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) March 26, 1998
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.)
11601 Wilshire Boulevard, Fourth Floor
Los Angeles, California 90025
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 966-2600
Item 2. Acquisition or Disposition of Assets
On May 20, 1998, Arden Realty, Inc. (collectively with its
subsidiaries, the "Company") completed a series of transactions
to purchase five commercial properties, totaling approximately
788,000 rentable square feet and approximately 34 acres of
undeveloped commercial property. In addition, the Company
exercised its option to purchase the remaining 25% interest in
the World Savings Center. All the properties were purchased from
unaffiliated entities.
As previously reported on Form 10-Q for the first quarter 1998,
the Company exercised its option to purchase the remaining 25%
interest in the World Savings Center for approximately
$27,530,000 from Forest City San Vicente Corporation, an Ohio
corporation ("Forest City").
As previously reported on Form 10-Q for the first quarter 1998,
the Company purchased approximately 34 acres of undeveloped
commercial property and a 36,959 square foot executive health and
athletic club (the "Spectrum Club") in El Segundo, California for
approximately $38,565,000, which was based on arm's length
negotiations. The 34 acres of undeveloped commercial property
and the Spectrum Club are part of the 70-acre Howard Hughes Center
(the "Center"). The Center is a mixed-use development currently
containing three office buildings, the Spectrum Club and
entitlements for the construction of an additional 1,288,000 square
feet of office space. In addition, the property is entitled to
include up to 600 rooms in two hotels and a 250,000 square foot retail
and entertainment complex, which will be developed by third parties.
The undeveloped commercial property and the Spectrum Club were
purchased from Howard Hughes Properties, Limited Partnership, a
Delaware limited partnership.
11075 Santa Monica in Los Angeles, California contains 35,696
rentable square feet. The purchase price for the property was
approximately $4,950,000, which was based on arm's-length
negotiations. The property is presently 100% occupied, at an
average annual rental rate of $18.60 per square foot. The
property was purchased from Flags Investment Inc., a California
corporation.
Continental Grand in El Segundo, California contains 235,926
rentable square feet. The purchase price for the property was
approximately $47,550,000, which was based on arm's-length
negotiations. The property is presently 96% occupied, at an
average annual rental rate of $23.35 per square foot. The
property was purchased from Highridge-Apollo Grand Plaza L.P., a
California limited partnership.
Calabasas Tech Center in Calabasas, California contains 276,526
rentable square feet. The purchase price for the property was
approximately $46,120,000, which was based on arm's-length
negotiations. The property is presently 99% occupied, at an
average annual rental rate of $12.00 per square foot. The
property was purchased from Calabasas Tech Center, Inc., a
Delaware corporation.
Oceangate Tower in Long Beach, California contains 202,860
rentable square feet. The purchase price for the property was
approximately $23,480,000, which was based on arm's-length
negotiations. The property is presently 87% occupied, at an
average annual rental rate of $16.30 per square foot. The
property was purchased from The Mutual Life Insurance Company of
New York, a New York mutual life insurance company.
To finance these acquisitions the Company used approximately
$30,545,000 of its working capital, borrowed $133,800,000 on its
line of credit from a group of banks led by Wells Fargo Bank (the
"Credit Facility"), assumed a mortgage note payable secured by
the World Savings Center of approximately $15,000,000, assumed a
mortgage note payable secured by a parcel in the Center for
approximately $4,550,000, and issued 10,412 OP Units valued at
approximately $300,000 in connection with the purchase of
Continental Grand. In addition, the Company also retired a
$4,000,000 receivable from Forest City as partial consideration
for the purchase of the remaining 25% interest in the World
Savings Center.
Inclusive of these purchases, the Company's portfolio consists of
132 commercial properties comprising approximately 17.2 million
rentable square feet, 16 apartment units, and approximately 34
acres of undeveloped commercial property.
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 8-K 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 8-K within 60 days.
(c) Exhibits.
10.59 Purchase Agreement and Escrow Instructions by and
between Howard Hughes Properties, Limited Partnership, a
Delaware limited partnership, and Arden Realty, Inc., a
Maryland corporation.
10.60 Amendment to Purchase Agreement and Escrow Instructions
by and between Howard Hughes Properties, Limited
Partnership, a Delaware limited partnership, and Arden
Realty, Inc., a Maryland corporation.
10.61 Purchase Agreement and Escrow Instructions by and
between Howard Hughes Properties, Limited Partnership, a
Delaware limited partnership, and Arden Realty, Inc., a
Maryland corporation.
10.62 Amendment to Purchase Agreement and Escrow Instructions
by and between Howard Hughes Properties, Limited
Partnership, a Delaware limited partnership, and Arden
Realty, Inc., a Maryland corporation.
10.63 Agreement of Purchase and Sale and Joint Escrow
Instructions by and between Flags Investment Inc., a
California corporation, and Arden Realty Limited
Partnership, a Maryland limited partnership.
10.64 First Amendment to agreement of Purchase and Sale and
Joint Escrow Instruction by and between Flags Investment,
Inc., a California corporation, and Arden Realty Limited
Partnership, a Maryland limited partnership.
10.65 Contribution Agreement for Continental Grand Plaza
dated March 30, 1998 between Highridge-Apollo
Grand Plaza. L.P., a California limited partnership, or its
constituent (direct and indirect through tiered entities)
partners who qualify as "accredited investors" (but not more
than 10), and Arden Realty Limited Partnership, a Maryland
limited partnership.
10.66 Side letter dated March 30, 1998 with reference made to
certain Contribution Agreement dated March 30, 1998 and
covering the Continental Grand Plaza Office Building between
Highridge-Apollo Grand Plaza, L.P., a California limited
partnership or its constituent partners as Contributor, and
Arden Realty Limited Partnership, a Maryland limited
partnership.
10.67 Side letter dated April 8, 1998 with reference made to
certain Contribution Agreement dated March 30, 1998 and
covering the Continental Grand Plaza Office Building between
Highridge-Apollo Grand Plaza, L.P., a California limited
partnership or its constituent partners as Contributor, and
Arden Realty Limited Partnership, a Maryland limited
partnership.
10.68 Agreement of Purchase and Sale by and between Calabasas
Tech Center, Inc., a Delaware corporation, and Arden Realty
Limited Partnership, a Maryland limited partnership.
10.69 Purchase and Sale Agreement and Joint Escrow
Instructions by and between The Mutual Life Insurance
Company of New York, a New York mutual life insurance
company, and Arden Realty Limited Partnership, a Maryland
limited partnership.
10.70 First Amendment to Purchase and Sale Agreement and
Joint Escrow Instructions by and between The Mutual Life
Insurance Company of New York, a New York mutual life
insurance company, and Arden Realty Limited Partnership, a
Maryland limited partnership.
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
ARDEN REALTY, INC.
Date: May 29, 1998 By: /s/ Diana M. Laing
Diana M. Laing
Chief Financial Officer
PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
THIS PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
("Agreement") is made as of January 30, 1998, by and between
HOWARD HUGHES PROPERTIES, LIMITED PARTNERSHIP, a Delaware limited
partnership ("Seller"), and ARDEN REALTY, INC., a Maryland
corporation ("Buyer"), as follows:
1. Purchase and Sale. Upon all the terms and
conditions contained herein, Buyer hereby agrees to purchase from
Seller and Seller agrees to sell to Buyer the fee simple interest
in that certain real property (the "Property") (a) located within
the area commonly referred to as Howard Hughes Center (the
"Center"), (b) consisting of approximately 43.63 acres and all
entitlements and associated amenities, and (c) depicted and/or
described on Exhibit A attached hereto and incorporated herein by
this reference. Buyer hereby also agrees to purchase from Seller
and Seller agrees to assign to Buyer Seller's interest in the
Personal Property and the Intangible Property (as said Properties
are defined in the Bill of Sale and Assignment attached hereto as
Exhibit I and incorporated herein by this reference [the "Bill of
Sale"]). The approximately 5.36 net useable acres of the
Property depicted and/or described on Exhibit A as Lots 3, 4 and
5 of Tract No. 49299 and Lots 15, 16 and a portion of Lot 17 of
Tract No. 51419, the exact size of which will be determined as
provided in the Snyder Agreement [as defined in Section 6(a)(5)
below], and as the site of the proposed Hughes Entertainment
Center are hereinafter referred to as the "Snyder Parcels." The
approximately 3.31 acres depicted and/or described on Exhibit A
as Lots 8 and 9 of Tract No. 49299 and Lots 2 and 3 of Tract No.
51419 and as future sites for hotels are hereinafter referred to
as the "Hotel Parcels". The balance of the Property,
approximately 34.96 acres described on Exhibit A as Lots 4, 5, 9,
10, 11, 12, 13, 14, 17 (partial), 18, 19, 20, 21 and 22 of Tract
No. 51419 and Lots 6, 7, 10, 11, 18 and 19 of Tract No. 49299, is
hereinafter referred to as the "Remainder Parcels."
2. Opening of Escrow. Concurrently with the
execution of this Agreement, Seller and Buyer shall open an
escrow (the "Escrow") with Stewart Title Company at 330 North
Brand Boulevard, Suite 700, Glendale, California 91203 (the
"Escrow Holder") by delivering a fully executed copy of this
Agreement, or fully executed counterparts thereof, to Escrow
Holder. Escrow shall be deemed open upon Escrow Holder's
receipt thereof. Escrow Holder will execute copies of this
Agreement and return fully executed copies hereof to Buyer and
Seller when Escrow has opened. In addition, the parties agree to
be bound by the standard escrow General Provisions attached
hereto as Exhibit B and incorporated herein by this reference.
In the event of any discrepancy between this Agreement and such
General Provisions, the provisions of this Agreement shall
prevail.
3. Closing of Escrow. The closing (the "Closing") of
the purchase and sale of the Property shall take place through
Escrow on March 31, 1998 (the "Closing Date"), provided that the
conditions to Closing set forth herein have been satisfied. If
the Closing has not occurred on or before the Closing Date, then
this Agreement shall automatically terminate (and, subject to the
immediately succeeding sentence, Section 8 below shall apply)
unless the parties mutually agree to the contrary in writing. No
such termination shall relieve any party from liability due to
any breach or default under this Agreement by such party prior to
the time of such termination.
4. Purchase Price. The purchase price for the
Property, the Personal Property and the Intangible Property (the
"Purchase Price") shall be Twenty-Eight Million Five Hundred
Thirty Five Thousand Dollars ($28,535,000), broken down as
follows:
(a) Snyder Parcels. The purchase price for the
Snyder Parcels shall be Seven Million Five Hundred Thousand
Dollars ($7,500,000);
(b) Hotel Parcels. The purchase price for the
Hotel Parcels shall be Four Million Five Hundred Fifty
Thousand Dollars ($4,550,000), which Seller shall receive
upon the earlier of (i) the sale of the Hotel Parcels by
Buyer to a third party, or (ii) six (6) months after the
Closing (i.e., on September 30, 1998 assuming the Closing
occurs on March 31, 1998). In addition, if the "Net
Proceeds" (as hereinafter defined) from the sale or ground
lease by Buyer to a third party of the "Actual Hotel
Parcels" exceeds $4,550,000, Seller shall share equally
with Buyer in any Net Proceeds over said amount (said share
being referred to hereinafter as "Seller's Hotel Overage").
The "Actual Hotel Parcels" are such parcels, if any, within
the Property that are sold or ground leased by Buyer on or
before November 3, 2006 for hotel use; provided, however,
from and after the date on which Buyer has sold or ground
leased parcels entitling the owners thereof to build in the
aggregate at least 600 hotel rooms, no additional sales or
ground leases of parcels shall be treated as "Actual Hotel
Parcels", even if such parcels are used for hotel purposes,
and provided further, that as to the sale or ground lease of
the particular parcel (if any) which causes the aggregate
hotel rooms authorized to increase from less than 600 to
more than 600, the "Net Proceeds" from such sale or ground
lease of such parcel (the "Threshold Parcel") included in
the calculation of Seller's Hotel Overage shall be a
fraction of the actual Net Proceeds from such sale or
ground lease, the numerator of which is the amount by which
600 exceeds the aggregate hotel rooms authorized by the
previous sales or ground leases of Actual Hotel Parcels, and
the denominator of which is the total number of hotel rooms
authorized by such sale or ground lease of the Threshold
Parcel. For example, and without limitation on the
generality of the foregoing, if the first Actual Hotel
Parcel is sold for $2,500,000 of Net Proceeds, and
authorized the building of 400 hotel rooms, and the next
parcel sold for hotel use was sold for $6,000,000 of Net
Proceeds and authorized the building of 300 hotel rooms,
the sale of such second parcel would be the "Threshold
Parcel". In such example, only two thirds of the $6,000,000
of Net Proceeds from such Threshold Parcel would be taken in
account in the calculation of Seller's Hotel Overage; said
two thirds is the fraction, the numerator of which is 200
(the amount by which 600 exceeds the 400 hotel rooms
authorized by the previous sale of the first Actual Hotel
Parcel), and the denominator of which is 300 (the total
hotel rooms authorized in the sale of the Threshold Parcel).
In such example the total Net Proceeds would be $6,500,000
(i.e., $2,500,000 from the first sale and $4,000,000 from
the second sale), and the Seller's Hotel Overage would be
50% of $1,950,000, said $1,950,000 being the excess of
$6,500,000 over the $4,550,000. Seller's right to receive
the $4,550,000 purchase price for the Hotel Parcels and
Seller's Hotel Overage shall be evidenced by a non-interest
bearing promissory note (the "Note") in form and substance
satisfactory to Seller, which Note for the six (6) months
following the Closing shall be secured by a Deed of Trust on
the entire Property. Such Deed of Trust shall be a first
priority lien on the Property ahead of all other monetary
liens other than current real property taxes (the "First
Deed of Trust"). After Seller receives said $4,550,000,
Seller shall release said First Deed of Trust, provided
Seller receives a guaranty, in form and substance reasonably
satisfactory to Seller, from Arden Realty, Inc.,
guaranteeing Buyer's obligation to pay Seller's Hotel
Overage if and when received by Buyer. If prior to
September 30, 1998, either or both of the Hotel Parcels are
sold, and the Net Proceeds therefrom are less than
$4,550,000, then, at the time of any such sale, the First
Deed of Trust will be released from the parcel to be sold,
provided that the Net Proceeds from such sale are used to
pay down the Note. All post-Closing decisions as to the
Hotel Parcels, including, but not limited to, the selection
of the proposed purchaser(s) from Buyer, and the price of
the proposed purchase(s), and any decision to enter into a
ground lease of an Actual Hotel Parcel, and the terms of
such ground lease, shall be made by Buyer in its sole and
absolute discretion. For purposes of this paragraph, "Net
Proceeds" from this sale of an Actual Hotel Parcel means the
net proceeds to Buyer from the sale remaining after (i) all
costs and expenses of Buyer in connection with such sale,
including, but not limited to, brokerage costs, attorneys'
fees, and any transfer tax, recording fees, title insurance
and other sales costs for which Buyer is responsible in such
sale, and (ii) any real property taxes and assessments and
similar costs borne by Buyer with respect to the Hotel
Parcels. If Buyer enters into a ground lease instead of a
sale of an Actual Hotel Parcel, "Net Proceeds" means the net
proceeds to Buyer received from time to time under such
lease, remaining after (i) all costs and expenses of Buyer
in connection with such lease, including, but not limited
to, brokerage costs, attorney's fees, title insurance and
other costs for which Buyer is responsible in such leasehold
transaction, and any costs required to be borne by Buyer
under such lease and (ii) any real property taxes and
assessments and similar costs borne by Buyer with respect to
such Actual Hotel Parcel before such lease was entered into.
(c) Remainder Parcels The purchase price for the
Remainder Parcels shall be Sixteen Million Four Hundred Eighty-
Five Thousand Dollars ($16,485,000).
(d) Personal Property and Intangible Property. No
additional cash consideration shall be required to be paid for
the Personal Property and the Intangible Property.
The Purchase Price shall be payable as follows:
(i) Deposit. Concurrently with the
execution of this Agreement, Buyer shall deposit into
Escrow cash in the amount of Seven Hundred Fifty
Thousand Dollars ($750,000). Escrow Holder is hereby
instructed to deposit such amount (the "Deposit") in an
interest bearing account or other investment instrument
designated by Seller. All interest earned on the
Deposit shall be credited to the account of Seller and
shall be non-refundable under all circumstances. Upon
the satisfaction of the conditions to Buyer's
obligation to purchase the Property set forth in
Sections 6(a) and 6(b) below, the Deposit shall become
non-refundable, subject to the satisfaction of the
conditions set forth in Sections 6(c) and 6(d) below,
and shall be credited towards the Purchase Price. If
the Deposit becomes non-refundable as aforesaid, it
shall continue to be held by Escrow Holder to be
applied against the Purchase Price concurrently with
the Closing.
(ii) Cash at Closing. The remainder of the
Purchase Price, net of the purchase price for the Hotel
Parcels, shall be deposited into Escrow, in cash or by
wire transfer of immediately available federal funds,
by Buyer at or prior to Closing.
(iii) Additional Consideration Post-
Closing. As more fully set forth in Section 4(b)
above, under certain circumstances Seller shall be
entitled to receive additional post-Closing
consideration for the sale of the Hotel Parcels to
Buyer.
5. Costs and Prorations.
(a) Escrow and Title Fees. Buyer and Seller
shall each pay one-half (1/2) of the Escrow fees. Seller shall
bear the cost of (i) all documentary transfer taxes, (ii) the
premium which would be required for an extended coverage, ALTA
Owner's Policy of Title Insurance issued by the Title Company (as
defined below) insuring Buyer in the amount of the Purchase
Price, and (iii) the cost of the ALTA survey required for an
extended coverage, ALTA Owner's Policy of Title Insurance. Buyer
shall bear the cost of recording the Grant Deed (as defined in
Section 9(a) below). All other costs or expenses not otherwise
provided for in this Agreement shall be apportioned or allocated
between Buyer and Seller in the manner customary in Los Angeles
County, California.
(b) Taxes and Assessments. All current real
property taxes and all payments on general and special bonds and
assessments on the Property shall be prorated through Escrow
between Buyer and Seller as of Closing based upon the latest
available tax information, using the customary escrow procedures.
Any taxes levied under the Supplemental Tax Roll applicable to
the period prior to the Closing Date shall be paid by Seller and
any such taxes applicable to the period from and after the
Closing Date shall be paid by Buyer.
(c) Rents, Revenues and Expenses. All rents,
revenues and expenses relating to the Property shall be prorated
through Escrow between Buyer and Seller as of the Closing based
upon a proration statement prepared by Buyer, approved by Seller
and delivered to Escrow Holder prior to Closing. Buyer shall not
be required to pay to Seller at the Closing any delinquent rents;
rather, Seller's share of delinquent rents, if any, shall be paid
to Seller if, as and when received by Buyer. Rents received
after the Closing will be applied first to the then most recently
accrued obligation of the tenant.
(d) Outstanding Performance Bonds. Attached
hereto as Exhibit G is a schedule of four (4) outstanding Bonds
that Seller has posted with the City in connection with the
recordation of Tract Map Nos. 51419 and 49299, including the
proposed extension of Center Drive within the Center. Buyer
shall provide to Seller at Closing an indemnity agreement with
respect to such Bonds, in form and substance satisfactory to
Seller (the "Indemnity Agreement"). As soon as practical after
the Closing, Buyer shall obtain its own Bonds to substitute for
Seller's Bonds and shall use all reasonable efforts to get the
City to accept such substitute Bonds and to release Seller's
Bonds. Upon the release of such Bonds, the Indemnity Agreement
shall become null and void. In connection with the posting of
such Bonds, Seller has obtained from the City certain permits
(the "BD Permits") pursuant to which the City is reviewing the
design of the Center Drive improvements covered by the Bonds. In
connection with the BD Permits, Seller was required by the City
to provide funds (the "Deposits") to defray the City's cost in
reviewing the design of such improvements. In connection with
the substitution of Buyer's Bonds for Seller's Bonds, Buyer and
Seller agree to execute whatever documents or agreements the City
may require to reflect an assignment to Buyer of Seller's
interest in the Deposits and/or an assumption by Buyer of
Seller's obligation under the BD Permits to make additional
Deposits as and when required by the City.
(e) Culver City Agreement Letter of Credit.
Pursuant to that certain Agreement dated January 20, 1986 between
Seller and the City of Culver City (the "Culver City Agreement"),
Seller has provided the City of Culver City ("Culver City") with
a Letter of Credit in the amount of $675,000 ("Seller's Letter of
Credit"). On or prior to the Closing, Buyer shall use all
reasonable efforts to get Culver City to accept Buyer's Letter of
Credit in the same amount, in substitution for Seller's Letter of
Credit and to release Seller's Letter of Credit. If Buyer is
unable to do so prior to the Closing, Buyer shall provide to
Seller at the Closing a Letter of Credit ("Buyer's Letter of
Credit") in the amount of $675,000 which Letter of Credit shall
be in form and substance satisfactory to Seller, including
allowing Seller to draw down on such Letter of Credit as and when
Culver City draws down on Seller's Letter of Credit. After the
Closing, if Buyer is able to effectuate with Culver City a
substitution of its Letter of Credit for Seller's Letter of
Credit, then Seller shall promptly release Buyer's Letter of
Credit to Buyer.
6. Buyer's Conditions to Closing. The obligation of
Buyer to complete the purchase of the Property is subject to
satisfaction of the conditions set forth below, which conditions
shall be for the benefit of Buyer. Buyer's obligation to
complete the purchase of the Property is subject to the
satisfaction of the conditions set forth in Sections 6(a) and
6(b) on or before the date (the "Contingency Date") that is
thirty (30) days after the later of (a) execution of this
Agreement by both Buyer and Seller, or (b) delivery to Buyer of
all of the items set forth in Section 6(a) below. Buyer's
obligation to complete the purchase of the Property is subject to
the satisfaction of the conditions set forth in Sections 6(c) and
6(d) as of the Closing. Upon the failure of any such condition
to be satisfied in a timely manner, Buyer may terminate this
Agreement.
(a) Buyer shall have had opportunity to review at
Seller's office in Los Angeles (and Seller shall make copies for
Buyer upon Buyer's written request) and approve each of the
following (collectively, the "Items"):
(1) A current preliminary title report (the
"Preliminary Report") including the legal
description of the Property, together with copies
of all documents referred to therein, prepared by
Stewart Title Company (the "Title Company"). If
Buyer timely gives Seller notice of any
disapproved exceptions set forth in the
Preliminary Report, Seller may cause such
exceptions to be removed, but if Seller is
unwilling or unable to cause such exceptions to be
removed, then either party may terminate this
Agreement;
(2) Evidence that the Property complies with
the Subdivision Map Act of California;
(3) A current ALTA Survey of the Property;
(4) To the extent available, copies of any
documents relating to the following:
(i) Ability of Buyer to control the
Howard Hughes Center Property Owners
Association (the "Association") so long as
any portion of the Property remains
undeveloped;
(ii) Adequacy of current outstanding
balance of in lieu credits under the Coastal
Transportation Corridor Specific Plan of the
City of Los Angeles (Ordinance No. 160,394)
(the "Transportation Specific Plan") to cover
all future development of the Property,
including the Snyder Parcels;
(iii) Evidence that the cost to
build all of the remaining infrastructure of
the Property under the Development Agreement
not materially exceed $8,600,000;
(5) Copies of all agreements relating to the
Property, including but not limited to the
Development Agreement, the Tract Map (as defined
in Section 15 below), the Articles of
Incorporation and Bylaws of the Association, the
CC&Rs (as defined in Section 13(c) below), the
Culver City Agreement, the Purchase Agreement
between Seller and Snyder Properties Venture
("Snyder") covering the proposed sale of the
Snyder Parcels to Snyder (the "Snyder Agreement"),
the Ground Lease applicable to the Spectrum Club,
the Deed In Lieu of Foreclosure Agreement between
an affiliate of Seller and The Prudential
Insurance Company of America (the "Prudential
Agreement") and all amendments to the foregoing
and documents referenced therein;
(6) All plans, structural drawings,
architectural drawings, and any soils, structural,
geological, environmental, hazardous materials and
asbestos studies or reports relating to subsurface
conditions, grading plans, topographical maps and
similar data respecting the Property;
(7) Copies of property tax bills for the
last two (2) years and copies of the most recently
available utility bills and similar records
respecting the Property;
(8) A certificate of Seller certifying to
Seller's knowledge that there is no legal or
administrative action, proceeding, claim,
arbitration or suit pending before any court,
agency or official, nor any such claim or action
threatened in writing, relating to the Property or
with respect to the validity of any statutes,
ordinances, regulations or restrictions or any
permits or approvals thereunder relating to the
Property, nor any outstanding contingent
liabilities affecting the Property.
(b) During the period ending on the Contingency Date
(the "Contingency Period"), Buyer shall have the right to inspect
and approve (i) all physical, seismic and all other aspects of
the Property, (ii) each of the Items and (iii) all books,
records, correspondence, and files of Seller regarding the
Property, and to make inquiries and investigations as Buyer deems
necessary or appropriate. Seller will cause its consultants to
furnish Buyer with any information and copies of documents
reasonably requested by Buyer in writing during the Contingency
Period. In addition, the Buyer shall have the right to enter the
Property to conduct reasonable tests and inspections deemed
reasonably necessary or advisable by Buyer or its consultants
including, but not limited to, physical inspection. Buyer hereby
indemnifies and holds Seller and Seller's affiliates harmless
from any and all losses, damages, costs, liabilities and
expenses, including, without limitation, reasonable attorneys'
fees (and those fees incurred upon any appeals) and court costs
incurred or suffered by Seller, whether directly or proximately,
by the negligent or willful act or omission of Buyer or Buyer's
representatives during their inspections of the Property.
Notwithstanding the foregoing, prior to and at all times after
initially entering upon the Property for any purpose permitted by
this Agreement, Buyer shall at its expense maintain with a
reputable company or companies qualified to do business in
California and acceptable to Seller, a policy or policies of
comprehensive general liability insurance with respect to the
Property and the activities of or on behalf of Buyer on or about
the Property. Such policy or policies shall (i) name Seller as
an additional insured and include an effective waiver by the
issuer of all rights of subrogation against such additional
insured and (ii) provide that any losses shall be payable
notwithstanding any act or failure to act or negligence of Buyer
or Seller or any other person or entity. The minimum amount of
such insurance shall be $2,000,000 per person and $2,000,000 per
accident. Prior to entering onto the Property, Buyer shall
deliver to Seller a certificate of insurance evidencing that the
foregoing insurance is in full force and effect.
(c) All of Seller's covenants required to have
been performed by the Closing shall have been so performed,
and all representations and warranties of Seller shall be
current as of the Closing.
(d) Seller shall have complied with all of its
obligations under that certain Purchase Agreement And Escrow
Instructions dated as of January 30, 1998, by and between
Buyer and Seller covering that certain property within the
Center on which the Spectrum Club is located (the "Spectrum
Club Agreement"), and the Closing under the Spectrum Club
Agreement shall be in a position to occur concurrently with
the Closing under this Agreement. For this purpose, the
Closing under the Spectrum Club Agreement shall be deemed to
occur either (i) upon the recordation of Seller's Grant Deed
to Buyer thereunder, or (ii) Buyer's deposit into Escrow of
the entire Purchase Price thereunder.
Approval of the conditions set forth in Sections
6(a) and 6(b) above (which approval shall be in Buyer's sole
and absolute discretion) shall be in writing signed by
Buyer. Failure of Buyer to approve any Items on or before
the Contingency Date conclusively shall be deemed to
constitute Buyer's disapproval thereof. In that event, this
Agreement shall automatically terminate and the Deposit
shall be returned to Buyer.
7. Seller's Conditions to Closing. The obligation of
Seller to complete the sale of the Property is subject to
satisfaction of the conditions set forth below on or before the
Closing Date, which conditions shall be for the benefit of
Seller. Upon failure of any such condition to be satisfied in a
timely manner, Seller may terminate this Agreement.
(a) Buyer shall have deposited into Escrow in the
manner and at the time required under this Agreement, the Deposit
and the remainder of the Purchase Price.
(b) Buyer shall have executed the Note, the First Deed
of Trust, the Assignment And Assumption Agreements (as defined in
Section 9(a) below) and the Indemnity Agreement and deposited the
same, along with Buyer's Letter of Credit, if necessary, into
Escrow in a timely manner.
(c) All of Buyer's covenants required to be performed
by the Closing shall have been so performed, and all
representations and warranties of Buyer shall be current as of
the Closing.
(d) Buyer shall have complied with all of its
obligations under the Spectrum Club Agreement, and the Closing
under the Spectrum Club Agreement shall be in a position to occur
concurrently with the Closing under this Agreement. For this
purpose, the Closing under the Spectrum Club Agreement shall be
deemed to occur either (i) upon the recordation of Seller's Grant
Deed to Buyer thereunder, or (ii) Buyer's deposit into Escrow of
the entire Purchase Price thereunder.
8. Termination. If this Agreement automatically
terminates or if Buyer or Seller elects to terminate this
Agreement as provided above in Section 6 or Section 7, the
electing party shall send written notice thereof to the other
party and Escrow Holder. Upon receipt of such notice, Escrow
Holder shall return all funds deposited into Escrow and any
documents held by Escrow Holder to the parties depositing same.
All title and Escrow cancellation charges, if any, shall be
shared equally by Buyer and Seller. Upon return of such funds
and documents by Escrow Holder and, if applicable, by Seller and
subject to Section 12 below, the parties hereto shall have no
further rights or obligations under this Agreement, which shall
be deemed canceled for all purposes.
9. Documents at Closing.
(a) Agreements Assumed by Buyer. Attached hereto
and incorporated herein as Exhibit C is a schedule of agreements
to be assigned by Seller to Buyer at the Closing; Seller
represents and warrants that a true, complete and correct copy
of each of the agreements listed in Exhibit C, including all
amendments thereto, is included in the "Key Documents Binder" (as
hereinafter defined). Buyer acknowledges that Buyer shall be
required to assume all of Seller's obligations under such
agreements. For each such agreement where it is necessary to do
so in order to accomplish the foregoing assignment and
assumption, Buyer and Seller shall each, prior to Closing,
execute and deliver into Escrow an Assignment and Assumption
Agreement substantially in the form attached hereto and
incorporated herein as Exhibit D (the "Assignment And Assumption
Agreements").
(b) Trademark Agreement. Following the Closing,
Buyer desires to own, operate and manage the Property under the
name "Howard Hughes Center" and the logo and trademark applicable
thereto. In order to permit Buyer to do so, Buyer and Seller
shall each, prior to Closing, execute and deliver into Escrow
that certain Trademark and Tradename License Agreement attached
hereto and incorporated herein as Exhibit E (the "Trademark
Agreement").
(c) Transfer and Possession. Seller shall
deliver through Escrow an executed and recordable Grant Deed in a
form sufficient to convey good title to Buyer (the "Grant Deed"),
subject only to the exceptions described in the next following
subsection. Seller shall also deliver through Escrow the
executed Bill of Sale. When all required funds and instruments
have been deposited into Escrow by the appropriate parties and
when all other conditions to Closing have been fulfilled, Escrow
Holder shall record the Grant Deed, shall immediately thereafter
record the First Deed of Trust, shall deliver the Bill of Sale to
Buyer, shall deliver fully executed copies of the Assignment And
Assumption Agreements and the Trademark Agreement to Buyer and
Seller, and shall deliver the Indemnity Agreement and, if
necessary, Buyer's Letter of Credit to Seller. Buyer shall not
be entitled to possession of the Property until the Grant Deed
and the First Deed of Trust have been so recorded.
(d) Title. Seller shall cause the Title Company
to be prepared or committed to deliver to Buyer an extended
coverage ALTA Owner's Policy of Title Insurance (with such
endorsements as Buyer shall reasonably require) dated as of
Closing. The title policy shall insure Buyer in an amount equal
to the Purchase Price, and show title vested in Buyer subject
only to:
(i) The usual printed Title Company
exceptions applicable to an ALTA Owner's Policy;
(ii) All exceptions shown on the Preliminary
Report and not disapproved of by Buyer or not removed
by Seller pursuant to Section 6(a)(1) above; and
(iii) All other exceptions approved in
writing by Buyer.
10. Assignment. Buyer shall not assign its rights or
interests hereunder without Seller's prior written consent, which
consent may be withheld by Seller in its sole discretion.
Notwithstanding the foregoing, Buyer may assign its rights and
interests hereunder, without Seller's prior written consent, to
any Affiliate of Buyer. As used herein, "Affiliate of Buyer"
means a corporation, partnership or limited liability company of
which at least 20% of the interests are owned directly or
indirectly, by Arden Realty, Inc. or Arden Realty Limited
Partnership. Any attempted assignment made in violation of this
Section shall be null and void.
11. Time of Essence and Defaults.
(a) Time of Essence. Time is of the essence of
every provision of this Agreement in which time is an element.
Failure by one party to perform any obligation within the time
and on the terms and conditions required hereunder shall
discharge the other party's duties and obligations to perform
hereunder upon written notice or demand from the other party.
(b) Liquidated Damages. IF ESCROW DOES NOT CLOSE
DUE TO BUYER'S FAILURE TO DEPOSIT ANY REQUIRED SUMS BY THE
PRESCRIBED TIME OR TO PERFORM ANY OTHER ACT WHEN DUE HEREUNDER,
WHICH FAILURE SHALL BE DEEMED A MATERIAL BREACH OF AN OBLIGATION
OF BUYER TO BE PERFORMED UNDER THIS AGREEMENT, THEN SELLER SHALL
RETAIN ALL SUMS THEN HELD BY ESCROW HOLDER PURSUANT TO THE TERMS
OF THIS AGREEMENT, TOGETHER WITH INTEREST EARNED THEREON, AS
LIQUIDATED DAMAGES, WHICH AMOUNT IS THE BEST ESTIMATE BY THE
PARTIES OF THE DAMAGES SELLER WOULD SUFFER FROM SUCH BREACH, IT
BEING AGREED THAT IT IS EXTREMELY DIFFICULT, IF NOT IMPOSSIBLE
AND IMPRACTICABLE, TO FIX THE EXACT AMOUNT OF DAMAGE WHICH WOULD
BE INCURRED BY SELLER AS A RESULT OF SUCH DEFAULT BY BUYER.
THEREUPON ESCROW SHALL BE CANCELED AS PROVIDED ABOVE, ALL
INSTRUMENTS SHALL BE RETURNED TO THE RESPECTIVE PARTIES WHO
DEPOSITED SAME, THE PARTIES SHALL COMPLY WITH SECTION 12 BELOW
AND BUYER SHALL PAY ALL TITLE AND ESCROW CANCELLATION CHARGES.
IN ADDITION, IF ALL OR ANY PORTION OF SUCH SUMS HAVE BEEN
DEPOSITED INTO ESCROW BY EITHER BUYER OR SELLER, ESCROW HOLDER IS
HEREBY IRREVOCABLY INSTRUCTED BY BUYER AND SELLER TO DISBURSE TO
SELLER ALL SUCH SUMS UPON DEMAND OF SELLER ALONE AS LIQUIDATED
DAMAGES FOR BUYER'S BREACH OR FAILURE TO COMPLETE THE PURCHASE OF
THE PROPERTY AS PROVIDED HEREINABOVE, PURSUANT TO CALIFORNIA
CIVIL CODE SECTIONS 1671 ET. SEQ.
/s/ VJC /s/ MCI
Buyer's Initials Seller's Initials
12. Further Documents and Acts. Each of the parties
hereto agrees to cooperate in good faith with each other, and to
execute and deliver such further documents and perform such other
acts as may be reasonably necessary or appropriate to consummate
and carry into effect the transactions contemplated under this
Agreement. If this Agreement is terminated for any reason, Buyer
shall return to Seller any studies, reports or other documents,
including, without limitation, the Items, previously supplied to
Buyer by Seller, and shall deliver to Seller without charge any
and all such documents which Buyer shall have obtained with
respect to the Property at any time prior to such termination.
13. Representations, Warranties and Covenants of Buyer.
(a) Sole Reliance. Except as expressly set forth
herein, Buyer represents and warrants that it is relying solely
upon its own inspection, investigation and analyses of the
Property in purchasing the Property and is not relying in any way
upon any representations, statements, agreements, warranties,
studies, reports, descriptions, guidelines or other information
or material furnished by Seller or its representatives, whether
oral or written, express or implied, of any nature whatsoever
regarding any of the foregoing matters.
(b) As Is, Where Is. Except as expressly set
forth herein, Buyer represents and warrants that it is acquiring
the Property, the Personal Property and the Intangible Property
"AS IS, WHERE IS" without representation by Seller, and that no
patent or latent condition affecting the Property in any way,
whether or not known or discoverable or hereafter discovered,
shall affect Buyer's obligation to purchase the Property or any
of Buyer's other obligations contained in this Agreement, nor
shall any such condition give rise to any right of damages,
rescission or otherwise against Seller.
(c) U. S. Land Sales Act. Buyer is informed by
Seller that the Property is currently zoned by the appropriate
governmental authority for commercial development or will be
restricted to such uses by that certain Agreement and Declaration
of Covenants, Conditions and Restrictions for Howard Hughes
Center recorded June 24, 1993 as Instrument No. 93-1210312 in the
Official Records of Los Angeles County, as amended (the "CC&Rs");
that the appropriate local authorities have approved access from
the Property to a public street or highway; and that Seller
intends that this sale of the Property comply with the exemption
requirements of the Interstate Land Sales Full Disclosure Act.
Accordingly, Buyer hereby represents and warrants to Seller as
follows:
(i) It is a duly organized corporation,
partnership, trust or other business entity which is
engaged in commercial or industrial business;
(ii) It has been represented in this
transaction by an independent attorney, accountant,
real estate broker, investment advisor or other
representative of its own selection; and
(iii) It is purchasing the Property
either (x) substantially for its own use, or (y) under
a binding commitment to sell or lease the Property to
an entity which meets the requirements of subparagraph
(i) above, is engaged in commercial or industrial
business, and is not affiliated with Seller or its
agent.
(d) Subdivision Map Conditions. Buyer
understands that in connection with the subdivision of certain
real property of which the Property is a part, the City imposed
certain map conditions. Buyer acknowledges that, from and after
the Closing, Buyer shall be responsible for complying with such
map conditions to the extent required by the City in connection
with actions to be taken by Buyer affecting the Property.
(e) Defaults. Buyer represents and warrants that
the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not result in any
breach of the terms of, conditions of, or constitute a default
under, any instrument or obligation by which Buyer is bound, or
violate any order, writ, injunction or decree of any court in any
litigation to which Buyer is a party.
(f) Validity. Buyer represents and warrants that
it is a valid, legal and duly constituted corporation, organized
and in good standing under the laws of the State of Maryland and
is duly qualified to transact business in the State of
California, and the persons executing this Agreement and the
documents at Closing on behalf of Buyer are and will be duly
authorized so as to fully and legally bind Buyer.
(g) Survival. All the representations,
warranties, covenants and agreements of Buyer set forth herein
and elsewhere in this Agreement shall be true upon the execution
of this Agreement, and shall be deemed to be repeated at and as
of Closing and shall survive Closing. Additionally, all
indemnities by Buyer of Seller set forth in this Agreement shall
survive the termination of this Agreement.
(h) Indemnity. Buyer hereby agrees to indemnify
and defend, at its sole cost and expense, and hold Seller, its
successors and assigns, harmless from and against and to
reimburse Seller with respect to any and all claims, demands,
actions, causes of action, losses, damages, costs, liabilities
and expenses, including, without limitation, reasonable
attorneys' fees and court costs (and those fees and costs
incurred upon any appeals), of any and every kind or character,
known or unknown, fixed or contingent, asserted against or
incurred or suffered by Seller at any time and from time to time
by reason of or arising out of (a) the breach of any
representation or warranty of Buyer set forth in this Agreement,
(b) the failure of Buyer in whole or in part, to perform any
obligation required to be performed by Buyer under this
Agreement, (c) the ownership, construction, occupancy,
operation, use and maintenance of the Property after the Closing
Date, or (d) the violation after the Closing Date of any
Hazardous Material Law in effect after the Closing Date and any
and all matters arising out of any act, omission, event or
circumstance existing or occurring after the Closing Date
(including, without limitation, the presence on the Property or
release from the Property of Hazardous Materials disposed or
otherwise released after the Closing Date) which results in a
violation of a Hazardous Materials Law, regardless of whether the
act, omission, event or circumstance constitute a violation of
any Hazardous Materials Law at the time of its existence or
occurrence. The provisions of this Section 13(h) shall survive
the Closing of the transaction contemplated by this Agreement and
shall continue thereafter in full force and effect for the
benefit of Seller, its successors and assigns. However, except
as provided in Section 11(b), Seller may exercise any right or
remedy Seller may have at law or in equity should Buyer fail to
meet, comply with or perform its indemnity obligations required
by this Section 13(h). Section 11(b) sets forth the damages
which Seller is entitled to receive as a result of Buyer's
failure to close Escrow and this Section 13(h) applies only to
other breaches by Buyer. Section 11(b) only limits Seller's
rights hereunder for Buyer's failure to close Escrow. In no
event shall Buyer be obligated to indemnify Seller on account of
a matter which is or arises from the breach of any
representation, warranty or covenant of Seller set forth in this
Agreement.
(i) No Marketing. Buyer shall not market the
Property for sale or lease during the Escrow period, except in
connection with an agreement between Buyer and Seller jointly to
sell or lease the Hotel Parcels.
14. Representations, Warranties and Covenants of
Seller. All representations and warranties of Seller set forth
below in Subsection (a), (f), (g), (i), (j) and (l) shall be to
the actual knowledge of Mike Russell and the officers of The
Howard Hughes Corporation with a title of vice president or
higher. No other representations and warranties of Seller shall
be limited to the knowledge of Seller, except as expressly set
forth in such representations and warranties.
(a) Defaults. Seller represents and warrants
that the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not
result in any breach of the terms of, conditions of, or
constitute a default under, any instrument or obligation by which
Seller is bound, or violate any order, writ, injunction or decree
of any court in any litigation to which Seller is a party.
(b) Validity. Seller represents and warrants
that it is a valid, legal and duly constituted limited
partnership, organized and in good standing under the laws of the
State of Delaware and duly qualified to transact business in the
State of California, and the persons executing this Agreement and
the documents at Closing on behalf of Seller are and will be duly
authorized so as to fully and legally bind Seller.
(c) Survival. All the representations,
warranties, covenants and agreements of Seller set forth herein
and elsewhere in this Agreement shall be true upon the execution
of this Agreement, and shall be deemed to be repeated at and as
of Closing and shall survive Closing. Additionally, all
indemnities by Seller of Buyer set forth in this Agreement shall
survive the termination of this Agreement for a period of one (1)
year after the Closing Date.
(d) Seller represents and warrants that Seller
has duly and validly authorized and executed this Agreement and
has right, title, power and authority to enter into this
Agreement and, at Closing, to consummate the actions provided for
herein, and the joinder of no person or entity will be necessary
to convey the Property fully and completely to Buyer at Closing.
The execution by Seller of this Agreement and the consummation by
Seller of the transactions contemplated hereby do not, and at the
Closing will not (i) result in a breach of any of the terms or
provisions of, or constitute a default or a condition which upon
notice or lapse of time or both would ripen into a default under,
any indenture, agreement, instrument or obligation to which
Seller is a party or by which Seller or the Property or any
portion thereof is bound; or (ii) constitute a violation of any
order, rule or regulation of any court or of any federal or state
or municipal regulatory body or administrative agency or other
governmental body having jurisdiction over Seller or any portion
of the Property.
(e) Seller represents and warrants that there are
no adverse or other parties in possession of the Property or of
any part thereof except Seller and the operator of the Spectrum
Club (the "Club"), and no party has been granted any license,
lease or other right relating to the use or possession of the
Property, except the operator under the Club's Ground Lease and
Snyder under the Snyder Agreement, copies of which have been
given to Buyer.
(f) Seller represents and warrants that no notice
has been received by Seller and Seller is not aware of any person
having received notice from any insurance company that has issued
a policy with respect to any portion of the Property or from any
board of fire underwriters (or other body exercising similar
functions), claiming any defects or deficiencies or requiring the
performance of any repairs, replacements, alteration or other
work. No notice has been received by Seller from any issuing
insurance company that any of such policies will not be renewed,
or will be renewed only at a higher premium rate than is
presently payable therefor.
(g) Seller represents and warrants that no
pending condemnation, eminent domain, assessment or similar
proceeding or charge affecting the Property or any portion
thereof exists. Seller has not received any notice of a proposed
increase in the assessed valuation of the Property.
(h) Seller represents and warrants that there
will exist no material service contracts, management or other
similar agreements applicable to the Property other than the
Security Agreement and the Landscape Agreement, as those
Agreements are defined on Exhibit C attached hereto. There are
no material agreements or understandings (oral or written) with
respect to the Property or any portion thereof, to which Seller
is a party, except for the Club's Ground Lease and the agreements
listed in Exhibit C attached hereto and incorporated herein.
(i) Seller represents and warrants that no
default or breach exists under any covenant, condition,
restriction, right-of-way or easement affecting the Property or
any portion thereof.
(j) Seller represents and warrants that there are
no actions, suits or proceedings pending or threatened against or
affecting the Property or any portion thereof, or relating to or
arising out of the ownership of the Property, or before any
federal, state, county or municipal department, commission,
board, bureau or agency or other governmental instrumentality,
other than Snyder and Seller jointly processing with the City of
Los Angeles the Entitlement Modifications (as defined in the
Snyder Agreement), Seller's submittal to the City of its eleventh
annual report regarding compliance with the terms and conditions
of the Development Agreement, and Seller's efforts to obtain
confirmation by the City that residential uses can be developed
at Howard Hughes Center without further discretionary review
and/or lengthy environmental review.
(k) Seller represents and warrants that there are
no attachments, executions, assignments for the benefit of
creditors, or voluntary or involuntary proceedings in bankruptcy
or under any other debtor relief law contemplated by or pending
or threatened against Seller or the Property.
(l) For purposes of this Agreement, "Hazardous
Materials" shall mean (i) any hazardous or toxic substance,
material or waste which is or becomes designated, regulated or
classified as hazardous or toxic under any Hazardous Material
Law, (ii) any other substance, material or waste which results in
liability to any person or entity from exposure to such
substance, material or waste under any statutory or common law
theory, (iii) petroleum, oil or gas or any direct or derivative
produce or by-product thereof, (iv) asbestos and asbestos-
containing materials, (v) polychlorinated biphenyls, (vi)
flammable explosives, and (vii) radioactive materials.
For purposes of this Agreement, "Hazardous
Material Law" shall mean any applicable federal, state, or local
law, statute, common law, code, ordinance, rule, regulation or
other requirement relating to the protection of the environment,
natural resources, or the protection of public health and safety
from exposure to any Hazardous Materials, including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601, et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. 1801, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C.
6901, et seq., the Clean Water Act, 33 U.S.C. 1251, et seq.,
the Clean Air Act, 33 U.S.C, 2601, et seq., the Toxic
Substances Control Act, 15 U.S.C. 2601, et seq., the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. 136, et
seq., the Oil Pollution Act of 1990, 33 U.S.C. 2701, et seq.,
and the Federal Safe Drinking Water Act, 42 U.S.C. 300F, et
seq., as such laws have been amended or supplemented, and all
regulations promulgated pursuant thereto, and all analogous state
or local statutes.
Seller represents and warrants that, other than
with respect to (x) the site on which a gas station was
previously located and on which remedial work was previously
completed or caused to be completed, by Seller, (y) certain
underground pipelines located on the Property, as disclosed in
the Preliminary Report and/or the ALTA survey, and (z) activities
in connection with or conditions arising strictly from customary
and ordinary use or maintenance of the Property by Seller and the
operator of the Club in full compliance with any or all Hazardous
Materials Law, Seller is unaware of (i) any Hazardous Materials
installed, used, generated, manufactured, treated, handled,
refined, produced, processed, stored or disposed of, or otherwise
on or under, the Property; (ii) any activity being undertaken on
the Property which could cause (a) the Property to become a
hazardous waste treatment, storage or disposal facility within
the meaning of any Hazardous Materials Law, (b) a release or
threatened release of Hazardous Materials from the Property
within the meaning of any Hazardous Materials Law, or (c) the
discharge of Hazardous Materials into any watercourse, body of
surface or subsurface water or wetland, or the discharge into the
atmosphere of any Hazardous Materials which would require a
permit under any Hazardous Materials Law; (iii) any activity
undertaken with respect to the Property which would cause a
violation or support a claim under any Hazardous Materials Law;
(iv) any investigation, administrative order, litigation or
settlement with respect to any Hazardous Materials relating to or
affecting the Property; or (v) any notice being served on Seller
from any entity, governmental body or individual claiming any
violation of any Hazardous Materials Law, or requiring compliance
with any Hazardous Materials Law, or demanding payment or
contribution for the environmental damage or injury to natural
resources.
(m) Indemnity. Subject to the provisions
provided hereafter limiting the liability of Seller, Seller
hereby agrees to indemnify and defend, at its sole cost and
expense, and hold Buyer, its successors and assigns, harmless
from and against and to reimburse Buyer with respect to any and
all claims, demands, actions, causes of action, losses, damages,
liabilities, costs and expenses (including without limitation
reasonable attorneys' fees and court costs and those fees and
costs incurred upon any appeals) of any and every kind or
character, known or unknown, fixed or contingent, asserted
against or incurred or suffered by Buyer at any time and from
time to time by reason of or arising out of (a) the breach of any
representation or warranty of Seller set forth in this Agreement,
(b) the failure of Seller, in whole or in part, to perform any
obligation required to be performed by Seller under this
Agreement, (c) except for the matters disclosed herein, the
ownership, construction, occupancy, operation, use and
maintenance of the Property prior to the Closing Date, or (d) the
violation on or before the Closing Date of any Hazardous Material
Law in effect on or before the Closing Date and any and all
matters arising out of any act, omission, event or circumstance
existing or occurring on or prior to the Closing Date (including,
without limitation, the presence on the Property or release from
the Property of Hazardous Materials disposed or otherwise
released prior to the Closing Date) which results in a violation
of a Hazardous Materials Law, regardless of whether the act,
omission, event or circumstance constitute a violation of any
Hazardous Materials Law at the time of its existence or
occurrence. The provisions of this Section 14(m) shall survive
the Closing of the transaction contemplated by this Agreement and
shall continue thereafter in full force and effect for the
benefit of Buyer, its successors and assigns, for a period of one
(1) year after the Closing Date. Buyer may exercise any right or
remedy Buyer may have at law or in equity should Seller fail to
meet, comply with or perform its indemnity obligation required by
this Section 14(m).
(n) State Tax Withholding Certificates. Seller
shall execute and deliver into Escrow the Transferor's State Tax
Withholding Certificate attached hereto as Exhibit F, certifying
that withholding of tax under Sections 18805, 18815 and 26131 of
the California Revenue and Taxation Code will not be required.
(o) Maintain the Property. Seller shall maintain
the Property in good condition and shall maintain adequate
casualty liability insurance covering the Property until the
Closing.
(p) Agreements Affecting the Property. During
the Escrow period, Seller shall not enter into, amend or
terminate any leases, contracts or other agreements affecting the
Property or take any other actions affecting the Property (other
than in the ordinary course of ownership), without Buyer's prior
written approval, which shall not be unreasonably withheld or
delayed. Seller shall not market the Property for either sale or
lease during the Escrow period, except in connection with an
agreement between Buyer and Seller jointly to sell or lease the
Hotel Parcels.
(q) Copies of Documents. True, complete and
correct copies of the Development Agreement, the Tract Map, the
CC&Rs, the Club's Ground Lease, the Snyder Agreement, the Bylaws
and other agreements governing the Association, the Culver City
Agreement, and all amendments to each of the foregoing, are
included in that certain document binder (the "Key Documents
Binder"), marked for identification as, "Key Documents for Howard
Hughes Center", dated December 29, 1997, and initialed on the
front cover by Mike Russell.
(r) Work Remaining to Be Completed. Attached
hereto as Exhibit H is a true and complete copy of Exhibit C to
the Development Agreement, listing certain transportation
improvements. All items listed on said Exhibit C to the
Development Agreement have been fully completed and paid for,
except for the items identified on Exhibit H.
15. Development Agreements. Buyer has received a copy
of that certain Howard Hughes Center Development Agreement (the
"Development Agreement") entered into November 3, 1986 between
Seller and the City and recorded on November 4, 1986 as
Instrument No. 86-1507410 in the Official Records of Los Angeles
County, Tentative Tract Map No. 35269 and all conditions of
approval with respect thereto (the "Tract Map"), and the CC&Rs.
Seller has not made and Seller is not making any representations,
warranties or covenants to Buyer as to any matter relating to the
Development Agreement, including, without limitation, the effect
of the provisions contained therein (including, without
limitation, the effect of such provisions on the fee payable
under the Transportation Specific Plan as defined in Section
6(a)(4)(ii) above) or the enforceability thereof, the Tract Map
or the CC&Rs. Seller shall not have any liability to Buyer in
any manner relating to the Development Agreement, the Tract Map
or the CC&Rs and Buyer hereby releases Seller from any and all
liability, claims or damages resulting from the Development
Agreement, the Tract Map and the CC&Rs. The foregoing shall not
constitute a waiver of the representations, warranties and
covenants set forth in this Agreement and the documents delivered
pursuant hereto.
16. Brokers' Commission. Seller represents and
warrants to Buyer and Buyer represents and warrants to Seller
that no broker or finder has been engaged by Seller or Buyer,
respectively, in connection with any of the transactions
contemplated by this Agreement, and that no broker or finder is
in any way connected with any of such transactions. In the event
of any claim for broker's or finder's fees or commissions in
connection with the negotiation, execution or consummation of
this Agreement or the transactions contemplated hereby, Buyer
shall indemnify, save harmless and defend Seller from and against
such claim if it shall be based upon any statement or
representation or agreement made by Buyer, and Seller shall
indemnify, save harmless and defend Buyer from and against such
claim if it shall be based upon any statement, representation or
agreement made by Seller.
17. Waiver, Consent and Remedies. Each provision of
this Agreement to be performed by either party shall be deemed
both a covenant and a condition and shall be a material
consideration for the other party's performance hereunder, and
any breach thereof by either party shall be deemed a material
default hereunder. Either party may specifically and expressly
waive in writing any portion of this Agreement or any breach
thereof, but no such waiver shall constitute a further or
continuing waiver of any preceding or succeeding breach of the
same or any other provision. A waiving party may at any time
thereafter require further compliance by the other party with any
breach or provision so waived. The consent by one party to any
act by the other for which such consent was required shall not be
deemed to imply consent or waiver of the necessity of obtaining
such consent for the same or any similar acts in the future. No
waiver or consent shall be implied from silence or any failure of
a party to act, except as otherwise specified in this Agreement.
All rights, remedies, undertakings, obligations, options,
covenants, conditions and agreements contained in this Agreement
shall be cumulative and no one of them shall be exclusive of any
other. Except as otherwise specified herein, either party may
pursue any one or more of its rights, options or remedies
hereunder or may seek damages in the event of the other party's
breach hereunder, or may pursue any other remedy at law or
equity, whether or not stated in this Agreement; provided,
however, that Buyer hereby waives its rights to seek specific
performance or to record a lis pendens against the Property in
the event of Seller's default hereunder and Buyer agrees that its
right to sue for monetary damages is an appropriate and adequate
remedy in the event of any default by Seller hereunder.
18. Attorneys' Fees. In the event of any action or
proceeding instituted between Seller, Buyer and/or Escrow Holder
in connection with this Agreement, then as between Buyer and
Seller the prevailing party shall be entitled to recover from the
losing party all of its costs and expenses, including, without
limitation, court costs, all costs of appeals and reasonable
attorneys' fees.
19. Eminent Domain Proceedings. If at any time during
the Escrow period all or any substantial portion of the Property
is threatened with condemnation or legal proceedings are
commenced under the power of eminent domain, then notwithstanding
anything to the contrary contained herein, either Seller or Buyer
may terminate this Agreement and cancel Escrow by giving written
notice to Escrow Holder and the other party. Thereupon, all
instruments shall be returned to the respective parties who
deposited the same, Buyer and Seller shall each pay one-half
(1/2) of all title and Escrow cancellation charges, all other
funds then in Escrow shall be disbursed to Buyer, and each party
shall be excused from any further obligations hereunder or
liability to the other party except pursuant to Section 12 above.
20. Notices. Any notice, request, demand, consent,
approval or other communication required or permitted hereunder
or by law shall be validly given or made only if in writing and
delivered in person to an officer or duly authorized
representative of the other party or deposited in the United
States mail, duly certified or registered (return receipt
requested), postage prepaid, and addressed to the party for whom
intended, as follows:
If to Seller: Howard Hughes Properties, Limited Partnership
c/o The Howard Hughes Corporation
3800 Howard Hughes Parkway
Las Vegas, NV 89109
Attn: General Counsel
With a copy to: Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
Attn: Dale K. Neal
If to Buyer: Arden Realty, Inc.
9100 Wilshire Boulevard
East Tower, Suite 700
Beverly Hills, California 90212
Attn: Victor Coleman
With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars, #2600
Los Angeles, California 90067-6077
Attn: Real Estate Notices (PGN)
If to Escrow Holder: Stewart Title Company
330 North Brand Boulevard
Suite 700
Glendale, CA 91203
Attn: Dody Laney
Any party may from time to time, by written notice to the other,
designate a different address which shall be substituted for that
specified above. If any notice or other document is sent by mail
as aforesaid, the same shall be deemed fully delivered and
received forty-eight (48) hours after mailing as provided above.
21. Gender and Number. In this Agreement (unless the
context requires otherwise), the masculine, feminine and neuter
genders and the singular and the plural shall be deemed to
include one another, as appropriate.
22. Entire Agreement. This Agreement and its exhibits
constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof, and the final, complete
and exclusive expression of the terms and conditions thereof.
All prior agreements, representations, negotiations and
understandings of the parties hereto, oral or written, express or
implied, are hereby superseded and merged herein.
23. Captions. The captions used herein are for
convenience only and are not a part of this Agreement and do not
in any way limit or amplify the terms and provisions hereof.
24. Governing Law. This Agreement and the exhibits
attached hereto shall be governed by and construed under the laws
of the State of California.
25. Invalidity of Provision. If any provision of this
Agreement as applied to either party or to any circumstance shall
be adjudged by a court of competent jurisdiction to be void or
unenforceable for any reason, the same shall in no way affect (to
the maximum extent permissible by law) any other provision of
this Agreement, the application of any such provision under
circumstances different from those adjudicated by the court, or
the validity or enforceability of this Agreement as a whole.
26. Amendments. No addition to or modification of any
provision contained in this Agreement shall be effective unless
fully set forth in writing by both Buyer and Seller.
27. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute but one and
the same instrument.
28. Binding Agreement. Subject to the restrictions on
assignment set forth herein, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and
assigns.
29. Construction. The parties acknowledge that each
party and its counsel have reviewed and approved this Agreement
and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement or any
amendments or exhibits hereto.
30. Confidentiality. Buyer and Seller acknowledge
that it is their mutual intent to make a joint public
announcement of the transaction contemplated by this Agreement at
an appropriate time. As a result, Buyer and Seller each agree
not to make any public disclosure of this Agreement or the
Project without the prior express written consent of the other
party hereto. Additionally, the parties agree that there will be
no public announcement until the local councilwoman's office is
fully briefed, which briefing shall be arranged and coordinated
by Seller. Buyer shall maintain confidential, and shall not
divulge, disclose or use (except in connection with Buyer's
evaluation of the proposed transaction), any information obtained
or created by Buyer as a result of its investigations on the
Property or with respect to the proposed transaction, unless such
information is generally known or available to the public, is
disclosed by Buyer in connection with such inquiries and
investigations as Buyer may make during the Contingency Period
pursuant to section 6(b) above, or is required by law to be
disclosed by Buyer by virtue of Buyer being a publicly held
company. Notwithstanding anything in this Section 30 to the
contrary, once Buyer has deposited the Deposit and the Additional
Deposit into Escrow, Buyer may make a public announcement of the
transaction contemplated by this Agreement if, in the opinion of
Buyer's securities legal counsel, Buyer may be legally required
to do so. In any event, nothing shall preclude Buyer from
disclosing any such information if the Closing occurs.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written and such date shall
be deemed the date of this Agreement.
SELLER:
HOWARD HUGHES PROPERTIES, LIMITED
PARTNERSHIP, a Delaware limited
partnership
By:THE HOWARD HUGHES CORPORATION
(formerly known as Summa
Corporation), a Delaware
corporation, its sole general partner
By: /s/ Michael C. Inarchos
Its: Sr. Vice President, General Counsel
BUYER:
ARDEN REALTY, INC., a Maryland corporation
By:/s/ Victor J. Coleman
Its: President and COO
By:
Its:
ESCROW HOLDER:
Acknowledged and accepted this __ day of _____________, 1998.
STEWART TITLE COMPANY
By:/s/ Dody Laney
Its: Senior Escrow Officer
AMENDMENT TO PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
This Amendment to Purchase Agreement And Escrow Instructions
(the "Amendment") is made as of March 11, 1998 by and between
HOWARD HUGHES PROPERTIES, LIMITED PARTNERSHIP, a Delaware limited
partnership ("Seller"), and ARDEN REALTY, INC., a Maryland
corporation ("Buyer").
RECITALS
1. Buyer and Seller have entered into that certain
Purchase Agreement And Escrow Instructions dated as of January
30, 1998 regarding the purchase by Buyer of certain real property
located within the area commonly referred to as Howard Hughes
Center (the "Center") and described in said Purchase Agreement
And Escrow Instructions as the Snyder Parcels, the Hotel Parcels
and the Remainder Parcels (the "Purchase Agreement").
2. The parties desire to amend the Purchase Agreement as
hereinafter provided.
NOW THEREFORE, in consideration of the foregoing recitals
and other good and valuable consideration the receipt of which is
hereby acknowledged, Buyer and Seller hereby agree to amend the
Purchase Agreement as follows:
1. Definitions. All capitalized terms in this Amendment
shall have the meanings set forth herein or in the Purchase
Agreement, and all references to "Sections" shall be to Sections
of the Purchase Agreement.
2. Amendment to Section 1. The last two sentences of
Section 1 of the Purchase Agreement are amended and restated in
their entirety as follows:
"The approximately 3.31 acres depicted and/or described
on Exhibit A as Lot 8 of Tract No. 49299 and
Lots 6 and 23 of Tract 51419 and as future
sites for hotels are hereinafter referred to
as the "Hotel Parcels". The balance of the
Property, approximately 25.28 acres described
on Exhibit A as Lots 4, 5, 7, 8, 9, 10, 11,
12, 13, 14, 17 (partial), 18, 19, 20, 21, 22
and 24 of Tract No. 51419 and Lots 6 and 7 of
Tract No. 49299, is hereinafter referred to
as the Remainder Parcels."
In addition, Exhibit A attached hereto replaces and
supersedes Exhibit A to the Purchase Agreement.
3. Clarification Regarding Seller's Hotel Overage.
Notwithstanding anything in Section 4(b) to the contrary, only
Seller's right to receive the $4,550,000 purchase price for the
Hotel Parcels shall be evidenced by the Note and secured by the
First Deed of Trust, the form and substance of which have been
agreed to by Buyer and Seller and are attached hereto as Exhibits
B and C. Seller's receipt of the guaranty referred to in said
Section 4(b) shall not be a condition to the release of the First
Deed of Trust. Instead, the obligation to pay to Seller Seller's
Hotel Overage if and when received by Buyer shall remain an
unsecured obligation of Arden Realty, Inc. ("Arden")
notwithstanding any assignment by Arden of its rights or
interests under the Purchase Agreement pursuant to Section 10,
which obligation shall survive the Closing. Without limiting the
foregoing, Seller hereby waives any statutory or common law
vendor's lien securing Seller's Hotel Overage.
4. Indemnity Agreement. The Indemnity Agreement referred
to in Section 5(d) shall be in form and substance attached hereto
as Exhibit D.
5. Deletion of Reference to Prudential Agreement. The
reference to the Prudential Agreement is hereby deleted from
Section 6(a)(5) of the Purchase Agreement.
6. Buyer's Approval of Conditions Set Forth in Section
6(a) and 6(b). Buyer hereby approves the conditions set forth in
Section 6(a) and 6(b); provided, however, it shall be a condition
to Buyer's and Seller's obligation to complete the purchase and
sale of the Property (which condition may be waived by Buyer, and
if so waived, shall also be waived by Seller) that at Closing
Buyer receives a title policy in the form attached to that
certain letter from Buyer's counsel of even date herewith. As a
result of such approval, and in accordance with the provisions of
Section 4(i), the Deposit is now non-refundable, subject to the
satisfaction of the conditions set forth in the Purchase
Agreement, as amended hereby, and shall be credited towards the
Purchase Price.
7. Cost to Build Remaining Infrastructure. With respect
to the work applicable to the construction of Center Drive under
the Development Agreement (the "Infrastructure"), as such scope
was reviewed and approved by Buyer during the Contingency Period,
Seller shall reimburse Buyer for one-half (1/2) of the amount (up
to a maximum of $1 million) by which the actual costs of the
Infrastructure incurred by Buyer exceed Eight Million Three
Hundred Thousand Dollars ($8,300,000) (the "Estimated
Infrastructure Cost"); provided, however, increased costs due
solely to material changes made by Buyer to the scope of work for
such Infrastructure shall be borne by Buyer. These costs shall
include, without limitation, all costs of design and construction
and of securing all necessary governmental approvals and permits.
Seller shall reimburse Buyer for Seller's share of such actual
costs as and when requested by Buyer provided that Seller shall
have received prior to or concurrently with such request for
reimbursement documentation of such costs from Buyer reasonably
satisfactory to Seller. However, if the actual costs of the
Infrastructure are less than the Estimated Infrastructure Cost,
Buyer shall promptly pay to Seller one-half (1/2) of the amount
(up to a maximum of $1 million) by which such actual costs are
less than the Estimated Infrastructure Cost. For example, and
without limiting the generality of the foregoing, if the actual
costs of the Infrastructure are $9 million, Seller shall pay to
Buyer $350,000, and if the actual costs of the Infrastructure are
$7.8 million, Buyer shall pay to Seller $250,000. The obligation
of Buyer in this regard shall remain the obligation of Arden
after the Closing, notwithstanding any assignment by Arden of its
rights or interests under the Purchase Agreement pursuant to
Section 10. The obligations of Buyer and Seller under this
paragraph 7 shall terminate and be of no further force and effect
if not incurred on or before March 31, 2000.
8. Marketing Signage. Prior to the Closing, Seller shall
allow Buyer to place upon the Property at a location reasonably
approved by Seller and Buyer which shall indicate that interested
parties should call Mike Russell at the telephone number of
Seller's office located in the office building at 6701 Center
Drive West.
9. Cooperation. Without limitation on the terms and
conditions set forth in the Purchase Agreement, Seller shall
deliver copies of all notices and material correspondence given
or received by Seller from and after the date hereof and shall
not give any consents or approvals with respect to the Property
or enter into any new leases or contracts (or modify any existing
lease or contract) without Buyer's consent, which shall not be
unreasonably withheld. Seller and Buyer shall reasonably
cooperate to assure an orderly transition at Closing.
10. Assignment. Notwithstanding the provisions of the
Purchase Agreement, Buyer shall have the right to assign its
rights or interests in the Purchase Agreement without Seller's
consent.
11. Contingency Date. The Contingency Date under the
Purchase Agreement shall be March 12, 1998.
12. Counterparts. This Agreement may be executed in one or
more counterparts and may be executed by facsimile.
13. Miscellaneous.
A. Seller acknowledges that all project models and
the like will be conveyed to Buyer as part of the Personal
Property covered by the Bill of Sale.
B. Seller acknowledges that all deposits either
delivered to Seller or held in escrow with respect to the Snyder
Agreement will be credited or assigned to Buyer at Closing.
C. Seller acknowledges that Buyer may utilize the
"Licensed Marks" (as defined in the Trademark Agreement) in a
manner consistent with the current uses without obtaining
Seller's consent. In all events, Buyer's rights to use the
Licensed Marks shall include such rights as may be necessary to
satisfy existing agreements (such as the Snyder Agreement) being
assumed by Buyer. The Trademark Agreement shall be revised prior
to Closing to reflect the foregoing.
D. Seller acknowledges that if requested by Buyer,
Seller will provide separate assignments (in recordable form) of
its interests as Declarant or the like under existing CC&RS,
reciprocal easement agreements and similar agreements respecting
the Property.
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date first above written and such date shall be deemed
the date of this Amendment.
SELLER:
HOWARD HUGHES PROPERTIES LIMITED PARTNERSHIP,
a Delaware limited partnership
By: The Howard Hughes Corporation
(formerly known as Summa Corporation),
a Delaware corporation, its sole general partner
By:/s/ Michael C. Inarchos
Its: Senior Vice President, General Counsel
BUYER:
ARDEN REALTY, INC., a Maryland corporation
By:/s/ Victor J. Coleman
Its: President and COO
ESCROW HOLDER:
Acknowledged and accepted this day of March, 1998.
STEWART TITLE COMPANY
By: Dody Laney
Its: Senior Escrow Officer
PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
THIS PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
("Agreement") is made as of January 30, 1998, by and between
HOWARD HUGHES PROPERTIES, LIMITED PARTNERSHIP, a Delaware limited
partnership ("Seller"), and ARDEN REALTY, INC., a Maryland
corporation ("Buyer"), as follows:
1. Purchase and Sale. Upon all the terms and
conditions contained herein, Buyer hereby agrees to purchase from
Seller and Seller agrees to sell to Buyer the fee simple interest
in that certain real property (the "Property") (a) located within
the area commonly referred to as Howard Hughes Center (the
"Center") and known as the location of the Spectrum Club,
(b) consisting of approximately .53 acres and all entitlements
and associated amenities, and (c) depicted and/or described on
Exhibit A attached hereto and incorporated herein by this
reference. Buyer hereby also agrees to purchase from Seller and
Seller agrees to assign to Buyer Seller's interest in the
Personal Property and the Intangible Property (as said Properties
are defined in the Bill of Sale And Assignment attached hereto as
Exhibit E and incorporated herein by this reference [the "Bill of
Sale"]).
2. Opening of Escrow. Concurrently with the
execution of this Agreement, Seller and Buyer shall open an
escrow (the "Escrow") with Stewart Title Company at 330 North
Brand Boulevard, Suite 700, Glendale, California 91203 (the
"Escrow Holder") by delivering a fully executed copy of this
Agreement, or fully executed counterparts thereof, to Escrow
Holder. Escrow shall be deemed open upon Escrow Holder's
receipt thereof. Escrow Holder will execute copies of this
Agreement and return fully executed copies hereof to Buyer and
Seller when Escrow has opened. In addition, the parties agree to
be bound by the standard escrow General Provisions attached
hereto as Exhibit B and incorporated herein by this reference.
In the event of any discrepancy between this Agreement and such
General Provisions, the provisions of this Agreement shall
prevail.
3. Closing of Escrow. The closing (the "Closing") of
the purchase and sale of the Property shall take place through
Escrow on March 31, 1998 (the "Closing Date"), provided that the
conditions to Closing set forth herein have been satisfied. If
the Closing has not occurred on or before the Closing Date, then
this Agreement shall automatically terminate (and, subject to the
immediately succeeding sentence, Section 8 below shall apply)
unless the parties mutually agree to the contrary in writing. No
such termination shall relieve any party from liability due to
any breach or default under this Agreement by such party prior to
the time of such termination.
4. Purchase Price. The purchase price for the
Property, the Personal Property and the Intangible Property
(the "Purchase Price") shall be Ten Million Dollars
($10,000,000); provided, however, that if the owner and
operator of the Spectrum Club (the "Club Owner") exercises
its right of first offer under section 52 of that certain
Athletic Club Ground Lease applicable to the Property (the
"Ground Lease") to acquire the Property, the Purchase Price
shall at Closing be deposited by Escrow Holder in an
interest bearing account or other investment instrument
designated by Buyer, pending the closing of the purchase and
sale of the Property to the Club Owner. All interest earned
on the Purchase Price shall be credited to the account of
Buyer. If the Club Owner completes the purchase of the
Property, Escrow Holder shall promptly return the Purchase
Price to Buyer, together with all interest earned thereon.
If the Club Owner fails to complete the purchase of the
Property in accordance with said section 52 of the Ground
Lease, Seller shall so notify Buyer and Escrow Holder in
writing and Escrow Holder shall promptly record Seller's
Grant Deed to Buyer with respect to the Property, shall
deliver the Bill of Sale to Buyer, shall deliver fully
executed copies of the Assignment And Assumption Agreement
(as defined herein) to Buyer and Seller and record a fully
executed copy thereof, shall cause the Title Policy (as
defined below) to be delivered to Buyer and shall release
the Purchase Price to Seller in accordance with Seller's
instructions; provided, however, the Purchase Price shall
not be released to Seller unless and until the Title Policy
can be delivered to Buyer.
The Purchase Price shall be payable as follows:
(i) Deposit. Concurrently with the
execution of this Agreement, Buyer shall deposit into
Escrow cash in the amount of Two Hundred Fifty Thousand
Dollars ($250,000). Escrow Holder is hereby instructed
to deposit such amount (the "Deposit") in an interest
bearing account or other investment instrument
designated by Seller. All interest earned on the
Deposit shall be credited to the account of Seller and
shall be non-refundable under all circumstances. Upon
the satisfaction of the conditions to Buyer's
obligation to purchase the Property set forth in
Sections 6(a) and 6(b) below, the Deposit shall become
non-refundable, subject to the satisfaction of the
conditions set forth in Sections 6(c) and 6(d) below,
and shall be credited towards the Purchase Price. If
the Deposit becomes non-refundable as aforesaid, it
shall continue to be held by Escrow Holder to be
applied against the Purchase Price concurrently with
the Closing.
(ii) Cash at Closing. The remainder of the
Purchase Price shall be deposited into Escrow, in cash
or by wire transfer of immediately available federal
funds, by Buyer at or prior to Closing.
5. Costs and Prorations.
(a) Escrow and Title Fees. Buyer and Seller
shall each pay one-half (1/2) of the Escrow fees. Seller shall
bear the cost of (i) all documentary transfer taxes, (ii) the
premium which would be required for the Title Policy issued by
the Title Company (as defined below) insuring Buyer in the amount
of the Purchase Price, and (iii) the cost of the ALTA survey
required for the Title Policy. Buyer shall bear the cost of
recording the Grant Deed (as defined in Section 9(a) below). All
other costs or expenses not otherwise provided for in this
Agreement shall be apportioned or allocated between Buyer and
Seller in the manner customary in Los Angeles County, California.
(b) Taxes and Assessments. All current real
property taxes and all payments on general and special bonds and
assessments on the Property shall be prorated through Escrow
between Buyer and Seller as of Closing based upon the latest
available tax information, using the customary escrow procedures.
Any taxes levied under the Supplemental Tax Roll applicable to
the period prior to the Closing Date shall be paid by Seller and
any such taxes applicable to the period from and after the
Closing Date shall be paid by Buyer.
(c) Rents, Revenues and Expenses. All rents,
revenues and expenses relating to the Ground Lease shall be
prorated through Escrow between Buyer and Seller as of the
Closing based upon a proration statement prepared by Buyer,
approved by Seller and delivered to Escrow Holder prior to
Closing. Buyer shall not be required to pay to Seller at the
Closing any delinquent rents under the Ground Lease; rather,
Seller's share of delinquent rents, if any, shall be paid to
Seller if, as and when received by Buyer. Rents received after
the Closing will be applied first to the then most recently
accrued obligation of the tenant under the Ground Lease.
6. Buyer's Conditions to Closing. The obligation of
Buyer to complete the purchase of the Property is subject to
satisfaction of the conditions set forth below which conditions
shall be for the benefit of Buyer. Buyer's obligation to
complete the purchase of the Property is subject to the
satisfaction of the conditions set forth in Sections 6(a) and
6(b) on or before the date (the "Contingency Date") that is
thirty (30) days after the later of (a) execution of this
Agreement by both Buyer and Seller, or (b) delivery to Buyer of
all of the items set forth in Section 6(a) below. Buyer's
obligation to complete the purchase of the Property is subject to
the satisfaction of the conditions set forth in Sections 6(c) and
6(d) as of the Closing. Upon the failure of any such condition
to be satisfied in a timely manner, Buyer may terminate this
Agreement.
(a) Buyer shall have had opportunity to
review at Seller's office in Los Angeles (and Seller shall make
copies for Buyer upon Buyer's written request) and approve each
of the following (collectively, the "Items"):
(1) A current preliminary title report (the
"Preliminary Report") including the legal
description of the Property, together with copies
of all documents referred to therein, prepared by
Stewart Title Company (the "Title Company"). If
Buyer timely gives Seller notice of any
disapproved exceptions set forth in the
Preliminary Report, Seller may cause such
exceptions to be removed, but if Seller is
unwilling or unable to cause such exceptions to be
removed, then either party may terminate this
Agreement;
(2) Evidence that the Property complies with
the Subdivision Map Act of California;
(3) A current ALTA Survey of the Property;
(4) Copies of all agreements relating to the
Property, including but not limited to the
Development Agreement, the Tract Map (as defined
in Section 15 below), the Articles of
Incorporation and Bylaws of the Association, the
CC&Rs (as defined in Section 13(c) below), the
Ground Lease, and all amendments to the foregoing
and documents referenced therein;
(5) All plans, structural drawings,
architectural drawings, and any soils, structural,
geological, environmental, hazardous materials and
asbestos studies or reports relating to subsurface
conditions, grading plans, topographical maps and
similar data respecting the Property;
(6) Copies of property tax bills for the
last two (2) years and copies of the most recently
available utility bills and similar records
respecting the Property;
(7) A certificate of Seller certifying to
Seller's knowledge that there is no legal or
administrative action, proceeding, claim,
arbitration or suit pending before any court,
agency or official, nor any such claim or action
threatened in writing, relating to the Property or
with respect to the validity of any statutes,
ordinances, regulations or restrictions or any
permits or approvals thereunder relating to the
Property, nor any outstanding contingent
liabilities affecting the Property.
(b) During the period ending on the Contingency Date
(the "Contingency Period"), Buyer shall have the right to inspect
and approve (i) all physical, seismic and all other aspects of
the Property, (ii) each of the Items and (iii) all books,
records, correspondence, and files of Seller regarding the
Property, and to make inquiries and investigations as Buyer deems
necessary or appropriate. Seller will cause its consultants to
furnish Buyer with any information and copies of documents
reasonably requested by Buyer in writing during the Contingency
Period. In addition, the Buyer shall have the right to enter the
Property to conduct reasonable tests and inspections deemed
reasonably necessary or advisable by Buyer or its consultants
including, but not limited to, physical inspection. Buyer hereby
indemnifies and holds Seller and Seller's affiliates harmless
from any and all losses, damages, costs, liabilities and
expenses, including, without limitation, reasonable attorneys'
fees (and those fees incurred upon any appeals) and court costs
incurred or suffered by Seller, whether directly or proximately,
by the negligent or willful act or omission of Buyer or Buyer's
representatives during their inspections of the Property.
Notwithstanding the foregoing, prior to and at all times after
initially entering upon the Property for any purpose permitted by
this Agreement, Buyer shall at its expense maintain with a
reputable company or companies qualified to do business in
California and acceptable to Seller, a policy or policies of
comprehensive general liability insurance with respect to the
Property and the activities of or on behalf of Buyer on or about
the Property. Such policy or policies shall (i) name Seller as
an additional insured and include an effective waiver by the
issuer of all rights of subrogation against such additional
insured and (ii) provide that any losses shall be payable
notwithstanding any act or failure to act or negligence of Buyer
or Seller or any other person or entity. The minimum amount of
such insurance shall be $2,000,000 per person and $2,000,000 per
accident. Prior to entering onto the Property, Buyer shall
deliver to Seller a certificate of insurance evidencing that the
foregoing insurance is in full force and effect.
(c) All of Seller's covenants required to have
been performed by the Closing shall have been so performed,
and all representations and warranties of Seller shall be
current as of the Closing.
(d) Seller shall have complied with all of its
obligations under that certain Purchase Agreement And Escrow
Instructions dated as of January 30, 1998, by and between Buyer
and Seller covering the Snyder Parcels, the Hotel Parcels and the
Remainder Parcels (as each of such Parcels are defined in such
Purchase Agreement And Escrow Instructions), and the Closing
under such Purchase Agreement And Escrow Instructions shall be in
a position to occur concurrently with the Closing under this
Agreement.
Approval of the conditions set forth in Sections
6(a) and 6(b) above (which approval shall be in Buyer's sole
and absolute discretion) shall be in writing signed by
Buyer. Failure of Buyer to approve any Items on or before
the Contingency Date conclusively shall be deemed to
constitute Buyer's disapproval thereof. In that event, this
Agreement shall automatically terminate and the Deposit
shall be returned to Buyer.
7. Seller's Conditions to Closing. The obligation of
Seller to complete the sale of the Property is subject to
satisfaction of the conditions set forth below on or before the
Closing Date, which conditions shall be for the benefit of
Seller. Upon failure of any such condition to be satisfied in a
timely manner, Seller may terminate this Agreement.
(a) Buyer shall have deposited into Escrow in the
manner and at the time required under this Agreement, the Deposit
and the remainder of the Purchase Price.
(b) Buyer shall have executed the Assignment And
Assumption Agreement (as defined in Section 9(a) below) and
deposited the same into Escrow in a timely manner.
(c) All of Buyer's covenants required to be performed
by the Closing shall have been so performed, and all
representations and warranties of Buyer shall be current as of
the Closing.
(d) Buyer shall have complied with all of its
obligations under that certain Purchase Agreement And Escrow
Instructions dated as of January 30, 1998, by and between Buyer
and Seller covering the Snyder Parcels, the Hotel Parcels and the
Remainder Parcels (as each of such Parcels are defined in such
Purchase Agreement And Escrow Instructions), and the Closing
under such Purchase Agreement And Escrow Instructions shall be in
a position to occur concurrently with the Closing under this
Agreement.
8. Termination. If this Agreement automatically
terminates or if Buyer or Seller elects to terminate this
Agreement as provided above in Section 6 or Section 7, the
electing party shall send written notice thereof to the other
party and Escrow Holder. Upon receipt of such notice, Escrow
Holder shall return all funds deposited into Escrow and any
documents held by Escrow Holder to the parties depositing same.
All title and Escrow cancellation charges, if any, shall be
shared equally by Buyer and Seller. Upon return of such funds
and documents by Escrow Holder and, if applicable, by Seller and
subject to Section 12 below, the parties hereto shall have no
further rights or obligations under this Agreement, which shall
be deemed canceled for all purposes.
9. Documents at Closing.
(a) Ground Lease Assumed by Buyer. Seller
represents and warrants that a true, complete and correct copy
of the Ground Lease including all amendments thereto, is included
in the "Key Documents Binder" (as hereinafter defined). Buyer
acknowledges that Buyer shall be required to assume all of
Seller's obligations under the Ground Lease. In order to
accomplish the foregoing assignment and assumption, Buyer and
Seller shall each, prior to Closing, execute and deliver into
Escrow the Assignment and Assumption Agreement attached hereto
and incorporated herein as Exhibit C (the "Assignment And
Assumption Agreement").
(b) Transfer and Possession. Seller shall
deliver through Escrow an executed and recordable Grant Deed in a
form sufficient to convey good title to Buyer (the "Grant Deed"),
subject only to the exceptions described in the next following
subsection. Seller shall also deliver through Escrow the
executed Bill of Sale. When all required funds and instruments
have been deposited into Escrow by the appropriate parties and
when all other conditions to Closing have been fulfilled, Escrow
Holder shall record the Grant Deed, shall deliver the Bill of
Sale to Buyer and shall deliver fully executed copies of the
Assignment And Assumption Agreement to Buyer and Seller. Buyer
shall not be entitled to possession of the Property until the
Grant Deed has been so recorded.
(c) Title. Seller shall cause the Title Company
to be prepared or committed to deliver to Buyer an extended
coverage ALTA Owner's Policy of Title Insurance (with such
endorsements as Buyer shall reasonably require) dated as of
Closing (the "Title Policy"). The Title Policy shall insure
Buyer in an amount equal to the Purchase Price, and show title
vested in Buyer subject only to:
(i) The usual printed Title Company
exceptions applicable to an ALTA Owner's Policy;
(ii) All exceptions shown on the Preliminary
Report and not disapproved of by Buyer or not removed
by Seller pursuant to Section 6(a)(1) above; and
(iii) All other exceptions approved in
writing by Buyer.
10. Assignment. Buyer shall not assign its rights or
interests hereunder without Seller's prior written consent, which
consent may be withheld by Seller in its sole discretion.
Notwithstanding the foregoing, Buyer may assign its rights and
interests hereunder, without Seller's prior written consent, to
any Affiliate of Buyer. As used herein, "Affiliate of Buyer"
means a corporation, partnership or limited liability company of
which at least 20% of the interests are owned directly or
indirectly, by Arden Realty, Inc. or Arden Realty Limited
Partnership. Any attempted assignment made in violation of this
Section shall be null and void.
11. Time of Essence and Defaults.
(a) Time of Essence. Time is of the essence of
every provision of this Agreement in which time is an element.
Failure by one party to perform any obligation within the time
and on the terms and conditions required hereunder shall
discharge the other party's duties and obligations to perform
hereunder upon written notice or demand from the other party.
(b) Liquidated Damages. IF ESCROW DOES NOT CLOSE
DUE TO BUYER'S FAILURE TO DEPOSIT ANY REQUIRED SUMS BY THE
PRESCRIBED TIME OR TO PERFORM ANY OTHER ACT WHEN DUE HEREUNDER,
WHICH FAILURE SHALL BE DEEMED A MATERIAL BREACH OF AN OBLIGATION
OF BUYER TO BE PERFORMED UNDER THIS AGREEMENT, THEN SELLER SHALL
RETAIN ALL SUMS THEN HELD BY ESCROW HOLDER PURSUANT TO THE TERMS
OF THIS AGREEMENT, TOGETHER WITH INTEREST EARNED THEREON, AS
LIQUIDATED DAMAGES, WHICH AMOUNT IS THE BEST ESTIMATE BY THE
PARTIES OF THE DAMAGES SELLER WOULD SUFFER FROM SUCH BREACH, IT
BEING AGREED THAT IT IS EXTREMELY DIFFICULT, IF NOT IMPOSSIBLE
AND IMPRACTICABLE, TO FIX THE EXACT AMOUNT OF DAMAGE WHICH WOULD
BE INCURRED BY SELLER AS A RESULT OF SUCH DEFAULT BY BUYER.
THEREUPON ESCROW SHALL BE CANCELED AS PROVIDED ABOVE, ALL
INSTRUMENTS SHALL BE RETURNED TO THE RESPECTIVE PARTIES WHO
DEPOSITED SAME, THE PARTIES SHALL COMPLY WITH SECTION 12 BELOW
AND BUYER SHALL PAY ALL TITLE AND ESCROW CANCELLATION CHARGES.
IN ADDITION, IF ALL OR ANY PORTION OF SUCH SUMS HAVE BEEN
DEPOSITED INTO ESCROW BY EITHER BUYER OR SELLER, ESCROW HOLDER IS
HEREBY IRREVOCABLY INSTRUCTED BY BUYER AND SELLER TO DISBURSE TO
SELLER ALL SUCH SUMS UPON DEMAND OF SELLER ALONE AS LIQUIDATED
DAMAGES FOR BUYER'S BREACH OR FAILURE TO COMPLETE THE PURCHASE OF
THE PROPERTY AS PROVIDED HEREINABOVE, PURSUANT TO CALIFORNIA
CIVIL CODE SECTIONS 1671 ET. SEQ.
/s/ VJC /s/ MCI
Buyer's Initials Seller's Initials
12. Further Documents and Acts. Each of the parties
hereto agrees to cooperate in good faith with each other, and to
execute and deliver such further documents and perform such other
acts as may be reasonably necessary or appropriate to consummate
and carry into effect the transactions contemplated under this
Agreement. If this Agreement is terminated for any reason, Buyer
shall return to Seller any studies, reports or other documents,
including, without limitation, the Items, previously supplied to
Buyer by Seller, and shall deliver to Seller without charge any
and all such documents which Buyer shall have obtained with
respect to the Property at any time prior to such termination.
13. Representations, Warranties and Covenants of Buyer.
(a) Sole Reliance. Except as expressly set forth
herein, Buyer represents and warrants that it is relying solely
upon its own inspection, investigation and analyses of the
Property in purchasing the Property and is not relying in any way
upon any representations, statements, agreements, warranties,
studies, reports, descriptions, guidelines or other information
or material furnished by Seller or its representatives, whether
oral or written, express or implied, of any nature whatsoever
regarding any of the foregoing matters.
(b) As Is, Where Is. Except as expressly set
forth herein, Buyer represents and warrants that it is acquiring
the Property, the Personal Property and the Intangible Property
"AS IS, WHERE IS" without representation by Seller, and that no
patent or latent condition affecting the Property in any way,
whether or not known or discoverable or hereafter discovered,
shall affect Buyer's obligation to purchase the Property or any
of Buyer's other obligations contained in this Agreement, nor
shall any such condition give rise to any right of damages,
rescission or otherwise against Seller.
(c) U. S. Land Sales Act. Buyer is informed by
Seller that the Property is currently zoned by the appropriate
governmental authority for commercial development or will be
restricted to such uses by that certain Agreement and Declaration
of Covenants, Conditions and Restrictions for Howard Hughes
Center recorded June 24, 1993 as Instrument No. 93-1210312 in the
Official Records of Los Angeles County, as amended (the "CC&Rs");
that the appropriate local authorities have approved access from
the Property to a public street or highway; and that Seller
intends that this sale of the Property comply with the exemption
requirements of the Interstate Land Sales Full Disclosure Act.
Accordingly, Buyer hereby represents and warrants to Seller as
follows:
(i) It is a duly organized corporation,
partnership, trust or other business entity which is
engaged in commercial or industrial business;
(ii) It has been represented in this
transaction by an independent attorney, accountant,
real estate broker, investment advisor or other
representative of its own selection; and
(iii) It is purchasing the Property
either (x) substantially for its own use, or (y) under
a binding commitment to sell or lease the Property to
an entity which meets the requirements of subparagraph
(i) above, is engaged in commercial or industrial
business, and is not affiliated with Seller or its
agent.
(d) Subdivision Map Conditions. Buyer
understands that in connection with the subdivision of certain
real property of which the Property is a part, the City imposed
certain map conditions. Buyer acknowledges that, from and after
the Closing, Buyer shall be responsible for complying with such
map conditions to the extent required by the City in connection
with actions to be taken by Buyer affecting the Property.
(e) Defaults. Buyer represents and warrants that
the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not result in any
breach of the terms of, conditions of, or constitute a default
under, any instrument or obligation by which Buyer is bound, or
violate any order, writ, injunction or decree of any court in any
litigation to which Buyer is a party.
(f) Validity. Buyer represents and warrants that
it is a valid, legal and duly constituted corporation, organized
and in good standing under the laws of the State of Maryland and
is duly qualified to transact business in the State of
California, and the persons executing this Agreement and the
documents at Closing on behalf of Buyer are and will be duly
authorized so as to fully and legally bind Buyer.
(g) Survival. All the representations,
warranties, covenants and agreements of Buyer set forth herein
and elsewhere in this Agreement shall be true upon the execution
of this Agreement, and shall be deemed to be repeated at and as
of Closing and shall survive Closing. Additionally, all
indemnities by Buyer of Seller set forth in this Agreement shall
survive the termination of this Agreement.
(h) Indemnity. Buyer hereby agrees to indemnify
and defend, at its sole cost and expense, and hold Seller, its
successors and assigns, harmless from and against and to
reimburse Seller with respect to any and all claims, demands,
actions, causes of action, losses, damages, costs, liabilities
and expenses, including, without limitation, reasonable
attorneys' fees and court costs (and those fees and costs
incurred upon any appeals), of any and every kind or character,
known or unknown, fixed or contingent, asserted against or
incurred or suffered by Seller at any time and from time to time
by reason of or arising out of (a) the breach of any
representation or warranty of Buyer set forth in this Agreement,
(b) the failure of Buyer in whole or in part, to perform any
obligation required to be performed by Buyer under this
Agreement, (c) the ownership, construction, occupancy,
operation, use and maintenance of the Property after the Closing
Date, or (d) the violation after the Closing Date of any
Hazardous Material Law in effect after the Closing Date and any
and all matters arising out of any act, omission, event or
circumstance existing or occurring after the Closing Date
(including, without limitation, the presence on the Property or
release from the Property of Hazardous Materials disposed or
otherwise released after the Closing Date) which results in a
violation of a Hazardous Materials Law, regardless of whether the
act, omission, event or circumstance constitute a violation of
any Hazardous Materials Law at the time of its existence or
occurrence. The provisions of this Section 13(h) shall survive
the Closing of the transaction contemplated by this Agreement and
shall continue thereafter in full force and effect for the
benefit of Seller, its successors and assigns. However, except
as provided in Section 11(b), Seller may exercise any right or
remedy Seller may have at law or in equity should Buyer fail to
meet, comply with or perform its indemnity obligations required
by this Section 13(h). Section 11(b) sets forth the damages
which Seller is entitled to receive as a result of Buyer's
failure to close Escrow and this Section 13(h) applies only to
other breaches by Buyer. Section 11(b) only limits Seller's
rights hereunder for Buyer's failure to close Escrow.
(i) No Marketing. Buyer shall not market the
Property for sale or lease during the Escrow period.
14. Representations, Warranties and Covenants of
Seller. All representations and warranties of Seller set forth
below in Subsection (a), (f), (g), (i), (j) and (l) shall be to
the actual knowledge of Mike Russell and the officers of The
Howard Hughes Corporation with a title of vice president or
higher. No other representations and warranties of Seller shall
be limited to the knowledge of Seller, except as expressly set
forth in such representations and warranties.
(a) Defaults. Seller represents and warrants
that the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not
result in any breach of the terms of, conditions of, or
constitute a default under, any instrument or obligation by which
Seller is bound, or violate any order, writ, injunction or decree
of any court in any litigation to which Seller is a party.
(b) Validity. Seller represents and warrants
that it is a valid, legal and duly constituted limited
partnership, organized and in good standing under the laws of the
State of Delaware and duly qualified to transact business in the
State of California, and the persons executing this Agreement and
the documents at Closing on behalf of Seller are and will be duly
authorized so as to fully and legally bind Seller.
(c) Survival. All the representations,
warranties, covenants and agreements of Seller set forth herein
and elsewhere in this Agreement shall be true upon the execution
of this Agreement, and shall be deemed to be repeated at and as
of Closing and shall survive Closing. Additionally, all
indemnities by Seller of Buyer set forth in this Agreement shall
survive the termination of this Agreement for a period of one (1)
year after the Closing Date.
(d) Seller represents and warrants that Seller
has duly and validly authorized and executed this Agreement and
has right, title, power and authority to enter into this
Agreement and, at Closing, to consummate the actions provided for
herein, and the joinder of no person or entity will be necessary
to convey the Property fully and completely to Buyer at Closing.
The execution by Seller of this Agreement and the consummation by
Seller of the transactions contemplated hereby do not, and at the
Closing will not (i) result in a breach of any of the terms or
provisions of, or constitute a default or a condition which upon
notice or lapse of time or both would ripen into a default under,
any indenture, agreement, instrument or obligation to which
Seller is a party or by which Seller or the Property or any
portion thereof is bound; or (ii) constitute a violation of any
order, rule or regulation of any court or of any federal or state
or municipal regulatory body or administrative agency or other
governmental body having jurisdiction over Seller or any portion
of the Property.
(e) Seller represents and warrants that there are
no adverse or other parties in possession of the Property or of
any part thereof except Seller and the Club Owner, and no party
has been granted any license, lease or other right relating to
the use or possession of the Property, except the Club Owner
under the Ground Lease, a copy of which has been given to Buyer.
(f) Seller represents and warrants that no notice
has been received by Seller and Seller is not aware of any person
having received notice from any insurance company that has issued
a policy with respect to any portion of the Property or from any
board of fire underwriters (or other body exercising similar
functions), claiming any defects or deficiencies or requiring the
performance of any repairs, replacements, alteration or other
work. No notice has been received by Seller from any issuing
insurance company that any of such policies will not be renewed,
or will be renewed only at a higher premium rate than is
presently payable therefor.
(g) Seller represents and warrants that no
pending condemnation, eminent domain, assessment or similar
proceeding or charge affecting the Property or any portion
thereof exists. Seller has not received any notice of a proposed
increase in the assessed valuation of the Property.
(h) Seller represents and warrants that there
will exist no material service contracts, management or other
similar agreements applicable to the Property. There are no
material agreements or understandings (oral or written) with
respect to or any portion thereof, to which Seller is a party,
except for the Ground Lease.
(i) Seller represents and warrants that no
default or breach exists under any covenant, condition,
restriction, right-of-way or easement affecting the Property or
any portion thereof.
(j) Seller represents and warrants that there are
no actions, suits or proceedings pending or threatened against or
affecting the Property or any portion thereof, or relating to or
arising out of the ownership of the Property, or before any
federal, state, county or municipal department, commission,
board, bureau or agency or other governmental instrumentality,
other than Seller's submittal to the City of its eleventh annual
report regarding compliance with the terms and conditions of the
Development Agreement.
(k) Seller represents and warrants that there are
no attachments, executions, assignments for the benefit of
creditors, or voluntary or involuntary proceedings in bankruptcy
or under any other debtor relief law contemplated by or pending
or threatened against Seller or the Property.
(l) For purposes of this Agreement, "Hazardous
Materials" shall mean (i) any hazardous or toxic substance,
material or waste which is or becomes designated, regulated or
classified as hazardous or toxic under any Hazardous Material
Law, (ii) any other substance, material or waste which results in
liability to any person or entity from exposure to such
substance, material or waste under any statutory or common law
theory, (iii) petroleum, oil or gas or any direct or derivative
produce or by-product thereof, (iv) asbestos and asbestos-
containing materials, (v) polychlorinated biphenyls, (vi)
flammable explosives, and (vii) radioactive materials.
For purposes of this Agreement, "Hazardous
Material Law" shall mean any applicable federal, state, or local
law, statute, common law, code, ordinance, rule, regulation or
other requirement relating to the protection of the environment,
natural resources, or the protection of public health and safety
from exposure to any Hazardous Materials, including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601, et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. 1801, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C.
6901, et seq., the Clean Water Act, 33 U.S.C. 1251, et seq.,
the Clean Air Act, 33 U.S.C, 2601, et seq., the Toxic
Substances Control Act, 15 U.S.C. 2601, et seq., the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. 136, et
seq., the Oil Pollution Act of 1990, 33 U.S.C. 2701, et seq.,
and the Federal Safe Drinking Water Act, 42 U.S.C. 300F, et
seq., as such laws have been amended or supplemented, and all
regulations promulgated pursuant thereto, and all analogous state
or local statutes.
Seller represents and warrants that, other than
with respect to activities in connection with or conditions
arising strictly from customary and ordinary use or maintenance
of the Property by Seller and the Club Owner in full compliance
with any or all Hazardous Materials Law, Seller is unaware of (i)
any Hazardous Materials installed, used, generated, manufactured,
treated, handled, refined, produced, processed, stored or
disposed of, or otherwise on or under, the Property; (ii) any
activity being undertaken on the Property which could cause (a)
the Property to become a hazardous waste treatment, storage or
disposal facility within the meaning of any Hazardous Materials
Law, (b) a release or threatened release of Hazardous Materials
from the Property within the meaning of any Hazardous Materials
Law, or (c) the discharge of Hazardous Materials into any
watercourse, body of surface or subsurface water or wetland, or
the discharge into the atmosphere of any Hazardous Materials
which would require a permit under any Hazardous Materials Law;
(iii) any activity undertaken with respect to the Property which
would cause a violation or support a claim under any Hazardous
Materials Law; (iv) any investigation, administrative order,
litigation or settlement with respect to any Hazardous Materials
relating to or affecting the Property; or (v) any notice being
served on Seller from any entity, governmental body or individual
claiming any violation of any Hazardous Materials Law, or
requiring compliance with any Hazardous Materials Law, or
demanding payment or contribution for the environmental damage or
injury to natural resources.
(m) Indemnity. Subject to the provisions
provided hereafter limiting the liability of Seller, Seller
hereby agrees to indemnify and defend, at its sole cost and
expense, and hold Buyer, its successors and assigns, harmless
from and against and to reimburse Buyer with respect to any and
all claims, demands, actions, causes of action, losses, damages,
liabilities, costs and expenses (including without limitation
reasonable attorneys' fees and court costs and those fees and
costs incurred upon any appeals) of any and every kind or
character, known or unknown, fixed or contingent, asserted
against or incurred or suffered by Buyer at any time and from
time to time by reason of or arising out of (a) the breach of any
representation or warranty of Seller set forth in this Agreement,
(b) the failure of Seller, in whole or in part, to perform any
obligation required to be performed by Seller under this
Agreement, (c) except for the matters disclosed herein, the
ownership, construction, occupancy, operation, use and
maintenance of the Property prior to the Closing Date, or (d) the
violation on or before the Closing Date of any Hazardous Material
Law in effect on or before the Closing Date and any and all
matters arising out of any act, omission, event or circumstance
existing or occurring on or prior to the Closing Date (including,
without limitation, the presence on the Property or release from
the Property of Hazardous Materials disposed or otherwise
released prior to the Closing Date) which results in a violation
of a Hazardous Materials Law, regardless of whether the act,
omission, event or circumstance constitute a violation of any
Hazardous Materials Law at the time of its existence or
occurrence. The provisions of this Section 14(m) shall survive
the Closing of the transaction contemplated by this Agreement and
shall continue thereafter in full force and effect for the
benefit of Buyer, its successors and assigns, for a period of one
(1) year after the Closing Date. Buyer may exercise any right or
remedy Buyer may have at law or in equity should Seller fail to
meet, comply with or perform its indemnity obligation required by
this Section 14(m).
(n) State Tax Withholding Certificates. Seller
shall execute and deliver into Escrow the Transferor's State Tax
Withholding Certificate attached hereto as Exhibit D, certifying
that withholding of tax under Sections 18805, 18815 and 26131 of
the California Revenue and Taxation Code will not be required.
(o) Maintain the Property. Seller shall maintain
the Property in good condition and shall maintain adequate
casualty liability insurance covering the Property until the
Closing.
(p) Agreements Affecting the Property. During
the Escrow period, Seller shall not amend or terminate the Ground
Lease or enter into any other agreements or take any other
actions affecting the Property (other than in the ordinary course
of ownership), without Buyer's prior written approval, which
shall not be unreasonably withheld or delayed. Seller shall not
market the Property for either sale or lease during the Escrow
period.
(q) Copies of Documents. True, complete and
correct copies of the Development Agreement, the Tract Map, the
CC&Rs, the Ground Lease, the By-laws and other agreements
governing the Association, and all amendments to each of the
foregoing, are included in that certain document binder (the "Key
Documents Binder"), marked for identification as, "Key Documents
for Howard Hughes Center", dated December 29, 1997, and initialed
on the front cover by Mike Russell.
15. Development Agreements. Buyer has received a copy
of that certain Howard Hughes Center Development Agreement (the
"Development Agreement") entered into November 3, 1986 between
Seller and the City and recorded on November 4, 1986 as
Instrument No. 86-1507410 in the Official Records of Los Angeles
County, Tentative Tract Map No. 35269 and all conditions of
approval with respect thereto (the "Tract Map"), and the CC&Rs.
Seller has not made and Seller is not making any representations,
warranties or covenants to Buyer as to any matter relating to the
Development Agreement, including, without limitation, the effect
of the provisions contained therein or the enforceability
thereof, the Tract Map or the CC&Rs. Seller shall not have any
liability to Buyer in any manner relating to the Development
Agreement, the Tract Map or the CC&Rs and Buyer hereby releases
Seller from any and all liability, claims or damages resulting
from the Development Agreement, the Tract Map and the CC&Rs. The
foregoing shall not constitute a waiver of the representations,
warranties and covenants set forth in this Agreement and the
documents delivered pursuant hereto.
16. Brokers' Commission. Seller represents and
warrants to Buyer and Buyer represents and warrants to Seller
that no broker or finder has been engaged by Seller or Buyer,
respectively, in connection with any of the transactions
contemplated by this Agreement, and that no broker or finder is
in any way connected with any of such transactions. In the event
of any claim for broker's or finder's fees or commissions in
connection with the negotiation, execution or consummation of
this Agreement or the transactions contemplated hereby, Buyer
shall indemnify, save harmless and defend Seller from and against
such claim if it shall be based upon any statement or
representation or agreement made by Buyer, and Seller shall
indemnify, save harmless and defend Buyer from and against such
claim if it shall be based upon any statement, representation or
agreement made by Seller.
17. Waiver, Consent and Remedies. Each provision of
this Agreement to be performed by either party shall be deemed
both a covenant and a condition and shall be a material
consideration for the other party's performance hereunder, and
any breach thereof by either party shall be deemed a material
default hereunder. Either party may specifically and expressly
waive in writing any portion of this Agreement or any breach
thereof, but no such waiver shall constitute a further or
continuing waiver of any preceding or succeeding breach of the
same or any other provision. A waiving party may at any time
thereafter require further compliance by the other party with any
breach or provision so waived. The consent by one party to any
act by the other for which such consent was required shall not be
deemed to imply consent or waiver of the necessity of obtaining
such consent for the same or any similar acts in the future. No
waiver or consent shall be implied from silence or any failure of
a party to act, except as otherwise specified in this Agreement.
All rights, remedies, undertakings, obligations, options,
covenants, conditions and agreements contained in this Agreement
shall be cumulative and no one of them shall be exclusive of any
other. Except as otherwise specified herein, either party may
pursue any one or more of its rights, options or remedies
hereunder or may seek damages in the event of the other party's
breach hereunder, or may pursue any other remedy at law or
equity, whether or not stated in this Agreement; provided,
however, that Buyer hereby waives its rights to seek specific
performance or to record a lis pendens against the Property in
the event of Seller's default hereunder and Buyer agrees that its
right to sue for monetary damages is an appropriate and adequate
remedy in the event of any default by Seller hereunder.
18. Attorneys' Fees. In the event of any action or
proceeding instituted between Seller, Buyer and/or Escrow Holder
in connection with this Agreement, then as between Buyer and
Seller the prevailing party shall be entitled to recover from the
losing party all of its costs and expenses, including, without
limitation, court costs, all costs of appeals and reasonable
attorneys' fees.
19. Eminent Domain Proceedings. If at any time during
the Escrow period all or any substantial portion of the Property
is threatened with condemnation or legal proceedings are
commenced under the power of eminent domain, then notwithstanding
anything to the contrary contained herein, either Seller or Buyer
may terminate this Agreement and cancel Escrow by giving written
notice to Escrow Holder and the other party. Thereupon, all
instruments shall be returned to the respective parties who
deposited the same, Buyer and Seller shall each pay one-half
(1/2) of all title and Escrow cancellation charges, all other
funds then in Escrow shall be disbursed to Buyer, and each party
shall be excused from any further obligations hereunder or
liability to the other party except pursuant to Section 12 above.
21. Risk of Loss. If the improvements located on the
Property are destroyed or materially damaged prior to the
Closing, Buyer may terminate this Agreement and cancel Escrow by
giving written notice to Escrow Holder and to Seller. Thereupon,
all instruments shall be returned to the respective parties who
deposited the same, Buyer and Seller shall each pay one-half
(1/2) of all title and Escrow cancellation charges, all other
funds then in Escrow shall be disbursed to Buyer, and each party
shall be excused from any further obligations hereunder or
liability to the other party except pursuant to Section 12 above.
21. Notices. Any notice, request, demand, consent,
approval or other communication required or permitted hereunder
or by law shall be validly given or made only if in writing and
delivered in person to an officer or duly authorized
representative of the other party or deposited in the United
States mail, duly certified or registered (return receipt
requested), postage prepaid, and addressed to the party for whom
intended, as follows:
If to Seller: Howard Hughes Properties, Limited Partnership
c/o The Howard Hughes Corporation
3800 Howard Hughes Parkway
Las Vegas, NV 89109
Attn: General Counsel
With a copy to: Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
Attn: Dale K. Neal
If to Buyer: Arden Realty, Inc.
9100 Wilshire Boulevard
East Tower, Suite 700
Beverly Hills, California 90212
Attn: Victor Coleman
With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars, #2600
Los Angeles, California 90067-6077
Attn: Real Estate Notices (PGN)
If to Escrow
Holder: Stewart Title Company
330 North Brand Boulevard
Suite 700
Glendale, CA 91203
Attn: Dody Laney
Any party may from time to time, by written notice to the other,
designate a different address which shall be substituted for that
specified above. If any notice or other document is sent by mail
as aforesaid, the same shall be deemed fully delivered and
received forty-eight (48) hours after mailing as provided above.
22. Gender and Number. In this Agreement (unless the
context requires otherwise), the masculine, feminine and neuter
genders and the singular and the plural shall be deemed to
include one another, as appropriate.
23. Entire Agreement. This Agreement and its exhibits
constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof, and the final, complete
and exclusive expression of the terms and conditions thereof.
All prior agreements, representations, negotiations and
understandings of the parties hereto, oral or written, express or
implied, are hereby superseded and merged herein.
24. Captions. The captions used herein are for
convenience only and are not a part of this Agreement and do not
in any way limit or amplify the terms and provisions hereof.
25. Governing Law. This Agreement and the exhibits
attached hereto shall be governed by and construed under the laws
of the State of California.
26. Invalidity of Provision. If any provision of this
Agreement as applied to either party or to any circumstance shall
be adjudged by a court of competent jurisdiction to be void or
unenforceable for any reason, the same shall in no way affect (to
the maximum extent permissible by law) any other provision of
this Agreement, the application of any such provision under
circumstances different from those adjudicated by the court, or
the validity or enforceability of this Agreement as a whole.
27. Amendments. No addition to or modification of any
provision contained in this Agreement shall be effective unless
fully set forth in writing by both Buyer and Seller.
28. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute but one and
the same instrument.
29. Binding Agreement. Subject to the restrictions on
assignment set forth herein, this Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and
assigns.
30. Construction. The parties acknowledge that each
party and its counsel have reviewed and approved this Agreement
and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement or any
amendments or exhibits hereto.
31. Confidentiality. Buyer and Seller acknowledge
that it is their mutual intent to make a joint public
announcement of the transaction contemplated by this Agreement at
an appropriate time. As a result, Buyer and Seller each agree
not to make any public disclosure of this Agreement or the
Project without the prior express written consent of the other
party hereto. Additionally, the parties agree that there will be
no public announcement until the local councilwoman's office is
fully briefed, which briefing shall be arranged and coordinated
by Seller. Buyer shall maintain confidential, and shall not
divulge, disclose or use (except in connection with Buyer's
evaluation of the proposed transaction), any information obtained
or created by Buyer as a result of its investigations on the
Property or with respect to the proposed transaction, unless such
information is generally known or available to the public, is
disclosed by Buyer in connection with such inquiries and
investigations as Buyer may make during the Contingency Period
pursuant to section 6(b) above, or is required by law to be
disclosed by Buyer by virtue of Buyer being a publicly held
company. Notwithstanding anything in this Section 31 to the
contrary, once Buyer has deposited the Deposit and the Additional
Deposit into Escrow, Buyer may make a public announcement of the
transaction contemplated by this Agreement if, in the opinion of
Buyer's securities legal counsel, Buyer may be legally required
to do so. In any event, nothing shall preclude Buyer from
disclosing any such information if the Closing occurs.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written and such date shall
be deemed the date of this Agreement.
SELLER:
HOWARD HUGHES PROPERTIES, LIMITED
PARTNERSHIP, a Delaware limited
partnership
By:THE HOWARD HUGHES CORPORATION
(formerly known as Summa
Corporation), a Delaware
corporation, its sole general
partner
By:/s/ Michael C. Inarchos
Its: Senior V.P., General Counsel
BUYER:
ARDEN REALTY, INC, a Maryland
corporation
By:/s/ Victor J. Coleman
Its: President and COO
ESCROW HOLDER:
Acknowledged and accepted this __ day of _____________, 1998.
STEWART TITLE COMPANY
By: /s/ Dody Laney
Its: Senior Escrow Officer
AMENDMENT TO PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
This Amendment to Purchase Agreement And Escrow Instructions
(the "Amendment") is made as of March 11, 1998 by and between
HOWARD HUGHES PROPERTIES, LIMITED PARTNERSHIP, a Delaware limited
partnership ("Seller"), and ARDEN REALTY, INC., a Maryland
corporation ("Buyer").
RECITALS
1. Buyer and Seller have entered into that certain
Purchase Agreement And Escrow Instructions dated as of January
30, 1998 regarding the purchase by Buyer of certain real property
consisting of approximately .53 acres located within the area
commonly referred to as Howard Hughes Center (the "Center") and
described in said Purchase Agreement And Escrow Instructions as
the location of the Spectrum Club (the "Purchase Agreement").
2. The parties desire to amend the Purchase Agreement as
hereinafter provided.
NOW THEREFORE, in consideration of the foregoing recitals
and other good and valuable consideration the receipt of which is
hereby acknowledged, Buyer and Seller hereby agree to amend the
Purchase Agreement as follows.
1. Definitions. All capitalized terms in this Amendment
shall have the meanings set forth herein or in the Purchase
Agreement, and all references to "Sections" shall be to Sections
of the Purchase Agreement.
2. Amendment to Section 4. The first paragraph of Section
4 is amended and restated in its entirety as follows:
"The purchase price for the Property, the Personal
Property and the Intangible Property (the
"Purchase Price") shall be Ten Million
Dollars ($10,000,000)."
3. Exercise of Right of First Offer Under Ground Lease.
Buyer and Seller acknowledge that the Club Owner has exercised
its right of first offer under Section 52 of the Ground Lease to
acquire the Property. Buyer shall acquire the Property subject
to the Club Owner's exercise of such right. In that connection,
Seller shall cooperate with Buyer in endeavoring to have Seller
enter into, prior to the Closing, a purchase and sale agreement
with the Club Owner covering the Club Owner's purchase of the
Property for the same price as the Purchase Price (the "Club
Purchase Agreement"); provided, however, that neither agreement
by the Club Owner to the Club Purchase Agreement nor the
execution thereof by the Club Owner shall be a condition to
Buyer's obligations under the Purchase Agreement. Any Club
Purchase Agreement (or Parking Easement Agreement in connection
therewith) shall in all events be
subject to Buyer's approval. Buyer shall acquire the
Property subject to the terms and conditions of the Club Purchase
Agreement if such Agreement is executed by the Club Owner prior
to the Closing.
4. Seller's Indemnity Regarding Club Owner. Seller hereby
agrees to indemnify and defend (with counsel reasonably
acceptable to Buyer), and hold Buyer, its successors and assigns,
harmless from and against and to reimburse Buyer with respect to
any loss, cost, expense or liability incurred by Buyer in
connection with any claim that Buyer's offer to purchase the
Property was not a bona fide, good faith offer arrived at
independently by Buyer and at arms length with Seller or
otherwise does not comply with or violates the applicable
provisions of the Ground Lease, and any claim relating to any
other matter raised by Club Owner's Counsel in his letter to
Seller dated February 17, 1998, a copy of which is attached
hereto as Exhibit A (any and all such claims being referred to
hereinafter collectively as "Claims"). Seller agrees that if any
Claims are brought, Seller will not unreasonably withhold its
consent to any settlement proposal which may be approved by Club
Owner and Buyer; provided, however, that the $2 million limit on
Seller's indemnification obligation hereunder, as described
below, shall not be affected by any such withholding of consent
by Seller, whether reasonable or unreasonable. Seller's
obligation to pay for the costs of the defense of any such Claims
by Club Owner shall not exceed $150,000 plus one-half (1/2) of
such costs of defense in excess of $150,000 (with the other 1/2
being paid by Buyer) unless Seller rejects any good faith, bona
fide settlement offer acceptable to Buyer and Club Owner in which
case Seller shall be responsible for all costs and expenses
incurred in connection with the defense of such Claims. However,
under no circumstances shall Seller's indemnification obligation,
as described above, exceed $2 million, exclusive of the costs of
defending such Claims. Such indemnification obligation shall be
secured by $2 million of the Purchase Price which shall remain in
Escrow after the Closing (the "Withheld Purchase Price") pursuant
to escrow instructions to be reasonably agreed upon by Seller,
Buyer and Escrow Holder. The Withheld Purchase Price shall be
retained in Escrow until the earlier to occur of (i) the Club
Owner's purchase of the Property pursuant to Club Purchase
Agreement or any other agreement with Buyer (with appropriate
releases of any Claims satisfactory to Buyer), (ii) Buyer's
receipt from Club Owner of a release of the Claims in form and
substance satisfactory to Buyer, or (iii) March 31, 1999.
5. Buyer's Approval of Conditions Set Forth in Section
6(a) and 6(b). Buyer hereby approves the conditions set forth in
Sections 6(a) and 6(b); provided, however, it shall be a
condition to Buyer's and Seller's obligation to complete the
purchase and sale of the Property (which condition may be waived
by Buyer and, if so waived, shall also be waived by Seller) that
at closing Buyer receives a title policy in the form attached to
that certain letter from Buyer's counsel of even date herewith.
As a result of such approval, and in accordance with the
provisions of Section 4(i), the Deposit is now non-refundable,
subject to the satisfaction of the conditions set forth in the
Purchase Agreement, as amended hereby, and shall be credited
towards the Purchase Price.
6. Cooperation. Without limitation on the terms and
conditions set forth in the Purchase Agreement, Seller shall
deliver copies of all notices and material correspondence given
or received by Seller from and after the date hereof and shall
not give any consents or approvals with respect to the Property
or enter into any new leases or contracts (or modify any existing
lease or contract) without Buyer's consent, which shall not be
unreasonably withheld. Seller and Buyer shall reasonably
cooperate to assure an orderly transition at Closing.
7. Assignment. Notwithstanding the provisions of the
Purchase Agreement, Buyer shall have the right to assign its
rights or interests in the Purchase Agreement without Seller's
consent.
8. Contingency Date. The Contingency Date under the
Purchase Agreement shall be March 12, 1998.
9. Counterparts. This Amendment may be executed in one or
more counterparts and may be executed by facsimile.
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date first above written and such date shall be deemed
the date of this Amendment.
SELLER:
HOWARD HUGHES PROPERTIES
LIMITED PARTNERSHIP, a
Delaware limited partnership
By: The Howard Hughes Corporation
(formerly known as Summa Corporation),
a Delaware corporation, its sole general
partner
By:/s/ Michael C. Inarchos
Its: Sr. V.P., General Counsel
BUYER:
ARDEN REALTY, INC., a Maryland corporation
By: /s/ Victor J. Coleman
Its: President and COO
ESCROW HOLDER:
Acknowledged and accepted this
_____ day of March, 1998.
STEWART TITLE COMPANY
By:/s/ Dody Laney
Its: Sr. Escrow Officer
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
between
FLAGS INVESTMENT INC.,
a California corporation
as Seller
and
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
as Buyer
TABLE OF CONTENTS
Page
1. DEFINITIONS 1
1.1 "Appurtenances 1
1.2 "Assignment and Assumption of Leases 1
1.3 "Assignment of Intangible Property 1
1.4 "Bill of Sale 2
1.5 "Business Day(s)" 2
1.6 "Closing 2
1.7 "Closing Date 2
1.8 "Code 2
1.9 "Deed 2
1.10 "Deposit 2
1.11 "Due Diligence Period 2
1.12 "Escrow Holder 2
1.13 "Fixtures 2
1.14 "Governmental Regulations 3
1.15 "Hazardous Materials 3
1.16 "Intangible Property" 3
1.17 "Intellectual Property" 3
1.18 "Land 3
1.19 "Leases 4
1.20 "Licenses and Permits 4
1.21 "Notice To Tenants 4
1.22 "Personal Property 4
1.23 "Property" 4
1.24 "Purchase Price 4
1.25 "Real Property 4
1.26 "Records and Plans 4
1.27 "Schedule of Tenant Improvement
Allowances and Commissions" 4
1.28 "Service Contracts 4
1.29 "Tenant Estoppels 5
1.30 "Title Company 5
1.31 "Title Policy 5
1.32 "Transfer Documents" 5
1.33 "Transferor's Certificate 5
1.34 "Warranties 5
2. ESCROW 5
3. AGREEMENT TO SELL; PURCHASE PRICE 5
3.1 Deposit 6
3.2 Balance of Purchase Price 6
4. DELIVERIES AT CLOSING; CLOSING PROCEDURES 6
4.1 By Seller 6
4.2 By Buyer 7
4.3 By Buyer and Seller 7
4.4 Closing Procedures 7
5. REPRESENTATIONS AND WARRANTIES 8
5.1 Seller's Representations and Warranties. 8
5.2 Buyer's Representations and Warranties. 10
6. SELLER'S OBLIGATIONS 10
6.1 Further Liens and Encumbrances 10
6.2 Leases; Other Contracts; Interim
Activities 11
6.3 Property Management and Operation 11
6.4 Cooperation with Representatives 11
6.5 No Removal of Personal Property 11
6.6 Obtaining Estoppels and Consents 11
6.7 Service Contracts 12
6.8 Post-Closing Financial Records 12
6.9 Audit Rights 12
6.10 Management and Listing Agreements 13
6.11 Other Obligations 13
7. TITLE TO REAL PROPERTY 13
8. CONDITIONS PRECEDENT/CONCURRENT TO CLOSING; CLOSING
DATE 13
8.1 Buyer's Conditions 13
8.1.1 Representations, Warranties
and Covenants of Seller 13
8.1.2 Seller's Deliveries 14
8.1.3 No Material Changes 14
8.1.4 Delivery of Pre-Closing
Documents and Agreements 14
8.1.5 Title Insurance 14
8.1.6 Due Diligence Approval 14
9. DUE DILIGENCE PERIOD 14
9.1 Matters To Be Reviewed 14
9.1.1 Title 15
9.1.2 Inspections and Studies 16
9.2 Indemnity 17
9.3 Insurance 18
9.4 Return of Documents 18
9.5 Notice of Objections 18
10. PRORATIONS 18
10.1 Current Rent 18
10.2 Rent Arrears 18
10.3 Tenant Improvement Allowances and
Brokerage Commissions 19
10.4 Security Deposits 19
10.5 Other Prorations 19
10.6 Preliminary Closing Adjustment 20
10.7 Post-Closing Reconciliation 20
10.8 Survival 20
11. COSTS AND EXPENSES 20
11.1 Closing Costs 20
11.2 Delivery of Possession 20
12. AS-IS 20
13. CONDEMNATION AND DESTRUCTION 21
13.1 Eminent Domain or Taking 21
13.2 Damage or Destruction 22
14. REMEDIES 23
14.1 Buyer's Remedies 23
14.2 Seller's Remedies 24
15. BROKERAGE COMMISSIONS 25
16. NOTICE 25
17. MISCELLANEOUS 26
17.1 Survival 26
17.2 No Recording. 26
17.3 Parties in Interest 26
17.4 Section Headings 26
17.5 No Oral Modifications 26
17.6 Full Integration 26
17.7 Binding Effect 27
17.8 Seller's Advice of Counsel 27
17.9 Attorneys' Fees 27
17.10 Governing Law 27
17.11 Confidentiality 27
17.12 Captions 28
17.13 Severability 28
17.14 Time of the Essence 28
17.15 Non-Waiver 28
17.16 Facsimile 28
17.17 Further Assurances 28
17.18 Counterparts 28
17.20 WAIVER OF JURY TRIAL 28
17.21 1721 ''1031 Exchange 28
17.22 Arbitration 29
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW
INSTRUCTIONS ("Agreement") dated as of the 11th day of March
1998, is by and between Flags Investment Inc., a California
corporation ("Seller"), and Arden Realty Limited Partnership, a
Maryland limited partnership ("Buyer"). Capitalized terms used
in the Recitals below, not otherwise defined therein, shall have
the meanings ascribed to them in Section 1 of this Agreement.
R E C I T A L S
WHEREAS, this Agreement is made and entered into with
reference to the following facts:
WHEREAS, Seller is the owner of the Property.
WHEREAS, Buyer desires to purchase, and Seller desires
to sell, the Property on the terms and conditions set forth in
this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing
recitals, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Buyer
and Seller agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
1.1 "Appurtenances" means all rights, privileges
and easements appurtenant to the Land, including, without
limitation, all minerals, oil, gas and other hydrocarbon sub
stances in, on and under the Land, as well as all development
rights, air rights, water, water rights and water stock relating
to the Land and any other easements appurtenant to the Land.
1.2 "Assignment and Assumption of Leases" means
the Assignment and Assumption of Leases, to be duly executed and
delivered by Seller and Buyer in accordance with Sections 4.1 and
4.2 of this Agreement. The Assignment and Assumption of Leases
shall be in the form of, and upon the terms contained in,
Exhibit "C".
1.3 "Assignment of Intangible Property" means the
Assignment of Intangible Property, to be duly executed and
delivered by Seller and Buyer in accordance with Sections 4.1 and
4.2 of this Agreement. The Assignment of Intangible Property
shall be in the form of, and upon the terms contained in,
Exhibit "B".
1.4 "Bill of Sale" means the Bill of Sale, to be
duly executed and delivered by Seller in accordance with
Section 4.1 of this Agreement, conveying to Buyer all of the
Personal Property. The Bill of Sale shall be in the form of, and
upon the terms contained in, Exhibit "D".
1.5 "Business Day(s)" or "business day(s)" means
a day when Escrow Holder is open for business.
1.6 "Closing" means the consummation of the
conveyances of the Property (including the recording of the
Deed), the Leases and the other transactions contemplated under
this Agreement, all of which shall occur on or before the Closing
Date.
1.7 "Closing Date" means March 31, 1998, unless
otherwise mutually agreed to in writing by Buyer and Seller or
extended pursuant to the terms of this Agreement.
1.8 "Code" means the United States Internal
Revenue Code of 1986, as amended.
1.9 "Deed" means the Grant Deed, to be duly
executed, acknowledged and delivered in recordable form by Seller
in accordance with Section 4.1 of this Agreement conveying to
Buyer good and marketable fee simple title to the Real Property.
The Deed shall be in the form of, and upon the terms contained
in, Exhibit "E".
1.10 "Deposit" means the sum of One Hundred
Thousand Dollars ($100,000.00) to be delivered to Escrow Holder
within two (2) business days after the mutual execution of this
Agreement by Buyer and Seller and delivery of the same to Escrow
Holder in accordance with Section 3.1 of this Agreement.
1.11 "Due Diligence Period" means the period
commencing on the date this Agreement is executed and delivered
by both Buyer and Seller and ending at 6:00 p.m. (California
time) on March 30, 1998.
1.12 "Escrow Holder" means Chicago Title Company,
700 South Flower Street, Suite 900, Los Angeles, CA 90017, Attn:
Amy Hiraheta; Escrow No. 7135783X70.
1.13 "Fixtures" means all fixtures placed on,
attached to, or located at and used in connection with the
operation of, the Land and which are owned by Seller.
1.14 "Governmental Regulations" means any local,
state, and federal laws, ordinances, rules, requirements,
resolutions, policy statements and regulations (including, with
out limitation, those relating to land use, subdivision, zoning,
environmental, labor relations, notification of sale to employer,
Hazardous Materials, occupational health and safety, water,
earthquake hazard reduction and building and fire codes) bearing
on the construction, development, alteration, rehabilitation,
maintenance, use, operation, or sale of the Property.
1.15 "Hazardous Materials" means any hazardous or
toxic substance, material or waste which is or becomes regulated
by any local governmental authority, any agency of the State of
California or any agency of the United States Government. The
term "Hazardous Materials" includes, without limitation, any
material or substance which (a) contains petroleum or any
petroleum by-products, (b) contains asbestos, (c) contains urea
formaldehyde foam insulation, (d) is designated as a "hazardous
substance" pursuant to Section 311 of the Federal Water Pollution
Control Act (33 U.S.C. ' 1317), (e) is defined as a "hazardous
waste" pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C. ' 6901 (42 U.S.C.
' 6903), or (f) is defined as a "hazardous substance" pursuant to
Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ' 9601 (42 U.S.C.
' 9601). Each reference to a statute or law in this definition
shall be deemed to include any amendments thereto which are
enacted from time to time.
1.16 "Intangible Property" means all of Seller's
right, title and interest in and to any and all intangible
personal property now and through the Closing Date owned by
Seller and used in connection with the ownership, construction,
development, use and/or operation of the Real Property and/or
Personal Property, including, without limitation, all trade names
of the Real Property, any and all claims and causes of action
(but excluding any counterclaims that Seller may have under those
matters which Seller is indemnifying Buyer against under this
Agreement and any agreement which is attached as an Exhibit
hereto), the Service Contracts (to the extent approved in writing
by Buyer), the Licenses and Permits, the Intellectual Property
and the Records and Plans and the Warranties.
1.17 "Intellectual Property" means any and
all intellectual property owned by Seller or licensed to Seller
and used in connection with the ownership, use and/or operation
of the Real Property and/or Personal Property, including, without
limitation, trade names, logos, derivations, slogans and other
marks owned or used by or licensed to Seller and associated with
the Real Property and/or Personal Property.
1.18 "Land" means the real property located at
11075 Santa Monica Boulevard, Los Angeles, California, as legally
described in Exhibit "A".
1.19 "Leases" means the existing leases relating
to the Real Property, which Leases are listed on Exhibit "F".
1.20 "Licenses and Permits" means all of Seller's
right, title, interests, privileges, benefits and remedies in, to
and under all authorizations, approvals, permits, certificates of
occupancy, licenses, agreements, variances, tentative maps, final
maps, plans and specifications and land use entitlements held by
Seller and/or relating to the construction, reconstruction,
occupancy, operation or use of any part of the Real Property or
Personal Property (e.g., all building permits and certificates of
occupancy).
1.21 "Notice To Tenants" means the notice from
Seller to the tenants under the Leases whereby such tenants are
notified that the Property has been transferred by Seller to
Buyer and instructing the tenants to pay any and all rents and
other sums payable under the Leases from and after the Closing
directly to Buyer or as otherwise directed by Buyer, in the form
of Exhibit "G".
1.22 "Personal Property" means all personal
property of Seller located on or in or used in connection with
the Real Property.
1.23 "Property" means the Real Property, the
Personal Property and the Intangible Property.
1.24 "Purchase Price" means the sum of Four
Million Nine Hundred Thousand Dollars ($4,900,000).
1.25 "Real Property" means the Land, the
improvements situated on the Land, the Fixtures and the Appurten
ances.
1.26 "Records and Plans" means (a) all books and
records maintained in connection with the ownership, development,
construction, maintenance or operation of the Property, (b) all
preliminary, final and "as-built" plans and specifications
respecting the Real Property, and (c) all physical, structural
and environmental reviews, architectural drawings, and
engineering, soil, seismic, geologic and architectural reports,
studies and certificates and other documents pertaining to the
Real Property which are within the possession of, under the
control of, or reasonably available to Seller.
1.27 "Schedule of Tenant Improvement
Allowances and Commissions" means the schedule of unpaid tenant
improvement allowances and brokerage commissions for Leases
entered into prior to the date of this Agreement, which Schedule
is attached hereto as Exhibit "L"."
1.28 "Service Contracts" means any and all
management agreements, service contracts, brokerage agreements,
art contracts, landscaping contracts, equipment leases,
maintenance agreements and all other contracts for the provision
of labor, services, materials or supplies to or for the benefit
of the Real Property, together with all supplements, amendments
and modifications thereto, including without limitation those
documents which are set forth on Exhibit "H" attached to this
Agreement.
1.29 "Tenant Estoppels" means the written
statements in the form of, and upon the terms contained in,
Exhibit "I", in favor of Buyer from the tenants which are parties
to the Leases, dated not earlier than fifteen (15) days prior to
the Closing Date.
1.30 "Title Company" means Chicago Title Company,
700 South Flower Street, Suite 920, Los Angeles, CA 90017, Attn:
Mike Kovacs; Title Order No. 7135783X52.
1.31 "Title Policy" means an ALTA owner's title
policy (Form B-1970) issued by the Title Company for the benefit
of Buyer, which Title Policy shall have a liability limit in the
amount of the Purchase Price, shall include those endorsements
requested by Buyer and shall show only those matters which
constitute Permitted Exceptions (defined below).
1.32 "Transfer Documents" means the Deed,
Bill of Sale, Assignment of Intangible Property and Assignment
and Assumption of Leases.
1.33 "Transferor's Certificate" means the
certificate, to be duly executed by Seller under penalty of
perjury and delivered by Seller in accordance with Section 4.1 of
this Agreement, certifying that Seller is not a "foreign person"
in accordance with the provisions of Section 1445 of the Code and
any similar provisions of applicable state law. The Transferor's
Certificate shall be in the form of, and upon the terms contained
in, Exhibit "J".
1.34 "Warranties" means all third party warranties
and guarantees relating to the Property which are set forth on
Exhibit "M".
2. ESCROW. The purchase and sale of the Property
shall be consummated through an escrow at Escrow Holder. As soon
as reasonably practicable following the mutual execution of this
Agreement, but in no event later than three (3) days after the
date of this Agreement, the parties shall deliver to Escrow
Holder a fully executed counterpart of this Agreement, which
shall constitute its escrow instructions. The parties shall
execute such additional escrow instructions, not inconsistent
with this Agreement, as Escrow Holder shall deem reasonably
necessary for its protection. In the event of any conflict
between this Agreement and any additional escrow instructions,
the terms of this Agreement shall govern.
3. AGREEMENT TO SELL; PURCHASE PRICE. Seller agrees
to sell to Buyer, and Buyer agrees to purchase from Seller, the
Property in accordance with the terms, and subject to the
conditions, of this Agreement. The Purchase Price for the
Property will be paid as follows:
3.1 Deposit. Within two (2) business days after
the execution of this Agreement by Buyer and Seller and delivery
of the same to Escrow Holder, Buyer will deliver the Deposit to
Escrow Holder to hold in trust. Escrow Holder will invest the
Deposit in an interest bearing account with a responsible
federally-insured institutional lender approved by Buyer and
Seller, and interest will be for the account of Buyer except as
otherwise provided in this Agreement and will be credited against
the Purchase Price at Closing. The Deposit shall be fully
refundable to Buyer until the expiration of the Due Diligence
Period.
3.2 Balance of Purchase Price. The entire
balance of the Purchase Price (after taking into account the
adjustments described in Sections 10 and 11), shall be paid to
Seller, in immediately available funds, through Escrow Holder, at
Closing.
4. DELIVERIES AT CLOSING; CLOSING PROCEDURES. The
Closing will take place on the Closing Date. Buyer may elect to
close escrow on an earlier date by giving written notice to
Seller and Escrow Holder of its intent to close escrow earlier at
least five (5) business days in advance of such earlier date, and
upon Seller's receipt of such notice, the earlier date shall
become the new Closing Date.
4.1 By Seller. At least one (1) business day
prior to the Closing, Seller shall deliver or cause to be
delivered to Escrow Holder (unless otherwise indicated) the
following items, duly executed and, where appropriate,
acknowledged by Seller:
4.1.1 The Deed.
4.1.2 Two (2) originals of the Bill of Sale.
4.1.3 Two (2) original counterparts of the
Assignment of Intangible Property.
4.1.4 Two (2) original counterparts of the
Assignment and Assumption of Leases.
4.1.5 Two (2) originals of the Transferor's
Certificate.
4.1.6 Originals of the Tenant Estoppels
(to be delivered directly to Buyer).
4.1.7 Evidence reasonably satisfactory
to Buyer of the termination of any property management agreement
and brokerage listing agreement for the Property as provided in
Section 6.10 hereof.
4.1.8 All such further confirmations,
satisfactions, releases, approvals, consents and any and all such
further instruments as may be reasonably necessary, appropriate,
expedient or proper in the reasonable opinion of Title Company in
order to issue the Title Policy.
4.2 By Buyer. At least one (1) business day
prior to the Closing, Buyer will deliver or cause to be delivered
to Escrow Holder or the Seller the following items, duly executed
and, where appropriate, acknowledged by Buyer:
4.2.1 The net balance of the Purchase Price,
to be paid in accordance with Sections 3.2 of this Agreement,
after deducting both the Deposit plus any interest accrued
thereon and after taking into account the adjustments and cost
allocations in accordance with Sections 10 and 11.
4.2.2 Two (2) counterparts of the
Assignment of Intangible Property and the Assignment and
Assumption of Leases.
4.3 By Buyer and Seller. At the Closing, Seller
will deliver to all of the tenants of the Property the Notice to
Tenants. Buyer and Seller will furthermore each deposit such
other instruments consistent with this Agreement as are
reasonably required to effectuate the transactions contemplated
under this Agreement.
4.4 Closing Procedures. Provided that Escrow
Holder has received the documents and funds described in
Sections 4.1 and 4.2 above and has not received notice from any
party hereto either that an agreement of another party hereunder
has not been performed, that a condition set forth herein has not
been satisfied or waived or that this Agreement has terminated
(by its terms or by an election duly made hereunder), and further
provided that the Title Company has delivered to Buyer an
unconditional (or, if there are any conditions, Seller has
provided Buyer and Title Company with reasonable assurances that
such conditions will be satisfied and eliminated on or before the
Closing Date) commitment to issue the Title Policy, Escrow Holder
is authorized and instructed at 8:00 a.m. on the Closing Date to:
4.4.1 Record the Deed with the County
Recorder of Los Angeles County, California.
4.4.2 Cause the Title Policy to be
issued by the Title Company.
4.4.3 Deliver to Buyer: Originals of the
Assignment and Assumption of Leases, the Assignment of Intangible
Property, the Bill of Sale, the Transferor's Certificate, all
documents and items required to be delivered by Seller pursuant
to Sections 4.1 and 8.1.4 or any other provision of this
Agreement, not otherwise previously delivered directly to Buyer,
all other items deposited by Seller with Escrow Holder pertaining
to the Property, and any funds deposited by Buyer in excess of
the amount to be paid by Buyer under the terms of this Agreement.
4.4.4 Deliver to Seller: the Purchase Price
after taking into account the adjustments and cost allocations in
accordance with Sections 10 and 11, original counterparts of the
Assignment and Assumption of Leases and the Assignment of
Intangible Property and any other document deposited by Buyer
with Escrow Holder for delivery to Seller at the Closing.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Seller's Representations and Warranties.
Seller makes the following representations and warranties to
Buyer, upon which warranties and representations Buyer has relied
and will continue to rely, all of which are true as of the date
of this Agreement and will be true and correct as of the Closing:
5.1.1 Organization. Seller is duly
organized, validly existing and in good standing under the laws
of the State of California and is duly qualified to do business
in the State of California. The execution, delivery and
performance of this Agreement and the other documents
contemplated this Agreement by Seller, and the performance by
Seller of the obligations under this Agreement and the other
documents contemplated by this Agreement (i) are within the power
of Seller; (ii) have been duly authorized by all requisite
corporate action; and (iii) will not violate any provision of
law, any order of any court or agency of government, the charter
documents of Seller or its shareholders, or any indenture,
agreement or any other instrument to which Seller is a party.
This Agreement and each of the other documents described in this
Agreement when executed and delivered to Buyer, will constitute
legal, valid and binding obligations enforceable against Seller
in accordance with the terms of such documents.
5.1.2 Seller has full legal power and
authority to enter into and perform this Agreement in accordance
with its terms. The execution, delivery and performance of this
Agreement and all documents in connection therewith are not in
contravention of or in conflict with any deed of trust, agreement
or undertaking to which Seller is a party or by which Seller or
any of its property, including the Property, may be bound or
affected following the Closing. The execution and delivery of
this Agreement and the performance by Seller of its obligations
hereunder require no further action or approval in order to
constitute this Agreement as a binding and enforceable obligation
of Seller, and all such actions have been duly taken by Seller.
5.1.3 Seller is the owner of the
Personal Property and has good title thereto, free and clear of
all liens, claims and security interests whatsoever, except as
otherwise disclosed to Buyer in writing.
5.1.4 Except as disclosed to Buyer
during the Due Diligence Period or as contained in the materials
delivered to Buyer during the Due Diligence Period, Seller has no
actual knowledge (without any duty of inquiry required) of any:
a. Notification from any governmental
authority notifying Seller of any (a) violation of any
Governmental Regulations or any city, County, State, Federal,
building, zoning, fire, health code, regulation, ordinance or
covenant, filed or issued against the Property; or (b) impending
or threatened special assessments on the Property or (c) other
actions or proceedings with respect to the Property.
b. Existing, proposed or contemplated plan
to widen, modify or realign any existing street or highway or any
existing, proposed or contemplated eminent domain proceeding that
would result in the taking of all or any part of the Property;
c. Litigation, legal, administrative,
arbitration or other proceeding or governmental investigations
pending or threatened in writing against Seller or the Property
that could reasonably be expected to materially and adversely
affect Seller's or Buyer's ability to perform their respective
obligations hereunder, or Buyer's use of the Property for its
existing purposes;
d. Underground storage tanks located on or
under the land or storage or disposal on the Property of any
Hazardous Materials and Seller has received no notice from any
governmental authority requiring the removal of any Hazardous
Materials or other toxic or hazardous waste, material or
substance from the Property.
e. Leases (or tenancy or other rights of
occupancy or use for any portion of the Property under which any
party has a right to occupy the Property, other than pursuant to
the Leases), Service Contracts or Warranties, other than those
disclosed on Exhibits "F," "H" and "M" attached hereto.
f. Unpaid tenant improvement allowances or
brokerage or leasing commissions or in connection with any of the
Leases, other than those disclosed on Exhibit "L".
5.1.5 Security Deposits. Except as
otherwise disclosed to Buyer in writing prior to the expiration
of the Due Diligence Period, no part of any security deposits for
the Property have been applied to amounts due under any Leases.
5.1.6 Use Permits and Other Approvals.
To Seller's actual knowledge (without any duty of inquiry
required), the Licenses and Permits and easements and rights of
way, including proof of dedication, are all in full force and
effect.
5.1.7 Compliance with Agreements. To
Seller's actual knowledge (without any duty of inquiry required),
no default exists under any covenant, restriction or agreement
related to or affecting the Property or the Leases, except as
previously disclosed to Buyer.
5.1.8 Financial Position. The financial
statements and all financial data heretofore delivered to Buyer
relating to Seller or the Property, including, without
limitation, the Rent Roll and all operating statements, are true,
correct and complete in all respects as of the date thereof.
5.1.9 Agreements. To Seller's actual
knowledge (without any duty of inquiry required), the Licenses
and Permits, Records and Plans, Service Contracts, Warranties,
and all other (i) books and records relating to or affecting the
Property, and (ii) contracts or documents delivered to Buyer
pursuant to this Agreement or in connection with the execution
hereof, are true, correct and complete.
5.2 Buyer's Representations and Warranties.
Buyer makes the following representation and warranty to Seller
upon which representation and warranty Seller has relied and will
continue to rely, all of which are true as of the date of this
Agreement and will be true and correct as of the Closing:
5.2.1 Organization. Buyer is duly organized,
validly existing and in good standing under the laws of the State
of Maryland and is duly qualified to do business in the State of
California. The execution and delivery of this Agreement and the
other documents contemplated this Agreement by Buyer, and the
performance by Buyer of the obligations under this Agreement and
the other documents contemplated in this Agreement (i) are within
the power of Buyer; (ii) have been duly authorized by all
requisite partnership action and corporate action on the part of
all of its constituent corporate partners; and (iii) will not
violate any provision of law, any order of any court or agency of
government, the charter documents of Buyer or its general
partners, or any indenture, agreement or any other instrument to
which Buyer is a party. This Agreement and each of the other
documents described in this Agreement when executed and delivered
to Buyer, will constitute legal, valid and binding obligations
enforceable against Buyer in accordance with the terms of such
documents.
6. SELLER'S OBLIGATIONS. Seller hereby covenants to
Buyer, upon which covenants Buyer has relied and will continue to
rely, that for the period from the date of this Agreement through
and including the Closing Date:
6.1 Further Liens and Encumbrances. Seller will
not subject the Property to any additional liens, encumbrances,
covenants, conditions, easements, rights of way after the date of
this Agreement. Seller will not hereafter modify, extend, renew,
replace or otherwise change any of the terms, covenants or
conditions of any of the documents or agreements affecting the
Property, or enter into any new agreements affecting the
Property, without the prior written consent of Buyer, which
consent shall not be unreasonably withheld, conditioned or
delayed.
6.2 Leases; Other Contracts; Interim Activities.
Seller will not hereafter terminate, modify, extend, renew,
amend, replace or otherwise change any of the Leases or existing
contracts or enter into new leases or contracts affecting the
Property except with the prior written consent of Buyer, which
consent will not be unreasonably withheld, conditioned or
delayed. If Buyer fails to respond to Seller's written request
for such consent within five (5) business days of Buyer's receipt
of such request, then such silence shall be conclusively presumed
to constitute Buyer's consent to the matters specifically
enumerated and set forth in Seller's written request. From and
after the expiration of the Due Diligence Period, Seller shall
not apply for or otherwise deal with any governmental authority
regarding the development, entitlement or subdivision of the Real
Property without the prior written consent of Buyer, which may be
withheld in Buyer's sole and absolute discretion.
6.3 Property Management and Operation. Seller
shall provide all services and operate, manage and maintain the
Property (including mechanical equipment of every kind used in
the operation thereof) in such a manner that the Property shall
be in the same condition on the Closing Date as on the date of
this Agreement, ordinary wear and tear excepted. Without
limiting the foregoing, Seller shall perform all of its
obligations under the Leases and the Service Contracts.
6.4 Cooperation with Representatives. Seller
shall cooperate with Buyer and its accountants, counsel and/or
other representatives in providing information and materials
pertaining to the operation and marketing of the Property,
including access to the Property, provided that Seller shall not
be required to incur any unreasonable expense (except for
Seller's attorney's fees and costs, which shall be at Seller's
sole cost and expense) and such access shall be upon prior
written or facsimile notice by Buyer to Seller or Seller's
property manager (i.e. K.O. Investment, Inc.), and subject to
Seller's consent which shall not be unreasonably withheld,
conditioned or delayed. Without limiting the generality of the
foregoing, from and after the execution and delivery of this
Agreement, Seller shall allow a representative or representatives
of Buyer access to the Property for the purpose of (a) meeting
with and interviewing tenants of the Property provided that (i)
such communication does not unreasonably interfere with Tenant's
operation of their business or place unreasonable demands on
their time, and (ii) Seller shall have no responsibility to make
tenants available to Buyer, although if Buyer wants to
communicate with a specific tenant, Buyer may request Seller to
inform the tenant to expect Buyer's call and to cooperate with
Buyer, and (b) performing such investigations and analyses of the
Property as Buyer may reasonably require.
6.5 No Removal of Personal Property. Seller will
not remove any of the Personal Property unless the Personal
Property so removed is simultaneously replaced with substantially
similar Personal Property of similar quality or utilities.
6.6 Obtaining Estoppels and Consents. Seller
shall use commercially reasonable efforts (without requiring
Seller to incur any cost or expense, except for Seller's
attorney's fees and costs, which shall be at Seller's sole cost
and expense) to obtain all written consents from third parties
required or reasonably requested by Buyer or its accountants,
counsel or other representatives in connection with this
Agreement, except that Seller shall deliver to Buyer, at least
two (2) business days prior to the expiration of the Due
Diligence Period, the Tenant Estoppels for Buyer's review and
approval. Buyer agrees to use commercially reasonable efforts to
complete and provide to Seller, within five (5) business days
after the date that this Agreement is executed by Buyer and
Seller and is delivered to Escrow Holder, Schedule A for each
Tenant Estoppel, provided, however, that Buyer's failure to do so
shall not relieve Seller of its obligations hereunder nor
constitute a default of Buyer under this Agreement. Seller
agrees to attach the applicable Schedule A to the applicable
Tenant Estoppel before delivery of the Tenant Estoppel to the
applicable tenant. If Seller does not receive a completed
Schedule A for any Tenant Estoppel within the above mentioned
five (5) business day period, then Seller shall provide written
notice ("Schedule A Notice") to Buyer indicating those Tenant
Estoppels for which Seller has not received a completed Schedule
A. If Seller does not receive completed Schedule A's for the
Tenant Estoppels identified in the Schedule A Notice within two
(2) business days after Buyer's receipt of the Schedule A Notice,
then Seller may deliver such Tenant Estoppel(s) to the applicable
Tenant(s) without reference to the attachment of Schedule A
thereon. Seller hereby acknowledges and agrees that Buyer's
review and approval of the Tenant Estoppels is a condition
precedent to Buyer's obligations to close this transaction under
this Agreement.
6.7 Service Contracts. Seller shall deliver
notices of termination to any vendors under the Service Contracts
which have been designated in writing by Buyer to be terminated
("Disapproved Service Contract List") provided that the
Disapproved Service Contract List is delivered by Buyer to Seller
on or before the expiration of the Due Diligence Period.
Notwithstanding the foregoing, Buyer disapproves of all Service
Contracts pertaining to property management and leasing for the
Property. Seller shall, within two (2) days following the later
of the expiration of the Due Diligence Period or Buyer's delivery
of the Disapproved Service Contract List, deliver termination
notices to each of the vendors with respect to the Service
Contracts so designated by Buyer in the Disapproved Service
Contract List. Seller shall be solely responsible for all costs
and expenses associated with the termination of the Service
Contracts set forth by Buyer in the Disapproved Service Contract
List, and shall indemnify, defend, and hold Buyer harmless from
and against same.
6.8 Post-Closing Financial Records. As soon as
reasonably practicable following the Closing Date, Seller shall
deliver to Buyer the following: (a) a final income statement
through the Closing Date, (b) a final cumulative general ledger
through the Closing Date, (c) a final aged delinquency listing,
including all security deposits received by Seller, (d) final
operating statements for calendar year 1997 and (e) a
reconciliation statement showing the actual operating and common
area maintenance expenses and costs for calendar year 1997.
6.9 Audit Rights. At Buyer's request at any time
from and after the date hereof until the date that is one (1)
year after the Closing Date, Seller shall, at Buyer's expense,
provide to Buyer's designated independent auditor access to the
books and records of the Property, regarding the period for which
Buyer is required to have audited financial statements prepared
with respect to the Property as may be required by the Securities
and Exchange Commission, to the extent that such books, records
and related information are in Seller's possession or control and
relate to the period during which Seller held title to the
Property. Further, Seller agrees to provide to such auditor a
representation letter regarding the books and records of the
Property, in substantially the form of Exhibit "K" attached
hereto, in connection with the normal course of auditing the
Property in accordance with generally accepted auditing
standards.
6.10 Management and Listing Agreements.
Seller agrees to terminate, at Seller's sole cost and expense,
any property management agreement and brokerage leasing
agreement effective as of the Closing Date. Seller shall be
solely responsible for all costs and expenses associated with the
termination of any property management agreement and brokerage
leasing agreement, and shall indemnify, defend and hold Buyer and
Buyer's officers, directors, employees, representatives and
agents harmless from and against same.
6.11 Other Obligations. Seller shall
deliver to Buyer, no later than five (5) business days after the
Date of this Agreement, the lists of personal property to be
attached to Schedule 1 and Schedule 2 of the Bill of Sale and all
other information necessary to complete Exhibits "F," "H" and
"L."
7. TITLE TO REAL PROPERTY. At Closing, title to the
Real Property will be conveyed to Buyer by Seller by the Deed,
subject only to the following matters ("Permitted Exceptions"):
7.1 non-delinquent property taxes, assessments
and liens;
7.2 matters of title respecting the Real Property
approved or deemed approved by Buyer in accordance with this
Agreement; and
7.3 matters affecting the condition of title to
the Real Property created by or with the written consent of
Buyer.
8. CONDITIONS PRECEDENT/CONCURRENT TO CLOSING;
CLOSING DATE.
8.1 Buyer's Conditions. Buyer shall not be
required to close the transaction provided for under this
Agreement, unless and until Buyer deems that each and every one
of the following conditions has been fulfilled:
8.1.1 Representations, Warranties and
Covenants of Seller. Seller shall have duly and timely performed
each and every covenant to be performed by Seller under this
Agreement and the representations and warranties set forth in
this Agreement shall be true and correct as of the Closing in all
respects.
8.1.2 Seller's Deliveries. Seller shall have
duly and timely delivered to Escrow Holder or Buyer, as
applicable, all of the items described in Section 4.1 of this
Agreement.
8.1.3 No Material Changes. At the Closing,
there will be no material adverse changes in the physical or
financial condition of the Property which were discovered by
Buyer after the Due Diligence Period.
8.1.4 Delivery of Pre-Closing Documents and
Agreements. Seller shall have delivered to Buyer on or before
the Closing Date the following (to the extent in Seller's
possession, control or otherwise reasonably available to Seller,
provided that Seller shall not be required to incur any cost or
expense in connection therewith except for Seller's attorney's
fees and costs):
8.1.4.1 Originals of the Leases and
tenant and other files for and
concerning the Property;
8.1.4.2 Originals of all Records and
Plans;
8.1.4.3 Originals of all Licenses
and Permits;
8.1.4.4 Originals of all Warranties;
and
8.1.4.5 Originals and all duplicates
of all keys (individually
labeled) for the Property.
8.1.5 Title Insurance. The Title Company
will have issued or have unconditionally and irrevocably
committed to issue the Title Policy to Buyer, provided that if
there are any conditions, then if Seller has provided to Buyer
and Title Company reasonable assurances that such conditions will
be satisfied and eliminated on or before the Closing Date, then
this condition shall be deemed satisfied.
8.1.6 Due Diligence Approval. Buyer shall
have approved (or be deemed to have approved) all matters to be
reviewed in accordance with Section 9 of this Agreement.
9. DUE DILIGENCE PERIOD:
9.1 Matters To Be Reviewed. Buyer's obligation
to close the purchase of the Property and to pay the Purchase
Price shall be subject to and conditioned upon Buyer's complete
satisfaction with all of the following items, each of which Buyer
shall have the right to review and approve or disapprove in
Buyer's sole and absolute discretion during the Due Diligence
Period:
9.1.1 Title. Buyer will have until 6:00 p.m.
(California time) on the expiration of the Due Diligence Period
to examine and approve all matters of title (including matters
relating to an ALTA survey for the Property prepared and dated
after the date of this Agreement ("Survey")) and to notify Seller
in writing of any defects in title or the Survey. Seller shall,
at its sole cost and expense, within three (3) days following the
date this Agreement is executed and delivered by Buyer and
Seller, deliver to Buyer a current preliminary report
("Preliminary Report") issued by the Title Company and relating
to the Real Property, together with all underlying documents
relating thereto. If Buyer fails to notify Seller in writing of
any objections to title or the Survey prior to the expiration of
the Due Diligence Period, then title to the Property and the
Survey shall be conclusively deemed to be approved by Buyer. If
Buyer timely notifies Seller in writing of specific objections to
title or the Survey prior to the expiration of the Due Diligence
Period, then Seller will have five (5) days after receipt of
Buyer's notification of any objection in which to advise Buyer
that:
9.1.1.1 Seller will remove any
objectionable exceptions on or before the Closing Date; or
9.1.1.2 Seller will not cause the
exceptions to be removed.
If Seller fails to notify Buyer of its
election to remove or not cause the removal of any objectionable
exceptions within said five (5) day period, then Seller shall be
deemed to have agreed to remove all objectionable exceptions on
or before the Closing Date. However, if Seller advises Buyer
that it will not cause the exceptions to be removed, Buyer will
have five (5) days from its receipt of Seller's notice to elect
to:
(i) proceed with the purchase and
acquire the Property subject to such exceptions, but conditioned
upon Seller fulfilling each and every one of its other
obligations hereunder and all of the other conditions precedent
in favor of Buyer having been duly and timely satisfied; or
(ii) terminate this Agreement by
written notice to Seller, in which case the Deposit, and any
interest thereon, will be immediately returned to Buyer without
further instructions from Seller, and all rights and obligations
of the parties existing hereunder shall terminate and be of no
further force or effect, except any rights and obligations which
are expressly stated to survive the termination of this
Agreement. In the event of such termination, Buyer shall deliver
to Seller copies of all inspections and reports performed or
caused to be performed by Buyer in connection with the Property,
provided that Seller has first reimbursed Buyer for the actual
cost thereof, and then only to the extent that delivery of such
inspections and reports to Seller is permissible under such
documents.
If Buyer does not give Seller written notice
of its election within said five (5) day period, Buyer will be
conclusively deemed to have elected to terminate this Agreement
as described in (ii) above. Furthermore, if Buyer notifies Seller
of any specific objections to title or the Survey prior to the
expiration of the Due Diligence Period, then the Closing Date
shall be extended by the number of days that it takes for Buyer
and Seller to resolve any objectionable exceptions as provided in
this Section 9.1.1 or to proceed with the purchase of the
Property or terminate this Agreement, in accordance with the time
periods provided for herein.
If Seller commits (or is deemed to have
committed) to remove any objection to title or the Survey and
fails to do so by the Closing Date, Buyer may deduct from the
Purchase Price the reasonable cost of removing any such
objection(s) and the Closing shall proceed without any further
remedies of Buyer against Seller in connection with Seller's
failure to remove such objection. If, however, such objection(s)
cannot be removed by the payment of money, then Seller will be in
default under this Agreement and Buyer may, at Buyer's election,
terminate this Agreement and pursue its remedies as set forth in
Section 14 of this Agreement.
Notwithstanding anything to the contrary in
this Section 9.1.1, if a new or supplemental title exception or
matter is discovered or identified after the Title Company first
delivers the Preliminary Report to Buyer, then, as it relates to
Buyer's review and approval of such new or supplemental matter,
the Due Diligence Period shall be extended for a period of five
(5) business days following the date of Buyer's receipt of the
new or supplemental title exception or matter and all underlying
documents relating thereto.
9.1.2 Inspections and Studies. Buyer will
have until 6:00 p.m. (California time) on the expiration of the
Due Diligence Period to conduct (as applicable) and review and
approve the Tenant Estoppels, the schedules of personal property
to be attached as Schedule 1 and Schedule 2 to the Bill of Sale,
and any and all inspections, investigations, tests, studies
(including feasibility studies and other economic models) and
appraisals as Buyer may have elected to make or obtain with
respect to the Property and/or the operation and financial
condition of the Property, including, without limitation,
financial analyses of the books and records, environmental
inspections and studies, structural and mechanical
investigations, appraisals, and analyses of the Property's
compliance with Governmental Regulations. Subject to Section
6.4, Buyer and Buyer's representatives, agents and designees will
have the right to enter the Property at all reasonable times,
upon reasonable oral notice to perform all such investigations of
the Property, and to conduct interviews with (i) tenants of the
Property, (ii) property management personnel of Seller, and (iii)
such other parties as Buyer may deem appropriate in its sole
discretion. Seller will cooperate with Buyer and its
representatives in that regard. Seller shall deliver to Buyer at
Seller's sole cost and expense, within two (2) days (unless
indicated otherwise below) following the date this Agreement is
executed and delivered by Buyer and Seller, a copy of all
information in Seller's possession or control which is reasonably
related to the Property, plus the following items:
9.1.2.1 To the extent in Seller's
possession, an ALTA "as-built" survey of the Real Property
prepared by a licensed surveyor;
9.1.2.2 The Leases and all
modifications or amendments and guaranties relating thereto; any
inspection report recently performed at the Property of certain
building systems (including sprinklers, standpipe and emergency
lights); all tenant correspondence and all current financial
statements of tenants to the extent the same are in Seller's
possession or control; all contracts (including the Service
Contracts), agreements and management agreements; all "operating
statements" for the last three (3) calendar years for the
Property and a year-to-date operating statement for the calendar
year 1998, a balance sheet dated no earlier than December 31,
1997; an income statement for the last two (2) calendar years and
a year-to-date income statement for the calendar year 1998, each
such statement to be certified by Seller as being true, correct
and complete reports prepared by Seller in the ordinary course of
business; a cumulative general ledger for year-to-date 1998,
reports (including all environmental reports, soils reports,
surveys and plans and specifications affecting or relating to the
Property, and all modifications or amendments thereto); all
Records and Plans, Warranties, Licenses and Permits and
governmental approvals obtained or held by Seller and relating to
the development, construction, operation, use or occupancy of any
of the Property.
9.1.2.3 A current rent roll (to be
updated as of the expiration of the Due Diligence Period and as
of the Closing), prepared and certified by Seller as being true,
correct and complete and listing for each tenant at the Property
such information that is contained in the rent roll set forth on
Exhibit "N" attached hereto ("Rent Roll").
9.1.2.4 Reports of insurance
carriers, if any, insuring the Property during the period of
Seller's ownership of the Property and each portion thereof
respecting the claims history of the Property; insurance
certificates of Seller and tenants respecting the Property; all
correspondence, reports, and notices pertaining to the existence
of toxic or Hazardous Materials and/or waste at the Property; all
permits, reports, certificates and notices pertaining to the
existence, removal and/or decommission of any and all storage
tanks located on, at or underneath the Property; all brokerage
and commission agreements; all agreements entered by Seller and
Seller's affiliates affecting the Property and/or income and cash
flow to be received from the Property that will survive the
Closing; tax bills and assessments for the current year and the
three (3) year period immediately preceding the current year; any
and all information in Seller's possession respecting the
creditworthiness of the tenants under the Leases at the Property;
all written reports respecting incidents of theft, burglary or
crimes attempted or committed at, on or to the Property or other
such incidents which are the subject of litigation; and such
other information reasonably requested by Buyer of Seller in
writing during the Due Diligence Period.
9.2 Indemnity. Buyer agrees to indemnify, defend
and hold Seller and its officers, employees and agents harmless
from any and all injuries, losses, liens, claims, actions, causes
of action, proceedings, lawsuits, judgments, obligations,
liabilities, costs, expenses or damages (including reasonable
attorneys' fees and court costs) sustained by Seller to the
extent same results from or arises out of any inspections by
Buyer or any of its representatives pursuant to Section 9.1.2
above.
9.3 Insurance. Prior to any entry, Buyer shall
obtain, maintain and provide Seller, or shall cause any
consultant, contractor or other person entering the Property to
obtain, maintain and provide Seller, with proof of comprehensive
general liability insurance in the amount of at least $1,000,000
combined, single limit coverage, naming Seller as an additional
insured.
9.4 Return of Documents. If this transaction
fails to close, then Buyer shall immediately return to Seller at
Buyer's sole cost and expense the copies and originals of all
documents received by Buyer from Seller pursuant to Section 9.1.2
and its subparagraphs.
9.5 Notice of Objections.
9.5.1 If Buyer fails to notify Seller in
writing of any objections to the items set forth in Section 9.1.2
on or before the expiration of the Due Diligence Period, Buyer
shall be conclusively deemed to have approved such items.
9.5.2 If Buyer notifies Seller in writing of
any objections to the condition of the Property or any other
matters relating to the Property and/or operation or financial
condition of the Property as set forth in Section 9.1.2 on or
before the expiration of the Due Diligence Period, the parties
will have five (5) business days to agree upon a resolution of
the objection(s). If the parties cannot agree within the five
(5) business day period, then Buyer may terminate this Agreement
by delivering written notice to Seller (which notice must be
given within three (3) business days after the expiration of the
five (5) business day period), in which event the Deposit and any
interest accrued thereon shall be immediately returned to Buyer
without further instructions from Seller, and all rights and
obligations of the parties existing hereunder shall terminate and
be of no further force or effect, except any rights and
obligations which are expressly stated to survive the termination
of this Agreement. The Closing Date shall be extended by the
number of days that it takes for Buyer and Seller to resolve any
objections raised under this Section 9.5, including the three (3)
day period that Buyer has to terminate this Agreement, as
provided in this Section 9.5.2 above.
10 PRORATIONS. The following are to be prorated as
of the Closing Date, as follows:
10.1 Current Rent. Current rents under the Leases
shall be prorated as of the Closing Date, regardless of whether
such rents have been paid to Seller.
10.2 Rent Arrears. With respect to any rent
arrears arising under the Leases, Buyer shall pay to Seller any
rents actually collected that are applicable to the period
preceding the Closing Date, less reasonable collection charges;
provided, however, that it is hereby understood and agreed that
all rents collected by Buyer shall be applied first to unpaid
rents accruing after the Closing Date, and then, only after all
such past due rents have been collected, to unpaid rents accruing
prior to the Closing Date. Notwithstanding anything to contrary
herein, Seller shall have the exclusive right to enforce its
rights and remedies regarding any and all rent arrearages
applicable to the period preceding, but not including, the
Closing Date, but Seller shall have no right to and shall not (i)
commence or pursue any unlawful detainer or eviction action
against any tenants at the Property or (ii) terminate any Leases
or any parties' rights to possession or use thereunder or take
any action which could entitle any tenant to terminate its Lease.
10.3 Tenant Improvement Allowances and
Brokerage Commissions. Buyer shall receive a credit against the
Purchase Price at Closing for all unpaid tenant improvement
allowances, free rent and brokerage or leasing commissions
payable in connection with any leases entered into prior to the
date of this Agreement, as set forth in the approved Schedule of
Tenant Improvements Allowances and Commissions, as approved by
Buyer prior to the expiration of the Due Diligence Period.
10.4 Security Deposits. The security deposits
paid by the tenants pursuant to the Leases, and any interest
required to be paid thereon, shall be fully credited to Buyer at
Closing, to the extent such security deposits have not previously
been applied to amounts due under the tenant's respective lease.
Except in the event of any inaccuracy of Seller's representation
and warranty regarding security deposits or any dispute by a
tenant with respect to the amount of a security deposit being
held by Seller, Buyer shall thereafter assume full and exclusive
responsibility for repayment or proper application of such
security deposits and interest.
10.5 Other Prorations. Liability for all real
property taxes shall be prorated as of the Closing Date, and
liability for all common area maintenance, Property operation
expenses, and other recurring costs which are not otherwise paid
directly by tenants shall be prorated as of the Closing Date to
the extent actually paid by Seller prior to the Closing Date;
provided, however, Buyer shall not be responsible for any costs
or expenses pertaining to Service Contracts or other items of
expense which Buyer has not approved in writing. Buyer shall be
fully credited at Closing with any free rent under any of the
Leases which has not accrued as of the Closing. Seller shall
remain liable for any supplemental taxes attributable to any
period prior to the Closing. Seller reserves the right, at its
sole expense, to pursue appeals for reduction of property taxes
for the period prior to the Closing and any proceeds resulting
solely from any such reduction for the period prior to the
Closing shall belong solely to Seller, subject to the rights of
any tenants at the Property who may be entitled to refunds for
any such reduction pursuant to the terms of their respective
Leases. Buyer agrees to cooperate, at no cost to Buyer, in
connection with any such Seller's appeal. Seller shall indemnify
Buyer against any cost, liability, liability or expense incurred
by Buyer as a result of or arising out of any such appeal(s) by
Seller. Seller shall remain liable for any supplemental taxes
attributable to any period prior to the Closing. If any such
supplemental taxes shall be billed to Buyer or levied against the
Property after the Closing, then Seller agrees to pay its
prorated share thereof to Buyer within thirty (30) days of demand
therefor by Buyer. Any such sums not paid when due may be
advanced by Buyer, and such amounts shall bear interest from the
date of advance by Buyer until paid by Seller at the maximum
contract rate permitted by law.
10.6 Preliminary Closing Adjustment. Seller and
Buyer shall jointly prepare a preliminary closing adjustment
computation on the basis of the Leases and other sources, and
shall deliver such computation to the Escrow Holder prior to
Closing.
10.7 Post-Closing Reconciliation. All items
described in this Section 10 that are capable of being prorated
as of the Closing Date, shall be prorated as of the Closing Date.
All other items shall be reconciled within one hundred eighty
(180) days after the Closing Date to the extent that such items
may be reconciled within such one hundred eighty (180) day
period, or, to the extent such items may not be reconciled within
such one hundred eighty (180) day period, when such items may
first be reconciled after Closing.
10.8 Survival. The provisions of this Section 10
shall survive Closing.
11 COSTS AND EXPENSES. The closing costs shall be
allocated as follows:
11.1 Closing Costs.
(a) Seller shall pay the premium for the
CLTA portion of the Title Policy, Seller's share of prorations,
one-half of the escrow fees, all state and county transfer taxes,
all sales taxes, any other tax or assessment imposed as a result
of the transactions contemplated under this Agreement, and any
document recording charges and notary fees, including, without
limitation, any recording fees and notary charges with respect to
the Deed.
(b) Buyer shall pay one-half of the escrow
fees, the additional premium for the ALTA portion of the Title
Policy and its share of prorations.
(c) Each party will pay their own legal and
professional fees and fees of other consultants incurred by Buyer
and Seller, respectively.
11.2 Delivery of Possession. Simultaneously
with the Closing, Seller shall deliver possession and enjoyment
of the Property (including, without limitation, keys, files and
other Property documents) to Buyer and Buyer shall thereupon have
the immediate right to possess, develop, use, sell, encumber
and/or transfer the Property, or any part thereof for its own
account to the total exclusion of Seller.
12 AS-IS.
12.1 Except as specifically set forth in
this Paragraph and the representations set forth in Paragraph 5
above, the sale of the Property hereunder is and will be made on
an "as is" "where 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, improvements, roof, brick veneer, HVAC system and
elevators, all unrepaired earthquake damage affecting the Real
Property and the presence of gypcrete floors in the stairwells
and under the carpets in tenant suites, the presence of water
seepage in the garage and exterior portion of the Real Property,
the environmental condition of the Property (including, but not
limited to, the presence or absence of hazardous substances on or
respecting the Property)), the compliance of the Property with
applicable laws and regulations, the financial condition of the
Property or any other representation or warranty respecting any
income, expenses, charges, liens or encumbrances, rights or
claims on, affecting or pertaining to the Property or any party
thereof. Buyer acknowledges that Buyer will examine, review and
inspect all matters which in Buyer's judgment bear upon the
Property and its value and suitability for Buyer's purposes, and
Seller shall cooperate with Buyer in making such information
available to Buyer for such examination. Except as to matters
specifically set forth in this Paragraph and the representations
set forth in Paragraph 5 above, Buyer will acquire the Property
solely on the basis of its own physical and financial
examinations, reviews and inspections and the title insurance
protection afforded by the Title Policy. Nothing set forth in
this Section 12.1 above shall constitute a waiver or release by
Buyer of any claims, liabilities, losses, costs, expenses
(including, but not limited to, attorneys fees and costs),
penalties or damages based upon any breach by Seller of the
representations, warranties and/or covenants of Seller expressly
provided in this Agreement (including, but not limited to, any
indemnification obligation of Seller expressly provided in this
Agreement) and any statutory rights of contribution with respect
to the environmental condition of the Property, all of which are
hereby expressly reserved by Buyer.
12.2 Without limiting the terms of Section 12.1
above, Seller discloses to Buyer and Buyer acknowledges it is
aware that one of the tenants at the Property, Koo Koo Roo, has
complained (i) for the last year or so about the adequacy of the
HVAC system serving the second floor of the Property, and (ii) on
one occasion that the elevator maintenance company took too long
to respond when one of Koo Koo Roo's employees got stuck in the
elevator. Seller has advised Buyer that it has disputed said
complaints with Koo Koo Roo. Seller shall provide Buyer with all
correspondence regarding said complaints in accordance with the
terms of Section 9.1.2 above
13 CONDEMNATION AND DESTRUCTION:
13.1 Eminent Domain or Taking. If proceedings
under a power of eminent domain relating to the Property or any
part thereof are commenced prior to the Closing Date, Seller
shall promptly inform Buyer in writing.
13.1.1 If such proceedings involve the
taking of title to all or any Material (defined below) interest
in the Property, Buyer may elect to terminate this Agreement by
notice in writing sent within ten (10) business days of Seller's
written notice to Buyer, in which case the Deposit, and any
interest thereon, shall be returned to Buyer without any further
instructions from Seller and neither party shall have any further
obligation to or rights against the other except any rights or
obligations of either party which are expressly stated to survive
termination of this Agreement.
13.1.2 If the proceedings do not involve
the taking of title to all or a Material interest in the Property
or if Buyer does not elect to terminate this Agreement, this
transaction will be consummated as described in this Agreement
and any award or settlement payable with respect to such
proceeding will be paid or assigned to Buyer upon the Closing.
13.1.3 For purposes of this Section
13.1, "Material" shall mean a taking which Buyer reasonably
determines materially and adversely affects the value or
operations of the Property.
13.2 Damage or Destruction. Except as provided in
this paragraph, prior to the Close of Escrow the entire risk of
loss of damage by earthquake, flood, hurricane, landslide, fire
or other casualty is borne and assumed by Seller. If, prior to
the Closing Date, any part of the Property is damaged or
destroyed by earthquake, flood, landslide, fire or other
casualty, Seller will promptly inform Buyer of such fact in
writing and advise Buyer as to the extent of the damage.
13.2.1 If such damage or destruction is
Material (as defined below), Buyer has the option to terminate
this Agreement upon written notice to the Seller given not later
than ten (10) business days after receipt of Seller's written
notice to Buyer advising of such damage or destruction.
13.2.2 If this Agreement is so
terminated, the Deposit and any interest thereon, shall be
returned to Buyer without any further instructions from Seller,
and neither party shall have any further obligation to or rights
against the other except any rights or obligations of either
party which are expressly stated to survive termination of this
Agreement.
13.2.3 If Buyer does not timely exercise
this option to terminate this Agreement, or if the casualty is
not Material, Seller will assign to Buyer all of Seller's right,
title and interest in and to any and all insurance proceeds under
Seller's insurance policies relating to such damage or
destruction, and shall reduce the Purchase Price by the amount of
the deductible and any other amount not covered by insurance
under such policies (including reasonably anticipated post-
Closing rental loss, except to the extent covered by insurance,
through to completion of such repair and restoration resulting
from such casualty), and this transaction will close pursuant to
the terms of this Agreement.
13.2.4 For purposes of this Section
13.2, "Material" is deemed to be any damage or destruction to the
Property where the cost of repair or replacement is estimated to
be more than 10% of the Purchase Price.
13.2.5 Survival. The provisions of
Section 13.2.3 shall survive the Closing.
14 REMEDIES:
14.1 Buyer's Remedies. IN THE EVENT THAT SELLER
SHALL FAIL TO CONSUMMATE THIS AGREEMENT FOR ANY REASON, EXCEPT
BUYER'S DEFAULT OR A TERMINATION OF THIS AGREEMENT BY BUYER OR
SELLER PURSUANT TO A RIGHT TO DO SO UNDER THE PROVISIONS HEREOF,
BUYER SHALL HAVE THE FOLLOWING REMEDIES, WHICH SHALL BE BUYER'S
SOLE AND EXCLUSIVE REMEDIES BASED UPON A DEFAULT BY SELLER. SUCH
REMEDIES SHALL NOT BE CUMULATIVE, MEANING BUYER MAY EXERCISE ONE
(1) BUT NOT BOTH OF SUCH REMEDIES. BUYER SHALL DELIVER TO SELLER
AND ESCROW HOLDER NOTICE OF ITS ELECTION OF REMEDIES WITHIN TWO
(2) DAYS AFTER SELLER'S DEFAULT. THE SOLE REMEDIES AVAILABLE TO
BUYER ARE AS FOLLOWS:
(i) BUYER MAY TERMINATE THIS AGREEMENT, IN
WHICH CASE ESCROW HOLDER SHALL IMMEDIATELY RETURN THE DEPOSIT,
TOGETHER WITH ANY INTEREST EARNED THEREON, TO BUYER, UPON
EXECUTION OF CANCELLATION INSTRUCTIONS BY BUYER, AND SELLER SHALL
PAY ANY ESCROW CANCELLATION CHARGES. IN ADDITION, BUYER SHALL
HAVE THE RIGHT TO PURSUE AN ACTION AGAINST SELLER FOR ALL ACTUAL
OUT-OF-POCKET (BUT NOT CONSEQUENTIAL) DAMAGES SUFFERED BY BUYER;
OR
(ii) BUYER MAY BRING AN ACTION FOR SPECIFIC
PERFORMANCE AGAINST SELLER WITH RESPECT TO THIS AGREEMENT BUT
ONLY UNDER THE FOLLOWING CONDITIONS AND CIRCUMSTANCES:
(a) BUYER SHALL HAVE FULLY PERFORMED
ALL OBLIGATIONS OF BUYER UNDER THIS AGREEMENT, EXCEPT THAT WITH
RESPECT TO DEPOSITING THE BALANCE OF THE PURCHASE PRICE, BUYER
SHALL HAVE EVIDENCED TO SELLER'S REASONABLE SATISFACTION THAT
BUYER IS READY, WILLING AND ABLE TO TIMELY DEPOSIT SAID FUNDS IN
ESCROW;
(b) THE ACTION SHALL BE COMMENCED,
AND SERVICE OF PROCESS UPON SELLER MADE, NOT LATER THAN FORTY-
FIVE (45) DAYS AFTER SELLER'S DEFAULT; AND
(c) ALL OF THE ISSUES IN SUCH ACTION,
WHETHER OF FACT OR LAW, SHALL BE HEARD BY A REFERENCE PROCEEDING
PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE, SECTION 638,
ET. SEQ. WITHIN TEN (10) DAYS FOLLOWING THE COMMENCEMENT OF ANY
SUCH ACTION, THE PARTIES SHALL MAKE APPLICATION TO THE COURT IN
WHICH THE ACTION IS PENDING FOR THE APPOINTMENT OF A RETIRED
SUPERIOR COURT JUDGE OR COURT OF APPEAL JUSTICE FROM THE THEN
CURRENT LIST OF RETIRED JUDGES AVAILABLE TO SERVE AS REFEREES IN
THE COUNTY IN WHICH SUCH ACTION IS COMMENCED TO SERVE AS THE
REFEREE. THE REFEREE CHOSEN SHALL BE DEEMED QUALIFIED ONLY IF HE
IS WILLING TO AGREE TO HEAR THE SUBJECT ACTION WITHIN TWENTY (20)
DAYS FOLLOWING THE DATE OF APPLICATION TO THE COURT, TO HEAR THE
SUBJECT ACTION ON CONSECUTIVE DAYS AND TO RENDER A DECISION
WITHIN A FURTHER FIFTEEN (15) DAY PERIOD. THE PARTIES SHALL
ADVANCE, IN EQUAL SHARES, THE FEES AND EXPENSES OF THE REFEREE
SELECTED PURSUANT TO THIS PROVISION, BUT THE LOSING PARTY IN ANY
SUCH ACTION SHALL REIMBURSE THE PREVAILING PARTY FOR ANY AND ALL
FEES AND EXPENSES PREVIOUSLY ADVANCED BY SUCH PREVAILING PARTY
FOR THE REFEREE.
14.2 Seller's Remedies. IF BUYER SHOULD FAIL TO
CONSUMMATE THIS AGREEMENT AS A RESULT OF BUYER'S DEFAULT UNDER
THE TERMS OF THIS AGREEMENT, THEN SELLER, AS ITS SOLE AND
EXCLUSIVE REMEDY, MAY TERMINATE THIS AGREEMENT BY NOTIFYING BUYER
THEREOF AND RECEIVE OR RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES.
THE PARTIES AGREE THAT SELLER WILL SUFFER DAMAGES IN THE EVENT OF
BUYER'S DEFAULT ON ITS OBLIGATIONS. ALTHOUGH THE AMOUNT OF SUCH
DAMAGES IS DIFFICULT OR IMPOSSIBLE TO DETERMINE, THE PARTIES
AGREE THAT THE AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF
SELLER'S LOSS IN THE EVENT OF BUYER'S DEFAULT. THUS, SELLER
SHALL ACCEPT AND RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES BUT NOT
AS A PENALTY. SELLER HEREBY ACKNOWLEDGES AND AGREES SUCH
LIQUIDATED DAMAGES SHALL CONSTITUTE SELLER'S SOLE AND EXCLUSIVE
REMEDY AND SELLER HEREBY WAIVES THE PROVISIONS OF CALIFORNIA
CIVIL CODE SECTION 3389 AND ANY OTHER APPLICABLE EXISTING OR
FUTURE LAW PERMITTING A CONTRACT TO BE ENFORCED EVEN THOUGH
DAMAGES ARE LIQUIDATED FOR ITS BREACH.
SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND
UNDERSTAND THE PROVISIONS OF THE FOREGOING PROVISION AND BY THEIR
INITIALS IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS.
Seller: /s/ HM Buyer: /s/ VJC
15 BROKERAGE COMMISSIONS. Upon the Close of Escrow,
Seller shall pay a commission in the amount of two percent (2%)
of the Purchase Price to be split as follows: one and one
percent (1%) to K.O. Investment Inc., one percent (1%) to Hilton
& Hyland. Buyer shall have no responsibility for any of said
commissions. Each party hereby represents and warrants to the
other that except as set forth in this paragraph it has not
incurred any obligation to any third party for the payment of any
real estate commission, finder's fee or other like sum in
connection with the sale of the Property to Buyer, and each party
hereby agrees to indemnify and hold the other party harmless from
and against any and all claims, demands, causes of action and
costs, including attorneys' fees and costs, made, brought or
sought against or from the other arising out of any agreement for
the payment of a real estate commission, finder's fee or other
like sum entered into between either party and a third party in
connection with the sale of the Property to Buyer.
16 NOTICE. All notices, requests, demands or
documents which are required or permitted to be given or served
hereunder shall be in writing and (a) delivered personally,
(b) delivered by a national overnight courier (i.e., FedEx), or
(c) transmitted by facsimile, addressed as follows:
To Seller at: Flags Investment, Inc.
1801 Avenue of the Stars, Ste. 802
Los Angeles, CA 90067
Attn: Tammy Arima
Facsimile: (310) 551-9844
with a copy to:
Jeffrey H. Lerman, Esq.
Lerman & Lerman
1999 Avenue of the Stars, 15th Floor
Los Angeles, CA 90067
Facsimile: (310) 556-0656
To Buyer at: Arden Realty Limited Partnership
9100 Wilshire Blvd., Suite 700 E
Beverly Hills, California 90212
Attn: Mr. Victor Coleman
Ms. Brigitta Troy
Facsimile: (310) 274-6218
with a copy to:
Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars, Tenth Floor
Los Angeles, California 90067
Attn: Scott M. Kalt, Esq.
Facsimile: (310) 203-0567
Notice shall be deemed to have been delivered only upon actual
delivery to the intended addressee in the case of either
personal, courier, or facsimile delivery. The addresses for
purposes of this paragraph may be changed by giving written
notice of such change in the manner provided herein for giving
notices. Unless and until such written notice is delivered, the
latest information stated by written notice, or provided herein
if no written notice of change has been delivered, shall be
deemed to continue in effect for all purposes hereunder.
17 MISCELLANEOUS:
17.1 Survival. The representations and
warranties contained in this Agreement shall survive for a period
of six (6) months following the Closing Date.
17.2 No Recording. Neither this Agreement, nor
any memorandum of this Agreement, shall be recorded by Buyer, or
by anyone acting on its behalf, in any public office, any such
recording shall, at Seller's option, be a default by Buyer
hereunder.
17.3 Parties in Interest. As and when used
herein, the terms, "Seller" and "Buyer" mean and include, and
this Agreement their respective successor and assigns and shall
be binding upon and inure to the benefit of, the above-named
Seller and Buyer and their respective successors and permitted
assigns.
17.4 Section Headings. The headings of sections
are inserted only for convenience and shall in no way define,
describe or limit the scope or intent of any provision of this
Agreement.
17.5 No Oral Modifications. This Agreement may
not be amended or modified except in writing executed by all
parties hereto.
17.6 Full Integration. Buyer and Seller each
acknowledge that there are no other agreements or representa
tions, either oral or written, express or implied, that are not
embodied in this Agreement, and this Agreement, the Exhibits
attached to this Agreement, and the Transfer Documents, represent
a complete integration of all the prior and contemporaneous
agreements and understandings and documents.
17.7 Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the parties hereto, and
their respective successors and assigns, and no other party shall
be a beneficiary hereunder.
17.8 Seller's Advice of Counsel. Seller
acknowledges that (a) Buyer has not made any representation as to
the Federal or State tax implications relating to the
transactions contemplated herein, (b) Seller has thoroughly read
and reviewed the terms and provisions of this Agreement and the
Exhibits attached hereto and is familiar with the terms of this
Agreement, (c) the terms and provisions contained in this
Agreement are clearly understood by Seller and have been fully
and unconditionally consented to by it, (d) Seller has had full
benefit and advice of counsel of its own selection, in regard to
understanding the terms, meaning and effect of this Agreement,
(e) the execution of this Agreement and of the other documents
executed pursuant to this Agreement is done freely, voluntarily,
with full knowledge, and without duress, (f) in executing this
Agreement, Seller is relying on no other representations, either
written or oral, express or implied, made to it by any other
party to this Agreement, and the consideration received by it
under this Agreement has been actual and adequate.
17.9 Attorneys' Fees. If an action is commenced
by a party hereto resulting from a dispute with respect to the
transactions contemplated herein, the prevailing party shall be
entitled to recover its attorneys' fees and costs from the other
party in such action. As used herein, the term "attorneys' fees"
means attorneys' fees whether or not litigation ensues and if
litigation ensues whether incurred at trial, on appeal, on
discretionary review or otherwise.
17.10 Governing Law. This Agreement will be
governed by, interpreted under, and construed and enforced in
accordance with the laws of the State of California, with venue
in the city and County of Los Angeles, California.
17.11 Confidentiality. Unless otherwise
agreed to in writing by Seller and Buyer, each party will use
reasonable efforts to keep confidential the terms of this
Agreement, the possible sale of the Property, and all documents,
financial statements, reports or other information provided to,
or generated by the other party relating to the Property, and
will use reasonable efforts to not disclose any such information
to any person other than (a) those employed by Seller or Buyer;
(b) those who are actively and directly participating in the
evaluation of the Property and the negotiation and execution of
this Agreement or financing of the purchase of the Property; and
(c) governmental, administrative, regulatory or judicial authori
ties in the investigation of the compliance of the Property with
applicable legal requirements; and (d) third parties as required
under applicable law. The provisions of this paragraph will
survive the termination of this Agreement other than by Closing.
From and after the Closing, the obligations of the parties under
this paragraph shall cease and be of no further force or effect.
17.12 Captions. The captions contained in
this Agreement are for convenience only and are not intended to
limit or define the scope or effect of any provision of this
Agreement.
17.13 Severability. The invalidity,
illegality or unenforceability of any provision of this Agreement
shall not affect the enforceability of any other provision of
this Agreement, all of which shall remain in full force and
effect.
17.14 Time of the Essence. Time is of the
essence of this Agreement and of the obligations required
hereunder.
17.15 Non-Waiver. No delay or failure by any
party to exercise any right hereunder, and no partial or single
exercise of any such right, shall constitute a waiver of that or
any other right, unless otherwise expressly provided herein.
17.16 Facsimile. The parties hereto and
their respective successors and assigns are hereby authorized to
rely upon the signatures of each person and entity on this
Agreement which are delivered by facsimile as constituting a duly
authorized, irrevocable, actual, current delivery of this
Agreement with original ink signatures of each person and entity.
17.17 Further Assurances. Buyer and Seller
agree to execute all documents and instruments reasonably
required in order to consummate the purchase and sale
contemplated in this Agreement.
17.18 Counterparts. This Agreement may be
executed in any number of counterparts and each such counterpart
shall be deemed to be an original, but all of which, when taken
together, shall constitute one Agreement.
17.19 Seller's Indemnities. Seller's
indemnities set forth in Sections 6.7 and 6.10 hereof shall
survive the Closing and the execution and delivery of the Deed.
17.20 WAIVER OF JURY TRIAL. EACH PARTY
HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION SEEKING
SPECIFIC PERFORMANCE OF ANY PROVISION OF THIS AGREEMENT, FOR
DAMAGES FOR ANY BREACH UNDER THIS AGREEMENT, OR OTHERWISE FOR
ENFORCEMENT OF ANY RIGHT OR REMEDY HEREUNDER.
17.21 ' 1031 Exchange. Buyer agrees to
cooperate with Seller in completing an exchange qualifying for
non-recognition under Internal Revenue Code Section 1031 and the
applicable provisions of the California Revenue and Taxation
Code, as may be amended from time to time. Seller and Buyer
agree, however, that the consummation of the transactions
contemplated by this Agreement are not predicated or conditioned
upon completion of such an exchange. If Seller elects to
complete and exchange, Buyer, shall execute all escrow
instructions, documents, agreements, or instruments reasonably
requested by the Seller to complete the exchange. Buyer shall
incur no additional liabilities, expenses or costs as a result of
or connected with the exchange. Seller agrees to indemnify,
defend and hold Buyer harmless from any liability, damages or
costs (including, but not limited to, reasonable attorneys' fees
and costs) that may arise from Buyer's participation in the
exchange.
17.22 Arbitration. Except as otherwise
provided in Section 14.1 above, any controversy or claim arising
out of or relating to this Agreement or breach thereof shall be
resolved by binding, non-appealable arbitration before a retired
judge of the Superior Court of the State of California for the
County of Los Angeles (the "Los Angeles Superior Court") in the
following manner:
(a) The arbitration shall begin by one
party serving a complaint and a demand for arbitration upon other
parties. The party serving the demand shall include with the
demand a list of five retired judges of Los Angeles Superior
Court from the then available list of retired judges willing to
act as private judges. The responding party shall then have ten
days to select the arbitrator from the list of five. If the
selected arbitrator is unavailable, the responding party may
choose another name; with the process repeated until the list of
five is exhausted. If none of the five judges is available, the
responding party may select a judge from the list of available
retired judges.
(b) The arbitration shall take place in Los
Angeles, California at a time and place selected by the
arbitrator.
(c) The parties to the arbitration may have
all rights and powers afforded to a civil litigant in Los Angeles
Superior Court, including the ability to conduct full discovery.
The arbitrator shall be governed by the rules of civil procedure
for actions filed in California Superior Courts as set forth in
California Code of Civil Procedure ("CCP"). The arbitrator may
deviate from the rules by stipulation of the parties.
(d) The parties shall evenly divide the
cost of the arbitrator's fees. The arbitrator shall have the
power, as part of any award, to include these fees as an element
of recovery.
Buyer and Seller have executed this Agreement as of the
date written above.
"SELLER"
FLAGS INVESTMENT INC., a California
corporation
By:/s/ Hajime Matsunaga
Name: Hajime Matsunaga
Title: President
"BUYER"
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc., a Maryland
corporation, its general partner
By:/s/ Victor J. Coleman
Victor J. coleman
Its: President and COO
FIRST AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
This First Amendment to Agreement of Purchase and Sale
and Joint Escrow Instructions (this "Amendment") is entered into
as of the 31st day of March, 1998 by and between Flags
Investment, Inc., a California corporation ("Seller"), and Arden
Realty Limited Partnership, a Maryland limited partnership
("Buyer").
RECITALS
WHEREAS, Buyer and Seller entered into that certain
Agreement of Purchase and Sale and Joint Escrow Instructions
dated March 11, 1998 (the "Purchase Agreement"), pursuant to
which Seller agreed to sell and Buyer agreed to buy the
"Property" referenced therein, including the real property
located at 11075 Santa Monica Boulevard, Los Angeles, California.
Capitalized terms used in this Amendment and otherwise defined
shall have the meaning ascribed to such terms as set forth in the
Purchase Agreement.
WHEREAS, Buyer has objected to the amount to the tenant
improvement allowance for Shuwarger & Company as set forth on
Exhibit "L" of the Purchase Agreement;
WHEREAS, Buyer has received a Tenant Estoppel from
Wilson, Kenna & Borys, LLP ("WKB"), the tenant occupying the
entire third floor of the Property, wherein WKB contends that (i)
it has prepaid rent under its lease in the amount of Twenty-Four
Thousand Five Hundred Six and 80/00 Dollars ($24,506.80)
("Prepaid Rent") and (ii) it has an option to extend the term of
its lease.
WHEREAS, WKB contends that the Prepaid Rent was
delivered to Seller in order to be applied to the payment of rent
due under its lease for the first (1st) and sixteenth (16th)
months of its original lease term, and that such Prepaid Rent was
not properly credited to WKB's rental obligations under its lease
by Seller.
WHEREAS, Seller disagrees with WKB's contention
regarding the Prepaid Rent and believes that the Prepaid Rent was
properly credited to WKB's rental obligations under its lease and
Seller disagrees that WKB has a remaining option to extend the
term of its lease.
WHEREAS, Buyer and Seller now desire to amend the
Purchase Agreement as set forth below and establish an escrow
holdback account with Escrow Holder upon and subject to the terms
and conditions set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing
recitals, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Buyer
and Seller hereby agree as follows:
1. Escrow Holdback Account.
(a) Buyer and Seller hereby establish an escrow
holdback account with Escrow Holder ("Holdback Account") pursuant
to which Escrow Holder shall hold a sum equal to the Prepaid Rent
from the proceeds of the Purchase Price (the "Holdback Amount")
and not disburse said amount to any party until Escrow Holder is
authorized to do so as provided herein. Escrow Holder shall
invest the Holdback Amount in an interest bearing account with a
responsible federally-insured institutional lender approved by
Buyer and Seller and interest shall accrue for the account of the
party to whom the Holdback Amount (or such portions thereof) is
disbursed pursuant to the instructions set forth herein. Seller
shall be responsible for the payment of all charges and fees
imposed by Escrow Holder in connection with its duties hereunder.
(b) Escrow Holder shall hold the Holdback Amount until
the Disbursement Date (as defined below), at which time Escrow
Holder shall deliver to Buyer and/or Seller (as applicable) the
Holdback Amount (or such portion thereof as set forth in the
Final Resolution (as defined below)), plus all interest accrued
thereon for the benefit of such party. The Disbursement Date
shall be the earlier of (i) the date that Buyer delivers to
Escrow Holder evidence that the dispute between WKB and Seller
regarding the payment and application of the Prepaid Rent, as set
forth above, (the "Dispute") has reached Final Resolution, (ii)
the date that Buyer delivers to Escrow Holder and Seller evidence
that WKB has withheld or offset all or any portion of the Prepaid
Rent amount from or against rent due or which shall become due
under its lease (a "Withholding Event") or (iii) May 15, 1998,
but only if Escrow Holder has not received written evidence of
Seller's commencement of an action for declaratory relief against
WKB, as more particularly set forth in paragraph 2 below. If the
Disbursement Date occurs pursuant to subparagraph (ii) or (iii)
above, then Escrow Holder shall deliver to Buyer the entire
Holdback Amount plus all interest accrued thereon, without
further instruction.
(c) As used herein, the term "Final Resolution" shall
mean Seller's delivery to Escrow Holder of, and Buyer's delivery
to Escrow Holder of written approval (not to be unreasonably
withheld or delayed) of:
i) A fully executed written agreement by and
between WKB and Seller setting forth, among
other things, the disposition of the Prepaid
Rent and which also contains language
substantially similar to the following:
"Release. WKB hereby releases and forever discharges
Flags Investment Inc., a California corporation, and
Arden Realty Limited Partnership, a Maryland limited
partnership, and their respective officers, directors,
affiliates, partners, agents, employees,
representatives, attorneys and their respective heirs,
executors, administrators, successors and assigns, and
each of them, from any and all claims, demands,
damages, debts, liabilities, judgments, obligations,
causes of action, suits, expenses and costs (including,
without limitation, attorney's fees and costs), of
whatever nature, character or description (collectively
" Losses"), whether known or unknown, anticipated or
unanticipated, which WKB may have or may hereafter have
or claim to have against the released parties in
connection with the $24,506,80 prepaid rent paid by WKB
under its lease. In furtherance of this intention, WKB
acknowledges that it is familiar with Section 1542 of
the Civil Code of the State of California, which
provides as follows ("Section 1542"):
'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 releases,
which if known by him must have materially
affected his settlement with debtor.'
The parties hereby waive and relinquish any rights and
benefits which they may have under Section 1542" or;
ii) A final judgment entered in a declaratory
relief action between Seller and WKB which
fully and finally resolves all Disputes
regarding the Prepaid Rent. For purposes of
this paragraph a judgment will be deemed to
be "final" when it has been entered and the
time for appeal has passed without either
party filing a notice of appeal or, if an
appeal is taken from such judgment, then such
appeal has been litigated to a final
adjudication.
(d) Buyer and Seller each agree to sign such further
instructions and take such further actions as Escrow Holder may
reasonably require in connection with its duties under this
Amendment.
(e) Upon the occurrence of a Withholding Event, and
provided that Escrow Holder has delivered to Buyer the Holdback
Amount and all interest accrued thereon, Buyer shall be deemed
(without the necessity of any further action) to have assigned to
Seller any and all claims for damages it may have against WKB
with respect to the Prepaid Rent, but Seller shall have no right
to and shall not (i) commence or pursue any unlawful detainer or
eviction action against WKB, (ii) terminate WKB's lease or its
right to possession or use thereunder or (iii) take any action
which could entitle any WKB to terminate its lease.
2. Obligations of Seller. Seller hereby agrees to
use reasonable efforts to resolve the Dispute with WKB within
thirty (30) days following the date hereof. If WKB and Seller
have not reached a Final Resolution within said thirty (30) day
period, then Seller shall have fifteen (15) days following the
expiration of said thirty (30) day period (the "15 Day Filing
Period") to commence an action for declaratory relief against WKB
to resolve the Dispute. The "commencement of an action for
declaratory relief" shall be deemed to have occurred when
Seller's claim for declaratory relief against WKB is filed with a
court of competent jurisdiction. Seller shall deliver to Buyer
and Escrow Holder written evidence of the commencement of its
action for declaratory relief prior to the expiration of the 15
Day Filing Period. Seller's failure to do so shall constitute
its irrevocable instructions to Escrow Holder to release the
entire Holdback Amount, and all interest accrued thereon,
directly to Buyer without further instructions. In the event
that an action for declaratory relief is timely commenced by
Seller as provided above, then Seller agrees to diligently and
continually prosecute such action in good faith, until final
judgment is reached. Nothing herein shall prevent Seller from
commencing an action for declaratory relief against WKB sooner
than the time periods set forth herein.
3. Indemnity. Seller hereby agrees to indemnify,
protect and defend Buyer and Buyer's officers, partners,
directors, agents, shareholders, representatives, employees,
attorneys, affiliates, beneficiaries, subsidiaries, successors
and assigns (collectively "Buyer's Parties") against and hold
Buyer and Buyer's Parties harmless from, and to reimburse Buyer
and Buyer's Parties for any and all Losses (as defined in
paragraph 1(c) above) arising out of or relating to the Dispute.
4. Tenant Improvement Allowance for Shuwarger &
Company. Buyer and Seller hereby agree that tenant improvement
allowance for Shuwarger & Company as set forth on Exhibit "L" to
the Purchase Agreement is hereby amended to read as follows:
"TENANT IMPROVEMENT ALLOWANCE NOT PAID YET
# 150 Shuwarger & Company $15.000.00."
Buyer and Seller agree that said amount shall be credited to
Buyer at Closing, as more particularly set forth in the Purchase
Agreement.
5. Due Diligence Period and Closing Date. The
expiration of the Due Diligence Period is hereby extended to 6:00
p.m. (California time) on April 8, 1998, but only with respect to
Buyer's review and approval of the Tenant Estoppel for WKB and
the resolution, to Buyer's sole satisfaction, of all issues
pertaining to, regarding, or arising out of WKB's claim that it
has an option to extend its lease term. The Closing Date is
hereby extended to April 9, 1998, or sooner if agreed to by Buyer
and Seller.
6. Resolution of Objections. The execution and
delivery by Buyer and Seller of this Amendment to each other
shall constitute the parties resolution of the objections raised
in paragraphs 1, 2 and 4 of that certain letter from Buyer's
attorney to Seller and Seller's attorney dated March 30, 1998, a
copy of which is attached hereto as Exhibit "A."
7. Estimated Settlement Statement. Seller hereby
authorizes Tammy Arima of K.O. Investment to sign and approve all
settlement statements on behalf of Seller which are prepared by
Escrow Holder in connection with the Closing.
8. Ratification of Purchase Agreement. Except as
specifically amended by this Amendment, Buyer and Seller agree
that the Purchase Agreement shall remain in full force and effect
without modification. The terms and conditions of this Amendment
and the establishment of the Holdback Account shall survive the
Closing as set forth in the Purchase Agreement. Nothing contained
herein shall be deemed a waiver of any rights of Buyer or Seller
under the Purchase Agreement.
9. Counterparts. This Agreement may be executed in
duplicate counterparts, each of which shall be deemed an
original, but all of which, when taken together, shall
constitute one and the same instrument.
10. Facsimile. Each party shall be authorized to rely
on the signatures of the other party on this Amendment which are
delivered by facsimile as constituting duly authorized,
irrevocable, actual, current delivery of this Amendment binding
upon such other party. Each party that delivers such facsimile
signatures to any other parties agrees to deliver an executed
original of the same to the parties so receiving the previous
facsimile signature within five (5) business days after the
delivery of such facsimile signature, but the failure to so
deliver an executed original shall not effect the validity and
enforceability of this Amendment.
11. Brokers. Seller hereby represents and warrants
to Buyer that Seller has not dealt with any broker, agent or
other person with respect to that certain Third Amendment to
Office Lease dated March 31, 1998, by and between Seller and WKB
(the "Third Amendment"), and no broker, agent or other person is
entitled to any commission or compensation with respect to the
preparation of or matters contained in the Third Amendment and
the option term set forth therein. Seller agrees to indemnify,
defend, protect and hold Buyer harmless from and against any and
all Losses (as defined in paragraph 1(c) above) incurred or
suffered by Buyer in connection with any broker, agent or other
person claiming a commission or other form of compensation by
virtue of having dealt with Seller with regard to the Third
Amendment or the option contained therein.
12. Remedies. Without limiting any remedies available
to Buyer as provided by law, Buyer shall also have the right to
bring an action for specific performance against Seller to
enforce terms and provisions of this Amendment. In the event any
such action is commenced by Buyer, then the prevailing party in
such action shall be entitled to recover its attorney's fees as
provided in Section 17.9 of the Purchase Agreement.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
SIGNATURES BEGIN ON THE FOLLOWING PAGE NOTWITHSTANDING THAT THE
SIGNATURE PAGE IS DESIGNATED AS PAGE "4"]
IN WITNESS WHEREOF, Buyer and Seller have executed this
Amendment as of the date first set forth above.
SELLER
FLAGS INVESTMENT, INC., a
California corporation,
By: /s/ Hajime Matsunaga
Name: Hajimi Matsunaga
Title: President
BUYER
ARDEN REALTY LIMITED
PARTNERSHIP, a Maryland
limited partnership
By: ARDEN REALTY, INC.,
a Maryland corporation
Its: General Partner
By: /s/ Victor J. Coleman
Name: Victor Coleman
Its: President and COO
CONTRIBUTION AGREEMENT
CONTINENTAL GRAND PLAZA
(Project Name)
300 Continental Boulevard
El Segundo, California 90245
(Address)
BASIC TERMS
Date: March 30, 1998
Contributor: Highridge-Apollo Grand Plaza, L.P.
a California limited partnership, or its
constituent (direct and indirect through
tiered entities) partners who qualify as
"accredited investors" (but not more than
10).
OP: Arden Realty Limited Partnership,
a Maryland limited partnership
Property: The real estate described on Exhibit A,
together with all improvements thereon and
all personal property used in the operation
of the Property.
Consideration: $47,500,000 (Adjusted Payment Amount plus the
amount of all Scheduled Liabilities).
Adjusted Payment Amount: $47,500,000 reduced by (1) all existing
loans and liabilities to which the Property
is subject plus the amount of Contributor's
other unsecured indebtedness with respect to
the Property, all to the extent listed on
Exhibit D (collectively, the "Scheduled
Liabilities") and (2) Contributor's portion
of all costs and expenses associated with the
transactions contemplated hereby plus (or
minus) Contributor's adjustments and
prorations to be credited (or debited) to OP
pursuant to this Agreement.
Contribution Value: Adjusted Payment Amount (approximately
$300,000) delivered in the form of OP Units
at Closing.
Deposit: $1,000,000 upon the Effective Date
Due Diligence Period: Ends on the Effective Date.
Due Diligence Documents: The documents listed on Exhibit C.
Rent Roll: The list of tenants and the term and terms of
each lease as set forth on Exhibit B.
Scheduled Liabilities: The liabilities listed on Exhibit D.
Service Contracts: The service agreements listed on Exhibit D.
Closing: April 21, 1998
Closing Costs: Each party is responsible for paying the
legal fees of its counsel. Contributor shall
be responsible for the cost of the CLTA
portion of an owner's title policy in the
amount of the Consideration and satisfying
the requirements of this Agreement, the cost
of any requisite recording costs including
all documentary transfer taxes and all
brokerage/finder's fees. OP shall be
responsible for any additional costs
associated with title insurance including any
costs associated with obtaining an updated
ALTA survey covering the Property and for
payment of the costs of its tests and
inspections. Each party shall be responsible
for paying any other fees, costs, and
expenses identified herein as being the
responsibility of such party.
OP's Notice Address: Arden Realty Limited Partnership
9100 Wilshire Boulevard
Suite 700 East Tower
Beverly Hills, CA 90212
Attention: Brigitta B. Troy
Telephone: 310-271-8600
Facsimile: 310-274-6218
With a copy to: Troy & Gould Professional Corporation
1801 Century Park East, Sixteenth Floor
Los Angeles, CA 90067-2367
Attention: Kenneth R. Blumer, Esq.
Telephone: 310-789-1241
Facsimile: 310-201-4746
Contributor's
Notice Address: Summit Commercial Properties, Inc.
1970 East Grand Avenue, Suite 300
El Segundo, CA 90245
Attention: Jack Mahoney
Telephone: 310-648-7500
Facsimile: 310-648-7251
With a copy to: Pircher Nichols & Meeks
1999 Avenue of the Stars, Suite 2600
Los Angeles, CA 90067
Attention: Gary Laughlin, Esq.
Telephone: 310-201-8907
Facsimile: 310-201-8922
Title Company: Fidelity National Title Company
2510 Redhill Avenue, Suite 100
Santa Ana, CA 92705
Attention: Rick Dominick
Telephone: 714-622-4927
Facsimile: 714-477-6813
Title Order No. 62707
Contributor's Broker: Cushman & Wakefield, Inc.
879 West 190th Street, Suite 100
Los Angeles, CA 90009
Attention: Steven Silk / Jay Borzi
Telephone: 310-516-9100
Facsimile: 310-516-7651
Escrow Agent: Commerce Escrow Company
1545 Wilshire Boulevard, Suite 600
Los Angeles, CA 90017
Attention: Mark Minsky
Telephone: 213-484-0855
Facsimile: 213-484-0417
Effective Date: This Agreement shall be effective on the date
the OP receives a fully executed original of
this Agreement ("Effective Date").
ARTICLE I
1.1 Basic Terms. Each capitalized term used but not defined
below, shall have the meaning set forth in the Basic Terms. If a
conflict exists between the Basic Terms and the provisions below,
the provisions below will control.
1.2 Contribution. Subject to the terms of this Contribution
Agreement (the "Agreement"), Contributor agrees to contribute to
OP, and OP agrees to accept from Contributor, the Property for the
Consideration which shall be paid at Closing, subject to adjustment
as otherwise provided herein, as follows:
(a) OP Units. At Contributor's direction, OP shall
issue to the partners of Contributor or to their partners or
members, as directed by Contributor ("Unit Holders"), provided
there are no more than an aggregate of ten (10) such Unit Holders
and each qualifies as an "Approved Investor," units of limited
partnership interest in OP (the "OP Units") having a value equal to
the Adjusted Payment Amount, with the value and number of OP Units
to be issued described in Subsection (b) below. If such direction
is not made, the OP Units having a value equal to the Adjusted
Payment Amount shall be issued to Contributor. Contributor shall
give notice not later than two (2) business days prior to the
Closing Date to OP setting forth the identity and applicable
percentage interest of each Unit Holder for purposes of determining
the number of OP Units to be issued to each of such Unit Holder.
If the foregoing direction to issue the OP Units to the partners of
Contributor is made, such direction is for convenience only as part
of the liquidation of (or the distribution of the OP Units from)
Contributor. In that connection (and notwithstanding any such
direct issuance to the partners), it shall be deemed that such OP
Units were first issued to Contributor and then immediately
distributed by Contributor to the Unit Holders. OP Units shall
only be issued to Approved Investors, as hereinafter defined. Upon
receipt of the OP Units, the Approved Investors shall become
limited partners of OP and shall execute an Admission of New
Partner and Amendment to Limited Partnership Agreement, in the form
attached hereto as Exhibit N (the "Partnership Amendment").
"Approved Investors" shall mean the partners of the Contributor who
meet the "Accredited Investor" qualifications set forth in Rule
501(a) of Regulation D of the Securities Act of 1933, as amended
(the "Securities Act"). To the extent that Contributor has not
made the direction to OP to issue OP Units to Unit Holders and
Contributor is issued OP Units, such OP Units may be distributed to
Unit Holders (and such Unit Holders shall be admitted as limited
partners of OP) within twenty (20) days after such notice of such
distribution is given by Contributor to OP (but in no event shall
there be more than ten (10) such Unit Holders, and all of such Unit
Holders shall be Approved Investors).
(b) Determination of Number of OP Units. For purposes
of determining the number of OP Units to be delivered by OP at
Closing, each OP Unit shall be deemed to have a value equal to the
last reported sale price of the common shares of beneficial
interest (the "Common Shares") of Arden Realty, Inc., a Maryland
corporation (the "REIT") on the New York Stock Exchange on the
fifth (5th) trading day ("Trading Day") immediately before Closing
(the "Closing Price"). Upon request, Contributor shall receive
certificates at Closing representing the number of OP Units
calculated by dividing the Consideration less the amounts described
in Section 1.2(c) by the Closing Price, provided the number of OP
Units will be adjusted as set forth in subsection (d) below with
respect to the Distribution Loan. The certificates evidencing the
OP Units shall bear appropriate legends indicating (i) that the OP
Units have not been registered under the Securities Act, and (ii)
that the Partnership Agreement restricts the transfer of OP Units.
(c) Liabilities. The balance of the Consideration shall
consist of OP accepting the contribution of the Property subject to
the Scheduled Liabilities.
(d) Certain Borrowings. OP shall cause to be lent to
Contributor, as a condition precedent to the contribution of the
Property to OP by Contributor and prior to the contribution of the
Property, the sum of $15,000,000 whether or not secured by the
Property (the "Pre-Contribution Loan") to be used by Contributor to
accomplish the following in the order indicated: (i) first,
Contributor shall redeem (for approximately $9,500,000) interests
in itself from two of its partners, and with respect to such
redemptions, Contributor shall timely file an election under
Section 754 of the Internal Revenue Code of 1986 (as amended, the
"Code") and make a comparable election under state and local tax
laws, and then, (ii) Contributor shall satisfy the participation
owed to Bankers Trust Company in connection with Contributor's
acquisition of the Property in the approximate amount of
$5,500,000. The Pre-Contribution Loan shall constitute a Scheduled
Liability of the Contributor.
Immediately following the Closing of the Contribution of the
Property to OP by the Contributor, OP shall borrow the sum of
$8,487,000 (as adjusted by prorations owed by OP to Contributor, or
by Contributor to OP, under this Agreement), which amount (the
"Distribution Loan") shall be distributed to Contributor
immediately thereafter by OP (in the manner contemplated by
Treasury Regulations Section 1.707-5(b)(i)), so as to cause
Contributor's Capital Account in OP to be reduced to $300,000, and
Contributor's OP Units to be reduced to the "Adjusted Unit Amount"
(as defined below), after the Property has been contributed and
after such distribution has been made. The Distribution Loan (and
the distribution thereof to Contributor) shall be reduced by the
amount of the proration adjustments owed by Contributor to OP under
this Agreement, and shall be increased by the amount of the
proration adjustments owed by OP to Contributor under this
Agreement. Repayment of the Distribution Loan shall be guaranteed
by Contributor (and by the direct and indirect partners thereof) as
provided in Section 9.1 of the Partnership Amendment attached
hereto as Exhibit N, pursuant to documentation reasonably approved
by OP and Contributor (the "Guaranty Agreements") and executed and
delivered by Contributor to OP and OP's General Partner, and
accepted by OP and OP's General Partner, prior to the Closing Date.
The amount of the Pre-Contribution Loan, the Distribution Loan and
the distribution thereof to Contributor (and the portion thereof
guaranteed pursuant to the Guaranty Agreements) shall be adjusted
as final numbers are determined in light of prorations, adjustments
and actual expenses of the Contribution transaction. The Adjusted
Unit Amount shall be equal to $300,000 divided by the Closing
Price.
1.3 Deposit. Concurrently with the Effective Date, OP shall
deliver the Deposit to the Escrow Agent. The Deposit shall be held
by the Escrow Agent pursuant to the terms of this Agreement. The
term "Deposit" shall include all interest earned thereon. At
Closing, the Deposit shall be returned to OP.
1.4 Investor Questionnaires. Contributor covenants and
agrees to provide OP with original completed investor
questionnaires in the form attached as Exhibit I, on or before the
expiration of the Due Diligence Period. The Closing shall not
occur unless OP has approved all such investor questionnaires at
least two (2) business days prior to the Closing Date, which
approval shall not be unreasonably delayed or withheld. If no Unit
Holder is to receive OP Units on the Closing Date, only
Contributor's Investor Questionnaire will be required to be
delivered and approved by the Closing Date (and an Investor
Questionnaire must be received from each Unit Holder and approved
(OP agrees not to unreasonably withhold such approval) before
Contributor distributes any OP Units to such Unit Holder).
ARTICLE II
DUE DILIGENCE
2.1 Due Diligence Period. Upon the Effective Date, OP shall
have completed its various inspections of the Property, review of
the books and records concerning the Property and Contributor.
2.2 Title Matters. The Contributor has reviewed a CLTA
Preliminary Title Report covering the Real Property and the
Improvements, (the "Preliminary Title Report"), issued by Fidelity
National Title Company ("Title Company"), together with true copies
of all documents evidencing matters of record shown as exceptions
to title thereon. The Contributor has caused to be delivered to OP
a copy of a preexisting survey of the Property prepared by Pafford
& Associates (the "Survey"). OP has caused the same to be so
updated at OP's sole cost and expense. OP may on or before the
Effective Date object to any exceptions contained in the
Preliminary Title Report or the Survey (or updated Survey) by
giving notice to Contributor. Notwithstanding any of the
foregoing, OP shall at Closing receive a credit to the
Consideration sufficient to pay off all encumbrances, tax and
mechanic's liens (except only for the liens of the taxes and
assessments to be prorated to the OP). Unless OP gives written
notice that it disapproves any such exceptions to title matters,
stating the exceptions so disapproved, OP shall be deemed to have
approved said exceptions. OP's approval of the Preliminary Title
Report and Survey shall be without prejudice to OP's right to
disapprove additional title matters resulting from any supplemen
tary reports issued by Title Company or disclosed after the
Effective Date; provided, however, OP's approval shall not be
unreasonably withheld. If for any reason, on or before the Closing
Date Contributor does not cause such exceptions to title or survey
matters which OP timely disapproves (to the extent OP is permitted
hereunder to so disapprove) to be removed at no cost or expense to
OP (Contributor having the right but not the obligation to do so),
the obligation of Contributor to contribute, and OP to acquire, the
Property as herein provided shall terminate (and the Contributor
and OP shall have no further obligations in connection herewith).
OP shall have the option to waive the condition precedent set forth
in this paragraph by notice to the Contributor. 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 OP which are not timely objected to by
OP shall be permitted exceptions to title and shall additionally
include (i) any title or survey matters objected to by OP, which
objections are subsequently waived in writing by OP, and (ii) any
title or survey matters objected to by OP in accordance with the
terms and provisions of this Agreement, which objections are cured
to OP'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).
2.3 Due Diligence Documents. To the extent Contributor has
possession or control of the Due Diligence Documents, Contributor
has delivered them to OP prior to the Effective Date. In the event
Contributor does not have possession or control of any of the Due
Diligence Documents, Contributor shall so state in writing.
2.4 Access and Inspection.
(a) Prior to the Effective Date, OP and its agents,
employees and contractors have been afforded full access to the
Property for the purpose of making such investigations as OP deemed
prudent with respect to the physical condition of the Property. OP
has agreed to hold the Contributor harmless from and against any
loss, cost, damage, claim or expense suffered by the Contributor or
the Property and caused by OP's investigations (the foregoing
obligation surviving any termination of this Agreement). In no
event shall OP make any intrusive physical testing (environmental,
structural or otherwise) at the Property (such as soil borings or
the like) without Contributor's prior consent. Contributor
acknowledges that OP has restored the Property to its condition
immediately prior to such investigations. At the request of the
Contributor, OP shall promptly deliver to the Contributor true,
accurate and complete copies of any written reports relating to the
Property prepared for or on behalf of OP by any third party. OP
shall keep all information or data received or discovered in
connection with any of the inspections, reviews or examinations
strictly confidential; provided; however, that OP shall be entitled
to disclose such information to OP's attorneys, accountants and
prospective debt and equity financing sources who reasonably need
to be informed in connection with OP's determinations hereunder
(and who shall, in turn, be required to keep such information
confidential).
(b) Prior to the Effective Date, OP and its agents have
been afforded full opportunity by Contributor 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
Contributor's possession), all building permits, certificates of
occupancy, soil reports, engineers' reports and studies, leases,
service contracts and similar information relating to the Property
or its management, operation, maintenance or use, and all
warranties and operating manuals that Contributor 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) Based upon the foregoing, as of the Effective Date,
OP has approved the matters referred to in subparagraphs (a) and
(b) above.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Contributor.
Except as specifically set forth in this Paragraph 3.1, the
acquisition 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 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.
OP acknowledges that OP has examined, reviewed and inspected all
matters which in OP's judgment bear upon the Property and its value
and suitability for OP's purposes. Except as to matters
specifically set forth in this Paragraph 3.1, OP 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 Contributor to OP or otherwise
discovered by OP prior to the expiration of the Due Diligence
Period as contained in the materials delivered to OP and identified
in Exhibit C hereto, Contributor hereby makes the following
representations, warranties and covenants. Except as disclosed in
the materials delivered to OP and listed in Exhibit C attached
hereto or on Exhibit L attached hereto:
(a) Contributor has no knowledge of any of the following
that it has not disclosed to OP:
(i) existing latent defects or seismic conditions
concerning the Real Property or the Improvements or materially
incorrect income or expense figures in any financial statements
prepared by or for Owner and delivered to OP regarding the Property
(with respect to periods of time occurring prior to the date hereof
and, without limitation on the foregoing, Contributor does not make
any representation or warranty with respect to any projections);
(ii) any pending claim, litigation or administra
tive action, arbitration, proceeding pending before any court,
agency or official, nor any such claim or action threatened in
writing, relating to the Contributor or the Property;
(iii) written notice of violations of City, County,
State, Federal, building, zoning, fire or health codes, regulations
or ordinances, filed or issued against the Property;
(iv) 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 supplies in customary
quantities; and
(v) matter that would suggest any portion of the
Property having ever been used by Contributor or any tenant of any
portion of the Property during Contributor's ownership thereof as a
waste storage or disposal site or gasoline station. Without
limiting the other provisions of this Agreement, Contributor shall
reasonably cooperate with OP's investigation of matters relating to
the foregoing provisions of this paragraph and to provide access to
and copies of any third party data and/or documents dealing with
potentially Hazardous Substances used at the Property and any
disposal practices followed. Contributor agrees that OP 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.
(b) The Tenant Leases and Service Contracts and any
other agreements, matters and things to be submitted to OP by
Contributor for approval, 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 OP, on or before Closing. Notwithstanding anything to
the contrary contained herein, Contributor shall have no obligation
or liability to OP with respect to any of the foregoing tenant
lease matters which shall be confirmed as correct in any estoppel
certificate delivered to OP as provided in this Agreement.
(c) To Contributor's knowledge, the operating financial
information prepared by Contributor and delivered to OP with
respect to the Property, consisting of Statements of Operations for
all calendar years beginning on and after January 1, 1995 and for
the current calendar year are true and correct in all material
respects; in this regard Contributor agrees to make available to OP
and its accountants, at OP's cost, all accounting records for the
calendar year ended 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 directly relating to
the operations of the Property reasonably requested to the extent
in Contributor's possession and the right to audit the same through
the end of 1998.
(d) As used in this Agreement, "to Contributor's
knowledge" or other similar knowledge limitations as to Contributor
shall mean the actual knowledge, without any duty to investigate,
of Jack Mahoney.
(e) Notwithstanding anything contained in this Section
3.1 to the contrary, Contributor 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 OP by any broker
representing or purporting to represent Contributor, and no partner
of Contributor (or the respective partners or members of such
partner) shall be liable for any such representation or warranty.
(f) Securities Law Matters.
(i) The Contributor acknowledges its understanding
that the offering and sale of the OP Units to be acquired pursuant
to this Agreement is intended to be exempt from registration under
the Securities Act of 1933, as amended and the rules and
regulations in effect thereunder (the "Act"). In furtherance
thereof, the Contributor represents and warrants to OP as follows:
(ii) The Contributor is acquiring the OP Units
solely for its own account for the purpose of investment and not as
a nominee or agent for any other person and not with a view to, or
for offer or sale in connection with, any distribution of any
thereof except for the distribution thereof to the Unit Holders as
provided in Section 1.2 (a) above. The Contributor agrees and
acknowledges that except for the transfer of the OP Units to the
Unit Holders or the exercise of its redemption rights pursuant to
Section 8 of the Partnership Agreement or the exercise of the
redemption or pledge rights set forth in Section 7 of the
Partnership Amendment it will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of
(hereinafter, "Transfer") any of the OP Units unless (i) the
Transfer is pursuant to an effective registration statement under
the Act and qualification or other compliance under applicable blue
sky or state securities laws, or (ii) counsel for the Contributor
(which counsel shall be reasonably acceptable to the OP) shall have
furnished the OP with an opinion, reasonably satisfactory in form
and substance to the OP, to the effect that no such registration is
required because of the availability of an exemption from
registration under the Act and qualification or other compliance
under applicable blue sky or state securities laws.
(iii) The Contributor is knowledgeable,
sophisticated and experienced in business and financial matters;
the Contributor has previously invested in securities similar to
the OP Units and fully understands the limitations on transfer
imposed by the Federal securities laws and as described herein.
The Contributor is able to bear the economic risk of holding the OP
Units for an indefinite period and is able to afford the complete
loss of its investment in the OP Units; the Contributor has
received and reviewed all information and documents about or
pertaining to the Company, the OP, the business and prospects of
the REIT and the OP and the issuance of the OP Units as the
Contributor deems necessary or desirable, and has been given the
opportunity to obtain any additional information or documents and
to ask questions and receive answers about such information and
documents, the REIT, the OP, the business and prospects of the REIT
and the OP and the OP Units which the Contributor deems necessary
or desirable to evaluate the merits and risks related to its
investment in the OP Units; and the Contributor understands and has
taken cognizance of all risk factors related to the purchase of the
OP Units. The Contributor hereby represents and warrants that it
is an "accredited investor" (as such term is defined in Rule 501(a)
of Regulation D under the Securities Act of 1933, as amended).
(iv) The Contributor acknowledges that it has been
advised that (i) the OP Units must be held indefinitely unless
redeemed pursuant to Section 8 of the Partnership Agreement, and
the Contributor must continue to bear the economic risk of the
investment in the OP Units unless they have been or are
subsequently registered under the Act or an exemption from such
registration is available, (ii) a restrictive legend in the form
hereafter set forth shall be placed on the certificates
representing the OP Units, and (iii) a notation shall be made in
the appropriate records of the OP (and the Company) indicating that
the OP Units are subject to restrictions on transfer.
(v) Each certificate representing the OP Units
shall bear the following legend and no other restrictions or
legends:
THE OP UNITS REPRESENTED BY THIS CERTIFICATE OR
INSTRUMENT MAY NOT BE TRANSFERRED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
PARTNERSHIP AGREEMENT AS OF OCTOBER 9, 1996 AS IT MAY BE
AMENDED FROM TIME TO TIME (A COPY OF WHICH IS ON FILE
WITH THE OPERATING PARTNERSHIP). EXCEPT AS OTHERWISE
PROVIDED IN SUCH AGREEMENT, NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THE OP UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR (B) IF THE OPERATING PARTNERSHIP HAS BEEN
FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE
HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND
REGULATIONS IN EFFECT THEREUNDER.
(vi) Prior to the issuance of the OP Units,
Contributor and the Approved Investors and OP shall execute all
such other documents and instruments as may be reasonably necessary
to allow OP to comply with federal and state securities law
requirements with respect to the issuance of the OP Units and to
comply with the terms of the Partnership Agreement.
(vii) All of the partnership interests in the
Contributor are owned by the persons or entities set forth on
Exhibit J and are free and clear of all liens, claims and
encumbrances except as set forth as Scheduled Liabilities on
Exhibit D hereto. The information set forth on Exhibit J is true
and correct as of the date hereof and, except for a transfer in
connection with the death or incapacity of a partner, or as
otherwise indicated on Exhibit J, shall be true and correct as of
the Closing Date. Each Approved Investor that is receiving OP
Units on the Closing Date will, prior to the expiration of the Due
Diligence Period, complete, sign and deliver to OP an Investor
Questionnaire in the form attached hereto as Exhibit I (the
"Investor Questionnaire").
(g) None of Contributor, its partners or their partners
or members is a "foreign person" for purposes of the withholding
provisions of the Internal Revenue Code or under comparable
provisions of California law.
(h) The Property is free and clear of all liabilities
(including liabilities for taxes of any kind) other than the
Scheduled Liabilities.
3.2 Representations and Warranties of OP. OP represents
and warrants as follows:
(a) Organization, Power. OP is a duly formed and
validly existing entity in good standing under the laws of the
jurisdiction of its formation. The OP has a general partner which
qualifies as a REIT under the Internal Revenue Code, and
substantially all of the General Partner's assets are beneficially
owned by OP. Subject to Board Approval as herein provided, this
Agreement is duly authorized, executed and delivered by all
necessary action on the part of OP, and constitutes the valid and
binding agreement of OP, and is enforceable in accordance with its
terms.
(b) Noncontravention. The execution and delivery of and
the performance by OP of its obligations hereunder do not and will
not contravene, or constitute a default under any provisions of
applicable law or regulation or any agreement, judgment,
injunction, order, decree or other instrument binding upon OP or
result in the creation of any lien or other encumbrance on any
asset of OP.
(c) Material Documents. Exhibit K attached hereto and
made a part hereof represents a list of all documents comprising
the Partnership Agreement and all material filings with Securities
and Exchange Commission with respect to ARI within the last twelve
(12) months.
(d) Independent Investigation. As of the expiration of
the Due Diligence Period and as of the Closing Date (i) OP has
received and reviewed all materials provided to OP by Contributor
pursuant to Article II above (collectively, the "Due Diligence
Materials"), (ii) OP has inspected the Property, (iii) OP has made
such investigation of the information contained in the Due
Diligence Materials as it deems appropriate, and (iv) OP is
satisfied based upon its examination of the Due Diligence Materials
and its investigation of all other aspects of the Property which OP
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.
Except as set forth in Section 3.1 and elsewhere in this Agreement,
OP is not relying on the any representation, written information,
data, reports, warranty, or statement of Owner or their agents
concerning the Property or the accuracy or completeness of the Due
Diligence Materials, and OP is acquiring the Property in "AS-IS"
condition based solely upon OP's own independent inspection,
investigation and review, as more particularly set forth in Section
3.1 hereof.
ARTICLE IV
CONDITIONS PRECEDENT; ADDITIONAL COVENANTS
4.1 Conditions Precedent to OP's Obligation to Close. OP's
obligations hereunder are subject to the satisfaction of the
following conditions precedent and the compliance by Contributor
with the following covenants:
(a) Representations and Warranties True at Closing. The
representations and warranties of Contributor contained in 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. Contributor shall
have delivered to OP estoppel letters (the "Tenant Estoppels") from
tenants representing 80% of the leased area and from all tenants
leasing more than 5,000 square feet in the Improvements in
substantially the form of Exhibit G attached hereto and forming a
part hereof, consistent in all material respects with the
information to be provided by Contributor 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. Contributor 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) Reciprocal and Other Easement Agreements. OP and
Contributor shall have mutually approved of a new easement
agreement and an amendment to the Agreement regarding reciprocal
access, recreation, and parking, among other things, before the
close of business on April 1, 1998 regulating the use of the
Property and an adjacent to be developed property owned by an
entity affiliated with Contributor.
(e) Title Policy. Title Company shall be ready, willing
and able to issue the Title Policy required by this Agreement.
(f) Change in Condition. Subject to the provisions of
Section 7.1, there shall exist no material damage, destruction or
condemnation of the Property prior to Closing.
4.2 Conditions Precedent to Contributor's Obligation to
Close. The obligation of Contributor to consummate the transaction
contemplated hereby is subject to the following conditions:
(a) Representations and Warranties True at Closing. The
representations and warranties of OP contained in this Agreement,
or in any certificate or document signed by OP 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 Consideration and Documents. OP shall
have delivered all funds and documents to Escrow Holder required by
it hereunder to enable it to close the Escrow.
(c) Reciprocal and Other Easement Agreements. OP and
Contributor shall have mutually approved of a new easement
agreement and an amendment to the Agreement regarding reciprocal
access, recreation, and parking, among other things, before the
close of business on April 1, 1998 regulating the use of the
Property and an adjacent to be developed property owned by an
entity affiliated with Contributor.
(d) Compliance with This Agreement. OP 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.
4.3 Operation of Property Pending Closing.
(a) Tenant Leases. Contributor 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
Contributor 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 OP
(which consent shall not be unreasonably delayed or withheld). In
requesting such consent, Contributor shall inform OP 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 Contributor's proposed draft of the lease or amendment
agreement. The failure of OP to respond within five (5) business
days after written request for any such approval shall be deemed to
constitute approval. Contributor 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. Contributor covenants and agrees to be responsible
for all leasing commissions, and tenant improvement costs with
respect to any leases (including amendments and renewals) entered
into on or before the Effective Date. OP covenants and agrees to
be responsible for (1) all leasing commissions, tenant improvement
costs and unamortized rent concessions with respect to any new
leases, extensions of existing leases and renewals occurring after
the Effective Date and (2) unamortized rent concessions with
respect to leases entered into prior to the Effective Date,
provided that (i) with respect to clause (2) hereof, OP has
approved or is deemed to have approved such action or event by
Contributor and (ii) Contributor has delivered to OP 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), Contributor shall remain
responsible for all of costs and expenses including commissions.
(c) Insurance Policies. Contributor 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. Contributor 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 Contributor for any term provided
that such Service Contracts are terminable by Contributor or its
successors in interest upon not more than thirty (30) days' notice
to the service provider.
(e) Property Management. Contributor 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 Contributor.
ARTICLE V
SPECIAL PROVISIONS
5.1 Debt Maintenance Agreement. The parties have agreed to
the debt maintenance and other obligations of OP concerning debt
that are contained in Section 9.1 of the Partnership Amendment
admitting Contributor (or other Unit Holders) as limited partners.
A dissolution, merger, consolidation reorganization or other
combination of the OP which results in the termination of the
Partnership (a so-called "Termination Transaction" in the
Partnership Agreement) shall not constitute a default by the OP
under this Section 5.1 provided the OP shall comply with the
provisions of the Partnership Agreement.
5.2 Minimum Holding Period. For a period of seven (7) years
following the Closing, OP agrees that it will not voluntarily sell,
distribute in kind, exchange, transfer or otherwise dispose of the
Property other than (i) in a tax-deferred exchange qualifying under
Section 1031 of the Internal Revenue Code or under any equivalent,
successor, replacement or additional Internal Revenue Code Sections
in which no gain or loss is recognized for income tax purposes or
(ii) a sale under threat of eminent domain (described in Section
1033 of the Internal Revenue Code) or an (iii) involuntary sale (a)
pursuant to foreclosure of a first deed of trust securing the
Property, (b) a deed in lieu of foreclosure or (c) a proceeding in
connection with a Bankruptcy of the OP, unless the OP has been
merged into its general partner and/or the OP or such general
partner sells or transfers or is not the survivor in any
Termination Transaction (as described in the Partnership Agreement
of the OP) and not in control of substantially all of the OP's
assets by means of a single or series of related taxable trans
actions, and that no property other than cash will be distributed
to any Unit Holder except in connection with a Termination
Transaction or as may be approved by such Unit Holder.
Notwithstanding the foregoing, there shall be no limit on the OP's
ability to dispose of the Property after the date on which there
has been a "step-up" in the basis of all interests in the OP which
were transferred by the OP to Contributor (and any Unit Holders)
pursuant to this Agreement (e.g., as a result of a taxable
disposition of such interests by such parties or the death of each
such Unit Holder or their spouse), provided that the OP has made an
election under Section 754 of the Internal Revenue Code which is in
effect.
5.3 Treatment for Tax Purposes. Contributor represents that
all liabilities being transferred to OP in the subject contribution
are "qualified liabilities" as defined in Treasury Regulations
under Internal Revenue Code Section 707. Based on this
representation, the OP agrees to treat such liabilities as
qualified liabilities absent discovery of evidence to the contrary
(OP confirms that no such discovery has been made as of the date of
this Agreement). The parties agree to treat the entire subject
transaction as a contribution under Internal Revenue Code Sections
707 and 721(a), notwithstanding the exercise of any redemption or
exchange rights by any Unit Holders under Section 7 of the
Partnership Amendment.
ARTICLE VI
CLOSING
6.1 Closing. Closing of the transaction contemplated by this
Agreement shall be through the Escrow. OP and Contributor may,
upon mutual agreement, set an earlier or later Closing Date. It
shall be a condition to Closing that possession of the Property
shall be delivered to OP, subject only to the Scheduled
Liabilities.
6.2 Prorations. All rents and other income from the
Property, including any initial lump sum or disproportionate
payments which shall be allocable over the term of any agreement to
which such payments relate, and real estate and personal property
ad valorem taxes, and other operating expenses from the Property
shall be prorated on the basis of a 365 day year through the day
preceding the day of Closing. If Closing is extended by mutual
agreement, all adjustments shall be made as of the day prior to the
extended date. Without limitation upon the foregoing, the
following items shall be adjusted or prorated between Contributor
and OP as set forth below:
(a) 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; OP shall include such
delinquencies in its normal billing and shall pursue the collection
thereof in good faith after the Closing Date (but OP shall not be
required to litigate or declare a default in any Tenant Lease). To
the extent OP 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 OP 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 Contributor's share thereof being promptly
delivered to Contributor. OP 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 Contributor is
entitled to receive its share of charges or amounts without first
obtaining Contributor's written consent. Contributor hereby
reserves the right to pursue any remedy against any tenant owing
delinquent rents and any other amounts to Contributor. OP shall
reasonably cooperate with Contributor 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,
Contributor shall retain all rights relating thereto.
(b) 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 Contributor and
OP if current tax rates differ from the latest previous tax rates
as soon as the same are known. Contributor agrees that to the
extent any additional taxes, assessments or levies are imposed,
assessed or levied against the Property, or any portion thereof,
the Contributor or the OP at any time subsequent to Closing but
with reference to any period prior thereto during Contributor's
ownership thereof, Contributor shall promptly pay to OP an amount
equal to such additional assessments or levies. Similarly, if tax
refunds become payable for periods during Contributor'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 Contributor) shall be promptly paid over
to Contributor. In the event that any assessments on the Property
are payable in installments, then the installment for the current
period shall be prorated (with OP assuming the obligation to pay
any installment due after the Closing Date). In no event shall
Contributor 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.
(c) Interest with respect to all indebtedness or
liabilities which will be a credit to the Consideration to be paid
by OP for the contribution of the Property by Contributor;
(d) Transferable annual permits, licenses, and/or
inspection fees, if any, on the basis of the duration of the same;
(e) Security Deposits, plus accrued interest, if any,
payable thereon to tenants, and any other deposits and prepaid
rent, shall be credited (or assigned) to OP;
(f) Utility charges levied against Contributor or the
Property, and OP shall transfer all such utility services to its
name and account immediately upon Closing;
(g) Service Contracts on the basis of the charge or
premium for the period involved;
(h) Tenant improvements costs and leasing commissions
for leases signed after the Effective Date shall be paid by OP if
approved by OP in accordance with Section 4.3.
(i) 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. Notwithstanding
anything to the contrary contained in this Agreement, the
provisions of this Section 6.2 shall survive Closing. Any
prorations of any kind described in this Agreement payable by
Contributor to OP shall be treated as a reduction in the amount of
the Distribution Loan Proceeds that are distributed to Contributor
under Section 1.2(d). Any such prorations payable by OP to
Contributor shall be funded by an increase in the amount of the
Distribution Loan and the proceeds thereof that are distributed to
Contributor under Section 1.2(d) of this Agreement.
6.3 Contributor's Deliveries. Contributor shall deliver the
following to OP at Closing:
(a) The Deed;
(b) A Bill of Sale and Assignment Agreement in the form
attached as Exhibit E (the "Bill of Sale");
(c) An affidavit in form acceptable to the Title Company
sufficient to remove any exception for mechanics' and materialmen's
liens and parties in possession and appropriate lien waivers, if
necessary;
(d) Current information on the Property as of Closing
including a current rent roll, delinquent rent aging, and all
outstanding work orders, all certified to be complete and correct
by the Contributor;
(e) To be delivered at the Property, the original of
each of the tenant leases (including any amendments) in effect at
the Property as of the day of Closing, all tenant files in its
possession or control and all ledger cards;
(f) Evidence reasonably satisfactory to the OP of
Contributor's authority to close the transactions contemplated by
this Agreement;
(g) An affidavit certifying that the Contributor (and
each of the Unit Holders) is not a foreign entity under the Foreign
Investment in Real Property Act and a similar affidavit (Form
590RE) under California law;
(h) A notice letter to all tenants of the Property in
the form attached as Exhibit H (the "Notice Letter");
(i) A proposed prorations and adjustments statement;
(j) All keys, security codes, or other access devices in
the possession of Contributor to all locks used or applicable to
the Property;
(k) An authorization transferring the Property telephone
numbers to OP (the "Telephone Transfer");
(l) Copies of the Partnership Amendments executed by the
Approved Investors; and
(m) All such other documents that are normally
transferred at Closing in the jurisdiction in which the Property is
located or are reasonably requested by the OP, its title company or
its counsel; provided, however, the same do not impose any
additional material obligations, liabilities or costs on
Contributor.
6.4 OP's Deliveries. OP shall deliver the following to
Contributor at Closing:
(a) The Adjusted Payment Amount and written confirmation
that such distribution was funded by the Distribution Loan as
provided in Section 1.2(d);
(b) The Bill of Sale;
(c) The Notice Letter;
(d) A proposed prorations and adjustments statement;
(e) Evidence reasonably satisfactory to Contributor of
OP's authority to close the transactions contemplated by this
Agreement;
(f) Copies of the Partnership Amendment for each Unit
Holder executed by the OP;
(g) Certificates for OP Units in accordance with Section
1.2(a) of this Agreement;
(h) Guaranty Agreements acceptable to the General
Partner of OP as provided in Section 1.2(d); and
(i) All such other documents that are normally
transferred at Closing in the jurisdiction in which the Property is
located or are reasonably requested by the Contributor or its
counsel; provided, however, the same do not impose any additional
material obligations, liabilities or costs on OP.
ARTICLE VII
RISK OF LOSS; CONDEMNATION AND CASUALTY; TERMINATION RIGHTS
7.1 Risk of Loss; Condemnation and Casualty. Until
Closing, all risk of any loss or damage to all or part of the
Property, including eminent domain, shall be and remain on
Contributor. In the event that such loss or damage shall occur,
Contributor shall give OP written notice pursuant to this Agreement
of such loss or damage along with its estimate of the amount of the
loss or damage, within five (5) calendar days of such event
occurring. In the event of any loss due to eminent domain or
damage due to casualty in which the estimate of the loss is greater
than One Hundred Fifty Thousand Dollars ($150,000.00), then within
five (5) calendar days after receipt of Contributor's written
notice, OP, at its option by written notice to Contributor, may
elect to terminate this Agreement in which event the Deposit shall
be promptly returned to OP. In the event that OP does not elect to
terminate this Agreement or in the event that the loss is One
Hundred Fifty Thousand Dollars ($150,000.00) or less, Contributor
shall assign to OP all of its rights, title and interest to the
proceeds of any insurance or award covering such unrepaired loss or
damage at Closing, and OP shall receive a credit against the
Consideration at Closing in the amount of any deductible of such
insurance. Notwithstanding anything to the contrary, Contributor
has no obligation to repair any damage resulting from a casualty or
a condemnation.
7.2 Default by OP. THE PARTIES HERETO, BEFORE ENTERING
INTO THIS TRANSACTION, HAVE BEEN CONCERNED WITH THE FACT THAT
SUBSTANTIAL DAMAGES WILL BE SUFFERED BY CONTRIBUTOR IF OP 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 IM
POSSIBLE, TO ASCERTAIN WITH ANY DEGREE OF CERTAINTY PRIOR TO
SIGNING THIS AGREEMENT THE AMOUNT OF DAMAGES THAT WOULD BE SUFFERED
BY CONTRIBUTOR IN THE EVENT OF OP'S WRONGFUL FAILURE TO PURCHASE
THE PROPERTY. THE PARTIES, HAVING MADE DILIGENT BUT UNSUCCESSFUL
ATTEMPTS TO ASCERTAIN THE ACTUAL COMPENSATORY DAMAGES CONTRIBUTOR
WOULD SUFFER IN THE EVENT OF OP'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 OP'S
WRONGFUL FAILURE TO PURCHASE THE PROPERTY, CONTRIBUTOR SHALL BE
ENTITLED TO SUCH AMOUNT AS FULL LIQUIDATED DAMAGES, AND THAT
PAYMENT OR TENDER TO CONTRIBUTOR BY OP OF SUCH AMOUNT SHALL
TERMINATE ALL OF CONTRIBUTOR'S RIGHTS AND REMEDIES AT LAW OR IN
EQUITY AGAINST OP WITH RESPECT TO SUCH FAILURE TO PERFORM.
/s/ SAB /s/ VJC
Contributor's Initials OP's Initials
7.3 Default by Contributor.
(a) In the event that Contributor fails to keep and
perform each and every obligation, covenant and agreement herein by
Contributor to be kept or performed after OP has made the Pre-
Contribution Loan to Contributor, then OP may pursue an action
against Contributor and the Property for specific performance
and/or damages but agrees that it shall have no right to seek or
obtain consequential or punitive damages resulting from a breach of
Contributor's agreements to convey the Property. Notwithstanding
the foregoing, OP's right to file an action for specific
performance against Contributor (i) shall be limited to the period
of thirty (30) days following notice by OP to Contributor setting
forth the obligation, covenant or agreement which Contributor has
failed to keep or perform and (ii) shall require evidence of OP's
ability to perform all of the obligations of OP then capable of
being performed at the point in time of Contributor's breach or
default.
(b) EXCEPT IN THE CASE WHERE OP HAS MADE THE PRE-
CONTRIBUTION LOAN TO CONTRIBUTOR AS PROVIDED IN SUBPARAGRAPH (a)
ABOVE, IF THE TRANSACTION HEREIN PROVIDED SHALL NOT BE CLOSED BY
REASON OF THE CONTRIBUTOR'S DEFAULT UNDER THIS AGREEMENT AND OP
SHALL NOT HAVE DEFAULTED UNDER THIS AGREEMENT, THEN THE DEPOSIT
SHALL BE RETURNED TO OP. IN ADDITION, THE PARTIES HERETO, BEFORE
ENTERING INTO THIS TRANSACTION, HAVE BEEN CONCERNED WITH THE FACT
THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY OP IF THE CONTRIBUTOR
SHOULD WRONGFULLY FAIL TO CLOSE THE TRANSACTIONS HEREUNDER. THE
CONTRIBUTOR HAS STATED THAT IT WILL NOT PERMIT ANY ACTION FOR
SPECIFIC PERFORMANCE OF THIS AGREEMENT UNTIL AFTER OP HAS MADE THE
PRE-CONTRIBUTION LOAN. 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 OP IN THE
EVENT OF THE CONTRIBUTOR'S WRONGFUL FAILURE TO CLOSE THE
TRANSACTIONS HEREUNDER. IN ADDITION, OP DESIRES TO PROVIDE A
FINANCIAL DISINCENTIVE FOR ANY SUCH FAILURE BY CONTRIBUTOR. THE
PARTIES, HAVING MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO
ASCERTAIN THE ACTUAL COMPENSATORY DAMAGES OP WOULD SUFFER IN THE
EVENT OF CONTRIBUTOR'S WRONGFUL FAILURE TO CLOSE THE TRANSACTIONS
HEREUNDER, HEREBY AGREE THAT THE REASONABLE ESTIMATE OF SAID
DAMAGES IS AN AGGREGATE AMOUNT EQUAL TO TWO MILLION DOLLARS
($2,000,000); AND IN THE EVENT OF CONTRIBUTOR'S WRONGFUL FAILURE TO
CLOSE THE TRANSACTIONS HEREUNDER PRIOR TO THE TIME OP HAS MADE THE
PRE-CONTRIBUTION LOAN TO CONTRIBUTOR, OP SHALL BE ENTITLED TO SUCH
AMOUNT AS FULL LIQUIDATED DAMAGES, AND THAT PAYMENT OR TENDER TO OP
OF SUCH AMOUNT SHALL TERMINATE ALL OF OP'S RIGHTS AND REMEDIES AT
LAW OR IN EQUITY AGAINST CONTRIBUTOR WITH RESPECT TO SUCH FAILURE
TO PERFORM. AS USED HEREIN, CONTRIBUTOR'S WRONGFUL FAILURE TO
CLOSE THE TRANSACTIONS HEREUNDER SHALL MEAN SUCH CONTRIBUTOR'S
WILLFUL AND UNWARRANTED REFUSAL TO DELIVER THE GRANT DEED WITH OP
HAVING COMPLIED WITH ITS OBLIGATIONS HEREUNDER (EXCEPT FOR ITS
OBLIGATION TO FUND THE PRE-CONTRIBUTION LOAN, BALANCE OF THE
ADJUSTED PAYMENT AMOUNT) AND BEING READY, WILLING AND ABLE TO CLOSE
(AND SUCH TERM SHALL NOT APPLY TO ANY OTHER DEFAULT OR BREACH BY
CONTRIBUTOR HEREUNDER).
/s/ SAB /s/ VJC
Contributor's Initials OP's Initials
(c) 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 prior to the time that OP has made the Pre-
Contribution Loan to Contributor, OP 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.
7.4 Breach by Contributor. Subject to Section 7.3(b),
but notwithstanding any other provision to the contrary contained
herein, the aggregate liability of Contributor arising pursuant to
or in connection with the representations, warranties,
indemnifications, covenants or other obligations (whether express
or implied) of Contributor under this Agreement (or any document
executed or delivered in connection herewith) shall not exceed
$1,000,000.00. In no event shall this Agreement (or any short form
or memorandum thereof) be recorded against or with respect to the
Property.
ARTICLE VIII
INDEMNITIES
8.1 OP Indemnities. OP shall indemnify Contributor
against and hold the Contributor 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 OP
(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 OP)
unless caused by Contributor, resulting from such tort occasioned
in or about the Property (a) as a result of its investigation of
the Property during the Due Diligence Period and (b) on or
subsequent to Closing. These covenants shall survive Closing.
8.2 Contributor Indemnities. Contributor shall
indemnify OP against and hold OP 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 Contributor
(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
Contributor) unless caused by OP, resulting from such tort
occasioned in or about the Property prior to Closing, or in
connection with a breach of Contributor's representations and
warranties contained herein. These covenants shall survive
Closing.
8.3 Brokerage Commission. Except for any Broker set
forth in the Basic Terms of this Agreement, whose commission shall
be paid by the party represented by such Broker, neither
Contributor nor OP has engaged the services of, nor is it or will
it become liable to, any real estate agent, broker, finder or any
other person or entity for any brokerage or finder's fee,
commission or other amount with respect to the transactions
described herein. Each party shall indemnify, defend and hold the
other party harmless against all loss, liability and expense,
including reasonable attorneys' fees and costs, suffered by such
other party due to a breach of the foregoing representation,
covenant, and warranty. These covenants shall survive Closing.
ARTICLE IX
EMPLOYEES
9.1 Property Employees. Contributor has no employees.
Furthermore, nothing in this Agreement or any document delivered
pursuant hereto, express or implied, shall obligate OP to employ
any person now employed at the Property.
ARTICLE X
ESCROW AGREEMENT
10.1 Investment and Use of Funds. 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 Contributor, (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
Contributor and OP. The Deposit shall be disposed of by Escrow
Agent only as provided in this Agreement.
10.2 Termination of Escrow. Upon not less than five (5)
business days' prior written notice to the Escrow Agent and the
other party, Escrow Agent shall deliver the Deposit to the party
requesting the same; provided, however, that if the other party
shall, within said five (5) business day period, deliver to the
requesting party and the Escrow Agent a written notice that it
disputes the claim to the Deposit, Escrow Agent shall retain the
Deposit until it receives written instructions executed by both
Contributor and OP as to the disposition and disbursement of the
Deposit, or until ordered by final court order, decree or judgment,
which is not subject to appeal, to deliver the Deposit to a
particular party, in which event the Deposit shall be delivered in
accordance with such notice, instructions, order, decree or
judgment. Notwithstanding the foregoing, in the event OP
terminates this Agreement prior to the expiration of the Due
Diligence Period, the Escrow Agent shall pay the Deposit to OP
without first notifying Contributor, and Contributor's consent to
such payment shall not be required.
10.3 Interpleader. Contributor and OP mutually agree that in
the event of any controversy regarding the Deposit, unless mutual
written instructions are received by the Escrow Agent directing the
Deposit's disposition, the Escrow Agent shall not take any action,
but instead shall await the disposition of any proceeding relating
to the Deposit or, at the Escrow Agent's option, the Escrow Agent
may interplead all parties and deposit the Deposit with a court of
competent jurisdiction in which event the Escrow Agent may recover
all of its court costs and reasonable attorneys' fees. Contributor
or OP, whichever loses in any such interpleader action, shall be
solely obligated to pay such costs and fees of the Escrow Agent, as
well as the reasonable attorneys' fees of the prevailing party in
accordance with the other provisions of this Agreement.
10.4 Liability of Escrow Agent. The parties acknowledge that
the Escrow Agent is acting solely as a stakeholder at their request
and for their convenience, that the Escrow Agent shall not be
deemed to be the agent of either of the parties, and that the
Escrow Agent shall not be liable to either of the parties for any
act or omission on its part taken or made in good faith, and not in
disregard of this Agreement, but shall be liable for its negligent
acts and for any loss, cost or expense incurred by Contributor or
OP resulting from the Escrow Agent's mistake of law respecting the
Escrow Agent's scope or nature of its duties. Contributor and OP
shall jointly and severally indemnify and hold the Escrow Agent
harmless from and against all costs, claims and expenses, including
reasonable attorneys' fees, incurred in connection with the
performance of the Escrow Agent's duties hereunder, except with
respect to actions or omissions taken or made by the Escrow Agent
in bad faith, in disregard of this Agreement or involving
negligence on the part of the Escrow Agent.
ARTICLE XI
MISCELLANEOUS
11.1 Notice. Whenever any notice may be given or is required
to be given under the terms of this Agreement, the same shall be
given in writing and either sent by certified mail, return receipt
requested, postage pre-paid or by a national overnight delivery
service, delivery pre-paid or delivered by hand with written
receipt acknowledged, or by telecopy followed by another permitted
means of delivery at the address set forth in the Basic Terms of
this Agreement. Any notice required or given hereunder shall be
deemed given when received if sent by telecopy, hand or overnight
courier, or when sent if sent by certified mail, return receipt
requested. Further, all notices given pursuant to this Agreement
from Contributor to OP or from OP to Contributor shall be effective
if executed and sent by counsel to the respective party and be
deemed given when sent as provided above. The time to respond to
any notice shall commence to run upon the date of actual delivery
provided above (or attempted delivery if delivery is refused during
normal business hours at the appropriate address).
11.2 Successors and Assigns. OP may not assign any of its
rights or duties hereunder without the prior written consent of
Contributor (which consent may be given or withheld in
Contributor's discretion). Subject to the foregoing, all rights
and obligations of Contributor and OP under this Agreement shall
inure to and be binding on their respective successors and assigns.
11.3 Severability. If any provision of this Agreement shall
be in violation of any applicable law or unenforceable for any
reason, the invalidity or unenforceability of any provision shall
not invalidate or render unenforceable any other provision hereof,
which other provisions shall remain in full force and effect.
11.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the
transactions contemplated hereby and supersedes all prior
discussions, understandings, agreements and negotiations between
the parties hereto.
11.5 Modification. This Agreement may be modified only by a
written instrument duly executed by the OP and Contributor hereto.
Any modification to Article IX must be by a written instrument also
executed by Escrow Agent.
11.6 Incorporation by Reference. The Basic Terms and all of
the exhibits attached hereto are by this reference incorporated
herein and made a part hereof.
11.7 Survival. All warranties, representations, indemnities
and agreements made herein shall survive Closing for a period of
one year, except to the extent they relate to taxes as specified in
paragraph 3.1(h), which shall survive until one-month following the
applicable statute of limitations.
11.8 Cooperation; Further Assurances. Contributor agrees to
reasonably cooperate at OP's expense with OP after Closing, and to
assist OP after Closing in order for there to be an orderly
transition of ownership and management of the Property.
Contributor further covenants and agrees to sign, execute and
deliver or cause to be signed, executed and delivered and to do or
make, or to cause to be done or make, upon the written request of
OP, any and all agreements, instruments, papers, deeds, acts or
things, supplemental, confirming or otherwise, as may be reasonably
required by OP for the purpose of or in connection with the
transaction contemplated hereby. Not withstanding the foregoing,
Contributor shall not be required to incur any material costs or
any additional liabilities or obligations.
11.9 Time is of the Essence. Time is of the essence with
respect to every provision of this Agreement.
11.10 No Presumption Against Draftsman. The parties
acknowledge that each party and its counsel have participated in
the negotiation and preparation of this Agreement. This Agreement
shall be construed without regard to any presumption or other rule
requiring construction against the party causing the Agreement to
be drafted.
11.11 Days. If any action is required to be performed, or
if any notice, consent or other communication is given, on a day
that is a Saturday or Sunday or a legal federal holiday, such
performance shall be deemed to be required, and such notice,
consent or other communication shall be deemed to be given, on the
first Business Day following such Saturday, Sunday or legal
holiday. Unless otherwise specified herein, all references herein
to a "day" or "days" shall refer to calendar days and not Business
Days. A "Business Day" shall mean any day other than a Saturday,
Sunday or legal federal holiday.
11.12 Applicable Law. This Agreement shall be construed,
performed and enforced in accordance with the laws of the
jurisdiction in which the Property is located.
11.13 Attorneys' Fees. If any controversy shall arise
among the parties hereto and/or the Unit Holders concerning the
interpretation of this Agreement or the Partnership Amendment, the
prevailing party(ies) shall be entitled to receive its (their)
attorneys' fees and costs (including costs of collection) from the
non-prevailing party(ies).
11.14 Counterparts. To facilitate execution, this
Agreement may be executed in as many counterparts as may be
required. It shall not be necessary that the signatures on behalf
of all parties appear on each counterpart hereof. All counterparts
hereof shall collectively constitute a single agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the
duly authorized representatives of the parties hereto as of the
date designated below.
Contributor: HIGHRIDGE-APOLLO GRAND PLAZA, L.P.,
a California limited partnership
By: OLYMPIC BEND ASSOCIATES,
a California limited partnership,
Managing General Partner
By: /s/ Steven A. Berlinger
Name: Steven A. Berlinger
Title: Co-Managing General Partner
Date: March 31, 1998
OP: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: ARDEN REALTY, INC., a
Maryland corporation, General Partner
By: /s/ Victor J. Coleman
Name: Victor J. Coleman
Title: President and COO
Date: March 31, 1998
Escrow Agent: COMMERCE ESCROW COMPANY
a California corporation
By: /s/ Luisa Chi
Its: Escrow Officer
Date: March 31, 1998
ARDEN REALTY LIMITED PARTNERSHIP
9100 Wilshire Boulevard
Suite 700 East
Beverly Hills, California 90212
March 30, 1998
Highridge-Apollo Grand Plaza, L.P.
1970 East Grand Avenue, Suite 300
El Segundo, CA 90245
Attention: Jack Mahoney
Re: Continental Grand Plaza.
Gentlemen:
Reference is made to that certain Contribution Agreement
dated March 30, 1998 and covering the Continental Grand Plaza
Office Building ("Agreement"), between you and your direct
and indirect constituent partners as Contributor and the
undersigned as OP ("Arden") regarding the real property
("Property"). Capitalized terms not otherwise defined in
this letter shall have the meaning ascribed to them in the
Agreement.
This letter will acknowledge the mutual understanding of
Contributor and Arden that both have agreed to execute the
above-referenced Agreement in its present form even though it
has not been reviewed by Arden's tax and REIT counsel, Latham
and Watkins. If before the close of business on Friday,
April 3, 1998, such counsel has raised material and
substantive comments to the Agreement, the parties agree to
negotiate in good faith to resolve any such issues before the
close of business on April 3, 1998 and to execute a revised
Agreement dealing with such matters. Failure to reach timely
resolution of any such new issues raised by such counsel
shall release Contributor and Arden from any further
obligation or commitment to each other with respect to the
Property and by written notice to the other by either Arden
or Contributor the Agreement shall be terminated and
cancelled and the Escrow Agent shall be instructed to return
the Deposit to Arden. An absence of written notice from such
counsel shall conclusively mean that such counsel has no
material or substantive issues with respect to the Agreement.
This letter may be executed in two or more counterparts,
and, when so executed, will have the same force and effect as
though all signatures appeared on a single document. Any
signature page of this letter may be detached from any
counterpart without impairing the legal effect of any
signatures thereon, and may be attached to another
counterpart identical in form thereto but having attached to
it one or more additional signature pages. In addition to the
foregoing, the parties hereto each (i) has agreed to permit
the use of telecopied signatures in order to expedite the
transaction contemplated by this letter, (ii) intends to be
bound by its respective telecopied signature, (iii) is aware
that the other party will rely on the telecopied signature,
and (iv) acknowledges such reliance and waives any defenses
to the enforcement of this letter and notices effecting the
transaction contemplated by this letter based on the fact
that a signature or notice was sent by telecopy.
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,
a Maryland limited partnership
By: Arden Realty, Inc.
a Maryland corporation
Its general partner
By:/s/ Victor J. Coleman
Victor J. Coleman,
President and Chief Operating Officer
Accepted and Agreed to this
30th day to March 1998
HIGHRIDGE-APOLLO GRAND PLAZA, L.P.,
a California limited partnership
By: OLYMPIC BEND ASSOCIATES,
a California limited partnership,
Managing General Partner
By:/s/ Steven A. Berlinger
Name: Steven A. Berlinger
Title: Co-Managing Partner
ARDEN REALTY LIMITED PARTNERSHIP
9100 Wilshire Boulevard
Suite 700 East
Beverly Hills, California 90212
April 8, 1998
Highridge-Apollo Grand Plaza, L.P.
1970 East Grand Avenue, Suite 300
El Segundo, CA 90245
Attention: Jack Mahoney
Re: Continental Grand Plaza.
Gentlemen:
Reference is made to that certain Contribution Agreement
dated March 30, 1998 and covering the Continental Grand Plaza
Office Building ("Agreement"), between you and your direct
and indirect constituent partners as Contributor and the
undersigned as OP ("Arden") regarding the real property
("Property") and the Pre-Contribution Loan referenced
therein. Capitalized terms not otherwise defined in this
letter shall have the meaning ascribed to them in the
Agreement.
On or before the Closing Date, you will execute and
deliver to us your demand promissory note and we will cause
our line of credit lender ("Lender") to wire directly to you
the amount of the Pre-Contribution Loan. If the Closing
occurs, you will be responsible for the interest accrued on
the Pre-Contribution Loan from the date the Pre-Contribution
Loan is wired to you by Lender until the Closing occurs at
our cost of the funds, and the Property will be contributed
subject to the Pre-Contribution Loan as provided in the
Agreement (to the extent you have not paid such interest as
of the Closing, such amount will constitute a proration in
favor of OP under the Agreement). If the Closing does not
occur and the Agreement is terminated, you will be
responsible for all of the interest and unpaid principal on
the Pre-Contribution Loan, such amounts to be payable by you
to the Lender upon demand by us.
This letter may be executed in two or more counterparts,
and, when so executed, will have the same force and effect as
though all signatures appeared on a single document. Any
signature page of this letter may be detached from any
counterpart without impairing the legal effect of any
signatures thereon, and may be attached to another
counterpart identical in form thereto but having attached to
it one or more additional signature pages. In addition to the
foregoing, the parties hereto each (i) has agreed to permit
the use of telecopied signatures in order to expedite the
transaction contemplated by this letter, (ii) intends to be
bound by its respective telecopied
signature, (iii) is aware that the other party will rely on
the telecopied signature, and (iv) acknowledges such reliance
and waives any defenses to the enforcement of this letter and
notices effecting the transaction contemplated by this letter
based on the fact that a signature or notice was sent by
telecopy.
Please indicate your agreement with the foregoing by
signing this letter where indicated below and returning a
signed copy to the undersigned.
Very Truly Yours,
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
Accepted and Agreed to this
30th day to April 1998
HIGHRIDGE-APOLLO GRAND PLAZA, L.P.,
a California limited partnership
By: OLYMPIA BEND ASSOCIATES,
a California Limited Partnership,
Managing General Partner
By: /s/ Steven A. Berlinger
Name: Steven A. Berlinger
Title: Co-Managing General Partner
AGREEMENT OF PURCHASE AND SALE
CALABASAS TECH CENTER
By and Between
CALABASAS TECH CENTER, INC.,
Seller
and
ARDEN REALTY LIMITED PARTNERSHIP,
Purchaser
DATED: March 31, 1998
TABLE OF CONTENTS
Page
1. Definitions 2
2. Sale; Purchase Price 3
3. Conditions Precedent 3
3.1 Seller's Deliveries 4
3.2 Due Diligence 4
3.3 Title and Survey 7
3.4 Tenant Estoppels 8
4. Closing; Conditions; Deliveries 8
4.1 Time, Place and Manner of Closing 8
4.2 Condition to Parties' Obligation to Close 9
4.3 Deliveries 9
4.4 Permitted Termination 11
5. Prorations 11
6. Seller's Representations, Warranties and Covenants 13
6.1 Power 13
6.2 Requisite Action 13
6.3 Authority 14
6.4 Validity 14
6.5. Conflicts 14
6.6 Leases 14
6.7 Service Contracts 14
6.8 Litigation 14
6.9 Environmental Condition 14
6.10 Condemnation 15
6.11 Employees 15
6.12 Notices of Violation 15
6.13 Indemnity 15
7. Purchase As-Is 16
8. Purchaser's Representations, Warranties and Covenants 17
8.1 Power 17
8.2 Requisite Action 17
8.3 Authority 17
8.4 Validity 18
8.5 Conflicts 18
8.6 Litigation 18
8.7 Indemnity 18
9. Closing Costs 18
10. Commissions 18
11. Escrow Closing 19
12. Attorneys' Fees and Costs 19
13. Notice 19
14. Fire or Other Casualty; Condemnation 20
15. Operations After Date of This Agreement 20
16. Assignment 21
17. Remedies 22
18. Miscellaneous 24
18.1 Entire Agreement 24
18.2 Time 24
18.3 Counterpart Execution 24
18.4 Governing Law 24
18.5 Publicity 24
18.6 Recordation 24
18.7 Benefit 25
18.8 Section Headings 25
18.9 Further Assurances 25
18.10 Severability 25
18.11 WAIVER OF TRIAL BY JURY 25
18.12 Independent Counsel 26
18.13 Governmental Approvals 26
18.14 No Waiver 26
18.15 Discharge and Survival 26
19. Exculpation of Seller and Related Parties 26
20. Audit Letter 27
AGREEMENT OF PURCHASE AND SALE
(CALABASAS TECH CENTER)
THIS AGREEMENT OF PURCHASE AND SALE is made and entered
into this 31st day of March, 1998 (the "Effective Date") by
and between CALABASAS TECH CENTER, INC., a Delaware
corporation ("Seller"), having an address of c/o Heitman
Capital Management Corporation, 180 North LaSalle Street,
Suite 3600, Chicago, Illinois 60601-6789, Attention: Howard
J. Edelman; facsimile number (312) 541-6738, and ARDEN
REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
("Purchaser"), having an address of 9100 Wilshire Boulevard,
East Tower, Suite 700, Beverly Hills, California 90212,
Attention: Victor J. Coleman; facsimile number (310) 274-
6218.
RECITALS
A. Seller is the owner of the Property (as defined below).
B. Seller desires to sell and convey to Purchaser, and
Purchaser desires to purchase from Seller, subject to the
terms and conditions set forth in this Agreement:
1. That certain land located at 26520-26672 Agoura
Road in the City of Calabasas, County of Los Angeles,
State of California, and more particularly described on
Exhibit A attached hereto (the "Land");
2. All of Seller's interest in and to any and all
rights, privileges and easements appurtenant to the
Land, including, without limitation, all minerals,
oils, gas and other hydrocarbon substances on and under
the Land, as well as all development rights and air
rights relating to the Land, and all water rights and
water stock relating to the Land, and any and all
easements, rights-of-way or appurtenances used in
connection with the beneficial use and enjoyment of the
Land (all of which are sometimes collectively referred
to herein as the "Appurtenances");
3. All of Seller's interest in and to any and all
improvements and fixtures located upon the Land,
including, without limitation, seven buildings used as
a research and development park, and all other
structures located on the Land, all fixtures,
apparatus, equipment and appliances used in connection
with the operation or occupancy thereof (all of which
are collectively referred to herein as the
"Improvements");
4. All of Seller's interest, as landlord, in and to
the leases, occupancy agreements, and amendments
thereto for the Improvements (the "Leases"), excepting
therefrom, the landlord's right to any rents or other
amounts accruing prior to the Closing Date thereunder.
The Leases are listed on Schedule 1;
5. All of Seller=s right, title and interest in and
to any personal property, if any, located on or in the
Land or used exclusively in connection with Seller's
operation, maintenance or management of the Land and/or
the Improvements (collectively, the "Personal
Property"). The Personal Property is listed on
Schedule 5;
6. All of Seller's right, title and interest in and
to the service contracts, equipment leases, other
agreements related exclusively to the Property
(collectively, the "Service Contracts"). The Service
Contracts are listed on Schedule 2; and
7. All of Seller's right, title and interest in and
to any and all intangible property owned by Seller and
used exclusively in connection with Seller's ownership,
use and/or operation of the Land or the Improvements,
to the extent assignable, including, without
limitation, warranties and guaranties, the right to use
any trade names now used in connection with the Land or
the Improvements, the books and records relating to the
Property, inventory records, building management
records, payroll records and all other books and
records relating to the operation and management of the
Land and/or the Improvements (collectively, the
"Intangible Property"). The Intangible Property shall
not include any claims of Seller against third parties
or any books, records, reports, documents or
information which Seller has deemed to be confidential,
privileged or proprietary, or any computer discs, tapes
and other data bases or software (provided that Seller
shall provide copies of printouts of such data to the
extent same regards exclusively the Property).
The Land, the Appurtenances and the Improvements are
sometimes collectively referred to herein as the "Real
Property." The Real Property, the Personal Property,
the Leases, the Services Contracts and the Intangible
Property are sometimes collectively referred to herein
as the "Property."
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. Definitions. As used in this Agreement, the following
terms have the following meanings:
Closing Date. As agreed between Seller and Purchaser
but no later than May 14, 1998 (a pre-closing shall be
held on May 13, 1998).
Due Diligence Period. The period commencing on the
Effective Date and ending at 5:00 p.m. Chicago,
Illinois time on April 30, 1998.
Escrow Company. Near North National Title Corporation.
Title Company. Near North National Title Corporation
as agent for Chicago Title Company.
2. Sale; Purchase Price.
2.1 Subject to the terms and provisions hereof, Seller
agrees to sell and convey to Purchaser, and Purchaser agrees
to purchase from Seller the Property.
2.2 The total purchase price (hereinafter called the
"Purchase Price") to be paid by Purchaser to Seller for the
Property shall be Forty-Six Million Fifty Thousand and
no/100 Dollars ($46,050,000.00). The Purchase Price shall
be payable in the following manner:
(a) Earnest Money. Purchaser shall, within two
(2) business days after the execution and delivery of this
Agreement by Purchaser and Seller, deposit with the Escrow
Company, as escrow agent, the amount of Four Hundred
Thousand and 00/100 Dollars ($400,000.00) (hereinafter
called the "Earnest Money") which Earnest Money shall be in
the form of a wire transfer of immediately available United
States of America funds. Except as otherwise expressly
provided herein to the contrary, the Earnest Money shall
become nonrefundable at 5:00 p.m., Chicago, Illinois time,
of the last day of the Due Diligence Period. The Earnest
Money shall be held and disbursed by the Escrow Company
acting as escrow agent pursuant to the Earnest Money Escrow
Agreement in the form of Exhibit B attached hereto which the
parties have executed simultaneously with this Agreement.
The Earnest Money shall be invested in a federally issued or
insured interest bearing instrument with any interest
accruing thereon being deemed part of the Earnest Money and
shall be paid to the party to which the Earnest Money is
paid pursuant to the provisions hereof. If the sale
hereunder is consummated in accordance with the terms
hereof, the Earnest Money and any interest thereon shall be
applied to the Purchase Price to be paid by Purchaser at the
Closing. In the event of a default hereunder by Purchaser
or Seller, the Earnest Money shall be applied as provided
herein.
(b) Cash Balance. Purchaser shall pay the
balance of the Purchase Price, subject to the prorations
described in Section 5 below, in cash (the "Cash Balance")
by wire transfer of immediately available United States of
America funds to the Title Company for payment to Seller, in
accordance with the terms and conditions of this Agreement
no later than 11:00 a.m. (Chicago, Illinois time) on the
Closing Date.
3. Conditions Precedent. In the event any of the
conditions set forth in Sections 3.2(b), 3.3, or 3.4 below
shall not have been fulfilled, accepted or deemed accepted
or waived as provided herein on or before the applicable
dates specified herein, Purchaser shall have the right to
terminate this Agreement by giving written notice thereof to
Seller on or before the respective dates specified herein,
and thereupon all Earnest Money shall be refunded to
Purchaser and neither party shall have any further rights or
obligations hereunder, except for the Surviving Obligations
(as hereinafter defined).
3.1 Seller's Deliveries. Seller has delivered or made
available or within five (5) days after the Effective Date
shall deliver or make available to Purchaser complete copies
of the following items which are in Seller's possession:
(a) all Leases;
(b) all Service Contracts;
(c) copies of the real estate tax bills for the
current year and the last two prior years, if available;
(d) any existing environmental reports, including
any Phase I environmental report;
(e) the existing owner's title policy;
(f) the existing survey (the "Existing Survey");
(g) annual operating statements for the Property
for the last three calendar years and monthly operating
statements for the months in the current year, including the
calculation of escalations for expenses and taxes;
(h) existing plans and specifications;
(i) copies of all pending Proposals (as defined
in Section 15(b)) presently outstanding, if any; and
(j) a copy of Seller's internal rent roll for the
Property.
Seller shall provide to Purchaser any documents
described in this Section 3.1 and first coming into Seller's
possession or produced by Seller after the initial delivery
and continue to provide the same during the pendency of this
Agreement.
In the event this Agreement terminates for any reason,
Purchaser shall immediately return to Seller all information
delivered by Seller or Seller's agent(s) to Purchaser or
Purchaser's agent(s). The foregoing provision shall survive
termination of this Agreement.
3.2 Due Diligence. Purchaser and its representatives
shall be permitted to enter upon the Property at any
reasonable time and from time to time before the Closing
Date to examine, inspect and investigate the Property as
well as all records and other documentation provided by
Seller or located at the Property or at the offices of
Seller's property manager, Heitman Properties, Ltd., located
at 9601 Wilshire Boulevard, Beverly Hills, California 90210
(at which office Seller's operating files for the Property
shall be available for review) (collectively, "Due
Diligence"). The Due Diligence shall be subject to the
terms, conditions and limitations set forth in this Section
3.2.
(a) Purchaser shall have a right to enter upon
the Property for the purpose of conducting its Due Diligence
(and, after the Due Diligence Period, to prepare to operate
the Property) provided that in each such instance (i)
Purchaser notifies Seller of its intent to enter the
Property to conduct its Due Diligence not less than 36 hours
prior to such entry; (ii) the date and approximate time
period are scheduled with Seller; (iii) Purchaser is in full
compliance with the insurance requirements set forth in
Section 3.2(f) hereof; and (iv) Purchaser shall not be
permitted to conduct interviews with the tenants of the
Property and shall not have access to areas of a tenant's
space which such tenant deems to be a "sensitive area." At
Seller's election, a representative of Seller shall be
present during any entry by Purchaser or its representatives
upon the Property for conducting its Due Diligence.
Purchaser shall take all necessary actions to insure that
neither it nor any of its representatives unreasonably
interfere with the tenants or ongoing operations occurring
at the Property. Purchaser shall not cause or permit any
mechanic liens, materialmen's liens or other liens to be
filed against the Property as a result of its Due Diligence.
(b) Purchaser shall have through the last day of
the Due Diligence Period in which to conduct its Due
Diligence and, in Purchaser's sole discretion, to determine
whether the Property is acceptable to Purchaser. If during
the Due Diligence Period, Purchaser becomes aware of any
problem or defect in the Property or any other aspect of the
Property which Purchaser determines makes the Property
unsuitable to Purchaser, Purchaser may terminate this
Agreement by giving written notice of termination to Seller
on or before the last day of the Due Diligence Period. If
Purchaser does not timely give notice of termination as
aforesaid, Purchaser shall be deemed to have accepted the
Property and this Agreement shall continue in full force and
effect. In the event of such termination, the Earnest Money
shall be returned to Purchaser and neither party shall have
any further obligations to the other party hereunder, except
for the Surviving Obligations.
(c) Purchaser shall, at least thirty-one (31)
days prior to the Closing Date, notify Seller in writing
requesting termination of any or all of the Service
Contracts that Purchaser desires not to assume. Seller
shall (i) terminate all such Service Contracts which are
noted on Schedule 2 as being terminable upon thirty (30)
days' notice, and (ii) use commercially reasonably efforts
to terminate all other such Service Contracts (provided that
Seller shall not be required to make any termination
payment) that Purchaser does not elect to assume. If
Purchaser does not timely give notice requesting termination
of a Service Contract, Purchaser shall be deemed to have
accepted the assumption of such Service Contract. Purchaser
shall assume all other Service Contracts (including Service
Contracts which Seller is unable to terminate under the
preceding clause (ii)).
(d) Purchaser shall have the right to conduct, at
its sole cost and expense, any inspections, studies or tests
that Purchaser deems appropriate in determining the
condition of the Property, provided, however, Purchaser is
not permitted to perform any intrusive testing, including,
without limitation, a Phase II environmental assessment or
boring, without (i) submitting to Seller the scope and
inspections for such testing; and (ii) obtaining the prior
written consent of Seller.
(e) Purchaser agrees and covenants with Seller
not to disclose to any third party (other than lenders,
accountants, attorneys and other professionals and
consultants in connection with the transaction contemplated
herein) without Seller's prior written consent, unless
Purchaser is obligated by law to make such disclosure, any
of the reports or any other documentation or information
obtained by Purchaser which relates to the Property or
Seller in any way, all of which shall be used by Purchaser
and its agents solely in connection with the transaction
contemplated hereby. In the event that this Agreement is
terminated, Purchaser agrees that all such information will
be held in strict confidence. Notwithstanding the
foregoing, Purchaser may issue press releases or make other
disclosures to the extent required by applicable securities
laws. Purchaser agrees to use its best efforts to obtain
Seller's approval of the form and substance of any such
disclosure.
(f) Purchaser agrees to indemnify, defend and
hold Seller and its partners, trustees, beneficiaries,
shareholders, members, managers, advisors and other agents
and their respective partners, trustees, beneficiaries,
employees, officers, directors and shareholders (the
"Indemnified Parties") harmless from and against any and all
claims, losses, damages, costs and expense (including,
without limitation reasonable attorneys fees and court
costs) suffered or incurred by any of the Indemnified
Parties as a result of or in connection with any activities
of Purchaser (including activities of any of Purchaser's
employees, consultants, contractors or other agents) on or
about the Property, including, without limitation,
mechanics' liens, damage to the Property, injury to persons
or property resulting from such activities in connection
therewith, and in the event that the Property is disturbed
or altered in any way as a result of such activities.
Purchaser shall promptly restore the Property to its
condition existing prior to the commencement of such
activities which disturb or alter the Property.
Furthermore, Purchaser agrees to maintain and cause any of
its representatives or agents conducting any Due Diligence
to maintain and have in effect commercial general liability
insurance with (i) all risk coverage, (ii) waiver of
subrogation, and (iii) limits of not less than One Million
and 00/100 ($1,000,000.00) for personal injury, including
bodily injury and death, and property damage. Such
insurance shall name the Seller, Heitman Capital Management
Corporation ("HCMC") and Heitman Properties Ltd. as
additional insured parties. Purchaser shall deliver to
Seller a copy of the certificate of insurance effectuating
the insurance required hereunder prior to the commencement
of such activities which certificate shall provide that such
insurance shall not be terminated or modified without at
least thirty (30) days' prior written notice to Seller.
(g) Purchaser acknowledges and agrees that it
shall have no right to review or inspect any of the
following: (i) internal memoranda, correspondence,
analyses, documents or reports prepared by or for Seller or
an affiliate of Seller in connection with this (A) Agreement
(B) the transaction contemplated by this Agreement, (C) the
acquisition of the Property by Seller (other than
environmental reports, if any) or (D) any prior or current
contemplated reorganization of Seller and certain affiliated
funds, (ii) communications between Seller and HCMC, and
(iii) appraisals, assessments or other valuations of the
Property in the possession of Seller or HCMC.
(h) Sections 3.2(e) and 3.2(f) and such other
designated provisions in this Agreement shall survive
Closing or any termination of this Agreement (collectively,
the "Surviving Obligations").
3.3 Title and Survey. Seller shall, at Seller's sole
cost and expense, obtain and deliver to Purchaser for
Purchaser's review a preliminary title report along with a
copy of each instrument listed as an exception thereon (the
"Title Report") on the Real Property issued by the Title
Company and any existing survey of the Property in Seller's
possession or control (the "Existing Survey"). During the
Due Diligence Period, Purchaser shall have the right to
obtain, at its sole cost and expense, any desired
endorsements to the Title Report which are available, if
any. Purchaser may elect to receive an update to the
Existing Survey (the "Updated Survey") by notifying Seller
of such election in writing within five (5) days after
Purchaser's receipt of the Existing Survey. If Purchaser so
elects, Seller shall, at Purchaser's sole cost and expense,
obtain and deliver to Purchaser for Purchaser's review the
Updated Survey. The Updated Survey shall: (i) be made in
accordance with the specifications listed on Exhibit C
attached hereto, and (ii) contain a certification in the
form set forth on Exhibit D attached hereto. Purchaser
shall have until the date which is fifteen days after
receipt of the Title Commitment and Existing Survey (such
date being referred to as the "Title Review Date") for
examination of Title Commitment and Existing Survey and the
making of any objections thereto, said objections to be made
in writing and delivered to Seller on or before the end of
the Title Review Date. If Purchaser shall fail to make any
objections on or before the Title Review Date, Purchaser
shall be deemed to have accepted all exceptions to the Title
Commitment and the form and substance of the Existing Survey
and all matters shown thereon; all such exceptions and
matters and any exceptions or matters caused by or through
Purchaser shall be included in the term "Permitted
Exceptions" as used herein. In the event Purchaser elects
to receive the Updated Survey, then Purchaser shall have
until five (5) days after receipt thereof for examination of
the Updated Survey and the making of written objections
thereto and delivery of same to Seller. If Purchaser shall
fail to deliver written notice to Seller of any such
objections to the Updated Survey on or before the expiration
of such 5 day period, Purchaser shall be deemed to have
accepted the form and substance of the Updated Survey and
all matters shown thereon; all such exceptions and matters
and any exceptions or matters caused by or through Purchaser
shall be included as Permitted Exceptions. Provided that
Purchaser receives the Existing Survey before the end of the
Due Diligence Period, Purchaser may not object to matters
shown on the Updated Survey that were shown on the Existing
Survey, and shall not unreasonably withhold its approval of
the Updated Survey. If the Updated Survey is delivered less
than 5 days before Closing, the Closing Date shall be
extended by not more than 5 days to provide Purchaser with a
full 5 day period to review the Updated Survey. If any
objections to (i) the Title Commitment or Existing Survey
are made within the Title Review Period, or (ii) the Updated
Survey within the 5 day review period described above, then
Seller shall have the right, but not the obligation, to cure
(by removal, endorsement or otherwise; provided that any
endorsement, other than with respect to mechanics' liens,
monetary judgments and/or other monetary encumbrances, shall
be subject to Purchaser's prior written consent, not to be
unreasonably withheld) such objections on or before the
Closing Date. If the objections are not cured by Seller by
the scheduled Closing Date, then Purchaser may as its only
option, elect to either: (i) waive such objection and
consummate the transaction contemplated by this Agreement;
or (ii) terminate this Agreement, in which event the
Earnest Money shall be returned to Purchaser and neither
party shall have any further obligations to the other party
except for the Surviving Obligations.
3.4 Tenant Estoppels.
(a) Seller shall deliver to Purchaser, no later than
five (5) days prior to the Closing Date, estoppel
certificates, in the form of Exhibit E attached hereto from
tenants leasing at least eighty percent (80%) of the square
footage of the Property currently leased. Purchaser agrees
to reasonably approve changes made by tenants to the form of
the tenant estoppel certificate (and agrees that the tenant
may delete the language contained in paragraph 10 thereof)
and, if the tenant is not willing to deliver the estoppel
certificate in the form of Exhibit E, shall accept the form
of estoppel required under such tenant's lease.
(b) Prior to the Closing Date, Seller shall deliver to
Purchaser all estoppel certificates it receives before the
Closing Date. If estoppel certificates in addition to those
required to satisfy the condition in Section 3.4 are
received, and the information set forth in such additional
estoppel certificates would materially and adversely affect
Purchaser's ownership or operation of the Property after the
Close of Escrow, then Purchaser may, on or prior to the
Closing Date, deliver written notice to Seller of same,
which notice shall describe in reasonable detail the
disapproved items. If Purchaser makes such notice, Seller
may attempt to cure same, to Purchaser's reasonable approval
(and Seller may extend the Closing Date by not more than
five (5) business days to complete such cure). If Seller
elects not to cure, or fails to cure by the end of such five
(5) business day period, this Agreement shall terminate, the
Earnest Money shall be returned to Purchaser, and neither
party shall have any obligation to the other under this
Agreement except as expressly provided herein.
4. Closing; Conditions; Deliveries.
4.1 Time, Place and Manner of Closing. The Closing
shall be held on the Closing Date in the offices of Seller's
counsel in Los Angeles or at any location mutually
acceptable to the parties.
4.2 Condition to Parties' Obligation 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 transaction contemplated
hereunder shall be contingent upon the following:
(a) The other party's representations and
warranties contained herein shall be true and correct in all
material respects as of the date of this Agreement and the
Closing Date;
(b) As of the Closing Date, the other party shall
have performed its obligations hereunder in all material
respects and all deliveries to be made at Closing have been
tendered;
(c) As of the Closing Date, there shall exist no
pending action, suit or proceeding with respect to the other
party before or by any court or administrative agency which
seeks to restrain or prohibit, or to obtain damages or a
discovery order with respect to, this Agreement or the
consummation of the transactions contemplated hereby; and
(d) Simultaneously with execution of this
Agreement, Purchaser shall have delivered to Seller a fully
executed original ERISA certificate in the form of Exhibit F
attached hereto.
4.3 Deliveries. At Closing each party shall execute
and deliver to the other and/or the Title Company the
following documents and other items:
(a) Seller shall deliver to Purchaser and/or the Title
Company:
(i) a grant deed (the "Deed") to the
Property in recordable form, duly executed by Seller and
acknowledged and in substantially the same form as set forth
in Exhibit G attached hereto, conveying to Purchaser title
to the Real Property, subject to the Permitted Exceptions;
(ii) a bill of sale duly executed by Seller
and in substantially the same form as set forth in Exhibit H
attached hereto, conveying to Purchaser title to all
personal property owned by Seller and located at the Real
Property, if any;
(iii) an assignment to Purchaser of the
Leases duly executed by Seller and in substantially the same
form as set forth in Exhibit I attached hereto;
(iv) an assignment to Purchaser of the
Service Contracts in accordance with Section 3.2(c), and
other third party contracts pursuant to Section 5.8, being
assumed hereunder, licenses and permits affecting the
Property (to the extent freely assignable) duly executed by
Seller and in substantially the same form as set forth in
Exhibit J attached hereto; and
(v) a non-foreign transferor certification
pursuant to Section 1445 of the Internal Revenue Code and
any similar provisions of California state law, in
substantially the same form as set forth on Exhibit K
attached hereto (the "Affidavit").
(b) Purchaser shall deliver to Seller or the
Title Company:
(i) the Cash Balance, by wire transfer, as
provided in Section 2.2 hereof; and
(ii) an assumption duly executed by the
Purchaser of the assignments described in Sections
4.3(a)(iii) and (iv), in substantially the same form as set
forth in Exhibit I and Exhibit J attached hereto,
respectively.
(c) Seller and Purchaser shall jointly deliver to
the Title Company:
(i) A closing statement;
(ii) All transfer declarations or similar
documentation required by law;
(iii) Letters to the tenants of the
Property in the form of Exhibit L attached hereto; and
(iv) Notices in substantially the form
attached hereto as Exhibit M attached hereto to the other
party to each Service Contract assumed by Purchaser pursuant
to Section 3.2(c) of this Agreement.
(d) Seller shall deliver to Purchaser outside of
Escrow:
(i) Possession of the Property, on the
Closing Date; and
(ii) To the extent in Seller's possession,
any keys, original as-built plans, original Service
Contracts, unexpired warranties for any of the capital
improvements to the Property or the Personal Property,
original guaranties, original Leases, original tenant
estoppel certificates and the originals of any other
documents delivered or made available to Purchaser pursuant
to Section 3.1 hereof (confidential, privileged or
proprietary information shall not be provided).
(e) The Title Company shall irrevocably commit to
Purchaser that it is prepared to issue to Purchaser an ALTA
Form B (Revised 10/17/70; if the Title Company no longer
issues the 10/17/70 form) extended coverage policy of title
insurance, in the form required under Section 3.3, effective
as of the recording of the Deed, insuring Purchaser as the
owner of the Real Property, and removing all exceptions
other than Permitted Exceptions. Notwithstanding the
foregoing, if the Title Company is willing to accept a gap
undertaking from Seller in lieu of confirmation that the
Deed has been recorded, then the Closing (including delivery
of the Purchase Price proceeds to Seller) shall occur when
such gap undertaking is delivered and all other conditions
precedent hereunder have been satisfied or waived as
provided herein.
4.4 Permitted Termination. So long as a party is not
in default hereunder, if any condition to such party=s
obligation to proceed with the Closing hereunder has not
been satisfied or waived as of the Closing Date or such
earlier date as provided herein, such party may, in its sole
discretion, terminate this Agreement by delivering written
notice to the other party before the Closing 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. Prorations. All items of income and expense shall be
paid, prorated or adjusted as of the close of business on
the day prior to the Closing Date (the "Proration Date") in
the manner hereinafter set forth:
5.1 Purchaser shall be credited with (i) the amount of
(A) all rents and (B) all expense contributions, real estate
tax contributions, and other reimbursements from tenants
("Tenant Contributions") received by Seller and attributable
to any month commencing after the Closing Date and (ii) all
unapplied cash security deposits made by tenants under all
leases of the Real Property in effect as of the Closing
Date.
5.2 All rents and Tenant Contributions for the month
of Closing shall be prorated between Purchaser and Seller
based upon their respective days of ownership for such month
in which the Closing occurs. Neither Purchaser nor Seller
shall receive credit at Closing for any payments of rental
obligations due but not paid as of the Proration Date. At
the time of the final calculation and collection from
tenants of Tenant Contributions for 1998, whether in the
nature of a reconciliation payment or full payment, in
arrears, there shall be a reproration between Purchaser and
Seller as to the Tenant Contributions. Such reproration
shall not be made on the basis of a per diem method of
allocation, but shall instead be apportioned between Seller
and Purchaser on the basis of the relative share of actual
expenses in question incurred by Seller and Purchaser during
the lease year in question. Seller covenants to provide
Purchaser with any information necessary to finalize such
calculation. Purchaser covenants to bill tenants for
amounts due from tenants attributable to periods prior to
Closing and diligently pursue collections from tenants and,
as collected, to timely deliver to Seller reproration
amounts due Seller (including without limitation under
Section 5.6 below).
5.3 Intentionally deleted.
5.4 Any amounts received from tenants after Closing
shall be applied on a tenant by tenant basis in the
following order: (i) first on account of any amount
currently due Purchaser from such tenant(s); (ii) next, on
account of any amount due Seller from such tenant(s) for the
period up to and including the Proration Date and (iii)
finally, any balance then remaining to Purchaser. Seller
retains the right to pursue its remedies against tenants
after Closing for any delinquent payments or other amounts
owed to Seller, except for actions or proceedings affecting
possession or landlord liens. However, Seller will not
exercise any such rights or remedies unless such delinquent
rents have not been collected by Purchaser and paid to
Seller within three (3) months after the Closing Date. Any
money due to Seller shall be remitted to Seller within five
(5) business days after the end of each month in which
Purchaser receives such money.
5.5 Operating expenses, including, without limitation,
ordinary operating expenses, permits, licenses, membership
dues, and any other prepaid expenses, shall be prorated
between Purchaser and Seller based upon the actual days of
their respective ownership of the Property utilizing the
actual expenses or reasonable estimates (prorations made
based upon estimates shall be reprorated after the Closing
Date based upon the actual expenses once known).
5.6 Real estate taxes shall be prorated between Seller
and Purchaser based upon the actual days of ownership of the
parties for the year in which Closing occurs utilizing the
most recent ascertainable tax bill(s). Seller and Purchaser
agree to reprorate said real estate taxes upon Purchaser=s
receipt of supplemental tax bill(s).
Notwithstanding the foregoing, as between Seller and
Purchaser, Purchaser shall be solely responsible for any
real estate taxes attributable to the increase in the
assessed value of the Property resulting from Purchaser's
acquisition thereof or any improvements made after to the
Property after Closing. Accordingly, in the reproration and
any subsequent billing and collection of Tenant
Contributions for ad valorem real estate taxes and
assessments, such amounts shall be allocated to Seller on a
tenant-by-tenant basis before any such amounts are allocated
to Purchaser on account of the any such increased
assessment.
5.7 Except for utilities billed directly to Tenants,
utilities shall be prorated as of the Proration Date based
upon either meter readings on the Proration Date or the
prior month=s actual invoices, unless the Purchaser obtains
new utility service in its own name effective as of the
Closing Date.
5.8 Purchaser shall be responsible for and pay: (a)
the cost of all tenant improvements, (b) all leasing
commissions and (c) space planning and legal costs (those
matters listed under (a), (b) and (c) are hereinafter
collectively referred to as "Leasing Costs") due and payable
as a result of leases made pursuant to: (i) Proposals
listed on Schedule 4 attached hereto, and (ii) any Proposal
which Purchaser approves, or is deemed to have approved as
provided in Section 15. Purchaser shall also be responsible
for and pay any leasing commissions due under Leases as a
result of the tenant exercising any renewal right (or
failing to exercise any termination right), to the extent
such commission obligations are set forth in Schedule 4
attached hereto. Purchaser shall assume any agreements
evidencing payment obligations of Purchaser under this
Section 5.8. Seller shall be responsible for and pay any
leasing commissions (i) due under currently existing leasing
agreements for Leases existing as of the Effective Date, as
a result of the tenant exercising any renewal right (or
failing to exercise any termination right), to the extent
such commission obligations are not set forth in Schedule 4
attached hereto or (ii) due under any Proposal listed on
Schedule 4, which commission obligation is not listed on
Schedule 4.
5.9 All insurance policies and property management
agreements (including without limitation the property
management/leasing agreement with HCMC) shall be terminated
as of the Closing Date and there shall be no proration with
respect to these items.
All other items which are customarily prorated in
transactions similar to the transaction contemplated hereby
and which were not heretofore dealt with, will be prorated
as of the Proration Date. In the event any prorations or
computations made under this Section are based on estimates
or prove to be incorrect, then either party shall be
entitled to an adjustment to correct the same, provided that
it makes written demand on the party from whom it is
entitled to such adjustment within one hundred and twenty
days after the end of the current calendar year. Purchaser
shall indemnify and hold Seller harmless from and against
any and all claims and costs (i) in connection with
Purchaser's assumption of responsibility for the Leasing
Costs as provided in Section 5.8 herein, including but not
limited to any and all obligations under third party
contracts assumed by Purchaser as provided by Sections 4.3
(a) (iv) hereof; and (ii) for which Purchaser received
credits pursuant to this Section 5. The indemnity set forth
in the immediately preceding sentence and the covenants
contained in this Section 5 shall survive Closing.
6. Seller's Representations, Warranties and Covenants.
Seller hereby represents, warrants and covenants as follows:
6.1 Power. Seller has the legal power, right and
authority to enter into this Agreement and the instruments
referenced herein and to consummate the transactions
contemplated hereby.
6.2 Requisite Action. All requisite action
(corporate, trust, partnership or otherwise) has been taken
by Seller in connection with entering into this Agreement
and the instruments referenced herein and the consummation
of the transactions contemplated hereby. No consent of any
partner, shareholder, member, creditor, investor, judicial
or administrative body, authority or other party is required
which has not been obtained to permit Seller to enter into
this Agreement and consummate the transaction contemplated
hereby.
6.3 Authority. The individuals executing this
Agreement and the instruments referenced herein on behalf of
Seller have the legal power, right and actual authority to
bind Seller to the terms and conditions hereof and thereof.
6.4 Validity. This Agreement and all documents
required hereby to be executed by Seller are and shall be
valid, legally binding obligations of and enforceable
against Seller in accordance with their terms.
6.5. Conflicts. None of the execution and delivery of
this Agreement and documents referenced herein, the
incurrence of the obligations set forth herein, the
consummation of the transactions herein contemplated or
referenced herein conflicts with or results in the material
breach of any terms, conditions or provisions of or
constitutes a default under, any bond, note, or other
evidence of indebtedness or any contract, lease or other
agreements or instruments to which Seller is a party.
6.6 Leases. Attached hereto as Schedule 1 is a
complete and accurate list of the leases, occupancy
agreements and amendments thereto relating to the Property,
which shall be updated by Seller prior to Closing, if
necessary, including the addition thereto of leases executed
after the date hereof through Closing pursuant to Proposals
which are approved or deemed approved by Purchaser as
provided under Section 15. With respect only to leases for
which no estoppel certificate is returned by the tenant
thereunder, to the knowledge of Seller: (a) the lease
documents delivered or made available to Purchaser in
accordance with this Agreement constitute complete and
accurate copies of the documents constituting each such
lease and (b) there are no other written or oral agreements
between Seller and the applicable tenant with respect to the
Property or the tenancy under such lease.
6.7 Service Contracts. Attached hereto as Schedule 2
is a complete and accurate list of the service contracts,
equipment leases and other agreements relating to the
Property which shall be updated by Seller prior to Closing,
if necessary.
6.8 Litigation. Except as set forth on Schedule 3 no
litigation has been served upon Seller, nor to the best of
the Seller's knowledge has been filed, or threatened in
writing, affecting the Seller's ability to consummate the
transaction contemplated by this Agreement. Schedule 3
shall be updated by Seller prior to Closing, if necessary.
Purchaser shall have the right to reasonably disapprove any
update to Schedule 3 made after the end of the Due Diligence
Period, in which event this Agreement shall terminate, the
Earnest Money shall be returned to Purchaser, and neither
party shall have any further obligation to the other except
as expressly provided herein.
6.9 Environmental Condition. Seller has no knowledge
of any violation of Environmental Laws related to the
Property or the presence or release (other than as permitted
by law) of Hazardous Materials on or from the Property
except as disclosed in the environmental reports, studies
and other information relating to the environmental
condition of the Property delivered by Seller to Purchaser
or made available for Purchaser=s review. The term
AEnvironmental Laws@ includes, without limitation, the
Resource Conservation and Recovery Act and the Comprehensive
Environmental Response Compensation and Liability Act
(ACERCLA@) and other federal laws governing the environment
as in effect on the date of this Agreement together with
their implementing regulations and guidelines as of the date
of this Agreement, and all state, regional, county,
municipal and other local laws, regulations and ordinances
that are equivalent or similar to the federal laws recited
above or that purport to regulate Hazardous Materials in
effect as of the date of this Agreement. "Hazardous
Materials" means any substance which is (i) designated,
defined, classified or regulated as a hazardous substance,
hazardous material, hazardous waste, pollutant or
contaminant under any Environmental Law, as currently in
effect as of the date of this Agreement, (ii) petroleum
hydrocarbon, including crude oil or any fraction thereof and
all petroleum products, (iii) PCBs, (iv) lead, (v) friable
asbestos, (vi) flammable explosives, (vii) infectious
materials, or (viii) radioactive materials.
6.10 Condemnation. To Seller's knowledge, there are no
condemnation proceedings, either instituted or planned to be
instituted, which could materially and adversely affect
either the use or operation of the Property for its intended
purpose or the value of the Property.
6.11 Employees. Seller has no employees.
6.12 Notices of Violation. To Seller's knowledge,
Seller has received no notice of violation of fire, building
or life safety codes or ordinances from any local
governmental agency, which notice remains outstanding. For
purposes of this Section 6.12 only, the parties listed in
clause (i) of the grammatical paragraph following Section
6.13 below shall be limited to Jeffrey B. Kushen, Asset
Manager, HCMC, and not to any other parties.
6.13 Indemnity. Seller shall indemnify and hold
Purchaser harmless from and against any and all claims,
actions, judgments, liabilities, liens, damages, penalties,
fines, costs and reasonable attorneys' fees, asserted
against, imposed on or suffered or incurred by Purchaser (or
the Property) to the extent arising out of or in connection
with any breach of the warranties, representations and
covenants set forth in this Section 6. The warranties and
representations set forth in this Section 6 shall be deemed
remade as of Closing, and said warranties and
representations as so remade, and the indemnity obligation
set forth in herein shall survive Closing, provided that any
claim by Purchaser based upon a misrepresentation or breach
of any warranty or representation or indemnity obligation
under this Section 6 shall be deemed waived unless
Purchaser has given Seller notice of such claim prior to
December 31, 1998.
As used in this Section 6, the term "to Seller's knowledge"
"actual knowledge" or "best of Sellers knowledge" (i) shall
mean and apply to the actual knowledge of Howard J. Edelman,
Executive Vice President of HCMC, Laurence Glickman, Vice
President of HCMC, and Jeffrey B. Kushen, Asset Manager,
HCMC, and not to any other parties, (ii) shall mean the
actual knowledge of such individuals, without any
investigation or inquiry of any kind, and (iii) shall not
mean such individuals are charged with knowledge of the
acts, omissions and/or knowledge of Seller's agents or
employees.
Notwithstanding anything contained in this Agreement to
the contrary, Seller shall have no liability for breaches of
any representations, warranties and certifications (the
"Representations") which are made by Seller herein or in any
of the documents or instruments required to be delivered by
Seller hereunder if Purchaser, its officers, employees,
shareholders, members, partners, or agents had knowledge of
such breach by Seller at Closing and Purchaser shall not
have the right to bring any lawsuit or other legal action
against Seller, nor pursue any other remedies against
Seller, as a result of the breach of such Representation
caused thereby, but Purchaser's sole right shall be to
terminate this Agreement in which event, the Earnest Money
shall be returned to Purchaser.
7. Purchase As-Is. EXCEPT FOR THE REPRESENTATIONS OF
SELLER EXPRESSLY SET FORTH IN SECTION 6 OF THIS AGREEMENT,
PURCHASER WARRANTS AND ACKNOWLEDGES TO AND AGREES WITH
SELLER THAT PURCHASER IS PURCHASING THE PROPERTY IN ITS "AS-
IS, WHERE IS" CONDITION "WITH ALL FAULTS" AS OF THE CLOSING
DATE AND SPECIFICALLY AND EXPRESSLY WITHOUT ANY WARRANTIES,
REPRESENTATIONS OR GUARANTEES, EITHER EXPRESS OR IMPLIED, AS
TO ITS CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE,
MERCHANTABILITY, OR ANY OTHER WARRANTY OF ANY KIND, NATURE,
OR TYPE WHATSOEVER FROM OR ON BEHALF OF SELLER. EXCEPT FOR
THE REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH IN SECTION
6 OF THIS AGREEMENT, SELLER SPECIFICALLY DISCLAIMS ANY
WARRANTY, GUARANTY OR REPRESENTATION, ORAL OR WRITTEN, PAST
OR PRESENT, EXPRESS OR IMPLIED, CONCERNING (A) THE VALUE,
NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING,
WITHOUT LIMITATION, THE WATER, STRUCTURAL INTEGRITY, SOIL
AND GEOLOGY; (B) THE INCOME TO BE DERIVED FROM THE PROPERTY;
(C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL
ACTIVITIES AND USES WHICH PURCHASER MAY CONDUCT THEREON,
INCLUDING THE POSSIBILITIES FOR FUTURE DEVELOPMENT OF THE
PROPERTY; (D) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS
OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF
ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (E) THE
HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (F) THE
MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY,
INCORPORATED INTO THE PROPERTY; (G) THE MANNER, QUALITY,
STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY; (H) THE
PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR
ADJACENT TO THE PROPERTY OR ANY OTHER ENVIRONMENTAL MATTER
OR CONDITION OF THE PROPERTY; OR (I) ANY OTHER MATTER WITH
RESPECT TO THE PROPERTY. PURCHASER ACKNOWLEDGES AND AGREES
THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF
SELLER CONTAINED IN SECTION 6 OF THIS AGREEMENT, ANY
INFORMATION PROVIDED BY OR ON BEHALF OF SELLER WITH RESPECT
TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES AND
THAT SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR
VERIFICATION OF SUCH INFORMATION AND MAKES NO
REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH
INFORMATION. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY
ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE PROPERTY, OR THE OPERATION
THEREOF, FURNISHED BY ANY REAL ESTATE BROKER, AGENT,
EMPLOYEE, SERVANT OR OTHER PERSON EXCEPT FOR THE EXPRESS
REPRESENTATIONS SET FORTH IN SECTION 6 OF THIS AGREEMENT.
PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT PURCHASER IS
A SOPHISTICATED AND EXPERIENCED PURCHASER OF PROPERTIES SUCH
AS THE PROPERTY AND HAS BEEN DULY REPRESENTED BY COUNSEL IN
CONNECTION WITH THE NEGOTIATION OF THIS AGREEMENT. EXCEPT
AS MAY OTHERWISE BE PROVIDED HEREIN, SELLER HAS MADE NO
AGREEMENT TO ALTER, REPAIR OR IMPROVE ANY OF THE PROPERTY.
8. Purchaser's Representations, Warranties and Covenants.
Purchaser hereby represents, warrants and covenants as
follows:
8.1 Power. Purchaser has the legal power, right and
authority to enter into this Agreement and the instruments
referenced herein and to consummate the transactions
contemplated hereby.
8.2 Requisite Action. All requisite action
(corporate, trust, partnership or otherwise) has been taken
by Purchaser in connection with entering into this Agreement
and the instruments referenced herein and the consummation
of the transactions contemplated hereby. No consent of any
partner, shareholder, member, creditor, investor, judicial
or administrative body, authority or other party is required
which has not been obtained to permit Purchaser to enter
into this Agreement and consummate the transaction
contemplated hereby.
8.3 Authority. The individuals executing this
Agreement and the instruments referenced herein on behalf of
Purchaser have the legal power, right and actual authority
to bind Purchaser to the terms and conditions hereof and
thereof.
8.4 Validity. This Agreement and all documents
required hereby to be executed by Purchaser are and shall be
valid, legally binding obligations of and enforceable
against Purchaser in accordance with their terms.
8.5 Conflicts. Neither the execution and delivery of
this Agreement and documents referenced herein, nor the
incurrence of the obligations set forth herein, nor the
consummation of the transactions herein contemplated, nor
referenced herein conflict with or result in the material
breach of any terms, conditions or provisions of or
constitute a default under, any bond, note, or other
evidence of indebtedness or any contract, lease or other
agreements or instruments to which Purchaser is a party.
8.6 Litigation. There is no action, suit or
proceeding pending or threatened against Purchaser in any
court or by or before any other governmental agency or
instrumentality which would materially and adversely affect
the ability of Purchaser to carry out the transactions
contemplated by this Agreement.
8.7 Indemnity. Purchaser shall indemnify and hold the
Indemnified Parties harmless from and against any and all
claims, actions, judgments, liabilities, liens, damages,
penalties, fines, costs and reasonable attorneys= fees,
foreseen or unforeseen, asserted against, imposed on or
suffered or incurred by Seller directly or indirectly
arising out of or in connection with any breach of the
warranties, representations and covenants set forth in this
Section 8 or the inaccuracy of the ERISA Certificate. The
warranties, representations and indemnities set forth in
this Section 8 shall be deemed remade as of Closing and
shall survive Closing, and said warranties and
representations as so remade, and the indemnity obligation
set forth in herein shall be deemed waived unless Seller has
given Purchaser written notice of any such claim prior to
December 31, 1998.
9. Closing Costs. Seller shall pay the following
expenses: (i) the costs to obtain a standard CLTA owner's
title policy; (ii) the costs to obtain the Existing Survey;
(iii) one-half of all escrow fees; (iv) Seller's legal fees
and expenses; and (v) conveyance fees, documentary, stamp
and transfer taxes. Purchaser shall pay the following
expenses: (a) the costs for ALTA coverage and any
endorsements to the title policy; (b) the costs to obtain
the Updated Survey; (c) one-half of all escrow fees; (d)
the fee for the recording of the Deed; (e) all costs and
expenses incurred in connection with the transfer of any
transferable permits, warranties or licenses in connection
with the ownership or operation of the Property; (f) all
costs and expenses associated with Purchaser's financing, if
any; and (g) Purchaser's legal fees and expenses. The
provisions of this Section 9 shall survive Closing or any
termination of this Agreement.
10. Commissions. Seller shall be solely responsible for
the payment of the commission to The Greenwich Group
International LLC. Seller and Purchaser each warrant and
represent to the other that (other than The Greenwich Group
International LLC) neither has had any dealings with any
broker, agent, or finder relating to the sale of the
Property or the transactions contemplated hereby, and each
agrees to indemnify and hold the other and their respective
advisors (including HCMC) harmless against any claim for
brokerage commissions, compensation or fees by any broker,
agent, or finder in connection the sale of the Property or
the transactions contemplated hereby resulting from the acts
of the indemnifying party. The provisions of this Section
10 shall survive Closing.
11. Escrow Closing. It is contemplated that the
transaction contemplated herein shall be closed through an
escrow which shall be opened by the parties with the Escrow
Company within two (2) business days after mutual execution
of this Agreement (the "Escrow"). The parties shall
execute instructions to Escrow Holder consistent with the
terms of this Agreement prior to Closing.
12. Attorneys' Fees and Costs. In the event suit or
action is instituted to interpret or enforce the terms of
this Agreement, or in connection with any arbitration or
mediation of any dispute, the prevailing party shall be
entitled to recover from the other party such sum as the
court, arbitrator or mediator may adjudge reasonable as such
party's costs and attorney's fees, including such costs and
fees as are incurred in any trial, on any appeal, in any
bankruptcy proceeding (including the adjudication of issues
peculiar to bankruptcy law) and in any petition for review.
Each party shall also have the right to recover its
reasonable costs and attorney=s fees incurred in collecting
any sum or debt owed to it by the other party, with or
without litigation, if such sum or debt is not paid within
fifteen (15) days following written demand therefor. This
Section 12 shall survive the Closing or earlier termination
of this Agreement.
13. Notice. All notices, demands, deliveries and
communications (a "Notice") under this Agreement shall be
delivered or sent by: (i) first class, registered or
certified mail, postage prepaid, return receipt requested,
(ii) nationally recognized overnight carrier, or (iii)
facsimile with original Notice sent via overnight delivery
addressed to the address of the party in question set forth
in the first paragraph of this Agreement and copies to the
parties designated below or to such other address as either
party may designate by Notice pursuant to this Section 13.
Notices shall be deemed given (x) three business days after
being mailed as provided in clause (i) above, (y) one
business day after delivery to the overnight carrier as
provided in clause (ii) above, or (z) on the day of the
transmission of the facsimile so long as it is received in
its entirety by 5:00 p.m. (Chicago, Illinois time) on such
day and the original of such Notice is received the next
business day via overnight mail as provided in clause (iii)
above.
Notices to Seller copy to: Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street, 23rd Floor
Los Angeles, California 90071
ATTN: Mark L. Bronson, Esq.
facsimile no. (213) 627-0705
Notices to Purchaser copy to: Christensen, Miller, Fink, Jacobs,
Glaser, Weil and Shapiro, LLP
2121 Avenue of the Stars, 18th Floor
Los Angeles, California 90067
ATTN: Peter M. Weil, Esq.
facsimile no. (310) 556-2920
14. Fire or Other Casualty; Condemnation.
14.1 If the Property or any part thereof is damaged by fire
or other casualty prior to the Closing Date which would cost
in excess of $750,000 to repair (as determined by an
insurance adjuster selected by the insurance carriers),
Purchaser may terminate this Agreement by written notice to
Seller given on or before the earlier of (i) twenty (20)
days following such casualty or (ii) the Closing Date. In
the event of such termination, this Agreement shall be of no
further force and effect and, except for the Surviving
Obligations, neither party shall thereafter have any further
obligation under this Agreement, and Seller shall direct the
Title Company to promptly return all Earnest Money to
Purchaser. If Purchaser does not elect to terminate this
Agreement or the cost of repair is determined by said
adjuster to be less than $750,000, then the Closing shall
take place as herein provided without abatement of the
Purchase Price, and Seller shall assign and transfer to
Purchaser on the Closing Date, without warranty or recourse,
all of Seller=s right, title and interest to the balance of
insurance proceeds paid or payable to Seller on account of
such fire or casualty remaining after reimbursement to
Seller for the total amount of all costs and expenses
incurred by Seller in connection therewith including but not
limited to making emergency repairs, securing the Property
and complying with applicable governmental requirements.
Seller shall pay to Purchaser the amount of the deductible
of any of Seller's applicable insurance policies.
14.2 If any material portion of the Property is taken
in eminent domain proceedings prior to Closing, Purchaser
may terminate this Agreement by notice to Seller given on or
before the earlier of (i) twenty (20) days after such taking
or (ii) the Closing Date, and, in the event of such
termination, this Agreement shall be of no further force and
effect and, except for the Surviving Obligations, neither
party shall thereafter have any further obligation under
this Agreement, and Seller shall direct the Title Company to
promptly return all Earnest Money to Purchaser. If
Purchaser does not so elect to terminate or if the taking is
not material, then the Closing shall take place as herein
provided without abatement of the Purchase Price, and Seller
shall deliver or assign to Purchaser on the Closing Date,
without warranty or recourse, all of Seller's right, title
and interest in and to all condemnation awards paid or
payable to Seller.
15. Operations After Date of This Agreement. Seller
covenants and agrees with Purchaser that:
(a) after the date hereof through the Closing, Seller
will (except as specifically provided to the contrary
herein):
(i) Refrain from transferring any of the Property
or creating on the Property any easements, liens,
mortgages, encumbrances, or other interests which will
survive Closing or permitting any changes to the zoning
classification of the Land;
(ii) Refrain from entering into or amending any
contracts, or other agreements (excluding leases)
regarding the Property (other than contracts in the
ordinary and usual course of business and which are
cancelable by the owner of the Property without penalty
within thirty (30) days after giving notice thereof);
(iii) Continue to operate, maintain, and
repair the Property in a manner consistent with
Seller's current practices;
(iv) Fully comply with the terms of the Leases;
(v) Refrain from offering the Property for sale
or marketing the same; and
(vi) Deliver to Purchaser copies of all leases
entered into after the date hereof and copies of all
Proposals (as defined in Section 15(b) below) with
respect to which no lease has been executed and which
has not expired or been withdrawn, except as provided
otherwise in Section 15(b) below.
(b) after the date hereof through the Closing, Seller
will (except as specifically provided to the contrary
herein); refrain from (i) amending any Leases of any portion
of the Property without Purchaser's consent (which shall not
be unreasonably withheld, conditioned or delayed), (ii)
canceling any of such Leases (provided that Seller may
deliver 3 day notices to pay or quit in connection with
tenant defaults) without Purchaser's consent (which shall not
be unreasonably withheld, conditioned or delayed), or (iii)
executing any new leases without Purchaser's consent (which
shall not be unreasonably withheld, conditioned or delayed).
Purchaser shall have five (5) days from its receipt of a
Proposal to notify Seller in writing of its approval or
rejection of any such Proposal. If no such notice is
received by Seller within such period then Purchaser shall
be deemed to have approved any such Proposal. As used
herein, "Proposal" shall mean a description of the economic
terms of any proposed lease or amendment along with any
financial information on the tenant in Seller's possession
(the "Proposal"). Seller shall have the right to execute
lease documents evidencing a Proposal approved or deemed
approved by Purchaser.
16. Assignment. Purchaser shall not assign this
Agreement without Seller=s prior written consent which
consent may be withheld for any reason or no reason.
Subject to the previous sentence, this Agreement shall apply
to, inure to the benefit of and be binding upon and
enforceable against the parties hereto and their respective
successors and assigns. Seller=s consent to any such
assignment shall be conditioned upon Seller's receipt of the
following not less than five (5) business days prior to the
Closing Date: (i) a duly executed express assumption of all
of the duties and obligations of Purchaser by the proposed
assignee in a form acceptable to Seller, and (ii) an ERISA
certificate, in the form attached hereto as Exhibit B and
the content of which is satisfactory to Seller. Subject to
the foregoing conditions, Seller hereby consents to
Purchaser's assignment to an entity of which Purchaser is
the controlling shareholder, managing member or general
partner. Notwithstanding any such assignment, Purchaser
shall remain fully liable for its obligations under this
Agreement.
17. Remedies.
(a) (i) IN THE EVENT THAT SELLER SHALL FAIL TO
CONSUMMATE THIS AGREEMENT AND SUCH FAILURE IS NOT A RESULT
OF PURCHASER'S DEFAULT OR A TERMINATION OF THIS AGREEMENT BY
PURCHASER OR SELLER PURSUANT TO A RIGHT TO DO SO UNDER THE
PROVISIONS HEREOF, PURCHASER, IN THE CASE WHERE SUCH FAILURE
IS BASED UPON A VOLUNTARY BREACH BY SELLER ("SELLER'S
DEFAULT"), SHALL ONLY BE ENTITLED TO SEEK AT ITS ELECTION,
EITHER: (A) THE REMEDY OF SPECIFIC PERFORMANCE, OR (B)
DAMAGES IN AN AMOUNT NOT TO EXCEED SEVEN HUNDRED FIFTY
THOUSAND DOLLARS ($750,000) IN THE AGGREGATE OF ALL RECOURSE
OF PURCHASER UNDER THE PURCHASE DOCUMENTS (AS DEFINED IN
SECTION 19 HEREOF). IN NO EVENT SHALL SELLER BE LIABLE TO
PURCHASER FOR ANY PUNITIVE, SPECULATIVE OR CONSEQUENTIAL
DAMAGES. IN THE CASE WHERE SUCH FAILURE IS BASED UPON AN
INVOLUNTARY BREACH BY SELLER (I.E., SELLER'S INABILITY TO
CONVEY THE PROPERTY AS A RESULT OF A LIS PENDENS OR
INJUNCTION), PURCHASER, AS ITS SOLE AND EXCLUSIVE REMEDY,
MAY TERMINATE THIS AGREEMENT AND RECEIVE A REFUND OF THE
EARNEST MONEY. IN NO EVENT SHALL PURCHASER BE ENTITLED TO
RECORD A LIS PENDENS OR NOTICE OF PENDENCY OF ACTION AGAINST
THE PROPERTY FOR ANY REASON WHATSOEVER.
(ii) PURCHASER SHALL (A) NOTIFY SELLER OF ITS
ELECTION TO SEEK THE REMEDY OF SPECIFIC PERFORMANCE ON OR
BEFORE THE DATE WHICH IS FORTY FIVE DAYS AFTER THE DATE OF A
SELLER'S DEFAULT AND (B) INSTITUTE PROCEEDINGS SEEKING SUCH
REMEDY ON OR BEFORE THE DATE WHICH IS THIRTY DAYS AFTER THE
DATE OF PURCHASER'S NOTICE.
(iii) PURCHASER SHALL BE DEEMED TO HAVE WAIVED ITS
ELECTION TO SEEK THE REMEDY OF SPECIFIC PERFORMANCE IF
PURCHASER DOES NOT (x) NOTIFY SELLER OF SUCH ELECTION AS
PROVIDED IN SECTION 17(a)(ii) (A) HEREINABOVE , OR (y)
INSTITUTE PROCEEDINGS, SEEKING SUCH REMEDY AS PROVIDED IN
SECTION 17(a)(ii)(B) HEREINABOVE.
(iv) NOTWITHSTANDING ANYTHING IN THIS SECTION
17(a) TO THE CONTRARY, SELLER'S LACK OF DELIVERY OF THE
TENANT ESTOPPEL CERTIFICATES CONTEMPLATED IN SECTION 3.4
ABOVE SHALL NOT CONSTITUTE A BREACH BY SELLER UNDER THIS
AGREEMENT.
(b) IN THE EVENT THAT PURCHASER SHOULD FAIL TO
CONSUMMATE THIS AGREEMENT FOR ANY REASON, EXCEPT SELLER'S
DEFAULT OR THE TERMINATION OF THIS AGREEMENT BY PURCHASER OR
SELLER PURSUANT TO A RIGHT TO DO SO UNDER THE TERMS AND
PROVISIONS HEREOF, THEN SELLER, AS ITS SOLE AND EXCLUSIVE
REMEDY MAY TERMINATE THIS AGREEMENT BY NOTIFYING PURCHASER
THEREOF AND RECEIVE OR RETAIN THE EARNEST MONEY AS
LIQUIDATED DAMAGES, PROVIDED THAT THIS PROVISION SHALL NOT
LIMIT SELLER'S RIGHTS TO RECEIVE REIMBURSEMENT FOR ATTORNEYS
FEES AND TO PURSUE AND RECOVER ON A CLAIM WITH RESPECT TO
ANY SURVIVING OBLIGATIONS. THE PARTIES AGREE THAT SELLER
WILL SUFFER DAMAGES IN THE EVENT OF PURCHASER'S DEFAULT ON
ITS OBLIGATIONS. ALTHOUGH THE AMOUNT OF SUCH DAMAGES IS
DIFFICULT OR IMPOSSIBLE TO DETERMINE, THE PARTIES AGREE THAT
THE AMOUNT OF THE EARNEST MONEY IS A REASONABLE ESTIMATE OF
SELLER'S LOSS IN THE EVENT OF PURCHASER'S DEFAULT. THUS,
SELLER SHALL ACCEPT AND RETAIN THE EARNEST MONEY AS
LIQUIDATED DAMAGES BUT NOT AS A PENALTY. EXCEPT AS
OTHERWISE SET FORTH IN THIS SECTION 17(b), SUCH LIQUIDATED
DAMAGES SHALL CONSTITUTE SELLER'S SOLE AND EXCLUSIVE REMEDY.
IN THE EVENT SELLER IS ENTITLED TO THE EARNEST MONEY AS
LIQUIDATED DAMAGES AND TO THE EXTENT SELLER HAS NOT ALREADY
RECEIVED THE EARNEST MONEY, THE EARNEST MONEY SHALL BE
IMMEDIATELY PAID TO SELLER BY THE TITLE COMPANY UPON RECEIPT
OF WRITTEN NOTICE FROM SELLER THAT PURCHASER HAS DEFAULTED
UNDER THIS AGREEMENT, AND PURCHASER AGREES TO TAKE ALL SUCH
ACTIONS AND EXECUTE AND DELIVER ALL SUCH DOCUMENTS NECESSARY
OR APPROPRIATE TO EFFECT SUCH PAYMENT.
SELLER AND PURCHASER ACKNOWLEDGE THAT THEY HAVE READ
AND UNDERSTAND THE PROVISIONS OF THE FOREGOING LIQUIDATED
DAMAGES PROVISION AND BY THEIR SIGNATURES IMMEDIATELY BELOW
AGREE TO BE BOUND BY ITS TERMS.
SELLER'S INITIALS: PURCHASER'S INITIALS:
/s/ HJE /s/ VJC
18. Miscellaneous.
18.1 Entire Agreement. This Agreement, together with
the exhibits attached hereto, constitute the entire
agreement of the parties hereto regarding the purchase and
sale of the Property, and all prior agreements,
understandings, representations and statements, oral or
written, are hereby merged herein. In the event of a
conflict between the terms of this Agreement and any prior
written agreements, the terms of this Agreement shall
prevail. This Agreement may only be amended or modified by
an instrument in writing, signed by the party intended to be
bound thereby.
18.2 Time. All parties hereto agree that time is of
the essence in this transaction. If the time for
performance of any obligation hereunder shall fall on a
Saturday, Sunday or holiday (national, in the State of
Illinois or the state in which the Property is located) such
that the transaction contemplated hereby can not be
performed, the time for performance shall be extended to the
next such succeeding day where performance is possible.
18.3 Counterpart Execution. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original. Counterparts may be executed by
facsimile, provided that any party executing by facsimile
shall promptly execute and deliver original copies of this
Agreement.
18.4 Governing Law. THIS AGREEMENT SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF CALIFORNIA
AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
18.5 Publicity. Seller and Purchaser hereby covenant
and agree that, at all times after the date of execution
hereof and continuing after the Closing, unless consented to
in writing by the other party, no press release or other
public disclosure concerning this transaction shall be made,
and each party agrees to use best efforts to prevent
disclosure of this transaction. Notwithstanding the
foregoing, Purchaser may issue press releases or other
disclosures to the extent required by applicable securities
laws. Purchaser agrees to use its best efforts to obtain
Seller's approval of the form and substance of any such
disclosure.
18.6 Recordation. Purchaser shall not record this
Agreement or a memorandum or other notice thereof in any
public office without the express written consent of Seller.
A breach by Purchaser of this covenant shall constitute a
material default by Purchaser under this Agreement.
18.7 Benefit. This Agreement is for the benefit of
Purchaser and Seller, and except as provided in the
indemnity granted by Purchaser under Paragraphs 3.2 and 8.7
with respect to the Indemnified Parties listed therein, no
other person or entity will be entitled to rely on this
Agreement, receive any benefit from it or enforce any
provisions of it against Purchaser or Seller.
18.8 Section Headings. The Section headings contained
in this Agreement are for convenience only and shall in no
way enlarge or limit the scope or meaning of the various and
several Sections hereof.
18.9 Further Assurances. Purchaser and Seller agree to
execute all documents and instruments reasonably required in
order to consummate the purchase and sale herein
contemplated. The obligations of the parties under this
Section 18.9 shall survive the Close of Escrow through
December 31, 1998. Neither party shall be required to take
any action under this Section 18.9 after the Close of
Escrow, which causes it to incur any additional liability or
expense.
18.10 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.
18.11 WAIVER OF TRIAL BY JURY. SELLER AND
PURCHASER, TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY
EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER
OR WITH RESPECT TO THIS AGREEMENT, OR IN ANY WAY CONNECTED
WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE
PARTIES HERETO WITH RESPECT TO THIS AGREEMENT OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE
EXTENT THEY MAY LEGALLY DO SO, SELLER AND PURCHASER HEREBY
AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION,
OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A
JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR
PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY
JURY.
SELLER'S INITIALS: PURCHASER'S INITIALS:
/s/ HJE /s/ VJC
18.12 Independent Counsel. Purchaser and Seller
each acknowledge that: (a) they have been represented by
independent counsel in connection with this Agreement; (b)
they have executed this Agreement with the advice of such
counsel; and (c) this Agreement is the result of
negotiations between the parties hereto and the advice and
assistance of their respective counsel. The fact that this
Agreement was prepared by Seller's counsel as a matter of
convenience shall have no import or significance. Any
uncertainty or ambiguity in this Agreement shall not be
construed against Seller because Seller's counsel prepared
this Agreement in its final form.
18.13 Governmental Approvals. Nothing contained in
this Agreement shall be construed as authorizing Purchaser
to apply for a zoning change, variance, subdivision maps,
lot line adjustment, or other discretionary governmental
act, approval or permit with respect to the Property prior
to the Closing, and Purchaser agrees not to do so.
Purchaser agrees not to submit any reports, studies or other
documents, including, without limitation, plans and
specifications, impact statements for water, sewage,
drainage or traffic, environmental review forms, or energy
conservation checklists to any governmental agency, or any
amendment or modification to any such instruments or
documents prior to the Closing. Purchaser's obligation to
purchase the Property shall not be subject to or conditioned
upon Purchaser's obtaining any variances, zoning amendments,
subdivision maps, lot line adjustment or other discretionary
governmental act, approval or permit.
18.14 No Waiver. No covenant, term or condition
of this Agreement other than as expressly set forth herein
shall be deemed to have been waived by Seller or Purchaser
unless such waiver is in writing and executed by Seller or
Purchaser, as the case may be.
18.15 Discharge and Survival. The delivery of the
Deed by Seller, and the acceptance thereof by Purchaser
shall be deemed to be the full performance and discharge of
every covenant and obligation on the part of Seller to be
performed hereunder except the Surviving Obligations.
Except as otherwise expressly provided herein, no action
shall be commenced after the Closing on any covenant or
obligation except the Surviving Obligations.
19. Exculpation of Seller and Related Parties.
Notwithstanding anything to the contrary contained in this
Agreement or in any exhibits attached hereto or in any
documents executed in connection herewith (collectively,
including this Agreement, said exhibits and any such
document, 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 be limited to an amount not to exceed
$750,000 the aggregate of all recourse of Purchaser under
the Purchase Documents; 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 or HCMC, or against any of their respective
shareholders, directors, officers, employees, agents,
constituent partners, members, beneficiaries, trustees or
representatives except as provided in (i) above with respect
to Seller.
20. Audit Letter. Seller agrees, upon Purchaser's request
after Closing, to furnish Purchaser's independent auditor
with two (2) representation letters regarding the books and
records of the Property, in substantially the same form as
Exhibit N attached hereto. The first such letter shall
cover calendar year 1997. The second such letter shall
cover the period of calendar year 1998 up to the Closing
Date. Seller shall have no obligation to deliver more than
these two (2) such letters, or to deliver any such letter
requested later than one (1) year after the Closing Date.
Purchaser shall indemnify, defend and hold Seller harmless
from and against any and all claims, actions, judgments,
liabilities, liens, damages, penalties, fines and costs
(including, without limitation, reasonable attorneys' fees)
(collectively, the "Liabilities"), asserted against, imposed
on or suffered or incurred by Seller arising out of or in
connection with such representation letter, including as a
result of any inaccuracies or misrepresentations therein.
IN WITNESS WHEREOF, the parties hereto have caused
these presents to be made as of the day and year first above
stated.
SELLER:
CALABASAS TECH CENTER, INC.,
a Delaware corporation
By: /s/ Howard J. Edelman
Howard J. Edelman
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
Its: President and COO
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
To: Chicago Title Company ("Escrow Agent") Escrow No.:8307017-M23
16969 Von Karman, Suite 200 Title Order No.: 8137505-X59; 158179NBU
Irvine, California 92606 Title Officer: Clark McKinnon
Escrow Officer: Margie Wheeler
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW
INSTRUCTIONS ("Agreement") is made and entered into and is
effective as of the 12th day of May, 1998 (the "Effective Date"),
by and between THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, a
New York mutual life insurance company ("Seller"), and ARDEN
REALTY LIMITED PARTNERSHIP, a Maryland limited partnership ("Buyer").
Recitals
A. Seller is the owner of the Property (as defined below).
B. Seller has agreed to sell the Property to Buyer, and Buyer
has agreed to purchase the Property from Seller, such purchase
and sale being made upon and subject to the terms and conditions
set forth in this Agreement.
Agreement
NOW, THEREFORE, in consideration of the foregoing recitals,
the mutual covenants set forth in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Buyer and Seller hereby agree as set
forth below.
1. Purchase and Sale of the Property. Seller agrees to sell,
assign, convey, and transfer to Buyer all of Seller=s right,
title and interest in and to the following real and personal
property described in subsections (a) through (g) below
(collectively referred to herein as the "Property"), and Buyer
hereby agrees to purchase and accept the Property, and assume the
obligations in connection therewith, subject to and in accordance
with the terms and conditions contained in this Agreement:
(1) Land. Subject to general and special real estate taxes and
assessments, and all matters of record or apparent from an
inspection or survey, Seller's interest in that certain real
property located at 100 Oceangate, in the City of Long Beach,
County of Los Angeles, State of California (the "Land"), which
real property is more particularly described on Exhibit "A",
together with that certain leasehold interest of Seller more
particularly described on Exhibit "A-1" attached hereto.
(2) Improvements. Those certain fixtures and improvements
located on the Land and described on Exhibit AB@ attached hereto
(collectively, the "Improvements"), including one office
building, parking structure, driveways, hardscaping, and related
improvements, together with fixtures attached thereto, it being
understood and agreed, however, that Buyer shall have no right,
title or interest in or to any of such fixtures and improvements
which are the property of the tenants of the Property (the
"Tenants") under the Leases (as defined below). The Land and the
Improvements may be collectively referred to herein as the "Real
Property."
(3) Personalty. That certain tangible personal property of
Seller which is located on or in the Land or the Improvements and
which is described on Exhibit "B" attached hereto (collectively,
the "Personalty"), it being understood and agreed, however, that
Buyer shall have no right, title or interest in or to (and the
"Personalty" shall not include) (i) any personal property on the
Improvements which is the personal property of the Tenants
pursuant to the Leases, and (ii) any lap-top computers which are
the personal property of Seller and are located in the on-site
offices of the Real Property.
(4) Appurtenances. All of Seller's rights, privileges and
easements appurtenant to the Land, all development rights and air
rights relating to the Land and any and all easements,
rights-of-way and other appurtenances used in connection with the
beneficial use and enjoyment of the Land, but excluding all
water, water rights and water stock, and excluding minerals and
mineral rights of every kind (including oil, gas and other
hydrocarbon substances) on or under the Land.
(5) Leases. Seller's interest in all leases, subleases,
licenses, concessions, and other forms of agreement in effect as
of the Effective Date or entered into after the Effective Date,
and remaining in effect as of the Closing Date (as defined
below), granting to any party or parties the right of use or
occupancy of any portion of the Land and/or Improvements, and all
renewals, modifications, amendments, guarantees, and other
agreements affecting the same (together, the "Leases").
(6) Awards. All right, title and interest of Seller in and to
any unpaid awards for damages to the Land and/or Improvements
resulting from any taking in eminent domain or by reason of
change of grade of any street accruing after closing of the
purchase and sale pursuant to this Agreement.
(7) Intangible Property. Except the name of Seller or
affiliated entities, all of the interest of Seller in any
intangible property now or hereafter owned by Seller and used or
designed for use in connection with the Land, Improvements and/or
Personalty, and any contract or lease rights, licenses, permits,
certificates of occupancy, franchises, agreements, utility
contracts and agreements (including sewer and water line
agreements), telephone listings and numbers used by Seller at the
Real Property, unexpired claims, signs, trade names, logos,
trademarks and service marks arising from or related to the Real
Property (other than Seller's name or marks), warranties,
guaranties and sureties belonging to Seller, or other rights
relating to the ownership, development, construction, design, use
and operation of the Land and/or Improvements (together,
"Intangible Property"), so long as and to the extent that said
Intangible Property may be transferred or assigned, and is not
specifically excluded from the Bill of Sale (as defined below).
Notwithstanding anything to the contrary herein, Intangible
Property does not include (i) any refunds of taxes or assessments
which were paid by Seller or Seller's predecessor in interest,
prior to close of the purchase and sale pursuant hereto, or of
insurance premiums paid by Seller or Seller's predecessor-in-
interest and attributable to the period prior to the Closing Date
(without regard to when such refunds are received), (ii)
condemnation or other awards which represent refunds of amounts
paid by Seller or any predecessor-in-interest prior to the
Closing Date or awards for property damage (other than amounts to
be credited to Buyer pursuant to Section 13 of this Agreement) or
otherwise relating to the Property, (iii) any claims of Seller
existing as of the Closing Date against Tenants for delinquent
rents, to the extent not subsequently paid or credited to Seller,
or (iv) claims of Seller made pursuant to or arising in
connection with the litigation matters set forth on Exhibit "C"
attached hereto (the "Litigation Claims"); provided, however,
that Litigation Claims do not include any rents or other income relating
to the period after the Closing Date with respect to Leases as to
which the Tenant continues to occupy the leased premises after
the Closing Date.
2. Opening of Escrow and Deposit.
(1) General Instructions. Chicago Title Company is hereby
designated as escrow holder ("Escrow Agent"), to act in
accordance with this Agreement. Escrow Agent's general
conditions or provisions, which are attached hereto as
Exhibit "D", are incorporated by reference herein (with the
changes noted thereon); provided, however, that in the event of
any inconsistency between Exhibit "D" and any other provisions of
this Agreement, the provisions of this Agreement shall control
over the provisions of Exhibit "D." Buyer and Seller shall each
execute, deliver and be bound by such further escrow instructions
or other instruments as may be reasonably requested by the other
party or by Escrow Agent from time to time, so long as the same
are consistent with this Agreement, and upon execution thereof by
both Seller and Buyer, such escrow instructions shall be deemed
to be a material part of this Agreement. Escrow Agent needs to
be concerned only with those provisions of this Agreement that
instruct it to perform specific acts or with respect to which
escrow holders generally and reasonably would be expected to act.
Escrow Agent shall comply, but shall have no liability whatsoever
for complying, with the unilateral instructions of only one party
without the consent of the other party hereto if expressly
required to do so in this Agreement.
(2) Opening of Escrow; Deposit. Concurrently with its execution
of this Agreement, Buyer shall open an escrow with Escrow Agent
(the "Escrow") by delivering to Escrow (with a copy to Seller),
an executed copy of this Agreement, and a deposit in the form of
immediately available funds in the amount of Five Hundred
Thousand Dollars ($500,000.00) (such deposit, together with all
interest accrued thereon, is referred to herein as the
"Deposit"). Escrow Agent shall retain possession of the Deposit
until delivery or return thereof is permitted or required under
this Agreement. The Deposit shall be deposited by Escrow Agent
in an interest-bearing account with the interest thereon to be
disbursed with the Deposit in accordance with the provisions hereof.
(3) Disposition of Deposit. As of 5:00 p.m. Pacific Daylight
Time ("PDT") on the date of expiration of the Investigation
Period (as defined below), without written cancellation of the
Escrow by Buyer, the Deposit shall immediately become non-
refundable (except upon (i) default by Seller (giving effect to
any applicable cure period), or (ii) failure to occur of any of
the conditions set forth in subsection 7(a) below other than as a
result of the conduct or omissions of Buyer), shall immediately
be deemed to have been fully earned by Seller, and shall be
delivered by Escrow Agent to Seller on or before the date which
is one business day after the expiration of the Investigation
Period. If Buyer provides Notice (as defined below) to Seller,
during the Investigation Period, of Buyer's cancellation of
Escrow as a result of information obtained by Buyer during the
Investigation Period (other than information relating to Approved
Conditions, as defined below), then Escrow Agent shall return the
Deposit to Buyer, net only of Buyer's share of the costs and
expenses of Escrow and title. If the purchase and sale shall
close pursuant to this Agreement, the Deposit shall be credited
against the Purchase Price (as defined below) at the close of Escrow.
(4) Closing. The Escrow shall close, as evidenced by
recordation of a Grant Deed in accordance herewith (the
"Closing"), on a date mutually agreed to by the parties, but in
all events on or before May 22, 1998 at 5:00 p.m. PDT (the
"Outside Closing Date"). If Buyer does not cancel the Escrow
during the Investigation Period as herein permitted, and Escrow
thereafter fails to close on or before the expiration of the
Outside Closing Date, for any reason, then (i) this Agreement
shall terminate and, except for provisions which expressly
survive a termination, neither party shall have any further
obligation to the other hereunder; and (ii) Escrow shall be
canceled and the Deposit shall be distributed to Seller;
provided, however, that if Escrow fails to close on or before the
Outside Closing Date due solely to a default by Seller or to a
failure to satisfy any of the conditions set forth in subsection
7(a) below other than as a result of the conduct or omission of
Buyer, then the Deposit shall be distributed to Buyer.
(1) 3. Purchase Price. The "Purchase Price" for the Property
shall be Twenty-Three Million Four Hundred Thousand Dollars
($23,400,000.00) payable in immediately available funds upon
Closing, and otherwise in accordance with the terms and
conditions contained in this Agreement.
4. Prorations. The following items shall be prorated as of the
date of Closing (the "Closing Date") and such prorations shall be
reflected on the settlement statements prepared by Escrow Agent
on the Closing Date and shall serve to adjust the Purchase Price.
Such prorations shall be made on the basis of a 365-day year, as
of 12:01 a.m. on the Closing Date.
(1) Rents.
(1) All rentals, receipts and other revenues from the Property,
including base rents, percentage rents and additional rents
(other than those referenced in Section 4(b) below)
(collectively, "Rents"), which have been actually received by
Seller and which are payments under Leases for the period from
and after the Closing Date, shall be credited to Buyer, and Buyer
shall be entitled to collect all Rents which are delinquent or
due on or after the Closing Date.
(2) All Rents collected by Buyer after the Closing Date with
respect to each Lease for which Rent payments are delinquent at
Closing by not more than thirty (30) days and subject to Seller=s
retained right to sue therefor with respect to delinquent Rents
accruing prior to the Closing Date, to the extent not paid or
credited to Seller, shall be credited and paid by Buyer as
follows: first to Seller for amounts due before the Closing Date,
but unpaid prior to the Closing Date, and second to Buyer;
(3) All Rents collected by Buyer after the Closing Date with
respect to each Lease for which Rent payments are delinquent at
Closing by more than thirty (30) days shall (subject to Seller=s
retained right to sue therefor with respect to delinquent Rents
accruing prior to the Closing Date, to the extent not paid or
credited to Seller) be credited and paid by Buyer as follows:
first to Buyer in an amount equal to amounts due as of the date
of collection but after the Closing Date, and second to Seller in
an amount equal to amounts due prior to the Closing Date and
unpaid as of the Closing Date;
(4) Notwithstanding the foregoing, with respect to any Lease for
which Rent is paid in arrears, Rent received by Buyer after the
Closing shall be credited to the Rent in arrears for the previous
month before it is credited to current month or advance Rents;
(5) Any delinquent Rents which, as so credited, relate in whole
or part to any period prior to the Closing Date shall be remitted
by Buyer to Seller when collected by Buyer (net only of Buyer's
proportionate share of any reasonable out-of-pocket collection
expenses actually incurred by Buyer); and
(6) In addition to the foregoing, any tenant improvements,
leasing commissions or other monetary obligations of the landlord
under Leases entered into after the Effective Date pursuant to
Section 6(c) below, which obligations have been paid by Seller,
shall be credited to Seller.
(1) (2) Lease Operating Cost Pass-Throughs.
(1) All operating cost pass-throughs for taxes, utilities,
insurance, common area maintenance charges or other current
operating costs and cost of living escalation amounts ("CAM
Charges") (A) paid by Tenants and which have been actually
received by Seller and which are allocable to the period from and
after the Closing Date, shall be credited to Buyer, and (B)
payable by Tenants but unpaid as of the Closing Date and
attributable to the period before the Closing Date, shall
(subject to Seller's retained right to sue Tenants for such
amounts) be subject to collection by Buyer after the Closing Date
and upon such collection shall be credited and paid by Buyer as
set forth herein below.
(2) All CAM Charges collected by Buyer after the Closing Date
with respect to each Lease for which such payments are delinquent
at Closing by not more than thirty (30) days shall (subject to
Seller's retained right to sue therefor with respect to
delinquent CAM Charges accruing prior to the Closing Date, to the
extent not paid or credited to Seller) be credited and paid by
Buyer as follows: first to Seller for amounts due before the
Closing Date, but unpaid prior to the Closing Date, and second to
Buyer;
(3) All CAM Charges collected by Buyer after the Closing Date
with respect to each Lease for which such payments are delinquent
at Closing by more than thirty (30) days shall (subject to
Seller's retained right to sue therefor with respect to
delinquent CAM Charges accruing prior to the Closing Date, to the
extent not paid or credited to Seller) be credited and paid by
Buyer as follows: first to Buyer in an amount equal to amounts
due as of the date of collection but after the Closing Date, and
second to Seller in an amount equal to amounts due prior to the
Closing Date and unpaid as of the Closing Date; and
(4) With respect to any Lease for which CAM Charges are paid in
arrears, CAM Charges received by Buyer after the Closing under
such Lease shall be credited to the CAM Charges in arrears before
the same are credited to current month or advance CAM Charges
under such Lease. Any delinquent CAM Charges which, as so
credited, relate in whole or part to any period prior to the
Closing Date shall be remitted by Buyer to Seller when collected
by Buyer (net only of Buyer's proportionate share of any
reasonable out-of-pocket collection expenses actually incurred by
Buyer).
(3) Property Taxes. All real property taxes for the current
(1997-98) tax year which are due and payable on or before the
Closing Date and all real property taxes for years prior thereto
shall be paid by Seller on or before the Closing Date, and
prorated as of the Closing Date for the 1997-98 tax year (on the
basis of the portion of the 1997-98 tax year which falls after
the Closing Date, and based upon the most recent assessment and
levy). Any adjustments to such taxes for the 1997-98 tax year
(with the exception of any readjustment as a result of the sale
contemplated hereby) shall be adjusted between Seller and Buyer
promptly upon receipt by Buyer of the actual bills for such
taxes. Seller shall (subject to any refund rights of tenants) be
entitled to retain for its own account any and all refunds
(whenever received) of taxes and assessments paid by Seller prior
to the Closing Date, including any of the same that shall result
from pending property tax appeals, if any, relating to the
Property or the personalty associated therewith.
(4) Assessments. All assessments, special assessments and other
like charges imposed against the Property, or any part thereof,
by reason of roadways, utility lines, streets, alleys or other
improvements in existence, under construction or planned and
payable on or prior to the Closing Date shall be prorated to such
date. All such assessments, special assessments and other
charges affecting the Property and payable after the Closing Date
shall be the sole responsibility of Buyer. All pending refunds
of assessments paid by Seller prior to the Closing Date, if any,
shall be delivered to and retained by Seller.
(5) Security Deposits. All security and other deposits, if any,
including any accrued interest thereon if such interest is
required to be remitted to Tenants pursuant to their respective
Leases, received by Seller on or before the Closing Date on
behalf of any Tenants under any Leases (and not subject to
current or past application against Lease obligations pursuant to
the Leases), shall be credited to Buyer, and Escrow shall deliver
a notice to the Tenants, in the form of Exhibit "E": attached
hereto, advising Tenants that: (i) Buyer has purchased the
Property, (ii) the security deposit, if any, has been delivered
to Buyer in connection with such sale, and (iii) Seller is
relieved of any and all liability for any such security deposit.
(6) Utility Charges and Other Expenses. Prepaid water, sewer,
and other utility charges and similar Property expenses allocable
to the period from and after the Closing Date shall be credited
to Seller, and accrued water, sewer, and other utility charges
and similar Property expenses shall be credited to Buyer. After
the Closing, outside of Escrow, the parties shall make any
readjustments necessary based upon a final billing obtained by
Buyer or actual subsequent readings of utility meters respecting
that billing period in which the Closing occurred. All utility
security deposits, if any, shall either be retained by Seller
without adjustment or, at Seller's option, shall be delivered to
Buyer and credited to Seller.
(7) Service Contracts. Prepaid charges in connection with any
Service Contracts (as defined below) which Buyer assumes pursuant
hereto, and any licenses or permits issued in connection with the
Property (to the extent transferrable) shall be credited to
Seller. Accrued charges payable for the period up to the Closing
Date and unpaid as of the Closing in connection with such Service
Contracts, licenses or permits (to the extent transferrable)
shall be credited to Buyer.
(8) Tenant Allowances and Leasing Commissions. Amounts due from
Seller for tenant improvements and leasing commissions under
Leases (other than Leases or Lease modifications approved by
Buyer under Section 6), with respect to unpaid tenant improvement
costs, or leasing commissions (excluding any commissions which
may be due after the Effective Date with respect to options,
extensions, expansions or renewals), which amounts are unpaid as
of the Closing Date, shall be credited to Buyer on the Closing
Date, and at Closing, Buyer shall assume the liability for
payment thereof. Seller shall receive a credit for all amounts
paid by Seller for leasing commissions and tenant improvements
pursuant to Section 6 below (including without limitation in
connection with the proposed Lease to Michael Danner and all
other Leases approved by Buyer under Section 6 below; provided,
however, that the leasing commissions and tenant improvement
expenses for the proposed Lease to Carroll, Kelly & Trotter with
respect to Suite 800 (the "Trotter Lease"), having been approved
by Buyer pursuant to Section 6 below, shall be split 50% each,
with the initial credit to Seller at Closing to be (i) $30,714.62
in favor of Seller (assuming no approved change orders prior to
the Closing Date) in connection with the tenant improvement
construction contract, and (ii) $5,090.70 for leasing
commissions, with additional payments to be made by Buyer to
Seller, post-Closing in the event that the actual costs under the
construction contract increase as a result of change orders, if
any, which increase the cost of construction and are consented to
by Buyer, but which are not required to be paid for by the
tenant, with Buyer's share of such additional costs to be paid by
Buyer to Seller within ten (10) days after Seller's written
request therefor and delivery of copies of the change orders
evidencing such increased costs. In connection with the Closing,
Seller shall deliver to Buyer any tenant improvement funds paid
by Tenants and held by Seller as of the Closing Date with respect
to uncompleted tenant improvements or which are subject to refund
to Tenants and Buyer shall assume Seller's liability to provide
such tenant improvements and make such refunds: provided,
however, that Buyer shall not assume the obligations to complete
tenant improvements under the Trotter Lease (it being understood
that Seller shall be responsible for completion of such
improvements and payment of such expenses). In addition to the
foregoing, an amount equal to the value of "free rent," if any,
specified in the Leases for the one (1) year period commencing on
the Closing Date (exclusive of any Leases or Lease modifications
approved by Buyer under Section 6), to the extent the existence
of such free rent was not disclosed to Buyer in the offering
circular or pursuant to other materials delivered to Buyer on or
before the Effective Date, shall be credited to Buyer on the
Closing Date, by multiplying the number of months of free rent
with respect to each particular Lease during the one (1) year
period following the Closing Date, by the base monthly rental
rate payable under that Lease in the first month in which rent is
payable. On or before 9:00 a.m. PDT on May 8 , 1998, Buyer shall
deliver to Seller a list of Leases as to which free rent is due
within the specified period and the amounts of free rent due as
to each such Lease (the "Free Rent List"). Seller shall deliver
to Buyer a Notice specifying any exceptions (based upon
correctness or prior disclosure to Buyer) on or before 9:00 a.m.
PDT on May 11, 1998. If Seller's Notice is not satisfactory to
Buyer, Buyer shall cancel the Escrow in accordance with Section
5(c) or proceed to Close and waive any objections to Seller's
Notice. If Seller fails to deliver timely Notice, the Free Rent
List shall be deemed to be correct.
If any of the prorations described in this Section 4 cannot
be calculated accurately on the Closing Date, then the same shall
be calculated as soon as reasonably possible thereafter and
either party owing the other party a sum of money based on such
subsequent prorations shall promptly pay said sum to the other
party. If either party owing funds to the other after the
Closing Date pursuant to this Section does not remit them within
thirty (30) days after demand therefor (which demand shall also
include invoices or other appropriate documentation in support
thereof), such funds shall thereafter bear interest at a "Default
Rate" equal to five percent (5%) above the highest rate as
announced from time to time by Chase Manhattan Bank, N.A. at its
principal office in New York City as its "prime rate," as the
same shall fluctuate from day to day, or, if lesser, the maximum
rate permitted by law.
(i) Lease Terminations - O'Flaherty & Belgum and Josi &
Dold. Seller hereby advises Buyer that Seller intends to, and
Seller reserves the right to, terminate those certain leases
entered into by Seller with O'Flaherty & Belgum and Josi & Dold,
with respect to Suites 500 and 800 respectively, which tenants
are tenants that are currently in default with respect to their
Leases. In the event that Seller successfully negotiates a
termination of the Josi & Dold Lease prior to the Closing, then
Buyer acknowledges and agrees that Buyer shall not be entitled to
any credit in connection with the Closing as a result of the
termination of such Lease (as Carol, Kelly, & Trotter have agreed
to let the Josi & Dold space), and Seller shall retain its rights
to commence and maintain an action against Josi & Dold with
respect to that Lease, and the Lease shall not be assigned to
Buyer. In the event the Josi & Dold Lease is not terminated prior
to the Closing Date, then Buyer shall assume the Lease (and
rights and obligations thereunder from and after the Closing
Date), so as to enable Buyer to pursue an unlawful detainer
proceeding and a proceeding against Lease collateral and
guarantors after the Closing Date, in which event any recovery of
Rents, any security deposit, and proceeds of collateral for such
Lease, shall be applied first to Rents accruing after the Closing
Date and prior to the date of rent commencement under the Trotter
Lease, and then against Rents in arrears prior to the Closing
Date. With respect to the O'Flaherty & Belgum space, without
regard to whether Seller successfully terminates the Lease prior
to the Closing, Seller shall retain the right to pursue its
claims against such tenant following the Closing with respect to
all Rents arising under the Lease, Buyer shall use its best
efforts to let the space following the Closing in accordance with
Section 16(r) below, and Seller shall place in Escrow the sum of
$60,000.00 (the "Funds"), for credit and release to Buyer on
September 5, 1998, if and to the extent, despite Buyer's
compliance with its obligation to attempt to relet the premises,
Buyer does not either receive Rents with respect to the
O'Flaherty & Belgum Lease after the Closing, or relet such
premises within the period between the Closing Date and September
5, 1998 (the "Remaining Lease Period") to a new tenant. If Buyer
receives Rents with respect to the O'Flaherty & Belgum Lease
after the Closing, or leases such premises during the Remaining
Lease Period, Buyer shall be entitled to recover the Funds from
Escrow only if, and to the extent, the Rents payable for the
Remaining Lease Period (calculated based upon average rent during
the initial year of the new lease and applying it ratably
throughout such period, even if not so paid) by any new tenant,
and any Rents paid with respect to the O'Flaherty & Belgum Lease
after the Closing, shall be less than Rents due during the
Remaining Lease Period under the O'Flaherty & Belgum Lease, and
the remaining portion of the Funds shall be released to Seller.
Without limiting the generality of the foregoing, if the
O'Flaherty & Belgum Lease is not terminated prior to the Closing
Date, then Buyer shall assume such Lease (and rights and
obligations thereunder from and after the Closing Date), so as to
enable Buyer to pursue an unlawful detainer proceeding and a
proceeding against Lease collateral and guarantors after the
Closing Date, in which event any recovery of Rents, any security
deposit, and proceeds of collateral for such Lease, shall be
delivered to, and retained by, Seller (after deducting for
Buyer's reasonable out-of-pocket legal fees, costs and expenses
to the extent not collected in such action). Buyer and Seller
shall cooperate with each other in pursuing unlawful detainer
proceedings against such tenants, and proceedings against Lease
collateral and guarantors in connection with such Leases.
With respect to the leasing of Suite P-220, as to which
Buyer and Seller anticipated that the existing lease with
Alliance Shippers, Inc. ("Alliance"), which Lease expired April
30, 1998 would be renewed at market rates, the parties agree
that, if Suite P-220 is not relet effective on or before the
Closing Date (either to Alliance or another tenant, in each case
as approved by Buyer pursuant to Section 6 hereof), Buyer shall
receive a credit against the Purchase Price in the amount of One
Hundred Seventy-Five Thousand Dollars ($175,000.00).
5. Due Diligence Investigation Period.
(1) Due Diligence Materials.
(1) Materials Previously Delivered; Approved Conditions. On or
before April 22, 1998, without any representation or warranty as
to accuracy or completeness, Seller made available to Buyer the
following reports, information and studies:
(1) Robert Englekirk Consulting Structural Engineers letter
dated March 3, 1998 and relating to the REI Seismic Study -
Phase III;
(2) Phase I Environmental Site Assessment Document No. 4738-052-
E01 dated September 9, 1997, and prepared by ENSR;
(3) Seismic Study - Phase III, dated April 1991;
(4) Structural plans relating to the Property, prepared as of
July 31, 1991, by Robert Englekirk;
(5) A Certificate of Occupancy - Seismic Upgrade, issued by
the City of Long Beach as of April 9, 1992;
(6) A Beam Cyclic Loading Test prepared by SEQAD Consulting
Engineers, Report No. 91-03 dated March 1991; and
(7) Re Job No. 90-060 dated January 1991.
By execution and delivery hereof, Buyer
acknowledges and agrees that it has, for information purposes
only (and not for reliance thereon) received and reviewed all of
such reports, and conducted such additional testing, obtained
such additional reports, and conducted such additional
investigations as Buyer has deemed necessary or appropriate in
connection with purchase of the Property, relating to the
structural condition of the Real Property, seismic compliance and
soundness of the Improvements, and environmental condition of the
Real Property and the surrounding property (collectively, the
"Approved Conditions"). Based on the foregoing, Buyer hereby
acknowledges and agrees that Buyer shall not be entitled to
conduct any further review of, or diligence with respect to, the
Approved Conditions, and that the Approved Conditions shall not,
under any circumstances, form a basis for Buyer to determine not
to purchase the Property, and shall not be a basis for
cancellation of Escrow during the Investigation Period.
(2) Additional Deliveries. Buyer agrees and acknowledges that,
on or before the opening of Escrow (the "Diligence Date"),
without any representation or warranty as to accuracy or
completeness, and only to the extent within the physical
possession of Seller, and only to the extent not previously
provided, Seller has either (at Seller's option) delivered to
Buyer or made available for inspection (and copying) by Buyer at
Buyer=s expense, at the Property and/or the offices of Seller
(except that the items listed in (A) below shall be delivered by
Seller to Buyer), the following items relating to the Property:
(1) Preliminary title reports or commitments issued by Chicago
Title Company ("Title Company"), dated January 15, 1998 (the
"Preliminary Report"), relating to the Real Property, which
Buyer may use to obtain, directly from the Title Company,
copies of those documents referenced as exceptions in the
Preliminary Report, so that, to the extent Buyer wishes to
do so, it shall be able to review all such documents;
(2) The current Tenants' Leases, including any and all
amendments thereto; Service Contracts; maintenance records;
copies of current utility bills (to the extent received);
copies of architectural plans and "as-built" drawings (if
any) for the buildings (which Buyer understands do not
necessarily reflect the present state of the buildings);
building permits, certificates of occupancy, and licenses
pertaining to the Property to the extent they remain in
effect; copies of any written warranties relating to the
Personalty; copies of insurance claim reports, if any; and
Seller's Real Property operating statements for calendar
years 1996 and 1997, and monthly operating statements for
January 1998 through March 1998;
(3) Copies of all real property tax and assessment bills
received by Seller for the 1996-97 and 1997-98 tax years;
(4) Capital expenditures list for 1997 and 1998; and
(5) Assignment of Magnolia Street Ground Lease, dated December
14, 1973, by and between Boise Cascade and Seller.
(2) ALTA Survey. In the event that Buyer determines that it
desires to obtain, in addition to the survey delivered by Seller
to Buyer, an American Land Title Association survey for Buyer's
account with respect to the Property (the "Survey"), Buyer may
obtain such a Survey during the Investigation Period, at Buyer's
sole cost and expense; provided, however, that if Buyer fails to
obtain the Survey prior to the end of the Investigation Period,
Buyer must either cancel Escrow or proceed to purchase the
Property based solely on Title Company's agreement to provide
standard title insurance coverage (with exceptions for any items
a survey would disclose and for any items disclosed by a Survey
obtained after the end of the Investigation Period). Without
limiting the generality of the foregoing, Buyer acknowledges and
agrees that Buyer's failure to obtain a Survey prior to the end
of the Investigation Period shall not be deemed a default
hereunder or a failure of a condition to Buyer's obligation to
Close, but Buyer's delay in obtaining the Survey shall not extend
the Investigation Period or the Outside Closing Date, and, to the
extent any items are disclosed to Buyer in a Survey delivered to
Buyer after the end of the Investigation Period, such items shall
be deemed "Permitted Exceptions" (as defined below).
(3) Investigation Period. Beginning upon the date of Buyer's
and Seller's execution and delivery of the Entry Permit (as
defined below), and terminating as of 5:00 p.m. PDT on May 13,
1998 (the "Investigation Period"), Buyer may, subject to the
limitations set forth in this Agreement and in the Entry Permit,
investigate any and all aspects of the Property; provided,
however, Buyer shall not investigate the Approved Conditions
after the execution of this Agreement. To the extent Buyer is
entitled to investigate particular matters during the
Investigation Period, Seller, at no cost or expense to Seller,
shall reasonably cooperate with Buyer to the extent Seller's
cooperation is required for Buyer to obtain public information
pertaining to the Property from governmental agencies. If, in
Buyer's sole discretion, Buyer disapproves of any aspect of the
Property (including the form and/or status of the Lease described
on Exhibit "A-1") other than the Approved Conditions, Buyer may
cancel the Escrow by Notice to Seller delivered to Seller on or
before 5:00 p.m. PDT on the last day of the Investigation Period.
If Buyer does not timely cancel Escrow as set forth in the above
sentence, Buyer shall be unconditionally obligated to purchase
the Property without any contingencies (other than Section 7(a)
conditions precedent). Upon termination of the Investigation
Period without timely cancellation of Escrow, the Deposit shall
be non-refundable in favor of Seller, and shall be released to
Seller by Escrow Agent on the first business day following the
expiration of the Investigation Period, without further act of
Buyer. If Escrow is canceled during the Investigation Period in
accordance herewith, Buyer shall deliver to Seller, for retention
by Seller, all information, studies, and reports obtained or made
by Buyer or its agents relating to the Property. In addition, if
Escrow is canceled during the Investigation Period in accordance
herewith, Seller shall instruct Escrow Agent to refund the
Deposit to Buyer, net only of Buyer's share of costs and expenses
of the Escrow and title. Buyer's inspection, investigation and
survey of the Property , prior to execution hereof and during the
Investigation Period, shall be in lieu of any notice or
disclosure required by Section 25359.7 of the California Health
and Safety Code, or by any provision of the Civil Code or
pursuant to any other applicable law, and Buyer hereby waives any
requirement for a notice pursuant to those provisions. Buyer
shall be deemed to have approved all conditions pertaining to the
Property unless it cancels Escrow in accordance herewith (on the
basis of a condition other than an Approved Condition) on or
before the end of the Investigation Period. Notwithstanding
anything to the contrary herein, if Buyer desires to undertake
any testing, investigation or inspection of the Land (other than
in connection with the Approved Conditions) Buyer shall perform
such inspections, investigations or tests on or before the
expiration of the Investigation Period, using only consultants on
a list to be provided by Seller upon Buyer's written request therefor.
(4) Title. Not later than 5:00 PDT on May 6, 1998, Buyer may
provide Notice to Seller that Buyer disapproves of one or more
matters affecting title to the Property (the "Title Notice Date")
and request that Seller correct such deficiency. All matters
affecting title to the Property which are not disapproved by
Buyer by Notice to Seller on or before the Title Notice Date,
together with all matters consented to by Buyer or created by
Buyer or its agents, or by a tenant (without Seller's written
consent), shall be deemed to be "Permitted Exceptions" for the
purposes of this Agreement. In the event Seller receives no such
Notice, all matters affecting title to the Property shall be
deemed Permitted Exceptions. If Buyer timely and properly
objects to a title matter, Seller shall, in the exercise of its
sole discretion, at least one (1) day prior to the end of the
Investigation Period, advise Buyer whether Seller intends to
correct the title objection or provide endorsement coverage with
respect thereto prior to the close of Escrow. If Seller elects
not to correct the deficiency or provide endorsement coverage
with respect thereto, or if Seller provides no Notice to Buyer of
its intent with respect thereto (in which event Seller shall be
deemed to have elected not to correct the deficiency or provide
endorsement coverage with respect thereto), Buyer shall be
required, either to waive its objection or cancel Escrow by
Notice delivered to Seller and Escrow Agent on or before the
expiration of the Investigation Period. Subject to any
deficiency which Seller has agreed to correct or endorse prior to
the close of Escrow, if Buyer does not cancel Escrow during the
Investigation Period, Buyer shall be deemed to have waived its
previous objections to matters affecting title to the Property,
which objections shall thereafter be deemed included in the
"Permitted Exceptions." Notwithstanding the foregoing, Seller
agrees to use its reasonable efforts to cause the removal from
the Title Policy (by removal, indemnity or endorsement), prior to
Closing, of all monetary encumbrances recorded against the Real
Property after the end of the Investigation Period, other than
(i) liens recorded as a result of acts or omissions of Buyer, and
(ii) liens recorded as a result of acts or omissions of Tenants.
(5) Title Commitment. On or before the expiration of the
Investigation Period, Buyer shall have obtained from Title
Company Commitments to issue, in a form acceptable to Buyer, a
standard coverage policy of title insurance (collectively, the
"Title Policy") dated as of the Closing Date in an amount which,
in the aggregate, is equal to the amount of the Purchase Price,
showing fee title to, the Property vested in Buyer, subject only
to the Permitted Exceptions, and with such endorsements and such
exclusions as shall be acceptable to Buyer (each, a
"Commitment"). If Buyer fails to obtain the Commitments, Buyer
shall be required to close Escrow (subject only to the conditions
in Section 7(a)) notwithstanding that Buyer may not be able to
obtain, thereafter, a Title Policy in a form acceptable to Buyer
with respect to the Property.
(6) Buyer's Right of Entry. Prior to the Effective Date, Buyer
and Seller have entered into that certain Entry Permit shown on
Exhibit "F" attached hereto ("Entry Permit"), and shall act in
accordance with the terms of that Entry Permit, subject, however,
to the more specific limitations set forth in this Agreement.
Notwithstanding any greater rights previously set forth in the
Entry Permit, Buyer shall have the right to enter the Property
prior to the end of the Investigation Period, solely to conduct,
at Buyer's cost, expense and liability, the following studies or
inspections: (i) a market and neighborhood analysis; and (ii) a
complete financial analysis of the Property. Without limiting
the generality of the foregoing, Buyer acknowledges and agrees
that Buyer shall not be entitled to enter the Property after the
date of this Agreement, for the investigations relating to the
Approved Conditions, and by execution and delivery hereof, the
Entry Permit is deemed so modified. In addition, Buyer may enter
the Property after the expiration of the Investigation Period
(provided Escrow has not been canceled), subject to the Entry
Permit through the Closing Date with the prior written consent of
Seller (which consent shall not be unreasonably delayed or
denied), in connection with preparation for transfer of the
Property to Buyer (but not to conduct continuing diligence after
expiration of the Investigation Period), for purposes such as
obtaining access to the books and records of Seller made
available to Buyer pursuant to Section 5(a) above, in connection
with audits by Buyer=s auditors, and meeting with on-site staff
to effect an orderly transition of management following the
Closing Date.
6. Limitation on Leasing. Subsequent to Buyer's execution and
delivery of the Entry Permit, and while this Agreement is in
effect, and so long as Buyer is not in default hereunder, Seller
shall not modify any of the Leases or enter into any new Leases
after the Effective Date without the prior written consent of
Buyer, which shall not be unreasonably withheld. Such consent
shall be conclusively presumed to be granted two (2) business
days after a copy of such proposed new Lease or Lease
modification is delivered to Buyer, unless Buyer objects in
writing, listing the specific and reasonable basis for such
objection, by Notice to Seller within such period. As to all
such Leases or Lease modifications entered into after the
Effective Date (unless Buyer timely and properly objects as set
forth above), Buyer hereby expressly assumes all obligations of
the landlord under such Leases, including obligations with
respect to tenant improvements, and contracts relating thereto
(including without limitation such obligations relating to the
Michael Danner Lease), leasing commissions and free rent or other
rent concessions, whether such obligations are payable prior or
subsequent to the Closing Date; provided, however, that the
proposed construction contract with respect to the "Trotter
Lease," and leasing commissions obligations in connection
therewith, shall not be assumed by Buyer, and such tenant
improvement costs and leasing commissions shall be allocated as
described in Section 4(i) above. Except with respect to entering
into new Leases and Lease modifications, Seller shall retain all
of its rights to operate the Property in the ordinary course of
business prior to the Closing Date, including taking legal action
against Tenants in default under their Leases, and Buyer shall
cooperate (at no cost to Buyer) with Seller's prosecution of such
actions to completion following the Closing. Notwithstanding the
foregoing, prior to delivering a Tenant notice under Code of
Civil Procedure '1161, et seq., Seller shall deliver a Notice to
Buyer specifying the nature of the default and the amount to be
paid or other actions required to cure the default. If Buyer
fails to deliver Notice to Seller within three (3) days of
Seller=s Notice, pursuant to which Buyer agrees to treat such
Lease as a Lease subject to the provisions of Sections 4(a)(ii)
and 4(b)(ii) (so as to apply amounts received post-closing first
to delinquent amounts which accrued pre-closing), then Seller may
proceed to exercise its rights and remedies against such Tenant.
7. Conditions Precedent to Closing.
(1) Buyer's Conditions. The closing of the purchase of the
Property on the Closing Date and Buyer's obligation to acquire
the Property shall, in addition to any other conditions set forth
herein, be conditional and contingent upon satisfaction, or
waiver by Buyer, of all of the below listed conditions:
(1) Personal Property. The Personalty shall consist of those
items described on Exhibit "B" hereto, subject only to changes
relative to use and consumption thereof during the ordinary
course of business while this Agreement is in effect;
(2) Compliance with Agreement. Seller shall have substantially
performed and complied with all of its covenants and conditions
contained in this Agreement;
(3) Accuracy of Representations and Warranties. The
representations and warranties of Seller set forth in this
Agreement shall be confirmed by Seller in writing as materially
true and correct as of the Closing Date;
(4) Title. No matters shall have been placed of record after
expiration of the Investigation Period, and remain of record as
of the Closing Date, other than mechanics and materialmen liens,
and other liens, placed of record (i) in connection with acts or
omissions of Tenants or work performed by or for Tenants, and not
financed by Seller, and (ii) as a result of acts or omissions of
Buyer, which matters the Title Company intends to include as an
exception to the Title Policy;
(5) Casualty or Condemnation. No casualty or condemnation has
occurred pursuant to which Buyer has elected to terminate the
Agreement in accordance with Section 13 below; and
(6) Estoppels. Seller shall have delivered to Buyer prior to
the Closing Date, Tenant estoppels, executed within sixty (60)
days of the Closing Date and in the form of Exhibit "G-1", either
directly to the benefit of Buyer or assigned by Seller to Buyer,
and without any material exceptions noted thereon by the
applicable Tenant except for Permitted Estoppel Exceptions (as
defined below) ("Tenant Estoppels") from (i) Tenants leasing, in
the aggregate, as of the Effective Date, not less than seventy-
five percent (75%) of the total leased space in the Property,
with the exception of O'Flaherty & Belgum and Josi & Dold, and
(ii) all Tenants leasing, as of the Effective Date, more than
3,000 square feet of net rentable area of the Property, with the
exception of O'Flaherty & Belgum and Josi & Dold (it being
understood and agreed that Leases entered into after the
Effective Date and approved or deemed approved by Buyer shall be
deemed to have approved Tenant Estoppels); provided, however,
that, with respect to one or more particular premises in the
Property, Seller may, in lieu of delivering to Buyer a Tenant
Estoppel to meet such condition, deliver a "Seller's Estoppel"
with respect to such leased space, in the form of Exhibit "G-2"
attached hereto (or a portion thereof, as needed), subject only
to Permitted Estoppel Exceptions; provided, further, however,
that in the event that Seller thereafter delivers a Tenant
Estoppel to Buyer with respect to the same Lease (either before
or after the Closing Date), then Seller's Estoppel shall be of no
force and effect with respect to the Lease covered by such Tenant
Estoppel, if and to the extent that the Tenant Estoppel is
consistent with the previously delivered Seller's Estoppel. As
used herein, "Permitted Estoppel Exceptions" means all of the
following: (i) a Tenant's failure to include (after Seller's
delivery of the Tenant Estoppel to Tenant in the form of Exhibit
"G-1"), Paragraph 10 of Exhibit "G-1"; and (ii) a Tenant's
disclosure of information (x) consistent with the Lease of the
Tenant, or inconsistent with such Lease in an immaterial respect,
or (y) known to or made available to Buyer prior to expiration of
the Investigation Period in connection with Buyer's review of
materials pursuant to Section 5 above.
(2) Seller's Conditions. The closing of the purchase of the
Property on the Closing Date and Seller's obligation to sell and
convey the Property shall, in addition to any other conditions
set forth herein, be conditional and contingent upon
satisfaction, or waiver by Seller, of each and all of the below
listed conditions:
(1) Compliance with Agreement. Buyer shall have substantially
performed and complied with all of its covenants and conditions
contained in this Agreement, and shall have delivered all
documents required to be delivered by Buyer pursuant hereto to
effect a purchase of the Property in accordance herewith;
(2) Accuracy of Representations and Warranties. All
representations and warranties of Buyer contained in or made
pursuant to this Agreement shall be confirmed by Buyer in writing
as true and correct as of the Closing Date;
(3) Title. The condition precedent set forth in Section
7(a)(iv) shall have been satisfied.
8. Closing Documents. On or before the Closing Date, Seller
and Buyer shall deliver to Escrow Agent the following fully-
executed documents and/or items, acknowledged where appropriate
(together referred to herein as the "Closing Documents"):
(1) Deed. A Grant Deed, in the form attached as Exhibit "H"
(the "Deed"), executed by and notarized on behalf of Seller, and
conveying Seller's interest in the Property and Improvements to
Buyer, subject to general and special real estate taxes and
assessments, and all matters of record or apparent from an
inspection or survey.
(2) Bill of Sale, Assignment and Assumption Agreement. A Bill
of Sale, Assignment and Assumption agreement to be executed and
delivered by Seller and Buyer, in the form attached hereto as
Exhibit "I" (the "Bill of Sale") (i) conveying to Buyer title to
the Personalty, (ii) assigning to Buyer Seller's interest in all
Leases (other than the Lease described on Exhibit "A-1") and
providing for assumption thereof by Buyer, (iii) assigning to
Buyer, Seller's interest in all assignable, written or oral
service, maintenance, construction, parking, brokerage, leasing
commission, advertising, employment, operating or other
contracts, arrangements or agreements affecting the Property,
including any third party management agreements or contracts (but
not any management agreement or management contract, or leasing
agreement with respect to the entire Property, entered into by
ARES, Inc. or any other affiliate of Seller), and any agreements
pursuant to which goods, services, supplies or any other items
whatsoever are furnished and/or to be furnished in connection
with the Property, or the repair, maintenance or operation of the
Property or any portion or component thereof ("Service
Contracts"), and providing for assumption thereof by Buyer;
provided, however, that Seller shall cause to be completed
following the Closing, and Buyer shall not assume at Closing the
obligations to complete, the tenant improvements with respect to
the Trotter Lease (but shall be responsible for payment of 50% of
the costs of construction of such tenant improvements pursuant to
that certain contract entered into by and between Advance
Builders and Seller as of April 24, 1998); and (iv) assigning to
Buyer all of Seller's interest in the Intangible Property,
together with originals of all Intangible Property (if
applicable) in each case without representation by Seller as to
assignability or other matters (except to the extent expressly
represented and warranted by Seller herein in Section 10 below).
(3) Assignment of Lease. An Assignment and Assumption of Lease
to be executed and delivered by Seller and Buyer, in the form
attached hereto as Exhibit "I-1" (the "Assignment of Lease"),
conveying to Buyer all of Seller's interest, if any, in the Lease
described therein and on Exhibit "A-1" hereto.
(4) Non-Foreign Status Affidavit. Seller shall deliver an
Affidavit of Non-Foreign Status in the form of Exhibit "J"
attached hereto, together with a State of California FTB 590RE form.
(5) Other Documents. Buyer and Seller shall deliver such other
documents as shall be reasonably required to transfer or assign
the Property to Buyer, and provide for assumption of liabilities
by Buyer as provided herein.
9. Closing.
(1) Closing Date. The Closing Date shall be on a business day
as agreed to by Seller and Buyer, but in all events shall be on a
date no later than the Outside Closing Date, unless this date is
mutually extended in writing by Seller and Buyer in the exercise
of their respective sole discretion.
(2) Time and Place. The Closing shall take place through Escrow
on the Closing Date at the offices of Escrow Agent.
(3) Payment of Purchase Price. Buyer shall deliver to Escrow at
least one (1) business day before the Closing Date immediately
available funds in the amount of the Purchase Price plus any
prorations, costs and expenses hereunder payable by Buyer, and
less the amount of the Deposit (which shall have been delivered
to Seller on or before the day after the expiration of the
Investigation Period). The amount of the Deposit shall be
credited against the Purchase Price upon Closing.
(4) Possession. Possession of the Property shall be delivered
to Buyer on the Closing Date, subject only to the rights of
Tenants under the Leases and matters of record or apparent by
inspection or survey of the Property. At Closing, Seller will
make available to Buyer at the Real Property all keys (identified
as to suite), Personalty, and originals or true and correct
copies of all plans and specifications, manuals, warranties and
operating logs for the Real Property and other operating and
management documents not previously delivered to Buyer and in
Seller's possession or control.
(5) Closing Costs. Seller shall pay at Closing the premium for
the standard coverage policy of title insurance, documentary
transfer fees and one-half of the escrow and recording fees.
Buyer shall pay the premium for the extended coverage policy of
title insurance and one-half of the escrow and recording fees.
Seller and Buyer shall each be responsible for paying their
respective attorneys' fees and costs, if any.
(6) Settlement Statement and Disbursement Ledger. Escrow Agent
shall prepare and deliver to the parties on the Closing Date a
correct Settlement Statement and Cash Receipts and Disbursements Ledger.
(7) Title Policy. Escrow Agent shall require Title Company to
deliver the Title Policy to Buyer (with a copy to Seller) within
fifteen (15) business days following the Closing Date.
(8) Bill of Sale. On the Closing Date, Seller shall assign to
Buyer, the Personalty and the Intangible Property, with the
exception of items of Personalty excluded pursuant to the Bill of
Sale, and Seller shall assign to Buyer and Buyer shall assume,
Seller's rights and obligations under, the Leases and Service
Contracts, in accordance with and as specified in the Bill of Sale.
(9) Audit Letter. On or before the Closing Date, at Buyer's
request, Seller shall deliver a letter to Buyer's auditors, in
the form of Exhibit "K" attached hereto.
10. Representations and Warranties of Seller. Seller represents
and warrants to Buyer, as of the Effective Date and as of the
Closing Date, as follows:
(1) Status of and Execution by Seller. Seller is (i) in good
standing and validly existing as a New York corporation; and (ii)
duly authorized, qualified and licensed to do all things required
of it under or in connection with this Agreement, including to
execute, deliver and perform this Agreement. All agreements,
instruments, and documents herein provided to be executed by
Seller will be duly executed by and binding upon Seller as of the Closing.
(2) Leases. The Lease Schedule attached hereto as Exhibit "L"
correctly lists, as of the Effective Date, all of the Leases and
the base rental currently required to be paid with respect
thereto. Except as disclosed on Exhibit "L," the Leases are not
in monetary default as of April 30, 1998, and Seller shall have,
on or before the Diligence Date, made available to Buyer true and
accurate copies of the Leases in effect as of the Effective Date.
Notwithstanding anything to the contrary in this Agreement, to
the extent that the foregoing statements are confirmed by Tenants
in Tenant Estoppels delivered to Buyer (or in other documents
made available to Buyer), Seller shall have no obligation or
liability to Buyer with respect to such statements regarding such Leases.
(3) Service Contracts. There are no Service Contracts which are
not terminable on thirty (30) (or fewer) days' notice, and
entered into by Seller with respect to the Property, which remain
in effect, except those listed on Exhibit "M" attached hereto.
(4) Mechanics Liens. To Seller's knowledge, there are no
mechanics liens outstanding with respect to the Property as a
result of work performed thereon by Seller, or contractors or
agents of Seller, except any of the same as shall be removed (or
endorsed over by Title Company) as of the Closing Date.
(5) Financial Statements. To Seller's knowledge, there are no
materially incorrect income or expense figures in any financial
statements prepared by or for Seller and made available to Buyer
with respect to the Property, except as may be corrected in other
financial or other statements or documents made available to
Buyer in connection with Buyer's due diligence, and Seller
acknowledges and agrees that Buyer, at Buyer's sole cost and
expense, may request its auditors to review such statements in
connection with its purchase of the Property.
(6) Pending Actions. To Seller's knowledge, except as set forth
on Exhibit "C," there is no litigation, claim, administrative
action, arbitration or other proceeding now pending or threatened
in writing against Seller relating to the Property, which would
materially and adversely affect the use, operation or
construction of the Property, and which is not a matter of public record.
(7) No Violations. To Seller's knowledge, Seller has received
no written notice of violations of City, County, State, Federal,
building, fire or health codes, zoning codes or other regulations
or ordinances, filed or issued against the Property by any
government authority, which violations remain outstanding and
which would materially and adversely affect the use of the
Property.
As used in this Agreement, the term "to Seller's knowledge"
shall mean to Seller's actual present knowledge, as determined by
the state of knowledge of the individual who acts as the Seller's
asset manager of the Property as of the Effective Date (or, with
respect to Section 10(g) only, as determined by the state of
knowledge of Steve Randall and Terry Peterson), with respect to
the Property, without independent investigation or independent
review of Seller's files. Seller shall not have any liability
for breach of its representations and warranties herein if, as of
the Closing Date, the representations and warranties set forth
above shall not be true, but Buyer has knowledge of such facts
prior to the Closing and proceeds to close Escrow notwithstanding
such facts. Seller shall be entitled to state in writing prior
to Closing exceptions to the representations, warranties, and
covenants set forth above, in which case Buyer may (i) terminate
this Agreement if such exceptions are not reasonably acceptable,
in which event the Deposit (less Buyer's share of Escrow and
Closing costs) shall be returned to Buyer, or (ii) elect to close
Escrow notwithstanding such exceptions. In either event, Seller
shall have no further obligation or liability to Buyer. The
representations and warranties of Seller set forth in this
Agreement shall survive for one (1) year after the close of Escrow.
11. Representations and Warranties of Buyer. Buyer represents
and warrants to Seller, as of the Effective Date and as of the
Closing Date, as follows:
(1) Status of and Execution by Buyer. Buyer is now and on the
Closing Date will be: (i) duly formed and validly existing as a
Maryland limited partnership; (ii) duly authorized, qualified and
licensed under the laws of the State of California to conduct
business and to acquire the Property; and (iii) duly authorized,
qualified and licensed to do all things required of it under or
in connection with this Agreement, including to execute, deliver
and perform this Agreement. All agreements, instruments, and
documents herein provided to be executed by Buyer will be duly
executed by and binding upon Buyer as of the Closing.
(2) No Violations. Neither this Agreement nor any of the
agreements, instruments and documents herein provided to be
executed or to be caused to be executed by Buyer violate or will
violate any provision of any agreement, law, regulation or
judicial order to which Buyer is a party or by which it is bound.
The representations and warranties of Buyer contained in
this Agreement shall survive for one (1) year after the close of Escrow.
12. Condition of the Property.
(1) AS-IS. Buyer acknowledges that Seller is selling, and Buyer
shall accept, the Property in an "AS IS" condition without any
representation or warranty whatsoever by Seller relating to the
Property, with the exception of the express, limited
representations and warranties set forth in Section 10 above.
Buyer acknowledges that it is a sophisticated real estate
investor who shall have had, as of the Closing Date, open access
to, and sufficient time to review, all information, documents,
agreements, studies and tests relating to the Property that Buyer
elects to conduct, and conduct a complete and thorough
inspection, analysis and evaluation of the Property, including
without limitation investigation of structural, seismic, zoning,
land use and environmental issues, if any, and further
acknowledges that Buyer has conducted, or shall conduct with
respect to matters other than Approved Conditions, such tests and
investigations, if at all, prior to expiration of the
Investigation Period, and that Buyer shall receive and review
such information as Buyer shall require in the course of its
investigation. Buyer has undertaken (with respect to Approved
Conditions), and shall undertake (with respect to all matters
other than Approved Conditions) such investigation as Buyer
deems necessary or desirable to make Buyer fully aware of the
condition of the Property as well as all facts, circumstances and
information which may affect the use and operation of the
Property, and Buyer covenants and warrants to Seller that Buyer
shall rely solely on Buyer's own due diligence investigation in
determining to purchase the Property.
(2) Release. Effective as of the Closing Date, Buyer, on behalf
of itself, its officers, directors and its and their respective
successors, shall, and by the execution of this Agreement, hereby
does, forever release Seller, its officers, directors, agents and
employees, and its and their respective successors, of and from
any and all losses, liabilities, damages, claims, demands, causes
of action, costs and expenses, whether known or unknown, arising
out of or in any way connected with the Property, including the
condition of title to the Property (and Seller's interest in and
ownership thereof) and the environmental and structural condition
of the Property (herein, "Losses"). Buyer shall, upon the
Closing, and, by the execution of this Agreement, hereby does,
forever release Seller of and from any environmental claims and
causes of action existing now or hereafter created or enacted,
whether at common law or by federal, state, county, or municipal
law or ordinance. Buyer agrees never to commence, aid in any
way, or prosecute against Seller, its officers, directors, agents
or employees or its and their respective successors, any action
or other proceeding based upon any Losses. The foregoing release
shall not be deemed to release any claim of Buyer for Seller's
breach of its representations and warranties set forth in
Section 10 above (subject to the limitation on the (1)
survival of such representations and warranties as set forth in
Section 10), nor any claim of Buyer for damages resulting from
the untruth of any matter which Seller certifies to be true in
any Seller's Estoppel delivered to Buyer in connection with this
Agreement, which Seller's Estoppel remains in effect as of the
date Buyer brings such claim.
(3) Waiver. Buyer expressly waives any rights or benefits
available to it with respect to the foregoing release under any
provision of applicable law which generally provides that a
general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time the release
is agreed to, which, if known to such creditor, would materially
affect a settlement. Buyer, by the execution of this Agreement,
acknowledges that it fully understands the foregoing, and with
this understanding, nonetheless elects to and does assume all
risk for Losses known or unknown, described in this Section 12.
Without limiting the generality of the foregoing:
THE UNDERSIGNED ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY LEGAL
COUNSEL AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL
CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR
AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
HIM, MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
THE DEBTOR."
THE UNDERSIGNED, BEING AWARE OF THIS CODE SECTION, HEREBY
EXPRESSLY WAIVES ANY RIGHTS IT MAY HAVE THEREUNDER, AS WELL AS
UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.
Seller's Initials:/s/ WJS Buyer's Initials:/s/ VJC
13. Casualty or Condemnation. If prior to the Closing Date, the
Property shall be destroyed or substantially damaged, and the
cost to repair shall exceed One Million Dollars ($1,000,000.00),
or if the Property shall become the subject of any proceedings,
judicial, administrative, or otherwise, for eminent domain or
condemnation where the value of the portion of the Property
sought exceeds One Million Dollars ($1,000,000.00), Seller shall
promptly notify Buyer thereof, and Buyer may then, within fifteen
(15) days after delivery of Notice of the same by Seller, elect
to terminate this Agreement by giving Seller Notice thereof, in
which event the parties hereto shall be relieved and released of
and from any further duties, obligations, rights, or liabilities
hereunder (but not under the Entry Permit), and the Deposit shall
be returned to Buyer (less only Buyer's half of Escrow fees and
costs). If the Closing Date is within the aforesaid fifteen (15)
day period, then the Closing shall be extended to the next
business day following the end of said fifteen (15) day period.
If (i) the value of the Property destroyed or substantially
damaged or subject to taking is equal to or less than One Million
Dollars ($1,000,000.00), or (ii) Buyer elects to complete the
transactions contemplated herein as provided above
notwithstanding destruction or eminent domain or condemnation
proceedings involving damage or condemnation value of in excess
of One Million Dollars ($1,000,000.00), this Agreement shall
remain in full force and effect and the purchase contemplated
herein, less any portion of the Property taken by eminent domain
or condemnation, if any, shall be consummated with no further
adjustment or modification and at the Closing Seller shall
assign, transfer, and set over to Buyer all the right, title, and
interest of Seller in and to any insurance proceeds resulting
from the casualty or any awards that have been or may thereafter
be made for the taking or condemnation.
14. Default and Remedies.
IF (i) BUYER IS IN DEFAULT OF THIS AGREEMENT PRIOR TO THE
CLOSING, (ii) BUYER FAILS TO CURE SUCH DEFAULT ON OR BEFORE THE
DATE WHICH IS FIVE (5) DAYS AFTER NOTICE THEREOF FROM SELLER (OR,
IF EARLIER, ON OR BEFORE THE OUTSIDE CLOSING DATE), AND (iii)
SELLER ELECTS TO TERMINATE THIS AGREEMENT DUE TO BUYER'S DEFAULT,
THE DEPOSIT AND ALL OTHER PAYMENTS AND THINGS OF VALUE DELIVERED
BY BUYER SHALL BE FORFEITED BY BUYER AND RETAINED BY SELLER, AND
BOTH PARTIES SHALL THEREAFTER BE RELEASED FROM ALL FURTHER
OBLIGATIONS UNDER THIS AGREEMENT. IF (i) SELLER IS IN DEFAULT OF
THIS AGREEMENT PRIOR TO THE CLOSING, (ii) SELLER FAILS TO CURE
SUCH DEFAULT ON OR BEFORE THE DATE WHICH IS FIVE (5) DAYS AFTER
NOTICE THEREOF FROM BUYER (OR, IF EARLIER, ON OR BEFORE THE
OUTSIDE CLOSING DATE), AND (iii) BUYER ELECTS TO TERMINATE THIS
AGREEMENT DUE TO SELLER'S DEFAULT, BUYER SHALL BE ENTITLED TO
OBTAIN A RELEASE OF THE DEPOSIT, AND IN LIEU OF ALL OTHER
REMEDIES AND DAMAGES, BUYER SHALL BE ENTITLED TO, AT ITS
ELECTION, EITHER (A) SPECIFIC ENFORCEMENT OF SELLER'S DUTY TO
TRANSFER THE PROPERTY PURSUANT TO THIS AGREEMENT, OR (B) PAYMENT
BY SELLER OF FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) AS
LIQUIDATED DAMAGES (IN WHICH EVENT BOTH PARTIES SHALL THEREAFTER
BE RELEASED FROM ALL FURTHER OBLIGATIONS HEREUNDER); PROVIDED,
HOWEVER, BY PURSUING AN ACTION FOR SPECIFIC PERFORMANCE, BUYER
SHALL BE DEEMED TO HAVE IRREVOCABLY ELECTED SUCH ACTION AS ITS
SOLE REMEDY HEREUNDER AND SHALL NOT BE ENTITLED TO MAINTAIN A
CONCURRENT OR ALTERNATIVE ACTION FOR ANY OTHER DAMAGES OR REMEDIES.
BUYER AND SELLER ACKNOWLEDGE THAT BUYER'S AND SELLER'S
DAMAGES WOULD BE DIFFICULT OR IMPOSSIBLE TO DETERMINE IN THE
EVENT, RESPECTIVELY, OF BUYER'S OR SELLER'S FAILURE TO PERFORM
ITS OBLIGATIONS UNDER THIS AGREEMENT AND THAT THE DEPOSIT AND THE
LIQUIDATED RECOVERY SET FORTH ABOVE, FOR BUYER IN THE EVENT OF
SELLER'S BREACH, AND SELLER IN THE EVENT OF BUYER'S BREACH, ARE
REASONABLE ESTIMATES OF SUCH DAMAGES. THE DEPOSIT AND SUCH OTHER
PAYMENT SHALL, THEREFORE, BE LIQUIDATED DAMAGES TO, RESPECTIVELY,
SELLER AND BUYER, AND RETENTION THEREOF OR RECEIPT THEREOF SHALL
BE, RESPECTIVELY, SELLER'S AND BUYER'S SOLE AND EXCLUSIVE REMEDY
FOR THE OTHER PARTY'S FAILURE TO PERFORM ITS OBLIGATIONS UNDER
THIS AGREEMENT IN THE EVENT THE NON-DEFAULTING PARTY ELECTS TO
TERMINATE THIS AGREEMENT (UNLESS BUYER ELECTS ITS RIGHT TO SEEK
SPECIFIC PERFORMANCE AS PROVIDED HEREIN). EXCEPT AS EXPRESSLY
PROVIDED ABOVE, SELLER AND BUYER EACH EXPRESSLY WAIVE THE
REMEDIES OF SPECIFIC PERFORMANCE AND ADDITIONAL DAMAGES. IN
ADDITION, BUYER HEREBY WAIVES ANY RIGHT (EXCEPT IN CONNECTION
WITH AN ACTION FOR SPECIFIC PERFORMANCE), WHICH BUYER MAY
OTHERWISE HAVE TO RECORD ANY NOTICE OF PENDING ACTION (LIS
PENDENS) AFFECTING THE PROPERTY. BUYER AND SELLER FURTHER
ACKNOWLEDGE BY THEIR INITIALS BELOW THAT THEIR RESPECTIVE WAIVER
OF THEIR RIGHTS PURSUANT TO THIS SECTION 14 IS MATERIAL
CONSIDERATION FOR THE OTHER PARTY TO ENTER INTO THIS AGREEMENT.
SELLER'S INITIALS: /s/ WJS BUYER'S INITIALS: /s/ VJC
15. Brokerage Commissions. Buyer hereby represents and warrants
to Seller that Buyer has not incurred, and shall not have
incurred as of the Closing Date, any liability for the payment of
any brokerage fee or commission in connection with the
transaction contemplated in this Agreement. Seller hereby
represents and warrants to Buyer that Seller has not incurred,
and shall not have incurred as of the Closing Date, any liability
for the payment of any brokerage fee or commission in connection
with the transaction contemplated in this Agreement, except for
the commission due to Cushman & Wakefield, with respect to the
Property, which commission (as between Buyer and Seller) shall be
the sole obligation of Seller. Seller and Buyer hereby agree to
defend, indemnify and hold harmless the other from and against
any and all claims of any other person claiming a brokerage fee
or commission in connection with the Property through such party.
16. Miscellaneous.
(1) No Exchange. Seller shall not participate in, or
accommodate Buyer in connection with, a ' 1031 exchange.
(2) Entire Agreement. This Agreement supersedes all prior
discussions, agreements and understandings between Seller and
Buyer, with the exception of the Entry Permit and the
confidentiality letter signed by Buyer on or about April 13,
1998, and constitutes the entire agreement between Seller and
Buyer with respect to the transaction herein contemplated. This
Agreement may be amended or modified only by a written instrument
executed by Seller and Buyer.
(3) Waiver. Each party hereto may waive any breach by the other
party of any of the provisions contained in this Agreement or any
default by such other party in the observance or performance of
any covenant or condition required to be observed or performed by
it contained herein; provided, however, that such waiver or
waivers shall be in writing, shall not be construed as a
continuing waiver, and shall not extend to or be taken in any
manner whatsoever to affect any subsequent breach, act or
omission or default or affect each party's rights resulting
therefrom. No waiver will be implied from any delay or failure
by either party to take action on account of any default by the
other party. No extension of time for performance of any
obligations or acts shall be deemed an extension of the time for
performance of any other obligations or acts.
(4) Further Assurances. Each party hereto shall do such further
acts and execute and deliver such further agreements and
assurances as the other party may reasonably require to give full
effect and meaning to this Agreement.
(5) Notices. All notices demands, consents, approvals and other
communications given pursuant to this Agreement (each, a
"Notice") must be in writing and must be sent by hand, or by
telecopy (with a duplicate copy sent by ordinary mail, postage
prepaid), or by certified or registered mail, postage prepaid,
return receipt requested, or by reputable overnight courier
service, postage prepaid, addressed to the party to be notified
as set forth below:
TO SELLER:
The Mutual Life Insurance Company of New York
19712 MacArthur Blvd., Suite 200
Irvine, California 92612
Telecopy No.: (949) 622-8889
Attention: H.E. Dan Shasteen, Esq.
With a copy to:
Croudace & Dietrich
5 Park Plaza, Suite 1050
Irvine, California 92614
Telecopy No.: (949) 794-9909
Attention: Debra M. Dietrich, Esq.
TO BUYER:
Arden Realty Limited Partnership
c/o Arden Realty, Inc.
9100 Wilshire Boulevard, East Tower, Suite 700
Beverly Hills, California 90212
Telecopy No.: (310) 246-2941
Attention: Mr. Victor Coleman
With a copy to:
Troy & Gould, P.C.
1801 Century Park East, 16th Floor
Los Angeles, California 90067
Telecopy No.: (310) 201-4746
Attn: Kenneth R. Blumer, Esq.
Notices will be deemed given when delivered to Seller or Buyer,
as applicable (regardless of whether delivered to the persons
stated above to receive copies), by hand or when a legible copy
is received by telecopier (provided receipt is verified by
telephone confirmation or one of the other permitted means of
giving Notices under this Section), or if mailed, three (3) days
after deposit in the U.S. mail, certified, return receipt
requested (or on the date of delivery for overnight courier
service), with failure or refusal to accept delivery constituting
delivery for this purpose. The parties agree to use reasonable
efforts to provide copies of Notices to the outside counsel for
the other party specified above, but delivery of such copies
shall not be required for effective delivery of Notice. Actual
notice, however and from whomever given or received, will always
be effective Notice when received. Either party may change its
address for Notices set forth above by giving at least ten (10)
days' prior Notice of such change to the other party.
(6) Facsimile Signatures. Buyer and Seller each (i) agrees to
permit the use of telecopied signatures, from time to time, where
appropriate and consistent with subsection (e) above, in order to
expedite the transaction contemplated by this Agreement, (ii)
intends to be bound by its respective telecopied signature, (iii)
is aware that the other party will rely on the telecopied
signature, and (iv) acknowledges such reliance and waives any
defenses to the enforcement of the documents and Notices
effecting the transaction contemplated by this Agreement based on
the fact that a signature or Notice was sent by telecopy.
(7) Successors and Assigns; Survival. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and
their respective successors, heirs, administrators and assigns,
provided, however, that if Buyer assigns this Agreement, Buyer
shall not be relieved of any liability in connection herewith or
the purchase and sale. Any provision of this Agreement which, by
its terms, is to be performed after the Closing, shall survive
the Closing Date until full performance thereof.
(8) Governing Law and Venue. This Agreement shall be governed
by and construed in accordance with the laws of the State of
California and the venue shall be in Orange County.
(9) No Third Parties Benefitted. The parties do not intend to
confer any benefit on any person, firm, or corporation other than
Seller and Buyer, except as and to the extent otherwise expressly
provided herein.
(10) Attorneys' Fees. In the event of any dispute between any
parties arising out of or in connection with this Agreement or
any other document executed or delivered in connection herewith,
including any litigation, arbitration, bankruptcy and appellate
proceedings (and efforts to enforce the judgment, award or other
disposition of any of the same), the party which prevails in such
action (the "Prevailing Party") shall be reimbursed by the other
party for attorneys' fees, costs and expenses incurred by the
Prevailing Party in connection with such dispute (whether or not
such costs or expenses are specified in California Code of Civil
Procedure Section 1033.5 (a) or (b)). As used herein, the
"Prevailing Party" shall mean the party which obtains the net
monetary recovery or, if no monetary recovery is sought, the
party obtaining the greater nonmonetary relief.
(11) Construction. The section titles or captions in this
Agreement are for convenience only and shall not be deemed to be
part of this Agreement. All pronouns and any variations of
pronouns shall be deemed to refer to the masculine, feminine, or
neuter, singular or plural, as the identity of the parties may
require. Whenever the terms referred to herein are singular, the
same shall be deemed to mean the plural, as the context
indicates, and vice versa. The enumeration of certain
particulars as included within the general language shall not
restrict the scope or affect the generality of such language, and
except as expressly otherwise provided herein, the term "include"
shall mean "include, but shall not be limited to" and the term
"including" shall mean "including, without limitation." Both
Buyer and Seller are sophisticated parties who have been
represented by counsel in the negotiation of this Agreement, and
this Agreement shall not be construed as if it had been prepared
only by Buyer or Seller but rather as if both Buyer and Seller
had prepared the same. If any term, covenant, condition, or
provision of this Agreement or the application thereof to any
person or circumstance shall, at any time or to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances
other than those to which it is held invalid or unenforceable,
shall not be affected thereby, and each provision of this
Agreement shall be valid and shall be enforced to the fullest
extent permitted by law.
(1) (12) Time of Essence. Time is of the essence of this
Agreement and each and every term and provision hereof.
(13) Confidentiality and Indemnification. Buyer covenants and
agrees that: (i) all information provided to it by Seller in
connection with the Property or resulting from Buyer's
inspections of the Property and review of relevant materials will
be held in strict confidence by it and its agents and employees,
(ii) Buyer will return all such information to Seller in the
event the transaction contemplated by this Agreement is not
consummated for any reason, and (iii) Buyer will not rely
thereon, but will instead conduct Buyer's own due diligence
inquiry with respect to the Property. Buyer further agrees to
indemnify and hold Seller harmless from and against any and all
claims or damages, including attorneys' fees, resulting from
Buyer's breach of the covenant contained herein and/or from its
or its agents' or employees' entrance onto the Property. The
indemnification contained herein shall, without limitation,
survive the termination of this Agreement.
(14) Consents and Approvals. Both Seller and Buyer represent and
warrant to the other that each have obtained all requisite
consents and approvals, whether required by internal operating
procedures or otherwise, for entering into this Agreement and
closing the transaction contemplated hereby.
(15) No Other Agreements. After the Effective Date and until the
earlier of the termination of this Agreement or the Outside
Closing Date, Seller shall not enter into any written agreement
with any other person or entity for the sale of the Property;
provided, however, that Seller may accept back-up offers with
respect to purchase of the Property.
(16) Exhibits. All of the Exhibits referenced in this Agreement
are incorporated herein by reference.
(17) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which taken together shall be deemed one and the same instrument.
(18) Post-Closing Covenant Re: Defaulted Leases. If and to the
extent any of the Leases shall be in default as of the Closing
Date, and shall not have been terminated prior to the Closing
Date, Buyer acknowledges and agrees that, if Buyer consummates
the purchase of the Property, Buyer shall use good faith,
reasonable efforts to relet the premises subject to such Lease,
so as to mitigate damages and preserve the benefits to Seller of
the retained Litigation Claims.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the Effective Date.
BUYER:
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: Arden Realty, Inc., a Maryland corporation
Its: General Partner
By:/s/ Victor J. Coleman
Its: President and COO
SELLER:
THE MUTUAL LIFE INSURANCE COMPANY
OF NEW YORK, a New York mutual life insurance company
By:/s/ William J. Swackhamer
Its: Regional Vice President
By:
Its:
"ESCROW AGENT:" The undersigned acknowledges receipt of this
Agreement and agrees to act in accordance with all applicable
provisions contained herein.
CHICAGO TITLE INSURANCE COMPANY,
a California corporation
By: /s/ Margie Wheeler
Its: Sr. Escrow Officer
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT AND
JOINT ESCROW INSTRUCTIONS
THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT AND
JOINT ESCROW INSTRUCTIONS ("Amendment") is made and entered into
and is effective as of the __th day of May, 1998 (the "Effective
Date"), by and between THE MUTUAL LIFE INSURANCE COMPANY OF NEW
YORK, a New York mutual life insurance company ("Seller"), and
ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited partnership ("Buyer").
RECITALS
A. Seller and Buyer entered into that certain Purchase and
Sale Agreement and Joint Escrow Instructions, dated as of May 12,
1998 ("Original Purchase Agreement") pursuant to which Seller
agreed to sell and Buyer agreed to purchase that certain property
as defined in subsections (a) through (g) of the Original
Purchase Agreement (collectively referred to herein as the
"Property"). All terms with initial capitalization used and not
otherwise defined herein shall have the meanings set forth in the
Original Purchase Agreement.
B. Seller and Buyer now desire to amend the Original
Purchase Agreement to make certain modifications thereto.
AGREEMENT
NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING RECITALS,
the mutual covenants set forth in this Amendment and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Buyer and Seller hereby agree as
follows:
1. Definitions. From and after the date hereof, all
references to the "Agreement" in the Original Purchase Agreement
shall mean the Original Purchase Agreement, as amended hereby.
2. Purchase Agreement. The following amendments are made to
the Original Purchase Agreement:
a. Magnolia Street Lease. With respect to that certain
lease dated February 16, 1973 by and between the City Of Long
Beach, a municipal corporation ("City"), as lessor, and Boise
Cascade Urban Development Corporation, a Delaware corporation, as
lessee (the "Boise Cascade Lease"), as subsequently assigned
pursuant to that certain "Assignment of Magnolia Street Lease"
dated October 19, 1973, notwithstanding that Chicago Title
Company has agreed to provide title insurance to Buyer in
connection with the Boise Cascade Lease (upon which insurance
Buyer has agreed to rely in connection with Closing the
transaction) even if such an estoppel certificate is not
obtained, Buyer and Seller agree to cooperate to attempt to
obtain an estoppel certificate from the City after the Closing
Date. Similarly, with respect to the License Agreement dated May
10, 1993, by and between Seller and the Redevelopment Agency of
the City of Long Beach, California ("Agency"), concerning a
license to use a portion of an easement area (the "License"),
notwithstanding that Chicago Title Company has agreed to provide
title insurance to Buyer in connection with the License (upon
which insurance Buyer has agreed to rely in connection with
Closing the transaction) even if the Agency's consent to transfer
of the License is not obtained, Buyer and Seller agree to
cooperate to attempt to obtain the consent of the Agency after
the Closing Date
b. Investigation Period. Buyer and Seller acknowledge and
agree that the Investigation Period terminated in accordance with
the Original Purchase Agreement, effective 5:00 p.m, on
Wednesday, May 13, 1998.
c. Additional Work. As a condition precedent to Buyer=s
obligation to Close, Seller shall have either (i) fully paid for,
prior to the Closing Date, repairs with respect to the 10th, 12th
and 14th floors of the Property, as identified with respect to
the 10th floor in the notice dated September 16, 1997, delivered
to Seller by the Long Beach Fire Department, or (ii) to the
extent such work is not fully paid for prior to the Closing Date,
Buyer shall be given a credit at Closing in an amount equal to
the estimated cost of the work remaining unpaid (as determined
based upon the bid obtained by Seller with respect to the 10th
floor work), and Buyer shall be obligated following the Closing
to complete all such uncompleted work with respect to the 10th,
12th and 14th floors, and to pay any and all costs of such work
unpaid as of the Closing Date.
d. O'Flaherty & Belgum Lease. Section 4(i) of the
Original Purchase Agreement is hereby amended and restated in its
entirety to read as follows:
(i) Lease Terminations - O'Flaherty & Belgum and Josi & Dold.
Seller hereby advises Buyer that Seller intends to, and
Seller reserves the right to, terminate those certain leases
entered into by Seller with O'Flaherty & Belgum and Josi &
Dold, with respect to Suites 500 and 800 respectively, which
tenants are tenants that are currently in default with
respect to their Leases. In the event that Seller
successfully negotiates a termination of the Josi & Dold
Lease prior to the Closing, then Buyer acknowledges and
agrees that Buyer shall not be entitled to any credit in
connection with the Closing as a result of the termination
of such Lease (as Carol, Kelly, & Trotter have agreed to let
the Josi & Dold space), and Seller shall retain its rights
to commence and maintain an action against Josi & Dold with
respect to that Lease, and the Lease shall not be assigned
to Buyer. In the event the Josi & Dold Lease is not
terminated prior to the Closing Date, then Buyer shall
assume the Lease (and rights and obligations thereunder from
and after the Closing Date), so as to enable Buyer to pursue
an unlawful detainer proceeding and a proceeding against
Lease collateral and guarantors after the Closing Date, in
which event any recovery of Rents, any security deposit, and
proceeds of collateral for such Lease, shall be applied
first to Rents accruing after the Closing Date and prior to
the date of rent commencement under the Trotter Lease, and
then against Rents in arrears prior to the Closing Date.
With respect to the O'Flaherty & Belgum space, without
regard to whether Seller successfully terminates the Lease
prior to the Closing, Buyer and Seller agree as follows:
(i) Seller shall retain the right to pursue
its claims against such tenant following the
Closing with respect to all Rents arising
under the Lease;
(ii) Buyer shall use its best efforts to let
the space following the Closing in accordance
with Section 16(r) below; and
(iii) Seller shall place in Escrow the sum of
$63,500.00 (the "Funds"), for credit and
release to Buyer on September 5, 1998,
provided that Buyer complies with its
obligation to attempt to relet the premises,
of an amount equal to the difference between
(i) $63,500, and (ii) the sum of (A) rents
received by Buyer after the Closing with
respect to the O'Flaherty & Belgum Lease, and
(B) if Buyer enters into a new lease with
respect to the O'Flaherty & Belgum space on
or before September 5, 1998, rents payable by
a new tenant in the O'Flaherty & Belgum space
for the period between the Closing Date and
September 5, 1998 (calculated based upon
average rent during the initial year of the
new lease and applying it ratably throughout
such period, even if not so paid). All
remaining Funds shall be released to Seller.
Buyer and Seller acknowledge and agree that $3,500.00
of the Funds to be released to Buyer represent Buyer's and
Seller's agreed liquidated reimbursement of Buyer's likely
attorneys' fees and costs to be incurred in connection with
Buyer's prosecution to completion of an unlawful detainer
proceeding against O'Flaherty & Belgum, and that neither
Buyer nor Seller shall have any further obligation to each
other with respect to such costs, regardless of whether the
actual amount incurred is greater or lesser than such sum.
Without limiting the generality of the foregoing
paragraphs, if the O'Flaherty & Belgum Lease is not
terminated prior to the Closing Date, then Buyer shall
assume such Lease (and rights and the obligations thereunder
arising from and after the Closing Date), so as to enable
Buyer to pursue an unlawful detainer proceeding after the
Closing Date, for possession only. Prior to and after the
Closing Date, Seller shall have the sole right to pursue an
action (and Buyer hereby consents thereto) to recover
damages against the O'Flaherty & Belgum, the Lease
collateral and/or any guarantors, and Seller shall be
entitled to retain any security deposit, rents and proceeds
of collateral for such Lease recovered in such action.
Buyer and Seller shall cooperate with each other in pursuing
unlawful detainer proceedings against O'Flaherty & Belgum
and Josie & Dold, and in all other proceedings in connection
with such Leases.
With respect to the leasing of Suite P-220, as to which
Buyer and Seller anticipated that the existing lease with
Alliance Shippers, Inc. ("Alliance"), which Lease expired
April 30, 1998 would be renewed at market rates, the parties
agree that, if Suite P-220 is not relet effective on or
before the Closing Date (either to Alliance or another
tenant, in each case as approved by Buyer pursuant to
Section 6 hereof), Buyer shall receive a credit against the
Purchase Price in the amount of One Hundred Seventy-Five
Thousand Dollars ($175,000.00).
5. Miscellaneous. Except to the extent the Original Purchase
Agreement is amended hereby, all other terms and provisions of
the Original Purchase Agreement shall remain in full force and
effect. No amendments hereto shall be enforceable except if in
writing and executed by each of the parties. This Amendment may
be executed in two or more counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of the date first set forth above.
"SELLER"
"BUYER"
THE MUTUAL LIFE INSURANCE
COMPANY OF NEW YORK, ARDEN REALTY LIMITED
a New York mutual life PARTNERSHIP,
insurance company a Maryland limited partnership
By: Arden Realty, Inc., a
By: /s/ William J. Swackhamer Maryland corporation
Name: William J. Swackhamer Its: sole general partner
Its: Regional Vice President
By:/s/ Victor J. Coleman
Name: Victor J. Coleman
Its: President and COO
"ESCROW AGENT:" The
undersigned acknowledges
receipt of this Amendment and
agrees to act in accordance
with all applicable provisions
contained herein.
CHICAGO TITLE COMPANY,
a California corporation
By:/s/ Margie Wheeler
Its: Senior Escrow Officer
Date: May 20, 1998
