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) July 31,
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 August 1, 1997, Arden Realty, Inc. (collectively with
its subsidiaries, the "Company") completed a series of
transactions to purchase eight suburban office properties
totaling 965,612 rentable square feet. All properties were
purchased from unaffiliated entities.
299 Euclid in Pasadena, California contains 73,400 rentable
square feet. The property was purchased for approximately
$7,250,000, which was based on arm's-length negotiations.
The property is presently vacant. The property was
purchased from Overland Plaza Partnership, a California
general partnership.
Harbor Corporate Center in Gardena, California contains
63,925 rentable square feet. The purchase price for the
property was approximately $4,450,000, which was based on
arm's-length negotiations. The property is presently 77.4%
occupied, at average rents of $14.47 per square foot. The
property was purchased from JC Investment & Realty, Inc., a
Washington corporation.
Pacific Gateway II in Torrance, California contains 223,731
rentable square feet. The purchase price of the property
was approximately $25,225,000, which was based on arm's-
length negotiations. The property is presently 92.4%
occupied, at average rents of $19.21 per square foot. The
property was purchased from New York Life Insurance Company,
a New York mutual insurance company.
1000 Town Center in Oxnard, California and Mariner Court in
Torrance, California contain 107,653 and 105,436 rentable
square feet, respectively. The purchase price for 1000 Town
Center was approximately $14,050,000, which was based on
arm's-length negotiations. 1000 Town Center is presently
100% occupied, at average rents of $19.10 per square foot.
The purchase price for Mariner Court was approximately
$11,800,000, which was based on arm's-length negotiations.
Mariner Court is presently 86.7% occupied, at average rents
of $16.65 per square foot. These properties were purchased
from Bedford Property Investors, Inc., a Maryland
corporation.
1821 Dyer in Irvine, California contains 115,061 rentable
square feet. The purchase price for the property was
approximately $7,300,000, which was based on arm's-length
negotiations. The property is presently 100% occupied, at
average rents of $5.52 triple net per square foot. The
property is currently occupied by a single tenant with an
expiration date in December 1997. The property was
purchased from Echo USA, Inc., a Hawaii corporation.
Crown Cabot in Laguna Niguel, California contains 172,900
rentable square feet. The purchase price for the property
was approximately $28,300,000, which was based on arm's-
length negotiations. The property is presently 93.3%
occupied, at average rents of $20.71 per square foot. The
property was purchased from Leisure Colony Management
Corporation, a Florida corporation.
Carlsberg Corporate Center in Santa Monica, California
contains 103,506 rentable square feet. The purchase price
for the property was approximately $11,800,000, which was
based on arm's-length negotiations. The property is
presently 87.3% occupied, at average rents of $20.34 per
square foot. The property was purchased from Carlsberg
Investment Company, a Wyoming partnership.
To finance these acquisitions the Company used approximately
$2,200,000 of working capital, borrowed $2,000,000 on its
line of credit from a group of banks led by Wells Fargo Bank
( the "Credit Facility"), borrowed $2,100,000 on the secured
loan from Wells Fargo Bank, assumed a $5,000,000 mortgage
note payable (the "Mortgage Note Payable") in connection
with the purchase of 299 Euclid, and used approximately
$98,900,000 of proceeds from the Company's second public
offering of 13,750,000 shares of common stock (the
"Secondary Offering"). On July 10, 1997 the Company
borrowed $28,700,000 on the Credit Facility to repay the
outstanding balance on the secured loan with Wells Fargo
Bank. On July 24, 1997 the Company used proceeds of
$212,600,000 from the Company's Secondary Offering to repay
the outstanding balance on the Credit Facility. The
outstanding balance on the Mortgage Note Payable as of
August 1, 1997 was $5,000,000.
Inclusive of these purchases, the Company's portfolio
consists of 53 suburban office properties comprising
8,355,094 rentable square feet and 16 apartment units.
Item 7. Financial Statements and Exhibits
(a) Financial statements of properties acquired.
Pacific Gateway II
Statement of Revenue and Certain Expenses:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the Year
Ended December 31, 1996
Notes to Statement of Revenue and Certain Expenses
1000 Town Center and Mariner Court
Combined Statement of Revenue and Certain Expenses:
Report of Independent Auditors
Combined Statement of Revenue and Certain Expenses for
the Year Ended December 31, 1996
Notes to Combined Statement of Revenue and Certain
Expenses
Crown Cabot
Statement of Revenue and Certain Expenses:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the Year
Ended December 31, 1996
Notes to Statement of Revenue and Certain Expenses
(b) Pro forma financial information.
Pro Forma Condensed Consolidated Balance Sheet as of March
31, 1997 (Unaudited).
Pro Forma Condensed Consolidated Statement of Operations for
the Three Months Ended March 31, 1997 (Unaudited).
Pro Forma Condensed Consolidated Statement of Operations for
the Year Ended December 31, 1996 (Unaudited).
Notes to the Pro Forma Condensed Consolidated Financial
Statements (Unaudited).
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue
and certain expenses of Pacific Gateway II for the year
ended December 31, 1996. This statement of revenue and
certain expenses is the responsibility of the management of
Pacific Gateway II. Our responsibility is to express an
opinion on the statement of revenue and certain expenses
based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the statement of revenue and certain expenses
is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statement. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenue and certain
expenses was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange
Commission. Certain expenses (described in Note 1) that
would not be comparable to those resulting from the proposed
future operations of the property are excluded and the
statement is not intended to be a complete presentation of
the revenue and expenses of the property.
In our opinion, the statement of revenue and certain
expenses of Pacific Gateway II presents fairly, in all
material respects, the revenue and certain expenses, as
defined above, of Pacific Gateway II for the year ended
December 31, 1996, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Los Angeles, California
June 6, 1997
PACIFIC GATEWAY II
STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
(In thousands)
Revenue:
Rental $3,355
Tenant reimbursements 87
Other income 144
Total revenue 3,586
Certain Expenses:
Property operating and maintenance 925
Real estate taxes 214
Insurance 66
Total certain expenses 1,205
Excess of revenue over certain expenses $2,381
See accompanying notes to statement of revenue and certain expenses.
PACIFIC GATEWAY II
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
1. Organization and Summary of Significant Accounting
Policies
Organization
The accompanying statement of revenue and certain
expenses includes the operations of Pacific Gateway II (the
"Property") located in Southern California which was
acquired by Arden Realty, Inc. (the "Company"), from a
nonaffiliated third party. The Property was acquired for
approximately $25,225,000 and has 223,731 rentable square
feet.
Basis of Presentation
The accompanying statement has been prepared to comply
with rules and regulations of the Securities and Exchange
Commission.
The accompanying statement is not representative of the
actual operations for the period presented as certain
expenses that may not be comparable to the expenses expected
to be incurred by the Company in the future operations of
the Property have been excluded. Excluded expenses consist
of interest, depreciation and amortization and property
general and administrative costs not directly comparable to
the future operation of the Property.
Revenue Recognition
Rental revenue is recognized on a straight-line basis
over the terms of the related leases.
Use of Estimates
The preparation of financial statements, in conformity
with generally accepted accounting principles, requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could
differ from those estimates.
2. Commercial Office Property
The future minimum lease payments to be received under
existing operating leases as of December 31, 1996 are as
follows:
1997 $3,403,000
1998 2,829,000
1999 2,632,000
2000 2,322,000
2001 1,426,000
Thereafter 2,340,000
$14,952,000
The above future minimum lease payments do not include
specified payments for tenant reimbursements of operating
expenses.
Office space in the Property is generally leased to
tenants under lease terms which provide for the tenants to
pay increases in operating expenses in excess of specified
amounts. At December 31, 1996, three of the Property's
tenants accounted for approximately 53% of the Property's
aggregate annualized base rent.
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying combined statement of
revenue and certain expenses of 1000 Town Center and Mariner
Court for the year ended December 31, 1996. This combined
statement of revenue and certain expenses is the
responsibility of the management of 1000 Town Center and
Mariner Court. Our responsibility is to express an opinion
on the combined statement of revenue and certain expenses
based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the combined statement of revenue and certain
expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statement. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our
opinion.
The accompanying combined statement of revenue and
certain expenses was prepared for the purpose of complying
with the rules and regulations of the Securities and
Exchange Commission. Certain expenses (described in Note 1)
that would not be comparable to those resulting from the
proposed future operations of the property are excluded and
the statement is not intended to be a complete presentation
of the revenue and expenses of the property.
In our opinion, the combined statement of revenue and
certain expenses of 1000 Town Center and Mariner Court
presents fairly, in all material respects, the combined
revenue and certain expenses, as defined above, of 1000 Town
Center and Mariner Court for the year ended December 31,
1996, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Los Angeles, California
May 2, 1997
1000 TOWN CENTER AND MARINER COURT
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
(In thousands)
Revenue:
Rental $3,798
Tenant reimbursements 93
Total revenue 3,891
Certain Expenses:
Property operating and maintenance 1,007
Real estate taxes 264
Insurance 79
Total certain expenses 1,350
Excess of revenue over certain expenses $2,541
See accompanying notes to combined statement of revenue and certain expens
es.
1000 TOWN CENTER AND MARINER COURT
NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
1. Organization and Summary of Significant Accounting
Policies
Organization
The accompanying combined statement of revenue and
certain expenses includes the operations of 1000 Town Center
and Mariner Court (the "Properties") located in Southern
California which were acquired by Arden Realty, Inc. (the
"Company"), from a nonaffiliated third party. The Properties
were acquired for approximately $25,850,000 and have 213,089
rentable square feet.
Basis of Presentation
The accompanying statement has been prepared to comply
with rules and regulations of the Securities and Exchange
Commission.
The accompanying statement is not representative of the
actual operations for the period presented as certain
expenses that may not be comparable to the expenses expected
to be incurred by the Company in the future operations of
the Properties have been excluded. Excluded expenses consist
of interest, depreciation and amortization and property
general and administrative costs not directly comparable to
the future operation of the Properties.
Revenue Recognition
Rental revenue is recognized on a straight-line basis
over the terms of the related leases.
Use of Estimates
The preparation of financial statements, in conformity
with generally accepted accounting principles, requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could
differ from those estimates.
2. Commercial Office Property
The future minimum lease payments to be received under
existing operating leases as of December 31, 1996 are as
follows:
1997 $3,576,000
1998 3,331,000
1999 2,840,000
2000 1,923,000
2001 1,104,000
Thereafter 698,000
$13,472,000
The above future minimum lease payments do not include
specified payments for tenant reimbursements of operating
expenses.
Office space in the Properties is generally leased to
tenants under lease terms which provide for the tenants to
pay increases in operating expenses in excess of specified
amounts. At December 31, 1996, four of the Properties'
tenants accounted for approximately 55% of the Properties'
aggregate annualized base rent.
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Arden Realty, Inc.
We have audited the accompanying statement of revenue
and certain expenses of Crown Cabot for the year ended
December 31, 1996. This statement of revenue and certain
expenses is the responsibility of the management of Crown
Cabot. Our responsibility is to express an opinion on the
statement of revenue and certain expenses based on our
audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the statement of revenue and certain expenses
is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statement. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenue and certain
expenses was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange
Commission. Certain expenses (described in Note 1) that
would not be comparable to those resulting from the proposed
future operations of the property are excluded and the
statement is not intended to be a complete presentation of
the revenue and expenses of the property.
In our opinion, the statement of revenue and certain
expenses of Crown Cabot presents fairly, in all material
respects, the revenue and certain expenses, as defined
above, of Crown Cabot for the year ended December 31, 1996,
in conformity with generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
May 2, 1997
CROWN CABOT
STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
(In thousands)
Revenue:
Rental $3,002
Tenant reimbursements 71
Other income 41
Total revenue 3,114
Certain Expenses:
Property operating and maintenance 582
Real estate taxes 213
Insurance 102
Total certain expenses 897
Excess of revenue over certain expenses $2,217
See accompanying notes to statement of revenue and certain expenses.
CROWN CABOT
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
For the Year Ended December 31, 1996
1. Organization and Summary of Significant Accounting
Policies
Organization
The accompanying statement of revenue and certain
expenses include the operations of Crown Cabot (the
"Property") located in Southern California which was
acquired by Arden Realty, Inc. (the "Company"), from a
nonaffiliated third party. The Property was acquired for
approximately $28,300,000 and has 172,900 rentable square
feet.
Basis of Presentation
The accompanying statement has been prepared to comply
with rules and regulations of the Securities and Exchange
Commission.
The accompanying statement is not representative of the
actual operations for the period presented as certain
expenses that may not be comparable to the expenses expected
to be incurred by the Company in the future operations of
the Property have been excluded. Excluded expenses consist
of interest, depreciation and amortization and property
general and administrative costs not directly comparable to
the future operation of the Property.
Revenue Recognition
Rental revenue is recognized on a straight-line basis
over the terms of the related leases.
Use of Estimates
The preparation of financial statements, in conformity
with generally accepted accounting principles, requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could
differ from those estimates.
2. Commercial Office Property
The future minimum lease payments to be received under
existing operating leases as of December 31, 1996 are as
follows:
1997 $3,218,000
1998 2,359,000
1999 1,579,000
2000 1,072,000
2001 465,000
Thereafter 12,000
$8,705,000
The above future minimum lease payments do not include
specified payments for tenant reimbursements of operating
expenses.
Office space in the Property is generally leased to
tenants under lease terms which provide for the tenants to
pay increases in operating expenses in excess of specified
amounts. At December 31, 1996, two of the Property's tenants
accounted for approximately 33% of the Property's aggregate
annualized base rent.
ARDEN REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited pro forma condensed
consolidated balance sheet as of March 31, 1997 is presented
as if the following transactions had been consummated on
March 31, 1997: (i) the acquisition of properties acquired
subsequent to March 31, 1997 and on or prior to June 30,
1997, (the "Second Quarter 1997 Acquisitions"); (ii) the
consummation of the Secondary Offering; (iii) the
acquisitions of the properties acquired subsequent to June
30, 1997 and on or prior to August 1, 1997, including the
properties described in Item 2 above (the "Third Quarter
Acquisitions"); and (iv) the closings of the Mortgage
Financing, the Credit Facility and Mortgage Note Payable.
The following unaudited pro forma condensed consolidated
statements of operations for the three months ended March
31, 1997 and for the year ended December 31, 1996 are
presented as if: (i) the consummation of the initial public
offering of common stock in October 1996 (the "IPO"), and
related formation transactions in connection with the IPO;
(ii) the acquisition of the properties acquired during 1996
(the "1996 Acquisitions"); (iii) the acquisition of
properties acquired during 1997 prior to June 30, 1997 (the
"1997 Acquisitions"); (iv) the acquisition of the Third
Quarter Acquisitions; and (v) the closing of the Mortgage
Financing, the amendment to the Credit Facility and Mortgage
Note Payable had occurred at January 1, 1996.
The Pro forma condensed consolidated financial
statements are not necessarily indicative of what the actual
financial position or results of operations would have been
had the Company completed the transactions described above,
nor do they purport to represent the future financial
position of the Company.
<TABLE>
ARDEN REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 1997
(Unaudited)
(in thousands)
<S> <C> <C> <C> <S> <C>
Pro Forma Adjustments
Second Arden
Arden Quarter 1997 Secondary Third Quarter Other Realty, Inc.
Realty, Inc. Acquisitions (A) Offering (B) Acquisitions
(C) Adjustments (D) Pro Forma
ASSETS
Commercial office
properties - net $ 580,636 $ 188,450 $ -- $ 110,055
$ -- $ 879,141
Cash and cash
equivalents 822 (800) 340,631 (100,905) (213,600) 18,276
(3,872)
(4,000)
Restricted cash -- -- -- -- 4,000
4,000
Rents and other
receivables 2,093 -- -- -- -- 2,093
Deferred rent 6,609 -- -- -- -- 6,609
Prepaid financing
and leasing costs
- net 4,485 -- -- -- 3,872 8,357
Prepaid expenses
and other assets 4,693 (850) -- (150) --
3,693
Total assets $ 599,338 $186,800 $ 340,631 $ 9,000 $(213,600)
$ 922,169
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage loans
payable $137,800 $ 37,200 $ -- $ 5,000 $ -- $ 180,000
Unsecured lines of credit 60,000 149,600 -- 4,000
(213,600) --
Accounts payable and accrued expenses 9,243 -- -- --
- -- 9,243
Security deposits 3,958 -- -- -- --
3,958
Dividends and
distributions
payable 8,677 -- -- -- -- 8,677
Total liabilities 219,678 186,800 -- 9,000 (213,600)
201,878
Minority interests
in Operating
Partnership 47,563 -- -- -- -- 47,563
Stockholders' equity:
Common stock 217 -- 138 -- -- 355
Additional paid-in
capital 331,880 -- 340,493 -- -- 672,373
Retained earnings -- -- -- -- -- --
Total
stockholders'
equity 332,097 -- 340,631 -- -- 672,728
Total liabilities
and stockholders'
equity $599,338 $186,800 $340,631 $9,000 $(213,600) $922,169
</TABLE>
<TABLE>
See accompanying notes.
ARDEN REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1997
(Unaudited)
(in thousands, except per share data)
Pro Forma Adjustments
<S> <C> <C> <C> <C> <C>
Pre-Acquisition
Period
Arden
Arden for the 1997 Third Quarter Other
Realty, Inc.
Realty, Inc. Acquisitions(F)
Acquisitions(G) Adjustments Pro Forma
Revenues
Rental $21,892 $ 6,960 $ 3,360 $ 387(H) $
32,599
Tenant reimbursements 958 305 104 --
1,367
Parking - net 1,490 346 17 --
1,853
Other rental operations 576 67 16 -- 659
24,916 7,678 3,497 387
36,478
Other income 54 -- -- -- 54
Total revenues 24,970 7,678 3,497 387
36,532
Expenses
Property expenses 7,894 2,540 1,059 255(J)
11,748
REIT general and administrative 918 -- --
82(K) 1,000
Interest 3,024 -- -- 279(L)
3,303
Depreciation and amortization 3,562 -- --
1,788(M) 5,350
Total expenses 15,398 2,540 1,059 2,404
21,401
Income before minority interests 9,572 5,138 2,438
(2,017) 15,131
Minority interests (1,134) -- -- (31)(N)
(1,165)
Net income $8,438 $ 5,138 $ 2,438 $(2,048) $
13,966
Weighted average common shares
outstanding before the
conversion of OP Units 21,921 35,671
Net Income per common share $ 0.38 $ 0.39
</TABLE>
See accompanying notes.
<TABLE>
ARDEN REALTY, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Pro Forma Adjustments
Arden Realty, Inc. Arden Predecessors Equity in Net Loss
of Pre-Acquisition
Consolidated Combined Noncombined Entities Period
October 9, 1996 to January 1, 1996 to January 1, 1996 to
for the 1996
December 31, 1996 October 8, 1996 October 8,
1996 Acquisitions (E)
Revenues
Rental $17,041 $32,287 $12,828 $23,095
Tenant reimbursements 803 2,031 243 733
Parking-net 1,215 3,692 846 1,161
Other rental operations 375 1,125 357 606
19,434 39,135 14,274 25,595
Other income 138 1,330 -- --
Total revenues 19,572 40,465 14,274 25,595
Expenses
Property expenses 6,005 14,224 6,053 11,449
General and administrative 753 1,758 -- --
Interest 1,280 24,521 7,356 --
Depreciation and amortization 3,108 5,264 2,705 --
Total expenses 11,146 45,767 16,114 11,449
Equity in net (loss) of noncombined
entities -- (336) 336 --
Income (loss) before minority
interests and extraordinary items 8,426 (5,638) (1,504) 14,146
Minority interests (993) 721 (721) --
Income(loss) before
extraordinary items 7,433 (4,917) (2,225) 14,146
Extraordinary (loss) gain on early
extinguishment of debt, net of
minority interests share (13,105) 1,877 -- --
Net (loss) income $ (5,672) $ (3,040) $ (2,225) $14,146
Weighted average common shares
outstanding before conversion of
OP Units 21,680
Net (loss) income per
common share $(.26)
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Pro Forma Adjustments
1997 Third Quarter Other Arden
Realty, Inc.
Acquisitions (F) Acquisitions (G) Adjustments Pro
Forma
Revenues
Rental $28,520 $13,203 $ 1,815(H) $
128,789
Tenant reimbursements 1,419 414 -- 5,643
Parking-net 1,346 61 -- 8,321
Other rental operations 117 209 -- 2,789
31,402 13,887 1,815 145,542
Other income -- -- (1,253)(I) 215
Total revenues 31,402 13,887 562 145,757
Expenses
Property expenses 10,712 4,503 1,127(J) 54,073
General and administrative -- -- 1,489(K) 4,000
Interest -- -- (19,948)(L) 13,209
Depreciation and amortization -- -- 9,963(M) 21,040
Total expenses 10,712 4,503 (7,369) 92,322
Equity in net (loss) of noncombined
entities -- -- -- --
Income (loss) before minority
interests and extraordinary items 20,690 9,384 7,931 53,435
Minority interests -- -- (3,121)(N) (4,114)
Income (loss) before extraordinary items 20,690 9,384 4,810 49,321
Extraordinary (loss) gain on early
extinguishment of debt, net of
minority interests share -- -- 11,228(O) --
Net (loss) income 20,690 9,384 16,038 49,321
Weighted average common shares
outstanding before conversion of
OP Units 35,430
Net (loss) income per
common share $1.40
</TABLE>
ARDEN REALTY, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands)
1. Adjustments to the Pro Forma Condensed Consolidated Balance Sheet
The adjustments to the Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 1997 are as follows:
A. Acquisition of properties acquired in the second quarter of 1997 (the
"Second Quarter 1997 Acquisitions") with $1,650,000 of cash and deposits and
with proceeds of $37,200,000 of mortgage loans payable and $149,600,000 on the
unsecured lines of credit
Purchase price and actual and estimated additional closing costs of the
Second Quarter 1997 Acquisitions are as follows:
Second Quarter 1997 Acquisitions Purchase Price
10780 Santa Monica $ 10,550
Clarendon Crest 5,250
Noble Professional Center 6,750
South Bay Center 19,150
8383 Wilshire 59,100
Parkway Center 7,450
Centerpointe La Palma 80,200
Total $188,450
B. Sale of 13,750,000 shares of common stock in the Secondary Offering:
Gross proceeds from the Secondary Offering $ 359,219
Costs associated with the Secondary Offering (18,588)
$ 340,631
Par value of common stock 138
Additional paid in capital from
proceeds from sale of common stock 340,493
$340,631
ARDEN REALTY, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(in thousands)
1. Adjustments to the Pro Forma Condensed Consolidated Balance Sheet
(Continued)
C. Acquisition of properties acquired in the third quarter of 1997 (the
"Third Quarter Acquisitions") with use of proceeds from the Secondary Offering
and the Mortgage Note Payable and borrowings under the lines of credit
Purchase price and actual and estimated additional closing costs of the
Third Quarter Acquisitions are as follows:
Third Quarter Acquisitions
1000 Town Center $ 14,050
Mariner Court 11,800
Pacific Gateway II 25,225
Crown Cabot 28,300
299 Euclid 7,200
Harbor Corporate Center 4,450
1821 Dyer 7,230
Carlsberg Corporate Center 11,800
Total $110,055
D. Repayments of mortgage loans and lines of credit
Proceeds from the Company's new $175
million mortgage financing from an
affiliate of Lehman Brothers (the "Mortgage
Financing") $175,000
Repayment of mortgage loan with proceeds
from the Mortgage Financing (175,000)
Additional draws on the Credit Facility to
payfinancing costs incurred in connection
with the Mortgage Financing and the
amendment to the Credit Facility 3,872
Additional draws on the Credit Facility to
fund required reserve account in accordance
with the Mortgage Financing 4,000
Proceeds from the Secondary Offering used
to pay down lines of credit (221,472)
(213,600)
ARDEN REALTY, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(in thousands)
2. Adjustments to the Pro Forma Condensed Consolidated Statements of Operations
The pro forma adjustments reflected in the Pro Forma Condensed Consolidated
Statements of Operations for the three months ended March 31, 1997 and the year
ended December 31, 1996 are set forth below:
E. Represents the preacquisition period for the 17 properties acquired in
1996 (the "1996 Acquisitions")
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
400 Imperial 10351
Corporate 5832 9665 Bank 100 303 Santa
Pointe Bolsa Wilshire Tower Broadway
Norwalk Glenoaks Monica
Revenue
Rental $390 $80 $548 $1,351 $1,554 $1,387 $1,980
$1,134
Tenant reimbursements 103 -- 19 29 107
40 48 11
Parking - net 28 10 58 124 88 66 129 99
Other rental operations 23 -- 32 15
74 4 138 7
Total revenues 544 90 657 1,519 1,823 1,497 2,295
1,251
Property expenses 123 8 203 574 581 578
956 551
Excess of revenue
overcertain expenses $421 $82 $454 $ 945 $1,242 $ 919
$1,339 $ 700
</TABLE>
<TABLE>
<S> <C> <S> <C> <C> <C> <C> <C> <C> <C>
Burbank
Executive
Plaza and
California Los Angeles Sumitomo
10350
2730 Grand Federal Center Corporate 5200 W. Bank Santa
Wilshire Avenue Building Promenade Center Century Building
Monica Total
Revenue
Rental $ 960 -- $2,156 $2,097 $5,882 $1,021 $1,926 $ 629 $23,095
Tenant reimbursements -- -- --
51 128 115 79 3 733
Parking - net 43 -- 164 -- -- 40
254 58 1,161
Other rental operations 12 -- --
- -- 288 2 9 2
606
Total revenues 1,015 -- 2,320 2,148 6,298 1,178 2,268 692 25,595
Property expenses 451 -- 976 982 2,881 1,188 1,070 327 11,449
Excess of revenue
over certain
expenses $ 564 -- $1,344 $1,166 $3,417 $ (10) $1,198 $365 $14,146
</TABLE>
F. Represents the actual preacquisition results for the properties
acquired in the first six months of 1997 (the "1997 Acquisitions"):
<TABLE>
The 1997 Acquisitions
For the Year Ended December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Whittier
Financial,
Clarendon
10780 Crest, and 6800 Noble South Center-
535 Santa California Owens- Professional Bay
8383 Parkway pointe
Brand Monica Twin Centre mouth Center Centre Wilshire Center La Palma
Total
Revenue
Rental $ 707 $1,455 $5,580 $ 532 $ 794 $2,691 $6,628 $ 911 $
9,222 $28,520
Tenant reimbursements 74 57 225 26 5
143 -- 92 797 1,419
Parking - net 90 136 228 -- 51 --
832 -- 9 1,346
Other rental operations -- 2 15 5
- -- 26 31 -- 38 117
Total revenues 871 1,650 6,048 563 850 2,860
7,491 1,003 10,066 31,402
Property expenses 459 417 1,757 485 347 1,270
2,867 276 2,834 10,712
Excess of revenue
over certain
expenses $412 $1,233 $4,291 $ 78 $ 503 $1,590 $4,624 $ 727 $
7,232 $20,690
</TABLE>
<TABLE>
Pre-Acquisition Period for the 1997 Acquisitions
for the Three Months Ended
March 31, 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Whittier
Financial,
Clarendon
10780 Crest, and 6800 Noble South Center-
535 Santa California Owens- Professional Bay 8383 Parkway
pointe
Brand Monica Twin Centre mouth Center Centre
Wilshire Center La Palma Total
Revenue
Rental $147 $385 $1,265 $153 $258 $696 $1,688 $260 $2,108 $6,960
Tenant reimbursements 3 4 51 1 1
29 -- 14 202 305
Parking - net 14 36 58 -- -- --
236 -- 2 346
Other rental operations -- -- 3 -- --
3 22 -- 39 67
Total revenues 164 425 1,377 154 259 728
1,946 274 2,351 7,678
Property expenses 98 115 395 121 125 277 774 56 579
2,540
Excess of revenue over
certain expenses $ 66 $310 $ 982 $ 33 $134 $451
$1,172 $218 $1,772 $5,138
</TABLE>
G. Represent the actual historical results for the Third Quarter
Acquisitions:
<TABLE>
Third Quarter Acquisitions
For the Year Ended December 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1000
Town Center Harbor Carlsberg
and Pacific Crown 299 Corporate 1821
Corporate
Mariner Court Gateway II Cabot Euclid Center Dyer Center
Total
Revenue
Rental $3,798 $3,355 $3,002 $ -- $776 $593 $1,679 $13,203
Tenant reimbursements 93 87 71 -- -- 133 30
414
Parking - net -- -- -- -- -- -- 61
61
Other rental operations -- 144 41 -- 5 -- 19
209
Total revenues 3,891 3,586 3,114 -- 781 726 1,789 13,887
Property expenses 1,350 1,205 897 -- 246 92 713
4,503
Excess of revenue over
certain expenses $2,541 $2,381 $2,217 -- $535 $634 $1,076 $ 9,384
</TABLE>
<TABLE>
Third Quarter Acquisitions
For the Three Months Ended March 31, 1997
<S> <C> <C> <C> <S> <C> <C>
1000
Town Center Harbor Carlsberg
and Pacific Crown 299 Corporate 1821 Corporate
Mariner Court Gateway II Cabot Euclid Center Dyer
Center Total
Revenue
Rental $971 $823 $795 $ -- $179 $148 $444 $3,360
Tenant reimbursements 23 21 19 -- -- 33 8
104
Parking - net 2 -- -- -- -- -- 15
17
Other rental operations -- 9 2 -- -- --
5 16
Total revenues 996 853 816 -- 179 181 472 3,497
Property expenses 312 289 201 -- 62 27 168 1,059
Excess of revenue over
certain expenses $684 $564 $615 -- $117 $154 $304 $2,438
</TABLE>
H. Increase in rental revenue to adjust the 1996 Acquisitions, the 1997
Acquisitions, and the Third Quarter Acquisitions to straightline rental revenue
calculated as though the properties were purchased at January 1, 1996.
I. Decrease in other income to eliminated nonrecurring construction fees
which would not have been realized by the Company and certain management fees
that will not be earned.
J. Increase in property general and administrative expenses related to
additional property payroll costs relating to the 1997 Acquisitions and the
Third Quarter Acquisitions for the period ended March 31, 1997 and to the 1996
Acquisitions, 1997 Acquisitions and the Third Quarter Acquisitions for the
period ended December 31, 1996.
K. Increase in general and administrative expenses related to expected
level of operations as a public real estate investment trust and the incremental
increase relating to the management of additional properties.
Three Months Year Ended
Ended
L. March 31, 1997 December 31,
1996
Increase (decrease) in interest
expense:
Decrease in interest expense due
to repayment of mortgage loans $(3,024) $(33,157)
and lines of credit
Increase in interest expense
related to the Mortgage
Financing and the Mortgage Note
Payable with an interest rate of
7.5% and 7.0%, respectively, net 2,992 11,964
of amounts capitalized
Increase in amortization of
finance costs related to the
Mortgage Financing and the
Credit Facility, due in seven 311 1,245
and three years, respectively
Net increase (decrease) in $ 279 $(19,948)
interest expense
M.
Increase in depreciation expense:
Increase in depreciation expense
to reflect a full quarter of
depreciation for the 1997
Acquisitions and the Third
Quarter Acquisitions for the
three months ended March 31,
1997 and a full year of
depreciation for the 1996
Acquisitions, 1997 Acquisitions,
and the Third Quarter
Acquisitions for the year ended $ 1,788 $ 9,833
December 31, 1996, utilizing a
40 year useful life for
buildings and a 10 year useful
life for improvements
Increase in depreciation due to
the fair value of consideration
paid in excess of book value of
interests in properties acquired
from nonaffiliates in connection
with the completion of the -- 130
Company's initial public
offering of common stock
Net increase in depreciation $ 1,788 $ 9,963
expense
N. To reflect adjustment for minority interest of 7.7% in the Operating
Partnership.
O. To eliminate net extraordinary loss related to early extinguishment of
debt.
(c) Exhibits.
10.30 Agreement of Purchase and Sale and Escrow
Instructions between Overland Plaza Partnership, a
California general partnership, and Arden Realty
Limited Partnership, a Maryland limited partnership.
10.31 Agreement of Purchase and Sale and Joint Escrow
Instructions between JC Investment & Realty, Inc. a
Washington corporation, and Arden Realty Limited
Partnership, a Maryland limited partnership.
10.32 Letter of Amendment to Agreement of Purchase and
Sale and Joint Escrow Instructions between JC
Investment & Realty, Inc. a Washington corporation, and
Arden Realty Limited Partnership, a Maryland limited
partnership.
10.33 Agreement of Purchase and Sale and Escrow
Instructions between Arden Realty Limited Partnership,
a Maryland limited partnership, and New York Life
Insurance Company, a New York mutual insurance company.
10.34 Amendment to Agreement of Purchase and Sale and
Escrow Instructions between Arden Realty Limited
Partnership, a Maryland limited partnership, and New
York Life Insurance Company, a New York mutual
insurance company.
10.35 Amendment to Agreement of Purchase and Sale and
Escrow Instructions between Arden Realty Limited
Partnership, a Maryland limited partnership, and New
York Life Insurance Company, a New York mutual
insurance company.
10.36 Agreement of Purchase and Sale and Escrow
Instructions between Bedford Property Investors, Inc. a
Maryland corporation, and Arden Realty Limited
Partnership, a Maryland limited partnership.
10.37 Amendment to Agreement of Purchase and Sale and
Escrow Instructions between Bedford Property Investors,
Inc. a Maryland corporation, and Arden Realty Limited
Partnership, a Maryland limited partnership.
10.38 Agreement of Purchase and Sale and Joint Escrow
Instructions between Echo USA, Inc. a Hawaii
Corporation, and Arden Realty Limited Partnership, a
Maryland limited partnership.
10.39 Amendment to Agreement of Purchase and Sale and
Joint Escrow Instructions between Echo USA, Inc. a
Hawaii corporation, and Arden Realty Limited
Partnership, a Maryland limited partnership.
10.40 Real Estate Sales Contract by and between Leisure
Colony Management Corporation, a Florida corporation,
and Arden Realty Limited Partnership, a Maryland
limited partnership .
10.41 Agreement of Purchase and Sale and Joint Escrow
Instructions between Carlsberg Investment Company, a
Wyoming partnership, 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: August 13, 1997 By: /s/ Diana M. Laing
Diana M. Laing
Chief Financial Officer
AGREEMENT OF PURCHASE AND SALE
AND ESCROW INSTRUCTIONS
Between
OVERLAND PLAZA PARTNERSHIP
Seller
and
ARDEN REALTY LIMITED PARTNERSHIP
Purchaser
Covering
299 North Euclid Avenue
Pasadena, California 91101
AGREEMENT OF PURCHASE AND SALE
AND ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND ESCROW INSTRUC
TIONS ("Agreement") is made and entered into this 1st day
of April 1997 by and between OVERLAND PLAZA PARTNERSHIP,
a California general partnership ("Seller"), and ARDEN
REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
("Purchaser"), with reference to the following facts:
A. Seller is the fee owner of that certain parcel of
real property (the "Real Property") and the improvements
thereon, for informational purposes only, are a five-story
office building containing approximately 77,220 rentable
square feet, other facilities, fixtures, paving and
surfacing thereon or associated therewith, with automobile
parking with a total of approximately _____ marked parking
spaces (collectively, the "Improvements"). The Real
Property and Improvements are located at 299 North Euclid
Avenue, Pasadena, California 91101, and is more particularly
described in Exhibit "A" attached hereto and forming a part
hereof.
B. Seller desires to sell, and Purchaser desires to
purchase, all of the real and personal property owned by
Seller located at or forming part of the Real Property,
including, but not limited to, the Improvements, and all
appurtenant easements and rights, and the Personal Property
(as hereinafter defined) on the terms, covenants and condi
tions hereinafter set forth.
NOW, THEREFORE, with reference to the foregoing reci
tals and in reliance thereon and in consideration of the pur
chase price hereinbelow set forth, and the other terms, cov
enants and conditions set forth below, and other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, it is mutually covenanted and
agreed by Seller and Purchaser as follows:
1. Purchase and Sale. Subject to all of the terms
and conditions of this Agreement and for the consideration
set forth, on Closing (as hereinafter defined), Seller shall
convey, or cause to be conveyed, to Purchaser or to
Purchaser's assignee pursuant to paragraph 15(g) below, and
Purchaser or its assignee shall purchase from Seller, all of
the following:
(a) The Real Property and the Improvements,
together with all easements, hereditaments and appurtenances
thereto, subject only to such easements, agreements and
exceptions as may have been approved by Purchaser in
accordance with Paragraph 4(a) hereof and any tenancies and
occupancies;
(b) All of the personal property of Seller (the
"Personal Property") located at, attached or appurtenant to,
or used in connection with the operation or maintenance of
the Real Property and/or the Improvements (the "Inventory");
(c) Any leases to tenants leasing space in the
Improvements (the "Tenant Leases");
(d) To the extent assignable, those certain
service and other agreements more particularly described in
Exhibit "D" attached hereto and made a part hereof; and
(e) All other right, title and interest of Seller
constituting part and parcel of the Property (as hereinafter
defined), including, but not limited to, trade names, logos,
easements, licenses, permits, air rights, certificates of
occupancy, warranties, rights-of-way, signs, trademarks,
telephone listings and numbers, sewer agreements, water line
agreements, utility agreements, water rights and oil, gas
and mineral rights (collectively, the "Intangibles") to the
extent assignable or transferable.
Reference herein to the "Property" shall include all of the
real, personal and intangible property described in
subparagraphs (a) through (e) hereof.
2. Purchase Price and Payment. The purchase price
(the "Purchase Price") to be paid by Purchaser to Seller for
the Property is the sum of Seven Million and No/100 Dollars
($7,000,000.00), payable as follows:
(a) Upon the opening of Escrow (as hereinafter
set forth) Purchaser shall deliver to Escrow Agent (as
hereinafter defined) cash in the sum of One Hundred Thousand
Dollars ($100,000.00), ("Deposit") which shall be held by
Escrow Agent as security for the full performance by
Purchaser of its obligations hereunder and on account of the
Purchase Price payable at Closing, subject to the following
terms and conditions:
(i) If Closing occurs, then the Deposit shall be
applied to the Purchase Price;
(ii) If Closing does not occur and Seller shall be
entitled to liquidated damages as provided in Paragraph
10(b) hereof, Seller shall be entitled to the Deposit; and
(iii) If the Closing does not occur and Purchaser
shall be entitled to the return of the Deposit as provided
in this Agreement, the same shall be returned to Purchaser.
(b) Prior to the Close of Escrow, Purchaser shall
deliver into Escrow a promissory note payable to Seller in
the original principal amount of Five Million and No/100
Dollars ($5,000,000.00) in the form of Exhibit "B" attached
hereto and incorporated herein by this reference ("Note"), a
Deed of Trust, Assignment of Rents and Leases, Security
Agreement and Fixture Filing securing the Note in favor of
Seller in the form of Exhibit "C" attached hereto and
incorporated herein by this reference ("Deed of Trust").
(c) Purchaser shall pay to Seller through Escrow
Agent at Closing in immediately available funds an amount
equal to the balance of the Purchase Price, plus (or minus)
the net amount of all costs, expenses, adjustments and
prorations to be credited (or debited) to Purchaser pursuant
to this Agreement. If Seller fails to forward to Purchaser
a Qualifying Statement provided under 1445 of the Internal
Revenue Code and an equivalent Form 590RE provided under the
Revenue and Taxation Code of the State of California, Escrow
Agent shall be entitled to withhold and pay to the Internal
Revenue Service and the Franchise Tax Board such withholding
required of Purchaser pursuant to Internal Revenue Code 1445
and equivalent form provided under the Revenue and Taxation
Code of the State of California.
(d) The Deposit shall be at all times invested by
Escrow Agent in the following investments ("Approved Invest
ments"): (i) United States Treasury obligations, (ii)
United States Treasury-backed repurchase agreements issued
by a major money center banking institution reasonably
acceptable to Seller, (iii) Certificates of Deposit or Money
Market Accounts of institutions whose deposits are insured
by the FDIC or (iv) such other manner as may be reasonably
agreed to by Seller and Purchaser. The Deposit shall be
disposed of by Escrow Agent only as provided in this
Agreement.
(e) All payments required to be made under this
Agreement shall be made in U.S. funds.
3. Escrow.
(a) Opening of Escrow. As soon as commercially
reasonable after their complete execution of this Agreement
("Effective Date") and in any event not later than three (3)
business days thereafter, Seller and Purchaser shall open an
escrow (the "Escrow") with Commerce Escrow Company,
1545 Wilshire Boulevard, Suite 600, Los Angeles, California
90017, Attention: Mark Minsky ("Escrow Agent"), through
which the purchase and sale of the Property shall be
consummated. A fully executed copy of this Agreement shall
be deposited with Escrow Agent, duly executed by Seller, Pur
chaser and Escrow Agent, to serve as Escrow instructions to
Escrow Agent, and Escrow Agent shall be and is hereby
authorized and instructed to deliver pursuant to the terms
of this Agreement the documents and monies to be deposited
into the Escrow. Escrow Agent may attach to this Agreement
Escrow Agent's standard form escrow agreement, to the extent
that the same is consistent with the terms hereof, and are
reasonably approved by Seller and Purchaser. Escrow Agent
shall immediately, upon receipt of such duly executed copy
of this Agreement, notify Seller and Purchaser of the
opening of Escrow. Should either party fail to open Escrow
in accordance with the provisions of this Paragraph 3(a),
such failure shall constitute a material breach of this
Agreement.
(b) Closing of Escrow. Escrow shall close on or
after June 2, 1997 and upon three (3) business days prior
notice from Purchaser, but in all events not later than
July 1, 1997, provided all of Purchaser's Conditions
Precedent to Closing as set forth in Paragraph 8 hereof have
been satisfied. The term "Closing" as used herein shall be
deemed to be the date upon which the respective Conditions
Precedent to Purchaser's Obligation to Close Escrow (set
forth in Paragraph 8 below) and the Conditions Precedent to
Seller's Obligation to Close Escrow (set forth in Paragraph
9 below) have been satisfied, the Grant Deed ("Grant Deed"
herein) hereinafter referred to is recorded in the office of
the County Recorder of Los Angeles County and the net
proceeds of sale are held by Escrow Agent for disbursement
to Seller. If the Closing as provided herein does not
occur, this Agreement and the Escrow shall be cancelled and
terminated and thereafter neither party shall have any
further obligation or liability to the other party, except
as expressly set forth in this Agreement.
4. Title Matters.
(a) Title Report.
(i) Seller has ordered (and upon receipt shall
cause to be delivered to Purchaser) a CLTA Preliminary Title
Report covering the Real Property and the Improvements,
which may state that it is subject to any matter that would
be disclosed by a survey (the "Preliminary Title Report"),
issued by Chicago Title Insurance Company ("Title Company"),
together with true and legible copies of all documents
evidencing matters of record shown as exceptions to title
thereon. If Purchaser shall desire an ALTA Survey of the
Real Property and Improvements ("Survey"), Purchaser shall
cause the same to be so made at Purchaser's sole cost and
expense before the expiration of the Approval Period (and
upon receipt shall deliver a copy of the updated Survey to
Seller). Purchaser shall have the right to object to any
exceptions contained in the Preliminary Title Report or the
Survey by giving notice to Seller before the expiration of
the Approval Period. Notwithstanding any of the foregoing,
Seller shall at Closing (but shall not be obligated prior
thereto) remove of record all tax and mechanic's liens
(except only for the liens of the taxes and assessments to
be prorated under Paragraph 12(a)(ii)), at its sole cost and
expense. Unless Purchaser gives written notice that it
disapproves any such additional exceptions to title matters,
stating the exceptions so disapproved, before the expiration
of the Approval Period, Purchaser shall be deemed to have
approved said exceptions. Purchaser's approval of the
Preliminary Title Report shall be without prejudice to Pur
chaser's right to disapprove additional survey matters or
any supplementary reports issued by Title Company or
disclosed after the expiration of the Approval Period;
provided, however, Purchaser's approval shall not be
unreasonably withheld, and, as to survey matters, shall only
be applicable if Purchaser shall have obtained a Survey
before the expiration of the Approval Period. If for any
reason, on or before the Closing Date Seller does not cause
such exceptions to title or survey matters which Purchaser
timely disapproves (to the extent Purchaser is permitted
hereunder to so disapprove) to be removed at no cost or
expense to Purchaser (Seller having the right but not the
obligation to do so), the obligation of Seller to sell, and
Purchaser to buy, the Property as herein provided shall
terminate (and Seller and Purchaser shall have no further
obligations in connection herewith). Purchaser shall have
the option to waive the condition precedent set forth in
this paragraph 4(a) by notice to Seller. In the event of
such waiver, such condition shall be deemed satisfied. All
matters set forth on the Preliminary Title Report, the
Survey or any updated Survey obtained by Purchaser which are
not timely objected to by Purchaser shall be permitted
exceptions to title and shall additionally include (i) any
title or survey matters objected to by Purchaser, which
objections are subsequently waived in writing by Purchaser,
and (ii) any title or survey matters objected to by
Purchaser in accordance with the terms and provisions of
this Agreement, which objections are cured to Purchaser's
satisfaction, (iii) real estate taxes and assessments not
yet due and payable; and (iv) the printed exceptions which
appear in the standard form ALTA owner's policy of title
insurance (with extended coverage).
(ii) If at the date of Closing there are any liens
or encumbrances that Seller is obligated to pay and dis
charge, Escrow Agent may use any portion of the Purchase
Price to satisfy the same (if the same are not bonded-over
or otherwise satisfied by title endorsement), provided
Seller shall simultaneously either deliver to Escrow Agent
at Closing title instruments in recordable form sufficient
to satisfy such liens and encumbrances of record, together
with the cost of recording or filing said instruments.
(b) Title Policy. The Title Policy shall be
Chicago Title Company's ALTA Owner's policy with liability
in the amount of the Purchase Price, showing fee title to
the Real Property and the Improvements as vested in
Purchaser, or in Purchaser's permitted assignee, subject
only to the permitted exceptions specified in Paragraph 4(a)
above.
5. Delivery of Information.
(a) As soon as practicable after the date hereof,
but in no event later than five (5) business days after the
Effective Date, except as otherwise set forth, Seller shall
have delivered or shall have caused to be delivered or made
available to Purchaser at the Property to Purchaser to the
extent they are in Seller's possession or under its control,
the following:
(i) Evidence that the Real Property complies
with the Subdivision Map Act of California, the Property has
all of the necessary valid Certificates of Occupancy and
otherwise complies with all construction and operational
laws, codes, ordinances, regulations and conditional use
permits.
(ii) The loss history of the Property pertaining
to any property damage or personal injury suffered for which
an insurance claim of more than Fifty Thousand Dollars
($50,000) was submitted by Seller at any time after January
1, 1995 to the extent available to Seller;
(iii) A set of all "as built" plans, specifications
and structural drawings (including, but not limited to,
mechanical, electrical, air conditioning, landscaping and
sprinkler drawings), third-party soil, geological, seismic,
environmental and hazardous materials and asbestos studies
or reports, relating to the Improvements or the subsurface
conditions, grading plans, water table or other matters
bearing upon condition of the Property;
(iv) All electricity and property tax bills for
the period beginning January 1, 1995 to the extent available
to Seller;
(v) Statements of income and expense for the
Property for the calendar year 1995, 1996 and current year
to date to the extent available to Seller;
(vi) All warranties and operating manuals that
Seller may have from vendors, contractors or servicing
agents with respect to the physical condition of the
Improvements, the Property or any portion thereof or the
equipment located therein;
(vii) Complete copies of all service and other con
tracts pertaining to the Property (including, but not
limited to, HVAC, elevator, landscape, management, leasing
brokerage and parking) in respect to which Seller is
obligated (the "Service Contracts");
(viii) A list of all personal property (including
supplies) owned or leased by Seller and used in connection
with the operation, maintenance and repair of the Property.
(b) Purchaser shall have until 5:00 P.M. on
June 2, 1997 (the "Approval Period") in which to approve or
disapprove all matters and things that are subject to
Purchaser's rights of review, inspection and approval
hereunder. Purchaser's failure either to approve or
disapprove said information before the expiration of the
Approval Period as aforesaid shall be deemed its approval
thereof. If Purchaser disapproves any of said information,
Purchaser shall notify Seller in writing thereof within the
time period specified above whereupon, this Agreement shall
terminate. However, notwithstanding the foregoing, if
Purchaser disapproves any Service Contract, this Agreement
shall not terminate and Seller shall lawfully terminate such
Service Contract not later than thirty (30) days after the
Closing, to the extent the same can be so terminated and
provided Purchaser shall pay all cancellation or termination
penalties, fees or costs in connection therewith.
6. Inspections and Approval by Purchaser.
(a) From and after the date hereof, Purchaser and
its agents, employees and contractors shall be afforded full
access to the Property during normal business hours and upon
twenty-four (24) hours prior notice for the purpose of
making such investigations as Purchaser deems prudent with
respect to the physical condition of the Property,
including, but not limited to, engineering tests, subject to
the rights of tenants in possession. Seller shall
reasonably cooperate to assist Purchaser in completing such
inspection. However, Purchaser agrees not to contact any of
Seller's tenants without Seller's prior consent and to hold
Seller harmless from and against any loss, cost, damage,
claim or expense suffered by Seller or the Property and
caused by Purchaser's said investigations (the foregoing
obligation surviving any termination of this Agreement). In
no event shall Purchaser make any intrusive physical testing
(environmental, structural or otherwise) at the Property
(such as soil borings or the like) without Seller's prior
consent. Purchaser shall promptly restore the Property to
its condition immediately prior to such investigations. In
addition, Purchaser agrees not to unreasonably interfere
with the use and enjoyment of the Property by Seller, its
agents, representatives, employees or any tenants or other
occupants. Seller shall have the right, at its option, to
cause a representative of Seller to be present at all
inspections, reviews and examinations conducted hereunder.
At the request of Seller, Purchaser shall promptly deliver
to Seller true, accurate and complete copies of any written
reports relating to the Property prepared for or on behalf
of Purchaser by any third party and, in the event of
termination hereunder, shall return all documents and other
materials furnished to or on behalf of Purchaser by Seller
hereunder. Purchaser shall keep all information or data
received or discovered in connection with any of the
inspections, reviews or examinations strictly confidential;
provided; however, that Purchaser shall be entitled to
disclose such information to Purchaser's attorneys,
consultants, accountants and prospective debt and equity
financing sources who reasonably need to be informed in
connection with Purchaser's determinations hereunder.
(b) From and after the date hereof until Closing,
Purchaser and its agents shall be afforded full opportunity
by Seller during normal business hours and upon twenty-four
(24) hours prior notice to examine all operating books and
records that relate to the Property (including all specifica
tions and as-built drawings to the extent they are in
Seller's possession), all building permits, certificates of
occupancy, soil reports, engineers' reports and studies, and
similar information relating to the Property or its manage
ment, operation, maintenance or use, and all warranties and
operating manuals that Seller may have from vendors, contrac
tors or servicing agents with respect to the physical condi
tion of the Property or any portion thereof or the equipment
located thereon.
(c) Purchaser shall have until the expiration of
Approval Period in which to approve or disapprove the
matters referred to in subparagraphs (a) and (b) above.
Furthermore, Purchaser shall have until the expiration of
the Approval Period in which to approve or disapprove of a
market and leasing survey of the Property and the
surrounding leasing market (including its own economic
analysis of the feasibility of the Property for Purchaser's
particular use thereof). Purchaser's disapproval shall be
in writing and shall be delivered to Seller prior to the
expiration of the Approval Period. Failure to deliver such
written disapproval shall be deemed Purchaser's approval of
said matters.
7. Operation of Property Pending Closing.
(a) Tenant Leases. 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 tenancies
or approve any subleases without the prior written consent
of Purchaser (which consent shall not be unreasonably
delayed or withheld). In requesting such consent, Seller
shall inform Purchaser in writing of the amount, if any,
proposed to be required to pay for, or any allowance
proposed to be given for, tenant improvement work, any
leasing commissions and fees, in connection with such lease
and any rent concessions. Also included in the request for
consent, shall be Seller's proposed draft of the lease or
amendment agreement. The failure of Purchaser to respond
within five (5) business days after written request for any
such approval shall be deemed to constitute approval.
Seller shall not collect in advance any rent or other sum
due under any tenant lease, except for collection of current
rents no more than one month in advance.
(b) Leasing Commissions; Tenant Improvements and
Rent Concessions. Seller covenants and agrees to be
responsible for all leasing commissions, tenant improvement
costs and unamortized rent concessions with respect to any
leases (including amendments and renewals) entered into on
or before June 2, 1997. Purchaser covenants and agrees to
be responsible for all leasing commissions, tenant
improvement costs and unamortized rent concessions with
respect to any new leases, extensions of existing leases and
renewals occurring after June 2, 1997, provided that (i)
Purchaser has approved or is deemed to have approved such
action or event by Seller and (ii) Seller has delivered to
Purchaser copies of the proposed lease and other agreements
with respect thereto and to which any brokerage commissions
are payable. Failing such delivery and approval (or deemed
approval), Seller shall remain responsible for all of costs
and expenses including commissions.
(c) Insurance Policies. Seller shall keep all of
the insurance policies covering the Property (or
substantially equivalent coverage) in full force and effect
between the date of this Agreement and Closing (the
"Insurance Policies").
(d) Service Contracts. Seller shall have the
right to renew or replace Service Contracts that expire
prior to Closing or to enter into new Service Contracts for
emergency purposes if deemed reasonably necessary by Seller
for any term provided that such Service Contracts are
terminable by Seller or its successors in interest upon not
more than thirty (30) days' notice to the service provider.
(e) Property Management. Seller shall maintain
the Property in the same manner as prior hereto pursuant to
its normal course of business (such maintenance obligations
not including extraordinary capital expenditures or
expenditures not incurred in such normal course of
business), subject to reasonable wear and tear and further
subject to destruction by casualty or other events beyond
the reasonable control of Seller.
8. Conditions Precedent to Purchaser's Obligation to
Close Escrow. The obligation of Purchaser to consummate the
transactions contemplated hereby is subject to the following
conditions, inserted for Purchaser's sole benefit and that
may be waived by Purchaser only in writing at its sole
option. Said conditions are as follows:
(a) Representations and Warranties True at Clos
ing. The representations and warranties of Seller contained
in Paragraph 13 of this Agreement shall be true on the date
of Closing in all material respects as though such
representations and warranties were made on and as of such
date.
(b) Compliance with This Agreement. Seller shall
have performed and complied with in all material respects
all agreements and conditions required by this Agreement to
be performed or complied with by it on or prior to Closing.
(c) Title Policy. Title Company shall be ready,
willing and able to issue the Title Policy required by Para
graph 4(b).
(d) Change in Condition. Subject to the pro
visions of Paragraphs 15(b) and 15(c) hereof, there shall
exist no damage, destruction or condemnation of the Property
prior to Closing.
9. Conditions Precedent to Seller's Obligation to
Close Escrow. The obligation of Seller to consummate the
transactions contemplated hereby is subject to the following
conditions, inserted for Seller's sole benefit and that may
be waived solely by Seller only in writing at its sole
option. Said conditions are as follows:
(a) Representations and Warranties True at Clos
ing. The representations and warranties of Purchaser con
tained in this Agreement, or in any certificate or document
signed by Purchaser pursuant to the provisions hereof, shall
be true on and as of Closing in all material respects as
though such representations and warranties were made on and
as of such date.
(b) Delivery of Purchase Price and Documents.
Purchaser shall have delivered all funds and documents to
Escrow Holder required by it hereunder to enable it to close
the Escrow.
(c) Compliance with This Agreement. Purchaser
shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or
complied with by it on or prior to Closing.
10. Remedy of Purchaser and Seller Upon Default.
(a) Remedies of Purchaser. In the event that
Seller fails to keep and perform each and every obligation,
covenant and agreement herein by Seller to be kept or per
formed, then Purchaser may pursue such rights it may have
against Seller and the Property either at law or in equity.
(b) Remedy of Seller. THE PARTIES HERETO, BEFORE
ENTERING INTO THIS TRANSACTION, HAVE BEEN CONCERNED WITH THE
FACT THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY SELLER IF
PURCHASER SHOULD WRONGFULLY FAIL TO PURCHASE THE PROPERTY.
WITH THE FLUCTUATION IN VALUE OF REAL PROPERTY, THE CURRENT
AND HIGHLY UNPREDICTABLE STATE OF THE ECONOMY, THE
FLUCTUATING MONEY MARKET FOR REAL ESTATE LOANS OF ALL TYPES,
AND OTHER FACTORS THAT DIRECTLY AFFECT THE VALUE AND MARKET
ABILITY OF THE PROPERTY, IT IS REALIZED BY THE PARTIES THAT
IT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICABLE, IF NOT IM
POSSIBLE, TO ASCERTAIN WITH ANY DEGREE OF CERTAINTY PRIOR TO
SIGNING THIS AGREEMENT THE AMOUNT OF DAMAGES THAT WOULD BE
SUFFERED BY SELLER IN THE EVENT OF PURCHASER'S WRONGFUL FAIL
URE TO PURCHASE THE PROPERTY. THE PARTIES, HAVING MADE DILI
GENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL COM
PENSATORY DAMAGES SELLER WOULD SUFFER IN THE EVENT OF PUR
CHASER'S WRONGFUL FAILURE TO PURCHASE THE PROPERTY, HEREBY
AGREE THAT THE REASONABLE ESTIMATE OF SAID DAMAGES IS AN
AMOUNT EQUAL TO THE DEPOSIT; AND IN THE EVENT OF PURCHASER'S
WRONGFUL FAILURE TO PURCHASE THE PROPERTY, SELLER SHALL BE
ENTITLED TO SUCH AMOUNT AS FULL LIQUIDATED DAMAGES, AND THAT
PAYMENT OR TENDER TO SELLER BY PURCHASER OF SUCH AMOUNT
SHALL TERMINATE ALL OF SELLER'S RIGHTS AND REMEDIES AT LAW
OR IN EQUITY AGAINST PURCHASER WITH RESPECT TO SUCH FAILURE
TO PERFORM.
/s/ LLG /s/ RC /s/RSZ
Seller's Purchaser's
Initials Initials
11. Closing Procedure.
(a) At least one business day prior to the date
of Closing, Purchaser shall have delivered to Escrow Agent
counterpart executed originals of the following documents
and the following sums of money required to be delivered by
Purchaser hereunder:
(i) The Purchase Price in the manner set forth
in Paragraph 2(a);
(ii) Such funds as may be necessary to comply with
Purchaser's obligations hereunder regarding prorations,
costs and expenses; and
(iii) A signed counterpart of the Assignment of
Leases and Security Deposits (the "Assignment of Leases") if
any leases are in effect covering all or any portion of the
Property, substantially in the form and substance of Exhibit
"G" attached hereto and forming a part hereof and a signed
counterpart of the Assignment of Service and Miscellaneous
Rights and Agreements (the "Assignment of Service
Contracts").
(b) At least one business day prior to the date
of Closing, Seller shall have delivered to Escrow Agent
counterpart executed originals of the following documents:
(i) The Grant Deed in the form of Exhibit "E"
attached hereto and forming a part hereof;
(ii) A Bill of Sale (the "Bill of Sale") in the
form of Exhibit "F" attached hereto covering the Personal
Property;
(iii) An Assignment of Leases;
(iv) An Assignment of Service Contracts substan
tially in the form and substance of Exhibit "H" attached
hereto and forming a part hereof;
(v) An original counterpart of each of the
Service Contracts, Leases and keys to the Property if in
Seller's possession or under its control;
(vi) Notices to any tenants and occupants of the
Property of the transfer of the Property to Purchaser;
(vii) 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 Improvements; and
(viii) All warranties and operating manuals that
Seller may have from vendors, contractors or servicing
agents with respect to the physical condition of the
Property or any portion thereof or the equipment located
thereon.
(c) Upon delivery of the foregoing sums and
documents, Escrow Agent shall cause Title Company to cause
the Grant Deed to be recorded (by a special recording if
necessary) in the Official Records of Los Angeles County,
California, and immediately to issue the Title Policy.
12. Costs and Prorations.
(a) Prorations. All revenues, income, receiv
ables, costs, expenses and payables of the Property shall be
apportioned equitably between the parties as of Closing on
the basis of the actual number of days in a particular
month, and with respect to the items enumerated below where
a particular manner of apportionment is provided, then
apportionment of such item shall be made in such manner.
The obligation to make apportionments shall survive Closing.
Without limitation, the following items shall be so
apportioned:
(i) Monthly rents and percentage rent and
"passthroughs" of real estate taxes and operating expenses
due from occupancy tenants under Tenant Leases, as and when
collected. If at Closing there are any past due rents or
charges owed by occupancy tenants, they shall not be
prorated until received; Purchaser shall include such
delinquencies in its normal billing and shall pursue the
collection thereof in good faith after the Closing Date (but
Purchaser shall not be required to litigate or declare a
default in any Tenant Lease). To the extent Purchaser
receives amounts on account of Tenant Leases on or after the
Closing Date, such payments shall be applied first toward
then current rent owed to Purchaser in connection with the
applicable Tenant Lease for which such payments are
received, and any excess monies received shall be applied
toward the payment of any delinquent rents, with Seller's
share thereof being promptly delivered to Seller. Purchaser
may not waive any delinquent rents nor modify a Tenant Lease
so as to reduce or otherwise affect amounts owed thereunder
for any period in which Seller is entitled to receive its
share of charges or amounts without first obtaining Seller's
written consent. Seller hereby reserves the right to pursue
any remedy against any tenant owing delinquent rents and any
other amounts to Seller. Purchaser shall reasonably
cooperate with Seller in any collection efforts hereunder
(but shall not be require to litigate or declare a default
in any Lease). With respect to delinquent rents and any
other amounts or other rights of any kind respecting tenants
who are no longer tenants of the Property as of the Closing
Date, Seller shall retain all rights relating thereto.
(ii) Real estate and personal property taxes and
any special assessments, taking into consideration discounts
for the earliest permitted payment, based upon the latest
previous tax levies. Such items shall be reapportioned
between Seller and Purchaser if current tax rates differ
from the latest previous tax rates as soon as the same are
known. Seller agrees that to the extent any additional
taxes, assessments or levies are imposed, assessed or levied
against the Property, or any portion thereof, the Seller or
the Purchaser at any time subsequent to Closing but with
reference to any period prior thereto during Seller's
ownership thereof, Seller shall promptly pay to Purchaser an
amount equal to such additional assessments or levies.
Similarly, if tax refunds become payable for periods during
Seller's ownership of the Property, such amounts (subject to
adjustments for the potential claims of occupancy tenants
that paid tax increases by way of rent escalations to
Seller) shall be promptly paid over to Seller. In the event
that any assessments on the Property are payable in
installments, then the installment for the current period
shall be prorated (with Purchaser assuming the obligation to
pay any installment due after the Closing Date). In no
event shall Seller be charged with or be responsible for any
increase in the taxes on the Property resulting from the
sale of the Property or from any improvements made or lease
entered into on or after the Closing Date.
(iii) Transferable annual permits, licenses, and/or
inspection fees, if any, on the basis of the duration of the
same;
(iv) Security Deposits, plus accrued interest, if
any, payable thereon to tenants, and any other deposits and
prepaid rent, shall be credited (or assigned) to Purchaser;
(v) Utility charges levied against Seller or the
Property, and Purchaser shall transfer all such utility
services to its name and account immediately upon Closing;
(vi) Service Contracts on the basis of the charge
or premium for the period involved;
(vii) Tenant improvements costs and leasing commis
sions for leases signed after the June 2, 1997 shall be paid
by Purchaser if approved by Purchaser in accordance with
Paragraphs 7(a) and 7(b).
(viii) All other operating expenses incurred in the
management and operation of the Property.
No insurance policies shall be assigned hereunder, and
accordingly there shall be no proration of insurance
premiums.
(b) Expenses of Closing. The expenses of Closing
shall be paid in the following manner:
(i) Seller shall pay:
(1) The cost of securing the CLTA standard
coverage portion of the Title Policy that is
attributable to the required ALTA Owner's coverage, the
cost of title endorsements deemed reasonably necessary
to satisfy a specific title exception objection by
Purchaser);
(2) Documentary transfer tax (County and
City) imposed on the conveyance of title to the
Property to Purchaser;
(3) Any sales or use taxes that may be
owing in connection with the transactions contemplated
by this Agreement; and
(4) One-half of Escrow Agent's Escrow Fee.
(iii) Purchaser shall pay:
(1) The cost of the Preliminary Title
Report and the cost of any Escrow or Title cancellation
charges in the event that the transaction fails to
close through no fault of the Seller and, if Closing
does occur, that portion of the cost of the Title
Policy that is not to be paid by Seller pursuant to
Subsection (b)(i)(1) above and the cost of the ALTA
Survey; and
(2) The cost of recording the Grant Deed;
(3) All expenses relating to Purchaser's
financing of its acquisition of the Property including
the cost of recording the Deed of Trust and obtaining
Seller's Loan Policy of Title Insurance; and
(4) One half of Escrow Agent's Escrow fee.
All other Closing fees and expenses, including, but not
limited to, the parties' legal expenses, accounting and con
sulting fees, and other incidental expenses in connection
with this transaction shall be borne by the party incurring
same.
13. Representations, Warranties and Covenants of Seller.
(a) Seller hereby makes the following representa
tions, warranties and covenants, each of which is deemed to
be material and each of which is stated by Seller to be true
and correct on the date hereof and on the Closing Date and
each of which shall survive the Closing:
(i) Seller has no knowledge of any:
(1) existing latent defects or seismic
conditions concerning the Real Property or materially incor
rect income or expense figures in any financial statements
prepared by or for Seller and delivered to Purchaser
regarding the Property.
(2) any claim, litigation or administra
tive action, arbitration, proceeding pending before any
court, agency or official, nor any such claim or action
threatened in writing, relating to the Seller or the
Property or with respect to the validity of any statutes,
ordinances, regulations or restrictions or any permits or
approvals thereunder relating to the construction of any
Improvements on the Property or the operation thereof nor
any outstanding contingent liabilities affecting the
Property;
(3) written notice of violations of
City, County, State, Federal, building, zoning, fire or
health codes, regulations or ordinances, filed or issued
against the Property;
(4) Hazardous Substance in existence on
or below the surface of the Real Property or in any building
located upon the Real Property, including, without
limitation, contamination of soil, subsoil or ground water,
which constitutes a violation of any applicable law, rule or
regulation of any government entity having jurisdiction
thereof except for office and medical supplies in customary
quantities;
(5) thing that would suggest any
portion of the Property having ever been used as a waste
storage or disposal site or gasoline station. Without
limiting the other provisions of this Agreement, Seller
shall reasonably cooperate with Purchaser's investigation of
matters relating to the foregoing provisions of this
paragraph and to provide access to and copies of any data
and/or documents dealing with potentially Hazardous Sub
stances used at the Property and any disposal practices fol
lowed in accordance with, and subject to the provisions of,
Paragraph 6 hereof. Seller agrees that Purchaser may make
inquiries of governmental agencies regarding such matters,
without liability for the outcome of such discussions. For
the purposes of this Agreement, "Hazardous Substances" shall
mean (A) substances defined as "hazardous substances" in (i)
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S. C. 9601 et
seq.), or (ii) the Resource Conservation and Recovery Act of
1976 (42 U.S.C. 6901 et seq.), together with the regula
tions enacted pursuant to such acts, and (B) those
substances defined as "hazardous wastes" in 25117 of the
California Health and Safety Code or as "hazardous
substances" in 25316 of the California Health and Safety
Code together with the regulations enacted pursuant to such
statutes.
(ii) The Service Contracts and any other
agreements, matters and things to be submitted to Purchaser
by Seller for approval pursuant to Paragraph 5 above, or
otherwise, shall be true, correct and complete copies
thereof as of the date of submission thereof, and as
thereafter supplemented by supplements or additions,
approved in writing by Purchaser, on or before Closing.
Notwithstanding anything to the contrary contained herein,
Seller shall have no obligation or liability to Purchaser
with respect to any of the foregoing lease matters which
shall be confirmed as correct in any tenant estoppel
certificate delivered to Purchaser as provided in this
Agreement;
(iii) The operating financial information prepared
by Seller and delivered to Purchaser with respect to the
Property, consisting of Statements of Operations for the
calendar year ended December 31, 1995, December 31, 1996 and
for the current calendar year are true and correct in all
material respects; in this regard Seller agrees to make
available to Purchaser and its accountants, at Purchaser's
cost, all accounting records for the calendar years ended
December 31, 1995, December 31, 1996 and for the period from
January 1, 1997 through the date of Closing, including but
not limited to all general ledgers, cash receipts, cancelled
checks and any other accounting documents and information
reasonably requested; and
(iv) As used in this Agreement, "to Seller's
knowledge" or other similar knowledge limitations as to
Seller shall mean the actual knowledge, without any duty to
investigate, of Leslie L. Gonda.
(b) Notwithstanding anything contained in Para
graphs 5(a) or 13(a) to the contrary, Seller is neither
responsible nor liable for any representation or warranty,
either expressed or implied, guaranty, promise or other
information pertaining to the Property or the Improvements
made or furnished to Purchaser by any broker representing or
purporting to represent Seller.
14. Representations and Warranties of Purchaser. Pur
chaser hereby makes the following representations and
warranties, each of which is deemed to be material and each
of which is stated by Purchaser to be true and correct on
the date hereof:
(a) Purchaser has full legal power and authority
to enter into and perform this Agreement in accordance with
its terms. This Agreement constitutes the valid and binding
obligation of Purchaser, enforceable in accordance with its
terms, except as such enforcement may be affected by bank
ruptcy, insolvency and other laws affecting the rights of
creditors generally. The execution, delivery and
performance of this Agreement and all documents in
connection therewith are not in contravention of or in
conflict with any agreement or undertaking to which
Purchaser is a party or by which Purchaser may be bound or
affected; and
(b) The execution and delivery of this Agreement
and the payment and performance by Purchaser of its payments
and obligations hereunder require no further action or
approval in order to constitute this Agreement as a binding
and enforceable obligation of Purchaser, and all such
actions have been duly taken by Purchaser.
(c) As of the expiration of the Approval Period
and as of the Closing Date (i) Purchaser has received and
reviewed all materials provided to Purchaser by Seller
pursuant to Sections 4 and 5 above (collectively, the "Due
Diligence Materials"), (ii) Purchaser has inspected the
Property, (iii) Purchaser has made such investigation of the
information contained in the Due Diligence Materials as it
deems appropriate, and (iv) Purchaser is satisfied based
upon its examination of the Due Diligence Materials and its
investigation of all other aspects of the Property which
Purchaser deems material to its purchase thereof, including,
without limitation, the condition of title to the Property,
the zoning of the Property, the condition and physical
aspects of all structures located on the Real Property
(including the Improvements) and the presence or absence of
Hazardous Substances on the Property.
15. General Covenants and Agreements of Purchaser and Seller.
(a) Delivery of Possession. Possession of the
Property shall be delivered to Purchaser upon Closing,
subject to the rights of tenants in possession.
(b) Damage to or Destruction of Property Prior to
Closing; Risk of Loss. If prior to Closing the Property
shall sustain damage caused by fire or other casualty that
is insured and that would cost One Hundred Fifty Thousand
Dollars ($150,000) or more to repair or if any uninsured
loss or casualty occurs that would cost One Hundred Fifty
Thousand Dollars ($150,000) or more to repair, either Seller
or Purchaser may respectively elect to terminate this
Agreement by written notice to the other within fifteen days
after notice of such event, or at Closing, whichever is
earlier. If neither Seller nor Purchaser so elects to
terminate its obligations under this Agreement, or if the
loss or casualty would cost less than One Hundred Fifty
Thousand Dollars ($150,000) to repair, the Closing shall
take place as provided herein and Purchaser shall receive an
assignment of Seller's rights to insurance proceeds with
respect to any unrepaired damage (including any rental loss
proceeds for periods after the Closing), loss or casualty in
question. Seller shall retain all interest in and to the
insurance proceeds that may be payable to Seller on account
of repaired and completed damage, but Seller shall have no
obligation of repair or replacement.
(c) Condemnation of Property Prior to Closing. In
the event that the Property or any part thereof becomes the
subject of a condemnation proceeding other than of a minor
immaterial nature prior to Closing, Seller agrees to
immediately advise Purchaser thereof. In the event of such
condemnation, Purchaser shall have the option to (1) take
title in accordance with the terms and conditions of this
Agreement and negotiate with the said condemning authority
for the condemnation award and receive the benefits thereof
without affecting the Purchase Price, or (2) terminate this
Agreement and declare its obligations thereunder null and
void and of no further effect, in which event all sums
theretofore paid to Seller or to Escrow Agent hereunder
shall be returned to Purchaser as set forth herein. Notice
of the exercise of such option hereunder shall be in
writing, delivered to Seller at the address set forth in
Paragraph 16(g) of this Agreement (or such other address as
Seller may have theretofore designated in writing) at least
two days prior to Closing.
(d) Brokers' Commissions. Seller warrants that
Seller did not negotiate with respect to the purchase of the
Property through any broker, agent, finder, affiliate or
other third party or incur any liability, contingent or
otherwise, for brokerage or finder's fees or agent's
commissions or other like payments in connection with this
Agreement, or the transactions contemplated hereby. Seller
hereby agrees to indemnify Purchaser against and hold
Purchaser harmless from any and all claims, demands, causes
of action or damages resulting from any breach of this
warranty. Purchaser hereby warrants that Purchaser did not
negotiate through any broker, agent, finder, affiliate or
other third party or incur any liability, contingent or
otherwise, for any such brokerage or finder's fees, agent's
commissions or other like payments, in connection with this
Agreement, and hereby agrees to indemnify Seller against and
hold Seller harmless from any and all claims, demands,
causes of action or damages resulting from any breach of
this warranty. This provision shall survive Closing.
(e) Further Assurances Prior to Closing. Seller
and Purchaser shall, prior to Closing, execute any and all
documents and perform any and all acts reasonably necessary,
incidental or appropriate to effect the purchase and sale
and the transactions contemplated in this Agreement.
(f) Time of Essence. Time shall be of the
essence with respect to the obligations of the parties
hereunder.
(g) Assignability. Purchaser may assign all of
its rights and duties hereunder to any entity with which Pur
chaser is, directly or indirectly, affiliated or an entity
to be formed and controlled by the principals (Richard S.
Ziman and Victor J. Coleman) of Purchaser, without Seller's
consent, upon the giving of written notice to Seller, which
notice may not be given less than three days prior to
Closing. For the purpose of this paragraph an "affiliate"
of or a person "affiliated" with, a specified person, is a
person that directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under
common control with, the person specified. Any such
assignment is conditional upon such assignee assuming the
obligations of Purchaser under this Agreement agreeing to be
bound by all consents and approvals theretofore given or
deemed to have been given by Purchaser, and such assignment
or nomination shall not relieve Purchaser of its obligations
hereunder.
(h) Waivers, Amendments and Modifications of
Provisions. Waivers, amendments or modifications of any
term or condition of this Agreement must be in writing
signed by the party against whom such waiver is sought to be
enforced. No waiver by any party of any breach hereunder
shall be deemed a waiver of any other or subsequent breach.
(i) Indemnification. Seller shall indemnify Pur
chaser against and hold Purchaser harmless from any and all
loss, cost, damage, claim, liability or expense, including
court costs and reasonable attorneys' fees, for third party
claims arising out of or in connection with any tort
committed by Seller (including any personal injury or
property damage or claim of personal injury or property
damage of any kind whatsoever, including death, to property
or persons, including employees of Seller) unless caused by
Purchaser, resulting from such tort occasioned in or about
the Property prior to Closing. Purchaser shall indemnify
Seller against and hold Seller harmless from any and all
loss, damage, claim of damage, liability or expense,
including court costs and reasonable attorneys' fees, for
third party claims arising out of or in connection with any
tort committed by Purchaser (including any personal injury
or property damage or claim of personal injury or property
damage of any kind whatsoever, including death, to property
or persons, including employees of Purchaser) unless caused
by Seller, resulting from such tort occasioned in or about
the Property (a) as a result of its investigation of the
Property during the Approval Period or (b) on or subsequent
to Closing. These covenants shall survive Closing.
16. Miscellaneous Provisions.
(a) Successors and Assigns. Subject to the pro
visions hereof, the terms and provisions hereof shall be
binding upon and inure to the benefit of the successors and
assigns of the parties hereto.
(b) Meaning of Terms. When necessary herein, all
terms used in the singular shall apply to the plural and
vice versa; and all terms used in the masculine shall apply
to the neuter and feminine genders.
(c) Entire Agreement. This Agreement is the
entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior
agreements between the parties hereto with respect thereto.
No claim of waiver, modification, consent or acquiescence
with respect to any of the provisions of this Agreement
shall be made against either party, except on the basis of a
written instrument executed by or on behalf of such party.
(d) Governing Law. This Agreement is to be
governed by and construed in accordance with the internal
laws of the State of California.
(e) Paragraph Headings. The headings of the sev
eral paragraphs of this Agreement are inserted solely for
convenience of reference and are not a part of and are not
intended to govern, limit or aid in the construction of any
term or provision hereof.
(f) Attorneys' Fees. If either Seller or Pur
chaser shall obtain legal counsel and bring an action or
proceeding against the other by reason of an alleged breach
of any covenant, provision or condition hereof, or otherwise
arising out of this Agreement, the unsuccessful party shall
pay to the prevailing party reasonable attorneys' fees,
which shall be payable whether or not any proceeding is
prosecuted to judgment or award. The term "prevailing
party" shall include a party (i) who brings an action or
proceeding against the other by reason of the other's breach
or default and obtains substantially the relief sought by
judgment or award or (ii) who successfully defends an action
or proceeding brought by the other party and against whom no
material damages or specific performance are awarded.
(g) Notices. All notices, requests and other
communications hereunder shall be in writing and shall be
personally delivered or, in the alternative, deposited with
(1) the United States Postal Service, Certified Mail with
Return Receipt Requested, with postage prepaid or (2)
Federal Express or other overnight air freight forwarder for
delivery the next business day or (3) by facsimile
transmission during normal business hours on regular
business days at the to the following addresses, and shall
be effective immediately upon delivery:
Seller: Overland Plaza Partnership
1999 Avenue of the Stars
39th Floor
Los Angeles, CA 90067
Attention: Leslie L. Gonda
FAX (310)
With a copy to: Daniel Platt, Esq.
10100 Santa Monica Boulevard
Suite 800
Los Angeles, CA 90067
FAX (310)
Purchaser: Arden Realty, Inc.
9100 Wilshire Boulevard
Suite 700 East
Beverly Hills, CA 90212
Attn: Mr. Richard S. Ziman
FAX (310) 246-2941
With a copy to: Troy & Gould
1801 Century Park East
16th Floor
Los Angeles, CA 90067
Attn: Kenneth R. Blumer, Esq.
FAX (310) 201-4746
Escrow Agent: Commerce Escrow Company
1545 Wilshire Boulevard
Suite 600
Los Angeles, CA 90067
Attn: Mark Minsky
FAX (213) 484-0417
All notices, requests and other communications may be sent
by legal counsel for the party and shall be deemed received
on the date of acknowledgment or other evidence of actual
receipt.
(h) Severability. If any provision of this Agree
ment or the application thereof to any person or cir
cumstance shall be invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such
provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest
extent permitted by law.
(i) Further Assurances on or After Closing. Each
party hereto agrees to do all acts and things and to make,
execute and deliver such written instruments as shall be
reasonably necessary to carry out the terms and provisions
of this Agreement. This covenant of further assurances
shall survive Closing.
(j) Other Parties. Nothing in this Agreement
shall be construed as giving any person, firm, corporation
or other entity, other than the parties hereto, their
successors and permitted assigns, any right, remedy or claim
under or with respect to this Agreement or any provision
hereof.
(k) Confidentiality. Seller and Purchaser agree
that it is in both of their best interests to keep this
Agreement and all information concerning the Property
confidential until Closing. Seller and Purchaser each
agrees that neither shall take any action nor conduct itself
in any fashion that would disclose to third parties
unrelated to Purchaser's acquisition or intended ownership
and operation of the Property, any aspect of the
contemplated transaction. After Closing, neither party
shall make any public announcement of the transaction that
has not been approved in advance and in writing by the other
party.
(l) Tax Deferred Exchange. Seller may desire to
dispose of the Property through a tax deferred exchange
which qualifies for non-recognition of gain under Section
1031 of the Internal Revenue Code. Purchaser shall
cooperate with Seller in attempting to effectuate such
exchange, including, but not limited to, the execution of
such documentation as may be reasonably necessary to effect
such exchange, provided that (i) Purchaser shall not incur
any additional liability in connection with an exchange for
the benefit of Seller, (ii) Purchaser shall not be obligated
to take title to any real property (other than the
Property), (iii) the date of Closing shall not be extended
as a result of the exchange, without Purchaser's prior
written consent, and (iv) any additional costs and charges
attributable to the exchange, including, but not limited to,
attorneys' fees, brokers' commissions and other transaction
related expenses shall be paid for by Seller. Purchaser and
Seller further agree that Seller may substitute an
intermediary ("Intermediary") to act in place of Seller as
the seller of the Property. The Intermediary shall be desig
nated in writing by Seller. Upon identification of Interme
diary, Intermediary shall be substituted for Seller as the
seller of the Property. Purchaser agrees to accept the
Property and all other required performance from
Intermediary and to render its performance of all of its
obligations to Intermediary. Purchaser agrees that
performance by Intermediary will be treated as performance
by Seller. Seller shall unconditionally guarantee the full
and timely performance by Intermediary of each and every one
of the representations, warranties, covenants, indemnities,
obligations and undertakings of Intermediary. As guarantor,
Seller shall be treated as a primary obligor with respect to
these representations, warranties, covenants, indemnities,
obligations and undertakings, and, in the event of breach,
Purchaser may proceed directly against Seller on this
guarantee without the need to join Intermediary as a party
to any action against Seller. Seller unconditionally waives
any defense that it might have as guarantor that it would
not have if it had made or undertaken these representations,
warranties, covenants, indemnities, obligations and
undertakings directly. In the event of the breach of any
representations, warranties, covenants, obligations and
undertakings by Seller or Intermediary or in the event of
any claim upon any indemnity of Seller or Intermediary
(whether the representation, warranty, covenant, indemnity,
obligation or undertaking is express or implied),
Purchaser's exclusive recourse shall be against the Seller
and Purchaser shall have no recourse of any type against the
Intermediary arising from this transaction.
(m) Condition of Property. Purchaser
acknowledges that it will inspect and examine the Property
and, except as expressly provided in this Agreement, will
rely solely on its own investigation of the Property and not
on any information provided or to be provided by or on
behalf of Seller. Except as otherwise expressly provided in
this Agreement, the sale of the Property to Purchaser is
made on an "AS IS" "WHERE IS" and "WITH ALL FAULTS" basis.
Purchaser acknowledges that in consideration of entering
into this Agreement, that, except as expressly provided in
this Agreement, Seller makes no warranty or representation,
with respect to the Property, or any portion thereof,
express or implied, or arising by operation of law,
including, but not limited to, any warranty of condition
(physical, environmental or otherwise), title (other than
the limited warranties of title contained in the grant
deed), habitability or fitness for a particular purpose or
otherwise.
(n) Counterparts. This Agreement may be executed
in any number of counterparts, each of which so executed
shall be deemed an original; such counterparts shall
together constitute but one agreement.
(o) Facsimile Signatures. Purchaser and Seller
each (i) has agreed to permit the use, from time to time and
where appropriate, of telecopied signatures in order to
expedite the transaction contemplated by this Agreement,
(ii) intends to be bound by its respective telecopied
signature, (iii) is aware that the other party will rely on
the telecopied signature, and (iv) acknowledges such
reliance and waives any defenses to the enforcement of the
documents and notices effecting the transaction contemplated
by this Agreement based on the fact that a signature or
notice was sent by telecopy.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement the day and year first hereinabove written.
Seller: OVERLAND PLAZA PARTNERSHIP,
a California general partnership
By:/s/ Leslie L. Gonda
Name: Leslie L. Gonda
Title: General Partner
By: /s/ Raffi Cohen
Name: Raffi Cohen
Title: Managing General Partner
Purchaser: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc.,
a Maryland corporation,
Its general partner
By:/s/ Richard S. Ziman
Richard S. Ziman,
Chairman of the Board and
Chief Executive Officer
The undersigned hereby executes this Agreement to
evidence its agreement to act as Escrow Holder in accordance
with the terms of this Agreement.
AGREED AND ACCEPTED:
Escrow Agent:
COMMERCE ESCROW COMPANY
By: /s/ Mark Minsky
Name: Mark Minsky
Title: Escrow Officer
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
between
JC INVESTMENT & REALTY, INC.
a Washington corporation
as Seller
and
ARDEN REALTY LIMITED PARTNERSHIP
a Maryland limited partnership
as Buyer
for
HARBOR CORPORATE CENTER
19300 HAMILTON AVENUE
GARDENA, CALIFORNIA
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW
INSTRUCTIONS ("Agreement") dated as of the _____ day of
May, 1997 is by and between JC Investment & Realty, Inc.
("Seller"), and Arden Realty Limited Partnership ("Buyer").
Capitalized terms used in the Recitals below, not otherwise
defined therein, shall have the meanings ascribed to them
in Section 1 of this Agreement.
R E C I T A L S
WHEREAS, this Agreement is made and entered into with
reference to the following facts:
WHEREAS, Seller is the owner of the Property.
WHEREAS, Buyer desires to purchase, and Seller desires
to sell, the Property on the terms and conditions set forth
in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing
recitals, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby
acknowledged, Buyer and Seller agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
1.1 "Appurtenances" means all rights, privileges and
easements appurtenant to the Land, including, without
limitation, all minerals, oil, gas and other hydrocarbon
substances in, on and under the Land, as well as all
development rights, air rights, water, water rights and
water stock relating to the Land and any other easements
appurtenant to the Land.
1.2 "Assignment of Intangible Property" means the
Assignment of Intangible Property, to be duly executed and
delivered by Seller in accordance with Section 4.1 of this
Agreement, assigning to Buyer all of Seller's right, title
and interest, if any, in and to the Intangible Property.
The Assignment of Intangible Property shall be in the form
of, and upon the terms contained in, Exhibit "B".
1.3 "Assignment of Leases" means the Assignment of
Leases, to be duly executed and delivered by Seller in
accordance with Section 4.1 of this Agreement, assigning to
Buyer all of Seller's right, title and interest in and to
the Leases. The Assignment of Leases shall be in the form
of, and upon the terms contained in, Exhibit "C".
1.4 "Bill of Sale" means the Bill of Sale, to be duly
executed and delivered by Seller in accordance with
Section 4.1 of this Agreement, conveying to Buyer all of
the Personal Property. The Bill of Sale shall be in the
form of, and upon the terms contained in, Exhibit "D".
1.5 "Closing" means the consummation of the
conveyances of the Property, the Leases and the other
transactions contemplated under this Agreement, all of
which shall occur on or before the Closing Date.
1.6 "Closing Date" means July 22, 1997, unless
otherwise mutually agreed to in writing by Buyer and Seller
or extended pursuant to the terms of this Agreement.
1.7 "Code" means the United States Internal Revenue
Code of 1986, as amended.
1.8 "Deed" means the Grant Deed, to be duly executed,
acknowledged and delivered in recordable form by Seller in
accordance with Section 4.1 of this Agreement, conveying to
Buyer good and marketable fee simple title to the Real
Property. The Deed shall be in the form of, and upon the
terms contained in, Exhibit "E".
1.9 "Deposit" means the sum of One Hundred Thousand
Dollars ($100,000.00) to be delivered concurrently with the
mutual execution of this Agreement by Buyer and Seller and
delivery of the same to Escrow Holder in accordance with
Section 3.1 of this Agreement.
1.10 "Due Diligence Period" means the period commencing
on the date this Agreement is executed and delivered by
both Buyer and Seller and ending at 6:00 p.m. (California
time) on the date which is thirty (30) days following the
date that an escrow is opened with Escrow Holder for the
consummation of the transaction contemplated hereby.
1.11 "Escrow Holder" means Commerce Escrow Company.
1.12 "Fixtures" means all fixtures placed on, attached
to, or located at and used in connection with the operation
of, the Land and which are owned by Seller.
1.13 "Governmental Regulations" means any local, state,
and federal laws, ordinances, rules, requirements,
resolutions, policy statements and regulations (including,
without limitation, those relating to land use,
subdivision, zoning, environmental, labor relations,
notification of sale to employer, Hazardous Materials,
occupational health and safety, water, earthquake hazard
reduction and building and fire codes) bearing on the
construction, development, alteration, rehabilitation,
maintenance, use, operation, or sale of the Property.
1.14 "Hazardous Materials" means any hazardous or toxic
substance, material or waste which is or becomes regulated
by any local governmental authority, any agency of the
State of California or any agency of the United States
Government. The term "Hazardous Materials" includes,
without limitation, any material or substance which (a)
contains petroleum or any petroleum by-products,
(b) contains asbestos, (c) contains urea formaldehyde foam
insulation, (d) is designated as a "hazardous substance"
pursuant to Section 311 of the Federal Water Pollution
Control Act (33 U.S.C. 1317), (e) is defined as a
"hazardous waste" pursuant to Section 1004 of the Federal
Resource Conservation and Recovery Act, 42 U.S.C. 6901
(42 U.S.C. 6903), or (f) is defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42
U.S.C. 9601 (42 U.S.C. 9601). Each reference to a
statute or law in this definition shall be deemed to
include any amendments thereto which are enacted from time
to time.
1.15 "Intangible Property" means all of Seller's right,
title and interest in and to any and all intangible
personal property now and through the Closing Date owned by
Seller and used in connection with the ownership,
construction, development, use and/or operation of the Real
Property and/or Personal Property, including, without
limitation, the Service Contracts (to the extent approved
in writing by Buyer), the Licenses and Permits, the
Intellectual Property and the Records and Plans and the
Warranties.
1.16 "Land" means the real property located at 19300
Hamilton Avenue, Gardena, California, as legally described
in Exhibit "A".
1.17 "Leases" means the existing leases relating to the
Real Property, which Leases are listed on Exhibit "F".
1.18 "Licenses and Permits" means all of Seller's
right, title, interests, privileges, benefits and remedies
in, to and under all authorizations, approvals, permits,
certificates of occupancy, licenses, agreements, variances,
tentative maps, final maps, plans and specifications and
land use entitlements held by Seller and/or relating to the
construction, reconstruction, occupancy, operation or use
of any part of the Real Property or Personal Property
(e.g., all building permits and certificates of occupancy).
1.19 "Notices To Tenants" means the notices from Seller
to the tenants under the Leases whereby such tenant is
notified that the Property has been transferred by Seller
to Buyer and instructing it to pay any and all rents and
other sums payable under the Leases from and after the
Closing directly to Buyer or as otherwise directed by
Buyer, in the form of Exhibit "G".
1.20 "Personal Property" means all personal property of
Seller located on or in or used in connection with the Real
Property, as set forth on Exhibit "O".
1.21 "Property" means the Real Property, the Personal
Property and the Intangible Property.
1.22 "Purchase Price" means the sum of Four Million
Four Hundred Thousand Dollars ($4,400,000).
1.23 "Real Property" means the Land, the improvements
situated on the Land including surface parking, the
Fixtures and the Appurtenances.
1.24 "Records and Plans" means (a) all books and
records maintained in connection with the ownership,
development, construction, maintenance or operation of the
Property, (b) all preliminary, final and "as-built" plans
and specifications respecting the Real Property, and
(c) all structural reviews, architectural drawings, and
engineering, soil, seismic, geologic and architectural
reports, studies and certificates and other documents
pertaining to the Real Property (including those which
include comments by any building or safety engineer,
inspector or other person who regularly makes such
inspections) which are within the possession of, under the
control of, or reasonably available (without cost or
expense) to Seller.
1.25 "Service Contracts" means the management agreement
together with all supplements, amendments and modifications
thereto, relating to the management of the Property, which
is set forth on Exhibit "H" attached to this Agreement.
1.26 "Tenant Estoppel" means the written statement in
the form of, and upon the terms contained in, Exhibit "I",
in favor of Buyer from the tenant which is a party to each
of the Leases, dated not earlier than fifteen (15) days
prior to the Closing Date, for tenants occupying in the
aggregate at least eighty percent (80%) of the leased Real
Property.
1.27 "Title Company" means First American Insurance
Company.
1.28 "Title Policy" means an ALTA owner's title policy
(Form B-1970) issued by the Title Company for the benefit
of Buyer, which Title Policy shall have a liability limit
in the amount of the Purchase Price, shall include those
endorsements reasonably requested by Buyer and shall show
only those matters which constitute Permitted Exceptions
(defined below).
1.29 "Transferor's Certificate" means the certificate,
to be duly executed by Seller under penalty of perjury and
delivered by Seller in accordance with Section 4.1 of this
Agreement, certifying that Seller is not a "foreign person"
in accordance with the provisions of Section 1445 of the
Code and any similar provisions of applicable state law.
The Transferor's Certificate shall be in the form of, and
upon the terms contained in, Exhibit "J".
1.30
1.30 "Warranties" means all third party warranties and
guarantees relating to the Property.
2. ESCROW. The purchase and sale of the Property
shall be consummated through an escrow at Escrow Holder.
As soon as reasonably practicable following the mutual
execution of this Agreement, but in no event later than
three (3) days after the date of this Agreement, the
parties shall deliver to Escrow Holder a fully executed
counterpart of this Agreement, which shall constitute its
escrow instructions. The parties shall execute such
additional escrow instructions, not inconsistent with this
Agreement, as Escrow Holder shall deem reasonably necessary
for its protection. In the event of any conflict between
this Agreement and any additional escrow instructions, the
terms of this Agreement shall govern.
3. AGREEMENT TO SELL; PURCHASE PRICE. Seller agrees
to sell to Buyer, and Buyer agrees to purchase from Seller,
the Property in accordance with the terms, and subject to
the conditions, of this Agreement. The Purchase Price for
the Property will be paid as follows:
3.1 Deposit. Concurrently with the execution of this
Agreement by Buyer and Seller and delivery of the same to
Escrow Holder, Buyer will deliver the Deposit to Escrow
Holder to hold in trust. Escrow Holder will invest the
Deposit in an interest bearing account with a responsible
federally-insured institutional lender approved by Buyer
and Seller, and interest will be for the account of Buyer
except as otherwise provided in this Agreement and will be
credited against the Purchase Price at Closing.
3.2 Balance of Purchase Price. The entire balance of
the Purchase Price (after taking into account the
adjustments described in Sections 10 and 11), shall be paid
to Seller, either (a) in immediately available funds, or
(b) at the written election of Seller at least twenty one
days prior to Closing, in Operating Partnership Units of
Arden Realty Limited Partnership ("OP Units") through
Escrow Holder, at Closing. Each OP Unit shall have a value
equal to one (1) share of Arden Realty, Inc. common stock
as of the date of which is three (3) business days prior to
Closing. (Arden Realty, Inc. is listed on the New York
Stock Exchange under the symbol "ARI"). The OP Units shall
be exchanged in accordance with that certain Amendment to
Limited Partnership Agreement, in the form attached hereto,
as Exhibit "P", and by this referenced incorporated herein.
4. DELIVERIES AT CLOSING; CLOSING PROCEDURES. The
Closing will take place on the Closing Date. Buyer may
elect to close escrow on an earlier date by giving written
notice to Seller and Escrow Holder of its intent to close
escrow earlier at least five (5) days in advance of such
earlier date, but such notice shall not be binding upon
Buyer, and if Buyer is not in a position to close on the
earlier date, whether due to inability to expedite issuance
of Operating Partnership Units as elected by Seller, or
otherwise Buyer shall have until the Closing Date to close.
4.1 By Seller. At least one (1) business day prior to
the Closing, Seller shall deliver or cause to be delivered
to Escrow Holder (unless otherwise indicated) the following
items, duly executed and, where appropriate, acknowledged
by Seller:
4.1.1 The Deed.
4.1.2 The Bill of Sale.
4.1.3 The Assignment of Intangible Property.
4.1.4 The Assignment of Leases.
4.1.5 The Notices to Tenants.
4.1.6 The Transferor's Certificate.
4.1.7 The Tenant Estoppels.
4.1.8 If Seller so elects pursuant to Section 3.2
above, the Admission of New Partner and Amendment to
Limited Partnership Agreement.
4.1.9 All such further confirmations, satisfactions,
releases, approvals, consents and any and all such further
instruments as may be reasonably necessary, appropriate,
expedient or proper in the reasonable opinion of Title
Company in order to issue the Title Policy.
4.2 By Buyer. At the Closing, Buyer will deliver or
cause to be delivered to Escrow Holder or the Seller the
following items, duly executed and, where appropriate,
acknowledged by Buyer:
4.2.1 The net balance of the Purchase Price, to be
paid in accordance with Section 3.2 of this Agreement,
after deducting the Deposit plus any interest accrued
thereon, and after taking into account the adjustments and
cost allocations in accordance with Sections 10 and 11.
4.2.2 Counterparts of the Assignment of Intangible
Property and the Assignment of Leases.
4.2.3 If Seller so elects pursuant to Section 3.2(b)
above, the Admission of New Partner and Amendment to
Limited Partnership Agreement.
4.3 By Buyer and Seller. Buyer and Seller will each
deposit such other instruments consistent with this
Agreement as are reasonably required to effectuate the
transactions contemplated under this Agreement.
4.4 Closing Procedures. Provided that Escrow Holder has
received the documents and funds described in Sections 4.1
and 4.2 above and has not received notice from any party
hereto either that an agreement of another party hereunder
has not been performed, that a condition set forth herein
has not been satisfied or waived or that this Agreement has
terminated (by its terms or by an election duly made
hereunder), and further provided that the issuance of, or
an unconditional commitment to issue, the Title Policy has
been obtained, Escrow Holder is authorized and instructed
at 8:00 a.m. on the Closing Date to:
4.4.1 Record the Deed with the County Recorder of Los
Angeles County, California.
4.4.2 Cause the Title Policy to be issued by the
Title Company.
4.4.3 Deliver to Buyer: the Assignment of Leases, the
Assignment of Intangible Property, the Bill of Sale, the
Transferor's Certificate, all documents and items required
to be delivered by Seller pursuant to Sections 4.1
and 8.1.4 or any other provision of this Agreement, not
otherwise previously delivered directly to Buyer, all other
items deposited by Seller with Escrow Holder pertaining to
the Property, and any funds deposited by Buyer in excess of
the amount to be paid by Buyer under the terms of this
Agreement.
4.4.4 Deliver to Seller: the Purchase Price after
taking into account the adjustments and cost allocations in
accordance with Sections 10 and 11, and the Assignment of
Leases and Assignment of Intangible Property executed in
counterpart by Buyer, and any other document deposited by
Buyer with Escrow Holder for delivery to Seller at the
Closing.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Seller's Representations and Warranties. Seller
makes the following representations and warranties to
Buyer, upon which warranties and representations Buyer has
relied and will continue to rely, all of which are true as
of the date of this Agreement and will be true and correct
as of the Closing:
5.1.1 Organization. Seller is duly organized,
validly existing and in good standing under the laws of the
State of Washington and is duly qualified to do business in
the State of California. The execution and delivery of
this Agreement and the other documents contemplated this
Agreement by Seller, and the performance by Seller of the
obligations under this Agreement and the other documents
contemplated in this Agreement (i) are within the power of
Seller; (ii) have been duly authorized by all requisite
corporate action; and (iii) will not violate any provision
of law, any order of any court or agency of government, the
charter documents of Seller or its shareholders, or any
indenture, agreement or any other instrument to which
Seller is a party. This Agreement and each of the other
documents described in this Agreement when executed and
delivered to Buyer, will constitute legal, valid and
binding obligations enforceable against Seller in
accordance with the terms of such documents.
5.1.2 Seller has full legal power and authority to
enter into and perform this Agreement in accordance with
its terms. The execution, delivery and performance of this
Agreement and all documents in connection therewith are not
in contravention of or in conflict with any deed of trust,
agreement or undertaking to which Seller is a party or by
which Seller or any of its property, including the
Property, may be bound or affected following the Closing.
The execution and delivery of this Agreement and the
performance by Seller of its obligations hereunder require
no further action or approval in order to constitute this
Agreement as a binding and enforceable obligation of
Seller, and all such actions have been duly taken by
Seller;
5.1.3 Seller is the owner of the Personal Property
and has good title thereto, free and clear of all liens,
claims and security interests whatsoever. Seller knows of
no encroachments onto the Property or by the improvements
thereon onto any adjoining property except as disclosed in
the ALTA survey of the Property delivered to the Buyer
pursuant to Section 9.1.2 below;
5.1.4 Except as disclosed to Buyer during the Due
Diligence Period or as contained in the materials delivered
to Buyer during the Due Diligence Period, Seller has no
actual knowledge of any:
a. Governmental notification from any
governmental authority notifying Seller of any
(a) violation of any city, County, State, Federal,
building, zoning, fire, health code, regulation, ordinance
or covenant, filed or issued against the Property; and
(b) impending or threatened special assessments on the
Property;
b. Existing, proposed or contemplated
plan to modify or realign any existing street or highway or
any existing, proposed or contemplated eminent domain
proceeding that would result in the taking of all or any
part of the Property;
c. Litigation or legal proceeding
pending or threatened in writing against Seller or the
Property that could reasonably be expected to materially
and adversely affect Seller's or Buyer's ability to perform
their respective obligations hereunder, or Buyer's use of
the Property for its existing purposes;
d. Storage or disposal on the Property
of any material amounts of toxic or hazardous waste,
material or substance, and Seller has received no notice
from any governmental authority requiring the removal of
any toxic or hazardous waste, material or substance from
the Property.
e. Lease, tenancy or other right of
occupancy or use for any portion of the Property under
which any party has a right to occupy the Property (other
than pursuant to the Leases).
f. Maintenance contract, equipment
lease, warranty or guaranty relating to the operation or
maintenance of the Property (other than Service Contracts).
5.1.5 The rent roll attached hereto as Exhibit L
accurately sets forth and lists all of the Leases and all
tenants presently in possession or entitled to possession
of the Property, all security deposits from such tenants
and the status of the payment of all rents and other
charges due Seller from said tenants pursuant to the
Leases.
5.1.6 The Leases and Service Contracts provided to
Buyer are true, complete and accurate.
5.1.7 Except as otherwise disclosed to Buyer, the
Leases are all in full force and effect.
5.1.8 Except as set forth on Exhibit M, there are no
commissions or other fees payable to any person, entity or
agent with respect to the Leases.
5.1.9 Except as set forth on Exhibit N, any and all
decorating, painting, renovation or construction work
(other than the maintenance or repairs required to be
performed by the landlord under the Leases) required to be
done under the provisions of any Leases as of the Closing
have been, or as of the Closing, at Seller's expense, will
be fully completed and paid for.
5.2 Buyer's Representations and Warranties. Buyer makes
the following representations and warranties to Seller upon
which warranties and representations Seller has relied and
will continue to rely, all of which are true as of the date
of this Agreement and will be true and correct as of the
Closing:
5.2.1 Organization. Buyer is duly organized, validly
existing and in good standing under the laws of the State
of Maryland and is duly qualified to do business in the
State of California. The execution and delivery of this
Agreement and the other documents contemplated this
Agreement by Buyer, and the performance by Buyer of the
obligations under this Agreement and the other documents
contemplated in this Agreement (i) are within the power of
Buyer; (ii) have been duly authorized by all requisite
partnership action and corporate action on the part of all
of its constituent corporate partners; and (iii) will not
violate any provision of law, any order of any court or
agency of government, the charter documents of Buyer or its
general partners, or any indenture, agreement or any other
instrument to which Buyer is a party. This Agreement and
each of the other documents described in this Agreement
when executed and delivered to Buyer, will constitute
legal, valid and binding obligations enforceable against
Buyer in accordance with the terms of such documents.
5.2.2 Buyer has full legal power and authority to
enter into and perform this Agreement in accordance with
its terms. The execution, delivery and performance of this
Agreement and all documents in connection therewith are not
in contravention of or in conflict with any agreement or
undertaking to which Buyer is a party. The execution and
delivery of this Agreement and the performance by Buyer of
its obligations hereunder require no further action or
approval in order to constitute this Agreement as a binding
and enforceable obligation of Buyer, and all such actions
have been duly taken by Buyer;
6. SELLER'S OBLIGATIONS. Seller hereby covenants to
Buyer, upon which covenants Buyer has relied and will
continue to rely, that for the period from the date of this
Agreement through and including the Closing Date:
6.1 Further Liens and Encumbrances. Seller will not
subject the Property to any additional liens, encumbrances,
covenants, conditions, easements, rights of way or similar
matters after the date of this Agreement. Seller will not
hereafter modify, extend, renew, replace or otherwise
change any of the terms, covenants or conditions of any of
such documents, or enter into any new agreements affecting
the Property without the prior written consent of Buyer,
which consent may be withheld in Buyer's sole and absolute
discretion.
6.2 Leases; Other Contracts; Interim Activities. Seller
will not hereafter terminate, modify, extend, renew,
replace or otherwise change the Leases or existing
contracts or enter into new leases or contracts affecting
the Property except with the prior written consent of
Buyer, which consent (a) will not be unreasonably withheld
(with respect to any such action prior to the expiration of
the Due Diligence Period), and (b) may be withheld in
Buyer's sole and absolute discretion (with respect to any
such action after the expiration of the Due Diligence
Period). From and after the expiration of the Due
Diligence Period, Seller shall not apply for or otherwise
deal with any governmental authority regarding the
development, entitlement or subdivision of the Real
Property without the prior written consent of Buyer, which
may be withheld in Buyer's sole and absolute discretion.
6.3 Property Management and Operation. Seller shall
maintain the operation of the Property in a good and
business-like manner. Seller shall provide all services
and operate, manage and maintain the Property (including
mechanical equipment of every kind used in the operation
thereof, and liability and casualty insurance) in such a
manner that the Property shall be in the same condition on
the Closing Date as on the date of this Agreement, ordinary
wear and tear excepted. Without limiting the foregoing,
Seller shall perform all of its obligations under the
Leases and the Service Contracts.
6.4 Cooperation with Representatives. Seller shall
cooperate with Buyer and its accountants, counsel and/or
other representatives in providing information and
materials pertaining to the operation and marketing of the
Property, including access to the Property. Without
limiting the generality of the foregoing, from and after
the execution and delivery of this Agreement, Seller shall
allow a representative or representatives of Buyer access
to the Property for the purpose of (a) monitoring the
operation of the Property, and (b) performing such
investigations and analyses of the Property as Buyer may
reasonably require. Seller will permit a meeting with a
tenant and Buyer's representative during the Due Diligence
Period, provided that a Seller representative is present.
6.5 No Removal of Personal Property. Seller will not
remove any of the Personal Property unless the Personal
Property so removed is simultaneously replaced with
substantially similar Personal Property of similar quality
or utilities.
6.6 Obtaining Estoppels and Consents. Seller shall use
its reasonable best efforts to obtain all written consents
from third parties required or reasonably requested by
Buyer or its accountants, counsel or other representatives
in connection with this Agreement, including, without
limitation, the Tenant Estoppels. Seller hereby
acknowledges and agrees that the obtaining of the Tenant
Estoppels are a condition precedent to Buyer's obligations
under this Agreement.
6.7 Service Contracts. Seller shall deliver notices of
termination to any vendors under the Service Contracts
which have been designated in writing by Buyer to be
terminated ("Disapproved Service Contract List") provided
that the Disapproved Service Contract List is delivered by
Buyer to Seller on or before the expiration of the Due
Diligence Period. Seller shall, within two (2) days
following the later of the expiration of the Due Diligence
Period or Buyer's delivery of the Disapproved Service
Contract List, deliver termination notices to each of the
vendors with respect to the Service Contracts so designated
by Buyer in the Disapproved Service Contract List. Buyer
shall be solely responsible for all costs and expenses
associated with the termination of any of the Service
Contracts set forth by Buyer in the Disapproved Service
Contract List.
6.8 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.
6.9 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 "K" attached hereto, in connection with the normal
course of auditing the Property in accordance with
generally accepted auditing standards.
6.10 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.
7. TITLE TO REAL PROPERTY. At Closing, title to the
Real Property will be conveyed to Buyer by Seller by the
Deed, subject only to the following matters ("Permitted
Exceptions"):
7.1 matters of title respecting the Real Property
approved or deemed approved by Buyer in accordance with
this Agreement including all Schedule B Exceptions to the
Title Policy approved by Buyer; and
7.2 matters affecting the condition of title to the Real
Property created by or with the written consent of Buyer.
8. CONDITIONS PRECEDENT/CONCURRENT TO CLOSING; CLOSING
DATE.
8.1 Buyer's Conditions. 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:
8.1.1 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 respects.
8.1.2 Seller's Deliveries. Seller shall have duly
and timely delivered to Buyer all of the items described in
Section 4.1 of this Agreement.
8.1.3 No Material Changes. At the Closing, there
will be no material adverse changes in the physical or
financial condition of the Property which were discovered
by Buyer after the Due Diligence Period.
8.1.4 Delivery of Pre-Closing Documents and
Agreements. Seller shall have delivered to Buyer on or
before the Closing Date the following (to the extent in
Seller's possession, control or otherwise reasonably
available [at no cost or expense] to Seller):
8.1.4.1 Originals of all Leases and Service
Contracts;
8.1.4.2 Originals of all Records and Plans;
8.1.4.3 Originals of all Licenses and Permits; and
8.1.4.4 Originals of all Warranties.
8.1.5 Title Insurance. The Title Company will have
issued or have unconditionally and irrevocably committed to
issue the Title Policy to Buyer.
8.1.6 Due Diligence Approval. Buyer shall have
approved (or be deemed to have approved) all matters to be
reviewed in accordance with Section 9 of this Agreement.
9. DUE DILIGENCE PERIOD:
9.1 Matters To Be Reviewed. Buyer's obligation to close
the purchase of the Property and to pay the Purchase Price
shall be subject to and conditioned upon Buyer's complete
satisfaction with all of the following items, each of which
Buyer shall have the right to review and approve or
disapprove in Buyer's sole and absolute discretion during
the Due Diligence Period:
9.1.1 Title. Buyer will have until 6:00 p.m.
(California time) on the expiration of the Due Diligence
Period to examine and approve all matters of title and to
notify Seller in writing of any defects in title. Seller
shall, at its sole cost and expense, within three (3) days
following the date this Agreement is executed and delivered
by Buyer and Seller, deliver to Buyer a current preliminary
title report issued by the Title Company and relating to
the Real Property, together with all underlying documents
relating thereto. If Buyer fails to notify Seller in
writing of any objections to title prior to the expiration
of the Due Diligence Period, title to the Property shall be
conclusively deemed to be approved by Buyer. If Buyer, in
its sole discretion, timely notifies Seller in writing of
specific objections to title prior to the expiration of the
Due Diligence Period, Seller will have three (3) business
days after receipt of Buyer's notification of any objection
in which to advise Buyer that:
9.1.1.1 Seller will remove any objectionable
exceptions on or before the Closing Date; or
9.1.1.2 Seller will not cause the exceptions to be
removed.
If Seller advises Buyer that it will not
cause the exceptions to be removed, Buyer will have five
(5) days from its receipt of Seller's notice to elect to:
(i) proceed with the purchase and
acquire the Property subject to such exceptions, but
conditioned upon Seller fulfilling each and every one of
its other obligations hereunder and all of the other
conditions precedent in favor of Buyer having been duly and
timely satisfied; or
(ii) terminate this Agreement by
written notice to Seller, in which case the Deposit, and
any interest thereon, will be immediately returned to Buyer
without further instructions from Seller, and all rights
and obligations of the parties existing hereunder shall
terminate and be of no further force or effect, except any
rights and obligations which are expressly stated to
survive the termination of this Agreement.
If Buyer does not give Seller written
notice of its election within said five (5) day period,
Buyer will be conclusively deemed to have elected to
terminate this Agreement as described in (ii) above.
If Seller commits to remove any objection
to title and fails to do so by the Closing Date, Seller
will be in material default under this Agreement and Buyer
may, at Buyer's election, terminate this Agreement and
pursue its remedies as set forth in Section 14 of this
Agreement.
9.1.2 Inspections and Studies. Buyer will have until
6:00 p.m. (California time) on the expiration of the Due
Diligence Period to conduct (as applicable) and review and
approve any and all inspections, investigations, tests,
studies (including feasibility studies and other economic
models) and appraisals as Buyer may have elected to make or
obtain with respect to the Property and/or the operation
and financial condition of the Property, including, without
limitation, financial analyses of the books and records,
environmental inspections and studies, structural and
mechanical investigations, appraisals, and analyses of the
Property's compliance with Governmental Regulations. Buyer
and Buyer's representatives, agents and designees will have
the right to enter the Property at all reasonable times,
upon reasonable oral notice to perform all such
investigations of the Property, and to conduct interviews
with (i) property management personnel of Seller, and (ii)
such other parties as Buyer may deem appropriate in its
reasonable discretion. Seller will cooperate with Buyer
and its representatives in that regard. Seller shall
deliver to Buyer at Seller's sole cost and expense, within
five (5) days (unless indicated otherwise below) following
the date this Agreement is executed and delivered by Buyer
and Seller, all information in Seller's possession or
control which is reasonably related to the Property, plus
the following items:
9.1.2.1 To the extent in Seller's possession, an
ALTA "as-built" survey of the Real Property prepared by a
licensed surveyor;
9.1.2.2 The Leases and all modifications or
amendments
and guaranties relating thereto; all tenant correspondence
and all current financial statements of the tenant to the
extent the same are in Seller's possession or control; all
contracts (including the Service Contracts), agreements and
management agreements; all "operating statements" for the
last three (3) calendar years for the Property and a year-
to-date operating statement for the calendar year 1997, a
balance sheet dated no earlier than December 31, 1996; an
income statement for the last two (2) calendar years and a
year-to-date income statement for the calendar year 1997,
each such statement to be certified by Seller as being
true, correct and complete reports prepared by Seller in
the ordinary course of business; a cumulative general
ledger for year-to-date 1997, reports (including all
environmental reports, soils reports, surveys and plans and
specifications affecting or relating to the Property, and
all modifications or amendments thereto); all Records and
Plans, Warranties, Licenses and Permits and governmental
approvals obtained or held by Seller and relating to the
development, construction, operation, use or occupancy of
any of the Property.
9.1.2.3 Reports of insurance carriers, if any,
insuring
the Property during the period of Seller's ownership of the
Property and each portion thereof respecting the claims
history of the Property; insurance certificates of Seller
and tenants respecting the Property; all correspondence,
reports, and notices pertaining to the existence of toxic
or Hazardous Materials and/or waste at the Property; all
permits, reports, certificates and notices pertaining to
the existence, removal and/or decommission of any and all
storage tanks located on, at or underneath the Property;
all brokerage and commission agreements; all agreements
entered by Seller and Seller's affiliates affecting the
Property and/or income and cash flow to be received from
the Property that will survive the Closing; tax bills and
assessments for the current year and the three (3) year
period immediately preceding the current year; any and all
information in Seller's possession respecting the
creditworthiness of the tenants under the Leases at the
Property; all written reports respecting incidents of
theft, burglary or crimes attempted or committed at, on or
to the Property or other such incidents which are the
subject of litigation; and such other information
reasonably requested by Buyer of Seller in writing during
the Due Diligence Period.
9.1.3 Indemnity. Buyer agrees to indemnify and hold
Seller harmless from any and all injuries, losses, liens,
claims, judgments, obligations, liabilities, costs,
expenses or damages (including reasonable attorneys' fees
and court costs) sustained by Seller to the extent same
results from or arises out of any inspections by Buyer or
any of its representatives pursuant to Section 9.1.2 above.
9.1.4 Insurance. Prior to any entry, Buyer shall
obtain, maintain and provide Seller, or shall cause any
consultant, contractor or other person entering the
Property to obtain, maintain and provide Seller, with proof
of comprehensive general liability insurance in the amount
of at least $1,000,000 combined, single limit coverage,
naming Seller as an additional insured.
9.2 Notice of Objections.
9.2.1 If Buyer fails to notify Seller in writing of
any objections to the items set forth in Section 9.1.2 on
or before the expiration of the Due Diligence Period, Buyer
shall be conclusively deemed to have approved such items.
9.2.2 If Buyer, in its sole discretion, notifies
Seller in writing of any objections to the condition of the
Property or any other matters relating to the Property
and/or operation or financial condition of the Property as
set forth in Section 9.1.2 on or before the expiration of
the Due Diligence Period, the parties will have five (5)
business days to agree upon a resolution of the
objection(s). If the parties cannot agree within the five
(5) business day period, then Buyer may terminate this
Agreement by delivering written notice to Seller (which
notice must be given within three (3) business days after
the expiration of the five (5) business day period), in
which event the Deposit and any interest accrued thereon
will be returned to Buyer, and all rights and obligations
of the parties existing hereunder shall terminate and be of
no further force or effect, except any rights and
obligations which are expressly stated to survive the
termination of this Agreement.
10. PRORATIONS. The following are to be prorated as of
the Closing Date, as follows:
10.1 Current Rent. Current rent under the Leases shall
be prorated as of the Closing Date, regardless of whether
such rent has been paid to Seller.
10.2 Rent Arrears. With respect to any rent arrears
arising under the Leases, Buyer shall pay to Seller any
rent actually collected that is applicable to the period
preceding the Closing Date, less reasonable collection
charges actually incurred; provided, however, that it is
hereby understood and agreed that all rent collected by
Buyer shall be applied first to unpaid rent accruing after
the Closing Date, and then, only after all such past due
rent has been collected, to unpaid rent accruing prior to
the Closing Date.
10.3 Security Deposits. The security deposit paid by the
tenant pursuant to the Leases, and any interest required to
be paid thereon, shall be fully credited to Buyer at
Closing.
10.4 Other Prorations. Liability for all real property
taxes, common area maintenance, Property operation
expenses, and other recurring costs which are not otherwise
paid directly by tenants shall be prorated as of the
Closing Date; provided, however, Buyer shall not be
responsible for any costs or expenses pertaining to Service
Contracts or other items of expense which Buyer has not
approved in writing. Seller shall remain liable for any
supplemental taxes attributable to any period prior to the
Closing and Seller shall be entitled to any tax refunds
attributable to any period prior to the Closing. If any
such supplemental taxes shall be billed to Buyer or levied
against the Property after the Closing, then Seller agrees
to pay its prorated share thereof to Buyer within thirty
(30) days of demand therefor by Buyer. Any such sums not
paid when due may be advanced by
10.5
Buyer and such amounts shall bear interest from the date of
advance by Buyer until paid by Seller at ten percent (10%)
per annum.
10.5 Preliminary Closing Adjustment. Seller
and Buyer shall jointly prepare a preliminary closing
adjustment computation on the basis of the Leases and other
sources, and shall deliver such computation to the Escrow
Holder prior to Closing.
10.6 Post-Closing Reconciliation. All items
described in this Section 10 that are capable of being
prorated as of the Closing Date, shall be prorated as of
the Closing Date. All other items shall be reconciled
within one hundred eighty (180) days after the Closing Date
to the extent that such items may be reconciled within such
one hundred eighty (180) day period, or, to the extent such
items may not be reconciled within such one hundred eighty
(180) day period, when such items may first be reconciled
after Closing.
10.7 Survival. The provisions of this
Section 10 shall survive Closing.
11. COSTS AND EXPENSES. The closing costs shall be
allocated as follows:
11.1 Buyer. Buyer shall pay all premiums for the ALTA
portion of the Title Policy, one half of escrow fees, and
Buyer's share of prorations.
11.2 Other Closing Costs. Seller shall pay one half of
escrow fees and the CLTA portion of the Title Policy
premium; and each party will pay their own legal and
professional fees and fees of other consultants incurred by
Buyer and Seller respectively. Seller shall be responsible
for its share of prorations, including all state and county
transfer taxes, all sales taxes, any other tax or
assessment imposed as a result of the transactions
contemplated under this Agreement, and any document
recording changes and notary fees, including, without
limitation, any recording fees and notary charges with
respect to the Deed.
11.3 Delivery of Possession. Simultaneously with the
Closing, Seller shall deliver possession and enjoyment of
the Property to Buyer, and all keys to the Property in
Sellers' possession, and Buyer shall thereupon have the
immediate right to possess, develop, use, sell, encumber
and/or transfer the Property, or any part thereof for its
own account to the total exclusion of Seller.
12. AS-IS. Except as specifically set forth in this
Paragraph and the representations set forth in Paragraph 5
above, the sale of the Property hereunder is and will be
made on an "as is" basis, without representations and
warranties of any kind or nature, express, implied or
otherwise, including but not limited to, any representation
or warranty concerning title to the Property, the physical
condition of
13.
the Property (including, but not limited to, the condition
of the soil or the improvements) , the environmental
condition of the Property (including, but not limited to,
the presence or absence of hazardous substances on or
respecting the Property) , the compliance of the Property
with applicable laws and regulations (including, but not
limited to, zoning and building codes or the status of
development or use rights respecting the Property), the
financial condition of the Property or any other
representation or warranty respecting any income, expenses,
charges, liens or encumbrances, rights or claims on,
affecting or pertaining to the Property or any party
thereof. Buyer acknowledges that Buyer will examine,
review and inspect all matters which in Buyer's judgment
bear upon the Property and its value and suitability for
Buyer's purposes, and Seller shall cooperate with Buyer in
making such information available to Buyer for such
examination. Except as to matters specifically set forth
in this Paragraph and the representations set forth in
Paragraph 5 above, Buyer will acquire the Property solely
on the basis of its own physical and financial
examinations, reviews and inspections and the title
insurance protection afforded by the Title Policy.
13. CONDEMNATION AND DESTRUCTION:
13.1 Eminent Domain or Taking. If proceedings under a
power of eminent domain relating to the Property or any
part thereof are commenced prior to the Closing Date,
Seller shall promptly inform Buyer in writing.
13.1.1 If such proceedings involve the taking of title
to all or any Material (defined below) interest in the
Property, Buyer may elect to terminate this Agreement by
notice in writing sent within thirty (30) days of Seller's
written notice to Buyer, in which case the Deposit, and any
interest thereon, will be returned to Buyer and neither
party shall have any further obligation to or rights
against the other except any rights or obligations of
either party which are expressly stated to survive
termination of this Agreement.
13.1.2 If the proceedings do not involve the taking of
title to all or a Material interest in the Property or if
Buyer does not elect to terminate this Agreement, this
transaction will be consummated as described in this
Agreement and any award or settlement payable with respect
to such proceeding will be paid or assigned to Buyer upon
the Closing.
13.1.3 For purposes of this Section 13.1, "Material"
shall mean a taking which Buyer reasonably determines
materially and adversely affects the value or operations of
the Property, and which is not less than Fifty Thousand
Dollars ($50,000).
13.2 Damage or Destruction. Except as provided in this
paragraph, prior to the Close of Escrow the entire risk of
loss of damage by earthquake, flood, hurricane, landslide,
fire or other casualty is borne and assumed by Seller. If,
prior to the Closing Date, any part of the Property is
damaged or destroyed by earthquake, flood, landslide, fire
or other casualty, Seller will promptly inform Buyer of
such fact in writing and advise Buyer as to the extent of
the damage.
13.2.1 If such damage or destruction is Material (as
defined below), Buyer has the option to terminate this
Agreement upon written notice to the Seller given not later
than thirty (30) days after receipt of Seller's written
notice to Buyer advising of such damage or destruction.
13.2.2 If this Agreement is so terminated, Buyer will
be entitled to the return of the Deposit together with any
interest thereon.
13.2.3 If Buyer does not timely exercise this option
to terminate this Agreement, or if the casualty is not
Material, Seller will either (a) assign to Buyer all of
Seller's right, title and interest in and to any and all
insurance proceeds under Seller's insurance policies
relating to such damage or destruction, and shall reduce
the Purchase Price by the amount of the deductible and any
other amount not covered by insurance under such policies
(including reasonably anticipated post-Closing rental loss,
except to the extent covered by insurance, through to
completion of such repair and restoration resulting from
such casualty), and this transaction will close pursuant to
the terms of this Agreement, or (b) if the casualty is
Material, give Buyer notice of Seller's election to
terminate this Agreement by notice in writing sent within
ten (10) days of Buyer's last day upon which it could
exercise Buyer's right to terminate in which case the
Deposit, and any interest thereon, will be returned to
Buyer and neither party shall have any further obligation
to or right against the other except any rights or
obligations of either party which are expressly stated to
survive termination of this Agreement.
13.2.4 For purposes of this Section 13.2, "Material"
is deemed to be any damage or destruction to the Property
where the cost of repair or replacement is estimated to be
more than 10% of the Purchase Price.
13.2.5 Survival. The provisions of this Section 13
shall survive the Closing.
14. REMEDIES:
14.1 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
HEREOF, 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:
(i) BUYER MAY TERMINATE THIS AGREEMENT,
IN WHICH CASE SELLER 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
(ii) BUYER MAY BRING AN ACTION FOR
SPECIFIC PERFORMANCE AGAINST SELLER WITH RESPECT TO THIS
AGREEMENT BUT ONLY UNDER THE FOLLOWING CONDITIONS AND
CIRCUMSTANCES:
(a) 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;
(b) THE ACTION SHALL BE COMMENCED,
AND SERVICE OF PROCESS UPON SELLER MADE, NOT LATER THAN
FORTY-FIVE (45) DAYS AFTER SELLER'S DEFAULT; AND
(c) ALL OF THE ISSUES IN SUCH
ACTION, WHETHER 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.
14.2 Seller's Remedies. IF BUYER SHOULD FAIL TO
CONSUMMATE THIS AGREEMENT AS A RESULT OF BUYER'S DEFAULT
UNDER THE TERMS OF THIS AGREEMENT, THEN SELLER, AS ITS SOLE
AND EXCLUSIVE REMEDY, MAY TERMINATE THIS AGREEMENT BY
NOTIFYING BUYER THEREOF AND RECEIVE OR RETAIN THE DEPOSIT
AS LIQUIDATED DAMAGES. THE PARTIES AGREE THAT SELLER WILL
SUFFER DAMAGES IN THE EVENT OF BUYER'S DEFAULT ON ITS
OBLIGATIONS. ALTHOUGH THE AMOUNT OF SUCH DAMAGES IS
DIFFICULT OR IMPOSSIBLE TO DETERMINE, THE PARTIES AGREE
THAT THE AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF
SELLER'S LOSS IN THE EVENT OF BUYER'S DEFAULT. THUS,
SELLER SHALL ACCEPT AND RETAIN THE DEPOSIT AS LIQUIDATED
DAMAGES BUT NOT AS A PENALTY. SELLER HEREBY ACKNOWLEDGES
AND AGREES SUCH LIQUIDATED DAMAGES SHALL CONSTITUTE
SELLER'S SOLE AND EXCLUSIVE REMEDY AND SELLER HEREBY WAIVES
THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389 AND
ANY OTHER APPLICABLE EXISTING OR FUTURE LAW PERMITTING A
CONTRACT TO BE ENFORCED EVEN THOUGH DAMAGES ARE LIQUIDATED
FOR ITS BREACH.
SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND
UNDERSTAND THE PROVISIONS OF THE FOREGOING PROVISION AND BY
THEIR INITIALS IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS
TERMS.
Seller:/s/ HM Buyer:/s/ RSZ
15. BROKERAGE COMMISSIONS. Each party hereby represents
and warrants to the other that except for Seller's
obligation set forth below, it has not incurred any
obligation to any third party for the payment of any real
estate commission, finder's fee or other like sum in
connection with the sale of the Property to Buyer, and each
party hereby agrees to indemnify and hold the other party
harmless from and against any and all claims, demands,
causes of action and costs, including attorneys' fees and
costs, made, brought or sought against or from the other
arising out of any agreement for the payment of a real
estate commission, finder's fee or other like sum entered
into between either party and a third party in connection
with the sale of the Property to Buyer. Seller shall pay
CB Commercial at Closing through Escrow a commission equal
to two and one half percent (2.5%) of the Purchase Price.
16. NOTICE. All notices, requests, demands or documents
which are required or permitted to be given or served
hereunder shall be in writing and (a) delivered personally,
(b) delivered by a national overnight courier (i.e., Fed
Ex), or (c) transmitted by facsimile, addressed as follows:
To Seller at: JC Investment & Realty, Inc.
19300 Hamilton Avenue
Gardena, California
Attn: Harutoshi Mori, President
Facsimile: (310) 329-0255
with a copy to:
Graham & James LLP
801 S. Figueroa
Los Angeles, California
Attn: Edwin B. Reeser III
Facsimile: (213) 623-4581
To Buyer at: Arden Realty Limited Partnership
9100 Wilshire, Suite 700E
Beverly Hills, California 90212
Attn: Victor Coleman
President
Facsimile: (310) 274-6218
with a copy to:
Jeffer Mangels Butler & Marmaro, LLP
2121 Avenue of the Stars, Tenth Floor
Los Angeles, California
Attn: Scott A. Kalt
Facsimile: (310) 203-0567
Notice shall be deemed to have been delivered only upon
actual delivery to the intended addressee in the case of
either personal, courier, or facsimile delivery. The
addresses for purposes of this paragraph may be changed by
giving written notice of such change in the manner provided
herein for giving notices. Unless and until such written
notice is delivered, the latest information stated by
written notice, or provided herein if no written notice of
change has been delivered, shall be deemed to continue in
effect for all purposes hereunder.
17. MISCELLANEOUS:
17.1 Survival. The representations and warranties
contained in this Agreement shall survive for a period of
twelve (12) months following the Closing Date.
17.2 Assignment. Buyer shall not assign this Agreement
except to an affiliate or related party to Buyer which
party is more than fifty percent (50%) owned and controlled
by Buyer, and with Seller's approval, which approval shall
not be unreasonably withheld. Notwithstanding such
assignment Buyer and its general partner as of the date
hereof shall remain liable to Seller to perform all of
Buyer's obligations pursuant to this Agreement.
17.3 Parties in Interest. As and when used herein, the
terms, "Seller" and "Buyer" mean and include, and this
Agreement their respective successors and assigns and shall
be binding upon and inure to the benefit of, the above-
named Seller and Buyer and their respective successors and
permitted assigns.
17.4 Section Headings. The headings of sections are
inserted only for convenience and shall in no way define,
describe or limit the scope or intent of any provision of
this Agreement.
17.5 No Oral Modifications. This Agreement may not be
amended or modified except in writing executed by all
parties hereto.
17.6 Full Integration. Buyer and Seller each acknowledge
that there are no other agreements or representations,
either oral or written, express or implied, that are not
embodied in this Agreement, and this Agreement, the
Exhibits attached to this Agreement, and the Transfer
Documents, represent a complete integration of all the
prior and contemporaneous agreements and understandings and
documents.
17.7 Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, and
their respective successors and assigns, and no other party
shall be a beneficiary hereunder.
17.8 Attorneys' Fees. If an action is commenced by a
party hereto resulting from a dispute with respect to the
transactions contemplated herein, the prevailing party
shall be entitled to recover its attorneys' fees and costs
from the other party in such action. As used herein, the
term "attorneys' fees" means attorneys' fees whether or not
litigation ensues and if litigation ensues whether incurred
at trial, on appeal, on discretionary review or otherwise.
17.9 Governing Law. This Agreement will be governed by,
interpreted under, and construed and enforced in accordance
with the laws of the State of California, with venue in the
city and County of Los Angeles, California. Each of the
parties hereto acknowledge and agree that the laws of the
State of California and the selection of venue in the city
and County of Los Angeles were freely chosen by Buyer and
Seller.
17.10 Confidentiality. Unless otherwise agreed to in
writing by Seller and Buyer, each party will use reasonable
efforts to keep confidential the terms of this Agreement,
the possible sale of the Property, and all documents,
financial statements, reports or other information provided
to, or generated by the other party relating to the
Property, and will use reasonable efforts to not disclose
any such information to any person other than (a) those
employed by Seller or Buyer; (b) those who are actively and
directly participating in the evaluation of the Property
and the negotiation and execution of this Agreement or
financing of the purchase of the Property; and
(c) governmental, administrative, regulatory or judicial
authorities in the investigation of the compliance of the
Property with applicable legal requirements; and (d) third
parties as required under applicable law. The provisions
of this paragraph will survive the termination of this
Agreement other than by Closing.
17.11 Captions. The captions contained in this
Agreement are for convenience only and are not intended to
limit or define the scope or effect of any provision of
this Agreement.
17.12 Severability. The invalidity, illegality or
unenforceability of any provision of this Agreement shall
not affect the enforceability of any other provision of
this Agreement, all of which shall remain in full force and
effect.
17.13 Time of the Essence. Time is of the essence of
this Agreement and of the obligations required hereunder.
17.14 Non-Waiver. No delay or failure by any party
to exercise any right hereunder, and no partial or single
exercise of any such right, shall constitute a waiver of
that or any other right, unless otherwise expressly
provided herein.
17.15 Facsimile. The parties hereto and their
respective successors and assigns are hereby authorized to
rely upon the signatures of each person and entity on this
Agreement which are delivered by facsimile as constituting
a duly authorized, irrevocable, actual, current delivery of
this Agreement with original ink signatures of each person
and entity.
17.16 Further Assurances. Buyer and Seller agree to
execute all documents and instruments reasonably required
in order to consummate the purchase and sale contemplated
in this Agreement.
17.17 Counterparts. This Agreement may be executed
in any number of counterparts and each such counterpart
shall be deemed to be an original, but all of which, when
taken together, shall constitute one Agreement.
Buyer and Seller have executed this Agreement as of
the date written above.
"SELLER"
JC Investment & Realty, Inc.
a Washington corporation
By:/s/ Harutoshi Mori
Name: Harutoshi Mori
Title: President
"BUYER"
Arden Realty Limited Partnership
a Maryland limited partnership
By: Arden Realty, Inc.
Its: General Partner
By:/s/ Richard S. Ziman
Name: Richard S. Ziman
Title: Chief Executive Officer
ARDEN REALTY LIMITED PARTNERSHIP
9100 Wilshire Boulevard
Suite 700 East Tower
Beverly Hills, California 90212
(310) 271-8600
Fax (310) 246-2941
June 25, 1997
VIA FACSIMILE
JC Investment & Realty, Inc.
19300 Hamilton Avenue
Suite 170
Gardena, CA 90248
Attn: Harutoshi Mori, President
RE: Agreement of Purchase and Sale and Joint Escrow
Instructions (the "Agreement") between JC Investment &
Realty, Inc. ("Seller") and Arden Realty Limited
Partnership ("Purchaser"); Property located at 19300
Hamilton Avenue, Gardena, CA ("Property")
Dear Mr. Mori:
On June 23, 1997, Purchaser delivered notice (the "Objection
Notice") to seller objecting to certain items with respect to the
Property. Seller and Purchaser have agreed upon a Purchase Price
adjustment as a concession to Purchaser to cause it to proceed to
close the transaction as contemplated in the Agreement.
Accordingly, Purchaser and Seller hereby agree to modify the
Agreement in accordance with the following terms and conditions:
1. Capitalized terms used in this letter shall have the
meanings ascribed to them in the Agreement, unless otherwise
defined in this letter.
2. The Purchase Price is reduced from $4,400,000 to
$4,350,000.
3. Except to the extent set forth above, Seller and
Purchaser hereby reaffirm and ratify the Agreement, as amended
hereby.
If the forgoing is in accordance with your understanding of
our agreement, please sign and return a copy of this letter for
our files.
Sincerely,
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc., its sole general partner
By: /s/ Victor J. Coleman
Victor J. Coleman, President
AGREED AND ACCEPTED TO THIS
25TH DAY OF JUNE, 1997
JC Investment & Realty, Inc.
a Washington corporation
By: /s/ Harutoshi Mori
Name: Harutoshi Mori
Its: President
cc: Brig Troy
Scott Kalt, Esq. (310) 203-0567
Marley Harrill (213) 891-0834
AGREEMENT OF PURCHASE AND SALE
AND ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND ESCROW INSTRUCTIONS
("Agreement") is made as of May 21, 1997, by and between ARDEN
REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
("Buyer") and NEW YORK LIFE INSURANCE COMPANY, a New York mutual
insurance company (together with its successors and assigns,
collectively, "Seller").
For valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Buyer and Seller agree as follows:
AGREEMENT
1. Certain Basic Definitions. For purposes of this Agreement,
the following terms shall have the following definitions:
Assumed Liabilities means all costs, expenses (including
reasonable attorneys' fees and expenses), claims, losses,
commitments, liabilities and obligations of any kind or
nature, accrued or contingent, now existing or hereafter
arising from or related to (i) the Leases or the New Leases,
past, present or future, or (ii) the ownership, use,
possession, enjoyment or operation of the Property, past,
present or future, excluding only the Excluded Liabilities.
Assumed Liabilities shall not include any costs, expenses,
claims, losses, commitments, liabilities or obligations of
any kind or nature arising from the presence of any
Environmental Matters which were introduced on, under or
about the Real Property prior to the time that Seller
acquired fee title to the Real Property.
Business Day means any day which is not a Saturday, Sunday,
legal or banking holiday in the States of California or New
York.
Buyer's Address means c/o Arden Realty, Inc., 9100 Wilshire
Boulevard, Suite 700, Beverly Hills, California 90212,
Attention: Victor Coleman.
Claim means any claim, demand or Legal Proceeding.
Closing Date means the date the Close of Escrow occurs,
which shall be no later than August 1, 1997.
Contingency Period means the period commencing on the
Effective Date and expiring at 5:00 P.M., Pacific Daylight
Time, on the date which is twenty (20) days after the
Effective Date.
Contingency Termination Date means June 10, 1997.
Deposit means the Initial Deposit and, if posted pursuant to
Section 2.2.1(b), the Subsequent Deposit.
Effective Date means May 21, 1997.
Environmental Matter is defined in Section 9.11.
Environmental Reports is defined in Section 3.3.3(a)(ii).
Escrow Holder means the Los Angeles, California office of
Chicago Title Insurance Company.
Escrow Holder's Address means 700 South Flower Street, Suite
900, Los Angeles, California 91203.
Excluded Liabilities means all costs, expenses (including
reasonable attorneys' fees and expenses), claims, losses,
commitments, liabilities and obligations of any kind or
nature, accrued or contingent, now existing or hereafter
arising from or related to (i) a breach of any of Seller's
representations and warranties set forth in Sections 9.1
through 9.12 and 9.17 hereof, (ii) any Service Contract not
assumed by Buyer, and (iii) any liability or damage relating
to injury or death of any person or persons, or damage to
property, based on an act or omission occurring prior to the
Closing Date, which (a) if not covered by any insurance
policy owned by Seller, is asserted in writing within twelve
(12) months after the Close of Escrow, or (b) if covered by
an insurance policy owned by Seller is asserted in writing
within forty-eight (48) months after the Close of Escrow.
Excluded Liabilities shall not include any costs, expenses,
claims, losses, commitments, liabilities or obligations of
any kind or nature arising from the presence of any
Environmental Matters which were introduced on, under or
about the Real Property prior to the time that Seller
acquired fee title to the Real Property.
Improvements means all buildings and other improvements
located on the Real Property.
Initial Deposit means the amount of Six Hundred Thousand
Dollars ($600,000).
Intangible Personal Property means all of Seller's
assignable right, title and interest, if any, in and to all
rights to condemnation or insurance proceeds and other
awards or compensation arising from any taking, casualty or
permitted disposition of any portion of the Real Property
and any other intangible personal property of every kind and
character appurtenant to or used in connection with the
ownership or operation of the Real Property, including,
without limitation, the Service Contracts, any third party
claims related to the Real Property, the Licenses and
Permits, the Trade Names and the Warranties.
Leases is defined in Section 3.3.3(b).
Legal Proceeding means any action at law or in equity filed
in any court as to which process has been served, or any
administrative proceeding or any binding arbitration
proceeding as to which a demand has been served that has not
been terminated by dismissal, final judgment or settlement.
Licenses and Permits means all of Seller's assignable right,
title and interest, if any, in and to all licenses, permits,
certificates of occupancy, approvals, dedications,
subdivision maps or plats, land sale registrations, property
reports, conditional use permits, special use permits,
declarations of nonsignificance, environmental impact
statements and entitlements issued, approved or granted to
or for the benefit of Seller or Seller's predecessors in
interest by applicable governmental authorities or otherwise
in effect and which relate to the Real Property, and
including (without limitation) all of Seller's assignable
right, title and interest, if any, in and to any and all
development rights and other intangible rights, titles,
interests, privileges and appurtenances owned by Seller or
Seller's predecessors-in-interest as owner of the Real
Property and in any way related to or used in connection
with the Real Property; and all of Seller's assignable
right, title and interest, if any, in and to all licenses,
consents, easements, rights of way and approvals required to
make use of utilities and to ensure vehicular and pedestrian
ingress and egress to the Real Property.
Loss means any loss, reasonable cost or reasonable expense
actually incurred by a party which is directly related to
the breach by either Buyer or Seller, as the case may be, of
the performance of their respective obligations under
Section 35(b) or (c) of this Agreement, but does not include
(i) any loss of profit, or (ii) any other consequential
damages.
Property means the Real Property, the Tangible Personal
Property and the Intangible Personal Property.
Purchase Price means the sum of Twenty-Five Million One
Hundred Fifty Thousand Dollars ($25,150,000).
Real Property means (a) the real property known as 19191
South Vermont Avenue, Torrance, California, upon which is
located an office building, which real property is more
particularly described in Exhibit A attached hereto and
incorporated herein for all purposes, together with the
Improvements, and (b) any rights, privileges, easements and
appurtenances pertaining to such real property, including
the Leases and any right, title and interest (but without
warranty whether statutory, express or implied) in and to
adjacent streets, alleys or rights-of-way.
Seller's Address means New York Life Insurance Company, 51
Madison Avenue, New York, New York 10010-1603, Attention:
Senior Vice President, Mortgage Finance Department, with a
copy to New York Life Insurance Company, 51 Madison Avenue,
New York 10010-1603, Attention: Stephen P. Tuttle, Esq.
Service Contracts is defined in Section 3.3.3(d).
Shell is defined in Section 3.3.1(f).
Shell Indemnity is defined in Section 3.3.1(f).
Subsequent Deposit means the amount of Four Hundred Thousand
Dollars ($400,000).
Tangible Personal Property means all of Seller's assignable
right, title and interest, if any, in and to all equipment,
appliances, tools, machinery, supplies, building materials,
fixtures, furnishings, and any other tangible personal
property of every kind and character owned by Seller and
appurtenant to, located in or used in connection with the
operation of the Real Property, including, without
limitation: (A) all preliminary, final and proposed
building plans and specifications (including "as-built
drawings") respecting the Improvements, (B) all structural
reviews, environmental assessments and audits, architectural
drawings and engineering, geophysical, soils, seismic,
geologic, environmental (including with respect to the
impact of materials used in the construction of the
Improvements) and architectural reports, studies and
certificates pertaining to the Real Property, (C) all
accounting, tax, financial, and other books and records
relating to the use, maintenance, leasing and operation of
the Real Property, and (D) those items of Personal Property
described on the Personal Property Schedule attached as
Schedule F-2 to the Bill of Sale.
Tangible Property means, collectively, the Real Property and
the Tangible Personal Property.
Trade Names means the non-exclusive right in and to the use
of the trade name "Pacific Gateway II" and any and all other
trade names, trademarks, and logos used by Seller in the
operation and identification of the Real Property or the
Improvements, other than the tradenames or trademarks of New
York Life Insurance Company or its affiliates or PM Realty
Company or its affiliates.
Tenant means the tenant under any Lease.
Warranties means all of Seller's assignable right, title and
interest, if any, in and to all warranties, guaranties,
representations or covenants which are presently effective
and assignable and were given to or made in favor of Seller
or its predecessors in interest or their affiliates in
connection with the acquisition, development, construction,
maintenance, repair, renovation or inspection of the Real
Property, including, without limitation, any made under any
construction contracts for the construction of the
Improvements and the Service Contracts, but subject to any
and all terms and conditions to performance thereof.
2. Sale of Property: Purchase Price.
2.1 Sale of Property. Seller shall sell the Property to
Buyer, and Buyer shall purchase the Property from Seller,
for the Purchase Price on the terms and conditions of this
Agreement.
2.2 Purchase Price. The Purchase Price shall be payable as
follows:
2.2.1 Deposits.
(a) The Initial Deposit shall be
delivered by Buyer to Escrow Holder not later than
June 16, 1997, and upon the acceptance of this
Agreement by Escrow Holder in writing, in the form
of wire transfer pursuant to wiring instructions
provided to Buyer, cash or cashier's check drawn
on good and sufficient funds on a federally
insured bank in the State of California and made
payable to the order of Escrow Holder, and shall
be deposited by Escrow Holder pursuant to the
provisions of Section 3.1.
(b) In the event that the condition in
Section 3.3.1(f) is satisfied or waived on or
before July 9, 1997, the Subsequent Deposit shall
be delivered by Buyer to Escrow Holder not later
than July 11, 1997, in the form of wire transfer
pursuant to wiring instructions provided to Buyer,
cash or cashier's check drawn on good and
sufficient funds on a federally insured bank in
the State of California and made payable to the
order of Escrow Holder, and shall be deposited by
Escrow Holder into Escrow.
(c) The Deposit, plus accrued interest
thereon, shall be refunded to Buyer if (i) any of
the conditions in Section 3.3 are neither
satisfied nor waived by Buyer and Buyer notifies
Seller and Escrow Holder in writing that Buyer is
terminating this Agreement pursuant to Section 3.5
of this Agreement within one (1) day after the
Contingency Termination Date, (ii) Title Company
does not issue to Buyer a Title Policy pursuant to
Section 3.6.5, (iii) a casualty or condemnation
occurs in accordance with Section 8.1, (iv) the
transaction fails to close because of Seller's
default hereunder or (v) prior to the Closing
Date, a material change occurs in the condition of
the Property, the rent roll, or the
representations and warranties of Seller in
Section 9; provided however, that if the condition
set forth in Section 3.3.1(f) is not satisfied or
waived by Buyer on or before July 9, 1997, then
the Deposit, plus accrued interest thereon, minus
the sum of $100,000 shall be returned to Buyer,
and Seller shall be entitled to retain the sum of
$100,000. In all other events, the Deposit, plus
accrued interest thereon, shall be nonrefundable
to Buyer. Subject to the first sentence of this
Section 2.2.1(c), upon the satisfaction or waiver
by Buyer of the conditions in Section 3.3,
including the condition set forth in Section
3.3.1(f), the Deposit, plus accrued interest
thereon, shall belong to Seller, and shall
immediately be paid by Escrow Holder to Seller.
2.2.2 Balance. Buyer shall deposit into Escrow
an amount in immediately available federal funds equal
to the Purchase Price minus the Deposit plus interest
thereon accrued ("Cash Balance"), as reduced by the
amount of any credits due, or increased by the amount
of any items chargeable to, Buyer under this Agreement.
Buyer shall deposit the Cash Balance into Escrow in the
form of immediately available federal funds no later
than one (1) Business Day before the Closing Date (or
such earlier date as is required by Escrow Holder),
unless Escrow Holder advises Buyer and Seller that a
special recording time is available which would permit
Buyer to deposit the Cash Balance into Escrow on the
Closing Date, such that Escrow Holder will be in a
position to disburse the cash proceeds to Seller on the
Closing Date.
2.3 Interest. All funds received from or for the account
of Buyer shall be deposited by Escrow Holder in an interest-
bearing account with a federally insured state or national
bank or savings and loan association ("Account") located in
California and selected by Seller and approved by Buyer,
which approval shall not be unreasonably withheld or
delayed.
3. Escrow: Closing Conditions.
3.1 Escrow. On or after the Effective Date, and upon the
acceptance of this Agreement by Escrow Holder in writing,
this Agreement shall constitute the joint escrow
instructions of Buyer and Seller to Escrow Holder to open an
escrow ("Escrow") for the consummation of the sale of the
Property to Buyer pursuant to the terms of this Agreement.
Upon Escrow Holder's receipt of the Deposit and Escrow
Holder's written acceptance of this Agreement ("Opening of
Escrow"), Escrow Holder is authorized to act in accordance
with the terms of this Agreement. Escrow Holder's general
provisions, a copy of which is attached hereto and
incorporated herein as Exhibit B, shall be a part of this
Agreement; provided, however, that if there is any conflict
or inconsistency between such general provisions and this
Agreement, this Agreement shall control. Upon the Close of
Escrow, Escrow Holder shall pay all sums owed to Seller or
Buyer, as applicable, with immediately available federal
funds.
3.2 Closing Date. The Escrow shall close on the Closing
Date, provided that all conditions to the Close of Escrow
set forth in this Agreement have been satisfied or waived in
writing by the party intended to be benefitted thereby.
3.3 Buyer's Conditions to Closing. Buyer's obligation to
close the Escrow is subject to and contingent on the
satisfaction (or waiver) of the following conditions:
3.3.1 Inspection. Buyer's approval of the
physical condition of the Property at Buyer's sole cost
and expense within the Contingency Period.
(a) Buyer shall have the right to
commence Buyer's physical inspection of the
Property immediately on the Effective Date upon
one (1) Business Day's prior notice to Seller and
after Seller's receipt of written evidence that
Buyer has procured the insurance required by
Section 3.3.1(c). Buyer's physical inspection of
the Property shall be conducted during normal
business hours at a time mutually acceptable to
Buyer and Seller. Such inspection shall be
conducted in a manner that does not disturb the
present tenants and occupants of the Real Property
and Buyer and Buyer's agent shall perform
inspections only while accompanied by one or more
representatives of Seller. Buyer may interview
Seller's property manager in connection with the
Real Property upon one (1) Business Day's prior
notice to Seller.
(b) Buyer acknowledges that prior to
the Contingency Termination Date: (i) Buyer has or
may have conducted such surveys and inspections
and other studies of the Property; and (ii) Seller
has provided Buyer with adequate opportunity to
make such inspection of the Property (including an
inspection for zoning, land use, environmental and
other laws, regulations and restrictions) as Buyer
has, in Buyer's discretion, deemed necessary or
advisable as a condition precedent to Buyer's
purchase of the Property and to determine the
physical, environmental and land use
characteristics of the Property, including without
limitation, its subsurface) and its suitability
for Buyer's intended use. Buyer shall deliver to
Seller a copy of each report of findings that is
issued as a result of such activities. As to
environmental matters, Buyer represents and
warrants to Seller that Buyer has reviewed the
environmental reports and related materials
provided by Seller and has, to the extent it has
deemed it necessary or desirable to do so,
conducted its own independent due diligence as to
the environmental condition of the Property.
Based on such review and independent due diligence
Buyer has determined that it is not necessary for
it to conduct further environmental due diligence
concerning the Property, and its satisfaction as
to the environmental condition of the Property
shall not be a condition to closing under this
Agreement. Moreover, based on its familiarity
with and approval of the environmental condition
of the Property, Buyer agrees that it will not
need to conduct any type of testing or inspections
of the subsurface of the Property, including, but
not limited to boring, percolation, geologic,
environmental and soils tests. Seller has relied
on these representations in deciding to enter into
this Agreement with Buyer.
(c) Buyer shall obtain or cause its
consultants to obtain, at Buyer's sole cost and
expense prior to commencement of any investigative
activities on the Property, a policy of commercial
general liability insurance covering any and all
liability of Buyer and Seller with respect to or
arising out of any investigative activities. Such
policy of insurance shall be kept and maintained
in force during the term of this Agreement and so
long thereafter as necessary to cover any claims
of damages suffered by persons or property
resulting from any acts or omissions of Buyer,
Buyer's employees, agents, contractors, suppliers,
consultants or other related parties. Such policy
of insurance shall have liability limits of not
less than Three Million Dollars ($3,000,000)
combined single limit per occurrence for bodily
injury, personal injury and property damage
liability. Such insurance policy shall name
Seller as an additional insured and shall be in
form and substance and issued by an insurance
company licensed to do business in the State of
California and satisfactory to Seller.
(d) Buyer shall protect, indemnify,
defend and hold the Property, Seller and Seller's
officers, directors, shareholders, participants,
affiliates, employees, representatives, invitees,
agents and contractors free and harmless from and
against any and all claims, damages, liens, stop
notices, liabilities, losses, costs and expenses,
including reasonable attorneys' fees and court
costs, resulting from Buyer's inspection and
testing of the Property, including, without
limitation, repairing any and all damages to any
portion of the Property, arising out of or related
(directly or indirectly) to Buyer's conducting
such inspections, surveys, tests, and studies.
Buyer shall keep the Property free and clear of
any mechanics' liens or materialmen's liens
related to Buyer's right of inspection and the
activities contemplated by Section 3.3.1. Buyer's
indemnification obligations set forth herein shall
survive the Close of Escrow and shall not be
merged with the Deed, and shall survive the
termination of this Agreement and Escrow prior to
the Close of Escrow.
(e) Except as otherwise set forth in
Section 9 hereof, it is understood by the parties
that Seller does not make any representation or
warranty, express or implied, as to the accuracy
or completeness of any information contained in
Seller's files or in the documents produced by
Seller, including, without limitation, any
environmental audit or report. Except as
otherwise set forth in Section 9 hereof, Buyer
acknowledges that Seller and Seller's affiliates
shall have no responsibility for the contents and
accuracy of such disclosures, and Buyer agrees
that the obligations of Seller in connection with
the purchase of the Property shall be governed by
this Agreement irrespective of the contents of any
such disclosures or the timing or delivery
thereof.
(f) Buyer has advised Seller that, with
respect to the environmental condition at the
Property, it has entered into negotiations with
Shell Oil Company ("Shell") regarding the terms of
an agreement (the "Shell Indemnity") which Buyer
shall seek to obtain from Shell pursuant to which
Shell would hold Buyer harmless from and against
environmental response costs and/or third party
tort claims arising in connection with the
Property, directly or indirectly, as a result of
the ownership and/or operation of a tri-plant
synthetic rubber manufacturing complex or other
facility by Shell on or about the Property. It
shall be a condition to Buyer's obligations under
this Agreement that Buyer shall have obtained and
approved, in Buyer's sole discretion, the Shell
Indemnity, and delivered to Seller a copy of the
same on or before July 9, 1997. Buyer agrees to
keep Seller apprised of the status of any
negotiations it shall engage in with Shell, and
agrees that Seller shall have the right to contact
Shell directly to confirm the status of such
negotiations or otherwise to discuss matters of
interest to Seller and Shell concerning the
Property. Buyer agrees to (i) negotiate a
suitable exception to any confidentiality
provision contained in the Shell Indemnity in
order to permit Buyer to deliver to Seller a copy
of the fully-executed Shell Indemnity when
executed by the parties thereto, (ii) promptly
deliver a copy of the Shell Indemnity to Seller
when obtained by Buyer, and (iii) direct Shell in
writing before July 9, 1997 to deliver a copy of
the fully-executed Shell Indemnity when executed
by the parties thereto.
3.3.2 Preliminary Title Report. Buyer's approval
of (i) a current extended coverage, owner's preliminary
title report for the Real Property issued by Chicago
Title Insurance Company ("Title Company"), and (ii) all
exceptions to title described in Schedule B of the PTR
(which together with complete copies of all documents
and instruments referred to in any exceptions set forth
therein are collectively referred to as the "PTR").
(a) No later than two Business Days
after the Effective Date, Seller shall deliver to
Buyer (i) a copy of the PTR and (ii) a copy of
each survey of the Real Property (including
without limitation the most recently performed
survey ) in Seller's possession with respect to
the Real Property (the "Survey"). If Buyer does
not expressly object in writing to any exception
or other matter in the PTR or the Survey within
five (5) Business Days after the later to occur of
(x) Seller's delivery of the PTR and Survey to
Buyer, or (y) the Effective Date, then Buyer shall
be deemed to have approved the PTR and all
exceptions set forth therein. Buyer and Seller
agree that Buyer shall have five (5) Business Days
to review the PTR in its entirety, including,
without limitation, the legal description of the
Real Property and all title exceptions referred to
in the PTR. If Buyer disapproves of any item in
the PTR within the five (5) Business Day period,
then Buyer shall so notify Seller in writing,
specifying in detail the reasons for Buyer's
disapproval. Seller shall have the right, but not
the obligation, to notify Buyer in writing within
five (5) Business Days after Seller's receipt of
Buyer's notice that Seller desires to have until
the Closing Date in which to remove or cure, or
agree to remove or cure, such disapproved items,
and/or (subject to Buyer's reasonable
satisfaction) to obtain a bond or title commitment
or endorsement reasonably acceptable to Buyer at
the Close of Escrow insuring Buyer against such
disapproved item. Seller's failure to deliver
such notice to Buyer shall be deemed an election
not to cure the items Buyer has disapproved, and
Seller shall be deemed to have delivered the
notice described in Section 3.3.2(b).
(b) If Seller is unable or unwilling to
cure such disapproved items by removing such items
or by obtaining a bond, title commitment or
endorsement insuring Buyer against such items,
then Seller shall so notify Buyer, and Buyer shall
have the right either (i) to waive such exceptions
to title, and proceed to take title to the Real
Property subject to such exceptions, without any
deduction or offset in the Purchase Price, and
without any cause of action against Seller, or
(ii) to terminate this Agreement and the Escrow by
giving written notice of such termination to
Seller and to Escrow Holder, on or before five (5)
Business Days after the date Seller so notifies
Buyer. Buyer's failure to provide Seller or
Escrow Holder with such written notice of
termination on or before five (5) Business Days
after Seller's notice or deemed notice shall
constitute Buyer's election under clause (i)
above.
3.3.3 Seller Delivery Items. Buyer's approval
within the Contingency Period of all Seller Delivery
Items (as defined below) and any other matters related
to the Property or otherwise related to the transaction
described in this Agreement in Buyer's sole discretion.
Not later than two (2) Business Days after the
Effective Date Seller shall deliver to Buyer for
Buyer's review copies of the items (the "Seller
Delivery Items") set forth in Sections (a) through (i).
In the event that Seller shall delay in delivering the
Seller Delivery Items to Buyer, the Contingency Period
shall be extended by one day for each such day of delay
by Seller, provided that, promptly after such delay,
Buyer shall have notified Seller in writing of such
delay and Buyer's request for an extension of the
Contingency Period.
(a) If or to the extent in the Seller's
possession or in the possession of Seller's
property manager:
(i) Copies of complete sets
of all architectural, mechanical, structural
and/or electrical plans and specifications
used in connection with the construction of
or alterations or repairs to the Property
together with copies of as-built plans and
specifications for the Property.
(ii) Copies of all soil
tests, structural engineering tests, ADA
surveys, masonry tests, percolation tests,
water, oil, gas, mineral, radon,
formaldehyde, PCB, asbestos or other
environmental tests, audits or reports,
market studies and site plans related to the
Property, including, without limitation, the
environmental reports ("Environmental
Reports") listed on Exhibit D.
(iii) Parking, structural,
mechanical or other engineering reports or
studies related to the Property, if any.
(iv) Copies of any title
insurance policies covering the Property and
any surveys of all or any portion of the
Property.
(v) Copies of all
authorization, including, without limitation,
all certificates of occupancy, permits,
authorizations, approvals and licenses issued
by governmental authorities having
jurisdiction over the Property and copies of
all certificates issued by the local board of
fire underwriters (or other body exercising
similar functions) relating to the Property.
(vi) Financial and operating
statements for the Property for the previous
three (3) calendar years and the year to
date.
(vii) All Base Year (as
defined in the Leases) information applicable
to Leases.
(viii) A cumulative general ledger for year-
to-date 1997.
(ix) A current rent roll.
(x) Property tax bills for the last three
(3) years.
(b) All written rental agreements,
leases, lease guarantees and occupancy agreements
in Seller's actual possession currently affecting
the Property ("Leases").
(c) Intentionally Deleted.
(d) All landscaping, air conditioning,
janitorial and other service contracts relating to
the Property, if any, that are in Seller's actual
possession and that will remain in effect after
the Closing ("Service Contracts").
(e) The PTR, as defined in Section
3.3.2.
(f) Intentionally Deleted.
(g) The operating and capital
expenditure budget for the Property for the
current calendar year.
(h) A complete list of all personal
property of Seller located at and used in
connection with the Property.
(i) A complete list of all warranties
and guaranties in effect as of the Effective Date
and complete copies of all such warranties and
guaranties.
(j) In addition to the Seller Delivery
Items described in Sections (a) through (i) above,
Seller shall make available at the offices of the
property manager located at the Real Property for
review by Buyer and Buyer's representatives (upon
twenty-four (24) hours written notice, in a manner
that will not unreasonably disrupt Seller's or
such property manager's business operations) any
and all other documents in Seller's or Seller's
property manager's actual possession that bind the
Property or materially affect its use, provided
such documents are not confidential, proprietary
or privileged.
3.3.4 Estoppel Certificates. Buyer's approval of
the Estoppel Certificates to be delivered by Seller
pursuant to Section 4 of this Agreement.
3.4 Approval Procedure. Buyer shall notify Seller of
Buyer's disapproval, if at all, of the matters described in
Sections 3.3.1, 3.3.2 and 3.3.3 by written notice delivered
to Seller and Escrow Holder within the applicable time
periods specified in such Sections, but in no event later
than the one (1) day after the expiration of the Contingency
Termination Date. Buyer shall notify Seller of Buyer's
disapproval of the Estoppel Certificates described in
Section 3.3.4, if at all, by written notice delivered to
Seller and Escrow Holder within five (5) Business Days after
receipt thereof, and the Closing Date shall be subject to
extension for a period of up to five (5) Business Days as
required in order to allow Buyer the required time period
for review and approval (or disapproval) of such Estoppel
Certificates. Buyer's failure to disapprove of any of the
matters described in Sections 3.3.1, 3.3.2, 3.3.3 or 3.3.4
in the manner and within the applicable time periods
provided for herein shall be deemed Buyer's approval of such
matter and waiver of such condition.
3.5 Termination.
3.5.1 Termination Upon Disapproval. This
Agreement shall terminate at Buyer's option upon
Buyer's disapproval of any of the matters described in
Sections 3.3.1, 3.3.2, 3.3.3 and 3.3.4, within the time
period specified in such Section for such approval, but
with respect to any matter set forth in Sections 3.3.1,
3.3.2 or 3.3.3, in no event later than one (1) day
after the Contingency Termination Date. In no event
shall Buyer have the right to disapprove any matter set
forth in Sections 3.3.1, 3.3.2 or 3.3.3 any later than
one (1) day after the Contingency Termination Date.
Upon termination of this Agreement pursuant to this
Section 3.5.1: (a) each party shall promptly execute
and deliver to Escrow Holder such documents as Escrow
Holder may reasonably require to evidence such
termination; (b) Escrow Holder shall return all
documents to the respective parties who delivered such
documents to Escrow; (c) Escrow Holder shall return all
funds deposited into Escrow by Buyer together with any
accrued interest on such funds; (d) Buyer and Seller
shall each pay one-half of Escrow Holder's title and
escrow cancellation fees; (e) Buyer shall return to
Seller all Seller Delivery Items in Buyer's possession;
and (f) the respective obligations of Buyer and Seller
under this Agreement shall terminate; provided,
however, notwithstanding the foregoing, Buyer's
indemnity obligations under Sections 3.3.1(d) and 7 and
Buyer's obligations under Sections 27 and 32 shall
survive any such termination of the Agreement, and the
termination of this Agreement shall not release any
other indemnity obligation of Buyer or Seller.
3.5.2 Good Faith Determination. Buyer shall
approve or disapprove the matters described in Sections
3.3.1, 3.3.2, 3.3.3 and 3.3.4, according to the good
faith judgment of Buyer.
3.6 Title and Title Insurance.
3.6.1 Deed. Seller shall convey title to the
Real Property and Improvements to Buyer by grant deed
in the form of Exhibit E attached hereto ("Deed").
3.6.2 Assignment of Leases. Seller shall assign,
without recourse, to Buyer Seller's right, title and
interest in the Leases, subject to any rights of
consent as provided therein, pursuant to an assignment
in the form of Exhibit F attached hereto ("Assignment
of Leases").
3.6.3 General Assignment. Seller shall assign,
without recourse, to Buyer Seller's right, title and
interest in and to all permits, licenses, and
agreements with respect to the operation of the
Property, including, without limitation, the Service
Contracts, subject to any rights of consent as provided
therein, pursuant to an assignment in the form of
Exhibit G attached hereto ("General Assignment").
3.6.4 Bill of Sale. Seller shall convey, without
recourse, all of Seller's right, title and interest, if
any, to the Tangible Personal Property pursuant to a
Bill of Sale in the form of Exhibit H attached hereto
("Bill of Sale").
3.6.5 Buyer's Title Policy. Buyer shall not be
obligated to close the Escrow unless, at the Close of
Escrow, Escrow Holder causes the Title Company to issue
to Buyer a CLTA Coverage Owner's Policy of Title
Insurance (the "Title Policy") which:
(a) shall be written with liability in
the amount of the Purchase Price; and
(b) shall insure title to the Real
Property, to be vested in Buyer, subject only to
the following exceptions ("Permitted Exceptions"):
(i) the standard printed exceptions set forth in
the Title Policy; (ii) general and special real
property taxes and assessments for the current
fiscal year, a lien not yet due and payable; (iii)
the Leases; (iv) such other exceptions as Buyer
has approved or is deemed to have approved
pursuant to Section 3.3.2; and (v) any exceptions
directly or indirectly caused by Buyer.
3.6.6 ALTA Policy. Buyer shall have the right to
procure an ALTA Extended Coverage Owner's Policy of
Title Insurance ("ALTA Policy") as long as the issuance
of the ALTA Policy does not delay or extend the Closing
Date. Buyer shall pay for the increased cost of such
ALTA Policy and for the cost of any other increase in
the amount or scope of title insurance if Buyer elects
to increase the amount or scope of title insurance
coverage provided in the Title Policy.
3.7 Closing Costs and Charges.
3.7.1 Seller's Costs. Seller shall pay (a) the
premium for a CLTA Standard Coverage Owner's Policy of
Title Insurance written with liability in the amount of
the Purchase Price; (b) one-half (1/2) of all of Escrow
Holder's fees in connection with the Escrow; (c) all
expenses and charges incurred in connection with the
discharge of delinquent taxes, if any, which may be
required in order for the Title Company to issue the
Title Policy in accordance with Section 3.6.5; (d) all
documentary transfer taxes payable in connection with
the transfer of the Real Property; and (e) the cost of
any recertification to the survey delivered by Seller
to Buyer as part of the Seller Delivery Items which is
required by the Title Company as a condition of its
issuance of an ALTA Policy, if requested by Buyer.
3.7.2 Buyer's Costs. Buyer shall pay (a) any
additional premium for the Title Policy and all
endorsements requested by Buyer; (b) all recording fees
payable in connection with the transfer of the Real
Property; (c) one-half (1/2) of all of Escrow Holder's
fees in connection with the Escrow; and (d) the costs
of any audit or inspection by Buyer in connection with
the Property.
3.7.3 Other Costs. All other costs, if any,
shall be apportioned in the customary manner for real
property transactions in the county where the Real
Property is located.
3.8 Deposit of Documents and Funds by Seller. Not later
than two (2) Business Days prior to the Closing Date, Seller
shall deposit the following items into Escrow, each of which
shall be duly executed and acknowledged by Seller where
appropriate.
3.8.1 The Deed.
3.8.2 The Bill of Sale.
3.8.3 A counterpart of the Assignment of Leases.
3.8.4 A counterpart of the General Assignment.
3.8.5 Intentionally Deleted.
3.8.6 Intentionally Deleted.
3.8.7 Other documents that may reasonably be
required by Escrow Holder to close the Escrow in
accordance with this Agreement.
3.9 Deposit of Documents and Funds by Buyer. Not later
than two (2) Business Days prior to the Closing Date (with
respect to the Cash Balance, one (1) Business Day, unless
Escrow Holder advises Buyer and Seller that a special
recording time is available which would permit Buyer to
deposit the Cash Balance into Escrow on the Closing Date),
Buyer shall deposit the following items into Escrow, each of
which shall be duly executed and acknowledged by Buyer where
appropriate:
3.9.1 The Cash Balance, reduced by the amount of
any credits due to Buyer under this Agreement, and
increased by the amount of all items chargeable to
Buyer under this Agreement.
3.9.2 A counterpart of the Assignment of Leases.
3.9.3 A counterpart of the General Assignment.
3.9.4 Intentionally Deleted.
3.10 Delivery of Documents and Funds at Closing. Provided
that all conditions to Closing set forth in this Agreement
have been satisfied or, as to any condition not satisfied,
waived by the party intended to be benefitted thereby, on
the Closing Date Escrow Holder shall conduct the Closing by
recording or distributing the following documents and funds
in the following manner:
3.10.1 Recorded Documents. Record the Deed and
Assignment of Leases in the Official Records of the
County in which the Real Property is located.
3.10.2 Buyer's Documents. Deliver to Buyer: (a)
the original Title Policy; (b) the original Tenant
Estoppel Certificates; (c) an original counterpart of
the Assignment of Leases, executed by Seller; (d) an
original counterpart of the General Assignment,
executed by Seller; and (e) an original of the Bill of
Sale, executed by Seller.
3.10.3 Seller's Documents. Deliver to Seller: (a)
an original counterpart of the Assignment of Leases,
executed by Buyer; and (b) an original counterpart of
the General Assignment, executed by Buyer.
3.10.4 Intentionally Deleted.
3.10.5 Purchase Price. Deliver to Seller the
Purchase Price, plus such other funds, if any, as may
be due to Seller by reason of credits under this
Agreement, less all items chargeable to Seller under
this Agreement.
3.11 Prorations and Adjustments.
3.11.1 Taxes. Escrow Holder shall prorate real
property taxes and assessments on the Real Property as
of the Close of Escrow for the current fiscal year
based on the most current official real property tax
information available from the Los Angeles County
Assessor's office or other assessing authorities. If
real property tax and assessment figures for the
current fiscal year are not available, real property
taxes shall be prorated based on the real property
taxes for the previous fiscal year. Buyer and Seller
shall re-prorate the real estate taxes following the
Close of Escrow upon receipt of the actual real estate
tax bill for the fiscal year in which the Closing Date
occurs. Buyer shall be credited with an amount equal
to all real estate taxes which have accrued prior to
the Closing Date but only to the extent such real
estate taxes are not paid or payable by Tenants, which
credit amount shall be adjusted after the Closing Date
depending on whether real estate taxes are paid by
Tenant in advance or in arrears. Buyer shall also be
credited with an amount equal to all real estate taxes
already collected or received by Seller from Tenants
and attributable to periods prior to the Closing Date,
so long as such amounts have not previously been used
to pay real estate taxes already due. If, after the
Closing Date, any additional real estate taxes are
assessed against the Property by reason of back
assessments, corrections to previous tax bills and
similar reasons relating to the period prior to the
Closing Date, Seller shall pay all such additional real
estate taxes, except to the extent the same are
collected from Tenants or which would then be currently
due from Tenants pursuant to the terms of their
respective Leases. If, after the Close of Escrow, any
real estate tax or assessment savings are achieved or
refunds are made with respect to the Property by reason
of successful tax contest proceedings or appeals,
corrections to tax bills or similar reasons relating to
the period prior to the Closing Date, if funds remain
after required payments to Tenants, then Seller shall
be promptly reimbursed for all amounts of such
refund(s) or saving(s) attributable to the period prior
to the Closing Date, less Buyer's reasonable out-of-
pocket costs of collection, and Buyer shall be entitled
to all amounts of such refund(s) or saving(s)
attributed to the periods after the Closing Date.
Seller reserves the right to meet with governmental
officials and, subject to Buyer's reasonable approval
and cooperation, to contest any reassessment concerning
or affecting Seller's obligations under this
Section 3.11.1.
3.11.2 Rent and other Lease Monies and Expenses.
(a) Rentals. Subject to the provisions of
Sections 3.11.2(b) and (c), monthly rentals
("Rentals") which have been collected shall be
prorated as of the Closing Date.
(b) Delinquent Rentals. Delinquent Rentals
shall be prorated between Buyer and Seller as of
the Closing Date but not paid to Seller until they
are actually collected by Buyer. Rentals are
"Delinquent" when payment thereof has been due on
or before the Closing Date and is past due as of
the Closing Date. Buyer shall use Buyer's best
good faith efforts to collect any Delinquent
Rentals. Buyer shall not, however, be required to
institute legal proceedings and Buyer shall not be
required to expend more than nominal cost and
expense in collecting Delinquent Rentals. After
the Close of Escrow, Seller shall not institute
any legal proceedings against a Tenant (or other
occupant or user of the Project) owing Delinquent
Rentals unless Buyer has failed to institute such
legal proceedings with thirty (30) days after
receipt of Seller's written request that Buyer do
so and Seller's claim is limited to an action to
collect unpaid rent and to seek damages. Rentals
collected by the Buyer shall be applied first
against any amount currently due, and then against
any amount past due accruing after the Closing
Date, then to amounts due to Seller for past due
amounts that accrued prior to the Closing Date.
Buyer agrees that any payments due to Seller as a
result of collected Delinquent Rentals shall be
payable to Seller (less reasonable out-of-pocket
costs of collection actually incurred by Buyer)
not less often than monthly. Seller agrees that
any amounts collected by Seller after the Close of
Escrow but which are due to Buyer hereunder shall
be payable to Buyer (less reasonable out-of-pocket
costs of collection actually incurred by Seller)
not less often than monthly. Buyer shall not
compromise any rights to collect delinquent
Rentals or other amounts owed under Leases which,
if collected, would be credited to Seller
hereunder without having first obtained Seller's
written consent.
(c) Operating Cost Pass-Through, Etc.
Operating cost pass-throughs, expense
reimbursements, utility charges, common area
maintenance charges, any administrative charges,
tenant or property association dues, additional
rentals and other retroactive rentals,
escalations, sums or charges payable by Tenants
which accrue as of the Closing Date but are not
yet due and payable, shall be prorated as of the
Closing Date when such payments are received by
Buyer from Tenants. Seller agrees that any
amounts collected by Seller after the Close of
Escrow but which are due to Buyer hereunder shall
be payable to Buyer promptly upon receipt thereof,
but not less often than monthly (less reasonable
out-of-pocket costs of collection actually
incurred by Seller). Promptly upon completion of
the applicable payment periods therefor which
include the Close of Escrow, Buyer and Seller
agree to determine the amount of reimbursements
received from Tenants with respect to estimated
tax, insurance and operating expense pass-
throughs. To the extent Seller has received from
Tenants reimbursements for expenses in excess of
those reimbursable expenses actually paid by
Seller for the period prior to the Close of
Escrow, Buyer shall be reimbursed by Seller for
such amount. Conversely, to the extent Seller has
received from Tenants less than the reimbursement
required by their Leases for such expenses, Seller
shall be reimbursed by Buyer for such amounts at
the Close of Escrow.
(d) Prepaid Rentals. Rentals already
received by Seller attributable to periods after
the Closing Date and the amount of any other
credits due Tenants applicable to any period or
periods after the Closing Date shall be credited
to Buyer at the Close of Escrow.
(e) Tenant Deposits. Buyer shall be credited
at the Close of Escrow with an amount equal to all
Tenant security deposits remaining after any
permitted deduction or charge.
(f) Responsibility for Certain Obligations of
Landlord. Subject to Section 5.1 hereof, Buyer
shall be responsible for the performance of all
Lease obligations (including, without limitation,
obligations under Leases entered into prior to or
after the Effective Date, and modifications of
Leases pursuant to Lease Modifications) but Buyer
shall be credited at the Close of Escrow with an
amount equal to the amount necessary to satisfy
(i) the obligations of Seller, if any, to pay
tenant improvement allowances, construction
management fees and brokers commissions arising
pursuant to the terms of the lease dated January
7, 1997, made by Seller, as landlord, and
Healthcare Partners, as tenant (the "Healthcare
Partners Lease"), and (ii) the obligations of
Seller, if any, to pay any relocation expenses or
other sums to Tenants who are being relocated as a
result of the Healthcare Partners Lease, in either
case to the extent that such obligations have not
been paid or provided for by Seller prior to Close
of Escrow. The amount credited at the Close of
Escrow shall be established by delivery either (i)
of an estoppel by the Seller's contractor for the
construction of tenant improvements in the form
attached hereto as Exhibit M, or (ii) other
reasonable evidence of the amount due under the
contract for the construction of tenant
improvements. Buyer shall not be entitled to
receive any fee for its performance pursuant to
this Section 3.11.2(f). Buyer may consult with
Seller regarding the construction of the tenant
improvements; provided, however, Seller shall have
no obligation to obtain the approval of Buyer for
any aspect of the construction of such tenant
improvements. Notwithstanding anything to the
contrary contained herein, after the Contingency
Termination Date, Seller shall not modify any
contract for the construction of tenant
improvements without the consent of Buyer.
3.11.3 Utilities and Other Expenses.
(a) Utilities. Utilities shall be prorated
as of the Closing Date based upon meter readings
at Closing or the prior month's actual invoices.
Seller shall notify all water, gas, electric and
other utility companies servicing the Property
(collectively, "Utility Companies") of the sale of
the Property to Buyer and shall request that all
Utility Companies send Seller a final bill for the
period ending on the last day prior to the Close
of Escrow. Buyer shall notify all Utility
Companies servicing the Property that as of the
Close of Escrow, Buyer shall own the Property and
that all utility bills for the period commencing
on the Close of Escrow are to be sent to Buyer.
In addition to the Purchase Price, to the extent
that any subject utility company allows the
transfer of utility deposits and agrees to
recognize such transfer from Seller to Buyer,
Buyer shall be charged at Closing with an amount
equal to the amount of all utility deposits of
Seller that are on deposit with such utility
company and Seller shall assign to Buyer all of
Seller's right, title and interest in any such
utility deposits. If any of the Utility Companies
sends Seller or Buyer a bill for a period in which
the Close of Escrow occurs, Buyer and Seller shall
prorate such bills outside the Escrow. In
connection with such proration, it shall be
presumed that utility charges were uniformly
incurred during the billing period.
(b) Operating Expenses. Operating expenses
shall be prorated between Buyer and Seller based
upon the actual days of their respective ownership
of the Property utilizing the actual expenses.
Buyer and Seller shall prorate outside of Escrow
any prepayments, credits or past due expenses of
operating the Property which are applicable to any
period prior to or after the Close of Escrow,
based upon actual days elapsed. Buyer and Seller
each shall have the right to review and copy the
other's books and records with respect to the
ownership of the Property in order to facilitate
any such proration or collection by either party.
3.11.4 Insurance. All insurance policies and
property management and leasing agreements shall be
terminated as of the Closing Date and there shall be no
proration or surviving obligations for any payments or
commissions which would become the obligation of Buyer
with respect to these items.
3.11.5 Prorations. All prorations shall be made
as of the Close of Escrow on the basis of the actual
days of the month in which the Closing occurs. All
rents, income and profits derived from the Real
Property, if any, along with all expenses (other than
taxes addressed in Section 3.11.1) shall be prorated at
the Closing with appropriate debits and credits to the
accounts of Buyer and Seller so that, as between Buyer
and Seller, Seller shall receive, as appropriate, all
of the same to the extent duly allocable to the period
ending on the date immediately prior to the Closing
Date, and Buyer shall receive, as appropriate, all of
the same to the extent duly allocable to the period
commencing upon the Closing Date. Notwithstanding the
foregoing provisions in this Section 3.11.5, if
information is not available on or prior to the Closing
Date, which information is necessary to accurately
prorate the items to be prorated pursuant to this
Section 3.11.5, Buyer and Seller shall prorate such
items following the Close of Escrow upon the receipt of
the necessary information. The obligations in Section
3.11.1 and Section 3.11.2(c) of this Agreement shall
survive the Close of Escrow.
3.12. Material Adverse Change. No material adverse
change shall have occurred after the Contingency Termination
Date in the physical or financial condition of the Real
Property .
3.13. Seller's Representations and Warranties. All
representations and warranties of the Seller in Section 9
hereof, shall be true as of the Closing Date.
3.14. Tenant Notices. Seller shall deliver notices to
Tenants to inform them of the change of ownership in the Property
and to direct the Tenants to make all payments due under their
respective Leases to Buyer as of the Closing Date.
4. Estoppel Certificates. Seller shall use its reasonable
efforts to deliver to Buyer and Escrow Holder not later than five
Business Days prior to the Close of Escrow tenant estoppel
certificates substantially in the form of Exhibit I-1 ("Estoppel
Certificate") executed by all of the respective Tenants under the
Leases; provided, however, that Seller shall not have liability
of any kind to Buyer as a result of Seller's failure to deliver
any or all of the Estoppel Certificates to Buyer. Buyer's
obligation to Close pursuant to this Agreement shall be
conditioned and contingent upon Buyer's receipt of completed
Estoppel Certificates in the form of Exhibit I-1 hereto, with
only such modifications as are reasonably acceptable to Buyer,
from tenants of the Real Property occupying not less than 85% of
the rentable square footage of the Real Property which is under
lease as of the Effective Date (the "Required Estoppel
Certificates"). In the event that Seller is unable to obtain a
Required Estoppel Certificate, Seller may, but shall not be
obligated to, provide to Buyer an estoppel certificate
substantially in the form of Exhibit I-2 hereto ("Landlord's
Estoppel Certificate"), in lieu of the Required Estoppel
Certificates. Delivery by Seller of a Landlord's Estoppel
Certificate for a tenant shall be deemed a delivery of a Required
Estoppel Certificate for such tenant for all purposes under this
Agreement.
5. Leasing and Contracts.
5.1 Leasing. From the Effective Date through the
Contingency Termination Date, Seller may not agree to
terminate any existing Leases, but may enter into any
amendment or modification of any existing lease (a "Lease
Modification") or any new lease affecting the Real Property
(a "New Lease") with the prior written consent of Buyer,
which consent shall not be unreasonably withheld,
conditioned or delayed; provided, however, that (a) with
respect to any Lease Modification, Seller shall not (i)
reduce the rental rate; (ii) reduce the term of the Lease;
or (iii) provide for any act that negatively impacts the
landlord's economic interests or increases landlord's
obligations under the Lease; and (b) with respect to any New
Lease, the Lease shall contain commercially reasonable
terms. After the Contingency Termination Date, provided
that Buyer is not in default under this Agreement, Seller
shall refrain from entering into any New Lease or Lease
Modification without the prior written consent of Buyer, as
described below, except as expressly provided in this
Section 5.1. After the Contingency Termination Date, any
Lease Modification or New Lease shall be subject to clause
(a) of this Section 5.1, and prior to signing any Lease
Modification or New Lease or, Seller shall submit the
proposed form of Lease Modification or New Lease to Buyer
for Buyer's approval, which approval may be withheld in
Buyer's sole and absolute discretion. Buyer shall notify
Seller in writing of Buyer's approval or disapproval of each
proposed Lease Modification or New Lease submitted to Buyer
within three (3) Business Days after Buyer's receipt
thereof. Buyer's failure to disapprove any Lease
Modification or New Lease in accordance with the procedure
and within the three (3) Business Day period specified in
this Section shall be deemed to constitute Buyer's approval
of such Lease Modification or New Lease. Any notice of
disapproval of a Lease Modification or New Lease by Buyer
shall set forth in detail Buyer's specific objections
thereto. Seller may submit a Lease Modification or New
Lease to Buyer for approval after Seller's execution
thereof, provided the New Lease or Lease Modification
contains appropriate conditions regarding Buyer's approval
of such Lease Modification or New Lease. In the event that
Seller enters into a New Lease approved by Buyer prior to
the Closing Date, Seller shall perform all of the landlord's
obligations in connection with the New Lease which are to be
performed prior to the Closing Date. Notwithstanding any
provision to the contrary, however, on the Closing Date,
Seller shall receive a credit for all sums expended by
Seller in connection with such performance. Additionally,
for the period of time on and after the Closing Date, Buyer
shall be obligated to perform all obligations, monetary and
otherwise, of the Seller under or in connection with such
New Lease, including payment of all tenant improvements and
broker's commissions except such broker's commissions with
respect to PM Realty.
5.2 Other Contracts. Seller shall refrain from entering
into or amending any contracts or other agreements regarding
the Property or any portion thereof (other than contracts or
amendments thereof entered into in the ordinary and usual
course of business which are cancelable by the owner of the
Property without penalty within thirty (30) days after
giving notice thereof).
5.3 Intentionally Deleted.
6. Delivery and Possession of Tangible Property. Seller shall
deliver possession of the Tangible Property to Buyer at the Close
of Escrow, subject to the rights of the Tenants under the Leases.
7. Commissions. Buyer and Seller each represent and warrant to
the other that except for the commissions due to The Seeley
Company ("Seller's Broker") and CB Commercial ("Buyer's Broker"),
they are unaware of any commission, finder's fee or brokerage fee
arising out of the transactions contemplated by this Agreement.
Buyer and Seller shall indemnify and hold the other harmless from
and against any and all liabilities, claims, demands, damages,
costs and expenses, including, without limitation, reasonable
attorneys' fees and court costs, in connection with claims for
any such commissions, finders' fees or brokerage fees arising out
of the indemnifying party's conduct or the inaccuracy of the
foregoing representation and/or warranty of such indemnifying
party. Upon the Close of Escrow and Seller's receipt of the
Purchase Price (minus items properly charged to Seller, plus
items properly credited to Seller) from Escrow Holder, Seller
shall pay a commission ("Commission") to Seller's Broker outside
of Escrow pursuant to a written agreement between Seller and
Broker. Upon the Close of Escrow, Buyer shall pay a commission
to Buyer's Broker.
8. Damage or Destruction: Condemnation.
8.1 Uniform Act. This Agreement shall be governed by the
Uniform Vendor and Purchaser Risk Act as set forth in
Section 1662 of the California Civil Code ("Act") as
supplemented by this Section 8. For purposes of the Act,
(a) a taking by eminent domain of a portion of the Property
shall be deemed to affect a "material part" of the Property
if the estimated value of the portion of the Property taken
exceeds Five Hundred Thousand Dollars ($500,000) or if
Tenants can terminate their Leases because of such event,
and (b) the destruction of a "material part" of the Property
shall be deemed to mean an insured or uninsured casualty to
the Property following Buyer's inspection of the Property
and prior to the Close of Escrow having an estimated cost of
repair which equals or exceeds Five Hundred Thousand Dollars
($500,000) or that Tenants can terminate their leases
because of such event.
8.2 Definitions. The phrase "estimated value" shall mean
an estimate obtained from a M.A.I. appraiser, who has at
least five (5) years experience evaluating property located
in the County where the Real Property is located, similar in
nature and function to that of the Property, selected by
Seller and approved by Buyer, and the phrase "estimated cost
of repair shall" mean an estimate obtained from an
independent contractor selected by Seller and approved by
Buyer. Buyer shall not unreasonably withhold, condition or
delay Buyer's approval under this Section.
8.3 Notice; Credit to Buyer. Buyer shall have the right to
terminate this Agreement if all or a material part of the
Property is destroyed without fault of Buyer or a material
part of the Property is taken by eminent domain. Buyer
shall give written notice of Buyer's election to terminate
this Agreement under the Act within five (5) Business Days
after Buyer first learns of any damage to or condemnation of
the Property which entitles Buyer to terminate this
Agreement. If Buyer does not give such notice, then this
Agreement shall remain in effect and upon the Close of
Escrow, Seller shall assign to Buyer (a) any insurance
proceeds payable with respect to such damage; or the entire
award payable with respect to such condemnation proceeding,
whichever is applicable. If there is damage to the Real
Property as a result of an insured casualty, and this
Agreement remains in effect, Buyer shall receive a credit at
Close of Escrow in the amount of Seller's deductible. Buyer
shall receive no credit with respect to an uninsured
casualty.
9. Seller's Representations and Warranties. Except for any
breach of a representation or warranty set forth in this Section
9 which arises from and out of any matter disclosed in the
Disclosure Materials (as hereinafter defined) as to the
representations and warranties in Section 9.4 through Section
9.12 and Section 9.17, Seller represents and warrants to Buyer
that as of the date of this Agreement and as of the Closing Date:
9.1 Seller's Existence and Authority.
(a) Seller is duly organized, validly existing,
and in good standing under the laws of the state of its
formation. Seller is qualified to do business in, and
is in good standing under the laws of, the State of
California.
(b) Seller has the full power and authority to
execute, deliver and perform its obligations under this
Agreement, such execution, delivery and performance
have been duly authorized by all requisite action, and
the person executing this Agreement on behalf of Seller
has the authority to do so. Seller has full power to
execute, deliver and carry out the terms and provisions
of this Agreement and each of the other agreements,
instruments and documents herein required to be made or
delivered by Seller pursuant hereto, and has taken all
necessary action in connection with the execution,
delivery and performance of this Agreement and such
other agreements, instruments and documents. The
individuals executing this Agreement and all other
agreements, instruments and documents herein required
to be made or delivered by Seller pursuant hereto on
behalf of Seller are and shall be duly authorized to
sign the same on Seller's behalf and to bind Seller
thereto.
9.2 Valid Obligation. This Agreement constitutes a legal,
valid and binding obligation of Seller enforceable in
accordance with its terms, except as enforceability may be
limited by the application of bankruptcy, insolvency,
reorganization, moratorium or similar laws or by equitable
principles affecting creditors' rights generally or the
rights of buyers and sellers of real or personal property
generally.
9.3 No Violation of Contract; Consents. The execution,
delivery and performance of Seller's obligations under this
Agreement and the consummation of the transactions
contemplated hereby (i) will not result in a breach or
violation of any contract, commitment or restriction to
which Seller is a party or by which Seller or the Tangible
Property is bound; and (ii) do not require any consent,
approval or other authorization of any person, entity or
authority not previously obtained.
9.4 No Violations. To the best of Seller's knowledge,
Seller has not received any written notice that the Property
is in violation of any laws, statutes, codes, acts,
ordinances, orders, judgements, decrees, injunctions or
regulations of any governmental entity having jurisdiction
over the Property.
9.5 Legal Proceedings. To the best of Seller's knowledge,
except as expressly disclosed to Buyer on Exhibit J attached
hereto and made a part hereof, Seller has not been served
with any summons relating to any legal proceedings or
actions affecting the Property to Buyer at the Closing,
except for the Permitted Exceptions as defined in
Section 3.6.5(b).
9.6 Leases; Tenancies. To the best of Seller's knowledge,
there are no leases, tenancies and other rights of occupancy
or use for any portion of the Real Property under which any
other party has a right to occupy all or any part of the
Real Property in effect on the date of this Agreement except
as set forth on Exhibit K attached hereto and incorporated
herein for all purposes.
9.7 Material Contracts. To the best of Seller's knowledge,
Seller has made available for review by Buyer true, correct
and complete copies of all material documents and agreements
affecting the Property.
9.8 Condemnation. To the best of Seller's knowledge,
Seller has not received any written notice that any
condemnation or eminent domain proceeding affecting the Real
Property is pending.
9.9 Assessments. To the best of Seller's knowledge, except
as disclosed in the Title Report, Seller has not received
any written notice of any special assessment with respect to
the Real Property.
9.10 Section 1445(f) IRC. Seller is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal
Revenue Code.
9.11 Environmental Matters.
(a) Neither Seller, nor tenants who have leased
and occupied the Real Property, nor any other person or
entity, has during any period of Seller's ownership of
the Real Property caused there to exist on the Real
Property any hydrocarbon substances, polychlorinated
biphenyls, or any other hazardous or toxic substances,
wastes or materials (as determined under federal, state
or local law), asbestos or asbestos-bearing materials,
or any other environmental condition subject to legal
requirements for corrective action (collectively, any
"Environmental Matter"); and
(b) To the best of Seller's knowledge, there is no
Environmental Matter on or Environmental Report
relating to the Real Property which has not been
disclosed to Buyer by Seller or discovered by Buyer
through Buyer's due diligence.
9.12 Rent Roll. The rent roll submitted by Seller to Buyer
is true and correct.
9.13 Seller's Knowledge; Seller's Actual Possession. As
used in this Agreement, the phrase "to the best of Seller's
knowledge", or words of like import, means that the facts in
question are actually known (as opposed to imputed, inquiry
or constructive knowledge) to, and the phrase "Seller's
actual possession" means in the actual possession of, the
employee of Seller responsible for managing the Real
Property, based upon a review of files relating to the
Property that are in his possession, without any due
diligence or duty of inquiry. Seller shall have no duty of
investigation with respect to any representation made to the
best of its knowledge and shall not be charged with
"constructive", "inquiry", "imputed" or deemed knowledge.
Further, Seller's obligations to disclose matters "known to
Seller" or words of like import as used in this Agreement
shall be deemed breached only if Ron Petit had actual
knowledge (as opposed to imputed or constructive knowledge)
of the falsity of such matter not disclosed to Buyer, based
upon a review of files relating to the Property that are in
Seller's possession.
9.14 Seller shall obtain, during the Contingency Period, a
certification from its property management company in
connection with the Property to the effect that to the best
of its knowledge, all of Seller's representations and
warranties listed in Section 9.4 through Section 9.12 and
Section 9.17 are true and correct (the "Property Management
Certificate"). However, to the extent that any of the
foregoing representations and warranties are untrue or
incorrect, the Property Management Certificate shall set
forth such reasons therein. The disclosures made in the
Property Management Certificate shall be subject to the
qualifications in Section 9.13, except that the word
"Seller" shall be replaced with the words "Property Manager"
and the name "Ron Petit" shall be replaced with the name
Steven Roppel. Notwithstanding any provision to the
contrary, the disclosures in the Property Management
Certificate shall not be deemed representations and
warranties of Seller and Seller shall have no responsibility
to Buyer in the event that any such disclosure is false.
9.15 Definition of "Disclosure Materials". As used herein,
the term "Disclosure Materials" shall mean all written
disclosure, including the Property Management Certificate,
submitted by Seller to Buyer prior to the Contingency
Termination Date.
9.16 Survival of Seller's Representations and Warranties.
The representations and warranties in this Section 9 shall
survive the Close of Escrow but shall terminate (and no
Claim may be instituted with respect thereto) twelve (12)
months after the Closing Date.
9.17 Brokers. There are no brokers' commissions or
finder's fees currently due and payable in connection with
the Leases, any extension of the Leases, or any expansion of
any existing premises being leased pursuant to the leases,
except with respect to the Healthcare Partners Lease, New
Leases or Lease Modifications.
10. Buyer's Representations and Warranties. Buyer represents
and warrants to Seller that as of the date of this Agreement and
as of the Closing Date:
10.1 Buyer's Existence and Authority.
(1) If Buyer is other than an individual, Buyer is
duly organized, validly existing, and in good standing
under the laws of the state of its formation. Buyer is
qualified to do business in, and is in good standing
under the laws of, the State of California.
(2) Buyer has the full power and authority to
execute, deliver and perform its obligations under this
Agreement, such execution, delivery and performance
have been duly authorized by all requisite action, and
the person executing this Agreement on behalf of Buyer
has the authority to do so. Buyer has full power to
execute, deliver and carry out the terms and provisions
of this Agreement and each of the other agreements,
instruments and documents herein required to be made or
delivered by Buyer pursuant hereto, and has taken all
necessary action in connection with the execution,
delivery and performance of this Agreement and such
other agreements, instruments and documents. The
individuals executing this Agreement and all other
agreements, instruments and documents herein required
to be made or delivered by Buyer pursuant hereto on
behalf of Buyer are and shall be duly authorized to
sign the same on Buyer's behalf and to bind Buyer
thereto;
10.2 Valid Obligation. This Agreement constitutes a legal,
valid and binding obligation of Buyer enforceable in
accordance with its terms, except as enforceability may be
limited by the application of bankruptcy, insolvency,
reorganization, moratorium or similar laws or by equitable
principles affecting creditors' rights generally or the
rights of buyers and sellers of real or personal property
generally.
10.3 No Violation of Contract; Consents. The execution,
delivery and performance of Buyer's obligations under this
Agreement and the consummation of the transactions
contemplated hereby (i) will not result in a breach or
violation of any contract, commitment or restriction to
which Buyer is a party or by which Buyer is bound; and (ii)
do not require any consent, approval or other authorization
of any person, entity or authority not previously obtained.
11. Default.
11.1 Liquidated Damages - Deposit.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, IF BUYER HAS NOT TERMINATED THIS AGREEMENT WITHIN
ONE (1) DAY AFTER THE CONTINGENCY TERMINATION DATE AND IF
THE SALE OF THE PROPERTY TO BUYER IS NOT CONSUMMATED FOR ANY
REASON OTHER THAN SELLER'S DEFAULT UNDER THE AGREEMENT OR A
FAILURE OF A CONDITION FOR BUYER'S BENEFIT SET FORTH HEREIN,
SELLER SHALL BE ENTITLED AS ITS SOLE AND EXCLUSIVE REMEDY AT
LAW OR IN EQUITY TO RETAIN THE DEPOSIT AND ALL INTEREST
ACCRUED THEREON AS SELLER'S LIQUIDATED DAMAGES.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, IF BUYER HAS NOT TERMINATED THIS AGREEMENT WITHIN
ONE (1) DAY AFTER THE EXPIRATION OF THE CONTINGENCY PERIOD
AND IF THE SALE OF THE PROPERTY TO BUYER IS NOT CONSUMMATED
DUE TO SELLER'S DEFAULT UNDER THIS AGREEMENT, BUYER SHALL BE
ENTITLED TO A RETURN OF THE DEPOSIT PLUS ALL INTEREST
ACCRUED THEREON. THE PARTIES AGREE THAT IT WOULD BE
IMPRACTICABLE AND EXTREMELY DIFFICULT TO ASCERTAIN THE
ACTUAL DAMAGES SUFFERED BY SELLER AS A RESULT OF BUYER'S
FAILURE TO COMPLETE THE PURCHASE OF THE PROPERTY PURSUANT TO
THIS AGREEMENT, AND THAT UNDER THE CIRCUMSTANCES EXISTING AS
OF THE DATE OF THIS AGREEMENT, THE LIQUIDATED DAMAGES
PROVIDED FOR IN THIS SECTION REPRESENTS A REASONABLE
ESTIMATE OF THE DAMAGES WHICH SELLER WILL INCUR AS A RESULT
OF SUCH DEFAULT OF BUYER AND FAILURE PRIOR TO THE CLOSE OF
ESCROW, PROVIDED, HOWEVER, THAT THIS PROVISION SHALL NOT
WAIVE OR AFFECT ANY PARTY'S RIGHTS OR OBLIGATIONS UNDER
SECTIONS 3.3.1(d), 7, 27 AND/OR 32 OF THIS AGREEMENT. THE
PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED
DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN
THE MEANING OF CALIFORNIA CIVIL CODE SECTION 3275 OR 3369,
BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO THE
PARTY ENTITLED THERETO PURSUANT TO CALIFORNIA CIVIL CODE
SECTIONS 1671, 1676, AND 1677. NOTWITHSTANDING THE
FOREGOING, IF BUYER WRONGFULLY INTERFERES WITH OR MAKES ANY
ATTEMPT TO WRONGFULLY INTERFERE WITH SELLER'S RECOVERING THE
DEPOSIT HELD BY ESCROW HOLDER, INCLUDING, WITHOUT
LIMITATION, GIVING ANY NOTICE OR INSTRUCTIONS TO ESCROW
HOLDER NOT TO DELIVER THE DEPOSIT TO SELLER, SELLER SHALL
HAVE THE RIGHT TO ELECT TO RECOVER THE GREATER OF ITS ACTUAL
DAMAGES OR THE LIQUIDATED DAMAGES BY GIVING WRITTEN NOTICE
TO BUYER AND IN ADDITION SHALL HAVE ALL OTHER RIGHTS AND
REMEDIES AGAINST BUYER PROVIDED AT LAW AND IN EQUITY, AND
SHALL HAVE THE RIGHT TO REQUIRE THAT BUYER SPECIFICALLY
PERFORM BUYER'S OBLIGATIONS UNDER THIS AGREEMENT. THE
PARTIES HAVE SET FORTH THEIR INITIALS BELOW TO INDICATE
THEIR AGREEMENT WITH THE LIQUIDATED DAMAGES PROVISION
CONTAINED IN THIS SECTION.
SELLER'S INITIALS: /s/ RP BUYER'S INITIALS: /s/ VJC
11.2 Intentionally Deleted
11.3 No Contesting Liquidated Damages. As material
consideration to each party's agreement to the liquidated
damages provisions stated above, each party hereby agrees to
waive any and all rights whatsoever to contest the validity
of the liquidated damage provisions for any reason
whatsoever, including, but not limited to, that such
provision was unreasonable under circumstances existing at
the time this Agreement was made.
11.4 Remedies. If either party breaches its obligations
hereunder, then the other party may, without terminating
this Agreement, suspend performance until such breach is
cured. If Buyer breaches this Agreement, Seller's sole
remedy shall be to terminate this Agreement and cause Escrow
Holder to deliver the Deposit (less Seller's share of any
fees or expenses payable to or through Escrow Holder as
provided herein) as liquidated damages. If Seller breaches
its obligations hereunder, Buyer's remedies shall be to
terminate this Agreement and receive a refund of the Deposit
(less Buyer's share of any fees or expenses payable to or
through Escrow Holder as provided herein) and either (i)
exercise its remedies at law; provided, however, that, Buyer
(x) shall not seek nor be entitled to receive damages in
connection with any action under or with respect to this
Agreement in excess of $750,000; and (y) agrees that Seller
shall not be responsible for any consequential damages
(including without limitation, lost profits) arising from
any breach hereunder or tort (excluding a tort claim based
upon Seller's willful misconduct or gross negligence), or
any other wrong or claim arising under this Agreement; or
(ii) solely in the event of the willful breach by Seller of
its obligations under this Agreement, such specific
performance of Seller's obligations under this Agreement if
(x) 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; and (y) the action shall be commenced, and
service of process upon Seller made, not later than forty-
five (45) days after Seller's default; provided, however,
that, notwithstanding anything to the contrary herein, in no
event may Seller be required to perform its obligations
hereunder if the expense of such performance would exceed
$750,000. The foregoing limitations on remedies available
to Buyer and Seller shall not apply with respect to any
breach by Buyer or Seller of their respective obligations
under this Agreement which are to be performed after the
Close of Escrow, including without limitation, obligations
set forth in Section 35 hereof. With respect to any such
breach, the parties shall have all of their respective
rights and remedies arising at law or in equity. The
obligations of Seller under this Agreement shall be without
recourse to the assets of any officer, shareholder,
director, or employee of Seller or any parent company,
affiliate or subsidiary of Seller.
12. Waiver of Trial by Jury. Seller and Buyer, to the extent
they may legally do so, hereby expressly waive any right to trial
by jury of any claim, demand, action, cause of action, or
proceeding arising under or with respect to this Agreement, or in
any way connected with, or related to, or incidental to, the
dealings of the parties hereto with respect to this Agreement or
the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and irrespective of whether
sounding in contract, tort, or otherwise. To the extent they may
legally do so, Seller and Buyer hereby agree that any such claim,
demand, action, cause of action, or proceeding shall be decided
by a court trial without a jury and that any party hereto may
file an original counterpart or a copy of this section with any
court as written evidence of the consent of the other party or
parties hereto to waiver of its or their right to trial by jury.
13. Attorney's Fees. If any action or proceeding or arbitration
is commenced by either party to enforce their rights under this
Agreement or to collect damages as a result of the breach of any
of the provisions of this Agreement, the prevailing party in such
action or proceeding or arbitration, including any bankruptcy,
insolvency or appellate proceedings, shall be entitled to recover
all reasonable costs and expenses, including, without limitation,
reasonable attorneys' fees and court costs, in addition to any
other relief awarded by the court or arbitrator.
14. Notices. All notices, demands, approvals, and other
communications provided for in this Agreement shall be in writing
and shall be effective upon the earliest of the following to
occur: (a) when transmitted by facsimile to the recipient; or (b)
when delivered to the recipient; or (c) three (3) Business Days
after deposited in a sealed envelope in the United States mail,
postage prepaid by registered or certified mail, return receipt
requested, addressed to the recipient as set forth below. All
notices to Seller shall be sent to Seller's Address. All notices
to Buyer shall be sent to Buyer's Address. All notices to Escrow
Holder shall be sent to Escrow Holder's Address. If the date on
which any notice to be given hereunder falls on a Saturday,
Sunday or legal holiday, then such date shall automatically be
extended to the next Business Day immediately following such
Saturday, Sunday or legal holiday. The foregoing addresses may
be changed by written notice given in accordance with this
Section.
15. Amendment; Complete Agreement. All amendments and
supplements to this Agreement must be in writing and executed by
Buyer and Seller. This Agreement contains the entire agreement
and understanding between Buyer and Seller concerning the subject
matter of this Agreement and supersedes all prior agreements,
terms, understandings, conditions, representations and
warranties, whether written or oral, made by Buyer or Seller
concerning the Property or the other matters which are the
subject of this Agreement. This Agreement has been drafted
through a joint effort of the parties and their counsel and,
therefore, shall not be construed in favor of or against either
of the parties.
16. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of
California.
17. Severability. If any provision of this Agreement or
application thereof to any person or circumstance shall to any
extent be invalid or unenforceable, the remainder of this
Agreement (including the application of such provision to persons
or circumstances other than those to which it is held invalid or
unenforceable) shall not be affected thereby, and each provision
of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
18. Counterparts, Headings and Defined Terms. This Agreement
may be executed in counterparts, each of which shall be an
original, but all of which together shall constitute one
agreement. The headings to sections of this Agreement are for
convenient reference only and shall not be used in interpreting
this Agreement. Unless expressly stated to the contrary, all
references to "days" in this Agreement mean calendar days, and
"Business Days" mean calendar days excluding Saturdays, Sundays,
and California state bank holidays.
19. Time of the Essence. Time is of the essence of this
Agreement.
20. Waiver. No waiver by Buyer or Seller of any of the terms or
conditions of this Agreement or any of their respective rights
under this Agreement shall be effective unless such waiver is in
writing and signed by the party charged with the waiver.
21. Third Parties. This Agreement is entered into for the sole
benefit of Buyer and Seller and their respective permitted
successors and assigns. No party other than Buyer and Seller and
such permitted successors and assigns shall have any right of
action under or rights or remedies by reason of this Agreement.
22. Additional Documents. Each party agrees to perform any
further acts and to execute and deliver such further documents
which may be reasonably necessary to carry out the terms of this
Agreement.
23. Independent Counsel. Buyer and Seller each acknowledge
that: (i) they have been represented by independent counsel in
connection with this Agreement; (ii) they have executed this
Agreement with the advice of such counsel; and (iii) this
Agreement is the result of negotiations between the parties
hereto and the advice and assistance of their respective counsel.
The fact that this Agreement was prepared by Seller's counsel as
a matter of convenience shall have no import or significance.
Any uncertainty or ambiguity in this Agreement shall not be
construed against Seller because Seller's counsel prepared this
Agreement in its final form.
24. Condition of Property. Buyer represents and warrants that,
as specified in Section 3.3.1 hereof, Buyer has, or shall have
inspected and conducted tests and studies of the Property, and
that Buyer is familiar with the general condition of the
Property. Buyer understands and acknowledges that the Property
may be subject to earthquake, fire, floods, erosion, high water
table, dangerous underground soil conditions, hazardous materials
and similar occurrences that may alter its condition or affect
its suitability for any proposed use. Except for Buyer's right
to terminate this Agreement in accordance with the terms of
Section 8.3 hereof and Buyer's remedies in case of a breach of
any representation or warranty set forth in Section 9 hereof,
Seller shall have no responsibility or liability with respect to
any such occurrence. Except for the representations and
warranties set forth in Section 9 hereof, Buyer represents and
warrants that Buyer is acting, and will act only, upon
information obtained by Buyer directly from Buyer's own
inspection of the Property. Notwithstanding anything to the
contrary contained in this Agreement, the suitability or lack of
suitability of the Property for any proposed or intended use, or
availability or lack of availability of (a) permits or approvals
of governmental or regulatory authorities, or (b) easements,
licenses or other rights with respect to any such proposed or
intended use of the Property shall not affect the rights or
obligations of the Buyer hereunder; provided, however, that Buyer
shall maintain its right to terminate this Agreement as set forth
in Section 3.5 hereof.
25. No Warranties. Except for the representations and
warranties set forth in Section 9 hereof, the Property is
purchased and sold "AS IS". The Purchase Price and the terms and
conditions set forth herein are the result of arm's-length
bargaining between parties familiar with transactions of this
kind, and said price, terms and conditions reflect the fact that
Buyer shall have the benefit of, and is relying upon, except for
the representations and warranties set forth in Section 9 hereof,
no statements, representations or warranties whatsoever, made by
or enforceable against Seller relating to the condition,
operations, dimensions, descriptions, soil condition,
suitability, compliance or lack of compliance with any state,
federal, county or local law, ordinance, order, permit or
regulation, or any other attribute or matter of or relating to
the Property, including, without limitation, (i) the structural
integrity of the Improvements, (ii) the conformity of the
Improvements to any plans or specifications, including any plans
and specifications that may have been or may be provided to
Buyer, (iii) the conformity of the Property to past, current or
future applicable zoning or building code requirements, (iv) the
existence of soil instability, past soil repairs, soil additions
or conditions of soil fill, or susceptibility to landslides, (v)
the sufficiency of any undershoring, (vi) the sufficiency of any
drainage, (vii) whether the Property is located wholly or
partially in a flood plain or a flood hazard boundary or similar
area, (viii) the existence or non-existence of toxic or hazardous
wastes or materials or friable asbestos or asbestos containing
construction materials in, on or about the Property, (ix) any
other matter affecting the stability or integrity of the land, or
any buildings or improvements situated on or as part of the
Property, (xi) the fitness or suitability of the Property for
Buyer's intended use, (xii) the potential further development of
the Property, (xiii) the existence of vested land use, zoning or
building entitlements affecting the Property. Buyer represents,
warrants and covenants to Seller that, except for Seller's
express representations and warranties specified in this
Agreement, Buyer is relying solely upon Buyer's own investigation
of the Property. If Seller obtains or has obtained the services,
opinions or work product of surveyors, architects, engineers,
Escrow Holder, governmental authorities or any other person or
entity with respect to the Property, Buyer and Seller agree that
Seller shall do so only for the convenience of both parties, and
except to the extent of any breach by Seller of any of its
representations set forth in Section 9 hereof, the reliance by
Buyer upon any such services, opinions or work product shall not
create or give rise to any liability of or against Seller. Buyer
covenants, represents and warrants that as of the Closing Date,
Buyer shall have reviewed and approved the Environmental Reports.
The provisions of this Section 25 shall not be deemed to vitiate
the effect of the representations and warranties set forth in
Section 9 hereof.
26. Governmental Approvals. Nothing contained in this Agreement
shall be construed as authorizing Buyer to apply for a zone
change, variance, subdivision maps, lot line adjustment or other
discretionary governmental act, approval or permit with respect
to the Property prior to the Close of Escrow, and Buyer agrees
not to do so without Seller's prior written approval, which
approval may be withheld in Seller's sole and absolute
discretion. Buyer agrees not to submit any reports, studies or
other documents, including, without limitation, plans and
specifications, impact statements for water, sewage, drainage or
traffic, environmental review forms, or energy conservation
checklists to any governmental agency, or any amendment or
modification to any such instruments or documents prior to the
Close of Escrow unless first approved by Seller, which approval
Seller may withhold in Seller's sole discretion. Buyer's
obligation to purchase the Property shall not be subject to or
conditioned upon Buyer's obtaining any variances, zoning
amendments, subdivision maps, lot line adjustment or other
discretionary governmental act, approval or permit.
27. Release and Covenant Not to Sue.
27.1 Release. Buyer shall rely solely upon Buyer's own
inspection of the Property in determining the Property's
physical condition. Buyer waives Buyer's right to recover
from and hereby releases Seller, Seller's parent company,
affiliates and subsidiaries, and their respective directors,
officers, participants, employees and agents (the "Seller
Parties"), any and all damages, losses, liabilities, costs
or expenses whatsoever, and claims therefor, whether direct
or indirect, known or unknown, or foreseen or unforeseen,
which may arise from or be related to (i) the physical
condition of the Property and/or (ii) the Property's
compliance, or lack of compliance with any federal, state or
local laws or regulations applicable thereto, and all
regulations, rulings, and orders promulgated or adopted
pursuant thereto, including, without limitation, any and all
damages, losses, liabilities, costs or expenses whatsoever,
and claims therefor, whether direct or indirect, known or
unknown, or foreseen or unforeseen, which may arise from or
be related to any matter as to which Shell agreed to
indemnify, defend and hold harmless Buyer pursuant to the
Shell Indemnity, or any obligation of Shell to remediate
Environmental Matters set forth in the Shell Indemnity or
otherwise to perform covenants to, or for the account or
benefit of, Buyer as set forth in the Shell Indemnity,
without regard to whether or not Shell actually indemnifies,
defends, holds harmless, remediates or otherwise performs
such obligations, ("Shell Environmental Matters"), but
excluding any Environmental Matters, other than the Shell
Environmental Matters, arising on, under or about the Real
Property prior to the time that Seller acquired fee title to
the Real Property; provided, however, that such release
shall not be deemed to prevent Buyer from exercising any
rights or remedies based on (a) a breach of Seller's
representations set forth in Sections 9.4 through 9.12 and
9.17, (b) any failure by Seller to perform Seller's
covenants set forth in this Agreement which are to be
performed after the Close of Escrow and (c) any failure by
Seller to perform any indemnification obligations of Seller
under this Agreement.
27.2 Covenant Not to Sue. Buyer hereby covenants not to
undertake any legal, equitable, administrative or other
proceeding against any of the Seller Parties based on the
presence of any Environmental Matter on the Real Property,
including, without limitation, all Shell Environmental
Matters, but excluding any Environmental Matters, other than
the Shell Environmental Matters, arising on, under or about
the Real Property prior to the time that Seller acquired fee
title to the Real Property; provided, however, that such
covenant shall not be deemed to prevent Buyer from
exercising any rights or remedies based on (a) a breach of
Seller's representations set forth in Sections 9.4 through
9.12 and 9.17, (b) any failure by Seller to perform Seller's
covenants set forth in this Agreement which are to be
performed after the Close of Escrow and (c) any failure by
Seller to perform any indemnification obligations of Seller
under this Agreement.
27.3 Waiver. Buyer expressly waives the benefits of
Section 1542 of the California Civil Code, which provides as
follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THE
CREDITOR DOES NOT KNOW TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN TO HIM
MUST HAVE MATERIALLY AFFECTED THE SETTLEMENT WITH THE
DEBTOR.
In this connection and to the extent permitted by law, Buyer
hereby agrees, represents and warrants that Buyer realizes
and acknowledges that factual matters now unknown to it may
have given or may hereafter give rise to causes of action,
claims, demands, debts, controversies, damages, costs,
losses and expenses which are presently unknown,
unanticipated and unsuspected, and Buyer further agrees,
represents and warrants that the waivers and releases herein
have been negotiated and agreed upon in light of that
realization and that Buyer nevertheless hereby intends to
release, discharge and acquit Seller from any such unknown
causes of action, claims, demands, debts, controversies,
damages, costs, losses and expenses which might in any way
be included as a material portion of the consideration given
to Seller by Buyer in exchange for Seller's performance
hereunder, including, without limitation, all Shell
Environmental Matters, but excluding any Environmental
Matters, other than the Shell Environmental Matters, arising
on, under or about the Real Property prior to the time that
Seller acquired fee title to the Real Property; provided,
however, that this Section 27.3 shall not act to prevent
Buyer from exercising any rights or remedies based on (a) a
breach of Seller's representations set forth in Sections 9.4
through 9.12 and 9.17, (b) any failure by Seller to perform
Seller's covenants set forth in this Agreement which are to
be performed after the Close of Escrow and (c) any failure
by Seller to perform any indemnification obligations of
Seller under this Agreement.
27.4 Remaking of Release, Covenant Not to Sue and Waiver.
The release, covenant not to sue and waiver set forth in
Section 27.1 through Section 27.3 shall be deemed
automatically remade and regiven as of the Closing Date with
no necessity for the execution or delivery of additional
documents by either Seller or Buyer.
27.5 Consideration. Seller has given Buyer material
concessions regarding this transaction in exchange for Buyer
agreeing to the provisions of this Section 27. Seller and
Buyer have each initialed this Section 27 to further
indicate their awareness and acceptance of each and every
provision hereof.
SELLER'S INITIALS:/s/ RP BUYER'S INITIALS:/s/ VJC
28. Assignment. Buyer shall neither assign its rights nor
delegate its obligations hereunder without obtaining Seller's
prior written consent, which consent may be granted or withheld
by Seller in its discretion. In no event shall any such
assignment relieve Buyer from its obligations under this
Agreement. Any other purported or attempted assignment or
delegation without obtaining Seller's prior written consent shall
be void and of no effect.
29. Successors and Assigns. Subject to the restrictions on
transfer set forth in Section 28, this Agreement shall be binding
upon and inure to the benefits of the heirs, successors and
assigns of the parties hereto. In no event shall Buyer have any
right to delay or postpone the Closing to create a partnership,
corporation or other form of business association or to obtain
financing to acquire title to the Property or to coordinate with
any other sale, transfer, exchange or conveyance.
30. Exhibits. Each reference to an exhibit in this Agreement
shall mean the exhibit attached to this Agreement. Each such
exhibit is incorporated herein by this reference.
31. No Reservation of Property. The preparation and/or delivery
of unsigned drafts of this Agreement shall not create any legally
binding rights in the Property and/or obligations of the parties,
and Buyer and Seller acknowledge that this Agreement shall be of
no effect until it is duly executed by Buyer and Seller. Buyer
understands and agrees that Seller shall have the right to
continue to market the Property and/or to negotiate with other
potential purchasers of the Property until the expiration of the
Contingency Period and the satisfaction or waiver in writing of
all conditions to the obligations of Buyer under this Agreement,
however, Seller shall not enter into a contract to sell the
Property to a third party in derogation of this Agreement unless
and until this Agreement terminates.
32. Duty of Confidentiality. Buyer and Seller covenant,
represent and warrant that each shall keep all information and/or
reports obtained from the other, or related to or connected with
the Property, the other party, or this transaction, confidential
and will not disclose any such information to any person or
entity without obtaining the prior written consent of the other
party, which consent shall not be unreasonably withheld,
conditioned or delayed. If this Agreement is terminated for any
reason, Buyer shall promptly return to Seller all of the
documents and information theretofore delivered to Buyer by
Seller or obtained by Buyer in connection with its investigation
of the Property. At any time prior to the Closing Date, or at
any time if this Agreement is terminated, Buyer shall not deliver
any of the documents and information theretofore delivered to
Buyer by Seller or obtained by Buyer in connection with its
investigation of the Property, or otherwise knowingly transmit
any of the information contained in such documents to any third
party except Buyer's counsel or other advisors, employees,
consultants and agents, provided such individuals agree to be
bound to the same burdens of confidentiality and nondisclosure as
Buyer, or except in response to lawful process or subpoena or
other valid order of a court of competent jurisdiction. Buyer's
or Seller's obligations set forth herein shall survive the Close
of Escrow and shall not be merged with the Deed, and shall
survive the termination of this Agreement and Escrow prior to the
Close of Escrow.
33. Environmental Disclosure. Buyer acknowledges that Seller
has informed Buyer that there are Environmental Matters located
on, under or about the Property, all as more particularly
described in the Environmental Reports. Seller has made, or will
make, the Environmental Reports available to Buyer (but without
warranty), and this paragraph and the Environmental Reports shall
constitute notice and disclosure as required under California
Health and Safety Code Sections 25359.7, 25915.5 and 25917, as
applicable with respect to the presence of the Environmental
Matters disclosed in the Environmental Reports. As required by
California Health and Safety Code Section 25259.7 and any other
provisions of State law, Seller shall notify Buyer, and Buyer
shall notify Seller, if either knows or has reasonable cause to
believe that any release of Environmental Matters has come to be
located on or beneath the Real Property.
34. Covenants of Seller. Except as otherwise provided herein,
the following covenants shall survive the Closing Date and shall
not be deemed merged in the grant deed, but shall remain in full
force and effect until one (1) year after the Closing Date, at
which time the following covenants shall terminate:
(a) Keys and Document Delivery. Seller shall deliver
all keys in Seller's or Seller's property manager's actual
possession. Seller shall deliver any and all documents in
Seller's actual possession, or in the actual possession of
Seller's property manager, that bind the Property or
materially affect its use, provided such documents are not
confidential, proprietary or privileged. At any time, and
from time to time after the Closing Date, upon the
reasonable request of Buyer, and without payment of further
consideration to the Seller, other than reimbursement for
Seller's out-of-pocket expenses, Seller will cooperate with
Buyer to make available additional documents in connection
with the Property that are not confidential, proprietary or
privileged; provided that Seller shall incur no liability
whatsoever with respect to any third parties by virtue of
such cooperation.
(b) Material Changes. Seller shall notify Buyer promptly
upon becoming aware of any material changes in the condition
of the Property or the condition of Tenants in the Property.
(c) Monetary Liens. Seller shall remove or obtain a bond
over liens on the Property securing obligations of Seller to
pay money, which obligations arose after the date, and are
not shown, on the PTR such that the Title Policy to be
issued pursuant to Section 3.6.5 will not show such liens.
(d) Property Management and Operation. Seller shall
maintain the operation of the Property in a good and
business-like manner. Seller shall provide all services and
operate, manage and maintain the Property (including
mechanical equipment of every kind used in the operation
thereof) in such a manner that the Property shall be in the
same condition on the Closing Date as on the date of this
Agreement, ordinary wear and tear excepted. Without
limiting the foregoing, Seller shall perform all of its
material obligations under the Leases and the Service
Contracts and shall terminate the management agreement and
leasing agreement with PM Realty at the Close of Escrow.
(e) Compliance with Laws. Seller shall comply with all
governmental regulations affecting the Property.
(f) Actions Pending. Seller shall notify Buyer promptly of
any lawsuits, condemnation proceedings, rezoning, or other
governmental order or action thereof affecting the Property
of which Seller has actual knowledge.
(g) Insurance Policies. Seller shall maintain in full
force and effect all existing insurance policies through and
including the Closing Date.
(h) 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.
(i) Audit. Seller agrees that during the Contingency
Period, Buyer may conduct an audit of the revenues and
expenses in connection with the Property for the period
commencing January 1, 1996 and ending on the Contingency
Termination Date. Seller shall cooperate with Buyer in
Buyer's efforts to conduct the audit and shall provide Buyer
with such information, in Seller's or Seller's property
manager's possession, reasonably required by Buyer to
conduct the audit.
35. Assumption of Liabilities; Indemnity.
(a) [Intentionally Deleted]
(b) Indemnity of Seller. In addition to such remedies as
are specifically provided in, and subject to the conditions
and limitations of, this Agreement, Seller shall indemnify,
defend and hold Buyer harmless from and against any Loss
incurred by Buyer in respect of, arising out of or involving
a Third Party Claim (as defined in Section 35(d)(i)) as a
result of a material failure by Seller to retain and duly
perform and discharge all of the Excluded Liabilities.
(c) Indemnity of Buyer. In addition to such remedies as
are specifically provided in, and subject to the conditions
and limitations of this Agreement, Buyer shall indemnify,
defend and hold Seller harmless from and against any Loss
incurred by Seller in respect of, arising out of or
involving a Third Party Claim as a result of a material
failure by Buyer, after the Closing, to assume and duly
perform and discharge all of the Assumed Liabilities.
(d) Procedure for Indemnification.
(i) For any party seeking indemnification from the
other under this Section 35 (such party seeking
indemnification being hereinafter referred to as the
"Indemnified Party") to be entitled to any such
indemnification in respect of, arising out of or
involving a legal proceeding, counterclaim or cross
claim instituted by any third party against the
Indemnified Party (a "Third Party Claim"), the
Indemnified Party shall give the party from whom
indemnification is sought (such party from whom
indemnification is sought being hereinafter referred to
as the "Indemnifying Party"), written notice of such
Third Party Claim within ten (10) Business Days after
written notice of the commencement of such proceedings.
Failure by the Indemnified Party to give such notice
shall not result in a waiver by the Indemnified Party
of any right to be indemnified with respect to such
Legal Proceeding so long as the Indemnifying Party has
not been prejudiced by the failure to give timely
notice.
(ii) If the Indemnified Party is entitled to
indemnification pursuant to Section 35(d)(i), the
Indemnifying Party shall defend the Indemnified Party
against such Third Party Claim in such manner as the
Indemnifying Party reasonably deems appropriate, the
Indemnifying Party shall pay the costs of such defense,
including reasonable attorneys' fees and expenses and
witness fees, and the Indemnifying Party may settle
such Third Party Claim on such terms as it deems
appropriate without the necessity of obtaining the
consent of the Indemnified Party; provided, however,
that any such settlement shall include the complete
release of the Indemnified Party, and if no settlement
of such Third Party Claim is made, the Indemnifying
Party shall promptly pay or reimburse the Indemnified
Party for the amount of any judgment rendered with
respect to such Third Party Claim.
(iii) If the Indemnifying Party is unable to
defend the Indemnified Party against a Third Party
claim due to a conflict, of if the Indemnified Party
chooses to do so, the Indemnified Party may secure its
own legal counsel to defend it against the Third Party
Claim at the sole cost and expense of the Indemnified
Party.
(iv) Notwithstanding any provision to the contrary
in this Section 35, before Buyer shall be entitled to
indemnification with respect to any claim by Buyer of
Seller's breach of environmental representations set
forth in Section 9.11 hereof, Buyer must establish that
Seller, its agents or employees, or tenants who leased
and occupied the Real Property during any period of
Seller's ownership of the Real Property, such tenants'
agents or employees or any other party or entity,
caused there to exist Environmental Matters on the Real
Property, which Environmental Matters have not been
disclosed to Buyer by Seller or discovered by Buyer
through Buyer's due diligence performed prior to the
Closing Date.
(e) Survival. The indemnification obligations of each of
the parties under this Section 35 shall survive the Close of
Escrow. If a remedy for a breach of any obligation under
this Agreement is also provided for in any other provision
of this Agreement, such other provision shall control and
the provisions of this Section 35 shall not apply to such
breach.
36. Acknowledgments. Buyer and Seller acknowledge the following:
(a) Ralphs will vacate the building at the expiration of the
lease term;
(b) The utility tax surcharge will result in higher
annual operating expenses than previously reported;
(c) Buyer has assumed a commencement date of August 15,
1997 for the Healthcare Partners lease;
(d) Bowman and Brooke's expansion rights impact
approximately 5,000 square feet through December 1999;
(e) No value can be assigned to future development rights of
the Property;
(f) HRC, Inc. has vacated the Property;
(g) International Network Services has the right to
cancel its lease effective September, 1999;
(h) Infonet Services has the right to cancel its lease
effective April, 1999; and
(i) Right Management has two months of free rent in
November and December of 1997.
IN WITNESS WHEREOF, Buyer and Seller do hereby execute this
Agreement as of the date first written above.
BUYER:
ARDEN REALTY LIMITED PARTNERSHIP, a
Maryland limited partnership
By: /s/ Victor J. Coleman
Victor J. Coleman
Its: President and COO
SELLER:
NEW YORK LIFE INSURANCE COMPANY, a New York
mutual insurance company
By:/s/ Ron F. Petit
Ron F. Petit
Its:Assistant Vice President
Acceptance by Escrow Holder
Escrow Holder acknowledges receipt of the foregoing Agreement and
accepts the instructions contained therein.
CHICAGO TITLE INSURANCE COMPANY
By: E.M. Bailey-Sates
Its:Sr. Escrow Officer
June 13, 1997
New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attention: Senior Vice President,
Mortgage Finance Department
RE: Agreement of Purchase and Sale and Escrow Instructions
(the "Purchase Agreement") made as of May 21, 1997 by
and between Arden Realty Limited Partnership, a
Maryland limited partnership ("Buyer") and New York
Life Insurance Company, a New York mutual insurance
company ("Seller")
Gentlemen/Ladies:
Reference is made to the Purchase Agreement for the meaning
of each capitalized term used, but not otherwise defined, herein.
Buyer hereby certifies to Seller as follows:
1. Buyer hereby certifies that it has reviewed the
physical condition of the Property pursuant to Section 3.3.1. of
the Agreement and hereby approves the physical condition of the
Property; provided, however, that such approval by Buyer shall
not be deemed to effect the condition to Buyer's obligations
under the Agreement set forth in Section 3.3.1(f).
2. Buyer hereby certifies that it has reviewed each
exception or other matter in the PTR and/or the Survey pursuant
to Section 3.3.2 of the Agreement and hereby approves each
exception or other matter in the PTR and/or the Survey.
3. Buyer hereby certifies that it has reviewed all of the
Seller Delivery Items and all other maters relating to the
Property or otherwise related to the transaction described in
this Agreement pursuant to Section 3.3.3. of the Agreement and
hereby approves all of the Seller Delivery Items and all other
matters relating to the Property or otherwise related to the
transaction described in this Agreement.
4. Buyer has reviewed the tenant estoppel statements
provided by the tenants listed on Exhibits A to this letter.
Arden hereby approves such tenant estoppel statements for all
purposes under the Purchase Agreement provided only that each
tenant deliver to Arden a letter in the form attached hereto as
Exhibit B on or before the close of Escrow (as defined in the
Purchase Agreement).
5. Contingency Termination Date has occurred, the
Contingency Period has terminated, and the Purchase Agreement has
not been terminated by Buyer and remains in full force and effect
in accordance with its terms. The conditions to Buyer's
obligations under the Agreement set forth in Section 3.3.1 (other
than the condition to Buyer's obligations under the Agreement set
forth in Section 3.3.1(f), Section 3.3.2. and Section 3.3.3 have
been satisfied or waived by Buyer. The condition to Buyer's
obligations under the Agreement set forth in Section 3.3.4 has
been satisfied to the extent, and only to the extent, set forth
in Paragraph 4 of this letter.
Very Truly Yours,
ARDEN REALTY LIMITED PARTNERSHIP, a
Maryland limited partnership
By: Arden Realty, Inc., General Partner
By: /s/ Victor J. Coleman
Its: President and COO
July 9, 1997
VIA FACSIMILE
Victor Coleman
Arden Realty Limited Partnership
c/o Arden Realty, Inc.
9100 Wilshire Boulevard, Suite 700
Beverly Hills, California 90212
RE: Agreement of Purchase and Sale and Escrow Instruction
(the "Agreement") dated May 21, 1997 by and between
Arden Realty Limited Partnership ("Buyer") and New York
Life Insurance Company ("Seller")
Dear Mr. Coleman:
The undersigned, as Seller, hereby informs you that the date
for the satisfaction or waiver of the condition with respect to
Buyer obtaining and approving the Shell Indemnity pursuant to
Section 3.3.1(f) of the Agreement, is hereby extended to Monday,
July 14, 1997, at 5:00 P.M., Eastern Daylight Time. Accordingly,
the references in Section 2.2.1(b) and (c) to "July 9, 1997"
shall be deemed to refer to July 14, 1997 at 5:00 p.m. Eastern
Daylight Time, and the date of Buyer's deliver to Escrow Holder
of the Subsequent Deposit (as defined in the Agreement) pursuant
to Section 2.2.1(b) is hereby extended to Wednesday, July 16,
1997.
Except as hereinabove written, the terms and conditions of
the Agreement shall not be affected by the foregoing and the
Agreement shall remain in full force and effect.
Victor Coleman
July 9, 1997
Page 2
This letter agreement may be executed in counterparts, each
counterpart of which shall constitute an original and all of
which, taken together, shall continue but one and the same letter
agreement.
Very truly yours,
NEW YORK LIFE INSURANCE COMPANY, a
New York Life Insurance Company
By: /s/ Ron F. Petit
Its: Assistant Vice President
The undersigned, on behalf of his client, Buyer, acknowledges
receipt of, and agrees to comply with, the foregoing.
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: /s/ Victor J. Coleman
Its: President and COO
AGREEMENT OF PURCHASE AND SALE
AND ESCROW INSTRUCTIONS
BETWEEN
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
SELLER
AND
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
BUYER
for
1000 Town Center
Oxnard, California
and
Mariner Court
3625 Del Amo Boulevard
Torrance, California
INDEX
ARTICLE SUBJECT MATTER PAGE
1. SALIENT TERMS
2. AGREEMENT OF PURCHASE AND SALE.
3. SECURITY DEPOSIT.
4. CLOSING DATE.
5. TERMS.
6. DELIVERY OF INFORMATION AND CONDITION OF PROPERTY.
7. CONTINGENCY PERIOD.
8. SATISFACTION OF CONDITIONS.
9. TENANTS.
10. ESCROW.
11. TITLE.
12. COSTS AND PRORATIONS.
13. OPERATION OF PROPERTY PENDING CLOSING.
14. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE ESCROW.
15. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE ESCROW.
16. CLOSING PROCEDURE.
17. REPRESENTATIONS AND WARRANTIES.
18. REMEDIES UPON DEFAULT.
19. DAMAGE AND DESTRUCTION.
20. CONDEMNATION.
21. COMMISSIONS.
22. NOTICES.
23. OCCUPANCY AND POSSESSION.
24. ATTORNEY'S FEES.
25. ENTIRE AGREEMENT.
26. TIME OF THE ESSENCE.
27. MODIFICATIONS TO BE IN WRITING.
28. SURVIVAL.
29. SUCCESSORS.
30. ASSIGNMENT.
31. CHOICE OF LAWS.
32. PUBLIC ANNOUNCEMENT OF SALE.
33. CONDITION OF PROPERTY.
34. COUNTERPARTS.
35. FACSIMILE SIGNATURES.
36. MEANING OF TERMS.
37. SECTION HEADINGS.
38. FURTHER ASSURANCES ON OR AFTER CLOSING.
39. FURTHER ASSURANCES PRIOR TO CLOSING.
40. OTHER PARTIES.
41. NO SOLICITATION.
42. WAIVER OF JURY TRIAL.
43. SELLER'S EXCULPATION.
AGREEMENT OF PURCHASE AND SALE
AND ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND ESCROW INSTRUCTIONS
("Agreement") is made and entered into as of the "Date" set forth
in Section 1.1, below, by and between BEDFORD PROPERTY INVESTORS,
INC., a Maryland corporation ("Seller"), and ARDEN REALTY LIMITED
PARTNERSHIP, a Maryland limited partnership ("Buyer"), with
reference to the following facts.
R E C I T A L S:
A. Seller is the fee owner of two separate parcels of real
property and the improvements thereon, as described below.
B. Seller desires to sell, and Buyer desires to purchase,
all of the real and personal property owned by Seller located at
or forming part of the "Property," as that term is described
below, including, but not limited to, the "Improvements," and all
appurtenant easements and rights on the terms, covenants and
conditions hereinafter set forth.
A G R E E M E N T:
NOW, THEREFORE, with reference to the foregoing recitals and
in reliance thereon and in consideration of the purchase price
hereinbelow set forth, and the other terms, covenants and
conditions set forth below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, it is mutually covenanted and agreed by Seller and
Buyer as follows.
1. SALIENT TERMS
1.1 Date: May 13, 1997
1.2 Parties:
(a) Seller: BEDFORD PROPERTY INVESTORS,
INC., a Maryland corporation
270 Lafayette Circle, Suite 210
Lafayette, CA 94549
Phone No.: 510/283-8910
Fax No.: 510/283-8480
Attn: Robert Pester
(b) Buyer: ARDEN REALTY LIMITED
PARTNERSHIP, a Maryland
limited partnership
9100 Wilshire Blvd., East Tower, Suite 700
Beverly Hills, CA 90212
Phone No.: 310/271-8600
Fax No.: 310/274-6218
Attn: Mr. Victor Coleman
1.3 Purchase Price: Twenty-Five Million Seven
Hundred Fifty Thousand Dollars
($25,750,000.00)
(Section 5)
1.4 General Location
of the Property: The office building located at
1000 Town Center, Oxnard,
California, and the office
building known as "Mariner
Court,") and located at 3625
Del Amo Boulevard, Torrance,
California
1.5 Security Deposit: (a) Initial Deposit: Two
Hundred Fifty Thousand
Dollars ($250,000.00)
Cash;
(b) Increased Deposit: An
additional Seven Hundred
Fifty Thousand Dollars
($750,000.00) in form of
Buyer's note (the
"Deposit Note") at
termination of
Contingency Period.
(Section 3)
1.6 Scheduled Closing Date: On or before sixty (60) days
after expiration of
Contingency Period, to be
designated at Seller's option
upon minimum fifteen (15) days
prior written notice from
Seller to Buyer.
(Section 4)
1.7 LIQUIDATED DAMAGES
IN THE EVENT The entire Deposit, including
OF BUYER'S DEFAULT: the Deposit Note.
(Section 18)
1.8 Escrow Holder: FIRST AMERICAN TITLE COMPANY
1850 Mt. Diablo Blvd., Suite 300
Walnut Creek, CA 94596
Attn: Lori Kennon
Phone No.: 510/927-2173
Fax No.: 510/
1.9 Contingency Period Thirty (30) days after the
Expiration: date (the "Effective Date") of
full execution and delivery of
this Agreement by both
parties.
(Section 6)
1.10 Real Estate Commission
Payable If 1.5% of Sale Price to:
Purchase Closes: Cushman & Wakefield of
California, Inc. (by Seller)
1.12 Definitions: The terms listed below shall have the
following definitions:
"Improvements" the improvements on the Real Property
for informational purposes only, are, as to the First Property,
an office building , and, as to the Second Property, an office
building, and other facilities, fixtures, paving and surfacing
thereon or associated therewith, with automobile parking;
"Intangibles" all right, title and interest of Seller
constituting part and parcel of the Property (as hereinafter
defined), including, but not limited to, trade names, logos,
easements, licenses, permits, air rights, certificates of
occupancy, warranties, rights-of-way, signs, trademarks,
telephone listings and numbers, sewer agreements, water line
agreements, utility agreements, water rights and oil, gas and
mineral rights, to the extent assignable or transferable;
"Options Commissions" Any unpaid leasing commission
with respect to such Tenant Lease (including potential
obligations in connection with the exercise of any unexercised
options to expand or extend);
"Preliminary Title Report" a CLTA Preliminary Title
Report covering the Real Property and the Improvements, which may
state that it is subject to any matter that would be disclosed by
a survey;
"Property" all of the Real Property, Improvements
and Intangibles;
"Real Property" collectively that certain parcel of
real property located in the City of Oxnard, County of Ventura,
State of California and further described on Exhibit A-1,
attached hereto located at 1000 Town Center (the "First
Property"), and that certain parcel of real property located in
the City of Torrance, County of Los Angeles, State of California
and further described on Exhibit A-2 attached hereto (the "Second
Property");
"Rent Roll" That document attached hereto as Exhibit
"B", and incorporated by this reference. [WE ARE VERIFYING THE
CONTENT OF THE RENT ROLL]
"Service Contract" complete copies of all service and
other contracts pertaining to the Property (including, but not
limited to, HVAC, elevator, landscape, management, leasing
brokerage and parking) in respect to which Seller is obligated;
"Survey" ALTA Survey of the Real Property and
Improvements;
"Tenant Deposits" an amount equal to all security
deposits, prepaid rentals, cleaning fees and other deposits, plus
any interest accrued thereon for the benefit of Tenant, as set
forth in the "Tenant Leases," as that term is defined below, paid
by Tenants to Seller or any other person relative to the Project;
"Tenant Leases" All documents, agreements and other
writings referenced in or affecting all leases, licenses, rental
agreements or occupancy agreements, and all amendments and
supplements thereto, relating to all or any portion of the
Property (together with all rents, issues and profits
thereunder); and
"Tenants" any person who is named tenant or lessee
under a Tenant Lease.
2. AGREEMENT OF PURCHASE AND SALE.
The Buyer specified in Section 1.2(b) agrees to buy and the
Seller specified in Section 1.2(a), the fee owner of the
Property, agrees to sell the Property on all the terms and
conditions stated herein. The Property shall include all Real
Property, the Improvements, the Intangibles, the Tenant Leases,
the Service Contracts, and all appurtenances, licenses, permits
and contracts affecting the Property, which, subject to the
provisions of Section 12.1.64, below, regarding the contracts,
shall be assigned by Seller to Buyer at Close of Escrow.
3. SECURITY DEPOSIT.
As an inducement to Seller to enter into this contract,
Buyer shall deposit with the Escrow Holder upon the opening of
the Escrow described in Section 10 below, a Security Deposit
(also known as the "Deposit" or the "Initial Deposit") in the
amount of the sum specified in Section 1.5(a), which deposit
shall be held by the Escrow Holder to secure the performance of
the Buyer hereunder. Escrow Holder shall place the Initial
Deposit in an interest bearing account insured by the FDIC or
such other manner as may reasonably be approved by Seller and
Buyer, with the interest accruing to Buyer, and shall hold the
Initial Deposit and all interest accrued therein in the Escrow,
subject to terms of this Agreement. The amount of the Initial
Deposit shall be applied to the Purchase Price on Close of
Escrow. The Deposit Note shall be in the form attached hereto as
Exhibit C, and shall be held by Escrow Holder as part of the
Deposit, to be delivered to Seller together with the cash portion
of the Deposit upon Buyer's breach in accordance with Section
18.1 of this Agreement, or be returned to Buyer upon payment of
the entire Purchase Price in cash at Closing or, along with the
Initial Deposit, in connection with Section 18.2, below, along
with the Initial Deposit. Should Buyer not terminate this
Agreement at end of the Contingency Period, as provided for in
this Agreement, the entire Deposit shall become nonrefundable
(subject only to the satisfaction of the remaining conditions of
Closing. The Deposit Note shall be a part of the nonrefundable
Deposit.
4. CLOSING DATE.
"Close of Escrow," or the "Closing Date," is the date upon
which the Grant Deeds conveying title of the Property to Buyer
areis recorded with the County Recorder of the Counties in which
the Property is located, and shall occur on or before the date
specified in Section 1.6. Seller shall designate a Closing Date
which shall occur after the Contingency Period and prior to sixty
(60) days after the expiration of the Contingency Period by
fifteen (15) days prior written notice to Buyer of Seller's
designated Closing Date.
5. TERMS.
The purchase price shall be the sum specified in Section 1.3
(the "Purchase Price"), and shall be paid to Seller at Close of
Escrow in cash, plus or minus the net amount of all costs,
expenses, adjustments and prorations to be credited (or debited)
to Buyer pursuant to this Agreement.
6. DELIVERY OF INFORMATION AND CONDITION OF PROPERTY.
6.1 As soon as practicable after the date hereof, but in no
event later than five (5) business days after the Effective Date,
except as otherwise set forth, Seller shall have delivered or
shall have caused to be delivered or made available to Buyer at
Seller's Lafayette, California office or Tustin, California
office, the relevant location of the Property to the extent they
are in Seller's possession or under its control, all books and
records relating to or regarding the relevant Property, including
but not limit to the Tenant Leases, a current Rent Roll,
documents relating to the condition of the Property, electricity
and Property tax bills, and Service Contracts.
6.2 Inspections and Approval by Buyer.
6.2.1 Subject to the terms and conditions of this
Agreement, including the exhibits attached hereto, Buyer accepts
the Property "as is" without representation or warranty by Seller
as to physical condition, provided however, between the Effective
Date and the date specified in Section 1.9 (the "Contingency
Period"), Buyer, at its own risk, and expense, upon reasonable
notice to Seller, and subject to such conditions as Seller may
impose, may survey the Property and physically inspect the
Property including and not limited to electrical, plumbing,
mechanical, structural, and roof. Buyer has relied upon its own
inspection and its own professional advisors in its examination
of the Property and all improvements thereon. Buyer hereby
represents, warrants, and covenants to Seller that Buyer has
conducted, or prior to expiration of the Contingency Period will
conduct, Buyer's own investigation of the Property and the
physical condition thereof, including, without limitation,
accessibility and location of utilities, Use of Hazardous
Materials on, from, or under the Property, earthquake
preparedness of the property, all matters concerning the Property
with respect to taxes, assessments, income and expense data,
bonds, permissible uses, zoning, covenants, conditions and
restrictions, and other matters which in Buyer's judgment are
necessary or advisable or might affect or influence Buyer's use
of the Property, or bear upon the value and suitability of the
Property, for Buyer's intended purposes, or Buyer's willingness
to enter into this Agreement. Buyer recognizes that Seller would
not sell the Property except on an "as is" basis, and
acknowledges that Seller has made no representations or
warranties of any kind in connection with the Property other than
those, if any, which are expressly set forth in this Agreement.
Buyer's representations and warranties, as set forth above, shall
survive the closing of this transaction without limitation of
time. Buyer shall repair all damage to the Property resulting
from Buyer or Buyer's representatives coming upon the Property to
perform any surveys, inspections, tests or analyses. From and
after the Effective Date, Buyer and its agents, employees and
contractors shall be afforded full access to the Property during
normal business hours and upon twenty-four (24) hours prior
notice for the purpose of making such investigations as Buyer
deems prudent with respect to the physical condition of the
Property. From and after the Effective Date until Closing, Buyer
and its agents shall be afforded full opportunity by Seller
during normal business hours and upon twenty-four (24) hours
prior notice to examine all operating books, files and records
that relate to the Property (including all specifications and as-
built drawings to the extent they are in Seller's possession),
all building permits, certificates of occupancy, soil reports,
engineers' reports and studies, and similar information relating
to the Property or its management, operation, maintenance or use,
and all warranties and operating annuals that Seller may have
from vendors, contractors or servicing agents with respect to the
physical condition of the Property or any portion thereof or the
equipment located thereon. Inspections of the Property by Buyer
and its agents shall not allow for or permit physical
penetrations or intrusive testing of any of the improvements on
the real property without Seller's prior written consent in each
instance. All inspections shall be subject to the terms of
applicable leases and shall be conducted in such a manner so as
not to interfere with any tenant's quiet enjoyment of the
Property, take place in accordance with the schedule pre-approved
by Seller (as reasonably established by Buyer and Seller) and be
observed by Seller or its designee at Seller's election.
6.2.2 Buyer shall indemnify, defend by counsel
reasonably acceptable to Seller, and hold Seller harmless from
and against any cost, claims, damages or liabilities, including,
but not limited to, attorneys' fees and court costs, that may
arise in connection with any testing done on the Property. If
Buyer does not elect to proceed with the purchase of the Property
as provided herein, Buyer shall: (i) cause the property to be
returned to the same condition as it was prior to any testing
done on or with respect to the Property; and (ii) deliver to
Seller copies of all physical tests, reports or inspections that
Buyer has conducted on or with respect to the Property. Buyer's
obligations under this Section 6.2.2 shall survive the
termination of this Agreement until such obligations have been
fully performed and approved by Seller in writing.
6.3 Buyer shall have until 5:00 P.M. of the last day of the
Contingency Period (also known as the "Approval Period") in which
to approve or disapprove all matters and things that are subject
to Buyer's rights or review, inspection and approval hereunder as
set forth in Sections 6.1 and 6.2, above. Buyer's failure either
to approve or disapprove all matters and things that are subject
to Buyer's rights of review, inspection and approval hereunder
before the expiration of the Approval Period, shall be deemed its
approval thereof. If Buyer disapproves any of said information,
Buyer shall notify Seller in writing thereof within the time
period specified above whereupon, this Agreement shall terminate,
however, notwithstanding the foregoing, if Buyer disapproves any
Service Contract, this Agreement shall not terminate and Seller
shall lawfully terminate such Service Contract not later than
thirty (30) days after the Closing, to the extent the same can be
so terminated and provided Seller shall pay all cancellation or
termination penalties, fees or costs in connection therewith.
Buyer's disapproval shall be in writing and shall be delivered to
Seller prior to the expiration of the Contingency Period.
Failure to deliver such written disapproval shall be deemed
Buyers approval of said matters.
7. CONTINGENCY PERIOD.
If, during the Contingency Period, Buyer gives Seller
written notification (the "Termination Notice") that Buyer elects
not to consummate the purchase of Property in accordance with the
terms of this Agreement, this Agreement shall terminate. If the
Termination Notice is given, Buyer shall be entitled to the
immediate return of the Deposit and neither party shall have any
further liability as to the other under this Agreement, except as
provided in Sections 6.2.2. If Buyer fails to give or elects not
to give the Termination Notice prior to the expiration of the
Contingency Period, this Agreement shall remain in full force and
effect and the Deposit shall be dealt with as provided in Section
3. At any time prior to the expiration of the Contingency
Period, Buyer may give Seller a written notice waiving its rights
to terminate this Agreement under this Section 7 (but without
prejudice to its right to terminate this Agreement under any
other provision of this Agreement).
8. SATISFACTION OF CONDITIONS.
Upon failure to satisfy any of the conditions stated herein,
unless there is a waiver of said condition by the party in whose
favor the condition has been included, all Deposits hereunder
shall be returned to Buyer, the parties shall be returned to
their original position as existed prior to the execution hereof,
and unless otherwise expressly stated in this Agreement, this
Agreement shall be null and void and of no further force or
effect (excepting Sections 6.2.2, 24, 28, 29, 31, 32 and 42,
inclusive hereof), provided that Buyer, if Buyer is the party in
whose favor the condition runs, has timely notified Seller of the
failure of the condition. Should the party in whose favor the
failed condition has been included waive the condition, the
contract shall remain in force as if the condition had not been
included herein. Each party shall use reasonable diligence in
obtaining the removal of all conditions herein running in its
favor.
9. TENANTS.
Buyer takes the Property subject to the rights of tenants.
Seller represents that the Leases are the only leases or rental
agreements which affect the Property. Unless otherwise specified
in Exhibit B, each Lease is in full force and effect and has not
been modified. Buyer shall assume all obligations of "landlord"
thereunder accruing after Close of Escrow and the Leases shall be
then assigned to Buyer under the terms of an Assignment and
Assumption of Leases in the form attached hereto, marked Exhibit
E.
10. ESCROW.
Within five (5) business days after the Effective Date an
escrow shall be opened (the "Escrow") by Buyer depositing a
signed copy of this Agreement and the Initial Deposit with the
Escrow Holder designated in Section 1.8. Escrow fees shall be
paid one-half (.50) by Buyer and one-half (.50) by Seller. Escrow
Holder is hereby authorized and instructed to act in accordance
with the provisions of this Agreement, which Agreement together
with Escrow Holder's standard General Provisions, to the extent
that the same is consistent with the terms hereof, and are
reasonably approved by Seller and Buyer, shall constitute Escrow
Holder's escrow instructions. Seller and Buyer shall each
deposit such other instruments and funds as are necessary to
close the Escrow and complete the sale and purchase of the
Property in accordance with the terms hereof, provided that all
of Buyer's conditions precedents to Closing as set forth in
Section 14 have been satisfied. The obligations of each party
which are herein agreed to be undertaken by each party in the
Escrow shall be and are hereby made agreements of such party in
and under this Agreement independent of the Escrow. If any
requirements relating to the duties or obligations of Escrow
Holder hereunder are not acceptable to Escrow Holder, or if
Escrow Holder requires additional instructions, the parties agree
to make such deletions, substitutions and additions to these
escrow instructions relating to such duties or obligations of
Escrow Holder or clarification of these instructions as counsel
for Seller and for Buyer shall mutually approve, and which do not
substantially change this Agreement or its intent. Seller and
Buyer agree to perform, observe and fulfill the requirements of
this Agreement notwithstanding said deletions, substitutions or
additions to said escrow instructions. The term "Closing" as
used herein shall be deemed to be the date upon which the
respective conditions precedent to Buyer's obligation to close
escrow (set forth in Section 14 below) and the conditions
precedent to Seller's obligations to close escrow (set forth in
Section 15 below) have been satisfied, and the Closing Procedures
have been satisfied (as set forth in Section 16, below). If the
Closing as provided herein does not occur, this Agreement and the
Escrow shall be cancelled and terminated and thereafter neither
party shall have any further obligation or liability to the other
party, except as expressly set forth in this Agreement.
11. TITLE.
Within two (2) days of execution hereof by all parties
Buyer shall order a preliminary title report on the Property
("Preliminary Report") from Escrow Holder, together with true and
legible copies of all documents evidencing matters of record
shown as exceptions to title thereon. Buyer shall have the
right, by the expiration of the Contingency Period, to either
approve the report or, in the alternative, to specify in writing
those exceptions to title which it requests be removed prior to
Close of Escrow. If Seller elects not to remove such exceptions
to the title and so informs Buyer, or, if Seller cannot remove
such exceptions to title within the earlier of sixty (60) days
from the date of receipt of notice from Buyer and fifteen (15)
days before the Closing Date, Buyer may, at its option, terminate
this Agreement by written notice to Seller within five (5) days
following notice from Seller that the exceptions will not be
removed, any Deposit shall be returned to Buyer, and this
Agreement shall be of no further force or effect, except as
otherwise expressly stated herein. There shall be no other
remedy at law, equity or otherwise for failure by Seller to
deliver title in the manner herein agreed except for a willful
clouding of title by Seller. Evidence of marketable title shall
be in the form of an American Land Title Association ("ALTA")
extended form owners policy of title, the cost of which shall be
paid as follows: Seller shall pay the cost of California Land
Title Association standard form owners policy coverage ("CLTA
Premium") and Buyer shall pay all survey costs and all title
insurance cost which is in excess of the CLTA Premium. The
Title Policy shall be in the amount of the Purchase Price. Buyer
agrees to obtain the necessary Survey of the Property as soon as
possible after the opening of the Escrow., and approve or
disapprove the survey within the Contingency Period.. Buyer's
failure to timely notify Seller of those exceptions to title, or
any item shown by the Survey, of which it does not approve,
except as set forth above in this Section 11, within the
Contingency Period shall constitute approval of all exceptions
contained in the Preliminary Report. Notwithstanding anything to
the contrary set forth in this Agreement, Seller shall at Closing
(but shall not be obligated prior thereto) remove of record all
tax and mechanic's liens (except only for the liens of the taxes
and assessments to be prorated under Section 12.1), and pay and
discharge all deeds of trustliens and encumbrances on the
Property.
12. COSTS AND PRORATIONS.
Costs and prorations at Close of Escrow shall be as follows:
12.1 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:
12.1.1 Monthly rents and percentage rent and
"passthroughs" of real estate taxes and operating expenses due
from occupancy tenants under Tenant Leases, as and when
collected. If at Closing there are any past due rents or charges
owed by occupancy tenants, they shall notinto 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 Tenant Lease). To the
extent Buyer receives amounts on account of Tenant Leases on or
after the Closing Date, such payments shall be applied first
toward the delinquentthen current rent owed to SellerBuyer in
connection with the applicable Tenant Lease for which such
payments are received, and any excess monies received shall be
applied toward the payment of any then currentdelinquent rents
owed to Buyer, with Seller's share thereof being promptly
delivered to Seller. Buyer may not waive any delinquent rents
nor modify a Tenant Lease so as to reduce or otherwise affect
amounts owed thereunder for any period in which Seller is
entitled to receive its share of charges or amounts without first
obtaining Seller's written consent. Seller hereby reserves the
right to pursue any remedy against any tenant owing delinquent
rents and any other amounts or other rights of any kind
respecting tenants who are no longer tenants of the Property as
of the Closing Date.
12.1.2 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.
12.1.3 Transferable annual permits, licenses,
and/or inspection fees, if any, on the basis of the duration of
the same;
12.1.4 Deposits. The amount of all security
deposits and other tenant deposits as shown in the Rent Roll
shall be credited to Buyer in the Escrow, and the Buyer shall
hold Seller harmless from any claim by any tenant for the return
of such deposits.
12.1.5 Utilities. Seller shall be responsible
for all utility services to the Property and payment therefor
until midnight on the day preceding the Closing Date and Buyer
shall be responsible for utility services and payment therefor
thereafter. Seller shall be entitled to a return of any deposits
posted by it with any utility company and Buyer shall be
obligated to post its own deposits. Seller shall notify each
utility company of the change in ownership but Buyer shall
execute all forms necessary to assume responsibility for utility
services after the Close of Escrow.
12.1.6 Service and Maintenance Contracts.
Seller shall be responsible for payment of all service and
maintenance contracts prior to the Close of Escrow and Buyer
shall be responsible for such payment thereafter. On or before
the expiration of the Contingency Period, Buyer shall notify
Seller in writing of any Service Contracts which Buyer wishes to
assume as of the Closing Date. Provided such contracts are
assignable by Seller without charge, fee or penalty, Seller shall
assign its rights under such contracts to Buyer at the Closing,
under the terms of that form of assignment attached hereto,
marked Exhibit D. Except for such Service Contracts that are to
be assigned to Buyer at Closing in accordance with this Section,
Seller shall terminate contracts with third party service
providers related to the Property as of the Closing Date at
Seller's sole cost and expense.
12.1.7 Tenant improvement costs and leasing
commissions for leases signed after the Effective Date shall be
paid by Buyer if approved by Buyer in accordance with
Sections 13.1 and 13.2, below.
12.1.8 All other operating expenses incurred in
management and operation of the Property.
No insurance policies shall be assigned hereunder, and
accordingly there shall be no proration of insurance premiums.
12.2 Closing Charges. Buyer and Seller shall each pay one-
half (.50) of all recording fees, the cost of revenue and
documentary stamps, sales, excise and/or transfer taxes, all
other impositions of a similar nature and all other Closing costs
not otherwise provided for in this Agreement. Seller shall pay
the cost of securing the CLTA standard coverage portion of the
Title Policy that is attributable to the required ALTA Owner's
Coverage. Buyer shall pay the cost of the Title Policy
attributable to the ALTA portion and the cost of the Survey.
13. OPERATION OF PROPERTY PENDING CLOSING.
13.1 Tenant Leases. Seller has leased portions of the
Property to various occupancy tenants. From and after the
Effective Date and until the Closing DateFrom and after the
Effective Date until the date occurring five (5) days before the
end of the Contingency Period, 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 (collectively,
"Lease Transactions") without the prior written consent of Buyer
(which consent, until the end of the Contingency Period, shall
not be unreasonably delayed or withheld; provided that upon
notice to Buyer, on or before the date occurring five (5) days
before the end of the Contingency Period, Seller may enter into
new lease of space for less than 5,000 rentable square feet
without the consent of Buyer, provided that the rental rate and
other terms, conditions and concessions for such space,
(including commissions, improvement allowances, and free rent)
(collectively, the "Terms") are no less favorable to Seller from
the Terms for deals now being consummated in comparable buildings
located in the vicinity of the building. and Following the
Contingency Period, Seller must request Buyer's consent to any
Lease Transaction and Buyer may withhold its consent in its sole
discretion). 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
improvements work, any leasing commissions and fees, in
connection with such lease and any rent concessions. Also
included in the request for consent, shall be Seller's proposed
draft of the lease or amendment agreement. The failure of Buyer
to respond within five (5) business days after written request
for any such approval shall be deemed to constitute approval.
Seller shall not collect in advance any rent or other sum due
under any of the Tenant Leases, except for collection of current
rents no more than one month in advance.
13.2 Leasing Commissions; Tenant Improvements and Rent
Concessions. Seller covenants and agrees to be responsible for
all leasing commissions, tenant improvement costs and unamortized
rent concessions with respect to any leases (including amendments
and renewals) entered into on or before the Effective Date.
Buyer covenants and agrees to be responsible for all leasing
commissions, tenant improvement costs and unamortized rent
concessions with respect to any new leases, extensions of
existing leases and renewals occurring after the Effective Date,
provided that (a) Buyer has approved or is deemed to have
approved such action or event by Seller and (b) Seller has
delivered to Buyer copies of the proposed lease and other
agreement with respect thereto and to which any brokerage
commissions are payable. Failing such delivery and approval (or
deemed approval), Seller shall remain responsible for all of
costs and expenses including commissions.
13.3 Insurance Policies. Seller shall keep all of the
insurance policies covering the Property (or substantially
equivalent coverage) in full force and effect between the date of
this Agreement and Closing (the "Insurance Policies").
13.4 Property Management. Prior to the Closing, Seller
shall maintain the Property in the same manner as prior hereto
pursuant to its normal course of business (such maintenance
obligations not including extraordinary capital expenditures or
expenditures not incurred in such normal course of business),
subject to reasonable wear and tear and further subject to
destruction by casualty or other events beyond the reasonable
control of Seller.
14. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE ESCROW.
The obligation of Buyer to consummate the transactions
contemplated hereby; is subject to the following conditions,
inserted for Buyer's sole benefit and that may be waived by Buyer
only in writing at its sole option. Said conditions are as
follows.
14.1 Representations and Warranties True at Closing.
The representations and warranties of Seller contained in
Section 17.1 of this Agreement shall be true on the date of
Closing in all material respects and though such representations
and warranties were made on and as of such date.
14.2 Delivery of Tenant Estoppels. Seller shall have
delivered to Buyer estoppel letters dated within thirty (30) days
of the Closing Date (the "Tenant Estoppels") from tenants
representing 85% of the leased area of each of the First Property
and the Second Property and from all tenants leasing more than
3,500 square feet in the Improvements in substantially the form
of Exhibit "F" attached hereto and forming a part hereof.
14.3 Compliance with this Agreement. Seller shall have
performed and complied with in all material respects all
agreements and conditions required by this Agreement to be
performed or complied with by it on or prior to Closing.
14.4 Title Policy. Title Company shall be ready,
willing and able to issue the Title Policy required by
Section 11.1.
15. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE ESCROW.
The obligation of Seller to consummate the transactions
contemplated hereby is subject to the following conditions,
inserted for Seller's sole benefit and that may be waived solely
by Seller only in writing at its sole option. Said conditions
are as follows:
15.1 Representations and Warranties True at Closing.
The representations and warranties of Buyer contained in this
Agreement, or in any certificate or document signed by Buyer
pursuant to the provisions hereof, shall be true on and as of
Closing in all material respects as though such representations
and warranties were made on and as of such date.
15.2 Delivery of Purchase Price and Documents. Buyer
shall have delivered all funds and documents to Escrow Holder
required by it hereunder to enable it to close the Escrow.
15.3 Compliance with This Agreement. Buyer shall have
performed and complied with all agreements and conditions
required by this Agreement to be performed or complied with by it
on or prior to Closing.
16. CLOSING PROCEDURE.
16.1 At least one business day prior to the date of
Closing, Buyer shall have delivered to Escrow Holder counterpart
executed originals of the following documents and the following
sums of money required to be delivered by Buyer hereunder:
16.1.1 The Purchase Price in the manner set
forth in Section 5;
16.1.2 Such funds as may be necessary to comply
with Buyer's obligations hereunder regarding prorations, costs
and expenses; and
16.1.3 A signed counterpart of the Assignment
and Assumption of Leases (the "Assignment of Leases") and a
ssigned counterpart of the Assignment and Assumption of Contracts
(the "Assignment of Contracts").
16.2 At least one business day prior to the date of
Closing, Seller shall have delivered to Escrow Holder counterpart
executed originals of the following documents:
16.2.1 The Grant Deed in the form of
Exhibit "G" attached hereto and forming a part hereof;
16.2.2 A transferor's certification of non-
foreign status ("FIRPTA Certificate") duly executed by Seller in
the form of, and upon the terms contained in, Exhibit "H"
attached hereto;
16.2.3 Notices to each of the tenants and
occupants (Tenant Notification Letter) of the Property of the
transfer of the Property to Buyer in the form attached hereto as
Exhibit "I";
16.3 Upon delivery of the foregoing sums and documents,
Escrow Holder shall cause Title Company to cause Grant Deed to be
recorded (by a special recording if necessary) in the Official
Records of Los Angeles County and Ventura County, California, and
immediately to issue each Title Policy.
16.4 At least one business day prior to the date of
Closing, Seller shall deliver to Buyer, outside of Escrow, the
following documents:
16.4.1 An original of each of the Service
Contracts, Leases and keys to the Property if in Seller's
possession or under its control;
16.4.2 To the extent they are in Seller's
possession, a complete set of all plans, specifications and as-
built drawings, and all building permits, certificate of
occupancy, third-party soil reports, and environmental reports
and studies relating to the Improvements;
16.4.3 All warranties and operating manuals
that Seller may have from vendors, contractors or servicing
agents with respect to the physical condition of the Property or
any portion thereof or the equipment located thereon; and
16.4.4 A certified Rent Roll, updated within
three (3) days of the Closing.
17. REPRESENTATIONS AND WARRANTIES.
17.1 Representations or Warranties by Seller. Seller hereby
makes the following representations, warranties and covenants,
each of which is deemed to be material and each of which is
stated by Seller to be true and correct on the date hereof and on
the Closing Date and each of which shall survive the Closing,
subject to Section 28, below:
17.1.1 Seller is a Maryland corporation, duly
formed, validly existing and in good standing under the laws of
the state of its incorporation and of California.
17.1.2 Seller has full power and authority to enter
into and carry out the terms and provisions of this Agreement and
to execute and deliver all documents which are contemplated by
this Agreement, and all actions of Seller necessary to confer
such authority upon the persons executing this Agreement and such
other documents have been taken.
17.1.3 To the best of Seller's "current actual
knowledge" (which for the purposes of this Section 17.1 shall
mean the actual knowledge of Robert Pester, Seller's head of real
estate and acquisitions, the leasing agents for the Property, the
managers for the Property, and the engineers for the Property,
who is the individual with direct responsibility for the
operation, management or disposition of the Property, and without
inquiry of third parties or any independent investigation):
(a) Seller has received no written notice of any
pending or threatened litigation or other legal or administrative
action, proceeding, claim, arbitration or suit pending before any
court, agency or official, nor of any such claim or action
threatened in writing, regarding the Property; and
(b) Seller has received no written notice of any
existing violation of any applicable zoning regulation, ordinance
or other law, order, ordinance, permit, rule, regulation or
requirement, or any covenant, condition or restriction affecting
or relating to the use, operation or occupancy of the Property.
(c) The Rent Roll, as updated pursuant to the
terms of this Agreement, is true and complete in all respects.
17.1.4 Seller is not a foreign person and is a
"United States Person" as such term is defined in the Internal
Revenue Code of 1986, as amended.
17.1.5 The closing of the various transactions
contemplated by this Agreement will not constitute or result in
any default or event that with a notice or lapse of time, or
both, would be a default, breach or violation of any lease,
mortgage, deed of trust, covenant or other agreement, instrument
or arrangement by which Seller or the Property is bound.
17.2 Representations and Warranties of Buyer. Buyer hereby
makes the following representations and warranties, each of which
is deemed to be material and each of which is stated by Buyer to
be true and correct on the date hereof:
17.2.1 Buyer has full legal power and authority to
enter into and perform this Agreement in accordance with its
terms. This Agreement constitutes the valid and binding
obligation of Buyer, enforceable in accordance with its terms,
except as such enforcement may be affected by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally. The execution, delivery and performance of this
Agreement and all documents in connection therewith are not in
contravention of or in conflict with any agreement or undertaking
to which Buyer is a party or by which Buyer may be bound or
affected;
17.2.2 The execution and delivery of this Agreement
and the payment and performance by Buyer of its payments and
obligations hereunder require no further action or approval in
order to constitute this Agreement as a binding and enforceable
obligation of Buyer, and all such actions have been duly taken by
Buyer; and
17.2.3 As of the expiration of the Contingency
Period and as of the Closing Date (a) Buyer has received and
reviewed all materials provided to Buyer by Seller pursuant to
Sections 6.1 above (collectively, the "Due Diligence Materials"),
(b) Buyer has inspected the Property, (c) Buyer has made such
investigation of the information contained in the Due Diligence
Materials as it deems appropriate, and (d) Buyer is satisfied
based upon its examination of the Due Diligence Materials and its
investigation of all other aspects of the Property which Buyer
deems material to its purchase thereof, including, without
limitation, the condition of title to the Property, the zoning of
the Property, and condition and physical aspects of all
structures located on the Real Property (including the
Improvements) and the presence or absence of Hazardous Substances
on the Property.
18. REMEDIES UPON DEFAULT.
18.1 Remedies of Seller. If the purchase described herein
is not completed by the Closing Date due to a default by Buyer,
Seller shall be relieved from its obligation to sell the subject
property and may proceed against Buyer upon any claim and/or any
remedy which Buyer may have in law or equity; provided, however,
by inserting their initials belowat Section 1.7, BUYER AND SELLER
AGREE THAT IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX
ACTUAL DAMAGES IN CASE OF BUYER'S DEFAULT, THAT THE PARTIES HAVE
NEGOTIATED IN GOOD FAITH AS TO THEIR BEST REASONABLE ESTIMATE OF
DAMAGES TO SELLER, AND AGREE THAT THE AMOUNT DESCRIBED IN SECTION
1.7 (INCLUDING THE CASH AMOUNT OF THE DEPOSIT AND THE DEPOSIT
NOTE AMOUNT) REPRESENTS THE RESULTS OF SUCH NEGOTIATION AND THAT
SELLER MAY, AT ITS OPTION,SHALL TAKE THAT AMOUNT FROM ESCROW AS
LIQUIDATED DAMAGES AND ESCROW HOLDER IS HEREBY SO INSTRUCTED.
/s/ VJC
Seller's Initials Buyer's Initials
18.2 Remedies of Buyer. In the event that Seller fails
to keep and perform each and every obligation, covenant and
agreement herein by Seller to be kept or performed, then Buyer
may pursue such rights it may have against Seller and the
Property either at law or in equity, including specific
performance.
19. DAMAGE AND DESTRUCTION.
If, prior to Closing, the Property (when viewed separately
as two different office building complexes) shall sustain damage
caused by fire or other casualty that is insured and that would
cost Three Hundred Fifty Thousand Dollars ($350,000) or more to
repair or if any uninsured loss or casualty occurs that would
cost Three Hundred Fifty Thousand Dollars ($350,000) or more to
repair, Buyer may elect to terminate this Agreement by written
notice to Seller within fifteen (15) days after notice of such
event, or at Closing, whichever is earlier. If Buyer does not so
elect to terminate its obligations under this Agreement, or if
the loss or casualty would cost less than Three Hundred Fifty
Thousand Dollars ($350,000) to repair, the Closing shall take
place as provided herein and Buyer shall receive an assignment of
Seller's rights to insurance proceeds with respect to any
unrepaired damage (including any rental loss proceeds with
respect to any unrepaired damage (for periods after the Closing),
loss or casualty in question and a credit to the Purchase Price
for any deductible amount under any such policy. Seller shall
retain all interest in and to the insurance proceeds that may be
payable to Seller on account of repaired and completed damage,
but Seller shall have no obligation of repair or replacement.
20. CONDEMNATION.
In the event that the Property (when viewed separately as
two different office building complexes) or any part thereof
becomes the subject of a condemnation proceeding which prevents
the Property from being operated for its present use (a "Material
Condemnation"), Seller agrees to immediately advise Buyer
thereof. In the event of such Material Condemnation, Buyer shall
have the option to (a) take title in accordance with the terms
and conditions of this Agreement and negotiate with the said
condemning authority for the condemnation award and receive the
benefits thereof without affecting the Purchase Price, or
(b) terminate this Agreement and declare its obligations
thereunder null and void and of no further effect, in which event
all sums theretofore paid to Seller or to Escrow agent hereunder
shall be returned to Buyer as set forth herein. Notice of the
exercise of such option hereunder shall be in writing, delivered
to Seller at the address set forth in Section 22 of this
agreement (or such other address as Seller may have theretofore
designated in writing) at least two days prior to Closing.
21. COMMISSIONS.
Commissions, if any, payable in connection with this
transaction shall be deemed earned, due and payable when the sale
closes and in that event only, and are set forth in Section 1.10.
Such commissions shall be paid by Seller.
22. NOTICES.
All notices, demands, requests, elections, approvals,
disapprovals, consents or other communications which this
agreement contemplates, shall be in writing and shall be (i)
personally delivered, or (ii) sent by telephone facsimile upon
which date and final time is imprinted in the course of
transmission, or (iii) sent by reputable courier who presents
evidence of receipt of delivery, addressed to the respective
parties as set forth in Section 1.2,
With a copy to Buyer's Counsel: Allen, Matkins, Leck, Gamble & Mallory LLP
1800 Avenue of the Stars
Suite 1800
Los Angeles, California 90067
Attention: Anton N. Natsis, Esq.
Facsimile No.: (310) 788-2400;
and Escrow Holder, if applicable.
23. OCCUPANCY AND POSSESSION.
Occupancy and possession shall be delivered to Buyer at
Close of Escrow, subject to rights of Tenants.
24. ATTORNEY'S FEES.
If either party hereto prevails against the other in
litigation concerning any part of this Agreement, such successful
party shall be entitled to its reasonable attorney's fees,
including costs of investigation, discovery, and court costs in
addition to all other recovery or relief. The term "successful
party" shall include a party (a) who brings an action or
proceeding against the other by reason of the other's breach or
default and obtains substantially the relief sought by judgment
or award or (b) who successfully defends an action or proceeding
brought by the other party and against whom no material damages
or specific performance are awarded.
25. ENTIRE AGREEMENT.
This Agreement, which includes this instrument and its
exhibits, embodies the entire agreement and understanding between
the parties relating to the subject matter hereof and supersedes
all prior agreements, representations and memoranda. No other
representations, warranties or covenants have been made, relied
upon or survive the execution of this Agreement. The invalidity
of any one of the covenants, agreements, conditions or provisions
of this Agreement or any portion thereof shall not affect the
remaining portions hereof, and this Agreement shall be construed
as if such covenant, agreement, condition or provision had not
been inserted herein.
26. TIME OF THE ESSENCE.
Time is of the essence of this Agreement and every provision
hereof. The failure of Buyer to close Escrow within the precise
time specifications of this Agreement shall constitute a material
breach entitling Seller, at its option, to terminate this
Agreement in addition to having available to it all other
remedies at law and equity.
27. MODIFICATIONS TO BE IN WRITING.
All waivers, amendments or modifications of any term or
condition of this Agreement hereof shall be in writing signed by
both Buyer and Seller or by the party against whom such waiver is
sought to be enforced. No waiver by any party of any breach
hereunder shall be deemed a waiver of any other or subsequent
breach..
28. SURVIVAL.
Except as may be otherwise specified herein, any warranties
and representations made herein survive the closing of this
transaction for a period of nine (9) monthsone (1) year.
29. SUCCESSORS.
The terms, covenants and conditions of this Agreement shall
be binding upon and shall inure to the benefit of the heirs,
executors, administrators and assigns of the respective parties
hereto.
30. ASSIGNMENT.
Buyer may not assign its rights hereunder to any party other
than its own affiliate or wholly owned subsidiary without the
prior written consent of the Seller, which consent shall not be
unreasonably withheld. Seller may assign its rights hereunder so
long as it covenants to remain responsible for the full
performance hereof through Close of Escrow.
31. CHOICE OF LAWS.
This Agreement shall be governed by the laws of the State of
California and any question arising hereunder shall be construed
or determined according to such law.
32. PUBLIC ANNOUNCEMENT OF SALE.
Except to the extent required by law, or as to either
party's consultants, attorneys, accountants, or agents, Buyer and
Seller agree that neither party shall issue any press release or
otherwise disclose the existence of this Agreement or any term
thereof to any third party, except upon prior written approval of
both Buyer and Seller. Each party, including any of their
respective agents, representatives or employees, shall use
diligent efforts to keep the contents of this Agreement and the
specific economic terms hereof confidential. This Section 32
shall survive any termination of this Agreement.
33. CONDITION OF PROPERTY.
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
Seller. Except as otherwise expressly provided in this
Agreement, the sale of the Property to Buyer is made on as "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.
34. COUNTERPARTS.
This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed an
original; such counterparts shall together constitute but one
agreement.
35. FACSIMILE SIGNATURES.
Buyer and Seller each (a) has agreed to permit the use,
from time to time and where appropriate, of telecopied signatures
in order to expedite the transaction contemplated by this
Agreement, (b) intends to be bound by its respective telecopied
signature, (c) is aware that the other party will rely on the
telecopied signature, and (d) acknowledges such reliance and
waives any defenses to the enforcement of the documents and
notices effecting the transaction contemplated by this Agreement
based on the fact that a signature or notice was sent by
telecopy.
36. MEANING OF TERMS.
When necessary herein, all terms used in the singular
shall apply to the plural and vice versa; and all terms used in
the masculine shall apply to the neuter and feminine genders.
37. SECTION HEADINGS.
The headings of the several paragraphs of this
Agreement are inserted solely for convenience of reference and
are not a part of and are not intended to govern, limit or aid in
the construction of any term or provision hereof.
38. FURTHER ASSURANCES ON OR AFTER CLOSING.
Each party hereto agrees to do all acts and things and
to make, execute and deliver such written instruments as shall be
reasonably necessary to carry out the terms and provisions of
this Agreement. This covenant of further assurances shall
survive Closing.
39. FURTHER ASSURANCES PRIOR TO CLOSING.
Seller and Buyer shall, prior to Closing, execute any
and all documents and perform any and all acts reasonably
necessary, incidental or appropriate to effect the purchase and
sale and the transactions contemplated in this Agreement.
40. OTHER PARTIES.
Nothing in this Agreement shall be construed as giving
any person, firm, corporation and other entity, other than the
parties hereto, their successors and permitted assigns, any
right, remedy or claim under or with respect to this Agreement or
any provision hereof.
41. NO SOLICITATION.
Seller agrees that upon its execution of this Agreement
neither it nor its agents or employees will, prior to the
expiration of the Contingency Period, enter into any binding
agreement with any third party with respect to a sale or transfer
of the Property or any part thereof, except an agreement which is
contingent upon the termination of this Agreement, and, after the
expiration of the Contingency Period, enter into any binding or
non-binding agreement with any third party with respect to the
Property or any part thereof until such time, if any, that this
Agreement is terminated.
42. WAIVER OF JURY TRIAL.
SELLER AND BUYER, TO THE EXTENT THEY MAY LEGALLY DO SO,
HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR
WITH RESPECT TO THIS AGREEMENT, OR IN ANY WAY CONNECTED WITH, OR
RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE PARTIES HERETO
WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO
OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE. TO THE EXTENT THEY MAY LEGALLY DO SO, SELLER AND
BUYER HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF
ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A
JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS
OR THEIR RIGHT TO TRIAL BY JURY.
43. SELLER'S EXCULPATION.
Neither the Seller nor any officer, director, shareholder,
trustee, agent or representative of the Seller shall be held to
any personal liability hereunder, nor shall resort be had to
their private property for satisfaction of any claim hereunder or
in connection with the affairs of the Seller, and only the
Property herein and the sales proceeds related thereto (up to a
maximum of $400,000.00 for each of the First Property and the
Seccond Property) shall be liable for satisfaction of any such
claim. This limitation shall extend to any agreement, covenant,
assignment, assumption or action made, delivered, executed or
done under or in connection with this Agreement. The provisions
of this Section 18 shall survive the termination of this
Agreement and the Closing.
IN WITNESS WHEREOF, Buyer and Seller have executed this
Agreement as of the date first above written.
BUYER: SELLER:
ARDEN REALTY LIMITED PARTNERSHIP, BEDFORD PROPERTY INVESTORS, INC.,
a Maryland limited partnership a Maryland corporation
By:/s/ Victor J. Coleman By:
By: Victor J. Coleman By:
Amendment to Agreement of Purchase & Sale
And Escrow Instructions
This Amendment to Agreement of Purchase & Sale and
Escrow Instructions ("Amendment") dated for reference
purposes as of June 13, 1997, is made by and between BEDFORD
PROPERTY INVESTORS, INC., a Maryland corporation ("Seller")
and ARDEN REALTY LIMITED, a Maryland limited partnership
("Buyer") as an Amendment to that Agreement of Purchase &
Sale and Escrow Instructions between Buyer and Seller for
1000 Town Centre, Oxnard, California and Mariner Court, 3625
Del Amo Blvd., Torrance, California, dated May 13, 1997 (the
"Agreement"). All capitalized terms shall have the same
meaning as set forth in the Agreement. The parties wish to
amend the Agreement in certain respects, as set forth below:
NOW, THEREFORE, in exchange for the mutual
considerations set forth herein, the parties agree to amend
the Agreement as follows:
1. The Closing Date, previously set by notice from
Seller to Buyer under Sections 1.6 and 4 of the Agreement as
July 1, 1997, is hereby extended to July 31, 1997; provided
that the Initial Deposit amount provided for in Paragraph 2,
below, and the Increased Deposit are delivered to Seller by
5:00 p.m., June 16, 1997.
2. The Initial Deposit of Two Hundred Fifty Thousand
Dollars ($250,000.00) shall be non-refundable as of 5:00
p.m. June 13, 1997, except as provided below. The Initial
Deposit shall be increased to a total of Five Hundred
Thousand Dollars ($500,000.00) by delivery of the additional
sum of Two Hundred Fifty Thousand Dollars ($250,000.00) by
Buyer to Escrow Holder on June 16, 1997 and, on that date,
the entire Initial Deposit ($500,000.00) shall be released
to Seller to be either wired by Escrow Holder to Seller so
as to be received by Seller or picked up by Seller from
Escrow Holder, prior to 5:00 p.m. that day. The entire
Initial Deposit shall be nonrefundable, except in the event
of a default by Seller or failure of a condition to the
Agreement contained in Section 11 (Title) or 14 (Conditions
Precedent to Buyer's Obligation to Close Escrow). Buyer
shall also deliver the Deposit Note (the "Increased
Deposit") to Escrow Holder on or before June 16, 1997, which
Deposit Note shall be held under Section 3 of the Agreement
(nonrefundable, subject only to the satisfaction of the
remaining conditions of Closing).
3. Upon release of the Initial Deposit and its
Delivery to Seller, until Close of Escrow or termination of
this Agreement under its terms, Seller shall not enter into
any new lease of any portion of the Property without first
obtaining Buyer's approval.
4. Buyer hereby gives Seller notice of its election
not to give a Termination Notice under the provisions of
Section 7 of the Agreement and Buyer hereby waives its right
to terminate this Agreement, with respect to the
contingencies set forth in Section 6, only, as provided
under said Section 7.
5. Section 14.2 of the Agreement shall be amended to
provide that the Tenant Estoppels shall not be required to
be dated within thirty (30) days of the Closing Date, as
above extended, but rather shall be dated not earlier than
May 31, 1997.
6. Except as set forth above, all provisions of the
Agreement shall remain in full force and effect.
7. This Amendment may be executed in counterparts,
and a fully executed set of counterparts shall constitute a
single instrument. A facsimile transmitted copy of an
executed original hereof shall be as effective as the
original signed document.
BEDFORD PROPERTY INVESTORS, ARDEN REALTY LIMITED, a
INC., a Maryland corporation Maryland Partnership
By:/s/ Bob Pester By: /s/Victor J. Coleman
Title: Senior Vice President Title: President and COO
AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS
between
ECHO USA, INC.,
a Hawaii corporation
as Seller
and
Arden Realty Limited Partnership,
a Maryland limited partnership
as Buyer
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND JOINT
ESCROW INSTRUCTIONS ("Agreement") dated as of the 8th day of
April, 1997 is by and between Echo USA, Inc., a Hawaii
corporation ("Seller"), and Arden Realty Limited
Partnership, a Maryland limited partnership ("Buyer").
Capitalized terms used in the Recitals below, not otherwise
defined therein, shall have the meanings ascribed to them in
Section 1 of this Agreement.
R E C I T A L S
WHEREAS, this Agreement is made and entered into
with reference to the following facts:
WHEREAS, Seller is the owner of the Property. The
Property is leased to the successor to Toko Medical
Corporation on a triple net basis.
WHEREAS, Buyer desires to purchase, and Seller
desires to sell, the Property on the terms and conditions
set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing
recitals, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
Buyer and Seller agree as follows:
1. DEFINITIONS. For purposes of this Agreement,
the following terms shall have the following meanings:
1.1 "Appurtenances" means all rights,
privileges and easements appurtenant to the Land, including,
without limitation, all minerals, oil, gas and other
hydrocarbon substances in, on and under the Land, as well as
all development rights, air rights, water, water rights and
water stock relating to the Land and any other easements
appurtenant to the Land.
1.2 "Assignment of Intangible Property"
means the Assignment of Intangible Property, to be duly
executed and delivered by Seller in accordance with
Section 4.1 of this Agreement, assigning to Buyer all of
Seller's right, title and interest, if any, in and to the
Intangible Property. The Assignment of Intangible Property
shall be in the form of, and upon the terms contained in,
Exhibit "B".
1.3 "Assignment of Lease" means the
Assignment of Lease, to be duly executed and delivered by
Seller in accordance with Section 4.1 of this Agreement,
assigning to Buyer all of Seller's right, title and interest
in and to the Lease. The Assignment of Lease shall be in
the form of, and upon the terms contained in, Exhibit "C".
1.4 "Bill of Sale" means the Bill of Sale,
to be duly executed and delivered by Seller in accordance
with Section 4.1 of this Agreement, conveying to Buyer all
of the Personal Property. The Bill of Sale shall be in the
form of, and upon the terms contained in, Exhibit "D".
1.5 "Closing" means the consummation of the
conveyances of the Property, the Lease and the other
transactions contemplated under this Agreement, all of which
shall occur on or before the Closing Date.
1.6 "Closing Date" means June 30, 1997,
unless otherwise mutually agreed to in writing by Buyer and
Seller or extended pursuant to the terms of this Agreement.
1.7 "Code" means the United States Internal
Revenue Code of 1986, as amended.
1.8 "Deed" means the Grant Deed, to be duly
executed, acknowledged and delivered in recordable form by
Seller in accordance with Section 4.1 of this Agreement,
conveying to Buyer good and marketable fee simple title to
the Real Property. The Deed shall be in the form of, and
upon the terms contained in, Exhibit "E".
1.9 "Deposit" means the sum of One Hundred
Thousand Dollars ($100,000.00) to be delivered within two
(2) business days after the mutual execution of this
Agreement by Buyer and Seller and delivery of the same to
Escrow Holder in accordance with Section 3.1 of this
Agreement.
1.10 "Due Diligence Period" means the period
commencing on the date this Agreement is executed and
delivered by both Buyer and Seller and ending at 6:00 p.m.
(California time) on the date which is thirty (30) days
following the date that an escrow is opened with Escrow
Holder for the consummation of the transaction contemplated
hereby.
1.11 "Escrow Holder" means Chicago Title
Company, 700 Flower Street, Suite 920, Los Angeles,
California 90017, Attention: Frank Jansen.
1.12 "Fixtures" means all fixtures placed on,
attached to, or located at and used in connection with the
operation of, the Land and which are owned by Seller.
1.13 "Governmental Regulations" means any
local, state, and federal laws, ordinances, rules,
requirements, resolutions, policy statements and regulations
(including, without limitation, those relating to land use,
subdivision, zoning, environmental, labor relations,
notification of sale to employer, Hazardous Materials,
occupational health and safety, water, earthquake hazard
reduction and building and fire codes) bearing on the
construction, development, alteration, rehabilitation,
maintenance, use, operation, or sale of the Property.
1.14 "Hazardous Materials" means any
hazardous or toxic substance, material or waste which is or
becomes regulated by any local governmental authority, any
agency of the State of California or any agency of the
United States Government. The term "Hazardous Materials"
includes, without limitation, any material or substance
which (a) contains petroleum or any petroleum by-products,
(b) contains asbestos, (c) contains urea formaldehyde foam
insulation, (d) is designated as a "hazardous substance"
pursuant to Section 311 of the Federal Water Pollution
Control Act (33 U.S.C. 1317), (e) is defined as a
"hazardous waste" pursuant to Section 1004 of the Federal
Resource Conservation and Recovery Act, 42 U.S.C. 6901 (42
U.S.C. 6903), or (f) is defined as a "hazardous substance"
pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601
(42 U.S.C. 9601). Each reference to a statute or law in
this definition shall be deemed to include any amendments
thereto which are enacted from time to time.
1.15 "Intangible Property" means all of
Seller's right, title and interest in and to any and all
intangible personal property now and through the Closing
Date owned by Seller and used in connection with the
ownership, construction, development, use and/or operation
of the Real Property and/or Personal Property, including,
without limitation, the Service Contracts (to the extent
approved in writing by Buyer), the Licenses and Permits, the
Intellectual Property and the Records and Plans and the
Warranties.
1.16 "Land" means the real property located
at 1821 E. Dyer Road, Santa Ana, California, as legally
described in Exhibit "A".
1.17 "Lease" means the existing lease
relating to the Real Property, which Lease is listed on
Exhibit "F".
1.18 "Licenses and Permits" means all of
Seller's right, title, interests, privileges, benefits and
remedies in, to and under all authorizations, approvals,
permits, certificates of occupancy, licenses, agreements,
variances, tentative maps, final maps, plans and
specifications and land use entitlements held by Seller
and/or relating to the construction, reconstruction,
occupancy, operation or use of any part of the Real Property
or Personal Property (e.g., all building permits and
certificates and occupancy).
1.19 "Notice To Tenant" means the notice from
Seller to the tenant under the Lease whereby such tenant is
notified that the Property has been transferred by Seller to
Buyer and instructing it to pay any and all rents and other
sums payable under the Lease from and after the Closing
directly to Buyer or as otherwise directed by Buyer, in the
form of Exhibit "G".
1.20 "Personal Property" means all personal
property of Seller located on or in or used in connection
with the Real Property.
1.21 "Property" means the Real Property, the
Personal Property and the Intangible Property.
1.22 "Purchase Price" means the sum of Seven
Million Two Hundred Thousand Dollars ($7,200,000).
1.23 "Real Property" means the Land, the
improvements situated on the Land, the Fixtures and the
Appurtenances.
1.24 "Records and Plans" means (a) all books
and records maintained in connection with the ownership,
development, construction, maintenance or operation of the
Property, (b) all preliminary, final and "as-built" plans
and specifications respecting the Real Property, and (c) all
structural reviews, architectural drawings, and engineering,
soil, seismic, geologic and architectural reports, studies
and certificates and other documents pertaining to the Real
Property (including those which include comments by any
building or safety engineer, inspector or other person who
regularly makes such inspections) which are within the
possession of, under the control of, or reasonably available
to (without cost or expense) Seller.
1.25 "Service Contracts" means the management
agreement together with all supplements, amendments and
modifications thereto, relating to the management of the
Property, which is set forth on Exhibit "H" attached to this
Agreement.
1.26 "Tenant Estoppel" means the written
statement in the form of, and upon the terms contained in,
Exhibit "I", in favor of Buyer from the tenant which is a
party to the Lease, dated not earlier than fifteen (15) days
prior to the Closing Date.
1.27 "Title Company" means Chicago Title Company.
1.28 "Title Policy" means an ALTA owner's
title policy (Form B-1970) issued by the Title Company for
the benefit of Buyer, which Title Policy shall have a
liability limit in the amount of the Purchase Price, shall
include those endorsements requested by Buyer and shall show
only those matters which constitute Permitted Exceptions
(defined below).
1.29 "Transferor's Certificate" means the
certificate, to be duly executed by Seller under penalty of
perjury and delivered by Seller in accordance with
Section 4.1 of this Agreement, certifying that Seller is not
a "foreign person" in accordance with the provisions of
Section 1445 of the Code and any similar provisions of
applicable state law. The Transferor's Certificate shall be
in the form of, and upon the terms contained in,
Exhibit "J".
1.30 "Warranties" means all third party
warranties and guarantees relating to the Property.
2. ESCROW. The purchase and sale of the
Property shall be consummated through an escrow at Escrow
Holder. As soon as reasonably practicable following the
mutual execution of this Agreement, but in no event later
than three (3) days after the date of this Agreement, the
parties shall deliver to Escrow Holder a fully executed
counterpart of this Agreement, which shall constitute its
escrow instructions. The parties shall execute such
additional escrow instructions, not inconsistent with this
Agreement, as Escrow Holder shall deem reasonably necessary
for its protection. In the event of any conflict between
this Agreement and any additional escrow instructions, the
terms of this Agreement shall govern.
3. AGREEMENT TO SELL; PURCHASE PRICE. Seller
agrees to sell to Buyer, and Buyer agrees to purchase from
Seller, the Property in accordance with the terms, and
subject to the conditions, of this Agreement. The Purchase
Price for the Property will be paid as follows:
3.1 Deposit. Within two (2) business days
after the execution of this Agreement by Buyer and Seller
and delivery of the same to Escrow Holder, Buyer will
deliver the Deposit to Escrow Holder to hold in trust.
Escrow Holder will invest the Deposit in an interest bearing
account with a responsible federally-insured institutional
lender approved by Buyer and Seller, and interest will be
for the account of Buyer except as otherwise provided in
this Agreement and will be credited against the Purchase
Price at Closing.
3.2 Balance of Purchase Price. The entire
balance of the Purchase Price (after taking into account the
adjustments described in Sections 10 and 11), shall be paid
to Seller, in immediately available funds, through Escrow
Holder, at Closing.
4. DELIVERIES AT CLOSING; CLOSING PROCEDURES.
The Closing will take place on the Closing Date. Buyer may
elect to close escrow on an earlier date by giving written
notice to Seller and Escrow Holder of its intent to close
escrow earlier at least five (5) days in advance of such
earlier date, but such notice shall not be binding upon
Buyer, and if Buyer is not in a position to close on the
earlier date, Buyer shall have until the Closing Date to
close.
4.1 By Seller. At least one (1) business
day prior to the Closing, Seller shall deliver or cause to
be delivered to Escrow Holder (unless otherwise indicated)
the following items, duly executed and, where appropriate,
acknowledged by Seller:
4.1.1 The Deed.
4.1.2 The Bill of Sale.
4.1.3 The Assignment of Intangible Property.
4.1.4 The Assignment of Lease.
4.1.5 The Notices to Tenant.
4.1.6 The Transferor's Certificate.
4.1.7 The Tenant Estoppels (to be delivered directly to Buyer).
4.1.8 All such further confirmations, satisfactions, releases,
approvals, consents and any and all such further instruments as may be
reasonably necessary,appropriate, expedient or proper in the reasonable
opinion of Title Company in order to issue the Title Policy.
4.2 By Buyer. At the Closing, Buyer will
deliver or cause to be delivered to Escrow Holder or the
Seller the following items, duly executed and, where
appropriate, acknowledged by Buyer:
4.2.1 The net balance of the Purchase
Price, to be paid in accordance with Sections 3.2 of this
Agreement, after deducting the Deposit plus any interest
accrued thereon, and after taking into account the
adjustments and cost allocations in accordance with Sections
10 and 11.
4.2.2 Counterparts of the Assignment of
Intangible Property and the Assignment of Lease.
4.3 By Buyer and Seller. Buyer and Seller
will each deposit such other instruments consistent with
this Agreement as are reasonably required to effectuate the
transactions contemplated under this Agreement.
4.4 Closing Procedures. Provided that
Escrow Holder has received the documents and funds
described in Sections 4.1 and 4.2 above and has not received
notice from any party hereto either that an agreement of
another party hereunder has not been performed, that a
condition set forth herein has not been satisfied or waived
or that this Agreement has terminated (by its terms or by an
election duly made hereunder), and further provided that the
issuance of, or an unconditional commitment to issue, the
Title Policy has been obtained, Escrow Holder is authorized
and instructed at 8:00 a.m. on the Closing Date to:
4.4.1 Record the Deed with the County Recorder of
Orange County, California.
4.4.2 Cause the Title Policy to be issued by the Title Company.
4.4.3 Deliver to Buyer: the Assignment of Lease, the Assignment of
Intangible Property, the Bill of Sale, the Transferor's Certificate, all
documents and items required to be delivered by Seller pursuant to
Sections 4.1 and 8.1.4 or any other provision of this Agreement, not
otherwise previously delivered directly to Buyer, all other
items deposited by Seller with Escrow Holder pertaining to
the Property, and any funds deposited by Buyer in excess of
the amount to be paid by Buyer under the terms of this Agreement.
4.4.4 Deliver to Seller: the Purchase
Price after taking into account the adjustments and cost
allocations in accordance with Sections 10 and 11, and the
Assignment of Lease and Assignment of Intangible Property
executed in counterpart by Buyer, and any other document
deposited by Buyer with Escrow Holder for delivery to Seller at the Closing.
4.4.5 Mail the Notice to Tenant to the tenant under the Lease by
certified mail, return receipt requested.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Seller's Representations and Warranties.
Seller makes the following representations and warranties to
Buyer, upon which warranties and representations Buyer has
relied and will continue to rely, all of which are true as
of the date of this Agreement and will be true and correct
as of the Closing:
5.1.1 Organization. Seller is duly
organized, validly existing and in good standing under the
laws of the State of Hawaii and is duly qualified to do
business in the State of California. The execution and
delivery of this Agreement and the other documents
contemplated this Agreement by Seller, and the performance
by Seller of the obligations under this Agreement and the
other documents contemplated in this Agreement (i) are
within the power of Seller; (ii) have been duly authorized
by all requisite corporate action; and (iii) will not
violate any provision of law, any order of any court or
agency of government, the charter documents of Seller or its
shareholders, or any indenture, agreement or any other
instrument to which Seller is a party. This Agreement and
each of the other documents described in this Agreement when
executed and delivered to Buyer, will constitute legal,
valid and binding obligations enforceable against Seller in
accordance with the terms of such documents.
5.1.2 Seller has full legal power and
authority to enter into and perform this Agreement in
accordance with its terms. The execution, delivery and
performance of this Agreement and all documents in
connection therewith are not in contravention of or in
conflict with any deed of trust, agreement or undertaking to
which Seller is a party or by which Seller or any of its
property, including the Property, may be bound or affected
following the Closing. The execution and delivery of this
Agreement and the performance by Seller of its obligations
hereunder require no further action or approval in order to
constitute this Agreement as a binding and enforceable
obligation of Seller, and all such actions have been duly
taken by Seller;
5.1.3 Seller is the owner of the Personal Property and has good
title thereto, free and clear of all liens, claims and security interests
whatsoever. Seller knows of no encroachments onto the Property or by the
improvements thereon onto any adjoining property except as
disclosed in the ALTA survey of the Property delivered to
the Buyer pursuant to Section 9.1.2 below;
5.1.4 Except as disclosed to Buyer
during the Due Diligence Period or as contained in the
materials delivered to Buyer during the Due Diligence
Period, Seller has no actual knowledge of any:
a. Governmental notification from any
governmental authority notifying Seller of any (a) violation
of any city, County, State, Federal, building, zoning, fire,
health code, regulation, ordinance or covenant, filed or
issued against the Property; and (b) impending or threatened
special assessments on the Property;
b. Existing, proposed or contemplated
plan to modify or realign any existing street or highway or
any existing, proposed or contemplated eminent domain
proceeding that would result in the taking of all or any
part of the Property;
c. Litigation or legal proceeding
pending or threatened in writing against Seller or the
Property that could reasonably be expected to materially and
adversely affect Seller's or Buyer's ability to perform
their respective obligations hereunder, or Buyer's use of
the Property for its existing purposes;
d. Storage or disposal on the
Property of any material amounts of toxic or hazardous
waste, material or substance, and Seller has received no
notice from any governmental authority requiring the removal
of any toxic or hazardous waste, material or substance from
the Property.
e. Lease, tenancy or other right of
occupancy or use for any portion of the Property under which
any party has a right to occupy the Property (other than
pursuant to the Lease).
f. Maintenance contract, equipment
lease, warranty or guaranty relating to the operation or
maintenance of the Property (other than Service Contracts).
5.2 Buyer's Representations and Warranties.
Buyer makes the following representations and warranties to
Seller upon which warranties and representations Seller has
relied and will continue to rely, all of which are true as
of the date of this Agreement and will be true and correct
as of the Closing:
5.2.1 Organization. Buyer is duly organized, validly existing
and in good standing under the laws of the State of Maryland and is
duly qualified to do business in the State of California. The execution
and delivery of this Agreement and the other documents
contemplated this Agreement by Buyer, and the performance by
Buyer of the obligations under this Agreement and the other
documents contemplated in this Agreement (i) are within the
power of Buyer; (ii) have been duly authorized by all
requisite partnership action and corporate action on the
part of all of its constituent corporate partners; and
(iii) will not violate any provision of law, any order of
any court or agency of government, the charter documents of
Buyer or its general partners, or any indenture, agreement
or any other instrument to which Buyer is a party. This
Agreement and each of the other documents described in this
Agreement when executed and delivered to Buyer, will
constitute legal, valid and binding obligations enforceable
against Buyer in accordance with the terms of such documents.
6. SELLER'S OBLIGATIONS. Seller hereby
covenants to Buyer, upon which covenants Buyer has relied
and will continue to rely, that for the period from the date
of this Agreement through and including the Closing Date:
6.1 Further Liens and Encumbrances. Seller
will not subject the Property to any additional liens,
encumbrances, covenants, conditions, easements, rights of
way or similar matters after the date of this Agreement.
Seller will not hereafter modify, extend, renew, replace or
otherwise change any of the terms, covenants or conditions
of any of such documents, or enter into any new agreements
affecting the Property without the prior written consent of
Buyer, which consent may be withheld in Buyer's sole and
absolute discretion.
6.2 Lease; Other Contracts; Interim
Activities. Seller will not hereafter terminate, modify,
extend, renew, replace or otherwise change the Lease or
existing contracts or enter into new leases or contracts
affecting the Property except with the prior written consent
of Buyer, which consent (a) will not be unreasonably
withheld (with respect to any such action prior to the
expiration of the Due Diligence Period), and (b) may be
withheld in Buyer's sole and absolute discretion (with
respect to any such action after the expiration of the Due
Diligence Period). From and after the expiration of the Due
Diligence Period, Seller shall not apply for or otherwise
deal with any governmental authority regarding the
development, entitlement or subdivision of the Real Property
without the prior written consent of Buyer, which may be
withheld in Buyer's sole and absolute discretion.
6.3 Property Management and Operation.
Seller shall maintain the operation of the Property in a
good and business-like manner. Seller shall provide all
services and operate, manage and maintain the Property
(including mechanical equipment of every kind used in the
operation thereof) in such a manner that the Property shall
be in the same condition on the Closing Date as on the date
of this Agreement, ordinary wear and tear excepted. Without
limiting the foregoing, Seller shall perform all of its
obligations under the Lease and the Service Contracts.
6.4 Cooperation with Representatives.
Seller shall cooperate with Buyer and its accountants,
counsel and/or other representatives in providing
information and materials pertaining to the operation and
marketing of the Property, including access to the Property.
Without limiting the generality of the foregoing, from and
after the execution and delivery of this Agreement, Seller
shall allow a representative or representatives of Buyer
access to the Property for the purpose of (a) monitoring the
operation of the Property, (b) meeting with and interviewing
tenants of the Property, which tenants shall be made
available for such interviewing process, and (c) performing
such investigations and analyses of the Property as Buyer
may reasonably require.
6.5 No Removal of Personal Property. Seller
will not remove any of the Personal Property unless the
Personal Property so removed is simultaneously replaced with
substantially similar Personal Property of similar quality
or utilities.
6.6 Obtaining Estoppels and Consents.
Seller shall use its best efforts to obtain all written
consents from third parties required or reasonably requested
by Buyer or its accountants, counsel or other
representatives in connection with this Agreement,
including, without limitation, the Tenant Estoppel. Seller
hereby acknowledges and agrees that the obtaining of the
Tenant Estoppel is a condition precedent to Buyer's
obligations under this Agreement.
6.7 Service Contracts. Seller shall deliver
notices of termination to any vendors under the Service
Contracts which have been designated in writing by Buyer to
be terminated ("Disapproved Service Contract List") provided
that the Disapproved Service Contract List is delivered by
Buyer to Seller on or before the expiration of the Due
Diligence Period. Seller shall, within two (2) days
following the later of the expiration of the Due Diligence
Period or Buyer's delivery of the Disapproved Service
Contract List, deliver termination notices to each of the
vendors with respect to the Service Contracts so designated
by Buyer in the Disapproved Service Contract List. Seller
shall be solely responsible for all costs and expenses
associated with the termination of any of the Service
Contracts set forth by Buyer in the Disapproved Service
Contract List.
6.8 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.
6.9 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 "K" attached hereto, in connection with the normal
course of auditing the Property in accordance with generally
accepted auditing standards.
6.10 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.
6.11 For-Lease Signs. In the event the
tenant under the Lease exercises its right to terminate the
Lease, Seller shall promptly notify Buyer of such
termination election and Buyer shall thereafter have the
right to place a "For Lease" sign at the Property exhibiting
the Property for lease to prospective tenants.
7. TITLE TO REAL PROPERTY. At Closing, title to
the Real Property will be conveyed to Buyer by Seller by the
Deed, subject only to the following matters ("Permitted
Exceptions"):
7.1 matters of title respecting the Real
Property approved or deemed approved by Buyer in accordance
with this Agreement; and
7.2 matters affecting the condition of title
to the Real Property created by or with the written consent
of Buyer.
8. CONDITIONS PRECEDENT/CONCURRENT TO CLOSING; CLOSING DATE.
8.1 Buyer's Conditions. Buyer shall not be
required to close the transaction provided for under this
Agreement, unless and until Buyer deems that each and every
one of the following conditions has been fulfilled:
8.1.1 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 respects.
8.1.2 Seller's Deliveries. Seller shall
have duly and timely delivered to Buyer all of the items
described in Section 4.1 of this Agreement.
8.1.3 No Material Changes. At the
Closing, there will be no material adverse changes in the
physical or financial condition of the Property which were
discovered by Buyer after the Due Diligence Period.
8.1.4 Delivery of Pre-Closing Documents
and Agreements. Seller shall have delivered to Buyer on or
before the Closing Date the following (to the extent in
Seller's possession, control or otherwise reasonably
available [at no cost or expense] to Seller):
8.1.4.1 An original of the Lease;
8.1.4.2 Originals of all Records and Plans;
8.1.4.3 Originals of all Licenses and Permits; and
8.1.4.4 Originals of all Warranties.
8.1.5 Title Insurance. The Title
Company will have issued or have unconditionally and
irrevocably committed to issue the Title Policy to Buyer.
8.1.6 Due Diligence Approval. Buyer
shall have approved (or be deemed to have approved) all
matters to be reviewed in accordance with Section 9 of this Agreement.
9. DUE DILIGENCE PERIOD:
9.1 Matters To Be Reviewed. Buyer's
obligation to close the purchase of the Property and to pay
the Purchase Price shall be subject to and conditioned upon
Buyer's complete satisfaction with all of the following
items, each of which Buyer shall have the right to review
and approve or disapprove in Buyer's sole and absolute
discretion during the Due Diligence Period:
9.1.1 Title. Buyer will have until 6:00
p.m. (California time) on the expiration of the Due
Diligence Period to examine and approve all matters of title
and to notify Seller in writing of any defects in title.
Seller shall, at its sole cost and expense, within three (3)
days following the date this Agreement is executed and
delivered by Buyer and Seller, deliver to Buyer a current
preliminary title report issued by the Title Company and
relating to the Real Property, together with all underlying
documents relating thereto. If Buyer fails to notify Seller
in writing of any objections to title prior to the expira
tion of the Due Diligence Period, title to the Property
shall be conclusively deemed to be approved by Buyer. If
Buyer timely notifies Seller in writing of specific
objections to title prior to the expiration of the Due
Diligence Period, Seller will have three (3) business days
after receipt of Buyer's notification of any objection in
which to advise Buyer that:
9.1.1.1 Seller will remove any objectionable exceptions
on or before the Closing Date; or
9.1.1.2 Seller will not cause the exceptions to be removed.
If Seller advises Buyer that it will not
cause the exceptions to be removed, Buyer will have five (5)
days from its receipt of Seller's notice to elect to:
(i) proceed with the purchase
and acquire the Property subject to such exceptions, but
conditioned upon Seller fulfilling each and every one of its
other obligations hereunder and all of the other conditions
precedent in favor of Buyer having been duly and timely
satisfied; or
(ii) terminate this Agreement by
written notice to Seller, in which case the Deposit, and any
interest thereon, will be immediately returned to Buyer
without further instructions from Seller, and all rights and
obligations of the parties existing hereunder shall
terminate and be of no further force or effect, except any
rights and obligations which are expressly stated to survive
the termination of this Agreement.
If Buyer does not give Seller written
notice of its election within said five (5) day period,
Buyer will be conclusively deemed to have elected to
terminate this Agreement as described in (ii) above.
If Seller commits to remove any
objection to title and fails to do so by the Closing Date,
Seller will be in material default under this Agreement and
Buyer may, at Buyer's election, terminate this Agreement and
pursue its remedies as set forth in Section 14 of this
Agreement.
9.1.2 Inspections and Studies. Buyer
will have until 6:00 p.m. (California time) on the
expiration of the Due Diligence Period to conduct (as
applicable) and review and approve any and all inspections,
investigations, tests, studies (including feasibility
studies and other economic models) and appraisals as Buyer
may have elected to make or obtain with respect to the
Property and/or the operation and financial condition of the
Property, including, without limitation, financial analyses
of the books and records, environmental inspections and
studies, structural and mechanical investigations,
appraisals, and analyses of the Property's compliance with
Governmental Regulations. Buyer and Buyer's
representatives, agents and designees will have the right to
enter the Property at all reasonable times, upon reasonable
oral notice to perform all such investigations of the
Property, and to conduct interviews with (i) tenants of the
Property, (ii) property management personnel of Seller, and
(iii) such other parties as Buyer may deem appropriate in
its sole discretion. Seller will cooperate with Buyer and
its representatives in that regard. Seller shall deliver to
Buyer at Seller's sole cost and expense, within five (5)
days (unless indicated otherwise below) following the date
this Agreement is executed and delivered by Buyer and
Seller, all information in Seller's possession or control
which is reasonably related to the Property, plus the
following items:
9.1.2.1 To the extent in Seller's possession, an ALTA "as-built"
survey of the Real Property prepared by a licensed surveyor;
9.1.2.2 The Lease and all
modifications or amendments and guaranties relating thereto;
all tenant correspondence and all current financial
statements of the tenant to the extent the same are in
Seller's possession or control; all contracts (including the
Service Contracts), agreements and management agreements;
all "operating statements" for the last three (3) calendar
years for the Property and a year-to-date operating
statement for the calendar year 1997, a balance sheet dated
no earlier than December 31, 1996; an income statement for
the last two (2) calendar years and a year-to-date income
statement for the calendar year 1997, each such statement to
be certified by Seller as being true, correct and complete
reports prepared by Seller in the ordinary course of
business; a cumulative general ledger for year-to-date 1997,
reports (including all environmental reports, soils reports,
surveys and plans and specifications affecting or relating
to the Property, and all modifications or amendments
thereto); all Records and Plans, Warranties, Licenses and
Permits and governmental approvals obtained or held by
Seller and relating to the development, construction,
operation, use or occupancy of any of the Property.
9.1.2.3 Reports of insurance
carriers, if any, insuring the Property during the period of
Seller's ownership of the Property and each portion thereof
respecting the claims history of the Property; insurance
certificates of Seller and tenants respecting the Property;
all correspondence, reports, and notices pertaining to the
existence of toxic or Hazardous Materials and/or waste at
the Property; all permits, reports, certificates and notices
pertaining to the existence, removal and/or decommission of
any and all storage tanks located on, at or underneath the
Property; all brokerage and commission agreements; all
agreements entered by Seller and Seller's affiliates
affecting the Property and/or income and cash flow to be
received from the Property that will survive the Closing;
tax bills and assessments for the current year and the three
(3) year period immediately preceding the current year; any
and all information in Seller's possession respecting the
creditworthiness of the tenant under the Lease at the
Property; all written reports respecting incidents of theft,
burglary or crimes attempted or committed at, on or to the
Property or other such incidents which are the subject of
litigation; and such other information reasonably requested
by Buyer of Seller in writing during the Due Diligence
Period.
9.1.3 Indemnity. Buyer agrees to
indemnify and hold Seller harmless from any and all
injuries, losses, liens, claims, judgments, obligations,
liabilities, costs, expenses or damages (including
reasonable attorneys' fees and court costs) sustained by
Seller to the extent same results from or arises out of any
inspections by Buyer or any of its representatives pursuant
to Section 9.1.2 above.
9.1.4 Insurance. Prior to any entry,
Buyer shall obtain, maintain and provide Seller, or shall
cause any consultant, contractor or other person entering
the Property to obtain, maintain and provide Seller, with
proof of comprehensive general liability insurance in the
amount of at least $1,000,000 combined, single limit
coverage, naming Seller as an additional insured.
9.2 Notice of Objections.
9.2.1 If Buyer fails to notify Seller in
writing of any objections to the items set forth in
Section 9.1.2 on or before the expiration of the Due
Diligence Period, Buyer shall be conclusively deemed to have
approved such items.
9.2.2 If Buyer notifies Seller in
writing of any objections to the condition of the Property
or any other matters relating to the Property and/or
operation or financial condition of the Property as set
forth in Section 9.1.2 on or before the expiration of the
Due Diligence Period, the parties will have five (5)
business days to agree upon a resolution of the
objection(s). If the parties cannot agree within the five
(5) business day period, then Buyer may terminate this
Agreement by delivering written notice to Seller (which
notice must be given within three (3) business days after
the expiration of the five (5) business day period), in
which event the Deposit and any interest accrued thereon
will be returned to Buyer, and all rights and obligations of
the parties existing hereunder shall terminate and be of no
further force or effect, except any rights and obligations
which are expressly stated to survive the termination of
this Agreement.
10. PRORATIONS. The following are to be prorated
as of the Closing Date, as follows:
10.1 Current Rent. Current rent under the
Lease shall be prorated as of the Closing Date, regardless
of whether such rent has been paid to Seller.
10.2 Rent Arrears. With respect to any rent
arrears arising under the Lease, Buyer shall pay to Seller
any rent actually collected that is applicable to the period
preceding the Closing Date, less reasonable collection
charges; provided, however, that it is hereby understood and
agreed that all rent collected by Buyer shall be applied
first to unpaid rent accruing after the Closing Date, and
then, only after all such past due rent has been collected,
to unpaid rent accruing prior to the Closing Date.
10.3 Security Deposits. The security deposit
paid by the tenant pursuant to the Lease, and any interest
required to be paid thereon, shall be fully credited to
Buyer at Closing.
10.4 Other Prorations. Liability for all
real property taxes, common area maintenance, Property
operation expenses, and other recurring costs which are not
otherwise paid directly by tenants shall be prorated as of
the Closing Date; provided, however, Buyer shall not be
responsible for any costs or expenses pertaining to Service
Contracts or other items of expense which Buyer has not
approved in writing. Seller shall remain liable for any
supplemental taxes attributable to any period prior to the
Closing. If any such supplemental taxes shall be billed to
Buyer or levied against the Property after the Closing, then
Seller agrees to pay its prorated share thereof to Buyer
within thirty (30) days of demand therefor by Buyer. Any
such sums not paid when due may be advanced by Buyer, and
such amounts shall bear interest from the date of advance by
Buyer until paid by Seller at the maximum contract rate
permitted by law.
10.5 Preliminary Closing Adjustment. Seller
and Buyer shall jointly prepare a preliminary closing
adjustment computation on the basis of the Lease and other
sources, and shall deliver such computation to the Escrow
Holder prior to Closing.
10.6 Post-Closing Reconciliation. All items
described in this Section 10 that are capable of being
prorated as of the Closing Date, shall be prorated as of the
Closing Date. All other items shall be reconciled within
one hundred eighty (180) days after the Closing Date to the
extent that such items may be reconciled within such one
hundred eighty (180) day period, or, to the extent such
items may not be reconciled within such one hundred eighty
(180) day period, when such items may first be reconciled
after Closing.
10.7 Survival. The provisions of this
Section 10 shall survive Closing.
11. COSTS AND EXPENSES. The closing costs shall
be allocated as follows:
11.1 Buyer. Buyer shall pay all premiums for
the Title Policy, Buyer's share of prorations, all state and
county transfer taxes, all sales taxes, any other tax or
assessment imposed as a result of the transactions
contemplated under this Agreement, and any document
recording charges and notary fees, including, without
limitation, any recording fees and notary charges with
respect to the Deed.
11.2 Other Closing Costs. Buyer shall pay
all escrow fees but each party will pay their own legal and
professional fees and fees of other consultants incurred by
Buyer and Seller, respectively. Seller shall be responsible
for its share of prorations.
11.3 Delivery of Possession. Simultaneously
with the Closing, Seller shall deliver possession and
enjoyment of the Property to Buyer and Buyer shall thereupon
have the immediate right to possess, develop, use, sell,
encumber and/or transfer the Property, or any part thereof
for its own account to the total exclusion of Seller.
12. AS-IS. Except as specifically set forth in
this Paragraph and the representations set forth in
Paragraph 5 above, the sale of the Property hereunder is and
will be made on an "as is" basis, without representations
and warranties of any kind or nature, express, implied or
otherwise, including but not limited to, any representation
or warranty concerning title to the Property, the physical
condition of the Property (including, but not limited to,
the condition of the soil or the improvements) , the
environmental condition of the Property (including, but not
limited to, the presence or absence of hazardous substances
on or respecting the Property) , the compliance of the
Property with applicable laws and regulations (including,
but not limited to, zoning and building codes or the status
of development or use rights respecting the Property), the
financial condition of the Property or any other
representation or warranty respecting any income, expenses,
charges, liens or encumbrances, rights or claims on,
affecting or pertaining to the Property or any party
thereof. Buyer acknowledges that Buyer will examine, review
and inspect all matters which in Buyer's judgment bear upon
the Property and its value and suitability for Buyer's
purposes, and Seller shall cooperate with Buyer in making
such information available to Buyer for such examination.
Except as to matters specifically set forth in this
Paragraph and the representations set forth in Paragraph 5
above, Buyer will acquire the Property solely on the basis
of its own physical and financial examinations, reviews and
inspections and the title insurance protection afforded by
the Title Policy.
13. CONDEMNATION AND DESTRUCTION:
13.1 Eminent Domain or Taking. If
proceedings under a power of eminent domain relating to the
Property or any part thereof are commenced prior to the
Closing Date, Seller shall promptly inform Buyer in writing.
13.1.1 f such proceedings involve the
taking of title to all or any Material (defined below)
interest in the Property, Buyer may elect to terminate this
Agreement by notice in writing sent within thirty (30) days
of Seller's written notice to Buyer, in which case the
Deposit, and any interest thereon, will be returned to Buyer
and neither party shall have any further obligation to or
rights against the other except any rights or obligations of
either party which are expressly stated to survive
termination of this Agreement.
13.1.2 If the proceedings do not involve
the taking of title to all or a Material interest in the
Property or if Buyer does not elect to terminate this
Agreement, this transaction will be consummated as described
in this Agreement and any award or settlement payable with
respect to such proceeding will be paid or assigned to Buyer
upon the Closing.
13.1.3 For purposes of this Section 13.1,
"Material" shall mean a taking which Buyer reasonably
determines materially and adversely affects the value or
operations of the Property.
13.2 Damage or Destruction. Except as
provided in this paragraph, prior to the Close of Escrow the
entire risk of loss of damage by earthquake, flood,
hurricane, landslide, fire or other casualty is borne and
assumed by Seller. If, prior to the Closing Date, any part
of the Property is damaged or destroyed by earthquake,
flood, landslide, fire or other casualty, Seller will
promptly inform Buyer of such fact in writing and advise
Buyer as to the extent of the damage.
13.2.1 If such damage or destruction is
Material (as defined below), Buyer has the option to
terminate this Agreement upon written notice to the Seller
given not later than thirty (30) days after receipt of
Seller's written notice to Buyer advising of such damage or destruction.
13.2.2 If this Agreement is so terminated, Buyer will be entitled to
the return of the Deposit together with any interest thereon.
13.2.3 If Buyer does not timely exercise
this option to terminate this Agreement, or if the casualty
is not Material, Seller will assign to Buyer all of Seller's
right, title and interest in and to any and all insurance
proceeds under Seller's insurance policies relating to such
damage or destruction, and shall reduce the Purchase Price
by the amount of the deductible and any other amount not
covered by insurance under such policies (including
reasonably anticipated post-Closing rental loss, except to
the extent covered by insurance, through to completion of
such repair and restoration resulting from such casualty),
and this transaction will close pursuant to the terms of
this Agreement.
13.2.4 For purposes of this Section 13.2,
"Material" is deemed to be any damage or destruction to the
Property where the cost of repair or replacement is
estimated to be more than 10% of the Purchase Price.
13.2.5 Survival. The provisions of this
Section 13 shall survive the Closing.
14. REMEDIES:
14.1 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 HEREOF, 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:
(i) BUYER MAY TERMINATE THIS
AGREEMENT, IN WHICH CASE SELLER 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
(ii) BUYER MAY BRING AN ACTION FOR
SPECIFIC PERFORMANCE AGAINST SELLER WITH RESPECT TO THIS
AGREEMENT BUT ONLY UNDER THE FOLLOWING CONDITIONS AND
CIRCUMSTANCES:
(a) 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;
(b) THE ACTION SHALL BE
COMMENCED, AND SERVICE OF PROCESS UPON SELLER MADE, NOT
LATER THAN FORTY-FIVE (45) DAYS AFTER SELLER'S DEFAULT; AND
(c) ALL OF THE ISSUES IN SUCH
ACTION, WHETHER 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.
14.2 Seller's Remedies. IF BUYER SHOULD FAIL
TO CONSUMMATE THIS AGREEMENT AS A RESULT OF BUYER'S DEFAULT
UNDER THE TERMS OF THIS AGREEMENT, THEN SELLER, AS ITS SOLE
AND EXCLUSIVE REMEDY, MAY TERMINATE THIS AGREEMENT BY
NOTIFYING BUYER THEREOF AND RECEIVE OR RETAIN THE DEPOSIT AS
LIQUIDATED DAMAGES. THE PARTIES AGREE THAT SELLER WILL
SUFFER DAMAGES IN THE EVENT OF BUYER'S DEFAULT ON ITS
OBLIGATIONS. ALTHOUGH THE AMOUNT OF SUCH DAMAGES IS
DIFFICULT OR IMPOSSIBLE TO DETERMINE, THE PARTIES AGREE THAT
THE AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF
SELLER'S LOSS IN THE EVENT OF BUYER'S DEFAULT. THUS, SELLER
SHALL ACCEPT AND RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES
BUT NOT AS A PENALTY. SELLER HEREBY ACKNOWLEDGES AND AGREES
SUCH LIQUIDATED DAMAGES SHALL CONSTITUTE SELLER'S SOLE AND
EXCLUSIVE REMEDY AND SELLER HEREBY WAIVES THE PROVISIONS OF
CALIFORNIA CIVIL CODE SECTION 3389 AND ANY OTHER APPLICABLE
EXISTING OR FUTURE LAW PERMITTING A CONTRACT TO BE ENFORCED
EVEN THOUGH DAMAGES ARE LIQUIDATED FOR ITS BREACH.
SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ
AND UNDERSTAND THE PROVISIONS OF THE FOREGOING PROVISION AND
BY THEIR INITIALS IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS
TERMS.
Seller: /s/ JM Buyer:/s/ VJC
15. RIGHT OF FIRST NEGOTIATION FOR 200 BAKER
STREET PROPERTY. If at any time after the closing of the
transaction contemplated herein and while Buyer continues to
own the Property, Seller elects to sell or market for sale
the 200 Baker Street Property (defined below), Seller hereby
grants to Buyer the right of first negotiation to purchase
the 200 Baker Street Property in accordance with the terms
of this Section 15. Seller shall notify Buyer in writing as
soon as Seller elects to sell or market for sale the 200
Baker Street Property. Within five (5) business days after
Buyer's receipt of such written notice from Seller, Buyer
shall have the right to notify Seller in writing that Buyer
is interested in negotiating with Seller for the purchase of
the 200 Baker Street Property. If Buyer fails to so notify
Seller, Seller may thereafter sell the 200 Baker Street
Property to any other entity on any terms and conditions.
If Buyer does so notify Seller, Buyer and Seller shall have
a thirty (30) day period following such notification during
which they shall each negotiate in good faith the terms of a
purchase and sale agreement for the sale of the 200 Baker
Street Property to Buyer. If Buyer and Seller fail to agree
upon the terms of a purchase and sale agreement within such
thirty (30) day period, Seller may thereafter sell the 200
Baker Street Property to any other person on any terms and
conditions. For purposes of this Section 15, the term
"200 Baker Street Property" shall mean that certain real
property and improvements situated thereon, located at 200
Baker Street, Costa Mesa, California, as more particularly
described on Exhibit "L" attached hereto.
16. BROKERAGE COMMISSIONS. Each party hereby
represents and warrants to the other that it has not
incurred any obligation to any third party for the payment
of any real estate commission, finder's fee or other like
sum in connection with the sale of the Property to Buyer,
and each party hereby agrees to indemnify and hold the other
party harmless from and against any and all claims, demands,
causes of action and costs, including attorneys' fees and
costs, made, brought or sought against or from the other
arising out of any agreement for the payment of a real
estate commission, finder's fee or other like sum entered
into between either party and a third party in connection
with the sale of the Property to Buyer.
17. NOTICE. All notices, requests, demands or
documents which are required or permitted to be given or
served hereunder shall be in writing and (a) delivered
personally, (b) delivered by a national overnight courier
(i.e., FedEx), or (c) transmitted by facsimile, addressed as
follows:
To Seller at: Echo USA, Inc.
c/o Fushimiya Co., Ltd.
4 F Nishi-Shinbashi Building
2-3, Nishi-Shinbashi 2-Chome
Minato-Ku, Tokyo, Japan 105
Attn: Jun Masuyama, President
Facsimile: (011) 81-3 3502 2512
with a copy to:
Kono Law Office
Kono Building - 7th Floor
1-23-9 Nishi-Shinbashi
Minato-Ku, Tokyo, Japan 105
Attn: Muneo Kono, Esq.
Facsimile: (011) 81-3 3592 0958
with a copy to:
Troy & Gould
1801 Century Park East
Sixteenth Floor
Los Angeles, California 90067
Attn: Kenneth Blumer, Esq.
Facsimile: (310) 201-4746
To Buyer at: Arden Realty Limited Partnership
9100 Wilshire Blvd., Suite 700 E
Beverly Hills, California 90212
Attn: Mr. Victor Coleman
Ms. Brigitta Troy
Facsimile: (310) 274-6218
with a copy to:
Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars, Tenth Floor
Los Angeles, California 90067
Attn: Scott M. Kalt, Esq.
Facsimile: (310) 203-0567
Notice shall be deemed to have been delivered only upon
actual delivery to the intended addressee in the case of
either personal, courier, or facsimile delivery. The
addresses for purposes of this paragraph may be changed by
giving written notice of such change in the manner provided
herein for giving notices. Unless and until such written
notice is delivered, the latest information stated by
written notice, or provided herein if no written notice of
change has been delivered, shall be deemed to continue in
effect for all purposes hereunder.
18. MISCELLANEOUS:
18.1 Survival. The representations and
warranties contained in this Agreement shall survive for a
period of twelve (12) months following the Closing Date.
18.2 Intentionally Omitted.
18.3 Parties in Interest. As and when used
herein, the terms, "Seller" and "Buyer" mean and include,
and this Agreement their respective successor and assigns
and shall be binding upon and inure to the benefit of, the
above-named Seller and Buyer and their respective successors
and permitted assigns.
18.4 Section Headings. The headings of
sections are inserted only for convenience and shall in no
way define, describe or limit the scope or intent of any
provision of this Agreement.
18.5 No Oral Modifications. This Agreement
may not be amended or modified except in writing executed by
all parties hereto.
18.6 Full Integration. Buyer and Seller each
acknowledge that there are no other agreements or representa
tions, either oral or written, express or implied, that are
not embodied in this Agreement, and this Agreement, the
Exhibits attached to this Agreement, and the Transfer
Documents, represent a complete integration of all the prior
and contemporaneous agreements and understandings and documents.
18.7 Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the parties hereto,
and their respective successors and assigns, and no other
party shall be a beneficiary hereunder.
18.8 Seller's Advice of Counsel. Seller
acknowledges that (a) Buyer has not made any representation
as to the Federal or State tax implications relating to the
transactions contemplated herein, (b) Seller has thoroughly
read and reviewed the terms and provisions of this Agreement
and the Exhibits attached hereto and is familiar with the
terms of this Agreement, (c) the terms and provisions
contained in this Agreement are clearly understood by Seller
and have been fully and unconditionally consented to by it,
(d) Seller has had full benefit and advice of counsel of its
own selection, in regard to understanding the terms, meaning
and effect of this Agreement, (e) the execution of this
Agreement and of the other documents executed pursuant to
this Agreement is done freely, voluntarily, with full
knowledge, and without duress, (f) in executing this
Agreement, Seller is relying on no other representations,
either written or oral, express or implied, made to it by
any other party to this Agreement, and the consideration
received by it under this Agreement has been actual and adequate.
18.9 Attorneys' Fees. If an action is
commenced by a party hereto resulting from a dispute with
respect to the transactions contemplated herein, the
prevailing party shall be entitled to recover its attorneys'
fees and costs from the other party in such action. As used
herein, the term "attorneys' fees" means attorneys' fees
whether or not litigation ensues and if litigation ensues
whether incurred at trial, on appeal, on discretionary
review or otherwise.
18.10 Governing Law. This Agreement will be
governed by, interpreted under, and construed and enforced
in accordance with the laws of the State of California, with
venue in the city and County of Orange, California. Each of
the parties hereto acknowledge and agree that the laws of
the State of California and the selection of venue in the
city and County of Orange were freely chosen by Buyer and Seller.
18.11 Confidentiality. Unless otherwise
agreed to in writing by Seller and Buyer, each party will
use reasonable efforts to keep confidential the terms of
this Agreement, the possible sale of the Property, and all
documents, financial statements, reports or other
information provided to, or generated by the other party
relating to the Property, and will use reasonable efforts to
not disclose any such information to any person other than
(a) those employed by Seller or Buyer; (b) those who are
actively and directly participating in the evaluation of the
Property and the negotiation and execution of this Agreement
or financing of the purchase of the Property; and
(c) governmental, administrative, regulatory or judicial
authorities in the investigation of the compliance of the
Property with applicable legal requirements; and (d) third
parties as required under applicable law. The provisions of
this paragraph will survive the termination of this
Agreement other than by Closing.
18.12 Captions. The captions contained in
this Agreement are for convenience only and are not intended
to limit or define the scope or effect of any provision of
this Agreement.
18.13 Severability. The invalidity,
illegality or unenforceability of any provision of this
Agreement shall not affect the enforceability of any other
provision of this Agreement, all of which shall remain in
full force and effect.
18.14 Time of the Essence. Time is of the
essence of this Agreement and of the obligations required
hereunder.
18.15 Non-Waiver. No delay or failure by any
party to exercise any right hereunder, and no partial or
single exercise of any such right, shall constitute a waiver
of that or any other right, unless otherwise expressly
provided herein.
18.16 Facsimile. The parties hereto and their
respective successors and assigns are hereby authorized to
rely upon the signatures of each person and entity on this
Agreement which are delivered by facsimile as constituting a
duly authorized, irrevocable, actual, current delivery of
this Agreement with original ink signatures of each person and entity.
18.17 Further Assurances. Buyer and Seller
agree to execute all documents and instruments reasonably
required in order to consummate the purchase and sale
contemplated in this Agreement.
18.18 Joint and Several Liability. The
obligations of Seller under this Agreement and the other
documents executed pursuant to this Agreement shall be joint
and several.
18.19 Counterparts. This Agreement may be
executed in any number of counterparts and each such
counterpart shall be deemed to be an original, but all of
which, when taken together, shall constitute one Agreement.
Buyer and Seller have executed this Agreement as
of the date written above.
"SELLER"
ECHO USA, INC.,
a Hawaii corporation
/s/ Jun Masayaha
Name:Jun Masayaha
Title: President
"BUYER"
ARDEN REALTY LIMITED
PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc.,
a Maryland corporation,
its general partner
By:/s/ Victor J. Coleman
Victor J. Coleman
Its: President and COO
June 27, 1997
Echo USA, Inc.
c/o Fushimiya Co., Ltd.
4 F Nishi-Shinbashi Building
2-3, Nishi-Shinibashi 2-Chome
Minato-Ku, Tokyo, Japan 105
Attn; Jun Masuyama, President
RE: 1821 E. Dyer Road
Santa Ana, California
Dear Mr. Masuyama:
Reference is hereby made to that certain Agreement of
Purchase and Sale and Joint Escrow Instructions between you as
Seller and the undersigned as Purchaser ("Arden") regarding the
above-reference real property ("Property") and dated April 8,
1997 ("Agreement"). Capitalized terms not otherwise defined in
this letter shall have the meanings ascribed to them in the
agreement. Arden has requested that Seller extend the Closing
Date in accordance with such request upon the following terms and
conditions:
1. Closing Date. The Closing Date is extended until July 31,
1997; provided that upon five (5) days prior written notice to
seller, Arden shall have the right to designate an earlier date
as the "Closing Date" (provided such earlier date does not fall
on a Friday, Saturday, Sunday or state national holiday).
2. Deposit. Within one (1) business day following the date of
execution and delivery of this letter by all parties signifying
the parties' acceptance of the terms of this letter, Arden shall
increase the Deposit by a cash deposit to Escrow Holder in the
amount of One Hundred Thousand Dollars ($100,000.00).
3. Purchase Price. The Purchase Price shall be increased by
the product of (i) $1,000, multiplied by (ii) the number of the
days that have elapsed from July 1, 1997, until the Closing Date.
By way of example only, and not by way of limitations, if the
Closing Date occurs on July 20, 1997, the Purchase Price shall be
increased by $20,000 to equal $7,220,000.
4. Reaffirmation. Expect to the extend set forth above, Seller
and Arden hereby reaffirm and ratify the Agreement as amended
hereby.
June 27, 1997
Page 2
If the foregoing is in accordance with your understanding of
our agreement, please sign and return a copy of this Amendment
for our files.
Sincerely,
ARDEN REALTY LIMITED PARTNERSHIP,
By: Arden Realty, Inc.
Its general partner
By: /s/ Victor J. Coleman
Victor J. Coleman,
President & COO
Accepted and Agreed to
this 30th Day of June, 1997
Echo USA, Inc., a Hawaii corporation
By: /s/ Jun Masuyama
Name: Jun Masuyama
Title: Its President
cc: Brig Troy
Scott Kalt, Esq. (310) 203-0567
Marley Harrill (213) 891-0834
REAL ESTATE SALES CONTRACT
FOR THE PURCHASE AND SALE
OF
CROWN CABOT FINANCIAL CENTER
LAGUNA NIGUEL, CALIFORNIA
THIS REAL ESTATE SALES CONTRACT (the "Contract") is made and
entered into as of the ____ day of May, 1997, by and between
LEISURE COLONY MANAGEMENT CORP., a Florida corporation
("Seller"), and ARDEN REALTY LIMITED PARTNERSHIP, a Maryland
limited partnership, or its permitted assigns ("Buyer").
In consideration of the mutual terms, covenants,
conditions and agreements hereinafter contained and other
good and valuable consideration, it is hereby agreed by and
between the parties hereto as follows:
1. Sale of Property. Seller agrees to sell, convey,
assign, transfer and deliver to Buyer and Buyer agrees to
purchase, acquire and take from Seller the following
described property (the property described below sometimes
hereinafter being collectively called the "Property"):
A. All of Seller's right, title and interest in
and to that real property located in the City of
Laguna Niguel, County of Orange, and State of
California, more particularly described on Exhibit
"A" attached hereto and hereby made a part hereof,
together with all easements, rights-of-way,
hereditaments and appurtenances thereunto
belonging or in any way appertaining, and all
buildings and improvements situated thereon, if
any (hereinafter collectively called the "Subject
Premises").
B. All furniture, fixtures, equipment,
appliances and other items of personal property
owned by Seller and used in connection with the
operation of the Subject Premises and now located
upon the Subject Premises, if any.
C. Seller's interest in all leases, lease
guarantees and tenancies for the Subject Premises,
as well as any refundable security deposits made
by tenants of the Subject Premises, to be adjusted
for new deposits collected by Seller and deposits
refunded or paid by Seller.
D. All of Seller's right, title and interest, if
any, in and to any assignable licenses, permits,
service contracts, and all other contracts
affecting the Property.
E. All Seller's right, title and interest, if
any, in and to the non-exclusive business and
trade name "Crown Cabot Financial Center" under
which the Subject Premises have been managed and
operated.
2. Price. The purchase price to be paid by Buyer to
Seller for the Property shall be TWENTY-EIGHT MILLION TWO HUNDRED
TWENTY-FIVE THOUSAND DOLLARS AND NO/100 DOLLARS ($28,225,000.00)/s/VJC /s/
(hereinafter referred to as the ("Purchase Price"), payable as follows:
A. $ 500,000.00 cash in earnest money delivered
in escrow to Chicago Title Insurance Company (the
"Escrow Agent"), with an address at 700 South
Flower Street, Suite 900, Los Angeles, California
90017, acting as escrow agent, simultaneously with
the execution hereof by Buyer (such deposit, plus
all interest earned thereon, being hereinafter
referred to as the "Initial Earnest Money").
B. An additional $1,500,000.00 cash in earnest
money (the "Additional Earnest Money") shall be
delivered by Buyer to Escrow Agent on or before
5:00 p.m. PST on the last day of the "Inspection
Period" (as hereinafter defined in Paragraph 27)
unless Buyer shall have timely terminated this
Contract on or before the expiration of the
Inspection Period as provided in Paragraph 27
hereof.
C. The Initial Earnest Money and the Additional
Earnest Money are hereinafter sometimes
collectively referred to as the "Earnest Money".
All interest earned on the Earnest Money shall
become a part of the Earnest Money and shall be
disbursed in accordance with the provisions of
this Contract regarding Earnest Money. The
parties hereby agree that, pending the closing
hereunder, or the termination of this Contract,
the Earnest Money shall be deposited in an
interest bearing account or in such other
investment as the parties may mutually agree. The
Tax Identification Number of the Buyer
is_____________________. If the transaction
contemplated by this Contract is consummated in
accordance with the terms hereof, or is not
consummated due exclusively to the material
default of Seller hereunder, the Earnest Money
together with an amount (payable by Seller in
addition to, but inclusive of, any interest earned
thereon) sufficient to yield a cumulative return
thereon of 8% per annum, compounded montlhy, shall
be credited against the cash due on the Date of
Closing (as hereinafter defined) or returned to
Buyer in accordance with Paragraph 8 hereof and
other applicable provisions of this Contract. In
the event the transaction contemplated by this
Contract is not consummated in accordance with the
terms hereof for any reason other than the
aforesaid material default of Seller, the Earnest
Money together with the accrued interest derived
from the investment in the aforesaid interest
bearing account or other investment, shall be
delivered in accordance with Paragraph 8 hereof
and other applicable provisions of this Contract.
C. The balance of the Purchase Price, after a
credit for the Earnest Money and all interest or
other yield as provided for or set forth in
Paragraph 2.B above, shall be payable in cash by
federal wire transfer or other good federal funds
to be received by Seller on the Date of Closing
(as hereinafter defined) with such amount to be
increased or decreased by prorations and other
adjustments, if any, as provided herein.
3. Disclaimer of Warranties; "As-Is" Conveyance;
Inspection.
A. EXCEPT AS OTHERWISE SET FORTH IN THIS
CONTRACT, BUYER REPRESENTS, WARRANTS AND
ACKNOWLEDGES TO AND AGREES WITH SELLER THAT BUYER
IS PURCHASING THE PROPERTY IN AN "AS-IS" CONDITION
"WITH ALL FAULTS" AND SPECIFICALLY AND EXPRESSLY
WITHOUT ANY WARRANTIES, REPRESENTATIONS OR
GUARANTEES, EITHER EXPRESSED OR IMPLIED, OF ANY
KIND, NATURE, OR TYPE WHATSOEVER FROM OR ON BEHALF
OF SELLER. Except as otherwise set forth in this
Contract, Buyer acknowledges that Seller has
little or no direct knowledge concerning the
physical or economic characteristics of the
Property. Buyer acknowledges that Buyer has not
relied, and is not relying, upon any information,
document, sales brochures or other literature,
maps or sketches, projection, proforma, statement,
guarantee, representation or warranty (whether
expressed or implied, or oral or written, or
material or immaterial except as otherwise set
forth in this Contract) that may have been given
by or made by or on behalf of Seller.
B. Except as otherwise set forth in this
Contract, Buyer hereby acknowledges that it shall
not be entitled to, and should not, rely on Seller
or its agents as to (i) the quality, nature,
adequacy or physical condition of the Property
including, but not limited to, the structural
elements, foundation, roof, appurtenances, access,
landscaping, parking facilities or the electrical,
mechanical, HVAC, plumbing, sewage or utility
systems, facilities or appliances at the Property,
if any; (ii) the quality, nature, adequacy or
physical condition of soils, sub-surface support
or ground water at the Property; (iii) the
existence, quality, nature, adequacy or physical
condition of any utilities serving the Property,
or access thereto; (iv) the development potential
of the Property, its habitability, merchantability
or fitness, suitability or adequacy of the
Property for any particular purpose; (v) the
zoning classification, use or other legal status
of the Property; (vi) the Property's, or its
operations' compliance with any applicable codes,
laws, regulations, statutes, ordinances,
covenants, setback requirements, conditions or
restrictions of any governmental or quasi-
governmental entity or of any other person or
entity; (vii) the quality of any labor or
materials relating in any way to the Property; or
(viii) the condition of title to the Property or
the nature, status and extent of any right of way,
lease, right of redemption, possession, lien,
encumbrance, license, reservations, covenant,
condition, restriction or any other matter
affecting title to the Property.
C. EXCEPT AS OTHERWISE SET FORTH IN THIS
AGREEMENT, BUYER ACKNOWLEDGES TO AND AGREES WITH
SELLER THAT, WITH RESPECT TO THE PROPERTY, SELLER
HAS NOT, DOES NOT AND WILL NOT MAKE ANY WARRANTIES
OR REPRESENTATIONS, EXPRESSED OR IMPLIED, OR
ARISING BY OPERATION OF LAW, INCLUDING, BUT IN NO
WAY LIMITED TO, ANY WARRANTY OF CONDITION,
MERCHANTABILITY, HABITABILITY OR FITNESS FOR A
PARTICULAR USE, OR WITH RESPECT TO THE VALUE,
PROFITABILITY OR MARKETABILITY OF THE PROPERTY.
D. BUYER ACKNOWLEDGES THAT SELLER HAS NOT, DOES
NOT AND WILL NOT MAKE ANY REPRESENTATION OR
WARRANTY WITH REGARD TO COMPLIANCE WITH ANY
ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE
LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS
INCLUDING BUT NOT LIMITED TO, THOSE PERTAINING TO
THE HANDLING, GENERATING, TREATING, STORING OR
DISPOSING OF ANY HAZARDOUS WASTE, MATERIAL OR
SUBSTANCE. Without limiting the foregoing, Seller
does not make and has not made and specifically
disclaims any representation or warranty regarding
the presence or absence of any hazardous
substances, as hereinafter defined, at, on, under
or about the Property or the compliance or non-
compliance of the Property with the Comprehensive
Environmental Response, Compensation and Liability
Act, the Superfund Amendment and Reauthorization
Act, the Resource Conservation Recovery Act, the
Federal Water Pollution Control Act, the Federal
Environmental Pesticides Act, the Clean Water Act,
The Clean Air Act, any Federal, State or local so-
called "Superfund" or "Superlien Statute," or any
other statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating
to or imposing liability or standards of conduct
concerning any hazardous substances including the
laws, ordinances and regulations of the County of
Orange, the City of Laguna Niguel and the State of
California (collectively, the "Hazardous Substance
Laws"). The disclaimer set forth herein shall not
be affected or limited in any way by any
investigation conducted by Seller or any
contractor, agent or employee of Seller, or
delivery by Seller to Buyer of copies of any
environmental study or report prepared by any
environmental testing firm on behalf or at the
direction of Seller, Buyer or any other party.
Seller has not conducted any independent
investigation or verification of the contents of
any such study or report, and makes no
representation or warranty with respect to the
accuracy or completeness of the information
contained therein. For purposes of this Contract,
"hazardous substance" shall mean and include those
elements or compounds which are contained in the
list of Hazardous Substances adopted by the United
States Environmental Protection Agency and the
list of toxic pollutants designated by Congress or
the Environmental Protection Agency or under any
Hazardous Substance Laws. Hazardous substances
shall also include petroleum products and radon
gas. Buyer further acknowledges that neither
Seller, nor any broker(s), nor any agent(s) or
representative(s) of Seller has provided any
representation or warranty with respect to the
existence of asbestos or other hazardous substance
on the Property. Buyer shall have no recourse or
claim against Seller, any broker or any agent or
representative of Seller with respect to any loss
or damage claimed or suffered by any third party
arising from the condition of the Property, or
arising from the existence of any hazardous
substance on the Property based on events or
activities occurring or arising prior to September
28, 1995, the date on which Seller acquired title
to the Property, or after the Date of Closing.
The foregoing "As-Is" provisions shall constitute
a waiver and release of all claims by Buyer
against Seller, any broker or any agent or
representative of Seller, under all federal,
state, and local, laws, ordinances, rules and
regulations relating to environmental matters of
any kind which are attributable to activities or
events occurring or arising prior to September 28,
1995, the date on which Seller acquired title to
the Property, or after the Date of Closing.
E. Buyer acknowledges that Buyer has had and/or
will have, pursuant to this Contract, an adequate
opportunity to make such legal, factual and other
inquiries and investigation as Buyer deems
necessary, desirable or appropriate with respect
to the Property. Such inquiries and
investigations of Buyer shall be deemed to
include, but shall not be limited to, any leases
and contracts pertaining to the Property, the
physical components of all portions of the
Property, the existence of any wood destroying
organisms on the Property, such state of facts as
an accurate survey and inspection would show, the
present and future zoning ordinances, resolutions
and regulations of the city, county and state
where the Property is located and the value and
marketability of the Property. If Buyer elects
not to inspect the Property or to terminate this
Contract within the Inspection Period (as
hereinafter defined), Buyer acknowledges such
election will be made at Buyer's sole discretion,
in reliance solely upon the tests, analyses,
inspections and investigations that Buyer makes,
or had the right to make and opted not, or
otherwise failed, to make, and not in reliance
upon any alleged representation made by or on
behalf of Seller.
F. Except as otherwise set forth in this
Contract, Seller does not make and has not made
and specifically disclaims any representation or
warranty regarding the compliance or non-
compliance of the Property with the Americans With
Disabilities Act, or any other statute, law,
ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability or
standards of conduct concerning access and
accommodation for disabled persons.
G. Without in any way limiting the generality of
the preceding subparagraphs A through F, Buyer
specifically acknowledges and agrees that as to
all events or activities occurring or arising
prior to September 28, 1995, the date on which
Seller acquired title to the Property or after the
Date of Closing: (i) it hereby waives, releases
and discharges any claim it has, might have had or
may have against Seller with respect to the
condition of the Property, either patent or
latent, its ability or inability to obtain or
maintain building permits, either temporary or
final certificates of occupancy or other licenses
for the use or operation of the Property, and/or
certificates of compliance for the Property, the
actual or potential income or profits to be
derived from the Property, the real estate taxes
or assessments now or hereafter payable thereon,
the compliance with any environmental protection,
pollution or land use laws, rules, regulations or
requirements, and any other state of facts which
exist with respect to the Property, and (ii)
Buyer, on behalf of itself and its permitted
assigns, acknowledges and agrees that it
understands the meaning and effect of and waives
the benefit of, the principal set forth in Section
1542 of the California Civil Code or in any
similar rule of law in California. Section 1542
provides:
1542. General Release; Extent. A
general release does not extend to a claim
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.
H. Seller's Representations and Warranties.
Seller hereby represents and warrants to Buyer as
of the Effective Date and the Closing Date as
follows:
(i) Seller is a corporation organized under
the laws of the State of Florida, is qualified
to do business in the State of California;
(ii) Neither the execution nor the delivery of
this Contract, nor the consummation of the
purchase and sale contemplated hereby, nor the
fulfillment of or compliance with the terms
and conditions of this Contract conflict with
or will result in the breach of any of the
terms, conditions, or provisions of any
agreement or instrument to which Seller, or
any shareholder, partner, or related entity or
affiliate of Seller, is a party or by which
Seller, or any shareholder, partner or related
entity or affiliate of Seller, or any of
Seller's assets is bound.
(iii) To the best of Seller's knowledge,
all taxes (rental, real and personal) relating
to the Property have been paid; there are no
special assessments with respect to the
Property that are due and payable; and Seller
has no actual knowledge of any pending or
threatened assessments or condemnation
proceedings relating to the Property.
(iv) To the best of Seller's knowledge, there
are no outstanding suits, actions, or
proceeding relating to the Property.
(v) That Seller is not subject to any
commitment, obligation or agreement,
including, any right of first refusal or
option to purchase granted to a third party
which would or could prevent it from
completing the sale of the Property under this
Contract or which would bind Buyer subsequent
to consummation of this Contract.
(vi) Seller has not received any written
notice of any intention on the part of the
issuing authority to cancel, suspend or modify
or take any action or institute any proceeding
to effect such cancellation, suspension or
modification, of any permit, license or other
approval required by Seller from any
governmental or quasi-governmental authority
for the occupancy, operation, maintenance and
ownership of the Property.
(vii) To the best of Seller's knowledge
and belief, Seller has received no written
notice of any existing violations of any
federal, state, county or municipal laws,
ordinances, orders, codes, regulations or
requirements affecting the Property.
(viii) To the best of Seller's knowledge,
attached hereto as Exhibit "I" is a list of
all studies and reports within Seller's
possession or control addressing or evaluating
the environmental condition of the Property.
(ix) To the best of Seller's knowledge, (i)
the rent roll attached hereto as Exhibit "J"
(the "Rent Roll") accurately sets forth and
lists all leases (the "Leases") and all
tenants presently in possession or entitled to
possession of the Property, all security
deposits from such tenants currently in the
possession of the Seller, and the status of
the payment of all rents and other charges due
Seller from said tenants pursuant to the
Leases listed.
(x) Within five (5) days of the Effective
Date, Seller shall provide to Buyer a true and
accurate list of contracts for the management,
repair and/or operation of the Property and
Subject Premises (other than leases)
(collectively the "Contracts"), which list
shall then be deemed to be attached hereto as
Exhibit "K" and incorporated herein.
(xi) Within five (5) days of the Effective
Date, Seller shall provide to Buyer true and
correct copies of all Leases and amendments in
Seller's possession and that all of such
Leases are in full force and effect; that
there are no other documents or agreements
with respect to the tenants under the Leases
or regarding occupancy of the Property other
than the Leases; that, except as set forth in
the Leases, there are no rent concessions
given to any of the tenants except as set
forth on the Rent Roll, and all rental and
other payments due under such Leases, as of
the date thereof, have been paid in full;
that, except as set forth on the Rent Roll,
the tenants under such Leases are not, as of
the date thereof, in default thereunder; that
as of the date thereof, there are no
commissions or other fees payable to any
person, entity or agent with respect to the
execution of such Leases.
(xii) The Disclosure Materials (as herein
defined) contain all material documents,
instruments, correspondence and other writings
in Seller's possession relating to the
ownership and operation of the Property,
except for appraisals and internal memoranda
and documents related solely to Seller's
valuation of, and marketing efforts with
respect to, the Property.
(xiii) To the best of Seller's knowledge,
except as disclosed in the Disclosure
Materials there are no pending condemnation or
similar proceedings, existing contracts or
leases, violations of laws, ordinances or
regulations, pending actions, suits or
proceedings, or parties in possession that
would reasonably be expected to have a
material, adverse effect on the Property.
I. Seller's Obligations. Seller hereby
covenants to Buyer, upon which covenants Buyer has
relied and will continue to rely, that from the
Effective Date through and including the Closing
Date:
i. Seller will not subject the
Property to any additional liens,
encumbrances, covenants, conditions,
easements, rights of way or similar matters
or modify, extend, renew, replace or
otherwise change any of the terms, covenants
or conditions of existing agreements, or
enter into any new agreements, affecting the
Property without Buyers prior written
approval, after the expiration of the
Inspection Period (as herein defined). Prior
to the expiration of the Inspection Period
(as herein defined) Seller will not subject
the Property to any additional liens,
encumbrances, covenants, conditions,
easements, rights of way or similar matters
or modify, extend, renew, replace or
otherwise change any of the terms, covenants
or conditions of existing agreements, or
enter into any new agreements, affecting the
Property without providing prior written
notice of same to Buyer.
ii. From the Effective Date through the
end of the Inspection Period, Seller shall
promptly provide notice to Buyer of any new
lease affecting the Property or material
change in any of the Leases, including but
not limited to, any renewal, extension,
notice of default by Landlord or Tenant, or
termination of any lease term not provided
for in the subject lease. From the end of
the Inspection Period through the Date of
Closing, Seller shall not, without first
obtaining Buyer's prior written consent,
which consent shall not be unreasonably
withheld, conditioned or delayed, enter into
or effect any new lease affecting the
Property or material change to any of the
Leases. Buyer shall be deemed to have
consented to any proposed lease or lease
modification if it neither approves nor
rejects same within five (5) business of
receipt of Seller's request for same. Upon
Buyer's approval or deemed approval, Seller
shall be entitled to enter into such lease or
lease modification on Seller's standard lease
form, without material change, and Buyer will
be deemed to have assumed all expenses for
concessions, tenant improvement allowances
and/or brokerage commissions previously
disclosed to Buyer and included in such lease
or modification.
iii. From and after the expiration of
the Inspection Period, Seller shall not apply
for or otherwise deal with any governmental
authority regarding the development,
entitlement or subdivision of the Property
without prior written consent of Buyer, which
may be withheld in Buyer's sole and absolute
discretion.
iv. Seller shall maintain the Property
in a good and business-like manner. Seller
shall provide all services and operate,
manage and maintain the Subject Premises
(including mechanical equipment of every kind
used in the operation thereof) in such a
manner that it shall be in the same condition
on the Closing Date as on the Effective Date,
ordinary wear and tear excepted and subject
to the provisions of Paragraph 10 herein.
Without limiting the foregoing, Seller shall
perform all of its obligations under the
Leases and the Contracts.
v. Seller shall comply with all
statutes, ordinances, regulations, orders or
other laws with respect to the Property.
vi. Seller shall notify Buyer promptly
of any lawsuits, condemnation proceedings,
rezoning, or other governmental order or
action or any threat thereof known to Seller
which might affect the Property.
vii. Seller shall maintain in full force
and effect all existing insurance policies
insuring the Property and the Subject
Premises through and including the Closing
Date.
viii. Prior to or on the Closing
Date, Seller shall, at its sole cost and
expense, pay in full all outstanding
brokerage and leasing commissions, finders
fees or like sums pertaining to any and all
Leases (other than those approved or deemed
assumed by Buyer pursuant to Subparagraph
3.I.ii above.
ix. Seller shall cooperate with Buyer
and its accountants, counsel and/or other
representatives in providing information and
materials pertaining to the operation of the
Property, including reasonable access to the
Property.
x. Seller will not remove any of
personal property from the Subject Premises
unless the personal property so removed is
simultaneously replaced with substantially
similar personal property of similar quality
or utility.
xi. Seller shall deliver notices of
termination to any vendors under the
Contracts which have been designated in
writing by Buyer to be terminated
("Disapproved Contract List") provided that
the Disapproved Contract List is delivered by
Buyer to Seller on or before the expiration
of the Inspection Period. Seller shall
within two (2) days following the later of
the expiration of the Inspection Period or
Buyer's delivery of the Disapproved Contract
List, deliver termination notices to each of
the vendors with respect to the Contracts so
designated by Buyer in the Disapproved
Contract List.
xii. 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.
xiii. At Buyer's request at any
reasonable time from the Effective Date to
the date that is one (1) year from the
Closing Date, Seller shall, at Buyer's sole
cost and expense, provide to Buyer's
designated independent auditor access to
Seller's books and records regarding 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 and records are in Seller's
possession and control and relate to the
period during which Seller held title to the
Property. Further Seller agrees, on a one
time basis at Buyer's sole, reasonable cost
and expense, to provide a representation
letter regarding the books and records of the
Property, in substantially the form of
Exhibit "M" attached hereto, in connection
with the normal course of auditing the
Property in accordance with generally
accepted accounting standards.
"Disclosure Materials" means (i) the asset files of
Seller's servicer, Lennar Georgia Partners, Inc., maintained
in Atlanta, Georgia, which shall, within five (5) days of
the Effective Date be delivered to the Subject Premises and
made available to Buyer (the "Seller Files"), (ii) the files
maintained by Seller's property manager at the Property and
related to the maintenance and operation thereof, which will
be made available to Buyer (the "Property Manager Files"),
(iii) all schedules and exhibits attached to this Contract
and the other matters expressly set forth in this Contract,
(iv) all matters disclosed in the public records of the city
and county in which the Property is located, and (v) all
matters which would be revealed by an accurate survey or
physical inspection of the Property.
References in this Contract to "the best of Seller's
knowledge" and similar phrases shall be deemed to mean the
actual, subjective knowledge, without duty of inquiry and
without constructive knowledge, of Scott Werbel, Director of
Sales and Marketing, and John Charles, Asset Manager and
John Delaney, Property Manager. The foregoing
representations, warranties and obligations of Seller shall
be true, correct and fulfilled as of the Effective Date (as
herein defined) and the Date of Closing; and shall survive
beyond the Date of Closing for a period of nine (9) months.
4. Closing. The closing of the transaction (the
"Closing") contemplated hereunder shall take place on the
ninetieth (90th) day following the Effective Date (as
hereinafter defined) of this Contract, or the first business
day thereafter if the ninetieth (90th) day falls on a non-
business day, or such day prior thereto as may be mutually
agreed to by Buyer and Seller which day is herein referred
to as the "Date of Closing" or "Closing Date."
Notwithstanding the foregoing, in the event that Seller
elects to satisfy any title objections pursuant to the terms
of Paragraph 7 hereof and such objections have not been
satisfied prior to the Date of Closing, Seller shall have
the option to extend the Date of Closing for up to thirty
(30) days to attempt to satisfy such title objections.
A. On the Date of Closing, Seller shall execute
and deliver to Buyer the following documents:
i. A Grant Deed, in recordable form,
conveying title to the Subject Premises to
Buyer subject to the "Permitted Exceptions"
(as hereinafter defined). The form of Grant
Deed is attached hereto as Exhibit "B".
ii. A Bill of Sale, without warranty,
conveying the furniture, fixtures, equipment,
and personal property set forth in
Subparagraph 1(B) hereof. The form of such
Bill of Sale is attached hereto as Exhibit
"C".
iii. An assignment of Seller's interest
in and under all leases, lease guaranties,
and tenancies of the Property and of all
refundable escrow and security deposits (plus
any interest required to be paid thereon)
made by existing tenants, provided, however,
that Buyer shall assume all of Seller's
liabilities and responsibilities thereunder
arising on the Date of Closing and
thereafter. The form of the Assignment of
Seller's Interest in Leases and Assumption
Agreement is attached hereto as Exhibit "D".
iv. An assignment of Seller's interest
in any assignable licenses, permits, service
contracts, brokerage agreements and all other
contracts affecting the Property, and an
assumption by Buyer of all responsibilities
and liabilities thereunder arising on or
after the Date of Closing. The form of
Assignment of Licenses, Permits and Contracts
and Assumption Agreement is attached hereto
as Exhibit "E".
v. Such documents of Seller which
authorize the sale of the Property to Buyer
and the execution of all closing documents by
Seller as are required by the title insurance
company issuing the Title Commitment
described in Paragraph 7 hereof (the "Title
Insurance Company").
vi. An affidavit sufficient to cause
the Title Insurance Company issuing the Title
Commitment described in Paragraph 7 hereof to
remove the mechanic's lien exception as a
standard exception from its title policy. A
form of Seller's Affidavit of Title is
attached hereto as Exhibit "F".
vii. An affidavit sufficient to comply
with the non-foreign affidavit exemption to
the withholding requirement of Section 1445
of the Internal Revenue Code, as amended, and
Sections 18662 and 18668 of the Revenue and
Taxation Code of California. A form of
FIRPTA Affidavit is attached hereto as
Exhibit "G".
viii. Closing Statement.
ix. A notice to each of the tenants and
vendors in a form provided by Buyer advising
of the sale of the Property and directing the
tenants to make all future payments under the
leases, and directing the vendors to forward
all future invoices to Buyer at the address
designated in the notice.
x. Keys to all doors on any structures
and improvements situated on the Property,
and keys to all items of personal property
located on the Property, which keys shall be
properly tagged for identification.
B. On the Date of Closing, Buyer shall deliver
to Seller the following:
i. The Purchase Price calculated
pursuant to Paragraph 2 hereof.
ii. Assignment of Seller's Interest in
Leases and Assumption Agreement in the form
of Exhibit "D" hereto.
iii. An Assignment of Licenses, Permits
and Contracts and Assumption Agreement in the
form of Exhibit "E" attached hereto.
iv. Such documents as are necessary to
fully authorize the purchase of the Property
by Buyer and the execution of all closing
documents.
v. Closing Statement.
Buyer shall pay all recording costs in connection with
the transaction contemplated by this Contract, including one-
half of the escrow or disbursement fees and any survey costs
and Seller shall pay one-half of the escrow or disbursement
fees and any title insurance premiums and transfer taxes,
documentary stamps and any applicable surtax; provided,
however, that each party shall pay its own attorneys' fees.
All other costs associated with closing shall be apportioned
in the manner customary in Orange County, California. The
closing and delivery of all such documents shall take place,
in escrow, at the offices of Escrow Agent or at such other
place as may be mutually agreed to by the parties.
In the event that the transaction contemplated by this
Contract fails to close by the Date of Closing (as may be
extended by Seller for up to 30 days to attempt to satisfy
title objections), this Contract, and all of Buyer's rights
with respect to the acquisition of the Property, shall
terminate, and each party shall have the rights and remedies
set forth in Paragraph 8 hereof.
In addition to the foregoing deliveries to be made by
Seller on or before the Date of Closing, Seller shall
deliver, to the extent within Seller's possession of
control, the following items within two (2) days after the
Date of Closing:
A. Originals of all Leases and an updated Rent
Roll current as of Closing;
B. Originals or best evidence of all of the
Intangible Property (as defined in the Assignment
of Licenses, Permits and Contracts and Assumption
Agreement);
C. Final Certificates of Occupancy respecting
all premises at the Property, to the extent the
same are in Seller's possession or control;
D. Copies of any and all other written
contracts, agreements or documents and any other
matters affecting the Property as Buyer may
reasonably request;
E. All current real estate and personal property
tax bills for the Property; and,
F. The following information on both diskette
and hardcopy:
(i) Final income statement through Closing;
(ii) Final cumulative general ledger through
Closing; and
(iii) Final aged delinquency listing,
including all deposits held by Seller.
5. Taxes. All real estate taxes and assessments and
personal property taxes payable upon the Property shall be
prorated between Seller and Buyer for the tax year in which
the Closing is held on the basis of the tax statements for
such year; provided, however, that if tax statements for the
current year are not available as of the Date of Closing,
the tax proration between Seller and Buyer shall be made on
the basis of the taxes for the immediately prior tax year
(with a subsequent adjustment). Notwithstanding the
foregoing, if the tax assessment for the prior year is under
protest, then the closing tax proration shall be re-prorated
between Buyer and Seller at such time as there is a final
determination on such protest.
6.0 Income and Expenses.
6.1 All income and expenses of the Property incurred
by Seller shall be prorated on a daily basis (based upon
each party's respective days of ownership for such month in
which the closing occurs) between Seller and Buyer as of
12:01 a.m. of the Date of Closing or other such date as the
parties agree in writing (said date and time of proration
shall be referred to in this Paragraph 6 as the "Proration
Date").
6.2 Buyer shall receive all income from the Property
attributable to the period after the Proration Date and
shall be responsible for all expenses of the Property
attributable to the period after the Proration Date. Seller
shall be entitled to all income from the Property attributed
to the period up to and including the Proration Date and
shall be responsible for all expenses attributable to the
Property (including capital expenditures and tenant
improvement allowances not approved or deemed assumed by
Buyer pursuant to Subparagraph 3.I.ii herein) for the
Period prior to the Proration Date. Such items to be
prorated shall include:
A. Rents and income due for the month of
closing, if any;
B. Utility charges, if any (with Seller to use
its best efforts to have applicable utility
companies make final meter readings on the Date of
Closing);
C. Payments under service agreements, if any;
D. Periodic charges or fees assessed by any
governmental authority, if any; and,
E. Sanitary sewer taxes, if any.
6.3 The proration of rent shall include a proration of
all common area maintenance charges and all percentage rents
and in the event that such charges are not due and payable
prior to the Closing Date, the proration shall be based on
the previous period for which such charges were assessed
(with a subsequent adjustment). In the event that any
tenant is entitled to a refund arising from the overpayment
of common area maintenance charges, Seller shall pay its pro-
rata share of such refund.
6.4 Any escrow accounts held by any utility company
shall be either paid to Seller or, if assigned to Buyer,
Seller shall receive a credit at closing for any such
deposit.
6.5 Buyer shall use reasonable efforts to assist
Seller in collecting all accounts receivable (such efforts
not to include initiation of litigation), including accounts
receivable for rent, which are attributable to the period up
to and including the Proration Date and which remain
outstanding on the Date of Closing. If Seller or Buyer
receives any payment from a tenant with a past-due account,
said payment shall first be applied to current accounts then
due and then shall be paid to Seller to be applied to past
due accounts.
6.6 Seller shall cancel its insurance as of the
Proration Date, and Seller shall be entitled to any refund
or premiums prepaid thereon.
7. Title Examination and Survey. Buyer acknowledges
that Seller has provided to Buyer a commitment for the
issuance of a CLTA owner's policy of title insurance, in the
amount of the Purchase Price, issued by Chicago Title
Insurance Company (the "Title Commitment"). Subject to
Buyer's right to make title objections as hereinafter
provided, the exceptions shown on Schedule B of the Title
Commitment shall be deemed the "Permitted Exceptions" for
all purposes of this Contract. Those matters set forth in
the Title Commitment, together with any applicable zoning
ordinances, other land use laws and regulations together
with taxes for the current tax year not then due and payable
shall also be deemed Permitted Exceptions. Within five (5)
days after the Effective Date, Buyer shall be entitled to
deliver to Seller a written statement of any objections to
Seller's title. In objecting to Seller's title, Buyer shall
be obligated to act reasonably and agrees not to object to
easements of record and other matters which would not
materially affect the operation of the Property in its
present use. If Seller cures the objections, Buyer's
objections shall be deemed satisfied. If said objections
are satisfied on or before the Date of Closing (as the same
may be extended by Seller pursuant to the provisions of
Paragraph 4, above), Buyer shall be obligated to close
unless a later encumbrance shall be filed of record on or
before the Date of Closing. Seller shall have the same
right to cure said later encumbrance. If such later
encumbrance is satisfied, Buyer shall thereupon be obligated
to close. If any objections to title are not timely made or
if Seller is not properly notified in accordance with the
notice provisions of this Contract, all such objections
shall be deemed waived. Buyer agrees that Seller shall have
no obligation to satisfy any title objections, including but
not limited to, expending more than $25,000.00 in the
aggregate to remove mechanic's or materialman's liens
encumbering the Property or to obtain affirmative title
insurance. For purposes of this Contract, a title objection
shall be deemed cured if the title insurance company is
induced to remove the item objected to from the Title
Commitment such that it no longer appears as an exception
thereon. The rights of the parties with respect to any
uncured objections to title which are timely made and with
respect to which Seller has been properly notified shall be
governed by Paragraph 8, below.
In the event Buyer elects to have made a survey of the
Subject Premises, then any objections to title based upon
such survey shall be governed by the preceding paragraph.
Any such objections shall be due to Seller on the same date
as the title objections are due, and the failure to deliver
any such objections shall constitute a waiver thereof.
8. Default. If any objections to title are timely
made and Seller is properly notified, all as herein
provided, and if such objections are not cured prior to
the Date of Closing (as the same may be extended by Seller
pursuant to the provisions of Paragraphs 4 or 7, above),
or if Seller materially defaults in any of its obligations
hereunder, or if any conditions precedent to Buyer's
obligations as provided herein have not been met or have
not occurred or otherwise waived as of the Date of
Closing, Buyer may, as its sole remedies hereunder, by
serving notice in writing upon Seller in the manner
provided herein, either (i) elect to terminate this
Contract and to declare it null and void and receive a
refund of all Earnest Money deposited; or (ii) elect to
terminate this Contract, receive a refund of all Earnest
Money and seek actual damages, which damages would be
limited to Purchaser's actual and reasonable out of pocket
expenses not to exceed $200,000.00 or (iii) elect to waive
any such conditions, title objections, or defaults and to
consummate the transaction contemplated by this Contract
in the same manner as if there had been no title
objections, conditions or defaults without any reduction
in the Purchase Price and without any further claim
against Seller therefor; (iv) seek specific performance of
Seller's obligations, hereunder, except that the parties
hereto hereby agree that the remedy of specific
performance will not be applicable in situations where
there are outstanding title objections unless all said
title objections are waived by Buyer (except that Buyer
need not waive objections which Seller is obligated to
cure pursuant to Paragraph 7 herein) or (v) in the event
that the remedy of specific performance is not available
due to a default of Seller not reasonably discoverable and
not discovered by Buyer, despite Buyer's reasonable
diligence in such regard, until after the consummation of
the transaction contemplated by this Contract, Buyer shall
be entitled to seek actual damages, which damages shall be
limited to a maximum amount of $250,000.00.
IF BUYER SHALL DEFAULT IN THE PERFORMANCE OF ANY OF
ITS OBLIGATIONS HEREUNDER, SELLER SHALL BE ENTITLED TO
RETAIN COPIES OF ALL SURVEY, INSPECTION, EVALUATION AND
OTHER REPORTS ON THE PROPERTY PREPARED BY OR FOR BUYER AND
TO RETAIN THE EARNEST MONEY, TOGETHER WITH ALL INTEREST
EARNED THEREON, AS AND FOR ITS LIQUIDATED DAMAGES AND SOLE
REMEDY FOR SAID BREACH, AND NOT AS A PENALTY OR
FORFEITURE, ACTUAL DAMAGES BEING DIFFICULT OR IMPOSSIBLE
TO MEASURE, AND NO PARTY SHALL HAVE ANY FURTHER CLAIM
AGAINST EACH OTHER.
________________ /s/ VJC
Seller's initials Buyer's initials
Notwithstanding the foregoing provisions of this
Paragraph 8, and notwithstanding anything to the contrary in
this Contract, the following provisions of this Contract
shall survive any termination of this Contract for any
reason whatsoever or the closing of this Contract, and
remain in full force and effect: (i) the acknowledgments,
agreements, waivers and releases of Buyer and the
disclaimers of Seller set forth in Paragraph 3 of this
Contract; (ii) the indemnification obligations of Buyer and
Seller, as the case may be, set forth in Paragraph 11 of
this Contract; (iii) the indemnification obligations of
Buyer and Seller set forth in Paragraph 27 of this Contract;
and, (iv) the indemnification obligations of Buyer and
Seller set forth in Paragraph 29 of this Contract. No
limitation of remedies contained in this Paragraph 8 or
elsewhere in this Contract shall limit any and all rights
and remedies available to Buyer or Seller at law or in
equity in connection with the enforcement of any of the
obligations described in the preceding sentence.
9. Conditions To Close.
A. Seller's Conditions. Seller shall not be
obligated to proceed with the closing, nor make a
tender of the documents required to be delivered
by Seller on the Date of Closing pursuant to
Subparagraph 4 (A) or any other provision of this
Contract, unless and until each of the following
conditions has been fulfilled or waived in writing
by Seller:
i.Buyer shall be prepared to pay to Seller all
amounts to be paid to it on the Date of
Closing, pursuant to the provisions of this
Contract;
ii. Buyer shall be prepared to deliver to
Seller all instruments and documents to be
delivered to Seller on the Date of Closing,
pursuant to Subparagraph 4 (B) or any other
provision of this Contract; and
iii. This Contract shall not have been
previously terminated pursuant to any other
provisions hereof.
B. Buyer's Conditions. Buyer shall not be
required to close the transaction provided for
under this Contract, unless and until each and
every material one of the following conditions has
been fulfilled:
i. Representations, Warranties and
Covenants of Seller. Seller shall have duly
and timely performed each and every covenant
to be performed by Seller under this Contract
and the representations and warranties set
forth in this Contract shall be true and
correct as of the Closing in all material
respects. Provided, however, that in the
event Buyer discovers, or with reasonable
diligence should have discovered, prior to
the expiration of the Inspection Period (as
herein defined), a default, breach or
violation by Seller of any covenant,
representation or warranty of Seller, Buyer
shall be deemed to have forever waived such
default, breach or violation upon expiration
of said Inspection Period.
ii. Seller's Deliveries. Seller shall
have duly and timely delivered to Buyer all
of the items described in Section 4.A of this
Contract.
iii. No Material Changes. At the
Closing, there will be no material adverse
changes in the physical or financial
condition of the Property from those
discovered by Buyer during the Inspection
Period (defined below), subject, however, to
the provision of Paragraph 10 herein.
iv. Estoppel Certificates. Seller
shall have delivered to Buyer current
estoppel certificates in the form attached
hereto as Exhibit "L" (or such other form as
may be required by the respective tenants'
Lease), from tenants occupying at least 85%
of the total rentable square footage of the
Subject Premises (the "Estoppel
Certificate(s)"). Seller shall make a
reasonable good faith attempt to obtain
Estoppel Certificates from every tenant of
the Property. Should Seller not be able to
obtain Estoppel Certificates from every
tenant, Seller agrees to represent and
warrant to Buyer with respect to the items
contained in the Estoppel Certificates as to
those tenants from whom estoppels cannot be
obtained.
vi. Title Policy. Chicago Title
Insurance Company is prepared to mark the
Title Commitment and issue a title insurance
policy with liability limits equal to the
Purchase Price and with such endorsements as
may be reasonably acceptable to Buyer.
10. Damage, Destruction and Condemnation.
A. In the event that all or any substantial
portion of the Property shall be taken in
condemnation or under the right of eminent domain
before the Closing Date, Buyer may, at its option,
either (a) terminate this Contract by delivering
written notice thereof to Seller and receive an
immediate refund of the Earnest Money, or (b)
proceed to close the transaction contemplated
herein pursuant to the terms hereof, in which
event Seller shall deliver to Buyer at the
Closing, or as soon as available, any proceeds
actually received by Seller attributable to the
Property from such condemnation or eminent domain
proceeding, shall assign to Buyer any right it may
have to receive proceeds attributable to the
Property from such condemnation or eminent domain
proceeding, and there shall be no reduction in
the Purchase Price. For the purposes of this
provision, a "substantial portion" of the Property
shall be deemed to include any taking (i) equal to
or greater than 20% of the gross number of square
feet contained in the buildings and other
improvements that are situated on the Subject
Premises or (ii) which would result in any tenant
in the Subject Premises having the right under its
lease to terminate its lease or reduce its payment
of rent thereunder, and shall be deemed to exclude
all other takings.
B. In the event that all or any substantial
portion of the Property shall be damaged or
destroyed by fire or other casualty after the
Effective Date and before the Closing Date, Buyer
may, at its option, either (a) terminate this
Contract by written notice thereof to Seller and
receive an immediate refund of the Earnest Money,
or (b) proceed to close the transaction
contemplated herein pursuant to the terms hereof,
in which event Seller shall deliver to Buyer at
the Closing, or as soon as available, any
insurance proceeds actually received by Seller
attributable to the Property from such casualty
together with any deductible amount payable by
Seller or the reasonable repair costs in the event
such casualty is not insured, shall assign to
Buyer any right it may have to receive insurance
proceeds attributable to the Property from such
casualty (including any rental income insurance
proceeds), and there shall be no reduction in the
Purchase Price. For the purposes of this
provision, a "substantial portion" of the Property
shall be deemed to include any casualty loss
affecting a portion of the Subject Premises equal
to or greater than 20% of the gross number of
square feet contained in the buildings and other
improvements that are situated on the Subject
Premises and shall be deemed to exclude all other
casualty losses.
C. In the event a less than a substantial
portion of the Property shall be damaged or
destroyed by a casualty or taken in condemnation
or under the right of eminent domain before the
Closing Date or in the event the circumstances
specified in Paragraph 10A or 10B, above are
applicable and Buyer fails to give Seller proper
notice of termination, then the parties shall
proceed to close this transaction, any proceeds
actually received by Seller attributable to the
Property together with the amount of any
deductible payable by Seller under its insurance
policy or the reasonable repair costs in the event
such casualty is not insured, from such casualty,
condemnation or eminent domain and any right
Seller may have to receive proceeds attributable
to the Property from such casualty, condemnation
or eminent domain shall be delivered or assigned
to Buyer at closing or as soon as available, and
there shall be no reduction in the Purchase Price.
11. Broker's Commission. Seller shall pay
THE SEELEY COMPANY ("Broker") a broker's commission in
connection with this transaction and in accordance with a
separate written agreement, which commission shall only be
due in the event this transaction closes in accordance with
the terms hereof. Buyer represents to Seller that Buyer has
not been contacted by or dealt with any broker, finder or
intermediary of any kind in connection with this transaction
other than Broker. Seller represents to Buyer that Seller
has not been contacted by or dealt with any broker, finder
or intermediary of any kind in connection with this
transaction other than Broker. Buyer agrees to indemnify
and hold harmless Seller against and from all claims,
demands, causes of action, judgments and liabilities which
may be asserted or recovered for fees, commissions or other
compensation claimed to be due to any broker, finder or
intermediary with whom Buyer has dealt in connection with
this transaction other than Broker, including costs and
reasonable attorneys' fees incident thereto. Seller hereby
agrees to indemnify and hold harmless Buyer against and from
all claims, demands, causes of action, judgments and
liabilities which may be asserted or recovered for fees,
commissions or other compensation claimed to be due to any
broker, finder or intermediary with whom Seller has dealt in
connection with this transaction, including costs and
reasonable attorneys' fees incident thereto.
12. Assignment. Buyer shall not assign its rights,
duties or obligations under this Contract without the prior
written consent of Seller, which approval shall be at the
sole discretion of Seller.
13. Survival. The terms, covenants, conditions,
indemnities, representations, warranties, disclaimers and
agreements of this Contract shall survive and remain
enforceable after the Date of Closing, except as expressly
provided herein.
14. Notices. Any notice or election required or
permitted to be given or served by any party hereto upon any
other party shall be deemed given or served in accordance
with the provisions of this Contract when delivered or
mailed as follows: notices shall be personally delivered or
mailed in a sealed wrapper by United States registered or
certified mail, return receipt requested, postage prepaid or
delivered to a courier who guarantees overnight delivery,
properly addressed as follows:
In the case of notices directed to Seller:
Leisure Colony Management Corp.
c/o Lennar Partners, Inc.
NationsBank Plaza
600 Peachtree Street, Suite 3500
Atlanta, Georgia 30308
Attn: Scott Werbel
Fax: (404) 892-4450
with a copy to:
Michael E. Fincher, Esq.
Fincher & Associates, P.C.
NationsBank Plaza
600 Peachtree Street, Suite 3500
Atlanta, Georgia 30308
Fax: (404) 873-7932
If to Buyer:
Arden Realty Limited Partnership
c/o Arden Realty Inc.
9100 Wilshire Boulevard
Suite 700 East
Beverly Hills, California 90212
Attn: Victor Coleman
Fax: (310) 274-6218
with a copy to:
Jeffer, Mangels, Butler & Marmaro
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067
Attn: Scott M. Kalt, Esq.
Fax: (310) 203-0567
If to Escrow Agent:
Chicago Title Insurance Company
700 South Flower Street
Suite 900
Los Angeles, California 90017
Attn: Fran Butler
Each such notice or communication shall be deemed to
have been given to or served upon the party to which
addressed on the date the same is delivered, if personally
delivered, or on the day after it is deposited with a
courier service guaranteeing overnight delivery or two days
after deposit in the United States registered or certified
mail, return receipt requested, postage prepaid, properly
addressed in the manner above provided and upon receipt if
delivered via facsimile (provided that any original of such
notice is received by the addressee the next day via
overnight mail). Each such delivered notice or
communication shall be deemed to have been given to or
served upon the party to whom delivered upon the delivery
thereof in the manner above provided. Any party hereto may
change its address for the service of notice hereunder by
delivering written notice of said change to the other
parties hereunder, in the manner above specified, ten (10)
days prior to the Effective Date of said change.
15. Headings. The paragraph headings or captions
appearing in this Contract are for convenience only, are not
part of this Contract, and are not to be considered in
interpreting this Contract.
16. Entire Contract; Modification. This written
Contract constitutes the entire and complete agreement
between the parties hereto and supersedes any prior oral or
written agreements between the parties with respect to the
Property. It is expressly agreed that there are no verbal
understandings or agreements which in any way change the
terms, covenants, and conditions herein set forth, and that
no modification of this Contract and no waiver of any of its
terms and conditions shall be effective unless made in
writing and duly executed by the parties hereto.
17. Binding Effect. All covenants, agreements,
warranties, and provisions of this Contract shall be binding
upon and inure to the benefit of the parties hereto and
their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
18. Controlling Law. This Contract has been made and
entered into under the laws of the State of California, and
said laws shall control the interpretation hereof.
19. Effective Date. The "Effective Date" of this
Contract shall mean, and all references to the date of
execution of this Contract shall refer to, the date on which
the later of Buyer or Seller executes this Contract.
Submission of an unexecuted Contract by Seller shall not
constitute an offer by Seller, and Buyer acknowledges that
this Contract shall not be deemed to be a binding contract
unless and until it is fully executed by Buyer and Seller.
20. Time. Time is of the essence of this Contract and
the performance of the terms and conditions hereof.
21. Recordation Not Permitted. Except as may be
required pursuant to applicable regulations of the Security
and Exchange Commission, in no event shall this Contract or
any Memorandum hereof be recorded in the official or public
records where the Property is located, and any such
recordation or attempted recordation shall constitute a
default under this Contract by the party responsible for
such recordation or attempted recordation.
22. Condition of Property. Commencing upon the date
of this Contract and extending through the Date of Closing
hereunder, the Property shall remain in the same condition
as on the date hereof, except, however, for natural wear and
tear, condemnation, eminent domain, damage and destruction
due to casualties, acts of God and occurrences over which
Seller has no control and further subject to the provisions
regarding damage, destruction and condemnation set forth in
Paragraph 10, herein.
23. Attorneys' Fees. Should either Buyer or Seller
employ an attorney or attorneys to enforce any of the terms
and conditions hereof, or to protect any right, title, or
interest created or evidenced hereby, or to recover damages
for the breach of the terms and conditions hereof, the non-
prevailing party in any action pursued in a court of
competent jurisdiction shall pay to the prevailing party all
reasonable cost, damages, and expenses, including attorneys'
fees, expended or incurred by the prevailing party.
24. Waiver. Either Buyer or Seller may specifically
waive any breach of the terms and conditions hereof by the
other party, but no waiver specified in this Paragraph 24
shall constitute a continuing waiver of similar or other
breaches of the terms and conditions hereof. A waiving
party may at any time upon written notice to the breaching
party, direct future compliance with the waived terms and
conditions hereof, and the breaching party shall thereafter
comply as directed from such time forward. All remedies,
rights, undertaking, obligations, and agreement contained
herein shall be cumulative and not mutually exclusive.
25. Severability. If any of the terms and conditions
hereof shall for any reason be held to be invalid, illegal,
or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other
of the terms and conditions hereof and the terms and
conditions hereof shall thereafter be construed as if such
invalid, illegal, or unenforceable terms or conditions had
never been contained herein.
26. Counterparts. This Contract may be executed in
any number of identical counterparts, and each counterpart
hereof shall be deemed to be an original instrument, but all
counterparts hereof taken together shall constitute but a
single instrument.
27. Inspection and Improvements by Buyer.
A. Inspection by Buyer. Buyer will have the
period from the Effective Date until 6:00 p.m. EST
on May 14, 1997 (the "Inspection Period") to
conduct (as applicable) and review and approve any
and all inspections, investigations, tests,
studies (including feasibility studies and other
economic models) and appraisals as Buyer may have
elected to make or obtain with respect to the
Property and/or the operation and financial
condition of the Property, including, without
limitation, financial analyses of the books and
records, environmental inspections and studies,
structural and mechanical investigations,
appraisals, and analyses of the Property's
compliance with applicable governmental
regulations. Buyer and Buyer's representatives,
agents and designees will have the right to enter
the Property at all reasonable times, during
normal business hours, upon reasonable oral notice
to conduct interviews with property management
personnel of Seller, and to perform such
investigations, tests and studies of the Property,
provided such inspections, tests and studies shall
not interfere with or damage the Property and
provided further that Buyer shall leave the
Property in the same or better condition as it was
prior to the entry onto the Property by Buyer or
its agents or employees or, in the event of any
damage to the Property, shall repair and restore
the Property to its prior condition.. In
accordance with Subparagraph 3.H hereof, Seller
shall deliver to the Property and make available
to Buyer, at Seller's sole cost and expense,
within five (5) days (unless indicated otherwise
below) following the Effective Date, the
Disclosure Materials, which shall include all
information in Seller's possession or control
which is reasonably related to the Property,
including the following items:
i. To the extent in Seller's
possession, an ALTA "as-built" survey of the
Real Property prepared by a licensed
surveyor;
ii. Any and all Leases and all
modifications or amendments and guaranties
relating thereto; all tenant correspondence
and all current financial statements of
tenants to the extent the same are in
Seller's possession or control; all contracts
(including the Contracts), agreements and
management agreements; all "operating
statements" for the Property for the period
in which Seller owned the Property; and a
year-to date operating statement for the
calendar year 1997, a balance sheet dated no
earlier than December 31, 1996; an income
statement for the last two (2) calendar years
and a year-to-date income statement for the
calendar year 1997, each statement certified
by Seller as being true, correct and complete
reports prepared by Seller in the ordinary
course of business; all "Base Year"
information applicable to the Leases to the
extent in Seller's possession); a cumulative
general ledger for year-to-date 1997; reports
(including all environmental reports, soil
reports, surveys and plans and specifications
affecting or relating to the Property, and
all modifications or amendments thereto);
evidence of the "Intangible Property"
obtained or held by Seller and relating to
the development, construction, operation, use
or occupancy of any of the Property.
iii. A current rent roll (to be updated
as of the expiration of the Inspection Period
and as of the Closing), prepared and
certified by Seller as being true, correct
and complete and listing each tenant at the
Property.
Buyer may, by written notice to Seller
within the Inspection Period, at Buyer's sole and
absolute discretion, elect to terminate this
Contract, in which event Buyer shall deliver all
Due Diligence Materials (hereinafter defined) to
Buyer, and thereafter the Earnest Money shall be
refunded to Buyer and neither party shall have any
further claim against the other under this
Contract. In the event Buyer fails to so notify
Seller in writing of its desire to terminate this
Contract during the Inspection Period, Buyer shall
have waived its right to terminate this Contract
within the Inspection Period. Whether or not
Buyer elects to terminate this Contract pursuant
to this provision, Buyer shall furnish Seller with
copies of all surveys, engineering, soil, and
other inspection reports, government permits,
feasibility studies, and any other documents
obtained in connection with Buyer's inspection
(the "Due Diligence Materials"), as and when
received by Buyer.
B. Improvements by Buyer. From and after the
expiration of the Inspection Period, Buyer shall
be entitled, at Buyer's sole cost and expense, to
improve or repair the Subject Premises, subject to
Seller's prior written approval, which approval
shall not be unreasonably withheld or delayed.
Seller's approval shall be based upon Seller's
review of such plans and specifications (prepared
for and at the expense of Buyer) as Seller shall
deem reasonably necessary for the proper execution
of the proposed improvement or repair. Following
receipt of Seller's written approval as aforesaid,
Buyer and Buyer's representatives, agents and
designees will have the right to enter the
Property at all reasonable times, upon reasonable
prior written notice to Seller and Seller's
property manager, to so improve or repair the
Property, provided such entry and improvement or
repair shall not interfere with the current
operation of or unnecessarily damage the Property.
C. Indemnity. Buyer agrees to indemnify and
hold harmless Seller from any and all injuries,
losses, liens, claims, judgments, obligations,
liabilities, costs, expenses or damages,
including reasonable attorneys' fees and court
costs, arising out of the entry upon the Property
by Buyer, its agents or employees or arising out
of the inspections, tests or studies, repairs
maintenance or improvements that Buyer, its agents
or employees may conduct pursuant to this
Paragraph 27.
28. Tax-Free Exchange. At Seller's option, Buyer
shall cooperate fully in facilitating a tax-deferred
exchange of the Property by Seller, either simultaneously or
non-simultaneously, pursuant to Section 1031 of the Internal
Revenue Code, including the execution and immediate
delivery, before, on, or after the Date of Closing, of any
documents and agreements reasonably requested by Seller for
such purpose, provided, however, that (i) Buyer shall not be
obligated to incur any costs or liabilities or postpone the
Date of Closing in connection therewith; and, (ii) Buyer
shall be provided with all documents to be executed by Buyer
pursuant to this Paragraph 28 not less than forty-eight
hours in advance of the date on which such execution shall
be required.
29. Escrow Agent. Escrow Agent accepts its
appointment hereunder subject to the following conditions:
A. The Earnest Money may be processed for collection
in the normal course of business by Escrow Agent, who
may commingle funds received by it with escrow funds of
others in its regular escrow account maintained at a
bank selected by Escrow Agent insured by the Federal
Deposit Insurance Corporation (hereafter the
"Depository").
B. Escrow Agent shall not be liable for any loss
caused by the failure, suspension, bankruptcy or
dissolution of the Depository.
C. Escrow Agent shall be liable only for loss or
damage resulting from the malfeasance or negligence of
Escrow Agent or its employees and shall not be liable
for loss or damage resulting from (a) any good faith
act or forbearance of Escrow Agent; (b) any default,
error, action or omission of any party, other than
Escrow Agent; (c) any defect in the title to any
property unless such loss is covered under a policy of
title insurance issued by Escrow Agent; (d) the
expiration of any time limit or other delay which is
not caused by the failure of Escrow Agent to proceed in
its ordinary course of business, and in no event where
such time limit is not disclosed in writing to the
Escrow Agent; (e) the lack of authenticity of any
writing delivered to Escrow Agent or of any signature
thereto, or the lack of authority of the signatory to
sign such writing; (f) Escrow Agent's compliance with
all attachments, writs, orders, judgments or other
legal process issued out of any court; (g) Escrow
Agent's assertion or failure to assert any cause of
action or defense in any judicial or administrative
proceeding; (h) any loss or damage which arises after
the Earnest Money has been disbursed in accordance with
the terms of this Contract.
D. Investment of the Earnest Money shall be subject
to the rules, regulations, policies and procedures of
the Depository.
E. If written notice of default, non-performance or
dispute by or between the other parties hereto is given
to Escrow Agent, Escrow Agent may in its sole
discretion, perform in accordance with its obligations
hereunder or prepare to and shortly thereafter file an
interpleader action to resolve the conflict. Escrow
Agent shall be indemnified, saved and held harmless by
the other parties hereto for all of its expenses, costs
and reasonable attorneys' fees incurred in connection
with said interpleader action and such expenses, costs
and fees may be deducted from the funds held hereunder
except to the extent that such expenses costs and fees
are the result of the negligence or willful misconduct
of Escrow Agent.
F. If Escrow Agent is made a party to any judicial,
non-judicial or administrative action, hearing or
process based on acts of any of the other parties
hereto and not on the malfeasance and/or negligence of
Escrow Agent in performing its duties hereunder, the
expenses, costs and reasonable attorney fees incurred
by Escrow Agent in responding to such action, hearing
or process may be deducted from the funds held
hereunder and the party/parties whose alleged acts are
a basis for such proceedings shall indemnify, save or
hold Escrow Agent harmless from said expenses, costs
and fees so incurred.
[SIGNATURES COMMENCE ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this
Real Estate Sales Contract For The Purchase And Sale Of
Crown Cabot Financial Center, Laguna Niguel, California, to
be executed as of the Effective Date referenced herein.
SELLER:
LEISURE COLONY MANAGEMENT CORP.,
a Florida corporation
By: /s/ Mark A. Griffith
Mark A. Griffith
Vice-President
BUYER:
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc.,
a Maryland corporation
general partner
By: /s/ Victor J. Coleman
Victor J. Coleman
President and COO
BROKER:
THE SEELEY COMPANY, a
By: /s/ Kevin Shannon
Name: Kevin Shannon
Title:
ESCROW AGENT SIGNATURE PAGE
Received of Arden Realty, two million Dollars
($2,000,000.00), and Chicago Title Company
agrees to hold same, in accordance with the terms hereof.
ESCROW AGENT
By:/s/ Carol Perry
Date May 29, 1997 Carol Perry
Sr. National Closing Coordinator
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
Between
CARLSBERG INVESTMENT COMPANY
Seller
and
ARDEN REALTY LIMITED PARTNERSHIP
Purchaser
Covering
2800 28TH Street
Santa Monica, California
January 27, 1997
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW
INSTRUCTIONS ("Agreement") is made and entered into this
27th day of January 1997 by and between CARLSBERG INVESTMENT
COMPANY, a Wyoming partnership ("Seller"), and ARDEN REALTY
LIMITED PARTNERSHIP, a Maryland limited partnership ("Pur
chaser"), with reference to the following facts:
A. Seller is the fee owner of that certain parcel of
real property (the "Real Property") and the improvements
thereon, for informational purposes only, are a three-story
office building containing approximately 103,569 rentable
square feet, other facilities, fixtures, paving and
surfacing thereon or attached thereto (collectively, the
"Improvements"). The Real Property and Improvements are
commonly referred to as the Carlsberg Corporate Center and
are located at 2800 28th Street, Santa Monica, California
90405, and the Real Property is more particularly described
in Exhibit "A" attached hereto and forming a part hereof.
B. Seller desires to sell, and Purchaser desires to
purchase, all of the Real Property and the Personal Property
(as hereinafter defined) including, but not limited to, the
Improvements, and all appurtenant easements and rights on
the terms, covenants and conditions hereinafter set forth.
NOW, THEREFORE, with reference to the foregoing reci
tals and in reliance thereon and in consideration of the pur
chase price hereinbelow set forth, and the other terms, cov
enants and conditions set forth below, and other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, it is mutually covenanted and
agreed by Seller and Purchaser as follows:
1. Purchase and Sale. Subject to all of the terms
and conditions of this Agreement and for the consideration
set forth, on Closing (as hereinafter defined), Seller shall
convey, or cause to be conveyed, to Purchaser or to
Purchaser's assignee pursuant to paragraph 15(g) below, and
Purchaser or its assignee shall purchase from Seller, all of
the following:
(a) The Real Property and the Improvements,
together with all easements and appurtenances thereto,
subject only to such easements, agreements and exceptions as
may have been approved by Purchaser in accordance with
Paragraph 4(a) hereof and the tenancies and occupancies that
are set forth on Exhibit "B";
(b) Seller's right, title and interest in and to
all of the personal property of Seller located at, attached
or appurtenant to, and used in connection with the operation
or maintenance of the Real Property and/or the Improvements
more particularly set forth on Exhibit "C" attached hereto
and made a part hereof (the "Personal Property").
(c) All leases to tenants leasing space in the
Improvements (the "Tenant Leases");
(d) To the extent assignable and approved by
Purchaser (as hereinafter provided), those certain service
and other agreements more particularly described in Exhibit
"D" attached hereto and made a part hereof (the "Service
Contracts"); and
(e) Except for the name "Carlsberg" as it relates
to any matter other than the name of the Improvements, all
other right, title and interest of Seller constituting part
and parcel of the Property (as hereinafter defined),
including, but not limited to, trade names, logos, licenses,
permits, air rights, certificates of occupancy, warranties,
rights-of-way, signs, trademarks, telephone listings and
numbers, sewer agreements, water line agreements, utility
agreements, water rights and oil, gas and mineral rights
(collectively, the "Intangibles") to the extent assignable
or transferable.
Reference herein to the "Property" shall include all of
the real, personal and intangible property described in
subparagraphs (a) through (e) hereof.
2. Purchase Price and Payment. The purchase price
(the "Purchase Price") to be paid by Purchaser to Seller for
the Property is the sum of Twelve Million and No/100 Dollars
($12,000,000.00), payable as follows:
(a) Upon the opening of Escrow (as hereinafter
set forth) Purchaser shall deliver to Escrow Agent (as
hereinafter defined) cash in the sum of One Hundred Fifty
Thousand Dollars ($150,000.00), ("Initial Deposit") which
shall be held by Escrow Agent as security for the full
performance by Purchaser of its obligations hereunder and on
account of the Purchase Price payable at Closing, subject to
the following terms and conditions:
(i) If Purchaser elects to continue with its
purchase of the Property pursuant to this Agreement after
the Approval Period (as hereinafter defined), Purchaser
shall increase the Initial Deposit within one business day
after the expiration of the Approval Period by cash in the
amount of One Hundred Thousand Dollars ($100,000.00) for a
total of $250,000 (which sum, together with any interest
earned thereon and additions thereto, are herein
collectively called the "Deposit") and such Deposit shall
become non-refundable subject to the remaining conditions to
Closing;
(ii) If Closing occurs, then the Deposit
shall be applied to the Purchase Price;
(iii) If Closing does not occur and
Seller shall be entitled to liquidated damages as provided
in Paragraph 10(b) hereof, Seller shall be entitled to the
Deposit; and
(iv) If the Closing does not occur and
Purchaser shall be entitled to the return of the Deposit as
provided in this Agreement, the same shall be returned to
Purchaser.
(b) Purchaser shall pay to Seller through Escrow
Agent at Closing in immediately available funds an amount
equal to the balance of the Purchase Price, plus (or minus)
the net amount of all costs, expenses, adjustments and
prorations to be credited (or debited) to Purchaser pursuant
to this Agreement. If Seller fails to forward to Purchaser
a combined Qualifying Statement provided under 1445 of the
Internal Revenue Code and an equivalent Form 590RE provided
under the Revenue and Taxation Code of the State of
California in the form of Exhibit "E" attached hereto and
made a part hereof, Escrow Agent shall be entitled to
withhold and pay to the Internal Revenue Service and the
Franchise Tax Board such withholding required of Purchaser
pursuant to Internal Revenue Code 1445 and Section 18662 of
the Revenue and Taxation Code of the State of California.
(c) The Deposit shall be at all times invested by
Escrow Agent in the following investments ("Approved Invest
ments"): (i) United States Treasury obligations, (ii)
United States Treasury-backed repurchase agreements issued
by a major money center banking institution reasonably
acceptable to Seller, (iii) Certificates of Deposit or Money
Market Accounts of institutions whose deposits are insured
by the FDIC or (iv) such other investments as may be
reasonably agreed to by Seller and Purchaser. The Deposit
shall be paid by Escrow Agent only as provided in this
Agreement.
(d) All payments required to be made under this
Agreement shall be made in U.S. funds.
3. Escrow.
(a) Opening of Escrow. As soon as commercially
reasonable after their complete execution and delivery of
this Agreement ("Effective Date") and in any event not later
than two (2) business days thereafter, Seller and Purchaser
shall open an escrow (the "Escrow") with Chicago Title, 700
South Flower, Suite 900, Los Angeles, CA 90017, Attention:
Rose Martinez ("Escrow Agent"), through which the purchase
and sale of the Property shall be consummated. A fully
executed copy of this Agreement shall be deposited with
Escrow Agent, duly executed by Seller, Purchaser and Escrow
Agent, to serve as Escrow instructions to Escrow Agent, and
Escrow Agent shall be and is hereby authorized and
instructed to deliver pursuant to the terms of this
Agreement the documents and monies to be deposited into the
Escrow. Escrow Agent may attach to this Agreement Escrow
Agent's standard form general conditions to an escrow, to
the extent that the same are consistent with the terms
hereof, and are reasonably approved by Seller and Purchaser.
Escrow Agent shall immediately, upon receipt of such duly
executed copy of this Agreement, notify Seller and Purchaser
of the opening of Escrow. Should either party fail to open
Escrow in accordance with the provisions of this Paragraph
3(a), such failure shall constitute a material breach of
this Agreement.
(b) Closing of Escrow. Escrow shall close not
later than ten (10) business days following the expiration
of the Approval Period and upon at least three (3) business
days prior written notice from Purchaser to Seller, provided
in all such events the Estoppels (as hereinafter defined)
satisfying the requirements of paragraph 8(b) hereof have
been received and approved and all other Purchaser's
Conditions Precedent to Closing as set forth in Paragraph 8
hereof have been satisfied or waived by Purchaser. The term
"Closing" as used herein shall be deemed to be the date upon
which the respective Conditions Precedent to Purchaser's
Obligation to Close Escrow (set forth in Paragraph 8 below)
and the Conditions Precedent to Seller's Obligation to Close
Escrow (set forth in Paragraph 9 below) have been satisfied,
the Grant Deed ("Grant Deed" herein) hereinafter referred to
is recorded in the office of the County Recorder of Los
Angeles County and the net proceeds of sale are held by
Escrow Agent for disbursement to Seller. If the Closing as
provided herein does not occur on or before March 31, 1997,
this Agreement and the Escrow shall be cancelled and
terminated and thereafter neither party shall have any
further obligation or liability to the other party, except
as expressly set forth in this Agreement to the contrary.
4. Title Matters.
(a) Title Report.
(i) As of the Effective Date, Seller has
delivered to Buyer a CLTA Preliminary Title Report covering
the Real Property, which states that it is subject to any
matter that would be disclosed by a survey (the "Preliminary
Title Report"), issued by Chicago Title Insurance Company
("Title Company") dated as of January 2, 1997, and bears
Title Order No. 6125456, together with true and legible
copies of all documents evidencing matters of record shown
as exceptions to title thereon. Purchaser has also received
as of the Effective Date an ALTA Survey of the Real Property
and Improvements dated November 1, 1996 ("Survey") prepared
by Robert S. Olson. Purchaser shall cause the same to be
updated and recertified at Purchaser's sole cost and expense
before the expiration of the Approval Period (and upon
receipt shall deliver a copy of the updated Survey to
Seller). Purchaser shall have the right to object to any
exceptions contained in the Preliminary Title Report or the
Survey by giving written notice to Seller before the
expiration of the Approval Period. Unless Purchaser gives
written notice that it disapproves any title exceptions or
matters, stating the exceptions or matters so disapproved,
before the expiration of the Approval Period, Purchaser
shall be deemed to have approved all title exceptions and
matters. Notwithstanding the foregoing, Purchaser shall
have the right to disapprove any supplementary reports
issued by Title Company or disclosed after the expiration of
the Approval Period within five (5) business days following
Purchaser's receipt of any such supplemental report;
provided, however, Purchaser's approval shall not be
unreasonably withheld. If for any reason, on or before the
Closing Date, Seller does not cause the exceptions to title
or survey matters which Purchaser timely disapproves (to the
extent Purchaser is permitted hereunder to so disapprove) to
be removed at no cost or expense to Purchaser (Seller having
the right but not the obligation to do so), the obligation
of Seller to sell, and Purchaser to buy, the Property as
herein provided shall terminate (and Seller and Purchaser
shall have no further obligations in connection herewith
except as otherwise specifically provided in this Agreement
to the contrary). Notwithstanding any of the foregoing,
Seller shall at Closing (but shall not be obligated prior
thereto) remove of record all tax and mechanic's liens
(except only for the liens of the taxes and assessments to
be prorated under Paragraph 12(a)(ii)), at its sole cost and
expense. Purchaser shall have the option to waive the
condition precedent set forth in this Paragraph 4(a) by
notice to Seller. In the event of such waiver, such
condition shall be deemed satisfied. All matters set forth
on the Preliminary Title Report or the Survey obtained by
Purchaser which are not timely objected to by Purchaser
shall be permitted exceptions to title. In addition, the
following matters shall be permitted exceptions: (i) any
title or survey matters objected to by Purchaser, which
objections are subsequently waived in writing by Purchaser;
(ii) any title or survey matters objected to by Purchaser in
accordance with the terms and provisions of this Agreement,
which objections are cured to Purchaser's satisfaction;
(iii) real estate taxes and assessments not yet due and
payable; (iv) the printed exceptions which appear in the
standard form CLTA owner's policy of title insurance (with
extended coverage); and (v) the interests of tenants in
possession.
(ii) If at the date of Closing there are any
liens or encumbrances that Seller is obligated to pay and
discharge, Escrow Agent may use any portion of the Purchase
Price to satisfy the same (if the same are not bonded-over
or otherwise satisfied by title endorsement); Seller shall
use best efforts to deliver to Escrow Agent at Closing title
instruments in recordable form sufficient to satisfy such
liens and encumbrances of record, together with the cost of
recording or filing said instruments.
(b) Title Policy. The Title Policy shall be
Chicago Title Insurance Company's ALTA Owner's policy with
liability in the amount of the Purchase Price, showing fee
title to the Real Property and the Improvements as vested in
Purchaser, or in Purchaser's permitted assignee, subject
only to the permitted exceptions specified in Paragraph 4(a)
above.
5. Delivery of Information.
(a) As soon as practicable after the Effective
Date, but in no event later than three (3) business days
after the Effective Date, except as otherwise set forth,
Seller shall have delivered or shall have caused to be
delivered or made available to Purchaser for inspection at
the Property to the extent they are in Seller's possession
or under its control, the following:
(i) Complete copies of all of the Tenant
Leases and all amendments thereto, a schedule of which is
attached hereto as Exhibit "B" and forms a part hereof,
copies of all tenant improvement plans and specifications
and access to all tenant and leasing files.
(ii) Evidence that the Property has the neces
sary Certificates of Occupancy and other permits to operate
the Improvements.
(iii) The loss history of the Property
pertaining to any property damage or personal injury
suffered for which an insurance claim of more than Fifty
Thousand Dollars ($50,000) was submitted by Seller at any
time after January 1, 1995 to the extent available to
Seller;
(iv) All 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 the condition of the Property;
(v) All electricity and property tax bills
for the period beginning January 1, 1995 to the extent
available to Seller;
(vi) Statements of income and expense for the
Property for the calendar years 1995 and 1996 and current
year to date to the extent available to Seller;
(vii) All warranties and operating
manuals that Seller may have from vendors, contractors or
servicing agents with respect to the physical condition of
the Improvements, the Property or any portion thereof or the
equipment located therein; and
(viii) Complete copies of the Service
Contracts, including, without limitation, copies of all
service and other contracts pertaining to the Property
(including, but not limited to, HVAC, elevator, landscape,
management, leasing brokerage and parking) in respect to
which Seller is obligated.
(b) Purchaser shall have until 5:00 P.M. PST on
the later of (i) the twentieth (20th) business day following
the Effective Date, and (ii) the fifteenth (15th) day
following the date that the last of the materials listed in
paragraph (a) above have been delivered or made available to
Purchaser (the "Approval Period") in which to approve or
disapprove in writing all matters and things that are
subject to Purchaser's rights of review, inspection and
approval hereunder. Notwithstanding the expiration of the
Approval Period, Purchaser shall have until the later of the
expiration of the Approval Period or 5:00 p.m. PST on the
fifth (5th) business day following its receipt of the
written report of the Deep Boring Tests (hereinafter
described) (the "Deep Boring Tests Approval Date") in which
to approve or reject the Property based upon the results of
such Deep Boring Tests. Purchaser's failure either to
approve or disapprove in writing said information before the
expiration of the applicable period for Purchaser's approval
thereof as set forth herein shall be deemed to be
Purchaser's approval thereof. If Purchaser disapproves any
of said information, Purchaser shall notify Seller in
writing thereof within the time period specified above
whereupon, this Agreement shall automatically terminate,
unless Purchaser shall request that Seller agree prior to
the expiration of the Approval Period to cure the same to
Purchaser's satisfaction prior to the Closing Date. If
Seller notifies Purchaser of Seller's inability or
unwillingness to cure a disapproved item, Purchaser shall
have five (5) business days after receipt of Seller's notice
to either (1) waive its prior objection to the disapproved
item or (2) terminate the Agreement. Purchaser's failure to
waive its prior objection to the disapproved item or to
terminate the Agreement shall be deemed to constitute
Purchaser's election to waive its prior objection to the
disapproved item. Notwithstanding any of the foregoing,
however, if Purchaser disapproves any Service Contract
(except for those described on Schedule 1), this Agreement
shall not terminate and Seller shall lawfully terminate such
Service Contract not later than thirty (30) days after the
Closing.
6. Inspections and Approval by Purchaser.
(a) From and after the Effective Date, upon
twenty-four (24) hours prior notice to Seller and receipt by
Purchaser of Seller's prior consent (which shall not be
unreasonably withheld) Purchaser and its agents, employees,
contractors and consultants shall be afforded reasonable
access to the Property during normal business hours for the
purpose of making such investigations as Purchaser deems
prudent with respect to the physical condition of the Prop
erty, including, but not limited to, engineering, soil,
geological, environmental (including ground water),
hazardous or toxic material, noise, pollution, seismic,
structural or other tests, studies or investigations as
Purchaser may require (collectively, "Tests"). Included
shall be the right to access, expose and inspect (including
ultra-sound testing) a representative number of "moment"
frames in the steel structure of the Building, subject to
the rights of tenants in possession. Notwithstanding the
foregoing, however, all invasive examinations and testing by
Purchaser shall require the prior written consent of Seller,
not to be unreasonably conditioned, delayed or withheld.
Seller shall reasonably cooperate to assist Purchaser in
completing such Tests. Access for this purpose and the
location of such Tests shall be coordinated with and agreed
to by Seller. Purchaser shall promptly restore the Property
to its condition immediately prior to such investigations
and Purchaser shall be responsible for repairing or
replacing damage done in the process of such inspection and
Tests. Purchaser agrees not to contact any of Seller's
tenants without Seller's prior consent and to indemnify,
defend and hold Seller and its agents harmless from and
against any loss, cost, damage, claim or expense including,
without limitation, reasonable attorneys' fees, charges and
disbursements suffered by Seller, its agents or the Property
in connection with or arising out of Purchaser's
investigation and Tests. The obligations of Purchaser set
forth in the preceding two sentences of this Paragraph 6(a)
shall survive any termination of this Agreement. In
addition, Purchaser agrees not to unreasonably interfere
with the use and enjoyment of the Property by Seller, its
agents, representatives, employees or any tenants or other
occupants. Seller shall have the right, at its option, to
cause a representative of Seller to be present at all
inspections, reviews, examinations and Tests conducted
hereunder. Purchaser shall promptly deliver to Seller true,
accurate and complete copies of any written reports relating
to the physical condition and testing of the Property
prepared for or on behalf of Purchaser by any third party
(the foregoing obligation surviving any termination of this
Agreement). In the event of termination of this Agreement,
Purchaser shall return all documents and other materials
furnished to or on behalf of Purchaser by Seller hereunder
and comprising the so-called "due diligence" materials.
Purchaser shall keep all information or data received or
discovered in connection with any of the inspections,
reviews or examinations strictly confidential; provided,
however, that Purchaser shall be entitled to disclose such
information to Purchaser's attorneys, consultants,
accountants and prospective debt and equity financing
sources who reasonably need to be informed of Purchaser's
determinations hereunder. The confidentiality obligation of
Purchaser set forth in the preceding sentence shall survive
any termination of this Agreement.
(b) From and after the date hereof until Closing,
Purchaser and its agents shall be afforded full opportunity
by Seller during normal business hours and upon twenty-four
(24) hours prior notice to examine all operating books and
records that relate to the Property (including all specifica
tions and as-built drawings to the extent they are in
Seller's possession), all of the following available:
building permits, certificates of occupancy, soil reports,
engineers' reports and studies, and similar information
relating to the Property or its management, operation,
maintenance or use, and all warranties and operating manuals
that Seller may have from vendors, contractors or servicing
agents with respect to the physical condition of the
Property or any portion thereof or the equipment located
thereon.
(c) Seller has informed Purchaser of and
Purchaser is aware of the recent discovery of the presence
of Trichloroethane ("TCE") and other volatile organic
compounds ("VOCs") in the soil on the Property, the exact
location and quantity of which has not been determined.
Purchaser, by its execution of this Agreement, acknowledges
that it has received copies of and will review during the
Approval Period, the following documents: (1) the Phase I
Environmental Site Assessment, dated October 28, 1996,
prepared by Levine-Fricke-Recon ("LFR") and (2) the Phase II
Subsurface Investigation, dated November 19, 1996, prepared
by LFR. Seller has informed Purchaser that this Phase II
Subsurface Investigation did not include deep boring tests
on the Property. Purchaser covenants that, as part of its
investigation of the Property, it will engage an
environmental consultant (who shall be approved by Seller
which approval (i) shall include the scope of work to be
performed and (ii) shall not be unreasonably withheld or
delayed beyond 48 hours from submission) to perform deep
boring tests on the Property ("Deep Boring Tests"). Seller
shall be entitled to a written report detailing the results
of the Deep Boring Tests. Purchaser shall pay for the cost
of these tests. However, if the Closing does not occur
through no default of the Purchaser, Seller will reimburse
Purchaser for the cost of the Deep Boring Tests (the
foregoing obligation surviving any termination of this
Agreement) in an amount not to exceed $13,500.00.
(d) Purchaser shall have until the expiration of
Approval Period in which to approve, disapprove or waive in
its sole discretion each the matters referred to in subpara
graphs (a), (b) and (c) above. Notwithstanding the
foregoing, Purchaser shall have until the later of the Deep
Boring Tests Approval Date and the expiration of the
Approval Period to approve or disapprove the Property based
upon the results of the Deep Boring Tests. Furthermore,
Purchaser shall have until the expiration of the Approval
Period in which to approve or disapprove of a market and
leasing survey of the Property and the surrounding leasing
market (including its own economic analysis of the
feasibility of the Property for Purchaser's particular use
thereof) to be prepared at Purchaser's sole cost and
expense. Purchaser's disapproval shall be in writing and
shall be delivered to Seller prior to the expiration of the
Approval Period. Failure to timely deliver such written dis
approval shall be deemed Purchaser's approval of said
matters.
7. Operation of Property Pending Closing.
(a) Tenant Leases. Seller has leased portions of
the Property to various occupancy tenants. From and after
the Effective Date 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 (unless
the existing lease expires) or approve any new subleases
(collectively, "Lease Action") without the prior written
consent of Purchaser (which consent shall not be
unreasonably delayed or withheld). In requesting such
consent, Seller shall inform Purchaser in writing ("Request
for Consent") of the amount, if any, proposed to be required
to pay for, or any allowance proposed to be given for,
tenant improvement work, any leasing commissions and fees,
in connection with such lease and any rent concessions.
Notwithstanding the foregoing, Lease Action meeting all of
the requirements of Schedule 2 attached hereto and made a
part hereof shall be deemed approved and consented to by
Purchaser and may be taken by Seller. Also included in the
Request for Consent, shall be Seller's proposed draft of the
lease or amendment agreement. Purchaser shall use its best
efforts to approve or disapprove any Request for Consent as
soon as possible; provided, however, that the failure of
Purchaser to respond within five (5) days after its receipt
of any Request for Consent shall be deemed to constitute its
approval of such Request for Consent. From the date that
Purchaser receives any Request for Consent through the date
of the Closing or any termination of this Agreement,
Purchaser shall not engage in any competitive lease
negotiations with or enter into any lease, with any proposed
tenant disclosed by any Request for Consent, with respect to
any other property. If Purchaser shall timely object to
and/or disapprove of any Lease Action proposed to be taken
by Seller (requiring Purchaser's consent as provided herein)
prior to the expiration of the Approval Period, Seller,
nevertheless, can take such Lease Action which, upon written
notice by Seller to Purchaser, shall entitle Purchaser to an
option to terminate this Agreement for a period of five (5)
business days following Purchaser's receipt of such notice.
Purchaser's failure to timely exercise its option to
terminate shall be deemed to be its election to waive its
objection to such Lease Action by Seller. If Purchaser
shall timely object to and/or disapprove of any Lease Action
proposed to be taken by Seller after the expiration of the
Approval Period and the making of the Deposit by Purchaser
and before Closing, Seller shall not take such Lease Action.
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. Seller has
informed Purchaser that an affiliate of Seller is occupying
3,751 rentable square feet in the Improvements and that such
affiliate intends to vacate the space within sixty (60) days
following the Closing Date.
(b) Leasing Commissions; Tenant Improvements and
Rent Concessions. Seller covenants and agrees to be respon
sible for all leasing commissions, tenant improvement costs
and unamortized rent concessions with respect to any leases
(including amendments and renewals) entered into on or
before January 10, 1997 (collectively, "Old Leases").
Purchaser covenants and agrees to be responsible for all
leasing commissions, tenant improvement costs and
unamortized rent concessions with respect to any new leases,
extensions of existing leases and renewals occurring after
January 10, 1997 (collectively, "New Leases"), provided that
(i) Purchaser has approved or is deemed to have approved
such action by Seller and (ii) Seller has delivered to
Purchaser copies of the proposed New Leases and other
agreements with respect thereto prior to the Closing and by
virtue of which brokerage commissions are payable, tenant
improvements are to be constructed or rent concessions are
to be granted. Failing such delivery and approval (or
deemed approval), Seller shall remain responsible for all of
costs and expenses including commissions for New Leases
incurred prior to the Closing.
(c) Insurance Policies. Seller shall keep all of
the insurance policies covering the Property (or
substantially equivalent coverage) in full force and effect
between the date of this Agreement and Closing (the
"Insurance Policies").
(d) Property Management. Seller shall use its
best efforts to cause the property manager, Carlsberg
Management Company (which is unrelated to Seller) to
maintain the Property in the same manner as prior hereto
pursuant to its normal course of business (such maintenance
obligations not including extraordinary capital expenditures
or expenditures not incurred in such normal course of
business), subject to reasonable wear and tear and further
subject to destruction by casualty or other events beyond
the reasonable control of Seller.
(e) Service Contracts. Seller shall have the
right to renew or replace Service Contracts that expire
prior to Closing or to enter into new Service Contracts for
emergency purposes if deemed reasonably necessary by Seller
for any term provided that such Service Contracts are
terminable by Seller or its successors in interest upon not
more than thirty (30) days' notice to the service provider.
Notwithstanding the foregoing, Seller shall terminate and
cancel as of the Closing Date any and all exclusive leasing
agency agreements and shall give a thirty (30) day notice of
termination of the existing management agreement promptly
following (1) the later of the expiration of the Approval
Period and the Deep Boring Tests Approval Date and (2) the
making of the Deposit by Purchaser. Seller shall defend and
indemnify Purchaser against any loss, cost, expense or
damage suffered by Purchaser after the Closing if such
management agreement is not so terminated within such thirty
(30) day period.
8. Conditions Precedent to Purchaser's Obligation to
Close Escrow. The obligation of Purchaser to consummate the
transactions contemplated hereby is subject to the following
conditions, inserted for Purchaser's sole benefit and that
may be waived by Purchaser only in writing at its sole
option. Said conditions are as follows:
(a) Representations and Warranties True at Clos
ing. The representations and warranties of Seller contained
in Paragraph 13 of this Agreement shall be true on the date
of Closing in all material respects as though such
representations and warranties were made on and as of such
date.
(b) Delivery of Tenant Estoppels. Seller shall
have caused to be delivered to Purchaser estoppel letters
(collectively, the "Tenant Estoppels") from tenants
representing 85% of the leased area and from all tenants
leasing more than 3,500 square feet in the Improvements in
substantially the form of Exhibit "F" attached hereto and
forming a part hereof. Notwithstanding the foregoing,
Seller can satisfy the condition set forth in this Paragraph
8(b) by providing an estoppel executed by Seller in
substantially the form of Exhibit "G" attached hereto and
forming a part hereof (together with the Tenant Estoppels,
the "Estoppels"), for any tenant or all tenants for which
Seller has not been successful in obtaining a Tenant
Estoppel executed by such tenant.
(c) Compliance with This Agreement. Seller shall
have performed and complied with in all material respects
all agreements and conditions required by this Agreement to
be performed or complied with by it on or prior to Closing.
(d) Title Policy. Title Company shall be ready,
willing and able to issue the Title Policy required by Para
graph 4(b).
(e) Change in Condition. Subject to the pro
visions of Paragraphs 15(b) and 15(c) hereof, there shall
exist no damage, destruction or condemnation of the Property
prior to Closing.
9. Conditions Precedent to Seller's Obligation to
Close Escrow. The obligation of Seller to consummate the
transactions contemplated hereby is subject to the following
conditions, inserted for Seller's sole benefit and that may
be waived solely by Seller only in writing at its sole
option. Said conditions are as follows:
(a) Representations and Warranties True at Clos
ing. The representations and warranties of Purchaser con
tained in this Agreement, or in any certificate or document
signed by Purchaser pursuant to the provisions hereof, shall
be true on and as of Closing in all material respects as
though such representations and warranties were made on and
as of such date.
(b) Delivery of Purchase Price and Documents.
Purchaser shall have delivered all funds and documents to
Escrow Holder required by it hereunder to enable it to close
the Escrow.
(c) Compliance with This Agreement. Purchaser
shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or
complied with by it on or prior to Closing.
10. Remedy of Purchaser and Seller Upon Default.
(a) Remedies of Purchaser. In the event that
Seller fails to keep and perform each and every obligation,
covenant and agreement herein by Seller to be kept or per
formed, then Purchaser may pursue an action for specific
performance against Seller by first tendering its timely,
full performance required hereunder, but Purchaser hereby
agrees that Seller shall not be responsible to Purchaser for
any actual or consequential damages (including lost profits)
or punitive damages.
(b) Remedy of Seller. THE PARTIES HERETO, BEFORE
ENTERING INTO THIS TRANSACTION, HAVE BEEN CONCERNED WITH THE
FACT THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY SELLER IF
PURCHASER SHOULD WRONGFULLY FAIL TO PURCHASE THE PROPERTY.
WITH THE FLUCTUATION IN VALUE OF REAL PROPERTY, THE CURRENT
AND HIGHLY UNPREDICTABLE STATE OF THE ECONOMY, THE
FLUCTUATING MONEY MARKET FOR REAL ESTATE LOANS OF ALL TYPES,
AND OTHER FACTORS THAT DIRECTLY AFFECT THE VALUE AND MARKET
ABILITY OF THE PROPERTY, IT IS REALIZED BY THE PARTIES THAT
IT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICABLE, IF NOT IM
POSSIBLE, TO ASCERTAIN WITH ANY DEGREE OF CERTAINTY PRIOR TO
SIGNING THIS AGREEMENT THE AMOUNT OF DAMAGES THAT WOULD BE
SUFFERED BY SELLER IN THE EVENT OF PURCHASER'S WRONGFUL FAIL
URE TO PURCHASE THE PROPERTY. PURCHASER ACKNOWLEDGES THAT
(1) SELLER HAS RECEIVED SIX OTHER OFFER TO PURCHASE THE
PROPERTY AND (2) SELLER IS ELECTING NOT TO PURSUE
NEGOTIATIONS WITH ANY OF THE OTHER POTENTIAL PURCHASERS AND
IS REMOVING THE PROPERTY FROM THE MARKET IN RELIANCE ON
PURCHASER'S PROMISE TO PERFORM UNDER THIS AGREEMENT. THE
PARTIES HAVE MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO
ASCERTAIN THE ACTUAL COMPENSATORY DAMAGES SELLER WOULD
SUFFER IN THE EVENT OF PURCHASER'S WRONGFUL FAILURE TO
PURCHASE THE PROPERTY AND HEREBY AGREE THAT THE REASONABLE
ESTIMATE OF SAID DAMAGES IS AN AMOUNT EQUAL TO THE DEPOSIT;
AND IN THE EVENT OF PURCHASER'S WRONGFUL FAILURE TO PURCHASE
THE PROPERTY, SELLER SHALL BE ENTITLED TO SUCH AMOUNT AS
FULL LIQUIDATED DAMAGES, AND THAT PAYMENT OR TENDER TO
SELLER BY PURCHASER OF SUCH AMOUNT SHALL TERMINATE ALL OF
SELLER'S RIGHTS AND REMEDIES AT LAW OR IN EQUITY AGAINST
PURCHASER WITH RESPECT TO SUCH FAILURE TO PERFORM.
/s/BHC /s/RSZ
Seller's Purchaser's
Initials Initials
11. Closing Procedure.
(a) At least one business day prior to the date
of Closing, Purchaser shall have delivered to Escrow Agent
three (3) counterpart executed originals of the following
documents and the following sums of money required to be
delivered by Purchaser hereunder:
(i) The Purchase Price in the manner set
forth in Paragraph 2(a);
(ii) Such funds as may be necessary to comply
with Purchaser's obligations hereunder regarding prorations,
costs and expenses; and
(iii) A signed counterpart of the
Assignment of Leases and Security Deposits ("Assignment of
Leases") substantially in the form and substance of Exhibit
"J" attached hereto and forming a part hereof and a signed
counterpart of the Assignment of Service and Miscellaneous
Rights and Agreements (the "Assignment of Service
Contracts") substantially in the form and substance of
Exhibit "K" attached hereto and forming a part hereof.
(b) At least one business day prior to the date
of Closing, Seller shall have delivered to Escrow Agent
counterpart executed originals of the following documents:
(i) The Grant Deed in the form of Exhibit
"H" attached hereto and forming a part hereof;
(ii) A Bill of Sale (the "Bill of Sale") in
the form of Exhibit "I" attached hereto covering the
Personal Property;
(iii) An Assignment of Leases;
(iv) An Assignment of Service Contracts;
(v) An original counterpart of each of the
Service Contracts and Leases if in Seller's possession or
under its control;
(vi) Notices to each of the tenants and occu
pants of the Property of the transfer of the Property to
Purchaser substantially in the form and substance of Exhibit
"M" attached hereto and forming a part hereof;
(c) Upon delivery of the foregoing sums and docu
ments, Escrow Agent shall cause Title Company to cause the
Grant Deed to be recorded (by a special recording if neces
sary) in the Official Records of Los Angeles County,
California, and immediately to issue the Title Policy.
(d) Promptly following the Closing, a representa
tive of the Seller will arrange to meet with a
representative of Purchaser at the Property for the purpose
of delivering operating control of the Property to
Purchaser, as follows:
(i) Delivery of identified and coded keys
to the Property;
(ii) To the extent they are in Seller's
possession or under its control all building permits,
certificates of occupancy, elevator operating permits, third-
party engineering, structural and maintenance reports
covering the Property;
(iii) All warranties and operating manuals
that Seller may have from vendors, contractors or servicing
agents with respect to the physical condition of the
Property or any portion thereof or the equipment located
thereon; and
(iv) All tenant and service provider billing
and payment histories and correspondence to the extent in
Seller's possession or under its control.
12. Costs and Prorations.
(a) Prorations. All revenues, income, receiv
ables, costs, expenses and payables of the Property shall be
apportioned equitably between the parties as of Closing on
the basis of the actual number of days in a particular
month, and with respect to the items enumerated below where
a particular manner of apportionment is provided, then
apportionment of such item shall be made in such manner.
The obligation to make apportionments shall survive Closing.
Without limitation, the following items shall be so
apportioned:
(i) Monthly rents and percentage rent and
"passthroughs" of real estate taxes and operating expenses
due from occupancy tenants under Tenant Leases, as and when
collected. If at Closing there are any past due rents or
charges owed by occupancy tenants, they shall not be
prorated until received; Purchaser shall include such
delinquencies in its normal billing and shall pursue the
collection thereof in good faith after the Closing Date (but
Purchaser shall not be required to litigate or declare a
default in any Tenant Lease). To the extent Purchaser
receives amounts on account of Tenant Leases on or after the
Closing Date, such payments shall be applied (except as to
the lease with the County of Los Angeles) first toward then
current rent owed to Purchaser in connection with the
applicable Tenant Lease for which such payments are
received, and any excess monies received shall be applied
toward the payment of any delinquent rents, with Seller's
share thereof being promptly delivered to Seller. With
respect to the Tenant Lease with the County of Los Angeles,
however, first payments collected by Purchaser shall be
delivered to Seller until all arrearages and delinquencies
have been satisfied. Notwithstanding any of the foregoing,
in the event that Purchaser within six (6) months after
Closing alters the financial terms of any Tenant Lease of
2,500 square feet or less pursuant to which Seller is owed
delinquent rents or charges, then, with respect to rents or
charges under such Tenant Lease that are first received by
Purchaser after the alteration of the financial terms by
Purchaser, such payments shall be payable first as follows:
(x) first to Seller for the delinquent rents or charges
which are attributable to the two (2) month period just
prior to the Closing and (y) second to Purchaser for any
then outstanding rental obligations which first become due
and payable on or after the Closing and (z) third to Seller
for any remaining delinquent rents or charges which are
attributable to the period prior to the Closing. For the
purpose of the preceding sentence an eviction or termination
of any tenant's occupancy is not an alteration of the
financial terms of any Tenant Lease. Purchaser may not
waive any delinquent rents nor modify a Tenant Lease so as
to reduce or otherwise affect amounts owed thereunder for
any period in which Seller is entitled to receive its share
of charges or amounts without first obtaining Seller's
written consent. Seller hereby reserves the right to pursue
any remedy against any tenant owing delinquent rents and any
other amounts to Seller. Purchaser 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 Purchaser if current tax
rates differ from the latest previous tax rates as soon as
the same are known. Seller agrees that to the extent any
additional taxes, assessments or levies are imposed,
assessed or levied against the Property, or any portion
thereof, at any time subsequent to Closing but with
reference to any period prior thereto during Seller's
ownership thereof, Seller shall promptly pay to Purchaser an
amount equal to such additional assessments or levies
applicable to such period. Similarly, if tax refunds become
payable for periods during Seller's ownership of the
Property, such amounts (subject to adjustments for the
potential claims of occupancy tenants that paid tax
increases by way of rent escalations to Seller) shall be
promptly paid over to Seller. In the event that any
assessments on the Property are payable in installments,
then the installment for the current period shall be
prorated (with Purchaser assuming the obligation to pay any
installment due after the Closing Date). In no event shall
Seller be charged with or be responsible for any increase in
the taxes on the Property resulting from the sale of the
Property or from any improvements made or leases entered
into on or after the Closing Date.
(iii) Transferable annual permits,
licenses, and/or inspection fees, if any, on the basis of
the duration of the same;
(iv) Security Deposits, plus accrued
interest, if any, payable thereon to tenants, and any other
deposits and prepaid rent, shall be credited (or assigned)
to Purchaser;
(v) Utility charges levied against Seller or
the Property, and Purchaser shall transfer all such utility
services to its name and account immediately upon Closing;
(vi) Service Contracts on the basis of the
charge or premium for the period involved;
(vii) Tenant improvements costs and
leasing commissions for leases, amendments and renewals
signed after January 10, 1997, shall be paid by Purchaser if
approved by Purchaser in accordance with Paragraphs 7(a) and
7(b).
(viii) All other operating expenses
incurred in the management and operation of the Property.
No insurance policies shall be assigned hereunder, and
accordingly there shall be no proration of insurance
premiums.
(b) Expenses of Closing. The expenses of Closing
shall be paid in the following manner:
(i) Seller shall pay:
(1) The cost of securing the CLTA
standard coverage portion of the ALTA Owner's Title
Policy;
(2) Documentary transfer tax (County and
City) imposed on the conveyance of title to the
Property to Purchaser;
(3) Any sales or use taxes that may be
owing in connection with the transactions contemplated
by this Agreement; and
(4) One-half of Escrow Agent's Escrow
Fee.
(ii) Purchaser shall pay:
(1) The cost of the Preliminary Title
Report and the cost of any Escrow or Title cancellation
charges in the event that the transaction fails to
close through no default of the Seller and, if Closing
does occur, that portion of the cost of the Title
Policy that is not to be paid by Seller pursuant to
subparagraph (b)(i)(1) above, the cost of all
endorsements to the ALTA Owner's Title Policy and the
cost of the ALTA Survey;
(2) The cost of recording the Grant Deed;
(3) All expenses relating to Purchaser's
financing of its acquisition of the Property; and
(4) One half of Escrow Agent's Escrow fee.
All other Closing fees and expenses, including, but not
limited to, the parties' legal expenses, accounting and con
sulting fees, and other incidental expenses in connection
with this transaction shall be borne by the party incurring
same.
13. Representations, Warranties and Covenants of Seller.
(a) Seller hereby makes the following representa
tions, 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 Effective Date and on the Closing Date
and each of which shall survive the Closing for a period of
six (6) months, except as to subparagraph (i)(4) which shall
survive the Closing for a period of two (2) years:
(i) Except as set forth in Paragraph 6 (c)
above or on the Disclosure Schedule set forth in Exhibit "L"
attached hereto and made a part hereof, Seller has no
knowledge of any:
(1) existing latent defects or seismic
conditions concerning the Real Property or materially incor
rect income or expense figures in any financial statements
prepared by or for Seller and delivered to Purchaser
regarding the Property;
(2) any claim, litigation or administra
tive action, arbitration, proceeding pending before any
court, agency or official, nor any such claim or action
threatened in writing, relating to the Seller's interest in
the Property or the Property or with respect to the validity
of any statutes, ordinances, regulations or restrictions or
any permits or approvals thereunder relating to the
construction of any Improvements on the Property or the
operation thereof nor any outstanding contingent liabilities
affecting the Property;
(3) written notice of violations of
City, County, State, Federal, building, zoning, fire or
health codes, regulations or ordinances, filed or issued
against the Property; and
(4) Seller also represents and warrants
to Purchaser that: Seller has (i) not generated or
discharged any Hazardous Substances at the Property, (ii)
not violated and has not received any notice of violation of
any federal, state or local laws or ordinances governing
Hazardous Substances at the Property or (iii) no actual
knowledge of any Hazardous Substance on the Property other
than the TCE and VOCs or as disclosed in the Phase I
Environmental Site Agreement, dated October 28, 1996
prepared by LFR or the Phase II Subsurface Investigation
dated November 19, 1996 prepared by LFR.
(ii) Without limiting the other provisions of
this Agreement, Seller shall reasonably cooperate with
Purchaser's investigation of matters relating to the
foregoing provisions of Paragraph 13(i)(4) and to provide
access to and copies of any data and/or documents dealing
with potentially Hazardous Substances used at the Property
and any disposal practices followed in accordance with, and
subject to the provisions of, Paragraph 6 hereof. For the
purposes of this Agreement, "Hazardous Substances" shall
mean (A) substances defined as "hazardous substances" in (i)
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S. C. ?? 9601 et
seq.), or (ii) the Resource Conservation and Recovery Act of
1976 (42 U.S.C. ?? 6901 et seq.), together with the regula
tions enacted pursuant to such acts, and (B) those
substances defined as "hazardous wastes" in ? 25117 of the
California Health and Safety Code or as "hazardous
substances" in ? 25316 of the California Health and Safety
Code together with the regulations enacted pursuant to such
statutes.
(iii) The Rent Roll and the Service
Contracts submitted to Purchaser by Seller for approval
pursuant to Paragraph 5 above, or otherwise, shall be true,
correct and complete as to all economic terms thereof as of
the date of submission thereof, and as thereafter
supplemented by supplements or additions, approved in
writing by Purchaser, on or before Closing. Notwithstanding
anything to the contrary contained herein, Seller shall have
no obligation or liability to Purchaser with respect to any
of the foregoing Rent Roll matters or Service Contracts or
other agreements which shall be confirmed as correct in any
estoppel certificate or service provider certificate
delivered to Purchaser as provided in this Agreement;
(iv) To the best of Seller's actual
knowledge, the operating financial information prepared by
Seller's management agent and delivered to Purchaser with
respect to the Property, consisting of Statements of
Operations for the calendar year ended December 31, 1996,
and for the current calendar year are true and correct in
all material respects; in this regard Seller agrees to make
available to Purchaser and its accountants, at Purchaser's
cost, all accounting records for the calendar year ended
December 31, 1996, and for the current calendar year through
the date of Closing, including but not limited to all
general ledgers, cash receipts, cancelled checks and any
other accounting documents and information reasonably
requested; and
(v) As used in this Agreement, "to Seller's
knowledge" or other similar knowledge limitations as to
Seller shall mean the actual knowledge, without any duty to
investigate, of Barbara H. Carlsberg.
(b) Notwithstanding anything contained in Para
graphs 5(a) or 13(a) to the contrary, Seller is neither
responsible nor liable for any representation or warranty,
either expressed or implied, guaranty, promise or other
information pertaining to the Property or the Improvements
made or furnished to Purchaser by any broker representing or
purporting to represent Seller.
14. Representations and Warranties of Purchaser. Pur
chaser hereby makes the following representations and
warranties, each of which is deemed to be material and each
of which is stated by Purchaser to be true and correct on
the date hereof:
(a) Purchaser has full legal power and authority
to enter into and perform this Agreement in accordance with
its terms. This Agreement constitutes the valid and binding
obligation of Purchaser, enforceable in accordance with its
terms, except as such enforcement may be affected by bank
ruptcy, insolvency and other laws affecting the rights of
creditors generally. The execution, delivery and
performance of this Agreement and all documents in
connection therewith are not in contravention of or in
conflict with any agreement or undertaking to which
Purchaser is a party or by which Purchaser may be bound or
affected;
(b) The execution and delivery of this Agreement
and the payment and performance by Purchaser of its payments
and obligations hereunder require no further action or
approval in order to constitute this Agreement as a binding
and enforceable obligation of Purchaser, and all such
actions have been duly taken by Purchaser; and
(c) As of the expiration of the Approval Period
and as of the Closing Date (i) Purchaser has received and
reviewed all materials provided to Purchaser by Seller
pursuant to Sections 4 and 5 above (collectively, the "Due
Diligence Materials"), (ii) Purchaser has inspected the
Property, (iii) Purchaser has made such investigation of the
information contained in the Due Diligence Materials as it
deems appropriate, and (iv) Purchaser is satisfied based
upon its examination of the Due Diligence Materials and its
investigation of all other aspects of the Property which
Purchaser deems material to its purchase thereof, including,
without limitation, the condition of title to the Property,
the zoning of the Property, the condition and physical
aspects of all structures located on the Real Property
(including the Improvements) and the presence or absence of
Hazardous Substances on the Property.
15. General Covenants and Agreements of Purchaser
and Seller.
(a) Delivery of Possession. Possession of the
Property shall be delivered to Purchaser upon Closing,
subject to the rights of tenants in possession.
(b) Damage to or Destruction of Property Prior to
Closing; Risk of Loss. If prior to Closing the Property
shall sustain damage caused by fire or other casualty that
is insured and that would cost Five Hundred Thousand Dollars
($500,000) or more to repair or if any uninsured loss or
casualty occurs that would cost Five Hundred Thousand
Dollars ($500,000) or more to repair, either Seller or
Purchaser may respectively elect to terminate this Agreement
by written notice to the other within fifteen days after
notice of such event, or at Closing, whichever is earlier.
If neither Seller nor Purchaser so elects to terminate its
obligations under this Agreement, or if the loss or casualty
would cost less than Five Hundred Thousand Dollars
($500,000) to repair, the Closing shall take place as
provided herein and Purchaser shall receive an assignment of
Seller's rights to insurance proceeds with respect to any
unrepaired damage (including any rental loss proceeds for
periods after the Closing), loss or casualty in question.
Seller shall retain all interest in and to the insurance
proceeds that may be payable to Seller on account of
repaired and completed damage, but Seller shall have no
obligation of repair or replacement.
(c) Condemnation of Property Prior to Closing. In
the event that the Property or any material part thereof
becomes the subject of a condemnation proceeding other than
of a minor immaterial nature prior to Closing, Seller agrees
to immediately advise Purchaser thereof. In the event of
such condemnation, Purchaser shall have the option to (1)
take title in accordance with the terms and conditions of
this Agreement and negotiate with the said condemning
authority for the condemnation award and receive the
benefits thereof without affecting the Purchase Price, or
(2) terminate this Agreement and declare its obligations
thereunder null and void and of no further effect, in which
event all sums theretofore paid to Seller or to Escrow Agent
hereunder shall be returned to Purchaser as set forth
herein. Notice of the exercise of such option hereunder
shall be in writing, delivered to Seller at the address set
forth in Paragraph 16(g) of this Agreement (or such other
address as Seller may have theretofore designated in
writing) at least two days prior to Closing.
(d) Brokers' Commissions. Seller warrants that
Seller did not negotiate with respect to the purchase of the
Property through any broker, agent, finder, affiliate or
other third party other than First Property Realty
Corporation ("Broker") or incur any liability, contingent or
otherwise, for brokerage or finder's fees or agent's
commissions or other like payments in connection with this
Agreement, or the transactions contemplated hereby. Seller
agrees to pay at Closing to Broker a 2% commission in
connection with the within transaction and Seller hereby
agrees to defend and indemnify Purchaser against and hold
Purchaser harmless from any and all claims, demands, causes
of action or damages resulting from any breach of this
warranty. Purchaser hereby warrants that Purchaser did not
negotiate through any broker, agent, finder, affiliate or
other third party other than Broker or incur any liability,
contingent or otherwise, for any such brokerage or finder's
fees, agent's commissions or other like payments, in connec
tion with this Agreement or the closing hereof, and hereby
agrees to defend and indemnify Seller against and hold
Seller harmless from any and all claims, demands, causes of
action or damages resulting from any breach of this
warranty. This provision shall survive Closing.
(e) Further Assurances Prior to Closing. Seller
and Purchaser shall, prior to Closing, execute any and all
documents and perform any and all acts reasonably necessary,
incidental or appropriate to effect the purchase and sale
and the transactions contemplated in this Agreement.
(f) Time of Essence. Time shall be of the
essence with respect to the obligations of the parties
hereunder.
(g) Assignability. Purchaser may not assign its
rights and duties hereunder without the prior written
consent of Seller (which consent may be withheld in Seller's
sole and absolute discretion); provided, however, that
Purchaser may assign all of its rights and duties hereunder
to any entity with which Purchaser is, directly or
indirectly, affiliated or an entity to be formed and
controlled by the principals (Richard S. Ziman and Victor J.
Coleman) of Purchaser, without Seller's consent, upon the
giving of written notice to Seller, which notice may not be
given less than three days prior to Closing. For the
purpose of this paragraph an "affiliate" of or a person
"affiliated" with, a specified person, is a person that
directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control
with, the person specified. Any such assignment is
conditional upon such assignee assuming the obligations of
Purchaser under this Agreement and agreeing to be bound by
all consents and approvals theretofore given or deemed to
have been given by Purchaser. Such assignment or nomination
shall not relieve Purchaser of its obligations hereunder
including the obligation to pay the Purchase Price upon the
Closing hereof.
(h) Waivers, Amendments and Modifications of
Provisions. Waivers, amendments or modifications of any
term or condition of this Agreement must be in writing and
signed by the party against whom such waiver is sought to be
enforced. No waiver by any party of any breach hereunder
shall be deemed a waiver of any other or subsequent breach.
(i) Indemnification. Seller shall indemnify and
defend Purchaser against and hold Purchaser harmless from
any and all loss, cost, damage, claim, liability or expense,
including court costs and reasonable attorneys' fees,
charges or disbursements for (1) any of the matters under
the Assignment of Leases or the Assignment of Service
Contracts to the extent to be indemnified thereunder by
Seller; or (2) third party claims arising out of or in
connection with any tort committed by Seller (including any
personal injury or property damage or claim of personal
injury or property damage of any kind whatsoever, including
death, to property or persons, including employees of
Seller) unless caused by Purchaser, resulting from such tort
occasioned in or about the Property prior to Closing;
provided, however, Seller will not and does not protect,
defend or indemnify Purchaser from or against any claims,
damages or liabilities arising out of the TCE or the VOCs or
other Hazardous Substances on the Property nor will Seller
be responsible to Purchaser for any of the cost of clean-up,
if required. Purchaser shall indemnify and defend Seller
against and hold Seller harmless from any and all loss,
cost, damage, claim liability or expense, including court
costs and reasonable attorneys' fees, charges or disburse
ments, for (1) any of the matters under the Assignment of
Leases or the Assignment of Service Contracts to the extent
to be indemnified thereunder by Purchaser; (2) breach of its
confidentiality covenants under Paragraph 6(a); or (3) third
party claims arising out of or in connection with any tort
committed by Purchaser (including any personal injury or
property damage or claim of personal injury or property
damage of any kind whatsoever, including death, to property
or persons, including employees of Purchaser) unless caused
by Seller, resulting from such tort occasioned in or about
the Property (a) as a result of its investigation of the
Property during the Approval Period or until Closing or (b)
on or subsequent to Closing. These covenants shall survive
Closing or any termination of this Agreement.
16. Miscellaneous Provisions.
(a) Successors and Assigns. Subject to the pro
visions hereof, the terms and provisions hereof shall be
binding upon and inure to the benefit of the successors and
assigns of the parties hereto.
(b) Meaning of Terms. When necessary herein, all
terms used in the singular shall apply to the plural and
vice versa; and all terms used in the masculine shall apply
to the neuter and feminine genders.
(c) Entire Agreement. This Agreement is the
entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior
agreements between the parties hereto with respect thereto.
No claim of waiver, modification, consent or acquiescence
with respect to any of the provisions of this Agreement
shall be made against either party, except on the basis of a
written instrument executed by or on behalf of such party.
(d) Governing Law. This Agreement is to be
governed by and construed in accordance with the internal
laws of the State of California.
(e) Paragraph Headings. The headings of the sev
eral paragraphs of this Agreement are inserted solely for
convenience of reference and are not a part of and are not
intended to govern, limit or aid in the construction of any
term or provision hereof.
(f) Attorneys' Fees. If either Seller or Pur
chaser shall obtain legal counsel and bring an action or
proceeding against the other by reason of the breach of any
covenant, provision or condition hereof, or otherwise
arising out of this Agreement, the unsuccessful party shall
pay to the prevailing party reasonable attorneys' fees,
charges and disbursements, which shall be payable whether or
not any proceeding is prosecuted to judgment or award. The
term "prevailing party" shall include a party who brings an
action or proceeding against the other by reason of the
other's breach or default and obtains substantially the
relief sought by judgment or award.
(g) Notices. All notices, requests and other
communications hereunder shall be in writing and shall be
personally delivered or, in the alternative, sent by
facsimile transmission (with confirmation) to the numbers
listed below or deposited with (1) the United States Postal
Service, Certified Mail with Return Receipt Requested, with
postage prepaid or (2) Federal Express or other overnight
air freight forwarder for delivery to the following
addresses, and shall be effective immediately upon delivery
if during regular business hours or, if not delivered during
regular business hours, then the next business day:
Seller: Carlsberg Investment Company
2800 28th Street
Suite 200
Santa Monica, CA 90405
Attn: Barbara H. Carlsberg,
General Partner
FAX (310) 450-5313
With a copy to: Carlsberg Investment Company
c/o Pacific US Real Estate Group
2 North Lake Avenue, Suite 800
Pasadena, CA 91101
Attn: Paul Giuntini
Fax: (818) 577-5450
With a copy to: Munger Tolles & Olson
355 South Grand Avenue
Los Angeles, CA 90071
Attn: Richard S. Volpert, Esq.
FAX (213) 687-3702
Purchaser: Arden Realty, Inc.
9100 Wilshire Boulevard
Suite 700 East
Beverly Hills, CA 90212
Attn: Mr. Richard S. Ziman
Chairman & CEO
FAX (310) 246-2941
With a copy to: Troy & Gould
1801 Century Park East, 16th Floor
Los Angeles, CA 90067
Attn: Kenneth R. Blumer, Esq.
FAX (310) 201-4746
Escrow Agent: Chicago Title Insurance Company
700 South Flower
Suite 900
Los Angeles, CA 90017
Attn: Rose Martinez
FAX (213) 488-4384
All notices, requests and other communications shall be
deemed received on the date of acknowledgment or other
evidence of actual receipt if delivered during regular
business hours or, if not delivered during regular business
hours, then the next business day.
(h) Severability. If any provision of this Agree
ment or the application thereof to any person or cir
cumstance shall be invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such
provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest
extent permitted by law.
(i) Further Assurances on or After Closing. Each
party hereto agrees to do all acts and things and to make,
execute and deliver such written instruments as shall be
reasonably necessary to carry out the terms and provisions
of this Agreement after the Closing. In this regard Seller
agrees to use its best efforts to cause to be made available
to Purchaser's auditors copies of the books, records,
general ledgers and journals relating to the Property,
sufficient for them to prepare comparative certified
statements for Purchaser for calendar years 1996 and 1997 to
the date of Closing. This covenant of further assurances
shall survive Closing.
(j) Other Parties. Nothing in this Agreement
shall be construed as giving any person, firm, corporation
or other entity, other than the parties hereto, their
successors and permitted assigns, any right, remedy or claim
under or with respect to this Agreement or any provision
hereof.
(k) Confidentiality. Seller and Purchaser agree
that it is in both of their best interests to keep this
Agreement and all information concerning the Property
confidential until Closing. Seller and Purchaser each
agrees that neither shall take any action nor conduct itself
in any fashion that would disclose to third parties
unrelated to Purchaser's acquisition or intended ownership
and operation of the Property, any aspect of the
contemplated transaction. After Closing, neither party
shall make any public announcement of the transaction that
has not been approved in advance and in writing by the other
party. This Paragraph 16(i) shall survive the Closing or
any termination of this Agreement.
(l) Tax Deferred Exchange. Seller may desire to
dispose of the Property through a tax deferred exchange
which qualifies for non-recognition of gain under Section
1031 of the Internal Revenue Code. Purchaser shall
cooperate with Seller in attempting to effectuate such
exchange, including, but not limited to, the execution of
such documentation as may be reasonably necessary to effect
such exchange, provided that (i) Purchaser shall not incur
any additional liability in connection with an exchange for
the benefit of Seller, (ii) Purchaser shall not be obligated
to take title to any real property (other than the
Property), (iii) the date of Closing shall not be extended
as a result of the exchange, without Purchaser's prior
written consent, and (iv) any additional costs and charges
attributable to the exchange, including, but not limited to,
attorneys' fees, brokers' commissions and other transaction
related expenses shall be paid for by Seller. Purchaser and
Seller further agree that Seller may substitute an
intermediary ("Intermediary") to act in place of Seller as
the seller of the Property. The Intermediary shall be desig
nated in writing by Seller. Upon identification of Interme
diary, Intermediary shall be substituted for Seller as the
seller of the Property. Purchaser agrees to accept the
Property and all other required performance from
Intermediary and to render its performance of all of its
obligations to Intermediary. Purchaser agrees that
performance by Intermediary will be treated as performance
by Seller. Seller shall unconditionally guarantee the full
and timely performance by Intermediary of each and every one
of the representations, warranties, covenants, indemnities,
obligations and undertakings of Intermediary. As guarantor,
Seller shall be treated as a primary obligor with respect to
these representations, warranties, covenants, indemnities,
obligations and undertakings, and, in the event of breach,
Purchaser may proceed directly against Seller on this
guarantee without the need to join Intermediary as a party
to any action against Seller. Seller unconditionally waives
any defense that it might have as guarantor that it would
not have if it had made or undertaken these representations,
warranties, covenants, indemnities, obligations and
undertakings directly. In the event of the breach of any
representations, warranties, covenants, obligations and
undertakings by Seller or Intermediary or in the event of
any claim upon any indemnity of Seller or Intermediary
(whether the representation, warranty, covenant, indemnity,
obligation or undertaking is express or implied),
Purchaser's exclusive recourse shall be against the Seller
and Purchaser shall have no recourse of any type against the
Intermediary arising from this transaction.
(m) Condition of Property. Purchaser
acknowledges that it will inspect and examine the Property
and, except as expressly provided in this Agreement, will
rely solely on its own investigation of the Property and not
on any information provided or to be provided by or on
behalf of Seller. Except as otherwise expressly provided in
this Agreement, the sale of the Property to Purchaser is
made on an "AS IS" "WHERE IS" and "WITH ALL FAULTS" basis.
Purchaser acknowledges that in consideration of entering
into this Agreement, that, except as expressly provided in
this Agreement, Seller makes no warranty or representation
with respect to the Property, or any portion thereof,
express or implied, or arising by operation of law,
including, but not limited to, any warranty of condition
(physical, environmental or otherwise), title (other than
the limited warranties of title contained in the grant
deed), habitability or fitness for a particular purpose or
otherwise.
(n) Counterparts. This Agreement may be executed
in any number of counterparts, each of which so executed
shall be deemed an original; such counterparts shall
together constitute but one agreement.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement the day and year first hereinabove written.
Seller: CARLSBERG INVESTMENT COMPANY,
a Wyoming partnership
By: /s/ Barbara H. Carlsberg
Name: Barbara H. Carlsberg
Title: General Partner
Purchaser: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc.,
a Maryland corporation,
Its general partner
By:/s/ Richard S. Ziman
Richard S. Ziman,
Chairman of the Board and
Chief Executive Officer
The undersigned hereby executes this Agreement to
evidence its agreement to act as Escrow Holder in accordance
with the terms of this Agreement.
AGREED AND ACCEPTED:
Escrow Agent:
Chicago Title Insurance Company
By: /s/ Rose Martinez
Name: Rose Martinez
Title: Senior Escrow Officer
