EXHIBIT (10)
AMENDMENT NO. 1
TO
AGREEMENT OF PURCHASE AND SALE
AND
JOINT ESCROW INSTRUCTIONS
This AMENDMENT NO. 1 TO AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW
INSTRUCTIONS (the "Amendment") is made as of this 8th day of January 1997 by and
among XXXXXXX PROPERTIES, L.P., a California limited partnership ("SP"), XXXXXXX
NORTHWEST, INC., a California corporation ("SPN"), MISSION WEST PROPERTIES, a
California corporation ("MWP"), and MISSION WEST EXECUTIVE AIRCRAFT CENTER,
INC., a California corporation ("MWEAC"), with reference to the facts set forth
in the Recitals below.
RECITALS
A. MWEAC is a wholly-owned subsidiary of MWP. Hereafter, MWP and MWEAC
may sometimes be collectively referred to as the "Seller."
B. SP and Seller are parties to a certain Agreement of Purchase and Sale
and Joint Escrow Instructions dated December 6, 1996 (the "Purchase Agreement").
C. SPN is an affiliate of SP. SP desires to assign to SPN SP's rights
under the Purchase Agreement to purchase certain of the Assets.
D. The parties desire to amend the Purchase Agreement to obtain Seller's
consent to such assignment and to address other concerns of the parties, all as
set forth below in this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the Purchase Agreement, this Amendment
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereby agree as follows:
1. INTERPRETATION. Terms with initial capital letters are defined terms
which shall have the meanings ascribed to them in the Purchase Agreement, unless
the context of this Amendment requires otherwise. Except as amended by this
Amendment, the Purchase Agreement shall remain in full force and effect. In the
event of a conflict between the provisions of this Amendment and those of the
Purchase Agreement, this Amendment shall control.
2. ASSIGNMENT BY SP. Pursuant to Section 14.6 of the Purchase Agreement,
SP has assigned its rights under the Purchase Agreement to purchase the Arizona
Corporate Center Property, the Unimproved Parcel and the Leasehold Properties to
SPN. Seller hereby consents to such assignment to SPN on the express condition
that SP shall remain responsible for the full performance of all obligations of
SPN under the Purchase Agreement through the Close of Escrow. By signing below,
SP expressly agrees to remain responsible for the full performance of all
obligations of SPN under the Purchase Agreement through the Close of Escrow. By
signing below, SPN agrees to be bound by the Purchase Agreement and to assume
all obligations of SP to purchase the Arizona Corporate Center Property, the
Unimproved Parcel and the Leasehold Properties in accordance with the terms and
conditions of the Purchase Agreement, as amended by this Amendment. Hereafter,
the term "Buyer" shall mean and include SP and SPN.
3. ARIZONA PROPERTY TAX APPEALS.
(a) BACKGROUND. In August 1995 Seller filed appeals (the "Arizona
Property Tax Appeals") with the Arizona Tax Court for the purpose of contesting
increases in the assessed value of the Arizona Corporate
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Center Property for calendar years 1995 and 1996. Pending resolution of the
Arizona Property Tax Appeals, Seller has been paying the property taxes levied
on the Arizona Corporate Center Property at the increased rates. The total
amounts of property taxes levied and paid on the Arizona Corporate Center
Property in 1995 and 1996 were $96,293 and $91,330, respectively. Any unpaid
property taxes allocable to calendar year 1997 will be subject to proration, as
provided elsewhere in the Purchase Agreement.
(b) REFUNDS. It is agreed that Seller shall be entitled to pursue,
at Seller's sole cost and expense, the Arizona Property Tax Appeals after the
Closing. It is also agreed that Seller shall be entitled to be paid the full
amount of any property tax refund(s) for calendar years 1995, 1996 and the
portion of 1997 during which Seller owned the Arizona Corporate Center Property
which may ultimately become payable, even if the refund(s) are paid after the
Closing. Buyer hereby agrees to pay to Seller any such refund(s) in the event
the refund(s) are inadvertently paid to Buyer. Buyer also agrees to cooperate
with Seller in pursuing the Arizona Property Tax Appeals.
(c) COLLECTION FROM TENANTS.
(1) Notwithstanding the amount of property taxes actually paid
by Seller during 1995 and 1996 with respect to the Arizona Corporate Center
Property, Seller has only collected from the Tenants of the Arizona Corporate
Center Property property taxes for such years in the aggregate amounts of
$37,252 and approximately $42,000, respectively. (The final amount of property
taxes actually collected for 1996 has not yet been finally ascertained.) The
difference (the "Property Tax Delta") between the amounts ultimately determined
to be owed by Seller to Arizona tax authorities and the amounts actually
collected by Seller from the subject Tenants for the subject years is presently
unknown. (The Property Tax Delta will become known only after Seller's refund
claims are resolved.)
(2) When the amount of the Property Tax Delta is finally
ascertained, two outcomes are possible. Under one scenario, the Property Tax
Delta could be such that the subject Tenants owe Seller money due to Seller's
under collection of property taxes from the subject Tenants. Under the second
scenario, the Property Tax Delta could be such that Seller owes the subject
Tenants money due to Seller's collection of property taxes in excess of the
amounts finally determined to be due and payable to Arizona taxing authorities.
The first scenario has been assumed to be more likely and Seller has billed the
subject Tenants the estimated amount of the Property Tax Delta.
(3) The actual amount of the Property Tax Delta will be
determined after the Closing. Once it is determined, Seller shall promptly
notify Buyer of the actual Property Tax Delta. If the first scenario does in
fact apply, Seller expects the Tenants of the Arizona Corporate Center Property
to reimburse Seller for the amount of the Property Tax Delta and Seller shall be
entitled to collect same from the subject Tenants by appropriate means -- to the
extent not previously collected -- excluding, however, any right to evict
delinquent Tenants or to terminate the subject Leases, at Seller's sole cost and
expense. Buyer agrees to cooperate with Seller in collecting the Property Tax
Delta with no cost to Buyer.
(4) If the second scenario applies, Seller shall promptly pay to
SPN outside of the Escrow the amount of excess property taxes collected by
Seller and Buyer shall credit such amount to the Tenants entitled thereto.
(5) If SPN sells the Arizona Corporate Center Property to a
third party before the Arizona Property Tax Appeals are resolved and the actual
amount of the Property Tax Delta is determined, Buyer shall cause the party
purchasing from Buyer to assume Buyer's obligations under this Section 3.
4. BIFURCATION OF TRANSACTION. The parties have agreed to bifurcate the
purchase of the Assets, as contemplated in Section 3.3 of the Purchase
Agreement. Accordingly, it is agreed that Buyer shall purchase all the Assets
other than the Leasehold Properties as soon as practicable after the date of
this Amendment, as more fully provided in the Purchase Agreement, as amended
hereby. It is also agreed that SPN shall purchase the Leasehold Properties at a
later date, subject to the MWEAC Contingencies being waived or satisfied on or
before the end of the MWEAC Contingency Period. The parties agree to further
amend the Purchase Agreement to fix a Scheduled Closing Date for the purchase of
the Leasehold Properties. SPN hereby affirms its intention to purchase the
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Leasehold Properties, notwithstanding such bifurcation of the subject
transaction.
5. CLOSING SCHEDULE. The parties have agreed that the Closing shall
begin at 8:00 a.m. (Arizona time) on Wednesday, January 22, 1997, with
recordation of the Grant Deeds (the "Arizona Grant Deeds") for the Arizona
Corporate Center Property and the Unimproved Parcel. The parties intend that
the Grant Deeds for the California Properties will be recorded at 8:00 a.m. (San
Diego time) so that Escrow Holder will have sufficient time in which to remit
funds due to encumbrancers of the Realty by 10:00 a.m. (San Diego time) on
January 22, 1997. In order to accomplish the foregoing, it is agreed that Buyer
shall deposit into the Escrow sufficient funds to cover its financial
obligations under the Purchase Agreement, as amended by this Amendment, by the
close of business on Tuesday, January 21, 1996. These funds shall be invested
overnight at the direction of Buyer.
6. AMENDMENT OF SECTION 6.8(b). Section 6.8(b) of the Purchase Agreement
is hereby amended and restated in its entirety to read as follows:
"(b) OPERATING EXPENSES.
(1) Most of Leases, both the A-Leases and the
B-Leases, are multi-tenant leases which are written on a net
or so-called "modified gross" basis which require the
Tenants thereunder to pay Seller, as landlord, estimates of
Operating Expenses for their respective premises. Seller
makes annual (calendar year) reconciliations of such
Operating Expenses in order to reconcile (on a cash basis)
the receipts of estimated Operating Expenses from the
Tenants with the Operating Expenses actually paid for the
relevant calendar year. The reconciliation of Operating
Expenses collected for calendar year 1995 has been
completed.
(2) It is agreed that Seller shall be responsible for
making the reconciliation of Operating Expenses for calendar
year 1996, even if such reconciliation occurs after the
Close of Escrow. This reconciliation will occur outside of
the Escrow and Escrow Holder shall have no responsibility
therefor. Seller shall use its best efforts to complete
such reconciliation within sixty (60) days after the
Closing. Seller anticipates that the amount of estimated
Operating Expenses collected for calendar year 1996 will be
less than the amount of actual Operating Expenses incurred
for such year and that, therefore, certain payments may be
due to Seller from certain Tenants.
(3) After the such 1996 reconciliation is completed,
Seller shall pay any amounts due to the Tenants directly to
such Tenants. Buyer shall receive no credit against the
Purchase Price for any such amounts that may be due to the
Tenants. Seller hereby agrees to indemnify, defend and hold
Buyer harmless from and against any claims by the Tenants
with respect to sums which may be due to the Tenants as a
result of excess xxxxxxxx of Operating Expenses. If the
Operating Expenses actually paid by Seller for calendar year
1996 exceed the receipts of estimated Operating Expenses
received by Seller for such year by more than One Thousand
Dollars ($1,000) in the aggregate, Buyer agrees to use
diligence to collect, after the Closing, any shortfall for
the account of Seller in the same manner as delinquent rent.
Buyer shall pay Seller any portion of such shortfall in
Operating Expenses as and when Buyer collects same, so long
as all other obligations of the paying Tenant to Buyer are
current. If the shortfall in the collection of Operating
Expenses from the Tenants is less than One Thousand Dollars
($1,000) in the aggregate, Seller shall have no right to
collect the shortfall and Buyer shall be entitled to keep
any portion of the shortfall which it may succeed in
collecting.
(4) Payments of Operating Expenses by Tenants for
calendar year 1997 shall be prorated in the same manner as
rent pursuant to Section 6.8(a).
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Any prepayments by Seller of Operating Expenses for the Realty which
are to be billed to the Tenants for calendar year 1997 shall be
prorated in the same manner as other items subject to proration."
7. MODIFICATION OF SECTION 4.1. Section 4.1 of the Purchase Agreement is
hereby amended to state that the Purchase Price for the Realty is $47,000,000,
which is apportioned as follows:
- Arizona Corporate Center $3,200,000
- Xxxxxx Xxxx Xxxxxxxx Xxxx x0,000,000
- Xxxxxx Xxxx-Xxxxxxxx $4,500,000
- Carmel View Office Plaza $6,450,000
- Xxxxxxxxxx Xxxxx Xxx x0,000,000
- Xxxxxxxxxx Xxxxx Two $8,450,000
- La Place Court $6,720,000
- Western Metal Lath $5,955,000
- Leasehold Properties $3,300,000
- Unimproved Parcel $ 333,000
8. ALLOCATION TO LEASEHOLD PROPERTIES. The parties have agreed that the
portion of the Purchase Price allocable to the Leasehold Properties will be
$3,300,000, provided that Buyer pays Seller $300,000 (the "MWEAC Advance
Payment") in cash at the first Closing as an advance payment on the portion of
the Purchase Price so allocable to the Leasehold Properties. The MWEAC Advance
Payment shall be non-refundable when paid as additional consideration for Seller
agreeing to bifurcate the transaction. Seller shall be entitled to retain the
full amount of the MWEAC Advance Payment, even if Buyer does not purchase the
Leasehold Properties for any reason whatsoever, including, without limitation,
the non-satisfaction of the MWEAC Contingencies in whole or in part.
9. MWEAC EXTENSION PERIOD. The length of the MWEAC Extension Period
specified in Section 3.3(a) of the Purchase Agreement is hereby extended to a
total of one hundred twenty (120) days.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereby execute this Amendment No. 1 to
Agreement of Purchase and Sale and Joint Escrow Instructions as of the date
first written above.
"MWP" MISSION WEST PROPERTIES,
a California corporation
By: /s/
----------------------------------------
J. Xxxxxxx Xxxxx
President and Chief Executive Officer
"MWEAC" MISSION WEST EXECUTIVE AIRCRAFT CENTER, INC., a
California corporation
By: /s/
----------------------------------------
J. Xxxxxxx Xxxxx
President and Chief Executive Officer
"SP" XXXXXXX PROPERTIES, L.P.,
a California limited partnership
By: XXXXXXX PROPERTIES, INC.
a Maryland corporation,
Its General Partner
By: /s/
----------------------------------------
Xxxxxxx X. Xxxxxx
Senior Vice President
"SPN" XXXXXXX NORTHWEST, INC., a
California corporation
By: /s/
----------------------------------------
Xxxxxxx X. Xxxxxx
Vice President
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