations with
respect thereto. Without limiting the foregoing, Buyer acknowledges and
agrees that Buyer knowingly and intentionally waives any disclosures,
obligations or requirements of Seller with respect to Natural Hazards,
including, without limitation, any disclosure obligations or requirements
under the aforementioned code sections. BUYER ACKNOWLEDGES AND REPRESENTS
THAT BUYER HAS EXTENSIVE EXPERIENCE ACQUIRING AND CONDUCTING DUE DILIGENCE
REGARDING COMMERCIAL PROPERTIES. THIS WAIVER BY BUYER OF ANY RIGHTS IT MAY
HAVE HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THE BARGAIN BETWEEN
THE PARTIES.
2. All Properties.
(a) Seller acknowledges the possible presence of asbestos in mastic,
certain drywall past, and floor tiles as well as PCB's in light fixtures,
although Seller has received no actual written notice of the presence or absence
of these materials.
(b) Seller and Buyer acknowledge the existence of the repair,
maintenance, and improvement work on the attached Schedule 1-A in connection
with and as applicable to the Property and Buildings listed therein.
3. Portland Airport Business Park.
(a) Tenant, Van Kirk Electric, is in default for abandonment and
past-due rent; litigation regarding this matter is pending; and
(b) The City of Portland Bureau of Fire has notified Seller of
violations with respect to door locks pursuant to that certain Fire Inspection
Report dated August 27, 1998, a copy of which has been provided to Buyer.
4. Hesperian Industrial Park.
An underground storage tank is present on the property as disclosed in
environmental reports provided by Seller to Buyer.
A-3
<PAGE> 62
5. Hohokam Industrial Park.
(a) Stormwater from adjacent property to the east washes fine soil onto
the drive lane behind 1205 N. Park Lane.
(b) Dectectable levels of VOC's noted in one dry well at both East and
West properties as disclosed in environmental reports provided by Seller to
Buyer.
(c) Tenant, L & J Investments, Suite 311, 10 West, is past-due on rent
since July and is currently locked out of the space.
A-4
<PAGE> 63
REVISED SCHEDULE 4
------------------
GROSS RENT
- --------------------------------------- --------------------------
Hohokam 10 East / West $188,790.00
- --------------------------------------- --------------------------
Hesperian Industrial Park $ 74,391.00
- --------------------------------------- --------------------------
Sierra Trinity Industrial Park $196,310.00
- --------------------------------------- --------------------------
Contra Costa Diablo Industrial Park $ 61,712.00
- --------------------------------------- --------------------------
Portland Airport Business Park $ 89,721.00
- --------------------------------------- --------------------------
For purposes hereof, "Gross Rent" shall mean the total of the monthly base rent
payable by the existing tenants of each Property as of October 1998.
A-5
<PAGE> 64
EXHIBIT G
A-6
<PAGE> 65
EXHIBIT H
A-7
<PAGE> 66
EXHIBIT I
A-8
<PAGE> 67
EXHIBIT J
A-9
<PAGE> 1
EXHIBIT 10.2
INDUSTRIAL PORTFOLIO
AGREEMENT OF PURCHASE AND SALE
This Agreement of Purchase and Sale ("Agreement"), dated as of October
2, 1998, is between RREEF Performance Partnership - I, LP, an Illinois limited
partnership ("Seller"), and Pacific Gulf Properties Inc., a Maryland corporation
("Buyer").
ARTICLE I
PURCHASE AND SALE OF PROPERTY
SECTION 1.1 SALE.
Seller agrees to sell to Buyer, and Buyer agrees to purchase from
Seller, subject to the terms, covenants and conditions set forth herein, (i)
that certain industrial real property, together with any and all rights,
privileges and easements appurtenant thereto owned by Seller, (ii) all
improvements, buildings systems and fixtures located therein or thereon owned by
Seller, which real property is more particularly described in EXHIBIT A attached
hereto and made a part hereof (collectively the "Real Property"), together with
Seller's interest in all tenant leases and any other occupancy agreements
(hereinafter collectively referred to as the "leases") affecting the right to
occupy any portion of the Real Property, Seller's interest in any intangible
personal property now or hereafter used in connection with the operation,
Seller's interest in maintenance, management, or occupancy of the Real Property,
including, without limitation, Seller's interest in any trade names and
trademarks associated with the Real Property (provided Seller makes absolutely
no representation that it has any rights whatsoever with respect to trade names
or trademarks), and (iii) any personal property owned by Seller, if any, located
on the Real Property and used exclusively in the operation or maintenance of the
Real Property, as the same may be further described in any list which is in
Seller's possession and is furnished to Buyer within the Delivery Period as
defined in Section 2.1(a) below (the "Personal Property"). The Real Property and
Personal Property are collectively referred to herein as the "Property."
SECTION 1.2 PURCHASE PRICE.
(a) The purchase price of the Property is Seventy-Six Million
Three Hundred Thousand Dollars ($76,300,000) (the "Purchase Price"); the
allocated values of the indicated portions of the Property are set forth on
EXHIBIT A-1 attached hereto.
(b) The Purchase Price shall be paid as follows:
(1) Upon the execution of this Agreement by Buyer and
Seller, Buyer shall deposit in escrow with Chicago Title Company (the "Title
Company") an all-cash payment in the amount of One Hundred Forty-Two Thousand
Eight Hundred Seventy-Five Dollars ($142,875) (the "Deposit"). Prior to the end
of the Contingency Period, Buyer shall increase the amount of the Deposit by One
Million Two Hundred Eighty-Five Thousand Eight Hundred Seventy-Five Dollars
($1,285,875) for a total Deposit of One Million Four Hundred Twenty-Eight
Thousand Seven Hundred Fifty Dollars ($1,428,750) by depositing in escrow with
the Title Company said amount of One Million Two Hundred Eighty-Five Thousand
Eight Hundred
1
<PAGE> 2
Seventy-Five Dollars ($1,285,875) either in cash or in the form of an
irrevocable standby letter of credit in favor of Seller in a form and from an
institutional bank reasonably approved by Seller ("Letter of Credit"). The
expiration date of the Letter of Credit shall be no sooner than thirty (30) days
after the Closing Date (as defined below). The Letter of Credit shall recite
that it may be drawn down upon by Title Company in full upon presentation to the
issuing bank of a certificate executed by Seller stating that Buyer is default
under the terms of this Agreement. Immediately after the expiration of the
Contingency Period, Title Company, without direction from Buyer, shall, upon
receipt from Seller of a written statement declaring Buyer to be in default,
immediately draw down on the Letter of Credit and deposit such funds into
escrow. Buyer shall have the right at any time to substitute cash for Buyer's
Letter of Credit and Buyer shall substitute cash for the Letter of Credit prior
to the Closing Date. Upon such substitution, the Letter of Credit shall be
returned to Buyer. Upon such cash and Letter of Credit, if any, being deposited
in escrow, the amount of the Deposit for all purposes shall be One Million Four
Hundred Twenty-Eight Thousand Seven Hundred Fifty Dollars ($1,428,750).
(2) THE DEPOSIT WHICH IS IN THE FORM OF CASH SHALL BE
HELD IN AN INTEREST BEARING ACCOUNT AND ALL INTEREST THEREON SHALL IN ALL EVENTS
BELONG SOLELY TO BUYER. IF THE SALE OF THE PROPERTY AS CONTEMPLATED HEREUNDER IS
CONSUMMATED, THEN THE DEPOSIT (IN THE FORM OF CASH) SHALL BE PAID TO SELLER AT
THE CLOSING AND CREDITED AGAINST THE PURCHASE PRICE. IF THE SALE OF THE PROPERTY
IS NOT CONSUMMATED DUE TO SELLER'S DEFAULT HEREUNDER, THEN, AS BUYER'S SOLE
REMEDIES, BUYER MAY EITHER: (1) TERMINATE THIS AGREEMENT AND RECEIVE A REFUND OF
THE DEPOSIT, IN WHICH EVENT NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR
OBLIGATIONS HEREUNDER EXCEPT AS PROVIDED IN SECTIONS 6.1, 9.3 AND 9.10 BELOW, OR
(2) BUYER MAY ENFORCE SPECIFIC PERFORMANCE OF THIS AGREEMENT. IF THE SALE IS NOT
CONSUMMATED DUE TO ANY DEFAULT BY BUYER HEREUNDER, THEN SELLER SHALL RETAIN THE
DEPOSIT (IN THE FORM OF CASH) AS LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED
THAT SELLER'S ACTUAL DAMAGES, IN THE EVENT OF A FAILURE TO CONSUMMATE THIS SALE
DUE TO BUYER'S DEFAULT, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO
DETERMINE. AFTER NEGOTIATION, THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THE
CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT, THE AMOUNT OF THE DEPOSIT
IS A REASONABLE ESTIMATE OF THE DAMAGES THAT SELLER WOULD INCUR IN SUCH EVENT.
BY PLACING THEIR INITIALS BELOW, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY
OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS REPRESENTED BY
COUNSEL WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES OF
THIS LIQUIDATED DAMAGES PROVISION. IF THE SALE OF THE PROPERTY IS NOT
CONSUMMATED DUE TO ANY REASON OTHER THAN BUYER OR SELLER'S DEFAULT HEREUNDER,
THEN, THE DEPOSIT SHALL BE RETURNED TO BUYER AND NEITHER PARTY SHALL HAVE ANY
FURTHER RIGHTS OR OBLIGATIONS HEREUNDER EXCEPT AS PROVIDED IN SECTIONS 6.1, 9.3
AND 9.10 BELOW. THE FOREGOING IS NOT INTENDED TO LIMIT BUYER'S OBLIGATIONS UNDER
SECTIONS 6.1, 9.3 AND 9.9.
INITIALS: SELLER ________ BUYER _______
(3) The balance of the Purchase Price, which is
Seventy-Four Million Eight Hundred Seventy-One Thousand Two Hundred Fifty
Dollars ($74,871,250) (after substitution of cash for the Letter of Credit, if
any), shall be paid to Seller all in cash at the consummation of the purchase
and sale contemplated hereunder (the "Closing").
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ARTICLE II
CONDITIONS
SECTION 2.1 CONDITION PRECEDENT.
Buyer's obligation to purchase the Property is conditioned upon the
following:
(a) Buyer's review and approval of updated preliminary title
report, together with copies of the underlying documents, and any survey of the
Property in Seller's possession. Seller shall furnish to Buyer a copy of such
report, together with the underlying documents, and any survey in Seller's
possession, within ten (10) days after the date Seller receives a fully executed
original of this Agreement (the "Delivery Period").
(b) Buyer's review and approval of all leases affecting the
Property and any rent roll in Seller's possession provided that, notwithstanding
any other provision of this Agreement, Seller makes no representation as to, and
Buyer agrees that it shall not rely on, the accuracy of any information
contained in such rent roll. Seller shall furnish to Buyer copies of the leases
and any rent roll within the Delivery Period.
(c) Buyer's review and approval of the physical condition of the
Property.
(d) Buyer's review and approval of all zoning, land use,
building, environmental and other statutes, rules, or regulations applicable to
the Property.
(e) Buyer's review and approval of operating statements with
respect to the Property for 1996, 1997 and for the first eight (8) months of
1998, bills for the most recent real property taxes and assessments for the
Property, certificates of occupancy, plans and specifications, soils,
environmental and other reports, service contracts, guaranties, warranties and
other contracts or documents which will be binding on Buyer, or benefit the
Property, after the Closing. Seller shall make available to Buyer within the
Delivery Period copies of all such items in Seller's possession for Buyer's
inspection and copying, at Buyer's expense, during reasonable business hours.
Notwithstanding the foregoing, Buyer's review shall not include a review of
Seller's internal economic memoranda or reports, attorney-client privileged
materials or Seller's appraisals of the Property, if any.
(f) Buyer's review and approval of any other matters Buyer deems
relevant to the Property.
(g) Approval by Buyer's Executive Committee of the transactions
contemplated by this Agreement by September 23, 1998. If Buyer does not notify
Seller that Buyer's Executive Committee has disapproved the transactions
contemplated by this Agreement on or before said date, this condition shall be
deemed satisfied.
SECTION 2.2 CONTINGENCY PERIOD.
Buyer shall have until the date which is thirty (30) days after the date
of mutual execution and delivery hereof (such period being referred to herein as
the "Contingency Period") to review
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and approve the matters described in Sections 2.1(a)-(f) above in Buyer's sole
discretion. If Buyer determines to proceed with the purchase of the Property,
then Buyer shall, before the end of the Contingency Period, notify Seller in
writing that Buyer has approved all of the matters described in Section
2.1(a)-(f) above, including, without limitation, all documents, agreements,
surveys, reports and other items and materials delivered to or made available to
Buyer in connection with this Agreement (the "Due Diligence Materials"). If
before the end of the Contingency Period Buyer fails to give Seller such written
notice, then Buyer shall be deemed to have elected to terminate this Agreement,
the Deposit shall be returned to Buyer, and neither party shall have any further
rights or obligations hereunder except as provided in Sections 6.1, 9.3 and 9.9
below.
SECTION 2.3 CONSIDERATION.
Notwithstanding anything in this Agreement to the contrary, to induce
Buyer to enter into this Agreement and to expend the time and resources
necessary to evaluate the Property and possibly forego other opportunities while
doing so, Seller hereby grants to Buyer the rights to terminate this Agreement
as provided herein. Such expenditures of time and resources and possible loss of
opportunity by Buyer constitute adequate consideration for Seller's remaining
bound by this Agreement notwithstanding such termination rights in Buyer.
ARTICLE III
BUYER'S EXAMINATION
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF SELLER.
Subject to the provisions of Sections 3.2 and 3.3 below, Seller hereby
makes the following representations and warranties with respect to the Property,
provided that Seller makes no representations or warranties with respect to the
matters (the "Disclosure Items") which are set forth in SCHEDULE 1 attached
hereto and made a part hereof. Notwithstanding anything to the contrary
contained herein or in any document delivered in connection herewith, Seller
shall have no liability with respect to the Disclosure Items.
(a) Seller has not (i) made a general assignment for the benefit
of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the
filing of any involuntary petition by Seller's creditors, (iii) suffered the
appointment of a receiver to take possession of all, or substantially all, of
Seller's assets, (iv) suffered the attachment or other judicial seizure of all,
or substantially all, of Seller's assets, (v) admitted in writing its inability
to pay its debts as they come due, or (vi) made an offer of settlement,
extension or composition to its creditors generally.
(b) Seller is not a "foreign person" as defined in Section 1445
of the Internal Revenue Code of 1986, as amended (the "Code") and any related
regulations.
(c) This Agreement and all documents executed by Seller which
are to be delivered at the Closing (i) have been or will be duly authorized,
executed and delivered by Seller, and (ii) do not or will not violate any
provision of any agreement or judicial order to which Seller is a party or to
which Seller or the Property is subject.
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(d) Seller has the power and authority to enter into this
Agreement and to perform its obligations hereunder.
(e) Copies of the leases and contracts delivered or made
available to Buyer by Seller are true and accurate copies of such items.
(f) The only tenant leases and amendments thereto in force for
the Property as of the date hereof are set forth in a list which is attached
hereto as EXHIBIT B and made a part hereof.
(g) To the best of Seller's knowledge, there is no litigation
pending with respect to the Property.
(h) To the best of Seller's knowledge, Seller has received no
written notice that the Property or its current use and operation are in
material violation of any applicable law.
(i) To the best of Seller's knowledge, the documents which will
be delivered by Seller to Buyer or made available by Seller to Buyer for Buyer's
inspection and copying are true and complete copies of all documents in Seller's
possession related to the Property except for Seller's internal economic
memoranda and reports, attorney-client privileged materials and Seller's
appraisals of the Property, if any.
(j) To the best of Seller's knowledge, Seller has received no
written notice of any (i) condemnation, environmental, zoning or other land-use
proceedings, instituted or threatened, against the Property, or (ii) special
assessment proceedings affecting the Property (other than as set forth in the
preliminary title report).
(k) To the best of Seller's knowledge, Seller has received no
written notice of any material litigation or arbitration, instituted or intended
to be instituted, against the Property or against Seller as owner of the
Property except as set forth on SCHEDULE 1.
(l) To the best of Seller's knowledge, Seller has received no
written notice that 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 except as set forth on SCHEDULE 1.
(m) Seller has received no written notice of any defaults by
Seller under any of the leases except as set forth on SCHEDULE 1. Except as set
forth on SCHEDULE 1, Seller has given no written notice to any tenants of the
Property of any defaults under its lease which has not been cured.
(n) Seller has received no written notice of any defaults by
Seller which have not been cured under the service contracts, guaranties, or
warranties which will be binding on Buyer, after the Closing.
(o) Seller is duly formed, validly existing and in good standing
under the laws of the State of Illinois and is qualified to do business as a
foreign limited partnership in California, Arizona and Oregon.
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(p) SCHEDULE 2 attached hereto is a complete and accurate list
of all employee benefit or other plans described in Section 3.5(e) below which
are investors in Seller.
Each of the representations and warranties of Seller contained in this
Section 3.1: (1) is true as of the date of this Agreement; (2) except for the
representations and warranties contained in Sections 3.1 (l) and (m), shall be
deemed remade by Seller, and shall be true in all material respects as of the
date of Closing, subject in either case to (A) any Exception Matters (as defined
below), (B) the Disclosure Items, and (C) other matters expressly permitted in
this Agreement or otherwise approved in writing by Buyer including, without
limitation, the Due Diligence Materials; and (3) shall survive the close of
escrow as provided in Section 3.3 below. In connection with the representations
and warranties contained in Sections 3.1 (l) and (m), Seller shall deliver to
Buyer: (x) three (3) days prior to the expiration of the Contingency Period, an
updated SCHEDULE 1, as necessary, effective as of said date, for matters
relating to the representation and warranty in Section 3.1(l), and (y) three (3)
days prior to the end of the Contingency Period, an updated aged receivable
report, effective as of the date that is seven (7) days prior to the expiration
of the Contingency Period, for matters relating to the representation and
warranty in Section 3.1(m).
SECTION 3.2 NO LIABILITY FOR EXCEPTION MATTERS.
As used herein, the term "Exception Matter" shall refer to a matter
disclosed to Buyer in writing or discovered by Buyer before the Closing, that
would make a representation or warranty of Seller contained in this Agreement
untrue or incorrect, including, without limitation, matters disclosed in writing
to Buyer by Seller or by any other person. If Buyer obtains knowledge of any
Exception Matter after the date hereof, Buyer may terminate this Agreement and
receive a return of the Deposit upon written notice to Seller within five (5)
business days after Buyer learns of such Exception Matter. (For purposes of this
Agreement, "business day" shall mean any day other than a Saturday or Sunday, a
California, Arizona or Oregon State holiday, a national holiday or other day on
which commercial bankers in California, Arizona or Oregon are generally not open
for business.) Buyer shall promptly notify Seller in writing of any Exception
Matter of which Buyer obtains knowledge before the Closing. If Buyer obtains
knowledge of any Exception Matter before the Closing, but nonetheless elects to
proceed with the acquisition of the Property, Buyer shall consummate the
acquisition of the Property subject to such Exception Matter and Seller shall
have no liability with respect to such Exception Matter, notwithstanding any
contrary provision, covenant, representation or warranty contained in this
Agreement. If Buyer elects to terminate this Agreement on the basis of any
Exception Matter, Buyer shall so notify Seller in writing within five (5)
business days following Buyer's discovery of the Exception Matter, and the
Deposit shall be returned to Buyer. Buyer's failure to give such notice within
such 5 business-day period shall be deemed a waiver by Buyer of such Exception
Matter. Upon a termination of this Agreement pursuant to this Section 3.2,
neither party shall have any further rights or obligations hereunder, except as
provided in Sections 6.1, 9.3 and 9.9 below. If Buyer first obtains knowledge of
an Exception Matter within five (5) business days of the Closing Date, the
Closing shall be automatically extended for the number of business days
necessary to give Buyer five (5) business days to respond to such Exception
Matter. Seller shall have no obligation to cure or remedy any Exception Matter,
and, subject to Buyer's right to terminate this Agreement as set forth above,
Seller shall have no liability whatsoever to Buyer with respect to any Exception
Matters.
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SECTION 3.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Seller and Buyer contained herein
shall survive for a period of twelve (12) months after the Closing, except that
Buyer's representations and warranties in Sections 3.5(d) and 3.5(e), Seller's
representations and warranties in Sections 3.1(p) and Seller's and Buyer's
representations and warranties in Section 6.1 shall survive indefinitely. Any
claim which Buyer or Seller may have at any time against the other for a breach
of any such representation or warranty (other than those contained in Sections
3.1(p), 3.5(d), 3.5(e) and 6.1), whether known or unknown, which is not asserted
by written notice to Seller or Buyer within such twelve (12) month period shall
not be valid or effective, and the party shall have no liability with respect
thereto.
SECTION 3.4 SELLER'S KNOWLEDGE.
For purposes of this Agreement and any document delivered at Closing,
whenever the phrase "to the best of Seller's knowledge" or the "knowledge" of
Seller or words of similar import are used, they shall be deemed to refer to the
current actual knowledge of Mark Carlson (the person at Seller who is in charge
of disposition of the Property) and Scott Weigel as to Portland Airport
Industrial Park, Kevin Archer as to Hesperian Industrial Park, Contra Costa
Diablo Industrial Park, Sierra Trinity Industrial Park, and Sally Ryan as to
Hohokam 10 East and West (the district managers of the indicated portions of the
Property, except for Kevin Archer who is Vice President and Director of
Properties) at the times indicated only and not any implied, imputed or
constructive knowledge, without any independent investigation having been made
or any implied duty to investigate.
SECTION 3.5 REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller as follows:
(a) Buyer represents and warrants to Seller that this Agreement
and all documents executed by Buyer which are to be delivered to Seller at
Closing do not and at the time of Closing will not violate any provision of any
agreement or judicial order to which Buyer is a party or to which Buyer is
subject.
(b) Buyer represents and warrants to Seller that Buyer has not
(i) made a general assignment for the benefit of creditors, (ii) filed any
voluntary petition in bankruptcy or suffered the filing of any involuntary
petition by Buyer's creditors, (iii) suffered the appointment of a receiver to
take possession of all, or substantially all, of Buyer's assets, (iv) suffered
the attachment or other judicial seizure of all, or substantially all, of
Buyer's assets, (v) admitted in writing its inability to pay its debts as they
come due, or (vi) made an offer of settlement, extension or composition to its
creditors generally.
(c) Buyer is duly formed, validly existing and in good standing
under the laws of the State of Maryland. Buyer has duly authorized, executed and
delivered this Agreement.
(d) Buyer is purchasing the Property as investment rental
property, and not for Buyer's own operations or use.
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(e) Buyer is not a party in interest with respect to any
employee benefit or other plan within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or of
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"), which is subject to ERISA or Section 4975 of the Code and which is
listed on SCHEDULE 2 attached hereto.
Each of the representations and warranties of Buyer contained in this Section
shall be deemed remade by Buyer as of the Closing and shall survive the Closing
as provided in Section 3.3 above.
SECTION 3.6 BUYER'S INDEPENDENT INVESTIGATION.
(a) Buyer acknowledges and agrees that it has been given or will
be given before the end of the Contingency Period, a full opportunity to inspect
and investigate each and every aspect of the Property, either independently or
through agents of Buyer's choosing, including, without limitation:
(1) All matters relating to title, together with all
governmental and other legal requirements such as taxes, assessments, zoning,
use permit requirements and building codes.
(2) The physical condition and aspects of the Property,
including, without limitation, the interior, the exterior, the square footage
within the improvements on the Real Property and within each tenant space
therein, the structure, seismic aspects of the Property, the paving, the
utilities, and all other physical and functional aspects of the Property. Such
examination of the physical condition of the Property shall include an
examination for the presence or absence of Hazardous Materials, as defined
below, which shall be performed or arranged by Buyer at Buyer's sole expense.
For purposes of this Agreement, "Hazardous Materials" shall mean inflammable
explosives, radioactive materials, asbestos, polychlorinated biphenyls, lead,
lead-based paint, under and/or above ground tanks, hazardous materials,
hazardous wastes, hazardous substances, oil, or related materials, which are
listed or regulated in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (42 U.S.C. Sections 6901, et seq.), the
Resources Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901, et
seq.), the Clean Water Act (33 U.S.C. Section 1251, et seq.), the Safe Drinking
Water Act (14 U.S.C. Section 1401, et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801, et seq.), the and Toxic Substance
Control Act (15 U.S.C. Section 2601, et seq.), the California Hazardous Waste
Control Law (California Health and Safety Code Section 25100, et seq.), the
Porter-Cologne Water Quality Control Act (California Water Code Section 13000,
et seq.), and the Safe Drinking Water and Toxic Enforcement Act of 1986
(California Health and Safety Code Section 25249.5, et seq.) the Arizona
Environmental Quality Act, A.R.S. ss. 49-201, et seq.; the Arizona "State
Superfund" provisions, A.R.S. ss. 49-281, et seq.; the Arizona Solid Waste
Management provisions, A.R.S. ss. 49-701, et seq.; the Arizona Hazardous Waste
Management Act, A.R.S. ss. 49-921, et seq.; and the Arizona Underground Storage
Tank provisions, A.R.S. ss. 49-1001, applicable Oregon laws and regulations, and
any other applicable federal, state or local laws and regulations.
(3) Any easements and/or access rights affecting the
Property.
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(4) The leases and all matters in connection therewith,
including, without limitation, the ability of the tenants to pay the rent and
the economic viability of the tenants.
(5) The service contracts and any other documents or
agreements of significance affecting the Property.
(6) All other matters of material significance affecting
the Property.
(b) BUYER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT SELLER IS
SELLING AND BUYER IS PURCHASING THE PROPERTY ON AN "AS IS WITH ALL FAULTS" BASIS
AND THAT BUYER IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND
WHATSOEVER, EXPRESS OR IMPLIED, FROM SELLER, ITS AGENTS, OR BROKERS AS TO ANY
MATTERS CONCERNING THE PROPERTY EXCEPT AS EXPRESSLY SET FORTH IN SECTION 3.1
ABOVE, INCLUDING WITHOUT LIMITATION: (i) the quality, nature, adequacy and
physical condition and aspects of the Property, including, but not limited to,
the structural elements, seismic aspects of the Property, foundation, roof,
appurtenances, access, landscaping, parking facilities and the electrical,
mechanical, HVAC, plumbing, sewage, and utility systems, facilities and
appliances, the square footage within the improvements on the Real Property and
within each tenant space therein, (ii) the quality, nature, adequacy, and
physical condition of soils, geology and any groundwater, (iii) the existence,
quality, nature, adequacy and physical condition of utilities serving the
Property, (iv) the development potential of the Property, and the Property's
use, habitability, merchantability, or fitness, suitability, value or adequacy
of the Property for any particular purpose, (v) the zoning or other legal status
of the Property or any other public or private restrictions on use of the
Property, (vi) the compliance of the Property or its operation with any
applicable codes, laws, regulations, statutes, ordinances, covenants, conditions
and restrictions of any governmental or quasi-governmental entity or of any
other person or entity, (vii) the presence of Hazardous Materials on, under or
about the Property or the adjoining or neighboring property, (viii) the quality
of any labor and materials used in any improvements on the Real Property, (ix)
the condition of title to the Property, (x) the leases, service contracts, or
other agreements affecting the Property and (xi) the economics of the operation
of the Property.
SECTION 3.7 RELEASE.
(a) Without limiting the above, and subject to the
representations and warranties of Seller contained in Section 3.1 hereof, Buyer
on behalf of itself and its successors and assigns waives its right to recover
from, and forever releases and discharges, Seller, Seller's affiliates, Seller's
investment manager, the partners, trustees, beneficiaries, shareholders,
members, directors, officers, employees and agents of each of them, and their
respective heirs, successors, personal representatives and assigns
(collectively, the "Seller Related Parties"), from any and all demands, claims,
legal or administrative proceedings, losses, liabilities, damages, penalties,
fines, liens, judgments, costs or expenses whatsoever (including, without
limitation, attorneys' fees and costs), whether direct or indirect, known or
unknown, foreseen or unforeseen, that may arise on account of or in any way be
connected with (i) the physical condition of the Property including, without
limitation, all structural and seismic elements, all mechanical, electrical,
plumbing, sewage, heating, ventilating, air conditioning and other systems, the
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environmental condition of the Property and Hazardous Materials on, under or
about the Property, or (ii) any law or regulation applicable to the Property,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 6901, et
seq.), the Resources Conservation and Recovery Act of 1976 (42 U.S.C. Section
6901, et seq.), the Clean Water Act (33 U.S.C. Section 1251, et seq.), the Safe
Drinking Water Act (14 U.S.C. Section 1401, et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801, et seq.), the and Toxic Substance
Control Act (15 U.S.C. Section 2601, et seq.), the California Hazardous Waste
Control Law (California Health and Safety Code Section 25100, et seq.), the
Porter-Cologne Water Quality Control Act (California Water Code Section 13000,
et seq.), and the Safe Drinking Water and Toxic Enforcement Act of 1986
(California Health and Safety Code Section 25249.5, et seq.) the Arizona
Environmental Quality Act, A.R.S. ss. 49-201, et seq.; the Arizona "State
Superfund" provisions, A.R.S. ss. 49-281, et seq.; the Arizona Solid Waste
Management provisions, A.R.S. ss. 49-701, et seq.; the Arizona Hazardous Waste
Management Act, A.R.S. ss. 49-921, et seq.; and the Arizona Underground Storage
Tank provisions, A.R.S. ss. 49-1001, applicable Oregon laws and regulations, and
any other applicable federal, state or local laws and regulations.
(b) In connection with section 3.7(a) above, Buyer expressly
waives the benefits of Section 1542 of the California Civil Code, which provides
as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
SECTION 3.8 SURVIVAL.
The provisions of this Article III shall survive the Closing subject to
the limitations and qualifications contained in such provisions.
ARTICLE IV
TITLE
SECTION 4.1 CONDITIONS OF TITLE.
At the Closing, Seller shall convey title to the Property to Buyer by
grant deed for those real properties in California, in the form attached hereto
as EXHIBIT C-1, and, for those real properties outside of California, special
warranty deeds, in the forms attached hereto as EXHIBITS C-2 and C-3,
respectively, (collectively the "Deeds") subject to no exceptions other than:
(a) Interests of tenants in possession;
(b) Non-delinquent liens for real estate taxes and assessments;
and
(c) Any exceptions disclosed by the preliminary title report and
any amendments or supplements thereto, the public records or the Due Diligence
Materials, and any other exceptions to title which would be disclosed by an
inspection and/or survey of the Property except for trust deeds, mortgages and
other monetary liens granted or caused by Seller other than
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non-delinquent liens for real estate taxes and assessments. Buyer may at its
option approve or disapprove exceptions which are first disclosed to Buyer after
the date which is five (5) days prior to the end of the Contingency Date within
five (5) days of the date of such disclosure to Buyer. If Buyer disapproves of
such new exceptions, Buyer may, as Buyer's sole rights and remedies, either: (i)
terminate this Agreement in which event the Deposit shall be returned to Buyer,
and neither party under this Agreement shall have any rights or obligation
except as provided in Sections 6.1, 9.3 and 9.9 below, or (ii) waive its
disapproval and take title to the Property subject to such new exceptions.
All of the foregoing exceptions shall be referred to collectively as the
"Conditions of Title." By acceptance of the Deed and the Closing of the purchase
and sale of the Property, (i) Buyer agrees it is assuming for the benefit of
Seller all of the obligations of Seller with respect to the Conditions of Title
but only to the extent such obligations arise from and after the Closing, and
(ii) Buyer agrees that Seller shall have conclusively satisfied its obligations
with respect to title to the Property. The provisions of this Section shall
survive the Closing.
SECTION 4.2 EVIDENCE OF TITLE.
Delivery of title in accordance with the foregoing shall be evidenced by
the willingness of the Title Company to issue, at Closing, its Owner's ALTA
Policy of Title Insurance (Form B, rev. 10/17/70) in the amount of the Purchase
Price showing title to the Real Property vested in Buyer, subject to the
Conditions of Title and with the following CLTA endorsements: 100 (modified for
an owner), 101.4, 103.7, 116, 116.1, 116.4 and 116.7 (the "Title Policy"), or
the equivalent, but only to the extent that Buyer shall confirm in writing with
the Title Company prior to the end of the Contingency Period that the Title
Company will issue the aforesaid form of title insurance and endorsements at
Closing and Buyer shall, prior to the end of the Contingency Period, provide
Seller with a copy of such confirmation. Seller is under no obligation to
provide any indemnity or other agreement or undertaking to the Title Company in
order for Title Company to issue the foregoing endorsements. Buyer shall have
prepared, at Buyer's cost, the ALTA survey of the Property necessary to support
the issuance of the Title Policy.
ARTICLE V
RISK OF LOSS AND INSURANCE PROCEEDS
SECTION 5.1 MINOR LOSS.
Buyer shall be bound to purchase, and Seller shall be bound to sell, the
Property for the full Purchase Price as required by the terms hereof, without
regard to the occurrence or effect of any damage to the Property or destruction
of any improvements thereon or condemnation of any portion of the Property,
provided that: (a) the cost to repair any such damage or destruction, or the
diminution in the value of the remaining Property as a result of a partial
condemnation, does not exceed Five Hundred Thousand Dollars ($500,000) and (b)
upon the Closing, there shall be a credit against the Purchase Price due
hereunder equal to the amount of any insurance proceeds or condemnation awards
collected by Seller as a result of any such damage or destruction or
condemnation, plus the amount of any insurance deductible, less any sums
expended by Seller
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toward the restoration or repair of the Property. If the proceeds or awards have
not been collected as of the Closing, then such proceeds or awards shall be
assigned to Buyer, except to the extent needed to reimburse Seller for sums
expended to repair or restore the Property, and Seller shall retain the rights
to such proceeds and awards.
SECTION 5.2 MAJOR LOSS.
If the amount of the damage or destruction or condemnation as specified
above exceeds Five Hundred Thousand Dollars ($500,000), then Buyer may, at its
option to be exercised within five (5) business days of Buyer's receipt of
Seller's notice of the occurrence of the damage or destruction or the
commencement of condemnation proceedings, either terminate this Agreement or
consummate the purchase for the full Purchase Price as required by the terms
hereof. If Buyer elects to terminate this Agreement or fails to give Seller
notice within such 5 business-day period that Buyer will proceed with the
purchase, then the Deposit shall be returned to Buyer and neither party shall
have any further rights or obligations hereunder except as provided in Sections
6.1, 9.3 and 9.9 below. If Buyer elects to proceed with the purchase, then upon
the Closing, there shall be a credit against the Purchase Price due hereunder
equal to the amount of any insurance proceeds or condemnation awards collected
by Seller as a result of any such damage or destruction or condemnation, plus
the amount of any insurance deductible, less any sums expended by Seller toward
the restoration or repair of the Property. If the proceeds or awards have not
been collected as of the Closing, then such proceeds or awards shall be assigned
to Buyer, except to the extent needed to reimburse Seller for sums expended to
repair or restore the Property, and Seller shall retain the rights to such
proceeds and awards.
ARTICLE VI
BROKERS AND EXPENSES
SECTION 6.1 BROKERS.
The parties represent and warrant to each other that no broker or finder
was instrumental in arranging or bringing about this transaction except for
Cushman & Wakefield of California, Inc. ("Seller's Broker"). At Closing, Seller
shall pay the commission due, if any, to Seller's Broker, which shall be paid
pursuant to a separate agreement between Seller and Seller's Broker. If any
other person brings a claim for a commission or finder's fee based upon any
contact, dealings or communication with Buyer or Seller, then the party through
whom such person makes his claim shall defend the other party (the "Indemnified
Party") from such claim, and shall indemnify the Indemnified Party and hold the
Indemnified Party harmless from any and all costs, damages, claims, liabilities
or expenses (including without limitation, reasonable attorneys' fees and
disbursements) incurred by the Indemnified Party in defending against the claim.
The provisions of this Section 6.1 shall survive the Closing or, if the purchase
and sale is not consummated, any termination of this Agreement.
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SECTION 6.2 EXPENSES.
Except as provided in Sections 4.2 above and 8.5(b) below, each party
hereto shall pay its own expenses incurred in connection with this Agreement and
the transactions contemplated hereby.
ARTICLE VII
LEASES AND OTHER AGREEMENTS
SECTION 7.1 BUYER'S APPROVAL OF NEW LEASES AND AGREEMENTS AFFECTING THE
PROPERTY.
Between the date hereof and the Closing, Seller shall not enter into any
new lease or other agreement affecting the Property, or modify or terminate any
existing lease or other agreement affecting the Property, without first
obtaining Buyer's approval, which will not be unreasonably withheld or delayed
and which approval may take into account, without limitation, any tenant
improvement work, leasing commissions, free rent and other concessions for which
Buyer may be responsible or which may be allocated to Buyer. If Buyer fails to
give Seller notice of its approval or disapproval of any such proposed action
within two (2) business days after Seller notifies Buyer of Seller's desire to
take such action, then Buyer shall be deemed to have given its approval.
SECTION 7.2 TENANT IMPROVEMENT COSTS AND LEASING COMMISSIONS.
Seller shall be responsible for the cost of any and all tenant
improvement work and leasing commissions for the current term of any lease
affecting the Property fully executed and delivered by Seller and a tenant prior
to the date of this Agreement, provided that to the extent there are any such
outstanding tenant improvement costs as of the Closing, Buyer shall receive a
credit therefor and shall assume all such obligations on and after the Closing.
With respect to any new lease or lease modification entered into by Seller,
between the date of this Agreement and the Closing Date and approved, or deemed
approved, by Buyer pursuant to Section 7.1, or lease renewal or lease extension
pursuant to the existing terms of a lease which is exercised after the date
hereof, if Seller performs or pays or contracts for any tenant improvement work
or pays or contracts for any leasing commissions before the Closing, then at
Closing, such expenses shall be prorated as provided hereafter, and Buyer shall
assume pursuant to the assignment and assumption agreement described in Section
8.3(a)(3) any and all obligations outstanding with respect to Buyer's share of
such tenant improvements and leasing commissions. On and after the Closing,
Seller shall have no further obligations with respect to Buyer's share of such
costs which are prorated as hereafter provided. Notwithstanding the foregoing,
Buyer hereby approves the leases set forth on SCHEDULE 3 attached hereto. With
respect to any tenant improvement work, or leasing commissions, to be prorated
pursuant to this Section 7.2, such shall be prorated between Buyer and Seller as
follows: If, as a result of such new lease or lease modification, lease renewal
or lease extension, the gross rent payable by all tenants of the Property does
not exceed the gross rent payable pursuant to all leases in effect as of the
date of this Agreement which gross rent shall be determined as set forth on
SCHEDULE 4 attached hereto and made a part hereof, all such tenant improvement
work, and leasing commissions, attributable to such new lease, lease
modification, lease renewal or lease extension shall be paid by Seller. If, as a
result of such new lease or lease modification, lease renewal or lease extension
the gross rent payable by all tenants of the Property does exceed the gross rent
payable pursuant to all leases in effect as of the date of this Agreement, all
such tenant improvement work, and leasing commissions attributable to such new
lease, lease modification, lease renewal or lease extension
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shall be prorated so that Seller pays or Buyer receives a credit (if Seller has
not paid) for a portion thereof determined by multiplying the amounts thereof by
the number of days of the initial term of the applicable lease which have
elapsed at the Closing, dividing by the total number of days in the initial term
of such lease, and further multiplying by a fraction which is the portion of the
gross rent under such lease which does not represent an increase in the gross
rent payable pursuant to all leases in effect as of the date of this Agreement,
and Buyer pays or Seller receives a credit (if Seller has paid) for the balance.
Anything contained herein to the contrary notwithstanding, Seller shall pay and
Buyer shall have no liability for, any and all commissions, bonuses or
incentives payable to Seller's employees arising out of any such new lease,
lease modification, lease renewal or lease extension. The provisions of this
Section shall survive the Closing.
SECTION 7.3 SERVICE CONTRACTS.
Seller will terminate all property management, brokerage and leasing
contracts affecting the Property at Closing.
SECTION 7.4 TENANT NOTICES.
At the Closing, Seller shall furnish Buyer with a signed notice to be
given to each tenant of the Property. The notice shall disclose that the
Property has been sold to Buyer, that, after the Closing, all rents should be
paid to Buyer at an address to be supplied by Buyer and that Buyer shall be
responsible for all the tenant's security deposit. The form of the notice and
the amount of each tenant's security deposit listed therein shall be otherwise
reasonably acceptable to the parties.
ARTICLE VIII
CLOSING AND ESCROW
SECTION 8.1 ESCROW INSTRUCTIONS.
Upon execution of this Agreement, the parties hereto shall deposit an
executed counterpart of this Agreement with the Title Company, and this
instrument shall serve as the instructions to the Title Company as the escrow
holder for consummation of the purchase and sale contemplated hereby. Seller and
Buyer agree to execute such reasonable additional and supplementary escrow
instructions as may be appropriate to enable the Title Company to comply with
the terms of this Agreement; provided, however, that in the event of any
conflict between the provisions of this Agreement and any supplementary escrow
instructions, the terms of this Agreement shall control.
SECTION 8.2 CLOSING.
The Closing hereunder shall be held and delivery of all items to be made
at the Closing under the terms of this Agreement shall be made at the offices of
the Title Company on the date which is fifteen (15) days after the expiration of
the Contingency Period, and before 9:00 a.m. local time, or such other earlier
date and time as Buyer and Seller may mutually agree upon in writing (the
"Closing Date"). Except as expressly provided in this Agreement, such date and
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time may not be extended without the prior written approval of both Seller and
Buyer. All funds of Buyer to be deposited in escrow for the Closing shall be
deposited by Buyer in escrow no later than the last business day prior to the
Closing Date.
SECTION 8.3 DEPOSIT OF DOCUMENTS.
(a) At or before the Closing, Seller shall deposit into escrow
the following items:
(1) the duly executed and acknowledged Deeds conveying
the Real Property to Buyer subject to the Conditions of Title;
(2) four (4) duly executed counterparts of the Bill of
Sale in the form attached hereto as EXHIBIT D (the "Bill of Sale"), with Exhibit
C to said Bill of Sale listing the Conditions of Title;
(3) four (4) duly executed counterparts of an Assignment
and Assumption of Leases, Service Contracts and Warranties in the form attached
hereto as EXHIBIT E pursuant to the terms of which Buyer shall assume all of
Seller's obligations under the leases, equipment leases, service contracts,
leasing commission agreements and tenant improvement agreements affecting the
Property to the extent set forth in said EXHIBIT E (the "Assignment of Leases"),
with Exhibit D to said document listing the Conditions of Title;
(4) an affidavit pursuant to Section 1445(b)(2) of the
Federal Code, and on which Buyer is entitled to rely, that Seller is not a
"foreign person" within the meaning of Section 1445(f)(3) of the Federal Code;
(5) California 590RE Certificate;
(6) An Affidavit of Property Value for each of the real
properties located in Arizona allocating the value of said real properties in
accordance with EXHIBIT A-1; and
(7) Four (4) duly executed counterparts of a closing
statement in form and content satisfactory to Buyer and Seller (the "Closing
Statement") duly executed by Seller.
(b) At or before Closing, Buyer shall deposit into escrow the
following items:
(1) funds necessary to close this transaction;
(2) four (4) duly executed counterparts of the Bill of
Sale;
(3) four (4) duly executed counterparts of the
Assignment of Leases;
(4) An Affidavit of Property Value for each of the real
properties located in Arizona allocating the value of said real properties in
accordance with EXHIBIT A-1; and
(5) Four (4) duly executed counterparts of the Closing
Statement.
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(c) Buyer and Seller shall each deposit such other instruments
as are reasonably required by the Title Company or otherwise required to close
the escrow and consummate the purchase and sale of the Property in accordance
with the terms hereof, including, without limitation, an agreement (the
"Designation Agreement") designating Title Company as the "Reporting Person" for
the transaction pursuant to Section 6045(e) of the Federal Code and the
regulations promulgated thereunder, and executed by Seller, Buyer and Title
Company. The Designation Agreement shall appear in Seller's and Buyer's escrow
instructions and shall be in a form reasonably acceptable to the parties, and,
in any event, shall comply with the requirements of Section 6045(e) of the
Federal Code and the regulations promulgated thereunder.
(d) Seller shall deliver to Buyer originals of the leases,
copies of the tenant correspondence files (for the three (3) most recent years
of Seller's ownership of the Property only), and originals of any other items
which Seller was required to furnish Buyer copies of or make available at the
Property pursuant to Section 2.1(e) above, except for Seller's general ledger
and other internal books or records which shall be retained by Seller, within
five (5) business days after the Closing Date. Seller shall deliver to Buyer a
set of keys to the Property on the Closing Date.
SECTION 8.4 ESTOPPEL CERTIFICATES.
(a) Seller shall use its reasonable efforts to obtain estoppel
certificates from each tenant of the Property in the form attached hereto as
EXHIBIT F. Subject to the provisions of Section 8.4(b), it shall be a condition
to Buyer's obligation to close the sale and purchase of the Property that on or
before three (3) days prior to the end of the Contingency Period, Buyer is able
to obtain an estoppel certificate in the form described above from tenants
occupying ninety percent (90%) (the "Required Percentage") of the area of the
Property actually rented to tenants.
(b) For any tenant from whom Seller is unable to obtain such an
estoppel certificate, provided that such tenants occupy an aggregate of no more
than ten percent (10%) of the area of the Property actually rented to tenants,
Seller may, but shall not be obligated to, deliver to Buyer prior to the end of
the Contingency Period a Seller's certificate stating that as of the date
delivered (1) to the best of Seller's knowledge, as such term is defined in this
Agreement, the tenant is not in default under its lease except for the defaults
specified in the certificate, (2) the date through which base rent has been
paid; (3) to the best of Seller's knowledge, the lease is in full force and
effect, (4) except as specified in the certificate, all tenant improvements to
be constructed by Seller have been completed and approved by the tenant, and (5)
the amount of the security deposit for such tenant. If after Seller delivers
such Seller's estoppel certificate with respect to a tenant, Buyer receives an
estoppel certificate in the form described in Section 8.4(a) executed by such
tenant, Seller shall have no liability or obligation to Buyer arising out of
Seller's estoppel certificate. Any claim which Buyer may have arising out of a
breach of any statement contained in Seller's certificate, whether known or
unknown, which is not asserted by written notice from Buyer to Seller within
twelve (12) months after Closing shall not be valid or effective, and Seller
shall have no liability with respect thereto. Buyer shall be obligated to accept
Seller's estoppel certificate with respect to a tenant in lieu of the estoppel
certificate from the tenant; provided, however, that Buyer shall not be
obligated to accept or
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approve any estoppel provided by Seller if there is reasonable evidence to
believe that any statement contained therein would be disputed or denied by the
applicable tenant.
(c) If the condition contained in Section 8.4(a) above is not
satisfied on or before five (5) days prior to the end of the Contingency Period,
then Buyer may, by written notice given to Seller before the end of the
Contingency Period, elect to terminate this Agreement and receive a refund of
the Deposit or waive said condition. If said condition is not satisfied and if
Buyer fails to give said notice on or before the end of the Contingency Period,
Buyer shall be deemed to have waived said condition. If Buyer so elects to
terminate this Agreement, neither party shall have any further rights or
obligations hereunder except as provided in Section 6.1 above and Sections 9.3
and 9.9 below.
SECTION 8.5 PRORATIONS.
(a) Rents, including, without limitation, percentage rents, if
any, and any additional charges and expenses payable under tenant leases, all as
and when actually collected (whether such collection occurs prior to, on or
after the Closing Date); real property taxes and assessments; water, sewer and
utility charges; amounts payable under any service contracts; annual permits
and/or inspection fees (calculated on the basis of the period covered); and any
other expenses of the operation and maintenance of the Property (including,
without limitation, those expenses listed on SCHEDULE 5 attached hereto already
paid by Seller but which are being amortized over time by Seller and with
respect to which Seller shall receive a credit at Closing in the amount of the
unamortized portion thereof), together with tenant improvement costs, leasing
commissions, as provided in Section 7.2 above, shall all be prorated as of 12:01
a.m. on the date the Deed is recorded, on the basis of a 365-day year. Any sums
collected by Buyer from tenants after the Closing shall be promptly paid to
Seller to the extent of any rents and other sums which were delinquent at
Closing, after first applying all such amounts collected to current obligations.
Buyer shall use reasonable efforts to collect such delinquent rents but shall
not be obligated to expend any sums, commence any litigation, terminate any
lease or threaten to terminate any lease to do so. Seller retains the rights to
collect any such delinquent rents from tenants after Closing provided 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. The amount of any security
deposits under tenant leases shall be credited against the Purchase Price.
Seller shall receive credits at Closing for the amount of any utility or other
deposits with respect to the Property, in which case all such deposits for which
Seller receives credit shall remain in place for the benefit of Buyer and Seller
shall execute and deliver such documents as shall be necessary to assign such
deposits to Buyer. Buyer shall cause all utilities to be transferred into
Buyer's name and account at the time of Closing. Seller and Buyer hereby agree
that if any of the aforesaid prorations and credits cannot be calculated
accurately on the Closing Date, then the same shall be calculated as soon as
reasonably practicable after the Closing Date and either party owing the other
party a sum of money based on such subsequent proration(s) or credits shall
promptly pay said sum to the other party. 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 the Title
Company prior to the Closing.
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(b) The parties shall pay the closing costs below as follows:
(1) Portland Airport Business Park. Seller shall pay the
escrow fee, and the costs of obtaining the CLTA portion of the title insurance
policy. Buyer shall pay the costs of obtaining the ALTA portion of the title
insurance policy and the cost of any endorsements. Buyer and Seller shall each
pay one-half (1/2) the escrow fee. Recording charges and any other expenses of
the escrow for the sale shall be paid by Buyer and Seller in accordance with
customary practice as determined by the Title Company. In addition, Seller shall
be liable for any prepayment fee or other charge payable in connection with any
payoff of deeds of trusts or mortgages entered into by Seller.
(2) Hesperian Industrial Park. Seller shall pay any
county transfer taxes applicable to the sale and one-half (1/2) of any other
transfer taxes applicable to the sale. Buyer shall pay the costs of obtaining
the ALTA title insurance policy, the cost of any endorsements, one-half (1/2) of
any transfer taxes applicable to the sale other than county transfer taxes and
the escrow fee. Recording charges and any other expenses of the escrow for the
sale shall be paid by Buyer and Seller in accordance with customary practice as
determined by the Title Company. In addition, Seller shall be liable for any
prepayment fee or other charge payable in connection with any payoff of deeds of
trusts or mortgages entered into by Seller.
(3) Contra Costa Diablo Industrial Park and Sierra
Trinity Industrial Park. Seller shall pay any county transfer taxes applicable
to the sale. Buyer shall pay the costs of obtaining the ALTA title insurance
policy, the cost of any endorsements and the escrow fee. Recording charges and
any other expenses of the escrow for the sale shall be paid by Buyer and Seller
in accordance with customary practice as determined by the Title Company. In
addition, Seller shall be liable for any prepayment fee or other charge payable
in connection with any payoff of deeds of trusts or mortgages entered into by
Seller.
(4) Hohokam 10 East / West. Seller shall pay one-half
(1/2) of the escrow fee and the costs of obtaining the CLTA portion of the title
insurance policy. Buyer shall pay the costs of obtaining the ALTA portion of the
title insurance policy, the cost of any endorsements, and one-half (1/2) of the
escrow fee. Recording charges and any other expenses of the escrow for the sale
shall be paid by Buyer and Seller in accordance with customary practice as
determined by the Title Company. In addition, Seller shall be liable for any
prepayment fee or other charge payable in connection with any payoff of deeds of
trusts or mortgages entered into by Seller.
(c) The provisions of this Section 8.5 shall survive the
Closing.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 NOTICES.
Any notices required or permitted to be given hereunder shall be given
in writing and shall be delivered (a) in person, (b) by certified mail, postage
prepaid, return receipt requested, (c) by facsimile with confirmation of
receipt, or (d) by a commercial overnight courier that
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guarantees next day delivery and provides a receipt, and such notices shall be
addressed as follows:
To Buyer: Pacific Gulf Properties Inc.
4220 Von Karmen Avenue
Second Floor
Newport Beach, CA 92660
Attention: Lonnie P. Nadal
Telephone: (949) 223-5000
Fax No.: (949) 223-5033
with a copy to: Cox, Castle & Nicholson LLP
2049 Century Park East, Suite 2800
Los Angeles, California 90067
Attention: John H. Kuhl, Esq.
Telephone: (310) 284-2267
Fax No.: (310) 277-7889
To Seller: c/o RREEF America L.L.C.
101 California Street, 26th Floor
San Francisco, CA 94111
Attention: Mark Carlson
Telephone: (415) 781-3300
Fax No.: (415) 391-9015
with a copy to: Orrick, Herrington & Sutcliffe LLP
400 Sansome Street
San Francisco, CA 94111
Attention: Michael H. Liever, Esq.
Telephone: (415) 773-5808
Fax No.: (415) 773-4285
To Title Company: Chicago Title Company
388 Market Street, Suite 1300
San Francisco, CA 94111
Attention: Beth Bailey Gates
Telephone: (415) 788-0871
Fax No.: (415) 434-2176
or to such other address as either party may from time to time specify in
writing to the other party. Any notice shall be effective only upon delivery.
SECTION 9.2 ENTIRE AGREEMENT.
This Agreement, together with the Exhibits hereto, contains all
representations, warranties and covenants made by Buyer and Seller and
constitutes the entire understanding between the parties hereto with respect to
the subject matter hereof. Any prior correspondence,
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memoranda or agreements are replaced in total by this Agreement together with
the Exhibits hereto.
SECTION 9.3 ENTRY AND INDEMNITY.
In connection with any entry by Buyer, or its agents, employees or
contractors onto the Property, Buyer shall give Seller reasonable advance notice
of such entry and shall conduct such entry and any inspections in connection
therewith so as to minimize, to the extent reasonably possible, interference
with Seller's business and the business of Seller's tenants and otherwise in a
manner reasonably acceptable to Seller. Without limiting the foregoing, prior to
any entry to perform any on-site testing, Buyer shall give Seller written notice
thereof, including the identity of the company or persons who will perform such
testing and the proposed scope of the testing. Seller shall approve or
disapprove, in Seller's sole discretion, the proposed testing within three (3)
business days after receipt of such notice. If Seller fails to respond within
such three (3) business day period, Seller shall be deemed to have disapproved
the proposed testing. If Buyer or its agents, employees or contractors take any
sample from the Property in connection with any such approved testing, Buyer
shall provide to Seller a portion of such sample being tested to allow Seller,
if it so chooses, to perform its own testing. Seller or its representative may
be present to observe any testing or other inspection performed on the Property.
Buyer shall not contact any governmental authority with respect to any
environmental matter relating to the Property, except for the sole and limited
purpose of obtaining information necessary to prepare a Phase I environmental
study, without first obtaining the prior written consent of Seller thereto, and
Seller, at Seller's election, shall be entitled to have a representative on any
phone or other contact made by Buyer to a governmental authority and present at
any meeting by Buyer with a governmental authority. In the event Buyer contacts
any governmental authority with respect to any matter other than environmental
matters relating to the Property, Buyer shall provide Seller with prior notice
of such contact. Buyer shall maintain, and shall assure that its contractors
maintain, public liability and property damage insurance in amounts and in form
and substance adequate to insure against all liability of Buyer and its agents,
employees or contractors, arising out of any entry or inspections of the
Property pursuant to the provisions hereof, and Buyer shall provide Seller with
evidence of such insurance coverage upon request by Seller. Buyer shall
indemnify and hold Seller harmless from and against any costs, damages,
liabilities, losses, expenses, liens or claims (including, without limitation,
reasonable attorney's fees) arising out of or relating to any entry on the
Property by Buyer, its agents, employees or contractors in the course of
performing the inspections, testings or inquiries provided for in this
Agreement. The foregoing indemnity shall survive beyond the Closing, or, if the
sale is not consummated, beyond the termination of this Agreement.
SECTION 9.4 TIME.
Time is of the essence in the performance of each of the parties'
respective obligations contained herein.
SECTION 9.5 ATTORNEYS' FEES.
If either party hereto fails to perform any of its obligations under
this Agreement or if any dispute arises between the parties hereto concerning
the meaning or interpretation of any
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provision of this Agreement, then the defaulting party or the party not
prevailing in such dispute, as the case may be, shall pay any and all costs and
expenses incurred by the other party on account of such default and/or in
enforcing or establishing its rights hereunder, including, without limitation,
court costs and reasonable attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Agreement shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Agreement and to survive and not be merged into any such judgment. As
used in this Agreement, the term "attorneys' fees" or "expenses" (or similar
references to attorneys' fees and costs or expenses) shall include, without
limitation, all attorneys' and paralegals' fees and expenses, whether in action
or proceeding, upon appeal therefrom, or in connection with any petition for
review or action to rescind this Agreement, or in a case or proceeding under the
Bankruptcy Code or successor statute, or in connection with any other action to
enforce any provision of this Agreement.
SECTION 9.6 ASSIGNMENT.
Buyer's rights and obligations hereunder shall not be assignable without
the prior written consent of Seller. Notwithstanding the foregoing, Seller's
consent shall not be required for any assignment by Buyer to an entity of which
Buyer has majority ownership and control. Buyer shall in no event be released
from any of its obligations or liabilities hereunder in connection with any
assignment. Without limiting the above, in no event shall Buyer have the right
to assign its rights or obligations hereunder to any party which could not make
the representation and warranty contained in subsection 3.5(e) above, and in
connection with any assignment pursuant to the terms hereof, the assignee shall
reconfirm in a written instrument acceptable to Seller and delivered to Seller
prior to the assignment said representation and warranty as applied to the
assignee. Subject to the provisions of this Section, this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and assigns.
SECTION 9.7 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
SECTION 9.8 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of California.
SECTION 9.9 CONFIDENTIALITY AND RETURN OF DOCUMENTS.
Buyer and Seller shall each maintain as confidential any and all
material obtained about the other or, in the case of Buyer, about the Property,
this Agreement or the transactions contemplated hereby, and shall not disclose
such information to any third party other than (i) each party's respective
consultants and professionals in connection with their review, evaluation,
negotiation and closing of the subject transaction, (ii) the parties' actual and
prospective lenders and investors, or (iii) the parties' officers, directors,
employees, agents,
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contractors, affiliates and representatives (collectively, the
"Representatives"), provided that all such parties shall keep such information
confidential as provided herein. The parties agree to keep, and to use all
reasonable efforts to cause the Representatives to keep, any information and
documents received from the other party (or based upon the party's evaluation of
the Property) confidential, except to the extent (a) such information was known
by the party prior to the date hereof on the basis of information provided to
the party by persons other than the other party or its agents, (b) such
information was of general public knowledge prior to the date hereof, or (c)
disclosure is required by law or court order or is used in connection with any
litigation between the parties hereto. This provision shall survive the Closing
or any termination of this Agreement.
SECTION 9.10 INTERPRETATION OF AGREEMENT.
The article, section and other headings of this Agreement are for
convenience of reference only and shall not be construed to affect the meaning
of any provision contained herein. Where the context so requires, the use of the
singular shall include the plural and vice versa and the use of the masculine
shall include the feminine and the neuter. The term "person" shall include any
individual, partnership, joint venture, corporation, trust, unincorporated
association, any other entity and any government or any department or agency
thereof, whether acting in an individual, fiduciary or other capacity.
SECTION 9.11 LIMITED LIABILITY.
The obligations of Seller are intended to be binding only on the
property of Seller and shall not be personally binding upon, nor shall any
resort be had to, the private properties of any of its trustees, officers,
beneficiaries, directors, members, or shareholders, or of its investment
manager, the general partners, officers, directors, members, or shareholders
thereof, or any employees or agents of Seller or its investment manager. The
obligations of Buyer are intended to be binding only on the property of Buyer
and shall not be personally binding upon, nor shall any resort be had to, the
private properties of any of its trustees, officers, beneficiaries, directors,
members, or shareholders, or any employees or agents of Buyer.
SECTION 9.12 AMENDMENTS.
This Agreement may be amended or modified only by a written instrument
signed by Buyer and Seller.
SECTION 9.13 NO RECORDING.
Neither this Agreement or any memorandum or short form thereof may be
recorded by Buyer.
SECTION 9.14 DRAFTS NOT AN OFFER TO ENTER INTO A LEGALLY BINDING
CONTRACT.
The parties hereto agree that the submission of a draft of this
Agreement by one party to another is not intended by either party to be an offer
to enter into a legally binding contract with respect to the purchase and sale
of the Property. The parties shall be legally bound with respect to the purchase
and sale of the Property pursuant to the terms of this Agreement only if and
when
22
<PAGE> 23
the parties have been able to negotiate all of the terms and provisions of
this Agreement in a manner acceptable to each of the parties in their respective
sole discretion, including, without limitation, all of the Exhibits and
Schedules hereto, and both Seller and Buyer have fully executed and delivered to
each other a counterpart of this Agreement, including, without limitation, all
Exhibits and Schedules hereto.
SECTION 9.15 ERISA.
Prior to Seller's execution of this Agreement, Buyer shall furnish to
Seller all information regarding Buyer, its affiliates and the shareholders,
members, investors or partners of each of them (collectively, the "Buyer Related
Parties") as Seller requests in order to enable Seller to determine to Seller's
sole satisfaction that Buyer's representation and warranty contained in Section
3.5(e) of this Agreement is true and correct. Buyer represents and warrants to
Seller that there will not be any change in any such information regarding Buyer
or the Buyer Related Parties prior to or on the Closing. Buyer's representation
and warranty in Section 3.5(e) shall be deemed qualified in all respects by any
such information provided to Seller.
SECTION 9.16 NO PARTNERSHIP.
The relationship of the parties hereto is solely that of Seller and
Buyer with respect to the Property and no joint venture or other partnership
exists between the parties hereto. Neither party has any fiduciary relationship
hereunder to the other.
SECTION 9.17 NO THIRD PARTY BENEFICIARY.
The provisions of this Agreement are not intended to benefit any third
parties.
SECTION 9.18 SEC COMPLIANCE.
Seller hereby agrees to (i) cooperate with the auditors for Buyer to
allow Buyer's auditors to perform and complete in an expeditious manner from the
date hereof and no later than thirty (30) days after the Closing Date, an audit
of financial information prepared in accordance with GAAP for calendar year 1997
for the 314 Securities and Exchange Commission filing report and (ii) execute a
management representation letter in form reasonably acceptable to Seller and
limited to the actual knowledge of the portfolio manager of the Property (the
"Representation Letter"). The word "knowledge" shall be deemed to refer to the
current actual knowledge at the time indicated only and not implied, imputed or
constructive knowledge, without any independent investigation having been made
or any implied duty to investigate. Any representation or warranty contained in
such Representation Letter shall be considered representations of Seller under
this Agreement and shall be subject to all terms and conditions contained in
this Agreement, including without limitation, Sections 3.3, 9.2, 9.11 and 9.19
herein.
SECTION 9.19 LIMITATION ON LIABILITY.
Notwithstanding anything to the contrary contained herein, after the
Closing the maximum aggregate liability of Seller, and the maximum aggregate
amount which may be awarded to and collected by Buyer under this Agreement
(including, without limitation, for any
23
<PAGE> 24
breach of representation and warranty contained herein), and any and all
documents executed pursuant hereto or in connection herewith (collectively the
"Other Documents") including, without limitation, the Deed, the Bills of Sale
and the Assignment of Leases, shall under no circumstances whatsoever exceed
Three Percent (3%) of the Purchase Price.
SECTION 9.20 SURVIVAL.
Except as expressly set forth to the contrary herein, no
representations, warranties, covenants or agreements of the Seller contained
herein shall survive the Closing.
SECTION 9.21 OREGON STATUTORY DISCLAIMER.
THE PROPERTY DESCRIBED IN THIS INSTRUMENT MAY NOT BE WITHIN A FIRE
PROTECTION DISTRICT PROTECTING STRUCTURES. THE PROPERTY IS SUBJECT TO LAND USE
LAWS AND REGULATIONS, WHICH, IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE
CONSTRUCTION OR SITING A RESIDENCE AND WHICH LIMIT LAWSUITS AGAINST FARMING OR
FOREST PRACTICES AS DEFINED IN ORS 30.930 IN ALL ZONES. BEFORE SIGNING OR
ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD
CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED
USES AND EXISTENCE OF FIRE PROTECTION FOR STRUCTURES.
SECTION 9.22 SURVIVAL OF ARTICLE IX.
The provisions of this Article IX shall survive the Closing.
SECTION 9.23 POSSESSION.
Seller shall deliver possession of the Property to Buyer upon the
Closing, subject to the Conditions of Title.
SECTION 9.24 MAINTENANCE.
Between the date hereof and Closing, Seller shall operate the Property
pursuant to Seller's customary procedures consistent with the manner in which
Seller has operated the Property during Seller's ownership, provided Seller
shall not be obligated to make any capital expenditures in connection with such
operation.
SECTION 9.25 INSURANCE.
Between the date hereof and Closing, Seller shall keep in effect all
blanket insurance policies presently in effect as of the date hereof, except
that Seller may modify its insurance coverage as long as Seller is doing so for
all or substantially all of the properties covered by such blanket policies.
24
<PAGE> 25
SECTION 9.26 SECTION 1031 EXCHANGE.
Buyer may consummate the purchase of the Property as part of a so-called
like kind exchange (the "Exchange") pursuant to ss. 1031 of the Internal Revenue
Code of 1986, as amended (the "Code"), provided that: (a) Closing shall not be
delayed or affected by reason of the Exchange nor shall the consummation or
accomplishment of the Exchange be a condition precedent or condition subsequent
to Buyer's obligations under this Agreement; (b) Buyer shall effect the Exchange
through an assignment of this Agreement, or its rights under this Agreement, to
a qualified intermediary, provided that such assignment shall not release Buyer
of its obligations hereunder and that all Closing documents, including, without
limitation, the Deed, Bill of Sale and Assignment of Leases shall be directly
between Buyer and Seller; (c) Seller shall not be required to take an assignment
of the purchase agreement for other property or be required to acquire or hold
title to, or any beneficial interest in, any real property for purposes of
consummating the Exchange; and (d) Buyer shall pay any additional costs or
expenses that would not otherwise have been incurred by Buyer or Seller had
Buyer not consummated its purchase through the Exchange. Seller shall not by
this Agreement or acquiescence to the Exchange have its rights under this
Agreement affected or diminished in any manner or be responsible for compliance
with or be deemed to have warranted to Buyer that the Exchange in fact complies
with ss. 1031 of the Code and Buyer, will rely solely and exclusively on its own
tax advice with respect thereto. Seller shall have the right to review and
approve any documents to be executed by Seller in connection with the Exchange,
provided that Seller shall have no obligation to execute any documents or to
undertake any action by which Seller would or might incur any liability or
obligation not otherwise provided for in the other provisions of this Agreement.
Buyer shall indemnify and defend Seller and hold Seller harmless from and
against any and all claims, damages, liabilities, losses, costs and expenses,
including, without limitation, attorneys' fees and costs, arising out of or in
any way connected with the Exchange that Seller would not have incurred but for
the Exchange.
25
<PAGE> 26
The parties hereto have executed this Agreement as of the respective
dates written below.
SELLER: RREEF PERFORMANCE PARTNERSHIP - I, L.P.,
an Illinois limited partnership
By: RREEF Performance Partnership-I, L.P.,
an Illinois limited partnership
as its General Partner
By: RREEF Capital, Incorporated,
an Illinois corporation,
as its General Partner
By: ___________________________
Stephen M. Steppe
Its: Vice-President
Date: ___________________, 1998
26
<PAGE> 27
BUYER: PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By: _________________________
Its: _________________________
Date: ___________________, 1998
By: _________________________
Its: _________________________
Date: ___________________, 1998
27
<PAGE> 28
COUNTERPART SIGNATURE PAGE TO
AGREEMENT OF PURCHASE AND SALE
DATED AS OF OCTOBER 2, 1998
(TITLE COMPANY)
Title Company agrees to act as escrow holder and title company in
accordance with the terms of this Agreement and to act as the Reporting Person
in accordance with Section 6045(e) of the Internal Revenue Code and the
regulations promulgated thereunder.
CHICAGO TITLE COMPANY
By: _________________________
Its: _________________________
Date: ___________________, 1998
28
<PAGE> 29
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A Real Property Description
Exhibit A-1 Allocated Value of Property
Exhibit B List of Tenant Leases
Exhibit C-1 California Grant Deed
Exhibit C-2 Arizona Special Warranty Deed
Exhibit C-3 Oregon Special Warranty Deed
Exhibit D Bill of Sale
Exhibit E Assignment of Leases, Service Contracts and Warranties
Exhibit F Estoppel Certificate
SCHEDULES
Schedule 1 Disclosure Items
Schedule 2 Employee Benefit Plans
Schedule 3 Leases Approved by Buyer
Schedule 4 Gross Rent
Schedule 5 Unamortized Expenses
<PAGE> 30
REVISED SCHEDULE 1
------------------
DISCLOSURE ITEMS
1. With respect to the properties located in California, natural hazards
described in the following California code sections (the "Natural Hazard Laws")
may affect such properties: (A) Govt. Code Section 8589.4; (B) Govt. Code
Section 51183.4 (Fire Hazard Severity Zone); (C) Public Resource Code Section
2621.9 (Earthquake Fault Zone); (D) Public Resource Code Section 2694 (Seismic
Hazard Zone); and (E) Public Resource Code Section 4136 (Wildland Area). Buyer
acknowledges and agrees that Buyer will independently evaluate and investigate
whether any or all of such Natural Hazards affect such properties and Seller
shall have no liabilities or obligations with respect thereto. Without limiting
the foregoing, Buyer acknowledges and agrees that Buyer knowingly and
intentionally waives any disclosures, obligations or requirements of Seller with
respect to Natural Hazards, including, without limitation, any disclosure
obligations or requirements under the aforementioned code sections. BUYER
ACKNOWLEDGES AND REPRESENTS THAT BUYER HAS EXTENSIVE EXPERIENCE ACQUIRING AND
CONDUCTING DUE DILIGENCE REGARDING COMMERCIAL PROPERTIES. THIS WAIVER BY BUYER
OF ANY RIGHTS IT MAY HAVE HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THE
BARGAIN BETWEEN THE PARTIES.
2. All Properties.
(a) Seller acknowledges the possible presence of asbestos in
mastic, certain drywall past, and floor tiles as well as PCB's in light
fixtures, although Seller has received no actual written notice of the presence
or absence of these materials.
(b) Seller and Buyer acknowledge the existence of the repair,
maintenance, and improvement work on the attached Schedule 1-A in connection
with and as applicable to the Property and Buildings listed therein.
3. Portland Airport Business Park.
(a) Tenant, Van Kirk Electric, is in default for abandonment and
past-due rent; litigation regarding this matter is pending; and
(b) The City of Portland Bureau of Fire has notified Seller of
violations with respect to door locks pursuant to that certain Fire Inspection
Report dated August 27, 1998, a copy of which has been provided to Buyer.
4. Hesperian Industrial Park.
An underground storage tank is present on the property as disclosed in
environmental reports provided by Seller to Buyer.
5. Hohokam Industrial Park.
(a) Stormwater from adjacent property to the east washes fine
soil onto the drive lane behind 1205 N. Park Lane.
S1-1
<PAGE> 31
(b) Dectectable levels of VOC's noted in one dry well at both
East and West properties as disclosed in environmental reports provided by
Seller to Buyer.
(c) Tenant, L & J Investments, Suite 311, 10 West, is past-due
on rent since July and is currently locked out of the space.
S1-2
<PAGE> 32
SCHEDULE 2
----------
EMPLOYEE BENEFIT PLANS
The Raytheon Company Master Trust and all other employee and pension plans of
The Raytheon Company.
S2-1
<PAGE> 33
SCHEDULE 3
----------
LEASES APPROVED BY BUYER
None.
S3-1
<PAGE> 34
SCHEDULE 4
----------
GROSS RENT
- ----------------------------------------------------------------
Hohokam 10 East / West $188,790.00
- ----------------------------------------------------------------
Hesperian Industrial Park $ 74,391.00
- ----------------------------------------------------------------
Sierra Trinity Industrial Park $196,310.00
- ----------------------------------------------------------------
Contra Costa Diablo Industrial Park $ 61,712.00
- ----------------------------------------------------------------
Portland Airport Business Park $ 89,721.00
- ----------------------------------------------------------------
For purposes hereof, "Gross Rent" shall mean the total of the monthly base rent
payable by the existing tenants of each Property as of October 1998.
S4-1
<PAGE> 35
SCHEDULE 5
----------
UNAMORTIZED EXPENSES
1. Portland Airport Business Park. Parking lot seal coat and striping:
Twenty-Seven Thousand Two Hundred Seventeen and 34/100 Dollars ($27,217.34)
amortized monthly from 7/1/98 to 6/30/2001.
2. Sierra Trinity Industrial Park. Parking lot seal coat and striping:
Forty-Six Thousand Sixty-Five Dollars ($46,065.00) amortized monthly from 7/1/98
to 6/30/2001.
3. Contra Costa Diablo Industrial Park. Parking lot seal coat and
striping: Thirty-Six Thousand Three Hundred Ten Dollars ($36,310.00) amortized
monthly from 7/1/98 to 6/30/2001.
4. Hohokam 10 East.
(a) Parking lot seal coat: Forty Thousand Four Hundred
Eighty-Two and 30/100 Dollars ($40,483.30) amortized monthly from 4/1/98 to
3/1/2002 and Thirteen Thousand Seven Hundred Dollars ($13,700.00) amortized
monthly from 6/1/95 to 5/1/99.
(b) Exterior painting: Eighty-Eight Thousand Six Hundred
Twenty-Eight and 87/100 Dollars ($88,628.87) amortized monthly from 6/1/98 to
5/1/2003.
5. Hohokam 10 West.
(a) Parking lot seal coat: Twenty-Five Thousand Seventy-One and
09/100 Dollars ($27,071.09) amortized monthly from 4/1/98 to 3/1/2002.
(b) Exterior painting: Nine Thousand Four Hundred Forty-Six and
75/100 Dollars ($9,446.75) amortized monthly from 10/1/97 to 9/1/2002.
(c) Roof replacement: Twenty-Four Thousand Seven Hundred Eleven
Dollars ($24,711.00) amortized monthly from 5/1/96 to 4/1/2000.
S5-1
<PAGE> 36
EXHIBIT A
---------
REAL PROPERTY DESCRIPTION
A-1
<PAGE> 37
EXHIBIT A-1
-----------
ALLOCATED VALUE OF PROPERTY
<TABLE>
<CAPTION>
PROPERTY LOCATION PRICE
-------- -------- -----
<S> <C> <C>
Hohokam 10 East/ West Phoenix, AZ $21,000,000
Hesperian Industrial Park Hayward, CA $8,200,000
Sierra Trinity Industrial Park Dublin, CA $26,500,000
Contra Costa Diablo Industrial Park Concord, CA $9,500,000
Portland Airport Business Park Portland, OR $11,100,000
===========
TOTAL: $76,300,000
</TABLE>
A1-1
<PAGE> 38
EXHIBIT B
---------
LIST OF TENANT LEASES
B-1
<PAGE> 39
EXHIBIT C-1
-----------
FORM OF CALIFORNIA GRANT DEED
RECORDING REQUESTED BY
WHEN RECORDED RETURN TO:
Cox, Castle & Nicholson LLP
2049 Century Park East, 28th Floor
Los Angeles, CA 90067
Attn: John H. Kuhl, Esq.
AND MAIL TAX STATEMENTS TO:
___________________________
___________________________
___________________________
Attention: ________________
Documentary Transfer Tax is not of public record and is shown on a separate
sheet attached to this deed.
- ------------------------------------------------------------------------
GRANT DEED
FOR VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged,
________________________ ("Grantor") hereby grants to ________________________
("Grantee", the real property located in the City of
_____________, County of _____________, State of California, described on
EXHIBIT A attached hereto and made a part hereof. Grantor is conveying the
Property to Grantee subject to the exceptions to title thereto described on
EXHIBIT B attached hereto and made a part hereof.
Executed as of ______________, 1998.
[SELLER],
a __________________________
By: ____________________
Its: ____________________
C1-1
<PAGE> 40
STATE OF CALIFORNIA )
) ss
COUNTY OF __________________)
On _____________, 1998, before me, ______________________, a notary
public for the State of California, personally appeared ______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
--------------------------
Signature
[SEAL]
C1-2
<PAGE> 41
EXHIBIT A
---------
TO GRANT DEED
[LEGAL DESCRIPTION]
C1-3
<PAGE> 42
EXHIBIT B
---------
TO GRANT DEED
(a) Interests of tenants in possession pursuant to the terms of
their leases;
(b) Non-delinquent liens for real estate taxes and assessments; and
(c) Any exceptions disclosed by the preliminary title reports and
amendments thereto received by Grantee, the public records or
other documents or items delivered to Grantee, and any other
exceptions to title which would be disclosed by an inspection
and/or survey of the Property.
C1-4
<PAGE> 43
________________, 199__
____________ County Recorder
Re: Request That Statement of Documentary
Transfer Tax Not be Recorded
----------------------------
Dear Sir or Madam:
Request is hereby made in accordance with Section 11932 of the Revenue
and Taxation Code that this statement of tax due not be recorded with the
attached deed but be affixed to the deed after recordation and before return as
directed on the deed.
The attached deed names _______________________, a _______________, as
grantor, and ________________________, a _______________________, as grantee.
The property being transferred and described in the attached deed is
located in the City of ______________, ____________ County, California.
The amount of Documentary Transfer Tax due on the attached deed is
$____________, computed on full value of the property conveyed.
[SELLER]
a _______________________
By: _____________________________
Its: _____________________________
C1-5
<PAGE> 44
EXHIBIT C-2
-----------
FORM OF ARIZONA SPECIAL WARRANTY DEED
RECORDATION REQUESTED BY AND WHEN
RECORDED RETURN TO:
Cox, Castle & Nicholson LLP
2049 Century Park East, 28th Floor
Los Angeles, CA 90067
Attn: John H. Kuhl, Esq.
MAIL TAX STATEMENT TO:
______________________
______________________
______________________
================================================================================
(Space above this line for Recorder's use)
SPECIAL WARRANTY DEED
---------------------
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby acknowledged, ________________________________, the Grantor herein, does
hereby convey to ___________________________________, the Grantee, the real
property described on EXHIBIT A attached hereto and made a part hereof, together
with all rights and privileges appurtenant thereto, subject only to those
matters shown on EXHIBIT B attached hereto and made a part hereof.
AND THE Grantor hereby binds itself and its successors to warrant and
defend the title as against all acts of the Grantor herein and no other, subject
to all matters of record.
DATED this _____ day of ________, 1998.
Assessor's Parcel No.
- -----------------
[insert Seller's Signature Block]
________________________________,
a ______________________________
By: __________________________
Its: __________________________
C2-1
<PAGE> 45
STATE OF CALIFORNIA )
) ss
COUNTY OF __________________ )
On _____________, 1998, before me, ______________________, a notary
public for the State of California, personally appeared ______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
---------------------------
Signature
[SEAL]
C2-2
<PAGE> 46
EXHIBIT A
---------
TO SPECIAL WARRANTY DEED
[LEGAL DESCRIPTION]
C2-3
<PAGE> 47
EXHIBIT B
---------
TO SPECIAL WARRANTY DEED
(d) Interests of tenants in possession pursuant to the terms of
their leases;
(e) Non-delinquent liens for real estate taxes and assessments; and
(f) Any exceptions disclosed by the preliminary title reports and
amendments thereto received by Grantee, the public records or
other documents or items delivered to Grantee, and any other
exceptions to title which would be disclosed by an inspection
and/or survey of the Property.
C2-4
<PAGE> 48
EXHIBIT C-3
-----------
FORM OF OREGON SPECIAL WARRANTY DEED
Recordation requested by:
After recordation return to:
Cox, Castle & Nicholson LLP
2049 Century Park East, 28th Floor
Los Angeles, CA 90067
Attn: John H. Kuhl, Esq.
================================================================================
(Space above this line for Recorder's use)
STATUTORY
SPECIAL WARRANTY DEED
---------------------
__________________________________, a ____________________, Grantor,
conveys and specially warrants to_____________________________ a
______________________, Grantee, the following-described real property free of
encumbrances created or suffered by the Grantor or any persons claiming under
Grantor except as specifically set forth herein:
The real property described on the attached Exhibit A, subject to
exceptions for the encumbrances listed on the attached Exhibit B.
The true consideration for this conveyance is $______________.
THIS INSTRUMENT WILL NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS
INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE
SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE
PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO
VERIFY APPROVED USES AND TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR
FOREST PRACTICES AS DEFINED IN ORS 30.930
- -------------------------------------------------------------------------------
Until a change is requested, all tax statements shall be sent to the following
address:
- -------------------------------------------------------------------------------
Property tax account No.:
- -------------------------------------------------------------------------------
C3-1
<PAGE> 49
Dated this _____ day of _____, 1998.
[insert Seller's Signature Block]
_________________________________,
a _______________________________
By: ____________________________
Its: ___________________________
ACKNOWLEDGMENT (MULTI-STATE FORMAT)
-----------------------------------
STATE OF )
)
County of )
On this ____ day of ________, 199_, before me, ____________________
[notary's name], a Notary Public of the State of _______________, duly
commissioned and sworn, personally appeared __________________________, to me
personally known to me (or proved tome on the basis of satisfactory evidence) to
be the person who executed the written instrument as the _____________________
of __________________, as Member of and on behalf of
___________________________, a ____________, and acknowledged to me that such
______________________ executed the same.
------------------------------------------
Notary Public for the State of ___________
My commission expires:____________________
ACKNOWLEDGMENT (OREGON STATUTORY FORMAT - CORPORATE OR OTHER ENTITY)
--------------------------------------------------------------------
STATE OF )
)
County of )
The foregoing instrument was acknowledged before me on this ____ day of
____________, 199_, by ___________________[name], the __________________[title]
of _________________________________, a(n) ___________________.
------------------------------------------
Notary Public for the State of ___________
My commission expires:____________________
C3-2
<PAGE> 50
EXHIBIT A
---------
TO STATUTORY SPECIAL WARRANTY DEED
[LEGAL DESCRIPTION]
C3-3
<PAGE> 51
EXHIBIT B
---------
TO STATUTORY SPECIAL WARRANTY DEED
(g) Interests of tenants in possession pursuant to the terms of
their leases;
(h) Non-delinquent liens for real estate taxes and assessments; and
(i) Any exceptions disclosed by the preliminary title reports and
amendments thereto received by Grantee, the public records or
other documents or items delivered to Grantee, and any other
exceptions to title which would be disclosed by an inspection
and/or survey of the Property.
C3-4
<PAGE> 52
EXHIBIT D
---------
BILL OF SALE
----------------------------------------
This Bill of Sale (the "Bill of Sale") is made and entered into
____________, 199__, by and between ____________________("Assignor"), and
__________________("Assignee").
In consideration of the sum of Ten Dollars ($10) and other good and
valuable consideration paid by Assignee to Assignor, the receipt and sufficiency
of which are hereby acknowledged by Assignor, Assignor does hereby assign,
transfer, convey and deliver to Assignee, its successors and assigns, free and
clear of any liens or encumbrances created by, through or under Assignor, all
items of tangible personal property, if any, owned by Assignor and situated upon
and used exclusively in connection with the land described on the attached
Exhibit A (the "Land") and the improvements located thereon (the
"Improvements"), including without limitation the items described on the
attached Exhibit B, but specifically excluding any and all personal property
owned by tenants or otherwise considered the property of tenants under any
leases affecting the Land or Improvements (the "Personal Property").
This Bill of Sale is made subject, subordinate and inferior to the
easements, covenants and other matters and exceptions set forth on Exhibit C,
attached hereto and made a part hereof for all purposes.
ASSIGNEE ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED
HEREIN OR IN THAT CERTAIN AGREEMENT OF PURCHASE AND SALE DATED _______________,
199__, BY AND BETWEEN ASSIGNOR AND ASSIGNEE (THE "AGREEMENT"), ASSIGNOR HAS NOT
MADE, DOES NOT MAKE AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS, WARRANTIES,
PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER
WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR
FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO (A) THE NATURE, QUALITY OR
CONDITIONS OF THE PERSONAL PROPERTY, (B) THE INCOME TO BE DERIVED FROM THE
PERSONAL PROPERTY, (C) THE SUITABILITY OF THE PERSONAL PROPERTY FOR ANY AND ALL
ACTIVITIES AND USES WHICH ASSIGNEE MAY CONDUCT THEREON, (D) THE COMPLIANCE OF OR
BY THE PERSONAL PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR
REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY, (E) THE
HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE
PERSONAL PROPERTY, OR (F) ANY OTHER MATTER WITH RESPECT TO THE PERSONAL
PROPERTY. ASSIGNEE FURTHER ACKNOWLEDGES AND AGREES THAT, HAVING BEEN GIVEN THE
OPPORTUNITY TO INSPECT THE PERSONAL PROPERTY, ASSIGNEE IS RELYING SOLELY ON ITS
OWN INVESTIGATION OF THE PERSONAL PROPERTY AND NOT ON ANY INFORMATION PROVIDED
OR TO BE PROVIDED BY ASSIGNOR, EXCEPT AS SPECIFICALLY PROVIDED HEREIN OR IN THE
AGREEMENT. ASSIGNEE FURTHER ACKNOWLEDGES AND AGREES THAT ANY INFORMATION
PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE PERSONAL PROPERTY WAS OBTAINED
FROM A VARIETY OF SOURCES AND THAT ASSIGNOR HAS NOT MADE ANY INDEPENDENT
INVESTIGATION OR VERIFICATION OF SUCH INFORMATION. ASSIGNEE FURTHER ACKNOWLEDGES
AND AGREES THAT THE SALE OF THE PERSONAL PROPERTY AS PROVIDED FOR HEREIN IS MADE
ON AN "AS IS, WHERE IS" CONDITION AND BASIS "WITH ALL FAULTS," EXCEPT AS
SPECIFICALLY PROVIDED IN THE AGREEMENT.
D-1
<PAGE> 53
The obligations of Assignor are intended to be binding only on the
property of Assignor and shall not be personally binding upon, nor shall any
resort be had to, the private properties of any of its trustees, officers,
beneficiaries, directors, members, or shareholders, or of its investment
manager, the general partners, officers, directors, members, or shareholders
thereof, or any employees or agents of Assignor or its investment manager. The
obligations of Assignee are intended to be binding only on the property of
Assignee and shall not be personally binding upon, nor shall any resort be had
to, the private properties of any of its trustees, officers, beneficiaries,
directors, members, or shareholders, or any employees or agents of Assignee.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Bill of Sale
to be executed on the date and year first above written.
ASSIGNOR: ______________________________________
a ____________________________________
By: _________________________________
Its Investment Manager
By: _____________________________
Its:_____________________________
ASSIGNEE: ______________________________________
a ____________________________________
By: _________________________________
Its: _________________________________
D-2
<PAGE> 54
EXHIBIT E
---------
ASSIGNMENT OF LEASES, SERVICE CONTRACTS
AND WARRANTIES
-------------------------------
This Assignment of Lease, Service Contracts and Warranties (this
"Assignment") is made and entered into _______________, 199__, by and between
_____________________________ ("Assignor"), and
_____________________________________________ ("Assignee").
For good and valuable consideration paid by Assignee to Assignor, the
receipt and sufficiency of which are hereby acknowledged by Assignor, Assignor
does hereby assign, transfer, set over and deliver unto Assignee all of
Assignor's right, title, and interest in (i) those certain leases and all
guaranties thereof (collectively, the "Leases") listed on Exhibit A, attached
hereto and made a part hereof for all purposes except for Seller's right to
collect delinquent rent and other delinquent sums owing under such Leases for
the period prior to the date hereof, (ii) those certain service contracts,
equipment leases, tenant improvement agreements and leasing agreements (the
"Contracts") listed on Exhibit B, if any, attached hereto and made a part hereof
for all purposes, (iii) those certain warranties held by Assignor (the
"Warranties") listed on Exhibit C, attached hereto and made a part hereof for
all purposes, and (iv) any intangible personal property now or hereafter used in
connection with the operation, maintenance, management, or occupancy of the Real
Property, including, without limitation, trade names and trademarks associated
with the Real Property (as defined in the Agreement) (provided Seller makes
absolutely no representation that it has any rights whatsoever with respect to
trade names or trademarks).
This Assignment is made subject, subordinate and inferior to the
easements, covenants and other matters and exceptions set forth on Exhibit D,
attached hereto and made a part hereof for all purposes.
ASSIGNEE ACKNOWLEDGES AND AGREES, BY ITS ACCEPTANCE HEREOF, THAT, EXCEPT
AS EXPRESSLY PROVIDED HEREIN OR IN THAT CERTAIN AGREEMENT OF PURCHASE AND SALE,
DATED AS OF _______________, 199__, BY AND BETWEEN ASSIGNOR AND ASSIGNEE (THE
"AGREEMENT"), THE LEASES, THE CONTRACTS AND THE WARRANTIES ARE CONVEYED "AS IS,
WHERE IS" AND IN THEIR PRESENT CONDITION WITH ALL FAULTS, AND THAT ASSIGNOR HAS
NOT MADE, DOES NOT MAKE AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS,
WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR
CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT
OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO THE NATURE, QUALITY OR
CONDITION OF THE LEASES, THE CONTRACTS OR THE WARRANTIES, THE INCOME TO BE
DERIVED THEREFROM, OR THE ENFORCEABILITY, MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OF THE LEASES, THE CONTRACTS OR THE WARRANTIES.
Except as otherwise expressly provided herein or in the Agreement, by
accepting this Assignment and by its execution hereof, Assignee assumes the
payment and performance of, and agrees to pay, perform and discharge, all the
debts, duties and obligations to be paid, performed
E-1
<PAGE> 55
or discharged from and after the Closing Date (as defined in the Agreement), by
(a) the "landlord" or the "lessor" under the terms, covenants and conditions of
the Leases, including, without limitation, brokerage commissions and compliance
with the terms of the Leases relating to tenant improvements and security
deposits, and (b) the owner under the Contracts and/or the Warranties.
Subject to terms and conditions of Section 9.19 of the Agreement,
Assignor agrees to indemnify Assignee and hold harmless and defend Assignee from
and against any and all claims, damages, liabilities, losses, costs and expenses
(including, without limitation, reasonable attorneys fees) resulting from any
failure by Assignor to have paid, performed or discharged any debts, duties or
obligations which Assignor was obligated to have paid, performed or discharged
prior to the Closing Date and accruing for the period prior to the Closing Date,
(a) by the landlord or lessor under the terms, covenants and conditions of the
Leases or (b) the owner under the Contracts and/or the Warranties, excluding,
with respect to clauses (a) and (b), any such debts, duties or obligations
arising out of or in any way related to the physical condition of the Property,
including, without limitation, the environmental condition thereof (as defined
in the Agreement) and any repair or remediation of the Property, but including
any such obligations arising out of damages suffered by and payable to a tenant
as a result of Assignor's breach prior to the Closing Date of a covenant of
landlord pursuant to the provisions of the Lease relating to the physical
condition of the Property, including without limitation, the environmental
condition thereof. Assignee agrees to indemnify, hold harmless and defend
Assignor from and against any and all claims, losses, liabilities, damages,
costs and expenses (including, without limitation, reasonable attorneys' fees)
resulting by reason of the failure of Assignee to pay, perform or discharge any
of the debts, duties or obligations assumed or agreed to by Assignee hereunder.
The obligations of Assignor are intended to be binding only on the
property of Assignor and shall not be personally binding upon, nor shall any
resort be had to, the private properties of any of its trustees, officers,
beneficiaries, directors, members, or shareholders, or of its investment
manager, the general partners, officers, directors, members, or shareholders
thereof, or any employees or agents of Assignor or its investment manager. The
obligations of Assignee are intended to be binding only on the property of
Assignee and shall not be personally binding upon, nor shall any resort be had
to, the private properties of any of its trustees, officers, beneficiaries,
directors, members, or shareholders, or any employees or agents of Assignee.
All of the covenants, terms and conditions set forth herein shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
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<PAGE> 56
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment to
be executed on the day and year first above written.
ASSIGNOR: ______________________________________
a ____________________________________
By: _________________________________
Its Investment Manager
By: _____________________________
Its:_____________________________
ASSIGNEE: ______________________________________
a ____________________________________
By: _________________________________
Its: _________________________________
E-3
<PAGE> 57
EXHIBIT F
---------
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 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.
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<PAGE> 58
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 of 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 not 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. Unless you are notified by your landlord to
the contrary, from the date of this Estoppel Certificate through November 30,
1998, no modification or amendment to the Lease 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.
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<PAGE> 59
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 PCBs, 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. To the best of Tenant's knowledge, no underground storage tanks exist or
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.
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: __________________________
F-3
<PAGE> 1
EXHIBIT 10.3
INDUSTRIAL PORTFOLIO
AGREEMENT OF PURCHASE AND SALE
(WEST SACRAMENTO INDUSTRIAL CENTER)
This Agreement of Purchase and Sale ("Agreement"), dated as of December
11, 1998, is between SPT Real Estate Corp. D, a Delaware corporation ("Seller"),
and Pacific Gulf Properties Inc., a Maryland corporation ("Buyer").
ARTICLE I
PURCHASE AND SALE OF PROPERTY
SECTION 1.1 SALE.
Seller agrees to sell to Buyer, and Buyer agrees to purchase from
Seller, subject to the terms, covenants and conditions set forth herein, (i)
that certain industrial real property, together with any and all rights,
privileges and easements appurtenant thereto owned by Seller, (ii) all
improvements, buildings systems and fixtures located therein or thereon owned by
Seller, which real property is more particularly described in EXHIBIT A attached
hereto and made a part hereof (collectively the "Real Property"), together with
Seller's interest in all tenant leases and any other occupancy agreements
(hereinafter collectively referred to as the "leases") affecting the right to
occupy any portion of the Real Property, Seller's interest in any intangible
personal property now or hereafter used in connection with the operation,
Seller's interest in maintenance, management, or occupancy of the Real Property,
including, without limitation, Seller's interest in any trade names and
trademarks associated with the Real Property (provided Seller makes absolutely
no representation that it has any rights whatsoever with respect to trade names
or trademarks), and (iii) any personal property owned by Seller, if any, located
on the Real Property and used exclusively in the operation or maintenance of the
Real Property, as the same may be further described in any list which is in
Seller's possession and furnished to Buyer prior to the Closing (the "Personal
Property"). The Real Property and Personal Property are collectively referred to
herein as the "Property".
SECTION 1.2 PURCHASE PRICE.
(a) The purchase price of the Property is Six Million Four
Hundred Thousand Dollars ($6,400,000)(the "Purchase Price").
(b) The Purchase Price shall be paid as follows:
(1) Upon the execution of this Agreement by Buyer and
Seller, Buyer's cash on deposit in escrow with Chicago Title Company (the "Title
Company") shall be allocated in the amount of Fifty Thousand Dollars ($50,000)
(the "Deposit") to this Agreement.
(2) THE DEPOSIT SHALL BE HELD IN AN INTEREST BEARING ACCOUNT
AND ALL INTEREST THEREON SHALL IN ALL EVENTS BELONG SOLELY TO BUYER. IF THE SALE
OF THE PROPERTY AS CONTEMPLATED HEREUNDER IS CONSUMMATED, THEN THE DEPOSIT SHALL
BE PAID TO SELLER AT THE CLOSING AND CREDITED AGAINST THE PURCHASE PRICE. IF THE
SALE OF THE
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<PAGE> 2
PROPERTY IS NOT CONSUMMATED DUE TO SELLER'S DEFAULT HEREUNDER, THEN, AS BUYER'S
SOLE REMEDIES, BUYER MAY EITHER: (1) TERMINATE THIS AGREEMENT AND RECEIVE A
REFUND OF THE DEPOSIT, IN WHICH EVENT NEITHER PARTY SHALL HAVE ANY FURTHER
RIGHTS OR OBLIGATIONS HEREUNDER EXCEPT AS PROVIDED IN SECTIONS 6.1, 9.3 AND 9.9
BELOW, OR (2) BUYER MAY ENFORCE SPECIFIC PERFORMANCE OF THIS AGREEMENT. IF THE
SALE IS NOT CONSUMMATED DUE TO ANY DEFAULT BY BUYER HEREUNDER, THEN SELLER AS
ITS SOLE AND EXCLUSIVE REMEDY SHALL RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES.
THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE EVENT OF A FAILURE
TO CONSUMMATE THIS SALE DUE TO BUYER'S DEFAULT, WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICABLE TO DETERMINE. AFTER NEGOTIATION, THE PARTIES HAVE AGREED THAT,
CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT, THE
AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF THE DAMAGES THAT SELLER WOULD
INCUR IN SUCH EVENT. BY PLACING THEIR INITIALS BELOW, EACH PARTY SPECIFICALLY
CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY
WAS REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE,
THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION. IF THE SALE OF THE
PROPERTY IS NOT CONSUMMATED DUE TO ANY REASON OTHER THAN BUYER OR SELLER'S
DEFAULT HEREUNDER, THEN, THE DEPOSIT SHALL BE RETURNED TO BUYER AND NEITHER
PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER EXCEPT AS PROVIDED
IN SECTIONS 6.1, 9.3 AND 9.9 BELOW. THE FOREGOING IS NOT INTENDED TO LIMIT
BUYER'S OBLIGATIONS UNDER SECTIONS 6.1, 9.3 AND 9.9.
INITIALS: SELLER ________ BUYER _______
(3) The balance of the Purchase Price, which is Six Million
Three Hundred Fifty Thousand Dollars ($6,350,000), shall be paid to Seller all
in cash at the consummation of the purchase and sale contemplated hereunder (the
"Closing").
ARTICLE II
CONDITIONS
SECTION 2.1 CONDITION PRECEDENT.
Buyer's obligation to purchase the Property is conditioned upon the
following:
(a) Buyer's review and approval of updated preliminary title
report, together with copies of the underlying documents, and any survey of the
Property in Seller's possession. These items have been furnished to Buyer prior
to the execution of this Agreement.
(b) Buyer's review and approval of all leases affecting the
Property and any rent roll in Seller's possession provided that, notwithstanding
any other provision of this Agreement, Seller makes no representation as to, and
Buyer agrees that it shall not rely on, the accuracy of any information
contained in such rent roll. Seller has furnished to Buyer copies of the leases
and any rent roll.
(c) Buyer's review and approval of the physical condition of the
Property.
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<PAGE> 3
(d) Buyer's review and approval of all zoning, land use,
building, environmental and other statutes, rules, or regulations applicable to
the Property.
(e) Buyer's review and approval of operating statements with
respect to the Property for 1996, 1997 and for the first eight (8) months of
1998, bills for the most recent real property taxes and assessments for the
Property, certificates of occupancy, plans and specifications, soils,
environmental and other reports, service contracts, guaranties, warranties and
other contracts or documents which will be binding on Buyer, or benefit the
Property, after the Closing. Seller has made available to Buyer copies of all
such items in Seller's possession for Buyer's inspection and copying, at Buyer's
expense, during reasonable business hours. Notwithstanding the foregoing,
Buyer's review shall not include a review of Seller's internal economic
memoranda or reports, attorney-client privileged materials or Seller's
appraisals of the Property, if any.
(f) Buyer's review and approval of any other matters Buyer deems
relevant to the Property.
(g) Approval by Buyer's Board of Directors of the transactions
contemplated by this Agreement by November 20, 1998. If Buyer does not notify
Seller that Buyer's Board of Directors has disapproved the transactions
contemplated by this Agreement on or before said date, this condition shall be
deemed satisfied.
SECTION 2.2 CONTINGENCY PERIOD.
Buyer shall have until 5:00 p.m., California time, on December 17, 1998
(such period being referred to herein as the "Contingency Period") to review and
approve the matters described in Sections 2.1(a)-(f) above in Buyer's sole
discretion. If Buyer determines to proceed with the purchase of the Property,
then Buyer shall, before the end of the Contingency Period, notify Seller in
writing that Buyer has approved all of the matters described in Section
2.1(a)-(f) above, including, without limitation, all documents, agreements,
surveys, reports and other items and materials delivered to or made available to
Buyer in connection with this Agreement (the "Due Diligence Materials"). If
before the end of the Contingency Period Buyer fails to give Seller such written
notice, then Buyer shall be deemed to have elected to terminate this Agreement,
the Deposit shall be returned to Buyer, and neither party shall have any further
rights or obligations hereunder except as provided in Sections 6.1, 9.3 and 9.9
below. Notwithstanding the foregoing, Buyer acknowledges and agrees that it has
reviewed and unconditionally approved of all matters described in Sections
2.1(b)-(g) above, including, without limitation, the Due Diligence Materials
referenced therein. Consequently, Buyer shall have until the end of the
Contingency Period to review and approve the title and survey matters described
in Subsection 2.1(a) above.
SECTION 2.3 CONSIDERATION.
Notwithstanding anything in this Agreement to the contrary, to induce
Buyer to enter into this Agreement and to expend the time and resources
necessary to evaluate the Property and possibly forego other opportunities while
doing so, Seller hereby grants to Buyer the rights to terminate this Agreement
as provided herein. Such expenditures of time and resources and
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<PAGE> 4
possible loss of opportunity by Buyer constitute adequate consideration for
Seller's remaining bound by this Agreement notwithstanding such termination
rights in Buyer.
SECTION 2.4 [INTENTIONALLY DELETED].
ARTICLE III
BUYER'S EXAMINATION
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF SELLER.
Subject to the provisions of Sections 3.2 and 3.3 below, Seller hereby
makes the following representations and warranties with respect to the Property,
provided that Seller makes no representations or warranties with respect to the
matters (the "Disclosure Items") which are set forth in SCHEDULE 1 attached
hereto and made a part hereof. Notwithstanding anything to the contrary
contained herein or in any document delivered in connection herewith, Seller
shall have no liability with respect to the Disclosure Items.
(a) Seller has not (i) made a general assignment for the benefit
of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the
filing of any involuntary petition by Seller's creditors, (iii) suffered the
appointment of a receiver to take possession of all, or substantially all, of
Seller's assets, (iv) suffered the attachment or other judicial seizure of all,
or substantially all, of Seller's assets, (v) admitted in writing its inability
to pay its debts as they come due, or (vi) made an offer of settlement,
extension or composition to its creditors generally.
(b) Seller is not a "foreign person" as defined in Section 1445
of the Internal Revenue Code of 1986, as amended (the "Code") and any related
regulations.
(c) This Agreement and all documents executed by Seller which
are to be delivered at the Closing (i) have been or will be duly authorized,
executed and delivered by Seller, and (ii) do not or will not violate any
provision of any agreement or judicial order to which Seller is a party or to
which Seller or the Property is subject.
(d) Seller has the power and authority to enter into this
Agreement and to perform its obligations hereunder.
(e) Copies of the leases and contracts delivered or made
available to Buyer by Seller are true and accurate copies of such items.
(f) The only tenant leases and amendments thereto in force for
the Property as of the date hereof are set forth in a list which is attached
hereto as EXHIBIT B and made a part hereof.
(g) To the best of Seller's knowledge, there is no litigation
pending with respect to the Property.
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<PAGE> 5
(h) To the best of Seller's knowledge, Seller has received no
written notice that the Property or its current use and operation are in
material violation of any applicable law.
(i) To the best of Seller's knowledge, the documents which will
be delivered by Seller to Buyer or made available by Seller to Buyer for Buyer's
inspection and copying are true and complete copies of all documents in Seller's
possession related to the Property except for Seller's internal economic
memoranda and reports, attorney-client privileged materials and Seller's
appraisals of the Property, if any.
(j) To the best of Seller's knowledge, Seller has received no
written notice of any (i) condemnation, environmental, zoning or other land-use
proceedings, instituted or threatened, against the Property, or (ii) special
assessment proceedings affecting the Property (other than as set forth in the
preliminary title report).
(k) To the best of Seller's knowledge, Seller has received no
written notice of any material litigation or arbitration, instituted or intended
to be instituted, against the Property or against Seller as owner of the
Property except as set forth on SCHEDULE 1.
(l) To the best of Seller's knowledge, Seller has received no
written notice that 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 except as set forth on SCHEDULE 1.
(m) Seller has received no written notice of any defaults by
Seller under any of the leases except as set forth on SCHEDULE 1. Except as set
forth on SCHEDULE 1, Seller has given no written notice to any tenants of the
Property of any defaults under its lease which has not been cured.
(n) Seller has received no written notice of any defaults by
Seller which have not been cured under the service contracts, guaranties, or
warranties which will be binding on Buyer, after the Closing.
(o) Seller is duly formed, validly existing and in good standing
under the laws of the State of Delaware and is qualified to do business as a
foreign corporation in California.
(p) SCHEDULE 2 attached hereto is a complete and accurate list
of all employee benefit or other plans described in Section 3.5(e) below which
are investors in Seller.
Each of the representations and warranties of Seller contained in this
Section 3.1: (1) is true as of the date of this Agreement; (2) except for the
representations and warranties contained in Sections 3.1 (l) and (m), shall be
deemed remade by Seller, and shall be true in all material respects as of the
date of Closing, subject in either case to (A) any Exception Matters (as defined
below), (B) the Disclosure Items, and (C) other matters expressly permitted in
this Agreement or otherwise approved in writing by Buyer including, without
limitation, the Due Diligence Materials; and (3) shall survive the close of
escrow as provided in Section 3.3 below. In connection with the representations
and warranties contained in Sections 3.1 (l) and (m), Seller shall deliver to
Buyer: (x) three (3) days prior to the expiration of the Contingency Period, an
updated SCHEDULE 1, as necessary, effective as of such date, for matters
relating to the representation and warranty in Section 3.1(l), and (y) three (3)
days prior to the expiration of the
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<PAGE> 6
Contingency Period, an updated aged receivable report, effective as of the date
that is seven (7) days prior to the expiration of the Contingency Period, for
matters relating to the representation and warranty in Section 3.1(m).
SECTION 3.2 NO LIABILITY FOR EXCEPTION MATTERS.
As used herein, the term "Exception Matter" shall refer to a matter
disclosed to Buyer in writing or discovered by Buyer before the Closing, that
would make a representation or warranty of Seller contained in this Agreement
untrue or incorrect, including, without limitation, matters disclosed in writing
to Buyer by Seller or by any other person. If Buyer obtains knowledge of any
Exception Matter after the date hereof, Buyer may terminate this Agreement and
receive a return of the Deposit upon written notice to Seller within five (5)
business days after Buyer learns of such Exception Matter. (For purposes of this
Agreement, "business day" shall mean any day other than a Saturday or Sunday, a
California State holiday, a national holiday or other day on which commercial
bankers in California are generally not open for business.) Buyer shall promptly
notify Seller in writing of any Exception Matter of which Buyer obtains
knowledge before the Closing. If Buyer obtains knowledge of any Exception Matter
before the Closing, but nonetheless elects to proceed with the acquisition of
the Property, Buyer shall consummate the acquisition of the Property subject to
such Exception Matter and Seller shall have no liability with respect to such
Exception Matter, notwithstanding any contrary provision, covenant,
representation or warranty contained in this Agreement. If Buyer elects to
terminate this Agreement on the basis of any Exception Matter, Buyer shall so
notify Seller in writing within five (5) business days following Buyer's
discovery of the Exception Matter, and the Deposit shall be returned to Buyer.
Buyer's failure to give such notice within such 5 business-day period shall be
deemed a waiver by Buyer of such Exception Matter. Upon a termination of this
Agreement pursuant to this Section 3.2, neither party shall have any further
rights or obligations hereunder, except as provided in Sections 6.1, 9.3 and 9.9
below. If Buyer first obtains knowledge of an Exception Matter within five (5)
business days of the Closing Date, the Closing shall be automatically extended
for the number of business days necessary to give Buyer five (5) business days
to respond to such Exception Matter. Seller shall have no obligation to cure or
remedy any Exception Matter, and, subject to Buyer's right to terminate this
Agreement as set forth above, Seller shall have no liability whatsoever to Buyer
with respect to any Exception Matters.
SECTION 3.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Seller and Buyer contained herein
shall survive for a period of twelve (12) months after the Closing, except that
Buyer's representations and warranties in Sections 3.5(d) and 3.5(e), Seller's
representations and warranties in Sections 3.1(p) and Seller's and Buyer's
representations and warranties in Section 6.1 shall survive indefinitely. Any
claim which Buyer or Seller may have at any time against the other for a breach
of any such representation or warranty (other than those contained in Sections
3.1(p), 3.5(d), 3.5(e) and 6.1), whether known or unknown, which is not asserted
by written notice to Seller or Buyer within such twelve (12) month period shall
not be valid or effective, and the party shall have no liability with respect
thereto.
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SECTION 3.4 SELLER'S KNOWLEDGE.
For purposes of this Agreement and any document delivered at Closing,
whenever the phrase "to the best of Seller's knowledge" or the "knowledge" of
Seller or words of similar import are used, they shall be deemed to refer to the
current actual knowledge of Mark Carlson (the person at Seller who is in charge
of disposition of the Property) and Kevin Archer, Vice President and Director of
Properties, at the times indicated only and not any implied, imputed or
constructive knowledge, without any independent investigation having been made
or any implied duty to investigate.
SECTION 3.5 REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller as follows:
(a) Buyer represents and warrants to Seller that this Agreement
and all documents executed by Buyer which are to be delivered to Seller at
Closing do not and at the time of Closing will not violate any provision of any
agreement or judicial order to which Buyer is a party or to which Buyer is
subject.
(b) Buyer represents and warrants to Seller that Buyer has not
(i) made a general assignment for the benefit of creditors, (ii) filed any
voluntary petition in bankruptcy or suffered the filing of any involuntary
petition by Buyer's creditors, (iii) suffered the appointment of a receiver to
take possession of all, or substantially all, of Buyer's assets, (iv) suffered
the attachment or other judicial seizure of all, or substantially all, of
Buyer's assets, (v) admitted in writing its inability to pay its debts as they
come due, or (vi) made an offer of settlement, extension or composition to its
creditors generally.
(c) Buyer is duly formed, validly existing and in good standing
under the laws of the State of Maryland. Buyer has duly authorized, executed and
delivered this Agreement.
(d) Buyer is purchasing the Property as investment rental
property, and not for Buyer's own operations or use.
(e) Buyer is not a party in interest with respect to any
employee benefit or other plan within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or of
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"), which is subject to ERISA or Section 4975 of the Code and which is
listed on SCHEDULE 2 attached hereto.
Each of the representations and warranties of Buyer contained in this Section
shall be deemed remade by Buyer as of the Closing and shall survive the Closing
as provided in Section 3.3 above.
SECTION 3.6 BUYER'S INDEPENDENT INVESTIGATION.
(a) Buyer acknowledges and agrees that it has been given or will
be given before the end of the Contingency Period, a full opportunity to inspect
and investigate each and
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every aspect of the Property, either independently or through agents of Buyer's
choosing, including, without limitation:
(1) All matters relating to title, together with all
governmental and other legal requirements such as taxes, assessments, zoning,
use permit requirements and building codes.
(2) The physical condition and aspects of the Property,
including, without limitation, the interior, the exterior, the square footage
within the improvements on the Real Property and within each tenant space
therein, the structure, seismic aspects of the Property, the paving, the
utilities, and all other physical and functional aspects of the Property. Such
examination of the physical condition of the Property shall include an
examination for the presence or absence of Hazardous Materials, as defined
below, which shall be performed or arranged by Buyer at Buyer's sole expense.
For purposes of this Agreement, "Hazardous Materials" shall mean inflammable
explosives, radioactive materials, asbestos, polychlorinated biphenyls, lead,
lead-based paint, under and/or above ground tanks, hazardous materials,
hazardous wastes, hazardous substances, oil, or related materials, which are
listed or regulated in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (42 U.S.C. Sections 6901, et seq.), the
Resources Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901, et
seq.), the Clean Water Act (33 U.S.C. Section 1251, et seq.), the Safe Drinking
Water Act (14 U.S.C. Section 1401, et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801, et seq.), the and Toxic Substance
Control Act (15 U.S.C. Section 2601, et seq.), the California Hazardous Waste
Control Law (California Health and Safety Code Section 25100, et seq.), the
Porter-Cologne Water Quality Control Act (California Water Code Section 13000,
et seq.), and the Safe Drinking Water and Toxic Enforcement Act of 1986
(California Health and Safety Code Section 25249.5, et seq.); and any other
applicable federal, state or local laws and regulations.
(3) Any easements and/or access rights affecting the
Property.
(4) The leases and all matters in connection therewith,
including, without limitation, the ability of the tenants to pay the rent and
the economic viability of the tenants.
(5) The service contracts and any other documents or
agreements of significance affecting the Property.
(6) All other matters of material significance affecting the
Property.
(b) BUYER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT SELLER IS
SELLING AND BUYER IS PURCHASING THE PROPERTY ON AN "AS IS WITH ALL FAULTS" BASIS
AND THAT BUYER IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND
WHATSOEVER, EXPRESS OR IMPLIED, FROM SELLER, ITS AGENTS, OR BROKERS AS TO ANY
MATTERS CONCERNING THE PROPERTY EXCEPT AS EXPRESSLY SET FORTH IN SECTION 3.1
ABOVE, INCLUDING WITHOUT LIMITATION: (i) the quality, nature, adequacy and
physical condition and aspects of the Property, including, but not limited to,
the structural elements, seismic aspects of the Property, foundation, roof,
appurtenances, access, landscaping,
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parking facilities and the electrical, mechanical, HVAC, plumbing, sewage, and
utility systems, facilities and appliances, the square footage within the
improvements on the Real Property and within each tenant space therein, (ii) the
quality, nature, adequacy, and physical condition of soils, geology and any
groundwater, (iii) the existence, quality, nature, adequacy and physical
condition of utilities serving the Property, (iv) the development potential of
the Property, and the Property's use, habitability, merchantability, or fitness,
suitability, value or adequacy of the Property for any particular purpose, (v)
the zoning or other legal status of the Property or any other public or private
restrictions on use of the Property, (vi) the compliance of the Property or its
operation with any applicable codes, laws, regulations, statutes, ordinances,
covenants, conditions and restrictions of any governmental or quasi-governmental
entity or of any other person or entity, (vii) the presence of Hazardous
Materials on, under or about the Property or the adjoining or neighboring
property, (viii) the quality of any labor and materials used in any improvements
on the Real Property, (ix) the condition of title to the Property, (x) the
leases, service contracts, or other agreements affecting the Property and (xi)
the economics of the operation of the Property.
SECTION 3.7 RELEASE.
(a) Without limiting the above, and subject to the
representations and warranties of Seller contained in Section 3.1 hereof, Buyer
on behalf of itself and its successors and assigns waives its right to recover
from, and forever releases and discharges, Seller, Seller's affiliates, Seller's
investment manager, the partners, trustees, beneficiaries, shareholders,
members, directors, officers, employees and agents of each of them, and their
respective heirs, successors, personal representatives and assigns
(collectively, the "Seller Related Parties"), from any and all demands, claims,
legal or administrative proceedings, losses, liabilities, damages, penalties,
fines, liens, judgments, costs or expenses whatsoever (including, without
limitation, attorneys' fees and costs), whether direct or indirect, known or
unknown, foreseen or unforeseen, that may arise on account of or in any way be
connected with (i) the physical condition of the Property including, without
limitation, all structural and seismic elements, all mechanical, electrical,
plumbing, sewage, heating, ventilating, air conditioning and other systems, the
environmental condition of the Property and Hazardous Materials on, under or
about the Property, or (ii) any law or regulation applicable to the Property,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections 6901, et
seq.), the Resources Conservation and Recovery Act of 1976 (42 U.S.C. Section
6901, et seq.), the Clean Water Act (33 U.S.C. Section 1251, et seq.), the Safe
Drinking Water Act (14 U.S.C. Section 1401, et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801, et seq.), the and Toxic Substance
Control Act (15 U.S.C. Section 2601, et seq.), the California Hazardous Waste
Control Law (California Health and Safety Code Section 25100, et seq.), the
Porter-Cologne Water Quality Control Act (California Water Code Section 13000,
et seq.), and the Safe Drinking Water and Toxic Enforcement Act of 1986
(California Health and Safety Code Section 25249.5, et seq.), and any other
applicable federal, state or local laws and regulations.
(b) In connection with section 3.7(a) above, Buyer expressly
waives the benefits of Section 1542 of the California Civil Code, which provides
as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
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THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR."
SECTION 3.8 SURVIVAL.
The provisions of this Article III shall survive the Closing subject to
the limitations and qualifications contained in such provisions.
ARTICLE IV
TITLE
SECTION 4.9 CONDITIONS OF TITLE.
At the Closing, Seller shall convey its title to the Property to Buyer
by grant deed in the form attached hereto as EXHIBIT C (the "Deed") subject to
no exceptions other than:
(a) Interests of tenants in possession;
(b) Non-delinquent liens for real estate taxes and assessments;
and (C) Any exceptions disclosed by the preliminary title report and any
amendments or supplements thereto, the public records or the Due Diligence
Materials, and any other exceptions to title which would be disclosed by an
inspection and/or survey of the Property except for trust deeds, mortgages and
other monetary liens granted or caused by Seller other than non-delinquent liens
for real estate taxes and assessments. Buyer may at its option approve or
disapprove exceptions which are first disclosed to Buyer after the date which is
five (5) days prior to the end of the Contingency Date within five (5) days of
the date of such disclosure to Buyer. If Buyer disapproves of such new
exceptions, Buyer may, as Buyer's sole rights and remedies, either: (i)
terminate this Agreement in which event the Deposit shall be returned to Buyer,
and neither party under this Agreement shall have any rights or obligation
except as provided in Sections 6.1, 9.3 and 9.9 below, or (ii) waive its
disapproval and take title to the Property subject to such new exceptions.
All of the foregoing exceptions shall be referred to collectively as the
"Conditions of Title." By acceptance of the Deed and the Closing of the purchase
and sale of the Property, (i) Buyer agrees it is assuming for the benefit of
Seller all of the obligations of Seller with respect to the Conditions of Title
but only to the extent such obligations arise from and after the Closing, and
(ii) Buyer agrees that Seller shall have conclusively satisfied its obligations
with respect to title to the Property. The provisions of this Section shall
survive the Closing.
SECTION 4.2 EVIDENCE OF TITLE.
Delivery of title in accordance with the foregoing shall be evidenced by
the willingness of the Title Company to issue, at Closing, its Owner's ALTA
Policy of Title Insurance (Form B, rev. 10/17/70) in the amount of the Purchase
Price showing title to the Real Property vested in Buyer, subject to the
Conditions of Title and with the following CLTA endorsements: 100 (modified for
an owner), 101.4, 103.7, 116, 116.1, 116.4 and 116.7 (the "Title Policy"), or
the
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equivalent, but only to the extent that Buyer shall confirm in writing with the
Title Company prior to the end of the Contingency Period that the Title Company
will issue the aforesaid form of title insurance and endorsements at Closing and
Buyer shall, prior to the end of the Contingency Period, provide Seller with a
copy of such confirmation. Seller is under no obligation to provide any
indemnity or other agreement or undertaking to the Title Company in order for
Title Company to issue the foregoing endorsements. Buyer shall have prepared, at
Buyer's cost, the ALTA survey of the Property necessary to support the issuance
of the Title Policy.
ARTICLE V
RISK OF LOSS AND INSURANCE PROCEEDS
SECTION 5.1 MINOR LOSS.
Buyer shall be bound to purchase, and Seller shall be bound to sell, the
Property for the full Purchase Price as required by the terms hereof, without
regard to the occurrence or effect of any damage to the Property or destruction
of any improvements thereon or condemnation of any portion of the Property,
provided that: (a) the cost to repair any such damage or destruction, or the
diminution in the value of the remaining Property as a result of a partial
condemnation, does not exceed Five Hundred Thousand Dollars ($500,000) and (b)
upon the Closing, there shall be a credit against the Purchase Price due
hereunder equal to the amount of any insurance proceeds or condemnation awards
collected by Seller as a result of any such damage or destruction or
condemnation, plus the amount of any insurance deductible, less any sums
expended by Seller toward the restoration or repair of the Property. If the
proceeds or awards have not been collected as of the Closing, then such proceeds
or awards shall be assigned to Buyer, except to the extent needed to reimburse
Seller for sums expended to repair or restore the Property, and Seller shall
retain the rights to such proceeds and awards.
SECTION 5.2 MAJOR LOSS.
If the amount of the damage or destruction or condemnation as specified
above exceeds Five Hundred Thousand Dollars ($500,000), then Buyer may, at its
option to be exercised within five (5) business days of Buyer's receipt of
Seller's notice of the occurrence of the damage or destruction or the
commencement of condemnation proceedings, either terminate this Agreement or
consummate the purchase for the full Purchase Price as required by the terms
hereof. If Buyer elects to terminate this Agreement or fails to give Seller
notice within such 5 business-day period that Buyer will proceed with the
purchase, then the Deposit shall be returned to Buyer and neither party shall
have any further rights or obligations hereunder except as provided in Sections
6.1, 9.3 and 9.9 below. If Buyer elects to proceed with the purchase, then upon
the Closing, there shall be a credit against the Purchase Price due hereunder
equal to the amount of any insurance proceeds or condemnation awards collected
by Seller as a result of any such damage or destruction or condemnation, plus
the amount of any insurance deductible, less any sums expended by Seller toward
the restoration or repair of the Property. If the proceeds or awards have not
been collected as of the Closing, then such proceeds or awards shall be assigned
to Buyer, except to the extent needed to reimburse Seller for sums expended to
repair or restore the Property, and Seller shall retain the rights to such
proceeds and awards.
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ARTICLE VI
BROKERS AND EXPENSES
SECTION 6.1 BROKERS.
The parties represent and warrant to each other that no broker or finder
was instrumental in arranging or bringing about this transaction except for
Cushman & Wakefield of California, Inc. ("Seller's Broker"). At Closing, Seller
shall pay the commission due, if any, to Seller's Broker, which shall be paid
pursuant to a separate agreement between Seller and Seller's Broker. If any
other person brings a claim for a commission or finder's fee based upon any
contact, dealings or communication with Buyer or Seller, then the party through
whom such person makes his claim shall defend the other party (the "Indemnified
Party") from such claim, and shall indemnify the Indemnified Party and hold the
Indemnified Party harmless from any and all costs, damages, claims, liabilities
or expenses (including without limitation, reasonable attorneys' fees and
disbursements) incurred by the Indemnified Party in defending against the claim.
The provisions of this Section 6.1 shall survive the Closing or, if the purchase
and sale is not consummated, any termination of this Agreement.
SECTION 6.2 EXPENSES.
Except as provided in Sections 4.2 above and 8.5(b) below, each party
hereto shall pay its own expenses incurred in connection with this Agreement and
the transactions contemplated hereby.
ARTICLE VII
LEASES AND OTHER AGREEMENTS
SECTION 7.1 BUYER'S APPROVAL OF NEW LEASES AND AGREEMENTS AFFECTING THE
PROPERTY.
Between the date hereof and the Closing, Seller shall not enter into any
new lease or other agreement affecting the Property, or modify or terminate any
existing lease or other agreement affecting the Property, without first
obtaining Buyer's approval, which will not be unreasonably withheld or delayed
and which approval may take into account, without limitation, any tenant
improvement work, leasing commissions, free rent and other concessions for which
Buyer may be responsible or which may be allocated to Buyer. If Buyer fails to
give Seller notice of its approval or disapproval of any such proposed action
within two (2) business days after Seller notifies Buyer of Seller's desire to
take such action, then Buyer shall be deemed to have given its approval.
SECTION 7.2 TENANT IMPROVEMENT COSTS AND LEASING COMMISSIONS.
Seller shall be responsible for the cost of any and all tenant
improvement work and leasing commissions for the current term of any lease
affecting the Property fully executed and delivered by Seller and a tenant prior
to the date of this Agreement, provided that to the extent there are any such
outstanding tenant improvement costs as of the Closing, Buyer shall receive a
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credit therefor and shall assume all such obligations on and after the Closing.
With respect to any new lease or lease modification entered into by Seller,
between the date of this Agreement and the Closing Date and approved, or deemed
approved, by Buyer pursuant to Section 7.1, or lease renewal or lease extension
pursuant to the existing terms of a lease which is exercised after the date
hereof, if Seller performs or pays or contracts for any tenant improvement work
or pays or contracts for any leasing commissions before the Closing, then at
Closing, such expenses shall be prorated as provided hereafter, and Buyer shall
assume pursuant to the assignment and assumption agreement described in Section
8.3(a)(3) any and all obligations outstanding with respect to Buyer's share of
such tenant improvements and leasing commissions. On and after the Closing,
Seller shall have no further obligations with respect to Buyer's share of such
costs which are prorated as hereafter provided. Notwithstanding the foregoing,
Buyer hereby approves the leases set forth on SCHEDULE 3 attached hereto. With
respect to any tenant improvement work, or leasing commissions, to be prorated
pursuant to this Section 7.2, such shall be prorated between Buyer and Seller as
follows: If, as a result of such new lease or lease modification, lease renewal
or lease extension, the gross rent payable by all tenants of the Property does
not exceed the gross rent payable pursuant to all leases in effect as of the
date of this Agreement which gross rent shall be determined as set forth on
SCHEDULE 4 attached hereto and made a part hereof, all such tenant improvement
work, and leasing commissions, attributable to such new lease, lease
modification, lease renewal or lease extension shall be paid by Seller. If, as a
result of such new lease or lease modification, lease renewal or lease extension
the gross rent payable by all tenants of the Property does exceed the gross rent
payable pursuant to all leases in effect as of the date of this Agreement, all
such tenant improvement work, and leasing commissions attributable to such new
lease, lease modification, lease renewal or lease extension shall be prorated so
that Seller pays or Buyer receives a credit (if Seller has not paid) for a
portion thereof determined by multiplying the amounts thereof by the number of
days of the initial term of the applicable lease which have elapsed at the
Closing, dividing by the total number of days in the initial term of such lease,
and further multiplying by a fraction which is the portion of the gross rent
under such lease which does not represent an increase in the gross rent payable
pursuant to all leases in effect as of the date of this Agreement, and Buyer
pays or Seller receives a credit (if Seller has paid) for the balance. Anything
contained herein to the contrary notwithstanding, Seller shall pay and Buyer
shall have no liability for, any and all commissions, bonuses or incentives
payable to Seller's employees arising out of any such new lease, lease
modification, lease renewal or lease extension. The provisions of this Section
shall survive the Closing.
SECTION 7.3 SERVICE CONTRACTS.
Seller will terminate all property management, brokerage and leasing
contracts affecting the Property at Closing.
SECTION 7.4 TENANT NOTICES.
At the Closing, Seller shall furnish Buyer with a signed notice to be
given to each tenant of the Property. The notice shall disclose that the
Property has been sold to Buyer, that, after the Closing, all rents should be
paid to Buyer at an address to be supplied by Buyer and that Buyer shall be
responsible for all the tenant's security deposit. The form of the notice and
the amount of each tenant's security deposit listed therein shall be otherwise
reasonably acceptable to the parties.
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ARTICLE VIII
CLOSING AND ESCROW
SECTION 8.1 ESCROW INSTRUCTIONS.
Upon execution of this Agreement, the parties hereto shall deposit an
executed counterpart of this Agreement with the Title Company, and this
instrument shall serve as the instructions to the Title Company as the escrow
holder for consummation of the purchase and sale contemplated hereby. Seller and
Buyer agree to execute such reasonable additional and supplementary escrow
instructions as may be appropriate to enable the Title Company to comply with
the terms of this Agreement; provided, however, that in the event of any
conflict between the provisions of this Agreement and any supplementary escrow
instructions, the terms of this Agreement shall control.
SECTION 8.2 CLOSING.
The Closing hereunder shall be held and delivery of all items to be made
at the Closing under the terms of this Agreement shall be made at the offices of
the Title Company on December 22, 1998, or such other earlier date and time as
Buyer and Seller may mutually agree upon in writing (the "Closing Date").
Notwithstanding the foregoing, Buyer shall have the right to extend the Closing
Date to December 28, 1998, before 10:00 a.m. local time, provided that
(a) on or before December 22, 1998, (i) Buyer delivers to Seller
and Title Company written notice of its election to extend the Closing
Date, and (ii) Buyer deposits in escrow all documents to be executed and
delivered by Buyer at Closing, including without limitation the Closing
Statement; and
(b) on or before December 24, 1998, the balance of the Purchase
Price, which is Six Million Three Hundred Fifty Thousand Dollars
($6,350,000), shall be deposited in cash in escrow with the Title
Company.
Except as expressly provided in this Agreement, such date and time may not be
extended without the prior written approval of both Seller and Buyer. All funds
of Buyer to be deposited in escrow for the Closing shall be deposited by Buyer
in escrow no later than the last business day prior to the Closing Date. In the
event that Buyer extends the Closing Date as specified above, Seller agrees to
deposit in escrow on or before December 22, 1998, all documents to be executed
and delivered by Seller at Closing, including without limitation the Closing
Statement.
SECTION 8.2 DEPOSIT OF DOCUMENTS.
(a) At or before the Closing, Seller shall deposit into escrow
the following items with respect to its portion of the Property:
(1) the duly executed and acknowledged Deed conveying all of
the Seller's right, title and interest to the Real Property to Buyer subject to
the Conditions of Title;
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(2) four (4) duly executed counterparts of the Bill of Sale
in the form attached hereto as EXHIBIT D (the "Bill of Sale") conveying all of
the Seller's right, title and interest in and to the Personal Property, with
Exhibit C to said Bill of Sale listing the Conditions of Title;
(3) four (4) duly executed counterparts of an Assignment and
Assumption of Leases, Service Contracts and Warranties in the form attached
hereto as EXHIBIT E pursuant to the terms of which Buyer shall assume all of
Seller's obligations under the leases, equipment leases, service contracts,
leasing commission agreements and tenant improvement agreements affecting the
Property to the extent set forth in said EXHIBIT E (the "Assignment of Leases"),
with Exhibit D to said document listing the Conditions of Title;
(4) an affidavit pursuant to Section 1445(b)(2) of the
Federal Code, and on which Buyer is entitled to rely, that Seller is not a
"foreign person" within the meaning of Section 1445(f)(3) of the Federal Code;
(5) California 590RE Certificate; and
(6) Four (4) duly executed counterparts of a closing
statement in form and content satisfactory to Buyer and Seller (the "Closing
Statement") duly executed by Seller.
(b) At or before Closing, Buyer shall deposit into escrow the
following items:
(1) funds necessary to close this transaction;
(2) four (4) duly executed counterparts of the Bill of Sale;
(3) four (4) duly executed counterparts of the Assignment of
Leases; and
(4) Four (4) duly executed counterparts of the Closing
Statement.
(c) Buyer and Seller shall each deposit such other instruments
as are reasonably required by the Title Company or otherwise required to close
the escrow and consummate the purchase and sale of the Property in accordance
with the terms hereof, including, without limitation, an agreement (the
"Designation Agreement") designating Title Company as the "Reporting Person" for
the transaction pursuant to Section 6045(e) of the Federal Code and the
regulations promulgated thereunder, and executed by Seller, Buyer and Title
Company. The Designation Agreement shall appear in Seller's and Buyer's escrow
instructions and shall be in a form reasonably acceptable to the parties, and,
in any event, shall comply with the requirements of Section 6045(e) of the
Federal Code and the regulations promulgated thereunder.
(d) Seller shall deliver to Buyer originals of the leases, copies of the tenant
correspondence files (for the three (3) most recent years of Seller's ownership
of the Property only), and originals of any other items which Seller was
required to furnish Buyer copies of or make available at the Property pursuant
to Section 2.1(e) above, except for Seller's general ledger and other internal
books or records which shall be retained by Seller, within five (5)
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business days after the Closing Date. Seller shall deliver to Buyer a set of
keys to the Property on the Closing Date.
SECTION 8.4 ESTOPPEL CERTIFICATES. Buyer has reviewed and approved all
of the tenant estoppel certificates obtained with respect to the Property, and
obtaining any additional estoppel certificates shall not be a condition to
Buyer's obligations hereunder.
SECTION 8.5 PRORATIONS.
(a) Rents, including, without limitation, percentage rents, if
any, and any additional charges and expenses payable under tenant leases, all as
and when actually collected (whether such collection occurs prior to, on or
after the Closing Date); real property taxes and assessments; water, sewer and
utility charges; amounts payable under any service contracts; annual permits
and/or inspection fees (calculated on the basis of the period covered); and any
other expenses of the operation and maintenance of the Property (including,
without limitation, those expenses listed on SCHEDULE 5 attached hereto already
paid by Seller but which are being amortized over time by Seller and with
respect to which Seller shall receive a credit at Closing in the amount of the
unamortized portion thereof), together with tenant improvement costs, leasing
commissions, as provided in Section 7.2 above, shall all be prorated as of 12:01
a.m. on the date the Deed is recorded, on the basis of a 365-day year. Any sums
collected by Buyer from tenants after the Closing shall be promptly paid to
Seller to the extent of any rents and other sums which were delinquent at
Closing, after first applying all such amounts collected to current obligations.
Buyer shall use reasonable efforts to collect such delinquent rents but shall
not be obligated to expend any sums, commence any litigation, terminate any
lease or threaten to terminate any lease to do so. Seller retains the rights to
collect any such delinquent rents from tenants after Closing provided 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. The amount of any security
deposits under tenant leases shall be credited against the Purchase Price.
Seller shall receive credits at Closing for the amount of any utility or other
deposits with respect to the Property, in which case all such deposits for which
Seller receives credit shall remain in place for the benefit of Buyer and Seller
shall execute and deliver such documents as shall be necessary to assign such
deposits to Buyer. Buyer shall cause all utilities to be transferred into
Buyer's name and account at the time of Closing. Seller and Buyer hereby agree
that if any of the aforesaid prorations and credits cannot be calculated
accurately on the Closing Date, then the same shall be calculated as soon as
reasonably practicable after the Closing Date and either party owing the other
party a sum of money based on such subsequent proration(s) or credits shall
promptly pay said sum to the other party. 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 the Title
Company prior to the Closing.
16
<PAGE> 17
(b) Seller shall pay one-half (1/2) of the escrow fee, any
county transfer taxes applicable to the sale, and the costs of obtaining the
CLTA portion of the title insurance policy. Buyer shall pay the costs of
obtaining the ALTA portion of the title insurance policy, the cost of any
endorsements, and one-half (1/2) of the escrow fee. Recording charges and any
other expenses of the escrow for the sale shall be paid by Buyer and Seller in
accordance with customary practice as determined by the Title Company. In
addition, Seller shall be liable for any prepayment fee or other charge payable
in connection with any payoff of deeds of trusts or mortgages entered into by
Seller.
(c) The provisions of this Section 8.5 shall survive the
Closing.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 NOTICES.
Any notices required or permitted to be given hereunder shall be given
in writing and shall be delivered (a) in person, (b) by certified mail, postage
prepaid, return receipt requested, (c) by facsimile with confirmation of
receipt, or (d) by a commercial overnight courier that guarantees next day
delivery and provides a receipt, and such notices shall be addressed as follows:
To Buyer: Pacific Gulf Properties Inc.
4220 Von Karmen Avenue
Second Floor
Newport Beach, CA 92660
Attention: Lonnie P. Nadal
Telephone: (949) 223-5000
Fax No.: (949) 223-5033
with a copy to: Cox, Castle & Nicholson LLP
2049 Century Park East, Suite 2800
Los Angeles, California 90067
Attention: John H. Kuhl, Esq.
Telephone: (310) 284-2267
Fax No.: (310) 277-7889
To Seller: c/o RREEF America L.L.C.
101 California Street, 26th Floor
San Francisco, CA 94111
Attention: Mark Carlson
Telephone: (415) 781-3300
Fax No.: (415) 391-9015
17
<PAGE> 18
with a copy to: Orrick, Herrington & Sutcliffe LLP
400 Sansome Street
San Francisco, CA 94111
Attention: Michael H. Liever, Esq.
Telephone: (415) 773-5808
Fax No.: (415) 773-4285
To Title Company: Chicago Title Company
388 Market Street, Suite 1300
San Francisco, CA 94111
Attention: Beth Bailey Gates
Telephone: (415) 788-0871
Fax No.: (415) 434-2176
or to such other address as either party may from time to time specify in
writing to the other party. Any notice shall be effective only upon delivery.
SECTION 9.2 ENTIRE AGREEMENT.
This Agreement, together with the Exhibits hereto, contains all
representations, warranties and covenants made by Buyer and Seller and
constitutes the entire understanding between the parties hereto with respect to
the subject matter hereof. Any prior correspondence, memoranda or agreements are
replaced in total by this Agreement together with the Exhibits hereto.
SECTION 9.3 ENTRY AND INDEMNITY.
In connection with any entry by Buyer, or its agents, employees or
contractors onto the Property, Buyer shall give Seller reasonable advance notice
of such entry and shall conduct such entry and any inspections in connection
therewith so as to minimize, to the extent reasonably possible, interference
with Seller's business and the business of Seller's tenants and otherwise in a
manner reasonably acceptable to Seller. Without limiting the foregoing, prior to
any entry to perform any on-site testing, Buyer shall give Seller written notice
thereof, including the identity of the company or persons who will perform such
testing and the proposed scope of the testing. Seller shall approve or
disapprove, in Seller's sole discretion, the proposed testing within three (3)
business days after receipt of such notice. If Seller fails to respond within
such three (3) business day period, Seller shall be deemed to have disapproved
the proposed testing. If Buyer or its agents, employees or contractors take any
sample from the Property in connection with any such approved testing, Buyer
shall provide to Seller a portion of such sample being tested to allow Seller,
if it so chooses, to perform its own testing. Seller or its representative may
be present to observe any testing or other inspection performed on the Property.
Buyer shall not contact any governmental authority with respect to any
environmental matter relating to the Property, except for the sole and limited
purpose of obtaining information necessary to prepare a Phase I environmental
study, without first obtaining the prior written consent of Seller thereto, and
Seller, at Seller's election, shall be entitled to have a representative on any
phone or other contact made by Buyer to a governmental authority and present at
any meeting by Buyer with a governmental authority. In the event Buyer contacts
any governmental authority with respect to
18
<PAGE> 19
any matter other than environmental matters relating to the Property, Buyer
shall provide Seller with prior notice of such contact. Buyer shall maintain,
and shall assure that its contractors maintain, public liability and property
damage insurance in amounts and in form and substance adequate to insure against
all liability of Buyer and its agents, employees or contractors, arising out of
any entry or inspections of the Property pursuant to the provisions hereof, and
Buyer shall provide Seller with evidence of such insurance coverage upon request
by Seller. Buyer shall indemnify and hold Seller harmless from and against any
costs, damages, liabilities, losses, expenses, liens or claims (including,
without limitation, reasonable attorney's fees) arising out of or relating to
any entry on the Property by Buyer, its agents, employees or contractors in the
course of performing the inspections, testings or inquiries provided for in this
Agreement. The foregoing indemnity shall survive beyond the Closing, or, if the
sale is not consummated, beyond the termination of this Agreement.
SECTION 9.4 TIME.
Time is of the essence in the performance of each of the parties'
respective obligations contained herein.
SECTION 9.5 ATTORNEYS' FEES.
If either party hereto fails to perform any of its obligations under
this Agreement or if any dispute arises between the parties hereto concerning
the meaning or interpretation of any provision of this Agreement, then the
defaulting party or the party not prevailing in such dispute, as the case may
be, shall pay any and all costs and expenses incurred by the other party on
account of such default and/or in enforcing or establishing its rights
hereunder, including, without limitation, court costs and reasonable attorneys'
fees and disbursements. Any such attorneys' fees and other expenses incurred by
either party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from and in addition to any other amount included in such
judgment, and such attorneys' fees obligation is intended to be severable from
the other provisions of this Agreement and to survive and not be merged into any
such judgment.
SECTION 9.6 ASSIGNMENT.
Buyer's rights and obligations hereunder shall not be assignable without
the prior written consent of Seller. Notwithstanding the foregoing, Seller's
consent shall not be required for any assignment by Buyer to an entity of which
Buyer has majority ownership and control. Buyer shall in no event be released
from any of its obligations or liabilities hereunder in connection with any
assignment. Without limiting the above, in no event shall Buyer have the right
to assign its rights or obligations hereunder to any party which could not make
the representation and warranty contained in subsection 3.5(e) above, and in
connection with any assignment pursuant to the terms hereof, the assignee shall
reconfirm in a written instrument acceptable to Seller and delivered to Seller
prior to the assignment said representation and warranty as applied to the
assignee. Subject to the provisions of this Section, this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and assigns.
19
<PAGE> 20
SECTION 9.7 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
SECTION 9.8 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of California.
SECTION 9.9 CONFIDENTIALITY AND RETURN OF DOCUMENTS.
Buyer and Seller shall each maintain as confidential any and all
material obtained about the other or, in the case of Buyer, about the Property,
this Agreement or the transactions contemplated hereby, and shall not disclose
such information to any third party other than (i) each party's respective
consultants and professionals in connection with their review, evaluation,
negotiation and closing of the subject transaction, (ii) the parties= actual and
prospective lenders and investors, or (iii) the parties= officers, directors,
employees, agents, contractors, affiliates and representatives (collectively,
the "Representatives"), provided that all such parties shall keep such
information confidential as provided herein. The parties agree to keep, and to
use all reasonable efforts to cause the Representatives to keep, any information
and documents received from the other party (or based upon the party's
evaluation of the Property) confidential, except to the extent (a) such
information was known by the party prior to the date hereof on the basis of
information provided to the party by persons other than the other party or its
agents, (b) such information was of general public knowledge prior to the date
hereof, or (c) disclosure is required by law or court order or is used in
connection with any litigation between the parties hereto. This provision shall
survive the Closing or any termination of this Agreement.
SECTION 9.10 INTERPRETATION OF AGREEMENT.
The article, section and other headings of this Agreement are for
convenience of reference only and shall not be construed to affect the meaning
of any provision contained herein. Where the context so requires, the use of the
singular shall include the plural and vice versa and the use of the masculine
shall include the feminine and the neuter. The term "person" shall include any
individual, partnership, joint venture, corporation, trust, unincorporated
association, any other entity and any government or any department or agency
thereof, whether acting in an individual, fiduciary or other capacity.
SECTION 9.11 LIMITED LIABILITY.
The obligations of Seller are intended to be binding only on the
property of Seller and shall not be personally binding upon, nor shall any
resort be had to, the private properties of any of its trustees, officers,
beneficiaries, directors, members, or shareholders, or of its investment
manager, the general partners, officers, directors, members, or shareholders
thereof, or any employees or agents of Seller or its investment manager. The
obligations of Buyer are intended to be binding only on the property of Buyer
and shall not be personally binding upon, nor shall
20
<PAGE> 21
any resort be had to, the private properties of any of its trustees, officers,
beneficiaries, directors, members, or shareholders, or any employees or agents
of Buyer.
SECTION 9.12 AMENDMENTS.
This Agreement may be amended or modified only by a written instrument
signed by Buyer and Seller.
SECTION 9.13 NO RECORDING.
Neither this Agreement or any memorandum or short form thereof may be
recorded by Buyer.
SECTION 9.14 DRAFTS NOT AN OFFER TO ENTER INTO A LEGALLY BINDING
CONTRACT.
The parties hereto agree that the submission of a draft of this
Agreement by one party to another is not intended by either party to be an offer
to enter into a legally binding contract with respect to the purchase and sale
of the Property. The parties shall be legally bound with respect to the purchase
and sale of the Property pursuant to the terms of this Agreement only if and
when the parties have been able to negotiate all of the terms and provisions of
this Agreement in a manner acceptable to each of the parties in their respective
sole discretion, including, without limitation, all of the Exhibits and
Schedules hereto, and both Seller and Buyer have fully executed and delivered to
each other a counterpart of this Agreement, including, without limitation, all
Exhibits and Schedules hereto.
SECTION 9.15 ERISA.
Prior to Seller's execution of this Agreement, Buyer shall furnish to
Seller all information regarding Buyer, its affiliates and the shareholders,
members, investors or partners of each of them (collectively, the "Buyer Related
Parties") as Seller requests in order to enable Seller to determine to Seller's
sole satisfaction that Buyer's representation and warranty contained in Section
3.5(e) of this Agreement is true and correct. Buyer represents and warrants to
Seller that there will not be any change in any such information regarding Buyer
or the Buyer Related Parties prior to or on the Closing. Buyer's representation
and warranty in Section 3.5(e) shall be deemed qualified in all respects by any
such information provided to Seller.
SECTION 9.16 NO PARTNERSHIP.
The relationship of the parties hereto is solely that of Seller and
Buyer with respect to the Property and no joint venture or other partnership
exists between the parties hereto. Neither party has any fiduciary relationship
hereunder to the other.
SECTION 9.17 NO THIRD PARTY BENEFICIARY.
The provisions of this Agreement are not intended to benefit any third
parties.
21
<PAGE> 22
SECTION 9.18 SEC COMPLIANCE.
Seller hereby agrees to (i) cooperate with the auditors for Buyer to
allow Buyer's auditors to perform and complete in an expeditious manner from the
date hereof and no later than thirty (30) days after the Closing Date, an audit
of financial information prepared in accordance with GAAP for calendar year 1997
for the 314 Securities and Exchange Commission filing report and (ii) execute a
management representation letter in form reasonably acceptable to Seller and
limited to the actual knowledge of the portfolio manager of the Property (the
"Representation Letter"). The word "knowledge" shall be deemed to refer to the
current actual knowledge at the time indicated only and not implied, imputed or
constructive knowledge, without any independent investigation having been made
or any implied duty to investigate. Any representation or warranty contained in
such Representation Letter shall be considered representations of Seller under
this Agreement and shall be subject to all terms and conditions contained in
this Agreement, including without limitation, Sections 3.3, 9.2, 9.11 and 9.19
herein.
SECTION 9.19 LIMITATION ON LIABILITY.
Notwithstanding anything to the contrary contained herein, after the
Closing the maximum aggregate liability of Seller, and the maximum aggregate
amount which may be awarded to and collected by Buyer under this Agreement
(including, without limitation, for any breach of representation and warranty
contained herein), and any and all documents executed pursuant hereto or in
connection herewith (collectively the "Other Documents") including, without
limitation, the Deed, the Bill of Sale and the Assignment of Leases, shall under
no circumstances whatsoever exceed Three Percent (3%) of the Purchase Price.
SECTION 9.20 SURVIVAL.
Except as expressly set forth to the contrary herein, no
representations, warranties, covenants or agreements of the Seller contained
herein shall survive the Closing.
SECTION 9.21 SURVIVAL OF ARTICLE IX.
The provisions of this Article IX shall survive the Closing.
SECTION 9.22 POSSESSION.
Seller shall deliver possession of the Property to Buyer upon the
Closing, subject to the Conditions of Title.
SECTION 9.23 MAINTENANCE.
Between the date hereof and Closing, Seller shall operate the Property
pursuant to Seller's customary procedures consistent with the manner in which
Seller has operated the Property during Seller's ownership, provided Seller
shall not be obligated to make any capital expenditures in connection with such
operation.
22
<PAGE> 23
SECTION 9.24 INSURANCE.
Between the date hereof and Closing, Seller shall keep in effect all
blanket insurance policies presently in effect as of the date hereof, except
that Seller may modify its insurance coverage as long as Seller is doing so for
all or substantially all of the properties covered by such blanket policies.
SECTION 9.25 SECTION 1031 EXCHANGE.
Buyer may consummate the purchase of the Property as part of a so-called
like kind exchange (the "Exchange") pursuant to Section 1031 of the Internal
Revenue Code of 1986, as amended (the "Code"), provided that: (a) Closing shall
not be delayed or affected by reason of the Exchange nor shall the consummation
or accomplishment of the Exchange be a condition precedent or condition
subsequent to Buyer's obligations under this Agreement; (b) Buyer shall effect
the Exchange through an assignment of this Agreement, or its rights under this
Agreement, to a qualified intermediary, provided that such assignment shall not
release Buyer of its obligations hereunder and that all Closing documents,
including, without limitation, the Deed, Bill of Sale and Assignment of Leases
shall be directly between Buyer and Seller; (c) Seller shall not be required to
take an assignment of the purchase agreement for other property or be required
to acquire or hold title to, or any beneficial interest in, any real property
for purposes of consummating the Exchange; and (d) Buyer shall pay any
additional costs or expenses that would not otherwise have been incurred by
Buyer or Seller had Buyer not consummated its purchase through the Exchange.
Seller shall not by this Agreement or acquiescence to the Exchange have its
rights under this Agreement affected or diminished in any manner or be
responsible for compliance with or be deemed to have warranted to Buyer that the
Exchange in fact complies with Section 1031 of the Code and Buyer, will rely
solely and exclusively on its own tax advice with respect thereto. Seller shall
have the right to review and approve any documents to be executed by Seller in
connection with the Exchange, provided that Seller shall have no obligation to
execute any documents or to undertake any action by which Seller would or might
incur any liability or obligation not otherwise provided for in the other
provisions of this Agreement. Buyer shall indemnify and defend Seller and hold
Seller harmless from and against any and all claims, damages, liabilities,
losses, costs and expenses, including, without limitation, attorneys' fees and
costs, arising out of or in any way connected with the Exchange that Seller
would not have incurred but for the Exchange.
SECTION 9.26 SELLER'S CONDITIONS RELATED TO OTHER PURCHASE AGREEMENTS.
Concurrently with the execution and delivery hereof, SPT Real Estate
Corp. E (the "Broadway Seller") and Buyer are entering into a purchase and sale
agreement (the "Broadway Sale Agreement") with respect to certain additional
real property (the "Broadway Property"). It is a condition to Seller's
obligations hereunder that the Broadway Sale Agreement not be terminated on or
before the Closing. If for any reason whatsoever the Broadway Sale Agreement is
terminated on or prior to the Closing hereunder, then Seller shall have the
option, at its sole discretion, to waive such condition or to terminate this
Agreement by written notice to Buyer. Upon such termination, neither party shall
have any further rights or obligations hereunder, except as provided in Sections
6.1, 6.3 and 9.9, provided nothing contained herein shall limit Seller's rights
hereunder, including, without limitation, Seller's rights under Section 1.2, if
the
23
<PAGE> 24
termination is as a result of a default hereunder or under the Broadway Sale
Agreement by Buyer. Without limiting the foregoing, any default by Buyer under
the Broadway Sale Agreement shall be a default by Buyer hereunder.
The parties hereto have executed this Agreement as of the respective
dates written below.
SELLER: SPT REAL ESTATE CORP. D,
a Delaware corporation
By:
-------------------------
Stephen M. Steppe
Its: President
Date: , 1998
----------------------
BUYER: PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:
-------------------------
Its:
------------------------
Date: , 1998
----------------------
By:
-------------------------
Its:
------------------------
Date: , 1998
----------------------
24
<PAGE> 25
COUNTERPART SIGNATURE PAGE TO
AGREEMENT OF PURCHASE AND SALE
DATED AS OF DECEMBER 11, 1998
(TITLE COMPANY)
Title Company agrees to act as escrow holder and title company in
accordance with the terms of this Agreement and to act as the Reporting Person
in accordance with Section 6045(e) of the Internal Revenue Code and the
regulations promulgated thereunder.
CHICAGO TITLE COMPANY
By:
---------------------------
Its:
--------------------------
Date: , 1998
------------------
25
<PAGE> 26
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
Exhibit A Real Property Description
Exhibit B List of Tenant Leases
Exhibit C California Grant Deed
Exhibit D Bill of Sale
Exhibit E Assignment of Leases, Service Contracts and Warranties
SCHEDULES
Schedule 1 Disclosure Items
Schedule 2 Employee Benefit Plans
Schedule 3 Leases Approved by Buyer
Schedule 4 Gross Rent
Schedule 5 Unamortized Expenses
</TABLE>
<PAGE> 27
SCHEDULE 1
DISCLOSURE ITEMS
(WEST SACRAMENTO INDUSTRIAL CENTER)
1. Natural hazards described in the following California code sections
(the "Natural Hazard Laws") may affect such properties: (A) Govt. Code Section
8589.4; (B) Govt. Code Section 51183.4 (Fire Hazard Severity Zone); (C) Public
Resource Code Section 2621.9 (Earthquake Fault Zone); (D) Public Resource Code
Section 2694 (Seismic Hazard Zone); and (E) Public Resource Code Section 4136
(Wildland Area). Buyer acknowledges and agrees that Buyer will independently
evaluate and investigate whether any or all of such Natural Hazards affect such
properties and Seller shall have no liabilities or obligations with respect
thereto. Without limiting the foregoing, Buyer acknowledges and agrees that
Buyer knowingly and intentionally waives any disclosures, obligations or
requirements of Seller with respect to Natural Hazards, including, without
limitation, any disclosure obligations or requirements under the aforementioned
code sections. BUYER ACKNOWLEDGES AND REPRESENTS THAT BUYER HAS EXTENSIVE
EXPERIENCE ACQUIRING AND CONDUCTING DUE DILIGENCE REGARDING COMMERCIAL
PROPERTIES. THIS WAIVER BY BUYER OF ANY RIGHTS IT MAY HAVE HAS BEEN NEGOTIATED
AND IS AN ESSENTIAL ASPECT OF THE BARGAIN BETWEEN THE PARTIES.
2. Buyer acknowledges the possible presence of asbestos in mastic,
certain drywall paste, and floor tiles as well as PCB's in light fixtures,
although Seller has received no actual written notice of the presence or absence
of these materials.
S1-1
<PAGE> 28
SCHEDULE 2
EMPLOYEE BENEFIT PLANS
Shell Pension Trust
S2-1
<PAGE> 29
SCHEDULE 3
LEASES APPROVED BY BUYER
[NONE]
S3-1
<PAGE> 30
SCHEDULE 4
GROSS RENT
<TABLE>
<CAPTION>
- ----------------------------- -----------------------------------------------
<S> <C>
West Sacramento Industrial Center $ 52,209.00
- -----------------------------------------------------------------------------
</TABLE>
For purposes hereof, "Gross Rent" shall mean the total of the monthly base rent
payable by the existing tenants of each Property as of October 1998.
S4-1
<PAGE> 31
SCHEDULE 5
UNAMORTIZED EXPENSES
[None]
S5-1
<PAGE> 32
EXHIBIT A
REAL PROPERTY DESCRIPTION
A1-1
<PAGE> 33
EXHIBIT B
LIST OF TENANT LEASES
B-1
<PAGE> 34
EXHIBIT C
FORM OF CALIFORNIA GRANT DEED
RECORDING REQUESTED BY
WHEN RECORDED RETURN TO:
Cox, Castle & Nicholson LLP
2049 Century Park East, 28th Floor
Los Angeles, CA 90067
Attn: John H. Kuhl, Esq.
AND MAIL TAX STATEMENTS TO:
- ---------------------------
- ---------------------------
- ---------------------------
Attention:
-----------------
Documentary Transfer Tax is not of public record and is shown on a separate
sheet attached to this deed.
- ------------------------------------------------------------------------
GRANT DEED
FOR VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged,
________________________ ("Grantor") hereby grants to
___________________________ ("Grantee", the real property located in the City of
_____________, County of _____________, State of California, described on
EXHIBIT A attached hereto and made a part hereof. Grantor is conveying the
Property to Grantee subject to the exceptions to title thereto described on
EXHIBIT B attached hereto and made a part hereof.
Executed as of ______________, 1998.
[SELLER],
a
-----------------------------
By:
-----------------------
Its:
----------------------
C1-1
<PAGE> 35
STATE OF CALIFORNIA )
) ss
COUNTY OF __________________)
On _____________, 1998, before me, ______________________, a notary
public for the State of California, personally appeared ______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity on
behalf of which the person acted, executed the instrument.
Witness my hand and official seal.
------------------------------
Signature
[SEAL]
C1-2
<PAGE> 36
EXHIBIT A
TO GRANT DEED
[LEGAL DESCRIPTION]
C3-1
<PAGE> 37
EXHIBIT B
TO GRANT DEED
(a) Interests of tenants in possession pursuant to the terms of
their leases;
(b) Non-delinquent liens for real estate taxes and assessments; and
(c) Any exceptions disclosed by the preliminary title reports and
amendments thereto received by Grantee, the public records or
other documents or items delivered to Grantee, and any other
exceptions to title which would be disclosed by an inspection
and/or survey of the Property.
<PAGE> 38
________________, 199__
____________ County Recorder
Re: Request That Statement of Documentary
Transfer Tax Not be Recorded
Dear Sir or Madam:
Request is hereby made in accordance with Section 11932 of the Revenue
and Taxation Code that this statement of tax due not be recorded with the
attached deed but be affixed to the deed after recordation and before return as
directed on the deed.
The attached deed names _______________________, a _______________, as
grantor, and ________________________, a _______________________, as grantee.
The property being transferred and described in the attached deed is
located in the City of ______________, ____________ County, California.
The amount of Documentary Transfer Tax due on the attached deed is
$____________, computed on full value of the property conveyed.
[SELLER]
a _______________________
By: _______________________________
Its: ______________________________
<PAGE> 39
EXHIBIT D
BILL OF SALE
This Bill of Sale (the "Bill of Sale") is made and entered into
____________, 199__, by and between ____________________("Assignor"), and
__________________("Assignee").
In consideration of the sum of Ten Dollars ($10) and other good and
valuable consideration paid by Assignee to Assignor, the receipt and sufficiency
of which are hereby acknowledged by Assignor, Assignor does hereby assign,
transfer, convey and deliver to Assignee, its successors and assigns, free and
clear of any liens or encumbrances created by, through or under Assignor, all
items of tangible personal property, if any, owned by Assignor and situated upon
and used exclusively in connection with the land described on the attached
Exhibit A (the "Land") and the improvements located thereon (the
"Improvements"), including without limitation the items described on the
attached Exhibit B, but specifically excluding any and all personal property
owned by tenants or otherwise considered the property of tenants under any
leases affecting the Land or Improvements (the "Personal Property").
This Bill of Sale is made subject, subordinate and inferior to the
easements, covenants and other matters and exceptions set forth on Exhibit C,
attached hereto and made a part hereof for all purposes.
ASSIGNEE ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED
HEREIN OR IN THAT CERTAIN AGREEMENT OF PURCHASE AND SALE DATED _______________,
199__, BY AND BETWEEN ASSIGNOR AND ASSIGNEE (THE "AGREEMENT"), ASSIGNOR HAS NOT
MADE, DOES NOT MAKE AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS, WARRANTIES,
PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER
WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR
FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO (A) THE NATURE, QUALITY OR
CONDITIONS OF THE PERSONAL PROPERTY, (B) THE INCOME TO BE DERIVED FROM THE
PERSONAL PROPERTY, (C) THE SUITABILITY OF THE PERSONAL PROPERTY FOR ANY AND ALL
ACTIVITIES AND USES WHICH ASSIGNEE MAY CONDUCT THEREON, (D) THE COMPLIANCE OF OR
BY THE PERSONAL PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR
REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY, (E) THE
HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE
PERSONAL PROPERTY, OR (F) ANY OTHER MATTER WITH RESPECT TO THE PERSONAL
PROPERTY. ASSIGNEE FURTHER ACKNOWLEDGES AND AGREES THAT, HAVING BEEN GIVEN THE
OPPORTUNITY TO INSPECT THE PERSONAL PROPERTY, ASSIGNEE IS RELYING SOLELY ON ITS
OWN INVESTIGATION OF THE PERSONAL PROPERTY AND NOT ON ANY INFORMATION PROVIDED
OR TO BE PROVIDED BY ASSIGNOR, EXCEPT AS SPECIFICALLY PROVIDED HEREIN OR IN THE
AGREEMENT. ASSIGNEE FURTHER ACKNOWLEDGES AND AGREES THAT ANY INFORMATION
PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE PERSONAL PROPERTY WAS OBTAINED
FROM A VARIETY OF SOURCES AND THAT ASSIGNOR HAS NOT MADE ANY INDEPENDENT
INVESTIGATION OR VERIFICATION OF SUCH INFORMATION. ASSIGNEE FURTHER ACKNOWLEDGES
AND AGREES THAT THE SALE OF THE PERSONAL PROPERTY AS PROVIDED FOR HEREIN IS MADE
ON AN "AS IS, WHERE IS" CONDITION AND BASIS "WITH ALL FAULTS," EXCEPT AS
SPECIFICALLY PROVIDED IN THE AGREEMENT.
D-1
<PAGE> 40
The obligations of Assignor are intended to be binding only on the
property of Assignor and shall not be personally binding upon, nor shall any
resort be had to, the private properties of any of its trustees, officers,
beneficiaries, directors, members, or shareholders, or of its investment
manager, the general partners, officers, directors, members, or shareholders
thereof, or any employees or agents of Assignor or its investment manager. The
obligations of Assignee are intended to be binding only on the property of
Assignee and shall not be personally binding upon, nor shall any resort be had
to, the private properties of any of its trustees, officers, beneficiaries,
directors, members, or shareholders, or any employees or agents of Assignee.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Bill of Sale
to be executed on the date and year first above written.
ASSIGNOR:
-----------------------------------
a
-----------------------------------
By:
-------------------------------
-------------------------------
Its Investment Manager
By:
-------------------------------
Its:
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ASSIGNEE:
-----------------------------------
a
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By:
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Its:
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D-2
<PAGE> 41
EXHIBIT E
ASSIGNMENT OF LEASES, SERVICE CONTRACTS
AND WARRANTIES
This Assignment of Lease, Service Contracts and Warranties (this
"Assignment") is made and entered into _______________, 199__, by and between
_____________________________ ("Assignor"), and
_____________________________________________ ("Assignee").
For good and valuable consideration paid by Assignee to Assignor, the
receipt and sufficiency of which are hereby acknowledged by Assignor, Assignor
does hereby assign, transfer, set over and deliver unto Assignee all of
Assignor's right, title, and interest in (i) those certain leases and all
guaranties thereof (collectively, the "Leases") listed on Exhibit A, attached
hereto and made a part hereof for all purposes except for Seller's right to
collect delinquent rent and other delinquent sums owing under such Leases for
the period prior to the date hereof, (ii) those certain service contracts,
equipment leases, tenant improvement agreements and leasing agreements (the
"Contracts") listed on Exhibit B, if any, attached hereto and made a part hereof
for all purposes, (iii) those certain warranties held by Assignor (the
"Warranties") listed on Exhibit C, attached hereto and made a part hereof for
all purposes, and (iv) any intangible personal property now or hereafter used in
connection with the operation, maintenance, management, or occupancy of the Real
Property, including, without limitation, trade names and trademarks associated
with the Real Property (as defined in the Agreement) (provided Seller makes
absolutely no representation that it has any rights whatsoever with respect to
trade names or trademarks).
This Assignment is made subject, subordinate and inferior to the
easements, covenants and other matters and exceptions set forth on Exhibit D,
attached hereto and made a part hereof for all purposes.
ASSIGNEE ACKNOWLEDGES AND AGREES, BY ITS ACCEPTANCE HEREOF, THAT, EXCEPT
AS EXPRESSLY PROVIDED HEREIN OR IN THAT CERTAIN AGREEMENT OF PURCHASE AND SALE,
DATED AS OF _______________, 199__, BY AND BETWEEN ASSIGNOR AND ASSIGNEE (THE
"AGREEMENT"), THE LEASES, THE CONTRACTS AND THE WARRANTIES ARE CONVEYED "AS IS,
WHERE IS" AND IN THEIR PRESENT CONDITION WITH ALL FAULTS, AND THAT ASSIGNOR HAS
NOT MADE, DOES NOT MAKE AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS,
WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR
CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT
OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO THE NATURE, QUALITY OR
CONDITION OF THE LEASES, THE CONTRACTS OR THE WARRANTIES, THE INCOME TO BE
DERIVED THEREFROM, OR THE ENFORCEABILITY, MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OF THE LEASES, THE CONTRACTS OR THE WARRANTIES.
Except as otherwise expressly provided herein or in the Agreement, by
accepting this Assignment and by its execution hereof, Assignee assumes the
payment and performance of, and agrees to pay, perform and discharge, all the
debts, duties and obligations to be paid, performed
F-1
<PAGE> 42
or discharged from and after the Closing Date (as defined in the Agreement), by
(a) the "landlord" or the "lessor" under the terms, covenants and conditions of
the Leases, including, without limitation, brokerage commissions and compliance
with the terms of the Leases relating to tenant improvements and security
deposits, and (b) the owner under the Contracts and/or the Warranties.
Subject to terms and conditions of Section 9.19 of the Agreement,
Assignor agrees to indemnify Assignee and hold harmless and defend Assignee from
and against any and all claims, damages, liabilities, losses, costs and expenses
(including, without limitation, reasonable attorneys fees) resulting from any
failure by Assignor to have paid, performed or discharged any debts, duties or
obligations which Assignor was obligated to have paid, performed or discharged
prior to the Closing Date and accruing for the period prior to the Closing Date,
(a) by the landlord or lessor under the terms, covenants and conditions of the
Leases or (b) the owner under the Contracts and/or the Warranties, excluding,
with respect to clauses (a) and (b), any such debts, duties or obligations
arising out of or in any way related to the physical condition of the Property,
including, without limitation, the environmental condition thereof (as defined
in the Agreement) and any repair or remediation of the Property, but including
any such obligations arising out of damages suffered by and payable to a tenant
as a result of Assignor's breach prior to the Closing Date of a covenant of
landlord pursuant to the provisions of the Lease relating to the physical
condition of the Property, including without limitation, the environmental
condition thereof. Assignee agrees to indemnify, hold harmless and defend
Assignor from and against any and all claims, losses, liabilities, damages,
costs and expenses (including, without limitation, reasonable attorneys' fees)
resulting by reason of the failure of Assignee to pay, perform or discharge any
of the debts, duties or obligations assumed or agreed to by Assignee hereunder.
The obligations of Assignor are intended to be binding only on the
property of Assignor and shall not be personally binding upon, nor shall any
resort be had to, the private properties of any of its trustees, officers,
beneficiaries, directors, members, or shareholders, or of its investment
manager, the general partners, officers, directors, members, or shareholders
thereof, or any employees or agents of Assignor or its investment manager. The
obligations of Assignee are intended to be binding only on the property of
Assignee and shall not be personally binding upon, nor shall any resort be had
to, the private properties of any of its trustees, officers, beneficiaries,
directors, members, or shareholders, or any employees or agents of Assignee.
All of the covenants, terms and conditions set forth herein shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment to
be executed on the day and year first above written.
ASSIGNOR:
---------------------------------
a
--------------------------------
By:
------------------------------
------------------------------
Its Investment Manager
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<PAGE> 43
By:
------------------------------
Its:
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ASSIGNEE:
---------------------------------
a
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By:
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Its:
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F-3
