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) June 11, 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 90212
Beverly Hills, California
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 271-8600
Item 2. Acquisition or Disposition of Assets
In June 1997, Arden Realty, Inc. (collectively with its
subsidiaries, the "Company") completed a series of transactions
to purchase two suburban office properties totaling 658,883
rentable square feet. All properties were purchased from
unaffiliated entities.
Parkway Center in Bakersfield, California contains 61,333
rentable square feet. The property was purchased for
approximately $7,400,000, which was based on arm's-length
negotiations. The property is presently 99.5% occupied, at
average rents of $17.14 per square foot. The property was
purchased from Stockdale Investment Group, Inc. a California
corporation.
Centerpointe La Palma in La Palma, California contains 597,550
rentable square feet. The purchase price for the property was
approximately $80,100,000, which was based on arm's-length
negotiations. The property is presently 88.2% occupied, at
average gross rents of $19.12 per square foot for mid-rise
office space and average triple net rents of $10.10 per square
foot for flex office space. The property was purchased from
Mutual Life Insurance Company of New York, a New York
corporation.
To finance these acquisitions the Company used approximately
$5,000,000 of working capital and borrowed $60,000,000 on its
revolving line of credit with a group of banks led by Wells Fargo
Bank and borrowed $22,600,000 on the secured loan from Wells
Fargo Bank. The outstanding balances on the revolving line of
credit and secured loan from Wells Fargo Bank as of June 12, 1997
was $183,900,000 and $26,600,000, respectively.
Inclusive of these purchases, the Company's portfolio consists of
45 suburban office properties comprising 7,389,482 rentable
square feet and 16 apartment units.
Item 5. Other Events
In June 1997, the Company refinanced, through a special purpose
subsidiary, its existing $175 million bridge loan with a new $175
million mortgage financing from an affiliate of Lehman Brothers
(the "Mortgage Financing"). The Mortgage Financing is non-
recourse and secured by fully cross-collateralized and cross-
defaulted first mortgage liens on 18 of the Company's properties
(the "Mortgage Finance Properties") and has a fifteen year term.
The Mortgage Financing bears interest at a fixed rate of 7.52%,
is anticipated to be repaid in seven years and requires monthly
payments of interest only with all principal due in a balloon
payment at maturity, June 2012. If the Mortgage Financing is not
repaid or refinanced within seven years, the interest rate
increases by at least 2% and all excess cash flow from the
Mortgage Financing Properties must be used to pay down principal.
The Mortgage Financing documentation requires the Company to
comply with certain customary financial covenants, ongoing
operational restrictions, and certain cash management procedures.
In addition, the Mortgage Financing prohibits prepayment for
approximately three years from its origination.
In June 1997, the Company amended its then existing credit
facility with a $300 million unsecured line of credit (the
"Credit Facility") from a group of banks led by Wells Fargo Bank
(the "Lenders"). The interest rate of the Credit Facility ranges
between LIBOR plus 1.2% and LIBOR plus 1.45% depending on the
leverage ratio of the Company. Once the Company achieves a long-
term, unsecured, investment grade debt rating, the interest rate
may be lowered to between LIBOR plus 0.9% to LIBOR plus 1.15%
depending on such debt rating. Under certain circumstances, the
Company has the option to convert the interest rate from LIBOR to
the prime rate plus 0.5%. As of June 12, 1997, approximately
$14.0 million was available under the Credit Facility. The
Credit Facility has been and will be used, among other things, to
finance the acquisition of properties, provide funds for tenant
improvements and capital expenditures and provide for working
capital and other corporate purposes. The outstanding principal
balance is due on June 1, 2000.
The Credit Facility is subject to customary conditions to
borrowing, contains representations and warranties and default
provisions customary in REIT financings, and contains financial
covenants, including requirements for a minimum tangible net
worth, maximum liabilities to asset values, and minimum interest,
unsecured interest and fixed charge coverage ratios (all
calculated as defined in the Credit Facility documentation) and
requirements to maintain a pool of unencumbered properties which
meet certain defined characteristics and are approved by the
Lenders. The Credit Facility also contains restrictions on,
among other things, indebtedness, investments, distributions,
liens and mergers.
Pursuant to a separate agreement, Wells Fargo Bank has advanced
$26.6 million to the Company which is secured by two properties.
This advance bears interest at the Wells Fargo Prime Rate and is
scheduled to mature on July 10, 1997. Upon receipt of the
Lenders' consent to add the two properties which currently secure
this advance to the Credit Facility's unencumbered pool of
properties, the Company will draw down $26.6 million from the
Credit Facility to repay the advance.
Item 7. Financial Statements and Exhibits
(a) Financial statements of properties acquired.
Parkway Center
Statement of Revenue and Certain Expenses:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the Year Ended
December 31, 1996
Notes to Statement of Revenue and Certain Expenses
Centerpointe La Palma
Statement of Revenue and Certain Expenses:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the Year Ended
December 31, 1996
Notes to Statement of Revenue and Certain Expenses
(b) Pro forma financial information.
Pro Forma Condensed Consolidated Balance Sheet as of March 31,
1997 (Unaudited).
Pro Forma Condensed Consolidated Statement of Operations for the
Three Months Ended March 31, 1997 (Unaudited).
Pro Forma Condensed Consolidated Statement of Operations for the
Year Ended December 31, 1996 (Unaudited).
Note to the Pro Forma Condensed Consolidated Financial Statements
(Unaudited).
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue and
certain expenses of Parkway Center for the year ended
December 31, 1996. This statement of revenue and certain expenses
is the responsibility of the management of Parkway Center. Our
responsibility is to express an opinion on the statement of
revenue and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the statement of revenue and certain expenses is free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenue and certain expenses
was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission. Certain
expenses (described in Note 1) that would not be comparable to
those resulting from the proposed future operations of the
property are excluded and the statement is not intended to be a
complete presentation of the revenue and expenses of the
property.
In our opinion, the statement of revenue and certain
expenses of Parkway Center presents fairly, in all material
respects, the revenue and certain expenses, as defined above, of
Parkway Center for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
May 6, 1997
PARKWAY CENTER
STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
(In thousands)
Revenue:
Rental $ 911
Tenant reimbursements 92
Total revenue 1,003
Certain Expenses:
Property operating and maintenance 208
Real estate taxes 61
Insurance 7
Total certain expenses 276
Excess of revenue over
certain expenses $727
See accompanying notes to statement of revenue and certain expenses.
PARKWAY CENTER
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The accompanying statement of revenue and certain expenses
include the operations of Parkway Center (the "Property") located
in Southern California which was acquired by Arden Realty, Inc.
(the "Company"), from a nonaffiliated third party. The Property
was acquired for $7,400,000 and has 61,333 rentable square feet.
Basis of Presentation
The accompanying statement has been prepared to comply with
rules and regulations of the Securities and Exchange Commission.
The accompanying statement is not representative of the
actual operations for the period presented as certain expenses
that may not be comparable to the expenses expected to be
incurred by the Company in the future operations of the Property
have been excluded. Excluded expenses consist of interest,
depreciation and amortization, land lease expense, and property
general and administrative costs not directly comparable to the
future operation of the Property.
Revenue Recognition
Rental revenue is recognized on a straight-line basis over
the terms of the related leases.
Use of Estimates
The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
2. Commercial Office Property
The future minimum lease payments to be received under
existing operating leases as of December 31, 1996 are as follows:
1997 $1,051,000
1998 1,002,000
1999 915,000
2000 863,000
2001 519,000
Thereafter 512,000
$4,862,000
The above future minimum lease payments do not include
specified payments for tenant reimbursements of operating
expenses.
Office space in the Property is generally leased to tenants
under lease terms which provide for the tenants to pay increases
in operating expenses in excess of specified amounts. At
December 31, 1996, three of the Property's tenants accounted for
approximately 70% of the Property's aggregate annualized base
rent.
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue and
certain expenses of Centerpointe La Palma for the year ended
December 31, 1996. This statement of revenue and certain expenses
is the responsibility of the management of Centerpointe La Palma.
Our responsibility is to express an opinion on the statement of
revenue and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the statement of revenue and certain expenses is free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenue and certain expenses
was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission. Certain
expenses (described in Note 1) that would not be comparable to
those resulting from the proposed future operations of the
property are excluded and the statement is not intended to be a
complete presentation of the revenue and expenses of the
property.
In our opinion, the statement of revenue and certain
expenses of Centerpointe La Palma presents fairly, in all
material respects, the revenue and certain expenses, as defined
above, of Centerpointe La Palma for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
April 30, 1997
CENTERPOINTE LA PALMA
STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
(In thousands)
Revenue:
Rental $ 9,222
Tenant reimbursements 797
Parking-net of expenses 9
Other 38
Total revenue 10,066
Certain Expenses:
Property operating and maintenance 2,042
Real estate taxes 620
Insurance 172
Total certain expenses 2,834
Excess of revenue over
certain expenses $ 7,232
See accompanying notes to statement of revenue and certain expenses.
CENTERPOINTE LA PALMA
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The accompanying statement of revenue and certain expenses
include the operations of Centerpointe La Palma (the "Property")
located in Southern California which was acquired by Arden
Realty, Inc. (the "Company"), from a nonaffiliated third party.
The Property was acquired for $80,100,000 and has 597,550
rentable square feet.
Basis of Presentation
The accompanying statement has been prepared to comply with
rules and regulations of the Securities and Exchange Commission.
The accompanying statement is not representative of the
actual operations for the period presented as certain expenses
that may not be comparable to the expenses expected to be
incurred by the Company in the future operations of the Property
have been excluded.
Excluded expenses consist of interest, depreciation and
amortization, land lease expense, and property general and
administrative costs not directly comparable to the future
operation of the Property.
Revenue Recognition
Rental revenue is recognized on a straight-line basis over
the terms of the related leases.
Use of Estimates
The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
2. Commercial Office Property
The future minimum lease payments to be received under
existing operating leases as of December 31, 1996 are as follows:
1997 $ 8,123,000
1998 7,317,000
1999 5,686,000
2000 4,741,000
2001 4,117,000
Thereafter 14,960,000
$44,944,000
The above future minimum lease payments do not include
specified payments for tenant reimbursements of operating
expenses.
Office space in the Property is generally leased to tenants
under lease terms which provide for the tenants to pay increases
in operating expenses in excess of specified amounts. At
December 31, 1996, one of the Property's tenants accounted for
approximately 25% of the Property's aggregate annualized base rent.
ARDEN REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited pro forma condensed consolidated
balance sheet as of March 31, 1997 is presented as if the
following transactions had been consummated on March 31, 1997:
(i) the acquisition of properties acquired subsequent to
March 31, 1997 and on or prior to June 13, 1997, including the
properties described in Item 2 above (the "Second Quarter 1997
Acquisitions"); and (ii) the closings of the Mortgage Financing
and the Credit Facility. The following unaudited pro forma
condensed consolidated statements of operations for the three
months ended March 31, 1997 and for the year ended December 31,
1996 are presented as if: (i) the consummation of the initial
public offering of common stock in October 1996 (the "IPO"), and
related formation transactions in connection with the IPO;
(ii) the acquisition of properties acquired during 1996 (the
"1996 Acquisitions"); (iii) the acquisition of properties
acquired during 1997 (the "1997 Acquisitions");and (iv) the
closing of the Mortgage Financing and the amendment to the Credit
Facility had occurred at January 1, 1996.
The pro forma condensed consolidated financial statements
are not necessarily indicative of what the actual financial
position or results of operations would have been had the Company
completed the transactions described above, nor do they purport
to represent the future financial position of the Company.
<TABLE>
ARDEN REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 1997
(Unaudited)
(in thousands)
<S> <C> <C> <C> <C>
Pro Forma Adjustments
Second Arden
Arden Quarter 1997 Other Realty, Inc
Realty, Inc. Acquisitions(A) Adjustments(B) Pro Forma
ASSETS
Commercial office
properties, net $580,636 $188,450 $ -- $769,086
Cash and cash
equivalents 822 (800) -- 22
Restricted cash -- -- 4,000 4,000
Rents and other
receivables 2,093 -- -- 2,093
Deferred rent 6,609 -- -- 6,609
Prepaid financing and
leasing costs, net 4,485 -- 3,872 8,357
Prepaid expenses and
other assets 4,693 (850) -- 3,843
Total assets $599,338 $186,800 $7,872 $794,010
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage loans
payable $137,800 $37,200 $ -- $175,000
Unsecured lines of
credit 60,000 149,600 7,872 217,472
Accounts payable and
accrued expenses 9,243 -- -- 9,243
Security deposits 3,958 -- -- 3,958
Dividends and
distributions
payable 8,677 -- -- 8,677
Total liabilities 219,678 186,800 7,872 414,350
Minority interests
in Operating
Partnership 47,563 -- -- 47,563
Stockholders' equity:
Common Stock 217 -- -- 217
Additional paid-in
capital 331,880 -- -- 331,880
Retained earnings -- -- -- --
Total
stockholders'
equity 332,097 -- -- 332,097
Total liabilities
and stockholders'
equity $599,338 $186,800 $7,872 $794,010
</TABLE>
See accompanying notes.
<TABLE>
ARDEN REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1997
(Unaudited)
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Pro Forma Adjustments
Pre-Acquisition
Period Arden
Arden for the 1997 Other Realty, Inc.
Realty, Inc. Acquisitions(D) Adjustments Pro Forma
Revenues
Rental $21,892 $6,960 $ 216(E) $29,068
Tenant
reimbursements 958 305 -- 1,263
Parking, net 1,490 346 -- 1,836
Other 576 67 -- 643
24,916 7,678 216 32,810
Other income 54 -- -- 54
Total
revenues 24,970 7,678 216 32,864
Expenses
Property
expenses 7,894 2,540 170(G) 10,604
REIT general and
administrative 918 -- 82(H) 1,000
Interest 3,024 -- 4,419(I) 7,443
Depreciation and
amortization 3,562 -- 1,157(J) 4,719
Total expenses 15,398 2,540 5,828 23,766
Income before
minority
interests 9,572 5,138 (5,612) 9,098
Minority interests (1,134) -- 56(K) (1,078)
Net income $8,438 $5,138 $(5,556) $8,020
Weighted average
common shares
outstanding
before the
conversion of
OP Units 21,921 21,921
Net Income per
common share $0.38 $0.37
</TABLE>
See accompanying notes.
<TABLE>
ARDEN REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Pro Forma Adjustments
Equity in Net
Arden Arden Loss of
Realty, Inc. Predecessors Noncombined Pre-Acquisition
Consolidated Combined Entites Period Arden
Oct. 9, 1996 to Jan. 1, 1996 to Jan. 1, 1996 for the 1996 1997 Other Realty, Inc.
Dec. 31, 1996 Oct. 8, 1996 Oct. 8, 1996 Acquisitions(C) Acquisitions(D) Adjustments Pro Forma
Revenues
Rental $17,041 $32,287 $12,828 $23,095 $28,520 $1,013(E) $114,784
Tenant
reimbursements 803 2,031 243 733 1,419 -- 5,229
Parking, net 1,215 3,692 846 1,161 1,346 -- 8,260
Other 375 1,125 357 606 117 -- 2,580
19,434 39,135 14,274 25,595 31,402 1,013 130,853
Other income 138 1,330 -- -- -- (1,253)(F) 215
Total revenues 19,572 40,465 14,274 25,595 31,402 (240) 131,068
Expenses
Property expenses 6,005 14,224 6,053 11,449 10,712 789(G) 49,232
General and
administrative 753 1,758 -- -- -- 1,489(H) 4,000
Interest 1,280 24,521 7,356 -- -- (3,386)(I) 29,771
Depreciation and
amortization 3,108 5,264 2,705 -- -- 7,440(J) 18,517
Total expenses 11,146 45,767 16,114 11,449 10,712 6,332 101,520
Equity in net (loss)
of noncombined
entities -- (336) 336 -- -- -- --
Income (loss) before
minority interests
and extraordinary
items 8,426 (5,638) (1,504) 14,146 20,690 (6,572) 29,548
Minority interests (993) 721 (721) -- -- (2,508)(K) (3,501)
Income (loss) before
extraordinary
items 7,433 (4,917) (2,225) 14,146 20,690 (9,080) 26,047
Extraordinary (loss)
gain on early
extinguishment of
debt, net of
minority interests
share (13,105) 1,877 -- -- -- 11,228(L) --
Net (loss) income $(5,672) $(3,040) $(2,225) $14,146 $20,690 $2,148 $26,047
Weighted average
common shares
outstanding before
conversion of
OP Units 21,680 21,680
Net (loss) income
per common share $(0.26) $1.20
</TABLE>
See accompanying notes.
ARDEN REALTY, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
(in thousands)
1. Adjustments to the Pro Forma Condensed Consolidated
Balance Sheet
The adjustments to the Pro Forma Condensed Consolidated
Balance Sheet as of March 31, 1997 are as follows:
A. Acquisition of the Second Quarter 1997
Acquisitions with $1,650,000 of cash and deposits and with
proceeds of $37,200,000 of mortgage loans payable and
$149,600,000 on the unsecured lines of credit
Purchase price and actual and estimated additional
closing costs of the Second Quarter 1997 Acquisitions are as
follows:
Second Quarter 1997 Acquisitions Purchase Price
10780 Santa Monica $ 10,550
Clarendon Crest 5,250
Noble Professional Center 6,750
South Bay Centre 19,150
8383 Wilshire 59,100
Parkway Center 7,450
Centerpointe La Palma 80,200
Total $188,450
B. Repayments of mortgage loans and lines of credit
Proceeds from the Mortgage Financing $175,000
Repayment of mortgage loan with proceeds
from the Mortgage Financing (175,000)
Additional draws on the Credit Facility to
pay financing costs incurred in connection
with the Mortgage Financing and the amendment
to the Credit Facility 3,872
Additional draws on the Credit Facility to fund
required reserve account in accordance with the
Mortgage Financing 4,000
$7,872
2. Adjustments to the Pro Forma Condensed Consolidated Statements of Operations
The pro forma adjustments reflected in the Pro Forma Condensed
Consolidated Statements of Operations for the three months ended
March 31, 1997 and the year ended December 31, 1996 are set forth below:
C. Represents the preacquisition period for the 17 properties
acquired in 1996.
<TABLE>
1996 Acquisitions
For the Year Ended December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C>
400 Imperial
Corporate 5832 9665 Bank 100 303
Pointe Bolsa Wilshire Tower Broadway Norwalk Glenoaks
Revenue
Rental $390 $80 $548 $1,351 $1,554 $1,387 $1,980
Tenant
reimbursements 103 -- 19 29 107 40 48
Parking-net 28 10 58 124 88 66 129
Other 23 -- 32 15 74 4 138
Total revenues 544 90 657 1,519 1,823 1,497 2,295
Property expenses 123 8 203 574 581 578 956
Excess of revenue
over certain
expenses $421 $82 $454 $ 945 $1,242 $ 919 $1,339
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Burbank
Executive
Plaza and Los
10351 California Angeles 5200 Sumitomo 10350
Santa 2730 Grand Federal Center Corporate West Bank Santa
Monica Wilshire Avenue Building Promenade Center Century Building Monica Total
Revenue
Rental $1,134 $960 $-- $2,156 $2,097 $5,882 $1,021 $1,926 $629 $23,095
Tenant
reimbursements 11 -- -- -- 51 128 115 79 3 733
Parking-net 99 43 -- 164 -- -- 40 254 58 1,161
Other 7 12 -- -- -- 288 2 9 2 606
Total
revenues 1,251 1,015 -- 2,320 2,148 6,298 1,178 2,268 692 25,595
Property expenses 551 451 -- 976 982 2,881 1,188 1,070 327 11,449
Excess of revenue
over certain
expenses $700 $564 $-- $1,344 $1,166 $3,417 $ (10) $1,198 $365 $14,146
</TABLE>
D. Represents the actual preacquisition results for the 1997 Acquisitions:
<TABLE>
The 1997 Acquisitions
For the Year Ended December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Whittier
Financial
Clarendon
Crest, and Noble South
535 Santa California 6800 Professional Bay 8383 Parkway Centerpointe
Brand Monica Twin Centre Owensmouth Center Centre Wilshire Center La Palma Total
Revenue
Renta $707 $1,455 $5,580 $532 $794 $2,691 $6,628 $ 911 $9,222 $28,520
Tenant
reimbursements 74 57 225 26 5 143 -- 92 797 1,419
Parking-net 90 136 228 -- 51 -- 832 -- 9 1,346
Other -- 2 15 5 -- 26 31 -- 38 117
Total revenues 871 1,650 6,048 563 850 2,860 7,491 1,003 10,066 31,402
Property expenses 459 417 1,757 485 347 1,270 2,867 276 2,834 10,712
Excess of revenue
over certain
expenses $412 $1,233 $4,291 $ 78 $503 $1,590 $4,624 $ 727 $7,232 $20,690
</TABLE>
<TABLE>
Pre-Acquisition Period For the 1997 Acquisitions
For the Three Months Ended March 31, 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Whittier
Financial
Clarendon
10780 Crest, and Noble South
535 Santa California 6800 Professional Bay 8383 Parkway Centerpointe
Brand Monica Twin Centre Owensmouth Center Centre Wilshire Center La Palma Total
Revenue
Rental $147 $385 $1,265 $153 $258 $696 $1,688 $260 $2,108 $6,960
Tenant
reimbursements 3 4 51 1 1 29 -- 14 202 305
Parking-net 14 36 58 -- -- -- 236 -- 2 346
Other -- -- 3 -- -- 3 22 -- 39 67
Total
revenues 164 425 1,377 154 259 728 1,946 274 2,351 7,678
Property
expenses 98 115 395 121 125 277 774 56 579 2,540
Excess of
revenue over
certain
expenses $66 $310 $982 $33 $134 $451 $1,172 $218 $1,772 $5,138
</TABLE>
E. Increase in rental revenue to adjust the 1996
Acquisitions and the 1997 Acquisitions to
straightline rental revenue calculated as though
the properties were purchased at January 1, 1996.
F. Decrease in other income to eliminate
nonrecurring construction fees which would not
have been realized by the Company and certain
management fees that will not be earned.
G. Increase in property general and
administrative expenses related to additional
property payroll costs relating to the 1997
Acquisitions for the period ended March 31, 1997
and to the 1996 Acquisitions and 1997 Acquisitions
for the period ended December 31, 1996.
H. Increase in general and administrative
expenses related to expected level of operations
as a public real estate investment trust and the
incremental increase relating to the management of
additional properties.
Three
Months Ended Year Ended
March 31, 1997 December 31, 1996
I. Increase (decrease) in interest expense:
Decrease in interest expense due to
repayment of mortgage loans and lines of
credit $(3,024) $(33,157)
Increase in interest expense related to the
Mortgage Financing and lines of credit with
an interest rate of 7.52% and LIBOR plus
1.45%, respectively, net of amounts
capitalized 7,132 28,526
Increase in amortization of finance costs
related to the Mortgage Financing and the
amendment to the Credit Facility, due in
seven and three years, respectively 311 1,245
Net increase (decrease) in interest expense $4,419 $(3,386)
J. Increase in depreciation expense:
Increase in depreciation expense to reflect
a full quarter of depreciation for the 1997
for the three months ended March 31, 1997
and a full year of depreciation for the 1996
Acquisitions and 1997 Acquisitions for the
year ended December 31, 1996, utilizing a 40
year useful life for buildings and a 10 year
useful life for improvements $1,157 $7,310
Increase in depreciation due to the fair
value of consideration paid in excess of
book value of interests in properties
acquired from nonaffiliates in connection
with the completion of the IPO -- 130
Net increase in depreciation expense $1,157 $7,440
K. To reflect adjustment for minority interest of 11.85% in the
Operating Partnership.
L. To eliminate net extraordinary loss related to early extinguishment
of debt.
(c) Exhibits.
10.30 Agreement of Purchase and Sale Agreement and Escrow Instructions
between Stockdale Investment Group, Inc. a California corporation
and Arden Realty Limited Partnership, a Maryland limited partnership.
10.31 Purchase and Sale Agreement and Joint Escrow Instructions between
Mutual Life Insurance Company of New York, a New York Corporation, and
Arden Realty Limited Partnership, a Maryland limited partnership.
10.32 First Amendment to Purchase and Sale Agreement and Joint Escrow
Instructions between Mutual Life Insurance Company of New York, a
New York Corporation, and Arden Realty Limited Partnership, a Maryland
limited partnership.
10.33 Credit Facility documentation consisting of First Amended and Restated
Revolving Credit Agreement by and among the Operating Partnership and
Chase Manhattan Bank, Lehman Brothers Realty Corporation and Wells
Fargo Bank as filed as an exhibit to Registration Statement of
Form S-11 (No.333-30059) and incorporated herein by reference.
10.34 Mortgage Financing documentation consisting of Loan Agreement by and
between the Company's special purpose financing subsidiary and Lehman
Brothers Realty Corporation (the Loan Agreement includes the Mortgage
Note, Deed of Trust, and form of Tenant Estoppel Certificate and
Agreement as exhibits) as filed as an exhibit to Registration Statement
of Form S-11 (No.333-30059) and incorporated herein by reference.
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: July 9, 1997 By: /s/ Diana M. Laing
Diana M. Laing
Chief Financial Officer
ARDEN REALTY
AGREEMENT OF PURCHASE AND SALE
AND ESCROW INSTRUCTIONS
BETWEEN
STOCKDALE INVESTMENT GROUP, INC.,
A CALIFORNIA CORPORATION
SELLER
AND
ARDEN REALTY LIMITED PARTNERSHIP
PURCHASER
TABLE OF CONTENTS
Page
1. PURCHASE AND SALE 1
2. PURCHASE PRICE AND PAYMENT 2
3. ESCROW 3
4. TITLE MATTERS 4
5. DELIVERY OF INFORMATION 5
6. INSPECTIONS AND APPROVAL BY PURCHASER 6
7. OPERATION OF PROPERTY PENDING CLOSING 7
8. CONDITIONS PRECEDENT TO PURCHASER'S
OBLIGATION TO CLOSE ESCROW 8
9. CONDITIONS PRECEDENT TO SELLER'S
OBLIGATION TO CLOSE ESCROW 9
10.REMEDY OF PURCHASER AND SELLER UPON
DEFAULT 9
11.CLOSING PROCEDURE 10
12.COSTS AND PRORATIONS 11
13.REPRESENTATIONS, WARRANTIES AND COVENANTS
OF SELLER 13
14.REPRESENTATIONS AND WARRANTIES OF
PURCHASER 15
15.GENERAL COVENANTS AND AGREEMENTS OF
PURCHASER AND SELLER 15
16.MISCELLANEOUS PROVISIONS 18
AGREEMENT OF PURCHASE AND SALE
AND ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND ESCROW INSTRUCTIONS
("Agreement") is made and entered into this 9th day of April 1997
by and between STOCKDALE INVESTMENT GROUP, INC., a California
corporation ("Seller"), and ARDEN REALTY LIMITED PARTNERSHIP, a
Maryland limited partnership ("Purchaser"), with reference to the
following facts.
A. Seller is the fee owner of that certain parcel of real
property (the "Real Property") and the improvements thereon,
including a one-story office building and a three-story office
building containing, in the aggregate, approximately 61,000
rentable square feet, and other facilities, fixtures, paving and
surfacing thereon or associated therewith, (collectively, the
"Improvements"). The Real Property and Improvements are located
at 4200 and 4260 Truxtun Avenue, Bakersfield, California, and is
more particularly described in Exhibit "A" attached hereto and
forming a part hereof.
B. Seller desires to sell, and Purchaser desires to
purchase, all of the real and personal property owned by Seller
located at or forming part of the Real Property, including, but
not limited to, the Improvements, and all appurtenant easements
and rights, and the Personal Property (as hereinafter defined) on
the terms, covenants and conditions hereinafter set forth.
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 Seller and
Purchaser as follows:
1. Purchase and Sale. Subject to all of the terms and
conditions of this Agreement and for the consideration set forth,
on Closing (as hereinafter defined), Seller shall convey, or
cause to be conveyed, to Purchaser or to Purchaser's assignee
pursuant to paragraph 15(g) below, and Purchaser or its assignee
shall purchase from Seller, all of the following:
(a) The Real Property and the Improvements together
with all easements, hereditaments and appurtenances thereto,
subject only to such easements, agreements and exceptions as may
have been approved by Purchaser in accordance with Paragraph 4(a)
hereof and the tenancies and occupancies that are set forth on
Exhibit "B";
(b) All of the personal property of Seller (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");
(c) All leases to tenants leasing space in the
Improvements (the "Tenant Leases");
(d) To the extent assignable, those certain service
and other agreements more particularly described in Exhibit "C"
attached hereto and made a part hereof, which are approved by
Purchaser; and
(e) All other right, title and interest of Seller
constituting part and parcel of the Property (as hereinafter
defined), including, but not limited 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 (e) hereof.
2. Purchase Price and Payment. The purchase price (the
"Purchase Price") to be paid by Purchaser to Seller for the
Property is the sum of Seven Million Four Hundred Thousand and
No/100 Dollars ($7,400,000.00), payable as follows:
(a) Upon the opening of Escrow (as hereinafter set
forth) Purchaser shall deliver to Escrow Agent (as hereinafter
defined) cash in the sum of One Hundred Thousand Dollars
($100,000.00), ("Deposit") which shall be held by Escrow Agent as
security for the full performance by Purchaser of its obligations
hereunder and on account of the Purchase Price payable at
Closing, subject to the following terms and conditions:
(i) If Closing occurs, then the Deposit shall be
applied to the Purchaser Price;
(ii) If Closing does not occur and Seller shall be
entitled to liquidated damages as provided in Paragraph 10(b)
hereof, Seller shall be entitled to the Deposit; and
(iii) If the Closing does not occur and
Purchaser shall be entitled to the return of the Deposit as
provided in this Agreement, the same shall be returned to
Purchaser.
(b) Purchaser shall pay to Seller through Escrow Agent
at Closing in immediately available funds an amount equal to the
balance of the Purchase Price, plus (or minus) the net amount of
all costs, expenses, adjustments and prorations to be credited
(or debited) to Purchaser pursuant to this Agreement. If Seller
fails to forward to Purchaser a Qualifying Statement provided
under 1445 of the Internal Revenue Code and an equivalent Form
590RE provided under the Revenue and Taxation Code of the State
of California, Escrow Agent shall be entitled to withhold and pay
to the Internal Revenue Service and the Franchise Tax Board such
withholding required of Purchaser pursuant to Internal Revenue
Code 1445 and equivalent form provided under the Revenue and
Taxation Code of the State of California.
(c) The Deposit shall be at all times invested by
Escrow Agent in the following investments ("Approved
Investments"): (i) United States Treasury obligations,
(ii) United States Treasury-backed repurchase agreements issued
by a major money center banking institution reasonably acceptable
to Seller, (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 Seller
and Purchaser. The Deposit shall be disposed of by Escrow Agent
only as provided in this Agreement.
(d) All payments required to be made under this
Agreement shall be made in U.S. funds.
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 five (5)
business days thereafter, Seller and Purchaser shall open an
escrow (the "Escrow") with First American Title Company, 4540
California Avenue, Suite 100, Bakersfield, California, Attention:
Ms. Cathy Cox ("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 Seller, Purchaser 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 Seller and Purchaser. Escrow Agent shall
immediately, upon receipt of such duly executed copy of this
Agreement, notify Seller and Purchaser 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 on or
before May 23, 1997 (the "Closing Date"), provided the Tenant
Estoppels satisfying the requirements of paragraph 8(b) hereof
have been received and all other Purchaser's Conditions Precedent
to Closing as set forth in Paragraph 8 hereof have been
satisfied. The term "Closing" as used herein shall be deemed to
be the date upon which the respective Conditions Precedent to
Purchaser's Obligation to Close Escrow (set forth in Paragraph 8
below) and the Conditions Precedent to Seller's Obligations to
Close Escrow (set forth in Paragraph 9 below) have been
satisfied, the Grant Deed ("Grant Deed" herein) hereinafter
referred to is recorded in the office of the County Recorder of
Kern County and the net proceeds of sale are held by Escrow Agent
for disbursement to Seller. If the Closing as provided herein
does not occur by the Closing Date, this Agreement and the Escrow
shall be canceled 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 Reports.
(i) Purchaser shall order a CLTA Preliminary
Title Report covering the Real Property and the Improvements,
(the "Preliminary Title Report"), issued by First American Title
Insurance Company through First American Title Insurance Company,
4540 California Avenue, Suite 100, Bakersfield, California,
Attention: Mr. Brian Pace ("Title Agent"), together with true
and legible copies of all documents evidencing matters of record
shown as exceptions to title thereon. If Purchaser shall desire
an ALTA Survey of the Real Property and Improvements ("Survey"),
Purchaser shall cause the same to be so made at Purchaser's sole
cost and expense before the Closing Date (and upon receipt shall
deliver a copy of the undated Survey to Seller). Purchaser shall
have the right to object to any exceptions contained in the
Preliminary Title Report or the Survey by giving notice to Seller
as hereinafter provided. Notwithstanding any of the foregoing,
Seller 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
Purchaser gives written notice that it disapproves any such
exceptions to title matters, stating the exceptions so
disapproved, within the earlier of (i) thirty (30) days after
receipt of the last of the Preliminary Title Report or Survey, or
(ii) May 19, 1997, Purchaser shall be deemed to have approved
said exceptions. Purchaser's approval of the Preliminary Title
Report shall be without prejudice to Purchaser's right to
disapprove additional survey matters or any supplementary reports
issued by Title Company or other exceptions disclosed after
receipt of the initial Preliminary Title Report and Survey. If
for any reason, on or before the Closing Date Seller does not
cause such exceptions to title or survey matters which Purchaser
timely disapproves to be removed at no cost or expense to
Purchaser (Seller having the right but not the obligation to do
so), the obligation of Purchaser to buy the Property as herein
provided shall, at Purchaser's option, terminate (and Seller and
Purchaser shall have no further obligations in connection
herewith). Purchaser shall have the option to waive the
condition precedent set forth in this paragraph 4(a) by written
notice to Seller. In the event of such waiver, such condition
shall be deemed satisfied. All matters set forth on the
Preliminary Title Report, the Survey or any updated Survey
obtained by Purchaser which are not timely objected to by
Purchaser shall be permitted exceptions to title and shall
additionally include (i) any title or survey matters objected to
by Purchaser, which objections are subsequently waived in writing
by Purchaser, and (ii) any title or survey matters objected to by
Purchaser in accordance with the terms and provisions of this
Agreement, which objections are cured to Purchaser'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 Seller is obligated to pay and discharge,
Escrow Agent may use any portion of the Purchase Price to satisfy
the same (if the same are not bonded-over or otherwise satisfied
by title endorsement). Further, Seller shall simultaneously
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.
(b) Title Policy. The Title Policy shall be Chicago
Title Insurance Company's ALTA Owner's policy with liability in
the amount of the Purchase Price, showing fee title to the Real
Property and Improvements as vested in Purchaser, or in
Purchaser's permitted assignee, subject only to the permitted
exceptions specified in Paragraph 4(a) above.
5. Delivery of Information.
(a) As soon as practicable after the date hereof, but
in no event later than five (5) business days after the Effective
Date, except as otherwise set forth, Seller shall have delivered
or shall have caused to be delivered or made available to
Purchaser at the Property, to the extent they are in Seller's
possession or under its control, the following:
(i) 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.
(ii) Evidence that the Real Property complies with
the Subdivision Map Act of California, the Property has all of
the necessary valid Certificates of Occupancy and otherwise
complies with all construction and operational laws, codes,
ordinances, regulations and conditional use permits.
(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 Seller at any time after January 1,
1995 to the extent available to Seller;
(iv) A set of all "as built" plans, specifications
and structural drawings (including, but not limited to,
mechanical, electrical, air conditioning, landscaping and
sprinkler drawings), 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) All electricity and property tax bills for
the period beginning January 1, 1995 to the extent available to
Seller;
(vi) Statements of income and expense for the
Property for the calendar years 1995, 1996 and current year to
date to the extent available to Seller;
(vii) All warranties and operating manuals
that Seller 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;
(viii) 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 Seller is obligated (the "Service
Contract");
(ix) A list of all personal property (including
supplies) owned or leased by Seller and used in connection with
the operation, maintenance and repair of the Property.
(b) Purchaser shall have until 5:00 P.M. on the day
preceding the Closing Date (the "Approval Period") to approve or
disapprove all matters and things that are subject to Purchaser's
rights or review, inspection and approval hereunder. Purchaser's
failure either to approve or disapprove said information by the
date specified herein shall be deemed its disapproval thereof.
If Purchaser disapproves any of said information, Purchaser shall
notify Seller in writing thereof within the time period
specified. If Purchaser so notifies Seller or any matters are
deemed disapproved as provided herein, this Agreement shall
terminate. Notwithstanding the foregoing, if Purchaser
disapproves any Service Contract, this Agreement shall not
terminate and Seller shall lawfully terminate such Service
Contract not later than thirty (30) days after the Closing, to
the extent the same can be so terminated and provided Purchaser
shall pay all cancellation or termination penalties, fees or
costs in connection therewith.
6. Inspections and Approval by Purchaser.
(a) From and after the date hereof, Purchaser and its
agents, employees and contractors shall be afforded full access
to the Property during normal business hours and upon twenty-four
(24) hours prior notice for the purpose of making such
investigations as Purchaser deems prudent with respect to the
physical condition of the Property, including, but not limited
to, engineering tests, subject to the rights of tenants in
possession. Seller shall reasonably cooperate to assist
Purchaser in completing such inspection. However, Purchaser
agrees not to contact any of Seller's tenants without Seller's
prior consent and to hold Seller harmless from and against any
loss, costs, damages, claim or expense suffered by Seller or the
Property and caused by Purchaser's said investigations (the
foregoing obligation surviving any termination of this
Agreement). In no event shall Purchaser make any intrusive
physical testing (environmental, structural or otherwise) at the
Property (such as soil borings or the like) without Seller's
prior consent. Purchaser shall promptly restore the Property to
its condition immediately prior to such investigations. In
addition, Purchaser agrees not to unreasonably interfere with the
use and enjoyment of the Property by Seller, its agents,
representatives, employees or any tenants or other occupants.
Seller shall have the right, at its option, to cause a
representative of Seller to be present at all inspections,
reviews and examinations conducted hereunder. At the request of
Seller, Purchaser shall promptly deliver to Seller true, accurate
and complete copies of any written reports relating to the
Property prepared for or on behalf of Purchaser by any third
party and, in the event of termination hereunder, shall return
all documents and other materials furnished to or on behalf of
Purchaser by Seller hereunder. Purchaser shall keep all
information or data received or discovered in connection with any
of the inspections, reviews or examinations strictly
confidential; provided; however, that Purchaser shall be entitled
to disclose such information to Purchaser's attorneys,
consultants, accountants and prospective debt and equity
financing sources who reasonably need to be informed in
connection with Purchaser's determinations hereunder.
(b) From and after the date hereof until Closing,
Purchaser and its agents shall be afforded full opportunity by
Seller during normal business hours and upon twenty-four (24)
hours prior notice to examine all operating books and records
that relate to the Property (including all specifications and as-
built drawings to the extent they are in Seller's possession),
all building permits, certificates of occupancy, soil reports,
engineers' reports and studies, and similar information relating
to the Property or its management, operation, maintenance or use,
and all warranties and operating annuals that Seller 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.
(c) Purchaser shall have until the expiration of
Approval Period in which to approve or disapprove the matters
referred to in subparagraphs (a) and (b) above. Furthermore,
Purchaser shall have until the expiration of the Approval Period
in which to approve or disapprove of a market and leasing survey
of the Property and the surrounding leasing market (including its
own economic analysis of the feasibility of the Property for
Purchaser's particular use thereof). Purchaser's disapproval
shall be in writing and shall be delivered to Seller prior to the
expiration of the Approval Period. Failure to deliver such
written disapproval shall be deemed Purchaser's approval of said
matters.
7. Operation of Property Pending Closing.
(a) Tenant Leases. Seller has leased portions of the
Property to various tenants. From and after the date of
execution of this Agreement and until the Closing Date, Seller
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 Purchaser which
consent may be withheld in Purchaser's sole discretion. In
requesting such consent, Seller shall inform Purchaser in writing
of the amount, if any, proposed to be required to pay for, or any
allowance proposed to be given for, tenant improvements work, any
leasing commissions and fees, in connection with such lease and
any rent concessions. Also included in the request for consent,
shall be Seller's proposed draft of the lease or amendment
agreement. The failure of Purchaser to respond within five (5)
business days after written request for any such disapproval
shall be deemed to constitute approval. Seller 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. Notwithstanding the foregoing, with respect to
any tenant improvements which Seller is currently obligated to
complete under any lease, and which are not completed as of
Closing, Seller shall assign any and all contracts relating to
the construction of such improvements to Purchaser and Purchaser
shall be responsible for completing such improvements after
Closing. Furthermore, Purchaser shall receive a credit to the
Purchase Price in an amount equal to Twenty-Five Dollars ($25.00)
per square foot of the premises under any applicable lease, less
any verified amounts actually expended by Seller (which have been
distributed to the appropriate contractors and for which invoices
and unconditional lien releases have been received) for such
improvements prior to Closing.
(b) Leasing Commissions; Tenant Improvements and Rent
Concessions. Seller covenants and agrees to be responsible for
all leasing commissions, tenant improvement costs and unamortized
rent concessions with respect to any leases (including amendments
and renewals) entered into on or before the Closing Date;
provided that Purchaser covenants and agrees to be responsible
for all leasing commissions, tenant improvement costs and
unamortized rent concessions with respect to any new leases,
extensions of existing leases and renewals occurring after the
Effective Date; (i) that Purchaser, in its sole discretion,
approves and (ii) for which Purchaser has received fully
executed copies of such lease and other agreement with respect
thereto and to which any brokerage commissions are payable.
Failing such delivery and approval, Seller shall remain
responsible for all of costs and expenses including commissions.
(c) Insurance Policies. Seller 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. Seller 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 Seller for any term provided that
such Service Contracts are terminable by Seller or its successors
in interest upon not more than thirty (30) days' notice to the
service provider.
(d) Property Management. Seller 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 Seller.
8. Conditions Precedent to Purchaser's Obligation to Close
Escrow. The obligation of Purchaser to consummate the
transactions contemplated hereby; is subject to the following
conditions, inserted for Purchaser's sole benefit and that may be
waived by Purchaser only in writing at its sole option. Said
conditions are as follows:
(a) Representations and Warranties True at Closing.
The representations and warranties of Seller contained in
Paragraph 13 of this Agreement shall be true on the date of
Closing in all material respects as though such representations
and warranties were made on and as of such date.
(b) Delivery of Tenant Estoppels. Seller shall have
delivered to Purchaser 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" attached hereto and
forming a part hereof, consistent in all material respects with
the information to be provided by Seller 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 not 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.
(c) Compliance with this Agreement. Seller 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
Paragraph 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 Seller's Obligation to Close
Escrow. The obligation of Seller to consummate the transactions
contemplated hereby is subject to the following conditions,
inserted for Seller's sole benefit and that may be waived solely
by Seller only in writing at its sole option. Said conditions
are as follows:
(a) Representations and Warranties True at Closing.
The representations and warranties of Purchaser contained in this
Agreement, or in any certificate or document signed by Purchaser
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 Purchase Price and Documents.
Purchaser 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. Purchaser shall
have performed and complied with all agreements and conditions
required by this Agreement to be performed or complied with by it
on or prior to Closing.
10. Remedy of Purchaser and Seller Upon Default.
(a) Remedies of Purchaser. In the event that Seller
fails to keep and perform each and every obligation, covenant and
agreement herein by seller to be kept or performed, then
Purchaser may pursue such rights it may have against Seller and
the Property either at law or in equity.
(b) Remedy of Seller. THE PARTIES HERETO, BEFORE
ENTERING INTO THIS TRANSACTION, HAVE BEEN CONCERNED WITH THE FACT
THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY SELLER IF PURCHASER
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 MARKETABILITY OF THE PROPERTY, IT
IS REALIZED BY THE PARTIES THAT IT WOULD BE EXTREMELY DIFFICULT
AND IMPRACTICABLE, IF NOT IMPOSSIBLE, TO ASCERTAIN WITH ANY
DEGREE OF CERTAINTY PRIOR TO SIGNING THIS AGREEMENT THE AMOUNT OF
DAMAGES THAT WOULD BE SUFFERED BY SELLER IN THE EVENT OF
PURCHASER'S WRONGFUL FAILURE TO PURCHASE PROPERTY. THE PARTIES,
HAVING MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE
ACTUAL COMPENSATORY DAMAGES SELLER WOULD SUFFER IN THE EVENT OF
PURCHASER'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 PURCHASER'S WRONGFUL
FAILURE TO PURCHASE THE PROPERTY, SELLER SHALL BE ENTITLED TO
SUCH AMOUNT AS FULL LIQUIDATED DAMAGES, AND THAT PAYMENT OR
TENDER TO SELLER BY PURCHASER OF SUCH AMOUNT SHALL TERMINATE ALL
OF SELLER'S RIGHTS AND REMEDIES AT LAW OR IN EQUITY AGAINST
PURCHASER WITH RESPECT TO SUCH FAILURE TO PERFORM.
/s/ JPS /s/ RSZ
Seller's Initials Purchaser's Initials
11. Closing Procedure.
(a) At least one business day prior to the Closing
Date, Purchaser shall have delivered to Escrow Agent counterpart
executed originals of the following documents and the following
sums of money required to be delivered by Purchaser hereunder:
(i) The Purchase Price in the manner set forth in
Paragraph 2(a);
(ii) Such funds as may be necessary to comply with
Purchaser's obligations hereunder regarding prorations, costs and
expenses; and
(iii) A signed counterpart of the Tenant Lease
Assignment, and a signed counterpart of the Bill of Sale, each
defined below.
(b) At least one business day prior to the date of
Closing, Seller shall have delivered to Buyer Escrow Agent, as
applicable, counterpart executed originals (except with respect
to items (v) and (vi), in which case the actual items in Seller's
possession shall have been delivered) of the following documents:
(i) The Grant Deed in the form of Exhibit "E"
attached hereto and forming a part hereof;
(ii) A General Assignment and Bill of Sale for
Personal Property (the "Bill of Sale")it he form of Exhibit "F"
attached hereto covering the Personal Property;
(iii) A Tenant Lease Assignment substantially
in the form and substance of Exhibit "G" attached hereto and
forming a part hereof;
(iv) An original counterpart of each of the
Service Contracts, Leases and keys to the Property if in Seller's
possession or under its control;
(v) Notices to each of the tenants and occupants
of the Property of the transfer of the Property to Purchaser;
(vi) To the extent they are in Seller's
possession, a complete set of all plans, specifications and as-
built drawings, and all building permits, certificate of
occupancy, third-party soil reports, and environmental reports
and studies relating to the Improvements; and
(vii) All warranties and operating manuals
that Seller 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.
(c) Upon delivery of the foregoing sums and documents,
Escrow Agent shall cause the Grant Deed to be recorded (by a
special recording if necessary) in the Official Records of Kern
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 apportioned
equitably between the parties 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. 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. If at Closing there are any past due rents or charges
owed by occupancy tenants, they shall be prorated until received;
Purchaser shall include such delinquencies in its normal billing
and shall pursue the collection thereof in good faith under the
closing Date (but Purchaser shall not be required to litigate or
declare a default in any Tenant Lease). To the extent Purchaser
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 Purchaser 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 Seller's share thereof being promptly
delivered to Seller. Purchaser 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 Seller is
entitled to receive its share of charges or amounts without first
obtaining Seller's written consent. Seller hereby reserves the
right to pursue any remedy against any tenant owing 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, Seller shall retain all rights relating
thereto.
(ii) Real estate and personal property taxes and
any special assessments, taking into consideration discounts for
the earliest permitted payment, based upon the latest previous
tax levies. Such items shall be reapportioned between Seller and
Purchaser if current tax rates differ from the latest previous
tax rates as soon as the same are known. Seller agrees that to
the extent any additional taxes, assessments or levies are
imposed, assessed or levied against the Property, or any portion
thereof, the Seller or the Purchaser at any time subsequent to
Closing but with reference to any period prior thereto during
Seller's ownership thereof, Seller shall promptly pay to
Purchaser an amount equal to such additional assessments or
levies. Similarly, if tax refunds become payable for periods
during Seller'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 Seller) shall be
promptly paid over to Seller. In the event that any assessments
on the Property are payable in installments, then the installment
for the current period shall be prorated (with Purchaser assuming
the obligation to pay any installment due after the Closing
Date). In no event shall Seller 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.
(iii) Transferable annual permits, licenses,
and/or inspection fees, if any, on the basis of the duration of
the same;
(iv) Security Deposits, plus accrued interest, if
any, payable thereon to tenants, and any other deposits and
prepaid rent, shall be credited (or assigned) to Purchaser;
(v) Utility charges levied against Seller or the
Property, and Purchaser shall transfer all such utility services
to its name and account immediately upon Closing;
(vi) Service Contracts on the basis of the charge
or premium for the period involved;
(vii) Tenant improvement costs and leasing
commissions for leases signed after the Effective Date shall be
paid by Purchaser if approved by Purchaser in accordance with
Paragraphs 7(a) and 7(b).
(viii) All other operating expenses incurred in
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) Seller shall pay:
(1) The cost of securing the CTLA standard
coverage portion of the Title Policy that is attributable to the
required ALTA Owner's coverage, the cost of title endorsements
deemed reasonably necessary to satisfy a specific title exception
objection by Purchaser);
(2) Documentary transfer tax (County and
City) imposed on the conveyance of title to the Property of
Purchaser;
(3) Any sales or use taxes that may be owing
in connection with the transactions contemplated by this
Agreement; and
(4) One-half of Escrow Agent's Escrow Fee.
(ii) Purchaser 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
Seller and, if Closing does occur, that portion of the cost of
the Title policy that is not to be paid by Seller pursuant to
Subsection (b))i)(1) above and the cost of the ALTA Survey; and
(2) The cost of recording the Grant Deed;
(3) All expenses relating to Purchaser's
financing of its acquisition of the Property; 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 consulting fees, and other incidental expenses in
connection with this transaction shall be borne by the party
incurring same.
13. Representations, Warranties and Covenants of Seller.
(a) Seller hereby makes the following representations,
warranties and covenants, each of which is deemed to be material
and each of which is stated by Seller to be true and correct on
the date hereof and on the Closing Date and each of which shall
survive the Closing:
(i) Seller has no knowledge of any:
(1) existing latent defects or seismic
conditions concerning the Real Property or materially incorrect
income or expense figures in any financial statements prepared by
or for Seller and delivered to Purchaser regarding the Property;
(2) any 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 Seller or the Property or with respect to the
validity of any statutes, ordinances, regulations or restrictions
or any permits or approvals thereunder relating to the
construction of any Improvements on the Property or the operation
thereof nor any outstanding contingent liabilities affecting 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;
(5) thing that would suggest any portion of
the Property having ever been used by Seller or any tenant of any
portion of ht Property during Seller's ownership thereof as a
waste storage or disposal site or gasoline station. Without
limiting the other provisions of this Agreement, Seller shall
reasonably cooperate with Purchaser's investigation of matters
relating to the foregoing provisions of this paragraph and to
provide access to and copies of any 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. Seller agrees that
Purchaser may make inquiries of governmental agencies regarding
such matters, without liability for the outcome of such
discussions. For the purposes of this Agreement, "Hazardous
Substances" shall mean (A) substances defined as "hazardous
substances" in (i) the Comprehensive 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 Tenant Leases and Service Contracts and
any other agreements, matters and things to be submitted to
Purchaser by Seller 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
Purchaser, on or before Closing. Notwithstanding anything to the
contrary contained herein, Seller shall have no obligation or
liability to Purchaser with respect to any of the foregoing lease
matters which shall be confirmed as correct in any tenant
estoppel certificate delivered to Purchaser as provided in this
Agreement;
(iii) The operating financial information
prepared by Seller and delivered to Purchaser with respect to the
Property, consisting of Statements of Operations for the calendar
years ended December 31, 1995 and December 31, 1996 and for the
current calendar year are true and correct in all material
respects in this regard Seller agrees to make available to
Purchaser and its accountants, at Purchaser's cost, all
accounting records for the calendar years ended December 31, 1995
and 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, canceled checks and any other
accounting documents and information reasonably requested; and
(iv) As used in this Agreement, "to Seller's
knowledge" or other similar knowledge limitations as to Seller
shall mean the actual knowledge, without any duty to investigate,
of the property manager for the Real Property, Peggy Wilson, the
Leasing Agent for the Real Property, the chief engineer for the
Real Property and Mr. Brian Pratt.
(b) Notwithstanding anything contained in
Paragraphs 5(a) or 13(a) to the contrary, Seller 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 Purchaser by any broker representing or purporting to
represent Seller.
14. Representations and Warranties of Purchaser. Purchaser
hereby makes the following representations and warranties, each
of which is deemed to be material and each of which is stated by
Purchaser to be true and correct on the date hereof:
(a) Purchaser 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 Purchaser, enforceable in accordance with its
terms, except as such enforcement may be affected by bankruptcy,
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 Purchaser is a party or by which Purchaser may be bound
or affected;
(b) The execution and delivery of this Agreement and
the payment and performance by Purchaser 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 Purchaser, and all such actions have been duly
taken by Purchaser; and
(c) As of the expiration of the Approved Period and as
of the Closing Date (i) Purchaser has received and reviewed all
materials provided to Purchaser by Seller pursuant to Sections 4
and 5 above (collectively, the "Due Diligence Materials"),
(ii) Purchaser has inspected the Property, (iii) Purchaser has
made such investigation of the information contained in the Due
Diligence Materials as it deems appropriate, and (iv) Purchaser
is satisfied based upon its examination of ht Due Diligence
Materials and its investigation of all other aspects of the
Property which Purchaser deems material to its purchase thereof,
including, without limitation, the condition of title to the
Property, the zoning of the Property, and 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.
15. General Covenants and Agreements of Purchaser and
Seller.
(a) Delivery of Possession. Possession of the
Property shall be delivered to Purchaser 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 Hundred Fifty Thousand Dollars ($150,000)
or more to repair or if any uninsured loss or casualty occurs
that would cost One Hundred Fifty Thousand Dollars ($150,000) or
more to repair, either Seller or Purchaser 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 Seller nor Purchaser so elects to
terminate its obligations under this Agreement, or if the loss or
casualty would cost less than One Hundred Fifty Thousand Dollars
($150,000) to repair, the Closing shall take place as provided
herein and Purchaser shall receive an assignment of Seller's
rights to insurance proceeds with respect to any unrepaired
damage (including any rental loss proceeds with respect to any
unrepaired damage (including any rental loss proceeds for periods
after the Closing), loss or casualty in question. Seller shall
retain all interest in and to the insurance proceeds that may be
payable to Seller on account of repaired and completed damage,
but Seller 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, Seller agrees to immediately advise
Purchaser thereof. In the vent of such condemnation, Purchaser
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 Purchaser Price, 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 Seller or to Escrow agent hereunder
shall be returned to Purchaser as set forth herein. Notice of
the exercise of such option hereunder shall be in writing,
delivered to Seller at the address set forth in Paragraph 16(g)
of this Agreement (or such other address as Seller may have
theretofore designated in writing) at least two days prior to
Closing.
(d) Brokers' Commissions. Seller warrants that Seller
did not negotiate with respect to the purchase of the Property
through any broker, agent, finder, affiliate or other third party
other than ASU, Inc. ("Broker") 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. Seller
agrees to pay at Closing to Broker the commission due it in
connection with the within transaction and Seller and hereby
agrees to indemnify Purchaser against and hold Purchaser harmless
from any and all claims, demands, causes of action or damages
resulting from any breach of this warranty. Purchaser hereby
warrants that Purchaser did not negotiate through any broker,
agent, finder, affiliate or other third party other than Broker
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 Seller against and hold Seller 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. Seller and
Purchaser shall, prior to Closing, execute any and all documents
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) Assignability. Purchaser may assign all of its
rights and duties hereunder to any entity with which Purchaser
is, directly or indirectly, affiliated or an entity to be formed
and controlled by the principals (Richard S. Ziman and Victor J.
Coleman) of Purchaser, without Seller's consent, upon the giving
of written notice to Seller, which notice may not be given less
than three days prior to Closing. For the purpose of this
paragraph an "affiliate" of or a person "affiliated" with, a
specified person, is a person that directly or indirectly,
through one or more intermediaries, controls or is controlled by,
or is under common control with, the person specified. Any such
assignment is conditional upon such assignee assuming the
obligations of Purchaser under this Agreement agreeing to be
bound by all consents and approvals theretofore given or deemed
to have been given by Purchaser, and such assignment or
nomination shall not relieve Purchaser of its obligations
hereunder.
(h) Waivers, Amendments and Modifications of
Provisions. 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.
(i) Indemnification. Seller shall indemnify Purchaser
against and hold Purchaser harmless from any and all loss, cost,
damage, claim, liability or expense, including court costs and
reasonable attorneys' fees, for (1) any of the matters and to the
extent to be indemnified under the Assignment of Leases or the
Assignment of Service Contracts; (2) breach of its
confidentiality covenants under Paragraph 6(a); or (3) third
party claims arising out of or in connection with any tort
committed by Seller (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 Seller) unless caused by Purchaser, resulting from
such tort occasioned in or about the Property prior to Closing.
Purchaser shall indemnify Seller against and hold Seller harmless
from any and all loss, damage, claim of damage, liability or
expense, including court costs and reasonable attorneys' fees,
for (1) any of the matters and to the extent to be indemnified
under the Assignment of Leases or the Assignment of Service
Contracts; (2) breach of its confidentiality covenants under
Paragraph 6(a); or (3) third party claims arising out of or in
connection with any tort committed by Purchaser (including any
personal injury or property damage of any kind whatsoever,
including death, to property or persons, including employees of
Purchaser) unless caused by Seller, 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 provisions
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 subject
matter hereof and supersedes all prior agreements between the
parties hereto with respect thereto. No claim of waiver,
modification, consent of 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 several
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 Seller or Purchaser
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 following
addresses, and shall be effective immediately upon delivery:
Seller: Stockdale Investment Group, Inc.
14409 S. Paramount Boulevard
Paramount, CA 90723
Attention: Mr. John P. Schauerman
Facsimile No.: (562) 601-4604
With a copy to: John Perisich, Esq.
14409 S. Paramount Boulevard
Paramount, CA 90723
Facsimile No.: (562) 601-4604
Purchaser: Arden Realty, Inc.
9100 Wilshire Boulevard
Suite 700 East
Beverly Hills, California 90212
Attention: Mr. Richard S. Ziman
Facsimile No.: (310) 274-6218
With a copy to: Allen, Matkins, Leck, Gamble & Mallory
1999 Avenue of the Stars, Suite 1800
Los Angeles, California 90067
Attention: Anton N. Natsis, Esq.
Facsimile No.: (310) 788-2410
Escrow Agent: First American Title Company
4540 California Avenue Suite 100
Bakersfield California 93309
Attention: Ms. Cathy Cox
Facsimile No.: (805) 327-8533
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 Agreement
or the application thereof to any person or circumstance shall be
invalid or unenforceable to any extent, the remainder of this
Agreement and the application of such provision 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 and 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. Seller and Purchaser agree that
it is in both of their best interests to keep this Agreement and
all information concerning the Property confidential until
Closing. Seller and Purchaser each agrees that neither shall
take any action nor conduct itself in any fashion that would
disclose to third parties unrelated to Purchaser's acquisition or
intended ownership and operation of the Property, any aspect of
the contemplated transaction. After Closing, neither party shall
make any public announcement of the transaction that has not been
approved in advance and in writing by the other party.
(l) Tax Deferred Exchange. Seller may desire to
dispose of the Property through a tax deferred exchange which
qualifies for non-recognition of gain under Section 1031 of the
Internal Revenue Code. Purchaser shall cooperate with Seller in
attempting to effectuate such exchange, including, but not
limited to, the execution of such documentation as may be
reasonably necessary to effect such exchange, provided that
(i) Purchaser shall not incur any additional liability in
connection with an exchange for the benefit of Seller,
(ii) Purchaser shall not be obligated to take title to any real
property (other than the Property), (iii) the date of Closing
shall not be extended as a result of the exchange, without
Purchaser's prior written consent, and (iv) any additional costs
and charges attributable to the exchange, including, but not
limited to, attorneys' fees, brokers' commissions and other
transaction related expenses shall be paid for by Seller.
Purchaser and Seller further agree that Seller may substitute an
intermediary ("Intermediary") to act in place of Seller as the
seller of the Property. The Intermediary shall be designated in
writing by Seller. Upon identification of Intermediary,
Intermediary shall be substituted for Seller as the seller of the
Property. Purchaser agrees to accept the Property and all other
required performance from Intermediary and to render its
performance of all of its obligations to Intermediary. Purchaser
agrees that performance by Intermediary will be treated as
performance by Seller. Seller shall unconditionally guarantee
the full and timely performance by Intermediary of each and every
one of the representations, warranties, covenants, indemnities,
obligations and undertakings of Intermediary. As guarantor,
Seller shall be treated as a primary obligor with respect to
these representations, warranties, covenants, indemnities,
obligations and undertakings, and, in the event of breach,
Purchaser may proceed directly against Seller on this guarantee
without the need to join Intermediary as a party to any action
against Seller. Seller unconditionally waives any defense that
it might have as guarantor that it would not have if it had made
or undertaken these representations, warranties, covenants,
indemnities, obligations and undertakings directly. In the event
of the breach of any representations, warranties, covenants,
obligations and undertakings by Seller or Intermediary or in the
event of any claim upon any indemnity of Seller or Intermediary
(whether the representation, warranty, covenant, indemnity,
obligation or undertaking is express or implied), Purchaser's
exclusive recourse shall be against the Seller and Purchaser
shall have no recourse of any type against the Intermediary
arising from this transaction.
(m) Condition of Property. Purchaser acknowledges
that it will inspect and examine the Property and, except as
expressly provided in this Agreement, will rely solely on its own
investigation of the Property and not on any information provided
or to be provided by or on behalf of Seller. Except as otherwise
expressly provided in this Agreement, the sale of the Property to
Purchaser is made on as "AS IS" "WHERE IS" and "WITH ALL FAULTS"
basis. Purchaser acknowledges that in consideration of entering
into this Agreement, that, except as expressly provided in this
Agreement, Seller makes no warranty or representation, with
respect to the Property, or any portion thereof, express or
implied, or arising by operation of law, including, but not
limited to, any warranty of condition (physical, environmental or
otherwise), title (other than the limited warranties of title
contained in the grant deed), habitability or fitness for a
particular purpose or otherwise.
(n) 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.
(o) Facsimile Signatures. Purchaser and Seller 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, the parties hereto have executed this
Agreement the day and year first hereinabove written.
Seller: STOCKDALE INVESTMENT GROUP, INC.
a California corporation
By:/s/ John B. Shauerman
John P. Schauerman
President
Purchaser: 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
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:
FIRST AMERICAN TITLE COMPANY
By:/s/ Cathy Cox
Name: Cathy Cox
Title: Escrow Officer
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
To: First American Title
Insurance Company ("Escrow Agent") Escrow No. N971108G
114 East Fifth Street Title Order No. OR-9733589
Santa Ana, California 92702 Title Officer: David C. James
Attn.: Ms. Toni Groetsch
Telephone: (714) 558-3211
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
("Agreement") is made and entered into and is effective as of the
29th day of April, 1997 (the "Effective Date"), by and between THE
MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, a New York corporation
("Seller"), and ARDEN REALTY LIMITED PARTNERSHIP, a Maryland
limited partnership ("Buyer").
Recitals
A. Seller is the owner of the Property (as defined below).
B. 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.
1. 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:
(a) 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 1, 4, 5, 6, 8, 10, 18, 20, 22, 24, 26, 28, and
30 Centerpointe Drive, in the City of La Palma, County of Orange,
State of California, which real property is more particularly
described in Exhibit "A" (the "Land").
(b) Improvements. Those certain fixtures and
improvements located on the Land and described on Exhibit "B"
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 Land and the Improvements may be
collectively referred to herein as the "Real Property."
(c) Personalty. That certain tangible personal property
of Seller which is located on or in the Land or the Improvements
and which is described on Exhibit "B" attached hereto
(collectively, the "Personalty"), it being understood and agreed
that Buyer shall have no right, title or interest in or to any
personal property on the Improvements which is the personal
property of the Tenants pursuant to the Leases.
(d) 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.
(e) 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").
(f) 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.
(g) 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.
2. Opening of Escrow and Deposit.
(a) General Instructions. First American Title Insurance
Company 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.
(b) 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 One Million Dollars
($1,000,000.00) (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.
(c) Deposits. On or before 9:00 a.m. Pacific Daylight Time
("PDT") 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 Four Million Dollars ($4,000,000.00) (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
(other than information disclosed in or reasonably inferable from
the Disclosure Reports), then Escrow Agent shall return the Initial
Deposit to Buyer upon receipt of written verification from Seller
that Buyer has complied with its obligations hereunder with respect
to cancellation of Escrow during the Investigation Period, and 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.
(d) Closing. The Escrow shall close, as evidenced by
recordation of a Grant Deed in accordance herewith (the "Closing"),
on or before the earlier of (i) June 17, 1997, and (ii) 12:00 p.m.
PDT on the date which is three (3) business days after Buyer
completes a public offering of limited partnership interests in
Buyer; provided, however, that Buyer's completion of such an
offering shall in no event be deemed a condition to the Closing,
and provided further, however, that the Closing shall not occur,
without the written consent of both parties, on or before June 4,
1997 (with the applicable date of Closing being referred to as the
"Outside Closing Date"). Buyer shall advise Seller of the
scheduled date for completion of Buyer's public offering not less
than five (5) business days prior to such 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.
3. Purchase Price. The "Purchase Price" for the Property shall
be Eighty Million One Hundred Thousand Dollars ($80,100,000.00)
payable in immediately available funds upon Closing, and otherwise
in accordance with the terms and conditions contained in this
Agreement.
4. 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.
(a) Rents.
(i) 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)
(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;
(ii) 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 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 Seller for amounts due before the Closing Date, but unpaid prior
to the Closing Date, and second to Buyer;
(iii) 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;
(iv) 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;
(v) 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
(vi) 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.
(b) Lease Operating Cost Pass-Throughs.
(i) 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 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.
(ii) 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;
(iii) 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
(iv) 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).
(c) Property Taxes. All real property taxes for the current
(1996-97) 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 1996-97 tax year (on the basis of
the portion of the 1996-97 tax year which falls after the Closing
Date, and based upon the most recent assessment and levy). Any
adjustments to such taxes for the 1996-97 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 relating to the Property or the
personalty associated therewith.
(d) 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 shall be
delivered to and retained by Seller.
(e) 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" 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.
(f) 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.
(g) 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.
(h) 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, to pay for (i)
tenant improvements commenced prior to the Closing Date, and (ii)
Leasing commissions unpaid prior to the Closing Date (excluding any
commissions which may be due after the Effective Date with respect
to options, extensions, expansions or renewals), shall be credited
to Buyer on the Closing Date. 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 April 16, 1997,
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. PDT on May
12, 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. PDT on May 14, 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.
5. Due Diligence Investigation Period.
(a) 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, the following items:
(i) A preliminary title report or commitment issued by
First American Title Insurance Company ("Title Company"), dated
within forty-five (45) days of the Effective Date (the "Preliminary
Report"), 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 prior to noon on May
14, 1997;
(ii) 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
February 1997; and
(iii) Copies of all real property tax and assessment
bills received by Seller for the 1995-96 and 1996-97 tax years.
(b) ALTA Survey. On or before May 7, 1997, Seller shall
deliver to Buyer a current American Land Title Association survey
prepared by a surveyor selected by Seller, with respect to the
Property (the "Survey"); provided, however, that Seller's failure
to deliver the Survey by such date shall not be deemed a default
hereunder or a failure of a condition to Buyer's obligation to
Close, but shall only serve to extend the termination of the
Investigation Period by one day for each day of delay, from and
after May 14, 1997, in Seller's delivery of the survey to Buyer.
(c) Investigation Period. Beginning upon the opening of
Escrow, and terminating as of 5:00 p.m. PDT on the date which is
the later of (i) May 14, 1997, and (ii) seven (7) days after
Seller's delivery of the Survey to Buyer (the "Investigation
Period"), Buyer may, subject to the limitations set forth in this
Agreement and in the Entry Permit (as defined below), investigate
any and all aspects of the Property; provided, however, that if
such Investigation Period extends beyond May 14, 1997 (as a result
of Seller's delivery of the Survey after May 7, 1997 in accordance
with Section 5(a) above), Buyer's investigation and right to cancel
Escrow as a result of such investigation, shall be limited from and
after May 14, 1997 to matters relating to and disclosed solely in
connection with the Survey. 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 (other than matters
disclosed in or reasonably inferable from the Disclosure Reports
(as defined below)), Buyer may cancel the Escrow by Notice to
Seller delivered to Seller on or before 5:00 p.m. PDT, on (i) May
14, 1997 as to all matters disapproved other than matters disclosed
solely in the Survey, and (ii) the last day of the Investigation
Period as to matters disclosed solely in the Survey. If Buyer does
not timely cancel Escrow as set forth in the above sentence, Buyer
shall be unconditionally obligated to purchase the 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, (i) 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, and (ii) 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 Land unless it has delivered to Seller on or before May 14,
1997, Notice of disapproval specifically identifying each matter
pertaining to soils or physical conditions disapproved, which
determination shall be made by Buyer in its sole discretion.
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 May 14, 1997, using only
environmental engineers or consultants from the approved list of
engineers and consultants to be provided by Seller.
(d) Title. Not later than 5:00 p.m. PDT on May 7, 1997,
Buyer may provide Notice to Seller that Buyer disapproves of one or
more matters affecting title to the Property and request that
Seller correct such deficiency. All matters affecting title to the
Property which are not disapproved by Buyer by Notice to Seller
delivered on or before 5:00 p.m. PDT on May 7, 1997, 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 any such title exception up until the date which
is four (4) days prior to the expiration of the Investigation
Period, if and to the extent the Survey, if delivered after May 7,
1997, shows that such exception encroaches upon improvements on the
Land. 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.
(e) Title Commitment. On or before the expiration of the
Investigation Period, Buyer shall have obtained from Title Company
a Commitment to issue, in a form acceptable to Buyer, a standard
coverage policy of title insurance (the "Title Policy") dated as of
the Closing Date in the amount of the Purchase Price showing fee
title to the Land vested in Buyer, subject only to the Permitted
Exceptions and with such endorsements and such exclusions as shall
be acceptable to Buyer (the "Commitment"). If Buyer fails to
obtain the Commitment, 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.
(f) 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 through 5:00 p.m.
PDT on May 14, 1997, 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 analyses of the Improvements; (iv)
soils, geology and environmental studies; and (iv) an architectural
inspection of the Property. In addition, if the Survey is
delivered after May 7, 1997, Buyer may enter the Property after May
14, 1997 and through 5:00 p.m. PDT on the date of the expiration of
the Investigation Period, in accordance with the Entry Permit, for
the sole purpose of investigating matters shown on the Survey. 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.
(g) Environmental and Structural Reports. Seller has
previously delivered to Buyer those certain environmental and
structural reports described on Exhibit "G" attached hereto (the
"Disclosure Reports"). Notwithstanding anything to the contrary in
this Agreement, Buyer shall not be entitled to disapprove of any
condition relating to the Property, in connection with disapprovals
made during the Investigation Period or otherwise, to the extent
the condition was disclosed in or reasonably inferable from any of
the Disclosure Reports.
6. 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 and leasing
commissions, whether such obligations are payable prior or
subsequent to the Closing Date. 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.
7. Conditions Precedent to Closing.
(a) 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:
(i) Personal Property. The Personalty shall consist of
those items described on Exhibit"B" hereto, subject only to changes
relative to use and consumption thereof during the ordinary course
of business while this Agreement is in effect;
(ii) Compliance with Agreement. Seller shall have
substantially performed and complied with all of its covenants and
conditions contained in this Agreement;
(iii) 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;
(iv) 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 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;
(v) 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
(vi) 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 "E-3"
without any material exceptions noted thereon by the applicable
Tenant except for Permitted Estoppel Exceptions (as defined below)
("Tenant Estoppels") from (i) each of the Tenants leasing more than
3500 square feet of net rentable area in the Property on or before
the Effective Date, and (ii) Tenants leasing, in the aggregate, not
less than eighty-five percent (85%) of total leased space in the
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 "E-4"
attached hereto, subject only to Permitted Estoppel Exceptions, in
the event that Seller does not obtain such estoppel from a Tenant
prior to the Closing Date; provided, further, however, that in the
event that Seller obtains any such Tenant Estoppel after the
Closing Date and delivers the same to Buyer, then Seller's Estoppel
shall be of no further force and effect with respect to the Lease
covered by such Tenant Estoppel delivered after the Closing Date,
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 information (i) consistent
with the Lease of the Tenant, or inconsistent with such Lease in an
immaterial respect, or (ii) made available to Buyer during the
Investigation Period in connection with Buyer's review of materials
pursuant to Section 5 above.
(b) 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:
(i) 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;
(ii) 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;
(iii) Title. The condition precedent set forth in
Section 7(a)(iv) shall have been satisfied.
8. 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"):
(a) Deed. A Grant Deed, in the form attached as Exhibit "I"
(the "Deed"), 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;
(b) 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 "J" (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).
(c) Non-Foreign Status Affidavit. Seller shall deliver an
Affidavit of Non-Foreign Status in the form of Exhibit "K" attached
hereto, together with a State of California FTB 590RE form.
(d) 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.
9. Closing.
(a) 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.
(b) Time and Place. The Closing shall take place through
Escrow on the Closing Date at the offices of Escrow Agent.
(c) 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.
(d) 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.
(e) 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.
(f) 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.
(g) Title Policy. Escrow Agent shall require Title Company
to deliver the Title Policy to Buyer within fifteen (15) business
days following the Closing Date.
(h) 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.
(i) 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 "L" attached hereto.
10. Representations and Warranties of Seller. Seller represents
and warrants to Buyer, as of the Effective Date and as of the
Closing Date, as follows:
(a) 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.
(b) Leases. The Lease Schedule attached hereto as Exhibit
"E-2" 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 "E-2," 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.
(c) 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 "H" attached hereto.
(d) 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.
(e) 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.
(f) 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.
(g) 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, 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.
11. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller, as of the Effective Date and as of the Closing
Date, as follows:
(a) 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.
(b) 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.
12. Condition of the Property.
(a) 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 environmental issues, if
any, and further acknowledges that Buyer shall conduct such tests,
if at all, prior to May 14, 1997 or, with respect to Survey matters
only, on or before such later date (if any) as shall constitute the
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.
(b) 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.
(c) 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/TNC Buyer's Initials:/s/ VJC
13. 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.
14. 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/ TMC BUYER'S INITIALS/s/ VJC
15. 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 Mr.
David M. Norcott and Colliers/The Seeley Company, 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.
16. Miscellaneous.
(a) No Exchange. Seller shall not participate in, or
accommodate Buyer in connection with, a 1031 exchange.
(b) 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 April 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.
(c) 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.
(d) 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.
(e) Notices. All notices demands, consents, approvals and
other communications given pursuant to this Agreement (each, a
"Notice") 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) 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.
(k) 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.
(l) Time of Essence. Time is of the essence of this
Agreement and each and every term and provision hereof.
(m) 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.
(n) 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.
(o) 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.
(p) Exhibits. All of the Exhibits referenced in this
Agreement are incorporated herein by reference.
(q) 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 COO
SELLER:
THE MUTUAL LIFE INSURANCE COMPANY
OF NEW YORK, a New York corporation
By:/s/ Thomas McCahill
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,
a California corporation
By: Tony Rice Grotsch
Its: 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 14th day of May, 1997 (the "Effective
Date"), by and between THE MUTUAL LIFE INSURANCE COMPANY OF NEW
YORK, a New York corporation ("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 April 29,
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 reduce the Purchase Price as a result of
certain matters discovered by Buyer during Buyer's due diligence
period (which matters Buyer believes affect the value of the
Property), 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. Section 3 of the Original Purchase
Agreement is deleted and replaced with the following:
"The "Purchase Price" for the Property shall be Eighty
Million Fifty-Six Thousand Dollars ($80,056,000.00),
payable in immediately available funds upon Closing,
and otherwise in accordance with the terms and the
conditions contained in this "Agreement."
3. Rental Concessions Credits. Buyer acknowledges and agrees
that there will be no free rent credit to Buyer under Section
4(h) of the Agreement.
4. Investigation Period Expiration; Delivery of Deposit to
Seller. The Investigation Period has expired in accordance with
Section 5(c) of the Agreement, and Buyer has elected to purchase
the Property pursuant to and in accordance with the Agreement.
Without limiting the generality of the foregoing, Buyer
acknowledges and agrees that it has approved the survey and
matters shown thereon, and all other matters relating to the
Property. In furtherance thereof, Buyer hereby instructs Escrow
Agent to deliver the Deposit to Seller on May 15, 1997, as
provided in the Agreement.
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"
THE MUTUAL LIFE INSURANCE
COMPANY OF NEW YORK,
a New York corporation
By:/s/ William J. Swackhamer
Its:/s/ Regional Vice Presdient
"BUYER"
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: /s/ Victor J. Coleman
Its: President and COO
By:
Its:
"ESCROW AGENT:" 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: Tony Rice Grousch
Its: Escrow Officer
