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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 ▇▇▇▇▇▇'▇
Crossing located in Snohomish County, ▇▇▇▇▇▇'▇ Landing located in Snohomish
County, Hampton Bay located in King County, Heatherwood located in King County,
and ▇▇▇▇▇ 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, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ (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 ▇▇▇▇ 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, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇ ("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 ▇▇-▇▇▇▇▇▇▇. 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, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, 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. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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 ▇▇▇
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 ▇▇▇ 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 ▇▇▇ 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
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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 ▇▇▇▇▇▇▇ ▇▇▇▇▇ (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 ▇▇▇▇▇▇▇ ▇▇▇▇▇ on account of
Buyer's separate agreement with CB ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Seller shall indemnify,
hold harmless and defend Buyer from and
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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:
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22
If to Buyer: SAP II Originating LLC
c/o Sterling Advisors II Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Rubin, Baum, ▇▇▇▇▇, Constant & ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, P.C.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller: Pacific Gulf Properties Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇, Castle & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Escrow Holder: Chicago Title Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
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.
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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.
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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
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
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
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
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 ▇▇▇▇ 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)
29
SCHEDULE 1
----------
EXISTING MORTGAGES/DEEDS OF TRUST
30
SCHEDULE 2
----------
LEASE LIST
----------
31
SCHEDULE 3
----------
RENT ROLL
---------
32
SCHEDULE 4
----------
DELINQUENCY REPORT
------------------
33
EXHIBIT A-1 THROUGH A-5
-----------------------
COMMON NAME AND LEGAL DESCRIPTION OF EACH PROJECT IN THE PORTFOLIO
------------------------------------------------------------------
A-1
34
EXHIBIT B
---------
INTENTIONALLY OMITTED
---------------------
B-1
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 "▇▇▇▇▇▇'▇ Crossings", "▇▇▇▇▇▇'▇ Landing",
"Hampton Bay", "Heatherwood" and "▇▇▇▇▇ 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
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
37
SCHEDULE 1
----------
LEGAL DESCRIPTION
-----------------
C-3
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.
▇-▇
▇▇
▇▇▇ ▇▇▇▇▇▇▇ 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
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
41
Schedule 1 to Exhibit D
-----------------------
Legal Description
D-4
42
Schedule 2 to Exhibit D
-----------------------
All exceptions to Title
D-5
43
EXHIBIT E
---------
▇▇▇▇ OF SALE
------------
This ▇▇▇▇ 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 ▇▇▇▇ 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)
▇-▇
▇▇
▇▇▇▇▇▇▇▇ ▇-▇ to Exhibit A-
--------------------------
Legal Descriptions
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇
---------
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: ▇▇-▇▇▇▇▇▇▇.
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
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)
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"):
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
▇▇▇▇-▇▇▇▇▇▇ 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-
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-
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
▇-▇
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 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
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
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
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
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
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
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
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:
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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
59
REVISED EXHIBIT A
-----------------
REVISED LEGAL DESCRIPTION
FOR
SIERRA TRINITY INDUSTRIAL PARK
A-1
60
REVISED EXHIBIT A-1
-------------------
ALLOCATED VALUE OF PROPERTY
PROPERTY LOCATION PRICE
-------- -------- -----------
Hohokam ▇▇ ▇▇▇▇/ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ $19,500,000
Hesperian Industrial Park Hayward, CA $ 8,000,000
Sierra ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ $23,000,000
Contra Costa Diablo Industrial Park Concord, CA $ 8,000,000
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ $11,100,000
-----------
TOTAL: $69,600,000
===========
A-2
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, ▇▇▇ ▇▇▇▇ 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
62
5. Hohokam Industrial Park.
(a) Stormwater from adjacent property to the east washes fine soil onto
the drive lane behind ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇.
(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
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
64
EXHIBIT G
A-6
65
EXHIBIT H
A-7
66
EXHIBIT I
A-8
67
EXHIBIT J
A-9