UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) December 17, 1996
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 7. Financial Statements and Exhibits
(a) Financial statements of properties acquired.
Report of Independent Auditors
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue and
certain expenses of 5200 West Century for the period January 1, 1996
to December 19, 1996. This statement of revenue and certain
expenses is the responsibility of the management of 5200 West
Century. 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
presents fairly, in all material respects, the revenue and
certain expenses, as defined above, of 5200 West Century for the
period January 1, 1996 to December 19, 1996, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
February 5, 1997
5200 West Century
Statement of Revenue and Certain Expenses
(In thousands)
For the Period January 1, 1996 to December 19, 1996
Revenue
Rental $ 1,021
Tenant reimbursements 115
Parking - net of expenses 40
Other 2
Total revenue 1,178
Certain Expenses
Property operating and maintenance 841
Real estate taxes 135
Insurance 212
Total certain expenses 1,188
Excess of certain expenses over revenue $ (10)
See accompanying notes to statement of revenue and certain expenses.
5200 West Century
Notes to Statement of Revenue and Certain Expenses
For the Period January 1, 1996 to December 19, 1996
1. Organization and Summary of Significant Accounting
Policies
Organization
The accompanying statement of revenue and certain expenses
includes the operations of 5200 West Century (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 $11,400,000 and has approximately
310,910 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 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.
Risks and Uncertainties
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.
5200 West Century
Notes to Statement of Revenue and Certain Expenses
(continued)
For the Period January 1, 1996 to December 19, 1996
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 $ 783,000
1998 750,000
1999 684,000
2000 575,000
2001 562,000
Thereafter 3,258,000
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.
Report of Independent Auditors
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue and certain
expenses of 2730 Wilshire for the twelve months ended October 31,
1996. This statement of revenue and certain expenses is the
responsibility of the management of 2730 Wilshire. 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
presents fairly, in all material respects, the revenue and
certain expenses, as defined above, of 2730 Wilshire for the
twelve months ended October 31, 1996, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
February 5, 1997
2730 Wilshire
Statement of Revenue and Certain Expenses
(In thousands)
For the Twelve Months Ended October 31, 1996
Revenue
Rental $1,039
Parking - net of expenses 46
Other 15
Total revenue 1,100
Certain Expenses
Property operating and maintenance 340
Real estate taxes 102
Insurance 44
Total certain expenses 486
Excess of revenue over certain expenses $ 614
See accompanying notes to statement of revenue and certain expenses.
2730 Wilshire
Notes to Statement of Revenue and Certain Expenses
For the Twelve Months Ended October 31, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The accompanying statement of revenue and certain expenses
includes the operations of 2730 Wilshire (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 $9,500,000 and has approximately 67,820 rentable
square feet, of which 12,740 represents 16 multi-family housing
units, the rents of which are partially subsidized by the Housing
and Urban Development. The multi-family housing units are on
month to month leases.
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 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.
Risks and Uncertainties
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.
2730 Wilshire
Notes to Statement of Revenue and Certain Expenses (continued)
For the Twelve Months Ended October 31, 1996
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 $991,000
1998 903,000
1999 888,000
2000 755,000
2001 528,000
Thereafter 569,000
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.
Report of Independent Auditors
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue and certain
expenses of 10351 Santa Monica for the twelve months ended
October 31, 1996. This statement of revenue and certain expenses
is the responsibility of the management of 10351 Santa Monica.
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
presents fairly, in all material respects, the revenue and
certain expenses, as defined above, of 10351 Santa Monica for the
twelve months ended October 31, 1996, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
February 5, 1997
10351 Santa Monica
Statement of Revenue and Certain Expenses
(In thousands)
For the Twelve Months Ended October 31, 1996
Revenue
Rental $1,386
Tenant reimbursements 9
Parking - net of expenses 119
Other 7
Total revenue 1,521
Certain Expenses
Property operating and maintenance 527
Real estate taxes 81
Insurance 36
Total certain expenses 644
Excess of revenue over certain expenses $ 877
See accompanying notes to statement of revenue and certain expenses.
10351 Santa Monica
Notes to Statement of Revenue and Certain Expenses
For the Twelve Months Ended October 31, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The accompanying statement of revenue and certain expenses
includes the operations of 10351 Santa Monica (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 $11,000,000 and has approximately
96,251 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 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.
Risks and Uncertainties
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.
10351 Santa Monica
Notes to Statement of Revenue and Certain Expenses (continued)
For the Twelve Months Ended October 31, 1996
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 $1,374,000
1998 1,121,000
1999 991,000
2000 805,000
2001 677,000
Thereafter 804,000
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.
Report of Independent Auditors
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue and certain
expenses of Center Promenade for the period January 1, 1996 to
December 17, 1996. This statement of revenue and certain
expenses is the responsibility of the management of Center
Promenade. 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
presents fairly, in all material respects, the revenue and
certain expenses, as defined above, of Center Promenade for the
period January 1, 1996 to December 17, 1996, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
February 5, 1997
Center Promenade
Statement of Revenue and Certain Expenses
(In thousands)
For the Period January 1, 1996 to December 17, 1996
Revenue
Rental $2,097
Tenant reimbursements 51
Total revenue 2,148
Certain Expenses
Property operating and maintenance 756
Real estate taxes 171
Insurance 50
Bad debts 5
Total certain expenses 982
Excess of revenue over certain expenses $1,166
See accompanying notes to statement of revenue and certain expenses.
Center Promenade
Notes to Statement of Revenue and Certain Expenses
For the Period January 1, 1996 to December 17, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The accompanying statement of revenue and certain expenses
includes the operations of Center Promenade (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 $11,550,000 and has approximately
174,837 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 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.
Risks and Uncertainties
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.
Center Promenade
Notes to Statement of Revenue and Certain Expenses (continued)
For the Period January 1, 1996 to December 17, 1996
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 $1,661,000
1998 1,462,000
1999 1,151,000
2000 683,000
2001 407,000
Thereafter 213,000
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.
Report of Independent Auditors
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue and certain
expenses of 10350 Santa Monica for the period January 1, 1996 to
December 27, 1996. This statement of revenue and certain
expenses is the responsibility of the management of 10350 Santa
Monica. 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
presents fairly, in all material respects, the revenue and
certain expenses, as defined above, of 10350 Santa Monica for the
period January 1, 1996 to December 27, 1996, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
February 5, 1997
10350 Santa Monica
Statement of Revenue and Certain Expenses
(In thousands)
For the Period January 1, 1996 to December 27, 1996
Revenue
Rental $629
Tenant reimbursements 3
Parking - net of expenses 58
Other 2
Total revenue 692
Certain Expenses
Property operating and maintenance 271
Real estate taxes 45
Insurance 11
Total certain expenses 327
Excess of revenue over certain expenses $365
See accompanying notes to statement of revenue and certain expenses.
10350 Santa Monica
Notes to Statement of Revenue and Certain Expenses
For the Period January 1, 1996 to December 27, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The accompanying statement of revenue and certain expenses
includes the operations of 10350 Santa Monica (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 $4,300,000 and has approximately
42,292 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 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.
Risks and Uncertainties
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.
10350 Santa Monica
Notes to Statement of Revenue and Certain Expenses (continued)
For the Period January 1, 1996 to December 27, 1996
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 $583,000
1998 402,000
1999 265,000
2000 156,000
2001 28,000
Thereafter 14,000
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.
Report of Independent Auditors
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue and certain
expenses of Sumitomo Bank Building for the period January 1, 1996
to December 20, 1996. This statement of revenue and certain
expenses is the responsibility of the management of Sumitomo Bank
Building. 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
presents fairly, in all material respects, the revenue and
certain expenses, as defined above, of Sumitomo Bank Building for
the period January 1, 1996 to December 20, 1996, in conformity
with generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
February 5, 1997
Sumitomo Bank Building
Statement of Revenue and Certain Expenses
(In thousands)
For the Period January 1, 1996 to December 20, 1996
Revenue
Rental $1,926
Tenant reimbursements 79
Parking - net of expenses 254
Other 9
Total revenue 2,268
Certain Expenses
Property operating and maintenance 859
Real estate taxes 161
Insurance 51
Total certain expenses 1,071
Excess of revenue over certain expenses $1,197
See accompanying notes to statement of revenue and certain expenses.
Sumitomo Bank Building
Notes to Statement of Revenue and Certain Expenses
For the Period January 1, 1996 to December 20, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The accompanying statement of revenue and certain expenses
includes the operations of Sumitomo Bank Building (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 $12,800,000 and has
approximately 110,641 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 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.
Risks and Uncertainties
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.
Sumitomo Bank Building
Notes to Statement of Revenue and Certain Expenses (continued)
For the Period January 1, 1996 to December 20, 1996
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 $1,655,000
1998 1,223,000
1999 730,000
2000 385,000
2001 93,000
Thereafter -
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.
Report of Independent Auditors
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue and certain
expenses of LA Corporate Center for the period January 1, 1996 to
December 18, 1996. This statement of revenue and certain
expenses is the responsibility of the management of LA Corporate
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
presents fairly, in all material respects, the revenue and
certain expenses, as defined above, of LA Corporate Center for
the period January 1, 1996 to December 18, 1996, in conformity
with generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
February 5, 1997
LA Corporate Center
Statement of Revenue and Certain Expenses
(In thousands)
For the Period January 1, 1996 to December 18, 1996
Revenue
Rental $5,882
Tenant reimbursements 128
Other 288
Total revenue 6,298
Certain Expenses
Property operating and maintenance 2,090
Real estate taxes 367
Insurance 217
Other 207
Total certain expenses 2,881
Excess of revenue over certain expenses $3,417
See accompanying notes to statement of revenue and certain expenses.
LA Corporate Center
Notes to Statement of Revenue and Certain Expenses
For the Period January 1, 1996 to December 18, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The accompanying statement of revenue and certain expenses
includes the operations of LA Corporate 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 $41,850,000 and has approximately
389,293 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 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.
Risks and Uncertainties
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.
LA Corporate Center
Notes to Statement of Revenue and Certain Expenses (continued)
For the Period January 1, 1996 to December 18, 1996
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 $6,304,000
1998 3,979,000
1999 1,715,000
2000 996,000
2001 473,000
Thereafter -
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.
Report of Independent Auditors
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue and certain
expenses of Burbank Executive Center for the twelve months ended
October 31, 1996. This statement of revenue and certain
expenses is the responsibility of the management of Burbank Executive
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
presents fairly, in all material respects, the revenue and
certain expenses, as defined above, of Burbank Executive Center
for the twelve months ended October 31, 1996, in conformity
with generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
February 7, 1997
Burbank Executive Center
Statement of Revenue and Certain Expenses
(In thousands)
For the Twelve Months Ended October 31, 1996
Revenue
Rental $2,353
Parking - net of expenses 173
Total revenue 2,526
Certain Expenses
Property operating and maintenance 823
Real estate taxes 185
Insurance 45
Total certain expenses 1,053
Excess of revenue over certain expenses $1,473
See accompanying notes to statement of revenue and certain expenses.
Burbank Executive Center
Notes to Statement of Revenue and Certain Expenses
For the Twelve Months Ended October 31, 1996
1. Organization and Summary of Significant Accounting Policies
Organization
The accompanying statement of revenue and certain expenses
includes the operations of Burbank Executive 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 $13,000,000 and has
approximately 142,862 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 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.
Risks and Uncertainties
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.
Burbank Executive Center
Notes to Statement of Revenue and Certain Expenses (continued)
For the Twelve Months Ended October 31, 1996
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 $2,186,000
1998 1,610,000
1999 1,319,000
2000 668,000
2001 601,000
Thereafter 675,000
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.
Pro Forma Condensed Combined Statement of Operations (Unaudited)
The unaudited pro forma condensed combined statements of
operations for the year ended December 31, 1996 is presented as
if the Offering, the Formation Transactions, and the acquisitions
of the Properties acquired during 1996 prior to the Offering (the
"1996 Acquired Properties"), the acquisition of properties at the
time of the Offering of (the "Acquisition") and the acquisition
of the nine properties acquired subsequent to the Offering had all
occurred at the beginning of the year.
The pro forma condensed combined statement of operations are
not necessarily indicative of what the Company's results of
operations would have been assuming the completion of the
Formation Transactions, the Offering, and acquisitions at the
beginning of the period indicated, nor does it purport to project
the Company's results of operations for any future period.
(b) Pro forma financial information.
<TABLE>
<CAPTION>
Arden Realty, Inc.
Pro Forma Condensed Combined 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>
(A)
Equity in
Net loss of (C)
Arden Arden Noncombined (B) Pre-Acquisition (D)
Realty, Inc. Predecessors Entities Pro Forma Prior Period for Pre-Acquisition
October 9, January 1, January 1, to Acquisition Properties Period for
1996 to 1996 to 1996 to 1996 Acquired Acquisitions
December 31, October 8, October 8, Acquired at the time of Subsequent to
1996 1996 1996 Properties the Offering the Offering Total
Revenues
Revenues from
rental operations:
Rental $ 17,041 $32,287 $ 12,828 $3,923 $3,367 $15,805 $85,251
Tenant reimbursements 803 2,031 243 258 88 387 3,810
Parking,
net of expenses 1,215 3,692 846 308 195 658 6,914
Other rental operations 375 1,125 357 144 142 320 2,463
19,434 39,135 14,274 4,633 3,792 17,170 98,438
Other income 138 1,330 -- -- -- -- 1,468
Total revenue 19,572 40,465 104,274 4,633 3,792 17,170 99,906
Expenses
Property expenses 6,005 14,224 6,053 1,489 1,534 8,426 37,731
General and
administrative 753 1,758 -- -- -- -- 2,511
Interest 1,280 24,521 7,356 -- -- -- 3,157
Depreciation and
amortization 3,108 5,264 2,705 -- -- -- 11,077
Total expenses 11,146 45,767 16,114 1,489 1,534 8,426 84,476
Equity in net (loss) of
noncombined entities -- (336) 336 -- -- -- --
Income (loss) before
minority interests and
extraordinary items 8,426 (5,638) (1,504) 3,144 2,258 8,744 15,430
Minority interests (993) 721 (721) -- -- -- (993)
Income (loss) before
extraordinary items 7,433 (4,917) (2,225) 3,144 2,258 8,744 14,437
Extraordinary (loss)
gain on early
extinguishment of
debt, net of minority
interests share (13,105) 1,877 -- -- -- -- (11,228)
Net loss $ (5,672) $(3,040) $(2,225) $3,144 $2,258 $8,744 $ 3,209
Weighted average
common shares
outstanding before
conversion of
OP Units 21,679,500
Net (loss) income
per common share $(.26)
Pro Forma Arden Realty, Inc.
Adjustments Pro Forma
Revenues
Revenues from rental operations:
Rental $ 64 (E) $ 85,315
Tenant reimbursements -- 3,810
Parking, net of expenses -- 6,914
Other rental operations -- 2,463
64 98,502
Other income (1,253) (F) 215
Total revenue (1,189) 98,717
Expenses
Property expense 108 (G) 37,839
General and administrative 1,289 (H) 3,800
Interest (22,632) (I) 10,525
Depreciation and amortization 2,693 (J) 13,770
Total expenses (18,542) 65,934
Equity in net (loss)
of noncombined entities -- --
Income (loss) before minority
interests and extraordinary items 17,353 32,783
Minority interests (2,928) (K) (3,921)
Income (loss) before extraordinary
items 14,425 28,862
Extraordinary (loss) gain on early
extinguishment of debt, net of
minority interests share 11,228 (L) --
Net income $25,653 $28,862
Weighted average common shares
outstanding before conversion of OP Units 21,679,500
Net (loss) income per common share $1.33
(A) To account for Arden Predecessor entities on a post-
offering consolidated basis
(B) To record the pre-offering historical activity of 1996
Acquired Properties as defined in the Offering prospectus.
(C) To record the pre-offering historical activity of the
Acquisition Properties as defined in the Offering prospectus.
(D) To record the pre-acquisition combined financial
activity of the following acquisitions subsequent to the Offering:
Property Acquisition Date
10351 Santa Monica Blvd. October 1996
2730 Wilshire Boulevard November 1996
Burbank Executive Center November 1996
Grand Avenue Plaza November 1996
Los Angeles Corporate Center December 1996
Sumitomo Bank Building December 1996
5200 W. Century Blvd. December 1996
Center Promenade December 1996
10350 Santa Monica December 1996
(E) Increase in rental revenue to adjust the 1996 Acquired
Properties and the Acquisition Properties for straightline
rental revenue.
(F) Decrease in other income to eliminate non-recurring
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 expense
related to additional property payroll costs relating to the
1996 Acquired Properties and the Acquisition Properties.
(H) Increase in general and administrative expenses related
to expected level of operations as a public real estate investment
trust.
(I) Decrease in interest expense:
Decrease in interest expense due to
repayment of mortgage loans $(31,877)
Increase in interest expense related to the new
mortgage loan and line of credit with an
interest rate of LIBOR plus 1.5% and LIBOR
plus 1.75%, respectively, due in one year,
net of amounts capitalized 9,050
Increase in amortization of finance costs related to
the line of credit 195
Net decrease in interest expense $(22,632)
(J) Increase in depreciation expense:
Increase in depreciation expense to reflect a full
year of depreciation for the 1996 Acquired Properties,
the Acquisition Properties and acquisitions subsequent
to the Offering, utilizing a 40 year useful
life for buildings and a ten year useful life for
improvements $ 2,563
Increase in depreciation due to the fair value of
consideration paid in excess of book value of
interests in properties acquired from
nonaffiliates 130
$ 2,693
(K) To reflect adjustment for minority interest of 12% in
the Operating Partnership.
</TABLE>
(c) Exhibits.
10.36 Purchase and Sale Agreement between C. P. Properties I, Inc., a
Delaware corporation ("Seller") and Arden Realty Limited Partnership,
a Maryland Limited partnership ("Purchaser")
10.37 Sale Agreement by and between Metropolitan Life Insurance Company, a
New York Corporation and Arden Realty Limited partnership, a Maryland
limited partnership
10.38 Purchase and Sale Agreement and Joint Escrow Instructions by and
between Trust Company of the West, a California Corporation, as
trustee for TCW Realty Fund III , "Seller," and Arden Realty Limited
Partnership, a Maryland limited partnership, "Purchaser"
10.39 Agreement of Purchase and Sale of Tenancy-in-Common Interest between
Haptel, Inc., a Delaware corporation, as "Seller", and Fidelity
Partners, Inc., a California corporation as "Purchaser" for property
at 5200 W. Century Boulevard, Los Angeles, California
10.40 Offer to Purchase Rights under Purchase Agreement for Acquisition of
Co-Tenancy Interest in Union Bank Center, located at 5200 West
Century Boulevard, Los Angeles, California
10.41 Purchase and Sale Agreement between John Hancock Mutual Life Insurance
Company, a Massachusetts corporation, and Arden Realty Limited
Partnership, a Maryland limited partnership
10.42* Revolving Credit Agreement Among Arden Realty Limited Partnership, a
Maryland Limited Partnership, as Borrower, and Wells Fargo Bank,
National Association, Commerzbank AG, Los Angeles Branch, Dresdner
Bank AG, New York Branch and Grand Cayman Branch, Fleet National Bank,
Keybank National Association, Manufacturers Bank, Union Bank of
California, N.A., The First National Bank of Chicago, and PNC Bank, NA
Together With Those Assignees Becoming Parties Hereto Pursuant to
Section 12.20, as Lenders, and Wells Fargo Bank, National Association,
as Agent
* Filed previously
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: February 28, 1997 By: /s/ Diana M. Laing
Diana M. Laing
Chief Financial Officer
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated
for reference purposes only as of December 13, 1996, is made by
and between C.P. PROPERTIES I, INC., a Delaware corporation
("Seller"), and ARDEN REALTY LIMITED PARTNERSHIP, a Maryland
limited partnership ("Purchaser"), as of the "Effective Date"
specified in Section 10.13 below.
In consideration of the mutual covenants and representations
herein contained, and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, Seller
and Purchaser agree as follows:
Section 1.
PURCHASE AND SALE
1.1 Purchase and Sale. Subject to the terms and conditions
of this Agreement, Seller hereby agrees to sell and convey to
Purchaser, and Purchaser hereby agrees to purchase from Seller,
all of Seller's assignable and transferable right, title and
interest in and to the following described property (herein
collectively called the "Property"):
(a) Land. That certain tract of land (the "Land") located
in the City of Ventura, County of Ventura, State of California,
being more particularly described on Exhibit A attached hereto
and made a part hereof.
(b) Easements. All easements, if any, benefiting the Land
or the Improvements (as hereinafter defined).
(c) Rights and Appurtenances. All rights and appurtenances
pertaining to the Land, including any right, title and interest
of Seller in and to adjacent streets, alleys or rights-of-way.
(d) Improvements. All improvements and related amenities
known as "The Center Promenade" (the "Improvements") in and on
the Land, and having an address of 6401, 6477, 6555 and 6633
Telephone Road, 1000 and 1050 Hill Road, and 1001 Partridge
Drive, Ventura, California.
(e) Leases. All leases (the "Leases") of space in the
Property, concession leases, lease guaranties, and all tenant
security deposits and prepaid rent held by Seller on the Closing
Date (as defined in Section 6.1).
(f) Tangible Personal Property. All appliances, fixtures,
equipment, machinery, furniture, carpet, drapes and other
personal property, if any, owned by Seller, located on and used
in connection with the Land and the Improvements (the "Tangible
Personal Property").
(g) Contracts. To the extent assignable without the consent
of third parties, all written contracts and agreements pertaining
to the Property, and not cancelable on thirty (30) days notice
without penalty or premium (collectively, the "Contracts"),
including, but not limited to, service contracts, equipment
leases and maintenance contracts.
(h) Intangible Property. To the extent assignable without
the consent of third parties, all intangible property (the
"Intangible Property"), if any, owned by Seller and pertaining to
the Land, the Improvements, or the Tangible Personal Property
including, without limitation, transferable utility contracts,
transferable telephone exchange numbers, plans and
specifications, engineering plans and studies, floor plans and
landscape plans, surveys, permits, licenses, approvals,
guaranties and warranties relating thereto.
Section 2.
PURCHASE PRICE
2.1 Purchase Price. The purchase price (the "Purchase
Price") for the Property shall be ELEVEN MILLION FIVE HUNDRED
FIFTY THOUSAND AND NO/100 DOLLARS ($11,550,000.00) and shall be
paid in cash by Purchaser to Seller at the Closing (as defined in
Section 6.1) by wire transfer in accordance with wire transfer
instructions to be provided by Seller.
Section 3.
EARNEST MONEY
3.1 Earnest Money.
(a) Purchaser shall deliver to the Title Company (as defined
in Section 6.1) within two (2) business days after the date a
fully-executed copy of this Agreement is delivered to the Title
Company by Seller, by wire transfer in accordance with wire
transfer instructions provided by the Title Company, the amount
of ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00) (which
amount and any additional funds delivered by Purchaser to Title
Company pursuant to this Section 3, together with all interest
accrued thereon, if any, is herein called the "Earnest Money") to
be invested by the Title Company in an interest-bearing account
as Purchaser and Seller shall direct. Purchaser agrees to
promptly deliver or cause the Title Company to deliver to Seller
written acknowledgment by the Title Company that the executed
copy of this Agreement and the required Earnest Money have been
received by and are being held by the Title Company pursuant to
the terms of this Agreement.
(b) Seller shall have the option of terminating this
Agreement if the full amount of required Earnest Money is not
timely and fully delivered to the Title Company at the time(s)
and in the manner as prescribed in this Section 3.
(c) If on or before the expiration of the Approval Period
(as defined in Section 4.2) this Agreement has not been
terminated by Purchaser in accordance with an express termination
granted to Purchaser by the terms of this Agreement, the Earnest
Money shall automatically and without further notice or action by
Seller become and remain non-refundable except to the limited
extent otherwise expressly provided in this Agreement.
(d) If the sale of the Property is consummated under this
Agreement, the Earnest Money shall be paid to Seller and applied
to the payment of the Purchase Price at Closing.
(e) If Purchaser terminates this Agreement in accordance
with any right to terminate granted to Purchaser by the terms of
this Agreement, the Earnest Money shall be immediately returned
to Purchaser, and no party hereto shall have any further
obligation under this Agreement except for such obligations which
by their terms expressly survive the termination of this
Agreement (the "Surviving Obligations"). Purchaser agrees to
deliver to Seller copies of all third party Reports (as defined
in Section 4.4) identified in good faith by Purchaser in writing
at the time the notice to terminate this Agreement is given (the
notice to terminated shall not be deemed to have been properly
given if it does not identify such third party Reports). The
obligations to deliver the Reports shall survive the termination
of this Agreement. In no event shall $10,000.00 of the Earnest
Money be returned to Purchaser hereunder until all such
identified Reports have been delivered to Seller.
(f) If Seller terminates this Agreement in accordance with
Section 8.2(a), the Earnest Money Deposit shall be immediately
released by Title Company to Seller as liquidated damages as
provided in Section 8.2(a), and no party hereto shall have any
further obligation under this Agreement except for the Surviving
Obligations.
Section 4.
DELIVERIES, INSPECTIONS AND REPRESENTATIONS
4.1 Seller's Delivery Obligations. On or prior to the date
of this Agreement, Seller (at Seller's expense) has delivered to
Purchaser, and Purchaser has received from Seller, the following:
(1) Title Commitment. Commitment for Owner's Policy of
Title Insurance (the "Title Commitment") with respect to the
Property, issued by the Title Company, and legible copies of any
restrictive covenants, easements, and other items listed as title
exceptions therein.
(2) Survey. The most recent and existing "as-built" survey
of the Property (the "Survey"), if any, in Seller's possession.
(3) Contracts. Copies of all Contracts, to the extent in
the possession of Seller.
(4) Rent Roll. A rent roll in the form previously provided
by Seller to Purchaser (the "Rent Roll") identifying all Leases
of space within the Improvements current as of a date not earlier
than thirty (30) days prior to the Effective Date and certified
by Seller's property manager as being true and correct in all
material respects.
(5) Additional Items. Those additional documents, items
and things relating to the Property and particularly described in
Schedule 1 attached hereto.
4.2 Purchaser's Satisfaction. During the period commencing
on the Effective Date and ending on December 13, 1996 (the
"Approval Period"), the following matters shall be conditions
precedent to Purchaser's obligations under this Contract:
(a) Purchaser's being satisfied, in Purchaser's sole
discretion, that the Property is suitable for Purchaser's
intended uses; and
(b) Purchaser's being satisfied, in Purchaser's sole
discretion, with the items delivered pursuant to Section 4.1(3),
(4) and (5) above, including the information reflected therein.
If Purchaser is not satisfied, in its sole discretion, as to the
suitability of the Property for Purchaser's intended uses or any
of the items delivered pursuant to Section 4.1(3), (4) and (5),
Purchaser may give written notice thereof to Seller on or before
the expiration of the Approval Period (the "Disapproval Notice"),
whereupon this Agreement shall terminate, and upon such
termination, Purchaser shall be entitled to the return of the
Earnest Money (return of $10,000.00 of the Earnest Money shall be
subject to Purchaser's delivery of the third party Reports to
Seller as required pursuant to Section 3.1(d) above), and neither
party shall have any further obligation hereunder except for the
Surviving Obligations. If Purchaser fails to timely give the
Disapproval Notice, Purchaser shall be deemed to be satisfied
with such matters and the conditions precedent in this Section
4.2 shall be deemed to be satisfied.
4.3 Title Commitment and Survey.
(a)In the event (i) the Survey shows any easement,
right-of-way, encroachment, conflict, protrusion or other matter
affecting the Land or Improvements that is unacceptable to
Purchaser, in its sole discretion, or (ii) any exceptions appear
in the Title Commitment (other than the standard printed
exceptions set forth in the standard form of Title Commitment)
that are unacceptable to Purchaser, in its sole discretion,
Purchaser shall within twenty (20) days after the Effective Date
of this Agreement (the "Title Approval Period"), notify Seller in
writing of such facts and the reasons therefor ("Purchaser's
Title Objections"). Upon the expiration of the Title Approval
Period, except for Purchaser's Title Objections, Purchaser shall
be deemed to have accepted the form and substance of the Survey,
all matters shown or addressed thereon, all existing conditions
of title to the Land and Improvements including, without
limitation, any easement, right of way, encroachment, conflict,
discrepancy, overlapping of improvements, protrusion, lien,
encumbrance, restriction, condition, covenant, exception or other
matter with respect thereto and all items shown or addressed in
the Title Commitment (collectively, the "Approved Title
Matters").
(b) Notwithstanding anything to the contrary contained
herein, Seller shall have no obligation to take any steps or
bring any action or proceeding or otherwise to incur any effort
or expense whatsoever to eliminate or modify any of Purchaser's
Title Objections; provided, however, Seller, at its sole option,
may attempt to eliminate or modify all or a portion of
Purchaser's Title Objections to Purchaser's reasonable
satisfaction prior to the Closing Date. In the event Seller is
unable or unwilling to attempt to eliminate or modify all of
Purchaser's Title Objections to the reasonable satisfaction of
Purchaser, Seller shall provide written notice thereof to
Purchaser ("Seller's Notice"). Purchaser may (as its sole and
exclusive remedy) terminate this Agreement by delivering notice
thereof in writing to Seller by the earlier to occur of (i) the
Closing Date, or (ii) five (5) business days after Seller's
Notice, in which event neither party shall have any obligation
hereunder other than the Surviving Obligations.
(c)The term "Permitted Encumbrances" as used herein
includes: (i) all of the Approved Title Matters, (ii) any
Purchaser's Title Objection that remains uncured, for whatever
reason, at the earlier to occur of (A) Closing hereunder, or (B)
five (5) business days after Seller's provision of the Seller's
Notice, and (iii) the rights and interests of parties claiming
under the Leases.
4.4 Inspection.
(a) During the Approval Period, Purchaser may inspect, test,
investigate and survey: (i) the Property, (ii) all of Seller's
financial records pertaining to the operation of the Property,
and (iii) photocopies of all Leases and Contracts in the
possession of Seller. The foregoing may be done at any
reasonable time during ordinary business hours upon twenty-four
(24) hours prior written notice to Seller, at Purchaser's sole
cost and in a manner not disruptive to tenants or the operation
of the Property. Notwithstanding the foregoing, Purchaser must
obtain Seller's written approval (not to be unreasonably withheld
or delayed) of the scope and method of any inspection, testing or
investigation of the Property (other than a Phase I environmental
inspection) including, but without limitation, any inspection
which would involve taking subsurface borings or related
investigations and any inspection which would materially alter
the physical condition of the Property prior to Purchaser's
commencement of such inspections, testing or investigation.
Seller and its representatives, agents, and/or contractors shall
have the right to be present during any testing, investigation,
or inspection of the Property. In no event shall Purchaser or
any of its agents, representatives or independent contractors
contact any tenant at the Property directly without Seller's
prior written approval (not to be unreasonably withheld or
delayed).
(b) If such inspection, test, investigation or survey
reveals any fact or condition unacceptable to Purchaser, in its
sole discretion, Purchaser shall notify Seller in writing prior
to the expiration of the Approval Period of such unacceptable
fact or condition and the reasons therefor ("Purchaser's
Inspection Objections"). Notwithstanding anything to the
contrary contained herein, Seller shall have no obligation to
take any steps or bring any action or proceeding or otherwise to
incur any effort or expense whatsoever to eliminate or cure any
of the Purchaser's Inspection Objections; provided, however,
Seller, at its sole option, may attempt to eliminate or cure all
or a portion of Purchaser's Inspection Objections to Purchaser's
reasonable satisfaction prior to the Closing Date. In the event
Seller is unable or unwilling to attempt to eliminate or cure all
of Purchaser's Inspection Objections to the reasonable
satisfaction of Purchaser, Seller shall provide written notice
thereof to Purchaser ("Seller's Notice"). Purchaser may (as its
sole and exclusive remedy) terminate this Agreement by delivering
notice thereof in writing to Seller by the earlier to occur of
(i) the Closing Date, or (ii) five (5) business days after
Seller's Notice, in which event neither party shall have any
obligation hereunder other than the Surviving Obligations. If
Purchaser does not notify Seller of Purchaser's Inspection
Objections in writing prior to the expiration of the Approval
Period, all inspections, tests, investigations and surveys of the
Property, and all conditions relating to the Property (except for
Purchaser's express closing conditions specified in Section 6.9
below), shall be deemed satisfactory to Purchaser.
(c) All information provided by Seller to Purchaser or
obtained by Purchaser relating to the Property in the course of
Purchaser's review, including, without limitation, any
environmental assessment or audit (collectively, the "Reports")
shall be treated as confidential information by Purchaser and
Purchaser shall instruct all of its employees, agents,
representatives and contractors as to the confidentiality of all
such information. In the event that this transaction is not
closed for any reason, then Purchaser shall maintain the
confidentiality of such information, and shall require its
agents, representatives and accountants not to disclose any such
information to any other party.
(d) Purchaser shall restore the Property to its condition
existing immediately prior to Purchaser's inspection, testing,
investigation and survey thereof, and except to the extent
resulting from the gross negligence or willful misconduct of
Seller or Seller's agents, representatives or employees,
Purchaser shall be liable for all damage or injury to any person
or property resulting from, relating to or arising out of any
such inspection, testing, investigation or survey, whether
occasioned by the acts of Purchaser or any of its employees,
agents, representatives or contractors, and Purchaser shall
indemnify, defend and hold harmless Seller and its agents,
employees, officers, directors, affiliates, advisors and asset
managers from any liability resulting therefrom. This
indemnification by Purchaser shall survive the Closing or the
termination of this Agreement, as applicable.
(e) At Purchaser's request at any time from and after the
date hereof until that date which is one (1) year following the
Closing Date, Seller shall, at no cost or expense to Seller, make
available to Purchaser's designated independent auditor, upon
reasonable advance notice, the following: (i) the historical
property information for the Property for calendar years 1994,
1995 and 1996 (exclusive of any advisory, proprietary or other
materials which Seller is required to keep confidential), and
(ii) copies of any audited financial statements with respect to
the Property, prepared or to be prepared by Seller for calendar
years 1994, 1995 and 1996 so as to permit preparation by
Purchaser of audited or unaudited financial statements for all
periods required to be prepared by the Rules and Regulations of
the Securities and Exchange Commission (the "SEC Regulations"),
to the extent that the materials specified in subparagraphs (i)
and (ii) are in Seller's possession or under Seller's control.
Further, after Closing until that date which is one (1) year
following the Closing Date, upon written request by Purchaser's
designated independent auditor in connection with the normal
course of such auditor's auditing of the Property, Seller agrees
to authorize its auditors, at no cost, expense or liability to
Seller, to discuss such historical property information and
audited financial statements with Purchaser's designated
independent auditor. The use of any such information by
Purchaser or Purchaser's designated independent auditor shall be
subject to the confidentiality requirements of Section 4.4(c)
above, except to the extent, if any, such information is included
in statements required by the SEC Regulations.
4.5 Purchaser's Representations and Warranties. Purchaser
represents and warrants to Seller that:
(a) Purchaser is a limited partnership, duly organized and
in good standing under the laws of the State of Maryland, is
qualified to do business in the State of California and has the
power to enter into this Agreement and to execute and deliver
this Agreement and to perform all duties and obligations imposed
upon it hereunder, and Purchaser has obtained all necessary
corporate, partnership or other organizational authorizations
required in connection with the execution, delivery and
performance of this Agreement and the transaction contemplated
herein and has obtained the consent of all entities and parties
(whether private or governmental) necessary to bind Purchaser to
this Agreement;
(b) neither the execution nor the delivery of this
Agreement, nor the consummation of the purchase and sale
transaction contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement
conflict with or will result in the breach of any of the terms,
conditions or provisions of any agreement or instrument to which
Purchaser, or its general partner, is a party or by which
Purchaser, any shareholder, partner or related entity or
affiliate of Purchaser, or any of Purchaser's assets is bound;
(c) Purchaser has the financial resources to timely
consummate the purchase and sale transaction contemplated by this
Agreement;
(d) neither Purchaser nor any partner, shareholder, related
entity or affiliate of Purchaser is in any way affiliated with
Seller, GE Capital Realty Group, Inc., General Electric Capital
Corporation, General Electric Realty Advisors, Inc., GE Capital
Investment Advisors, Inc. ("Advisor"), General Electric Company
or any affiliate of any of the foregoing; provided, that to the
extent the foregoing representation applies with respect to any
investor in Purchaser's general partner, Purchaser is only
representing and warranting that no shareholders of record of
Purchaser's general partner are identified with "GE" or "General
Electric" in their name;
(e) Purchaser is not an "employee benefit plan" as defined
in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), which is subject to Title 1 of ERISA
and (b) the assets of Purchaser do not constitute "plan assets"
of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101;
(f) Purchaser is not a "governmental plan" within the
meaning of Section 3(32) of ERISA or a "plan" within the meaning
of Section 4975(e)(1) of the Internal Revenue Code (the "Code");
(g) One or more of the following circumstances is true:
(i) equity interests in Purchaser are publicly offered
securities, within the meaning of 29 C.F.R. Section 2510.3-
101(b)(2);
(ii) less than 25 percent of all equity interests in
Purchaser are held by "benefit plan investors" within the meaning
of 29 C.F.R. Section 2510.3-101(f)(2);
(iii) Purchaser is a corporation that qualifies as
either an "operating company" or a "real estate operating
company" within the meaning of 29 C.F.R. Section 2510.3-101(c)
and (e); or
(iv) with respect to Seller, and with respect to any
shareholder, partner, related entity or affiliate of Seller,
Purchaser is neither (1) a party in interest as defined in
Section 3(14) of ERISA, nor (2) a disqualified person as defined
in Section 4975(e)(2) of the Code;
(h) that prior to the end of the Approval Period, Purchaser
will have examined and investigated to Purchaser's full
satisfaction the physical, economic and legal condition of the
Property and made all other inquiries Purchaser deemed necessary
in connection with the transaction herein contemplated;
(i) except to the limited extent, if any, specifically and
expressly set forth in this Agreement, Purchaser shall accept the
Property "AS IS" and "WHERE IS" at Closing, and Purchaser has not
relied upon and will not rely upon, and Seller is not liable for
or bound by any, express or implied, warranties, guarantees,
statements, representations or information pertaining to the
Property or relating thereto made or furnished by Seller or any
of its advisors, or any of their agents, representatives,
contractors, employees, attorneys or brokers, to whomever made or
given, directly or indirectly, verbally or in writing, unless
specifically and expressly set forth herein;
(j) neither Purchaser nor Purchaser's general partner has a
controlling interest in, is controlled by, is under common
control with, and is otherwise in any way affiliated with Title
Company.
Purchaser's representations and warranties set forth in this
Section 4.5 shall survive the Closing or termination of this
Agreement. As a condition precedent to Seller's obligation to
close the purchase and sale transaction contemplated in this
Agreement, Purchaser's representations and warranties contained
herein must remain and be true and correct as of the Closing
Date. Prior to the Closing Date, Purchaser shall notify Seller
in writing of any facts, conditions or circumstances which render
any of the representations and warranties set forth in this
Section 4.5 in any way inaccurate, incomplete, incorrect or
misleading.
4.6 Seller's Representations and Warranties. Seller
represents and warrants to Purchaser that:
(a) Seller is a corporation organized under the laws of the
State of Delaware and is qualified to do business in the State of
California. Seller has the full right, power, and authority,
without the joinder of any other person or entity (or the consent
of any third parties), to enter into, execute and deliver this
Agreement, and to perform all duties and obligations imposed on
Seller under this Agreement, except to the limited extent, if
any, specifically and expressly set forth in this Agreement;
(b) neither the execution nor the delivery of this
Agreement, nor the consummation of the purchase and sale
contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement conflict with or will
result in the breach of any of the terms, conditions, or
provisions of any agreement or instrument to which Seller is a
party or by which Seller or any of Seller's assets is bound;
(c) [intentionally omitted]
(d) [intentionally omitted]
(e) to the best of Seller's knowledge, Seller has received
no written notice of (i) any pending assessment or condemnation
proceedings relating to the Property, (ii) any special assessment
or reassessment liens or proceedings for general real estate tax
purposes affecting the Property (other than those, if any, as may
be reflected in the Title Commitment), or (iii) any actions,
suits, or other proceedings filed or pending in any court or
before any administrative agency against Seller or affecting the
Property (exclusive of any tenant bankruptcy proceedings
disclosed in any of the materials delivered to Purchaser by or on
behalf of Seller pursuant to Section 4.1 above);
(f) [intentionally omitted]
As used herein, the phrase "to the best of Seller's knowledge"
shall mean only the actual, current conscious and not
constructive, imputed or implied knowledge of Pamela Wright and
Robert Lewis (the Portfolio Manager and Asset Manger,
respectively, of Advisor (as defined
below) primarily responsible with respect to the Property on
behalf of Seller) without any duty of investigation or inquiry.
Anything herein to the contrary notwithstanding, neither Pamela
Wright, Robert Lewis or Advisor shall have any personal or other
liability or obligation whatsoever with respect to any of the
matters set forth in this Agreement or any of Seller's
representations herein being or becoming untrue, inaccurate or
incomplete in any respect.
The parties agree that (a) Seller's warranties and
representations contained in this Section 4.6 shall survive the
Closing Date and Purchaser's acquisition of the Property only for
a period of nine (9) months after the Closing Date (the
"Limitation Period"), and (b) Purchaser shall provide written
notice to Seller of any breach of such warranties or
representations and shall allow Seller thirty (30) days within
which to cure such breach, or, if such breach cannot reasonably
be cured within thirty (30) days, an additional reasonable time
period, so long as such cure has been commenced within such
thirty (30) days and diligently pursued; provided that such time
for cure shall not in any event extend the Closing Date by more
than sixty (60) days. If Seller fails to cure such breach after
written notice and within such cure period, Purchaser's sole
remedy shall be an action at law for damages as a consequence
thereof (subject to the limitations contained in Section 8.1
below), which must be commenced, if at all, within the Limitation
Period; provided, however, that if within the Limitation Period
Purchaser gives Seller written notice of such a breach and Seller
commences to cure and thereafter terminates such cure effort or
is otherwise unable to cure such default, Purchaser shall have an
additional thirty (30) days from the date of such termination of
attempts to cure within which to commence an action at law for
damages as a consequence of Seller's failure to cure. The
Limitation Period referred to herein shall apply to known as well
as unknown breaches of such warranties or representations.
4.7 Tenant Estoppel Certificates.
(a) Seller agrees to submit or cause its property manager
to submit within ten (10) days after the Effective Date hereof to
each tenant or lessee under a Lease, an estoppel certificate, in
form substantially in accordance with Exhibit B-1 attached hereto
("Tenant Estoppel"). If an executed Tenant Estoppel contains
only non-material exceptions, qualifications or modifications and
complies with any of the following subparagraphs (i) through
(iii), then such Tenant Estoppel shall be deemed to be
substantially in compliance with Exhibit B-1 and shall
automatically be deemed to be acceptable to Purchaser (an
"Acceptable Estoppel"):
(i) the Tenant Estoppel shall include at least the
information specified in Exhibit B-2; or
(ii) the Tenant Estoppel shall include at least the
information specified in such tenant's Lease to be included in
such tenant's required tenant estoppel or other certification as
provided in such tenant's Lease; or
(iii) if such tenant is a federal, state or local
governmental authority or instrumentality, the Tenant Estoppel is
provided on such tenant's individual form.
Seller shall have no liability or obligation to Purchaser with
respect to any Tenant Estoppel other than to submit or cause its
property manager to submit such Tenant Estoppel to the tenant or
lessee with a request that such Tenant Estoppel be executed and
returned not later than two (2) business days prior to the end of
the Approval Period; provided, however, Seller shall make
commercially reasonable efforts to follow-up and obtain such
Tenant Estoppels.
(b) In the event that Seller is unable to obtain and deliver
to Purchaser on or before that day which is three (3) business
days preceding the Closing Date executed Acceptable Estoppels
from tenants occupying, in the aggregate, at least fifty percent
(50%) (the "Aggregate Percentage") of the net rentable space in
the Improvements (such percentage of net rentable space to be
determined exclusive of the space leased to the Specified Tenants
(as defined below)), Purchaser shall have the option of giving
written notice to Seller, no later than that day which is two (2)
business days preceding the Closing Date, that Purchaser will
require Seller to execute and deliver Landlord Estoppels (as
defined below) with respect to tenants (exclusive of Specified
Tenants) designated in Purchaser's notice who have not provided
Acceptable Estoppels in order to achieve an aggregate of
Acceptable Estoppels and Landlord Estoppels from or with respect
to tenants occupying not less than seventy-five percent (75%) of
net rentable space in the Improvements (such percentage of net
rentable space to be determined exclusive of the space leased to
the Specified Tenants) (the "Higher Percentage"). If Purchaser
shall have timely delivered such notice to Seller, Seller shall,
on or before the Closing Date, deliver to Purchaser a Tenant
Estoppel, substantially in compliance with Exhibit B-2 (the
"Landlord's Estoppel"), executed by Seller with respect to any
tenant from whom Seller has been unable to obtain an Acceptable
Estoppel as designated in Purchaser's notice in order to achieve
the Higher Percentage; under no circumstances shall Seller be
obligated to execute any Landlord Estoppel which would exceed the
Higher Percentage. If Purchaser shall not have given timely
written notice as described in this paragraph, Purchaser shall be
deemed for all purposes to be satisfied with the form and
substance of each Tenant Estoppel and shall have no further right
to object thereto based on the response or lack thereof with
respect to the Tenant Estoppels. In the event that Seller shall
execute and deliver a Landlord's Estoppel, such Landlord's
Estoppel shall thereafter automatically and without further
action by Seller or Purchaser be deemed cancelled and terminated
upon execution and delivery (whether before or after the Closing
Date) to Purchaser of an Acceptable Estoppel from the tenant to
which such Landlord's Estoppel related.
(c) In addition, as provided in Section 6.9(d) below,
Purchaser's obligation to consummate the transaction contemplated
herein is subject to Purchaser's timely receipt of Acceptable
Estoppels from each of American Commercial Bank; Kennedy/Jenks
Consultants; Spray, Gould & Bowers; and at least three (3) of the
other four (4) Specified Tenants. As used herein, the
"Specified Tenants" shall mean and refer to the following
existing tenants under Leases: (i) American Commercial Bank,
(ii) IBM, (iii) Lifetime Benefits, (iv) Kennedy/Jenks
Consultants, (v) Carl Warren & Company, (vi) Spray, Gould &
Bowers, and (vii) Hill Street Cafe.
4.6 Defective Condition. In the event that subsequent to
the execution of this Agreement Seller obtains knowledge of, or
Purchaser's inspection of the Property reveals, either (i) the
presence of any Hazardous Materials (as defined below in this
Section 4.8) or the violation or potential violation of any
Environmental Requirements (as defined below in this Section 4.8)
or (ii) any structural or other defect in the Improvements,
whether or not in violation of any applicable law, ordinance,
code, regulation or decree of any governmental authority having
jurisdiction over the Property (collectively, a "Defective
Condition"), which Seller, in its sole good faith judgment,
determines could constitute a potential liability to Seller after
the Closing or should be remedied prior to the sale of the
Property, Seller shall have the right upon written notice to
Purchaser on or before the scheduled Closing Date either (i) to
extend the Closing Date for the period of time (not to exceed 30
days) necessary to complete such remediation at Seller's sole
cost and expense, or (ii) to terminate this Agreement upon
written notice to Purchaser in which event the Earnest Money
shall be refunded to Purchaser and neither party shall have any
further right or obligation hereunder other than the Surviving
Obligations. The terms of this Section 4.8 are solely for the
benefit of Seller and Purchaser shall have no additional right or
remedy hereunder as a result of the exercise by Seller of its
rights under this Section 4.8.
As used herein, the term "Hazardous Materials" shall mean
any substance which is or contains (i) any "hazardous substance"
as now or hereafter defined in 101(14) of the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980,
as amend (42 U.S.C. 9601 et seq.) ("CERCLA") or any regulations
promulgated under CERCLA; (ii) any "hazardous waste" as now or
hereafter defined in the Resource Conservation and Recovery Act
(42 U.S.C. 6901 et seq.) ("RCRA") or regulations promulgated
under RCRA; (iii) any substance regulated by the Toxic Substances
Control Act (15 U.S.C. 2601 et seq.); (iv) gasoline, diesel fuel,
or other petroleum hydrocarbons; (v) asbestos and asbestos
containing materials, in any form, whether friable or
non-friable; (vi) polychlorinated biphenyls; (vi) radon gas; and
(viii) any additional substances or materials which are now or
hereafter classified or considered to be hazardous or toxic under
Environmental Requirements or the common law, or any other
applicable laws relating to the Property. Hazardous Materials
shall include, without limitation, any substance, the presence of
which on the Property, (A) requires reporting, investigation or
remediation under Environmental Requirements; (B) causes or
threatens to cause a nuisance on the Property or adjacent
property or poses or threatens to pose a hazard to the health or
safety of persons on the Property or adjacent property; or (C)
which, if it emanated or migrated from the Property, could
constitute a trespass.
As used herein, the term "Environmental Requirements" shall
mean all laws, ordinances, statutes, codes, rules, regulations,
agreements, judgments, orders, and decrees, now or hereafter
enacted, promulgated, or amended, of the United States, the
states, the counties, the cities, or any other political
subdivisions in which the Property is located, and any other
political subdivision, agency or instrumentality exercising
jurisdiction over the owner of the Property, the Property, or the
use of the Property, relating to pollution, the protection or
regulation of human health, natural resources, or the
environment, or the emission, discharge, release or threatened
release of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or waste or Hazardous Materials
into the environment (including, without limitation, ambient air,
surface water, ground water or land or soil).
Section 5.
NO REPRESENTATIONS OR WARRANTIES BY SELLER
ACCEPTANCE OF PROPERTY
5.1 Disclaimer. PURCHASER ACKNOWLEDGES AND AGREES SELLER
HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND
DISCLAIMS ANY REPRESENTATIONS, WARRANTIES (OTHER THAN AS SET
FORTH IN SECTION 4.6 ABOVE, THE WARRANTY OF TITLE CONTAINED IN
THE DEED, AS DEFINED IN SECTION 6.5 BELOW), PROMISES, COVENANTS,
AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER,
WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR
FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO:
(A) THE VALUE, NATURE, QUALITY OR CONDITION OF THE PROPERTY
INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY;
(B) THE INCOME TO BE DERIVED FROM THE PROPERTY;
(C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES
AND USES WHICH PURCHASER OR ANY TENANT MAY CONDUCT THEREON;
(D) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH
ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE
GOVERNMENTAL AUTHORITY OR BODY;
(E) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY,
PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE
PROPERTY;
(F) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF
ANY, INCORPORATED INTO THE PROPERTY;
(G) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF
THE PROPERTY;
(H) COMPLIANCE WITH ANY ENVIRONMENTAL REQUIREMENTS;
(I) THE PRESENCE OR SUSPECTED PRESENCE IN, ON, UNDER OR ABOUT
THE PROPERTY OR THE SOIL OR GROUND WATER THEREOF OF ANY HAZARDOUS
MATERIALS;
(J)ANY OTHER MATTER WITH RESPECT TO THE PROPERTY.
ADDITIONALLY, NO PERSON ACTING ON BEHALF OF SELLER IS
AUTHORIZED TO MAKE, AND BY EXECUTION HEREOF, PURCHASER
ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN, NO
PERSON HAS MADE, ANY REPRESENTATION, AGREEMENT, STATEMENT,
WARRANTY, GUARANTY OR PROMISE REGARDING THE PROPERTY OR THE
TRANSACTION CONTEMPLATED HEREIN; AND NO SUCH REPRESENTATION,
WARRANTY, AGREEMENT, GUARANTY, STATEMENT OR PROMISE, IF ANY, MADE
BY ANY PERSON ACTING ON BEHALF OF SELLER SHALL BE VALID OR
BINDING UPON SELLER UNLESS EXPRESSLY SET FORTH HEREIN.
PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT HAVING BEEN
GIVEN A FULL AND ADEQUATE OPPORTUNITY TO INSPECT, TEST AND
INVESTIGATE THE PROPERTY, SUBJECT TO ANY REPRESENTATIONS BY
SELLER EXPRESSLY SET FORTH HEREIN, PURCHASER IS RELYING SOLELY ON
ITS OWN INSPECTION, TESTING AND INVESTIGATION OF THE PROPERTY AND
NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY SELLER, AND
PURCHASER AGREES TO ACCEPT THE PROPERTY IN ITS THEN EXISTING "AS-
IS" CONDITION AND BASIS WITH ALL FAULTS AT THE CLOSING AND WAIVES
ALL OBJECTIONS OR CLAIMS AGAINST SELLER (INCLUDING, BUT NOT
LIMITED TO, ANY RIGHT OR CLAIM OF CONTRIBUTION) ARISING FROM OR
RELATED TO THE PROPERTY OR ITS PHYSICAL, ENVIRONMENTAL, ECONOMIC
OR LEGAL CONDITION (INCLUDING, WITHOUT LIMITATION, THE ACTUAL OR
SUSPECTED EXISTENCE OF ANY HAZARDOUS MATERIALS IN, ON UNDER OR
ABOUT THE PROPERTY OR THE SOIL OR GROUND WATER THEREOF).
PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT ANY
INFORMATION PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE
PROPERTY BY OR ON BEHALF OF SELLER WAS OBTAINED FROM A VARIETY OF
SOURCES AND THAT SELLER HAS NOT MADE ANY INDEPENDENT
INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKES NO
REPRESENTATIONS AS TO THE ACCURACY, TRUTHFULNESS OR COMPLETENESS
OF SUCH INFORMATION AND, EXCEPT FOR ANY EXPRESS REPRESENTATIONS
OF SELLER SET FORTH HEREIN, THAT SELLER IS NOT, AND SHALL NOT BE,
LIABLE OR BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENT,
REPRESENTATION OR INFORMATION PERTAINING TO THE PROPERTY, OR THE
OPERATION OR CONDITION THEREOF, FURNISHED BY ANY ADVISOR,
ATTORNEY, REAL ESTATE BROKER, CONTRACTOR, AGENT, EMPLOYEE,
SERVANT OR OTHER PERSON. PURCHASER FURTHER ACKNOWLEDGES AND
AGREES THAT, SUBJECT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT AND ANY REPRESENTATIONS EXPRESSLY MADE BY SELLER
CONTAINED HEREIN, TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE
SALE OF THE PROPERTY AS PROVIDED FOR HEREIN IS MADE ON AN "AS IS"
CONDITION AND BASIS WITH ALL FAULTS. IT IS UNDERSTOOD AND AGREED
THAT THE PURCHASE PRICE HAS BEEN ADJUSTED BY PRIOR NEGOTIATION TO
REFLECT THAT ALL OF THE PROPERTY IS SOLD BY SELLER AND PURCHASED
BY PURCHASER SUBJECT TO THE FOREGOING.
PURCHASER HEREBY AGREES TO INDEMNIFY, PROTECT, DEFEND, SAVE
AND HOLD HARMLESS SELLER FROM AND AGAINST ANY AND ALL DEBTS,
DUTIES, OBLIGATIONS, LIABILITIES, SUITS, CLAIMS, DEMANDS, CAUSES
OF ACTION, DAMAGES, LOSSES, FEES AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS' FEES AND EXPENSES AND COURT COSTS) IN ANY
WAY RELATING TO, OR IN CONNECTION WITH OR ARISING OUT OF
PURCHASER'S ACQUISITION, OWNERSHIP, LEASING, USE, OPERATION,
MAINTENANCE AND MANAGEMENT OF THE PROPERTY; PROVIDED, HOWEVER,
THE FOREGOING SHALL NOT BE APPLICABLE WITH RESPECT TO ANY THIRD
PARTY CLAIMS FOR SUCH MATTERS TO THE EXTENT THAT THE SAME SHALL
ARISE OR RESULT FROM EVENTS OCCURRING IN THEIR ENTIRETY PRIOR TO
THE CLOSING DATE. THE PROVISIONS OF THIS SECTION 5 SHALL SURVIVE
THE CLOSING OR ANY TERMINATION HEREOF.
5.2 Waiver and Release. Except with respect to any claims
arising out of any breach of express and specific covenants,
indemnities, representations or warranties of Seller set forth in
this Agreement, Purchaser, for itself and its agents, affiliates,
successors and assigns, effective as of the Closing Date hereby
releases and forever discharges Seller, its agents, partners,
affiliates, successors and assigns from any and all rights,
claims and demands at law or in equity, whether known or unknown
as of the Closing Date, which Purchaser has or may thereafter
have in the future, arising out of the physical, environmental,
economic or legal condition of the Property. Purchaser hereby
specifically acknowledges that Purchaser has carefully reviewed
this subsection and discussed its import with legal counsel and
that the provisions of this subsection are a material part of
this Agreement.
PURCHASER SPECIFICALLY WAIVES THE PROVISIONS OF SECTION 1542 OF
THE CALIFORNIA CIVIL CODE WHICH PROVIDES AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS TO 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.
Section 6.
CLOSING
6.1 Closing. The closing of the purchase and sale
transaction contemplated herein (the "Closing") shall be held at
or conducted through the offices of Continental Lawyers Title
Insurance Company (the "Title Company") at 751 Daily Drive, Suite
100, Camarillo, California 32010, Attn: Judy Cook, Escrow No.
C14179CJ, at a date designated by Seller and Purchaser on or
before December 17, 1996 (the "Closing Date"), unless the parties
mutually agree in writing upon another place, time or date. On
the Closing Date, all documents to be recorded shall be
appropriately recorded and all other closing documents and funds
shall be deemed to be simultaneously delivered.
6.2 Possession. Possession of the Property shall be
delivered to Purchaser at the Closing, subject to the Permitted
Encumbrances.
6.3 Proration. All rents, other amounts payable by the
tenants under the Leases, income, utilities and all other
operating expenses with respect to the Property for the month in
which the Closing occurs, and real estate and personal property
taxes and other assessments with respect to the Property for the
year in which the Closing occurs, shall be prorated to the date
of Closing, with Purchaser receiving the benefits and burdens of
ownership on the Closing Date.
(a) If the Closing shall occur before rents and all other
amounts payable by the tenants under the Leases and all other
income from the Property have actually been paid for the month in
which the Closing occurs, the apportionment of such rents and
other amounts and other income shall be upon the basis of such
rents, other amounts and other income actually received by
Seller. Subsequent to the Closing, if any such rents, other
amounts and other income are actually received by Purchaser, all
such amounts shall first be applied to post-closing rents due to
Purchaser which are currently or past due and the balance shall
be immediately paid by Purchaser to Seller to the extent of pre-
closing delinquent rents and other amounts due Seller. Purchaser
shall make a good faith effort and attempt to collect any such
rents and other amounts and other income not apportioned at the
Closing for the benefit of Seller, however, Purchaser shall not
be required to expend any funds or institute any litigation in
its collection efforts. Nothing in this paragraph shall restrict
Seller's right to collect delinquent rents directly from a tenant
by any legal means. At Closing, prepaid rents and refundable
security deposits in the possession or control of Seller
(together with any interest accrued thereon only if interest is
specifically required to be paid thereon under applicable law or
under the terms of a specific Lease), whether held in the form of
cash, pledged securities or letters of credit, at Seller's sole
option shall either be (i) transferred to Purchaser at Closing
and not subject to adjustment, or (ii) adjusted by way of a
credit in favor of Purchaser.
(b) If the Closing shall occur before the tax rate or the
assessed valuation of the Property is fixed for the then current
year, the apportionment of taxes and assessments shall be upon
the basis of the tax rate for the preceding year applied to the
latest assessed valuation. Subsequent to the Closing, when the
tax rate and the assessed valuation of the Property is fixed for
the year in which the Closing occurs, the parties agree to adjust
the proration of taxes and assessments and, if necessary, to
refund or repay such sums as shall be necessary to effect such
adjustment. If the Property is not assessed as a separate parcel
for tax or assessment purposes, then such taxes and assessments
attributable to the Property shall be determined by Purchaser and
Seller. If, as of the Closing, the Property is not being treated
as a separate tax parcel, then within thirty (30) days after the
Closing, Purchaser shall, at its sole cost and expense, have the
Property assessed separately for tax and assessment purposes.
(c) Seller shall request that final water, electric and gas
meter readings be made on the Closing Date. If the Closing shall
occur before the actual amount of utilities and all other
operating expenses with respect to the Property for the month in
which the Closing occurs are determined, the apportionment of
such utilities and other operating expenses shall be upon the
basis of a reasonable estimate by Seller (to be reasonably
approved by Purchaser) of such utilities and other operating
expenses for such month. Subsequent to the Closing, when the
actual amount of such utilities and other operating expenses with
respect to the Property for the month in which the Closing occurs
are determined, the parties agree to adjust the proration of such
utilities and other operating expenses and, if necessary, to
refund or repay such sums as shall be necessary to effect such
adjustment.
(d) Any tenant-improvement and/or leasing-commission costs
(including, without limitation, referral or locator fees) and all
other out-of-pocket fees and costs (including, without
limitation, legal fees and costs) (collectively, "New Tenant
Costs") paid or incurred by Seller after the Effective Date with
respect to new Leases or modifications to existing Leases
executed on or after the Effective Date in accordance with
Section 9 below shall be credited in favor of Seller at Closing
(provided, however, that Purchaser shall not be obligated for any
New Tenant Costs with respect to new Leases or modifications to
existing Leases executed prior to expiration of the Approval
Period unless Purchaser has consented thereto, which consent will
not be unreasonably withheld and which consent shall be given or
denied in writing within two (2) business days of Seller's
written request with Purchaser's consent being deemed to have
been given in the event that Purchaser fails to respond to such
request within such two (2) business day period). Seller shall
supply invoices and statements for all New Tenant Costs to
Purchaser on or prior to the Closing Date. Purchaser shall be
solely responsible for the payment of all New Tenant Costs in
connection with any options, renewals, or extensions exercisable
under the Leases after the Closing Date and Purchaser shall
indemnify, protect, defend, save and hold harmless Seller from
and against any and all debts, duties, obligations, liabilities,
suits, claims, demands, causes of action, damages, losses, fees
and expenses (including, without limitation, attorneys' fees and
expenses and court costs) in any way relating to, or in
connection with or arising out of New Tenant Costs.
(e) If Leases contain obligations ("Lease Obligations") on
the part of the Tenants for: (i) CPI or similar adjustments, (ii)
percentage rents, (iii) escalation payments for taxes, labor or
operations, or (iv) other expenses including, without limitation,
common area maintenance or any other operating cost pass-throughs
or retroactive charges payable by Tenants which have accrued as
of the Closing Date but are not then due and payable, the amount
of such Lease Obligations shall be prorated as of the Closing
Date upon the basis of a reasonable estimate by Seller (to be
reasonably approved by Purchaser) of such Lease Obligations
through the Closing Date. Subsequent to the Closing, when the
actual amount of such Lease Obligations with respect to the
Property through the Closing Date is determined, the parties
agree to adjust the proration of such Lease Obligations and, if
necessary, to refund or repay such sums as shall be necessary to
effect such adjustment.
The agreements of Seller and Purchaser set forth in this Section
6.3 shall survive the Closing.
6.4 Closing Costs. Seller shall pay, on the Closing Date,
the standard coverage portion of the title insurance premium for
the Owner's Policy (as defined in Section 6.5(a) below),
applicable county and city transfer taxes, one-half (1/2) of any
escrow fees and other customary fees, costs and charges of the
closing and consummation of the purchase and sale transaction
contemplated in this Agreement as customarily charged to and
payable by the seller in such transactions in the location in
which the Land is situate. Purchaser shall pay, on the Closing
Date, the extended coverage portion, if applicable, of the title
insurance premium for the Owner's Policy, the costs of any
endorsements to the Owner's Policy requested by Purchaser, all
recording costs, one-half (1/2) of any escrow fees and other
customary fees, costs and charges of the closing and consummation
of the purchase and sale transaction contemplated in this
Agreement as customarily charged to and payable by the purchaser
in such transactions in the location in which the Land is
situate. Notwithstanding the foregoing, each party shall pay its
own attorneys' fees incurred in connection with the transaction
contemplated in this Agreement.
6.5 Seller's Obligations at the Closing. At the Closing,
Seller shall deliver or cause to be delivered to Purchaser the
following:
(a) Title Policy. An ALTA Owner's Policy of Title Insurance
(the "Owner's Policy"), issued by Title Company naming Purchaser
as insured, in the amount of the Purchase Price, insuring that
Purchaser owns good and indefeasible fee simple title to the
Property, subject only to the Permitted Encumbrances without
exception for mechanics' liens. Purchaser, at Purchaser's sole
expense, may elect to cause the Title Company to issue certain
endorsements. Notwithstanding the foregoing, Seller shall have
no obligation or liability to Purchaser in the event that Title
Company is unwilling or unable to issue the Owner's Policy and
the provision at Purchaser's request of endorsements shall not be
a condition to Closing.
(b) Evidence of Authority. Such organizational and
authorizing documents of Seller as shall be reasonably required
by the Title Company to evidence Seller's authority to consummate
the transactions contemplated by this Agreement.
(c) Deed. A duly executed and acknowledged deed to the Land
and Improvements in the form attached to this Agreement as
Exhibit C (the "Deed").
(d) Assignment. A duly executed and acknowledged
counterpart Assignment and Assumption of Personal Property,
Service Contracts, Warranties and Leases in the form attached to
this Agreement as Exhibit D (the "Assignment").
(e) FIRPTA Affidavit. A duly executed affidavit of Seller
in form attached hereto as Exhibit E certifying that Seller is
not a "foreign person," as defined in Section 1445 of the
Internal Revenue Code of 1986, as amended, and in any applicable
state laws for the state in which the Property is located.
(f) Tenant Notices. Duly executed notices to all tenants or
lessees under the Leases in form attached hereto as Exhibit F.
(g) Original Documents. The original of all Leases,
Contracts and other Intangible Property in Seller's possession.
(h) California Form 590. A duly executed California
Form 590 certifying that Seller is qualified to do business in
California in the form attached hereto as Exhibit I.
(i) Update Certificate. A duly executed certificate
updating Seller's representations set forth in Section 4.6 in the
form attached to this Agreement as Exhibit J.
(j) Updated Rent Roll. An updated Rent Roll certified by
Seller's property manager effective as of a date not earlier than
three (3) business days prior to the Closing Date.
(k) Keys. Seller shall request its property manager to
deliver a master key or duplicate keys for all locks in the
Improvements to the extent, if any, in the property manager's
possession.
6.6 Purchaser's Obligations at the Closing. At the Closing,
Purchaser shall deliver or cause to be delivered to Seller the
following:
(a) Purchase Price. The Purchase Price by wire transfer of
immediately available funds.
(b) Evidence of Authority. Such organizational and
authorizing documents of Purchaser as shall be reasonably
required by Seller and/or the Title Company authorizing
Purchaser's acquisition of the Property pursuant to this
Agreement and the execution of this Agreement and any documents
to be executed by Purchaser at the Closing.
(c) Assignment. A duly executed and acknowledged
counterpart Assignment.
(d) Taxpayer Certification. A duly executed Taxpayer I.D.
Certification in the form attached to this Agreement as Exhibit
G.
(e) ERISA Certificate. A duly executed ERISA Certificate in
the form attached to this Agreement as Exhibit H.
6.7 Insurance. Seller's existing liability and property
insurance pertaining to the Property shall be canceled as of the
Closing Date, and Seller shall receive any premium refund due
thereon.
6.8 Filing of Reports. Title Company shall be solely
responsible for the timely filing of any reports or returns
required pursuant to the provisions of Section 6045(e) of the
Internal Revenue Code of 1986 (and any similar reports or returns
required under any state or local laws) in connection with the
closing of the transaction contemplated in this Agreement.
6.9 Purchaser's Closing Conditions. Closing shall be
subject to Purchaser's reasonable satisfaction, or written
waiver, of the following conditions precedent:
(a) Seller shall have substantially performed all of its
covenants provided in Section 9 below.
(b) Seller's representations set forth in Section 4.6 shall
remain true and correct in all material respects.
(c) Title Company shall be ready, willing and able to issue,
upon payment of Title Company's regularly scheduled premium, the
Owner's Policy.
(d) Without limiting the provisions of Section 4.7(a) and
(b) above, Purchaser shall have received Acceptable Estoppels
from each of American Commercial Bank; Kennedy/Jenks Consultants;
Spray, Gould & Bowers; and at least three (3) of the other four
(4) Specified Tenants.
Section 7.
RISK OF LOSS
7.1 Condemnation. If, prior to the Closing, action is
initiated to take any of the Property by eminent domain
proceedings or by deed in lieu thereof, Purchaser may either at
or prior to Closing (a) terminate this Agreement (in which event
Purchaser shall be entitled to immediate return of the Earnest
Money), or (b) consummate the Closing, in which latter event all
of Seller's assignable right, title and interest in and to the
award of the condemning authority shall be assigned to Purchaser
at the Closing and there shall be no reduction in the Purchase
Price.
7.2 Casualty. Except as otherwise provided in this
Agreement, Seller assumes all risks and liability for damage to
or injury occurring to the Property by fire, storm, accident, or
any other casualty or cause until the Closing has been
consummated. If the Property, or any part thereof, suffers any
damage in excess of $200,000.00 prior to the Closing from fire or
other casualty which Seller, at its sole option, does not elect
to repair, Purchaser may either at or prior to Closing (a)
terminate this Agreement (in which event Purchaser shall be
entitled to immediate return of the Earnest Money), or (b)
consummate the Closing, in which latter event all of Seller's
right, title and interest in and to the proceeds of any insurance
covering such damage plus an amount equal to Seller's deductible
under its applicable insurance policy (less an amount equal to
any out-of-pocket expenses and costs incurred by Seller to
collect or adjust such insurance or to repair or restore the
Property and any portion of such proceeds paid or to be paid on
account of the loss of rents or other income from the Property
for the period prior to and including the Closing Date, all of
which shall be payable to Seller), to the extent the amount of
such insurance does not exceed the Purchase Price, shall be
assigned to Purchaser at the Closing. If the Property, or any
part thereof, suffers any damage equal to or less than
$200,000.00 prior to the Closing, Purchaser agrees that it will
consummate the Closing and accept the assignment of the proceeds
of any insurance covering such damage plus an amount equal to
Seller's deductible under its insurance policy and there shall be
no reduction in the Purchase Price.
Section 8.
DEFAULT
8.1 Breach by Seller.
(a) Pre-Closing. In the event that Seller shall (i) breach
or default in the performance of any of its obligations to be
performed prior to Closing, or (ii) fail to consummate the
transaction contemplated by this Agreement for any reason (except
Purchaser's breach or default under this Agreement or a
termination of this Agreement by Purchaser or Seller pursuant to
a right to do so under the provision hereof), or (iii) breach any
of its representations set forth in Section 4.6 above, or (iv)
default in performance of any of its covenants set forth in
Section 9.3 below, Purchaser, as Purchaser's sole and exclusive
remedy, may either (1) terminate this Agreement, receive a refund
of the Earnest Money and pursue Seller for actual damages,
subject to the limitations contained in Section 8.1(c) below; or
(2) pursue the remedy of specific performance of Seller's
obligations under this Agreement provided that (i) any such suit
for specific performance must be filed within sixty (60) days
after Purchaser first becomes aware of the breach or default by
Seller, (ii) Purchaser is not in breach or default in the
performance of its obligations under this Agreement, and (iii)
Purchaser has tendered the Purchase Price, less Purchaser's good
faith reasonable estimate of proration credits that would be
credited against the Purchase Price, to the Title Company in
immediately available funds and the Title Company has
acknowledged receipt of same, in writing, to Seller.
Notwithstanding anything to the contrary contained herein, in the
event Purchaser seeks specific performance under this Agreement,
Seller shall not be obligated to expend any sums to cure any
defaults under this Agreement.
(b) Breach of Representations. In the event that Seller
shall breach or default in the performance of any of its
representations, warranties or covenants which by the express
terms of this Agreement survive the Closing, Purchaser, as
Purchaser's sole and exclusive remedy may pursue Seller for
actual damages, subject to the limitations contained in Section
8.1(c) below, incurred by Purchaser solely as the result of such
breach or default.
(c) Damages. Notwithstanding anything to the contrary
contained in this Agreement, in no event whatsoever shall
Purchaser have the right to seek or recover money damages from
Seller in excess of One Hundred Thousand and No/100 Dollars
($100,000.00) as a result of any breach or default by Seller
under any of the terms of this Agreement. Purchaser specifically
and without limitation hereby waives and relinquishes any right
to seek or recover from Seller, and specifically acknowledges and
agrees that in no event shall Seller be liable to Purchaser for,
any damages in excess One Hundred Thousand and No/100 Dollars
($100,000.00) whether as punitive, speculative or consequential
damages.
Purchaser hereby agrees that prior to its exercise of any right
or remedy as a result of any breach or default by Seller,
Purchaser will first deliver written notice of said breach or
default to Seller and give Seller five (5) business days
thereafter in which to cure said breach or default, if Seller so
elects.
8.2 Breach by Purchaser.
(a) Liquidated Damages. In the event that Purchaser fails
to comply with Section 6 of this Agreement and consummate the
transaction contemplated by this Agreement, Seller may terminate
this Agreement and thereupon Seller shall be entitled to receive
and retain the Earnest Money as liquidated damages (and not as a
penalty or forfeiture) and as Seller's sole remedy and relief
hereunder (except for the Surviving Obligations).
SELLER AND PURCHASER ACKNOWLEDGE THAT THE ACTUAL DAMAGES TO
SELLER WHICH WOULD RESULT FROM SUCH FAILURE WOULD BE EXTREMELY
DIFFICULT TO CALCULATE OR ESTABLISH ON THE DATE HEREOF. IN
ADDITION, PURCHASER DESIRES TO HAVE A LIMITATION PUT UPON ITS
POTENTIAL LIABILITY TO SELLER IN THE EVENT OF SUCH FAILURE BY
PURCHASER. BY PLACING THEIR INITIALS IN SPACES HEREINAFTER
PROVIDED, SELLER AND PURCHASER SPECIFICALLY ACKNOWLEDGE AND
AGREE, AFTER NEGOTIATION BETWEEN SELLER AND PURCHASER, THAT THE
AMOUNT OF THE EARNEST MONEY CONSTITUTES REASONABLE COMPENSATION
TO SELLER FOR SUCH FAILURE BY PURCHASER AND SHALL BE DISBURSED TO
AND RETAINED BY SELLER AS LIQUIDATED DAMAGES IN THE EVENT OF SUCH
FAILURE BY PURCHASER. IN CONNECTION THEREWITH, SELLER HEREBY
SPECIFICALLY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE
SECTION 3389.
PURCHASER /s/ RSZ SELLER /s/ GDB /s/ RRL
(b) Other Remedies. In the event of any breach or default
by Purchaser other than as specifically described in Section
8.2(a) above, Seller shall have any and all rights and remedies
available at law or in equity by reason of such breach or
default.
None of the provisions of this Section 8.2 shall limit, impair or
affect any of Purchaser's indemnities of Seller or other
Surviving Obligations of Purchaser as provided elsewhere in this
Agreement.
Section 9.
FUTURE OPERATIONS
9.1 Operations. From the Effective Date of this Agreement
until the Closing or earlier termination of this Agreement:
(a) Seller will keep and maintain the Property in
substantially its condition as of the date of this Agreement,
ordinary wear and tear and casualties excepted.
(b) Seller will perform all Seller's material obligations
under the Contracts and the Leases to be performed during such
time period. Seller will not, without the prior written consent
of Purchaser (which consent will not be unreasonably withheld or
delayed), modify, enter into, or renew any Contract which cannot
be canceled upon thirty (30) days prior written notice.
(c) Seller will not knowingly and voluntarily commit or
permit any action on the Property that will result in a violation
of any applicable statute, ordinance, regulation, order or other
law concerning the use of the Property or the existence or
construction of the Improvements.
(d) Seller shall notify Purchaser promptly of Seller's
receipt of written notice of the commencement of any lawsuits,
condemnation proceedings, rezoning or other governmental order or
action against Seller or affecting the Property filed on or after
the Effective Date.
(e) Seller shall keep and remain in effect substantially all
of the existing liability insurance policies and coverages, or
substantially equivalent policies and coverages, as Seller
maintains in effect as of the Effective Date with respect to the
Property.
(f) Seller shall not voluntarily enter into any agreement or
intentionally cause any matter to be recorded which may
constitute an exception to title to the Property which Seller
shall be unable to cause the Title Company to insure over or be
binding upon Purchaser after the Closing Date, without the prior
written consent of Purchaser (which consent shall not be
unreasonably withheld or delayed).
9.2 Leasing. From the expiration of the Approval Period
until the Closing or earlier termination of this Agreement,
Seller will not, without the prior written consent of Purchaser
(which consent will not be unreasonably withheld and which
consent shall be given or denied in writing within two (2)
business days of Seller's written request with Purchaser's
consent being deemed to have been given in the event that
Purchaser fails to respond to such request within such two (2)
business day period), modify, terminate, enter into, or renew any
Leases except in the customary and ordinary operation of the
Property by Seller consistent with Seller's current practices in
effect as of the Effective Date. In the event that Seller shall
enter into any such lease transactions prior to expiration of the
Approval Date, Seller shall promptly advise Purchaser thereof and
provide to Purchaser a copy of the executed documents relating
thereto.
9.3 Other Covenants.
(a)Seller will deliver to Purchaser, as soon as reasonably
practicable after the Closing Date, Seller's final (i) income and
expense statement for the Property for calendar year 1996 through
the Closing Date, (ii) cumulative general ledger for the Property
for calendar year 1996 through the Closing Date, and (iii) aged
delinquency report for the Property as of the date of such
report.
(b) Seller will terminate or cause to be terminated, as of
the Closing Date, Seller's existing property management agreement
and leasing brokerage agreement.
(c) From the Effective Date of this Agreement until the end
of the Approval Period, Seller will, upon reasonable advance
notice to Seller, make available to Purchaser (i) at Seller's on-
site property manager's office at the Property during business
hours, all of Seller's books and records relating to the
operation and leasing of the Property which are maintained by or
on behalf of Seller at such on-site property management office,
and (ii) at Advisor's office in San Francisco during business
hours, Pamela Wright and Robert Lewis for interview by Purchaser.
Section 10.
MISCELLANEOUS
10.1 Notices. All notices, demands and requests which may
be given or which are required to be given by either party to the
other, and any exercise of a right of termination provided by
this Agreement, shall be in writing and shall be deemed effective
either: (a) on the date personally delivered to the address
below, as evidenced by written receipt therefor, whether or not
actually received by the person to whom addressed; (b) on the
third (3rd) business day after being sent, by certified or
registered mail, postage prepaid, return receipt requested,
addressed to the intended recipient at the address specified
below; (c) on the first (1st) business day after being deposited
into the custody of a nationally recognized overnight delivery
service such as Federal Express Corporation, Emery or Purolator,
addressed to such party at the address specified below; or (d) on
the date of actual receipt in the office of the intended
recipient if sent by facsimile transmission to the facsimile
number provided below and concurrently sent the same day by
either (a), (b) or (c) above. For purposes of this Section 10.1,
the addresses of the parties for all notices are as follows
(unless changed by similar notice in writing given by the
particular person whose address is to be changed):
If to Seller: c/o GE Capital Investment Advisors, Inc.
One Boston Place, Suite 1810
Boston, MA 02108
Attn: Jill S. Hatton
Telephone: (617) 742-5566
Facsimile: (617) 742-4760
with a copy to: GE Capital Investment Advisors, Inc.
444 Market Street, Suite 2100
San Francisco, CA 94111
Attn: Joyce S. Jaber
General Counsel
Telephone: (415) 433-7770
Facsimile: (415) 398-9472
and
Landels Ripley & Diamond, LLP
350 The Embarcadero, 6th Floor
San Francisco, CA 94105-1250
Attn: Scott D. Rogers, Esq.
Telephone: (415) 512-8700
Facsimile: (415) 512-8750
If to Purchaser: c/o Arden Realty, Inc.
9100 Wilshire Boulevard,
East Tower, Suite 700
Beverly Hills, CA 90212
Attn: Brigitta B. Troy
Telephone: (310) 271-8600
Facsimile: (310) 274-6218
with a copy to: Jeffer, Mangels, Butler & Marmaro
2121 Avenue of the Stars, 10th Floor
Los Angeles, CA 90067
Attn: Scott Kalt, Esq.
Telephone: (310) 785-5314
Facsimile: (310) 203-0567
If to Title
Company: Continental Lawyers Title Insurance Company
751 Daily Drive, Suite 100
Camarillo, CA 93010
Attn: Judy Cook
Escrow No. C14179CJ
Telephone: (805) 484-2701 x 142
Facsimile: (805) 388-9669
10.2 Real Estate Commissions. Seller shall pay to CB
Commercial Real Estate, Inc. (hereinafter called "Agent" whether
one or more) upon the Closing of the transaction contemplated
hereby, and not otherwise, a cash commission in the amount agreed
on in a separate listing agreement between Seller and Agent.
Said commission shall in no event be payable unless and until the
transaction contemplated hereby is closed in accordance with the
terms of this Agreement; if such transaction is not closed for
any reason, including, without limitation, failure of title or
default by Seller or Purchaser or termination of this Agreement
pursuant to the terms hereof, then such commission will be deemed
not to have been earned and shall not be due or payable. Except
as set forth above with respect to Agent, neither Seller nor
Purchaser has authorized any broker or finder to act on
Purchaser's or Seller's behalf in connection with the sale and
purchase hereunder and neither Seller nor Purchaser has dealt
with any broker or finder purporting to act on behalf of any
other party. Purchaser agrees to indemnify, defend, protect and
hold harmless Seller from and against any and all claims, losses,
damages, liabilities, costs or expenses of any kind or character
arising out of or resulting from any agreement, arrangement or
understanding alleged to have been made by Purchaser or on
Purchaser's behalf with any broker or finder in connection with
this Agreement or the transaction contemplated hereby. Seller
agrees to indemnify, defend, protect and hold harmless Purchaser
from and against any and all claims, losses, damages,
liabilities, costs or expenses of any kind or character arising
out of or resulting from any agreement, arrangement or
understanding alleged to have been made by Seller or on Seller's
behalf with any broker or finder in connection with this
Agreement or the transaction contemplated hereby.
Notwithstanding anything to the contrary contained herein, this
Section 10.2 shall survive the Closing or any earlier termination
of this Agreement.
10.3 Entire Agreement. This Agreement embodies the entire
agreement between the parties relative to the subject matter
hereof, and there are no oral or written agreements between the
parties, nor any representations made by either party relative to
the subject matter hereof, which are not expressly set forth
herein.
10.4 Amendment. This Agreement may be amended only by a
written instrument executed by the party or parties to be bound
thereby.
10.5 Headings. The captions and headings used in this
Agreement are for convenience only and do not in any way limit,
amplify, or otherwise modify the provisions of this Agreement.
10.6 Time of Essence. Time is of the essence of this
Agreement; however, if the final date of any period which is set
out in any provision of this Agreement falls on a Saturday,
Sunday or legal holiday under the laws of the United States or
the State in which the Property is located, then, in such event,
the time of such period shall be extended to the next day which
is not a Saturday, Sunday or legal holiday.
10.7 Governing Law. This Agreement shall be governed by the
laws of the State in which the Property is located and the laws
of the United States pertaining to transactions in such State.
10.8 Successors and Assigns; Assignment. This Agreement
shall bind and inure to the benefit of Seller and Purchaser and
their respective heirs, executors, administrators, personal and
legal representatives, successors and permitted assigns.
Purchaser shall not assign Purchaser's rights under this
Agreement without the prior written consent of Seller, in
Seller's sole and absolute discretion. No assignment of
Purchaser's rights hereunder shall relieve Purchaser of its
liabilities under this Agreement. This Agreement is solely for
the benefit of Seller and Purchaser; there are no third party
beneficiaries hereof. Any assignment of this Agreement in
violation of the foregoing provisions shall be null and void.
10.9 Invalid Provision. If any provision of this Agreement
is held to be illegal, invalid or unenforceable under present or
future laws, such provision shall be fully severable; this
Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of
this Agreement; and, the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected
by such illegal, invalid, or unenforceable provision or by its
severance from this Agreement.
10.10 Attorneys' Fees. In the event it becomes necessary
for either party hereto to file suit to enforce this Agreement or
any provision contained herein, the party prevailing in such suit
shall be entitled to recover, in addition to all other remedies
or damages, as provided herein, reasonable attorneys' fees
incurred in such suit.
10.11 Multiple Counterparts. This Agreement may be executed
in a number of identical counterparts which, taken together,
shall constitute collectively one (1) agreement; in making proof
of this Agreement, it shall not be necessary to produce or
account for more than one such counterpart with each party's
signature.
10.12 Effective Date. As used herein the term "Effective
Date" shall mean the first date the Title Company is in receipt
of both this Agreement executed by Purchaser and Seller (whether
in counterparts or not) and the Earnest Money.
10.13 Exhibits. The exhibits attached to this Agreement and
referred to herein are hereby incorporated into this Agreement by
this reference and made a part hereof for all purposes.
10.14 Construction. Seller and Purchaser acknowledge that
each party and its counsel have reviewed and revised this
Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of this
Agreement or any amendments or exhibits hereto.
10.15 No Recordation. Seller and Purchaser hereby
acknowledge that neither this Agreement nor any memorandum or
affidavit thereof shall be recorded of public record in the
county in which the Property is located or any other county.
Should Purchaser ever record or attempt to record this Agreement,
or a memorandum or affidavit thereof, or any other similar
document, then, notwithstanding anything herein to the contrary,
said recordation or attempt at recordation shall constitute a
default by Purchaser hereunder, and, in addition to the other
remedies provided for herein, Seller shall have the express right
to terminate this Agreement by filing a notice of said
termination in the county in which the Land is located.
10.16 Merger Provision. Except as otherwise expressly
provided herein, any and all rights of action of Purchaser for
any breach by Seller of any representation, warranty or covenant
contained in this Agreement shall merge with the Deed and other
instruments executed at Closing, shall terminate at Closing and
shall not survive Closing.
10.17 Jury Waiver. PURCHASER AND SELLER DO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, OR UNDER OR IN CONNECTION WITH THIS AGREEMENT,
THE DOCUMENTS DELIVERED BY PURCHASER AT CLOSING OR SELLER AT
CLOSING, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ANY ACTIONS OF EITHER PARTY
ARISING OUT OF OR RELATED IN ANY MANNER WITH THIS AGREEMENT OR
THE PROPERTY (INCLUDING WITHOUT LIMITATION, ANY ACTION TO RESCIND
OR CANCEL THIS AGREEMENT AND ANY CLAIMS OR DEFENSES ASSERTING
THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID
OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR SELLER TO
ENTER INTO AND ACCEPT THIS AGREEMENT AND THE DOCUMENTS DELIVERED
BY PURCHASER AT CLOSING AND SHALL SURVIVE THE CLOSING AND
TERMINATION OF THIS AGREEMENT.
10.18 No Personal Liability of Officers, Directors, Etc.
Purchaser acknowledges that this Agreement is entered into by a
corporation as Seller and Seller acknowledges that this Agreement
is entered into by a limited partnership as Purchaser having a
corporation as its sole general partner. Purchaser and Seller
agree that no individual officer or director or other
representative of Purchaser, Purchaser's general partner, Seller
or Advisor shall have any personal liability under this Agreement
or any document executed in connection with the transactions
contemplated by this Agreement. Further, Purchaser acknowledges
that Advisor is not a party to this Agreement and that neither
such Advisor nor the individual officers, directors or
representatives of Advisor shall have any personal liability
under this Agreement or any document executed in connection with
the transaction contemplated by this Agreement. For the purposes
of this Agreement, Advisor in its capacity as Seller's authorized
investment advisor, is acting as Seller's representative; the
burdens and liabilities of this Agreement shall extend only to
Seller and Advisor shall have no liability hereunder. In
addition, all approvals to be given by Seller hereunder may be
given or withheld by Advisor as Seller's representative, and all
requests or requirements that Seller is entitled to make
hereunder may be by Advisor on behalf of Seller.
PURCHASER:
ARDEN REALTY LIMITED PARTNERSHIP
a Maryland limited partnership
By: ARDEN REALTY, INC.
a Maryland Corporation
By: /s/ Richard S. Ziman
Name: Richard S. Ziman
Its: CEO
Date of Execution
by Purchaser:
December 16, 1996
[Signatures Continued on Next Page]
SELLER:
C.P. PROPERTIES I, INC.,
a Delaware corporation
By: /s/ Gerald D. Binkley
Name: Gerald D. Binkley
Its: Vice President
By: Roger R. Levesque
Name: Roger R. Levesque
Its: Vice President
Date of Execution
by Seller:
December 16, 1996
The undersigned Title Company hereby acknowledges receipt of the
Earnest Money and a copy of this Agreement, and agrees to hold
and dispose of the Earnest Money in accordance with the
provisions of this Agreement.
TITLE COMPANY:
CONTINENTAL LAWYERS TITLE INSURANCE COMPANY,
a corporation
By: /s/ Judy M. Cook
Name: Judy M. Cook
Its: Escrow Manager
Date of Execution
by Title Company:
December 16, 1996
The Company hereby agrees to furnish supplementally the omitted
exhibits and schedules to the Commission upon request.
SALE AGREEMENT
THIS SALE AGREEMENT (this "Agreement") is made as
of November 6, 1996 (the "Effective Date"), by and between
Metropolitan Life Insurance Company, a New York corporation
("Seller"), and Arden Realty, Inc., a Maryland corporation
("Purchaser").
W I T N E S E T H:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Agreement of Purchase and. Subject to
the terms and conditions hereinafter set forth, Seller agrees to
sell and convey to Purchaser, and Purchaser agrees to purchase
from Seller, the following:
(a) that certain tract or parcel of land situated in
the City of Monterey Park, Los Angeles County, California more
particularly described in Exhibit A attached hereto and made a
part hereof, together with all rights and appurtenances
pertaining to such property, including any right, title and
interest of Seller in and to adjacent streets, alleys or
rights-of-way (the property described in clause (a) of this
Section 1.1 being herein referred to collectively as the "Land");
(b) the buildings, structures, fixtures and other
improvements affixed to or located on the Land, excluding
fixtures owned by tenants (the property described in clause (b)
of this Section 1.1 being herein referred to collectively as the
"Improvements");
(c) any and all of Seller's right, title and interest
in and to all tangible personal property located upon the Land or
within the Improvements, including, without limitation, any and
all appliances, furniture, carpeting, draperies and curtains,
tools and supplies, and other items of personal property owned by
Seller (excluding cash and any software), located on and used
exclusively in connection with the operation of the Land and the
Improvements, which personal property includes without limitation
the personal property listed on Exhibit B attached hereto (the
property described in clause (c) of this Section 1.1 being herein
referred to collectively as the "Personal Property");
(d) any and all of Seller's right, title and interest
in and to the leases, licenses and occupancy agreements covering
all or any portion of the Real Property, to the extent they are
in effect on the date of the Closing (as such term is defined in
Section 4.1 hereof) (the property described in clause (d) of this
Section 1.1 being herein referred to collectively as the
"Leases"), together with all rents and other sums due thereunder
(the "Rents") and any and all security deposits in Seller's
possession in connection therewith (the "Security Deposits"); and
(e) any and all of Seller's right, title and interest
in and to (i) all assignable contracts and agreements
(collectively, the "Operating Agreements") listed and described
on Exhibit C attached hereto and made a part hereof, relating to
the upkeep, repair, maintenance or operation of the Land,
Improvements or Personal Property, and (ii) all assignable
existing warranties and guaranties (express or implied) issued to
Seller in connection with the Improvements or the Personal
Property, and (iii) all assignable existing permits, licenses,
approvals and authorizations issued by any governmental authority
in connection with the Property (the property described in clause
(e) of this Section 1.1 being sometimes herein referred to
collectively as the "Intangibles").
Section 1.2 Property Defined. The Land and the
Improvements are hereinafter sometimes referred to collectively
as the "Real Property." The Land, the Improvements, the Personal
Property, the Leases and the Intangibles are hereinafter
sometimes referred to collectively as the "Property."
Section 1.3. Purchase Price. Seller is to sell and
Purchaser is to purchase the Property for the amount of Forty-Two
Million Dollars ($42,000,000) (the "Purchase Price").
Section 1.4 Payment of Purchase Price. The Purchase
Price, as increased or decreased by prorations and adjustments as
herein provided, shall be payable in full at Closing in cash by
wire transfer of immediately available funds to a bank account
designated by Seller in writing to Purchaser prior to the
Closing.
Section 1.5 Deposit. Simultaneously with the
execution and delivery of this Agreement, Purchaser is depositing
with Chicago Title Company (the "Escrow Agent"), having its
office at 700 S. Flower Street, #900, Los Angeles,CA 90017
Attention: Terri Gervasi the sum of Five Hundred Thousand Dollars
($500,000) (the "Deposit") in good funds, either by certified
bank or cashier's check or by federal wire transfer. The Escrow
Agent shall hold the Deposit in an interest-bearing account
reasonably acceptable to Seller and Purchaser, in accordance with
the terms and conditions of this Agreement. All interest on such
sum shall be deemed income of Purchaser, and Purchaser shall be
responsible for the payment of all costs and fees imposed on the
Deposit account. The Deposit and all accrued interest shall be
distributed in accordance with the terms of this Agreement. The
failure of Purchaser to timely deliver any Deposit hereunder
shall be a material default, and shall entitle Seller, at
Seller's sole option, to terminate this Agreement immediately.
Section 1.6 Deposit as Liquidated Damages. FROM AND
AFTER THE EXPIRATION OF THE INSPECTION PERIOD AND THE TITLE
INSPECTION PERIOD, AS SUCH TERMS ARE DEFINED HEREINBELOW (THE
"APPROVAL DATE"), IN THE EVENT THE SALE OF THE PROPERTY AS
CONTEMPLATED HEREUNDER IS NOT CONSUMMATED FOR ANY REASON EXCEPT A
DEFAULT UNDER THIS AGREEMENT ON THE PART OF SELLER, THE DEPOSIT
(INCLUDING ALL INTEREST EARNED FROM THE INVESTMENT THEREOF) SHALL
BE PAID TO AND RETAINED BY SELLER AS LIQUIDATED DAMAGES. THE
PARTIES ACKNOWLEDGE THAT SELLER'S ACTUAL DAMAGES IN THE EVENT
THAT THE SALE IS NOT CONSUMMATED WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICABLE TO DETERMINE. THEREFORE, BY SEPARATELY EXECUTING
THIS SECTION 1.6 BELOW, THE PARTIES ACKNOWLEDGE THAT THE
NONREFUNDABLE DEPOSIT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS
THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES AND AS
SELLER'S EXCLUSIVE REMEDY AGAINST PURCHASER IN THE EVENT THE
CLOSING DOES NOT OCCUR AND AS SELLER'S SOLE AND EXCLUSIVE REMEDY
AGAINST PURCHASER ARISING FROM SUCH FAILURE OF THE SALE TO CLOSE.
IN ADDITION, PURCHASER SHALL PAY ALL TITLE, SURVEY AND ESCROW
CANCELLATION CHARGES. NOTWITHSTANDING THE FOREGOING, IN NO EVENT
SHALL THIS SECTION 1.6 LIMIT THE DAMAGES RECOVERABLE BY EITHER
PARTY AGAINST THE OTHER PARTY DUE TO (A) THE OTHER PARTY'S
OBLIGATION TO INDEMNIFY SUCH PARTY IN ACCORDANCE WITH THIS
AGREEMENT, OR (B) THIRD PARTY CLAIMS. BY THEIR SEPARATELY
EXECUTING THIS SECTION 1.6 BELOW, PURCHASER AND SELLER
ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTOOD THE ABOVE
PROVISION COVERING LIQUIDATED DAMAGES, AND THAT EACH PARTY WAS
REPRESENTED BY COUNSEL WHO EXPLAINED THE CONSEQUENCES OF THIS
LIQUIDATED DAMAGES PROVISION AT THE TIME THIS AGREEMENT WAS
EXECUTED.
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation
By: /s/ B. Jill Fitzgerald
Title: Investment Officer
ARDEN REALTY, INC.,
a Maryland corporation
By: /s/ Richard S. Ziman
Title: Chairman of the Board and
Chief Executive Officer
Section 1.7 Escrow Agent.
Escrow Agent shall hold and dispose of the Deposit
in accordance with the terms of this Agreement. Seller and
Purchaser agree that the duties of the Escrow Agent hereunder are
purely ministerial in nature and shall be expressly limited to
the safekeeping and disposition of the Deposit in accordance with
this Agreement. Escrow Agent shall incur no liability in
connection with the safekeeping or disposition of the Deposit for
any reason other than Escrow Agent's willful misconduct or gross
negligence. In the event that Escrow Agent shall be in doubt as
to its duties or obligations with regard to the Deposit, or in
the event that Escrow Agent receives conflicting instructions
from Purchaser and Seller with respect to the Deposit, Escrow
Agent shall not be required to disburse the Deposit and may, at
its option, continue to hold the Deposit until both Purchaser and
Seller agree as to its disposition, or until a final judgment is
entered by a court of competent jurisdiction directing its
disposition, or Escrow Agent may interplead the Deposit in
accordance with the laws of the state in which the Property is
located.
Escrow Agent shall not be responsible for any
interest on the Deposit except as is actually earned, or for the
loss of any interest resulting from the withdrawal of the Deposit
prior to the date interest is posted thereon.
Escrow Agent shall execute this Agreement solely
for the purpose of being bound by the provisions of Sections 1.5,
1.6 and 1.7 hereof.
ARTICLE II
TITLE AND SURVEY
Section 2.1 Title Inspection Period. During the
period beginning upon the Effective Date and ending at 5:00 p.m.
(local time at the Property) on the date that is thirty (30) days
after the date hereof (hereinafter referred to as the "Title
Inspection Period"), Purchaser shall have the right to review (a)
a current preliminary title report on the Real Property,
accompanied by copies of all documents referred to in the report,
which shall be obtained by Purchaser promptly after the Effective
Date; (b) copies of the most recent property tax bills for the
Property, which shall be obtained by Seller promptly after the
Effective Date; (c) a survey of the Real Property prepared by a
licensed surveyor or engineer hired by Purchaser (the "Survey");
and (d) a copy of Seller's title insurance policy and/or survey
for the Real Property, if available, which policy and survey (if
available) shall be provided by Seller promptly after the
Effective Date.
Section 2.2 Title Examination. Purchaser shall
notify Seller in writing (the "Title Notice") prior to the
expiration of the Title Inspection Period which exceptions to
title (including survey matters), if any, will not be accepted by
Purchaser. If Purchaser fails to notify Seller in writing of its
disapproval of any exceptions to title by the expiration of the
Title Inspection Period, Purchaser shall be deemed to have
approved the condition of title to the Real Property. If
Purchaser notifies Seller in writing that Purchaser objects to
any exceptions to title, Seller shall have ten (10) business days
after receipt of the Title Notice to notify Purchaser (a) that
Seller will remove such objectionable exceptions from title on or
before the Closing; provided that Seller may extend the Closing
for such period as shall be required to effect such cure, but not
beyond thirty (30) days; or (b) that Seller elects not to cause
such exceptions to be removed. The procurement by Seller of a
commitment for the issuance of the Title Policy (as defined in
Section 2.5 hereof) or an endorsement thereto insuring Purchaser
against any title exception which was disapproved pursuant to
this Section 2.2 shall be deemed a cure by Seller of such
disapproval. If Seller gives Purchaser notice under clause (b)
above, Purchaser shall have five (5) business days in which to
notify Seller that Purchaser will nevertheless proceed with the
purchase and take title to the Property subject to such excep
tions, or that Purchaser will terminate this Agreement. If this
Agreement is terminated pursuant to the foregoing provisions of
this paragraph, then neither party shall have any further rights
or obligations hereunder (except for any indemnity obligations of
either party pursuant to the other provisions of this Agreement),
the Deposit shall be returned to Purchaser and each party shall
bear its own costs incurred hereunder. If Purchaser shall fail
to notify Seller of its election within said five-day period,
Purchaser shall be deemed to have elected to proceed with the
purchase and take title to the Property subject to such
exceptions.
Section 2.3 Pre-Closing "Gap" Title Defects.
Purchaser may, at or prior to Closing, notify Seller in writing
(the "Gap Notice") of any objections to title (a) raised by the
Title Company between the expiration of the Title Inspection
Period and the Closing and (b) not disclosed by the Title Company
or otherwise known to Purchaser prior to the expiration of the
Title Inspection Period; provided that Purchaser must notify
Seller of such objection to title within two (2) business days of
being made aware of the existence of such exception. If
Purchaser sends a Gap Notice to Seller, Purchaser and Seller
shall have the same rights and obligations with respect to such
notice as apply to a Title Notice under Section 2.2 hereof.
Section 2.4 Permitted Exceptions. The Property
shall be conveyed subject to the following matters, which are
hereinafter referred to as the "Permitted Exceptions":
(a) those matters that either are not objected to in
writing within the time periods provided in Sections 2.2 or 2.3
hereof, or if objected to in writing by Purchaser, are those
which Seller has elected not to remove or cure, or has been
unable to remove or cure, and subject to which Purchaser has
elected or is deemed to have elected to accept the conveyance of
the Property;
(b) the rights of tenants under the Leases;
(c) the lien of all ad valorem real estate taxes and
assessments not yet due and payable as of the date of Closing,
subject to adjustment as herein provided;
(d) local, state and federal laws, ordinances or
governmental regulations, including but not limited to, building
and zoning laws, ordinances and regulations, now or hereafter in
effect relating to the Property; and
(e) items shown on the Survey and not objected to by
Purchaser or waived or deemed waived by Purchaser in accordance
with Section 2.2 hereof.
Section 2.5 Conveyance of Title. At Closing, Seller
shall convey and transfer to Purchaser fee simple title to the
Land and Improvements, by execution and delivery of the Deed (as
defined in Section 4.2(a) hereof). Evidence of delivery of such
title shall be the issuance by Chicago Title Company (the "Title
Company"), or another national title company, of a CLTA Owner's
Policy of Title Insurance (the "Title Policy") covering the Real
Property, in the full amount of the Purchase Price, subject only
to the Permitted Exceptions.
ARTICLE III
REVIEW OF PROPERTY
Section 3.1 Right of Inspection. During the period
beginning upon the Effective Date and ending at 5:00 p.m. (local
time at the Property) on the date that is thirty (30) days after
the date hereof (hereinafter referred to as the "Inspection
Period"), Purchaser shall have the right to make a physical
inspection of the Real Property, including an inspection of the
environmental condition thereof pursuant to the terms and
conditions of this Agreement, and to examine at the Property (or
the property manager's office, as the case may be) documents and
files located at the Property or the property manager's office
concerning the leasing, maintenance and operation of the
Property, but excluding Seller's partnership or corporate
records, internal memoranda, financial projections, budgets,
appraisals, accounting and tax records and similar proprietary,
confidential or privileged information (collectively, the
"Confidential Documents").
Purchaser understands and agrees that any on-site
inspections of the Property shall occur at reasonable times
agreed upon by Seller and Purchaser after reasonable prior
written notice to Seller and shall be conducted so as not to
interfere unreasonably with the use of the Property by Seller or
its tenants. Seller reserves the right to have a representative
present during any such inspections. If Purchaser desires to do
any invasive testing at the Property, Purchaser shall do so only
after notifying Seller and obtaining Seller's prior written
consent thereto, which consent may be subject to any terms and
conditions imposed by Seller in its sole discretion, including
without limitation the prompt restoration of the Property to its
condition prior to any such inspections or tests, at Purchaser's
sole cost and expense. At Seller's option, Purchaser will
furnish to Seller copies of any reports received by Purchaser
relating to any inspections of the Property. Purchaser agrees to
protect, indemnify, defend and hold Seller harmless from and
against any claim for liabilities, losses, costs, expenses
(including reasonable attorneys' fees), damages or injuries
arising out of or resulting from the inspection of the Property
by Purchaser or its agents or consultants, and notwithstanding
anything to the contrary in this Agreement, such obligation to
indemnify and hold harmless Seller shall survive Closing or any
termination of this Agreement.
Section 3.2 Environmental Reports. PURCHASER
ACKNOWLEDGES THAT (1) PURCHASER HAS RECEIVED COPIES OF THE
ENVIRONMENTAL REPORTS LISTED ON EXHIBIT D ATTACHED HERETO, (2) IF
SELLER DELIVERS ANY ADDITIONAL ENVIRONMENTAL REPORTS TO
PURCHASER, PURCHASER WILL ACKNOWLEDGE IN WRITING THAT IT HAS
RECEIVED SUCH REPORTS PROMPTLY UPON RECEIPT THEREOF, AND (3) ANY
ENVIRONMENTAL REPORTS DELIVERED OR TO BE DELIVERED BY SELLER OR
ITS AGENTS OR CONSULTANTS TO PURCHASER ARE BEING MADE AVAILABLE
SOLELY AS AN ACCOMMODATION TO PURCHASER AND MAY NOT BE RELIED
UPON BY PURCHASER IN CONNECTION WITH THE PURCHASE OF THE
PROPERTY. PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY
OR OBLIGATION WHATSOEVER FOR ANY INACCURACY IN OR OMISSION FROM
ANY ENVIRONMENTAL REPORT. PURCHASER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD, ITS OWN
INVESTIGATION OF THE ENVIRONMENTAL CONDITION OF THE PROPERTY TO
THE EXTENT PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY
OR APPROPRIATE.
Section 3.3 Right of Termination. If for any reason
whatsoever Purchaser determines that the Property or any aspect
thereof is unsuitable for Purchaser's acquisition, Purchaser
shall have the right to terminate this Agreement by giving
written notice thereof to Seller prior to the expiration of the
Inspection Period, and if Purchaser gives such notice of
termination within the Inspection Period, this Agreement shall
terminate. If this Agreement is terminated pursuant to the
foregoing provisions of this paragraph, then neither party shall
have any further rights or obligations hereunder (except for any
indemnity obligations of either party pursuant to the other
provisions of this Agreement), the Deposit shall be returned to
Purchaser and each party shall bear its own costs incurred
hereunder. If Purchaser fails to give Seller a notice of
termination prior to the expiration of the Inspection Period,
Purchaser shall be deemed to have approved all aspects of the
Property (except title and survey, which shall be governed by
Article II hereof) and to have elected to proceed with the
purchase of the Property pursuant to the terms hereof.
Section 3.4 Review of Tenant Estoppels. Seller
shall deliver to each tenant of the Property an estoppel
certificate in substantially the form of Exhibit E attached
hereto (the "Tenant Estoppels"), and shall request that the
tenants complete and sign the Tenant Estoppels and return them to
Seller. Seller shall deliver copies of the completed Tenant
Estoppels to Purchaser as Seller receives them. Purchaser shall
notify Seller within three (3) days of receipt of any Tenant
Estoppel in the event Purchaser determines such Tenant Estoppel
is not acceptable to Purchaser along with the reasons for such
determination. In the event Purchaser fails to give such notice
within such three (3) day period then any such Tenant Estoppel
shall be deemed to be acceptable to Purchaser. In the event that
Seller fails to obtain the Tenant Estoppels (or in lieu thereof,
at Seller's option, Seller estoppels therefor) that are
satisfactory to Purchaser with respect to all of the tenants of
the Property, Purchaser shall have until the Approval Date to
terminate this Agreement by written notice to Seller. If this
Agreement is terminated pursuant to the foregoing provisions of
this paragraph, then neither party shall have any further rights
or obligations hereunder (except for any indemnity obligations of
either party pursuant to the other provisions of this Agreement),
the Deposit shall be returned to Purchaser and each party shall
bear its own costs incurred hereunder. If Purchaser fails to
give Seller a notice of termination as set forth above, Purchaser
shall be deemed to have approved the Tenant Estoppels (and Seller
estoppels, if applicable) and to have elected to proceed with the
purchase of the Property pursuant to the terms hereof. Any
Tenant Estoppel which is received from a tenant after Seller
provides its own estoppel may be substituted for Seller's
estoppel and Seller shall have no further liability thereunder,
provided that such Tenant Estoppel contains no changes or, if
changed, is otherwise reasonably acceptable to Purchaser. The
provisions of this Section 3.4 shall survive the Closing.
ARTICLE IV
CLOSING
Section 4.1 Time and Place. The consummation of the
transaction contemplated hereby (the "Closing") shall be held by
mail or overnight courier, to the extent possible, or if
necessary, at the offices of Seller at 101 Lincoln Centre Drive,
Foster City, California 94404 on December 18, 1996.
Notwithstanding the foregoing, Seller shall have the elction,
exercisable on written notice to Purchaser delivered prior to the
Closing, to cause the Closing to occur on any business day during
the first week of January 1997 that Seller shall select. At the
Closing, Seller and Purchaser shall perform the obligations set
forth in, respectively, Section 4.2 and Section 4.3 hereof, the
performance of which obligations shall be concurrent conditions;
provided that the Deed shall not be recorded until Seller
receives confirmation that Seller has received the full amount of
the Purchase Price, adjusted by prorations as set forth herein.
At Seller's option, the Closing shall be consummated through an
escrow administered by Escrow Agent. In such event, the Purchase
Price and all documents shall be deposited with the Escrow Agent
as escrowee.
Section 4.2 Seller's Obligations at Closing. At
Closing, Seller shall:
(a) deliver to Purchaser a duly executed grant deed
(the "Deed") in the form attached hereto as Exhibit G, conveying
the Land and Improvements, subject only to the Permitted
Exceptions; the warranty of title in the Deed will be only as to
claims made by, through or under Seller and not otherwise;
(b) deliver to Purchaser a duly executed bill of sale
(the "Bill of Sale") conveying the Personal Property without
warranty of title or use and without warranty, express or
implied, as to merchantability and fitness for any purpose and in
the form attached hereto as Exhibit H;
(c) assign to Purchaser, and Purchaser shall assume,
the landlord/lessor interest in and to the Leases, Rents and
Security Deposits, and any and all obligations to pay leasing
commissions and finder's fees with respect to the Leases and
amendments, renewals and expansions thereof, to the extent
provided in Section 4.4(b)(v) hereof, by duly executed assignment
and assumption agreement (the "Assignment of Leases") in the form
attached hereto as Exhibit I pursuant to which (i) Seller shall
indemnify Purchaser and hold Purchaser harmless from and against
any and all claims pertaining thereto arising prior to Closing
and (ii) Purchaser shall indemnify Seller and hold Seller
harmless from and against any and all claims pertaining thereto
arising from and after the Closing, including without limitation,
claims made by tenants with respect to tenants' Security Deposits
to the extent paid, credited or assigned to Purchaser;
(d) to the extent assignable, assign to Purchaser, and
Purchaser shall assume, Seller's interest in the Operating
Agreements and the other Intangibles by duly executed assignment
and assumption agreement (the "Assignment of Contracts") in the
form attached hereto as Exhibit J pursuant to which (i) Seller
shall indemnify Purchaser and hold Purchaser harmless from and
against any and all claims pertaining thereto arising prior to
Closing and (ii) Purchaser shall indemnify Seller and hold
Seller harmless from and against any and all claims pertaining
thereto arising from and after the Closing;
(e) join with Purchaser to execute a notice (the
"Tenant Notice") in the form attached hereto as Exhibit K, which
Purchaser shall send to each tenant under each of the Leases
promptly after the Closing, informing such tenant of the sale of
the Property and of the assignment to Purchaser of Seller's
interest in, and obligations under, the Leases (including, if
applicable, any Security Deposits), and directing that all Rent
and other sums payable after the Closing under each such Lease be
paid as set forth in the notice;
(f) In the event that any representation or warranty
of Seller needs to be modified due to changes since the Effective
Date, deliver to Purchaser a certificate, dated as of the date of
Closing and executed on behalf of Seller by a duly authorized
officer thereof, identifying any representation or warranty which
is not, or no longer is, true and correct and explaining the
state of facts giving rise to the change. In no event shall
Seller be liable to Purchaser for, or be deemed to be in default
hereunder by reason of, any breach of representation or warranty
which results from any change that (i) occurs between the
Effective Date and the date of Closing and (ii) is expressly
permitted under the terms of this Agreement or is beyond the
reasonable control of Seller to prevent; provided, however, that
the occurrence of a change which is not permitted hereunder or is
beyond the reasonable control of Seller to prevent shall, if
materially adverse to Purchaser, constitute the non-fulfillment
of the condition set forth in Section 4.6(b) hereof; if, despite
changes or other matters described in such certificate, the
Closing occurs, Seller's representations and warranties set forth
in this Agreement shall be deemed to have been modified by all
statements made in such certificate;
(g) deliver to Purchaser such evidence as the Title
Company may reasonably require as to the authority of the person
or persons executing documents on behalf of Seller;
(h) deliver to Purchaser a certificate in the form
attached hereto as Exhibit L duly executed by Seller stating that
Seller is not a "foreign person" as defined in the Federal
Foreign Investment in Real Property Tax Act of 1980;
(i) deliver to Purchaser the Leases and the Operating
Agreements, together with such leasing and property files and
records located at the Property or the property manager's office
which are material in connection with the continued operation,
leasing and maintenance of the Property, but excluding any
Confidential Documents. For a period of three (3) years after
the Closing, Purchaser shall allow Seller and its agents and
representatives access without charge to all files, records and
documents delivered to Purchaser at the Closing, upon reasonable
advance notice and at all reasonable times, to examine and make
copies of any and all such files, records and documents, which
right shall survive the Closing;
(j) deliver such affidavits as may be customarily and
reasonably required by the Title Company, in a form reasonably
acceptable to Seller;
(k) deliver to Purchaser possession and occupancy of
the Property, subject to the Permitted Exceptions;
(l) execute a closing statement acceptable to Seller;
and
(m) deliver such additional documents as shall be
reasonably required to consummate the transaction contemplated by
this Agreement.
Section 4.3 Purchaser's Obligations at Closing. At
Closing, Purchaser shall:
(a) pay to Seller the full amount of the Purchase
Price (which amount shall include the Deposit), as increased or
decreased by prorations and adjustments as herein provided, in
immediately available wire transferred funds pursuant to Section
1.4 hereof;
(b) join Seller in execution of the Assignment of
Leases, Assignment of Contracts and Tenant Notices;
(c) In the event that any representation or warranty
of Purchaser set forth in Sections 5.5(a) or (b) hereof needs to
be modified due to changes since the Effective Date, deliver to
Seller a certificate, dated as of the date of Closing and
executed on behalf of Purchaser by a duly authorized
representative thereof, identifying any such representation or
warranty which is not, or no longer is, true and correct and
explaining the state of facts giving rise to the change. In no
event shall Purchaser be liable to Seller for, or be deemed to be
in default hereunder by reason of, any breach of representation
or warranty set forth in Sections 5.5(a) or (b) hereof which
results from any change that (i) occurs between the Effective
Date and the date of Closing and (ii) is expressly permitted
under the terms of this Agreement or is beyond the reasonable
control of Purchaser to prevent; provided, however, that the
occurrence of a change which is not permitted hereunder or is
beyond the reasonable control of Purchaser to prevent shall, if
materially adverse to Seller, constitute the non-fulfillment of
the condition set forth in Section 4.7(c) hereof; if, despite
changes or other matters described in such certificate, the
Closing occurs, Purchaser's representations and warranties set
forth in this Agreement shall be deemed to have been modified by
all statements made in such certificate;
(d) deliver to Seller such evidence as the Title
Company may reasonably require as to the authority of the person
or persons executing documents on behalf of Purchaser;
(e) deliver such affidavits as may be customarily and
reasonably required by the Title Company, in a form reasonably
acceptable to Purchaser;
(f) execute a closing statement acceptable to
Purchaser; and
(g) deliver such additional documents as shall be
reasonably required to consummate the transaction contemplated by
this Agreement.
Section 4.4 Credits and Prorations.
(a) All income and expenses of the Property shall be
apportioned as of 12:01 a.m., on the day of Closing, as if
Purchaser were vested with title to the Property during the
entire day upon which Closing occurs. Such prorated items shall
include without limitation the following:
(i) all Rents, if any;
(ii) taxes and assessments (including personal
property taxes on the Personal Property) levied against the
Property;
(iii) utility charges for which Seller is liable,
if any, such charges to be apportioned at Closing on the basis of
the most recent meter reading occurring prior to Closing (dated
not more than fifteen (15) days prior to Closing) or, if
unmetered, on the basis of a current bill for each such utility;
(iv) all amounts payable under brokerage
agreements and Operating Agreements, pursuant to the terms of
this Agreement; and
(v) any other operating expenses or other items
pertaining to the Property which are customarily prorated between
a purchaser and a seller in the county in which the Property is
located.
(b) Notwithstanding anything contained in Section
4.4(a) hereof:
(i) At Closing, (A) Seller shall, at Seller's
option, either deliver to Purchaser any Security Deposits
actually held by Seller pursuant to the Leases or credit to the
account of Purchaser the amount of such Security Deposits (to the
extent such Security Deposits have not been applied against
delinquent Rents or otherwise as provided in the Leases), and (B)
Purchaser shall credit to the account of Seller all refundable
cash or other deposits posted with utility companies serving the
Property, or, at Seller's option, Seller shall be entitled to
receive and retain such refundable cash and deposits;
(ii) Any taxes paid at or prior to Closing shall
be prorated based upon the amounts actually paid. If taxes and
assessments due and payable during the year of Closing have not
been paid before Closing, Seller shall be charged at Closing an
amount equal to that portion of such taxes and assessments which
relates to the period before Closing and Purchaser shall pay the
taxes and assessments prior to their becoming delinquent. Any
such apportionment made with respect to a tax year for which the
tax rate or assessed valuation, or both, have not yet been fixed
shall be based upon the tax rate and/or assessed valuation last
fixed. To the extent that the actual taxes and assessments for
the current year differ from the amount apportioned at Closing,
the parties shall make all necessary adjustments by appropriate
payments between themselves within thirty (30) days after such
amounts are determined following Closing, subject to the
provisions of Section 4.4(d) hereof;
(iii) Charges referred to in Section 4.4(a)
hereof which are payable by any tenant to a third party shall not
be apportioned hereunder, and Purchaser shall accept title
subject to any of such charges unpaid and Purchaser shall look
solely to the tenant responsible therefor for the payment of the
same. If Seller shall have paid any of such charges on behalf of
any tenant, and shall not have been reimbursed therefor by the
time of Closing, Purchaser shall credit to Seller an amount equal
to all such charges so paid by Seller;
(iv) As to utility charges referred to in Section
4.4(a)(iii) hereof, Seller may on notice to Purchaser elect to
pay one or more of all of said items accrued to the date
hereinabove fixed for apportionment directly to the person or
entity entitled thereto, and to the extent Seller so elects, such
item shall not be apportioned hereunder, and Seller's obligation
to pay such item directly in such case shall survive the Closing
or any termination of this Agreement;
(v) Purchaser shall be responsible for the
payment of (A) all Tenant Inducement Costs (as hereinafter
defined) and leasing commissions which become due and payable
(whether before or after Closing) as a result of any new Leases,
or any renewals, amendments or expansions of existing Leases,
signed during the Lease Approval Period (as hereinafter defined)
and, if required, approved or deemed approved in accordance with
Section 5.4 hereof; and (B) all Tenant Inducement Costs and
leasing commissions with respect to new Leases, or renewals,
amendments or expansions of existing Leases, signed or entered
into from and after the date of Closing; and (C) all Tenant
Inducement Costs and leasing commissions listed on Exhibit M
attached hereto. If, as of the date of Closing, Seller shall
have paid any Tenant Inducement Costs or leasing commissions for
which Purchaser is responsible pursuant to the foregoing
provisions, Purchaser shall reimburse Seller therefor at Closing.
For purposes hereof, the term "Tenant Inducement Costs" shall
mean any out-of-pocket payments required under a Lease to be paid
by the landlord thereunder to or for the benefit of the tenant
thereunder which is in the nature of a tenant inducement,
including specifically, without limitation, tenant improvement
costs, lease buyout costs, and moving, design, refurbishment and
club membership allowances. The term "Tenant Inducement Costs"
shall not include loss of income resulting from any free rental
period, it being agreed that Seller shall bear the loss resulting
from any free rental period until the date of Closing and that
Purchaser shall bear such loss from and after the date of
Closing. For purposes hereof, the term "Lease Approval Period"
shall mean the period from the date hereof until the date of
Closing;
(vi) Unpaid and delinquent Rent collected by
Seller and Purchaser after the date of Closing shall be delivered
as follows: (a) if Seller collects any unpaid or delinquent Rent
for the Property, Seller shall, within fifteen (15) days after
the receipt thereof, deliver to Purchaser any such Rent which
Purchaser is entitled to hereunder relating to the date of
Closing and any period thereafter, and (b) if Purchaser collects
any unpaid or delinquent Rent from the Property, Purchaser shall,
within fifteen (15) days after the receipt thereof, deliver to
Seller any such Rent which Seller is entitled to hereunder
relating to the period prior to the date of Closing. Seller and
Purchaser agree that (i) all Rent received by Seller or Purchaser
within the first ninety (90) day period after the date of Closing
from each tenant under the Leases shall be applied first to such
tenant's delinquent Rent, if any, in the order of maturity, and
then to such tenant's current Rent, and (ii) all Rent received by
Seller or Purchaser after the first ninety (90) day period after
the date of Closing from each tenant under the Leases shall be
applied first to such tenant's current Rent and then to such
tenant's delinquent Rent, if any, in the inverse order of
maturity. Purchaser will make a good faith effort after Closing
to collect all Rents in the usual course of Purchaser's operation
of the Property, but Purchaser will not be obligated to institute
any lawsuit or other collection procedures to collect delinquent
Rents. Seller may attempt to collect any delinquent Rents owed
Seller and may institute any lawsuit or collection procedures,
but may not evict any tenant. In the event that there shall be
any Rents or other charges under any Leases which, although
relating to a period prior to Closing, do not become due and
payable until after Closing or are paid prior to Closing but are
subject to adjustment after Closing (such as year end common area
expense reimbursements and the like), then any Rents or charges
of such type received by Purchaser or its agents or Seller or its
agents subsequent to Closing shall, to the extent applicable to a
period extending through the Closing, be prorated between Seller
and Purchaser as of Closing and Seller's portion thereof shall be
remitted promptly to Seller by Purchaser.
(c) Seller may prosecute an appeal of the real
property tax assessment for the 1995/1996 tax years, and may take
related action which Seller deems appropriate in connection
therewith. Purchaser shall cooperate with Seller in connection
with such appeal and collection of a refund of real property
taxes paid. Seller owns and holds all right, title and interest
in and to such appeal and refund, and all amounts payable in
connection therewith shall be paid directly to Seller by the
applicable authorities. If such refund or any part thereof is
received by Purchaser, Purchaser shall promptly pay such amount
to Seller. Any refund received by Seller shall be distributed as
follows: first, to reimburse Seller for all costs incurred in
connection with the appeal; second, with respect to refunds
payable to tenants of the Real Property pursuant to the Leases,
to such tenants in accordance with the terms of such Leases; and
third, to Seller to the extent such appeal covers the period
prior to the Closing, and to Purchaser to the extent such appeal
covers the period as of the Closing and thereafter. If and to
the extent any such appeal covers the period after the Closing,
Purchaser shall have the right to participate in such appeal.
(d) Except as otherwise provided herein, any revenue
or expense amount which cannot be ascertained with certainty as
of Closing shall be prorated on the basis of the parties'
reasonable estimates of such amount, and shall be the subject of
a final proration sixty (60) days after Closing, or as soon
thereafter as the precise amounts can be ascertained. Purchaser
shall promptly notify Seller when it becomes aware that any such
estimated amount has been ascertained. Once all revenue and
expense amounts have been ascertained, Purchaser shall prepare,
and certify as correct, a final proration statement which shall
be subject to Seller's approval. Upon Seller's acceptance and
approval of any final proration statement submitted by Purchaser,
such statement shall be conclusively deemed to be accurate and
final.
(e) Subject to the final sentence of Section 4.4(d)
hereof, the provisions of this Section 4.4 shall survive Closing.
Section 4.5 Transaction Taxes and Closing Costs.
(a) Seller and Purchaser shall execute such returns,
questionnaires and other documents as shall be required with
regard to all applicable real property transaction taxes imposed
by applicable federal, state or local law or ordinance;
(b) Seller shall pay the fees of any counsel
representing Seller in connection with this transaction. Seller
shall also pay the following costs and expenses: one-half of the
escrow fee, if any, which may be charged by the Escrow Agent or
Title Company; the premium for the Title Policy, to the extent it
does not exceed the cost of a CLTA policy; one-half (1/2) of the
fees for recording the Deed and the Assignment of Leases; and any
transfer tax which becomes payable by reason of the transfer of
the Property.
(c) Purchaser shall pay the fees of any counsel
representing Purchaser in connection with this transaction.
Purchaser shall also pay the following costs and expenses: one-
half of the escrow fee, if any, which may be charged by the
Escrow Agent or Title Company; the premium for the Title Policy,
to the extent it exceeds the cost of a CLTA policy, and all
endorsements to the Title Policy; the cost of the Survey; and one-
half (1/2) of the fees for recording the Deed and the Assignment
of Leases;
(d) The Personal Property is included in this sale
without charge, except that Purchaser shall pay to Seller the
amount of any and all sales or similar taxes payable in
connection with the transfer of the Personal Property and
Purchaser shall execute and deliver any tax returns required of
it in connection therewith;
(e) All costs and expenses incident to this
transaction and the closing thereof, and not specifically
described above, shall be paid by the party incurring same; and
(f) The provisions of this Section 4.5 shall survive
the Closing.
Section 4.6 Conditions Precedent to Obligation of
Purchaser. The obligation of Purchaser to consummate the
transaction hereunder shall be subject to the fulfillment on or
before the date of Closing of all of the following conditions,
any or all of which may be waived by Purchaser in its sole
discretion:
(a) Seller shall have delivered to Purchaser all of
the items required to be delivered to Purchaser pursuant to the
terms of this Agreement, including but not limited to, those
provided for in Section 4.2 hereof;
(b) All of the representations and warranties of
Seller contained in this Agreement shall be true and correct in
all material respects as of the date of Closing (with appropriate
modifications permitted under this Agreement); and
(c) Seller shall have performed and observed, in all
material respects, all covenants and agreements of this Agreement
to be performed and observed by Seller as of the date of Closing.
Section 4.7 Conditions Precedent to Obligation of
Seller. The obligation of Seller to consummate the transaction
hereunder shall be subject to the fulfillment on or before the
date of Closing of all of the following conditions, any or all of
which may be waived by Seller in its sole discretion:
(a) Seller shall have received the Purchase Price as
adjusted as provided herein, pursuant to and payable in the
manner provided for in this Agreement;
(b) Purchaser shall have delivered to Seller all of
the items required to be delivered to Seller pursuant to the
terms of this Agreement, including but not limited to, those
provided for in Section 4.3 hereof;
(c) All of the representations and warranties of
Purchaser contained in this Agreement shall be true and correct
in all material respects as of the date of Closing (with
appropriate modifications permitted under this Agreement); and
(d) Purchaser shall have performed and observed, in
all material respects, all covenants and agreements of this
Agreement to be performed and observed by Purchaser as of the
date of Closing.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of
Seller. Seller hereby makes the following representations and
warranties to Purchaser as of the Effective Date, which
representations and warranties shall be deemed to have been made
again as of the Closing, subject to Section 4.2(f) hereof:
(a) Organization and Authority. Seller has been duly
organized and is validly existing under the laws of the State of
New York. Subject to the provisions of Section 10.16 hereof,
Seller has the full right and authority to enter into this
Agreement and to transfer all of the Property and to consummate
or cause to be consummated the transaction contemplated by this
Agreement. The person signing this Agreement on behalf of Seller
is authorized to do so.
(b) Pending Actions. To Seller's knowledge, Seller
has not received written notice of any action, suit, arbitration,
unsatisfied order or judgment, government investigation or
proceeding pending against Seller which, if adversely determined,
could individually or in the aggregate materially interfere with
the consummation of the transaction contemplated by this
Agreement.
(c) Operating Agreements. To Seller's knowledge, the
Operating Agreements listed on Exhibit C are all of the
agreements concerning the operation and maintenance of the
Property entered into by Seller and affecting the Property,
except those operating agreements that are not assignable or are
to be terminated by Seller within thirty (30) days after the
Closing, and except any agreement with Seller's property manager,
which shall be terminated by Seller.
(d) Lease Brokerage. To Seller's knowledge, there are
no agreements with brokers providing for the payment from and
after the Closing by Seller or Seller's successor-in-interest of
leasing commissions or fees for procuring tenants with respect to
the Property, except as disclosed in Exhibit N hereto;
(e) Condemnation. To Seller's knowledge, Seller has
received no written notice of any condemnation proceedings
relating to the Property.
(f) Litigation. To Seller's knowledge, except as set
forth on Exhibit O attached hereto, and except tenant eviction
proceedings, tenant bankruptcies, proceedings for the collection
of delinquent rentals from tenants and proceedings related to
claims for personal injury or damage to property due to events
occurring at the Property, Seller has not received written notice
of any litigation which has been filed against Seller that arises
out of the ownership of the Property and would materially affect
the Property or use thereof, or Seller's ability to perform
hereunder;
(g) Violations. To Seller's knowledge, except as set
forth on Exhibit P attached hereto, Seller has not received
written notice of any uncured violation of any federal, state or
local law relating to the use or operation of the Property which
would materially adversely affect the Property or use thereof;
and
(h) Leases. To Seller's knowledge, the rent roll
attached hereto as Exhibit Q is accurate in all material
respects, and lists all of the leases currently affecting the
Property.
Section 5.2 Knowledge Defined. References to the
"knowledge" of Seller shall refer only to the current actual
knowledge of the Designated Employees (as hereinafter defined) of
Seller, and shall not be construed, by imputation or otherwise,
to refer to the knowledge of Seller or any affiliate of Seller,
to any property manager, or to any other officer, agent, manager,
representative or employee of Seller or any affiliate thereof or
to impose upon such Designated Employees any duty to investigate
the matter to which such actual knowledge, or the absence
thereof, pertains. As used herein, the term "Designated
Employees" shall refer to Alison McPipkin, who is Seller's
internal asset manager with primary internal business
responsibility for the operation of the Property.
Section 5.3 Survival of Seller's Representations and
Warranties. The representations and warranties of Seller set
forth in Section 5.1 hereof as updated as of the Closing in
accordance with the terms of this Agreement, shall survive
Closing for a period of one hundred eighty (180) days. No claim
for a breach of any representation or warranty of Seller shall be
actionable or payable if the breach in question results from or
is based on a condition, state of facts or other matter which was
known to Purchaser prior to Closing. Seller shall have no
liability to Purchaser for a breach of any representation or
warranty (a) unless the valid claims for all such breaches
collectively aggregate more than Fifty Thousand Dollars
($50,000), in which event the full amount of such valid claims
shall be actionable, up to the Cap (as defined in this Section),
and (b) unless written notice containing a description of the
specific nature of such breach shall have been given by Purchaser
to Seller prior to the expiration of said one hundred eighty
(180) day period and an action shall have been commenced by
Purchaser against Seller within two hundred forty (240) days of
Closing. Purchaser agrees to first seek recovery under any
insurance policies, service contracts and Leases prior to seeking
recovery from Seller, and Seller shall not be liable to Purchaser
if Purchaser's claim is satisfied from such insurance policies,
service contracts or Leases. As used herein, the term "Cap"
shall mean the total aggregate amount of One Million Dollars
($1,000,000).
Section 5.4 Covenants of Seller. Seller hereby
covenants with Purchaser as follows:
(a) From the Effective Date hereof until the Closing
or earlier termination of this Agreement, Seller shall use
reasonable efforts to operate and maintain the Property in a
manner generally consistent with the manner in which Seller has
operated and maintained the Property prior to the date hereof;
(b) Except as provided hereinbelow, a copy of any
amendment, renewal or expansion of an existing Lease or of any
new Lease which Seller wishes to execute between the Effective
Date and the date of Closing will be submitted to Purchaser prior
to execution by Seller. Purchaser agrees to notify Seller in
writing within five (5) business days after its receipt thereof
of either its approval or disapproval thereof, including all
Tenant Inducement Costs and leasing commissions to be incurred in
connection therewith. In the event Purchaser informs Seller
within such five business day period that Purchaser does not
approve the amendment, renewal or expansion of the existing Lease
or the new Lease, which approval shall not be unreasonably
withheld, Seller shall have the right to terminate this Agreement
by written notice thereof to Purchaser within five (5) business
days after Seller's receipt of written notice of Purchaser's
disapproval thereof. If this Agreement is terminated pursuant to
the foregoing provisions of this paragraph, then neither party
shall have any further rights or obligations hereunder (except
for any indemnity obligations of either party pursuant to the
other provisions of this Agreement), the Deposit shall be
returned to Purchaser and each party shall bear its own costs
incurred hereunder. In the event Purchaser fails to notify
Seller in writing of its approval or disapproval within the five
(5) business day period set forth above, Purchaser shall be
deemed to have approved such new Lease, amendment, renewal or
expansion. At Closing, Purchaser shall reimburse Seller for any
Tenant Inducement Costs, leasing commissions or other expenses,
including legal fees, incurred by Seller pursuant to an
amendment, a renewal, an expansion or a new Lease approved (or
deemed approved) by Purchaser.
Section 5.5 Representations and Warranties of
Purchaser. Purchaser hereby makes the following representations
and warranties to Seller as of the Effective Date, which
representations and warranties shall be deemed to have been made
again as of the Closing, subject to Section 4.3(c) hereof:
(a) Organization and Authority. Purchaser has been
duly organized and is validly existing under the laws of
California. Purchaser has the full right and authority to enter
into this Agreement and to consummate or cause to be consummated
the transaction contemplated by this Agreement. The person
signing this Agreement on behalf of Purchaser is authorized to do
so;
(b) Pending Actions. To Purchaser's knowledge, there
is no action, suit, arbitration, unsatisfied order or judgment,
government investigation or proceeding pending against Purchaser
which, if adversely determined, could individually or in the
aggregate materially interfere with the consummation of the
transaction contemplated by this Agreement.
(c) ERISA. As of the Closing, (1) Purchaser will
not be an employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to Title I of ERISA, nor a plan as
defined in Section 4975(e)(1) of the Internal Revenue Code of
1986, as amended (each of the foregoing hereinafter referred to
collectively as "Plan"), and (2) the assets of the Purchaser will
not constitute "plan assets" of one or more such Plans within the
meaning of Department of Labor ("DOL") Regulation Section 2510.3-
101.
As of the Closing, if Purchaser is a "governmental
plan" as defined in Section 3(32) of ERISA, the closing of the
sale of the Property will not constitute or result in a violation
of state or local statutes regulating investments of and
fiduciary obligations with respect to governmental plans.
As of the Closing, Purchaser will be acting on its own
behalf and not on account of or for the benefit of any Plan.
Purchaser has no present intent to transfer the
Property to any entity, person or Plan which will cause a
violation of ERISA.
Purchaser shall not assign its interest under this
contract of sale to any entity, person, or Plan which will cause
a violation of ERISA.
Section 5.6 Survival of Purchaser's Representations
and Warranties. The representations and warranties of Purchaser
set forth in Section 5.5 hereof as updated as of the Closing in
accordance with the terms of this Agreement, shall survive
Closing for a period of one hundred eighty (180) days. Purchaser
shall have no liability to Seller for a breach of any
representation or warranty unless written notice containing a
description of the specific nature of such breach shall have been
given by Seller to Purchaser prior to the expiration of said one
hundred eighty (180) day period and an action shall have been
commenced by Seller against Purchaser within two hundred forty
(240) days of Closing.
ARTICLE VI
DEFAULT
Section 6.1 Default by Purchaser. In the event the
sale of the Property as contemplated hereunder is not consummated
due to Purchaser's default hereunder, Seller shall be entitled,
as its sole remedy, to terminate this Agreement and receive the
Deposit as liquidated damages for the breach of this Agreement,
it being agreed between the parties hereto that the actual
damages to Seller in the event of such breach are impractical to
ascertain and the amount of the Deposit is a reasonable estimate
thereof.
Section 6.2 Default by Seller. In the event the
sale of the Property as contemplated hereunder is not consummated
due to Seller's default hereunder, Purchaser shall be entitled,
as its sole remedy, either (a) to receive the return of the
Deposit, which return shall operate to terminate this Agreement
and release Seller from any and all liability hereunder, or (b)
to enforce specific performance of Seller's obligation to convey
the Property to Purchaser in accordance with the terms of this
Agreement, it being understood and agreed that the remedy of
specific performance shall not be available to enforce any other
obligation of Seller hereunder. Purchaser expressly waives its
rights to seek damages in the event of Seller's default
hereunder. Purchaser shall be deemed to have elected to
terminate this Agreement and receive back the Deposit if
Purchaser fails to file suit for specific performance against
Seller in a court having jurisdiction in the county and state in
which the Property is located, on or before thirty (30) days
following the date upon which Closing was to have occurred.
Section 6.3 Recoverable Damages. Notwithstanding
Sections 6.1 and 6.2 hereof, in no event shall the provisions of
Sections 6.1 and 6.2 limit the damages recoverable by either
party against the other party due to the other party's obligation
to indemnify such party in accordance with this Agreement.
ARTICLE VII
RISK OF LOSS
Section 7.1 Minor Damage. In the event of loss or
damage to the Property or any portion thereof which is not
"Major" (as hereinafter defined), this Agreement shall remain in
full force and effect provided that Seller shall, at Seller's
option, either (a) perform any necessary repairs, or (b) assign
to Purchaser all of Seller's right, title and interest in and to
any claims and proceeds Seller may have with respect to any
casualty insurance policies or condemnation awards relating to
the premises in question. In the event that Seller elects to
perform repairs upon the Property, Seller shall use reasonable
efforts to complete such repairs promptly and the date of Closing
shall be extended a reasonable time in order to allow for the
completion of such repairs. If Seller elects to assign a
casualty claim to Purchaser, the Purchase Price shall be reduced
by an amount equal to the lesser of the deductible amount under
Seller's insurance policy or the cost of such repairs as
determined in accordance with Section 7.3 hereof. Upon Closing,
full risk of loss with respect to the Property shall pass to
Purchaser.
Section 7.2 Major Damage. In the event of a "Major"
loss or damage, either Seller or Purchaser may terminate this
Agreement by written notice to the other party, in which event
the Deposit shall be returned to Purchaser. If neither Seller
nor Purchaser elects to terminate this Agreement within ten (10)
days after Seller sends Purchaser written notice of the
occurrence of such Major loss or damage (which notice shall state
the cost of repair or restoration thereof as opined by an
architect in accordance with Section 7.3 hereof), then Seller and
Purchaser shall be deemed to have elected to proceed with
Closing, in which event Seller shall, at Seller's option, either
(a) perform any necessary repairs, or (b) assign to Purchaser all
of Seller's right, title and interest in and to any claims and
proceeds Seller may have with respect to any casualty insurance
policies or condemnation awards relating to the premises in
question. In the event that Seller elects to perform repairs
upon the Property, Seller shall use reasonable efforts to
complete such repairs promptly and the date of Closing shall be
extended a reasonable time in order to allow for the completion
of such repairs. If Seller elects to assign a casualty claim to
Purchaser, the Purchase Price shall be reduced by an amount equal
to the lesser of the deductible amount under Seller's insurance
policy or the cost of such repairs as determined in accordance
with Section 7.3 hereof. Upon Closing, full risk of loss with
respect to the Property shall pass to Purchaser.
Section 7.3 Definition of "Major" Loss or Damage.
For purposes of Sections 7.1 and 7.2, "Major" loss or damage
refers to the following: (a) loss or damage to the Property
hereof such that the cost of repairing or restoring the premises
in question to substantially the same condition which existed
prior to the event of damage would be, in the opinion of an
architect selected by Seller and reasonably approved by
Purchaser, equal to or greater than Five Hundred Thousand Dollars
($500,000), and (b) any loss due to a condemnation which
permanently and materially impairs the current use of the
Property. If Purchaser does not give written notice to Seller of
Purchaser's reasons for disapproving an architect within five (5)
business days after receipt of notice of the proposed architect,
Purchaser shall be deemed to have approved the architect selected
by Seller.
ARTICLE VIII
COMMISSIONS
Section 8.1 Brokerage Commissions. With respect to
the transaction contemplated by this Agreement, Seller represents
that its sole broker is Cushman & Wakefield of California, Inc.
("Seller's Broker"), and Purchaser represents that it is not
represented by a broker. Each party hereto agrees that if any
person or entity, other than Seller's Broker, makes a claim for
brokerage commissions or finder's fees related to the sale of the
Property by Seller to Purchaser, and such claim is made by,
through or on account of any acts or alleged acts of said party
or its representatives, said party will protect, indemnify,
defend and hold the other party free and harmless from and
against any and all loss, liability, cost, damage and expense
(including reasonable attorneys' fees) in connection therewith.
The provisions of this paragraph shall survive Closing or any
termination of this Agreement.
ARTICLE IX
DISCLAIMERS AND WAIVERS
Section 9.1 No Reliance on Documents. Except as
expressly stated herein, Seller makes no representation or
warranty as to the truth, accuracy or completeness of any
materials, data or information delivered by Seller or its brokers
or agents to Purchaser in connection with the transaction
contemplated hereby. Purchaser acknowledges and agrees that all
materials, data and information delivered by Seller to Purchaser
in connection with the transaction contemplated hereby are
provided to Purchaser as a convenience only and that any reliance
on or use of such materials, data or information by Purchaser
shall be at the sole risk of Purchaser, except as otherwise
expressly stated herein. Neither Seller, nor any affiliate of
Seller, nor the person or entity which prepared any report or
reports delivered by Seller to Purchaser shall have any liability
to Purchaser for any inaccuracy in or omission from any such
reports.
SECTION 9.2 AS-IS SALE; DISCLAIMERS. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD AND
AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY
WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS
OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT
LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING
SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL
ACCEPT THE PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS", EXCEPT TO
THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT.
PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT
LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES,
GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING
TO THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY,
WITHOUT LIMITATION, OFFERING PACKAGES DISTRIBUTED WITH RESPECT TO
THE PROPERTY) MADE OR FURNISHED BY SELLER, THE MANAGERS OF THE
PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR
PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY
SET FORTH IN THIS AGREEMENT. PURCHASER ALSO ACKNOWLEDGES THAT
THE PURCHASE PRICE REFLECTS AND TAKES INTO ACCOUNT THAT THE
PROPERTY IS BEING SOLD "AS-IS."
PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS
CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS
OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND
ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY OR
DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY
AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN
WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR
DISCHARGED FROM THE PROPERTY, AND WILL RELY SOLELY UPON SAME AND
NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR
ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE
EXPRESSLY SET FORTH IN THIS AGREEMENT. UPON CLOSING, PURCHASER
SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT
LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY
PURCHASER'S INVESTIGATIONS, AND PURCHASER, UPON CLOSING, SHALL BE
DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER (AND
SELLER'S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS)
FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION
(INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES,
LIABILITIES, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS'
FEES) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH
PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND
SELLER'S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS)
AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT
CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY
APPLICABLE LAWS AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS,
CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY.
IN CONNECTION THEREWITH, PURCHASER EXRESSLY WAIVES ALL RIGHTS
UNDER CALIFORNIA CIVIL CODE SECTION 1542, WHICH 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 OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR."
Section 9.3 Survival of Disclaimers. The provisions
of this Article IX shall survive Closing or any termination of
this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Confidentiality. Purchaser and its
representatives shall hold in strictest confidence all data and
information obtained with respect to Seller or its business,
whether obtained before or after the execution and delivery of
this Agreement, and shall not disclose the same to others;
provided, however, that it is understood and agreed that
Purchaser may disclose such data and information to the
employees, lenders, consultants, accountants and attorneys of
Purchaser provided that such persons agree in writing to treat
such data and information confidentially. In the event this
Agreement is terminated or Purchaser fails to perform hereunder,
Purchaser shall promptly return to Seller any statements,
documents, schedules, exhibits or other written information
obtained from Seller in connection with this Agreement or the
transaction contemplated herein. It is understood and agreed
that, with respect to any provision of this Agreement which
refers to the termination of this Agreement and the return of the
Deposit to Purchaser, such Deposit shall not be returned to
Purchaser unless and until Purchaser has fulfilled its obligation
to return to Seller the materials described in the preceding
sentence. In the event of a breach or threatened breach by
Purchaser or its agents or representatives of this Section 10.1,
Seller shall be entitled to an injunction restraining Purchaser
or its agents or representatives from disclosing, in whole or in
part, such confidential information. Nothing herein shall be
construed as prohibiting Seller from pursuing any other available
remedy at law or in equity for such breach or threatened breach.
The provisions of this Section 10.1 shall survive Closing or any
termination of this Agreement.
Section 10.2 Public Disclosure. Prior to and after
the Closing, any release to the public of information with
respect to the sale contemplated herein or any matters set forth
in this Agreement will be made only in the form approved by
Purchaser and Seller. The provisions of this Section 10.2 shall
survive the Closing or any termination of this Agreement.
Section 10.3 Assignment. Subject to the provisions
of this Section 10.3, the terms and provisions of this Agreement
are to apply to and bind the permitted successors and assigns of
the parties hereto. Purchaser may not assign its rights under
this Agreement without first obtaining Seller's written approval,
which approval may be given or withheld in Seller's sole
discretion. In the event Purchaser intends to assign its rights
hereunder, (a) Purchaser shall send Seller written notice of its
request at least ten (10) business days prior to Closing, which
request shall include the legal name and structure of the
proposed assignee, as well as any other information that Seller
may reasonably request, and (b) Purchaser and the proposed
assignee shall execute an assignment and assumption of this
Agreement in form and substance satisfactory to Seller, and (c)
in no event shall any assignment of this Agreement release or
discharge Purchaser from any liability or obligation hereunder.
Notwithstanding the foregoing, under no circumstances shall
Purchaser have the right to assign this Agreement to any person
or entity owned or controlled by an employee benefit plan if
Seller's sale of the Property to such person or entity would, in
the reasonable opinion of Seller's ERISA advisor, create or
otherwise cause a "prohibited transaction" under ERISA. Any
transfer, directly or indirectly, of any stock, partnership
interest or other ownership interest in Purchaser shall
constitute an assignment of this Agreement. The provisions of
this Section 10.3 shall survive the Closing or any termination of
this Agreement.
Section 10.4 Notices. Any notice pursuant to this
Agreement shall be given in writing by (a) personal delivery, (b)
reputable overnight delivery service with proof of delivery, (c)
United States Mail, postage prepaid, registered or certified
mail, return receipt requested, or (d) legible facsimile
transmission, sent to the intended addressee at the address set
forth below, or to such other address or to the attention of such
other person as the addressee shall have designated by written
notice sent in accordance herewith, and shall be deemed to have
been given upon receipt or refusal to accept delivery, or, in the
case of facsimile transmission, as of the date of the facsimile
transmission provided that an original of such facsimile is also
sent to the intended addressee by means described in clauses (a),
(b) or (c) above. Unless changed in accordance with the
preceding sentence, the addresses for notices given pursuant to
this Agreement shall be as follows:
If to Seller: Metropolitan Life Insurance Company
101 Lincoln Center Drive, Sixth Floor
Foster City, California 94404
Attention: B. Jill Fitzgerald
Equity Investments
Telephone No. 415.574.3065
Telecopy No. 415.349.4615
If to Purchaser: Arden Realty, Inc.
9100 Wilshire Boulevard, #700 East
Beverly Hills, CA 90212
Attention: Richard S. Ziman
Telephone No. (310) 271-8600
Telecopy No. (310) 246-2941
Section 10.5 Modifications. This Agreement cannot be
changed orally, and no executory agreement shall be effective to
waive, change, modify or discharge it in whole or in part unless
such executory agreement is in writing and is signed by the
parties against whom enforcement of any waiver, change,
modification or discharge is sought.
Section 10.6 Entire Agreement. This Agreement,
including the exhibits and schedules hereto, contains the entire
agreement between the parties hereto pertaining to the subject
matter hereof and fully supersedes all prior written or oral
agreements and understandings between the parties pertaining to
such subject matter, other than any confidentiality agreement
executed by Purchaser in connection with the Property.
Section 10.7 Further Assurances. Each party agrees
that it will execute and deliver such other documents and take
such other action, whether prior or subsequent to Closing, as may
be reasonably requested by the other party to consummate the
transaction contemplated by this Agreement. The provisions of
this Section 10.7 shall survive Closing.
Section 10.8 Counterparts. This Agreement may be
executed in counterparts, all such executed counterparts shall
constitute the same agreement, and the signature of any party to
any counterpart shall be deemed a signature to, and may be
appended to, any other counterpart.
Section 10.9 Facsimile Signatures. In order to
expedite the transaction contemplated herein, telecopied
signatures may be used in place of original signatures on this
Agreement. Seller and Purchaser intend to be bound by the
signatures on the telecopied document, are aware that the other
party will rely on the telecopied signatures, and hereby waive
any defenses to the enforcement of the terms of this Agreement
based on the form of signature.
Section 10.10 Severability. If any provision of this
Agreement is determined by a court of competent jurisdiction to
be invalid or unenforceable, the remainder of this Agreement
shall nonetheless remain in full force and effect; provided that
the invalidity or unenforceability of such provision does not
materially adversely affect the benefits accruing to any party
hereunder.
Section 10.11 Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State in which the Property is located. Purchaser and Seller
agree that the provisions of this Section 10.11 shall survive the
Closing or any termination of this Agreement.
Section 10.12 No Third-Party Beneficiary. The
provisions of this Agreement and of the documents to be executed
and delivered at Closing are and will be for the benefit of
Seller and Purchaser only and are not for the benefit of any
third party, and accordingly, no third party shall have the right
to enforce the provisions of this Agreement or of the documents
to be executed and delivered at Closing.
Section 10.13 Captions. The section headings
appearing in this Agreement are for convenience of reference only
and are not intended, to any extent and for any purpose, to limit
or define the text of any section or any subsection hereof.
Section 10.14 Construction. The parties acknowledge
that the parties and their counsel have reviewed and revised this
Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of this
Agreement or any exhibits or amendments hereto.
Section 10.15 Recordation. This Agreement may not be
recorded by any party hereto without the prior written consent of
the other party hereto. The provisions of this Section 10.15
shall survive the Closing or any termination of this Agreement.
Section 10.16 Seller Approval. Notwithstanding any
other provision of this Agreement, the obligation of Seller to
consummate the transaction contemplated herein shall be subject
to the condition that the Real Estate Investments Committee, the
National Investments Committee and the Investments Committee of
the Board of Directors of Seller shall have approved the sale of
the Property to Purchaser, pursuant to the terms and conditions
of this Agreement, on or prior to the date that is thirty (30)
days following the date hereof (the "Committee Approval Date").
If Seller fails to give Purchaser notice within five (5) business
days after the Committee Approval Date that such committees have
approved the sale of the Property to Purchaser pursuant to the
terms hereof, then this Agreement shall terminate and neither
party shall have any further rights or obligations hereunder
(except for any indemnity obligations of either party pursuant to
the other provisions of this Agreement), the Deposit shall be
returned to Purchaser and each party shall bear its own costs
hereunder.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the Effective Date.
SELLER:
METROPOLITAN LIFE INSURANCE COMPANY
a New York corporation
By: /s/ B. Jill Fitzgerald
Title: Investment Officer
PURCHASER:
ARDEN REALTY, INC.
a Maryland corporation
By: /s/ Richard S. Ziman
Title: Chairman of the Board and
Chief Executive Officer
Escrow Agent executes this Agreement below solely for the
purpose of acknowledging that it agrees to be bound by the
provisions of Sections 1.5, 1.6 and 1.7 hereof.
ESCROW AGENT:
Chicago Title Company
a _____________________
By: Terri Gervasi
Title: ____________________
The Company hereby agrees to furnish supplementally the omitted
exhibits and schedules to the Commission upon request.
15250 Ventura Blvd.
Sumitomo Bank Building
PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
by
and
between
TRUST COMPANY OF THE WEST, a California corporation,
as trustee for TCW REALTY FUND III
"Seller"
and
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
"Purchaser"
Dated as of
December 6, 1996
TABLE OF CONTENTS
1. IDENTIFICATION OF PARTIES
2. DESCRIPTION OF THE PROPERTY
3. THE PURCHASE PRICE
4. TITLE
5. INSPECTION
6. REPRESENTATIONS AND WARRANTIES OF SELLER
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
8. DELIVERY OF DOCUMENTS
9. CONFIDENTIALITY
10. CONDITIONS PRECEDENT TO CLOSING
11. COVENANTS OF SELLER
12. SELLER'S CLOSING DELIVERIES
13. PURCHASER'S CLOSING DELIVERIES
14. PRORATIONS AND ADJUSTMENTS
15. CLOSING
16. CLOSING COSTS
17. RISK OF LOSS
18. DEFAULT
19. BROKER'S COMMISSION
20. ESCROW
PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
1. IDENTIFICATION OF PARTIES.
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW
INSTRUCTIONS (this "Agreement") is entered into as of December 6,
1996, by and between ARDEN REALTY LIMITED PARTNERSHIP, a Maryland
limited partnership ("Purchaser"), and TRUST COMPANY OF THE WEST, a
California corporation, as trustee of TCW REALTY FUND III ("Seller").
2. DESCRIPTION OF THE PROPERTY.
Seller hereby agrees to sell, assign and convey to
Purchaser, and Purchaser hereby agrees to purchase from Seller, all of
Seller's right, title and interest in and to the following:
(a) That certain real property located at 15250 Ventura
Boulevard, in the City of Los Angeles, County of Los Angeles, State of
California, more particularly described on Exhibit A attached hereto
and incorporated herein by this reference (the "Land"), together with
any improvements located thereon (the "Improvements");
(b) All of Seller's interest as lessor in all leases covering the
Land and Improvements (said leases, together with any and all
amendments, modifications or supplements thereto, are hereinafter
referred to collectively as the "Leases" and are identified on the
Schedule of Leases attached hereto as Exhibit B);
(c) All rights, privileges, easements and appurtenances to the
Land and the Improvements, if any, including, without limitation, all
of Seller's right, title and interest, if any, in and to all mineral
and water rights and all easements, rights-of-way and other
appurtenances used or connected with the beneficial use or enjoyment of
the Land and the Improvements (the Land, the Improvements and all such
easements and appurtenances (including, without limitation, Seller's
interest as lessor under the Leases) are sometimes collectively herein
after referred to as the "Real Property");
(d) All tangible personal property and fixtures located now or at
the Closing on or about the Land or Improvements or attached or
appurtenant thereto or used in connection with the operation thereof,
but excluding: (i) tangible personal property owned by tenants under
Leases in their capacity as tenants, and (ii) all other tangible
personal property and fixtures located on or about the Land or
Improvements which are not owned by Seller. (The tangible personal
property and fixtures described in the preceding sentence is referred
to in this Agreement as the "Personal Property"); and
(e) All non-exclusive trademarks and trade names (if any) used or
useful in connection with the Real Property, but only to the extent
that the same are not trademarks or trade names of Seller or any of
Seller's affiliated companies (collectively, the "Trade Names"),
together with Seller's interest (if any) in and to any service
contracts, utility contracts, telephone exchange numbers, advertising
materials, guarantees, licenses, approvals, certificates, plans and
specifications, permits, governmental approvals and development rights,
and warranties relating to the Property, to the extent assignable
(collectively, the "Intangible Property"). (The Real Property, the
Personal Property, the Trade Names and the Intangible Property are
sometimes collectively hereinafter referred to as the "Property").
3. THE PURCHASE PRICE.
The purchase price for the Property is Twelve
Million Eight Hundred Thousand and No/100 Dollars ($12,800,000.00) (the
"Purchase Price") and shall be paid to Seller by Purchaser at the
Closing (as that term is defined in Section 15 below) as follows:
(a) Within two (2) business days after execution of this
Agreement by all parties, Purchaser shall deposit in escrow with
Commonwealth Land Title Company, 888 W. Sixth Street, 4th Floor, Los
Angeles, California 90017 ("Escrow Company") an initial earnest money
deposit in immediately available funds in the amount of Two Hundred
Thousand and No/100 Dollars ($200,000.00) (the "Initial Deposit").
(b) By the end of the Due Diligence Period (as defined in Section
5(a) below), Purchaser shall deposit in escrow with Escrow Company an
additional earnest money deposit in immediately available funds in the
amount of Two Hundred Thousand and No/100 Dollars ($200,000.00) (the
"Additional Deposit"). The Initial Deposit and the Additional Deposit
are sometimes hereinafter collectively referred to as the "Deposit."
The Deposit paid by Purchaser pursuant to the terms hereof shall be
held by Escrow Company in an interest bearing account insured by the
federal government in an institution as directed by Purchaser and
reasonably acceptable to Seller. In the event the purchase and sale of
the Property is consummated as contemplated hereunder, the Deposit plus
all interest accrued thereon shall be paid to Seller and credited
against the Purchase Price. In the event the purchase and sale of the
Property is not consummated because of the failure of any Purchaser's
Condition Precedent (as defined in Section 10 below) or any other
reason except for a default under this Agreement on the part of
Purchaser, or if Purchaser fails to deliver the Additional Deposit on
or before the end of the Due Diligence Period (as defined in Section
5(a) below) the Deposit plus all interest accrued thereon shall be
immediately refunded to Purchaser. In the event the purchase and sale
of the Property is not consummated because of a default under this
Agreement on the part of Purchaser, the Deposit plus all interest
accrued thereon shall be paid to and retained by Seller pursuant to
Section 18(b).
(c) The balance of the Purchase Price over and above the amounts
paid by or credited to Purchaser pursuant to Sections 3(a) and (b)
above shall be paid to Seller by wire transfer of immediately available
funds at the Closing, net of all prorations as provided herein.
4. TITLE.
(a) Seller has obtained from Commonwealth Land Title Company, 888
W. Sixth Street, 4th Floor, Los Angeles, California 90017 ("Title
Company"), and Purchaser acknowledges receipt of, a preliminary title
report dated November 22, 1996, order no. 9600144-9, pertaining to the
Real Property (the "PTR"), together with copies of all documents
relating to the title exceptions referred to in such PTR. Purchaser
acknowledges receipt of the PTR and the title exceptions referred to
therein.
(b) Purchaser elects to obtain an ALTA extended coverage policy
of title insurance. By December 18, 1996, Purchaser shall obtain an
updated survey of the Real Property (the "Survey") as soon as possible
after the execution of this Agreement, a copy of which shall be
promptly delivered to Seller and Title Company. The current survey of
the Real Property was prepared by Steryo Engineering on February 12,
1986, and updated January 12, 1987, designated no. 414-02, a copy of
which has been received by Purchaser. The Survey shall be sufficient
to enable Title Company at the Closing to issue an ALTA extended
owner's policy of title insurance (with mechanic's lien coverage), and
shall be certified to Purchaser and Title Company. The Survey shall be
at Purchaser's sole cost and expense.
(c) No later than December 18, 1996, or within two business days
after Purchaser receives the Survey, whichever is earlier, Purchaser
shall notify Seller in writing of any title exceptions identified in
the PTR (other than exceptions ("Survey Exceptions") which are listed
in any amendment or supplement thereof as a result of the Survey and
were not listed in the November 22, 1996 title report) which Purchaser
disapproves. No later than December 18, 1996, or within two business
days after Purchaser receives the Survey, whichever is earlier,
Purchaser shall notify Seller in writing of any Survey Exceptions which
Purchaser disapproves. Any exception not disapproved in writing by the
applicable date shall be deemed approved by Purchaser, and shall
constitute a "Permitted Exception" hereunder. Purchaser and Seller
hereby agree that (i) all non-delinquent property taxes and
assessments, except for the lien of supplemental taxes which are due as
a result of an event occurring prior to the Closing, (ii) the rights of
the tenants under the Leases, and (iii) all matters created by or on
behalf of Purchaser, including, without limitation, any documents or
instruments to be recorded as part of any financing for the acquisition
of the Property by Purchaser, shall constitute "Permitted Exceptions."
No more than five (5) business days after Purchaser notifies Seller of
any disapproved title exceptions, Seller shall notify Purchaser in
writing of any disapproved title exceptions which Seller is unable or
unwilling to cause to be removed or insured against prior to or at
Closing and, with respect to such exceptions, Purchaser then shall
elect, by giving written notice to Seller and Escrow Company within
three (3) business days thereafter, (x) to terminate this Agreement, or
(y) to waive its disapproval of such exceptions, in which case such
exceptions shall then be deemed to be Permitted Exceptions.
Purchaser's failure to give such notice shall be deemed an election to
waive the disapproval of any such exception. In the event Purchaser
elects to terminate this Agreement in accordance with clause (x) above,
the Deposit, plus all interest accrued thereon, shall be immediately
refunded to Purchaser; provided, however, that Purchaser and Seller
each shall be responsible for one-half of any title or escrow
cancellation fees. Notwithstanding anything to the contrary contained
herein, Seller shall cause all mortgages, deeds of trust and monetary
liens (including liens for delinquent or supplemental taxes as set
forth above, mechanic's liens and judgement liens) affecting the
Property as may be shown in the PTR or any update thereof (including
the title policy to be issued to Purchaser at Closing), and all
indebtedness secured thereby (collectively, "Monetary Liens") to be
fully satisfied, released and discharged of record on or prior to the
Closing. If any Monetary Liens remain at Closing, then Buyer shall be
entitled to offset the Purchase Price and receive a credit in Escrow
for the amounts expended to discharge the same, provided that before
discharging any Monetary Lien, Purchaser shall give Seller written
notice and reasonable opportunity to cause any such lien to be released
or discharged of record (including, without limitation, by posting of a
bond in accordance with Civil Code 3143).
(d) At Purchaser's request, upon prior arrangement with Seller,
at any time during reasonable business hours within one (1) year after
the Closing, Seller shall, at Purchaser's expense, provide to
Purchaser's designated independent auditor, access to the books and
records of the Property, regarding the period for which Purchaser is
required by applicable rules or regulations of the Securities Exchange
Commission to have audited financial statements prepared with respect
to the Property, to the extent that such books, records and related
information are in the Seller's possession or control and relate to the
period during which Seller held title to the Property, provided
however, such books and records shall not include Internal Analyses (as
defined in Section 5(c)), and Seller shall not be deemed to make any
representations or warranties of any kind regarding the accuracy or
thoroughness of such books and records.
5. INSPECTION.
(a) As used in this Agreement, the term "Due Diligence Period"
shall mean the period from the date hereof until 5:00 p.m. Los Angeles
time on December 18, 1996. During the Due Diligence Period, and with
reasonable advance notice to Seller, Purchaser, its agents and repre
sentatives shall be entitled to enter onto the Real Property during
reasonable business hours (subject to the rights of tenants in
possession) to perform inspections and tests of the Property and the
structural and mechanical systems within any Improvements; provided,
however, that in no event shall (i) such inspections or tests disrupt
or disturb the on-going operation of the Property or the rights of the
tenants at the Property, or (ii) Purchaser or its agents or
representatives drill or bore on or through the surface of the Property
without Seller's prior written consent, which consent may be given or
withheld in Seller's sole and absolute discretion. After making such
tests and inspections, Purchaser agrees to promptly restore the
Property to its condition prior to such tests and inspections (which
obligation shall survive for one (1) year after the Closing or any
termination of this Agreement). Prior to Purchaser entering the
Property to conduct the inspections and tests described above,
Purchaser shall obtain and maintain, and shall cause each of its
contractors and agents to maintain (and shall deliver to Seller
evidence thereof), at Purchaser's sole cost and expense, general
liability insurance, from an insurer reasonably acceptable to Seller,
in the amount of One Million and No/100 Dollars ($1,000,000.00)
combined single limit for personal injury and property damage per
occurrence, such policies to name Seller as an additional insured
party, which insurance shall provide coverage against any claim for
personal liability or property damage caused by Purchaser or its
agents, employees or contractors in connection with such inspections
and tests.
(b) Purchaser agrees to keep the Property free from all liens and
to indemnify, defend, and hold harmless Seller, and Seller's officers,
directors, shareholders, beneficiaries, partners, agents, employees and
attorneys, and their respective successors and assigns, from and
against all claims, actions, losses, liabilities, damages, costs and
expenses (including, but not limited to, reasonable attorneys' fees and
costs) incurred, suffered by, or claimed against Seller by reason of
personal injury, bodily injury, property damage or mechanics' or
materialmen's liens caused by Purchaser and/or its agents, employees or
contractors in exercising its rights under this Section 5. This
indemnity shall survive the Closing or any termination of this
Agreement.
(c) During the Due Diligence Period and with reasonable advance
notice to Seller, Purchaser, its agents and representatives shall be
entitled to inspect, during Seller's regular business hours, material
documents in the possession or control of Seller or Seller's on-site
property manager (provided, however, that, except as expressly set
forth herein, Seller makes no representations or warranties of any kind
regarding the accuracy or thoroughness of the information contained in
such documents), if any, relating to the Property, excluding, however,
Seller's internal appraisals and economic evaluations of the Property
and reports regarding the Property prepared by Seller, Trust Company of
the West, Westmark Real Estate Investment Services, Westmark Realty
Advisors L.L.C., TCW Realty Advisors, CB Commercial Realty Advisors,
Inc. and/or CB Commercial Real Estate Group, Inc. solely for internal
use or for the information of the investors in Seller (collectively,
"Internal Analyses").
6. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Purchaser that the
following matters are true and correct as of the execution of this
Agreement and will also be true and correct as of the Closing:
(a) Seller is a corporation, duly organized, validly existing and
in good standing under the laws of the State of California.
(b) This Agreement is, and all the documents executed by Seller
which are to be delivered to Purchaser at the Closing will be, duly
authorized, executed, and delivered by Seller, and is and will be
legal, valid, and binding obligations of Seller enforceable against
Seller in accordance with their respective terms (except to the extent
that such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium and other principles relating to or limiting the
right of contracting parties generally), and does not and will not
violate any provisions of any agreement to which Seller is a party or
to which it is subject.
(c) Except as set forth in the materials delivered to Purchaser
pursuant to Section 8 below or as otherwise disclosed in writing by
Seller to Purchaser prior to the end of the Due Diligence Period, to
Seller's actual knowledge, there are no pending or threatened legal
proceedings or administrative actions of any kind or character
adversely affecting the Property or Seller's interest therein.
(d) Except as set forth in the materials delivered to Purchaser
pursuant to Section 8 below, or as otherwise disclosed in writing by
Seller to Purchaser prior to the end of the Due Diligence Period,
Seller has received no written notice from any city, county, state or
other government authority of any violation of any statute, ordinance,
regulation, or administrative or judicial order or holding, whether or
not appearing in public records, with respect to the Property, which
violation has not been corrected.
(e) Except as set forth in the materials delivered to Purchaser
pursuant to Section 8 below, or as otherwise disclosed in writing by
Seller to Purchaser prior to the end of the Due Diligence Period,
Seller has received no written notice from any city, county, state or
other government authority (i) of any order or directive requiring any
work of repair, maintenance or improvement be performed on the
Property, or (ii) relating to defects in the Improvements or relating
to noncompliance with any applicable building code or restriction that
has not been corrected, or relating to any threat of impending
condemnation.
(f) Except as set forth in the materials delivered to Purchaser
pursuant to Section 8 below, or as otherwise disclosed in writing by
Seller to Purchaser prior to the end of the Due Diligence Period,
Seller has received no written notice from governmental authorities
that (i) the Property is in violation of any federal, state and local
laws, ordinances and regulations applicable to the Property with
respect to hazardous or toxic substances or industrial hygiene
(collectively, "Environmental Laws"), which violation has not been
corrected, or (ii) past or current tenants of all or any portion of the
Property have owned, used, generated, manufactured, stored, handled,
released or disposed of any hazardous or toxic substances on the
Property in violation of applicable Environmental Laws.
Notwithstanding the foregoing representations and warranties, the acts,
if any, of Seller's past or current tenants shall not be imputed to
Seller.
(g) To the best of Seller's knowledge, and except as set forth in
the tenant estoppel certificates delivered to Purchaser pursuant to
Section 10(a) below or as otherwise specifically disclosed in writing
to Purchaser prior to the end of the Due Diligence Period, there is no
current default in the performance of the obligations of any party
under the Leases.
(h) Except as set forth in the tenant estoppel certificates
delivered to Purchaser pursuant to Section 10(a) below or as otherwise
specifically disclosed in writing to Purchaser prior to the end of the
Due Diligence Period: (i) the Leases are in full force and effect, (ii)
the copies of the Leases given to Purchaser by Seller are true, correct
and complete copies of the Leases, (iii) the term of the Leases and
obligation to pay rent thereunder has commenced, (iv) the tenant
thereunder is in full possession and actual occupancy thereof, (v) no
rebates, rental concessions, free rent periods, credits, setoffs or
rent reductions relating to any period after the Closing have given by
Seller, (vi) no tenant is affiliated with Seller, and (vii) Seller has
not entered into any modifications of the Leases. There are no
outstanding assignments by Seller of Seller's interest in the Leases.
(i) To the best of Seller's knowledge, there are no management,
employee, maintenance, operating, service or other contracts or
arrangements of a similar nature affecting the Property which would be
binding on Purchaser subsequent to the Closing, other than those
delivered to Purchaser pursuant to Section 8 hereof. The copies of the
documents and materials delivered to Purchaser by Seller pursuant to
Section 8 hereof constitute true and complete copies of such documents
in effect on the date hereof, except as otherwise noted in such
documents and materials. As of the date hereof, Seller has neither
sent nor received written notice declaring a default or breach under
any such documents or materials, which has not been subsequently cured,
except as disclosed in such documents or materials and except for
claims which Seller has or may have against its insurers or others
relating to or arising out of the January 17, 1994 earthquake (the
"Earthquake Claims"), which Earthquake Claims Seller reserves and is
not transferring to Purchaser.
(j) Except as set forth in the tenant estoppel certificates
delivered to Purchaser pursuant to Section 10(a) below or as otherwise
specifically disclosed in writing to Purchaser prior to the end of the
Due Diligence Period, the Rent Roll (as defined in Section 8) is true
and correct, and sets forth all Leases, and amendments or modifications
thereof which would be binding on Purchaser subsequent to Closing.
(k) Except as set forth in the tenant estoppel certificates
delivered to Purchaser pursuant to Section 10(a) below or as otherwise
specifically disclosed in writing to Purchaser prior to the end of the
Due Diligence Period, to the best of Seller's knowledge, there are no
assignments or subleases of any of the Leases.
(l) Seller is sufficiently capitalized and has sufficient assets
such that it shall be able to pay any and all reasonably anticipated
liabilities, costs, claims and expenses of Seller in connection with
the Property and this Agreement.
(m) The Insurance Information (as defined in Section 8(ii)) is
true and accurate in all material respects, subject to the exceptions,
exclusions, modifications and other terms and conditions of the
underlying insurance policies to which the Insurance Information
relates, which insurance policies are in full force and effect.
(n) The inventory of Personal Property delivered pursuant to
Section 8(ix) is true and correct in all material respects.
As used in this Agreement, (x) the phrase "to Seller's
actual knowledge" or words of similar import shall mean the actual (and
not constructive or imputed) knowledge, without independent
investigation or inquiry, of Michael Everly, the Portfolio Manager and
Andrew Pellman, Asset Manager, and (y) the phrase "to the best of
Seller's knowledge" shall mean the knowledge, after reasonable
investigation and inquiry (but not constructive or imputed knowledge)
of Michael Everly and Andrew Pellman, and Seller represents that the
foregoing are the individuals with the primary responsibility for
overseeing the management, operation and sale of the Property). The
express representations and warranties made in this Agreement shall not
merge into any instrument or conveyance delivered at the Closing;
provided, however, that any action, suit or proceeding with respect to
the truth, accuracy or completeness of such representations and
warranties shall be commenced and served, if at all, on or before the
date which is twelve (12) months after the date of the Closing and, if
not commenced and served on or before such date, thereafter shall be
void and of no force or effect. Seller shall have no liability with
respect to any of the foregoing representations and warranties if,
prior to the Closing, Purchaser discovers or learns of information
(from whatever source, including, without limitation, the tenant
estoppel certificates delivered pursuant to Section 10(a) below, as a
result of Purchaser's due diligence tests, investigations and
inspections of the Property, or disclosure by Seller or Seller's agents
and employees) that contradicts any of the foregoing representations
and warranties, or renders any of the foregoing representations and
warranties untrue or incorrect, and Purchaser nevertheless consummates
the transaction contemplated by this Agreement.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
Purchaser represents and warrants to Seller that the
following matters are true and correct as of the execution of this
Agreement and will also be true and correct as of the Closing:
(a) Purchaser is a Maryland limited partnership, duly formed,
validly existing and in good standing under the laws of the State of
Maryland, and qualified to do business in the State of California.
(b) This Agreement is, and all the documents executed by
Purchaser which are to be delivered to Seller at the Closing will be,
duly authorized, executed, and delivered by Purchaser, and is and will
be legal, valid, and binding obligations of Purchaser enforceable
against Purchaser in accordance with their respective terms (except to
the extent that such enforcement may be limited by applicable
bankruptcy, insolvency, moratorium and other principles relating to or
limiting the right of contracting parties generally), and does not and
will not violate any provisions of any agreement to which Purchaser is
a party or to which it is subject.
(c) That except as otherwise expressly set forth in this Agreement,
neither Seller, nor anyone acting for or on behalf of Seller, has made
any representation, warranty, promise or statement, express or implied,
to Purchaser, or to anyone acting for or on behalf of Purchaser,
concerning the Property or the condition, use or development thereof.
Purchaser further represents and warrants that, in entering into this
Agreement, Purchaser has not relied on any representation, warranty,
promise or statement, express or implied, of Seller, or anyone acting
for or on behalf of Seller, other than as expressly set forth in this
Agreement, and that all matters concerning the Property have been or
shall be independently verified by Purchaser prior to the Closing, and
that Purchaser shall purchase the Property on Purchaser's own prior
investigation and examination of the Property (or Purchaser's election
not to do so); AND THAT, AS A MATERIAL INDUCEMENT TO THE EXECUTION AND
DELIVERY OF THIS AGREEMENT BY SELLER, AND EXCEPT AS EXPRESSLY SET FORTH
IN THIS AGREEMENT, PURCHASER IS PURCHASING THE PROPERTY IN AN "AS IS"
PHYSICAL CONDITION AND IN AN "AS IS" STATE OF REPAIR, WITH ALL FAULTS.
Except as may be expressly set forth in this Agreement, Purchaser does
hereby waive, and Seller does hereby disclaim, all warranties of any
type or kind whatsoever with respect to the Property, whether express
or implied, including, by way of description but not limitation, those
of fitness for a particular purpose and use. Notwithstanding anything
to the contrary herein, Purchaser and Seller acknowledge that any
written disclosures made by Seller prior to the Closing shall
constitute notice to Purchaser of the matter disclosed, and Seller
shall have no further liability thereafter if Purchaser thereafter con
summates the transaction contemplated hereby.
(d) Purchaser is not an employee benefit plan (a "Plan") subject
to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), nor a person or entity acting, directly or
indirectly, on behalf of any Plan or using the assets of any Plan to
acquire the Property, Purchaser is not a "party in interest" (as that
term is defined in Section 3(14) of ERISA with respect to any Plan that
is an investor in Seller, and Purchaser's acquisition of the Property
will not constitute or result in a prohibited transaction under Section
406 of ERISA or Section 4975 of the Code.
(e) It is expressly acknowledged by Purchaser that no financing
for this transaction shall be provided by Seller.
(f) Purchaser is sufficiently capitalized and has sufficient
assets such that it shall be able to pay any and all reasonably
anticipated liabilities, costs, claims and expenses of Purchaser in
connection with this Agreement.
8. DELIVERY OF DOCUMENTS.
Seller has delivered or shall deliver to Purchaser
within ten (10) days after execution of this Agreement true and correct
copies of the following documents relating to the Property (to the
extent the same are in Seller's possession or control), subject to the
confidentiality provisions of this Agreement, and the terms of an
Acknowledgement and Disclaimer in the form attached hereto as Exhibit
J, which Purchaser shall execute and deliver to Seller together with
Purchaser's executed copy of this Agreement:
(i) copies of all outstanding labor, service, equipment, supply,
management (excluding the current property management agreement),
maintenance, concession, utility, construction and operating contracts,
and any amendments thereto to which Seller is a party (collectively,
the "Service Contracts");
(ii) statement of insurance coverage and premiums by policy type,
and evidence of insurance (collectively, "Insurance Information")
(Purchaser acknowledges that Seller's insurance is carried under a
blanket policy which will not be assigned to Purchaser, and that
Purchaser shall be responsible for obtaining, at Purchaser's sole cost
and expense, all insurance relating to the Property which is necessary
or desirable);
(iii) engineering and physical inspection reports including
hazardous materials and asbestos reports, Phase 1 and Phase 2
environmental reports, if any;
(iv) all building permits, existing surveys, final, unqualified
and unconditional certificates of occupancy, governmental agreements
and approvals, complete architectural, structural and site plans;
(v) income and expense statements for 1994 and 1995, and for the
period from January 1, 1996 through October 15, 1996;
(vi) all base year information for all current Leases in place for
the Property;
(vii) the most current rent roll for the Property (the "Rent
Roll") which shall be updated to October 15, 1996, setting forth the
tenant name, suite number, approximate tenant Lease square footage,
Lease commencement date, Lease expiration date for all Leases at the
Property, security deposits and tenant prepayments. During reasonable
business hours during the Due Diligence Period, Purchaser may inspect
recent tenant correspondence for each tenant, as well as utility bills
and other matters relating to the operation of the Property present at
the property management office at the Property;
(viii) a budget for calendar year 1996;
(ix) an inventory of the Personal Property;
(x) tax bills for the Property for 1993-1994, 1994-1995, and 1995-
1996, together with the tax bill for 1996-1997; and
(xi) copies of all leases for the Property.
During the Due Diligence Period, Purchaser shall have the right to
conduct the inspections and investigations specified in Section 5 and
to review all the materials provided under this Section 8, as well as
any other materials Purchaser may elect to obtain and review at
Purchaser's sole cost and expense in connection with the Property.
Purchaser agrees to promptly deliver to Seller copies of all reports,
studies and results of tests and investigations obtained or conducted
by Purchaser with respect to the Property. Purchaser may at any time
during the Due Diligence Period terminate this Agreement in its sole
and absolute discretion, by sending to Seller and Escrow Company
written notice indicating Purchaser's election to so terminate the
Agreement. In the event Purchaser, in its sole and absolute
discretion, terminates this Agreement during the Due Diligence Period,
the Deposit, plus all interest accrued thereon, shall be immediately
refunded to Purchaser; provided, however, that Purchaser and Seller
each shall be responsible for one-half of any title or escrow
cancellation fees. Purchaser's failure to terminate this Agreement
prior to the expiration of the Due Diligence Period in accordance with
the provisions of this Section 8 shall be deemed approval of the
Property and the matters covered by Purchaser's investigations and
inspections thereof and the only remaining contingencies to Purchaser's
obligation to consummate the transaction contemplated herein shall be
Purchaser's Conditions Precedent as set forth in Section 10(a) below.
Purchaser acknowledges and agrees that the foregoing deliveries will be
made by Seller to accommodate and facilitate Purchaser's investigations
relating to the Property, and that, except as expressly set forth
herein, Seller makes no representations or warranties of any kind
regarding the accuracy or thoroughness of the information contained in
the materials delivered to Purchaser.
9. CONFIDENTIALITY.
Purchaser agrees that it shall keep confidential the
information contained in the materials provided by Seller for
Purchaser's inspection pursuant to Section 5 and Section 8, and shall
not disclose such information to any third parties; provided, however:
(i) Purchaser may disclose the information contained in the materials
provided by Seller for Purchaser's inspection to the extent required by
applicable reporting requirements of the Securities Exchange
Commission, and (ii) Purchaser shall have the right to provide such
information to its agents, consultants, proposed lenders, consultants,
attorneys and prospective investors in connection with Purchaser's
acquisition of the Property under the following conditions:
(a) Purchaser shall instruct the aforesaid parties to maintain
the confidentiality of such information;
(b) Upon the written request of Seller, Purchaser shall promptly
inform Seller of the identity of each party to whom such information is
furnished and when such information was furnished to each party; and
(c) Purchaser shall instruct such parties to return to Seller all
copies and originals of any documents relating to the Property provided
by Seller, upon Seller's written request.
If the transaction contemplated by this Agreement is not consum
mated for any reason, Purchaser promptly shall return to Seller, and
instruct its representatives, consultants, attorneys, and prospective
investors to return to Seller, all copies and originals of information
and materials previously provided for inspection by Seller to
Purchaser. The provisions of this Section 9 shall survive any
termination of this Agreement. This Section 9 shall cease to apply to
Purchaser upon the Closing of the purchase and sale contemplated by
this Agreement.
10. CONDITIONS PRECEDENT TO CLOSING.
(a) The following shall be conditions precedent to Purchaser's
obligation to consummate the purchase and sale transaction contemplated
herein (the "Purchaser's Conditions Precedent"):
(i) Purchaser shall not have terminated this Agreement in
accordance with Section 4, Section 8, Section 17(a) or Section 17(b)
of this Agreement within the time periods described in said Sections.
(ii) Title Company shall stand ready to issue, at the Closing, an
ALTA owner's policy of title insurance (the "Title Policy"), insuring
Purchaser's interest in the Real Property, dated the day of the
Closing, with liability in the amount of the Purchase Price, subject
only to the Permitted Exceptions.
(iii) Purchaser shall have received and reasonably approved,
at least ten (10) days prior to the Closing, executed estoppel
certificates substantially in the form of Exhibit C hereto from every
tenant occupying at least 2,500 rentable square feet, and, collectively
from tenants occupying at least eighty percent (80%) of the leasable
space in the Improvements which is leased as of the date of this
Agreement, provided, however, that if the form of estoppel certificate
attached hereto as Exhibit C requests information in addition to or
different than that required to be given pursuant to a tenant's Lease,
this condition will be satisfied for such tenant(s) if such tenant(s)
executes an estoppel certificate in the form required pursuant to its
Lease. If Seller is unable to obtain an estoppel certificate from a
sufficient number of tenants to satisfy the percentage set forth above,
then, in lieu thereof, Seller shall provide to Purchaser a certificate
pertaining to those tenants necessary to satisfy the percentage set
forth above covering the same matters that would have been set forth in
the tenant's estoppel certificate (and, in the event that, after the
Closing, Seller delivers to Purchaser a tenant estoppel certificate
from a tenant for whom Seller executed a Seller's certification at the
Closing, then Seller thereafter shall be released from said
certification). Subject to the preceding sentence, Seller's liability
in connection with any Seller's certificate shall not merge into any
instrument or conveyance delivered at the Closing; provided, however,
that any action, suit or proceeding with respect to the truth, accuracy
or completeness of such certificate shall be commenced and served, if
at all, on or before the date which is twelve (12) months after the
date of the Closing and, if not commenced and served on or before such
date, thereafter shall be void and of no force or effect.
(xv) There shall be no material breach of any of
Seller's representations, warranties or covenants set forth in Section
6 and Section 11, as of the Closing.
(iv) Seller shall have delivered to the Escrow Company the items
described in Section 12.
The conditions set forth in this Section 10(a) are solely for
the benefit of Purchaser and may be waived only by Purchaser.
Purchaser shall, at all times prior to the termination of this
Agreement, have the right to waive any of these conditions.
(b) The following shall be conditions precedent to Seller's obli
gation to consummate the purchase and sale transaction contemplated
herein (the "Seller's Conditions Precedent"):
(i) Purchaser shall not have terminated this Agreement in
accordance with Section 4, Section 8, Section 17(a) or Section 17(b) of
this Agreement within the time periods described in said Sections.
(ii) Purchaser shall have delivered to Escrow Company, prior to
the Closing, for disbursement as directed hereunder, all cash or other
immediately available funds due from Purchaser in accordance with this
Agreement.
(iii) There shall be no material breach of any of Purchaser's
representations, warranties or covenants set forth in Section 5 and
Section 7, as of the Closing.
(iv) Purchaser shall have delivered to Escrow Company the items
described in Section 13.
(v) Seller shall have received a fully executed letter in the
form attached hereto as Exhibit D from the broker(s) identified in
Section 19 below, which fully executed letter Seller shall obtain by
the end of the Due Diligence Period.
The conditions set forth in this Section 10(b) are solely for
the benefit of Seller and may be waived only by Seller. Seller shall,
at all times prior to the termination of this Agreement, have the right
to waive any of these conditions.
11. COVENANTS OF SELLER.
Seller hereby covenants with Purchaser, as follows:
(a) After the date hereof and prior to the Closing, no part of
the Property, or any interest therein, will be sold, encumbered or
otherwise transferred without Purchaser's consent.
(b) After the date hereof and prior to the Closing, Seller shall
not enter into any new Leases, or materially amend, modify or extend
any existing Leases, in any case without the prior written consent of
Purchaser (which consent shall not be unreasonably withheld or
delayed). Purchaser shall have two (2) business days from receipt of a
written lease proposal from Seller to consent to said lease. If
Purchaser does not respond in writing to Seller within said two (2)
business days, the lease shall be deemed approved. If Purchaser
disapproves a lease proposal received from Seller, Purchaser's written
response to the lease proposal shall state the reasons for such
disapproval. If Purchaser consents to any such new Lease, or to the
amendment, modification or extension of any existing Lease, Purchaser
shall be solely responsible for the payment of all leasing commissions
in connection therewith and any tenant improvement costs or allowance,
move-in allowance and any other payment to the tenant thereunder
(whether coming due prior to the Closing, if the transaction
contemplated by this Agreement closes, in which case any such amount
shall be payable to Seller at Closing, or after the Closing), provided
however, such commissions and costs shall be prorated between Seller
and Purchaser based on the portion of the term of the respective lease
(or renewal) which precedes Closing and the portion of the term of the
Lease which occurs after the Closing.
(c) Until the Closing, Seller shall keep the Property insured
against fire, vandalism and other loss, damage and destruction,
provided, however, that Seller's insurance policies shall not be
assigned to Purchaser at the Closing, and Purchaser shall be obligated
to obtain its own insurance coverage from and after the Closing.
(d) Until the Closing, Seller shall operate and maintain the
Property in the manner being operated and maintained on the date of
this Agreement.
12. SELLER'S CLOSING DELIVERIES.
At least one (1) business day prior to the Closing,
Seller shall deliver or cause to be delivered to Escrow Company the
following:
(a) A Grant Deed executed by Seller, the form of Exhibit E
attached hereto, conveying the Real Property to Purchaser free and
clear of all claims, liens and encumbrances except the Permitted
Exceptions and matters arising by or through Purchaser (the "Grant
Deed").
(b) A Bill of Sale executed by Seller, in the form of Exhibit F
attached hereto, conveying to the Purchaser title to the Personal
Property, if any (the "Bill of Sale").
(c) An affidavit in the form of Exhibit G attached hereto,
certifying that Seller is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Code (the "Certificate of Non-Foreign
Status"), together with California Form 590.
(d) A General Assignment executed by Seller, in the form of
Exhibit H attached hereto, assigning to Purchaser the Service Contracts
and any warranties, guaranties and indemnities relating to the
Property, to the extent that such items are assignable (the "General
Assignment").
(e) An Assignment of Leases executed by Seller, in the form of
Exhibit I attached hereto, assigning to Purchaser all of Seller's
interest under the Leases (the "Assignment of Leases").
(f) Any other documents, instruments or agreements reasonably
necessary to effectuate the transaction contemplated by this Agreement.
13. PURCHASER'S CLOSING DELIVERIES.
At least one (1) business day prior to the Closing,
Purchaser shall deliver to Escrow Company:
(a) The balance of the Purchase Price, as adjusted for
Purchaser's share of the Closing costs, prorations, reimbursements and
adjustments as set forth in Sections 14 and 16 herein, in immediately
available funds.
(b) An executed counterpart of the General Assignment and the
Assignment of Leases, whereby Purchaser shall assume the obligations
relating to the matters set forth in such documents.
(c) Any other documents, instruments or agreements reasonably
necessary to effectuate the transaction contemplated by this Agreement.
14. PRORATIONS AND ADJUSTMENTS.
(a) The following shall be prorated and adjusted between Seller
and Purchaser as of the day of the Closing, except as otherwise
specified:
(i) General real estate, personal property and ad valorem taxes
and assessments, and any improvement or other bonds encumbering the
Property, for the current tax year for the Property.
(ii) Utility charges, if any, and such other items that are
customarily prorated in transactions of this nature shall be ratably
prorated.
(iii) Rent and other charges under the Leases (to the extent
such monies have actually been collected by Seller). Rents and other
charges under the Leases which are delinquent as of the Closing shall
not be prorated, and rents and other amounts received by Purchaser
after the Closing from a tenant owing such delinquent rent or other
charges shall be applied (A) first, to Purchaser's actual out-of-pocket
costs of collection incurred with respect to such tenant; (B) second,
to rents due from such tenant for the month in which such payment is
received by Purchaser; (C) third, to rents attributable to any period
after the Closing which are past due on the date of receipt; and (D)
finally, to rents and other charges delinquent as of the Closing (and
Purchaser promptly shall remit such amounts to Seller). Seller retains
the right to pursue and collect (through any lawful proceeding)
delinquent rents pertaining to Seller's period of ownership. Purchaser
agrees that it shall use commercially reasonable efforts to collect any
such delinquent rents and will not compromise or settle any of Seller's
claims regarding delinquent rent without Seller's written consent
(provided, however, that Purchaser shall have no obligation to
institute legal proceedings, including an action for unlawful detainer,
against a tenant owing delinquent rents).
(iv) The amount of all unapplied security deposits under the
Leases shall be credited to Purchaser.
For purposes of calculating prorations, Purchaser shall be deemed
to be in title to the Property, and, therefore, entitled to the income
therefrom and responsible for the expenses thereof for the entire day
upon which the Closing occurs. All such prorations shall be made on
the basis of the actual number of days of the month which shall have
elapsed as of the day of the Closing and based upon the actual number
of days in the month and a three hundred sixty-five (365) day year.
The amount of such prorations shall be initially performed by the
Escrow Company at Closing but shall be subject to adjustment in cash
after the Closing outside of escrow as and when complete and accurate
information becomes available, if such information is not available at
the Closing. Seller and Purchaser agree to cooperate and use their
best efforts to make such adjustments no later than sixty (60) days
after the Closing (except with respect to property taxes, which shall
be adjusted within sixty (60) days after the tax bills for the
applicable period are received). Without limiting the generality of
the foregoing, Seller and Purchaser hereby agree that (i) with respect
to any year-end reconciliations of reimbursable expenses under the
Leases, Seller and Purchaser shall cooperate to complete such
reconciliations as soon as possible after the Closing, with Seller
responsible for amounts owing to tenants under the Leases, and entitled
to amounts payable by tenants under the Leases (as the case may be),
with respect to periods prior to the Closing, and with Purchaser
responsible for amounts owing to tenants under the Leases, and entitled
to amounts payable by tenants under the Leases (as the case may be),
with respect to periods from and after the Closing (and, with respect
to any such amounts payable to Seller, Purchaser agrees that it shall
use commercially reasonable efforts to collect such amounts, provided,
however, that Purchaser shall have no obligation to institute legal
proceedings, including an action for unlawful detainer, against a
tenant owing any such amounts), and (ii) with respect to any property
tax appeals or reassessments filed by Seller for tax years prior to the
year in which the Closing occurs, Seller shall be entitled to the full
amount of any refund or rebate resulting therefrom (subject to any
requirement under the Leases to pay to the tenants thereunder a share
of any such refund or rebate, which shall be Seller's sole obligation),
and with respect to any property tax appeals or reassessments filed by
Seller for the tax year in which the Closing occurs, Seller and
Purchaser shall share the amount of any rebate or refund resulting
therefrom (after first paying to Seller all costs and expenses incurred
by Seller in pursuing such appeal or reassessment) in proportion to
their respective periods of ownership of the Property for such tax year
(with Seller and Purchaser each obligated for any amount of such refund
or rebate required to be paid to the tenants under the Leases for its
respective period of ownership of the Property for such tax year), and
(iii) in no event will there be any proration of insurance premiums
under Seller's existing policies of insurance relating to the Property,
and Purchaser acknowledges and agrees that none of Seller's insurance
policies (or any proceeds payable thereunder, except as expressly
provided for in Section 17 below) will be assigned to Purchaser at the
Closing, and Purchaser shall be solely obligated to obtain any and all
insurance that it deems necessary or desirable. Except as set forth in
this Section 14, all items of income and expense which accrue for the
period prior to the Closing will be for the account of Seller and all
items of income and expense which accrue for the period on and after
the Closing will be for the account of Purchaser. The provisions of
this Section 14 shall survive the Closing.
15. CLOSING.
The purchase and sale contemplated herein shall close
(the "Closing") fifteen (15) days after the end of the Due Diligence
Period or on such specific date and time mutually agreed to by the
parties, but in no event later than December 20, 1996. As used herein,
the term "Closing" means the date and time that Seller's Grant Deed is
recorded in the Official Records of the County in which the Land is
located (the "Official Records").
16. CLOSING COSTS.
Seller shall pay any documentary transfer tax due in
connection with the consummation of the transaction contemplated
herein, the premium for the Title Policy (including the cost of title
curative endorsements which Seller elects to obtain pursuant to Section
4 above) equal to the amount of a CLTA standard coverage owner's
policy, and fifty percent (50%) of all other escrow and closing costs.
Purchaser shall pay all costs and expenses incurred in connection with
obtaining any financing for the purchase of the Property, including any
additional title insurance premium payable in connection with Purchaser
obtaining an ALTA extended coverage owner's policy and any lender's
policy of title insurance, the cost of any title endorsements which are
not title curative endorsements which Seller elects to obtain pursuant
to Section 4 above, the fee for recording the Grant Deed and the
Assignment of Leases, and fifty percent (50%) of all other escrow and
closing costs. Each party shall bear the expense of its own counsel.
Unless otherwise specified herein, if the sale of the Property
contemplated hereunder does not occur because of a failure of one or
more of the conditions described Section 10(a)(i), (ii), or (iii), or
a default on the part of Purchaser, all escrow cancellation and title
fees shall be paid by Purchaser; if the sale of the Property does not
occur because of a default on the part of Seller, all escrow
cancellation and title fees shall be paid by Seller.
17. RISK OF LOSS.
(a) If, after the execution of this Agreement by Purchaser and
Seller, and prior to the Closing, the Improvements, or any part
thereof, are materially damaged (as set forth in Section 17(d)),
Purchaser shall have the right, exercisable by giving notice to Seller
within ten (10) business days after receiving written notice of such
damage or destruction (but in any event prior to the Closing), either
(i) to terminate this Agreement, in which case neither party shall have
any further rights or obligations hereunder (except as may be expressly
provided to the contrary elsewhere in this Agreement), and any money
(including, without limitation, the Deposit and all interest accrued
thereon) or documents in escrow shall be returned to the party
depositing the same and Purchaser and Seller each shall be responsible
for one-half of any title or escrow cancellation fee, or (ii) to accept
the Property in its then condition and to proceed with the Closing
without any abatement or reduction in the Purchase Price (except as set
forth in Section 17(f) below), and receive an assignment of all of
Seller's right to any insurance proceeds payable by reason of such
damage or destruction. If Purchaser elects to proceed under clause
(ii) above, Seller shall not compromise, settle or adjust any claims to
such proceeds without Purchaser's prior written consent.
(b) If prior to the Closing, all or any material portion (as set
forth in Section 17(d)) of the Property is subject to a taking by
public authority, Purchaser shall have the right, exercisable by giving
notice to Seller within five (5) days after receiving written notice of
such taking (but in any event prior to the Closing), either (i) to
terminate this Agreement, in which case neither party shall have any
further rights or obligations hereunder (except as may be expressly
provided to the contrary elsewhere in this Agreement), and any money
(including, without limitation, the Deposit and all interest accrued
thereon) or documents in escrow shall be returned to the party
depositing the same, and Purchaser and Seller each shall be responsible
for one-half of any title or escrow cancellation fee, or (ii) to accept
the Property in its then condition, without any abatement or reduction
in the Purchase Price, and receive an assignment of all of Seller's
rights to any condemnation award payable by reason of such taking. If
Purchaser elects to proceed under clause (ii) above, Seller shall not
compromise, settle or adjust any claims to such award without
Purchaser's prior written consent. As used in this Section 17,
"taking" shall mean any transfer of the Property or any portion thereof
to a governmental entity or other party with appropriate authority, by
exercise of the power of eminent domain.
(c) In the event that prior to the Closing, any non-material
portion of the Property is damaged or subject to a taking, Purchaser
shall accept the Property in its then condition (without any abatement
or reduction in the Purchaser Price except as set forth in Section
17(f) below) and proceed with the Closing, in which case Purchaser
shall be entitled to an assignment of all of Seller's rights to any
insurance proceeds or any award in connection with such taking, as the
case may be. In the event of any such non-material damage or taking,
Seller shall not compromise, settle or adjust any claims to such
insurance proceeds or such award, as the case may be, without
Purchaser's prior written consent.
(d) For the purpose of this Section 17, damage to the Property or
a taking of a portion thereof shall be deemed to involve a material
portion thereof if the reasonably estimated cost of restoration or
repair of such damage or the amount of the condemnation award with
respect to such taking shall exceed the sum of Two Hundred Fifty
Thousand Dollars ($250,000.00).
(e) Seller agrees to give Purchaser notice of any taking, damage
or destruction of the Property promptly after Seller obtains knowledge
thereof.
(f) If, after the execution of this Agreement by Purchaser and
Seller, and prior to the Closing, the Improvements, or any part
thereof, are damaged and Purchaser proceeds with the Closing, then
Purchaser shall receive a credit against the Purchase Price equal to
the reasonably estimated cost of restoration or repair of such damage,
subject to the following: (i) in no event shall such credit exceed the
sum of Two Hundred Fifty Thousand Dollars ($250,000.00), and (ii) if
insurance coverage is available to pay for all or a portion of the cost
of repair of such damage or for the loss of income arising from such
damage, then the credit shall be reduced by the amount of such
available insurance coverage.
18. DEFAULT.
(a) In the event Seller defaults in its obligations under this
Agreement, Purchaser shall have all remedies at law and in equity,
including, without limitation, specific performance; provided, however,
that in an action for damages, Purchaser shall be limited to recovering
its actual damages but not any consequential damages.
(b) IF PURCHASER FAILS TO CLOSE THE PURCHASE OF THE PROPERTY AS A
RESULT OF PURCHASER'S DEFAULT, THE DEPOSIT, PLUS ANY INTEREST ACCRUED
THEREON, SHALL BE PAID TO AND RETAINED BY SELLER AS LIQUIDATED DAMAGES.
THE AMOUNT PAID TO AND RETAINED BY SELLER AS LIQUIDATED DAMAGES SHALL
BE SELLER'S SOLE REMEDY IN THE EVENT OF PURCHASER'S FAILURE TO CLOSE
THE PURCHASE OF THE PROPERTY. THE PARTIES HERETO EXPRESSLY AGREE AND
ACKNOWLEDGE THAT SELLER'S ACTUAL DAMAGES IN THE EVENT OF A DEFAULT BY
PURCHASER WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO ASCERTAIN
AND THAT THE AMOUNT OF THE DEPOSIT PLUS ANY INTEREST ACCRUED THEREON
REPRESENTS THE PARTIES' REASONABLE ESTIMATE OF SUCH DAMAGES. THE
PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A
FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE
SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES
TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND
1677. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
SECTION 18(b), SELLER AND PURCHASER AGREE THAT THIS LIQUIDATED DAMAGES
PROVISION IS NOT INTENDED AND SHOULD NOT BE DEEMED OR CONSTRUED TO
LIMIT IN ANY WAY PURCHASER'S INDEMNITY OBLIGATIONS UNDER SECTIONS 5 AND
19.
SELLER'S INITIALS: /s/ AJP /s/ME PURCHASER'S INITIALS: /s/RSZ
19. BROKER'S COMMISSION.
Purchaser and Seller each represents and warrants to the
other that no brokerage commission, finder's fee or other compensation
is due or payable with respect to the transaction contemplated hereby
other than a commission to be paid to CB Commercial Real Estate Group,
Inc. and First Property Realty Corporation pursuant to a separate
agreement, which shall be paid by Seller only upon the Closing of the
purchase and sale contemplated hereby. Purchaser hereby agrees to
indemnify, defend, and hold Seller harmless from and against any
losses, damages, costs and expenses (including, but not limited to,
attorneys' fees and costs) incurred by Seller by reason of any breach
or inaccuracy of the Purchaser's representations and warranties
contained in this Section 19. Seller hereby agrees to indemnify,
defend, and hold Purchaser harmless from and against any losses,
damages, costs and expenses (including, but not limited to, attorneys'
fees and costs) incurred by Purchaser by reason of any breach or
inaccuracy of Seller's representations and warranties contained in this
Section 19. The provisions of this Section 19 shall survive the
Closing.
20. ESCROW.
(a) Instructions. Within five (5) days after execution of this
Agreement, Purchaser and Seller each shall deposit a copy of this
Agreement executed by such party (or either of them shall deposit a
copy executed by both Purchaser and Seller) with Escrow Company. This
Agreement, together with such further instructions, if any, as the
parties shall provide to Escrow Company by written agreement, shall
constitute the escrow instructions. If any requirements relating to
the duties or obligations of Escrow Company hereunder are not accept
able to Escrow Company, or if Escrow Company requires additional in
structions, the parties hereto agree to make such deletions,
substitutions and additions hereto as counsel for Purchaser and Seller
shall mutually approve, which additional instructions shall not sub
stantially alter the terms of this Agreement unless otherwise expressly
agreed to by Seller and Purchaser.
(b) Deposits into Escrow. Seller shall make its deposits into
escrow in accordance with Section 12. Purchaser shall make its
deposits into escrow in accordance with Section 13. Escrow Company is
hereby authorized to close the escrow only if and when: (i) Escrow
Company has received all items to be delivered by Seller and Purchaser
pursuant to Sections 12 and 13; and (ii) Title Company can and will
issue the Title Policy concurrently with the Closing.
(c) Close of Escrow. Provided that Escrow Company shall not have
received written notice in a timely manner from Purchaser or Seller of
the failure of any condition to the Closing or of the termination of
the escrow, and if and when Purchaser and Seller have deposited into
escrow the matters required by this Agreement and Title Company can and
will issue the Title Policy concurrently with the Closing, Escrow
Company shall:
(i) Deliver to Purchaser: (i) the Grant Deed by causing it to be
recorded in the Official Records of the County of Los Angeles, State of
California and immediately upon recording delivering to Purchaser a
conformed copy of the Grant Deed; (ii) the Bill of Sale; (iii) the
Certificate of Non-Foreign Status and California Form 590; (iv) the
General Assignment; and (v) the Assignment of Leases by causing it to
be recorded in the Official Records and immediately upon recording
delivering to Purchaser a conformed copy of the Assignment of Leases.
(ii) Deliver to Seller: the Purchase Price, after satisfying the
Closing costs, prorations and adjustments and any broker commission to
be paid by Seller pursuant to Sections 14, 16 and 19, respectively.
(iii) Deliver to Purchaser: any funds deposited by Purchaser,
and any interest earned thereon, in excess of the amount required to be
paid by Purchaser hereunder.
(iv) Deliver the Title Policy issued by Title Company to Purchaser.
(d) Real Estate Reporting Person. Escrow Company is hereby
designated the "real estate reporting person" for purposes of section
6045 of title 26 of the United States Code and Treasury Regulation
1.6045-4 and any instructions or settlement statement prepared by
Escrow Company shall so provide. Upon the consummation of the
transaction contemplated by this Agreement, Escrow Company shall file
Form 1099 information return and send the statement to Seller as
required under the aforementioned statute and regulation.
21. MISCELLANEOUS.
(a) Purchaser acknowledges that Trust Company of the West is
entering into this Agreement as trustee of a trust created under the
laws of California and agrees to look solely to the assets of the
beneficiary of such trust for the enforcement of any claims against
Seller, as neither Trust Company of the West nor any of its affiliated
entities (including, but not limited to, Westmark Real Estate
Investment Services, Westmark Realty Advisors L.L.C., TCW Realty
Advisors, CB Commercial Realty Advisors, Inc. and CB Commercial Real
Estate Group, Inc.) nor any investor or participant in the beneficiary
of such trust nor any of their respective officers, directors,
employees, partners or shareholders assume any personal liability for
any of the obligations entered into on behalf of Seller.
(b) Each individual and entity executing this Agreement hereby
represents and warrants that he, she or it has the capacity set forth
on the signature pages hereof with full power and authority to bind the
party on whose behalf he, she or it is executing this Agreement to the
terms hereof.
(c) This Agreement is the entire Agreement between the parties
hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, whether oral or written, between
the parties with respect to the matters contained in this Agreement.
Any waiver, modification, consent or acquiescence with respect to any
provision of this Agreement shall be set forth in writing and duly
executed by or in behalf of the party to be bound thereby. No waiver
by any party of any breach hereunder shall be deemed a waiver of any
other or subsequent breach.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which when taken
together shall constitute one and the same instrument. The signature
page of any counterpart may be detached therefrom without impairing the
legal effect of the signature(s) thereon provided such signature page
is attached to any other counterpart identical thereto except having
additional signature pages executed by other parties to this Agreement
attached thereto.
(e) Time is of the essence in the performance of and compliance
with each of the provisions and conditions of this Agreement.
(f) Any communication, notice or demand of any kind whatsoever
which either party may be required or may desire to give to or serve
upon the other shall be in writing and delivered by personal service
(including express or courier service), by electronic communication,
whether by telex, telegram or telecopy (if confirmed in writing sent by
registered or certified mail, postage prepaid, return receipt
requested), or by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
Purchaser: ARDEN REALTY LIMITED PARTNERSHIP
9100 Wilshire Boulevard,
East Tower, Suite 700
Beverly Hills, California 90212
Attention: Birgitta B. Troy, Executive Vice President
Telephone: (310) 271-8600
Telecopy: (310) 274-6218
With a copy to: Christensen, Miller, Fink, Jacobs, Glaser,
Weil & Shapiro, LLP
2121 Avenue of the Stars, 18th Floor
Los Angeles, California 90067
Attention: Alisa J. Freundlich, Esq.
Telephone: (310) 556-7862
Telecopy: (310) 556-2920
Seller: TRUST COMPANY OF THE WEST,
a California corporation,
as trustee of TCW REALTY FUND III
c/o Westmark Realty Advisors
865 South Figueroa Street
Suite 3500
Los Angeles, California 90017-2543
Attention: Andrew Pellman and
Kevin Corbett, Esq.
Telephone: (213) 683-4200
Telecopy: (213) 683-4201
With a copy to: Davis & Fox
1901 Avenue of the Stars, Suite 400
Los Angeles, California 90067
Attention: Steven A. Fox, Esq.
Telephone: (310) 286-2915
Telecopy: (310) 286-2916
Escrow Company: Commonwealth Land Title Company
888 W. Sixth Street, 4th Floor,
Los Angeles, California 90017
Attention: Mai Ly Marsh
Telephone: (800) 432-0706 ext. 112
Telecopy: (213) 627-8722
Title Company: Commonwealth Land Title Company
801 N. Brand Blvd., 12th Floor
Glendale, California 91203
Attention: Doug Abernathy
Telephone: (800) 950-9772 ext. 6421
Telecopy: (818) 551-1268
Any party may change its address for notice by written notice given to
the other in the manner provided in this Section. Any such communication,
notice or demand shall be deemed to have been duly given or served on the
date personally served, if by personal service, on the date of confirmed
dispatch, if by electronic communication, or three (3) days after being
placed in the U.S. Mail, if mailed.
(g) The parties agree to execute such instructions to Escrow
Company and Title Company and such other instruments and to do such fur
ther acts as may be reasonably necessary to carry out the provisions of
this Agreement.
(h) The making, execution and delivery of this Agreement by the
parties hereto has been induced by no representations, statements,
warranties or agreements other than those expressly set forth herein.
(i) Wherever possible, each provision of this Agreement shall be
interpreted in such a manner as to be valid under applicable law, but,
if any provision of this Agreement shall be invalid or prohibited
thereunder, such invalidity or prohibition shall be construed as if
such invalid or prohibited provision had not been inserted herein and
shall not affect the remainder of such provision or the remaining
provisions of this Agreement.
(j) The language in all parts of this Agreement shall be in all
cases construed simply according to its fair meaning and not strictly
for or against any of the parties hereto. Section headings of this
Agreement are solely for convenience of reference and shall not govern
the interpretation of any of the provisions of this Agreement.
References to "Sections" are to Sections of this Agreement, unless
otherwise specifically provided.
(k) This Agreement shall be governed by and construed in ac
cordance with the laws of the State of California.
(l) If any action is brought by either party against the other
party, relating to or arising out of this Agreement, the transaction
described herein or the enforcement hereof, the prevailing party shall
be entitled to recover from the other party reasonable attorneys' fees,
costs and expenses incurred in connection with the prosecution or
defense of such action. For purposes of this Agreement, the term
"attorneys' fees" or "attorneys' fees and costs" shall mean the fees
and expenses of counsel to the parties hereto, which may include
printing, photostating, duplicating and other expenses, air freight
charges, and fees billed for law clerks, paralegals and other persons
not admitted to the bar but performing services under the supervision
of an attorney, and the costs and fees incurred in connection with the
enforcement or collection of any judgment obtained in any such
proceeding. The provisions of this Section 21.12 shall survive the
entry of any judgment, and shall not merge, or be deemed to have
merged, into any judgment.
(m) This Agreement shall be binding upon and inure to the benefit
of each of the parties hereto and to their respective transferees,
successors, and assigns. Neither this Agreement nor any of the rights
or obligations of Seller or Purchaser hereunder shall be transferred or
assigned by Seller or Purchaser without the prior written consent of
the non-assigning party.
(n) Exhibits A through J, inclusive, attached hereto are
incorporated herein by reference.
(o) Notwithstanding anything to the contrary contained herein,
this Agreement shall not be deemed or construed to make the parties
hereto partners or joint venturers, or to render either party liable
for any of the debts or obligations of the other, it being the
intention of the parties to merely create the relationship of Seller
and Purchaser with respect to the Property to be conveyed as
contemplated hereby.
(p) This Agreement shall not be recorded or filed in the public
land or other public records of any jurisdiction by either party and
any attempt to do so may be treated by the other party as a breach of
this Agreement.
(q) Each party agrees that, except as otherwise set forth in this
Agreement or provided by law or unless compelled by an order of a
court, it shall keep the contents of this Agreement and any information
related to the transaction contemplated hereby confidential (except
that Purchaser may disclose such matters in accordance with the
provisions of Section 9 above) and further agrees to refrain from
generating or participating in any publicity statement, press release,
or other public notice regarding this transaction without the prior
written consent of the other party unless required under applicable law
or by a court order. The provisions of this Section 21.17 shall
survive the Closing or any termination of this Agreement and shall not
be merged into any instrument or conveyance delivered at the Closing.
(r) Seller and Purchaser agree that it is their specific intent
that no broker shall be a party to or a third party beneficiary of this
Agreement or the escrow; and further that the consent of a broker shall
not be necessary to any agreement, amendment, or document with respect
to the transaction contemplated by this Agreement.
(s) In the event that any of the dates specified in this
Agreement shall fall on a Saturday, a Sunday, or a holiday, then the
date of such action shall be deemed to be extended to the next business
day.
[SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized representatives as of the date
first above written.
SELLER: TRUST COMPANY OF THE WEST,
a California corporation,
as trustee of TCW REALTY FUND III
By: /s/ Andrew J. Pellman
Its Authorized Signatory
By: /s/ Michael Everly
Its Authorized Signatory
PURCHASER: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty Group, Inc.
a Maryland corporation,
Its General Partner
Date: December 6, 1996 Signature: By: /s/ Richard S. Ziman
Its: CEO
The Company hereby agrees to furnish supplementally the omitted
exhibits and schedules to the Commission upon request.
Agreement of Purchase and Sale
of Tenancy-in-Common Interest
between
Haptel, Inc.,
a Delaware corporation,
as "Seller",
and
Fidelity Partners, Inc.,
a California corporation
as "Purchaser"O,
dated as of November 15, 1996
for property at
5200 W. Century Boulevard
Los Angeles, California
Table Of Contents
Page
List of Exhibits
1. TIC Interest
1.1 Description
1.2 The Property
1.3 "As-Is" Purchase
2. Price and Payment
2.1 Purchase Price
2.2 Payment
2.3 Closing
3. Inspections and Approvals
3.1 Inspections
3.2 Title and Survey
3.3 Contracts
3.4 Permitted Encumbrances
3.5 Survey
3.6 Due Diligence Documents
3.7 Purchaser's Right to Terminate
3.8 Confidentiality
4. Prior to Closing
4.1 Insurance
4.2 Operation
4.3 New Contracts
4.4 New Leases
4.5 Prospective Leases
4.6 Liens and Encumbrances
5. Representations and Warranties
5.1 By Seller
5.2 By Purchaser
5.3 Mutual
6. Costs and Prorations
6.1 Purchaser's Costs
6.2 Seller's Costs
6.3 Prorations
6.4 Taxes
6.5 In General
6.6 Purpose and Intent
7. Damage, Destruction or Condemnation
7.1 Material Event
7.2 Immaterial Event
7.3 Termination and Return of Deposit
8. Notices
9. Closing and Escrow
9.1 Escrow Instructions
9.2 Seller's Deliveries
9.3 Purchaser's Deliveries
9.4 (Intentionally Deleted)
9.5 Insurance
9.6 Utility Service and Deposits
9.7 Notice Letters
9.8 Post-Closing Collections
9.9 Reporting Requirements
10. Default; Failure of Condition
10.1 Purchaser Default
10.2 Seller Default
10.3 Failure of Condition
11. Miscellaneous
11.1 Entire Agreement
11.2 Severability
11.3 Applicable Law
11.4 Assignability
11.5 Successors Bound
11.6 Breach
11.7 No Public Disclosure
11.8 Captions
11.9 Attorneys' Fees
11.10 No Partnership
11.11 Time of Essence
11.12 Counterparts
11.13 Recordation
11.14 Proper Execution
11.15 Tax Protest
11.16 No Merger
11.17 Actual Knowledge
11.18 Survival and Limitation of Representations
and Warranties
11.19 Limited Liability
11.20 Execution of HPP Agreement
11.21 Time to Execute and Deliver
Agreement of Purchase and Sale of Tenancy-in-Common Interest
This Agreement of Purchase and Sale of Tenancy-in-Common
Interest (this "Agreement"), dated as of the 15th day of
November, 1996, is made by and between Haptel, Inc., a
Delaware corporation ("Seller"), and Fidelity Partners, Inc.
a California corporation ("Purchaser").
Recitals:
A. In 1983, Seller became a partner in Hapsmith-Praxis
Airport Associates, a California general partnership (the
"Partnership"), formed pursuant to that certain Joint
Venture Agreement of Hapsmith-Praxis Airport Associates by
and between Seller and Hapsmith-Praxis Partners, a
California limited partnership ("HPP"), dated as of
January 27, 1983.
B. Since 1983, the Partnership has owned certain real
property situated in the County of Los Angeles, State of
California, as more particularly described on Exhibit A
hereto, together with the improvements located thereon,
consisting of a ten-story office building commonly known as
the Union Bank Center located at 5200 W. Century Boulevard,
Los Angeles, California (the "Property").
C. As a result of the dissolution of the Partnership,
Seller will be an eighty-six and one-quarter percent
(86.25%) tenant-in-common in the Property with HPP. As used
in this Agreement, the phrase "Seller's Allocable
Percentage" shall mean eighty-six and one-quarter percent
(86.25%).
D. Seller desires to sell to Purchaser and Purchaser
desires to purchase from Seller on the Closing Date Seller's
tenancy-in-common interest in the Property (the "TIC
Interest").
E. For purposes of this Agreement, Seller and HPP shall be
collectively referred to as the "Partners" during the period
prior to the dissolution of the Partnership and as the
"Tenants-In-Common" from and after the dissolution of the
Partnership.
Now, Therefore, in consideration of the foregoing, of
the covenants, promises and undertakings set forth herein,
and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Seller and
Purchaser agree as follows:
1. TIC Interest
1.1 Description
Subject to the terms and conditions of this Agreement,
and for the consideration herein set forth, Seller agrees to
sell and transfer, and Purchaser agrees to purchase and
acquire the TIC Interest.
1.2 The Property
For purposes of this Agreement, the Property shall
consist of the following:
1. Certain land ("Land") located in the City of
Los Angeles, County of Los Angeles, State of California and
more specifically described in Exhibit 1.1.1 attached
hereto;
2. The buildings, parking areas, improvements, and
fixtures now situated on the Land (the "Improvements");
3. All furniture, personal property, machinery, apparatus,
and equipment currently used in the operation, repair and
maintenance of the Land and Improvements and situated
thereon (collectively, the "Personal Property"), generally
described on Exhibit 1.1.3 attached hereto. The Personal
Property to be conveyed is subject to depletions,
replacements and additions in the ordinary course of
Seller's business;
4. All easements, hereditaments, and appurtenances
belonging to or inuring to the benefit of Seller and
pertaining to the Land, if any;
5. The leases or occupancy agreements, including those in
effect on the date of this Agreement which are identified on
the Schedule of Leases attached hereto as Exhibit 1.1.5, and
any new leases entered into pursuant to Section 4.4, which
as of the Closing (as hereinafter defined) affect all or any
portion of the Land or Improvements ("Leases"), and any
security deposits actually held by Seller with respect to
any such Leases;
6. Subject to Section 3.3, all contracts and agreements
relating to the operation or maintenance of the Land,
Improvements or Personal Property the terms of which extend
beyond midnight of the day preceding the Closing Date;
7. Assignable warranties and guaranties issued in
connection with the Improvements or Personal Property; and
8. All transferable consents, authorizations, variances or
waivers, licenses, permits and approvals from any
governmental or quasi-governmental agency, department,
board, commission, bureau or other entity or instrumentality
solely in respect of the Land or Improvements (collectively,
"Approvals").
1.3 "As-Is" Purchase
Purchaser acknowledges and agrees that it has been or
will prior to the Approval Date (as hereinafter defined) be
given a full opportunity to inspect and investigate every
aspect of the Property, including all matters related to
legal status or requirements, physical condition, title,
leasing, contracts and other matters of significance.
Purchaser specifically acknowledges and agrees that the TIC
Interest is being sold in an "as is" condition and "with all
faults" as of the date of Closing. Except as expressly set
forth in this Agreement, no representations or warranties
have been made or are made and no responsibility has been or
is assumed by Seller or by any partner, officer, person,
firm, agent or representative acting or purporting to act on
behalf of Seller as to any matters concerning the TIC
Interest or the Property, including, without limitation, the
condition or repair of the Property or the value, expense of
operation, or income potential thereof or as to any other
fact or condition which has or might affect the Property or
the condition, repair, value, expense of operation or income
potential of the Property or any portion thereof. The
parties agree that all understandings and agreements
heretofore made between them or their respective agents or
representatives are merged in this Agreement and the
Exhibits hereto annexed, which alone fully and completely
express their agreement, and that this Agreement has been
entered into after full investigation, or with the parties
satisfied with the opportunity afforded for full
investigation, Purchaser is not relying upon any statement
or representation by the other unless such statement or
representation is specifically embodied in this Agreement or
the Exhibits annexed hereto. Without limiting the
foregoing, Seller makes no representations or warranties as
to whether the Property contains asbestos or harmful or
toxic substances or pertaining to the extent, location or
nature of same. Further, to the extent that Seller has
provided to Purchaser information from any inspection,
engineering or environmental reports concerning asbestos or
harmful or toxic substances, Seller makes no representations
or warranties with respect to the accuracy or completeness,
methodology of preparation or otherwise concerning the
contents of such reports. Purchaser acknowledges that
Seller has requested Purchaser to inspect fully the Property
and investigate all matters relevant thereto and to rely
solely upon the results of Purchaser's own inspections or
other information obtained or otherwise available to
Purchaser, rather than any information that may have been
provided by Seller to Purchaser.
Without limiting the above, Purchaser on behalf of
itself and its successors and assigns waives and releases
Seller and its successors and assigns from any and all
demands, claims, legal or administrative proceedings,
losses, liabilities, damages, penalties, fines, liens,
judgments, costs or expenses whatsoever (including, without
limitation, attorneysO fees and costs), whether direct or
indirect, known or unknown, foreseen or unforeseen, arising
from or relating to the physical condition of the Property
or any law or regulation applicable thereto, including the
presence or alleged presence of asbestos or harmful or toxic
substances in, on, under or about the Property including,
without limitation, any claims under or on account of (i)
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as the same may have been or may be
amended from time to time, and similar state statutes, and
any regulations promulgated thereunder, (ii) any other
federal, state or local law, ordinance, rule or regulation,
now or hereafter in effect, that deals with or otherwise in
any manner relates to, environmental matters of any kind, or
(iii) this Agreement or the common law. Consequently,
Purchaser expressly waives all rights under California Civil
Code section 1542, which 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 of executing
the release, which if known by him must have
materially affected his settlement with the
debtor."
Purchaser
Initials /s/ JS
The terms and provisions of this paragraph shall survive
Closing hereunder.
2. Price and Payment
2.1 Purchase Price
The purchase price for the TIC Interest ("Purchase
Price") is Eight Million Nine Hundred Seventy Thousand
Dollars ($8,970,000).
2.2 Payment
Payment of the Purchase Price is to be made as follows:
1. (a) Within two (2) business days after the date of
this Agreement and the execution by HPP and Purchaser of the
HPP Agreement (as hereinafter defined), Purchaser shall make
an earnest money deposit of Eighty-Six Thousand Two Hundred
Fifty Dollars ($86,250) (the "Initial Deposit").
(b) On or before the Approval Date, and provided
Purchaser does not give the Termination Notice (as defined
in and pursuant to Section 3.7 hereof) on or before the
Approval Date, Purchaser shall deposit an additional Three
Hundred Forty-Five Thousand Dollars ($345,000) (the
"Additional Deposit). (The Initial Deposit and the
Additional Deposit, if made, are collectively referred to
herein as the "Deposit.")
(c) The Deposit, as installments of the same are paid,
will be placed and held in escrow (the "Escrow") by Chicago
Title Insurance Company ("Title Company") in an interest
bearing account at a mutually acceptable banking
institution. Any interest earned by the Deposit shall be
considered as part of the Deposit. Except as otherwise
provided in this Agreement, the Deposit will be applied to
the Purchase Price at Closing.
2. At Closing, the Purchaser shall pay Seller Eight
Million Nine Hundred Seventy Thousand Dollars ($8,970,000)],
inclusive of the Deposit , and subject to the prorations as
provided herein, to the Escrow via wire transfer in
immediately available funds.
2.3 Closing
Payment of the Purchase Price and the closing hereunder
("Closing") will take place pursuant to the Escrow closing
on or before the date that is fifteen (15) days after the
Approval Date, but in no event later than December 31, 1996
("Closing Date"), at the offices of the Title Company at
10:00 a.m. local time or at such other time and place as may
be agreed upon in writing by Seller and Purchaser.
3. Inspections and Approvals
3.1 Inspections
1. Seller agrees to allow Purchaser or Purchaser's agents
or representatives reasonable access to the Property (during
business hours) for purposes of any non-intrusive physical
or environmental inspection of the Property and review of
the Leases, expenses and other matters relating to the
Property, all at Purchaser's sole cost and expense.
Purchaser shall not conduct or intentionally allow any
physically intrusive testing of, on or under the Property
without first obtaining SellerOs written consent as to the
timing and scope of work to be performed and, upon request
of Seller, entering into an access agreement in a form
acceptable to Seller. Purchaser's breach of the foregoing
prohibition shall entitle Seller, at its option, immediately
and without the cure period provided in Section 11.6 hereof
to declare this Agreement to be terminated and to retain as
provided in Section 10.1 hereof the Deposit as liquidated
damages. For purposes of this Section 3.1.1, "physically
intrusive testing" means any testing which involves the
boring of or into the land or the improvements and/or the
removal, collection or obtaining of soils, building
materials or other physical samples from the land or the
improvements.
2. Purchaser agrees that, in making any non-intrusive
physical or environmental inspections of the Property,
Purchaser will carry not less than One Million Dollars
($1,000,000) comprehensive general liability insurance with
contractual liability endorsement which insures Purchaser's
indemnity obligations hereunder, and, upon request of
Seller, will provide Seller with written evidence of same,
will not interfere with the activity of tenants or any
persons occupying or providing service at the Property, will
not reveal the results of its inspections to any third party
not approved by Seller, except for Purchaser's advisors,
consultants, partners and lenders, and will restore promptly
any physical damage caused by the inspections. Purchaser
shall give Seller reasonable prior notice of its intention
to conduct any inspections, and Seller reserves the right to
have a representative present. Purchaser agrees to provide
Seller with a copy of any inspection report upon Seller's
written request, which agreement shall survive Closing;
provided, however, if the transaction does not close
hereunder for a reason other than a default by Purchaser ,
then Seller shall reimburse Purchaser for fifty percent
(50%) of the cost of any such report requested by Seller in
writing. Purchaser agrees (which agreement shall survive
Closing or termination of this Agreement) to indemnify,
defend, and hold Seller free and harmless from any loss,
injury, damage, claim, lien, cost or expense, including
attorney"s fees and costs (collectively, "Costs"), arising
out of a breach of the foregoing agreements by Purchaser in
connection with the inspection of the Property, or otherwise
from the exercise by Purchaser or its agents or
representatives of the right of access under this Section
3.1 (collectively, "Purchaser's Indemnity Obligations").
Any inspections shall be at Purchaser's expense.
3. Except as expressly provided in Section 5.1.5 below,
Seller makes no representations or warranties as to the
truth, accuracy or completeness of any materials, data or
other information supplied to Purchaser in connection with
Purchaser's inspection of the Property (e.g., that such
materials are complete, accurate or the final version
thereof, or that all such materials are in Seller's
possession). It is the parties' express understanding and
agreement that such materials are provided only for
Purchaser's convenience in making its own examination and
determination prior to the Approval Date, as hereinafter
defined, as to whether it wishes to purchase the TIC
Interest, and, in doing so, Purchaser shall rely exclusively
on its own independent investigation and evaluation of every
aspect of the Property and not on any materials supplied by
Seller. Purchaser expressly disclaims any intent to rely on
any such materials provided to it by Seller in connection
with its inspection and agrees that it shall rely solely on
its own independently developed or verified information.
3.2 Title and Survey
Within two (2) business days after the date of this
Agreement, Seller shall cause to be delivered to Purchaser a
preliminary title report for title insurance on the TIC
Interest or the TIC Interest in the Land, issued by Title
Company ("Title Report"), together with copies of all items
shown as exceptions to title therein. Purchaser shall have
until the date that is ten (10) days prior to the Approval
Date ("Interim Date") to provide written notice to Seller of
any matters shown by the Title Report which are not
satisfactory to Purchaser, which notice ("Title Notice")
must specify the reason such matter(s) are not satisfactory
and the curative steps necessary to remove the basis for
Purchaser's disapproval. The parties shall then have until
the Approval Date specified in Section 3.7 to make such
arrangements or take such steps as they shall mutually agree
to satisfy Purchaser's objection(s); provided, however, that
Seller shall have no obligation whatsoever to expend or
agree to expend any funds, to undertake or agree to
undertake any obligations or otherwise to cure or agree to
cure any title objections, and Seller shall not be deemed to
have any obligation to cure unless Seller expressly
undertakes such an obligation by a written notice to or
written agreement with Purchaser given or entered into on or
prior to the Approval Date and which recites that it is in
response to a Title Notice. Purchaser's sole right with
respect to any Title Report matter to which it objects in a
Title Notice given in a timely manner shall be to elect on
or before the Approval Date to terminate this Agreement
pursuant to Section 3.6 hereof. All matters shown in the
Title Report with respect to which Purchaser fails to give a
Title Notice on or before the last date for so doing, or
with respect to which a timely Title Notice is given but
Seller fails to undertake an express obligation to cure as
provided above, shall be deemed to be approved by Purchaser
as "Permitted Encumbrances" as provided in Section 3.4
hereof, subject, however, to Purchaser's termination right
provided in Section 3.7 hereof.
3.3 Contracts
On or before the Approval Date, Purchaser shall notify
Seller in writing if Purchaser elects not to assume at
Closing any of the service, maintenance, supply or other
contracts relating to the operation of the Property which
are identified on Exhibit 3.3 attached hereto. If Purchaser
does not exercise its right to terminate this Agreement on
or before the Approval Date, Seller shall give notice of
termination of such disapproved contract(s); provided, if by
the terms of the disapproved contract Seller has no right to
terminate same on or prior to Closing, or if any fee or
other compensation is due thereunder as a result of such
termination, Purchaser shall be required at Closing to
assume all obligations thereunder until the effective date
of the termination and to assume the obligation to pay or to
reimburse Seller for the payment of the termination related
charge.
3.4 Permitted Encumbrances
Unless Purchaser terminates this Agreement pursuant to
Section 3.7 hereof following its opportunity fully to
inspect the Property, the state of title thereto and all
other matters relating to the Property, including its
feasibility for Purchaser's intended use and its suitability
as an investment, Purchaser shall be deemed to have approved
and to have agreed to purchase the TIC Interest subject to
the following:
1. All exceptions to title shown in the Title Report or
matters shown on the Survey, if any, which Purchaser has
approved or is deemed to have approved pursuant to
Section 3.2 hereof;
2. All contracts and leases which Purchaser has approved
or is deemed to have approved pursuant to Sections 3.3, 4.3
and 4.4 hereof;
3. the lien of non-delinquent real and personal property
taxes and assessments;
4. rights of parties in possession not shown by the public
records;
5. discrepancies, conflicts in boundary lines, shortages
in area, encroachments, and any state of facts which an
inspection of the premises would disclose and which are not
shown by the public records;
6. easements or claims of easements not shown by the
public records;
7. any service, installation, connection, maintenance or
construction charges due after closing, and subject to the
proration provisions hereof, for sewer, water, electricity,
telephone, cable television or gas;
8. unrecorded leaseholds, rights of vendors and holders of
security interests on personal property installed upon the
Property by tenants and rights of tenants to remove trade
fixtures at the expiration of the term of the leases of
tenants; and
9. any matters created by or consented to in writing by
Purchaser.
All of the foregoing are referred to herein collectively as
"Permitted Encumbrances".
3.5 Survey
Purchaser shall have the right to obtain an ALTA survey
of the Land and Improvements ("Survey"), at Purchaser's sole
cost and expense, on or before the Approval Date. If
Purchaser disapproves the Survey, Purchaser shall have the
right to terminate the transaction by delivering a
Termination Notice to Seller pursuant to Section 3.7 below
on or before the Termination Date.
3.6 Due Diligence Documents
Prior to the date hereof, Seller has provided to
Purchaser copies of or otherwise made available to Purchaser
for review the documents described in Exhibit 3.6 hereto,
all to the extent such documents are in the possession of
Seller on the date of this Agreement (collectively, the "Due
Diligence Documents"). Purchaser shall have until the
Approval Date to review the Due Diligence Documents. If
Purchaser is not satisfied with the Due Diligence Documents,
it shall have the right to deliver a Termination Notice
pursuant to Section 3.7 below.
3.7 Purchaser's Right to Terminate
If Purchaser determines that the TIC Interest is not a
suitable investment for its purposes, Purchaser shall have
the right by giving Seller written notice ("Termination
Notice") on or before the date ("Approval Date") that is
thirty (30) days after the execution of this Agreement and
the HPP Agreement, but in no event later than December 20,
1996, to terminate its obligation to purchase the TIC
Interest. If the Termination Notice is timely given, Seller
shall direct the Title Company promptly to return the
Deposit to Purchaser and neither party shall have any
further liability hereunder except for Purchaser's Indemnity
Obligations and other obligations set forth in Section 3.1.2
and Purchaser's obligations set forth in Sections 3.8, 5.3
and 11.7 hereof.
3.8 Confidentiality
Unless Seller specifically and expressly otherwise
agrees in writing, Purchaser agrees that all information
regarding the TIC Interest or the Property of whatsoever
nature made available to it by Seller or Seller's agents or
representatives ("Proprietary Information") is confidential
and shall not be disclosed to any other person except those
assisting Purchaser with the transaction, or PurchaserOs
investors or lender, if any, and then only upon Purchaser
making such person aware of the confidentiality restriction
and procuring such person's agreement to be bound thereby.
In the event the purchase and sale contemplated hereby fails
to close for any reason whatsoever, Purchaser agrees to
return to Seller, or cause to be returned to Seller all
Proprietary Information. Further, Purchaser agrees not to
use or allow to be used any Proprietary Information for any
purpose other than to determine whether to proceed with the
contemplated purchase, or if same is consummated, in
connection with the operation of the Property post-Closing.
Notwithstanding any other term of this Agreement, the
provisions of this SectionE3.8 shall survive Closing or the
termination of this Agreement.
4. Prior to Closing
From and after the date of this Agreement and until
Closing, Seller shall cause the Partnership or Tenants-In-
Common to:
4.1 Insurance
Keep the Property insured against fire and other hazards
covered by extended coverage endorsement and comprehensive
public liability insurance against claims for bodily injury,
death and property damage occurring in, on or about the
Property, with coverage amounts under such policies not less
than the coverages in effect on the date of this Agreement.
4.2 Operation
Operate and maintain the Property in a businesslike
manner and substantially in accordance with the
Partnership's or the Tenants-In-Common's past practices with
respect to the Property, and make any and all repairs and
replacements reasonably required to cause the Property to be
at closing in its present condition, normal wear and tear
excepted, provided that in the event of any loss or damage
to the Property as described in Section 7, Seller shall have
an obligation to Purchaser to cause the Partnership or the
Tenants-In-Common to repair the Property only if Seller so
elects and then shall be obligated only to the extent of
available insurance proceeds.
4.3 New Contracts
Not enter into any third party service or maintenance
contracts without the written consent of Purchaser, which
consent shall not be unreasonably withheld, conditioned or
delayed. Failure of Purchaser to consent or expressly
withhold its consent stating with specificity the basis of
its objection within two (2) business days after written
request for such consent shall be deemed to constitute
consent.
4.4 New Leases
Subject to the rights of Purchaser under Section 4.5
below, continue its present rental program and efforts at
the Property to rent vacant space, provided that (i) prior
to the Approval Date, Seller or HPP will give Purchaser
immediate notice of any new leases or lease amendments
entered into by the Partnership or the Tenants-In-Common or
any subleases approved by the Partnership or the Tenants-In-
Common, together with copies of the underlying lease or
sublease documents, (ii) on and after the Approval Date,
neither the Partnership nor the Tenants-In-Common will
execute any new leases or amend, terminate or accept the
surrender of any existing tenancies or approve any subleases
without the prior written consent of Purchaser, which
consent shall not be unreasonably withheld, conditioned or
delayed, except that the Partnership and the Tenants-In-
Common are authorized to accept the termination of leases at
the end of their existing terms; and (iii) in the event that
the Partnership or the Tenants-In-Common execute any new
lease after the date of this Agreement which requires the
construction of tenant fixtures or improvements or the
payment of leasing or brokerage commission(s) at the expense
of the landlord, Purchaser, by electing to proceed with the
purchase notwithstanding its termination right pursuant to
Section 3.7, or by approving such lease if executed after
the Approval Date, agrees to assume the obligation to pay
and/or at Closing to reimburse Seller for Seller's Allocable
Percentage of the paid portion of the cost of such
improvements and leasing or brokerage commission(s) and any
other costs associated with such Lease unless Seller and
Purchaser expressly agree in writing that Seller shall be
responsible for any such costs. Failure of Purchaser to
consent or expressly withhold its consent stating with
specificity the basis of its objection within two (2)
business days after written request for such consent shall
be deemed to constitute consent.
4.5 Prospective Leases
From and after the Approval Date through the Closing or
the earlier termination of this Agreement, Purchaser shall
have the right to retain a leasing broker for the Property
approved by Seller (the "Leasing Broker"), such approval not
to be unreasonably withheld, and to cause such Leasing
Broker to market the Property to prospective tenants;
provided, however, that Purchaser shall cause the Leasing
Broker to disclose to each prospective tenant in writing
that Purchaser is not the owner of the Property and that the
effectiveness of any lease negotiated by Purchaser (a
"Prospective Lease") shall be conditioned upon the
acquisition of the TIC Interest by Purchaser in accordance
with this Agreement. Purchaser have no right or authority
to execute any Prospective Lease or to otherwise bind the
Property and all Prospective Leases and other agreements
shall be executed, if at all, by Seller. Seller shall have
the right to approve the terms and conditions of all
Prospective Leases prior to executing the same. Purchaser
acknowledges that if it requests Seller to execute any
Prospective Lease pursuant to this Section 4.5, then
Purchaser shall be deemed to have approved such lease for
all purposes of Section 4.4 above. Purchaser shall
indemnify, defend, and hold Seller free and harmless from
any Costs arising in connection with the exercise of
Purchaser's rights under this Section 4.5, including,
without limitation, any Costs arising out of claims by
prospective tenants, real estate brokers or leasing agents
(including, without limitation, any claim to a brokerage
commission or finders' fee by any real estate broker or
leasing agent). The foregoing indemnity shall survive
beyond the Closing or, if the sale is not consummated,
beyond the termination of this Agreement.
4.6 Liens and Encumbrances
Not voluntarily create any liens, encumbrances or
easements against the Property without the prior written
consent of Purchaser, except for liens or encumbrances which
will be discharged prior to Closing.
5. Representations and Warranties
5.1 By Seller
Seller represents and warrants to Purchaser that:
1. Seller is a corporation duly organized under the
laws of the State of Delaware, has duly authorized the
execution and performance of this Agreement, and such
execution and performance will not violate any material term
of its certificate of incorporation or bylaws.
2. This Agreement is the valid and binding obligation
of Seller.
3. To the actual knowledge of Seller, Seller has not
received, within the twelve (12) month period prior to the
date hereof (the "Operative Period"), written notice from
any governmental authority having jurisdiction over the
Property that the Property is in violation of any laws,
ordinances or regulations of such governmental authority.
4. To the actual knowledge of Seller, Seller has not
received, during the Operative Period, written notice from
any governmental authority having jurisdiction over the
Property of any pending or threatened condemnation actions
with respect to the Property.
5. To the actual knowledge of Seller, the rent roll
and operating statements prepared by Seller and delivered to
Purchaser pursuant to Section 3.6 above are accurate and
complete in all material respects.
5.2 By Purchaser
Purchaser represents and warrants to Seller that:
1. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of
California, is authorized to do business in the State of
California, has duly authorized the execution and
performance of this Agreement, and such execution and
performance will not violate any material term of its
certificate of incorporation or bylaws.
2. Purchaser is acting as principal in this transaction
with authority to close the transaction.
3. No petition in bankruptcy (voluntary or otherwise),
assignment for the benefit of creditors, or petition seeking
reorganization or arrangement or other action under Federal
or State bankruptcy laws is pending against or contemplated
by Purchaser.
4. By the Approval Date, Purchaser will have inspected the
Property fully and completely at its expense and will have
ascertained to its satisfaction the extent to which the
Property complies with applicable zoning, building,
environmental, health and safety and all other laws, codes
and regulations.
5. By the Approval Date, Purchaser will have reviewed the
Leases, contracts, expenses and other matters relating to
the Property and, based upon its own investigations,
inspections, tests and studies, will have determined whether
to purchase the TIC Interest and to assume SellerOs
obligations with respect to the Property arising after the
Closing Date under the leases, contracts and otherwise with
respect to the Property.
6. Purchaser is a corporation domesticated in the United
States of America.
7. Purchaser will not use the assets of an employee
benefit plan as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
and covered under Title I, Part 4 of ERISA or Section 4975
of the Internal Revenue Code of 1986, as amended, in the
performance or discharge of its obligations hereunder,
including the acquisition of the TIC Interest. Purchaser
shall not assign its interest hereunder to any person or
entity which does not expressly make this covenant and
warranty for the benefit of Seller.
5.3 Mutual
Each of Seller and Purchaser represents to the other
that it has had no dealings, negotiations, or consultations
with any broker, representative, employee, agent or other
intermediary, except Union Property Capital (Broker), in
connection with the Agreement or the sale of the TIC
Interest. Purchaser will be responsible for any commission,
fee or other compensation, if any, payable upon Closing to
Broker pursuant to the terms of a separate written agreement
between Purchaser and Broker. Seller and Purchaser agree
that each will indemnify, defend and hold the other free and
harmless from the claims of any other broker(s),
representatives, employees, agent(s) or other
intermediary(ies) claiming to have represented Seller or
Purchaser, respectively, or otherwise to be entitled to
compensation in connection with this Agreement or in
connection with the sale of the TIC Interest. Purchaser
will indemnify, defend and hold Seller free and harmless
from any and all losses, liabilities, claims, and expenses
(including reasonable attorneys fees) arising out of any
claims of Broker for compensation in connection with the
sale of the TIC Interest. The provisions of this
Section 5.3 shall survive Closing and the termination of
this Agreement.
6. Costs and Prorations
6.1 Purchaser's Costs
Purchaser will pay the following costs of closing this
transaction:
1. The fees and disbursements of its counsel, inspecting
architect and engineer, if any;
2. One-half (1/2) of any escrow fees and recording fees;
3. One-half (1/2) of any sales or use taxes relating to
the transfer of Seller's interest in the Personal Property
to Purchaser;
4. One-half (1/2) of any real estate transfer, stamp or
documentary taxes;
5. One-half (1/2) of the cost of an owner's title
insurance policy without extended coverage or special
endorsements, issued in connection with this transaction;
6. The cost of any title insurance in excess of the costs
of an owner's policy without extended coverage or special
endorsements, including any charge(s) for endorsements
and/or deletions of exception items, and any escrow or title
cancellation fees imposed by any title company in the event
the escrow is canceled;
7. The broker's fee payable to Broker; and
8. Any other expense(s) incurred by Purchaser or its
representatives in inspecting or evaluating the Property or
closing this transaction.
6.2 Seller's Costs
Seller will pay:
1. The fees and disbursements of Seller's counsel;
2. One-half (1/2) of any escrow fees and recording fees;
3. One-half (1/2) of any sales or use taxes relating to
the transfer of Seller's interest in the Personal Property
to Purchaser;
4. One-half (1/2) of any real estate transfer, stamp or
documentary taxes; and
5. One-half (1/2) of the cost of an owner's title
insurance policy without extended coverage or special
endorsements, issued in connection with this transaction.
6.3 Prorations
Seller's Allocable Percentage of the rents and any other
amounts payable by tenants, personal property taxes,
installment payments of special assessment liens, vault
charges, sewer charges, utility charges and normally
prorated operating expenses actually collected or paid as of
the Closing Date shall be prorated as of the Closing Date
and be adjusted against the Purchase Price due at the
Closing, provided that within one hundred twenty (120) days
after the Closing, Purchaser and Seller will make a further
adjustment for such rents, taxes or charges which may have
accrued or been incurred prior to the Closing Date, but not
collected or paid at that date. All prorations shall be
made on a 360-day calendar year basis, thirty (30) days to
the month.
6.4 Taxes
Seller's Allocable Percentage of general real estate
taxes and special assessments relating to the Property
payable during the year in which Closing occurs shall be
prorated as of the Closing Date. If closing shall occur
before the actual taxes and special assessments payable
during such year are known, the apportionment of taxes shall
be upon the basis of taxes for the Property payable during
the immediately preceding year, provided that, if the taxes
and special assessments payable during the year in which
closing occurs are thereafter determined to be more or less
than the taxes payable during the preceding year (after any
appeal of the assessed valuation thereof is concluded),
Seller and Purchaser promptly (but no later than
December 31, 1996 except in the case of an ongoing tax
protest) shall adjust the proration of such taxes and
special assessments and Seller or Purchaser, as the case may
be, shall pay to the other Seller's Allocable Percentage of
any amount required as a result of such adjustment and this
covenant shall not merge with the deed delivered hereunder
but shall survive the Closing.
6.5 In General
Any other costs or charges of closing this transaction
not specifically mentioned in this Agreement shall be paid
and adjusted in accordance with local custom in LosEAngeles
County, California.
6.6 Purpose and Intent
Except as expressly provided herein, the purpose and
intent as to the provisions of prorations and apportionments
set forth in this Section 6 and elsewhere in this Agreement
is that Seller shall bear Seller's Allocable Percentage of
the expenses of ownership and operation of the Property and
shall receive Seller's Allocable Percentage of the income
therefrom accruing through midnight at the end of the day
preceding the Closing and Purchaser shall bear all such
expenses and receive all such income accruing thereafter.
7. Damage, Destruction or Condemnation
7.1 Material Event
If, after the Approval Date but prior to Closing,
fifteen percent (15%) or more of the net rentable area of
the building(s) or of the parking spaces on the Property or
all access to the Property are rendered completely
untenantable, or are destroyed or taken under power of
eminent domain, Purchaser may elect to terminate this
Agreement by giving written notice of its election to Seller
within fourteen (14) days after receiving notice of such
destruction or taking. If Purchaser does not give such
written notice within such fourteen (14) day period, this
transaction shall be consummated on the date and at the
Purchase Price provided for in Section 2, and Seller will
assign to Purchaser Seller's Allocable Percentage of the
physical damage proceeds of any insurance policy(ies) or
condemnation awards payable to the Partnership or the
Tenants-In-Common as a result of any such damage or
destruction or condemnation up to the amount of the Purchase
Price (the "Seller's Proceeds").
7.2 Immaterial Event
If, after the Approval Date but prior to Closing, less
than fifteen percent (15%) of the net rentable area of the
buildings or of the parking spaces on the Property are
rendered completely untenantable or are destroyed, or are
taken under power of eminent domain, Purchaser shall close
this transaction on the date and at the Purchase Price
agreed upon in Section 2, and Seller will assign to
Purchaser the Seller's Proceeds.
7.3 Termination and Return of Deposit
If either party elects to terminate this Agreement
pursuant to this Section 7, and if Purchaser is not, on the
date of such election, in default under the Agreement,
Seller shall promptly direct the Title Company to return the
Deposit to Purchaser.
8. Notices
Any notice required or permitted to be given hereunder
shall be deemed to be given when hand delivered or one (1)
business day after pickup by Emery Air Freight, Airborne,
Federal Express, or similar overnight express service, in
either case addressed to the parties at their respective
addresses referenced below:
If to Seller: Haptel, Inc.
c/o OOConnor Realty Advisors, Inc.
525 Market Street, Suite 1420
San Francisco, California 94105
Attention: Jerry L. Davidson
With a copy to: Morrison & Foerster
345 California Street
SanEFrancisco, California 94104
Attention: Peter Aitelli, Esq.
If to Purchaser: Fidelity Partners, Inc.
744 Montgomery Street
Suite 200
San Francisco, California 94111
Attention: Joseph L. Sherman
With a copy to: Freed & Heinemann
633 Battery Street
Suite 620
San Francisco, California 94111
or in each case to such other address as either party may
from time to time designate by giving notice in writing to
the other party.
9. Closing and Escrow
9.1 Escrow Instructions
Upon execution of this Agreement, the parties shall
deliver an executed counterpart of this Agreement to the
Title Company to serve as the instructions to the Title
Company as the escrow holder for consummation of the
transaction contemplated herein. Seller and Purchaser agree
to execute such additional and supplementary escrow
instructions as may be appropriate to enable the Title
Company to comply with the terms of this Agreement,
provided, however that in the event of any conflict between
the provisions of this Agreement and any supplementary
escrow instructions, the terms of this Agreement shall
prevail.
9.2 Seller's Deliveries
Seller shall deliver either at the Closing or by making
available at the Property, as appropriate, the following
original documents, each, executed and, if required,
acknowledged:
1. A grant deed to convey the TIC Interest, in the form
attached hereto as Exhibit 9.2.1, subject to the matters set
out in Section 3.4 and other matters subsequently approved
by Purchaser or Purchaser's counsel.
2. A bill of sale in the form attached hereto as Exhibit
9.2.2 conveying Seller's interest in the Personal Property.
3. (i) The Leases described in Section 1.1.5 which are
still in effect as of Closing and any new leases entered
into pursuant to Section 4.4; (ii) a current listing of any
tenant security deposits and prepaid rents held by the
Partnership or the Tenants-In-Common with respect to the
Property; and (iii) an assignment of SellerOs interest in
such leases, deposits, and prepaid rents by way of an
assignment and assumption agreement in the form attached
hereto as Exhibit 9.2.3.
4. (i) Copies of all contracts relating to the Property
which Purchaser has elected to assume or which are not
terminable by the Partnership or the Tenants-In-Common on or
before the Closing Date; and (ii) an assignment of Seller's
interest in such contracts to Purchaser by way of an
assumption agreement, in the form attached hereto as Exhibit
9.2.4.
5. An assignment of Seller's interest in and to all
transferable warranties and guarantees then in effect, if
any, with respect to the improvements located on the
Property or any repairs or renovations to such improvements
and Personal Property being conveyed hereunder, which
assignment is in the form attached hereto as Exhibit 9.2.5.
6. All books and records at the Property held by or for
the account of the Partnership or the Tenants-In-Common,
including without limitation, plans and specifications and
lease applications, as available.
7. An affidavit pursuant to the Foreign Investment and
Real Property Tax Act in the form attached hereto as Exhibit
9.2.7.
8. A California Franchise Tax Board Form 590-RE.
9.3 Purchaser's Deliveries
At the closing, Purchaser shall (i) pay Seller the
Purchase Price, subject to adjustment for the prorations as
provided herein; (ii) execute the agreements referred to in
Sections 9.2.3(iii) and 9.2.4(ii) and the ERISA certificate
attached hereto as Exhibit 9.3; and (iii) execute and
deliver to Seller a corporation authorization and incumbency
certificate in form and substance satisfactory to Seller and
SellerOs counsel.
9.4 (Intentionally Deleted)
9.5 Insurance
Seller shall terminate all policies of insurance
maintained by the Partnership or the Tenants-In-Common as of
noon on the Closing Date and Purchaser shall be responsible
for obtaining its own insurance thereafter.
9.6 Utility Service and Deposits
Seller shall be entitled to the return of Seller's
Allocable Percentage of any deposit(s) posted by the
Partnership or the Tenants-In-Common with any utility
company and Seller shall notify each utility company serving
the Property to terminate Seller's accounts of the
Partnership or the Tenants-In-Common, effective at noon on
the Closing Date.
9.7 Notice Letters
Within thirty (30) days after the Closing, Seller shall
provide to Purchaser copies of form letters to contractors
and utility companies serving the Property and tenants of
the Property, advising them of the sale of the TIC Interest
to Purchaser.
9.8 Post-Closing Collections
Purchaser shall use its best efforts following Closing
to collect and promptly remit to Seller Seller's Allocable
Percentage of the rents or other amounts due Seller for the
period prior to Closing. Purchaser shall apply such rents
or other amounts received, first for the account of
Purchaser to pay reasonable collection costs and for amounts
currently due to Purchaser; second, to Seller for any and
all amounts due to Seller for periods prior to Closing; and
the balance to be retained by Purchaser. Notwithstanding
the foregoing, Seller reserves the right after Closing to
proceed against any present or former tenants of the
Property for rents, additional charges or other sums due
from such tenants attributable to the period prior to the
Closing Date.
9.9 Reporting Requirements
Purchaser and Seller shall each deposit such other
instruments as are reasonably required by Title Company or
otherwise required to close the escrow and consummate the
purchase and sale of the TIC Interest in accordance with the
terms hereof, including, without limitation, an agreement
designating Title Company as the "Reporting Person" for the
transaction pursuant to Section 6045(e) of the Internal
Revenue Code and the regulations promulgated thereunder, and
executed by Seller, Purchaser and Title Company, in the form
attached hereto as Exhibit 9.9. Such agreement shall comply
with the requirements of Section 6045(e) of the Internal
Revenue Code and the regulations promulgated thereunder.
10. Default; Failure of Condition
10.1 Purchaser Default
If Purchaser shall become in breach of or default under
this Agreement and the breach or default continues beyond
the expiration of the cure period, if any, provided in
Section 11.6 hereof, the Deposit shall be retained by Seller
as liquidated damages, and both parties shall be relieved of
and released from any further liability hereunder except for
Purchaser's indemnity obligations and other obligations set
forth in Section 3.1.2 and Purchaser's obligations set forth
in Sections 3.8, 5.3 and 11.7 hereof. Seller and Purchaser
agree that the Deposit is a fair and reasonable amount to be
retained by Seller as agreed and liquidated damages in light
of Seller's removal of the TIC Interest from the market and
the costs incurred by Seller and shall not constitute a
penalty or a forfeiture.
Purchaser Seller
Initials /s/ JS /s/ JLD
10.2 Seller Default
If Seller shall refuse or fail to convey the TIC
Interest as herein provided for any reason other than (i) a
default by Purchaser and the expiration of the cure period,
if any, provided under Section 11.6 hereof, (ii) the
existence of a pending default (as defined in and
contemplated by Section 11.6) of Purchaser, or (iii) any
other provision of this Agreement which permits Seller to
terminate this Agreement or otherwise relieves Seller of the
obligation to convey the TIC Interest, Purchaser shall elect
as its sole remedy hereunder either to terminate the
Agreement and recover the Deposit plus an amount equal to
Purchaser's actual out-of-pocket costs in conducting its due
diligence investigations hereunder, not to exceed the sum of
Fifty Thousand Dollars ($50,000), or to enforce the Seller's
obligations to convey the TIC Interest, provided that no
such action in specific performance shall seek to require
the Seller to do any of the following: (a) change the
condition of the Property or restore the same after any fire
or other casualty; (b) subject to Section 10.3, below,
expend money or post a bond to remove a title encumbrance or
defect or correct any matter shown on a survey of the
Property; or (c) secure any permit, approval, or consent
with respect to the Property or Seller's conveyance of the
Tic Interest.
Purchaser Seller
Initials /s/ JS /s/ JLD
10.3 Failure of Condition
If prior to Closing Seller discloses to Purchaser or
Purchaser discovers that (i) title to the TIC Interest is
subject to defects, limitations or encumbrances other than
Permitted Encumbrances, or (ii) any representation or
warranty of Seller contained in this Agreement is or, as of
the Closing Date, will be untrue, then Purchaser shall
promptly give Seller written notice of its objection
thereto. In such event, Seller may elect to postpone the
Closing for thirty (30) days and attempt to cure such
objection, provided that Purchaser may not object to the
state of title of the TIC Interest on the basis of matters
set out in Section 3.4 above. The parties acknowledge and
agree that Seller shall have no obligation to cure any
objection. If Purchaser fails to waive the objection within
ten (10) days after notice from Seller that Seller will not
cure the objection, this Agreement will terminate
automatically and Seller shall promptly direct the Title
Company to return the Deposit to Purchaser, provided that
Purchaser shall not be in default hereunder, and neither
party shall have any liability to the other except for
PurchaserOs Indemnity Obligations and other obligations set
forth in SectionE3.1.2 and PurchaserOs obligations set forth
in Sections 3.8, 5.3 and 11.7 hereof. For the purposes of
this Agreement, any title defect, limitation or encumbrance
other than a Permitted Encumbrance shall be deemed cured if
a title company reasonably acceptable to Purchaser and
authorized to do business in the State of California will
agree to issue an owner's title insurance policy to
Purchaser for the Purchase Price, which policy takes no
exception for such defect, limitation or encumbrance and is
issued for no additional premium or for an additional
premium if Seller agrees to pay such additional premium upon
Closing.
11. Miscellaneous
11.1 Entire Agreement
This Agreement, together with the Exhibits attached
hereto, all of which are incorporated by reference, is the
entire agreement between the parties with respect to the
subject matter hereof, and no alteration, modification or
interpretation hereof shall be binding unless in writing and
signed by both parties.
11.2 Severability
If any provision of this Agreement or application to any
party or circumstances shall be determined by any court of
competent jurisdiction to be invalid and unenforceable to
any extent, the remainder of this Agreement or the
application of such provision to such person or
circumstances, other than those as to which it is so
determined invalid or unenforceable, shall not be affected
thereby, and each provision hereof shall be valid and shall
be enforced to the fullest extent permitted by law.
11.3 Applicable Law
This Agreement shall be construed and enforced in
accordance with the laws of the State of California.
11.4 Assignability
Purchaser may not assign this Agreement without first
obtaining Seller's written consent; provided, however, that
Purchaser shall be entitled to assign this Agreement at any
time without Seller's consent to a partnership or limited
liability company in which Purchaser or a partnership or
limited liability company controlled by Purchaser is the
managing general partner or manager, as appropriate; and,
provided further, that Purchaser shall be entitled to freely
assign this Agreement without Seller's consent after the
Approval Date and the delivery of the Additional Deposit to
Title Company. Any assignment in contravention of this
provision shall be void. No assignment shall release the
Purchaser herein named from any obligation or liability
under this Agreement. Any permitted assignee shall be
deemed to have made any and all representations and
warranties made by Purchaser hereunder, as if the assignee
were the original signatory hereto.
11.5 Successors Bound
Subject to Section 11.4 above, this Agreement shall be
binding upon and inure to the benefit of Purchaser and
Seller and their successors and permitted assigns.
11.6 Breach
Should either party be in breach of or default under or
otherwise fail to comply with any of the terms of this
Agreement, except as otherwise provided in this Agreement,
the complying party shall have the option to cancel this
Agreement upon ten (10) days written notice to the other
party of the alleged breach and failure by such other party
to cure such breach within such ten (10) day period. The
non-defaulting party shall promptly notify the defaulting
party in writing of any alleged default upon obtaining
knowledge thereof. The Closing Date shall be extended to
the extent necessary to afford the defaulting party the full
ten-day period within which to cure such default; provided,
however, that the failure or refusal by a party to perform
on the scheduled Closing Date (except in respect of a
Pending Default by the other party) shall be deemed to be an
immediate default without the necessity of notice; and
provided further, that if the Closing Date shall have been
once extended as a result of default by a party, such party
shall be not be entitled to any further notice or cure
rights with respect to that or any other default. For
purposes of this SectionE11.6, a OPending DefaultO shall be
a default for which (i) written notice was given by the non-
defaulting party, and (ii) the cure period extends beyond
the scheduled Closing Date.
11.7 No Public Disclosure
Purchaser shall make no public disclosure of the terms
of this transaction without the prior written consent of
Seller, except that Purchaser may discuss the transaction in
confidence with Purchaser's advisors, consultants, partners
and lenders and with the Leasing Broker.
11.8 Captions
The captions in this Agreement are inserted only as a
matter of convenience and for reference and in no way
define, limit or describe the scope of this Agreement or the
scope or content of any of it provisions.
11.9 Attorneys' Fees
If either party hereto fails to perform any of its
obligations under this Agreement or if any dispute arises
between the parties hereto concerning the meaning or
interpretation of any provision of this Agreement, then the
defaulting party or the party not prevailing in such
dispute, as the case may be, shall pay any and all costs and
expenses incurred by the other party on account of such
default and/or in enforcing or establishing its rights
hereunder, including, without limitation, court costs and
reasonable attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party
in enforcing a judgment in its favor under this Agreement
shall be recoverable separately from and in addition to any
other amount included in such judgment, and such attorneysO
fees obligation is intended to be severable from the other
provisions of this Agreement and to survive and not be
merged into any such judgment.
11.10 No Partnership
Nothing contained in this Agreement shall be construed
to create a partnership or joint venture between the parties
or their successors in interest.
11.11 Time of Essence
Time is of the essence in this Agreement.
11.12 Counterparts
This Agreement may be executed and delivered in any
number of counterparts, each of which so executed and
delivered shall be deemed to be an original and all of which
shall constitute one and the same instrument.
11.13 Recordation
Purchaser and Seller agree not to record this Agreement
or any memorandum hereof.
11.14 Proper Execution
The submission by Seller to Purchaser of this Agreement
in unsigned form shall be deemed to be a submission solely
for Purchaser's consideration and not for acceptance and
execution. Such submission shall have no binding force and
effect, shall not constitute an option, and shall not confer
any rights upon Purchaser or impose any obligations upon
Seller irrespective of any reliance thereon, change of
position or partial performance. The submission by Seller
of this Agreement for execution by Purchaser and the actual
execution and delivery thereof by Purchaser to Seller shall
similarly have no binding force and effect on Seller unless
and until Seller shall have executed this Agreement and the
Initial Deposit shall have been received by the Title
Company and a counterpart thereof shall have been delivered
to Purchaser.
11.15 Tax Protest
If as a result of any tax protest or otherwise any
refund or reduction of any real property or other tax or
assessment relating to the Property during the period for
which, under the terms of this Agreement, Seller is
responsible, Seller shall be entitled to receive or retain
Seller's Allocable Percentage of such refund or the benefit
of such reduction, less equitable prorated costs of
collection.
11.16 No Merger
The obligations contained herein shall not merge with
the transfer of title to the TIC Interest but shall remain
in effect until fulfilled.
11.17 Actual Knowledge
Whenever a representation or warranty is made in this
Agreement on the basis of the actual knowledge of Seller,
such representation and warranty is made with the exclusion
of any facts disclosed to or otherwise known by Purchaser,
and is made solely on the basis of the actual, as
distinguished from implied, imputed and constructive,
knowledge on the date that such representation or warranty
is made, without inquiry or investigation or duty, of
Jerry L. Davidson ("Davidson"), the officer of O'Connor
Realty Advisors, Inc. with day to day responsibility for the
operation of the Property, without attribution to Davidson
of facts and matters otherwise within the personal knowledge
of any other officers or employees of Seller or third
parties, including but not limited to tenants and the
property manager of the Property.
11.18 Survival and Limitation of Representations and Warranties
The representations and warranties set forth in
Section 5.1 shall survive the Closing but written
notification of any claim arising therefrom must be received
by Seller within nine (9) months of the Closing Date or such
claim shall be forever barred and Seller shall have no
liability with respect thereto.
11.19 Limited Liability
The obligations of Seller are intended to be binding
only on the TIC Interest prior to Closing and on the
proceeds of the sale of the TIC Interest after the Closing,
and shall not be personally binding upon, nor shall any
resort be had to, Seller or the private properties of any of
its partners, trustees, officers, directors or shareholders
(except for private properties acquired after the Closing
with the proceeds of the sale of the TIC Interest).
11.20 Execution of HPP Agreement
Promptly after the execution of this Agreement,
Purchaser shall attempt to negotiate the terms of a purchase
and sale agreement with HPP (the "HPP Agreement") pursuant
to which Purchaser shall acquire the tenancy-in-common
interest of HPP in the Property. If for any reason
Purchaser and HPP fail to enter into the HPP Agreement on or
before December 1, 1996, then Seller and Purchaser shall
each have the right to terminate this Agreement by written
notice to the other party, which notice shall be given, if
at all, not later than December 5, 1996.
11.21 Time to Execute and Deliver
This Agreement shall be void if one fully executed copy
is not received by Seller on or before 5:00 p.m. California
time on November 20, 1996. Seller will accept an executed
signature page transmitted by facsimile within the time
period set forth above; provided that this Agreement will be
void unless Seller receives one fully executed original
within one business day thereafter.
In Witness Whereof, Purchaser and Seller have executed
this Agreement on the date set forth below, effective as of
the date set forth above.
Seller: Haptel, Inc.,
a Delaware corporation
By: /s/ Jerry L. Davidson
Name: Jerry L. Davidson
Title: Vice President
Purchaser: Fidelity Partners, Inc.
a California corporation
By: /s/ Joseph L. Sherman
Joseph Sherman
President
The Company hereby agrees to furnish supplementally the
omitted exhibits and schedules to the Commission upon
request.
Arden Realty Limited Partnership
c/o Arden Realty, Inc.
9100 Wilshire Boulevard, Suite 700-E
Los Angeles, California 90212
December 5, 1996
Fidelity Partners, Inc.
744 Montgomery Street, Suite 200
San Francisco, California 94111
Attn: Joseph Sherman
Re: Offer to Purchase Rights under Purchase
Agreement for Acquisition of Co-Tenancy
Interest in Union Bank Center, located
at 5200 West Century Boulevard, Los
Angeles, California
Gentlemen:
By this letter, Arden Realty Limited Partnership,
a Maryland limited partnership ("Buyer") offers to purchase
from Fidelity Partners, Inc., a California corporation
("Seller"), (i) all of Seller's right, title and interest
(the "Haptel Purchase Rights") under that certain Agreement
of Purchase and Sale of Tenancy-in-Common Interest dated
November 15, 1996 between Haptel, Inc., a Delaware
corporation ("Owner"), as seller, and Seller, as buyer (the
"Agreement"), pursuant to which Seller has the right to
purchase Owner's co-tenancy interest in the Property, and
(ii) all of Seller's right, title and interest (the "HPP
Purchase Rights") under the HPP Agreement (defined in
paragraph 5(b) below) (collectively, the "Purchase Rights").
Unless defined herein, all capitalized terms used herein
shall have the meanings given to them in the Agreement or in
the HPP Agreement.
Buyer offers to purchase the Purchase Rights on
the following terms and conditions:
1. Purchase Price of Purchase Rights.
$650,000.00. Such purchase price shall be paid in two (2)
installments as follows: $150,000 of the purchase price
shall be paid upon the Closing (as defined in the Agreement
and the HPP Agreement) and $500,000 of the purchase price
shall be paid on January 2, 1997.
2. Deposits Under Agreement.
(a) Concurrently with the mutual execution
and delivery of this letter agreement, and in addition to
Buyer's obligation under Paragraph 1 above, Buyer agrees to
deposit an amount equal to $86,250.00 (the "Initial
Deposit") in escrow with the Title Company, which amount
shall constitute the "Initial Deposit" under the Agreement
and the HPP Agreement. Such deposit shall be fully
refundable to Buyer in the event the conditions set forth
under Paragraph 4 below are not satisfied or in the event
Seller fails to perform its obligations under this letter
agreement. In this regard, Seller agrees (i) concurrently
with the mutual execution and delivery of this letter
agreement, to direct the Title Company in writing that any
return of the Initial Deposit shall be delivered to Buyer,
and not to Seller, and (ii) upon receipt by Seller of
written notice from Buyer that any of the conditions set
forth in Paragraph 4 below have not been satisfied and that
Buyer terminates this letter agreement, to immediately
instruct the Title Company to refund the Initial Deposit to
Buyer.
(b) In the event the condition set forth in
Paragraph 4(a) below is satisfied, Buyer agrees to deposit
an amount equal to Three Hundred Forty-Five Thousand Dollars
($345,000) (the "Additional Deposit") in escrow with the
Title Company, which amount shall constitute the "Additional
Deposit" under the Agreement and the HPP Agreement. The
Initial Deposit and the Additional Deposit are collectively
referred to as the "Deposit". Such Deposit shall be fully
refundable to Buyer in the event the conditions set forth in
Paragraphs 4(b) or 4(c) below are not satisfied or in the
event Seller fails to perform its obligations under this
Agreement. In this regard, Seller agrees (i) concurrently
with the delivery of the Additional Deposit, to direct the
Title Company in writing that any return of the Additional
Deposit shall be delivered to Buyer, and not to Seller, and
(ii) upon receipt by Seller of written notice from Buyer
that any of the conditions set forth in Paragraph 4(b) or
4(c) below have not been satisfied and that Buyer terminates
this letter agreement, to immediately instruct the Title
Company to refund the Deposit to Buyer. Provided that
Seller complies with its obligations under the immediately
preceding sentence, Seller shall have no additional
liability to Buyer as a result of the Title Company's
failure to comply with such directions.
3. Transfer. Title to the Purchase Rights shall
be assigned to Buyer on the Transfer Date (defined below)
free and clear of all liens, encumbrances and prior
assignments. Such transfer shall be effectuated by the
mutual execution and delivery by Buyer and Seller of
Assignment Agreements, in the respective forms attached
hereto as Exhibits "A-1" and "A-2". The "Transfer Date"
shall be the Approval Date, provided that the conditions set
forth in Paragraph 4(a) below have been satisfied or waived
by Buyer, and provided that in no event shall the Transfer
Date occur prior to the Approval Date.
4. Buyer Conditions. Buyer's obligations to
purchase the Purchase Rights shall be conditioned upon the
following:
(a) Buyer's approval (in its sole and
absolute discretion) in writing on or before the date which
is one (1) day before the Approval Date of the condition of
and all other matters relating to the Property, as well as
all of the other due diligence items set forth in
Paragraph 3 of each of the Agreement and the HPP Agreement,
including without limitation, the Title Report, Survey,
Leases, contracts listed on Exhibit 3.3 of each of the
Agreement and the HPP Agreement and the Due Diligence
Documents. In this regard, (i) Seller agrees to cooperate
with Buyer and take all actions (A) reasonably requested by
Buyer to arrange for Buyer's entry onto the Property and any
inspections and/or testing by Buyer in connection therewith,
and (B) otherwise requested by Buyer in connection with
Buyer's efforts to perform its due diligence review
hereunder, and (ii) Seller assigns to Buyer all of Seller's
access, inspection and other rights under the Agreement and
the HPP Agreement with respect to the performance of
Seller's due diligence review under the Agreement and the
HPP Agreement.
(b) (i) the satisfaction of all conditions
to Seller's (or any assignee's) obligation, as buyer, to
consummate the Closing under the Agreement, (ii) no breach
or default by the Owner under the Agreement, and (iii) the
concurrent Closing under the Agreement.
(c) (i) the satisfaction of all conditions
to Seller's (or any assignee's) obligation, as buyer, to
consummate the Closing under the HPP Agreement concurrently
with the Closing under the Agreement, (ii) no breach or
default by HPP under the HPP Agreement, and (iii) the
concurrent Closing under the HPP Agreement.
If Buyer shall timely disapprove any of the due diligence
items set forth above, or if any of the conditions set forth
in Paragraphs 4(b) or 4(c) above are not satisfied, then
this letter agreement shall terminate, the Deposit shall be
immediately returned to Buyer, and neither party shall have
any further rights or remedies against the other by reason
hereof. In the event either of the conditions set forth in
Paragraphs 4(b) or 4(c) is not satisfied or waived by Buyer,
and the Transfer Date has occurred, upon request from
Seller, Buyer shall re-assign the Purchase Rights back to
Seller.
5. Actions Pending Transfer Date.
(a) Provided that Buyer is not in material
default under this letter agreement, (i) if any consents,
approvals or elections of Seller are required or permitted
under the Agreement or HPP Agreement, then Seller shall not
give or make the same without first obtaining the written
consent of Buyer, (ii) Seller shall not modify or amend the
Agreement or HPP Agreement or waive any right of the buyer
under the Agreement or HPP Agreement without the prior
written consent of Buyer, (iii) Seller further agrees not to
amend or modify the Union Property Commission Agreement
(defined below) without the prior written consent of Buyer,
(iv) Seller shall deliver to Buyer promptly upon receipt
copies of any notices or other communications received from
Owner relating to the Agreement or the Property or from HPP
relating to the HPP Agreement or Property, and (v) Seller
shall not deliver any notice or other communication to Owner
or HPP or take any other action under the Agreement or HPP
Agreement without first having the same approved by Buyer.
(b) Seller acknowledges that that certain
Contribution Agreement (the "HPP Agreement") by and between
the Seller and Hapsmith-Praxis Partners ("HPP") was entered
into as of November 27, 1996, and subsequently modified by
the parties pursuant to a memorandum from Michael Klein to
Joe Sherman dated November 29, 1996, and a letter from Joe
Sherman to Michael Klein dated December 5, 1996.
6. Warranties and Representations. Seller makes
the following warranties and representations to Buyer, which
shall be true and correct as of the date of Seller's
acceptance hereof, as of the Transfer Date and as of the
Closing under the Agreement and the HPP Agreement:
(a) To the best of Seller's knowledge, all
documents delivered to Buyer by and on behalf of Seller are
or will be true and correct copies of the originals and
truly represent the factual matters stated therein.
(b) Seller has the legal power, right and
authority to enter into this letter agreement and the
instruments referenced herein, and to consummate the
transactions contemplated hereby.
(c) All requisite corporate action has been
taken by Seller in connection with entering into this letter
agreement, the instruments referenced herein, and the
consummation of the transactions contemplated hereby. No
consent of any partner, shareholder, creditor, investor of
Seller, judicial or administrative body, or governmental
authority having jurisdiction over Seller or other party is
required.
(d) The individuals executing this letter
agreement and the instruments referenced herein on behalf of
Seller have the legal power, right, and actual authority to
bind Seller to the terms and conditions hereof and thereof.
(e) This letter agreement and all documents
required hereby to be executed by Seller are and shall be
valid, legally binding obligations of and enforceable
against Seller in accordance with their terms, except as may
be limited by laws of bankruptcy and insolvency.
(f) Except for the required consents of the
Owner and HPP under Section 11.4 of the Agreement and
Section 11.4 of the HPP Agreement, respectively, neither the
execution and delivery of this letter agreement and
documents referenced herein, nor the incurrence of the
obligations set forth herein, nor the consummation of the
transactions herein contemplated, nor compliance with the
terms of this letter agreement and the documents referenced
herein conflict with or result in the material breach of any
terms, conditions or provisions of, or constitute a default
under, any bond, note, or other evidence of indebtedness or
any contract, indenture, mortgage, deed of trust, loan,
lease or other agreements or instruments to which Seller is
a party.
(g) A true and correct copy of the HPP
Agreement and the Agreement are respectively attached hereto
as Exhibits "B" and "C". There are no other agreements with
respect to the transfer of Owner's interest in the Property
to Seller other than the Agreement. There are no other
agreements with respect to the transfer of HPP's interest in
the Property to Seller other than the HPP Agreement.
Neither the HPP Agreement nor the Agreement has been
modified or amended.
(h) Seller has not previously assigned,
agreed to assign or hypothecated all or any part of the
Purchase Rights and is the holder thereof free and clear of
any liens, encumbrances or other rights of third parties.
(i) A true and correct copy of the brokerage
agreement with Union Property Capital which is referred to
in Paragraph 5.3 of the Agreement and Paragraph 5.3 of the
HPP Agreement (the "Union Property Commission Agreement") is
attached hereto as Exhibit "D". Except as expressly set
forth in this letter agreement, there are no other
agreements pursuant to which Buyer is obligated to pay a
brokerage commission or finder's fee to a third party in
connection with the purchase of the Property, other than the
Union Property Commission Agreement. The Union Property
Commission Agreement has not been modified or amended.
(j) To the best of Seller's knowledge,
Seller is not aware of any material information relating to
the Property which has not been disclosed to Buyer.
7. Brokers. Each party represents to the other
that it has not hired or dealt with any broker or other
middleman entitled to any commission or other compensation
based upon the transactions contemplated hereby, other than
Hawthorne Realty. In the event of and upon the closing of
the sale of the Owner's interest in the Property to Buyer,
and the closing of the contribution of HPP's interest in the
Property to Buyer, Buyer and Seller shall equally split a
brokerage commission to Hawthorne Realty in connection with
the transactions contemplated hereby in an amount equal to
$100,000 ($50,000 to be paid by Seller and $50,000 to be
paid by Buyer). Such commission shall be in addition to the
payment of any commission due and owing by Buyer under the
Agreement or under the HPP Agreement.
8. Assignment. Except as provided in the
preceding sentence, neither party shall assign its rights or
obligations under this letter agreement without the prior
written consent of the other party, which shall not be
unreasonably withheld.
9. Confidentiality. Buyer and Seller agree to
keep the terms of this transaction strictly confidential and
not disclose same to any third parties, without the consent
of the other party, except that Buyer may discuss and
disclose the terms of this transaction to Buyer's advisors,
employees, consultants, attorneys, partners and lenders.
10. Indemnity. Seller hereby agrees to
indemnify, defend and hold harmless Buyer from and against
(i) any and all claims, damages, costs, expenses and
liabilities ("Claims") arising from or related to any
actions taken by Seller in connection with the Agreement or
the HPP Agreement which Buyer was unaware of or which Buyer
did not approve, and (ii) any actual out-of-pocket costs
incurred by Buyer due to or in connection with any Claims
arising from or related to Owner's or HPP's failure to honor
and accept the transfer of the Purchase Rights to Buyer
without having consented thereto.
11. Miscellaneous.
(a) In the event of any litigation between
the parties respecting this letter agreement, the prevailing
party shall be entitled to reasonable attorneys fees, court
costs and litigation expenses, as determined by the Court.
(b) Notices required or permitted hereunder
shall be personally delivered or sent by air courier or
first class mail, return receipt requested, addressed as
follows:
(1) If to Buyer:
c/o Arden Realty, Inc.
9100 Wilshire Boulevard, Suite 700E
Beverly Hills, California 90212
Attn: Mr. Richard S. Ziman
with copies to:
Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067
Attn: Scott M. Kalt, Esq.
(2) If to Seller:
Fidelity Partners, Inc.
744 Montgomery Street, Suite 200
San Francisco, California 94111
Attn: Mr. Joseph L. Sherman
with a copy to:
Freed and Heinemann
633 Battery Street
Suite 620
San Francisco, CA 94111
Peter Heinemann, Esq.
(c) This letter agreement shall be binding
upon and inure to the benefit of the parties and their
respective representatives, successors and assigns.
(d) This letter agreement represents the
entire understanding of the parties respecting the subject
matter hereof, supersedes all prior understandings, whether
oral or written, and may not be amended except in writing
signed by the parties hereof. This letter agreement shall
be construed in accordance with the laws of the State of
California.
(e) Each party hereto shall be authorized to
rely upon the signatures of all of the parties hereto on
this letter agreement which are delivered by facsimile as
constituting duly authorized, irrevocable, actual, current
delivery of this letter agreement with original ink
signatures of each person and entity; provided, however,
that each party hereto that delivers such facsimile shall
deliver an executed original of the same to each party so
receiving the previous facsimile signatures within five (5)
days after the delivery of such facsimile signatures.
(f) Each of the parties shall from time to
time at the request of the other party execute and deliver
such documents and take such other actions as may be
required to more effectively carry out the terms of this
letter agreement. The warranties and representations of
Seller shall survive the Closing.
12. Notwithstanding anything to the contrary
contained herein, in the event the transactions contemplated
under the Agreement and the HPP Agreement are not
consummated for reasons other than due to (i) a default by
Owner or HPP under the Agreement or the HPP Agreement,
respectively, or (ii) the occurrence of an event (or the
discovery by Buyer of a circumstance pursuant to its due
diligence review of the Property) which materially adversely
effects the value or condition of the Property, as
determined by Buyer in its reasonable discretion, Buyer
shall pay to Seller an amount equal to $75,000.
If the foregoing is consistent with your
understanding, please acknowledge your acceptance and
agreement by signing where shown below and returning to the
undersigned the enclosed copy of this letter on or before
5 p.m. on December 6, 1996, at which time this offer will
otherwise expire.
Very truly yours,
Arden Realty Limited Partnership,
a Maryland limited partnership
By: Arden Realty, Inc., a
Maryland corporation,
its sole general partner
By /s/ Victor J. Coleman
Name: Victor J. Coleman
Title: President and COO
ACCEPTED AND AGREED:
Fidelity Partners, Inc.,
a California corporation
By /s/ Joseph Sherman
Joseph Sherman, President
Date: /s/ 12/5/96
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT made and entered into as of the 19th day of
December, 1996, by and between JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY, a Massachusetts corporation, having its principal address
c/o The Real Estate Investment Group, John Hancock Place, P.O. Box
111, Boston, Massachusetts 02117 (hereinafter "Seller"), and ARDEN
REALTY LIMITED PARTNERSHIP, a Maryland limited partnership, having
an office address at 9100 Wilshire Boulevard, Suite 700 East,
Beverly Hills, California 90212 (hereinafter "Buyer");
WITNESSETH THAT:
WHEREAS, Seller is the owner of the premises known as 10350
Santa Monica Boulevard, Los Angeles, California, containing
approximately 17,600 square feet of land improved with a building
containing approximately 42,510 square feet of space ("the
Premises"), more particularly described on Exhibit A attached
hereto and made a part hereof, and subterranean and surface
parking for approximately 99 automobiles, landscaping and other
amenities, and certain tangible and intangible personal property
(collectively, the "Property"); and
WHEREAS, Buyer desires to purchase the Premises and acquire
possession thereof in accordance with the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth the parties hereto mutually agree as
follows:
1. Purchase Price. The Premises are to be sold to Buyer for
the sum of Four Million Three Hundred Thousand dollars
($4,300,000.00) ("the Purchase Price"), which Buyer shall pay
to Seller on the Date of Closing by wiring immediately
available Federal funds to such bank account as may be
designated by Seller.
2. Deposit. Buyer shall deposit with Title Company (as
hereinafter defined) as escrow agent $100,000.00 by official
bank cashier's check or federal wire transfer of funds
simultaneously with the execution of this Agreement as a good
faith deposit (hereinafter, said deposit and such interest as
is earned thereon shall be referred to as "the Deposit"),
which Deposit shall be disposed of in the manner herein
provided. If Buyer performs all of its obligations under this
Agreement, the Deposit shall either be applied against the
Purchase Price or returned by escrow agent to Buyer on the
Date of Closing, as hereinafter provided. If Seller shall be
unable to deliver title and possession, as hereinafter
provided, or if Buyer shall fail to perform any of its
agreements hereunder, the Deposit shall be disposed of in the
manner hereinafter provided.
3. Closing. Subject to the provisions of this Agreement, the
grant deed representing fee title to the Premises shall be
delivered at 9 o'clock A.M., P.S.T., on December 30, 1996
("the Date of Closing" or "Closing"), at the offices of
Chicago Title Insurance Company located at 700 S. Flower
Street, Suite 920, Los Angeles, California 90017 (the "Title
Company").
4. Buyer's Review. Buyer shall have until 5 o'clock P.M.,
Boston time, on December 23, 1996 ("the Review Period") (a) to
obtain and review a commitment for title insurance and a
survey; (b) to make or have made such reasonable non-
destructive inspections as it desires of the Premises,
including, without limitation, the interior, exterior, and
structure of all improvements, and the condition of soils and
subsurfaces; and (c) to review all of Seller's financial
records, contracts, and leases relating to the Premises. All
such items shall be obtained and reviewed at Buyer's sole cost
and expense, except as otherwise expressly provided herein.
If Buyer has any objection to any of the matters set out in
(a), (b), or (c) of this section 4, it may either notify
Seller in writing of such objection on or before the end of
the Review Period ("Notice of Objection"), provided that with
such notice Buyer shall provide Seller with copies of all
written materials which provide or evidence the basis of any
such objection, or notify Seller in writing that this
Agreement is terminated ("Notice of Termination"). Any
matters not objected to in writing as herein provided shall be
deemed waived. Upon the expiration of the Review Period
without Notice of Objection or Notice of Termination, as
provided herein, or upon Seller's cure of Buyer's objections,
as provided in the following paragraph, or upon Buyer's actual
or deemed notification to Seller that Buyer will proceed
notwithstanding Seller's failure to cure Buyer's objections,
as provided in the following paragraph, the Deposit will
become nonrefundable, except in the case of Seller's default
hereunder.
If Seller is unwilling or unable to correct to Buyer's
satisfaction all defects to which Buyer has objected within 30
days after receipt of Notice of Objection (provided that
correction of defects objected to in the title commitment or
survey may be accomplished either by removing such defects or
by arranging for the title insurance policy to insure over
such defects; and provided further that Seller may use the
Purchase Price or any portion thereof to cure any such defects
which may be cured by instruments recorded on the Date of
Closing, or later if arrangements are made which are
satisfactory to Buyer and the Title Company), Seller shall, at
any time before the end of said 30-day period, so notify
Buyer, provided that if Seller fails to give such notice,
Seller shall be deemed to have notified Buyer on the 30th day
after receipt of Notice of Objection that Seller is unwilling
or unable to cure all defects to which Buyer has objected.
Buyer shall, within ten days after Seller has given or is
deemed to have given said notice, either (i) notify Seller
that it shall waive said defect(s) and proceed to closing, as
set out in section 3 hereof, or (ii) give Notice of
Termination, provided that if Buyer fails to give such notice,
Buyer shall be deemed to have notified Seller that it shall
waive all defects and proceed to closing. If any new matters
come to the attention of the Title Company after the close of
the Review Period but prior to the Closing Date which would
constitute exceptions on Buyer's title policy, Seller shall
promptly notify Buyer of such matters and Buyer shall have
five (5) business days in which to determine if such new
exceptions are acceptable or objectionable, and if necessary,
the Review Period shall be extended only for this purpose
until the completion of such five (5) business days.
Upon receipt of Notice of Termination the Deposit shall be
refunded and this Agreement shall become null and void, and
neither party shall be liable to the other for damages or
otherwise, except as otherwise expressly provided herein.
5. Condition of Premises. Buyer and Seller agree that,
subject to section 5A below, Buyer is acquiring the Premises
and any related personal property in their "AS IS" condition,
WITH ALL FAULTS, IF ANY, AND WITHOUT ANY WARRANTY, EXPRESS OR
IMPLIED. Neither Seller nor any agents, representatives, or
employees of Seller have made any representations or
warranties, direct or indirect, oral or written, express or
implied, to Buyer or any agents, representatives, or employees
of Buyer with respect to the condition of the Property, their
fitness for any particular purpose, or their compliance with
any laws, and Buyer is not aware of and does not rely upon any
such representation to any other party. Buyer acknowledges
that the Purchase Price might be higher if Buyer were not
acquiring the Property in "as is" condition. Buyer
acknowledges that it either has had or will have before the
Date of Closing the opportunity to make such inspections (or
have such inspections made by consultants) as it desires of
the Property and all factors relevant to its use, including,
without limitation, the interior, exterior, and structure of
all improvements, and the condition of soils and subsurfaces
(particularly with respect to the presence or absence of
hazardous substances).
After its inspections are completed, Buyer shall restore
the Premises and personal property to their condition prior to
Buyer's inspections. Buyer agrees to indemnify Seller for all
claims or damages arising out of Buyer's inspections,
including, without limitation, claims for personal injury or
property damage, and including all costs and attorneys' fees.
The obligations in this paragraph shall survive the Closing or
the termination of this Agreement for any reason, including
without limitation pursuant to section 4, 9, or 14 hereof.
Buyer hereby releases Seller and its agents,
representatives, and employees from any and all claims,
demands, and causes of action, past, present, and future, that
Buyer may have relating to (i) the condition of the Premises
and the personal property at any time, before or after the
Date of Closing, including, without limitation, the presence
of any hazardous substance, or (ii) any other matter
pertaining to the Premises or the personal property. This
release shall survive the Closing or the termination of this
Agreement for any reason. This release shall not apply to (x)
any presence or release of hazardous substances which first
occurred while Seller owned the Premises, and of which Buyer,
after having a phase I environmental site assessment performed
on the Premises, has no knowledge, or (y) any administrative
or judicial action brought against Buyer, without Buyer's
instigation, by an unrelated third party or governmental
entity, relating to a condition or event that occurred while
Seller owned the Premises, in which action Buyer may file a
third party complaint or similar pleading against Seller.
Seller shall deliver possession to Buyer, subject to the
matters set forth in section 7(a)(1) hereof, not later than
the Date of Closing, provided that all the terms and
conditions of this Agreement have been complied with. Seller
until the Date of Closing shall maintain, repair (subject to
section 9 hereof), manage, and operate the Premises in a
businesslike manner in accordance with Seller's prior
practices; shall comply with its contractual obligations as
owner of the Premises; shall maintain the types and amounts of
insurance that are in force on the date of execution hereof;
and shall not dissipate the Premises or remove any material
property therefrom, except in the ordinary course of business.
Between the date hereof and the Date of Closing, Seller will
not execute any new Leases or materially amend, terminate (except
upon a default by the tenant thereunder) or accept the surrender of
any existing tenancies or approve any subleases without the prior
consent of Buyer; provided however that Seller is authorized to
accept the termination of Leases at the end of their existing terms
and to expand, extend or renew any Leases pursuant to expansion,
extension or renewal options contained therein. With respect to
all new Leases executed after the Review Period expires which Buyer
has approved pursuant to this section 5, which new Leases require
the construction of tenant improvements after the date hereof
and/or the payment of leasing or brokerage commission(s) by
landlord, including without limitation brokerage commissions upon
the exercise by the tenant thereunder of an expansion, extension or
renewal option contained in such tenant's lease, Buyer shall: (a)
pay, and/or reimburse Seller at Closing for the paid portion of,
the cost of such improvements and such leasing or brokerage
commission(s) and any other costs associated with such Lease; and
(b) assume all of Seller's obligations as landlord thereunder with
respect to the payment of tenant improvements and brokerage
commissions after Closing. The failure of Buyer to notify Seller
of Buyer's consent or disapproval, within forty-eight (48) hours
after written request by Seller for such consent, to any Lease or
lease amendment submitted by Seller to Buyer after the expiration
of the Review Period shall be deemed to constitute Buyer's
disapproval.
5A. Representations and Warranties. (a) Seller represents and
warrants to Buyer as follows:
(1) Seller is an insurance company, duly organized, validly
existing, and in good standing under the laws of the Commonwealth
of Massachusetts and the State in which the Premises are located.
(2) Seller has all requisite power and authority to execute and
deliver this Agreement and to carry out its obligations hereunder
and the transactions contemplated hereby. This Agreement has
been, and the documents contemplated hereby will be, duly executed
and delivered by Seller and constitutes the Seller's legal, valid,
and binding obligation enforceable against Seller in accordance
with its terms. The consummation by Seller of the sale of the
Premises is not in violation of or in conflict with, nor does it
constitute a default under any term or provision of, the
organizational documents of Seller, or any of the terms of any
agreement or instrument to which Seller is a party, or by which
Seller is bound, or any provision of any applicable law,
ordinance, rule, or regulation of any governmental authority or
any provision of any applicable order, judgment, or decree of any
court, arbitrator, or governmental authority.
(3) Except as listed on Exhibit E hereto, to the best of Seller's
knowledge, Seller has not received, with respect to the Premises,
any notices from (i) any governmental agency of any violations of
building codes and/or zoning ordinances or other governmental
laws, regulations, or orders, (ii) any governmental agency of any
pending or threatened condemnation proceedings, or (iii) any party
of pending or threatened litigation affecting the Premises in any
way.
(4) To the best of Seller's knowledge, the list attached hereto
as Exhibit B is a true and complete list of all tenants and their
security deposits at the Premises, the leases to be provided by
Seller to Buyer during the Review Period are true and complete
copies of all existing leases for space at the Premises, and
Seller has paid all leasing commissions incurred by Seller as
owner of the Premises.
(5) To the best of Seller's knowledge, the list attached hereto
as Exhibit C is a true and complete list of all service and
management contracts affecting the Premises, and the contracts to
be provided by Seller to Buyer during the Review Period are true
and complete copies of all existing service and management
contracts for the Premises.
(6) To the best of Seller's knowledge, Seller has received no
notice of the presence of any hazardous substances, as defined by
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), 42 USC 9601(14), pollutants or
contaminants, as defined in CERCLA, 42 USC 9601(33), or hazardous
waste, as defined by the Resource Conservation and Recovery Act
("RCRA"), 42 USC 6903(5), or other similar applicable federal or
state laws and regulations, including, but not limited to,
asbestos and PCB's, at the Premises, except as set forth in the
report prepared by Ralph Stone & Co., and dated June 7, 1994, and
except for minor amounts of substances customarily used in the
maintenance of properties similar to the Premises and maintained
in accordance with applicable laws.
(b) Buyer represents and warrants to Seller as follows:
(1) Buyer is a limited partnership, duly organized, validly
existing, and in good standing under the laws of Maryland and the
State in which the Premises are located.
(2) Buyer has all requisite power and authority to execute and
deliver this Agreement and to carry out its obligations hereunder
and the transactions contemplated hereby. This Agreement has
been, and the documents contemplated hereby will be, duly executed
and delivered by Buyer and constitutes its legal, valid, and
binding obligation enforceable against it in accordance with its
terms, and the consummation and performance by Buyer of the
transactions contemplated herein will not result in a violation of
or be in conflict with or constitute a default under any term or
provision of the organizational documents of Buyer, or any of the
terms of provisions of any agreement or instrument to which it is
a party, or by which it is bound, or of any term of any applicable
law, ordinance, rule or regulation of any governmental authority
or of any term of any applicable order, judgment, or decree of any
court, arbitrator, or governmental authority.
(c) The above-stated representations and warranties will
survive the Closing for a period of one year, before the
expiration of which the party claiming a breach must have filed an
action in a court of competent jurisdiction, and any
representation and warranty not specified in such action shall
expire. Buyer acknowledges that Seller has maintained no
employees at the Premises and that the Premises have during
Seller's ownership thereof always been managed by a third-party
manager, and that Seller has relied upon such manager for
knowledge and notice. The words "to the best of Seller's
knowledge" in this section 5A mean to the actual knowledge of John
Garrison and Kelly Loring, the two employees of Seller who are
most familiar with the Premises and who have had the most contact
with the management company.
(d) Indemnification. Seller shall indemnify Buyer against
and hold Buyer harmless from any and all loss, cost, damage,
claim, liability or expense, including court costs and reasonable
attorneys' fees, for third party claims relating to the Premises
and arising out of or in connection with any act or omission of
Seller prior to closing (including any personal injury or property
damage of any kind whatsoever, including death, to property or
persons including employees and agents of Seller), unless caused
by Buyer. Buyer shall indemnify Seller against and hold Seller
harmless from any and all loss, cost, damage, claim, liability or
expense, including court costs and reasonable attorneys' fees, for
third party claims relating to the Premises and arising out of or
in connection with any act or omission of Buyer as a result of its
investigation of the Premises during the Review Period or
subsequent to the Closing (including any personal injury or
property damage of any kind whatsoever, including death, to
property or persons including employees and agents of Buyer),
unless caused by Seller. These covenants shall survive the
Closing.
5B. Conditions Precedent. (a) Conditions Precedent to Buyer's
Obligation to Close Escrow. The obligation of Buyer to consummate
the transactions contemplated hereby is subject to the following
conditions, inserted for Buyer's sole benefit and that may be
waived by Buyer only in writing at its sole option. Said
conditions are as follows:
1. Representations and Warranties True at Closing. The
representations and warranties of Seller contained in section 5A
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.
2. Delivery of Tenant Estoppels. Seller shall have delivered
to Buyer 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 Premises 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 no defenses or offsets against the landlord known to
tenant thereunder; and that rental is current and has not been
paid more than one month in advance.
(b) 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 by
Seller only in writing at its sole option. Said conditions are as
follows:
1. Representations and Warranties True at Closing. The
representations and warranties of Buyer contained in section 5A 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.
2. Delivery of Purchase Price and Documents. Buyer shall
have delivered all funds and documents to the Title Company
required by it hereunder to enable it to close pursuant to the
terms of this Agreement.
6. Adjustments and Prorations. All taxes, including, without
limitation, real estate taxes and personal property taxes,
collected rents, charges for utilities, including water,
sewer, and fuel oil, and for utility services, maintenance
services, maintenance and service contracts, all operating
costs and expenses, and all other income, costs, and charges
of every kind which in any manner relate to the operation of
the Premises (but not including insurance premiums) shall be
prorated to the Date of Closing, except that if Seller does
not receive the Purchase Price (by receipt of wired funds or
by receipt in hand of an official bank cashier's check) by 1
o'clock P.M., Boston time on the Date of Closing, all
prorations shall be made as of the following business day.
Rents shall be prorated on an as-collected basis, with first
rents collected after the Date of Closing credited toward
current rent, if owed, and the balance to delinquencies. The
Buyer shall receive credit for any post-closing unamortized
rental concessions granted by Seller prior to the date of this
Agreement. Buyer shall use reasonable efforts to assist the
Seller in collecting delinquent rent, but shall not be
required to file an action for the delinquency. Buyer shall
receive a credit for all security deposits set forth on
Exhibit B. If the amount of said taxes, assessments, or rents
is not known on the Date of Closing, they shall be apportioned
on the basis of the amounts for the preceding year, with a
reapportionment as soon as the new amounts can be ascertained.
If such taxes and assessments shall thereafter be reduced by
abatement, the amount of such abatement, less the reasonable
cost of obtaining the same, shall be apportioned between the
parties, provided that neither party shall be obligated to
institute or prosecute proceedings for an abatement unless
otherwise agreed. Buyer shall be responsible for the payment
of any assessments or notice of assessments made after the
date of execution hereof for any public improvement, provided
Buyer takes title hereunder. Any deposits on utilities paid
by Seller shall be returned to Seller. The foregoing
provisions of this section shall not apply to any taxes,
assessments, or other payments which are directly payable by
tenants under their leases or reimbursable by such tenants to
the owner of the Premises, as landlord, under their leases.
On the Date of Closing, Seller shall deliver to Buyer all
inventories of supplies on hand at the Premises owned by
Seller, if any, at no additional cost to Buyer.
7. Closing Documents. (a) Seller's Deliveries. Conditioned
upon performance by Buyer hereunder, Seller shall execute and
deliver to Buyer at the Closing the following documents
("Seller's Closing Documents"):
(1) Deed. A grant deed conveying marketable title to the
Premises subject to the following:
(A) All easements, conditions, restrictions, and
reservations of record set forth on the Schedule B of a
pro forma title policy from the Title Company, including
all private and public rights in highways and rights-of-
way;
(B) All building and zoning laws, ordinances, and State
and Federal regulations;
(C) Encroachments and all other matters that an accurate
survey might show, provided that the same do not
unreasonably interfere with the use of the Premises as an
office building;
(D) Rights of tenants in possession as tenants only; and
(E) Real estate taxes and all installments of special
assessments or levies not yet due and payable on the Date
of Closing.
(2) Bill of Sale. A bill of sale, assigning and
transferring to Buyer all of the right, title, and interest of
Seller in and to all tangible personal property, if any, owned
by Seller and located upon the Premises.
(3) Assignment of Leases. An assignment of leases,
tenancies, and security deposits, which will include an
indemnification by Seller of Buyer for all landlord
obligations accruing prior to the Date of Closing.
(4) Assignment of Service Contracts. An assignment of
maintenance and service contracts, which will include an
indemnification by Seller of Buyer for all owner obligations
accruing prior to the Date of Closing.
(5) Non-Foreign Certificate. A certification that Seller
is not a non-resident alien (a foreign corporation,
partnership, trust, or estate as defined in the Internal
Revenue Code and Treasury Regulations promulgated thereunder).
(b) Buyer's Deliveries. Conditioned upon performance by
Seller hereunder, Buyer shall execute and deliver to Seller at
the Closing the following documents:
(1) Assumption of Leases. An assumption of leases,
tenancies, and security deposits, which will include an
indemnification by Buyer of Seller for all landlord
obligations accruing on or after the Date of Closing.
(2) Assumption of Service Contracts. An assumption of
maintenance and service contracts, which will include an
indemnification by Buyer of Seller for all owner obligations
accruing on or after the Date of Closing.
(c) Other Closing Documents and Deliveries. Each party
shall deliver to the other party or the Title Company such
duly executed and acknowledged or verified certificates,
affidavits, and other usual closing documents respecting the
power and authority to perform the obligations hereunder and
as to the due authorization thereof by the appropriate
corporate, partnership, or other representatives acting for
it, as counsel for the other party or the Title Company may
reasonably request. Seller shall cause tenant notices to be
sent out at Closing. Seller shall deliver keys and personal
property located on the Premises and used in the operation of
the Premises at the Closing.
8. Costs. Buyer and Seller shall each pay one-half of the
escrow fee, while Seller shall pay the documentary transfer
tax (city and county) and the CLTA portion of the title
premium, plus the cost of any specific endorsements Seller
agrees to obtain to cure specific title objections of the
Buyer. Buyer shall pay the balance of the title premium
charges and the cost of recording the deed and other transfer
documents. Buyer shall pay its attorneys' fees, and the fees
and costs of any other professionals or consultants. Seller
shall pay its attorneys' fees, if any, incurred by Seller in
connection with this transaction, and the Broker's commission,
but only if, as, and when the transaction contemplated hereby
is fully consummated and the deed is recorded and the full
consideration therefor has been received by Seller.
9. Casualty or Condemnation. In the event that prior to the
Date of Closing either the improvements on the Premises are
damaged or destroyed, in whole or in part, by fire or other
cause, or any portion of the Premises becomes the subject of a
condemnation proceeding by a public or quasi-public authority
having the power of eminent domain, then either (a) the
parties shall proceed with the transaction contemplated
herein, in which event Buyer shall be entitled to receive any
insurance proceeds or condemnation awards, or (b) in the event
such damage, destruction, or condemnation involves, in the
reasonable estimation of Seller, a loss in an amount in excess
of ten per cent (10%) of the Purchase Price, or loss of all or
a material portion of access to the Premises, either party, at
its option, may terminate this Agreement by notice to the
other within ten (10) days of Buyer's receipt of Seller's
notice of such damage or proceeding, in which case the Deposit
shall be refunded, and thereafter neither party shall have any
further obligation or liability to the other by virtue of this
Agreement, except as otherwise expressly provided herein.
10. Insurance. Seller shall not be obligated to assign to
Buyer any fire, hazard, or liability insurance policies which
it holds respecting the Premises, and Seller shall have the
right to any and all refunds or rebates resulting from the
termination of such policies.
11. Broker's Commission. Buyer and Seller each hereby
warrants and represents to the other that it has dealt with no
broker or finder in connection with this transaction except
Cushman and Wakefield and Westmac ("the Broker"), and that it
is not affiliated with the Broker in any way. Buyer and
Seller each hereby agrees to indemnify and hold the other
harmless from and against any and all claims for brokerage or
finder's fees or other similar commissions or compensation
made by any and all other brokers or finders claiming to have
dealt with the indemnifying party in connection with this
Agreement or the consummation of the transaction contemplated
hereby. The obligations in this section shall survive the
Closing or the termination of this Agreement for any reason,
including without limitation pursuant to section 4, 9, or 14
hereof.
12. Seller's Performance. The acceptance of Seller's Closing
Documents by Buyer shall be deemed to be a full performance
and discharge of every agreement and obligation of Seller
herein contained and expressed, except such as are, by the
terms hereof, to be performed after the delivery of said
instruments.
13. Recording Prohibited. This Agreement shall not be
recorded with Los Angeles County Records or in any other
office or place of public record. If Buyer shall record this
Agreement or cause or permit the same to be recorded, Seller
may, at its option, elect to treat such act as a default by
Buyer under this Agreement.
14. Remedies. If Seller defaults under this Agreement,
Buyer's sole remedy, at law or in equity, shall be one of
either (a) the return of the Deposit to Buyer, whereupon the
obligations of Seller under this Agreement shall terminate; or
(b) the right to obtain specific performance of Seller's
obligation to convey the Premises pursuant to this Agreement,
provided that in no event shall Seller be obliged to cure
defects objected to by Buyer pursuant to section 4 hereof. In
no event shall any officer, director, employee, agent, or
representative of Seller have any personal liability in
connection with this Agreement or transaction.
BUYER ACKNOWLEDGES THAT IF IT FAILS TO PURCHASE THE PREMISES
AS THE RESULT OF BUYER'S DEFAULT UNDER THIS AGREEMENT SELLER
SHOULD BE ENTITLED TO COMPENSATION FOR THE DETRIMENT RESULTING
THEREFROM, AND THEREFORE THE PARTIES AGREE AS FOLLOWS: IF
BUYER SHALL DEFAULT IN ITS OBLIGATIONS TO PURCHASE THE
PREMISES, SELLER SHALL BE ENTITLED TO RETAIN AS AND FOR ITS
OWN PROPERTY, AS LIQUIDATED DAMAGES AND NOT AS A PENALTY, AN
AMOUNT EQUAL TO THE DEPOSIT, TOGETHER WITH ANY AND ALL
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) THAT SELLER
MAY INCUR IN COLLECTING SUCH LIQUIDATED DAMAGES. BOTH PARTIES
ACKNOWLEDGE AND AGREE THAT SAID AMOUNT IS PRESENTLY A
REASONABLE SUM CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING
ON THE DATE OF THIS AGREEMENT, INCLUDING THE RELATIONSHIP OF
THE SUM TO THE RANGE OF HARM TO SELLER THAT REASONABLY COULD
BE ANTICIPATED AND THE ANTICIPATION THAT PROOF OF ACTUAL
DAMAGES WOULD BE COSTLY OR INCONVENIENT. IN PLACING THEIR
INITIALS AT THE PLACES PROVIDED,
SELLER /s/ JMG BUYER /s/ VJC
EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE
STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS
REPRESENTED BY COUNSEL WHO EXPLAINED THE CONSEQUENCES OF THIS
LIQUIDATED DAMAGES PROVISION AT THE TIME THIS AGREEMENT WAS
MADE. BOTH PARTIES AGREE THAT THIS SUM STATED AS LIQUIDATED
DAMAGES SHALL BE IN LIEU OF ANY OTHER RELIEF TO WHICH SELLER
MIGHT OTHERWISE BE ENTITLED BY VIRTUE OF THIS AGREEMENT OR
OPERATION OF LAW.
Nothing in this section 14 shall limit the express
provisions of this Agreement obligating one party hereto to
indemnify the other or to restore the Premises, including
without limitation sections 5 and 11 hereof.
15. Assignment. This Agreement may not be assigned by Buyer
without the express written consent of Seller, which consent
Seller may in its sole discretion withhold, except that Buyer
may, without Seller's consent, assign this Agreement to a
limited partnership of which Buyer (or a principal of Buyer)
or any parent or any wholly owned subsidiary of Buyer are the
sole general partners. No such assignment shall operate to
relieve Buyer from any obligation hereunder.
16. Waiver. No waiver of any breach of any agreement or
provision contained herein shall be deemed a waiver of any
preceding or succeeding breach of any other agreement or
provision herein contained. No extension of time for the
performance of any obligation or act shall be deemed an
extension of time for the performance of any other obligation
or act.
17. Time. It is agreed that time is of the essence of this
Agreement.
18. Governing Law. This Agreement shall be construed under
the laws of the state in which the Premises are located.
19. Notices. All notices required or permitted to be given
hereunder shall be in writing and sent by overnight delivery
service (such as Federal Express), in which case notice shall
be deemed given on the day after the date sent, or by personal
delivery, in which case notice shall be deemed given on the
date received, or by certified mail, in which case notice
shall be deemed given three (3) days after the date sent, or
by fax (with copy by overnight delivery service), in which
case notice shall be deemed given on the date sent, to the
appropriate address indicated below or at such other place or
places as either Buyer or Seller may, from time to time,
respectively, designate in a written notice given to the other
in the manner described above.
To Seller: c/o The Real Estate Investment Group
John Hancock Place, P.O. Box 111
Boston, MA 02117
Re: File No. ______________
Attention: John Garrison, Investment Officer
Fax No.: (617) 572-3860 or 3866
With Copy To:John Hancock Mutual Life
Insurance Company
Law Department (T-50)
John Hancock Place, P.O. Box 111
Boston, MA 02117
Re: File No. ______________
Attention: Roslyn Poznansky, Esq.
Fax No.: (617) 572-9268 or 9269
To Buyer: Arden Realty Limited Partnership
9100 Wilshire Boulevard
Beverly Hills, CA 90212
Attention: Ms. Brig Troy
Fax No.: (310) 246-2941
With Copy To:Kenneth R. Blumer, Esq.
Troy & Gould
1801 Century Park East, 16th Floor
Los Angeles, CA 90067-2367
Fax No.: (310) 201-4746
20. Confidentiality. Buyer shall not disclose the financial
and economic terms and conditions of the transaction
contemplated herein except as may be necessary in the ordinary
course of its business. All press releases or other
dissemination of information to the media, or responses to
requests from the media, for information relating to the
transaction contemplated herein shall be subject to the prior
written approval of Seller; provided that, following the
Closing, Seller's approval shall not be unreasonably withheld
or delayed. The obligations in this section shall survive the
Closing or termination of this Agreement for any reason.
21. Entire Agreement. This instrument, executed in
duplicate, sets forth the entire agreement between the parties
and may not be canceled, modified, or amended except by a
written instrument executed by both Seller and Buyer.
[Page Intentionally Ends Here]
IN WITNESS WHEREOF, the parties hereto have caused these presents
to be executed the day and year first above written.
SELLER: JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By: /s/ John M. Garrison
Name: John M. Garrison
Title: Investment Officer
BUYER: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: ARDEN REALTY GROUP, INC.,
a Maryland corporation,
its sole general partner
By: /s/ Victor J. Coleman
Name: Victor J. Coleman
Title: President and COO
The Company hereby agrees to furnish supplementally the omitted
exhibits and schedules to the Commission upon request.
