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) April 10, 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 May 12, 1997, Arden Realty, Inc. (collectively with its subsidiaries, the
"Company") completed a series of transactions to purchase nine suburban
office properties totaling 1,287,475 rentable square feet. With the
exception of 535 Brand, all properties were purchased from unaffiliated
entities.
535 Brand in Glendale, California contains 109,187 rentable square feet. The
property was purchased for approximately $10,000,000, which was based on arms
length negotiations. The Company plans to complete capital improvements to
the property for approximately $4,000,000. The property is presently 51%
occupied, at average rents of $11.47 per square foot. Quoted market rental
rates are $25.50 per square foot. The property was purchased from Arthur
Gilbert, a minority interest common share owner of the Company, and former
member of the Board of Directors of the Company.
California Twin Centre in Bakersfield, California contains 155,189 rentable
square feet. The purchase price for the property was approximately
$19,500,000, which was based on arms length negotiations. The property is
presently 88.5% occupied, at average rents of $23.75 per square foot. Quoted
market rental rates are $21.00 per square foot. The property was purchased
from Caltwin Associates, LLC, and Caltwin Investors, LLC.
Whittier Financial Center in Whittier, California contains 135,415 rentable
square feet. The purchase price for the property was approximately
$14,300,000, which was based on arms length negotiations. The property is
presently 85.2% occupied, at average rents of $17.85 per square foot. The
quoted market rental rates are $21.60 per square foot. The property was
purchased from Whittier LRP, Inc.; BFMHRBF No. II Inc.; Highridge-BFM
Investment Partnership L.P.; and Highridge-Commercial Fund No. I, L.P. as
Tenants-in-Common.
6800 Owensmouth in Canoga Park, California contains 80,014 rentable square
feet. The purchase price of the property was approximately $7,500,000, which
was based on arms length negotiations. The property is presently 84.9%
occupied, at average rents of $18.25 per square foot. Quoted market rental
rates are $18.60 per square foot. The property was purchased from 6800
Owensmouth, Inc.
Noble Professional Center in Sherman Oaks, California contains 51,828 rentable
square feet. The purchase price for the property was approximately $6,700,000,
which was based on arms length negotiations. The property is presently 80.5%
occupied, at average rents of $20.05 per square foot. Quoted market rental
rates are $22.20 per square foot. The property was purchased from QRE
Holding Company.
10780 Santa Monica Boulevard in Los Angeles, California contains 92,486
rentable square feet. The purchase price for the property was approximately
$10,500,000, which was based on arms length negotiations. The property is
presently 84.1% occupied, at average rents of $18.22 per square foot. Quoted
market rental rates are $20.40 per square foot. The property was purchased
from John Hancock Mutual Life Insurance Company.
Clarendon Crest in Woodland Hills, California contains 43,063 rentable square
feet. The purchase price for the property was approximately $5,200,000,
which was based on arms length negotiations. The property is presently 84.7%
occupied, at average rents of $18.56 per square foot. Quoted market rental
rates are $19.80 per square foot. The property was purchased from HFA -
Clarendon Crest L.L.C.
South Bay Center located in Gardena, California contain 202,830 rentable square
feet. The purchase price for the property was approximately $19,100,000, which
was based on arms length negotiations. The property is presently 85.8%
occupied, at average rents of $17.30 per square foot. Quoted market rental
rates are $19.80 per square foot. The property was purchased from RCBT
California Properties, L.P.
8383 Wilshire in Beverly Hills, California contains 417,463 rentable square
feet. The purchase price for the property was approximately $59,000,000
which was based on arms length negotiations. The property is presently 76.8%
occupied, at average rents of $21.09 per square foot. Quoted market rental
rates are $23.40 per square foot. The property was purchased from ZML-WSFP
Limited Partnership.
To finance these acquisitions the Company borrowed $71,000,000 on its existing
bridge loan with Lehman Brothers Holdings, Inc. (bringing the outstanding
balance on that loan to $175,000,000), borrowed $3,200,000 on its revolving
line of credit with a group of banks led by Wells Fargo Bank (bringing the
outstanding balance to $54,200,000), and borrowed $10,000,000 on its
unsecured line of credit with City National Bank (bringing the outstanding
balance to $10,000,000). In addition, 26,880 operating partnership units
were issued by Arden Realty Limited Partnership in connection with the
purchase of California Twin Centre.
Inclusive of these purchases, the Company's portfolio consists of 43 suburban
office properties comprising 6,730,599 rentable square feet and 16 apartment
units.
Item 7. Financial Statements and Exhibits
(a) Financial statements of properties acquired.
It is impracticable to provide the required financial statements at the time of
the filing of this report. The required financial statements for the acquired
properties will be filed as an amendment to this Form within 60 days.
(b) Pro forma financial information.
It is impracticable to provide the required pro forma financial information at
the time of the filing of this report. The required pro forma financial
information will be filed as an amendment to this Form within 60 days.
(c) Exhibits.
10.10 Agreement of Purchase and Sale and Escrow Instructions between Arthur
Gilbert, Trustee of the Arthur Gilbert and Rosalinde Gilbert 1982 Trust,
as amended ("Seller") and Arden Realty Limited Partnership, a Maryland
limited partnership ("Purchaser")
10.11 Amendment to Agreement of Purchase and Sale and Escrow Instructions
between Arthur Gilbert, Trustee of Arthur Gilbert and Rosalinde Gilbert
1982 Trust, as amended ("Seller") and Arden Realty Limited Partnership,
a Maryland limited partnership ("Purchaser").
10.12 Agreement of Purchase and Sale and Contribution and Escrow Instructions
between Caltwin Associates, L.L.C., a Delaware limited liability company
("Associates") and Caltwin Investors, L.L.C., a Delaware limited
liability company ("Investors") and Arden Realty Limited Partnership, a
Maryland limited partnership ("Purchaser").
10.13 Agreement of Purchase and Sale or Contribution and Escrow Instructions
between Whittier-LRP, Inc., a California corporation; BFMHRBF No. II
Inc., a Delaware corporation; Highridge-BFM Investment Partnership, L.P.,
a California limited partnership; and Highridge Commercial Fund, No. I,
L.P., a California limited partnership, as Tenants-in-Common ("Sellers")
and Arden Realty Limited Partnership, a Maryland limited partnership
("Purchaser").
10.14 Assignment and Amendment to Agreement of Purchase and Sale or
Contribution and Escrow Instructions between Highridge Commercial Fund
No. I, L.P., a California limited partnership ("Seller") and RPM
Investments, Inc., a California corporation ("Accommodator") and Arden
Realty Limited Partnership, a Maryland limited partnership ("Purchaser").
10.15 Agreement of Purchase and Sale and Escrow Instructions between 6800
Owensmouth, Inc., a California corporation ("Seller") and Arden Realty
Limited Partnership, a Maryland limited partnership.
10.16 Purchase Agreement as amended by this letter agreement between 6800
Owensmouth, Inc., a California corporation ("Seller") and Arden Realty
Limited Partnership, a Maryland limited partnership ("Purchaser").
10.17 Purchase and Sale Agreement and Joint Escrow Instructions between QRE
Holding Company, a California corporation ("Seller") and Arden Realty
Limited Partnership, a Maryland limited partnership ("Purchaser").
10.18 First Amendment to Purchase and Sale Agreement and Joint Escrow
Instructions between QRE Holding Company, a California corporation
("Seller") and Arden Realty Limited Partnership, a Maryland limited
partnership ("Purchaser").
10.19 Second Amendment to Purchase and Sale Agreement and Joint Escrow
Instructions between QRE Holding Company, a California corporation
("Seller") and Arden Realty Limited Partnership, a Maryland limited
partnership ("Purchaser").
10.20 Purchase and Sale Agreement between John Hancock Mutual Life Insurance
Company, a Massachusetts corporation, ("Seller") and Arden Realty Limited
Partnership, a Maryland limited partnership ("Buyer").
10.21 First Amendment to Purchase and Sale Agreement between John Hancock
Mutual Life Insurance Company ("Seller") and Arden Realty Limited
Partnership ("Buyer").
10.22 Second Amendment to Purchase and Sale Agreement between John Hancock
Mutual Life Insurance Company ("Seller") and Arden Realty Limited
Partnership ("Buyer").
10.23 Third Amendment to Purchase and Sale Agreement between John Hancock
Mutual Life Insurance Company ("Seller") and Arden Realty Limited
Partnership ("Buyer").
10.24 Fourth Amendment to Purchase and Sale Agreement between John Hancock
Mutual Life Insurance Company ("Seller") and Arden Realty Limited
Partnership ("Buyer").
10.25 Fifth Amendment to Purchase and Sale Agreement between John Hancock
Mutual Life Insurance Company ("Seller") and Arden Realty Limited
Partnership ("Buyer").
10.26 Agreement of Purchase and Sale or Contribution and Escrow Instructions
between HFA - Clarendon Crest, L.L.C., a Delaware limited liability
company ("Seller") and Arden Realty Limited Partnership, a Maryland
limited partnership ("Purchaser").
10.27 Agreement to Sell and Purchase and Escrow Instructions between RCBT
California Properties, L.P., a California limited partnership
("Seller") and Arden Realty Limited Partnership, a Maryland limited
partnership ("Purchaser").
10.28 First Amendment to Agreement to Sell and Purchase and Escrow Instructions
between RCBT California Properties, L.P., a California limited
partnership ("Seller") and Arden Realty Limited Partnership, a Maryland
limited partnership ("Purchaser").
10.29 Real Estate Sale Agreement and Escrow Instructions between ZML-WSVP
Limited Partnership, an Illinois limited partnership ("Seller") and
Arden Realty Limited Partnership, a Maryland limited partnership
("Purchaser").
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: May 22, 1997 By: /s/ Diana M. Laing
Diana M. Laing
Chief Financial Officer
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 6th day of
November 1996 by and between ARTHUR GILBERT, TRUSTEE OF THE
ARTHUR GILBERT AND ROSALINDE GILBERT 1982 TRUST, AS AMENDED
("Seller"), and ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership ("Purchaser"), with
reference to the following facts:
A. Prior to closing Seller will be the fee owner of
that certain parcel of real property (the "Real Property")
and the improvements thereon, for informational purposes
only, are an eleven (11)-story office building containing
approximately 118,000 rentable square feet, other facili-
ties, fixtures, paving and surfacing thereon or associated
therewith, and a separate three (3)-story automobile parking
structure containing approximately 75,000 square feet
including 230 marked parking spaces (collectively, the
"Improvements"). The Real Property and Improvements are
commonly known as the Wells Fargo Bank Building and are
located at 535 North Brand Boulevard, Glendale, California
91203, 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 to be
acquired by Seller located at or forming part of the Real
Property, including, but not limited to, the Improvements,
and all appurtenant easements and rights, and the Personal
Property (as hereinafter defined) on the terms, covenants
and conditions hereinafter set forth.
NOW, THEREFORE, with reference to the foregoing reci-
tals and in reliance thereon and in consideration of the
purchase price hereinbelow set forth, and the other terms,
covenants and conditions set forth below, and other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, it is mutually covenanted and
agreed by Seller and Purchaser as follows:
1. Purchase and Sale. Subject to all of the
terms and conditions of this Agreement and for the
consideration set forth, on Closing (as hereinafter
defined), Seller shall convey, or cause to be conveyed, to
Purchaser or to Purchaser's assignee pursuant to paragraph
15(f) below, and Purchaser or assignee shall purchase from
Seller, all of the following:
(a) The Real Property and the Improvements,
together with all easements, hereditaments and appurtenances
thereto, subject only to such easements, agreements and
exceptions as may have been approved by Purchaser in
accordance with Paragraph 4(a) hereof and the tenancies and
occupancies that are set forth on Exhibit "B";
(b) All of the personal property (the "Personal
Property") located at, attached or appurtenant to, or used
in connection with the operation or maintenance of the Real
Property and/or the Improvements (the "Inventory");
(c) All leases to tenants leasing space in the
Improvements (the "Tenant Leases");
(d) To the extent assignable, those certain
service and other agreements more particularly described in
Exhibit "C" attached hereto and made a part hereof; 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 Ten Million Dollars
($10,000,000.00), 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), ("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) Purchaser shall pay to Seller through Escrow
Agent at Closing in immediately available funds an amount
equal to the balance of the Purchase Price, plus (or minus)
the net amount of all costs, expenses, adjustments and
prorations to be credited (or debited) to Purchaser pursuant
to this Agreement. If Seller fails to forward to Purchaser
a Qualifying Statement provided under 1445 of the Internal
Revenue Code and an equivalent Form 590RE provided under the
Revenue and Taxation Code of the State of California, Escrow
Agent shall be entitled to withhold and pay to the Internal
Revenue Service and the Franchise Tax Board such withholding
required of Purchaser pursuant to Internal Revenue Code 1445
and equivalent form provided under the Revenue and Taxation
Code of the State of California.
(c) The Deposit shall be at all times invested by
Escrow Agent in the following investments ("Approved
Investments"): (i) United States Treasury obligations, (ii)
United States Treasury-backed repurchase agreements issued
by a major money center banking institution reasonably
acceptable to Seller, (iii) Certificates of Deposit or Money
Market Accounts of institutions whose deposits are insured
by the FDIC or (iv) such other manner as may be reasonably
agreed to by Seller and Purchaser. The Deposit shall be
disposed of by Escrow Agent only as provided in this
Agreement.
(d) All payments required to be made under this
Agreement shall be made in U.S. funds.
3. Escrow.
(a) Opening of Escrow. As soon as commercially
reasonable after their complete execution of this Agreement
("Effective Date") and in any event not later than two
business days thereafter, Seller and Purchaser shall open an
escrow (the "Escrow") with Commerce Escrow, 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, Purchaser and
Escrow Agent, to serve as Escrow instructions to Escrow
Agent, and Escrow Agent shall be and is hereby authorized
and instructed to deliver pursuant to the terms of this
Agreement the documents and monies to be deposited into the
Escrow. Escrow Agent may attach to this Agreement Escrow
Agent's standard form escrow agreement, to the extent that
the same is consistent with the terms hereof, and are
reasonably approved by Seller and Purchaser. Escrow Agent
shall immediately, upon receipt of such duly executed copy
of this Agreement, notify Seller and Purchaser of the
opening of Escrow. Should either party fail to open Escrow
in accordance with the provisions of this Paragraph 3(a),
such failure shall constitute a material breach of this
Agreement.
(b) Closing of Escrow. Escrow shall close not
later than sixty (60) days following the expiration of the
Approval Period and upon five (5) days prior written notice
from Purchaser, but in all events not later than January 31,
1997, provided the Tenant Estoppels satisfying the
requirements of paragraph 8(b) hereof have been received and
all other Purchaser's Conditions Precedent to Closing as set
forth in Paragraph 8 hereof have been satisfied. The term
"Closing" as used herein shall be deemed to be the date upon
which the respective Conditions Precedent to Purchaser's
Obligation to Close Escrow (set forth in Paragraph 8 below)
and the Conditions Precedent to Seller's 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 Commonwealth Title Insurance
Company ("Title Company"), together with true 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 Approval Date (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 by the Approval Date. 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, by the
Approval Date, Purchaser shall be deemed to have approved
said exceptions. Purchaser's approval of the Preliminary
Title Report shall be without prejudice to Purchaser's right
to disapprove additional survey matters or any supplementary
reports issued by Title Company or disclosed after the
Approval Date; 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 Approval Date. 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 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),
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
Commonwealth 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) Complete copies of all of the
Tenant Leases and all amendments thereto, a schedule of
which is attached hereto as Exhibit "B" and forms a part
hereof.
(ii) 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, 1994 to the extent
available to Seller;
(v) Statements of income and expense
for the Property for the calendar years 1994, 1995 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 contracts pertaining to the Property (including, but
not limited to, HVAC, elevator, landscape, management,
leasing brokerage and parking) in respect to which Seller is
obligated (the "Service 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 the
later of November 30, 1996 or 15 days following the latest
date that (i) all of the materials listed in paragraph (a)
above have been delivered or made available to Purchaser and
(ii) Purchaser shall have obtained an ALTA Survey, Phase I
Report and M.A.I. Appraisal of the Property (the "Approval
Date") 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 by the
Approval Date 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,
accountants and prospective debt and equity financing
sources who reasonably need to be informed in connection
with Purchaser's determinations hereunder (and who shall, in
turn, be required to keep such information confidential).
(b) From and after the date hereof until Closing,
Purchaser and its agents shall be afforded full opportunity
by Seller during normal business hours and upon twenty-four
(24) hours prior notice to examine all operating books and
records that relate to the Property, including all
specifications and as-built drawings (to the extent they are
in Seller's possession), all building permits, certificates
of occupancy, soil reports, engineers' reports and studies,
and similar information relating to the Property or its
management, operation, maintenance or use, and all
warranties and operating 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) Purchaser shall have until the Approval Date
in which to approve or disapprove the matters referred to in
subparagraphs (a) and (b) above. Purchaser's disapproval
shall be in writing and shall be delivered to Seller prior
to the Approval Date. Failure to 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 date of execution of this Agreement and until the
Closing Date Seller shall not enter into any new leases or
amend or extend, terminate or accept the surrender of any
existing tenancies or approve any subleases without the
prior written consent of Purchaser (which consent shall not
be unreasonably 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
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 of the Tenant Leases, except for collection of current
rents no more than one month in advance.
(b) Leasing Commissions; Tenant Improvements and
Rent Concessions. Purchaser agrees to be responsible for
all leasing commissions, tenant improvement costs and
unamortized rent concessions with respect to new leases,
extension of existing leases and renewal occurring after
November 1, 1996, 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, 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) Delivery of Tenant Estoppels. Seller shall
have delivered to Purchaser estoppel letters (the "Tenant
Estoppels") from tenants representing 85% of the leased area
and from all tenants leasing more than 3,500 square feet in
the Improvements in substantially the form of Exhibit "D"
attached hereto and forming a part hereof, consistent in all
material respects with the information to be provided by
Seller hereunder and certifying inter alia to the effect
that there are no defaults by landlord under the lease known
to tenant thereunder; that such lease is unmodified except
as may be set forth therein and in full force and effect;
that there are no defenses or offsets against the landlord
known to tenant thereunder; and that rental is current and
has not been paid more than one month in advance.
(c) Compliance with This Agreement. Seller shall
have performed and complied within 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 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
IMPOSSIBLE, TO ASCERTAIN WITH ANY DEGREE OF CERTAINTY PRIOR
TO SIGNING THIS AGREEMENT THE AMOUNT OF DAMAGES THAT WOULD
BE SUFFERED BY SELLER IN THE EVENT OF PURCHASER'S WRONGFUL
FAILURE TO PURCHASE THE PROPERTY. THE PARTIES, HAVING MADE
DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL
COMPENSATORY DAMAGES SELLER WOULD SUFFER IN THE EVENT OF
PURCHASER'S WRONGFUL FAILURE TO PURCHASE THE PROPERTY,
HEREBY AGREE THAT THE REASONABLE ESTIMATE OF SAID DAMAGES IS
AN AMOUNT EQUAL TO ONE HUNDRED THOUSAND DOLLARS ($100,000);
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.
/a/ AG /a/ 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;
(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 a signed counterpart of 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 and Assumption of
Leases and Security Agreements (the "Assignment of Leases")
substantially in the form and substance of Exhibit "G"
attached hereto and forming a part hereof;
(iv) An Assignment and Assumption of
Service and Miscellaneous Rights and Agreements (the
"Assignment of Service Contracts") substantially in the form
and substance of Exhibit "H" attached hereto and forming a
part hereof;
(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 each of the 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 which have not
been validly applied by Seller to a prior default by any of
such tenants, and any other deposits and prepaid rent, shall
be credited (or assigned) to Purchaser;
(v) Subject to the provisions of
Paragraph 12(c) below, 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 signed after the November 1, 1996 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 nothing, except
its own legal and accounting fees and expenses.
(ii) Purchaser shall pay:
(1) The cost of recording the
Grant Deed, including the documentary transfer taxes;
(2) The cost of the Title Policy
and the cost of any Survey;
(3) Escrow Agent's Escrow fees,
charges and expenses;
(4) The prepayment premium on any
mortgages or deeds of trust paid off at Closing; and
(5) The Brokerage commission of Sheldon
Katzer, a licensed broker, in the amount of $175,000.00.
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). Except as specifically set forth in this
Paragraph 13(a), 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 in 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. Purchaser acknowledges that Purchaser has
examined, reviewed and inspected all matters which in
Purchaser's judgment bear upon the Property and its value
and suitability for Purchaser's purposes. Except as to
matters specifically set forth in this Paragraph 13(a),
Purchaser will acquire the Property solely on the basis of
its own physical and financial examinations, reviews and
inspections and the title insurance protection afforded by
the Title Policy. Subject to the foregoing and except as
disclosed by Seller to Purchaser or otherwise discovered by
Purchaser prior to the Approval Date or as contained in the
materials delivered to Purchaser and identified in Paragraph
5 hereof, 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 for a period of one
(1) year:
(i) Seller has no actual knowledge,
without independent investigation, of any:
(1) existing latent defects or
seismic conditions concerning the Real Property or
materially incorrect income or expense figures in any
financial statements prepared by or for Seller and delivered
to Purchaser regarding the Property.
(2) any litigation or
administrative action, arbitration, proceeding pending
before any court, agency or official, nor any 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 (other
than asbestos) 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;
(5) thing that would suggest any
portion of the Property has ever been used by Seller or any
tenant of any portion of the Property during Seller's
ownership thereof as a waste storage or disposal site or
gasoline station. Without limiting the other provisions of
this Agreement, Seller shall reasonably cooperate with
Purchaser's investigation of matters relating to the
foregoing provisions of this paragraph and to provide access
to and copies of any data and/or documents dealing with
potentially Hazardous Substances used at the Property and
any disposal practices followed in accordance with, and
subject to the provisions of, Paragraph 6 hereof. Seller
agrees that Purchaser may make inquiries of governmental
agencies regarding such matters, without liability for the
outcome of such discussions. For the purposes of this
Agreement, "Hazardous Substances" shall mean (A) substances
defined as "hazardous substances" in (i) the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended (42 U.S. C. ss. 9601 et seq.), or (ii) the
Resource Conservation and Recovery Act of 1976 (42 U.S.C.
ss. 6901 et seq.), together with the regulations enacted
pursuant to such acts, and (B) those substances defined as
"hazardous wastes" in ss. 25117 of the California Health and
Safety Code or as "hazardous substances" in ss. 25316 of the
California Health and Safety Code together with the
regulations enacted pursuant to such statutes.
(ii) The Tenant Leases and Service
Contracts and any other agreements, matters and things to be
submitted to Purchaser by Seller for approval pursuant to
Paragraph 5 above, or otherwise, shall be true, correct and
complete copies thereof as of the date of submission
thereof, and as thereafter supplemented by supplements or
additions, approved in writing by Purchaser, on or before
Closing. Notwithstanding anything to the contrary contained
herein, Seller shall have no obligation or liability to
Purchaser with respect to any of the foregoing lease matters
which shall be confirmed as correct in any tenant estoppel
certificate delivered to Purchaser as provided in this
Agreement;
(iii) The operating financial information
prepared by Seller and delivered to Purchaser with respect
to the Property, consisting of Statements of Operations for
the calendar years ended December 31, 1994, December 31,
1995 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, 1995 and for the period from January
1, 1996 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 of Arthur
Gilbert and Sheldon Katzer, the Property Manager of Seller.
(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.
Purchaser hereby makes the following representations and
warranties, each of which is deemed to be material and each
of which is stated by Purchaser to be true and correct on
the date hereof:
(a) Purchaser has full legal power and authority
to enter into and perform this Agreement in accordance with
its terms. This Agreement constitutes the valid and binding
obligation of Purchaser, enforceable in accordance with its
terms, except as such enforcement may be affected by 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 Approval Date 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 other than Sheldon Katzer ("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. Purchaser agrees to pay
at Closing to Broker the commission due him in connection
with the within transaction and Seller and hereby agrees to
indemnify Purchaser against and hold Purchaser harmless from
any and all claims, demands, causes of action or damages
resulting from any breach of this warranty. Purchaser
hereby warrants that Purchaser did not negotiate through any
broker, agent, finder, affiliate or other third party other
than Broker or incur any liability, contingent or otherwise,
for any such brokerage or finder's fees, agent's commissions
or other like payments, in connection with this Agreement,
and hereby agrees to indemnify Seller against and hold
Seller harmless from any and all claims, demands, causes of
action or damages resulting from any breach of this
warranty. This provision shall survive Closing.
(e) Further Assurances Prior to Closing. Seller
and Purchaser shall, prior to Closing, execute any and all
documents and perform any and all acts reasonably necessary,
incidental or appropriate to effect the purchase and sale
and the transactions contemplated in this Agreement.
(f) Time of Essence. Time shall be of the
essence with respect to the obligations of the parties
hereunder.
(g) Assignability. Purchaser may assign all of
its rights and duties hereunder to any entity with which
Purchaser is, directly or indirectly, affiliated or an
entity to be formed 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 and (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 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,
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, 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:
Seller: Arthur Gilbert
Gilbert Financial Corporation
9536 Wilshire Boulevard
Suite 420
Beverly Hills, California 90212
With a copy to: Martin H. Blank, Jr.
Attorney at Law
11755 Wilshire Boulevard
Suite 1400
Los Angeles, California 90025
Purchaser: Arden Realty, Inc.
9100 Wilshire Boulevard
Suite 700 East
Beverly Hills, CA 90212
Attn: Mr. Richard S. Ziman
With a copy to: Troy & Gould
1801 Century Park East
16th Floor
Los Angeles, CA 90067
Attn: Kenneth R. Blumer, Esq.
Escrow Agent: Commerce Escrow
1545 Wilshire Boulevard
Suite 600
Los Angeles, CA 90017
Attn: Mark Minsky
All notices, requests and other communications shall be
deemed received on the date of acknowledgment or other
evidence of actual receipt and shall also be deemed received
on the date service is refused.
(h) Severability. If any provision of this
Agreement 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.
(h). 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) 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: /s/ Arthur Gilbert
ARTHUR GILBERT, TRUSTEE OF THE
ARTHUR GILBERT AND ROSALINDE GILBERT
1982 TRUST, AS AMENDED
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
By: /s/ Mark Minsky
Name: Mark Minsky
Title: President
ARDEN REALTY LIMITED PARTNERSHIP
9100 WILSHIRE BOULEVARD
SUITE 700 E
Beverly Hills, California 90212
(310)-271-8600
FAX (310)-274-6218
March 10, 1997
VIA FACSIMILE & FIRST CLASS MAIL
Arthur Gilbert,
Trustee of The Arthur Gilbert and Rosalinde
Gilbert 1982 Trust, As Amended
c/o Gilbert Financial Corporation
9536 Wilshire Boulevard
Suite 420
Beverly Hills, California 90212
Re: Amendment to Agreement of Purchase and Sale and Escrow
Instructions covering 535 North Brand Boulevard, Glendale, California
Dear Mr. Gilbert:
Reference is made to that certain Agreement of Purchase and Sale and Escrow
Instructions ("Agreement") dated November 6, 1996, between Arden Realty Limited
Partnership, a Maryland limited partnership ("Purchaser") and Arthur Gilbert,
Trustee of The Arthur Gilbert and Rosalinde Gilbert 1982 Trust, As Amended
("Seller"). Capitalized terms not defined herein shall have the meaning given
to them in the Agreement.
This letter shall confirm our prior mutual agreement (1) to amend paragraph
3(b) of the Agreement to extend the outside Closing Date to not later than
March 31, 1997 and (2) that this letter shall constitute sufficient
notice to Seller to establish a Closing Date for the purchase and sale of the
Property on March 12, 1997. In all other respects the Agreement shall be and
remain in full force and effect as originally written.
If the foregoing correctly reflects your understanding of our mutual agreement,
please so indicate in the space provided below for your signature and return a
copy of this Amendment to the undersigned and to the Escrow.
Sincerely,
ACCEPTED AND AGREED TO: ARDEN REALTY LIMITED PARTNERSHIP,
this 11 day of March 1997 a Maryland limited partnership
/s/ Arthur Gilbert
Arthur Gilbert, Trustee of The
Arthur Gilbert and Rosalinde
Gilbert 1982 Trust, As Amended
BY. Arden Realty Limited Partnership
A Maryland Corporation, Its General Partner
By:/s/ Richard S. Ziman
Name: Richard S. Ziman
Title: Chairman and Chief Executive Officer
AGREEMENT OF PURCHASE AND SALE
AND CONTRIBUTION
AND ESCROW INSTRUCTIONS
Among
CALTWIN ASSOCIATES, L.L.C.,
CALTWIN INVESTORS, L.L.C.
and
ARDEN REALTY LIMITED PARTNERSHIP
Covering
4900 California Avenue
Bakersfield, California
February 18, 1997
AGREEMENT OF PURCHASE AND SALE
AND CONTRIBUTION
AND ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND CONTRIBUTION AND
ESCROW INSTRUCTIONS ("Agreement") is made and entered into this
18th day of February 1997 by and among CALTWIN ASSOCIATES, L.L.C.,
a Delaware limited liability company ("Associates"), CALTWIN
INVESTORS, L.L.C., a Delaware limited liability company
("Investors") (Associates and Investors are each sometimes
hereinafter individually called a "CalTwin Party" and both are
sometimes hereinafter called the "CalTwin Parties"), and ARDEN
REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
("Arden"), with reference to the following facts:
A. As more particularly hereinafter set forth, the CalTwin
Parties are, or at "Closing" (as hereinafter defined) will be, as
tenants in common, the fee owner of that certain parcel of real
property (the "Real Property") that, for informational purposes
only, is improved with two (2), four (4)-story structural steel
reinforced concrete office buildings with a glass aluminum curtain
wall system containing approximately 155,189 net rentable square
feet, other facilities, fixtures, paving and surfacing thereon or
associated therewith, and approximately 649 marked automobile
parking spaces (collectively, the "Improvements"). The Real
Property is located at 4900 California Avenue, in the City of
Bakersfield, County of Kern, in the State of California, and is
more particularly described in Exhibit "A" attached hereto and
forming a part hereof. The undivided ownership interest of the
CalTwin Parties as tenants in common are, or as of the Closing
will be, as set forth in a separate notice ("TIC Interest Notice")
to be given by the CalTwin Parties to Arden prior to the "Approval
Date" as hereinafter defined. The undivided tenancy in common
interests contemplated herein are each sometimes hereinafter
individually referred to as a "TIC Interest" and all are sometimes
hereinafter collectively referred to as the "TIC Interests". As
used herein, the term "Percentage Interest" as to each CalTwin
Party means such CalTwin Party's percentage interest as set forth
in the TIC Interest Notice.
B. Associates desires to sell its TIC Interest (the
"Sale") and Investors desires to contribute its TIC Interest to
the capital of Arden (the "Contribution"), as more particularly
described hereafter, and Arden desires to acquire, all of the real
and personal property owned by each CalTwin Party located at or
forming part of the Real Property, including, but not limited to,
the Improvements, and all appurtenant easements and rights, and
the Personal Property (as hereinafter defined) on the terms,
covenants and conditions hereinafter set forth.
NOW, THEREFORE, with reference to the foregoing recitals and
in reliance thereon and in consideration of the purchase price
hereinbelow set forth, and the other terms, covenants and
conditions set forth below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, it is mutually covenanted and agreed by the CalTwin
Parties and Arden as follows:
1. Purchase, Sale and Contribution. Subject to all of the
terms and conditions of this Agreement and for the consideration
set forth, on Closing (as hereinafter defined), Associates shall
convey, or cause to be conveyed, to Arden, and Arden or its
assignee shall acquire, by purchase from Associates of an
undivided interest (the "Sale Interest") and by contribution to
the capital of Arden by Investors of an undivided interest (the
"Contribution Interest") in and to 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 Arden in accordance with Paragraph 4(a)
hereof and the tenancies and occupancies that are set forth on
Exhibit "B";
(b) All of the personal property (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 listed on Exhibit "C" (the "Inventory");
(c) All leases to tenants leasing space in the
Improvements (the "Tenant Leases");
(d) To the extent assignable, those certain service
and other agreements more particularly described in Exhibit "D"
attached hereto and made a part hereof; and
(e) All other right, title and interest of the CalTwin
Parties constituting part and parcel of the Property (as here-
inafter 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. Payment and Contribution Amounts.
2.1 Deposits.
(a) Upon the opening of Escrow (as hereinafter set
forth) Arden shall deliver to Escrow Agent (as hereinafter
defined) cash in the sum of Fifty Thousand Dollars ($50,000),
("Initial Deposit") which shall be held by Escrow Agent as
security for the full performance by Arden of its obligations
hereunder and on account of the "Sale Price" (as hereinafter
defined) payable at Closing (and other obligations of Arden
provided for herein), subject to the following terms and
conditions:
(i) If Arden elects to continue with this
Agreement at the Approval Date (as hereinafter defined), Arden
shall increase the Initial Deposit by the amount of $50,000 in
cash for a total of $100,000 (which sums, together with any
interest earned thereon and additions thereto, are herein
collectively called the "Deposit") within one business day after
the Approval Date;
(ii) If Closing occurs, then the Deposit shall be
applied to the Sale Price;
(iii) If Closing does not occur and the CalTwin
Parties shall be entitled to liquidated damages as provided in
Paragraph 10(b) hereof, the CalTwin Parties shall be entitled to
the Deposit (each CalTwin Party in accordance with its respective
Percentage Interest thereof); and
(iv) If the Closing does not occur and Arden
shall be entitled to the return of the Deposit as provided in this
Agreement, the same shall be returned to Arden.
(b) The Deposit shall be at all times invested by
Escrow Agent in the following investments ("Approved
Investments"): (i) United States Treasury obligations, (ii)
United States Treasury-backed repurchase agreements issued by a
major money center banking institution reasonably acceptable to
the CalTwin Parties, (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 the
CalTwin Parties and Arden. The Deposit shall be disposed of by
Escrow Agent only as provided in this Agreement.
2.2 Sale. The purchase price ("Sale Price") to be
paid by Arden for the Sale Interest of Associates shall be an
amount equivalent to the Percentage Interest of Associates applied
to the sum of Nineteen Million Five Hundred Thousand and No/100
Dollars ($19,500,000.00). The Sale Interest of Associates shall
not be subject to the existing loans ("Existing Loans") made by
Fremont Investment & Loan and by Heller Financial, Inc. ("Existing
Lenders") secured by, among other documents, deeds of trust
covering the Property, it being understood that a portion of the
Sale Price shall be utilized by Associates to pay off its
Percentage Interest of the outstanding balance of the Existing
Loan as of the Closing (the "Existing Loan Balance"). Arden shall
pay to Associates through Escrow Agent at Closing in immediately
available funds an amount equal to the balance of the Sale Price,
plus (or minus) Associates percentage interest of the net amount
of all costs, expenses, adjustments and prorations to be credited
(or debited) to Arden pursuant to this Agreement (the "Adjusted
Payment Amount"). If Associates fails to forward to Arden 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 Arden
pursuant to Internal Revenue Code 1445 and equivalent form
provided under the Revenue and Taxation Code of the State of
California.
2.3 Contribution. Investors shall contribute the
Contribution Interest to Arden and become an additional limited
partner in Purchaser at Closing. The Contribution Interest shall
be contributed to the capital of Arden subject to Investor's
Percentage Interest of the Existing Loan Balance (it being
understood and agreed that Arden intends to immediately pay off
the foregoing portion of the Existing Loans after the making of
the Contribution by Investors). At Closing, and in consideration
for the Contribution, Investors shall receive limited partnership
interests in Arden ("OP Units") in an amount equal to the
"Contribution Value". As used herein, "Contribution Value" means
the amount by which the "Investor Share" exceeds an amount equal
to (i) an amount equal to Investor's Percentage Interest of the
Existing Loan Balance, plus (or minus) (ii) an amount equal to
Investor's Percentage of the net amount of all costs, expenses,
adjustments and prorations to be credited (or debited) to Arden
pursuant to this Agreement. As used herein, the term "Investor
Share" means an amount equivalent to Investor's Percentage
Interest applied to the sum of $19,500,000. Each OP Unit shall
have a value equal to one (1) share of Arden Realty, Inc. common
stock ("ARI") as of the date which is three (3) business days
prior to Closing. ARI is listed on the New York Stock Exchange
under the Symbol ARI. The OP Units may be exchanged only in
accordance with the certain Amendment to Limited Partnership
Agreement, in the form attached hereto as Exhibit "K" and by this
reference incorporated herein.
2.4 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
business days thereafter, the CalTwin Parties and Arden shall open
an escrow (the "Escrow") with Commerce Escrow, 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 the CalTwin Parties, Arden 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 the CalTwin Parties and Arden. Escrow Agent shall
immediately, upon receipt of such duly executed copy of this
Agreement, notify the CalTwin Parties and Arden of the opening of
Escrow. Should any 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 April 1,
1997, provided the Tenant Estoppels satisfying the requirements of
paragraph 8(b) hereof have been received and all other Arden'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 Arden's Obligation to Close Escrow (set forth in
Paragraph 8 below) and the Conditions Precedent to the CalTwin
Parties' Obligation to Close Escrow (set forth in Paragraph 9
below) have been satisfied, the Grant Deeds ("Grant Deeds" herein)
hereinafter referred to is recorded in the office of the County
Recorder of Kern County. 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) The CalTwin Parties have ordered (and upon
receipt shall cause to be delivered to Arden) 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
Commonwealth Land Title Company ("Title Company"), together with
true copies of all documents evidencing matters of record shown as
exceptions to title thereon. The CalTwin Parties have delivered
to Arden a copy of that certain survey of the Property dated May
6, 1996 prepared by Simpson-Lusich-Van Curren (the "Survey"). If
Arden shall desire to update such Survey, Arden shall cause the
same to be so updated at Arden's sole cost and expense before the
Approval Date (and upon receipt shall deliver a copy of the
updated Survey to the CalTwin Parties). Arden shall have the
right to object to any exceptions contained in the Preliminary
Title Report or the Survey (or updated Survey) by giving notice to
the CalTwin Parties by the Approval Date. Notwithstanding any of
the foregoing, the CalTwin Parties shall at Closing (but shall not
be obligated prior thereto) remove of record or at the CalTwin
Parties' election provide a credit to Arden sufficient to pay off
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 Arden gives written notice
that it disapproves any such additional exceptions to title
matters, stating the exceptions so disapproved, by the Approval
Date, Arden shall be deemed to have approved said exceptions.
Arden's approval of the Preliminary Title Report shall be without
prejudice to Arden's right to disapprove additional survey matters
or any supplementary reports issued by Title Company or disclosed
after the Approval Date; provided, however, Arden's approval shall
not be unreasonably withheld, and, as to survey matters, shall
only be applicable if Arden shall have obtained an update of the
Survey before the Approval Date. If for any reason, on or before
the Closing Date the CalTwin Parties do not cause such exceptions
to title or survey matters which Arden timely disapproves (to the
extent Arden is permitted hereunder to so disapprove) to be
removed at no cost or expense to Arden (the CalTwin Parties having
the right but not the obligation to do so), the obligation of the
CalTwin Parties to sell and contribute, and Arden to acquire, the
Property as herein provided shall terminate (and the CalTwin
Parties and Arden shall have no further obligations in connection
herewith). Arden shall have the option to waive the condition
precedent set forth in this paragraph 4(a) by notice to the
CalTwin Parties. 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 Arden which are not timely objected to by Arden shall
be permitted exceptions to title and shall additionally include
(i) any title or survey matters objected to by Arden, which
objections are subsequently waived in writing by Arden, and (ii)
any title or survey matters objected to by Arden in accordance
with the terms and provisions of this Agreement, which objections
are cured to Arden'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 the CalTwin Parties are obligated to
pay and discharge, Escrow Agent may use any portion of the Sale
Price to satisfy the same (if the same are not bonded-over or
otherwise satisfied by title endorsement), provided the CalTwin
Parties 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
Commonwealth Land 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 Arden, or
in Arden'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, the CalTwin Parties shall
have delivered or shall have caused to be delivered or made
available to Arden at the Property to Arden to the extent they are
in the CalTwin Parties' possession or under its control, the
following:
(i) Complete copies of all of the Tenant Leases
and all amendments thereto, a schedule of which is attached hereto
as Exhibit "B" and forms a part hereof.
(ii) 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 the CalTwin Parties at any time after July 1, 1996 to
the extent available to the CalTwin Parties;
(iii) A set of all plans and specifications and
third-party soil reports, or environmental reports and studies
relating to the Property;
(iv) All electricity and property tax bills for
the period beginning July 1, 1996 to the extent available to the
CalTwin Parties;
(v) Statements of income and expense for the
Property for the calendar year 1996 from and after July 1, 1996
and current year to date to the extent available to the CalTwin
Parties;
(vi) All warranties and operating manuals that
the CalTwin Parties 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 therein;
and
(vii) Complete copies of all service and other
contracts pertaining to the Property in respect to which the
CalTwin Parties is obligated (the "Service Contracts").
(b) Except as expressly provided in this Agreement,
the CalTwin Parties makes no representation or warranty as to the
accuracy of the information contained in any of the documents,
instruments or agreements to be provided to Arden pursuant to this
Paragraph 5.
(c) Arden shall have until 5:00 P.M. on the date that
is thirty (30) days after the Effective Date or the next business
day if that date is a Saturday, Sunday or legal holiday (the
"Approval Date") in which to approve or disapprove all matters and
things that are subject to Arden's rights of review, inspection
and approval hereunder. Arden's failure either to approve or
disapprove said information by the Approval Date as aforesaid
shall be deemed its approval thereof (and its covenant to deliver
the additional $50,000 deposit required pursuant to paragraph
2(a)(i) hereof). If Arden disapproves any of said information,
Arden shall notify the CalTwin Parties in writing thereof within
the time period specified above whereupon, this Agreement shall
terminate, however, notwithstanding the foregoing, if Arden
disapproves any Service Contract, this Agreement shall not
terminate and the CalTwin Parties 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
Arden shall pay all cancellation or termination penalties, fees or
costs in connection therewith.
6. Inspections and Approval by Arden.
(a) From and after the date hereof, Arden and its
agents, employees and contractors shall be afforded full access to
the Property during normal business hours and upon forty-eight
(48) hours prior notice for the purpose of making such
investigations as Arden 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.
The CalTwin Parties shall reasonably cooperate to assist Arden in
completing such inspection. However, Arden agrees not to contact
any of the CalTwin Parties' tenants without the CalTwin Parties'
prior consent and to hold the CalTwin Parties harmless from and
against any loss, cost, damage, claim or expense suffered by the
CalTwin Parties or the Property and caused by Arden's said
investigations (the foregoing obligation surviving any termination
of this Agreement). In no event shall Arden make any intrusive
physical testing (environmental, structural or otherwise) at the
Property (such as soil borings or the like) without the CalTwin
Parties' prior consent. Arden shall promptly restore the Property
to its condition immediately prior to such investigations. In
addition, Arden agrees not to unreasonably interfere with the use
and enjoyment of the Property by the CalTwin Parties, their
agents, representatives, employees or any tenants or other
occupants. The CalTwin Parties shall have the right, at its
option, to cause a representative of the CalTwin Parties to be
present at all inspections, reviews and examinations conducted
hereunder. At the request of the CalTwin Parties, Arden shall
promptly deliver to the CalTwin Parties true, accurate and
complete copies of any written reports relating to the Property
prepared for or on behalf of Arden by any third party and, in the
event of termination hereunder, shall return all documents and
other materials furnished to or on behalf of Arden by the CalTwin
Parties hereunder. Arden shall keep all information or data
received or discovered in connection with any of the inspections,
reviews or examinations strictly confidential; provided; however,
that Arden shall be entitled to disclose such information to
Arden's attorneys, accountants and prospective debt and equity
financing sources who reasonably need to be informed in connection
with Arden's determinations hereunder (and who shall, in turn, be
required to keep such information confidential).
(b) From and after the date hereof until Closing,
Arden and its agents shall be afforded full opportunity by the
CalTwin Parties during normal business hours and upon forty-eight
(48) hours prior notice to examine all operating books and records
that relate to the Property, including all specifications and
as-built drawings (to the extent they are in the CalTwin Parties'
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 manuals that the CalTwin
Parties 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) Arden shall have until the Approval Date in which
to approve or disapprove the matters referred to in subparagraphs
(a) and (b) above. Furthermore, Arden 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 Arden's particular use
thereof) to be prepared at Arden's sole cost and expense. Arden's
disapproval shall be in writing and shall be delivered to the
CalTwin Parties prior to the Approval Date. Failure to deliver
such written disapproval shall be deemed Arden's approval of said
matters (and its covenant to deliver the additional $50,000
deposit required pursuant to paragraph 2(a)(i) hereof). Arden
understands and agrees that if it shall disapprove of any matter
or thing subject to its approval pursuant to paragraph 5 and 6
hereof, the CalTwin Parties shall not on account thereof be
obligated to correct the objection or otherwise lower the Purchase
Price or grant any credit with respect thereto.
7. Operation of Property Pending Closing.
(a) Tenant Leases. The CalTwin Parties have leased
portions of the Property to various occupancy tenants. From and
after the date of execution of this Agreement and until the
Closing Date the CalTwin Parties shall not enter into any new
leases or amend, terminate or accept the surrender of any existing
tenancies or approve any subleases without the prior written
consent of Arden (which consent shall not be unreasonably
withheld). Concurrently with its execution of this Agreement
Seller shall notify Purchaser of any lease agreements that are
outstanding for signature by prospective tenants, each of which is
hereby deemed approved by buyer. Any such agreements, if signed,
shall be deemed to be signed prior to execution of this Agreement.
In requesting such consent, the CalTwin Parties shall inform
Arden 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. The failure of Arden to
respond within five (5) business days after written request for
any such approval shall be deemed to constitute approval. The
CalTwin Parties shall not collect in advance any rent or other sum
due under any of the Tenant Leases, except for collection of
current rents no more than one month in advance.
(b) Leasing Commissions; Tenant Improvements and Rent
Concessions. Arden shall be responsible for all leasing
commissions, tenant improvement costs and unamortized rent
concessions due with respect to leases, extensions, and renewals
of leases, and similar events occurring after the date of this
Agreement, provided that (i) Arden has approved or is deemed to
have approved such action or event by the CalTwin Parties to the
extent occurring prior to the Closing Date and (ii) the CalTwin
Parties have delivered to Arden copies of the agreements with
respect to which any such commissions are payable. Failing such
delivery, the CalTwin Parties shall remain responsible for all of
such commissions.
(c) Insurance Policies. The CalTwin Parties 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. The CalTwin Parties 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 the CalTwin Parties for
any term provided that such Service Contracts are terminable by
the CalTwin Parties or its successors in interest upon not more
than thirty (30) days' notice to the service provider.
(e) Property Management. The CalTwin Parties 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 the CalTwin Parties.
8. Conditions Precedent to Arden's Obligation to Close
Escrow. The obligation of Arden to consummate the transactions
contemplated hereby is subject to the following conditions,
inserted for Arden's sole benefit and that may be waived by Arden
only in writing at its sole option. Said conditions are as
follows:
(a) Representations and Warranties True at Closing.
The representations and warranties of the CalTwin Parties
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. The CalTwin Parties
shall have delivered to Arden estoppel letters (the "Tenant
Estoppels") from tenants representing 85% of the leased area and
from all tenants leasing more than 3,500 square feet in the
Improvements in substantially the form of Exhibit "E" attached
hereto and forming a part hereof, consistent in all material
respects with the information to be provided by the CalTwin
Parties hereunder and certifying inter alia to the effect that
there are no defaults by landlord under the lease known to tenant
thereunder; that such lease is unmodified except as may be set
forth therein and in full force and effect; that there are no
defenses or offsets against the landlord known to tenant
thereunder; and that rental is current and has not been paid more
than one month in advance.
(c) Compliance with This Agreement. The CalTwin
Parties shall have performed and complied within all material
respects all agreements and conditions required by this Agreement
to be performed or complied with by it on or prior to Closing.
(d) Title Policy. Title Company shall be ready,
willing and able to issue the Title Policy required by Paragraph
4(b).
(e) Change in Condition. Subject to the provisions of
Paragraphs 15(b) and 15(c) hereof, there shall exist no damage,
destruction or condemnation of the Property occurring after the
date hereof and prior to Closing.
9. Conditions Precedent to the CalTwin Parties' Obligation
to Close Escrow. The obligation of the CalTwin Parties to
consummate the transactions contemplated hereby is subject to the
following conditions, inserted for the CalTwin Parties' sole
benefit and that may be waived solely by the CalTwin Parties only
in writing at its sole option. Said conditions are as follows:
(a) Representations and Warranties True at Closing.
The representations and warranties of Arden contained in this
Agreement, or in any certificate or document signed by Arden
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 or Contribution Value
and Documents. Arden 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. Arden 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.
(d) Compliance with Chevron Rights. The right of
first offer provided in the Office Building Lease dated May 16,
1985 between Carver Development Partnership Two (predecessor-in-
interest to the CalTwin Parties) and Contel Service Corporation
(predecessor-in-interest to Chevron U.S.A., Inc.) shall have been
waived or otherwise expired in accordance with its terms.
(e) Consent of Existing Lenders. The Existing Lenders
shall have consented to the transactions contemplated herein.
10. Remedy of Arden and the CalTwin Parties Upon Default.
(a) IF THE TRANSACTION HEREIN PROVIDED SHALL NOT BE
CLOSED BY REASON OF THE CALTWIN PARTIES' DEFAULT UNDER THIS
AGREEMENT AND ARDEN SHALL NOT HAVE DEFAULTED UNDER THIS AGREEMENT,
THEN THE DEPOSIT SHALL BE RETURNED TO ARDEN. IN ADDITION, THE
PARTIES HERETO, BEFORE ENTERING INTO THIS TRANSACTION, HAVE BEEN
CONCERNED WITH THE FACT THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED
BY ARDEN IF THE CALTWIN PARTIES SHOULD WRONGFULLY FAIL TO CLOSE
THE TRANSACTIONS HEREUNDER. THE CALTWIN PARTIES HAVE STATED THAT
THEY WILL NOT PERMIT ANY ACTION FOR SPECIFIC PERFORMANCE OF THIS
AGREEMENT. WITH THE FLUCTUATION IN VALUE OF REAL PROPERTY, THE
CURRENT AND HIGHLY UNPREDICTABLE STATE OF THE ECONOMY, THE
FLUCTUATING MONEY MARKET FOR REAL ESTATE LOANS OF ALL TYPES, AND
OTHER FACTORS THAT DIRECTLY AFFECT THE VALUE AND MARKETABILITY OF
THE PROPERTY, IT IS REALIZED BY THE PARTIES THAT IT WOULD BE
EXTREMELY DIFFICULT AND IMPRACTICABLE, IF NOT IMPOSSIBLE, TO
ASCERTAIN WITH ANY DEGREE OF CERTAINTY PRIOR TO SIGNING THIS
AGREEMENT THE AMOUNT OF DAMAGES THAT WOULD BE SUFFERED BY ARDEN IN
THE EVENT OF THE CALTWIN PARTIES' WRONGFUL FAILURE TO CLOSE THE
TRANSACTIONS HEREUNDER. IN ADDITION, ARDEN DESIRES TO PROVIDE A
FINANCIAL DISINCENTIVE FOR ANY SUCH FAILURE BY THE CALTWIN
PARTIES. THE PARTIES, HAVING MADE DILIGENT BUT UNSUCCESSFUL
ATTEMPTS TO ASCERTAIN THE ACTUAL COMPENSATORY DAMAGES ARDEN WOULD
SUFFER IN THE EVENT OF THE CALTWIN PARTIES' WRONGFUL FAILURE TO
CLOSE THE TRANSACTIONS HEREUNDER, HEREBY AGREE THAT THE REASONABLE
ESTIMATE OF SAID DAMAGES IS AN AGGREGATE AMOUNT EQUAL TO TWO
HUNDRED THOUSAND DOLLARS ($200,000) (EACH CALTWIN PARTY IN
ACCORDANCE WITH ITS RESPECTIVE PERCENTAGE INTEREST THEREOF); AND
IN THE EVENT OF THE CALTWIN PARTIES' WRONGFUL FAILURE TO CLOSE THE
TRANSACTIONS HEREUNDER, ARDEN SHALL BE ENTITLED TO SUCH AMOUNT AS
FULL LIQUIDATED DAMAGES, AND THAT PAYMENT OR TENDER TO ARDEN OF
SUCH AMOUNT SHALL TERMINATE ALL OF ARDEN'S RIGHTS AND REMEDIES AT
LAW OR IN EQUITY AGAINST THE CALTWIN PARTIES WITH RESPECT TO SUCH
FAILURE TO PERFORM. AS USED HEREIN, THE CALTWIN PARTIES' WRONGFUL
FAILURE TO CLOSE THE TRANSACTIONS HEREUNDER SHALL MEAN SUCH
CALTWIN PARTIES' WILLFUL AND UNWARRANTED REFUSAL TO DELIVER THE
GRANT DEEDS WITH ARDEN HAVING COMPLIED WITH ITS OBLIGATIONS
HEREUNDER (EXCEPT FOR ITS OBLIGATION TO FUND THE BALANCE OF THE
SALE PRICE) AND BEING READY, WILLING AND ABLE TO CLOSE (AND SUCH
TERM SHALL NOT APPLY TO ANY OTHER DEFAULT OR BREACH BY THE CALTWIN
PARTIES HEREUNDER).
/s/ JL /s/ VC
CalTwin Arden's
Parties' Initials
Initials
(b) Remedy of the CalTwin Parties. THE PARTIES HERETO,
BEFORE ENTERING INTO THIS TRANSACTION, HAVE BEEN CONCERNED WITH
THE FACT THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY THE CALTWIN
PARTIES IF ARDEN SHOULD WRONGFULLY FAIL TO CLOSE THE TRANSACTIONS
HEREUNDER. WITH THE FLUCTUATION IN VALUE OF REAL PROPERTY, THE
CURRENT AND HIGHLY UNPREDICTABLE STATE OF THE ECONOMY, THE
FLUCTUATING MONEY MARKET FOR REAL ESTATE LOANS OF ALL TYPES, AND
OTHER FACTORS THAT DIRECTLY AFFECT THE VALUE AND MARKETABILITY OF
THE PROPERTY, IT IS REALIZED BY THE PARTIES THAT IT WOULD BE
EXTREMELY DIFFICULT AND IMPRACTICABLE, IF NOT IMPOSSIBLE, TO
ASCERTAIN WITH ANY DEGREE OF CERTAINTY PRIOR TO SIGNING THIS
AGREEMENT THE AMOUNT OF DAMAGES THAT WOULD BE SUFFERED BY THE
CALTWIN PARTIES IN THE EVENT OF ARDEN'S WRONGFUL FAILURE TO CLOSE
THE TRANSACTIONS HEREUNDER. THE PARTIES, HAVING MADE DILIGENT BUT
UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL COMPENSATORY DAMAGES
THE CALTWIN PARTIES WOULD SUFFER IN THE EVENT OF ARDEN'S WRONGFUL
FAILURE TO CLOSE THE TRANSACTIONS HEREUNDER, HEREBY AGREE THAT THE
REASONABLE ESTIMATE OF SAID DAMAGES IS AN AMOUNT EQUAL TO THE
DEPOSIT; AND IN THE EVENT OF ARDEN'S WRONGFUL FAILURE TO CLOSE THE
TRANSACTIONS HEREUNDER, THE CALTWIN PARTIES SHALL BE ENTITLED TO
SUCH AMOUNT (EACH CALTWIN PARTY IN ACCORDANCE WITH ITS RESPECTIVE
PERCENTAGE INTEREST THEREOF) AS FULL LIQUIDATED DAMAGES, AND THAT
PAYMENT OR TENDER TO THE CALTWIN PARTIES BY ARDEN OF SUCH AMOUNT
SHALL TERMINATE ALL OF THE CALTWIN PARTIES' RIGHTS AND REMEDIES AT
LAW OR IN EQUITY AGAINST ARDEN WITH RESPECT TO SUCH FAILURE TO
PERFORM.
/s/ JL /s/ VC
CalTwin Arden's
Parties' Initials
Initials
(c) Notwithstanding anything to the contrary contained
herein, the aggregate liability of the CalTwin Parties arising
pursuant to or in connection with the representations, warranties,
indemnifications, covenants or other obligations (whether express
or implied) of the CalTwin Parties under this Agreement (or any
document executed or delivered in connection herewith) shall not
exceed $400,000.00 (each CalTwin Party in accordance with its
respective Percentage Interest thereof). Without limitation on
the other limitations or remedies contained herein, in the event
of any dispute between the parties respecting this Agreement or
the transactions herein contemplated, Arden hereby waives (i) any
right to record or file a lis pendens or other similar notice of
suit, (ii) any right to seek specific performance of this
Agreement, and (iii) any right to assert any claim affecting the
right of possession or title to the Property. In no event shall
this Agreement (or any short form or memorandum thereof) be
recorded against or with respect to the Property.
11. Closing Procedure.
(a) At least one business day prior to the date of
Closing, Arden shall have delivered to Escrow Agent counterpart
executed originals of the following documents and the following
sums of money required to be delivered by Arden hereunder:
(i) Sale Price and any other amount due from
Arden hereunder in the manner set forth in Paragraph 2;
(ii) Such funds as may be necessary to comply
with Arden's obligations hereunder regarding prorations, costs and
expenses; and
(iii) A signed counterpart of the Assignment of
Leases, a signed counterpart of the Assignment of Service
Contracts and a signed counterpart of the Amendment to Limited
Partnership Agreement executed by all required partners (with the
"Agreed Value of Contributed Property" column of Paragraph 4 of
such Amendment to Limited Partnership Agreement being the
"Contribution Value" provided for in this Agreement).
(b) At least one business day prior to the date of
Closing, the CalTwin Parties shall have delivered to Escrow Agent
counterpart executed originals of the following documents:
(i) The Grant Deeds in the form of Exhibit "F"
attached hereto and forming a part hereof;
(ii) A Bill of Sale (the "Bill of Sale") in the
form of Exhibit "G" attached hereto covering the Personal
Property;
(iii) An Assignment and Assumption of Leases and
Security Agreements (the "Assignment of Leases") substantially in
the form and substance of Exhibit "H" attached hereto and forming
a part hereof;
(iv) An Assignment and Assumption of Service and
Miscellaneous Rights and Agreements (the "Assignment of Service
Contracts") substantially in the form and substance of Exhibit "I"
attached hereto and forming a part hereof;
(v) An original counterpart of the Amendment to
Limited Partnership Agreement;
(vi) An original counterpart of each of the
Service Contracts, Leases and keys to the Property if in the
CalTwin Parties' possession or under its control;
(vii) Notices to each of the tenants and occupants
of the Property of the transfer of the Property to Arden;
(viii) To the extent they are in the CalTwin
Parties' possession, a complete set of all plans, specifications
and as-built drawings, and all building permits, certificates of
occupancy, third-party soil reports, and environmental reports and
studies relating to the Improvements;
(ix) All warranties and operating manuals that
the CalTwin Parties 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
(x) To the extent necessary, cash in the sum of
the Security Deposits, the net prorations owing to Arden and the
CalTwin Parties' share of the costs and expenses of the
transaction (it being understood that the CalTwin Parties may
elect to cause all such amounts to be credited to Arden and
debited against the Purchase Price).
(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 Kern County, California, and immediately to issue the
Title Policy.
(d) Notwithstanding anything to the contrary contained
herein, Arden hereby agrees that the CalTwin Parties may cause the
Property to be direct deeded to Arden by any entity holding record
title to the Property as of the Closing Date.
12. Costs and Prorations.
(a) Prorations. All revenues, income, receivables,
costs, expenses and payables of the Property shall be apportioned
equitably between the parties as of Closing on the basis of the
actual number of days in a particular month, and with respect to
the items enumerated below where a particular manner of apportion-
ment 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;
Arden shall include such delinquencies in its normal billing and
shall pursue the collection thereof in good faith after the
Closing Date (but Arden shall not be required to litigate or
declare a default in any Tenant Lease). To the extent Arden
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 Arden 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 the CalTwin Parties' share thereof being
promptly delivered to the CalTwin Parties. Arden 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
the CalTwin Parties are entitled to receive its share of charges
or amounts without first obtaining the CalTwin Parties' written
consent. The CalTwin Parties hereby reserves the right to pursue
any remedy against any tenant owing delinquent rents and any other
amounts to the CalTwin Parties. Arden shall reasonably cooperate
with the CalTwin Parties 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, the CalTwin
Parties 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 the CalTwin
Parties and Arden if current tax rates differ from the latest
previous tax rates as soon as the same are known. The CalTwin
Parties agree that to the extent any additional taxes, assessments
or levies are imposed, assessed or levied against the Property, or
any portion thereof, the CalTwin Parties or the Arden at any time
subsequent to Closing but with reference to any period prior
thereto during the CalTwin Parties' ownership thereof, the CalTwin
Parties shall promptly pay to Arden an amount equal to such
additional assessments or levies. Similarly, if tax refunds
become payable for periods during the CalTwin Parties' 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 the CalTwin Parties) shall be promptly
paid over to the CalTwin Parties. In the event that any
assessments on the Property are payable in installments, then the
installment for the current period shall be prorated (with Arden
assuming the obligation to pay any installment due after the
Closing Date). In no event shall the CalTwin Parties 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 Arden;
(v) Utility charges levied against the CalTwin
Parties or the Property, and Arden 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 and leasing commissions
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) The CalTwin Parties shall (each CalTwin
Party in accordance with its respective Percentage Interest
thereof) pay:
(1) The cost of the Preliminary Title
Report, that portion of the cost of securing the Title Policy that
is attributable to CLTA Owner's coverage;
(2) Documentary transfer tax imposed on
the conveyance of title to the Property to Arden;
(3) One-half of Escrow Agent's Escrow Fee.
(ii) Arden shall pay:
(1) The cost of recording the Grant Deeds;
(2) That portion of the cost of the Title
Policy that is not paid by the CalTwin Parties, including the cost
of any endorsements, and the cost of any update to any existing
ALTA Survey; and
(3) One half of Escrow Agent's Escrow fee.
All other Closing fees and expenses, including, but not limited
to, the parties' legal expenses, accounting and consulting fees,
and other incidental expenses in connection with this transaction
shall be borne by the party incurring same.
13. Representations, Warranties and Covenants of the
CalTwin Parties.
(a) Except as specifically set forth in this Paragraph
13(a), 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 in 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.
Arden acknowledges that Arden has examined, reviewed and
inspected all matters which in Arden's judgment bear upon the
Property and its value and suitability for Arden's purposes.
Except as to matters specifically set forth in this Paragraph
13(a), Arden will acquire the Property solely on the basis of its
own physical and financial examinations, reviews and inspections
and the title insurance protection afforded by the Title Policy.
Subject to the foregoing and except as disclosed by the CalTwin
Parties to Arden or otherwise discovered by Arden prior to the
Approval Date or as contained in the materials delivered to Arden
and identified in Paragraph 5 hereof, the CalTwin Parties hereby
makes the following representations, warranties and covenants,
each of which is deemed to be material and each of which is stated
by the CalTwin Parties to be true and correct on the date hereof
and on the Closing Date (subject to any exceptions disclosed by
Arden in writing) and each of which shall survive the Closing for
a period of one (1) year. Except as disclosed in the reports and
documents listed on Exhibit "J" attached hereto:
(i) The CalTwin Parties are (or as of the
Closing Date will be) the owner of the Personal Property and have
marketable title, free and clear of all liens, claims and security
interests whatsoever, except for matters of record.
(ii) The CalTwin Parties have no knowledge of
any:
(1) existing latent defects or seismic
conditions concerning the Real Property or materially incorrect
income or expense figures in any financial statements prepared by
or for the CalTwin Parties and delivered to Arden regarding the
Property (with respect to periods of time occurring prior to the
date hereof and, without limitation on the foregoing, Seller does
not make any representation or warranty with respect to any
projections).
(2) any pending litigation or agreement
not of record materially and adversely affecting the Property and
which would be binding upon Arden after the Closing;
(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;
(5) thing that would suggest any portion
of the Property has ever been used by the CalTwin Parties or any
tenant of any portion of the Property during the CalTwin Parties'
ownership thereof as a waste storage or disposal site or gasoline
station. Without limiting the other provisions of this Agreement,
the CalTwin Parties shall reasonably cooperate with Arden's
investigation of matters relating to the foregoing provisions of
this paragraph and to provide access to and copies of any data
and/or documents dealing with potentially Hazardous Substances
used at the Property and any disposal practices followed in
accordance with, and subject to the provisions of, Paragraph 6
hereof. The CalTwin Parties agrees that Arden may make inquiries
of governmental agencies regarding such matters, without liability
for the outcome of such discussions. For the purposes of this
Agreement, "Hazardous Substances" shall mean (A) substances
defined as "hazardous substances" in (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S. C. '' 9601 et seq.), or (ii) the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. '' 6901 et seq.),
together with the regulations enacted pursuant to such acts, and
(B) those substances defined as "hazardous wastes" in ' 25117 of
the California Health and Safety Code or as "hazardous substances"
in ' 25316 of the California Health and Safety Code together with
the regulations enacted pursuant to such statutes.
(iii) The Tenant Leases and Service Contracts
entered into by the CalTwin Parties and, to the CalTwin Parties'
knowledge, the other Tenant Leases, Service Contracts and any
other agreements, matters and things to be submitted to Arden by
the CalTwin Parties 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 unless thereafter
supplemented by supplements or additions, approved in writing by
Arden, on or before Closing. Notwithstanding anything to the
contrary contained herein, the CalTwin Parties shall have no
obligation or liability to Arden with respect to any of the
foregoing lease matters which shall be confirmed as correct in any
tenant estoppel certificate delivered to Arden as provided in this
Agreement;
(iv) The operating financial information prepared
by the CalTwin Parties and delivered to Arden with respect to the
Property (which financial information was prepared on a cash basis
of accounting), consisting of Statements of Operations for the
calendar years ended December 31, 1996 and for the current
calendar year are true and correct in all material respects
(provided, however, for the period of time occurring prior to July
1, 1996, such representation shall be limited to Seller's
knowledge); in this regard the CalTwin Parties agree to make
available to Arden and its accountants, at Arden'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 to the extent in
the CalTwin Parties' possession; and
(v) As used in this Agreement, "to the CalTwin
Parties' knowledge" or other similar knowledge limitations as to
the CalTwin Parties shall mean the actual knowledge of Jack
Mahoney, as President, and Nat Williams, as Asset Manager, each of
Summit Commercial Properties, Inc.
(b) Notwithstanding anything contained in Paragraphs
5(a) or 13(a) to the contrary, the CalTwin Parties are 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 Arden by any broker representing or purporting to represent the
CalTwin Parties.
14. Representations and Warranties of Arden.
Arden hereby makes the following representations and
warranties, each of which is deemed to be material and each of
which is stated by Arden to be true and correct on the date
hereof:
(a) Arden 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
Arden, 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 Arden is a party or by
which Arden may be bound or affected; and
(b) The execution and delivery of this Agreement and
the payment and performance by Arden 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 Arden, and all such actions have been duly taken by
Arden.
(c) As of the Approval Date and as of the Closing Date
(i) Arden has received and reviewed all materials provided to
Arden by the CalTwin Parties pursuant to Sections 4 and 5 above
(collectively, the "Due Diligence Materials"), (ii) Arden has
inspected the Property, (iii) Arden has made such investigation of
the information contained in the Due Diligence Materials as it
deems appropriate, (iv) Arden is satisfied with all aspects of the
Property which Arden 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, and (v) except as set forth in
subparagraph 13(a) and elsewhere in this Agreement, Arden is not
relying on any representation, written information, data, reports,
warranty, or statement of the CalTwin Parties or their agents
concerning the Property or the accuracy or completeness of the Due
Diligence Materials, and Arden is purchasing the Property in "AS-
IS" condition based solely upon Arden's own independent
inspection, investigation and review, as more particularly, set
forth in Paragraph 13(a) hereof.
15. General Covenants and Agreements of Arden and the
CalTwin Parties.
(a) Delivery of Possession. Possession of the Property
shall be delivered to Arden upon Closing, subject to the rights of
tenants in possession.
(b) Damage to or Destruction of Property Prior to
Closing; Risk of Loss. If after the date hereof and 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 the CalTwin Parties
or Arden 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 the
CalTwin Parties nor Arden 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 Arden shall
receive an assignment of the CalTwin Parties' 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. The CalTwin Parties shall retain all
interest in and to the insurance proceeds that may be payable to
the CalTwin Parties on account of repaired and completed damage,
but the CalTwin Parties 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, the CalTwin Parties agree to immediately advise
Arden thereof. In the event of such condemnation, Arden shall
have the option to (1) take title in accordance with the terms and
conditions of this Agreement and negotiate with the said con-
demning 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 the CalTwin Parties or to Escrow Agent here-
under shall be returned to Arden as set forth herein. Notice of
the exercise of such option hereunder shall be in writing,
delivered to the CalTwin Parties at the address set forth in
Paragraph 16(g) of this Agreement (or such other address as the
CalTwin Parties may have theretofore designated in writing) at
least two days prior to Closing.
(d) Brokers' Commissions. The CalTwin Parties warrants
that the CalTwin Parties did not negotiate with respect to the
purchase of the Property through any broker, agent, finder,
affiliate or other third party other than Cushman & Wakefield
("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. The CalTwin Parties agrees to pay at Closing
to Broker the commission due it in connection with the within
transaction in accordance with the provisions of a separate
written agreement between Broker and the CalTwin Parties and
hereby agrees to indemnify Arden against and hold Arden harmless
from any and all claims, demands, causes of action or damages
resulting from any breach of this warranty. Arden hereby warrants
that Arden did not negotiate through any broker, agent, finder,
affiliate or other third party other than Broker or incur any
liability, contingent or otherwise, for any such brokerage or
finder's fees, agent's commissions or other like payments, in
connection with this Agreement, and hereby agrees to indemnify the
CalTwin Parties against and hold the CalTwin Parties harmless from
any and all claims, demands, causes of action or damages resulting
from any breach of his warranty. This provision shall survive
Closing.
(e) Further Assurances Prior to Closing. The CalTwin
Parties and Arden 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. Arden may not assign any of its
rights or duties hereunder without the prior written consent of
the CalTwin Parties (which consent may be given or withheld in the
CalTwin Parties' discretion). Each of the CalTwin Parties may
assign its rights hereunder in accordance with the provisions of
paragraph 16(m) below.
(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. The CalTwin Parties shall
indemnify Arden against and hold Arden 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 the
CalTwin Parties (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 the CalTwin Parties) unless caused by Arden,
resulting from such tort occasioned in or about the Property prior
to Closing. Arden shall indemnify the CalTwin Parties against and
hold the CalTwin Parties 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 Arden (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 Arden) unless caused
by the CalTwin Parties, resulting from such tort occasioned in or
about the Property (a) as a result of its investigation of the
Property during the Approval Period and (b) on or subsequent to
Closing. These covenants shall survive Closing.
16. Miscellaneous Provisions.
(a) Successors and Assigns. Subject to the provisions
hereof, the terms and provisions hereof shall be binding upon and
inure to the benefit of the successors and assigns of the parties
hereto.
(b) Meaning of Terms. When necessary herein, all terms
used in the singular shall apply to the plural and vice versa; and
all terms used in the masculine shall apply to the neuter and
feminine genders.
(c) Entire Agreement. This Agreement is the entire
agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements between the
parties hereto with respect thereto. No claim of waiver,
modification, consent 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 several
paragraphs of this Agreement are inserted solely for convenience
of reference and are not a part of and are not intended to govern,
limit or aid in the construction of any term or provision hereof.
(f) Attorneys' Fees. If either the CalTwin Parties or
Arden 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, 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, 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:
CalTwin: c/o Summit Commercial
300 Continental Boulevard
Suite 565
El Segundo, CA 90245
Attn: Jack Mahoney
With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, CA 90067
Attn: Real Estate Notices (GML)
Arden: Arden Realty, Inc.
9100 Wilshire Boulevard
Suite 700 East
Beverly Hills, CA 90210
Attn: Ms. Brigitta B. Troy
With a copy to: Troy & Gould
1801 Century Park East
16th Floor
Los Angeles, CA 90067
Attn: Kenneth R. Blumer, Esq.
Escrow Agent: Commerce Escrow
1545 Wilshire Boulevard
Suite 600
Los Angeles, CA 90017
Attn: Mark Minsky
All notices, requests and other communications shall be deemed
given up on deposit with the United States Postal Service or
reputable delivery service as provided for herein and shall be
deemed received on the date of acknowledgment or other evidence of
actual receipt.
(h) Severability. If any provision of this Agreement
or the application thereof to any person or circumstance shall be
invalid or unenforceable to any extent, the remainder of this
Agreement and the application of such 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. The CalTwin Parties and Arden
agree that it is in both of their best interests to keep this
Agreement and all information concerning the Property confidential
until Closing. The CalTwin Parties and Arden each agrees that
neither shall take any action nor conduct itself in any fashion
that would disclose to third parties unrelated to Arden's acqui-
sition 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) 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.
(m) The CalTwin Parties Exchange Rights. Each of the
CalTwin Parties may consummate the sale of its interest in the
Property as part of a so-called like kind exchange ("Exchange")
pursuant to Section 1031 of the Internal Revenue Code of 1986, as
amended, provided that (i) except as hereinafter set forth, all
costs, fees and expenses attendant to such Exchange shall be the
sole responsibility of such CalTwin Party, (ii) the closing shall
not be delayed or affected by reason of such Exchange nor shall
the consummation or accomplishment of the Exchange be a condition
precedent or condition subsequent to such CalTwin Party's
obligations under this Agreement, (iii) Arden shall not be
required to acquire or hold title to any real property other than
the Property for purposes of consummating the Exchange, (iv) in
the event of any such Exchange, and notwithstanding that in
connection with such Exchange record title to the Property may be
conveyed by such CalTwin Party to an accommodation entity which
thereupon conveys title to the Property to Arden pursuant to an
amendment and assignment ("Assignment") of this Agreement by the
CalTwin Parties to such accommodation entity (which assignment,
and amendment of escrow instructions in connection therewith,
shall be prepared by the Parties at such CalTwin Party's expense
and executed by Arden when reasonably requested by such CalTwin
Party, subject to the reasonable approval of the form thereof by
Arden), all covenants and agreements of the CalTwin Parties
pursuant to this Agreement shall be deemed to be made by such
CalTwin Party, shall survive any conveyance to an accommodation
party, shall continue in favor of and inure to the benefit of
Arden and shall be enforceable by Arden against such CalTwin
Party, as though the Property had been conveyed directly by such
CalTwin Party to Arden, and (v) the Exchange shall in no way
reduce, abridge or modify any of such CalTwin Party's obligations
or duties or any of Arden's rights or remedies hereunder. Arden
will have no liability to such CalTwin Party in the event the
Exchange is not consummated, or in the event such CalTwin Party
does not achieve the desired tax treatment. Arden shall pay its
own attorneys' fees in connection with the review of any documents
in connection with the Exchange.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first hereinabove written.
ASSOCIATES: CALTWIN ASSOCIATES, L.L.C.,
a Delaware limited liability company
By: CALTWIN INVESTORS, L.L.C.,
a Delaware limited liability company,
its Managing Member
By: MJL ASSOCIATES,
A California Limited Partnership,
its Managing Member
By: MJL INVESTMENTS, INC.,
A California corporation,
its General Partner
By:/s/ John Long
Name:John Long
Title: President
INVESTORS: CALTWIN INVESTORS, L.L.C.,
a Delaware limited liability company
By: MJL ASSOCIATES,
A California Limited Partnership,
its Managing Member
By: MJL INVESTMENTS, INC.,
A California corporation,
its General Partner
By: /s/ John Long
Name: John Long
Title: President
ARDEN: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc.,
a Maryland corporation,
Its General Partner
By: /s/ Victor J. Coleman
Victor J. Coleman,
President
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: President
AGREEMENT OF PURCHASE AND SALE
OR CONTRIBUTION
AND ESCROW INSTRUCTIONS
Between
WHITTIER-LRP, INC.,
BFMHRBF NO. II INC.,
HIGHRIDGE-BFM INVESTMENT PARTNERSHIP, L.P.,
and
HIGHRIDGE COMMERCIAL FUND NO. 1, L.P.,
AS TENANTS-IN-COMMON
Collectively, Sellers
and
ARDEN REALTY LIMITED PARTNERSHIP,
Purchaser
Covering
15111 and 15141 Whittier Boulevard
Whittier, California
February 18, 1997
AGREEMENT OF PURCHASE AND SALE
OR CONTRIBUTION
AND ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE OR CONTRIBUTION AND
ESCROW INSTRUCTIONS ("Agreement") is made and entered into this
18th day of February 1997 by and among WHITTIER-LRP, INC., a
California corporation ("WLRP"), BFMHRBF NO. II INC., a Delaware
corporation ("BFM II"), HIGHRIDGE-BFM INVESTMENT PARTNERSHIP,
L.P., a California limited partnership ("Investment"), and
HIGHRIDGE COMMERCIAL FUND NO. 1, L.P., a California limited
partnership ("Commercial") (WLRP, BFM II, Investment and
Commercial are each sometimes hereinafter individually referred to
as "Seller" and are sometimes hereinafter collectively referred to
as "Sellers"), and ARDEN REALTY LIMITED PARTNERSHIP, a Maryland
limited partnership ("Purchaser"), with reference to the following
facts:
A. As more particularly hereinafter set forth, the Sellers
are, or at "Closing" (as hereinafter defined) will be, as tenants
in common, the fee owners of that certain parcel of real property
(the "Real Property") that, for informational purposes only, is
improved with (a) five (5)-story Driv-It stucco panel covering
over structural steel I-beam frame office building containing
approximately 81,749 net rentable square feet, (b) a four (4)
story structural pressure bar window system and stucco over
structural steel I-beam frame office building containing
approximately 53,666 net rentable square feet and other
facilities, fixtures, paving and surfacing thereon or associated
therewith and a separate three (3) story level post tension and
cast-in-place concrete parking structure containing approximately
536 marked spaces and additional surface parking for approximately
268 automobiles (collectively, the "Improvements"). The Real
Property is located at 15111 and 15141 Whittier Boulevard in the
City of Whittier, County of Los Angeles, in the State of
California, and is more particularly described in Exhibit "A"
attached hereto and forming a part hereof. The undivided
ownership interests of the Sellers as tenants in common are, or as
of the Closing will be, as set forth in a separate notice ("TIC
Interest Notice") to be given by Seller to Buyer prior to the
"Approval Date" (as hereinafter defined). The undivided tenancy
in common interests contemplated herein are each sometimes
hereinafter individually referred to as a "TIC Interest" and all
are sometimes hereinafter collectively referred to as the "TIC
Interests". As used herein, the term "Percentage Interest" as to
each Seller means such Seller's percentage interest as set forth
in the TIC Interest Notice.
B. Each Seller desires to sell, and Purchaser desires to
purchase, all of the real and personal property owned by each
Seller located at or forming part of the Real Property, including,
but not limited to, the Improvements, and all appurtenant
easements and rights, and the Personal Property (as hereinafter
defined) on the terms, covenants and conditions hereinafter set
forth.
NOW, THEREFORE, with reference to the foregoing recitals and
in reliance thereon and in consideration of the purchase price
hereinbelow set forth, and the other terms, covenants and
conditions set forth below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, it is mutually covenanted and agreed by each Seller
and Purchaser as follows:
1. Purchase and Sale; or Contribution. Subject to all of
the terms and conditions of this Agreement and for the
consideration set forth, on Closing (as hereinafter defined), each
Seller shall convey, or cause to be conveyed, to Purchaser, and
Purchaser shall acquire by purchase from each Seller (or Seller's
accommodation entity, if any, set forth in Paragraph 16(m) below)
or by contribution from each Seller, each Seller's respective TIC
Interest in and to all of the following:
(a) The Real Property and the Improvements, together
with all easements, hereditaments and appurtenances thereto,
subject only to such easements, agreements and exceptions as may
have been approved by Purchaser in accordance with Paragraph 4(a)
hereof and the tenancies and occupancies that are set forth on
Exhibit "B";
(b) All of the personal property (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 listed on Exhibit "C" (the "Inventory");
(c) All leases to tenants leasing space in the
Improvements (the "Tenant Leases");
(d) To the extent assignable, those certain service
and other agreements more particularly described in Exhibit "D"
attached hereto and made a part hereof; and
(e) All of each Seller's respective TIC Interest in
and to any other right, title and interest of each 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; Payment or Contribution.
2.1 The purchase price (the "Purchase Price") to be
paid by Purchaser to Sellers for the Property, if the transaction
is to be a purchase and sale, is the aggregate sum of Fourteen
Million Three Hundred Thousand and No/100 Dollars ($14,300,000.00)
allocated to each Seller in accordance with its respective
Percentage Interest, 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 Fifty Thousand Dollars ($50,000),
("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 this
Agreement at the Approval Date (as hereinafter defined), Purchaser
shall increase the Initial Deposit by the amount of $50,000 in
cash for a total of $100,000 (which sums, together with any
interest earned thereon and additions thereto, are herein
collectively called the "Deposit") within one business day after
the Approval Date;
(ii) If Closing occurs, then the Deposit shall be
applied to the Purchase Price;
(iii) If Closing does not occur and Sellers shall
be entitled to liquidated damages as provided in Paragraph 10(b)
hereof, the Sellers shall be entitled to the Deposit (each Seller
in accordance with its respective Percentage Interest thereof);
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 the Sellers 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 (the
"Adjusted Purchase Price"). 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 (to the
extent applicable), Escrow Agent shall be entitled to withhold and
pay to the Internal Revenue Service and the Franchise Tax Board
such withholding required of Purchaser pursuant to Internal
Revenue Code 1445 and equivalent form provided under the Revenue
and Taxation Code of the State of California.
(c) The Deposit shall be at all times invested by
Escrow Agent in the following investments ("Approved
Investments"): (i) United States Treasury obligations, (ii)
United States Treasury-backed repurchase agreements issued by a
major money center banking institution reasonably acceptable to
Seller, (iii) Certificates of Deposit or Money Market Accounts of
institutions whose deposits are insured by the FDIC or (iv) such
other manner as may be reasonably agreed to by Seller and
Purchaser. The Deposit shall be disposed of by Escrow Agent only
as provided in this Agreement.
(d) All payments required to be made under this
Agreement shall be made in U.S. funds.
2.2 In lieu of a purchase and sale transaction, each
Seller can elect by written notice delivered to Purchaser prior to
the expiration of the Approval Period (as hereinafter defined), to
contribute the Property to Purchaser ("Contribution") and to
become an additional limited partner in Purchaser at Closing. In
that connection, the parties agree that the payments to be made by
Purchaser to each Seller so electing a contribution at Closing
shall be made and adjusted as follows:
(i) An amount (the "Loan Payoff Amount") equal to
the Percentage Interest of such Seller of the aggregate
amount necessary to pay off the existing loan
("Existing Loan") made by Glendale Federal Bank
("Existing Lender") and secured by, among other
documents, a first deed of trust covering the Property;
and
(ii) An amount (the "Contribution Value") equal
to the amount by which such Seller's Percentage
Interest in the Adjusted Purchase Price exceeds such
Seller's Percentage Interest in the Loan Payoff Amount
shall be deemed paid by Seller receiving at Closing
limited partnership interests in Purchaser ("OP
Units"), as more particularly set forth herein.
Each OP Unit shall have a value equal to one (1) share of Arden
Realty, Inc. common stock ("ARI") as of the date which is three
(3) business day prior to Closing. ARI is listed on the New York
Stock Exchange under the Symbol ARI. The OP Units may be
exchanged only in accordance with that certain Amendment to
Limited Partnership Agreement, in the form attached hereto as
Exhibit "K" and by this reference incorporated herein. Except as
otherwise set forth herein, the balance of Subparagraphs (a)
through (d) above, shall be equally applicable to the
Contribution; provided further, however, if any Seller makes the
Contribution election as herein provided, the terms and provisions
of this Agreement shall be modified mutatis mutandis to effectuate
the foregoing (and if requested the parties will enter into a
modification agreement in such form as may be reasonably agreed
upon to effectuate the same).
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
business days thereafter, Sellers and Purchaser shall open an
escrow (the "Escrow") with Commerce Escrow, 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 Sellers, Purchaser and Escrow Agent, to serve as Escrow
instructions to Escrow Agent, and Escrow Agent shall be and is
hereby authorized and instructed to deliver pursuant to the terms
of this Agreement the documents and monies to be deposited into
the Escrow. Escrow Agent may attach to this Agreement Escrow
Agent's standard form escrow agreement, to the extent that the
same is consistent with the terms hereof, and are reasonably
approved by Sellers and Purchaser. Escrow Agent shall immediately,
upon receipt of such duly executed copy of this Agreement, notify
Sellers and Purchaser of the opening of Escrow. Should any 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 April 1,
1997, provided the Tenant Estoppels satisfying the requirements of
paragraph 8(b) hereof have been received and all other Purchaser's
Conditions Precedent to Closing as set forth in Paragraph 8 hereof
have been satisfied. The term "Closing" as used herein shall be
deemed to be the date upon which the respective Conditions
Precedent to Purchaser's Obligation to Close Escrow (set forth in
Paragraph 8 below) and the Conditions Precedent to Sellers'
Obligation to Close Escrow (set forth in Paragraph 9 below) have
been satisfied, the Grant Deeds ("Grant Deeds" herein) hereinafter
referred to is recorded in the office of the County Recorder of
Los Angeles County. 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) Sellers have 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 Orange Coast
Title Company ("Title Company"), together with true copies of all
documents evidencing matters of record shown as exceptions to
title thereon. Sellers have delivered to Purchaser a copy of that
certain survey of the Property dated December 3, 1993 prepared by
W.R. Lind, Inc. (the "Survey"). If Purchaser shall desire to
update such Survey, Purchaser shall cause the same to be so
updated at Purchaser's sole cost and expense before the Approval
Date (and upon receipt shall deliver a copy of the updated Survey
to Sellers). Purchaser shall have the right to object to any
exceptions contained in the Preliminary Title Report or the Survey
(or updated Survey) by giving notice to Sellers by the Approval
Date. Notwithstanding any of the foregoing, Sellers shall at
Closing (but shall not be obligated prior thereto) remove of
record (or at Sellers' election provide a credit to Purchaser
sufficient to pay off) 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, by the Approval Date, Purchaser shall be deemed to
have approved said exceptions. Purchaser's approval of the
Preliminary Title Report shall be without prejudice to Purchaser's
right to disapprove additional survey matters or any supplementary
reports issued by Title Company or disclosed after the Approval
Date; provided, however, Purchaser's approval shall not be
unreasonably withheld, and, as to survey matters, shall only be
applicable if Purchaser shall have obtained an update of the
Survey before the Approval Date. If for any reason, on or before
the Closing Date Sellers do 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 (Sellers having the right but
not the obligation to do so), the obligation of Sellers to sell,
and Purchaser to buy, the Property as herein provided shall
terminate (and Sellers 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 Sellers. 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 Sellers are 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 Sellers shall simultane-
ously either deliver to Escrow Agent at Closing title instruments
in recordable form sufficient to satisfy such liens and encum-
brances 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, Sellers 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
Sellers' possession or under its control, the following:
(i) Complete copies of all of the Tenant Leases
and all amendments thereto, a schedule of which is attached hereto
as Exhibit "B" and forms a part hereof.
(ii) 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 plans and specifications and
third-party soil reports, or environmental reports and studies
relating to 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 years 1995, 1996 and current year to
date to the extent available to Seller;
(vi) All warranties and operating manuals that
Sellers 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 therein; and
(vii) Complete copies of all service and other
contracts pertaining to the Property in respect to which Sellers
are obligated (the "Service Contracts").
(b) Except as expressly provided in this Agreement,
Sellers make no representation or warranty as to the accuracy of
the information contained in any of the documents, instruments or
agreements to be provided to Purchaser pursuant to this Paragraph
5.
(c) Purchaser shall have until 5:00 P.M. on the date
that is thirty (30) days after the Effective Date or the next
business day if that date is a Saturday, Sunday or legal holiday
(the "Approval Date") 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 by the Approval
Date as aforesaid shall be deemed its approval thereof (and its
covenant to deliver the additional $50,000 deposit required
pursuant to paragraph 2(a)(i) hereof). 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 Sellers 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 forty-eight
(48) 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.
Sellers shall reasonably cooperate to assist Purchaser in
completing such inspection. However, Purchaser agrees not to
contact any of Sellers' tenants without Sellers' prior consent and
to hold Sellers harmless from and against any loss, cost, damage,
claim or expense suffered by Sellers 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 Sellers' 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 Sellers, their agents, representatives, employees or any
tenants or other occupants. Sellers shall have the right, at
their option, to cause a representative of Sellers to be present
at all inspections, reviews and examinations conducted hereunder.
At the request of Sellers, Purchaser shall promptly deliver to
Sellers 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 Sellers 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, accountants and
prospective debt and equity financing sources who reasonably need
to be informed in connection with Purchaser's determinations
hereunder (and who shall, in turn, be required to keep such
information confidential).
(b) From and after the date hereof until Closing,
Purchaser and its agents shall be afforded full opportunity by
Sellers during normal business hours and upon forty-eight (48)
hours prior notice to examine all operating books and records that
relate to the Property, including all specifications and as-built
drawings (to the extent they are in Sellers' 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 manuals that Sellers may have
from vendors, contractors or servicing agents with respect to the
physical condition of the Property or any portion thereof or the
equipment located thereon.
(c) Purchaser shall have until the Approval Date 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) to be prepared at Purchaser's
sole cost and expense. Purchaser's disapproval shall be in
writing and shall be delivered to Sellers prior to the Approval
Date. Failure to deliver such written disapproval shall be deemed
Purchaser's approval of said matters (and its covenant to deliver
the additional $50,000 deposit required pursuant to paragraph
2(a)(i) hereof). Purchaser understands and agrees that if it
shall disapprove of any matter or thing subject to its approval
pursuant to paragraph 5 and 6 hereof, Sellers shall not on account
thereof be obligated to correct the objection or otherwise lower
the Purchase Price or grant any credit with respect thereto.
7. Operation of Property Pending Closing.
(a) Tenant Leases. Sellers have leased portions of the
Property to various occupancy tenants. From and after the date of
execution of this Agreement and until the Closing Date Sellers
shall not enter into any new leases or amend, terminate or accept
the surrender of any existing tenancies or approve any subleases
without the prior written consent of Purchaser (which consent
shall not be unreasonably withheld). Concurrently with its
execution of this Agreement Seller shall notify Purchaser of any
lease agreements that are outstanding for signature by prospective
tenants, each of which is hereby deemed approved by Buyer. Any
such agreements, if signed, shall be deemed to be signed prior to
execution of this Agreement. In requesting such consent, Sellers
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. The failure
of Purchaser to respond within five (5) business days after
written request for any such approval shall be deemed to
constitute approval. Sellers shall not collect in advance any
rent or other sum due under any of the Tenant Leases, except for
collection of current rents no more than one month in advance.
(b) Leasing Commissions; Tenant Improvements and Rent
Concessions. Purchaser shall be responsible for all leasing
commissions, tenant improvement costs and unamortized rent
concessions due with respect to leases, extensions, and renewals
of leases, and similar events occurring after the date of this
Agreement, provided that (i) Purchaser has approved or is deemed
to have approved such action or event by Sellers to the extent
occurring prior to the Closing Date and (ii) Sellers have
delivered to Purchaser copies of the agreements with respect to
which any such commissions are payable. Failing such delivery,
Sellers shall remain responsible for all of such commissions.
(c) Insurance Policies. Sellers 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. Sellers 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 Sellers for any term provided that
such Service Contracts are terminable by Sellers or its successors
in interest upon not more than thirty (30) days' notice to the
service provider.
(e) Property Management. Sellers 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 Sellers.
8. Conditions Precedent to Purchaser's Obligation to Close
Escrow. The obligation of Purchaser to consummate the transactions
contemplated hereby is subject to the following conditions,
inserted for Purchaser's sole benefit and that may be waived by
Purchaser only in writing at its sole option. Said conditions are
as follows:
(a) Representations and Warranties True at Closing.
The representations and warranties of Sellers 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. Sellers shall have
delivered to Purchaser estoppel letters (the "Tenant Estoppels")
from tenants representing 85% of the leased area and from all
tenants leasing more than 3,500 square feet in the Improvements in
substantially the form of Exhibit "E" attached hereto and forming
a part hereof, consistent in all material respects with the
information to be provided by Sellers hereunder and certifying
inter alia to the effect that there are no defaults by landlord
under the lease known to tenant thereunder; that such lease is
unmodified except as may be set forth therein and in full force
and effect; that there are no defenses or offsets against the
landlord known to tenant thereunder; and that rental is current
and has not been paid more than one month in advance.
(c) Compliance with This Agreement. Sellers shall have
performed and complied within all material respects all agreements
and conditions required by this Agreement to be performed or
complied with by it on or prior to Closing.
(d) Title Policy. Title Company shall be ready,
willing and able to issue the Title Policy required by Paragraph
4(b).
(e) Change in Condition. Subject to the provisions of
Paragraphs 15(b) and 15(c) hereof, there shall exist no damage,
destruction or condemnation of the Property occurring after the
date hereof and prior to Closing.
9. Conditions Precedent to Sellers' Obligation to Close
Escrow. The obligation of Sellers to consummate the transactions
contemplated hereby is subject to the following conditions,
inserted for Sellers' sole benefit and that may be waived solely
by Sellers only in writing at its sole option. Said conditions
are as follows:
(a) Representations and Warranties True at Closing.
The representations and warranties of Purchaser contained in this
Agreement, or in any certificate or document signed by Purchaser
pursuant to the provisions hereof, shall be true on and as of
Closing in all material respects as though such representations
and warranties were made on and as of such date.
(b) Delivery of Purchase Price or Contribution Value
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 Sellers Upon Default.
(a) IF THE TRANSACTION HEREIN PROVIDED SHALL NOT BE
CLOSED BY REASON OF SELLERS' DEFAULT UNDER THIS AGREEMENT AND
PURCHASER SHALL NOT HAVE DEFAULTED UNDER THIS AGREEMENT, THEN THE
DEPOSIT SHALL BE RETURNED TO PURCHASER. IN ADDITION, THE PARTIES
HERETO, BEFORE ENTERING INTO THIS TRANSACTION, HAVE BEEN CONCERNED
WITH THE FACT THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY
PURCHASER IF SELLERS SHOULD WRONGFULLY FAIL TO SELL THE PROPERTY
TO PURCHASER. SELLERS HAVE STATED THAT THEY WILL NOT PERMIT ANY
ACTION FOR SPECIFIC PERFORMANCE OF THIS AGREEMENT. WITH THE
FLUCTUATION IN VALUE OF REAL PROPERTY, THE CURRENT AND HIGHLY
UNPREDICTABLE STATE OF THE ECONOMY, THE FLUCTUATING MONEY MARKET
FOR REAL ESTATE LOANS OF ALL TYPES, AND OTHER FACTORS THAT
DIRECTLY AFFECT THE VALUE AND MARKETABILITY OF THE PROPERTY, IT IS
REALIZED BY THE PARTIES THAT IT WOULD BE EXTREMELY DIFFICULT AND
IMPRACTICABLE, IF NOT IMPOSSIBLE, TO ASCERTAIN WITH ANY DEGREE OF
CERTAINTY PRIOR TO SIGNING THIS AGREEMENT THE AMOUNT OF DAMAGES
THAT WOULD BE SUFFERED BY PURCHASER IN THE EVENT OF SELLERS'
WRONGFUL FAILURE TO SELL THE PROPERTY TO PURCHASER. IN ADDITION,
PURCHASER DESIRES TO PROVIDE A FINANCIAL DISINCENTIVE FOR ANY SUCH
FAILURE BY SELLERS. THE PARTIES, HAVING MADE DILIGENT BUT
UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL COMPENSATORY DAMAGES
PURCHASER WOULD SUFFER IN THE EVENT OF SELLERS' WRONGFUL FAILURE
TO SELL THE PROPERTY TO PURCHASER, HEREBY AGREE THAT THE
REASONABLE ESTIMATE OF SAID DAMAGES IS AN AGGREGATE AMOUNT EQUAL
TO TWO HUNDRED THOUSAND DOLLARS ($200,000) (EACH SELLER IN
ACCORDANCE WITH ITS RESPECTIVE PERCENTAGE INTEREST THEREOF); AND
IN THE EVENT OF SELLERS' WRONGFUL FAILURE TO SELL THE PROPERTY TO
PURCHASER, PURCHASER SHALL BE ENTITLED TO SUCH AMOUNT AS FULL
LIQUIDATED DAMAGES, AND THAT PAYMENT OR TENDER TO PURCHASER OF
SUCH AMOUNT SHALL TERMINATE ALL OF PURCHASER'S RIGHTS AND REMEDIES
AT LAW OR IN EQUITY AGAINST SELLERS WITH RESPECT TO SUCH FAILURE
TO PERFORM. AS USED HEREIN, SELLERS' WRONGFUL FAILURE TO SELL THE
PROPERTY TO PURCHASER SHALL MEAN ITS WILLFUL AND UNWARRANTED
REFUSAL TO DELIVER THE GRANT DEED WITH PURCHASER HAVING COMPLIED
WITH ITS OBLIGATIONS HEREUNDER (EXCEPT FOR ITS OBLIGATION TO FUND
THE BALANCE OF THE PURCHASE PRICE) AND BEING READY, WILLING AND
ABLE TO CLOSE (AND SUCH TERM SHALL NOT APPLY TO ANY OTHER DEFAULT
OR BREACH BY SELLERS HEREUNDER).
/s/JL /s/LF /s/ VC
Sellers' Purchaser's
Initials Initials
(b) Remedy of Sellers. THE PARTIES HERETO, BEFORE
ENTERING INTO THIS TRANSACTION, HAVE BEEN CONCERNED WITH THE FACT
THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY SELLERS IF PURCHASER
SHOULD WRONGFULLY FAIL TO PURCHASE THE PROPERTY. WITH THE
FLUCTUATION IN VALUE OF REAL PROPERTY, THE CURRENT AND HIGHLY
UNPREDICTABLE STATE OF THE ECONOMY, THE FLUCTUATING MONEY MARKET
FOR REAL ESTATE LOANS OF ALL TYPES, AND OTHER FACTORS THAT
DIRECTLY AFFECT THE VALUE AND MARKETABILITY OF THE PROPERTY, IT IS
REALIZED BY THE PARTIES THAT IT WOULD BE EXTREMELY DIFFICULT AND
IMPRACTICABLE, IF NOT IMPOSSIBLE, TO ASCERTAIN WITH ANY DEGREE OF
CERTAINTY PRIOR TO SIGNING THIS AGREEMENT THE AMOUNT OF DAMAGES
THAT WOULD BE SUFFERED BY SELLERS IN THE EVENT OF PURCHASER'S
WRONGFUL FAILURE TO PURCHASE THE PROPERTY. THE PARTIES, HAVING
MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL
COMPENSATORY DAMAGES SELLERS 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, SELLERS SHALL BE ENTITLED TO SUCH AMOUNT
(EACH SELLER IN ACCORDANCE WITH ITS RESPECTIVE PERCENTAGE INTEREST
THEREOF); AS FULL LIQUIDATED DAMAGES, AND THAT PAYMENT OR TENDER
TO SELLERS BY PURCHASER OF SUCH AMOUNT SHALL TERMINATE ALL OF
SELLERS' RIGHTS AND REMEDIES AT LAW OR IN EQUITY AGAINST PURCHASER
WITH RESPECT TO SUCH FAILURE TO PERFORM.
/s/JL /s/LF /s/ VC
Sellers' Purchaser's
Initials Initials
(c) Notwithstanding anything to the contrary contained
herein, the aggregate liability of Sellers arising pursuant to or
in connection with the representations, warranties,
indemnifications, covenants or other obligations (whether express
or implied) of Sellers under this Agreement (or any document
executed or delivered in connection herewith) shall not exceed the
aggregate amount of $400,000.00 (each Seller in accordance with
its respective Percentage Interest thereof). Without limitation
on the other limitations or remedies contained herein, in the
event of any dispute between the parties respecting this Agreement
or the transactions herein contemplated, Purchaser hereby waives
(i) any right to record or file a lis pendens or other similar
notice of suit, (ii) any right to seek specific performance of
this Agreement, and (iii) any right to assert any claim affecting
the right of possession or title to the Property. In no event
shall this Agreement (or any short form or memorandum thereof) be
recorded against or with respect to the Property.
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 applicable Purchase Price or the Loan
Payoff Amount (depending upon each Seller's election for a
purchase and sale or a Contribution) in the manner set forth in
Paragraph 2;
(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, a signed counterpart of the Assignment of Service
Contracts and a signed counterpart of the Amendment to Limited
Partnership Agreement, executed by all required partners if any
Seller shall have elected to contribute the Property for OP Units
in Purchaser.
(b) At least one business day prior to the date of
Closing, each Seller shall have delivered to Escrow Agent counter-
part executed originals of the following documents with respect to
such Seller's respective TIC Interest:
(i) A Grant Deed in the form of Exhibit "F"
attached hereto and forming a part hereof;
(ii) A Bill of Sale (the "Bill of Sale") in the
form of Exhibit "G" attached hereto covering the Personal
Property;
(iii) An Assignment and Assumption of Leases and
Security Agreements (the "Assignment of Leases") substantially in
the form and substance of Exhibit "H" attached hereto and forming
a part hereof;
(iv) An Assignment and Assumption of Service and
Miscellaneous Rights and Agreements (the "Assignment of Service
Contracts") substantially in the form and substance of Exhibit "I"
attached hereto and forming a part hereof;
(v) An original counterpart of the Amendment to
Limited Partnership Agreement if such Seller shall have elected to
contribute the Property to Purchaser.
(vi) An original counterpart of each of the
Service Contracts, Leases and keys to the Property if in Sellers'
possession or under its control;
(vii) Notices to each of the tenants and occupants
of the Property of the transfer of the Property to Purchaser;
(viii) To the extent they are in Sellers'
possession, a complete set of all plans, specifications and
as-built drawings, and all building permits, certificates of
occupancy, third-party soil reports, and environmental reports and
studies relating to the Improvements;
(ix) All warranties and operating manuals that
Sellers 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
(x) If the transaction is to be a Contribution,
cash in the sum of the Security Deposits, the net prorations owing
to Purchaser and Sellers' share of the costs and expenses of the
transaction (it being understood that such Seller may elect to
cause all such amounts to be credited to Purchaser and debited
against the Purchase Price).
(c) Upon delivery of the foregoing sums and documents,
Escrow Agent shall cause Title Company to cause the Grant Deeds 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.
(d) Notwithstanding anything to the contrary contained
herein, Purchaser hereby agrees that the Sellers may cause the
Property to be direct deeded to Purchaser by any entity holding
record title to the Property as of the Closing Date.
12. Costs and Prorations.
(a) Prorations. All revenues, income, receivables,
costs, expenses and payables of the Property shall be apportioned
equitably between the parties as of Closing on the basis of the
actual number of days in a particular month, and with respect to
the items enumerated below where a particular manner of apportion-
ment 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 (with amounts being credited or debited to each
Seller, as appropriate, in accordance with its respective
Percentage Interest thereof):
(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 Sellers' share thereof being promptly
delivered to Sellers. 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 Sellers are
entitled to receive its share of charges or amounts without first
obtaining Seller's written consent. Sellers hereby reserve the
right to pursue any remedy against any tenant owing delinquent
rents and any other amounts to Sellers. Purchaser shall
reasonably cooperate with Sellers 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,
Sellers 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 Sellers and
Purchaser if current tax rates differ from the latest previous tax
rates as soon as the same are known. Sellers agree that to the
extent any additional taxes, assessments or levies are imposed,
assessed or levied against the Property, or any portion thereof,
the Sellers or the Purchaser at any time subsequent to Closing but
with reference to any period prior thereto during Sellers'
ownership thereof, Sellers shall promptly pay to Purchaser an
amount equal to such additional assessments or levies. Similarly,
if tax refunds become payable for periods during Sellers'
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 Sellers) shall be promptly
paid over to Sellers. 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 Sellers 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 Sellers 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 and leasing commissions
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) Sellers shall pay (each Seller in accordance
with its respective Percentage Interest thereof):
(1) The cost of the Preliminary Title
Report, that portion of the cost of securing the Title Policy that
is attributable to CLTA Owner's coverage;
(2) Documentary transfer tax imposed on
the conveyance of title to the Property to Purchaser;
(3) One-half of Escrow Agent's Escrow Fee.
(ii) Purchaser shall pay:
(1) The cost of recording the Grant Deeds;
(2) That portion of the cost of the Title
Policy that is not paid by Sellers, including the cost of any
endorsements, and the cost of any update to any existing ALTA
Survey; and
(3) One half of Escrow Agent's Escrow fee.
All other Closing fees and expenses, including, but not limited
to, the parties' legal expenses, accounting and consulting fees,
and other incidental expenses in connection with this transaction
shall be borne by the party incurring same.
13. Representations, Warranties and Covenants of Sellers.
(a) Except as specifically set forth in this Paragraph
13(a), 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 in 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.
Purchaser acknowledges that Purchaser has examined, reviewed and
inspected all matters which in Purchaser's judgment bear upon the
Property and its value and suitability for Purchaser's purposes.
Except as to matters specifically set forth in this Paragraph
13(a), Purchaser will acquire the Property solely on the basis of
its own physical and financial examinations, reviews and
inspections and the title insurance protection afforded by the
Title Policy. Subject to the foregoing and except as disclosed by
Sellers to Purchaser or otherwise discovered by Purchaser prior to
the Approval Date or as contained in the materials delivered to
Purchaser and identified in Paragraph 5 hereof, Sellers hereby
make the following representations, warranties and covenants, each
of which is deemed to be material and each of which is stated by
Sellers to be true and correct on the date hereof and on the
Closing Date (subject to any exceptions disclosed by Sellers in
writing) and each of which shall survive the Closing for a period
of one (1) year. Except as disclosed in the reports and documents
listed on Exhibit "J" attached hereto:
(i) Sellers are (or as of the Closing Date will
be) the owners of the Personal Property and have marketable title,
free and clear of all liens, claims and security interests
whatsoever, except for matters of record.
(ii) Sellers have no knowledge of any:
(1) existing latent defects or seismic
conditions concerning the Real Property or materially incorrect
income or expense figures in any financial statements prepared by
or for Sellers and delivered to Purchaser regarding the Property
(with respect to periods of time occurring prior to the date
hereof and, without limitation on the foregoing, Sellers do not
make any representation or warranty with respect to any
projections);
(2) any pending litigation or agreement
not of record materially and adversely affecting the Property and
which would be binding upon Purchaser after the Closing;
(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;
(5) thing that would suggest any portion
of the Property has ever been used by Sellers or any tenant of any
portion of the Property during Sellers' ownership thereof as a
waste storage or disposal site or gasoline station. Without
limiting the other provisions of this Agreement, Sellers shall
reasonably cooperate with Purchaser's investigation of matters
relating to the foregoing provisions of this paragraph and to
provide access to and copies of any data and/or documents dealing
with potentially Hazardous Substances used at the Property and any
disposal practices followed in accordance with, and subject to the
provisions of, Paragraph 6 hereof. Sellers agree that Purchaser
may make inquiries of governmental agencies regarding such mat-
ters, without liability for the outcome of such discussions. For
the purposes of this Agreement, "Hazardous Substances" shall mean
(A) substances defined as "hazardous substances" in (i) the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S. C. '' 9601 et seq.), or (ii) the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. '' 6901
et seq.), together with the regulations enacted pursuant to such
acts, and (B) those substances defined as "hazardous wastes" in
' 25117 of the California Health and Safety Code or as "hazardous
substances" in ' 25316 of the California Health and Safety Code
together with the regulations enacted pursuant to such statutes.
(iii) The Tenant Leases and Service Contracts
entered into by Sellers and, to Sellers' knowledge, the other
Tenant Leases, Service Contracts and any other agreements, matters
and things to be submitted to Purchaser by Sellers 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 unless thereafter supplemented by supplements or
additions, approved in writing by Purchaser, on or before Closing.
Notwithstanding anything to the contrary contained herein,
Sellers 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;
(iv) The operating financial information prepared
by Sellers and delivered to Purchaser with respect to the Property
(which financial information was prepared on a cash basis of
accounting), consisting of Statements of Operations for the
calendar years ended December 31, 1995, December 31, 1996 and for
the current calendar year are true and correct in all material
respects (provided, however, for the period of time occurring
prior to April 1, 1995, such representation shall be limited to
Sellers' knowledge); in this regard Sellers agree 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 to the
extent in Seller's possession; and
(v) As used in this Agreement, "to Sellers'
knowledge" or other similar knowledge limitations as to Sellers
shall mean the actual knowledge of Jack Mahoney, as President, and
Rod Oshita, as Asset Manager, both of Summit Commercial
Properties, Inc.
(b) Notwithstanding anything contained in Paragraphs
5(a) or 13(a) to the contrary, Sellers are 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 Sellers.
14. Representations and Warranties of Purchaser.
Purchaser hereby makes the following representations and
warranties, each of which is deemed to be material and each of
which is stated by Purchaser to be true and correct on the date
hereof:
(a) Purchaser has full legal power and authority to
enter into and perform this Agreement in accordance with its
terms. This Agreement constitutes the valid and binding
obligation of Purchaser, enforceable in accordance with its terms,
except as such enforcement may be affected by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally. The execution, delivery and performance of this
Agreement and all documents in connection therewith are not in
contravention of or in conflict with any agreement or undertaking
to which Purchaser is a party or by which Purchaser may be bound
or affected; 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 Approval Date and as of the Closing Date
(i) Purchaser has received and reviewed all materials provided to
Purchaser by Sellers 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, (iv) Purchaser is satisfied
with all 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, and (v) except as
set forth in subparagraph 13(a) and elsewhere in this Agreement,
Purchaser is not relying on any representation, written
information, data, reports, warranty, or statement of Sellers or
their agents concerning the Property or the accuracy or
completeness of the Due Diligence Materials, and Purchaser is
purchasing the Property in "AS-IS" condition based solely upon
Purchaser's own independent inspection, investigation and review,
as more particularly, set forth in Paragraph 13(a) hereof.
15. General Covenants and Agreements of Purchaser and
Sellers.
(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 after the date hereof and 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 Sellers 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 Sellers
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 Sellers' 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. Sellers
shall retain all interest in and to the insurance proceeds that
may be payable to Sellers on account of repaired and completed
damage, but Sellers 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, Sellers agree 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 con-
demning 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 Sellers 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 Sellers
at the address set forth in Paragraph 16(g) of this Agreement (or
such other address as Sellers may have theretofore designated in
writing) at least two days prior to Closing.
(d) Brokers' Commissions. Sellers warrant that Sellers
did not negotiate with respect to the purchase of the Property
through any broker, agent, finder, affiliate or other third party
other than Cushman & Wakefield ("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. Sellers agree
to pay at Closing to Broker the commission due it in connection
with the within transaction in accordance with the provisions of a
separate written agreement between Broker and Sellers and hereby
agree to indemnify Purchaser against and hold Purchaser harmless
from any and all claims, demands, causes of action or damages
resulting from any breach of this warranty. Purchaser hereby
warrants that Purchaser did not negotiate through any broker,
agent, finder, affiliate or other third party other than Broker or
incur any liability, contingent or otherwise, for any such
brokerage or finder's fees, agent's commissions or other like
payments, in connection with this Agreement, and hereby agrees to
indemnify Sellers against and hold Sellers harmless from any and
all claims, demands, causes of action or damages resulting from
any breach of his warranty. This provision shall survive Closing.
(e) Further Assurances Prior to Closing. Sellers 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 any of
its rights or duties hereunder without the prior written consent
of Sellers (which consent may be given or withheld in Sellers'
sole and absolute discretion). Each Seller may assign its rights
hereunder in accordance with the provisions of Paragraph 16(m)
below.
(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. Sellers shall indemnify Purchaser
against and hold Purchaser harmless from any and all loss, cost,
damage, claim, liability or expense, including court costs and
reasonable attorneys' fees, for third party claims arising out of
or in connection with any tort committed by Sellers (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 Sellers) unless caused
by Purchaser, resulting from such tort occasioned in or about the
Property prior to Closing. Purchaser shall indemnify Sellers
against and hold Sellers 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 Sellers, resulting from such tort occasioned in or about
the Property (a) as a result of its investigation of the Property
during the Approval Period and (b) on or subsequent to Closing.
These covenants shall survive Closing.
16. Miscellaneous Provisions.
(a) Successors and Assigns. Subject to the provisions
hereof, the terms and provisions hereof shall be binding upon and
inure to the benefit of the successors and assigns of the parties
hereto.
(b) Meaning of Terms. When necessary herein, all terms
used in the singular shall apply to the plural and vice versa; and
all terms used in the masculine shall apply to the neuter and
feminine genders.
(c) Entire Agreement. This Agreement is the entire
agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements between the
parties hereto with respect thereto. No claim of waiver,
modification, consent 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 several
paragraphs of this Agreement are inserted solely for convenience
of reference and are not a part of and are not intended to govern,
limit or aid in the construction of any term or provision hereof.
(f) Attorneys' Fees. If either Sellers or Purchaser
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, 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, 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:
Seller: c/o Summit Commercial
300 Continental Boulevard
Suite 565
El Segundo, CA 90245
Attn: Jack Mahoney
With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, CA 90067
Attn: Real Estate Notices (GML)
Purchaser: Arden Realty, Inc.
9100 Wilshire Boulevard
Suite 700 East
Beverly Hills, CA 90210
Attn: Ms. Brigitta B. Troy
With a copy to: Troy & Gould
1801 Century Park East
16th Floor
Los Angeles, CA 90067
Attn: Kenneth R. Blumer, Esq.
Escrow Agent: Commerce Escrow
1545 Wilshire Boulevard
Suite 600
Los Angeles, CA 90017
Attn: Mark Minsky
All notices, requests and other communications shall be deemed
given upon deposit with the United States Postal Service or
reputable delivery service as provided for herein and shall be
deemed received on the date of acknowledgment or other evidence of
actual receipt.
(h) Severability. If any provision of this Agreement
or the application thereof to any person or circumstance shall be
invalid or unenforceable to any extent, the remainder of this
Agreement and the application of such 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. Sellers 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) 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.
(m) Sellers Exchange Rights. Any Seller may
consummate the sale of its interest in the Property as part of a
so-called like kind exchange ("Exchange") pursuant to Section 1031
of the Internal Revenue Code of 1986, as amended, provided that
(i) except as hereinafter set forth, all costs, fees and expenses
attendant to such Exchange shall be the sole responsibility of
such Seller, (ii) the Closing shall not be delayed or affected by
reason of such Exchange nor shall the consummation or
accomplishment of the Exchange be a condition precedent or
condition subsequent to such Seller's obligations under this
Agreement, (iii) Purchaser shall not be required to acquire of
hold title to any real property other than the Property for
purposes of consummating the Exchange, (iv) in the event of any
such Exchange, and notwithstanding that in connection with such
Exchange record title to the Property may be conveyed by such
Seller to an accommodation entity which thereupon conveys title to
the Property to Purchaser pursuant to an amendment and assignment
("Assignment") of this Agreement by such Seller to such
accommodation entity (which assignment, and amendment of escrow
instructions in connection therewith, shall be prepared by such
Seller at such Seller's expense and executed by Purchaser when
reasonably requested by such Seller, subject to the reasonable
approval of the form thereof by Purchaser), all covenants and
agreements of such Seller pursuant to this Agreement shall be
deemed to be made by such Seller, shall survive any conveyance to
an accommodation party, shall continue in favor of and inure to
the benefit of Purchaser and shall be enforceable by Purchaser
against such Seller, as though the Property had been conveyed
directly by such Seller to Purchaser, and (v) the Exchange shall
in no way reduce, abridge or modify any of such Seller's
obligations or duties or any of Purchaser's rights or remedies
hereunder. Purchaser will haven no liability to such Seller in
the event the Exchange is not consummated, or in the event such
Seller does not achieve the desired tax treatment. Purchaser
shall pay its own attorneys' fees in connection with the review of
any documents in connection with the Exchange.
(n) Limitation of Liability. No constituent partner
in or agent of any Seller, nor any advisor, trustee, director,
officer, employee, beneficiary, shareholder, participant,
representative or agent of any corporation or trust that is or
becomes a constituent partner in Seller (including, but not
limited to, Summit Commercial Properties, Inc., and the
individual(s) specified in Paragraph 13(a)(v) above) shall have
any personal liability, directly or indirectly, under or in
connection with this Agreement or any agreement made or entered
into under or pursuant to the provisions of this Agreement, or any
amendment or amendments to any of the foregoing made at any time
or times, heretofore or hereafter, and Purchaser and its
successors and assigns and, without limitation, all other persons
and entities, shall look solely to each Seller's interests in the
Property for the payment of any claim or for any performance, and
Purchaser, on behalf of itself and its successors and assigns,
hereby waives any and all such personal liability.
Notwithstanding anything to the contrary contained in this
Agreement, neither the negative capital account of any constituent
partner in any Seller (or in any other constituent partner of any
Seller), nor any obligation of any constituent partner in any
Seller (or in any other constituent partner of any Seller) to
restore a negative capital account or to contribute capital to any
Seller (or to any other constituent partner of any Seller), shall
at any time be deemed to be the property or an asset of Seller or
any such other constituent partner (and neither Purchaser nor any
of its successors or assigns shall have any right to collect,
enforce or proceed against or with respect to any such negative
capital account of partner's obligation to restore or contribute).
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first hereinabove written.
Seller: WHITTIER-LRP, INC.,
a California corporation
By: /s/ John Long
Name: John Long
Title: President
BFMHRBF NO. II INC.,
a Delaware corporation,
By: /s/ Laurence Fink
Name: Laurence Fink
Title: Chairman and CEO
HIGHRIDGE-BFM INVESTMENT PARTNERSHIP, L.P.,
a California limited partnership,
By: LAMCO Real Property, Inc.,
a California corporation,
its General Partner
By: /s/ John Long
Name: John Long
Title: President
HIGHRIDGE COMMERCIAL FUND NO. 1, L.P.,
a California limited partnership,
By: LAMCO Real Property, Inc.,
a California corporation,
its General Partner
By: /s/ John Long
Name: John Long
Title: President
Purchaser: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc.,
a Maryland corporation,
Its General Partner
By:/s/ Victor J. Coleman
Victor J. Coleman
President
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: President
ASSIGNMENT AND AMENDMENT TO
AGREEMENT OF PURCHASE AND SALE OR CONTRIBUTION
AND ESCROW INSTRUCTIONS
THIS ASSIGNMENT AND AMENDMENT TO AGREEMENT OF PURCHASE AND SALE OR
CONTRIBUTION AND ESCROW INSTRUCTIONS (the "Assignment") is entered
into as of this 26th day of March, 1997, by and between Arden Realty
Limited Partnership, a Maryland limited partnership ("Buyer"),
Highridge Commercial Fund No. 1, L.P., a California limited
partnership ("Exchange Party"), and RPM INVESTMENTS, INC., a
California corporation ("Accommodator"), with respect to the
following:
A. Exchange Party owns, as a tenant in common, an undivided interest
in the real property located at 15111 and 15141 Whittier Boulevard in
the City of Whittier, County of Los Angeles, in the State of
California (the "Real Property") (Exchange Party's interest in the
Real Property shall hereafter be referred to as the "Relinquished
Property").
B. Exchange Party has entered into a certain Agreement of Purchase
and Sale or Contribution and Escrow Instructions, dated February 18,
1997 ("Purchase Agreement") with Buyer pursuant to which Exchange
Party has agreed to convey the Relinquished Property to Buyer, upon
the terms and conditions set forth in the Purchase Agreement.
D. The parties desire to assign and amend the Purchase Agreement
upon the terms and conditions set forth herein.
NOW THEREFORE, for and in consideration of the foregoing premises
and the mutual undertakings set forth below, the parties hereby agree
as follows:
1. Assignment of Interest in Purchase Agreement.
1.1 Exchange Party hereby assigns to Accommodator all of
Exchange Party's right, title and interest in and to (i) the Purchase
Agreement and (ii) the Relinquished Property. Subject to the terms
and conditions of Paragraphs 2 and 3 of this Assignment, Accommodator
hereby accepts such assignment and agrees to be bound by the terms and
conditions of the Purchase Agreement and to sell the Relinquished
Property to Buyer. Exchange Party's assignment of its right, title
and interest in the Purchase Agreement and the Relinquished Property
shall not release Exchange Party from its representations, warranties,
covenants and obligations under the Purchase Agreement. Buyer hereby
acknowledges the foregoing assignment and, to the extent required,
Buyer hereby consents to such assignment.
1.2 Notwithstanding the foregoing assignment, the parties
acknowledge and agree that if Accommodator defaults in its obligations
under the Purchase Agreement, then (i) Exchange Party shall still be
liable to buyer under the Purchase Agreement and, (ii) in addition to
all other remedies, Buyer shall have all of the rights against
Exchange Party which Buyer possessed prior to this Assignment.
Nothing contained in this Paragraph, however, shall affect any rights
of Exchange Party against Accommodator by reason of any default of
Accommodator.
1.3 Any covenants, representations and warranties heretofore
made by exchange Party to Buyer (or its predecessor) and made by Buyer
(or its predecessor) to Exchange Party under the Purchase Agreement
shall continue to inure to the benefit of Buyer and Exchange Party,
respectively, notwithstanding this Assignment and/or the fact that
Exchange Party may convey the Property to Accommodator who shall then
convey it to Buyer.
2. Rights and Obligation of Accommodator.
2.1 It is understood between Buyer and Accommodator that
Accommodator is simply an accommodator to facilitate Exchange Party in
structuring the acquisition of certain property as an exchange. Buyer
acknowledges and agrees that it is not relying on any covenant,
representation or warranty of Accommodator or its shareholders,
directors, officers, employees, agents, affiliates or attorneys in
entering into this Assignment. Further, Buyer acknowledges and agrees
that Accommodator has not made, nor shall it be liable for, any
covenant, representation or warranty contained in the Purchase
Agreement or relating to the Property, the condition thereof, or title
thereto, except for Accommodator's agreement in this Assignment to
sell the Property to Buyer in accordance with the terms of the
Purchase Agreement. Buyer hereby releases Accommodator from any
claims, liability, costs, expenses or damages, including reasonable
attorneys' fees and costs, in connection with any matter relating to
the Purchase Agreement or the Relinquished Property, except as
provided in Section 2.3 below.
2.2 In the event of any breach by Exchange Party under the
Purchase Agreement, or with respect to the Relinquished Property,
Buyer agrees that its sole recourse shall be to proceed against
Exchange Party with respect to any such claim or allegation, and not
against Accommodator. Further, Exchange Party hereby agrees that
Exchange Party (and not Accommodator) shall be solely responsible and
liable to Buyer for the performance of all covenants, representations
and warranties under the Purchase Agreement, and the condition of the
Relinquished Property (to the extent provided therein), and that Buyer
shall have the right to look exclusively to Exchange Party for any
breaches thereof or claims related thereto.
2.3 Accommodator covenants and agrees that it shall not, by
action or omission, cause any damage to title to the Relinquished
Property and it agrees to hold Exchange Party and Buyer each harmless
from and against any costs, claims, liability, expenses, losses or
damages, including reasonable attorneys' fees and costs, arising from
or related to any action or omission of Accommodator.
3. Direct Deeding and Closing.
In lieu of Exchange Party delivering a deed and other closing
documents to the Relinquished Property to Accommodator, Accommodator
hereby agrees that, prior to the closing, Exchange Party may execute
and deliver such deed and other closing documents in favor of Buyer.
Buyer agrees to accept same, subject to the provisions of the Purchase
Agreement.
4. Amendments to Purchase Agreement.
Accommodator and Buyer agree that they shall not amend the Purchase
Agreement after the execution of this Assignment without the prior
written consent of Exchange Party to do so. Buyer shall not, by this
Agreement or acquiescence to the exchange between Exchange Party and
Accommodator, (i) have its rights under the Purchase Agreement,
including those that survive closing, affected or diminished in any
manner, or (ii) be responsible for compliance with or be deemed to
have warranted to Exchange Party that such exchange in fact complies
with Section 1031 of the Internal Revenue Code of 1986, as amended
(the "Code") or Section 18031 of the California Revenue and Taxation
Code, as amended.
5. Purchase Agreement.
Except as provided in this Assignment, the Purchase Agreement, as it
may have been heretofore amended, shall remain in full force and
effect.
6. Establishment of qualified Escrow Account.
At the closing of the Sale of the Relinquished Property to Buyer,
Buyer shall transfer the entire net cash proceeds due to Exchange
Party (after payment therefrom of Exchange Party's costs, expenses,
prorations and similar items in connection with such sale to the
extent directed at or prior to such closing by Exchange Party) (the
"Cash Portion of the Acquisition Price") as follows:
(i) to Exchange Party (or its designee) so much of the Cash
Portion of the Acquisition Price that Exchange Party specifies, by
written notice to Buyer at or prior to such closing, as being "boot"
to the Exchange Party under Section 1031 of the Code, and
(ii) to Accommodator, the balance of the Cash Portion of
the Acquisition Price.
7. Indemnity.
Except for the attorneys' fees incurred by Buyer in connection with
the review and negotiation of this Assignment (which are addressed in
the Purchase Agreement), Exchange Party agrees to defend, indemnify
and hold harmless Buyer from all losses, costs and expenses (including
reasonable attorneys' fees) resulting from Buyer entering into this
Assignment which Buyer would not have incurred under the Purchase
Agreement, but for entering into this Assignment.
8. Counterparts.
This Assignment may be executed in several counterparts, each of which
shall be deemed an original but all of which shall constitute one and
the same instrument.
9. Attorneys' Fees.
In the event any action be instituted by a party to enforce any of the
terms and provisions contained herein, the non-prevailing party shall
pay to the prevailing party in such action the reasonable attorneys'
fees, costs and expenses incurred by the prevailing party in
connection therewith.
10. Applicable Law and Severability
This Assignment shall, in all respects, be governed by the laws of the
State of California applicable to agreements executed and to be wholly
performed within the State of California. Nothing contained herein
shall be construed so as to require the commission of any act contrary
to law, and wherever there is any conflict between any provision
contained herein and any present or future statute, law, ordinance or
regulation contrary to which the parties have no legal right to
contract, the latter shall prevail but the provision of the Assignment
which is affected shall be curtailed and limited only to the extent
necessary to bring it within the requirements of the law.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment and Amendment to Agreement of Purchase and Sale or
Contribution and Escrow Instructions as of the day and year first
above written.
BUYER: Arden Realty Limited Partnership, a
Maryland limited partnership
By: Arden Realty, Inc. a Maryland
corporation, its General Partner
By: /s/ Victor J. Coleman
Name: Victor J. Coleman
Title: President and Chief Operating Officer
EXCHANGE PARTY: Highridge Commercial Fund No. 1 L.P., a
California limited partnership
By: LAMCO Real Property, Inc., a
California corporation, its General Partner
By: /s/ Steven A. Berlinger
Name: Steven A. Berlinger
Title: Vice President
ACCOMMODATOR: RPM INVESTMENTS, INC., A California corporation
BY: /s/ Mark Minsky
Name: Mark Minsky
Title: President
AGREEMENT OF PURCHASE AND SALE
AND ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND ESCROW INSTRUCTIONS
("Agreement") is made and entered into this 22nd day
of November 1996 by and between 6800 OWENSMOUTH, INC., a
California corporation ("Seller"), and ARDEN REALTY LIMITED
PARTNERSHIP, a Maryland limited partnership ("Purchaser"),
with reference to the following facts:
A. Seller is the fee owner of that certain parcel of
real property (the "Real Property") and the improvements
thereon, for informational purposes only, are a four
(4)-story office building containing approximately 80,029
rentable square feet, other facilities, fixtures, paving and
surfacing thereon or associated therewith, with subterranean
and surface automobile parking with a total of approximately
317 marked parking spaces (collectively, the
"Improvements"). The Real Property and Improvements are
located at 6800 Owensmouth Avenue, Canoga Park, California,
and is more particularly described in Exhibit "A" attached
hereto and forming a part hereof.
B. Seller desires to sell, and Purchaser desires to
purchase, all of the real and personal property owned by
Seller located at or forming part of the Real Property,
including, but not limited to, the Improvements, and all
appurtenant easements and rights, and the Personal Property
(as hereinafter defined) on the terms, covenants and condi-
tions hereinafter set forth.
NOW, THEREFORE, with reference to the foregoing reci-
tals and in reliance thereon and in consideration of the
purchase price hereinbelow set forth, and the other terms,
covenants and conditions set forth below, and other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, it is mutually covenanted and
agreed by Seller and Purchaser as follows:
1. Purchase and Sale. Subject to all of the terms
and conditions of this Agreement and for the consideration
set forth, on Closing (as hereinafter defined), Seller shall
convey, or cause to be conveyed, to Purchaser or to
Purchaser's assignee pursuant to paragraph 15(f) below, and
Purchaser or assignee shall purchase from Seller, all of the
following:
(a) The Real Property and the Improvements,
together with all easements, hereditaments and appurtenances
thereto, subject only to such easements, agreements and
exceptions as may have been approved by Purchaser in
accordance with Paragraph 4(a) hereof and the tenancies and
occupancies that are set forth on Exhibit "B";
(b) All of the personal property of Seller (the
"Personal Property") located at, attached or appurtenant to,
or used in connection with the operation or maintenance of
the Real Property and/or the Improvements (the "Inventory");
(c) All leases to tenants leasing space in the
Improvements (the "Tenant Leases");
(d) To the extent assignable, those certain
service and other agreements more particularly described in
Exhibit "C" attached hereto and made a part hereof; 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 Eight Million Seven Hundred
Seventy-Five Thousand and No/100 Dollars ($8,775,000.00),
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 Two Hundred Sixty-
Three Thousand Two Hundred Fifty Dollars ($263,250),
("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) Purchaser shall pay to Seller through Escrow
Agent at Closing in immediately available funds an amount
equal to the balance of the Purchase Price, plus (or minus)
the net amount of all costs, expenses, adjustments and
prorations to be credited (or debited) to Purchaser pursuant
to this Agreement. If Seller fails to forward to Purchaser
a Qualifying Statement provided under 1445 of the Internal
Revenue Code and an equivalent Form 590RE provided under the
Revenue and Taxation Code of the State of California, Escrow
Agent shall be entitled to withhold and pay to the Internal
Revenue Service and the Franchise Tax Board such withholding
required of Purchaser pursuant to Internal Revenue Code 1445
and equivalent form provided under the Revenue and Taxation
Code of the State of California.
(c) The Deposit shall be at all times invested by
Escrow Agent in the following investments ("Approved
Investments"): (i) United States Treasury obligations, (ii)
United States Treasury-backed repurchase agreements issued
by a major money center banking institution reasonably
acceptable to Seller, (iii) Certificates of Deposit or Money
Market Accounts of institutions whose deposits are insured
by the FDIC or (iv) such other manner as may be reasonably
agreed to by Seller and Purchaser. The Deposit shall be
disposed of by Escrow Agent only as provided in this
Agreement.
(d) All payments required to be made under this
Agreement shall be made in U.S. funds.
3. Escrow.
(a) Opening of Escrow. As soon as commercially
reasonable after their complete execution of this Agreement
("Effective Date") and in any event not later than two
business days thereafter, Seller and Purchaser shall open an
escrow (the "Escrow") with Commerce Escrow, 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, Purchaser and
Escrow Agent, to serve as Escrow instructions to Escrow
Agent, and Escrow Agent shall be and is hereby authorized
and instructed to deliver pursuant to the terms of this
Agreement the documents and monies to be deposited into the
Escrow. Escrow Agent may attach to this Agreement Escrow
Agent's standard form escrow agreement, to the extent that
the same is consistent with the terms hereof, and are
reasonably approved by Seller and Purchaser. Escrow Agent
shall immediately, upon receipt of such duly executed copy
of this Agreement, notify Seller and Purchaser of the
opening of Escrow. Should either party fail to open Escrow
in accordance with the provisions of this Paragraph 3(a),
such failure shall constitute a material breach of this
Agreement.
(b) Closing of Escrow. Escrow shall close not
later than three (3) business days following the expiration
of the Approval Period and upon one-days prior notice from
Purchaser, but in all events not later than January 15,
1997, provided the Tenant Estoppels satisfying the
requirements of paragraph 8(b) hereof have been received and
all other Purchaser's Conditions Precedent to Closing as set
forth in Paragraph 8 hereof have been satisfied. The term
"Closing" as used herein shall be deemed to be the date upon
which the respective Conditions Precedent to Purchaser's
Obligation to Close Escrow (set forth in Paragraph 8 below)
and the Conditions Precedent to Seller's 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 North American Title Company
("Title Agent"), together with true and legible copies of
all documents evidencing matters of record shown as
exceptions to title thereon. If Purchaser shall desire an
ALTA Survey of the Real Property and Improvements
("Survey"), Purchaser shall cause the same to be so made at
Purchaser's sole cost and expense before the 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 Purchaser'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
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), 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
First American 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) Complete copies of all of the Tenant
Leases and all amendments thereto, a schedule of which is
attached hereto as Exhibit "B" and forms a part hereof.
(ii) Evidence that the Real Property complies
with the Subdivision Map Act of California, the Property has
all of the necessary valid Certificates of Occupancy and
otherwise complies with all construction and operational
laws, codes, ordinances, regulations and conditional use
permits.
(iii) The loss history of the Property
pertaining to any property damage or personal injury
suffered for which an insurance claim of more than Fifty
Thousand Dollars ($50,000) was submitted by Seller at any
time after January 1, 1995 to the extent available to
Seller;
(iv) A set of all "as built" plans,
specifications and structural drawings (including, but not
limited to, mechanical, electrical, air conditioning,
landscaping and sprinkler drawings), third-party soil,
geological, seismic, environmental and hazardous materials
and asbestos studies or reports, relating to the
Improvements or the subsurface conditions, grading plans,
water table or other matters bearing upon condition of the
Property;
(v) All electricity and property tax bills
for the period beginning January 1, 1995 to the extent
available to Seller;
(vi) Statements of income and expense for the
Property for the calendar year 1995 and current year to date
to the extent available to Seller;
(vii) All warranties and operating manuals
that Seller may have from vendors, contractors or servicing
agents with respect to the physical condition of the
Improvements, the Property or any portion thereof or the
equipment located therein;
(viii) Complete copies of all service and other
contracts pertaining to the Property (including, but not
limited to, HVAC, elevator, landscape, management, leasing
brokerage and parking) in respect to which Seller is
obligated (the "Service Contracts");
(ix) A list of all personal property
(including supplies) owned or leased by Seller and used in
connection with the operation, maintenance and repair of the
Property.
(b) Purchaser shall have until 5:00 P.M. on the
later of December 22, 1996 or 15 days following date that
(i) all of the materials listed in paragraph (a) above have
been delivered or made available to Purchaser and (ii)
Purchaser shall have obtained an ALTA Survey and Phase I
Environmental Report covering the Property (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, notwith-
standing 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
written 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 and use such information or data
solely in connection with its examination of the Property
for the purpose of determining whether to purchase the
Property, and for no other purpose; provided; however, that
Purchaser shall be entitled to disclose such information to
Purchaser's attorneys, accountants and prospective debt and
equity financing sources who reasonably need to be informed
in connection with Purchaser's determinations hereunder (and
whom Purchaser shall require to keep such information and
data only for the specific purposes permitted hereunder).
(b) From and after the date hereof until Closing,
Purchaser and its agents shall be afforded full opportunity
by Seller during normal business hours and upon twenty-four
(24) hours prior notice to examine all operating books and
records that relate to the Property (including all
specifications and as-built drawings to the extent they are
in Seller's possession), all building permits, certificates
of occupancy, soil reports, engineers' reports and studies,
and similar information relating to the Property or its
management, operation, maintenance or use, and all
warranties and operating 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) 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.
Purchaser's disapproval shall be in writing and shall be
delivered to Seller prior to the expiration of the Approval
Period. Failure to deliver such written disapproval shall
be deemed Purchaser's approval of said matters.
7. Operation of Property Pending Closing.
(a) Tenant Leases. Seller has leased portions of
the Property to various occupancy tenants. From and after
the date of execution of this Agreement and until the
Closing Date Seller shall not enter into any new leases or
amend or extend, terminate or accept the surrender of any
existing tenancies or approve any subleases without the
prior written consent of Purchaser (which consent 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 of the Tenant Leases, except for
collection of current rents no more than one month in
advance.
(b) Leasing Commissions; Tenant Improvements and
Rent Concessions. 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 November 22, 1996. 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 November 22, 1996, 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) Delivery of Tenant Estoppels. Seller shall
have delivered to Purchaser estoppel letters (the "Tenant
Estoppels") from tenants representing 85% of the leased area
and from all tenants leasing more than 3,500 square feet in
the Improvements in substantially the form of Exhibit "D"
attached hereto and forming a part hereof, consistent in all
material respects with the information to be provided by
Seller hereunder and certifying inter alia to the effect
that there are no defaults by landlord under the lease known
to tenant thereunder; that such lease is unmodified except
as may be set forth therein and in full force and effect;
that there are no defenses or offsets against the landlord
known to tenant thereunder; and that rental is current and
has not been paid more than one month in advance.
(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 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
IMPOSSIBLE, TO ASCERTAIN WITH ANY DEGREE OF CERTAINTY PRIOR
TO SIGNING THIS AGREEMENT THE AMOUNT OF DAMAGES THAT WOULD
BE SUFFERED BY SELLER IN THE EVENT OF PURCHASER'S WRONGFUL
FAILURE TO PURCHASE THE PROPERTY. THE PARTIES, HAVING MADE
DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL
COMPENSATORY DAMAGES SELLER WOULD SUFFER IN THE EVENT OF
PURCHASER'S WRONGFUL FAILURE TO PURCHASE THE PROPERTY,
HEREBY AGREE THAT THE REASONABLE ESTIMATE OF SAID DAMAGES IS
AN AMOUNT EQUAL TO THE DEPOSIT; AND IN THE EVENT OF
PURCHASER'S WRONGFUL FAILURE TO PURCHASE THE PROPERTY,
SELLER SHALL BE ENTITLED TO SUCH AMOUNT AS FULL LIQUIDATED
DAMAGES, AND THAT PAYMENT OR TENDER TO SELLER BY PURCHASER
OF SUCH AMOUNT SHALL TERMINATE ALL OF SELLER'S RIGHTS AND
REMEDIES AT LAW OR IN EQUITY AGAINST PURCHASER WITH RESPECT
TO SUCH FAILURE TO PERFORM.
/s/ JP /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;
(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 a signed counterpart of 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 and Assumption of Leases
and Security Agreements (the "Assignment of Leases")
substantially in the form and substance of Exhibit "G"
attached hereto and forming a part hereof;
(iv) An Assignment and Assumption of Service
and Miscellaneous Rights and Agreements (the "Assignment of
Service Contracts") substantially in the form and substance
of Exhibit "H" attached hereto and forming a part hereof;
(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 each of the tenants and occu-
pants 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) Subject to the provisions of Paragraph
12(c) below, 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 signed after the November 22, 1996
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.
(ii) Purchaser shall pay:
1. The cost of the Preliminary Title Report
and the cost of any Escrow or Title cancellation
charges in the event that the transaction fails to
close through no fault of the Seller and, if Closing
does occur, that portion of the cost of the Title
Policy that is not to be paid by Seller pursuant to
Subsection (b)(i)(1) above and the cost of the ALTA
Survey; and
2. The cost of recording the Grant Deed;
3. All expenses relating to Purchaser's
financing of its acquisition of the Property; and
4. One half of Escrow Agent's Escrow fee.
All other Closing fees and expenses, including, but not
limited to, the parties' legal expenses, accounting and 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 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) Except as disclosed to Purchaser or its
agents prior to the expiration of the Approval Period,
Seller has no knowledge of any:
1. existing latent defects or seismic
conditions concerning the Real Property or materially
incorrect income or expense figures in any financial
statements prepared by or for Seller and delivered to
Purchaser regarding the Property.
2. any claim, litigation or
administrative action, arbitration, proceeding pending
before any court, agency or official, nor any such claim
or action threatened in writing, relating to the Seller
or the Property or with respect to the validity of any
statutes, ordinances, regulations or restrictions or any
permits or approvals thereunder relating to the
construction of any Improvements on the Property or the
operation thereof nor any outstanding contingent
liabilities affecting the Property;
3. written notice of violations of
City, County, State, Federal, building, zoning, fire or
health codes, regulations or ordinances, filed or issued
against the Property;
4. Hazardous Substance in existence on
or below the surface of the Real Property or in any
building located upon the Real Property, including,
without limitation, contamination of soil, subsoil or
ground water, which constitutes a violation of any
applicable law, rule or regulation of any government
entity having jurisdiction thereof except for office and
medical supplies in customary quantities;
5. thing that would suggest any
portion of the Property having ever been used by Seller
or any tenant of any portion of the Property during
Seller's ownership thereof as a waste storage or disposal
site or gasoline station. Without limiting the other
provisions of this Agreement, Seller shall reasonably
cooperate with Purchaser's investigation of matters
relating to the foregoing provisions of this paragraph
and to provide access to and copies of any data and/or
documents dealing with potentially Hazardous Substances
used at the Property and any disposal practices followed
in accordance with, and subject to the provisions of,
Paragraph 6 hereof. Seller agrees that Purchaser may
make inquiries of governmental agencies regarding such
matters, without liability for the outcome of such
discussions. For the purposes of this Agreement,
"Hazardous Substances" shall mean (A) substances defined
as "hazardous substances" in (i) the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended (42 U.S. C. ss. 9601 et seq.), or (ii)
the Resource Conservation and Recovery Act of 1976 (42
U.S.C. ss. 6901 et seq.), together with the regulations
enacted pursuant to such acts, and (B) those substances
defined as "hazardous wastes" in ss. 25117 of the
California Health and Safety Code or as "hazardous
substances" in ss. 25316 of the California Health and
Safety Code together with the regulations enacted
pursuant to such statutes.
(ii) The Tenant Leases and Service Contracts
and any other agreements, matters and things to be submitted
to Purchaser by Seller for approval pursuant to Paragraph 5
above, or otherwise, shall be true, correct and complete
copies thereof as of the date of submission thereof, and as
thereafter supplemented by supplements or additions,
approved in writing by Purchaser, on or before Closing.
Notwithstanding anything to the contrary contained herein,
Seller shall have no obligation or liability to Purchaser
with respect to any of the foregoing lease matters which
shall be confirmed as correct in any tenant estoppel
certificate delivered to Purchaser as provided in this
Agreement;
(iii) The operating financial information pre-
pared by Seller and delivered to Purchaser with respect to
the Property, consisting of Statements of Operations for the
calendar year ended December 31, 1995 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, 1995 and
for the period from January 1, 1996 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 Joseph Perlmutter.
(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.
(c) Notwithstanding anything to the contrary in
this Agreement, Seller's liability for representations or
warranties under Paragraph 13(a), or elsewhere in this
Agreement or in any agreement, instrument or document
contemplated hereby or delivered in connection herewith (i)
shall apply only to the extent that Purchaser's aggregate
damages for breach of such representations or warranties
exceeds One Hundred Thousand Dollars ($100,000) and (ii)
shall terminate one (1) year after the Closing Date.
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 Two Hundred Thousand Dollars
($200,000) or more to repair or if any uninsured loss or
casualty occurs that would cost Two Hundred Thousand Dollars
($200,000) 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 Two Hundred Thousand Dollars ($200,000) 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 other than Cushman & Wakefield of
California, Inc. ("Broker") or incur any liability,
contingent or otherwise, for brokerage or finder's fees or
agent's commissions or other like payments in connection
with this Agreement, or the transactions contemplated
hereby. Seller agrees to pay at Closing to Broker the
commission due it in connection with the within transaction
and Seller and hereby agrees to indemnify Purchaser against
and hold Purchaser harmless from any and all claims,
demands, causes of action or damages resulting from any
breach of this warranty. Purchaser hereby warrants that
Purchaser did not negotiate through any broker, agent,
finder, affiliate or other third party other than Broker or
incur any liability, contingent or otherwise, for any such
brokerage or finder's fees, agent's commissions or other
like payments, in connection with this Agreement, and hereby
agrees to indemnify Seller against and hold Seller harmless
from any and all claims, demands, causes of action or
damages resulting from any breach of this warranty. This
provision shall survive Closing.
(e) Further Assurances Prior to Closing. Seller
and Purchaser shall, prior to Closing, execute any and all
documents and perform any and all acts reasonably necessary,
incidental or appropriate to effect the purchase and sale
and the transactions contemplated in this Agreement.
(f) Time of Essence. Time shall be of the
essence with respect to the obligations of the parties
hereunder.
(g) Assignability. Purchaser may assign all of
its rights and duties hereunder to any entity with which
Purchaser is, directly or indirectly, affiliated or an
entity to be formed and controlled by the principals
(Richard S. Ziman and Victor J. Coleman) of Purchaser,
without Seller's consent, upon the giving of written notice
to Seller, which notice may not be given less than three
days prior to Closing. For the purpose of this paragraph an
"affiliate" of or a person "affiliated" with, a specified
person, is a person that directly or indirectly, through one
or more intermediaries, controls or is controlled by, or is
under common control with, the person specified. Any such
assignment is conditional upon such assignee assuming the
obligations of Purchaser under this Agreement agreeing to be
bound by all consents and approvals theretofore given or
deemed to have been given by Purchaser, and such assignment
or nomination shall not relieve Purchaser of its obligations
hereunder.
(h) Waivers, Amendments and Modifications of
Provisions. Waivers, amendments or modifications of any
term or condition of this Agreement must be in writing
signed by the party against whom such waiver is sought to be
enforced. No waiver by any party of any breach hereunder
shall be deemed a waiver of any other or subsequent breach.
(i) Indemnification. Seller shall indemnify 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 (1) any of
the matters and to the extent to be indemnified under the
Assignment of Leases or the Assignment of Service Contracts;
(2) breach of it confidentiality covenants under Paragraph
6(a); or (3) third party claims arising out of or in
connection with any tort committed by Seller (including any
personal injury or property damage or claim of personal
injury or property damage of any kind whatsoever, including
death, to property or persons, including employees of
Seller) unless caused by Purchaser, resulting from such tort
occasioned in or about the Property prior to Closing.
Purchaser shall indemnify Seller against and hold Seller
harmless from any and all loss, damage, claim of damage,
liability or expense, including court costs and reasonable
attorneys' fees, for (1) any of the matters and to the
extent to be indemnified under the Assignment of Leases or
the Assignment of Service Contracts; (2) breach of it
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 (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 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,
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, 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:
Seller: 6800 Owensmouth, Inc.
208 South Camden Drive
Beverly Hills, California 90212
Attention: Joseph Perlmutter
With a copy to: James Friedberg, Esq.
614 N. Walden Drive
Beverly Hills, California 90210
Purchaser: Arden Realty, Inc.
9100 Wilshire Boulevard
Suite 700 East
Beverly Hills, CA 90212
Attn: Mr. Richard S. Ziman
With a copy to: Troy & Gould
1801 Century Park East
16th Floor
Los Angeles, CA 90067
Attn: Kenneth R. Blumer, Esq.
Escrow Agent: Commerce Escrow
1545 Wilshire Boulevard
Suite 600
Los Angeles, CA 90017
Attn: Mark Minsky
All notices, requests and other communications shall be
deemed received on the date of acknowledgment or other
evidence of actual receipt.
(h) Severability. If any provision of this
Agreement or the application thereof to any person or 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
designated in writing by Seller. Upon identification of
Intermediary, Intermediary shall be substituted for Seller
as the seller of the Property. Purchaser agrees to accept
the Property and all other required performance from
Intermediary and to render its performance of all of its
obligations to Intermediary. Purchaser agrees that
performance by Intermediary will be treated as performance
by Seller. Seller shall unconditionally guarantee the full
and timely performance by Intermediary of each and every one
of the representations, warranties, covenants, indemnities,
obligations and undertakings of Intermediary. As guarantor,
Seller shall be treated as a primary obligor with respect to
these representations, warranties, covenants, indemnities,
obligations and undertakings, and, in the event of breach,
Purchaser may proceed directly against Seller on this
guarantee without the need to join Intermediary as a party
to any action against Seller. Seller unconditionally waives
any defense that it might have as guarantor that it would
not have if it had made or undertaken these representations,
warranties, covenants, indemnities, obligations and
undertakings directly. In the event of the breach of any
representations, warranties, covenants, obligations and
undertakings by Seller or Intermediary or in the event of
any claim upon any indemnity of Seller or Intermediary
(whether the representation, warranty, covenant, indemnity,
obligation or undertaking is express or implied),
Purchaser's exclusive recourse shall be against the Seller
and Purchaser shall have no recourse of any type against the
Intermediary arising from this transaction.
(m) Condition of Property. Purchaser
acknowledges that it will inspect and examine the Property
and, except as expressly provided in this Agreement, will
rely solely on its own investigation of the Property and not
on any information provided or to be provided by or on
behalf of Seller. Except as otherwise expressly provided in
this Agreement, the sale of the Property to Purchaser is
made on 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: 6800 OWENSMOUTH, INC.,
a California corporation,
By:/s/ Joseph Perlmutter
Name: Joseph Perlmutter
Title: President
Purchaser: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc.,
a Maryland corporation,
Its general partner
By:/s/ Richard S. Ziman
Richard S. Ziman,
Chairman of the Board and
Chief Executive Officer
The undersigned hereby executes this Agreement to
evidence its agreement to act as Escrow Holder in accordance
with the terms of this Agreement.
AGREED AND ACCEPTED:
Escrow Agent:
COMMERCE ESCROW
By /s/ Mark Minsky
Name: Mark Minsky
Title: President
ARDEN REALTY, INC.
9100 WILSHIRE BOULEVARD
SUITE 700 E
Beverly Hills, California 90212
(310)-271-8600
FAX (310)-274-6218
March 20, 1997
VIA FACSIMILE & FIRST CLASS MAIL (310) 277-6029
6800 OWENSMOUTH, INC.
208 South Camden Drive
Beverly Hills, CA 90212
Attn. Joseph Perlmutter
President
Re: 6800 Owensmouth Avenue, Canoga Park
Gentlemen:
Reference is made to that certain Agreement of Purchase and Sale
and Escrow Instructions dated November 22, 1996 ("Purchase
Agreement"), between Arden Realty Limited Partnership, a Maryland
limited partnership as purchaser ("Arden"), and 6800 Owensmouth, Inc.,
a California corporation, as seller ("Seller") covering that certain
improved real property commonly known as 6800 Owensmouth Avenue,
Canoga Park, California ("Property"). On December 16, 1996 and again
on December 20, 1996 Arden delivered notices to Seller rejecting the
Property. Seller disputed the genuineness of the rejection notices and
litigation between Arden and Seller ensued ("Litigation"). Seller and
Arden have now agreed to attempt to resolve their differences and
settle and dismiss the Litigation by Seller and Arden entering into a
Settlement Agreement dated of even date herewith ("Settlement
Agreement") and Arden agreeing to purchase and Seller agreeing to sell
the Property in accordance with the terms of the Purchase Agreement as
amended by this letter agreement ("Amendment") for a full cash
Purchase Price of Seven Million Five Hundred Thousand and No/100
Dollars ($7,500,000.00) upon the following additional or modified
terms and conditions:
1. Capitalized terms used in this letter shall have the same
meaning given to them in the Purchase Agreement unless defined,
redefined or modified herein.
2. The Purchase Price for the Property shall be $7,500,000.00
payable in cash, in immediately available funds at Closing.
3. Commencing as of the date of this Amendment and for the period
ending at 5:00 pm PST on March 26, 1997, Arden shall have the
unfettered right to approve or disapprove all matters and things that
are subject to Arden's rights of review, inspection and approval
pursuant to the Purchase Agreement as amended hereby, including the
physical aspects of the Improvements and the mechanical and electrical
systems and an updated rent roll certified by Joseph Perlmutter and
review of the tenant lease files ("Extended Approval Period").
Arden's failure either to approve or disapprove said matters before
the expiration of the Extended Approval Period as aforesaid shall be
deemed its approval thereof. If Arden disapproves any of said
matters, Arden shall notify Seller in writing thereof within the time
period specified above whereupon, this Amendment shall terminate and
be of no further force or effect and the parties shall return to their
original position pursuant to the original Purchase Agreement and the
Litigation. Seller agrees that, during the Extended Approval Period,
Arden shall be allowed the opportunity to secure new Tenant Estoppel
Certificates from the tenants in the form of Exhibit "D" to the
Purchase Agreement, but the failue to obtain any of them shll not be a
condition of Closing.
4. If Arden approves of or does not disapprove of the Property
during the Extended Approval Period, Arden's Deposit shall become non-
refundable and liquidated damages to Seller in the event that Arden
does not Close the purchase of the Property in accordance with the
terms and conditions of the Purchase Agreement as amended hereby.
5. The Closing of the purchase and sale shall occur on or before
March 28, 1997 and upon at least 24 hours written notice from Arden to
Seller.
6. Except to extent set forth above, Seller and Arden hereby
reaffirm and ratify the Purchase Agreement as amended hereby with the
understanding between them that if Arden disapproves of the Property
during the Extended Approval Period, the parties shall be returned to
their original position prior to entering into a Settlement Agreement
and this Amendment.
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/ Richard S. Ziman
Richard S. Ziman
Chief Executive Officer
Accepted and Agreed to this
25th day to March 1997
6800 Owensmouth, Inc.
a California corporation,
By:/s/ Joseph Perlmutter
Joseph Perlmutter
President
cc: Victor J. Coleman
Brig Troy
Kenneth R. Blumer, Esq. (310) 201-4746
James Friedberg, Esq. (310) 285-0250
Mark Minsky (213) 484-0417
Andrew Clare, Esq. (213) 688-3460
PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
1. IDENTIFICATION OF PARTIES.
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW
INSTRUCTIONS (this "Agreement") is entered into as of March 12, 1997,
by and between ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited
partnership ("Purchaser"), and QRE HOLDING COMPANY, a California
corporation ("Seller").
2. DESCRIPTION OF THE PROPERTY.
Seller hereby agrees to sell, assign and convey to
Purchaser, and Purchaser hereby agrees to purchase from Seller, all of
Seller's right, title and interest in and to the following:
(a) That certain real property located at 15060 Ventura
Boulevard, in the City of Los Angeles, County of Los Angeles,
State of California, more particularly described on Exhibit A
attached hereto and incorporated herein by this reference (the
"Land"), together with any improvements located thereon (the
"Improvements");
(b) All of Seller's interest as lessor in all leases
covering the Land and Improvements (said leases, together with
any and all amendments, modifications or supplements thereto, are
hereinafter referred to collectively as the "Leases" and are
identified on the Schedule of Leases attached hereto as
Exhibit B);
(c) All rights, privileges, easements and appurtenances to
the Land and the Improvements, if any, including, without
limitation, all of Seller's right, title and interest, if any, in
and to all mineral and water rights and all easements, rights-of-way and
other appurtenances used or connected with the beneficial
use or enjoyment of the Land and the Improvements (the Land, the
Improvements and all such easements and appurtenances (including,
without limitation, Seller's interest as lessor under the Leases)
are sometimes collectively hereinafter referred to as the "Real
Property");
(d) All tangible personal property and fixtures located
now or at the Closing on or about the Land or Improvements or
attached or appurtenant thereto or used in connection with the
operation thereof, but excluding: (i) tangible personal property
owned by tenants under Leases in their capacity as tenants, and
(ii) all other tangible personal property and fixtures located on
or about the Land or Improvements which are not owned by Seller.
(The tangible personal property and fixtures described in the
preceding sentence is referred to in this Agreement as the
"Personal Property"); and
(e) All non-exclusive trademarks and trade names (if any)
used or useful in connection with the Real Property, but only to
the extent that the same are not trademarks or trade names of
Seller or any of Seller's affiliated companies (collectively, the
"Trade Names"), together with Seller's interest (if any) in and
to any service contracts, utility contracts, telephone exchange
numbers, advertising materials, guarantees, licenses, approvals,
certificates, plans and specifications, permits, governmental
approvals and development rights, and warranties relating to the
Property, to the extent assignable (collectively, the "Intangible
Property"). (The Real Property, the Personal Property, the Trade
Names and the Intangible Property are sometimes collectively
hereinafter referred to as the "Property").
3. THE PURCHASE PRICE.
The purchase price for the Property is Six Million Six
Hundred Fifty and no/100s Dollars ($6,650,000.00) (the "Purchase
Price") and shall be paid to Seller by Purchaser at the Closing
(as that term is defined in Section 15 below) as follows:
(a) Within two (2) business days after execution of this
Agreement by all parties, Purchaser shall deposit in escrow with
Commonwealth Land Title Company, 888 West Sixth Street, 4th
Floor, Los Angeles, California 90017 ("Escrow Company") an
earnest money deposit in immediately available funds in the
amount of One Hundred Thousand and no/100s Dollars ($100,000.00)
(the "Deposit"). The Deposit paid by Purchaser pursuant to the
terms hereof shall be held by Escrow Company in an interest
bearing account insured by the federal government in an
institution as directed by Purchaser and reasonably acceptable to
Seller. In the event the purchase and sale of the Property is
consummated as contemplated hereunder, the Deposit plus all
interest accrued thereon shall be paid to Seller and credited
against the Purchase Price. In the event the purchase and sale
of the Property is not consummated because of the failure of any
Purchaser's Condition Precedent (as defined in Section 10 below)
or any other reason except for a default under this Agreement on
the part of Purchaser, the Deposit plus all interest accrued
thereon shall be immediately refunded to Purchaser. In the event
the purchase and sale of the Property is not consummated because
of a default under this Agreement on the part of Purchaser, the
Deposit plus all interest accrued thereon shall be paid to and
retained by Seller pursuant to Section 18(b) below.
(b) The balance of the Purchase Price over and above the
amount paid by or credited to Purchaser pursuant to Section 3(a)
above shall be paid to Seller by wire transfer of immediately
available funds at the Closing, net of all prorations as provided
herein.
4. TITLE.
(a) Seller has obtained from Commonwealth Land Title
Company, 888 West Sixth Street, Los Angeles, California 90017
("Title Company"), and Purchaser acknowledges receipt of, a
preliminary title report dated February 6, 1997, Order No.
1704096-27, pertaining to the Real Property (the "PTR"), together
with copies of all documents relating to the title exceptions
referred to in such PTR. Purchaser acknowledges receipt of the
PTR and the title exceptions referred to therein.
(b) Purchaser elects to obtain an ALTA extended coverage
policy of title insurance. Purchaser shall obtain an updated
survey of the Real Property (the "Survey"), a copy of which shall
be promptly delivered to Seller and Title Company. The Survey
shall be sufficient to enable Title Company at the Closing to
issue an ALTA extended owner's policy of title insurance (with
mechanic's lien coverage), and shall be certified to Purchaser
and Title Company. Seller shall pay for the Survey. At Closing,
Purchaser shall pay Seller Three Thousand and no/100s Dollars
($3,000.00) towards the cost of the Survey.
(c) As soon as possible after the execution of this
Agreement, Purchaser shall confer with the Title Company and
attempt to resolve title matters which Purchaser might otherwise
disapprove. Within three (3) business days after Purchaser
receives the Survey, Purchaser shall notify Seller in writing of
any title exceptions identified in the PTR (other than exceptions
("Survey Exceptions") which are listed in any amendment or
supplement thereof as a result of the Survey and were not listed
in the February 6, 1997 PTR) which Purchaser disapproves. Within
three (3) business days after Purchaser receives the Survey,
Purchaser shall notify Seller in writing of any Survey Exceptions
which Purchaser disapproves. Any exception not disapproved in
writing by the applicable date shall be deemed approved by
Purchaser, and shall constitute a "Permitted Exception"
hereunder. Purchaser and Seller hereby agree that (i) all non-delinquent
property taxes and assessments, except for the lien of
supplemental taxes which are due as a result of an event
occurring prior to the Closing, (ii) the rights of the tenants
under the Leases, and (iii) all matters created by or on behalf
of Purchaser, including, without limitation, any documents or
instruments to be recorded as part of any financing for the
acquisition of the Property by Purchaser, shall constitute
"Permitted Exceptions." No more than two (2) business days after
Purchaser notifies Seller of any disapproved title exceptions,
Seller shall notify Purchaser in writing of any disapproved title
exceptions which Seller is unable or unwilling to cause to be
removed or insured against prior to or at Closing and, with
respect to such exceptions, Purchaser then shall elect, by giving
written notice to Seller and Escrow Company within one (1)
business day thereafter, (x) to terminate this Agreement, or (y)
to waive its disapproval of such exceptions, in which case such
exceptions shall then be deemed to be Permitted Exceptions.
Purchaser's failure to give such notice shall be deemed an
election to waive the disapproval of any such exception. In the
event Purchaser elects to terminate this Agreement in accordance
with clause (x) above, the Deposit, plus all interest accrued
thereon, shall be immediately refunded to Purchaser; provided,
however, that Purchaser and Seller each shall be responsible for
one-half of any title or escrow cancellation fees.
Notwithstanding anything to the contrary contained herein, Seller
shall cause all mortgages, deeds of trust and monetary liens
(including liens for delinquent or supplemental taxes as set
forth above, mechanic's liens and judgement liens) affecting the
Property as may be shown in the PTR or any update thereof
(including the title policy to be issued to Purchaser at the
Closing), and all indebtedness secured thereby (collectively,
"Monetary Liens") to be fully satisfied, released and discharged
of record on or prior to the Closing. If any Monetary Liens
remain at the Closing, then Purchaser shall be entitled to offset
against the Purchase Price and receive a credit in Escrow for the
amounts expended to discharge the same, provided that before
discharging any Monetary Lien, Purchaser shall give Seller
written notice and reasonable opportunity to cause any such lien
to be released or discharged of record (including, without
limitation, by posting of a bond in accordance with Civil Code ss.
3143).
(d) At Purchaser's request, upon prior arrangement with
Seller, at any time during reasonable business hours within one
(1) year after the Closing, Seller shall, at Purchaser's expense,
provide to Purchaser's designated independent auditor, access to
the books and records of the Property, regarding the period for
which Purchaser is required by applicable rules or regulations of
the Securities Exchange Commission to have audited financial
statements prepared with respect to the Property, to the extent
that such books, records and related information are in the
Seller's possession or control and relate to the period during
which Seller held title to the Property; provided however, such
books and records shall not include Internal Analyses (as defined
in Section 5(c)), and Seller shall not be deemed to make any
representations or warranties of any kind regarding the accuracy
or thoroughness of such books and records. Seller further agrees
to provide to Purchaser's designated auditor a letter in the form
of Exhibit L.
5. INSPECTION.
(a) As used in this Agreement, the term "Due Diligence
Period" shall mean the period from the date hereof until 5:00
p.m. Los Angeles, California time on March 24, 1997. During the
Due Diligence Period, and with reasonable advance notice to
Seller, Purchaser, its agents and representatives shall be
entitled to enter onto the Real Property during reasonable
business hours (subject to the rights of tenants in possession)
to perform inspections and tests of the Property and the
structural and mechanical systems within any Improvements;
provided, however, that in no event shall (i) such inspections or
tests disrupt or disturb the on-going operation of the Property
or the rights of the tenants at the Property, or (ii) Purchaser
or its agents or representatives drill or bore on or through the
surface of the Property without Seller's prior written consent,
which consent may be given or withheld in Seller's sole and
absolute discretion. After making such tests and inspections,
Purchaser agrees to promptly restore the Property to its
condition prior to such tests and inspections (which obligation
shall survive for one (1) year after the Closing or any
termination of this Agreement). Prior to Purchaser entering the
Property to conduct the inspections and tests described above,
Purchaser shall obtain and maintain, and shall cause each of its
contractors and agents to maintain (and shall deliver to Seller
evidence thereof), at Purchaser's sole cost and expense, general
liability insurance, from an insurer reasonably acceptable to
Seller, in the amount of One Million and no/100s Dollars
($1,000,000.00) combined single limit for personal injury and
property damage per occurrence, such policies to name Seller as
an additional insured party, which insurance shall provide
coverage against any claim for personal liability or property
damage caused by Purchaser or its agents, employees or
contractors in connection with such inspections and tests.
(b) Purchaser agrees to keep the Property free from all
liens and to indemnify, defend, and hold harmless Seller, and
Seller's officers, directors, shareholders, beneficiaries,
partners, agents, employees and attorneys, and their respective
successors and assigns, from and against all claims, actions,
losses, liabilities, damages, costs and expenses (including, but
not limited to, reasonable attorneys' fees and costs) incurred,
suffered by, or claimed against Seller by reason of personal
injury, bodily injury, property damage or mechanics' or
materialmens' liens caused by Purchaser and/or its agents,
employees or contractors in exercising its rights under this
Section 5. This indemnity shall survive the Closing or any
termination of this Agreement.
(c) During the Due Diligence Period and with reasonable
advance notice to Seller, Purchaser, its agents and repre-
sentatives shall be entitled to inspect, during Seller's regular
business hours, material documents, if any, relating to the
Property in the possession or control of Seller or Seller's
property manager (provided, however, that, except as expressly
set forth herein, Seller makes no representations or warranties
of any kind regarding the accuracy or thoroughness of the
information contained in such documents), excluding, however,
Seller's internal appraisals and economic evaluations of the
Property and reports regarding the Property prepared by Seller,
Trust Company of the West, Westmark Realty Advisors L.L.C. and/or
TCW Realty Advisors solely for internal use or for the
information of the investors in Seller (collectively, "Internal
Analyses").
6. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Purchaser that the
following matters are true and correct as of the execution of this
Agreement and will also be true and correct as of the Closing:
(a) Seller is a corporation, duly organized, validly
existing and in good standing under the laws of the State of
California.
(b) This Agreement is, and all the documents executed by
Seller which are to be delivered to Purchaser at the Closing will
be, duly authorized, executed, and delivered by Seller, and is
and will be legal, valid, and binding obligations of Seller
enforceable against Seller in accordance with their respective
terms (except to the extent that such enforcement may be limited
by applicable bankruptcy, insolvency, moratorium and other
principles relating to or limiting the right of contracting
parties generally), and does not and will not violate any
provisions of any agreement to which Seller is a party or to
which it is subject.
(c) Except as set forth in the materials delivered to
Purchaser pursuant to Section 8 below or as otherwise disclosed
in writing by Seller to Purchaser prior to the end of the Due
Diligence Period, to Seller's actual knowledge, there are no
pending or threatened legal proceedings or administrative actions
of any kind or character adversely affecting the Property or
Seller's interest therein.
(d) Except as set forth in the materials delivered to
Purchaser pursuant to Section 8 below, or as otherwise disclosed
in writing by Seller to Purchaser prior to the end of the Due
Diligence Period, Seller has received no written notice from any
city, county, state or other government authority of any
violation of any statute, ordinance, regulation, or
administrative or judicial order or holding, whether or not
appearing in public records, with respect to the Property, which
violation has not been corrected.
(e) Except as set forth in the materials delivered to
Purchaser pursuant to Section 8 below, or as otherwise disclosed
in writing by Seller to Purchaser prior to the end of the Due
Diligence Period, Seller has received no written notice from any
city, county, state or other government authority (i) of any
order or directive requiring any work of repair, maintenance or
improvement be performed on the Property, or (ii) relating to
defects in the Improvements or relating to noncompliance with any
applicable building code or restriction that has not been
corrected, or relating to any threat of impending condemnation.
(f) Except as set forth in the materials delivered to
Purchaser pursuant to Section 8 below, or as otherwise disclosed
in writing by Seller to Purchaser prior to the end of the Due
Diligence Period, Seller has received no written notice from
governmental authorities that (i) the Property is in violation of
any federal, state and local laws, ordinances and regulations
applicable to the Property with respect to hazardous or toxic
substances or industrial hygiene (collectively, "Environmental
Laws"), which violation has not been corrected, or (ii) past or
current tenants of all or any portion of the Property have owned,
used, generated, manufactured, stored, handled, released or
disposed of any hazardous or toxic substances on the Property in
violation of applicable Environmental Laws. Notwithstanding the
foregoing representations and warranties, the acts, if any, of
Seller's past or current tenants shall not be imputed to Seller.
(g) To the best of Seller's knowledge, and except as set
forth in the tenant estoppel certificates delivered to Purchaser
pursuant to Section 10(a) below or as otherwise specifically
disclosed in writing to Purchaser prior to the end of the Due
Diligence Period, there is no current default in the performance
of the obligations of any party under the Leases.
(h) Except as set forth in the tenant estoppel
certificates delivered to Purchaser pursuant to Section 10(a)
below or as otherwise specifically disclosed in writing to
Purchaser prior to the end of the Due Diligence Period: (i) the
Leases are in full force and effect, (ii) the copies of the
Leases given to Purchaser by Seller are true and complete copies
of the Leases, (iii) the term of the Leases and obligation to pay
rent thereunder has commenced, (iv) to Seller's actual knowledge,
the tenants thereunder are in possession and occupancy thereof,
(v) no rebates, rental concessions, free rent periods, credits,
setoffs or rent reductions relating to any period after the
Closing have given by Seller, (vi) no tenant is affiliated with
Seller, and (vii) Seller has not entered into any modifications
of the Leases. There are no outstanding assignments by Seller of
Seller's interest in the Leases.
(i) To the best of Seller's knowledge, except as disclosed
in writing to Purchaser prior to the end of the Due Diligence,
there are no management, employee, maintenance, operating,
service or other contracts or arrangements of a similar nature
affecting the Property which would be binding on Purchaser
subsequent to the Closing, other than those delivered to
Purchaser pursuant to Section 8 hereof. The copies of the
documents and materials delivered to Purchaser by Seller pursuant
to Section 8 hereof constitute true and complete copies of such
documents in effect on the date hereof, except as otherwise noted
in such documents and materials. As of the date hereof, Seller
has neither sent nor received written notice declaring a default
or breach under any such documents or materials, which has not
been subsequently cured, except as disclosed in such documents or
materials and except for claims which Seller has or may have
against its insurers or others relating to or arising out of the
January 17, 1994 earthquake (the "Earthquake Claims"), which
Earthquake Claims Seller hereby expressly reserves and are not
being transferred to Purchaser.
(j) Except as set forth in the tenant estoppel
certificates delivered to Purchaser pursuant to Section 10(a)
below or as otherwise specifically disclosed in writing to
Purchaser prior to the end of the Due Diligence Period, the Rent
Roll (as defined in Section 8) is true and correct, and sets
forth all Leases, and amendments or modifications thereof which
would be binding on Purchaser subsequent to Closing.
(k) Except as set forth in the tenant estoppel
certificates delivered to Purchaser pursuant to Section 10(a)
below or as otherwise specifically disclosed in writing to
Purchaser prior to the end of the Due Diligence Period, to the
best of Seller's knowledge, there are no assignments or subleases
of any of the Leases.
(l) The inventory of Personal Property delivered pursuant
to Section 8 is true and correct in all material respects.
As used in this Agreement, (x) the phrase "to Seller's
actual knowledge" or words of similar import shall mean the actual
(and not constructive or imputed) knowledge, without independent
investigation or inquiry, of William K. Krauch, the Portfolio Manager,
and Andrew Pellman, Asset Manager, and (y) the phrase "to the best of
Seller's knowledge" shall mean the actual knowledge, after reasonable
investigation and inquiry (but not constructive or imputed knowledge)
of William K. Krauch and Andrew Pellman, and Seller represents s of this
Agreement, unless otherwise specifically provided.
(k) This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
(l) If any action is brought by either party against the
other party, relating to or arising out of this Agreement, the
transaction described herein or the enforcement hereof, the
prevailing party shall be entitled to recover from the other par-
ty reasonable attorneys' fees, costs and expenses incurred in
connection with the prosecution or defense of such action. For
purposes of this Agreement, the term "attorneys' fees" or
"attorneys' fees and costs" shall mean the fees and expenses of
counsel to the parties hereto, which may include printing,
photostating, duplicating and other expenses, air freight
charges, and fees billed for law clerks, paralegals and other
persons not admitted to the bar but performing services under the
supervision of an attorney, and the costs and fees incurred in
connection with the enforcement or collection of any judgment
obtained in any such proceeding. The provisions of this Section
21(l) shall survive the entry of any judgment, and shall not
merge, or be deemed to have merged, into any judgment.
(m) This Agreement shall be binding upon and inure to the
benefit of each of the parties hereto and to their respective
transferees, successors, and assigns. Neither this Agreement nor
any of the rights or obligations of Seller or Purchaser hereunder
shall be transferred or assigned by Seller or Purchaser without
the prior written consent of the non-assigning party.
(n) Exhibits A through L, inclusive, attached hereto are
incorporated herein by reference.
(o) Notwithstanding anything to the contrary contained
herein, this Agreement shall not be deemed or construed to make
the parties hereto partners or joint venturers, or to render
either party liable for any of the debts or obligations of the
other, it being the intention of the parties to merely create the
relationship of Seller and Purchaser with respect to the Property
to be conveyed as contemplated hereby.
(p) This Agreement shall not be recorded or filed in the
public land or other public records of any jurisdiction by either
party and any attempt to do so may be treated by the other party
as a breach of this Agreement.
(q) Each party agrees that, except as otherwise set forth
in this Agreement or provided by law or unless compelled by an
order of a court, it shall keep the contents of this Agreement
and any information related to the transaction contemplated
hereby confidential (except that Purchaser may disclose such
matters in accordance with the provisions of Section 9 above) and
further agrees to refrain from generating or participating in any
publicity statement, press release, or other public notice
regarding this transaction without the prior written consent of
the other party unless required under applicable law or by a
court order. The provisions of this Section 21(q) shall survive
the Closing or any termination of this Agreement and shall not be
merged into any instrument or conveyance delivered at the
Closing.
(r) Seller and Purchaser agree that it is their specific
intent that no broker shall be a party to or a third party
beneficiary of this Agreement or the escrow; and further that the
consent of a broker shall not be necessary to any agreement,
amendment, or document with respect to the transaction
contemplated by this Agreement.
(s) In the event that any of the dates specified in this
Agreement shall fall on a Saturday, a Sunday, or a holiday, then
the date of such action shall be deemed to be extended to the
next business day.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as
of the date first above written.
SELLER: QRE HOLDING COMPANY,
a California corporation
By:/s/ William K. Krauch
Its Authorized Signatory
By:/s/ Stanton H. Zarrow
Its Authorized Signatory
PURCHASER: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: ARDEN REALTY GROUP, INC.,
a Maryland corporation,
as General Partner
By:/s/ Richard S. Ziman
Its: Chairman and CEO
FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT AND JOINT
ESCROW INSTRUCTIONS (this "First Amendment") is entered into as of
March 24, 1997, by and between QRE HOLDING COMPANY, a California
corporation ("Seller"), and ARDEN REALTY LIMITED PARTNERSHIP, a
Maryland limited partnership ("Purchaser"), with reference to the
following Recitals.
R E C I T A L S:
A. Seller and Purchaser have previously entered into that
certain Purchase and Sale Agreement and Joint Escrow Instructions
dated as of March 12, 1997 (the "Original Agreement"). All initial
capitalized terms not otherwise defined herein shall have the meanings
set forth in the Original Agreement unless the context clearly
indicates otherwise. References to "the Agreement" or "this
Agreement" in the Original Agreement or in this First Amendment shall
mean and refer to the Original Agreement, as amended by this First
Amendment.
B. Seller and Purchaser desire to amend the Original Agreement
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing Recitals and
the mutual promises, covenants and conditions contained herein, and
for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby amend the
Original Agreement as follows:
1. Surety Financial Services Lease. Pursuant to Section 11(b) of
the Agreement, Seller has previously forwarded to Purchaser for
Purchaser's approval a copy of a proposed lease with Surety
Financial Services and a 1/8" scale space plan (the "Surety
Lease"). Purchaser has previously disapproved the Surety Lease
based upon the economics of the proposed Surety Lease. In order
to induce Purchaser to accept and approve the Surety Lease,
Seller has agreed to give Purchaser a credit against the Purchase
Price payable at the Closing in the amount of Twenty Two Thousand
and no/100s Dollars ($22,000.00). As full and complete
compensation for Purchaser's approval of the Surety Lease,
Section 3 of the Original Agreement is hereby amended to reduce
the Purchase Price for the Property by Twenty Two Thousand and
no/100s Dollars ($22,000.00) to Six Million Six Hundred Twenty-Eight
Thousand and no/100s Dollars ($6,628,000.00). Purchaser
expressly acknowledges and agrees that, upon consummation of the
transaction contemplated by the Agreement, Purchaser shall be
solely responsible for all costs of tenant improvements, rental
concessions, and leasing commissions payable by the landlord in
connection with the Surety Lease.
2. Closing. Section 15 of the Original Agreement is hereby amended
to change the outside date for the Closing to not later than
April 3, 1997.
3. Amendment to Section 21(a). Section 21(a) of the Original
Agreement is hereby amended by adding the following to the end of
such section:
Provided the transaction contemplated by this Agreement is
consummated, Seller hereby agrees, for a period of thirteen
(13) months from the date of the Closing, (a) to maintain a
minimum net worth in the amount of One Hundred Thousand and
no/100s Dollars ($100,000.00), (b) to create a liquidating
trust, in form reasonably satisfactory to Purchaser, in the
amount of One Hundred Thousand and no/100s Dollars
($100,000.00), (c) to post a letter of credit, in form
reasonably satisfactory to Purchaser, in the amount of One
Hundred Thousand and no/100s Dollars ($100,000.00), or (d)
to provide such other financial assurance as Seller in its
sole discretion shall elect to cover Seller's One Hundred
Thousand and no/100s Dollar ($100,000.00) contingent
liability hereunder provided the form thereof is reasonably
satisfactory to Purchaser.
4. Effect of this First Amendment. Except as amended and/or
modified by this First Amendment, the Agreement is hereby
ratified and confirmed and all other terms of the Original
Agreement shall remain in full force and effect, unaltered and
unchanged by this First Amendment. In the event of any conflict
between the provisions of this First Amendment and the provisions
of the Original Agreement, the provisions of this First Amendment
shall prevail. Whether or not specifically amended by this First
Amendment, all of the terms and provisions of the Original
Agreement are hereby amended to the extent necessary to give
effect to the purpose and intent of this First Amendment.
5. Counterparts. This First Amendment may be executed in any number
of counterparts, each of which shall be deemed an original, but
all of which when taken together shall constitute one and the
same instrument. The signature page of any counterpart may be
detached therefrom without impairing the legal effect of the
signature(s) thereon provided such signature page is attached to
any other counterpart identical thereto except having additional
signature pages executed by other parties to this First Amendment
attached thereto.
[Signatures on next page]
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this First Amendment as of the
date first above written.
SELLER: QRE HOLDING COMPANY,
a California corporation
By: /s/ Kevin A. Corbett
Its Authorized Signatory
By: /s/ Stanton H. Zarrow
Its Authorized Signatory
PURCHASER: ARDEN REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: ARDEN REALTY GROUP, INC.,
a Maryland corporation,
as General Partner
By:/s/ Richard S. Ziman
Its: Chairman and CEO
SECOND AMENDMENT TO
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT AND JOINT
ESCROW INSTRUCTIONS (this "Second Amendment") is entered into as of
March 25, 1997, by and between QRE HOLDING COMPANY, a California
corporation ("Seller"), and ARDEN REALTY LIMITED PARTNERSHIP, a
Maryland limited partnership ("Purchaser"), with reference to the
following Recitals.
R E C I T A L S:
A. Seller and Purchaser have previously entered into that
certain Purchase and Sale Agreement and Joint Escrow Instructions
dated as of March 12, 1997, as amended by that certain First Amendment
to Purchase and Sale Agreement and Joint Escrow Instructions dated as
of March 24, 1997 (the "Original Agreement"). All initial capitalized
terms not otherwise defined herein shall have the meanings set forth
in the Original Agreement unless the context clearly indicates
otherwise. References to "the Agreement" or "this Agreement" in the
Original Agreement or in this Second Amendment shall mean and refer to
the Original Agreement, as amended by this Second Amendment.
B. Seller and Purchaser desire to amend the Original Agreement
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing Recitals and
the mutual promises, covenants and conditions contained herein, and
for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby amend the
Original Agreement as follows:
1. Limited Extension of the Due Diligence Period. Purchaser
has notified Seller of the issues more particularly
described in Sections 2, 3 and 4 (the "Unresolved Issues")
with respect to the condition of the Property raised as a
result of Purchaser's investigations pursuant to Section 5
of the Agreement. Seller and Purchaser hereby agree that
the Due Diligence Period shall be extended with respect to
the Unresolved Issues only until 5:00 p.m. Los Angeles,
California time on April 1, 1997 (such additional period for
resolution of the Unresolved Issues is sometimes hereinafter
referred to as the "Extended Due Diligence Period"). If the
Unresolved Issues have not been resolved in the manner set
forth below prior to 5:00 p.m. Los Angeles, California time
on April 1, 1997, Purchaser shall elect by giving written
notice to Seller and to Escrow Company on or before 5:05
p.m. Los Angeles, California time on April 1, 1997 either
(I) to terminate the Agreement, in which case neither party
shall have any further rights or obligations under the
Agreement (except as may be expressly provided to the
contrary elsewhere in the Agreement), and any money
(including, without limitation, the Deposit and all interest
accrued thereon) or documents in escrow shall be returned to
the party depositing the same and Purchaser and Seller each
shall be responsible for one-half of any title or escrow
cancellation fee, or (ii) to accept the Property
notwithstanding such Unresolved Issues and to proceed with
the Closing.
2. Regulation No. 4 Defects Issue: A prior annual inspection
of the Property completed in February 1997 pursuant to
Regulation No. 4 of the Los Angeles City Fire Code revealed
certain items for repair and correction. The Property must
be reinspected. Seller agrees, at Seller's sole cost and
expense, to use best efforts (a) to cause such reinspection
on or before the end of the Extended Due Diligence Period
and (b) to provide Purchaser with the government required
sign off to be obtained as a result thereof. Seller's
obtaining a final government required sign-off of the annual
Regulation No. 4 inspection shall be deemed resolution of
the Regulation No. 4 Defects Issue.
3. Permits Issue: Purchaser has advised that the following
permits have expired:
a. Division of Occupational Safety and Health Permit for
Roof/Watertube Boiler, Permit No. AC 1590;
b. Division of Occupational Safety and Health Permit for
Roof/Watertube Boiler, Permit No. AB 8153; and
c. Division of Occupational Safety and Health Permit for
Roof/Airtank, Permit No. AA 9846.
Seller agrees, at Seller's sole cost and expense, to use
best efforts to cause such permits to be reinstated,
renewed, or extended or to obtain replacement permits on or
before the end of the Extended Due Diligence Period.
Seller's obtaining such reinstated, renewed or extended
permits or replacement permits shall be deemed resolution of
the Permit Issue.
4. Roof Repair Issue. Purchaser's consultant has noted certain
deficiencies in the condition of certain roofs at the
Property. On or before March 27, 1997, Purchaser shall
provide Seller with a copy of Purchaser's consultant's
report or other written specification of the reported
deficiencies, together with an amount for which Purchaser
would be willing to accept the Property with the roofs "as
is" in their present condition without any repair. On or
before 12:00 noon on April 1, 1997, Seller shall advise
Purchaser in writing what amount, if any, Seller is willing
to credit to Purchaser against the Purchaser Price at the
Closing to resolve the roof repair issue ("Seller's
Proposal"). Purchaser shall notify Seller on or before the
end of the Extended Due Diligence Period whether Purchaser,
in Purchaser's sole discretion, accepts or rejects Seller's
Proposal. Purchaser's acceptance of Seller's Proposal shall
be deemed resolution of the Roof Repair Issue.
5. Effect of this Second Amendment. Except as amended and/or
modified by this Second Amendment, the Agreement is hereby
ratified and confirmed and all other terms of the Original
Agreement shall remain in full force and effect, unaltered
and unchanged by this Second Amendment. In the event of any
conflict between the provisions of this Second Amendment and
the provisions of the Original Agreement, the provisions of
this Second Amendment shall prevail. Whether or not
specifically amended by this Second Amendment, all of the
terms and provisions of the Original Agreement are hereby
amended to the extent necessary to give effect to the
purpose and intent of this Second Amendment.
6. Counterparts. This Second Amendment may be executed in any
number of counterparts, each of which shall be deemed an
original, but all of which when taken together shall
constitute one and the same instrument. The signature page
of any counterpart may be detached therefrom without
impairing the legal effect of the signature(s) thereon
provided such signature page is attached to any other
counterpart identical thereto except having additional
signature pages executed by other parties to this Second
Amendment attached thereto.
[Signatures on next page]<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this Second Amendment as of the
date first above written.
SELLER: QRE HOLDING COMPANY,
a California corporation
By: /s/ Ken A. Corbett
Its Authorized Signatory
By: /s/ Jim Bell
Its Authorized Signatory
PURCHASER: ARDEN REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: ARDEN REALTY GROUP, INC.,
a Maryland corporation,
as General Partner
By: /s/ Richard S. Ziman
Its: Chairman and CEO
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT made and entered into as of the 10 day of January, 1997,
by and between JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a
Massachusetts corporation, having its principal address c/o The Real
Estate Investment Group, John Hancock Place, P.O. Box 111, Boston,
Massachusetts 02117 (hereinafter "Seller"), and ARDEN REALTY LIMITED
PARTNERSHIP, a Maryland limited partnership, having an office address
at 9100 Wilshire Boulevard, Suite 700 East, Beverly Hills, California
90212 (hereinafter "Buyer");
WITNESSETH THAT:
WHEREAS, Seller is the owner of the premises known as 10780 Santa
Monica Boulevard, Los Angeles, California, containing approximately
29,450 square feet of land improved with a building containing
approximately 93,000 square feet of space ("the Premises"), more
particularly described on Exhibit A attached hereto and made a part
hereof, and subterranean and surface parking for approximately 246
automobiles, landscaping and other amenities, and certain tangible and
intangible personal property (collectively, the "Property"); and
WHEREAS, Buyer desires to purchase the Premises and acquire
possession thereof in accordance with the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth the parties hereto mutually agree as follows:
1. Purchase Price. The Premises are to be sold to Buyer for the
sum of Ten Million Five Million Hundred Thousand dollars
($10,500,000.00) ("the Purchase Price"), which Buyer shall pay to
Seller on the Date of Closing by wiring immediately available
Federal funds to such bank account as may be designated by Seller.
2. Deposit. Buyer shall deposit with Title Company (as
hereinafter defined) as escrow agent $150,000.00 by official bank
cashier's check or federal wire transfer of funds simultaneously
with the execution of this Agreement as a good faith deposit
(hereinafter, said deposit and such interest as is earned thereon
shall be referred to as "the Deposit"), which Deposit shall be
disposed of in the manner herein provided. If Buyer performs all
of its obligations under this Agreement, the Deposit shall either
be applied against the Purchase Price or returned by escrow agent
to Buyer on the Date of Closing, as hereinafter provided. If
Seller shall be unable to deliver title and possession, as
hereinafter provided, or if Buyer shall fail to perform any of its
agreements hereunder, the Deposit shall be disposed of in the
manner hereinafter provided.
3. Closing. Subject to the provisions of this Agreement, the
grant deed representing fee title to the Premises shall be
delivered at 9 o'clock A.M., P.S.T., on February 13, 1997 ("the
Date of Closing" or "Closing"), at the offices of Chicago Title
Insurance Company located at 700 S. Flower Street, Suite 920, Los
Angeles, California 90017 (the "Title Company").
4. Buyer's Review. Buyer shall have until 5 o'clock P.M., Boston
time, on January 31, 1997 ("the Review Period") (a) to obtain and
review a commitment for title insurance and a survey; (b) to make
or have made such reasonable non-destructive inspections as it
desires of the Premises, including, without limitation, the
interior, exterior, and structure of all improvements, and the
condition of soils and subsurfaces; and (c) to review all of
Seller's financial records, contracts, and leases relating to the
Premises. All such items shall be obtained and reviewed at Buyer's
sole cost and expense, except as otherwise expressly provided
herein. If Buyer has any objection to any of the matters set out
in (a), (b), or (c) of this section 4, it may either notify Seller
in writing of such objection on or before the end of the Review
Period ("Notice of Objection"), provided that with such notice
Buyer shall provide Seller with copies of all written materials
which provide or evidence the basis of any such objection, or
notify Seller in writing that this Agreement is terminated ("Notice
of Termination"). Any matters not objected to in writing as herein
provided shall be deemed waived. Upon the expiration of the Review
Period without Notice of Objection or Notice of Termination, as
provided herein, or upon Seller's cure of Buyer's objections, as
provided in the following paragraph, or upon Buyer's actual or
deemed notification to Seller that Buyer will proceed
notwithstanding Seller's failure to cure Buyer's objections, as
provided in the following paragraph, the Deposit will become
nonrefundable, except in the case of Seller's default hereunder.
If Seller is unwilling or unable to correct to Buyer's
satisfaction all defects to which Buyer has objected within 30 days
after receipt of Notice of Objection (provided that correction of
defects objected to in the title commitment or survey may be
accomplished either by removing such defects or by arranging for
the title insurance policy to insure over such defects; and
provided further that Seller may use the Purchase Price or any
portion thereof to cure any such defects which may be cured by
instruments recorded on the Date of Closing, or later if
arrangements are made which are satisfactory to Buyer and the Title
Company), Seller shall, at any time before the end of said 30-day
period, so notify Buyer, provided that if Seller fails to give such
notice, Seller shall be deemed to have notified Buyer on the 30th
day after receipt of Notice of Objection that Seller is unwilling
or unable to cure all defects to which Buyer has objected. Buyer
shall, within ten days after Seller has given or is deemed to have
given said notice, either (i) notify Seller that it shall waive
said defect(s) and proceed to closing, as set out in section 3
hereof, or (ii) give Notice of Termination, provided that if Buyer
fails to give such notice, Buyer shall be deemed to have notified
Seller that it shall waive all defects and proceed to closing. If
any new matters come to the attention of the Title Company after
the close of the Review Period but prior to the Closing Date which
would constitute exceptions on Buyer's title policy, Seller shall
promptly notify Buyer of such matters and Buyer shall have five (5)
business days in which to determine if such new exceptions are
acceptable or objectionable, and if necessary, the Review Period
shall be extended only for this purpose until the completion of
such five (5) business days.
Upon receipt of Notice of Termination the Deposit shall be
refunded and this Agreement shall become null and void, and neither
party shall be liable to the other for damages or otherwise, except
as otherwise expressly provided herein.
5. Condition of Premises. Buyer and Seller agree that, subject to
section 5A below, Buyer is acquiring the Premises and any related
personal property in their "AS IS" condition, WITH ALL FAULTS, IF
ANY, AND WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED. Neither Seller
nor any agents, representatives, or employees of Seller have made
any representations or warranties, direct or indirect, oral or
written, express or implied, to Buyer or any agents,
representatives, or employees of Buyer with respect to the
condition of the Property, their fitness for any particular
purpose, or their compliance with any laws, and Buyer is not aware
of and does not rely upon any such representation to any other
party. Buyer acknowledges that the Purchase Price might be higher
if Buyer were not acquiring the Property in "as is" condition.
Buyer acknowledges that it either has had or will have before the
Date of Closing the opportunity to make such inspections (or have
such inspections made by consultants) as it desires of the Property
and all factors relevant to its use, including, without limitation,
the interior, exterior, and structure of all improvements, and the
condition of soils and subsurfaces (particularly with respect to
the presence or absence of hazardous substances).
After its inspections are completed, Buyer shall restore the
Premises and personal property to their condition prior to Buyer's
inspections. Buyer agrees to indemnify Seller for all claims or
damages arising out of Buyer's inspections, including, without
limitation, claims for personal injury or property damage, and
including all costs and attorneys' fees. The obligations in this
paragraph shall survive the Closing or the termination of this
Agreement for any reason, including without limitation pursuant to
section 4, 9, or 14 hereof.
Buyer hereby releases Seller and its agents, representatives,
and employees from any and all claims, demands, and causes of
action, past, present, and future, that Buyer may have relating to
(i) the condition of the Premises and the personal property at any
time, before or after the Date of Closing, including, without
limitation, the presence of any hazardous substance, or (ii) any
other matter pertaining to the Premises or the personal property.
This release shall survive the Closing or the termination of this
Agreement for any reason. This release shall not apply to (x) any
presence or release of hazardous substances which first occurred
while Seller owned the Premises, and of which Buyer, after having a
phase I environmental site assessment performed on the Premises,
has no knowledge, or (y) any administrative or judicial action
brought against Buyer, without Buyer's instigation, by an unrelated
third party or governmental entity, relating to a condition or
event that occurred while Seller owned the Premises, in which
action Buyer may file a third party complaint or similar pleading
against Seller.
Seller shall deliver possession to Buyer, subject to the
matters set forth in section 7(a)(1) hereof, not later than the
Date of Closing, provided that all the terms and conditions of this
Agreement have been complied with. Seller until the Date of
Closing shall maintain, repair (subject to section 9 hereof),
manage, and operate the Premises in a businesslike manner in
accordance with Seller's prior practices; shall comply with its
contractual obligations as owner of the Premises; shall maintain
the types and amounts of insurance that are in force on the date of
execution hereof; and shall not dissipate the Premises or remove
any material property therefrom, except in the ordinary course of
business.
Between the date hereof and the Date of Closing, Seller will not
execute any new Leases or materially amend, terminate (except upon
a default by the tenant thereunder) or accept the surrender of any
existing tenancies or approve any subleases without the prior
consent of Buyer; provided however that Seller is authorized to
accept the termination of Leases at the end of their existing terms
and to expand, extend or renew any Leases pursuant to expansion,
extension or renewal options contained therein. With respect to
all new Leases executed after the Review Period expires which Buyer
has approved pursuant to this section 5, which new Leases require
the construction of tenant improvements after the date hereof
and/or the payment of leasing or brokerage commission(s) by
landlord, including without limitation brokerage commissions upon
the exercise by the tenant thereunder of an expansion, extension or
renewal option contained in such tenant's lease, Buyer shall: (a)
pay, and/or reimburse Seller at Closing for the paid portion of,
the cost of such improvements and such leasing or brokerage
commission(s) and any other costs associated with such Lease; and
(b) assume all of Seller's obligations as landlord thereunder with
respect to the payment of tenant improvements and brokerage
commissions after Closing. The failure of Buyer to notify Seller
of Buyer's consent or disapproval, within forty-eight (48) hours
after written request by Seller for such consent, to any Lease or
lease amendment submitted by Seller to Buyer after the expiration
of the Review Period shall be deemed to constitute Buyer's
disapproval.
5A. Representations and Warranties. (a) Seller represents and
warrants to Buyer as follows:
(1) Seller is an insurance company, duly organized, validly
existing, and in good standing under the laws of the Commonwealth
of Massachusetts and the State in which the Premises are located.
(2) Seller has all requisite power and authority to execute and
deliver this Agreement and to carry out its obligations hereunder
and the transactions contemplated hereby. This Agreement has been,
and the documents contemplated hereby will be, duly executed and
delivered by Seller and constitutes the Seller's legal, valid, and
binding obligation enforceable against Seller in accordance with
its terms. The consummation by Seller of the sale of the Premises
is not in violation of or in conflict with, nor does it constitute
a default under any term or provision of, the organizational
documents of Seller, or any of the terms of any agreement or
instrument to which Seller is a party, or by which Seller is bound,
or any provision of any applicable law, ordinance, rule, or
regulation of any governmental authority or any provision of any
applicable order, judgment, or decree of any court, arbitrator, or
governmental authority.
(3) Except as listed on Exhibit E hereto, to the best of Seller's
knowledge, Seller has not received, with respect to the Premises,
any notices from (i) any governmental agency of any violations of
building codes and/or zoning ordinances or other governmental laws,
regulations, or orders, (ii) any governmental agency of any pending
or threatened condemnation proceedings, or (iii) any party of
pending or threatened litigation affecting the Premises in any way.
(4) To the best of Seller's knowledge, the list attached hereto as
Exhibit B is a true and complete list of all tenants and their
security deposits at the Premises, the leases to be provided by
Seller to Buyer during the Review Period are true and complete
copies of all existing leases for space at the Premises, and Seller
has paid all leasing commissions incurred by Seller as owner of the
Premises.
(5) To the best of Seller's knowledge, the list attached hereto as
Exhibit C is a true and complete list of all service and management
contracts affecting the Premises, and the contracts to be provided
by Seller to Buyer during the Review Period are true and complete
copies of all existing service and management contracts for the
Premises.
(6) To the best of Seller's knowledge, Seller has received no
notice of the presence of any hazardous substances, as defined by
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), 42 USC ss.9601(14), pollutants or
contaminants, as defined in CERCLA, 42 USC ss.9601(33), or hazardous
waste, as defined by the Resource Conservation and Recovery Act
("RCRA"), 42 USC ss.6903(5), or other similar applicable federal or
state laws and regulations, including, but not limited to, asbestos
and PCB's, at the Premises, except as set forth in the report
prepared by , and except for minor amounts of substances
customarily used in the maintenance of properties similar to the
Premises and maintained in accordance with applicable laws.
(b) Buyer represents and warrants to Seller as follows:
(1) Buyer is a limited partnership, duly organized, validly
existing, and in good standing under the laws of Maryland and the
State in which the Premises are located.
(2) Buyer has all requisite power and authority to execute and
deliver this Agreement and to carry out its obligations hereunder
and the transactions contemplated hereby. This Agreement has been,
and the documents contemplated hereby will be, duly executed and
delivered by Buyer and constitutes its legal, valid, and binding
obligation enforceable against it in accordance with its terms, and
the consummation and performance by Buyer of the transactions
contemplated herein will not result in a violation of or be in
conflict with or constitute a default under any term or provision
of the organizational documents of Buyer, or any of the terms of
provisions of any agreement or instrument to which it is a party,
or by which it is bound, or of any term of any applicable law,
ordinance, rule or regulation of any governmental authority or of
any term of any applicable order, judgment, or decree of any court,
arbitrator, or governmental authority.
(c) The above-stated representations and warranties will
survive the Closing for a period of one year, before the expiration
of which the party claiming a breach must have filed an action in a
court of competent jurisdiction, and any representation and
warranty not specified in such action shall expire. Buyer
acknowledges that Seller has maintained no employees at the
Premises and that the Premises have during Seller's ownership
thereof always been managed by a third-party manager, and that
Seller has relied upon such manager for knowledge and notice. The
words "to the best of Seller's knowledge" in this section 5A mean
to the actual knowledge of John Garrison and Kelly Loring, the two
employees of Seller who are most familiar with the Premises and who
have had the most contact with the management company.
(d) Indemnification. Seller shall indemnify Buyer against
and hold Buyer harmless from any and all loss, cost, damage, claim,
liability or expense, including court costs and reasonable
attorneys' fees, for third party claims relating to the Premises
and arising out of or in connection with any act or omission of
Seller prior to closing (including any personal injury or property
damage of any kind whatsoever, including death, to property or
persons including employees and agents of Seller), unless caused by
Buyer. Buyer shall indemnify Seller against and hold Seller
harmless from any and all loss, cost, damage, claim, liability or
expense, including court costs and reasonable attorneys' fees, for
third party claims relating to the Premises and arising out of or
in connection with any act or omission of Buyer as a result of its
investigation of the Premises during the Review Period or
subsequent to the Closing (including any personal injury or
property damage of any kind whatsoever, including death, to
property or persons including employees and agents of Buyer),
unless caused by Seller. These covenants shall survive the
Closing.
5B. Conditions Precedent. (a) Conditions Precedent to Buyer's
Obligation to Close Escrow. The obligation of Buyer to consummate
the transactions contemplated hereby is subject to the following
conditions, inserted for Buyer's sole benefit and that may be
waived by Buyer only in writing at its sole option. Said
conditions are as follows:
1. Representations and Warranties True at Closing. The
representations and warranties of Seller contained in section 5A of
this Agreement shall be true on the date of Closing in all material
respects as though such representations and warranties were made on
and as of such date.
2. Delivery of Tenant Estoppels. Seller shall have delivered
to Buyer estoppel letters (the "Tenant Estoppels") from tenants
representing 85% of the leased area and from all tenants leasing
more than 3,500 square feet in the Premises in substantially the
form of Exhibit D attached hereto and forming a part hereof,
consistent in all material respects with the information to be
provided by Seller hereunder and certifying, inter alia, to the
effect that there are no defaults by landlord under the lease known
to tenant thereunder; that such lease is unmodified, except as may
be set forth therein, and in full force and effect; that there are
no defenses or offsets against the landlord known to tenant
thereunder; and that rental is current and has not been paid more
than one month in advance.
(b) Conditions Precedent to Seller's Obligation to Close
Escrow. The obligation of Seller to consummate the transactions
contemplated hereby is subject to the following conditions,
inserted for Seller's sole benefit and that may be waived by Seller
only in writing at its sole option. Said conditions are as
follows:
1. Representations and Warranties True at Closing. The
representations and warranties of Buyer contained in section 5A of
this Agreement shall be true on the date of Closing in all material
respects as though such representations and warranties were made on
and as of such date.
2. Delivery of Purchase Price and Documents. Buyer shall
have delivered all funds and documents to the Title Company
required by it hereunder to enable it to close pursuant to the
terms of this Agreement.
6. Adjustments and Prorations. All taxes, including, without
limitation, real estate taxes and personal property taxes,
collected rents, charges for utilities, including water, sewer, and
fuel oil, and for utility services, maintenance services,
maintenance and service contracts, all operating costs and
expenses, and all other income, costs, and charges of every kind
which in any manner relate to the operation of the Premises (but
not including insurance premiums) shall be prorated to the Date of
Closing, except that if Seller does not receive the Purchase Price
(by receipt of wired funds or by receipt in hand of an official
bank cashier's check) by 1 o'clock P.M., Boston time on the Date of
Closing, all prorations shall be made as of the following business
day. Rents shall be prorated on an as-collected basis, with first
rents collected after the Date of Closing credited toward current
rent, if owed, and the balance to delinquencies. The Buyer shall
receive credit for any post-closing unamortized rental concessions
granted by Seller prior to the date of this Agreement. Buyer shall
use reasonable efforts to assist the Seller in collecting
delinquent rent, but shall not be required to file an action for
the delinquency. Buyer shall receive a credit for all security
deposits set forth on Exhibit B. If the amount of said taxes,
assessments, or rents is not known on the Date of Closing, they
shall be apportioned on the basis of the amounts for the preceding
year, with a reapportionment as soon as the new amounts can be
ascertained. If such taxes and assessments shall thereafter be
reduced by abatement, the amount of such abatement, less the
reasonable cost of obtaining the same, shall be apportioned between
the parties, provided that neither party shall be obligated to
institute or prosecute proceedings for an abatement unless
otherwise agreed. Buyer shall be responsible for the payment of
any assessments or notice of assessments made after the date of
execution hereof for any public improvement, provided Buyer takes
title hereunder. Any deposits on utilities paid by Seller shall be
returned to Seller. The foregoing provisions of this section shall
not apply to any taxes, assessments, or other payments which are
directly payable by tenants under their leases or reimbursable by
such tenants to the owner of the Premises, as landlord, under their
leases. On the Date of Closing, Seller shall deliver to Buyer all
inventories of supplies on hand at the Premises owned by Seller, if
any, at no additional cost to Buyer.
7. Closing Documents. (a) Seller's Deliveries. Conditioned upon
performance by Buyer hereunder, Seller shall execute and deliver to
Buyer at the Closing the following documents ("Seller's Closing
Documents"):
(1) Deed. A grant deed conveying marketable title to the
Premises subject to the following:
(A) All easements, conditions, restrictions, and reservations
of record set forth on the Schedule B of a pro forma title
policy from the Title Company, including all private and
public rights in highways and rights-of-way;
(B) All building and zoning laws, ordinances, and State and
Federal regulations;
(C) Encroachments and all other matters that an accurate
survey might show, provided that the same do not unreasonably
interfere with the use of the Premises as an office building;
(D) Rights of tenants in possession as tenants only; and
(E) Real estate taxes and all installments of special
assessments or levies not yet due and payable on the Date of
Closing.
(2) Bill of Sale. A bill of sale, assigning and transferring
to Buyer all of the right, title, and interest of Seller in and to
all tangible personal property, if any, owned by Seller and located
upon the Premises.
(3) Assignment of Leases. An assignment of leases, tenancies,
and security deposits, which will include an indemnification by
Seller of Buyer for all landlord obligations accruing prior to the
Date of Closing.
(4) Assignment of Service Contracts. An assignment of
maintenance and service contracts, which will include an
indemnification by Seller of Buyer for all owner obligations
accruing prior to the Date of Closing.
(5) Non-Foreign Certificate. A certification that Seller is
not a non-resident alien (a foreign corporation, partnership,
trust, or estate as defined in the Internal Revenue Code and
Treasury Regulations promulgated thereunder).
(b) Buyer's Deliveries. Conditioned upon performance by Seller
hereunder, Buyer shall execute and deliver to Seller at the Closing
the following documents:
(1) Assumption of Leases. An assumption of leases, tenancies,
and security deposits, which will include an indemnification by
Buyer of Seller for all landlord obligations accruing on or after
the Date of Closing.
(2) Assumption of Service Contracts. An assumption of
maintenance and service contracts, which will include an
indemnification by Buyer of Seller for all owner obligations
accruing on or after the Date of Closing.
(c) Other Closing Documents and Deliveries. Each party shall
deliver to the other party or the Title Company such duly executed
and acknowledged or verified certificates, affidavits, and other
usual closing documents respecting the power and authority to
perform the obligations hereunder and as to the due authorization
thereof by the appropriate corporate, partnership, or other
representatives acting for it, as counsel for the other party or
the Title Company may reasonably request. Seller shall cause
tenant notices to be sent out at Closing. Seller shall deliver
keys and personal property located on the Premises and used in the
operation of the Premises at the Closing.
8. Costs. Buyer and Seller shall each pay one-half of the escrow
fee, while Seller shall pay the documentary transfer tax (city and
county) and the CLTA portion of the title premium, plus the cost of
any specific endorsements Seller agrees to obtain to cure specific
title objections of the Buyer. Buyer shall pay the balance of the
title premium charges and the cost of recording the deed and other
transfer documents. Buyer shall pay its attorneys' fees, and the
fees and costs of any other professionals or consultants. Seller
shall pay its attorneys' fees, if any, incurred by Seller in
connection with this transaction, and the Broker's commission, but
only if, as, and when the transaction contemplated hereby is fully
consummated and the deed is recorded and the full consideration
therefor has been received by Seller.
9. Casualty or Condemnation. In the event that prior to the Date
of Closing either the improvements on the Premises are damaged or
destroyed, in whole or in part, by fire or other cause, or any
portion of the Premises becomes the subject of a condemnation
proceeding by a public or quasi-public authority having the power
of eminent domain, then either (a) the parties shall proceed with
the transaction contemplated herein, in which event Buyer shall be
entitled to receive any insurance proceeds or condemnation awards,
or (b) in the event such damage, destruction, or condemnation
involves, in the reasonable estimation of Seller, a loss in an
amount in excess of ten per cent (10%) of the Purchase Price, or
loss of all or a material portion of access to the Premises, either
party, at its option, may terminate this Agreement by notice to the
other within ten (10) days of Buyer's receipt of Seller's notice of
such damage or proceeding, in which case the Deposit shall be
refunded, and thereafter neither party shall have any further
obligation or liability to the other by virtue of this Agreement,
except as otherwise expressly provided herein.
10. Insurance. Seller shall not be obligated to assign to Buyer
any fire, hazard, or liability insurance policies which it holds
respecting the Premises, and Seller shall have the right to any and
all refunds or rebates resulting from the termination of such
policies.
11. Broker's Commission. Buyer and Seller each hereby warrants
and represents to the other that it has dealt with no broker or
finder in connection with this transaction except Westmac and
Cushman and Wakefield ("the Brokers"), and that it is not
affiliated with the Brokers in any way. Buyer and Seller each
hereby agrees to indemnify and hold the other harmless from and
against any and all claims for brokerage or finder's fees or other
similar commissions or compensation made by any and all other
brokers or finders claiming to have dealt with the indemnifying
party in connection with this Agreement or the consummation of the
transaction contemplated hereby. The obligations in this section
shall survive the Closing or the termination of this Agreement for
any reason, including without limitation pursuant to section 4, 9,
or 14 hereof.
12. Seller's Performance. The acceptance of Seller's Closing
Documents by Buyer shall be deemed to be a full performance and
discharge of every agreement and obligation of Seller herein
contained and expressed, except such as are, by the terms hereof,
to be performed after the delivery of said instruments.
13. Recording Prohibited. This Agreement shall not be recorded
with Los Angeles County Records or in any other office or place of
public record. If Buyer shall record this Agreement or cause or
permit the same to be recorded, Seller may, at its option, elect to
treat such act as a default by Buyer under this Agreement.
14. Remedies. If Seller defaults under this Agreement, Buyer's
sole remedy, at law or in equity, shall be one of either (a) the
return of the Deposit to Buyer, whereupon the obligations of Seller
under this Agreement shall terminate; or (b) the right to obtain
specific performance of Seller's obligation to convey the Premises
pursuant to this Agreement, provided that in no event shall Seller
be obliged to cure defects objected to by Buyer pursuant to section
4 hereof. In no event shall any officer, director, employee,
agent, or representative of Seller have any personal liability in
connection with this Agreement or transaction.
BUYER ACKNOWLEDGES THAT IF IT FAILS TO PURCHASE THE PREMISES AS THE
RESULT OF BUYER'S DEFAULT UNDER THIS AGREEMENT SELLER SHOULD BE
ENTITLED TO COMPENSATION FOR THE DETRIMENT RESULTING THEREFROM, AND
THEREFORE THE PARTIES AGREE AS FOLLOWS: IF BUYER SHALL DEFAULT IN
ITS OBLIGATIONS TO PURCHASE THE PREMISES, SELLER SHALL BE ENTITLED
TO RETAIN AS AND FOR ITS OWN PROPERTY, AS LIQUIDATED DAMAGES AND
NOT AS A PENALTY, AN AMOUNT EQUAL TO THE DEPOSIT, TOGETHER WITH ANY
AND ALL EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) THAT SELLER
MAY INCUR IN COLLECTING SUCH LIQUIDATED DAMAGES. BOTH PARTIES
ACKNOWLEDGE AND AGREE THAT SAID AMOUNT IS PRESENTLY A REASONABLE
SUM CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING ON THE DATE OF
THIS AGREEMENT, INCLUDING THE RELATIONSHIP OF THE SUM TO THE RANGE
OF HARM TO SELLER THAT REASONABLY COULD BE ANTICIPATED AND THE
ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR
INCONVENIENT. IN PLACING THEIR INITIALS AT THE PLACES PROVIDED,
SELLER /s/ JMG BUYER /s/ VJC
EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS
MADE ABOVE AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL
WHO EXPLAINED THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION
AT THE TIME THIS AGREEMENT WAS MADE. BOTH PARTIES AGREE THAT THIS
SUM STATED AS LIQUIDATED DAMAGES SHALL BE IN LIEU OF ANY OTHER
RELIEF TO WHICH SELLER MIGHT OTHERWISE BE ENTITLED BY VIRTUE OF
THIS AGREEMENT OR OPERATION OF LAW.
Nothing in this section 14 shall limit the express provisions
of this Agreement obligating one party hereto to indemnify the
other or to restore the Premises, including without limitation
sections 5 and 11 hereof.
15. Assignment. This Agreement may not be assigned by Buyer
without the express written consent of Seller, which consent Seller
may in its sole discretion withhold, except that Buyer may, without
Seller's consent, assign this Agreement to a limited partnership of
which Buyer (or a principal of Buyer) or any parent or any wholly
owned subsidiary of Buyer are the sole general partners. No such
assignment shall operate to relieve Buyer from any obligation
hereunder.
16. Waiver. No waiver of any breach of any agreement or provision
contained herein shall be deemed a waiver of any preceding or
succeeding breach of any other agreement or provision herein
contained. No extension of time for the performance of any
obligation or act shall be deemed an extension of time for the
performance of any other obligation or act.
17. Time. It is agreed that time is of the essence of this
Agreement.
18. Governing Law. This Agreement shall be construed under the
laws of the state in which the Premises are located.
19. Notices. All notices required or permitted to be given
hereunder shall be in writing and sent by overnight delivery
service (such as Federal Express), in which case notice shall be
deemed given on the day after the date sent, or by personal
delivery, in which case notice shall be deemed given on the date
received, or by certified mail, in which case notice shall be
deemed given three (3) days after the date sent, or by fax (with
copy by overnight delivery service), in which case notice shall be
deemed given on the date sent, to the appropriate address indicated
below or at such other place or places as either Buyer or Seller
may, from time to time, respectively, designate in a written notice
given to the other in the manner described above.
To Seller: c/o The Real Estate Investment Group
John Hancock Place, P.O. Box 111
Boston, MA 02117
Re: File No. ______________
Attention: John Garrison, Investment Officer
Fax No.: (617) 572-3860 or 3866
With Copy To: John Hancock Mutual Life Insurance Company
Law Department (T-50)
John Hancock Place, P.O. Box 111
Boston, MA 02117
Re: File No. ______________
Attention: Roslyn Poznansky, Esq.
Fax No.: (617) 572-9268 or 9269
To Buyer: Arden Realty Limited Partnership
9100 Wilshire Boulevard
Beverly Hills, CA 90212
Attention: Ms. Brig Troy
Fax No.: (310) 246-2941
With Copy To: Kenneth R. Blumer, Esq.
Troy & Gould
1801 Century Park East, 16th Floor
Los Angeles, CA 90067-2367
Fax No.: (310) 201-4746
20. Confidentiality. Buyer shall not disclose the financial and
economic terms and conditions of the transaction contemplated
herein except as may be necessary in the ordinary course of its
business. All press releases or other dissemination of information
to the media, or responses to requests from the media, for
information relating to the transaction contemplated herein shall
be subject to the prior written approval of Seller; provided that,
following the Closing, Seller's approval shall not be unreasonably
withheld or delayed. The obligations in this section shall survive
the Closing or termination of this Agreement for any reason.
21. Seller's Approvals. Seller's obligation to close hereunder
shall be conditioned upon the approval of this transaction by
Seller's internal committees. If on or before the last day of the
Review Period Seller has not notified Buyer that such approval has
been granted, such approval shall be deemed not to have been
granted; if approval is not granted, the Deposit shall be refunded
and this Agreement shall terminate, and neither party shall be
liable to the other for damages or otherwise except as otherwise
expressly provided herein.
22. Entire Agreement. This instrument, executed in duplicate,
sets forth the entire agreement between the parties and may not be
canceled, modified, or amended except by a written instrument
executed by both Seller and Buyer.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed the day and year first above written.
SELLER:
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By: /s/ John M. Garrison
Name: John M. Garrison
Title: Investment Office
BUYER:
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: ARDEN REALTY GROUP, INC.,
a Maryland corporation,
its sole general partner
By:/s/ Victor J. Coleman
Name: Victor J. Coleman
Title: President
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
FIRST AMENDMENT made and entered into this 31st day of
January 1997, by and between JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY ("Seller") and ARDEN REALTY LIMITED PARTNERSHIP
("Buyer");
WITNESSETH THAT:
WHEREAS, Seller and Buyer executed a Purchase and Sale
Agreement dated January 10, 1997 (the "Agreement"), pursuant to
which Buyer has agreed to purchase the premises known as 10780
Santa Monica Boulevard, Los Angeles, California (the "Premises"),
as more fully described in the Agreement; and
WHEREAS, Buyer and Seller wish to amend the terms of the
Agreement;
NOW, THEREFORE, in consideration of mutual covenants
hereinafter set forth, the Agreement is amended as follows:
1. Extension of Date of Closing. Section 3 of the
Agreement is hereby amended to change the Date of
Closing to February 28, 1997.
2. Inspections and Approvals. Section 4 of the Agreement
is hereby amended to extend the Review Period until
February 14, 1997.
3. Miscellaneous. Except as hereby amended, Buyer and
Seller hereby ratify, confirm and adopt the Agreement
as amended by this First Amendment. Time remains of
the essence.
IN WITNESS WHEREOF, the parties hereto have caused these
presents to be executed as of the day and year first above
written.
SELLER:
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By:/s/ John M. Garrison
Name: John M. Garrison
Title:Investment Officer
BUYER:
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: ARDEN REALTY GROUP, INC.,
a Maryland corporation,
its sole general partner
By: /s/ Victor J. Coleman
Name: Victor J. Coleman
Title: President
SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT
SECOND AMENDMENT made and entered into this 14th day of February
1997, by and between JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
("Seller") and ARDEN REALTY LIMITED PARTNERSHIP ("Buyer");
WITNESSETH THAT:
WHEREAS, Seller and Buyer executed a Purchase and Sale Agreement
dated January 10, 1997, as amended by the First Amendment to Purchase
and Sale Agreement dated January 31, 1997 (the "Agreement"),
pursuant to which Buyer has agreed to purchase the premises known as
10780 Santa Monica Boulevard, Los Angeles, California (the
"Premises"), as more fully described in the Agreement; and
WHEREAS, Buyer and Seller wish to amend the terms of the
Agreement;
NOW, THEREFORE, in consideration of mutual covenants hereinafter
set forth, the Agreement is amended as follows:
1. Inspections and Approvals. Section 4 of the Agreement is
hereby amended to extend the Review Period until 5 p.m.
P.S.T. on February 18, 1997.
2. Miscellaneous. Except as hereby amended, Buyer and Seller
hereby ratify, confirm and adopt the Agreement as amended
by this First Amendment. Time remains of the essence.
IN WITNESS WHEREOF, the parties hereto have caused these
presents to be executed as of the day and year first above written.
SELLER: BUYER:
JOHN HANCOCK MUTUAL LIFE ARDEN REALTY LIMITED PARTNERSHIP,
INSURANCE COMPANY a Maryland limited partnership
By: ARDEN REALTY GROUP, INC.,
By:/s/ John M. Garrison a Maryland corporation,
Name: John M. Garrison its sole general partner
Title: Investment Officer
By:/s/ Victor J. Coleman
Name: Victor J. Coleman
Title: President
THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT
Third Amendment made and entered into this 18th day of February 1997, by
and between John Hancock Mutual Life Insurance Company ("Seller") and Arden
Realty Limited Partnership ("Buyer").
WITNESSETH THAT:
WHEREAS, Seller and Buyer executed a Purchase and Sale Agreement dated
January 10, 1997, as amended by a First Amendment to Purchase and Sale
Agreement dated January 31, 1997 and a Second Amendment to Purchase and Sale
Agreement dated February 14, 1997 (the "Agreement"), pursuant to which buyer
has agreed to Purchase and Seller has agreed to sell the premises commonly
known as 10780 Santa Monica Boulevard, Los Angeles, California, a multi-story
office building ("Premises") as more fully described in the Agreement; and
WHEREAS, Buyer and Seller wish to amend certain of the terms of the
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Agreement is amended as follows:
1. Buyer's Review. Section 4 of the Agreement is hereby amended to
acknowledge that Buyer has approved of all of the matters and things subject
to its review and approval, subject only to the (1) receipt and approval of
the Tenant Estoppels as provided for under Section 5B (2), and (2) City
Approval of Certain Uses as proved for under Section 5B (3) as added to the
Agreement in paragraph 2 below.
2. Conditions Precedent. Section 5B (a) of the Agreement is hereby
amended to add thereto an additional subparagraph 3, as follows:
"3. City Approval of Certain Uses. The City shall have waived or
modified to Buyer's satisfaction the existing and recorded covenant against
the Premises forbidding use of the Premises, or any portion thereof, as an
office for residential real estate brokerage business, among other proscribed
uses; and the City shall continue to acknowledge by an agreement to be
recorded that the requirement of valet parking shall be eliminated and that
the restriction against the Premises being utilized for medical or dental
offices shall also be eliminated on the condition that the owner of the
Premises agree to provide free transient parking on the Premises."
3. Closing. Section 3 of the Agreement is hereby amended to provide
that the Closing will occur two (2) business days following satisfaction or
waiver by Buyer of the Conditions Precedent set forth in Section 5B (a) of the
Agreement, but not later than April 1, 1997.
4. Miscellaneous. Except as hereby amended, Buyer and Seller hereby
ratify, confirm and adopt the Agreement as amended by the First Amendment,
Second Amendment and this Third Amendment. Time remains of the essence.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed as of the day and year first above written.
SELLER:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Stephen Kindl
Name: Stephen Kindl
Title: Senior Investment Officer
BUYER:
ARDEN REALTY LIMITED PARTNERSHIP
a Maryland limited partnership
By: Arden Realty, Inc.,
a Maryland corporation,
its sole general partner
By:/s/ Richard S. Ziman
Name: Richard S. Ziman
Title: CEO
FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT
FOURTH AMENDMENT made and entered into this 7th day of March
1997, by and between JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
("Seller") and ARDEN REALTY LIMITED PARTNERSHIP ("Buyer");
WITNESSETH THAT:
WHEREAS, Seller and Buyer executed a Purchase and Sale Agreement
dated January 10, 1997, as amended by the First Amendment to Purchase
and Sale Agreement dated January 31, 1997, as further amended by the
Second Amendment to Purchase and Sale Agreement dated February 14,
1997, as further amended by the Third Amendment to Purchase and Sale
Agreement dated February 18, 1997 (the "Agreement"), pursuant to
which Buyer has agreed to purchase the premises known as 10780 Santa
Monica Boulevard, Los Angeles, California (the "Premises"), as more
fully described in the Agreement; and
WHEREAS, Buyer and Seller wish to amend the terms of the
Agreement;
NOW, THEREFORE, in consideration of mutual covenants hereinafter
set forth, the Agreement is amended as follows:
1. Inspections and Approvals. Section 4 of the Agreement is
hereby amended to extend the Review Period, for purposes
only of the receipt of a document in recordable form from
the City of Los Angeles (the "City"), which document shall
provide for the termination, replacement and consolidation
of the covenants recorded as 81-1187512, 83-492309, 83-
492310, 84-128565 and 89-157136, until 5 p.m. P.S.T. on
March 25, 1997, unless said document is delivered prior to
March 25, 1997, in form substantially similar to that
attached as Exhibit A hereto. Closing shall occur two
business days after receipt of said document, but in no
event later than April 1, 1997. Buyer's failure to close
for any reason other than a failure by the City to deliver
said document will result in the payment to Seller of
liquidated damages pursuant to the Agreement.
Notwithstanding the foregoing, Buyer agrees that although
the form of Exhibit A proposes to delete the present
requirement that any leases or subleases of space have a
minimum of 500 square feet and have a minimum of two
parking spaces, and that the balance of a suite after
subleasing also have a minimum of two parking spaces, the
deletion of these requirements is not a condition of
closing. If the City fails to approve the deletion of
these requirements, but nonetheless approves the remainder
of Exhibit A in a form substantially similar hereto,
Seller has satisfied its obligations to Buyer, and the
parties shall proceed to Closing.
2. Miscellaneous. Except as hereby amended, Buyer and Seller
hereby ratify, confirm and adopt the Agreement as amended
by this Fourth Amendment. Time remains of the essence.
IN WITNESS WHEREOF, the parties hereto have caused these
presents to be executed as of the day and year first above written.
SELLER: BUYER:
JOHN HANCOCK MUTUAL LIFE ARDEN REALTY LIMITED PARTNERSHIP,
INSURANCE COMPANY a Maryland limited partnership
By: ARDEN REALTY GROUP, INC.,
By:/s/ John M. Garrison a Maryland corporation,
Name: its sole general partner
Title: Investment Officer
By: /s/ Richard S. Ziman
Name: Richard S. Ziman
Title: Chief Executive Officer
FIFTH AMENDMENT TO PURCHASE AND SALE AGREEMENT
FIFTH AMENDMENT made and entered into this 25th day of March 1997,
by and between JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY ("Seller") and
ARDEN REALTY LIMITED PARTNERSHIP ("Buyer");
WITNESSETH THAT:
WHEREAS, Seller and Buyer executed a Purchase and Sale Agreement
dated January 10, 1997, as amended by the First Amendment to Purchase
and Sale Agreement dated January 31, 1997, as further amended by the
Second Amendment to Purchase and Sale Agreement dated February 14, 1997,
as further amended by the Third Amendment to Purchase and Sale Agreement
dated February 18, 1997, as further amended by Fourth Amendment to the
Purchase and Sale Agreement dated March 7, 1997 (the "Agreement"),
pursuant to which Buyer has agreed to purchase the premises known as
10780 Santa Monica Boulevard, Los Angeles, California (the "Premises"),
as more fully described in the Agreement; and
WHEREAS, Buyer and Seller wish to amend the terms of the
Agreement;
NOW, THEREFORE, in consideration of mutual covenants hereinafter
set forth, the Agreement is amended as follows:
1. Inspections and Approvals. Section 4 of the Agreement is hereby
further amended to revise the dates set forth in Paragraph 1 of the
Fourth Amendment to Purchase and Sale Agreement. The references to
March 25, 1997 are hereby deleted, and April 2, 1997 substituted in its
place. The reference to April 1, 1997 is hereby deleted, and April 4,
1997 substituted in its place.
2. Miscellaneous. Except as hereby amended, Buyer and Seller hereby
ratify, confirm and adopt the Agreement as amended by this Fifth
Amendment. Time remains of the essence.
IN WITNESS WHEREOF, the parties hereto have caused these presents
to be executed as of the day and year first above written.
SELLER:
JOHN HANCOCK MUTUAL LIFE ARDEN REALTY LIMITED PARTNERSHIP,
INSURANCE COMPANY a Maryland limited partnership
By: ARDEN REALTY GROUP, INC.,
By: /s/ J.M. Garrison a Maryland corporation,
Name: John M. Garrison Its sole general partner
Title: Investment Officer
By: /s/Richard S. Ziman
Name: Richard S. Ziman
Title: Chief Executive Officer
AGREEMENT OF PURCHASE AND SALE
OR CONTRIBUTION
AND ESCROW INSTRUCTIONS
Between
HFA-CLARENDON CREST, L.L.C.,
Seller
and
ARDEN REALTY LIMITED PARTNERSHIP,
Purchaser
Covering
22144 Clarendon Street
Woodland Hills, California
February 18, 1997
AGREEMENT OF PURCHASE AND SALE
OR CONTRIBUTION
AND ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE OR CONTRIBUTION AND
ESCROW INSTRUCTIONS ("Agreement") is made and entered into this
18th day of February, 1997 by and between HFA-CLARENDON CREST,
L.L.C., a Delaware limited liability company ("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") that, for informational purposes
only, is improved with a three (3)-story stucco covered structural
steel moment frame office building above reinforced concrete
parking levels containing approximately 43,061 net rentable square
feet, other facilities, fixtures, paving and surfacing thereon or
associated therewith, and parking facilities containing
approximately 124 marked spaces (collectively, the
"Improvements"). The Real Property is located at 22144 Clarendon
Street, in the City of Los Angeles, County of Los Angeles, in the
State of California, and is more particularly described in Exhibit
"A" attached hereto and forming a part hereof.
B. Seller desires to sell, and Purchaser desires to
purchase, all of the real and personal property owned by Seller
located at or forming part of the Real Property, including, but
not limited to, the Improvements, and all appurtenant easements
and rights, and the Personal Property (as hereinafter defined) on
the terms, covenants and conditions hereinafter set forth.
NOW, THEREFORE, with reference to the foregoing recitals and
in reliance thereon and in consideration of the purchase price
hereinbelow set forth, and the other terms, covenants and
conditions set forth below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, it is mutually covenanted and agreed by Seller and
Purchaser as follows:
1. Purchase and Sale; or Contribution. 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, and Purchaser or
its assignee shall acquire by purchase from Seller or, at Seller's
election, by contribution from Seller, all of the following:
(a) The Real Property and the Improvements, together
with all easements, hereditaments and appurtenances thereto,
subject only to such easements, agreements and exceptions as may
have been approved by Purchaser in accordance with Paragraph 4(a)
hereof and the tenancies and occupancies that are set forth on
Exhibit "B";
(b) All of the personal property (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 listed on Exhibit "C" (the "Inventory");
(c) All leases to tenants leasing space in the
Improvements (the "Tenant Leases");
(d) To the extent assignable, those certain service
and other agreements more particularly described in Exhibit "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; Payment or Contribution.
2.1 The purchase price (the "Purchase Price") to be
paid by Purchaser to Seller for the Property, if the transaction
is to be a purchase and sale, is the sum of Five Million Two
Hundred Thousand Dollars ($5,200,000.00), 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 Twenty-Five Thousand Dollars
($25,000), ("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 this
Agreement at the Approval Date (as hereinafter defined), Purchaser
shall increase the Initial Deposit by the amount of $25,000 in
cash for a total of $50,000 (which sums, together with any
interest earned thereon and additions thereto, are herein
collectively called the "Deposit") within one business day after
the Approval Date;
(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 (the "Adjusted
Purchase Price"). 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 (to the extent
applicable), Escrow Agent shall be entitled to withhold and pay to
the Internal Revenue Service and the Franchise Tax Board such
withholding required of Purchaser pursuant to Internal Revenue
Code 1445 and equivalent form provided under the Revenue and
Taxation Code of the State of California.
(c) The Deposit shall be at all times invested by
Escrow Agent in the following investments ("Approved
Investments"): (i) United States Treasury obligations, (ii)
United States Treasury-backed repurchase agreements issued by a
major money center banking institution reasonably acceptable to
Seller, (iii) Certificates of Deposit or Money Market Accounts of
institutions whose deposits are insured by the FDIC or (iv) such
other manner as may be reasonably agreed to by Seller and
Purchaser. The Deposit shall be disposed of by Escrow Agent only
as provided in this Agreement.
(d) All payments required to be made under this
Agreement shall be made in U.S. funds.
2.2 In lieu of a purchase and sale transaction, Seller
can elect by written notice delivered to Purchaser prior to the
expiration of the Approval Period (as hereinafter defined), to
contribute the Property to Purchaser ("Contribution") and to
become an additional limited partner in Purchaser at Closing. In
that connection, the parties agree that the payments to be made by
Purchaser to Seller at Closing shall be made and adjusted as
follows:
(i) An amount (the "Loan Payoff Amount") equal to
the aggregate amount necessary to pay off the existing loan
("Existing Loan") made by Imperial Thrift & Loan Association
("Existing Lender") and secured by, among other documents, a first
deed of trust covering the Property; and
(ii) An amount (the "Contribution Value") equal to
the amount by which the Adjusted Purchase Price exceeds the Loan
Payoff Amount shall be deemed paid by Seller receiving at Closing
limited partnership interests ("OP Units") in Purchaser (as more
particularly set forth herein).
Each OP Unit shall have a value equal to one (1) share of Arden
Realty, Inc. common stock ("ARI") as of the date which is three
(3) business day prior to Closing. ARI is listed on the New York
Stock Exchange under the Symbol ARI. The OP Units may be
exchanged only in accordance with that certain Amendment to
Limited Partnership Agreement, in the form attached hereto as
Exhibit "K" and by this reference incorporated herein. Except as
otherwise set forth herein, the balance of subparagraphs (a)
through (d) above, shall be equally applicable to the
Contribution; provided, further, however that if Seller makes the
Contribution election as herein provided, the terms and provisions
of this Agreement shall be modified mutatis mutandis to effectuate
the foregoing (and if requested the parties will enter into a
modification agreement in such form as may be reasonably agreed
upon to effectuate the same).
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
business days thereafter, Seller and Purchaser shall open an
escrow (the "Escrow") with Commerce Escrow, 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, Purchaser and Escrow Agent, to serve as Escrow
instructions to Escrow Agent, and Escrow Agent shall be and is
hereby authorized and instructed to deliver pursuant to the terms
of this Agreement the documents and monies to be deposited into
the Escrow. Escrow Agent may attach to this Agreement Escrow
Agent's standard form escrow agreement, to the extent that the
same is consistent with the terms hereof, and are reasonably
approved by Seller and Purchaser. Escrow Agent shall immediately,
upon receipt of such duly executed copy of this Agreement, notify
Seller and Purchaser of the opening of Escrow. Should either
party fail to open Escrow in accordance with the provisions of
this Paragraph 3(a), such failure shall constitute a material
breach of this Agreement.
(b) Closing of Escrow. Escrow shall close April 1,
1997, provided the Tenant Estoppels satisfying the requirements of
paragraph 8(b) hereof have been received and all other Purchaser's
Conditions Precedent to Closing as set forth in Paragraph 8 hereof
have been satisfied. The term "Closing" as used herein shall be
deemed to be the date upon which the respective Conditions
Precedent to Purchaser's Obligation to Close Escrow (set forth in
Paragraph 8 below) and the Conditions Precedent to Seller's
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. 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 First
American Title Company ("Title Company"), together with true
copies of all documents evidencing matters of record shown as
exceptions to title thereon. Seller has delivered to Purchaser a
copy of that certain survey of the Property dated March 21, 1996
prepared by Pafford Associates (the "Survey"). If Purchaser shall
desire to update such Survey, Purchaser shall cause the same to be
so updated at Purchaser's sole cost and expense before the
Approval Date (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 (or updated Survey) by giving notice to Seller by
the Approval Date. Notwithstanding any of the foregoing, Seller
shall at Closing (but shall not be obligated prior thereto) remove
of record (or at Seller's election provide a credit to Purchaser
sufficient to pay off) 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, by the Approval Date, Purchaser shall be deemed to
have approved said exceptions. Purchaser's approval of the
Preliminary Title Report shall be without prejudice to Purchaser's
right to disapprove additional survey matters or any supplementary
reports issued by Title Company or disclosed after the Approval
Date; provided, however, Purchaser's approval shall not be
unreasonably withheld, and, as to survey matters, shall only be
applicable if Purchaser shall have obtained an update of the
Survey before the Approval Date. 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 simultane-
ously either deliver to Escrow Agent at Closing title instruments
in recordable form sufficient to satisfy such liens and encum-
brances of record, together with the cost of recording or filing
said instruments.
(b) Title Policy. The Title Policy shall be First
American 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) Complete copies of all of the Tenant Leases
and all amendments thereto, a schedule of which is attached hereto
as Exhibit "B" and forms a part hereof.
(ii) 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 April 1, 1996 to the extent
available to Seller;
(iii) A set of all plans and specifications and
third-party soil reports, or environmental reports and studies
relating to the Property;
(iv) All electricity and property tax bills for
the period beginning April 1, 1996 to the extent available to
Seller;
(v) Statements of income and expense for the
Property for the calendar years 1996 (from and after April 1,
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 Property or any portion
thereof or the equipment located therein; and
(vii) Complete copies of all service and other
contracts pertaining to the Property in respect to which Seller is
obligated (the "Service Contracts").
(b) Except as expressly provided in this Agreement,
Seller makes no representation or warranty as to the accuracy of
the information contained in any of the documents, instruments or
agreements to be provided to Purchaser pursuant to this Paragraph
5.
(c) Purchaser shall have until 5:00 P.M. on the date
that is thirty (30) days after the Effective Date or the next
business day if that date is a Saturday, Sunday or legal holiday
(the "Approval Date") 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 by the Approval
Date as aforesaid shall be deemed its approval thereof (and its
covenant to deliver the additional $25,000 deposit required
pursuant to paragraph 2(a)(i) hereof). 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 forty-eight
(48) 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, accountants and
prospective debt and equity financing sources who reasonably need
to be informed in connection with Purchaser's determinations
hereunder (and who shall, in turn, be required to keep such
information confidential).
(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 forty-eight (48)
hours prior notice to examine all operating books and records that
relate to the Property, including all specifications and as-built
drawings (to the extent they are in Seller's possession), all
building permits, certificates of occupancy, soil reports,
engineers' reports and studies, and similar information relating
to the Property or its management, operation, maintenance or use,
and all warranties and operating 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) Purchaser shall have until the Approval Date 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) 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 Approval
Date. Failure to deliver such written disapproval shall be deemed
Purchaser's approval of said matters (and its covenant to deliver
the additional $25,000 deposit required pursuant to paragraph
2(a)(i) hereof). Purchaser understands and agrees that if it
shall disapprove of any matter or thing subject to its approval
pursuant to paragraph 5 and 6 hereof, Seller shall not on account
thereof be obligated to correct the objection or otherwise lower
the Purchase Price or grant any credit with respect thereto.
7. Operation of Property Pending Closing.
(a) Tenant Leases. Seller has leased portions of the
Property to various occupancy tenants. From and after the date of
the complete execution of this Agreement and until the Closing
Date Seller shall not enter into any new leases or amend,
terminate or accept the surrender of any existing tenancies or
approve any subleases without the prior written consent of
Purchaser (which consent shall not be unreasonably withheld).
Concurrently with its execution of this Agreement Seller shall
notify Purchaser of any lease agreements that are outstanding for
signature by prospective tenants, each of which is hereby deemed
approved by Buyer. Any such agreements, if signed, shall be
deemed to be signed prior to execution of this Agreement. 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. 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 of the Tenant
Leases, except for collection of current rents no more than one
month in advance.
(b) Leasing Commissions; Tenant Improvements and Rent
Concessions. Purchaser shall be responsible for all leasing
commissions, tenant improvement costs and unamortized rent
concessions due with respect to leases, extensions, and renewals
of leases, and similar events occurring after the date of this
Agreement, provided that (i) Purchaser has approved or is deemed
to have approved such action or event by Seller to the extent
occurring prior to the Closing Date and (ii) Seller has delivered
to Purchaser copies of the agreements with respect to which any
such commissions are payable. Failing such delivery, Seller shall
remain responsible for all of such 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 Closing.
The representations and warranties of Seller contained in
Paragraph 13 of this Agreement shall be true on the date of
Closing in all material respects as though such representations
and warranties were made on and as of such date.
(b) Delivery of Tenant Estoppels. Seller shall have
delivered to Purchaser estoppel letters (the "Tenant Estoppels")
from tenants representing 85% of the leased area and from all
tenants leasing more than 3,500 square feet in the Improvements in
substantially the form of Exhibit "E" attached hereto and forming
a part hereof, consistent in all material respects with the
information to be provided by Seller hereunder and certifying
inter alia to the effect that there are no defaults by landlord
under the lease known to tenant thereunder; that such lease is
unmodified except as may be set forth therein and in full force
and effect; that there are no defenses or offsets against the
landlord known to tenant thereunder; and that rental is current
and has not been paid more than one month in advance.
(c) Compliance with This Agreement. Seller shall have
performed and complied within all material respects all agreements
and conditions required by this Agreement to be performed or
complied with by it on or prior to Closing.
(d) Title Policy. Title Company shall be ready,
willing and able to issue the Title Policy required by Paragraph
4(b).
(e) Change in Condition. Subject to the provisions of
Paragraphs 15(b) and 15(c) hereof, there shall exist no damage,
destruction or condemnation of the Property occurring after the
date hereof and prior to Closing.
9. Conditions Precedent to Seller's Obligation to Close
Escrow. The obligation of Seller to consummate the transactions
contemplated hereby is subject to the following conditions,
inserted for Seller's sole benefit and that may be waived solely
by Seller only in writing at its sole option. Said conditions are
as follows:
(a) Representations and Warranties True at Closing.
The representations and warranties of Purchaser contained in this
Agreement, or in any certificate or document signed by Purchaser
pursuant to the provisions hereof, shall be true on and as of
Closing in all material respects as though such representations
and warranties were made on and as of such date.
(b) Delivery of Purchase Price or Contribution Value
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) IF THE TRANSACTION HEREIN PROVIDED SHALL NOT BE
CLOSED BY REASON OF SELLER'S DEFAULT UNDER THIS AGREEMENT AND
PURCHASER SHALL NOT HAVE DEFAULTED UNDER THIS AGREEMENT, THEN THE
DEPOSIT SHALL BE RETURNED TO PURCHASER. IN ADDITION, THE PARTIES
HERETO, BEFORE ENTERING INTO THIS TRANSACTION, HAVE BEEN CONCERNED
WITH THE FACT THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY
PURCHASER IF SELLER SHOULD WRONGFULLY FAIL TO SELL THE PROPERTY TO
PURCHASER. SELLER HAS STATED THAT IT WILL NOT PERMIT ANY ACTION
FOR SPECIFIC PERFORMANCE OF THIS AGREEMENT. WITH THE FLUCTUATION
IN VALUE OF REAL PROPERTY, THE CURRENT AND HIGHLY UNPREDICTABLE
STATE OF THE ECONOMY, THE FLUCTUATING MONEY MARKET FOR REAL ESTATE
LOANS OF ALL TYPES, AND OTHER FACTORS THAT DIRECTLY AFFECT THE
VALUE AND MARKETABILITY OF THE PROPERTY, IT IS REALIZED BY THE
PARTIES THAT IT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICABLE, IF
NOT IMPOSSIBLE, TO ASCERTAIN WITH ANY DEGREE OF CERTAINTY PRIOR TO
SIGNING THIS AGREEMENT THE AMOUNT OF DAMAGES THAT WOULD BE
SUFFERED BY PURCHASER IN THE EVENT OF SELLER'S WRONGFUL FAILURE TO
SELL THE PROPERTY TO PURCHASER. IN ADDITION, PURCHASER DESIRES TO
PROVIDE A FINANCIAL DISINCENTIVE FOR ANY SUCH FAILURE BY SELLER.
THE PARTIES, HAVING MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO
ASCERTAIN THE ACTUAL COMPENSATORY DAMAGES PURCHASER WOULD SUFFER
IN THE EVENT OF SELLER'S WRONGFUL FAILURE TO SELL THE PROPERTY TO
PURCHASER, HEREBY AGREE THAT THE REASONABLE ESTIMATE OF SAID
DAMAGES IS AN AMOUNT EQUAL TO ONE HUNDRED THOUSAND DOLLARS
($100,000); AND IN THE EVENT OF SELLER'S WRONGFUL FAILURE TO SELL
THE PROPERTY TO PURCHASER, PURCHASER SHALL BE ENTITLED TO SUCH
AMOUNT AS FULL LIQUIDATED DAMAGES, AND THAT PAYMENT OR TENDER TO
PURCHASER OF SUCH AMOUNT SHALL TERMINATE ALL OF PURCHASER'S RIGHTS
AND REMEDIES AT LAW OR IN EQUITY AGAINST SELLER WITH RESPECT TO
SUCH FAILURE TO PERFORM. AS USED HEREIN, SELLER'S WRONGFUL
FAILURE TO SELL THE PROPERTY TO PURCHASER SHALL MEAN ITS WILLFUL
AND UNWARRANTED REFUSAL TO DELIVER THE GRANT DEED WITH PURCHASER
HAVING COMPLIED WITH ITS OBLIGATIONS HEREUNDER (EXCEPT FOR ITS
OBLIGATION TO FUND THE BALANCE OF THE PURCHASE PRICE) AND BEING
READY, WILLING AND ABLE TO CLOSE (AND SUCH TERM SHALL NOT APPLY TO
ANY OTHER DEFAULT OR BREACH BY SELLER HEREUNDER).
/s/ JM /s/ VC
Seller's Purchaser's
Initials Initials
(b) Remedy of Seller. THE PARTIES HERETO, BEFORE
ENTERING INTO THIS TRANSACTION, HAVE BEEN CONCERNED WITH THE FACT
THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY SELLER IF PURCHASER
SHOULD WRONGFULLY FAIL TO PURCHASE THE PROPERTY. WITH THE
FLUCTUATION IN VALUE OF REAL PROPERTY, THE CURRENT AND HIGHLY
UNPREDICTABLE STATE OF THE ECONOMY, THE FLUCTUATING MONEY MARKET
FOR REAL ESTATE LOANS OF ALL TYPES, AND OTHER FACTORS THAT
DIRECTLY AFFECT THE VALUE AND MARKETABILITY OF THE PROPERTY, IT IS
REALIZED BY THE PARTIES THAT IT WOULD BE EXTREMELY DIFFICULT AND
IMPRACTICABLE, IF NOT IMPOSSIBLE, TO ASCERTAIN WITH ANY DEGREE OF
CERTAINTY PRIOR TO SIGNING THIS AGREEMENT THE AMOUNT OF DAMAGES
THAT WOULD BE SUFFERED BY SELLER IN THE EVENT OF PURCHASER'S
WRONGFUL FAILURE TO PURCHASE THE PROPERTY. THE PARTIES, HAVING
MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL
COMPENSATORY 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/ JM /s/ VC
Seller's Purchaser's
Initials Initials
(c) Notwithstanding anything to the contrary contained
herein, the aggregate liability of Seller arising pursuant to or
in connection with the representations, warranties,
indemnifications, covenants or other obligations (whether express
or implied) of Seller under this Agreement (or any document
executed or delivered in connection herewith) shall not exceed
$400,000.00. Without limitation on the other limitations or
remedies contained herein, in the event of any dispute between the
parties respecting this Agreement or the transactions herein
contemplated, Purchaser hereby waives (i) any right to record or
file a lis pendens or other similar notice of suit, (ii) any right
to seek specific performance of this Agreement, and (iii) any
right to assert any claim affecting the right of possession or
title to the Property. In no event shall this Agreement (or any
short form or memorandum thereof) be recorded against or with
respect to the Property.
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 or the Loan Payoff Amount
(depending upon Seller's election for a purchase and sale or a
Contribution) in the manner set forth in Paragraph 2;
(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, a signed counterpart of the Assignment of Service
Contracts and a signed counterpart of the Amendment to Limited
Partnership Agreement executed by all required partners, if Seller
shall have elected to contribute the Property for OP Units in
Purchaser.
(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 "F"
attached hereto and forming a part hereof;
(ii) A Bill of Sale (the "Bill of Sale") in the
form of Exhibit "G" attached hereto covering the Personal
Property;
(iii) An Assignment and Assumption of Leases and
Security Agreements (the "Assignment of Leases") substantially in
the form and substance of Exhibit "H" attached hereto and forming
a part hereof;
(iv) An Assignment and Assumption of Service and
Miscellaneous Rights and Agreements (the "Assignment of Service
Contracts") substantially in the form and substance of Exhibit "I"
attached hereto and forming a part hereof;
(v) An original counterpart of the Amendment to
Limited Partnership Agreement if Seller shall have elected to
contribute the Property to Purchaser.
(vi) An original counterpart of each of the
Service Contracts, Leases and keys to the Property if in Seller's
possession or under its control;
(vii) Notices to each of the tenants and occupants
of the Property of the transfer of the Property to Purchaser;
(viii) 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;
(ix) 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
(x) If the transaction is to be a Contribution,
cash in the sum of the Security Deposits, the net prorations owing
to Purchaser and Seller's share of the costs and expenses of the
transaction (it being understood that Seller may elect to cause
all such amounts to be credited to Purchaser and debited against
the Purchase Price).
(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, 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 apportion-
ment 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 and leasing commissions
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 the Preliminary Title
Report, that portion of the cost of securing the Title Policy that
is attributable to CLTA Owner's coverage;
(2) Documentary transfer tax imposed on
the conveyance of title to the Property to Purchaser;
(3) One-half of Escrow Agent's Escrow Fee.
(ii) Purchaser shall pay:
(1) The cost of recording the Grant Deed;
(2) That portion of the cost of the Title
Policy that is not paid by Seller, including the cost of any
endorsements, and the cost of any update to any existing ALTA
Survey; and
(3) One half of Escrow Agent's Escrow fee.
All other Closing fees and expenses, including, but not limited
to, the parties' legal expenses, accounting and consulting fees,
and other incidental expenses in connection with this transaction
shall be borne by the party incurring same.
13. Representations, Warranties and Covenants of Seller.
(a) Except as specifically set forth in this Paragraph
13(a), 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 in 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.
Purchaser acknowledges that Purchaser has examined, reviewed and
inspected all matters which in Purchaser's judgment bear upon the
Property and its value and suitability for Purchaser's purposes.
Except as to matters specifically set forth in this Paragraph
13(a), Purchaser will acquire the Property solely on the basis of
its own physical and financial examinations, reviews and
inspections and the title insurance protection afforded by the
Title Policy. Subject to the foregoing and except as disclosed by
Seller to Purchaser or otherwise discovered by Purchaser prior to
the Approval Date or as contained in the materials delivered to
Purchaser and identified in Paragraph 5 hereof, 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 (subject to any exceptions disclosed by Seller in
writing) and each of which shall survive the Closing for a period
of one (1) year, except as disclosed in the reports and documents
listed on Exhibit "J" attached hereto:
(i) Seller is the owner of the Personal Property
and has marketable title, free and clear of all liens, claims and
security interests whatsoever, except for matters of record.
(ii) Seller has no knowledge of any:
(1) existing latent defects or seismic
conditions concerning the Real Property or materially incorrect
income or expense figures in any financial statements prepared by
or for Seller and delivered to Purchaser regarding the Property
(with respect to periods of time occurring prior to the date
hereof and, without limitation on the foregoing, Seller does not
make any representation or warranty with respect to any
projections).
(2) any pending litigation or agreement
not of record materially and adversely affecting the Property and
which would be binding upon Purchaser after the Closing;
(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;
(5) thing that would suggest any portion
of the Property has ever been used by Seller or any tenant of any
portion of the Property during Seller's ownership thereof as a
waste storage or disposal site or gasoline station. Without
limiting the other provisions of this Agreement, Seller shall
reasonably cooperate with Purchaser's investigation of matters
relating to the foregoing provisions of this paragraph and to
provide access to and copies of any data and/or documents dealing
with potentially Hazardous Substances used at the Property and any
disposal practices followed in accordance with, and subject to the
provisions of, Paragraph 6 hereof. Seller agrees that Purchaser
may make inquiries of governmental agencies regarding such mat-
ters, without liability for the outcome of such discussions. For
the purposes of this Agreement, "Hazardous Substances" shall mean
(A) substances defined as "hazardous substances" in (i) the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (42 U.S. C. '' 9601 et seq.), or (ii) the
Resource Conservation and Recovery Act of 1976 (42 U.S.C. '' 6901
et seq.), together with the regulations enacted pursuant to such
acts, and (B) those substances defined as "hazardous wastes" in
' 25117 of the California Health and Safety Code or as "hazardous
substances" in ' 25316 of the California Health and Safety Code
together with the regulations enacted pursuant to such statutes.
(iii) The Tenant Leases and Service Contracts
entered into by Seller and, to Seller's knowledge, the other
Tenant Leases, 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 unless 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;
(iv) The operating financial information prepared
by Seller and delivered to Purchaser with respect to the Property
which financial information was prepared on a cash basis of
accounting, consisting of Statements of Operations for the
calendar years ended December 31, 1996 and for the current
calendar year are true and correct in all material respects
(provided, however, for the period of time occurring prior to
April 1, 1996, such representation shall be limited to Seller's
knowledge); 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 to the extent in Seller's
possession or under its control; and
(v) As used in this Agreement, "to Seller's
knowledge" or other similar knowledge limitations as to Seller
shall mean the actual knowledge of Jack Mahoney, as President, and
Nat Williams, as Asset Manager, both of Summit Commercial
Properties, Inc.
(b) Notwithstanding anything contained in Paragraphs
5(a) or 13(a) to the contrary, Seller is neither responsible nor
liable for any representation or warranty, either expressed or
implied, guaranty, promise or other information pertaining to the
Property or the Improvements made or furnished to Purchaser by any
broker representing or purporting to represent Seller.
14. Representations and Warranties of Purchaser.
Purchaser hereby makes the following representations and
warranties, each of which is deemed to be material and each of
which is stated by Purchaser to be true and correct on the date
hereof:
(a) Purchaser has full legal power and authority to
enter into and perform this Agreement in accordance with its
terms. This Agreement constitutes the valid and binding
obligation of Purchaser, enforceable in accordance with its terms,
except as such enforcement may be affected by bankruptcy,
insolvency and other laws affecting the rights of creditors
generally. The execution, delivery and performance of this
Agreement and all documents in connection therewith are not in
contravention of or in conflict with any agreement or undertaking
to which Purchaser is a party or by which Purchaser may be bound
or affected; 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 Approval Date 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, (iv) Purchaser is satisfied
with all 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, and (v) except as
set forth in subparagraph 13(a) and elsewhere in this Agreement,
Purchaser is not relying on any representation, written
information, data, reports, warranty, or statement of Seller or
its agents concerning the Property or the accuracy or completeness
of the Due Diligence Materials, and Purchaser is purchasing the
Property in "AS-IS" condition based solely upon Purchaser's own
independent inspection, investigation and review, as more
particularly, set forth in Paragraph 13(a) hereof.
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 after the date hereof and 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 Agree-
ment, 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 con-
demning 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 Cushman & Wakefield ("Broker") or incur any liability,
contingent or otherwise, for brokerage or finder's fees or agent's
commissions or other like payments in connection with this
Agreement, or the transactions contemplated hereby. Seller agrees
to pay at Closing to Broker the commission due it in connection
with the within transaction in accordance with the provisions of a
separate written agreement between Broker and Seller and hereby
agrees to indemnify Purchaser against and hold Purchaser harmless
from any and all claims, demands, causes of action or damages
resulting from any breach of this warranty. Purchaser hereby
warrants that Purchaser did not negotiate through any broker,
agent, finder, affiliate or other third party other than Broker or
incur any liability, contingent or otherwise, for any such
brokerage or finder's fees, agent's commissions or other like
payments, in connection with this Agreement, and hereby agrees to
indemnify Seller against and hold Seller harmless from any and all
claims, demands, causes of action or damages resulting from any
breach of his 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 any of its
rights or duties hereunder without the prior written consent of
Seller (which consent may be given or withheld in Seller's sole
and absolute discretion). Seller may assign its rights hereunder
in accordance with the provisions of Paragraph 16(m) below.
(h) Waivers, Amendments and Modifications of
Provisions. Waivers, amendments or modifications of any term or
condition of this Agreement must be in writing signed by the party
against whom such waiver is sought to be enforced. No waiver by
any party of any breach hereunder shall be deemed a waiver of any
other or subsequent breach.
(i) Indemnification. Seller shall indemnify Purchaser
against and hold Purchaser harmless from any and all loss, cost,
damage, claim, liability or expense, including court costs and
reasonable attorneys' fees, for 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 and (b) on or subsequent to Closing.
These covenants shall survive Closing.
16. Miscellaneous Provisions.
(a) Successors and Assigns. Subject to the provisions
hereof, the terms and provisions hereof shall be binding upon and
inure to the benefit of the successors and assigns of the parties
hereto.
(b) Meaning of Terms. When necessary herein, all terms
used in the singular shall apply to the plural and vice versa; and
all terms used in the masculine shall apply to the neuter and
feminine genders.
(c) Entire Agreement. This Agreement is the entire
agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements between the
parties hereto with respect thereto. No claim of waiver,
modification, consent 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 several
paragraphs of this Agreement are inserted solely for convenience
of reference and are not a part of and are not intended to govern,
limit or aid in the construction of any term or provision hereof.
(f) Attorneys' Fees. If either Seller or Purchaser
shall obtain legal counsel and bring an action or proceeding
against the other by reason of 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, 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, 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:
Seller: c/o Summit Commercial
300 Continental Boulevard
Suite 565
El Segundo, CA 90245
Attn: Jack Mahoney
With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, CA 90067
Attn: Real Estate Notices (GML)
Purchaser: Arden Realty, Inc.
9100 Wilshire Boulevard
Suite 700 East
Beverly Hills, CA 90210
Attn: Ms. Brigitta B. Troy
With a copy to: Troy & Gould
1801 Century Park East
16th Floor
Los Angeles, CA 90067
Attn: Kenneth R. Blumer, Esq.
Escrow Agent: Commerce Escrow
1545 Wilshire Boulevard
Suite 600
Los Angeles, CA 90017
Attn: Mark Minsky
All notices, requests and other communications shall be deemed
given upon deposit with the United States Postal Service or
reputable delivery service as provided for herein and shall be
deemed received on the date of acknowledgment or other evidence of
actual receipt.
(h) Severability. If any provision of this Agreement
or the application thereof to any person or circumstance shall be
invalid or unenforceable to any extent, the remainder of this
Agreement and the application of such 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) 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.
(m) Seller Exchange Rights. Seller may consummate the
sale of the Property as part of a so-called like kind exchange
("Exchange") pursuant to Section 1031 of the Internal Revenue Code
of 1986, as amended, provided that (i) except as hereinafter set
forth, all costs, fees and expenses attendant to such Exchange
shall be the sole responsibility of Seller, (ii) the Closing shall
not be delayed or affected by reason of such Exchange nor shall
the consummation or accomplishment of the Exchange be a condition
precedent or condition subsequent to Seller's obligations under
this Agreement, (iii) Purchaser shall not be required to acquire
or hold title to any real property other than the Property for
purposes of consummating the Exchange, (iv) in the event of any
such Exchange, and notwithstanding that in connection with such
Exchange record title to the Property may be conveyed by Seller to
an accommodation entity which thereupon conveys title to the
Property to Purchaser pursuant to an amendment and assignment
("Assignment") of this Agreement by Seller to such accommodation
entity (which assignment, and amendment of escrow instructions in
connection therewith, shall be prepared by Seller at Seller's
expense and executed by Purchaser when reasonably requested by
Seller, subject to the reasonable approval of the form thereof by
Purchaser), all covenants and agreements of Seller pursuant to
this Agreement shall be deemed to be made by Seller, shall survive
any conveyance to an accommodation party, shall continue in favor
of and inure to the benefit of Purchaser and shall be enforceable
by Purchaser against Seller, as though the Property had been
conveyed directly by Seller to Purchaser; and (v) the Exchange
shall in no way reduce, abridge or modify any of Seller's
obligations or duties or any of Purchaser's rights or remedies
hereunder. Purchaser will have no liability to Seller in the
event the Exchange is not consummated, or in the event Seller does
not achieve the desired tax treatment. Purchaser shall pay its
own attorneys' fees in connection with the review of any documents
in connection with the Exchange.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first hereinabove written.
Seller: HFA-CLARENDON CREST, L.L.C.,
a Delaware limited liability company
By: Clarendon Crest-HFA, Inc.,
a California corporation
Its Managing Member
By: /s/ Jack Mahoney
Name: Jack Mahoney
Title: President
Purchaser: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc.,
a Maryland corporation,
Its General Partner
By: /s/ Victor J. Coleman
Victor J. Coleman
President
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: President
AGREEMENT TO SELL
AND PURCHASE
AND ESCROW INSTRUCTIONS
Between
RCBT CALIFORNIA PROPERTIES, L.P.,
a California limited partnership
("SELLER")
and
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
("PURCHASER")
South Bay Centre
Gardena, California
March 24, 1997
AGREEMENT TO SELL AND PURCHASE
AND ESCROW INSTRUCTIONS
THIS AGREEMENT TO SELL AND PURCHASE AND ESCROW
INSTRUCTIONS (this "Agreement") is entered into as of March
24, 1997 by and between RCBT CALIFORNIA PROPERTIES, L.P.,
a California limited partnership ("Seller") and ARDEN REALTY
LIMITED PARTNERSHIP, a Maryland limited partnership
("Purchaser").
R E C I T A L S
A. Seller owns an office building located in the
City of Los Angeles, State of California and desires to sell
the same to Purchaser. Purchaser is willing to purchase the
building from Seller on the terms set forth below.
B. This Agreement sets forth the agreement between
Purchaser and Seller and the instructions to Escrow Company
with respect to the purchase and sale of the building.
NOW, THEREFORE, FOR VALUABLE CONSIDERATION, the
receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. Purchase and Sale. Seller agrees to sell
the Property described below to Purchaser, and Purchaser
agrees to purchase the Property from Seller, on the terms
and subject to the conditions contained in this Agreement.
The "Property" consists of:
(a) land located at 1515 W. 190th Street
in the City of Los Angeles, County of Los Angeles, State of
California, more particularly described in Exhibit "A" (the
"Land");
(b) the improvements on the Land, which
include an office building, exclusive of any leasehold
improvements owned by tenants;
(c) Seller's right, title and interest in
and to any and all rights, privileges, easements and
appurtenances pertaining to the Land, including without
limitation (but without warranty whether statutory, express
or implied) in and to adjacent streets, alleys or rights-of-
way; and
(d) any materials, supplies, equipment,
fixtures and personal property owned by Seller and located
on the Land.
2. Purchase Price. The total purchase price
(the "Purchase Price") to be paid by Purchaser to Seller for
the Property shall be Nineteen Million One Hundred Thousand
and 00/100 Dollars ($19,100,000.00) and shall be deposited
and paid as follows:
2.1. Earnest Money Deposit.
(a) Purchaser shall deposit within
one (1) Business Day following the date of this Agreement
with Commonwealth Land Title Insurance Company ("Escrow
Company"), the amount of Five Hundred Thousand and 00/100
Dollars ($500,000.00) (hereinafter, together with all
interest accrued thereon, the "Earnest Money") which Earnest
Money shall be in the form of cash or a wire transfer of
immediately available United States of America funds.
(b) If the sale hereunder is
consummated in accordance with the terms hereof, the Earnest
Money shall be applied to the Purchase Price to be paid by
Purchaser at the Closing. In the event the transaction
described herein shall fail to be consummated in accordance
with the terms hereof, whether due to a default by Purchaser
or Seller or for any other reason, the Earnest Money shall
be applied pursuant to the applicable provisions of this
Agreement.
2.2. Cash at Closing. At least one (1)
Business Day prior to the Closing Date, Purchaser will
deposit into the Escrow the balance of the Purchase Price,
plus such additional sums as shall be necessary to pay the
expenses payable by Purchaser hereunder, as adjusted by the
allocations and prorations in accordance with Section 5.4,
by confirmed wire transfer of funds in immediately available
United States of America funds.
3. Representations and Warranties of Seller.
3.1. Seller represents and warrants to
Purchaser that:
3.1.1. Seller is duly organized
and legally existing. The execution and delivery by Seller
of, and Seller's performance under, this Agreement shall
have been duly authorized by all requisite action. 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. 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;
3.1.2. Performance of this
Agreement by Seller will not result in a breach of, or
constitute a default under, any agreement or instrument to
which Seller is a party or by which it is bound. This
Agreement has been, and each and all of the other
agreements, instruments and documents herein required to be
made or delivered by Seller pursuant hereto have been, or as
of the Closing will have been, executed by Seller and when
so executed, are and shall be legal, valid, and binding
obligations of Seller enforceable against Seller in
accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization,
moratorium, and other similar laws affecting the rights of
creditors generally and, as to enforceability, the general
principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law);
3.1.3. Seller (a) is not in
receivership or dissolution; (b) has not made any assignment
for the benefit of creditors; (c) has not admitted in
writing its inability to pay its debts as they mature; (d)
has not been adjudicated a bankrupt; (e) has not filed a
petition in voluntary bankruptcy, a petition or answer
seeking reorganization, or an arrangement with creditors
under the Federal Bankruptcy Law or any other similar law or
statute of the United States or any state; and (f) does not
have any such petition described in 3.1.3(e) filed against
Seller;
3.1.4. Seller is not a "foreign
person" within the meaning of Section 1445 of the Internal
Revenue Code of 1986 nor Sections 18662 and 18668 of the
Revenue and Taxation Code of California (i.e., Seller is not
a non-resident alien, foreign corporation, foreign
partnership, foreign trust or foreign estate as those terms
are defined in the codes and regulations promulgated
thereunder);
3.1.5. To Seller's knowledge,
there are no leases, tenancies or other rights of occupancy
or use for any portion of the Property under which any other
party has a right to occupy all or any part of the Property
in effect on the date of this Agreement except as set forth
on Exhibit "B" (the "Leases");
3.1.6. Since October 1, 1995,
Seller has not received, and prior to October 1, 1995, to
Seller's knowledge, Seller has not received, any written
notice of violation of any laws, statutes, codes, acts,
ordinances, orders, judgements, decrees, injunctions or
regulations of any governmental entity having jurisdiction
over the Property except as set forth on Exhibit "C";
3.1.7. Except as set forth on
Exhibit "D", there has been no litigation served upon Seller
with respect to the Property, which remains pending. Except
as set forth on Exhibit "D", to Seller's knowledge there has
been no other litigation filed or threatened in writing
against Seller with respect to the Property;
3.1.8. Seller has not received any
written notice that any condemnation or eminent domain
proceeding affecting the Property is pending;
3.1.9. Seller has no employees
located at or employed primarily in connection with the
Property;
3.1.10. Seller has delivered to
Purchaser true and correct copies of all management,
service, supply, utility or maintenance agreements with
respect to the Property to which it is a party, or any
portion thereof, as described on Exhibit "E" (other than the
contracts with its property manager and its real estate
advisor, which shall be terminated as of the Closing with
respect to the Property) (collectively, the "Service
Contracts"). To Seller's knowledge, there are no other
management, service, supply, utility or maintenance
agreements with respect to the Property other than the
Service Contracts;
3.1.11. As of the execution of this
Agreement, to Seller's knowledge, Seller has received no
written expression of interest to purchase the Property or
any part thereof from a governmental or quasi-governmental
agency with condemnation authority. However, if proceedings
under a power of condemnation or eminent domain relating to
the Property or any part thereof are commenced prior to the
Outside Closing Date, or if to Seller's Actual Knowledge,
Seller receives a written expression of interest to purchase
the Property or any part thereof from a governmental or
quasi-governmental agency with condemnation authority prior
to the Outside Closing Date, Seller will promptly inform
Purchaser in writing;
3.1.12. Since October 1, 1995,
Seller has not received, and prior to October 1, 1995, to
Seller's knowledge, 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;
3.1.13. Seller has provided to
Purchaser true and correct copies of all of the Leases and
any subleases, occupancy agreements and guarantees thereof
in Seller's possession;
3.1.14. Except as set forth on
Exhibit "P", there are no commissions or other fees payable
to any person, entity or agent with respect to the execution
of the Leases;
3.1.15. Since October 1, 1995,
Seller, as landlord, has received no written notice from any
tenant that Seller is in default or is not complying with
Seller's obligations, as landlord, under any Lease;
3.1.16. Except as set forth on
Exhibit "Q", any and all decorating, painting, renovation or
construction work (other than 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 Date has been, or as of the Closing Date, at
Seller's expense, will be fully completed and paid for; and
3.1.17. Eugene Markowski is the
employee of Seller with primary responsibility for the
Property. Steve Center is an employee of Lincoln with
primary responsibility for the Property.
3.2. As used in this Agreement, the term
"to Seller's knowledge" or words of similar import (i) shall
mean and apply to the actual knowledge of Eugene Markowski,
of Seller, and Steve Center, of Lincoln, and not to any
other parties, without any investigation or inquiry of any
kind, it being understood and acknowledged that such
individuals, in some instances, are not involved in the day-
to-day operations of the Property and in some instances were
not involved in the negotiation or execution of any leases,
management contracts, or service contracts; (ii) shall not
mean such individuals are charged with knowledge of the
acts, omissions and/or knowledge of the predecessors in
title to the Property or with knowledge of the acts,
omissions and/or knowledge of Seller's agents or employees;
and (iii) shall not apply to or be construed to apply to
information or material which may be in the possession of
Seller generally or incidentally, but which is not actually
known to the individuals who are directly engaged in the
management of the Property and the sale and purchase
transaction described herein.
3.3. All of Seller's representations and
warranties in Section 3.1 shall survive the Closing until
December 30, 1997. Notwithstanding the above, in the event
the transaction contemplated hereby is consummated, Seller
shall have no obligation after the Closing Date with respect
to any breach of Seller's representations and warranties in
Section 3.1 of which Purchaser had knowledge as of the
Closing Date. Seller shall furnish a certificate on the
Closing Date in substantially the form of Exhibit "O"
certifying the accuracy of the representations and
warranties contained in Section 3.1 as of the Closing Date,
which certificate shall disclose any changes in facts
contained in such representations and warranties between the
date of this Agreement and the Closing Date, and any
inaccuracies contained in such representations and
warranties discovered by Seller between the date of this
Agreement and the Closing Date (the "Seller's Certificate").
3.4. As used in Section 3.3, the term
"Purchaser had knowledge" shall mean and apply to the actual
knowledge of Victor J. Coleman and Brigitta Troy and not to
any other parties, without any investigation or inquiry of
any kind (provided that such individuals shall have reviewed
all reports regarding the Property prepared for Purchaser by
third party consultants).
4. Representations and Warranties of
Purchaser.
4.1. Purchaser represents and warrants to
Seller that:
4.1.1. Purchaser is duly organized
and legally existing. The execution and delivery by
Purchaser of, and Purchaser's performance under, this
Agreement shall have been duly authorized by all requisite
action. Purchaser 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 Purchaser
pursuant hereto. The individuals executing this Agreement
and all other agreements, instruments and documents herein
required to be made or delivered by Purchaser pursuant
hereto on behalf of Purchaser are and shall be duly
authorized to sign the same on Purchaser's behalf and to
bind Purchaser thereto;
4.1.2. Performance of this
Agreement by Purchaser will not result in a breach of, or
constitute a default under, any agreement or instrument to
which Purchaser is a party or by which it is bound. This
Agreement has been, and each and all of the other
agreements, instruments and documents herein required to be
made or delivered by Purchaser pursuant hereto have been, or
as of the Closing will have been, executed by Purchaser and
when so executed, are and shall be legal, valid, and binding
obligations of Purchaser enforceable against Purchaser in
accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization,
moratorium, and other similar laws affecting the rights of
creditors generally and, as to enforceability, the general
principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law);
4.1.3. Purchaser (a) is not in
receivership or dissolution, (b) has not made any assignment
for the benefit of creditors, (c) has not admitted in
writing its inability to pay its debts as they mature,
(d) has not been adjudicated a bankrupt, (e) has not filed a
petition in voluntary bankruptcy, a petition or answer
seeking reorganization, or an arrangement with creditors
under the federal bankruptcy law, or any other similar law
or statute of the United States or any state, and (f) does
not have any such petition described in Section
4.1.3(e) filed against Purchaser; and
4.1.4. Purchaser's acquisition of
the Property has been approved by all parties whom must
approve all acquisitions of Purchaser.
4.2. All of Purchaser's representations
and warranties in Section 4.1 shall survive the Closing
until December 30, 1997.
5. Escrow Instructions.
5.1. Opening of Escrow.
(a) The parties have opened an
escrow at Escrow Company as Escrow No. 80475 (the "Escrow")
in order to consummate the purchase and sale in accordance
with the terms and provisions hereof. This Agreement shall
be deposited in the Escrow and the provisions hereof shall
constitute joint primary escrow instructions to Escrow
Company; provided, however, that the parties shall execute
such additional instructions as requested by Escrow Company
not inconsistent with the provisions hereof. In the event
of any conflict between the provisions of this Agreement and
such other instructions, the provisions of this Agreement
shall control. The date as of which Escrow Company receives
the Earnest Money from Purchaser constitutes the "Opening of
Escrow".
(b) Promptly upon receipt of the
Earnest Money and a fully executed original of this
Agreement, Escrow Company shall:
(i) deliver to Seller and
Purchaser a written acknowledgment by Escrow Company that
the Earnest Money has been received by Escrow Company and is
being held by Escrow Company pursuant to the terms of this
Agreement;
(ii) place the Earnest Money in
a federally-insured interest bearing account in an
institution approved by both Seller and Purchaser. At
5:00 p.m. (Pacific Standard Time) on the Contingency
Termination Date, the Earnest Money shall become
nonrefundable to Purchaser except in the event the
transaction described herein shall fail to Close for a
reason other than a default by Purchaser; and
(iii) execute this Agreement
where indicated and return counterpart original signatures
to each of Seller and Purchaser.
5.2. Documents and Funds Delivered to or
by Escrow. The following shall be delivered into the Escrow
or by Escrow in connection with the transfer of the
Property:
5.2.1. Delivery of Documents by
Seller in Escrow. At least one (1) Business Day prior to
the Closing Date, Seller shall deposit into Escrow:
(a) a Grant Deed to the
Property in substantially the form of Exhibit "F" (the
"Deed"), duly executed and acknowledge by Seller and in
recordable form;
(b) four (4) originals of an
affidavit from Seller which satisfies the requirements of
Section 1445 of the Internal Revenue Code, as amended, and
Sections 18662 and 18668 of the Revenue and Taxation Code of
California in substantially the form of Exhibit "G" (the
"FIRPTA Certificate"), duly executed by Seller;
(c) four (4) counterpart
originals of an Assignment and Assumption of Leases in
substantially the form of Exhibit "H" (the "Assignment of
Leases"), duly executed by Seller;
(d) four (4) counterpart
originals of a General Assignment in substantially the form
of Exhibit "I" (the "General Assignment"), duly executed by
Seller;
(e) four (4) originals of a
Bill of Sale in substantially the form of Exhibit "J" (the
"Bill of Sale"), duly executed by Seller;
(f) notices to each of the
tenants in substantially the same form as attached hereto as
Exhibit "K" advising tenants under the Leases of the sale of
the Property and directing the tenants to make all future
payments under the Leases to Purchaser at a place designated
by Purchaser (the "Tenant Notices"), duly executed by
Seller;
(g) four (4) originals of the
Seller's Certificate, duly executed by Seller; and
(h) such other instruments and
documents as may be reasonably requested by Purchaser or
Escrow Company to transfer the Property to Purchaser.
5.2.2. Delivery of Documents by
Purchaser in Escrow. At least one (1) Business Day prior to
the Closing Date, Purchaser shall deposit into Escrow:
(a) four (4) counterpart
originals of the Assignment of Leases, duly executed by
Purchaser;
(b) four (4) counterpart
originals of the General Assignment, duly executed by
Purchaser;
(c) notices to each of the
vendors under the Assumed Service Contracts in substantially
the same form as attached hereto as Exhibit "L" advising
such vendors of the sale of the Property and directing the
vendors to forward all future invoices to Purchaser at a
place designated by Purchaser (the "Vendor Notices"), duly
executed by Purchaser; and
(d) such instruments and
documents as may be reasonably requested by Seller or Escrow
Company or otherwise required to transfer the Property to
Purchaser.
5.2.3. Further Delivery by
Purchaser in Escrow. Prior to the close of the Business Day
preceding the Closing Date, Purchaser shall deposit into
Escrow the balance of the Purchase Price as set forth in
Section 2.2. hereof.
5.2.4. Delivery by Escrow. At
least three (3) Business Days prior to the Close of Escrow,
Escrow Company shall deliver to Purchaser and Seller a
pro forma closing statement which sets forth, in a manner
satisfactory to Purchaser and Seller, the closing costs,
prorations and other credits and debits contemplated by this
Agreement.
5.3. Conditions to Close. Escrow shall
not Close unless and until the following conditions
precedent and contingencies have been satisfied or waived in
writing by the party for whose benefit the applicable
conditions have been included, prior to the Outside Closing
Date:
5.3.1. All conditions described in
Sections 6.2, 9 and 10 below have either been satisfied or
waived in writing by the party for whose benefit the
applicable conditions have been included, as may be provided
in each such Section;
5.3.2. All funds and instruments
described in this Section 5 have been delivered to Escrow
Company;
5.3.3. The parties hereto have
performed in all material respects, all of their respective
obligations hereunder;
5.3.4. The Title Company is in a
position to issue to Purchaser the Title Policy upon
Closing; and
5.3.5. There has been no change
affecting or involving in the aggregate a decrease in rental
income from the Property of more than $120,000.00 per year,
which was not reflected in the materials delivered or made
available to Purchaser during the Due Diligence Period.
5.4. Prorations and Costs.
5.4.1. Purchaser shall be credited
with (i) the amount of all expense contributions and other
reimbursements from tenants received by Seller and
attributable to any period following the Closing Date and
(ii) all prepaid rents and unapplied refundable cash
security deposits made by tenants under all Leases of the
Property in effect as of the Closing Date.
5.4.2. General real estate taxes
for the then current year relating to the Property shall be
prorated as of the Closing Date. If Closing shall occur
before the actual taxes for the then current year are known,
the apportionment of taxes shall be upon the basis of taxes
for the Property for the immediately preceding year,
provided that, if the taxes for the current year are
thereafter determined to be more or less than the taxes for
the preceding year (after any appeal of the assessed
valuation thereof is concluded), Seller and Purchaser
promptly shall adjust the proration of such taxes and Seller
or Purchaser, as the case may be, shall pay to the other any
amount required as a result of such adjustment. All special
or supplemental taxes or assessments assessed for periods
preceding the Closing Date shall be prorated between
Purchaser and Seller as of the Closing Date, and those
assessed for periods following the Closing Date shall be
paid by Purchaser. All taxes, whether retroactive or not,
imposed as a result of this transaction or due to a change
in the usent is
terminated, Purchaser agrees to return to Seller all
information, studies, or reports Purchaser or Purchaser's
agents have obtained from Seller or Seller's agents,
contractors or representatives with respect to the Property
or the condition of the Property.
18.11. Time Calculations; Business
Days. Should the calculation of any of the various time
periods provided for herein result in an obligation becoming
due on a Saturday, Sunday or legal holiday, then the due
date of such obligation or scheduled time of occurrence of
such event shall be delayed until the next Business Day. As
used in this Agreement, the term "Business Day" shall mean
any day which is not a Saturday, Sunday, or legal or banking
holiday in the State of California.
18.12. No Recordation. Seller and
Purchaser hereby acknowledge that neither this Agreement nor
any memorandum or affidavit thereof shall be recorded with
the county recorder for the County of Los Angeles, State of
California. Should Purchaser ever record or attempt to
record this Agreement, or a memorandum or affidavit thereof,
or any other similar document, then, notwithstanding
anything herein to the contrary, said recordation or attempt
at recordation shall constitute a default by Purchaser
hereunder, and, in addition to the other remedies provided
for herein, Seller shall have the express right to terminate
this Agreement by filing a notice of said termination in the
proper place for said filing.
18.13. Merger Provision. Except as
otherwise expressly provided herein, any and all rights of
action of Purchaser and Seller for any breach by Seller and
Purchaser, respectively, of any representation, warranty or
covenant contained in this Agreement shall merge with the
Deed and other instruments executed at Closing, shall
terminate at the Closing and shall not survive the Closing.
Notwithstanding anything contained herein to the contrary,
all other provisions of this Agreement which are intended by
their terms to survive the Close of Escrow or a termination
of this Agreement shall survive the Close of Escrow or a
termination of this Agreement, including without limitation,
Sections 5.4, 7, 12, 15 and 18.1.
18.14. Further Assurances. Purchaser
and Seller agree to execute all documents and instruments
reasonably required in order to consummate the purchase and
sale herein contemplated.
18.15. Possession. Seller shall
deliver possession of the Property to Purchaser as of the
Close of Escrow, including all keys in Seller's possession
and originals of Property Documents delivered hereunder.
18.16. Severability. If any portion of
this Agreement is held to be unenforceable by a court of
competent jurisdiction, the remainder of this Agreement
shall remain in full force and effect.
18.17. Exculpation. Notwithstanding
anything to the contrary contained in this Agreement or in
any exhibits hereto attached or in any documents executed in
connection herewith (collectively, including this Agreement
and said exhibits the "Purchase Documents"), it is expressly
understood and agreed by and between the parties hereto
that: (i) the recourse of Purchaser or its successors or
assigns against Seller with respect to the alleged breach by
or on the part of Seller of any representation, warranty,
covenant, undertaking, indemnity or agreement contained in
any of the Purchase Documents (collectively, "Seller's
Undertakings") shall extend only to Seller's interest in the
Property (which shall include the Purchase Price paid by
Purchaser as a result of the Closing of the sale of the
Property to Purchaser) and not to any other assets of Seller
or its shareholders, or any of the other persons or entities
referred to in clause (ii) below; and (ii) no personal
liability or personal responsibility of any sort with
respect to any of Seller's Undertakings or any alleged
breach thereof is assumed by, or shall at any time be
asserted or enforceable against, Seller, its shareholders or
Lincoln or Anchor, or against any of their respective
directors, officers, employees, agents, constituent
partners, beneficiaries, trustees or representatives, except
to the extent of their interest in the Property (or in the
Purchase Price paid by Purchase in connection with the sale
thereof).
18.18. Sections. All references to
Sections herein refer to the appropriate Section of this
Agreement, except as otherwise expressly stated herein.
18.19. Exhibits. All references to
Exhibits herein refer to the Exhibits attached hereto, and
incorporated herein by this reference.
18.20. Post Closing Deliveries.
Promptly after the Closing, Purchaser agrees to deliver the
Tenant Notices to the tenants under the Leases and Seller
agrees to deliver the Vendor Notices to the vendors under
the Service Contracts.
IN WITNESS WHEREOF, this Agreement is executed as of
the date first written above.
"SELLER"
RCBT CALIFORNIA PROPERTIES, L.P.,
a California limited partnership
By: Edgar W. Barksdale, Jr., as
Sub-Trustee of the RCBT California
Trust, a Sub-Trust of the RCB Trust
Company - Real Property Trust -
Southport Financial - I, a Collective
Trust, its general partner
By:/s/ Edgar W. Barksdale, Jr.
Edgar W. Barksdale, Jr.
"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 and CEO
ACKNOWLEDGEMENT BY ESCROW COMPANY
By the execution hereof Escrow Company hereby covenants and
agrees to be bound by the terms of this Agreement.
"ESCROW COMPANY"
COMMONWEALTH LAND TITLE COMPANY
By:/s/ Carol Carozza
Name: Carol Carozza
Its: Vice President
FIRST AMENDMENT TO AGREEMENT TO
SELL AND PURCHASE AND ESCROW INSTRUCTIONS
THIS FIRST AMENDMENT TO AGREEMENT TO SELL AND
PURCHASE AND ESCROW INSTRUCTIONS ("Amendment") is entered
into as of April 9, 1997, by and between RCBT CALIFORNIA
PROPERTIES, L.P., a California limited partnership
("Seller") and ARDEN REALTY LIMITED PARTNERSHIP, a Maryland
limited partnership ("Purchaser").
RECITALS
A. Seller and Purchaser entered into that
certain Agreement to Sell and Purchase and Escrow
Instructions dated as of March 24, 1997 (the "Agreement")
for the purchase and sale of certain real property located
in the City of Los Angeles, County of Los Angeles, State of
California, as more particularly described therein.
B. Purchaser and Seller desire to amend the
terms of the Agreement by this Amendment.
C. All initially capitalized terms used herein
not otherwise defined shall have the meaning set forth in
the Agreement.
AGREEMENT
For valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Purchaser and
Seller agree that the Agreement is hereby amended as
follows:
1. Exhibits "E", "P" and "Q" of the Agreement
are hereby deleted and replaced with Exhibits "E", "P" and
"Q" attached hereto.
2. The following new Section 5.4.13 is hereby
added to the Agreement:
"5.4.13 At Closing, Purchaser shall
receive a credit against the Purchase Price in the
amount of $68,383.21 for the rent concessions and
other obligations of landlord under the Leases
attributable to the period after the Closing, as
set forth on Schedule 1 attached hereto."
3. The following new Section 5.4.14 is hereby
added to the Agreement:
"5.4.14 At Closing, Purchaser shall
receive a credit against the Purchase Price in the
amount of $9,980.00 for resolution of Purchaser's
objections raised in its March 31, 1997 Document
and Physical Review Disapproval Letter. Subject
to receipt of such credit, all such objections
shall be waived."
4. The last sentence of Section 9.4 of the
Agreement is hereby deleted and replaced with the following:
"The obligations of Seller under the Seller's
Estoppel Certificates shall survive the Closing
until December 30, 1997; provided, however, that
if a tenant under a Seller's Estoppel Certificate
subsequently delivers, and Purchaser reasonably
approves, an Estoppel Certificate from any tenant
which Seller has provided a Seller's Estoppel
Certificate, the Seller's Estoppel Certificate
shall terminate and be of no force and effect."
5. The Agreement contemplated that the Purchaser
would execute the University Construction Contract prior to
the Closing, subject to it being effective upon the Close of
Escrow. The parties hereby acknowledge and agree that
Seller executed the University Construction Contract and
upon execution and delivery of the General Assignment,
Purchaser shall assume and Seller shall be released of all
obligations of "Owner" thereunder, including the payment for
work commenced and/or completed prior to the Closing Date.
6. Except as amended by this Amendment, the
Agreement remains unamended and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have
executed this Amendment as of the date first written above.
"SELLER"
RCBT CALIFORNIA PROPERTIES, L.P.,
a California limited partnership
By: Edgar W. Barksdale, Jr., as
Sub-Trustee of the RCBT California
Trust, a Sub-Trust of the RCB Trust
Company - Real Property Trust -
Southport Financial - I, a Collective
Trust, its general partner
By:/s/ Eugene P. Markowski
Edgar W. Barksdale, Jr., by
Eugene P. Markowski, his
attorney-in-fact
"PURCHASER"
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc., a Maryland
corporation, its general partner
By:/s/ Victor J. Coleman
Name: Victor J. Coleman
Its: President and COO
8383 WILSHIRE BOULEVARD OFFICE BUILDING
BEVERLY HILLS, CALIFORNIA
REAL ESTATE SALE AGREEMENT
AND ESCROW INSTRUCTIONS
THIS REAL ESTATE SALE AGREEMENT AND ESCROW INSTRUCTIONS (this
"Agreement") is made as of the ________ day of April, 1997, by and between
ZML-WSVP LIMITED PARTNERSHIP, an Illinois limited partnership ("Seller"), with
an office at Two North Riverside Plaza, Suite 2200, Chicago, Illinois 60606,
and ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
("Purchaser"), with an office at 9100 Wilshire Boulevard, Suite 700E,
Beverly Hills, California 90212.
RECITALS
A. Seller is the owner of a certain parcel of real estate (the "Real
Property") in the City of Beverly Hills, State of California, which parcel is
more particularly described in attached Exhibit A, and which is commonly known
as "8383 Wilshire Boulevard."
B. Purchaser has been reviewing information about, and performing inspections
of, the Property (as hereinafter defined) pursuant to a letter agreement
between Purchaser and Seller's agent Equity Office Holding, L.L.C., dated
March 21, 1997 (the "Confidentiality Agreement"), which Confidentiality
Agreement, by this reference, is hereby incorporated into this
Agreement as if fully set forth herein.
C. Seller desires to sell to Purchaser, and Purchaser desires to purchase
from Seller, the Property (as such term is hereinafter defined), each in
accordance with and subject to the terms and conditions set forth in this
Agreement.
THEREFORE, in consideration of the above Recitals, the mutual covenants and
agreements herein set forth and the benefits to be derived therefrom, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Purchaser and Seller agree as follows:
1. PURCHASE AND SALE
Subject to and in accordance with the terms and conditions set forth in this
Agreement, Purchaser shall purchase from Seller and Seller shall sell to
Purchaser the Real Property, together with:
(i) all buildings and improvements owned by Seller and any and all of
Seller's rights, easements, licenses and privileges presently thereon or
appertaining thereto (collectively, the "Improvements");
(ii) Seller's right, title and interest in and to the leases affecting the
Property or any part thereof, a current list of which is attached hereto as
Exhibit B, and subject to any New Leases (as hereinafter defined) permitted
by this Agreement (collectively, the "Leases");
(iii) all furniture, furnishings, fixtures, equipment, maintenance vehicles,
supplies, tools and other tangible personalty owned by Seller, located on the
Property and used in connection therewith, a list of which is attached hereto
as Exhibit C (collectively, the "Tangible Personal Property");
(iv) all right, title and interest of Seller under any and all of the
maintenance, management, service, leasing, advertising and other like contracts
and agreements with respect to the ownership and operation of the Property (the
"Service Contracts"); and
(v) all right, title and interest of Seller in and to all licenses, permits,
certificates, warranties, guaranties and other intangible rights appurtenant to
the Real Property or Improvements (including, but not limited to, the right to
use the name "8383 Wilshire Boulevard," if any, and telephone numbers and
listings which are owned by Seller and used exclusively by Seller in connection
with the ownership and operation of the Real Property or Improvements)
(excluding, however, judgment liens against tenants of the Property relating
to obligations prior to the Closing, and further excluding Seller's right,
title and interest in and to that certain Promissory Note dated October 6,
1993, in the original principal amount of $55,800, from Rubin M. Turner,
Gerald F. Gerstenfeld, Barry R. Wilk, Bert Z. Tigerman, Steven E. Young and
Edward Friedman).
all to the extent applicable to the period from and after the Closing (as such
term is hereinafter defined). The Real Property, along with items (i) through
(v) above are collectively referred to in this Agreement as the "Property".
All of the foregoing expressly excludes (i) all property owned by tenants
or other users or occupants of the Property, (ii) all computers and
computer equipment in the management office of the Property, (iii) all rights
with respect to any refund of taxes applicable to any period prior to the
"Closing Date" (as defined herein), and (iv) the equipment owned by
Seller that is or was being used in connection with the Environmental
Work (as hereinafter defined).
2. PURCHASE PRICE
The purchase price to be paid by Purchaser to Seller for the Property is
Fifty-Nine Million Dollars ($59,000,000.00) (the "Purchase Price"). The
Purchase Price shall be paid as follows:
A. Earnest Money
(i) Upon execution of this Agreement by Purchaser, Purchaser shall
deliver into an escrow (the "Escrow") to be established with Chicago Title
Company, Attention: Marley Harrill, 700 South Flower Street #920, Los Angeles,
California 90017, Telephone: 213/488-4348, Facsimile: 213/891-0834
(sometimes hereinafter "Escrow Agent" or "Title Company") initial earnest
money (the "Initial Earnest Money") in the sum of Five Hundred Thousand
and No/100 Dollars ($500,000.00). Purchaser shall deposit with the Escrow
Agent additional earnest money (the "Additional Earnest Money") in the sum of
Five Hundred Thousand and No/100 Dollars ($500,000.00) on or before the
expiration of the Review Period (as hereinafter defined). The Initial
Earnest Money and the Additional Earnest Money, together with any interest
earned thereon net of investment costs, are referred to in this Agreement as
the "Earnest Money." The Earnest Money shall be invested as Seller and
Purchaser so direct. Any and all interest earned on the Earnest Money shall
be reported to Purchaser's federal tax identification number. A fully
executed copy of this Agreement shall be deposited with the Escrow Agent,
duly executed by Purchaser, Seller and the Escrow Agent, to serve as escrow
instructions to Escrow Agent. 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. Upon receipt of a duly executed
copy of this Agreement, Escrow Agent shall immediately notify Purchaser and
Seller of the opening of Escrow.
(ii) If the transaction closes in accordance with the terms of this
Agreement, then at Closing, the Earnest Money shall be delivered by Escrow Agent
to Seller as part payment of the Purchase Price. If the transaction fails to
close due to a default on the part of Seller, the Earnest Money shall be
delivered by Escrow Agent to Purchaser, and Purchaser shall have the remedy
provided for in Section 7(A) below. If the transaction fails to close due to
a default on the part of Purchaser, the Earnest Money shall be delivered by
Escrow Agent to Seller as liquidated and agreed upon damages in accordance
with Section 7(B) below.
B. Cash at Closing. At Closing, Purchaser shall pay to Seller, by wire
transferred current federal funds and through the Escrow, an amount equal
to the Purchase Price, minus the sum of the Earnest Money which Seller
receives at Closing from the Escrow Agent, and plus or minus, as the case
may require, the closing prorations and adjustments to be made pursuant to
Section 4(C) below or pursuant to any other provision of this Agreement.
3. EVIDENCE OF TITLE
A. Seller has, at Seller's expense, obtained and delivered to Purchaser a
current preliminary title report (the "Preliminary Title Report") a copy of
which is attached hereto as Exhibit D.
B. Purchaser shall cause to be prepared, at Purchaser's expense, a current,
certified, on-the-ground, staked plat of survey of the Property (the
"Survey"), prepared by a duly licensed California land surveyor, and
otherwise acceptable to Purchaser. Purchaser shall cause to be prepared a
UCC lien search acceptable to Purchaser (the "UCC Searches"). Purchaser
shall cause copies of the Survey and UCC Searches, once prepared, to be
promptly forwarded to Seller.
C. During the Review Period, Purchaser shall review title to the Property as
disclosed by the Preliminary Title Report, the Survey and UCC Searches.
Purchaser shall advise Seller, the Title Company and the surveyor in writing
of any matters set forth on those documents to which Purchaser objects.
Seller will reasonably cooperate with Purchaser in curing Purchaser's
objections, but Seller shall not be obligated to cure any such objections
except liens and security interests created by Seller (including, without
limitation, those disclosed by the UCC Searches), all of which liens and
security interests Seller shall cause to be released at Closing; but the
foregoing expressly excludes, and Seller shall not be obligated to remove,
any liens and security interests for obligations of third parties to which
Seller did not consent in writing ("Third Party Liens"). Seller also agrees
to remove or cause to be removed any exceptions or encumbrances to title
which are created by Seller after the date of the Preliminary Title Report.
Prior to the expiration of the Review Period, the parties shall memorialize
in writing those objections which Seller is obligated to cure as aforesaid,
or has elected to cure at Closing, and together with the Title Company cause
a Pro Forma Title Policy to be issued. The term "Permitted Exceptions"
means all those exceptions shown on the Preliminary Title Report, the Survey
and UCC Searches as of the expiration of the Review Period, other than those
exceptions to which Purchaser has objected and which Seller has elected to
cure in writing prior to the expiration of the Review Period. If after the
expiration of the Review Period the Title Company revises the Preliminary
Title Report to add or materially modify exceptions, then Purchaser may
terminate this Agreement and receive a refund of the Earnest Money if
provision for their removal or modification satisfactory to Purchaser is not
made.
Upon such termination, the Earnest Money shall be refunded to Purchaser, and
neither party shall have any further obligations hereunder, except for the
indemnity obligations set forth in Sections 6 and 10(G) hereof, and the
Confidentiality Agreement. Purchaser shall have been deemed to have
approved any title exception that Seller is not obligated to remove and to
which either Purchaser did not object as provided above, or to which
Purchaser did object, but with respect to which Purchaser did not terminate
this Agreement.
D. Title Policy. As a condition of Purchaser's obligation to close the
transaction contemplated hereby, at Closing, the Title Company shall be
ready, willing and able to issue an ALTA Owner's Policy of Title Insurance
(the "Title Policy"), insuring fee simple title to the Property, in the
standard form issued by the Title Company, in the amount of the Purchase
Price, subject to no exception or reservation other than the Permitted
Exceptions.
4. CLOSING
A. Closing Date. The "Closing" of the transaction contemplated by this
Agreement (that is, the payment of the Purchase Price and the transfer of
title to the Property through Escrow, and the satisfaction of all other
terms and conditions of this Agreement) shall occur at 8:00 a.m. on May 1,
1997, through the Escrow established with the Title Company. The "Closing
Date" shall be the date of Closing. Escrow Agent shall not close the Escrow
until it has received written direction from both Purchaser and Seller that
all other conditions set forth in this Agreement have been satisfied. If
the Closing as provided herein does not occur as herein required, this
Agreement and the Escrow shall be cancelled and terminated, and thereafter
neither party shall have any further liability or obligation to the other
party, except as expressly set forth in this Agreement.
B. Closing Documents and Procedure.
(i) Seller. At least one business day prior to the Closing Date, Seller
shall have delivered into Escrow executed originals of the following documents:
(a) a grant deed (the "Deed"), subject to Permitted Exceptions,
and in the form attached hereto as Exhibit E;
(b) a "special" warranty bill of sale, sufficient to transfer to
Purchaser title to the Tangible Personal Property in its "as is, where is"
condition and expressly disclaiming any warranties other than as to title
as aforesaid, in the form attached hereto as Exhibit F;
(c) a letter advising tenants under the Leases of the change in
ownership of the Property in the form attached hereto as Exhibit G; and a
similar letter advising providers of services under the Service Contracts
in the form attached hereto as Exhibit H;
(d) a counterpart of the Assignment and Assumption of Leases,
Service Contracts, Security Deposits and Intangibles (the "Assignment"), in
the form attached hereto as Exhibit I;
(e) an affidavit stating, under penalty of perjury, Seller's U.S.
taxpayer identification number and that Seller is not a foreign person within
the meaning of Section 1445 of the Internal Revenue Code, and a California
Form 590-RE; and
(f) a counterpart of the closing statement prepared by Seller
consistent with the terms and requirements of this Agreement ("Closing
Statement") setting forth the prorations and adjustments to the Purchase
Price as required by Section 4(C) below. Escrow Agent may prepare, and
Seller agrees to execute and deliver, Escrow Agent's own settlement and
disbursement statements, provided that the same are consistent with the
terms and requirements of this Agreement.
(ii) Purchaser. At least one business day prior to the Closing Date,
Purchaser shall have delivered into Escrow executed originals of the
following documents and the following sums of money:
(a) the balance of the Purchase Price required pursuant to
Section 2(B) above;
(b) a counterpart of the Assignment, in the form attached hereto
as Exhibit I;
(d) a counterpart of the Closing Statement. Escrow Agent may
prepare, and Purchaser agrees to execute and deliver, Escrow Agent's own
settlement and disbursement statements, provided that the same are consistent
with the terms and requirements of this Agreement.
C. Closing Prorations and Adjustments.
(i) The following items are to be prorated or adjusted (as appropriate)
as of the close of business on the day immediately preceding the Closing Date,
it being understood that for purposes of prorations and adjustments, Seller
shall be deemed the owner of the Property on such day and Purchaser shall be
deemed the owner of the Property as of the Closing Date:
(a) real estate and personal property taxes and assessments
(on the basis of the most recent ascertainable tax bill if the current bill
is not then available);
(b) the "minimum" or "base" rent payable by tenants under the
Leases; provided, however, that rent and all other sums which are due and
payable to Seller by any tenant but uncollected as of the Closing shall not be
adjusted, but Purchaser shall cause the rent and other sums for the period
prior to Closing to be remitted to Seller if, as and when collected. At
Closing, Seller shall deliver to Purchaser a schedule of all such past due
but uncollected rent and other sums owed by tenants. Purchaser shall include
the amount of such rent and other sums in the first bills thereafter
submitted to the tenants in question after the Closing, and shall continue
to do so for six (6) months thereafter. Purchaser shall promptly deliver to
Seller a copy of each such bill submitted to tenants. Purchaser
shall promptly remit to Seller any such rent or other sums paid by scheduled
tenants, but only if a deficiency in the then current rent is not thereby
created. To the extent not set forth on said schedule, percentage or
overage rent and reimbursement of real estate taxes payable, common area
maintenance, mall maintenance, utility charges, water and sewer charges,
insurance and merchant's association dues and assessments and all other
charges to or contributions by tenants under the Leases shall be prorated
as follows: with respect to percentage rents, and upon receipt by Purchaser,
Purchaser shall furnish to Seller copies of all sales reports from tenants
relative thereto, including, without limitation, all sales reports with
respect to any tenants whose lease years have expired as of the
Closing but whose sales reports were not available on Closing and sales
reports of any tenants whose lease year expires after the Closing, and the
amount of any rents (including, without limitation, percentage rents),
reimbursement or contribution to be made by any tenant shall be made in
accordance with such tenant's Lease as now existing and Purchaser shall
promptly pay to Seller a pro-rata portion of such rents, reimbursement or
contribution, based upon apportionment being made as of the Closing Date,
promptly after the date when such rents, reimbursement or contribution is
received from the tenant;
(c) Subject to the following sentence, with respect to tenant
improvement costs or leasing commissions relating to Leases, or any
modification, amendment, restatement or renewal thereto, executed after
March 1, 1997 (referred to as a "New Lease"), Seller and Purchaser agree
that such costs and commissions shall be prorated over the term of any New
Lease with Seller being responsible for a portion of such costs and
commissions based on the ratio of base rent payments received by Seller
through the Closing Date to the total base rent payable over the term of
the particular New Lease. A list of such New Leases that were entered into
between March 1, 1997, and the date of this Agreement, is attached hereto
as Exhibit J. Exhibit J shall be updated as of the last day of, and
prior to the expiration of, the Review Period, as well as on the Closing Date.
(d) the amount of security deposits paid under the Leases and
card key deposits (and with respect to tenants that have posted letters of
credit as security deposits, Seller agrees to cooperate with Purchaser for
a period of six (6) months after Closing to have such letters of credit
transferred to Purchaser's name, but any material expense for any such
transfer shall be borne by Purchaser);
(e) water, electric, telephone and all other utility and fuel
charges, fuel on hand (at cost plus sales tax), and any deposits with utility
companies (to the extent possible, utility prorations will be handled by meter
readings on the day immediately preceding the Closing Date);
(f) amounts due and prepayments under the Service
Contracts;
(g) assignable license and permit fees (including, without
limitation, the Beverly Hills "business tax"); and
(h) other similar items of income and expenses of operation.
(ii) Notwithstanding the foregoing, Seller shall in all events be entitled
to retain amounts paid by tenants (referred to herein as "Tenant
Reimbursements") for real estate taxes and assessments, and common area and
operating expenses (collectively, "Tenant Reimbursable Expenses") as of the
Closing to the extent not in excess of the actual amount of such Tenant
Reimbursable Expenses paid by Seller for the period prior to the Closing Date,
and following the Closing and upon Purchaser's completion of the
reconciliation of such amounts with tenants for 1997, then:
(x) in the event that the amount of Tenant Reimbursements
collected by Seller for 1997 is less than the amount of Tenant Reimbursable
Expenses paid by Seller with respect to 1997 and for which Seller is
entitled to recover under the terms of the Leases, Purchaser shall (1) to
the extent such amounts have already been collected by Purchaser from the
tenants, promptly remit such amounts to Seller but only if the applicable
tenant is otherwise current in the payment of all obligations due for the
period following Closing, and (2) to the extent such amounts have not yet
been collected from tenants, Purchaser shall promptly bill the tenants for
such amounts and continue to bill such tenants for such amounts each month
for six (6) months thereafter, and, promptly upon receipt thereof, pay such
amounts to Seller; and
(y) in the event that the amount of Tenant Reimbursements
collected by Seller for 1997 exceeds the amount of Tenant Reimbursable
Expenses paid by Seller with respect to 1997 and for which Seller is
entitled to recover under the terms of the Leases, Seller shall remit
such excess amounts to Purchaser, provided, that (1) Purchaser shall be
thereafter obligated to promptly remit the applicable portion to the
particular tenants entitled thereto, and (2) Purchaser shall indemnify,
defend and hold Seller, its beneficiaries, their partners, and their
respective directors, officers, employees and agents, and each of them,
harmless from and against any losses, claims, damages and liabilities,
including, without limitation, reasonable attorneys' fees and expenses
incurred in connection therewith, arising out of or resulting from
Purchaser's failure to remit any such amounts to tenants in accordance
with the provisions hereof.
(iii) Seller shall be responsible for the reconciliation with tenants of
Tenant Reimbursements and Tenant Reimbursable Expenses for the calendar year
1996, and (x) in the event the amount of Tenant Reimbursements collected by
Seller for 1996 is less than the amount of Tenant Reimbursable Expenses paid
by Seller with respect to 1996 and for which Seller is entitled to recover
under the terms of the Leases, then Seller shall be entitled to bill such
tenants and retain any such amounts due from tenants, and (y) in the event
that the amount of Tenant Reimbursements collected by Seller for 1996 exceeds
the amount of Tenant Reimbursable Expenses paid by Seller with respect to
1996 and for which Seller is entitled to recover under the terms of the
Leases, then, to the extent required under the terms of the Leases, Seller
shall remit such excess amounts to the applicable tenants.
(iv) Notwithstanding anything to the contrary contained in this Section 4,
Seller reserves the right: (a) to meet with governmental officials and to
contest any reassessment governing or affecting Seller's obligations under
Section 4(C)(i) above; and (b) to contest any assessment of the Property or
any portion thereof and to attempt to obtain a refund for any taxes
previously paid. Seller shall retain all rights with respect to any refund
of taxes applicable to any period prior to the Closing Date.
(v) For purposes of this Section 4(C), the amount of any expense
credited by one party to the other shall be deemed an expense paid by that
party.
(vi) Notwithstanding anything to the contrary set forth in this
Agreement, with respect to the following contracts, (the "Capital Project
Contracts"):
(a) Seller shall assign at Closing, and Purchaser agrees to assume,
the Construction Agreement between Seller (by its agent, Equity Office
Properties, L.L.C.) and Apex Communications Inc. dated January 20, 1997,
Project #: SVA9701, in the amount of $106,499, for the Gale Street entrance
expansion and parking control access installation, together with a change
order for directional entry signage in the approximate amount of $10,000, the
terms and conditions of which have not been finally agreed upon as of the
date of this Agreement (such agreement, together with change orders thereto,
is referred to as the "Apex Contract"). Seller's understanding is that the
Apex Contract will be fully performed by the Closing Date, except for the
signage work. Purchaser and Seller agree to share equally the costs of the
Apex Contract. Seller agrees to make a partial payment, and to obtain an
unconditional lien waiver, for $60,000 (provided, however, such agreement
shall not alter the agreement of the parties to split the cost, and any
reconciling adjustments that may be necessary shall be made at Closing).
(b) Seller shall assign at Closing, and Purchaser agrees to assume,
the Lighting Services Agreement between Seller (by its agent, Equity Office
Properties, L.L.C.) and Sylvania Lighting Services Corporation, dated
November 25, 1996, Agreement #: 9611d1089, for lighting equipment and
services (the "Lighting Contract"). Except for any amounts expended on the
Lighting Contract by Seller prior to the date of this Agreement (and Seller
believes it has not expended any such amounts), Purchaser agrees to pay any
and all costs of the Lighting Contract. On or before Closing, Seller agrees
to deliver to Purchaser a letter from the Sylvania Lighting Services
Corporation stating the percentage of work completed, any amounts paid and
the date of such payment, and the amount owed under such contract at such
time.
(c) Seller further agrees, at its sole option, to either (1) repair the
recent damage to the roof, or (2) give Purchaser an appropriate, mutually
acceptable credit at Closing to pay for such repair; in either case to the
extent of the work described in the correspondence from Performance Roof
Systems dated April 10, 1997 attached hereto as Exhibit O.
D. Transaction Costs.
Seller shall pay for the premium for the owner's title insurance policy in
an amount not to exceed $0.60 per thousand dollars of the Purchase Price,
and County transfer taxes in an amount not to exceed $1.10 per thousand
dollars of the Purchase Price. Purchaser shall pay for the cost of the
Survey, any other transfer taxes, documentary stamps, deed recording charges,
the premiums for the owner's title insurance policy in excess of $0.60 per
thousand dollars of the Purchase Price, all endorsements thereto, and any
lender's title insurance policy. Seller and Purchaser shall each pay
one-half (1/2) of all escrow fees, whether or not the Closing occurs.
Seller and Purchaser shall, however, be responsible for the fees of
their respective attorneys.
E. Possession.
Upon Closing, Seller shall deliver to Purchaser possession of the Property,
subject to such matters as are permitted by or pursuant to this Agreement.
Seller shall tender to Purchaser at the Property all keys, plans and
specifications, Service Contracts and corresponding vendor files, Leases
and corresponding tenant files, and warranties, licenses, permits and
certificates to the extent in Seller's possession.
F. Conditions to the Parties' Obligations to Close.
In addition to all other conditions set forth herein, the obligation of
Seller, on the one hand, and Purchaser, on the other hand, to consummate the
transactions contemplated hereunder shall be contingent upon the following:
1. The other party's representations and warranties contained herein
shall be true and correct as of the Closing Date in all material respects
as though such representations and warranties were made on and as of such
date.
2. As of the Closing Date, the other party shall have performed its
obligations hereunder in all material respects, and all deliveries to be
made by the other party at Closing have been tendered.
3. Any other condition set forth in this Agreement to such party's
obligation to close shall have been satisfied or waived by the applicable date.
So long as a party is not in default hereunder, if any condition to such
party's obligation to proceed with Closing hereunder has not been satisfied
as of the Closing Date or other applicable date, such party may, in its sole
discretion, terminate this Agreement by delivering written notice to the
other party on or before the Closing Date or other applicable date, or elect
to close, notwithstanding the non-satisfaction of such condition, in which
event such party shall be deemed to have waived any such condition.
5. CASUALTY LOSS AND CONDEMNATION
If, prior to Closing, the Property or any part thereof shall be condemned
or destroyed or damaged by fire or other casualty, Seller shall promptly so
notify Purchaser. If the reasonably estimated cost to repair or restore the
Property as a result of such condemnation or casualty exceeds One Million
Dollars ($1,000,000.00) (a "Material Loss"), Purchaser shall have the option
to terminate this Agreement by giving notice to Seller within fifteen (15)
days of Seller's request that the option be exercised. If the condemnation,
destruction or damage does not result in a Material Loss, or if Purchaser
fails to terminate this Agreement following a Material Loss as provided
herein, then Seller and Purchaser shall consummate the transaction
contemplated by this Agreement notwithstanding such condemnation,
destruction or damage. If the transaction contemplated by this Agreement
is consummated, Purchaser shall be entitled to receive the condemnation
proceeds or settle the loss under all policies of insurance applicable to
the destruction or damage and receive the proceeds of insurance applicable
thereto, and Seller shall, at Closing, allow Purchaser a credit against the
Purchase Price in an amount equal to any applicable deductibles and shall
also execute and deliver to Purchaser all customary proofs of loss,
assignments of claims and other similar items. If Purchaser elects to
terminate this Agreement, the Earnest Money shall be returned to Purchaser
by the Escrow Agent, in which event this Agreement shall, without further
action of the parties, become null and void and neither party shall have
any further rights or obligations under this Agreement except as otherwise
provided for in Section 7(B) below.
6. BROKERAGE
Seller and Purchaser each represent to the other that neither has employed
any brokers or finders that are entitled to a commission or other fee for
the consummation of this transaction, except that Seller acknowledges that
Purchaser may have dealt with The Greenwich Group ("Greenwich"). Seller
has informed Purchaser that there is no presently effective agreement
between Greenwich and Seller with respect to the Property, and Seller agrees
that Purchaser shall not be responsible for the payment of any commission or
fee due to Greenwich except pursuant to any separate agreement between
Purchaser and Greenwich. Seller and Purchaser shall each indemnify and
hold the other harmless from and against any and all claims of all brokers
and finders claiming by, through or under the indemnifying party and in any
way related to the sale and purchase of the Property, this Agreement or
otherwise, including, without limitation, attorneys' fees and expenses
incurred by the indemnified party in connection with such claim.
7. DEFAULT AND REMEDIES
A. Purchaser's Remedies. Notwithstanding anything to the contrary
contained in this Agreement, if: (i) Seller fails to perform in accordance
with the terms of this Agreement; (ii) Purchaser is not otherwise in default
hereunder; and (iii) the Closing does not occur; then, as Purchaser's sole
and exclusive remedy hereunder and at Purchaser's option, either: (a) the
Earnest Money shall be returned to Purchaser, in which event this Agreement
shall be null and void, and neither party shall have any rights or
obligations under this Agreement; or (b) upon notice to Seller not less
than ten (10) days after Purchaser becomes aware of which failure, and
provided an action is filed within thirty (30) days thereafter, Purchaser
may seek specific performance of this Agreement, but not damages. Purchaser's
failure to seek specific performance as aforesaid shall constitute its
election to proceed under clause (a) above.
B. SELLER'S REMEDIES. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN THIS AGREEMENT, IF: (I) PURCHASER FAILS TO PERFORM IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT; (II) SELLER IS NOT OTHERWISE
IN DEFAULT HEREUNDER; AND (III) THE CLOSING DOES NOT OCCUR; THEN SELLER'S
SOLE REMEDY IN SUCH EVENT SHALL BE TO TERMINATE THIS AGREEMENT AND TO
RETAIN THE EARNEST MONEY AS LIQUIDATED DAMAGES (PROVIDED, HOWEVER, THAT
THE FOREGOING SHALL NOT LIMIT SELLER'S RECOURSE AGAINST PURCHASER
UNDER SECTIONS 6 AND 10(G) HEREOF, AND UNDER THE CONFIDENTIALITY
AGREEMENT). IF PURCHASER IS REQUIRED TO BUT DOES NOT DEPOSIT WITH THE
ESCROW AGENT THE ADDITIONAL EARNEST MONEY AS PROVIDED FOR IN
SECTION 2(A)(I) ABOVE, THE SUM OF $1,000,000.00 SHALL NONETHELESS BE
RECOVERABLE BY SELLER FROM PURCHASER AS EARNEST MONEY IN ACCORDANCE
WITH THE PRECEDING SENTENCE AS SELLER'S SOLE AND EXCLUSIVE REMEDY.
PURCHASER AND SELLER ACKNOWLEDGE AND AGREE THAT: (1) THE EARNEST
MONEY IS A REASONABLE ESTIMATE OF AND BEARS A REASONABLE RELATIONSHIP
TO THE DAMAGES THAT WOULD BE SUFFERED AND COSTS INCURRED BY SELLER AS
A RESULT OF HAVING WITHDRAWN THE PROPERTY FROM SALE AND THE FAILURE OF
CLOSING TO OCCUR DUE TO A DEFAULT OF PURCHASER UNDER THIS AGREEMENT;
(2) THE ACTUAL DAMAGES SUFFERED AND COSTS INCURRED BY SELLER AS A
RESULTS OF SUCH WITHDRAWAL AND FAILURE TO CLOSE DUE TO A DEFAULT OF
PURCHASER UNDER THIS AGREEMENT WOULD BE EXTREMELY DIFFICULT AND
IMPRACTICAL TO DETERMINE; (3) PURCHASER SEEKS TO LIMIT ITS LIABILITY UNDER
THIS AGREEMENT TO THE AMOUNT OF THE EARNEST MONEY IN THE EVENT THIS
AGREEMENT IS TERMINATED AND THE TRANSACTION CONTEMPLATED BY THIS
AGREEMENT DOES NOT CLOSE DUE TO A DEFAULT OF PURCHASER UNDER THIS
AGREEMENT; AND (4) THE EARNEST MONEY SHALL BE AND CONSTITUTE VALID
LIQUIDATED DAMAGES. SUCH RETENTION OF THE EARNEST MONEY BY SELLER IS
ALSO INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO
SECTIONS 1671, 1676 AND 1677 OF THE CALIFORNIA CIVIL CODE, AND SHALL NOT BE
DEEMED TO CONSTITUTE A FORFEITURE OR PENALTY WITHIN THE MEANING OF
SECTION 3275 OR SECTION 3369 OF THE CALIFORNIA CIVIL CODE OR ANY SIMILAR
PROVISION.
/s/ JMP /s/ VJC
SELLER'S INITIALS PURCHASER'S INITIALS
C. Other Remedies. After Closing, Seller and Purchaser shall, subject
to the terms and conditions of this Agreement, have such rights and
remedies as are available at law or in equity as to any claims or causes
of action arising after Closing, except that neither Seller nor Purchaser
shall be entitled to recover from the other consequential or special damages.
8. REVIEW PERIOD; ESTOPPELS
A. Review Period. Subject to Section 10(G) below and the provisions of
the Confidentiality Agreement, Purchaser shall have until 5 p.m. (Chicago,
Illinois time) on April 22, 1997, within which to inspect the Property (the
"Review Period"). If Purchaser determines that the Property is unsuitable
for its purposes for whatever reason, and if Purchaser gives Seller written
notice of such decision prior to the expiration of the Review Period, then
the Earnest Money shall be returned to Purchaser, this Agreement shall be null
and void, and neither party shall have any further rights or obligations
under this Agreement, except for the indemnity obligations set forth in
Sections 6 and 10(G) hereof, and in the Confidentiality Agreement, which
shall survive termination. Purchaser's failure to object within the Review
Period shall be deemed a waiver by Purchaser of the condition contained in
this Section 8(A).
B. Estoppel Certificates. (i) As a condition to Purchaser's obligation to
close hereunder, Purchaser shall have received estoppel certificates
("Estoppel Certificates"), dated no more than forty-five (45) days prior
to Closing, from tenants occupying not less than seventy-five percent (75%)
of the rentable space leased as of the date of Closing pursuant to valid and
existing Leases and in the form and content as set forth herein (the aforesaid
acceptable Estoppel Certificates to be delivered are collectively referred to
as the "Required Estoppel Certificates"). The Estoppel Certificates shall
be in the form of Exhibit K attached hereto (the "Form Tenant Estoppel
Certificate"). The Estoppel Certificates executed by tenants shall be in
substantially the form of the Form Tenant Estoppel Certificate, except that:
(i) an Estoppel Certificate executed by a tenant shall be deemed an acceptable
Estoppel Certificate for purposes of this Section 8(B) as long as it contains
the information set forth in items 1 through 7 on the Form Tenant Estoppel
Certificate, and such information is consistent with the rent roll attached
hereto as Exhibit B; and (ii) an Estoppel Certificate shall be deemed an
acceptable Estoppel Certificate for purposes of this Section 8(B) if it
contains the qualification by the tenant of any statement as being to the
best of its knowledge or as being subject to any similar qualification. If
Seller is unable to provide to Purchaser the Required Estoppel Certificates
on or before Closing, then by written notice to Seller given on or before the
Closing Date, Purchaser may either: (a) terminate this Agreement, in which
event the Earnest Money shall be returned to Purchaser, at which time this
Agreement shall be null and void and neither party shall have any further
rights or obligations under this Agreement, except for the indemnity
obligations set forth in Sections 6 and 10(G) hereof, and the Confidentiality
Agreement, which shall survive termination; or (b) waive the condition
contained in this Section 8(B) and proceed to Closing (and Seller's failure
to terminate the Agreement as permitted in subsection (a) shall be deemed an
election to waive this condition as provided in subsection (b)).
(ii) In order to satisfy the foregoing condition, Seller shall have the
right (but shall not be obligated to) deliver to Purchaser a "Landlord
Certificate" for any tenant or tenants that Seller may select that have not
delivered Estoppel Certificates. Any such Landlord Certificate shall be
deemed to be an Required Estoppel Certificate for purposes of the condition
set forth in the preceding sentence. Seller's liability under any Landlord
Certificate shall terminate upon the sooner of: (i) the termination or
amendment of the applicable Lease (provided such termination is not the
direct result of a default or alleged default of the Lease pursuant to a
landlord-tenant controversy), (ii) when Purchaser subsequently obtains an
Estoppel Certificate for the applicable tenant that meets the acceptability
requirements described in Section 8(B)(i) above, or (iii) the date which is
six (6) months after the Closing Date. If after Closing, Purchaser
discovers that any statement contained in any Landlord Certificate is
materially incorrect, Purchaser's sole and exclusive remedy against Seller
shall be actual, compensatory damages not to exceed $650,000 in the
aggregate, Purchaser hereby waiving any other claims (including, without
limitation, claims for special damages). The Landlord Certificates shall
confirm the information set forth in items 1 through 7 on the Form Tenant
Estoppel Certificate (except that item 4 shall be limited to the Actual
Knowledge of Seller, as hereinafter defined), and such information shall be
consistent with the rent roll attached hereto as Exhibit B. In addition, by
written notice to Purchaser given on or before May 1, 1997, Seller may also
unilaterally extend the Closing Date for up to two (2) weeks in
order to satisfy the condition described in Section 8(B)(i) above.
9. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
A. Subject to Section 9(B) below, Seller represents and warrants to
Purchaser that, as of the date of this Agreement:
(i) Title to Real Property. Seller holds fee simple title to the Real
Property.
(ii) Organization; Authority. Seller is a limited partnership duly
organized and in good standing under the laws of the State of Illinois.
Seller has the power and authority under (i) Seller's partnership agreement,
and (ii) the certificate of incorporation and by-laws of Seller's general
partner (the instruments described in (i) and (ii) above being referred to
as "Seller's Organizational Documents"), to sell, transfer, convey and
deliver the Property to be sold and purchased hereunder, and all action and
approvals required thereunder have been duly taken and obtained.
(iii) No Breach. The execution and delivery of this Agreement, the
consummation of the transactions provided for herein and the fulfillment of
the terms hereof will not result in a breach of any of the terms or
provisions of, or constitute a default under, any provision of Seller's
Organizational Documents.
(iv) Condemnation. Seller has not received from any governmental
authority any written notice of any condemnation of the Property or any
part thereof.
(v) Litigation. Except as set forth on Exhibit L attached hereto, to the
Actual Knowledge of Seller, Seller has not been served with (nor has Seller
received any written threat of) any material litigation which is still
pending against Seller with respect to its ownership or operation of the
Property that would prevent Seller from performing its obligations hereunder,
or which would constitute a lien or charge against the Property or the
Purchaser after Closing.
(vi) Notice of Violations. Except as set forth on Exhibit L attached
hereto, to the Actual Knowledge of Seller, Seller has not received written
notice of any violation of City, County, State, Federal, building, zoning,
fire or health codes, regulations or ordinances, filed or issued against the
Property.
(vii) Tenancies. Exhibit B hereto is a true and correct schedule of all
tenants at the Property under Leases, together with a brief description of
their respective suite numbers, the number of square feet occupied, monthly
base rent currently payable, the base year (if any) upon which Tenant
Reimbursements are calculated and primary lease term. Except as shown on
Exhibit B or for New Leases permitted by the terms of this Agreement,
there are no other leases or rights of occupancy affecting the Property.
Except as shown on Exhibit B, to the Actual Knowledge of Seller, no tenant
has delivered written notice that Seller is in default under any Leases. To
the extent that any tenant returns an Estoppel Certificate that meets the
acceptability requirements described in Section 8(B)(i) above, this
representation and warranty, as it relates to such Tenant, shall immediately
expire.
As used in this Section 9(A), the term "Actual Knowledge of Seller" means the
actual (as opposed to constructive or imputed) current knowledge of Alissa
Schneider, Richard Berk and Peter Adams, the Assistant Vice President, Vice
President and Regional Vice President, respectively, of Seller.
B. Purchaser represents and warrants to Seller that:
(i) Purchaser has been duly organized, is validly existing, and is in
good standing (if necessary) and qualified to do business (if necessary) in
the state of its organization and the state in which the Property is located.
Purchaser has the full right and authority and has obtained any and all
consents required to enter into this Agreement and to consummate or cause to
be consummated the transactions contemplated hereby.
(ii) There is no agreement to which Purchaser is a party, or, to
Purchaser's knowledge, which is binding on Purchaser, which is in conflict
with this Agreement. There is not now pending or, to the best of Purchaser's
knowledge, threatened, any action, suit or proceeding before any court or
governmental agency or body against Purchaser that would prevent Purchaser
from performing its obligations hereunder or against or with respect to the
Property.
C. The representation and warranty set forth in Section 9(A)(i) shall not
survive the Closing. The representations and warranties set forth in Section
9(A)(ii) through Section 9(A)(vii), and those set forth in Section 9(B),
subject to modifications thereto as a result of any Pre-Closing Disclosure
(as hereinafter defined), shall survive the Closing, but only for a period
of six (6) months thereafter, and not otherwise. Except as provided for in
Sections 4(C)(iv), 6, 10(G), and this Section 9(B), the obligations of the
parties under this Agreement shall not survive the Closing or any termination
of this Agreement. The obligations of the parties under the Confidentiality
Agreement shall survive Closing or any termination of this Agreement. Either
party (the "Notifying Party") may update the foregoing representations and
warranties (but only with newly discovered information) by delivering
written notice to the other party (the "Receiving Party") in order to reflect
any fact, matter or circumstance that was not known to that party as of the
date of this Agreement and that would make any of the Notifying Party's
representations or warranties contained herein untrue or incorrect (any such
disclosure being referred to as a "Pre-Closing Disclosure"). Upon receipt
of any such Pre-Closing Disclosure, the Receiving Party shall have the right
to terminate this Agreement by delivering written notice thereof to the
Notifying Party on or before the earlier of (i) the Closing, or (ii) the
fifth (5th) business day after receipt of such Pre-Closing Disclosure. If
the Receiving Party does not terminate this Agreement pursuant to its rights
under this Section 9(C), then such representations and warranties shall be
deemed modified to conform them to the Pre-Closing Disclosure.
10. MISCELLANEOUS
A. All understandings and agreements heretofore had between Seller and
Purchaser with respect to the Property are merged in this Agreement, which
alone fully and completely expresses the agreement of the parties. Except
as expressly set forth in Section 9 of this Agreement, Purchaser acknowledges
that it has inspected or will inspect the Property and that it accepts same
in its "as is" condition subject to use, ordinary wear and tear and natural
deterioration. Purchaser further acknowledges that, except as expressly
provided in this Agreement, neither Seller nor any agent or representative
of Seller has made, and Seller is not liable for or bound in any manner by,
any express or implied warranties, guaranties, promises, statements,
inducements, representations or information pertaining to the Property.
B. Neither this Agreement nor any interest hereunder shall be assigned or
transferred by Purchaser, except to an entity which is owned and controlled
by Purchaser. Seller may assign or otherwise transfer its interest under
this Agreement. As used in this Agreement, the term "Seller" and "Purchaser"
shall be deemed to include any permitted assignee or other transferee of any
Seller or Purchaser, as the case may be. Upon any such transfer by a Seller
or Purchaser, such original Seller or Purchaser, as the case may be, shall
remain liable for the obligations of Seller or Purchaser, as the case may be,
under this Agreement. Subject to the foregoing, this Agreement shall inure
to the benefit of and shall be binding upon Seller and Purchaser and their
respective successors and assigns.
C. This Agreement shall not be modified or amended except in a written
document signed by Seller and Purchaser.
D. Time is of the essence of this Agreement.
E. This Agreement shall be governed and interpreted in accordance with the
laws of the State of California.
F. All notices, requests, demands or other communications required or
permitted under this Agreement shall be in writing and delivered personally,
by certified mail, return receipt requested, postage prepaid, by overnight
courier (such as Federal Express), or by facsimile transmission (with a copy
to follow by either overnight courier or certified mail, return receipt
requested, postage prepaid), addressed as follows:
1. If to Seller: c/o Equity Office Holdings, L.L.C.
Two North Riverside Plaza
Suite 2200
Chicago, Illinois 60606
Attention: Alissa Schneider
Telephone: 312/466-3595
Facsimile: 312/559-5051
With a copy to: Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza
Chicago, Illinois 60606
Attention: Kelly L. Stonebraker
Telephone: 312/466-3653
Facsimile: 312/454-0335
2. If to Purchaser: Arden Realty Limited Partnership
9100 Wilshire Boulevard, Suite 700E
Beverly Hills, California 90212
Attention: Victor J. Coleman
Telephone: 310/271-8600
Facsimile: 310/246-2941
With a copy to: Troy & Gould
1801 Century Park East, 16th Floor
Los Angeles, California 90067
Attention: Kenneth Blumer
Telephone: 310/553-4441
Facsimile: 310/201-4746
All notices given in accordance with the terms hereof shall be deemed received
forty-eight (48) hours after posting, or when delivered personally or otherwise
received. Either party hereto may change the address for receiving notices,
requests, demands or other communication by notice sent in accordance with
the terms of this Section 10(F).
G. Purchaser's right of inspection shall be subject to the rights of tenants
under the Leases and other occupants and users of the Property. No inspection
shall be undertaken without reasonable prior notice to Seller. Seller shall
have the right to be present at any or all inspections. Neither Purchaser
nor its agents or representatives shall contact any tenants without the prior
consent of Seller. No inspection shall involve the taking of samples or
other physically invasive procedures without the prior consent of Seller.
Notwithstanding anything to the contrary contained in this Agreement,
Purchaser shall indemnify and hold Seller and its employees and agents, and
each of them, harmless from and against any and all losses, claims, damages
and liabilities (including, without limitation, attorneys' fees incurred in
connection therewith) arising out of or resulting from Purchaser's exercise
of its rights under this Agreement, including, without limitation, its right
of inspection.
H. Acknowledging the prior use of the Property and Purchaser's
opportunity to inspect the Property, except as expressly set forth in
Section 9 of this Agreement, Purchaser agrees to take the Property "AS-IS"
with all faults and conditions thereon. Any information, reports,
statements, documents or records ("Disclosures") provided or made to
Purchaser or its constituents by Seller, its agents or employees concerning
the environmental condition of the Property shall not be representations or
warranties. Purchaser shall not rely on such Disclosures, but rather,
Purchaser shall rely only on its own inspection of the Property. Except as
expressly set forth in Section 9 of this Agreement, Purchaser acknowledges
and agrees that Seller has not made, does not make and specifically disclaims
any representations, warranties, promises, covenants, agreements or
guaranties of any kind or character whatsoever, whether express or implied,
oral or written, past, present or future, of, as to, concerning or with
respect to:
(i) the nature, quality or condition of the Property, including, without
limitation, the water, soil and geology thereof; (ii) the income to be
derived from the Property; (iii) the suitability of the Property for any and
all activities and uses which Purchaser may conduct thereon; (iv) the
compliance of or by the Property or its operation with any laws, rules,
ordinances or regulations of any applicable governmental authority or body;
(v) the habitability, merchantability or fitness for a particular purpose of
the Property; or (vi) any other matter with respect to the Property, and
specifically disclaims any representations regarding termites or wastes, as
defined by the U.S. Environmental Protection Agency Regulations at 40 C.F.R.,
or any hazardous substance, as defined by the Comprehensive Environmental
Response Compensation and Liability Act of 1980 ("CERCLA"), as amended, and
regulations promulgated thereunder. Purchaser, its successors and assigns,
hereby waive, release and agree not to make any claim or bring any cost
recovery action or claim for contribution or other action or claim against
Seller or its affiliates, directors, officers, employees, agents, attorneys,
or assigns (collectively, "Seller and its Affiliates") based on: (a) any
federal, state, or local environmental or health and safety law or regulation,
including CERCLA or any state equivalent, or any similar law now existing or
hereafter enacted; (b) any discharge, disposal, release, or escape of any
chemical, or any material whatsoever, on, at, to, or from the Property; or
(c) any environmental conditions whatsoever on, under, or in the vicinity of
the Property. With respect to the release set forth herein relating to
unknown and unsuspected claims, Purchaser hereby acknowledges that such
waiver and release is made with the advice or counsel and with fully
knowledge and understanding of the consequences and effects of such waiver,
and that such waiver is made with the full knowledge, understanding and
agreement that California Civil Code ss. 1542 provides as follows, and that
the protection afforded by said Code Section is hereby waived:
"A General Release does not extend to claims which
the creditor does not know or suspect to exist in his
favor at the time of executing the Release, which if
known by him must have materially affected his
settlement with the Debtor."
Purchaser: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc., a Maryland corporation
By: /s/ Victor J. Coleman
Name: Victor J. Coleman
Title: President and COO
I. Purchaser or anyone claiming by, through or under Purchaser, hereby
fully and irrevocably releases Seller and its Affiliates, from any and all
claims that it may now have or hereafter acquire against Seller and its
Affiliates, for any cost, loss, liability, damage, expense, action or cause
of action, whether foreseen or unforeseen, arising from or related to any
construction defects, errors or omissions on or in the Property, the presence
of environmentally hazardous, toxic or dangerous substances, or any other
conditions (whether patent, latent or otherwise) affecting the Property,
except for claims against Seller based upon any obligations and liabilities
of Seller expressly provided in this Agreement. Purchaser further
acknowledges and agrees that this release shall be given full force and
effect according to each of its expressed terms and provisions, including,
but not limited to, those relating to unknown and unsuspected claims, damages
and causes of action. As a material covenant and condition of this Agreement,
Purchaser agrees that in the event of any such construction defects, errors
or omissions, the presence of environmentally hazardous, toxic or dangerous
substances, or any other conditions affecting the Property, Purchaser shall
look solely to Seller's predecessors in interest or to such contractors and
consultants as may have contracted for work in connection with the Property
for any redress or relief, except for claims against Seller based upon any
obligations and liabilities of Seller expressly provided in this Agreement.
Purchaser further understands that some of Seller's predecessors in interest
or such contractors and consultants may have filed petitions under the
bankruptcy code and Purchaser may have no remedy against such predecessors,
contractors or consultants. With respect to the release set forth herein
relating to unknown and unsuspected claims, Purchaser hereby acknowledges that
such waiver and release is made with the advice or counsel and with fully
knowledge and understanding of the consequences and effects of such waiver,
and that such waiver is made with the full knowledge, understanding and
agreement that California Civil Code ss. 1542 provides as follows, and that
the protection afforded by said Code Section is hereby waived:
"A General Release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the Release, which if known by him
must have materially affected his settlement with the
Debtor."
Purchaser: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc., a Maryland corporation
By: /s/ Victor J. Coleman
Name: Victor J. Coleman
Title: President and COO
J. In any lawsuit or other proceeding initiated by Purchaser under or with
respect to this Agreement, Purchaser waives any right it may have to trial by
jury. In addition, Purchaser waives any right to seek rescission of the
transaction provided for in this Agreement.
K. Seller and Purchaser hereby designate Escrow Agent to act as and
perform the duties and obligations of the "reporting person" with respect
to the transaction contemplated by this Agreement for purposes of 26 C.F.R.
Section 1.6045-4(e)(5) relating to the requirements for information reporting
on real estate transaction closed on or after January 1, 1991. In this
regard, Seller and Purchaser each agree to execute at Closing, and to cause
the Escrow Agent to execute at Closing, a Designation Agreement, designating
Escrow Agent as the reporting person with respect to the transaction
contemplated by this Agreement.
L. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument.
M. Seller and Purchaser acknowledge and agree that neither this Agreement
nor a memorandum thereof shall be recorded against the Property.
N. Purchaser acknowledges and agrees that any recovery against Seller
that Purchaser may be entitled to as a result of any claim, demand or cause of
action that Purchaser may have against Seller with respect to this Agreement
and the transactions contemplated herein shall only be recoverable against
Seller to the extent of Seller's interest in the Property and the amount of
the proceeds received by Seller from the sale of the Property to Purchaser
(but the foregoing shall not be deemed to limit or abrogate Purchaser's
remedy of specific performance, as more particularly described in Section
7(A) above.
O. Seller hereby covenants and agrees with Purchaser as follows:
1. From and after the date hereof through the Closing, Seller shall
deliver for Purchaser's review (a "New Lease Notice") a copy of any proposed
New Lease. From and after the expiration of the Review Period and through
and including the Closing Date, Purchaser shall have the right to approve or
disapprove of any New Lease (other than pursuant to the exercise of an option
in the existing Lease) by responding in writing to Seller's New Lease Notice
within five (5) days after Purchaser's receipt of the New Lease Notice. If
Purchaser fails to approve or disapprove of such New Lease within such five
(5) day period, Purchaser shall be deemed to have conclusively approved of
such New Lease.
2. 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.
3. Seller shall have the right to renew or replace Service Contracts
that expire prior to Closing, or to enter into any new Service Contract so
long as the same is terminable by Seller or its successors in interest upon
not more than thirty (30) days' notice to the service provider.
4. Seller shall maintain the Property in the ordinary course of its
business, and in substantially its present condition (but Seller shall not
be obligated to make capital improvements or capital repairs), subject to
the other terms of this Agreement.
P. Should either party employ attorneys to enforce any of the provisions
hereof, the party against whom any final judgment is entered agrees to pay
the prevailing party all reasonable costs, charges, and expenses, including
reasonable attorneys' fees, expended or incurred by the prevailing party in
connection therewith.
Q. At Purchaser'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
Purchaser's expense, provide to Purchaser's designated independent auditor
reasonable access to the books and records of the Property, regarding the
period for which Purchaser is required to have audited financial statements
prepared with respect to the Property as may be required by the Securities and
Exchange Commission, but only to the extent that such books, records and
related information are in Seller's possession or control and relate to the
period during which Seller held title to the Property. Further, Seller
agrees to provide such auditor a representation letter regarding the books
and records of the Property, in substantially the form of Exhibit M attached
hereto, in connection with the normal course of auditing the Property in
accordance with generally accepted auditing standards (but shall not thereby
be deemed to have made any representation or warranty to Purchaser or to any
other third party).
R. Seller agrees to perform the work (the "Environmental Work") described in
the letter from the Los Angeles Regional Water Quality Control Board to Equity
Office Properties dated March 27, 1997, a copy of which is attached hereto as
Exhibit N. Purchaser acknowledges that Seller is or may be entitled to
reimbursement for the Environmental Work out of the escrow fund established
pursuant to that certain Escrow Agreement dated November 27, 1991, by and
among Seller's general partner, Wilshire-San Vicente Company and Ticor Title
Insurance Company (the "Escrow Agreement"). As such, Seller hereby expressly
reserves, and the conveyances contemplated in this Agreement expressly
exclude, all of Seller's right, title and interest in the Escrow Agreement.
If the Environmental Work is not completed by Closing, Purchaser agrees to
provide Seller with the right of reasonable access to the Property in order to
complete such work, and in order to remove the equipment owned by Seller that
is or was being used in connection with the treatment of the underlying
problem. Seller agrees to promptly repair any damage that may be caused by
the Environmental Work or by the removal of the equipment.
IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered this
Agreement as of the date first above written.
SELLER:
ZML-WSVP LIMITED PARTNERSHIP, an Illinois limited partnership
By: ZML-Wilshire limited partnership, an Illinois limited partnership,
its general partner
By: ZML-Wilshire, Inc., an Illinois corporation, its general partner
By: /s/ James M. Phipps
Name: James M. Phipps
Title: Vice President
PURCHASER:
ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
By: Arden Realty, Inc., a Maryland corporation, its general partner
By:/s/ Victor J. Coleman
Name: Victor J. Coleman
Title: President and COO
