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AMENDED AND RESTATED AGREEMENT AND WAIVER
AMENDED AND RESTATED AGREEMENT AND WAIVER (the "Waiver"), dated
as of May __, 1997, between Pacific Gulf Properties Inc., a Maryland corporation
(the "Corporation" or the "Company"), and Five Arrows Realty Securities L.L.C.,
a Delaware limited liability company (the "Investor"). Terms used herein and not
otherwise defined herein shall have the meanings set forth in the Corporation's
Articles of Incorporation, as amended through and on the date hereof (the
"Charter"), the Articles Supplementary (the "Articles Supplementary")
classifying an aggregate 1,411,765 shares of the Corporation's Class B Senior
Cumulative Convertible Preferred Stock (the "Class B Preferred Shares") and the
Articles Supplementary with respect to the Class A Preferred Shares (as defined
below).
WHEREAS, on December 31, 1996, the Corporation and Investor
entered into an Investment Agreement, pursuant to which the Corporation agreed
to sell and the Investor agreed to buy, 1,351,351 shares of the Corporation's
Class A Senior Cumulative Convertible Preferred Stock (the "Class A Preferred
Shares" and, collectively with the Class B Preferred Shares, the "Preferred
Shares") and, in connection therewith, the Corporation and Investor executed an
Agreement and Waiver dated as of April 1, 1997;
WHEREAS, the Corporation intends to issue and sell to the
Investor, and the Investor intends to purchase from the Corporation, the Class B
Preferred Shares;
WHEREAS, the Charter and the Articles Supplementary set forth
certain restrictions with respect to the ownership of the Corporation's capital
stock;
WHEREAS, the Corporation desires to waive certain of those
restrictions in connection with the sale to the Investor of the Class B
Preferred Shares and to restate the terms of the Agreement and Waiver in
connection with the sale of Class A Preferred Shares to the Investor; and
WHEREAS, the Corporation's Board of Directors has approved the
provisions of this Waiver.
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
Corporation hereby represents and warrants to the Investor as follows:
(a) No individual (as determined for purposes of Section
856(h) of the Code but including "qualified trusts" (as defined
in Section 856(h)(3)(E) of the Code)), Beneficially Owns more
than 9.8% of the number of shares of the outstanding Common Stock
and, to the knowledge of the Corporation, no such individual
Beneficially Owns more than 5% of such Common Stock.
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(b) (i) Attached hereto as Exhibit A is a true and
complete list of the Tenants which are not individuals and which
have leases which provide for the payment of annual "rents from
real property" to the Company (as such term is defined in Section
856(d) of the Code, and giving effect to the provisions of
Treasury Regulation Section 1.856-3(g)) in an amount, determined
solely with reference to the amount required to be included in
the gross income of the Company for purposes of applying Section
856(c) of the Code, in excess of $500,000 (a "Major Lease") (it
being understood that at any time and from time to time the
Corporation may, pursuant to Section 3(b) hereof, notify the
Investor that there has been an addition to or a change in
Tenants and supply to the Investor a revised Exhibit A, which
shall become Exhibit A hereto as of and after the date of receipt
by the Investor of such revised Exhibit A), (ii) the Corporation
does not own, directly or indirectly (after applying the
constructive ownership rules of Section 856(d)(5) of the Code)
any stock or other equity interest in any such Tenant (as
determined for purposes of applying Section 856(d)(2)(B) of the
Code) (the representation in this clause (ii) is sometimes
hereinafter referred to as a "Tenant Representation") and (iii)
for purposes of Section 856(c)(2) of the Code, at least 98% of
the gross income of the Corporation for the calendar year ending
December 31, 1996, determined without regard to the Investor's
acquisition of the Preferred Shares, will be derived from the
sources specified in Section 856(c)(2) of the Code. For purposes
of this Agreement, the term "Tenant" refers to any corporation,
partnership, limited liability company, joint venture,
unincorporated organization, estate, trust, or any other entity
that pays or is expected to pay "rents from real property" (as
such term is defined in Section 856(d) of the Code) to the
Corporation or to any entity all or part of the income of which
would be attributed to the Company for purposes of applying
Sections 856(c)(2) and 856(c)(3) of the Code.
(c) Under current law, the only basis upon which the
Investor could cause the Corporation to fail to qualify as a REIT
solely by reason of the ownership by the Investor of the
Preferred Shares or shares of Common Stock into which the
Preferred Shares have been converted (such Preferred Shares or
shares of Common Stock, hereinafter, the "Subject Shares") (it
being understood that this representation does not apply to
failure to qualify as a result of any action, inaction or event,
including but not limited to the provision of any service or the
institution of any legal proceeding, by any person, including but
not limited to the Investor, that could affect the Company's
status as a REIT), is by (i) the Investor owning, actually or
Beneficially, shares of Capital Stock to the extent that such
actual or Beneficial Ownership of Capital Stock would result in
the Corporation being "closely-held" within the meaning Section
856(h) of the Code or (ii) actual or constructive ownership of an
interest in the Company that, after application of the
constructive ownership rules of Section 856(d)(5) of the Code,
would result in the Corporation being deemed to own, after
application of such rules, an interest in a Tenant that would
cause the Corporation to own or be deemed to own, for purposes of
applying Section 856(d)(2)(B) of the Code, 10%
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or more of the voting power, number of shares, or interests in
assets or net profits, as applicable, in such Tenant and the
income derived by the Corporation from such Tenants, when
combined with other income that is both (i) required to be taken
into account by the Company for purposes of applying Section
856(c) of the Code and (ii) not described in Sections
856(c)(2)(A) through (H) or Sections 856(c)(3)(A) through (I) of
the Code, as applicable, would cause the Corporation to fail to
satisfy any of the gross income requirements of Section 856(c) of
the Code.
2. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
(a) Relying upon and assuming the accuracy of the
representations and warranties given by the Corporation set forth
in Section 1, the ownership by the Investor and The Public
Employees Retirement System of Ohio ("OPERS") of the Subject
Shares and any Additional Shares (as defined herein) will not
result in the Corporation being "closely-held" within the meaning
of Section 856(h) of the Code and will not result in the
Corporation otherwise failing to qualify as a REIT.
(b) Attached hereto as Exhibit B is a true and complete
list of the persons owning a capital or profits interest in the
Investor, the interest owned in the Investor, the persons owning
beneficial interests in the entities (other than OPERS) owning a
capital or profits interest in the Investor and the interest
owned.
(c) OPERS is a "qualified trust" as that term is defined
in Section 856(h)(3)(E) of the Code except to the extent that it
not being a "qualified trust" would not result in the Corporation
being "closely-held" within the meaning of Section 856(h) of the
Code or would not result in the Corporation otherwise failing to
qualify as a REIT.
(d) The Investor and those persons owning a direct or
indirect interest in the Investor collectively own, directly or
indirectly, no more than 5% of the value of the Corporation, not
including the Subject Shares.
(e) No person has a beneficial interest in OPERS with a
value of more than 0.2% of the total value of all beneficial
interests in OPERS.
(f) (i) The Investor directly owns no stock or other
equity interest in a Tenant identified on Exhibit A (as the same
may be amended from time to time), and (ii) no Person owns a
stock or other equity interest (as determined for purposes of
applying Section 856(d)(2)(B) of the Code) in a Tenant identified
on Exhibit A (as the same may be amended from time to time) that
would both (A) be attributable to Investor by operation of
Section 318 of the Code, as modified by Section 856(d)(5) of the
Code and (B) result in the Investor being deemed to own, pursuant
to such section as so modified, in excess of 4.9% of such stock
or other equity interests in such Tenant.
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(g) For purposes of applying Section 856(h) of the Code,
no individual (as determined for purposes of applying Section
856(h) but including "qualified trusts" other than OPERS) is or
will be deemed to own more than 0.2% of the value or number of
shares, whichever is greater, of the outstanding Capital Stock by
virtue of the Investor's or OPERS' ownership of the Subject
Shares and any Additional Shares, except for the direct or
indirect individual members of Rothschild Realty Investors II
L.L.C., no one of whom, following such acquisition, will be
deemed to own (for purposes of applying such section), more than
9.8% of the value or the number of shares, whichever is greater,
of the Capital Stock.
3. UNDERTAKINGS OF THE CORPORATION.
(a) Other than the waiver provided pursuant to this
Waiver, the Corporation will not grant any waiver of the
Ownership Limit in the Charter or the Articles Supplementary if
such waiver would cause the Corporation to be "closely-held" or a
"pension-held REIT," both within the meaning of Section 856(h) of
the Code.
(b) Before the Corporation, or any entity, all or part of
the income of which would be attributed to the Company for
purposes of applying Sections 856(c)(2) and 856(c)(3) of the
Code, enters into a Major Lease, the Corporation will provide the
name of the proposed Tenant to the Investor and will represent to
Investor the Tenant Representation contained in 1(b)(ii) hereof.
The Corporation will not enter (or cause such entity to enter)
into such Major Lease unless Investor shall inform (or be treated
as informing pursuant to Section 4(b) hereof) the Corporation
that the Investor does not own and is not deemed to own, for
purposes of Section 856(d)(2)(B), more than a 4.9% interest in
the proposed tenant.
(c) Except as provided in this Waiver, the Corporation
will not take any action or fail to take any reasonable action
that it knows (or reasonably should know) would reasonably be
expected to result in (other than (i) any action or failure to
take action required to preserve the Corporation's status as a
REIT or (ii) any action or failure to take action in reliance
upon the representations and warranties of the Investor in
Section 2 or the undertakings of the Investor in Section 4), (x)
the Investor owning, actually or Beneficially, shares of Capital
Stock to the extent that such actual or Beneficial Ownership of
Capital Stock would result in the Corporation being
"closely-held" within the meaning of Section 856(h) of the Code
or would result in the Corporation otherwise failing to qualify
as a REIT, in either case solely by reason of the actual or
Beneficial Ownership of the Subject Shares and any Additional
Shares by the Investor and OPERS, or (y) less than 97% of the
gross income of the Corporation for any year (for purposes of
Section 856(c)(2)) being derived from the sources specified in
Section 856(c)(2) (it being understood that, absent actual
knowledge to the
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contrary or the failure of the Company to comply with Section
1(b) and 3(b) hereof, the Company shall be entitled to assume for
this purpose that it does not own and is not deemed to own any
interest in a Tenant described in Section 856(d)(2)(B) by reason
of the ownership of the Subject Shares or any Additional Shares
by the Investor, OPERS or any transferee that executes a
Successor Waiver Agreement (as defined in Section 6)).
4. UNDERTAKINGS OF THE INVESTOR.
(a) The Investor and those persons identified on Exhibit B
or who, following the date hereof, acquire a direct or indirect
capital or profits interest in the Investor (the "Investor
Group") will not take any action or fail to take any reasonable
action that the Investor or any such Person knows (or reasonably
should know) would reasonably be expected to cause: (i) the
Investor to be an individual for purposes of Section 542(a)(2) of
the Code as modified by Section 856(h) of the Code, (ii) OPERS to
fail to qualify as a "qualified trust" as that term is defined in
Section 856(h)(3)(E) of the Code, (iii) any individual (as
determined for purposes of applying Section 856(h) but including
"qualified trusts" other than OPERS), except for the direct or
indirect individual members of Rothschild Realty Investors II
L.L.C., to be deemed to own more than 0.2% of the value or number
of shares, whichever is greater, of the outstanding Capital Stock
by virtue of the Investor's or OPERS' ownership of the Subject
Shares or any Additional Shares, (iv) a direct or indirect
individual member of Rothschild Realty Investors II L.L.C. to be
deemed to own (for purposes of applying such section), more than
9.8% of the value or number of shares, whichever is greater, of
the Capital Stock, (v) any person to have a beneficial interest
in OPERS with a value of more than 0.2% of the total value of all
beneficial interests in OPERS, (vi) Investor to directly acquire
a stock or other equity interest in a Tenant identified on
Exhibit A (as the same may be amended from time to time)
following the date hereof, and (vii) any Person to acquire a
stock or other equity interest (as determined for purposes of
applying Section 856(d)(2)(B) of the Code) in a Tenant identified
on Exhibit A, following the receipt of such Exhibit A (as the
same may be amended from time to time), that would both (A) be
attributable to Investor by operation of Section 318 of the Code,
as modified by Section 856(d)(5) of the Code and (B) result in
the Investor being deemed to own, pursuant to such section as so
modified, in excess of 4.9% of such stock or other equity
interests in such Tenant.
(b) The Investor shall inform the Corporation, within 10
business days of receiving any notice from the Corporation set
forth in Section 3(b) hereof, if the Investor or any person
having a direct or indirect ownership interest in the Investor
owns or is deemed to own, for purposes of applying Section
856(d)(2)(B) of the Code, more than a 4.9% ownership interest in
such proposed Tenant and the nature of such ownership (any such
failure to notify the Corporation within such 10 business day
period will for all purposes be deemed to be an affirmative
statement by the Investor to the Corporation that neither the
Investor nor any
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person having a direct or indirect ownership interest in the
Investor owns or is deemed to own, for purposes of applying such
section, more than a 4.9% ownership interest in such proposed
Tenant).
5. WAIVER. On the basis of the accuracy of the
representations and warranties of the Investor contained in Section 2 and the
undertakings in Section 4, the Corporation, pursuant to subparagraph D.4(i), and
subject to subparagraph D.4(b)(iii) and (iv), of Article V of the Charter,
hereby exempts the Investor from the restrictions on ownership of Capital Stock
set forth in the Charter (the "Ownership Restrictions"), including subparagraphs
D.4(b)(i) and (ii) of Article V of the Charter; such exemption to be effective
(i) only to the extent necessary to enable Investor and OPERS to Beneficially
Own, collectively, the Subject Shares and an additional 350,000 shares of Common
Stock (subject to adjustment in the event of a stock dividend, stock split or
similar subdivison or combination of Common Stock) (such additional shares up to
350,000 shares referred to herein as "Additional Shares"), and no other Capital
Stock, and (ii) only to the extent it does not result in any individual (as
determined for purposes of 856(h) of the Code but excluding OPERS and any
qualified trusts as defined in Section 856(h)(3)(E) of the Code) Beneficially
Owning more than 9.8% of the value or number of Shares, whichever is greater, of
the Company's outstanding Capital Stock.
6. TRANSFER OF SUBJECT SHARES: RIGHT OF FIRST REFUSAL. The
provisions of this Section 6 apply in the event the Investor seeks to transfer
Subject Shares in a manner that, but for this Section 6, would result in a
violation of the Ownership Restrictions.
(a) Subject to the provisions of this Section 7, the
Corporation hereby waives the Ownership Restrictions to the
extent necessary to enable the Investor to transfer ownership of
Subject Shares to another Person, provided such transfer is not
effected using the facilities of the NYSE (or any other stock
exchange) or through an underwriter or person acting in a similar
capacity.
(b) The waiver described in paragraph (a) shall not become
effective until the right of first refusal period with respect to
the Subject Shares that the Investor seeks to transfer in excess
of the number of Subject Shares that the intended transferee (the
"Intended Transferee") may acquire without violating the
Ownership Restrictions (the "Extra Subject Shares") has expired
or otherwise terminated without the Corporation having exercised
its right to purchase such Extra Subject Shares.
(c) The waiver described in paragraph (a) shall be
conditioned on the accuracy of the statement of Capital Stock
owned by the Intended Transferee described in Section 7(b) hereof
and on obtaining from the Intended Transferee representations and
undertakings reasonably requested by the Corporation in order to
ensure that (i) no individual (as determined for purposes of
Section 856(h) of the Code but excluding "qualified trusts" as
defined in Section 856(h)(3)(B) of the Code) will Beneficially
Own more than 9.8% of the value or number of shares, whichever is
greater, of the outstanding Capital Stock following the Intended
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Transferee's acquisition of the Subject Shares, and (ii)
ownership of the Extra Subject Shares by the Intended Transferee
will not give rise to more than $750,000 of income not described
in Sections 856(c)(2) of the Code. The parties agree that the
phrase "representations and undertakings reasonably requested"
includes, but is not limited to, representations and undertakings
similar to those set forth in Section 2 and 4 hereof (but as
modified by this Section 6). Such representations and
undertakings shall be included in an agreement between the
Corporation and the Intended Transferee consistent with the terms
of this Waiver (a "Successor Waiver Agreement").
(d) In no event will a Person be entitled to any waiver of
the Ownership Restrictions based on Beneficial Ownership of
Capital Stock arising as a result of a transfer or issuance of an
interest in the Investor or a transfer or issuance of any direct
or indirect interest in any member of the Investor.
(e) The waiver described in paragraph (a) shall apply only
to the actual or Beneficial Ownership by the Intended Transferee
of Subject Shares and an additional number of Common Shares equal
to the number of Additional Shares, and all such Shares shall be
taken into account in applying the Ownership Restrictions to any
other shares of Capital Stock owned by the Intended Transferee or
any other person.
7. RIGHT OF FIRST REFUSAL. For purposes of this Section 7,
the following terms have the following meanings:
"Transfer" shall mean any direct or indirect disposition of an
interest whether by sale, exchange, merger, consolidation, transfer, assignment,
conveyance, distribution, pledge, inheritance, gift, mortgage, the creation of
any security interest in, or lien or encumbrance upon, any other disposition of
any kind and in any manner, by operation of law or otherwise, of Subject Shares
or any other transfer or agreement which would result in a change in the
percentage of the Subject Shares actually or Beneficially Owned by the Investor.
(a) Restrictions. The Investor agrees that it will not
Transfer any Extra Subject Shares (or any direct or indirect
interest therein) or any stock certificate representing the same,
now or hereafter at any time owned by it, except to current
partners of the Investor and as required or permitted by this
Section 7.
(b) Bona Fide Offers. (a) If the Investor desires to
Transfer any Extra Subject Shares and such Investor shall have
received a bona fide written offer (a "Bona Fide Offer") that it
intends to accept from a Person (the "Outside Party") for the
Transfer of such Extra Subject Shares, the Investor shall give
written notice (the "Option Notice") to the Corporation setting
forth such desire, which notice shall set forth at least the name
and address of the Outside Party and the price and terms of the
Bona Fide Offer and shall be accompanied by a copy of the Bona
Fide Offer, a statement executed by the Outside Party setting
forth the number of shares and type of Capital Stock beneficially
owned (for purposes of
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applying Section 13(d)(3) of the Securities Exchange Act of 1934)
by such Intended Transferee and any Affiliate thereof, and
evidence reasonably demonstrating the Outside Party's ability to
consummate such offer. Upon the giving of such Option Notice, the
Corporation shall have the option to purchase for cash, at the
price offered by the Outside Party in the Bona Fide Offer, all,
but not less than all, of the Extra Subject Shares specified in
the Option Notice, said option to be exercised within ten (10)
business days following the giving of such Option Notice, by
giving a counter-notice (a "Counter-Notice") to the Investor. In
the event that a determination must be made (as described below)
as to the fair market value of non-cash consideration, the ten
(10) business day period referred to in the immediately preceding
sentence shall be extended to such greater period of time, not to
exceed twenty (20) business days after said option Notice,
specified in good faith by the majority of the disinterested
members of the Board. In the event that the Bona Fide Offer
provides, in whole or in part, for non-cash consideration, the
"price" offered by the Outside Party shall be deemed to be the
amount of cash, if any, provided in the Bona Fide offer plus the
fair market value of the non-cash consideration as initially
determined in good faith by the majority of the disinterested
members of the Board, which determination may be challenged by
the Investor.
(c) Subject to paragraph (d), in the event that the
Corporation elects to purchase Extra Subject Shares pursuant to
Section 7(a), the Corporation will be obligated to purchase, and
the Investor shall be obligated to sell, such Extra Subject
Shares at a closing (which shall be the closing for all Extra
Subject Shares being purchased in connection with such Option
Notice) to be held on the thirtieth business day after the
delivery of the Corporation's counter-notice to such Investor at
the principal executive offices of the Corporation, or at such
other time and place as may be mutually acceptable to the
Corporation and the Investor. The closing of any such purchase by
the Corporation may, at the election of the Corporation, be
delayed up to thirty (30) business days in order to permit such
acquisition of such Extra Subject Shares to made in conformity
with applicable laws.
(d) If the Corporation elects not to purchase all of the
Extra Subject Shares subject to the Bona Fide Offer within the
time limits specified above, then the offer to sell any of the
Extra Subject Shares to the Corporation shall be deemed revoked
and the Investor, at any time within a period of thirty-five (35)
business days following the expiration of such time limits, may
Transfer all (but not less than all) of such Extra Subject Shares
to the Outside Party at no lower price than set forth in the Bona
Fide Offer and on substantially the same economic terms contained
in the Bona Fide Offer; provided, however, that in the event the
Investor has not so Transferred said Extra Subject Shares to the
Outside Party within said thirty-five (35) day period, then said
Extra Subject Shares thereafter shall continue to be subject to
all of the restrictions contained in this Waiver as though no
Option Notice had ever been given.
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(e) At the closing of any purchase of Extra Subject Shares
pursuant to this Section 7, the Investor shall deliver
certificates representing such Extra Subject Shares duly endorsed
for transfer and accompanied by all requisite stock transfer
taxes to the extent required by the Bona Fide Offer to be paid by
the Investor. Any Extra Subject Shares purchased pursuant to this
Section 7 shall be free and clear of any and all liens, claims,
options, charges, encumbrances, voting trusts, irrevocable
proxies or other rights of any kind or nature and at the closing
of the purchase the Investor shall represent and warrant to such
effect and to the effect that the Investor is the beneficial
owner of such Extra Subject Shares.
(f) If, in any instance, the Corporation elects not to
exercise its rights hereunder or elects to waive such rights,
such election shall not constitute a waiver of such the
Corporation's rights to receive an Option Notice in the case of
any Transfer subsequently proposed by the Investor.
8. VIOLATION.
(a) In the event of any breach of a representation or
warranty given by the Investor in Section 2 (other than as a
result of a breach of the representations or warranties given by
the Corporation in Section 1) or a violation of any of the
undertakings set forth in Section 4 (other than as a result of a
violation by the Corporation of the representations of the
Corporation set forth in Section 1 or the undertakings of the
Corporation set forth in Section 3), in addition to all rights
provided in this Waiver, in the Charter or the Articles
Supplementary, or granted by law (including recovery of damages),
the Waiver set forth in Section 5 hereof shall, to the extent
reasonably determined by the Board to be necessary in order for
the Corporation to qualify for taxation as a REIT, be void ab
initio and shall result in a conversion of all or a portion (as
reasonably determined by the Board to be necessary) of the
Subject Shares and any Additional Shares into Excess Stock or, if
an IRS Ruling Satisfactory to the Corporation has not been
obtained, shall to such extent cause the issuance or acquisition
of all or a portion of the Subject Shares and any Additional
Shares to be void ab initio, in either case to the same extent as
if the Waiver in Section 5 hereof had never been granted, and to
be subject to the ownership limits and related provisions set
forth in the Charter and the Articles Supplementary.
(b) In addition to and not in limitation of the provisions
of paragraph (a), to the extent the Investor or OPERS purports to
acquire Beneficial Ownership of Capital Stock that would result
in Beneficial Ownership of Capital Stock by the Investor and
OPERS, collectively, in excess of the Subject Shares and any
Additional Shares, or that would result in any individual (other
than OPERS or any other "qualified trust") Beneficially Owning in
excess of 9.8% of the value or number of shares, whichever is
greater, of Capital Stock, such purported acquisition shall be
void ab initio and shall result in a conversion of such excess
Capital Stock into Excess Stock, or if an IRS Ruling Satisfactory
to the
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Corporation has not been obtained, shall cause the issuance or
acquisition of such excess Capital Stock to be void ab initio.
(c) In the event the Corporation breaches any of the
representations and warranties given by the Corporation in
Section 1 or any of the undertakings in Section 3 and such breach
results in shares of Common Stock issued upon conversion of the
Preferred Shares or Preferred Shares being exchanged for Excess
Stock or automatic repurchase in accordance with subparagraph
D.4(c)(ii) of Article V of the Charter, the Investor shall be
entitled to exercise all rights provided herein or granted by law
(including recovery of damages) or in equity.
9. CHANGE IN LAW. In the event that there is a change in law
or in the interpretation of the law of which the Corporation or the Investor has
knowledge that may cause or has caused any Subject Shares held by the Investor
to be exchanged for Excess Stock or to be void ab initio, the Corporation and
the Investor shall communicate such knowledge to the other party and shall use
reasonable efforts (a) to prevent such occurrence or circumstance, (b) to amend
the documents and instruments with respect to the Subject Shares held by the
Investor to mitigate the effect of such change (provided, however, that in
effecting such amendment, the Corporation shall in no event be required to (i)
materially disproportionately disadvantage any other security holder of the
Corporation, (ii) provide the Investor as a holder of the Subject Shares with
better terms, on a whole, than existed with respect to such Preferred Shares or
Common Stock prior to such amendment or (iii) repurchase any securities of the
Corporation owned, directly or indirectly, by the Investor), and (c) unless
required by the Charter or the Articles Supplementary or in order to preserve
the Corporation's status as a REIT, to not disproportionately disadvantage the
Investor with respect to other security holders of the Corporation in
determining, if the Corporation is permitted to make such a determination, which
shares of the Corporation's Capital Stock shall be void ab initio or exchanged
for Excess Stock or repurchased.
10. ASSIGNMENT. Except to the extent provided herein, no
party hereto may assign (by operation of law or otherwise) either this Waiver or
any if its rights, interests, or obligations hereunder without the prior written
consent of the other party in its sole and absolute discretion.
11. AMENDMENTS. The provisions of this Waiver, including the
provisions of this sentence (but excluding Exhibit A, which may be amended in
accordance with Section 1), may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless each of the parties hereto consents in writing to such amendment,
modification, supplement or waiver. Each such consent or waiver shall be
effective only in the specific instance and for the specific purpose for which
given.
12. NOTICE. All notices hereunder shall be in writing and
shall be given: (a) if to the Company, at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: President, or such other address or addresses
of which the Investor shall have been given notice, with copies to ▇▇▇▇▇▇, ▇▇▇▇
& ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Dhiya El-Saden, Esq., or such other address of
which the Investor shall have been given notice; and (b) if to the Investor, at
Rothschild Realty Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, or such other address of which the Company shall have been
given notice, with copies to ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇, Esq., or such other address of which
the Company shall have been given notice. Any notice shall be deemed to have
been given if personally delivered or sent by United States mail or by
commercial courier or delivery service or by telegram or telex and shall be
deemed received, unless earlier received, (i) if sent by certified or registered
mail, return receipt requested, three business days after deposit in the mail,
postage prepaid, (ii) if sent by United States Express Mail or by commercial
courier or delivery service, one Business Day after delivery to a United States
Post Office of delivery service, postage prepaid, (iii) if sent by telegram,
telex or facsimile transmission, when receipt is acknowledged by answerback, and
(iv) if delivered by hand, on the date of receipt.
13. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
14. HEADINGS. The headings in this Waiver are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
15. GOVERNING LAW. This Waiver shall be governed by and
construed in accordance with the laws of the State of Maryland as applied
between residents of that State entering into contracts wholly to be performed
in that State.
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16. COUNTERPARTS. This Waiver may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
* * * * * *
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Waiver as of the date first written above.
PACIFIC GULF PROPERTIES INC.,
a Maryland corporation
By:____________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman, Chief Executive
Officer and President
FIVE ARROWS REALTY SECURITIES L.L.C.,
a Delaware limited liability company
By:____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Manager
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EXHIBIT A
PACIFIC GULF PROPERTIES INC
INDUSTRIAL TENANTS PAYING $500,000 OR MORE IN ANNUAL RENTS
TENANT NAME PROJECT
----------- -------
VANS VISTA
USCO ETIWANDA
N.A.L.S (MARS) ETIWANDA
DYNACRAFT ALGONA
STEL INDUSTRIES ALGONA
▇▇▇▇▇ RIVER WOODLAND
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EXHIBIT B
FIVE ARROWS REALTY SECURITIES L.L.C. -- OWNERSHIP SCHEDULE
Capital Interest
99% Capital Interest - Public Employees Retirement System of Ohio
1% Capital Interest - Rothschild Realty Investors II L.L.C.
100% Capital Interest - Rothschild Realty Group Inc., a 100%
owned subsidiary of Rothschild North America Inc.
Interest in Profits
100% Profits Interest - Public Employees Retirement System of Ohio until
Internal Rate of Return is 10%
80% Profits Interest - Public Employees Retirement System of Ohio after Internal
Rate of Return reaches 10%
20% Profits Interest - Rothschild Realty Investors II L.L.C. after Internal Rate
of Return reaches 10%
Interest in profits of Rothschild Realty Investors II L.L.C.
68% Profits Interest - Rothschild Realty Group Inc.
32% Profits Interest - four individuals own 8% each
