-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D8hGEHHr0jHzjkgBAx3LeaKFY8loP2iYEEhaOFkaN7CwewyevF9+6qCooZ1g1S3x T1dTJbZGvaGJn2J+6tOmWA== /in/edgar/work/0000930661-00-002468/0000930661-00-002468.txt : 20001003 0000930661-00-002468.hdr.sgml : 20001003 ACCESSION NUMBER: 0000930661-00-002468 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20001002 GROUP MEMBERS: BUSH GARDENS, LLC GROUP MEMBERS: JGB HOLDINGS, INC. GROUP MEMBERS: JGB VENTURES I, LTD. GROUP MEMBERS: JOSEPH G. BEARD GROUP MEMBERS: RONALD KIMEL GROUP MEMBERS: WESTDALE PROPERTIES AMERICA I LTD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GLENBOROUGH REALTY TRUST INC CENTRAL INDEX KEY: 0000929454 STANDARD INDUSTRIAL CLASSIFICATION: [6500 ] IRS NUMBER: 943211970 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-49007 FILM NUMBER: 733593 BUSINESS ADDRESS: STREET 1: 400 SOUTH EL CAMINO REAL STREET 2: STE 1100 CITY: SAN MATEO STATE: CA ZIP: 94402 BUSINESS PHONE: 6503439300 MAIL ADDRESS: STREET 1: 400 SOUT EL CAMINO REAL STREET 2: STE 1100 CITY: SAN MATEO STATE: CA ZIP: 94402 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WESTDALE PROPERTIES AMERICA I LTD CENTRAL INDEX KEY: 0001076228 STANDARD INDUSTRIAL CLASSIFICATION: [ ] IRS NUMBER: 752437665 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 3300 COMMERCE CITY: DALLAS STATE: TX ZIP: 75226 BUSINESS PHONE: 2145157000 MAIL ADDRESS: STREET 1: 3300 COMMERCE CITY: DALLAS STATE: TX ZIP: 75226 SC 13D/A 1 0001.txt AMENDMENT NO. 2 TO SCHEDULE 13D/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No.2)* Glenborough Realty Trust Incorporated ________________________________________________________________________________ (Name of Issuer) Common stock, par value $0.001 per share ________________________________________________________________________________ (Title of Class of Securities) 37803P105 _______________________________________________________________ (CUSIP Number) Joseph G. Beard 3300 Commerce Dallas, Texas 75226 (214)515-7000 ________________________________________________________________________________ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) September 27, 2000 _______________________________________________________________ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of (S)(S)240.13d-1(e), 240.13d-1(f) or 240.13d(g), check the following box [_]. Note: Schedules filed in paper format shall include a signed original and five copes of the schedule, including all exhibits. See Rule 240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 CUSIP NO. 37803P105 13D Page 2 - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Westdale Properties America I, Ltd. - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [X] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (SEE INSTRUCTIONS) 4 WC - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(a) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Texas - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF None SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 1,899,700 ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING None PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 1,899,700 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 1,899,700 - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (SEE INSTRUCTIONS) [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 6.6% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) 14 PN - ------------------------------------------------------------------------------ CUSIP NO. 37803P105 13D Page 3 - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Bush Gardens, LLC - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [X] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (SEE INSTRUCTIONS) 4 N/A - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(a) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Nevada - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF None SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 1,899,700 ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING None PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 1,899,700 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 1,899,700 - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (SEE INSTRUCTIONS) [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 6.6% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) 14 OO - ------------------------------------------------------------------------------ CUSIP NO. 37803P105 13D Page 4 - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON JGB Ventures I, Ltd. - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [X] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (SEE INSTRUCTIONS) 4 N/A - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(a) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Texas - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF None SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 1,899,700 ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING None PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 1,899,700 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 1,899,700 - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (SEE INSTRUCTIONS) [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 6.6% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) 14 PN - ------------------------------------------------------------------------------ CUSIP NO. 37803P105 13D Page 5 - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON JGB Holdings, Inc. - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [X] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (SEE INSTRUCTIONS) 4 N/A - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(a) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Texas - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF None SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 1,899,700 ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING None PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 1,899,700 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 1,899,700 - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (SEE INSTRUCTIONS) [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 6.6% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) 14 CO - ------------------------------------------------------------------------------ CUSIP NO. 37803P105 13D Page 6 - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Joseph G. Beard - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [X] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (SEE INSTRUCTIONS) 4 PF/OO for shares listed in Items 7 & 9 below; not applicable for shares listed in Items 8 & 10 below - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(a) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 USA - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF 111,000 SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 1,899,700 ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 111,000 PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 1,899,700 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 2,010,700 - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 12 (SEE INSTRUCTIONS) [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 7.0% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) 14 IN - ------------------------------------------------------------------------------ CUSIP NO. 37803P105 13D Page 7 - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Ronald Kimel - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [X] - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS (See Instructions) 4 PF/OO for shares listed in Items 7 & 9 below; not applicable for shares listed in Items 8 & 10 below - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 Canadian - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF 3,000 SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 1,899,700 ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 3,000 PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 1,899,700 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 1,902,700 - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 6.6% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) 14 IN - ------------------------------------------------------------------------------ CUSIP NO. 37803P105 13D Page 8 Item 1. Security and Issuer. - ------ ------------------- The title and class of equity securities to which this Statement relates is the common stock, $0.001 par value per share, (the "Stock") of Glenborough Realty Trust Incorporated, a Maryland corporation ("Glenborough"). The address of the principal executive offices of Glenborough is 400 South El Camino Real, Suite 1100, San Mateo, California 94402-1708. Item 2. Identity and Background. - ------ ----------------------- Pursuant to Rule 13d-1(a) of Regulation 13D-G of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Act"), this Schedule 13D Statement is hereby filed by the following persons (collectively, the "Reporting Persons"): Westdale Properties America I, Ltd., a Texas limited partnership ("WPA I Ltd."); JGB Ventures I, Ltd., a Texas limited partnership and sole general partner of WPA I Ltd. ("JGB I Ltd."); JGB Holdings, Inc., a Texas corporation and sole general partner of JGB I Ltd. ("JGB Holdings"); Bush Gardens, LLC, a Nevada limited liability company ("BG LLC"); Joseph G. Beard, a citizen of the United States and sole shareholder of JGB Holdings ("Beard"); and Ronald Kimel, a Canadian citizen and sole Trustee of the Manuel Kimel Family Trust ("Kimel"). WPA I Ltd. is a Texas limited partnership, the principal business of which is to own, operate, develop, construct, acquire, and consult in respect of real estate in the United States. The principal business address of WPA I Ltd., which also serves as its principal office, is 3300 Commerce, Dallas, Texas 75226. JGB I Ltd. is a Texas limited partnership, the principal business of which is serving as the general partner of WPA I Ltd., serving as the general partner of Westdale Asset Management, Ltd., a Texas limited partnership, and activities related thereto. The principal business address of JGB I Ltd., which also serves as its principal office, is 3300 Commerce, Dallas, Texas 75226. JGB Holdings is a Texas corporation, the principal business of which is serving as the general partner of JGB I Ltd. and activities related thereto. The principal business address of JGB Holdings, which also serves as its principal office, is 3300 Commerce, Dallas, Texas 75226. Beard is sole director and President, Vice President and Treasurer of JGB Holdings. It has no other executive officers. BG LLC is a Nevada limited liability company, the principal business of which is to own, operate, develop, construct, acquire, and consult in respect of real estate in the United States. The principal business address of BG LLC, which also serves as its principal office, is 3300 Commerce, Dallas, Texas 75226. BG LLC is a wholly owned subsidiary of WPA I Ltd. Beard's principal occupation or employment is serving as the President of JGB Holdings, the general partner of JGB I Ltd. Beard is also the Manager of BG LLC. The principal business address of Beard, which also serves as his principal office, is 3300 Commerce, Dallas, Texas 75226. The principal business of Kimel is investments. Kimel also serves as the sole Trustee of the Manuel Kimel Family Trust, which through subsidiary ownership is a limited partner in WPA I Ltd. The principal business address of Kimel, which also serves as his principal office, is 444 Adelaide Street West, Toronto, Ontario M5V 1S7. CUSIP NO. 37803P105 13D Page 9 The Reporting Persons may be deemed to comprise a "group" within the meaning of Section 13(d)(3) of the Act, although neither the fact of this filing nor any of the information contained herein shall be deemed to be an admission by any of the Reporting Persons that a "group" exists. During the last five years, none of the Reporting Persons (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. - ------- ------------------------------------------------- The source and amount of funds used by WPA I Ltd. to purchase its Stock is Working Capital of WPA I Ltd. As used herein, the term "Working Capital" includes income from the business operations of the entity plus sums borrowed from, among other sources, banks and brokerage firm margin accounts, to operate such business in general. Beard used personal funds and sums borrowed from brokerage firm margin accounts to purchase his shares of Stock. Kimel used personal funds and sums borrowed from brokerage firm margin accounts to purchase his shares of Stock. Item 4. Purpose of Transaction. - ------ ---------------------- Pursuant to a series of transactions ending on April 20, 2000, WPA I Ltd. has purchased for an aggregate of $27,458,325.75 in cash an aggregate of 1,899,700 shares of Stock. The shares of Stock were acquired by WPA I Ltd. for the purpose of investment. Pursuant to a series of transactions ending on April 20, 2000, Beard, individually, purchased for an aggregate of $1,627,313.00 in cash an aggregate of 111,000 shares of Stock. The shares of Stock purchased by Beard individually were acquired for the purpose of investment. Pursuant to a transaction on April 11, 2000, Kimel, individually, purchased for an aggregate of $44,250.00 in cash an aggregate of 3,000 shares of Stock. The shares of Stock purchased by Kimel individually were acquired for the purpose of investment. Pursuant to a Stock Repurchase Agreement dated September 25, 2000 by and between BG LLC and Glenborough, BG LLC agreed to sell, or cause to be sold, to Glenborough 2,013,700 shares of Stock which the Reporting Persons beneficially own for $18.50 per share plus a pro rata portion of the per share amount of any dividend on or distribution payable to record holders of the shares of Stock at any time during the fiscal quarter in which the Stock Repurchase Agreement closes. The intent behind the structure of the purchase price is to assure that BG LLC receives the benefit of dividends or distributions declared or paid during the fiscal quarter in which the Stock Repurchase Agreement closes, adjusted to reflect the number of days during the quarter in question that BG LLC was a record or beneficial owner of the shares. In a related transaction, BG LLC has agreed to purchase certain real property from various affiliates of Glenborough. Pursuant to a Purchase Agreement dated September 25, 2000 by and between certain affiliates of Glenborough and BG LLC, various affiliates of Glenborough agreed to sell to BG LLC certain multifamily residential properties for an aggregate purchase price of $404,093,516.00. In a third related transaction, pursuant to a Guaranty Agreement dated September 25, 2000 by and between Glenborough and BG LLC, Glenborough guarantied the obligations of its affiliates under the Purchase Agreement to (i) cure monetary liens against the properties being sold and (ii) deliver the closing documents to BG LLC as and when the documents become due. Under the Guaranty Agreement, if Glenborough's affiliates do not meet their obligations as set out in the Purchase Agreement, Glenborough will pay $15 million to BG LLC. Under the Guaranty Agreement, Glenborough and its affiliates are permitted to furnish information to or enter into discussions or negotiations with any person that makes an unsolicited bona fide proposal to acquire all or substantially all of the properties subject to the Purchase Agreement, whether by merger, purchase of partnership interest or assets or otherwise, if the Board of Directors of Glenborough determines in good faith that such proposal could result in a transaction more favorable to Glenborough's stockholders from a financial point of view than the transaction contemplated by the Purchase Agreement. In the event that Glenborough's Board of Directors is prepared to accept such a proposal, Glenborough may terminate the Purchase Agreement by giving proper notice and paying $15 million to BG LLC. Furthermore, the Guaranty Agreement provides that Glenborough can take any action with respect to any merger, consolidation or sale of all or substantially all of the assets of Glenborough or its affiliates in the event that Glenborough's Board of Directors determines, based upon advice of outside legal counsel, that failure to take such action would be inconsistent with the Board's fiduciary duties to Glenborough's shareholders as long as Glenborough gives proper notice of termination and pays the sum of $15 million to BG LLC. CUSIP NO. 37803P105 13D Page 10 Consummation of each of the transactions, described in the previous three paragraphs, contemplated by each of the Stock Repurchase Agreement, the Purchase Agreement and the Guaranty Agreement, is dependent upon consummation of the transactions contemplated under the other two agreements. Subject to the foregoing, the Reporting Persons intend to continue to evaluate the Issuer's business, prospects and financial condition, the market for the Stock, monetary and stock market conditions and other further developments. As a part of such evaluation, one or more of the Reporting Persons may participate in meetings or hold discussions with the Issuer's management, other security holders of the Issuer and other persons in which the Reporting Persons may express their views with respect to potential changes in the operations, assets, capital structure or ownership of the Issuer. Such expression of views may relate to one or more of the transactions specified in clauses (a) through (j) of Item 4 of the Schedule 13D form. Depending upon, among other things, the factors set forth above, the Reporting Persons reserve the right to (i) dispose of all or part of their investment in the Stock at any time, (ii) acquire additional equity securities of the Issuer or its affiliates by tender offer, in the open market, in private transactions or otherwise, (iii) propose a merger or other business combination with the Issuer or its affiliates, (iv) seek control of the Issuer by stock ownership or otherwise, or (v) take any other action with respect to the Issuer. Except as set forth in this Item 4, the Reporting Persons have no present plans or proposals that relate to or that would result in any of the following actions: (a) The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (d) Any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) Any material change in the present capitalization or dividend policy of the Issuer; (f) Any other material change in the Issuer's business or corporate structure; (g) Changes in the Issuer's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person; (h) Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) A class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or CUSIP NO. 37803P105 13D Page 11 (j) Any action similar to any of those enumerated above. Item 5. Interest in Securities of the Issuer. - ------ ------------------------------------ Pursuant to Rule 13d-3(a), at the close of business on September 28, 2000, WPA I Ltd. may be deemed to be the beneficial owner of 1,899,700 shares of the Stock, which constitutes approximately 6.6% of the 28,696,576 shares of Stock outstanding on July 31, 2000, according to the Issuer's Form 10-Q filed on August 10, 2000 (the "Outstanding Shares"). Each of the Reporting Persons, either directly or indirectly, has or shares the power to vote or to direct the vote and to dispose or to direct the disposition of, such shares of Stock. Each of JGB I Ltd., as the sole general partner of WPA I Ltd., and JGB Holdings, as the sole general partner of JGB I Ltd., pursuant to Rule 13d-3 of the Act, may be deemed to be the beneficial owner of 1,899,700 shares of the Stock, which constitutes approximately 6.6% of the Outstanding Shares. Each of such persons, either directly or indirectly, may have or share the power to vote or to direct the vote and to dispose of or to direct the disposition of, such shares of Stock. BG LLC, as a wholly owned subsidiary of WPA I Ltd., pursuant to Rule 13d-3 of the Act, may be deemed to be the beneficial owner of 1,899,700 shares of the Stock, which constitutes approximately 6.6% of the Outstanding Shares. BG LLC, either directly or indirectly, may have or share the power to vote or to direct the vote and to dispose of or to direct the disposition of, such shares of Stock. Beard, individually and as sole shareholder of JGB Holdings, pursuant to Rule 13d-3 of the Act, may be deemed to be the beneficial owner of 2,010,700 shares of the Stock, which constitutes approximately 7.0% of the Outstanding Shares and consists of (i) the 1,899,700 shares described in the preceding paragraphs and (ii) 111,000 additional shares of Stock beneficially owned by Beard separately. Beard, either directly or indirectly, may have or share the power to vote or direct the vote and to dispose of or to direct the disposition of, such shares of Stock. Kimel, individually and as sole Trustee of the Manuel Kimel Family Trust, pursuant to Rule 13d-3 of the Act, may be deemed to be the beneficial owner of 1,902,700 shares of the Stock, which constitutes approximately 6.6% of the Outstanding Shares and consists of (i) the 1,899,700 shares described in the first two paragraphs of this Item and (ii) 3,000 additional shares of Stock beneficially owned by Kimel separately. Kimel, either directly or indirectly, may have or share the power to vote or direct the vote and to dispose of or to direct the disposition of, such shares of Stock. Other than as set forth above, none of the Reporting Persons named herein is the beneficial owner of any shares of the Stock. There have been no transactions in Stock by the Reporting Persons during the last 60 days. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect - ------ --------------------------------------------------------------------- to Securities of the Issuer. - --------------------------- By virtue of constituent arrangements of the Reporting Persons, Beard and Kimel may be deemed to act jointly and thus deemed to share the power to vote, acquire and dispose of Stock. To the best knowledge of the Reporting Persons, there are no other contracts, arrangements, understandings or relationships (legal or otherwise) among the Reporting Persons or between the Reporting Persons and any other person with respect to any securities of the Issuer, including but not limited to, transfer or voting of any of the securities of the Issuer, finder's fees, joint ventures, loan or CUSIP NO. 37803P105 13D Page 12 option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies, or a pledge or contingency the occurrence of which would give another person voting power over the securities of the Issuer. Item 7. Material to be Filed as Exhibits. - ------ --------------------------------
Exhibit Description Number 1. Stock Repurchase Agreement dated September 25, 2000 by and between Bush Gardens, LLC and Glenborough Realty Trust Incorporated 2. Purchase Agreement dated September 25, 2000 by and between Bush Gardens, LLC and certain affiliates of Glenborough Realty Trust Incorporated 3. Guaranty Agreement dated September 25, 2000 by and between Bush Gardens, LLC and Glenborough Realty Trust Incorporated
[The remainder of this page is intentionally left blank.] CUSIP NO. 37803P105 13D SIGNATURE After reasonable inquiry and to the best of the knowledge and belief of the undersigned, the undersigned certify that the information set forth in this statement is true, complete and correct. Pursuant to Rule 13d-1(k)(1)(ii) of Regulation 13D-G of the General Rules and Regulations of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, the undersigned agree that the attached statement is filed on behalf of each of them in the capacities set forth below. Each of the undersigned Reporting Persons hereby constitutes and appoints Joseph G. Beard and Ronald Kimel, and each of them (with full power in each to act alone), as attorneys and agents of the undersigned, to sign and file with the Securities and Exchange Commission under Regulation 13 D-G under the Securities Exchange Act of 1934, as amended, any and all amendments and exhibits to this Schedule 13D, with full power and authority to do and perform any and all acts and things whatsoever requisite or desirable in their or his sole discretion. Dated: October 2, 2000 WESTDALE PROPERTIES AMERICA I, LTD., a Texas limited partnership By: JGB Ventures I, Ltd., a Texas limited partnership Its: General Partner By: JGB Holdings, Inc., a Texas corporation Its: General Partner By: /s/ Joseph G. Beard ----------------------------------------------- Joseph G. Beard, President JGB VENTURES I, LTD., a Texas limited partnership By: JGB Holdings, Inc., a Texas corporation Its: General Partner By: /s/ Joseph G. Beard ----------------------------------------------- Joseph G. Beard, President JGB HOLDINGS, INC., a Texas corporation By: /s/ Joseph G. Beard ---------------------------------------------------- Joseph G. Beard, President BUSH GARDENS, LLC, a Nevada limited liability company By: /s/ Joseph G. Beard ---------------------------------------------------- Joseph G. Beard, Manager /s/ Joseph G. Beard ---------------------------------------------------------------- Joseph G. Beard /s/ Ronald Kimel ---------------------------------------------------------------- Ronald Kimel EX-1 2 0002.txt STOCK REPURCHASE AGREEMENT EXHIBIT 1 ================================================================================ STOCK REPURCHASE AGREEMENT Dated September 25, 2000 by and between BUSH GARDENS, LLC and GLENBOROUGH REALTY TRUST INCORPORATED ================================================================================ TABLE OF CONTENTS -----------------
Page 1. PURCHASE AND SALE OF SHARES............................................................... 1 1.1 Purchase and Sale, Purchase Consideration............................................ 1 ----------------------------------------- 1.2 Determination of Purchase Price...................................................... 1 ------------------------------- 1.3 Price Adjustments.................................................................... 2 ----------------- 1.4 Securities Closing................................................................... 2 ------------------ 2. REPRESENTATIONS AND WARRANTIES............................................................ 3 2.1 Representations and Warranties of Seller............................................. 3 ---------------------------------------- (a) Due Organization, Good Standing and Power..................................... 3 ----------------------------------------- (b) Authorization and Validity of Agreement....................................... 3 --------------------------------------- (c) No Conflict................................................................... 3 ----------- (d) Title to Shares............................................................... 3 --------------- (e) Finders and Investment Bankers................................................ 3 ------------------------------ (f) Litigation.................................................................... 4 ---------- (g) Solvency, Value............................................................... 4 --------------- (h) Knowledge, Access............................................................. 4 ----------------- 2.2 Representations and Warranties of Buyer.............................................. 4 --------------------------------------- (b) Authorization and Validity of Agreement....................................... 5 --------------------------------------- (c) No Conflict................................................................... 5 ----------- (d) Finders and Investment Bankers................................................ 5 ------------------------------ (e) Litigation.................................................................... 5 ---------- (f) Investment Representation..................................................... 6 ------------------------- (g) Solvency, Value............................................................... 6 --------------- (h) Buyer's Periodic Reports...................................................... 6 ------------------------ 3. COVENANTS OF THE PARTIES.................................................................. 7 3.1 Additional Agreements; Best Efforts; Cooperation..................................... 7 ------------------------------------------------ 3.2 Publicity............................................................................ 7 --------- 3.3 Contemporaneous Transactions......................................................... 7 ---------------------------- 4. CONDITIONS PRECEDENT...................................................................... 8 4.1 Conditions Precedent to Buyer's Obligations.......................................... 8 ------------------------------------------- (a) Consents, Authorizations, Etc................................................. 8 ----------------------------- (b) Injunction, Etc............................................................... 8 --------------- (c) Representations and Warranties; Compliance with Covenants and Obligations..... 8 ------------------------------------------------------------------------- (d) Opinion of Counsel............................................................ 8 ------------------ (e) Purchase Agreement............................................................ 8 ------------------ 4.2 Conditions Precedent to Seller's Obligations......................................... 8 -------------------------------------------- (a) Consents, Authorizations, Etc................................................. 9 -----------------------------
-i- (b) Injunction, Etc............................................................. 9 --------------- (c) Representations and Warranties; Compliance with Covenants and Obligations... 9 ------------------------------------------------------------------------- (d) Opinion of Counsel.......................................................... 9 ------------------ (e) Purchase Agreement.......................................................... 9 ------------------ 5. INDEMNITY............................................................................. 9 5.1 Indemnification of Buyer......................................................... 9 ------------------------ 5.2 Indemnification of Seller........................................................ 10 ------------------------- 5.3 Notice and Opportunity to Defend................................................. 10 -------------------------------- 5.4 Compounded Losses................................................................ 11 ----------------- 5.5 Subrogation Rights............................................................... 11 ------------------ 6. TERMINATION AND ABANDONMENT........................................................... 11 6.1 Termination and Abandonment...................................................... 11 --------------------------- (a) By Mutual Action.......................................................... 11 ---------------- (b) By Buyer.................................................................. 11 -------- (c) By Seller................................................................. 11 --------- (d) Deadline Date............................................................. 11 ------------- 6.2 Procedure for Termination........................................................ 11 ------------------------- 6.3 Effective Termination............................................................ 12 --------------------- 7. MISCELLANEOUS......................................................................... 12 7.1 Survival......................................................................... 12 -------- 7.2 Expenses......................................................................... 12 -------- 7.3 Notices.......................................................................... 12 ------- 7.4 Parties in Interest.............................................................. 13 ------------------- 7.5 Headings......................................................................... 13 -------- 7.6 Governing Law, Venue and Arbitration............................................. 13 ------------------------------------ 7.7 Counterparts..................................................................... 13 ------------ 7.8 Severability..................................................................... 13 ------------ 7.9 Entire Agreement; Amendments; Waiver; Severability; Gender....................... 14 ----------------------------------------------------------
-ii- STOCK REPURCHASE AGREEMENT This Stock Repurchase Agreement (the "Agreement"), dated September 25, 2000, is entered into by and between Bush Gardens, LLC., a Nevada limited liability company ("Seller"), and Glenborough Realty Trust Incorporated, a Maryland corporation ("Buyer"), with respect to the Common Stock, $.001 par value per share (the "Common Stock") of Seller. W I T N E S S E T H: WHEREAS, Seller owns of record or beneficially, 2,013,700 shares of the Common Stock (collectively, the "Shares"); and WHEREAS, Buyer has proposed to purchase and Seller has agreed to sell all of the shares (the "Shares") of Common Stock held of record or beneficially by the Seller as of the closing of the transactions contemplated in this Agreement; and WHEREAS, contemporaneously herewith, Seller and one or more of its affiliates, on the one hand, and Buyer and one of more of its affiliates, on the other, have entered into that certain Purchase Agreement, of even date herewith (the "Purchase Agreement") pursuant to which Seller has agreed to purchase or cause to be purchased and Buyer has agreed to sell or cause to be sold certain multifamily residential properties; and WHEREAS, as a condition precedent to the consummation of the transactions contemplated in the Purchase Agreement, Seller has agreed to sell and Buyer has agreed to repurchase, the Shares, upon the terms and conditions set forth in this Agreement. NOW, THEREFORE, for and in consideration of the premises and the mutual covenants contained herein, and such other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer do hereby agree as follows: 1. PURCHASE AND SALE OF SHARES 1.1 Purchase and Sale, Purchase Consideration. Upon the terms and subject ----------------------------------------- to the conditions of this Agreement, at the Securities Closing (as subsequently defined) Seller will sell, assign, transfer and convey, or cause to be sold, assigned, transferred or conveyed to Buyer, and Buyer will purchase from Seller, the Shares, free and clear of any liens, claims, pledges, liabilities, obligations, charges, options, rights of first refusal, limitations, restrictions, trusts, security interests or other encumbrances of any kind whatsoever resulting from the actions of Seller (individually, a "Lien" and collectively, "Liens"), other than those existing under Buyer's Articles of Incorporation or those existing under state and federal securities laws generally, for the Purchase Price described below. 1.2 Determination of Purchase Price. The purchase price (the "Purchase ------------------------------- Price") for the Shares shall be an amount in cash equal to the sum of (A) $18.50 per share of Common Stock and (B) a pro rata portion of the per share amount of any dividend on or distribution payable to record holders of the Shares at any time during the fiscal quarter of the Securities Closing, based upon the number of days elapsed since the beginning of the fiscal quarter during which the Securities Closing occurs, and the Securities Closing, as compared to the aggregate number of days in that fiscal quarter. The intent of the preceding sentence is to assure that the Seller receives the benefit of dividends or distributions declared or paid during the fiscal quarter of the Securities Closing, adjusted to reflect the number of days during the quarter in question that the Seller was a record or beneficial holder of the Shares. To the extent that a dividend or distribution on the Shares is declared after the Securities Closing, but before the end of the then current fiscal quarter, the Buyer shall remit the amount payable pursuant to clause (B) of the first sentence of this Section 1.2 not later than the third day following the payment date for the dividend or distribution in question. To the extent that the Purchase Price shall be increased to reflect a declared but unpaid dividend on the Common Stock, Seller shall, pursuant to Section 1.4 below, assign its rights to the dividend in question to Buyer. 1.3 Price Adjustments. Notwithstanding the provisions of Section 1.2 ----------------- hereof to the contrary, in the event that the Shares shall be the subject of any stock split, stock dividend or similar transaction pursuant to which holders of shares of the Common Stock, including the Seller, actually receive, without the payment of additional consideration, any additional shares of Common Stock, the number of Shares constituting all of the Shares and the specific dollar amounts described in the preceding sentence shall be appropriately and proportionately adjusted. Each of the parties will cooperate in connection with the purchase and delivery of additional shares of Common Stock to be received by Seller with respect to any stock dividend or stock split payable after the Securities Closing to holders of record prior thereto In the event that holders of the Common Stock, including the Seller, shall have received, without the payment of additional consideration, any other security or other property with respect to the Common Stock, whether by way of a dividend, stock combination, stock split or otherwise, and such security or other property shall be listed for trading separately from the Common Stock and have been trading on the New York Stock Exchange or another national securities exchange for not less than eleven trading days prior to the Securities Closing (such separately listed securities or property being the "Additional Stock"), the "Shares" shall be deemed to include, for all purposes hereunder, such Additional Stock. Notwithstanding the immediately preceding sentence, the Seller, at its sole option, shall be entitled to retain and not convey to the Buyer any additional securities, or rights thereto, received with respect to the Common Stock, and in such event, the "Shares" shall not include such securities and the Purchase Price shall be reduced, by the average of the closing prices reported on the New York Stock Exchange (or such other national securities exchange) of any such Additional Stock withheld by Seller for the ten trading days ending in the trading day preceding the Securities Closing. No adjustment shall be made for securities withheld which are not Additional Stock. 1.4 Securities Closing. The closing of the transactions contemplated ------------------ herein (the "Securities Closing") shall occur at the offices of Buyer, or at such other place as the parties may agree, contemporaneously with the closing of the transactions contemplated in the Purchase 2 Agreement. At the Securities Closing, the Buyer shall pay the Purchase Price in cash to the Seller's order by wire transfer of immediately available funds against delivery by the Seller of (i) a guarantee of delivery of the Shares by a member of the National Association of Securities Dealers, Inc. and an appropriate assignment separate or other instrument of transfer with regard thereto in form and substance reasonably satisfactory to the parties and (ii) in the event that the Purchase Price shall have been increased in the manner contemplated in Section 1.2 above to reflect any declared but unpaid dividend on the Common Stock, an assignment, in form and substance reasonably satisfactory to the parties, of Seller's right to receive such dividend. 2. REPRESENTATIONS AND WARRANTIES 2.1 Representations and Warranties of Seller. Seller hereby represents and ---------------------------------------- warrants to Buyer as follows: (a) Due Organization, Good Standing and Power. Seller is a limited ----------------------------------------- liability company, duly organized, validly existing and in good standing under the laws of the State of Nevada and has all requisite power and authority to own its properties and to carry on its business as now being conducted and to enter into this Agreement and perform its obligations hereunder. Seller is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary. (b) Authorization and Validity of Agreement. The Seller has the full --------------------------------------- corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by Seller of this Agreement and the consummation by the Seller of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Seller are necessary to authorize this Agreements or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Seller and constitutes a valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, except to the extent that its enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other laws affecting the enforcement of creditors' rights generally and accept that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceedings therefore may be brought. (c) No Conflict. No filing with, and no permit, authorization, consent, or ----------- approval of, any foreign or domestic public body or authority is necessary for the consummation by the Seller of the transactions contemplated by this Agreement. The execution and the delivery of this Agreement by the Seller, the consummation by the Seller of the transactions contemplated by this Agreement and the compliance by the Seller with any of the provisions of this Agreement will not (i) conflict with or result in any breach of any provision of the Articles of Incorporations or Bylaws of the Seller; (ii) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions, or provisions of any note, bond, mortgage, indenture, license, lease, contract, 3 agreement, or other instrument or obligation to which the Seller is a party or by which any of its properties or assets may be bound; or (iii) violate any order, writ, injunction, decree, statute, rule, or regulation applicable to the Seller or any of its properties or assets. (d) Title to Shares. Seller has or will obtain from one of more of its --------------- affiliates good and marketable title to the Shares free and clear of any Liens not subject to satisfaction at or prior to the Securities Closing. (e) Finders and Investment Bankers. Except as previously disclosed in ------------------------------ writing to the Buyer, neither the Seller nor any of its officers or directors, or any of their respective affiliates, has employed any investment banker, business consultant, financial advisor, broker or finder in connection with the transactions contemplated by this Agreement, or incurred in any liability for any investment banking, business consultancy, financial advisory, brokerage or finder's fees or commissions in connection with the transactions contemplated hereby, except for fees payable to mortgage bankers and others with respect to certain financing transactions related to the consummation of the transactions contemplated pursuant to the Purchase Agreement. (f) Litigation. There is (i) no suit, proceeding, action or claim pending ---------- or threatened, (ii) no investigation or inquiry by any administrative agency or governmental body pending or threatened and (iii) no legal, administrative or arbitration proceeding pending or threatened, to which the Seller is or, to the best knowledge of Seller, might become a party, challenging or seeking to prohibit or delay consummation of the transaction contemplated at the Securities Closing, which is reasonably likely to have a materially adverse effect on the financial condition of Seller or Seller's ability to convey the Shares, or which is reasonably likely to result in a claim against the Shares (or any portion thereof), and, to the best knowledge of Seller there is no basis or grounds for any such suit, action, claim, investigation, inquiry or proceeding. (g) Solvency, Value. Seller is not now Insolvent (as subsequently --------------- defined), nor will Seller be rendered Insolvent by the consummation of the transactions contemplated by this Agreement. Seller's agreement to enter into the Agreement and to consummate the transactions contemplated at the Securities Closing involves no actual intent to hinder, delay or defraud any of Seller's creditors or any person with a lien upon, a claim against or an encumbrance on any of Seller's property. Seller does not intend to incur debts beyond its ability to pay as such debts become due, and there is no reasonable basis for believing that it has or will incurred debts beyond its ability to pay as such debts mature. The Purchase Price to be received for the Shares was arrived at by arm's length negotiation between unrelated parties under no compulsion to agree to or consummate a transaction and represents (i) reasonably equivalent value as that term is utilized in section 548 of the United States Bankruptcy Code and/or the Uniform Fraudulent Transfer Act and (ii) fair consideration as that term is utilized in the Uniform Fraudulent Conveyance Act. As used in this Agreement, "Insolvent" means, with respect to any person or entity, that (i) the sum of the present fair saleable value of such person's or entity's assets does not exceed such person's or entity's debts and other probable liabilities, (ii) such person's capital is unreasonably small or otherwise inadequate for the conduct of its business as presently conducted or as contemplated to be conducted, or (iii) such person or entity is not able to pay its debts as they mature. 4 (h) Knowledge, Access. Seller has been provided access to such ----------------- information regarding the Common Stock, the Buyer, and the Buyer's assets, financial condition and business prospects, including access to executive officers of the Buyer, as it deems necessary to the making of an informed decision to sell the Shares as contemplated herein. Seller is a sophisticated investor with extensive experience in purchase and sale of securities and in the conduct of businesses similar to that of the Buyer. 2.2 Representations and Warranties of Buyer. Buyer represents and --------------------------------------- warrants to Seller as follows: (a) Due Organization, Good Standing and Power. Buyer is a corporation, ----------------------------------------- duly organized, validly existing and in good standing under the laws of the State of Maryland and has all requisite power and authority to own its properties and to carry on its business as now being conducted and to enter into this Agreement and perform its obligations hereunder. Buyer is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary. (b) Authorization and Validity of Agreement. The Buyer has the full --------------------------------------- corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by Buyer of this Agreement and the consummation by the Buyer of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Buyer are necessary to authorize this Agreements or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Buyer and constitutes a valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, except to the extent that its enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other laws affecting the enforcement of creditors' rights generally and accept that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceedings therefore may be brought. (c) No Conflict. No filing with, and no permit, authorization, consent, or ----------- approval of, any foreign or domestic public body or authority is necessary for the consummation by the Buyer of the transactions contemplated by this Agreement. The execution and the delivery of this Agreement by the Buyer, the consummation by the Seller of the transactions contemplated by this Agreement and the compliance by the Buyer with any of the provisions of this Agreement will not (i) conflict with or result in any breach of any provision of the Articles of Incorporations or Bylaws of the Buyer; (ii) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions, or provisions of any note, bond, mortgage, indenture, license, lease, contract, agreement, or other instrument or obligation to which the Buyer is a party or by which any of its properties or assets may be bound; or (iii) violate any order, writ, injunction, decree, statute, rule, or regulation applicable to the Buyer or any of its properties or assets. 5 (d) Finders and Investment Bankers. Except as previously disclosed to ------------------------------ Seller in writing, neither the Buyer nor any of its officers or directors, or any of their respective affiliates, has employed any investment banker, business consultant, financial advisor, broker or finder in connection with the transactions contemplated by this Agreement, or incurred in any liability for any investment banking, business consultancy, financial advisory, brokerage or finder's fees or commissions in connection with the transactions contemplated hereby. (e) Litigation. There is (i) no suit, proceeding, action or claim pending ---------- or threatened, (ii) no investigation or inquiry by any administrative agency or governmental body pending or threatened and (iii) no legal, administrative or arbitration proceeding pending or threatened, to which the Buyer is or, to the best knowledge of Buyer, might become a party, challenging or seeking to prohibit or delay consummation of the transaction contemplated at the Securities Closing, which is reasonably likely to have a materially adverse effect on the financial condition of Buyer or Buyer's ability to convey the Shares, or which is reasonably likely to result in a claim against the Shares (or any portion thereof), and, to the best knowledge of Buyer there is no basis or grounds for any such suit, action, claim, investigation, inquiry or proceeding. (f) Investment Representation. Buyer is the issuer of the Shares and is ------------------------- acquiring such Shares for its own account and not with a view to or in connection with, any distribution thereof within the meaning of the Securities Act of 1933, as amended or any applicable state securities laws. The funds constituting the Purchase Price will be obtained by Buyer from its own working capital and will not represent the proceeds of subscriptions or loans by any third party, including any direct or indirect subsidiary or other affiliate of the Buyer, having, or expecting, an interest, whether as an investor, pledgee or other stakeholder, in the Shares. (g) Solvency, Value. Buyer is not now Insolvent (as subsequently defined), --------------- nor will Buyer be rendered Insolvent by the consummation of the transactions contemplated by this Agreement. Buyer's agreement to enter into the Agreement and to consummate the transactions contemplated at the Securities Closing involves no actual intent to hinder, delay or defraud any of Buyer's creditors or any person with a lien upon, a claim against or an encumbrance on any of Buyer's property. Buyer does not intend to incur debts beyond its ability to pay as such debts become due, and there is no reasonable basis for believing that it has or will incurred debts beyond its ability to pay as such debts mature. The Purchase Price to be paid for the Shares was arrived at by arm's length negotiation between unrelated parties under no compulsion to agree to or consummate a transaction and the exchange of the Shares therefor represents (i) reasonably equivalent value as that term is utilized in section 548 of the United States Bankruptcy Code and/or the Uniform Fraudulent Transfer Act and (ii) fair consideration as that term is utilized in the Uniform Fraudulent Conveyance Act. The capital surplus of Buyer as of the date hereof is not, and such capital surplus as of the Securities Closing will not be, less than $250,000,000. None of the Buyer's subsidiaries, as described in the Company Reports (as defined below) is Insolvent and none will be rendered Insolvent as a result of the consummation of the transaction contemplated hereby. (h) Buyer's Periodic Reports. At least since December 31, 1998, the Buyer ------------------------ has filed with the Securities and Exchange Commission, and Buyer will file prior to the Securities Closing, all 6 forms, reports, statements, and documents required to be filed by it pursuant to the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the "Securities Act"), and the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the "Exchange Act"), together with all amendments, supplements or exhibits thereto required by the Securities Act or the Exchange Act (collectively, the "Company Reports") and has otherwise complied in all material respects with the requirements of the Securities Act and the Exchange Act. As of their respective dates, the Company Reports did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were or will be made, not misleading. Each of the historical consolidated balance sheets included in or incorporated by reference into the Company Reports as of its date and each of the historical consolidated statements of income and earnings, shareholders' equity, and cash flows included in or incorporated by reference into the Company Reports (including any related notes and schedules) fairly presents or will fairly present the consolidated financial condition, results of operations, shareholders' equity, and cash flows, as the case may be, of the Buyer and its subsidiaries for the periods set forth (subject in the case of unaudited statements, to normal year-end audit adjustments), in each case in accordance with generally accepted accounting principals consistently applied during the periods involved. 3. COVENANTS OF THE PARTIES 3.1 Additional Agreements; Best Efforts; Cooperation. Subject to the terms ------------------------------------------------ and conditions herein provided, Buyer and Seller each shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable (i) to satisfy the conditions of such party's obligations hereunder, consummate and make effective as promptly as practicable the transactions contemplated by this Agreement and to cooperate with the other party in connection with the foregoing, (ii) to defend all lawsuits or other legal proceedings challenging this Agreement or the consummation of the transactions contemplated hereby, (iii) to lift or rescind any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated hereby, and (iv) to effect all necessary registrations and filings and submissions of information required or requested by governmental authorities. 3.2 Publicity. The parties shall cooperate with one another with respect --------- to any public announcements relating to the transactions contemplated herein. To the extent commercially reasonable, the parties will provide one another with prior notice of and opportunity to comment on the form and substance of any press release, Company Filing, filing under the Securities Act or the Exchange Act or other public statement or document which is expected to receive public dissemination describing or relating to the transactions contemplated herein. No provision hereof shall be interpreted to restrict a party's ability to timely make any announcement or to file any document required under applicable law. 3.3 Contemporaneous Transactions. The parties have entered into this ---------------------------- Agreement in the expectation that the transactions contemplated at the Securities Closing will be part of a series of 7 related transactions described in this Agreement, the Purchase Agreement and that certain Guaranty Agreement, of even date herewith, between Buyer and Seller (the "Guaranty Agreement"). This Agreement, the Purchase Agreement and the Guaranty Agreement are hereinafter sometimes referred to as the "Transaction Documents"). Although the parties contemplate that one or more of the transactions contemplated pursuant to the Transaction Documents will be consummated in advance of the others, it is the intent of the parties hereto and to the Transaction Documents that each of the transactions contemplated at the closings described in each of the Transaction Documents will be consummated if any of them are. Except to the extent that any party to a Transaction Document shall be in breach of its obligations thereunder, it shall be entitled to receive reasonable assurances from the other parties to the Transaction Documents that each of the transactions contemplated at the various closings provided for therein will be consummated in the order and manner provided for in the Transaction Documents and each of the parties hereto agrees to use commercially reasonable efforts to provide such assurances. Notwithstanding the foregoing, no provision of this Section 3.3 is intended to confer any benefit on any third party and no third party to the Transaction Documents shall be entitled to rely upon this Section 3.3 or seek enforcement thereof. In addition, notwithstanding the provisions of this Section 3.3, no party to this Agreement shall be obliged, by virtue thereof, to enter into any amendment to this Agreement or to incur or suffer any material liability, expense or detriment. 4. CONDITIONS PRECEDENT 4.1 Conditions Precedent to Buyer's Obligations. The obligations of Buyer ------------------------------------------- to consummate the transactions contemplated at the Securities Closing is subject to the fulfillment to the reasonable satisfaction of the Buyer, prior to the Securities Closing, of each of the following conditions: (a) Consents, Authorizations, Etc. All consents, waivers, authorizations ----------------------------- and approvals of, and filings with, any governmental agency or authority or any third party which are required in connection with the execution and the delivery by the Seller of this Agreement and the consummation by the Seller of the transactions contemplated at the Securities Closing shall have been obtained or made; (b) Injunction, Etc.. There shall be no judgment, decree, injunction, ---------------- ruling or order by any court, governmental department, commission, agency or instrumentality outstanding against Buyer, Seller or any of their respective affiliates which prohibits, restricts or delays consummation of the transactions contemplated at the Securities Closing; (c) Representations and Warranties; Compliance with Covenants and ------------------------------------------------------------- Obligations. The representations and warranties of the Seller contained in this - ----------- Agreement shall have been true and correct in all material respects on the date hereof and shall also be true and correct in all material respects on and as of the Securities Closing, except for changes contemplated in this Agreement, with the same force and effect as if made on and as of the Securities Closing, except to the extent that such representations and warranties by their terms relate only to periods of time prior to the Securities Closing; 8 (d) Opinion of Counsel. Buyer shall have received an opinion of counsel to ------------------ the Seller, dated as of the Securities Closing, in form, scope and substance reasonably satisfactory to Buyer, addressing the matters described in Section 2.1(a), (b), (c) and (d) hereof; and (e) Purchase Agreement. The conditions precedent to the closing of the ------------------ transactions contemplated pursuant to the Purchase Agreement shall have occurred. 4.2 Conditions Precedent to Seller's Obligations. The obligations of -------------------------------------------- Seller to consummate the transactions contemplated at the Securities Closing is subject to the fulfillment to the reasonable satisfaction of the Seller, prior to the Securities Closing, of each of the following conditions: (a) Consents, Authorizations, Etc. All consents, waivers, authorizations ----------------------------- and approvals of, and filings with, any governmental agency or authority or any third party which are required in connection with the execution and the delivery by the Buyer of this Agreement and the consummation by the Buyer of the transactions contemplated at the Securities Closing shall have been obtained or made; (b) Injunction, Etc.. There shall be no judgment, decree, injunction, ---------------- ruling or order by any court, governmental department, commission, agency or instrumentality outstanding against Seller, Buyer or any of their respective affiliates which prohibits, restricts or delays consummation of the transactions contemplated at the Securities Closing; (c) Representations and Warranties; Compliance with Covenants and ------------------------------------------------------------- Obligations. The representations and warranties of the Buyer contained in this - ----------- Agreement shall have been true and correct in all material respects on the date hereof and shall also be true and correct in all material respects on and as of the Securities Closing, except for changes contemplated in this Agreement, with the same force and effect as if made on and as of the Securities Closing, except to the extent that such representations and warranties by their terms relate only to periods of time prior to the Securities Closing; (d) Opinion of Counsel. Seller shall have received an opinion of counsel ------------------ to the Buyer, dated as of the Securities Closing, in form, scope and substance reasonably satisfactory to Seller, addressing the matters described in Section 2.2(a), (b), (c) and (d) hereof; and (e) Purchase Agreement. The conditions precedent to the closing of the ------------------ transactions contemplated pursuant to the Purchase Agreement shall have occurred. 4.3 Waiver of Conditions. Any party may, at its option, waive in writing -------------------- any or all of the conditions herein contained to which its obligations hereunder are subject. 9 5. INDEMNITY 5.1 Indemnification of Buyer. Seller, from and after the effective time ------------------------ agrees to indemnify, defend and hold harmless Buyer and its officers, directors, and controlling persons harmless from and against any liability, loss, obligation, claim, lawsuit, costs, damage or expense, including, without limitation, reasonable attorneys' fees and expenses (in each case, a "Loss") asserted against, imposed upon or suffered by them, or any of them, without limit and without regard to the cause or cause thereof, directly or indirectly arising out of, resulting from, relating to or connection with (i) any breach of, inaccuracy in, or non-performance of any representation, warranty, covenant or agreement of Seller contained in this Agreement or (ii) any claim, action or proceeding relating to any actions taken or omitted to be taken by Seller or members of its Board of Directors and in any way related to the execution and delivery of this Agreement or the Purchase Agreement, the performance of this Agreement or the Purchase Agreement or the consummation of the transactions contemplated thereunder. 5.2 Indemnification of Seller. Buyer, from and after the effective time ------------------------- agrees to indemnify, defend and hold harmless Seller and its officers, directors, and controlling persons harmless from and against any Loss asserted against, imposed upon or suffered by them, or any of them, without limit and without regard to the cause or cause thereof, directly or indirectly arising out of, resulting from, relating to or connection with (i) any breach of, inaccuracy in, or non-performance of any representation, warranty, covenant or agreement of Buyer contained in this Agreement or (ii) any claim, action or proceeding relating to any actions taken or omitted to be taken by Buyer or members of its Board of Directors and in any way related to the execution and delivery of this Agreement or the Purchase Agreement, the performance of this Agreement or the Purchase Agreement or the consummation of the transactions contemplated thereunder. 5.3 Notice and Opportunity to Defend. -------------------------------- (a) If any of the persons entitled to indemnification hereunder (an "Indemnitee") receives notice of any claim or commencement of any action or proceeding (an "Asserted Liability") with respect to which another person (the "Indemnitor") is obligated to provide indemnification pursuant to Section 4.1 or Section 4.2 hereof, the Indemnitee shall promptly give the Indemnitor written notice thereof, describing the Asserted Liability in reasonable detail and indicating the amount (which may be estimated) of the Loss that has been or may be asserted by the Indemnitee against the Indemnitor. (b) The failure of the Indemnitee to give such notice shall not result in a loss of the Indemnitee's right to indemnification under this Article 4 unless such failure prejudices the Indemnitor's ability to defend against the Asserted Liability. (c) No settlement or compromise of an Asserted Liability may be made by the Indemnitee without the written consent of the Indemnitor, which shall not be unreasonably withheld. 10 (d) If the Indemnitor so elects, the Indemnitor, at the Indemnitor's expense shall assume the defense of the Asserted Liability and shall have the right to settle or compromise the same, except that if the Indemnitee's counsel reasonably objects to such assumption on the ground that there may be legal defenses available to the Indemnitee that are different from or in addition to those available to the Indemnitor, then the Indemnitee shall have the right to employ separate counsel approved by the Indemnitor. (e) If the Indemnitor assumes the defense of the Asserted Liability, the Indemnitor shall not be liable for the fees and expenses of the Indemnitee's counsel incurred thereafter in connection with the Asserted Liability. (f) In no event shall the Indemnitor be liable for the fees and expenses of more than one counsel for any, some or all Indemnitees in any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, unless in the reasonable opinion of such counsel, there is, under applicable standards of professional conduct a conflict on any significant issue between the positions of any two Indemnitees. 5.4 Compounded Losses. No party otherwise entitled to indemnification ----------------- under this Agreement shall be indemnified pursuant to this Agreement to the extent that such party's Loss is increased by the willful misconduct, violation of law, gross negligence or bad faith of such party. 5.5 Subrogation Rights. In the event that an Indemnitor shall be obligated ------------------ to indemnify and Indemnitee pursuant to this Article 5, the Indemnitor shall upon payment of any Loss in full, or upon agreement to do so, be subrogated to all rights of the Indemnitee with respect to the Loss to which such indemnification relates; provided, however, that the Indemnitor shall only be subrogated to the extent of any amount actually paid by it pursuant to this Article 5 in connection with such Loss. 6. TERMINATION AND ABANDONMENT 6.1 Termination and Abandonment. This Agreement may be terminated at any --------------------------- time prior to the Securities Closing: (a) By Mutual Action. By mutual action of the Boards of Directors of Buyer ---------------- and Seller; (b) By Buyer. By Buyer, if: (i) any condition set forth in Section 4.1 -------- shall not have been complied with or performed any material respect and if such noncompliance or nonperformance shall not have been cured or eliminated, or by its nature cannot be cured or eliminated, by Seller on or before January 31, 2001; provided, however, that such deadline shall be extended indefinitely, so long as the closing of the transactions contemplated pursuant to the Purchase Agreement have been postponed, and the Purchase Agreement not terminated; or (ii) Buyer determines in good faith that the Seller will be rendered Insolvent by the consummation of the transactions contemplated at the Securities Closing. 11 (c) By Seller. By Seller, if: (i) any condition set forth in Section 4.2 --------- shall not have been complied with or performed any material respect and if such noncompliance or nonperformance shall not have been cured or eliminated, or by its nature cannot be cured or eliminated, by Buyer on or before January 31, 2001; provided, however, that such deadline shall be extended indefinitely, so long as the closing of the transactions contemplated pursuant to the Purchase Agreement have been postponed, and the Purchase Agreement not terminated; or (ii) Seller determines in good faith that the Buyer will be rendered Insolvent by the consummation of the transactions contemplated at the Securities Closing. (d) Deadline Date. By any party hereto not in breach of its duties and ------------- obligations hereunder, in the event that the Securities Closing is not consummated pursuant to this Agreement on or before February 28, 2001; provided, however, that no party shall be entitled to terminate pursuant to this Section 6.1(d) unless, simultaneously therewith, the other party's obligations under the Purchase Agreement are simultaneously terminated. 6.2 Procedure for Termination. The termination of this Agreement by any ------------------------- party hereto shall be effective only upon the giving of notice of such termination, stating the grounds for such termination and signed by the terminating party, to the other party. 6.3 Effective Termination. In the event of the termination and abandonment --------------------- of this Agreement, (i) by mutual action of the Boards of Directors of Buyer and Seller pursuant to Section 6.1(a); or (ii) by either Buyer or Seller pursuant to Section 6.1, no party shall have any liability hereunder (except pursuant to Section 3.2 and Articles 5 and 7, which shall survive any such termination) unless such failure to consummate or fulfill as a condition is or was within the reasonable control Buyer or Seller, in which case, such party having reasonable control shall continue to be liable hereunder. 7. MISCELLANEOUS 7.1 Survival. The representations, warranties, covenants and agreements -------- made by Buyer or Seller in this Agreement (including, without limiting the generality of the foregoing, the agreements regarding indemnity set forth herein in Article 5 of this Agreement) shall survive the Securities Closing. 7.2 Expenses. Each party hereto agrees to pay, without right of -------- reimbursement from the other, the costs incurred by it incident to the performance of its obligations hereunder, whether or not the transactions contemplated hereby shall be consummated, including, without limitation, those incident to the preparation of this Agreement, and the fees and disbursements of counsel, accountants and consultants employed by it in connection with the transactions contemplated hereby. Any transfer tax imposed on the sale and transfer of the Shares shall be paid by Buyer. 7.3 Notices. Any notice, approval or other communication required or ------- permitted under this Agreement shall be effective only if it is in writing and delivered personally or sent by overnight 12 delivery service, postage prepaid (unless otherwise required by this Agreement), addressed as follows: If to Buyer, addressed to: Glenborough Realty Trust Incorporated 400 South El Camino Real, Suite 1100 San Mateo, California 94402 Attn: Robert Batinovich With a copy to: G. Lee Burns, Jr., Esq. Glenborough Realty Trust Incorporated 400 South El Camino Real, Suite 1100 San Mateo, California 94402 If to Seller, addressed to: Bush Gardens, LLC c/o Westdale Asset Management 3300 Commerce Boulevard East Dallas, Texas 75226 Attn: Joseph G. Beard, Manager With a copy to: Jackson Walker L.L.P. 901 Main Street, Suite 6000 Dallas, Texas 75202 Attn: William H. Hornberger or such other address as Buyer or Seller may designate by notice to the other. Notices shall be deemed given when received when delivered and receipted for (or upon the date of attempted delivery where delivery is refused). 7.4 Parties in Interest. This Agreement cannot be assigned, amended or ------------------- modified except by a written agreement executed by the parties hereto. This Agreement is binding upon and is for the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns. Except as specifically provided in Article 5 with respect to Indemnitees, this Agreement is not made for the benefit of any person, firm, corporation or association not a party hereto (or their respective successors or permitted assigns), and no person, firm, corporation or association other than the parties hereto or the successors or permitted assigns of any of them shall acquire or have any right under or by virtue of this Agreement. 13 7.5 Headings. The headings in this Agreement are inserted for convenience -------- of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. 7.6 Governing Law, Venue and Arbitration. Sections 14(b) and 14(j) of the ------------------------------------ Purchase Agreement are incorporated herein by reference and made a part hereof. 7.7 Counterparts. This Agreement may be executed in several counterparts, ------------ each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any party may deliver an executed copy of this Agreement and an executed copy of any document contemplated hereby by facsimile transmission to another party except when the law expressly requires physical delivery, and such delivery shall have the same force and effect as any other delivery of a manually signed copy. 7.8 Severability. If any term or other provision of this Agreement ------------ invalid, illegal or incapable of being enforced by any rule of law of public policy, all other terms and provisions will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected an any manner materially adverse to any party hereto. Upon any determination that any term or other provision of this Agreement is invalid, illegal or incapable of being enforced, the parties hereto will negotiate in good faith to modify this Agreement so as to effect the intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated by this Agreement are consummated to the fullest extent possible. 7.9 Entire Agreement; Amendments; Waiver; Severability; Gender. This ---------------------------------------------------------- Agreement hereto sets forth the entire agreement and understanding of the parties in respect of the transactions contemplated hereby and supersede all prior agreements, arrangements and understandings relating to the subject matter hereof. No representation, promise, inducement or statement of intention has been made by any party which is not embodied in this Agreement or in the documents referred to herein, and no party shall be bound by or liable for any alleged representation, promise, inducement or statement of intention not so set forth. The failure of any party at any time to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of any condition, or of any breach of any term, covenant, representation or warranty contained in this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach, or a waiver of any other condition or of any breach of any other term, covenant, representation or warranty. In the event that any provision in this Agreement shall be determined to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and the remaining provisions of this Agreement shall not, at the election of the party for whose benefit the provision exists, be in any way impaired. Whenever the context so requires, the masculine shall include the feminine and neuter, and conversely. 14 EXECUTED by the respective parties, each duly authorized as of the date first above written. BUYER: By:__________________________________ Name:_____________________________ Title:____________________________ SELLER: By:__________________________________ Name:_____________________________ Title:____________________________ 15 EX-2 3 0003.txt PURCHASE AGREEMENT EXHIBIT 2 PURCHASE AGREEMENT THIS PURCHASE AGREEMENT ("Agreement") is dated September 25, 2000 (the "Effective Date") by and between those parties listed in Addendum I as Sellers (individually referred to herein as a Seller, and collectively as Sellers), and those parties listed in Addendum I as Exchangors (individually referred to herein as an Exchangor and collectively as Exchangors), on the one hand (Sellers and Exchangors collectively referred to herein as "Transferors"), and Bush Gardens, LLC, a Nevada limited liability company ("Buyer"). Recitals A. Sellers are the owners of those certain properties listed on Schedule 1A (the "Sale Properties"). Exchangors are the owners of those certain Properties listed on Schedule lB (the "Exchange Properties"). Buyer desires to acquire all of the Properties and each of the Transferors desire to transfer the Property to Buyer, upon the terms and subject to the conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises, the mutual representations, warranties, covenants and agreements hereinafter contained, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged and intending to be legally bound, the parties hereby agree as follows: 1. Definitions. Terms used in this Agreement shall have the meanings set forth in Addendum I attached hereto. 2. Agreement to Purchase and Transfer. Subject to and upon the terms and conditions herein set forth and the representations and warranties contained herein, Transferors agree to transfer, severally and not jointly, the Properties owned by such Transferor to Buyer, and Buyer agrees to acquire the Properties from Transferors. 3. Consideration. Subject to the remainder hereof, Transferors and Buyer agree that the total Consideration for the Properties shall be Four Hundred Four Million Ninety Three Thousand Five Hundred Sixteen and 00/100ths Dollars ($404,093,516.00). (a) The Consideration shall comprise the following components: (i) Earnest Money Deposit. Within two (2) business days after the Effective Date, Buyer shall deposit the Initial Earnest Money Deposit in escrow with the Title Company. If Buyer does not terminate this Agreement on or before the Approval Date, Buyer shall deposit the Remaining Earnest Money Deposit with the Title Company on or before the Approval Date. While held by the Title Company, the Earnest Money shall be held in a federally insured interest-bearing account and interest accruing thereon shall be for the account of Buyer. In the event the 1 transaction contemplated hereby is consummated, the Earnest Money plus interest accrued thereon while held by the Title Company shall be credited against Buyer's payment obligations hereunder. (ii) The Assumed Loans. At the Closing, there shall be credited against the Consideration an amount equal to the principal balance of the Assumed Loans as of the Closing Date, together with all accrued unpaid interest thereon as of the Closing Date, and all late charges, penalties or other charges owing under the Assumed Loans. As a condition precedent to Buyer's obligations hereunder, Buyer shall have received binding written commitments allowing Buyer to assume each of the Assumed Loans, as more fully provided in Section 5(a)(v), below. Any other Loans that encumber any portion of the Property are the responsibility of Transferors, and will be paid in full at the Closing at Transferors' sole cost and expense. Any and all costs, charges, expenses and fees relating to the Buyer's assumption of the Assumed Loans shall be paid by the Buyer. As to the Assumed Loans, at Closing, Transferors shall either (i) retain all rights to existing escrowed reserve amounts (for taxes, replacements, repairs, etc) held by the Lenders, with a commitment from such Lenders to promptly return such amounts of Transferors or (ii) receive a credit from Buyer for all such amounts retained by the Lenders post Closing for the benefit of Buyer. (iii) Cash. Immediately available funds, in an amount equal to the Consideration, less the aggregate amount of the Earnest Money Deposit and the Assumed Loans credit as set forth above. (iv) Independent Contract Consideration. Promptly after execution of this Agreement by all parties hereto, Buyer will deliver to Seller the amount of One Hundred and No/100 Dollars ($100.00) (the "Independent Contract Consideration") which amount has been bargained for and agreed to as consideration for Seller's execution and delivery of this Contract. The Independent Contract Consideration is in addition to and independent of all other consideration provided in this Contract, and is nonrefundable in all events. (b) Allocation of Consideration. The Consideration shall be allocated among the Transferors and the multiple properties comprising the Property in the manner set forth in Section 14(a) and on Schedule 5. 4. Buyer's Due Diligence. Buyer acknowledges that Transferors have afforded Buyer and its agents and representatives an opportunity to review all of the Due Diligence Materials prior to the date of this Agreement and, subject to the express terms of this Agreement, that Buyer has completed such review to its satisfaction. Buyer has assumed fully the risk that Buyer has failed completely and adequately to review and consider any or all of such materials. But for Buyers' expression of satisfaction with the content of the Due Diligence Materials, Buyer would not have entered into this Agreement; but for Buyer's expression of such satisfaction and assumption of any risk as to the character of its review and 2 consideration of the Due Diligence Materials, Transferors would not have entered into this Agreement. Nevertheless, during the Due Diligence Period, Buyer shall be permitted to make a further review of the Investigation Matters to determine whether any Material Adverse Matters Amounts exist with respect to the Properties and the extent of any such Material Adverse Matters Amount. After the Approval Date, Buyer shall have no further right of inspection and review with respect to the Properties except solely for the purpose of assisting Buyer in its management transition. The rights and obligations of the parties arising out of Buyer's determination and assertion prior to the Approval Date that such Material Adverse Matters Amounts do exist shall be limited to Investigation Matters and governed solely by the provisions of Section 4(f) below. Subject to the foregoing, and as more fully provided below, Transferors agree to assist and cooperate with Buyer in obtaining access to the Property and certain documents relating thereto for purposes of inspection and due diligence. (a) Physical Inspection of the Property. At any time(s) reasonably requested by Buyer following the Effective Date and prior to Closing, Transferors shall afford authorized representatives of Buyer reasonable access to the Property for purposes of informing itself as to the Investigation Matters, satisfying Buyer with respect to the representations, warranties and covenants of Transferors contained herein and with respect to the satisfaction of any Buyer's Conditions Precedent to the Closing; provided, however, that Buyer shall use commercially reasonable efforts not to unreasonably disturb or interfere with the rights of Tenants. Buyer shall provide Transferors with not less than forty-eight (48) hours advance written notice of any such inspections, and Transferors, at their election, shall have the right to have a representative present during any such investigations. Buyer hereby agrees to indemnify and hold the Transferors harmless from any claims, liabilities, costs, damages or injury to persons or property resulting from such investigations or caused by Buyer or its authorized representatives during their entry and investigations prior to the Closing. In the event this Agreement is terminated, Buyer shall restore each of the Properties to substantially the condition in which it was found. This indemnity shall survive the termination of this Agreement or the Closing, as applicable. (b) Delivery of Documents and Records. Buyer acknowledges receipt of the Due Diligence Materials, except for the information contained on Schedules 2 and II.E.1, which shall be provided by Transferors not later than fifteen (15) business days after the Effective Date. Except as specifically set forth herein or in any closing documents delivered by Transferors hereunder, Transferors make no representations or warranties as to the truth, accuracy or completeness of any materials, data or other information supplied to Buyer in connection with Buyer's inspection of the Property (e.g., that such materials are complete, accurate, or the final version thereof, or that all such materials are in the Transferors' possession). It is the parties' express understanding and agreement that such materials are provided only for Buyer's convenience in making its own examination and determinations regarding the Properties prior to the Approval Date, and, in doing so, Buyer shall rely exclusively on its own independent investigation and evaluation of every aspect of the Property and not on any materials supplied by Transferors except for the express representations and warranties of Transferors contained herein or in any closing documents 3 delivered by Transferors hereunder. Buyer expressly disclaims any intent to rely on any such materials provided to it by Transferors in connection with its own inspections and agrees that it shall rely solely on its own independently developed or verified information except for the express representations and warranties of Transferors contained herein or in any closing documents delivered by Transferors hereunder. (c) Contacts with Property Managers. At any time reasonably requested by Buyer following the Effective Date and prior to Closing, Buyer may contact and interview the property manager/leasing agent(s), provided that such contacts or interviews shall occur only after reasonable oral or written notice to Transferors and a representative of Transferors may be present during any interview. (d) Service Contracts. At or before the Closing, except as set forth below, Transferors will terminate all existing Service Contracts for the Property except for those Service Contracts listed on Schedule 2, which will be assigned to and assumed by Buyer at the Closing. Transferors will provide Buyer with a complete listing of the Service Contracts to be listed on Schedule 2 within fifteen (15) days after the Effective Date. Schedule 2(a) includes a list of capital expenditures/repairs that the Transferors anticipate completing on or before the Closing Date (the "Property Work"). Buyer and Transferors shall agree upon a revised form of Schedule 2(a) as ofthe Closing Date; to the extent that any Property Work remains unfinished as of the Closing Date, Buyer shall assume the obligation to complete the unfinished Property Work (including any Contracts in connection therewith), and Transferors shall give Buyer a credit at closing for the cost of completing any such unfinished work, including the costs associated with any change orders executed or authorized by Transferors relating to such unfinished work. (e) Approval of Title. Prior to the Approval Date, Buyer shall advise Transferors what exceptions to title, if any, will not be accepted by Buyer. Transferors shall be obligated to remove any objectionable exception which can be removed with the payment of a liquidated sum of money. Transferors' failure to cure any such monetary objection shall constitute a breach of Transferors' obligations under this Section 4(e) and shall entitle Buyer to the remedies set forth in the Guaranty Agreement. With respect to any objectionable exception which cannot be removed with the payment of a liquidated sum of money, Transferors shall have fifteen (15) business days after receipt of Buyer's objections to give to Buyer: (A) written notice that Transferors will remove such objectionable exceptions on or before the Closing Date; or (B) written notice that Transferors elect not to cause such exceptions to be removed. Transferors' failure to give notice to Buyer within the fifteen (15) business day period shall be deemed to be Transferors' election not to cause such exceptions to be removed. If Transferors give Buyer notice or are otherwise deemed to have elected to proceed under clause (B), Buyer shall have until ten (10) business days after receipt of Transferors' actual or deemed notice as to Transferors' unwillingness to cause such exceptions to be removed to elect (i) to proceed to close the transaction as set forth in this Agreement, or (ii) to proceed to close the transaction without purchasing any Property that is subject, as of the Closing Date, to any uncured objectionable non-monetary exception that materially and negatively impairs the Property ("Impaired Property"), in which event the 4 Consideration will be reduced by the Allocated Price of such Impaired Property, or (iii) to terminate this Agreement pursuant to Section 13(a). If Buyer fails to give Transferors notice of its election on or before the expiration of such ten (10) business day period, Buyer shall be deemed to have elected to proceed to close the transaction without purchasing the Impaired Property and for the appropriately reduced Consideration, and to have waived any right to terminate this Agreement under this provision. If Transferors give notice pursuant to clause (A) and fail to remove any such objectionable exceptions from title prior to the Closing Date despite Transferors good faith efforts to the contrary, Buyer shall have the same rights and options set forth in (i), (ii) and (iii) above in this Section 4(e). (f) Buyer's Right to Terminate. Buyer shall have the right to terminate this Agreement pursuant to Section 13(a) on or before the Approval Date only if, on or prior to the Approval Date, Buyer shall deliver to Transferors written notice asserting, in Buyer's good faith determination, the existence of Material Adverse Matters Amounts as to the Property only (i) with respect to Investigation Matters, and (ii) if the aggregate total of Material Adverse Matters Amounts exceeds 2% of the Consideration ("Buyer's Termination Notice"). Buyer's failure to deliver to Transferors on or prior to the Approval Date the Buyer's Termination Notice, shall be deemed conclusively as Buyer's confirmation of the absence of any Material Adverse Matters Amounts and Buyers election to waive its termination rights pursuant to this Section 4(f), and to proceed with the acquisition of the Properties hereunder. If Buyer delivers a Buyer's Termination Notice, the notice shall set forth: (i) the identity of any Properties as to which Buyer has identified any Material Adverse Matters Amounts, (ii) the nature of the Investigation Matter which resulted in such Material Adverse Matters Amounts, and (iii) reasonably detailed evidence of the existence of such Material Adverse Matters Amount and Buyer's rationale for and calculation of the Material Adverse Matters Amounts set forth. 5. Conditions to Closing. (a) Buyer's Conditions Precedent. Buyer's Conditions Precedent as set forth below are precedent to Buyer's obligation to acquire the Property. The Buyer's Conditions Precedent are intended solely for the benefit of Buyer. If any of the Buyer's Conditions Precedent is not satisfied, Buyer shall have the right in its sole discretion either to waive the Buyer's Condition Precedent and proceed with the acquisition without adjustment to the Consideration or terminate this Agreement by written notice to Transferors and the Title Company. (i) Conveyances by Transferors. At the Closing, the Transferors shall convey to Buyer all of their respective right, title and interest to the Properties by executing and delivering all documents required to be delivered by Transferors pursuant to the Section entitled "Closing and Escrow." (ii) Representations and Warranties. The representations and warranties of the Transferors contained in Addendum II shall be true and correct in all material respects as of the Closing Date as though made at and as of the Closing 5 Date, and Transferors' covenants under this Agreement shall be satisfied as of the Closing Date (to the extent such covenants are to be satisfied as of the Closing Date.) (iii) Title Policy. Title Company shall be committed to issue the Title Policy at Closing for the Property, showing title to the insured Property vested in Buyer, subject only to the Permitted Exceptions. (iv) Property Condition. The physical condition of the Real Property shall be substantially the same on the Closing Date as on the Effective Date, reasonable wear and tear and loss by casualty excepted. (v) Assumption of Existing Loans. On or before seventy five (75) days after the Effective Date (the "Loan Commitment Date"), Buyer shall have received binding written approvals allowing Buyer to assume the Assumed Loans, with aggregate fees and costs payable by Buyer to such lenders not exceeding 1.5% of the principal amount of the debt so assumed, and on such other terms as are currently prevailing in the marketplace and as are reasonably acceptable to Buyer. Buyer agrees to promptly file and diligently pursue applications for the assumption of the Assumed Loans and to pay all costs and provide all information that is required by those Lenders considering such applications. Buyer agrees to keep the Transferors advised as to the progress of the Buyer in obtaining such approvals, and to file reasonably complete assumption applications with the Lenders no later than thirty (30) days after the Effective Date (the "Assumption Application Deadline"). Buyer shall confirm in writing to Transferors on or before the Assumption Application Deadline that such assumption applications for the Assumed Loans have been completed by Buyer and delivered to the required Lenders. Any right to terminate this Agreement as a result of the failure of this Buyer's Condition Precedent shall be conditioned upon Buyer's fulfilling its obligations as to the filing of the assumption applications as required above, and shall be exercised by Buyer's delivery of written notice to Transferors on or before the Loan Commitment Date; failure to file the required applications and or deliver such termination notice shall constitute Buyer's waiver of this Buyer's Condition Precedent. (vi) Securities Closing. The closing of the transactions contemplated in the Stock Repurchase Agreement has occurred. (vii) Guaranty Agreement. The Guaranty Agreement has been executed by the parties thereto, no default exists under such document, and such document has not been terminated by either party thereto. (b) Transferors' Conditions Precedent. (i) Buyer's Representations, Warranties and Covenants. It shall be a condition precedent to Transferors' obligation to transfer the Property, that the representations and warranties of Buyer contained herein shall be true and correct as 6 of the Closing Date as though made at and as of the Closing Date, and Buyer's covenants under this Agreement shall be satisfied as of the Closing Date (to the extent such covenants are to be satisfied as of the Closing Date). (ii) Assumption of Existing Loans. On or before the Closing Date, Buyer shall have received binding written commitments allowing Buyer to assume the Assumed Loans. Each loan assumption agreement/documentation shall release the applicable Transferor and any guarantors from any obligations arising or accruing under the terms of the Assumed Loans (as the same may be amended as a part of the assumption process) from and after the Closing Date. (iii) Securities Closing. The closing of the transactions contemplated in the in the Stock Repurchase Agreement has occurred. (iv) Guaranty Agreement. The Guaranty Agreement has been executed by the parties thereto, no default exists under such document, and such document has not been terminated by either party thereto. (v) Transferors' Rights to Waive. Such conditions precedent are intended solely for the benefit of the Transferors. If any of the Transferors' Conditions Precedent is not satisfied, Transferors shall have the right in their sole discretion either to waive the Transferors' Condition Precedent and proceed with the transaction or terminate this Agreement by written notice to Buyer and the Title Company. (c) Deemed Approval of Conditions. In the event that any party having the right of cancellation hereunder based on failure of a condition precedent set forth herein does not inform the other party and Title Company in writing of the failure of any condition precedent made for the benefit of such party prior to the Closing, such failure shall be deemed to have been waived, effective as of the Closing; provided that a party shall not be deemed to have waived any claim for breach of any representation or warranty by the other party unless such party has Actual Knowledge of such breach prior to Closing. (d) Return of Materials. Upon termination of this Agreement and the escrow for failure of a condition precedent or upon termination by Buyer prior to the Approval Date, Buyer shall return to Transferors all materials provided by Transferors to Buyer pursuant to the Section entitled "Buyer's Due Diligence." 6. Closing and Escrow. (a) Closing Date. The Closing shall be conducted through the Title Company, on or before the Closing Date. (b) Deposit of Agreement and Escrow Instructions. The parties shall promptly deposit a fully executed copy of this Agreement with Title Company and this Agreement 7 shall serve as escrow instructions to Title Company for consummation of the transactions contemplated hereby. The parties agree to execute such additional escrow instructions as may be appropriate to enable Title Company to comply with the terms of this Agreement; provided, however, that in the event of any conflict between the provisions of this Agreement and any supplementary escrow instructions, the terms of this Agreement shall control unless such supplementary instructions are signed by both Buyer and Transferors and a contrary intent is expressly indicated in such supplementary instructions. Transferors and Buyer hereby designate Title Company as the Reporting Person for the transaction pursuant to Section 6045(e) of the Internal Revenue Code and the regulations promulgated thereunder. (c) Transferors' Deliveries to Escrow. At or before the Closing, Transferors shall deliver to the Title Company, in escrow, the following for each Property: (i) the duly executed and acknowledged Deed; (ii) a duly executed Assignment of Leases; (iii) a duly executed Bill of Sale; (iv) a duly executed Assignment of Contracts; (v) loan assumption documentation to be executed by Transferor(s) with respect to the Assumed Loans; (vi) any documents or agreements reasonably necessary to permit Exchangors to facilitate a 1031 exchange of their Property, executed by Exchangors; (vii) a FIRPTA affidavit (in the form attached as Exhibit E) pursuant to Section 1445(b)(2) of the Internal Revenue Code of 1986 (the code), and on which Buyer is entitled to rely, that each Transferor is not a foreign person within the meaning of Section 1445(f)(3) of the Internal Revenue Code, and any equivalents required by the states in which the property is located; and ( viii) any other instruments, records or correspondence called for hereunder which have not previously been delivered. (d) Transferors' Deliveries to Buyer. (i) Deliveries at Closing. At or before the Closing, Transferors shall deliver to Buyer the following for each Property: a) operating statements for that portion of the current year ending at the end of the calendar month preceding the month in which the Closing Date occurs, provided, however, that if the Closing occurs during the first fifteen days of a month, the operating statement shall be updated to the end of the calendar month that is two months prior to the Closing; b) a Rent Roll dated as of the first day of the month in which the Closing Date occurs; c) one original form notice to the Tenants for each of the Properties, informing them of this transaction; and d) all keys, alarm codes, etc relating to each the Property. 8 (ii) Deliveries After Closing. Promptly after closing, Transferors shall deliver to Buyer the following, to the extent they have not already been delivered, provided, however, that Transferors may satisfy this requirement by leaving these materials in on-site management/leasing offices located at the Properties: a) Copies of the Contracts listed on Schedule 2; b) originals of the Leases, to the extent available; if an original is not available, Transferors shall use best efforts to provide Buyer with a legible copy; and c) any other instruments, records or correspondence called for hereunder which have not previously been delivered, to the extent available. (e) Buyer's Deliveries to Escrow. At or before the Closing, Buyer shall deliver or cause to be delivered in escrow to the Title Company the following: (i) a duly executed Assignment of Leases for each Property; (ii) a duly executed Assignment of Contracts for each Property; (iii) any documents reasonably necessary to permit Exchangors to facilitate a 1031 exchange of their Properties, subject to the limitations on Buyer's obligations in connection therewith as set forth in Section 15(t) below; (iv) loan assumption documentation relating to the Assumed Loans to be executed by Buyer; and (v) the Cash. (f) Deposit of Other Instruments. Transferors and Buyer shall each deposit such other instruments as are reasonably required by Title Company or otherwise required to close the escrow and consummate the transactions described herein in accordance with the terms hereof. 7. Closing Adjustments and Prorations. With respect to the Property, the following adjustments shall be made, and the following procedures shall be followed: (a) Basis of Prorations. All prorations shall be calculated as of 12:01 a.m. on the Closing Date, on the basis of a 365-day year. (b) Items Not to be Prorated. There shall be no prorations or adjustments of any kind with respect to: (i) Insurance Premiums; (ii) Delinquent Rents for Full Months Prior to the Month in which the Closing Occurred. Delinquent rents for full months prior to the month in which the Closing occurred shall remain the property of Transferors, and except as set forth herein, Buyer shall have no claim thereto whether collected by Transferors or Buyer, 9 before or after the Closing, and no responsibility of any kind with respect thereto except as specifically set forth herein. Transferors may take all appropriate collection measures (including litigation if deemed by Transferors to be necessary or desirable), except that Transferors may not seek any remedy which would interfere with the Tenant's continued occupancy and full use of its premises under such Tenant's Lease, or Buyer's rights to receive Rent with respect to any period beginning on the Closing Date. If requested by Transferors, Buyer shall use reasonable efforts in accordance with its standard collection practices to collect delinquent rents on Transferors' behalf. In the event that Buyer collects any such delinquent rents, Buyer shall promptly pay such amounts over to Transferors in accordance with the procedures set forth subsection (d) below less the amount of Buyer's out of pocket third party collection costs. The foregoing notwithstanding, in the event that Transferors have commenced legal collection proceedings against any Tenant prior to the Approval Date, Transferors shall have the right, but not the obligations, to continue to prosecute such proceedings at their own cost and expense, and to seek any remedy to which it may be entitled. (c) Closing Adjustments. Prior to Closing, Transferors shall prepare for review, comment and agreement by Buyer a proration statement for each Property, and each party shall be credited or charged at the Closing, in accordance with the following: (i) Rents. Transferors shall account to Buyer for any Rents actually collected by Transferors for the rental period in which the Closing occurs, and Buyer shall be credited for its pro rata share. (ii) Expenses. a) Prepaid Expenses. To the extent Expenses have been paid prior to the Closing Date for the rental period in which the Closing occurs, Transferors shall account to Buyer for such prepaid Expenses, and Transferors shall be credited for the amount of such prepaid expenses applicable to the period after the Closing Date. b) Unpaid Expenses. To the extent Expenses relating to the rental period in which the Closing occurs are unpaid as of the Closing Date but are ascertainable, Buyer shall be credited for Transferors' pro rata share of such Expenses for the period prior to the Closing date. c) Property Taxes. For purposes of this Subsection entitled "Expenses," the Title Company shall pro-rate property taxes based on local custom in each relevant jurisdiction for sales of similar multifamily properties. The decision of the Title Company as to local custom shall be binding upon the parties 10 hereto. If commonly done pursuant to local custom, Property Taxes shall be subject to a post closing adjustment once the actual tax bills are available (to the extent that the same are not available at Closing for the period in which the Closing occurs), provided, however, that the Buyer shall be solely responsible for any increased taxes resulting from the change in ownership of the Property from Transferors to Buyer or resulting from an increased tax levy based upon the Consideration paid hereunder. (iii) Security Deposits. Transferors shall deliver to Buyer all prepaid rents, security deposits, letters of credit, non-refundable cleaning and other fees and deposits and other collateral given to Transferor or any of its affiliates or successors-in-interest under any of the Leases, to the extent not applied by Transferors prior to the Closing Date. Buyer shall assume all of Transferor's obligations with respect to the Security Deposits, shall agree to hold and administer the same in accordance with the terms of applicable State law, and shall indemnify and hold harmless Transferors from any and all liability respecting the same arising from and after the Closing Date. This undertaking and indemnity shall survive the Closing. (iv) Laundry Leases. Transferors shall also deliver to Buyer the amount of any prepaid income applicable to the month of Closing or thereafter under any cable television or laundry lease or the like allocable to the period from and after the Closing Date. Buyer shall deliver to Transferors the amount of any income under any cable television, laundry lease or similar agreement attributable to the period prior to the Closing Date. (v) Utility Deposits. Transferors shall receive credits at Closing for the amount of any utility or other deposits with respect to the Properties, in which case all such deposits for which the Transferors receive credit shall remain in place for the benefit of Buyer and the Transferors shall execute and deliver to Buyer such documents as shall be necessary to assign such deposits to the Buyer. (d) Post-Closing Adjustments. After the Closing Date, Transferors and Buyer shall make post closing adjustments in accordance with the following; (i) Non-delinquent Rents. If either Buyer or Transferors collects any non-delinquent Rents applicable to the month in which the Closing occurred, such Rents shall be prorated as of the Closing Date and paid to the party entitled thereto. (ii) Delinquent Rents for month in which the Closing occurred. If either Buyer or Transferors collects from any Tenant Rents that were delinquent as of the Closing Date and that relate to the rental period in which the Closing occurred, then such Rents shall be applied in the following order of priority: First, to reimburse Buyer or Transferors for all out-of-pocket third-party collection costs actually 11 incurred by Buyer or Transferors in collecting such Rents (including the portion thereof relating to the period after the Closing Date); second, to satisfy such Tenant's Rent obligations relating to the period after the Closing Date; and third, to satisfy such delinquent Rent obligations relating to the period prior to the Closing Date. Transferors shall have no right to pursue the collection of such delinquent Rents, except that Transferors shall retain to right to continue to prosecute any collection proceedings that were initiated against any Tenant prior to the Closing Date. (iii) Expenses. With respect to any invoice received by Buyer or Transferors after the Closing Date for Expenses that relate to the period in which the Closing occurred, the party receiving such invoice shall give the other party written notice of such invoice, and the other party shall have thirty days to review and approve the accuracy of any such invoice. If the parties agree that the Invoice is accurate and should be paid, Buyer shall compute Buyer's pro rata share, write a check for that amount in favor of the vendor, and then send the invoice and check to Transferors, in which case Transferors agree that they will pay for its share and forward the invoice and the two payments to the vendor. (iv) Survival of Obligations. The obligations of Transferors and Buyer under the Subsection entitled "Post-Closing Adjustments" shall survive the Closing for a period of ninety (90) days, and all such adjustments shall be made prior to that time. (e) Allocation of Closing Costs. Closing costs shall be allocated as set forth below: (i) Escrow charges: 50% to Buyer and 50% to Transferors. (ii) Recording fees: 50% to Buyer and 50% to Transferors. (iii) Title insurance premium for base Title Policy: 100% to Transferors. Buyer shall be solely responsible for the costs for extended coverages, endorsements and lender's title policies requested by Buyer or its lender(s). (iv) Transfer taxes: 100% to Buyer. (v) Survey costs: 100% to Buyer. 8. Transfer of Property "As Is". Except for representations and warranties made herein, Buyer acknowledges that none of the Transferors, any affiliate of the Transferors, any of their respective shareholders, partners, members, officers, directors, employees, contractors, agents, attorneys, nor other representatives of Transferors (collectively, the "Transferors Related Parties") have made any verbal or written representations, warranties, promises or guarantees whatsoever to Buyer, whether express or implied, and, in particular, no such representations, warranties, guaranties or promises have been made with respect to the physical condition or operation of the Property, title to or the boundaries of the Property, soil conditions, the environmental condition of the Property, including, without limitation, the presence, discovery, release, threatened release or removal of Hazardous Materials (including, without limitation, the presence of asbestos or, asbestos containing materials), 12 the actual or projected revenue and expenses or the Property, the zoning and other laws, regulations or rules applicable to the Property or the compliance of the Property therewith, the quantity, quality or condition of the articles of personal property and fixtures included in the transactions contemplated hereby, the use or occupancy of the Property or any part thereof or any other matter or thing affecting or related to the Property or the transactions contemplated hereby, except as, and solely to the extent, herein specifically set forth. (a) Prior to the Effective Date, Buyer acknowledges that it will have reviewed or have had the opportunity to review the Due Diligence Materials. (b) Buyer further acknowledges that certain of the Due Diligence Materials may have been prepared by parties other than Transferors. (c) Buyer acknowledges that it has not relied upon any representations or warranties not specifically set forth herein, and has entered into this Agreement after having made and relied solely on its own independent investigation, inspections, analyses, appraisals and evaluations of facts and circumstances. (d) Except for its reliance on the representations and warranties specifically set forth herein, Buyer agrees to accept Property "as is" in its present condition, subject to reasonable use, wear and tear but excluding casualty and condemnation, between the date hereof and the Closing Date, and further agrees that except for any breach of its representations and warranties specifically set forth herein, Transferors shall not be liable for any latent defects in the Property or bound in any manner whatsoever by any guarantees, promises, projections, operating statements, setups or other information pertaining to the Property made, furnished or claimed to have been made or furnished by Transferors or any Transferors Related Party, whether verbally or in writing. (e) Buyer is a sophisticated purchaser, with experience in acquiring, owning and operating real property in the nature of the Property. Buyer is familiar with the risks associated with sale transactions that involve purchases based on limited information, representations and disclosures. Buyer understands and is freely taking all risks involved in connection with this transaction. (f) Buyer acknowledges that, except as specifically set forth herein, Transferors hereby specifically disclaim any warranty or guaranty, oral or written, implied or arising by operation of law, and any warranty of condition, habitability, merchantability or fitness for a particular purpose, in respect to the Property. (g) Except for those matters expressly set forth in this Agreement to survive the Closing and except for the agreements of Transferors and Buyer set forth in the closing documents or otherwise entered into at the Closing, Buyer agrees that Buyer's acceptance of the Deed shall be and be deemed to be an agreement by Buyer that Transferors have fully performed, discharged and complied with all of Transferors' obligations, covenants and agreements hereunder and that Transferors shall have no further liability with respect thereto. 13 (h) As a material inducement to Transferors to agree to sell the Property to Buyer and to execute this Agreement, except to the extent specifically provided to the contrary herein or in the Deed and other instruments to be executed and delivered by Transferors at the Closing, or any action for breach of any representation, warranty and/or covenant of Transferors specifically set forth herein, Buyer hereby waives, releases and forever discharges Transferors, any affiliate, and their respective shareholders, partners, members, officers, directors, employees, contractors, agents, attorneys and other representatives (collectively, the "Released Parties") from all claims, causes of action, demands, losses, damages, liabilities, costs and expenses (including attorney's fees and disbursements whether suit is instituted or not) which Buyer has or may have in the future on account of or in any way arising out of (i) the structural and physical condition of the Property or its surroundings, (ii) the financial condition of the operation of the Property either before or after the Closing Date, (iii) any law, ordinance, rule, regulation, restriction or legal requirement which is now or may hereafter be applicable to the Property, including, without limitation, the Americans with Disabilities Act of 1990, and (iv) the environmental condition of the Property, including, without limitation, the presence, discovery or removal of any Hazardous Materials in, at, about or under the Property or the applicability to the Property of any Environmental Laws, as such acts may be amended from time to time, or any other federal, state or local statute or regulation relating to environmental contamination at, in or under the Property. Buyer shall not make or institute any claims against any of the Released Parties which are inconsistent with the foregoing. Buyer agrees that this release shall be given full force and effect according to each of its expressed terms and provisions. In connection with the foregoing release, the Buyer expressly waives the benefit of Section 1542, of the California Civil Code, which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." (i) In no event shall Transferors be liable for any incidental, special, exemplary or consequential damages, including, without limitation, loss of profits or revenue, interference with business operations, loss of tenants, lenders, investors, buyers, diminution in value of the Property, or inability to use the Property, due to the physical condition of the Property. (j) The provisions of this Section shall survive the Closing or any termination of this Agreement. 9. Transferors' Representations and Warranties. (a) General. Transferors hereby represent and warrant to Buyer the matters set forth on Addendum II, which is incorporated herein by this reference as though fully set forth herein. Other than as expressly contained in Addendum II, Transferors makes no representations or warranties of any kind relating to the Property or its condition or fitness. 14 Buyer is entitled to rely on Transferors' representations and warranties notwithstanding Buyer's inspection and investigation of the Property, except to the extent that Buyer has Actual Knowledge on or before the Closing Date that any such representation or warranty is inaccurate, in which case such representation or warranty shall be deemed modified by Buyer's Actual Knowledge. 10. Buyer's Representations and Warranties. Buyer hereby represents and warrants as of the Effective Date and as of the Closing Date to Transferors as follows: (a) Organization. Buyer is a Nevada limited liability company, duly organized, validly existing and in good standing under the laws of the State of Nevada, and is qualified to do business in the state(s) where the Property is located. (b) Entity Authority. Buyer has full corporate or partnership power and authority to execute and deliver this Agreement and to perform all of the terms and conditions hereof to be performed by Buyer and to consummate the transactions contemplated hereby. This Agreement and all documents executed by Buyer which are to be delivered to Transferors at Closing have been duly executed and delivered by Buyer and are or at the time of Closing will be the legal, valid and binding obligation of Buyer and is enforceable against Buyer in accordance with its terms, except as the enforcement thereof may be limited by applicable Creditors' Rights Laws. Buyer is not presently subject to any bankruptcy, insolvency, reorganization, moratorium, or similar proceeding. (c) Signers' Authority. The individuals executing this Agreement and the instruments referenced herein on behalf of Buyer and its constituent entities, if any, have the legal power, right and actual authority to bind Buyer to the terms and conditions hereof and thereof. (d) No Conflict. Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated by this Agreement, nor the compliance with the terms and conditions hereof will (a) violate or conflict, in any material respect, with any provision of Buyer's organizational documents or to Buyer's Actual Knowledge any statute, regulation or rule, or, to Buyer's Actual Knowledge, any injunction, judgment, order, decree, ruling, charge or other restrictions of any government, governmental agency or court to which Buyer is subject, and which violation or conflict would have a material adverse effect on Buyer. Buyer is not a party to any contract or subject to any other legal restriction that would prevent fulfillment by Buyer of all of the terms and conditions of this Agreement or compliance with any of the obligations hereunder. (e) Required Consents. To Buyer's Actual Knowledge all material consents required from any governmental authority or third party in connection with the execution and delivery of this Agreement by Buyer or the consummation by Buyer of the transactions contemplated hereby have been made or obtained or shall have been made or obtained by the Closing Date. Complete and correct copies of all such consents shall be delivered to Transferors. 15 (f) Independent Investigation. Buyer has made (or will make prior to the Closing Date) an independent investigation with regard to the Property, will have ascertained to its satisfaction the extent to which the Property complies with applicable zoning, building, environmental, health and safety and all other laws codes and regulations, and Buyer's intended use thereof, including without limitation, review and/or approval of matters disclosed by Transferors pursuant to this Agreement. (g) No Litigation. There is no litigation pending or, to Buyer's knowledge, threatened, against Buyer or any basis therefor that might materially and detrimentally affect the ability of Buyer to perform its obligations under this Agreement. Buyer shall notify Transferors promptly of any such litigation of which Buyer becomes aware. 11. Risk of Loss. (a) Notice of Loss. If, prior to the Closing Date, any portion of the Property suffers a Minor or Major Loss, Transferors shall immediately notify Buyer of that fact, which notice shall include sufficient detail to apprise Buyer of the current status of the Property following such loss. (b) Minor Loss. Buyer's obligations hereunder shall not be affected by the occurrence of a Minor Loss, provided that: (i) upon the Closing, there shall be a credit against the Consideration equal to the amount of any insurance proceeds or condemnation awards collected by Transferors as a result of such Minor Loss, plus the amount of any insurance deductible applicable to such casualty; or (ii) insurance or condemnation proceeds available to Transferors are sufficient to cover the cost of restoration and the insurance carrier has admitted liability for the payment of such costs. If the proceeds or awards have not been collected as of the Closing, then Transferors' right, title and interest to, such proceeds or awards shall be assigned to Buyer at the Closing, together with a credit against the Consideration in the amount of any insurance deductible applicable to such casualty. This provision shall not limit any of the Buyer's repair obligations under the Leases. If there is a Minor Loss and insurance coverage as set forth above is not available, Buyer shall have the same rights as if it was a Major Loss. (c) Major Loss. In the event of a Major Loss, Buyer may, at its option to be exercised by written notice to Transferors within ten (10) days of Transferors' notice to Buyer of the occurrence thereof, elect to either (i) terminate this Agreement as to the damaged or condemned Property (in which event the Consideration payable hereunder shall be reduced by the Consideration allocable to such Property, or (ii) consummate the acquisition of the Property for the full Consideration, subject to the following. If Buyer elects to proceed with the acquisition of the Property, then the Closing shall be postponed to the later of the Closing Date or the date which is five (5) days after Buyer makes such election and, upon the Closing, Buyer shall be given a credit against the Consideration equal to the amount of any insurance proceeds or condemnation awards collected by Transferors as a result of such Major Loss, plus the amount of any insurance deductible applicable to 16 such casualty. If the proceeds or awards have not been collected as of the Closing, then Transferors' right, title and interest to such proceeds or awards shall be assigned to Buyer, and Transferors will cooperate with Buyer as reasonably requested by Buyer in the collection of such proceeds or award. If Buyer fails to give Transferors notice within such 10-day period, then Buyer will be deemed to have elected to terminate this Agreement as to the damaged or condemned Property. If the Agreement is not terminated, nothing herein shall limit any of the Buyer's repair obligations under the Leases. 12. Transferors' Continued Operation of the Property. (a) General. Except as otherwise contemplated or permitted by this Agreement or approved by Buyer in writing, from the Effective Date to the Closing Date, Transferors will operate, maintain, repair and lease of the Property in a prudent manner, in the ordinary course of business, on an arm's- length basis and consistent with its past practices (and without limiting the foregoing, Transferors shall, in the ordinary course, negotiate with prospective tenants and enter into leases of the Property, enforce leases in all material respects, pay all costs and expenses of the Property, including, without limitation, debt service, real estate taxes and assessments, and maintain insurance and pay and perform loan obligations) and will not dispose of or encumber the Property or any part thereof, except for dispositions of personal property in the ordinary course of business. (b) Actions Requiring Buyer's Consent. Notwithstanding the above terms of this Section, from the Approval Date until the Closing Date, Transferors shall not, without the prior written approval of Buyer, which approval shall not be unreasonably withheld or delayed, take any of the following actions: (i) Leases. Execute or renew any Lease, except for such actions in connection with residential leases of one year or less on the Transferors' standard form for the Property at market rents; provided, however, that if Transferors request Lease approval and Buyer has not responded to Transferors' request for Lease approval within two (2) business days, that Buyer shall be deemed to have approved the Lease activity in question; (ii) Contracts. Except as otherwise required under this Agreement, enter into, execute or terminate any operating agreement, reciprocal easement agreement, management agreement or any lease, contract, agreement or other commitment of any sort (including any contract for capital items or expenditures), with respect to the Property that will survive the Closing or otherwise bind the Buyer after the Closing. (iii) Property Work. Buyer and Transferors agree that Transferors shall proceed with the completion of the Property Work prior to the Closing Date, with reasonable diligence and in accordance with Transferors' past practices. Subsection (ii) above notwithstanding, Transferors shall enter into such Contracts as are necessary to complete the Property Work, which Contracts may be assigned to assumed by Buyer at Closing per Section 4(d) above. 17 13. Total Non-Consummation of the Transaction. If the transaction is not consummated in whole or in part on or before the Closing Date, the following provisions shall apply: (a) No Default. If the transaction is not consummated for a reason other than a default by one of the parties, then (i) Title Company and each party shall return to the depositor thereof the Earnest Money and all other funds and items which were deposited hereunder; (ii) Transferors and Buyer shall each bear one-half of any Escrow cancellation charges. (b) Default by Transferors. If (a) the conditions precedent set forth in Section 5(b) shall have been satisfied or waived (provided that for purposes of this Section Buyer shall not be required to tender formally the Consideration but only demonstrate the commitment of immediately available funds to pay such Consideration) and (b) Transferors shall refuse to perform its closing obligations under this Agreement (e.g., by refusing to convey a Property to Buyer at Closing), then Buyer's sole and exclusive remedy under this Agreement shall be either (i) to receive back the Earnest Money in the event Transferors refused to perform its closing obligations with respect to all of the Properties plus all accrued interest thereon, in which case, after the payment by Transferors of any Escrow cancellation charges, neither party shall have any further rights or obligations hereunder, or (ii) to proceed to close the transaction without purchasing the affected Property, in which event the Consideration will be reduced by the Allocated Price of such affected Property, and pursue an action for specific performance on a Property by Property basis as to those Properties as to which Transferors refuse to perform its closing obligations; provided, however, that any such action for specific performance shall be filed and served by Buyer within thirty (30) days of the date of the alleged Transferors' default, it being the intent of the parties hereto that any failure of Buyer to meet the time deadline set for filing shall be deemed to be Buyer's election to waive and relinquish any rights to enforce specific performance of this Agreement; and provided further, that notwithstanding anything to the contrary contained herein, Buyer's right to pursue an action for specific performance is expressly conditioned on Buyer not being in default or having defaulted in any material respect under this Agreement. Nothing contained in this Section 13(b) is intended to limit Buyer's rights under Sections 15(g), 15(m) and 15(p) of this Agreement. Transferors refusal to perform its closing obligations under this Agreement shall constitute a breach by Transferors under Section 6(c) of this Agreement and shall entitle Buyer to the remedies available under the Guaranty Agreement. (c) Default by Buyer. If the Closing does not occur as a result of a default by Buyer, then (i) Buyer shall pay all escrow cancellation charges, (ii) to the extent it has not previously been delivered to Transferors, the Title Company shall deliver the Earnest Money to Transferors and (iii) any portion of the Initial Earnest Money or the Remaining Earnest Money that has not been deposited by Buyer shall immediately be paid by Buyer to Transferors. The aggregate amount under items (ii) and (iii) above shall constitute Transferors' full and complete liquidated damages and its sole and exclusive remedy for 18 Buyer's default. THE PARTIES HAVE AGREED THAT TRANSFERORS'S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY BUYER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE AMOUNT SPECIFIED ABOVE HAVE BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF TRANSFERORS'S DAMAGES AND AS TRANSFERORS'S EXCLUSIVE REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE EVENT OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF BUYER. INITIALS: Transferors _____ Buyer_____ This Section 13(c) is intended only to liquidate and limit Transferors' rights to damages arising due to Buyer's failure to purchase the Properties and shall not limit the indemnification or other obligations of (i) Buyer pursuant to the Confidentiality Agreement dated May 17, 2000 (the "Confidentiality Agreement") or (ii) Buyer pursuant to (A) any other documents delivered pursuant to this Agreement or (B) Sections 4(a), 15(g), 15(m) and 15(p) of this Agreement. In the event that Transferors are entitled to the Earnest Money pursuant to this provision, an amount equal to the lesser of (i) the Earnest Money or (ii) the sum of (A) the maximum amount that can be paid to Transferors without causing Transferors (or any of their constituent partners or members) to fail to meet the requirements of Sections 856(c)(2) and 856(c)(3) of the Internal Revenue Code, determined as if the payment of such amount did not constitute income described in Section 856(c)(2)(A) -- (H) and 856 (c)(3)(A)-- (I) of the Internal Revenue Code ("Qualifying Income"), as determined by Transferors' accountants, plus (B) in the even Transferors receive either (x) a letter from Transferors' counsel prior to the Closing Date indicating that Transferors (or their constituent partners or members, as applicable) has received a ruling from the Internal Revenue (the "IRS") described in clauses (ii) or (iii) of the following paragraph, or (y) an opinion from Transferors' (or their constituent partners or members, as applicable) counsel as described in clause (iv) of the following paragraph, an amount equal to the Earnest Money less the amount payable under clause (A) above, and any balance of the Earnest Money (the "Balance") shall be retained by the Title Company in escrow in accordance with the terms of an escrow (subject to the terms of the following paragraph) being otherwise agreed upon by Transferors and the Title Company. The escrow agreement described in this Section 13(c) shall provide that the amount in escrow or any portion thereof shall not be released to Transferors except to the extent the Title Company receives any one or combination of the following: (i) a letter from Transfers' accountants indicating the maximum amount that can be paid by the title Company to Transferors without causing Transferors (or any of their constituent partners or members, as applicable) to fail to meet the requirements of Sections 856(c)(2) and 856(c)(3) of the Internal Revenue Code, determined as if the payment of such amount did not constitute Qualifying Income, in which case the Title Company shall release the amount indicated in such letter to Transferors, (ii) a letter from Transferors' (or any of their constituent partner's or member's, as applicable) counsel indicating that Transferors (or any of its constituent 19 partners or members, as applicable) received a ruling from the IRS holding that the receipt by Transferors (or any of their constituent partners or members, as applicable) of the Earnest Money would either constitute Qualifying Income or would be excluded from gross income within the meaning of Sections 856(c)(2) and 856(c)(3) of the Internal Revenue Code, in which case the Title Company shall release the Balance to Transferors, (iii) a letter from Transferors' (or any of their constituent partners' or members', as applicable) counsel, indicating that Transferors (or any of their constituent partners or members, as applicable) received a ruling from the IRS holding that the receipt by Transferor (or any of its constituent partners or members, as applicable) of the Balance following the receipt of and pursuant to such ruling would not be deemed constructively received prior thereto or (iv) an opinion of a Transferor's (or its constituent partner's or member's, as applicable) legal counsel to the effect that the receipt by a Transferor (or its constituent partner, as applicable) of the Earnest Money would either constitute Qualifying Income or would be excluded from gross income within the meaning of Sections 856(c)(2) and 856(c)(3) of the Internal Revenue Code, in which case the Title Company shall release the Balance to Transferors. Buyer and the Title Company agree to act reasonably and cooperate with Transferors, in order (x) to maximize the portion of the Earnest Money that may be distributed to Transferors hereunder without causing a Transferor (or its constituent partner or member, as applicable) to fail to meet the requirements of Sections 856(c)(2) and 856(c)(3) of the Code or (y) to improve a Transferor's (or any of their constituent partners or members, as applicable) chances of securing a favorable ruling described in this Section 13(c), provided that, except as otherwise provided in this Agreement, Buyer and Title Company shall not be required to incur any out-of-pocket costs in connection therewith. The escrow agreement shall also provide that any portion of the Earnest Money then held in escrow after the expiration of five (5) years from the date of the establishment of such escrow shall be released by the Title Company to Buyer. Buyer shall not be a party (other than as a contingent beneficiary as described above) to such escrow arrangements and shall not bear any cost of or have liability resulting from such escrow arrangements. (d) Cure Rights. Prior to the exercise of any right or remedy for a default hereunder as contained in this Section 13, the party alleging a default hereunder shall give the defaulting party written notice of nature of such default (with such specificity as to enable the defaulting party to identify the cure of such default), and a ten (10) business day period in which to cure such default. If such cure has not been effected within such ten (10) business day period, then the party alleging a default hereunder may proceed pursuant this Section 13, and no further cure periods shall apply to such default. 14. Additional Rights of Termination. In addition to other rights set forth elsewhere in this Agreement, Transferors and Buyer shall have the following rights to terminate this Agreement: (a) Allocated Values. Transferors and Buyer agree and acknowledge that the aggregate Allocated Price of the Exchange Properties shall be $57,649,098 and the balance of the Consideration shall be allocated among the Sale Properties in accordance with a schedule to be attached hereto as Schedule 5. If the parties are unable to agree upon the 20 Allocated Prices of the Sales Properties on or before the date which is 3 weeks after the Effective Date, then either Transferors or Buyer shall have the right to terminate this Agreement pursuant to Section 13(a) upon seven (7) days written notice to the other party. (b) OP Unit Agreement. In the event the OP Unit Agreement has not been executed and delivered by GLB, and any of its affiliates, including the Transferors which are necessary parties thereto, and Galesi on or before the date which is 3 weeks after the Effective Date, then Transferors shall have the right to terminate this Agreement pursuant to Section 13(a) upon seven (7) days written notice to Buyer of such election to terminate. If GLB, and any of its affiliates, including the Transferors which are necessary parties thereto, and Galesi do execute and deliver the OP Unit Agreement within the 3 week period after the Effective Date, then Buyer shall have the right to terminate this Agreement pursuant to Section 13(a) at any time during the fourteen (14) days following notice to Buyer of such execution any delivery (which notice shall contain a true, correct and complete copy of the OP Unit Agreement and each other agreement between any of the parties thereto or hereto relating to the OP Unit Agreement or any of the Properties) upon seven (7) days written notice to Transferor, if the terms of the OP Unit Agreement are not acceptable to Buyer in its sole discretion. 15. Miscellaneous. (a) Disclosure of Transaction. Promptly following the Effective Date, Transferors shall (i) file, if necessary, with the Securities & Exchange Commission a report on Form 8-K, and (ii) issue a press release announcing the execution of the Agreement, in the form attached hereto as Exhibit G. Except as provided in the preceding sentence, neither party shall publicly announce or discuss the execution of this Agreement or the transaction contemplated hereby without the prior written consent of the other party, which shall not be unreasonably withheld. Notwithstanding the foregoing, nothing herein shall limit or restrict the making of any public announcement or notification which Buyer or its affiliates or Transferors or its general partner is required to make under the applicable provisions of the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended and the rules and regulations adopted by the Securities and Exchange Commission thereunder. (b) ARBITRATION OF DISPUTES. CONTROVERSIES OR CLAIMS BETWEEN BUYER AND TRANSFERORS HEREUNDER SHALL BE RESOLVED BY ARBITRATION CONDUCTED IN ACCORDANCE WITH THE TEXAS CIVIL PRACTICE AND REMEDIES CODE, CHAPTER 171 ET SEQ. AND UNDER THE REAL ESTATE INDUSTRY RULES OF THE AMERICAN ARBITRATION ASSOCIATION ("AAA RULES"). THE ARBITRATOR(S) SHALL GIVE EFFECT TO SUBSTANTIVE AND PROCEDURAL LAW OF THE STATE OF TEXAS INCLUDING, WITHOUT LIMITATION, THE STATUTES OF LIMITATION IN DETERMINING ANY CLAIM (BUT EXCLUDING PRINCIPLES RELATING TO CONFLICTS OF LAWS). ANY CONTROVERSY CONCERNING WHETHER AN ISSUE IS ARBITRABLE SHALL BE DETERMINED BY THE ARBITRATOR(S). ALL DECISIONS BY THE 21 ARBITRATOR(S) SHALL BE IN WRITING AND COPIES OF THE DECISIONS SHALL BE DELIVERED TO EACH PARTY. ARBITRATION SHALL TAKE PLACE IN DENVER, COLORADO AT A LOCATION MUTUALLY ACCEPTABLE TO THE PARTIES OR AS DESIGNATED BY THE ARBITRATOR(S) IF THE PARTIES CANNOT AGREE ON A LOCATION. THE DECISION BY THE ARBITRATOR(S) SHALL BE ISSUED NO LATER THAN SIXTY (60) DAYS AFTER THE DATE ON WHICH THE INITIATING PARTY GIVES WRITTEN NOTICE TO THE OTHER PARTY OF ITS INTENTION TO ARBITRATE, WHICH NOTICE SHALL COMPLY WITH THE REQUIREMENTS OF THE AAA RULES AND THREE COPIES OF SUCH NOTICE SHALL BE FILED AT THE REGIONAL OFFICE OF AAA IN DENVER, COLORADO AS PROVIDED IN THE AAA RULES. JUDGMENT UPON THE ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. THE INSTITUTION AND MAINTENANCE OF AN ACTION FOR JUDICIAL RELIEF OR PURSUIT OF A PROVISIONAL OR ANCILLARY REMEDY SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE PLAINTIFF, TO SUBMIT THE CONTROVERSY OR CLAIM TO ARBITRATION IF ANY OTHER PARTY CONTESTS SUCH ACTION FOR JUDICIAL RELIEF. NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY TEXAS LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW, YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE TEXAS CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION. ______________________ _____________________ BUYER'S INITIALS TRANSFERORS' INITIALS (c) Possession. Possession of the Property shall be delivered to Buyer upon the Closing. 22 (d) Force Majeure. Transferors' corporate headquarters are located in San Mateo, California. If during the term of this Agreement, there occurs a Force Majeure Event (a fire or other casualty, act of God, riot or other civil disturbance, or any other event out of the control of Transferors that prevents Transferors from having access to and use of its headquarters facility for the conduct of its operations), Transferors shall have the right, exercisable by written notice to Buyer within five (5) business days of the date of the Force Majeure Event, to extend any period for Transferors' performance hereunder by an period of time equal to the time that Transferors reasonably anticipates that it will be unable to use its headquarters, but not to exceed fourteen (14) days. (e) Tax Protest. If as a result of any tax protest or otherwise any refund or reduction of real property or other tax or assessment relating to the Property during the period prior to Closing, Transferors shall be entitled to receive or retain such refund or the benefit of such reduction, less equitable prorated costs of collection and subject to the rights of tenants under leases as to any such refunds. To the extent any such tax protest or proceedings are ongoing as of the Closing, Transferors shall have the right, but not the obligation, to continue to pursue such protest or proceeding following the Closing, but only to the extent that it applies to the pre-closing tax periods. (f) Notices. Any notice, consent or approval required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given upon (i) hand or confirmed telecopy delivery, (ii) one (1) day after being deposited with Federal Express, DHL Worldwide Express or another reliable overnight courier service or (iii) two (2) days after being deposited in the United States mail, registered or certified mail, postage prepaid, return receipt required, and addressed as indicated below, or such other address as either party may from time to time specify in writing to the other. If to Buyer: If to Transferors: Bush Gardens, L.L.C. Glenborough Properties, L.P. 3300 Commerce Blvd. East 400 South El Camino Real, 11/th/ Floor Dallas, Texas 75226 San Mateo, CA 94402-1708 Attention: Joe Beard Attention: Robert Batinovich Telecopy No. (214)887-1575 Telecopy No. (650)343-0957 with a copy to: with a copy to: Jackson Walker L.L.P. Glenborough Realty Trust Incorporated 301 Commerce Street, Suite 2400 400 South El Camino Real, 11/th/ Floor Fort Worth, Texas 76102 San Mateo, CA 94402-1708 Attention: Susan A. Halsey Attention G. Lee Burns, Jr. Telecopy No. (817)334-7290 Telecopy No. (650)343-7438 (g) Brokers and Finder. Neither party has had any contact or dealings regarding the Property, or any communication in connection with the subject matter of this transaction through any real estate broker or other person who can claim a right to a commission or 23 finder's fee in connection with the transaction contemplated herein. In the event that any broker or finder perfects a claim for a commission or finder's fee based upon any such contact, dealings or communication, the party through whom the broker or finder makes its claim shall be responsible for said commission or fee and shall indemnify and hold harmless the other party from and against all liabilities, losses, costs and expenses (including reasonable attorneys' fees) arising in connection with such claim for a commission or finder's fee. The provisions of this Subsection shall survive the Closing. (h) Successors and Assigns. Subject to the following, this Agreement shall be binding upon, and inure to the benefit of, the parties and their respective successors, heirs, administrators and assigns. Buyer shall have the right, with written notice to Transferors not later than ten (10) business days prior to the Closing Date, and upon receipt of Transferors' consent, which shall not be unreasonably withheld or delayed, to assign its right, title and interest in and to this Agreement to one or more assignees; provided, however that such assignee(s) shall assume all obligations of Buyer, and such assignment and assumption shall not release Buyer from any obligation hereunder. Transferors shall not have the right to assign its interest in this Agreement. (i) Amendments. Except as otherwise provided herein, this Agreement may be amended or modified only by a written instrument executed by Transferors and Buyer. (j) Governing Law. The substantive laws of the State of Texas, without reference to its conflict of laws provisions, will govern the validity, construction, and enforcement of this Agreement. (k) Merger of Prior Agreements. This Agreement and the Addenda, Exhibits and Schedules hereto constitute the entire agreement between the parties and supersede all prior agreements and understandings between the parties relating to the subject matter hereof. (l) Time for Performance. Any time deadlines contained herein shall be calculated by reference to calendar days unless otherwise specifically notes. For notice purposes hereunder, days shall be deemed to end at 5:00 P.M. Pacific Time. In the event that any time periods for performance hereunder fall on a weekend or legal holiday (either national holiday, California or Texas holiday, or official holiday in the state where the Property is located), the date for performance shall be the next following business day. (m) Enforcement. If either party fails to perform any of its obligations under this Agreement or if a dispute arises between the parties concerning the meaning or interpretation of any provision of this Agreement, then the defaulting party or the party not prevailing in such dispute shall pay any and all costs and expenses incurred by the other party on account of such default and/or in enforcing or establishing its rights hereunder, including, without limitation, arbitration or court costs and attorneys' fees and disbursements. Any such attorneys' fees and other expenses incurred by either party in enforcing a judgment in its favor under this Agreement shall be recoverable separately from and in addition to any other amount included in such judgment, and such attorneys' fees obligation is intended to be 24 severable from the other provisions of this Agreement and to survive and not be merged into any such judgment. (n) Time of the Essence. Time is of the essence of this Agreement. (o) Severability. If any provision of this Agreement or the application thereof to any person, place, or circumstance, shall be held by a court of competent jurisdiction to be invalid, unenforceable or void, the remainder of this Agreement and such provisions as applied to other persons, places and circumstances shall remain in full force and effect. (p) Confidentiality. Transferors and Buyer acknowledge and agree that the following provisions shall supercede the Confidentiality Agreement: (i) Each Receiving Party acknowledges the confidential and proprietary nature of the Confidential Information of the Disclosing Party and agrees that such Confidential Information (A) shall be kept confidential by the Receiving Party, (B) shall not be used for any reason or purpose other than to evaluate and consummate the transactions contemplated in this Agreement, and (C) without limiting the foregoing, shall not be disclosed by the Receiving Party to any Person, except in each case as otherwise expressly permitted by the terms of this Agreement or with the prior written consent of an authorized representative of Seller with respect to Confidential Information of Transferors (each, a "Transferor Contact") or an authorized representative of Buyer with respect to Confidential Information of Buyer (each, a "Buyer Contact"). Each of Buyer and Transferors shall disclose the Confidential Information of the other party only to its representatives who require such material for the purpose of evaluating the transactions contemplated in this Agreement and are informed by Buyer, or Transferors as the case may be, of the obligations of this Section 15(p) with respect to such information. Each of Buyer and Transferors shall (x) enforce the terms of this Section 15(p) as to its respective representatives, (y) take such action to the extent necessary to cause its representatives to comply with the terms and conditions of this Section 15(p), and (z) be responsible and liable for any breach of the provisions of this Section 15(p) by it or its representatives. (ii) Unless and until this Agreement is terminated, Transferors shall maintain as confidential any Confidential Information (including for this purpose any information of Transferors of the type referred to in Section (i) of the definition of Confidential Information, whether or not disclosed to Buyer) of the Transferors relating to any of the Property or the Assumed Loans. Notwithstanding the preceding sentence, Transferors may use any Confidential Information of Transferors before the Closing in the ordinary course of business in connection with the transactions permitted by Section 12. (iii) From and after the Closing, the provisions of subsection (i) above shall not apply to or restrict in any manner Buyer's use of any Confidential Information of the Transferors relating to any of the Property or the Assumed Loans. (iv) Notwithstanding the foregoing, subsections (i) and (ii) above do not apply to that part of the Confidential Information of a Disclosing Party that a Receiving Party demonstrates (A) was, 25 is or becomes generally available to the public other than as a result of a breach of this Section 15(p) or the Confidentiality Agreement by the Receiving Party or its Representatives, (B) was or is developed by the Receiving Party independently of and without reference to any Confidential Information of the Disclosing Party, (C) was, is or becomes available to the Receiving Party on a non-confidential basis from a Third Party not bound by a confidentiality agreement or any legal, fiduciary or other obligation restricting disclosure, or (D) which the Receiving Party is obligated or compelled to disclose pursuant to applicable law or process of law. Transferors shall not disclose any Confidential Information of Transferors relating to any of the Property or the Assumed Loans in reliance on the exceptions in clauses (B) or (C) above. (q) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. (r) Addenda, Exhibits and Schedules. All addenda, exhibits and schedules referred to herein are, unless otherwise indicated, incorporate herein by this reference as though set forth herein in full. (s) Construction. Headings at the beginning of each section and subsection are solely for the convenience of the parties and are not a part of the Agreement. Whenever required by the context of this Agreement, the singular, shall include the plural and the masculine shall include the feminine and vice versa. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if both parties had prepared the same. (t) Tax Free Exchange. As an accommodation to Exchangors, Buyer agrees to cooperate with Exchangors to accomplish one or more I.R.C. Section 1031 like kind tax deferred exchanges, provided that the following terms and conditions are met; (i) as to any properties not currently identified as Exchange Properties, Transferors shall give Buyer notice of any desired exchange not later than five (5) days prior to the Closing Date; (ii) Buyer shall in no way be liable for any additional costs, fees and/or expenses relating to any exchange; (iii) if, for whatever reason, the Closing does not occur, Buyer shall have no responsibility or liability to the third party involved in the exchange transaction, if any; and (iv) Buyer shall not be required to make any representations or warranties nor assume or incur any obligations or personal liability whatsoever in connection with the exchange transactions. Exchangors indemnify and agree to hold Buyer and its partners harmless from and against any and all causes, claims, demands, liabilities, costs and expenses, including attorneys' fees, as a result of or in connection with any such exchange. 26 IN WITNESS WHEREOF, the parties have executed this Agreement as of last date listed below next to the signatures of the Transferors and Buyer. Transferors Buyer Date: ___________, 2000 American Title Company The undersigned executes this Agreement for the purposes of acknowledging its agreement to serve as escrow agent in accordance with the terms of this Agreement and to acknowledge receipt of the Earnest Money from the Buyer. American Title Company By: _______________________ Its: ______________________ 27 Addendum I Definitions Terms used in this Agreement shall have the meanings set forth below: 1. Actual Knowledge of Buyer (or Buyer's Actual Knowledge). The knowledge of any Responsible Individual of Buyer, without duty of inquiry. 2. Actual Knowledge of Transferors (or Transferors' Actual Knowledge). The knowledge of any Responsible Individual of Transferors, without duty of inquiry. 3. Agreement. This Agreement between Transferors and Buyer, including all Addenda, Schedules and Exhibits attached hereto and incorporated herein by reference. 4. Allocated Price. As to each Property, the portion of the Consideration allocated to such Property as set forth on Schedule 5 to this Agreement. 5. Approval Date. 5:00 P.M. Central Standard Time on the forty fifth (45/th/) day after the Effective Date. 6. Assignment of Contracts. An Assignment and Assumption of Service Contracts, Guaranties and Warranties and Other Intangible Property substantially in the form of Exhibit D attached hereto. 7. Assignment of Leases. An Assignment and Assumption of Leases substantially in the form of Exhibit B attached hereto. 8. Assumed Loans. Those loans identified as Assumed Loans on Schedule 6 (Freddie Mac, Patrician and Riley Loans), which will be assumed by the Buyer at Closing. 9. Bill of Sale. A Bill of Sale substantially in the form of Exhibit C attached hereto. 10. Board of Directors. The Board of Directors of GLB. 11. Buyer (collectively if more than one). Bush Gardens, LLC, a Nevada limited liability company. 12. Buyer's Conditions Precedent. Conditions precedent to Buyer's obligation to consummate this transaction, as set forth in the Section entitled "Conditions to Closing." 13. Cash. Immediately available funds to be paid by Buyer at the Closing, as provided in the Section entitled "Consideration". ADDENDUM I-1 14. Closing. The delivery of the Deeds and the other documents required to be delivered hereunder and the payment of the Consideration. 15. Closing Date. December 22, 2000. 16. Confidential Information. Any and all of the following information of Transferors or Buyer that has been or may hereafter be disclosed in any form, whether in writing, orally, electronically, or otherwise, or otherwise made available by observation, inspection or otherwise by either party (Buyer on the one hand or Transferors collectively on the other hand) or its representatives (collectively, a "Disclosing Party") to the other party or its representatives (collectively, a "Receiving Party"): (i) all information concerning the business and affairs of the Disclosing Party (which includes historical and current financial statements, financial projections and budgets, tax returns and accountants' materials, historical, current and projected sales, capital spending budgets and plans, business plans, strategic plans, marketing and advertising plans, publications, client and customer lists and files, contracts, the names and backgrounds of key personnel, and personnel training techniques and materials, however documented), and all information obtained from review of the Disclosing Party's documents or property or discussions with the Disclosing Party regardless of the form of the communication; and (ii) all notes, analyses, compilations, studies, summaries, and other material prepared by the Receiving Party to the extent containing or based, in whole or in part, on any information included in the foregoing. 17. Consideration. The total consideration to be paid by Buyer to Transferors as described in the Section entitled "Consideration," which is allocated in the manner indicated on Schedule 5. 18. Contracts. The service contracts, construction contracts for work in progress, any warranties thereunder, management contracts, unrecorded reciprocal easement agreements, operating agreements, maintenance agreements, franchise agreements and other similar agreements relating to the Property. 19. Creditors' Rights Laws. All bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally, as well as general equitable principles whether or not the enforcement thereof is considered to be a proceeding at law or in equity. 20. Deed. A deed for each Property substantially in the form for each respective State in which a property is located, in the forms attached hereto as Exhibit A. 21. Delinquency Report. A report attached hereto as Schedule 4(a) setting forth the name of each Tenant as to which a delinquency exists as to the payment of Rent, and specifying the amount of each such delinquency, the period of time during which each such delinquency ADDENDUM I-2 has been outstanding, and whether collection of such delinquency has been referred to legal counsel. 22. Due Diligence Materials. The materials described in Addendum III, to which Buyer has been afforded access and review rights prior to the date of this Agreement 23. Due Diligence Period. A period of time commencing on the Effective Date, and expiring on the Approval Date. 24. Earnest Money (also Earnest Money Deposit). The Initial Earnest Money Deposit and the Remaining Earnest Money Deposit. 25. Effective Date. The date this Agreement is signed by Transferors or Buyer or is approved by the Board of Directors, whichever occurs later. GLB shall deliver written notice to Buyer setting forth the date on which the Board of Directors approves this Agreement. If such approval is not obtained on or before 5:00 pm Pacific time on September 30, 2000, this Agreement shall be null and void and shall have no further effect. 26. Environmental Laws. All federal, state, local or administrative agency ordinances, laws, rules, regulations, orders or requirements relating to Hazardous Materials. 27. Environmental Reports. All environmental reports and investigations relating to the Property which are available to any Transferor, which are listed on Schedule 3 attached hereto. 28. Exchangors. Glenborough Properties, L.P. as to the following Properties: Cross Creek Apartments, Harcourt Club Apartments, Island Club Apartments. Glenborough Fund VI, LLC as to the following Properties: Sahara Gardens Apartments and Villas de Mission; provided, however, that Transferors may upon reasonable notice to Buyer, and without the necessity of Buyer's consent, add to this list of Exchangors and Exchange Properties. 29. Expenses. All operating expenses normal to the operation and maintenance of the Property, including without limitation real property taxes and assessments; current installments of any improvement bonds or assessments which are a lien on the Property or which are pending and may become a lien on the Property; water, sewer and utility charges; amounts payable under any Contract for any period in which the Closing occurs; permits, licenses and inspection fees. Expenses shall not include expenses which are of a capital nature. 30. General Intangibles. All general intangibles relating to design, development, operation, management and use of the Real Property; all certificates of occupancy, zoning variances, building, use or other permits, approvals, authorizations, licenses and consents obtained from any governmental authority or other person in connection with the development, use, operation or management of the Real Property; all contract rights related to the Land, Improvements, Personal Property or Leases, Seller's interest in the following: management, maintenance, construction, commission, architectural, parking, supply or Service Contracts, ADDENDUM I-3 warranties, guarantees and bonds and other agreements related to the Improvements, Personal Property, and Leases that will remain in existence after Closing, all engineering reports, architectural drawings, plans and specifications relating to all or any portion of the Real Property, and all payment and performance bonds or warranties or guarantees relating to the Real Property; Any pending or future award made with respect to condemnation of the Land or Improvements, any award or payment for damage to the Land or Improvements or claim or cause of action for damage, injury or loss with respect to the ownership, maintenance and operation of the Land or Improvements and all of Transferors' right, title and interest in and to any and all of the following to the extent assignable: trademarks, service marks, logos or other source and business identifiers, trademark registration and applications for registration used at or relating to the Real Property and any written agreement granting to any Transferor any right to use any trademark or trademark registration at or in connection with the Real Property. 31. GLB. Glenborough Realty Trust Incorporated, a Maryland corporation, and general partner of Glenborough Properties, L.P. 32. Guaranty Agreement. That certain Guaranty Agreement of even date herewith executed by GLB and Buyer. 33. Hazardous Materials. Hazardous or toxic materials, substances or wastes, or other materials injurious to human health or the environment. 34. Improvements. All buildings, parking lots, signs, walks and walkways, fixtures and equipment and all other improvements and structures located at or on or affixed to the Land to the full extent that such items constitute realty under the laws of the state in which the Land is located. 35. Initial Earnest Money Deposit. The earnest money deposit(s) paid by Buyer within two (2) business days after the Effective Date pursuant to the Section entitled "Consideration", in the amount of Five Million Dollars ($5,000,000). 36. Investigation Matters. Matters revealed as a result of Buyer's obtaining and review of the following during the Due Diligence Period: (i) environmental reports/updates commissioned by Buyer, (ii) engineering/structural reports commissioned by Buyer, which may be performed by entities which are affiliated with Buyer, (iii) title reports, underlying documents and surveys, (iv) the Assumed Contracts listed on Schedule 2 and (v) the pending litigation listed on Schedule II.E.1. 37. Land. The land described in Schedule I attached hereto, together with all rights and appurtenances pertaining thereto, including without limitation, all of Seller's right, title and interest in and to (i) all minerals, oil, gas, and other hydrocarbon substances thereon, (ii) all adjacent strips, streets, roads, alleys and rights-of-way, public or private, open or proposed, (iii) all easements, privileges, and hereditaments, whether or not of record, and (iv) all access, air, water, riparian, development, utility, and solar rights (collectively, the "Land"). ADDENDUM I-4 38. Laws. All Environmental Laws, zoning and land use laws, and other local, state and federal laws and regulations applicable to the Property. 39. Leases. The leases and rental agreements listed in the Rent Rolls, together with any leases or rental agreements executed between the Effective Date and the Closing Date. 40. Lease Rights. All of Transferors' right, title and interest in and to the Leases and any and all, guarantees of the Leases and all security deposits, advance rental or like payments, if any, held by Transferors in connection with the Leases. 41. Loan(s). The mortgage loan or loans described on Schedule 6 attached hereto. 42. Loan Documents. All notes or other evidence of indebtedness, loan agreements, mortgages, guaranty agreements, and any and all other documents entered into by Transferor and all amendments, modifications and supplements thereto relating to the Loans. 43. Material Adverse Matters Amount. As to any Property, the amount, if any, as to which Buyer claims negatively impacts a Property with respect to an Investigation Matter. 44. Major Loss is defined as any damage or destruction to, or condemnation of, any Property as to which the cost to repair, or the value of the portion taken, as the case may be, exceeds $1,000,000. 45. Minor Loss is defined as any such damage, destruction or condemnation that is not a Major Loss. 46. OP Unit Agreement. An agreement between one or more of the Transferors, Buyer and various affiliates/partners/members of the Galesi Group ("Galesi") whereby Galesi shall recontribute all of its currently outstanding OP units in Glenborough Properties, L.P. in exchange for the distribution, directly or indirectly, of a portion of the Property hereunder, or a security representing an ownership interest therein, in which event a portion of the Consideration payable hereunder shall consist of such recontributed OP units at a price of $18.50 per unit. 47. Permitted Exceptions. The Leases and the exceptions to title approved by Buyer during the Due Diligence Period, pursuant to the title review procedure set forth in the Agreement. 48. Personal Property. All of Transferors' right, title and interest in and to the personal property and any interest therein owned by Transferors or held directly for the benefit of Transferors, if any, located on the Real Property and used in the operation or maintenance of the Real Property. 49. Property or Properties. The Real Property, together with the Leases, the Lease Rights, the Personal Property and the General Intangibles. Depending on context, "Property" may refer (i) in aggregate to all of the Real Property which is the subject of this Agreement (which may ADDENDUM I-5 also be referred to as the "Properties"), or (ii) singly to any individual parcel of Land with associated Improvements. The Properties are divided into Sale Properties and Exchange Properties. 50. Real Property. The Land and Improvements. 51. Remaining Earnest Money Deposit. The earnest money deposit(s) paid by Buyer on or before the Approval Date pursuant to the Section entitled "Consideration", in the amount of Ten Million Dollars ($10,000,000). 52. Rent Rolls. The lists of each of the Leases as of the date of this Agreement, attached hereto as Schedule 4 setting forth for each Lease. 53. Rents. The periodic rental payments under any Lease. 54. Responsible Individuals. With respect to Buyer: Joe Beard; and with respect to Transferors: Robert Batinovich and Andrew Batinovich. 55. Sellers. Glenborough Properties, L.P. as to Woodmere Trace and the Springs of Indian Creek, Phases I and II. Glenborough Fund V, L.P. as to Overlook Apartments. Glenborough Fund VI, LLC as to Arrowood Crossing, Chase Monroe, Park at Woodlake, Player's Club, Sabal Point and Willow Glen Apartments. Glenborough Fund X as to Bandera Crossing, Bear Creek, Cypress Creek, Hunters Chase, Hunterwood, Longspur Crossing, North Park, Silver Vale Crossing, Stone Ridge, the Hollows, Vista Crossing, Walnut Creek Crossing, Willow Brook and Wind River Crossing, Jefferson Creek, Jefferson Place and La Costa. GLB Chase on Commonwealth, L.P. as to Chase on Commonwealth. DC Courtyard, L.P. as to the Courtyard Apartments. GLB Farmhurst, L.P. as to the Landing on Farmhurst Apts. GLB the Oaks, L.P. as to the Oaks Apartments. GLB Sharonridge Apts Phase I and II, L.P. as to Sharonridge Apartments. GLB Wendover Glen, L.P. as to Wendover Glen Apartments. Chase Monroe, LLC as to the Chase, Phase II. 56. Service Contracts. All Contracts involving ongoing services and periodic payment therefor, as distinguished from franchise agreements, easements, guarantees, warranties and the like. 57. Stock Repurchase Agreement. That certain Stock Repurchase Agreement of even date herewith, executed by and between GLB and Buyer. 58. Tenant(s). Each and all tenants as listed on the Rent Rolls. 59. Third Party. Any person other than Buyer or any Affiliate of Buyer. 60. Third Party Acquisition. The acquisition of the Property by a Third Party pursuant to a Superior Proposal. ADDENDUM I-6 61. Title Company. American Title Company, whose address is 1909 Woodall Rodgers Freeway, Suite 400, Dallas, Texas 75201; attention Bo Feagin. 62. Title Policy. A policy of extended coverage American Land Title Association Policy of Owner's Title Insurance (or Texas Land Title Association Policy of Owner's Title Insurance in the case of the Texas Properties) issued by Title Company in the amount of the Consideration, showing title vested in Buyer subject only to the Permitted Exceptions. 63. Transferors. The Sellers and the Exchangors. 64. Transferors' Breach. The Breach by Transferors of any representation or warranty or covenant or a claim under any indemnity contained in this Agreement or any representation, warranty, covenant or indemnity contained in any other document or instrument delivered by Transferors to Buyer at closing. 65. Transferors' Conditions Precedent. Conditions precedent to Transferors' obligation to consummate this transaction, as set forth in the Section entitled "Conditions to Closing. Addendum II Transferors' Representations and Warranties Transferors hereby represents and warrants to Buyer as follows: A. Organization and Authorization. 1. Each Transferor is a limited partnership or limited liability company as shown on the signature page, duly organized, validly existing and in good standing under the laws of the State of shown on the signature page, and is qualified to do business in the state where the Property that it owns is located. 2. Each Transferor has full partnership or limited liability company power and authority to execute and deliver this Agreement and to perform all of the terms and conditions hereof to be performed by such Transferor and to consummate the transactions contemplated hereby. This Agreement and all documents executed by Transferors which are to be delivered to Buyer at Closing have been duly executed and delivered by Transferors and are or at the time of Closing will be the legal, valid and binding obligation of Transferors and is enforceable against each Transferor in accordance with its terms, except as the enforcement thereof may be limited by applicable Creditors' Rights Laws. No Transferor is presently subject to any bankruptcy, insolvency, reorganization, moratorium, or similar proceeding. 3. The individuals executing this Agreement and the instruments referenced herein on behalf of each Transferor and its constituent entities, if any, have the legal power, right and actual authority to bind such Transferor to the terms and conditions hereof and thereof. ADDENDUM 11-1 B. Title Matters 1. To Transferor's Actual Knowledge, Transferors have good and indefeasible title to the Properties located in the State of Texas and good and marketable title to the Properties located in other states. There are no adverse or other parties in possession of the Property, or any part thereof, with the consent of Transferors except Transferors and Tenants. No party has been granted by Transferors any license, easement, lease, or other right relating to the use or possession of the Property or any part thereof, except Tenants or the matters of record or the parties to the Service Contracts listed on Schedule 2. 2. The Property is not subject to any outstanding agreements of sale or any options, liens, or other rights of third parties to acquire any interest therein, except as described in this Agreement, and upon execution and delivery by Transferors of the conveyancing documents required to be executed by Transferors hereunder, Buyer will be vested with good, marketable and indefeasible title to the Properties located in the State of Texas and good and marketable title to the Properties located in other states. C. Property Condition, Use and Compliance 1. Compliance with Laws. Except as set forth on Schedule II.C.1., to Transferors' Actual Knowledge, no Transferor has received written notice that the use or operation of any Property is in violation of any applicable Laws. 2. No Regulatory Proceedings. Except as set forth on Schedule II.C.2., to Transferors' Actual Knowledge, no Transferor has received any written notice of any condemnation, environmental, zoning or other land-use regulation proceedings that have been instituted, or are planned to be instituted, which directly identify any of the Property, nor has any Transferor received written notice of any special assessment proceedings affecting any of the Property. Transferors shall notify Buyer promptly of any such proceedings of which any Responsible Party of Transferors becomes aware prior to Closing. D. The Leases 1. Rent Rolls. The Rent Rolls attached hereto completely and accurately reflect the material terms and conditions of the Leases in all material respects as of its date. Except as disclosed on the Rent Roll, to the Actual Knowledge of Transferors, as of the date of the Rent Roll, there are no other Tenants at the Property with a Transferor's consent, and no Rental under any Lease has been collected in advance of the current month. The Rent Roll shall be updated at the Closing to reflect any changes which occur after the Effective Date. 2. Security Deposits. The Rent Roll sets forth all cash security deposits held by Transferors as to the Property. Transferors have not received from any Tenant or any other party written notice of any claim (other than for customary refund at the expiration of a Lease) to all or any part of any security deposit, except as set forth on the Rent Roll. ADDENDUM II-2 E. Other Matters 1. No Litigation. Except as will be set forth on Schedule II.E.1 (which will be provided by Transferors no later than fifteen (15) days after the Effective Date)., there is no litigation pending or, to Transferors' Actual Knowledge, threatened: (i) against any Transferor that arises out of the ownership of the Property or that might materially and detrimentally affect the value or the use or operation of any of the Property for its intended purpose or the ability of such Transferor to perform its obligations under this Agreement; or (ii) by any Transferors against any Tenant. Transferors shall notify Buyer promptly of any such litigation of which a Responsible Individual of Transferors becomes aware before Closing. 2. No Contracts for Improvements. Except as set forth on Schedule 2(a) or Schedule II.E.2., at the time of Closing there will be no outstanding written or oral contracts made by a Transferor for any improvements to the Property which have not been fully paid for and Transferors shall cause to be discharged all mechanics and materialmen's liens arising from any labor or materials furnished to the Property prior to the time of Closing. 3. Exhibits and Schedules. The Schedules attached hereto, as provided by or on behalf of Transferors, completely and correctly present in all material respects the information required by this Agreement to be set forth therein, provided, however, that as set forth in more detail in the Agreement, Transferors make no representation or warranty as to the completeness or accuracy of any materials contained in the Schedules that have been prepared by third parties unrelated to Transferors. 4. Transferors Not a Foreign Person. No Transferor is a "foreign person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code. F. Miscellaneous 1. Timeliness of Representations and Warranties. All representations and warranties set forth herein shall be deemed to be given as of the Effective Date and the Closing Date. 2. Materiality Limitation. Buyer shall not be entitled to any right or remedy for any inaccuracy in or breach of any representation, warranty or covenant under this Agreement or any conveyance document unless the amount of damages proximately caused thereby exceeds the following: (A) the aggregate measure of such claims with respect to a Property exceeds 1% of the Allocated Price for such Property, and (B) the aggregate measure of such claims with respect to all of the Properties exceeds 1% of the Consideration (the "Threshold"). Transferors' aggregate liability for claims arising out of all Transferors' breaches shall not, in the aggregate, exceed an amount equal to three percent (3%) of the aggregate Consideration for all of the Properties. 3. Continuation and Survival of Representations and Warranties, Etc. All representations and warranties by the respective parties contained herein or made in writing ADDENDUM II-3 pursuant to this Agreement are intended to and shall remain true and correct as of the time of Closing, and, together with all conditions, covenants and indemnities made by the respective parties contained herein or made in writing pursuant to this Agreement (except as otherwise expressly limited or expanded by the terms of this Agreement), shall survive the execution and delivery of this Agreement and shall survive the Closing for a period of twelve (12) months after the Closing, or, to the extent the context requires, beyond any termination of this Agreement for a period of twelve (12) months. Any claim for breach of a representation and warranty given hereunder must be filed and served within this twelve (12) month period, or be deemed waived and released. ADDENDUM II-4 Addendum III DUE DILIGENCE LIST OF INFORMATION Loan Documents 1. DC Fund X - FNMA $97.6 million line of credit 2. Freddie Mac Offering Circular 3. DC Fund VI - Freddie Mac $ term loan 4. Patrician Island Club 5. Patrician Cross Creek 6. Patrician Harcourt 7. Riley Chase Commonwealth term loan 8. Riley Courtyard term loan 9. Riley Landing on Farmhurst term loan 10. Riley Sharonridge term loan 11. Riley Wendover Glen term loan 12. Riley Oaks term loan (See attached tables of contents for specific document references on the above) Multifamily Portfolio Summary Volumes I through V 1. Property Photographs 2. Property Location 3. Maps 2000 Budgets 4. 2000 Year to Date Operating Statements 5. Current Rent Rolls 6. Occupancy Listings 7. Schedule of 2000 Budgets 8. Debt Summary Other Information 1. Trailing 12 month operating statements for all properties dated 6/30/00 2. RUBs program rollout and penetration schedule 3. Capital Expenditures Open Capital Items List 61900 4. Multifamily Turnover CapEx 2000 First Quarter Actuals 5. Multifamily Portfolio Unit Mix 6. Schedule of Laundry Facilities 7. Schedule of Property Tax Values 8. Adjustments to Q1 2000 Net Operating Income Schedules EX-3 4 0004.txt GUARANTY AGREEMENT EXHIBIT 3 GUARANTY AGREEMENT This Guaranty Agreement (this "Agreement") is executed as of September 25, 2000 by GLENBOROUGH REALTY TRUST INCORPORATED ("Guarantor") in favor of BUSH GARDENS, LLC ("Bush Gardens"). WHEREAS, Bush Gardens and one or more affiliates (the "Affiliates") of Guarantor have entered into a Purchase Agreement of even date herewith (the "Purchase Agreement") pursuant to which Bush Gardens and one or more of its affiliates has agreed to purchase and the Affiliates have agreed to sell certain residential real property (collectively, the "Properties"), subject to the terms and conditions set forth in the Purchase Agreement; and WHEREAS, contemporaneously with the execution and delivery of the Purchase Agreement, Guarantor and Bush Gardens have entered into that certain Stock Repurchase Agreement (the "Stock Purchase Agreement") pursuant to which, among other things, Guarantor has agreed to purchase and Bush Gardens has agreed to sell certain shares of the equity securities of Guarantor, subject to the terms and conditions set forth therein; and NOW, THEREFORE, in consideration of the premises hereof, the parties have agreed as follows: Section 1. Guaranty. 1.1 Guaranty of Obligations. Guarantor hereby irrevocably and ----------------------- unconditionally guaranties to Bush Gardens (and its successors and assigns) the prompt performance of each and all of the obligations of the Affiliates arising under (a) Section 4(e) of the Purchase Agreement regarding the Transferors' obligations to cure monetary liens, and (b) Section 6(c) of the Purchase Agreement regarding the delivery of the closing documents to Bush Gardens (the "Guaranteed Obligations") as and when the same shall be due. Guarantor irrevocably and unconditionally covenants and agrees that it is liable, jointly and severally with the Affiliates, and each of them, for the primary performance by the Affiliates, and each of them, of the Guaranteed Obligations respective obligations arising under or related to the Purchase Agreement. 1.2 Nature of Guaranty. The obligations of Guarantor set forth herein ------------------ are an irrevocable, absolute and continuing guaranty of performance, are joint and several and are not a guaranty of collection. The obligations of Guarantor hereunder may not be revoked by Guarantor and shall continue to be effective notwithstanding any attempted revocation by Guarantor. The fact that at any time, or from time to time, the Guaranteed Obligations may be increased or reduced, shall not release or discharge the obligations of Guarantor to Bush Gardens hereunder. The allegations of Guarantor hereunder may be enforced by Bush Gardens and its assigns. 1 1.3 No Set Off. The Guaranteed Obligations and the liabilities and ---------- obligations of Guarantor to Bush Gardens hereunder, shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or defense of the Affiliates, or any other party, against Bush Gardens or against payment or performance of the Guaranteed Obligations or any of them, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise. 1.4 Payment by Guarantor, Limitation of Liability. If on the Closing Date --------------------------------------------- (as defined in the Purchase Agreement), the Affiliates, or any of them, shall fail or be in breach of their respective Guaranteed Obligations to be performed prior to, at or in connection with the Closing (as defined in the Purchase Agreement) and Bush Gardens shall be prepared to perform those of its obligations required to be performed at or in connection with the Closing, Guarantor shall, immediately upon demand by Bush Gardens, and without presentment, protest, notice of protest, notice of nonpayment, notice of intention to accelerate, or any other notice whatsoever, pay to Bush Gardens, by wire transfer of immediately available funds, the sum of $15 million in full satisfaction of Guarantor's obligations under Section 1.1 above. Notwithstanding the foregoing, in the event that the Closing (as defined in the Purchase Agreement) shall occur, Guarantor shall be released from and with respect to all of the Guaranteed Obligations. 1.5 Obligations of Guarantor After the Closing. Notwithstanding the ------------------------------------------ consummation of the transactions contemplated at the Closing, unless the parties to the Purchase Agreement shall otherwise specifically agree (and reference this Section 1.5 with regard thereto), the Guarantor hereby irrevocably and unconditionally guarantees to Bush Gardens (and its successors and assigns) the prompt performance of each and all of the obligations (the "Purchase Agreement Obligations") of the Affiliates arising under or related to the Purchase Agreement and the transactions contemplated therein as and when the same shall be due, including any Purchase Agreement Obligations arising from and after the Closing Date, and such guarantee shall survive the Closing and this Agreement shall remain in full force and effect with respect thereto. 1.6 No Duty to Pursue Others. It shall not be necessary for Bush Gardens ------------------------ (and Guarantor hereby waives any rights which Guarantor may have to require Bush Gardens) in order to enforce the payment provided for herein by Guarantor, first to (i) institute suit or exhaust its remedies against any of the Affiliates or others liable with respect to the Purchase Agreement Obligations or the Guaranteed Obligations or any other person, (ii) enforce or exhaust any of Bush Gardens' rights or remedies against any collateral which shall be given to secure the Purchase Agreement Obligations or the Guaranteed Obligations, (iii) enforce Bush Gardens' rights or remedies available to Bush Gardens against any other guarantors of the Purchase Agreement Obligations or Guaranteed Obligations, (iv) join the Affiliates or any others liable on or with respect to the Purchase Agreement Obligations or the Guaranteed Obligations in any actions seeking to 2 enforce this Agreement, or (v) resort to any other means of obtaining payment or performance of or with respect to the Purchase Agreement Obligations or the Guaranteed Obligations. 1.7 No Mitigation Required. Bush Gardens shall not be required to ---------------------- mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations or the Purchase Agreement Obligations. 1.8 Waivers. Guarantor agrees to the provisions of the Purchase ------- Agreement and hereby waives notice of (i) any amendment or extension thereof or of any of the Purchase Agreement Obligations or the Guaranteed Obligations, (ii) the execution and delivery by the Affiliates, or any of them, and Bush Gardens of any other agreement relating to the Purchase Agreement, the Purchase Agreement Obligations or the Guaranteed Obligations, whether or not resulting in an increase of the Purchase Agreement Obligations or the Guaranteed Obligations, (iii) the occurrence of any breach by the Affiliates, or any of them, under the Purchase Agreement or (iv) any assignment by Bush Gardens of its rights under this Agreement or with respect to the Purchase Agreement, or any of them. Section 2. Alternative Transactions. 2.1 No Solicitation of Alternative Transactions. Unless and until the ------------------------------------------- Purchase Agreement shall have been terminated in accordance with its terms, Guarantor, for itself and on behalf of the Affiliates and each of their respective subsidiaries and affiliates, agrees to refrain, directly and indirectly, and to cause their respective officers, directors, employees, agents and representatives (including, without limitation, any investment banker, attorney or accountant retained by any of them) to refrain from soliciting or encouraging any person or entity with respect to any transaction (an "Alternative Transaction"), the consummation of which would make impossible or delay the Closing or the consummation of the transactions contemplated thereat. 2.2 Unsolicited Proposals. Notwithstanding the provisions of Section --------------------- 2.1 above, Guarantor may and may permit the Affiliates to furnish information to or enter into discussions or negotiations with any person that makes an unsolicited bona fide Acquisition Proposal to acquire all or substantially all of the Properties, whether by merger, purchase of partnership interest or assets or otherwise , if the Board of Directors of the Guarantor determines in good faith that the Acquisition Proposal, if consummated, could result in an Alternative Transaction more favorable to the Guarantor's stockholders from a financial point of view than the consummation of the transactions contemplated pursuant to the Purchase Agreement (any such Proposal being referred to herein as a "Superior Proposal"). For purposes of this Agreement, the term "Acquisition Proposal" shall mean any inquiry or the making or implementation of any proposal or offer with respect to a merger, acquisition, or similar transaction involving the direct or indirect purchase of the Properties. For the purpose of the first sentence of this Section 2.2, 3 "substantially all" shall mean, with respect to any Proposal, a Proposal to engage in an Alternative Transaction, the consummation of which would have the effect of requiring the Guarantor or the Affiliates to assign, transfer or convey, directly or indirectly, whether by merger, purchase of partnership interests or assets or otherwise, to a third party not controlled by or under common control with the Guarantor, Properties that are the subject of the Purchase Agreement and which represent, in the aggregate, not less than eighty-five percent (85%) of the purchase price to be paid by Bush Gardens with respect to all of the Properties. If the Board of Directors is prepared to accept a Superior Proposal, then Guarantor shall have the right to terminate this Agreement by delivering 48 hours written notice that the Board of Directors is prepared to accept the Superior Proposal, and not later than 1:00 p.m. Dallas, Texas time, on the first business day commencing after the passage of such 48 hour notice period, paying to Bush Gardens by wire transfer of immediately available funds, the sum of $15 million. 2.3 Merger or Consolidation. Subject to the remainder of this Section ----------------------- 2.3, nothing in this Agreement, the Stock Purchase Agreement or in the Purchase Agreement, shall be deemed to prevent in any manner the taking of any action by Guarantor with respect to any merger, consolidation or sale of all or substantially all of the assets of Guarantor or of the Affiliates or any of them, in the event that the Board of Directors of Guarantor shall determine, based upon advice of outside legal counsel, that the failure to take such action would be inconsistent with such Board of Directors' fiduciary duties to Guarantor's stockholders under applicable law. In the event that any action taken by Guarantor, the Affiliates, or the Board of Directors of Guarantor pursuant to the preceding sentence, shall be inconsistent with, make impossible or delay the consummation of the transactions contemplated at the Closing, the Guarantor shall have the right to terminate this Agreement by giving Bush Gardens 48 hours written notice that the Board of Directors is prepared to take such action, and not later than 1:00 p.m. Dallas, Texas time on the first business day commencing after the passage of such 48 hour notice period, paying to Bush Gardens by wire transfer of immediately available funds, the sum of $15 million. 2.4 Release of Obligations. Receipt by Bush Gardens of the sum of $15 ---------------------- million pursuant to the provisions of Section 2.2 or 2.3 above, shall constitute Bush Gardens' sole and exclusive remedy for any termination of this Agreement pursuant to Sections 2.2 or 2.3 above. In the event that Guarantor shall pay to Bush Gardens the sum of $15 million pursuant to Section 2.2 or 2.3 above, each of the respective parties to the Stock Purchase Agreement shall be deemed released from their respective obligations thereunder and the Stock Purchase Agreement shall be deemed of no further force and effect. Notwithstanding any termination of this Agreement pursuant to Section 2.2 or 2.3 above, the obligations of the Affiliates provided for in Section 13(a) of the Purchase Agreement to return the earnest money of Bush Gardens under the Purchase Agreement shall survive and each of the conditions precedent to such obligations shall be deemed satisfied. Each of the parties hereto shall execute and deliver 4 such further instruments, documents or agreements, including such affidavits or certificates as may be required by the Title Company (as defined in the Purchase Agreement) with respect to the return of the Earnest Money to Bush Gardens as shall be reasonably required to give effect to the provisions of this Section 2.4. Section 3. Miscellaneous. 3.1 Representations and Warranties of Bush Gardens. The representations ---------------------------------------------- and warranties of Bush Gardens set forth in Section 2.1 of the Stock Purchase Agreement are hereby incorporated by reference and made a part hereof. 3.2 Representations and Warranties of Guarantor. The representations and ------------------------------------------- warranties of Guarantor set forth in Section 2.2 of the Stock Purchase Agreement are hereby incorporated by reference and made a part hereof. 3.3 Miscellaneous. The provisions of Article 7 of the Stock Purchase ------------- Agreement are hereby incorporated by reference in their entirety and made a part hereof. 5 IN WITNESS WHEREOF, the parties have executed this Guaranty Agreement as of the day and date first above written. GLENBOROUGH REALTY TRUST INCORPORATED By:______________________________________ (Printed) Name:__________________________ Title:_____________________________________ BUSH GARDENS, LLC By:______________________________________ (Printed) Name:__________________________ Title:_____________________________________ 6 -----END PRIVACY-ENHANCED MESSAGE-----