<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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) DECEMBER 17, 1997
KILROY REALTY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
MARYLAND COMMISSION FILE: 1-12675 95-4598246
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR IDENTIFICATION NO.)
ORGANIZATION)
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2250 EAST IMPERIAL HIGHWAY, SUITE 1200,
EL SEGUNDO, CALIFORNIA, 90245
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 563-5500
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 17, 1997, Kilroy Realty L.P., a partnership in which Kilroy
Realty Corporation is the sole general partner (collectively referred to
herein as the "Company"), acquired two industrial buildings and two office
buildings with approximately 393,000 aggregate rentable square feet for an
aggregate purchase price of approximately $37,100,000. The acquisitions were
financed with approximately $36,200,000 of working capital and the issuance of
a $900,000 promissory note. The promissory note bears interest at 5% per annum
and matures January 2, 1998. The Company expects to repay the promissory note
from borrowings under its revolving credit facility. The properties were
acquired from Swede-Cal Properties, Inc., Viking Investors of Southern
California, L.P. and Viking Investors of Southern California II, L.P.
(collectively referred to herein as "Swede-Cal"). Swede-Cal is not affiliated
with the Company, and the acquisitions were based on arms-length negotiations.
The first industrial building is located in Huntington Beach, California,
contains approximately 57,000 rentable square feet and is presently 78%
leased. The average monthly rent per square foot is $0.52 and the quoted
market rental rate for comparable industrial buildings in Huntington Beach is
$0.76 per square foot. The second industrial building is located in Lake
Forest, California, contains approximately 45,000 rentable square feet and is
presently 100% leased. The average monthly rent per square foot is $0.75 and
the quoted market rental rate for comparable industrial buildings in Lake
Forest is $0.78 per square foot. The first office building is located in Alisa
Viejo, California, contains approximately 134,000 rentable square feet and is
presently 95% leased. The average monthly rent per square foot is $1.08 and
the quoted market rental rate for comparable office buildings in Alisa Viejo
is $1.04 per square foot. The second office building is located in Anaheim,
California, contains approximately 157,000 rentable square feet and is
presently 86% leased. The average monthly rent per square foot is $0.79 and
the quoted market rental rate for comparable office buildings in Anaheim is
$1.03 per square foot.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
DESCRIPTION
(a) Financial statements of properties acquired.
The required financial statements for the acquired properties will be
filed within 60 days.
(b) Pro forma financial information.
The required financial statements for the acquired properties will be
filed within 60 days.
(c) Exhibits
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EXHIBIT NO.
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<C> <S>
10.70 Purchase and Sale Agreement and Escrow Instructions, dated
December 11, 1997, by and between Kilroy Realty, L.P. and Swede-
Cal Properties, Inc., Viking Investors of Southern California,
L.P. and Viking Investors of Southern California II, L.P.
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S-1
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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
December 29, 1997 /s/ Ann Marie Whitney
Date: _________________ By: _________________________________
ANN MARIE WHITNEY
Vice-President and Controller
S-2
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EXHIBIT 10.70
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
BY AND BETWEEN
KILROY REALTY, L.P.,
A DELAWARE LIMITED PARTNERSHIP
AS
"BUYER"
AND
SWEDE-CAL PROPERTIES, INC., A CALIFORNIA CORPORATION,
VIKING INVESTORS OF SOUTHERN CALIFORNIA, A CALIFORNIA LIMITED PARTNERSHIP, AND
VIKING INVESTORS OF SOUTHERN CALIFORNIA II, A CALIFORNIA LIMITED
PARTNERSHIP,
COLLECTIVELY,
"SELLER"
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TABLE OF CONTENTS
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PAGE
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ARTICLE I. PURCHASE AND SALE.............................................. 1
Section 1.1. Agreement of Purchase and Sale........................ 1
Section 1.2. Property Defined...................................... 2
Section 1.3. Purchase Price........................................ 2
Section 1.4. Payment of Purchase Price............................. 2
Section 1.5. Deposit............................................... 3
Section 1.6. Deposit as Liquidated Damages......................... 3
Section 1.7. Escrow Holder......................................... 4
Section 1.8. Like-Kind Exchange.................................... 5
Section 1.9. Alton Business Center Right of First Offer............ 5
ARTICLE II. TITLE AND SURVEY.............................................. 5
Section 2.1. Delivery of Title Documents........................... 5
Section 2.2. Title Examination..................................... 5
Section 2.3. Pre-Closing "Gap" Title Defects....................... 6
Section 2.4. Permitted Exceptions.................................. 6
Section 2.5. Conveyance of Title................................... 7
ARTICLE III. REVIEW OF PROPERTY........................................... 7
Section 3.1. Right of Inspection................................... 7
Section 3.2. Environmental Reports................................. 8
Section 3.3. Right of Termination.................................. 8
Section 3.4. Review of Tenant Estoppels............................ 9
ARTICLE IV. CLOSING....................................................... 10
Section 4.1. Time and Place........................................ 10
Section 4.2. Seller's Obligations At and Prior to Closing.......... 10
Section 4.3. Buyer's Obligations at or Prior to Closing............ 12
Section 4.4. Credits and Prorations................................ 13
Section 4.5. Transaction Taxes and Closing Costs................... 16
Section 4.6. Conditions Precedent to Obligation of Buyer........... 17
Section 4.7. Conditions Precedent to Obligation of Seller.......... 17
Section 4.8. Allocations........................................... 17
ARTICLE V. REPRESENTATIONS, WARRANTIES AND COVENANTS...................... 18
Section 5.1. Representations and Warranties of Seller.............. 18
Section 5.2. Relationship of Title Policy.......................... 19
Section 5.3. Survival of Seller's Representations and Warranties... 20
Section 5.4. Covenants of Seller................................... 20
Section 5.5. Representations and Warranties of Buyer............... 21
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Section 5.6. Covenant of Buyer.................................... 21
Section 5.7. Survival of Buyer's Representations and Warranties... 21
Section 5.8. Environmental Indemnity.............................. 22
ARTICLE VI. DEFAULT........................................................ 23
Section 6.1. Default by Buyer..................................... 23
Section 6.2. Default by Seller.................................... 23
Section 6.3. Recoverable Damages.................................. 23
ARTICLE VII. RISK OF LOSS.................................................. 23
Section 7.1. Minor Damage......................................... 23
Section 7.2. Major Damage......................................... 24
Section 7.3. Definition of "Major" Loss or Damage................. 24
Section 7.4. Rental Loss Insurance and Indemnification............ 24
ARTICLE VIII. BROKERAGE COMMISSIONS........................................ 24
Section 8.1. Buyer's Brokers...................................... 24
Section 8.2. Jan-Erik Palm........................................ 25
ARTICLE IX. DISCLAIMERS.................................................... 25
ARTICLE X. MISCELLANEOUS................................................... 25
Section 10.1. Confidentiality...................................... 25
Section 10.2. Public Disclosure.................................... 25
Section 10.3. Assignment........................................... 26
Section 10.4. Notices.............................................. 26
Section 10.5. Modifications........................................ 27
Section 10.6. Entire Agreement..................................... 27
Section 10.7. Further Assurances................................... 28
Section 10.8. Counterparts......................................... 28
Section 10.9. Facsimile Signatures................................. 28
Section 10.10. Severability......................................... 28
Section 10.11. Applicable Law....................................... 28
Section 10.12. No Third Party Beneficiary........................... 28
Section 10.13. Captions............................................. 28
Section 10.14. Construction......................................... 28
Section 10.15. Recordation.......................................... 28
Section 10.16. Exhibits............................................. 29
Section 10.17. Date of Performance.................................. 29
Section 10.18. Attorneys Fees....................................... 29
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EXHIBITS
- --------
A - DESCRIPTION OF LAND
B - LIST OF PERSONAL PROPERTY
C - LIST OF OPERATING AGREEMENTS
D - LIST OF ENVIRONMENTAL REPORTS
E - TENANT ESTOPPEL FORM
F - ESCROW HOLDER'S GENERAL PROVISIONS
G - FORM OF DEED
H - FORM OF BILL OF SALE
I - FORM OF ASSIGNMENT OF LEASES
J - FORM OF ASSIGNMENT OF CONTRACTS
K - FORM OF TENANT NOTICE
L - FORM OF FIRPTA AND CALFIRPTA CERTIFICATES
M - INTENTIONALLY OMITTED
N - LIST OF BROKERAGE AGREEMENTS
O - LIST OF SPECIFIED LITIGATION
P - LIST OF VIOLATION NOTICES
Q - RENT ROLL
R - 8-K AND AUDIT REQUIREMENTS
iii
<PAGE>
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (this
"Agreement") is made effective as of December 11, 1997 (the "Effective Date"),
- ---------- --------------
by and between KILROY REALTY, L.P., a Delaware limited partnership ("Buyer"),
-----
and SWEDE-CAL PROPERTIES, INC., a California corporation ("S-C"), VIKING
INVESTORS OF SOUTHERN CALIFORNIA , a California limited partnership ("Viking
I"), and VIKING INVESTORS OF SOUTHERN CALIFORNIA II, a California limited
partnership ("Viking II") ("collectively, Seller").
------
ARTICLE I.
PURCHASE AND SALE
Section 1.1. Agreement of Purchase and Sale. Subject to the terms
------------------------------
and conditions hereinafter set forth, Seller agrees to sell and convey to Buyer,
and Buyer agrees to purchase from Seller, the following:
(a) Those certain parcels of land situated in Orange County,
California more particularly described in Exhibit A attached hereto and made a
---------
part hereof, together with all rights and appurtenances pertaining to such
property, including any right, title and interest of Seller in and to adjacent
streets, alleys or rights-of-way (the parcels of land described in clause (a) of
this Section 1.1 being herein referred to collectively as the "Land"). The Land
----
is comprised of five (5) office and industrial parks which are known, located
and currently owned as follows: (i) "Anaheim Corporate Center" in Anaheim,
California, owned by S-C; (ii) "Pacific Park Plaza" in Aliso Viejo, California,
owned by S-C; (iii) "Alton Business Center" in Irvine, California; owned by
Viking II, (iv) "Dimension Business Park" in El Toro, California; owned by
Viking I; and (v) "Gothard Industrial Park" in Huntington Beach, California,
owned by Viking I;
(b) the buildings, structures, fixtures and other improvements
affixed to or located on the Land, excluding fixtures owned by tenants (the
property described in clause (b) of this Section 1.1 being herein referred to
collectively as the "Improvements");
------------
(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
(excluding that personal property located within Suite 175 located at 27131
Aliso Creek Road at the Pacific Park Plaza and the personal property located
within Suite 165 located at 27111 Aliso Creek Road at the Pacific Park Plaza,
all of which shall be removed by Seller no later than January 31, 1998),
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 Land and the Improvements, which personal property includes
without limitation the personal property listed on Exhibit B attached hereto
---------
(the
<PAGE>
property described in clause (c) of this Section 1.1 being herein referred to
collectively as the "Personal Property");
-----------------
(d) any and all of Seller's right, title and interest in and to the
leases, licenses, and occupancy agreements covering all or any portion of the
Real Property (as hereinafter defined), to the extent they are in effect on the
date of the Closing (as such term is defined in Section 4.1 hereof) (the
property described in clause (d) of this Section 1.1 being referred to
collectively as the "Leases"), together with all rents and other sums due
------
thereunder (the "Rents") and any and all security deposits in Seller's
-----
possessions in connection therewith (the "Security Deposits"); and
-----------------
(e) any and all of Seller's right, title and interest in and to (i)
all assignable contracts and agreements (collectively, the "Operating
---------
Agreements") listed and described on Exhibit C attached hereto and made a part
- ---------- ---------
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, and (iii) all assignable existing
permits, licenses, approvals and authorizations issued by any governmental
authority in connection with the Properties (the property described in clause
(e) of this Section 1.1 being sometimes herein referred to collectively as the
"Intangibles").
-----------
Section 1.2. Property Defined. The Land and the Improvements are
----------------
hereinafter sometimes referred to collectively as the "Real Property." The
-------------
Land, the Improvements, the Personal Property, the Leases and the Intangibles
respecting each individual parcel are collectively referred to as "Property."
The Land, the Improvements, the Personal Property, the Leases and the
Intangibles respecting all five (5) office and industrial parks are herein
collectively referred to as the "Properties." The Properties contain, in the
----------
aggregate, approximately five hundred thirty-six thousand three hundred seventy
(536,370) rentable square feet.
Section 1.3. Purchase Price.
--------------
(a) Seller is to sell and Buyer is to purchase the Properties for the
amount of Forty-Nine Million Dollars ($49,000,000) (the "Purchase Price").
--------------
(b) For purposes of calculating documentary transfer tax, the
Purchase Price shall be allocated to each Property in the manner to be mutually
agreed upon by the parties hereto. Such allocation shall not be effective for
any other purpose whatsoever.
Section 1.4. Payment of Purchase Price. The Purchase Price (less
-------------------------
the amount of the Note (as hereinafter defined)), as increased or decreased by
prorations and adjustments as herein provided, shall be deposited with Escrow
Holder at or prior to Closing in cash by wire transfer of immediately available
funds. If the Closing occurs on or prior to December 31, 1997, a portion of the
Purchase Price shall be evidenced by a promissory note in the principal amount
of
2
<PAGE>
Nine Hundred Thousand Dollars ($900,000) with interest accruing at the rate of
five percent (5%) per annum (the "Note"). The Note shall mature and be due
January 2, 1998.
Section 1.5. Deposit. Not later than three (3) days following the
-------
parties' mutual execution and delivery of this Agreement, Buyer shall open an
escrow (the "Escrow") with First American Title Insurance Company (the "Escrow
------ ------
Holder"), having its office at the location specified in Section 10.4 hereof, by
- ------
concurrently delivering to Escrow Holder a fully executed original of this
Agreement and depositing into Escrow the sum of Seven Hundred Fifty Thousand
Dollars ($750,000) (the "Deposit") in good funds either by certified bank or
-------
cashier's check or by federal wire transfer. The Escrow Holder shall hold the
Deposit in an interest-bearing account reasonably acceptable to Seller and
Buyer, in accordance with the terms, and 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. Except as otherwise provided in this Agreement, the
Deposit shall be non-refundable to Buyer upon the expiration of the Inspection
Period.
Section 1.6 Deposit as Liquidated Damages. EXCEPT AS OTHERWISE
-----------------------------
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 PROPERTIES AS CONTEMPLATED HEREUNDER IS NOT CONSUMMATED AS
A RESULT OF BUYER'S 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 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 SELLER'S SOLE AND EXCLUSIVE REMEDY
AGAINST BUYER ARISING FROM SUCH FAILURE OF THE SALE TO CLOSE. NOTWITHSTANDING
THE FOREGOING, THIS SECTION 1.6 SHALL NOT LIMIT THE DAMAGES RECOVERABLE BY
SELLER RESULTING FROM A BREACH OTHER THAN SUCH REFUSAL OR INABILITY BY BUYER TO
PURCHASE THE PROPERTIES. 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.
3
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SELLER: BUYER:
SWEDE-CAL PROPERTIES, INC., KILROY REALTY, L.P.,
a California corporation a Delaware limited partnership
By: /s/ Kent Berg By: KILROY REALTY CORPORATION, a
----------------------------------- Maryland corporation, its
Name: Kent Berg General partner
---------------------------------
Title: President
--------------------------------
VIKING INVESTORS OF SOUTHERN By: /s/ Tyler H. Rose
CALIFORNIA I, a California limited --------------------------------
partnership Name: Tyler H. Rose
-----------------------------
Title: Sr. V.P. & Treasurer
-----------------------------
By: /s/ Kent Berg & /s/ Jan-Erik Palm
-----------------------------------
Name: Kent Berg & Jan-Erik Palm
---------------------------------
Title: General Partners
--------------------------------
VIKING INVESTORS OF SOUTHERN CALIFORNIA II,
a California limited partnership
By: Viking Partners, a general partnership
By: /s/ Kent Berg & /s/ Jan-Erik Palm
----------------------------------
Name: Kent Berg & Jan-Erik Palm
---------------------------------
Title: General Partners
--------------------------------
Section 1.7 Escrow Holder. Escrow Holder shall hold and dispose of
-------------
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 safekeeping and disposition of the
Deposit 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 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 Properties are 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. 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, 4.1, 4.2, 4.3, 4.5, 4.6 and 4.7 and 10.4, 10.5 and 10.9 hereof.
Escrow Holder's General Provisions are attached hereto as Exhibit F and made a
---------
part hereof.
4
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Section 1.8. Like-Kind Exchange. Buyer will cooperate with Seller in
------------------
connection with any tax deferred exchange pursuant to Internal Revenue Code
Section 1031 ("Exchange"), provided that such exchange (a) does not result in
any cost to Buyer; (b) results in no liability of Buyer to any person or entity
other than as specifically set forth herein; and (c) does not delay the Closing.
Section 1.9 Alton Business Center Right of First Offer. The Irvine
------------------------------------------
Company ("TIC") has asserted that it holds a right of first offer (the "Right")
with respect to Alton Business Center, and Alton Business Center was offered to
TIC on the same terms as set forth herein pursuant to that certain December 10,
1997 letter to TIC from Sandra A. Jacobson, a copy of which has been provided to
Buyer. If TIC fails to waive the Right by the Closing, the Closing shall
nevertheless occur for all of the Properties other than Alton Business Center,
and the aggregate Purchase Price shall be reduced by $12,435,000. This
Agreement shall remain in effect with respect to Alton Business Center until TIC
either waives the Right, acquires Alton Business Center or fails to acquire
Alton Business Center for any reason after having exercised the Right. If TIC
does not waive the Right until after the initial Closing for the other
Properties or exercises the right but thereafter fails to acquire Alton Business
Center for any reason whatsoever, Seller shall give prompt written notice
thereof to Buyer, and the Closing for the sale of Alton Business Center to Buyer
shall occur thirty (30) days following the effective date of Seller's notice,
but otherwise on the terms set forth herein.
ARTICLE II.
TITLE AND SURVEY
Section 2.1. Delivery of Title Documents. As soon as reasonably
---------------------------
practicable, but in no event later than five (5) days after the Effective Date,
Seller shall cause to be delivered to Buyer (a) a current preliminary title
report respecting each 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 each Property; and (d) a copy
of Seller's title insurance policy and/or survey for each Property, if available
(the documents referred to in (a) - (d) of this Section 2.1 are collectively
referred to as the "Title Documents").
---------------
Section 2.2. Title Examination.
-----------------
(a) During the period beginning upon the Effective Date and ending at
5:00 p.m. (local time at the Properties) on December 15, 1997 (hereinafter
referred to as the "Title Inspection Period"), Buyer shall have the right to
-----------------------
review the Title Documents and otherwise examine the status of title to the
Properties.
(b) During the Title Inspection Period, Buyer shall have the right
(but not the obligation) at Buyer's expense to obtain and approve, new or
updated ALTA surveys of the Properties to be prepared by a licensed surveyor or
engineer hired by Buyer (collectively, the "Surveys"). Any ALTA "extended
-------
coverage" supplemental reports for the Properties covered by the Surveys shall
be obtained by Buyer at Buyer's sole cost and expense.
5
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(c) Buyer shall notify Seller in writing (the "Title Notice") prior
------------
to the expiration of the Title Inspection 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 Title Inspection 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 three (3)
business days after receipt of the Title Notice to notify Buyer in writing (i)
that Seller will remove such objectionable exceptions from title on or before
the Closing; or (ii) that Seller elects not to cause such exceptions to be
removed. If Seller fails to notify Buyer in writing of its election within said
three (3) business day period, the Seller shall be deemed to have elected not to
cause such exception to be cured. The procurement by 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 (ii) above, then
Buyer shall have three (3) business days within which to notify Seller in
writing that Buyer will nevertheless proceed with the purchase and take title to
the Real 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 three (3) business day period, then Buyer shall be deemed
to have elected to proceed with the purchase and take title to the Real 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 either Buyer or Seller
may apply such portion of the Purchase Price as is necessary to cause the
removal of such items concurrently with the 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 title (a) raised by First American Title Insurance Company (the
"Title Company") between the expiration of the Title Inspection Period and the
Closing and (b) not disclosed by the Title Company or otherwise known to Buyer
prior to the expiration of the Title Inspection Period. Buyer must notify
Seller of such objection to title within three (3) 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 2.3. Permitted Exceptions. The Real Property shall be
--------------------
conveyed subject to the following matters, which are hereinafter referred to as
the "Permitted Exceptions":
--------------------
6
<PAGE>
(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 Properties;
(b) the rights of tenants under the Leases;
(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 Properties;
(e) items shown on the Surveys which are not objected to by Buyer or
are waived or deemed waived by Buyer in accordance with Section 2.2(c) hereof;
and
(f) the lien of supplemental taxes assessed pursuant to Chapter 35
commencing with Section 75 of the California Revenue and Taxation Code.
Section 2.5 Conveyance of Title. At Closing Seller shall convey and
-------------------
transfer to Buyer the Real Property, by execution and delivery of a Deed (as
defined in Section 4.2(a) hereof) respecting each Property individually.
Evidence of delivery of such title shall be the issuance by Title Company of (i)
an ALTA Standard Coverage Owner's Policy of Title Insurance (the "Title Policy")
------------
covering each 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 one or more Surveys in compliance with
all applicable ALTA requirements, then the Title Policy required hereunder
respecting each Property covered by said Surveys 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 period beginning upon
-------------------
the Effective Date and ending at 5:00 p.m. (local time at the Properties) on
December 15, 1997 (hereinafter referred to as the "Inspection Period") Buyer
-----------------
shall have the right to:
(a) Perform, or hire consultants, at its own expense, to perform a
physical inspection of the Properties.
(b) Inspect, or hire consultants to inspect, the environmental
condition of the Properties pursuant to the terms and conditions of this
Agreement, and to obtain and review, at
7
<PAGE>
Buyer's sole election and cost, soils, geology, structural and environmental and
any other engineering reports.
(c) Obtain and examine a search report showing liens against the
Personal Property which have been perfected by filings under the Uniform
Commercial Code.
(d) Examine at the Properties, 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 Properties,
which are to be provided by Seller to the extent available. Such documents
include, without limitation, (i) Seller's current Lease files for the
Properties, including copies of all existing Leases and Operating Agreements,
and letters of intent from prospective tenants, (ii) unaudited income and
expense statements 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 May 31, 1997 related to the
Properties, (iii) existing notes and deeds of trust encumbering the Properties,
if any, (iv) as-built plans and specifications for the Improvements, if any, (v)
prior soils, geology, structural and engineering reports in Seller's possession
and control, (vi) recorded and unrecorded parking agreements, (vii) common area
maintenance agreements or other agreements affecting the Properties, (viii)
certificates of occupancy pertaining to the Improvements (ix) pertinent
correspondence with governmental agencies and current tenants concerning the
Properties and (x) evidence that the Properties are zoned for the purpose to
which Buyer intends to use it. 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 Properties shall occur at reasonable
times agreed upon by Seller and Buyer after reasonable prior written notice to
Seller and shall be conducted so as not to interfere unreasonably with the use
of the Properties by Seller or its tenants. Seller may have a representative
present during any such inspections. If Buyer desires to do any invasive
testing at the Properties, 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 Properties 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 (i.e. shall not merge into the
Deeds). Buyer shall keep the Properties free and clear of any mechanic's liens
or materialmen's liens arising out of Buyer's entry onto the Properties.
Section 3.2. Environmental Reports. Buyer acknowledges that Buyer
---------------------
has received copies of the environmental reports listed on Exhibit D 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
8
<PAGE>
inspections contemplated by Section 3.1 hereof makes the Properties unsuitable
for Buyer's acquisition, Buyer shall have the right, prior to the expiration of
the Inspection 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 Inspection Period, then Buyer shall be deemed to
have approved all aspects of the Properties (except (i) Title Documents and
Surveys, 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 Properties pursuant to the terms hereof.
Section 3.4. Review of Tenant Estoppels. Seller shall deliver to
--------------------------
each tenant of the Properties an estoppel certificate in substantially the form
of Exhibit E attached hereto (the "Tenant Estoppels") and shall request that the
--------- ----------------
tenants complete and sign the Tenant Estoppels and return them to Seller. No
Tenant Estoppel shall be dated more than thirty (30) days prior to the Closing
Date. Seller shall deliver copies of the completed Tenant Estoppels to Buyer as
Seller receives them. Buyer shall notify Seller within three (3) business days
of receipt of any Tenant Estoppel if Buyer determines that such Tenant Estoppel
is not acceptable to Buyer, along with the reasons for such determination. If
Buyer fails to give such notice within such three (3) business day period, then
any such Tenant Estoppel shall be deemed to be acceptable to Buyer. If Seller
fails to obtain Tenant Estoppels from (i) at least seventy-five percent (75%) of
the Tenants leasing greater than five thousand (5,000) square feet of space
within each of the Properties and (ii) at least fifty percent (50%) of the
Tenants leasing five thousand (5,000) square feet of space or less within each
of the Properties, that are satisfactory to Buyer with respect to tenants of the
Properties on or before ten (10) business days prior to the Closing Date, 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 Estoppels and Seller
Estoppels (as defined below) and to have elected to proceed with the purchase of
the Properties pursuant to the terms hereof. Seller shall deliver an estoppel
certificate in substantially the form of Exhibit E attached hereto as to any
---------
premises for which a Tenant Estoppel has not been obtained (the "Seller
-------
Estoppels"), with such estoppel certificate to be executed by the
- ---------
landlord/owner of the leased premises. In the event a Tenant Estoppel is
obtained after the Closing Date, such Tenant Estoppel shall replace the Seller
Estoppel to the extent they are not inconsistent, and Seller shall not have any
obligations or liability under the Seller Estoppel to the extent that it is so
replaced. The provisions of this Section 3.4 shall survive the Closing.
9
<PAGE>
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 ("Notices") on December 17,
-------
1997 or as may be extended to comply with the provisions of Sections 2.2(c), 2.3
and 3.4; provided that if the Closing has not occurred by December 17, 1997,
because of the effect of the time periods contained within Section 2.2(c), 2.3
or 3.4, then the Closing shall occur on January 6, 1998. At the Closing, the
Purchase Price and all documents shall be deposited with the Escrow Holder and
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 Deeds shall not be recorded until
Escrow Holder has received the full amount of the Purchase Price, adjusted by
prorations as set forth herein. Upon written demand by either Buyer or Seller
given not less than three (3) business days prior to the Closing, there shall be
a pre-closing at the office of Escrow Holder at 9:00 a.m. on the day prior to
the Closing. The pre-closing shall be attended by (i) legal counsel to Seller,
(ii) legal counsel to Buyer and (iii) representatives of Seller and of Buyer
with signature authority.
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) duly executed and notarized grant deeds (the "Deeds") as
-----
to each of the Properties in the form attached hereto as Exhibit G, conveying
---------
the Real Property, subject only to the Permitted Exceptions;
(ii) a duly executed bill of sale (the "Bill of Sale") as to
------------
each of the Properties in the form attached hereto as Exhibit H, conveying the
---------
Personal Property in its as-is condition without warranty of title or use and
without warranty, express or implied, as to merchantability and fitness for any
purpose;
(iii) a duly executed counterpart of an assignment of leases
(the "Assignment of Leases") as to each of the Properties in the form attached
hereto as Exhibit I, pursuant to which, among other things, (x) Seller shall
---------
assign to Buyer, and Buyer shall assume, the landlord/lessor interest in and to
the Leases, Rents and Security Deposits, (y) Seller shall indemnify Buyer and
hold Buyer harmless from and against any and all claims pertaining to the Leases
arising prior to Closing and (z) Buyer shall indemnify Seller and hold Seller
harmless from and against any and all claims pertaining to the Leases arising
from and after the Closing, including without limitation, claims made by tenants
with respect to tenants' Security Deposits to the extent paid, credited or
assigned to Buyer;
(iv) a duly executed counterpart of an assignment and
assumption agreement (the "Assignment of Contracts") as to each of the
-----------------------
Properties in the form attached
10
<PAGE>
hereto as Exhibit J, 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 L-1 and L-2 duly executed by Seller;
------------ ---
(vii) such affidavits as may be customarily and reasonably
required by the Title Company;
(viii) executed closing statements (one from each of S-C, Viking
I and Viking II as each such statement relates to the Property owned by that
Seller) reasonably acceptable to Seller;
(ix) such additional documents as shall be reasonably required
to consummate the transaction contemplated by this Agreement; and
(x) a Closing Certificate executed by each entity comprising
Seller in the form attached hereto as Exhibit S, representing and warranting
---------
that as of the date of Closing (A) all representations and warranties made by
such Seller pursuant to this Agreement are true and correct, (B) copies of all
those agreements, materials, instruments, documents, records, report and the
like material to the Properties were provided by Seller to Buyer pursuant to
Section 5.4(d) of this Agreement, and (C) such copies were true and accurate.
(b) join with Buyer to execute notices (the "Tenant Notices") in the
--------------
form attached hereto as Exhibit K, which Buyer shall send to each tenant under
---------
each of the Leases promptly after the Closing, informing such tenant of the sale
of the Properties and of the assignment to Buyer of Seller's interest in, and
obligations under the Leases (including, if applicable, any Security Deposits),
and directing that all Rents and other sums payable after the Closing under each
such 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
11
<PAGE>
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 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 Leases and the Operating Agreements, together
with such leasing and property files and records located at the Properties or
Seller's and/or the property manager's office, which are material in connection
with the continued operation, leasing and maintenance of the Properties, 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, at
Buyer's expense, 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
Properties, subject only to the Permitted Exceptions.
Section 4.3. Buyer's Obligations at or Prior to Closing. Buyer
------------------------------------------
shall:
(a) No less than one (1) business day prior to Closing, deliver to
Escrow Holder:
(i) the full amount of the Purchase Price (less the amount of
the Note) as increased or decreased by prorations and adjustments, less the
Deposit, as provided in Section 1.5 hereof;
(ii) a duly executed counterpart of an Assignment of Leases as
to each Property;
(iii) a duly executed counterpart of an Assignment of Contracts
as to each Property;
(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 for each of S-C, Viking I
and Viking II reasonably acceptable to Buyer;
(vii) such additional documents as shall be reasonably required
to consummate the transaction contemplated by this Agreement; and
12
<PAGE>
(viii) the Note.
(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 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) Subject to the terms and provisions in Section 5.4(b), all income
and expenses of the Properties shall be apportioned as of 12:01 a.m., on the day
of Closing as if Buyer were vested with title to the Properties during the
entire day upon which Closing occurs. 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 Properties;
(iii) utility charges respecting the Properties 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 tenants under the Leases 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
13
<PAGE>
(vi) any other operating expenses or other items pertaining to
the Properties which are customarily prorated between a buyer and a seller in
the county in which the Properties are located.
(b) Notwithstanding anything contained in Section 4.4(a) hereof:
(i) At Closing, (A) Seller shall credit to the account of
Buyer the amount of such Security Deposits (to the extent such Security Deposits
have not been applied against delinquent Rents or otherwise as provided in the
Leases), and (B) Buyer shall credit to the account of Seller all refundable cash
or other deposits posted with utility companies serving the Properties;
(ii) 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 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;
(iii) Unpaid and delinquent Rents 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 any of the Properties, Seller shall, within
fifteen (15) days after the receipt thereof, deliver to Buyer any such Rents
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
any of the Properties, Buyer shall, within fifteen (15) days after the receipt
thereof, deliver to Seller any such Rents which Seller is entitled to hereunder
relating to the period prior to the date of Closing. Seller and Buyer agree
that all Rents 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 such 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
Properties, 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 any tenant; and
14
<PAGE>
(iv) 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 Leases, Seller and Buyer
shall cooperate to complete such reconciliations as soon as possible after the
Closing, with Seller responsible for amounts owing to tenants under the Leases
and entitled to amounts payable by tenants under the Leases (as the case may
be), with respect to periods prior to the Closing, and with Buyer responsible
for amounts owing to tenants under the Leases and entitled to amounts payable by
tenants under the Leases (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 Properties, 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 any 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 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 tenants of the Properties pursuant to the Leases, to such
tenants in accordance with the terms of such Leases; third, to Seller to the
extent such appeal covers the period prior to the Closing; and fourth, 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 with respect
to each Property 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.
15
<PAGE>
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 the ALTA Owner's Policy of Title Insurance
(with Regional Exceptions) to be issued to Buyer by the Title Company at
Closing;
(iii) the fees for recording the Deeds;
(iv) any documentary transfer tax or similar tax which becomes
payable by reason of the transfer of the Properties;
(v) the fees for Seller's brokers, if any, identified in
Article VIII hereof.
(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 an ALTA Standard Coverage Owner's Policy (with Regional Exceptions);
(iii) the cost of the Surveys;
(iv) the fees for Buyer's Brokers identified in Article VIII
hereof.
(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.
16
<PAGE>
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 Escrow Holder or Buyer, as
appropriate, all of the items required to be delivered to Buyer 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:
(a) Escrow Holder 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 Escrow Holder or Seller, as
appropriate, all of the items required to be delivered to Seller 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.
Section 4.8 Allocations. All credits and prorations made pursuant
-----------
to Section 4.4 and any closing costs or other expenses incurred by Seller shall
be allocated to S-C, Viking I and Viking II as such costs relate to the Property
owned by each entity comprising Seller. If it is unclear whether a particular
cost or credit is attributable to a particular Property or Properties, such cost
shall be allocated to each of the five Properties in the amounts determined as
follows: For each Property, such cost or credit shall be multiplied by a ratio,
the numerator of which is the portion of the Purchase Price attributed to such
Property in Section 1.3(b) and the denominator of which is the Purchase Price.
17
<PAGE>
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. Each entity comprising Seller has
--------------------------
been duly organized and is validly existing under the laws of the State of
California. Each entity comprising Seller has the full right and authority to
enter into this Agreement and to transfer the Property or Properties owned by
that entity and to consummate or cause to be consummated the transaction
contemplated by this Agreement. The person signing this Agreement on behalf of
each entity comprising Seller is authorized to do so.
(b) Pending Actions. There is no action, suit, arbitration,
---------------
unsatisfied order or judgment, government investigation (with respect to which
Seller has been notified) 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 Properties and would materially affect the
Properties or use thereof, or Seller's ability to perform hereunder.
(c) Operating Agreements. The Operating Agreements listed on
--------------------
Exhibit C are all of the agreements concerning the operation and maintenance of
- ---------
the Properties entered into by Seller and affecting the Properties, except those
Operating Agreements that are terminable upon not more than thirty (30) days
notice.
(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 commissions or fees for procuring tenants with respect to
the Properties, except as disclosed in Exhibit N hereto.
---------
(e) Condemnation. Seller has received no written notice of any
------------
condemnation proceedings relating to the Properties.
(f) Violations. Except as set forth on Exhibit P attached hereto,
---------- ---------
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 Properties which
would materially adversely affect the Properties or use thereof.
(g) Leases. The rent roll attached hereto as Exhibit Q is accurate
------ ---------
in all material respects and lists all of the Leases currently affecting the
Real Property.
18
<PAGE>
(h) Authorization. This Agreement has been, and on the Closing
-------------
Date, 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 Deeds.
(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 (a) a breach or
violation of (i) any governmental requirement applicable to Seller or the
Properties 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 any of the Properties.
(k) 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.
(l) Contiguous Property. Neither Seller nor any Affiliate of Seller
-------------------
is retaining any contiguous or adjacent property to any of the Properties.
(m) Material Facts. 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.
(n) Mello-Roos and Overflight. Seller has informed Buyer that the
-------------------------
Dimension Business Park and Pacific Park Plaza are located in Mello-Roos
Community Facilities District and are under the flight path for El Toro Marine
Corps Air Station.
(o) Disclaimer. Except for the foregoing limited representations and
----------
warranties, Seller hereby expressly disclaims any representations, warranties
and guaranties relating to the Properties.
Section 5.2. Relationship of Title Policy. Buyer's acceptance of the
----------------------------
Title Policy shall be in full satisfaction of any warranties relating to the
condition of title to the Properties, and Buyer will look solely to the remedies
available to Buyer under the Title Policy with respect to title matters.
19
<PAGE>
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 Properties
in a manner generally consistent with the manner in which Seller has operated
and maintained the Properties prior to the date hereof;
(b) Except as provided hereinbelow, Seller agrees not to amend, renew
or expand the Leases or enter into any new Leases between the Effective Date and
the Closing without 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 three (3) 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 three (3) business day period set forth above, Buyer shall be deemed to have
disapproved such amendment, renewal, expansion or new Lease. Notwithstanding
the foregoing, the parties hereto acknowledge that Seller has entered into and
Buyer has approved (i) that certain lease with CWC, Inc. dba Sun Cal in the
Anaheim Corporate Center, as to which Seller shall be obligated to pay the
leasing commission and the cost of the tenant improvements; (ii) that certain
lease with Resource Financial in the Anaheim Corporate Center, as to which Buyer
shall be obligated to pay for the cost of the leasing commission and the cost of
the tenant improvements; (iii) that certain lease with Aubrey Group in the Alton
Business Center, as to which Buyer shall be obligated to pay for the cost of the
tenant improvements; (iv) that certain lease with Bio Cybernetics in the Alton
Business Center, as to which Buyer shall be obligated to pay the cost of the
tenant improvements; (v) that certain lease with Audient, Inc. in the Dimension
Business Park, as to which Buyer shall be obligated to pay for the cost of the
tenant improvements; (vi) that certain Lease with HSH Interplan U.S.A. in the
Gothard Industrial Park, as to which Buyer shall be obligated to pay for the
cost of the tenant improvements; and (vii) that certain lease with Indus
Industries in the Dimension Business Park, as to which Buyer shall be obligated
to pay for the cost of the leasing commission. The parties hereto further
acknowledge and agree that Buyer shall be responsible for paying for any leasing
commissions and the cost of any tenant improvements in connection with any
further leases entered into between the Effective Date and the Closing Date,
provided Buyer has approved same in accordance with the terms and provisions of
this Section 5.4(b).
(c) Commencing upon the Effective Date and through the first
anniversary of the Closing Date, Seller shall comply with the provisions of
Exhibit R hereto.
- ---------
(d) Seller hereby covenants to promptly provide Buyer with true and
accurate copies of all agreements, materials, instruments, documents, records,
report and the like which
20
<PAGE>
are material to the Properties, including, but not limited to those items listed
in Section 3.1(d), together with an index listing each and every such agreement,
material, instrument, document, record, report and the like provided to Seller.
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) As-Is. Except for the specific limited representations and
-----
warranties of Seller set forth in Section 5.1 hereof and the covenant of Seller
to provide Buyer with true and accurate copies of documents and materials
pursuant to the terms and provisions of Section 5.4(d) hereof, Buyer has not
relied on and will not rely upon any representation or warranty of Seller or any
of its respective agents and acknowledges that no such representations have been
made. Buyer is, or as of the expiration of the Contingency Period will be,
familiar with the Properties. Buyer is relying solely upon, and as of the
expiration of the Contingency Period, will have conducted its own, independent
inspection, investigation and analysis of the Properties as it deems necessary
or appropriate in acquiring the Properties from Seller, including, without
limitation, reviewing and analyzing the documents and materials provided by
Seller to Buyer in accordance with the terms and provisions of Section 5.4(d).
Buyer acknowledges and agrees that upon Closing, Seller shall convey to Buyer
and Buyer shall accept the Properties "as is, where is, with all faults."
Section 5.6. Covenant of Buyer. Buyer shall enter into a contract
-----------------
with the entity currently managing the Properties (the "Management Company") to
continue to manage the Properties for a period of twelve (12) months after the
Closing. The contract will provide that either Buyer or the Management Company
shall have the right to terminate the contract effective any time after three
(3) months following the Closing by giving thirty (30) days' prior written
notice to the other party.
Section 5.7. 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.
21
<PAGE>
Section 5.8 Environmental Indemnity. Buyer hereby releases,
-----------------------
discharges and holds harmless Seller and its successors and assigns from any and
all claims, demands, sums of money, costs, actions, causes of action,
obligations or liabilities of every kind and nature whatsoever which Buyer may
have or hereafter may have or claim to have in connection with the existence of
Hazardous Substances on the Properties (whether same exists or accrues prior to
or after the Close of Escrow). Buyer hereby waives any rights it may have under
California Civil Code Section 1542 to later assert that the foregoing release
does not cover unknown claims. Section 1542 of the California Civil Code reads
as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR."
For purposes of this Agreement, the term "Hazardous Substances" means (i) any
--------------------
chemical, material or substance at any time defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous waste," "acutely hazardous waste," "radioactive waste,"
"biohazardous waste," "pollutant," "toxic pollutant," "contaminant," "restricted
hazardous waste," "infectious waste," "toxic substances," or any other term or
expression intended to define, list or classify substances by reason of
properties harmful to health, safety or the indoor or outdoor environment
(including harmful properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws);
(ii) any oil, petroleum, petroleum fraction or petroleum derived substance;
(iii) any drilling fluids, produced waters and other waste associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (iv) any flammable substances or explosives; (v) any radioactive
materials; (vi) any asbestos-containing materials; (vii) urea formaldehyde foam
insulation; (viii) electrical equipment which contains any oil or dielectric
fluid containing polychlorinated biphenyls; (ix) pesticides; (x) lead-based
paint; and (xi) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority (with
jurisdiction over the Properties or which may or could pose a hazard to the
health and safety of the owners, occupants or any persons in the vicinity of the
Properties.
Notwithstanding anything to the contrary contained herein, the obligations of
Buyer pursuant to this Section 5.8 shall not apply in connection with the
existence of Hazardous Substances or any environmental condition on any of the
Properties which Seller, at any time, may have caused or knowingly permitted.
For purposes of this paragraph, the term "knowingly permitted" with respect to
an environmental condition means an environmental condition that occurred with
the actual and not imputed knowledge of Jan-Erik Palm and/or Kent Berg. In any
legal proceeding based upon this paragraph, Buyer shall have the burden of proof
with respect to the knowledge of Jan-Erik Palm and Kent Berg.
22
<PAGE>
Seller and Buyer acknowledge that they have read and understand the provisions
of this Section and by their initials immediately below agree to be bound by its
terms.
/s/ TR /s/ KB
----------------- -------------------
Buyer's Initials S-C Initials
/s/ KB /s/JEP /s/ KB /s/JEP
----------------- -------------------
Viking I Initials Viking II Initials
ARTICLE VI.
DEFAULT
Section 6.1. Default by Buyer. If the sale of the Properties 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 Properties 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 Properties 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
------------
Properties or any portion thereof which is not "Major" (as hereinafter defined),
this Agreement shall remain in full force and effect provided that Seller shall
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 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 Properties shall pass to Buyer.
23
<PAGE>
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 7.3 hereof), then Seller and Buyer
shall be deemed to have elected to proceed with Closing. In that event Seller
shall 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
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 Properties 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 Properties 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
any of the Properties. 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.
Section 7.4. Rental Loss Insurance and Indemnification. Seller shall
-----------------------------------------
pay Buyer the amount of any rental loss which occurs on or following the Closing
and resulting from loss or damage to the Properties which occurs prior to the
Closing (the "Rental Loss"). If such loss or damage occurs, Seller shall
deliver to Buyer at the Closing (a) an assignment of any Rental Loss insurance
proceeds to which Seller would be entitled and (b) an indemnification of Buyer
against any Rental Loss. Each of such instruments shall be in a form reasonably
acceptable to Buyer.
ARTICLE VIII.
BROKERAGE COMMISSIONS
Section 8.1. Buyer's Brokers. With respect to the transaction
---------------
contemplated by this Agreement, Buyer shall pay a commission in the amount of
Fifty Thousand Dollars ($50,000) to ITC Real Estate Group and One Hundred
Thousand Dollars ($100,000) to Voit Commercial Brokerage (collectively, the
"Buyer's Brokers"). Except for the Buyer's Brokers, and as otherwise set forth
in Section 8.2 herein, Seller represents to Buyer, and Buyer represents to
Seller, that it is not represented by a broker. Each party hereto agrees that
if any person or entity, other than the Buyer's Brokers, makes a claim for
brokerage commissions or finder's fees
24
<PAGE>
related to the sale of the Properties 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.
Section 8.2. Jan-Erik Palm. Buyer and Seller acknowledge that
-------------
Jan-Erik Palm is a licensed California real estate broker and will be receiving
a disposition fee from Seller in connection with the transaction contemplated by
this Agreement.
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 Properties 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 Buyer's reporting requirements
under law. 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. This Section shall
survive the termination of this Agreement.
Section 10.2. Public Disclosure. Prior to 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 mutually
approved by Buyer and Seller. Seller shall not unreasonably withhold or delay
its approval of any such release proposed by Buyer. Seller shall have two (2)
business days following receipt of a proposed written release from Buyer within
which to approve or disapprove such release. Failure to disapprove such release
within
25
<PAGE>
such period of time shall be deemed to be approval. 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
to such other address or to the attention of such other person as the addressee
shall have designated by written notice sent 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.
Notice to S-C shall also be deemed notice to each of Viking I and Viking II.
Unless changed in accordance with the preceding sentence, the addresses for
notices given pursuant to this Agreement shall be as follows:
26
<PAGE>
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 Tester
Telephone No. (714) 540-1235
Facsimile No. (714) 755-8290
If to Seller: Swede-Cal Properties, Inc.
1000 Quail Street, Suite 220
Newport Beach, California 92660
Attention: Kent V. Berg
Telephone No. (714) 250-0100
Facsimile No. (714) 250-0200
with a copy to: Allen, Matkins, Leck, Gamble & Mallory LLP
18400 Von Karman, 4th Floor
Irvine, California 92715
Attention: Thomas C. Foster
Telephone No. (714) 553-1313
Facsimile No. (714) 553-8354
If to Escrow Holder: First American Title Insurance Company
114 East Fifth Street
Santa Ana, California 92801
Attention: Judy Moore
Telephone No. (714) 647-4466
Facsimile No. (714) 647-2235
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 Properties.
27
<PAGE>
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.
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 Properties
are 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 may 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>
Section 10.16. Exhibits. All exhibits attached to this Agreement
--------
are incorporated herein by reference.
Section 10.17. Date of Performance. If the date on which any
--------
performance required hereunder is other than a business day, then such
performance shall be required as of the next following business day.
Section 10.18. Attorneys 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 or the Assignments of Leases and the Assignments of Contracts
entered into concurrently herewith, 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. For the purposes of this paragraph, Costs shall include, without
limitation, attorneys' fees, costs and expenses incurred in the following: (i)
postjudgment motions; (ii) contempt proceedings; (iii) garnishment, levy, and
debtor and third party examination; (iv) discovery; and (v) bankruptcy
litigation.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the Effective Date.
SELLER:
SWEDE-CAL PROPERTIES, INC.,
a California corporation
By: /s/ Kent Berg
----------------------------------------
Name: Kent Berg
-------------------------------------
Title: President
-------------------------------------
VIKING INVESTORS OF SOUTHERN CALIFORNIA,
a California limited partnership
By: /s/ Kent Berg & /s/ Jan-Erik Palm
---------------------------------------
Name: Kent Berg & Jan-Erik Palm
-------------------------------------
Title: General Partners
-------------------------------------
29
<PAGE>
VIKING INVESTORS OF SOUTHERN CALIFORNIA II,
a California limited partnership
By: Viking Partners, a general partnership
By: /s/ Kent Berg & /s/ Jan-Erik Palm
---------------------------------------
Name: Kent Berg & Jan-Erik Palm
-------------------------------------
Title: General Partners
-------------------------------------
BUYER:
KILROY REALTY, L.P., a Delaware
limited partnership
By: KILROY REALTY CORPORATION,
a Maryland corporation, its
General Partner
By: /s/ Tyler H. Rose
----------------------------------
Name: Tyler H. Rose
--------------------------------
Title: Sr. V.P. & Treasurer
--------------------------------
30
<PAGE>
ACKNOWLEDGMENT
--------------
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, 1.7, 4.1, 4.2, 4.3, 4.5, 4.6 and 4.7 and 10.4, 10.5 and 10.9 hereof.
ESCROW HOLDER:
FIRST AMERICAN TITLE INSURANCE COMPANY,
a _____________________________________
By: ________________________________
Name: ________________________________
Title: ________________________________
31
<PAGE>
EXHIBIT A
DESCRIPTION OF LAND
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT B
LIST OF PERSONAL PROPERTY
NONE
<PAGE>
EXHIBIT C
LIST OF OPERATING AGREEMENTS
<TABLE>
<CAPTION>
EXPIRATION
PROPERTY VENDOR NAME PURPOSE DATE
<S> <C> <C> <C>
Dimension Business Park ADT Security Fire Alarm 08/05/99
Monitoring/Testing
Anaheim Corporate Center Security Signal Devices Fire Alarm 06/27/99
Monitoring/Testing
Gothard Industrial Park Security Signal Devices Fire Alarm 04/28/00
Monitoring/Testing
Anaheim Corporate Center McQuay Services HVAC 03/31/98
1400 N. Kellogg Drive
Anaheim
All Properties Commercial Roof Management Roof 11/98
</TABLE>
<PAGE>
EXHIBIT D
LIST OF ENVIRONMENTAL REPORTS
The following is a list of Environmental, Architectural & Engineering
and Seismic reports for the below referenced properties which were delivered to
Kilroy Realty Corporation on November 5, 1997:
<TABLE>
<S> <C>
1. Alton Business Center a. Environmental Due Diligence
Assessment November 8, 1991
b. Limited Subsurface Investigation
Phase II Report
March 6, 1990
2. Anaheim Corporate Center a. Site Characterization/Final Report
February 1989
3. Dimension Business Park a. Phase I Environmental Audit
June 14, 1990
4. Gothard Industrial Park a. Phase I Environmental Assessment
Update March 14, 1990
5. Pacific Park Plaza a. Phase I Hazardous Materials
Assessment July 27, 1990
</TABLE>
<PAGE>
EXHIBIT E
TENANT ESTOPPEL FORM
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT F
ESCROW HOLDER'S GENERAL PROVISIONS
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT G
FORM OF DEED
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
-----------------
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT H
FORM OF BILL OF SALE
--------------------
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT I
FORM OF ASSIGNMENT OF LEASES
----------------------------
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT J
FORM OF ASSIGNMENT OF CONTRACTS AND INTANGIBLES
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT K
FORM OF TENANT NOTICE
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT L-1
FORM OF FIRPTA CERTIFICATE
CERTIFICATE REGARDING FOREIGN INVESTMENT
----------------------------------------
IN REAL PROPERTY TAX ACT
------------------------
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT M
[Intentionally Omitted]
<PAGE>
EXHIBIT N
LIST OF BROKERAGE AGREEMENTS
Lease Commission Agreement dated December 15, 1996 by and between Swede-Cal
Properties, Inc. and Cushman & Wakefield of Calif. Inc., as extended, expiring
December 31, 1997.
<PAGE>
EXHIBIT O
LIST OF SPECIFIED LITIGATION
None. Seller has advised Buyer of four pending unlawful detainer actions
against tenants.
<PAGE>
EXHIBIT P
LIST OF VIOLATION NOTICES
Ralph Bowers: 16182 Gothard Street, Suite R, Huntington Beach, California
92647
[See attached violation.]
<PAGE>
EXHIBIT Q
RENT ROLL
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT R
8-K AND AUDIT REQUIREMENTS
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT S
CLOSING CERTIFICATE
[INTENTIONALLY OMITTED]
