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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported) June 30, 1997
KILROY REALTY CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND COMMISSION FILE: 1-12675 95-4598246
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2250 EAST IMPERIAL HIGHWAY, EL SEGUNDO, CALIFORNIA, 90245
(Address of principal executive offices)
Registrant's telephone number, including area code: (213) 772-1193
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 30, 1997 Kilroy Realty Corporation (collectively with its
subsidiaries the "Company") acquired three office buildings in Santa Monica,
California which comprise approximately 94,800 aggregate rentable square feet.
On such date, the office buildings were 100% leased at an average annual rental
rate of $2.02 per square foot. The quoted independent market rental rate is
$2.10 per square foot for comparable office properties in the Santa Monica
submarket. The properties were purchased from Santa Monica Number Seven
Associates L.P., an unaffiliated entity, for approximately $31,000,000 in cash.
On July 1, 1997 the Company acquired two office buildings in Santa Ana,
California which comprise approximately 124,900 aggregate rentable square feet.
On such date, the office buildings were 100% leased at an average annual rental
rate of $1.10 per square foot. The quoted independent market rental rate is
$0.95 per square foot for comparable office properties in the Santa Ana
submarket. The properties were purchased from Pullman Carnegie Associates, an
unaffiliated entity, for approximately $15,540,000 in cash.
On July 2, 1997 the Company acquired one office building and one industrial
building in Irvine, California which comprise approximately 272,000 aggregate
rentable square feet. On such date, the office building was 100% leased at an
average annual rental rate of $0.85 per square foot. The quoted independent
market rental rate is $1.05 per square foot for comparable office properties in
the Irvine submarket. On such date, the industrial building was 100% leased at
an average annual rental rate of $0.45 per square foot. The quoted independent
market rental rate is $0.57 per square foot for comparable industrial properties
in the Irvine submarket. The properties were purchased from Mazda Motor of
America, Inc., an unaffiliated entity, for approximately $17,025,000 in cash.
The purchase prices for the above acquisitions were based on arms length
negotiations. The Company used its secured revolving credit facility to finance
the acquisitions. The loans currently bear interest at LIBOR plus 1.5%.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
DESCRIPTION
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(a) Financial statements of properties acquired.
The required financial statements for the acquired property will
be filed within 60 days.
(b) Pro forma financial information.
The required pro forma financial information will be filed within
60 days.
(c) Exhibits
EXHIBIT
NO.
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10.54 Purchase and Sale Agreement and Escrow Instructions, dated May 5,
1997, by and between Kilroy Realty, L.P. and Pullman Carnegie
Associates.
10.59 Amendment to Purchase and Sale Agreement and Escrow Instructions,
dated June 27, 1997, by and between Kilroy Realty, L.P. and
Pullman Carnegie Associates.
10.60 Agreement of Purchase and Sale and Joint Escrow Instructions,
dated June 12, 1997, by and between Mazda Motor of America, Inc.,
and Kilroy Realty, L.P.
10.61 Amendment to Agreement of Purchase and Sale and Joint Escrow
Instructions, dated June 30, 1997, by and between Mazda Motor of
America, Inc., and Kilroy Realty, L.P.
10.62 Agreement For Purchase and Sale of 2100 Colorado Avenue, Santa
Monica, California, dated June 16, 1997, by and between Santa
Monica Number Seven Associates L.P., and Kilroy Realty, L.P.
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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.
KILROY REALTY CORPORATION
Date: July 15, 1997 By /s/ Ann Marie Whitney
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Name: Ann Marie Whitney
Title: Vice President and Controller
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EXHIBIT 10.54
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
BY AND BETWEEN
KILROY REALTY, L.P.,
A DELAWARE LIMITED PARTNERSHIP
AS
"BUYER"
AND
PULLMAN CARNEGIE ASSOCIATES,
A CALIFORNIA LIMITED PARTNERSHIP
AS
"SELLER"
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TABLE OF CONTENTS
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PAGE
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ARTICLE I. PURCHASE AND SALE..................................... 1
1.1. Agreement of Purchase and Sale......................... 1
1.2. Property Defined....................................... 2
1.3. Purchase Price......................................... 2
1.4. Opening of Escrow; Deposit............................. 2
1.5. Payment of Purchase Price.............................. 3
1.6. Deposit as Liquidated Damages.......................... 3
1.7. Escrow Holder.......................................... 4
ARTICLE II. TITLE AND SURVEY..................................... 5
2.1. Delivery of Title Documents............................ 5
2.2. Title Examination...................................... 5
2.3. Pre-Closing "Gap" Title Defects........................ 6
2.4. Permitted Exceptions................................... 6
2.5. Conveyance of Title.................................... 7
ARTICLE III. REVIEW OF PROPERTY.................................. 7
3.1. Right of Inspection.................................... 7
3.2. Environmental Reports.................................. 8
3.3. Right of Termination................................... 8
3.4. Review of Tenant Estoppel.............................. 8
ARTICLE IV. CLOSING.............................................. 9
4.1. Time and Place......................................... 9
4.2. Seller's Obligations At and Prior to Closing........... 9
4.3. Buyer's Obligations at Closing......................... 11
4.4. Credits and Prorations................................. 12
4.5. Transaction Taxes and Closing Costs.................... 14
4.6. Conditions Precedent to Obligation of Buyer............ 15
4.7. Conditions Precedent to Obligation of Seller........... 15
ARTICLE V. REPRESENTATIONS, WARRANTIES AND COVENANTS............. 16
5.1. Representations and Warranties of Seller............... 16
5.2. Knowledge Defined...................................... 21
5.3. Survival of Seller's Representations and Warranties.... 21
5.4. Covenants of Seller.................................... 21
5.5. Representations and Warranties of Buyer................ 22
5.6. Survival of Buyer's Representations and Warranties..... 22
ARTICLE VI. DEFAULT.............................................. 23
6.1. Default by Buyer....................................... 23
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6.2. Default by Seller...................................... 23
6.3. Recoverable Damages.................................... 23
ARTICLE VII. RISK OF LOSS........................................ 23
7.1. Minor Damage........................................... 23
7.2. Major Damage........................................... 23
7.3. Definition of "Major" Loss or Damage................... 24
ARTICLE VIII. BROKERAGE COMMISSIONS.............................. 24
ARTICLE IX. DISCLAIMERS.......................................... 25
ARTICLE X. MISCELLANEOUS......................................... 25
10.1. Confidentiality...................................... 25
10.2. Public Disclosure.................................... 25
10.3. Assignment........................................... 25
10.4. Notices.............................................. 25
10.5. Modifications........................................ 27
10.6. Entire Agreement..................................... 27
10.7. Further Assurances................................... 27
10.8. Counterparts......................................... 27
10.9. Facsimile Signatures................................. 27
10.10. Severability......................................... 27
10.11. Applicable Law....................................... 27
10.12. No Third Party Beneficiary........................... 27
10.13. Captions............................................. 28
10.14. Construction......................................... 28
10.15. Recordation.......................................... 28
</TABLE>
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<TABLE>
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EXHIBITS
<S> <C> <C>
A - DESCRIPTION OF LAND
B - LIST OF PERSONAL PROPERTY
C - FORM OF ASSIGNMENT OF LEASE
D - LIST OF OPERATING AGREEMENTS
E - OREDS LETTER AND RELATED CORRESPONDENCE
F - FORM OF QUIT CLAIM DEED
G - ESCROW HOLDER'S GENERAL PROVISIONS
H - LIST OF ENVIRONMENTAL REPORTS
I - TENANT ESTOPPEL FORM
J - FORM OF DEED
K - FORM OF BILL OF SALE
L - FORM OF ASSIGNMENT OF CONTRACTS
M - FORM OF FIRPTA AND CALFIRPTA CERTIFICATES
N - FORM OF TENANT NOTICE
O - LIST OF SPECIFIED LITIGATION
P - LIST OF BROKERAGE AGREEMENTS
Q - LIST OF VIOLATION NOTICES
R - RENT ROLL
S - LIST OF CERTAIN TENANT COSTS AND COMMISSIONS
T - 8-K AND AUDIT REQUIREMENTS
</TABLE>
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PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (this
"Agreement") is made as of May 5, 1997 (the "Effective Date"), by and between
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KILROY REALTY, L.P., a Delaware limited partnership ("Buyer"), and
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PULLMAN CARNEGIE ASSOCIATES, a California limited partnership ("Seller").
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ARTICLE I.
PURCHASE AND SALE
Section 1.1. Agreement of Purchase and Sale. Subject to the terms and
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conditions hereinafter set forth, Seller agrees to sell and convey to Buyer, and
Buyer agrees to purchase from Seller, the following:
(a) that certain parcel of land situated in Orange County, California
more particularly described in Exhibit A attached hereto, together with all
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rights and appurtenances pertaining to such land, including any right, title and
interest of Seller in and to adjacent streets, alleys or rights-of-way (the
parcel of land described in this clause (a) of Section 1.1 being herein referred
to collectively as the "Land"). The Land is located at 2501 Pullman Avenue,
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Santa Ana, California, and 1700 Carnegie Avenue, Santa Ana, California;
(b) the buildings, structures, fixtures and other improvements
affixed to or located on the Land, excluding fixtures owned by tenants (the
property described in this clause (b) of Section 1.1 being herein referred to
collectively as the "Improvements") (The Land and Improvements are referred to
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collectively herein as the "Real Property");
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(c) any and all of Seller's right, title and interest in and to all
tangible personal property located upon the Land or within the Improvements,
including, without limitation, any and all appliances, furniture, carpeting,
draperies and curtains, tools and supplies, and other items of personal property
owned by Seller, located on and used exclusively in connection with the
operation of the Real Property, which personal property includes without
limitation the personal property listed on Exhibit B attached hereto (the
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property described in this clause (c) of Section 1.1 being herein referred to
collectively as the "Personal Property");
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(d) any and all of Seller's right, title and interest in and to that
certain lease dated April 28, 1988, by and between Seller as landlord and State
of California as tenant, as amended, covering all or any portion of the Real
Property, to the extent it is in effect on the date of the Closing (as such term
is defined in Section 4.1 hereof) (the property described in this clause (d) of
Section 1.1 being herein referred to as the "Lease" which Lease is identified on
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the rent roll attached hereto as Schedule 2 to Exhibit C), together with all
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rents and other sums due thereunder after the Closing (collectively the
"Rents"); and
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(e) any and all of Seller's right, title and interest in and to (i)
all assignable contracts and agreements (collectively, the "Operating
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Agreements") listed and described on Exhibit D attached hereto and made a part
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hereof, relating to the upkeep, repair, maintenance or operation of the Land,
Improvements or Personal Property, and (ii) all assignable existing warranties
and guaranties (express or implied) issued to Seller in connection with the
Improvements or the Personal Property, (iii) all assignable existing permits,
licenses, approvals, entitlements, certificates and authorizations issued by any
governmental authority in connection with the Property (as defined in Section
1.2 below) and (iv) the tradenames and trademarks used or useful in connection
with the Real Property, but only to the extent that the same are not trademarks
or tradenames of Seller (the property described in this clause (e) of Section
1.1 being collectively referred to herein as the "Intangibles").
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Section 1.2. Property Defined. The Land, the Improvements, the
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Personal Property, the Lease and the Intangibles are collectively referred to
herein as "Property." The Property contains two office buildings with, in the
aggregate, approximately 124,921 rentable square feet.
Section 1.3. Purchase Price. Seller is to sell and Buyer is to
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purchase the Property for the amount of:
(a) Fifteen Million Four Hundred and Fifty Thousand Dollars
($15,450,000); plus
(b) the amount, which shall not exceed Eight Hundred and Fifty
Thousand Dollars ($850,000), that is incurred or expended by Seller between the
Effective Date and Closing in completing the unfinished rehabilitation and
retrofitting items set forth in that certain letter dated May 13, 1997 from
Karen Fredericks, Vice President of Essex Realty Management to Tony Macris,
Associate Space Planner of the Office of Real Estate and Design Services
("OREDS") (the "OREDS Letter") in response to the November 13, 1996 letter from
Tony Macris to Burrel Magnusson and Karen Fredericks, together with those
underlying structural reports evidenced by the letters of October 3, 1996 and
December 16, 1996 from Robert Lawson of Robert Lawson, Structural Engineers,
letters of December 3, 1996 and December 16, 1996 from Pacific Building
Industries and the letter of August 9, 1996 from Dames & Moore; each of which
are attached hereto as Exhibit E.
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The aggregate of the amounts set forth in subparagraphs (a) and (b) of
this Section 1.3 are collectively referred to herein as the "Purchase Price".
Section 1.4. Opening of Escrow; Deposit. Not later than three (3) days
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following the parties' mutual execution and delivery of this Agreement, Buyer
shall open an escrow (the "Escrow") with Commerce Escrow Company (the "Escrow
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Holder"), having its office at the address set forth under Section 10.4, by
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concurrently delivering to Escrow Holder a full executed original of this
Agreement and depositing into Escrow the sum of Three Hundred and Fifty Thousand
Dollars ($350,000) (the "Deposit") in good funds either by certified bank or
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cashier's check or by federal wire transfer. Escrow Holder shall hold the
Deposit in an interest-bearing account reasonably acceptable to Seller and
Buyer, in accordance with the terms, and
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conditions of this Agreement with interest accruing thereon to be paid to Buyer
upon demand to Escrow Holder or, at Buyer's election, paid to Seller and
credited to the Purchase Price upon the Closing. All interest accrued on the
Deposit shall be deemed income of Buyer; and Buyer shall be responsible for the
payment of all costs and fees imposed on the Deposit account.
(b) Upon expiration of the Contingency Period (as defined in Section
2.2(a) below) the Deposit shall be immediately released to Seller by Escrow
Holder and concurrently therewith Seller shall deliver to Buyer for immediate
recordation a Deed of Trust on the Property in a form reasonably satisfactory to
Buyer to secure the repayment of the Deposit to Buyer if Buyer becomes entitled
to a refund. Buyer shall concurrently deliver into Escrow a Quit Claim Deed for
the Property in substantially the form attached hereto as Exhibit F. In the
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event of Seller's default under this Agreement after the expiration of the
Contingency Period, or in the event a closing condition for the benefit of Buyer
fails to occur, Buyer shall be legally entitled to the full refund of the
Deposit. In either such event, Weyerhaeuser Venture Co., a limited partner of
Seller, shall cause the Deposit to be refunded to Seller. Failure of Seller or
Weyerhaeuser Venture Co. to refund the Deposit in either of such events shall be
an event of default permitting Buyer to foreclose on the Deed of Trust. If the
Deposit is refunded to Buyer or if the Closing fails to occur and Seller becomes
entitled to retain the Deposit as liquidated damages in accordance with Section
1.6 hereof, Escrow Holder shall record the Quit Claim Deed. If a dispute arises
between Buyer and Seller with respect to the recordation of the Quit Claim Deed
and Seller desires to remove the lien of the Deed of Trust from the Property,
Seller may post a bond from a reputable lender or bonding institution, or other
security satisfactory to Buyer in the amount of the Deposit. Upon delivery of
the bond or other satisfactory security, Escrow Holder shall cause the Quit
Claim Deed to be recorded.
Section 1.5. Payment of Purchase Price. The Purchase Price, as
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increased or decreased by prorations and adjustments as herein provided, less
the Deposit, shall be payable in full through Escrow at Closing in cash by wire
transfer of immediately available funds to a bank account designated by Seller
in writing to Escrow Holder prior to the Closing.
Section 1.6. Deposit as Liquidated Damages. EXCEPT AS OTHERWISE
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SPECIFICALLY SET FORTH HEREIN AND PROVIDED THAT SELLER IS NOT IN MATERIAL BREACH
HEREOF AND PROVIDED FURTHER THAT ALL CLOSING CONDITIONS IN FAVOR OF BUYER HEREIN
HAVE BEEN SATISFIED, THE DEPOSIT (BUT NOT THE INTEREST EARNED FROM THE
INVESTMENT THEREOF) SHALL BE RETAINED BY SELLER AS LIQUIDATED DAMAGES IN THE
EVENT THE SALE OF THE PROPERTY AS CONTEMPLATED HEREUNDER IS NOT CONSUMMATED AS A
RESULT OF BUYER'S FAILURE, REFUSAL OR INABILITY TO DO SO. THE PARTIES
ACKNOWLEDGE THAT SELLER'S ACTUAL DAMAGES IN THE EVENT THAT THE SALE IS NOT SO
CONSUMMATED WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE.
THEREFORE, BY SEPARATELY EXECUTING THIS SECTION 1.6 BELOW, THE PARTIES
ACKNOWLEDGE THAT THE THREE HUNDRED AND FIFTY THOUSAND DOLLAR ($350,000)
NONREFUNDABLE DEPOSIT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF SELLER'S DAMAGES, AND AS SELLER'S EXCLUSIVE REMEDY
AGAINST BUYER IN THE EVENT THE CLOSING DOES NOT OCCUR AND AS
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SELLER'S SOLE AND EXCLUSIVE REMEDY AGAINST BUYER ARISING FROM SUCH FAILURE OF
THE SALE TO CLOSE. NOTWITHSTANDING THE FORGOING, THIS SECTION 1.6 SHALL NOT
LIMIT THE DAMAGES RECOVERABLE BY SELLER RESULTING FROM A BREACH OTHER THAN SUCH
FAILURE, REFUSAL OR INABILITY BY BUYER TO PURCHASE THE PROPERTY. BY THEIR
SEPARATELY EXECUTING THIS SECTION 1.6 BELOW, BUYER AND SELLER ACKNOWLEDGE THAT
THEY HAVE READ AND UNDERSTOOD THE ABOVE PROVISION COVERING LIQUIDATED DAMAGES,
AND THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED THE CONSEQUENCES OF
THIS LIQUIDATED DAMAGES PROVISION AT THE TIME THIS AGREEMENT WAS EXECUTED.
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PULLMAN CARNEGIE ASSOCIATES, KILROY REALTY, L.P., a Delaware
a California limited partnership limited partnership
By: Bay-Santa Ana Partners, By: KILROY REALTY CORPORATION, a
a California limited partnership, its Maryland corporation, its General
General Partner partner
By: Bay Development Corporation By: /s/ Jeffrey C. Hawken
a California corporation, its ---------------------------
General Partner Name: Jeffrey C. Hawken
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Its: Executive Vice President
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By: /s/ Burrel D. Magnusson
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Name: Burrel D. Magnusson
Its: President
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Section 1.7. Escrow Holder. Escrow Holder shall hold and dispose of
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the Deposit in accordance with the terms of this Agreement. Seller and Buyer
agree that the duties of the Escrow Holder hereunder are purely ministerial in
nature and shall be expressly limited to the administration of the Escrow and
the safekeeping and disposition of the Deposit and any closing funds delivered
into Escrow in accordance with this Agreement. Escrow Holder shall incur no
liability in connection with the safekeeping or disposition of the Deposit for
any reason other than Escrow Holder's failure to comply with any written escrow
instructions signed by Buyer and Seller, willful misconduct or gross negligence.
If Escrow Holder is in doubt as to its duties or obligations with regard to the
Deposit, or if Escrow Holder receives conflicting instructions from Buyer and
Seller with respect to the Deposit, then Escrow Holder shall not be required to
disburse the Deposit and may, at its option, continue to hold the Deposit until
both Buyer and Seller agree as to its disposition, or until a final judgment is
entered by a court of competent jurisdiction directing its disposition, or
Escrow Holder may interplead the Deposit in accordance with the laws of the
state in which the Property is located. Escrow Holder shall not be responsible
for any interest on the Deposit except as is actually earned, or for the loss of
any interest resulting from the withdrawal of the Deposit prior to the date
interest is posted thereon.
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Escrow Holder shall execute this Agreement solely for the purpose of being bound
by the provisions of Sections 1.4, 1.5, 1.6, 1.7 and Article IV hereof. The
parties agree to be bound by Escrow Holder's General Provisions attached hereto
as Exhibit G; provided, however in the event of a discrepancy between this
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Agreement and Escrow Holder's General Provisions, this Agreement shall prevail.
ARTICLE II.
TITLE AND SURVEY
Section 2.1. Delivery of Title Documents. As soon as reasonably
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practicable but in no event later than ten (10) days after the Effective Date,
Seller shall cause to be delivered to Buyer (a) a current preliminary title
report respecting the Property, to be obtained by Seller at Buyer's expense; (b)
copies of all documents referred to in the preliminary title reports, (c) copies
of the most recent property tax bills for the Property; and (d) a copy of
Seller's title insurance policy and/or survey for the Property, if available
(the documents referred to in (a) - (d) of this Section 2.1 are collectively
referred to as the "Title Documents").
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Section 2.2. Title Examination.
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(a) During the period beginning upon the Effective Date and ending at
5:00 p.m. (local time at the Property) on June 13, 1997 (hereinafter referred to
as the "Contingency Period"), Buyer shall have the right to review the Title
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Documents and otherwise examine the status of title to the Property. Seller
shall have no obligation to extend the Contingency Period beyond June 13, 1997
under any circumstances, time being of the essence of this provision. If Seller
has not actually received the Deposit immediately after the expiration of the
Contingency Period for any reason, Seller may terminate this Agreement and
neither party shall have any further obligations hereunder.
(b) During the Contingency Period, Buyer shall have the right (but
not the obligation) to obtain and approve, a new or updated ALTA survey of the
Property to be prepared by a licensed surveyor or engineer hired by Buyer at
Buyer's expense (collectively, the "Survey"). Buyer may obtain an ALTA "extended
coverage" supplemental report for the Property covered by the Survey, provided
Buyer pays any additional expense therefor and satisfies any other Title Company
requirements for the issuance thereof.
(c) Buyer shall notify Seller in writing (the "Title Notice") prior
to the expiration of the Contingency Period which exceptions to title (including
survey matters), if any, will not be accepted by Buyer. If Buyer fails to notify
Seller in writing of any exceptions to title by the expiration of the
Contingency Period, then Buyer shall be deemed to have approved the condition of
title to the Real Property. If Buyer notifies Seller in writing that Buyer
objects to any exceptions to title, then Seller shall have two (2) business days
after receipt of the Title Notice to notify Buyer in writing (a) that Seller
will remove such objectionable exceptions from title on or before the Closing;
or (b) that Seller elects not to cause such exceptions to be removed. If Seller
fails to notify Buyer in writing of its election within said two (2) business
day period, the Seller shall be deemed to have elected not to cause such
exception to be cured. The procurement by
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Seller of a commitment for the issuance of the Title Policy (as defined in
Section 2.5 hereof) or an endorsement thereto insuring Buyer against any title
exception which was disapproved pursuant to this Section 2.2 shall be deemed a
cure by Seller of such disapproval. If Seller gives Buyer notice under clause
(b) above, then Buyer shall have two (2) business days within which to notify
Seller in writing that Buyer will nevertheless proceed with the purchase and
take title to the Property subject to such exceptions, or that Buyer will
terminate this Agreement. If this Agreement is terminated pursuant to the
foregoing provisions of this paragraph, then neither party shall have any
further rights or obligations hereunder (except for any indemnity obligations of
either party pursuant to the other provisions of this Agreement), the Deposit
and all interest thereon shall be returned to Buyer and each party shall bear
its own costs incurred hereunder. If Buyer fails to notify Seller in writing of
its election within said two (2) business day period, then Buyer shall be deemed
to have elected to proceed with the purchase and take title to the Property
subject to such exceptions. Notwithstanding the foregoing, Buyer need not
disapprove any monetary lien representing monies owed, as Seller hereby agrees
to cause all such monetary liens (other than non-delinquent ad valorem real
estate taxes and assessments) to be removed prior to Closing. If Seller fails to
remove any such monetary lien prior to Closing, then Buyer shall apply such
portion of the Purchase Price as is necessary to cause the removal of such items
prior to Closing, and the proceeds of escrow to be otherwise distributed to
Seller upon Closing shall be reduced by the amount so applied.
Section 2.3. Pre-Closing "Gap" Title Defects. Buyer may, at or prior
-------------------------------
to Closing, notify Seller in writing (the "Gap Notice") of any objections to
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title (a) raised by the Title Company between the expiration of the Contingency
Period and the Closing and (b) not disclosed by the Title Company or otherwise
known to Buyer prior to the expiration of the Contingency Period. Buyer must
notify Seller of such objection to title within two (2) business days, but prior
to Closing, of being made aware of the existence of such exception. If Buyer
sends a Gap Notice to Seller, then Buyer and Seller shall have the same rights
and obligations with respect to such notice as apply to a Title Notice under
Section 2.2(c) hereof.
Section 2.4. Permitted Exceptions. The Property shall be conveyed
--------------------
subject to the following matters, which are hereinafter referred to as the
"Permitted Exceptions":
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(a) those matters that either are not objected to in writing within
the time periods provided in Sections 2.2(c) or 2.3 hereof, or if objected to in
writing by Buyer, are those which Seller has elected not to remove or cure, or
has been unable to remove or cure, and subject to which Buyer has elected or is
deemed to have elected to accept the conveyance of the Property;
(b) the rights of the tenant under the Lease;
(c) the lien of all ad valorem real estate taxes and assessments not
yet due and payable as of the date of Closing, subject to adjustment as herein
provided;
(d) local, state and federal laws, ordinances or governmental
regulations, including but not limited to building and zoning laws, ordinances
and regulations, now or hereafter in effect relating to the Property;
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(e) items shown on the Survey which are not objected to by Buyer or
are waived or deemed waived by Buyer in accordance with Section 2.2(c) hereof.
Section 2.5. Conveyance of Title. At Closing Seller shall convey and
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transfer to Buyer fee simple title to the Real Property, by execution and
delivery of a Deed (as defined in Section 4.2(a)(i) hereof) respecting the
Property. Evidence of delivery of such title shall be the issuance by Title
Company of a CLTA Standard Coverage Owner's Policy of Title Insurance (the
"Title Policy") covering the Property, in the aggregate amount of the Purchase
------------
Price, subject only to the Permitted Exceptions; provided, however, that if
Buyer has delivered to the Title Company prior to the Closing a Survey in
compliance with all applicable ALTA requirements, then the Title Policy required
hereunder shall be an ALTA Extended Coverage Owner's Policy of Title Insurance
in accordance with Section 2.2(b) hereof.
ARTICLE III.
REVIEW OF PROPERTY
Section 3.1. Right of Inspection. During the Contingency Period, Buyer
-------------------
shall have the right to:
(a) Perform, or hire consultants to perform a physical inspection of
the Property.
(b) Inspect, or hire consultants to inspect, the environmental
condition of the Property pursuant to the terms and conditions of this
Agreement, to obtain and review, at Buyer's sole election and cost, soils,
geology, structural and environmental and any other engineering reports and to
examine the defects in the Property alleged in the November 13, 1996 letter from
Tony Macris to Burrel Magnusson, discuss the resolution of those items with
representatives of the tenant under the lease and make and determine cost
estimates relating to those defects.
(c) To obtain and examine a search report showing liens against the
Personal Property which have been perfected by filings under the Uniform
Commercial Code.
(d) To examine at the Property, Seller's office and/or the property
manager's office, as the case may be, all books, records, reports, and files
related to the ownership, leasing, maintenance and operation of the Property,
which are to be provided by Seller to the extent available. Such documents
include, without limitation, (i) Seller's current Lease files for the Property,
including copies of the Lease, Operating Agreements, and letters of intent from
prospective tenants (ii) Seller's financial records concerning the Property's
income and operating expenses showing, among other things, all sources of
revenue and expense (including utility rates, ad valorem tax rates, maintenance
expenses and any anticipated capital improvements) through March 31, 1997 (iii)
existing notes and deeds of trust encumbering the Property, (iv) as-built plans
and specifications for the Improvements, (v) prior soils, geology, structural
and engineering reports, (vi) recorded and unrecorded parking agreements, (vii)
common area maintenance agreements or other agreements affecting the Property,
(viii) certificates of occupancy pertaining to the Improvements (ix) pertinent
correspondence with governmental agencies and the current
7
<PAGE>
tenant concerning the Property (x) evidence that the Property is zoned for the
purpose to which Buyer intends to use it and (xi) documents which set forth the
capital improvements to be made pursuant to Paragraph II of the OREDS Letter.
Notwithstanding the foregoing, Buyer shall not have the right to examine
Seller's partnership or corporate records, internal memoranda, financial
projections, budgets, appraisals, accounting and tax records and similar
proprietary, confidential or privileged information (collectively, the
"Confidential Documents").
----------------------
Any on-site inspections of the Property shall occur as soon as
possible after prior oral or written notice to Seller and shall be conducted so
as not to interfere unreasonably with the use of the Property by Seller or the
tenant. Seller may have a representative present during any such inspections.
If Buyer desires to do any invasive testing at the Property, Buyer shall do so
only after notifying Seller and obtaining Seller's prior written consent
thereto, which consent shall not be unreasonably withheld or delayed. Buyer
agrees to protect, indemnify, defend and hold Seller harmless from and against
any claim for liabilities, losses, costs, expenses (including reasonable
attorneys' fees), damages or injuries arising out of or resulting from the
inspection of the Property by Buyer or its agents or consultants, and
notwithstanding anything to the contrary in this Agreement, such obligation to
indemnify and hold harmless Seller shall survive the Closing or any termination
of this Agreement. Buyer shall keep the Property free and clear of any
mechanic's liens or materialmen's liens arising out of Buyer's entry onto the
Property.
Section 3.2. Environmental Reports. Buyer acknowledges that Buyer has
---------------------
received copies of the environmental reports listed on Exhibit H attached
---------
hereto.
Section 3.3. Right of Termination. If for any reason whatsoever Buyer
--------------------
determines that any aspect of the documents listed in Section 3.1 hereof or the
results of any inspections contemplated by Section 3.1 hereof makes the Property
unsuitable for Buyer's acquisition, or Buyer does not approve, or waive, the
failure to occur of any commercially reasonable contingencies, Buyer shall have
the right, prior to the expiration of the Contingency Period, to give written
notice thereof to Seller. If Buyer gives such notice, this Agreement shall
terminate and neither party shall have any further obligations hereunder (except
for any indemnity obligations of either party pursuant to the other provisions
of this Agreement), the Deposit and all interest thereon shall be returned to
Buyer and each party shall bear its own costs incurred hereunder. If Buyer fails
to give Seller a notice of termination prior to the expiration of the
Contingency Period, then Buyer shall be deemed to have approved all aspects of
the Property (except (i) title and survey, which shall be governed by Article II
hereof and (ii) tenant estoppels, which shall be governed by Section 3.4 hereof)
and to have elected to proceed with the purchase of the Property pursuant to the
terms hereof.
Section 3.4 Review of Tenant Estoppel. Seller shall deliver to the
-------------------------
tenant of the Property an estoppel certificate in substantially the form of
Exhibit I attached hereto (the "Tenant Estoppel") and shall request that the
tenant complete and sign the Tenant Estoppel and return it to Seller. The Tenant
Estoppel shall not be dated more than thirty (30) days prior to the Closing
Date. Seller shall deliver a copy of the completed Tenant Estoppel to Buyer upon
its receipt thereof. Buyer shall notify Seller within two (2) business days of
its receipt the Tenant Estoppel if Buyer determines that the Tenant Estoppel is
not acceptable to Buyer, along with the reasons for such determination. If Buyer
fails to give such notice within such two (2) business day period,
8
<PAGE>
then the Tenant Estoppel shall be deemed to be acceptable to Buyer. If Seller
fails to obtain a Tenant Estoppel with respect to the tenant at the Property
which is satisfactory to Buyer on or before two (2) business days prior to the
expiration of the Contingency Period, Buyer shall have the right to terminate
this Agreement by written notice to Seller. If this Agreement is terminated
pursuant to the foregoing provisions of this paragraph, then neither party shall
have any further rights or obligations hereunder (except for any indemnity
obligations of either party pursuant to the other provisions of this Agreement),
the Deposit and all interest thereon shall be returned to Buyer, and each party
shall bear its own costs incurred hereunder. If Buyer fails to give Seller a
notice of termination as set forth above, Buyer shall be deemed to have approved
the Tenant Estoppel and to have elected to proceed with the purchase of the
Property pursuant to the terms hereof. In that event Buyer may demand and Seller
shall deliver an estoppel certificate in substantially the form of Exhibit I
---------
with such estoppel certificate to be executed by the landlord/owner of the
leased premises. The provisions of this Section 3.4 shall survive the Closing.
ARTICLE IV.
CLOSING
Section 4.1. Time and Place. The consummation of the transaction
--------------
contemplated hereby (the "Closing") shall be held at the offices of Escrow
-------
Holder, at the address set forth under Section 10.4, on June 24, 1997. At the
Closing, Seller and Buyer shall perform the obligations set forth in,
respectively, Section 4.2 and Section 4.3 hereof, the performance of which
obligations shall be concurrent conditions; provided that the Deed shall not be
recorded until Escrow Holder has received the full amount of the Purchase Price
(which shall include the Deposit and all interest accrued thereon), adjusted by
prorations as set forth herein.
Section 4.2. Seller's Obligations At and Prior to Closing. Seller
--------------------------------------------
shall:
(a) no less than one (1) business day prior to Closing, deliver to
Escrow Holder:
(i) a duly executed and notarized grant deed (the "Deed")
----
in the form attached hereto as Exhibit J, conveying the Real Property, subject
---------
only to the Permitted Exceptions;
(ii) a duly executed bill of sale (the "Bill of Sale") in
------------
the form attached hereto as Exhibit K, conveying the Personal Property without
---------
warranty of title or use and without warranty, express or implied, as to
merchantability and fitness for any purpose;
(iii) a duly executed assignment of lease (the "Assignment of
Lease") in the form attached hereto as Exhibit C, pursuant to which, among other
---------
things, (x) Seller shall assign to Buyer, and Buyer shall assume, the
landlord/lessor interest in and to the Lease and Rents, (y) Seller shall
indemnify Buyer and hold Buyer harmless from and against any and all claims
pertaining to the Lease arising prior to the Closing, except for the cost of
completing any unfinished rehabilitation and retrof itting items and/or any
unfinished HVAC repairs and carpeting
9
<PAGE>
described in the OREDS Letter, all of which shall be Buyer's obligation and (z)
Buyer shall indemnify Seller and hold Seller harmless from and against any and
all claims pertaining to the Lease arising from and after the Closing and from
and against any and all claims pertaining to the completion of any unfinished
rehabilitation and retrofitting items and/or any such unfinished HVAC repairs
and unfinished carpeting required by the OREDS Letter;
(iv) a duly executed assignment and assumption agreement
(the "Assignment of Contracts") in the form attached hereto as Exhibit L,
----------------------- ---------
pursuant to which, among other things, (x) Seller shall, to the extent
assignable, assign to Buyer, and Buyer shall assume, Seller's interest in the
Intangibles, (y) Seller shall indemnify Buyer and hold Buyer harmless from and
against any and all claims pertaining to the Operating Agreements arising prior
to Closing, and (z) Buyer shall indemnify Seller and hold Seller harmless from
and against any and all claims pertaining to the Operating Agreements from and
after the Closing;
(v) such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of Seller;
(vi) FIRPTA and CALFIRPTA certificates in the form attached
hereto as Exhibits M-1 and M-2 duly executed by Seller;
------------ ---
(vii) such affidavits as may be customarily and reasonably
required by the Title Company;
(viii) an executed closing statement reasonably acceptable to
Seller; and
(ix) such additional documents as shall be reasonably
required to consummate the transaction contemplated by this Agreement;
(b) join with Buyer to execute notices (the "Tenant Notices") in the
--------------
form attached hereto as Exhibit N, which Buyer shall send to the tenant under
---------
the Lease promptly after the Closing, informing the tenant of the sale of the
Property and of the assignment to Buyer of Seller's interest in, and obligations
under the Lease and directing that all Rent and other sums payable after the
Closing under the Lease be paid as set forth in the notice; and
(c) at or prior to Closing, deliver to Buyer:
(i) if any representation or warranty of Seller needs to be
modified due to changes since the Effective Date, a certificate, dated as of the
date of Closing and executed on behalf of Seller by a duly authorized
representative thereof, identifying any representation or warranty which is not,
or no longer is, true and correct and explaining the state of facts giving rise
to the change. In no event shall Seller be liable to Buyer for, or be deemed to
be in default hereunder by reason of any breach of representation or warranty
which results from any change that (x) occurs between the Effective Date and the
date of Closing and (y) is expressly permitted under the terms of this Agreement
or is beyond the reasonable control of Seller to prevent. The occurrence of a
change in a representation and warranty which is not permitted hereunder or is
beyond the reasonable control of Seller to prevent shall, if materially adverse
to Buyer, constitute the non-fulfillment of the condition set forth in Section
4.6(b) hereof. If, despite changes or other
10
<PAGE>
matters described in such certificate, the Closing occurs, Seller's
representations and warranties set forth in this Agreement shall be deemed to
have been modified by all statements made in such certificate;
(ii) the original Lease and the Operating Agreements,
together with such leasing and property files and records located at the
Property or Seller's and/or the property manager's office, which are material in
connection with the continued operation, leasing and maintenance of the
Property, but excluding any Confidential Documents. For a period of three (3)
years after the Closing, Buyer shall allow Seller and its representatives access
without charge to all files, records and documents delivered to Buyer at the
Closing, upon reasonable advance notice and at all reasonable times, to make
copies of any and all such files, records and documents, which right shall
survive the Closing;
(iii) keys (if any) to, and possession and occupancy of, the
Property, subject only to the Permitted Exceptions.
Section 4.3. Buyer's Obligations at Closing. Buyer shall:
------------------------------
(a) Not less than one (1) business day prior to Closing, deliver to
Escrow Holder:
(i) the full amount of the Purchase Price as increased or
decreased by prorations and adjustments, less the Deposit, as provided in
Section 1.5 hereof;
(ii) a duly executed Assignment of Lease;
(iii) a duly executed Assignment of Contracts;
(iv) such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of Buyer;
(v) such affidavits, as may be customarily and reasonably
required by the Title Company;
(vi) an executed closing statement reasonably acceptable to
Buyer; and
(vii) such additional documents as shall be reasonably
required to consummate the transaction contemplated by this Agreement;
(b) if any representation or warranty of Buyer set forth in Section
5.5 hereof needs to be modified due to changes since the Effective Date, deliver
to Seller a certificate, dated as of the date of Closing and executed on behalf
of Buyer by a duly authorized representative thereof, identifying any such
representation or warranty which is not, or no longer is, true and correct and
explaining the state of facts giving rise to the change. In no event shall Buyer
be liable to Seller for, or be deemed to be in default hereunder by reason of
any breach of representation or warranty set forth in Section 5.5 hereof which
results from any change that (i) occurs between the Effective Date and the date
of Closing and (ii) is expressly permitted under
11
<PAGE>
the terms of this Agreement or is beyond the reasonable control of Buyer to
prevent. The occurrence of a change in a representation or warranty which is not
permitted hereunder or is beyond the reasonable control of Buyer to prevent
shall, if materially adverse to Seller, constitute the non-fulfillment of the
conditions set forth in Section 4.7(c) hereof. If, despite changes or other
matters described in such certificate, the Closing occurs, Buyer's
representations and warranties set forth in this Agreement shall be deemed to
have been modified by all statements made in such certificate; and
(c) join with Seller to execute the Tenant Notices.
Section 4.4. Credits and Prorations.
----------------------
(a) All income and expenses of the Property shall be apportioned as
of 12:01 a.m., on the day of Closing as if Buyer were vested with title to the
Property during the entire day upon which Closing occurs, subject, however, to
Buyer's obligation, net of expenses, to pay to Seller Seller's portion of the
income of the Property received by Buyer in arrears for the portion of the month
of June that precedes the Closing, it being acknowledged that the tenant pays
rent in arrears. Such prorated items include without limitation the following:
(i) all Rents, if any;
(ii) taxes and assessments (including personal property
taxes on the Personal Property) levied against the Property;
(iii) utility charges respecting the Property for which
Seller is liable, if any, such charges to be apportioned at Closing on the basis
of the most recent meter reading occurring prior to Closing (dated not more than
fifteen (15) days prior to Closing) or, if unmetered, on the basis of a current
bill for each such utility;
(iv) all amounts payable under brokerage agreements and
Operating Agreements, pursuant to the terms of this Agreement;
(v) all operating cost reimbursements, percentage rents,
additional rents and other retroactive rental escalations, sums or charges
payable by the tenant under the Lease which accrue prior to the Closing but are
not then due and payable, shall be prorated as of the Closing. Such amounts
shall be for the account of Seller for the period before the Closing and for the
account of Buyer from and after the Closing; and
(vi) any other operating expenses or other items pertaining
to the Property which are customarily prorated between a buyer and a seller in
the county in which the Property is located.
(b) Notwithstanding anything contained in Section 4.4(a) hereof:
(i) Any taxes paid at or prior to Closing shall be prorated
based upon the amounts actually paid. If taxes and assessments due and payable
during the year of Closing have not been paid before Closing, Seller shall be
charged at Closing an amount equal to that
12
<PAGE>
portion of such taxes and assessments which relates to the period before
Closing, and Buyer shall pay the taxes and assessments prior to their becoming
delinquent. Any such apportionment made with respect to a tax year for which the
tax rate or assessed valuation, or both, have not yet been fixed shall be based
upon the tax rate and/or assessed valuation fixed. To the extent that the actual
taxes and assessments for the current year differ from the amount apportioned at
Closing, the parties shall make all necessary adjustments by appropriate
payments between themselves within thirty (30) days after such amounts are
determined following Closing, subject to the provisions of Section 4.4(d)
hereof. Buyer shall pay all supplemental taxes resulting from the change in
ownership and reassessment occurring as of the Closing Date;
(ii) Unpaid and delinquent Rent collected by Seller and
Buyer after the date of Closing shall be delivered as follows: (a) if Seller
collects any unpaid or delinquent Rent for the Property, Seller shall, within
fifteen (15) days after the receipt thereof, deliver to Buyer any such Rent
which Buyer is entitled to hereunder relating to the date of Closing and any
period thereafter, and (b) if Buyer collects any unpaid or delinquent Rent from
the Property, Buyer shall, within fifteen (15) days after the receipt thereof,
deliver to Seller any such Rent which Seller is entitled to hereunder relating
to the period prior to the date of Closing. Seller and Buyer agree that all Rent
received by Seller or Buyer after the date of Closing shall be applied first to
actual out-of-pocket costs of collection incurred by Seller or Buyer, as
applicable, with respect to the tenant; second, to Rents due from such tenant
for the month in which such payment is received; third, to Rents and other
tenant charges attributable to any period after the Closing which are past due
on the date of receipt, and; finally, to Rents and other tenant charges
delinquent as of Closing. Buyer shall use commercially reasonable efforts after
Closing to collect all Rents in the usual course of Buyer's operation of the
Property, but Buyer will not be obligated to institute any legal proceedings,
including an action for unlawful detainer, or other collection procedures to
collect delinquent Rents. Seller may attempt to collect any delinquent Rents
owed to Seller and may institute any lawsuit or collection procedures, but may
not evict the tenant; and
(iii) with respect to any year-end reconciliations of
percentage rent, retroactive rental escalations and reimbursable expenses
(including common area expense reimbursements and the like) under the Lease,
Seller and Buyer shall cooperate to complete such reconciliations as soon as
possible after the Closing, with Seller responsible for amounts owing to the
tenant under the Lease and entitled to amounts payable by the tenant under the
Lease (as the case may be), with respect to periods prior to the Closing, and
with Buyer responsible for amounts owing to the tenant under the Lease and
entitled to amounts payable by the tenant under the Lease (as the case may be),
with respect to periods from and after the Closing. With respect to any such
amounts payable to Seller, Buyer shall use commercially reasonable efforts after
Closing to collect all amounts in the usual course of Buyer's operation of the
Property, but Buyer will not be obligated to institute legal proceedings,
including an action for unlawful detainer, or other collection procedures to
collect such amounts. Seller may attempt to collect any such amounts owed to
Seller and may institute any lawsuit or collection procedures, but may not evict
the tenant.
(c) Seller may prosecute an appeal of the real property tax
assessment for any tax years to and including the tax year in which the Closing
occurs, and may take related action which Seller deems appropriate in connection
therewith. Buyer shall cooperate with Seller in
13
<PAGE>
connection with such appeal and collection of a refund of real property taxes
paid. Seller owns and holds all right, title and interest in and to such appeal
and refund relating to the period prior to the Closing, and all amounts payable
in connection therewith shall be paid directly to Seller by the applicable
authorities. If such refund or any part thereof is received by Buyer, Buyer
shall promptly pay to Seller any amounts relating to the period prior to the
Closing. Any refund received by Seller shall be distributed as follows: first,
to reimburse Seller and Buyer for all costs incurred in connection with the
appeal; second, with respect to refunds payable to the tenant pursuant to the
Lease, to such tenant in accordance with the terms of such Lease; and third, to
Seller to the extent such appeal covers the period prior to the Closing, and to
Buyer to the extent such appeal covers the period as of the Closing and
thereafter. If and to the extent any such appeal covers the period after the
Closing, Buyer shall have the right to participate in such appeal.
(d) Except as otherwise provided herein, any revenue or expense
amount which cannot be ascertained with certainty as of Closing shall be
prorated on the basis of the parties' reasonable estimates of such amount, and
shall be the subject of a final proration sixty (60) days after Closing, or as
soon thereafter as the precise amounts can be ascertained. Buyer shall promptly
notify Seller when it becomes aware that any such estimated amount has been
ascertained. Once all revenue and expense amounts have been ascertained, Buyer
shall prepare, and certify as correct, a final proration statement which shall
be subject to Seller's approval. Upon Seller's acceptance and approval of any
final proration statement submitted by Buyer, such statement shall be
conclusively deemed to be accurate and final.
(e) The provisions of this Section 4.4 shall survive Closing.
Section 4.5. Transaction Taxes and Closing Costs.
-----------------------------------
(a) Seller and Buyer shall execute such returns, questionnaires and
other documents as shall be required with regard to all applicable real property
transaction taxes imposed by applicable federal, state or local law or
ordinance;
(b) Seller shall pay the fees of any counsel representing Seller in
connection with this transaction. Seller shall also pay the following costs and
expenses:
(i) one-half (1/2)of the escrow fee, if any, which may be
charged by the Escrow Holder or Title Company;
(ii) the premium for a CLTA Owner's Policy of Title
Insurance to be issued to Buyer by the Title Company at Closing;
(iii) one-half (1/2) of the fees for recording the Deed;
(iv) any documentary transfer tax or similar tax which
becomes payable by reason of the transfer of the Property;
(v) the fees for Seller's Broker, if any, identified in
Article VIII hereof.
14
<PAGE>
(c) Buyer shall pay the fees of any counsel representing Buyer in
connection with this transaction. Buyer shall also pay the following costs and
expenses:
(i) one-half (1/2) of the escrow fee, if any, which may be
charged by the Escrow Holder or Title Company;
(ii) the premium for the ALTA Extended Coverage Owner's
Policy of Title Insurance to be issued to Buyer by the Title Company at Closing,
and the fee for all endorsements thereto, to the extent that those costs exceed
the cost of a CLTA Standard Coverage Owner's Policy;
(iii) one- half (1/2) of the fees for recording the Deed;
(iv) the cost of the Survey.
(d) The Personal Property is included in this sale without charge,
except that Seller shall be obligated to pay the amount of any and all sales or
similar taxes payable in connection with the transfer of the Personal Property;
(e) All costs and expenses incident to this transaction and the
Closing hereof, and not specifically described above, shall be paid by the party
incurring same; and
(f) The provisions of this Section 4.5 shall survive the Closing.
Section 4.6. Conditions Precedent to Obligation of Buyer. The
-------------------------------------------
obligation of Buyer to consummate the transaction hereunder shall be subject to
the fulfillment on or before the date of Closing of all of the following
conditions, any or all of which may be waived by Buyer in its sole discretion:
(a) Seller shall have delivered to Buyer and Escrow Holder, as
required, all of the items required to be delivered pursuant to the terms of
this Agreement, including but not limited to, those provided for in Section 4.2
hereof;
(b) All of the representations and warranties of Seller contained in
this Agreement shall be true and correct in all material respects as of the date
of Closing (with appropriate modifications permitted under this Agreement); and
(c) Seller shall have performed and observed in all material
respects, all covenants and agreements of this Agreement to be performed and
observed by Seller as of the date of Closing.
Section 4.7. Conditions Precedent to Obligation of Seller. The
--------------------------------------------
obligation of Seller to consummate the transaction hereunder shall be subject to
the fulfillment on or before the date of Closing of all of the following
conditions, any or all of which may be waived by Seller in its sole discretion:
15
<PAGE>
(a) Seller shall have received the Purchase Price as adjusted as
provided herein, and payable in the manner provided for in this Agreement;
(b) Buyer shall have delivered to Seller or Escrow Holder, as
required, all of the items required to be delivered pursuant to the terms of
this Agreement, including but not limited to, those provided for in Section 4.3
hereof;
(c) All of the representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects as of the date
of Closing (with appropriate modifications permitted under this Agreement); and
(d) Buyer shall have performed and observed, in all material
respects, all covenants and agreements of this Agreement to be performed and
observed by Buyer as of the date of Closing.
ARTICLE V.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1. Representations and Warranties of Seller. Seller hereby
----------------------------------------
makes the following representations and warranties to Buyer as of the Effective
Date, which representations and warranties shall be deemed to have been made
again as of the Closing, subject to Section 4.2(c)(i) hereof:
(a) Organization and Authority. Seller has been duly organized and is
--------------------------
validly existing under the laws of the State of California. Seller has the full
right and authority to enter into this Agreement and to transfer each of the
Property and to consummate or cause to be consummated the transaction
contemplated by this Agreement. The person signing this Agreement on behalf of
Seller is authorized to do so.
(b) Pending Actions. There is no action, suit, arbitration,
---------------
unsatisfied order or judgment, government investigation or proceeding pending,
or to Seller's knowledge, threatened against Seller which, if adversely
determined, could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement. Except as set
forth on Exhibit O attached hereto, there is no litigation which has been filed
---------
against Seller that arises out of the ownership of the Property and would
materially affect the Property or use thereof, or Seller's ability to perform
hereunder.
(c) Operating Agreements. The Operating Agreements listed on
--------------------
Exhibit D are all of the agreements concerning the operation and maintenance of
- ---------
the Property entered into by Seller and affecting the Property, except those
Operating Agreements that are not assignable or are to be terminated by Seller
within thirty (30) days after the Closing, and except any agreement with
Seller's property manager, which shall be terminated by Seller.
(d) Lease Brokerage. There are no agreements with brokers providing
---------------
for the payment from and after the Closing by Seller or Seller's successor-in-
interest of leasing
16
<PAGE>
commissions or fees for procuring tenants with respect to the Property, except
as disclosed in Exhibit P hereto.
---------
(e) Condemnation. Seller has received no written notice of any
------------
condemnation proceedings relating to the Property.
(f) Notice of Violations. Seller has not received written notice of
--------------------
any uncured violation of any federal, state or local law or code relating to the
use or operation of the Property which would materially adversely affect the
Property or use thereof, except as related to that portion of the work which has
been or will be completed by Seller prior to Closing pursuant to the OREDS
Letter and underlying structural reports or as set forth on Exhibit Q attached
---------
hereto.
(g) Leases. The rent roll attached hereto as Exhibit R is accurate
------ ---------
in all material respects and lists all of the leases, licenses and occupancy
agreements currently affecting all or any portion of the Real Property.
(h) Authorization. This Agreement has been, and on the Closing Date,
-------------
all documents to be executed by Seller hereunder will have been, duly
authorized, executed and delivered by Seller, and constitute and will constitute
the valid and binding obligations of Seller enforceable against it in accordance
with their respective terms.
(i) No Consents Required. No consent, approval or other authorization
--------------------
of, or registration, declaration or filing with, any governmental authority is
required for the due execution and delivery of this Agreement, and/or any of the
documents to be executed by Seller hereunder, or for the performance by or the
validity or enforceability thereof against Seller, other than the recording or
filing for recordation of the Deed.
(j) Zoning. Seller has obtained all consents, permits, licenses,
------
approvals and authorizations from governmental authorities or other third
parties which are necessary to permit the conveyance of the Property in
accordance with the provisions of this Agreement and the use of the Property for
its current use and for all uses contemplated under the Lease, which is in full
force and effect, and the Property is in compliance with all applicable zoning
ordinances and the Permitted Exceptions.
(k) No Violations. The execution and delivery of this Agreement, and
-------------
all other documents to be executed by Seller hereunder, compliance with the
provisions hereof and thereof and the consummation of the transactions
contemplated hereunder and thereunder will not, to Seller's knowledge, result in
(a) a breach or violation of (i) any governmental requirement applicable to
Seller or the Property now in effect; (ii) the organizational documents of
Seller; (iii) any judgment, order or decree of any governmental authority
binding upon Seller; or (iv) any agreement or instrument to which Seller is a
party or by which it is bound; (b) the acceleration of any obligation of Seller;
or (c) the creation of any lien, encumbrance or other matter affecting title
(other than the Permitted Exceptions) to the Property.
(l) Use Permitted. Current local zoning ordinances, general plans and
-------------
other applicable land use regulations and all private covenants, conditions and
restrictions, if any,
17
<PAGE>
affecting the Property, permit the transfer of the Property and the use of the
Property for its current use (and reconstruction and resumption of use in the
event of damage, destruction, or cessation of use) as a matter of right for an
unlimited time period and not merely as a legal non-conforming use.
(m) Environmental Matters. Subject to the tank removal report
---------------------
identified on Exhibit I attached hereto, as to hazardous substances:
---------
(i) Seller has no knowledge of any underground tanks or
hazardous substances currently located on the Property, that such tanks have
ever been located on the Property or that hazardous substances have ever been
present, used, stored, treated, released from or disposed of on the Property;
(ii) no enforcement, cleanup, removal or other governmental
or regulatory actions have, at any time, been instituted or, to Seller's
knowledge, threatened with respect to the Property;
(iii) there is no current or, to Seller's knowledge, prior
violation or state of noncompliance with any environmental law relating to
hazardous substances with respect to the Property;
(iv) no claims have been made or, to Seller's knowledge,
threatened by any third party with respect to the Property relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from or
related to any hazardous substance; and
(v) to Seller's knowledge, there are no current or prior
businesses engaged in the storage, treatment or disposal of hazardous substances
on any property adjacent to the Property.
(n) Special Risk Areas. To Seller's knowledge the Property is not
------------------
located within an area of special risk with respect to natural or man-made
disasters or hazards, including any flood hazard area.
(o) Utilities. To Seller's knowledge all public utilities, including
---------
telephone, gas, electric power, sanitary and storm sewer and water, are
available for connection at the boundaries of the Property; such utilities are
adequate for the current use of the Property; and the means of ingress and
egress, parking, access to public streets and drainage facilities are adequate
for the current use of the Property.
(p) Legal Parcel. To Seller's knowledge the Property is a legal lot
------------
or parcel which for all purposes may be mortgaged, conveyed and otherwise dealt
with as separate parcel and is taxed as a separate parcel.
(q) Tax Withholding. Buyer is not required to withhold taxes from the
---------------
payment of sale proceeds to Seller under the Internal Revenue code or any
applicable state, commonwealth or local tax laws.
18
<PAGE>
(r) Contiguous Property. Neither Seller nor any affiliate of Seller
-------------------
is retaining any contiguous or adjacent property to the Property.
(s) Physical Condition. To Seller's knowledge, there is no existing
------------------
patent or latent structural or other physical defect of deficiency in the
condition of the Property, or any component or portion thereof, that would or
could impair or impose costs upon the use, occupancy or operation of the
Property, and that has not been fully corrected, or will not be fully corrected
pursuant to that work which is to be completed pursuant to the OREDS Letter and
underlying structural reports. Subject to the OREDS Letter, to Seller's
knowledge there is no defect or deficiency in the Improvements, the structural
elements thereof, the mechanical systems (including, without limitation, all
HVAC System, plumbing, electrical, elevator, security, utility and sprinkler
systems) therein.
(t) Improvements. To Seller's knowledge, the Improvements were
------------
completed and installed in accordance with the plans and specifications therefor
being delivered by Seller to Buyer hereunder, which were approved by all
governmental authorities having jurisdiction thereover, and do not violate any
governmental laws, ordinances, rules or regulations other than as will be
corrected by work to be performed by Seller pursuant to the OREDS Letter and
underlying structural reports.
(u) Rezoning. There is not now pending, and Seller has no knowledge
--------
of, any threatened proceeding for the rezoning of the Property or any portion
thereof, or the taking of any other action by governmental authorities that
would have an adverse or material impact on the value of the Property or use
thereof.
(v) Easements and Other Agreements. To Seller's knowledge, Seller is
------------------------------
not in default in complying with the terms and provisions of any of the
covenants, conditions, restrictions, right-of-way or easements constituting one
or more of the Permitted Exceptions.
(w) Soil Condition. To Seller's knowledge, the soil condition of the
--------------
Land is such that it will support all of the Improvements for the foreseeable
life of the Improvements, without the need for unusual or new sub-surface
excavations, fill, footings, caissons or other installations. To Seller's
knowledge, the Improvements, as built, were constructed in a manner compatible
with the soil condition at the time of construction, and all necessary
excavations, fill, footings, caissons or other installations were then and have
since been provided. There are no adverse geological or soil conditions
affecting the Property.
(x) Tenant Leases. With respect to the Lease and the tenant
-------------
("Tenant") listed on the Rent Roll provided to Buyer by Seller, and subject to
the OREDS Letter:
(i) The Lease is in full force and effect strictly
according to the terms set forth therein and in the Rent Roll, and have not been
modified, amended, or altered, in writing or otherwise. Tenant is legally
required to pay all sums and perform all obligations set forth in the Lease,
without concessions, abatements, offsets or other bases for relief or
adjustment.
19
<PAGE>
(ii) All obligations of the lessor under the Lease that
accrue to the date of Closing have been performed including, but not limited to,
all required tenant improvements, cash or other inducements, rent abatements or
moratoria, installations and construction (for which payment in full has been
made in all cases), and the Tenant has, to Seller's knowledge, unconditionally
accepted lessor's performance of such obligations. To Seller's knowledge, the
Tenant has asserted no offsets, defenses or claims available against Rent
payable by it or other performance or obligations otherwise due from it under
the Lease. No portion of any Rent due and payable by Tenant represents or
constitutes a reimbursement of a tenant improvement or of construction costs
incurred by Seller. A true, complete and correct summary of the terms and
provisions of all concessions granted by Seller to Tenant (including but not
limited to any and all free rent, tenant improvement allowances, direct
payments, moving allowances and buyouts of other leases) is attached hereto as
Exhibit S. Except as set forth on Exhibit S there have been no other
- --------- ---------
concessions, of any nature, granted to Tenant.
(iii) Tenant is not in default under or is in arrears in the
payment of any sums or in the performance of any obligations required of it
under the Lease. Tenant has not prepaid any rent or other charges.
(iv) Except as disclosed in writing to Buyer, during the
thirty-six (36) month period immediately preceding the Effective Date and the
Closing Date: (1) Tenant has not, at any time, been more than thirty (30) days
delinquent in its respective payment of any and all sums due under the terms of
the Lease; (2) Tenant has not requested orally or in writing that Seller provide
Tenant with any reduction in Tenant's monetary obligations under its Lease; (3)
Tenant has not expressed to Seller orally or in writing any weakness or material
decline in Tenant's financial condition, nor has Tenant requested that Seller,
in its capacity as lessor, permit Tenant to sublease its leased premises except
to the California Highway Patrol as described in the addendum to the Lease, or
assign the Lease, or terminate the Lease on an accelerated basis; (4) Seller has
not "written off" any delinquent sums owed by Tenant to satisfy its obligation
to contribute to the payment of real estate taxes, common area maintenance
charges, and insurance premiums; and (5) Seller has not had, nor is it currently
engaged in, any dispute (whether of a formal or an informal nature) with Tenant
concerning Tenant's obligations to make payments under the terms of the Lease
toward real estate taxes, insurance premiums and common area maintenance
charges.
(v) Seller has no reason to believe that Tenant is, or may
become, unable or unwilling to perform any or all of its obligations under the
Lease, whether for financial or legal reasons or otherwise.
(vi) Except as disclosed in writing to Buyer, neither base
rent ("Base Rent"), nor regularly payable estimated Tenant contributions for
operating expenses, insurance premiums, real estate taxes, common area charges,
and similar or other "pass through" or non-Base Rent items including, without
limitation, cost-of-living or so-called "C.P.I." or other such adjustments
(collectively, "Additional Rent"), nor any other item payable by Tenant under
the Lease has been heretofore prepaid for more than one (1) month nor shall it
be prepaid between the Effective Date and the Closing Date for more than one (1)
month.
20
<PAGE>
(vii) To Seller's knowledge, no guarantor(s) of the Lease has
been released or discharged, voluntarily or involuntarily, or by operation of
law, from any obligation under or in connection with the Lease or any
transaction related thereto.
(viii) There are no brokers' commissions, finders' fees, or
other charges payable or to become payable to any third party on behalf of
Seller as a result of or in connection with the Lease or any transaction related
thereto, including, but not limited to, any exercised or unexercised option(s)
to expand or renew.
(ix) Tenant has no right to renew or extend the term of the
Lease. Tenant has no: (1) option to purchase the Land or Improvements; or (2)
right of first refusal to purchase the Land or Improvements or to lease
additional space in the Improvements.
(y) Material Facts. To Seller's knowledge neither this Agreement nor
--------------
any certificate, statement or other document furnished or to be furnished to
Buyer by or on behalf of Seller in connection with the transactions contemplated
hereunder and the Exhibits hereto contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
(z) Tenant has not paid any security deposit under the Lease.
Section 5.2. Knowledge Defined. References to the "knowledge" of
-----------------
Seller shall refer only to the actual knowledge of the Designated Employees (as
hereinafter defined) of Seller or Seller's property manager, and shall not be
construed, by imputation or otherwise, to refer to the knowledge of Seller or
any affiliate of Seller, or to any other officer, agent, manager, representative
or employee of Seller or any affiliate thereof. As used herein, the term
"Designated Employees" shall refer to Burrel Magnusson, Karen Fredericks, and
--------------------
Larry Martinez, who are the only personnel likely to have detailed knowledge of
the Property.
Section 5.3. Survival of Seller's Representations and Warranties. The
---------------------------------------------------
representations and warranties of Seller set forth in Section 5.1 hereof as
updated as of the Closing in accordance with the terms of this Agreement, shall
survive Closing for a period of one (1) year.
Section 5.4. Covenants of Seller. Seller hereby covenants with Buyer
-------------------
as follows:
(a) From the Effective Date hereof until the Closing or earlier
termination of this Agreement, Seller shall operate and maintain the Property in
a manner generally consistent with the manner in which Seller has operated and
maintained the Property prior to the date hereof, and Seller further will not
create nor permit the creation of any title exceptions such as easements or
liens to encumber the Property without Buyer's prior written approval. Seller
has commenced and/or completed some of the works of improvement described in
paragraph I of the OREDS Letter but is not obligated hereunder to complete such
work;
(b) Except as provided hereinbelow, Seller agrees not to amend, renew
or expand the Lease or enter into any new Lease between the Effective Date and
the Closing without
21
<PAGE>
the prior written approval of Buyer. Seller will submit to Buyer, prior to
execution by Seller any such amendment, renewal, expansion or new Lease and
Buyer shall have ten (10) business days after its receipt thereof to notify
Seller in writing of either its approval or disapproval thereof. If Buyer fails
to notify Seller in writing of its approval or disapproval within the ten (10)
business day period set forth above, Buyer shall be deemed to have disapproved
such amendment, renewal, expansion or new Lease.
(c) Commencing upon the Effective Date and through the first
anniversary of the Closing Date, Seller shall comply with the provisions of
Exhibit T hereto.
- ---------
Section 5.5. Representations and Warranties of Buyer. Buyer hereby
---------------------------------------
makes the following representations and warranties to Seller as of the Effective
Date, which representations and warranties shall be deemed to have been made
again as of the Closing, subject to Section 4.3(b) hereof:
(a) Organization and Authority. Buyer has been duly organized and is
--------------------------
validly existing under the laws of Delaware. Buyer has the full right and
authority to enter into this Agreement and to consummate or cause to be
consummated the transaction contemplated by this Agreement. The person signing
this Agreement on behalf of Buyer is authorized to do so;
(b) Pending Actions. There is no action, suit, arbitration,
---------------
unsatisfied order or judgment, government investigation or proceeding pending or
to Buyer's knowledge, threatened against Buyer which, if adversely determined,
could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement.
(c) Authorization. This Agreement has been, and on the Closing Date,
-------------
all documents to be executed by Buyer hereunder will have been, duly authorized,
executed and delivered by Buyer, and constitute and will constitute the valid
and binding obligations of Buyer enforceable against it in accordance with their
respective terms.
(d) No Violations. The execution and delivery of this Agreement, and
-------------
all other documents to be executed by Buyer hereunder, compliance with the
provisions hereof and thereof and the consummation of the transactions
contemplated hereunder and thereunder will not result in (a) a breach or
violation of (i) any governmental requirement applicable to Buyer or the
Property now in effect; (ii) the organizational documents of Buyer; (iii) any
judgment, order or decree of any governmental authority binding upon Buyer; or
(iv) any agreement or instrument to which Buyer is a party or by which it is
bound.
Section 5.6. Survival of Buyer's Representations and Warranties. The
--------------------------------------------------
representations and warranties of Buyer set forth in Section 5.5 hereof as
updated as of the Closing in accordance with the terms of this Agreement, shall
survive Closing for a period of one (1) year.
22
<PAGE>
ARTICLE VI.
DEFAULT
Section 6.1. Default by Buyer. If the sale of the Property as
----------------
contemplated hereunder is not consummated due to Buyer's default hereunder,
Seller shall be entitled, as its sole remedy, to terminate this Agreement and
receive the Deposit as liquidated damages for the breach of this Agreement, it
being agreed between the parties hereto that the actual damages to Seller in the
event of such breach are impractical to ascertain and the amount of the Deposit
is a reasonable estimate thereof.
Section 6.2. Default by Seller. If the sale of the Property as
-----------------
contemplated hereunder is not consummated due to Seller's default hereunder,
Buyer shall be entitled, as its sole remedy, either (a) to receive the return of
the Deposit, which return shall operate to terminate this Agreement and release
Seller from any and all liability hereunder, or (b) to enforce specific
performance of Seller's obligation to convey the Property to Buyer in accordance
with the terms of this Agreement.
Section 6.3. Recoverable Damages. Notwithstanding Sections 6.1 and 6.2
-------------------
hereof, in no event shall the provisions of Sections 6.1 and 6.2 limit the
damages recoverable by either party against the other party due to the other
party's obligation to indemnify such party in accordance with this Agreement.
ARTICLE VII.
RISK OF LOSS
Section 7.1. Minor Damage. In the event of loss or damage to the
------------
Property or any portion thereof which is not "Major" (as hereinafter defined),
this Agreement shall remain in full force and effect provided that Seller shall,
at Buyer's option, either (a) perform any necessary repairs, or (b) assign to
Buyer all of Seller's right, title and interest in and to any claims and
proceeds Seller may have with respect to any casualty insurance policies or
condemnation awards relating to the premises in question. If Seller performs
repairs upon the Property, Seller shall use reasonable efforts to commence and
complete such repairs promptly, and the date of Closing shall be extended a
reasonable time in order to allow for the completion of such repairs. If Seller
assigns a casualty claim to Buyer, the Purchase Price shall be reduced by an
amount equal to the lesser of the deductible amount under Seller's insurance
policy or the cost of such repairs as determined in accordance with Section 7.3
hereof. Upon Closing, full risk of loss with respect to the Property shall pass
to Buyer.
Section 7.2. Major Damage. In the event of a "Major" loss or damage,
------------
either Seller or Buyer may terminate this Agreement by written notice to the
other party, in which event the Deposit and all interest thereon shall be
returned to Buyer. If neither Seller nor Buyer elects to terminate this
Agreement within ten (10) business days after Seller sends Buyer written notice
of the occurrence of such Major loss or damage (which notice shall state the
cost of repair or restoration thereof as opined by an architect or other
qualified expert in accordance with Section
23
<PAGE>
7.3 hereof), then Seller and Buyer shall be deemed to have elected to proceed
with Closing. In that event Seller shall, at Buyer's option, either (a) perform
any necessary repairs, or (b) assign to Buyer all of Seller's right, title and
interest in and to any cla ims and proceeds Seller may have with respect to any
casualty insurance policies or condemnation awards relating to the premises in
question. If Seller elects to perform repairs upon the Property, Seller shall
use reasonable efforts to commence and complete such repairs promptly, and the
date of Closing shall be extended a reasonable time in order to allow for the
completion of such repairs. If Seller assigns a casualty claim to Buyer, the
Purchase Price shall be reduced by an amount equal to the lesser of the
deductible amount under Seller's insurance policy or the cost of such repairs as
determined in accordance with Section 7.3 hereof. Upon Closing, full risk of
loss with respect to the Property shall pass to Buyer.
Section 7.3. Definition of "Major" Loss or Damage. For purposes of
------------------------------------
Sections 7.1 and 7.2, "Major" loss or damage refers to the following: (a) loss
-----
or damage to the Property hereof such that the cost of repairing or restoring
the premises in question to substantially the same condition which existed prior
to the event of damage would be, in the opinion of an architect or other
qualified expert selected by Seller and reasonably approved by Buyer, equal to
or greater than Five Hundred Thousand Dollars ($500,000), and (b) any loss due
to a condemnation which permanently and materially impairs the current use of
the Property. If Buyer does not give written notice to Seller of Buyer's reasons
for disapproving an architect or other qualified expert within ten (10) business
days after receipt of notice of the proposed architect or other qualified
expert, Buyer shall be deemed to have approved the architect or other qualified
expert selected by Seller.
ARTICLE VIII.
BROKERAGE COMMISSIONS
With respect to the transaction contemplated by this Agreement, Seller
represents that its brokers are Voit Commercial Brokerage and Essex Realty
Management Inc. ("Seller's Brokers"), and Buyer represents that it is not
----------------
represented by a broker. Buyer shall not be responsible for the payment of a
real estate brokerage commission relative to the transaction contemplated by
this Agreement, but rather Seller shall pay the full amount of any such
brokerage commission owing to Seller's Brokers. Each party hereto agrees that
if any person or entity, other than Seller's Brokers, makes a claim for
brokerage commissions or finder's fees related to the sale of the Property by
Seller to Buyer, and such claim is made by, through or on account of any acts or
alleged acts of said party or its representatives, said party will protect,
indemnify, defend and hold the other party free and harmless from and against
any and all loss, liability, cost, damage and expense (including reasonable
attorneys' fees) in connection therewith. The provisions of this paragraph
shall survive Closing or any termination of this Agreement.
24
<PAGE>
ARTICLE IX.
DISCLAIMERS
Except as expressly stated herein, Seller makes no representation or
warranty as to the truth, accuracy or completeness of any materials, data or
information delivered by Seller or its brokers or agents to Buyer in connection
with the transaction contemplated hereby.
ARTICLE X.
MISCELLANEOUS
Section 10.1 Confidentiality. Buyer and its representatives shall
---------------
hold in confidence all data and information obtained with respect to Seller or
its business, whether obtained before or after the execution and delivery of
this Agreement, and shall not disclose the same to others; provided, however,
that Buyer may disclose (a) prior to the Closing, to the employees, lenders,
consultants, accountants and attorneys of Buyer, any such data and information,
if such persons agree in writing to treat such data and information
confidentially, (b) on and after the Closing, to the public, the fact that Buyer
has acquired the Property and the Purchase Price paid therefor, and (c) at any
time, to governmental officials or other third parties (including the public,
respecting information contained in public reports), any such data and
information as may be required to comply with applicable laws and/or Buyer's
reporting requirements. If this Agreement is terminated or Buyer fails to
perform hereunder, Buyer shall promptly return to Seller any statements,
documents, schedules, exhibits or other written information obtained from Seller
in connection with this Agreement or the transaction contemplated herein.
Section 10.2. Public Disclosure. Prior to and after the Closing, any
-----------------
release to the public of information with respect to the sale contemplated
herein or any matters set forth in this Agreement will be made only in the form
approved by Buyer. The provisions of this Section 10.2 shall survive the Closing
or any termination of this Agreement.
Section 10.3. Assignment. Subject to the provisions of this Section
----------
10.3, the terms and provisions of this Agreement are to apply to and bind the
permitted successors and assigns of the parties hereto. Buyer may assign its
rights under this Agreement if Buyer and the proposed assignee execute and
deliver to Seller an assignment and assumption of this Agreement in form and
substance reasonably satisfactory to Seller. In no event shall any assignment of
this Agreement release or discharge Buyer from any liability or obligation
hereunder. Any transfer, directly or indirectly, of more than fifty percent
(50%) of any stock, partnership interest or other ownership interest in Buyer
shall constitute an assignment of this Agreement. The provisions of this Section
10.3 shall survive the Closing or any termination of this Agreement.
Section 10.4. Notices. Any notice pursuant to this Agreement shall be
-------
given in writing by (a) personal delivery, (b) reputable overnight delivery
service with proof of delivery, (c) United States Mail, postage prepaid,
registered or certified mail, return receipt requested, or (d) legible facsimile
transmission, sent to the intended addressee at the address set forth below, or
25
<PAGE>
to such other address or to the attention of such other person as the addressee
shall have designated by written notice sen t in accordance herewith. Any notice
so given shall be deemed to have been given upon receipt or refusal to accept
delivery, or, in the case of facsimile transmission, as of the date of the
facsimile transmission provided that an original of such facsimile is also sent
to the intended addressee by means described in clauses (a), (b) or (c) above.
Unless changed in accordance with the preceding sentence, the addresses for
notices given pursuant to this Agreement shall be as follows:
If to Buyer: Kilroy Realty, L.P.
2250 East Imperial Highway
El Segundo, California 90245
Attention: Jeffrey C. Hawken
Telephone No. (213) 772-1193
Facsimile No. (310) 322-5981
with a copy to: Latham & Watkins
650 Town Center Drive
20th Floor
Costa Mesa, California 92626
Attention: Bruce A. Tester
Telephone No. (714) 540-1235
Facsimile No. (714) 755-8290
If to Seller: Pullman Carnegie Associates
c/o Essex Realty Management, Inc.
3146 Redhill Avenue, Suite 150
26
<PAGE>
Costa Mesa, California 92626
Attention: Burrel Magnusson
Telephone No. (714) 540-5188
Facsimile No. (714) 540-3741
with a copy to: Allen, Matkins, Leck, Gamble & Mallory
88 Kearny Street, Suite 1750
San Francisco, California 94108
Attention: Richard C. Mallory
Telephone No. (415) 837-1515
Facsimile No. (415) 837-1516
If to Escrow Holder: Commerce Escrow Company
1545 Wilshire Blvd., Suite 600
Los Angeles, California 90017
Attention: Mark Minsky or Phil Graff
Telephone No. (213) 484-0855
Facsimile No. (213) 484-0417
Section 10.5. Modifications. This Agreement cannot be changed orally,
-------------
and no executory agreement shall be effective to waive, change, modify or
discharge it in whole or in part unless such executory agreement is in writing
and is signed by the parties against whom enforcement of any waiver, change,
modification or discharge is sought.
Section 10.6. Entire Agreement. This Agreement, including the exhibits
----------------
and schedules hereto, contains the entire agreement between the parties hereto
pertaining to the subject matter hereof and fully supersedes all prior written
or oral agreements and understandings between the parties pertaining to such
subject matter, other than any confidentiality agreement executed in connection
with the Property.
Section 10.7. Further Assurances. Each party agrees that it will
------------------
execute and deliver such other documents and take such other action, whether
prior or subsequent to Closing, as may be reasonably requested by the other
party to consummate the transaction contemplated by this Agreement. The
provisions of this Section 10.7 shall survive Closing.
Section 10.8. Counterparts. This Agreement may be executed in
------------
counterparts, all such executed counterparts shall constitute the same
agreement, and the signature of any party to any counterpart shall be deemed a
signature to, and may be appended to, any other counterpart.
Section 10.9. Facsimile Signatures. In order to expedite the
--------------------
transaction contemplated herein, telecopied signatures may be used in place of
original signatures on this Agreement or any document delivered pursuant hereto.
Seller and Buyer intend to be bound by the signatures on the telecopied
document, are aware that the other party will rely on the telecopied signatures,
and hereby waive any defenses to the enforcement of the terms of this Agreement
based on the form of signature.
27
<PAGE>
Section 10.10. Severability. If any provision of this Agreement is
------------
determined by a court of competent jurisdiction to be invalid or unenforceable,
the remainder of this Agreement shall nonetheless remain in full force and
effect; provided that the invalidity or unenforceability of such provision does
not materially adversely affect the benefits accruing to any party hereunder.
Section 10.11. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State in which the Property is
located. Buyer and Seller agree that the provisions of this Section 10.11 shall
survive the Closing or any termination of this Agreement.
Section 10.12. No Third Party Beneficiary. The provisions of this
--------------------------
Agreement and of the documents to be executed and delivered at Closing are and
will be for the benefit of Seller and Buyer only and are not for the benefit of
any third party; and, accordingly, no third party shall have the right to
enforce the provisions of this Agreement or of the documents to be executed and
delivered at Closing.
Section 10.13. Captions. The section headings appearing in this
--------
Agreement are for convenience of reference only and are not intended, to any
extent and for any purpose, to limit or define the text of any section or any
subsection hereof.
Section 10.14 Construction. The parties acknowledge that the parties
------------
and their counsel have reviewed and revised this Agreement and that the normal
rule of construction to take effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement or any exhibits or amendments hereto.
Section 10.15. Recordation. This Agreement many not be recorded by any
-----------
party hereto without the prior written consent of the other party hereto. The
provisions of this Section 10.15 shall survive the Closing or any termination of
this Agreement.
28
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the Effective Date.
SELLER:
PULLMAN CARNEGIE ASSOCIATES,
a California limited partnership
By: Bay-Santa Ana Partners,
a California limited partnership, its General Partner
By: Bay Development Corporation,
a California corporation, its General Partner
By: /s/ Burrel D. Magnusson
----------------------------
Name: Burrel D. Magnusson
Its: President
BUYER:
KILROY REALTY, L.P., a Delaware
limited partnership
By: KILROY REALTY CORPORATION,
a Maryland corporation, its General Partner
By: /s/ Jeffrey C. Hawken
-----------------------------------
Name: Jeffrey C. Hawken
-----------------------------------
Its: Executive Vice President
-----------------------------------
29
<PAGE>
ACKNOWLEDGMENTS
---------------
Escrow Holder executes this Agreement below solely for the purpose of
acknowledging that it agrees to be bound by the provisions of Sections 1.4, 1.5,
1.6 and 1.7 hereof and Article IV hereof.
ESCROW HOLDER:
COMMERCE ESCROW COMPANY
By: ______________________________________
Name: ______________________________________
Title: ______________________________________
Weyerhaeuser Venture Co. executes this Agreement below in its
individual corporate capacity solely for the purpose of acknowledging that it
agrees to be bound by the provisions of Section 1.4(b) hereof.
WEYERHAEUSER VENTURE CO., a
Nevada corporation
By: /s/ Robert J Plavchak
_______________________________
Name: Robert J Plavchak
Its Senior Vice President
By: /s/ Stephen M. Margolin
-------------------------------
Name: Stephen M. Margolin
-------------------------------
Its: Executive Vice President
-------------------------------
30
<PAGE>
EXHIBIT A
DESCRIPTION OF LAND
Parcel 1, in the City of Santa Ana, County of Orange, State of
California, as shown on Map filed in Book 60, Page 40 of Parcel maps, in the
office of the County Recorder of Orange County, California.
<PAGE>
EXHIBIT B
LIST OF PERSONAL PROPERTY
NONE
<PAGE>
EXHIBIT C
FORM OF ASSIGNMENT OF LEASE
THIS ASSIGNMENT OF LEASE (the "Assignment") is made as of this ____
day of June, 1997 between PULLMAN CARNEGIE ASSOCIATES, a California limited
partnership ("Assignor"), and KILROY REALTY, L.P., a Delaware limited
partnership ("Assignee").
Assignor is the owner of that certain real property located in the
City of Santa Ana, County of Orange, State of California, more particularly
described in Schedule 1 attached hereto (the "Property"). Assignor hereby
----------
assigns, transfers, sets over and conveys to Assignee all of Assignor's right,
title and interest in, to and under that certain lease, as amended, described on
Schedule 2 attached hereto and incorporated herein by this reference (the
- ----------
"Lease").
Assignee does hereby assume and agree to perform all of Assignor's
obligations under or with respect to the Lease accruing from and after the date
hereof, including without limitation, any and all obligations to pay leasing
commissions and finder's fees which are due or payable after the date hereof
with respect to the Lease. Assignee agrees to indemnify, protect, defend and
hold Assignor harmless from and against any and all liabilities, losses, costs,
damages and expenses (including reasonable attorneys' fees) directly or
indirectly arising out of or related to any breach or default in Assignee's
obligations hereunder.
Assignor shall remain liable for all of Assignor's obligations under
or with respect to the Lease accruing prior to the date hereof. Assignor agrees
to indemnify, protect, defend and hold Assignee harmless from and against any
and all liabilities, losses, costs, damages and expenses (including reasonable
attorneys' fees) directly or indirectly arising out of related to any breach or
default in Assignor's obligations hereunder.
This Assignment shall be binding upon and inure to the benefit of
Assignor and Assignee and their respective heirs, executors, administrators,
successors and assigns.
This Assignment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have each executed this
Assignment as of the date first written above.
ASSIGNOR:
PULLMAN CARNEGIE ASSOCIATES,
a California limited partnership
By: Bay-Santa Ana Partners,
a California limited partnership, its General Partner
By: Bay Development Corporation,
a California corporation, its General Partner
By: ____________________________
Name: Burrel D. Magnusson
Its: President
ASSIGNEE:
KILROY REALTY, L.P., a Delaware limited partnership
By: KILROY REALTY CORPORATION, a
Maryland corporation, its General Partner
By: ________________________________
Name: ________________________________
Title: ________________________________
2
<PAGE>
SCHEDULE 1
LEGAL DESCRIPTION
-----------------
Parcel 1, in the City of Santa Ana, County of Orange, State of
California, as shown on Map filed in Book 60, Page 40 of Parcel maps, in the
office of the County Recorder of Orange County, California.
<PAGE>
SCHEDULE 2
LEASE
-----
1. Lease dated April 28, 1988 executed between Pullman Carnegie Associates
("Landlord") and State of California ("Tenant") for those premises located
at 2501 Pullman Avenue, Santa Ana, California, and 1700 Carnegie Avenue,
Santa Ana, California.
2. First Amendment to Lease dated ___________, executed between Landlord and
Tenant.
3. Second Amendment to Lease dated _________, executed between Landlord and
Tenant.
<PAGE>
EXHIBIT D
LIST OF OPERATING AGREEMENTS
<TABLE>
<CAPTION>
VENDOR AGREEMENT CANCELLATION
NAME DATE PURPOSE TERM CLAUSE
<S> <C> <C> <C> <C>
Avila Landscape 11/12/89 Landscaping $1,000/mo. 30 day written notice
Contemporary 4/11/89 HVAC 30 day written notice
Heating & Air Bldg. A $1,095/qtr.
Bldg. B $1,155/qtr
10/20/92 HVAC 30 day written notice
Cooling Tower $225/mo.
2/12/97 HVAC "TMC" $720/qtr 30 day written notice
West Coast 1/7/88 Sweeping 30 day written notice
Sweeping $85.00
Am-Tech 10/17/95 Elevator Main. 30 day written notice
Elevator Bldg. A $125
Bldg. B $125
Wells Fargo 7/13/87 Fire Alarm 5 yrs. Terminates 12/4/97
Monitoring then 30 day notice
Telewatch 12/1/96 Elevator phone monitoring 1 yr. Terminates 12/31/97
$60/qtr.
Firemaster 6/92 Sprinkler Maintenance 60 days notice
Inspections $175/qtr.
Annual test of precaution
System $400.00
</TABLE>
<PAGE>
EXHIBIT E
OREDS LETTER AND RELATED CORRESPONDENCE
1. Letter from Karen Fredericks of Essex Realty to Tony Macris of OREDS dated
May 13, 1997.
2. Letter from Robert Lawson of Robert Lawson, Structural Engineers to Karen
Fredericks of Essex Realty dated December 16, 1996.
3. Letter from Bill Casella of Pacific Building to Karen Fredericks of Essex
Realty dated December 16, 1996.
4. Letter from Bill Casella of Pacific Building to Karen Fredericks of Essex
Realty dated December 3, 1996.
5. Letter from Randy Peterson of Contemporary Heating & Air Conditioning to
Pullman Carnegie Associates dated December 3, 1996.
6. Letter from Kenneth Kaino of Tsuchiyama & Kaino to Burrel Magnusson of
Essex Realty dated November 21,1996.
7. Letter from Tony Macris of OREDs to Burrel Magnusson and Karen Fredericks
of Essex Realty dated November 13, 1996.
8. Letter from Robert Lawson of Robert Lawson, Structural Engineers to Michael
Lawson of Pacific Building dated October 3, 1996.
9. Report from Mark Gorman of Dames & Moore to Joel McRonald, Division of
State Architect dated August 9, 1996.
<PAGE>
EXHIBIT F
FORM OF QUIT CLAIM DEED
<PAGE>
EXHIBIT G
ESCROW HOLDER'S GENERAL PROVISIONS
<PAGE>
EXHIBIT H
LIST OF ENVIRONMENTAL REPORTS
1. Report on Tank Removal Operations/Investigation, dated April 3, 1987, by
Hydrotech Consultants Inc.
<PAGE>
EXHIBIT I
TENANT ESTOPPEL FORM
June ___, 1997
KILROY REALTY, L.P.
2250 East Imperial Highway
El Segundo, California 90245
PULLMAN CARNEGIE ASSOCIATES
c/o Essex Realty Management, Inc.
3146 Redhill Avenue, Suite 150
Costa Mesa, California 92626
Re: Lease dated April 28, 1988 executed between Pullman Carnegie
Associates ("Landlord"), and State of California ("Tenant") , for those premises
located at 2501 Pullman Avenue, Santa Ana, California, and 1700 Carnegie Avenue,
Santa Ana, California as amended and/or extended (the "Lease").
Gentlemen:
The following information is furnished in lieu of an Estoppel
Certificate requested by you. It is not the policy of the State of California
to execute Estoppel Certificate Documents; however, we do acknowledge the
following:
1. Under the Lease, the State of California, by and through its duly
appointed, qualified and acting Director of General Services, leases from
certain premises described in said Lease.
2. The State leases approximately 124,921 net square feet of office space for
a term commencing on May 1, 1989 and ending on April 30, 1999. The State
may terminate the Lease at any time effective on or after by giving written
notice to Landlord at least 30 days prior to the date when such termination
shall become effective.
3. The present monthly rent for the facilities is $188,006.11 which is paid in
arrears on the last day of each month. A portion of the monthly rental is
subject to adjustment by any increase or decrease of the Consumer Price
Index (CPI) in accordance with Paragraph 31 of the Lease.
4. The Lease is in full force and effect.
5. At the present time, the State has no apparent claim against Landlord which
might be set off by accruing rentals.
<PAGE>
6. No advance rental or deposit has been paid by State to Landlord.
7. This letter may be relied upon by any lender which finances or refinances
all or any portion of the purchase price of the Property, or any lender of
Buyer who disburses loan proceeds based upon the collateralization of the
Property to secure said loan.
If you have any further questions concerning the Lease, please do not
hesitate to contact me. Should any changes occur regarding the terms of the
Lease in the future, the State will acknowledge appropriate and legally
sufficient notification and/or documentation received in that event and proceed
accordingly. Any such notification and/or documentation should be mailed to the
State in accordance with Lease Paragraph 5.
Sincerely,
Real Estate Officer
2
<PAGE>
EXHIBIT J
FORM OF DEED
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
LATHAM & WATKINS
650 Town Center Drive, 20th Floor
Costa Mesa, California 92626-1925
Attn: Bruce Tester, Esq.
- --------------------------------------------------------------------------------
(Space Above This Line For Recorder's Use Only)
GRANT DEED
FOR VALUE RECEIVED, PULLMAN CARNEGIE ASSOCIATES,
a California limited partnership, hereby grants to KILROY REALTY, L.P., a
Delaware limited partnership, all of its right, title and interest in and to
that certain real property situated in the City of Santa Ana, County of Orange,
State of California, described on Schedule 1 attached hereto and by this
reference incorporated herein.
SAID PROPERTY IS CONVEYED SUBJECT TO; (a) All liens, encumbrances,
easements, covenants, conditions and restrictions of record; (b) All matters
which would be revealed or disclosed in an accurate survey of the Property; and
(c) Interests of tenants in possession.
IN WITNESS WHEREOF, the undersigned has executed this Grant Deed dated
as of _________________________, 19__.
PULLMAN CARNEGIE ASSOCIATES,
a California limited partnership
By: Bay-Santa Ana Partners,
a California limited partnership, its General
Partner
By: Bay Development Corporation, a
California corporation, its General Partner
By: ________________________________
Name: Burrel D. Magnusson
Its: President
<PAGE>
SCHEDULE 1
LEGAL DESCRIPTION
-----------------
Parcel 1, in the City of Santa Ana, County of Orange, State of
California, as shown on Map filed in Book 60, Page 40 of Parcel maps, in the
office of the County Recorder of Orange County, California.
<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On __________________________, 1997 before me, __________________________, a
notary public in and for said State, personally appeared
_______________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature (Seal)
<PAGE>
EXHIBIT K
FORM OF BILL OF SALE
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby acknowledged, PULLMAN CARNEGIE ASSOCIATES, a California limited
partnership ("Seller") does hereby sell and convey to KILROY REALTY, L.P., a
Delaware limited partnership ("Buyer"), any and all of Sellers' right, title and
interest in and to all tangible personal property located upon the land
described on Schedule 1 attached hereto and hereby made a part hereof (the
----------
"Land") or within the improvements located thereon, including, without
limitation, any and all appliances, furniture, carpeting, draperies and
curtains, tools and supplies, and other items of personal property owned by
Seller (excluding cash and any software), used exclusively in the operation of
the Land and/or the improvements located thereon.
TO HAVE AND TO HOLD all of said personal property unto Buyer, its
successors and assigns, to its own use forever.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of the
____ day of June, 1997.
SELLER:
PULLMAN CARNEGIE ASSOCIATES,
a California limited partnership
By: Bay-Santa Ana Partners,
a California limited partnership, its General
Partner
By: Bay Development Corporation, a
California corporation, its General
Partner
By: ___________________________
Name: Burrel D. Magnusson
Its: President
<PAGE>
SCHEDULE 1
LEGAL DESCRIPTION
-----------------
Parcel 1, in the City of Santa Ana, County of Orange, State of
California, as shown on Map filed in Book 60, Page 40 of Parcel maps, in the
office of the County Recorder of Orange County, California.
<PAGE>
EXHIBIT L
FORM OF ASSIGNMENT OF CONTRACTS
THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND INTANGIBLES (the
"Assignment") is made as of this ____ day of June, 1997 between PULLMAN CARNEGIE
ASSOCIATES, a California limited partnership ("Assignor"), and KILROY REALTY,
L.P., a Delaware limited partnership ("Assignee").
Assignor is the owner of that certain parcel of Real Property located
in the City of Santa Ana, County of Orange, State of California, more
particularly described in Schedule 1 attached hereto and incorporated herein by
---------
reference (the "Property"). Assignor hereby assigns, transfers, sets over and
conveys to Assignee all of Assignor's right, title and interest, to the extent
assignable, in, to and under any and all of the following:
(i) the contracts and agreements listed and described on
Schedule 2 attached hereto and incorporated herein by this
----------
reference (the "Contracts");
(ii) all existing warranties and guaranties (express or implied)
issued to Assignor in connection with the improvements or
the personal property being conveyed to Assignee by Bill of
Sale on the date hereof; and
(iii) all existing permits, licenses, approvals and authorizations
issued by any governmental authority in connection with the
Property.
All items described in (i), (ii) and (iii) above are hereinafter collectively
referred to as "Intangible Property."
Assignee does hereby assume and agree to perform all of Assignor's
obligations under the Contracts and Intangible Property accruing from and after
the date hereof. Assignee agrees to indemnify, protect, defend and hold
Assignor harmless from and against any and all liabilities, losses, costs,
damages and expenses (including reasonable attorneys' fees) directly or
indirectly arising out of or related to any breach or default in Assignee's
obligations hereunder. Assignor shall remain liable for all of Assignor's
obligations under the Contracts and Intangible Property accruing prior to the
date hereof. Assignor agrees to indemnify, protect, defend and hold Assignee
harmless from and against any and all liabilities, losses, costs , damages and
expenses (including reasonable attorneys' fees) directly or indirectly arising
out of or related to any breach or default in Assignor's obligations hereunder.
This Assignment shall be binding upon and inure to the benefit of
Assignor and Assignee and their respective heirs, executors, administrators,
successors and assigns.
This Assignment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have each executed this
Assignment as of the date first written above.
ASSIGNOR:
PULLMAN CARNEGIE ASSOCIATES,
a California limited partnership
By: Bay-Santa Ana Partners,
a California limited partnership, its General
Partner
By: Bay Development Corporation, a
California corporation, its General
Partner
By:________________________________________
Name: Burrel D. Magnusson
Its: President
ASSIGNEE:
KILROY REALTY, L.P., a Delaware limited
partnership
By: KILROY REALTY CORPORATION, a
Maryland corporation, its General Partner
By: ___________________________________________
Name: ___________________________________________
Its: ___________________________________________
2
<PAGE>
SCHEDULE 1
LEGAL DESCRIPTION
-----------------
Parcel 1, in the City of Santa Ana, County of Orange, State of
California, as shown on Map filed in Book 60, Page 40 of Parcel maps, in the
office of the County Recorder of Orange County, California.
<PAGE>
SCHEDULE 2
CONTRACTS
---------
[To be attached]
<PAGE>
EXHIBIT M-1
FORM OF FIRPTA CERTIFICATE
CERTIFICATE REGARDING FOREIGN INVESTMENT
----------------------------------------
IN REAL PROPERTY TAX ACT
------------------------
(ENTITY TRANSFEROR)
Section 1445 of the Internal Revenue Code provides that the transferee
of a United States property interest must withhold tax if the transferor is a
foreign person. To inform Kilroy Realty, L.P. ("Buyer") that withholding of tax
is not required upon the disposition of a United States real property interest
by Pullman Carnegie Associates, a California limited partnership ("Seller"), and
with the knowledge that Buyer will rely upon the following statements, Seller
hereby certifies the following facts to Buyer:
1. Seller is not a foreign corporation, foreign partnership, foreign
trust, foreign estate or foreign person (as those terms are
defined in the Internal Revenue Code and Income Tax Regulations).
2. Seller's United States Employer Identification Number/Social
Security Number is: _______________.
3. Seller's office/home address is __________________________
___________________________________________________________
___________________________________________________________.
Seller understands that this certification may be disclosed to the
Internal Revenue Service by Buyer and that any false statement contained herein
could be punished by fine, imprisonment, or both.
<PAGE>
Under penalty of perjury, the undersigned declare that I/we have
examined this Certificate and, to the best of my/our knowledge and belief, it is
true, correct and complete, and I/we further declare that I/we have authority to
sign this document on behalf of Seller.
Dated as of ________, 1997 SELLER:
PULLMAN CARNEGIE ASSOCIATES,
a California limited partnership
By: Bay-Santa Ana Partners,
a California limited partnership, its General
Partner
By: Bay Development Corporation, a
California corporation, its General
Partner
By: _______________________________
Name: Burrel D. Magnusson
Its: President
2
<PAGE>
EXHIBIT M-2
FORM OF CALFIRPTA CERTIFICATE
<PAGE>
EXHIBIT N
FORM OF TENANT NOTICE
TENANT NOTIFICATION LETTER
June 24, 1997
TO: State of California, Department of General Services
RE: Notification Regarding Change of Ownership
This letter is to notify you as a Tenant at 2501 Pullman Avenue and 1700
Carnegie Avenue, Santa Ana, California (the "Property"), that the Property has
been sold by Pullman Carnegie Associates, a California limited partnership
("Seller"), to Kilroy Realty, L.P., a Delaware limited partnership ("Buyer").
As of the date hereof, your Lease has been assigned by Seller to Buyer. From
the date of this letter, any and all unpaid rent as well as all future rent, or
any other amounts due under the terms of your Lease, shall be directed as
follows:
TO: KILROY REALTY, L.P.
ATTN: Jeffrey C. Hawken
2250 East Imperial Highway
El Segundo, CA 90245
Any and all payments of rent (or other sums due under your Lease)
hereafter paid to any party other than Buyer shall not relieve you of the
obligation of making said payment to Buyer.
<TABLE>
<CAPTION>
<S> <C>
SELLER: BUYER:
PULLMAN CARNEGIE ASSOCIATES, KILROY REALTY, L.P.,
a California limited partnership a Delaware limited partnership
By: Bay-Santa Ana Partners, By: KILROY REALTY
a California limited partnership, its General CORPORATION, a Maryland
corporation, its General Partner
By: Bay Development Corporation, a By: __________________________________
California corporation, its General Name: __________________________________
Partner Its: __________________________________
By: _________________________________
Name: Burrel D. Magnusson
Its: President
</TABLE>
<PAGE>
EXHIBIT O
LIST OF SPECIFIED LITIGATION
NONE
<PAGE>
EXHIBIT P
LIST OF BROKERAGE AGREEMENTS
1. Sale listing with Voit Commercial.
<PAGE>
EXHIBIT Q
LIST OF VIOLATION NOTICES
NONE
<PAGE>
EXHIBIT R
RENT ROLL
[TO BE ATTACHED]
<PAGE>
EXHIBIT S
CERTAIN TENANT COSTS AND COMMISSIONS
NONE
<PAGE>
EXHIBIT T
8-K AND AUDIT REQUIREMENTS
For the period of time commencing on the Effective Date and continuing
through the first anniversary of the Closing Date, Seller shall, from time to
time, upon reasonable advance notice from Buyer, provide Buyer and its
representatives, agents and employees with access to all financial and other
information pertaining to the period of Seller's ownership and operation of the
Property, which information is relevant and reasonably necessary, in the opinion
of Buyer's outside, third party accountants (the "Accountants"), to enable Buyer
and its Accountants to prepare financial statements in compliance with any or
all of (a) Rule 3-14 of Regulation S-X of the Securities and Exchange Commission
(the "Commission"); (b) any other rule issued by the Commission and applicable
to Buyer, and (c) any registration statement, report or disclosure statement
filed with the Commission by, or on behalf of Buyer; provided, however, that in
any such event(s), Buyer shall reimburse Seller for those third party, out-of-
pocket costs and expenses that Seller incurs in order to comply with the
foregoing requirement. Seller shall provide such information, and documentation
on a per-building basis, if available. Seller agrees to provide the following
information and documentation that Buyer and the Accountants may require in
order to comply with (a), (b) and (c) above:
1. Rent rolls for the calendar month in which the Closing occurs and
the eleven (11) calendar months immediately preceding the calendar month in
which the Closing occurs;
2. Seller's written analysis of both (a) scheduled increases in base
rent required under the Lease in effect on the Closing Date; and (b) rent
concessions imposed by the Lease, and the straight line effect of (a) and (b);
3. Seller's internally-prepared operating statements;
4. Most currently available real estate tax bills;
5. Access to Seller's cash receipt journal(s)) and bank statements
for the Property;
6. Seller's general ledger with respect to the Property;
7. Seller's schedule of expense reimbursements required under the
Lease in effect on the Closing Date;
8. Schedule of those items of repairs and maintenance performed by,
or at the direction of Seller, during Seller's final fiscal year in which Seller
owns and operates the Property (the "Final Fiscal Year");
9. Schedule of those capital improvements and fixed asset additions
made by, or at the direction of, Seller during the Final Fiscal Year;
<PAGE>
10. Access to Seller's invoices with respect to expenditures made
during the Final Fiscal Year;
11. Access (during normal and customary business hours) to
responsible personnel to answer accounting questions; and
12. A representation letter in such form as is reasonably required by
Buyer, signed by the individual(s) responsible for Seller's financial reporting,
as prescribed by generally accepted auditing standards promulgated by the
Auditing Standards Division of the American Institute of Certified Public
Accountants, which representation letter may be required to assist the
Accountants in rendering an opinion on such financial statements.
2
<PAGE>
EXHIBIT 10.59
AMENDMENT TO
-------------
PURCHASE AND SALE AGREEMENT
---------------------------
AND ESCROW INSTRUCTIONS
-----------------------
THIS AMENDMENT TO PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS
("Amendment") is dated as of June 27, 1997 by and between PULLMAN CARNEGIE
ASSOCIATES, a California limited partnership ("Seller"), and KILROY REALTY,
L.P., a Delaware limited partnership ("Buyer").
WHEREAS, Buyer and Seller are parties to that certain Purchase and
Sale Agreement and Escrow Instructions dated as of May 5, 1997 with respect to
Escrow No. 97-26849 at Commerce Escrow Company, Los Angeles, California (the
"Purchase Agreement"); and
WHEREAS, Buyer and Seller wish to amend the Purchase Agreement in
certain respects as set forth below;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Buyer and Seller hereby amend the
Purchase Agreement as follows:
The capitalized terms used herein shall have the same meanings as
set forth in the Purchase Agreement.
The Contingency Period shall expire upon the full execution and
delivery of telecopied counterparts of this Amendment, which Buyer and Seller
anticipate shall occur on Friday, June 27, 1997.
The Closing shall be June 30, 1997.
The Purchase Price shall remain Fifteen Million Four Hundred Fifty
Thousand Dollars ($15,450,000); however, at the Closing, Escrow Holder shall
retain and transfer to a money market account at Union Bank, or such other
account as may be specified by Buyer and Seller, the sum of One Million Three
Hundred Thousand Dollars ($1,300,000) (the "Holdback"), which sum shall be
disbursed to Seller or to Buyer, as applicable, together with any accrued
interest, pursuant to the following:
(a) Upon receipt of a copy of a fully executed amendment to the
April 28, 1988 Lease with the State of California ("Caltrans") extending
the term thereof (other than pursuant to a "holdover" agreement on a month-
to-month or other short term basis) on terms and conditions acceptable to
Buyer in its sole discretion, the Holdback shall be delivered by Escrow
Holder to Seller.
<PAGE>
(b) Upon receipt of a notice from Buyer and Seller that the
condition set forth in Paragraph 4(a) of this Amendment has not been
satisfied prior to the expiration of the term of the April 28, 1988 Lease,
the Holdback shall be distributed to Buyer.
Subparagraphs (a) and (b) above are intended to document the basic agreement of
Buyer and Seller that, if Caltrans does not renew the term of the April 28, 1988
Lease, Buyer shall receive the Holdback and, if Caltrans does renew the term of
the April 28, 1988 Lease, Seller is entitled to the Holdback.
5. An additional holdback in the sum of Four Hundred Seventy Thousand
Dollars ($470,000) from the distribution to Seller of the Purchase Price,
together with any accrued interest thereon, shall remain in a money market
account at Union Bank or such other account as may be specified by Buyer and
Seller (the "Renovation Holdback"), which Renovation Holdback shall be disbursed
to Seller by Escrow Holder upon receipt by Escrow Holder, from time to time, of
invoices, countersigned by Buyer and Seller, from contractors performing works
of improvement to the Real Property at Buyer's direction which are for the cost
of construction of "Qualified Items." As used herein, the term "Qualified
Items" shall mean and refer to works of improvement to the Real Property which
are included in the list of items set forth in Paragraph I of the May 13, 1997
letter to Tony Macris of OREDS from Karen Fredericks of Essex Realty Management.
The countersignatures of Buyer and Seller shall evidence that the submitted
invoice is a "Qualified Item." When such work of improvement of the Qualified
Items is completed, as evidenced by a written notice delivered to Escrow Holder
by Buyer and Seller to such effect, any undisbursed portion of the Renovation
Holdback, together with any accrued interest thereon, shall be promptly
disbursed by Escrow Holder to Seller. If the cost of completing such work of
improvement exceeds the Renovation Holdback, Seller shall promptly pay such
excess cost. To securitize the agreement of Seller to timely pay its
obligations under this Paragraph 5, this Amendment has been acknowledged by
Weyerhaeuser Venture Company ("WVC"), by which acknowledgment WVC hereby
unconditionally guarantees and promises to pay to Buyer any such payment which
Seller fails to timely make, together with interest thereon at a rate of ten
percent (10%) per annum accruing from the date which is thirty (30) days after
the invoice date for such payment; provided however, that such payment by WVC
shall not exceed the amount actually received by WVC as a distribution from
Seller out of the net sales proceeds under the Purchase Agreement (currently
estimated, based on a trial closing balance, at One Million Five Hundred Fifty
Thousand Dollars ($1,550,000)). Seller hereby agrees that it will promptly
distribute all net sale proceeds to WVC that WVC is entitled to receive. In the
event that WVC fails to receive such funds to which it is entitled, WVC hereby
agrees to take all necessary and appropriate legal actions against Seller to
recover such funds.
6. Buyer and Seller have anticipated that Caltrans will require certain
works of improvement ("Lease Incentive Items") to be made to the Real Property
as a condition to the renewal by Caltrans of the April 28, 1988 Lease. Buyer
and Seller currently estimate the Lease Incentive Items to cost Three Hundred
Eighty Thousand Dollars ($380,000). If negotiations with Caltrans result in a
commitment by Buyer to construct Lease Incentive Items at a cost in excess of
Three Hundred Eighty Thousand Dollars ($380,000), Seller shall contribute to
such costs a
-2-
<PAGE>
sum of money, not to exceed One Hundred Twenty Thousand Dollars ($120,000). By
way of illustration, if Caltrans renews its Lease and obtains a commitment from
Buyer to construct Lease Incentive Items at a cost of Five Hundred Fifty
Thousand Dollars ($550,000), Buyer shall pay the first Three Hundred Eighty
Thousand Dollars ($380,000), Seller shall pay the next One Hundred Twenty
Thousand Dollars ($120,000), and Buyer shall pay the final Fifty Thousand
Dollars ($50,000). To securitize the agreement of Seller to fund up to One
Hundred Twenty Thousand Dollars ($120,000) as required in this paragraph, this
Amendment has been acknowledged to such effect by WVC, by which acknowledgment
WVC hereby unconditionally guarantees and promises to pay to Buyer up to One
Hundred Twenty Thousand Dollars ($120,000), to the extent the cost of the Lease
Incentive Items exceed Three Hundred Eighty Thousand Dollars ($380,000) and
Seller fails to pay such amount.
7. Except to the extent modified by this Amendment, the Agreement
remains in full force and effect. This Amendment also constitutes an amendment
to the instructions to Escrow Holder. If any provision of this Amendment
contradicts or is inconsistent with any provision of the Agreement, then the
provisions of this Amendment shall prevail.
8. This Amendment may be executed in any number of counterparts, each
of which shall be an original, but all of which taken together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, this Amendment has been executed by Buyer and
Seller as of this 27th day of June, 1997.
SELLER: PULLMAN CARNEGIE ASSOCIATES,
a California limited partnership
By: Bay-Santa Ana Partners,
a California limited partnership,
its General Partner
By: Bay Development Corporation,
a California corporation,
its General Partner
By:
------------------------------
Name: Burrel D. Magnusson
Its: President
[SIGNATURES CONTINUED]
-3-
<PAGE>
BUYER: KILROY REALTY, L.P.,
a Delaware limited partnership
By: Kilroy Realty Corporation,
a Maryland corporation,
its General Partner
By: ___________________________
Name:___________________________
Its: ___________________________
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<PAGE>
ACKNOWLEDGMENTS
---------------
Escrow Holder hereby executes this Amendment as of June 27, 1997
solely for the purpose of acknowledging that it agrees to be bound by the
provisions applicable to Escrow Holder as set forth in Paragraphs 4, 5 and 6
hereof.
ESCROW HOLDER: COMMERCE ESCROW COMPANY
By: __________________________
Name: __________________________
Its: __________________________
Weyerhaeuser Venture Company hereby executes this Amendment as of June
27, 1997 in its individual corporate capacity solely for the purposes of
acknowledging that it agrees to be bound by the provisions applicable to
Weyerhaeuser Venture Company in Paragraphs 5 and 6 hereof.
WEYERHAEUSER VENTURE COMPANY,
a Nevada corporation
By: _____________________________
Name: Robert J. Plavchak
Its: Senior Vice President
By: ____________________________
Name:____________________________
Its: ____________________________
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<PAGE>
EXHIBIT 10.60
AGREEMENT
OF
PURCHASE AND SALE
AND
JOINT ESCROW INSTRUCTIONS
-------------------------
<PAGE>
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
-----------------------------
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Purchase and Sale................................... 1
2. Purchase Price...................................... 1
3. Payment of Purchase Price........................... 2
4. Escrow.............................................. 2
5. Condition of Title.................................. 2
6. Title Policy........................................ 3
7. Conditions to Close of Escrow....................... 3
8. Deposits by Seller.................................. 7
9. Deposits by Buyer................................... 8
10. Costs and Expenses.................................. 8
11. Prorations.......................................... 8
12. Disbursements and Other Actions by Escrow Holder.... 8
13. Seller's Representations and Warranties............. 9
14. Buyer's Covenants, Representations and Warranties... 10
15. Liquidated Damages.................................. 12
16. Waiver Of Right To Specific Performance............. 13
17. Damage or Condemnation Prior to Closing............. 14
18. Notices............................................. 14
19. Brokers............................................. 15
20. Legal Fees.......................................... 15
21. Assignment.......................................... 16
22. Miscellaneous....................................... 16
</TABLE>
Exhibit "A" Legal Description Of Property
Exhibit "B" Grant Deed
Exhibit "C" Seller's Federal Certificate
Exhibit "D" Seller's California Certificate
Exhibit "E" Bill of Sale
Exhibit "F" Assignment of Contracts
<PAGE>
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS
-----------------------------
<TABLE>
<CAPTION>
<S> <C>
TO: First American Title Insurance Company Escrow No. 9762747M
114 East Fifth Street Escrow Officer: Ms. Judith M. Moore
Santa Ana, California 92701 Title Order No. OR-9762747
("Escrow Holder") Title Officer: Mr. Eric Bowen
</TABLE>
This AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS
("Agreement") is made and entered into as of this 12th day of June, 1997 (the
"Effective Date"), by and between MAZDA MOTOR OF AMERICA, INC., a California
corporation ("Seller"), and KILROY REALTY L.P., a Delaware limited partnership
("Buyer"), with respect to the following:
R E C I T A L S :
----------------
A. Seller is the owner of that certain real property located in the
City of Irvine ("City"), County of Orange, State of California, consisting of
approximately twenty (20) acres of improved land (the "Land"), all of which is
described on Exhibit "A" attached hereto, together with (i) a warehouse building
-----------
located thereon containing approximately 244,800 square feet of space and the
fixtures therein, including, without limitation, all floor coverings, draperies,
curtains and light fixtures (the "Warehouse Building"), (ii) an office building
located thereon containing approximately 27,200 square feet of space and the
fixtures therein, including, without limitation, all floor coverings, draperies,
curtains and light fixtures (the "Office Building"), and (iii) associated
parking areas and other improvements located thereon (the "Parking and Other
Improvements"). The Warehouse Building, the Office Building, and the Parking
and Other Improvements shall hereinafter be collectively referred as the
"Improvements." The Land, together with the Improvements, shall hereinafter be
collectively referred to as the "Property."
B. Seller desires to sell the Property to Buyer and Buyer desires to
purchase the Property from Seller upon the terms and conditions hereinafter set
forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer hereby agree that
the terms and conditions of this Agreement and the instructions to Escrow Holder
with regard to the escrow ("Escrow") created pursuant hereto are as follows:
A G R E E M E N T :
------------------
1. Purchase and Sale. Seller agrees to sell the Property to Buyer,
-----------------
and Buyer agrees to purchase the Property from Seller, upon the terms and
conditions herein set forth.
2. Purchase Price. The purchase price ("Purchase Price") for the
--------------
Property shall be Seventeen Million Twenty-Five Thousand Dollars ($17,025,000).
<PAGE>
3. Payment of Purchase Price. The Purchase Price for the Property
-------------------------
shall be paid by Buyer as follows:
(a) Deposit. Prior hereto, Buyer has deposited with Escrow
-------
Holder, in cash, by certified or bank cashier's check made payable to Escrow
Holder, or by a confirmed wire transfer of funds (hereinafter referred to as
"Immediately Available Funds"), the sum of One Million Dollars ($1,000,000) (the
"Deposit"). Escrow Holder has placed the Deposit in an interest bearing account.
The Deposit shall be refundable to Buyer if Buyer terminates this Agreement in
accordance with any of its rights to do so prior to the expiration of the
Contingency Period. The Deposit and the interest accrued thereon shall be
applicable to the Purchase Price upon the "Close of Escrow" (as defined in
Paragraph 4(b) below) and, upon the expiration of the Contingency Period, the
Deposit shall be nonrefundable to Buyer unless (i) a condition to the Close of
Escrow for the benefit of Buyer contained in this Agreement fails to timely be
satisfied or waived in writing by Buyer, or (ii) Seller fails to convey the
Property to Buyer as provided herein and such failure constitutes a default by
Seller hereunder.
(b) Closing Funds. At least one (1) business day prior to the
-------------
Close of Escrow, Buyer shall deposit or cause to be deposited with Escrow
Holder, in Immediately Available Funds, the balance of the Purchase Price plus
Escrow Holder's estimate of Buyer's share of closing costs, prorations and
charges payable pursuant to this Agreement.
4. Escrow.
------
(a) Opening of Escrow. For purposes of this Agreement, the
-----------------
Escrow was opened on May 6, 1997 (the "Opening of Escrow"). Buyer and Seller
agree to execute, deliver and be bound by any reasonable or customary
supplemental escrow instructions of Escrow Holder or other instruments as may
reasonably be required by Escrow Holder in order to consummate the transaction
contemplated by this Agreement. Any such supplemental instructions shall not
conflict with, amend or supersede any portions of this Agreement. To the extent
of any inconsistency between the provisions of such supplemental instructions
and the provisions of this Agreement, the provisions of this Agreement shall
control.
(b) Close of Escrow. For purposes of this Agreement, the "Close
---------------
of Escrow" shall be defined as the date that the grant deed ("Grant Deed"), the
form of which is attached hereto as Exhibit "B", conveying the Property to
-----------
Buyer, is recorded in the Official Records of the Orange County, California
Recorder's Office (the "Official Records"). This Escrow shall close three (3)
business days following the expiration of the Contingency Period (as the
Contingency Period may be extended by Seller pursuant to Paragraph 7(c) below)
(the "Closing Date").
5. Condition of Title. It shall be a condition to the Close of
------------------
Escrow for Buyer's benefit that title to the Property shall be conveyed to Buyer
by the Grant Deed subject only to the following condition of title ("Condition
of Title"):
(a) A lien to secure payment of general and special real property
taxes and assessments, not delinquent.
(b) The lien of supplemental taxes assessed pursuant to Chapter
3.5 commencing with Section 75 of the California Revenue and Taxation Code.
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<PAGE>
(c) Matters affecting the Condition of Title created by or with
the written consent of Buyer (including, without limitation, the Lease [as
defined in Paragraph 7(c)(i) below]).
(d) All matters which a correct survey and inspection of the
Property would disclose.
(e) All exceptions to title which are approved or deemed
approved by Buyer as provided in Paragraph 7(a)(ii) below.
(f) All applicable laws, ordinances, rules and governmental
regulations (including, but not limited to, those relative to building, zoning
and land use) affecting the development, use, occupancy or enjoyment of the
Property.
6. Title Policy. Title shall be evidenced by the willingness of
------------
Escrow Holder in its capacity as title insurer ("Title Company") to issue its
ALTA Extended Coverage Owner's Form Policy of Title Insurance ("Title Policy")
in the amount of the Purchase Price showing title to the Property vested in
Buyer.
7. Conditions to Close of Escrow.
-----------------------------
(a) Conditions to Buyer's Obligations. Buyer's obligation to
---------------------------------
consummate the transaction contemplated by this Agreement is subject to the
satisfaction of the following conditions for Buyer's benefit (or Buyer's waiver
thereof, it being agreed that Buyer may waive any or all of such conditions) on
or prior to the dates designated below for the satisfaction of such conditions.
In the event Buyer terminates this Agreement and the Escrow due to the
nonsatisfaction of any of such conditions, then Buyer shall be entitled to the
return of the Deposit and all interest accrued thereon and both Seller and Buyer
shall be relieved of all further obligations and liabilities under this
Agreement (except for the indemnity and insurance obligations of Buyer set forth
in Paragraph 7(a)(i)(A) below and the covenants of Buyer set forth in Paragraph
22(a) below, which shall survive any such termination).
(i) Contingency Matters. Buyer has satisfied itself, in
-------------------
Buyer's sole and absolute discretion, as to the following matters:
(A) Buyer's Review of the Property and Related Matters.
--------------------------------------------------
All aspects of the Property and its condition and suitability for Buyer's
intended use thereof, including, without limitation, the zoning for the Property
and the availability of all permits, licenses, variances and the like necessary
for Buyer's intended use of the Property. During the term of this Escrow, Buyer,
its agents, contractors and subcontractors shall have the right to enter upon
the Property, at reasonable times during hours specified by Seller following not
less than twenty-four (24) hours prior notice to Seller, to make such
inspections, surveys and tests as may be necessary in Buyer's discretion,
including, without limitation, soils tests, toxic waste analysis, geological
and/or engineering studies and land use or related studies; provided, however,
if Buyer proposes to make any tests in connection with any Phase II
environmental report or any other tests which involve drilling, boring or other
similar intrusive or invasive action on or under the Property, then Buyer shall
obtain Seller's written consent prior to making any such tests, which consent
may be withheld in Seller's sole, absolute and subjective discretion. Buyer
shall use care and consideration in connection with any of its inspections or
tests and Seller shall have the right to be present during any inspection of the
Property by Buyer or its agents. Buyer shall restore the Property to its
original condition after any and all tests and/or inspections. Buyer hereby
indemnifies, protects, defends (with counsel chosen by Seller) and holds Seller
and the Property free and harmless from and against any and all costs, losses,
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<PAGE>
liabilities, damages, lawsuits, judgments, actions, proceedings, penalties,
demands, attorneys' fees, mechanic's liens, or expenses of any kind or nature
whatsoever, arising out of or resulting from (i) any entry and/or activities
upon the Property by Buyer, Buyer's agents, contractors and/or subcontractors,
and/or the contractors and subcontractors of such agents, or (ii) from the
enforcement of this agreement of indemnity or the assertion by Buyer of any
defense to its obligations hereunder. Prior to any entry upon the Property by
Buyer's agents, contractors, subcontractors or employees, Buyer shall deliver to
Seller an original endorsement to Buyer's commercial general liability insurance
policy which evidences that Buyer is carrying a commercial general liability
insurance policy with a financially responsible insurance company acceptable to
Seller, covering (i) the activities of Buyer, and Buyer's agents, contractors,
subcontractors and employees on or upon the Property, and (ii) Buyer's indemnity
obligation contained in Paragraph 7(a)(i)(A) above. Such endorsement to such
insurance policy shall evidence that such insurance policy shall have a per
occurrence limit of at least Two Million Dollars ($2,000,000) and an aggregate
limit of at least Five Million Dollars ($5,000,000), shall name Seller as an
additional insured, shall be primary and noncontributing with any other
insurance available to Seller and shall contain a full waiver of subrogation
clause.
(B) Review and Approval of Documents and Materials. The
----------------------------------------------
documents, reports, bills and plans heretofore delivered to Buyer by Seller
concerning the entitlements to, construction, ownership, condition, maintenance,
and operation of, the Property (the "Documents and Materials").
(ii) Buyer's Review of Title.
-----------------------
(A) Buyer acknowledges receipt and approval of that
certain Commitment for Title Insurance relating to the Property dated May 1,
1997 issued by the Title Company under order no. 9762747 (which, together with
the supplements and amendments thereto delivered to Buyer prior to the Effective
Date and the underlying documents relating to the Schedule B exceptions set
forth in such Commitment, is collectively referred to herein as the "Report").
Buyer may, at or prior to Close of Escrow, notify Seller in writing (the "Gap
Notice") of any objections to title which are adverse to Buyer and which are (i)
raised by the Title Company between the Effective Date and the Close of Escrow
(the "Gap Period") and (ii) not disclosed by the Title Company or otherwise
known to Buyer prior to the commencement of the Gap Period (a "Gap Exception");
provided that Buyer must notify Seller of such objection to title within two (2)
business days of being made aware of the existence of such exception. The
failure of Buyer to timely give to Seller a Gap Notice shall be deemed to
constitute Buyer's approval of the applicable Gap Exception.
(B) If Buyer sends a Gap Notice, then Seller may, but
shall have no obligation to, within five (5) days after its receipt thereof
("Seller's Election Period"), elect to eliminate the disapproved Gap Exceptions
by giving Buyer written notice ("Seller's Title Notice") of those disapproved
Gap Exceptions, if any, which Seller agrees to so eliminate by the Closing Date.
(C) If Seller does not elect to eliminate any
disapproved Gap Exceptions, or if Seller fails to timely deliver Seller's Title
Notice, then Buyer shall have the right, upon delivery to Seller and Escrow
Holder (on or before five (5) days following the expiration of Seller's Election
Period) of a written notice, to either (a) waive its prior disapproval, in which
event said disapproved matters shall be deemed approved, or (b) terminate this
Agreement and the Escrow created pursuant hereto. Failure to take either one of
the actions described in clauses (a) and (b) above shall be deemed to be Buyer's
election to take the action described in clause (a) above. Notwithstanding
anything to the contrary contained in this Paragraph 7(a)(ii), Seller agrees to,
on or before the Close of Escrow, release all voluntary
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<PAGE>
monetary liens affecting the Property, other than non-delinquent real property
taxes and assessments. Further notwithstanding anything to the contrary
contained in this Paragraph 7(a)(ii), during the term of this Escrow, Seller
will not voluntarily change the condition of title approved by Buyer in a manner
adverse to Buyer.
(D) If, in Seller's Title Notice, Seller has agreed to
eliminate by the Closing Date certain disapproved Gap Exceptions described in
Buyer's Gap Notice, but Seller is unable to do so despite having made reasonable
efforts, then Buyer shall have the right (which shall be Buyer's sole and
exclusive right or remedy for such failure), upon delivery to Seller and Escrow
Holder (on or before one (1) business day prior to the Closing Date) of a
written notice to either (a) waive its prior disapproval, in which event said
disapproved matters shall be deemed approved, or (b) terminate this Agreement
and the Escrow created pursuant hereto, in which event Buyer shall be entitled
to the return of the Deposit, together with all interest accrued thereon while
in Escrow. Failure to take either one of the actions described in clauses (a)
and (b) above shall be deemed to be Buyer's election to take the action
described in clause (a) above. In the event this Agreement is terminated by
Buyer pursuant to the provisions of this Paragraph 7(a)(ii), neither party shall
have any further rights or obligations hereunder except that the indemnity and
insurance obligations of Buyer set forth in Paragraph 7(a)(i)(A) above and the
covenants of Buyer set forth in Paragraph 22(a) below shall survive any such
termination.
(E) The Closing Date shall be postponed to the extent
necessary to comply with the foregoing time frames set forth in this Paragraph
7(a)(ii).
(F) Buyer agrees that its acceptance of the Title
Policy shall be in full satisfaction of any express or implied warranty of
Seller as to the condition of title to the Property, and in the event there are
any title exceptions or defects, including, without limitation, liens,
encumbrances, covenants, conditions, reservations, restrictions, rights, rights
of way, or easements, which, in Buyer's opinion, constitute a defect in title
not shown or revealed in the Report, the Title Policy, or otherwise contemplated
in Paragraph 5 of this Agreement above, Buyer shall look solely to the remedies
available to Buyer under the Title Policy, and Seller shall have no
responsibility or liability therefor.
(iii) Seller's Obligations. As of the Close of Escrow,
--------------------
Seller shall have timely performed in all material respects, all covenants and
agreements contained in this Agreement required to be performed by Seller under
this Agreement.
(iv) Conditions Generally. Buyer hereby acknowledges
--------------------
that Seller shall have no duty or obligation of any kind whatsoever to amend,
modify or in any way ameliorate or attempt to amend, modify or ameliorate any
matter disapproved by Buyer, and Buyer's sole and exclusive remedy in the event
Buyer disapproves any one or more of such matters shall be to cancel this
Agreement in accordance with Buyer's rights to do so contained herein.
(v) Seller's Representations and Warranties. All of
---------------------------------------
the representations and warranties of Seller set forth in this Agreement shall
be true and correct in all material respects as of the Close of Escrow. In the
event that any representation or warranty of Seller needs to be modified due to
changes or additional information regarding the Property which becomes available
following the Effective Date, Seller shall deliver to Buyer a certificate
identifying any representation or warranty which is not, or no longer is, true
and correct and explaining the state of facts giving rise to the change. In no
event shall Seller be liable to Buyer for, or be deemed to be in default
hereunder by reason of, any breach of representation or warranty which results
from any change that (A) occurs between the Effective Date and the Close of
Escrow, and (B) is not prohibited under the terms of this Agreement or is
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<PAGE>
beyond the reasonable control of Seller to prevent, or is the result of
additional information regarding the Property which becomes available; provided,
however, that the occurrence of a change which is not permitted hereunder or is
beyond the reasonable control of Seller to prevent or the availability of
additional information regarding the Property, shall, if materially adverse to
Buyer, constitute the non-fulfillment of the condition set forth herein; if,
despite changes or other matters described in such certificate, the Close of
Escrow occurs, such representations and warranties shall be deemed to have been
modified by all statements made in such certificate.
(b) Conditions to Seller's Obligations. For the benefit of
----------------------------------
Seller, the Close of Escrow shall be conditioned upon the occurrence or
satisfaction (or Seller's waiver thereof, it being agreed that Seller may waive
such condition) of the condition that Buyer shall have timely performed all of
the obligations required by the terms of this Agreement to be performed by
Buyer.
(c) Conditions to the Obligations of Both Seller and Buyer. For
------------------------------------------------------
the benefit of both Buyer and Seller, the Close of Escrow shall be conditioned
upon the occurrence or satisfaction of the following conditions. If the parties
cannot agree upon the form of the Lease and resolve the Roof Issue prior to the
expiration of the Contingency Period, then either Buyer or Seller may, at its
sole option, but without any obligation to do so, elect to extend the
Contingency Period as to the open issue only for up to fifteen (15) business
days. If the parties still cannot agree upon the form of the Lease and resolve
the Roof Issue prior to the expiration of the extended Contingency Period, if
applicable, then either party may terminate this Agreement and the Escrow
created pursuant hereto by delivering written notice to the other party and
Escrow Holder on or before the expiration of the Contingency Period (as
extended, if applicable), in which event (A) this Agreement and the Escrow shall
terminate and be of no further force or effect (except for the indemnity and
insurance obligations of Buyer contained in Paragraph 7(a)(i)(A) above and the
covenants of Buyer set forth in Paragraph 22(a) below, which shall survive any
such termination), (B) Escrow Holder shall return to Buyer the Deposit and all
interest accrued thereon (less Buyer's share of escrow cancellation charges),
(C) Buyer shall return to Seller all Documents and Materials received by Buyer
from Seller, and (D) Buyer shall deliver to Seller all surveys, reports, studies
and the like that Buyer may have theretofore procured with respect to the
Property:
(i) Lease. Buyer and Seller shall have agreed upon
-----
the form of, on or before the date which is ten (10) business days following the
Effective Date (such period of time shall be referred to herein as the
"Contingency Period"), a lease for the Property, or a portion thereof (the
"Lease"), pursuant to which Seller shall lease back the Property, or a portion
thereof, from Buyer upon the Close of Escrow. The Lease shall contain at least
the following provisions, as well as such other terms and conditions as Buyer
and Seller may be willing to agree upon during the Contingency Period:
(A) The original term of the Lease will be for three
(3) years, with two (2) one-year options to extend exercisable upon not less
than one hundred twenty (120) days' prior written notice.
(B) The Lease will be triple net to the Buyer, with
Seller being responsible for paying its pro rata share of taxes, insurance and
maintenance expenses.
(C) The rental rate per square foot per month within
the Warehouse Building will be forty-five cents ($0.45), increasing annually by
one penny ($0.01) per month, including the option terms.
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<PAGE>
(D) The rental rate per square foot per month within
the Office Building will be eighty-five cents ($0.85), increasing annually by
two pennies ($0.02) per month, including the option terms.
(E) By not less than one hundred twenty (120) days'
written notice to Buyer, Seller will have the right to reduce the portion of the
Warehouse Building it leases to between approximately 150,000 and 200,000 square
feet, approximately 124,400 square feet of which will be in the south half of
the Warehouse Building and the balance of which will be in the easterly portion
of the north half. The effective date of the reduction will not be later than
the last day of the 24th month of the original Lease term. Buyer will have the
right to market the space in the Warehouse Building being given back by Seller
upon receipt of Seller's written notification that it has elected such
reduction. The cost of constructing any demising walls required to separate the
new, smaller portion of the Warehouse Building from the remainder of the
Warehouse Building will be the sole responsibility of the Seller.
(F) By not less than one hundred twenty (120) days'
written notice to Buyer, Seller will have the one time right to cancel the Lease
as to the Office Building, effective between the first day of the 6th month and
the last day of the 18th month of the original Lease term. Buyer will have the
right to market the Office Building upon receipt of Seller's written
cancellation notice.
(G) The Lease will not cover the approximately four (4)
acre portion of the Land directly to the east of the Warehouse Building
(presently undeveloped), which Buyer will have the right to hold, develop or
dispose of, provided Seller's use and possession of the Improvements is not
interfered with.
(H) The Lease will specify that, upon vacation of the
Property by Seller, Seller will be able to remove those certain items identified
in the Lease, provided Seller repairs all damage to the Improvements resulting
from the removal.
(ii) Roof. Buyer and Seller shall have resolved the
----
issue (the "Roof Issue") of who will pay what, if anything, toward the cost of
repairing or replacing either or both of the Warehouse Building roof and/or the
Office Building roof.
8. Deposits by Seller. At least one (1) business day prior to the
------------------
Close of Escrow, Seller shall deposit or cause to be deposited with Escrow
Holder the following documents and instruments:
(a) Grant Deed. The Grant Deed, in the form attached hereto as
----------
Exhibit "B", duly executed by Seller and acknowledged.
- -----------
(b) Seller's Certificates of Non-Foreign Status. Certificates of
-------------------------------------------
non-foreign status ("Firpta Certificate" and "Calfirpta Certificate"), duly
executed by Seller, in the forms attached hereto as Exhibit "C" and Exhibit "D".
----------- -----------
(c) Lease. A counterpart of the Lease, duly executed by Seller.
-----
(d) Title Company Documents. Such evidence as the Title Company
-----------------------
may reasonably require as to the authority of the person or persons executing
documents on behalf of Seller, such affidavits as may be customarily and
reasonably required by the Title Company, and an executed closing statement
acceptable to Seller.
(e) Bill of Sale. The "Bill of Sale" in the form attached hereto
------------
as Exhibit "E".
-----------
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<PAGE>
(f) Assignment of Contracts. A counterpart of the "Assignment of
-----------------------
Contracts," duly executed by Seller in the form of Exhibit "F" attached hereto.
(g) Other Documents. Such other documents and instruments as may
---------------
be required in order in order to comply with the terms of Paragraph 22(b)
hereof.
9. Deposits by Buyer. Buyer shall deposit or cause to be deposited
-----------------
with Escrow Holder the Deposit which is to be applied towards the payment of the
Purchase Price and the balance of the Purchase Price in the amounts and at the
times set forth in Paragraph 3 above. In addition, at least one (1) business
day prior to the Close of Escrow, Buyer shall deposit with Escrow Holder the
following documents and instruments:
(a) Lease. A counterpart of the Lease, duly executed by Buyer.
-----
(b) Assignment of Contracts. A counterpart of the Assignment of
-----------------------
Contracts, duly executed by Buyer.
(c) Other Documents. Such other documents and instruments as may
---------------
be required in order to comply with the terms of Paragraph 22(b) hereof.
10. Costs and Expenses. The cost of the CLTA portion of the Title
------------------
Policy shall be paid by Seller and the premium and any additional costs for the
ALTA extended coverage additional to the premium for CLTA coverage and the cost
of any endorsements to the Title Policy shall be paid by Buyer. The escrow fee
of Escrow Holder shall be shared equally by Seller and Buyer. Seller shall pay
all documentary transfer taxes and recording fees payable in connection with the
recordation of the Grant Deed. Buyer and Seller shall pay, respectively, the
Escrow Holder's customary charges to buyers and sellers for document drafting
and miscellaneous charges. If, as a result of no fault of Buyer or Seller,
Escrow fails to close, Buyer and Seller shall share equally all of Escrow
Holder's fees and charges.
11. Prorations. There will be no prorations, since Seller will
----------
remain responsible for all taxes, utilities and the like applicable to the
period of time following the Close of Escrow pursuant to the Lease.
12. Disbursements and Other Actions by Escrow Holder. Upon the Close
------------------------------------------------
of Escrow, Escrow Holder shall promptly undertake all of the following in the
manner indicated:
(a) Recording. Cause the Grant Deed and any other documents
---------
which the parties hereto may mutually direct, to be recorded in the Official
Records, in the order directed by the parties.
(b) Funds. Disburse from funds deposited by Buyer with Escrow
-----
Holder towards payment of all items chargeable to the account of Buyer pursuant
hereto in payment of such costs, including, without limitation, the payment of
the Purchase Price to Seller, and disburse the balance of such funds, if any, to
Buyer.
(c) Title Policy. Direct the Title Company to issue the Title
------------
Policy to Buyer.
(d) Documents to Seller. Deliver to Seller counterparts of the
-------------------
Lease and the Assignment of Contracts executed by Buyer.
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<PAGE>
(f) Documents to Buyer. Deliver to Buyer the Bill of Sale, the
------------------
Calfirpta Certificate, and the and Firpta Certificate and counterparts of the
Lease and the Assignment of Contracts executed by Seller.
13. Seller's Representations and Warranties. In consideration of
---------------------------------------
Buyer entering into this Agreement and as an inducement to Buyer to purchase the
Property from Seller, Seller hereby makes the following representations and
warranties to Buyer as of the date of this Agreement, each of which is material
and being relied upon by Buyer; and the truth and accuracy in all material
respects of each of which shall be a condition to Buyer's obligations to close
the Escrow:
(a) Authority. Seller has been duly organized and is validly
---------
existing under the laws of the State of California. Seller has the legal right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby, and the execution, delivery and performance of
this Agreement have been duly authorized and no other action by Seller is
requisite to the valid and binding execution, delivery and performance of this
Agreement, except as otherwise expressly set forth in this Agreement.
(b) Foreign Person Affidavit. Seller is not a foreign person as
------------------------
defined in Section 1445 of the Internal Revenue Code, nor is Buyer required to
withhold taxes from the payment of sales proceeds under any applicable state or
local tax laws based upon the status of Seller as foreign or resident of a state
other than California.
(c) Pending Actions. Seller has received no written notice of
---------------
any action, suit, arbitration, unsatisfied order or judgment, government
investigation or proceeding pending, and to Seller's knowledge, there is no
action, suit, arbitration, unsatisfied order or judgment, government
investigation or proceeding threatened, against Seller which, if adversely
determined, could individually or in the aggregate, materially interfere with
the consummation of the transaction contemplated by this Agreement. There is no
litigation which has been filed against Seller that arises out of the ownership
of the Property and would materially affect the Property or use thereof, or
Seller's ability to perform hereunder.
(d) Eminent Domain. To Seller's actual knowledge, there is no
--------------
actual or pending proceeding against the Property in eminent domain.
(e) Hazardous Materials. To Seller's actual knowledge, there are
-------------------
no "Hazardous Materials" (as defined in Paragraph 14(b) below) located on the
Property in violation of any applicable laws, rules or regulations in existence
as of the date of this Agreement.
(f) No Leases. No leasehold or subleasehold estates currently
---------
affect the Property.
(g) Operating Agreements. To Seller's knowledge, there are no
--------------------
agreements concerning the operation and maintenance of the Property or a portion
of the Property entered into by Seller that will not be terminable by Buyer or
Seller by thirty (30) days (or less) notice given following termination of the
Lease or a portion of the Lease.
(h) Violations. Seller has not received written notice of any
----------
uncured violation of any federal, state or local law relating to the use or
operation of the Property which would materially, adversely affect the Property
or use thereof.
-9-
<PAGE>
(i) No Consents Required. To Seller's knowledge, no consent,
--------------------
approval or other authorization of, or registration, declaration or filing with,
any governmental authority is required for the due execution and delivery of
this Agreement and/or any of the documents to be executed by Seller hereunder,
or for the performance by or the validity or enforceability thereof against
Seller, other than the recording or filing for recordation of the Grant Deed.
(j) No Violations. The execution and delivery of this Agreement,
-------------
and all other documents to be executed by Seller hereunder, compliance with the
provisions hereof and thereof and the consummation of the transactions
contemplated hereunder and thereunder will not result in (i) a breach or
violation of (A) any governmental requirement applicable to Seller or the
Property now in effect; (B) the organizational documents of Seller; (C) any
judgment, order or decree of any governmental authority binding upon Seller; or
(D) any agreement or instrument to which Seller is a party or by which it is
bound; (ii) the acceleration of any obligation of Seller; or (iii) the creation
of any lien, encumbrance or other matter affecting title (other than those
matters affected by the Condition of Title) to the Property.
(k) Physical Condition. To Seller's knowledge, there is no
------------------
existing material, patent or latent structural or other physical defect of
deficiency in the condition of the Property, or any component or portion
thereof, that would or could impair or impose costs upon the use, occupancy or
operation of the Property, and that has not been fully corrected.
(l) Easements and Other Agreements. To Seller's knowledge,
------------------------------
Seller is not in default in complying with the terms and provisions of any of
the covenants, conditions, restrictions, right-of-way or easements constituting
any Condition of Title.
The "knowledge" of Seller, as used in this Paragraph 13, means the
actual, present knowledge of Seller as of the date of this Agreement, without
any investigation or inquiry of any kind or nature whatsoever. The
representations and warranties set forth in Paragraph 13 hereof as updated as of
the Close of Escrow in accordance with the terms of this Agreement, shall
survive Close of Escrow for a period of one (1) year. No claim for a breach of
any representation or warranty shall be actionable or payable if the breach in
question results from or is based on a condition, state of facts or other matter
which was known to Buyer prior to Close of Escrow.
14. Buyer's Covenants, Representations and Warranties. In
-------------------------------------------------
consideration of Seller entering into this Agreement and as an inducement to
Seller to sell the Property to Buyer, Buyer makes the following covenants,
representations and warranties, each of which is material and is being relied
upon by Seller:
(a) Authority. Buyer has the legal right, power and authority to
---------
enter into this Agreement and to consummate the transactions contemplated
hereby, and the execution, delivery and performance of this Agreement have been
duly authorized and no other action by Buyer is requisite to the valid and
binding execution, delivery and performance of this Agreement, except as
otherwise expressly set forth in this Agreement.
(b) "AS IS." Except for the express representations and
------
warranties of Seller set forth in Paragraph 13 above, Buyer is acquiring the
Property "AS-IS" without any representation or warranty of Seller, express,
implied or statutory, as to the nature or condition of or title to the Property
or its fitness for Buyer's intended use of same. Buyer is, or as of the
expiration of the Contingency Period will be, familiar with the Property. Except
for the express representations and warranties of Seller set forth in Paragraph
13 above, Buyer is relying solely upon, and as of the expiration of the
Contingency Period will
-10-
<PAGE>
have conducted, its own, independent inspection, investigation and analysis of
the Property as it deems necessary or appropriate in so acquiring the Property
from Seller, including, without limitation, an analysis of any and all matters
concerning the condition of the Property and its suitability for Buyer's
intended purposes, and a review of all applicable laws, ordinances, rules and
governmental regulations (including, but not limited to, those relative to
building, zoning and land use) affecting the development, use, occupancy or
enjoyment of the Property.
Without limiting the generality of the foregoing, Buyer hereby
expressly waives and relinquishes any and all rights and remedies Buyer may now
or hereafter have against Seller, whether known or unknown, with respect to any
past, present or future presence or existence of "Hazardous Materials" (as
herein defined) on, under or about the Property or with respect to any past,
present or future violations of any "Environmental Laws" (as herein defined),
except to the extent any such presence or existence of Hazardous Materials or
violations of Environmental Laws is attributable to the acts or omissions (where
there is a duty to act) of Seller or its agents or employees. As used herein,
the term "Environmental Laws" includes all rules, regulations or laws, now or
hereafter enacted, regulating or governing the use, handling, storage or
disposal of Hazardous Materials, including, without limitation, (i) any and all
rights Buyer may now or hereafter have to seek contribution from Seller under
Section 113(f)(i) of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), as amended by the Superfund Amendments and
Reauthorization Act of 1986 (42 U.S.C.A. (S)9613), as the same may be further
amended or replaced by any similar law, rule or regulation, (ii) any and all
rights Buyer may now or hereafter have against Seller under the Carpenter-
Presley-Tanner Hazardous Substance Account Act (California Health and Safety
Code, Section 25300 et seq.), as the same may be further amended or replaced by
-- ---
any similar law, rule or regulation, and (iii) any and all claims, whether known
or unknown, now or hereafter existing, with respect to the Property under
Section 107 of CERCLA (42 U.S.C.A. (S)9607). As used herein, the term
"Hazardous Material(s)" includes, without limitation, any hazardous or toxic
materials, substances or wastes, such as (A) those materials identified in
Sections 66680 through 66685 and Sections 66693 through 66740 of Title 22 of the
California Administrative Code, Division 4, Chapter 30, as amended from time to
time, (B) those materials defined in Section 25501(j) of the California Health
and Safety Code, (C) any materials, substances or wastes which are toxic,
ignitable, corrosive or reactive and which are regulated by any local
governmental authority, any agency of the state of California or any agency of
the United States Government, (D) asbestos, (E) petroleum and petroleum based
products, (F) urea formaldehyde foam insulation, (G) polychlorinated biphenyls
(PCBs), and (H) freon and other chlorofluorocarbons.
BUYER HEREBY ACKNOWLEDGES THAT IT HAS READ AND IS FAMILIAR WITH
THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 ("SECTION 1542"), WHICH IS
SET FORTH BELOW:
"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."
-11-
<PAGE>
BY INITIALLING BELOW, BUYER HEREBY WAIVES THE PROVISIONS OF
SECTION 1542 SOLELY IN CONNECTION WITH THE MATTERS WHICH ARE THE SUBJECT OF THE
FOREGOING WAIVERS AND RELEASES:
/s/ JH
----------------
Buyer's Initials
The waivers and releases by Buyer herein contained shall survive
the Close of Escrow and the recordation of the Grant Deed and shall not be
deemed merged into the Grant Deed upon its recordation.
(c) Limitation on Seller's Liability. Buyer represents and
--------------------------------
covenants that Seller shall not have any liability, obligation or responsibility
of any kind with respect to the following:
(i) The content or accuracy of any report, study,
opinion or conclusion of any soils, toxic, environmental or other engineer or
other person or entity who has examined the Property or any aspect thereof.
(ii) The content or accuracy of any information
released to Buyer by an engineer or planner in connection with the development
of the Property.
(iii) The availability of building or other permits or
approvals for the Property by any state or local governmental bodies with
jurisdiction over the Property.
(iv) The availability or capacity of sewer, water or
other utility connections to the Property.
(v) Any of the items delivered to Buyer pursuant to
Buyer's review of the condition of the Property (but Seller will be liable for a
material inaccuracy in any of such items to the extent they are prepared by
Seller).
(vi) The content or accuracy of any other development
or construction cost, projection, financial or marketing analysis or other
information given to Buyer by Seller or reviewed by Buyer with respect to the
Property.
15. LIQUIDATED DAMAGES.
------------------
(a) BREACH BY BUYER. EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH
---------------
IN THIS AGREEMENT AND PROVIDED THAT SELLER IS NOT IN MATERIAL BREACH OF THIS
AGREEMENT AND PROVIDED FURTHER THAT ALL CLOSING CONDITIONS IN FAVOR OF BUYER SET
FORTH IN THIS AGREEMENT HAVE BEEN SATISFIED, THE DEPOSIT (BUT NOT THE INTEREST
EARNED FROM THE INVESTMENT THEREOF) SHALL BE RETAINED BY SELLER AS LIQUIDATED
DAMAGES IN THE EVENT THE SALE OF THE PROPERTY, AS CONTEMPLATED IN THIS
AGREEMENT, IS NOT CONSUMMATED AS A RESULT OF BUYER'S REFUSAL OR INABILITY TO
CLOSE UNDER THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT SELLER'S ACTUAL DAMAGES
IN THE EVENT THAT THE SALE IS NOT SO CONSUMMATED WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICABLE TO DETERMINE. THEREFORE, BY SEPARATELY INITIALING THIS PARAGRAPH
15(a) BELOW, THE PARTIES ACKNOWLEDGE THAT THE NONREFUNDABLE DEPOSIT HAS BEEN
AGREED UPON, AFTER NEGOTIATION, AS THE
-12-
<PAGE>
PARTY'S REASONABLE ESTIMATE OF SELLER'S DAMAGES, AND AS SELLER'S EXCLUSIVE
REMEDY AGAINST BUYER IN THE EVENT THE CLOSING DOES NOT OCCUR AND AS SELLER'S
SOLE AND EXCLUSIVE REMEDY AGAINST BUYER ARISING FROM SUCH FAILURE OF THE SALE TO
CLOSE. NOTWITHSTANDING THE FOREGOING, THIS PARAGRAPH 15(a) SHALL NOT LIMIT THE
DAMAGES RECOVERABLE BY SELLER RESULTING FROM A BREACH OTHER THAN BUYER'S REFUSAL
OR INABILITY TO PURCHASE THE PROPERTY. BY THEIR SEPARATELY INITIALING THIS
PARAGRAPH 15(a) BELOW, BUYER AND SELLER ACKNOWLEDGE THAT THEY HAVE READ AND
UNDERSTOOD THE ABOVE PROVISION COVERING LIQUIDATED DAMAGES, AND THAT EACH PARTY
WAS REPRESENTED BY COUNSEL WHO EXPLAINED THE CONSEQUENCES OF THIS LIQUIDATED
DAMAGES PROVISION AT THE TIME THIS AGREEMENT WAS EXECUTED.
JB JH
----------------- ----------------
Seller's Initials Buyer's Initials
(b) BREACH BY SELLER. EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH
----------------
IN THIS AGREEMENT AND PROVIDED THAT BUYER IS NOT IN MATERIAL BREACH OF THIS
AGREEMENT AND PROVIDED FURTHER THAT ALL CLOSING CONDITIONS IN FAVOR OF SELLER
SET FORTH IN THIS AGREEMENT HAVE BEEN SATISFIED, IN THE EVENT THE SALE OF THE
PROPERTY, AS CONTEMPLATED IN THIS AGREEMENT, IS NOT CONSUMMATED AS A RESULT OF
SELLER'S REFUSAL OR INABILITY TO CLOSE UNDER THIS AGREEMENT, SELLER SHALL PAY TO
BUYER LIQUIDATED DAMAGES IN THE AMOUNT OF ONE MILLION AND 00/100 DOLLARS
($1,000,000.00). THE PARTIES ACKNOWLEDGE THAT BUYER'S ACTUAL DAMAGES IN THE
EVENT THAT THE SALE IS NOT SO CONSUMMATED WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICABLE TO DETERMINE. THEREFORE, BY SEPARATELY INITIALING THIS PARAGRAPH
15(b) BELOW, THE PARTIES ACKNOWLEDGE THAT THE FOREGOING $1,000,000.00 AMOUNT HAS
BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF
BUYER'S DAMAGES, AND AS BUYER'S EXCLUSIVE REMEDY AGAINST SELLER IN THE EVENT THE
CLOSING DOES NOT OCCUR AND AS BUYER'S SOLE AND EXCLUSIVE REMEDY AGAINST SELLER
ARISING FROM SUCH FAILURE OF THE SALE TO CLOSE. NOTWITHSTANDING THE FOREGOING,
THIS PARAGRAPH 15(b) SHALL NOT LIMIT THE DAMAGES RECOVERABLE BY BUYER RESULTING
FROM A BREACH OTHER THAN SELLER'S REFUSAL OR INABILITY TO SELL THE PROPERTY. BY
THEIR SEPARATELY INITIALING THIS PARAGRAPH 15(b) BELOW, BUYER AND SELLER
ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTOOD THE ABOVE PROVISION COVERING
LIQUIDATED DAMAGES, AND THAT EACH PARTY WAS REPRESENTED BY COUNSEL TO EXPLAIN
THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION AT THE TIME THIS AGREEMENT
WAS EXECUTED.
JB JH
----------------- ----------------
Seller's Initials Buyer's Initials
16. WAIVER OF RIGHT TO SPECIFIC PERFORMANCE. IF SELLER SHALL FAIL TO
---------------------------------------
CONVEY THE PROPERTY TO BUYER IN ACCORDANCE WITH THE PROVISIONS OF THIS
AGREEMENT, AND SUCH FAILURE CONSTITUTES A DEFAULT HEREUNDER, THEN BUYER SHALL BE
ENTITLED TO THE REMEDY SET FORTH IN PARAGRAPH 15(b) ABOVE AND THE RETURN OF THE
DEPOSIT AND ALL INTEREST ACCRUED THEREON WHILE IN
-13-
<PAGE>
ESCROW BUT BUYER SHALL NOT HAVE THE RIGHT TO RECEIVE ANY EQUITABLE RELIEF,
INCLUDING, WITHOUT LIMITATION, THE RIGHT TO RECORD A LIS PENDENS AGAINST THE
PROPERTY UNDER APPLICABLE LAW, OR TO PURSUE THE SPECIFIC PERFORMANCE OF THIS
AGREEMENT. SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE
PROVISIONS OF THIS PARAGRAPH 16 AND BY THEIR INITIALS IMMEDIATELY BELOW AGREE TO
BE BOUND BY ITS TERMS.
JB JH
----------------- ----------------
Seller's Initials Buyer's Initials
17. Damage or Condemnation Prior to Closing. Seller shall promptly
---------------------------------------
notify Buyer of any casualty to the Property or any condemnation proceeding
commenced prior to the Close of Escrow. If any such damage or proceeding relates
to or may result in the loss of any material portion of the Property, Buyer may,
at its option, elect either to: (i) terminate this Agreement, in which event all
funds deposited into Escrow by Buyer shall be returned to Buyer and neither
party shall have any further rights or obligations hereunder, or (ii) continue
the Agreement in effect, in which event upon the Close of Escrow, Buyer shall be
entitled to any compensation, awards, or other payments or relief resulting from
such casualty or condemnation proceeding relating to the Property and there
shall be no adjustment to the Purchase Price.
18. Notices. All notices or other communications required or
-------
permitted hereunder shall be in writing, and shall be personally delivered, sent
by registered or certified mail, postage prepaid, return receipt requested,
delivered by overnight courier such as FedEx, Express Mail, etc. for next
business day delivery, or sent by telecopy, and shall be deemed received upon
the earlier of (i) if personally delivered, the business day of delivery to the
address of the person to receive such notice, (ii) if mailed, three (3) business
days after the date of posting by the United States post office, (iii) if given
by telecopy, when received as evidenced by the confirmation report, provided it
is received before 5:00 p.m. Pacific Time (if received later, the notice will be
deemed received on the next business day), or (iv) if delivered by overnight
courier, the next business day. Any notice, request, demand, direction or other
communication sent by telecopy must be confirmed within forty-eight (48) hours
by letter mailed or delivered in accordance with the foregoing.
To Buyer: Kilroy Realty
2250 E. Imperial Highway
El Segundo, California 90245
Attention: Mr. Jeffrey C. Hawken
Telephone: (213) 772-1193
Telecopy: (310) 322-5981
With a copy to: Latham & Watkins
650 Town Center Drive, Suite 2000
Costa Mesa, California 92626
Attention: Bruce A. Tester, Esq.
Telephone: (714) 540-1235
Telecopy: (714) 755-8290
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<PAGE>
To Seller: Mazda Motor of America, Inc.
7755 Irvine Center Drive
Irvine, California 92618-2922
Attention: Mr. Robert Belzer
Telephone: (714) 727-6393
Telecopy: (714) 727-6256
With a copy to: Mazda Motor of America, Inc.
7755 Irvine Center Drive
Irvine, California 92618-2922
Attention: General Counsel
Telephone: (714) 727-1990
Telecopy: (714) 727-6260
With a copy to: Allen, Matkins, Leck, Gamble & Mallory LLP
18400 Von Karman, Fourth Floor
Irvine, California 92612
Attention: Bradley N. Schweitzer, Esq.
Telephone: (714) 553-1313
Telecopy: (714) 553-8354
To Escrow Holder: First American Title Insurance Company
114 East Fifth Street
Santa Ana, California 92701
Attention: Ms. Judith M. Moore
Telephone: (714) 647-4466
Telecopy: (714) 647-2235
Notice of change of address shall be given by written notice in the manner
detailed in this Paragraph 18. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given
shall be deemed to constitute receipt of the notice, demand, request or
communication sent.
19. Brokers. Upon the Close of Escrow, Seller shall pay real estate
-------
brokerage commissions to Collins Commercial Corporation and Lee & Associates
with respect to this transaction in accordance with escrow instructions
previously signed by Seller and Seller hereby agrees to indemnify and hold Buyer
free and harmless from such commission obligations. If any additional claims
for brokers' or finders' fees for the consummation of this Agreement arise, then
Buyer hereby agrees to indemnify, save harmless and defend Seller from and
against such claims if they shall be based upon any statement or representation
or agreement by Buyer, and Seller hereby agrees to indemnify, save harmless and
defend Buyer if such claims shall be based upon any statement, representation or
agreement made by Seller.
20. Legal Fees. In the event of the bringing of any action or suit
----------
by a party hereto against another party hereunder by reason of any breach of any
of the covenants or agreements or any inaccuracies in any of the representations
and warranties on the part of the other party arising out of this Agreement,
then in that event, the prevailing party in such action or dispute, whether by
final judgment, or out of court settlement shall be entitled to have and recover
of and from the other party all costs and expenses of suit, including actual
attorneys' fees. Any judgment or order entered in any final judgment shall
contain a specific provision providing for the recovery of all costs and
expenses of suit, including actual attorneys' fees (collectively "Costs")
incurred in enforcing, perfecting and executing such judgment.
-15-
<PAGE>
For the purposes of this paragraph, Costs shall include, without limitation,
attorneys' fees, costs and expenses incurred in (a) postjudgment motions, (b)
contempt proceeding, (c) garnishment, levy, and debtor and third party
examination, (d) discovery, and (e) bankruptcy litigation.
21. Assignment. Neither party shall assign, transfer or convey its
----------
rights and/or obligations under this Agreement and/or with respect to the
Property without the prior written consent of the other, which consent the other
party may withhold in its sole, absolute and subjective discretion; provided,
however, without Buyer's consent, Seller may assign its rights and/or delegate
its duties under this Agreement and/or the Lease to a successor corporation,
provided Buyer shall receive written notice thereof. Any permitted assignments
shall not relieve the assigning party from its liability under this Agreement.
22. Miscellaneous.
-------------
(a) Confidentiality. Buyer acknowledges that, prior to the Close
---------------
of Escrow, it is in the best interest of Buyer and Seller to maintain the
confidentiality of the terms and provisions of this Agreement and/or the Lease
and the materials relating hereto and thereto. Except as may be required by law
or court order or as otherwise provided or contemplated herein, prior to the
Close of Escrow, Buyer shall not disclose any of the terms or provisions of this
Agreement to any person or entity not a party to this Agreement, nor shall Buyer
issue any press releases or make any public statements relating to this
Agreement or Buyer's intended use of the Property, and Buyer shall keep all
materials provided or made available to Buyer by Seller, and all materials
generated by Buyer in the course of conducting its inspections, review of books
and records, and other due diligence activities relating to the Property
(including, without limitation, matters relating to the environmental condition
of the Property), whether obtained through documents, oral or written
communications, or otherwise (collectively, the "Information"), in the strictest
confidence. Under no circumstances shall any of the Information be used for any
purpose other than the investigation of the Property in connection with its
purchase by Buyer as contemplated under this Agreement. Buyer shall cause the
confidentiality obligations set forth in this Paragraph 22(a) to be agreed to by
its attorneys, auditors, consultants, accountants and any other third parties
which Buyer may employ or with which Buyer may work in connection with this
transaction and the investigations contemplated hereunder. If this Agreement
terminates for any reason, Buyer shall return to Seller all original materials,
together with any copies made by Buyer, and all copies of any reports or
compilations of data generated from materials or other Information provided to
Buyer, and Buyer will cause third parties acting on behalf of Buyer to deliver
to Seller all such materials in their possession.
(b) Required Actions of Buyer and Seller. Buyer and Seller agree
------------------------------------
to execute such instruments and documents and to diligently undertake such
actions as may reasonably be required in order to consummate the purchase and
sale herein contemplated and shall use good faith efforts to accomplish the
Close of Escrow in accordance with the provisions hereof. The provisions of this
Paragraph 22(b) shall survive the Close of Escrow and shall not be deemed merged
into the Grant Deed upon its recordation.
(c) Time of Essence. Time is of the essence of each and every
---------------
term, condition, obligation and provision hereof. All references herein to a
particular time of day shall be deemed to refer to Los Angeles, California time.
(d) Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute one and the same instrument.
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<PAGE>
(e) Captions. Any captions to, or headings of, the paragraphs or
--------
subparagraphs of this Agreement are solely for the convenience of the parties
hereto, are not a part of this Agreement, and shall not be used for the
interpretation or determination of the validity of this Agreement or any
provision hereof.
(f) No Obligations to Third Parties. Except as otherwise
-------------------------------
expressly provided herein, the execution and delivery of this Agreement shall
not be deemed to confer any rights upon, nor obligate any of the parties hereto,
to any person or entity other than the parties hereto.
(g) Exhibits. The Exhibits attached hereto are hereby
--------
incorporated herein by this reference for all purposes.
(h) Amendment to this Agreement. The terms of this Agreement may
---------------------------
not be modified or amended except by an instrument in writing executed by each
of the parties hereto.
(i) Waiver. The waiver or failure to enforce any provision of
------
this Agreement shall not operate as a waiver of any future breach of any such
provision or any other provision hereof.
(j) Applicable Law. This Agreement shall be governed by and
--------------
construed and enforced in accordance with the laws of the State of California.
(k) Fees and Other Expenses. Except as otherwise provided
-----------------------
herein, each of the parties shall pay its own fees and expenses in connection
with this Agreement.
(l) Entire Agreement. This Agreement supersedes any prior
----------------
agreements, negotiations and communications, oral or written (including, without
limitation, that certain nonbinding letter of intent dated May 6, 1997), and
contains the entire agreement between Buyer and Seller as to the subject matter
hereof. No subsequent agreement, representation, or promise made by either party
hereto, or by or to an employee, officer, agent or representative of either
party shall be of any effect unless it is in writing and executed by the party
to be bound thereby.
(m) Partial Invalidity. If any portion of this Agreement as
------------------
applied to either party or to any circumstances shall be adjudged by a court to
be void or unenforceable, such portion shall be deemed severed from this
Agreement and shall in no way effect the validity or enforceability of the
remaining portions of this Agreement.
(n) Successors and Assigns. Subject to the provisions of
----------------------
Paragraph 21 hereof, this Agreement shall be binding upon and shall inure to the
benefit of the successors and assigns of the parties hereto.
(o) Facsimile Signatures. In order to expedite the transaction
--------------------
contemplated herein, telecopied signatures may be used in place of original
signatures on this Agreement or any document delivered pursuant hereto, provided
original signatures are delivered the next business day. Seller and Buyer intend
to be bound by the signatures on the telecopy document, are aware that the other
party will rely on the telecopied signatures, and hereby waive any defenses to
the enforcement of the terms of this Agreement based on the form of signature.
(p) Business Days. In the event any date described in this
-------------
Agreement relative to the performance of actions hereunder by Buyer, Seller
and/or Escrow Holder falls on a Saturday, Sunday or legal holiday, such date
shall be deemed postponed until the next business day thereafter.
-17-
<PAGE>
(q) Covenant of Seller. If any governmental agency requires the
------------------
existing 100-gallon diesel tank located on the Property to have a permit, Seller
will obtain such permit at Seller's sole expense. This covenant shall survive
the Close of Escrow and shall not be deemed merged into the Grant Deed upon its
recordation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
"Buyer" KILROY REALTY L.P., a
Delaware limited partnership
By: Kilroy Realty Corporation, a Maryland corporation,
Its General Partner
By: /s/Jeffrey C. Hawken
-------------------------------
Print Name: Jeffrey C. Hawken
-------------------
Print Title: EVP & COV
-------------------
"Seller" MAZDA MOTOR OF AMERICA, INC., a
California corporation
By: /s/ Jeff Baortale
-----------------------------------
Print Name: Jeff Baortale
------------------------
Print Title: Vice President Finance
-----------------------
ACCEPTANCE BY ESCROW HOLDER:
First American Title Insurance Company hereby acknowledges that it has
received originally executed counterparts or a fully executed original of the
foregoing Agreement of Purchase and Sale and Joint Escrow Instructions and
agrees to act as Escrow Holder thereunder and to be bound by and perform the
terms thereof as such terms apply to Escrow Holder.
Dated: June 13, 1997 FIRST AMERICAN TITLE INSURANCE
COMPANY
By: /s/ Judith M. Moore
-----------------------------------
Print Name: Judith M. Moore, A.V.P.
------------------------
Its Authorized Agent
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<PAGE>
LEGAL DESCRIPTION OF PROPERTY
-----------------------------
ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE,
CITY OF IRVINE, DESCRIBED AS FOLLOWS:
PARCEL 1, AS SHOWN ON A PARCEL MAP FILED IN BOOK 185, PAGES 1 TO 3 INCLUSIVE OF
PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPTING THEREFROM ANY AND ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS,
NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN, GEOTHERMAL
STEAM, AND OTHER MATERIAL RESOURCES AND ALL PRODUCTS DERIVED FROM ANY OF THE
FOREGOING, THAT MAY BE WITHIN OR UNDER SAID LAND, TOGETHER WITH THE PERPETUAL
RIGHT OF DRILLING, MINING, EXPLORING AND OPERATING THEREFOR, AND STORING IN AND
REMOVING THE SAME FROM SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN SAID LAND, OIL
OR GAS WELLS, TUNNELS AND SHAFTS INTO, THROUGH OR ACROSS THE SUBSURFACE OF SAID
LAND, AND TO BOTTOM SUCH WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND
SHAFTS UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO REDRILL,
RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY SUCH WELLS OR MINES,
WITHOUT, HOWEVER, THE RIGHT TO DRILL, MINE, STORE, EXPLORE AND OPERATE THROUGH
THE SURFACE OR THE UPPER 500 FEET OF THE SUBSURFACE OF SAID LAND, AS RESERVED IN
THAT DEED RECORDED JANUARY 11, 1984 AS INSTRUMENT NO. 84-014635 OF OFFICIAL
RECORDS, BY THE IRVINE COMPANY, GRANTOR THEREIN.
ALSO EXCEPTING THEREFROM ANY AND ALL WATER, RIGHTS OR INTERESTS THEREIN, NO
MATTER HOW ACQUIRED BY GRANTOR IN THE ABOVE MENTIONED DEED, AND OWNED OR USED BY
GRANTOR IN CONNECTION WITH OR WITH RESPECT TO SAID LAND, TOGETHER WITH THE RIGHT
AND POWER TO EXPLORE, DRILL, REDRILL, REMOVE AND STORE THE SAME FROM SAID LAND
OR TO DIVERT OR OTHERWISE UTILIZE SUCH WATER, RIGHTS OR INTERESTS ON ANY OTHER
PROPERTY OWNED OR LEASED BY GRANTOR, WHETHER SUCH WATER RIGHTS SHALL BE
RIPARIAN, OVERLYING, APPROPRIATIVE, LITTORAL, PERCOLATING, PRESCRIPTIVE,
ADJUDICATED, STATUTORY OR CONTRACTUAL, BUT WITHOUT, HOWEVER, ANY RIGHT TO ENTER
UPON THE SURFACE OF THE LAND IN THE EXERCISE OF SUCH RIGHTS, AS RESERVED IN THE
ABOVE MENTIONED DEED.
EXHIBIT "A"
-----------
<PAGE>
WHEN RECORDED MAIL
THIS GRANT DEED AND ALL
TAX STATEMENTS TO:
- --------------------------------
- --------------------------------
- --------------------------------
- --------------------------------
- --------------------------------------------------------------------------------
(ABOVE SPACE FOR RECORDER'S USE ONLY)
GRANT DEED
----------
The undersigned grantor declares:
Documentary transfer tax is $____________
(X) computed on full value of property conveyed, or
( ) computed on full value, less value of liens and encumbrances
remaining at time of sale.
FOR VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, MAZDA MOTOR OF AMERICA, INC., a California corporation, hereby
GRANTS to _________________________, a _______________________, the following
described real property (the "Property") located in the City of Irvine, County
of Orange, State of California:
SEE SCHEDULE "1" ATTACHED HERETO AND INCORPORATED
------------
HEREIN BY THIS REFERENCE
SUBJECT TO:
1. Taxes and assessments.
2. All other covenants, conditions, restrictions, reservations,
rights, rights of way, easements, encumbrances, liens and title matters of
record or visible from an inspection or survey of the Property.
EXHIBIT "B"
-----------
<PAGE>
IN WITNESS WHEREOF, Grantor has caused this Grant Deed to be executed
as of the _____ day of ________________, 1997__.
-
MAZDA MOTOR OF AMERICA, INC., a
California corporation
By:________________________________
Print Name:_____________________
Print Title:____________________
[Attach Legal Description and Acknowledgment]
B-2
<PAGE>
SELLER'S FEDERAL CERTIFICATE
----------------------------
To inform _________________________________ (the "Transferee") that
withholding of tax under Section 1445 of the Internal Revenue Code of 1986, as
amended ("Code") will not be required by MAZDA MOTOR OF AMERICA,
INC._________________________________, a California corporation________________
(the "Transferor") upon the transfer of certain real property by the Transferor
to the Transferee, the undersigned hereby certifies the following:
1. The Transferor is not a foreign corporation, foreign partnership,
foreign trust, foreign estate or foreign person (as those terms are defined in
the Code and the Income Tax Regulations promulgated thereunder); and
2. The Transferor's U.S. employer or tax (social security)
identification number is ___________________.
The Transferor understands that this Certification may be disclosed to
the Internal Revenue Service by the Transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury, the undersigned declares that it has
examined this Certification and to the best of its knowledge and belief, it is
true, correct and complete.
MAZDA MOTOR OF AMERICA, INC., a
California corporation
By:___________________________________
Print Name:________________________
Print Title:_______________________
EXHIBIT "C"
-----------
<PAGE>
SELLER'S CALIFORNIA CERTIFICATE
-------------------------------
YEAR WITHHOLDING EXEMPTION CERTIFICATE FOR CALIFORNIA FORM
- -------- -----------------
19______ REAL ESTATE SALES 590-RE
(FOR USE BY SELLERS OF CALIFORNIA REAL ESTATE)
================================================================================
FILE THIS FORM WITH YOUR WITHHOLDING AGENT OR BUYER. WITHHOLDING AGENT'S NAME
- --------------------------------------------------------------------------------
Seller's name
- --------------------------------------------------------------------------------
Seller's address (number and street) Seller's daytime telephone number
( )
- --------------------------------------------------------------------------------
City State ZIP code
- --------------------------------------------------------------------------------
Read the following carefully and check the box that applies to the seller:
[ ] CERTIFICATE OF RESIDENCY - INDIVIDUALS:
I am a resident of California and I reside at the address shown above.
See Side 2 for the definition of a resident.
[ ] CERTIFICATE OF PRINCIPAL ADDRESS - INDIVIDUALS:
The California real property located at _________________________________
qualifies as my principal residence within the meaning of the Internal
Revenue Code Section 1034. See Side 2 for the definition of a principal
residence.
[ ] CORPORATIONS:
The above-named corporation has a permanent place of business in
California at the address shown above or is qualified to do business in
California. See Side 2 for the definition of permanent place of
business.
[ ] PARTNERSHIPS:
The above-named entity is a partnership and the recorded title to the
property is in the name of the partnership. The partnership will file a
California return to report the sale and will withhold on foreign and
domestic nonresident partners when required.
[ ] LIMITED LIABILITY COMPANIES (LLCs):
The above-named entity is an LLC and the recorded title to the property
is in the name of the LLC. The LLC will file a California return to
report the sale and will withhold on foreign and domestic nonresident
partners when required.
[ ] TAX EXEMPT ENTITIES AND NONPROFIT ORGANIZATIONS:
The above-named entity is a exempt from tax under California or federal
law.
[ ] IRREVOCABLE TRUSTS:
At least one trustee of the above-named irrevocable trust is a California
resident. The trust will file a California fiduciary return reporting the
sale and will withhold on foreign and domestic nonresident beneficiaries
when required.
[ ] CERTIFICATE OF RESIDENCY OF DECEASED PERSON - ESTATES:
I am the executor of the above-named person's estate. The decedent was a
California resident at the time of death. The estate will file a
California fiduciary return reporting the sale and will withhold on
foreign and domestic nonresident beneficiaries when required.
[ ] BANK:
The above-named entity is a bank or a bank acting as a fiduciary for a
trust.
- --------------------------------------------------------------------------------
CERTIFICATE: Please complete and sign below.
Under penalties of perjury, I hereby certify that the information provided
herein is, to the best of my knowledge, true and correct. If conditions change,
I will promptly inform the withholding agent.
Seller's name and title (type or print)_________________________________________
Seller's social security number, California corporation number,
FEIN or Californa Secretary of State file number___________________________
(NOTE: Failure to provide your identification number will render this
certificate void.)
Seller's signature___________________________________ Date_____________________
For Privacy Act Notice, see form FTB 1131 (individuals only).
- --------------------------------------------------------------------------------
Form 590-RE C2 (REV. 1996) Side 1
EXHIBIT "D"
-----------
<PAGE>
BILL OF SALE
------------
THIS BILL OF SALE is made as of _________________, 1997 (the
"Effective Date"), by and between KILROY REALTY, L.P., a Delaware limited
partnership ("Buyer"), and MAZDA MOTOR OF AMERICA, INC., a California
corporation.
R E C I T A L S :
----------------
A. Seller is the owner of that certain real property located in
the City of Irvine, County of Orange, State of California, consisting of
approximately twenty (20) acres of improved land described in Schedule 1
----------
attached hereto (the "Land").
B. This Bill of Sale is made pursuant to that certain Agreement of
Purchase and Sale and Joint Escrow Instructions (the "Agreement of Purchase and
Sale") dated _________________, 1997 (as the same may have been amended), by and
between Seller and Buyer.
C. Pursuant to the Agreement of Purchase and Sale, Buyer has agreed
to purchase the Land, together with (1) a warehouse building located thereon
containing approximately 244,800 square feet of space and the fixtures (as
defined below) therein (the "Warehouse Building"), (2) an office building
located thereon containing approximately 27,200 square feet of space and the
fixtures therein (the "Office Building"), and (3) associated parking areas and
other improvements located thereon (the "Parking and Other Improvements"). The
Warehouse Building, Office Building, and the Parking and Other Improvements are
referred to herein collectively as the "Property."
D. This Bill of Sale is also made pursuant to that certain Standard
Industrial/Commercial Single-Tenant Lease-Net, dated _________________, 1997
(the "Lease") pursuant to which Seller has agreed to lease a portion of the
Property for a term of three (3) years with the option to extend the term of the
Lease for two (2) additional one (1) year periods.
E. This Bill of Sale is subject to the terms and provisions of the
Agreement of Purchase and Sale and the Lease and in the event of any
inconsistency between either of (1) the Agreement of Purchase and Sale or the
Lease and (2) this Bill of Sale, the terms and provisions of the former shall
control.
F. Seller currently operates a business at the Property and intends
to continue the operation of such business at the Property hereafter as tenant
under the Lease. In such business, Seller will employ the use of personal
property, of which it is, and will continue to be, the owner, and employ the use
of fixtures attached to the Warehouse Building, the Office Building and the
Parking and Other Improvements as tenant under the Lease.
G. Seller and Buyer acknowledge that the law is sometimes unclear
concerning the dividing line between fixtures and personal property. Pursuant
to this Bill of Sale, Buyer desires to purchase, and Seller desires to sell,
those fixtures that may otherwise be considered personal property such
EXHIBIT "E"
-----------
<PAGE>
that ownership thereof would not otherwise transfer to Buyer pursuant to the
Agreement of Purchase and Sale.
A G R E E M E N T :
------------------
NOW, THEREFORE, in consideration of the parties hereto entering into
the Agreement of Purchase and Sale and the Lease and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged:
Seller does hereby sell and convey to Buyer, without warranty of title
or use and without warranty, express or implied, as to merchantability or
fitness for any purpose, all of Seller's right, title and interest, if any, in
and to all tangible personal property, if any, affixed to the Land or the
Property, including, without limitation, any and all affixed appliances, HVAC,
carpeting, draperies and curtains, wall coverings, lighting and lighting
systems, window washing equipment, water, gas, electrical, storm and sanitary
sewer facilities and all other utilities, sprinklers, landscaping, built-in
shelving and other items of personal property owned by Seller that are used
exclusively in the maintenance or operation of the Property, provided, however,
-------- -------
that such personal property shall exclude any items which can be removed without
materially damaging the Property, such as, without limitation, furniture,
furnishings, warehouse racking, computers, office machines and supplies,
equipment, telephones (but not the lines), machinery, plans, specifications,
shop drawings, goods, tools, tooling, inventory, raw materials, work in process,
finished goods and materials used or consumed in Seller's business, accessories,
parts, repossessions and returns thereof that are not affixed to the Property
(the property conveyed hereunder being the "Conveyed Personal Property").
Without limiting the generality of the foregoing, there shall be specifically
excluded from the Conveyed Personal Property the items listed on the inventories
attached hereto as Schedule 2, which inventories are acknowledged to be outdated
----------
and incomplete.
To have and to hold all of said personal property unto Buyer, its
successors and assigns, to its own use forever.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of the
_____ day of _________________, 1997.
MAZDA MOTOR OF AMERICA, INC., a
California corporation
By:_______________________________________________
Print Name:____________________________________
Print Title:___________________________________
[SCHEDULES 1 AND 2 NEED TO BE ATTACHED]
E-2
<PAGE>
ASSIGNMENT OF CONTRACTS
-----------------------
This ASSIGNMENT AND ASSUMPTION OF CONTRACTS (the "Assignment") is made
as of the ___ day of ___________________, 19__ between MAZDA MOTOR OF AMERICA,
INC., a California limited partnership ("Assignor"), and KILROY REALTY, L.P., a
Delaware limited partnership ("Assignee").
Assignor is the owner of that certain real property located in the
City of Irvine, County of Orange, State of California, more particularly
described in Schedule 1 attached hereto and incorporated herein by reference
----------
(the "Property"). Assignor hereby assigns, transfers, sets over and conveys to
Assignee, without warranty of title or use and without warranty, express or
implied, as to merchantability or fitness for any purpose, all of Assignor's
right, title and interest, if any and to the extent assignable, in, to and under
any and all of the following:
(i) the contracts and agreements listed and described on
Schedule 2 attached hereto and incorporated herein by this reference (the
----------
"Contracts");
(ii) all existing warranties and guaranties (express or
implied) issued to Assignor in connection with the personal property being
conveyed to Assignee by Bill of Sale on the date hereof; and
(iii) all existing permits, licenses, approvals and
authorizations issued by any governmental authority in connection with the
Property.
All items described in (ii) and (iii) above are hereinafter collectively
referred to as "Intangible Property."
Assignee does hereby assume and agree to perform all of Assignor's
obligations under the Contracts and Intangible Property accruing from and after
the date hereof. Assignor shall remain liable for all of Assignor's obligations
under the Contracts and Intangible Property accruing prior to the date hereof.
This Assignment shall be binding upon and inure to the benefit of
Assignor and Assignee and their respective heirs, executors, administrators,
successors and assigns.
This Assignment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF. Assignor and Assignee have each executed this
Assignment as of the date first written above.
"Seller" MAZDA MOTOR OF AMERICA, INC., a
California corporation
By:_______________________________________
Print Name:____________________________
Print Title:___________________________
[SIGNATURES CONTINUED]
EXHIBIT "F"
----------
<PAGE>
"Buyer" KILROY REALTY L.P., a
Delaware limited partnership
By: Kilroy Realty Corporation, a Maryland corporation,
Its General Partner
By:_______________________________________________
Print Name:____________________________________
Print Title:___________________________________
[SCHEDULES 1 AND 2 NEED TO BE ATTACHED]
F-2
<PAGE>
[LETTERHEAD OF FIRST AMERICAN TITLE INSURANCE COMPANY]
SELLER'S CLOSING STATEMENT
ESCROW STATEMENT OF: Escrow: 9762747M
MAZDA DISTRIBUTORS (PACIFIC), INC. Escrow Officer: Judith M. Moore
Date: June 16, 1997
Closing Date: 06/20/97
Estimated
Purchaser: KILROY REALTY L.P.
Property Address: 9451 TOLEDO WAY
IRVINE, CA 92618
<TABLE>
<S> <C> <C>
TOTAL CONSIDERATIONS 17,025,000.00
REIMBURSEMENTS/CREDITS
TOTAL CREDITS: 17,025,000.00
-------------
LESS: CHARGES AND DEDUCTIONS/DEBITS
COMMISSION(S)
LISTING BROKER: LEE & ASSOCIATES
COMMISSION 17,250.00
SELLING BROKER: COLLINS COMMERCIAL CORPORATION
COMMISSION 17,250.00
TITLE CHARGES TO FIRST AMERICAN-TITLE INSURANCE CO.
OWNERS ALTA POLICY FOR $17,025,000.00 15,322.50
TRANSFER TAX 18,727.50
ESCROW CHARGES TO FIRST AMERICAN TITLE
ESCROW FEE 3,104.25
RECORDING FEES:
DEED 50.00
TOTAL DEBITS: 377,704.25
-------------
BALANCE DUE YOU 16,647,295.75
=============
</TABLE>
<PAGE>
EXHIBIT 10.61
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 ("Amendment") is made and entered into as of this 30th day of June,
1997, by and between MAZDA MOTOR OF AMERICA, INC., a California corporation
("Seller"), and KILROY REALTY L.P., a Delaware limited partnership ("Buyer"),
with respect to the following:
R E C I T A L S
- - - - - - - -
A. Buyer and Seller are parties to that certain Agreement of
Purchase and Sale and Joint Escrow Instructions dated June 12, 1997 (the
"Purchase Agreement"), pursuant to which Seller has agreed to sell to Buyer, and
Buyer has agreed to purchase from Seller, certain property in Irvine,
California, more particularly described in the Purchase Agreement as the
"Property."
B. Defined terms which are used in this Amendment without definition
have the meanings given to the them in the Purchase Agreement.
C. Buyer and Seller desire to confirm the satisfaction of certain
conditions set forth in the Purchase Agreement as more particularly provided in
this Amendment below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows:
A G R E E M E N T
- - - - - - - - -
1. The form of Lease to which Buyer and Seller have agreed pursuant
to the terms of Paragraph 7(c)(i) of the Purchase Agreement is attached to this
Amendment. The Roof Issue described in Paragraph 7(c)(ii) of the Purchase
Agreement has been resolved as provided in the Lease attached hereto, and the
parties acknowledge by execution of this Amendment that the conditions set forth
in Paragraph 7(c) of the Purchase Agreement have been satisfied.
2. In all other respects, the Purchase Agreement remains unmodified
and in full force and effect.
3. This Amendment may be executed in multiple counterparts, each of
which shall be deemed an original, but all of which, together, shall constitute
one and the same Amendment.
IN WITNESS WHEREOF, Buyer and Seller have executed this Amendment as
of the date first written above.
"Buyer" KILROY REALTY L.P., a
Delaware limited partnership
By: Kilroy Realty Corporation, a Maryland
corporation,
Its General Partner
By:__________________________
Print Name:_______________
Print Title:______________
"Seller" MAZDA MOTOR OF AMERICA, INC., a
California corporation
By:_______________________________
Print Name:____________________
Print Title:___________________
<PAGE>
EXHIBIT 10.62
AGREEMENT FOR PURCHASE AND SALE
OF
2100 COLORADO AVENUE, SANTA MONICA, CALIFORNIA
JUNE 16, 1997
_______________
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I BASIC DEFINITIONS............................................ -1-
ARTICLE II
PURCHASE AND SALE............................................ -3-
Section 2.1 Purchase and Sale.............................................. -3-
Section 2.2 Purchase Price................................................. -3-
Section 2.3 Buyer's Review and Seller's Disclaimer......................... -3-
Section 2.4 Permitted Title Exceptions..................................... -5-
ARTICLE III
CONDITIONS PRECEDENT......................................... -6-
Section 3.1 Conditions..................................................... -6-
Section 3.2 Failure or Waiver of Conditions Precedent...................... -7-
ARTICLE IV
COVENANTS. WARRANTIES AND REPRESENTATIVES.................... -8-
Section 4.1 Seller's Warranties and Representations........................ -8-
Section 4.2 Seller's Covenants............................................. -9-
Section 4.3 Buyer's Warranties and Representations......................... -10-
Section 4.4 Limitations.................................................... -10-
Section 4.5 Seller's Certificate........................................... -11-
Section 4.6 Indemnifications............................................... -11-
Section 4.7 Completion of Seismic Retrofit Work............................ -12-
ARTICLE V DEPOSIT...................................................... -12-
ARTICLE VI
ESCROW AND CLOSING .......................................... -13-
Section 6.1 Escrow Arrangements............................................ -13-
Section 6.2 Closing........................................................ -15-
Section 6.3 Prorations..................................................... -15-
Section 6.4 Other Closing Costs............................................ -16-
</TABLE>
<PAGE>
TABLE OF CONTENTS
-----------------
(continued)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 6.5 Further Documentation ......................................... -16-
ARTICLE VII
MISCELLANEOUS................................................ -17-
Section 7.1 Damage or Destruction.......................................... -17-
Section 7.2 Brokerage Commissions and Finder's Fees........................ -17-
Section 7.3 Successors and Assigns......................................... -18-
Section 7.4 Notices........................................................ -18-
Section 7.5 Time........................................................... -19-
Section 7.6 Possession..................................................... -19-
Section 7.7 Incorporation by Reference..................................... -19-
Section 7.8 No Deductions or Off-Sets...................................... -19-
Section 7.9 Attorneys' Fees................................................ -19-
Section 7.10 Construction.................................................. -19-
Section 7.11 Governing Law................................................. -19-
Section 7.12 Confidentiality............................................... -20-
Section 7.13 Counterparts.................................................. -20-
Section 7.14 Entire Agreement: Amendments.................................. -20-
Section 7.15 Further Assurances............................................ -20-
Section 7.16 Partial Invalidity............................................ -20-
Section 7.17 Waivers....................................................... -21-
Section 7.18 Damages....................................................... -21-
</TABLE>
EXHIBIT A DISCLOSURE STATEMENT
EXHIBIT B INSPECTION LETTER
EXHIBIT C LIST OF CONTRACTS AND WARRANTIES
EXHIBIT D PROPERTY DESCRIPTION
EXHIBIT E DEED
EXHIBIT F BILL OF SALE
EXHIBIT G ASSIGNMENT OF LEASES AND INTANGIBLE PROPERTY
EXHIBIT H DUE DILIGENCE MATERIALS
EXHIBIT I ESCROW AGREEMENT
EXHIBIT I FORM OF SONY ESTOPPEL
EXHIBIT K FORM OF DEVELOPMENT AGREEMENT ESTOPPEL
EXHIBIT L FORM OF MTA LEASE ESTOPPEL
EXHIBIT M FORM OF THETFORD ASSIGNMENT
-ii-
<PAGE>
AGREEMENT FOR PURCHASE AND SALE
OF
2100 COLORADO AVENUE, SANTA MONICA, CALIFORNIA
THIS AGREEMENT FOR PURCHASE AND SALE OF 2100 COLORADO AVENUE, SANTA
MONICA, CALIFORNIA ("Agreement") is made and entered into as of June 16, 1997,
by and between Santa Monica Number Seven Associates L.P., a Delaware limited
partnership ("Seller"), and Kilroy Realty L.P., a Delaware limited partnership
("Buyer").
RECITALS
--------
A. Seller owns certain improved real property consisting of an office
building commonly known as the Sony Building and located at 2100 Colorado
Avenue, Santa Monica, California, together with associated tangible and
intangible personal property.
B. Buyer desires to purchase from Seller and Seller desires to sell to
Buyer, subject to the terms and conditions contained in this Agreement, the
foregoing real property and any and all associated tangible and intangible
personal property owned by Seller.
AGREEMENT
---------
NOW, THEREFORE, Buyer and Seller do hereby agree as follows:
ARTICLE I
BASIC DEFINITIONS
-----------------
For purposes of this Agreement, and in addition to the other terms defined
in this Agreement, each of the following terms, when used with an initial
capital letter, shall have the following meaning:
CC&R's. The term "CC&R's" shall mean that certain Second Declaration
-------
of Protective Covenants, Conditions and Restrictions and Reciprocal Easement
Agreement for the Arboretum dated as of November 8, 1994 and recorded November
23, 1994 as Instrument No. 94-2115484 of the Official Records of Los Angeles
County, as amended by that certain First Amendment to Second Declaration of
Protective Covenants, Conditions and Restrictions and Reciprocal Easement
Agreement for the Arboretum dated December 5, 1994 and recorded May 2, 1995 as
Instrument No. 95-717712 in the Official Records of Los Angeles County.
<PAGE>
Closing Date. The term "Closing Date" shall mean June 24, 1997, or
-------------
another date approved in writing by both Buyer and Seller. For purposes of this
Agreement, the Closing Date shall be deemed to have occurred on the date of the
recordation of the Deed and payment of the Purchase Price to Seller.
Contract Period. The term "Contract Period" shall mean the period from
----------------
the date of this Agreement through and including the Closing Date.
Development Agreement. The term "Development Agreement" shall mean
----------------------
that certain Development Agreement affecting the Property dated December 16,1987
and recorded December 17, 1987 as Instrument No. 87-1996737 in the Official
Records of Los Angeles County, as amended by (i) Amendment No. 1 to Development
Agreement dated December 28,1988 and recorded January 5,1989 as Instrument No.
89-15234 in the Official Records of Los Angeles County, (ii) an Assignment and
Assumption Agreement dated February 22, 1989 and recorded February 22, 1989 as
Instrument No. 89-282004 in the Official Records of Los Angeles County, and
(iii) Amendment No. 2 to Development Agreement dated March 16,1995 and recorded
April 11,1995 as Instrument No. 95-504419 in the Official Records of Los Angeles
County.
Disclosure Statement. The term "Disclosure Statement" shall mean the
---------------------
statement set forth as Exhibit A to this Agreement.
---------
Estoppel Certificate. The term "Estoppel Certificate" shall have the
---------------------
meaning set forth in Section 3.1(a)(iii).
Inspection Period. The term "Inspection Period" shall mean the period
------------------
commencing on the date of this Agreement and ending at [5pm] Pacific Time on
[June 24], 1997, subject to extension as may be approved in writing by both
Buyer and Seller or extended pursuant to Section 2.3(c) below; provided that the
Inspection Period may end earlier at Buyer's election upon delivery by Buyer to
Seller of the Inspection Letter (representing the conclusive waiver by Buyer of
any further Inspection Period). RN
--
Inspection Letter. The term "Inspection Letter" shall mean a letter
------------------
in the form attached as Exhibit B to this Agreement, to be delivered by Buyer to
---------
Seller on or prior to the close of the Inspection Period pursuant to Section 3.2
below.
Intangible Property. The term "Intangible Property" shall mean
--------------------
Seller's rights and interests in: (a) any and all transferable or assignable
permits, building plans and specifications, certificates of occupancy, operating
permits, sign permits, development rights and approvals, certificates, licenses,
warranties and guarantees, trade names, service marks, engineering, soils, pest
control and other reports relating to the Property, tenant lists, advertising
materials, and telephone exchange numbers identified with the Property; (b) all
maintenance, service and other operating contracts), equipment leases and other
arrangements or agreements to which Seller is a party affecting the ownership,
repair, maintenance, management, leasing or operation of the Property, not
terminated pursuant to Section 4.2(c) including, without limitation, the
contracts and warranties listed on Exhibit C hereto; (c) all other transferable
---------
intangible property, miscellaneous
-2-
<PAGE>
rights, benefits or privileges of any kind or character with respect to the
Property; (d) Seller's rights (but reserving to Seller any indemnification
rights of Seller) under the Development Agreement and the CC&R's; and (e) all
rights, claims or remedies of seller against Dimitry Vergun arising with respect
to the Retrofit Work.
MTA Lease. The term "MTA Lease" shall mean that certain Commercial
----------
Lease dated March 12, 1979, between the Metropolitan Transit Authority of Los
Angeles ("MTA"),as successor-in-interest to Southern Pacific Transportation
Company, a Delaware corporation, and Seller, as successor-in-interest to Santa
Monica Lowe Partners, L.P.,a Delaware limited partnership.
Personal Property. The term "Personal Property" shall mean all
------------------
furniture, furnishings, trade fixtures, building systems and equipment
(including, without limitation, HVAC, security and life safety systems) and
other tangible personal property owned by Seller that is located at and used in
connection with the operation of the Real Property.
Property. The term "Property" shall mean the Real Property, Seller's
---------
interest in the MTA Lease, the Thetford Agreement, the Sony Lease, the Personal
Property located on and used in connection with the Real Property and the
Intangible Property that pertains to the Real Property.
Real Property. The term "Real Property" shall mean that certain real
--------------
property (including, without limitation, any and all improvements thereon, all
easements and rights appurtenant thereto, all strips and gores of land owned by
Seller and adjacent thereto and any interest of Seller in the SMNSA Garage and
the other improvements on the adjacent Lot 6) commonly known as the Sony
Building and situated at 2100 Colorado Avenue, Santa Monica, California, the
land component of which is legally described in Exhibit D attached to this
---------
Agreement.
Seller's Knowledge. The term "Seller's Knowledge" shall have the
-------------------
meaning set forth in Section 4.1 below.
Sony. The term "Sony" shall mean Sony Music Entertainment Inc., a
-----
Delaware corporation.
Sony Lease. The term "Sony Lease" shall mean that certain Office
-----------
Lease by and between Seller, as landlord, and Sony, as tenant, dated to be
effective as of January 1, 1997, together with a Guaranty of Lease executed by
Sony Corporation of America and dated as of January 1, 1997.
Thetford Agreement. The term "Thetford Agreement" shall mean that
-------------------
certain Wastewater Treatment Agreement dated August 21,1991 between Thetford
Systems, Inc., a Michigan corporation and Seller, as successor-in-interest to
Santa Monica Lowe Partners, a Delaware limited partnership.
Title Company. The term "Title Company" shall mean Chicago Title
--------------
Insurance Company, whose address is 700 South Flower Street, Suite 900, Los
Angeles, California 90017; Attn: Nate Glover (telephone no. 213 488-4361).
-3-
<PAGE>
ARTICLE II
PURCHASE AND SALE
-----------------
Section 2.1 Purchase and Sale. Seller agrees to sell the Property to Buyer,
------------------
and Buyer agrees to purchase the Property upon all of the terms, covenants and
conditions set forth in this Agreement.
Section 2.2 Purchase Price. The purchase price for the Property (the
---------------
"Purchase Price") shall be the sum of Thirty-One Million Dollars ($31,000,000).
The entire amount of the Purchase Price (less the Deposit delivered pursuant to
Article V below) shall be payable by Buyer to Seller in cash on the Closing Date
through the escrow described in Section 6.1 below.
Section 2.3 Buyer's Review and Seller's Disclaimer.
---------------------------------------
(a) Seller has previously delivered, or will deliver, to Buyer for
its review and evaluation copies of (i) the Sony Lease, (ii) all leasing agent
contracts currently in effect with respect to the Property, (iii) the most
recent survey of the Real Property in Seller's possession or control, and (iv) a
set of environmental and physical inspection reports performed on behalf of and
held by seller. In addition, subject to the provisions of subsection 2.3(c)
below, during the Inspection Period, following reasonable notice, Buyer shall be
permitted to make a complete review and inspection of all materials within
Seller's possession or control relating to the physical, legal, economic and
environmental condition of the Property, including, without limitation, the
tenant correspondence files and records maintained by Seller or its agents
relating to the Property, rent rolls for the Property, operating statements of
Seller, the most recent real estate tax bills for the Property, Seller's
schedule, if any, of expense reimbursements to tenants, Seller's schedules, if
any, of repairs or capital improvements to the Property for 1996 and the first
quarter of 1997, Seller's invoices for Property expenditures within the last 12
months, boundary and other survey-related issues relating to the Real Property,
reports relating to pest control matters, soil condition, asbestos, PCB,
hazardous waste, toxic substance or other environmental matters, evidence of
compliance with building, health, safety, land use and zoning laws, regulations
and orders, plans and specifications, reports relating to structural, life
safety, HVAC and other building system and engineering characteristics, traffic
patterns and all other information pertaining to the Property. The materials
previously delivered or to be delivered to, or otherwise made available for
review by, Buyer pursuant to the preceding two sentences are referred to
collectively in this Agreement as the "Due Diligence Materials". The Due
Diligence Materials are those materials listed on Exhibit H hereto. Upon
---------
reasonable notice and request, Seller agrees to provide Buyer with access to all
of the Due Diligence Materials in its possession or control at the Property, at
Buyer's offices in Los Angeles or at the offices of Lowe Enterprises in Los
Angeles. Buyer acknowledges (i) that Buyer has entered into this Agreement with
the intention of making and relying upon its own investigation of the physical,
environmental, economic and legal condition of the Property and (ii) that Buyer
is not relying upon any representations and warranties, other than those
specifically set forth in this Agreement or in any of the documents to be
-4-
<PAGE>
executed and delivered by Seller on the Closing Date or as a condition to the
closing, made by Seller or anyone acting or claiming to act on Seller's behalf
concerning the Property. Buyer further acknowledges that it has not received
from Seller any accounting, tax, legal, architectural, engineering, property
management or other advice with respect to this transaction and is relying
solely upon the advice of its own accounting, tax, legal, architectural,
engineering, property management and other advisors. Subject to the provisions
of Section 4.1 of this Agreement, Buyer shall purchase the Property in its "as
is" condition on the Closing Date and except as otherwise provided in this
Agreement, assumes the risk that adverse physical, environmental, economic or
legal conditions may not have been revealed by its investigation. Buyer hereby
approves all physical, environmental, economic, legal and all other matters
relating to the Property and Buyer's review of the Property, with the exception
of (i) the status of title to the property as it relates to item #16 of the
Chicago title preliminary report dated May 13, 1997, (ii) review of the scope
of work, budget and amount of holdback for the completion of the Retrofit Work
(as defined below) (such excepted items being the "Remaining Due Diligence
-----------------------
Items"). Buyer's expression of approval in this subparagraph shall not deny
- -----
Buyer the benefit of the conditions set forth in Sections 3.1(a)(iii)-
(vi). RN HG
-- --
(b) Except with respect to any claims arising out of (i) any breach of
express covenants, representations or warranties set forth in this Agreement or
any of the documents to be executed and delivered by Seller on the Closing Date
or as a condition of the closing or (ii) Seller's commission of fraudulent
misrepresentation or omission or fraud in the inducement of this transaction:
Buyer, for itself and its agents, affiliates, successors and assigns, hereby
releases and forever discharges Seller, its agents, affiliates, successors and
assigns from any and all rights, claims and demands at law or in equity, whether
known or unknown at the time of this Agreement, which Buyer has or may have in
the future, arising out of the physical, environmental, economic or legal
condition of the Property, including, without limitation, any claim for
indemnification or contribution arising under the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601, et. seq.), as
amended, or any similar federal, state or local statute, rule or ordinance
relating to liability of property owners for environmental matters
(collectively, "Environmental Laws"). For the foregoing purposes, Buyer hereby
specifically waives the provisions of Section 1542 of the California Civil Code
and any similar law of any other state, territory or jurisdiction. Section 1542
provides:
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.
-5-
<PAGE>
Buyer hereby specifically acknowledges that Buyer has carefully reviewed this
subsection and discussed its import with legal counsel and that the provisions
of this subsection are a material part of this Agreement.
The foregoing provisions of release shall not apply to claims against Seller for
indemnification or contribution based on rights arising under Environmental Laws
based upon the generation or release (which, for such purposes, shall not be
deemed to include mere movement of substances [unless moved by or on behalf of
Seller] under the Property which were present as of the date of Seller's
acquisition of the Property, any migration of substances from adjoining Property
or any matters as to which Buyer has actual knowledge as of the Closing Date) of
toxic or hazardous substances on or about the Property during Seller's ownership
of the Property, except for claims based solely on the unauthorized acts of
trespassers, invitees or tenants of the Property.
HG
-------------------
Buyer
(c) Buyer's exercise of the rights of review and inspection set forth
in subsection (a) shall be subject to the following limitations: (i) any entry
onto the Real Property by Buyer, its agents or representatives, shall be during
normal business hours, following reasonable prior notice to Seller and delivery
to Seller of satisfactory evidence of Buyer's general liability insurance, and,
at Seller's discretion, accompanied by a representative of Seller; (ii) Buyer
shall not conduct any drilling, test borings or other disturbance of the Real
Property for review of soils, compaction, environmental, structural or other
conditions without Seller's prior written consent; (iii) any discussions or
interviews with Sony or its personnel shall be conducted in the presence of
Seller or its representatives; (iv) Buyer shall exercise reasonable diligence
not to disturb the use or occupancy of any occupant of the Property; and (v)
Buyer shall indemnify, defend and hold Seller harmless from all loss, cost, and
expense resulting from any personal injury or property damage caused by any
entry or inspections performed by Buyer, its agents or representatives except to
the extent such property damage is covered by Seller's property insurance
policy. Any request for Seller's consent to any matter described in clause (ii)
above shall be made in writing (which may be sent by facsimile with telephone
confirmation of receipt) to Seller's representative, Michael Pepper. Seller
shall respond as promptly as reasonably possible to any such request and, if
Seller does not respond to any such request within two (2) business days, the
Inspection Period shall be extended on a day by day basis for each day of delay
in Seller's response. Buyer's obligations under clause (v) above shall survive
any termination of this Agreement.
Section 2.4 Permitted Title Exceptions. During the Inspection Period,
---------------------------
Buyer shall obtain from Title Company and review a preliminary title report or
commitment with respect to the Real Property ("Title Report"), together with all
documents and information pertaining to the exceptions to title listed in the
Title Report. In addition, Seller will deliver to Buyer a copy of any survey of
the Real Property in Seller's possession ("Survey"). At Buyer's sole cost and
expense, Buyer may have the Survey updated and certified as Buyer and the
surveyor may agree during the Inspection Period. Buyer may advise Seller in
writing and in reasonable detail, not later
-6-
<PAGE>
than the close of the Inspection Period, what exceptions to title, if any,
listed in the current preliminary report for the Real Property or disclosed on
the Survey (as it may be further refined by Buyer, as provided above) or other
title or survey matters are not acceptable to Buyer with respect to the Real
Property ("Title Objections"). Prior to notifying Seller of any Title
Objections, Buyer shall endeavor in good faith to cause Title Company to modify
and update the preliminary report to reflect requested corrections and
revisions. Seller shall have one (1) business day after receipt of Buyer's Title
Objections to give Buyer notice that (a) Seller will remove any Title Objections
from title (or, if acceptable to Buyer, in its sole discretion, afford the Title
Company necessary information or certifications to permit it to insure over such
exceptions) or (b) Seller elects not to cause such exceptions to be removed or
to cause the Title Company to insure over such exceptions. Seller's failure to
provide notice to Buyer within such 1-business day period as to any Title
Objection shall be deemed an election by Seller not to remove the Title
Objection. If Seller so notifies or is deemed to have notified Buyer that Seller
shall not remove any or all of the Title Objections, Buyer shall have until the
close of the Inspection Period to determine whether (i) to proceed with the
purchase and take the Property subject to such exceptions or (ii) to terminate
this Agreement and cause a concurrent release of the Deposit and any accrued
interest to Buyer. Buyer's delivery of the Inspection Letter shall constitute
Buyer's conclusive agreement to accept the Property subject to the Permitted
Exceptions. "Permitted Exceptions" shall include and refer to (x) any and all
exceptions to title disclosed by the Title Report or the Survey, excepting
solely Title Objections which are timely identified by Buyer and which Seller
has notified Buyer pursuant to this Section that Seller is willing to remove and
(y) any other exceptions to title (i) caused by the acts or omissions of, or
(ii) approved by, Buyer. Notwithstanding the foregoing, Seller shall be
responsible for the removal from title of any mortgage liens or mechanic's liens
for work or services provided at the Property prior to the Closing Date and
post-closing with respect to the Seismic Retrofit Work.
ARTICLE III
CONDITIONS PRECEDENT
--------------------
Section 3.1 Conditions.
-----------
(a) Notwithstanding anything in this Agreement to the contrary,
Buyer's obligation to purchase the Property shall be subject to and contingent
upon the satisfaction or waiver of the following conditions precedent:
(i) Buyer's inspection and approval in its sole discretion,
within the Inspection Period, of the Remaining Due
Diligence Items, as evidenced by Buyer's delivery of the
Inspection Letter;
(ii) The willingness of Title Company to issue, upon the sole
condition of the payment of its premium as approved by
Buyer during the Inspection Period, its American Land
Title
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<PAGE>
Association extended coverage Owner's Policy of Title
Insurance [1970-B Form] ("Title Policy"), insuring Buyer
in the amount of the Purchase Price that fee title to the
Real Property is vested of record in Buyer on the Closing
Date subject only to the printed conditions and
exceptions of such policy and the Permitted Exceptions;
(iii) Execution and delivery of the Sony Lease, and Buyer's
receipt from Sony, on or prior to the Closing Date, of an
estoppel certificate in substantially the form attached
hereto as Exhibit J, executed by Sony and any guarantor
----------
of the Sony Lease (the "Sony Lease Estoppel") and
--------------------
delivery of the Sony Lease Estoppel to the guarantor of
the Sony Lease with a request that such Guarantor execute
same, provided that the failure of such guarantor to
execute the Sony Lease Estoppel shall not be deemed a
failure of this condition precedent;
(iv) Confirmation by Buyer that the lease previously in effect
between Sony and Seller has been terminated, that Sony
has agreed to waive the benefit of the first sentence of
the last paragraph of Section 4.2 of the Sony Lease which
reads as follows: Tenant shall not be liable for payment
of any increase in Taxes which is solely attributable. .
. from the date of such sale through August 31, 1997"
(the "Proposition 13 Provision") and that Sony has
--------------------------
received the sums owing to Sony on account of the
incremental difference between rent due and payable by
Sony pursuant to the Sony Lease and rent previously paid
by Sony on account of the prior lease in effect between
Seller and Sony;
(v) Buyer's receipt, on or prior to the Closing Date, from
the City of Santa Monica of an estoppel certificate with
respect to the Development Agreement, pursuant to Section
30 of the Development Agreement, substantially in the
form attached hereto as Exhibit K ("the Development
---------
Agreement Estoppel");
(vi) Seller's delivery to MTA, on or prior to the Closing
Date, of an estoppel with respect to the MTA Lease, in
the form attached hereto as Exhibit L (the "MTA Lease
---------
Estoppel"), and Seller's delivery to Buyer of the
conveyance documents necessary to transfer the interest
of the lessee under the MTA Lease to Buyer;
(vii) Execution, on or prior to the Closing Date, of an
agreement between Seller and the owner of the parcel
adjacent to the Property, in recordable form satisfactory
to Buyer (the "Lot 6/7 Agreement"); and
-8-
<PAGE>
(viii) Seller's performance or tender of performance of all
material obligations under this Agreement and the truth
and accuracy of Seller's express representations and
warranties, as of the Closing Date.
Buyer's receipt from the MTA of an executed MTA Lease estoppel shall not be a
condition precedent to Buyer's obligation to purchase the Property, nor shall
the failure of MTA to deliver an executed MTA Lease Estoppel or Buyer's receipt
of an estoppel from MTA that varies from the form of the MTA Lease Estoppel be a
condition subsequent to Buyer's obligation to purchase the Property or afford
Buyer any legal or equitable rights or remedies against Seller.
(b) Notwithstanding anything in this Agreement to the contrary,
Seller's obligation to sell the Property shall be subject to and contingent upon
the satisfaction or waiver of the following conditions precedent:
(i) Buyer's performance or tender of performance of all
material obligations under this Agreement and the truth
and accuracy of Buyer's express representations and
warranties, as of the Closing Date; and
(ii) The satisfaction or Buyer's written waiver of the
conditions set forth in subparagraphs (a)(i), (ii) and
(iii) above.
Section 3.2 Failure or Waiver of Conditions Precedent. In the event
------------------------------------------
any of the conditions set forth in Section 3.1 are not fulfilled or waived, the
party benefitted by such condition may, by written notice to the other party,
terminate this Agreement, whereupon all then remaining rights and obligations
hereunder of each party shall be at an end and, in the event of the failure of a
condition set forth in Section 3.1(a), the Deposit, together with interest,
shall be returned to Buyer. Either party may, at its election, at any time or
times on or before the date specified for the satisfaction of the condition,
waive in writing the benefit of any of the conditions set forth in Section
3.1(a) and 3.1(b) above. Notwithstanding the foregoing, Buyer's failure to
deliver to Seller on or prior to the close of the Inspection Period an executed
Inspection Letter in the form attached as Exhibit B, without modification or
----------
qualification in any manner whatsoever, shall be deemed a failure of the
condition set forth in Section 3.1(a)(i) above. In any event, Buyer's consent to
the close of escrow pursuant to this Agreement shall waive any remaining
unfulfilled conditions. In the event this Agreement is terminated by Buyer prior
to the end of the Inspection Period based on the failure of a condition set
forth in Section 3.1(a)(i) (as evidenced by written notice of such termination
given by Buyer to Seller and Title Company on or prior to the close of the
Inspection Period), then, within two (2) business days following Title Company's
receipt of Buyer's demand therefor, Title Company is hereby instructed, without
the need for further mutual instructions from the parties (and notwithstanding
any contrary instruction from either Buyer or Seller), to immediately deliver
the Deposit and all interest accrued thereon to Buyer and to cancel the Escrow.
Title Company is instructed not to accept any modification of this instruction
unless such modification is on a single document signed by both Buyer and
-9-
<PAGE>
Seller. If either Buyer or Seller should attempt to break the mutuality of this
instruction, Title Company is authorized to return to the party attempting to do
so any documents purporting to do so and to continue with the instructions set
forth herein. Each of Buyer and Seller acknowledge that they are sophisticated
parties with extensive experience in commercial real estate transactions, that
they have been represented by legal counsel in negotiating the agreement set
forth herein and that they have consulted with such counsel in respect of the
execution of this agreement. Each of Buyer and Seller agree to indemnify Title
Company for following the instructions set forth herein. Any party attempting to
break the mutuality of this agreement hereby agrees to indemnify, defend,
protect and hold harmless the other party from and against any all loss, cost,
damage, liability and expense (including without limitation attorneys' fees and
costs) incurred as a result or arising out of such attempt, including without
limitation any loss, cost, damage, liability or expense incurred under the
indemnity set forth in the immediately preceding sentence.
ARTICLE IV
COVENANTS, WARRANTIES AND REPRESENTATIVES
-----------------------------------------
Section 4.1 Seller's Warranties and Representations. Seller hereby
----------------------------------------
makes the following representations and warranties to Buyer as of the date of
this Agreement; provided that each of such representations and warranties shall
be deemed to be modified by any contrary or qualifying information set forth on
the Disclosure Statement:
(a) Seller is a limited partnership duly formed and in good standing
under the laws of the State of Delaware and is duly qualified to conduct
business in California. Seller has the power, right and authority to enter into
this Agreement and the instruments and documents referenced herein, and to
consummate the transaction contemplated hereby. The persons executing this
Agreement on behalf of Seller have the right, power and authority to bind
Seller.
(b) All requisite action has been taken by Seller and all requisite
consents have been obtained in connection with the entering into this Agreement
and the instruments and documents referenced herein, and the consummation of the
transaction contemplated hereby, and no consent of any other party is required.
(c) This Agreement is, and all Agreements, instruments and documents
to be executed by Seller pursuant to this Agreement shall be, duly executed by
Seller and are, or shall be, valid and legally binding upon Seller and
enforceable in accordance with their respective terms subject to the effect of
applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the rights of creditors generally.
(d) Neither the execution of this Agreement nor the consummation of
the transactions contemplated hereby shall result in a breach of or constitute a
default under any Agreement, document, instrument or other obligation to which
Seller is a party or by which Seller may be bound, or under any law, statute,
ordinance, rule,
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<PAGE>
governmental regulation or any writ, injunction, order or decree of any court or
governmental body, applicable to Seller or to the Property.
(e) The Sony Lease constitutes the only lease or rental agreement
presently in effect with respect to the Real Property; the copy of the Sony
Lease delivered to Buyer is true, correct and complete and sets forth all
written agreements in effect with Sony with respect to Sony's occupancy of the
Property; and, to Seller's Knowledge, (i) the copies of the correspondence
related to the Sony Lease delivered or made available to Buyer are true, correct
and complete, (ii) there have been no prepayments of rent under the Sony Lease,
(iii) except as may be set forth in the Sony Lease, Sony shall not become
entitled to any concession, rebate, allowance or free rent for any period
subsequent to the Closing Date, and (iv) the Sony Lease is in full force and
effect.
(f) To Seller's Knowledge, (i) Seller has received no written notice
that Sony intends to terminate the Sony Lease prior to the expiration of its
scheduled term, (ii) no default by Seller as Landlord or by Sony as Tenant
exists under the Sony Lease, and (iii) no event has occurred which, with the
giving of notice or the passage of time or both, would constitute a default
under the Sony Lease by Seller or Sony.
(g) To Seller's Knowledge, Seller has received no written notice from
any governmental authority that any of the improvements located on the Real
Property are presently in violation of any applicable building codes, zoning or
land use laws, or other law, order, ordinance, rule or regulation affecting the
Real Property, including the Development Agreement (collectively, "Applicable
Laws").
(h) To Seller's Knowledge, Seller has received no written notice from
any governmental authority that the current use of the Real Property is
presently in violation of any Applicable Laws.
(i) To Seller's Knowledge, Seller possesses all licenses, permits and
approvals required in connection with the ownership and operation of the
Property.
(j) To Seller's Knowledge: the copies of the service and equipment
contracts listed on Exhibit C and delivered to Buyer as part of the Due
---------
Diligence Materials include all such contracts affecting the Real Property which
will be binding upon Buyer following the Closing Date; the copies of all such
contracts (collectively, the "Contracts") which Seller has delivered or made
available to Buyer pursuant to this Agreement, are true, correct and complete
copies of such documents; Seller has received no written notice of a default by
Seller under any of the Contracts; and no event has occurred which, with the
giving of notice or the passage of time or both, would constitute a default
under any of the Contracts.
(k) To Seller's Knowledge, Seller has received no written notice from
any governmental authorities that eminent domain proceedings for the
condemnation of the Real Property are pending or threatened.
-11-
<PAGE>
(1) To Seller's Knowledge, Seller has received no written notice of
(i) any threatened or pending litigation, governmental investigation or
arbitration affecting the Property (other than litigation arising in the
ordinary course of the operation of the Property and covered by insurance) or
(ii) any threatened or pending litigation, governmental investigation or
arbitration against Seller which would materially and adversely affect Seller's
capacity to perform under this Agreement.
(m) Seller has no employees who, by reason of any governmental
regulations, employment contract or other reason, would become employees of
Buyer as a result of Buyer's purchase of the Property. Seller is not a party to
any collective bargaining agreements or multi-employer pension funds covering
employees who service the Property.
(n) To Seller's Knowledge, (i) Seller is not in default under the
Development Agreement, the Thetford Agreement or the MTA Lease, (ii) no event
has occurred which, with the giving of notice or the passage of time or both,
would constitute a default by Seller under the Development Agreement, the
Thetford Agreement or the MTA Lease, (iii) there exists no basis for a right of
termination of the MTA Lease based on a discontinuation of use for more than
ninety (90) days and (iv) Seller has received no written notice of any default
by any other party to the MTA Lease.
(o) To Seller's Knowledge, Seller is not in material default under the
CC&R's.
(p) To Seller's Knowledge, Seller has received no written notice of
any default by any party under the Development Agreement.
(q) To Seller's Knowledge, (i) the copies of the CC&R's and the MTA
Lease delivered to Buyer are true, correct and complete, and (ii) the CC&R's and
the MTA Lease are in full force and effect.
(r) Seller is not a "foreign person" within the meaning of Section
1445(f)(3) of the Internal Revenue Code of 1986, as amended (the "Code").
As used herein, the term "Seller's Knowledge" or words of similar effect shall
mean the current actual subjective knowledge of Michael Pepper, Rick Newman and
Peter Kristensen, without duty of independent inquiry. Neither such individuals
nor any party other than Seller shall bear responsibility for any breach of
representation. Seller, however, represents and warrants that Messrs. Pepper,
Newman and Kristensen are the individuals associated with Seller that have
principal administrative and oversight responsibility for the Property.
Section 4.2 Seller's Covenants. Seller hereby covenants and agrees as
-------------------
follows:
(a) During the Contract Period, (i) Seller shall ensure that the
Property is operated and maintained in a manner consistent with past practices
and maintain
-12-
<PAGE>
current levels and coverages of insurance, (ii) Seller shall not create or
acquiesce in the creation of liens or exceptions to title other than the
Permitted Exceptions or voluntarily take any action (other than as may be
permitted pursuant to subparagraphs (b) and (c) of this Section 4.2) to cause
any of the representations or warranties of Seller set forth in Section 4.1 to
be materially incorrect, (iii) Seller shall promptly provide Buyer with copies
of any of the notices enumerated in Sections 4.1(c)-(e) and (g)-(i) received by
Seller and (iv) Seller shall exercise reasonable efforts, consistent with past
practices and without incurring any capital or extraordinary operating expense,
to comply with the contracts affecting the Property, the CC&R's, the Development
Agreement, the MTA Lease and the Sony Lease.
(b) Upon Buyer's written request, Seller will give notice as of the
Closing Date terminating any Contracts which Buyer does not elect to assume, in
a written notice to Seller delivered during the Inspection Period. Such notices
of termination shall be effective as provided in the applicable Contracts.
(c) Following the Closing Date, Seller shall pay to Buyer, in
accordance with a separate escrow agreement in the form attached hereto as
Exhibit I, a supplement to base rent due and payable by Sony pursuant to the
- -----------
Sony Lease.
Section 4.3 Buyer's Warranties and Representations. Buyer hereby
---------------------------------------
represents and warrants to Seller that (a) Buyer has and as of the Closing Date
shall have, full power and lawful authority to enter into and carry out the
terms and conditions of this Agreement and to execute and deliver all documents
which are contemplated by this Agreement, (b) all actions necessary to confer
such power and authority upon the persons executing this Agreement and all
documents which are contemplated by this Agreement to be executed on behalf of
Buyer or its assignee have been taken, and (c) Buyer has received no written
notice of any threatened or pending litigation which would materially and
adversely affect Buyer's capacity to perform under this Agreement.
Section 4.4 Limitations. The parties agree that (a) Seller's
-------------
warranties and representations contained in this Agreement and in any document
executed by Seller pursuant to this Agreement shall survive Buyer's purchase of
the Property only for a period of 12 months after the Closing Date (the
"Limitation Period"), (b) Seller shall have no liability to Buyer for any
matters disclosed to Buyer in the Due Diligence Materials or any other due
diligence materials procured by Buyer in connection with its review of the
Property, (c) Seller's aggregate liability for claims arising out of such
representations and warranties shall not exceed $500,000 in the aggregate, and
(d) Buyer shall provide actual written notice to Seller prior to the expiration
of the Limitation Period of any breach of such applicable warranties or
representations and shall allow Seller 30 days within which to cure such breach,
or, if such breach cannot reasonably be cured within 30 days, an additional
reasonable time period, so long as such cure has been commenced within such 30
days and diligently pursued to completion within 90 days. If Seller fails to
cure such breach after written notice and within such cure period, Buyer's sole
remedies shall be either an action at law for damages or, assuming the character
of the breach meets the requirements for such a remedy, rescission, as a
-13-
<PAGE>
consequence thereof, either of which remedies must be commenced, if at all,
within the Limitation Period; provided, however, that if within the Limitation
---------
Period Buyer gives Seller written notice of such a breach and Seller gives
Buyer written notice of its commencement of a cure and thereafter terminates
such cure effort by giving written notice to Buyer of such termination, Buyer
shall have an additional 30 days from the date of such termination (and the
Limitation Period shall be deemed extended for such additional 30-day period)
within which to commence an action at law for damages or a suit for rescission
as a consequence of Seller's failure to cure. The Limitation Period referred to
herein shall apply to known as well as unknown breaches of such warranties or
representations.
Section 4.5 Seller's Certificate. Seller shall deliver to Buyer on the
----------------------
Closing Date a certificate (a "Seller's Certificate") updating the
representations and warranties of Seller set forth in Section 4.1 with respect
to the Property through the then current date; provided, however, that if Seller
becomes aware during the Contract Period of any matters which make any of such
representations or warranties untrue, Seller shall disclose such matters in
writing to Buyer promptly upon becoming aware of them (and shall also disclose
such matters in the Seller's Certificate). In the event that Seller discloses
any matters to Buyer which make any of Seller's representations or warranties
untrue (whether such disclosure is made in the Seller's Certificate or
otherwise) or in the event any matters which make any of Seller's
representations or warranties materially untrue in any material respect are
otherwise disclosed to or discovered by Buyer during the Contract Period, Seller
shall bear no liability for such matters (provided that Seller has not breached
an express covenant set forth in this Agreement), but Buyer shall have the right
to elect in writing (a) to waive such matters and complete the purchase of the
Property in accordance with the terms of this Agreement, or (b) as to any
matters disclosed or discovered following the expiration of the Inspection
Period, to terminate this Agreement, if at all, prior to the Closing Date.
Buyer's delivery of the Inspection Letter shall constitute Buyer's conclusive
agreement to accept or waive any such matters disclosed to or discovered by
Buyer prior to the close of the Inspection Period.
Section 4.6 Indemnifications. Subject to the foregoing limitations:
-----------------
(a) Seller shall indemnify and defend Buyer against and hold Buyer
harmless from any and all claims, liabilities, losses, damage, costs and
expenses, including, without limitation, all reasonable attorneys' fees,
asserted against or suffered by Buyer resulting from (i) any breach by Seller of
this Agreement, (ii) the untruth, inaccuracy or breach of any of the
representations and warranties made by Seller pursuant to this Agreement,
subject to the limitations of Section 4.4, or (iii) any claim, liability or
obligation arising in connection with the Property and accruing prior to the
Closing Date (except as may be expressly assumed by Buyer pursuant to the
operation of Section 6.3). For purposes of this subparagraph, no claim,
liability or obligation arising on or following the Closing Date shall be deemed
to accrue prior to the Closing Date based on a causal or other relationship to
the physical, environmental or legal condition of the Property as of the Closing
Date.
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(b) Buyer shall indemnify and defend Seller against and hold Seller
harmless from any claim, loss, damage, or expense, including any reasonable
attorneys' fees, asserted against or suffered by Seller resulting from (i) any
breach by Buyer of this Agreement, (ii) the untruth, inaccuracy or breach of any
of the representations or warranties made by Buyer pursuant to this Agreement,
(iii) any liability or obligation arising in connection with the Property
accruing following the Closing Date, or (iv) any liability or obligation
expressly assumed by Buyer arising in connection with the Property accruing
prior to the Closing Date pursuant to the operation of Section 6.3.
Section 4.7 Completion of Seismic Retrofit Work. Within one hundred
------------------------------------
eighty (180) days following the Closing Date, Seller shall complete or cause the
completion of certain seismic retrofit work at the Property as provided in the
Scope of Work and Specifications contained in that certain Abbreviated Form of
Agreement Between Owner and Contractor (the "Construction Contract") between
-----------------------
Seller and Lowe Enterprises Commercial Group dated March 27, 1997, as approved
by Dimitry Vergun and including any changes in the Scope of Work and
Specifications approved by Dimitry Vergun or recommended by Dimitry Vergun in
writing (such written recommendation having been reasonably approved by Seller)
or required by any applicable governmental authority (the "Retrofit Work"). To
--------------
ensure Seller's timely completion of the Retrofit Work, Seller shall deposit
into an escrow account the amount necessary to complete the Retrofit Work, as
agreed to between Seller and Buyer, together with 25% of such amount. The rights
and responsibilities of Buyer and Seller with respect to the Retrofit Work and
the release of the funds in the escrow account shall be governed by the terms of
the Escrow Agreement to be executed in the form attached hereto as Exhibit I.
----------
Seller shall not be deemed to have made any representation or warranty to Buyer
with respect to the design, sufficiency or workmanship of the Retrofit Work by
virtue of its agreement to complete the Retrofit Work, provided, however, that
Seller shall assign to Buyer any warranty rights or legal or equitable rights
and remedies set forth in the Construction Contract and with any other
contractors, subcontractors and suppliers.
ARTICLE V
DEPOSIT
-------
Within two (2) business days following execution of this Agreement, Buyer
shall deliver to Title Company for deposit into the escrow described in Section
6.1 below, the sum of $500,000 (the "Initial Deposit"). At the close of the
Inspection Period, if Buyer has not then elected to terminate this Agreement as
provided herein, Buyer shall deliver to Title Company, for deposit into the
escrow described in Section 6.1 below, the additional sum of $500,000 (which
amount, together with the Initial Deposit and any interest that may accrue
thereon in escrow, referred to herein as the "Deposit"). The Initial Deposit
and the Deposit shall be kept by Title Company in an interest-bearing account.
In the event that the sale of the Property to Buyer is consummated as
contemplated by this Agreement, then the entire amount of the Deposit, including
any interest accrued thereon, shall be credited against the Purchase Price. The
entire amount of the Initial Deposit or Deposit, as applicable, including any
interest accrued thereon, shall be returned immediately to Buyer in the event
that Buyer is entitled to
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terminate this Agreement due to the failure of any of the conditions precedent
set forth in Section 3.l(a) or pursuant to Sections 2.4, 4.5 or 7.l(b), in
each case, prior to the Closing Date as contemplated in this Agreement, or in
the event that (a) the conditions precedent set forth in Section 3.1(b) shall
have been satisfied or waived, (b) Buyer shall have performed fully or tendered
performance of its obligations hereunder and (c) Seller shall be unable or fail
to perform its obligations under this Agreement to close the sale of the
Property. The return of the Deposit shall be governed by the automatic
procedures of Section 3.2 if the termination of the Agreement is based on a
failure of the condition set forth in Section 3.1(a)(i). IF THE CLOSING DOES
NOT OCCUR FOR THE PROPERTY ON OR BEFORE THE DATE PROVIDED THEREFOR IN THIS
AGREEMENT DUE TO A DEFAULT BY BUYER, THEN THE ENTIRE
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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AMOUNT OF THE DEPOSIT SHALL BE RETAINED BY SELLER AS LIQUIDATED DAMAGES, AND
BUYER SHALL EXECUTE ANY REASONABLE DOCUMENTATION REQUIRED BY TITLE COMPANY IN
ORDER TO RELEASE THE DEPOSIT TO SELLER. BUYER AND SELLER HEREBY ACKNOWLEDGE AND
AGREE THAT SELLER'S DAMAGES IN THE EVENT OF SUCH A BREACH OF THIS AGREEMENT BY
BUYER WOULD BE DIFFICULT OR IMPOSSIBLE TO DETERMINE, THAT THE AMOUNT OF THE
DEPOSIT IS THE PARTIES' BEST AND MOST ACCURATE ESTIMATE OF THE DAMAGES SELLER
WOULD SUFFER IN THE EVENT THE SALE OF THE PROPERTY TO BUYER FAILS TO CLOSE ON OR
BEFORE THE CLOSING DATE CONTEMPLATED BY THIS AGREEMENT, AND THAT SUCH ESTIMATE
IS REASONABLE UNDER THE CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT.
BUYER AND SELLER AGREE THAT SELLER'S RIGHT TO RETAIN THE DEPOSIT SHALL BE THE
SOLE AND EXCLUSIVE REMEDY OF SELLER AT LAW IN THE EVENT OF A BREACH OF THIS
AGREEMENT BY BUYER THAT PREVENTS THE SALE OF THE PROPERTY FROM CLOSING.
ACCEPTED AND AGREED TO:
Ron Newman, Jr. Hugh Greenup
- ------------------------------ ------------------------------
Seller Buyer
ARTICLE VI
ESCROW AND CLOSING
------------------
Section 6.1 Escrow Arrangements. An escrow for the purchase and sale
-------------------
contemplated by this Agreement has been opened by Buyer and Seller with Title
Company. Not later than one business day prior to the Closing Date, Seller and
Buyer shall each deliver escrow instructions to the Title Company consistent
with this Article VI, and the parties shall deposit in escrow the funds and
documents described below.
(a) Seller shall deposit (or cause to be deposited):
(i) a duly executed and acknowledged grant deed in favor of
Buyer from Seller with respect to the Real Property in the
form attached to this Agreement as Exhibit E, with the
----------
statement of documentary transfer tax separately affixed
(the "Deed");
(ii) a duly executed bill of sale with respect to the Personal
Property in the form attached to this Agreement as
Exhibit F (the "Bill of Sale");
---------
(iii) two duly executed counterparts of an assignment and
assumption of Seller's interest in the Sony Lease, the MTA
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Lease and Intangible Property in the form attached to this
Agreement as Exhibit G (the "Assignment of Leases and
---------
Intangible Property") pertaining to the Property;
(iv) three (3) counterparts of the Assignment of the Thetford
Agreement, executed by Seller and Thetford in the form
attached hereto to Exhibit M (the "Thetford Assignment");
---------
(v) a certificate from Seller certifying the information
required by Sections 18662 and 26131 of the California
Revenue and Taxation Code to establish that the
transaction contemplated by this Agreement is exempt from
the tax withholding requirements of the State of
California (the "California Certificate");
(vi) a certificate from Seller certifying the information
required by (S)1445 of the Internal Revenue Code and the
regulations issued thereunder to establish, for the
purposes of avoiding Buyer's tax withholding obligations,
that Seller is not a "foreign person" as defined in
Internal Revenue Code (S)1445(f)(3) (the "FIRPTA
Certificate");
(vii) the Seller's Certificate;
(viii) an executed notice to Sony, informing Sony of the transfer
of the Property and directing the payment of rent as
requested by Buyer;
(ix) a notice to the City of Santa Monica of the transfer of
the Property as may be required pursuant to the
Development Agreement;
(x) a notice to the other Lot owners under the CC&R's of the
transfer of the Property as may be required pursuant to
the CC&R's; and
(xi) customary affidavits as may be reasonably requested by
Title Company.
(b) Buyer shall deposit:
(i) at least one (1) business day prior to the Closing Date,
immediately available funds sufficient to pay the balance
of the Purchase Price, plus sufficient additional cash to
pay Buyer's share of all applicable escrow costs and
closing expenses;
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(ii) two duly executed counterparts of the Assignment of Leases
and Intangible Property pertaining to the Property; and
(iii) three (3) counterparts of the Thetford Assignment executed
by Buyer;
(iv) a certificate duly executed by Buyer in favor of Seller
confirming the waivers and acknowledgments set forth in
Sections 2.3(a) and (b) above with respect to the
Property.
Section 6.2 Closing. Title Company shall close escrow for the sale of
-------
the Property by:
(a) recording the Deed [, the Lot 6/7 Agreement] and other recordable
documents, if any, and causing conformed copies to be delivered
to Buyer and Seller;
(b) issuing the Title Policy to Buyer;
(c) delivering to Buyer the Bill of Sale, the FIRPTA Certificate, the
California Certificate, the Seller's Certificate and one counterpart of the
Assignment of Leases and Intangible Property, each executed by Seller;
(d) delivering to Seller one counterpart of the Assignment of Leases
and Intangible Property executed by Buyer, the certificate described in Section
6.1(b)(iii) above, and funds in the amount of the Purchase Price, as adjusted
for credits, prorations and closing costs in accordance with this Article VI;
and
(e) filing the information return for the sale of the Property
required by Section 6045 of the Internal Revenue Code of 1986, as amended, and
the Income Tax Regulations thereunder.
Section 6.3 Prorations.
----------
(a) Real estate taxes and assessments, personal property taxes, if
any, rental income and all other items of income and expense with respect to the
Property shall be prorated between Seller and Buyer as of the Closing Date.
Income and expenses for the Property shall be prorated on the basis of the
actual number of days in the month and on the basis of the accrual method of
accounting. All items of income and expense for the Property attributable to the
period through and including the Closing Date shall be credited and debited,
respectively, to Seller; all items of income and expense attributable to the
period following the Closing-Date shall be credited and debited, respectively,
to Buyer. Buyer shall be credited in escrow with (i) any portion of deposits
made by Sony with respect to the Property held by Seller and which are
refundable to Sony and (ii) rent prepaid by Sony beyond the Closing Date. Buyer
shall not be entitled to any interest on deposits made by Sony or prepaid rent
accrued on or
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before the Closing Date, except for any interest required to be paid to Sony
under Applicable Law or pursuant to the terms of the Sony Lease. Seller shall be
credited in escrow with any refundable deposits or bonds held by any utility,
governmental agency or service contractor with respect to the Property (to the
extent the same are assignable and assigned to Buyer in connection with the sale
of the Property). Buyer shall be credited in escrow with any leasing
commissions, other allowances or leasing costs (collectively, "Leasing Costs")
attributable to the Sony Lease which Seller has not paid on or prior to the
Closing Date, and the budgeted amount for the Sony Work agreed upon between
Buyer and Seller.
(b) Buyer and Seller shall cooperate to produce prior to the Closing
Date a schedule of prorations to be made on and after the Closing Date
pertaining to the Property as complete and accurate as reasonably possible. All
prorations which can be liquidated accurately or reasonably estimated as of the
Closing Date shall be made in escrow on the Closing Date. All other prorations,
and adjustments to initial estimated prorations, shall be made by the parties
with due diligence and cooperation within 30 days following the Closing Date, or
such later time as may be required to obtain necessary information for
proration, by immediate cash payment to the party yielding a net credit from
such prorations from the other party.
(c) On or prior to the Closing Date, Seller shall pay to Sony any
sums owing to Sony on account of the incremental difference' between rent due
and payable by Sony pursuant to the Sony Lease and rent previously paid by Sony
on account of the prior lease in effect between Seller and Sony.
(d) On the Closing Date, Seller shall pay Sony through escrow the
amount due to Sony, as agreed between Seller and Sony, in order for Sony to
waive the benefit of the Proposition 13 Provision of the Sony Lease.
Section 6.4 Other Closing Costs.
-------------------
(a) Buyer shall pay (i) the cost of the Survey, (ii) 50% of any
escrow or other costs charged by or reimbursable to the Title Company (other
than the title premium), (iii) the cost of the Title Policy in excess of the
premium borne by Seller pursuant to subsection (b)(iii) below, and (iv) all fees
and expenses of its legal counsel and other third party consultants engaged by
or on behalf of Buyer in connection with this transaction.
(b) Seller shall pay (i) 100% of any state or county governmental
documentary transfer or transaction taxes or fees due on the transfer of the
Property, (ii) 100% of any charter city governmental documentary transfer or
transaction taxes or fees due on the transfer of the Property, (iii) the premium
for the Title Policy -- up to the amount of the premium which would be charged
for a CLTA standard coverage Owner's policy (i.e., excluding any premium
attributable to extended coverage insurance and any endorsements), (iv) 50% of
any escrow or other costs charged by or reimbursable to the Title Company (other
than the title premium) and (v) all fees and expenses of its legal
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counsel and other third party consultants engaged by or on behalf of Seller in
connection with this transaction.
(c) Any costs and expenses of closing that are not expressly
identified in subparagraph (a) or (b) above shall be allocated between the
parties in accordance with prevailing custom in Los Angeles County, California.
Section 6.5 Further Documentation. Buyer and Seller shall provide to
---------------------
each service contractor of the Real Property written notice advising such
contractors of the sale of the Real Property by Seller to Buyer, and including
any other information required by applicable local law. At or following each
such close of escrow, Buyer and Seller each shall execute any certificate or
other instruments required by law or local custom or otherwise reasonably
requested by the other party to effect the transaction contemplated by this
Agreement.
ARTICLE VII
MISCELLANEOUS
-------------
Section 7.1 Damage or Destruction.
---------------------
(a) Subject to subparagraph (b) below, Buyer shall be bound to
purchase the Property for the Purchase Price as required by the terms of this
Agreement without regard to the occurrence or effect of any damage to or
destruction of the improvements on the Real Property, provided that if Buyer is
so bound to purchase the Property, notwithstanding the occurrence of damage or
destruction, upon the Closing Date for the Property: (A) in the event of damage
fully covered by insurance, Buyer shall receive a credit against the Purchase
Price in the amount of the estimated cost of repairs as a result of any such
damage or destruction; and (B) in the event of damage not fully covered by
insurance, Buyer shall receive a credit in the amount of the estimated cost to
repair the damage.
(b) Notwithstanding the foregoing, Buyer may terminate this Agreement
by written notice of election given promptly to Seller following the event if
there occurs damage or destruction to the Property prior to the Closing Date
therefor (i) which involves a repair cost in excess of $500,000 (whether or not
covered by insurance), excluding the cost of any remaining portion of the
seismic retrofit work described in Section 4.7, or (ii) which affords Sony the
right to terminate the Sony Lease. Seller shall have the right to terminate this
Agreement if the repair costs not covered by insurance are in excess of $250,000
(excluding the cost of any remaining portion of the seismic retrofit work
described in Section 4.7), provided that in such case Buyer shall have the right
to pay for the estimated cost of repair in excess of $250,000 and proceed with
the closing of its acquisition of the Property pursuant to the terms of this
Agreement.
Section 7.2 Brokerage Commissions and Finder's Fees.
---------------------------------------
(a) Each party to this Agreement warrants to the other that, except
as provided in subsection (b) below, no person or entity can properly claim a
right to a real
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estate commission, real estate finder's fee, real estate acquisition fee or
other real estate brokerage-type compensation (collectively, "Real Estate
Compensation") based upon the acts of that party with respect to the transaction
contemplated by this Agreement. Each party hereby agrees to indemnify and defend
the other against and to hold the other harmless from any and all loss, cost,
liability or expense (including but not limited to attorneys' fees and returned
commissions) resulting from any claim for Real Estate Compensation by any person
or entity based upon such acts.
(b) The parties hereby acknowledge that Beitler Commercial, on behalf
of Buyer, and Lowe Development, on behalf of Seller (the "Brokers"), have acted
as brokers in connection with this transaction. Buyer and Seller shall be
responsible for paying any commission due to their respective Brokers in
connection with this transaction.
Section 7.3 Successors and Assigns. Buyer may not assign any of
----------------------
Buyer's rights or duties hereunder without the prior written consent of Seller;
provided that Buyer may assign this Agreement, (a) without Seller's prior
consent, to a title-holding corporation whose stock is wholly owned, directly or
indirectly, by Buyer or (b) to any other entity affiliated with Buyer, provided
that such assignee has, in Seller's reasonable judgment, the financial capacity
to perform the obligations of Buyer hereunder. No assignment by Buyer shall
relieve Buyer of its obligations under this Agreement. Subject to the
limitations on assignment expressed in this Section 7.3, this Agreement shall be
binding upon, and inure to the benefit of, Buyer and Seller and their respective
successors and assigns.
Section 7.4 Notices. All notices or other communications required or
-------
provided to be sent by either party shall be in writing and shall be sent by
United States Postal Service, postage prepaid or certified mail, return receipt
requested, by any nationally known overnight delivery service, by courier, or in
person. All notices shall be deemed to have been given forty-eight (48) hours
following deposit in the United States Postal Service or upon personal delivery
if sent by facsimile, overnight delivery service, courier or personally
delivered. All notices shall be addressed to the party at the address below:
To Seller: Lowe Enterprises
11777 San Vicente Blvd. #900
Los Angeles, CA 90049
Attn: Mr. Rick Newman
Facsimile: (310) 207- 1132
with a copy to: c/o AEW Capital Management, L.P.
225 Franklin Street
Boston, Massachusetts 02110
Attn: General Counsel
Facsimile: (617) 261-9555
with a copy to: c/o AEW Capital Management, L.P.
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601 S. Figueroa Street, Suite 2150
Los Angeles, CA 90017-3405
Attn: Mr. Michael Pepper
Facsimile: (213) 629-9160
and with a copy to: Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
Attn: Brian Smith, Esq.
Facsimile: (415) 772-6268
To Buyer: Kilroy Realty L.P.
2250 East Imperial Highway
El Segundo, California 90245
Attn: Mr. Jeffrey C. Hawken
Facsimile: (310) 322-5981
with a copy to: Appel & Associates
1875 Century Park East, Suite 700
Los Angeles, CA 90067
Attn: Brian J. Appel, Esq.
Facsimile: (310) 785-1010
Any address or name specified above may be changed by notice given to the
addressee by the other party in accordance with this Section 7.4. The inability
to deliver because of a changed address of which no notice was given, or
rejection or other refusal to accept any notice, shall be deemed to be the
receipt of the notice as of the date of such inability to deliver or rejection
or refusal to accept. Any notice to be given by any party hereto may be given by
the counsel for such party.
Section 7.5 Time. Time is of the essence of every provision contained
----
in this Agreement.
Section 7.6 Possession. The rights of possession of the Property
----------
(subject to the Sony Lease) shall be delivered to Buyer on the Closing Date.
Section 7.7 Incorporation by Reference. All of the exhibits attached
--------------------------
to this Agreement or referred to herein and all documents in the nature of such
exhibits, when executed, are by this reference incorporated in and made a part
of this Agreement.
Section 7.8 No Deductions or Off-Sets. Buyer acknowledges that the
-------------------------
Purchase Price to be paid pursuant to this Agreement is a net amount and shall
not be subject to any off-sets or deductions except as specifically provided in
this Agreement.
Section 7.9 Attorneys' Fees. In the event any dispute between Buyer
---------------
and Seller should result in litigation, the prevailing party shall be reimbursed
for all
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reasonable costs incurred in connection with such litigation, including, without
limitation, reasonable attorneys' fees.
Section 7.10 Construction. The parties acknowledge that each party
------------
and its counsel have reviewed and revised this Agreement and that the normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement or any amendments or exhibits hereto.
Section 7.11 Governing Law. This Agreement shall be construed and
-------------
interpreted in accordance with and shall be governed and enforced in all
respects according to the laws of the State of California.
Section 7.12 Confidentiality. Each of Seller and Buyer hereby
---------------
acknowledges and agrees that the existence of this Agreement, and the terms and
conditions set forth herein, are to be kept strictly confidential. Accordingly,
except as may be required by law or court order, neither Seller nor Buyer shall,
without the prior written consent of the other, release, publish or otherwise
distribute (and shall not authorize or permit any other person or entity to
release, publish or otherwise distribute) any information concerning this
Agreement or the transaction contemplated herein to any person or entity other
than such party's prospective lenders and such party's legal and financial
advisors or other consultants engaged in connection with this transaction, each
of whom shall agree to hold such information strictly confidential as if such
persons were bound by the provisions of this Section 7.12. The foregoing shall
not prevent either party from disclosing the existence, but not the terms, of
this transaction to other persons, including, without limitation, prospective
property managers and/or leasing brokers. Buyer and Seller shall exercise
reasonable efforts to secure the agreement of their respective Brokers
identified in Section 7.2 to keep the existence of this Agreement and its terms
confidential. Buyer and Seller acknowledge that they will cooperate to prepare a
mutually acceptable press release announcing the sale of the Property to Buyer.
Section 7.13 Counterparts. This Agreement may be executed in one or
------------
more counterparts. All counterparts so executed shall constitute one contract,
binding on all parties, even though all parties are not signatory to the same
counterpart.
Section 7.14 Entire Agreement: Amendments. This Agreement and the
----------------------------
attached exhibits, which are by this reference incorporated herein, and all
documents in the nature of such exhibits, when executed, contain the entire
understanding of the parties and supersede any and all other written or oral
understanding. This Agreement may not be amended or modified except by a written
instrument signed by Buyer and Seller.
Section 7.15 Further Assurances. From and after the date of this
------------------
Agreement, Seller and Buyer agree to do such things, perform such acts, and
make, execute, acknowledge and deliver such documents as may be reasonably
necessary or proper and usual to complete the transactions contemplated by this
Agreement and to
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carry out the purpose of this Agreement in accordance with this Agreement.
Seller agrees that for a period of sixty (60) days following the closing, Seller
or its representatives will provide, at no cost to Buyer, Seller's time and
personnel for the purposes of (a) providing reasonable assistance to Buyer in
the transition of the Property to new ownership, including familiarizing Buyer
with the Property files and introducing Buyer to vendors, contractors and tenant
representatives at the Property and (b) enabling Buyer to review any Due
Diligence Materials that may be necessary for Buyer to comply with regulatory
compliance requirements applicable to Buyer; provided. that such activities
--------
shall in no way operate to supplement or expand the limited representations and
warranties of Seller contained in this Agreement.
Section 7.16 Partial Invalidity. If any provision of this Agreement is
------------------
determined by a proper court to be invalid, illegal or unenforceable, such
invalidity, illegality or unenforceability shall not affect the other provisions
of this Agreement and this Agreement shall remain in full force and effect
without such invalid, illegal or unenforceable provision.
Section 7.17 Waivers. No waiver of any provision of this Agreement or
-------
any breach of this Agreement shall be effective unless such waiver is in writing
and signed by the waiving party and any such waiver shall not be deemed a waiver
of any other provision of this Agreement or any other or subsequent breach of
this Agreement.
Section 7.18 Damages. Subject to the limitations of Section 4.4 and
-------
except as provided below, Buyer agrees that any liability of Seller under any
claim brought prior to the Closing Date pursuant to this Agreement or any
document or instrument delivered simultaneously or in connection with, or
pursuant to this Agreement, shall be limited solely to its interest in the
Property, and no other assets of Seller shall be subject to levy or execution
With respect to any such claim brought following the Closing Date, any liability
of Seller shall be limited solely to the assets of Seller, provided that Seller
agrees that it shall, during the Limitation Period, maintain assets or permit
Buyer recourse to assets, of at least $500,000 to cover any claims that may be
asserted by Buyer under this Agreement following the Closing Date, in addition
to the amounts held in the Escrow Account pursuant to the Escrow Agreement. In
addition, in the event that any legal action is commenced by Buyer against
Seller during the Limitation Period based on a claim arising out of this
Agreement, Seller shall, until such claim is resolved, maintain or permit Buyer
recourse to assets equal to the lesser of (a) the amount of such claim, or (b)
$500,000, in addition to the amounts held in the Escrow Account pursuant to the
Escrow Agreement. The minimum amounts described in the preceding two sentences
shall be referred to herein as the "Minimum Assets". Except as expressly
--------------
provided in this Section 7.18,Seller shall be under no obligation to retain, or
afford Buyer recourse to, any assets of Seller following the Closing Date. In no
event shall either party seek satisfaction for any claim asserted by such party
against the other from any of the other party's trustees, beneficiaries or
partners or from any partners, shareholders, directors, officers, employees,
agents, legal representatives, successors or assigns of such party or such
party's trustees, beneficiaries or partners, nor shall any such person or entity
have any personal liability for any such obligations of the other party,
provided (i) notwithstanding anything to the contrary in this Agreement,
- --------
including without limitation
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Section 4.4 hereof, that the foregoing shall not limit Buyer's ability to trace,
and have recourse to, the proceeds of the sale of the Property to the extent
that the cost to complete the Retrofit Work exceeds the amount of funds in the
Escrow Account established pursuant to the terms of the Escrow Agreement
attached hereto as Exhibit I and (ii) except as provided in subsection (i)
---------
above, that Buyer shall have the right to seek satisfaction for claims following
the Closing Date from AEW Partners, L.P., a Delaware limited partnership, solely
if Seller has either liquidated, dissolved or failed to maintain the pertinent
Minimum Assets during or following the
-24A-
<PAGE>
Limitation Period, provided further that any such claims shall remain subject to
----------------
the limitations set forth in Section 4.4 above. AEW Partners has executed this
Agreement in the space provided below the parties' signature blocks for the sole
purpose of confirming the foregoing conditional right of action of Buyer. In no
event shall AEW Partners, L.P. have any other liability or obligation arising
out of this Agreement.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as
of the day and year first written above.
BUYER:
SELLER:
KILROY REALTY L.P.,a Maryland
SANTA MONICA NUMBER SEVEN Limited Partnership
ASSOCIATES L.P., a Delaware limited
partnership By: KILROY REALTY CORPORATION, A
Maryland Corporation
By: COLORADO PHASE III L.P.,a Its General Partner
California Limited Partnership
Its General Partner By: /s/ HUGH GREENUP
-------------------------
By: COLORADO PHASE III, Name: Hugh Greenup
---------------------
INC., a California
corporation Title: General Counsel
---------------------
Its General Partner
By: /s/ RICHARD NEWMAN JR. By:
---------------------- _________________________
Name: RICHARD NEWMAN JR. Name:
-------------------- _____________________
Title: VICE PRESIDENT Title:
-------------------- _____________________
-25-
<PAGE>
Solely for the limited purpose described
in the final sentence of Section 7.18 above:
AEW Partners L.P.,a Delaware limited
partnership doing business in Arizona
as AEW Partners Limited Partnership.
By: AEW/L.P., a Delaware limited
partnership, its general partner
By: AEW Inc., a Delaware Corporation,
its general partner
By: [SIGNATURE ILLEGIBLE]
---------------------
Its: Vice President
---------------------
-26-
<PAGE>
EXHIBIT A
---------
DISCLOSURE STATEMENT
All capitalized terms used herein but not otherwise defined shall have the
meanings given them in the Agreement.
1. Matters disclosed by any environmental reports and audits, structural,
soils and other physical inspection reports, title reports and surveys
delivered to Buyer prior to the end of the Inspection Period or included in
the materials delivered to or made available to Buyer pursuant to Section
2.3 of the Agreement.
2. The Personal Property and the improvements located on the Real Property,
and their structural components, the building systems and other mechanical
systems, and the parking and loading areas are, and have been, subject to
normal wear and tear and obsolescence as the result of the age of such
items.
3. Seller received notice from the Santa Monica Fire Marshal that the Property
needs to have street address numbers at least 6" in height with a 3/4" wide
stroke at rear entrance. Currently the Property has numbers 3" in height
with a 1/2" wide stroke. Seller has asked for a variance as of June 3,
1997, but has not yet received a response.
4. To Seller's Knowledge, Seller possesses all licenses, permits and approvals
required in connection with the ownership and operation of the Property
with the exception of the Waste Water Treatment Plant, for which licensing
and permits are currently under application with the Air Quality Management
District.
All the matters set forth on this Disclosure Statement are limited to
Seller's Knowledge. Seller does not make any representations or warranties,
other than as expressly set forth in the Agreement, regarding the scope or
content of the matters referenced in this Disclosure Statement. Neither the
foregoing list nor the materials referred to therein are intended to be an
exhaustive enumeration of issues relevant to the Property, nor are they intended
to fully inform you of any particular issue or its ramifications. Rather this
Disclosure Statement is presented to you pursuant to Section 4.1 of the
Agreement and is merely intended to assist you with your investigation of the
Property by flagging for you those matters which, to Seller's Knowledge, may
affect the Property or Seller's warranties and representations set forth in
Section 4.1 of the Agreement.
<PAGE>
EXHIBIT B
---------
INSPECTION LETTER
__________, 1997
AEW Capital Management, L.P.
225 Franklin Street
Boston, Massachusetts 02110
Attn: General Counsel
Re: Agreement for Purchase and Sale of 2100 Colorado Avenue, Santa Monica,
California dated June 16, 1997 (the "Purchase Agreement") between
Santa Monica Number Seven Associates L.P. ("Seller") and Kilroy Realty
L.P. ("Buyer")
Gentlemen & Ladies:
This letter constitutes the Inspection Letter contemplated by the
above referenced Purchase Agreement and is delivered to confirm the satisfaction
of the condition precedent described in Section 3.1(a)(i) of the Purchase
Agreement.
Buyer hereby expressly confirms to Seller (and to its trustees and
beneficiaries and their respective agents, employees, successors and assigns)
that Buyer has completed to its satisfaction the inspection and review of the
Remaining Due Diligence Items (as such term is defined in Section 2.3(a) of the
Purchase Agreement. Buyer, moreover, hereby ratifies and affirms all of the
acknowledgements, waivers and releases set forth in Section 2.3 of the Purchase
Agreement.
Accordingly, based on its inspection and review of the Property, Buyer
is prepared to proceed with the purchase of the Property in accordance with the
terms of the Purchase Agreement subject only to the satisfaction of the
conditions described in Sections 3.1(a)(ii)-(vii) of the Purchase Agreement.
Very truly yours,
KILROY REALTY L.P.,a Maryland limited partnership
By: Kilroy Realty Corporation, a Maryland corporation
Its General Partner
By:__________________________
Name:________________________
Title:_______________________
By:__________________________
Name: _______________________
Title:_______________________
<PAGE>
EXHIBIT C
---------
LIST OF CONTRACTS AND WARRANTIES
1. Roofing and Waterproofing Warranty - Owen Pacific
2. Pest Control Service Agreement - ORKIN
3. Parking Management Contract - Century Parking, Inc.
4. Landscaping Agreement - Live Art Plantscapes
5. Carpet/Wood Floors Agreement - InTex Services
6. HVAC Service Contract - Imperial Air Conditioning Corp.
7. Elevator Maintenance Agreement- Schindler Elevator Corp.
8. Water Waste Treatment Agreement - Integrated Performance
9. Fire Alarm System - TRL Systems, Inc.
11. Property Management Agreement - Santa Monica Lowe Partners
12. Fish Pond Service - Asahi Fancy Koi, Inc.
13. Property Tax Audit - Red Estate Tax Services
<PAGE>
EXHIBIT D
---------
PROPERTY DESCRIPTION
<PAGE>
DESCRIPTION
- -------------------------------------------------------------------------------
PARCEL 1:
LOT 7 OF TRACT NO. 49694, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 1175 PAGES 37 TO 40 INCLUSIVE,
IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL 2:
THAT PORTION OF THE RIGHT-OF-WAY, 100.00 FEET WIDE, OF THE SOUTHERN PACIFIC
RAILROAD COMPANY, IN THE CITY OF SANTA MONICA, COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 40 PAGE 282 OF DEEDS, IN THE OFFICE OF
THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE INTERSECTION OF THE CURVED NORTHWESTERLY LINE OF SAID RIGHT-OF-
WAY, 100.00 FEET WIDE, WITH THE CURVED NORTHWESTERLY LINE OF THE LAND DESCRIBED
IN PARCEL 3 OF THE FINAL ORDER OF CONDEMNATION NO. 496651, FILED JULY 23, 1945
AND ENTERED JULY 24, 1945 IN JUDGMENT BOOK 1553 PAGE 27, SUPERIOR COURT RECORDS
OF SAID STATE; SAID LAST MENTIONED CURVE BEING CONCAVE SOUTHEASTERLY AND HAVING
A RADIUS OF 905.00 FEET; A RADIAL LINE OF SAID CURVE TO SAID INTERSECTION BEARS
NORTH 51 DEGREES 34 MINUTES 36 SECONDS WEST; THENCE SOUTHWESTERLY AND CONTINUING
ALONG SAID CURVE, 94.25 FEET THROUGH A CENTRAL ANGLE OF 5 DEGREES 58 MINUTES 02
SECONDS TO A POINT IN A CURVED LINE BEING CONCENTRIC WITH AND DISTANT
SOUTHEASTERLY 40.00 FEET MEASURED RADIALLY FROM SAID NORTHWESTERLY LINE OF SAID
RIGHT-OF-WAY, 100.00 FEET WIDE; SAID LAST DESCRIBED CURVE BEING CONCAVE
SOUTHEASTERLY AND HAVING A RADIUS OF 11,663.40 FEET; A RADIAL LINE OF SAID CURVE
TO SAID POINT BEARS NORTH 29 DEGREES 38 MINUTES 43 SECONDS WEST; THENCE
SOUTHWESTERLY 636.65 FEET ALONG SAID CONCENTRIC CURVE THROUGH A CENTRAL ANGLE OF
3 DEGREES 07 MINUTES 39 SECONDS, TO THE NORTHEASTERLY LINE OF TWENTIETH STREET,
70.00 FEET WIDE, AS SHOWN ON THE MAP OF TRACT NO. 9774 IN SAID CITY AND RECORDED
IN BOOK 140 PAGES 64 AND 65 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY; THENCE ALONG SAID LAST DESCRIBED NORTHEASTERLY LINE NORTH 44
DEGREES 45 MINUTES 25 SECONDS WEST 40.88 FEET TO ITS INTERSECTION WITH SAID
CURVE NORTHWESTERLY LINE OF SAID RIGHT-OF-WAY, 100.00 FEET WIDE; SAID LAST
MENTIONED CURVE BEING CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 11,703.40
FEET; A RADIAL LINE OF SAID CURVE TO SAID INTERSECTION BEARS NORTH 32 DEGREES 48
MINUTES 53 SECONDS WEST; THENCE NORTHEASTERLY 732.79 FEET ALONG SAID CURVE,
THROUGH A CENTRAL ANGLE OF 3 DEGREES 35 MINUTES 15 SECONDS TO THE POINT OF
BEGINNING.
PARCEL 3.
NON-EXCLUSIVE EASEMENTS FOR THE PURPOSES OF VEHICULAR AND PEDESTRIAN INGRESS AND
EGRESS, PARKING TOGETHER WITH THE RIGHT TO USE A PARKING TICKET COLLECTION
BOOTH, AS PROVIDED FOR IN THAT CERTAIN DOCUMENT ENTITLED "SECOND DECLARATION OF
PROTECTIVE COVENANTS AND RESTRICTIONS AND RECIPROCAL EASEMENT AGREEMENT FOR THE
ARBORETUM" RECORDED NOVEMBER 23, 1994 AS INSTRUMENT NO. 94-2115484, OVER LOT 6
AND THOSE PORTIONS OF LOTS 4 AND 5 OF TRACT NO. 49694, RECORDED IN BOOK 1175
PAGES 37 TO 40 INCLUSIVE OF MAPS, SHOWN AS PARCEL C OF THE CERTIFICATE OF
COMPLIANCE NO. WPM 96-01, RECORDED APRIL 4, 1997 AS INSTRUMENT NO. 97-512250.
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT E
---------
DEED
[Form attached]
<PAGE>
DEED
----
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
MAIL TAX STATEMENTS TO:
- --------------------------------------------------------------------------------
(Above Space For Recorder's Use Only)
The undersigned grantor declares:
Documentary Transfer Tax is shown on a separate sheet attached to this
deed and is not a part of the public record.
- --------------------------------------------------------------------------------
GRANT DEED
FOR A VALUABLE CONSIDERATION, RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, Santa
Monica Number Seven Associates L.P., a Delaware limited partnership ("Grantor"),
hereby grants to Kilroy Realty L.P., a Maryland limited partnership, that
certain real property described on Exhibit "A" attached hereto and made a part
-----------
hereof (the "Property"), TOGETHER with all improvements located thereon and all
rights, privileges, easements and appurtenances of Grantor appertaining to the
Property and all right, title and interest of Grantor in, to and under adjoining
streets, rights-of-way and easements.
DATED: _____________, 1997
GRANTOR: SANTA MONICA NUMBER SEVEN ASSOCIATES L.P., a Delaware limited
partnership
By: COLORADO PHASE III L.P., a California limited partnership
Its General Partner
By: COLORADO PHASE III, INC., a California corporation
Its General Partner
By:___________________________
Name:_________________________
<PAGE>
SEPARATE STATEMENT OF
DOCUMENTARY TRANSFER TAX
------------------------
County Recorder
Los Angeles County
Gentlemen:
In accordance with Revenue and Taxation Code Section 11932, it is
requested that this Statement of Documentary Transfer Tax due not be recorded
with the attached deed, but be affixed to the deed after recordation and before
return as directed on the deed.
The deed names the undersigned as Grantor, and Kilroy Realty L.P.,a
Maryland limited partnership, as Grantee.
The undersigned Grantor declares:
A. The purchase price for the property is $31,000,000.
B. The documentary transfer tax is $34,100,based upon $1.10 per $1,000 of
property value.
C. The real property being transferred is located in the City of Santa
Monica, County of Los Angeles, State of California, as more particularly
described in the deed.
Very Truly Yours,
SANTA MONICA NUMBER SEVEN ASSOCIATES L.P., a Delaware limited
partnership
By: COLORADO PHASE III L.P., a California limited partnership
Its General Partner
By: COLORADO PHASE III, INC., a California corporation
Its General Partner
By:___________________________
Name:_________________________
<PAGE>
EXHIBIT F
---------
BILL OF SALE
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby expressly acknowledged, Santa Monica Number Seven Associates L.P., a
Delaware limited partnership, hereby assigns, transfers and conveys a fee
interest to Kilroy Realty L.P., a Maryland limited partnership ("Buyer"), in and
to all of the Personal Property (including the personal property listed on
Schedule 1 attached hereto) and Intangible Property of Seller, as such terms are
- ----------
defined in that certain Agreement for Purchase and Sale of 2100 Colorado Avenue,
Santa Monica, California dated as of June 16, 1997, by and between Seller and
Buyer (the "Purchase Agreement"). The foregoing conveyance is made pursuant to,
and is subject to the terms and conditions of, the Purchase Agreement.
Seller hereby warrants to Buyer that it is the lawful owner of the
Personal Property and the Intangible Property, that the Personal Property and
Intangible Property are free of all encumbrances and that Seller has good right
to sell the Personal Property and the Intangible Property.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of
_________ 1997.
SELLER:
SANTA MONICA NUMBER SEVEN ASSOCIATES L.P., a Delaware limited
partnership
By: COLORADO PHASE III L.P., a California limited partnership
Its General Partner
By: COLORADO PHASE III, INC., a California corporation
Its General Partner
By:___________________________
Name:_________________________
<PAGE>
SCHEDULE 1
----------
Personal Property
. Miscellaneous power and hand tools located at the Property.
. Plans, files and documents stored on-site at the Property.
<PAGE>
EXHIBIT G
---------
ASSIGNMENT OF LEASES AND INTANGIBLE PROPERTY
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby expressly acknowledged, Santa Monica Number Seven L.P., a Delaware
limited partnership ("Assignor"), hereby assigns, transfers and conveys to
Kilroy Realty L.P., a Maryland limited partnership ("Assignee"), all of the
landlord's right, title and interest in and to the Sony Lease and the Intangible
Property, as those terms are defined in that certain Agreement for Purchase and
Sale of 2100 Colorado Avenue, Santa Monica, California dated June 16, 1997 (the
"Agreement"), entered into by and between Assignor, as "Seller," and Assignee,
as "Buyer."
In accordance with the Agreement, Assignee hereby assumes all
obligations of Seller as landlord under the Sony Lease, as tenant under the MTA
Lease and as owner of the Intangible Property (including, without limitation,
Assignor's rights and interests as a party to the Contracts) to the extent such
obligations arise on or after the date of this Assignment (collectively, the
"Assigned Obligations"), and Assignee agrees to indemnify and defend Assignor
against, to hold Assignor harmless from, and to reimburse Assignor for, any and
all loss, cost, liability and expense (including attorneys' fees) arising out of
or relating to any breach or alleged breach of the Assigned Obligations
occurring (or alleged to have occurred) on or after the date of this Assignment.
Assignor agrees to indemnify and defend Assignee against, to hold
Assignee harmless from, and to reimburse Assignee for, any and all loss, cost,
liability and expense (including attorneys' fees) arising out of or relating to
any breach or alleged breach of any obligations of the Landlord under the Lease
or as owner of the Intangible Property (including the Contracts) occurring (or
alleged to have occurred) prior to the date of this Assignment.
This Assignment may be executed in one or more counterparts. All
counterparts so executed shall constitute one contract, binding on all parties,
even though all parties are not signatory to the same counterpart.
Any liability which may arise as a consequence of the execution of
this Assignment by or on behalf of either Assignor or Assignee shall be a
liability of Assignor or Assignee, as applicable, and not the personal liability
of any trustee, corporate officer of a trustee, corporate officer of such party
or employee of such party.
IN WITNESS WHEREOF, Assignor and Assignees have executed
<PAGE>
this Assignment of Leases and Intangible Property as of _________, 1997.
ASSIGNEE:
ASSIGNOR:
KILROY REALTY L.P., a Maryland
SANTA MONICA NUMBER SEVEN limited partnership
ASSOCIATES L.P., a Delaware limited
partnership
By: Kilroy Realty Corporation, A
By: COLORADO PHASE III L.P., a Maryland corporation
California limited partnership Its General Partner
Its General Partner
By:_____________________
By: COLORADO PHASE III,
INC., a California Name:___________________
corporation
Its General Partner Title:__________________
By:______________________
By:_____________________
Name:____________________
Name:___________________
Title:___________________
Title:__________________
Exhibit G - Page 2
<PAGE>
EXHIBIT H
---------
DUE DILIGENCE MATERIALS
<PAGE>
DUE DILIGENCE MATERIALS
- --------------------------------------------------------------------------------
1. Materials provided on or before May 30, 1997 from Lowe Enterprises:
A. SOIL REPORTS
------------
Report of Foundation Investigation - (June 13, 1991)
Law/Crandall
REPORT OF PRELIMINARY FOUNDATION INVESTIGATION - (OCT08ER 3,
1985)
Report of Ground Motion Studies - (December 26, 1989)
LeRoy Crandall And Associates
Report of Geotechnical Investigation - (April 17, 1997)
Law/Crandall
Report of Foundation Investigation - (December 4, 1989)
Geotechnical Executive Summary - (Letter dated April 10, 1997)
Proposal for Geotechnical Investigation (Letter dated February 24,
1997)
B ENVIRONMENTAL
-------------
Report of Environmental Assessment - (November 3, 1988)
LeRoy Crandall And Associates
Environmental Materials packet
Report of Building Survey For Asbestos-Containing Materials - (dated
November 2, 1988)
Letco Associates, Inc.
Letter RE: Hydrocarbon Leakage - (dated October 15, 1986
Southmark Pacific Corp.
Report of Environmental Assessment And Geologic-Seismic Hazards Study
- (dated November 3, 1988).
LeRoy Crandall And Associates
Memo from Mac to Marcia with attachments - (dated November 1, 1996)
Supplementary Environmental Information
LeRoy Crandall And Associates
Report of Phase I Environmental Site Assessment - (dated November 21,
1996)
Law/Crandall
C. COPIES OF SERVICE AGREEMENTS & CONTRACTS - (Delivered 5/30 via FEDX)
--------------------------------------------------------------------
L.E. PROPERTY MANAGEMENT FILES
1. Property Management Agreement - Santa Monica Lowe Partners
2. Roofing And Waterproofing Warranty - Owen Pacific
3. Pest Control Service Agreement - ORKIN
4. Parking Management Contract - Century Parking, Inc.
5. Landscaping Agreement - Live Art Plantscapes
6. Carpet/Wood Floors Agreement- InTex Services
7. HVAC Service Contract - Imperial Air Conditioning Corp.
8. Elevator Maintenance Agreement - Schindler Elevator Corp.
9. Water Waste Treatment Agreement - Integrated Performance
10. Window Washing - Skyline Services
11. Fish Pond Service - Asahi Fancy Koi, Inc.
1
<PAGE>
EXHIBIT H - DUE DILIGENCE MATERIALS
- --------------------------------------------------------------------------------
D. Preliminary Title Report as of May 8th 1997
E. Amended CC&R's
F. Copy of Certificate of Occupancy
G. Plans for the Sony Music Project:
. Architectural
. Electrical
. Structural
. Plumbing
. HVAC
H. Closure report from Clean Up Technologies, RE: Soils
I. Water Treatment Agreement & Plans
J. Schindler Elevator Corporation Contract
K. Real Estate Tax Services Contract
L. Monthly Operating Reports - 01/97 - 04/97
II. Due Diligence Documentation - (Delivered May 5, 1997 by AEW)
1. Year End Financial Statements: 1994-1996
2. Non Reimbursable Expense Worksheet
3. Development Agreement
4. Declaration of Protective Covenants, Conditions, and Restrictions and
Reciprocal Easement Agreement for the Arboretum
5. Arboretum Settlement Agreement
6. Director's Action by Unanimous Written Consent, The Arboretum
Association
7. Memo re: Parking Requirement Calculations
8. MTA Lease
9. Sony Music Lease
10. Correspondence re: Lease Renewal
11. Structural Engineering Reports
12. Correspondence re: facade Repair/Retrofit Project
13. First Cause of Action/Lowe Development Corp. vs. Orange County
Plastering
14. Correspondence re: Orange County Plastering lawsuit
15. Settlement Agreement
16. Sony Office Lease
17. Operating Expense Reconciliation
18. CLA File C-1439 Site Observation Report #1 through #6
19. Preliminary Project Report
20. Excerpt from December 1995 Appraisal
21. Floor Plans
22. Certificate of Insurance
23. Replacement Cost Memorandum
24. Correspondence: Remediation Program
25. Phase I Environmental Assessment (performed for Lincoln Property Co. on
the Arboretum site which is adjacent to Sony Music Campus).
2
<PAGE>
EXHIBIT H - DUE DILIGENCE MATERIALS
- --------------------------------------------------------------------------------
III List of all files/information in Lowe Enterprises Possession:
A. SONY ASSET MANAGEMENT FILES
---------------------------
LE - 9TH Floor - (S. Sanchez/R. Newman files)
1. ADP
2. Aldrich Eastman Waltch
3. Budget 1996
4. Business Plan
5. Correspondence
6. Credit Lyonnais
7. Development/Property Management Agreement
8. Earthquake Costs
9. Insurance
10. Leaks
11. Sony Lease
12. John Lewis
13. Monthly Reports
14. Parking
15. Business Plan & Quarterly Operating Reports
16. Property Management
17. Operating Expense Reconciliation
18. City of Santa Monica
19. Soils (closure)
20. SMNSA Budget
21. CCR's
22. Development Agreement
23. Environmental
24. Soils Reports
B. ARBORETUM DEVELOPMENT & SONY FILES
----------------------------------
LE - FILE STORAGE (9TH FLOOR)
1. DA Amendment City Council
2. ADP/SMNSA - Final Settlement Agreement
3. EIR/Planning Commission for Processing of ARBO-DA Amendment #2 -
1994
4. Arboretum Development Agreement Amendment Two
5. Development Agreement
6. ADP Settlement Agreement - 11/94
7. Amendment Arboretum CC&R's - 11/94
8. Architectural Committee
9. ADP Arboretum DA Amendment - City Council
10. Sony/Arbor Business License
11. ADP/SMNSA - Issues/Settlement
12. ADP/SMNSA - Issues/Settlement - 1993
13. ADP/SMNSA - Declarancy Suit/Settlement Agreement
14. ADP/SMNSA-DA-Amendment Suit
15. Arbor Association
3
<PAGE>
EXHIBIT H - DUE DILIGENCE MATERIALS
- --------------------------------------------------------------------------------
16. ADP/SMNSA
17. ARBO - Watergarden vs. ADP
18. SMNSA 1993 Financials
19. ADP - CC&R's
20. Arboretum - Development/Property Management
21. Arboretum - Lawrence & Harding
22 Sony - Earthquake Restoration
23. Sony - Earthquake Costs/Draws
24. Sony - "C of O"
25. SMNSA Tax Appeal
26. SMNSA Monthly Reports
27. Sony Correspondence
28. Sony - Water damage/Kemper
29. Sony - Leaks
30. Sony - "Awards" files
31. Sony Soils
32. Sony "Sale" Proposal
33. Sony Music Campus/SM (Law/Crandall, Inc.)
34. Sony Music Campus City of S.M.
35. ARBOR 20/20 Video
36. RTC/San Jacinto Loon Pool v Purchase
37. Sub-Contractors/Suppliers List
38. Sub-Lease Form
39. Personnel
40. Service Call Log
41. Chron File
42. Outstanding Leases
43. Arboretum Aerials
44. Arboretum Hotel Site
45. Arboretum - Project Description
46. Arboretum- Peck/Jones
47. Pre-Construction Agreement
48. Arboretum - Gensler Architectural Contract with S.M Lowe
Partners, L.P.
C. ADP/SMNSA FILES
---------------
LE - BOXED IN STORAGE ROOM
1. ADP Suit O9.13.1994
2. ADP/Lowe/AEW Fraud Suit (correspondence)
3. ADP/Lowe/AEW Fraud Suite
4. ADP/SMNSA - "Declarancy Suit"
5. ADP/SMNSA - "Declarancy Suits" (correspondence)
6. ADP/SMNSA - DA Suite Discovery
7. ADP/SMNSA "# Votes" Association Suit
8. ADP/SMNSA DA Amendment Suit
9. ADP/SMNSA DA Amendment Suit (correspondence)
10. ADP/SMNSA Settlement Drafts/Discussions
4
<PAGE>
EXHIBIT 1l - DUE DILIGENCE MATERIALS
- --------------------------------------------------------------------------------
11. Number Two (7/26/94)
12. Sony to be approved (Charlotte's Construction Administration)
D. CONSTRUCTION PLANS & FILES
--------------------------
Sony Garage Storage
1. Construction Plans: TI And Shell
2. Construction Files: Reports, Budgets, Draws Process,
Inspections, etc.
E. SONY PROPERTY MANAGEMENT FILES
------------------------------
LE - 9th Floor Files - Property Management
1. Air Quality Management
2. American Industrial Supply
3. Appraisal 1995
4. Awnings
5. Back-up Power System
6. Browning Ferris Industries
7. Business License
8. Business Plan/Budget
9. Budget & Business Plan
10. Budget Notes
11. Carpet - Masland Carpets Inc.
12. Carpet/Wood Floors - Intex Services
13. Carpet/Wood Floors - Service Tickets (Intex)
14. Carpet/Wood Floors - 1995
15. Certificate of Occupancy
16. Chambers of Commerce
17. City of Santa Monica
18. Claim Handling Procedures
19. Columbia - Reception Desk
20. Columbia - West Conference Room
21. Columbia - Conference Room
22. Columbia - Mat
23. Columbia - Skylight
24. Construction - Agreement
25. Construction - Saunders Construction
26. Construction Loan
27. Correspondence - Lease
28. Correspondence - NewLowe Construction
29. Correspondence - Sergio Navarro
30. COX Industrial
31. CPI Increases
32. Credit Applications
33. Dalon Engineering
34. Draperies
35. Doors - Hardware (S&S)
5
<PAGE>
EXHIBIT H - DUE DILIGENCE MATERIALS
- --------------------------------------------------------------------------------
36. Doors
37. Doors - (Walters & Wolf)
38. Employee Listings
39. Earthquake - ACCO
40. Earthquake - Releases
41. Earthquake - Carpets
42. Earthquake - AEW Draw Requisition
43. Earthquake - Revised Earthquake Budget
44. Earthquake - Damage Meeting
45. Earthquake - EDA Reports
46. Earthquake - Emergency Shut Offs
47. Earthquake - Facility Memorandums
48. Earthquake - Indoor Air Quality
49. Earthquake - Information to Tenants
50. Earthquake - Related Invoices
51. Earthquake - Punch Lists
52. Earthquake - Painting
53. Earthquake - Repairs- LDC
54. Earthquake - Seismic Engineering Association
55. Earthquake - Studio
56. Earthquake - Thetford
57. Earthquake - Video Tapes
58. Earthquake - TRL
59. Earthquake - Water Damage/lnsurance
60. Earthquake - Waterproofing Repairs
61. Electrical - Halo Electric
62. Elevators - Permits
63. Elevators - Schindler
64. Elevators- Safety Materials
65. Emergency Contact List
66. Environment Air Quality
67. Phantom Direct (Vacuum Cleaner)
68. Fire - Fire Life & Safety
69. Fire - Instant Fire Protection
70. Fire - Studio Pre-action System
71. Fire - Monitoring
72. FIRE - Grinnel Fire Protection
73. FIRE - Fire Sprinklers
74. Fire - World Fire Protection
75. Floor Cleaning
76. Furniture Floor Plans
77. Flooring - Pacific Flooring Inc.
78. Garage Door- Vortex
79. Garbage Collection (BFI)
80. GILL Construction (Energy Management)
81. Glass - Glass Table/Columbia Building
82. Glass - Lynden Glass Company
83. Glass - Swartz Glass Company
84. Hazardous Waste Manifest
6
<PAGE>
EXHIBIT H-DUE DILIGENCE MATERIALS
- --------------------------------------------------------------------------------
85. HVAC-Imperial A/C
86. HVAC-A/C Data Room
87. HVAC-Notes
88. Indoor Air Quality
89. Images of
90. Insurance-Insurance Claims Procedures
91. Insurance-Miscellaneous Certificates
92. Insurance-Sony
93. Insurance-Vendor Correspondence 1994
94. Janitorial-Gemini Excellence In Maintenance
95. Janitorial-MainTech
96. Janitorial-John Kalodner
97. Landscaping-Landscaping
98. Landscaping-Live Art PlantScapes
99. Leaks-Leaks
100.Leaks-Water Leaks
101.Legal-Bisno Settlement Agreement
102.Legal-Greenwood Suit
103.Legal-Legal 1
104.Legal-Legal 2
105.Legal-Notices
106.Lighting-3rd Floor Conference Room
107.Lighting-Art Gate Lighting
108.Lighting-Christopher Electrical Service
109.Lighting-Graham Lighting
110.Lighting-Midwest Wholesale Lighting
111.Lighting-Regency Lighting
112.Lock-Lock Combinations
113.Lock-Master Keys
114.Lock-Manchester Lock & Key
115.Mailroom
116.Maintenance Logs-Jan-June 1997
117.Maintenance Logs-Jul-Dec 1997
118.Maintenance Requests 1996
119.Preventive Maintenance Calendar
120.Metropolitan Transportation Authority
121.1994 Operating Expense Reconclliation
122.1994 Actual Operating Expense-Reimbursement
123.Operating Expenses
124.Painting-A-1 Work Painting
125.Painting-Duggan & Associates
126.Painting-Painting
127.Parking
128.Parking-Century
129.Parking Fees
130.Pest Control-Orkin Pest Control
131.Pest Control-Advance
132.Photographs
133.Pizzulli Associates, Inc
7
<PAGE>
EXHIBIT H - DUE DILIGENCE MATERIALS
- --------------------------------------------------------------------------------
134. Planter Drains
135. Plumbing - All Area Plumbing Inc.
136. Plumbing - Backflow Testing
137. Plumbing - Plumbing Information
138. Plumbing - Faucets
139. Plumbing - Fish Pond
140. Plot Plan
141. Property Management File
142. Proposition 65 Signage
143. Power Outage/Generator
144. Prudential Overall Supply
145. Roof - Warranty File
146. Roof - Owen Pacific Roofing
147. Roof - San Marino Roof Company, Inc.
148. Sam's U-Drive
149. Satellite Dish
150. Security - GuardsMark Incident Reports
151. Security - Melvin Barnum Security
152. Security - ADT Access Card
153. Security - Security Access Fax
154. Signage - Carl Berkhout, Inc.
155. Signage - CAS
156. Signage - Signage Page
157. Signage - Plan
158. Power - Southern CA Edison
159. Power - Southern CA Millwork
160. Power - Door Veneers
161. Stairwells - Vinyl Samples
162. Stairwells - Railing Corp. Building
163. Studio
164. Studio - Notices - Phil Kaye
165. Studio Security
166. Studio - Correspondence
167. Studio- Sample (Marmoleum)
168. Studio Basketball Court
169. Sub-contractors List
170. Sump Pump (Cox Industry)
171. Tape Library
172. Taxes - Tax Appeal
173. Taxes - Real Estate Tax Service
174. Taxes - KRMG Peat Marwick
175. Taxes - Property Tax Appeal
176. Teleco Room
177. Teledata Room
178. Teledata Room Expansion
179. T.I. Buildout
180. Tool Inventory
181. TRL Systems
182. Valuation Data Summary
8
<PAGE>
EXHIBIT H - DUE DILIGENCE MATERIALS
- --------------------------------------------------------------------------------
183. Wall Finishing (Interior)
184. Warehouse - AVID Room
185. Water Heater Temps
186. Water Leaks
187. Water Treatment
186. Waste Treatment - (IPC)
189. Waste Treatment - (Thetford Systems)
190. West Coast Elevator Pads
191. Westwood Wholesale Electric
192. Window Washing - Skyline Service
193. Wood Trends
194. Zee Medical Service.
F. CONSTRUCTION FILES
------------------
Jamie Daugherty's files at NewLowe
(1) SONY STRUCTURAL RETROFIT CONTRACT FILES
---------------------------------------
1. AEW/Santa Monica Number Seven Associates
2. Dimitry Vergun
3. Owner/Contractor Agreement (Santa Monica #7 & LECG)
4. Sony Music
5. Ted Gropman
6. TruForm Construction
7. Tuttle & Taylor
8. Building Analytics
9. Bob Dampf - Expense Reports
10. Chris Barr Painting
11. Daily Construction Reports
12. Memos - Rick Newman
13. Memos - Aida Goodbarian
14. Memos - Bob Dampf
15. Settlement Information - Orange County Plastering
16. Santa Monica Number Seven
17. Truform Construction
18. Memos to Aida Goodbarian
19. Memos to Bob Dampf
(2) SONY EARTHQUAKE REPAIR - CONTRACT FILES
---------------------------------------
1. ACCO
2. Advanced Waterproofing
3. Aldrich, Eastman & Waltch
4. American Bonding Company
5. Arend & Associates
6. Booth, Mitchell & Strange
7. Carmel Architectural Sales
8. Carnevale & Lohr
9. Chris Barr Painting
9
<PAGE>
EXHIBIT H - DUE DILIGENCE MATERIALS
- --------------------------------------------------------------------------------
10. Christopher Electric
11. Civic Engineering
12. Clean Up Technology
13. CAN Insurance
14. Continental Studio Builders
15. Dalan Engineering
16. Devco Engineering
17. Dimitry Vergun
18. Duggan & Associates
19. Fetzers, Inc.
20. GSC Associates
21. Harry S. Peterson
22. Home Insurance
23. Integrated Performance Consultants
24. International Marble
25. Intex Service
(3) EARTHQUAKE REPAIR (2-LEAF)
--------------------------
1. Arend & Associates
2. As-Built Information
3. Attic Stock Carpet
4. Backup Power System
5. Bid Analysis
6. Budget Estimates - Earthquake
7. Building Department
8. Carpet Issues - Masland Mills
9. Closeout Schedule
10. Construction Estimates
11. Devco Design Calculations
12. Door Survey
13. Earthquake Repair Log - Exterior Damage
14. Earthquake Repair Log Interior Damage
15. Elevator Information
16. Epic Facade Failure Repair Costs
17. Estimates - Misc. T.I.'s
18. Estep & Sons
19. GC Fee Calculation
20. Har-Bro Construction - EQ Retro Estimate
21. Halco Electric
22. Integrated Performance Consultants
23. Job Cost Information
24. Karmey Waterproofing - Insurance Claim
25. Leak Survey
26 Maintenance
27. Masland Carpets Inc.
28. Mediation Information
29. Meeting Minutes - Sony
30. Memos Aida Goodbarian
10
<PAGE>
EXHIBIT H - DUE DILIGENCE MATERIALS
- --------------------------------------------------------------------------------
31. Memos Angie Olmos
32. Memos Cindy Buddes
33. Memos Debra Masuda
34. Memos Diane Thompson
35. Memos Gary Bertisch
36. Memos Janice Clark
37. Memos Jeanette Iverson
38. Memos Jim Arend
39. Memos Mitch Rozalsky
40. Memos Rick Newman
41. Memos Vincent Adams
42. Metalurgical Testing Corporation
43. Planters
44. Punchlist
45. Schedules
46. Settlement Information - O.C.P.
47. Shapiro - Ben Basat
48. Sony Music Lease 1630 21st
49. Structural Information
50. Subcontractor List
51. Waterproofing
52. Westland Heating & Air
53. Zenon
(4) SONY PROJECT EARTHQUAKE REPAIRS #2
----------------------------------
1. Advance Waterproofing
2. Daily Reports
3. Pizzulli
4. Ismail & Otova
5. Steven Ehrlich
6. Seismic Engineering Assoc.
7. ACCO
8. Truform Construction
9. Continental Studio builders
10. Fetzers Inc.
11. Sony
12. Deimitry K. Vergun
13. Kemper Insurance
14. Sheldon Pollack;
15. International Marble
16. Devco Engineering
17. AEW
18. Smith Emery Company
19. Home Insurance
20. Ted Gropman
21. GSC & Associated
22. CNA Insurance
23. Toshco
11
<PAGE>
EXHIBIT H - DUE DILIGENCE MATERIALS
- --------------------------------------------------------------------------------
24. Cleanup Technology
25. Western Office Interiors
26. American Bonding Company
27. Thetford Systems
28. Intex Services, Inc.
29. Christopher Electric
30. Johnson & Higgins
31. Civic Engineering
32. Marks & Golia
33. Kirtland & Packard
34. Sedgwick, Detert, Moran & Arnold
35. Booth Mitchel & Strange
36. Dalan Engineering
37. Twining Laboratories
38. Carnevale & Lohr, Inc.
39. San Marino Roofing
40. So. Cal. Millwork
41. Truform Construction
42. Orange County Plastering
43. Lynden Glass
44. HSP
45. Duggan Painting
46. Chris Barr Painting
47. Pacific Flooring
48. Masland Carpets
12
<PAGE>
IV. AEW - SONY FILES
----------------
A. Sony (Also, See Iron Mountain List)
1993 Business Plan
1994 Budget From Lowe Development
1994 Business Plan
1995 ABP
1995 ABP - Draft Budget(s)
1995 ABP - Leasing Assumptions & Market Info.
1995 ABP - Valuation
Arboretum Association
Articles
Issue: Power Outages
Issue: Remediation Program: Clean-up Technology (cut)
Issue: SCE Under Billing
Issue: Seismic/PMI. Evaluation
Issue: Soil Remediation Program
Issue: Renewal/Expansion
Litigation - 2O/20 Video v. CP Phase III, L.P., et al
Litigation - Greenwood & Co. Development Corp. v.
Lowe Development Corp.et al
Litigation - Legal Bills
Market - Water Garden Note Purchase
Market - Water Garden Phase II Sale
Marketing/Leasing
Project Notes
Roof Guarantees - Post Earthquake
Tax Appeal - 1995/1996
Valuation Strategy & Related Information (2/95)
B. IRON MOUNTAIN FILES
1.9 Sony
Bisno Dispute
Bisno Dispute - ADP's Motion for Summary Adjudication
Bisno Dispute - AEW Answer to Complaint (8/16/94)
Bisno Dispute - AEW Response to Interrogatories
Bisno Dispute - Association Issue
Bisno Dispute - Attorney Evaluation
Bisno Dispute - Comments for Public Hearing Planning Commission
Bisno Dispute - Development Agreement Amendment
Bisno Dispute - Draft EIR
Bisno Dispute - Gensfer & Associates: Urban Design
1
<PAGE>
Issues & Principles Paper/Drawings (11/94)
Bisno Dispute - Litigation Strategy & Assessment by Tuttle &
Taylor (9/94)
Bisno Dispute - Response to Draft EIR
Bisno Dispute - Legal Bills
Bisno Dispute - Letters To/From Adjacent Property/Land Owners
Bisno Dispute - Litigation File
Bisno Dispute - Memorandum of Right of First Refusal
Bisno Dispute - "Nuisance" Lawsuit
Bisno Dispute - Planning Staff Report/Correspondence (11/9/94)
Bisno Dispute - Proposed Market Development
Bisno Dispute - Real Estate Development Plans
Bisno Dispute - Request For Resolution via Binding Arbitration
Bisno Dispute - RTC Approval of Development Agreement (DA)
Amendment
Bisno Dispute - Settlement Agreement (Fully Executed Original)
Bisno Dispute - Settlement Proposal/Notes
Bisno Dispute - SMNSA Opposition To Summary Adjudication
Bisno Dispute - SMNSA Response to Planning Commission
Bisno Dispute - SMNSA Responses to Specially Prepared
Interrogatories (11/94)
Bisno Dispute - Status Report
Bisno Dispute - Stipulation for Protective Order & Letters
To/From RTC
Bisno Dispute - Summaries of Settlement Proposal
Bisno Dispute - Urban Design Issues & Principles
Bisno Dispute - Verified Complaint for Damages
Bisno Dispute - Zoning Administrator Appeal
Earthquake
Earthquake - Change Orders
Earthquake - Construction Related Correspondence
Earthquake - Draw Request #1
Earthquake - Draw Request #2
Earthquake - Draw Request #3
Earthquake - Draw Request #4
Earthquake - Draw Request #5
Earthquake - Draw Request #6
Earthquake - Draw Request #7
Earthquake - Draw Request #8
Earthquake - Facade Failure/O.C. Plastering
Earthquake - Landscape Planter Repairs
Earthquake - Lease Review & Settlement Discussion
Earthquake - LDC Fee Negotiation
2
<PAGE>
Earthquake - UT Testing Report
Earthquake - Videotapes (2) of Earthquake Damage
Earthquake - Water Damage Claim & Correspondence
3
<PAGE>
INDEX REFERENCE LIST - BOTTOM FILE DRAWER
ARBORETUM/BISNO RESTRUCTURING FILES
FILE NO. FILE NAME
AB 1.1 Arboretum/Bisno: Acquisition letters/memos/corresp
AB 2.1 Arboretum/Bisno: Market Data Information
AB 3.4 Arboretum/Bisno: TransAction Background Report
AB 3.5 Arboretum/Bisno: 1993 AEW Business Plan
AB 4.1 Arboretum/Bisno: Grubb & Ellis Appraisal/Info.
AB 4.2 Arboretum/Bisno: Lease/Sale Proposals/Offers
AB 5.3 Arboretum/Bisno: Loan Restructuring
AB 6.1 Arboretum/Bisno: Joint Venture Agreement
AB 6.3 Arboretum/Bisno: AEW Investment Committee Minutes
AR 7.3 Arboretum/Bisno: Marketing Agreement
AB 7.6 Arboretum/Bisno: Letters of Intent
AB 7.6 Arboretum/Bisno: Supermarket Proposals
ARBORETUM/SONY MUSIC CAMPUS FILES
AS 2.1 Arboretum/Sony: West Side Office Market Data
AS 3.1 Arboretum/Sony: Hazardous Waste
AS 3.3 Arboretum/Sony: Lowe General Contractor
AS 3.3 Arboretum/Sony: Marx/Okubo Review of Plans/Specs
AS 3.4 Arboretum/Sony: Owners' Representative Proposals
AS 3.6 Arboretum/Sony: 1991 Business Plan
AS 3.6.1 Arboretum/Sony: 1993 AEW Business Plan
AS 4.1 Arboretum/Sony: KTR Appraisal 11/92
AS 4.1 Arboretum/Sony: CB Appraisal 5/17/91
AS 4.1 Arboretum/Sony: Brown, Chudleigh Appraisal
AS 4.1 Arboretum/Sony: LEA Assoc. Appraisal 6/21/91
AS 4.2 Arboretum/Sony: Lease/Hotel Proposal
AS 5.3 Arboretum/Sony: Credit Lyonnaise Financing
AS 5.3 Arboretum/Sony: FNBC Construction Loan/Guaranty: Enviorn.
Side Ltr.
AS 5.4 Arboretum/Sony: First Chicago
AS 5.4 Arboretum/Sony: SO PAC Restructure
AS 5.6 Arboretum/Sony: Financing Proposals
AS 5.7 Arboretum/Sony: Real Estate Taxes
AS 6.1 Arboretum/Sony: Santa Monica #7 Assoc. L.P. Agreement
AS 7.2 Arboretum/Sony: Change Orders
AS 7.2 Arboretum/Sony: Architect's Agreement (Chrlich 4/11/91)
AS 7.7 Arboretum/Sony: Release of Lot #7 - Release Docs. 5/12/91
<PAGE>
EXHIBIT I
---------
ESCROW AGREEMENT
----------------
This Escrow Agreement (this "Agreement") is entered into as of ___________,
---------
1997, by and among Santa Monica Number Seven Associates, L.P., a Delaware
limited partnership ("Seller"), Kilroy Realty, L.P., a Delaware limited
------
partnership ("Buyer") and Chicago Title Insurance Company ("Escrow Holder").
----- --------------
RECITALS
--------
A. Buyer and Seller are the parties to that certain Agreement for
Purchase and Sale of 2100 Colorado Avenue, Santa Monica, California dated as of
June __, 1997 (the "Purchase Agreement"), pursuant to which Buyer has agreed to
------------------
purchase from Seller certain real property and improvements located at 2100
Colorado Avenue and commonly known as the Sony Arboretum Building in Santa
Monica, California and more particularly described in the Purchase Agreement, in
accordance with the terms of the Purchase Agreement. Capitalized terms used but
not defined herein shall have the meanings given to them in the Purchase
Agreement.
B. Buyer and Seller have agreed in the Purchase Agreement to establish an
escrow account with respect to certain post-closing obligations of Seller.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, Buyer, Seller and
Escrow Holder do hereby agree as follows:
1. Appointment of Escrow Agent. Seller and Buyer hereby appoint and
---------------------------
designate Escrow Holder as the escrow agent for the purposes set forth herein,
and Escrow Holder hereby accepts such appointment.
2. Deposit and Investment of Funds. Escrow Holder shall retain as of
-------------------------------
the date of this Agreement, as trustee and fiduciary of Buyer and Seller, the
Sony Lease Amount (as defined below) and the Seismic Retrofit Amount (as defined
below) in an escrow account in the name of Buyer and Seller (the "Escrow
------
Account"), to be released from such Escrow Account only in accordance with the
- -------
terms of this Agreement. Escrow Holder shall invest all amounts deposited into
the Escrow Account (and all payments, collections, interest and other proceeds
of any such investments) in (i) securities that are direct obligations of the
United States of America for the full and timely payment of which the full faith
and credit of the United States of America are pledged, maturing not later than
180 days following the date of this Agreement and cancelable at any time with
prorated interest accrual and without penalty as to interest or principal or
(ii) money market accounts, bank repurchase agreements or such other investments
as Seller may direct in writing, provided that Seller covenants to Buyer that
all such investments shall be consistent with prudent institutional standards
for short-term cash management investments and involve de minimis risk of loss
of principal. Escrow Holder shall have
-1-
<PAGE>
no liability for any loss incurred by reason of any such investments, except for
actions which result from its negligence or willful misconduct. All interest
received with respect to the amounts in the Escrow Account shall be disbursed by
Escrow Holder as provided in this Agreement.
3. Sony Lease Payments. Seller shall deposit into the Escrow
-------------------
Account, from the proceeds of the Purchase Price on the Closing Date, an amount
equal to $____________ (the "Sony Lease Amount") for the payment to Buyer of a
-----------------
supplement to base rent due and payable by Sony pursuant to the Sony Lease.
Escrow Holder shall release to Buyer from the Escrow Account, on the first day
of each month following the Closing Date and until release of the last payment
for December 1, 1997, an amount equal to $72,081.44. If the Closing Date should
occur on any date that is not the first day of the month, then the first such
release of funds to Buyer shall be made on the Closing Date and prorated
according to the number of days remaining in the month in which the Closing Date
occurs. Any amounts payable to Buyer pursuant to this paragraph shall not be
subject to increase based upon (i) any failure of Sony to pay in a full and
timely fashion any rental due under the Sony Lease or (ii) any termination or
modification of the Sony Lease by Buyer.
4. Seismic Retrofit Escrow.
-----------------------
(a) Amount of Holdback. Seller shall deposit into the Escrow Account,
------------------
from the proceeds of the Purchase Price on the Closing Date, an amount (the
"Seismic Retrofit Holdback") equal to the sum of (i) the estimated cost to
complete the Retrofit Work determined pursuant to Section 4.7 of the Purchase
Agreement (the "Seismic Retrofit Amount"); plus (ii) twenty-five percent (25%)
of the Seismic Retrofit Amount, as adjusted from time to time (the "Seismic
Retrofit Contingency"). If the estimated cost to complete the Retrofit Work is
increased after the Close of Escrow, then the Seismic Retrofit Amount and the
Seismic Retrofit Contingency shall be increased accordingly. The Retrofit Work
shall be supervised by Seller to its completion in accordance with the
Construction Contract.
(b) Progress Payments. Seller shall have the right to a release of
-----------------
portions of the Seismic Retrofit Amount upon satisfaction of the following
conditions:
i. Seller's written request (delivered not more often than
once per month) for a portion of the Seismic Retrofit Amount to be released,
delivered to Buyer and Escrow Holder along with copies of invoices evidencing
such amounts, certification by Dimitry Vergun that the work covered by such
request and invoices has been completed, conditional lien releases for the work
covered by the payment request and unconditional lien releases for any work
covered by prior payment requests;
ii. Seller's and the general contractor's statement of the
estimated cost to complete the Retrofit Work;
iii. Buyer's approval of the work covered by the payment
request, provided that if Buyer fails to disapprove of any such work within five
(5)
-2-
<PAGE>
business days after receipt of such payment request, Buyer shall be deemed to
have approved of same; and
iv. Seller having deposited in the Escrow Account the amount by
which the estimated cost to complete the Retrofit Work (as adjusted from time to
time) exceeds the unfunded portion of the Seismic Retrofit Amount, plus the
amount by which the Seismic Retrofit Contingency has been increased due to the
increase in estimated cost to complete the Retrofit Work.
(c) Release of Balance of Seismic Retrofit Holdback. The Seismic
-----------------------------------------------
Retrofit Contingency shall not be released to Seller until the conditions set
forth in this Section (c) are satisfied. The unfunded portion of the Seismic
Retrofit Holdback shall be released to Seller upon the satisfaction of the
following conditions:
i. Completion of the Retrofit Work and certification by
Dimitry Vergun that the Retrofit Work has been completed;
ii. Correction of any work disapproved by Buyer in Buyer's
reasonable opinion, provided that if Buyer fails to disapprove of any such work
within five (5) business days after receipt of such payment request, Buyer shall
be deemed to have approved of same;
iii. Receipt of all governmental approvals, certificates of
occupancy and final sign-offs as may be required by applicable laws;
iv. Provision to Buyer of all photographs, deputy inspector's
certificates, records and descriptions of the Retrofit Work in Seller's
possession, as the same may be reasonably requested by Buyer;
v. Receipt of unconditional lien releases from the general
contractor and all subcontractors and suppliers; and
vi. The expiration of the mechanics' lien period without any
lien having been filed.
(d) Objection to Release of Funds. Escrow Holder shall release the
-----------------------------
requested funds to Seller unless Buyer delivers written notice to Escrow Holder
of its objection to such release within seven (7) business days of Buyer's
receipt of the applicable request, provided that Buyer may only object to such
release on the basis that the conditions set forth in Sections (c) and (d) above
have not been satisfied.
(e) Completion: Resolution of Disputes. Seller shall complete the
----------------------------------
Retrofit Work within one hundred eighty (180) days following the Closing Date.
If the Retrofit Work has not been completed by such date, then, in addition to
any other rights and remedies which Buyer may have, Buyer shall have a right to
the release of funds then resident in the Escrow Account with respect to the
Seismic Retrofit Amount. Buyer shall only be entitled to use such funds for the
completion of the Retrofit Work. If the
-3-
<PAGE>
funds so released to Buyer exceed the amount necessary for Buyer to complete the
Retrofit Work; Buyer shall retain such excess. Any disputes regarding the
completion of the Retrofit Work shall be resolved by a neutral third party
agreed upon between Buyer and Seller, whose decision shall be binding. If Buyer
and Seller are unable to agree on a neutral third party, either party may apply
to the court to appoint a neutral structural engineer with experience in
projects similar to the Retrofit Work.
5. Release of Other Funds.
----------------------
(a) Seller shall have the right to withdraw from time to time any
interest accrued on funds resident in the Escrow Account.
(b) Seller shall have the right to a release of all funds then
resident in the Escrow Account with respect to the Sony Payment Amount following
the final monthly release of funds by Escrow Holder to Buyer on account of the
Sony Lease on December 1, 1997.
6. Termination. This Agreement shall terminate upon the written
-----------
instruction of each of the parties to this Agreement.
7. Hold Harmless. Buyer and Seller jointly and severally hereby
-------------
agree to protect, defend, indemnify and hold harmless Escrow Holder from and
against any and all liability, claims, including without limitation demands,
losses, damages, actions and causes of action, and to reimburse expenses, costs
and reasonable attorneys' fees which Escrow Holder, at any time, may sustain or
incur in connection with this Agreement, excepting claims, demands, losses,
damages, actions and causes of action caused by the negligence or willful
misconduct of Escrow Holder. Escrow Holder may act upon any instrument or other
writing believed by it in good faith to be genuine and to have been signed or
presented by the proper person and shall not be liable to any party hereto in
connection with the performance of its duties hereunder, except for its own
negligence or willful misconduct. Escrow Holder's duties shall be determined
only with reference to this Escrow Agreement and applicable laws, and Escrow
Holder is not charged with knowledge of or any duties or responsibilities in
connection with any other document or agreement. If in doubt as to its duties
and responsibilities hereunder, Escrow Holder may (i) consult with counsel of
its choice and shall be protected in any action taken or omitted in connection
with the written advice or opinion of such counsel; or (ii) place the matter
before any court of competent jurisdiction, transferring to the court the entire
balance of the Escrow Account, whereupon Escrow Holder shall be relieved of any
further obligations hereunder.
8. Escrow Costs and Fees. All fees and costs of Escrow Holder in
---------------------
connection with the escrow contemplated by this Agreement shall be shared
equally by Seller and Buyer.
9. Notices. All notices or other communications required or provided
-------
to be sent by either party shall be in writing and shall be sent by United
States Postal Service, postage prepaid or certified mail, return receipt
requested, by any nationally
-4-
<PAGE>
known overnight delivery service, by courier, facsimile or in person. All
notices shall be deemed to have been given forty-eight (48) hours following
deposit in the United States Postal Service or upon delivery (as evidenced by a
courier receipt or facsimile transmission confirmation) if sent by overnight
delivery service, facsimile, courier or personally delivered. All notices shall
be addressed to the party at the address below:
To Seller: Lowe Enterprises
11777 San Vicente Blvd. #900
Los Angeles, CA 90049
Attn: Mr. Rick Newman
Facsimile: (310) 207-1132
with a copy to: c/o AEW Capital Management, L.P.
601 S. Figueroa Street, Suite 2150
Los Angeles, CA 90017-3405
Attn: Mr. Michael Pepper
Facsimile: (213) 629-9160
and with a copy to: Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, California 94104
Attn: Brian Smith, Esq.
Facsimile: (415) 772-6268
To Buyer: Kilroy Realty L.P.
2250 East Imperial Highway
El Segundo, California 90245
Attn: Mr. Jeffrey C. Hawken
Facsimile: (310) 322-5981
with a copy to: Appel & Associates
1875 Century Park East, Suite 700
Los Angeles, CA 90067
Attn: Brian J. Appel, Esq.
Facsimile: (310) 785-1010
To Escrow Holder: Chicago Title Insurance Company
700 South Flower Street, Suite 900
Los Angeles, CA 90017
Attn: Mr. Nate Clover
Facsimile: (213) 488-4361
Any address or name specified above may be changed by notice given to the
addressee by the other party in accordance with this Section 7. The inability to
deliver because of a changed address of which no notice was given, or rejection
or other refusal to accept any notice, shall be deemed to be the receipt of the
notice as of the date of such
-5-
<PAGE>
inability to deliver or rejection or refusal to accept. Any notice to be given
by any party hereto may be given by the counsel for such party.
10. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of California.
11. Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the parties and their respective successors and assigns.
12. Attorneys' Fees. In the event any dispute between Buyer and
---------------
Seller should result in litigation, the prevailing party shall be reimbursed for
all reasonable costs incurred in connection with such litigation, including,
without limitation, reasonable attorneys' fees.
13. Miscellaneous. This Agreement may be executed in two or more
-------------
counterparts, each of which shall be a duplicate original and all of which shall
constitute one and the same agreement. No amendment or modification of this
Agreement shall be effective unless in writing and executed by each of the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
BUYER:
SELLER:
KILROY REALTY L.P., a Delaware
SANTA MONICA NUMBER SEVEN limited partnership
ASSOCIATES L.P., a Delaware limited
partnership
By: Kilroy Realty Corporation,
By: COLORADO PHASE III, L.P.,a Maryland corporation
California limited partnership Its General Partner
Its General Partner
By:___________________________
By: COLORADO PHASE III, Name:_________________________
INC., a California Title:________________________
corporation
Its General Partner
By:___________________________
By: ___________________ Name:_________________________
Title:________________________
Name:__________________
Title:_________________
-6-
<PAGE>
ESCROW HOLDER:
CHICAGO TITLE INSURANCE COMPANY
By: _______________________
Its:_______________________
-7-
<PAGE>
EXHIBIT J
FORM OF SONY ESTOPPEL
-1-
<PAGE>
ESTOPPEL CERTIFICATE
TO: KILROY REALTY, L.P.
2250 East Imperial Highway
El Segundo, CA 90245
Attn; Mr. Jeffrey C. Hawken
LEASE: OFFICE LEASE by and between SANTA MONICA NUMBER SEVEN ASSOCIATES, L.P.
("Landlord") and SONY MUSIC ENTERTAINMENT INC.("Tenant") dated January
1, 1997 (the "Lease"), regarding the real property and improvements
located at 2100 Colorado Avenue, Santa Monica, California (the
"Premises")
KILROY REALTY L.P., a Maryland limited partnership ("Purchaser") has
entered into a purchase agreement with Landlord for the purchase of the real
property and improvements located at 2100 Colorado Avenue, Santa Monica,
California, along with the assignment of Landlord's leasehold interest in the
Lease. In connection with the purchase and assignment, Tenant's certification
to the terms and conditions of the Lease are necessary.
The undersigned hereby certifies to Purchaser as follows, with the
understanding that Purchaser has agrees to purchase the real property and
improvements, which includes the Premises, and that Purchaser and Purchaser's
lenders and successors and assigns will be relying on this certificate in
connection with such purchase:
1. Attached to this certificate is a true, correct and complete copy of the
Lease covering the Premises. The Lease is in full force and effect and has not
been amended, modified or supplemented, and constitutes a legally enforceable
and legally binding obligation of Tenant. The Lease represents the entire
agreement between Tenant and Landlord with respect to the Premises.
2. The commencement date of the Lease was JANUARY 1, 1997 and the term will
expire on DECEMBER 31, 2003. Tenant has TWo (2) options to extend the term of
the Lease for an additional term of FIVE (5) YEARS each. Tenant does not have
any other rights to renew or extend the term of the Lease.
3. The monthly rent, not including any additional rent, presently payable
under the terms of the Lease is equal to one-twelfth (1/12) of the annual Base
Rent as noted on the Base Rent Schedule attached hereto to this Estoppel
Certificate. The monthly rent, not including any additional rent, has been paid
through JUNE 30, 1997. No rent or other charges under the Lease have been paid
for more than thirty (30) days in advance of its due date. Tenant has no right
to any free rent, tenant improvement allowance or other concession (rental or
otherwise) or similar compensation.
4. There has been no security deposit or any other deposit of funds held by
Landlord under the terms of the Lease.
<PAGE>
Estoppel Certificate
Page 2
5. The Landlord under the Lease is not in default of any provision under the
Lease and no event has occurred which, with the passage of time or giving of
notice or both, would constitute a default by the Landlord under the Lease. As
of the date hereof, Tenant has no right of setoff or counterclaim against the
Landlord under the Lease.
6. Tenant is obligated under the terms of the Lease to lease and pay for 230
reserved, subterranean parking spaces, and 45 uncovered, unreserved, surface
parking spaces. Tenant is being provided 230 reserved, subterranean parking
spaces in the parking garage. Tenant is presently paying One Hundred Twenty-Five
Dollars ($125) per month for each subterranean parking space and Sixty Dollars
($60) per month for each surface parking space. Tenant has not presently
exercised the option to lease an additional 38 uncovered, unreserved surface
parking spaces.
7. This Estoppel Certificate may be relied upon by Purchaser and Purchaser's
lenders, successors and assigns.
8. The provisions of this Estoppel Certificate shall be binding on the
undersigned and its successors and assigns and shall inure to the benefit of the
Purchaser and its successors and assigns.
IN WITNESS WHEREOF, this Estoppel Certificate has been duly executed and
delivered by the Tenant as of ________________ 1997.
"Tenant"
SONY MUSIC ENTERTAINMENT INC.,
a Delaware corporation
By:_______________________
Name:_____________________
Title:____________________
By:_______________________
Name:_____________________
Title:____________________
<PAGE>
Estoppel Certificate
Page 3
The Lease and the obligations of Tenant are guaranteed by SONY CORPORATION OF
AMERICA ("Guarantor") for the benefit of the Landlord, its successors or
assigns, pursuant to EXHIBIT C - GUARANTY OF LEASE by Guarantor dated January 1,
-----------------------------
1997 (the "Guaranty"). Guarantor has read the foregoing Estoppel Certificate and
hereby certifies to Purchaser that (i) the foregoing information contained in
this Estoppel Certificate is true, correct, and complete, (ii) a true, correct,
and complete copy of the Guaranty is attached hereto, (iii) the Guaranty is in
full force and effect, and (iv) further, that there are no defaults on behalf of
the Landlord or defenses on the part of Guarantor that would affect the
obligations of Guarantor under the Guaranty or the Lease.
Signed this __ day of _______________, 1997
"Guarantor"
SONY CORPORATION OF AMERICA
a New York corporation
By: _________________________
Name:________________________
Title:_______________________
By: _________________________
Name:________________________
Title:_______________________
<PAGE>
EXHIBIT K
FORM OF DEVELOPMENT AGREEMENT ESTOPPEL
-1-
<PAGE>
ESTOPPEL CERTIFICATE
--------------------
TO: Santa Monica Number Seven Associates, L.P.
c/o Lowe Enterprises Commercial Group
11777 San Vicente Boulevard
Suite 900
Los Angeles, CA 90049
Attn: Richard G. Newman, Jr. ("Owner")
-----
FROM: City of Santa Monica ("City)
----
1685 Main Street
Santa Monica, CA 90401
The undersigned understands that Owner is the fee owner of that
certain real property known as the Sony Music Campus located within the City of
Santa Monica and, more particularly, constituting a portion of the Real
Property, as such term is defined in that certain Development Agreement dated as
of December 16, 1987, by and between Owner, as successor-in-interest to SoPac
Properties, Inc. (with respect to a portion of the Real Property described
therein), and City (as amended and modified to date, the "Development
-----------
Agreement"). City hereby certifies the following information with respect to the
- ---------
Development Agreement:
1. The Development Agreement is in full force and effect and
constitutes a binding obligation of the parties.
2. The Development Agreement has not been amended or modified,
either orally or in writing, except by the following written amendments:
a. Memorandum of Clarification dated as of December 16, 1987,
between the City and SoPac Properties, Inc.
b. Second Memorandum of Clarification dated as of December 16,
1987, between the City, and SoPac Properties, Inc. and SoPac Development Co.
c. Amendment Number One to Development Agreement dated as of
December 28, 1988, between the City and SoPac Properties, Inc., which was
recorded in the Official Records of the County of Los Angeles on January 5, 1989
as Instrument Number 89-15234.
d. Amendment Number Two to Development Agreement dated as of
March 16, 1995, between the City and Arboretum Development Partners, L.P., which
was recorded in the Official Records of the County of Los Angeles on April 11,
1995 as Instrument Number 95-504419.
3. Owner is not in default in the performance of its obligations
under the Development Agreement, except as described on Attachment "1" attached
hereto and incorporated herein by this reference.
<PAGE>
4. City acknowledges that this Estoppel Certificate may be relied
upon by Owner, by any transferee of Owner's interest in the Development
Agreement, or any Mortgagee (as such term is defined in the Development
Agreement).
This Estoppel Certificate has been executed by the City as of
____________________________, 1997.
Approved as to form: CITY OF SANTA MONICA, a Municipal corporation
____________________________ By:__________________________________________
City Attorney
Attest:______________________________________
<PAGE>
Attachment "1"
Nature and Amount of Default
<PAGE>
EXHIBIT L
FORM OF MTA LEASE ESTOPPEL
<PAGE>
LESSOR'S ESTOPPEL CERTIFICATE
TO KILROY REALTY L.P.
2250 East Imperial Highway
El Segundo, CA 90245
Attn: Mr. Jeffrey C. Hawken
LEASE: Commercial Lease by and between METROPOLITAN TRANSIT AUTHORITY OF LOS
ANGELES ("Lessor"), successor in interest to SOUTHERN PACIFIC
TRANSPORTATION COMPANY and SANTA MONICA PLUMBER SEVEN ASSOCIATES
("Lessee"), successor in interest to PARKER MANUFACTURING COMPANY,
dated March 12, 1979, as amended (the "Lease"), concerning that
certain real property located in the City of Santa Monica, County of
Los Angeles, California, as illustrated on Lessor's Los Angeles
Division Drawing No. A-12498, Sheet 2, as revised September 21, 1978
(the "Premises").
The undersigned, Lessor, hereby certifies to Purchaser as follows, with the
understanding that Purchaser has agreed to purchase the leasehold interest as
Lessee in the Lease, and that Purchaser and Purchaser's lenders and successors
and assigns will be relying on this certificate in connection with such
purchase:
1. Attached to this certificate is a true, correct and complete copy of the
Lease covering the Premises. The Lease is in full force and effect and has not
been amended, modified or supplemented, except as follows:
ASSIGNMENT OF LEASE 187808, DATED FEBRUARY 11,1986; AND
ASSIGNMENT DATED FEBRUARY 22, 1989,
and the Lessee under the Lease has no other obligations to or agreements with
Lessor. True, correct and complete copies of such assignments are attached. The
Lease and the foregoing documents represent the entire agreement between Lessor
and Lessee with respect to the Premises.
2. Lessor is the successor in interest to the prior lessor, Southern Pacific
Transportation Company. Lessor's interest in the Lease or the Premises has not
been assigned, sublet, licensed, or hypothecated, and Lessor has not agreed to
do any of the foregoing.
3. The commencement date of the Lease was JUNE l, 1979 and the term will
expire on MAY 31. 2004. Lessee under the Lease has THREE (3) options to extend
the term of the Lease for an additional term of FIVE (S) YEARS each.
4. The monthly rent presently payable under the terms of the Lease is
S2,300.00. The
<PAGE>
Estoppel Certificate
Page 2
monthly rent has been paid through JUNE 30, 1997, and is current The monthly
rent shall increase to $2,990.00 per month commencing JUNE 1, 1999 through MAY
31, 2004. The rent during the option periods shall be the reasonable and fair
rental value established bY the parties pursuant to the terms of the Lease.
5 The Lessee is not in, and the use of the Premises by Lessee does not
constitute, a default of any provision under the Lease. No event has occurred
which, with the passage of time or giving of notice or both, would constitute a
default by Lessee under the Lease.
6. The provisions of this certificate shall be binding on the undersigned and
its successors and assigns and shall inure to the benefit of Purchaser and its
successors and assigns.
7. This certificate may be relied upon by Purchaser and Purchaser's lenders,
successors and assigns.
IN WITNESS WHEREOF, this certificate has been duly executed and delivered
by the Lessor as of________ 1997.
"Lessor"
METROPOLITAN TRANSIT AUTHORITY OF LOS ANGELES
a municipal corporation
By:_____________________
Name:___________________
Title:__________________
By:_____________________
Name:___________________
Title:__________________
<PAGE>
EXHIBIT M
FORM OF THETFORD ASSIGNMENT
-2 -
<PAGE>
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Appel & Associates
1875 Century Park East, Suite 700
Los Angeles, CA 90067
Attn: Brian J. Appel, Esq.
________________________________________________________________________________
ASSIGNMENT [OF] AND ASSUMPTION
---
OF
WASTEWATER TREATMENT AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION OF WASTEWATER TREATMENT AGREEMENT (the
"ASSIGNMENT") is entered into as of this _ day of_________, 1997, by and between
SANTA MONICA NUMBER SEVEN ASSOCIATES, L.P., a Delaware limited partnership
("ASSIGNOR") and KILROY REALTY L.P., a Maryland limited partnership ("ASSIGNEE")
with reference to the following facts:
1. Recitals.
---------
1.1 Assignor is the owner of that certain real property located in the
City of Santa Monica, County of Los Angeles, State of California, as more fully
described in EXHIBIT A, attached hereto, together with all buildings and other
---------
improvements thereon ("the PROPERTY"). The Property is being conveyed to
Assignee pursuant to the terms and conditions of that certain Agreement for
Purchase and Sale of 2100 Colorado Avenue, Santa Monica, California (the
"PURCHASE AGREEMENT") by and between Assignor and Assignee.
1.2 Assignor succeeded to the interest of Santa Monica Lowe partners,
L.P., a Delaware limited partnership ("SMLP") in that certain Wastewater
Treatment Agreement (the "Agreement") dated August 21, 1991 by and between SMLP
and THETFORD SYSTEMS, INC., a Michigan corporation ("THETFORD"), a memorandum of
which was recorded January 6, 1992 as Instrument No. 92-20062 in the official
records of the Los Angeles County Recorder's Office. The Agreement provides for
the construction, operation and maintenance of a wastewater treatment facility
to be located on the adjoining Property by Thetford, and further, that Thetford
would
<PAGE>
accept, treat, filter and recycle wastewater from the site for renewable four
(4) year terms.
1.3 The Purchase Agreement contemplates that Assignor will assign its
rights, obligations and interests in and to the Agreement to Assignee and that
Assignee will assume Assignor's obligations thereunder.
1.4 Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree
as follows.
2. The effective date of this Assignment shall be the date first above
written.
3. Assignor is the successor in interest to SMLP, and Assignor has the proper
authority, power and right to assign all of SMLP's interests in the Agreement to
Assignee.
4. Assignor hereby assigns, transfers and conveys to Assignee all of its
rights, obligations, and interests in and to the Agreement. Assignor hereby
covenants and warrants to Assignee that Assignor shall remain liable for all of
its obligations accruing prior to the effective date of this Assignment.
Assignor shall indemnify and defend Assignee, and hold Assignee, its successor
and assigns, harmless against any and all claims, demands, liabilities, costs,
judgments, or expenses of any kind or nature arising out of any matter relating
to the Agreement prior to the effective date of the Assignment hereof.
5. Assignee hereby acknowledges that the Assignment of the Agreement is
subject to the terms, covenants, and conditions of the Purchase Agreement.
6. Assignee hereby accepts all of the rights, obligations, and interests of
Assignor in the Agreement, and assumes all of Assignor's obligations arising
from and after the effective date of this Assignment. Assignee specifically
---------------------
assumes all of Assignor's obligations with respect to the cost of upgrading the
- -------------------------------------------------------------------------------
wastewater treatment facility so that it is fully operational. Assignee shall
- --------------------------------------------------------------
indemnify and defend Assignor, and hold Assignor harmless against any and all
claims, demands, liabilities, costs, judgments, or expenses of any kind or
nature arising out of any matter relating to the Agreement subsequent to the
effective date of the Assignment hereof.
7. The provisions of this Assignment shall be binding upon and inure to the
benefit of Assignor and Assignee, and their respective successors and permitted
assigns.
8. This Assignment may be executed in counterparts, all of which when taken
- - ------------------------------------------------------------------------
together shall
- --------------
2
<PAGE>
CONSTITUTE ONE AGREEMENT
- ------------------------
IN WITNESS WHEREOF, the parties have executed this Assignment effective as
of the date first above written.
"Assignor"
SANTA MONICA NUMBER SEVEN ASSOCIATES, L.P.
a Delaware Limited partnership
By: COLORADO PLACE PHASE III, L.p.,
-------------------------------
A CALIFORNIA LIMITED PARTNERSHIP
-------------------------------
ITS GENERAL PARTNER
-------------------
BY: COLORADO PLACE PHASE III, INC.,
-----------------------------------
A CALIFORNIA CORPORATION
- -------------------------------
ITS GENERAL PARTNER
- -------------------------
BY:
- -----------------------------------
PRINT NAME:
- -----------------------------------
ITS:
- -----------------------------------
BY:----------------------------
PRINT NAME:--------------------
ITS:---------------------------
"Assignee"
KILROY REALTY L.P.,
A DELAWARE LIMITED PARTNERSHIP
BY: KILROY REALTY CORPORATION.
- -----------------------------
A MARYLAND CORPORATION.
- ---------------------------
ITS GENERAL PARTNER
- -----------------------
BY:
- -----------------------------------
PRINT NAME:
- -----------------------------------
ITS:
- -----------------------------------
BY:
- -----------------------------------
PRINT NAME:
- -----------------------------------
Its:
- -----------------------------------
3
<PAGE>
State of California
County of Los Angeles
On__________ before me_______________________________), personally
appeared______________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature__________________(Seal)
State of California
County of Los Angeles
On__________________before me_________________________), personally
appeared ________________________, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person(s) whose name(s)) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s),acted, executed the instrument.
WITNESS my hand and official seal.
Signature__________________(Seal)
4
<PAGE>
CONSENT TO ASSIGNMENT
The undersigned, THETFORD SYSTEMS. INC., hereby consents to the Assignment of
the Wastewater Treatment Agreement from Assignor to Assignee, and Assignee being
substituted as the facility user in the Agreement, subject to all of the terms,
covenants and conditions as set forth in the Agreement.
THETFORD SYSTEMS, INC.,
a Michigan corporation
By:_______________________________
Name:_____________________________
Title:____________________________
By:_______________________________
Name:_____________________________
Title:____________________________
State of California
County of Los Angeles
On_______________before me______________________), personally appeared
________________________, personally known to me (or proved to me on the basis
of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which
the person(s) acted, executed thE instrument.
WITNESS my hand and official seal.
Signature___________________(Seal)
6
<PAGE>
EXHIBIT A
---------
LEGAL DESCRIPTION
-----------------
