UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) December 5, 1997
ARDEN REALTY, INC.
(Exact name of registrant as specified in its charter)
Maryland 1-12193 95-4578533
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
9100 Wilshire Boulevard
East Tower, Suite 700
Beverly Hills, California 90212
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 271-8600
Item 2. Acquisition or Disposition of Assets
On December 15, 1997, Arden Realty, Inc. (collectively with
its subsidiaries, the "Company") completed a series of
transactions to purchase four suburban office properties
totaling 979,965 rentable square feet. All the properties
were purchased from unaffiliated entities.
City Centre in Fountain Valley, California contains 302,519
rentable square feet. The purchase price for the property
was approximately $33,300,000 which was based on arm's-
length negotiations. The property is presently 94.0%
occupied at average rents of $13.68 per square foot. The
property was purchased from Pacific Life Insurance Company,
a California corporation.
Wilshire Pacific Plaza in Los Angeles, California and
Glendale Corporate Center in Glendale, California contain
100,122 and 108,209 rentable square feet, respectively. The
purchase price for both properties was approximately
$30,825,000 which was based on arm's-length negotiations.
Wilshire Pacific Plaza is presently 66.1% occupied at
average rents of $17.40 per square foot and Glendale
Corporate Center is presently 78.9% occupied at average
rents of $18.24 per square foot. These properties were
purchased from The Mutual Life Insurance Company of New
York, a New York mutual life insurance company.
The World Savings Building in Los Angeles, California
contains 469,115 rentable square feet. The Company
purchased a 75 percent interest in the property for
approximately $83,200,000 and has an option to purchase the
remaining 25 percent interest in the property for
$27,500,000 which may be exercised beginning on March 15, 1998.
The transactions were based on arm's-length negotiations. The
property is presently 83.5% occupied at average rents of
$25.56 per square foot. The 75 percent interest in the
property was purchased from 11601 Holding Corporation, a
Delaware corporation, and Wilshire SV Associates, a
California limited partnership. The remaining 25 percent
interest in the property is currently owned by Forest City
San Vicente Corporation, an Ohio corporation ("Forest").
In connection with the purchase of The World Savings
Building, the Company has a $4,000,000 note receivable from
Forest. The note receivable will be due at such time the
Company exercises its option to purchase the remaining 25
percent interest in The World Savings Building.
To finance these acquisitions the Company used approximately
$2,665,000 of working capital, borrowed $78,300,000 on its
line of credit from a group of banks led by Wells Fargo
Bank, borrowed $500,000 on its line of credit with City
National Bank, and borrowed $45,000,000 from an affiliate of
Morgan Stanley. The $45,000,000 mortgage note payable is
secured by The World Savings Building. In addition, 826,828
operating partnership units with an approximate value of
$24,860,000 were issued by Arden Realty Limited Partnership
in the connection with the purchase of The World Savings Building.
Inclusive of these acquisitions, the Company's portfolio
consists of 71 suburban office properties comprising
10,167,762 rentable square feet and 16 apartment units.
Item 7. Financial Statements and Exhibits
(a) Financial statements of properties acquired.
It is impracticable to provide the required financial
statements at the time of the filing of this report. The
required financial statements for the acquired properties
will be filed as an amendment to this Form within 60 days.
(b) Pro forma financial information.
It is impracticable to provide the required pro forma
financial information at the time of the filing of this
report. The required pro forma financial information will
be filed as an amendment to this Form within 60 days.
(c) Exhibits.
10. 59 Purchase and Sale Agreement and Joint Escrow
Instructions by and between Pacific Life Insurance Company,
a California corporation, and Arden Realty Limited
Partnership, a Maryland limited partnership.
10. 60 Purchase and Sale Agreement and Joint Escrow
Instructions by and between The Mutual Life Insurance
Company of New York, a New York mutual life insurance
company, and Arden Realty Limited Partnership, a Maryland
limited partnership.
10. 61 First Amendment to Purchase and Sale Agreement and
Joint Escrow Instructions by and between The Mutual Life
Insurance Company of New York, a New York mutual life
insurance company, and Arden Realty Limited Partnership, a
Maryland limited partnership.
10. 62 Addendum to First Amendment to Purchase and Sale
Agreement and Joint Escrow Instructions by and between The
Mutual Life Insurance Company of New York, a New York mutual
life insurance company, and Arden Realty Limited
Partnership, a Maryland limited partnership.
10. 63 Agreement to Acquire Certain Interest in Real
Property and Escrow Instructions by and among Arden Realty
Limited Partnership, a Maryland limited partnership, Arden
Realty, Inc., a Maryland corporation; 11601 Holding
Corporation, a Delaware corporation, Forest City San Vicente
Corporation, an Ohio corporation, Wilshire SV Associates, a
California limited partnership and the constituent partners
of Wilshire SV Associates.
10. 64 Acquisition Amendment to Agreement to Acquire
Certain Interest in Real Property and Escrow Instructions
dated December 9, 1997 by and among Arden Realty Limited
Partnership, a Maryland limited partnership, Arden Realty,
Inc., a Maryland corporation; 11601 Holding Corporation, a
Delaware corporation, Forest City San Vicente Corporation,
an Ohio corporation, Wilshire SV Associates, a California
limited partnership and the constituent partners of Wilshire
SV Associates.
10. 65 Letter Amendment dated November 20, 1997 to
Agreement to Acquire Certain Interest in Real Property and
Escrow Instructions by and among Arden Realty Limited
Partnership, a Maryland limited partnership, Arden Realty,
Inc., a Maryland corporation; 11601 Holding Corporation, a
Delaware corporation, Forest City San Vicente Corporation,
an Ohio corporation, Wilshire SV Associates, a California
limited partnership and the constituent partners of Wilshire
SV Associates.
10. 66 Letter Amendment dated November 26, 1997 to
Agreement to Acquire Certain Interest in Real Property and
Escrow Instructions by and among Arden Realty Limited
Partnership, a Maryland limited partnership, Arden Realty,
Inc., a Maryland corporation; 11601 Holding Corporation, a
Delaware corporation, Forest City San Vicente Corporation,
an Ohio corporation, Wilshire SV Associates, a California
limited partnership and the constituent partners of Wilshire
SV Associates.
10. 67 Letter Amendment dated December 1, 1997 to
Agreement to Acquire Certain Interest in Real Property and
Escrow Instructions by and among Arden Realty Limited
Partnership, a Maryland limited partnership, Arden Realty,
Inc., a Maryland corporation; 11601 Holding Corporation, a
Delaware corporation, Forest City San Vicente Corporation,
an Ohio corporation, Wilshire SV Associates, a California
limited partnership and the constituent partners of Wilshire
SV Associates.
10. 68 Letter Amendment dated December 3, 1997 to
Agreement to Acquire Certain Interest in Real Property and
Escrow Instructions by and among Arden Realty Limited
Partnership, a Maryland limited partnership, Arden Realty,
Inc., a Maryland corporation; 11601 Holding Corporation, a
Delaware corporation, Forest City San Vicente Corporation,
an Ohio corporation, Wilshire SV Associates, a California
limited partnership and the constituent partners of Wilshire
SV Associates.
Signatures
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
ARDEN REALTY, INC.
Date: December 18, 1997 By: /s/ Diana M. Laing
Diana M. Laing
Chief Financial Officer
PURCHASE AND SALE AGREEMENT
And JOINT ESCROW INSTRUCTIONS
by and between
PACIFIC LIFE INSURANCE COMPANY
as
"Seller"
and
ARDEN REALTY LIMITED PARTNERSHIP
as
"Buyer"
dated November 3, 1997
PURCHASE AND SALE AGREEMENT
And JOINT ESCROW INSTRUCTIONS
By and Between
PACIFIC LIFE INSURANCE COMPANY
and
ARDEN REALTY LIMITED PARTNERSHIP
TABLE OF CONTENTS
ARTICLE I. Definitions
ARTICLE II. Agreement of Purchase and Sale
ARTICLE III. Execution of Agreement; Conditions Prior to Closing Date
ARTICLE IV. Representations, Warranties and Covenants of
Seller and Buyer
ARTICLE V. Action on the Closing Date
ARTICLE VI. Termination
ARTICLE VII. Costs and Commissions
ARTICLE VIII. Post-Closing Cooperation
ARTICLE IX. Default by Buyer
ARTICLE X. Default by Seller
ARTICLE XI. Exchange Provisions
ARTICLE XII. Miscellaneous
EXHIBITS
"A" Legal Description
"B" Audit Letter
"C" Rent Roll
"C-1" Assignment of Contract
"D" Grant Deed
"E" Form of Tenant Estoppel Certificate
"E-1" Form of Seller's Certificate
"F" Assignment of Rights, Warranties and Permits
"G" Assignment and Assumption of Service Contracts
"H" Assignment and Assumption of Leases
"I" Bill of Sale
"J" Transferor's Certificate of Non-Foreign Status
PURCHASE AND SALE AGREEMENT
And JOINT ESCROW INSTRUCTIONS
This Agreement ("Agreement") is made as of this 3rd day of November, 1997,
between PACIFIC LIFE INSURANCE COMPANY, a California corporation and ARDEN
REALTY LIMITED PARTNERSHIP a Maryland limited partnership ("Buyer").
ARTICLE I.
Definitions
The terms set forth below shall have the following meanings:
1.1 Closing: Payment of Seller's proceeds, and delivery of the Deed in
favor of Buyer, in accordance with the terms of this Agreement.
1.2 Closing Date: On or before December 4, 1997.
1.3 Earnest Money Deposit (to be credited to Purchase Price): $500,000.
1.4 Escrow Agent: First American Title Insurance Company
114 E. Fifth Street
Santa Ana, California 92701
Attn: Judith M. Moore
Telephone No.: (714) 647-4466
Fax No.: (714) 647-2235
1.5 Improvements: The improvements consist of three (3) office buildings
containing a total of approximately 302,500 rentable square feet, and all
related improvements.
1.6 Leases: All leases, subleases, amendments, extensions and
assignments and guarantees affecting the occupancy of the Property.
1.7 Permitted Exceptions: (i) Nondelinquent real property taxes and
special assessments, if any; (ii) utility easements to service the Property
which do not materially interfere with its existing use; and (iii) such title
matters as Buyer shall have approved in accordance with Section 3.6 below, and
such other matters as may appear as exceptions to title in accordance with
Section 3.6 below.
1.8 Personal Property: All equipment, appliances, tools, machinery,
supplies and other personal property owned by Seller and located at and used in
connection with the operation of the Property, excluding the telephone system
and related telephone equipment located in the following offices of the
Property: the on-site property management office, the engineer's office, the
security office, and the access phones located at each entrance to each
building of the Property, which have not or will not become trade fixtures
under the terms of the Leases, as more particularly described in the Bill of
Sale attached hereto as Exhibit "I".
1.9 Property: The Property shall collectively include the Real Property,
the Improvements, the Personal Property, if any, and all of Seller's interest
in the Leases, the Service Contracts and the rights, warranties and permits
described in Exhibit "F" attached hereto ("Permits").
1.10 Purchase Price: $33,000,000.
1.11 Real Property: Those certain tracts or parcels of land described in
Exhibit "A" attached hereto and by this reference made a part hereof, together
with all rights, privileges and easements benefiting said land, located at
17330-17390 Brookhurst Street, Fountain Valley, California and commonly known
as City Centre.
1.12 Review Contingency Date: November 19, 1997.
1.13 Service Contracts: All service contracts, management agreements,
listing agreements, operating contracts and other agreements affecting the
operation or use of the Property (other than Title Matters) if any.
1.14 Title Company: First American Title Insurance Company
115 E. Fifth Street
Santa Ana, California 92701
Attn: Dick Hines, National Accounts
Telephone No.: (714) 588-3211
Fax No.: (714) 541-4702
1.15 The following terms are defined in the Article or Section set
forth opposite such terms:
Term Article or Section
Advisors 3.1(c)
Amended Title Commitment 3.2
Buyer's Broker 7.2
Buyer's Title Notice 3.6(a)
Deed 5.2(a)
Documents and Materials 3.1(a)
Due Diligence Information 3.1(c)
Earnest Money Deposit 2.1
ERISA 4.1(d)
Exchange XI
Exchange Property XI(a)
Lender's Title Policy 5.2(d)
New Lease Obligations 4.2(b)
Opening of Escrow 3.1(a)
Owner's Title Policy 5.2(d)
PMG Lease 4.9
Permits 1.9
Property Manager 3.1(b)
Rent Roll 3.1(a)(i)
Seller's Certificate 4.8
Seller's Title Notice 3.6(b)
Suite 180 Work 4.10
Survey 3.2
Tenant Estoppel Certificate 4.8
Tenant Notification Letters 5.2(h)
Title Commitment 3.2
Title Matters 3.6(a)
Work Contract 4.10
ARTICLE II.
Agreement of Purchase and Sale
2.1 Subject to the terms and conditions of this Agreement, Seller agrees
to sell the Property to Buyer, and Buyer agrees to purchase the Property from
Seller and to pay the Purchase Price therefor. Upon full execution of this
Agreement, but in no event later than two (2) business days following such
execution, Buyer shall deposit with Escrow Agent, in the form of a wire
transfer of funds, the sum of $500,000 (the "Earnest Money Deposit"), together
with a fully executed copy of this Agreement. Any deposit made by Buyer to
Seller or Seller's representative prior to the Opening of Escrow shall be
deemed to constitute part of the Earnest Money Deposit and shall be delivered
to Escrow Agent by Seller or its representative promptly upon the Opening of
Escrow, as defined herein. Upon the Review Contingency Date, in the event
Buyer has not elected to terminate this transaction in accordance with the
terms of Article III of this Agreement, the Earnest Money Deposit shall be
deemed non-refundable to Buyer, except as a result of Seller's default or as a
result of the failure of a condition of the Closing in favor of Buyer which is
not waived in writing by Buyer on or prior to Closing. All interest on the
Earnest Money Deposit will accrue to the benefit of Buyer, and Buyer shall be
solely responsible for delivering, at Buyer's option, written instructions to
the Escrow Agent concerning the investment of the Earnest Money Deposit or any
portion thereof which is held by Escrow Agent, in accordance with the customs
and practices of Escrow Agent. At the close of this transaction, the Earnest
Money Deposit shall be credited against the Purchase Price and disbursed to
Seller along with the balance of the Purchase Price.
2.2 At least one day before the Closing Date Buyer shall cause such
balance of the Purchase Price to be delivered directly to the Escrow Agent for
the account of Seller, by wire transfer in immediately available funds, less
any credits due to Buyer, plus all sums necessary to pay Buyer's prorations in
connection with this transaction. On or before Closing, Seller shall provide
Escrow Agent with written wiring instructions identifying the financial
institution and the name and number of the account to which Seller's proceeds
shall be transferred and credited prior to the close of business of such
financial institution on the Closing Date.
2.3 The Closing shall be held at 9:00 a.m., local time, on the Closing
Date at the office of Escrow Agent, or at such other time or such other place
as may be mutually agreed upon in writing by the parties.
ARTICLE III.
Execution of Agreement; Conditions Prior to Closing Date
3.1 (a) Upon full execution of this Agreement, the party last executing
same shall date this Agreement in the space provided on the facing page and on
page 1 herein, and shall deliver three (3) fully executed originals of this
Agreement to the Escrow Agent and a facsimile copy of the signature page(s) to
the other party. Escrow Agent shall thereupon execute all three originals of
this Agreement and immediately deliver one fully executed original to Seller,
and one fully executed original to Buyer. The date of transmittal by Escrow
Agent to Buyer and Seller of this Agreement, as fully executed by Seller, Buyer
and Escrow Agent, shall hereinafter be referred to as the "Opening of Escrow".
To the extent not already furnished or made available to Buyer prior
to the Opening of Escrow, Seller shall furnish to Buyer, on or before the
Opening of Escrow, copies of the following documents and materials ("Documents
and Materials"):
(i) A rent roll for the Property (the "Rent Roll"), setting forth for
each tenant the tenant's name, square footage occupied, unit number, monthly
rent, percentage of common area expense reimbursement, lease expiration date
(if any), and security deposits actually held by Seller or Property Manager at
such time, if any. In addition, under separate cover, Seller shall furnish to
Buyer the amount of any prepaid rents and the period for which same have been
paid and the amount of any delinquent rents and/or any other arrearages;
(ii) Copies of all Service Contracts;
(iii) Copies of the most recent property tax bills received by Seller
or Property Manager;
(iv) Copies of the Leases affecting the Property; and
(v) Seller's customary monthly management, revenue and expense reports,
prepared by Seller and based upon data furnished to Seller by the Property
Manager (including operating statements), for 1995, 1996 and for year-to-date
1997, followed by periodic updates of such items customarily prepared by Seller
or Property Manager following the Opening of Escrow.
In addition, Seller shall furnish to Buyer or make available to
Buyer, to the extent not already furnished or made available to Buyer prior to
the Opening of Escrow, the following items, all of which shall be deemed to be
"Documents and Materials" within the meaning of this Agreement, to the extent
such Documents and Materials are in the actual possession of Seller or Seller's
Property Manager:
(vi) A site plan for the Property;
(vii) A list of the Personal Property, if any, maintained at the
Property and necessary for the continued operation thereof, to be transferred
to Buyer at Closing pursuant to the Bill of Sale attached hereto as Exhibit
"I";
(viii) Copies of the certificate(s) of occupancy for the Property,
along with any certifications from governmental agencies in connection with the
operation of the Improvements;
(ix) Maintenance reports for 1996 and year-to-date 1997 and records of any
capital improvements made to the Property during the same period of time; and
(x) Copies of the most recent existing soils, environmental and
engineering reports relating to the Property or the Improvements including,
without limitation, the most recent Phase I environmental study or report
relating to the Property, if any, provided such matters have been based upon
tests and/or studies performed during Seller's period of ownership; provided,
Buyer acknowledges that any such items shall be delivered or made available
without any representation or warranty regarding the accuracy, completeness or
any other aspect of such matters.
(b) Buyer shall have the right to review such records and documents
relating to the ownership and operation of the Property as Buyer may reasonably
deem appropriate in connection with its due diligence efforts. At any
reasonable time during the term of this Agreement, Seller shall, at Buyer's
request and at Buyer's sole cost and expense, provide to Buyer's designated
independent auditor access to Seller's books and records regarding the Property
for the period for which Buyer is required to have audited financial statements
prepared with respect to the Property as may be required by the Securities and
Exchange Commission, to the extent that such books and records are in Seller's
possession and control and relate to the period during which Seller held title
to the Property. Further, Seller agrees, on a one-time basis at Buyer's sole,
reasonable cost and expense, to provide a representation letter regarding the
books and records of the Property in substantially the form of Exhibit "B"
attached hereto, in connection with the normal course of auditing the Property
in accordance with generally accepted accounting standards. Seller shall
assist and cooperate with Buyer as may be reasonably necessary to facilitate
Buyer's investigation, due diligence and review pursuant to this Section 3.1,
including access to the files and documents (including, without limitation,
tenant files and accounting records for the Property) containing information
pertaining to the Property which are maintained at the office of Seller's
Property Manager(s), PM Realty Advisors, ("Property Manager") on site at the
Property and which have been prepared during Seller's period of ownership;
provided, Buyer shall not be entitled to examine records and documents at
Seller's home office.
(c) All Documents and Materials supplied to or made available to
Buyer or Buyer's Advisors by Seller as provided in this Section 3.1 are
confidential in nature and shall not be released or disclosed by Buyer to any
other parties except as set forth in the further provisions of this Section
3.1. All Documents and Materials shall be delivered to Buyer without
representation or warranty of any kind from Seller. In the event the Closing
of this transaction does not occur for any reason, then Buyer shall return
promptly to Seller all of such Documents and Materials, along with copies of
any reports, studies, analyses, test results or other environmental documents
which are: (i) prepared by or on behalf of Buyer or its agents in the course
of Buyer's due diligence investigation; or (ii) furnished or made available by
Seller to Buyer pursuant to this Section 3.1 or other applicable section of
this Agreement (collectively, the "Due Diligence Information"). In
consideration of the Documents and Materials being made available to Buyer, it
is understood and agreed that Buyer shall treat all Due Diligence Information
confidentially, in accordance with the provisions of this paragraph. Seller's
Documents and Materials are to be used solely for purposes of the performance
of Buyer's due diligence hereunder and no Due Diligence Information shall be
disclosed or delivered by Buyer to any person or entity other than Buyer's
attorneys, directors, officers, employees, agents, representatives and
consultants, who must be advised of such matters for the purpose of evaluating
Buyer's acquisition of the Property (collectively the "Advisors"). The
Advisors shall be informed by Buyer of the confidential nature of the Due
Diligence Information, shall be directed by Buyer to treat the Due Diligence
Information confidentially, and shall agree to be bound by the provisions of
this Subsection and to disclose the Due Diligence Information only to the
persons and/or entities to whom Buyer is authorized to disclose such matters
pursuant to the provisions of this paragraph. Buyer shall not, and shall
direct that the Advisors do not, disclose the fact that this Agreement has
been executed, or the status of any matter under this Agreement, without
Seller's prior written consent to such disclosure and approval of the form
thereof. The parties hereto acknowledge that Buyer is a publicly traded Real
Estate Investment Trust (REIT) and that the provisions of this Section 3.1 (c)
shall not prohibit Buyer from making those disclosures required by, and solely
for the purpose of complying with, the regulations of the Securities and
Exchange Commission in connection with the operation of the REIT; provided,
however, that during the term of this Agreement, Buyer shall provide Seller
with prior written notice of its intent to make each such disclosure.
Notwithstanding anything contained herein, it is understood and agreed by the
parties that all press releases or other public announcements relating to
Buyer's purchase of the Property (other than any disclosures compelled by law,
an order of a court of competent jurisdiction or a valid subpoena) shall be
subject to the prior written approval of the other party hereto, which approval
may be granted or withheld in the sole discretion of such other party. Buyer
shall defend, protect, indemnify and hold harmless Seller from and against all
claims, demands, causes of action, liabilities, losses, damages or expenses
asserted against or incurred by Seller by reason of Buyer's unauthorized
disclosure of such information in violation of this Section 3.1.
3.2 On or before the Opening of Escrow, Title Company and/or Seller shall
deliver to Buyer: (i) a Title Commitment for the Property, contemplating the
issuance of ALTA Extended Coverage (1970 Form B, if available from the Title
Company) Owner's Policy of Title Insurance or equivalent thereof ("Title
Commitment") issued by the Title Company, in the form customarily used by the
Title Company in California, showing title to the Property vested in Seller and
committing to issue ALTA Extended Coverage (1970 Form B, if available from the
Title Company) Owner's Policy of Title Insurance (or equivalent thereof,
subject to variations in conformance with local custom and practice), showing
title thereto vested in Buyer, with coverage in the amount of the Purchase
Price specifying all easements, liens, encumbrances, restrictions, conditions
or covenants of record with respect to the Property and including legible
copies of all documents referred to as exceptions to title in the Title
Commitment which are available to the Title Company, along with copies of all
documents noted therein as specifically recorded exception to title; and (ii)
the most recent available survey of the Property, if any (the "Survey"), for
the purpose of causing the Title Company to remove the standard general survey
exception(s) from the Owner's Title Policy described in Section 5.2(d) herein
and substituting therefor any specific survey exceptions disclosed by the
Survey. Within ten (10) days of the Opening of Escrow, Seller shall, at
Seller's cost, deliver or cause to be delivered to Buyer a new or updated
Survey (to the extent the prior Survey, if any, is insufficient for the Title
Company to remove the standard general survey exception((s) as described above)
and updated Title Commitment ("Amended Title Commitment") setting forth any new
or additional exceptions to title shown or disclosed by the Survey or updated
survey (if any). Notwithstanding the foregoing, Seller's failure to cause the
updated Survey (if necessary) and the Amended Title Commitment to be delivered
to Buyer within the ten (10) day period set forth herein, despite Seller's and
Buyer's reasonable good faith efforts, shall not be deemed to be a default by
Seller hereunder. The Survey shall be an as-built Survey, prepared by a
surveyor registered in the State of California.
3.3 [Intentionally Omitted]
3.4 (a) Buyer shall have until 5:00 p.m. (Pacific Time) on the Review
Contingency Date to complete, at its own expense, an inspection of the
condition of the Property, including verification of current zoning of the
Property, and such structural or soils tests or environmental reports as Buyer
may contract for. Buyer shall notify Seller in writing, no later than 5:00
p.m. (Pacific Time) on the Review Contingency Date, of its disapproval of or
any objection to the condition of the Property (including, without limitation,
the physical condition of the Property and the matters listed in Section 3.1
above), in Buyer's sole, absolute and subjective discretion, whereupon this
Agreement shall terminate in accordance with Section 3.8 herein. Failure to
provide Seller with such written disapproval or objection under this Section
3.4 on or before 5:00 p.m. (Pacific Time) on the Review Contingency Date shall
be deemed to constitute approval by Buyer of the condition of the Property,
whereupon this Agreement shall remain in full force and effect.
(b) Seller shall permit Buyer and its representatives full access
during normal business hours to make such inspections and tests as Buyer deems
necessary to complete its physical review of the Property. Such inspection
shall take place upon not less than 24 hours notice to Seller, shall be made at
Buyer's own expense, and shall take place only by appointment arranged through
Lydia Kennedy ("Seller's Representative") and with a representative of Seller
present at all times, and shall be subject to the rights of tenants and/or
other occupants of the Property.
(c) Buyer shall be responsible for obtaining copies of any
additional documentation or information concerning the Property as Buyer may
deem appropriate in connection with Buyer's due diligence, which shall be
coordinated with and obtained through the Property Manager, with the
cooperation of Seller. Buyer shall have the right to contact such persons or
entities as Buyer may reasonably deem appropriate in connection with its due
diligence efforts and Seller shall cooperate with Buyer in arranging interviews
and meetings for Buyer with any such persons; provided, neither Buyer nor its
agents, consultants or representatives shall contact any tenant(s) of the
Property without the prior written consent of Seller, which consent shall not
be unreasonably withheld, provided that Buyer's contact with any tenant shall,
at Seller's option, be arranged by and conducted in the presence of Seller's
Property Manager or other designated representative.
(d) Seller shall assist and cooperate with Buyer as may be
reasonably necessary to facilitate Buyer's investigation, due diligence and
review pursuant to this Section 3.4, including Buyer's physical inspection of
the Property in order to conduct engineering studies, soil tests and any other
inspection and/or tests that Buyer may deem necessary or advisable; provided,
Buyer shall not be entitled to perform any tests of any kind which involve
drilling, boring, excavation, groundwater testing or similar intrusive or
invasive action on or under the surface of the Property without Seller's prior
written consent following not less than two (2) business days' written notice
setting forth in reasonable detail the nature, extent and location of such
tests and the name and contact person of the contractor selected to perform
such tests, which consent may be withheld by Seller in its sole and absolute
discretion. Failure of Seller to affirmatively consent to such tests or other
matters within the time period set forth herein shall constitute Seller's
refusal to consent to the performance of such tests or other matters. Buyer
shall treat the results of all such tests consented to by Seller as
confidential and shall not, except as expressly provided in this Agreement,
disseminate the results of such tests, in any form, written or verbal, to any
third party and shall cause its consultants to agree in writing to do the same.
Buyer shall deliver to Seller copies of all reports, analyses and test results
promptly upon Buyer's receipt of same, without warranty or representation from
Buyer of any kind.
(e) Buyer shall defend, indemnify and hold Seller harmless from and
against any and all claims, demands, causes of action, liabilities, damages,
losses or expenses (including, without limitation, Seller's reasonable
attorneys' fees) asserted against or incurred by Seller and resulting from any
act or omission of Buyer or Buyer's agents, employees, representatives or
consultants relating to Buyer's inspection and testing pursuant to this Section
3.4.
3.5 If Buyer disapproves the condition of the Property pursuant to
Section 3.4, within the time period provided therein, this Agreement shall
terminate in accordance with Section 3.8 and Section 3.9 herein. Without
limiting the application of any other provision of this Article III, upon such
disapproval, Buyer shall promptly return to Seller hereunder all copies of the
Due Diligence Information including, without limitation, any other materials
and/or documents furnished or made available to Buyer in connection with its
review of the Property and a copy of any environmental reports, studies or
analyses (along with all back-up data) performed in connection with Buyer's due
diligence activities hereunder.
3.6 (a) Buyer shall have until the earlier of: (i) the Review
Contingency Date; or (ii) the date which is five (5) days following its receipt
of the updated Survey and Amended Title Commitment in which to give Seller and
Escrow Agent written notice ("Buyer's Title Notice") of Buyer's disapproval,
which may be based on Buyer's sole, absolute and subjective discretion, or
conditional approval of the legal description or any matters shown in the
Survey, the Amended Title Commitment, all documents referred to in the Amended
Title Commitment and all matters disclosed therein (collectively the "Title
Matters"). For purposes of this Section 3.6, recertification of the Survey,
written notations of matters shown thereon, or addition of similar ministerial
matters shall not delay the time period for delivery of Buyer's Title Notice,
or the scheduled Closing Date. In the event the Survey (and any updates
thereto)and Amended Title Commitment are not received by Buyer within the time
periods set forth in Section 3.2 herein, such failure shall not be deemed to be
a default by Seller hereunder; provided, however, in the event Seller is unable
to cause such items to be timely delivered to Buyer for any reason, the date
for delivery of Buyer's Title Notice, as provided in this Section 3.6, shall be
extended on a day-to-day basis until delivery of such items to Buyer, and the
Review Contingency Period shall be extended for the same number of days with
respect to, and solely for the purpose of, extending the date for delivery of
Buyer's Title Notice. The failure of Buyer to timely give Buyer's Title Notice
shall be deemed to constitute Buyer's approval of the legal description and all
Title Matters.
(b) If Buyer timely disapproves or conditionally approves any Title
Matters, Seller may, within five (5) days after receipt of Buyer's Title
Notice, elect to eliminate some or all of the disapproved or conditionally
approved Title Matters. In such event, Seller may give Buyer written notice
("Seller's Title Notice") of those disapproved or conditionally approved Title
Matters, if any, which Seller shall attempt to cause the Title Company to
eliminate from the Owner's Title Policy as exceptions to title to the Property.
(c) If Buyer approves of Seller's Title Notice within three (3) days
of receipt thereof, Seller covenants and agrees to use reasonable efforts to
cause the Title Company to eliminate from the Owner's Title Policy, as
exceptions to title to the Property, those disapproved Title Matters set forth
in Seller's Title Notice; provided, that if as of one (1) business day prior to
the Close Date Seller has been unable, despite reasonable efforts, to cause the
Title Company to agree to eliminate as exceptions to title any such Title
Matters which Seller elected in Seller's Title Notice to attempt to cause to be
so eliminated, Seller shall not be in default hereunder, and Buyer may by
written notice to Seller either : (a) terminate this Agreement in accordance
with Section 3.8 and Section 3.9 herein; or (b) accept title in its then
existing condition, and proceed to Closing the Property as otherwise provided
herein. Failure of Buyer to deliver to Seller written disapproval of Seller's
Title Notice within such three (3) day period following its receipt thereof
shall be deemed to constitute Buyer's approval of Seller's Title Notice. Once
Buyer shall have approved, or have been deemed to approve, the Title Matters,
Buyer shall not have the right to withdraw such approval; provided, however,
that if thereafter the Title Company discloses to Buyer a new title exception,
then Buyer shall have three (3) days from its receipt of such notice form the
Title Company with respect to any such new title exception to approve or
disapprove the same by written notice to Seller as provided in Section 3.6, and
the Closing Date may be extended solely for the purposes of, and only to the
extent necessary, to permit delivery of Buyer's and Seller's Title Notices in
connection therewith as provided for in Section 3.6.
(d) If Seller does not elect to eliminate any disapproved or
conditionally approved Title Matters (which election may be based, in whole or
in part, upon the cost to eliminate such Title Matter(s), regardless of the
party obligated herein to pay such cost or the party which may otherwise agree
to pay for such cost), or Buyer disapproves of Seller's Title Notice by
written notice to Seller within three (3) days of Buyer's receipt thereof,
then this condition shall be deemed to have failed, and Buyer may, by written
notice to Seller on or before the later of: (i) the time period for delivery to
Seller of Buyer's disapproval of Seller's Title Notice, pursuant to subsection
(c) above; or (ii) the Review Contingency Date, either: (A) terminate this
Agreement in accordance with Section 3.8 and Section 3.9 herein; or (B) accept
title in its then existing condition, which shall constitute a waiver by Buyer
of any such disapproved and uncured Title Matters, and proceed to Closing on
the Property as otherwise provided herein.
(e) Other than liens for non-delinquent property taxes and
assessments, Seller shall either satisfy, or otherwise cause to be removed any
monetary encumbrances at or before Closing as exception(s) to title in the
Owner's Title Policy
3.7 (a) Seller shall notify Buyer of any damage, or destruction, or
threatened condemnation to the Property, which notice shall contain Seller's
good faith estimate of the cost to repair such damage, as soon as practicable
after Seller receives notice of such occurrence. If, prior to Closing, all or
a material part of the Property is destroyed by fire or other casualty or is
threatened to be taken or is taken by eminent domain, either Buyer or Seller
may terminate this Agreement in accordance with Section 3.8 and Section 3.9
herein by written notice to the other party within five (5) business days of
receipt of notice of the damage or condemnation. If neither Buyer nor Seller
terminates this Agreement within the time provided, Buyer shall be deemed to
have waived the destruction or taking, and this transaction shall be completed
as provided in this Agreement, without reduction in the Purchase Price (except
to the extent of the deductible under Seller's casualty policy and any
non-insured portion of the loss but only in the event Seller does not elect, in
its discretion, to repair such damage), and Buyer shall be entitled to receive
all insurance proceeds, if any, and eminent domain awards, if any, applicable
to the destruction, damage or taking, other than proceeds and awards
constituting reimbursement to Seller for repair or restoration work to the
Property resulting from such destruction, damage or taking, and performed prior
to Closing. Any termination of this Agreement pursuant to this Section 3.7 due
to damage, destruction or a taking of the Property shall constitute a
termination of this entire Agreement and this transaction, whereupon the
provisions of Section 3.8 shall apply. Nothing in this Section 3.7 shall
affect the provisions of Section 3.9 herein.
(b) Seller shall, at Closing and thereafter, execute and deliver to
Buyer all required proofs of loss, and assignments of claims and awards. The
term "material part" as used in this Section 3.7 shall be deemed damaged or
destroyed within the meaning of this Section if: (i) the cost of restoring the
Property to its condition prior to the fire or other casualty causing loss, in
Seller's good faith business judgment, will exceed $200,000 or (ii) a part of
the Property shall be taken or threatened to be taken by eminent domain (which
threatened taking shall be in the form of a formal written notice from the
appropriate governmental authority), and such taking or threatened taking shall
result in the unavailability for leasing or occupancy, at market rates and on
market terms, more than five percent (5%) of the then current rental receipts
from the Property for a period of more than three (3) months from the Closing
Date.
3.8 Should a termination occur under the terms of this Agreement: (i)
Escrow Agent shall refund to Buyer the Earnest Money Deposit, and any accrued
interest thereon which was earned while in the possession of Escrow Agent, then
held by Escrow Agent; (ii) Buyer and Seller shall have no further liability to
each other under this Agreement, except for any liability accruing under
Buyer's indemnification and/or confidentiality obligations to Seller under
Sections 3.1, 3.4, 4.2 and/or 7.2, which liability shall survive the
termination of this Agreement; and (iii) Buyer shall have no right or claim to
or against the Property or any portion thereof, absent a written agreement to
the contrary between the parties, as referenced in Section 3.9 herein. Upon
such termination, the provisions of Article VI shall apply.
3.9 Disapproval by Buyer pursuant to this Article III with respect to the
Property, accompanied by termination of this Agreement in accordance with the
terms hereof, shall be deemed to constitute disapproval and termination of this
Agreement with respect to the Property, absent a written agreement executed by
the parties, whereupon this Agreement shall terminate in its entirety pursuant
to Section 3.8 herein.
ARTICLE IV.
Representations, Warranties and Covenants of Seller and Buyer
4.1 Seller covenants and agrees with Buyer that, between the date hereof
and the Closing Date:
(a) Seller shall: (i) cause the Property to be maintained in
accordance with all applicable laws; (ii) maintain and operate the Property in
the same manner as is consistent with the operation and maintenance of the
Property during the period of Seller's ownership of the Property; (iii) keep
all insurance policies pertaining to the Property in full force and effect; and
(iv) promptly advise Buyer of any litigation, arbitration or administrative
hearing which concerns the Property or may affect Seller's ability to
consummate the transaction contemplated hereby, of which Seller has actual
knowledge. Without limiting the foregoing provisions of this Subsection (a),
Seller shall have no obligation to perform any capital improvements on the
Property unless agreed upon in writing between the parties prior to the Closing
Date, in the sole discretion of each party.
(b) If Seller acquires knowledge of any material defect, error or
omission in any of Seller's Documents and Materials, Seller shall promptly give
Buyer notice with detailed information of such defect, error or omission, and
notwithstanding the Contingency Review Date, Buyer shall have five (5) business
days from receipt of such notice to submit written objections thereto. Buyer's
failure to deliver written objection to Seller within said period shall be
deemed to constitute Buyer's waiver of the information contained in said notice
and the effect thereof upon the Property and this transaction.
(c) Seller shall not enter into any binding contract to sell or
convey the Property, or enter into any letter of intent for such sale, whether
binding or non-binding, with a third party. Upon termination of this Agreement
in accordance with the terms hereof, the provisions of this Subsection (c)
shall be null and void and of no further force and effect.
(d) There are not, as of the date of this Agreement, and shall not
be as of the Closing, any unfunded, vested liability or employer withdrawal
liability under the Employee Retirement Income Security Act of 1974 or the
Multi-Employer Pension Plan Amendment Act of 1980 ("ERISA") with respect to any
union contracts, pension plans, profit sharing plans and/or employee benefit
plans related to Seller and the Property.
4.2 (a) Seller shall keep Buyer informed of any negotiations or
discussions regarding material terms, new Leases or amendments thereto, or
termination of existing Leases, promptly upon the occurrence of same and shall,
at Buyer's request, provide Buyer with a copy of any such new Lease or
amendment. From and after the date of this Agreement, Seller shall not enter
into any new Leases, or amendments or terminations of existing Leases at the
Property except: on such other terms as may have been approved by Buyer, which
approval may not be unreasonably withheld by Buyer; provided, however, in the
event Buyer does not disapprove of any such matter within three (3) business
days following Buyer's receipt from Seller of the proposed material terms of
any such new Lease or amendment thereto, Buyer shall be deemed to have approved
such new Lease or amendment thereto and Seller shall thereupon be free to enter
into any such new Lease or amendment. Except as set forth herein, from and
after the Opening of Escrow, Seller shall not take any action or execute any
document which would create a new interest in the Property or cause to be
incurred any material liability with respect thereto. In addition, Seller
shall not, following the Opening of Escrow, enter into any Service Contract
having a material impact on the Property or its operations which shall survive
the Closing or which cannot be canceled upon thirty (30) days notice (except in
the event of an emergency and/or the inability of any service provider to
continue to discharge its duties under an existing Service Contract), without
the prior written approval of Buyer, which shall not be unreasonably withheld.
Failure of Buyer to respond to Seller's request for any approval under this
paragraph within three (3) business days from receipt of such request shall be
deemed to constitute Buyer's approval of same and Seller shall be free to enter
into such new Lease, or amendment to Lease or new Service Contract during the
pendency of this Agreement. Any such new Lease or amendment thereto entered
into after the date of this Agreement shall be deemed to be a New Lease
Obligation, as defined in the further provisions of this Section 4.2.
(b) As a condition of Closing, Buyer shall pay for all leasing
commissions and tenant improvement costs or allowances incurred in connection
with any lease transaction described herein entered into by Seller and approved
by Buyer in accordance with Subsection (a) above after the date of this
Agreement and prior to Closing in accordance with this Section 4.2 ("New Lease
Obligations") as well as any leasing commissions, tenant improvement costs or
allowances or other compensation due under existing Leases by reason of an
extension of term, renewal of such Lease, expansion of space or exercise of an
option for a period which commences following the Closing Date.
Notwithstanding the foregoing, Buyer acknowledges Space Vector Corporation's
request to renew its Lease for a three (3) year period commencing on November
1, 1997, and Buyer agrees to credit Seller through escrow at the Closing for
Buyer's share of the $2,387.25 Lease commission due for and attributable to
that portion of the Lease renewal term running from and after the Closing Date.
Buyer shall indemnify, defend, protect and hold Seller harmless from all
claims, demands, causes of action, liabilities, losses and/or damages asserted
against and/or incurred by Seller in connection with Buyer's failure to perform
its obligations pursuant to this Section 4.2. Buyer's indemnification
obligations hereunder shall survive the Closing Date or earlier termination of
this Agreement by Seller pursuant to Article IX in the event of a default by
Buyer.
4.3 Effective as of the Closing Date, Seller shall assume all existing
Service Contracts affecting the Property, excluding the current management,
leasing and listing agreement. Seller shall terminate its existing management,
leasing and listing agreements affecting the Property, effective as of the
Closing Date, and Seller shall pay all expenses of such termination.
4.4 Seller represents and warrants on its own behalf, now and as of the
Closing Date, that:
(a) Seller has the full right, power and authority to enter into
this Agreement and to sell the Property to Buyer as provided herein and to
carry out Seller's obligations hereunder, and the individuals executing this
Agreement on behalf of Seller are fully authorized to do so.
(b) To Seller's knowledge, there are no pending claims, suits,
actions, arbitrations or regulatory, legal, or other proceedings or
investigations affecting the Property or Seller's rights and obligations under
this Agreement, other than as disclosed to or discovered by Buyer prior to the
Review Contingency Date, pursuant to Section 3.1 or otherwise. To Seller's
knowledge, there is no pending condemnation of the Property, or any part of it.
(c) There are no tenant Leases currently in force or effect for the
Property and no security deposits or other sums due tenants which are actually
held by Seller or Property Manager except as specified on the Rent Roll
attached hereto as Exhibit "C" (and as may be updated prior to the Closing to
account (in part) for the use or application of any such security deposit(s) by
Seller in accordance with the Leases) and, to Seller's knowledge, Exhibit "C"
lists all Leases and tenancies, if any, with respect to the Property or any
part thereof, as of the date hereof.
(d) All of Seller's representations and warranties set forth in this
Section 4.4 shall be true and correct in all material respects as of the
Closing Date.
(e) To Seller's knowledge, Seller has not received any written
notice of any material violation of any applicable laws, ordinances, rules,
requirements, regulations, building codes or environmental rules of any
governmental agency, body or subdivision thereof bearing on the Property and
the construction of the Improvements.
(f) To Seller's knowledge: (i) all documents delivered by Seller to
Buyer pursuant to this Agreement are true, accurate, correct and complete
copies of originals; (ii) and any and all information prepared by Seller or at
Seller's direction and supplied to or made available to Buyer by Seller in
accordance with this Agreement is true, accurate, correct, and complete.
(g) To Seller's knowledge, there are no maintenance contracts,
service contracts or any other contracts (whether oral or written) affecting or
relating to the Property which will survive the Closing Date, except as
approved by Buyer. At the Closing Date, there will be no outstanding contracts
entered into by Seller for the construction of any capital improvements (not
including normal repairs and maintenance) which have not been fully paid for,
and Seller shall cause to be discharged all mechanic's and materialmen's liens
arising from any labor or materials furnished to the Property prior to the
Closing Date.
(h) Except for any matters disclosed in the Documents and Materials,
Seller has received no written notice, from the date Seller first acquired
ownership of the Property to the date of this Agreement, of: (a) any Hazardous
Material Activity in, on or from the Property or (b) the presence of any
Hazardous Materials in, on or under the Property or any real property adjoining
the Property. To Seller's knowledge, the Property has not been used for any
Hazardous Material Activity from and after the date on which Seller acquired
ownership of the Property and Seller has received no written notice of any
proceeding or threatened proceeding with respect to the presence or possible
presence of Hazardous Materials on the Property or the migration thereof from
or to adjoining real property from and after the date on which Seller acquired
ownership of the Property. For purposes of this Subsection (h), "Hazardous
Materials" shall include, without limitation, substances defined as "hazardous
substances" in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq; the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 et seq; the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq; and those
substances defined in such terms in applicable provisions of the laws of the
State of California and/or in the regulations adopted and publications
promulgated pursuant to said laws. In addition, the term "Hazardous
Material(s) Activity" as used herein shall mean the use, generation,
manufacture, storage and/or disposal of Hazardous Materials on, under or about
the Property or transportation of Hazardous Materials to or from the Property.
(i) To Seller's knowledge, Seller has not received any written notice
that there are any physical or mechanical defects or deficiencies in the
condition of the Property which would impair the operation or use thereof,
including, but not limited to, the roofs, exterior walls or structural
components of the Improvements and the heating, air conditioning, plumbing,
ventilating, utility, sprinkler and other mechanical and electrical systems,
apparatus and appliances located on the Property or in the Improvements.
(j) There are no attachments, execution proceedings, assignments for the
benefit of creditors, insolvency bankruptcy reorganization or other proceedings
pending or threatened against Seller, not are any such proceedings contemplated
by Seller.
As used in this Section 4.4 herein, Seller's "knowledge" means the actual
knowledge of John Mulvihill and Lydia Kennedy as the Vice-President and
Director of Asset Management of Seller, respectively, responsible for the
monitoring and limited supervision of the Property Manager for the Property,
without duty to inspect the Property or make any independent investigation;
provided, it is contemplated that such individuals have reasonably discharged
such monitoring and limited supervision of the Property Manager in accordance
with Seller's customary practices concerning properties acquired for similar
purposes, and will continue to do so until the Closing Date.
Notwithstanding anything to the contrary contained in this Agreement, if
Buyer has actual knowledge that any representation or warranty of Seller is not
true and correct as of the Closing Date and shall elect to acquire the Property
notwithstanding such fact, Buyer shall be deemed to have waived such specific
breach of representation and warranty and to have released Seller from all
liability or responsibility in connection therewith, and neither Buyer nor
Buyer's permitted assignees or successors shall be entitled to commence any
action or to recover damages from Seller based upon such specific breach of a
representation and warranty.
4.5 Except as otherwise represented and warranted in Section 4.4 herein,
Seller hereby specifically disclaims any warranty, guaranty or representation,
oral or written, past, present or future, of, as to, or concerning the
following matters regarding the Property:
(i) the nature and condition of the Property, including, but not
limited to the water, soil and geology, and the suitability thereof and of the
Property for any and all activities and uses which Buyer may elect to conduct
thereon;
(ii) the nature and extent of any right-of-way, possession, lien,
encumbrance, license, reservation, condition or otherwise;
(iii) the compliance of the Property or its operation with any
laws, ordinances or regulations of any government or other body;
(iv) the quality, nature, adequacy and physical condition of the
Property, including, but not limited to, the structural elements, foundation,
appurtenances, access, landscaping, parking facilities and the electrical,
mechanical, HVAC, plumbing, sewage and utility systems, facilities and
appliances;
(v) the existence, quality, nature, adequacy and physical condition
of utilities serving the Property;
(vi) the zoning or other legal status of the Property or any other
public or private restrictions on the use of the Property;
(vii) the presence of any hazardous substances on, under or about
the Property or the adjoining or neighboring property;
(viii) the quality of any labor and materials used in any
Improvements on the Real Property; and
(ix) the possible right of any third party(ies) to use any common
area of the Property for community services, performances, public interest
information, school activities and similar matters, if applicable; and
(x) the economics of the operation of the Property.
Except as provided herein, in consideration of Buyer's receiving access to
the Property as set forth in Article III herein so that Buyer may conduct such
studies, costs, investigations, inspections and analyses with respect to the
Property as Buyer might desire, Buyer acknowledges and confirms that unless
Buyer elects to terminate this Agreement as provided herein, Buyer shall accept
Seller's conveyance of the Property to Buyer in an "AS-IS" and "WHERE-IS"
condition, free of any warranty by Seller, except as otherwise expressly
provided in this Agreement, and free of any obligation by Seller to perform any
repairs or other improvement work with respect to the Property. Buyer expressly
acknowledges that, in consideration of the agreements of Seller herein, except
as otherwise specified in this Agreement, SELLER MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, CONCERNING
THE PROPERTY, INCLUDING, BUT IN NO WAY LIMITED TO, ANY WARRANTY OF CONDITION,
HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IMPLIED IN THIS AGREEMENT, SELLER
AFFIRMS, ACKNOWLEDGES AND AGREES THAT THE FOREGOING LIMITATIONS AND DISCLAIMERS
IN THIS AGREEMENT ARE NOT INTENDED TO ABROGATE, NULLIFY OR OVERRIDE THE EXPRESS
COVENANTS, WARRANTIES AND REPRESENTATIONS OF SELLER SET FORTH IN SECTIONS 4.1,
4.2, 4.3, AND 4.4 HEREIN AND, TO THE EXTENT THE FOREGOING DISCLAIMERS ARE
DEEMED TO BE IN CONFLICT WITH THE PROVISIONS OF EITHER OF SAID SECTIONS 4.1,
4.2, 4.3 AND 4.4, THE PROVISIONS OF SUCH SECTIONS SHALL CONTROL.
4.6 Buyer represents and warrants now and as of the date of Closing that:
(a) If Buyer (or any permitted assignee of Buyer under Section 12.2
herein) is a partnership or corporation (including, without limitation, a
limited liability corporation or company), it is duly organized, validly
existing and in good standing under the laws of the state of its formation.
(b) Buyer has the full right, power and authority to purchase the
Property from Seller as provided herein and to carry out Buyer's obligations
hereunder, and the person or persons executing this Agreement on behalf of
Buyer is/are fully authorized to do so.
(c) Buyer's purchase of the Property at Closing shall constitute its
certification that Buyer, except as expressly warranted and represented by
Seller herein,: (i) has inspected and is familiar with the Property; (ii) has
had the opportunity to have prepared for Buyer's review such soils,
engineering, environmental or hazardous substance reports or such other reports
or inspections of any nature relating to the Property as Buyer deemed
appropriate; (iii) has purchased the Property on an "AS IS" and "WHERE-IS"
basis, relying solely on Buyer's own examination and inspection of the
Property, and the express representations contained herein.
(d) All of Buyer's representations and warranties under this Section
4.6 shall be true and correct in all material respects as of the Closing Date.
4.7 All representations, warranties and covenants of Seller and Buyer
under this Article IV shall survive the Closing; provided, however, that any
claim, action, suit or proceeding with respect to the truth, accuracy or
completeness of such representations and warranties must be commenced, if at
all, on or before nine (9) months from the Closing Date.
4.8 Seller shall use its good faith and commercially reasonable efforts
to obtain tenant estoppel certificates (collectively, "Tenant Estoppel
Certificates" and individually, a "Tenant Estoppel Certificate") duly executed
by all of the tenants occupying space in the Improvements. The Tenant Estoppel
Certificates shall be in the form of, and upon the terms contained in, Exhibit
"E" attached hereto, with such modifications for any particular tenant as may
be reasonably requested by Buyer and reflected in the Lease for such tenant(s).
Seller shall use its good faith and commercially reasonable efforts to deliver
the original executed Tenant Estoppel Certificates of Systems Tax Service,
Environmental Science & Engineering, Pacific Mutual Group Life Insurance
Company and Safeco Insurance Company of America ("Credit Tenants") and all
other tenants to Buyer not later than three (3) business days prior to the
Review Contingency Date. Buyer's failure to disapprove the executed Tenant
Estoppel Certificates in writing prior to the Review Contingency Date shall be
deemed to constitute Buyer's approval thereof. In the event Seller has been
unable to obtain Tenant Estoppel Certificates from all of the tenants in a
timely fashion, as set forth herein, and Buyer has elected to nevertheless go
forward with the purchase of the Property as set forth in this Agreement,
Seller shall deliver to Buyer at Closing its own, separate certificate to Buyer
for each of the Credit Tenants from whom a Tenant Estoppel Certificate is not
obtained ("Seller's Certificate"), wherein Seller certifies to Buyer the
accuracy of the matters set forth in the Tenant Estoppel Certificate(s)
relating to such Credit Tenant who fails to deliver Estoppel Certificates in a
timely manner. The form of Seller's Certificate is attached hereto as Exhibit
"E-1". Seller shall deliver the original executed Seller's Certificates to
Buyer not later than two (2) business days prior to the Closing Date.
Notwithstanding any other provision of this Section 4.8, the inability or
failure of Seller to obtain one or more Tenant Estoppel Certificates, and to
deliver such executed documents to Buyer on or before the time provided herein,
despite the good faith and commercially reasonable efforts of Seller, and/or
its Property Manager, shall not be deemed to be a default of Seller hereunder.
Nothing in this Section 4.8 shall be deemed to establish or imply that the
obtaining of executed Tenant Estoppel Certificates from each tenant at the
Property shall be a condition precedent to the Closing.
4.9 As a condition of Closing, Pacific Mutual Group Life Insurance
Company ( a subsidiary of Seller and herein referred to as "PMG"), as tenant,
will enter into a lease with Buyer, as lessor (the "PMG Lease") for the
premises presently occupied by PMG in the 17360 building at the Property, which
premises is identified as Suites 100, 200 and 300 consisting of approximately
95,245 rentable square feet (the "Premises"), upon the following terms: (a)
PMG will accept the Premises in "as is" condition; (b) the initial term of the
Lease will be five years commencing on the Closing Date, at a monthly rent of
$1.00 per square foot triple net for the first 30 months, and $1.15 per square
foot triple net for months 31 through 60 ; (c) tenant will have a renewal
option exercisable no later than six months prior to the expiration of the
initial term of the Lease at an option rental rate equal to ninety-five percent
(95%) of the fair rental value of the premises as of the 60th month of the
initial term; and (d) the Lease shall be made on Buyer's lease form for the
Property, a copy of which Buyer will provide to Seller within three (3) days
following the Opening of Escrow. Buyer and Seller each agree to use its good
faith efforts to negotiate a mutually acceptable and commercially reasonable
PMG Lease; provided, that in the event Buyer and Seller reach an impass in the
PMG Lease negotiations which cannot be resolved to their mutual satisfaction,
or Buyer and Seller cannot otherwise agree on a mutually acceptable PMG Lease,
then either Buyer or Seller may terminate this Agreement upon written notice to
the other and in accordance with Section 3.8.
4.10 Buyer and Seller acknowledge that Seller, as lessor, has certain
obligations to fund the following leasehold improvement allowances to Systems
Tax Service ("STS") pursuant to its lease for space at the Property: (i)
leasehold improvement reimbursement in the amount of $52,115 upon submission of
required STS leasehold improvement invoices for work done in the first floor
Suite at the 17390 building of the Property, pursuant to the Fourth Amendment
to Office Lease for STS dated April 11, 1996; and (ii) leasehold improvements
in the amount of $42,028 for work to be done in Suite 180 of the 17330 building
of the Property (the "Suite 180 Work"), pursuant to the Sixth Amendment to
Office Lease for STS, dated March 3, 1997, (collectively the "Leasehold
Allowances").
The parties hereby acknowledge that certain approvals are
required of STS for finalization and/or modification to any contract for the
Suite 180 Work (a "Work Contract"). Seller shall use its best efforts to enter
into a Work Contract prior to the Closing. During the term of this Agreement
Seller shall keep Buyer informed of any negotiations or discussions regarding
material terms or modifications to the Work Contract. Seller shall provide
Buyer with a copy of any Work Contract executed prior to the Review Contingency
Date, within one (1) business day of Seller's receipt of same. From and after
the Review Contingency Date, Seller shall not enter into any new Work Contract
or amendment to existing Work Contract except on terms approved by Buyer, which
approval may not be unreasonably withheld; provided, however, in the event
Buyer does not disapprove any such new Work Contract or amendment within one
(1) business day following receipt thereof, Buyer shall be deemed to have
approved said new Work Contract or amendment and Seller shall be free to enter
into same. Notwithstanding the foregoing, Seller shall be free to amend a Work
Contract without Buyer's prior approval for purposes of effecting change orders
approved by STS to be done at STS's cost, or required by any regulatory body or
agency having authority over the Suite 180 Work. On the Closing Date the
amount of the Leasehold Allowances, less any amounts thereof previously funded
to STS or under the Work Contract(s), will be credited to Buyer, and Seller's
rights and obligations under the Work Contract(s), and any amendments thereto,
will be assigned to Buyer. Notwithstanding anything contained herein, Buyer
and Seller agree that Seller's inability to enter into or complete a Work
Contract prior to the Closing for reasons beyond Seller's control shall not be
deemed to be a default hereunder, and Buyer shall assume, as holder of the
lessor's interest, the obligation for execution and/or completion of the Suite
180 Work.
4.11 Seller has entered into a contract with SCR Construction dated
September 11, 1997 (a copy of which will be provided to Buyer on or before the
Opening of Escrow) for redecoration of the on-site property management office
at the Property (the `Redecoration Contract") to be completed on or before the
Closing Date. Seller will pay all outstanding amounts due or owing upon
completion of the work pursuant to said Redecoration Contract, and Seller
indemnifies, defends and holds Buyer harmless from any and all claims,
demands, causes of action, liabilities, costs and/or expenses incurred by Buyer
in connection with any claim for payment owing for work performed under the
Redecoration Contract.
ARTICLE V.
Action on the Closing Date
5.1 Buyer shall take the following actions on or before the Closing Date,
the satisfaction or written waiver of each of which shall be deemed to be a
condition precedent to Seller's Closing obligations hereunder:
(a) Seller shall have received, on the date of Closing, confirmation
by Escrow Agent of receipt of Buyer's funds in the amount of the Purchase Price
(adjusted for credits or debits for all prorations under Section 5.3) and
Escrow Agent's unconditional commitment to disburse said funds by wire transfer
to the account of Seller at the financial institution designated by Seller in
its instructions to Escrow Agent prior to Closing, in sufficient time for
investment at such institution's customary rate paid to Seller;
(b) Seller shall be provided on the date of Closing with an executed
duplicate original of the documents listed under subsections (e), (f), (g), (m)
and (n) of Section 5.2 below.
(c) Seller shall be provided on the date of Closing with a fully
executed duplicate original of the PMG Lease required under the provisions of
Section 4.9 herein.
5.2 Seller shall provide or cause to be provided to Buyer the following
items, on or before the Closing Date, the provision of which shall be deemed to
be a condition precedent to Buyer's Closing obligations hereunder:
(a) An executed and acknowledged California grant deed for the
Property (collectively, the "Deed") in the form of Exhibit "D";
(b) Originals (or copies if such originals are not available) of all
executed Leases, if any, in accordance with Section 4.2 herein;
(c) All keys for the Property in the possession or control of Seller
(properly labeled);
(d) An ALTA Extended Coverage (1970-Form B, if available from the
Title Company) Owner's Policy of Title Insurance, or equivalent thereof, for
the Property in the form customarily used in the State of California (subject
to variations in conformance with local custom and practice), issued by the
Title Company and dated as of the Closing Date, with coverage in the amount of
the Purchase Price, setting forth the legal description of the Property and
showing title vested in Buyer, subject only to the Permitted Exceptions,
together with such endorsements as Buyer may request (and the Title Company may
agree to issue) (the "Owner's Title Policy"); provided, however, in the event
Buyer desires an "extended coverage" form of Owner's Title Policy and/or one or
more lender's title Policy ("Lender's Title Policy"), Buyer shall so inform the
Title Company, and the Owner's Title Policy and Lender's Title Policy, if
applicable, shall contain "extended coverage" in accordance with the statutes,
regulations, customs and/or practices of the State of California . In the
event Buyer uses third-party financing in connection with the funding of the
Purchase Price, the Title Company shall issue the Lender's Title Policy in
favor of such Lender; provided, however, nothing herein shall be construed to
mean that the obtaining of any financing or the issuance of one or more
Lender's Title Policy is a condition to the performance of Buyer's obligations
hereunder. The premium for the Owner's Title Policy and Lender's Title Policy
and any endorsements thereto shall then be allocated between the parties
pursuant to Section 7.1 herein.
(e) An executed duplicate original of the Assignment and Assumption
of Rights, Warranties and Permits in the form of Exhibit "F";
(f) An executed duplicate original of the Assignment and Assumption
of Service Contracts in the form of Exhibit "G".
(g) An executed duplicate original of the Assignment and Assumption
of Leases in the form of Exhibit "H".
(h) Letters executed by Seller, in form reasonably satisfactory to
Buyer, notifying each of the tenants at the Property of the change of ownership
of the Property, and directing such tenants to make all payments following the
Closing Date which are due under the Leases to such party and at such address
as Buyer may designate ("Tenant Notification Letters"). Buyer shall be
responsible for delivery of all such Tenant Notification Letters outside of
Escrow, not sooner than the recordation of the Deed and receipt by Seller of
the Purchase Price, and Escrow Agent shall have no responsibility therefor;
(i) An original executed Bill of Sale for the Personal Property
identified in Exhibit "I" attached hereto, reciting that such transfer is on an
"AS-IS" and "WHERE-IS" basis; provided, Exhibit "1" to the Bill of Sale may, at
Seller's election, list only the Personal Property excluded from the transfer
or, alternatively, Exhibit "1" may be eliminated in the event all Personal
Property (if any) located at the Property is included in the transfer;
(j) An updated Rent Roll, dated as of the end of the last full
calendar month prior to the Closing Date;
(k) A certification duly executed by Seller under penalty of perjury
in the form of, and upon the terms set forth in Exhibit "J", setting forth
Seller's address and federal tax identification number and certifying that
Seller is not a foreign entity in accordance with and/or for the purpose of the
provisions of Section 1445 (as may be amended) of the Internal Revenue Code of
1954, as amended, and any regulations promulgated thereunder;
(l) The PMG Lease required under the provisions of Section 4.9
herein executed in duplicate original by PMG;
(m) An executed duplicate original of the Assignment of Contract, if
any, required under Section 4.10; and
(n) An executed duplicate original of the Tenant Allowances Escrow
Agreement required under the provisions of Section 7.4 herein.
5.3 The following items will be prorated as of the Closing Date on a per
diem basis: rents (including any adjustments and other charges, if any, paid
by the tenants under the Leases as pass-through items); merchants' association
dues and advertising charges, if any; the current year's real estate taxes and
assessments (calculated on the most recent available tax bill and reprorated
after Closing based upon the actual tax bill for the period in which the
Closing occurred, and again reprorated, if necessary, due to any change in the
assessed value or tax rate of the Property following a pending assessment
appeal by Seller or a separate reassessment due to the change in ownership of
the Property pursuant to this transaction), amounts payable or paid under
Service Contracts assumed by Buyer, as set forth in Section 4.3 herein, and
utilities; provided, however, rent and all other sums which are due and payable
to Seller by any tenant but uncollected as of Closing shall not be adjusted,
but Buyer shall cause such sums for the period prior to Closing to be remitted
to Seller if, as and when collected pursuant to Article VIII of this Agreement.
Notwithstanding the foregoing, utilities shall be prorated only to the extent
Seller is unable, despite its best efforts, to cause the providers of utilities
services to the Property to read the meters and, in cooperation with Buyer, to
cause such providers to change the name of the responsible party for payment of
such utilities from Seller to Buyer, effective as of the Closing Date. The
account of Seller or Buyer shall be debited or credited, as the case may be, on
the closing settlement statement to reflect these prorations, and the Purchase
Price to be paid to Seller shall be similarly adjusted. Security deposit(s)
and pre-paid rents under Leases shall be credited to Buyer at the Closing.
Buyer and Seller agree to use reasonable efforts to prepare and deliver to
Escrow Agent a schedule of tentative rental adjustments three (3) business days
prior to the Closing of this Agreement. Any such adjustments not determinable
or not agreed upon as of the Closing shall be paid by Buyer to Seller, or by
Seller to Buyer, as the case may be, in cash or by wire transfer of funds as
soon as practicable following the Closing of this Agreement. A copy of the
schedule of adjustments as agreed upon by Buyer and Seller shall be delivered
to Escrow Agent as soon as practicable prior to the Closing. For purposes of
this Section 5.3, Buyer shall be deemed to be the owner of the Property as of
12:01 A.M. on the Closing Date, regardless of the actual hour on which Closing
occurs or recordation of the Deed takes place. This transaction shall in no
event close later than the Closing Date, as defined in Section 1.2 hereof.
5.4 Any property and liability insurance on the Property maintained by
Seller shall terminate on the Closing Date.
5.5 Seller shall deliver possession of the Property to Buyer on the
Closing Date.
5.6 In addition to the matters set forth in Section 5.2 herein, the
Closing shall be subject to the satisfaction, or Buyer's written waiver, of the
following conditions, for the benefit of Buyer:
(a) The Title Company shall be unconditionally prepared to issue the
Owner's Title Policy, subject only to the Permitted Exceptions;
(b) Seller shall have duly performed each and every covenant and
agreement to be performed by Seller pursuant to this Agreement and Seller's
representations, warranties and covenants shall be true and correct as of the
Closing Date subject to the provisions of Section 4.4 herein.
(c) Buyer shall have received the Tenant Estoppel Certificates
and/or Seller's Certificates in the form and in the manner required by Section
4.8 herein.
5.7 In addition to the matters set forth in Section 5.1 herein, the
Closing shall be subject to the satisfaction, or Seller's written waiver, of
the following conditions, for the benefit of Seller:
(a) Buyer shall have duly performed each and every covenant and agreement
to be performed by Buyer pursuant to this Agreement and Buyer's
representations, warranties and covenants as set forth in this Agreement shall
be true and correct as of the Closing Date, subject to the provisions of
Section 4.4 herein.
ARTICLE VI.
Termination
Should this transaction not close on or before 5:00 p.m., local time, as
of the fifth day following the Closing Date, for reasons other than a default
by Buyer (in which case Article IX herein shall govern) or a default by Seller
(in which case Article X herein shall govern) either party may, by delivery of
written notice to the other and to the Escrow Agent, terminate this Agreement,
whereupon each party shall pay one-half (1/2) of Escrow Agent's normal
cancellation charges. Such exercise of the right of termination by either
party shall constitute a waiver of any rights, claims, causes of action or
demands either party may have against the other or the Property, or any portion
thereof, due to such failure of this transaction to close on or before the
Closing Date, except for any liability accruing under Buyer's indemnification
and/or confidentiality obligations to Seller pursuant to Sections 3.1, 3.4, 4.2
and/or 7.2 herein, which liability shall survive the termination of this
Agreement. Upon such termination, pursuant to this Article VI, Buyer shall
return to Seller, within five (5) days following such termination, all of
Seller's Documents and Materials provided or made available to Buyer by Seller
hereunder, along with copies of Buyer's Due Diligence Information compiled in
accordance with Article III herein, and Buyer shall be entitled to the prompt
return of the Earnest Money Deposit deposited with Escrow Agent, together with
any accrued interest thereon which was earned while in the possession of Escrow
Agent, whether or not previously released to Seller in accordance with the
terms of this Agreement, unless Buyer is in default hereunder, in which event
the Earnest Money Deposit shall be non-refundable and Buyer shall pay the full
amount of Escrow Agent's normal cancellation charges. In the event the Closing
does not occur and this transaction is terminated by reason of a default by
Seller, Seller shall pay the full amount of Escrow Agent's normal cancellation
charges. The provisions of this Article shall not limit or affect the
provisions of Section 3.8 herein.
ARTICLE VII.
Costs and Commissions
7.1 Seller shall pay the premiums for the Owner's Title Policies
allocable to standard coverage, the cost of the Survey, and updated Survey (if
any), its own legal fees, state sales tax and grantor's documentary transfer
tax (if any). Buyer shall pay any additional title premiums attributable to
extended (survey) coverage and any endorsements to the Owner's Title Policy
requested by Buyer and agreed to by the Title Company, the entire cost of the
Lender's Title Policy, if any, and any endorsements thereto, its own legal
fees, all fees and expenses relating to its inspection and testing of the
Property or its review of the books and records relating to the Property, the
cost of recording the Deed. Seller and Buyer will share equally all other
closing fees and closing costs (to the extent consistent with local custom and
practice), including, without limitation, Escrow Agent's fees and expenses,
subject to the provisions of Article VI herein.
7.2 In connection with the transaction contemplated by this Agreement,
Buyer has agreed, pursuant to a separate document, to pay to Steve Levine
("Buyer's Broker") at Closing compensation in an amount set forth in such
separate agreement. Buyer and Seller each represent to the other that they
have not entered into any other agreement or incurred any other obligation
which might result in the obligation to pay a real estate sales or brokerage
commission or finder's fee to any other person or entity with respect to this
transaction. Buyer and Seller each agree to indemnify, defend and hold the
other harmless from and against any and all claims, demands, causes of action,
liabilities, costs and/or expenses (including reasonable attorney's fees and
costs) asserted against or incurred by the other party as a result of any claim
or assertion made by any person to a right to a real estate sales or brokerage
commission or finder's fee in connection with this transaction, to the extent
such claim or assertion is based on the actual or alleged acts or omissions of
the indemnifying party, its broker or representative. The obligations of Buyer
and Seller under this Section 7.2 shall survive the Closing Date or the earlier
termination of this Agreement pursuant to its terms.
ARTICLE VIII.
Post-Closing Cooperation
If, as of Closing Date, there is any accrued and delinquent rent due from
any tenant then in occupancy, and Seller advises Buyer of that fact on or
before the Closing Date by means of the Rent Roll or otherwise, Buyer shall use
its good faith and commercially reasonable efforts to collect such delinquent
rent following Closing; provided, however, Buyer shall not be required to incur
any out-of-pocket expense or liability in doing so. The good faith and
commercially reasonable efforts required of Buyer shall not be deemed to
include the institution of any litigation. All rent collected by Buyer from
such delinquent tenant(s) shall be applied by Buyer first, to rent and other
charges currently due Buyer for the period from and after the Closing Date and
second, to rent and other charges due to Seller for the period prior to the
Closing Date. Notwithstanding the foregoing, Seller shall retain the right to
pursue, at Seller's sole cost, any and all actions or proceedings against: (i)
any former tenants or occupants of the Property, who are not subject to
existing Leases at the Property or who are in breach of their Leases by reason
(in part) of their abandonment of the leased premises prior to the end of the
term of their Lease; or (ii) any remaining tenants of the Property who are
delinquent in payment of rent and/or other charges for a period of sixty (60)
days or more as of the Closing Date, for delinquent rents and/or other cause(s)
of action, and any amounts collected by Seller pursuant to such actions or
proceedings shall be the sole property of Seller. Buyer hereby assigns any
cause(s) of action or claim(s) it may have against such persons for the period
prior to Closing to Seller, and Buyer shall have no responsibility in
connection with the prosecution of said actions or proceedings.
ARTICLE IX.
Default by Buyer
IF THE CLOSING OF THIS TRANSACTION FAILS TO OCCUR ON OR BEFORE THE CLOSING
DATE AS A RESULT OF BUYER'S BREACH OF THIS AGREEMENT, THE PARTIES ACKNOWLEDGE
AND AGREE BY INITIALING THIS AGREEMENT IN THE SPACE PROVIDED BELOW THAT:
(I) THE EARNEST MONEY DEPOSIT BEARS A REASONABLE RELATIONSHIP TO THE
DAMAGES WHICH THE PARTIES ESTIMATE MAY BE SUFFERED BY SELLER AS THE RESULT OF
BUYER'S DEFAULT IN THE PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT,
WHICH DAMAGES WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX, THAT THE
EARNEST MONEY DEPOSIT CONSTITUTES A REASONABLE ESTIMATE OF SELLER'S DAMAGES IN
SUCH EVENT, AND THAT THE REMEDY PROVIDED FOR HEREIN IS NOT A PENALTY OR
FORFEITURE AND IS A REASONABLE LIMITATION ON BUYER'S POTENTIAL LIABILITY AS A
RESULT OF SUCH DEFAULT; AND
(II) AS A RESULT OF BUYER'S BREACH OF THIS AGREEMENT AND FAILURE OF THE
CLOSING TO OCCUR ON OR BEFORE THE CLOSING DATE, SELLER SHALL HAVE THE RIGHT TO
TERMINATE THIS AGREEMENT AND THE ESCROW BY WRITTEN NOTICE TO ESCROW AGENT,
WHEREUPON SELLER AND ESCROW AGENT SHALL THEREUPON BE RELEASED FROM THEIR
RESPECTIVE OBLIGATIONS THEREUNDER TO SELL THE PROPERTY TO BUYER OR ITS
PERMITTED ASSIGNEE, AND SELLER SHALL RETAIN THE EARNEST MONEY DEPOSIT (OR
ESCROW AGENT SHALL RELEASE THE EARNEST MONEY DEPOSIT AND ALL ACCRUED INTEREST
THEREON TO SELLER, TO THE EXTENT NOT ALREADY SO RELEASED) AS LIQUIDATED
DAMAGES, WHICH DAMAGES SHALL BE SELLER'S SOLE AND EXCLUSIVE REMEDY HEREUNDER IN
THE EVENT OF SUCH BREACH, EXCEPT FOR SELLER'S RIGHTS AND REMEDIES FOR A
SEPARATE BREACH, IF ANY OF THE CONFIDENTIALITY AND INDEMNIFICATION PROVISIONS
OF THIS AGREEMENT.
/s/ JCM /s/ DC /s/ VJC
Initials of Seller Initials of Buyer
ARTICLE X.
Default by Seller
In the event of a default by Seller under the terms of this Agreement,
Buyer shall have the right either: (i) to purchase the Property notwithstanding
such default, whereupon such default shall be deemed waived; or (ii) to
terminate this Agreement by notice furnished to Seller and to Escrow Agent,
whereupon Buyer will be entitled to a refund of the Earnest Money Deposit and
all interest accrued thereon, if any, held by Escrow Agent, and Buyer shall be
entitled to pursue an action against Seller at law for damages; provided,
however, Buyer shall have no right of action against Seller or subsequent
owners of the Property at equity, for specific performance of this Agreement or
otherwise, for purposes of asserting a claim of title to and/or possession of
all or any portion of the Property.
ARTICLE XI.
Exchange Provisions
Seller acknowledges that Buyer may elect to engage in a tax-deferred
exchange ("Exchange") pursuant to Section 1031 of the Internal Revenue Code.
To effect this Exchange, Buyer may assign its rights in, and delegate its
duties under, this Agreement to an exchange accommodator which Buyer shall
determine. As an accommodation to Buyer, Seller agrees to cooperate with Buyer
in connection with the Exchange, including the execution of documents therefor,
provided the following terms and conditions are satisfied:
(a) Seller shall have no obligation to take title to any property in
connection with the Exchange, nor shall Seller have any liability to Buyer in
connection with any such property ("Exchange Property");
(b) Buyer shall be solely responsible, and Seller shall have no
responsibility whatsoever, for negotiating any and all agreements, escrow
instructions and other documents (collectively "Exchange Documents") with
respect to the Exchange Property, as well as for any and all investigations,
approvals and/or other actions required to be taken or permitted to be taken by
Buyer under the Exchange Documents;
(c) Seller shall in no way to be obligated to pay any escrow costs,
brokerage commissions, title charges, survey costs, recording costs or other
charges incurred with respect to any Exchange Property and/or the Exchange, and
Buyer shall reimburse Seller for any professional fees including, without
limitation, actual attorneys' fees which Seller may incur with respect thereto;
(d) In no way shall the Closing of this transaction be contingent upon or
otherwise subject to the consummation of the Exchange, and the escrow shall
timely close in accordance with the terms of this Agreement, notwithstanding
any failure, for any reason, of the parties to the Exchange to effect same;
(e) Buyer shall not be relieved of any obligations which would otherwise
survive the Closing by reason of effecting the Exchange contemplated herein,
and all such obligations of Buyer shall survive the Closing in the same fashion
as if the Exchange had not taken place;
(f) Seller shall not be required to make any representations or
warranties, or to assume any obligations, or to spend any sum or to incur any
personal liability whatsoever in connection with the Exchange;
(g) No representations, warranties, covenants and/or indemnification
obligations set forth in this Agreement shall be affected or limited by Buyer's
use of an exchange accommodator and shall survive the Exchange and shall
continue to inure from Buyer for the benefit of Seller. No provision of any
separate instruction or related instruction from Buyer, the exchange
accommodator and/or any other party shall be deemed to modify the terms of this
Agreement or any rights of Seller hereunder; and
(h) Buyer agrees to indemnify, protect, defend (with counsel chosen by
Seller) and hold harmless Seller from and against any and all claims, demands,
causes of action, liabilities, costs and expenses (including, without
limitation, actual attorneys fees) asserted against and/or incurred by Seller
in connection with the Exchange or attempted Exchange.
Seller makes absolutely no representations or warranties of any kind or
nature, express or implied, that tax-deferred exchange treatment is available
to Buyer with respect to the Exchange, or that such a transaction will qualify
in any respect for such treatment, and Seller shall incur no liability if the
Exchange fails to qualify for tax-deferred treatment for any reason. If Seller
defaults under the terms of this Agreement, then Seller shall be liable to
Buyer for only those damages which would have occurred if Buyer had not
included the Property in any Exchange. Specifically excluded from such damages
for which Seller would be liable, but not by way of limitation, are any
consequential damages Buyer may incur because of a loss of tax advantages, tax
deferral or other detrimental tax impacts upon Buyer caused by Seller's
default. Buyer hereby acknowledges and represents to Seller that Buyer is
relying solely and entirely upon the advice of Buyer's own attorneys and
consultants with respect to any and all aspects of any such Exchange. In no
event whatsoever shall the obligations of Buyer under this Agreement be
contingent upon the inclusion of this transaction and/or the Property as part
of any Exchange in which Buyer may become involved.
ARTICLE XII.
Miscellaneous
12.1 All notices, requests, demands or other communications required or
permitted under this Agreement shall be in writing and delivered personally, by
certified mail, return receipt requested, postage prepaid, by telecopy or other
facsimile transmission, or by overnight courier (such as Federal Express),
addressed as follows:
Seller: Pacific Life Insurance Company
700 Newport Center Drive,
Newport Beach, California 92660
Attention: John C. Mulvihill,
Vice President, Sales and Acquisitions
Lydia Kennedy, Director, Asset Management
Fax No: (714)760-9680
Copy to: Pacific Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
Attn: June E. Knuth, Esq.
Fax No: (714) 640-3706
Buyer: Arden Realty Limited Partnership
9100 Wilshire Boulevard
East Tower, Suite 700
Beverly Hills, California 90212
Attn: Richard S. Ziman
Telephone No: (310) 271-8600
Fax No: (310) 274-6218
Copy to: Jeffer, Mangels, Butler & Marmaro
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067
Attn: Scott M. Kalt, Esq.
Telephone No: (310) 785-5314
Fax No: (310) 203-0567
All Notices in accordance with the terms hereof shall be deemed given upon
actual receipt thereof whether delivered by first-class mail, postage prepaid,
personally, or by courier or messenger service, or facsimile transmission to
the numbers given above, provided electronic confirmation of such facsimile
transmission is received by the noticing party. Either party hereto may change
the address or facsimile number for receiving notices, requests, demands or
other communication by notice sent in accordance with the terms of this Section
12.1.
12.2 Buyer may not assign this Agreement or its rights and obligations
hereunder without the prior written consent of Seller, which Seller may
withhold in its sole and absolute discretion; provided, however, Buyer shall be
entitled to assign this Agreement, upon prompt notice to Seller but without
Seller's prior consent, to an affiliate of Buyer. For purposes of this Section
12.2, an "affiliate" of Buyer is an entity which controls Buyer, or is
controlled by or under common control with Buyer. Any assignment hereunder
will be subject to the terms and provisions of this Agreement; provided,
however, that upon such assignment such Assignee shall succeed to all of the
rights and obligations of Buyer hereunder, and agrees to execute all documents
and perform all obligations pursuant to this Agreement. Notwithstanding any
assignment of this Agreement, the Assignor shall not be relieved of its
obligations to complete this transaction and pay the Purchase Price to Seller
as provided for herein.
12.3 Each party agrees to execute any additional documents or supplemental
escrow instructions as may be reasonably necessary to comply with the terms of
this Agreement, provided that such instructions are not in conflict with the
terms hereof and that if a conflict exists, the provisions of this Agreement
shall prevail.
12.4 This is the entire agreement between Seller and Buyer pertaining to
the sale of the Property and supersedes any prior written or oral
understandings. Any amendment to this Agreement must be in writing. This
Agreement will be governed by the laws of the state in which the Property is
located.
12.5 The prevailing party in any litigation, including any appeal, arising
out of this Agreement will be entitled to its reasonable attorney's fees, costs
and expenses incurred in connection with the prosecution or defense of such
action.
12.6 All Exhibits referred to are attached to this Agreement and are
incorporated herein by reference.
12.7 In the event this Agreement is terminated by the default of Buyer or
Seller, any escrow termination fee or charges of Escrow Agent will be borne by
the defaulting party.
12.8 This Agreement may be executed in separate counterparts, each of
which will be deemed an original, and all of which together will constitute one
instrument.
12.9 Time is of the essence of this Agreement.
12.10 The heading, captions and titles used in this Agreement are for
convenience only and shall not be deemed in any way to limit or amplify the
terms and provisions of this Agreement.
12.11 If any date of significance hereunder falls upon a Saturday,
Sunday, or legal holiday such date will be deemed moved forward to the next day
which is not a Saturday, Sunday, or legal holiday. The terms "working day" or
"business day" shall mean days elapsed exclusive of Saturdays, Sunday, or legal
holidays.
12.12 This Agreement is not intended to confer any benefit upon, or
create any contractual right in, any person or entity other than the parties
hereto.
12.13 In the event this Agreement is not fully executed by Buyer and
Seller on or before November 5, 1997, this Agreement shall be null and void and
neither party shall have any liability to the other hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
SELLER: BUYER:
PACIFIC LIFE INSURANCE COMPANY ARDEN REALTY LIMITED PARTNERSHIP,
a California corporation a Maryland limited partnership
By: /s/ John C. Mulvihill By: ARDEN REALTY, INC.
Name: John Mulvihill a Maryland corporation
Title: Vice President Its: General Partner
By: Debra Cunningham By: /s/ Victor J. Coleman
Name: Debra Cunningham Victor J. Coleman
Title: Assistant Secretary President & COO
Dated November 4, 1997 Dated: November 4, 1997
Escrow Agent acknowledges receipt of a fully executed copy of this
Agreement, and by its signature hereby accepts and agrees that the provisions
of this Agreement, and any amendment thereto as may be executed by Buyer and
Seller, shall constitute instructions and control the deposit and disposition
of funds by the Escrow Agent hereunder.
ESCROW AGENT:
/s/ J. M. Moore
FIRST AMERICAN TITLE INSURANCE COMPANY
Title: A. V. President
Date: 11-5-97
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
To: First American Title Insurance Company Escrow No. 4971189
of Los Angeles ("Escrow Agent") Title Order Nos. 9722438-8, 9722417-8
520 North Central Avenue Title Officer: Anthony Rivera
Glendale, California 91203
Attn.: Tricia Pewthers
Telephone: (818) 242-5800
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW
INSTRUCTIONS ("Agreement") is made and entered into and is
effective as of the 12th day of November, 1997 (the "Effective
Date"), by and between THE MUTUAL LIFE INSURANCE COMPANY OF NEW
YORK, a New York mutual life insurance company ("Seller"), and
ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
("Buyer").
Recitals
1. Seller is the owner of the Property (as defined below).
2. Seller has agreed to sell the Property to Buyer, and Buyer
has agreed to purchase the Property from Seller, such purchase
and sale being made upon and subject to the terms and conditions
set forth in this Agreement.
Agreement
NOW, THEREFORE, in consideration of the foregoing recitals,
the mutual covenants set forth in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Buyer and Seller hereby agree as set
forth below.
2. Purchase and Sale of the Property. Seller agrees to sell,
assign, convey, and transfer to Buyer all of Seller's right,
title and interest in and to the following real and personal
property described in subsections (a) through (g) below
(collectively referred to herein as the "Property"), and Buyer
hereby agrees to purchase and accept the Property, and assume the
obligations in connection therewith, subject to and in accordance
with the terms and conditions contained in this Agreement:
(1) Land. Subject to general and special real estate taxes and
assessments, and all matters of record or apparent from an
inspection or survey, Seller's interest in that certain real
property located at 425 East Colorado Street, in the City of
Glendale, County of Los Angeles, State of California (the
AGlendale Land@), and 12301 Wilshire Blvd., in the City of Los
Angeles, County of Los Angeles, State of California (the
"Wilshire Land"), which real property is more particularly
described, respectively, on Exhibit "A-1" and Exhibit "A-2"
(collectively, the "Land").
(2) Improvements. Those certain fixtures and improvements
located on the Land and described on Exhibit "B-1" and Exhibit "B-
2" attached hereto (collectively, the "Improvements"), including
several commercial, retail and/or industrial buildings, parking
structures, driveways, hardscaping, and related improvements,
together with fixtures attached thereto, it being understood and
agreed, however, that Buyer shall have no right, title or
interest in or to any of such fixtures and improvements which are
the property of the tenants of the Property (the "Tenants") under
the Leases (as defined below). The Glendale Land and
Improvements thereon may be referred to herein as the Glendale
Property, and the Wilshire Land and the Improvements thereon may
be referred to as the Wilshire Property. The Land and the
Improvements may be collectively referred to herein as the "Real
Property."
(3) Personalty. That certain tangible personal property of
Seller which is located on or in the Land or the Improvements and
which is described on Exhibits "B-1" and Exhibit "B-2" attached
hereto (collectively, the "Personalty"), it being understood and
agreed, however, that Buyer shall have no right, title or
interest in or to (and the "Personalty" shall not include) (i)
any personal property on the Improvements which is the personal
property of the Tenants pursuant to the Leases, or (ii) any lap-
top computers which are the personal property of Seller and are
located in the on-site offices of the Real Property.
(4) Appurtenances. All of Seller's rights, privileges and
easements appurtenant to the Land, all development rights and air
rights relating to the Land and any and all easements,
rights-of-way and other appurtenances used in connection with the
beneficial use and enjoyment of the Land, but excluding all
water, water rights and water stock, and excluding minerals and
mineral rights of every kind (including oil, gas and other
hydrocarbon substances) on or under the Land.
(5) Leases. Seller's interest in all leases, subleases,
licenses, concessions, and other forms of agreement in effect as
of the Effective Date or entered into after the Effective Date,
and remaining in effect as of the Closing Date (as defined
below), granting to any party or parties the right of use or
occupancy of any portion of the Land and/or Improvements, and all
renewals, modifications, amendments, guarantees, and other
agreements affecting the same (together, the "Leases").
(6) Awards. All right, title and interest of Seller in and to
any unpaid awards for damages to the Land and/or Improvements
resulting from any taking in eminent domain or by reason of
change of grade of any street accruing after closing of the
purchase and sale pursuant to this Agreement.
(7) Intangible Property. Except the name of Seller or
affiliated entities, all of the interest of Seller in any
intangible property now or hereafter owned by Seller and used or
designed for use in connection with the Land, Improvements and/or
Personalty, and any contract or lease rights, licenses, permits,
certificates of occupancy, franchises, agreements, utility
contracts and agreements (including sewer and water line
agreements), telephone listings and numbers used by Seller at the
Real Property, unexpired claims, signs, trade names, logos,
trademarks and service marks arising from or related to the Real
Property (other than Seller's name or marks), warranties,
guaranties and sureties belonging to Seller, or other rights
relating to the ownership, development, construction, design, use
and operation of the Land and/or Improvements (together,
"Intangible Property"), so long as and to the extent that said
Intangible Property may be transferred or assigned, and is not
specifically excluded from the Bill of Sale (as defined below).
Notwithstanding anything to the contrary herein, Intangible
Property does not include (i) any refunds of taxes or assessments
which were paid by Seller or Seller's predecessor in interest,
prior to close of the purchase and sale pursuant hereto, or of
insurance premiums paid by Seller or Seller's predecessor-in-
interest and attributable to the period prior to the Closing Date
(without regard to when such refunds are received), (ii)
condemnation or other awards which represent refunds of amounts
paid by Seller or any predecessor-in-interest prior to the
Closing Date or awards for property damage (other than amounts to
be credited to Buyer pursuant to Section 13 of this Agreement) or
otherwise relating to the Property, (iii) any claims of Seller
existing as of the Closing Date against Tenants for delinquent
rents, to the extent not subsequently paid or credited to Seller,
or (iv) claims of Seller made pursuant to or arising in
connection with the litigation matters set forth on Exhibit "C"
attached hereto (the "Litigation Claims"); provided, however,
that Litigation Claims do not include any rents or other income
relating to the period after the Closing Date with respect to
Leases as to which the Tenant continues to occupy the leased
premises after the Closing Date.
3. Opening of Escrow and Deposit.
(1) General Instructions. First American Title Insurance
Company of Los Angeles is hereby designated as escrow holder
("Escrow Agent"), to act in accordance with this Agreement.
Escrow Agent's general conditions or provisions, which are
attached hereto as Exhibit "D", are incorporated by reference
herein (with the changes noted thereon); provided, however, that
in the event of any inconsistency between Exhibit "D" and any
other provisions of this Agreement, the provisions of this
Agreement shall control over the provisions of Exhibit "D."
Buyer and Seller shall each execute, deliver and be bound by such
further escrow instructions or other instruments as may be
reasonably requested by the other party or by Escrow Agent from
time to time, so long as the same are consistent with this
Agreement, and upon execution thereof by both Seller and Buyer,
such escrow instructions shall be deemed to be a material part of
this Agreement. Escrow Agent needs to be concerned only with
those provisions of this Agreement that instruct it to perform
specific acts or with respect to which escrow holders generally
and reasonably would be expected to act. Escrow Agent shall
comply, but shall have no liability whatsoever for complying,
with the unilateral instructions of only one party without the
consent of the other party hereto if expressly required to do so
in this Agreement.
(2) Opening of Escrow. Concurrently with its execution of this
Agreement, Buyer shall open an escrow with Escrow Agent (the
"Escrow") by delivering to Escrow (with a copy to Seller), an
executed copy of this Agreement, and a deposit in the form of
immediately available funds in the amount of Five Hundred
Thousand Dollars ($500,000.00) (such deposit, together with all
interest accrued thereon, is collectively referred to herein as
the "Initial Deposit"). Escrow Agent shall retain possession of
the Initial Deposit until delivery or return thereof is permitted
or required under this Agreement. The Initial Deposit shall be
deposited by Escrow Agent in an interest-bearing account with the
interest thereon to be disbursed with the Deposit in accordance
with the provisions hereof.
(3) Deposits. On or before 9:00 a.m. Pacific Standard Time
("PST") of the first business day after the date of expiration of
the Investigation Period (as defined below) without written
cancellation of the Escrow by Buyer, Buyer shall initiate a bank
wire to Escrow Agent in the form of immediately available funds,
in the additional amount of Five Hundred Thousand Dollars
($500,000.00) (such deposit, together with all interest accrued
thereon while in Escrow, is collectively referred to herein as
the "Additional Deposit," and together with the Initial Deposit,
the "Deposit"). Buyer understands, acknowledges and agrees that,
upon deposit of the Additional Deposit into Escrow, the entire
Deposit shall immediately become non-refundable (except upon (i)
Default (as defined below) by Seller or (ii) failure to occur of
any of the conditions set forth in subsection 7(a) below other
than as a result of the conduct or omissions of Buyer), shall
immediately be deemed to have been fully earned by Seller, and
shall be immediately delivered by Escrow Agent to Seller. If
Buyer provides Notice (as defined below) to Seller, during the
Investigation Period, of Buyer's cancellation of Escrow as a
result of information obtained by Buyer during the Investigation
Period, then Escrow Agent shall return the Initial Deposit to
Buyer, net only of Buyer's share of the costs and expenses of
Escrow and title. If the purchase and sale shall close pursuant
to this Agreement, the Deposit shall be credited against the
Purchase Price (as defined below) at the close of Escrow.
(4) Closing. The Escrow shall close, as evidenced by
recordation of a Grant Deed in accordance herewith (the
"Closing"), on a date mutually agreed to by the parties, but in
all events on or before Friday, December 5, 1997 at 5:00 p.m. PST
(the "Outside Closing Date"). If Buyer does not cancel the
Escrow during the Investigation Period as herein permitted, and
Escrow thereafter fails to close on or before the expiration of
the Outside Closing Date, for any reason, then (i) this Agreement
shall terminate and, except for provisions which expressly
survive a termination, neither party shall have any further
obligation to the other hereunder; and (ii) Escrow shall be
canceled and the Deposit shall be distributed to Seller;
provided, however, that if Escrow fails to close on or before the
Outside Closing Date due solely to a default by Seller or to a
failure to satisfy any of the conditions set forth in subsection
7(a) below other than as a result of the conduct or omission of
Buyer, then the Deposit shall be distributed to Buyer.
4. Purchase Price. The "Purchase Price" for the Property shall
be Thirty Million Eight Hundred Thousand Dollars ($30,800,000.00)
payable in immediately available funds upon Closing, and
otherwise in accordance with the terms and conditions contained
in this Agreement. Buyer understands and agrees that Buyer shall
not have any right to purchase either the Glendale Property or
the Wilshire Property unless Buyer shall concurrently purchase
both such properties pursuant to this Agreement.
5. Prorations. The following items shall be prorated as of the
date of Closing (the "Closing Date") and such prorations shall be
reflected on the settlement statements prepared by Escrow Agent
on the Closing Date and shall serve to adjust the Purchase Price.
Such prorations shall be made on the basis of a 365-day year, as
of 12:01 a.m. on the Closing Date.
(1) Rents.
(1) All rentals, receipts and other revenues from the Property,
including base rents, percentage rents and additional rents
(other than those referenced in Section 4(b) below) and the last
sentence of this Section 4(a)(i) (collectively, "Rents"), which
have been actually received by Seller and which are payments
under Leases for the period from and after the Closing Date,
shall be credited to Buyer, and Buyer shall be entitled to
collect all Rents which are delinquent or due on or after the
Closing Date. Notwithstanding the foregoing, and the other
provisions of this Section 4, Seller shall retain to the extent
received by Seller, and Buyer shall pay to Seller, if, when and
to the extent received by Buyer (A) any Rents paid by Medical
Data Exchange, for all or any portion of the months of November
and December, 1997, which Rent such Tenant has indicated it will
now agree to pay, pursuant to a Lease amendment to be executed
(in lieu of free rent previously attributable to Tenant's
occupancy during such months in 1997), and (B) any amounts paid
by Medical Data Exchange as reimbursement for tenant improvement
costs, to the extent that the actual cost of tenant improvements
exceeds the amount estimated by Seller for such work
(approximately $124,064.00).
(2) All Rents collected by Buyer after the Closing Date with
respect to each Lease for which Rent payments are delinquent at
Closing by not more than thirty (30) days, including without
limitation Rents and other amounts collected by Buyer pursuant to
the last sentence of Section 4(a)(i) above, and subject to
Seller=s retained right to sue therefor with respect to
delinquent Rents accruing prior to the Closing Date (or with
respect to Medical Data Exchange, prior to December 31, 1997), to
the extent not paid or credited to Seller, shall be credited and
paid by Buyer as follows: first to Seller for amounts due before
the Closing Date, but unpaid prior to the Closing Date, and
second to Buyer;
(3) All Rents collected by Buyer after the Closing Date with
respect to each Lease for which Rent payments are delinquent at
Closing by more than thirty (30) days shall (subject to Seller's
retained right to sue therefor with respect to delinquent Rents
accruing prior to the Closing Date, to the extent not paid or
credited to Seller) be credited and paid by Buyer as follows:
first to Buyer in an amount equal to amounts due as of the date
of collection but after the Closing Date, and second to Seller in
an amount equal to amounts due prior to the Closing Date and
unpaid as of the Closing Date;
(4) Notwithstanding the foregoing, with respect to any Lease for
which Rent is paid in arrears, Rent received by Buyer after the
Closing shall be credited to the Rent in arrears for the previous
month before it is credited to current month or advance Rents;
(5) Any delinquent Rents which, as so credited, relate in whole
or part to any period prior to the Closing Date shall be remitted
by Buyer to Seller when collected by Buyer (net only of Buyer's
proportionate share of any reasonable out-of-pocket collection
expenses actually incurred by Buyer); and
(6) In addition to the foregoing, any tenant improvements,
leasing commissions or other monetary obligations of the landlord
under Leases entered into after the Effective Date pursuant to
Section 6(c) below, which obligations have been paid by Seller,
shall be credited to Seller.
(2) Lease Operating Cost Pass-Throughs.
(1) All operating cost pass-throughs for taxes, utilities,
insurance, common area maintenance charges or other current
operating costs and cost of living escalation amounts ("CAM
Charges") (A) paid by Tenants and which have been actually
received by Seller and which are allocable to the period from and
after the Closing Date, shall be credited to Buyer, and (B)
payable by Tenants but unpaid as of the Closing Date and
attributable to the period before the Closing Date, shall
(subject to Seller=s retained right to sue Tenants for such
amounts) be subject to collection by Buyer after the Closing Date
and upon such collection shall be credited and paid by Buyer as
set forth herein below.
(2) All CAM Charges collected by Buyer after the Closing Date
with respect to each Lease for which such payments are delinquent
at Closing by not more than thirty (30) days shall (subject to
Seller's retained right to sue therefor with respect to
delinquent CAM Charges accruing prior to the Closing Date, to the
extent not paid or credited to Seller) be credited and paid by
Buyer as follows: first to Seller for amounts due before the
Closing Date, but unpaid prior to the Closing Date, and second to
Buyer;
(3) All CAM Charges collected by Buyer after the Closing Date
with respect to each Lease for which such payments are delinquent
at Closing by more than thirty (30) days shall (subject to
Seller's retained right to sue therefor with respect to
delinquent CAM Charges accruing prior to the Closing Date, to the
extent not paid or credited to Seller) be credited and paid by
Buyer as follows: first to Buyer in an amount equal to amounts
due as of the date of collection but after the Closing Date, and
second to Seller in an amount equal to amounts due prior to the
Closing Date and unpaid as of the Closing Date; and
(4) With respect to any Lease for which CAM Charges are paid in
arrears, CAM Charges received by Buyer after the Closing under
such Lease shall be credited to the CAM Charges in arrears before
the same are credited to current month or advance CAM Charges
under such Lease. Any delinquent CAM Charges which, as so
credited, relate in whole or part to any period prior to the
Closing Date shall be remitted by Buyer to Seller when collected
by Buyer (net only of Buyer's proportionate share of any
reasonable out-of-pocket collection expenses actually incurred by
Buyer).
(3) Property Taxes. All real property taxes for the current
(1997-98) tax year which are due and payable on or before the
Closing Date and all real property taxes for years prior thereto
shall be paid by Seller on or before the Closing Date, and
prorated as of the Closing Date for the 1997-98 tax year (on the
basis of the portion of the 1997-98 tax year which falls after
the Closing Date, and based upon the most recent assessment and
levy). Any adjustments to such taxes for the 1997-98 tax year
(with the exception of any readjustment as a result of the sale
contemplated hereby) shall be adjusted between Seller and Buyer
promptly upon receipt by Buyer of the actual bills for such
taxes. Seller shall be entitled to retain for its own account
any and all refunds (whenever received) of taxes and assessments
paid by Seller prior to the Closing Date, including any of the
same that shall result from pending property tax appeals, if any,
relating to the Property or the personalty associated therewith.
(4) Assessments. All assessments, special assessments and other
like charges imposed against the Property, or any part thereof,
by reason of roadways, utility lines, streets, alleys or other
improvements in existence, under construction or planned and
payable on or prior to the Closing Date shall be prorated to such
date. All such assessments, special assessments and other
charges affecting the Property and payable after the Closing Date
shall be the sole responsibility of Buyer. All pending refunds
of assessments paid by Seller prior to the Closing Date, if any,
shall be delivered to and retained by Seller.
(5) Security Deposits. All security and other deposits, if any,
including any accrued interest thereon if such interest is
required to be remitted to Tenants pursuant to their respective
Leases, received by Seller on or before the Closing Date on
behalf of any Tenants under any Leases (and not subject to
current or past application against Lease obligations pursuant to
the Leases), shall be credited to Buyer, and Escrow shall deliver
a notice to the Tenants, in the form of Exhibit "E-1" and Exhibit
"E-2" attached hereto, advising Tenants that: (i) Buyer has
purchased the Property, (ii) the security deposit, if any, has
been delivered to Buyer in connection with such sale, and (iii)
Seller is relieved of any and all liability for any such security
deposit.
(6) Utility Charges and Other Expenses. Prepaid water, sewer,
and other utility charges and similar Property expenses allocable
to the period from and after the Closing Date shall be credited
to Seller, and accrued water, sewer, and other utility charges
and similar Property expenses shall be credited to Buyer. After
the Closing, outside of Escrow, the parties shall make any
readjustments necessary based upon a final billing obtained by
Buyer or actual subsequent readings of utility meters respecting
that billing period in which the Closing occurred. All utility
security deposits, if any, shall either be retained by Seller
without adjustment or, at Seller's option, shall be delivered to
Buyer and credited to Seller.
(7) Service Contracts. Prepaid charges in connection with any
Service Contracts (as defined below) which Buyer assumes pursuant
hereto, and any licenses or permits issued in connection with the
Property (to the extent transferrable) shall be credited to
Seller. Accrued charges payable for the period up to the Closing
Date and unpaid as of the Closing in connection with such Service
Contracts, licenses or permits (to the extent transferrable)
shall be credited to Buyer.
(8) Tenant Allowances. Amounts due from Seller under the Leases
(other than Leases or Lease modifications approved by Buyer under
Section 6), but unpaid as of the Closing Date, shall be credited
to Buyer on the Closing Date, and at Closing, Buyer shall assume
the liability for payment thereof, to pay for:
(1) tenant improvements commenced prior to the Closing Date;
(2) Leasing commissions (excluding any commissions which may be
due after the Effective Date with respect to options, extensions,
expansions or renewals); and
(3) with respect to a Lease for Suite 410 at the Glendale
Property, which Seller anticipated leasing prior to the Effective
Date, Buyer shall be credited for an amount equal to (x)
$68,588.10 for leasing commissions, (y) $163,305.00 for tenant
improvements to be performed prior to the commencement of such
Lease, irrespective of when or whether such improvements
commence, and (z) $114,313.50, for an amount equal to six months
of rent which would have been due under such Lease, but offset by
an amount equal to $38,104.50 if Suite 710 at the Glendale
Property is leased prior to the Closing Date; each of which such
credits compensate Buyer for amounts which would have been the
obligation of Seller had such Lease been entered into prior to
the Effective Date.
Seller shall receive a credit for all amounts paid by Seller for
leasing commissions and tenant improvements pursuant to Section 6
below (including without limitation the Lease to MSI
Entertainment, Inc. described therein). Seller shall also
deliver to Buyer any tenant improvement funds held by Seller as
of the Closing Date with respect to uncompleted tenant
improvements or which are subject to refund to Tenants and Buyer
shall assume Seller's liability to provide such tenant
improvements and make such refunds. In addition to the
foregoing, an amount equal to the value of "free rent," if any,
specified in the Leases for the one (1) year period commencing on
the Closing Date (exclusive of any Leases or Lease modifications
approved by Buyer under Section 6), to the extent the existence
of such free rent was not disclosed to Buyer in the offering
circular or pursuant to other materials delivered to Buyer on or
before the Effective Date, shall be credited to Buyer on the
Closing Date, by multiplying the number of months of free rent
with respect to each particular Lease during the one (1) year
period following the Closing Date, by the base monthly rental
rate payable under that Lease in the first month in which rent is
payable. On or before 9:00 a.m. PST on November 14, 1997, Buyer
shall deliver to Seller a list of Leases as to which free rent is
due within the specified period and the amounts of free rent due
as to each such Lease (the "Free Rent List"). Seller shall
deliver to Buyer a Notice specifying any exceptions (based upon
correctness or prior disclosure to Buyer) on or before 9:00 a.m.
PST on November 21, 1997. If Seller's Notice is not satisfactory
to Buyer, Buyer shall cancel the Escrow in accordance with
Section 5(c) or proceed to Close and waive any objections to
Seller's Notice. If Seller fails to deliver timely Notice, the
Free Rent List shall be deemed to be correct.
If any of the prorations described in this Section 4 cannot
be calculated accurately on the Closing Date, then the same shall
be calculated as soon as reasonably possible thereafter and
either party owing the other party a sum of money based on such
subsequent prorations shall promptly pay said sum to the other
party. If either party owing funds to the other after the
Closing Date pursuant to this Section does not remit them within
thirty (30) days after demand therefor (which demand shall also
include invoices or other appropriate documentation in support
thereof), such funds shall thereafter bear interest at a "Default
Rate" equal to five percent (5%) above the highest rate as
announced from time to time by Chase Manhattan Bank, N.A. at its
principal office in New York City as its "prime rate," as the
same shall fluctuate from day to day, or, if lesser, the maximum
rate permitted by law.
6. Due Diligence Investigation Period.
(1) Due Diligence Materials. Within seven (7) days after the
opening of Escrow (the "Diligence Date"), without any
representation or warranty as to accuracy or completeness, and
only to the extent within the physical possession of Seller,
Seller shall either (at Seller's option) deliver to Buyer or make
available for inspection (and copying) by Buyer at Buyer's
expense, at the Property and/or the offices of Seller (except
that the items listed in (i) below shall be delivered by Seller
to Buyer), the following items relating to the Property:
(1) Preliminary title reports or commitments issued by First
American Title Insurance Company ("Title Company"), dated within
ninety (90) days of the Effective Date (the "Preliminary
Report"), relating to the Glendale Property and the Wilshire
Property which Buyer may use to obtain, directly from the Title
Company, copies of those documents referenced as exceptions in
the Preliminary Report, so that, to the extent Buyer wishes to do
so, it shall be able to review all such documents;
(2) The current Tenants' Leases, including any and all
amendments thereto; Service Contracts; maintenance records;
copies of current utility bills (to the extent received); copies
of architectural plans and "as-built" drawings (if any) for the
buildings (which Buyer understands do not necessarily reflect the
present state of the buildings); building permits, certificates
of occupancy, and licenses pertaining to the Property to the
extent they remain in effect; copies of any written warranties
relating to the Personalty; copies of insurance claim reports, if
any; and Seller's Property operating statements for calendar
years 1995 and 1996 and monthly operating statements for January
1997 through September 1997;
(3) Copies of all real property tax and assessment bills
received by Seller for the 1996-97 and 1997-98 tax years;
(4) That certain Phase I Environmental Survey prepared by
Woodward & Clyde dated August 3, 1993 and a Phase II report
prepared by the same consultant dated August 6, 1993, both with
respect to the Glendale Property;
(5) That certain Americans With Disabilities Act study prepared
by Palazzolo and Company dated February 4, 1994, and that certain
Property Conditions Assessment Report study prepared by Building
Diagnostic Group dated May 30, 1995, both with respect to the
Glendale Property;
(6) A Seismic Study dated August 2, 1994, and prepared by
Englekirk & Sabol, with respect to the Wilshire Property;
(7) An Environmental Site Assessment dated March 1994, and
prepared by Woodward & Clyde, with respect to the Wilshire
Property;
(8) A Seismic Report dated September 1994, and prepared by
Woodward & Clyde, with respect to the Wilshire Property;
(9) Seismic Retrofit Plans dated November 1994, and prepared by
Englekirk & Sabol, with respect to the Wilshire Property; and
(10) A Letter dated September 15, 1997 from Englekirk & Sabol,
with respect to the Wilshire Property.
(2) ALTA Survey. In the event that Buyer determines that it
desires to obtain an American Land Title Association survey with
respect to the Property (the "Survey"), Buyer may obtain such a
Survey during the Investigation Period (as defined below), at
Buyer's sole cost and expense; provided, however, that if Buyer
fails to obtain the Survey prior to the end of the Investigation
Period, Buyer must either cancel Escrow or proceed to purchase
the Property based solely on Title Company's agreement to provide
standard title insurance coverage (with exceptions for any items
a survey would disclose and for any items disclosed by a Survey
obtained after the end of the Investigation Period). Without
limiting the generality of the foregoing, Buyer acknowledges and
agrees that Buyer's failure to obtain a Survey prior to the end
of the Investigation Period shall not be deemed a default
hereunder or a failure of a condition to Buyer's obligation to
Close, but Buyer's delay in obtaining the Survey shall not extend
the Investigation Period or the Outside Closing Date, and, to the
extent any items are disclosed to Buyer in a Survey delivered to
Buyer after the end of the Investigation Period, such items shall
be deemed "Permitted Exceptions" (as defined below).
(3) Investigation Period. Beginning upon the date of Buyer's
and Seller's execution and delivery of the Entry Permit (as
defined below), and terminating as of 12:00 noon PST on Monday,
November 24, 1997 (the "Investigation Period"), Buyer may,
subject to the limitations set forth in this Agreement and in the
Entry Permit, investigate any and all aspects of the Property.
To the extent Buyer is entitled to investigate particular matters
during the Investigation Period, Seller, at no cost or expense to
Seller, shall reasonably cooperate with Buyer to the extent
Seller's cooperation is required for Buyer to obtain public
information pertaining to the Property from governmental
agencies. If, in Buyer's sole discretion, Buyer disapproves of
any aspect of the Property, Buyer may cancel the Escrow by Notice
to Seller delivered to Seller on or before 5:00 p.m. PST on the
last day of the Investigation Period. If Buyer does not timely
cancel Escrow as set forth in the above sentence, Buyer shall be
unconditionally obligated to purchase both the Glendale Property
and the Wilshire Property without any contingencies (other than
Section 7(a) conditions precedent). Upon termination of the
Investigation Period without timely cancellation of Escrow, the
Deposit shall be non-refundable in favor of Seller, and shall be
released to Seller by Escrow Agent without further act of Buyer.
If Escrow is canceled during the Investigation Period in
accordance herewith, Buyer shall deliver to Seller, for retention
by Seller, all information, studies, and reports obtained or made
by Buyer or its agents relating to the Property. In addition, if
Escrow is canceled during the Investigation Period in accordance
herewith, Seller shall instruct Escrow Agent to refund the
Deposit to Buyer, net only of Buyer's share of costs and expenses
of the Escrow and title. The inspection, investigation and
survey of the Land and other portions of the Property by Buyer
shall be in lieu of any notice or disclosure required by Section
25359.7 of the California Health and Safety Code, or by any
provision of the Civil Code or pursuant to any other applicable
law, and Buyer hereby waives any requirement for a notice
pursuant to those provisions. Buyer shall be deemed to have
approved all soil and other physical conditions pertaining to the
Property unless it cancels Escrow in accordance herewith on or
before the end of the Investigation Period. Notwithstanding
anything to the contrary herein, if Buyer desires to undertake
any testing, investigation or inspection of the Land with respect
to the presence of hazardous or toxic substances or any substance
which requires investigation or remediation under any federal,
state or local statute, regulation, ordinance, order, action or
policy, Buyer shall perform such inspections, investigations or
tests on or before the expiration of the Investigation Period,
using only environmental engineers or consultants from the
approved list of engineers and consultants to be provided by Seller.
(4) Title. Not later than 5:00 PST on Monday, November 17,
1997, Buyer may provide Notice to Seller that Buyer disapproves
of one or more matters affecting title to the Property (the
"Title Notice Date") and request that Seller correct such
deficiency. All matters affecting title to the Property which
are not disapproved by Buyer by Notice to Seller on or before the
Title Notice Date, together with all matters consented to by
Buyer or created by Buyer or its agents, or by a tenant (without
Seller's written consent), shall be deemed to be "Permitted
Exceptions" for the purposes of this Agreement; provided,
however, that Buyer shall have the right to further disapprove
title exceptions up until the date which is four (4) days prior
to the expiration of the Investigation Period, if and to the
extent a Survey obtained by Seller shows exceptions unacceptable
to Buyer and not disclosed in the previously approved Permitted
Exceptions. In the event Seller receives no such Notice, all
matters affecting title to the Property shall be deemed Permitted
Exceptions. If Buyer timely and properly objects to a title
matter, Seller shall, in the exercise of its sole discretion, at
least one (1) day prior to the end of the Investigation Period,
advise Buyer whether Seller intends to correct the title
objection or provide endorsement coverage with respect thereto
prior to the close of Escrow. If Seller elects not to correct
the deficiency or provide endorsement coverage with respect
thereto, or if Seller provides no Notice to Buyer of its intent
with respect thereto (in which event Seller shall be deemed to
have elected not to correct the deficiency or provide endorsement
coverage with respect thereto), Buyer shall be required, either
to waive its objection or cancel Escrow by Notice delivered to
Seller and Escrow Agent on or before the expiration of the
Investigation Period. Subject to any deficiency which Seller has
agreed to correct or endorse prior to the close of Escrow, if
Buyer does not cancel Escrow during the Investigation Period,
Buyer shall be deemed to have waived its previous objections to
matters affecting title to the Property, which objections shall
thereafter be deemed included in the "Permitted Exceptions."
Notwithstanding the foregoing, Seller agrees to use its
reasonable efforts to cause the removal from the Title Policy (by
removal, indemnity or endorsement), prior to Closing, of all
monetary encumbrances recorded against the Real Property after
the end of the Investigation Period, other than (i) liens
recorded as a result of acts or omissions of Buyer, and (ii)
liens recorded as a result of acts or omissions of Tenants.
(5) Title Commitment. On or before the expiration of the
Investigation Period, Buyer shall have obtained from Title
Company Commitments to issue, in a form acceptable to Buyer, a
standard coverage policy of title insurance (collectively, the
"Title Policy") dated as of the Closing Date, with respect to the
Glendale Property and the Wilshire Property, in an amount which,
in the aggregate, is equal to the amount of the Purchase Price,
showing fee title to, respectively, the Glendale Property and the
Wilshire Property vested in Buyer, subject only to the Permitted
Exceptions, and with such endorsements and such exclusions as
shall be acceptable to Buyer (each, a "Commitment"). If Buyer
fails to obtain the Commitments, Buyer shall be required to close
Escrow (subject only to the conditions in Section 7(a))
notwithstanding that Buyer may not be able to obtain, thereafter,
a Title Policy in a form acceptable to Buyer with respect to each
of the Glendale Property and the Wilshire Property.
(6) Buyer's Right of Entry. Prior to the Effective Date, Buyer
and Seller have entered into that certain Entry Permit shown on
Exhibit "F" attached hereto ("Entry Permit"), and shall act in
accordance with the terms of that Entry Permit, subject, however,
to the more specific limitations set forth in this Agreement.
Buyer shall have the right to enter the Property prior to the end
of the Investigation Period, to conduct, at Buyer's cost, expense
and liability, the following studies or inspections: (i) a market
and neighborhood analysis; (ii) a complete financial analysis of
the Property; (iii) subject to the rights of Tenant, physical
inspections and structural and seismic analyses of the
Improvements; (iv) soils, geology and environmental studies; and
(iv) an architectural inspection of the Property. In addition,
Buyer may enter the Property, subject to the Entry Permit through
the Closing Date with the prior written consent of Seller (which
consent shall not be unreasonably delayed or denied), in
connection with preparation for transfer of the Property to Buyer
(but not to conduct continuing diligence after expiration of the
Investigation Period), for purposes such as obtaining access to
the books and records of Seller made available to Buyer pursuant
to Section 5(a) above, in connection with audits by Buyer's
auditors, and meeting with on-site staff to effect an orderly
transition of management following the Closing Date.
7. Limitation on Leasing. While this Agreement is in effect,
and so long as Buyer is not in default hereunder, Seller shall
not modify any of the Leases or enter into any new Leases after
the Effective Date without the prior written consent of Buyer,
which shall not be unreasonably withheld. Such consent shall be
conclusively presumed to be granted two (2) business days after a
copy of such proposed new Lease or Lease modification is
delivered to Buyer, unless Buyer objects in writing, listing the
specific and reasonable basis for such objection, by Notice to
Seller within such period. As to all such Leases or Lease
modifications entered into after the Effective Date (unless Buyer
timely and properly objects as set forth above), Buyer hereby
expressly assumes all obligations of the landlord under such
Leases, including obligations with respect to tenant
improvements, leasing commissions and free rent or other rent
concessions, whether such obligations are payable prior or
subsequent to the Closing Date. In addition to the foregoing,
Buyer assumes all such obligations with respect to a Lease
entered into by and between Seller and MSI Entertainment, Inc.
with respect to Suite 402 at the Wilshire Property,
notwithstanding that such Lease was entered into prior to the
Effective Date, including without limitation leasing commissions
due in connection with entering into such Lease; provided,
however, that Buyer shall be responsible for leasing commissions
in the amount of $13,090.64, and Seller shall be responsible for
any leasing commissions in excess of that amount. Except with
respect to entering into new Leases and Lease modifications,
Seller shall retain all of its rights to operate the Property in
the ordinary course of business prior to the Closing Date,
including taking legal action against Tenants in default under
their Leases, and Buyer shall cooperate (at no cost to Buyer)
with Seller's prosecution of such actions to completion following
the Closing. Notwithstanding the foregoing, prior to delivering a
Tenant notice under Code of Civil Procedure '1161, et seq.,
Seller shall deliver a Notice to Buyer specifying the nature of
the default and the amount to be paid or other actions required
to cure the default. If Buyer fails to deliver Notice to Seller
within three (3) days of Seller's Notice, pursuant to which Buyer
agrees to treat such Lease as a Lease subject to the provisions
of Sections 4(a)(ii) and 4(b)(ii) (so as to apply amounts
received post-closing first to delinquent amounts which accrued
pre-closing), then Seller may proceed to exercise its rights and
remedies against such Tenant.
8. Conditions Precedent to Closing.
(1) Buyer's Conditions. The closing of the purchase of the
Property on the Closing Date and Buyer's obligation to acquire
the Property shall, in addition to any other conditions set forth
herein, be conditional and contingent upon satisfaction, or
waiver by Buyer, of all of the below listed conditions:
(1) Personal Property. The Personalty shall consist of those
items described on Exhibit "B-1" hereto with respect to the
Glendale Property and Exhibit "B-2," with respect to the Wilshire
Property, subject only to changes relative to use and consumption
thereof during the ordinary course of business while this
Agreement is in effect;
(2) Compliance with Agreement. Seller shall have substantially
performed and complied with all of its covenants and conditions
contained in this Agreement;
(3) Accuracy of Representations and Warranties. The
representations and warranties of Seller set forth in this
Agreement shall be confirmed by Seller in writing as materially
true and correct as of the Closing Date;
(4) Title. No matters shall have been placed of record after
expiration of the Investigation Period, and remain of record as
of the Closing Date, other than mechanics and materialmen liens,
and other liens, placed of record (i) in connection with acts or
omissions of Tenants or work performed by or for Tenants, and not
financed by Seller, and (ii) as a result of acts or omissions of
Buyer, which matters the Title Company intends to include as an
exception to the Title Policy;
(5) Casualty or Condemnation. No casualty or condemnation has
occurred pursuant to which Buyer has elected to terminate the
Agreement in accordance with Section 13 below; and
(6) Estoppels. Seller shall have delivered to Buyer prior to
the Closing Date, Tenant estoppels, executed within sixty (60)
days of the Closing Date and in the form of Exhibit "G-1" (with
respect to the Glendale Property Leases), and Exhibit "G-2" with
respect to the Wilshire Property Leases, either directly to the
benefit of Buyer or assigned by Seller to Buyer, and without any
material exceptions noted thereon by the applicable Tenant except
for Permitted Estoppel Exceptions (as defined below) ("Tenant
Estoppels") from (i) Tenants leasing, in the aggregate, as of the
Effective Date, not less than seventy percent (70%) of the total
leased space in each of the Glendale Property and the Wilshire
Property, and (ii) Tenants leasing, in the aggregate, as of the
Effective Date, more than 3500 square feet of net rentable area
in each of the Glendale Property and the Wilshire Property (it
being understood and agreed that Leases entered into after the
Effective Date and approved or deemed approved by Buyer shall be
deemed to have approved Tenant Estoppels); provided, however,
that, with respect to one or more particular premises in the
Property, Seller may, in lieu of delivering to Buyer a Tenant
Estoppel to meet such condition, deliver a "Seller's Estoppel"
with respect to such leased space, in the form of Exhibit "G-3"
attached hereto, subject only to Permitted Estoppel Exceptions;
provided, further, however, that in the event that Seller
thereafter delivers a Tenant Estoppel to Buyer with respect to
the same Lease (either before or after the Closing Date), then
Seller=s Estoppel shall be of no force and effect with respect to
the Lease covered by such Tenant Estoppel, if and to the extent
that the Tenant Estoppel is consistent with the previously
delivered Seller's Estoppel. As used herein, "Permitted Estoppel
Exceptions" means all of the following: (x) a Tenant's failure or
refusal to provide the bracketed paragraphs on Exhibit "G-1" with
respect to the Glendale Property (such that Seller shall deliver,
to all Tenants at the Glendale Property, the form of Tenant
Estoppel on Exhibit "G-1" including such paragraphs, but if one
or more Tenants only deliver a Tenant Estoppel with such
paragraphs omitted or stricken, such a Tenant Estoppel shall
nevertheless be deemed to be a conforming Tenant Estoppel;
provided, however, that if Paragraph 14 (as shown on Exhibit AG-
1@) is omitted or stricken, Seller shall be entitled to satisfy
the estoppel requirement by delivering a Seller's Estoppel
acknowledging that Buyer and its potential lenders may rely on
the Tenant Estoppel); (y) a Wilshire Property Tenant's failure to
include (after Seller's delivery to such Tenant the Tenant
Estoppel in the form of Tenant Estoppel on Exhibit "G-2"),
Paragraphs 10 or 11 of Exhibit "G-2" with respect to the Wilshire
Property; and (z) a Tenant's disclosure of information (i)
consistent with the Lease of the Tenant, or inconsistent with
such Lease in an immaterial respect, or (ii) known to or made
available to Buyer prior to expiration of the Investigation
Period in connection with Buyer's review of materials pursuant to
Section 5 above.
(2) Seller's Conditions. The closing of the purchase of the
Property on the Closing Date and Seller's obligation to sell and
convey the Property shall, in addition to any other conditions
set forth herein, be conditional and contingent upon
satisfaction, or waiver by Seller, of each and all of the below
listed conditions:
(1) Compliance with Agreement. Buyer shall have substantially
performed and complied with all of its covenants and conditions
contained in this Agreement, and shall have delivered all
documents required to be delivered by Buyer pursuant hereto to
effect a concurrent purchase of both the Glendale Property and
the Wilshire Property in accordance herewith;
(2) Accuracy of Representations and Warranties. All
representations and warranties of Buyer contained in or made
pursuant to this Agreement shall be confirmed by Buyer in writing
as true and correct as of the Closing Date;
(3) Title. The condition precedent set forth in Section
7(a)(iv) shall have been satisfied.
9. Closing Documents. On or before the Closing Date, Seller
and Buyer shall deliver to Escrow Agent the following fully-
executed documents and/or items, acknowledged where appropriate
(together referred to herein as the "Closing Documents"):
(1) Deed. Two Grant Deeds, in the form attached as Exhibit "H-
1" (relating to the Glendale Property) and Exhibit "H-2"
(relating to the Wilshire Property) (collectively, the "Deeds"),
executed by and notarized on behalf of Seller, and conveying
Seller=s interest in the Land and Improvements to Buyer, subject
to general and special real estate taxes and assessments, and all
matters of record or apparent from an inspection or survey;
(2) Bill of Sale, Assignment and Assumption Agreement. A Bill
of Sale, Assignment and Assumption agreement to be executed and
delivered by Seller and Buyer, in the form attached hereto as
Exhibit "I-1" relating to the Glendale Property and Exhibit "I-2"
relating to the Wilshire Property (collectively, the "Bill of
Sale") (i) conveying to Buyer title to the Personalty, (ii)
assigning to Buyer Seller's interest in all Leases and providing
for assumption thereof by Buyer, (iii) assigning to Buyer,
Seller's interest in all assignable, written or oral service,
maintenance, construction, parking, brokerage, leasing
commission, advertising, employment, operating or other
contracts, arrangements or agreements affecting the Property,
including any third party management agreements or contracts (but
not any management agreement or management contract, or leasing
agreement with respect to the entire Property, entered into by
ARES, Inc. or any other affiliate of Seller), and any agreements
pursuant to which goods, services, supplies or any other items
whatsoever are furnished and/or to be furnished in connection
with the Property, or the repair, maintenance or operation of the
Property or any portion or component thereof ("Service
Contracts"), and providing for assumption thereof by Buyer, and
(iv) assigning to Buyer all of Seller's interest in the
Intangible Property, together with originals of all Intangible
Property (if applicable) in each case without representation by
Seller as to assignability or other matters (except to the extent
expressly represented and warranted by Seller herein in Section
10 below).
(3) Non-Foreign Status Affidavit. Seller shall deliver an
Affidavit of Non-Foreign Status in the form of Exhibit "J"
attached hereto, together with a State of California FTB 590RE
form.
(4) Other Documents. Buyer and Seller shall deliver such other
documents as shall be reasonably required to transfer or assign
the Property to Buyer, and provide for assumption of liabilities
by Buyer as provided herein.
10. Closing.
(1) Closing Date. The Closing Date shall be on a business day
as agreed to by Seller and Buyer, but in all events shall be on a
date no later than the Outside Closing Date, unless this date is
mutually extended in writing by Seller and Buyer in the exercise
of their respective sole discretion.
(2) Time and Place. The Closing shall take place through Escrow
on the Closing Date at the offices of Escrow Agent.
(3) Payment of Purchase Price. Buyer shall deliver to Escrow at
least one (1) business day before the Closing Date immediately
available funds in the amount of the Purchase Price plus any
prorations, costs and expenses hereunder payable by Buyer, and
less the amount of the Deposit (which shall have been delivered
to Seller on or before the day after the expiration of the
Investigation Period). The amount of the Deposit shall be
credited against the Purchase Price upon Closing.
(4) Possession. Possession of the Property shall be delivered
to Buyer on the Closing Date, subject only to the rights of
Tenants under the Leases and matters of record or apparent by
inspection or survey of the Property. At Closing, Seller will
make available to Buyer at the Real Property all keys (identified
as to suite), Personalty, and originals or true and correct
copies of all plans and specifications, manuals, warranties and
operating logs for the Real Property and other operating and
management documents not previously delivered to Buyer and in
Seller's possession or control.
(5) Closing Costs. Seller shall pay at Closing the premium for
the standard coverage policy of title insurance, documentary
transfer fees and one-half of the escrow and recording fees.
Buyer shall pay the premium for the extended coverage policy of
title insurance and one-half of the escrow and recording fees.
Seller and Buyer shall each be responsible for paying their
respective attorneys' fees and costs, if any.
(6) Settlement Statement and Disbursement Ledger. Escrow Agent
shall prepare and deliver to the parties on the Closing Date a
correct Settlement Statement and Cash Receipts and Disbursements Ledger.
(7) Title Policy. Escrow Agent shall require Title Company to
deliver the Title Policy to Buyer (with a copy to Seller) within
fifteen (15) business days following the Closing Date.
(8) Bill of Sale. On the Closing Date, Seller shall assign to
Buyer, the Personalty and the Intangible Property, with the
exception of items of Personalty excluded pursuant to the Bill of
Sale, and Seller shall assign to Buyer and Buyer shall assume,
Seller's rights and obligations under, the Leases and Service
Contracts, in accordance with and as specified in the Bill of Sale.
(9) Audit Letter. On or before the Closing Date, at Buyer's
request, Seller shall deliver a letter to Buyer's auditors, in
the form of Exhibit "K" attached hereto.
11. Representations and Warranties of Seller. Seller represents
and warrants to Buyer, as of the Effective Date and as of the
Closing Date, as follows:
(1) Status of and Execution by Seller. Seller is (i) in good
standing and validly existing as a New York corporation; and (ii)
duly authorized, qualified and licensed to do all things required
of it under or in connection with this Agreement, including to
execute, deliver and perform this Agreement. All agreements,
instruments, and documents herein provided to be executed by
Seller will be duly executed by and binding upon Seller as of the
Closing.
(2) Leases. The Lease Schedule attached hereto as Exhibit "L"
correctly lists, as of the Effective Date, all of the Leases and
the base rental currently required to be paid with respect
thereto. Except as disclosed on Exhibit "L," the Leases are not
in monetary default as of the Effective Date, and Seller shall
have, on or before the Diligence Date, made available to Buyer
true and accurate copies of the Leases in effect as of the
Effective Date. Notwithstanding anything to the contrary in this
Agreement, to the extent that the foregoing statements are
confirmed by Tenants in Tenant Estoppels delivered to Buyer (or
in other documents made available to Buyer), Seller shall have no
obligation or liability to Buyer with respect to such statements
regarding such Leases.
(3) Service Contracts. There are no Service Contracts which are
not terminable on thirty (30) (or fewer) days' notice, and
entered into by Seller with respect to the Property, which remain
in effect, except those listed on Exhibit "M" attached hereto.
(4) Mechanics Liens. To Seller's knowledge, there are no
mechanics liens outstanding with respect to the Property as a
result of work performed thereon by Seller, or contractors or
agents of Seller, except any of the same as shall be removed (or
endorsed over by Title Company) as of the Closing Date.
(5) Financial Statements. To Seller's knowledge, there are no
materially incorrect income or expense figures in any financial
statements prepared by or for Seller and made available to Buyer
with respect to the Property, except as may be corrected in other
financial or other statements or documents made available to
Buyer in connection with Buyer's due diligence, and Seller
acknowledges and agrees that Buyer, at Buyer's sole cost and
expense, may request its auditors to review such statements in
connection with its purchase of the Property.
(6) Pending Actions. To Seller's knowledge, except as set forth
on Exhibit "C," there is no litigation, claim, administrative
action, arbitration or other proceeding now pending or threatened
in writing against Seller relating to the Property, which would
materially and adversely affect the use, operation or
construction of the Property, and which is not a matter of public
record.
(7) No Violations. To Seller's knowledge, Seller has received
no written notice of violations of City, County, State, Federal,
building, fire or health codes, zoning codes or other regulations
or ordinances, filed or issued against the Property by any
government authority, which violations remain outstanding and
which would materially and adversely affect the use of the Property.
As used in this Agreement, the term "to Seller's knowledge"
shall mean to Seller's actual present knowledge, as determined by
the state of knowledge of the individual who acts as the Seller's
asset manager of the Property as of the Effective Date (or, with
respect to Section 10(g) only, as determined by the state of
knowledge of Steve Randall and Carol Kenney, with respect to the
Glendale Property and, of Steve Randall, Carol Kenney and Eric
Van't Hof, with respect to the Wilshire Property), without
independent investigation or independent review of Seller's
files. Seller shall not have any liability for breach of its
representations and warranties herein if, as of the Closing Date,
the representations and warranties set forth above shall not be
true, but Buyer has knowledge of such facts prior to the Closing
and proceeds to close Escrow notwithstanding such facts. Seller
shall be entitled to state in writing prior to Closing exceptions
to the representations, warranties, and covenants set forth
above, in which case Buyer may (i) terminate this Agreement if
such exceptions are not reasonably acceptable, in which event the
Deposit (less Buyer=s share of Escrow and Closing costs) shall be
returned to Buyer, or (ii) elect to close Escrow notwithstanding
such exceptions. In either event, Seller shall have no further
obligation or liability to Buyer. The representations and
warranties of Seller set forth in this Agreement shall survive
for one (1) year after the close of Escrow.
12. Representations and Warranties of Buyer. Buyer represents
and warrants to Seller, as of the Effective Date and as of the
Closing Date, as follows:
(1) Status of and Execution by Buyer. Buyer is now and on the
Closing Date will be: (i) duly formed and validly existing as a
Maryland limited partnership; (ii) duly authorized, qualified and
licensed under the laws of the State of California to conduct
business and to acquire the Property; and (iii) duly authorized,
qualified and licensed to do all things required of it under or
in connection with this Agreement, including to execute, deliver
and perform this Agreement. All agreements, instruments, and
documents herein provided to be executed by Buyer will be duly
executed by and binding upon Buyer as of the Closing.
(2) No Violations. Neither this Agreement nor any of the
agreements, instruments and documents herein provided to be
executed or to be caused to be executed by Buyer violate or will
violate any provision of any agreement, law, regulation or
judicial order to which Buyer is a party or by which it is bound.
The representations and warranties of Buyer contained in
this Agreement shall survive for one (1) year after the close of Escrow.
13. Condition of the Property.
(1) AS-IS. Buyer acknowledges that Seller is selling, and Buyer
shall accept, the Property in an "AS IS" condition without any
representation or warranty whatsoever by Seller relating to the
Property, with the exception of the express, limited
representations and warranties set forth in Section 10 above.
Buyer acknowledges that it is a sophisticated real estate
investor who shall have had, as of the Closing Date, open access
to, and sufficient time to review, all information, documents,
agreements, studies and tests relating to the Property that Buyer
elects to conduct, and conduct a complete and thorough
inspection, analysis and evaluation of the Property, including
without limitation investigation of structural, seismic, zoning,
land use and environmental issues, if any, and further
acknowledges that Buyer shall conduct such tests and
investigations, if at all, prior to expiration of the
Investigation Period, and that Buyer shall receive and review
such information as Buyer shall require in the course of its
investigation. Buyer shall undertake such investigation as Buyer
shall deem necessary or desirable to make Buyer fully aware of
the condition of the Property as well as all facts, circumstances
and information which may affect the use and operation of the
Property, and Buyer covenants and warrants to Seller that Buyer
shall rely solely on Buyer's own due diligence investigation in
determining to purchase the Property.
(2) Release. Effective as of the Closing Date, Buyer, on behalf
of itself, its officers, directors and its and their respective
successors, shall, and by the execution of this Agreement, hereby
does, forever release Seller, its officers, directors, agents and
employees, and its and their respective successors, of and from
any and all losses, liabilities, damages, claims, demands, causes
of action, costs and expenses, whether known or unknown, arising
out of or in any way connected with the Property, including the
condition of title to the Property (and Seller's interest in and
ownership thereof) and the environmental and structural condition
of the Property (herein, "Losses"). Buyer shall, upon the
Closing, and, by the execution of this Agreement, hereby does,
forever release Seller of and from any environmental claims and
causes of action existing now or hereafter created or enacted,
whether at common law or by federal, state, county, or municipal
law or ordinance. Buyer agrees never to commence, aid in any
way, or prosecute against Seller, its officers, directors, agents
or employees or its and their respective successors, any action
or other proceeding based upon any Losses. The foregoing release
shall not be deemed to release any claim of Buyer for Seller=s
breach of its representations and warranties set forth in Section
10 above (subject to the limitation on the survival of such
representations and warranties as set forth in Section 10), nor
any claim of Buyer for damages resulting from the untruth of any
matter which Seller certifies to be true in any Seller's Estoppel
delivered to Buyer in connection with this Agreement, which
Seller's Estoppel remains in effect as of the date Buyer brings
such claim.
(3) Waiver. Buyer expressly waives any rights or benefits
available to it with respect to the foregoing release under any
provision of applicable law which generally provides that a
general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time the release
is agreed to, which, if known to such creditor, would materially
affect a settlement. Buyer, by the execution of this Agreement,
acknowledges that it fully understands the foregoing, and with
this understanding, nonetheless elects to and does assume all
risk for Losses known or unknown, described in this Section 12.
Without limiting the generality of the foregoing:
THE UNDERSIGNED ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY LEGAL
COUNSEL AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL
CODE SECTION 1542, 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."
THE UNDERSIGNED, BEING AWARE OF THIS CODE SECTION, HEREBY
EXPRESSLY WAIVES ANY RIGHTS IT MAY HAVE THEREUNDER, AS WELL AS
UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR
EFFECT.
Seller's Initials: /s/ SR Buyer's Initials:/s/ VJC
14. Casualty or Condemnation. If prior to the Closing Date,
the Property shall be destroyed or substantially damaged, and the
cost to repair shall exceed One Million Dollars ($1,000,000.00),
or if the Property shall become the subject of any proceedings,
judicial, administrative, or otherwise, for eminent domain or
condemnation where the value of the portion of the Property
sought exceeds One Million Dollars ($1,000,000.00), Seller shall
promptly notify Buyer thereof, and Buyer may then, within fifteen
(15) days after delivery of Notice of the same by Seller, elect
to terminate this Agreement by giving Seller Notice thereof, in
which event the parties hereto shall be relieved and released of
and from any further duties, obligations, rights, or liabilities
hereunder (but not under the Entry Permit), and the Deposit shall
be returned to Buyer (less only Buyer's half of Escrow fees and
costs). If the Closing Date is within the aforesaid fifteen (15)
day period, then the Closing shall be extended to the next
business day following the end of said fifteen (15) day period.
If (i) the value of the Property destroyed or substantially
damaged or subject to taking is equal to or less than One Million
Dollars ($1,000,000.00), or (ii) Buyer elects to complete the
transactions contemplated herein as provided above
notwithstanding destruction or eminent domain or condemnation
proceedings involving damage or condemnation value of in excess
of One Million Dollars ($1,000,000.00), this Agreement shall
remain in full force and effect and the purchase contemplated
herein, less any portion of the Property taken by eminent domain
or condemnation, if any, shall be consummated with no further
adjustment or modification and at the Closing Seller shall
assign, transfer, and set over to Buyer all the right, title, and
interest of Seller in and to any insurance proceeds resulting
from the casualty or any awards that have been or may thereafter
be made for the taking or condemnation.
15. Default and Remedies.
IF (i) BUYER IS IN DEFAULT OF THIS AGREEMENT PRIOR TO THE
CLOSING, (ii) BUYER FAILS TO CURE SUCH DEFAULT ON OR BEFORE THE
DATE WHICH IS FIVE (5) DAYS AFTER NOTICE THEREOF FROM SELLER (OR,
IF EARLIER, ON OR BEFORE THE OUTSIDE CLOSING DATE), AND (iii)
SELLER ELECTS TO TERMINATE THIS AGREEMENT DUE TO BUYER'S DEFAULT,
THE DEPOSIT AND ALL OTHER PAYMENTS AND THINGS OF VALUE DELIVERED
BY BUYER SHALL BE FORFEITED BY BUYER AND RETAINED BY SELLER, AND
BOTH PARTIES SHALL THEREAFTER BE RELEASED FROM ALL FURTHER
OBLIGATIONS UNDER THIS AGREEMENT. IF (i) SELLER IS IN DEFAULT OF
THIS AGREEMENT PRIOR TO THE CLOSING, (ii) SELLER FAILS TO CURE
SUCH DEFAULT ON OR BEFORE THE DATE WHICH IS FIVE (5) DAYS AFTER
NOTICE THEREOF FROM BUYER (OR, IF EARLIER, ON OR BEFORE THE
OUTSIDE CLOSING DATE), AND (iii) BUYER ELECTS TO TERMINATE THIS
AGREEMENT DUE TO SELLER'S DEFAULT, BUYER SHALL BE ENTITLED TO
OBTAIN A RELEASE OF THE DEPOSIT, AND IN LIEU OF ALL OTHER
REMEDIES AND DAMAGES, BUYER SHALL BE ENTITLED TO, AT ITS
ELECTION, EITHER (A) SPECIFIC ENFORCEMENT OF SELLER'S DUTY TO
TRANSFER THE PROPERTY PURSUANT TO THIS AGREEMENT, OR (B) PAYMENT
BY SELLER OF ONE MILLION DOLLARS ($1,000,000.00) AS LIQUIDATED
DAMAGES (IN WHICH EVENT BOTH PARTIES SHALL THEREAFTER BE RELEASED
FROM ALL FURTHER OBLIGATIONS HEREUNDER); PROVIDED, HOWEVER, BY
PURSUING AN ACTION FOR SPECIFIC PERFORMANCE, BUYER SHALL BE
DEEMED TO HAVE IRREVOCABLY ELECTED SUCH ACTION AS ITS SOLE REMEDY
HEREUNDER AND SHALL NOT BE ENTITLED TO MAINTAIN A CONCURRENT OR
ALTERNATIVE ACTION FOR ANY OTHER DAMAGES OR REMEDIES.
BUYER AND SELLER ACKNOWLEDGE THAT BUYER'S AND SELLER'S
DAMAGES WOULD BE DIFFICULT OR IMPOSSIBLE TO DETERMINE IN THE
EVENT, RESPECTIVELY, OF BUYER'S OR SELLER'S FAILURE TO PERFORM
ITS OBLIGATIONS UNDER THIS AGREEMENT AND THAT THE DEPOSIT AND THE
LIQUIDATED RECOVERY SET FORTH ABOVE, FOR BUYER IN THE EVENT OF
SELLER'S BREACH, AND SELLER IN THE EVENT OF BUYER'S BREACH, ARE
REASONABLE ESTIMATES OF SUCH DAMAGES. THE DEPOSIT AND SUCH OTHER
PAYMENT SHALL, THEREFORE, BE LIQUIDATED DAMAGES TO, RESPECTIVELY,
SELLER AND BUYER, AND RETENTION THEREOF OR RECEIPT THEREOF SHALL
BE, RESPECTIVELY, SELLER'S AND BUYER'S SOLE AND EXCLUSIVE REMEDY
FOR THE OTHER PARTY'S FAILURE TO PERFORM ITS OBLIGATIONS UNDER
THIS AGREEMENT IN THE EVENT THE NON-DEFAULTING PARTY ELECTS TO
TERMINATE THIS AGREEMENT (UNLESS BUYER ELECTS ITS RIGHT TO SEEK
SPECIFIC PERFORMANCE AS PROVIDED HEREIN). EXCEPT AS EXPRESSLY
PROVIDED ABOVE, SELLER AND BUYER EACH EXPRESSLY WAIVE THE
REMEDIES OF SPECIFIC PERFORMANCE AND ADDITIONAL DAMAGES. IN
ADDITION, BUYER HEREBY WAIVES ANY RIGHT (EXCEPT IN CONNECTION
WITH AN ACTION FOR SPECIFIC PERFORMANCE), WHICH BUYER MAY
OTHERWISE HAVE TO RECORD ANY NOTICE OF PENDING ACTION (LIS
PENDENS) AFFECTING THE PROPERTY. BUYER AND SELLER FURTHER
ACKNOWLEDGE BY THEIR INITIALS BELOW THAT THEIR RESPECTIVE WAIVER
OF THEIR RIGHTS PURSUANT TO THIS SECTION 14 IS MATERIAL
CONSIDERATION FOR THE OTHER PARTY TO ENTER INTO THIS AGREEMENT.
SELLER'S INITIALS /s/ SR BUYER'S INITIALS: /s/ VJC
16. Brokerage Commissions. Buyer hereby represents and warrants
to Seller that Buyer has not incurred, and shall not have
incurred as of the Closing Date, any liability for the payment of
any brokerage fee or commission in connection with the
transaction contemplated in this Agreement. Seller hereby
represents and warrants to Buyer that Seller has not incurred,
and shall not have incurred as of the Closing Date, any liability
for the payment of any brokerage fee or commission in connection
with the transaction contemplated in this Agreement, except for
the commission due David M. Norcott and Colliers/The Seeley
Company, with respect to the Wilshire Property, and Cushman &
Wakefield, with respect to the Glendale Property, which
commission (as between Buyer and Seller) shall be the sole
obligation of Seller. Seller and Buyer hereby agree to defend,
indemnify and hold harmless the other from and against any and
all claims of any other person claiming a brokerage fee or
commission in connection with the Property through such party.
17. Miscellaneous.
(1) No Exchange. Seller shall not participate in, or
accommodate Buyer in connection with, a 1031 exchange.
(2) Entire Agreement. This Agreement supersedes all prior
discussions, agreements and understandings between Seller and
Buyer, with the exception of the Entry Permit and the
confidentiality letter signed by Buyer on or about October 21,
1997, and constitutes the entire agreement between Seller and
Buyer with respect to the transaction herein contemplated. This
Agreement may be amended or modified only by a written instrument
executed by Seller and Buyer.
(3) Waiver. Each party hereto may waive any breach by the other
party of any of the provisions contained in this Agreement or any
default by such other party in the observance or performance of
any covenant or condition required to be observed or performed by
it contained herein; provided, however, that such waiver or
waivers shall be in writing, shall not be construed as a
continuing waiver, and shall not extend to or be taken in any
manner whatsoever to affect any subsequent breach, act or
omission or default or affect each party's rights resulting
therefrom. No waiver will be implied from any delay or failure
by either party to take action on account of any default by the
other party. No extension of time for performance of any
obligations or acts shall be deemed an extension of the time for
performance of any other obligations or acts.
(4) Further Assurances. Each party hereto shall do such further
acts and execute and deliver such further agreements and
assurances as the other party may reasonably require to give full
effect and meaning to this Agreement.
(5) Notices. All notices demands, consents, approvals and other
communications given pursuant to this Agreement (each, a
ANotice@) must be in writing and must be sent by hand, or by
telecopy (with a duplicate copy sent by ordinary mail, postage
prepaid), or by certified or registered mail, postage prepaid,
return receipt requested, or by reputable overnight courier
service, postage prepaid, addressed to the party to be notified
as set forth below:
TO SELLER:
The Mutual Life Insurance Company of New York
19712 MacArthur Blvd., Suite 200
Irvine, California 92612
Telecopy No.: (714) 622-8889
Attention: H.E. Dan Shasteen, Esq.
With a copy to:
Croudace & Dietrich
5 Park Plaza, Suite 1050
Irvine, California 92614
Telecopy No.: (714) 251-2779
Attention: Debra M. Dietrich, Esq.
TO BUYER:
Arden Realty Limited Partnership
c/o Arden Realty, Inc.
9100 Wilshire Boulevard, East Tower, Suite 700
Beverly Hills, California 90212
Telecopy No.: (310) 246-2941
Attention: Mr. Victor Coleman
With a copy to:
Troy & Gould, P.C.
1801 Century Park East, 16th Floor
Los Angeles, California 90067
Telecopy No.: (310) 201-4746
Attn.: Kenneth R. Blumer, Esq.
Notices will be deemed given when delivered to Seller or Buyer,
as applicable (regardless of whether delivered to the persons
stated above to receive copies), by hand or when a legible copy
is received by telecopier (provided receipt is verified by
telephone confirmation or one of the other permitted means of
giving Notices under this Section), or if mailed, three (3) days
after deposit in the U.S. mail, certified, return receipt
requested (or on the date of delivery for overnight courier
service), with failure or refusal to accept delivery constituting
delivery for this purpose. The parties agree to use reasonable
efforts to provide copies of Notices to the outside counsel for
the other party specified above, but delivery of such copies
shall not be required for effective delivery of Notice. Actual
notice, however and from whomever given or received, will always
be effective Notice when received. Either party may change its
address for Notices set forth above by giving at least ten (10)
days' prior Notice of such change to the other party.
(6) Facsimile Signatures. Buyer and Seller each (i) agrees to
permit the use of telecopied signatures, from time to time, where
appropriate and consistent with subsection (e) above, in order to
expedite the transaction contemplated by this Agreement, (ii)
intends to be bound by its respective telecopied signature, (iii)
is aware that the other party will rely on the telecopied
signature, and (iv) acknowledges such reliance and waives any
defenses to the enforcement of the documents and Notices
effecting the transaction contemplated by this Agreement based on
the fact that a signature or Notice was sent by telecopy.
(7) Successors and Assigns; Survival. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and
their respective successors, heirs, administrators and assigns,
provided, however, that if Buyer assigns this Agreement, Buyer
shall not be relieved of any liability in connection herewith or
the purchase and sale. Any provision of this Agreement which, by
its terms, is to be performed after the Closing, shall survive
the Closing Date until full performance thereof.
(8) Governing Law and Venue. This Agreement shall be governed
by and construed in accordance with the laws of the State of
California and the venue shall be in Orange County.
(9) No Third Parties Benefitted. The parties do not intend to
confer any benefit on any person, firm, or corporation other than
Seller and Buyer, except as and to the extent otherwise expressly
provided herein.
(10) Attorneys' Fees. In the event of any dispute between any
parties arising out of or in connection with this Agreement or
any other document executed or delivered in connection herewith,
including any litigation, arbitration, bankruptcy and appellate
proceedings (and efforts to enforce the judgment, award or other
disposition of any of the same), the party which prevails in such
action (the "Prevailing Party") shall be reimbursed by the other
party for attorneys' fees, costs and expenses incurred by the
Prevailing Party in connection with such dispute (whether or not
such costs or expenses are specified in California Code of Civil
Procedure Section 1033.5 (a) or (b)). As used herein, the
"Prevailing Party" shall mean the party which obtains the net
monetary recovery or, if no monetary recovery is sought, the
party obtaining the greater nonmonetary relief.
(11) Construction. The section titles or captions in this
Agreement are for convenience only and shall not be deemed to be
part of this Agreement. All pronouns and any variations of
pronouns shall be deemed to refer to the masculine, feminine, or
neuter, singular or plural, as the identity of the parties may
require. Whenever the terms referred to herein are singular, the
same shall be deemed to mean the plural, as the context
indicates, and vice versa. The enumeration of certain
particulars as included within the general language shall not
restrict the scope or affect the generality of such language, and
except as expressly otherwise provided herein, the term "include"
shall mean "include, but shall not be limited to" and the term
"including" shall mean "including, without limitation." Both
Buyer and Seller are sophisticated parties who have been
represented by counsel in the negotiation of this Agreement, and
this Agreement shall not be construed as if it had been prepared
only by Buyer or Seller but rather as if both Buyer and Seller
had prepared the same. If any term, covenant, condition, or
provision of this Agreement or the application thereof to any
person or circumstance shall, at any time or to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances
other than those to which it is held invalid or unenforceable,
shall not be affected thereby, and each provision of this
Agreement shall be valid and shall be enforced to the fullest
extent permitted by law.
(12) Time of Essence. Time is of the essence of this Agreement
and each and every term and provision hereof.
(13) Confidentiality and Indemnification. Buyer covenants and
agrees that: (i) all information provided to it by Seller in
connection with the Property or resulting from Buyer's
inspections of the Property and review of relevant materials will
be held in strict confidence by it and its agents and employees,
(ii) Buyer will return all such information to Seller in the
event the transaction contemplated by this Agreement is not
consummated for any reason, and (iii) Buyer will not rely
thereon, but will instead conduct Buyer's own due diligence
inquiry with respect to the Property. Buyer further agrees to
indemnify and hold Seller harmless from and against any and all
claims or damages, including attorneys' fees, resulting from
Buyer's breach of the covenant contained herein and/or from its
or its agents' or employees' entrance onto the Property. The
indemnification contained herein shall, without limitation,
survive the termination of this Agreement.
(14) Consents and Approvals. Both Seller and Buyer represent and
warrant to the other that each have obtained all requisite
consents and approvals, whether required by internal operating
procedures or otherwise, for entering into this Agreement and
closing the transaction contemplated hereby.
(15) No Other Agreements. After the Effective Date and until the
earlier of the termination of this Agreement or the Outside
Closing Date, Seller shall not enter into any written agreement
with any other person or entity for the sale of the Property;
provided, however, that Seller may accept back-up offers with
respect to purchase of the Property.
(16) Exhibits. All of the Exhibits referenced in this Agreement
are incorporated herein by reference.
(17) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which taken together shall be deemed one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the Effective Date.
BUYER:
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By Arden Realty, Inc., a Maryland corporation,
its sole general partner
By:/s/ Victor J. Coleman
Its: President and Chief Operating Officer
SELLER:
THE MUTUAL LIFE INSURANCE COMPANY
OF NEW YORK, a New York mutual life insurance company
By:/s/ Steven Randall
Its: Vice-President
"ESCROW AGENT:" The undersigned acknowledges receipt of this
Agreement and agrees to act in accordance with all applicable
provisions contained herein.
FIRST AMERICAN TITLE INSURANCE COMPANY OF LOS ANGELES,
a California corporation
By:/s/ Patricia Pewthers
Its: Senior Escrow Officer
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT AND
JOINT ESCROW INSTRUCTIONS
THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT AND
JOINT ESCROW INSTRUCTIONS ("Amendment") is made and entered into
and is effective as of the 26th day of November, 1997 (the
"Effective Date"), by and between THE MUTUAL LIFE INSURANCE
COMPANY OF NEW YORK, a New York mutual life insurance company
("Seller"), and ARDEN REALTY LIMITED PARTNERSHIP, a Maryland
limited Partnership ("Buyer").
RECITALS
A. Seller and Buyer entered into that certain Purchase and Sale
Agreement and Joint Escrow Instructions, dated as of November 12,
1997 ("Original Purchase Agreement") pursuant to which Seller
agreed to sell and Buyer agreed to purchase that certain property
as defined in subsections (a) through (g) of the Original
Purchase agreement (collectively referred to herein as the
"Property"). All terms with initial capitalization used and not
otherwise defined herein shall have the meanings set forth in the
Original Purchase Agreement.
B. Seller and Buyer now desire to amend the Original Purchase
Agreement to extend the Investigation Period, and to provide a
mechanism for adjustment of the Purchase Price, to the extent
(and only to the extent) described below, as a result of certain
HVAC deficiencies as disclosed in the report of Paul Antieri
obtained by Buyer with respect to the Glendale Property in
connection with Buyer's due diligence (the "HVAC conditions"),
and to clarify certain other matters relating to the sale, as
further set forth below.
AGREEMENT
NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING
RECITALS, the mutual covenants set forth in this Amendment and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Buyer and Seller
hereby agree as follows:
1. Definitions. From and after the date hereof, all references
to the "Agreement" in the Original Purchase Agreement shall mean
the Original Purchase Agreement, as amended hereby.
2. Purchase Agreement. The following amendments are made to
the Original Purchase Agreement:
a. Investigation Period. The Investigation Period shall expire
as of noon PST, on Wednesday, November 26, 1997.
b. Additional Deposits; Negotiation Period. The Additional
Deposit shall be required to be made and delivered to Seller or
Buyer (together with the Initial Deposit), and Escrow shall be
canceled, as follows:
1. On or before the expiration of the Investigation Period (as
amended pursuant to Section 2.a above), Buyer shall either cancel
Escrow, or cause to be wired into Escrow (subject to later
confirmation of receipt by Escrow Agent) the Additional Deposit
(of $500,000.00), in immediately available funds, to be held in
Escrow with the Initial Deposit, pending cancellation of Escrow
on or before the expiration of the Negotiation Period (as defined
below), or release of the Deposit to Seller upon expiration of
the Negotiation Period without cancellation of Escrow, in each
case as described (and to the extent permitted) below. If Buyer
shall timely deliver the Additional Deposit, then Buyer's right
to make any further objections relating to the status or
condition of the Property shall be waived, and Escrow shall
remain open; provided, however, that Buyer and Seller shall,
during the Negotiation Period (as defined below), negotiate in
good faith to determine (as described below) the appropriate
decrease in the Purchase Price, to be provided as a result of the
HVAC Conditions. In furtherance thereof, Seller and Buyer
acknowledge and agree (i) that a decrease in the Purchase Price
(up to, but not to exceed the amount of the Maximum Adjustment,
as defined below, and with the exact amount determined as
described below), is appropriate as a result of the HVAC
Conditions, (ii) to jointly inspect such system and (iii) to
negotiate in good faith, during the Negotiation Period, to reach
agreement as to an adjustment in the Purchase Price which Buyer
and Seller in good faith determine, based upon such inspection,
to be sufficient to remedy the reported HVAC Conditions;
provided, however that (A) in no event shall such adjustment to
the Purchase Price exceed One Hundred Fifty Thousand Dollars
($150,000.00)(the "Maximum Adjustment"), and (B) Buyer shall be
required to proceed to close Escrow notwithstanding that the
amount required to remedy the HVAC Conditions is, or is agreed by
Buyer and Seller to be, greater than the Maximum Adjustment
amount, so long as the Purchase Price is decreased by One Hundred
Fifty Thousand Dollars ($150,000.00). In all events, Buyer shall
be solely responsible for any costs related to the HVAC
Conditions in excess of the agreed adjustment to the Purchase
Price. As used herein, the "Negotiation Period" shall be the
period commencing on the expiration of the Investigation Period
and ending on the earlier of (A) the date of agreement by Buyer
and Seller as to the appropriate adjustment in the Purchase
Price, and (B) 5:00 P.M. on Wednesday, December 3, 1997 (the
"Expiration Date").
2. If Buyer fails to timely make the Additional Deposit in
accordance with section 2.b.1 above, or if Buyer and Seller are
unable, prior to the Expiration Date and pursuant to the
provisions of Section 2.b.1 above, to agree on a Purchase Price
adjustment for the HVAC Conditions (with such agreement to be
evidenced by joint Notice to Escrow Agent of the amount of such
agreed-upon Purchase Price adjustment, which Notice shall be
irrevocable upon delivery), then Escrow shall be deemed canceled,
and Buyer's Initial Deposit and Additional Deposit, not only of
fifty percent (50%) of Escrow and title fees, shall be
immediately refunded by Escrow Agent to Buyer without further
Notice or instruction from Buyer or Seller, and notwithstanding
any contrary or inconsistent instruction from Seller; provided,
however, that no such cancellation shall occur in any event if
Seller provides Notice to Escrow Agent that it has agreed to the
Maximum Adjustment in the Purchase Price as a result of the HVAC
Conditions.
3. Unless Escrow is canceled pursuant to section 2.b.2 above,
Escrow Agent is hereby irrevocably instructed to release the
Deposit to Seller in immediately available funds within one (1)
day after the expiration of the Negotiation Period.
4. Title and Survey Exceptions: Closing Date. The extension of
the Investigation Period as described above, and Seller's
agreement to allow a Negotiation Period, shall not extend the
period for Buyer's objection to title matters or survey matters,
which time period Buyer acknowledges has expired, or the Outside
Closing Date.
5. Miscellaneous. Except to the extent the Original Purchase
Agreement is amended hereby, all other terms and provisions of
the Original Purchase Agreement shall remain in full force and
effect. No amendments hereto shall be enforceable except if in
writing and executed by each of the parties. This Amendment may
be executed in two or more counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of the date first set forth above.
"SELLER" "BUYER"
THE MUTUAL LIFE INSURANCE ARDEN REALTY LIMITED PARTNERSHIP,
COMPANY OF NEW YORK, a Maryland limited partnership
a New York mutual life insurance company
By: By: /s/ Richard S. Ziman
Its: Its: Chief Executive Officer
"ESCROW AGENTs" The undersigned acknowledges receipt of this
Amendment and agrees to act in accordance with all applicable
provisions contained herein.
FIRST AMERICAN TITLE INSURANCE COMPANY,
a California corporation
By:
Its
Date:
ADDENDUM TO FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT AND
JOINT ESCROW INSTRUCTIONS
THIS ADDENDUM ("Addendum") TO FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT AND JOINT ESCROW
INSTRUCTIONS dated November 26, 1997 (the
"Amendment") is made as of December 3,1 997, to be
attached to and made a part of the Amendment. All
defined terms have the meaning set forth in the Amendment.
Pursuant to Amendment Section 2.b(1), the
parties hereby agree, and instruct Escrow that, the
Purchase Price shall be reduced by Seventh-Five
Thousand Dollars ($75,000) to Thirty
Million Seven Hundred Twenty-Five Thousand Dollars
($30,725,000).
IN WITNESS WHEREOF, the undersigned have executed this
Addendum as of the date first set forth above.
"SELLER" "BUYER"
THE MUTUAL LIFE INSURANCE ARDEN REALTY LIMITED
COMPANY OF NEW YORK, PARTNERSHIP,
A New York mutual life A Maryland Partnership
insurance company
By: Arden Realty,Inc.
By:/s/ William Swackhamer a Maryland corporation
Its: Regional Vice President
By: /s/ Victor J. Coleman
Its: President & COO
"ESCROW AGENT" The undersigned acknowledges receipt
of this Addendum and agree to act in accordance with
all applicable provisions contained herein.
FIRST AMERICAN TITLE INSURANCE COMPANY,
a California corporation
By: /s/ Patricia Pewthers
Its: Senior
Escrow Officer
Date:
AGREEMENT TO ACQUIRE CERTAIN INTERESTS IN REAL PROPERTY
AND ESCROW INSTRUCTIONS
Among
11601 HOLDING CORP.;
FOREST CITY SAN VICENTE CORP.;
WILSHIRE SV ASSOCIATES
and
The Constituent Partners of Wilshire SV Associates
Owner
and
ARDEN REALTY LIMITED PARTNERSHIP
Acquirer
and
ARDEN REALTY, INC.
ARI
Covering
World Savings Building
11601 Wilshire Boulevard
Los Angeles, California
November 12, 199
AGREEMENT TO ACQUIRE CERTAIN INTERESTS IN REAL PROPERTY
AND ESCROW INSTRUCTIONS
THIS AGREEMENT TO ACQUIRE CERTAIN INTERESTS IN REAL
PROPERTY AND ESCROW INSTRUCTIONS ("Agreement") is made and
entered into this 12th day of November 1997 by and among
ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited
partnership ("Acquirer"), ARDEN REALTY, INC., a Maryland
corporation ("ARI"), 11601 HOLDING CORP., a Delaware
corporation ("Apollo"), FOREST CITY SAN VICENTE CORP., an
Ohio corporation ("Forest City"), WILSHIRE SV ASSOCIATES, a
California limited partnership and the constituent partners
of WILSHIRE SV ASSOCIATES (collectively, "Wilstein").
Apollo, Forest City and Wilstein are sometimes hereinafter
collectively referred to as "Owner."
A. At the Closing (as hereinafter described) Apollo,
Forest City and Wilstein will be the owner, as tenants in
common, of a leasehold estate covering that certain parcel
of real property (the "Real Property") and the owner of the
improvements thereon which, for informational purposes only,
are a 25-story office building containing approximately
469,115 rentable square feet, other facilities, fixtures,
paving and surfacing thereon or associated therewith, with a
separate eight level automobile parking structure with a
total of approximately 1,000 marked parking spaces (collec
tively, the "Improvements"). The Real Property and Improve
ments are located at 11601 Wilshire Boulevard, Los Angeles,
California, and more particularly described in Exhibit "A"
attached hereto and forming a part hereof. The entity and
undivided ownership interest of Apollo, Wilstein and Forest
City, as tenants in common, either directly or through
constituent entities, are, or as of the Closing will be,
Apollo as to 50%, Wilstein as to 25% and Forest City as to
25%. The undivided tenancy in common interests are each
sometimes hereinafter individually referred to as a "TIC
Interest" and all are sometimes hereinafter collectively
referred to as the "TIC Interests". As used herein, the
term "Percentage Interest" as to each of Apollo, Wilstein
and Forest City means such party's percentage interest as
set forth in this paragraph.
B. Wilstein desires to contribute its TIC Interest to
Acquirer in exchange for cash and limited partnership
interests ("OP Units") in Acquirer, and Apollo desires to
merge its entity into ARDEN REALTY, INC., the general
partner of Acquirer ("ARI") in exchange for ARI common
stock, and Acquirer desires to acquire, all of their
respective TIC Interests in the real and personal property
located at or forming part of the Real Property, the
Improvements, and all appurtenant easements and rights, and
the Personal Property (as hereinafter defined) on the terms,
covenants and conditions hereinafter set forth.
C. Forest City desires to hold its TIC Interest
following the Closing as a tenant in common with Acquirer,
and Acquirer acknowledges that it will be a tenant in common
with Forest City following Acquirer's acquisition of the TIC
Interests of Apollo and Wilstein at the Closing.
D. As of the date hereof, all of the TIC Interests in
the real property are subject to a first trust deed loan
with Swiss Bank Corporation ("Existing Loan"), with the
ability to repay the same in full on or before December 15,
1997, in the discounted amount of $77,000,000 ("Pay-Off
Amount") reduced by $1,000,000 which has already been paid
by Owner leaving a remaining amount to be paid of
$76,000,000 ("Remaining Pay-Off Amount"). After the Closing
(as hereinafter defined), Acquirer shall cause the Existing
Loan to be replaced by a new nonrecourse first trust deed
loan(s) complying in all respects with the requirements of
paragraphs 2.2, 2.3 and 2.4 below ("New Loan").
NOW, THEREFORE, with reference to the foregoing recitals
and in reliance thereon and in consideration of the purchase
price hereinbelow set forth, and the other terms, covenants
and conditions set forth below, and other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, it is mutually covenanted and agreed by
Owner and Acquirer as follows:
1. Acquisition. Subject to all of the terms and
conditions of this Agreement and for the consideration set
forth, on Closing (as hereinafter defined), Apollo, Wilstein
and Forest City individually and collectively agree as
follows:
1.1 Apollo. Apollo shall merge into ARI and ARI
shall issue to the merged entity's shareholders, ARI common
stock and thereby acquire all of Apollo's right, title and
interest in and to the Property (hereinafter described)(the
"Merger") in the manner provided in that certain Merger
Agreement ("Merger Agreement") attached hereto as Exhibit
"N" and made a part hereof.
1.2 Wilstein. Wilstein shall contribute and convey
or cause to be conveyed to Acquirer all of Wilstein's right,
title and interest in the Property in exchange for OP Units
and cash of Acquirer (the "Contribution") in the manner
provided in that certain Contribution Agreement
("Contribution Agreement") attached hereto as Exhibit "K"
and made a part hereof.
1.3 Forest City. Forest City shall enter into a
Tenancy in Common Agreement (the "TIC Agreement") setting
forth the respective rights and obligations of Forest City
and Acquirer as tenants in common with respect to the
Property following the Closing in the form and substance of
Exhibit "M" attached hereto and made a part hereof.
1.4 The Property. The Property shall consist of
all of the interests of Apollo, Wilstein and Forest City and
shall constitute all of the ownership interests in the
following:
(a) That certain leasehold estate ("Leasehold
Estate") in the Real Property more particularly described in
Exhibit "A" which, as a condition to Closing will be subject
only to such easements, agreements and exceptions as may
have been approved or deemed approved by Acquirer in
accordance with Paragraph 4(a) hereof and the tenancies and
occupancies that are set forth on Exhibit "B" or which are
approved hereafter as herein provided;
(b) The interests of the Owner in the Improvements,
together with all easements and appurtenances thereto;
(c) All of the personal property of Owner (the
"Personal Property") located at, attached or appurtenant to,
or used in connection with the operation or maintenance of
the Real Property and/or the Improvements (the "Inventory");
(d) All leases to tenants leasing space in the
Improvements (the "Tenant Leases");
(e) To the extent assignable, those certain service
and other agreements more particularly described in Exhibit
"C" attached hereto and made a part hereof; and
(f) All other right, title and interest of Owner in
and to trade names, logos, easements, licenses, permits, air
rights, certificates of occupancy, warranties,
rights-of-way, signs, trademarks, telephone listings and
numbers, sewer agreements, water line agreements, utility
agreements, water rights and oil, gas and mineral rights
(collectively, the "Intangibles") to the extent assignable
or transferable. Reference herein to the "Property" shall
include all of the real, personal and intangible property
described in subparagraphs (a) through (f) hereof.
2. Valuation and Payment or Exchange. Owner and
Acquirer have agreed that the value of the Property is the
sum of One Hundred Ten Million Six Hundred Thousand and
No/100 Dollars ($110,600,000) ("Valuation") and Acquirer
will exchange with Apollo and Wilstein for all of their TIC
Interests in the Property (75%) based upon $83,100,000 of
the Valuation, and accept Forest City as a tenant in common
and owner of an undivided twenty-five (25%) interest in the
Property, subject to the terms of the TIC Agreement.
2.1 Deposit.
(a) Upon the opening of Escrow (as hereinafter set
forth) Acquirer shall deliver to Escrow Agent (as
hereinafter defined) cash in the sum of Five Hundred
Thousand and No/100 Dollars ($500,000.00), ("Initial
Deposit") which shall be held by Escrow Agent as security
for the full performance by Acquirer of its obligations
hereunder and on account of its obligations at Closing,
subject to the following terms and conditions:
(i) If Acquirer elects to continue with its
acquisition of the Property pursuant to this Agreement after
the Approval Period or the Extended Approval Period, as the
case may be, (as hereinafter defined), Acquirer shall
increase the Initial Deposit prior to the Approval Date or
the Extended Approval Date, as the case may be, by cash in
the amount of Two Million Dollars ($2,000,000) for a total
of $2,500,000 (which sum, together with any interest earned
thereon and additions thereto, are herein collectively
called the "Deposit") and such Deposit shall become non-
refundable subject to the remaining conditions to Closing;
(ii) If Closing occurs, then the Deposit shall
be refunded;
(iii) If Closing does not occur and Owner
shall be entitled to liquidated damages as provided in
Paragraph 10(b) hereof, Owner shall be entitled to the
Deposit; and
(iv) If the Closing does not occur and Acquirer
shall be entitled to the return of the Deposit as provided
in this Agreement, the same shall be returned to Acquirer.
(b) The Deposit shall be at all times invested by
Escrow Agent in the following investments ("Approved Invest
ments"): (i) United States Treasury obligations, (ii)
United States Treasury-backed repurchase agreements issued
by a major money center banking institution reasonably
acceptable to Owner, (iii) Certificates of Deposit or Money
Market Accounts of institutions whose deposits are insured
by the FDIC or (iv) such other manner as may be reasonably
agreed to by Owner and Acquirer. The Deposit shall be
disposed of by Escrow Agent only as provided in this
Agreement.
2.2 Contribution. Wilstein shall contribute its
TIC Interest to Acquirer and become an additional limited
partner in Acquirer at Closing. The TIC Interest of
Wilstein ( the "Contribution Interest") shall be contributed
to the capital of Acquirer subject to Wilstein's Percentage
Interest of the Remaining Pay-Off Amount of the Existing
Loan (it being understood and agreed that Acquirer shall
replace after Closing the Existing Loan with the New Loan in
an amount at least equal to $60,000,000 and containing terms
and provisions no more materially onerous than the Existing
Loan). At Closing, and in consideration for the
Contribution, Wilstein shall receive limited partnership
interests in Acquirer ("OP Units") and cash in an aggregate
amount equal to the "Contribution Value". As used herein,
"Contribution Value" means the amount by which Twenty-Eight
Million Seven Hundred Seventy Thousand and No/100 Dollars
($28,770,000) (the "Wilstein Share") exceeds an amount equal
to (i) an amount equal to Wilstein's Percentage Interest of
the Remaining Pay-Off Amount, plus (or minus) (ii) an amount
equal to Wilstein's Percentage Interest of the net amount of
all costs, expenses, adjustments and prorations to be
credited (or debited) to Acquirer pursuant to this
Agreement. For purposes of determining the number of OP
Units to be issued to Wilstein, each OP Unit shall have a
deemed value equal to the value of one (1) share of ARI
common stock as of the date which is five (5) business days
prior to Closing. The Contribution shall be consummated
pursuant to the terms of that certain Contribution Agreement
in the form of Exhibit "K" attached hereto and made a part
hereof. Notwithstanding anything to the contrary contained
in this paragraph 2.2, if at the Effective Date both the
Contribution Agreement and the Amendment to Limited
Partner's Agreement have not been attached hereto as
Exhibits "K" and "L," respectively, the parties agree that
unless on or before November 17, 1997 the same shall be
initialed by Acquirer and Wilstein and attached hereto, then
either Acquirer or Wilstein shall have the right to
terminate this Agreement. Any such termination shall be
exercised, if at all, by the electing party giving written
notice thereof to all parties hereto, whereupon this
Agreement shall terminate. The OP Units issued to Wilstein
thereby may be redeemed or exchanged only in accordance with
that certain Amendment to Limited Partnership Agreement, in
the form attached hereto as Exhibit "L".
2.3 Merger. Apollo shall merge into ARI and ARI
shall issue to the merged entity's shareholders, ARI common
stock in exchange pursuant to a tax-free reorganization
qualifying under the Internal Revenue Code, as amended. The
value of the Apollo TIC Interest so merged shall be subject
to the Apollo Percentage Interest of the Remaining Pay-Off
Amount (it being understood and agreed that Acquirer shall
replace after Closing the Existing Loan with the New Loan in
an amount at least equal to $60,000,000). At the Closing and
consummation of the merger, the Apollo shareholders shall
receive ARI Common Stock in an amount equal to the "Merged
Value". As used herein, "Merged Value" means the amount by
which Fifty-Four Million Three Hundred Thirty Thousand and
No/100 Dollars ($54,330,000) (the "Apollo Share") exceeds an
amount equal to (i) Apollo's Percentage Interest of the
Remaining Pay-Off Amount, plus (or minus) (ii) an amount
equal to Apollo's Percentage Interest of the net amount of
all costs, expenses, adjustments and prorations to be
credited (or debited) to Acquirer pursuant to this
Agreement. Each share of ARI Common Stock shall have a
value equal to its closing price five (5) business days
prior to the Closing. The Merger shall be consummated
pursuant to the terms of that certain Merger Agreement in
the form of Exhibit "N" attached hereto and made a part
hereof and the Investor Questionnaire in the form of Exhibit
"O" attached hereto and made a part hereof. Notwithstanding
anything to the contrary contained in this paragraph 2.3, if
at the Effective Date the Merger Agreement has not been
attached hereto as Exhibit "N", the parties agree that
unless on or before November 17, 1997 (a) the same shall be
initialled by Acquirer and Apollo and attached hereto or (b)
Apollo shall elect in writing to sell for cash its TIC
Interest in the Property based upon a sale price equal to
the amount by which Fifty-Four Million Three Hundred Thirty
Thousand and No/100 Dollars ($54,330,000) exceeds an amount
equal to (i) Apollo's Percentage Interest of the Remaining
Pay-Off Amount, plus (or minus) (ii) an amount equal to
Apollo's Percentage Interest applied to the net amount of
all costs, expenses, adjustments and proration to be
credited (or debited) to Acquirer pursuant to this
Agreement, then either Acquirer or Apollo shall have the
right to terminate this Agreement. Any such termination
shall be exercised, if at all, by the electing party giving
written notice thereof to all parties hereto, whereupon this
Agreement shall terminate.
2.4 Tenant in Common. Forest City shall hold its
TIC Interest subject to an amount of the New Loan which
shall be nonrecourse and in an amount equal to its share
(for its tax basis purposes) of the Remaining Pay-Off
Amount. Forest City agrees to (a) enter into a nonrecourse
promissory note in that amount and secured by its TIC
Interest, and to execute any collateral agreements or
documents that are reasonably necessary or customarily
appropriate in connection with such portion of the New Loan
in form and substance reasonably acceptable to Forest City
and (b) enter into that certain Tenancy In Common Agreement
in the form of Exhibit "M" attached hereto and made a part
hereof. Notwithstanding anything to the contrary contained
in this paragraph 2.4, (a) if at the Effective Date the
Tenancy In Common Agreement has not been attached hereto as
Exhibit "M", the parties agree that unless on or before
November 17, 1997 the same shall be initialed by Acquirer
and Forest City and attached hereto or (b) if on or before
November 28, 1997 Acquirer has not provided Forest City with
evidence of the commitment of the lender to make the New
Loan, then either Acquirer or Forest City shall have the
right to terminate this Agreement. Any such termination
shall be exercised, if at all, by the electing party giving
written notice thereof to all parties hereto, whereupon this
Agreement shall terminate.
3. Escrow.
(a) Opening of Escrow. As soon as commercially
reasonable after their complete execution of this Agreement
("Effective Date") and in any event not later than three (3)
business days thereafter, Owner and Acquirer shall open an
escrow (the "Escrow") with Chicago Title Insurance Company,
700 South Flower Street, Suite 900, Los Angeles, California,
90017, Attention: Rose Martinez ("Escrow Agent"), through
which the purchase and sale of the Property shall be
consummated. A fully executed copy of this Agreement shall
be deposited with Escrow Agent, duly executed by Owner, Acq
uirer and Escrow Agent, to serve as Escrow instructions to
Escrow Agent, and Escrow Agent shall be and is hereby
authorized and instructed to deliver pursuant to the terms
of this Agreement the documents and monies to be deposited
into the Escrow. Escrow Agent may attach to this Agreement
Escrow Agent's standard form escrow agreement, to the extent
that the same is consistent with the terms hereof, and are
reasonably approved by Owner and Acquirer. Escrow Agent
shall immediately, upon receipt of such duly executed copy
of this Agreement, notify Owner and Acquirer of the opening
of Escrow. Should either party fail to open Escrow in
accordance with the provisions of this Paragraph 3(a), such
failure shall constitute a material breach of this
Agreement.
(b) Closing of Escrow. Escrow shall close ten (10)
business days following the Approval Date, but subject to
Owner's right to extend as hereinafter provided, in all
events not later than December 2, 1997, provided the Ground
Lessor Consent and Estoppels and the Tenant Estoppels
satisfying the requirements of paragraph 8(b) hereof have
been received and all other Acquirer's Conditions Precedent
to Closing as set forth in Paragraph 8 hereof and the
Conditions Precedent to Owner's Obligation to Close Escrow
(set forth in Paragraph 9 below) have been satisfied.
Notwithstanding the foregoing, any Owner (with the written
consent of each other Owner) shall have the right to extend
the Closing, subject to obtaining an extension of the
Remaining Pay-Off Amount for the same extension period, for
a period not to extend beyond January 7, 1998, by giving
written notice thereof to Acquirer on or before November 28,
1997. The term "Closing" as used herein shall be deemed to
be the date upon which the respective Conditions Precedent
to Acquirer's Obligation to Close Escrow (set forth in
Paragraph 8 below) and the Conditions Precedent to Owner's
Obligation to Close Escrow (set forth in Paragraph 9 below)
have been satisfied, the Assignment of Leasehold and Grant
to the Improvements ("Assignment of Leasehold" herein)
hereinafter referred to is recorded in the office of the
County Recorder of Los Angeles County and the net proceeds
(in cash and OP Units) required to close are held by Escrow
Agent for disbursement to Owner. If the Closing as provided
herein does not occur, this Agreement and the Escrow shall
be cancelled and terminated and thereafter neither party
shall have any further obligation or liability to the other
party, except as expressly set forth in this Agreement.
4. Title Matters.
(a) Title Report.
(i) Owner has caused to be delivered to
Acquirer a CLTA Preliminary Title Report covering the Real
Property and the Improvements, which states that it is
subject to any matter that would be disclosed by a survey
(the "Preliminary Title Report"), issued by Chicago Title
Insurance Company ("Title Company"), together with copies of
all documents evidencing matters of record shown as
exceptions to title thereon. If Acquirer shall desire an
updated ALTA Survey of the Real Property and Improvements
("Survey"), Acquirer shall cause the same to be so made at
Acquirer's sole cost and expense before the Approval Date
(and upon receipt shall deliver a copy of the Survey to
Owner). Acquirer shall have the right to object to any
exceptions contained in the Preliminary Title Report or the
Survey by giving notice to Owner before the Approval Date.
Notwithstanding any of the foregoing, Owner shall at Closing
(but shall not be obligated prior thereto) remove of record
all tax and mechanic's liens (except only for the liens of
the taxes and assessments to be prorated under Paragraph
12(a)(ii)), at its sole cost and expense. Unless Acquirer
gives written notice that it disapproves any such additional
exceptions to title matters, stating the exceptions so
disapproved, before the Approval Date, Acquirer shall be
deemed to have approved said exceptions. Acquirer's
approval of the Preliminary Title Report shall be without
prejudice to Acquirer's right to disapprove additional
survey matters or any supplementary reports issued by Title
Company or disclosed after the Approval Date; provided,
however, Acquirer's approval shall not be unreasonably
withheld, and, as to survey matters, shall only be
applicable if Acquirer shall have obtained the updated
Survey before the Approval Date. If for any reason, on or
before the Closing Date Owner does not cause such exceptions
to title or survey matters which Acquirer timely disapproves
(to the extent Acquirer is permitted hereunder to so
disapprove) to be removed at no cost or expense to Acquirer
(Owner having the right but not the obligation to do so),
the obligation of Apollo and Wilstein to transfer (and
Forest City to enter into the TIC Agreement) and Acquirer to
acquire the Property as herein provided shall terminate (and
Owner and Acquirer shall have no further obligations in
connection herewith). Acquirer shall have the option to
waive the condition precedent set forth in this paragraph
4(a) by notice to Owner. In the event of such waiver, such
condition shall be deemed satisfied. All matters set forth
on the Preliminary Title Report, the updated Survey obtained
by Acquirer which are not timely objected to by Acquirer
shall be permitted exceptions to title and shall
additionally include (i) any title or survey matters
objected to by Acquirer, which objections are subsequently
waived in writing by Acquirer, and (ii) any title or survey
matters objected to by Acquirer in accordance with the terms
and provisions of this Agreement, which objections are cured
to Acquirer's satisfaction, (iii) real estate taxes and
assessments not yet due and payable; and (iv) the printed
exceptions which appear in the standard form ALTA owner's
policy of title insurance (with extended coverage).
(ii) If at the date of Closing there are any
liens or encumbrances that Owner is obligated to pay and dis
charge, Escrow Agent may use any portion of the net proceeds
of the Escrow to satisfy the same (if the same are not
bonded-over or otherwise satisfied by title endorsement),
provided Owner shall simultaneously either deliver to Escrow
Agent at Closing title instruments in recordable form
sufficient to satisfy such liens and encumbrances of record,
together with the cost of recording or filing said
instruments or appropriate pay off letters or instructions.
(b) Title Policy. The Title Policy shall be
Chicago Title Company's ALTA Owner's policy with liability
in the amount of $83,100,000, showing the Apollo and
Wilstein TIC Interests (i) in the Leasehold Estate in Real
Property and (ii) in the fee title to the Improvements in
each instance, as vested in Acquirer, subject only to the
permitted exceptions specified in Paragraph 4(a) above.
5. Delivery of Information.
(a) Owner has previously delivered or has caused to
be delivered to Acquirer or made available to Acquirer at
the Property to the extent they are in Owner's possession or
under its control, and Acquirer has reviewed and approved
(except the environmental materials) the following:
(i) Complete copies of all of the leases
constituting the Leasehold Estate and all amendments
thereto;
(ii) Complete copies of all of the Tenant
Leases and all amendments thereto, a schedule of which is
attached hereto as Exhibit "B" and forms a part hereof;
(iii) The loss history of the Property
pertaining to any property damage or personal injury
suffered for which an insurance claim of more than Fifty
Thousand Dollars ($50,000) was submitted by Owner at any
time after January 1, 1995 to the extent available to Owner;
(iv) A set of any "as built" plans, specifica
tions and structural drawings with respect to the Building
shell and any third-party soil, geological, seismic,
environmental and hazardous materials and asbestos studies
or reports, relating to the Improvements or the subsurface
conditions, grading plans, water table or other matters
bearing upon condition of the Property;
(v) A copy of all documents and instruments
evidencing, securing and pertaining to the existing first
trust deed loan covering the Property;
(vi) All electricity and property tax bills for
the period beginning January 1, 1995 to the extent available
to Owner;
(vii) Statements of income and expense for
the Property for all calendar years beginning 1995 and for
the current year to date to the extent available to Owner;
(viii) All warranties and operating manuals
that Owner may have from vendors, contractors or servicing
agents with respect to the physical condition of the
Improvements, the Property or any portion thereof or the
equipment located therein;
(ix) Complete copies of all service and other
contracts pertaining to the Property (including, but not
limited to, HVAC, elevator, landscape, management, leasing
brokerage and parking) in respect to which Owner is
obligated and which are intended to survive Closing
hereunder (the "Service Contracts"); and
(x) A list of all personal property (including
supplies) owned or leased by Owner and used in connection
with the operation, maintenance and repair of the Property.
(b) As of the Effective Date, Acquirer has approved
all of the matters and things set forth in paragraph 5(a)
except the environmental studies and its own environmental
investigations. Acquirer shall have until 5:00 P.M. Los
Angeles time on November 14, 1997 (the "Approval Date") in
which to approve or disapprove all of the other matters and
things that are subject to Acquirer's rights of review,
inspection and approval hereunder; provided, however, if on
the Approval Date Acquirer has not received (at least three
(3) days prior thereto) its written environmental report
concerning the Property, Acquirer shall have the right, by
written notice to Owner prior to the Approval Date, to
extend the Approval Date ("Extended Approval Date") only as
to the environmental matters (the reports of which it has
not timely received) to the date which is three (3) business
days after the receipt of the same but not later than
November 28, 1997. Acquirer's failure either to approve or
disapprove the Property before the expiration of the
Approval Date, as the same may be extended as to the
environmental matters shall be deemed its approval thereof.
If Acquirer disapproves any of said information, Acquirer
shall notify Owner in writing thereof within the time period
specified above whereupon, this Agreement shall terminate.
(c) At Acquirer's request at any time from and
after the date hereof until the date that is one (1) year
after the Closing Date, Owner shall, at Acquirer's expense,
provide to Acquirer's designated independent auditor, Ernst
& Young, reasonable access to the books and records of the
Property, regarding the period for which Acquirer is
required to have audited financial statements prepared with
respect to the Property as may be required by the Securities
and Exchange Commission, but only to the extent that such
books, records and related information are in Owner's
possession or control and relate to the period during which
Owner held title to the Property.
(d) Acquirer has delivered to Wilstein copies of
all recent audited and unaudited financial statements of and
filings with the S.E.C. by Acquirer and ARI for its review.
6. Inspections and Approval by Acquirer.
(a) Acquirer has approved the matters referred to
in subparagraphs (b) and (c) below, subject to such
additional testing as may be necessary to complete its
environmental investigation of the Property.
(b) Notwithstanding subparagraph (a) to the con
trary, from and after the date hereof, Acquirer and its
agents, employees and contractors shall be afforded
reasonable access to the Property during normal business
hours and upon twenty-four (24) hours prior notice, subject
to the rights of tenants in possession. Owner shall
reasonably cooperate to assist Acquirer. However, Acquirer
agrees not to contact any of Owner's tenants without Owner's
prior consent and to hold Owner harmless from and against
any loss, cost, damage, claim or expense suffered by Owner
or the Property and caused by Acquirer's investigations (the
foregoing obligation surviving any termination of this
Agreement). In no event shall Acquirer make any intrusive
physical testing (environmental, structural or otherwise) at
the Property (such as soil borings or the like) without
Owner's prior consent. Acquirer shall promptly restore the
Property to its condition immediately prior to such
investigations. In addition, Acquirer agrees not to
unreasonably interfere with the use and enjoyment of the
Property by Owner, its agents, representatives, employees or
any tenants or other occupants. Owner shall have the right,
at its option, to cause a representative of Owner to be
present at all inspections, reviews and examinations
conducted hereunder. At the request of Owner, Acquirer
shall promptly deliver to Owner true, accurate and complete
copies of any written reports relating to the Property
prepared for or on behalf of Acquirer by any third party
and, in the event of termination hereunder, shall return all
documents and other materials furnished to or on behalf of
Acquirer by Owner hereunder. Acquirer shall keep all
information or data received or discovered in connection
with any of the inspections, reviews or examinations
strictly confidential; provided, however, that Acquirer
shall be entitled to disclose such information to Acquirer's
attorneys, consultants, accountants and prospective debt and
equity financing sources who reasonably need to be informed
in connection with Acquirer's determinations hereunder (who
shall, in turn, be required to keep such information
confidential). Acquirer acknowledges that any and all such
information shall be utilized solely for the purpose of
assisting Acquirer in its determination of whether or not to
purchase the Property hereunder (and for no other purpose).
The parties acknowledge that the amount of damages that
Owner would suffer by reason of a breach of the
confidentiality provisions hereunder or under Paragraph
16(k) hereof would be extremely difficult, if not
impossible, to determine and that, in addition to any and
all other rights or remedies which may be available to
Owner, Owner may pursue an action for injunctive relief in
connection therewith.
(c) From and after the date hereof until Closing,
Acquirer and its agents shall be afforded reasonable
opportunity by Owner during normal business hours and upon
twenty-four (24) hours prior notice to examine all operating
books and records that directly relate to the Property
(including all specifications and as-built drawings to the
extent they are in Owner's possession), all building
permits, certificates of occupancy, third party soil and
engineers' reports and studies, and similar information
relating to the Property or its management, operation,
maintenance or use, and all warranties and operating manuals
that Owner may have from vendors, contractors or servicing
agents with respect to the physical condition of the
Property or any portion thereof or the equipment located
thereon.
7. Operation of Property Pending Closing.
(a) Tenant Leases. Owner has leased portions of
the Property to various occupancy tenants. From and after
the date of execution of this Agreement and until the
Closing Date Owner shall not enter into any new leases or
amend or extend, terminate or accept the surrender of any
existing tenancies or approve any subleases without the
prior written consent of Acquirer (which consent shall not
be unreasonably delayed or withheld). In requesting such
consent, Owner shall inform Acquirer in writing of the
amount, if any, proposed to be required to pay for, or any
allowance proposed to be given for, tenant improvement work,
any leasing commissions and fees, in connection with such
lease and any rent concessions. Also included in the
request for consent, shall be Owner's proposed draft of the
lease or amendment agreement. The failure of Acquirer to
respond within five (5) business days after written request
for any such approval shall be deemed to constitute
approval. Owner shall not collect in advance any rent or
other sum due under any of the Tenant Leases, except for
collection of current rents no more than one month in
advance.
(b) Leasing Commissions; Tenant Improvements and
Rent Concessions. Owner covenants and agrees to be respon
sible for all leasing commissions, tenant improvement costs
and legal fees with respect to any leases (including amend
ments and renewals) entered into on or before the Effective
Date. Owner represents that as of the Effective Date there
are no pending lease transactions to which Acquirer will be
subject which Acquirer has not approved in writing.
Acquirer covenants and agrees to be responsible for all
leasing commissions, tenant improvement costs, legal fees
and unamortized rent concessions with respect to any new
leases, extensions of or options under existing leases and
renewals occurring after the Effective Date, provided that
(i) with respect to matters occurring prior to Closing,
Acquirer has approved or is deemed to have approved such
action or event by Owner, to the extent Acquirer is entitled
to approve hereunder and (ii) Owner has delivered to
Acquirer copies of the proposed lease and other agreements
with respect thereto and to which any brokerage commissions
are payable. Failing such delivery, if applicable, and
approval (or deemed approval), Owner shall remain
responsible for all of costs and expenses including
commissions.
(c) Insurance Policies. Owner shall keep all of
the insurance policies covering the Property (or
substantially equivalent coverage) in full force and effect
between the date of this Agreement and Closing (the
"Insurance Policies").
(d) Service Contracts. Owner shall have the right
to renew or replace Service Contracts that expire prior to
Closing or to enter into new Service Contracts for emergency
purposes if deemed reasonably necessary by Owner for any
term provided that such Service Contracts are terminable by
Owner or its successors in interest upon not more than
thirty (30) days' notice to the service provider.
(e) Property Management. Owner shall maintain the
Property in the same manner as prior hereto pursuant to its
normal course of business (such maintenance obligations not
including extraordinary capital expenditures or expenditures
not incurred in such normal course of business), subject to
reasonable wear and tear and further subject to destruction
by casualty or other events beyond the reasonable control of
Owner.
8. Conditions Precedent to Acquirer's Obligation to
Close Escrow. The obligation of Acquirer to consummate the
transactions contemplated hereby is subject to the following
conditions, inserted for Acquirer's sole benefit and that
may be waived by Acquirer only in writing at its sole
option. Said conditions are as follows:
(a) Representations and Warranties True at Closing.
The representations and warranties of Owner contained in
Paragraph 13 of this Agreement shall be true on the date of
Closing in all material respects as though such representa
tions and warranties were made on and as of such date.
(b) Delivery of Estoppels. Owner shall have deliv
ered to Acquirer (i) estoppel letters (the "Tenant
Estoppels") from tenants representing 85% of the leased area
and from all tenants leasing more than 3,500 square feet in
the Improvements in substantially the form of Exhibit "D-1"
attached hereto and forming a part hereof or substantially
in the form prescribed in the applicable lease (it being
understood and acknowledged by Acquirer that paragraph 6 and
paragraph 10 (as it relates to requiring the tenant to give
notice to Acquirer's lenders) in Exhibit "D-1" is optional
and not a requirement in any tenant's lease), consistent in
all material respects with the information to be provided by
Owner hereunder and certifying inter alia to the effect that
there are no defaults by landlord under the lease known to
tenant thereunder; that such lease is unmodified except as
may be set forth therein and in full force and effect; that
there are no defenses or offsets against the landlord known
to tenant thereunder; and that rental is current and has not
been paid more than one month in advance and (ii) estoppel
letters ("Ground Lease Estoppels") from each of the lessors
(fee owners) under the Leasehold Estate consenting to the
proposed transaction contemplated by this Agreement, if
required, and otherwise substantially in the form of
Exhibits "D-2A" and "D-2B", respectively, attached hereto
and forming a part hereof, conforming in all material
respects with the information produced by Owner herewith.
Owner can satisfy the Tenant Estoppel condition of this
paragraph and Acquirer will accept Tenant Estoppel
Certificates executed by Owner if executed and delivered, in
substantially the form attached as Exhibit "D-1" and
conforming to the rent roll provided by Owner, as to each
tenant required to meet either the 85% or 3,500 square feet
threshold. If Owner notifies Acquirer that it is unable to
secure an estoppel with respect to the Gorfain Lease,
Acquirer shall have two (2) business day thereafter to
either (i) waive the condition or (ii) terminate this
Agreement for failure of such condition.
(c) Compliance with This Agreement. Owner shall
have performed and complied with in all material respects
all agreements and conditions required by this Agreement to
be performed or complied with by it on or prior to Closing.
(d) Title Policy. Title Company shall be ready,
willing and able to issue the Title Policy required by Para
graph 4(b).
(e) Change in Condition. Subject to the provisions
of Paragraphs 15(b) and 15(c) hereof, there shall exist no
damage, destruction or condemnation of the Property prior to
Closing.
9. Conditions Precedent to Owner's Obligation to Close
Escrow. The obligation of Owner to consummate the
transactions contemplated hereby is subject to the following
conditions, inserted for Owner's sole benefit and that may
be waived solely by Owner only in writing at its sole
option. Said conditions are as follows:
(a) Representations and Warranties True at Closing.
The representations and warranties of Acquirer contained in
this Agreement, or in any certificate or document signed by
Acquirer pursuant to the provisions hereof, shall be true on
and as of Closing in all material respects as though such
representations and warranties were made on and as of such
date.
(b) Delivery of Net Proceeds and Documents. Acq
uirer shall have delivered all funds and documents to Escrow
Holder required by it hereunder to enable it to close the
Escrow.
(c) Compliance with This Agreement. Acquirer shall
have performed and complied with all agreements and con
ditions required by this Agreement to be performed or
complied with by it on or prior to Closing.
(d) Consent of World Savings. World Savings, the
lessor under the ground lease, shall have given its consent
in writing to the proposed conveyance of the leasehold
estate to Acquirer in accordance with the terms of this
Agreement.
10. Remedy of Acquirer and Owner Upon Default.
(a) Remedies of Acquirer. In the event that Owner
fails to keep and perform each and every obligation,
covenant and agreement herein by Owner to be kept or per
formed, then Acquirer may pursue an action against Owner and
the Property for specific performance and/or damages but
agrees that it shall have no right to seek or obtain
consequential or punitive damages resulting from a breach of
Apollo's and/or Wilstein's agreements to convey their TIC
Interests in the Property or Forest City's breach of its
agreement to enter in the TIC Agreement. Notwithstanding
the foregoing, Acquirer's right to file an action for
specific performance against Owner, or any of the them, (i)
shall be limited to the period of thirty (30) days following
notice by Acquirer to Owner setting forth the obligation,
covenant or agreement which Owner has failed to keep or
perform and (ii) shall require evidence of Acquirer's
ability to perform all of the obligations of Acquirer then
capable of being performed at the point in time of Owner's
breach or default.
(b) Remedy of Owner. THE PARTIES HERETO, BEFORE
ENTERING INTO THIS TRANSACTION, HAVE BEEN CONCERNED WITH THE
FACT THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY OWNER IF
ACQUIRER SHOULD WRONGFULLY FAIL TO PURCHASE THE PROPERTY.
WITH THE FLUCTUATION IN VALUE OF REAL PROPERTY, THE CURRENT
AND HIGHLY UNPREDICTABLE STATE OF THE ECONOMY, THE
FLUCTUATING MONEY MARKET FOR REAL ESTATE LOANS OF ALL TYPES,
AND OTHER FACTORS THAT DIRECTLY AFFECT THE VALUE AND MARKET
ABILITY OF THE PROPERTY, IT IS REALIZED BY THE PARTIES THAT
IT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICABLE, IF NOT IM
POSSIBLE, TO ASCERTAIN WITH ANY DEGREE OF CERTAINTY PRIOR TO
SIGNING THIS AGREEMENT THE AMOUNT OF DAMAGES THAT WOULD BE
SUFFERED BY OWNER IN THE EVENT OF ACQUIRER'S WRONGFUL FAIL
URE TO PURCHASE THE PROPERTY. THE PARTIES, HAVING MADE DILI
GENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL COM
PENSATORY DAMAGES OWNER WOULD SUFFER IN THE EVENT OF
ACQUIRER'S WRONGFUL FAILURE TO PURCHASE THE PROPERTY, HEREBY
AGREE THAT THE REASONABLE ESTIMATE OF SAID DAMAGES IS AN
AMOUNT EQUAL TO THE DEPOSIT; AND IN THE EVENT OF ACQUIRER'S
WRONGFUL FAILURE TO PURCHASE THE PROPERTY, OWNER SHALL BE
ENTITLED TO SUCH AMOUNT AS FULL LIQUIDATED DAMAGES, AND THAT
PAYMENT OR TENDER TO OWNER BY ACQUIRER OF SUCH AMOUNT SHALL
TERMINATE ALL OF OWNER'S RIGHTS AND REMEDIES AT LAW OR IN
EQUITY AGAINST ACQUIRER WITH RESPECT TO SUCH FAILURE TO
PERFORM. NOTWITHSTANDING THE FOREGOING, NOTHING CONTAINED
HEREIN SHALL LIMIT OWNER'S RIGHTS OR REMEDIES IN THE EVENT
OF A BREACH BY ACQUIRER OF THE CONFIDENTIALITY PROVISIONS
SET FORTH IN PARAGRAPHS 6(a) and 16(k) HEREOF.
/s/ DW /s/ RLJ /s/ AC /s/ DLR /s/ VJC
Wilsteins's Apollo's Forest City's Acquirer's
Initials Initials Initials Initials
(c) Notwithstanding anything to the contrary
contained herein, the (i) liability of Apollo, Wilstein and
Forest City under this Agreement shall be several both as to
amounts and remedies, (ii) the aggregate liability of Owner
arising pursuant to or in connection with the
representations, warranties, indemnifications, covenants or
other obligations (whether express or implied) of Owner
under this Agreement or any document executed or delivered
in connection herewith (except the Merger Agreement) or
otherwise related to or connected with the Property shall
not exceed $2,000,000 (i.e., the maximum exposure of Apollo
will be $1,000,000 and the maximum exposure of each of
Forest City and Wilstein will be $500,000); provided,
however, no such limitation shall exist with respect to
Apollo only for the matters covered by the Merger Agreement.
11. Closing Procedure.
(a) At least one business day prior to the date of
Closing, Acquirer shall have delivered to Escrow Agent
counterpart executed originals, and acknowledged as
required, of the following documents and the following sums
of money required to be delivered by Acquirer hereunder:
(i) The cash amounts necessary to fulfill its
requirements set forth in Paragraph 2;
(ii) Such funds as may be necessary to comply
with Acquirer's obligations hereunder regarding prorations,
costs and expenses;
(iii) A signed counterpart of the Assignment
of Leasehold and Grant to the Improvements and notarized for
recordation ("Assignment of Leasehold") in the form of
Exhibit "E" attached hereto and forming a part hereof;
(iv) A Preliminary Change of Ownership Report
for delivery with the Assignment of Leasehold;
(v) A signed counterpart of the Assignment of
Leases and Security Deposits (the "Assignment of Leases")
substantially in the form and substance of Exhibit "G"
attached hereto and forming a part hereof and a signed
counterpart of the Assignment of Service and Miscellaneous
Rights and Agreements (the "Assignment of Service
Contracts") substantially in the form and substance of
Exhibit "H" attached hereto and forming a part hereof;
(vi) A signed counterpart of the Contribution
Agreement executed by Wilstein in the form of Exhibit "K"
attached hereto and made a part hereof;
(vii) A signed counterpart of the Amendment
to Agreement of Limited Partnership executed by all of the
required existing partners, in the form of Exhibit "L"
hereto and forming a part hereof;
(viii) A signed counterpart of the Merger
Agreement executed by Apollo in the form of Exhibit "N"
attached hereto and made a part hereof: and
(ix) A signed counterpart and notarized for
recordation of the TIC Agreement with Forest City in the
form of Exhibit "M" hereto and forming a part hereof and/or
other collateral agreements and documents relating to
Acquirer's tenancy in common with Forest City as are deemed
acceptable to Acquirer.
(x) Signed copies of the New Loan documents,
save and except for the ones being executed by Forest City,
as may be necessary to consummate the New Loan; and
(xi) Execute such other documents, instruments
and certificates as may be reasonably necessary to carry out
the intent and purpose of this Agreement.
(b) At least one business day prior to the date of
Closing, Wilstein, Forest City and Apollo, to the extent
applicable, shall have delivered to Escrow Agent counterpart
executed originals, and acknowledged as required, of the
following documents:
(i) The Assignment of Leasehold together with
a separate Declaration Regarding Documentary Transfer Taxes;
(ii) A Bill of Sale (the "Bill of Sale") in the
form of Exhibit "F" attached hereto covering the Personal
Property;
(iii) An Assignment of Leases;
(iv) An Assignment of Service Contracts;
(v) An original counterpart of each of the
Service Contracts, Leases and keys to the Property if in
Owner's possession or under its control;
(vi) An affidavit or declaration certifying
that Wilstein and Apollo is not a foreign person under IRC
? 1445 and the equivalent form 590 RE with respect to the
State of California;
(vii) Notices to each of the tenants of the
Property of the transfer of the TIC Interests in the
Property to Acquirer;
(viii) To the extent they are in Owner's
possession, a complete set of all plans, specifications and
as-built drawings, and all building permits, certificates of
occupancy, third-party soil reports, and environmental
reports and studies relating to the Improvements;
(ix) All warranties and operating manuals that
Owner may have from vendors, contractors or servicing agents
with respect to the physical condition of the Property or
any portion thereof or the equipment located thereon;
(x) A signed counterpart of the Contribution
Agreement executed by Wilstein and each of the constituent
partners of Wilstein in the form of Exhibit "K" attached
hereto and made a part hereof;
(xi) A signed counterpart of the Amendment to
Agreement of Limited Partnership executed by each of the
constituent partners of Wilstein receiving OP Units, in the
form of Exhibit "L" hereto and forming a part hereof;
(xii) A signed counterpart of the Merger
Agreement executed by Apollo in the form of Exhibit "N"
attached hereto and made a part hereof;
(xiii) A signed counterpart by Forest City and
notarized for recordation of the TIC Agreement and/or any
other collateral documents and instruments relating to the
tenancy in common as may be agreed to between Acquirer and
Forest City;
(xiv) A signed copy of the Investor Question
naire in the form of Exhibit "O" attached hereto from each
of the Apollo Shareholders and the holders of the Wilstein
OP Units;
(xv) Signed copies by Forest City and Wilstein
of the appropriate New Loan documents as may be reasonably
necessary to consummate the New Loan; and
(xvi) Execute such other documents,
instruments and certificates as may be reasonably necessary
to carry out the intent and purpose of this Agreement.
(c) Upon delivery of the foregoing sums and
documents, Escrow Agent shall cause Title Company to cause
the Assignment of Leasehold and the Tenancy in Common
Agreement to be recorded (by a special recording if
necessary) in the Official Records of Los Angeles County,
California, and immediately to issue the Title Policy.
12. Costs and Prorations.
(a) Prorations. All revenues, income, receivables,
costs, expenses and payables of the Property shall be
prorated between Owner (including the TIC Interest of Forest
City) on the one hand and Acquirer and Forest City, on the
other hand, as of Closing on the basis of the actual number
of days in a particular month, and with respect to the items
enumerated below where a particular manner of apportionment
is provided, then apportionment of such item shall be made
in such manner. The obligation to make apportionments shall
survive Closing and if any item of proration or adjustment
is incapable of complete proration or adjustment at the
Closing, the parties agree to make such proration or
adjustment as soon thereafter as reasonably possible based
upon complete information. Without limitation, the
following items shall be so apportioned:
(i) Monthly rents and percentage rent and
"passthroughs" of real estate taxes and operating expenses
due from occupancy tenants under Tenant Leases, as and when
collected. Acquirer shall receive no credit for unamortized
rent concessions with respect to tenant leases in effect on
the Effective Date. If at Closing there are any past due
rents or charges owed by occupancy tenants, they shall not
be prorated until received; Acquirer shall include such
delinquencies in its normal billing and shall pursue the
collection thereof in good faith after the Closing Date (but
Acquirer shall not be required to litigate or declare a
default in any Tenant Lease). To the extent Acquirer
receives amounts on account of Tenant Leases on or after the
Closing Date, such payments shall be applied first toward
then current rent owed to Acquirer in connection with the
applicable Tenant Lease for which such payments are
received, and any excess monies received shall be applied
toward the payment of any delinquent rents, with Owner's
share thereof being promptly delivered to Owner. Acquirer
may not waive any delinquent rents nor modify a Tenant Lease
so as to reduce or otherwise affect amounts owed thereunder
for any period in which Owner is entitled to receive its
share of charges or amounts without first obtaining Owner's
written consent. Owner hereby reserves the right to pursue
any remedy against any tenant owing delinquent rents and any
other amounts to Owner. Acquirer shall reasonably cooperate
with Owner in any collection efforts hereunder (but shall
not be require to litigate or declare a default in any
Lease). With respect to delinquent rents and any other
amounts or other rights of any kind respecting tenants who
are no longer tenants of the Property as of the Closing
Date, Owner shall retain all rights relating thereto;
(ii) Rent for the current payment period under
the Ground Lease. Any remaining credit due Owner on
Additional Rent pursuant to the Settlement Agreement dated
December 12, 1995 between Owner and World Savings shall be
credited to Owner at Closing;
(iii) Real estate and personal property taxes
and any special assessments, based upon the latest previous
tax levies. Such items shall be reapportioned between Owner
and Acquirer if current tax rates differ from the latest
previous tax rates as soon as the same are known. Owner
agrees that to the extent any additional taxes, assessments
or levies are imposed, assessed or levied against the
Property, or any portion thereof, the Owner or the Acquirer
at any time subsequent to Closing but with reference to any
period prior thereto during Owner's ownership thereof, Owner
shall promptly pay to Acquirer an amount equal to such
additional assessments or levies. Similarly, if tax refunds
become payable for periods during Owner's ownership of the
Property, such amounts (subject to adjustments for the
potential claims of occupancy tenants that paid tax
increases by way of rent escalations to Owner) shall be
promptly paid over to Owner. In the event that any
assessments on the Property are payable in installments,
then the installment for the current period shall be
prorated (with Acquirer assuming the obligation to pay any
installment due after the Closing Date). In no event shall
Owner be charged with or be responsible for any increase in
the taxes on the Property resulting from the sale of the
Property or from any improvements made or lease entered into
on or after the Closing Date;
(iv) Transferable annual permits, licenses,
and/or inspection fees, if any, on the basis of the duration
of the same;
(v) Security Deposits, plus accrued interest,
if any, payable thereon to tenants, and any other deposits
and prepaid rent, shall be credited (or assigned) to
Acquirer;
(vi) Utility charges levied against Owner or
the Property, and Acquirer shall transfer all such utility
services to its name and account immediately upon Closing;
(vii) Service Contracts on the basis of the
charge or premium for the period involved;
(viii) Tenant improvements costs, leasing
commissions and legal fees for leases signed after the
Effective Date shall be paid by Acquirer, to the extent
approved by Acquirer in accordance with Paragraphs 7(a) and
7(b) together with any amounts payable thereunder; and
(ix) All other operating expenses incurred in
the management and operation of the Property.
No insurance policies shall be assigned hereunder, and
accordingly there shall be no proration of insurance
premiums.
(b) Expenses of Closing. The expenses of Closing
shall be paid in the following manner:
(i) Wilstein and Apollo shall pay:
(1) The cost of securing the CLTA
standard coverage portion of the Title Policy that is
attributable to the required ALTA Owner's coverage;
(2) Documentary transfer tax (County
and City) imposed on the conveyance of title to the Property
to Acquirer it being agreed that Acquirer will acquire the
Wilstein and Apollo TIC Interests subject to the Existing
Loan; and
(3) One-half of Escrow Agent's
Escrow Fee.
(ii) Acquirer shall pay:
(1) The cost of the Preliminary
Title Report and the cost of any Escrow or Title
cancellation charges in the event that the transaction fails
to close through no fault of the Owner and, if Closing does
occur, that portion of the cost of the Title Policy that is
not to be paid by Wilstein and Apollo pursuant to Subsection
(b)(i)(1) above including the cost of any endorsements and
the cost of updating the ALTA Survey;
(2) The cost of recording the
Assignment of Leasehold, and the Tenancy in Common
Agreement;
(3) All expenses relating to Acquire
r's financing of its acquisition of the Property and its due
diligence reviews hereunder; and
(4) One half of Escrow Agent's
Escrow fee.
All other Closing fees and expenses, including, but not
limited to, the parties' legal expenses, accounting and con
sulting fees, and other incidental expenses in connection
with this transaction shall be borne by the party incurring
same.
13. Representations, Warranties and Covenants of Owner.
(a) Except as specifically set forth in this
Paragraph 13(a), the acquisition of the Property hereunder
is and will be made on an "as is" basis, without
representations and warranties of any kind or nature,
express, implied or otherwise, including but not limited to,
any representation or warranty concerning title to the
Property, the physical condition of the Property (including,
but not limited to, the presence or absence of hazardous
substances on or respecting the Property), the compliance of
the Property with applicable laws and regulations
(including, but not limited to, zoning and building codes or
the status of development or use rights respecting the
Property), the financial condition of the Property or any
other representation or warranty respecting any income,
expenses, charges, liens or encumbrances, rights or claims
on, affecting or pertaining to the Property or any party
thereof. Acquirer acknowledges that Acquirer has examined,
reviewed and inspected all matters which in Acquirer's
judgment bear upon the Property and its value and
suitability for Acquirer's purposes. Except as to matters
specifically set forth in this Paragraph 13(a), Acquirer
will acquire the Property solely on the basis of its own
physical and financial examinations, reviews and inspections
and the title insurance protection afforded by the Title
Policy. Subject to the foregoing and except as disclosed by
Owner to Acquirer or otherwise discovered by Acquirer prior
to the expiration of the Approval Period as contained in the
materials delivered to Acquirer and identified in Paragraph
5 hereof, Owner hereby makes the following representations,
warranties and covenants. Except as disclosed in Exhibit
"J" attached hereto:
(i) Owner has no knowledge of any:
(1) existing latent defects or
seismic conditions concerning the Real Property or the
Improvements or materially incorrect income or expense
figures in any financial statements prepared by or for Owner
and delivered to Acquirer regarding the Property (with
respect to periods of time occurring prior to the date
hereof and, without limitation on the foregoing, Owner does
not make any representation or warranty with respect to any
projections);
(2) any pending claim, litigation or
administrative action, arbitration, proceeding pending
before any court, agency or official, nor any such claim or
action threatened in writing, relating to the Owner or the
Property;
(3) written notice of violations of
City, County, State, Federal, building, zoning, fire or
health codes, regulations or ordinances, filed or issued
against the Property;
(4) Hazardous Substance in existence
on or below the surface of the Real Property or in any
building located upon the Real Property, including, without
limitation, contamination of soil, subsoil or ground water,
which constitutes a violation of any applicable law, rule or
regulation of any government entity having jurisdiction
thereof except for office and medical supplies in customary
quantities; and
(5) matter that would suggest any
portion of the Property having ever been used by Owner or
any tenant of any portion of the Property during Owner's
ownership thereof as a waste storage or disposal site or
gasoline station. Without limiting the other provisions of
this Agreement, Owner shall reasonably cooperate with
Acquirer's investigation of matters relating to the
foregoing provisions of this paragraph and to provide access
to and copies of any third party data and/or documents
dealing with potentially Hazardous Substances used at the
Property and any disposal practices followed in accordance
with, and subject to the provisions of, Paragraph 6 hereof.
Owner agrees that Acquirer may make inquiries of
governmental agencies regarding such matters, without liabil
ity for the outcome of such discussions. For the purposes
of this Agreement, "Hazardous Substances" shall mean (A) sub
stances defined as "hazardous substances" in (i) the Compre
hensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S. C. ?? 9601 et seq.), or
(ii) the Resource Conservation and Recovery Act of 1976 (42
U.S.C. ?? 6901 et seq.), together with the regulations
enacted pursuant to such acts, and (B) those substances
defined as "hazardous wastes" in ? 25117 of the California
Health and Safety Code or as "hazardous substances" in
? 25316 of the California Health and Safety Code together
with the regulations enacted pursuant to such statutes.
(ii) The ground lease with World Savings
described in Exhibit "A" hereto constituting the Leasehold
Estate, the Tenant Leases and Service Contracts and any
other agreements, matters and things to be submitted to
Acquirer by Owner for approval pursuant to Paragraph 5
above, or otherwise, shall be true, correct and complete
copies thereof as of the date of submission thereof, and as
thereafter supplemented by supplements or additions,
approved in writing by Acquirer, on or before Closing.
Notwithstanding anything to the contrary contained herein,
Owner shall have no obligation or liability to Acquirer with
respect to any of the foregoing ground or tenant lease
matters which shall be confirmed as correct in any estoppel
certificate delivered to Acquirer as provided in this
Agreement;
(iii) To Owner's knowledge, the operating
financial information prepared by Owner and delivered to
Acquirer with respect to the Property, consisting of
Statements of Operations for all calendar years beginning on
and after January 1, 1995 and for the current calendar year
are true and correct in all material respects; in this
regard Owner agrees to make available to Acquirer and its
accountants, at Acquirer's cost, all accounting records for
the calendar year ended December 31, 1996 and for the period
from January 1, 1997 through the date of Closing, including
but not limited to all general ledgers, cash receipts,
cancelled checks and any other accounting documents and
information directly relating to the operations of the
Property reasonably requested to the extent in Owner's
possession; and
(iv) As used in this Agreement, "to Owner's
knowledge" or other similar knowledge limitations as to
Owner shall mean the actual knowledge, without any duty to
investigate, of Jeff Buttikofer, David Wilstein and Andrew
S. Cohen.
(b) Notwithstanding anything contained in Para
graphs 5(a) or 13(a) to the contrary, Owner is neither
responsible nor liable for any representation or warranty,
either expressed or implied, guaranty, promise or other
information pertaining to the Property or the Improvements
made or furnished to Acquirer by any broker representing or
purporting to represent Owner.
(c) None of Apollo, Wilstein or Forest City has any
employees which are also employed by 11601 Wilshire
Associates, a California general partnership and whose job
description require work at or solely with respect to the
Property. Furthermore, nothing in this Agreement or any
document delivered pursuant hereto, express or implied,
shall obligate Acquirer to employ any person now employed at
the Property.
14. Representations and Warranties of Acquirer. Acq
uirer hereby makes the following representations and
warranties, each of which is deemed to be material and each
of which is stated by Acquirer to be true and correct on the
date hereof:
(a) Acquirer has full legal power and authority to
enter into and perform this Agreement in accordance with its
terms. This Agreement constitutes the valid and binding
obligation of Acquirer, enforceable in accordance with its
terms, except as such enforcement may be affected by bank
ruptcy, insolvency and other laws affecting the rights of
creditors generally. The execution, delivery and
performance of this Agreement and all documents in
connection therewith are not in contravention of or in
conflict with any agreement or undertaking to which Acquirer
is a party or by which Acquirer may be bound or affected.
(b) The execution and delivery of this Agreement
and the payment and performance by Acquirer of its payments
and obligations hereunder require no further action or
approval in order to constitute this Agreement as a binding
and enforceable obligation of Acquirer, and all such actions
have been duly taken by Acquirer.
(c) As of the expiration of the Approval Period and
as of the Closing Date (i) Acquirer has received and
reviewed all materials provided to Acquirer by Owner
pursuant to Paragraphs 4 and 5 above (collectively, the "Due
Diligence Materials"), (ii) Acquirer has inspected the
Property, (iii) Acquirer has made such investigation of the
information contained in the Due Diligence Materials as it
deems appropriate, and (iv) Acquirer is satisfied based upon
its examination of the Due Diligence Materials and its
investigation of all other aspects of the Property which
Acquirer deems material to its purchase thereof, including,
without limitation, the condition of title to the Property,
the zoning of the Property, the condition and physical
aspects of all structures located on the Real Property
(including the Improvements) and the presence or absence of
Hazardous Substances on the Property. Except as set forth
in subparagraph 13(a) and elsewhere in this Agreement,
Acquirer is not relying on any representation, written
information, data, reports, warranty, or statement of Owner
or their agents concerning the Property or the accuracy or
completeness of the Due Diligence Materials, and Acquirer is
acquiring the Property in "AS-IS" condition based solely
upon Acquirer's own independent inspection, investigation
and review, as more particularly set forth in Paragraph
13(a) hereof. Furthermore, Acquirer acknowledges and agrees
that Owner has no obligation from and after the date hereof
to continue or complete the installation of any corridor
upgrades or environmental management systems.
15. General Covenants and Agreements of Acquirer
and Owner.
(a) Delivery of Possession. Possession of the
Property shall be delivered to Acquirer upon Closing,
subject to the rights of tenants in possession.
(b) Damage to or Destruction of Property Prior to
Closing; Risk of Loss. If prior to Closing the Property
shall sustain damage caused by fire or other casualty that
is insured and that would cost One Million Dollars
($1,000,000) or more to repair or if any uninsured loss or
casualty occurs that would cost One Million Dollars
($1,000,000) or more to repair, either Owner or Acquirer may
respectively elect to terminate this Agreement by written
notice to the other within fifteen days after notice of such
event, or at Closing, whichever is earlier. If neither
Owner nor Acquirer so elects to terminate its obligations
under this Agreement, or if the loss or casualty would cost
less than One Million Dollars ($1,000,000) to repair, the
Closing shall take place as provided herein and Acquirer
shall receive (i) a credit for the amount of Owner's
deductible or retention and (ii) an assignment of Owner's
rights to insurance proceeds with respect to any unrepaired
damage (including any rental loss proceeds for periods after
the Closing), loss or casualty in question. Owner shall
retain all interest in and to the insurance proceeds that
may be payable to Owner on account of repaired and completed
damage, but Owner shall have no obligation of repair or
replacement.
(c) Condemnation of Property Prior to Closing. In
the event that the Property or any part thereof becomes the
subject of a condemnation proceeding other than of a minor
immaterial nature prior to Closing, Owner agrees to
immediately advise Acquirer thereof. In the event of such
condemnation, Acquirer shall have the option to (1) take
title in accordance with the terms and conditions of this
Agreement and negotiate with the said condemning authority
for the condemnation award and receive the benefits thereof
without affecting the Valuation, or (2) terminate this
Agreement and declare its obligations thereunder null and
void and of no further effect, in which event all sums
theretofore paid to Owner or to Escrow Agent hereunder shall
be returned to Acquirer as set forth herein. Notice of the
exercise of such option hereunder shall be in writing,
delivered to Owner at the address set forth in Paragraph
16(g) of this Agreement (or such other address as Owner may
have theretofore designated in writing) at least two days
prior to Closing.
(d) Brokers/Finders. Owner warrants that Owner did
not negotiate with respect to the purchase of the Property
through any broker, agent, finder, affiliate or other third
party or incur any liability, contingent or otherwise, for
brokerage or finder's fees or agent's commissions or other
like payments in connection with this Agreement, or the
transactions contemplated hereby and Owner hereby agrees to
indemnify Acquirer against and hold Acquirer harmless from
any and all claims, demands, causes of action or damages
resulting from any breach of this warranty. Acquirer hereby
warrants that Acquirer did not negotiate through any broker,
agent, finder, affiliate or other third party or incur any
liability, contingent or otherwise, for any such brokerage
or finder's fees, agent's commissions or other like
payments, in connection with this Agreement, and hereby
agrees to indemnify Owner against and hold Owner harmless
from any and all claims, demands, causes of action or
damages resulting from any breach of this warranty. This
provision shall survive Closing.
(e) Further Assurances Prior to Closing. Owner and
Acquirer shall, prior to Closing, execute any and all docu
ments and perform any and all acts reasonably necessary,
incidental or appropriate to effect the purchase and sale
and the transactions contemplated in this Agreement.
(f) Time of Essence. Time shall be of the essence
with respect to the obligations of the parties hereunder.
(g) Waivers, Amendments and Modifications of Provi
sions. Waivers, amendments or modifications of any term or
condition of this Agreement must be in writing signed by the
party against whom such waiver is sought to be enforced. No
waiver by any party of any breach hereunder shall be deemed
a waiver of any other or subsequent breach.
(h) Indemnification. Owner shall indemnify Acq
uirer against and hold Acquirer harmless from any and all
loss, cost, damage, claim, liability or expense, including
court costs and reasonable attorneys' fees, for third party
claims arising out of or in connection with any tort
committed by Owner (including any personal injury or
property damage or claim of personal injury or property
damage of any kind whatsoever, including death, to property
or persons, including employees of Owner) unless caused by
Acquirer, resulting from such tort occasioned in or about
the Property prior to Closing. Acquirer shall indemnify
Owner against and hold Owner harmless from any and all loss,
damage, claim of damage, liability or expense, including
court costs and reasonable attorneys' fees, for third party
claims arising out of or in connection with any tort
committed by Acquirer (including any personal injury or
property damage or claim of personal injury or property
damage of any kind whatsoever, including death, to property
or persons, including employees of Acquirer) unless caused
by Owner, resulting from such tort occasioned in or about
the Property (a) as a result of its investigation of the
Property during the Approval Period or (b) on or subsequent
to Closing. These covenants shall survive Closing.
16. Miscellaneous Provisions.
(a) Successors and Assigns. Subject to the pro
visions hereof, the terms and provisions hereof shall be
binding upon and inure to the benefit of the successors and
assigns of the parties hereto.
(b) Meaning of Terms. When necessary herein, all
terms used in the singular shall apply to the plural and
vice versa; and all terms used in the masculine shall apply
to the neuter and feminine genders.
(c) Entire Agreement. This Agreement is the entire
agreement between the parties hereto with respect to the sub
ject matter hereof and supersedes all prior agreements
between the parties hereto with respect thereto. No claim
of waiver, modification, consent or acquiescence with
respect to any of the provisions of this Agreement shall be
made against either party, except on the basis of a written
instrument executed by or on behalf of such party.
(d) Governing Law. This Agreement is to be
governed by and construed in accordance with the internal
laws of the State of California.
(e) Paragraph Headings. The headings of the sev
eral paragraphs of this Agreement are inserted solely for
convenience of reference and are not a part of and are not
intended to govern, limit or aid in the construction of any
term or provision hereof.
(f) Attorneys' Fees. If either Owner or Acquirer
shall obtain legal counsel and bring an action or proceeding
against the other by reason of an alleged breach of any
covenant, provision or condition hereof, or otherwise
arising out of this Agreement, the unsuccessful party shall
pay to the prevailing party reasonable attorneys' fees,
which shall be payable whether or not any proceeding is
prosecuted to judgment or award. The term "prevailing
party" shall include a party (i) who brings an action or
proceeding against the other by reason of the other's breach
or default and obtains substantially the relief sought by
judgment or award or (ii) who successfully defends an action
or proceeding brought by the other party and against whom no
material damages or specific performance are awarded.
(g) Notices. All notices, requests and other
communications hereunder shall be in writing and shall be
personally delivered or, in the alternative, deposited with
(1) the United States Postal Service, Certified Mail with
Return Receipt Requested, with postage prepaid or (2)
Federal Express or other overnight air freight forwarder for
delivery the next business day or (3) by facsimile
transmission during normal business hours on regular
business days at the to the following addresses, and shall
be effective immediately upon delivery:
Owner: Apollo Real Estate Advisors, LP
1301 Avenue of the Americas
38th Floor
New York, NY 10019
Attn: Andrew S. Cohen
FAX (212) 261-4060
With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
16th Floor
Los Angeles, CA 90067
Attn: Real Estate Notices (GML)
FAX (310) 201-8922
With a copy to: Forest City Enterprises, Inc.
Legal Department
1160 Terminal Tower
50 Public Square
Cleveland, OH 44113-2203
Attn: William M. Warren, Esq.
FAX (216) 263-6206
With a copy to: Baker & Hostetler LLP
3200 National City Center
1900 East Ninth Street
Cleveland, OH 44114-3485
Attn: Alexander J. Szilvas, Esq.
FAX: (216) 696-0740
With a copy to: David Wilstein
Realtech
2080 Century Park East
Penthouse
Los Angeles, CA 90067
FAX (310) 553-0205
With a copy to: Resch Polster Alpert & Berger LLP
10390 Santa Monica Boulevard
4th Floor
Los Angeles, CA 90025
Attn: Ronald Resch, Esq.
FAX (310) 552-3209
Acquirer: Arden Realty, Inc.
9100 Wilshire Boulevard
Suite 700 East
Beverly Hills, CA 90212
Attn: Victor J. Coleman
FAX (310) 246-2941
With a copy to: Troy & Gould
1801 Century Park East
16th Floor
Los Angeles, CA 90067
Attn: Kenneth R. Blumer, Esq.
FAX (310) 201-4746
Escrow Agent: Chicago Title Company
700 South Flower Street
Suite 900
Los Angeles, CA 90017
Attn: Rose Martinez
FAX (213) 488-4384
All notices, requests and other communications may be sent
by legal counsel for the party and shall be deemed received
on the date of acknowledgment or other evidence of actual
receipt.
(h) Severability. If any provision of this Agree
ment or the application thereof to any person or cir
cumstance shall be invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such
provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest
extent permitted by law.
(i) Further Assurances on or After Closing. Each
party hereto agrees to do all acts and things and to make,
execute and deliver such written instruments as shall be
reasonably necessary to carry out the terms and provisions
of this Agreement. This covenant of further assurances
shall survive Closing.
(j) Other Parties. Nothing in this Agreement shall
be construed as giving any person, firm, corporation or
other entity, other than the parties hereto, their
successors and permitted assigns, any right, remedy or claim
under or with respect to this Agreement or any provision
hereof.
(k) Confidentiality. Owner and Acquirer agree that
it is in both of their best interests to keep this Agreement
and all information concerning the Property confidential
until Closing. Owner and Acquirer each agrees that neither
shall take any action nor conduct itself in any fashion that
would disclose to unrelated third parties Acquirer's acqui
sition or intended ownership and operation of the Property
or any aspect of the contemplated transaction, subject,
however, to any party's obligations under the Securities Act
of 1933, the Securities and Exchange Act of 1934, the rules
and regulations promulgated thereunder, the rules of the
NYSE and any credit or underwriting agreement by which
either party is bound and Owner's obligation to notify World
Savings, the Lessor under the Master Lease, as defined in
Exhibit "E" hereto, or the occupancy tenants and its
existing lender of the proposed transactions hereunder.
After Closing, either party may make a public announcement
of the transaction.
(l) Survival. Any cause of action of a party for a
breach of the representations and warranties contained in
this agreement shall survive for a one (1) year period after
Closing, at which time such representations and warranties
(and any cause of action resulting from a breach thereof not
then in litigation) shall terminate. Notwithstanding the
foregoing, if Acquirer shall have actual knowledge as of the
Closing that any of the representations or warranties of
Owner contained herein are false or inaccurate or that Owner
is in breach or default of any of its obligations under this
Agreement, and Acquirer nonetheless closes the transactions
hereunder and acquires the Property, then Owner shall have
no liability or obligation respecting such false or
inaccurate representations or warranties or other breach or
default (and any cause of action resulting therefrom shall
terminate upon such closing hereunder).
(m) Counterparts. This Agreement may be executed
in any number of counterparts, each of which so executed
shall be deemed an original; such counterparts shall
together constitute but one agreement.
(n) Facsimile Signatures. Acquirer and Owner each
(i) has agreed to permit the use, from time to time and
where appropriate, of telecopied signatures in order to
expedite the transaction contemplated by this Agreement,
(ii) intends to be bound by its respective telecopied
signature, (iii) is aware that the other party will rely on
the telecopied signature, and (iv) acknowledges such
reliance and waives any defenses to the enforcement of the
documents and notices effecting the transaction contemplated
by this Agreement based on the fact that a signature or
notice was sent by telecopy.
IN WITNESS WHEREOF, Owner and Acquirer do hereby execute
this Agreement as of the date first written above.
Owner: 11601 HOLDING CORP.,
a Delaware corporation
By: /s/ Andrew Cohen
Name: Andrew Cohen
Title: Vice President
WILSHIRE SV ASSOCIATES,
a California limited partnership
(formerly known as WSV Associates)
By: Housing Affiliates, Inc.,
a California corporation
By:/s/ David Wilstein
David Wilstein, President
CONSTITUENT PARTNERS OF WILSHIRE SV ASSOCIATES
HOUSING AFFILIATES, INC.,
a California corporation
By:/s/ David Wilstein
David Wilstein, President
/s/ David Wilstein
David Wilstein
/s/ Leonard Wilstein
Leonard Wilstein
/s/ Arnold Rosenstein
Arnold Rosenstein
/s/ Raymond Lee Jensen
Lee Jensen
FOREST CITY SAN VICENTE CORP.,
an Ohio corporation
By:/s/ David J. LaRue
Name: David J. LaRue
Title: Vice President
Acquirer: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc.,
a Maryland corporation,
Its general partner
By: /s/ Victor J. Coleman
Victor J. Coleman,
President and Chief
Operating Officer
ARI: ARDEN REALTY, INC.
a Maryland limited partnership
Its general partner
By: /s/ Victor J. Coleman
Victor J. Coleman,
President and Chief
Operating Officer
The undersigned hereby executes this Agreement to
evidence its agreement to act as Escrow Holder in accordance
with the terms of this Agreement.
AGREED AND ACCEPTED:
Escrow Agent:
Chicago Title Company
By: /s/ Rose Martinez
Name: Rose Martinez
Title: Senior Escrow Officer
ARDEN REALTY LIMITED PARTNERSHIP
9100 Wilshire Boulevard
Suite 700 East
Beverly Hills, California 90212
December 9, 1997
11601 Wilshire Associates
c/o Real Tech Leasing & Management
2080 Century Park East
Penthouse
Los Angeles, CA 90067
Attn: David Wilstein
Re: World Savings Building.
Gentlemen:
Reference is made to that certain Agreement to Acquire
Certain Interests in Real Property dated November 12, 1997
and covering the World Savings Building at 11601 Wilshire
Boulevard, Los Angeles, California, as modified by those
certain letter agreements among us dated November 13, 1997,
November 20, 1997, November 26, 1997, December 1, 1997 and
December 3, 1997, respectively, extending the critical dates
to December 5, 1997 and the Closing Date to December 10, 1997
(collectively, the "Master Agreement"), between you and your
direct and indirect constituent partners as Owner and the
undersigned as Acquirer ("Arden") regarding the above-
referenced real property ("Property"). Capitalized terms not
otherwise defined in this letter shall have the meaning
ascribed to them in the Master Agreement.
Prior to the date hereof you delivered to Arden a
proposed Settlement Agreement between you and Sprink, Inc.
("Sprink") covering an alleged defect in the bolts used in
the coupling of sprinkler system ("Bolts") whereby Sprink
offered you the sum of $200,000 in full settlement of any
claims related to the Bolts in exchange for a full and
general release. In addition, the fire safety panel at the
Building ("Fire Panel") and the upgrade of the Energy
Management System at the Building ("EM System") may not be
completed, repaired, fully functional and "signed-off" by the
City of Los Angeles until after the Closing. Owner and Arden
have continued discussion regarding these matters and have
now agreed to resolve their differences with regard to these
items and follows: Arden hereby agrees to acquire and Owner
agrees to transfer the Property in accordance with the terms
of the Master Agreement as amended by this letter agreement
("Amendment") upon the following additional or modified terms
and conditions:
1. Owner shall assign at Closing all of its right,
title and interest in and to its cause of action or right to
a cause of action against Sprink and all rights to the
proposed settlement with Sprink, including the proceeds
thereof.
2. Owner acknowledges that (a) there is a balance due
on the Fire Panel installation contract with Pyro Technation
Specialists the sum of $87,941 (which includes certain
holdbacks) at the completion thereof and (b) the Building has
been cited by the Fire Department for violations of the fire,
life-safety systems which must be remedied by January 5,
1998. Arden believes that there may be an additional $25,000
required to do the work which is specifically excluded from
the Pyro Technation Specialists Contract (such as ceiling
repair and painting) as well as do the work to satisfy the
notices of violation. Owner agrees to credit the sum of
$112,941 (i.e., $87,941 plus $25,000) to Arden at Closing and
agrees to use its best efforts to obtain an extension prior
to Closing of the date by which the violations must be cured
to February 15, 1998.
3. The EMS System work is being performed by The Bar
Wren Company ("Contractor"). In order to provide security to
Arden that the work will be completed, signed-off by the City
of Los Angeles, fully functional under load conditions and
warranted for one year by the Contractor, Owner has agreed to
leave $250,000 in Escrow after Closing in an interest bearing
account as a security fund and held by Escrow for a maximum
of one year after Closing to provide security to Arden that
if the Contractor fails to fully perform or complete the
installation of the EM System upgrade to the reasonable
satisfaction of Arden or the City of Los Angeles, or if the
EM System fails under load tests or fails to otherwise
adequately perform under standard working conditions at the
Building in accordance with its specifications or the
covenants or warranties of the Contractor or breaks-down
during the warranty period and, in all such cases, is not
promptly repaired so as to be fully functional by the
Contractor under its warranty (as opposed to problems and
costs related to maintenance work), Arden shall have the
right by written notice to Escrow to demand immediate
reimbursement for monies expended by it to correct, repair or
replace the EM System (which ever is the most commercially
reasonable alternative under the circumstances). This
holdback reserve shall be managed in accordance with that
certain Post Closing Reserve Agreement, attached hereto
marked Exhibit A and incorporated herein by this reference.
4. Commencing as of the date this Amendment is
accepted by Owner, Purchaser shall be deemed to have
"approved" the Property for all purposes and its Deposit
shall be increased to a total of $2,500,000 and become non-
refundable, subject to the conditions precedent to its
obligation to Close as set forth in the Master Agreement.
Without limitation thereon, Arden acknowledges that it is
acquiring the Property subject to (i) the matters disclosed
in connection with the Sprink litigation, and (ii) the status
of the Fire Panel, Fire Department violations, and the EM
System (and acknowledges that, except for the credits or
holdbacks provided for herein, Owner shall have no further
liability or obligation with respect thereto, such liability
or obligation being hereby released). Arden waives and
releases all claims whether known or unknown regarding the
matters described in the preceding clauses (i) and (ii)
including, without limitation, all benefits under California
Civil Code Section 1542; provided, however, that Owner
represents and warrants to Arden that $87,941 is the maximum
amount due under paragraph 2(a) above and the foregoing
waiver shall not apply to this representation and warranty.
5. Notwithstanding anything in the Master Agreement to
the contrary, the Apollo interest shall first be contributed
to Arden by means of a Contribution Agreement being executed
concurrently with this Amendment whereby Apollo shall receive
at Closing OP Units in exchange for its equity in the
Property; and the amount utilized to calculate the number of
OP Units of Apollo and the OP Units of the Constituent
Partners of Wilstein to be acquired pursuant to the
respective Contribution Agreements shall be reduced by each
such entities' share of the net expenses of the transaction
which shall be paid by Arden on such entities' behalf.
6. Except to the extent set forth above, Owner and
Arden hereby reaffirm and ratify the Master Agreement as
previously amended and as amended hereby.
7. This letter may be executed in two or more
counterparts, and, when so executed, will have the same force
and effect as though all signatures appeared on a single
document. Any signature page of this letter may be detached
from any counterpart without impairing the legal effect of
any signatures thereon, and may be attached to another
counterpart identical in form thereto but having attached to
it one or more additional signature pages. In addition to the
foregoing, the parties hereto each (i) has agreed to permit
the use of telecopied signatures in order to expedite the
transaction contemplated by this letter, (ii) intends to be
bound by its respective telecopied signature, (iii) is aware
that the other party will rely on the telecopied signature,
and (iv) acknowledges such reliance and waives any defenses
to the enforcement of this letter and notices effecting the
transaction contemplated by this letter based on the fact
that a signature or notice was sent by telecopy.
If the foregoing is in accordance with your
understanding of our agreement, please sign and return a copy
of this Amendment for our files.
Sincerely,
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc.
a Maryland corporation
Its general partner
By:/s/ Richard S. Ziman
Richard S. Ziman,
Chairman of the Board and
Chief Executive Officer
Accepted and Agreed to this
12th day to December 1997
11601 WILSHIRE ASSOCIATES,
a California general partnership
By: 11601 HOLDING CORP.,
a Delaware corporation,
Its General Partner
By:/s/ Andrew S. Cohen
ANDREW S. COHEN,
Vice President
By: SAN VICENTE ASSOCIATES,
a California general partnership,
Its General Partner
By: WILSHIRE SV ASSOCIATES,
a California limited partnership
(formerly known as WSVA Associates),
Its General Partner
By: HOUSING AFFILIATES, INC.,
a California corporation,
Its General Partner
By:/s/ David Wilstein
DAVID WILSTEIN,
President
By: FOREST CITY SAN VICENTE CORP.,
an Ohio corporation,
Its General Partner
By: /s/ D. Layton McCown
Print Name: D. Layton McCown
Print Title: Vice President
11601 HOLDING CORP.,
a Delaware corporation
By: /s/ Andrew S. Cohen
Name: Andrew S. Cohen
Title: Vice President
WILSHIRE SV ASSOCIATES,
a California limited partnership
By:Housing Affiliates, Inc.,
a California corporation
By: /s/ David Wilstein
David Wilstein, President
CONSTITUENT PARTNERS OF WILSHIRE SV ASSOCIATES
HOUSING AFFILIATES, INC.,
a California corporation
By: /s/ David Wilstein
David Wilstein, President
/s/ David Wilstein
David Wilstein as Co-Trustee of
D & S Wilstein Family Trust - 1989
/s/ Leonard Wilstein
Leonard Wilstein as Co-Trustee of 1987
L & J Wilstein Family Trust
/s/ Arnold Rosenstein
Arnold Rosenstein
/s/ Lee Jensen
Lee Jensen as Trustee of the 1987
Jensen Living Revocable Trust
FOREST CITY SAN VICENTE CORP.,
an Ohio corporation
By: /s/ D. Layton McCown
Name: D. Layton McCown
Title: Vice President
cc: Victor J. Coleman
Brig Troy
Kenneth R. Blumer, Esq. (310) 201-4746
Rose Martinez (213) 488-4384
Gary Laughlin Esq. (310) 201-8922
Nicolas Ramniceanu, Esq.(310) 552-3209
November 20, 1997
ARD2-13
VIA FACSIMILE AND FIRST CLASS MAIL
Gary M. Laughlin, Esq.
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, CA 90067
FAX (310) 201-8922
Alexander J. Szilvas, Esq.
Baker & Hostetler LLP
3200 National City Center
1900 East Ninth Street
Cleveland, OH 44114-3485
FAX: (216) 696-0740
Ronald Resch, Esq.
Resch Polster Alpert & Berger LLP
10390 Santa Monica Boulevard
4th Floor
Los Angeles, CA 90025
FAX (310) 552-3209
Re: World Savings Master Agreement
Dear Gary, Alex and Ron:
As you know, pursuant to the terms of that certain
Agreement to Acquire Certain Interests in Real Property among
our respective clients dated November 12, 1997 and covering
the World Savings Building at 11601 Wilshire Boulevard, Los
Angeles, California, as modified by that certain letter
agreement among us dated November 13, 1997, extending the
critical dates to November 21, 1997 (collectively, the
"Master Agreement") tomorrow is the last day of the Due
Diligence Period and the last day to approve of the Merger
Agreement, Contribution Agreement and the Tenancy In Common
Agreement, as respects each of your client's aspect of the
proposed transaction.
Because of requirements of the proposed new lender on
the Property, which continue to be in flux, as well as the
tax requirements of each of your respective clients, it is
now apparent that there will not be complete agreement on all
of the sub-parts of the Master Agreement by such deadline;
namely, the Merger Agreement, Contribution Agreements and the
new debt and tax structure. While my client, Arden Realty
Limited Partnership, continues to be willing to waive its due
diligence contingencies based upon its physical and fiscal
review of the Property, the issue of the required debt or
basis requirements for each of your clients continues to be
an unresolved issue and I believe it to be in everyone's best
interest to agree upon an extension of this and all of the
other November deadlines set forth in the Master Agreement
until the earlier of the date when all of the aforementioned
have been approved (including the Option and Put Agreement
between my client and Forest City) or Wednesday, November 26,
1997 at 5:00 pm Los Angeles time.
In this way, we can all proceed apace to conclude each
of our respective tax and legal aspects of this transaction
without immediate fear of a "drop-dead" date.
Therefore, this letter will confirm our mutual agreement
on behalf of our respective clients that (1) the Due
Diligence Period and (2) the date by which the Tenancy in
Common Agreement (including the Option and Put Agreement),
the Contribution Agreements and the Merger Agreement must be
approved are hereby extended to the earlier of that date such
agreements are approved by each of the respective parties or
Wednesday, November, 1997.
Please confirm this understanding, by signing and
returning a copy of this letter to each party's counsel for
their and my files. Thank you for your cooperation.
Please let me know if you have any questions or comments
concerning any of the foregoing.
Best Regards,
/s/ Kenneth R. Blumer
Kenneth R. Blumer
Member of the Firm
KRB:rl
The foregoing is hereby confirmed and agreed to on
behalf of our respective clients.
/s/ Gary Laughlin
Gary Laughlin
Pircher Nichols & Meeks
on behalf of Apollo
/s/ Alexander Szilvas
Alexander Szilvas
Baker & Hostetler LLP
on behalf of Forest City
/s/ Ronald Resch
Ronald Resch
Resch Polster Alpert & Berger LLP
on behalf of Wilstein
November 26, 1997
ARD2-13
VIA FACSIMILE AND FIRST CLASS MAIL
Gary M. Laughlin, Esq.
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, CA 90067
FAX (310) 201-8922
Alexander J. Szilvas, Esq.
Baker & Hostetler LLP
3200 National City Center
1900 East Ninth Street
Cleveland, OH 44114-3485
FAX: (216) 696-0740
Ronald Resch, Esq.
Resch Polster Alpert & Berger LLP
10390 Santa Monica Boulevard
4th Floor
Los Angeles, CA 90025
FAX (310) 552-3209
Re: World Savings Master Agreement
Dear Gary, Alex and Ron:
As you know, pursuant to the terms of that certain
Agreement to Acquire Certain Interests in Real Property among
our respective clients dated November 12, 1997 and covering
the World Savings Building at 11601 Wilshire Boulevard, Los
Angeles, California, as modified by that certain letter
agreement among us dated November 13, 1997, extending the
critical dates to November 21, 1997 (collectively, the
"Master Agreement"), as further modified by the Letter
Agreement dated November 20, 1997, extending the critical
dates to November 26, 1997, today is the last day of the Due
Diligence Period and the last day to approve of the Merger
Agreement, Contribution Agreement and the Tenancy In Common
Agreement, as respects each of your client's aspect of the
proposed transaction.
Because of requirements of the proposed new lender on
the Property, which continue to be in flux, as well as the
tax requirements of each of your respective clients, it is
now apparent that there will not be complete agreement on all
of the sub-parts of the Master Agreement by such deadline;
namely, the Merger Agreement, Contribution Agreements and the
new debt and tax structure. While my client, Arden Realty
Limited Partnership, continues to be willing to waive its due
diligence contingencies based upon its physical and fiscal
review of the Property, the issue of the required debt or
basis requirements for each of your clients continues to be
an unresolved issue and I believe it to be in everyone's best
interest to agree upon an extension of this and all of the
other November deadlines set forth in the Master Agreement
until the earlier of the date when all of the aforementioned
have been approved (including the Option and Put Agreement
between my client and Forest City) or Monday, December 1,
1997 at 5:00 pm Los Angeles time.
In this way, we can all proceed apace to conclude each
of our respective tax and legal aspects of this transaction
without immediate fear of a "drop-dead" date.
Therefore, this letter will confirm our mutual agreement
on behalf of our respective clients that (1) the Due
Diligence Period and (2) the date by which the Tenancy in
Common Agreement (including the Option and Put Agreement),
the Contribution Agreements and the Merger Agreement must be
approved are hereby extended to the earlier of that date such
agreements are approved by each of the respective parties or
Monday, December 1, 1997.
Please confirm this understanding, by signing and
returning a copy of this letter to each party's counsel for
their and my files. Thank you for your cooperation.
Please let me know if you have any questions or comments
concerning any of the foregoing.
Best Regards,
Patrick R. Obel
Member of the Firm
PRO:rl
The foregoing is hereby confirmed and agreed to on
behalf of our respective clients.
/s/ Gary Laughlin
Gary Laughlin
Pircher Nichols & Meeks
on behalf of Apollo
/s/ Alexander Szilvas
Alexander Szilvas
Baker & Hostetler LLP
on behalf of Forest City
/s/ Ronald Resch
Ronald Resch
Resch Polster Alpert & Berger LLP
on behalf of Wilstein
December 1, 1997
ARD2-13
VIA FACSIMILE AND FIRST CLASS MAIL
Gary M. Laughlin, Esq.
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, CA 90067
FAX (310) 201-8922
Alexander J. Szilvas, Esq.
Baker & Hostetler LLP
3200 National City Center
1900 East Ninth Street
Cleveland, OH 44114-3485
FAX: (216) 696-0740
Ronald Resch, Esq.
Resch Polster Alpert & Berger LLP
10390 Santa Monica Boulevard
4th Floor
Los Angeles, CA 90025
FAX (310) 552-3209
Re: World Savings Master Agreement
Dear Gary, Alex and Ron:
As you know, pursuant to the terms of that certain
Agreement to Acquire Certain Interests in Real Property among
our respective clients dated November 12, 1997 and covering
the World Savings Building at 11601 Wilshire Boulevard, Los
Angeles, California, as modified by those certain letter
agreements among us dated November 13, 1997, November 20,
1997 and November 26, 1997, respectively, extending the
critical dates to December 1, 1997 (collectively, the "Master
Agreement"), today is the last day of the Due Diligence
Period and the last day to approve of the Merger Agreement,
Contribution Agreement and the Tenancy In Common Agreement,
as respects each of your client's aspect of the proposed
transaction.
Because of requirements of the proposed new lender on
the Property as well as the tax requirements of each of your
respective clients as respects the changing nature of the
Contribution Agreement and the Merger Agreement, it is now
apparent that there will not be complete agreement on all of
the sub-parts of the Master Agreement by such deadline;
namely, the Merger Agreement and Contribution Agreement.
While my client, Arden Realty Limited Partnership, continues
to be willing to waive its due diligence contingencies based
upon its physical and fiscal review of the Property, the
issue of the required debt or basis requirements for each of
your clients continues to be an unresolved issue and I
believe it to be in everyone's best interest to agree upon an
extension of this and all of the other November deadlines set
forth in the Master Agreement until the earlier of the date
when all of the aforementioned have been approved or
Wednesday, December 3, 1997 at 5:00 pm Los Angeles time.
In this way, we can all proceed apace to conclude each
of our respective tax and legal aspects of this transaction
without immediate fear of a "drop-dead" date.
Therefore, this letter will confirm our mutual agreement
on behalf of our respective clients that (1) the Due
Diligence Period and (2) the date by which the Contribution
Agreements and the Merger Agreement must be approved (the
Tenancy in Common Agreement and Option and Put Agreement have
previously been approved) are hereby extended to the earlier
of that date such agreements are approved by each of the
respective parties or Wednesday, December 3, 1997; and the
Closing Date is hereby extended to December 10, 1997.
Please confirm this understanding, by signing and
returning a copy of this letter to each party's counsel for
their and my files. Thank you for your cooperation.
Please let me know if you have any questions or comments
concerning any of the foregoing.
Best Regards,
/s/ Kenneth R. Blumer
Kenneth R. Blumer
Member of the Firm
The foregoing is hereby confirmed and agreed to on
behalf of our respective clients.
/s/ Gary Laughlin
Gary Laughlin
Pircher Nichols & Meeks
on behalf of Apollo
/s/ Alexander Szilvas
Alexander Szilvas
Baker & Hostetler LLP
on behalf of Forest City
/s/ Ronald Resch
Ronald Resch
Resch Polster Alpert & Berger LLP
on behalf of Wilstein
December 3, 1997
ARD2-13
VIA FACSIMILE AND FIRST CLASS MAIL
Gary M. Laughlin, Esq.
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, CA 90067
FAX (310) 201-8922
Alexander J. Szilvas, Esq.
Baker & Hostetler LLP
3200 National City Center
1900 East Ninth Street
Cleveland, OH 44114-3485
FAX: (216) 696-0740
Ronald Resch, Esq.
Resch Polster Alpert & Berger LLP
10390 Santa Monica Boulevard
4th Floor
Los Angeles, CA 90025
FAX (310) 552-3209
Re: World Savings Master Agreement
Dear Gary, Alex and Ron:
As you know, pursuant to the terms of that certain
Agreement to Acquire Certain Interests in Real Property among
our respective clients dated November 12, 1997 and covering
the World Savings Building at 11601 Wilshire Boulevard, Los
Angeles, California, as modified by those certain letter
agreements among us dated November 13, 1997, November 20,
1997, November 26, 1997 and December 1, 1997, respectively,
extending the critical dates to December 3, 1997 and the
Closing Date to December 10, 1997 (collectively, the "Master
Agreement"), today is the last day of the Due Diligence
Period and the last day to approve of the Merger Agreement,
Contribution Agreement and the Tenancy In Common Agreement,
as respects each of your client's aspect of the proposed
transaction.
While the Tenancy in Common Agreement and the Option and
Put Agreements have been finalized, approved and initialled
by the appropriate parties, the tax requirements of the
Apollo and Wilstein interests as respects the changing nature
of the Contribution Agreement, Admission and Amendment
Agreement and the Merger Agreement have not been finalized
and it is now apparent that there will not be complete
agreement by executed or initialled documents on all of these
sub-parts of the Master Agreement by today; namely, the
Merger Agreement, the Contribution Agreement for Apollo, the
Contribution Agreement for Wilstein and the Admission and
Amendment Agreement for the Wilstein Interests. While my
client, Arden Realty Limited Partnership, continues to be
willing to waive its due diligence contingencies based upon
its physical and fiscal review of the Property, the tax
issues of your clients related to the Contribution
Agreements, Admission and Amendment Agreements and the Merger
Agreement continues to be unresolved issues and I believe it
to be in everyone's best interest to agree upon an extension
of this and all of the other December 3, 1997 deadlines set
forth in the Master Agreement (as previously amended) until
the earlier of the date when all of the aforementioned have
been approved or Friday, December 5, 1997 at 5:00 pm Los
Angeles time.
In this way, we can all proceed apace to conclude each
of our respective tax and legal aspects of this transaction
without immediate fear of a "drop-dead" date.
Therefore, this letter will confirm our mutual agreement
on behalf of our respective clients that (1) the Due
Diligence Period and (2) the date by which the Contribution
Agreements, Admission and Amendment Agreement and the Merger
Agreement must be approved (the Tenancy in Common Agreement
and Option and Put Agreement have previously been approved)
are hereby extended to the earlier of that date such
agreements are approved by each of the respective parties or
Friday, December 5, 1997; and the Closing Date shall continue
to be scheduled for December 10, 1997.
Please confirm this understanding, by signing and
returning a copy of this letter to each party's counsel for
their and my files. Thank you for your cooperation.
Please let me know if you have any questions or comments
concerning any of the foregoing.
Best Regards,
/s/ Kenneth R. Blumer
Kenneth R. Blumer
Member of the Firm
The foregoing is hereby confirmed and agreed to on
behalf of our respective clients.
/s/ Gary Laughlin
Gary Laughlin
Pircher Nichols & Meeks
on behalf of Apollo
/s/ Alexander Szilvas
Alexander Szilvas
Baker & Hostetler LLP
on behalf of Forest City
/s/ Ronald Resch
Ronald Resch
Resch Polster Alpert & Berger LLP
on behalf of Wilstein
