UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) September 30, 1997
ARDEN REALTY, INC.
(Exact name of registrant as specified in its charter)
Maryland 1-12193 95-4578533
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
9100 Wilshire Boulevard, East Tower, Suite 700 90212
Beverly Hills, California
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 271-8600
Item 2. Acquisition or Disposition of Assets
On September 30, 1997, Arden Realty, Inc. (collectively with
its subsidiaries, the "Company") completed a series of
transactions to purchase five suburban office properties
totaling 371,331 rentable square feet and two mortgage notes
receivable. All the properties and the mortgage notes
receivable were purchased from unaffiliated entities.
120 South Spalding in Beverly Hills, California contains
60,656 rentable square feet. The purchase price for the
property was approximately $11,300,000, which was based on
arm's-length negotiations. The property is presently 39%
occupied, at average rents of $39.12 per square foot. The
property was purchased from South Spalding Associates,
L.L.C., a Delaware limited liability company.
1370 Valley Vista in Diamond Bar, California contains 84,081
rentable square feet. The purchase price of the property
was approximately $10,800,000, which was based on arm's-
length negotiations. The property is presently 87%
occupied, at average rents of $19.59 per square foot. The
property was purchased from Frontier II Properties Limited
Partnership, a Texas limited partnership.
South Bay Tech in Torrance, California contains 104,815
rentable square feet. The purchase price for the property
was approximately $6,450,000, which was based on arm's-
length negotiations. The property is presently 68%
occupied, at average rents of $14.31 per square foot. The
property was purchased from Metropolitan Life Insurance
Company, a Maryland limited partnership.
Renaissance Court in Westlake Village, California contains
61,245 rentable square feet. The purchase price for the
property was approximately $7,100,000, which was based on
arm's-length negotiations. The property is presently 61%
occupied, at average rents of $19.18 per square foot. The
property was purchased from Property Asset Management, Inc.,
a Delaware corporation.
Foremost Professional Plaza in San Diego, California
contains 60,534 rentable square feet. The purchase price
for the property was approximately $8,250,000, which was
based on arm's-length negotiations. The property is
presently 99% occupied, at average rents of $18.82 per
square foot. The property was purchased from Foremost Carmel
Mountain Ltd., A California limited partnership.
Two mortgage notes receivable, secured by a single
commercial office property, with an aggregate balance of
approximately $17,550,000 were purchased at a discount for
approximately $14,400,000, which was based on arm's length
negotiations. The notes bear interest at the Eleventh
District Cost of Funds plus 3.25% per annum, require monthly
payments of principal and interest, and mature on May 31,
2004. The mortgage notes receivable were purchased from
Coast Federal Bank, Federal Savings Bank, a federally
chartered capital stock savings bank, as successors in
interest to Coast Savings and Loan Associates, a California
corporation.
To finance these acquisitions the Company used approximately
$1,100,000 of working capital, borrowed $37,800,000 on its
line of credit from a group of banks led by Wells Fargo Bank
(the "Credit Facility"), borrowed $8,100,000 on its line of
credit from City National Bank, and used approximately
$11,300,000 of proceeds from the Company's public offering
of 13,750,000 shares of common stock (the "Secondary
Offering").
Inclusive of these purchases, the Company's portfolio
consists of 58 suburban office properties comprising
8,726,425 rentable square feet and 16 apartment units.
Item 7. Financial Statements and Exhibits
(a) Financial statements of properties acquired.
It is impracticable to provide the required financial
statements at the time of the filing of this report. The
required financial statements for the acquired properties
will be filed as an amendment to this Form within 60 days.
(b) Pro forma financial information.
It is impracticable to provide the required pro forma
financial information at the time of the filing of this
report. The required pro forma financial information will
be filed as an amendment to this Form within 60 days.
(c) Exhibits.
10.42 Agreement of Purchase and Sale of Real Property
and Escrow Instructions by and between South Spalding
Associates, L.L.C., a Delaware limited liability
company, and Arden Realty Limited Partnership, a
Maryland limited partnership.
10.43 Letter Amendment dated August 13, 1997 by and
between Seller and Purchaser extending the Contingency
Date.
10.44 Letter Amendment dated August 18, 1997 by and
between Seller and Purchaser as to the reduction in the
Purchase Price for long term maintenance costs and
expenses.
10.45 Real Property Purchase and Sale Agreement and
Escrow Instructions by and between Frontier II
Properties Limited Partnership, a Texas limited
partnership, and Arden Realty Limited Partnership, a
Maryland limited partnership.
10.46 First Amendment to Purchase and Sale Agreement by
and between Frontier II Properties Limited Partnership,
a Texas limited partnership, and Arden Realty Limited
Partnership, a Maryland limited partnership.
10.47 Sale and Purchase Agreement and Escrow Agreement
by and between Metropolitan Life Insurance Company, a
New York corporation, and Arden Realty Limited
Partnership, a Maryland limited partnership.
10.48 Purchase and Sale Agreement and Joint Escrow
Instructions by and between Property Asset Management,
Inc., a Delaware corporation, and Arden Realty Limited
Partnership, a Maryland limited partnership.
10.49 First Amendment to Purchase and Sale Agreement and
Joint Escrow Instructions between Property Asset Management,
Inc. a Delaware corporation, and Arden Realty Limited
Partnership, a Maryland limited partnership.
10.50 Agreement of Purchase and Sale and Joint Escrow
Instructions by and between Foremost Carmel Mountain
Ltd., a California limited partnership and Arden Realty
Limited Partnership, a Maryland limited partnership.
10.51 Letter Amendment to the Agreement of Purchase and
Sale and Joint Escrow Instructions by and between
Foremost Carmel Mountain Ltd., a California limited
partnership and Arden Realty Limited Partnership, a
Maryland limited partnership.
10.52 Note Purchase and Sale Agreement and Joint Escrow
Instructions by and between Coast Federal Bank, Federal
Savings Bank, a federally chartered capital stock
savings bank, as successors in interest to Coast
Savings and Loan Associates, a California corporation,
and Arden Realty Limited Partnership, a Maryland
limited partnership.
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: October 15, 1997 By: /s/ Diana M. Laing
Diana M. Laing
Chief Financial Officer
AGREEMENT OF PURCHASE AND
SALE OF REAL PROPERTY
AND ESCROW INSTRUCTIONS
TABLE OF CONTENTS
PAGE
1. Parties 1
2. Recitals 1
3. Agreement to Purchase and Sell Property 1
4. Purchase Price and Terms 1
4.1 Payment of Purchase Price 1
4.2 RELEASE OF DEPOSIT 2
5. Escrow; Closing Date 2
5.1 Opening of Escrow 2
5.2 Close of Escrow 2
5.3 Termination of Escrow 2
5.4 No Liability for Escrow Holder 3
5.5 No Withdrawal of Funds 3
6. Representations and Warranties of Buyer 3
7. Representations and Warranties of Seller 4
7.1 Seller's Representations 4
7.2 AS-IS Conveyance 5
7.3 No Additional Representations by Seller 6
7.4 Release 7
7.5 Breach of Representations and Warranties 7
7.6 Limitation on Liability 7
8. Representations and Warranties of Seller and
Buyer Regarding Brokers 7
8.1 Brokers 7
8.2 Broker's Indemnity 7
9. Contingencies 8
9.1 Condition of Property 8
9.2 Title 8
9.3 Tenant Estoppels 9
10. Maintenance of the Property 10
11. Covenant to Convey; Title Insurance 10
11.1 Conveyance of Title 10
11.2 Title Policy 10
12. Deliveries 10
12.1 Seller's Deliveries 10
12.2 Buyer's Deliveries 11
12.3 Escrow Holder's Deliveries 11
13. Prorations, Costs 11
13.1 Prorations 11
13.2 Costs 12
13.3 Cancellation Fees 12
14. Conditions Precedent 12
15. Cooperation Regarding Tax-Deferred Exchange 13
16. Casualty; Condemnation 13
16.1 Partial Damage 14
16.2 Material Damage or Condemnation 14
17. Liquidated Damages 14
18. Notices 14
19. Further Assurances 15
20. Indemnification 15
20.1 Buyer's Indemnification 15
20.2 Seller's Indemnity 16
21. Attorneys' Fees 16
22. Miscellaneous Provisions 16
22.1 Entire Agreement 16
22.2 Partial Invalidity 16
22.3 No Waiver of Breach 17
22.4 Amendments 17
22.5 Waiver of Conditions 17
22.6 Successors and Assigns 17
22.7 Survival 17
22.8 Time 17
22.9 Remedies 17
22.10 Meaning of Certain Words 17
22.11 California Law 17
22.12 Headings and Labels 17
22.13 Counterparts 17
22.14 Exhibits 17
22.15 Construction 18
22.16 Performance 18
22.17 No Third Party Beneficiaries 18
22.18 Partial Invalidity 18
22.19 Limitation of Liability of Buyer and Seller 18
22.20 Assignment. 18
22.21 Audit Rights 18
AGREEMENT OF PURCHASE AND
SALE OF REAL PROPERTY
AND ESCROW INSTRUCTIONS
1. Parties. This Agreement of Purchase and Sale of Real
Property and Escrow Instructions ("Agreement") dated for
identification purposes August 6, 1997 is made and entered into
by and between South Spalding Associates, L.L.C., a Delaware
limited liability company, ("Seller") and Arden Realty Limited
Partnership, a Maryland limited partnership ("Buyer").
2. Recitals.
2.1 Seller is the owner of that certain real property (the
"Land") which is located at 120 South Spalding Drive, Beverly
Hills, California and is more particularly described on Exhibit
"A" attached hereto. The Land is improved with a commercial
office building containing approximately 62,700 square feet (the
"Improvements").
2.2 The Land and the Improvements, and all fixtures which
have attached to the Land and the Improvements are herein
collectively referred to as the "Property." As used herein the
term "Property" shall also include all right, title and interest
of Seller in and to (i) all streets, alleys, easements, and
rights of way in, on, across, in front of, abutting or adjoining
the Property; (ii) all oil, gas and hydrocarbons under the
surface of the Property; (iii) all rights as landlord under any
leases (the "Leases") for the Property; (iv) all water and water
rights pertaining to the Property; (v) all licenses, permits,
approvals, dedications and entitlements issued, approved or
granted by governmental authorities or otherwise in connection
with the Improvements or the use thereof; and (vi) all furniture,
apparatus, equipment and machinery, if any, owned by Seller and
which is attached to or appurtenant to the Improvements, as more
particularly described on Exhibit AB@ attached hereto and
incorporated herein by reference (the "Personal Property").
2.3 Seller desires to sell the Property to Buyer and Buyer
desires to purchase the Property from Seller upon and subject to
the terms and conditions set forth below.
3. Agreement to Purchase and Sell Property. Seller hereby
agrees to sell the Property to Buyer and Buyer hereby agrees to
purchase the Property from Seller on the terms and conditions of
this Agreement.
4. Purchase Price and Terms.
4.1 Payment of Purchase Price. The purchase price for the
Property (the "Purchase Price") shall be Eleven Million One
Hundred Thousand Dollars ($11,100,000), payable as follows:
1. On or before the Contingency Date (as defined
below), Buyer shall deposit with Escrow Holder immediately
available funds in the amount of Two Hundred Thousand Dollars
($200,000) (the "Deposit") which shall be applied toward the
Purchase Price upon the Close of Escrow.
1.
2. Buyer shall deposit with Escrow Holder no later
than one (1) day prior to the Closing Date immediately available
funds in the amount of the balance of the Purchase Price.
4.2 RELEASE OF DEPOSIT. BUYER HEREBY AUTHORIZES AND
INSTRUCTS ESCROW HOLDER TO RELEASE THE ENTIRE DEPOSIT TO SELLER
UPON RECEIPT THEREOF. BUYER FULLY UNDERSTANDS THAT NO FURTHER
WRITTEN INSTRUCTIONS WILL BE REQUIRED BY ESCROW HOLDER TO RELEASE
THE DEPOSIT. THE RELEASE OF THE DEPOSIT IS WITHOUT LIABILITY OR
RECOURSE TO ESCROW HOLDER. BUYER=S FAILURE TO TIMELY DELIVER THE
DEPOSIT AND CAUSE THE SAME TO BE RELEASED TO SELLER SHALL BE
DEEMED BUYER=S ELECTION TO TERMINATE THIS ESCROW. IF BUYER
DELIVERS THE DEPOSIT ON OR BEFORE THE CONTINGENCY DATE, BUYER
SHALL BE DEEMED TO HAVE IRREVOCABLY WAIVED ALL CONDITIONS SET
FORTH IN ARTICLE 9. IN SUCH EVENT, THE DEPOSIT SHALL BELONG TO
SELLER, SHALL BE NON-REFUNDABLE AND SHALL BE APPLIED AGAINST THE
PURCHASE PRICE AT CLOSING OR RETAINED BY SELLER AS LIQUIDATED
DAMAGES PURSUANT TO PARAGRAPH 17 BELOW; PROVIDED, HOWEVER, IF
ESCROW FAILS TO CLOSE FOR ANY REASON OTHER THAN BUYER=S DEFAULT,
BUYER SHALL BE ENTITLED TO A REFUND OF THE DEPOSIT.
/s/ VJC /s/RMP
BUYER'S INITIALS SELLER'S INITIALS
5. Escrow; Closing Date.
5.1 Opening of Escrow. A copy of this Agreement executed
by the parties shall be deposited in an escrow ("Escrow") with
Commerce Escrow Company, 1545 Wilshire Blvd., Suite 600, Los
Angeles, California 90017 ("Escrow Holder"), and shall serve as
the escrow instructions, together with such further instructions,
if any, as the parties shall provide by written agreement. The
parties agree to execute such further escrow instructions as
Escrow Holder may require as long as Escrow Holder shall not
require the imposition of any additional obligations or
liabilities on the parties. Such further instructions shall not
modify the provisions of this Agreement unless otherwise
expressly set forth therein. Escrow shall be deemed "opened" on
the date Escrow Holder accepts this Agreement in writing or as of
the date fully executed counterparts of any further escrow
instructions required by Escrow Holder are deposited, whichever
occurs first. The parties agree to perform all acts necessary to
open Escrow within three (3) business days of the execution of
this Agreement. Escrow Holder shall promptly give Buyer and
Seller written notice of its acceptance of this Agreement and of
the date on which Escrow has opened.
5.2 Close of Escrow. The terms "Close of Escrow" and
"Closing Date" shall mean that date on which the conveyance of
the Property to Buyer shall be consummated by the recording of
the Grant Deed, which date shall be on or before August 20, 1997.
5.3 Termination of Escrow. If Escrow Holder is unable to
close Escrow by the Closing Date in compliance with this
Agreement, Escrow Holder shall hold the Escrow open and effect
closing as soon as it is able to do so in compliance with this
Agreement unless Escrow Holder receives a written demand to
terminate Escrow from either Buyer or Seller, whereupon Escrow
Holder shall send a copy of such demand to the other party. If
the other party does not object to the termination of Escrow
within five (5) business days of its receipt of such demand, then
Escrow Holder shall terminate Escrow and return all of the
documents and funds then held by Escrow Holder to the party who
has deposited the same. If the other party objects to the
termination of Escrow within such five (5) day period, then
Escrow Holder shall not terminate Escrow but shall hold such
documents and funds then held by Escrow Holder until Escrow
Holder shall have received instructions signed by both parties
with respect to such funds and documents. At any time after one
party makes written demand for the termination of Escrow and the
other party objects thereto, Escrow Holder may deposit all
documents and funds then held by Escrow Holder in a court of
competent jurisdiction and, after giving written notice of the
same to Buyer and Seller, Escrow Holder's obligations hereunder
shall terminate.
5.4 No Liability for Escrow Holder. Escrow Holder is not
to be held liable for the sufficiency or correctness as to form,
manner of execution or validity of any instruments deposited with
Escrow Holder, as to the identity, authority or rights of any
person executing the same, nor for any failure to comply with any
of the provisions of any agreement, contract or other instrument
referred to in this Agreement. Escrow Holder's duties hereunder
shall be limited to the safekeeping of any documents or monies
received by it as Escrow Holder and for the disposition of the
same in accordance with the written instructions of the parties
hereto. Escrow Holder shall not be concerned with any agreements
contained herein not required by Escrow Holder to close the
Escrow.
5.5 No Withdrawal of Funds. Except for the release of the
Deposit, no party shall have the right to withdraw any monies or
documents deposited by it with Escrow Holder prior to the Close
of Escrow or the termination thereof in accordance with the terms
of this Agreement.
6. Representations and Warranties of Buyer. Buyer hereby
represents and warrants the following to Seller for the purpose
of inducing Seller to enter into this Agreement and to consummate
the transactions contemplated hereby, all of which shall be true
as of the date hereof and as of the Closing Date and shall
survive the Close of Escrow and conveyance of title to the
Property hereunder:
a. Buyer is a duly organized, validly existing
limited partnership in good standing under the laws of the State
of Maryland. Buyer has the legal power, right and authority to
enter into this Agreement and the instruments and documents
referenced herein, and to consummate the transaction contemplated
hereby. The individuals executing this Agreement and the
instruments referenced herein on behalf of Buyer hereby represent
and warrant that they have the power, right and authority to bind
Buyer.
b. All requisite action has been taken by Buyer and
all requisite consents have been obtained in connection with the
entering into this Agreement and the instruments and documents
referenced herein, and the consummation of the transaction
contemplated hereby, and no consent of any other party is
required.
c. This Agreement is, and all agreements, instruments
and documents to be executed by Buyer pursuant to this Agreement
shall be duly executed by and are, or shall be, valid and legally
binding upon Buyer and enforceable in accordance with their
respective terms.
d. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby shall result
in a breach of or constitute a default under any agreement,
document, instrument or any other obligation to which Buyer is a
party or to which Buyer may be bound or affected, or under any
law, statute, ordinance, rule, governmental regulation or any
writ, injunction, order or decree of any court or governmental
body, applicable to Buyer or to the Property.
7. Representations and Warranties of Seller.
7.1 Seller's Representations. Seller hereby represents and
warrants the following to Buyer for the purpose of inducing Buyer
to enter into this Agreement and to consummate the transactions
contemplated hereby, all of which shall be true as of the date
hereof and as of the Closing Date and shall survive the closing
and conveyance of title to the Property hereunder:
a. Seller is a duly organized, validly existing
limited liability company in good standing under the laws of the
State of Delaware. Seller has the legal power, right and
authority to enter into this Agreement and the instruments and
documents referenced herein, and to consummate the transaction
contemplated hereby. The individuals executing this Agreement
and the instruments referenced herein on behalf of Seller hereby
represent and warrant that they have the power, right and
authority to bind Seller.
b. All requisite action has been taken by Seller and
all requisite consents have been obtained in connection with the
entering into this Agreement and the instruments and documents
referenced herein, and the consummation of the transaction
contemplated hereby, and no consent of any other party is
required.
c. This Agreement is, and all agreements, instruments
and documents to be executed by Seller pursuant to this Agreement
shall be duly executed by and are, or shall be, valid and legally
binding upon Seller and enforceable in accordance with their
respective terms.
d. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby shall result
in a breach of or constitute a default under any agreement,
document, instrument, or other obligation to which Seller is a
party or by which Seller may be bound, or under any law, statute,
ordinance, rule, governmental regulation or any writ, injunction,
order or decree of any court or governmental body, applicable to
Seller or to the Property.
e. Except as disclosed to Buyer, there is no claim,
action, litigation, arbitration or other proceeding pending
against Seller which relates to the Property or the transactions
contemplated hereby and, to Seller's actual knowledge, there is
currently no governmental investigation, threatened litigation or
arbitration proceedings to which Seller is, or would be, a party
which relates or would relate to the Property.
f. The Property shall be sold subject to those
certain Leases (the "Leases") as shown on Exhibit "C" hereto.
The Leases constitute all of the leases currently in effect at
the Property and no other parties (other than the tenants named
in the Leases) have any right to possession of all or any portion
of the Property. Seller has previously delivered to Buyer true
and complete copies of all of the Leases, and any amendments or
modifications thereto. Prior to the Close of Escrow, the Leases
shall not be modified or amended nor shall Seller enter into any
new leases or terminate any existing Leases (or any related
guaranties) without the prior written consent of Buyer, which
consent shall not be unreasonably withheld. However, Buyer shall
pay the broker's commissions and tenant improvement allowances
payable in connection with any such new leases.
g. Except for the agreements (the "Service
Contracts") set forth in Exhibit "D" attached hereto, there are
no contracts or other agreements which affect or will affect or
which are or will be obligations of the Buyer, the Property or
the Improvements after the Close of Escrow. All of the Service
Contracts may be terminated without penalty or other payment upon
no more than thirty (30) days notice. Seller shall not, after
the date of this Agreement, modify, extend or otherwise change
any of the Service Contracts or enter into any new service
contracts or any other obligations or agreements affecting the
Property without the prior written consent of Buyer, which
consent shall not be unreasonably withheld.
h. There are no pending or, to Seller's actual
knowledge, contemplated condemnation, annexation or other
proceedings affecting the Property or any part thereof.
i. To Seller's actual knowledge, without inquiry, the
Property does not contain any Hazardous Materials except for
substances and chemicals used in the ordinary operation of the
Property (e.g. cleaning products, paints, toner, insecticides and
normal medical uses). Hazardous Materials shall mean any
flammable explosives, radioactive materials, hazardous wastes or
substances, toxic wastes or substances and other related
materials including without limitation any substances defined as
or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials" or "toxic substances"
under any applicable federal, state or local laws or regulations.
j. To Seller's actual knowledge, without inquiry, the
Property is not in violation, and Seller has not received any
notice of any violation of, any law, ordinance, regulation, order
or requirement applicable to the Property including without
limitation, requirements imposed under any recorded covenants,
conditions, restrictions, easements or other rights affecting the
Property.
k. To the best of Seller=s knowledge, the operating
statements and rent roll delivered to Buyer are true and
complete.
7.2 AS-IS Conveyance. Buyer expressly acknowledges and
agrees: (a) Seller has previously delivered or made available to
Buyer and Buyer's representatives for their review and inspection
all plans, drawings, reports and other documents with respect to
the Property which are in Seller's possession and which represent
Seller's good faith identification, after reasonable
investigation of its files, of those documents determined by
Seller as likely to be of material concern to a prudent purchaser
of the Property; (b) Seller is not making, has not made and
expressly disclaims any representation or warranty, express or
implied, that such documents delivered by Seller or made
available for Buyer's review and inspection constitute all of the
documents and information in Seller's files relating to the Prop
erty; (c) Buyer has made (or by the Contingency Date will make)
such independent factual, physical and legal examinations and
inquiries as Buyer deems necessary and desirable with respect to
the Property and the transaction contemplated by this Agreement;
(d) Buyer is specifically purchasing the Property on an "AS-IS
WITH ALL FAULTS BASIS" and is relying solely upon Buyer's own
independent factual, physical and legal investigations, examina
tions and inquiries and the materials and information prepared by
Buyer or by third parties at Buyer's request in determining that
the Property and each portion thereof is suitable and adequate in
all respects for any and all activities and uses which Buyer may
elect to conduct thereon; (e) Except as provided in this
Agreement, Seller is not making, has not made and expressly
disclaims any representation, warranty or other assurance
whatsoever with respect to the Property or any condition or
feature thereof, including without limitation, any representa
tion, warranty or assurance regarding the validity or accuracy of
any documents (or the date contained therein) delivered by Seller
to Buyer or made available for Buyer's review and inspection; (f)
Buyer shall verify the accuracy and reliability of such documents
and date with the third parties who prepared the same; and (g)
Buyer is (or by the Contingency Date will be) fully acquainted
with the nature and condition, in all respects, of the Property,
including the existence or availability of all permits and
approvals from governmental authorities and the soil and geology
thereof. The provisions of this Paragraph 7.2 shall survive the
Close of Escrow.
7.3 No Additional Representations by Seller. Subject to
Paragraph 7.1 above, neither Seller nor any of its agents,
partners or employees has made and does not make any
representations or warranties, whether oral or written, expressed
or implied, with respect to: (i) any physical or environmental
aspect or condition of the Property or any part thereof
(including, without limitation, the presence of any hazardous
materials); (ii) any dimension or specifications of the Property
or any part thereof, including, without limitation, the square
footage or rentable area of the improvements or the number or
sufficiency of parking spaces on or about the Property; (iii)
feasibility, desirability, suitability, habitability or
convertibility of the Property and any part thereof into or for
any particular use or purpose; (iv) the zoning, building or land
use restrictions applicable to the Property or any part thereof;
(v) the leases, the tenants, or the project income or expenses,
if any, for the Property; (vi) soil, seismic or other geological
conditions effecting the Property or any part thereof with any
applicable laws, rules or regulations, including, without
limitation, use permits, building codes, fire and safety codes
and handicapped access codes and regulations (including, without
limitation, the Americans With Disabilities Act); (vii) the
availability or unavailability of governmental, quasi-
governmental or other permits, approvals, licenses, or
entitlements, if any, in any way relating to the Property or any
part thereof; (viii) the operability, adequacy, state of repair
or useful life of any fixture, equipment, machinery or other
apparatus of the Property; (ix) restrictions on hours of
operation, parking, types of tenants and uses, signage,
architectural and other limitations imposed by zoning, use
permits and other restrictions effecting the Property; and (x)
any other matter of any nature whatsoever relating in any way to
the Property or to any of the documents delivered by Seller to
Buyer.
7.4 Release. Except as otherwise set forth in Paragraph
7.1 above, as of the Close of Escrow, Buyer fully releases and
discharges Seller from and relinquishes all rights, claims and
actions that Buyer may have against Seller which arise out of or
are in any way connected with the Property at Closing, including
but not limited to the existence or presence on the Property of
(i) construction, design or natural defects of any kind or
nature, whether patent or latent, (ii) hazardous materials, and
(iii) violations of any federal, state or local law or regulation
applicable to the physical condition of the Property. This
release applies to all described rights, claims and actions,
whether known or unknown, foreseen or unforeseen, present or
future. Buyer specifically waives application of California
Civil Code Section 1542, which provided as follows:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor
at the time of executing the release, which if known by
him must have materially affected his settlement with
the debtor."
/s RSZ /s/ RMP
Buyer's Initials Seller's Initials
7.5 Breach of Representations and Warranties. If prior to
the Close of Escrow, Buyer learns of any fact or circumstances
which makes any of Seller's representations or warranties
materially untrue or misleading, Buyer's sole remedies shall be
to either (i) terminate this Agreement and to receive a refund of
its Deposit, it being understood that Buyer expressly waives any
right to close escrow and pursue any claims against Buyer for any
breach of such representations and warranties, or (ii) close
Escrow and waive any such breach without any reduction in the
Purchase Price.
7.6 Limitation on Liability. The liability of Seller for
breach of a representation or warranty made in this Article 7
shall terminate with respect to such representations and
warranties if Buyer has not commenced an action against Seller
within one (1) year after the Closing and shall otherwise be
limited as set forth in this Agreement.
8. Representations and Warranties of Seller and Buyer Regarding
Brokers.
8.1 Brokers. Each party represents and warrants that it
has not employed any brokers or finders in connection with the
transactions contemplated hereby other than Grubb & Ellis
(ABroker@).
8.2 Broker's Indemnity. Except for the commissions due
Broker, which shall be paid by Buyer pursuant to a separate
agreement betweenBuyer and Broker, each party shall indemnify,
save, defend and hold the other party free and harmless from and
against any and all obligations or liabilities to pay any real
estate broker's commission, finder's fee, or other compensation
to any person, firm or corporation arising from or in connection
with this Agreement or the Property which results from any act or
agreement of such party.
9. Contingencies. Notwithstanding anything to the contrary
contained in this Agreement, Buyer's obligation to purchase the
Property and to close Escrow hereunder is subject to Buyer's
written approval or waiver of all of the following matters:
9.1 Condition of Property. On or before 5:00 p.m. on
August 15, 1997 (the "Contingency Date"), Buyer shall have
approved or disapproved (in its sole discretion) in writing, the
results of any and all inspections, tests and studies with
respect to the condition of the Property which Buyer may elect to
make or obtain. Buyer's failure to timely approve such results
in writing and to deliver the Deposit pursuant to Section 4.1
above, shall be deemed Buyer's disapproval thereof. Upon Buyer's
disapproval (or deemed disapproval) of such results, this
Agreement shall terminate, and neither party shall have any
further rights or obligations hereunder except for Buyer's
obligations under this Paragraph 9.1 and Paragraph 21 below. The
cost of any such inspections, tests and studies shall be borne
entirely by Buyer. For the sole purpose of conducting such
inspections, tests and studies, Buyer and Buyer's representatives
shall have the right, during reasonable business hours, upon
reasonable notice, to enter onto the Property. Buyer shall
repair any damage to, and remove any liens against, the Property
caused by such tests, inspections and studies. Buyer hereby
indemnifies, defends and holds Seller harmless from and against
any and all loss, cost, damage, liability and expense, including
without limitation attorney's fees and costs, arising out of the
entry onto the Property by Buyer or Buyer's representatives. In
connection with Buyer's investigation of the Property, Seller
shall make available to Buyer, upon the execution of this
Agreement, all of Seller=s files relating to the Property
including, without limitation, copies of all Leases, maps, plans,
surveys, governmental agency documents, engineering, soils and
geological studies, marketing analysis, drainage studies,
operating statements, environmental studies, and similar
materials which Seller has in its possession or which is
reasonably available to Seller. At Close of Escrow, Seller shall
assign to Buyer all of Seller's right title interest in and to
the such documents.
9.2 Title. Buyers shall, at its sole cost, obtain from
First American Title Company (the "Title Company") a preliminary
title report ("PTR") for the Property along with copies of all
items identified as exceptions in the PTR. If Buyer elects to
obtain an ALTA extended coverage policy of title insurance, Buyer
shall notify Seller of such election promptly after execution of
this Agreement and shall obtain a survey of the Property, at
Buyer's sole cost on or before the Contingency Date. Upon
receipt of such survey, Buyer shall deliver to Seller, without
charge, one (1) original thereof. If Buyer elects to obtain a
survey, the survey shall be sufficient to enable the Title
Company to update the PTR to: (i) delete the standard survey
exceptions, (ii) add any new title exceptions which are revealed
by said survey and an inspection of the Property, and (iii)
enable the Title Company at Closing to issue an ALTA extended
owner's policy of title insurance. Buyer shall notify Seller no
later than the Contingency Date of any exceptions disapproved by
Buyer on either the PTR or the survey. Buyer hereby disapproves,
and Seller hereby agrees to cause the Title Company to remove or
insure over, all monetary liens (other than non-delinquent real
property taxes) set forth in the PTR delivered to Buyer
concurrently herewith. Buyer's failure to timely disapprove of
the PTR and/or survey in writing shall be deemed Buyer's approval
thereof. Within five (5) days after receipt of Buyer=s
disapproved exceptions, Seller shall notify Buyer in writing of
any disapproved title exceptions which Seller will cause to be
removed or insured against prior to the Close of Escrow.
Seller=s failure to notify Buyer in writing during such period
shall be deemed to be Seller=s notification of its unwillingness
to remove or insure against such exceptions. With respect to
such exceptions which Seller will not remove or insure against,
Buyer shall then elect, by giving written notice to Seller within
five (5) days thereafter to either (i) terminate this Agreement
(in which case the Deposit shall be returned to Buyer and neither
party shall have any further rights or obligations hereunder
except for Buyer=s obligations under Paragraph 9.1 and Paragraph
21), or (ii) waive the disapproval of such exceptions, in which
case the exceptions shall then be deemed to be approved. Those
exceptions approved by Buyer, the standard printed exceptions in
the Title Policy and such items as a correct survey and
inspection of the Property would disclose shall be referred to
herein as "Permitted Exceptions." If on the Closing Date, there
are any liens, assessments or encumbrances that Seller is
obligated to pay and discharge, Seller shall deposit with Escrow
Holder sufficient monies (or authorize Escrow Holder to use the
cash portion of the Purchase Price), acceptable to and required
by Escrow Holder to insure the obtaining and recording of such
satisfactions and the issuance of the Title Policy either free of
any such liens, assessments and encumbrances, or with insurance
against any loss or damage that Buyer may suffer as a result
thereof.
9.3 Tenant Estoppels. Promptly following the mutual
execution of this Agreement, Seller shall prepare, and deliver to
each of the tenants, written estoppel certificates in the form
attached hereto as Exhibit "E" and incorporated herein by
reference (the "Tenant Estoppels"). Seller shall use
commercially reasonable efforts to obtain signed Tenant Estoppels
from each of the existing tenants on or before the Contingency
Date. If by the Contingency Date Seller has not received and
delivered to Buyer a Tenant Estoppel from each existing tenant or
Buyer has disapproved the content of any Tenant Estoppel, Buyer
shall have the right to terminate this Agreement upon written
notice to Seller on or before the Contingency Date. Buyer's
failure to timely disapprove any Tenant Estoppel shall be deemed
Buyer's approval thereof. Notwithstanding the following, Buyer
shall not have the right to disapprove any Tenant Estoppel which
is in form and substance materially the same as the form attached
hereto as Exhibit "E" and which is not materially inconsistent
with the rent roll and Leases delivered to Buyer and does not
otherwise disclose any quarrel or disagreement with Seller.
Additionally, if any Tenant Estoppel is not timely received by
Buyer, Seller shall prior to the Close of Escrow, deliver to
Buyer (and Buyer shall accept in lieu of a Tenant Estoppel) an
estoppel certified by Seller (to Seller's actual knowledge) with
respect only to the following matters: the amount of base rent
payable by such tenant (and the date through which such base rent
has been paid); the amount of the security deposit held by
Seller; the term of such lease including options; the amount and
date of the last payment of any pass-through expenses; and a
representation that there are no known defaults under such Lease
(or stating any known defaults). Such certification shall
survive the Close of Escrow for a maximum period of twelve (12)
months (provided, however, if Seller subsequently delivers a
Tenant Estoppel from such tenant(s) or Buyer obtains a Tenant
Estoppel from such tenant(s), Seller shall thereafter be
released from such certification if such Tenant Estoppel confirms
the matters in the estoppel certified by Seller).
10. Maintenance of the Property. From and after the date hereof
until the Close of Escrow, Seller shall maintain the Property in
its present condition, normal wear and tear and damage or
destruction excepted.
11. Covenant to Convey; Title Insurance.
11.1 Conveyance of Title. At the Close of Escrow, Seller
shall convey fee simple title to the Property to Buyer by grant
deed subject only to the Permitted Exceptions.
11.2 Title Policy. On the Closing Date, Seller shall cause
the Title Company to issue to Buyer the Title Company's CLTA
owner's policy of title insurance (or ALTA coverage if elected by
Buyer pursuant to Paragraph 9.2 above) (the "Title Policy") with
a liability limit in the amount of the Purchase Price showing fee
title to the Property to be vested in Buyer, subject only to the
Permitted Exceptions.
12. Deliveries.
12.1 Seller's Deliveries. At least two (2) business days
prior to the Closing Date, Seller shall deliver to Escrow Holder
the following documents, fully executed and acknowledged where
appropriate, and such other items as follows:
a. A grant deed ("Grant Deed") conveying fee simple
title to the Property to Buyer;
b. A bill of sale ("Bill of Sale") substantially in
the form and substance of Exhibit "F" hereto, conveying to Buyer,
without representation or warranty all of the Personal Property,
if any.
c. An Assignment and Assumption of Leases (the
"Assignment of Leases") substantially in the form and substance
of Exhibit "G" hereto, assigning to Buyer all of Seller's right,
title and interest as landlord under the Leases.
d. An Assignment of Service Contracts, Intangibles,
Warranties and Guarantees (the "Assignment of Service Contracts")
substantially in the form and substance of Exhibit "H" hereto,
assigning to Buyer all of Seller's right, title and interest in
and to the Service Contracts and other property described in the
Assignment of Service Contracts.
e. An original counterpart of the Leases and all
amendments thereto.
f. Notices to the tenants under the Leases of the
transfer of the Property to Buyer in form reasonably satisfactory
to the parties (including a certification that the security
deposit, if any, has been credited to Buyer).
g. A certificate duly executed by Seller under
penalty of perjury certifying that Seller is not a "foreign
person" in accordance with and for the purpose of provisions of
'1445 of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder, together with California Form
590.
h. Such funds as may be necessary to comply with
Seller's obligation hereunder regarding prorations, costs,
expenses, assignment of security deposits, and removal of liens
or encumbrances, and payment of taxes and assessments, or
Seller's authorization to Escrow Holder to use the cash portion
of the Purchase Price to comply with such of Seller's
obligations.
12.2 Buyer's Deliveries. At least one (1) business day
prior to the Closing Date, Buyer shall deliver to Escrow Holder
the following documents, fully executed and acknowledged where
appropriate, and such other funds and items as follows:
a. A counterpart of the Assignment of Leases;
b. A counterpart of the Assignment of Service Contracts;
c. A Preliminary Change of Ownership Statement in
form suitable for filing with the Los Angeles County Tax
Collector; and
d. Immediately available funds in the amount of the
balance of the cash portion of the Purchase Price.
12.3 Escrow Holder's Deliveries. On the Close of Escrow,
subject to Escrow Holder having received the documents and monies
required to be deposited into Escrow pursuant to this Agreement
and Escrow having received no written notice by a party that a
condition precedent to its obligation to close has not been
satisfied, Escrow shall do each of the following:
a. Duly record the Grant Deed and arrange for the
delivery to the parties conformed copies thereof as soon as
available.
b. Deliver to Buyer originals of the Bill of Sale,
Assignment of Leases, Assignment of Service Contracts, the Leases
(and all amendment thereto) and the items specified in Paragraph
12.1(f).
c. Deliver the Assignment of Leases, Assignment of
Service Contracts, and the Purchase Price to Seller.
d. Cause the Title Company to deliver the Title
Policy to Buyer.
13. Prorations, Costs.
13.1 Prorations. Monthly rent paid by the tenants under the
Leases (including, but not limited to, fixed monthly rentals,
additional rents, escalations, operating expense pass-throughs
and other sums and charges payable by the tenants under the
Leases), non-delinquent real property taxes, and other revenues,
income and receivables, and all items of costs and expenses with
respect to the Property (excluding any costs or expenses relating
to services, utilities or contracts which are to be terminated at
Closing or which are directly payable by tenants under the
Leases), shall be prorated as of the Close of Escrow. The
unapplied portion of any security deposits under the Leases shall
be credited at the Close of Escrow against Buyer's obligation to
deliver the cash portion of the Purchase Price. Seller reserves
all claims and causes of action against tenants and others who
are in arrears, and Buyer shall promptly remit to Seller any
arrearages upon receipt thereof provided that all current
obligations of such tenant have been paid. Additionally, with
respect to any property tax appeal or reassessment filed by
Seller for tax years (or portions thereof) prior to the Close of
Escrow, Seller shall be entitled to the full amount of any refund
or rebate resulting therefrom (less any credits owning to the
tenants under the Lease in connection with such refund or
rebate). Any items to be prorated that is not determined or
determinable at the Closing shall be promptly adjusted by Buyer
and Seller by appropriate cash payment outside of Escrow when the
amount due is determined. Either party shall be entitled to
request such an adjustment, by written demand on the other party,
at any time within two (2) months after the Closing Date.
13.2 Costs. Each party shall pay all attorneys' fees,
accounting fees, and other expenses incurred by it in connection
with the transactions contemplated hereby. Seller shall pay:
(i) the CLTA portion of the premium for the Title Policy, (ii)
one-half (2) of all escrow fees, and (iii) all recording fees and
documentary transfer taxes. Buyer shall pay: (a) one-half (2)
of all escrow fees, (b) the ALTA portion of the premium for the
Title Policy and the premiums and costs for any endorsements or
extended coverages obtained by Buyer in connection with the title
policy; and (c) the premiums for the lender's policy, if any.
All other closing costs shall be apportioned in the manner
customary in the county where the Property is located.
13.3 Cancellation Fees. Notwithstanding the foregoing
Paragraph 13.2, in the event of a default by Seller or Buyer
hereunder, all cancellation fees and other Escrow charges shall
be borne by the defaulting party.
14. Conditions Precedent.
14.1 The obligation of Buyer to consummate the conveyance of
the Property hereunder is subject to the satisfaction of each of
the following conditions precedent:
a. The representations and warranties of Seller
contained in Articles 7 and 8 shall be true on and as of the
Close of Escrow as if the same were made on and as of that date.
b. Seller shall have performed and complied with all
agreements, covenants and conditions required by this Agreement
to be performed or complied with by Seller prior to or on the
Close of Escrow.
c. There shall not have been filed by or against
Seller at any time prior to or on the Close of Escrow any
bankruptcy, reorganization or arrangement petition.
d. Buyer's timely approval or deemed approval of all
matters and items referred to in Article 9.
14.2 The obligation of Seller to consummate the conveyance
of the Property hereunder is subject to the satisfaction of each
of the following conditions precedent:
a. The representations and warranties of Buyer
contained in Articles 6 and 8 shall be true on and as of the
Close of Escrow as if the same were made on and as of that date.
b. Buyer shall have performed and complied with all
agreements, covenants and conditions required by this Agreement
to be performed or complied with by Buyer prior to or on the
Close of Escrow.
c. There shall not have been filed by or against
Buyer at any time prior to the Close of Escrow any bankruptcy,
reorganization or arrangement petition.
15. Cooperation Regarding Tax-Deferred Exchange. Although this
Agreement is not conditioned upon the consummation of a
concurrent or delayed exchange in accordance with Section 1031 of
the Internal Revenue Code of 1986, Buyer acknowledges that Seller
may desire to utilize all or a portion of the Purchase Price paid
by Buyer for the Property in this Escrow in connection with such
an exchange. Seller shall have the right, without the need of
any further approval or consent of Buyer at all times during the
term of the Escrow and prior to the Close of Escrow, to convey
all or a portion of the Property and assign and delegate Seller's
corresponding rights and obligations under this Agreement to an
intermediary party designated by Seller for the purpose of
effecting such an exchange. Upon the assumption by such
intermediary party of such obligations, Seller shall be released
and relieved of all further obligations and liabilities pursuant
to this Agreement, provided that Seller shall remain liable for
all the representations, warranties and indemnities of Seller as
set forth in this Agreement. Seller hereby indemnifies Buyer and
holds Buyer harmless from and against all loss, cost, damage,
liability and expense (including without limitation reasonable
attorneys' fees and costs) arising out of or incurred in
connection with Buyer's cooperation with Seller pursuant to this
Article 15. Seller acknowledges and agrees that Buyer shall
cooperate with Seller as provided above as an accommodation to
Seller only, and Buyer makes no representations or warranties of
any kind regarding whether the consummation of this Agreement or
any other escrow of Seller shall result in any tax benefit to
Seller or shall qualify as a tax-deferred exchange under Section
1031 of the Internal Revenue Code of 1986. Seller's failure to
close any other escrow in connection with such an exchange shall
have no effect upon or interfere with the Closing of this Close
of Escrow pursuant to this Agreement. Seller shall pay for
Buyer=s reasonable attorneys= fees and costs in connection with
Buyer=s review of such exchange documentation. Additionally,
Buyer shall not be required to take title to any other property
in connection with such exchange and the Closing shall not be
delayed.
16. Casualty; Condemnation.
16.1 Partial Damage. In the event of the occurrence of any
casualty to the Property prior to the Close of Escrow which shall
cost One Hundred Thousand Dollars ($100,000) or less to repair
(as determined by an independent contractor selected by Seller
and reasonably approved by Buyer), the obligations of the parties
hereunder shall be unaffected and the parties shall proceed to
closing without reduction of the Purchase Price. In such case,
Seller shall credit to Buyer the reasonable cost of such repair.
16.2 Material Damage or Condemnation. In the event of the
occurrence of any of the following prior to the Close of Escrow:
(i) the commencement of any eminent domain or condemnation
proceedings with respect to any portion of the Property, or (ii)
any casualty which shall cost in excess of One Hundred Thousand
Dollars ($100,000) to repair, Buyer may terminate this Agreement
on written notice to Seller given prior to the Close of Escrow in
which case Buyer shall be responsible for any escrow costs and
cancellation fees. If Buyer does not terminate this Agreement in
a timely manner pursuant to this Paragraph 16.2, then the parties
shall proceed to the Close of Escrow without any reduction of the
Purchase Price or other change in terms and Seller shall assign
to Buyer at closing all insurance or condemnation proceeds.
17. Liquidated Damages. IF BUYER SHOULD DEFAULT OR BREACH ITS
OBLIGATIONS UNDER THIS AGREEMENT, SELLER SHALL BE ENTITLED TO
RECEIVE AND RETAIN, AS LIQUIDATED DAMAGES, THE DEPOSIT OF TWO
HUNDRED THOUSAND DOLLARS ($200,000). THE PARTIES ACKNOWLEDGE
THAT SAID SUM IS FAIR AND REASONABLE IN LIGHT OF ALL OF THE
CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT, INCLUDING
THE PARTIES' ESTIMATION OF THE POSSIBLE RANGE OF DAMAGES TO
SELLER IN THE EVENT OF SUCH A DEFAULT OR BREACH BY BUYER, THE
PARTIES HERETO HEREBY AGREEING THAT THE DAMAGES TO SELLER IN THE
EVENT OF BUYER'S DEFAULT OR BREACH WOULD BE IMPOSSIBLE TO
ACCURATELY DETERMINE AND THAT PROOF OF THE AMOUNT OF SUCH DAMAGES
WOULD BE COSTLY AND INCONVENIENT. SUCH LIQUIDATED DAMAGES SHALL
BE SELLER'S SOLE AND EXCLUSIVE REMEDY FOR BUYER'S DEFAULT OR
BREACH AND BUYER SHALL HAVE NO OTHER OR FURTHER OBLIGATION OR
LIABILITY UNDER THIS AGREEMENT TO SELLER ON ACCOUNT OF SUCH
DEFAULT OR BREACH. SELLER AND BUYER HEREBY AGREE, AND SO
INSTRUCT ESCROW HOLDER. BY INITIALING THIS PROVISION IN THE
SPACE BELOW, SELLER AND BUYER EACH SPECIFICALLY AFFIRM THEIR
RESPECTIVE AGREEMENTS CONTAINED IN THIS ARTICLE 17.
BUYER'S INITIALS: /s/ RSZ SELLER'S INITIALS:/s/RMP
18. Notices. Any notice, demand or document which any party is
required or may desire to give, deliver or make to any other
party shall be in writing, and may be personally delivered or
given or made by United States registered or certified mail,
return receipt requested, by overnight delivery service (e.g.,
Federal Express), or by facsimile transmission addressed as
follows:
To Seller: c/o Mr. Scott Dew
Rubin-Pachulski Properties, Inc.
10351 Santa Monica Blvd., Suite 410
Los Angeles, CA 90025
With copy to: David C. Klein, Esq.
1875 Century Park East, Suite 700
Los Angeles, CA 90067
Fax No. (310) 788-2738
To Buyer: Arden Realty Limited Partnership
9100 Wilshire Blvd., #700E
Beverly Hills, CA 90212
Fax No. (310) 274-6218
With copy to: Ken Blumer
Troy & Gould
1801 Century Park East, 16th Flr.
Los Angeles, CA 90067
Fax No. (310) 201-4746
Any party may designate a different address for itself by notice
similarly given. Any notice, demand or document so given, deliv
ered or made by United States mail shall be deemed to have been
given seventy-two (72) hours after the same is deposited in the
United States mail as registered or certified matter, addressed
as above provided, with postage thereon fully prepaid. Any
notice, demand or document delivered by overnight delivery
service shall be deemed complete upon actual delivery or
attempted delivery, provided such attempted delivery is made on a
business day. Any such notice, demand or document not given by
registered or certified mail or by overnight delivery service as
aforesaid shall be deemed to be given, delivered or made upon
receipt of the same by the party to whom the same is to be given
or delivered. Any notice given by facsimile shall be deemed
delivered upon confirmed transmission by the sender.
19. Further Assurances. Seller and Buyer agree that at any time
or from time to time after the execution of this Agreement and
whether before or after the closing they shall, upon request of
each other, execute and deliver such further documents and do
such further acts and things as such party may reasonably request
in order to fully effect the purpose of this Agreement.
20. Indemnification.
20.1 Buyer's Indemnification. Buyer hereby saves,
indemnifies, defends and holds harmless Seller and its successors
and assigns from and against any and all loss, cost, damage,
liability and expenses (including without limitation attorneys'
fees and costs) resulting from or arising out of any failure or
breach of any of Buyer's warranties, representations, covenants,
agreements or obligations set forth in this Agreement or arising
with respect to the Property from and after the Close of Escrow.
Seller shall notify Buyer of any such claim within ten (10) days
after Seller has notice of such claim, but failure to notify
Buyer shall in no case prejudice the rights of Seller under this
Agreement unless Buyer shall be prejudiced by such failure and
then only to the extent of such prejudice. Buyer shall have the
right to defend such claim with counsel of its own choice,
subject to the reasonable written approval of such counsel by
Seller. Should Buyer fail to discharge or undertake to defend
Seller against such claim upon learning of the same, then Seller
may settle such claim and Buyer's liability to Seller shall be
conclusively established by such settlement, the amount of such
liability to include both the settlement consideration and the
reasonable costs and expenses, including attorneys' fees,
incurred by Seller in effecting such settlement.
20.2 Seller's Indemnity. Seller hereby saves, indemnifies,
defends and holds harmless Buyer and its successors and assigns
from and against any and all loss, cost, damage, liability and
expenses (including without limitation attorneys' fees and costs)
resulting from or arising out of any failure or breach of any of
Seller's warranties, representations, covenants, agreements or
obligations set forth in this Agreement. Buyer shall notify
Seller of any such claim within ten (10) days after Buyer has
notice of such claim, but failure to notify Seller shall in no
case prejudice the rights of Buyer under this Agreement unless
Seller shall be prejudiced by such failure and then only to the
extent of such prejudice. Seller shall have the right to defend
such claim with counsel of its own choice, subject to the
reasonable written approval of such counsel by Buyer. Should
Seller fail to discharge or undertake to defend Buyer against
such claim upon learning of the same, then Buyer may settle such
claim and Seller's liability to Buyer shall be conclusively
established by such settlement, the amount of such liability to
include both the settlement consideration and the reasonable
costs and expenses, including attorneys' fees, incurred by Buyer
in effecting such settlement.
21. Attorneys' Fees. In the event of any action for breach of,
to enforce the provisions of, or otherwise involving this
Agreement, the court in such action shall award a reasonable sum
as attorneys' fees to the party who, in the light of the issues
litigated and the court's decision on those issues, was more
successful in the action. The more successful party need not be
the party who recovers a judgment in the action. If a party
voluntarily dismisses an action, a reasonable sum as attorneys'
fees shall be awarded to the other party.
22. Miscellaneous Provisions.
22.1 Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto pertaining to the
subject matter hereof and supersedes all prior agreements, oral
or written, express or implied, and all understandings,
negotiations or discussions of the parties, whether oral or
written, and there are no warranties, representations or
agreements between the parties in connection with the subject
matter hereof except as are set forth herein.
22.2 Partial Invalidity. If any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect
the remainder of such provision or any other provisions hereof.
22.3 No Waiver of Breach. No waiver by any party of any
breach hereunder shall be deemed a waiver of any other or
subsequent breach.
22.4 Amendments. This Agreement may not be altered,
amended, changed, waived, terminated or modified in any respect
or particular unless the same shall be in writing and signed by
or on behalf of the party to be charged therewith.
22.5 Waiver of Conditions. Either party may, at any time or
times, at its election, waive any of the conditions to its
obligations hereunder, but any such waiver shall be effective
only if contained in a writing signed by such party. No waiver
shall reduce the rights and remedies of such party by reason of
any breach of the other party.
22.6 Successors and Assigns. Subject to the provisions of
Section 22.20 below, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and to their
respective successors and assigns.
22.7 Survival. Except as specifically provided to the
contrary in this Agreement, each and every agreement, obligation,
warranty, representation, covenant and indemnification of Seller
and Buyer contained herein shall survive the closing hereunder
and the transfer and conveyance of the Property and any and all
performances hereunder.
22.8 Time. Time is of the essence of this Agreement
22.9 Remedies. Except as otherwise specifically provided
herein, no remedy conferred upon a party in this Agreement is
intended to be exclusive of any other remedy herein or by law
provided or permitted, but each shall be cumulative and shall be
in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute.
22.10 Meaning of Certain Words. Wherever appropriate in
this Agreement, the singular shall be deemed to refer to the
plural and the plural to the singular, and pronouns of certain
genders shall be deemed to include either or both of the other
genders.
22.11 California Law. This Agreement shall be construed
and enforced in accordance with the laws of the State of
California.
22.12 Headings and Labels. All article and paragraph
titles or captions are for convenience only and shall not be
deemed a part of this Agreement.
22.13 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but
which when taken together shall constitute one and the same
instrument.
22.14 Exhibits. All of the Exhibits attached to this
Agreement are incorporated herein as if set forth in full.
Exhibit A Legal Description
Exhibit B Personal Property
Exhibit C Schedule of Leases
Exhibit D Schedule of Service Contracts
Exhibit E Tenant Estoppel
Exhibit F Bill of Sale
Exhibit G Assignment and Assumption of Leases
Exhibit H Assignment of Service Contracts, Intangibles,
Warranties and Guarantees
Exhibit I Audit Letter
22.15 Construction. This Agreement shall not be
construed as if it had been prepared by one of the parties, but
rather as if both parties had prepared the same.
22.16 Performance. If the date on which Buyer or Seller
is required to take any action under the terms of this Agreement
occurs on a Saturday, Sunday, or Federal or State Holiday, then
the action shall be taken on the next succeeding business day.
22.17 No Third Party Beneficiaries. The parties do not
intend to confer any benefit hereunder on any person, firm or
corporation other than the parties hereto.
22.18 Partial Invalidity. If any term or provision of
this Agreement or the application thereof to any person or
circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected
thereby, and each such term and provision of this Agreement shall
be valid and be enforced to the fullest extent permitted by law.
22.19 Limitation of Liability of Buyer and Seller.
Notwithstanding any other provision of this Agreement to the
contrary, in no event shall Buyer or Seller have any liability
for speculative, special, consequential, punitive, or any other
damages than actual damages under any provision of this
Agreement.
22.20 Assignment. Buyer shall neither assign its rights
nor delegate its obligations hereunder unless (i) Buyer is the
general partner, member or controlling shareholder of such
assignee or assignee is an affiliate of Buyer; and (ii) such
assignee expressly agrees in writing to assume and be bound by
all of the duties, obligations, releases, waivers and liabilities
hereunder. In no event shall any such assignment relieve Buyer
from its obligations hereunder or delay the Close of Escrow.
22.21 Audit Rights. At Buyer=s request at any time from
and after the date hereof until the date that is one (1) year
after the Closing, Seller shall, at Buyer=s expense, provide to
Buyer=s designated independent auditor access to the books and
records of the Property, regarding the period for which Buyer is
required to have audited financial statements prepared with
respect to the Property as may be required by the Securities and
Exchange Commission, to the extent that such books, records and
related information are in Seller=s possession or control and
relate to the period during which Seller held title to the
Property. Further, Seller agrees to provide to such auditor a
representation letter regarding the books and records of the
Property, in substantially the form of Exhibit AI@ attached
hereto, in connection with the normal course of auditing the
Property in accordance with generally accepted auditing
standards.
IN WITNESS WHEREOF, the parties have executed this Agreement
of Purchase and Sale of Property and Escrow Instructions on the
dates and at the places set forth opposite their signatures
below.
"SELLER"
South Spalding Associates, L.L.C. Executed this 12th day of
a Delaware limited liability company August, 1997.
By: RPP VIII, L.P.
a California Limited Partnership
By: Rubin-Pachulski Properties, Inc.,
a California corporation
By: /s/ Richard Pachulski
Richard Pachulski, Secretary
"BUYER"
ARDEN REALTY Limited Partnership Executed this 7th day of
a Maryland limited partnership August, 1997.
By: Arden Realty, Inc., a
Maryland Corporation
By: /s/ Richard S. Ziman
Its: CEO
ACKNOWLEDGED AND ACCEPTED THIS ___ DAY OF ____________, 1997.
COMMERCE ESCROW COMPANY
By:
Its:
Arden Realty Limited Partnership
9100 Wilshire Boulevard
Suite 700 East Tower
Beverly Hills, California 90212
(310) 271-8600
FAX (310) 246-2941
August 13, 1997
South Spalding Associates, L.L.C.
c/o Rubin-Pachulski Properties, Inc.
10351 Santa Monica Boulevard
Suite 410
Los Angeles, CA 90025
Attn: Scott Dew
Re: 120 South Spalding Building.
Dear Ladies and Gentlemen:
Reference is made to that certain Agreement of Purchase
and Sale of Real Property and Escrow Instructions between you
as Seller and the undersigned as Purchaser ("Arden")
regarding the above-referenced real property ("Property") and
dated August 6, 1997 as supplemented by that certain letter
between Seller and Purchaser dated August 11, 1997
(collectively, "Agreement"). Capitalized terms not otherwise
defined in this letter shall have the meaning ascribed to
them in the Agreement.
Pursuant to the Agreement, August 15, 1997 is the end of
the Contingency Date within which to object to matters
concerning the Property. This letter will confirm your
agreement with Arden as of this date that the Contingency
Date has been extended to and including 4:00 p.m. PDT on
August 18, 1997. In all other respects, the Agreement shall
be and remain in full force and effect as originally written
and supplemented.
Please sign and return a copy of this letter for our
files.
Sincerely,
ARDEN REALTY LIMITED PARTNERSHIP,
By: Arden Realty, Inc.
Its general partner
By:/s/ Victor J. Coleman
Victor J. Coleman, President
Accepted and Agreed to this
13th day to August 1997
South Spalding Associates, L.L.C.,
a Delaware limited liability company,
By:/s/ Scott C. Dew
Name: Scott C. Dew
Title: EVP
cc: Brig Troy
Kenneth R. Blumer, Esq. (310) 201-4746
David Klein, Esq. (310) 788-2738
ARDEN REALTY LIMITED PARTNERSHIP
9100 WILSHIRE BOULEVARD
SUITE 700 E
Beverly Hills, California 90212
(310)-271-8600
FAX (310)-274-6218
August 18, 1997
VIA FACSIMILE & FIRST CLASS MAIL
South Spalding Associates, L.L.C.
c/o Rubin-Pachulski Properties, Inc.
10351 Santa Monica Boulevard
Suite 410
Los Angeles, California 90025
Attn: Scott Dew
Re: 120 South Spalding Drive, Beverly Hills,
California ("Property")
Gentlemen:
Reference is made to that certain Sale and Purchase
Agreement and Escrow Agreement dated August 6, 1997, as
supplemented by that certain side letter dated August
11, 1997 and amended by that certain Letter Amendment
dated August 13, 1997 (collectively, "Agreement")
between Arden Realty Limited Partnership, a Maryland
limited partnership ("Purchaser") and South Spalding
Associates, L.L.C., a Delaware limited liability
company ("Seller") for the sale and purchase of the
above-reference Property. Capitalized terms not defined
herein shall have the meaning given to them in the
Agreement.
Pursuant to the Agreement, the Purchase Price for the
Property is $11,100,000. This Letter Amendment confirms
that Seller does hereby credit Purchaser in the amount
of $18,000.00 for certain long term maintenance issues
at the Property as a reduction to the Purchase Price.
Therefore, the Purchase Price shall now be
$11,082,000.00. In all other respects the Agreement
shall be and remain in full force and effect as
originally written.
If the foregoing correctly reflects your understanding
of our mutual agreement, please so indicate in the
space provided below for your signature and return a
copy of this Amendment to the undersigned and to the
Escrow.
Sincerely,
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc.
a Maryland corporation,
Its general partner
By:/s/ Victor J. Coleman
Name: Victor J. Coleman
Title: President and COO
ACCEPTED AND AGREED TO:
this 19th day of August, 1997
SOUTH SPALDING ASSOCIATES, L.L.C.
a Delaware limited liability company
By:/s/ Richard Pachulski
Name: Richard Pachulski
Title: Secretary
cc: David Klein, Esq. (310) 788-2738
Brigitta B. Troy (310) 274-6218
Richard S. Ziman (310) 274-6218
Kenneth R. Blumer, Esq. (310) 201-4746
PURCHASE AND SALE AGREEMENT
REAL PROPERTY PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
by and between
FRONTIER II PROPERTIES LIMITED PARTNERSHIP,
a Texas limited partnership
as Seller
and
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
as Buyer
August 15, 1997
Relating to Real Property Located At:
1370 South Valley Vista
Diamond Bar, California
TABLE OF CONTENTS
Section Page
RECITALS 1
1. PURCHASE AND SALE 1
1.1 Agreement to Buy and Sell 1
1.2 Purchase Price 2
1.3 Payment of Purchase Price 2
2. OPENING OF ESCROW 2
2.1 Escrow; Escrow Holder 2
2.2 Closing Date 3
3. ACTIONS PENDING CLOSING 3
3.1 Deliveries by Seller 3
3.2 Buyer's Review of Title 4
3.3 Buyer's Review of the Property and Agreements 5
3.4 No Processing 7
3.5 Buyer's Termination 7
3.6 Seller's Termination 8
4. ADDITIONAL AGREEMENTS OF THE PARTIES 8
4.1 Representations and Warranties 8
4.1.1 Buyer's Representations and Warranties 8
4.1.2 Sellers Covenants, Representations and
Warranties 10
4.2 Reaffirmation 13
4.3 Hazardous Material Indemnification 14
4.4 Condemnation 14
4.5 Damage or Destruction 15
4.6 Indemnity 15
5. CLOSING 16
5.1 Deposits Into Escrow 16
5.2 Prorations 17
5.3 Payment of Closing Costs 18
5.4 Closing of Escrow 18
5.5 Failure to Close; Cancellation 19
5.6 LIQUIDATED DAMAGES 19
5.7 BUYER'S REMEDIES 19
5.8 Possession 21
5.9 Conditions Precedent/Consurrent to Closing 21
6. GENERAL PROVISIONS 21
6.1 Counterparts 21
6.2 Entire Agreement 21
6.3 Legal Advice; Neutral Interpretation; Headings 22
6.4 Choice of Law 22
6.5 Severability 22
6.6 Waiver of Covenants, Conditions or Remedies 22
6.7 Exhibits 22
6.8 Amendment 22
6.9 Relationship of Parties 22
6.10 No Third Party Benefit 22
6.11 Time of the Essence 23
6.12 Further Acts 23
6.13 Recordation; Actions to Clear Title 23
6.14 Assignment 23
6.15 Attorneys' Fees 23
6.16 Brokers 23
6.17 Confidentiality 23
6.18 Manner of Giving Notice 24
6.19 Survival 25
6.20 Acceptance of Offer 25
REAL PROPERTY PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
THIS REAL PROPERTY PURCHASE AND SALE AGREEMENT (this
"Agreement") is entered into as of August 15, 1997, by and
between FRONTIER II PROPERTIES LIMITED PARTNERSHIP, a Texas
limited partnership (the "Seller"), and ARDEN REALTY LIMITED
PARTNERSHIP, a Maryland limited partnership (the "Buyer").
RECITALS:
A. Seller is the owner of approximately 4.37 acres of real
property improved with an approximately 84,081 square foot
suburban office building located at 1370 South Valley Vista, in
the City of Diamond Bar, County of Los Angeles, State of
California.
B. Buyer desires to purchase that property, and Seller
desires to sell that property on the terms and conditions
contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, Buyer and Seller agree as
follows:
1. PURCHASE AND SALE
1.1 Agreement to Buy and Sell. Subject to all of the terms
and conditions of this Agreement, Seller hereby agrees to sell
and convey to Buyer and Buyer hereby agrees to acquire and
purchase from Seller the following (all of which are collectively
called the "Property" in this Agreement):
1.1.1 That certain real property described on
Exhibit "A", and all of Seller's right, title and interest in and
to all easements, rights and privileges appurtenant thereto,
including any right, title and interest of Seller in and to
adjacent streets, alleys or rights of way (collectively, the
"Land"), together with all of Seller's right, title and interest
in and to all improvements, structures, equipment and fixtures
currently located on or under the Land (the "Improvements");
1.1.2 All of Seller's right, title and interest in
and to all tangible personal property, if any, located on,
affixed to, or pertaining to the Property and used in connection
with the ownership, operation or maintenance of the Property, and
all intangible property, if any (including, without limitation,
plans and specifications, surveys, permits, licenses and
approvals) owned or held by Seller that pertains to the
ownership, maintenance, use or operation of the Property
(collectively, the "Personal Property"), all as listed on Exhibit
"B" attached hereto;
1.1.3 All of Seller's right, title and interest in
any leases, licenses, security deposits, letters of credit,
guarantees, occupancy agreement or other agreements demising
space in, providing for the use of and/or occupancy of the Land
or the Improvements (collectively, the "Leases");
1.1.4 All of Seller's right, title and interest, if
any, in and to any and all Leases, service contracts, maintenance
agreements, construction contracts, architect's agreements,
parking agreements, consultant agreements, warranties,
guaranties, bonds and all other contracts and agreement relating
to the Property which continue in full force and effect beyond
the Closing, together with all supplements, amendment and
modifications thereto (collectively, the "Surviving Contracts").
1.2 Purchase Price. The purchase price of the Property
shall be the sum of Ten Million Eight Hundred Thousand Dollars
($10,800,000.00) (the "Purchase Price").
1.3 Payment of Purchase Price. The Purchase Price shall be
payable as follows:
1.3.1 "Effective Date" means the date a fully
executed original of this Agreement is delivered to Fidelity
National Title Insurance Company, at 2510 North Red Hill Avenue,
Suite 100, Santa Ana, California 92705-5542, Attention: Dennis
Chaplin ("Escrow Holder"). Within three business days after the
Effective Date hereof, Buyer shall deposit into "Escrow" (as
defined below), into an interest bearing account, the sum of
Three Hundred Thousand Dollars ($300,000.00) (the "Deposit") by
certified check or wire transfer of federal funds, or in other
immediately available funds. Except as otherwise set forth in
this Agreement, the Deposit shall be non-refundable to Buyer
after the Decision Date. Any income or interest earned on the
Deposit while in Escrow prior to "Closing" (as defined below)
shall be held in Escrow and shall be deemed a part of the Deposit
for all purposes of this Agreement. The Deposit and all interest
accrued thereon while in Escrow shall be applied to the Purchase
Price upon Closing.
1.3.2 At least one (1) business day prior to the
"Closing Date" (as defined below), Buyer shall deposit into
Escrow the balance of the Purchase Price (i.e., $10,500,000.00),
subject to adjustment by reason of any applicable prorations and
the allocation of closing costs described below. The deposit
required by this paragraph shall be made by wire transfer of
federal funds or in another immediately available form.
2. OPENING OF ESCROW
2.1 Escrow; Escrow Holder. On the Effective Date, an
escrow (the "Escrow") shall be opened with the Escrow Holder.
The terms and conditions set forth in this Agreement shall
constitute both an agreement between Seller and Buyer and escrow
instructions for Escrow Holder. Seller and Buyer shall promptly
execute and deliver to Escrow Holder any separate or additional
escrow instructions requested by Escrow Holder which are
consistent with the terms of this Agreement. Any separate or
additional instructions shall not modify or amend the provisions
of this Agreement unless otherwise expressly set forth by mutual
consent of Buyer and Seller. As used in this Agreement,
"Closing" means the recordation of the "Deed" (as defined below)
in the Official Records of Los Angeles County, California.
2.2 Closing Date. Escrow shall close on or before
September 4, 1997 (the "Closing Date").
3. ACTIONS PENDING CLOSING
3.1 Deliveries by Seller.
3.1.1 On or prior to the execution of this
Agreement, Seller shall deliver to Buyer a copy of a current
standard coverage preliminary title report issued by Fidelity
National Title Insurance Company (the "Title Company") showing
the condition of title to the Property, accompanied by copies of
all documents referred to therein (collectively, the "PTR").
3.1.2 Prior to the date hereof, Seller has
delivered or made available to Buyer the following items and
documents (the "Delivered Documents") pertaining to the Property
(but only to the extent the same are in Seller's or Seller's
management company's possession). By signing this Agreement
Buyer acknowledges receipt of a package containing all of the
following documents except the documents that Seller has agreed
to make available to Buyer. Where Seller has agreed to make
documents available to Buyer, such documents shall be assembled
by Seller within twenty-four (24) hours after a request by Buyer,
either at the property manager's office at the Property or at
Seller's Los Angeles office, and shall be available for Buyer's
review and/or duplication during regular business hours.
(a) copies of all leases, modifications, riders,
amendments, lease guarantees and a copy of the standard form
lease (including all standard addenda and exhibits thereto);
(b) a current rent roll (the "Rent Roll"),
reflecting, as of the date hereof, with respect to each tenant of
the Property: (1) suite/unit number; (2) name of tenant; (3)
annual rental; (4) the amount of such tenant's security deposit
(and any other deposits), if any; (5) the expiration date of such
tenant's lease; (6) any future free rent or other rental
concessions thereunder and the period to which the same apply;
(7) any renewal, purchase, and expansion options; and (8) any
cancellation or termination rights;
(c) a list and copies of all maintenance and
repair contracts, all service or supply contracts, any other
contracts or agreements relating to the Property ("Service
Contracts"), together with copies of all other contracts (if any)
that shall survive Closing;
(d) a list and complete copies of licenses,
permits, certificates of occupancy, building inspection reports
and approvals, and other governmental approvals (if any), and a
list of all building, health and safety violations within the
last three (3) years;
(e) copies of any warranties or guarantees
currently in effect;
(f) the Property's operating expense statements
(the "Operating Statements") for the past two (2) years and year
to date as of June 30, 1997, and Seller shall make available to
Buyer the Property's other books and records for such periods;
(g) certificate of insurance;
(h) any topographical information and a complete
set of plans and specifications for the Property, and Seller
shall make available to Buyer tenant improvement plans and
specifications for premises in the Property;
(i) copies of tax bills for the past three (3)
years, and Seller shall make available to Buyer utility bills for
the Property for the past three (3) years;
(j) any soils reports, termite inspection
reports, earthquake, environmental, engineering, ADA,
architectural or other structural reports or studies relating to
the Property, and copies of correspondence with or notices from
any governmental agency relating to Hazardous Materials on the
Property;
(k) a schedule of all personal property owned or
leased by Seller and used in connection with the operation of the
Property;
(l) copies of Seller's most current title policy
and surveys;
(m) Seller shall make available to Buyer copies
of tenant correspondence and financial statements of tenants of
the Property;
(n) Seller shall make available to Buyer all
"base year" information applicable to Leases; and
(o) all brokerage commission agreements.
3.1.3 Upon receipt of Buyer's reasonable written
request, Seller shall promptly provide or make available to Buyer
copies of such other non-privileged documents and materials that
materially relate to the Property that are in Seller's
possession.
3.2 Buyer's Review of Title.
3.2.1 Buyer shall have until August 20, 1997,
within which to deliver to Seller written notice of Buyer's
disapproval or conditional approval of title as shown on the PTR
("Disapproved Exceptions"). Buyer's failure to provide such
notice on or before such date shall constitute Buyer's approval
of the condition of title as shown on the PTR.
3.2.2 If Buyer timely notifies Seller of its
Disapproved Exceptions, Seller shall notify Buyer in writing on
or before August 25, 1997, that: (a) Seller has removed such
Disapproved Exceptions from title (or met Buyer's conditions for
approval of a title exception); or (b) Seller is covenanting to
do so as of or before Closing; or (c) Seller will not remove (or
meet the conditions of approval of) specified Disapproved
Exceptions. Failure to address Disapproved Exceptions in any
notice, or failure to give such a notice, shall constitute
Seller's statement that it will not remove or otherwise address
such Disapproved Exceptions.
3.2.3 If Seller does not timely remove or covenant
to remove (or meet or covenant to meet the conditions of approval
of) any Disapproved Exceptions, Buyer shall have the right to
terminate this Agreement on or before August 27, 1997 (the
"Decision Date"), or to waive its objection to the Disapproved
Exceptions in question and proceed to Closing as Buyer's sole and
exclusive remedy. Buyer's failure to provide written notice of
termination on or before the Decision Date shall constitute
Buyer's waiver of its disapproval of the Disapproved Exceptions.
In the case of Buyer's waiver (or deemed waiver) of Disapproved
Exceptions, Seller shall have no obligation to remove or
otherwise address such Disapproved Exception from title and such
waived Disapproved Exceptions shall be deemed approved. If Buyer
elects to terminate this Agreement, the provisions of Section 3.5
shall apply.
3.2.4 Except for the Disapproved Exceptions that
Seller removes or covenants to remove, the exceptions to title
shown by the PTR and any encumbrance arising from the acts or
omissions of Buyer are called the "Permitted Exceptions" in this
Agreement.
3.3 Buyer's Review of the Property and Agreements.
3.3.1 Review of Agreements. Buyer shall have until
the Decision Date to review the documents and other materials
delivered pursuant to Section 3.1. If on the basis of such
review, Buyer determines in its sole and absolute discretion that
the Property is not suitable for Buyer's intended use, then on or
before the Decision Date, Buyer may deliver written notice to
Seller to terminate this Agreement in accordance with Section 3.5
below. Buyer's failure to provide such notice on or before the
Decision Date shall constitute Buyer's approval of each document
and each other material described in Section 3.1 (which was
reviewed or which could have been reviewed).
3.3.2 Inspection of the Property.
(a) Nonexclusive License. Seller hereby grants
to Buyer and its agents, employees, representatives or
contractors (collectively, "Buyer's Agents") a nonexclusive
license to enter onto the Property solely for the purpose of
conducting Buyer's inspection, tests, studies and feasibility
analysis of the Property to determine if the Property is suitable
for Buyer's purposes (the "Inspection"). Any Inspection work
shall be at the sole cost and expense of Buyer. Seller agrees to
reasonably cooperate with Buyer in the conduct of Buyer's
Inspection. The license created under this paragraph shall
expire on the Decision Date. At least forty-eight (48) hours
prior to any entry and Inspection, Buyer shall deliver to Seller
notice of its intention to enter the Property to conduct such
Inspection and the proposed date and time of such entry (and
Buyer may enter only on the dates and at the times contained in
such notices, and Seller shall have the right to have one or more
of its representatives or agents accompany Buyer and Buyer's
Agents at all times while Buyer or Buyer's Agents are on the
Property). In addition, Buyer shall have the right to interview
tenants of the Property, in which case Buyer shall notify Seller
of its desire and Seller shall schedule the interviews and Seller
shall have the right to have a representative present at any and
all such interviews.
(b) Physical Testing. Notwithstanding the
foregoing, without first obtaining Seller's prior written consent
(which shall not be unreasonably withheld or delayed), Buyer
shall only conduct a visual inspection, with no right to conduct
any boring, sampling or removal of any portion of the Property
(collectively, "Physical Testing"). (Without limiting the
generality of the foregoing sentence, it is specifically agreed
that a Phase II environmental inspection shall constitute
"Physical Testing" for purposes of this Agreement.) If Buyer
wishes to conduct any Physical Testing of the Property, Buyer
shall submit a work plan to Seller for Seller's prior written
approval (not to be unreasonably withheld or delayed), which work
plan Seller may modify, limit or disapprove in its reasonable
discretion. It shall be reasonable for Seller to disapprove a
Phase II environmental inspection if there is no Phase I
environmental report that sets forth adequate grounds for
conducting a Phase II inspection. If Seller approves a work
plan, all Physical Testing shall comply strictly with the work
plan that has been approved by Seller, and if Seller does not
approve a work plan, Buyer shall not conduct any Physical Testing
of the Property. If Buyer intends to conduct any Physical
Testing, prior to commencing any such Physical Testing, Buyer
shall provide Seller with sufficient evidence to show that Buyer
and Buyer's Agents who are to enter upon the Property are
adequately covered by policies of insurance insuring Buyer and
Seller against any and all liability arising out of Buyer's or
Buyer's Agents' entry upon and Inspection of the Property,
including without limitation any loss or damage to the Property,
with coverage in the amount not less than $1,000,000 per
occurrence. If Buyer or Buyer's Agents conduct any activities on
the Property that are excluded from the definition of
"Inspection" (except pursuant to a work plan approved by Seller
in accordance with this paragraph), that shall be a material
breach of this Agreement and Seller may terminate this Agreement
in accordance with the terms of Section 3.6 and keep the Deposit
and any interest accrued thereon as liquidated damages pursuant
to Section 5.6.
(c) Indemnification. Buyer hereby agrees to hold
harmless, protect, defend and indemnify and hereby releases
Seller and its partners, and each of their officers, partners,
trustees, directors, employees, contractors, agents,
subsidiaries, affiliates and its and their respective successors
and assigns ("Indemnitees") and the Property from and against any
and all claims, demands, causes of actions, losses, liabilities,
liens, encumbrances, costs or expenses (including without
limitation reasonable attorneys' fees and litigation costs) to
the extent arising out of or resulting from any injuries to
persons (including death) or property (real or personal) by
reason of the work or activities conducted on the Property by
Buyer or Buyer's Agents. The provisions of this paragraph shall
not be limited in any way by any other terms of this Agreement,
including, but not limited to, Section 5.6 of this Agreement.
(d) Condition of the Property. Except in
connection with the performance of its Inspection, in no event
shall Buyer or Buyer's Agents have the right to place any
materials or equipment on the Property (including, without
limitation, signs or other advertising material) until after the
Closing has occurred. Buyer shall, at its sole cost and expense,
clean up the Property, in a manner reasonably satisfactory to
Seller, after Buyer's or Buyer's Agents' entry thereon so that
the Property shall be returned to the same condition that existed
prior to Buyer's or Buyer's Agents' entry thereon.
(e) Copies of Due Diligence Materials. If this
Agreement is terminated prior to Closing, Seller shall promptly
be provided with a copy of any and all information, materials and
data that Buyer and/or Buyer's Agents discover, obtain or
generate in connection with or resulting from its Inspection and
work under Section 3.3.2 hereof, which information, materials and
data shall be confidential "Information" as such term is used in
Section 6.17 below.
(f) Termination of this Agreement. On or before
the Decision Date, Buyer shall have caused the preparation of,
obtained, reviewed (or shall have chosen not to have reviewed)
and approved, among other things, all reports of investigations
of the Property, including such soil, geological, engineering and
environmental tests and reports and other inspections of the
Property as Buyer shall deem necessary in order to determine
whether the Property is suitable for Buyer's intended use, as
well as investigated all applicable zoning requirements, federal,
state and local laws, ordinances, rules, regulations, permits,
licenses, approvals and orders. If, on the basis of the review
and the Inspection described in this Section 3.3.2, Buyer
determines in its sole and absolute discretion that the Property
is not suitable for Buyer's intended use, then on or before the
Decision Date, Buyer may terminate this Agreement by providing
written notice in accordance with Section 3.5 below. Buyer's
failure to provide such written notice on or before the Decision
Date shall constitute Buyer's approval of the aforementioned
items and of the condition of the Property.
3.3.3 Estoppel Certificates. Seller shall use all
reasonable good faith efforts to obtain from each tenant of the
Property an estoppel certificate in the form attached hereto as
Exhibit AE@. If Seller has not obtained and delivered to Buyer
an estoppel certificate in such form from at least 80% of the
current tenants of the Property and from all tenants who rent in
excess of 3,000 square feet in the Property on or before the
Decision Date, Buyer shall have the right to terminate this
Agreement in accordance with Section 3.5 below, or to waive the
right to terminate this Agreement based on the failure to deliver
such estoppel certificates. If Buyer does waive the right to
terminate this Agreement, Seller shall nevertheless continue
until the Closing Date to use all reasonable good faith efforts
to obtain and deliver to Buyer the remaining estoppel
certificates in such form.
3.4 No Processing. Until the Closing, without obtaining
Seller's prior consent (not to be unreasonably withheld or
delayed), Buyer shall not make any application to any
governmental agency for any permit, approval, license or other
entitlement for the Property or the use or development thereof.
3.5 Buyer's Termination. If Buyer elects to terminate this
Agreement in accordance with Sections 3.2, 3.3 or 4.5, then, on
or before the Decision Date or later date with respect to 4.5,
Buyer shall give Seller and Escrow Holder written notice that
Buyer elects to terminate this Agreement. Buyer's failure to
provide such notice by the specified deadline shall constitute
Buyer's waiver of Buyer's right to terminate this Agreement for
reasons for which that deadline applied and a waiver of any
condition to Closing relating to such deadline, but not as to the
reasons for which a later deadline applies. In the event Buyer
elects to terminate this Agreement pursuant to this Section 3.5,
Escrow Holder shall return to the depositor thereof any funds and
interest thereon accrued while in Escrow and materials previously
placed in Escrow and remaining in Escrow; Seller shall return to
Buyer any of the Deposit and interest earned thereon while in
Escrow to the extent that such sums were released to Seller;
Buyer shall pay all title and escrow charges; and neither party
shall thereafter have any further rights or obligations under
this Agreement unless expressly provided otherwise herein.
3.6 Seller's Termination. If Seller elects to terminate
this Agreement in accordance with Sections 3.3, 6.14 or as a
result of a material breach of Buyer's obligations hereunder,
then, on or before the Decision Date, or within five (5) business
days after the date of such material breach (whichever is
applicable), Seller shall give Buyer and Escrow Holder written
notice that Seller elects to terminate this Agreement. Seller's
failure to provide such notice by the specified deadline shall
constitute Seller's waiver of Seller's right to terminate this
Agreement for reasons for which that deadline applied and a
waiver of any condition to Closing relating to such deadline, but
not as to the reasons for which a later deadline applies. In the
event Seller elects to terminate this Agreement pursuant to this
Section 3.6, subject to Section 5.6, Escrow Holder shall return
to the depositor thereof any funds and interest thereon accrued
while in Escrow and materials previously placed in Escrow and
remaining in Escrow; subject to Section 5.6, Seller shall return
to Buyer any of the Deposit and interest earned thereon while in
Escrow to the extent that such sums were released to Seller; if
the termination was the result of Buyer's material breach
hereunder Buyer shall pay all title and escrow charges, and
otherwise Seller shall pay all title and escrow charges; and
neither party shall thereafter have any further rights or
obligations under this Agreement unless expressly provided
otherwise herein.
4. ADDITIONAL AGREEMENTS OF THE PARTIES
4.1 Representations and Warranties.
4.1.1 Buyer's Representations and Warranties.
Buyer hereby represents, warrants and covenants to and agrees
with Seller as follows:
(a) Disclosures. Buyer acknowledges that Seller
has delivered to Buyer the documents and materials described in
Section 3.1.2 above, which contain information concerning the
condition of the Property. Except as provided in Section 4.1.2
below, Buyer acknowledges and agrees that Seller delivers the
material and information described in Section 3.1.2 without
representation or warranty as to the accuracy thereof, and Buyer
specifically acknowledges and agrees that Seller shall have no
liability or responsibility for any inaccuracy thereof. BUYER
ACKNOWLEDGES AND UNDERSTANDS THAT THE DELIVERED DOCUMENTS AND
OTHER MATERIALS MAY HAVE BEEN PREPARED BY PARTIES OTHER THAN
SELLER AND THAT, EXCEPT AS SPECIFICALLY SET FORTH HEREIN, SELLER
AND ITS EMPLOYEES, OFFICERS, PARTNERS, AGENTS, BROKERS AND
CONTRACTORS MAKE NO REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, AS TO THE COMPLETENESS, CONTENT OR ACCURACY
OF THE DELIVERED DOCUMENTS AND OTHER MATERIALS.
(b) Buyer's Investigation. (i) On or prior to
the Decision Date Buyer will have (or will have chosen not to
have) fully investigated the Property and all matters pertaining
thereto; (ii) except for Seller's representations and warranties
that are specifically set forth in this Agreement, Buyer, in
entering into this Agreement and in completing its purchase of
the Property, is relying entirely on its own investigation of the
Property based on its extensive experience in and knowledge of
real property in Southern California; and (iii) On or prior to
the Decision Date Buyer will be aware (or will have chosen not to
be aware) of all zoning regulations, other governmental
requirements, reasonably discoverable site and physical
conditions, and other matters affecting the use and condition of
the Property.
(c) Disclaimer of Warranties. Buyer is acquiring
the Property "AS IS" with all faults and defects. Except as
specifically stated in this Agreement, Seller hereby specifically
disclaims any representation or warranty, oral or written,
including but not limited to those concerning (1) the nature and
condition of the Property and the suitability of the Property for
any and all activities and uses which Buyer may elect to conduct
thereon, (2) the manner, construction, condition and state of
repair or lack of repair of any improvements located on the
Property, (3) except for any warranties contained in the Deed,
the nature and extent of any right-of-way, lease, possession,
lien, encumbrance, license, reservation, condition, covenant,
restriction or otherwise, and (4) the compliance of the Property
or its operation with any laws, rules, ordinances, or regulations
of any government or other body, it being specifically understood
that before the date hereof Buyer has had a full opportunity to
determine for itself the condition of the Property. The sale of
the Property as provided for herein is made on an "AS IS" basis,
and Buyer expressly acknowledges that, in consideration of the
agreements of Seller herein, except as otherwise specified
herein, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING, BUT IN NO WAY
LIMITED TO, ANY WARRANTY OF QUANTITY, QUALITY, CONDITION,
HABITABILITY, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF THE PROPERTY, ANY IMPROVEMENTS, THE
PERSONAL PROPERTY, OR SOIL, WATER, AIR OR OTHER ENVIRONMENTAL
CONDITIONS. SELLER SPECIFICALLY DISCLAIMS ANY WARRANTY, GUARANTY
OR REPRESENTATION, ORAL OR WRITTEN, PAST OR PRESENT, EXPRESS OR
IMPLIED, CONCERNING THE PROPERTY, EXCEPT AS SPECIFICALLY SET
FORTH IN THIS AGREEMENT AND THE WARRANTY AS TO TITLE TO BE
PROVIDED IN THE DEED TO BE DELIVERED TO BUYER AT CLOSING. BUYER
ACKNOWLEDGES THAT BUYER IS PURCHASING THE PROPERTY BASED SOLELY
UPON BUYER'S OWN INDEPENDENT INVESTIGATIONS AND FINDINGS AND NOT
IN RELIANCE ON ANY INFORMATION PROVIDED BY SELLER OR SELLER'S
AGENTS OR CONTRACTORS, EXCEPT AS SPECIFICALLY SET FORTH IN THIS
AGREEMENT.
(d) Formation. Buyer is a limited partnership
duly organized and validly existing under the laws of the State
of Maryland, and is duly qualified to do business in the State of
California.
(e) Authority. Buyer has the power and authority
to own the Property and to consummate the transactions
contemplated by this Agreement. This Agreement and all
instruments, documents and agreements to be executed by Buyer in
connection herewith are or when delivered shall be duly
authorized, executed and delivered by Buyer and are valid,
binding and enforceable obligations of Buyer. Each individual
executing this Agreement on behalf of Buyer represents and
warrants to Seller that he or she is duly authorized to do so.
(f) Consents. Buyer is not required to obtain
any consents or approvals to consummate the transactions
contemplated in this Agreement.
4.1.2 Seller's Covenants, Representations and
Warranties. As used in this Section 4.1.2, the words "to
Seller's actual knowledge" or other words of similar effect shall
mean the actual knowledge of the following individuals only
without a duty of investigation other than a review of their own
files, and shall not mean the knowledge of any other individual
employed by or under contract with Seller: Becky Galvan - Asset
Manager and Carol Trueman - Property Manager. Seller represents
that such individuals are the individuals in Seller's
organization who have had in-depth, day-to-day involvement with
the ownership and management of the Property and are the
individuals who are most likely to have any information relating
to the following representations and warranties. Seller hereby
represents, warrants and covenants to and agrees with Buyer as
follows:
(a) Insurance. At all times from the date hereof
to the Closing or earlier termination of this Agreement, Seller
shall cause to be maintained in force, fire and extended coverage
insurance on the Property in the same amounts as the insurance
coverage on the Property on the date hereof.
(b) Operation of the Property. At all times from
the date hereof to the Closing or earlier termination of this
Agreement, Seller shall operate and maintain the Property in
substantially the same manner as it is now managed and as if
Seller were retaining the Property, use reasonable efforts to
maintain the physical condition of the property in its current
condition, reasonable and ordinary wear and tear and damage by
fire and casualty and condemnation excepted, and use reasonable
efforts to perform all obligations to be performed by the
landlord under the Leases.
(c) Removal of Personal Property. From the date
hereof until the Closing or earlier termination of this
Agreement, Seller shall neither transfer nor remove any Personal
Property or fixtures from the Property, except in the ordinary
course of business or unless the same are no longer needed for
the maintenance and operation of the Property or except for
purposes of replacement thereof, in which case such replacements
shall be promptly installed prior to Closing and shall be
comparable in quality to the items being replaced.
(d) New Documents. From the date hereof until
the Closing or earlier termination of this Agreement, Seller
shall not enter into any "New Document" (as defined below)
without the prior written consent of the Buyer, which consent
shall not be unreasonably withheld or delayed. "New Document"
means (1) any lease, lease extension, lease termination or lease
modification affecting the Property, (2) any other document
creating or consenting to an additional encumbrance upon the
Property, and (3) any contract or agreement that will bind Buyer
after the Closing unless the same is terminable on no more than
30 days notice.
(e) New Restrictive Covenants. From the date
hereof until the Closing or earlier termination of this
Agreement, Seller will not impose any restrictive covenants or
encumbrances (other than tenant leases) on the Property or
execute or file any subdivision plat affecting the Property
without the prior written consent of Buyer, which consent shall
not be unreasonably withheld or delayed.
(f) Formation. Seller is a limited partnership
duly organized and validly existing under the laws of the State
of Texas, and is duly qualified to do business in the State of
California.
(g) Authority. Seller has the power and
authority to own the Property and to consummate the transactions
contemplated by this Agreement. This Agreement and all
instruments, documents and agreements to be executed by Seller in
connection herewith are or when delivered shall be duly
authorized, executed and delivered by Seller and are valid,
binding and enforceable obligations of Seller. Each individual
executing this Agreement on behalf of Seller represents and
warrants to Buyer that he or she is duly authorized to do so.
(h) Consents. Prior to the execution of this
Agreement, Seller has obtained all necessary approvals to
consummate this Agreement.
(i) Contracts. There are no contracts or
agreements, written or oral, which would bind Buyer, affecting
the ownership or operation of the Property, except: (1) those
that have been delivered to Buyer pursuant to Section 3.1.2, (2)
the Permitted Exceptions, or (3) as permitted under Section
4.1.2(d) above.
(j) Proceedings. To Seller's actual knowledge,
there are no (i) taking, condemnation, betterment or assessment
actions, suits, arbitration, or claims, (ii) attachments,
proceedings, or assignments for the benefit of creditors, or
(iii) insolvency, bankruptcy, reorganization or other
proceedings, actual or proposed, pending or threatened against
Seller and which, individually or in the aggregate, would
materially and adversely affect the operation or value of the
Property or Seller's ability to perform its obligations under
this Agreement.
(k) Actions Pending. Seller shall notify Buyer
promptly of any lawsuits, condemnation proceedings, or
governmental action or order affecting the Property. Between the
date hereof and the Closing Date, Seller shall comply with all
applicable laws, ordinances, rules and regulations of
governmental agencies with competent jurisdiction with respect to
the Property.
(l) Commissions. Prior to Closing, Seller shall
pay in full all outstanding brokerage commissions relating to the
Property or any premises therein.
(m) Rent Roll. To Seller's actual knowledge, the
information set forth in the Rent Roll is true and correct in all
material respects as of the date thereof;
(n) Service Contracts. Except as permitted under
Section 4.1.2(d), disclosed to Buyer in writing before the date
hereof, or contained in the Delivered Documents, there are no
management, service, supply, equipment rental, and similar
agreements affecting the Property and which will bind Buyer after
the Closing other than the Service Contracts and, to Seller's
actual knowledge, the Service Contracts are in full force and
effect;
(o) Operating Statements. To Seller's actual
knowledge, the information shown on the Operating Statements is
true and correct in all material respects;
(p) No Defaults. Neither the entry into, nor the
performance of, nor the compliance with this Agreement, has
resulted or will result in any violation of, or be in conflict
with, or invalidate, cancel or make inoperative, or interfere
with, or constitute a default under, or result in the creation of
a lien, encumbrance or other charge upon the Property pursuant
to, any charter, bylaw, partnership agreement, trust agreement,
mortgage, deed of trust, contract, indenture, credit agreement,
franchise, permit, judgment, decree, order, ordinance, statute,
rule, regulation, easement, restriction, or other charge, right,
or interest applicable to Seller or to the Property;
(q) Service Contracts. All Service Contracts
relating to the Property can be terminated on thirty (30) days'
notice.
(r) Post-Closing Financial Records. As soon as
reasonably practicable following the Closing Date, Seller shall
deliver to Buyer the following: (a) a final income statement
through the Closing Date, (b) a final cumulative general ledger
through the Closing Date, and (c) a final aged delinquency
listing, including all security deposits received by Seller.
(s) Audit Rights. At Buyer's request at any time
from and after the date hereof until the date that is one (1)
year after the Closing Date, Seller shall, at Buyer's expense,
provide to Buyer's designated independent auditor access to the
books and records of the Property regarding the period for which
Buyer is required to have audited financial statements prepared
with respect to the Property as may be required by the Securities
and Exchange Commission, to the extent that such books, records
and related information are in Seller's possession or control and
relate to the period during which Seller held title to the
Property. Further, Seller agrees to provide to such auditor a
representation letter regarding the books and records of the
Property, in substantially the form of Exhibit "D" attached
hereto, in connection with the normal course of auditing the
Property in accordance with generally accepted auditing
standards.
(t) Management and Listing Agreements. Seller
agrees to terminate, at Seller's sole cost and expense, any
property management agreement and brokerage leasing agreement
effective as of the Closing Date.
(u) Change in Condition. Seller shall promptly
notify Buyer of any material adverse change in any physical or
financial condition of the Property or any event or circumstance
which makes any representation or warranty of Seller under this
Agreement untrue or misleading, or any covenant of Buyer or
Seller under this Agreement incapable of being performed, it
being understood that Seller's obligation to provide notice to
Buyer shall in no way relieve Seller of any liability for a
breach by Seller of any of its representations, warranties or
covenants under this Agreement.
(v) Agreements. There are no oral or written
agreements or executory agreements whatsoever for the use and
occupancy of the Improvements other than the Leases and there are
no tenants or occupants of the Property except pursuant to the
Leases.
(w) Hazardous Materials. To Seller's actual
knowledge, Seller has delivered to Buyer all environmental
reports, studies and other material relating to the potential
presence of Hazardous Materials on the Property, and Seller has
no actual knowledge of an environmental issue relating to the
Property that is not disclosed in such delivered materials.
(x) Use Permits and Other Approvals. To Seller's
actual knowledge, all licenses, permits, approvals and easements
and rights of way, including proof of dedication, are all in full
force and effect.
(y) Compliance with Agreements. To Seller's
actual knowledge, no default exists under any covenant,
restriction or agreement related to or affecting the Property or
the Leases, except as previously disclosed to Buyer.
(z) Leases. Except as stated in this paragraph,
there are no uncured monetary defaults (with or without the
giving of notice or the passage of time) and, to Seller's actual
knowledge, no uncured non-monetary defaults (with or without the
giving of notice or the passage of time), or outstanding notices
of default or termination under the Leases; Seller, as landlord,
has received no written notice from any tenant that Seller is in
default or not complying with Seller's obligations, as landlord,
under any Lease. Notwithstanding the foregoing, Seller hereby
advises Buyer that the State of California (a tenant of the
Property) has delivered its rent payments for May, June and July
1997 to the wrong address and is in the process of issuing new
checks for such rent payments, and it is anticipated that such
rent payments shall be made prior to the Closing Date.
4.2 Reaffirmation. The representations and warranties of
Buyer and Seller set forth in Section 4.1 are true and correct as
of the date of this Agreement and shall be true and correct as of
the Closing. The Closing shall constitute Buyer's and Seller's
reaffirmation of those representations and warranties as of the
Closing. Seller shall be entitled to rely upon Buyer's
representations and warranties set forth in Sections 4.1.1(b) and
(c), notwithstanding any inspection or investigation of the
Property which was made or could have been made by Buyer.
4.3 Hazardous Material Indemnification.
4.3.1 Indemnification. If this transaction closes
and Buyer acquires title to the Property, Buyer, on behalf of
itself, its successors, assigns and successors-in-interest, shall
protect, defend, indemnify, hold harmless Indemnitees from and
against any and all liabilities, claims, demands, suits,
judgments, causes of action (including, but not limited to,
causes of action arising under the Comprehensive Environmental
Response Compensation and Liability Act of 1980, 42 U.S.C. 9601 et. seq.),
losses, costs, damages, injuries, penalties, enforcement actions, fines,
taxes, remedial actions, removal and disposal costs, investigation and
remediation costs and expenses (including, without limit, reasonable
attorneys' fees, litigation, arbitration and administrative proceeding costs,
expert and consultant fees and laboratory costs), sums paid in
settlement of claims, whether direct or indirect, known or
unknown, arising out of, related in any way to, or resulting from
or in connection with, in whole or in part, the presence or
suspected presence of Hazardous Materials (defined below) in, on,
under, or about the Property, but only to the extent Hazardous
Materials first become present in, on, under, or about the
Property on or after the Closing Date.
4.3.2 Definition. "Hazardous Material(s)" means
any chemical, substance, material, controlled substance, object,
condition, waste living organisms or combination thereof which is
or may be hazardous to human health or safety or to the
environment due to its radioactivity, ignitability, corrosivity,
reactivity, explosivity, toxicity, carcinogenicity, mutagenicity,
phytotoxicity, infectiousness or other harmful or potentially
harmful properties or effects, including, without limitation,
petroleum hydrocarbons and petroleum products, lead, asbestos,
radon, polychlorinated biphenyls (PCBs) and all of those
chemicals, substances, materials, controlled substances, objects,
conditions, wastes, living organisms or combinations thereof
which are now or become in the future listed, defined or
regulated in any manner by any federal, state or local law based
upon, directly or indirectly, such properties or effects.
4.3.3 No Limitation to Liability. The provisions
of this Section 4.3 shall not be limited in any way by any other
terms of this Agreement including, but not limited to,
Section 5.6 of this Agreement (Liquidated Damages).
4.4 Condemnation. If, prior to Closing, any portion of the
Property shall be condemned or becomes the subject of any pending
or threatened condemnation action, Seller shall promptly notify
Buyer thereof. If a material portion of the Property shall be
condemned or becomes the subject of any pending or threatened
condemnation action, Buyer shall have the right, as its sole and
exclusive remedy, to terminate this Agreement in accordance with
Section 3.5. If the portion of the Property condemned or subject
of a condemnation action is not material, or if Buyer does not
elect to terminate this Agreement, this Agreement shall remain in
full force and effect, regardless of such condemnation or
threatened or pending action, and if any condemnation award is
received by Seller prior to Closing, the amount of such award
shall be applied as a credit against the Purchase Price. Any
condemnation awards received by Seller on or after Closing shall
be promptly delivered by Seller to Buyer.
4.5 Damage or Destruction. In the event of any damage to
or destruction of the Property prior to the Closing, the Closing
shall nevertheless occur as otherwise provided for in this
Agreement except Seller shall assign to Buyer upon the Closing
all insurance proceeds payable to Seller in connection with such
occurrences, and the Purchase Price shall be reduced by the
deductible amount and any repair costs in excess of such
insurance proceeds (in which case the amount by which the
Purchase Price is reduced shall be held in escrow and shall be
released pursuant to escrow instructions to be mutually
acceptable to Buyer and Seller that shall require evidence of
satisfactory lien-free completion of repairs prior to release of
the funds). Seller shall have no obligation to repair such
damage or destruction. If cost to repair such damage or
destruction to the Property exceeds ten percent (10%) of the
Purchase Price, then Seller shall promptly notify Buyer and
within five (5) business days after receipt of such notice, Buyer
shall deliver written notice to Seller and Escrow Holder,
electing either: (a) to proceed with this transaction and
Closing in accordance with this Agreement notwithstanding such
damage or destruction; or (b) to terminate this Agreement in
accordance with the terms of Section 3.5. Buyer's failure to
deliver either of such notices to Seller and Escrow Holder within
such five (5) business day period shall constitute Buyer's
election to proceed to Closing under clause (a).
4.6 Indemnity.
4.6.1 Buyer shall hold harmless, indemnify protect
and defend Indemnitees from and against (a) any and all claims,
demands, causes of action, loss, liability, liens or
encumbrances, other than matters arising from any act, conduct or
omission of Indemnitees in any way related to the Property and
occurring after the Closing, or in any way related to or arising
from any act, conduct, omission, contract or commitment of Buyer
and/or Buyer's Agents; (b) any loss or damage to Seller resulting
from any inaccuracy in or breach of any representation or
warranty of Buyer or resulting from any breach or default by
Buyer under this Agreement; and (c) all costs and expenses,
including reasonable attorneys' fees, related to any actions,
suits or judgments incident to any of the foregoing.
4.6.2 Seller shall hold harmless, indemnify protect
and defend Buyer and its partners, and each of their officers,
trustees, directors, employees, contractors, agents,
subsidiaries, affiliates and its and their respective successors
and assigns ("Buyer's Indemnitees") from and against (a) any and
all claims, demands, causes of action, loss, liability, liens or
encumbrances, other than matters arising from any act, conduct or
omission of Buyer's Indemnitees in any way related to the
Property and occurring prior to the Closing, or in any way
related to or arising from any act, conduct, omission, contract
or commitment of Seller and/or its agents, employees,
representatives or contractors; (b) any loss or damage to Buyer
resulting from any inaccuracy in or breach of any representation
or warranty of Seller or resulting from any breach or default by
Seller under this Agreement; and (c) all costs and expenses,
including reasonable attorneys' fees, related to any actions,
suits or judgments incident to any of the foregoing.
5. CLOSING
5.1 Deposits Into Escrow.
5.1.1 At least one (1) business day prior to the
Closing Date, Seller shall deposit into Escrow:
(a) A grant deed conveying the Property to Buyer
(the "Deed") on the Title Company's form, subject to the
following (collectively, the "Permitted Exceptions"): (i) the
Permitted Exceptions, (ii) installments of general and special
real property taxes and assessments not then delinquent, and
(iii) any encumbrance arising from the acts or omissions of
Buyer.
(b) An affidavit or qualifying statement which
satisfies the requirements of Section 1445 of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder
(the "Non-Foreign Affidavit").
(c) A Withholding Exemption Certificate, Form
590, or in the event that the Seller is a non-California
resident, a certificate issued by the California Franchise Tax
Board, pursuant to the Revenue and Taxation Code Sections 18805
and 26131, stating either the amount of withholding required from
Seller's proceeds or that Seller is exempt from such withholding
requirement (the "Withholding Certificate");
(d) A counterpart original of a Bill of Sale (the
"Bill of Sale"), duly executed by Seller, assigning and conveying
to Buyer all of Seller's right, title and interest in and to the
Personal Property. The Bill of Sale shall be substantially in
the form of, and upon the terms contained in, Exhibit "B"
attached hereto and incorporated herein.
(e) A counterpart original of an Assignment and
Assumption Agreement (the "Assignment and Assumption Agreement")
duly executed by Seller assigning all of Seller's right, title
and interest in and to the Surviving Contracts. The Assignment
and Assumption Agreement shall be substantially in the form of,
and upon the terms contained in, Exhibit "C" attached hereto and
incorporated herein.
(f) Written notices addressed to all tenants of
the Property informing them of the sale of the Property and the
name and address of the new owner (the "Tenant Notices").
5.1.2 At least one (1) business day prior to the
Closing Date, Buyer shall deposit into Escrow:
(a) Funds in accordance with the provisions of
Section 1.3.2.
(b) A counterpart original of the Bill of Sale
duly executed by Buyer.
(c) A counterpart original of the Assignment and
Assumption Agreement duly executed by Buyer and assuming all of
Seller's obligations under the Surviving Contracts.
5.1.3 Seller and Buyer shall each deposit such
other instruments and funds as are reasonably required by Escrow
Holder or otherwise required to close Escrow and consummate the
sale of the Property in accordance with the terms of this
Agreement.
5.2 Prorations. The following prorations shall be made as
of 12:01 a.m. on the day the Closing occurs on the basis of a 365-
day year. At least two (2) business days prior to the Closing
Date, Escrow Holder shall deliver to Seller and Buyer a tentative
proration schedule setting forth a preliminary determination.
5.2.1 Rentals, prepaid rentals and prepaid payments
(and all accrued interest thereon, if any) (collectively, "Rent")
shall be prorated on the basis that Buyer shall receive a credit
for all Rent which Seller has actually received before the
Closing which is allocable to the period after the Closing and
for all security deposits held by Seller. Buyer shall not
receive a credit for any Rent Seller has not received as of the
Closing which is allocable to the period prior to the Closing.
If Buyer shall collect any such Rent after the Closing, Buyer
shall promptly pay the same to Seller (provided that all rent
collected by Buyer after Closing shall be first applied to unpaid
rent accruing after the Closing Date).
5.2.2 Real estate taxes and assessments shall be
prorated as of the Closing on the basis of the most recent tax
statement for the Property.
5.2.3 Any adjustments or prorations not finally
determined or agreed upon as of the Closing Date shall be paid by
Buyer to Seller, or by Seller to Buyer, as the case may be, from
time to time in cash as soon as practicable following the receipt
or determination of the information necessary to make the
adjustments after the Closing Date.
5.2.4 Without limiting the generality of Section
5.2.3, after the adjustments with tenants under the Leases at the
end of the calendar year in which the Closing occurs (or other
applicable period) for taxes, assessments, maintenance charges
and operating expenses (collectively, "CAM Charges"), Buyer shall
prepare and present to Seller a calculation of the re-proration
of taxes, assessments, CAM Charges and those operating expenses
to which the CAM Charges relate, based on the actual amount of
such items charged to or received by the parties for the year or
other applicable fiscal period. The parties shall make the
appropriate adjusting payment between them within thirty (30)
days after presentment to Seller of Buyer's calculation. In
addition, Seller shall provide Buyer with a credit for any unpaid
tenant improvement expenses that are the landlord's obligation
under Leases (other than New Documents and other than the $38,200
tenant improvement expense under the Lease with the University of
Phoenix), and a credit for any free rent granted to tenants under
Leases other than New Documents (other than the one month of free
rent granted to the University of Phoenix for the month of March
2000). Seller represents to Buyer that Seller shall not dissolve
or otherwise cease conducting business within one year after
Closing and shall maintain sufficient assets to enable it to
reasonably comply with its obligations under this paragraph and
satisfy its other indemnification obligations under this
Agreement.
5.2.5 For a period of twelve (12) months following
the Closing Date, Buyer and Buyer's successors and assigns shall
make available to Seller, and Seller shall make available to
Buyer and Buyer's successors and assigns, and their respective
employees, agents and representatives, all books and records
maintained with respect to the Property which relate to any of
the items to be prorated or allocated under this Agreement in
connection with the Closing, which books and records shall be
made available for inspection and copying upon reasonable notice
during ordinary business hours. Any such inspection shall be at
reasonable intervals and at the inspecting party's sole cost and
expense.
5.3 Payment of Closing Costs.
5.3.1 Closing Costs Borne by Seller. Seller shall
bear and Escrow Holder shall discharge on Seller's behalf out of
the sums payable to Seller hereunder the portion of the costs
associated with the standard coverage premium for the "Owner's
Policy" (defined below), equal to the premium on a CLTA owner's
policy of title insurance in the amount of the Purchase Price,
the documentary transfer tax and all sales and use taxes required
in connection with the transfer of the Property to Buyer, the
sums necessary to obtain and the cost of recording any
reconveyance required hereby, one-half of Escrow Holder's fee,
and any additional costs and charges customarily charged to
sellers in accordance with common escrow practices in Southern
California.
5.3.2 Closing Costs Borne by Buyer. Buyer shall
deposit with Escrow Holder for disbursement by Escrow Holder one-
half of Escrow Holder's fee, all costs and expenses of the
Owner's Policy in excess of the premium to be borne by Seller
(including, without limitation, any additional premium charged
for any extended coverage policy or endorsements requested by
Buyer and the cost of any survey which may be required by the
Title Company in connection therewith), the recording fees
required in connection with the transfer of the Property to
Buyer, and any additional charges customarily charged to buyers
in accordance with common escrow practices in Southern
California.
5.4 Closing of Escrow.
5.4.1 Escrow Holder shall hold the Closing on the
Closing Date if: (i) it has received in a timely manner all the
funds and materials required to be delivered into Escrow by Buyer
and Seller; and (ii) it has received assurances satisfactory to
it that, effective as of the Closing, the Title Company will
issue to Buyer its standard coverage title insurance policy in
the amount of the Purchase Price, insuring Buyer as the owner of
the Property, subject only to the Permitted Exceptions other than
any encumbrance created by an act or omission of Buyer (the
"Owner's Policy").
5.4.2 To Close the Escrow, Escrow Holder shall:
(a) Cause the Deed to be recorded and thereafter
mailed to Buyer, and deliver the Owner's Policy, Bill of Sale,
Assignment and Assumption Agreement, Non-Foreign Affidavit and
Withholding Certificate to Buyer;
(b) Deliver to Seller the Bill of Sale, the
Assignment and Assumption Agreement and by wire transfer of
federal funds, funds in the amount of the Purchase Price, plus or
less any net debit or credit to Seller by reason of the
prorations and allocations of closing costs provided for in this
Agreement;
(c) Cause the Title Company to issue the Owner=s
Policy to Buyer; and
(d) Mail the Tenant Notices to all tenants of the
Property.
5.4.3 Pursuant to Section 6045 of the Internal
Revenue Code, Escrow Holder shall be designated the closing agent
hereunder and shall be solely responsible for complying with the
tax reform act of 1986 with regard to reporting all settlement
information to the Internal Revenue Service.
5.5 Failure to Close; Cancellation. If the Escrow Holder
is not in a position to Close the Escrow on the Closing Date,
then, except as provided in Section 5.6, Escrow Holder shall
return to the depositor thereof any funds or other materials
previously placed in Escrow. No such return shall relieve either
party of liability for any failure to comply with the terms of
this Agreement.
5.6 LIQUIDATED DAMAGES. BUYER AND SELLER AGREE THAT IN THE
EVENT OF A MATERIAL DEFAULT OR BREACH HEREUNDER BY BUYER, THE
DAMAGES TO SELLER WOULD BE EXTREMELY DIFFICULT AND IMPRACTICABLE
TO ASCERTAIN, AND THAT THEREFORE, IN THE EVENT OF A MATERIAL
DEFAULT OR BREACH HEREUNDER BY BUYER, A SUM IN THE AMOUNT OF THE
DEPOSIT IS A REASONABLE ESTIMATE OF THE DAMAGES TO SELLER, SUCH
DAMAGES INCLUDING COSTS OF NEGOTIATING AND DRAFTING OF THIS
AGREEMENT, COSTS OF COOPERATING IN SATISFYING CONDITIONS TO
CLOSING, COSTS OF SEEKING ANOTHER BUYER UPON BUYER'S DEFAULT,
OPPORTUNITY COSTS IN KEEPING THE PROPERTY OUT OF THE MARKETPLACE,
AND OTHER COSTS INCURRED IN CONNECTION HEREWITH. ACCORDINGLY,
BUYER AND SELLER AGREE THAT, EXCEPT FOR ANY DAMAGES, COSTS AND
EXPENSES INCURRED IN CONNECTION WITH OR RESULTING FROM BUYER'S
DEFAULT, OR BREACH OF ITS OBLIGATIONS, UNDER SECTIONS 6.13 AND
6.17 BELOW, RECEIPT AND RETENTION OF THE SPECIFIED SUM SHALL BE
THE SOLE DAMAGES OF SELLER IN THE EVENT OF ANY BREACH OR DEFAULT
BY BUYER HEREUNDER.
Initials of Buyer: Initials of Seller:
/s/ VJC /s/ MJR
5.7 BUYER'S REMEDIES. IN THE EVENT THAT SELLER SHALL FAIL
TO CONSUMMATE THIS AGREEMENT FOR ANY REASON, EXCEPT BUYER'S
DEFAULT OR A TERMINATION OF THIS AGREEMENT BY BUYER OR SELLER
PURSUANT TO A RIGHT TO DO SO UNDER THE PROVISIONS OF THIS
AGREEMENT, BUYER SHALL HAVE THE FOLLOWING REMEDIES, WHICH SHALL
BE BUYER'S SOLE AND EXCLUSIVE REMEDIES BASED UPON A DEFAULT BY
SELLER. SUCH REMEDIES SHALL NOT BE CUMULATIVE, MEANING BUYER MAY
EXERCISE ONE (1) BUT NOT BOTH OF SUCH REMEDIES. BUYER SHALL
DELIVER TO SELLER AND ESCROW HOLDER NOTICE OF ITS ELECTION OF
REMEDIES WITHIN TWO (2) DAYS AFTER SELLER'S DEFAULT. THE SOLE
REMEDIES AVAILABLE TO BUYER ARE AS FOLLOWS:
(A) BUYER MAY TERMINATE THIS AGREEMENT, IN WHICH CASE
ESCROW HOLDER SHALL IMMEDIATELY RETURN THE DEPOSIT, TOGETHER WITH
ANY INTEREST EARNED THEREON, TO BUYER UPON EXECUTION OF
CANCELLATION INSTRUCTIONS BY BUYER, AND SELLER SHALL PAY ANY
ESCROW CANCELLATION CHARGES. IN ADDITION, BUYER SHALL HAVE THE
RIGHT TO PURSUE AN ACTION AGAINST SELLER FOR ALL ACTUAL OUT-OF-
POCKET (BUT NOT CONSEQUENTIAL) DAMAGES SUFFERED BY BUYER; OR
(B) BUYER MAY BRING AN ACTION FOR SPECIFIC PERFORMANCE
AGAINST SELLER WITH RESPECT TO THIS AGREEMENT BUT ONLY UNDER THE
FOLLOWING CONDITIONS AND CIRCUMSTANCES:
(1) BUYER SHALL HAVE FULLY PERFORMED ALL
OBLIGATIONS OF BUYER UNDER THIS AGREEMENT, EXCEPT THAT WITH
RESPECT TO DEPOSITING THE BALANCE OF THE PURCHASE PRICE, BUYER
SHALL HAVE EVIDENCED TO SELLER'S REASONABLE SATISFACTION THAT
BUYER IS READY, WILLING AND ABLE TO TIMELY DEPOSIT SAID FUNDS IN
ESCROW;
(2) THE ACTION SHALL BE COMMENCED, AND SERVICE OF
PROCESS UPON SELLER MADE, NOT LATER THAN THIRTY (30) DAYS AFTER
SELLER'S DEFAULT; AND
(3) ALL OF THE ISSUES IN SUCH ACTION, WETHER OF
FACT OR LAW, SHALL BE HEARD BY A REFERENCE PROCEEDING PURSUANT TO
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638, ET SEQ. WITHIN
TEN (10) DAYS FOLLOWING THE COMMENCEMENT OF ANY SUCH ACTION, THE
PARTIES SHALL MAKE APPLICATION TO THE COURT IN WHICH THE ACTION
IS PENDING FOR THE APPOINTMENT OF A RETIRED SUPERIOR COURT JUDGE
OR COURT OF APPEAL JUSTICE FROM THE THEN CURRENT LIST OF RETIRED
JUDGES AVAILABLE TO SERVE AS REFEREES IN THE COUNTY IN WHICH SUCH
ACTION IS COMMENCED TO SERVE AS THE REFEREE. THE REFEREE CHOSEN
SHALL BE DEEMED QUALIFIED ONLY IF HE IS WILLING TO AGREE TO HEAR
THE SUBJECT ACTION WITHIN TWENTY (20) DAYS FOLLOWING THE DATE OF
APPLICATION TO THE COURT, TO HEAR THE SUBJECT ACTION ON
CONSECUTIVE DAYS AND TO RENDER A DECISION WITHIN A FURTHER
FIFTEEN (15) DAY PERIOD. THE PARTIES SHALL ADVANCE, IN EQUAL
SHARES, THE FEES AND EXPENSES OF THE REFEREE SELECTED PURSUANT TO
THIS PROVISION, BUT THE LOSING PARTY IN ANY SUCH ACTION SHALL
REIMBURSE THE PREVAILING PARTY FOR ANY AND ALL FEES AND EXPENSES
PREVIOUSLY ADVANCED BY SUCH PREVAILING PARTY FOR THE REFEREE.
Initials of Buyer: Initials of Seller:
/s/ VJC /s/ MJR
5.8 Possession. Possession of the Property, originals of
all Leases and the Surviving Contracts, shall be delivered to
Buyer upon Closing.
5.9 Conditions Precedent/Concurrent to Closing. Buyer
shall not be required to close the transaction provided for under
this Agreement, unless and until each and every one of the
following conditions has been fulfilled:
5.9.1 Representations, Warranties and Covenants of
Seller. Seller shall have duly and timely performed each and
every covenant to be performed by Seller under this Agreement and
the representations and warranties set forth in this Agreement
shall be true and correct as of the Closing in all material
respects.
5.9.2 Seller's Deliveries. Seller shall have duly
and timely delivered or made available to Buyer all of the items
described in Section 5.1.1 of this Agreement.
5.9.3 No Material Changes. At the Closing, there
will be no material adverse changes in the physical or financial
condition of the Property which occurred after the Decision Date.
6. GENERAL PROVISIONS
6.1 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all
of which, taken together, shall constitute one and the same
instrument.
6.2 Entire Agreement. This Agreement contains the entire
integrated agreement between the parties respecting the subject
matter of this Agreement and supersedes all prior understandings
and agreements, whether oral or in writing, between the parties
respecting the subject matter of this Agreement. There are no
representations, agreements, arrangements or understandings, oral
or in writing, between or among the parties to this Agreement
relating to the subject matter of this Agreement which are not
fully expressed in this Agreement. The terms of this Agreement
are intended by the parties as a final expression of their
agreement with respect to those terms and they may not be
contradicted by evidence of any prior agreement or of any
contemporaneous agreement. The parties further intend that this
Agreement constitute the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced
in any judicial proceeding involving this Agreement.
6.3 Legal Advice; Neutral Interpretation; Headings. Each
party has received independent legal advice from its attorneys
with respect to the advisability of executing this Agreement and
the meaning of the provisions hereof. The provisions of this
Agreement shall be construed as to their fair meaning, and not
for or against any party based upon any attribution to such party
as the source of the language in question. Headings used in this
Agreement are for convenience of reference only and shall not be
used in construing this Agreement.
6.4 Choice of Law. This Agreement shall be governed by the
laws of the State of California.
6.5 Severability. If any term, covenant, condition or
provision of this Agreement, or the application thereof to any
person or circumstance, shall to any extent be held by a court of
competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, covenants, conditions or provisions of
this Agreement, or the application thereof to any person or
circumstance, shall remain in full force and effect and shall in
no way be affected, impaired or invalidated thereby.
6.6 Waiver of Covenants, Conditions or Remedies. The
waiver by one party of the performance of any covenant, condition
or promise under this Agreement shall not invalidate this
Agreement nor shall it be considered a waiver by it of any other
covenant, condition or promise under this Agreement. The waiver
by either or both parties of the time for performing any act
under this Agreement shall not constitute a waiver of the time
for performing any other act or an identical act required to be
performed at a later time. The exercise of any remedy provided
in this Agreement shall not be a waiver of any consistent remedy
provided by law, and the provision in this Agreement for any
remedy shall not exclude other consistent remedies unless they
are expressly excluded.
6.7 Exhibits. All exhibits to which reference is made in
this Agreement are deemed incorporated in this Agreement, whether
or not actually attached.
6.8 Amendment. This Agreement may be amended at any time
by the written agreement of Buyer and Seller. All amendments,
changes, revisions and discharges of this Agreement, in whole or
in part, and from time to time, shall be binding upon the parties
despite any lack of legal consideration, so long as the same
shall be in writing and executed by the parties hereto.
6.9 Relationship of Parties. The parties agree that their
relationship is that of seller and buyer, and that nothing
contained herein shall constitute either party the agent or legal
representative of the other for any purpose whatsoever, nor shall
this Agreement be deemed to create any form of business
organization between the parties hereto, nor is either party
granted any right or authority to assume or create any obligation
or responsibility on behalf of the other party, nor shall either
party be in any way liable for any debt of the other.
6.10 No Third Party Benefit. This Agreement is intended to
benefit only the parties hereto and no other person or entity has
or shall acquire any rights hereunder.
6.11 Time of the Essence. Time shall be of the essence as
to all dates and times of performance, whether contained herein
or contained in any escrow instructions to be executed pursuant
to this Agreement, and all escrow instructions shall contain a
provision to this effect.
6.12 Further Acts. Each party agrees to perform any further
acts and to execute, acknowledge and deliver any documents which
may be reasonably necessary to carry out the provisions of this
Agreement.
6.13 Recordation; Actions to Clear Title. Buyer shall not
record this Agreement, any memorandum of this Agreement, any
assignment of this Agreement or any other document which would
cause a cloud on the title to the Property.
6.14 Assignment. Except as stated in the preceding
sentence, Buyer shall not assign Buyer's rights or delegate its
obligations hereunder without the prior written consent of Seller
in each instance, which consent Seller may withhold in Seller's
reasonable discretion. If Buyer assigns its rights or delegates
its obligations hereunder in violation of this Section, Seller
shall have the right to terminate this Agreement pursuant to
Section 3.6 above. Subject to the foregoing, this Agreement
shall be binding upon and shall inure to the benefit of the
successors and assigns of the parties to this Agreement.
6.15 Attorneys' Fees. In the event of any litigation
involving the parties to this Agreement to enforce any provision
of this Agreement, to enforce any remedy available upon default
under this Agreement, or seeking a declaration of the rights of
either party under this Agreement, the prevailing party shall be
entitled to recover from the other such attorneys' fees and costs
as may be reasonably incurred, including the costs of reasonable
investigation, preparation and professional or expert
consultation incurred by reason of such litigation. All other
attorneys' fees and costs relating to this Agreement and the
transactions contemplated hereby shall be borne by the party
incurring the same.
6.16 Brokers. Buyer and Seller each represent and warrant
to the other that (a) they have not dealt with any brokers or
finders in connection with the purchase and sale of the Property
except for a commission payable by Seller to The Seeley Companies
pursuant to separate agreement, and (b) insofar as such party
knows, no other broker or other person is entitled to any
commission or finder's fee in connection with the purchase and
sale of the Property. Seller and Buyer each agree to indemnify
and hold harmless the other against any loss, liability, damage,
cost, claim or expense incurred by reason of any brokerage fee,
commission or finder's fee which is payable or alleged to be
payable to any broker or finder (including The Seeley Companies)
because of any agreement, act, omission or statement of the
indemnifying party.
6.17 Confidentiality. Pursuant to the terms of this
Agreement, Seller shall furnish to Buyer certain information
concerning the condition, development or value of the Property
(the "Information") which is either confidential, proprietary or
otherwise not available to the public. Any information furnished
to Buyer by a director, officer, employee, agent, contractor or
representative of Seller shall be deemed for purposes of this
Agreement to have been Information furnished by Seller. As a
condition to Seller furnishing the Information, Buyer hereby
represents, warrants and agrees that without the prior written
consent of Seller, which consent may be withheld in Seller's sole
and absolute discretion, Buyer will: (a) Keep the Information
used by Buyer confidential, except information which is in the
public domain or which Buyer may have received from sources other
than Seller, and the Information will not be used other than in
connection with the Buyer's Investigation of the Property; (b)
Use the same efforts that Buyer would use to safeguard its own
confidential or proprietary information to safeguard the
Information from unauthorized disclosure; (c) Not disclose to any
person (i) that the Information has been made available to Buyer,
(ii) that Buyer has inspected any portion of the Information,
(iii) that discussions with respect to the sale of the Property
are taking place (and Seller also agrees to keep confidential the
fact that such discussions are taking place), or (iv) any other
facts with respect to such discussions, including the status
thereof. Notwithstanding the foregoing, Buyer shall have the
right to disclose Information to: (A) its attorneys, accountants,
employees, agents and contractors who are assisting Buyer in its
inspection and purchase of the Property, in which case Buyer
shall require such recipients of the Information to likewise
maintain the confidentiality of the Information in accordance
with this paragraph; (B) any person or entity to whom a court of
competent jurisdiction has required the Buyer to disclose
Information; and (C) any person or entity to whom a government
agency in the proper exercise of its jurisdiction over the
Property has required the Buyer to disclose Information,
provided, however, that before disclosing Information as required
by any such government agency, the Buyer shall give reasonable
advance written notice to the Seller to allow the Seller to
oppose such disclosure if it so desires. Buyer shall indemnify
Seller from and against any and all claims, demands, causes of
action, loss, damage or liability resulting from, arising out of
or in connection with Buyer's breach of its obligations under
this Section 6.17. Upon Seller's request, upon termination of
this Agreement, Buyer agrees to return to Seller all information
furnished to Buyer by Seller in connection with the Property,
including without limitation internally generated rent rolls,
without retaining any copies thereof.
6.18 Manner of Giving Notice. All notices and demands which
either party is required or desires to give to the other shall be
given in writing by personal delivery, express courier service or
by telecopy followed by next day delivery of a hard copy to the
address or telecopy number set forth below for the respective
party, provided that if any party gives notice of a change of
name, address or telecopy number notices to that party shall
thereafter be given as demanded in that notice. All notices and
demands so given shall be effective upon receipt by the party to
whom notice or a demand is being given.
To Seller: With Copies To:
Frontier II Properties Lamb & Baute
Limited Partnership 601 South Figueroa
c/o Sarofim Realty Advisors Street, Suite 4100
8201 Preston Road, Suite 300 Los Angeles, California 90017
Dallas, Texas 75231 Telephone: (213) 630-5000
Telephone: (214) 692-4200 Telecopier: (213) 683-1225
Telecopier: (214) 692-4201 Attn: Kevin J. Lamb
Attn: Ms. Becky Galvan
To Buyer: With Copies To:
Arden Realty Limited Partnership Jeffer, Mangels, Butler & Marmaro
9100 Wilshire Boulevard, 2121 Avenue of the Stars
Suite 700, East Tower 10th Floor
Beverly Hills, California 90212 Los Angeles, California 90067
Telephone: (310) 271-8600 Telephone: (310) 785-5314
Telecopier: (310) 274-6218 Telecopier: (310) 203-0567
Attn: Mr. Victor J. Coleman Attn: Scott M. Kalt, Esq.
6.19 Survival. The provisions of Sections 3.7 (Access to
Property), 4.3 (Hazardous Material Indemnification and Waiver),
4.4 (Condemnation), 4.5 (Damage or Destruction), 4.6 (Indemnity),
5.3 (Payment of Closing Costs), 5.6 (Liquidated Damages),
5.7 (Buyer's Remedies), 5.8 (Possession) and Article 6 (General
Provisions) shall survive the Closing and the consummation of the
transactions contemplated by this Agreement or the termination of
this Agreement for any reason without the conveyance of the
Property to Buyer. The provisions of Sections 4.1.1 (Buyer's
Representations and Warranties), 4.1.2 (Seller's Representations
and Warranties), 4.2 (Reaffirmation), and 5.2 (Prorations), shall
survive only if this Agreement Closes and then only for a period
of one (1) year following the Closing Date.
6.20 Acceptance of Offer. This Agreement constitutes an
offer by Seller to sell the Property to Buyer on the terms and
conditions set forth herein. Unless sooner terminated or
withdrawn by notice in writing to Buyer, this offer shall expire
at 12:00 noon Los Angeles time on August 11, 1997.
[Signatures on the following page]
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.
"BUYER": ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By:ARDEN REALTY, INC.,
a Maryland corporation,
its General Partner
By: /s/ Victor J. Coleman
Name: Victor J.Coleman
Title: President and COO
"SELLER": FRONTIER II PROPERTIES LIMITED
PARTNERSHIP, a Texas limited partnership
By:Frontier Holdings, L.L.C.,
a Texas limited liability company,
its General Partner
By:Frontier Equity Partners II,
Ltd., a Texas liability
partnership, a Member
By:TCV #2 GP Holdings Limited
Partnership, a Texas limited
partnership, its General
Partner
By:Sarofim Realty Advisors
Co., a Texas corporation,
as Agent and Attorney-In-
Fact
By:/s/ Michael J. Rono
Name: Michael J. Rono
Title: Vice President
FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT
THIS FIRST AMENDMENT (this "Amendment") is entered into as
of August 29, 1997, by and between FRONTIER II PROPERTIES LIMITED
PARTNERSHIP, a Texas limited partnership (the "Seller"), and
ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
(the "Buyer").
Recitals:
A. Buyer and Seller entered into that certain Real
Property Purchase and Sale Agreement and Escrow Instructions,
dated as of August 15, 1997 (the "Sale Agreement"), by which
Seller agreed to sell and Buyer agreed to buy certain real
property located at 1370 South Valley Vista, in the City of
Diamond Bar, County of Los Angeles, State of California, and more
particularly described therein (the "Property").
B. Buyer and Seller now wish to amend the Sale Agreement,
on the terms and conditions set forth in this Amendment.
NOW, THEREFORE, for good and valuable consideration, the
parties agree as follows:
1. Capitalized Terms. All capitalized terms that are used
but not defined in this Amendment shall have the meanings given
to them in the Sale Agreement.
2. Purchase Price. The Purchase Price is hereby reduced
by Ten Thousand Dollars ($10,000.00) to Ten Million Seven Hundred
Ninety Thousand Dollars ($10,790,000.00).
3. Contingencies. Buyer hereby agrees that all of its
contingencies to Closing have either been satisfied or are hereby
waived, except only the following:
3.1 Buyer shall have received, on or before the
Closing Date, an estoppel certificate, in the form specified in
Section 3.3.3 of the Sale Agreement, from the University of
Phoenix;
3.2. Seller shall have duly and timely performed each
and every covenant to be performed by Seller under the Sale
Agreement and Seller's representations and warranties set forth
in the Sale Agreement shall be true and correct as of the Closing
in all material respects;
3.3 Seller shall have duly and timely delivered or
made available to Buyer all of the items described in Section
5.1.1. of this Agreement; and
3.4 At the Closing, there will be no material adverse
changes in the physical or financial condition of the Property
which occurred after the Decision Date.
4. Escrow Holdback. Other than a carpet allowance of
$1.50 psf totaling $4,474.50 (the "Carpet Credit") owing to the
State of California during the last five (5) years of their
lease, Section 5.2.4 of the Sale Agreement is hereby revised to
provide that, instead of requiring a credit against the Purchase
Price for any unpaid tenant improvement expenses at Closing, an
escrow holdback account (the "Escrow Account") shall be
established with the Escrow Holder. Escrow Holder shall hold
$112,441.39 in the Escrow Account in accordance with the
following:
4.1 Tenant Improvement Holdback. Of that amount,
$110,384.74 (the "Tenant Improvement Holdback") shall be for
payment of certain unpaid tenant improvement expenses for
Kleinfelder (a tenant of the Property) of which $105,384.74 is
the amount Seller estimates to be the remaining unpaid tenant
improvement expenses for Kleinfelder, and Five Thousand ($5,000)
Dollars is to be used as a reserve to cover any cost overruns;
provided Seller shall still be solely responsible for all tenant
improvements related to Kleinfelder. Escrow Holder shall hold
such funds and shall only release them upon presentation by Buyer
of invoices for work that has been completed, together with
partial or final lien releases (as appropriate), and Escrow
Holder shall not release the final 10% of such funds until Buyer
presents a final invoice, certifying that all work in connection
therewith has been completed, together with a final lien release.
If upon final payment of all invoices, any of the Tenant
Improvement Holdback remains in escrow , Escrow Holder shall
deliver the remaining amount to Seller. Buyer and Seller agree
to sign such further instructions and take such further actions
as the Escrow Holder may reasonably require in connection
therewith. Seller hereby represents and warrants to Buyer that,
other than the foregoing tenant improvement expense, unpaid
tenant improvement expense relating to the University of Phoenix
as described in Section 5.2.4 of the Sale Agreement, and the
Carpet Credit, as of Closing, there are no other unpaid tenant
improvement expenses for the Property.
4.2 Leasing Commission Holdback. The remaining
$2,056.65 shall be for payment of certain leasing commissions to
be paid on the date that a new tenant, Sayed Consulting Inc.,
occupies premises in the Property and its lease term commences.
Upon presentation by Buyer of a letter certifying that such
tenant has occupied the premises and its lease term has
commenced, Escrow Holder shall pay one-half of such funds to
Trammell Crow Company and one-half to American Properties Corp.
Buyer and Seller agree to sign such further instructions and take
such further actions as the Escrow Holder may reasonably require
in connection therewith. Seller hereby represents and warrants
to Buyer that, other than the foregoing commission as of Closing
there are no other unpaid leasing commissions for the Property.
5. With respect to paragraph 4.1(z), the new checks
reference therein will not be received until after Closing.
6. Ratification of Sale Agreement. Except as specifically
amended by this Amendment, Buyer and Seller hereby agree that the
Sale Agreement remains in full force and effect without
modification.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the day and year first above written.
"SELLER": FRONTIER II PROPERTIES LIMITED
PARTNERSHIP, a Texas limited partnership
By: Frontier Holdings, L.L.C., a Texas limited
liability company, its General Partner
By: Frontier Equity Partners II, Ltd., a Texas
liability partnership, a Member
By:TCV #2 GP Holdings Limited
Partnership, a Texas limited
partnership, its General
Partner
By:Sarofim Realty Advisors
Co., a Texas corporation,
as Agent and Attorney-In-
Fact
By:/s/ Charles R. Latham
Name: Charles R. Latham
Title: Vice President
"BUYER": ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By:ARDEN REALTY, INC.,
a Maryland corporation, its General Partner
By: /s/ R. S. Ziman
Name: Richard S. Ziman
Title: CEO
FIDELITY NATIONAL TITLE COMPANY, THE ESCROW HOLDER IN THE SALE
DESCRIBED IN THE FOREGOING AMENDMENT, HEREBY ACKNOWLEDGES THAT IT
HAS READ THE FOREGOING AMENDMENT AND AGREES TO COMPLY STRICTLY
WITH THE TERMS AND CONDITIONS OF SECTIONS 4.1 AND 4.2 THEREOF.
DATED AS OF SEPTEMBER ___, 1997
FIDELITY NATIONAL TITLE COMPANY
By:
Name:
Title:
SALE AND PURCHASE AGREEMENT
AND
ESCROW AGREEMENT
This Agreement, dated as of August 29, 1997, is made
by and between METROPOLITAN LIFE INSURANCE COMPANY, a New York
corporation ("Seller"), and ARDEN REALTY LIMITED PARTNERSHIP, a
Maryland limited partnership ("Buyer") with reference to the
recitals set forth in Article I below and constitutes (i) a
contract of sale and purchase between the parties and (ii) an
escrow agreement between Seller, Buyer and FIRST AMERICAN TITLE
INSURANCE COMPANY ("Escrow Agent"), the consent of which appears
at the end hereof.
ARTICLE I
RECITALS
1.1 Real Property. Seller owns and holds fee title to
that certain land (the "Land") described in Exhibit A attached
hereto, together with all improvements (the "Improvements")
located thereon known as South Bay Technology Center and located
at 680 and 690 Knox Street, Los Angeles, California,
(collectively, the "Real Property").
1.2 Personal Property. In connection with the Real
Property, Seller has (i) obtained certain governmental permits
and approvals, (ii) obtained certain contractual rights and other
intangible assets, and (iii) acquired certain other items of
tangible personal property more completely described in Exhibit B
(collectively, the "Personal Property"). The Real Property and
the Personal Property are collectively referred to as the
"Property."
1.3 Purchase and Sale. Seller now desires to sell and
Buyer now desires to purchase all of Seller's right, title and
interest in and to the Property, upon the terms and covenants and
subject to the conditions set forth below.
ARTICLE II
PURCHASE PRICE
2.1 Price. In consideration of the covenants herein
contained, Seller hereby agrees to sell and Buyer hereby agrees
to purchase the Property for a total purchase price of Six
Million Four Hundred Thousand Dollars ($6,400,000) (the "Purchase
Price"), which Buyer shall, at or before the Closing (as defined
in Section 8.1), deliver to Escrow Agent, by bank wire transfer
of immediately available funds. The Purchase Price received by
Seller at Closing shall be adjusted to reflect prorations and
other adjustments pursuant to Section 9.1.
ARTICLE III
OPENING OF ESCROW
Buyer and Seller have opened an escrow with Escrow
Agent. Upon the mutual execution of this Agreement, Buyer and
Seller shall deposit with Escrow Agent fully executed
counterparts of this Agreement for use as escrow instructions.
If required by Escrow Agent, Buyer and Seller further agree to
execute Escrow Agent's usual form of supplemental escrow
instructions for transactions of this type as Escrow Agent may
reasonably request and as are reasonably acceptable to Buyer and
Seller and as are not inconsistent with the provisions of this
Agreement; provided, however, that such escrow instructions shall
be for the purpose of implementing this Agreement, and such
instructions shall incorporate this Agreement by reference and
shall specifically provide that no provision thereof shall have
the effect of modifying this Agreement unless it is so expressly
stated and initialed on behalf of Buyer and Seller.
ARTICLE IV
CONDITIONS TO THE PARTIES' OBLIGATIONS
4.1 Escrow Agent. Escrow Agent shall not be concerned
with this Section nor have any responsibility therefor.
4.2 Conditions to Buyer's Obligation to Purchase.
Buyer's obligation to purchase is expressly conditioned upon each
of the following:
(a) Performance by Seller. Performance in all
material respects of the obligations and covenants of, and
deliveries required of, Seller hereunder.
(b) Delivery of Title and Possession. Delivery at the
Closing of (i) the Deed (as defined in Section 6.1(a)) and
issuance of the Title Policy (as defined in Section 8.1(b))
showing title in Buyer in the condition described in Section
8.1(b), and (ii) possession as provided in Section 17.1.
(c) Seller's Representations. The representations and
warranties by Seller set forth in Section 13.2 being true and
correct in all material respects as of the Closing.
(d) Tenant Estoppels. Delivery at the Closing of
estoppel letters (the "Estoppel Letters"), which except in the
case of leases to agencies or departments of the State of
California, shall be in substantially the form annexed hereto as
Exhibit G, from tenants under Leases representing not less than
seventy-five percent (75%) of the leased square footage of the
Property and, in any event, including responses from Pitney
Bowes, Inc., Carnet Holding Corporation and RE Harrington, Inc.;
provided, however, that if Seller is unable to obtain the
Estoppel Letters prior to the Scheduled Closing Date, Seller
shall be entitled to adjourn the Closing for up to thirty (30)
days to attempt to obtain the Estoppel Letters; and provided,
further, that, if Seller is unable to obtain any of the Estoppel
Letters, Seller shall be entitled (but shall not be obligated) to
satisfy the closing condition with respect thereto by providing,
in lieu thereof, Seller's representations as to the matters
addressed in the missing Estoppel Letters, subject, however, to
the limitations contained in Sections 13.4 and 18.15 hereof.
(e) Shell Indemnity. Delivery at the Closing of an
Indemnification Agreement, substantially in the form attached
hereto as Exhibit M, executed by Shell Oil Company in favor of
Buyer.
4.3 Conditions to Seller's Obligation to Sell.
Seller's obligation to sell is expressly conditioned upon each of
the following:
(a) Performance by Buyer. Performance in all material
respects of the obligations and covenants of, and deliveries
required of, Buyer hereunder.
(b) Receipt of Purchase Price. Receipt of the
Purchase Price and any adjustments due Seller under Article IX at
the Closing in the manner herein provided.
ARTICLE V
BUYER'S DELIVERIES TO ESCROW AGENT
5.1 Purchase Price. Buyer shall deliver to Escrow
Agent the Purchase Price as set forth in Article II, subject to
adjustments and prorations in accordance with Article IX.
5.2 Deliveries. Buyer shall, at or before the
Closing, deliver to Escrow Agent each of the following:
(a) Assignment of Leases and Contracts. Four executed
counterparts of the Assignment and Assumption of Leases,
Contracts and Other Property Interests (the "Assignment of Leases
and Contracts") in the form of Exhibit C.
(b) Bill of Sale. Four executed counterparts of a
bill of sale (the "Bill of Sale") in the form of Exhibit F,
pursuant to which Seller shall convey and transfer to Buyer all
of its right, title and interest in and to the Personal Property.
(c) Cash B Prorations. The amount, if any, required
of Buyer under Article IX.
5.3 Failure to Deliver. The failure of Buyer to make
any delivery required above by the date, or within the time, set
forth above shall constitute a default hereunder by Buyer.
ARTICLE VI
SELLER'S DELIVERIES TO ESCROW AGENT
6.1 Delivery of Instruments and Documents. Seller
shall, at or before the Closing, deliver to Escrow Agent the
following instruments and documents:
(a) Deed. A grant deed (the "Deed"), substantially in
the form annexed hereto as Exhibit L, with respect to the Real
Property, executed and acknowledged by Seller, pursuant to which
Seller shall convey title to the Real Property subject to the
following (collectively, the "Permitted Encumbrances"):
(1) Non-delinquent real property taxes and
all assessments and unpaid installments thereof which
are not delinquent.
(2) The leases affecting the Property
enumerated in Exhibit D and any leases executed in
accordance with this Agreement after the date hereof
(collectively, the "Leases"), and the rights of the
tenants thereunder.
(3) Any other lien, encumbrance, easement or
other exception or matter voluntarily imposed or
consented to by Buyer prior to or as of the Closing.
(4) All exceptions to title disclosed in the
Title Policy (as defined in Section 8.1).
(5) Exceptions and matters normally
contained in the standard printed form of American Land
Title Association extended coverage owner's policy.
(6) Any matters shown on the survey, if any,
delivered in accordance with Section 7.1, or which a
visual inspection of the Property would reveal.
(b) Assignment of Leases and Contracts. Four executed
counterparts of the Assignment of Leases and Contracts, together
with original executed counterparts (or copies if originals are
not in Seller's possession) of the Leases and the service
contracts, equipment leases, maintenance agreements and other
contracts affecting the Property enumerated in Exhibit E (the
"Contracts") assigned thereby.
(c) Bill of Sale. Four executed counterparts of the
Bill of Sale.
(d) Tenant Estoppels. The Estoppel Letters (as
defined in Section 4.2(d)).
(e) Notices to Tenants. Notices signed by Seller (or
Seller's manager for the Improvements) addressed to each tenant
under each Lease in the form of Exhibit H.
(f) FIRPTA Affidavit. Executed copies of an affidavit
in the form of Exhibit I, with respect to the Foreign Investment
in Real Property Tax Act.
(g) California Form 590 RE. Executed copies of
California Franchise Tax Board Form 590 RE in the form of Exhibit
K.
(h) Cash B Prorations. The amount, if any, required
of Seller under Article IX.
6.2 Failure to Deliver. The failure of Seller to make
any delivery required above by the date, or within the time, set
forth above shall constitute a default hereunder by Seller.
ARTICLE VII
INVESTIGATION OF PROPERTY
7.1 Delivery of Documents. On or before the date of
this Agreement, Seller has delivered to Buyer all items listed on
Exhibit J attached hereto and Buyer hereby confirms receipt of
same.
7.2 Physical Inspection of Property. Buyer acknowl
edges and agrees that Buyer has completed all physical
inspection, testing and survey of the Property required by Buyer
and Buyer's representatives, agents and designees.
Buyer hereby agrees to indemnify and hold harmless
Seller, SSR Realty Advisors, Inc. and the pension fund or other
investors on whose behalf Seller is acting, from and against any
mechanics' lien or claim therefor, any claim, cause of action,
lawsuit, damage, liability, loss, cost or expense (including,
without limitation, attorneys' fees) arising out of any such
inspections, tests or survey conducted by Buyer, its representa
tives, agents or designees. The provisions of this Section 7.2
shall survive the termination of this Agreement or the Closing
hereunder.
ARTICLE VIII
THE CLOSING
8.1 Date and Manner of Closing. Escrow Agent shall
close the escrow (the "Closing") as soon as all conditions to
closing contained in this Agreement have been satisfied which
shall in any event be no later than August 28,1997 (the "Final
Closing Date"), time being of the essence (subject only to
Seller's remedy period under Section 4.2(d) actually extending
beyond such date and Seller's cure rights under Section 15.2, in
which event Seller will give Buyer not less than three business
days notice of the date of Closing), by (i) filing for record the
Deed and such other documents as may be necessary to procure the
Title Policy, (ii) delivering the Purchase Price to Seller in the
form of a bank wire transfer of immediately available funds, and
(iii) delivering funds and documents as set forth in Article X
entitled "Distribution of Funds and Documents," WHEN AND ONLY
WHEN each of the following conditions has been satisfied:
(a) Funds and Documents. All funds and instruments
required to be delivered to Escrow Agent pursuant to Articles V
and VI have been so delivered to Escrow Agent.
(b) Title Insurance. The Title Company is prepared to
issue a standard American Land Title Association owner's policy
of title insurance (the "Title Policy") with liability in the
amount of the Purchase Price, insuring that fee title to the Real
Property vests in Buyer subject to the Permitted Encumbrances.
8.2 Additional Title Insurance. Buyer may, at Buyer's
option, direct Title Company to issue additional title insurance
endorsements and extended coverage and extended coverage, if
Buyer pays for the extra cost of such additional endorsements and
provided that Title Company's failure to issue any such
additional endorsements shall not affect Buyer's obligations
under this Agreement.
8.3 Delay in Closing; Authority to Close. If Escrow
Agent cannot close the escrow on or before the Final Closing
Date, it will, nevertheless, close the same when all conditions
have been satisfied or waived, notwithstanding that one or more
of such conditions has not been timely performed, unless after
the Final Closing Date and prior to the close of the escrow,
Escrow Agent receives a written notice to terminate the escrow
and this Agreement from a party who, at the time such notice is
delivered, is not in default hereunder. The exercise of such
right of termination, any delay in the exercise of such right,
and the return of monies and documents, shall not affect the
right of the party giving such notice of termination to pursue
remedies permitted under Article XII for the other party's breach
of this Agreement. In addition, the giving of such notice, the
failure to object to termination of the escrow or the return of
monies and documents shall not affect the right of the other
party to pursue other remedies permitted under Article XII for
the breach of the party who gives such notice.
ARTICLE IX
PRORATION, FEES, COSTS AND ADJUSTMENTS
9.1 Prorations. (a) On or before the Closing, Buyer
and Seller shall agree on the amounts of the prorations and
inform Escrow Agent of such amounts. In accordance therewith,
Escrow Agent shall prorate between the parties (and the parties
shall deposit funds therefor with Escrow Agent or shall instruct
Escrow Agent to debit against sums held by Escrow Agent owing to
such party), as of 11:59 p.m. the day prior to the Closing, all
income and expenses with respect to the Property and payable to
or by the owner of the Property, including, without limitation:
(i) all real property taxes on the basis of the fiscal period for
which assessed (if the Closing shall occur before the tax rate is
fixed, the apportionment of taxes shall be based on the tax rate
for the preceding period applied to the latest assessed
valuation); (ii) rents and other tenant payments, if any,
received under the Leases; (iii) delinquent rentals and other
tenant payments, if any, not more than 30 days overdue under the
Leases; (iv) charges for water, sewer, electricity, gas, fuel and
other utility charges, all of which shall be read promptly before
Closing, unless Seller elects to close its own applicable
account, in which event Buyer shall open its own account and the
respective charges shall not be prorated; (v) amounts prepaid and
amounts accrued but unpaid on service contracts and management
contracts which are to be assumed by Buyer; and (vi) amounts, if
applicable, pursuant to Section 18.16.
At the Closing Buyer shall pay or reimburse Seller for
all leasing commissions, tenant improvement costs and other
charges payable by reason of or in connection with any Lease
entered into after July 7, 1997 or any renewal, modification or
extension of an existing Lease after such date.
Real property tax refunds and credits received after
the Closing which are attributable to a fiscal tax year prior to
the Closing shall belong to Seller. Any such refunds and credits
attributable to the fiscal tax year during which the Closing
occurs shall be apportioned between Seller and Buyer after
deducting the reasonable out-of-pocket expenses of collection
thereof, and this apportionment obligation shall survive the
Closing.
At the Closing, Seller shall deliver to Buyer all
security deposits (plus interest accrued thereon to the extent
required to be paid by the applicable Lease or applicable law)
required to be held by Seller under the Leases (other than those
then permitted to be applied by Landlord against outstanding
obligations).
Delinquent rentals and other tenant payments more than
30 days overdue, if any, shall not be prorated and all rights
thereto shall be retained by Seller who reserves the right to
collect and retain such delinquent rentals and payments, provided
that any legal proceedings initiated by Seller with respect to
the collection thereof shall be subject to Buyer's approval not
to be unreasonably withheld or delayed. If at any time after the
Closing Buyer shall receive any such delinquent rentals or
payments (all of which Buyer shall use its best efforts to
obtain), Buyer shall immediately remit such rents and payments to
Seller, provided that any monies received by Buyer from a
delinquent tenant shall be applied first to current rents then
due and payable and then to delinquent rents in the inverse order
in which they became due and payable. If any tenants are
required to pay percentage rent, additional rent or escalation
charges for real property taxes, operating expenses or other
charges, Seller and Buyer shall at the Closing reasonably
estimate the unpaid amount thereof attributable to any period
prior to the Closing and Buyer shall pay such amount to Seller at
the Closing.
(b) (i) If any rents (including cost reimbursement
payments) are payable or accruable under the Leases on the basis
of estimates or formulae and are subject to adjustment after the
Closing Date, such rents shall be apportioned at the Closing to
the extent collected on the basis of the then current charges or
accruals, as applicable, and shall be subject to reapportionment
on the basis of the amounts as finally determined to be owing
under the Leases. Apportionment of escalation rent shall be made
on the basis of a 365-day year and the actual number of days
elapsed. At the end of the fiscal year following Closing, Buyer
shall prepare and submit to Seller a final calculation of the
amounts and other items to be apportioned pursuant to this
Agreement as of the Closing Date (the "Final Report"). Seller
shall raise any objections it has to the Final Report within
thirty (30) days after the submission thereof by written notice
to Buyer given within said thirty (30) day period and stating in
reasonable detail Seller's objections, and Buyer shall allow
Seller and its authorized representatives reasonable access
during business hours to its books and records pertinent to the
Property to permit Seller to review the Final Report and to
ascertain its accuracy.
(ii) If Seller shall raise any objections to the Final
Report as provided above, the parties shall meet within
ten (10) days after submission of Seller's notice thereof and
attempt to resolve such objections. If any objections are not
resolved within said ten (10) day period, such objections may
thereafter be submitted by either party to Price Waterhouse LLP
(or if it shall fail or refuse to serve such other "Big Six"
accounting firm as mutually acceptable to Seller and Buyer) for
determination. The determination of such firm shall be final and
conclusive on the parties and judgment may be entered thereon in
any court of competent jurisdiction. The rules of the American
Arbitration Association applicable to commercial arbitrations
shall apply to any such arbitration.
(iii) The Final Report shall be deemed amended by
agreement of the parties or determination of such firm, and,
within ten (10) days after such agreement or determination, Buyer
shall bill the tenants therefor. Thereafter, Seller promptly
shall pay to Buyer, or Buyer shall pay to Seller promptly upon
collection, as the case may be, the amount determined to be due
from such party to the other in accordance with this Section 8
based upon the Final Report, as the same may have been amended;
provided, however, if the Final Report as so amended or
determined shall evidence a net amount due from one party to the
other of less than $10,000, no settlement of such amount due
shall be required.
(iv) If a determination is required, the parties shall
bear the fees and expenses of the firm handling such
determination equally.
(c) The obligations of the parties hereto under this
Section 9.1 shall survive the Closing.
9.2 Seller's Closing Costs. Seller will pay (i) the
documentary transfer tax, in the amount Escrow Agent determines
to be required by law, (ii) one-half of Escrow Agent's escrow fee
or escrow termination charge, (iii) Seller's own attorneys' fees,
(iv) the cost of the Title Report and the title premium for the
Title Policy, and (v) taxes and any other costs incurred in
recording the Deed or any other instruments other than the
documentary transfer tax.
9.3 Buyer's Closing Costs. Buyer will pay (i)
one-half of Escrow Agent's escrow fee or escrow termination
charge, (ii) the cost of any other title insurance endorsements
and extended coverage ordered by Buyer, (iii) the cost of any new
survey of the Property or any update of any existing survey,
(iv) any costs incurred in connection with Buyer's investigation
of the Property pursuant to Article VII, and (v) Buyer's own
attorneys' fees.
ARTICLE X
DISTRIBUTION OF FUNDS AND DOCUMENTS
10.1 Form of Disbursements. All disbursements by
Escrow Agent shall be made by bank wire transfer to the account
of the receiving party, as such pa to the
Property. Further, Seller agrees to provide such auditor a
representation letter regarding the books and records of the
Property, in a form reasonably acceptable to Seller, Buyer and
Buyer's auditor, in connection with the normal course of auditing
the Property in accordance with generally accepted auditing
standards (but shall not thereby be deemed to have made any
representation or warranty to Buyer or to any other third party).
IN WITNESS WHEREOF, this Agreement has been executed as
of the date first set forth above.
SELLER: BUYER:
METROPOLITAN LIFE INSURANCE ARDEN REALTY LIMITED
COMPANY PARTNERSHIP, a Maryland limited
partnership
By: SSR Realty Advisor, By: Arden Realty,Inc., a Maryland
its Investment Advisor corporation, its general partner
By:/s/ John F. Loehr By:/s/ Richard S. Ziman
Authorized Signatory Name: Richard S. Ziman
Title:CEO
CONSENT OF ESCROW AGENT
The undersigned Escrow Agent hereby agrees to (i)
accept the foregoing Agreement, (ii) be escrow agent under said
Agreement, and (iii) be bound by said Agreement in the
performance of its duties as escrow agent.
By /s/ Patricia Pewthers
Patricia Pewthers
[Print Name]
Its Escrow Officer
[Title]
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW
INSTRUCTIONS (this "Agreement") is entered into as of July 30,
1997 by and between PROPERTY ASSET MANAGEMENT, INC., a Delaware
corporation ("Seller"), and ARDEN REALTY LIMITED PARTNERSHIP, a
Maryland limited partnership ("Buyer").
RECITALS:
A. Seller is the owner of certain improved real property
located in Westlake Village, California known as Westlake
Renaissance Court.
B. Buyer desires to purchase that property, and Seller
desires to sell that property, on the terms and conditions
contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, Buyer and Seller agree as
follows:
1. PURCHASE AND SALE
1.1 Agreement to Buy and Sell. Subject to all of the terms
and conditions of this Agreement, Seller hereby agrees to sell
and convey to Buyer and Buyer hereby agrees to acquire and
purchase from Seller the following (collectively, the
"Property"):
1.1.1 That certain parcel of real property described on
Exhibit "A" attached hereto, together with all of Seller's right,
title and interest in and to all easements, privileges and other
rights, including but not limited to development rights, air
rights and water rights, appurtenant thereto (collectively, the
"Land");
1.1.2 All improvements, structures and fixtures located
on or under the Land (collectively, the "Improvements") (the Land
and Improvements are herein collectively called the "Project");
1.1.3 All of Seller's right, title and interest in and
to all tangible personal property, if any, located on or affixed
to the Project and used in connection with the ownership,
operation or maintenance of the Project, and all intangible
property (including, but not limited to, trade names, logos,
easements, licenses, permits, air rights, certificates of
occupancy, warranties, rights of way, signs, trademarks,
telephone listings and numbers, sewer agreements, water line
agreements, utility agreements, water rights and oil, gas and
mineral rights), if any, owned or held by Seller that pertains to
the ownership, operation or maintenance of the Project
(collectively, the "Personal Property");
1.1.4 All leases or other agreements demising space in
or providing for the use or occupancy of any portion of the
Project (collectively, the "Leases") as more particularly
described in Schedule 1.1.4 attached hereto and made a part
hereof; and
1.1.5 Any and all service contracts, maintenance
agreements, management contracts, bonds and all other contracts
and agreements relating to the Property which continue in full
force and effect beyond the "Closing" (as defined below) as more
particularly described in Schedule 1.1.5 attached hereto,
together with all supplements, amendments and modifications
thereto (collectively, the "Contracts"), to the extent the
Contracts are assignable.
1.2 Purchase Price. The purchase price to be paid by Buyer
to Seller for the Property shall be the sum of Seven Million One
Hundred Thousand Dollars ($7,100,000.00) (the "Purchase Price").
1.3 Payment of Purchase Price. The Purchase Price shall be
payable as follows:
1.3.1 Within two (2) days after the "Effective Date" (as
defined below), Buyer shall deposit into "Escrow" (as defined
below), into an interest bearing account, Three Hundred Thousand
Dollars ($300,000) (such amount, together with any interest
earned thereon, is herein called the "Deposit") by certified
check or wire transfer of federal funds or in another immediately
available form. The Deposit shall be at all times invested by
Escrow Holder (as defined below) in the following investments:
(i) U.S. Treasury obligations, (ii) U.S. Treasury backed
repurchase agreements issued by a major money center banking
institution reasonably acceptable to Seller, (iii) CDs or Money
Market Accounts of institutions whose deposits are insured by the
FDIC, or (iv) such other manner reasonably acceptable to Seller
and Buyer. The Deposit shall be nonrefundable to Buyer unless
(i) Buyer shall timely terminate this Agreement pursuant to
Sections 3.1.4, 3.2, 4.5 or 4.6, or (ii) Seller shall be in
material breach of Seller's obligations under this Agreement, or
(iii) or the Closing shall fail to occur through no fault of
Buyer. The Deposit shall be applied to the Purchase Price at
Closing.
1.3.2 At least one (1) business day prior to the
"Closing Date" (as defined below), Buyer shall deposit into
Escrow the balance of the Purchase Price, subject to adjustment
by reason of any applicable prorations and the allocation of
closing costs described below. The deposit required by this
Section 1.3.2 shall be made by wire transfer of federal funds or
in another immediately available form.
2. OPENING OF ESCROW
2.1 Escrow; Escrow Holder. Within three (3) days after
Seller and Buyer shall have executed this Agreement, Seller shall
open an escrow (the "Escrow") with First American Title
Insurance Company, at 345 California Street, 24th Floor, San
Francisco, California 94104, Attn: Gyda Kelly ("Escrow Holder")
by delivering to Escrow Holder a fully executed copy of this
Agreement. Escrow Holder shall immediately, upon receipt, duly
execute this Agreement. The date of the opening of Escrow is
herein called the "Effective Date" and Escrow Holder shall
promptly advise Seller and Buyer of the Effective Date.
2.2 Escrow Instructions. The terms and conditions set forth
in this Agreement shall constitute both an agreement between
Seller and Buyer and escrow instructions for Escrow Holder.
Seller and Buyer shall promptly execute and deliver to Escrow
Holder any separate or additional escrow instructions requested
by Escrow Holder which are consistent with the terms of this
Agreement. Any separate or additional instructions shall not
modify or amend the provisions of this Agreement unless otherwise
expressly set forth by mutual written consent of Buyer and
Seller. As used in this Agreement, "Closing" shall mean the
recordation of the "Deed" (as defined below) in the Official
Records of Los Angeles County, California.
2.3 Closing Date. Escrow shall close on or before the date
that is forty-five (45) days after the Effective Date (the
"Closing Date").
3. ACTIONS PENDING CLOSING
3.1 Buyer's Review of Title.
3.1.1 Seller has heretofore delivered to Buyer,
accompanied by copies of all documents referred to therein, a
current preliminary title report or commitment for title
insurance issued by First American Title Insurance Company (the
"Title Company") showing the condition of title to the Property
(the "Preliminary Title Report"). If Buyer shall desire an ALTA
Survey of the Project ("Survey"), Buyer shall cause the same to
be made at Buyer's sole cost before the "Title Date" (as defined
below).
3.1.2 Buyer shall have until twenty-five (25) days
after the Effective Date (such date being herein called the
"Title Date") within which to deliver to Seller written notice of
Buyer's disapproval of title as shown on the Preliminary Title
Report and Survey (those disapproved title matters as so
identified by Buyer are hereafter called the "Disapproved
Exceptions"). Buyer's failure to provide such notice on or
before the Title Date shall constitute Buyer's approval of the
condition of title as shown on the Preliminary Title Report and
Survey.
3.1.3 If Buyer timely notifies Seller of its
Disapproved Exceptions on or before the Title Date, Seller shall
notify Buyer in writing within five (5) days after receipt of
Buyer?s notice that: (a) Seller will remove such Disapproved
Exceptions from title as of or before Closing; or (b) Seller will
not remove any or certain specified Disapproved Exceptions from
title. Seller's failure to address any Disapproved Exceptions in
any notice, or failure to give a notice as to any Disapproved
Exceptions, shall constitute Seller's statement that it will not
remove such Disapproved Exceptions from title.
3.1.4 If Seller does not provide Buyer with written
notice that it shall remove all Disapproved Exceptions from
title, Buyer shall have the right to terminate this Agreement by
delivery of written notice of termination in accordance with
Section 3.3 on or before the date that is thirty (30) days after
the Effective Date (the "Decision Date"), as Buyer's sole and
exclusive remedy. Buyer's failure to provide such notice of
termination on or before the Decision Date shall constitute
Buyer's waiver of its disapproval of the Disapproved Exceptions.
In the case of Buyer's waiver (or deemed waiver) of Disapproved
Exceptions, Seller shall have no obligation to remove or
otherwise address such Disapproved Exceptions from title, and
such waived Disapproved Exceptions shall be deemed approved. If
Buyer elects to terminate this Agreement pursuant to this
Section 3.1.4, the provisions of Section 3.3 shall apply. Except
for the Disapproved Exceptions Seller removes or covenants to
remove, the exceptions to title shown by the Preliminary Title
Report and any encumbrance arising from the acts of Buyer are
called the "Permitted Exceptions" in this Agreement.
3.1.5 Notwithstanding any of the foregoing, Seller shall
at Closing (but shall not be obligated prior thereto) remove of
record all tax and mechanic's liens (except only for the liens of
taxes to be prorated under Section 5.2.2 below) at its sole cost
and expense. Notwithstanding any of the foregoing, Buyer's
approval of the Preliminary Title Report shall be without
prejudice to Buyer's right to disapprove any additional
exceptions to title disclosed by any supplementary reports issued
by the Title Company; provided, however, Buyer's approval shall
not be unreasonably withheld. If any such additional exceptions
to title are disclosed, then unless Buyer gives written notice
that it disapproves such additional exceptions to title on or
before the sooner to occur of the Closing Date or five (5)
business days after receipt of written notice of such additional
exceptions (together with copies of the underlying documents
evidencing same), Buyer shall be deemed to have approved said
additional exceptions. If, for any reason, on or before the
Closing Date, Seller does not cause such additional exceptions
which Buyer disapproves (to the extent Buyer is permitted
hereunder to so disapprove) to be removed at no cost to Buyer
(Seller having the right but not the obligation to do so), then,
at Buyer's option exercised by giving written notice thereof on
or before the Closing Date, this Agreement shall terminate.
3.2 Buyer's Review of the Property; Agreements. On or
before the Decision Date, Buyer shall have prepared, obtained,
reviewed (or shall have chosen not to have prepared, obtained or
reviewed) and approved, among other things, all reports of
investigations of the Property, including, such soil,
environmental, geological and engineering tests and reports,
financial information about the Project, and other inspections of
the Property as Buyer shall deem necessary in order to determine
whether the Property is suitable for Buyer's intended use, as
well as investigated (or chosen not to have investigated) all
zoning requirements, federal, state and local laws, ordinances,
rules, regulations, permits, licenses, approvals and orders
applicable to the Property. Pursuant to and subject to the
requirements of Section 3.5 of this Agreement, Buyer may enter
onto the Property for the purpose of conducting its inspection
(the "Inspection") of the Property; provided, however, without
first obtaining Seller's prior written consent, Buyer shall only
conduct a visual inspection, with no right to conduct any
physical testing, boring, sampling or removal (collectively,
"Physical Testing") of any portion of the Property. Seller shall
reasonably cooperate to assist Buyer in completing the
Inspection. If Buyer wishes to conduct any Physical Testing of
the Property, Buyer shall submit a work plan to Seller prior to
the Decision Date for Seller's prior written approval, which work
plan Seller may modify, limit or disapprove in its sole and
absolute discretion. If, on the basis of the review and the
Inspection described in this Section 3.2, or if for any other
reason or for no reason, Buyer determines in its sole and
absolute discretion that the Property is not suitable for Buyer's
intended use, then on or before the Decision Date, Buyer may
terminate this Agreement in accordance with Section 3.3 below.
Buyer's failure to provide such notice on or before the Decision
Date shall constitute Buyer's approval of the aforementioned
items and of the condition of the Property.
As soon as practicable after the date hereof, but in no event
later than five (5) business days after the Effective Date,
except as otherwise set forth, Seller shall deliver to Buyer, or
shall cause to be delivered or made available to Buyer at the
Project, to the extent they are in Seller's possession (or the
possession of Seller's property manager), the following:
(i) Complete copies of all of the Tenant Leases and all
amendments thereto, a schedule of which is attached hereto as
Schedule 1.1.4;
(ii) Evidence that the Project complies with the
Subdivision Map Act of California, the Project has all of the
necessary valid Certificates of Occupancy and otherwise complies
with all construction and operational laws, codes, ordinances,
regulations and conditional use permits;
(iii) The loss history of the Project pertaining to
any property damage or personal injury suffered for which an
insurance claim of more than Fifty Thousand Dollars ($50,000) was
submitted by Seller at any time after January 1, 1995;
(iv) A set of all "as built" plans, specifications and
structural drawings (including, but not limited to, mechanical,
electrical, air conditioning, landscaping and sprinkler
drawings), third-party soil, geological, seismic, environmental
and hazardous materials and asbestos studies or reports, relating
to the Improvements or the subsurface conditions, grading plans,
water table or other matters bearing upon condition of the
Project;
(v) All electricity, utility and property tax bills for
the period beginning January 1, 1995 and current year to date;
(vi) Statements of income and expense for the Project
for the calendar years 1995, 1996 and current year to date;
(vii) All warranties and operating manuals that
Seller may have from vendors, contractors or servicing agents
with respect to the physical condition of the Improvements, the
Project or any portion thereof or the equipment located therein;
(viii) Complete copies of all Contracts; and
(ix) A list of all personal property, if any (including
supplies) owned or leased by Seller and used in connection with
the operation, maintenance and repair of the Project.
Seller's obligation with respect to the foregoing items is only
to make deliver such items to Buyer or to make such items
available to Buyer to the extent such items are in the possession
of Seller or its property manager, and Seller shall have no
obligation to obtain any of the foregoing items from third
parties (other than Seller's property manager) or to prepare or
generate such items.
3.3 Buyer's Termination. If Buyer elects to terminate this
Agreement in accordance with Sections 3.1.4, 3.1.5, 3.2, 4.5 or
4.6, then, on or before the Decision Date with respect to a
termination pursuant to Sections 3.1.4 or 3.2., or on or before
any applicable later date in connection with a termination
pursuant to Sections 3.1.5, 4.5 or 4.6, Buyer shall give Seller
and Escrow Holder written notice that Buyer elects to terminate
this Agreement. Buyer's failure to timely provide such
termination notice pursuant to said Sections shall constitute
Buyer's waiver of Buyer's right to terminate this Agreement
pursuant to said Sections. In the event Buyer timely elects to
terminate this Agreement pursuant to this Section 3.3, Escrow
Holder (or Seller, if the Deposit has previously been delivered
to Seller) shall deliver the Deposit to Buyer and shall return to
the depositor thereof any other materials previously placed in
Escrow and remaining in Escrow; Buyer shall deliver to Seller
all information, materials and data that Buyer and/or Buyer's
Agents discover, obtain or generate in connection with or
resulting from Buyer's investigation of the Property (including,
without limitation, pursuant to Section 3.5); and neither party
shall thereafter have any further rights or obligations under
this Agreement unless expressly provided otherwise herein.
3.4 No Processing. Without Seller's prior written consent,
until the Closing, Buyer shall not make any application to any
governmental agency for any permit, approval, license or other
entitlement for the Property or the use or development thereof.
3.5 Access to Property.
3.5.1 Subject to the rights of existing tenants of the
Property ("Tenants"), whom Buyer hereby agrees not to interview
or question without having provided Seller and Seller's Broker
(as defined below) with at least 24 hours prior written notice of
its intention to do so and an opportunity for Seller's
representative to accompany Buyer or its representative during
such interview, Seller hereby grants to Buyer a nonexclusive
license to enter onto the Property solely for the purpose of
conducting Buyer's Inspection which shall also include the
examination of all operating books and records that relate to the
Project (including all specifications and as-built drawings,
building permits, certificates of occupancy, soil reports,
engineering reports and similar information relating to the
Project or its management, operation, maintenance or use, all to
the extent they are in Seller's possession). Any Inspection work
shall be at the sole cost and expense of Buyer. If Buyer or its
agents, employees, representatives or contractors (collectively,
"Buyer's Agents") conduct any activities on the Property that are
excluded from the definition of "Inspection" in Section 3.2, that
shall be a material breach of this Agreement and Seller may
terminate this Agreement by written notice thereof to Buyer. The
license created under this Section 3.5.1 shall expire on
termination of this Agreement. At least forty-eight (48) hours
prior to any entry and Inspection, Buyer shall provide Seller
with sufficient evidence to show that Buyer and Buyer's Agents,
who are to enter upon the Property, are adequately covered by
policies of insurance issued by a carrier reasonably acceptable
to Seller insuring Buyer and Seller against any and all liability
arising out of Buyer's or Buyer's Agents' entry upon and
Inspection of the Property, including without limitation any loss
or damage to the Property, with coverage in the amount of not
less than $1,000,000 per occurrence.
3.5.2 Buyer agrees to keep the Property free from any
liens arising out of any work performed, materials furnished or
obligations incurred by or on behalf of Buyer or Buyer's Agents
with respect to any Inspection or Physical Testing of the
Property. If any such lien shall at any time be filed, Buyer
shall cause the same to be discharged of record within twenty
(20) days thereafter by satisfying the same or, if Buyer in its
discretion and in good faith determines that such lien should be
contested, by recording a bond. Failure by Buyer to discharge
such lien shall be a material breach of this Agreement and Seller
may terminate this Agreement by written notice thereof to Buyer.
3.5.3 Buyer shall, at its sole cost and expense, comply
with all applicable federal, state and local laws, statutes,
rules, regulations, ordinances, or policies in conducting the
Inspection and the Physical Testing.
3.5.4 Buyer hereby agrees to hold harmless, protect,
defend and indemnify, and hereby releases, Seller and its
trustees, officers, directors, employees, contractors, agents,
subsidiaries and affiliates, and its and their respective
successors and assigns (collectively, the "Indemnitees") and the
Property from and against any and all claims, demands, causes of
action, losses, liabilities, liens, encumbrances, costs or
expenses (including without limitation reasonable attorneys' fees
and litigation costs) arising out of, connected with or
incidental to: (a) any injuries to persons (including death) or
property (real or personal), or (b) any mechanics', workers' or
other liens on the Property, by reason of or relating to the work
or activities conducted on the Property by Buyer or Buyer's
Agents. The provisions of this Section 3.5.4 shall survive any
termination of this Agreement and shall not be limited in any way
by any other terms of this Agreement, including, but not limited
to, Section 5.6 of this Agreement.
3.5.5 Except as otherwise permitted under Section 3.5,
in no event shall Buyer or Buyer's Agents have the right to place
any materials or equipment on the Property (including, without
limitation, signs or other advertising material) until after the
Closing has occurred.
3.5.6 Buyer shall, at its sole cost and expense, clean
up and repair the Property, in whatever manner necessary, after
Buyer's or Buyer's Agents' entry thereon so that the Property
shall be returned to the same condition that existed prior to
Buyer's or Buyer's Agents' entry thereon.
3.5.7 Seller shall promptly be provided with a copy of
any and all information, materials and data that Buyer and/or
Buyer's Agents discover, obtain or generate in connection with or
resulting from its Inspection and work under Section 3.5
hereunder.
4. ADDITIONAL AGREEMENTS OF THE PARTIES
4.1 Seller's Representations and Warranties. (a) Seller
hereby represents, warrants and covenants to and agrees with
Buyer that Seller has the power and authority to own the Property
and to consummate the transactions contemplated by this
Agreement, and that this Agreement and all instruments, documents
and agreements to be executed by Seller in connection herewith
are, or when delivered shall be, duly authorized, executed and
delivered by Seller and are, or when delivered shall be, valid,
binding and enforceable obligations of Seller.
(b) Seller hereby makes the following
representations, warranties and covenants, each of which is
deemed to be material and each of which is stated by Seller to be
true and correct on the date hereof and, to Seller?s knowledge,
shall be true and correct on the Closing Date and each of which
shall survive the Closing (subject to Section 4.1.1 below):
To Seller's knowledge, there are no:
(1) existing latent defects or seismic
conditions concerning the Project or materially incorrect income
or expense figures in any financial statements or materials
prepared by or for Seller and delivered to Buyer regarding the
Property;
(2) claims, litigation or administrative
actions or arbitration proceedings pending before any court,
agent or official, nor have any such claims or actions been
threatened in writing, relating to Seller (except such matters
that do not affect the Property or Seller's ability to perform
its obligations hereunder) or the Property or with respect to the
validity of any statutes, ordinances, regulations or
restrictions, or any permits or approvals thereunder, relating
to the construction of any Improvements on the Property or the
operation thereof;
(3) written notices of violations of City,
County, State, Federal, building, zoning, fire or health codes,
regulations or ordinances, filed or issued against the Property;
(4) "Hazardous Materials" (as defined below)
in existence on or below the surface of the Project or in any
building located upon the Land, including, without limitation,
contamination of soil, subsoil or ground water, which constitutes
a violation of any applicable law, rule or regulation of any
government entity having jurisdiction thereof except for office
and medical supplies in customary quantities;
(5) the Property has never been used as a
waste storage, disposal site or a gasoline storage or service
station. Without limiting the other provisions of this
Agreement, Seller shall reasonably cooperate with Buyer's
investigation of matters relating to the foregoing provisions of
this paragraph and provide access to and copies of any data
and/or documents dealing with potentially Hazardous Materials
used at the Property and any disposal practices followed in
connection with the same. Seller agrees that Buyer may make
inquires of governmental agencies regarding such matters, without
liability for the outcome of such discussions; and
(6) the Tenant Leases and Contracts and any
other agreements, matters and things to be submitted to Buyer by
Seller for approval pursuant to this Agreement shall be true,
correct and complete copies thereof as of the date of submission
thereof, and as thereafter supplemented by supplements or
additions that have been delivered to Buyer. Notwithstanding
anything to the contrary contained herein, Seller shall have no
obligation or liability to Buyer with respect to any of the
foregoing lease or Contract matters which shall be confirmed as
incorrect in any tenant estoppel certificate delivered to Buyer
as provided in this Agreement.
4.1.1 Seller's Knowledge. As used herein, Seller's
"knowledge" means the actual (not constructive and without
attribution) conscious knowledge, without undertaking, and
without any duty to undertake, any investigation or inquiry, of
Jennifer O'Brien, which individual is the employee of Seller's
asset manager who has asset management responsibility for the
Property and the most knowledge with respect to the Property .
Without limiting the foregoing, Buyer acknowledges that the items
and information delivered, or to be delivered or made available,
to Buyer hereunder have not been reviewed by Jennifer O'Brien. It
is the express intention of Buyer and Seller that Buyer shall be
entitled to recover any damages or have any other remedies
against Seller by reason of a breach of Seller's representations
and/or warranties set forth in subparagraphs 4.1 (b) above if and
only if Buyer shall allege and prove that Jennifer O'Brien had
actual conscious knowledge of the falsity of such representations
and/or warranties when made. It is also expressly agreed and
understood that in no event shall Buyer be entitled to bring any
action(s) for damages or otherwise against Jennifer O'Brien. Any
action against Seller based upon an alleged breach of Seller's
representations and warranties set forth herein must be filed
within three hundred sixty five (365) days after the Closing
Date, and failure to timely file any such action shall be deemed
Buyer's waiver and release of any such action.
4.2 Buyer's Representations and Warranties. Buyer hereby
represents, warrants and covenants to and agrees with Seller as
follows:
4.2.1 Buyer's Investigation. (a) Buyer acknowledges
that Seller, or Seller's predecessor, acquired the Property
through foreclosure or deed in lieu of foreclosure and, except as
explicitly set forth herein, there are no representations or
warranties of any kind whatsoever, express or implied, made by
Seller in connection with this Agreement, the purchase of the
Property by Buyer, the Leases or Contracts, the physical
condition of the Property or whether the Property complies with
applicable laws or is appropriate for Buyer's intended use;
(b) On or prior to the Decision Date, Buyer will have (or will
have chosen not to have) fully investigated the Property
(including the Leases and Contracts) and all matters pertaining
thereto; (c) Except as set forth expressly in this Agreement
(including the Schedules attached hereto) Buyer is not relying on
any statement or representation of Seller, its agents or its
representatives nor on any information supplied by Seller, its
agents or its representatives; (d) Buyer, in entering into this
Agreement and in completing its purchase of the Property, is
relying entirely on its own investigation of the Property based
on its extensive experience in and knowledge of real property in
the areas where the Property is located; (e) On or prior to the
Decision Date Buyer will be aware (or will have chosen not to be
aware) of all zoning regulations, other governmental
requirements, legal, site and physical conditions, and other
matters affecting the use and condition of the Property; (f)
Buyer's decision, on or prior to the Decision Date, of whether to
purchase the Property on the terms and conditions hereof shall be
made solely and exclusively in reliance on Buyer's own review,
inspection and investigation of the Property (including the
Leases and Contracts) and of materials, documents, information
and studies relating to the Property (including, without
limitation, Buyer's Inspection or Physical Testing) and the
representations and warranties of Seller set forth in Section 4.1
above; and (g) Buyer shall purchase the Property in its "as is"
condition as of the date of Closing.
4.2.2 Authority. Buyer has the power and authority to
own the Property and to consummate the transactions contemplated
by this Agreement. This Agreement and all instruments, documents
and agreements to be executed by Buyer in connection herewith are
or when delivered shall be duly authorized, executed and
delivered by Buyer and are valid, binding and enforceable
obligations of Buyer. Each individual executing this Agreement
on behalf of Buyer represents and warrants to Seller that he or
she is duly authorized to do so.
4.2.3 Consents. Buyer is not required to obtain any
consents or approvals to consummate the transactions contemplated
in this Agreement.
4.3 Reaffirmation. The representations and warranties of
Buyer set forth in Section 4.2 are true and correct as of the
date of this Agreement and shall be true and correct as of the
Closing. The representations and warranties of Seller set forth
in Section 4.1(a) are true and correct as of the date of the
Agreement and shall be true and correct as of the Closing. The
representations and warranties of Seller set forth in Section
4.1(b) are true and correct as of the date of this Agreement.
The Closing shall constitute Buyer's reaffirmation of those
representations and warranties as of the Closing and Buyer shall
execute and deliver at Closing a document (a "Buyer's
Reaffirmation Certificate") reaffirming Buyer's representations
and warranties. Seller shall be entitled to rely upon Buyer's
representations and warranties, notwithstanding any inspection or
investigation of the Property which was made or could have been
made by Buyer. The Closing shall constitute Seller's
reaffirmation of the representations of Seller set forth in
Section 4.1(a) as of the Closing and Seller shall execute and
deliver at Closing a document ("Seller's Reaffirmation
Certificate") reaffirming Seller's representations and warranties
set forth in Section 4.1(a). In addition, Seller's Reaffirmation
Certificate shall reaffirm Seller's representations and
warranties set forth in Section 4.1(b), or, to the extent facts
or Seller's knowledge have changed since the date of execution of
this Agreement that render any of such representations and
warranties no longer accurate, Seller's Reaffirmation Certificate
shall identify such changed facts or knowledge.
4.4 Hazardous Material Waiver. To the extent permitted by
applicable law, Buyer, on behalf of itself, its successors and
assigns, hereby releases Indemnitees (but does not indemnify
Indemnitees) from and against any and all liabilities, claims,
demands, suits, judgments, causes of action (including, but not
limited to, causes of action arising under the Comprehensive
Environmental Response Compensation and Liability Act of 1980, 42
U.S.C. ss 9601 et. seq.), losses, costs, damages, injuries,
penalties, enforcement actions, fines, taxes, remedial actions,
removal and disposal costs, investigation and remediation costs
and expenses (including, without limit, attorneys' fees,
litigation, arbitration and administrative proceeding costs,
expert and consultant fees and laboratory costs), sums paid in
settlement of claims, whether direct or indirect, known or
unknown, arising out of, related in any way to, or resulting from
or in connection with, in whole or in part, the presence or
suspected presence of Hazardous Materials (defined below) in, on,
under, or about the Property. In that connection, Buyer, on
behalf of itself, its successors, assigns and
successors-in-interest and such other persons and entities,
waives the benefit of California Civil Code Section 1542, which
provides as follows:
"A general release does not extend to
claims which the creditor does not know
or suspect to exist in his favor at the
time of executing the release, which if
known by him must have materially
affected his settlement with the debtor."
"Hazardous Material(s)" means any chemical, substance, material,
controlled substance, object, condition, waste living organisms
or combination thereof which is or may be hazardous to human
health or safety or to the environment due to his radioactivity,
ignitability, corrosivity, reactivity, explosivity, toxicity,
carcinogenicity, mutagenicity, phytotoxicity, infectiousness or
other harmful or potentially harmful properties or effects,
including, without limitation, petroleum hydrocarbons and
petroleum products, lead, asbestos, radon, polychlorinated
biphenyls (PCBs) and all of those chemicals, substances,
materials, controlled substances, objects, conditions, wastes,
living organisms or combinations thereof which are now or become
in the future listed, defined or regulated in any manner by any
federal, state or local law based upon, directly or indirectly,
such properties or effects.
4.5 Condemnation. If, prior to Closing, any portion of the
Property shall be condemned or become the subject of any pending
or threatened condemnation action, Seller shall promptly notify
Buyer thereof. This Agreement shall remain in full force and
effect, regardless of such condemnation or threatened or pending
action, and if any condemnation award is received by Seller prior
to Closing, the amount of such award shall be applied as a credit
against the Purchase Price. Any condemnation awards received by
Seller on or after Closing shall be promptly delivered by Seller
to Buyer. Notwithstanding the foregoing, in the event such
condemnation involves more than twenty percent (20%) of the Land
or the Improvements, or otherwise materially and adversely
affects the Property in the reasonable opinion of Buyer, Buyer
shall be entitled to terminate this Agreement by written notice
thereof to Seller given within five (5) business days after Buyer
shall have been notified of such condemnation, whereupon the
Deposit shall be returned to Buyer. Buyer's failure to timely
deliver such notice to Seller within such five (5) business day
period shall constitute Buyer's election to proceed to Closing.
4.6 Damage or Destruction. In the event of any damage to or
destruction of the Property prior to the Closing, Seller shall
promptly notify Buyer thereof and the Closing shall nevertheless
occur as otherwise provided for in this Agreement, except Seller
shall assign to Buyer upon the Closing all insurance proceeds
paid or payable to Seller in connection with such occurrences and
shall pay Buyer the amount of any deductible under the applicable
insurance policy. Seller shall have no obligation to repair such
damage or destruction. Notwithstanding the foregoing, if such
damage or destruction to the Property has resulted in the cost of
repair of damage to the Property equal to or in excess of
$100,000, then Seller shall promptly so notify Buyer and within
five (5) business days after receipt of such notice, Buyer shall
deliver written notice to Seller and Escrow Holder, electing
either: (a) to proceed with this transaction and Closing in
accordance with this Agreement notwithstanding such damage or
destruction; or (b) to terminate this Agreement in accordance
with the terms of Section 3.3. Buyer's failure to deliver either
of such notices to Seller and Escrow Holder within such five (5)
business day period shall constitute Buyer's election to proceed
to Closing under clause (a).
4.7 Indemnity. (a) Buyer shall hold harmless, indemnify,
protect and defend Indemnitees from and against any and all
liabilities, claims, demands, suits, judgments, causes of action,
losses, costs, damages, injuries, penalties, enforcement actions,
fines, taxes, liens or encumbrances, expenses (including, without
limit, attorneys' fees, litigation, arbitration and
administrative proceeding costs, expert and consultant fees and
laboratory costs), and sums paid in settlement of claims
(collectively, "Costs"), whether direct or indirect, known or
unknown, arising out of, related in any way to, or resulting from
or in connection with (a) the Property based upon events or facts
occurring after the Closing (other than matters arising from any
act, conduct or omission of Indemnitees), or in any way
proximately related to or proximately arising from any act,
conduct, omission, contract or commitment of Buyer and/or Buyer's
Agents; and (b) any inaccuracy in or breach of any representation
or warranty of Buyer or resulting from any breach or default by
Buyer under this Agreement. In the event Seller receives notice
of a claim or demand against which it is entitled to
indemnification pursuant to this paragraph, Seller shall promptly
give written notice thereof to Buyer. Buyer shall immediately
thereupon take such measures as may be reasonably required to
properly and effectively defend such claim with counsel approved
in writing in advance by Seller. If Buyer fails to properly and
effectively defend such claim, then Seller may defend such claim
with counsel of its own choosing at Buyer's cost and expense.
The provisions of this paragraph shall survive the Closing Date.
(b) Seller shall hold harmless, indemnify, protect and defend
Buyer from and against any and all Costs, whether direct or
indirect, known or unknown, arising out of, related in any way
to, or resulting from or in connection with the Property
occurring (i) during Seller's period of ownership of the Property
(other than any matter arising from any act, conduct or omission
of Buyer's Agents) as a result of any injury relating to the
Property that shall have occurred to persons or the property of
third parties (except, with respect to Hazardous Materials, this
indemnity shall relate only to Hazardous Materials actually
released by Seller onto the Property and shall not relate to any
other injury caused by Hazardous Material(s)) during Seller's
period of ownership of the Property; or (ii) subject to Section
4.1.1, resulting from any inaccuracy in or breach of any
representation or warranty of Seller or resulting from any breach
or default by Seller under this Agreement. In the event Buyer
receives notice of a claim or demand against which it is entitled
to indemnification pursuant to this paragraph, Buyer shall
promptly give written notice thereof to Seller. Seller shall
immediately thereupon take such measures as may be reasonably
required to properly and effectively defend such claim. Subject
to Section 4.1.1, the provisions of this paragraph shall survive
the Closing Date.
4.8 Lease Amendments . From and after the date of execution
of this Agreement and until the Closing Date, Seller shall not
enter into any new leases or amend or extend, terminate or accept
the surrender of any existing tenancies or approve any subleases
without the prior written consent of Buyer (which consent shall
not be unreasonably delayed or withheld). In requesting such
consent, Seller shall inform Buyer in writing of the amount, if
any, proposed to be required to pay for, or any allowance
proposed to be given for, tenant improvement work and any leasing
commissions and fees (collectively, a "Lease Expense"), in
connection with such lease and any rent concessions. Also
included in the request for consent, shall be Seller's proposed
draft of the lease or amendment agreement. The failure of Buyer
to respond within five (5) business days after written request
for any such approval shall be deemed to constitute approval. In
the event Buyer approves any such lease or lease modification,
Buyer shall, at Closing, reimburse Seller in the amount of any
Lease Expense associated with such approved lease or lease
modification previously expended by Seller, and shall assume
Seller's obligations with respect to any Lease Expense not yet
paid by Seller. Seller shall not collect in advance any rent or
other sum due under any of the Tenant Leases, except for
collection of current rents no more than one month in advance.
Subject to damage or destruction, or other matters outside of
Seller's control, Seller agrees to continue to manage the
Property until Closing in the same manner it is currently
managing the Property.
4.9 Estoppel Certificates. Seller agrees to promptly exert
good faith efforts to obtain Tenant Estoppel Certificates
("Tenant Estoppel Certificates") in accordance with the
respective leases, from all tenants of the Property. Seller
shall not be in default hereunder if Seller is unable to obtain
any or all such Estoppel Certificates nor, except for termination
on or before the Decision Date as provided in Section 3.2 hereof,
shall Buyer have the right to terminate this Agreement by reason
of the lack of delivery of, or the contents of, any Estoppel
Certificates. Each Estoppel Certificate shall be substantially
in the form of Exhibit ?B? attached hereto.
4.8 Audit Report. At Buyer's request at any time from and
after the date hereof until the date that is one (1) year after
the Closing Date, Seller shall, at Buyer's expense, provide to
Purchaser's designated independent auditor reasonable access to
the books and records of the Property, regarding the period for
which Buyer is required to have audited financial statements
prepared with respect to the Property as may be required by the
Securities and Exchange Commission, but only to the extent that
such books, records and related information are in Seller's
possession or control and relate to the period during which
Seller held title to the Property. Further, Seller agrees to
provide such auditor a representation letter regarding the books
and records of the Property, in substantially the form of Exhibit
"F" attached hereto, in connection with the normal course of
auditing the Property in accordance with generally accepted
auditing standards (but shall not thereby be deemed to have made
any representation or warranty to Buyer or to any other third
party).
5. CLOSING
5.1 Deposits Into Escrow.
5.1.1 At least one (1) business day prior to the
Closing Date, Seller shall deposit into Escrow:
(a) A grant deed in the form of Exhibit "C"
attached hereto, conveying the Property to Buyer (the "Deed"),
subject to the Permitted Exceptions;
(b) An affidavit or qualifying statement which
satisfies the requirements of Section 1445 of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder
(the "Non-Foreign Affidavit");
(c) A "Withholding Exemption Certificate, Form
590", pursuant to the Revenue and Taxation Code Sections 18805
and 26131 stating either the amount of withholding required from
Seller's proceeds or that Seller is exempt from such withholding
requirement (the "Certificate");
(d) An original bill of sale and assignment (the
"Bill of Sale"), duly executed by Seller, assigning and conveying
to Buyer all of Seller's right, title and interest in and to the
Personal Property. The Bill of Sale shall be in the form of
Exhibit "D" attached hereto;
(e) An original assignment and assumption agreement
(the "Assignment and Assumption Agreement") duly executed by
Seller assigning all of Seller's right, title and interest in and
to the Leases and the Contracts. The Assignment and Assumption
Agreement shall be in the form of Exhibit "E" attached hereto;
(f) An original counterpart of each of the Leases,
Contracts and keys to the Property that are in Seller's
possession and/or under its control;
(g) Notices for each of the tenants and occupants
of the Property of the transfer of the Property to Buyer in the
form of Exhibit "F" attached hereto ("Notices");
(h) To the extent they are in Seller's possession,
a complete set of all plans, specifications and as-built
drawings, and all building permits, certificates of occupancy,
third-party soil reports, and environmental reports and studies
relating to the Project (to the extent not previously delivered
to Buyer);
(i) All warranties and operating manuals that are
in Seller's possession or control with request to the Property or
any portion thereof (to the extent not previously delivered to
Buyer); and
(j) Seller's Reaffirmation Certificate.
Notwithstanding the foregoing, Seller may choose to deliver those
items referenced in Sections 5.1.1 (f), (h) and (i) above
directly to Buyer outside of Escrow on or before the Closing
Date.
5.1.2 At least one (1) business day prior to the
Closing Date, Buyer shall deposit into Escrow:
(a) Funds in accordance with the provisions of
Section 1.3.2;
(b) Buyer's Reaffirmation Certificate; and
(c) An original counterpart of the Assignment and
Assumption Agreement duly executed by Buyer.
5.1.3 Seller and Buyer shall each deposit such other
instruments and funds as are reasonably required by Escrow Holder
or otherwise required to close Escrow and consummate the sale of
the Property in accordance with the terms of this Agreement,
including but not limited to documents required under
Section 5.4.1.
5.2 Prorations.
5.2.1 Rentals (including fixed monthly rentals and
other periodic rentals, additional rentals, operating cost pass-
throughs and other sums and charges payable by the tenants),
prepaid rentals and prepaid payments (collectively, "Rent")
shall, subject to the further provisions hereof, be prorated on
the basis that Buyer shall receive a credit for all Rent which
Seller has actually received before the Closing which is
allocable to the period after the Closing and for all security
deposits paid to the landlord under the Leases as referenced in
the Leases, less only the amount thereof, if any, Seller shall
have applied pursuant to one or more Leases (in which event
Seller shall provide Buyer with a written explanation of the
application of same). Seller shall not receive a credit for any
Rent Seller has not received as of the Closing which is allocable
to the period prior to the Closing. If Buyer shall collect any
such Rent after the Closing (Buyer shall exert good faith efforts
to collect such Rent), Buyer shall promptly pay the same to
Seller.
5.2.2 Real estate taxes shall be prorated as of the
Closing on the basis of the most recent assessed valuation of and
rates and multiplier applicable to the Property.
5.2.3 Utilities shall be read at the Closing Date and
Seller shall be responsible for payment of such utilities. Buyer
shall establish new utility accounts and shall be responsible for
all utilities from and after the Closing.
5.2.4 Common area and maintenance charges, property
taxes, insurance and other operating cost pass-throughs payable
by tenants of the Project which accrue as of the Closing Date,
but which are not then due and payable (collectively, the
"Operating Expenses"), shall not be prorated, except as herein
provided. Buyer shall receive and retain any Operating Expenses
paid by tenants of the Project on or after the Closing Date and
Seller shall receive and retain any Operating Expenses paid by
tenants of the Project prior to the Closing Date; provided,
however, that any monthly or periodic deposits or payments of
estimated Operating Expenses with respect to the month in which
the Closing occurs received by Seller prior to the Closing Date
or by Buyer on or after the Closing Date shall be prorated as of
the Closing Date. Buyer and Seller shall cooperate within
thirty (30) days after Closing to reconcile actual Operating
Expenses collected by Seller from Project tenants prior to
Closing with actual Operating Expenses paid by Seller with
respect to such period, so that if there are any rebates owing to
Project tenants for the period of Seller's ownership, Seller
shall be charged therefor, and if the Project tenants owe the
landlord any additional amounts for Operating Expenses with
respect to the period of Seller's ownership, and actually pay
such amounts to Buyer (Buyer agrees to exert good faith efforts
to collect the same), Seller shall be entitled to receive such
amounts from Buyer. Any prorations under this Agreement shall be
based upon the actual number of days in the applicable period.
5.3 Payment of Closing Costs.
5.3.1 Closing Costs Borne by Seller. Seller shall bear
and Escrow Holder shall discharge on Seller's behalf out of the
sums payable to Seller hereunder (a) the portion of the costs
associated with the standard coverage premium for the "Owner's
Policy" (defined below), (b) the documentary transfer tax and all
sales and use taxes required in connection with the transfer of
the Property to Buyer, (c) one-half of Escrow Holder's fee, and
(d) any additional costs and charges customarily charged to
sellers in accordance with common escrow practices in Los
Angeles County, California.
5.3.2 Closing Costs Borne by Buyer. Buyer shall
deposit with Escrow Holder for disbursement by Escrow Holder
(a) one-half of Escrow Holder's fee, (b) all costs and expenses
of the Owner's Policy in excess of the premium to be borne by
Seller (including, without limitation, any additional premium
charged for any extended coverage policy or endorsements required
by Buyer and the cost of any survey which may be required by
Title Company in connection therewith), (c) the recording fees
required in connection with the transfer of the Property to
Buyer, and (d) any additional charges customarily charged to
buyers in accordance with common escrow practices in Los Angeles
County, California.
5.4 Closing of Escrow.
5.4.1 Pursuant to Section 6045 of the Internal Revenue
and Taxation Code, Escrow Holder shall be designated the "closing
agent" hereunder and shall be solely responsible for complying
with the tax reform act of 1986 with regard to reporting all
settlement information to the Internal Revenue Service.
5.4.2 Escrow Holder shall hold the Closing on the
Closing Date if: (i) it has received in a timely manner all the
funds and materials required to be delivered into Escrow by Buyer
and Seller; and (ii) it has received assurances satisfactory to
it that, effective as of the Closing, the Title Company will
issue to Buyer its ALTA extended coverage (Form 1970) title
insurance policy in the amount of the Purchase Price, insuring
Buyer as the owner of the Property, subject only to the Permitted
Exceptions (the "Owner's Policy").
5.4.3 To Close the Escrow, Escrow Holder shall:
(a) Cause the Deed to be recorded and thereafter
mailed to Buyer, and deliver to Buyer the Owner's Policy, Bill of
Sale, Assignment and Assumption Agreement (executed by Seller),
Non-Foreign Affidavit to, original Leases, original Contracts,
Notice, Seller's Reaffirmation Certificate and all other
documents delivered to Escrow Holder pursuant to Sections
5.1.1(h) and (i).
(b) Deliver to Seller the Reaffirmation
Certificate, the Assignment and Assumption Agreement (executed by
Buyer) and by wire transfer of federal funds, funds in the amount
of the Purchase Price, plus or less any net debit or credit to
Seller by reason of the prorations and allocations of closing
costs provided for in this Agreement, and less the Deposit, to
the extent previously released to Seller.
5.5 Failure to Close; Cancellation. If the Escrow Holder is
not in a position to Close the Escrow on the Closing Date, then,
subject to Section 5.7 below, this Agreement shall terminate,
except that no such termination shall relieve either party of
liability for any failure to comply with the terms of this
Agreement.
5.6 LIQUIDATED DAMAGES. BUYER AND SELLER AGREE THAT IN THE
EVENT OF A MATERIAL DEFAULT OR BREACH HEREUNDER BY BUYER
(INCLUDING, WITHOUT LIMITATION, ANY DEFAULT OR BREACH BY BUYER
WHICH RESULTS IN THE FAILURE OF ESCROW TO CLOSE), THE DAMAGES TO
SELLER WOULD BE EXTREMELY DIFFICULT AND IMPRACTICABLE TO
ASCERTAIN, AND THAT THEREFORE THE DEPOSIT IS A REASONABLE
ESTIMATE OF THE DAMAGES TO SELLER, SUCH DAMAGES INCLUDING COSTS
OF NEGOTIATING AND DRAFTING OF THIS AGREEMENT, COSTS OF
COOPERATING IN SATISFYING CONDITIONS TO CLOSING, COSTS OF SEEKING
ANOTHER BUYER UPON BUYER'S DEFAULT, OPPORTUNITY COSTS IN, AND
CARRYING COST ASSOCIATED WITH, KEEPING THE PROPERTY OUT OF THE
MARKETPLACE, AND OTHER COSTS INCURRED IN CONNECTION HEREWITH.
ACCORDINGLY, BUYER AND SELLER AGREE THAT, EXCEPT FOR ANY DAMAGES,
COSTS AND EXPENSES INCURRED IN CONNECTION WITH OR RESULTING FROM
BUYER'S DEFAULT, OR BREACH OF ITS OBLIGATIONS UNDER SECTIONS 3.5,
4.2 AND 6.16 (WHICH DAMAGES, COSTS AND EXPENSES SHALL SURVIVE ANY
CLOSING OR TERMINATION OF THIS AGREEMENT AND ARE NOT LIMITED BY
THIS SECTION 5.6), RECEIPT AND RETENTION OF THE DEPOSIT SHALL BE
THE SOLE DAMAGES OF SELLER IN THE EVENT OF ANY
BREACH OR DEFAULT BY BUYER HEREUNDER.
Initials of Buyer: Initials of Seller:
/s/ VJC /s/ YC
5.7 Remedies of Purchaser. If Seller fails to comply with
its obligations under Section 5.1.1 hereof, then Buyer may pursue
such rights it may have against Seller and the Property either at
law or in equity including, without limitation, the right to
specific performance hereunder.
5.8 Possession. Subject to the Leases and any amendments
thereto or new leases permitted under Section 4.8 above,
possession of the Property shall be delivered to Buyer upon
Closing.
6. GENERAL PROVISIONS
6.1 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all
of which, taken together, shall constitute one and the same
instrument.
6.2 Entire Agreement. This Agreement contains the entire
integrated agreement between the parties respecting the subject
matter of this Agreement and supersedes all prior and
contemporaneous understandings and agreements, whether oral or in
writing, between the parties respecting the subject matter of
this Agreement. There are no representations, agreements,
arrangements or understandings, oral or in writing, between or
among the parties to this Agreement relating to the subject
matter of this Agreement which are not fully expressed in this
Agreement. The terms of this Agreement are intended by the
parties as a final expression of their agreement with respect to
those terms and they may not be contradicted by evidence of any
prior agreement or of any contemporaneous agreement. The parties
further intend that this Agreement constitute the complete and
exclusive statement of its terms and that no extrinsic evidence
whatsoever may be introduced in any judicial proceeding involving
this Agreement.
6.3 Legal Advice; Neutral Interpretation; Headings. Each
party has received independent legal advice from its attorneys
with respect to the advisability of executing this Agreement and
the meaning of the provisions hereof. The provisions of this
Agreement shall be construed as to their fair meaning, and not
for or against any party based upon any attribution to such party
as the source of the language in question. Headings used in this
Agreement are for convenience of reference only and shall not be
used in construing this Agreement.
6.4 Choice of Law. This Agreement shall be governed by the
laws of the State of California.
6.5 Severability. If any term, covenant, condition or
provision of this Agreement, or the application thereof to any
person or circumstance, shall to any extent be held by a court of
competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, covenants, conditions or provisions of
this Agreement, or the application thereof to any person or
circumstance, shall remain in full force and effect and shall in
no way be affected, impaired or invalidated thereby.
6.6 Waiver of Covenants, Conditions or Remedies. The
waiver by one party of the performance of any covenant, condition
or promise under this Agreement shall not invalidate this
Agreement nor shall it be considered a waiver by it of any other
covenant, condition or promise under this Agreement. The waiver
by either or both parties of the time for performing any act
under this Agreement shall not constitute a waiver of the time
for performing any other act or an identical act required to be
performed at a later time. The exercise of any remedy provided
in this Agreement shall not be a waiver of any consistent remedy
provided by law, and the provision in this Agreement for any
remedy shall not exclude other consistent remedies unless they
are expressly excluded.
6.7 Exhibits. All exhibits to which reference is made in
this Agreement are deemed incorporated in this Agreement.
6.8 Amendment. This Agreement may be amended at any time
by the written agreement of Buyer and Seller. All amendments,
changes, revisions and discharges of this Agreement, in whole or
in part, and from time to time, shall be binding upon the parties
despite any lack of legal consideration, so long as the same
shall be in writing and executed by the parties hereto.
6.9 Relationship of Parties. The parties agree that their
relationship is that of seller and buyer, and that nothing
contained herein shall constitute either party the agent or legal
representative of the other for any purpose whatsoever, nor shall
this Agreement be deemed to create any form of business
organization between the parties hereto, nor is either party
granted any right or authority to assume or create any
obligation or responsibility on behalf of the other party, nor
shall either party be in any way liable for any debt of the
other.
6.10 No Third Party Benefit. This Agreement is intended to
benefit only the parties hereto and no other person or entity has
or shall acquire any rights hereunder.
6.11 Time of the Essence. Time shall be of the essence as
to all dates and times of performance, whether contained herein
or contained in any escrow instructions to be executed pursuant
to this Agreement, and all escrow instructions shall contain a
provision to this effect.
6.12 Further Acts. Each party agrees to perform any
further acts and to execute, acknowledge and deliver any
documents which may be reasonably necessary to carry out the
provisions of this Agreement both before and after the Closing.
6.13 Recordation. Buyer shall not record this Agreement,
any memorandum of this Agreement, any assignment of this
Agreement or any other document which would cause a cloud on the
title to the Property.
6.14 Assignment. Upon written notice to Seller, Buyer
shall be entitled to assign Buyer's rights and delegate its
obligations hereunder to a third party, but no such assignment
shall release Buyer of any liability hereunder. This Agreement
shall be binding upon and shall inure to the benefit of the
successors and assigns of the parties to this Agreement.
6.15 Attorneys' Fees. In the event of any litigation
involving the parties to this Agreement to enforce any provision
of this Agreement, to enforce any remedy available upon default
under this Agreement, or seeking a declaration of the rights of
either party under this Agreement, the prevailing party shall be
entitled to recover from the other such attorneys' fees and costs
as may be reasonably incurred, including the costs of reasonable
investigation, preparation and professional or expert
consultation incurred by reason of such litigation. All other
attorneys' fees and costs relating to this Agreement and the
transactions contemplated hereby shall be borne by the party
incurring the same.
6.16 Brokers. Pursuant to separate agreement, Seller shall
pay Grubb & Ellis ("Seller's Broker") for its services as broker
in this transaction if, as and when the Closing occurs. Buyer
and Seller each represent and warrant to the other that, except
as stated in the preceding sentence (a) they have not dealt with
any brokers or finders in connection with the purchase and sale
of the Property, and (b) insofar as such party knows, no broker
or other person is entitled to any commission or finder's fee in
connection with the purchase and sale of the Property. Seller
and Buyer each agree to indemnify and hold harmless the other
against any loss, liability, damage, cost, claim or expense
incurred by reason of any brokerage fee, commission or finder's
fee which is payable or alleged to be payable to any broker or
finder because of any agreement, act, omission or statement of
the indemnifying party. The provisions of this Section 6.16
shall not be limited in any way by any terms of this Agreement
including, but not limited to, Section 5.6 of this Agreement.
6.17 Manner of Giving Notice. All notices and demands
which either party is required or desires to give to the other
shall be given in writing by personal delivery, express courier
service or by telecopy followed by next day delivery of a hard
copy to the address or telecopy number set forth below for the
respective party, provided that if any party gives notice of a
change of name, address or telecopy number, notices to that party
shall thereafter be given as demanded in that notice. All
notices and demands so given shall be effective upon receipt by
the party to whom notice or a demand is being given.
To Buyer:
Arden Investment Group
9100 Wilshire Boulevard, Suite 700
Beverly Hills, California 90212
Attn: Ms. Birgitta Troy
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
Attn: Peter M. Weil, Esq.
Telephone: (310) 282-6211
Telecopy: (310) 556-2920
To Seller:
Property Asset Management, Inc.
c/o GMAC Commercial Mortgage Corporation
550 California Street, Twelfth Floor
San Francisco, CA 94104
Attn: Jennifer O?Brien
Telephone: (415) 391-6155
Telecopy: (415) 391-2949
With a copy to:
David W. Greenman, Esq.
Bainbridge Group
18301 Von Karman Boulevard, Suite 410
Irvine, California 92612
Telephone: (714) 442-6605
Telecopy: (714) 442-6609
6.18 Survival. Only the provisions of Sections 3.5 (Access
to Property), 4.1 (Seller's Representations and Warranties),
4.2 (Buyer's Representations and Warranties), 4.3
(Reaffirmation), 4.4 (Hazardous Material Waiver),
4.5 (Condemnation), 4.6 (Damage or Destruction), 4.7 (Indemnity),
5.2 (Prorations), 5.3 (Payment of Closing Costs), 5.6 (LIQUIDATED
DAMAGES), 5.7 (Possession) and Article 6 (General Provisions)
shall survive the Closing and the consummation of the
transactions contemplated by this Agreement or the termination of
this Agreement for any reason without the conveyance of the
Property to Buyer.
6.19 Confidentiality. Seller and Buyer agree that it is in
both of their best interests to keep this Agreement and all
information concerning the Property confidential until Closing.
Seller and Buyer each agrees that neither shall take any action
nor conduct itself in any fashion that would disclose to third
parties unrelated to Buyer's acquisition or intended ownership
and operation of the Property, any aspect of the contemplated
transaction. After Closing neither party shall make any public
announcement of the transaction (unless required by applicable
law) that has not been approved in advance and in writing by the
other party.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day
and year first above written.
SELLER: PROPERTY ASSET
MANAGEMENT, INC.,
a Delaware corporation
By:/s/ Yon Cho
Its: Vice President
BUYER: ARDEN REALTY
LIMITED PARTNERSHIP
a Maryland limited partnership
By: Victor J. Coleman
Its: President and COO
ESCROW HOLDER:
The undersigned hereby executes this Agreement to
evidence its agreement to act as Escrow Holder in accordance with
the terms of this Agreement.
FIRST AMERICAN TITLE INSURANCE COMPANY
By: ____________________________
Name: _________________________
Title: __________________________
_______________________________
1IRMAIN01 Doc: 49765_1 NOTES
DOCUMENT CODED FOR "TABLE OF CONTENTS" -- Levels 1 & 2 only!
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT AND JOINT
ESCROW INSTRUCTIONS
This FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT AND
JOINT ESCROW INSTRUCTIONS (this "First Amendment") is made
and entered into as of this 16th day of September, 1997, by
and between PROPERTY ASSET MANAGEMENT, INC., a Delaware
corporation ("Seller"), and ARDEN REALTY LIMITED
PARTNERSHIP, a Maryland limited partnership ("Buyer"), with
reference to the following facts and circumstances:
A. Buyer is the purchaser from Seller of that certain
improved real property located in Westlake Village,
California known as Westlake Renaissance Court under that
certain Purchase and Sale Agreement and Joint Escrow
Instructions dated as of July 30, 1997 (the "Purchase
Agreement").
B. Buyer and Seller desire to modify the Purchase
Agreement as hereinafter provided.
C. All capitalized terms not otherwise defined herein
shall have the meaning afforded such terms in the Purchase
Agreement.
NOW, THEREFORE, IN CONSIDERATION of the foregoing, and
other valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. Section 1.2 of the Purchase Agreement, which reads
as follows:
Purchase Price. The purchase price to be paid by
Buyer to Seller for the Property shall be the sum of the
Seven Million One Hundred Thousand Dollars ($7,100,000.00)
(the "Purchase Price").
is hereby deleted in its entirety and the following is
hereby substituted n lieu thereof:
Purchase Price. The purchase price to be paid by
Buyer to Seller for the Property shall be the sum of Seven
Million Dollars ($7,000,000.00) (the "Purchase Price").
2. Section 2.3 of the Purchase Agreement which reads
as follows:
Closing Date. Escrow shall close on or before the
date that is forty-five (45) days after the Effective Date
(the "Closing Date").
is hereby deleted in its entirety and the following is
hereby substituted in lieu thereof:
Closing Date. Escrow shall close on September 16,
1997 (the "Closing Date").
3. Real Property Taxes. As of the date hereof,
Escrow Holder has been unable to determine whether any
supplemental real property taxes are owed for the period of
Seller's ownership of the Property following the 1995-1996
fiscal year. This is to confirm that Seller shall continue
to be responsible to Buyer, pursuant to the Agreement, for
any supplemental real property taxes which relate to the
period of Seller's ownership of the Property.
4. No Other Amendments. Except as expressly set
forth in this First Amendment, the Purchase Agreement shall
remain unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed
this First Amendment as of the date first above written.
BUYER: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: ARDEN REALTY, INC.,
a Maryland corporation
Its: General Partner
By: /s/ Victor J. Coleman
Its: President and COO
SELLER: PROPERTY ASSET MANAGEMENT, INC.,
a Delaware corporation
By:/s/ Jennifer O'Brien
Its:Authorized Agent
AGREEMENT OF PURCHASE AND SALE
AND
JOINT ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW
INSTRUCTIONS (this "Agreement") is made and entered into as of
this 15th day of August, 1997, by and between FOREMOST CARMEL
MOUNTAIN LTD., a California limited partnership ("Seller"), and
ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
("Buyer"), with reference to the following facts:
A. Seller is the owner of the Property (as hereinafter
defined).
B. Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, the Property (as hereinafter defined),
on the terms and conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the foregoing and the
mutual covenants and agreements herein set forth, and other
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller and Buyer hereby agree as follows:
ARTICLE 1
PROPERTY
Seller hereby agrees to sell and convey to Buyer, and Buyer
hereby agrees to purchase from Seller, subject to the terms and
conditions set forth herein, the following:
1.1 Land. That certain land (the "Land"), located in the
City of San Diego, State of California commonly known as the
Foremost Professional Building and more particularly described on
Exhibit A hereto;
1.2 Appurtenances. All rights, privileges and easements
appurtenant to the Land, including, without limitation, all
minerals, oil, gas and other hydrocarbon substances on and under
the Land, as well as all development rights and air rights
relating to the Land, and all water, water rights and water stock
relating to the Land, and any and all easements, rights-of-way or
appurtenances used in connection with the beneficial use and
enjoyment of the Land (all of which are sometimes collectively
referred to as the "Appurtenances");
1.3 Improvements. All improvements and fixtures located
upon the Land, including, without limitation, an approximately
60,384 rentable square foot Class "A" office building, and all
other structures presently located on the Land, all fixtures,
apparatus, equipment, and appliances used in connection with the
operation or occupancy thereof (all of which are collectively
referred to as the "Improvements");
1.4 Leases. All interest of Seller, as landlord, in and to
the leases of space in the Improvements as described on Exhibit B
hereto (collectively, the "Leases");
1.5 Personal Property. All personal property of Seller, if
any, located on or in or used in connection with the operation,
maintenance or management of the Land and/or the Improvements
(collectively, the "Personal Property");
1.6 Service Contracts. Those service contracts and other
agreements, lease rights, warranties, guarantees, agreements,
utility contracts and other rights relating to the ownership, use
and operation of all or any part of the Property, elected to be
assumed by Buyer pursuant to Section 5.2 hereof (collectively,
the "Service Contracts"); and
1.7 Intangible Property. All right, title and interest of
Seller in and to any and all intangible property owned by Seller
and used in the ownership, use and/or operation of the Land or
the Improvements, including, without limitation, the right to use
any trade name now used in connection with the Land or the
Improvements, the current books and records in Seller's
possession relating to the Property, and all other books and
records and all other books and records relating to the operation
and management of the Real Property (collectively, the
"Intangible Property").
The Land, the Appurtenances, the Improvements and the Leases
are sometimes referred to herein collectively as the "Real
Property." The Real Property, Personal Property, Service
Contracts and the Intangible Property are sometimes referred to
herein collectively as the "Property."
ARTICLE 2
PURCHASE PRICE
2.1 Purchase Price. The total purchase price for the
Property shall be the sum of Eight Million One Hundred Ninety-
Five Thousand Dollars ($8,195,000) (the "Purchase Price").
2.2 Payment of Purchase Price. The Purchase Price shall be
paid as follows:
(a) Deposit. Upon the Opening of Escrow (as
hereinafter defined), Buyer shall deliver to California Counties
Title ("Escrow Holder"), 1971 Fourth Street, Suite 130, Santa
Ana, California 92705 the sum of One Hundred Thousand Dollars
($100,000) (the "Deposit"). In the event the sale of the
Property is consummated, the Deposit shall be credited towards
the Purchase Price.
(b) Balance of Purchase Price. The Purchase Price,
less the sum of the Deposit (the "Purchase Price Balance") shall
be deposited with Escrow Holder by Buyer in immediately available
funds not later than the Closing Date (as hereinafter defined).
In the event the sale of the Property is consummated, such
amounts to be paid as set forth herein shall be credited towards
the Purchase Price. In the event the sale of the Property is not
consummated because of the failure of any condition or the
default by Seller, all such amounts, together with interest
thereon, shall be returned immediately to Buyer.
2.3 Investment of Deposit; Liquidated Damages
2.3.1 Investment of Deposit. The Deposit shall be
placed in an interest-bearing account with a financial
institution reasonably acceptable to Buyer, with all interest
accruing to the benefit of Buyer. The Deposit shall be disposed
of by Escrow Holder only as provided in this Agreement.
2.3.2 Liquidated Damages. IN THE EVENT THAT,
FOLLOWING THE EXPIRATION OF THE CONTINGENCY PERIOD, THE
TRANSACTIONS CONTEMPLATED HEREBY ARE NOT CONSUMMATED DUE TO A
DEFAULT SOLELY ON THE PART OF BUYER, THE AMOUNT OF THE DEPOSIT
SHALL BE PAID TO AND RETAINED BY SELLER AS LIQUIDATED DAMAGES.
THE PARTIES ACKNOWLEDGE THAT SELLER'S ACTUAL DAMAGES IN THE EVENT
THE TRANSACTIONS CONTEMPLATED HEREBY ARE NOT CONSUMMATED
FOLLOWING THE EXPIRATION OF THE CONTINGENCY PERIOD DUE TO A
DEFAULT SOLELY ON THE PART OF BUYER WOULD BE EXTREMELY DIFFICULT
OR IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR
SIGNATURES BELOW, THE PARTIES ACKNOWLEDGE THAT THE AMOUNT OF THE
DEPOSIT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF SELLER'S DAMAGES.
Seller:/s/ RLW CVK Buyer:/s/ VJC
ARTICLE 3
ESCROW
3.1 Deposit with Escrow Holder and Escrow Instructions.
Within three (3) business days following the execution of this
Agreement by the parties hereto, the parties hereto shall deposit
a fully executed original of this Agreement with Escrow Holder,
and this Agreement shall serve as the instructions to Escrow
Holder for consummation of the transactions contemplated hereby.
Seller and Buyer agree to execute such additional and
supplementary escrow instructions as may be appropriate to enable
Escrow Holder to comply with the terms of this Agreement;
provided, however, that in the event of any conflict between the
terms and provisions of this Agreement and the terms and
provisions of any supplementary escrow instructions, the terms
and provisions of this Agreement shall control.
3.2 Confirmation of the Opening of Escrow. Upon receipt of
a fully executed copy of this Agreement, Escrow Holder shall
immediately execute this Agreement to evidence Escrow Holder's
agreement to act in compliance with the terms and provisions
hereof. Escrow Holder shall immediately notify Buyer in Seller
in writing of the date on which escrow was established with
Escrow Holder (the "Opening of Escrow"), which date shall
thereafter be the Opening of Escrow date for purposes of this
Agreement.
ARTICLE 4
TITLE TO PROPERTY
4.1 Real Property. At the Closing, Seller shall convey to
Buyer marketable and insurable fee simple title to the Real
Property by duly executed and acknowledged grant deed in the form
of Exhibit C hereto (the "Grant Deed"). Evidence of delivery of
marketable and insurable fee simple title to the Real Property
shall be the issuance by Chicago Title Insurance Company (the
"Title Company") of an ALTA Owner's Policy of Title Insurance
(extended coverage) (form B, rev. 10-17-70) (the "Title Policy")
in the amount of the Purchase Price, insuring fee simple title to
the Real Property in Buyer, free and clear of monetary liens and
subject only to the Permitted Exceptions (as hereinafter defined)
and including the Endorsements (as hereinafter defined).
4.2 Leases. At the Closing, Seller shall transfer all of
its right, title and interest in and to the Leases by an
Assignment of Leases in the form of Exhibit D hereto (the
"Assignment of Leases"), free and clear of any liens,
encumbrances or interests of third parties.
4.3 Personal Property. At the Closing, Seller shall
transfer title to the Personal Property, if any, by a bill of
sale in the form of Exhibit E hereto (the "Bill of Sale"), free
and clear of any liens, encumbrances or interests of third
parties.
4.4 Service Contracts. At the Closing, Seller shall
transfer all of its right, title and interest in and to the
Service Contracts, if any, by an Assignment of Service Contracts,
Warranties and Guarantees in the form of Exhibit F hereto (the
"Assignment of Service Contracts"), free and clear of any liens,
encumbrances or interest of third parties.
4.5 Intangible Property. At the Closing, Seller shall
transfer all of its right, title and interest in and to all
Intangible Property, if any, by an Assignment of Intangible
Property in the form of Exhibit G hereto (the "Assignment of
Intangible Property"), free and clear of any liens, encumbrances
or interests of third parties.
ARTICLE 5
BUYER'S CONDITIONS TO CLOSING
The following conditions are conditions precedent to Buyer's
obligation to purchase the Property:
5.1 Review and Approval of Title. Not later than ten (10)
days following the date first above written, Seller shall deliver
to Buyer all of the following:
5.1.1 a current extended coverage preliminary title
report (the "Preliminary Title Report") with respect to the
Property issued by the Title Company, accompanied by copies of
all documents referenced in such report;
5.1.2 at Buyer's sole cost and expense, an ALTA survey
of the Real Property prepared by a licensed surveyor reasonably
acceptable to Buyer (the "Survey"). Notwithstanding the
foregoing, Seller agrees to provide Buyer with a copy of any ALTA
survey of the Property in Seller's possession. The Survey shall
be certified to Buyer and the Title Company and in sufficient
detail to provide the basis for an ALTA owner's policy of title
insurance without boundary, encroachment or survey exceptions,
and shall show the location of all easements and improvements,
and any and all other pertinent information with respect to the
Real Property. The Survey shall also indicate and certify as to
the total acreage of the Real Property and any encroachments of
improvements onto easements or onto adjacent properties or
certify as to their absence and shall indicate the presence of
improvements and easements on property adjoining the Real
Property if located within five (5) feet of the boundaries of the
Real Property; and
5.1.3 at Seller's sole cost and expense, copies of all
existing and proposed unrecorded easements, covenants,
restrictions, agreements or other documents in Seller's
possession which affect the Real Property, including, without
limitation, any and all documents relating to any variance,
conditional use permits or land-use restrictions relating to or
affecting the Real Property, or if no such documents exist, a
certification of Seller to that effect.
Title to the Property shall be subject only to such exceptions in
the Preliminary Title Report as Buyer shall approve, in Buyer's
sole and absolute discretion (collectively, the "Permitted
Exceptions"). Buyer shall have until the later of (i) thirty
(30) days following the date hereof, or (ii) thirty (30) days
following receipt of the items listed in 5.1.1, 5.1.2, and 5.1.3
hereof (the "Contingency Period"), in which to notify Seller, in
writing, as to those items which are Permitted Exceptions, those
matters which Buyer approves and which Buyer disapproves, and
which endorsements Buyer will be requiring (collectively, the
"Endorsements"). Buyer's failure to provide such written notice
to Seller shall constitute approval of all matters shown in the
Preliminary Title Report and Survey. If Buyer disapproves of any
matter disclosed in the Preliminary Title Report or Survey as
herein provided, Seller shall have ten (10) business days after
Seller receives written notice of such disapproval to elect to
cure any such matter by delivering written notice of such
election to Buyer. Seller's failure to give such notice to Buyer
within the ten (10) day period set forth herein shall constitute
Seller's election not to cure the matters disapproved by Buyer.
If Seller elects not to cure any such matter, Buyer may either,
at Buyer's sole election, (i) proceed with the purchase of the
Property, in which event Buyer shall be deemed to have approved
such matters which were previously disapproved, or (ii) terminate
this Agreement, in which event this Agreement shall terminate,
the Deposit, together with any interest earned thereon, shall be
returned to Buyer, and the parties hereto shall be relieved of
all further rights and obligations hereunder.
5.2 Delivery of Reports and Documents. Within five (5)
days following the date hereof, Seller shall deliver to Buyer,
copies of any and all of the following documents in Seller's
possession or control:
(a) a rent roll of the Property for the current month;
(b) copies of the Leases, and all licenses, service
contracts (including parking, elevator, HVAC and landscaping
maintenance contracts), management contracts, brokerage
agreements, permits, variances, insurance policies, maps,
certificates of occupancy, building permits and other
documentation and evidence that the construction, present use,
occupancy and operation of the Property is authorized by and is
in compliance with all governmental regulations;
(c) warranties and instruction books (e.g., for
vertical transportation, HVAC and other building systems); income
tax returns for calendar years 1995 and 1996, and 1997 monthly
operating statements to date;
(d) all available plans, structural drawings,
architectural and "as built" drawings, including, but not limited
to, mechanical, electrical, air conditioning, landscape and
sprinkler drawings and specifications regarding the improvements,
and any soils, structural, geological, environmental, hazardous
materials and asbestos studies or reports relating to subsurface
conditions, grading plans, topographical maps and similar data
respecting the Property;
(e) copies of property tax bills for the last two (2)
years and copies of the most recently available utility bills and
similar records respecting the Property;
(f) a list of all personal property owned by or leased
by Seller and used in connection with the ownership or operation
of the Property;
(g) a certificate of Seller certifying to Seller's
knowledge that there is no legal or administrative action,
proceeding, claim, arbitration or suit pending before any court,
agency or official, nor any such claim or action threatened in
writing, relating to the Seller, the Property or with respect to
the validity of any statutes, ordinances, regulations or
restrictions or any permits or approvals thereunder relating to
the Property, nor any outstanding contingent liabilities
affecting the Property; and
(h) any and all other reports, plans or studies
relating to the Property
(collectively, the "Reports and Documents"). Buyer shall have
until the expiration of the Contingency Period in which to review
the Reports and Documents heretofore delivered and approve or
disapprove any of the foregoing, in Buyer's sole and absolute
discretion. In the event Buyer disapproves any of the Reports
and Documents, Buyer shall deliver Seller written notice of
Buyer's disapproval prior to the expiration of the Contingency
Period, in which event this Agreement shall terminate, the
Deposit, together with any interest thereon, shall be returned to
Buyer, and the parties hereto shall be relieved of all further
rights and obligations hereunder. In the event Buyer fails to
deliver said written notice to Seller prior to the expiration of
the Contingency Period, Buyer shall be deemed to have approved
the Reports and Documents. Buyer agrees to return the Reports
and Documents to Seller in the event for any reason this
Agreement is terminated and the transactions contemplated herein
are not consummated.
5.3 Buyer's Independent Review. Buyer shall have the
right, during the Contingency Period, to conduct such further
inspections and/or tests of the Property as Buyer deems necessary
and/or desirable, to enable Buyer to satisfy itself as to all
matters relating to the Property, including, without limitation,
a Phase 1 environmental assessment of the Property, asbestos-
containing-materials studies, Americans with Disabilities Act
compliance studies, soils testing, engineering studies, zoning
and intended use reviews, the physical, structural, mechanical
condition of the Property, seismic studies, and other surveys and
studies of the Property (collectively, "Buyer's Inspections and
Reports"). Buyer's right to conduct Buyer's Inspections and
Reports shall be subject to and conducted in accordance with
Buyer's right of access to the Property as set forth in Section
12.2 hereof. In the event that, based upon Buyer's independent
review of the Property, Buyer determines, in Buyer's sole and
absolute discretion, that Buyer is unwilling to proceed with the
purchase of the Property, Buyer may elect to terminate the
Agreement by so notifying Seller in writing of Buyer's election
prior to the expiration of the Contingency Period, and this
Agreement shall terminate, the Deposit, together with any
interest earned thereon, shall be returned to Buyer, and the
parties hereto shall be relieved of all further rights and
obligations hereunder. In the event Buyer fails to deliver said
written notice to Seller prior to the expiration of the
Contingency Period, Buyer shall be deemed to have disapproved
Buyer's Inspections and Reports.
5.4 Estoppel Certificates. Buyer shall receive, prior to
the Closing, an estoppel certificate from (i) each tenant
occupying not less than three thousand (3,000) rentable square
feet, and (ii) a sufficient number of other tenants at the
Property such that estoppel certificates shall have been received
pursuant to clauses (i) and (ii) hereof with respect to not less
than eighty-five percent (85%) of the aggregate rentable square
feet of the Property covered by Leases in effect on the Closing
Date, in the form of Exhibit H hereto and in substance
satisfactory to Buyer, in Buyer's sole and absolute discretion
(collectively, the "Estoppel Certificates"). In the event that
Buyer disapproves of any Estoppel Certificate Buyer may elect to
terminate the Agreement by so notifying Seller in writing of
Buyer's election prior to the expiration of the Contingency
Period, or, if delivered subsequent to the expiration of the
Contingency Period, within five (5) business days following
receipt of such estoppel certificate, in which event this
Agreement shall terminate, the Deposit, together with any
interest earned thereon, shall be returned to Buyer, and the
parties hereto shall be relieved of all further rights and
obligations hereunder. In the event Seller is able to obtain
estoppel certificatess from tenants representing at least seventy-
five percent (75%) of the aggregate rentable square feet of the
Property, Seller may provide Buyer with Landlord estoppel
certificates in a form substantially similar to Exhibit A for
sufficient leases so that Buyer has estoppel certificates with
respect to not less than eighty-five percent (85%) of the
aggregate rentable square feet of the Property covered by Leases
in effect on the Closing Date.
5.5 Representations and Warranties of Seller. All of
Seller's representations and warranties contained in or made
pursuant to this Agreement shall have been true and correct when
made and shall be true and correct as of the Closing Date.
5.6 Covenants of Seller. Seller shall have complied with
all of Seller's covenants and agreements contained in or made
pursuant to this Agreement.
5.7 Delivery of Documents. Seller shall have delivered
into Escrow the documents and instruments described in Section
7.2 hereof and shall have delivered to Buyer the documents and
instruments described in Section 7.3 hereof.
5.8 Condition of Property. The condition of the Property
shall not have changed from the date of this Agreement to the
Closing Date, ordinary wear and tear excepted.
5.9 Conditions for the Benefit of Buyer. The foregoing
conditions are for the sole benefit of Buyer. If any of the
foregoing conditions described in this Article 4 is not satisfied
for any reason whatsoever, Buyer shall have the right at its sole
election either to waive such condition and proceed with the
transactions contemplated hereby, or, in the alternative, to
terminate this Agreement, in which event Buyer shall be entitled
to a return of the Deposit, together with all interest earned
thereon, and Seller and Buyer shall be released from further
obligation or liability hereunder (except for those obligations
and liabilities which, pursuant to the terms of this Agreement,
survive such termination).
ARTICLE 6
SELLER'S CONDITIONS TO CLOSING
The following conditions are conditions precedent to
Seller's obligation to sell the Property:
6.1 Representations and Warranties of Buyer. All of
Buyer's representations and warranties contained in or made
pursuant to this Agreement shall have been true and correct when
made and shall be true and correct as of the Closing Date.
6.2 Covenants of Buyer. Buyer shall have complied with all
of Buyer's covenants and agreements contained in or made pursuant
to this Agreement.
6.3 Delivery of Documents and Funds. Buyer shall have
delivered into Escrow the documents, instruments and funds
described in Section 7.4 hereof.
6.4 Conditions for the Benefit of Seller. The foregoing
conditions are for the sole benefit of Seller. If any of the
foregoing conditions described in this Article 5 is not satisfied
for any reason whatsoever, Seller shall have the right at its
sole election either to waive such condition and proceed with the
transactions contemplated hereby, or, in the alternative, to
terminate this Agreement, in which event Buyer shall be entitled
to a return of the Deposit, together with all interest earned
thereon, and Seller and Buyer shall be released from further
obligation or liability hereunder (except for those obligations
and liabilities which, pursuant to the terms of this Agreement,
survive, such termination).
ARTICLE 7
CLOSING
7.1 Closing. The closing hereunder (the "Closing") shall
mean the recording of the Grant Deed conveying title to the
Property from Seller to Buyer and shall be held and delivery of
all items to be made at the Closing shall be made at the offices
of Escrow Holder on the sooner to occur of (i) September 30,
1997, or (ii) the fifteenth (15th) day following the expiration
of the Contingency Period (the "Closing Date"), or such other
date prior thereto and/or at such other location as Buyer and
Seller may mutually agree in writing. In the event the Closing
Date does not fall on a Business Day (as hereinafter defined),
the Closing Date shall be moved to the next succeeding Business
Day. Such date may not otherwise be modified without the written
approval of both Seller and Buyer. In the event the Closing does
not occur on or before the Closing Date, Escrow Holder shall,
unless it is notified by both parties to the contrary within five
(5) days after the Closing Date, return to the depositor thereof
items which may have been deposited hereunder. Any such return
shall not, however, relieve either party hereto of any liability
it may have for its wrongful failure to close.
7.2 Deliveries by Seller to Escrow Holder. Not later than
one (1) business day prior to the Closing Date, Seller shall
deposit with Escrow Holder the following:
7.2.1 The Grant Deed, duly executed and acknowledged
by Seller, in recordable form, and ready for recordation on the
Closing Date;
7.2.2 An Affidavit of Non-Foreign Status in the form
of Exhibit I hereto, duly executed by Seller pursuant to Section
1445 of the Internal Revenue Code of 1986, as amended;
7.2.3 California Form 590-RE, duly executed by Seller;
7.2.4 The Bill of Sale;
7.2.5 The Assignment of Leases;
7.2.6 The Assignment of Service Contracts; and
7.2.7 Any and all other documents, instruments, data,
records, correspondence or agreements called for hereunder which
have not been previously delivered.
Buyer may waive compliance on Seller's part under any of the
foregoing items by an instrument in writing.
7.3 Deliveries by Seller Outside of Escrow. On or before
the Closing Date, Seller shall deliver or cause to be delivered
to Buyer the following:
7.3.1 To the extent they are then in Seller's
possession, and have not heretofore been delivered to Buyer, the
original and as-built plans and specifications for all
Improvements on the Property;
7.3.2 To the extent in Seller's possession, all
unexpired warranties and guarantees which Seller has received in
connection with any work or services performed with respect to,
or equipment installed in, the improvements on the Property;
7.3.3 All keys in Seller's possession (properly
tagged for identification) for all improvements on the Property;
7.3.4 The originals of all Leases and Estoppel
Certificates (if not previously delivered), all correspondence to
or from any tenants, relating to the Leases and all guarantees,
certificates of deposit or other security associated therewith;
7.3.5 The originals of all Service Contracts
which are being assumed by Buyer and will remain in effect after
the Closing and all correspondence and existing records prepared
by Seller in its normal course of operations specifically for the
Property (and which are not otherwise confidential) relating to,
and necessary for, the on-going operations and maintenance of the
Property (which materials may be either delivered at Closing or
left at the management office at the Property); and
7.3.6 An inventory list of all Seller's personal
property on the Property.
Buyer may waive compliance on Seller's part under any of the
foregoing items by an instrument in writing.
7.4 Deliveries by Buyer. Not later than one (1) business
day prior to the Closing Date, Buyer shall deposit with Escrow
Holder the following:
7.4.1 The Purchase Price Balance, for disbursement to
Seller in accordance with the terms and provisions hereof, to be
held by Escrow Holder pursuant to joint closing instructions
reasonably acceptable to Buyer and Seller; and
7.4.2 Any other documents, instruments, data, records,
correspondence or agreements called for hereunder which have not
previously been delivered.
Seller may waive compliance on Buyer's part under any of the
foregoing items by an instrument in writing.
7.5 Other Instruments. In addition to the documents and
instruments to be delivered as herein provided, each of the
parties hereto shall, from time to time at the request of the
other party, execute and deliver to the other party such other
instruments of transfer, conveyance and assignment and shall take
such other action as may be reasonably required to effectively
carry out the terms of this Agreement.
7.6 Prorations. All revenues, income, receivables, costs,
expenses and payables of the Property shall be apportioned
equitably between the parties as of Closing on the basis of the
actual number of days in a particular month, and with respect to
the items enumerated below where a particular manner of
apportionment is provided, then apportionment of such item shall
be made in such manner. The obligation to make apportionments
shall survive Closing. Without limitation, the following items
shall be so apportioned:
(i) Monthly rents and percentage rent and
"passthroughs" of real estate taxes and operating expenses due
from occupancy tenants under Leases, as and when collected. If
at Closing there are any past due rents or charges owed by
occupancy tenants, they shall not be prorated until received;
Buyer shall include such delinquencies in its normal billing and
shall pursue the collection thereof in good faith after the
Closing Date (but Buyer shall not be required to litigate or
declare a default in any Lease). To the extent Buyer receives
amounts on account of Leases on or after the Closing Date, such
payments shall be applied first toward then current rent owed to
Buyer in connection with the applicable Lease for which such
payments are received, and any excess monies received shall be
applied toward the payment of any delinquent rents, with Seller's
share thereof being promptly delivered to Seller. Buyer may not
waive any delinquent rents nor modify a Lease so as to reduce or
otherwise affect amounts owed thereunder for any period in which
Seller is entitled to receive its share of charges or amounts
without first obtaining Seller's written consent. Seller hereby
reserves the right to pursue any remedy against any tenant owing
delinquent rents and any other amounts to Seller. Buyer shall
reasonably cooperate with Seller in any collection efforts
hereunder (but shall not be required to litigate or declare a
default in any Lease). With respect to delinquent rents and any
other amounts or other rights of any kind respecting tenants who
are no longer tenants of the Property as of the Closing Date,
Seller shall retain all rights relating thereto;
(ii) Real estate and personal property taxes and any
special assessments, taking into consideration discounts for the
earliest permitted payment, based upon the latest previous tax
levies. Such items shall be reapportioned between Seller and
Buyer if current tax rates differ from the latest previous tax
rates as soon as the same are known. Seller agrees that to the
extent any additional taxes, assessments or levies are imposed,
assessed or levied against the Property, or any portion thereof,
the Seller or the Buyer at any time subsequent to Closing but
with reference to any period prior thereto during Seller's
ownership thereof, Seller shall promptly pay to Buyer an amount
equal to such additional assessments or levies. Similarly, if
tax refunds become payable for periods during Seller's ownership
of the Property, such amounts (subject to adjustments for the
potential claims of occupancy tenants that paid tax increases by
way of rent escalations to Seller) shall be promptly paid over to
Seller. In the event that any assessments on the Property are
payable in installments, then the installment for the current
period shall be prorated (with Buyer assuming the obligation to
pay any installment due after the Closing Date). In no event
shall Seller be charged with or be responsible for any increase
in the taxes on the Property resulting from the sale of the
Property or from any improvements made or lease entered into on
or after the Closing Date;
(iii) Transferable annual permits, licenses, and/or
inspection fees, if any, on the basis of the duration of the
same;
(iv) Security deposits, plus accrued interest, if any,
payable thereon to tenants, and any other deposits and prepaid
rent, shall be credited (or assigned) to Buyer;
(v) Utility charges levied against Seller or the
Property, and Buyer shall transfer all such utility services to
its name and account immediately upon Closing;
(vi) Service Contracts on the basis of the charge or
premium for the period involved;
(vii) All forms of rent concessions, including free
rent, reduced rent and other concessions or obligations under all
Leases for following the Closing not to exceed Two Thousand Five
Hundred Dollars ($2,500) shall be assumed by Buyer at Closing,
and all amounts in excess of said Two Thousand Five Hundred
Dollars ($2,500) shall be credited to Buyer against the Purchase
Price at Closing; and
(viii) All other operation expenses incurred in the
management and operation of the Property.
No insurance policies shall be assigned hereunder, and
accordingly there shall be no proration of insurance premiums.
7.7 Costs and Expenses. Buyer and Seller shall each pay
one-half (1/2) of Escrow Holder's escrow fee. Seller shall pay
all documentary transfer taxes, transfer or conveyance taxes
imposed by the City and/or County in which the Property is
located. Seller shall pay any and all delinquent real property
taxes or assessments, and the cost of recording the Grant Deed.
Seller shall pay that portion of the premium for the Title Policy
attributable to the issuance of a CLTA standard coverage title
policy and Buyer shall pay the balance of the premium for the
Title Policy, and the cost of the Endorsements, if any.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF SELLER
As a material inducement to Buyer to enter into this
Agreement, Seller hereby represents and warrants to and agrees
with Buyer as follows:
8.1 Reports, Contracts and Other Documents. The survey,
mechanical and structural plans and specifications, soil reports,
certificates of occupancy, warranties, and all other books and
records relating to or affecting the Property and all other
contracts or documents delivered to Buyer pursuant to this
Agreement or in connection with the execution hereof, including,
without limitation, the Reports and Documents, are and at the
time of Closing will be true and correct copies and contain no
inaccuracies or misstatements of fact, and all such contracts and
other documents relating to or affecting the Property have been
or will be delivered to Buyer pursuant to this Agreement.
8.2 Condemnation; Land-Use Regulation. Seller has not
received notice of any condemnation, environmental, zoning or
other land-use regulation proceedings, either instituted or
planned to be instituted against the Property.
8.3 Leases. Except as set forth on Exhibit B, Seller has
not executed or otherwise entered into any written or unwritten
leases, tenancies, occupancy agreements, or other agreements with
respect to the Property or affecting possession thereof or any
portion thereof or any rights thereto and there are no such
agreements entered into or executed by any third party. To
Seller's actual knowledge, there is no default on the part of
Seller, as lessor, or, except as described on Schedule 8.5
hereto, on the part of any lessee, and there exists no condition
that with the passage of time or the giving of notice or both
would constitute such a default.
8.4 Service Contracts, Mechanic's Liens and Other
Agreements. Other than those which are cancelable on thirty (30)
day's notice, Seller has not entered into any service agreements
or contracts or other agreements, oral or written (other than as
set forth in this Agreement) relating to the Property which will
be in force on the Closing Date, except as disclosed on Schedule
8.6 hereto, and Seller has not received any notice of any
material default thereunder that remains uncured. Seller shall
provide Buyer with true, correct and complete copies of all
agreements listed on Schedule 8.6 pursuant to Section 5.2 hereof.
8.5 Absence of Other Agreements Affecting the Property.
To Seller's knowledge, there are no easements, encumbrances or
other matters affecting the Property except as may be shown in
the Preliminary Title report.
8.6 Litigation. There is no litigation pending or, to
Seller's knowledge threatened, against Seller that arises out of
the ownership or operation of the Property or that might
detrimentally affect the use or operation of the Property for its
intended purpose or the value of the Property or is likely to
materially and adversely affect the ability of Seller to perform
its obligations under this Agreement.
8.7 Authority of Seller. This Agreement and all documents
executed by Seller which are to be delivered to Buyer at or prior
to the Closing are or at the time of Closing will be duly
authorized, executed, and delivered by Seller, are or at the time
of Closing will be legal, valid, and binding obligations of
Seller enforceable in accordance with their terms, and are and
at the time of Closing will be sufficient to convey title (if
they purport to do so).
8.8 No Conflict. The execution and delivery of this
Agreement, the consummation of the transactions herein
contemplated, and compliance with the terms of this Agreement
shall not conflict with or result in a breach of any of the terms
of provisions of, or constitute a default under, any instrument
or agreement to which Seller is a party or, to Seller's
knowledge, by which any of the Property is or may be bound, or
any applicable regulation of any governmental agency, or any
judgment, order or decree of any court having jurisdiction over
Seller or, to Seller's knowledge, the Property.
8.9 Use and Operation of Property. Seller knows of no
facts nor has Seller failed to disclose to Buyer any fact known
to Seller which would prevent Buyer from using, leasing and
operating the Property after Closing in the normal manner in
which similar properties in the area are used, operated and
leased or in the manner in which the Property has been used,
leased and operated prior to the Closing Date.
8.10 Other Contracts to Convey Property. Seller has not
committed nor obligated itself in any manner whatsoever to sell
the Property to any party other than Buyer.
8.11 Hazardous Substances and Environmental Matters. To
Seller's actual knowledge, neither Seller, nor any other person
or entity, has ever used, generated, manufactured, produced,
stored, released, discharged or disposed of on, under or about
the Property, or transported to or form the Property any
Hazardous Substance (as hereinafter defined) or allowed any other
person or entity to do so. To Seller's actual knowledge, no
proceeding or inquiry by any governmental authority with respect
to the presence of any Hazardous Substance on the Property or the
migration thereof from or to other property is pending or
threatened, nor have any claims been made or threatened by any
third party against Seller or the Property relating to any loss
or injury resulting form any Hazardous Substance. The term
"Environmental Law" shall include, without limitation, any
federal, state or local law, statute, ordinance or regulation
pertaining to health, industrial hygiene or the environment
(collectively referred to as "Environmental Laws"), including,
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") as amended, 42
U.S.C. Sections 9601 et seq., and the Resource Conservation and
Recovery Act of 1976 ("RCRA") as amended, 42 U.S.C. Sections 9601
et seq. The term "Hazardous Substance" shall include, without
limitation, (i) those substances included within the definitions
"hazardous substances," "hazardous materials," "toxic
substances," or "solid waste" in CERCLA, RCRA and the Hazardous
Materials Transportation Act, 49 U.S.C. Sections 1801 et seq., as
amended, and in the regulations promulgated pursuant to said
laws; (ii) those substances defined as "hazardous wastes" in
Section 25117 of the California Health & California Health &
Safety Code, or as "hazardous substances" in Section 25316 of the
California Health & Safety Code, and in the regulations
promulgated pursuant to said laws; (iii) those substances listed
in the United States Department of Transportation Table (49 CFR
172.101 and amendments thereto) or by the Environmental
Protection Agency (or any successor agency) as hazardous
substances (40 CFR Part 302 and amendments thereto); and (iv)
such other substances, materials, and wastes which are or become
regulated under applicable local, state or federal law, or which
are classified as hazardous or toxic under local, state or
federal law, rules or regulations.
8.12 Knowledge of Seller. As used herein, the phrase, "to
the knowledge of Seller" or other similar phrases mean and refer
to the present actual knowledge of Robert Wish, a principal of
Seller. In connection therewith, Seller represents and warrants
that Robert Wish is the person in Seller's organization who
possess relevant knowledge pertaining to the Property and the
representations and warranties contained herein.
8.13 General Disclaimer. Buyer acknowledges that it will
inspect and examine the Property and, except as expressly
provided in this Agreement, will rely solely on its own
investigation of the Property and not on any information provided
or to be provided by or on behalf of the Seller. Except as
otherwise expressly provided in this Agreement, the sale of the
Property to Buyer is made on an "AS IS" "WHERE IS" and "WITH ALL
FAULTS" basis. Buyer acknowledges that in consideration of
entering into this Agreement, that, except as expressly provided
in this Agreement, Seller makes no warranty or representation,
with respect to the Property, or any portion thereof, express or
implied, or arising by operation of law, including, but not
limited to, any warranty of condition (physical, environmental or
otherwise), title (other than the limited warranties of title
contained in the grant deed), habitability or fitness for a
particular purpose or otherwise.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to Seller to enter into this
Agreement, Buyer hereby represents and warrants to and agrees
with Seller as follows:
9.1 Authority of Buyer. This Agreement and all documents
executed by Buyer which are to be delivered to Seller at or prior
to the Closing are or at the time of Closing will be duly
authorized, executed, and delivered by Buyer, are or at the time
of Closing will be legal, valid, and binding obligations of Buyer
enforceable in accordance with their terms.
9.2 Litigation. There is no litigation pending or, to
Buyer's knowledge threatened, against Buyer that is likely to
materially and adversely affect the ability of Buyer to perform
its obligations under this Agreement.
9.3 No Conflict. The execution and delivery of this
Agreement, the consummation of the transactions herein
contemplated, and compliance with the terms of this Agreement
shall not conflict with or result in a breach of any of the terms
of provisions of, or constitute a default under, any instrument
or agreement to which Buyer is a party or any applicable
regulation of any governmental agency, or any judgment, order or
decree of any court having jurisdiction over Buyer.
ARTICLE 10
COVENANTS OF SELLER
Seller agrees and covenants with Buyer, from the date hereof
through the Closing Date, as follows:
10.1 Maintenance and Operation of the Property. Seller
shall maintain the Property in good order, condition and repair,
reasonable wear and tear excepted, and shall make all repairs,
maintenance and replacements as is necessary to so maintain the
Property.
10.2 No Leases or Other Contracts. Seller shall not enter
into or modify any leases, service contracts or other similar
agreements with respect to the Property without the prior written
consent of Buyer, which consent shall not be unreasonably
withheld, and which consent or disapproval shall be provided
within two (2) business days following request therefor.
10.3 No Other Encumbrances. Seller shall not enter into
any agreements respecting the sale of the Property or any portion
thereof, and shall not enter into any agreements which encumber
or subject to lien the Property or any portion thereof.
10.4 Insurance. Seller shall keep its existing policies of
insurance in full force and effect.
10.5 Disclosure of Changes. If Seller discovers any
information or facts which would materially or adversely change
the representations and warranties of Seller contained in this
Agreement, Seller shall promptly give notice to Buyer of such
information or facts.
ARTICLE 11
DAMAGE OR DESTRUCTION; CONDEMNATION
In the event that, after the date hereof but prior to the
Closing Date, either any portion of the Property is taken
pursuant to eminent domain proceedings or any of the improvements
on the Property are damaged or destroyed by any casualty, Seller
shall have no obligation to repair or replace any such damage or
destruction. Seller shall, upon consummation of the transaction
herein provided, assign to Buyer all claims of Seller respecting
any condemnation or casualty insurance coverage, as applicable,
and all condemnation proceeds or proceeds from any such casualty
insurance received by Seller on account of any casualty (the
damage from which shall not have been repaired by Seller prior to
the Closing Date) as applicable, and Seller shall give Buyer a
credit equal to the deductible portion of Seller's insurance
policy attributable to the Property. In the event (i) the
condemnation award shall equal or exceed One Hundred Thousand
Dollars ($100,000) or otherwise materially and adversely affect
the Property, as reasonably determined by Buyer, or (ii) the cost
of repair of damage to the Property on account of a casualty,
shall equal or exceed One Hundred Thousand Dollars ($100,000) or
otherwise materially and adversely interfere with the operations
of the Property, as reasonably determined by Buyer, Buyer may, at
its option, terminate this Agreement by notice to Seller, given
on or before the Closing Date, in which event this Agreement
shall terminate, the Deposit, together with all interest earned
thereon, shall be returned to Buyer, and each party shall be
relieved of all further obligations hereunder.
ARTICLE 12
DELIVERY OF POSSESSION AND ENTRY ON PROPERTY
12.1 Delivery of Possession. Possession of the Property
shall be delivered to Buyer on the Closing Date.
12.2 Entry on Property. From the date hereof until the
Closing, Seller shall afford Buyer reasonable access to the
Property for the purpose of conducting Buyer's Inspections.
Buyer agrees to keep the Property free and clear of any
mechanic's liens or other liens in connection with Buyer's
Inspections and Reports, and Buyer indemnifies and holds Seller
harmless from and against any and all liability, loss, cost,
damage and/or expense, including, without limitation, attorneys'
fees and costs, resulting directly from Buyer's entry onto the
Property.
ARTICLE 13
INDEMNIFICATION
13.1 Indemnification by Seller. Seller hereby agrees to
indemnify Buyer and hold Buyer harmless from and against any and
all claims, demands and losses, including, without limitation,
reasonable attorneys' fees and costs suffered by Buyer as a
direct or indirect result of:
(a) Any misrepresentation or breach of warranty or
breach of covenant made by Seller in this Agreement or any
document, certificate, or exhibit given by Seller or delivered by
Seller to Buyer pursuant to or in connection with this Agreement;
and
(b) Any and all obligations, liabilities, claims,
liens or encumbrances, whether direct, contingent or
consequential and no matter how arising, and in any way related
to the Property and arising or accruing on or before the Closing
Date, or in any way related to or arising from any act, conduct,
omission, contract or commitment of Seller (or any of its agents
or employees) at any time or times on or before the Closing Date.
13.2 Indemnification by Buyer. Buyer hereby agrees to
indemnify Seller and hold Seller harmless from and against any
and all claims, demands liabilities, liens, costs, expenses,
penalties, damages and losses, including, without limitation,
reasonable attorneys' fees and costs suffered by Seller as a
direct or indirect result of:
(a) Any misrepresentation or breach of warranty or
breach of covenant made by Buyer in this Agreement or any
document, certificate, or exhibit given by Buyer or delivered by
Buyer to Seller pursuant to or in connection with this Agreement;
and
(b) Any and all obligations, liabilities, claims,
liens or encumbrances, whether direct, contingent or
consequential and no matter how arising, and in any way related
to the Property and arising or accruing after the Closing Date,
or in any way related to or arising from any act, conduct,
omission, contract or commitment of Buyer (or any of its agents
or employees) at any time or times after the Closing Date.
13.3 Warranty and Indemnity Regarding Estoppels. If Seller
has failed to deliver to Buyer any estoppel certificates required
to be delivered pursuant to Section 5.4 hereof on or before the
Closing Date and Buyer nevertheless elects to close the
transaction, Seller shall indemnify Buyer with respect to any
claim made by any tenant or other party which is based upon facts
not consistent with the representations and warranties of Seller
herein or set forth on the respective unmodified form of estoppel
certificate to have been provided by such tenant.
The provisions of this Article 13 shall survive the
execution and delivery of this Agreement, the delivery of the
Grant Deed and transfer of title.
ARTICLE 14
MISCELLANEOUS
14.1 Notices. Any notice or other communication required or
permitted to be given under this Agreement shall be in writing
and sent by commercial courier service, United States mail,
registered or certified mail, postage prepaid, return receipt
requested, and addressed as follows:
If to Buyer: Arden Realty Limited Partnership
9100 Wilshire Boulevard, Suite 700
Beverly Hills, California 90212
Attn: Brigitta B. Troy, Director of
Acquisitions
with a copy to: Christensen, Miller, Fink, Jacobs,
Glaser, Weil & Shapiro, LLP
2121 Avenue of the Stars
Suite 1800
Los Angeles, California 90067
Attn: Peter M. Weil, Esq.
Fax No. (310) 556-2920
If to Seller: Foremost Carmel Mountain Ltd.
25351 Alicia Parkway, Suite "A"
Laguna Hills, California 92653
Attn: Robert L. Wish
Fax No. (714) 837-4136
If to Escrow Holder: California Counties Title Escrow
1971 Fourth Street
Suite 130
Santa Ana, California 92705
Attn: Jack Hannigan
If to the Title Company: Chicago Title Insurance Company
________________________________
________________________________
________________________________
Attn: __________________________
or such other address as either party may from time to time
specify in writing to the other in the manner aforesaid. If
personally delivered, such notices or other communications shall
be deemed delivered upon delivery. If sent by commercial courier
service, United States mail, registered or certified mail,
postage prepaid, return receipt requested, such notices or other
communications shall be deemed delivered upon delivery or refusal
to accept delivery as indicated on the return receipt.
14.2 Brokers and Finders. In connection with the
transactions contemplated by this Agreement (a) Seller hereby
represents and warrants to Buyer that Seller has not, and shall
not, incur any obligation to any third party for the payment of
any broker's fee, finder's fee, commission or other similar
compensation, other than to Lee & Associates, and (b) Buyer
hereby represents and warrants to Seller that Buyer has not, and
shall not, incur any obligation to any third party for the
payment of any broker's fee, finder's fee, commission or other
similar compensation. In the event of a claim for broker's fee,
finder's fee, commission or other similar compensation in
connection herewith, Buyer, if such claims is based upon any
agreement alleged to have been made by Buyer, hereby agrees to
indemnify and hold Seller harmless from and against any and all
liability, loss, cost, damage and/or expense (including, without
limitation, reasonable attorneys' fees and expenses) which Seller
may sustain or incur by reason of such claim, and Seller, if such
claims is based upon any agreement alleged to have been made by
Seller, hereby agrees to indemnify and hold Buyer harmless from
and against any and all liability, loss, cost, damage and/or
expense (including, without limitation, reasonable attorneys'
fees and expenses) which Buyer may sustain or incur by reason of
such claim. The provisions of this Section shall survive the
Closing.
14.3 Successors and Assigns. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereof and
their respective successors, heirs, administrators and assigns;
provided, however, that Buyer may not assign its rights or
obligations under this Agreement without the prior written
consent of Seller, which consent shall not be unreasonably
withheld or delayed. In addition, Buyer may assign its rights in
this Agreement to an entity which controls, is controlled by, or
is under common control with, Buyer without the consent of
Seller.
14.4 Amendments. This Agreement may be amended or modified
only by a written instrument executed by the parties hereto.
14.5 Continuation and Survival of Representations and
Warranties. All representations and warranties by the respective
parties contained herein or made in writing pursuant to this
Agreement are intended to be and shall remain true and correct as
of the time of Closing, shall be deemed to be material, and shall
survive the execution and delivery of this Agreement, and the
execution and delivery of the Deed and the transfer of title to
the Property.
14.6 Interpretation. Whenever used herein, the term
"including" shall be deemed to be followed by the words "without
limitation." Words used in the singular number shall include
the plural, and vice-versa, and any gender shall be deemed to
include each other gender.
14.7 Captions. The captions and headings of the Articles
and Sections of this Agreement are for convenience of reference
only, and shall not be deemed to define or limit the provisions
hereof.
14.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
14.9 Merger of Prior Agreements. This Agreement, including
the exhibits and schedules hereto, constitutes the entire
agreement between the parties with respect to the purchase and
sale of the Property and supersedes all prior agreements and
understandings between the parties hereto relating to the subject
matter hereof.
14.10 Attorneys' Fees. In the event either Buyer or Seller
brings any suit or other proceeding with respect to the subject
matter or enforcement of this Agreement, the prevailing party (as
determined by the court, agency or other authority before which
such suit or proceeding is commenced) shall, in addition to such
other relief as may be awarded, be entitled to recover attorneys'
fees, expenses and costs of investigation as actually incurred
(including, without limitation, attorneys' fees, expenses and
costs of investigation incurred in appellate proceedings, costs
incurred in establishing the right to indemnification, or in any
action or participation in, or in connection with, any case or
proceeding under Chapter 7, 11 or 13 of the Bankruptcy Code, 11
United States Code Sections 101 et seq., or any successor
statutes).
14.11 Time of the Essence. Time is of the essence of this
Agreement.
14.12 Election of Remedies. Except as otherwise
specifically provided herein to the contrary in Section 2.3.2
hereof, no right or remedy conferred upon either party in this
Agreement is intended to be exclusive of any other right or
remedy contained herein or now or hereafter available to either
part at law or in equity, and every such right and remedy shall
be cumulative and shall be in addition be every other right or
remedy contained in this Agreement or now or hereafter available
to either party at law or in equity.
14.13 Authority. The parties signing below represent and
warrant that they have the requisite authority to bind the
entities on whose behalf they are signing.
14.14 Exhibits. The exhibits and schedules attached hereto
are hereby incorporated by reference herein.
14.15 Severability. The invalidity or unenforceability of
any one or more of the provisions of this Agreement shall not
affect the validity or enforceability of any of the other
provisions of this Agreement.
14.16 Further Assurances. The parties hereto agree to
execute, acknowledge and deliver any and all additional papers,
documents and other assurances and shall perform any and all acts
and things reasonably necessary in connection with the
performance of the obligations hereunder and to carry out the
intent of the parties hereto.
14.17 Effect of Waiver. A waiver by either party hereto
shall not affect either party's right to enforce the provisions
contained herein, nor shall nay extension or waiver be held to be
an extension of time or waiver of any prior or subsequent breach
of the same or any other obligation under this Agreement.
14.18 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
14.19 No Third Parties Benefitted. This Agreement is made
and entered into solely for the benefit of Seller and Buyer,
their successors and assigns, and no other person or entity shall
have any rights hereunder.
14.20 Specific Performance. The parties understand and
agree that the Property is unique and for that reason, among
others, Buyer will be irreparably damaged in the event that this
Agreement is not specifically enforced. Accordingly, in the
event of any breach or default in or of this Agreement or any of
the warranties, terms or provisions hereof by Seller, Buyer shall
have, in addition to a claim for damages for such breach or
default, and in addition and without prejudice to any right or
remedy available at law or in equity, the right to demand and
have specific performance of this Agreement.
14.21 Business Day. As used herein, Business Day shall
mean and refer to any day in which banking institutions are open
for business and the County Recorder's Office of San Diego
County, California is accepting documents for recordation in
their real estate records.
14.22 Furnishing of Audit Letter. Seller agrees to
furnish, from time to time upon the request of Buyer, an Audit
Letter substantially in the form of Exhibit K hereto, to Buyer's
accountants.
14.23 Arbitration. ANY CONTROVERSY OR CLAIM ARISING
UNDER OR RELATING TO THE TERMS OF THIS AGREEMENT OR ANY OF THE
EXHIBITS ATTACHED TO IT, AND ANY PROCEEDINGS TO ENFORCE THIS
AGREEMENT OR RIGHTS UNDER THIS AGREEMENT AND ITS EXHIBITS OTHER
THAN THE "EXCLUDED MATTERS" (AS HEREINAFTER DEFINED) SHALL BE
SETTLED BY ARBITRATION IN THE CITY OF SAN DIEGO, IN ACCORDANCE
WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION
ASSOCIATION. THE ARBITRATOR(S) SHALL HAVE THE RIGHT TO DETERMINE
THE SCOPE OF THEIR JURISDICTION AND GRANT EQUITABLE RELIEF,
INCLUDING, WITHOUT LIMITATION, THE RIGHT TO ORDER THE EXPUNGEMENT
OF ANY LIS PENDENS WHICH THE ARBITRATOR(S) DEEM IMPROPER. THE
PREVAILING PARTY SHALL BE ENTITLED TO REASONABLE ATTORNEYS' FEES
AND OTHER REASONABLE COSTS INCURRED IN CONNECTION WITH THE
ARBITRATION OR ANY OTHER LITIGATION PLUS INTEREST ON THE AMOUNT
OF ANY AWARD. JUDGMENT UPON THE AWARD RENDERED BY THE
ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING JURISDICTION
THEREOF. THIS PARAGRAPH MUST BE INITIALED BELOW IN ORDER FOR
THIS PARAGRAPH OF THE AGREEMENT TO BE BINDING.
NOTICE: BY INITIALLING IN THE SPACE BELOW, YOU ARE
AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS
INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY
CALIFORNIA LAW, AND YOU ARE GIVING UP ANY RIGHTS YOU
MIGHT POSSESS TO HAVE THE DISPUTE LITIGATION IN A COURT
OR JURY TRIAL. BY INITIALLING IN THE SPACE BELOW, YOU
ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND
APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN
THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE
TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS
PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE.
YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS
VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING
AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS
INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO
NEUTRAL ARBITRATION.
/s/ RLW CVK /s/ VJC
Seller's Initials Buyer's Initials
As used herein, "Excluded Matters" means any controversy,
claim or proceeding with respect to or otherwise related to a
breach or default of any representation or warranty contained in
this Agreement (which matters shall not be subject to the
arbitration provisions contained herein).
14.24 Tax Deferred Exchange. Seller may desire to
dispose of the Property through a tax deferred exchange which
qualifies for non-recognition of gain under Section 1031 of the
Internal Revenue Code. Buyer shall cooperate with Seller in
attempting to effectuate such exchange, including, but not
limited to, the execution of such documentation as may be
reasonably necessary to effect such exchange, provided that
(i) Buyer shall not incur any additional liability in connection
with an exchange for the benefit of Seller, (ii) Buyer shall not
be obligated to take title to any real property (other than the
Property), (iii) the date of Closing shall not be extended as a
result of the exchange, without Buyer's prior written consent,
and (iv) any additional costs and charges attributable to the
exchange, including, but not limited to, attorneys' fees,
brokers' commissions and other transaction related expenses shall
be paid for by Seller. Buyer and Seller further agree that
Seller may substitute an intermediary ("Intermediary") to act in
place of Seller as the seller of the Property. The Intermediary
shall be designated in writing by Seller. Upon identification of
Intermediary, Intermediary shall be substituted for Seller as the
seller of the Property. Buyer agrees that performance by
Intermediary will be treated as performance by Seller. Seller
shall unconditionally guarantee the full and timely performance
by Intermediary of each and every one of the representations,
warranties, covenants, indemnities, obligations and undertakings,
and, in the event of breach, Buyer may proceed directly against
Seller on this guarantee without the need to join Intermediary as
a party to any action against Seller. Seller unconditionally
waives any defense that it might have as guarantor that it would
not have if it had made or undertaken these representations,
warranties, covenants, indemnities, obligations and undertakings
directly. In the event of the breach of any representations,
warranties, covenants, obligations and undertakings by Seller or
Intermediary or in the event of any claim upon any indemnity of
Seller or Intermediary (whether the representation, warranty,
covenant, indemnity, obligation or undertaking is express or
implied), Buyer's exclusive recourse shall be against the Seller
and Buyer shall have no recourse of any type against the
Intermediary arising from this transaction.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
Seller: FOREMOST CARMEL MOUNTAIN LTD.
a California limited partnership
By: MAMMOTH EQUITIES, LLC,
a Nevada limited liability company
Its: General Partner
By: /s/ Robert L. Wish
Its: Managing Manager
By: BRIGHTON PARK, LTD.,
a California limited partnership
By: /s/ Charles V. Kaminskas
Its: General Partner
Buyer: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: ARDEN REALTY, INC.,
a Maryland corporation
Its: General Partner
By: /s/ Victor J. Coleman
Its: President and COO
ARDEN REALTY LIMITED PARTNERHSHIP
October 7, 1997
VIA FACSIMILE
Foremost Carmel Mountain Ltd.
25351 Alicia Parkway
Suite A
Laguna Hills, California 92653
Attn: Robert L. Wish
Re: Agreement of Purchase and Sale dated as of August 15,
1997/12396 World Trade Drive, San Diego, California
Gentlemen:
This letter refers to that certain Agreement of Purchase and
Sale and Joint Escrow Instructions dated as of August 15, 1997
(the "Agreement"), by and between Foremost Carmel Mountain Ltd.,
a California limited partnership ("Seller") and Arden Realty
Limited Partnership, a Maryland limited partnership ("Buyer").
All capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Agreement.
Notwithstanding anything to the contrary contained in the
Agreement, Buyer and Seller hereby agree as follows:
1. The Contingency Period, insofar as it relates to the
rights of Buyer to review and approve or disapprove the Estoppel
Certificates, is hereby extended to 6:00 p.m. on Monday,
September 29, 1997. Buyer shall continue to have the rights
afforded it under Section 5.4 of the Agreement with respect to
the Estoppel Certificates.
2. Buyer has reviewed and has approved the matters shown
on that certain preliminary title report prepared by Chicago
Title Insurance Company and dated as of August 14, 1997, order
no. 007359411, except as follows: real property taxes as shown in
item no. 1 are to be prorated at Closing through Escrow in
accordance with the Agreement; and item nos. 18, 19 and 20, which
all relate to financing on the Property, are disapproved and are
to be paid by Seller through Escrow at Closing in accordance with
the Agreement, and provided Buyer obtain the following
endorsements, all of which have been consented to by the Title
Company: 100, 116, 116.1, 103.7, 103.3 as to item nos. 3 and 10,
123.2, and 103.9 as to item nos. 13, 14, 16 and 17.
3. Buyer and Seller intend to close the transactions
contemplated by the Agreement on Tuesday, September 30, 1997.
4. With respect to various physical deficiencies of the
Property discovered by Buyer and listed on that certain list
entitled "Work to be performed by the Seller from Exhibit A,
12396 Carmel Mountain Road (sic), San Diego, CA", together with
Exhibit A thereto and attached hereto as Schedule 1 (the
"Physical Deficiencies List"), Buyer and Seller have agreed as
follows:
4.1 Buyer shall receive a credit against the Purchase
Price at Closing of Four Thousand Five Hundred Dollars ($4,500)
for the window repairs at the Property more specifically noted as
item 10.e. on the Physical Deficiencies List.
4.2 Buyer and Seller shall instruct Escrow Holder to
hold back the sum of Forty-Five Thousand Five Hundred Dollars
($45,500) (the "Hold Back Sum") from the proceeds due Seller at
Closing pending Seller's completion, to Buyer's satisfaction, in
Buyer's sole and absolute discretion, of the remaining repairs,
alterations and other works of improvements set forth in the
Physical Deficiencies List within thirty (30) days following the
Closing Date. The Hold Back Sum shall be promptly released to
Seller upon Buyer's approval, in writing, of the repairs so
completed by Seller. In the event Seller fails to satisfactorily
complete such repairs within such thirty (30) day period, so much
of the Hold Back Sum as is necessary for Buyer to complete all
remaining repairs shall be released to Buyer, without limiting or
otherwise impairing any other rights of Buyer, and the balance of
the Hold Back Sum, if any, shall be released to Seller.
5. Except as otherwise specifically set forth in this
letter to the contrary, Buyer has completed its due diligence
with respect to the Property and has approved the same.
6. The parties signing below represent and warrant that
they have the authority to bind the entity on whose behalf they
are signing.
If you are in agreement with the foregoing, please so
indicate in the space provided below and return it by facsimile
to the undersigned at (310) 274-6218.
Very truly yours,
Arden Realty Limited Partnership,
a Maryland limited partnership
By: Arden Realty Group, Inc.
a Maryland corporation
Its: General Partner
By: /s/ Victor J. Coleman
Its: President and COO
Acknowledged, accepted and agreed to this 26th day of September,
1997:
Foremost Carmel Mountain Ltd.,
a California limited partnership
By: Mammoth Equities, LLC,
a Nevada limited liability company
Its: General Partner
By: /s/ Robert L. Wish
Its: Managing Manager
NOTE PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
This NOTE PURCHASE AND SALE AGREEMENT ("Agreement") is
entered into as of August 27, 1997 by and between Coast
Federal Bank, Federal Savings Bank, a federally chartered
capital stock savings bank, as successor in interest to
Coast Savings and Loan Association, a California corporation
("Coast") and Arden Realty Limited Partnership, a Maryland
limited partnership ("Buyer") with regard to the following
facts and circumstances.
RECITALS
A. Coast and Washington Mutual Bank, a Washington
corporation, as successor in interest to Washington Mutual
Savings Bank, a Washington corporation ("Washington") are
the payee and holder of that certain Restated and Amended
Promissory Note dated as of December 14, 1994 (the "Note")
in the original principal amount of $15,728,745.29 (the
"Loan"), which Note was executed by Carlton Brown and
Company, Incorporated, a California corporation (the
"Original Borrower") in favor of Coast. The Note is secured
by that certain Construction and Permanent Deed of Trust,
Financing Statement, Security Agreement and Fixture Filing
(with Assignment of Rents and Leases) and Grant of Easement
dated as of December 23, 1986, as amended (the "Deed of
Trust"), covering that certain real property more
particularly described in Exhibit "A" attached hereto and
incorporated herein by this reference (the "Property"),
which Deed of Trust was recorded on December 29, 1986, as
Instrument Number 86-1818749 in the Official Records of Los
Angeles County (the "County"), California. The Note amended
and restated in its entirety that certain Promissory Note
dated as of December 23, 1986 made by Original Borrower to
the order of Coast in the original principal amount of
$16,400,000.00 (the "Original Loan"). The Note is also
evidenced, accompanied or secured by certain additional
documents, including, without limitation: (a) that certain
Security Agreement dated as of December 23, 1986, as amended
(the "Security Agreement), and (b) that certain Assignment
of Lessor's Interest in Leases dated as of December 23,
1986, as amended (the "Assignment of Leases"), and recorded
on December 29, 1986, as Instrument Number 86-1818750 in the
Official Records of the County. The Note, the Deed of
Trust, the Assignment of Leases, the Security Agreement, and
all the other documents described in Schedule 1 attached
hereto, shall hereinafter be referred to collectively as the
"First Loan Documents."
B. On or about February 20, 1987, Coast assigned an
undivided 58.63% beneficial interest in the Original Loan to
Crossland Savings, F.S.B., a federally chartered savings
bank ("Crossland"), and on or about April 24, 1987, Coast
assigned an undivided 21.37% beneficial interest in the
Original Loan to Washington.
C. On or about February 16, 1994, Coast acquired the
beneficial interest of Crossland in the Loan. As of the
date of this Agreement, Coast owns an undivided 78.63%
beneficial interest in the Loan, and Washington owns an
undivided 21.37% beneficial interest in the Loan.
D. In addition to Coast's beneficial interest in the
Loan, Coast currently services the Loan.
E. Coast is the sole payee and holder of that certain
Restated and Amended Promissory Note dated as of
December 14, 1994 (the "Second Note"), in the original
principal amount of $9,944,958.73 (the "Second Loan"), which
Second Note was executed by Original Borrower in favor of
Coast. The Second Note was originally secured by that
certain Second Deed of Trust, Financing Statement, Security
Agreement and Fixture Filing (with Assignment of Rents and
Leases) and Grant of Easement dated as of December 23, 1986,
as amended (the "Second Deed of Trust"), covering the
Property, which Second Deed of Trust was recorded on
December 29, 1986 as Instrument Number 86-1818751 in the
Official Records of the County. The Second Note amended and
restated in its entirety that certain Promissory Note dated
as of December 23, 1986, made by Original Borrower to the
order of Coast in the original principal amount of
$9,700,000.00 as amended. The Second Note is also
evidenced, accompanied or secured by certain additional
documents, including, without limitation: (a) that certain
Security Agreement dated as of December 23, 1986, as amended
(the "Second Security Agreement"), and (b) that certain
Assignment of Lessor's Interest in Leases dated as of
December 23, 1986, and recorded on December 29, 1986, as
Instrument Number 86-1818752 in the Official Records of the
County, as amended (the "Second Assignment of Leases"). The
Second Note, the Second Deed of Trust, the Second Assignment
of Leases, the Second Security Agreement, and all the other
documents described in Schedule 2 attached hereto, shall
hereinafter referred to collectively as the "Second Loan
Documents."
F. Coast is the sole owner and the holder of the
Second Loan, and Coast services the Second Loan.
G. For purposes of this Agreement, the First Loan
Documents and the Second Loan Documents and any
modifications, revisions or extensions thereof, and all
other documents in connection with the Loan and the Second
Loan described in paragraph 8.1 hereof shall hereinafter be
referred to collectively as the "Loan Documents."
Notwithstanding anything to the contrary herein, Loan
Documents shall include only those documents which exist and
are in the possession or control of Coast and which are not
privileged or are not an internal memorandum or report of
Coast, and Loan Documents shall not include the
participation agreements and related documents between Coast
and Washington and Coast and Crossland.
H. On June 14, 1993, Long Beach Airport Business Park
II, a California limited partnership ("LBABP II") filed a
case under Chapter 11 of the U.S. Bankruptcy Code (the
"Bankruptcy Case").
I. A consensual plan of reorganization (the "Plan")
proposed by Coast and LBABP II and approved by Washington
was confirmed by the United States Bankruptcy Court Central
District of California on November 30, 1994.
J. In accordance with the terms of the Plan, on or a
about December 14, 1994, LBABP II assumed the obligations of
Original Borrower under the Loan Documents and became
jointly and severally liable with the Original Borrower for
such obligations, and the terms of the Loan and the Second
Loan were amended and restated in their entirety.
K. Subject to the terms and conditions set forth in
this Agreement, (i) Buyer desires to purchase the Note and
the First Loan Documents from Coast and Washington, and
Coast and Washington desire to sell to Buyer the Note and
the First Loan Documents; and (ii) Buyer desires to purchase
the Second Note and the Second Loan Documents from Coast,
and Coast desires to sell to Buyer the Second Note and the
Second Loan Documents.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing
Recitals, as well as the covenants and conditions contained
herein, and for other good and valuable consideration, the
receipt, sufficiency and validity of which are hereby
acknowledged by all parties, it is hereby agreed as follows:
1. Recitals. All of the above Recitals are
incorporated herein as part of this Agreement.
2. Purchase and Sale. Upon the terms and
conditions of this Agreement, Coast hereby agrees to sell,
assign, and transfer to Buyer all of its right, title and
interest in and to the Note, the Second Note, and all of the
other Loan Documents, without recourse, warranty,
representation, of any nature whatsoever, except as
specifically set forth in this Agreement, and Buyer hereby
agrees to purchase from Coast, on an "AS IS" basis, without
recourse to Coast, all of Coast's right, title and interest
in and to the Note, the Second Note, and all of the other
Loan Documents. Upon the terms and conditions of this
Agreement, Coast hereby agrees to use its best efforts to
cause Washington to sell, assign, and transfer to Buyer all
of its right, title and interest in and to the Note, and the
other First Loan Documents, without recourse, warranty,
representation, of any nature whatsoever, except as
specifically set forth in that certain estoppel letter dated
of even date herewith and executed by Washington (the
"Estoppel Letter"), and Buyer hereby agrees to purchase from
Washington, on an "AS IS" basis, without recourse to
Washington, all of Washington's right, title and interest in
and to the Note, and the other First Loan Documents.
3. Purchase Price. The purchase price for
the Note, the Second Note, and the other Loan Documents
shall be Fourteen Million Four Hundred Thousand and No/100
Dollars ($14,400,000.00) (the "Purchase Price") payable as
hereinafter provided. With respect to the Loan, as of the
Closing Date, Escrow Holder shall allocate the Purchase
Price as payment for the Loan as follows: (i) Coast shall
receive an amount equal to 78.63% of the outstanding amounts
owing under the Loan, and (ii) Washington shall receive an
amount equal to 21.37% of the outstanding amounts owing
under the Loan. With respect to the Loan, Escrow Holder
shall deduct from each of Coast's and Washington's pro rata
share of the Purchase Price (based upon Coast's and
Washington's interest in the Loan as set forth in Paragraph
B of the Recitals section of this Agreement), any amounts
for which Coast and Washington are responsible for under the
terms of Paragraphs 7.6 and 10 hereof in accordance with
their pro rate share (based upon Coast's and Washington's
interest in the Loan). With respect to the Second Loan, as
of the Closing Date, Escrow Holder shall deliver to Coast
the remaining balance of the Purchase Price (after payment
in full of the Loan) as payment for the Second Loan.
4. Payment of Purchase Price.
4.1 Deposit. Upon the Opening of Escrow (as
defined in paragraph 6 below), Buyer shall deposit with
Escrow Holder (as defined in Paragraph 6 below) a deposit in
the aggregate sum of One Hundred Thousand and No/100 Dollars
($100,000.00) ("Deposit"). Buyer shall deliver the Deposit
by its check made payable to Escrow Holder. Escrow Holder
shall invest the Deposit in a non-term, interest-bearing
account with a FDIC-insured financial institution located in
the County and designated by Coast, with all interest
thereon to be paid to the account for Buyer's benefit. On
the day after the Contingency Date (as defined in Paragraph
7.1 of this Agreement), and provided that Buyer has not
terminated this Agreement as a result of its disapproval
prior to the Contingency Date of any of the items set forth
in paragraph 7 below, Escrow Holder shall pay to Coast the
Deposit and the interest thereon ("Deposit Interest")
without further instruction from Buyer.
4.2 Cash Payment. On or before one (1)
business day prior to the Close of Escrow (as defined in
Paragraph 6 below), Buyer shall deposit into Escrow (as
defined in Paragraph 6 below), in cash or cash equivalent,
(which for purposes of this Agreement shall mean a wire
transfer of immediately available funds or a bank cashier's
check drawn on a reputable bank or savings association
licensed to do business in California and acceptable to
Coast) the amount of Fourteen Million Three Hundred Thousand
and No/100 Dollars ($14,300,000.00), and (ii) the amount
representing the payment described in paragraph 11.4(a) and
11.4(b) hereof, subject to Buyer's share of prorations and
adjustments, closing costs and any other obligations of
Buyer expressly set forth herein, and minus those funds
actually paid by Buyer to the Escrow Holder together with
interest thereon (collectively, the "Cash Payment").
5. Condition of Title. At the Close of
Escrow, with respect to the Loan and the Second Loan, Coast
shall convey to Buyer by Assignment of Deed of Trust (the
"Assignment of Deed of Trust"), all of its right, title and
interest in and to the Deed of Trust and the Second Deed of
Trust covering the Property, and Coast shall also cause
Washington to convey to Buyer by an Assignment of Deed of
Trust all of Washington's right, title and interest in the
Deed of Trust covering the Property, subject only to the
following matters (collectively, "Approved Title
Conditions"): (a) real property general and special taxes
and assessments not delinquent and the lien of supplemental
assessments; (b) the exceptions to the title set forth on
Exhibit "J" ("Title Exceptions") attached hereto which are
approved by Buyer pursuant to Paragraph 7.1.1; and (c) such
other matters as may appear of record and be approved or
waived by Buyer in writing. The present title company
insuring,the liens of the Deed of Trust and the Second Deed
of Trust in favor of Coast is Commonwealth Land Title
Insurance Company ("Commonwealth"). With respect to the
Deed of Trust, Commonwealth issued that certain ALTA 1970
lender's policy dated December 30, 1994, file number
874986809 ("First Title Policy"). With respect to the
Second Deed of Trust, Commonwealth issued that certain 1970
ALTA lender's policy dated December 30, 1994, file number
874986809 ("Second Title Policy").
6. Escrow.
6.1 Buyer and Coast shall cause an escrow
("Escrow") to be opened upon the full execution of this
Agreement, for the consummation of the transaction, by
delivering into Escrow a fully executed copy of this
Agreement no later than one (1) business day following its
full execution by all parties ("Opening of Escrow"). Escrow
shall be with First American Title Company of Los Angeles
located at 520 North Central Avenue, Glendale, California
("Escrow Holder"). The Close of Escrow shall be no later
than September 3, 1997 ("Close of Escrow"), and there shall
be no extension thereof unless specifically set forth in a
writing executed by both Coast and Buyer. Should the
Closing Date fall on a Saturday, Sunday or national, state
or local holiday, or a holiday recognized by Coast, the
Closing Date shall occur on the next business day that is
not a national, state or local holiday, or a holiday
recognized by Coast. This Agreement shall be null and void
and of no further effect unless it is executed and delivered
by Buyer to the Escrow Holder no later than the close of
business on September 2, 1997.
6.2 Notwithstanding anything to the contrary
in this Agreement, the general provisions of Escrow Holder,
if any, which are later signed by the parties, are
incorporated by reference to the extent they are not
inconsistent with the provisions of this Agreement. If
there is any inconsistency between the provisions of those
general provisions and any of the provisions of this
Agreement, the provisions of this Agreement shall control.
If any requirements under this Agreement relating to the
duties or obligations of the Escrow Holder are unacceptable
to the Escrow Holder, or if the Escrow Holder requires
additional instructions, the parties agree to make any
deletions, substitutions and additions as Buyer and Coast
shall mutually approve in writing, and which do not
materially alter the terms of the Agreement. Any
supplemental instructions shall be signed only as an
accommodation to Escrow Holder and shall not be deemed to
modify or amend the rights of Buyer and Coast, as between
Buyer and Coast, unless those supplemental instructions
expressly so provide and are agreed to in writing by both
Buyer and Coast. To the extent permissible by law, Coast
shall cooperate with Buyer in requesting the Escrow Holder
to prepare the conveyance documents (including, without
limitation, the Assignments of Deed of Trust) in a manner
that keeps the documentary transfer stamps and taxes and
Purchase Price from becoming a part of, or determinable
from, the public record.
6.3 If necessary, Escrow Holder is
authorized to insert in any undated closing documents the
date of the Assignments of Deed of Trust and other documents
which require recordation.
7. Conditions.
7.1 Conditions Precedent to the Contingency
Date. Buyer's obligations to purchase the Note, the Second
Note, and the other Loan Documents are subject to the
satisfaction, not later than 5:00 p.m. on August 28, 1997
(the "Contingency Date") of each of the following
conditions. These conditions shall be either approved or
disapproved in writing by Buyer, in the exercise of Buyer's
sole and absolute discretion, on or before the Contingency
Date set forth herein or shall be deemed approved
conclusively if no written disapproval has been submitted by
Buyer to Escrow Holder and Coast as of the Contingency Date.
7.1.1 Title. On or before the
Contingency Date, Title Company shall deliver to Buyer: (i)
a standard preliminary title report relating to the Property
("Title Report"), and (ii) copies of all documents relating
to the exceptions shown. The items set forth in
subparagraph (i) and (ii) above shall be referred to
collectively as the "Title Documents". Buyer shall have
until the Contingency Date to deliver to Coast and Escrow
Holder written notice of Buyer's approval or disapproval of
the matters of title shown in the Title Documents ("Buyer's
Title Notice").
7.1.1.1 If Buyer timely
disapproves of any items shown in the Title Documents, Coast
shall then have the right, but not the obligation, in
Coast's sole and absolute discretion, to attempt to cure or
remove the objections. Coast shall exercise its right to
attempt to cure or remove the objections by depositing
notice into Escrow with a copy to Buyer within five (5)
business days after Coast's receipt of Buyer's Title Notice,
which Notice shall set forth Coast's proposed cure for such
objection. Failure or refusal of Coast to deposit such
notice electing to attempt to cure or remove Buyer's
objections shall be deemed an election by Coast not to
attempt to so cure or remove the objections.
7.1.1.2 If Coast elects to cure
or remove Buyer's objections and such proposed cure is
acceptable to Buyer, in its sole and absolute discretion,
then Coast shall have until the Close of Escrow to cure or
remove said objections. Coast shall be deemed to have cured
Buyer's objections if Title Company commits to issue the
Title Policy.
7.1.2 Operating Documents. On or
before the Contingency Date, Buyer has received, secured,
reviewed and approved any and all documents and materials
respecting the Property and its operation, which exist and
are in the possession or control of Coast, and which are not
privileged or are not an internal memorandum or report of
Coast, relating to: (i) tenant leases, if any, for current
tenants in effect, (ii) ground leases, if any, (iii) ground
subleases, if any, and (iv) copies of all applicable
warranties affecting the Property. The documents referred
to in subparagraphs (i) through (iv) hereof shall be
referred to collectively as the "Operating Documents". The
Operating Documents are being furnished without Coast's
representations or warranty as to their accuracy or their
completeness.
7.1.3 Inspection of Property.
7.1.3.1 On or before the
Contingency Date, Buyer has completed and approved or
disapproved the results of any are' all inspections,
investigations, tests and studies, with respect to the
Property as Buyer may at Buyer's reasonable discretion elect
to make or obtain (including, without limitation,
investigations with regard to the environmental condition,
zoning, building codes and other governmental regulations,
architectural and/or structural inspections, mechanical,
engineering tests, economic feasibility studies and soils,
seismic geologic and environmental reports). The cost of
any such inspections, tests, reviews, reports and studies
shall be borne exclusively by Buyer. Notwithstanding
anything stated above, Buyer shall not engage in any
destructive testing or cause any physical damage to the
Property without Coast's and Borrower's prior written
consent. Buyer shall indemnify and hold Coast, Washington,
Borrower, and the Property free of and harmless from any and
all claims (including mechanics' liens), liabilities,
losses, damages, costs and expenses, including, without
limitation, attorneys' fees and costs caused by or arising
out of the activities of Buyer, its agents, representatives,
employees, and independent contractors in connection with or
relating to the Property, and its surroundings, whether
pursuant to the terms hereof or otherwise. Notwithstanding
any contrary provisions hereof, this indemnification shall
survive the termination of this Agreement, the cancellation
of Escrow or the Close of Escrow.
7.1.3.2 In the event that, in the
exercise of its sole and absolute discretion, Buyer timely
disapproves of the condition of the Property as provided
herein, Buyer shall deposit with Escrow Holder prior to the
Contingency Date, with a copy to Coast, a writing
identifying the items disapproved and specifying the reasons
for the disapproval, along with a copy of any reports test
results or other documents verifying the disapproved
condition.
7.1.3.3 If Buyer disapproves any
such items, Coast shall then have the right, but not the
obligation, in Coast's sole and absolute discretion, to
attempt to cure or remove the objections to the satisfaction
of Buyer. Coast shall exercise its right to attempt to cure
or remove the objections by depositing notice in Escrow with
a copy to Buyer within five (5) business days after Coast's
receipt of Buyer's notice, which notice shall set forth
Coast's proposed cure for such objection, in its sole and
absolute discretion. Failure or refusal of Coast to deposit
such notice electing to attempt to cure or remove Buyer's
objections shall be deemed an election by Coast not to
attempt to so cure or remove the objections. If Coast
elects to cure or remove Buyer's objections and such
proposed cure is acceptable to Buyer, in its sole and
absolute discretion, then Coast shall have until the Close
of Escrow to cure or remove such objections.
7.1.3.4 Buyer acknowledges,
understands, represents and agrees that: (1) Buyer is
purchasing the Note, the Second Note, and the other Loan
Documents in an "AS-IS CONDITION" "WITH ALL FAULTS"; (2)
Buyer shall conduct or cause to be conducted, in its sole
and absolute discretion, an independent investigation,
inspection, survey and analysis, as it deems necessary, to
determine the threat or presence of any hazardous substance
at, on, in, under, about, above, from or adjacent to the
Property and its surroundings, and (3) Coast has not
provided Buyer with any environmental reports, nor has Coast
made any written representations of warranties concerning
the environmental condition of the Property.
7.1.4 Loan Documents and the Loan
Service Documents. On or before the Opening of Escrow,
Coast has or shall deliver to Buyer true, correct and
complete copies of the Loan Documents and the Loan Service
Documents (as defined herein). Buyer shall have until the
Contingency Date to approve or disapprove the Loan Documents
and the Loan Service Documents, in the exercise of Buyer's
sole and absolute discretion. With respect to the Loan and
the Second Loan, the "Loan Service Documents" shall mean the
fire and casualty insurance policies, the loan histories,
the statements of account and the tax files.
7.2 Failure of Conditions Precedent to the
Contingency Date. Except as otherwise provided, Buyer may
terminate this Agreement and cancel Escrow by reason of
Buyer's written disapproval prior to the Contingency Date of
any of the items set forth in Paragraphs 7.1.1, 7.1.2,
7.1.3, and 7.1.4, which, with respect to the matters
identified in Paragraphs 7.1.1, 7.1.2 and 7.1.3, Coast
elects not to cure or remove as provided, in which case the
Deposit and Deposit Interest shall be returned to Buyer and
the cancellation charges required to be paid to Escrow
Holder shall be divided equally between Buyer and Coast, and
all other charges shall be borne by the party that incurred
the charge. Notwithstanding any provision to the contrary
stated herein, the Deposit and the Deposit Interest shall
not be returned to Buyer until Buyer delivers to Coast all
instruments and documents previously delivered to Buyer by
Coast in connection with the transactions contemplated by
this Agreement.
7.3 Conditions Precedent to Coast's
Obligation to Close. Coast's obligations under this
Agreement are subject to the satisfaction, no later than the
Closing Date, of the following conditions precedent: (i)
Buyer shall have delivered to Escrow Holder, for
disbursement as herein set forth, the Deposit and the Cash
Payment; (ii) Buyer shall have delivered to Escrow Holder
the items and the documents described in Paragraph 8.2
below, duly executed and acknowledged as provided therein;
(iii) Buyer's representations, warranties and covenants set
forth in Paragraph 12 shall be true and correct in all
material respects as of the Closing Date; (iv) as of the
Closing Date, First American Title Company of Los Angeles
("Title Company") shall have issued or shall have committed
to issue to Buyer the 1970, ALTA Loan Policy and all
endorsements thereto (collectively, the "Title Policy"),
subject to the Approved Title Conditions; and (v)
Washington's execution and delivery to Coast or Escrow
Holder, as the case may be, all documents required to close
this transaction, including, but not limited to, the
documents described in paragraph 8.1.3 hereof.
7.4 Mutual Conditions Precedent to Close of
Escrow. The Close of Escrow and the obligations of both
Buyer and Coast under this Agreement are subject to the
satisfaction, no later than the Closing Date, of the
following conditions precedent: (i) Buyer shall have fully
performed, satisfied and completed all of the conditions
precedent required by Coast prior to the Close of Escrow,
and (ii) Washington shall have delivered to Buyer the
Estoppel Letter, in form and substance satisfactory to
Buyer.
7.5 Failure of Conditions Precedent to Close
of Escrow.
7.5.1 Title and Condition of
Property. In the event that the Title Policy is not in
conformity with the matters approved by Buyer as provided in
Paragraphs 5 and 7.1.1 hereof as of the Closing Date, or
Buyer has disapproved of the condition of the Property in
accordance with Paragraph 7.1.3, and Coast has elected not
to attempt to remedy or cure the defects or objections or is
unable to do so to the satisfaction of Buyer, then Buyer
either shall terminate this Agreement and cancel Escrow or
waive the objections and purchase the Note, the Second Note,
and other Loan Documents without such objections being so
remedied and with no reduction in the Purchase Price, and
such election shall be Buyer's sole remedy.
7.5.2 Other Conditions Precedent.
In the event any of the conditions set forth in Paragraph
7.3 or 7.4 are not timely satisfied or waived: (i) this
Agreement shall terminate, the rights, obligations and
liabilities of Buyer and Coast shall terminate, and Escrow
shall be canceled, except as otherwise provided herein; (ii)
Escrow Holder shall promptly return to Coast and Buyer all
funds (except as provided for in Paragraph 7.5.2 (ii)
hereinbelow) and documents respectively deposited by them
into Escrow which are held by Escrow Holder on the date of
said termination and cancellation less the amount of any
cancellation charges required to be paid by such party under
Paragraph 7.6; and (ii) if any condition set forth in
Paragraph 7.3 (i) through (iv) was not timely satisfied or
waived, Coast shall retain or shall be entitled to the
receipt from Escrow Holder of the Deposit and the Deposit
Interest. However, if the unsatisfied, unwaived conditions
relate exclusively to Paragraph 7.4, Coast shall return to
Buyer the funds actually delivered by the Buyer to Escrow
Holder, with interest thereon.
7.6 Cancellation Fees and Expenses. Except
as otherwise set forth herein, in the event this Agreement
terminates and Escrow is canceled because of: (i) the non-
satisfaction of any condition set forth in Paragraph 7.3,
the cancellation charges required to be paid to Escrow
Holder shall be borne by Buyer, and all other charges shall
be borne by the party that incurred the charge; (ii) the non-
satisfaction of any condition set forth in Paragraph 7.4,
the cancellation charges required to be paid by and to
Escrow Holder shall be equally divided between Buyer and
Coast, and all other charges shall be borne by the party
that incurred the charge; (iii) any default by Buyer or
Coast, the cancellation charges required to be paid by and
to Escrow Holder shall be borne by the defaulting party; and
(iv) the mutual agreement of Buyer and Coast, Escrow
Holder's fees and all other costs shall be divided equally
between Buyer and Coast. Notwithstanding any provision to
the contrary herein, (a) if this Agreement terminates and
Escrow is cancelled solely as a result of the Second Loan,
Coast and not Washington shall be responsible for paying any
cancellation charges, fees or costs set forth in
subparagraphs (ii), (iii) and (iv) of this paragraph, and
(b) if this Agreement terminates and Escrow is cancelled
solely as a result of Washington's failure to take the
action necessary to close this transaction, Washington and
not Coast shall be responsible for paying any cancellation
charges, fees and costs set forth in subparagraphs (ii),
(iii) and (iv) of this paragraph.
8. Deliveries to Escrow. Buyer and Coast
hereby agree to deliver, or cause to be delivered, to Escrow
Holder on or prior to the Close of Escrow the following
instruments and documents, the delivery of which shall be a
condition precedent to the Close of Escrow:
8.1 Deliveries by Coast. Coast shall
deliver, or cause to be delivered, to Escrow prior to the
Closing Date, original, duly executed and acknowledged as
required, the Loan Documents and the documents required to
close this transaction, which are in the possession or
control of Coast, and which are not privileged or are not an
internal memorandum or report of Coast, including, but not
limited to each of the following:
8.1.1 With respect to the Loan (Loan
No. 2728236):
(a) The Amended and Restated
Promissory Note dated as of December 14, 1994;
(b) The Construction and Permanent
Deed of Trust, Financing Statement Security Agreement and
Fixture Filing (with Assignment of Rents and Leases) and
Grant of Easement dated as of December 23, 1986 and recorded
on December 29, 1986 as Instrument Number 86-1818749 in the
Official Records of the County;
(c) The Amendment to Deed of
Trust, Security Agreement, and Assignment of Rents and
Leases dated as of December 14, 1994 and recorded on
December 30, 1994 as Instrument Number 94-2289112 in the
Official Records of the County; and
(d) The Security Agreement dated
as of December 23, 1986;
(e) The UCC-1 Financing Statement
dated as of December 23, 1986 and filed on January 15, 1987
as File Number 87-013228 in the Office of the California
Secretary of State, and all UCC-2s filed in connection
therewith;
(f) The Assignment of Lessor's
Interest in Leases dated as of December 23, 1986 and
recorded on December 29, 1986 as Instrument Number 86-
1818750 in the Official Records of the County; and
(g) The First Title Policy issued
by Commonwealth insuring the Loan as a first lien on the
Property dated as of December 30, 1994, File Number 8749868-
09, any endorsements thereto.
8.1.2 With respect to Second Loan (Loan
No. 2728285):
(a) The Amended and Restated
Promissory Note dated as of December 14, 1994;
(b) The Second Deed of Trust,
Financing Statement, Security Agreement and Fixture Filing
(with Assignment of Rents and Leases) and Grant of Easement
dated as of December 23, 1986 and recorded on December 29,
1986 as Instrument Number 86-1818751 in the Official Records
of the County;
(c) The First Amendment (I) to
Second Deed of Trust, Financing Statement, Security
Agreement and Fixture Filing (with Assignment of Rents and
Leases) and Grant of Easement, and (II) To Assignment of
Lessor's Interest in Leases dated as of December 28, 1988
and recorded on December 30, 1988 as Instrument Number 88-
2088378 in the Official Records of the County;
(d) The Amendment to Deed of Trust
Security Agreement and Assignment of Rents and Leases dated
as of December 14, 1994 and recorded on December 30, 1994 as
Instrument Number 94-2289113 in the Official Records of the
County;
(e) The Security Agreement dated
as of December 23, 1986;
(f) The UCC-1 Financing Statement
dated as of December 23, 1986 and filed on January 15, 1987,
as File Number 87-013226 in the Office of the California
Secretary of State, and all UCC-2s filed in connection
therewith;
(g) The Assignment of Lessor's
Interest in Leases dated as of December 23, 1986 and
recorded on December 29, 1986 as Instrument Number 86-
1818752 in the Official Records of the County; and
(h) The Second Title Policy issued
by Commonwealth insuring the Second Loan as a second lien on
the Property dated as of December 30, 1994, file number
8749868-09, and any endorsements thereto.
8.1.3 With respect to each of the Loan
(Loan No. 2728236) and the Second Loan (Loan No. 2728285):
(a) An Assignment and Endorsement
of Promissory Note in favor of Buyer, in the form attached
hereto as Exhibit "B";
(b) The Assignment of Deed of
Trust, in the form attached hereto as Exhibit "C";
(c) The Assignment of Assignment
of Lessor's Interest in Leases and Proceeds (the "Assignment
of Assignment of Leases") in the form attached hereto as
Exhibit "D";
(d) The Assignment of Loan
Documents in the form attached hereto as Exhibit "E";
(e) The UCC-2 Financing Statement
Change/Fixture Filing (the "UCC-2 Fixture Filing") in the
form attached hereto as Exhibit "F";
(f) The UCC-2 Financing Statement
Change/State Filing (the "UCC-2 State Filing") in the form
attached hereto as Exhibit "G";
(g) The Certification of Non-
Foreign Status by Entity Transferor ("FIRPTA") in the form
attached hereto as Exhibit "I";
(h) The Title Exceptions in the
form attached hereto as Exhibit "J"; and
(i) The Substitution of Trustee
(the "Substitution of Trustee") form in the form attached
hereto as Exhibit "K".
8.2 Deliveries by Buyer. Buyer shall
deliver, each of the following:
(a) The Deposit;
(b) The Cash Payment;
(c) The Closing Costs;
(d) The General Release (the
"Release"), in the form attached hereto as Exhibit "H"; and
(e) With respect to the Loan and the
Second Loan, a certificate to Coast, in the form attached
hereto as Exhibit "L", acknowledging that:
(1) Buyer has been provided with
access to the Loan Documents described herein which Coast
represents to be all of the Loan Documents which exist and
are in its possession or control of Coast and which are not
privileged or are not an internal memorandum or report of
Coast and other information related to the Loan, and has had
full and complete access to, and has either fully inspected
and studied, or has waived its right to inspect and study
the Property;
(2) Buyer has fully reviewed the
Loan Documents described herein, information provided by
Coast related to the Loan, and information provided by Coast
pertaining to the Loan, the Loan Documents and the Property
as it and any of its advisors have deemed appropriate.
(3) Except as set forth in this
Agreement, Coast has made no warranties, express, implied or
statutory, or representations of any kind to Buyer
including, but not limited to, any representation or
warranty related to the Loan, the Loan Documents, other
information related to the Loan, the enforceability of the
Loan Documents, the ownership, existence, value,
sufficiency, condition, environmental status or status of
title of the Property or any other collateral securing
payment of the Loan, the creditworthiness of Borrower, or
any other party that may be obligated on the Loan or the
perfection or appropriateness of any filing with respect to
any lien or security interest related to the Loan in
connection with the sale and assignment of the Loan and the
Loan Documents.
(4) Buyer reaffirms, as of the
date of the Closing, all of Buyers representations and
warranties contained in Paragraph 12 of this Agreement.
9. Condition of Title and Title Policy.
With respect to each of the Loan and the Second Loan, on or
before the Close of Escrow, Buyer shall cause Title Company
to issue in favor of Buyer the Title Policy showing that by
a valid assignment the beneficial interest under the Deed of
Trust and Second Deed of Trust has been transferred to
Buyer, subject only to the Approved Title Conditions. Coast
shall pay for the entire cost of the Title Policy.
10. Costs and Expenses. Except as otherwise
provided in the supplemental escrow instructions, with
respect to the Loan and the Second Loan, Coast shall pay for
any and all documentary transfer taxes, or equivalent or
like taxes, and all recording and filing fees incurred in
the closing of this transaction. Coast and Buyer shall
additionally divide equally all escrow fees incurred in
connection with the closing of this transaction. Each party
shall be responsible for its own attorneys' fees incurred in
connection with the review, negotiation and preparation of
this Agreement, the Exhibits attached to this Agreement and
any other agreement, instrument or document prepared by
Buyer's or Coast's legal counsel in connection with the
closing of this transaction.
11. Closing. On or before the Close of
Escrow, and when all conditions precedent have been
satisfied, Escrow Holder shall close the Escrow by
proceeding as follows:
11.1 With respect to the Loan and the Second
Loan, record or cause the recordation of the Assignment of
Deed of Trust, the Assignment of Assignment of Leases, and
the UCC-2 Fixture Filing, and any other documents which
Coast and Buyer may require, to be recorded in the County,
and obtain conformed copies thereof for distribution to
Coast and Buyer, and deliver or cause to be delivered the
UCC-2 State Filing to the Office of the Secretary of State
and obtain conformed copies thereof for distribution to
Coast and Buyer.
11.2 Direct Title Company to issue the Title
Policy in favor of Buyer, subject only to the Approved Title
Conditions.
11.3 Disburse all funds deposited with Escrow
Holder by Buyer in payment of the Purchase Price and any
other obligations hereunder as follows: (a) deduct from the
account of Coast all items chargeable to Coast under this
Agreement, including amounts due under Paragraphs 9 and 10;
(b) credit to the account of Coast all items due to Coast
under this Agreement; (c) disburse to Coast by wire transfer
promptly upon the Close of Escrow the remaining amount due
to Coast; and (d) any funds remaining after deducting
Buyer's share of the closing costs and expenses, and all
other amounts chargeable to Buyer under this Agreement,
shall be returned to Buyer by Escrow Holder's check.
11.4 (a) With respect to the Loan, regularly
scheduled monthly principal and interest payments due under
the Note shall be prorated for the period beginning on the
first day of the calendar month in which the closing occurs
through the Close of Escrow, assuming a three hundred and
sixty (360) day year, and, subject to the provisions of
Paragraph 3 hereof, shall be paid in cash to Coast, on or
before one (1) business day prior to the Close of Escrow, at
the interest rate provided for in the Note; and (b) with
respect to the Second Loan, regularly scheduled monthly
principal and interest payments due under the Second Note
shall be prorated for the period beginning on the first day
of the calendar month in which the closing occurs through
the Close of Escrow, assuming a three hundred and sixty
(360) day year, and, subject to the provisions of Paragraph
3 hereof, shall be paid in cash to Coast, on or before one
(1) business day prior to the Close of Escrow, at the
interest rate provided for in the Note. Notwithstanding
anything to the contrary contained herein, upon the Close of
Escrow Buyer shall be entitled to retain (i) all payments
received by Buyer for the Loan or the Second Loan after the
Closing Date of any kind or character, including, without
limitation, all principal and interest (other than the
regularly scheduled monthly principal and interest payments
described in subparagraphs (a) and (b) above, and proceeds
from compromises and settlements; and (ii) a credit against
the amount of the Purchase Price for all amounts held by
Coast in any escrow reserve account required to be
maintained in accordance with the terms of the Loan
Documents. The regularly scheduled monthly payments
described in subparagraphs (a) and (b) of this paragraph
11.4 shall be prorated as of 11:59 p.m. on the day
immediately preceding the Close of Escrow.
11.5 With respect to the Loan and the Second
Loan, disburse to Buyer originals of this Agreement, the
Loan Documents, the Title Exceptions, the Assignment of Loan
Documents, the FIRPTA, the Assignment and Endorsement of
Promissory Note, disburse to Buyer copies of the Release and
the Certificate, and disburse to Buyer conformed copies of
the Assignment of Deed of Trust, the Assignment of
Assignment of Leases, the UCC-2 Fixture Filing, and the UCC-
2 State Filing, the Substitution of Trustee, and any other
documents (or copies thereof) deposited into Escrow pursuant
to this Agreement.
11.6 With respect to the Loan and the Second
Loan, disburse to Coast the originals of this Agreement, the
Release, and the Certificate, disburse to Coast copies of
the Assignment of Loan Documents, the Title Exceptions, the
FIRPTA, Assignment and Endorsement of Promissory Note, and
disburse to Coast conformed copies of the Assignment of Deed
of Trust, Assignment of Assignment of Leases, the
Substitution of Trustee, UCC-2 State Filing, and UCC-2
Fixture Filing, and any other documents (or copies thereof)
deposited into Escrow pursuant to this Agreement.
12. Buyer's Representations and Warranties.
With respect to the Loan and the Second Loan, Buyer and each
person executing this agreement on its behalf hereby
represent and warrant to Coast each of the following:
12.1 Buyer has had access to and
has inspected the Property to the extent that Buyer and its
advisors have deemed necessary or desirable.
12.2 Buyer has been advised to
undertake, has been given the opportunity to undertake, has
undertaken and is relying solely on, its own investigation
of the Loan, the Second Loan, the Loan Documents, the
Operating Documents, the Loan Service Documents, and the
Property and its own investigation and determination of the
ownership, existence, value, condition and environmental
status of the Property and the creditworthiness of Borrower
and any other parties that may be obligated under the Loan.
12.3 Buyer is a sophisticated
investor and is sufficiently knowledgeable and experienced
in financial and business matters, including, without
limitation, the purchase and ownership of promissory notes,
commercial real estate, mortgages, deeds of trust and
chattel paper, to be able to evaluate the risks and merits
of this transaction.
12.4 Neither the execution and
delivery by Buyer of this Agreement, nor the performance by
Buyer of its obligations hereunder, will (a) conflict with,
or result in a breach of, any of the material terms,
conditions, or provisions of any law, rule or regulation
applicable to Buyer or any order, injunction, or decree of
any court or governmental instrumentality or of any bond,
debenture, note, mortgage, deed of trust, indenture,
agreement or other instrument to which Buyer is now a party
or by which it may be bound, or constitute a default
thereunder after the expiration of any applicable notice and
cure period, or (b) result in the creation or imposition of
any claim, lien, security interest, charge, or other
encumbrance of any nature whatsoever upon any property of
Buyer pursuant to the terms of any such agreement or
instrument.
12.5 Neither the execution and
delivery by Buyer of this Agreement, nor the performance by
Buyer of its obligations hereunder requires (a) the consent,
authorization, or approval of, the giving of notice to, or
the registration with, or the taking of any other action in
respect of, any federal, state, or foreign governmental
authority or agency, pursuant to any law, rule, or
regulation applicable to Buyer or pursuant to any order,
injunction or decree of any such authority or agency, or (b)
the consent, authorization or approval of, or the giving of
notice to any partner, shareholder, officer, director,
affiliate, or creditor of Buyer.
12.6 Buyer has the legal power,
right, and authority to enter into this Agreement and the
instruments referenced herein, and to consummate the
transaction contemplated hereby.
12.7 All requisite action
(corporate, trust, partnership, or otherwise) has been taken
by Buyer in connection with the entering into this Agreement
and the instruments referenced herein and the consummation
of the transaction contemplated hereby. No further consent
of any shareholder, creditor, investor, judicial or
administrative body, governmental authority, or other party
is required.
12.8 The individuals executing this
Agreement and the instruments referenced herein on behalf of
Buyer have the legal power, right, and actual authority to
bind Buyer to the terms and conditions hereof and thereof.
12.9 This Agreement and all
documents required hereby to be executed by Buyer are and
shall be valid, legally binding obligations of, and
enforceable against, Buyer in accordance with their terms,
subject to bankruptcy, insolvency, and other limitations on
creditors' rights.
13. Coast's Representations and Warranties.
Coast hereby represents and warrants to Buyer each of the
following:
13.1 Coast is the holder of an undivided
78.63 % beneficial interest in the Loan and the other First
Loan Documents, and Coast has the right to assign its right,
title, and interest in and to the Loan and the other First
Loan Documents. Washington is the holder of an undivided
21.37% beneficial interest in the Loan and the other First
Loan Documents.
13.2 Coast is the sole owner and holder of
the Second Note, and the other Second Loan Documents and has
the right to assign its right, title, and interest in and to
the Second Note and the other Second Loan Documents.
13.3 Coast is, and as of the Closing Date,
will be a federally chartered capital stock savings bank
duly organized, validly existing and in good standing under
the laws of the United States, and is qualified to conduct
business in the State of California. Coast has taken all
necessary action to authorize the execution, delivery and
performance of this Agreement by it, and has the power and
authority to execute, deliver and perform this Agreement and
all the transactions contemplated hereby;
13.4 The Agreement and all of the obligations
of the Coast hereunder are the legal, valid and binding
obligations of the Coast, enforceable in accordance with the
terms of this Agreement;
13.5 To the best of Coast's knowledge, there
is no action, suit or proceeding pending against the Coast
in any court or by or before any other governmental agency
or instrumentality which would materially and adversely
affect the ability of the Coast to carry out the
transactions contemplated by this Agreement.
13.6 As to each of the Loan or the Second
Loan sold hereunder:
13.6.1 Except as otherwise set forth in
the Loan Documents, Coast is transferring such loan and the
Loan Documents free and clear of any and all liens, pledges,
charges or security interests of any nature encumbering such
loan and the related Loan Documents;
13.6.2 The proceeds of the Loan or the
Second Loan have been fully disbursed and, except as
otherwise set forth in the Loan Documents, there is no
requirement for future advances, payments, draws, or funding
thereunder, nor is Coast obligated to reimburse the Borrower
thereunder for or complete any off-site or on-site
improvements with respect to the Property;
13.6.3 The assignment of the Loan and
the Second Loan, and the Assignments of the Loan Documents,
constitutes the legal, valid and binding assignment of Coast
to Buyer;
13.6.4 To the best of Coast's
knowledge, there is no proceeding known to the Coast to be
pending for the total or partial condemnation of the
Property.
13.6.5 All Loan Documents, Operating
Documents, Title Documents, and Loan Service Documents
pertaining to the Loan and the Second Loan, which exist and
are in Coast's possession or control, which are not
privileged or are not an internal memorandum or report of
Coast have been made available to Buyer prior to execution
of this Agreement. To the best of Coast's knowledge, copies
of any original documents or papers made available to Buyer
are true and correct copies of the documents and papers they
purport to be;
13.6.6 Except as otherwise provided in
the Loan Documents, neither the Loan nor the Second Loan is
cross-collateralized, nor is the Property subject to any
cross-collateralization, with any other Coast loans.
13.6.7 The outstanding principal
balance of the Loan as of July 31, 1997 was $7,823,822.45;
the accrued and unpaid interest as of July 31, 1997 was $0
and the amount of any reserve escrow account as of July 31,
1997 was $0. The outstanding principal balance of the
Second Loan as of July 31, 1997 was $9,722,008.03; the
accrued and unpaid interest as of July 31, 1997 was $0 and
the amount of any reserve escrow account as of July 31, 1997
is $0.
13.6.8 During the period commencing on
the date on which this Agreement is executed by both Coast
and Buyer and ending on the Closing Date, Coast shall not,
except as required by law or the terms of the Note, the
Second Note, the Loan Documents, or any other applicable
document, release any of the collateral for the Loan or the
Second Loan or any party from any liability on or with
respect to the Loan or the Second Loan, compromise or settle
any claims of any kind or character with respect to the Loan
or the Second Loan, enter into any modification, amendment,
supplement or waiver with respect to the Loan or the Second
Loan, the Note or the Second Note, the Loan Documents,
without Buyer's written consent, nor will Coast provide any
additional advances under the Loan without Buyer's written
consent, except as required by law or by the terms of the
Loan Documents.
13.6.9 Coast acknowledges that it
understands the meaning and legal consequences of the
representations, warranties, covenants and acknowledgements
set forth in this Paragraph 13.
13.6.10 For the purposes of this
Agreement, the phrase "to the best of Coast's knowledge"
shall mean the actual knowledge of Joe Losorelli, Vice
President of Coast, without the duty of inquiry or
investigation.
14. NO REPRESENTATIONS BY COAST OR
WASHINGTON. BUYER IS PURCHASING COAST'S AND WASHINGTON'S
INTEREST IN THE LOAN DOCUMENTS "AS-IS," WITHOUT RECOURSE TO
COAST OR WASHINGTON, AND WITHOUT ANY REPRESENTATIONS OR
WARRANTIES WHATSOEVER BY COAST OR WASHINGTON EXCEPT THOSE
EXPRESSLY STATED IN THIS AGREEMENT. IN PARTICULAR, BUT
WITHOUT LIMITATION, EXCEPT AS OTHERWISE EXPRESSLY STATED IN
THIS AGREEMENT, COAST AND WASHINGTON MAKE NO REPRESENTATIONS
OR WARRANTIES REGARDING THE VALUE OF THE PROPERTY, THE
ABILITY OF BORROWER TO REPAY THE LOAN OR THE ENFORCEABILITY
OF THE LOAN DOCUMENTS. BUYER REPRESENTS, WARRANTS, AND
ACKNOWLEDGES THAT BUYER HAS MADE AN INDEPENDENT INSPECTION
AND INVESTIGATION OF THE PROPERTY, THE CONDITION OF TITLE,
THE LOAN, THE SECOND LOAN, AND THE LOAN DOCUMENTS, AND
EXCEPT AS OTHERWISE EXPRESSLY STATED IN THIS AGREEMENT THAT
BUYER IS PURCHASING THE LOAN DOCUMENTS AT BUYER'S SOLE RISK
BASED UPON BUYER'S INDEPENDENT INSPECTION AND INVESTIGATION
AND WITHOUT RELIANCE ON ANY REPRESENTATION, WARRANTY, OR
STATEMENT OF COAST, WASHINGTON OR COAST FED SERVICES, THE
TRUSTEE UNDER THE DEED OF TRUST, OR THE AGENTS OR EMPLOYEES
OF EITHER OF THEM.
15. "As Is" Condition of Property. Buyer
has made, or will on or before the, Contingency Date, have
made an on-site inspection of the Property, including all
improvements thereon, and/or has otherwise investigated the
Property, its current owner, together with zoning,
environmental condition, title matters and the like to
Buyer's satisfaction, or Buyer has had an opportunity to
perform the above functions; and except as specifically
provided to the contrary in this Agreement, Coast and
Washington are fully and completely released from all
responsibility and liability regarding the condition,
fitness, suitability, evaluation and/or utility of the
Property. Buyer expressly acknowledges that Buyer is buying
the Loan and the Second Loan secured by the Property and
such security is in an "AS IS" condition with all faults and
Buyer has not relied on any warranties, promises,
understandings or representations, express or implied, of
Coast or Washington or any agent of Coast or Washington
relating to the Property and all aspects thereof, including,
without limitation, the presence or absence of any hazardous
or toxic substances, the suitability of the use of the
Property for any purpose, access to any public or private
road or right of way, or the compliance of the Property with
any applicable laws, regulations, or ordinances, including,
without limitation, those related to hazardous or toxic
waste or substances, building, zoning, fire hazard, drainage
and licensing requirements. Buyer acknowledges that any and
all leasing information, feasibility or marketing reports,
or other information of any type that Buyer has received or
may receive from Coast or Washington or its agents is
furnished on the express condition that Buyer shall or would
make an independent verification of the accuracy of any or
all such information, all such information being furnished
without any warranty whatsoever (express or implied), except
as otherwise specifically provided in this Agreement. Buyer
agrees that it will not attempt to assert any liability
against Coast or Washington and/or its agents for furnishing
such information, and Buyer agrees to indemnify and hold
Coast and Washington and/or its agents free of and harmless
from any and all such claims of liability. This indemnity
shall survive the Close of Escrow or the termination of this
Agreement.
16. Indemnification. Buyer hereby agrees to
indemnity, protect and hold harmless Coast, Washington, any
past, present or future Parent Company ("Parent Company") of
Coast or Washington, any past, present or future affiliate
or subsidiary company of Coast, Washington or Parent
Company, including the employees, agents, representatives,
directors, officers, shareholders, attorneys, accountants,
successors and assigns, of any of them (collectively, the
"Related Persons") against, and to hold such parties
harmless from all claims, demands, liabilities, losses,
damages, costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred by such
parties to the extent arising after the Closing Date in
connection with any act, omission, conduct or activity of
Buyer (including Buyer's employees, agents, representatives,
directors, officers, shareholders, attorneys accountants) in
its capacity as lender with respect to the Note, the Second
Note, the other Loan Documents, the Property or the
environmental condition of the Property.
17. Release. Buyer hereby waives and
releases any claims against Coast, Washington and the
Related Persons pertaining to the existence, release or
threatened existence or release of Hazardous Substances (as
defined in Paragraph 17.2 of this Agreement) at, on, in,
under, about, above, from or adjacent to the Property and
its surroundings, or the environmental condition of the
Property, including, without limitation, claims arising
under one or more Environmental Laws (as defined in
Paragraph 17.1 of this Agreement).
17.1 Environmental Laws. Environmental Laws
shall mean any and all federal, state, municipal and local
laws, statutes, ordinances, rules, regulations, orders and
decrees, whether statutory or common law, as amended from
time to time, now or hereafter in effect, or promulgated,
pertaining to the environment, public health and safety and
industrial hygiene, including the use, generation,
manufacture, production, storage, release, discharge,
disposal, handling, treatment, removal, decontamination,
clean-up, transportation or regulation of any Hazardous
Substance as defined in Paragraph 17.2 of this Agreement.
Environmental Laws shall include, without limitation, the
Comprehensive Environmental Response Compensation Liability
Act of 1980 ("CERCLA"), 42 U.S.C. Sections 9601, et seq.,
the Resource Conservation and Recovery Act of 1976 ("RCRA"),
42 U.S.C. Sections 6901, et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., the
Residential Lead-Based Paint Hazard Reduction Act of 1992,
42 U.S.C. 4852d, and the California Health and Safety Code
Section 25100, et seq., as amended from time to time. This
definition shall not be construed or interpreted to limit or
restrict any definition or provision of any Exhibit to this
Agreement.
17.2 Hazardous Substance. Hazardous
Substance shall mean any hazardous substance, hazardous
waste or hazardous material as defined in one or more
Environmental Laws, petroleum hydrocarbons including crude
oil or any fraction thereof, asbestos, polychlorinated
biphenyls, lead-based paint and/or lead-based paint hazards
(as those terms are defined in the Lead-Based Paint
Statute), any noxious, toxic, flammable explosive or
radioactive substance, any waste, material, or matter, and
any other substance, material, waste or matter now or
hereafter regulated by one or more Environmental Laws. This
definition shall not be construed or interpreted to limit or
restrict any definition or provision of any Exhibit to this
Agreement.
18. Notices. All notices or other
communications required or permitted hereunder shall be in
writing, and shall be telecopied, personally delivered
(including by means of professional messenger service), sent
by registered or certified mail, postage prepaid, return
receipt requested, or sent by recognized overnight air
courier (e.g., Federal Express), cost prepaid, and shall be
deemed received upon the date of delivery of a legible copy,
if telecopied, and shall be deemed received by 5: 00 p.m.,
California time, on the date of delivery (otherwise on the
following date), if personally delivered, or two (2) days
following delivery to the U.S. Mail, if mailed, and one (1)
day following delivery to the courier if sent by overnight
air courier and addressed as follows:
To Buyer: Arden Realty Limited Partnership
9100 Wilshire Boulevard, Suite 700E
Beverly Hills, California 90212
Attn: Ms. Brig Troy
With a Copy to: Loeb & Loeb LLP
1000 Wilshire Boulevard, Suite 1800
Los Angeles, California 90017
Attn: Jonathan P. Roth, Esq.
To Coast: Coast Federal Bank
8433 Fallbrook Avenue
West Hills, California 91304
Attn: Joe Losorelli
Telephone: (818) 316-8104
Facsimile: (818) 316-3143
With a Copy to: Coast Federal Bank
8433 Fallbrook Avenue
West Hills, California 91304
Attn: Carolyn Y. Morgan, Esq.
Telephone: (818) 316-8625
Facsimile: (818) 316-3928
19. Conditions Precedent to Sale of the Note
and the Second Note. The following are conditions precedent
to the sale and purchase of the Note and the Second Note
pursuant to this Agreement:
19.1 Execution of Documents. Buyer shall
have executed, acknowledged, where applicable, and delivered
to Coast and Escrow Holder this Agreement and each of the
documents specified in this Agreement.
19.2 With respect to the Loan, Washington
shall have executed and acknowledged, where applicable, and
delivered to Coast and/or Escrow Holder each of the
documents required to close this transaction, including,
without limitation, the Estoppel Letter.
19.3 Execution of Release. Buyer shall
execute and acknowledge, where applicable, and deliver to
Coast the Release.
19.4 Representations and Warranties. The
continued truth, accuracy and completeness of each of the
representations and warranties of Buyer set forth in
Paragraph 12 above and the continued truth, accuracy and
completeness of each of the representations and warranties
of Coast set forth in Paragraph 13 above.
19.5 Payment. Buyer shall have deposited
with Escrow Holder the Deposit and the Cash Payment. The
Deposit shall have been paid directly to Escrow Holder
simultaneously with the execution of this Agreement.
19.6 All Conditions. Coast, Washington and
Buyer shall have performed and complied with all agreements
and conditions required by this Agreement to be performed or
complied with by them prior to or at the Close of Escrow.
19.7 Effectiveness of Sale. Notwithstanding
Coast's negotiation, preparation or execution of this
Agreement, or any of the instruments or documents attached
as exhibits, and notwithstanding anything else to the
contrary, the sale of the Note, and the Second Note, and the
assignment of the Loan Documents shall not be deemed to have
occurred unless and until the recordation of the Assignments
of Deed of Trust has occurred with respect to the Deed of
Trust and the Second Deed of Trust, and all other conditions
precedent have been met or waived by Coast.
19.8 Transfer of Servicing. As of Close of
Escrow, Coast shall transfer to Buyer the servicing with
respect to the Loan and the Second Loan. Subsequent to the
Close of Escrow, Coast shall notify the Borrower of the
transfer to Buyer and Buyer shall notify the Borrower
regarding the manner in which payments on the Loan are to be
made. Coast's notification shall be in the form attached
hereto as Exhibit "M".
19.9 Substitution of Trustee. With respect
to the Deed of Trust and the Second Deed of Trust, Buyer
shall execute and record or cause the recordation of a
Substitution of Trustee naming Title Company as Trustee
thereunder.
20. Default. In the event of a default by
Coast or Buyer, the following shall apply:
20.1 DEFAULT BY COAST. EXCEPT AS PROVIDED
HEREIN, IN THE EVENT THE CLOSE OF ESCROW AND THE
CONSUMMATION OF THE TRANSACTION CONTEMPLATED HEREIN DO NOT
OCCUR BY REASON OF ANY DEFAULT BY COAST, AND PROVIDED BUYER
SHALL NOT BE IN DEFAULT UNDER THIS AGREEMENT, BUYER'S SOLE
AND EXCLUSIVE REMEDY SHALL BE THE RETURN OF ALL FUNDS PAID
BY BUYER TO ESCROW HOLDER TOGETHER WITH INTEREST THEREON,
THE PAYMENT BY COAST OF ANY CHARGES REQUIRED TO BE PAID BY
OR TO ESCROW HOLDER OR TITLE COMPANY, AND THE REIMBURSEMENT
BY COAST FOR BUYER'S ACTUAL, OUT-OF-POCKET EXPENSES ARISING
FROM COAST'S BREACH AS SHOWN BY INVOICES AND OTHER EVIDENCE
SATISFACTORY TO COAST WITH SUCH REIMBURSEMENT ITSELF NOT TO
EXCEED ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00). THIS REMEDY IS IN LIEU OF ALL OTHER REMEDIES
BUYER MAY HAVE AT LAW OR IN EQUITY, INCLUDING THE SPECIFIC
PERFORMANCE OF THIS AGREEMENT AND BENEFIT-OF-THE-BARGAIN
MONEY DAMAGES. If FOR ANY REASON, WASHINGTON FAILS OR
REFUSES TO TAKE THE NECESSARY ACTION OR FAILS TO EXECUTE THE
DOCUMENTS REQUIRED TO CLOSE THIS TRANSACTION, AND THIS
TRANSACTION DOES NOT CLOSE AS A RESULT THEREOF, COAST SHALL
NOT BE IN DEFAULT UNDER THE TERMS OF THIS AGREEMENT.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, UPON THE
CLOSE OF ESCROW AND THE CONSUMMATION OF THE TRANSACTION
CONTEMPLATED HEREIN, THE REMEDY DESCRIBED IN THIS PARAGRAPH
20.1 SHALL BE TERMINATED.
/s/ RSZ /s/ GS
Buyer's Initials Coast's Initials
20.2 DEFAULT BY BUYER. IN THE EVENT THE
CLOSE OF ESCROW DOES NOT OCCUR AS PROVIDED BY REASON OF ANY
DEFAULT OF BUYER, BUYER AND COAST AGREE THAT IT WOULD BE
IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES
WHICH COAST MAY SUFFER. THEREFORE BUYER AND COAST HEREBY
AGREE THAT A REASONABLE ESTIMATE OF THE TOTAL NET DETRIMENT
COAST WOULD SUFFER IN THE EVENT BUYER DEFAULTS AND FAILS TO
COMPLETE THE PURCHASE OF THE PROPERTY HEREUNDER IS AND SHALL
BE, AS COAST'S SOLE AND EXCLUSIVE REMEDY, WHETHER AT LAW OR
IN EQUITY, AN AMOUNT EQUAL TO THE DEPOSIT PLUS ACCRUED
INTEREST THEREON. SAID AMOUNT SHALL BE THE FULL, AGREED AND
LIQUIDATED DAMAGES FOR THE BREACH OF THIS AGREEMENT BY
BUYER, ALL OTHER CLAIMS TO DAMAGES OR OTHER REMEDIES BEING
HEREIN EXPRESSLY WAIVED BY COAST. UPON FAULT BY BUYER AND
UPON COAST'S ELECTION, THIS AGREEMENT SHALL BE TERMINATED
AND NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR
OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT FOR THE
RIGHT OF COAST TO COLLECT SUCH LIQUIDATED DAMAGES FROM BUYER
AND ESCROW HOLDER AS HEREIN PROVIDED.
/s/ RSZ /s/ GS
Buyer's Initials Coast's Initials
21. Broker. Coast and Buyer represent and
warrant to the another that no broker or finder has been
engaged in connection with the transaction contemplated by
this Agreement, or to its knowledge is in any way connected
with such transaction. Coast and Buyer agree to indemnify
one another from any claim against the other for any broker
or agent commission arising from acts, engagements or
alleged acts or engagements of Buyer or Coast, respectively,
as the case may be, or related to this Agreement. This
indemnification clause shall survive the Close of Escrow,
the termination of this Agreement or the cancellation of
Escrow.
22. General Provisions.
22.1 Partial Invalidity. If any term or
provision of this Agreement or the application thereof to
any person or circumstance shall, to any extent, be invalid
or unenforceable, the remainder of this Agreement, shall not
be affected thereby, and each such other term and provision
of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
22.2 Waivers. No waiver of any breach of any
covenant or provision herein contained shall be deemed a
waiver of any preceding or succeeding breach thereof, or of
any other covenant or provision herein contained. No
extension of time for performance of any obligation or act
shall be deemed an extension of the time for performance of
any other obligation or act.
22.3 Survival of Representations. Except as
otherwise provided, the covenants, agreements,
representations and warranties made herein shall survive the
Close of Escrow.
22.4 Successors and Assigns. This Agreement
shall be binding upon and shall inure to the benefit of the
heirs, devisees, legatees, personal representatives,
administrators, executors and successors and assigns of the
parties hereto.
22.5 Professional Fees. In the event of the
bringing of any action or suit by a party hereto against
another party hereunder by reason of any breach of, or to
enforce, any of the covenants, agreements or provisions on
the part of the other party arising out of this Agreement,
then in that event the prevailing party shall be entitled to
have and recover of and from the other part all costs and
expenses of the action or suit, including reasonable
attorneys' fees, accounting and engineering fees, and any
other professional fees resulting therefrom.
22.6 Entire Agreement. This Agreement
(including all exhibits attached hereto) is the final
expression of, and contains the entire agreement between,
the parties with respect to the subject matter hereof and
supersedes all prior understandings with respect thereto,
including all prior letters of intent. This Agreement may
not be modified, changed or supplemented, except by written
instrument signed by the party to be charged or by its agent
duly authorized in writing or as otherwise expressly
permitted herein. The parties do not intend to confer any
benefit hereunder on any person, firm or corporation other
than the parties hereto.
22.7 Time of Essence. Time is strictly of
the essence with respect to each and every term, condition,
obligation and provision hereof. Failure to timely perform
any of the terms, conditions, obligations or provisions
hereof by either party shall constitute a material breach of
a non-curable (but waivable) default under this Agreement by
the party so failing to perform.
22.8 Construction. Headings at the beginning
of each paragraph and subparagraph are solely for the
convenience of the parties and are not a part of this
Agreement. Whenever required by the context of this
Agreement, the singular shall include the plural and the
masculine shall include the feminine and vice versa. This
Agreement shall not be construed as if it had been prepared
by one of the parties, but rather as if both parties had
prepared the same. Unless otherwise indicated, all
references to paragraphs and subparagraphs are to this
Agreement. All exhibits referred to in this Agreement and
attached hereto are incorporated herein by this reference.
22.9 Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
an original, but all of which shall constitute one
agreement.
22.10 Governing Law. The provisions of this
Agreement governing the contractual rights and obligations
of Buyer and Coast shall be governed, construed, and
enforced according to the laws of the United States and,
where not inconsistent, by the laws of the State of
California.
22.11 Efforts to Close Escrow. Buyer and
Coast agrees to execute all such instruments and documents
and to take all actions pursuant to the provisions hereof in
order to consummate the purchase and sale herein
contemplated by this Agreement and shall use their
reasonable efforts to accomplish the Close of Escrow in
accordance with the provisions hereof.
22.12 No Reliance. In entering into this
Agreement, neither party has relied on statements or
representations made by the other party hereto, their agents
or representatives, with the exception of the
representations set forth herein. Each party has considered
all matters contained herein with the aid of counsel and has
relied entirely on their own judgment and the judgment of
their own counsel.
23. Arbitration.
23.1 In the event of any dispute, claim or
controversy between the parties hereto arising out of or
relating to the interpretation or enforcement of this
Agreement, whether in contract, tort, equity or otherwise,
such dispute, claim or controversy shall be resolved by and
through an arbitration proceeding to be conducted under the
auspices and the commercial arbitration rules of the
American Arbitration Association (or any like organization
successor thereto) at Los Angeles, California before an
arbitrator who has been agreed to in writing by both
parties. The arbitrability of any such dispute, claim or
controversy shall likewise be determined in such
arbitration. Such arbitration proceeding shall be conducted
in as expedited a manner as is then permitted by the
commercial arbitration rules (formal or informal) of the
American Arbitration Association. Both the foregoing
agreement of the parties to arbitrate any and all such
disputes, claims and controversies and the results,
determinations, findings, judgments and/or awards rendered
through any such arbitration shall be final and binding on
the parties and may be specifically enforced by legal
proceedings. Time is of the essence of this arbitration
procedure, and the arbitrator(s) shall be instructed and
required to render his (their) decision within ten (10) days
following completion of the arbitration. Judgment on any
award rendered by such arbitrator may be entered in any
court having jurisdiction over the subject matter of the
controversy.
23.2 Procedure. Such arbitration may be
initiated by written notice from either party to the other
setting forth a demand for arbitration and detailing with
specificity the nature of the dispute, claim or controversy
to be arbitrated.
23.3 Discovery Rules. The parties and
arbitrator(s) shall have all of the rights and duties
relating to discovery provided by ?1283.05 of the California
Code of Civil Procedure, which is hereby made a part of this
Agreement, except that the arbitrator(s) shall have the
right to disapprove or to limit any discovery which such
arbitrator(s) deems to be for purposes of delay or otherwise
unnecessarily burdensome or oppressive.
23.4 Qualifications of Arbitrator(s). Each
arbitrator in any such arbitration shall, insofar as is
practicable, be a person who is expert in the subject matter
of the dispute.
23.5 Governing Law. The arbitrator(s) shall
follow any applicable federal law and California state law
(with respect to all matters of substantive law) in
rendering an award.
23.6 Opportunity to Present Evidence. Prior
to rendering his (their) determination or award, the
arbitrator(s) shall afford each party an opportunity to
express its views as to the proper determination of the
matters under arbitration, orally or in writing as the
arbitrator(s) may deem appropriate; provided, however, that
(i) either party submitting written material shall be
required to submit a copy of that material to the other
party who shall have the opportunity to submit a written
reply to that material within ten (10) days, and (ii) if
either party is to submit oral statements, the other party
shall be afforded a reasonable opportunity to be present at
the time at which these oral statements are made before the
arbitrator(s) and to reply orally.
23.7 Costs of Arbitration. The cost of the
arbitration proceeding and any proceeding in court to
confirm or to vacate any arbitration award, as applicable
(including, without limitation, attorneys' fees and costs),
shall be borne by the unsuccessful party or at the
discretion of the arbitrator(s), may be prorated between the
parties in such proportion as the arbitrator(s) determine(s)
to be equitable and shall be awarded as part of the judgment
of the arbitrator(s).
23.8 Exclusive Remedy. The parties agree
that arbitration as set forth above shall be the sole means
of resolving any disputes, claims and controversies among
them arising out of or relating to the interpretation or
enforcement of this Agreement.
IN WITNESS, WHEREOF, the parties hereto have
executed this Agreement as of the day and year set forth
above.
SELLER: BUYER:
COAST FEDERAL BANK, FEDERAL Arden Realty Limited
SAVINGS BANK, a federally Partnership, a Maryland
chartered capital stock limited partnership
savings bank, as successor
in interest to Coast Savings By: Arden Realty, Inc.,
and Loan Association, a a Maryland corporation
California corporation Its General Partner
By: /s/ Glenn Shimabuku
Name: Glenn Shimabuku By: /s/ R. S. Ziman
Its: Vice President Name: Richard S. Ziman
Its: CEO
ESCROW HOLDER
FIRST AMERICAN TITLE COMPANY
OF LOS ANGELES
By: /s/ Patricia Pewthers
Name: Patricia Pewthers
Its: Senior Escrow Officer
